TScan Therapeutics(TCRX) - 2025 Q1 - Quarterly Report

PART I. FINANCIAL INFORMATION Item 1. Financial Statements (Unaudited) This section presents TScan Therapeutics, Inc.'s unaudited condensed consolidated financial statements as of March 31, 2025, highlighting a net loss of $34.1 million and $251.7 million in cash and equivalents Condensed Consolidated Balance Sheets As of March 31, 2025, total assets decreased to $332.7 million from $371.1 million, primarily due to reduced cash, while liabilities and equity also declined Condensed Consolidated Balance Sheets (in thousands) | | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $154,108 | $178,689 | | Marketable securities | $97,581 | $111,421 | | Total current assets | $254,836 | $292,722 | | Total assets | $332,709 | $371,118 | | Liabilities and Stockholders' Equity | | | | Total current liabilities | $29,816 | $35,956 | | Total liabilities | $122,507 | $130,148 | | Total stockholders' equity | $210,202 | $240,970 | | Total liabilities and stockholders' equity | $332,709 | $371,118 | Condensed Consolidated Statements of Operations Collaboration and license revenue increased to $2.2 million, but rising operating expenses led to a wider net loss of $34.1 million for the three months ended March 31, 2025 Condensed Consolidated Statements of Operations (in thousands) | | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | Collaboration and license revenue | $2,171 | $566 | | Research and development | $29,788 | $24,857 | | General and administrative | $8,633 | $7,082 | | Total operating expenses | $38,421 | $31,939 | | Loss from operations | ($36,250) | ($31,373) | | Net loss | ($34,127) | ($30,142) | | Net loss per share, basic and diluted | ($0.26) | ($0.32) | Condensed Consolidated Statements of Cash Flows Net cash used in operating activities increased to $37.6 million in Q1 2025, partially offset by $13.5 million from investing activities, resulting in a net cash decrease Condensed Consolidated Statements of Cash Flows (in thousands) | | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | Net cash used in operating activities | ($37,586) | ($29,267) | | Net cash provided by investing activities | $13,530 | $36,163 | | Net cash provided by (used in) financing activities | ($525) | $258 | | Net (decrease) increase in cash, cash equivalents and restricted cash | ($24,581) | $7,154 | Notes to Unaudited Condensed Consolidated Financial Statements These notes detail the company's business, accounting policies, recurring losses, and significant financial activities including the Amgen collaboration and a new SVB loan agreement - The company has incurred recurring losses, including a net loss of $34.1 million for the three months ended March 31, 2025, and had an accumulated deficit of $409.2 million. Management asserts that cash, cash equivalents, and marketable securities are sufficient to fund operations for at least the next 12 months[37] - Under the Amgen Collaboration Agreement, the company received a $30 million upfront payment and is eligible for over $500 million in milestones. In Q1 2025, $2.2 million was recognized as revenue from this agreement[52][53][58] - In December 2024, the company entered into a new Loan and Security Agreement with Silicon Valley Bank (SVB) for up to $52.5 million, with an initial tranche of $32.5 million funded. This replaced the previous K2HV loan agreement[65] Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the company's TCR-T therapy development, significant operating losses, and liquidity, projecting existing cash to fund operations into Q1 2027 Overview TScan is a clinical-stage biotechnology company developing TCR-T therapies for cancer, with lead candidates in Phase 1 trials and a history of significant operating losses - The company is advancing lead product candidates TSC-100 and TSC-101 in a Phase 1 trial for heme malignancies (AML, MDS, ALL) in patients undergoing allogeneic HCT[80] - For solid tumors, the company is developing a multiplex TCR-T therapy (T-Plex) and has seven IND applications cleared by the FDA, with a Phase 1 trial (PLEXI-T™) underway[81] - The company has incurred significant operating losses since inception, with a net loss of $34.1 million for Q1 2025 and an accumulated deficit of $409.2 million as of March 31, 2025[84] Results of Operations Collaboration revenue increased, but higher R&D and G&A expenses led to a wider loss from operations of $36.3 million for Q1 2025 compared to Q1 2024 Comparison of Results of Operations (in thousands) | | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | Change | | :--- | :--- | :--- | :--- | | Collaboration and license revenue | $2,171 | $566 | $1,605 | | Research and development | $29,788 | $24,857 | $4,931 | | General and administrative | $8,633 | $7,082 | $1,551 | | Loss from operations | ($36,250) | ($31,373) | ($4,877) | - The $4.9 million increase in R&D expenses was primarily driven by a $2.2 million increase in laboratory supplies and studies related to start-up activities with a global CDMO, and a $1.6 million increase in facility-related expenses[91] - The $1.6 million increase in G&A expenses was mainly due to a $0.4 million increase in personnel costs from additional headcount and a $0.3 million increase in legal and professional fees[92] Liquidity and Capital Resources As of March 31, 2025, the company held $251.7 million in cash and equivalents, projected to fund operations into Q1 2027, with recent funding from equity offerings and a new debt facility - The company believes its existing cash, cash equivalents, and marketable securities of $251.7 million (as of March 31, 2025) will fund its operating plan into the first quarter of 2027[88][99][100] - Recent funding includes net proceeds of $134.7 million from a June 2023 public offering, $161.4 million from an April 2024 offering, and $30.0 million from a December 2024 registered direct offering[95][96][98] - The company secured a new debt facility with SVB in December 2024 for up to $52.5 million, drawing an initial $32.5 million and terminating its prior K2HV loan agreement[97] Item 3. Quantitative and Qualitative Disclosures About Market Risk As a "smaller reporting company," TScan is exempt from providing quantitative and qualitative disclosures about market risk - As a "smaller reporting company," TScan is not required to provide quantitative and qualitative disclosures about market risk[120] Item 4. Controls and Procedures Management concluded that disclosure controls and procedures were effective as of March 31, 2025, with no material changes to internal control over financial reporting during the quarter - Based on an evaluation as of March 31, 2025, the Principal Executive Officer and Principal Financial Officer concluded that the company's disclosure controls and procedures were effective[121] - No changes in internal control over financial reporting occurred during the quarter ended March 31, 2025, that have materially affected, or are reasonably likely to materially affect, internal controls[122] PART II. OTHER INFORMATION Item 1. Legal Proceedings The company is not currently a party to any material legal proceedings, though future involvement in ordinary course legal matters is possible - The company is not currently a party to any material legal proceedings[124] Item 1A. Risk Factors This section details numerous risks, including financial losses, dependence on novel TCR-T therapy, clinical development challenges, manufacturing complexities, regulatory uncertainty, intellectual property issues, and reliance on third parties Risks Related to Our Business and Industry This subsection outlines fundamental business risks, including a history of significant losses, dependence on the TCR-T platform, limited operating history, and the need for substantial additional funding - The company has a history of significant losses, reporting a net loss of $34.1 million for Q1 2025, and expects to incur substantial losses for the foreseeable future[129] - The business is highly dependent on the success of its proprietary platform to discover and develop TCR-T therapy product candidates, which is a novel approach with significant challenges[131][162] - Substantial additional funding is required to complete development and commercialization. Existing cash is projected to fund operations into Q1 2027, but the company will need to raise more capital, which may not be available on favorable terms[140][141] Risks Related to the Development of Our Product Candidates This subsection details risks in product candidate development, including the novelty of TCR-T therapy, potential for undesirable side effects, and the uncertainty of preclinical results predicting clinical success - The company's novel approach to cancer treatment with TCR-T therapy creates significant challenges, including educating medical personnel, managing potential side effects (GvHD, neurotoxicity), and scaling manufacturing[162][163] - Product candidates are in early development, and there is a high risk of failure. Preclinical and early clinical results may not be predictive of later-stage trial success[165][174] - Product candidates may cause undesirable side effects, such as GvHD, autoimmunity, or off-tumor toxicity, which could halt clinical development, prevent regulatory approval, or limit commercial potential[196][197][198] Risks Related to Manufacturing This subsection details manufacturing risks, including the complexity of TCR-T therapy production, reliance on third parties, and challenges in validating processes for diverse patient materials - The manufacturing process for TCR-T therapies is complex, costly, and highly regulated, with risks of product loss or failure due to logistical issues, contamination, or operator error[249][251] - The company has limited experience managing a manufacturing facility and relies on third-party suppliers for critical components, creating risks related to quality control, supply continuity, and scaling up production[250][255] - Difficulties may arise in validating the manufacturing process due to the heterogeneity of patient starting materials, which could impact the ability to produce consistent products for clinical or commercial use[258][259] Risks Related to Government Regulation This subsection covers extensive regulatory risks, including lengthy approval processes, uncertain pricing and reimbursement, and compliance with complex healthcare and data privacy laws - The regulatory approval process for novel product candidates is lengthy, time-consuming, and uncertain, and the company may experience significant delays or may not obtain approval at all[260][265] - Even if approved, the company's products face uncertain and potentially unfavorable pricing, coverage, and reimbursement from government and private payers, which could limit commercial success[291][293] - The company is subject to complex federal, state, and foreign laws regarding healthcare fraud and abuse, as well as data privacy (e.g., GDPR, CCPA), with non-compliance carrying risks of significant fines and penalties[311][318][321] Risks Related to Our Intellectual Property This subsection details intellectual property risks, including challenges in obtaining and maintaining patent protection, potential infringement claims, and compliance with in-licensed IP agreements - The company's success depends on obtaining and maintaining patent protection, but there is no guarantee that its pending applications will issue as patents with a scope sufficient to protect its product candidates[331][334][335] - The company may face costly litigation from third-party claims of IP infringement, which could result in substantial damages or block the commercialization of its products[374][375] - The company relies on licenses from third parties (e.g., BWH) and could lose significant rights if it fails to comply with its obligations under these agreements[346] Risks Related to Our Reliance on Third Parties This subsection outlines risks from reliance on third parties for clinical trials and manufacturing, including potential delays, quality issues, and challenges in securing future strategic collaborations - The company depends on third parties like CROs and clinical investigators to conduct trials, and their failure to perform their duties properly could delay or compromise clinical development[403][404] - Future strategic collaborations are important for development and commercialization, but the company faces significant competition in seeking partners and may not realize the benefits of such arrangements[406][407] - Reliance on third-party manufacturers for clinical supply exposes the company to risks of production delays, quality control failures, and inability to meet demand, which could halt clinical trials[414][415] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds No unregistered sales of equity securities occurred, and the planned use of $89.6 million net proceeds from the July 2021 IPO remains materially unchanged - There has been no material change in the planned use of proceeds from the company's July 2021 IPO, which generated net proceeds of $89.6 million[472] Item 5. Other Information No director or officer adopted, modified, or terminated a Rule 10b5-1 or non-Rule 10b5-1 trading arrangement during Q1 2025 - No director or officer adopted, modified, or terminated a Rule 10b5-1 trading plan or other trading arrangement during the first quarter of 2025[473]