Tempest Therapeutics(TPST) - 2025 Q1 - Quarterly Report

PART I — FINANCIAL INFORMATION Financial Statements Tempest Therapeutics reported a net loss of $10.9 million for Q1 2025, with cash decreasing to $21.5 million, raising going concern doubts Condensed Consolidated Balance Sheets Total assets decreased to $32.2 million by March 31, 2025, driven by reduced cash, leading to a decline in stockholders' equity Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | March 31, 2025 (Unaudited) | December 31, 2024 | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $21,511 | $30,268 | | Total current assets | $22,433 | $31,474 | | Total assets | $32,164 | $41,488 | | Liabilities & Stockholders' Equity | | | | Total current liabilities | $13,177 | $14,220 | | Total liabilities | $21,031 | $22,362 | | Total stockholders' equity | $11,133 | $19,126 | Condensed Consolidated Statements of Operations Net loss increased to $10.9 million in Q1 2025, primarily due to a significant rise in research and development expenses to $7.6 million Condensed Consolidated Statements of Operations (in thousands, except per share data) | Metric | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | Research and development | $7,627 | $4,340 | | General and administrative | $3,309 | $3,634 | | Loss from operations | $(10,936) | $(7,974) | | Net loss | $(10,860) | $(7,904) | | Net loss per share, basic and diluted | $(3.16) | $(4.62) | | Weighted-average shares outstanding | 3,437,671 | 1,710,323 | Condensed Consolidated Statements of Cash Flows Net cash used in operating activities increased to $8.0 million in Q1 2025, resulting in an $8.8 million net decrease in cash Summary of Cash Flows (in thousands) | Activity | For the Three Months Ended March 31, 2025 | For the Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | Cash used in operating activities | $(8,036) | $(7,186) | | Cash used in investing activities | $0 | $(168) | | Cash provided by (used in) financing activities | $(721) | $450 | | Net decrease in cash | $(8,757) | $(6,904) | Notes to Condensed Consolidated Financial Statements Notes detail a 1-for-13 reverse stock split, going concern doubt, and post-quarter workforce reduction and loan repayment - The company's financial statements were prepared on a going concern basis, but management has concluded there is substantial doubt about its ability to continue operating for the next 12 months due to recurring losses and insufficient cash reserves[32] - On April 8, 2025, the company effected a 1-for-13 reverse stock split of its common stock, with all share and per-share amounts retrospectively adjusted[29][82] - Subsequent to the quarter end, in April 2025, the company reduced its workforce by 21 of 26 full-time employees, expecting to incur $1.5 million in severance and related costs[80] - On April 8, 2025, the company fully repaid its outstanding loan, including principal and fees, for a total of $3.5 million, terminating the loan agreement[51][81] Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses strategic alternatives, workforce reduction, and a 76% increase in R&D expenses, reiterating going concern doubts - The company is exploring a full range of strategic alternatives, including mergers, acquisitions, partnerships, or other transactions, and has retained MTS Health Partners as a financial advisor[97][99] - In April 2025, the company reduced its workforce by 21 of 26 employees to extend capital resources, anticipating $1.5 million in cash expenditures for severance and related costs[100] - The FDA has granted Orphan Drug Designation and Fast Track Designation for amezalpat for the treatment of hepatocellular carcinoma (HCC), and the company has received a "Study May Proceed" letter for its pivotal Phase 3 trial[90][91] R&D Expenses by Program (in thousands) | Program | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | % Change | | :--- | :--- | :--- | :--- | | TPST-1120 (amezalpat) | $4,218 | $882 | 378% | | TPST-1495 | $0 | $596 | (100)% | | Personnel and other costs | $2,181 | $1,766 | 23% | | Total R&D Expenses | $7,627 | $4,340 | 76% | Quantitative and Qualitative Disclosures About Market Risk As a smaller reporting company, Tempest Therapeutics is not required to provide market risk disclosures - Disclosure under this item is not required as the company qualifies as a smaller reporting company[135] Controls and Procedures Management concluded disclosure controls were effective as of March 31, 2025, with no material changes to internal controls - The company's management, including the CEO and CFO, concluded that as of March 31, 2025, the disclosure controls and procedures were effective at a reasonable assurance level[138] - 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[139] PART II — OTHER INFORMATION Legal Proceedings Legal proceedings information is incorporated by reference from Note 5 to the financial statements - The report refers to Note 5 of the financial statements for information on legal proceedings[142] Risk Factors Key risks include going concern doubt, potential failure of strategic review, dependence on product candidates, and intellectual property challenges - There is substantial doubt about the company's ability to continue as a going concern, as existing cash is expected to fund operations for less than 12 months, and failure to secure additional funding or a strategic alternative may force the company to wind down operations[147][150] - The process of evaluating strategic alternatives may not result in a transaction, could be costly and time-consuming, and may not enhance stockholder value[151] - The company's business is highly dependent on the successful development, regulatory approval, and commercialization of its lead product candidates, amezalpat and TPST-1495, which is a lengthy, expensive, and uncertain process[170] - The company faces risks related to its intellectual property, including the ability to obtain and maintain patent protection, potential infringement claims from third parties, and the difficulty of protecting trade secrets[308][331] Unregistered Sales of Equity Securities and Use of Proceeds No unregistered sales of equity securities were reported during the period - None[393] Other Information The company entered a retention agreement with its principal accounting officer and reported no Rule 10b5-1 trading plan changes - The company entered into a retention agreement with its principal accounting officer, providing a $100,000 cash bonus for service through July 31, 2025[396] - No director or officer adopted or terminated a Rule 10b5-1 or non-Rule 10b5-1 trading arrangement during the last fiscal quarter[397] Exhibits This section lists exhibits filed as part of the Quarterly Report on Form 10-Q, including required certifications