Septerna, Inc.(SEPN) - 2025 Q2 - Quarterly Report

PART I. FINANCIAL INFORMATION Item 1. Financial Statements (unaudited) Unaudited H1 2025 financials reveal decreased assets to $415.2 million, a widened net loss of $46.3 million, and increased operating cash outflow Condensed Balance Sheets As of June 30, 2025, total assets decreased to $415.2 million from $456.6 million, primarily due to a drop in cash, while equity declined Condensed Balance Sheet Summary (in thousands) | Account | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $189,311 | $238,196 | | Total current assets | $334,141 | $356,824 | | Total assets | $415,231 | $456,554 | | Liabilities & Equity | | | | Total current liabilities | $15,127 | $12,849 | | Total liabilities | $37,674 | $36,507 | | Total stockholders' equity | $377,557 | $420,047 | | Accumulated deficit | $(164,688) | $(118,374) | Condensed Statements of Operations and Comprehensive Loss Net loss for H1 2025 widened to $46.3 million from $30.6 million, driven by increased R&D and G&A expenses Statement of Operations Summary (in thousands, except per share data) | Metric | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Revenue | $338 | $687 | | Research and development | $41,459 | $28,188 | | General and administrative | $13,767 | $6,054 | | Total operating expenses | $55,226 | $34,242 | | Loss from operations | $(54,888) | $(33,555) | | Net loss | $(46,314) | $(30,607) | | Net loss per share | $(1.05) | $(13.40) | Condensed Statements of Cash Flows Net cash used in operating activities increased to $43.6 million in H1 2025, with minimal financing cash compared to prior year Cash Flow Summary (in thousands) | Activity | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Net cash used in operating activities | $(43,630) | $(29,698) | | Net cash used in investing activities | $(5,660) | $(2,565) | | Net cash provided by financing activities | $405 | $74,952 | | Net (decrease) increase in cash | $(48,885) | $42,689 | Notes to Unaudited Condensed Financial Statements Notes detail the company's IPO, a major collaboration with Novo Nordisk, and confirm sufficient capital for 12 months - The company is a biotechnology firm focused on GPCR oral small molecule drug discovery using its proprietary Native Complex Platform™[31] - In October 2024, the company completed its IPO, raising net proceeds of $302.8 million[35] - The company believes its cash, cash equivalents, and marketable securities of $379.2 million as of June 30, 2025, are sufficient to fund operations for at least 12 months[40] - In May 2025, the company entered into a collaboration with Novo Nordisk, effective July 1, 2025, receiving a $195.0 million upfront payment in July 2025 and eligible for up to $498.0 million in milestones per R&D program, plus tiered royalties[52][54] - A milestone related to the 2023 asset purchase agreement with Vertex was achieved in July 2025, resulting in a $12.5 million payment received in August 2025[57] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the GPCR platform, increased H1 2025 operating losses, and the Novo Nordisk collaboration, projecting funding into 2029 Overview and Pipeline Septerna, a biotechnology company, pioneers GPCR oral small molecule drug discovery with its Native Complex Platform™ and a pipeline in endocrinology, immunology, and metabolic diseases - The company's proprietary Native Complex Platform™ replicates the natural structure and function of GPCRs, enabling an industrialized, structure-based drug design approach[100] Development Pipeline Summary | Program / Target | Therapeutic Area | Development Status | | :--- | :--- | :--- | | Wholly-Owned Programs | | | | PTH1R Program | Endocrinology | Discovery | | SEP-631 (MRGPRX2) | Immunology and Inflammation | Discovery | | TSHR Program | Endocrinology | Discovery | | Partnered Programs | | | | Metabolic Programs (GLP-1R, etc.) | Obesity & Cardiometabolic | Partnered (Novo) | Results of Operations Net loss increased to $46.3 million in H1 2025, driven by a $13.3 million rise in R&D expenses and a $7.7 million increase in G&A expenses Comparison of Results of Operations (in thousands) | Line Item | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | Change | | :--- | :--- | :--- | :--- | | Revenue | $338 | $687 | $(349) | | Research and development | $41,459 | $28,188 | $13,271 | | General and administrative | $13,767 | $6,054 | $7,713 | | Net loss | $(46,314) | $(30,607) | $(15,707) | Research and Development Expense Breakdown (in thousands) | Program | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | Change | | :--- | :--- | :--- | :--- | | PTH1R | $6,733 | $4,746 | $1,987 | | SEP-631 (MRGPRX2) | $3,765 | $874 | $2,891 | | Other programs | $9,996 | $2,153 | $7,843 | | Unallocated costs | $20,965 | $20,415 | $550 | | Total R&D Expense | $41,459 | $28,188 | $13,271 | Liquidity and Capital Resources With $379.2 million in cash as of June 30, 2025, bolstered by $195.0 million from Novo and $12.5 million from Vertex, the company projects funding into 2029 - The company historically financed operations through convertible notes, preferred stock, and its October 2024 IPO, which raised $302.8 million in net proceeds[143] - Management projects that its cash position of $379.2 million as of June 30, 2025, combined with the $195.0 million from Novo and $12.5 million from Vertex, will fund operations into 2029[144] Summary of Cash Flows (in thousands) | Cash Flow Activity | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Net cash used in operating activities | $(43,630) | $(29,698) | | Net cash used in investing activities | $(5,660) | $(2,565) | | Net cash provided by financing activities | $405 | $74,952 | Item 3. Quantitative and Qualitative Disclosures About Market Risk As a smaller reporting company, Septerna, Inc. is not required to provide the information requested under this item - The company is a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and is not required to provide quantitative and qualitative disclosures about market risk[161] Item 4. Controls and Procedures Management concluded disclosure controls were effective as of June 30, 2025, with no material changes in internal control over financial reporting - Based on an evaluation as of the end of the period, the Principal Executive Officer and Principal Financial Officer concluded that the company's disclosure controls and procedures were effective at a reasonable assurance level[163] - No changes in internal control over financial reporting occurred during the quarter ended June 30, 2025, that have materially affected, or are reasonably likely to materially affect, internal controls[164] PART II. OTHER INFORMATION Item 1. Legal Proceedings The company is not currently a party to any legal proceedings deemed probable to have a material adverse effect on its business - The company is not currently involved in any litigation or legal proceedings expected to have a material adverse effect on its business, financial condition, or results of operations[168] Item 1A. Risk Factors Updated risk factors include potential FDA disruptions, unfavorable global economic conditions, geopolitical instability, and healthcare legislative reforms impacting drug pricing - Risks include potential disruptions at the FDA and other agencies due to staffing reductions, funding shortages, or government shutdowns, which could delay product development and approval[170][171] - Unfavorable global economic conditions, political instability, and geopolitical events such as military conflicts and trade tariffs could adversely affect the business, financial condition, and stock price[172][173] - Healthcare legislative reforms, including the Inflation Reduction Act (IRA) and recent Executive Orders, may negatively impact the business by containing healthcare costs and affecting drug pricing and reimbursement[176][179][180] - Recent changes to U.S. tax law, such as the One Big Beautiful Bill Act (H.R.1), could materially affect the company's business and cash flow, particularly regarding the capitalization and amortization of R&D expenses[186] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds No unregistered sales occurred; IPO proceeds of $302.8 million are reallocated to advance other pipeline candidates after discontinuing the SEP-786 program - The company's October 2024 IPO generated net proceeds of $302.8 million[189] - The planned use of IPO proceeds has changed due to the discontinuation of the SEP-786 product candidate; funds will now advance other programs, including a next-generation PTH1R agonist and SEP-631[190] Item 3. Defaults Upon Senior Securities Not applicable - No defaults upon senior securities were reported[192] Item 4. Mine Safety Disclosures Not applicable - No mine safety disclosures were required[193] Item 5. Other Information No directors or officers adopted or terminated Rule 10b5-1 trading plans during the fiscal quarter ended June 30, 2025 - No directors or officers adopted or terminated a Rule 10b5-1 trading plan or other similar trading arrangement during the quarter[194] Item 6. Exhibits This section lists exhibits filed with the Form 10-Q, including corporate governance documents, the Novo Collaboration Agreement, and certifications - The list of exhibits includes the Novo Collaboration Agreement, CEO/CFO certifications, and XBRL data files[196]