Astria Therapeutics(ATXS) - 2021 Q3 - Quarterly Report

PART I. FINANCIAL INFORMATION Financial Statements (unaudited) Presents Astria Therapeutics' unaudited condensed consolidated financial statements, showing asset and equity growth from financing and a net loss from a one-time IPR&D charge Condensed Consolidated Balance Sheets Total assets and stockholders' equity significantly increased to $135.1 million and $130.4 million respectively, driven by cash and financing activities Condensed Consolidated Balance Sheet Highlights (in thousands) | Balance Sheet Item | Sep 30, 2021 | Dec 31, 2020 | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $131,777 | $24,930 | | Total current assets | $134,522 | $46,325 | | Total assets | $135,129 | $47,456 | | Liabilities & Equity | | | | Total liabilities | $4,700 | $6,787 | | Total stockholders' equity | $130,429 | $40,669 | | Total liabilities and stockholders' equity | $135,129 | $47,456 | Condensed Consolidated Statements of Operations The company reported a $185.4 million net loss for the nine months ended September 30, 2021, primarily due to a $164.6 million acquired IPR&D charge Statement of Operations Highlights (in thousands, except per share data) | Metric | Q3 2021 | Q3 2020 | Nine Months 2021 | Nine Months 2020 | | :--- | :--- | :--- | :--- | :--- | | Research and development | $3,788 | $7,806 | $9,859 | $19,845 | | General and administrative | $4,110 | $3,057 | $10,992 | $8,612 | | Acquired in-process R&D | $0 | $0 | $164,617 | $0 | | Loss from operations | $(7,898) | $(10,863) | $(185,468) | $(28,457) | | Net loss | $(7,871) | $(10,862) | $(185,421) | $(28,322) | | Net loss per share | $(0.61) | $(3.36) | $(27.81) | $(9.56) | Condensed Consolidated Statements of Comprehensive Loss Comprehensive loss for the three and nine months ended September 30, 2021, mirrored net loss due to immaterial other comprehensive loss items Comprehensive Loss (in thousands) | Period | Net Loss | Comprehensive Loss | | :--- | :--- | :--- | | Three Months Ended Sep 30, 2021 | $(7,871) | $(7,871) | | Nine Months Ended Sep 30, 2021 | $(185,421) | $(185,421) | | Three Months Ended Sep 30, 2020 | $(10,862) | $(10,863) | | Nine Months Ended Sep 30, 2020 | $(28,322) | $(28,322) | Condensed Consolidated Statements of Stockholders' Equity Stockholders' equity significantly changed due to Series X Preferred Stock issuance, conversion to common stock, and a non-cash dividend, increasing additional paid-in capital - In the nine months ended Sep 30, 2021, the company issued Series X Preferred Stock valued at $240.9 million through the Quellis acquisition and a private placement[17] - During the same period, 54,622 shares of Series X Preferred Stock were converted into 9,103,664 shares of common stock, transferring $168.9 million from preferred stock value to additional paid-in capital[17][27] - A non-cash dividend of $24.4 million was recorded related to a beneficial conversion feature and issuance costs on the convertible preferred stock[17][42] Condensed Consolidated Statements of Cash Flows Net cash increased by $106.8 million for the nine months ended September 30, 2021, driven by $104.3 million from financing activities Cash Flow Summary (in thousands) | Cash Flow Activity | Nine Months Ended Sep 30, 2021 | Nine Months Ended Sep 30, 2020 | | :--- | :--- | :--- | | Net cash used in operating activities | $(23,865) | $(24,424) | | Net cash provided by investing activities | $26,445 | $26,310 | | Net cash provided by financing activities | $104,267 | $40,829 | | Net increase in cash | $106,847 | $42,715 | Notes to Condensed Consolidated Financial Statements Notes detail the Quellis Biosciences acquisition, a $164.6 million IPR&D charge, $110 million private placement, and a 1-for-6 reverse stock split - On January 28, 2021, the company acquired Quellis Biosciences, whose lead product candidate is STAR-0215 for the treatment of hereditary angioedema (HAE)[22] - The Quellis acquisition was accounted for as an asset acquisition, resulting in a one-time charge of $164.6 million for acquired in-process research and development (IPR&D) with no alternative future use[45][46][49] - Concurrent with the acquisition, the company raised gross proceeds of approximately $110.0 million in the February 2021 Financing through the sale of Series X Preferred Stock[25] - A 1-for-6 reverse stock split of common stock was effected on August 19, 2021. All share and per-share amounts have been retrospectively adjusted[23] Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the strategic pivot to STAR-0215 development, a 50% R&D expense decrease, a $164.6 million IPR&D charge, and sufficient cash to fund operations through 2023 - The company's primary focus is now on STAR-0215, a monoclonal antibody inhibitor for treating hereditary angioedema (HAE), acquired through the Quellis acquisition in January 2021[67] - Key development milestones include submitting an IND for STAR-0215 in mid-2022, initiating a Phase 1 trial with initial results expected by the end of 2022, and a planned Phase 1b/2 trial in HAE patients in 2023[67] R&D Expense Breakdown (Nine Months Ended Sep 30, in thousands) | Program | 2021 | 2020 | | :--- | :--- | :--- | | STAR-0215 | $4,422 | $0 | | Edasalonexent | $660 | $13,765 | | Other research programs | $765 | $0 | | Unallocated Costs | $4,012 | $6,080 | | Total R&D Expenses | $9,859 | $19,845 | - The company recorded a $164.6 million expense for Acquired In-process Research and Development (IPR&D) in January 2021 related to the Quellis Acquisition[77][91] - As of September 30, 2021, the company had $131.8 million in cash and cash equivalents, which is expected to be sufficient to support operating expenses through 2023[92][102] Qualitative and Quantitative Disclosures About Market Risk The company's primary market risk is interest rate sensitivity on its cash and cash equivalents, with a 10% rate change deemed immaterial due to portfolio nature - The company's main market risk is interest rate sensitivity on its $131.8 million in cash and cash equivalents[108] - Due to the short-term and low-risk nature of the investment portfolio, management concludes that an immediate 10% change in interest rates would not have a material effect on its financial position[108] Controls and Procedures Management concluded that disclosure controls and procedures were effective as of September 30, 2021, with no material changes to internal control over financial reporting - Management concluded that as of September 30, 2021, the company's disclosure controls and procedures were effective at the reasonable assurance level[109] - There were no material changes in internal control over financial reporting during the nine months ended September 30, 2021[110] PART II. OTHER INFORMATION Risk Factors This section refers readers to the Annual Report on Form 10-K for a comprehensive discussion of material risk factors - The report refers to the Risk Factors section of the Annual Report on Form 10-K for the fiscal year ended December 31, 2020, for a discussion of material risks[112] Exhibits This section lists exhibits filed with the Form 10-Q, including corporate amendments and officer certifications - Exhibits filed include amendments to the Certificate of Incorporation and By-laws, and officer certifications pursuant to the Sarbanes-Oxley Act[113]