Enliven Therapeutics(ELVN) - 2023 Q2 - Quarterly Report

PART I. FINANCIAL INFORMATION Condensed Consolidated Financial Statements (Unaudited) Unaudited financial statements reflect significant asset growth and positive equity by June 30, 2023, driven by a February 2023 merger and financing, despite increased net loss and operating cash usage Condensed Consolidated Balance Sheets The company's financial position significantly improved due to increased assets and a shift to positive equity from a deficit | | June 30, 2023 | December 31, 2022 | | :--- | :--- | :--- | | Total current assets | $283,175 | $77,753 | | Total assets | $288,501 | $83,298 | | Total current liabilities | $9,147 | $9,715 | | Total liabilities | $9,507 | $10,374 | | Total stockholders' equity (deficit) | $278,994 | $(76,825) | All figures in thousands - The company's financial position strengthened significantly, with cash, cash equivalents, and marketable securities increasing to $277.9 million as of June 30, 2023, from $75.5 million at the end of 2022[15] - Stockholders' equity improved from a deficit of $76.8 million to a positive equity of $279.0 million, primarily due to the conversion of preferred stock and issuance of common stock related to the February 2023 merger and financing transaction[15][20] Condensed Consolidated Statements of Operations and Comprehensive Loss The company reported increased operating expenses and a higher net loss for the six months ended June 30, 2023, driven by R&D and G&A costs | | Three Months Ended June 30, | Six Months Ended June 30, | | :--- | :--- | :--- | | | 2023 | 2022 | 2023 | 2022 | | Research and development | $15,183 | $7,937 | $27,063 | $14,996 | | General and administrative | $4,951 | $1,079 | $9,489 | $2,698 | | Loss from operations | $(20,134) | $(9,016) | $(36,552) | $(17,694) | | Net loss | $(16,721) | $(8,889) | $(31,445) | $(17,558) | | Net loss per share, basic and diluted | $(0.41) | $(2.86) | $(1.05) | $(5.87) | All figures in thousands, except per share amounts - Operating expenses for the six months ended June 30, 2023, more than doubled to $36.6 million from $17.7 million in the prior-year period, primarily due to increased research and development activities and higher general and administrative costs[17] Condensed Consolidated Statements of Cash Flows Cash flows reflect increased operating cash usage, significant investing in marketable securities, and substantial cash inflow from financing activities | | Six Months Ended June 30, | | :--- | :--- | | | 2023 | 2022 | | Net cash used in operating activities | $(32,893) | $(17,485) | | Net cash used in investing activities | $(151,549) | $(497) | | Net cash provided by financing activities | $234,621 | $414 | | Net increase (decrease) in cash | $50,179 | $(17,568) | | Cash at end of period | $125,769 | $92,510 | All figures in thousands - Financing activities provided $234.6 million in cash during the first six months of 2023, primarily from a $161.4 million financing transaction and $81.8 million in cash acquired from the reverse recapitalization, net of transaction costs[23] - Investing activities used $151.5 million, mainly for the purchase of marketable securities, a significant change from the prior year which had minimal investing activities[23] Notes to Unaudited Condensed Consolidated Financial Statements Notes detail the February 2023 reverse recapitalization and financing, which significantly improved liquidity and increased stock-based compensation - On February 23, 2023, the company completed a merger with Former Enliven, which was accounted for as a reverse recapitalization[27][28] - Concurrently with the merger, a financing transaction raised an aggregate of $164.5 million through the sale of common stock[31] - The company expects its cash, cash equivalents, and marketable securities of $277.9 million as of June 30, 2023, to be sufficient to fund operations for at least the next 12 months[35] - Stock-based compensation expense increased significantly to $6.5 million for the six months ended June 30, 2023, from $1.4 million in the same period of 2022[118] Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the company's biopharmaceutical development, increased expenses, and improved liquidity from the February 2023 merger, ensuring a 12-month cash runway Overview Enliven Therapeutics is a clinical-stage biopharmaceutical company developing small molecule inhibitors for cancer - Enliven Therapeutics is a clinical-stage biopharmaceutical company focused on developing small molecule inhibitors for cancer, aiming to improve both survival and patient well-being[123] | Program | Target | Disease | Next Milestone | Milestone Expected | | :--- | :--- | :--- | :--- | :--- | | ELVN-001 | BCR-ABL | CML | Phase 1a Safety/Efficacy | 2024 | | ELVN-002 | HER2 & mutants | NSCLC, other solid tumors | Phase 1a Safety/Efficacy | 2024 | - As of June 30, 2023, the company had cash, cash equivalents, and marketable securities of $277.9 million, which is expected to fund operations for at least the next 12 months[126] - The company has incurred significant losses since inception, with an accumulated deficit of $114.3 million as of June 30, 2023, and expects operating losses to continue[127] Results of Operations Results of operations highlight significant increases in R&D and G&A expenses, leading to a higher net loss | Expense Category | Six Months Ended June 30, 2023 | Six Months Ended June 30, 2022 | Change | | :--- | :--- | :--- | :--- | | Research and development | $27.1 million | $15.0 million | +$12.1 million | | General and administrative | $9.5 million | $2.7 million | +$6.8 million | - The $12.1 million increase in R&D expenses for the first half of 2023 was primarily driven by a $5.5 million increase in clinical trial expenses, along with higher contract manufacturing, preclinical, and personnel-related costs[151] - The $6.8 million increase in G&A expenses for the first half of 2023 was mainly due to higher professional services costs ($2.1M), stock-based compensation ($1.9M), and accelerated stock option vesting from the merger ($1.3M)[152] - Interest income rose to $5.1 million for the six months ended June 30, 2023, from $136,000 in the prior-year period, due to higher interest rates and larger investment balances[153] Liquidity and Capital Resources Liquidity and capital resources detail the company's cash position, primary funding sources, and future capital requirements - The company's primary sources of liquidity have been private placements of convertible preferred stock ($140.5M) and a common stock sale in a Financing Transaction ($164.5M) in February 2023[154] - On June 23, 2023, the company entered into an "at-the-market" (ATM) sales agreement allowing it to sell up to $200.0 million of its common stock[155] - Net cash used in operating activities increased to $32.9 million for the first six months of 2023, compared to $17.5 million for the same period in 2022, reflecting higher net loss and changes in operating assets and liabilities[163][164][165] Quantitative and Qualitative Disclosures About Market Risk The company's primary market risk is interest rate sensitivity on short-term investments, with limited foreign currency exposure - The company's main market risk is interest rate sensitivity on its cash, cash equivalents, and marketable securities, primarily U.S. Treasury instruments[181] - Due to the short-term maturities of its investments, a hypothetical 100 basis point change in interest rates is not expected to materially impact financial results[181] - The company has limited exposure to foreign currency exchange risk and does not currently engage in hedging activities[183] Controls and Procedures Management concluded disclosure controls were effective as of June 30, 2023, with no material changes to internal controls - Management concluded that the company's disclosure controls and procedures were effective as of the end of the period, June 30, 2023[184] - No material changes to the company's internal control over financial reporting were identified during the quarter ended June 30, 2023[185] PART II. OTHER INFORMATION Legal Proceedings The company is not currently a party to any material legal proceedings, with a prior merger-related shareholder complaint dismissed - The company is not currently a party to any material litigation[188] - A shareholder complaint related to the merger was voluntarily dismissed by the plaintiff in January 2023 after supplemental disclosures were filed[89][91][92] Risk Factors This section details substantial risks including limited operating history, net losses, and dependence on lead product candidates - The company has a limited operating history, has incurred significant net losses, and its success is substantially dependent on its two lead product candidates, ELVN-001 and ELVN-002[191] - Clinical development is highly uncertain, and positive results from early trials may not be predictive of success in later trials, which could prevent or delay regulatory approval[191][206] - The company will need substantial additional funding to complete the development of its product candidates and may be forced to delay or cut programs if unable to raise capital[191][449] - The company's success depends on its ability to obtain and maintain intellectual property protection for its technologies and product candidates[191][368] Unregistered Sales of Equity Securities and Use of Proceeds The company reported no unregistered sales of equity securities during the period - There were no unregistered sales of equity securities in the reported period[479] Other Information CEO Sam Kintz and other executives adopted Rule 10b5-1 trading plans in Q2 2023 for orderly stock sales - CEO Sam Kintz adopted a Rule 10b5-1 trading plan on June 26, 2023, to sell up to 421,665 shares over two years for asset diversification[483] - Other directors and executive officers also adopted Rule 10b5-1 plans during the second quarter of 2023[484]