Monte Rosa Therapeutics(GLUE) - 2023 Q1 - Quarterly Report

PART I. FINANCIAL INFORMATION Item 1. Financial Statements (Unaudited) Unaudited condensed consolidated financial statements for Monte Rosa Therapeutics, Inc. for Q1 2023, including balance sheets, operations, equity, cash flows, and notes Condensed Consolidated Balance Sheets (Unaudited) Total assets decreased to $309.0 million from $342.4 million as of March 31, 2023, primarily due to reduced cash and marketable securities, with liabilities and equity also declining Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | March 31, 2023 | December 31, 2022 | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $51,847 | $54,912 | | Marketable securities | $179,887 | $207,914 | | Total current assets | $240,556 | $275,886 | | Total assets | $309,028 | $342,389 | | Liabilities & Stockholders' Equity | | | | Total current liabilities | $20,515 | $25,569 | | Total liabilities | $65,302 | $70,976 | | Total stockholders' equity | $243,726 | $271,413 | | Total liabilities and stockholders' equity | $309,028 | $342,389 | Condensed Consolidated Statements of Operations and Comprehensive Loss (Unaudited) Net loss for Q1 2023 increased to $32.0 million (or $0.65 per share) from $23.9 million in Q1 2022, driven by higher R&D operating expenses Statement of Operations Summary (in thousands, except per share data) | Metric | Three months ended March 31, 2023 | Three months ended March 31, 2022 | | :--- | :--- | :--- | | Research and development | $26,755 | $17,915 | | General and administrative | $7,504 | $6,387 | | Total operating expenses | $34,259 | $24,302 | | Loss from operations | ($34,259) | ($24,302) | | Interest income, net | $2,437 | $149 | | Net loss | ($32,038) | ($23,932) | | Net loss per share | ($0.65) | ($0.51) | Condensed Consolidated Statements of Stockholders' Equity (Unaudited) Total stockholders' equity decreased from $271.4 million to $243.7 million as of March 31, 2023, primarily due to the $32.0 million net loss, partially offset by stock-based compensation Changes in Stockholders' Equity (in thousands) | Description | Amount | | :--- | :--- | | Balance at January 1, 2023 | $271,413 | | Stock-based compensation expense | $3,974 | | Net Loss | ($32,038) | | Other changes | $367 | | Balance at March 31, 2023 | $243,726 | Condensed Consolidated Statements of Cash Flows (Unaudited) Net cash used in operating activities was $23.4 million for Q1 2023, with investing activities providing $20.3 million, leading to a $3.1 million decrease in total cash and equivalents Cash Flow Summary (in thousands) | Activity | Three months ended March 31, 2023 | Three months ended March 31, 2022 | | :--- | :--- | :--- | | Net cash used in operating activities | ($23,406) | ($27,404) | | Net cash provided by (used in) investing activities | $20,326 | ($180,520) | | Net cash provided by financing activities | $18 | $153 | | Net decrease in cash, cash equivalents and restricted cash | ($3,062) | ($207,771) | Notes to the Condensed Consolidated Financial Statements (Unaudited) Detailed notes explain accounting policies, the company's biotechnology business, liquidity, lease commitments, collaboration agreements, and equity structure, including stock-based compensation - The company is a biotechnology firm developing small molecule medicines to degrade therapeutically-relevant proteins, with operations in Boston and Basel, Switzerland[25] - As of March 31, 2023, the company had cash, cash equivalents, and marketable securities of $231.7 million, which it expects will be sufficient to fund operations and capital requirements for at least 12 months from the report's issuance date[28] - The company has a license and collaboration agreement with CRT and the ICR, which may require future milestone payments up to $7 million for a first product and $3.5 million for subsequent products, plus low single-digit royalties on net sales[53][56] - Total unrecognized stock-based compensation cost as of March 31, 2023, was $44.4 million ($43.7 million for options, $0.1 million for restricted stock, and $0.6 million for RSUs), expected to be recognized over a weighted average period of approximately 2.8 years[76] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses Q1 2023 financial performance, highlighting increased operating losses from R&D expansion, and confirms sufficient liquidity for at least the next twelve months to advance its drug pipeline Results of Operations Operating loss for Q1 2023 increased to $34.3 million from $24.3 million in Q1 2022, driven by higher R&D and G&A expenses due to expanded activities and headcount Comparison of Operating Results (in thousands) | Item | Q1 2023 | Q1 2022 | Dollar Change | | :--- | :--- | :--- | :--- | | Research and development | $26,755 | $17,915 | $8,840 | | General and administrative | $7,504 | $6,387 | $1,117 | | Total operating expenses | $34,259 | $24,302 | $9,957 | | Loss from operations | ($34,259) | ($24,302) | ($9,957) | - The increase in R&D expenses was primarily due to the expansion of research activities in the U.S. and Switzerland, including increased headcount, facility costs, and laboratory expenses. R&D headcount grew from 77 to 109 year-over-year[96][97] - The increase in G&A expenses was mainly due to higher personnel costs, including a rise in stock compensation from $1.1 million to $1.8 million, to support the company's growth[98] Liquidity and Capital Resources As of March 31, 2023, the company had $237.0 million in cash and equivalents, deemed sufficient for at least the next twelve months, though additional financing will be required for future clinical development - As of March 31, 2023, the company had $237.0 million in cash, cash equivalents, restricted cash, and marketable securities[100][130] - The company expects its existing cash, cash equivalents, and marketable securities will be sufficient to fund operating expenses and capital expenditure requirements for at least the next twelve months[108] - Net cash used in operating activities was $23.4 million for Q1 2023, compared to $27.4 million in Q1 2022[101][102] - The company will require additional financing to advance its product candidates through clinical development and will seek funds through equity or debt offerings, or collaborations[109] Item 3. Quantitative and Qualitative Disclosures About Market Risk As a smaller reporting company, Monte Rosa Therapeutics is not required to provide quantitative and qualitative disclosures about market risk - As a smaller reporting company, Monte Rosa Therapeutics is not required to provide quantitative and qualitative disclosures about market risk[121] Item 4. Controls and Procedures Management concluded the company's disclosure controls and procedures were effective as of March 31, 2023, with no material changes in internal control over financial reporting during the quarter - The principal executive officer and principal financial officer concluded that the company's disclosure controls and procedures were effective at the reasonable assurance level as of March 31, 2023[123] - No changes in internal control over financial reporting occurred during the quarter that materially affected, or were reasonably likely to materially affect, these controls[124] PART II. OTHER INFORMATION Item 1. Legal Proceedings As of March 31, 2023, the company is not party to any legal proceedings expected to have a material adverse effect on its business, though claims may arise in the ordinary course - The company is not currently party to any claim or litigation that is expected to have a material adverse effect on its business[127] Item 1A. Risk Factors No material changes to risk factors from the 2022 Annual Report, reiterating significant operating losses since inception and expected continuation due to ongoing R&D and clinical trial activities - The company has incurred significant operating losses since inception and anticipates these will continue for the foreseeable future[130] - As of March 31, 2023, the company had an accumulated deficit of $262.6 million[130] - Future expenses are expected to increase significantly due to activities such as conducting clinical trials for MRT-2359, advancing preclinical programs (NEK7, CDK2, VAV1, SCD), submitting IND applications, and expanding manufacturing capabilities[130][131] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds No unregistered sales of equity securities occurred during the period, and no material change in the planned use of $234.6 million net IPO proceeds was reported - There were no unregistered sales of equity securities in the reporting period[135] - The company received net proceeds of $234.6 million from its IPO in June/July 2021, and there has been no material change in the planned use of these funds[138][139] Item 3. Defaults Upon Senior Securities The company reported no defaults upon senior securities - None[140] Item 4. Mine Safety Disclosures This item is not applicable to the company - Not Applicable[141] Item 6. Exhibits This section lists the exhibits filed with the Form 10-Q, including corporate documents and required certifications