Structure Therapeutics(GPCR) - 2023 Q4 - Annual Report

Part I Business Structure Therapeutics is a clinical-stage biopharmaceutical company focused on developing novel oral small molecule therapeutics for chronic diseases, primarily targeting GPCRs - The company is a clinical-stage biopharmaceutical firm developing oral small molecule therapeutics for chronic diseases, primarily targeting GPCRs[24][25] - Completed its Initial Public Offering (IPO) in February 2023, raising net proceeds of approximately $166.7 million[24] - Completed a Private Placement in September 2023, raising net proceeds of approximately $281.5 million[24] Product Candidate Pipeline Summary | Program/Candidate | Target | Indication | Discovery | Preclinical | Phase 1 | Phase 2 | Phase 3 | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Metabolic Diseases | | | | | | | | | GSBR-1290 | GLP-1R | T2DM & Obesity | ✔ | ✔ | ✔ | Ongoing | | | Next-Gen GLP-1R | GLP-1R/GIPR, Amylin | T2DM & Obesity | Ongoing | | | | | | Pulmonary & Cardiovascular | | | | | | | | | LTSE-2578 | LPA1R | IPF & PPF | ✔ | Ongoing | | | | | ANPA-0073 | APJR | IPF & Cardiometabolic | ✔ | ✔ | ✔ | | | Our Strategy The company's strategy focuses on leveraging its structure-based drug discovery platform to advance its GLP-1R franchise and explore new therapeutic areas through strategic partnerships - Leverage its next-generation structure-based drug discovery platform to innovate in GPCR targeted therapies and beyond[39] - Advance the GLP-1R franchise for metabolic diseases, with lead candidate GSBR-1290 for T2DM and obesity, and develop next-generation combinations (e.g., with GIPR, amylin)[39] - Pursue opportunities in other chronic diseases, including pulmonary (IPF with LTSE-2578) and cardiovascular conditions (ANPA-0073)[39] - Maximize platform potential through strategic partnerships, building on the existing collaboration with Schrödinger[40] Our Lead GPCR Programs The company's lead programs utilize its GPCR platform to develop treatments for chronic metabolic, cardiovascular, and pulmonary diseases, including the GLP-1R, LPA1R, and APJR franchises - The company's lead programs focus on chronic metabolic, cardiovascular, and pulmonary diseases by leveraging its GPCR platform[85] - The GLP-1R franchise, led by GSBR-1290, targets T2DM and obesity. GSBR-1290 is an oral, biased agonist of the GLP-1R[86][87] - The LPA1R and APJR programs target Idiopathic Pulmonary Fibrosis (IPF). LTSE-2578 is an LPA1R antagonist, and ANPA-0073 is an APJR agonist[176][179] Intellectual Property The company protects its GLP-1R, APJR, and LPA1R programs through a portfolio of granted U.S. patents and pending applications, supplemented by trade secrets and confidentiality agreements - For the GLP-1R program (including GSBR-1290), the company owns one granted U.S. patent, 11 pending U.S. applications, and 94 pending foreign applications, with expected expiration between 2041 and 2044[228] - For the APJR program (including ANPA-0073), the company owns two granted U.S. patents, three pending U.S. applications, and 24 pending foreign applications, with expected expiration between 2039 and 2043[229] - For the LPA1R program (including LTSE-2578), the company owns three pending U.S. applications and seven pending foreign applications, with expected expiration between 2041 and 2044[230] - The company also relies on trade secrets, know-how, and confidentiality agreements to protect its competitive position[232] Collaborations The company has strategic collaborations with Schrödinger for small molecule discovery, involving potential milestone payments and low single-digit royalties for both LPA1R and a specific undisclosed target - In October 2020, subsidiary Lhotse entered a collaboration with Schrödinger to discover small molecule inhibitors of LPA1R. Lhotse retains sole ownership of IP generated under the agreement[234] - Under the Lhotse-Schrödinger agreement, Lhotse is obligated to pay potential development and regulatory milestone payments up to $17.0 million and tiered low single-digit royalties on net sales[235] - In November 2023, subsidiary Aconcagua entered a collaboration with Schrödinger to discover small molecule modulators of a specific target. Aconcagua retains sole ownership of IP generated under the agreement[237] - Under the Aconcagua-Schrödinger agreement, Aconcagua is obligated to pay potential development, regulatory, and commercialization milestone payments up to $89.0 million and tiered low single-digit royalties on net sales[239] Competition The company faces intense competition from major pharmaceutical and biotechnology firms across its GLP-1R, APJR, and LPA1R programs in a rapidly evolving technological landscape - The company faces competition from major pharmaceutical and biotechnology companies in a rapidly evolving technological landscape[242] - In the GLP-1R space for diabetes and obesity, competitors include Eccogene (Astrazeneca), Carmot Therapeutics (Roche), Terns, Pfizer, and Eli Lilly with small molecules, and Novo Nordisk, Eli Lilly, AstraZeneca, and Sanofi with approved peptides[245] - In the APJR space, competitors include CohBar, Apie Therapeutics, BioAge Labs, Amgen, and Bristol Myers Squibb[246] - In the LPA1R space for IPF, competitors include Bristol Myers Squibb, Horizon Therapeutics (Amgen), and DJS Antibodies Ltd[247] Regulation The company's operations are subject to extensive regulatory oversight by the FDA in the U.S. and NMPA in China, encompassing drug approval processes, healthcare laws, and data privacy regulations - The company's operations are subject to extensive regulation by the FDA in the United States, the NMPA in China, and other foreign regulatory bodies[253][298][299] - The U.S. drug approval process involves preclinical studies, an IND submission, and three phases of clinical trials (Phase I, II, III) before an NDA can be submitted for FDA review[255][260] - In China, recent reforms aim to encourage innovation, and the regulatory framework is governed by the PRC Drug Administration Law and its implementing regulations[297][298] - The company is also subject to healthcare laws concerning fraud and abuse (e.g., Anti-Kickback Statute), data privacy (e.g., GDPR, HIPAA), and pricing/reimbursement regulations[301][252] Risk Factors The company faces substantial risks including limited operating history, significant losses, reliance on an unproven platform, and complex regulatory and operational challenges - The company has a limited operating history, has incurred significant losses since inception ($89.6M in 2023), and expects these losses to continue for the foreseeable future[369][370] - The company's drug discovery platform is unproven, and its two lead candidates, GSBR-1290 and ANPA-0073, are in early clinical development, with all other programs in preclinical or discovery stages[381][385] - Reliance on third parties for manufacturing and conducting clinical trials increases risks related to supply, cost, quality, and timelines. A data collection omission at a clinical site has already caused a delay in the Phase 2a obesity study for GSBR-1290[439][446][396] - Significant risks are associated with operating in China, including changes in political/economic policies, U.S.-China relations, and complex data security and regulatory laws (e.g., CSRC filing requirements)[561][565][578] - A material weakness in internal control over financial reporting related to lacking a sufficient complement of finance professionals continues to exist as of December 31, 2023[687][688] Unresolved Staff Comments The company reports no unresolved staff comments from the SEC - None[749] Cybersecurity The company has implemented information security processes to manage cybersecurity risks, overseen by its cybersecurity function and integrated into its overall risk management - The company has processes to identify, assess, and manage material risks from cybersecurity threats, which are integrated into its overall risk management[750][752] - The Audit Committee of the Board of Directors oversees the company's cybersecurity risk management processes[757] - Management, including the Senior Director of Internal Controls, Director of IT Security, and CFO, are responsible for implementing and maintaining cybersecurity processes[758] - The company has not identified any risks from cybersecurity threats that have materially affected or are reasonably likely to materially affect its operations, business strategy, or financial condition[761] Properties The company leases approximately 11,800 sq ft for its principal executive office in South San Francisco, California, and additional office and lab space in Shanghai, China - Leases approximately 11,800 sq. ft. in South San Francisco, CA for its principal executive office (lease expires Aug 2027)[762] - Leases approximately 22,500 sq. ft. of office space and 8,400 sq. ft. of lab space in Shanghai, China (leases expire Dec 2026 and Jan 2027, respectively)[762] Legal Proceedings The company is not currently subject to any material legal proceedings, though it may be involved in ordinary course legal matters in the future - The company is not currently the subject of any material governmental investigation, private lawsuit, or other legal proceeding[763] Mine Safety Disclosures The company reports that this item is not applicable - None[765] Part II Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities The company's ADSs began trading on Nasdaq in February 2023, has never paid dividends, and completed significant private placement and IPO financings in 2023 - The company's ADSs have been listed on the Nasdaq Global Market under the symbol "GPCR" since February 3, 2023[767] - The company has never declared or paid dividends and does not intend to in the foreseeable future, expecting to retain earnings for business operations[769] - In October 2023, the company closed a private placement, issuing 21,617,295 ordinary shares and 2,401,920 non-voting ordinary shares for aggregate gross proceeds of approximately $300 million[770] - Net proceeds from the February 2023 IPO were approximately $166.7 million after deducting underwriting discounts and offering costs[775] Reserved This item is reserved Management's Discussion and Analysis of Financial Condition and Results of Operations The company's net loss increased significantly in 2023 due to higher R&D and G&A expenses, but liquidity was strengthened by substantial capital raises Consolidated Results of Operations (in thousands) | | Year Ended December 31, 2023 | Year Ended December 31, 2022 | | :--- | :--- | :--- | | Research and development | $70,103 | $36,193 | | General and administrative | $32,672 | $16,368 | | Total operating expenses | $102,775 | $52,561 | | Loss from operations | ($102,775) | ($52,561) | | Interest and other income (expense), net | $13,391 | $1,257 | | Net loss | ($89,620) | ($51,321) | - Research and development expenses increased by $33.9 million (94%) in 2023, primarily due to the advancement of the GLP-1R franchise (GSBR-1290 expenses grew from $18.8M to $44.8M) and increased personnel costs[856][857] - General and administrative expenses increased by $16.3 million (100%) in 2023, mainly due to higher professional services and employee-related costs associated with operating as a public company[858] - As of December 31, 2023, the company had $467.3 million in cash, cash equivalents, and short-term investments, which is expected to fund operations through at least 2026[861][833] Quantitative and Qualitative Disclosures About Market Risk The company's primary market risks are interest rate sensitivity on its cash and investments, foreign currency fluctuations, and credit risk, none of which are currently considered material - The company's primary market risk is interest rate sensitivity on its $467.3 million in cash, cash equivalents, and short-term investments. However, due to short maturities, the impact of a 10% rate change is not considered material[884] - Foreign currency risk exists due to operating expenses in foreign currencies but is not expected to have a material effect on financial results[885] - Credit risk is managed by holding funds in several financial institutions and investing in investment-grade securities. The company has not experienced any losses on its deposits[886] Financial Statements and Supplementary Data This section presents the company's audited consolidated financial statements for 2023 and 2022, including balance sheets, statements of operations, equity, and cash flows Key Balance Sheet Data (in thousands) | | Dec 31, 2023 | Dec 31, 2022 | | :--- | :--- | :--- | | Cash and cash equivalents | $129,792 | $26,091 | | Short-term investments | $337,531 | $64,750 | | Total Assets | $482,017 | $97,845 | | Total Liabilities | $29,051 | $13,010 | | Total redeemable convertible preferred shares | $0 | $199,975 | | Total shareholders' equity (deficit) | $452,966 | ($115,140) | Key Statement of Operations Data (in thousands) | | Year Ended Dec 31, 2023 | Year Ended Dec 31, 2022 | | :--- | :--- | :--- | | Total operating expenses | $102,775 | $52,561 | | Loss from operations | ($102,775) | ($52,561) | | Net loss | ($89,620) | ($51,321) | | Net loss per share | ($0.81) | ($5.51) | Key Cash Flow Data (in thousands) | | Year Ended Dec 31, 2023 | Year Ended Dec 31, 2022 | | :--- | :--- | :--- | | Net cash used in operating activities | ($79,488) | ($46,120) | | Net cash used in investing activities | ($268,342) | ($62,108) | | Net cash provided by financing activities | $451,531 | $29,014 | Changes in and Disagreements With Accountants on Accounting and Financial Disclosure The company reports no changes in or disagreements with its accountants on accounting and financial disclosure - None[1055] Controls and Procedures Management concluded that disclosure controls were ineffective as of December 31, 2023, due to a material weakness in internal control over financial reporting, currently under remediation - Management concluded that disclosure controls and procedures were not effective as of December 31, 2023[1057] - A material weakness in internal control over financial reporting continues to exist: the company lacked a sufficient complement of professionals for its financial reporting requirements[1061] - The company is remediating the weakness by hiring additional accounting personnel, including a senior director of SEC reporting and a senior director of internal controls[1063] - Two previously reported material weaknesses related to segregation of duties and IT general controls were remediated as of December 31, 2023[1064][1065][1066] Other Information The company's Chief Scientific Officer adopted a Rule 10b5-1 trading plan in December 2023 to sell up to 106,666 ADSs - On December 28, 2023, Chief Scientific Officer Xichen Lin, Ph.D., adopted a Rule 10b5-1 trading plan to sell up to 106,666 ADSs, with an expiration date of December 15, 2024[1070][1071] Disclosure Regarding Foreign Jurisdictions that Prevent Inspections The company reports that this item is not applicable - None[1072] Part III Directors, Executive Officers, Corporate Governance, Compensation, Security Ownership, and Accountant Fees Information for these items is incorporated by reference from the company's forthcoming 2024 Annual General Meeting Proxy Statement - Information for Items 10 (Directors, Executive Officers and Corporate Governance), 11 (Executive Compensation), 12 (Security Ownership), 13 (Certain Relationships and Related Transactions), and 14 (Principal Accountant Fees and Services) is incorporated by reference from the company's forthcoming 2024 Proxy Statement[1075][1076][1078][1079][1080][1081] Part IV Exhibits, Financial Statement Schedules This section lists the financial statements and provides an index of all exhibits filed with the Form 10-K, with financial statement schedules omitted as not applicable - This section contains the list of financial statements, notes that financial statement schedules are omitted, and provides an index of all exhibits filed with the Form 10-K[1084][1085][1086] Form 10–K Summary The company reports that this item is not applicable - None[1096]