Disc Medicine(IRON) - 2021 Q3 - Quarterly Report

FORM 10-Q Cover Page Provides key administrative details of the quarterly report, including filing type, period, registrant, and stock information | Detail | Value | | :----- | :---- | | Filing Type | Quarterly Report (10-Q) | | Period Ended | September 30, 2021 | | Registrant | GEMINI THERAPEUTICS, INC. | | State of Incorporation | Delaware | | Exchange | The Nasdaq Global Market | | Trading Symbol | GMTX | | Filer Status | Non-accelerated filer, Smaller reporting company, Emerging growth company | | Common Stock Outstanding (as of Nov 9, 2021) | 43,112,742 shares | Forward-Looking Statements Details the inherent uncertainties and risks associated with future-oriented statements within the report, emphasizing that actual results may differ materially - The report contains forward-looking statements regarding future operations, financial position, revenue, costs, and market growth, which are subject to known and unknown risks and uncertainties that may cause actual results to differ materially[8][9] - Key areas of forward-looking statements include clinical trial outcomes (GEM103), regulatory filings, market potential, commercialization strategy, intellectual property, and financial performance, including cash runway[10][12] - The company undertakes no obligation to update these statements after the report date[9] Part I. Financial Information Presents the unaudited condensed consolidated financial statements and management's discussion and analysis of financial condition and results of operations Item 1. Financial Statements (Unaudited) Presents the unaudited condensed consolidated financial statements, including balance sheets, statements of operations, stockholders' equity, and cash flows for specified periods Condensed Consolidated Balance Sheets Presents the company's financial position, highlighting significant increases in cash and total assets, and a shift to positive stockholders' equity | Metric (in thousands) | Sep 30, 2021 | Dec 31, 2020 | Change | | :-------------------- | :----------- | :----------- | :----- | | Cash and cash equivalents | $150,069 | $4,503 | +$145,566 | | Total current assets | $154,800 | $5,065 | +$149,735 | | Total assets | $155,535 | $8,319 | +$147,216 | | Total current liabilities | $12,661 | $24,876 | -$12,215 | | Total liabilities | $14,674 | $30,180 | -$15,506 | | Total stockholders' equity (deficit) | $140,861 | $(21,861) | +$162,722 | Condensed Consolidated Statements of Operations and Comprehensive Loss Details increased net loss for the three and nine months ended September 30, 2021, driven by higher R&D and G&A expenses | Metric (in thousands) | 3 Months Ended Sep 30, 2021 | 3 Months Ended Sep 30, 2020 | Change (YoY) | 9 Months Ended Sep 30, 2021 | 9 Months Ended Sep 30, 2020 | Change (YoY) | | :-------------------- | :-------------------------- | :-------------------------- | :----------- | :-------------------------- | :-------------------------- | :----------- | | Research and development | $13,455 | $6,727 | +$6,728 | $36,083 | $20,472 | +$15,611 | | General and administrative | $4,995 | $1,222 | +$3,773 | $15,177 | $3,774 | +$11,403 | | Total operating expenses | $18,450 | $7,949 | +$10,501 | $51,260 | $24,246 | +$27,014 | | Loss from operations | $(18,450) | $(7,949) | $(10,501) | $(51,260) | $(24,246) | $(27,014) | | Interest expense | $(104) | $(2,047) | +$1,943 | $(2,073) | $(2,307) | +$234 | | Net loss and comprehensive loss | $(18,551) | $(10,003) | $(8,548) | $(54,046) | $(26,522) | $(27,524) | | Net loss per share (basic and diluted) | $(0.43) | $(0.65) | +$0.22 | $(1.37) | $(1.77) | +$0.40 | Condensed Consolidated Statements of Stockholders' Equity (Deficit) Details changes in stockholders' equity, highlighting the impact of the February 2021 Business Combination on paid-in capital and equity position - Balance at December 31, 2020 (effect of Business Combination): $(21,861) thousand[22] - Issuance of common stock upon Business Combination, net of issuance costs: +$195,882 thousand[22] - Conversion of promissory notes: +$14,515 thousand[22] - Net loss for the nine months ended September 30, 2021: $(54,046) thousand[19] - Balance at September 30, 2021: $140,861 thousand[22] Condensed Consolidated Statements of Cash Flows Reports a significant increase in cash and equivalents, primarily from financing activities, offsetting increased cash used in operations | Metric (in thousands) | 9 Months Ended Sep 30, 2021 | 9 Months Ended Sep 30, 2020 | Change (YoY) | | :-------------------- | :-------------------------- | :-------------------------- | :----------- | | Net cash used in operating activities | $(47,032) | $(23,855) | $(23,177) | | Net cash used in investing activities | $(61) | $(22) | $(39) | | Net cash provided by financing activities | $192,659 | $34,106 | +$158,553 | | Increase in cash, cash equivalents and restricted cash | $145,566 | $10,229 | +$135,337 | | Cash, cash equivalents and restricted cash at end of period | $150,392 | $13,538 | +$136,854 | Notes to Unaudited Condensed Consolidated Financial Statements Provides detailed disclosures and explanations for the financial statements, covering business, risks, liquidity, accounting policies, and key financial items 1. Nature of the Business Clinical-stage precision medicine company developing therapies for genetically defined AMD, with lead candidate GEM103 in Phase 2a - Clinical-stage precision medicine company developing therapies for genetically defined age-related macular degeneration (AMD)[27] - Lead product candidate: GEM103 (Phase 2a clinical development); Other product candidate: GEM307 (preclinical stage)[29] - Completed Business Combination on February 5, 2021, with FS Development Corporation, receiving approximately $195.9 million in net proceeds[30][33] 2. Risks and Liquidity Faces early-stage biotech risks, requires significant capital, and holds $150.1 million cash, with COVID-19 posing ongoing operational risks - Subject to risks of early-stage biotech: product development uncertainty, lack of marketing/sales history, competition, dependence on key personnel, and regulatory compliance[34][35] - Cash and cash equivalents as of September 30, 2021: $150.1 million, expected to fund operations for at least 12 months, but additional funds may be needed sooner[36] - COVID-19 pandemic has caused disruptions in supply chains and clinical trial enrollment/data collection, but did not have a significant impact on Q3 2021 financial results[37][38][39][40] 3. Business Combination Details the February 2021 reverse recapitalization, generating $195.9 million net proceeds and converting Old Gemini's equity - Business Combination completed on February 5, 2021, with Old Gemini merging into FSDC (now Gemini Therapeutics, Inc.), accounted for as a reverse recapitalization[41][44] - Net proceeds from the Business Combination: approximately $195.9 million, including a $95.1 million PIPE Financing[33][47] - Old Gemini's preferred and common stock, and options, were converted into shares of the combined company's common stock based on a 1.00 Old Gemini share for 0.2180 shares of the Company Conversion Ratio[43][44][48] 4. Summary of Significant Accounting Policies Outlines key accounting policies, including basis of presentation, estimates, R&D accruals, stock-based compensation, and emerging growth company status - Financial statements prepared in conformity with GAAP and SEC rules for interim reporting; Business Combination accounted for as a reverse recapitalization[50][51][52] - Significant estimates include R&D accruals, stock-based compensation, and fair value of common stock/warrant liability[53] - R&D expenses are expensed as incurred, including upfront and milestone payments for technology licensing; stock-based awards are measured at fair value on grant date and expensed over the vesting period[71][72][75] - Qualifies as an "emerging growth company" and has elected the extended transition period for new accounting standards[88][90] 5. Fair Value Measurements Details fair value measurements, classifying money market funds as Level 1 and noting the warrant liability's exercise post-combination | Financial Instrument (in thousands) | Fair Value Hierarchy Level | Sep 30, 2021 | Dec 31, 2020 | | :---------------------------------- | :------------------------- | :----------- | :----------- | | Money market funds in cash and cash equivalents | Level 1 | $149,318 | $4,015 | | Warrant liability | Level 3 | $0 | $76 | 6. Accrued Expenses and Other Current Liabilities Accrued expenses increased to $6.7 million, primarily driven by higher R&D costs and payroll accruals | Accrued Item (in thousands) | Sep 30, 2021 | Dec 31, 2020 | Change | | :-------------------------- | :----------- | :----------- | :----- | | Accrued payroll and benefits | $1,832 | $1,500 | +$332 | | Accrued external research and development | $4,482 | $3,136 | +$1,346 | | Accrued professional fees | $371 | $691 | -$320 | | Accrued interest | $21 | $437 | -$416 | | Accrued other | $16 | $46 | -$30 | | Total | $6,722 | $5,810 | +$912 | 7. Term Loan Details the $10.0 million Term Loan with SVB, $6.7 million outstanding, maturing January 2023, with deferred principal repayments - Term Loan facility of up to $10.0 million with Silicon Valley Bank (SVB); $6.7 million principal outstanding as of September 30, 2021[101][103] - Maturity date: January 2023; accrues interest at a floating rate (1.75% as of Sep 30, 2021)[105][106] - Includes a 4.0% end-of-term charge ($0.3 million accrued as of Sep 30, 2021)[107] - Principal repayments were deferred by six months in April 2020 due to the COVID-19 pandemic[106] 8. Convertible Promissory Notes Describes the $14.0 million convertible notes issued in August 2020, converted to Series B preferred stock before the Business Combination - Issued $14.0 million in convertible promissory notes in August 2020, accruing 8% simple interest[109] - Converted into 2,341,316 shares of Series B preferred stock at $6.1986 per share prior to the Business Combination[112] - Resulted in a $0.7 million loss on conversion for the nine months ended September 30, 2021[112] 9. Stockholders' Equity (Deficit) Details authorized and outstanding common stock post-Business Combination, with 43.1 million shares outstanding as of September 30, 2021 - Authorized 10,000,000 shares of preferred stock (none issued) and 250,000,000 shares of common stock[115][117] - All previously issued preferred stock converted to common stock during the Business Combination[116] - Common stock outstanding as of September 30, 2021: 43,112,742 shares; each share carries one vote; no dividends declared to date[5][118][119] 10. Equity Incentive Plan Outlines equity incentive plans, including the 2021 Gemini and Inducement Plans, and reports a significant increase in stock-based compensation expense - 2017 Old Gemini Equity Incentive Plan: Ceased new grants post-Business Combination; existing awards converted[123][124] - 2021 Gemini Equity Incentive Plan: 4,264,341 shares reserved, 1,307,794 shares available as of September 30, 2021[126] - 2021 Inducement Plan: 983,949 shares available for issuance as of September 30, 2021[128] | Metric (in thousands) | 3 Months Ended Sep 30, 2021 | 3 Months Ended Sep 30, 2020 | 9 Months Ended Sep 30, 2021 | 9 Months Ended Sep 30, 2020 | | :-------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Total stock-based compensation expense | $1,659 | $161 | $6,114 | $393 | 11. Net Loss Per Share Reports basic and diluted net loss per share of $(0.43) for Q3 2021 and $(1.37) for the nine months, with no dilution | Metric | 3 Months Ended Sep 30, 2021 | 3 Months Ended Sep 30, 2020 | 9 Months Ended Sep 30, 2021 | 9 Months Ended Sep 30, 2020 | | :----- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Net loss attributable to common stockholders (in thousands) | $(18,551) | $(10,003) | $(54,046) | $(26,522) | | Weighted average common shares outstanding (basic and diluted) | 43,091,822 | 15,282,987 | 39,427,476 | 15,016,038 | | Net loss per share (basic and diluted) | $(0.43) | $(0.65) | $(1.37) | $(1.77) | - Potential dilutive securities (unvested restricted stock, common stock options, warrants) were excluded from diluted EPS calculation as their effect was anti-dilutive due to net loss[131] 12. Commitments and Contingencies Details contractual obligations with CROs/CMOs and license agreements, noting no material legal proceedings or recorded contingent liabilities - Long-term contractual obligations include agreements with clinical research organizations (CROs) and contract manufacturing organizations (CMOs), which are generally cancellable[133] - Multiple license agreements involve upfront payments, annual fees, and potential milestone and royalty payments upon development and commercialization (e.g., Sanquin Blood Supply Foundation, Life Technologies Corporation, Avitide, Inc., Catalent Pharma Solutions, LLC)[134][135][136][137][138] - No liabilities recorded for contingent milestone/royalty payments as revenue has not been generated and achievement of milestones is not deemed probable[134][135][136][137][138] - Not a party to any material legal matters or claims as of September 30, 2021[141] 13. Related Party Transactions Reports $0.1 million in related party professional service costs, with the executive resigning and no outstanding amounts owed - Engaged a firm managed by an executive for professional services, incurring $0.1 million in costs for the nine months ended Sep 30, 2021[142] - $0.1 million recorded as reduction to additional paid-in capital; $10 thousand as general and administrative expense[142] - Executive resigned in February 2021; no amounts owed as of Sep 30, 2021[142] 14. Subsequent Events Details a corporate restructuring in October 2021 and the employment agreement for Dr. Georges Gemayel in November 2021 - Corporate Restructuring (Oct 4, 2021): Prioritized GEM103 pivotal trial, reduced workforce by 11 positions, estimated severance costs $1.3M-$1.6M[143] - Employment Agreement with Dr. Georges Gemayel (Nov 15, 2021): Appointed as an employee with a base salary of $300,000, a $63,300 sign-on bonus, and eligibility for annual bonuses and various stock option grants[144][243][245] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management's analysis of financial condition and results, covering business overview, recent developments, risks, liquidity, and critical accounting policies Overview Clinical-stage precision medicine company focused on AMD therapies, with GEM103 in Phase 2a, and no product revenue to date - Clinical-stage precision medicine company developing novel therapeutic compounds to treat genetically defined age-related macular degeneration (AMD)[148] - Lead product candidate, GEM103, is in Phase 2a clinical development; GEM307 is in the preclinical stage[150] - No products approved for sale, no revenue from product sales since inception; relies on financing for operations[149][150] Recent Developments Highlights October 2021 corporate restructuring for GEM103 and November 2021 employment agreement for Dr. Georges Gemayel - Corporate Restructuring (Oct 4, 2021): Prioritized GEM103 pivotal trial, reduced workforce by 11 positions, estimated severance costs $1.3M-$1.6M[151] - Employment Agreement with Dr. Georges Gemayel (Nov 15, 2021): Appointed as an employee, base salary $300,000, sign-on bonus $63,300, eligible for annual bonuses and equity awards[152] Risks & Liquidity Discusses significant operating losses, accumulated deficit, future funding needs, and current cash runway, alongside COVID-19 risks - Incurred significant operating losses ($54.0 million for nine months ended Sep 30, 2021) and an accumulated deficit ($166.9 million as of Sep 30, 2021)[154][205] - Requires substantial additional funding for R&D, regulatory approvals, commercialization, and public company expenses; expects to finance through equity, debt, or collaborations[155][159] - Current cash resources ($150.1 million as of Sep 30, 2021) expected to fund operations into the second half of 2023, but estimates are subject to risks and uncertainties[157][218] - COVID-19 pandemic continues to disrupt supply chains and clinical trial activities, but did not significantly impact Q3 2021 financial results[158][160][161][162] Business Combination Details the February 2021 reverse recapitalization, generating $195.9 million net proceeds and converting Old Gemini's equity - Business Combination completed on February 5, 2021, with Old Gemini merging into FSDC (now Gemini Therapeutics, Inc.), accounted for as a reverse recapitalization[163][165][167] - Net proceeds from the Business Combination: approximately $195.9 million, including a $95.1 million PIPE Financing[166] - Old Gemini's stock and options were retroactively restated to reflect the conversion ratio (1.00 Old Gemini share for 0.2180 shares of the Company)[167] Term Loan Outlines the $10.0 million Term Loan with SVB, $6.7 million outstanding, maturing January 2023, with deferred principal repayments - Term Loan facility of up to $10.0 million with SVB; $6.7 million principal outstanding as of September 30, 2021[169] - Maturity date: January 2023; accrues interest at a floating rate (1.75% as of Sep 30, 2021)[171] - Principal repayments were deferred by six months in April 2020 due to the COVID-19 pandemic[172] - Includes a 4.0% end-of-term charge[173] Convertible Promissory Notes Describes the $14.0 million convertible notes issued in August 2020, converted to Series B preferred stock before the Business Combination - Issued $14.0 million in convertible promissory notes in August 2020, accruing 8% simple interest and maturing in February 2021[174] - Converted into 2,341,316 shares of Series B preferred stock at $6.1986 per share immediately prior to the Business Combination[174] Financial Operations Overview Summarizes financial operations, including no revenue, expensed R&D and G&A, and other income/expense items, with a full valuation allowance - No revenue generated since inception; future revenue dependent on product commercialization or collaboration/license agreements[175] - Research and development expenses are expensed as incurred and expected to remain consistent in 2022 due to continued product development and restructuring benefits[176][177][178][179] - General and administrative expenses are expensed as incurred and expected to remain consistent in 2022[184][185] - Interest expense decreased due to the accretion of the beneficial conversion feature discount on convertible notes[186] - A $0.7 million loss on conversion of convertible notes was recognized for the nine months ended Sep 30, 2021[188] - Maintains a full valuation allowance against all net deferred tax assets[191] Results of Operations Analyzes increased net loss for Q3 and nine months ended September 30, 2021, primarily due to higher R&D and G&A expenses | Metric (in thousands) | 3 Months Ended Sep 30, 2021 | 3 Months Ended Sep 30, 2020 | Change (YoY) | 9 Months Ended Sep 30, 2021 | 9 Months Ended Sep 30, 2020 | Change (YoY) | | :-------------------- | :-------------------------- | :-------------------------- | :----------- | :-------------------------- | :-------------------------- | :----------- | | Research and development | $13,455 | $6,727 | +$6,728 | $36,083 | $20,472 | +$15,611 | | General and administrative | $4,995 | $1,222 | +$3,773 | $15,177 | $3,774 | +$11,403 | | Total operating expenses | $18,450 | $7,949 | +$10,501 | $51,260 | $24,246 | +$27,014 | | Net loss and comprehensive loss | $(18,551) | $(10,003) | $(8,548) | $(54,046) | $(26,522) | $(27,524) | Liquidity and Capital Resources Details significant operating losses, accumulated deficit, $150.1 million cash, and future funding needs for development and commercialization - No revenue from product sales; incurred significant operating losses and negative cash flows since inception[204][206][209] - Accumulated deficit: $166.9 million as of September 30, 2021[205] - Cash and cash equivalents: $150.1 million as of September 30, 2021, expected to fund operations into the second half of 2023[205][218] | Cash Flow Activity (in thousands) | 9 Months Ended Sep 30, 2021 | 9 Months Ended Sep 30, 2020 | | :-------------------------------- | :-------------------------- | :-------------------------- | | Net cash used in operating activities | $(47,032) | $(23,855) | | Net cash used in investing activities | $(61) | $(22) | | Net cash provided by financing activities | $192,659 | $34,106 | - Anticipates needing substantial additional funds for future development and commercialization[217][219] Critical Accounting Policies and Significant Judgments and Estimates Highlights critical accounting policies for R&D accruals and stock-based compensation, noting EGC and smaller reporting company status - Accrued Research and Development Expenses: Estimates based on service progress, invoices, and contracts with CROs, CMOs, and research institutions[222][223][224] - Stock-based Compensation: Measured at fair value on grant date; fair value of common stock determined using OPM/hybrid method pre-Business Combination and Nasdaq closing price post-Business Combination[225][227][228] - Emerging Growth Company (EGC) and Smaller Reporting Company status allows for certain disclosure exemptions and an extended transition period for new accounting standards[234][235] Item 3. Quantitative and Qualitative Disclosures About Market Risk Not required to provide market risk disclosures due to its status as a smaller reporting company - Not required to provide market risk disclosures due to status as a smaller reporting company[236] Item 4. Controls and Procedures Disclosure controls and procedures were effective as of September 30, 2021, with no material changes in internal control over financial reporting - Disclosure controls and procedures were effective as of September 30, 2021, ensuring timely and accurate reporting[237] - No material changes in internal control over financial reporting occurred during the three months ended September 30, 2021[238] Part II. Other Information Presents other required information not covered in the financial statements, including legal proceedings, risk factors, equity sales, and subsequent events Item 1. Legal Proceedings The company is not currently involved in any material legal proceedings - Not currently subject to any material legal proceedings[240] Item 1A. Risk Factors No material changes to the risk factors previously disclosed in the Annual Report on Form 10-K and Form 8-K/A - No material changes to risk factors previously disclosed in the Annual Report on Form 10-K (Dec 31, 2020) and Form 8-K/A (Mar 29, 2021)[241] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds Reports no unregistered sales or issuer purchases of equity securities during the reporting period - No unregistered sales of equity securities[242] - No issuer purchases of equity securities[242] Item 3. Defaults Upon Senior Securities Reports no defaults upon senior securities - No defaults upon senior securities[242] Item 4. Mine Safety Disclosures This item is not applicable to the company's operations - Not applicable[242] Item 5. Other Information Details the November 2021 employment agreement with Dr. Georges Gemayel, including compensation and stock option grants - Employment Agreement with Dr. Georges Gemayel (Effective Nov 15, 2021): Appointed as an at-will employee and Executive Chair of the Board[243][244] - Compensation includes a base salary of $300,000, a one-time sign-on bonus of $63,300, and eligibility for annual bonus programs[245] - Eligible for multiple stock option grants: 23,514 shares (vesting Aug 5, 2022), 17,245 shares (vesting earlier of 1-year anniversary or next annual meeting), 793,274 shares (granted Jan 3, 2022, vesting 50% Aug 5, 2022, 50% Aug 5, 2023), and an annual equity award of 0.16% of outstanding shares[245][246] Item 6. Exhibits Lists all exhibits filed with the Form 10-Q, including organizational documents, agreements, and executive certifications - Lists various exhibits filed with the 10-Q, including organizational documents, retention agreements, the Executive Chairman Agreement, and certifications from executive officers[247] Signatures Confirms the official signing of the report by the Chief Executive Officer and Chief Financial Officer - Report signed by Jason Meyenburg (Chief Executive Officer) and Brian Piekos (Chief Financial Officer) on November 15, 2021[250][251][252][253]