Nuvalent(US:NUVL)2021-09-08 12:31PART I—FINANCIAL INFORMATION Item 1. Financial Statements (Unaudited) Unaudited H1 2021 financials show increased assets from financing, a $16.6 million net loss, and a post-period $174.2 million IPO Balance Sheet Summary (in thousands) | Account | June 30, 2021 | December 31, 2020 | | :--- | :--- | :--- | | Cash | $138,919 | $10,332 | | Total Assets | $143,502 | $10,646 | | Total Liabilities | $5,829 | $6,615 | | Total Stockholders' Deficit | ($47,740) | ($31,323) | Statement of Operations Summary (in thousands) | Period | Research & Development | General & Administrative | Net Loss | | :--- | :--- | :--- | :--- | | Three Months Ended June 30, 2021 | $7,826 | $2,024 | ($9,838) | | Three Months Ended June 30, 2020 | $3,657 | $349 | ($8,557) | | Six Months Ended June 30, 2021 | $13,310 | $2,702 | ($16,623) | | Six Months Ended June 30, 2020 | $6,983 | $668 | ($3,198) | Statement of Cash Flows Summary (Six Months Ended June 30, in thousands) | Cash Flow Activity | 2021 | 2020 | | :--- | :--- | :--- | | Net cash used in operating activities | ($15,645) | ($5,941) | | Net cash provided by financing activities | $144,232 | $12,250 | | Net increase in cash | $128,587 | $6,309 | - Subsequent to the reporting period, on August 2, 2021, the company completed its IPO, receiving net proceeds of approximately $174.2 million after deducting underwriting discounts and commissions45105 - On July 23, 2021, the company effected a one-for-5.38213 reverse stock split of its common stock, with all share and per-share amounts retroactively adjusted4399 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations A preclinical biopharmaceutical company, it incurred a $16.6 million net loss in H1 2021, with cash from its $174.2 million IPO expected to fund operations into 2024 - The company is a preclinical stage biopharmaceutical company focused on creating precisely targeted therapies for patients with cancer, with lead programs NVL-520 and NVL-655108109 - The company expects its existing cash, including net proceeds from its August 2021 IPO, will be sufficient to fund operating expenses and capital expenditure requirements into 2024115142 Comparison of Results of Operations (in thousands) | Period | Research & Development | General & Administrative | Net Loss | | :--- | :--- | :--- | :--- | | Six Months Ended June 30, 2021 | $13,310 | $2,702 | ($16,623) | | Six Months Ended June 30, 2020 | $6,983 | $668 | ($3,198) | Research and Development Expenses by Program (Six Months Ended June 30, in thousands) | Program | 2021 | 2020 | Change | | :--- | :--- | :--- | :--- | | NVL-520 | $4,258 | $1,854 | $2,404 | | NVL-655 | $3,172 | $1,142 | $2,030 | | Discovery programs | $2,877 | $1,768 | $1,109 | - The increase in R&D expenses was primarily due to increased manufacturing and CRO costs for NVL-520 and NVL-655 in preparation for planned clinical trials and IND-enabling studies132 - The increase in G&A expenses was driven by higher personnel-related costs from increased headcount (including a new CFO and CLO) and increased professional fees for legal, audit, and recruiting in preparation for operating as a public company134 Item 3. Quantitative and Qualitative Disclosures About Market Risk As a smaller reporting company, the company is exempt from providing market risk disclosures - As a smaller reporting company, Nuvalent, Inc. is not required to provide quantitative and qualitative disclosures about market risk152 Item 4. Controls and Procedures Management concluded disclosure controls were effective as of June 30, 2021, with no material changes in internal control over financial reporting - The company's principal executive officer and principal financial officer concluded that as of the end of the period covered by the report, disclosure controls and procedures were effective at a reasonable assurance level154 - There were no changes in internal control over financial reporting during the most recently completed fiscal quarter that have materially affected, or are reasonably likely to materially affect, internal controls155 PART II—OTHER INFORMATION Item 1. Legal Proceedings As of June 30, 2021, the company was not party to any material legal proceedings - The company is not currently party to any material legal proceedings157 Item 1A. Risk Factors The company faces significant risks from its early stage, reliance on lead candidates NVL-520 and NVL-655, need for capital, competition, third-party dependence, IP challenges, and COVID-19 impacts - The company is in its early stages, has a limited operating history, no approved products, and has incurred significant net losses ($48.5 million accumulated deficit as of June 30, 2021), making it difficult to evaluate its prospects159163 - Future success is substantially dependent on the clinical development and commercialization of its lead product candidates, NVL-520 and NVL-655, which are still in preclinical development173 - The company will require substantial additional capital to finance operations and may be forced to delay, reduce, or eliminate programs if unable to raise funds on acceptable terms168 - The company faces substantial competition from major multinational pharmaceutical and established biotechnology companies with greater financial resources and experience225228 - The company relies on third parties for manufacturing its product candidates and conducting preclinical and clinical trials, which increases risks related to supply, quality, and timelines397402 - The company's ability to protect its intellectual property is uncertain, as its patent applications are at a very early stage and may not issue or provide meaningful protection348 - The ongoing COVID-19 pandemic could adversely impact business operations, including planned clinical trials and preclinical studies, by causing delays in site initiation, patient enrollment, and supply chain disruptions212 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds The company issued 2.3 million stock options in Q2 2021 and completed a $174.2 million IPO in August 2021, with no material change in proceeds use - During Q2 2021, the company issued options to purchase 2,322,663 shares of common stock to employees and directors at a weighted-average exercise price of $7.72 per share454 - The company closed its IPO on August 2, 2021, raising net proceeds of approximately $174.2 million, with no material change in the planned use of these proceeds from the prospectus455456457 Item 3. Defaults Upon Senior Securities The company reports no defaults upon senior securities - The company reports no defaults upon senior securities458 Item 4. Mine Safety Disclosures This item is not applicable to the company's operations - This item is not applicable to the company460 Item 5. Other Information The company reports no other information for this item - The company reports no other information for this item461 Item 6. Exhibits This section lists exhibits filed with the Form 10-Q, including corporate documents and officer certifications