PART I. FINANCIAL INFORMATION Item 1. Condensed Unaudited Financial Statements The unaudited financial statements show a higher net loss from increased spending, alongside a significantly strengthened balance sheet due to a recent public offering Condensed Balance Sheets The balance sheet shows a substantial increase in total assets and stockholders' equity, driven by proceeds from the February 2024 public offering Condensed Balance Sheet Highlights (in thousands) | Account | March 31, 2024 | December 31, 2023 | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $275,594 | $249,108 | | Marketable securities | $313,259 | $50,078 | | Total current assets | $535,589 | $296,588 | | Total assets | $629,884 | $339,891 | | Liabilities & Equity | | | | Total current liabilities | $16,403 | $18,951 | | Total liabilities | $29,323 | $32,062 | | Total stockholders' equity | $600,561 | $307,829 | Condensed Statements of Operations The company's net loss increased year-over-year due to higher R&D and G&A expenses, partially offset by greater interest income Condensed Statement of Operations (in thousands) | Account | Three Months Ended Mar 31, 2024 | Three Months Ended Mar 31, 2023 | | :--- | :--- | :--- | | Collaboration and license revenue | $28 | $298 | | Research and development | $27,870 | $22,412 | | General and administrative | $10,294 | $7,992 | | Loss from operations | ($38,136) | ($30,106) | | Interest income | $5,745 | $1,443 | | Net loss | ($32,401) | ($28,682) | | Net loss per share | ($0.66) | ($0.88) | Condensed Statements of Cash Flows Financing activities from a public offering provided a significant cash inflow, offsetting cash used in operating and investing activities Condensed Statement of Cash Flows Highlights (in thousands) | Cash Flow Activity | Three Months Ended Mar 31, 2024 | Three Months Ended Mar 31, 2023 | | :--- | :--- | :--- | | Net cash used in operating activities | ($29,088) | ($27,906) | | Net cash provided by (used in) investing activities | ($263,258) | $43,130 | | Net cash provided by financing activities | $318,832 | $10,994 | | Net increase in cash and cash equivalents | $26,486 | $26,218 | | Cash and cash equivalents, end of period | $275,594 | $78,569 | Notes to Unaudited Condensed Financial Statements The notes detail a significant public offering, the company's liquidity, key agreements, and an accumulated deficit of $447.7 million - In February and March 2024, the company completed a public offering, selling common stock and pre-funded warrants, resulting in total net proceeds of approximately $316.1 million ($281.2 million + $34.9 million)3334 - The company has an accumulated deficit of $447.7 million as of March 31, 2024, but believes its cash, cash equivalents, and marketable securities are sufficient to fund planned operations for at least one year35 - In July 2023, the company entered a license agreement with Astellas Gene Therapies (AGT), receiving a $20 million upfront payment and potential future milestones up to $942.5 million82 - In January 2024, the company entered into a new lease for warehouse space with future minimum lease payments of approximately $1.5 million over five years98 Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses its focus on developing genetic medicines, the status of its clinical trials, and the financial impact of increased R&D and G&A spending Results of Operations Operating expenses rose 26% year-over-year, driven by increased clinical trial activity and higher payroll costs in both R&D and G&A Comparison of Results of Operations (in thousands) | Line Item | Q1 2024 | Q1 2023 | $ Change | % Change | | :--- | :--- | :--- | :--- | :--- | | Collaboration and license revenue | $28 | $298 | ($270) | (91)% | | Research and development | $27,870 | $22,412 | $5,458 | 24% | | General and administrative | $10,294 | $7,992 | $2,302 | 29% | | Loss from operations | ($38,136) | ($30,106) | ($8,030) | 27% | | Net loss | ($32,401) | ($28,682) | ($3,719) | 13% | - The increase in R&D expenses was primarily driven by a $3.9 million increase in clinical trial costs for product candidate 4D-150 and a $1.3 million increase in payroll162 - The increase in G&A expenses was primarily due to a $1.7 million increase in payroll and personnel expenses and a $0.9 million increase in facilities and other expenses162 Liquidity and Capital Resources The company holds $588.9 million in cash and securities and believes this is sufficient to fund operations for at least the next year - As of March 31, 2024, the company had cash, cash equivalents and marketable securities of $588.9 million172 - The company believes its existing cash and cash equivalents will fund planned operations for at least one year from the date of the report's issuance177 - Net cash provided by financing activities of $318.8 million in Q1 2024 was primarily due to $315.7 million in net proceeds from the public offering186 Summary of Cash Flows (in thousands) | Cash Flow Activity | Three Months Ended Mar 31, 2024 | Three Months Ended Mar 31, 2023 | | :--- | :--- | :--- | | Net cash used in operating activities | ($29,088) | ($27,906) | | Net cash provided by (used in) investing activities | ($263,258) | $43,130 | | Net cash provided by financing activities | $318,832 | $10,994 | Quantitative and Qualitative Disclosures About Market Risk The company's primary market risk is interest rate sensitivity on its $588.9 million in cash and securities, which management deems not material - The company holds $588.9 million in cash, cash equivalents, and marketable securities and believes a 10% change in interest rates would not have a material effect on their fair value198 - The company does not believe that inflation or interest rate changes have had a significant impact on its results of operations for the periods presented199 Controls and Procedures Management concluded that the company's disclosure controls and internal control over financial reporting were effective as of March 31, 2024 - Management concluded that the company's disclosure controls and procedures were effective at the reasonable assurance level as of March 31, 2024203 - There were no material changes to the company's internal control over financial reporting during the first quarter of 2024204 PART II. OTHER INFORMATION Legal Proceedings The company reports no material legal proceedings are outstanding as of the end of the quarter - As of March 31, 2024, there are no material legal proceedings outstanding against the company103206 Risk Factors The company faces significant risks related to its early stage of development, history of net losses, and reliance on novel gene therapy technology - The company is in the early stages of drug development with a limited operating history, recurring net losses ($447.7 million accumulated deficit), and no approved products209211 - All product candidates are based on novel AAV genetic medicine technology, which has limited regulatory and clinical experience, making development unpredictable209229 - Gene therapies are complex to manufacture, and the company could experience production problems or raw material shortages that delay development209294304 - The company's success depends on its ability to protect its intellectual property, which may be challenged, invalidated, or circumvented214373 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 quarter491 Default Upon Senior Securities The company reported no defaults upon senior securities - There were no defaults upon senior securities492 Mine Safety Disclosures This item is not applicable to the company - Not applicable493 Other Information Several company officers and directors adopted or terminated Rule 10b5-1 trading plans during the quarter - President and COO Fariborz Kamal adopted a Rule 10b5-1 trading plan on January 4, 2024, for the sale of up to 15,000 shares494 - CMO Robert Kim terminated a prior Rule 10b5-1 plan and adopted a new one on March 19, 2024, for the sale of up to 16,000 shares495496 - CEO David Kirn terminated a prior Rule 10b5-1 plan and adopted a new one on March 21, 2024, for the sale of up to 305,083 shares497498 Exhibits This section lists the exhibits filed with the quarterly report, including required officer certifications - Exhibits filed include CEO and CFO certifications (31.1, 31.2, 32.1) and Inline XBRL documents502
4D Molecular Therapeutics(FDMT) - 2024 Q1 - Quarterly Report