Pliant Therapeutics(US:PLRX)2023-05-09 20:14PART I. FINANCIAL INFORMATION Item 1. Condensed Financial Statements The unaudited condensed financial statements for Q1 2023 reflect significant asset and equity growth from a public offering, alongside an increased net loss due to higher operating expenses Condensed Balance Sheets As of March 31, 2023, total assets significantly increased to $597.9 million from $350.6 million at December 31, 2022, primarily due to a public offering, while stockholders' equity grew to $561.9 million Condensed Balance Sheet Highlights (in thousands) | Account | March 31, 2023 | December 31, 2022 | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $102,527 | $33,685 | | Short-term investments | $474,787 | $297,502 | | Total Assets | $597,881 | $350,613 | | Liabilities & Equity | | | | Total liabilities | $35,961 | $37,271 | | Total stockholders' equity | $561,920 | $313,342 | | Total Liabilities and Stockholders' Equity | $597,881 | $350,613 | Condensed Statements of Operations and Comprehensive Loss For Q1 2023, the company reported a net loss of $37.5 million, an increase from $28.1 million in Q1 2022, primarily driven by higher research and development and general and administrative expenses Statement of Operations Highlights (in thousands, except per share data) | Metric | Three Months Ended March 31, 2023 | Three Months Ended March 31, 2022 | | :--- | :--- | :--- | | Revenue | $1,332 | $1,249 | | Research and development | $(29,273) | $(20,881) | | General and administrative | $(14,154) | $(8,579) | | Loss from operations | $(42,095) | $(28,211) | | Net loss | $(37,548) | $(28,100) | | Net loss per share, basic and diluted | $(0.67) | $(0.78) | Condensed Statements of Stockholders' Equity Total stockholders' equity significantly increased to $561.9 million as of March 31, 2023, primarily driven by $269.9 million in net proceeds from a public common stock offering - In January 2023, the company completed a public offering of common stock, resulting in net proceeds of approximately $269.9 million3727 - Stock-based compensation expense for the quarter was $11.9 million27 Condensed Statements of Cash Flows For Q1 2023, net cash used in operating activities was $30.3 million, while financing activities provided $273.3 million from a public offering, leading to a net increase in cash of $68.8 million Cash Flow Summary (in thousands) | Cash Flow Activity | Three Months Ended March 31, 2023 | Three Months Ended March 31, 2022 | | :--- | :--- | :--- | | Net cash used in operating activities | $(30,276) | $(20,498) | | Net cash (used in) provided by investing activities | $(174,208) | $1,531 | | Net cash provided by (used in) financing activities | $273,326 | $(153) | | Net increase (decrease) in cash | $68,842 | $(19,120) | - The company received $270.3 million in proceeds from the sale of common stock in a public offering during the quarter33 Notes to Condensed Financial Statements Key disclosures include the January 2023 public offering raising $269.9 million, the termination of the Novartis collaboration for PLN-1474, and details on the $10.0 million long-term debt and $11.9 million stock-based compensation expense - In January 2023, the company completed a public offering raising approximately $269.9 million in net proceeds37 - Novartis exercised its right to terminate the collaboration agreement for PLN-1474, effective April 18, 2023, with all rights and licenses reverting to Pliant57 - The company has a $10.0 million term loan with Oxford Finance, with an effective interest rate of 12.69%5355 Stock-Based Compensation Expense (in thousands) | Category | Three Months Ended March 31, 2023 | Three Months Ended March 31, 2022 | | :--- | :--- | :--- | | Research and development | $4,848 | $1,914 | | General and administrative | $7,075 | $1,617 | | Total | $11,923 | $3,531 | Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the increased net loss of $37.5 million in Q1 2023, the strengthened financial position with $577.3 million in cash, and key clinical developments including positive bexotegrast data and the Novartis collaboration termination - The company's lead product candidate, bexotegrast, showed positive data in a Phase 2a trial for IPF, with a Phase 2b trial expected to start in mid-20239295 - The collaboration with Novartis for PLN-1474 was terminated in April 2023, with global rights returning to Pliant9399 - As of March 31, 2023, the company had $577.3 million in cash, cash equivalents, and short-term investments, believed to be sufficient to fund operations into the second half of 2026116120 Comparison of Operating Results (in thousands) | Item | Three Months Ended March 31, 2023 | Three Months Ended March 31, 2022 | $ Change | | :--- | :--- | :--- | :--- | | Revenue | $1,332 | $1,249 | $83 | | Research and development | $(29,273) | $(20,881) | $(8,392) | | General and administrative | $(14,154) | $(8,579) | $(5,575) | | Net loss | $(37,548) | $(28,100) | $(9,448) | Item 3. Quantitative and Qualitative Disclosures About Market Risk The company's primary market risk is interest rate sensitivity on its $577.3 million in cash and investments, with a hypothetical 100 basis point change not expected to materially affect financial statements - The company's primary market risk is interest rate sensitivity on its $577.3 million of cash, cash equivalents, and short-term investments134 - The company's $10.0 million term loan has a capped interest rate exposure of 2.0%134 - A hypothetical 10% change in interest rates is not expected to have a material impact on the condensed financial statements135 Item 4. Controls and Procedures Management concluded that disclosure controls and procedures were effective as of March 31, 2023, with no material changes to internal control over financial reporting during the quarter - Management concluded that disclosure controls and procedures were effective as of March 31, 2023138 - There were no changes in internal control over financial reporting during the quarter ended March 31, 2023, that materially affected, or are reasonably likely to materially affect, internal controls139 PART II. OTHER INFORMATION Item 1. Legal Proceedings As of the filing date, the company is not a party to any material legal proceedings or claims, while acknowledging the possibility of future matters - The company is not currently party to any material legal matters or claims141 Item 1A. Risk Factors The company outlines significant financial, R&D, regulatory, intellectual property, third-party reliance, operational, and stock-related risks, including a history of losses and dependence on its lead candidate bexotegrast Risks Related to Our Financial Position and Need for Additional Capital This section details financial risks, including a $376.0 million accumulated deficit, the need for substantial additional capital, and restrictive covenants in the Oxford Loan Agreement - The company has incurred significant net losses since inception, with an accumulated deficit of $376.0 million as of March 31, 2023144 - Substantial additional capital will be required to fund operations, and failure to raise capital could force delays or elimination of research programs147 - The Oxford Loan Agreement contains covenants that restrict the company's ability to incur additional debt, make certain investments, and pay dividends, among other things156 Risks Related to Research and Development and the Biopharmaceutical Industry The company's business is highly dependent on the success of its lead candidate bexotegrast, facing risks from its unproven drug discovery approach, the long and uncertain clinical development process, and challenges in patient enrollment for orphan indications - The business is highly dependent on the success of its lead product candidate, bexotegrast, which requires significant additional development161 - The company's approach to drug discovery in fibrotic diseases by targeting integrins is unproven and may not result in marketable products164 - The company faces potential difficulties in enrolling patients for its clinical trials in orphan indications like IPF and PSC, which have small patient populations182 Risks Related to Our Intellectual Property The company's success depends on its ability to protect intellectual property, facing risks of patent invalidation, trade secret misappropriation, and costly third-party infringement litigation that could block commercialization - The company's success depends on its ability to protect its intellectual property, but the patenting process is expensive, time-consuming, and uncertain245246 - The company may face third-party claims of intellectual property infringement, which could lead to costly litigation, substantial damages, or prohibitions on selling product candidates263264 - The company relies on trade secrets and confidentiality agreements, which may not provide adequate protection against misappropriation or independent development by competitors260 Risks Related to Our Reliance on Third Parties The company heavily relies on third parties for critical functions, including CROs and single-source manufacturers, with the Novartis collaboration termination highlighting partnership risks and potential delays from third-party failures - The termination of the Novartis collaboration agreement in April 2023 highlights the risks of relying on partners for development and commercialization300301 - The company relies on third parties to conduct preclinical studies and clinical trials, with limited control over their performance and compliance with regulations like GCP303304 - The company relies on single-source third-party suppliers, including some located in China, to manufacture its drug candidates, creating a risk of supply interruption due to business or geopolitical events311 Risks Related to Managing Our Business and Operations Operational risks include potential COVID-19 disruptions, challenges in managing growth, dependence on key personnel, concentration in an earthquake-prone area, and the need to comply with evolving global data protection laws - The COVID-19 pandemic could continue to adversely impact the business, including preclinical studies and clinical trials, through delays and disruptions324 - The company is highly dependent on its key management and scientific personnel, and competition for skilled employees is intense331332 - The company is subject to evolving global data protection laws (e.g., HIPAA, CCPA, GDPR), and failure to comply could result in significant penalties and harm business operations366367376 - Current operations are concentrated in South San Francisco, California, exposing the company to risks from earthquakes or other natural disasters334 Risks Related to Our Common Stock Risks for common stock investors include high price volatility, no foreseeable dividends, significant insider control, potential dilution from future equity issuances, and anti-takeover provisions - The trading price of the company's common stock is likely to be highly volatile344 - Executive officers, directors, and principal stockholders hold a significant portion of the stock and can exert significant control over matters subject to stockholder approval348 - Anti-takeover provisions in the company's charter documents and under Delaware law could delay or prevent a change of control351 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds During Q1 2023, the company reported no unregistered sales or repurchases of its equity securities - There were no unregistered sales of equity securities in the quarter397 - There were no repurchases of company equity securities in the quarter398 Item 3. Defaults Upon Senior Securities This item is not applicable as the company has not defaulted upon any senior securities - Not applicable399 Item 4. Mine Safety Disclosures This item is not applicable to the company's business - Not applicable400 Item 5. Other Information There is no other information to report for this period - None401 Item 6. Exhibits This section lists the exhibits filed with the Form 10-Q, including corporate documents and required CEO and CFO certifications