Pliant Therapeutics(PLRX) - 2021 Q3 - Quarterly Report

PART I. FINANCIAL INFORMATION Item 1. Condensed Financial Statements Pliant Therapeutics' Q3 2021 unaudited financial statements reflect decreased assets, a significant increase in net loss, and higher cash used in operations Condensed Balance Sheets Condensed Balance Sheet Highlights (in thousands) | Account | Sep 30, 2021 | Dec 31, 2020 | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $45,231 | $50,882 | | Short-term investments | $175,813 | $226,012 | | Total Assets | $234,121 | $295,526 | | Liabilities & Equity | | | | Total Liabilities | $13,681 | $12,465 | | Total Stockholders' Equity | $220,440 | $283,061 | | Total Liabilities & Stockholders' Equity | $234,121 | $295,526 | - Total assets decreased from $295.5 million at the end of 2020 to $234.1 million as of September 30, 2021, mainly due to a reduction in cash, cash equivalents, and short-term investments[20] Condensed Statements of Operations and Comprehensive Loss Statement of Operations Highlights (in thousands, except per share data) | Metric | Nine Months Ended Sep 30, 2021 | Nine Months Ended Sep 30, 2020 | | :--- | :--- | :--- | | Revenue — related party | $5,573 | $37,352 | | Research and development | ($58,797) | ($48,339) | | General and administrative | ($19,712) | ($11,642) | | Loss from operations | ($72,936) | ($22,629) | | Net loss | ($72,732) | ($22,506) | | Net loss per share, basic & diluted | ($2.03) | ($1.36) | - Net loss for the nine months ended September 30, 2021, increased significantly to $72.7 million from $22.5 million in the prior-year period. The increase was driven by a sharp decline in related-party revenue and higher operating expenses[23] Condensed Statements of Cash Flows Cash Flow Summary (in thousands) | Activity | Nine Months Ended Sep 30, 2021 | Nine Months Ended Sep 30, 2020 | | :--- | :--- | :--- | | Net cash used in operating activities | ($55,578) | ($20,786) | | Net cash provided by/(used in) investing activities | $47,916 | ($222,772) | | Net cash provided by financing activities | $2,011 | $212,975 | - Cash used in operating activities increased to $55.6 million for the nine months ended Sep 30, 2021, compared to $20.8 million in the same period of 2020. Financing activities provided only $2.0 million in 2021, compared to $213.0 million in 2020 which included proceeds from the IPO and preferred stock issuance[32] Notes to Condensed Financial Statements - The company is a clinical-stage biopharmaceutical firm focused on therapies for fibrosis. In June 2020, it completed an IPO raising net proceeds of $148.3 million[34][36] - The collaboration with Novartis for PLN-1474 provided $5.6 million in revenue for the nine months ended Sep 30, 2021, down from $37.4 million in the prior year period, which included a $25.0 million milestone payment[55][56] - Total stock-based compensation expense for the nine months ended Sep 30, 2021 was $7.7 million, a significant increase from $2.4 million in the same period of 2020[78] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses Pliant Therapeutics' fibrosis therapies, noting increased net loss from lower revenue and higher expenses, with cash sufficient into 2023 Overview and Recent Highlights - The company's lead product candidate, PLN-74809, is an oral inhibitor for idiopathic pulmonary fibrosis (IPF) and primary sclerosing cholangitis (PSC), currently in three Phase 2a trials[97] - Positive interim results from a Phase 2a PET imaging trial showed up to 98% target engagement of αvβ6 in the lungs of IPF patients, supporting the potential anti-fibrotic activity of PLN-74809[100] - The second product candidate, PLN-1474 for NASH, is partnered with Novartis. The IND was transferred to Novartis in Q1 2021, and Novartis is now responsible for all further development[98] Financial Operations Overview Comparison of Three Months Ended Sep 30, 2021 and 2020 (in thousands) | Account | Q3 2021 | Q3 2020 | $ Change | | :--- | :--- | :--- | :--- | | Revenue—related party | $1,610 | $4,814 | ($3,204) | | Research and development | ($21,052) | ($16,884) | ($4,168) | | General and administrative | ($7,671) | ($4,591) | ($3,080) | | Net loss | ($27,045) | ($16,534) | ($10,511) | Comparison of Nine Months Ended Sep 30, 2021 and 2020 (in thousands) | Account | 9M 2021 | 9M 2020 | $ Change | | :--- | :--- | :--- | :--- | | Revenue—related party | $5,573 | $37,352 | ($31,779) | | Research and development | ($58,797) | ($48,339) | ($10,458) | | General and administrative | ($19,712) | ($11,642) | ($8,070) | | Net loss | ($72,732) | ($22,506) | ($50,226) | - The decrease in revenue for the nine-month period was primarily due to a $25.0 million milestone achieved in Q1 2020 for the PLN-1474 trial, which was not repeated in 2021[121] - The increase in R&D expenses for both the three and nine-month periods was driven by higher employee-related costs and increased clinical trial expenses for PLN-74809[114][122] Liquidity and Capital Resources - As of September 30, 2021, the company had $221.0 million in cash, cash equivalents, and short-term investments[128] - Management anticipates that current cash reserves are sufficient to fund planned operations into 2023[128] - The company entered into a Controlled Equity Offering Sales Agreement for an "at-the-market" offering to sell up to $150.0 million of common stock, though no shares have been issued under this agreement yet[128] Item 3. Quantitative and Qualitative Disclosures About Market Risk The company's primary market risk is interest rate sensitivity on its $221.0 million investment portfolio, deemed immaterial to fair value due to short-term maturities - The company's primary market risk is interest rate sensitivity on its $221.0 million portfolio of cash, cash equivalents, and short-term investments[146] - The portfolio consists of bank deposits, money market funds, U.S. treasury securities, U.S. government agency securities, and corporate debt securities[146] - Due to the short-term maturities of the investments, management asserts that a 1% change in interest rates would not materially impact the portfolio's fair value[146] Item 4. Controls and Procedures Management concluded that disclosure controls and procedures were effective as of September 30, 2021, with no material changes to internal controls during the quarter - Management concluded that as of September 30, 2021, the company's disclosure controls and procedures were effective at a reasonable assurance level[148] - No material changes to the internal control over financial reporting occurred during the third quarter of 2021[149] PART II. OTHER INFORMATION Item 1. Legal Proceedings The company is not currently a party to any material legal matters or claims - The company is not currently party to any material legal proceedings[151] Item 1A. Risk Factors The company outlines significant risks including historical net losses, capital needs, dependence on lead product success, and challenges in clinical development, competition, and third-party reliance Risks Related to Our Financial Position and Need for Additional Capital - The company has a history of significant net losses ($72.7 million for the nine months ended Sep 30, 2021) and expects to continue incurring losses for the foreseeable future[154] - Substantial additional capital will be required to finance operations. Existing cash is expected to fund operations into 2023, but failure to raise more capital when needed could force delays or elimination of R&D programs[156][157] - The company has a limited operating history since its incorporation in 2015, making it difficult to evaluate its prospects and likelihood of success[161] Risks Related to Research and Development and the Biopharmaceutical Industry - The business is highly dependent on the success of its lead product candidate, PLN-74809, which requires significant additional development before seeking regulatory approval[162] - The company's approach to drug discovery, focusing on integrin modulation and TGF-ß signaling inhibition, is unproven and may not result in marketable products[165] - Clinical development is a lengthy, complex, and expensive process with an uncertain outcome, and there is a high rate of failure for product candidates[168] - The company faces substantial competition from major biopharmaceutical companies with greater financial resources and expertise in developing treatments for fibrosis[203][204][205] Risks Related to Our Reliance on Third Parties - The company is reliant on its collaboration with Novartis for the development of PLN-1474. Novartis is responsible for all development, manufacturing, and commercialization activities after the initial period, limiting Pliant's control[306] - Pliant depends on third-party Contract Research Organizations (CROs) to conduct aspects of its preclinical studies and clinical trials, and is responsible for ensuring their compliance with regulations like Good Clinical Practice (GCP)[308][309] - The company relies on third-party contract manufacturers for its product candidates and does not own manufacturing facilities. It relies on a sole supplier for PLN-74809, creating supply chain risk[316][320] Risks Related to Managing Our Business and Operations - The COVID-19 pandemic has caused and could continue to cause disruptions to business operations, including delays in patient enrollment for clinical trials and interruptions in the manufacturing supply chain[330][331] - The company is highly dependent on key management personnel, and competition for skilled personnel in the San Francisco Bay Area is intense, posing a risk to attracting and retaining talent[338][340][341] - Current operations are concentrated in a single location in South San Francisco, making the business vulnerable to earthquakes or other natural disasters[343] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds The company reported no unregistered equity sales and confirmed consistent use of $148.3 million IPO proceeds, with minor share repurchases from former employees - There were no unregistered sales of equity securities in the period[406] - The company confirms no material change in the planned use of proceeds from its June 2020 IPO, which raised net proceeds of $148.3 million[407][408] - In Q3 2021, the company repurchased 1,355 shares of unvested common stock from former employees at an average price of $0.08 per share[410] Item 3. Defaults Upon Senior Securities Not applicable - Not applicable[411] Item 4. Mine Safety Disclosures Not applicable - Not applicable[412] Item 5. Other Information None - None[413] Item 6. Exhibits The report includes an index of all exhibits filed, such as corporate governance documents and required CEO/CFO certifications - The report includes an index of all exhibits filed, such as corporate governance documents and required CEO/CFO certifications[414]