Pliant Therapeutics(PLRX) - 2022 Q1 - Quarterly Report

PART I. FINANCIAL INFORMATION Condensed Financial Statements Presents unaudited condensed financial statements for Q1 2022 and 2021, detailing a $28.1 million net loss and $178.3 million in cash and investments Condensed Balance Sheets Condensed Balance Sheet Highlights (in thousands) | Account | March 31, 2022 | December 31, 2021 | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $32,545 | $51,665 | | Short-term investments | $145,735 | $148,931 | | Total Assets | $197,022 | $221,215 | | Liabilities & Equity | | | | Total liabilities | $23,229 | $22,156 | | Total stockholders' equity | $173,793 | $199,059 | | Total Liabilities and Stockholders' Equity | $197,022 | $221,215 | - Total assets decreased from $221.2 million at the end of 2021 to $197.0 million as of March 31, 2022, primarily due to a decrease in cash and cash equivalents used to fund operations[24] Condensed Statements of Operations and Comprehensive Loss Condensed Statement of Operations (in thousands, except per share data) | Metric | Three Months Ended Mar 31, 2022 | Three Months Ended Mar 31, 2021 | | :--- | :--- | :--- | | Revenue | $1,249 | $2,174 | | Research and development | ($20,881) | ($18,527) | | General and administrative | ($8,579) | ($6,566) | | Loss from operations | ($28,211) | ($22,919) | | Net loss | ($28,100) | ($22,856) | | Net loss per share (Basic & Diluted) | ($0.78) | ($0.64) | - The company's net loss increased to $28.1 million in Q1 2022 from $22.9 million in Q1 2021, driven by lower revenue from its collaboration agreement and higher operating expenses, particularly in R&D and G&A[27] Condensed Statements of Cash Flows Condensed Statement of Cash Flows (in thousands) | Activity | Three Months Ended Mar 31, 2022 | Three Months Ended Mar 31, 2021 | | :--- | :--- | :--- | | Net cash used in operating activities | ($20,498) | ($13,665) | | Net cash provided by investing activities | $1,531 | $12,232 | | Net cash (used in) provided by financing activities | ($153) | $1,370 | | Net decrease in cash and cash equivalents | ($19,120) | ($63) | - Cash used in operating activities increased to $20.5 million in Q1 2022 from $13.7 million in Q1 2021, primarily due to a higher net loss and changes in operating assets and liabilities[36] Notes to Condensed Financial Statements - Under the Novartis collaboration agreement for PLN-1474, the company recognized $1.2 million in revenue for R&D services in Q1 2022, down from $2.2 million in Q1 2021. A total of $391.0 million in potential contingent payments remain eligible for achievement[53][54] - Total stock-based compensation expense was $3.5 million for Q1 2022, an increase from $2.6 million in Q1 2021. As of March 31, 2022, there was $32.6 million of unrecognized compensation cost related to stock options[76] - Subsequent to the quarter end, in May 2022, the company entered into a term loan facility with Oxford Finance LLC for up to $100.0 million, receiving an initial term loan of $10.0 million at closing[91] Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses Q1 2022 financial results, highlighting a $28.1 million net loss, PLN-74809 progress, and liquidity extending to mid-2024 Overview and Recent Highlights - The company is a clinical-stage biopharmaceutical firm focused on novel therapies for fibrosis by inhibiting integrin-mediated activation of TGF-β. Its lead product candidate is PLN-74809 for idiopathic pulmonary fibrosis (IPF) and primary sclerosing cholangitis (PSC)[96] - Data readout for the INTEGRIS-IPF Phase 2a trial is anticipated in mid-2022. All patients have completed the 12-week treatment[100] - PLN-74809 received FDA Fast Track designation for IPF and EMA Orphan Drug designation for PSC[104] - The company secured a $100 million loan facility from Oxford Finance, extending its cash runway to mid-2024. An initial $10 million was drawn at closing[103] Results of Operations Comparison of Operating Results (in thousands) | Item | Q1 2022 | Q1 2021 | $ Change | | :--- | :--- | :--- | :--- | | Revenue | $1,249 | $2,174 | ($925) | | Research and development | ($20,881) | ($18,527) | ($2,354) | | General and administrative | ($8,579) | ($6,566) | ($2,013) | | Net loss | ($28,100) | ($22,856) | ($5,244) | - Revenue decreased by $0.9 million year-over-year, primarily due to the substantial completion of R&D services for PLN-1474 under the Novartis agreement in Q1 2021[114] - R&D expenses increased by $2.4 million, mainly due to costs for advancing preclinical programs and higher employee-related expenses, partially offset by lower clinical trial manufacturing costs for PLN-74809 compared to the prior year[115] - G&A expenses increased by $2.0 million, primarily driven by higher employee-related costs, including salaries and stock-based compensation[117] Liquidity and Capital Resources - As of March 31, 2022, the company had $178.3 million in cash, cash equivalents, and short-term investments[120] - Management believes existing capital, combined with proceeds from the Oxford Loan Agreement, will be sufficient to fund operations into the middle of 2024[121] - Operations have been financed primarily through preferred stock sales, the Novartis collaboration, and the IPO. In May 2022, the company secured a loan agreement with Oxford Finance for up to $100.0 million[122] Quantitative and Qualitative Disclosures About Market Risk The company's primary market risk is interest rate sensitivity on its $178.3 million cash and investments, with no material impact from a 100 basis point rate change - The company's primary market risk is interest rate sensitivity on its portfolio of cash, cash equivalents, and short-term investments, which totaled $178.3 million as of March 31, 2022[137] - Due to the short-term maturities of its investments, the company does not believe an immediate 100 basis point change in interest rates would materially affect the fair market value of its portfolio[137] Controls and Procedures Management concluded disclosure controls and procedures were effective as of March 31, 2022, with no material changes to internal control over financial reporting - The CEO and CFO concluded that as of March 31, 2022, the company's disclosure controls and procedures were effective at a reasonable assurance level[139] - There were no material changes to the company's internal control over financial reporting during the quarter ended March 31, 2022[140] PART II. OTHER INFORMATION Legal Proceedings The company is not currently a party to any material legal proceedings or claims as of the filing date - The company is not currently party to any material legal proceedings or claims[142] Risk Factors Details significant business risks across financial, R&D, IP, and operational areas, emphasizing a history of losses and dependence on lead candidate PLN-74809 Risks Related to Financial Position and Need for Additional Capital - The company has a history of significant net losses, with a net loss of $28.1 million for Q1 2022 and an accumulated deficit of $243.2 million as of March 31, 2022, and expects to continue incurring losses[145] - Substantial additional capital will be required to finance operations. Failure to raise capital when needed could force delays or elimination of research and development programs[148] - The Oxford Loan Agreement contains restrictive covenants that could adversely affect business operations and financial conditions. A default could lead to foreclosure on substantially all company assets[153] Risks Related to Research and Development and the Biopharmaceutical Industry - The company has a limited operating history (incorporated in 2015) with no products approved for sale, making it difficult to evaluate its prospects[161] - The business is highly dependent on the success of its lead product candidate, PLN-74809, which requires significant additional clinical development[162] - The company's approach to treating fibrotic diseases by inhibiting integrins is unproven and may not result in marketable products[166] - Clinical development is a lengthy, complex, and expensive process with an uncertain outcome, and the company may experience delays or be unable to complete the development of its product candidates[170][176] Risks Related to Intellectual Property - The company's success depends on its ability to obtain and maintain patent, trademark, and trade secret protection for its technologies and product candidates, which is a difficult and costly process[253] - Third-party claims of intellectual property infringement could prevent or delay product development and commercialization efforts, leading to expensive litigation and potential damages[270] - If the company is unable to protect the confidentiality of its trade secrets, such as its techniques for testing live tissue samples, its competitive position could be harmed[265] Risks Related to Reliance on Third Parties - The company relies on its collaboration with Novartis for the development of PLN-1474. If this collaboration is unsuccessful or terminated, the development of this candidate could be halted[304][305] - The company depends on third parties, such as Contract Research Organizations (CROs), to conduct preclinical studies and clinical trials. Failure by these parties to perform their duties could delay or prevent regulatory approval[307] - The company relies on third-party contract manufacturers for its product supply. Any interruption, quality issues, or failure to comply with cGMP could disrupt development and commercialization[315] Risks Related to Managing Business and Operations - The COVID-19 pandemic has caused and could continue to cause disruptions to business operations, including delays in clinical trial enrollment and supply chain interruptions[329] - The loss of key management personnel or failure to recruit additional skilled personnel could impair the company's ability to develop its product candidates[338] - Current operations are concentrated in South San Francisco, California, a region susceptible to earthquakes and other natural disasters, which could disrupt business[341] Unregistered Sales of Equity Securities and Use of Proceeds The company reports no unregistered sales of equity securities and no material change in the planned use of IPO proceeds during the period - There were no unregistered sales of equity securities in the quarter[404] - There has been no material change in the planned use of proceeds from the company's initial public offering[405] Defaults Upon Senior Securities This section is not applicable to the company Mine Safety Disclosures This section is not applicable to the company Other Information No other material information is reported in this section Exhibits Lists exhibits filed with the Quarterly Report on Form 10-Q, including corporate governance documents and Sarbanes-Oxley certifications - Lists exhibits filed with the report, including corporate governance documents and CEO/CFO certifications under Sarbanes-Oxley Sections 302 and 906[411]