sensei(SNSE) - 2023 Q2 - Quarterly Report

PART I: FINANCIAL INFORMATION Condensed Consolidated Financial Statements (Unaudited) This section presents the unaudited financial statements for the period ended June 30, 2023, detailing a net loss of $19.6 million and $78.8 million in cash and equivalents Condensed Consolidated Balance Sheets As of June 30, 2023, total assets decreased to $89.6 million from $118.4 million, with total liabilities at $10.4 million and stockholders' equity at $79.2 million Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | June 30, 2023 | December 31, 2022 | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $10,226 | $17,795 | | Marketable securities | $68,614 | $89,321 | | Total current assets | $81,069 | $108,589 | | Total assets | $89,580 | $118,375 | | Liabilities & Stockholders' Equity | | | | Total current liabilities | $5,357 | $9,066 | | Total liabilities | $10,379 | $14,968 | | Total stockholders' equity | $79,201 | $103,407 | | Total liabilities and stockholders' equity | $89,580 | $118,375 | Condensed Consolidated Statements of Operations and Comprehensive Loss The company reported a net loss of $9.4 million for Q2 2023 and $19.6 million for the six months ended June 30, 2023, primarily due to lower research and development expenses Statement of Operations Summary (in thousands, except per share data) | Metric | Q2 2023 | Q2 2022 | H1 2023 | H1 2022 | | :--- | :--- | :--- | :--- | :--- | | Research and development | $4,784 | $6,393 | $9,988 | $13,848 | | General and administrative | $5,393 | $4,319 | $11,197 | $9,351 | | Loss from operations | $(10,177) | $(10,712) | $(21,185) | $(23,199) | | Net loss | $(9,386) | $(10,535) | $(19,563) | $(22,940) | | Net loss per share, basic and diluted | $(0.31) | $(0.34) | $(0.64) | $(0.75) | Condensed Consolidated Statements of Cash Flows For the six months ended June 30, 2023, net cash used in operations was $21.2 million, offset by $21.8 million from investing activities, resulting in a $7.6 million net decrease in cash Cash Flow Summary for the Six Months Ended June 30 (in thousands) | Activity | 2023 | 2022 | | :--- | :--- | :--- | | Net cash used in operating activities | $(21,199) | $(22,649) | | Net cash provided by investing activities | $21,838 | $25,389 | | Net cash used in financing activities | $(8,208) | $0 | | Net (decrease) increase in cash | $(7,569) | $2,740 | Notes to Condensed Consolidated Financial Statements These notes detail accounting policies, liquidity, and commitments, highlighting $78.8 million in cash and equivalents, a $7.7 million share repurchase, and a subsequent $2.0 million repurchase agreement - The company expects its cash, cash equivalents, and marketable securities of $78.8 million as of June 30, 2023, will be sufficient to fund operations for at least the next twelve months[23] - On June 1, 2023, the company completed the repurchase of 4,454,248 shares of its common stock from the Apeiron Parties for $1.58 per share, totaling approximately $7.0 million, plus $0.75 million for costs[33][53][72] - A restructuring plan initiated in December 2022 was completed, with all related accrued liabilities paid out by June 30, 2023[76][78] - Subsequent to the quarter end, on July 31, 2023, the company agreed to repurchase 1,587,302 shares from Cambrian BioPharma for approximately $2 million[79] Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the company's financial condition, operations, and liquidity, focusing on the TMAb™ platform, SNS-101 clinical trial, and the sufficiency of $78.8 million in cash until H2 2025 Overview Sensei is an immuno-oncology company developing TMAb™ platform therapeutics, with lead candidate SNS-101 in Phase 1/2 clinical trials and preclinical candidates SNS-102 and SNS-103 advancing - Lead product candidate SNS-101, targeting VISTA, initiated a first-in-human Phase 1/2 clinical trial in May 2023[83] - The company expects to report initial pharmacokinetic and safety data for the SNS-101 trial by year-end 2023, with topline monotherapy and initial combination data in 2024[83] - Preclinical candidates SNS-102 (targeting VSIG4) and SNS-103 (targeting CD39) are in lead optimization, with product candidate selection expected in 2023[83] Results of Operations Operating results for Q2 and H1 2023 show a decrease in R&D expenses and an increase in G&A expenses, primarily due to stockholder activism costs Comparison of Operating Expenses (in thousands) | Expense Category | Q2 2023 | Q2 2022 | Change | H1 2023 | H1 2022 | Change | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Research and development | $4,784 | $6,393 | $(1,609) | $9,988 | $13,848 | $(3,860) | | General and administrative | $5,393 | $4,319 | $1,074 | $11,197 | $9,351 | $1,846 | - The $1.1 million increase in G&A expenses for Q2 2023 was primarily driven by a $1.6 million increase in external professional services related to stockholder activism for the 2023 annual meeting[101] Liquidity and Capital Resources As of June 30, 2023, the company held $78.8 million in cash and equivalents, projected to fund operations into the second half of 2025, with R&D as the primary cash use - As of June 30, 2023, the company had cash, cash equivalents and marketable securities of $78.8 million[108] - The company expects its existing cash and cash equivalents will be sufficient to fund its operating expenses and capital expenditure requirements at least into the second half of 2025[119] Cash Flow Summary for Six Months Ended June 30 (in thousands) | Cash Flow Activity | 2023 | 2022 | | :--- | :--- | :--- | | Net cash used in operating activities | $(21,199) | $(22,649) | | Net cash provided by investing activities | $21,838 | $25,389 | | Net cash used in financing activities | $(8,208) | $0 | Quantitative and Qualitative Disclosures About Market Risk As a smaller reporting company, Sensei is not required to provide quantitative and qualitative disclosures about market risk - As a smaller reporting company, Sensei is not required to provide the information otherwise required under this item[131] Controls and Procedures Management, including the CEO and CFO, concluded that disclosure controls and procedures were effective as of June 30, 2023, with no material changes in internal control over financial reporting - Management, including the CEO and CFO, concluded that the company's disclosure controls and procedures were effective at the reasonable assurance level as of June 30, 2023[134] - There were no material changes in internal control over financial reporting during the three months ended June 30, 2023[135] PART II: OTHER INFORMATION Legal Proceedings The company is not currently a party to any material legal proceedings, with an ongoing Ontario matter not expected to materially impact financial results - The Company is not currently a party to any material legal proceedings[138] - Regarding a lawsuit in Ontario, Canada, management believes the outcome is not likely to have any material impact on the Company's results, cash flows, or financial position[49] Risk Factors This section details key risks including the need for additional funding, a history of significant losses, dependence on early-stage product candidates, reliance on third parties, and potential shareholder activism - Financial Risk: The company has a history of significant losses ($217.4 million accumulated deficit as of June 30, 2023) and will need substantial additional funding, which may not be available on favorable terms[146][156] - Development Risk: The business is highly dependent on the success of its early-stage product candidates; clinical development is long, expensive, and uncertain, and positive preclinical results may not translate to human trials[165][180] - Third-Party Reliance: The company relies on third-party CROs for clinical trials and CMOs for manufacturing, which reduces control and introduces risks related to performance, compliance, and supply chain disruptions[203][217] - Shareholder Activism Risk: The company's business could be negatively affected by shareholder activism, which could cause significant expense and hinder the execution of its business strategy[331] Unregistered Sales of Equity Securities and Use of Proceeds The company reports no unregistered sales of equity securities and details a share repurchase of 4,454,248 shares at $1.58 per share completed on June 1, 2023 - There were no unregistered sales of equity securities during the quarter[366] Issuer Purchases of Equity Securities (Q2 2023) | Period | Total Number of Shares Purchased | Average Price Paid per Share | | :--- | :--- | :--- | | April 2023 | — | $— | | May 2023 | — | $— | | June 2023 | 4,454,248 | $1.58 | | Total | 4,454,248 | $1.58 | Defaults Upon Senior Securities The company reports no defaults upon senior securities - None[370] Mine Safety Disclosures This item is not applicable to the company - Not applicable[371] Other Information On July 31, 2023, the company agreed to repurchase 1,587,302 shares from Cambrian BioPharma for approximately $2 million, including standstill and voting provisions, in a related-party transaction - On July 31, 2023, the company agreed to repurchase 1,587,302 shares of its common stock from Cambrian BioPharma at $1.26 per share for an aggregate price of approximately $2 million[372] - The agreement includes standstill restrictions and a voting agreement where Cambrian will vote its shares in line with the Board's recommendations until a specified time before the 2025 Annual Meeting[372] - This is a related-party transaction, as James Peyer, a director of Sensei Biotherapeutics, is the CEO of Cambrian[374] Exhibits This section lists key corporate documents and agreements filed as exhibits, including a significant purchase agreement and officer certifications - Lists key corporate documents and agreements filed as exhibits, including the Purchase Agreement with Apeiron Investment Group and officer certifications (302 and 906)[375] Signatures - The report was signed on August 3, 2023, by John Celebi, President and Chief Executive Officer, and Erin Colgan, Chief Financial Officer[379]