TScan Therapeutics(US:TCRX)2023-03-08 12:31PART I Business Overview TScan Therapeutics, Inc. is a clinical-stage biopharmaceutical company focused on developing T cell receptor-engineered T cell (TCR-T) therapies for cancer patients Company Overview and Approach TScan Therapeutics is a clinical-stage biopharmaceutical company developing TCR-T therapies for cancer, aiming to overcome limitations of existing T cell therapies through multiplexed TCR-T and enhanced T cell persistence - TScan's approach is based on identifying therapeutic T cell receptors (TCRs) from cancer patients with exceptional responses to immunotherapy and genetically engineering T cells to target and eliminate cancer2633 - The company aims to address shortcomings in the TCR field, such as low response rates and limited duration of response in solid tumors, by adding enhancements like CD8α/β and dominant-negative TGFβRII to improve persistence and overcome immunosuppression273247 - TCR-T therapy is believed to combine the benefits of TIL and CAR-T therapies while uniquely addressing their key limitations, offering a broader set of targetable antigens (intracellular and cell surface) and optimized T cell stimulation3359 Proprietary Platform Technologies TScan's proprietary platform consists of TargetScan for novel target discovery, ReceptorScan for identifying highly active TCRs, SafetyScan for de-risking candidates, ImmunoBank for diverse therapeutic TCRs, and T-Integrate for rapid, cost-effective manufacturing - TargetScan identifies natural targets of TCRs using an unbiased, genome-wide high-throughput screen, applicable across cancer, autoimmune, and infectious diseases3775 - SafetyScan screens TCR candidates to identify potential off-target interactions with proteins expressed in critical organs, aiming to reduce safety risks early in development3881 - ReceptorScan identifies and clones highly active TCRs against known or clinically validated targets, such as HA-1, HA-2, and MAGE-A13984 - The ImmunoBank is a diverse repository of therapeutic TCRs designed to enable customized multiplexed TCR-T therapy, addressing tumor heterogeneity and preventing resistance4072 - T-Integrate is a non-viral transposon/transposase system for rapid, cost-effective, and consistent manufacturing of TCR-Ts, with additional cargo capacity for T cell enhancements like CD8α/β and dominant-negative TGFβRII418790 Pipeline Programs and Strategy TScan is building the ImmunoBank to deliver customized multiplexed TCR-T therapies for cancer, advancing lead candidates for hematologic malignancies and solid tumors, and exploring applications beyond oncology through partnerships - The company's strategy includes leveraging its platform to build the ImmunoBank for diverse tumor types, advancing TSC-100/101, applying hematologic malignancy experience to solid tumors, maintaining internal T-Integrate manufacturing, developing next-generation allogeneic T cell engineering, and pursuing strategic partnerships4849 - TScan aims to transition to generating off-the-shelf, allogeneic T cells pre-engineered with TCRs for direct, customized administration to patients, and is exploring in vivo T cell engineering49 - A collaboration with Novartis involves identifying novel cancer antigens, with Novartis having options to license up to three targets for $10 million each, plus future milestones and royalties50 Background on T Cell Therapies T cell therapies, including checkpoint inhibitors, TIL, and CAR-T, harness cytotoxic T cells to fight cancer but have limitations, which TCR-T therapy is positioned to overcome by recognizing a broader range of antigens and providing optimized T cell stimulation - T cells are crucial for adaptive immunity against cancer, infection, and autoimmune disease, with cytotoxic CD8+ T cells recognizing unnatural proteins displayed on cell surfaces via MHCs5253 - Current T cell therapies like TIL and CAR-T have shown efficacy but are limited by specific T cells present in patients, surface-only targets, and potential toxicities, highlighting the need for broader T cell-based approaches5758 - TCR-T therapy requires an effective anti-cancer TCR, knowledge of the precise peptide antigen, and confirmation of no problematic off-targets, which are technically challenging to identify62 TScan's Therapeutic Approach TScan's approach involves discovering clinically relevant TCRs and targets from cancer patients with exceptional immunotherapy responses, de-risking them with SafetyScan, and populating the ImmunoBank for customized multiplexed TCR-T therapy - TScan isolates clinically active anti-cancer T cells from immunotherapy-responding patients, uses TargetScan to identify precise TCR targets, and then applies SafetyScan to ensure no problematic off-target effects, de-risking clinical development6566 - The ImmunoBank is populated with these validated TCRs, allowing for customized multiplexed TCR-T therapy where patient T cells are engineered with multiple TCRs matched to their tumor's targets and HLA type67 - The FDA's clearance of the T-Plex IND supports the simultaneous use of multiple TCRs, facilitating the rapid expansion of the ImmunoBank and the delivery of customized, multiplexed therapies67 Therapeutic Programs TScan's therapeutic programs are built on a three-pillar strategy: Hematologic Malignancies, Solid Tumors, and Strategic Partnerships, advancing lead candidates TSC-100/101 and the TSC-200 series - TScan's R&D strategy has three pillars: Hematologic Malignancies Program, Solid Tumor Program, and Strategic Partnerships and Collaborations91 Hematologic Malignancies Program The Hematologic Malignancies Program focuses on TSC-100 and TSC-101, allogeneic TCR-T therapy candidates designed to eliminate residual leukemia and prevent relapse after allogeneic HCT by targeting HA-1 and HA-2 antigens - TSC-100 and TSC-101 target HA-1 and HA-2 antigens, respectively, which are minor histocompatibility antigens (miHAs) highly expressed in blood cells, aiming to induce a specific graft-versus-leukemia (GvL) effect post-HCT9293101 - TSC-100 is designed for HA-1-positive, HLA-A02:01-positive patients receiving HCT from HA-1-negative or HLA-A02:01-negative donors, ensuring selective elimination of patient's native blood cells102105 - TSC-101 targets HA-2 in HA-2-positive, HLA-A02:01-positive patients, with HA-2 being highly prevalent (95% of individuals) and requiring HLA-A02:01 for expression109110 - Phase 1 clinical studies for TSC-100 and TSC-101 are multi-arm, controlled trials in ALL, AML, and MDS patients undergoing HCT following reduced-intensity conditioning (RIC), with initial safety and biomarker data expected mid-2023 and relapse prevention data in 2024116117119 - Potential market expansion opportunities include treating patients not in complete remission, those eligible for minimal intensity conditioning, and non-malignant diseases like sickle cell anemia, by reducing relapse rates and chemotherapy/radiation risks120121 Solid Tumor Program The Solid Tumor Program is developing a portfolio of autologous TCR-T therapy candidates (TSC-200 series) for multiplexed treatment of solid tumors, targeting both known and novel antigens, with initial INDs cleared for Phase 1 clinical trials - The TSC-200 series targets cancer-specific antigens in solid tumors, including known targets like HPV16 (TSC-200), PRAME (TSC-203), MAGE-A1 (TSC-204), and novel antigens (TSC-201, TSC-202, TSC-205)122137 - FDA cleared IND applications for T-Plex (primary IND for multiplexed TCR-T therapy) and two MAGE-A1 targeting TCRs (TSC-204-A0201 and TSC-204-C0702) in December 2022/January 2023, enabling Phase 1 clinical development122144147148 - The strategy involves analyzing patient tumors for target and HLA expression, then selecting up to three matched TCRs from the ImmunoBank for customized multiplexed TCR-T therapy123 - Initial Phase 1 clinical trials for solid tumors will evaluate safety and preliminary efficacy of multiplexed TCR-T therapy, with patient dosing expected in Q3 2023 and initial multiplex therapy data in H1 2024148155 Expansion Opportunities Beyond Oncology TScan's TargetScan technology is suitable for novel target discovery in therapeutic areas beyond oncology, such as autoimmune and infectious diseases, with the company pursuing strategic collaborations to maximize platform potential - TScan's TargetScan technology is well-suited for novel antigen discovery in infectious diseases (e.g., tuberculosis, influenza, HIV) and autoimmune diseases (e.g., rheumatoid arthritis, psoriasis, scleroderma) by identifying disease-relevant T cell targets157158 - The company plans to opportunistically pursue collaborations for applications outside oncology, leveraging its expanded CD8+ and CD4+ T cell target discovery capabilities50157 License and Collaboration Agreements TScan has key agreements including a collaboration with Novartis for novel cancer antigen identification, an exclusive patent license with Brigham and Women's Hospital (BWH) for TargetScan, and a non-exclusive license with Provincial Health Services Authority (PHSA) for T cell epitope identification - The Novartis Agreement (March 2020) provided $20.0 million upfront and $10.0 million in research funding, with Novartis having options to license up to three targets for $10.0 million each, plus potential milestones up to $230.0 million and tiered royalties159163 - An Exclusive Patent License Agreement with BWH (December 2018, amended April 2021) grants TScan exclusive worldwide rights to BWH's patent rights for identifying T cell epitopes, including MHC Class I and Class II fields, with potential milestone payments up to $12.72 million and tiered royalties166167 - A Non-Exclusive License Agreement with PHSA (October 2020) provides a non-exclusive, perpetual license to PHSA's patent rights for identifying T cell epitopes, involving an upfront fee of $500,000 and annual license fees170171 - A Royalty Agreement (June 2018) with a founder mandates a 1% royalty on net sales of any product covered by a pending or issued patent held by TScan as of the founder's service end date173 Manufacturing Capabilities TScan has established in-house cell therapy manufacturing capabilities using its T-Integrate non-viral transposon/transposase system for rapid, cost-effective, and consistent production of TCR-Ts, supporting Phase 1 and 2 clinical development - TScan utilizes an in-house 7,000 square-foot GMP manufacturing facility in Waltham, MA, with a projected capacity to support over 300 patients per year for Phase 1 and 2 clinical trials2742177 - The manufacturing process employs the T-Integrate non-viral transposon/transposase system, which uses Nanoplasmid™ and mRNA for efficient and reproducible genetic engineering of T cells, avoiding the complexities and costs of viral vectors274187175 - The T-Integrate system allows for additional genetic elements, such as CD8 and dominant-negative TGFβRII, to be included in the TCR-T construct to augment T cell function and persistence in the tumor microenvironment2790 Competitive Landscape TScan operates in a highly competitive biopharmaceutical industry, facing numerous companies in the TCR-T, CAR-T, and TIL spaces, with its proprietary platform technologies considered a competitive advantage in a rapidly evolving market - TScan faces intense competition from large biopharmaceutical companies, academic institutions, and smaller companies in the rapidly advancing cell therapy field, particularly in TCR-T, CAR-T, and TIL therapies178179 - Key competitive factors for TCR-T therapies include safety, potency, purity, tolerability, reliability, convenience of use, price, and reimbursement182385 - Immunocore's KIMMTRAK, the first FDA-approved TCR-based therapeutic, sets a precedent but is not directly competitive to TScan's current focus, though other TCR-mimic bispecifics could be180 Intellectual Property Strategy TScan relies on a combination of patent applications, trademarks, trade secrets, and license agreements to protect its proprietary technology and product candidates, with patents expected to expire between 2038 and 2043 if issued - TScan's intellectual property strategy combines patent applications, trademarks, trade secrets, and license agreements to protect its technology and product candidates183 - The patent portfolio includes pending applications for SARS-CoV-2 immunodominant antigens, anti-SARS-CoV-2 TCRs, anti-HA-1 TCRs (TSC-100), anti-HA-2 TCRs (TSC-101), anti-HPV TCRs (TSC-200), anti-PRAME TCRs (TSC-203), and anti-MAGE-A1 TCRs (TSC-204)185186187188 - Patent applications also cover platform technologies, including a phospholipid scrambling reporter-based T cell antigen screening platform and a TCR multiplexing platform185189190 - If issued, patents are expected to expire between 2038 and 2043, without considering potential patent term adjustments or extensions185186187188189190 Government Regulation and Approval Process TScan's products are regulated as biologics by the FDA, requiring a lengthy and complex BLA approval process involving preclinical studies, IND submission, and multi-phase clinical trials, with international regulations also imposing stringent requirements - FDA regulates TScan's products as biologics, requiring a Biologics License Application (BLA) approval process that includes preclinical studies (GLP), IND submission, and human clinical trials (GCP)194195197198200 - The BLA process involves extensive data submission, FDA review (10 months standard, 6 months priority), pre-approval inspections of manufacturing facilities (cGMP, cGTP), and potential advisory committee review197202207210211 - Expedited programs like Fast Track, Regenerative Medicine Advanced Therapy (RMAT), and Accelerated Approval are available for serious conditions with unmet medical needs, potentially shortening development/review times but not guaranteeing approval224225226227 - Orphan drug designation provides financial incentives and seven years of market exclusivity in the U.S. (ten years in the EU) for products treating rare diseases, though exclusivity can be limited or lost under certain conditions220273 - Post-marketing, approved products are subject to ongoing FDA regulation, including surveillance, adverse event reporting, cGMP compliance, and potential Risk Evaluation and Mitigation Strategies (REMS)215231434 - In the EU, marketing authorization requires approval from national competent authorities or the European Commission (centralized procedure), with specific rules for Advanced Therapy Medicinal Products (ATMPs) and similar data/market exclusivity periods266267272 Human Capital and Workforce As of February 28, 2023, TScan Therapeutics had 137 full-time and 1 part-time employee, with 39 holding Ph.D. or M.D. degrees, emphasizing attracting and retaining diverse talent through competitive compensation and benefits - As of February 28, 2023, TScan had 137 full-time and 1 part-time employee, with 39 holding Ph.D. or M.D. degrees281 - 105 employees are engaged in research and development activities, while 32 are in finance, business development, and general/administrative functions281 - The company's human capital objectives include identifying, recruiting, retaining, motivating, and integrating employees through competitive compensation, benefits, and equity incentive plans286 Corporate Facilities TScan's corporate headquarters are in Waltham, Massachusetts, comprising a 25,472 square-foot laboratory space and a 113,487 square-foot office and laboratory space, deemed adequate for immediate needs - TScan's corporate headquarters are located at 830 Winter Street, Waltham, Massachusetts, with a 25,472 sq ft laboratory space (lease expires Sept 2024)287590 - The company also leases a 113,487 sq ft office and laboratory facility at 880 Winter Street, with a lease termination date of December 2032287590 Legal Proceedings TScan Therapeutics is not currently involved in any material legal proceedings but acknowledges potential involvement in ordinary course litigation that could adversely impact its business - TScan Therapeutics is not currently a party to any material legal proceedings289591 - The company may become involved in ordinary course legal proceedings, which could have an adverse impact due to defense/settlement costs, diversion of management resources, and negative publicity289591 Risk Factors TScan's business is subject to numerous significant risks, including substantial historical and projected losses, dependence on its novel TCR-T platform, limited operating history, and the need for significant additional funding - TScan has incurred significant net losses since inception ($158.4 million accumulated deficit as of Dec 31, 2022) and expects to continue incurring losses, requiring substantial additional funding to complete product development and commercialization295296305716 - The company's success is highly dependent on its proprietary TCR-T platform, which represents a novel approach to cancer treatment, creating challenges in development, regulatory approval, and commercialization298314 - Clinical trials are lengthy, expensive, and uncertain, with high attrition rates. Failures in demonstrating safety, potency, or purity, or encountering undesirable side effects, could prevent or delay regulatory approval325326350 - Manufacturing TCR-T candidates is complex and highly regulated, with risks including logistical issues, supply chain disruptions, contamination, and difficulties in scaling production, which could delay clinical trials or commercialization393394397399 - Obtaining and maintaining patent protection is crucial but uncertain, with risks of challenges to validity, enforceability, or scope, and potential infringement claims from third parties469470476504 Risks Related to Business and Industry TScan faces significant business and industry risks, including a history of substantial losses, dependence on its novel TCR-T platform, and the need for substantial additional funding for development and commercialization Net Losses (2020-2022) | Year Ended December 31, | Net Loss (Millions USD) | | :---------------------- | :---------------------- | | 2020 | $26.1 | | 2021 | $48.6 | | 2022 | $66.2 | - As of December 31, 2022, TScan had an accumulated deficit of $158.4 million296 - The company's existing cash and cash equivalents are projected to fund operations only into Q2 2024, necessitating substantial additional funding for regulatory approval and commercialization306632 - Raising additional capital may dilute existing stockholders, restrict operations through debt covenants, or require relinquishing intellectual property rights on unfavorable terms308 - The Loan and Security Agreement with K2HV (Sept 2022) provides up to $60 million in convertible term loans, with $30 million funded, but imposes restrictions on operating and financial flexibility and requires maintaining minimum unrestricted cash312 Risks Related to Product Candidate Development Developing TScan's novel TCR-T product candidates presents significant challenges, including educating medical personnel, managing potential side effects, sourcing clinical supplies, scaling manufacturing, and navigating uncertain clinical trial outcomes - Challenges in TCR-T development include educating medical personnel on administration and side effects (CRS, GvHD, neurotoxicity, autoimmunity), sourcing supplies, manufacturing efficiently, and managing the supply chain315 - Preclinical studies and early clinical trial results may not be predictive of later-stage outcomes, and a high rate of attrition is typical in biopharmaceutical development326 - Clinical trials can be delayed or terminated due to regulatory disagreements, difficulties in patient recruitment (especially for specific genetic criteria or due to COVID-19), site issues, or safety concerns329330360 - Product candidates may cause undesirable side effects, including increased GvHD in post-HCT settings, autoimmunity in solid tumor patients, or immunogenicity, potentially halting clinical development or limiting commercial potential350351352353354 - The market opportunities for TScan's product candidates may be relatively small, initially limited to second or third-line therapies for patients who have failed prior treatments, and estimates of target patient populations may be inaccurate370371 Risks Related to Manufacturing Manufacturing TScan's product candidates is complex and highly regulated, with inherent risks including product loss, supply chain interruptions, contamination, and challenges in scaling up for commercialization, despite expanding internal capacity - Manufacturing TCR-T product candidates is complex, involving multiple steps from cell harvesting to infusion, leading to higher costs and potential unreliability compared to traditional processes394395 - The manufacturing process is susceptible to product loss or failure due to logistical issues, variability in patient white blood cells, supply chain interruptions, contamination, and equipment/operator error397 - TScan relies on single or sole-source suppliers for many critical raw materials and reagents (e.g., cell culture media, cryopreservation buffer, cell processing equipment), making it vulnerable to supply disruptions396405546 - Despite expanding internal manufacturing capacity for Phase 1/2 trials, TScan lacks direct company experience in managing such facilities, posing risks of cost-overruns, delays, equipment failures, and difficulties in maintaining regulatory compliance401402 Risks Related to Government Regulation TScan faces extensive and evolving government regulations for its biologic products, including lengthy FDA approval processes and international marketing authorizations, with risks of delays, failure to obtain approval, and challenges in securing adequate reimbursement - The FDA regulatory approval process for biologics is lengthy, complex, and uncertain, with potential for significant delays in clinical development and approval due to various factors, including manufacturing process approval and changes in requirements407408409 - Failure to obtain or maintain regulatory approval in one jurisdiction does not guarantee success in others, and international approval processes vary, potentially requiring additional studies or facing price controls428429 - Post-approval, products are subject to ongoing regulatory obligations, including surveillance, adverse event reporting, and cGMP/cGTP compliance, with non-compliance leading to sanctions like product recalls, fines, or withdrawal of approval434 - Sales depend on adequate coverage and reimbursement from third-party payors (government and commercial), which is uncertain for new products and subject to cost-containment efforts and pricing regulations436437438439 - TScan is subject to anti-kickback, false claims, and data privacy laws (HIPAA, GDPR, CCPA), with non-compliance risking significant criminal/civil penalties, exclusion from healthcare programs, and reputational harm449456460 Risks Related to Intellectual Property TScan's competitive position relies heavily on obtaining and maintaining robust patent protection for its technology and product candidates, but patent positions in life sciences are uncertain, expensive, and prone to challenges, invalidation, or narrowing by third parties - TScan's success depends on obtaining and maintaining broad patent protection for its technology and product candidates, but the early stage of its patent portfolio and the complexity of patent law create significant uncertainty469470471474 - Issued patents may be challenged, narrowed, or invalidated by third parties through litigation or administrative proceedings, potentially allowing competitors to commercialize similar products without payment476477517 - Reliance on trade secret protection is critical for unpatented know-how, but risks of unauthorized disclosure or independent development by competitors could harm TScan's competitive advantage503 - Third-party claims of intellectual property infringement or misappropriation are a substantial risk, potentially leading to expensive litigation, substantial damages, injunctions, or the need for costly licenses504506507 - In-licensed patent rights may be subject to third-party reservations, including government march-in rights, which could limit TScan's ability to exclude competitors or force licensing528 Risks Related to Reliance on Third Parties TScan heavily relies on third parties for clinical trials, manufacturing, and specialty materials, facing risks of delays, quality issues, supply chain disruptions, and uncommitted resources from collaborators - TScan relies on independent investigators, CROs, and CMOs for preclinical studies and clinical trials, but has limited direct control over their activities, risking delays or compromised data if they fail to comply with protocols or regulations529530 - Anticipated reliance on a limited number of third-party manufacturers for registrational trials exposes TScan to risks like inability to identify suitable manufacturers, manufacturing difficulties, and non-compliance with cGMP/cGTP539540541 - The company's product candidates require specialty materials, some from single or limited suppliers, creating vulnerability to supply disruptions that could delay clinical or commercial manufacturing545546 - Collaborations and strategic alliances carry risks, including partners not committing sufficient resources, developing competing products, or terminating agreements, which could delay development or require additional capital535537538 Risks Related to Employee Matters and Managing Growth TScan's success depends on attracting and retaining qualified personnel and effectively managing anticipated organizational growth, with product liability lawsuits posing an inherent risk of substantial liabilities and reputational damage - TScan is highly dependent on its key managerial, scientific, and medical personnel, and intense competition for talent in the biopharmaceutical industry may limit its ability to attract and retain qualified individuals549550551 - Expected organizational growth will impose significant responsibilities on management, requiring effective management of internal development, compliance, and outsourced activities552553 - Product liability lawsuits are an inherent risk, potentially leading to substantial liabilities, decreased demand, reputational harm, and commercialization limitations, with insurance coverage possibly being insufficient555556 General Risk Factors TScan faces general business risks including potential adverse effects from changes in tax legislation, increased operating costs due to inflation, securities class action litigation, and business disruptions from natural disasters or epidemics - Changes in tax legislation could adversely affect TScan's business and financial condition, potentially increasing tax liabilities586 - Rising inflation rates may lead to increased operating costs, reduced liquidity, and difficulties in accessing credit, impacting the company's financial health587 - The company is susceptible to securities class action litigation following stock price declines, which could incur substantial costs and divert management attention588 - Business disruptions from natural disasters, power shortages, or epidemics could seriously harm future revenue and financial condition589 Unresolved Staff Comments This section indicates that there are no unresolved staff comments from the SEC regarding the company's filings Properties TScan's corporate headquarters are located in Waltham, Massachusetts, consisting of a 25,472 square-foot laboratory space and a 113,487 square-foot office and laboratory space, deemed sufficient for its current and foreseeable needs - TScan's corporate headquarters are at 830 Winter Street, Waltham, Massachusetts, with a 25,472 sq ft laboratory space (lease expires Sept 2024)590 - An additional 113,487 sq ft office and laboratory facility is leased at 880 Winter Street, with a lease termination date of December 2032590 Legal Proceedings TScan Therapeutics is not currently involved in any material legal proceedings but acknowledges potential involvement in ordinary course litigation that could adversely impact its business - TScan Therapeutics is not currently a party to any material legal proceedings591 - The company may become involved in ordinary course legal proceedings, which could have an adverse impact due to defense/settlement costs, diversion of management resources, and negative publicity591 Mine Safety Disclosures This item is not applicable to TScan Therapeutics PART II Market for Common Equity, Stockholder Matters, and Equity Security Purchases TScan Therapeutics' common stock has been publicly traded on The Nasdaq Global Market under the symbol "TCRX" since July 16, 2021, with no cash dividends declared and future earnings retained for business operations - TScan's common stock (TCRX) began trading on The Nasdaq Global Market on July 16, 2021595 - As of February 28, 2023, there were over 100 holders of record for the common stock596 - The company has not declared or paid cash dividends since inception and plans to retain future earnings for business operations597 - The July 2021 IPO generated $89.6 million in net proceeds from the sale of 6,666,667 shares of voting common stock at $15.00 per share598 [Reserved] This item is reserved and contains no information Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides an overview of TScan Therapeutics' financial condition and results of operations, highlighting its status as a clinical-stage biopharmaceutical company with no product sales revenue and a need for additional funding - TScan Therapeutics is a clinical-stage biopharmaceutical company focused on TCR-T therapies for cancer, with no product sales revenue to date601609 - Operations have been primarily funded by convertible preferred stock sales ($159.4 million), IPO proceeds ($89.6 million net), and revenue from a collaboration agreement with Novartis ($20.0 million upfront, $10.0 million research funding)604605608 - The company incurred net losses of $66.2 million in 2022 and $48.6 million in 2021, with an accumulated deficit of $158.4 million as of December 31, 2022296626704716 - Existing cash and cash equivalents are expected to fund operations into Q2 2024, but substantial additional funding will be required for full development and commercialization306632 Overview TScan Therapeutics is a clinical-stage biopharmaceutical company developing TCR-T therapies for cancer, utilizing proprietary platforms to build an ImmunoBank and advancing lead candidates for hematologic malignancies and solid tumors - TScan is a clinical-stage biopharmaceutical company focused on developing TCR-T therapies for cancer, using proprietary platforms like TargetScan and ReceptorScan to build an ImmunoBank601 - Lead candidates TSC-100 and TSC-101 are in Phase 1 for hematologic malignancies, and the TSC-200 series for solid tumors has multiple INDs cleared, including T-Plex for multiplexed therapy602603 - Funding sources include $159.4 million from convertible preferred stock, $89.6 million net from the July 2021 IPO, and $30.0 million from a debt facility, alongside a Novartis collaboration604605 Impact of COVID-19 The COVID-19 pandemic has caused significant disruption to TScan's operations and those of its vendors, potentially increasing development costs and negatively impacting data quality, quantity, timing, and regulatory usability - The COVID-19 pandemic has caused significant disruption, potentially increasing development costs and negatively impacting data quality, quantity, timing, and regulatory usability606607 - TScan implemented flexible work-at-home policies to safeguard employees, but the financial impact and duration of disruptions remain uncertain607 Initial Public Offering TScan completed its IPO on July 16, 2021, issuing 6,666,667 shares of voting common stock at $15.00 per share, generating $89.6 million in net proceeds and converting all outstanding convertible preferred stock - TScan completed its IPO on July 16, 2021, selling 6,666,667 shares of voting common stock at $15.00 per share608 - The IPO generated $89.6 million in net proceeds after deducting underwriting discounts, commissions, and offering costs608 - Upon IPO closing, all convertible preferred stock converted into 15,616,272 shares of common stock, including 5,143,134 non-voting shares608 Components of Results of Operations TScan's revenue is from collaboration and licensing agreements, with operating expenses primarily research and development (R&D) and general and administrative (G&A) costs, both expected to increase substantially - Revenue is currently derived from collaboration and licensing agreements, with no product sales expected in the near future609 - Research and development (R&D) expenses, including personnel, materials, manufacturing, and clinical studies, are expensed as incurred and are expected to increase substantially613615 - General and administrative (G&A) expenses, including personnel, legal, and professional fees, are increasing due to business expansion and public company operating costs619620 - As of December 31, 2022, TScan had federal net operating loss carryforwards of $86.2 million and federal R&D tax credit carryforwards of $6.9 million, fully reserved due to uncertainty of benefit realization624625 Results of Operations (Years Ended December 31, 2022 and 2021) For the year ended December 31, 2022, TScan reported a net loss of $66.2 million, an increase from $48.6 million in 2021, driven by higher operating expenses despite increased collaboration revenue Consolidated Statements of Operations (in thousands) | Metric | Year Ended Dec 31, 2022 (in thousands) | Year Ended Dec 31, 2021 (in thousands) | Change (YoY) (in thousands) | | :-------------------------- | :------------------------------------- | :------------------------------------- | :-------------------------- | | Collaboration and license revenue | $13,535 | $10,141 | $3,394 | | Research and development | $59,819 | $44,954 | $14,865 | | General and administrative | $20,352 | $13,828 | $6,524 | | Total operating expenses | $80,171 | $58,782 | $21,389 | | Loss from operations | $(66,636) | $(48,641) | $(17,995) | | Interest and other income, net | $1,591 | $16 | $1,575 | | Interest expense | $(1,176) | $- | $(1,176) | | Total other income | $415 | $16 | $399 | | Net loss | $(66,221) | $(48,625) | $(17,596) | - Revenue increased by $3.4 million (33.5%) YoY, primarily due to the timing of research activities under the Novartis Agreement627 - Research and development expenses increased by $14.9 million (33.1%) YoY, driven by a $7.0 million increase in personnel, $4.4 million in facility-related expenses, $1.9 million in clinical studies, and $1.0 million in laboratory supplies628 - General and administrative expenses increased by $6.5 million (47.2%) YoY, mainly due to a $4.5 million increase in personnel (including $1.3 million in stock-based compensation) and $2.0 million in insurance, depreciation, and facilities costs629 Liquidity and Capital Resources TScan's liquidity is primarily from equity sales, IPO proceeds, and a $30.0 million convertible debt facility, with existing capital projected to fund operations into Q2 2024, necessitating substantial additional funding for future development - As of December 31, 2022, TScan had $120.0 million in cash and cash equivalents and $29.3 million in outstanding convertible debt under the Loan Agreement with K2HV630 - The company's existing cash and cash equivalents are estimated to fund operating expenses and capital expenditure requirements into Q2 2024632 - Future funding requirements are substantial and depend on the scope, progress, and costs of R&D, clinical trials, regulatory review, manufacturing expansion, and commercialization activities631636 - Additional financing may involve equity offerings (dilution), debt financings (restrictive covenants), or collaborations (relinquishing rights to technologies or revenue streams)633638 Cash Flows (Years Ended December 31, 2022 and 2021) In 2022, net cash used in operating activities increased to $66.5 million from $48.7 million in 2021, while net cash provided by financing activities significantly decreased to $29.4 million from $189.7 million in 2021 Summary of Cash Flows (in thousands) | Cash Flow Activity | Year Ended Dec 31, 2022 (in thousands) | Year Ended Dec 31, 2021 (in thousands) | Change (YoY) (in thousands) | | :------------------------------ | :------------------------------------- | :------------------------------------- | :-------------------------- | | Net cash used in operating activities | $(66,503) | $(48,677) | $(17,826) | | Net cash used in investing activities | $(4,225) | $(9,941) | $5,716 | | Net cash provided by financing activities | $29,356 | $189,668 | $(160,312) | | Net increase (decrease) in cash, cash equivalents and restricted cash | $(41,372) | $131,050 | $(172,422) | - Net cash used in operating activities increased by $17.8 million YoY, driven by the higher net loss and a $9.0 million decrease in deferred revenue641 - Net cash provided by financing activities decreased by $160.3 million YoY, reflecting $29.4 million from convertible debt in 2022 versus $189.7 million from preferred stock and IPO in 2021644645 Contractual Obligations TScan's contractual obligations include those related to its Loan and Security Agreement with K2HV, involving interest-only payments followed by amortized installments, and its facility lease agreements - Contractual obligations include those related to the Loan and Security Agreement with K2HV and facility lease agreements646 - The K2HV Loan Agreement (Sept 2022) provides up to $60 million in convertible term loans, with $30 million drawn, subject to interest-only payments until Sept 2024 (extendable to Sept 2025) and amortized payments until Sept 2026 maturity788789 Critical Accounting Policies and Estimates TScan's critical accounting policies involve significant judgment and estimates, particularly for revenue recognition, accrued research and development expenses, and the full valuation allowance on deferred tax assets due to historical losses - Revenue recognition under ASC 606 requires significant judgment in identifying performance obligations, determining transaction price (including variable consideration), and allocating revenue based on estimated standalone selling prices650651653732734 - Accrued research and development expenses are estimated based on the progress of studies, invoices, and contracted costs, with potential for adjustments if actual timing or effort varies655730 - Patent-related costs for filing and prosecuting applications are expensed as incurred due to uncertainty of recovery731 - Deferred tax assets are fully reserved with a valuation allowance due to recurring losses and uncertainty of realizing future tax benefits625742770 Quantitative and Qualitative Data About Market Risk TScan Therapeutics, as a smaller reporting company, is not required to provide quantitative and qualitative disclosures about market risk Financial Statements and Supplementary Data This section indicates that the required financial statements are appended to the Annual Report on Form 10-K, with an index provided in Item 15 Changes in and Disagreements with Accountants on Accounting and Financial Disclosure There have been no changes in or disagreements with accountants on accounting and financial disclosure Controls and Procedures TScan's management assessed the effectiveness of disclosure controls and internal controls over financial reporting as effective as of December 31, 2022, with the company exempt from an independent attestation report as an "emerging growth company" - Management concluded that TScan's disclosure controls and procedures were effective at the reasonable assurance level as of December 31, 2022663 - Internal controls over financial reporting were also assessed as effective by management as of December 31, 2022, providing reasonable assurance regarding financial reporting reliability666 - As an "emerging growth company," TScan is exempt from the independent registered public accounting firm's attestation report on internal control over financial reporting under Section 404 of the Sarbanes-Oxley Act667 Other Information This item states that there is no other information to report Disclosures Regarding Foreign Jurisdictions that Prevent Inspections This item is not applicable to TScan Therapeutics PART III Directors, Executive Officers and Corporate Governance Information regarding TScan's directors, executive officers, and corporate governance is incorporated by reference from the definitive proxy statement for the 2023 Annual Meeting of Stockholders - Information on directors, executive officers, and corporate governance is incorporated by reference from the 2023 Annual Meeting of Stockholders proxy statement672 - TScan has adopted a Code of Business Conduct and Ethics applicable to all directors, officers, and employees673 Executive Compensation Information regarding executive compensation is incorporated by reference from the definitive proxy statement for the 2023 Annual Meeting of Stockholders - Executive compensation information is incorporated by reference from the 2023 Annual Meeting of Stockholders proxy statement674 Security Ownership and Related Stockholder Matters Information regarding security ownership of certain beneficial owners, management, and related stockholder matters is incorporated by reference from the definitive proxy statement for the 2023 Annual Meeting of Stockholders - Information on security ownership and related stockholder matters is incorporated by reference from the 2023 Annual Meeting of Stockholders proxy statement675 Certain Relationships and Related Transactions, and Director Independence Information regarding certain relationships, related transactions, and director independence is incorporated by reference from the definitive proxy statement for the 2023 Annual Meeting of Stockholders - Information on certain relationships, related transactions, and director independence is incorporated by reference from the 2023 Annual Meeting of Stockholders proxy statement676 Principal Accounting Fees and Services Information regarding principal accounting fees and services is incorporated by reference from the definitive proxy statement for the 2023 Annual Meeting of Stockholders - Information on principal accounting fees and services is incorporated by reference from the 2023 Annual Meeting of Stockholders proxy statement677 PART IV Exhibits, Financial Statement Schedules This section lists all exhibits and financial statement schedules filed as part of the Annual Report on Form 10-K, including various corporate documents, equity incentive plans, license agreements, employment agreements, and certifications - The section provides a comprehensive list of exhibits, including corporate documents (e.g., Certificate of Incorporation, Bylaws), equity incentive plans (2018 Stock Option Plan, 2021 Equity Incentive Plan, 2021 ESPP), and key agreements680 - Key agreements listed include the Fourth Amended and Restated Investors' Rights Agreement, Registration Rights Agreement, Amended and Restated Nominating Agreement, various Lease agreements, and Collaboration and License Agreements with Novartis, BWH, and PHSA680 - It also includes employment agreements for executive officers, a Management Cash Incentive Plan, a Royalty Agreement, and certifications (e.g., SOX 302 and 906)681 Form 10-K Summary This item indicates that no Form 10-K Summary is provided