Tenaya Therapeutics(TNYA) - 2023 Q2 - Quarterly Report

PART I—FINANCIAL INFORMATION This section presents the unaudited financial statements, management's discussion and analysis, market risk disclosures, and controls and procedures for the company Item 1. Financial Statements (Unaudited) This section presents the unaudited condensed financial statements for Tenaya Therapeutics, Inc. as of June 30, 2023, including balance sheets, statements of operations, stockholders' equity, and cash flows, reporting a $65.0 million net loss and $151.6 million in cash and equivalents Condensed Balance Sheet Summary (in thousands) | Account | June 30, 2023 | December 31, 2022 | | :--- | :--- | :--- | | Total Current Assets | $138,906 | $193,754 | | Cash and cash equivalents | $75,565 | $95,272 | | Total Assets | $220,754 | $278,945 | | Total Current Liabilities | $20,917 | $24,248 | | Total Liabilities | $30,814 | $35,569 | | Total Stockholders' Equity | $189,940 | $243,376 | Condensed Statement of Operations Summary (in thousands) | Metric | Three Months Ended June 30, 2023 | Three Months Ended June 30, 2022 | Six Months Ended June 30, 2023 | Six Months Ended June 30, 2022 | | :--- | :--- | :--- | :--- | :--- | | Research and development | $26,477 | $20,876 | $52,082 | $45,031 | | General and administrative | $8,627 | $7,743 | $16,745 | $14,742 | | Loss from operations | $(35,104) | $(28,619) | $(68,827) | $(59,773) | | Net loss | $(33,269) | $(28,397) | $(65,006) | $(59,453) | Condensed Statement of Cash Flows Summary (Six Months Ended June 30, in thousands) | Cash Flow Activity | 2023 | 2022 | | :--- | :--- | :--- | | Net cash used in operating activities | $(56,510) | $(54,186) | | Net cash provided by investing activities | $33,146 | $46,644 | | Net cash provided by financing activities | $3,678 | $275 | | Net change in cash, cash equivalents and restricted cash | $(19,686) | $(7,267) | - As of June 30, 2023, the company had an accumulated deficit of $344.2 million and held $151.6 million in cash, cash equivalents, and marketable securities; management believes these funds are sufficient to support operations for at least the next twelve months[28][29] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section analyzes the company's financial condition and operations, detailing its clinical-stage biotechnology business, lead product candidates, increased operating expenses, and liquidity, confirming sufficient funds for the next twelve months - Tenaya is a clinical-stage biotechnology company focused on developing curative therapies for heart disease, with a pipeline including gene therapies and small molecules[73] - Lead product candidates include: TN-201 (gene therapy for HCM, Phase 1b trial expected Q3 2023, data 2024); TN-301 (small molecule for HFpEF, Phase 1 topline data Q4 2023); TN-401 (gene therapy for ARVC, IND submission expected H2 2023)[75][76][78][79] - The company has established an in-house cGMP manufacturing facility, the Genetic Medicines Manufacturing Center, to support its portfolio of gene therapy and cellular regeneration candidates[82] - As of June 30, 2023, the company had $151.6 million in cash, cash equivalents, and marketable securities, believed sufficient to fund operations for at least the next twelve months[98][101] Results of Operations Operating expenses and net loss increased for both three and six-month periods ended June 30, 2023, primarily driven by higher research and development and general and administrative expenses Comparison of Three Months Ended June 30, 2023 and 2022 (in thousands) | Metric | 2023 | 2022 | $ Change | % Change | | :--- | :--- | :--- | :--- | :--- | | Research and development | $26,477 | $20,876 | $5,601 | 27% | | General and administrative | $8,627 | $7,743 | $884 | 11% | | Total operating expenses | $35,104 | $28,619 | $6,485 | 23% | | Net loss | $(33,269) | $(28,397) | $(4,872) | 17% | Comparison of Six Months Ended June 30, 2023 and 2022 (in thousands) | Metric | 2023 | 2022 | $ Change | % Change | | :--- | :--- | :--- | :--- | :--- | | Research and development | $52,082 | $45,031 | $7,051 | 16% | | General and administrative | $16,745 | $14,742 | $2,003 | 14% | | Total operating expenses | $68,827 | $59,773 | $9,054 | 15% | | Net loss | $(65,006) | $(59,453) | $(5,553) | 9% | - The increase in R&D expenses for the six months ended June 30, 2023, was primarily driven by a $5.7 million increase in employee-related costs (higher stock-based compensation and 2022 tax credits) and a $2.0 million increase in facility and laboratory costs[94][97] Liquidity and Capital Resources The company primarily funds operations through equity sales, holding $151.6 million in cash and equivalents as of June 30, 2023, with recent capital raises including a $76.9 million offering and $3.9 million from an ATM offering, sufficient for the next twelve months but requiring future funding - The company completed an underwritten public offering in November 2022, receiving total net proceeds of $76.9 million[99] - Through its "at-the-market" (ATM) equity offering, the company sold 535,767 shares during Q2 2023, resulting in proceeds of $3.9 million, net of commissions[100] - Net cash used in operating activities was $56.5 million for the first six months of 2023, compared to $54.2 million for the same period in 2022, primarily driven by the net loss[105][106][107] Item 3. Quantitative and Qualitative Disclosures About Market Risk As a smaller reporting company, the company is exempt from providing quantitative and qualitative disclosures about market risk - As a smaller reporting company, Tenaya Therapeutics is not required to provide quantitative and qualitative disclosures about market risk[119] Item 4. Controls and Procedures Management concluded that disclosure controls and procedures were effective as of June 30, 2023, with no material changes in internal control over financial reporting during the quarter - Management concluded that as of the end of the period, the company's disclosure controls and procedures are effective to provide reasonable assurance that required information is recorded, processed, and reported in a timely manner[120] - There were no changes in internal control over financial reporting during the quarter ended June 30, 2023, that have materially affected, or are reasonably likely to materially affect, internal controls[121] PART II—OTHER INFORMATION This section covers legal proceedings, risk factors, unregistered sales of equity securities, and other miscellaneous information including exhibits Item 1. Legal Proceedings The company is not currently involved in any material legal proceedings expected to adversely affect its business - The company is not currently involved in any material legal proceedings[125] Item 1A. Risk Factors This section outlines significant investment risks, including the company's early development stage, history of losses, need for capital, uncertain drug development, manufacturing challenges, competition, and intellectual property concerns - The company is in the early stages of development with a limited operating history, has only completed one clinical trial, and has no products approved for commercial sale[127][128] - The company has a history of significant net losses ($344.2 million accumulated deficit as of June 30, 2023) and expects to continue incurring losses for the foreseeable future[127][131] - Substantial additional capital is required to finance operations; failure to raise capital when needed could force the company to delay, reduce, or eliminate research and development programs[127][137] - Drug development is a lengthy, expensive, and uncertain process; preclinical and clinical trials may not demonstrate the required safety and efficacy, and early positive results may not be predictive of future success[127][164] - The company faces risks related to manufacturing its complex gene therapy products, both in-house and through third parties, and must comply with significant government regulations (cGMP)[127][198][203] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds No unregistered equity sales occurred during the period, and the $188.5 million net proceeds from the August 2021 IPO remain unchanged in their planned use - There were no sales of unregistered securities in the period[386] - The company's IPO on August 3, 2021, generated net proceeds of $188.5 million; there has been no material change in the planned use of these proceeds[387] Item 3. Defaults Upon Senior Securities This section is not applicable to the company Item 4. Mine Safety Disclosures This section is not applicable to the company Item 5. Other Information No other information is reported in this section Item 6. Exhibits This section lists exhibits filed with the Form 10-Q, including bylaws, compensation plans, officer certifications, and XBRL data files Signatures This section contains the required signatures for the filing