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Tenaya Therapeutics(TNYA) - 2021 Q3 - Quarterly Report

PART I—FINANCIAL INFORMATION Financial Statements The company's unaudited financials show a significant asset increase to $331.8 million post-IPO, alongside a growing net loss of $46.6 million for the nine months ended September 30, 2021 Condensed Balance Sheets Total assets grew to $331.8 million and stockholders' equity turned positive to $303.7 million by September 30, 2021, driven by IPO proceeds and preferred stock conversion Condensed Balance Sheet Data (in thousands) | | September 30, 2021 (Unaudited) | December 31, 2020 | | :--- | :--- | :--- | | Total current assets | $284,822 | $129,964 | | Total assets | $331,794 | $148,161 | | Total current liabilities | $13,692 | $5,041 | | Total liabilities | $28,095 | $8,722 | | Total stockholders' equity (deficit) | $303,699 | $(81,315) | Condensed Statements of Operations and Comprehensive Loss Net losses increased to $18.3 million for Q3 2021 and $46.6 million for the first nine months, driven by higher R&D and G&A expenses Operating Results (in thousands) | | Three Months Ended Sep 30, | Nine Months Ended Sep 30, | | :--- | :--- | :--- | | | 2021 | 2020 | 2021 | 2020 | | Research and development | $12,944 | $8,480 | $33,440 | $22,735 | | General and administrative | $5,356 | $1,972 | $13,202 | $5,855 | | Total operating expenses | $18,300 | $10,452 | $46,642 | $28,590 | | Loss from operations | $(18,300) | $(10,452) | $(46,642) | $(28,590) | | Net loss | $(18,262) | $(10,295) | $(46,570) | $(28,077) | | Net loss per share | $(0.68) | $(10.29) | $(4.75) | $(29.65) | Condensed Statements of Convertible Preferred Stock and Stockholders' Equity (Deficit) The company's equity structure was transformed by the IPO, which converted all preferred stock and added substantial paid-in capital - Upon completion of the IPO, all 26,102,278 shares of convertible preferred stock were converted into common stock23 - The company issued 13,800,000 shares of common stock in its IPO, resulting in a significant increase in additional paid-in capital23 Condensed Statements of Cash Flows Net cash used in operations and investing was offset by $209.0 million in financing activities, primarily from the IPO and Series C stock issuance Cash Flow Summary (in thousands) | | Nine Months Ended September 30, | | :--- | :--- | :--- | | | 2021 | 2020 | | Net cash used in operating activities | $(44,465) | $(25,046) | | Net cash (used in) provided by investing activities | $(175,984) | $1,167 | | Net cash provided by financing activities | $208,991 | $61,344 | | Net change in cash, cash equivalents and restricted cash | $(11,458) | $37,465 | | Cash, cash equivalents and restricted cash at end of period | $117,624 | $61,736 | Notes to Unaudited Condensed Financial Statements The notes detail the company's business, the $188.5 million net proceeds from its August 2021 IPO, and management's assertion of sufficient liquidity for the next year - The company is a preclinical stage biotechnology company focused on therapies for heart disease, advancing candidates from gene therapy, cellular regeneration, and precision medicine platforms33 - On August 3, 2021, the company completed its IPO, issuing 13.8 million shares of common stock and receiving net proceeds of $188.5 million35 - Management believes that its cash, cash equivalents, and marketable securities of $280.5 million as of September 30, 2021, are sufficient to fund operations for at least the next twelve months3637 Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses its preclinical programs, increased operating expenses, and strengthened financial position following the $188.5 million IPO - The company is a preclinical biotechnology firm focused on curative therapies for heart disease with a pipeline including gene therapies and small molecules101 - Key pipeline milestones for 2022 include submitting an IND or CTA for gene therapy candidate TN-201 and an IND for small molecule inhibitor TYA-11631103104 - The company completed its IPO on August 3, 2021, raising net proceeds of $188.5 million105 Results of Operations Net losses widened significantly in the three and nine months ended September 30, 2021, due to increased R&D and G&A spending Comparison of Operating Results (in thousands) | | Three Months Ended Sep 30, | Nine Months Ended Sep 30, | | :--- | :--- | :--- | | | 2021 | 2020 | 2021 | 2020 | | Research and development | $12,944 | $8,480 | $33,440 | $22,735 | | General and administrative | $5,356 | $1,972 | $13,202 | $5,855 | | Net loss | $(18,262) | $(10,295) | $(46,570) | $(28,077) | - The increase in R&D expenses was driven by higher facility and laboratory costs (+$1.4M in Q3, +$5.0M in 9M), personnel-related costs (+$1.9M in Q3, +$3.9M in 9M), and external research costs (+$1.2M in Q3, +$1.8M in 9M)118119125130 - General and administrative expenses rose due to increased personnel costs, professional services for the IPO, and higher facility costs120125 Liquidity and Capital Resources The company holds $280.5 million in cash and securities post-IPO, sufficient for the next twelve months, but will require substantial future funding - As of September 30, 2021, the company had cash, cash equivalents, and investments in marketable securities of $280.5 million129 - Management believes existing cash will be sufficient to fund operations and capital expenditure needs for at least the next twelve months132 - The company will require substantial additional funding to complete the development and commercialization of its product candidates133 Quantitative and Qualitative Disclosures About Market Risk As a smaller reporting company, this section is not applicable - As a smaller reporting company, Tenaya Therapeutics is not required to provide quantitative and qualitative disclosures about market risk151 Controls and Procedures Management concluded that disclosure controls and procedures were effective as of September 30, 2021, with no material changes to internal controls - The CEO and CFO concluded that as of September 30, 2021, the company's disclosure controls and procedures were effective152 - There were no changes in internal control over financial reporting during the quarter ended September 30, 2021, that have materially affected, or are reasonably likely to materially affect, internal controls153 PART II—OTHER INFORMATION Legal Proceedings The company is not currently party to any material legal proceedings - As of the filing date, the company is not involved in any legal proceedings that are likely to have a material adverse effect on its business155 Risk Factors The company faces significant risks related to its early stage of development, history of losses, need for capital, and uncertainties in drug development and regulation - The company is in the early stages of development with a limited operating history, no products approved for sale, and has incurred significant net losses since inception157158161 - Substantial additional capital will be required to finance operations, and failure to raise it could force delays or elimination of research programs157168 - The development of novel gene therapy product candidates is subject to a rigorous, complex, and uncertain regulatory landscape, with no guarantee of approval157192 - The company faces risks related to intellectual property, including the ability to obtain and enforce patents and operate without infringing on the rights of third parties157333347 Unregistered Sales of Equity Securities and Use of Proceeds The company details pre-IPO stock option grants and confirms the use of its $188.5 million in net IPO proceeds remains consistent with its registration statement - From July 1 to July 30, 2021, the company granted stock options to employees to purchase an aggregate of 446,998 shares of common stock at an exercise price of $10.56 per share467 - The company's IPO on August 3, 2021, generated net proceeds of approximately $188.5 million after deducting underwriting discounts, commissions, and offering expenses469 - There has been no material change in the planned use of proceeds from the IPO as described in the Form S-1 registration statement469 Defaults Upon Senior Securities This section is not applicable as the company reports no defaults Mine Safety Disclosures This section is not applicable Other Information The company reports no other information for this period Exhibits This section lists all exhibits filed with the quarterly report