89BIO, INC. Forward Looking Statements
You should read the following discussion and analysis of our financial condition
and results of operations together with our unaudited condensed consolidated
financial statements and related notes and other financial information included
elsewhere in this Quarterly Report on Form 10-Q and our consolidated financial
statements and related notes and other financial information included in our
Annual Report on Form 10-K for the year ended
Overview
We are a clinical-stage biopharmaceutical company focused on the development and commercialization of innovative therapies for the treatment of liver and cardio-metabolic diseases. Our lead product candidate, pegozafermin (previously BIO89-100), a specifically engineered glycoPEGylated analog of fibroblast growth factor 21 ("FGF21"), is currently being developed for the treatment of severe hypertriglyceridemia ("SHTG") and nonalcoholic steatohepatitis ("NASH").
SHTG is a condition identified by severely elevated levels of triglycerides
(?500 mg/dL), which is associated with an increased risk of NASH, cardiovascular
events and acute pancreatitis. In
NASH is a severe form of nonalcoholic fatty liver disease, characterized by
inflammation and fibrosis in the liver that can progress to cirrhosis, liver
failure, hepatocellular carcinoma and death. There are currently no approved
products for the treatment of NASH. In
Additional exploratory analyses of cohort 7 data presented at the AASLD
(
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We commenced operations in 2018 and have devoted substantially all of our resources to raising capital, acquiring our initial product candidate, identifying and developing pegozafermin, licensing certain related technology, conducting research and development activities (including preclinical studies and clinical trials) and providing general and administrative support for these operations.
As of
We have incurred net losses since our inception. Our net losses for the three
months ended
Impact of COVID-19 Pandemic
The ongoing COVID-19 pandemic has disrupted and may continue to disrupt our business and delay our development timeline. The extent to which the COVID-19 pandemic may impact our future operating results and financial condition is uncertain. We do not yet know the full extent of potential delays that may affect our clinical trials, which could prevent or delay us from obtaining approval for pegozafermin. Given the surges in cases of COVID-19 experienced previously and uncertainty regarding other variants, we cannot predict how our ongoing trials may be impacted. For more information regarding risks related to the ongoing COVID-19 pandemic, please see the risk factor entitled "The ongoing COVID-19 pandemic has resulted and may in the future result in significant disruptions to our clinical trials or other business operations, which could have a material adverse effect on our business," in Part II, Item 1A of this Quarterly Report on Form 10-Q. To the extent the ongoing COVID-19 pandemic adversely affects our business and financial results, it may also have the effect of heightening many of the other risks set forth under "Risk Factors" in this Quarterly Report on Form 10-Q.
Components of Results of Operations
Research and Development Expenses
Research and development expenses consist primarily of costs incurred for the development of our lead product candidate, pegozafermin. Our research and development expenses consist primarily of external costs related to preclinical and clinical development, including costs related to acquiring patents and intellectual property, expenses incurred under license agreements and agreements with contract research organizations and consultants, costs related to acquiring and manufacturing clinical trial materials, including under agreements with contract manufacturing organizations and other vendors, costs related to the preparation of regulatory submissions and expenses related to laboratory supplies and services, as well as personnel costs. Personnel costs consist of salaries, employee benefits and stock-based compensation for individuals involved in research and development efforts.
We expense all research and development expenses in the periods in which they are incurred. We accrue for costs incurred as services are provided by monitoring the status of specific activities and invoices received from our external service providers. We adjust our accrued expenses as actual costs become known.
Payments associated with licensing agreements to acquire licenses to develop, use, manufacture and commercialize products that have not reached technological feasibility and do not have alternate commercial use are expensed as incurred. Where contingent milestone payments are due to third parties under research and development arrangements or license agreements, the milestone payment obligations are expensed when the milestone results are probable and estimable, which is generally upon achievement of milestones.
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We expect our research and development expenses to increase for the foreseeable future as we continue the development of pegozafermin and continue to invest in research and development activities. The process of conducting the necessary clinical research to obtain regulatory approval is costly and time consuming, and the successful development of pegozafermin and any future product candidates is highly uncertain. To the extent that pegozafermin continues to advance into larger and later stage clinical trials, our expenses will increase substantially and may become more variable. The actual probability of success for pegozafermin or any future product candidate may be affected by a variety of factors, including the safety and efficacy of our product candidates, investment in our clinical programs, manufacturing capability and competition with other products. As a result, we are unable to determine the timing of initiation, duration and completion costs of our research and development efforts or when and to what extent we will generate revenue from the commercialization and sale of pegozafermin or any future product candidate.
General and Administrative Expenses
General and administrative expenses consist primarily of personnel costs, expenses for outside professional services, including legal, human resource, audit and accounting services, consulting costs and allocated facilities costs. Personnel and related costs consist of salaries, benefits and stock-based compensation for personnel in executive, finance and other administrative functions. Facilities costs consist of rent and maintenance of facilities. We expect our general and administrative expenses to increase for the foreseeable future as we increase the size of our administrative function to support the growth of our business and support our continued research and development activities.
Other Income (Expenses), Net
Other income (expenses), net primarily consists of interest expense, amortization of deferred debt issuance costs and amortization of premium on available-for-sale securities offset by interest income on cash equivalents and available-for-sale securities.
Results of Operations
Three Months Ended
The following table summarizes our results of operations for the periods
presented (in thousands):
Three Months Ended
September 30,
2022 2021 Change
Operating expenses:
Research and development $ 22,197 $ 23,590 $ (1,393 )
General and administrative 4,844 4,622 222
Total operating expenses 27,041 28,212 (1,171 )
Loss from operations (27,041 ) (28,212 ) 1,171
Other income (expenses), net 238 (117 ) 355
Net loss before tax $ (26,803 ) $ (28,329 ) $ 1,526 Research and Development Expenses
The following table summarizes the period-over-period changes in research and development expenses for the periods presented (in thousands):
Three Months Ended
September 30,
2022 2021 Change
Clinical development $ 11,981 $ 6,691 $ 5,290
Contract manufacturing 6,373 13,593 (7,220 )
Personnel-related expenses 3,553 3,121 432
Other expenses 290 185 105
Total research and development expenses
Research and development expenses decreased by
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ongoing clinical trials, and an increase of
General and Administrative Expenses
General and administrative expenses increased by
Other Income (Expenses), Net
Other income (expenses), net changed by
Nine Months Ended
The following table summarizes our results of operations for the periods
presented (in thousands):
Nine Months Ended
September 30,
2022 2021 Change
Operating expenses:
Research and development $ 61,732 $ 49,351 $ 12,381
General and administrative 15,155 14,151 1,004
Total operating expenses 76,887 63,502 13,385
Loss from operations (76,887 ) (63,502 ) (13,385 )
Other expenses, net (534 ) (332 ) (202 )
Net loss before tax $ (77,421 ) $ (63,834 ) $ (13,587 ) Research and Development Expenses
The following table summarizes the period-over-period changes in research and development expenses for the periods presented (in thousands):
Nine Months Ended
September 30,
2022 2021 Change
Clinical development $ 36,039 $ 17,715 $ 18,324
Contract manufacturing 13,869 22,051 (8,182 )
Personnel-related expenses 10,891 8,348 2,543
Preclinical costs - 163 (163 )
Other expenses 933 1,074 (141 )
Total research and development expenses
Research and development expenses increased by
General and Administrative Expenses
General and administrative expenses increased by
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Other Expenses, Net
Other expenses, net increased by
Liquidity and Capital Resources
To date, we have incurred significant net losses and negative cash flows from
operations. As of
In
In
In
Our primary use of cash is to fund operating expenses, which consist primarily of research and development expenditures related to our lead product candidate, pegozafermin. We plan to increase our research and development expenses for the foreseeable future as we continue the clinical development of our current and future product candidates. At this time, due to the inherently unpredictable nature of clinical development, we cannot reasonably estimate the costs we will incur and the timelines that will be required to complete development, obtain marketing approval, and commercialize our current product candidate or any future product candidates. For the same reasons, we are also unable to predict when, if ever, we will generate revenue from product sales or our current or any future license agreements which we may enter into or whether, or when, if ever, we may achieve profitability. Clinical and preclinical development timelines, the probability of success, and development costs can differ materially from expectations. In addition, we cannot forecast the timing and amounts of milestone, royalty and other revenue from licensing activities, which future product candidates may be subject to future collaborations, when such arrangements will be secured, if at all, and to what degree such arrangements would affect our development plans and capital requirements.
Based on our research and development plans, we expect that our existing cash
and cash equivalents and short-term available-for-sale securities as of
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Our future funding requirements will depend on many factors, including the following:
• the progress, timing, scope, results and costs of our clinical trials of
pegozafermin and preclinical studies or clinical trials of other potential
product candidates we may choose to pursue in the future, including the
ability to enroll patients in a timely manner for our clinical trials;
• the costs and timing of obtaining clinical and commercial supplies and
validating the commercial manufacturing process for pegozafermin and any
other product candidates we may identify and develop;
• the cost, timing and outcomes of regulatory approvals;
• the timing and amount of any milestone, royalty or other payments we are
required to make pursuant to current or any future collaboration or license
agreements;
• costs of acquiring or in-licensing other product candidates and technologies;
• the terms and timing of establishing and maintaining collaborations,
licenses and other similar arrangements;
• the costs associated with attracting, hiring and retaining additional
qualified personnel as our business grows;
• our efforts to enhance operational systems and hire additional personnel to
satisfy our obligations as a public company, including enhanced internal
controls over financial reporting; and
• the cost of preparing, filing, prosecuting, defending and enforcing any
patent claims and other intellectual property rights.
We expect to continue to generate substantial operating losses for the foreseeable future as we expand our research and development activities. We will continue to fund our operations primarily through utilization of our current financial resources and through additional raises of capital to advance our current product candidate through clinical development, to develop, acquire or in-license other potential product candidates and to fund operations for the foreseeable future. However, there is no assurance that such funding will be available to us or that it will be obtained on terms favorable to us or will provide us with sufficient funds to meet our objectives. Any failure to raise capital as and when needed could have a negative impact on our financial condition and on our ability to pursue our business plans and strategies.
To the extent that we raise additional capital through partnerships or licensing arrangements with third parties, we may have to relinquish valuable rights to our product candidates, future revenue streams or research programs or to grant licenses on terms that may not be favorable to us. If we raise additional capital through public or private equity offerings, the ownership interest of our then-existing stockholders will be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect our stockholders' rights. If we raise additional capital through debt financing, we may be subject to covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures or declaring dividends. If we are unable to obtain adequate financing when needed, we may have to delay, reduce the scope of or suspend one or more of our clinical trials or preclinical studies, research and development programs or commercialization efforts or grant rights to develop and market our product candidates even if we would otherwise prefer to develop and market such product candidates ourselves.
Cash Flows
The following table summarizes our cash flows for the periods presented (in
thousands):
Nine Months Ended
September 30,
2022 2021
Net cash (used in) provided by
Operating activities $ (53,994 ) $ (48,541 )
Investing activities (22,882 ) (11,927 )
Financing activities 96,820 1,980
Net change in cash and cash equivalents,
and restricted cash$ 19,944 $ (58,488 ) Operating Activities
During the nine months ended
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by
During the nine months ended
Investing Activities
During the nine months ended
During the nine months ended
Financing Activities
During the nine months ended
During the nine months ended
Debt Obligations
Our 2021 Loan Agreement provided for a total term loan facility of
Other Contractual Obligations and Commitments
See Note 5 to our condensed consolidated financial statements for additional
disclosures. There have been no other material changes from the contractual
obligations disclosed in our Annual Report on Form 10-K for the year ended
Critical Accounting Estimates
There have been no significant changes in our critical accounting estimates as
compared to the critical accounting estimates disclosed in our Annual Report on
Form 10-K for the year ended
Recent Accounting Pronouncements
See Note 2 to our condensed consolidated financial statements for more information.
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JOBS Act Accounting Election
We are an emerging growth company, as defined in the JOBS Act. Under the JOBS Act, emerging growth companies can delay adopting new or revised accounting standards issued subsequent to the enactment of the JOBS Act until such time as those standards apply to private companies.
We have elected to use this extended transition period to enable us to comply with new or revised accounting standards that have different effective dates for public and private companies until the earlier of the date we (i) are no longer an emerging growth company or (ii) affirmatively and irrevocably opt out of the extended transition period provided in the JOBS Act. As a result, our consolidated financial statements and our interim condensed consolidated financial statements may not be comparable to companies that comply with new or revised accounting pronouncements.
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