You should read the following discussion and analysis of our financial condition
and results of operations in conjunction with our condensed financial statements
and related notes included elsewhere in this Quarterly Report on Form 10-Q and
our final prospectus, dated
In addition to historical financial information, this discussion and analysis and other parts of this report contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, based upon current expectations that involve risks, uncertainties and assumptions. Our actual results could differ materially from those anticipated in these forward-looking statements as a result of various factors, including those set forth in the section titled "Risk Factors" under Part II, Item 1A. below. You should carefully read the "Risk Factors" to gain an understanding of the factors that could cause actual results to differ materially from our forward-looking statements. Please also see the section titled "Special Note Regarding Forward-Looking Statements."
Overview
We are a biotechnology company headquartered in
We were incorporated in
We are advancing a deep and diverse pipeline that includes both gene therapies
and small molecules. In 2022, we intend to submit an investigational new drug
application (IND) or a clinical trial application (CTA) to the
We also intend to submit an IND to the FDA in 2022 for the most advanced product candidate from our Precision Medicine platform, TYA-11631, a highly specific small molecule inhibitor of histone deacetylase 6 (HDAC6i). TYA-11631, currently in IND-enabling studies, has potentially broad utility in both heart failure (HF) with preserved ejection fraction (HFpEF) as well as genetic dilated cardiomyopathy (gDCM). Our PKP2 program involves using an AAV-based gene therapy to address genetic arrhythmogenic right ventricular cardiomyopathy (gARVC) caused by plakophilin 2 (PKP2) gene mutations, and is currently at the candidate selection stage. Our DWORF program, an AAV-based gene therapy designed to express the Dwarf Open Reading Frame (DWORF) gene in the heart, has potentially broad utility in dilated cardiomyopathy (DCM) and HF with reduced ejection fraction (HFrEF), and is currently at the candidate selection stage. Our Reprogramming program for cardiac regeneration can potentially replace heart cells lost in patients experiencing HF due to prior myocardial infarction (MI), and is currently at the candidate selection stage. In addition, we have numerous earlier-stage programs emerging from our product platforms to address other forms of HF.
Since our inception, we have incurred net losses each year and we expect to
continue to incur significant and increasing losses for the foreseeable future
as we continue to advance our platforms, programs and product candidates, and as
we transition to operating as a public company. Our net losses may fluctuate
significantly from period to period, depending on the timing of expenditures on
our research and development activities. Our net losses were
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Initial Public Offering
On
COVID-19
The global COVID19 pandemic continues to evolve. Potential impacts to our business include disruptions or restrictions on our employees' ability to effectively conduct their work. In addition, some of our suppliers of certain lab materials, or service providers used in the performance of our research activities, are located in the areas impacted by COVID-19, which could limit our ability to achieve planned progress. COVID-19 could adversely affect the economies and financial markets, resulting in an economic downturn that could affect our financing prospects. To date, we have experienced modest delays in the progress of our research and development activities, primarily due to extended lead times at certain suppliers and temporary and partial shutdowns at certain academic institutions as a result of statewide stay-at-home orders. However, these stay-at-home orders have largely terminated and operations have since resumed. We continue to monitor and assess the effects of the COVID-19 pandemic on our business, but the ultimate impact of the COVID-19 outbreak or a similar health epidemic is highly uncertain and subject to change. For additional details, see Part II, Item 1A. "Risk Factors."
Components of Operating Results
Research and Development
Research and development activities account for a significant portion of our operating expenses. Research and development expenses relate primarily to discovery and development of our platforms, programs and product candidates, and are recognized as incurred. Internal research and development costs include, among others, personnel-related costs (including salaries, benefits, travel and stock-based compensation for employees engaged in research and development functions), laboratory supplies and other non-capital equipment utilized for in-house research, allocated facilities and overhead costs. External research and development expenses include, among others, amounts incurred to clinical research organizations (CROs) that conduct research and development activities on our behalf, consulting fees and amounts owed under licensing agreements. We do not allocate our costs by platform, program or product candidate, as a significant amount of research and development expenses include internal costs, which are deployed across multiple platforms, programs, product candidates and activities.
Amounts recorded for external goods or services incurred for research and development activities that have not yet been invoiced often represent estimates. We do not currently have projects that require estimates for percentage of completion and we record estimates for amounts due but not yet invoiced based on input from external service providers.
We expect our research and development expenses to increase for the foreseeable future as we continue to invest in research and development activities related to developing our platforms, programs and product candidates and progressing through preclinical and clinical product development stages. The process of conducting the necessary research to advance to the clinical stage and ultimately obtain regulatory approval is costly and time-consuming, and the successful development of our product candidates is highly uncertain. As a result, we are unable to determine the duration and completion costs of our research and development projects or when and to what extent we will generate revenue from the commercialization and sale of any of our product candidates.
General and Administrative
General and administrative expenses consist of personnel-related costs (including salaries, benefits, travel and stock-based compensation for our employees in executive, finance and other administrative functions), legal fees, professional fees incurred for accounting, audit, and tax services, recruiting costs, and facility costs not otherwise included in research and development expenses. Legal fees include those related to corporate and intellectual property related matters.
We expect that our general and administrative expenses will increase for the
foreseeable future to support our continued research and development activities,
general operations, future business development opportunities and professional
fees. In addition, we expect to incur additional expenses associated with
operating as a public company, including legal, accounting, insurance, exchange
listing,
Interest Income
Interest income primarily consists of interest earned on our cash, cash equivalents and investment balances.
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Change in Fair Value of Convertible Preferred Stock Tranche Liability
The change in fair value of our convertible preferred stock tranche liability
fluctuates based on remeasurements at each reporting period. Our convertible
preferred stock tranche liability stemmed from our obligation to issue
additional shares to investors upon the second and third closings of our Series
B convertible preferred stock. Until settlement, fluctuations in the fair value
of a convertible preferred stock tranche liability are based on the
remeasurement at each reporting period. Our convertible preferred stock tranche
liability was settled on the second and third closings of our Series B
convertible preferred stock financing in March and
Other Income (Expense), Net
Other income (expense), net primarily consists of sublease income for a portion
of our facilities in
Results of Operations
Comparison of the Three Months Ended
The following table summarizes our results of operations for the periods presented: Three Months Ended June 30, $ % 2021 2020 Change Change (In thousands) Operating expenses: Research and development$ 10,906 $ 6,958 $ 3,948 57% General and administrative 4,331 1,914 2,417 126% Total operating expenses 15,237 8,872 6,365 72% Loss from operations (15,237 ) (8,872 ) (6,365 ) 72% Other income (expense), net: Interest income 9 18 (9 ) 50% Change in fair value of convertible preferred stock tranche liability - (57 ) 57 100% Other income (expense), net 18 180 (162 ) 90% Total other income (expense), net 27 141 (114 ) 81%
Net loss and comprehensive loss
Research and Development Expenses
The following table summarizes our research and development expenses for the periods presented: Three Months Ended June 30, $ % 2021 2020 Change Change (In thousands) Facility and laboratory costs$ 4,621 $ 2,530 $ 2,091 83% Personnel-related costs 3,548 2,474 1,074 43% External costs 2,687 1,915 772 40% Other research and development expenses 50 39 11 28%
Total research and development expenses
Research and development expenses were
• an increase of$2.1 million in facility and laboratory costs, including laboratory supplies and materials and other allocated costs, as we ramped up our research and development operations; • an increase of$1.1 million in personnel-related costs, including stock-based compensation, primarily due to growth in the number of our research and development employees as we expanded our research and development capabilities; and • an increase of$0.8 million in external costs, including amounts paid to CROs for research and development activities, consulting fees, preclinical studies and other external research expenses as we progressed development of our programs. 23
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General and Administrative
General and administrative expenses were
Interest Income
Interest income was
Change in Fair Value of Convertible Preferred Stock Tranche Liability
The change in fair value of our convertible preferred stock tranche liability
for the three months ended
Other Income (Expense), Net
Other income (expense), net of
Comparison of the Six Months Ended
The following table summarizes our results of operations for the periods presented: Six Months Ended June 30, $ % 2021 2020 Change Change (In thousands) Operating expenses: Research and development$ 20,496 $ 14,255 $ 6,241 44% General and administrative 7,846 3,883 3,963 102% Total operating expenses 28,342 18,138 10,204 56% Loss from operations (28,342 ) (18,138 ) (10,204 ) 56% Other income (expense), net: Interest income 18 75 (57 ) 76% Change in fair value of convertible preferred stock tranche liability - (76 ) 76 100% Other income (expense), net 16 357 (341 ) 96% Total other income (expense), net 34 356 (322 ) 90%
Net loss and comprehensive loss
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Research and Development Expenses
The following table summarizes our research and development expenses for the periods presented: Six Months Ended June 30, $ % 2021 2020 Change Change (In thousands) Facility and laboratory costs$ 8,715 $ 5,130 $ 3,585 70% Personnel-related costs 6,885 4,906 1,979 40% External costs 4,731 4,064 667 16%
Other research and development expenses 165 155 10 6%
Total research and development expenses
Research and development expenses were
• an increase of$3.6 million in facility and laboratory costs, including laboratory supplies and materials and other allocated costs, as we ramped up our research and development operations; • an increase of$2.0 million in personnel-related costs, including stock-based compensation, primarily due to growth in the number of our research and development employees as we expanded our research and development capabilities; and • an increase of$0.7 million in external costs, including amounts paid to CROs for research and development activities, consulting fees, preclinical studies and other external research expenses as we progressed development of our programs. General and Administrative
General and administrative expenses were
Interest Income
Interest income was
Change in Fair Value of Convertible Preferred Stock Tranche Liability
The change in fair value of our convertible preferred stock tranche liability
for the six months ended
Other Income (Expense), Net
Other income (expense), net of
Liquidity and Capital Resources
Sources of Liquidity
Since our inception, we have not generated any revenue and we have incurred
significant net losses and negative cash flows from operations. From our
inception through
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In connection with our IPO, we issued and sold 13,800,000 shares of our common
stock at a price of
Funding Requirements
We expect our expenses and operating losses will increase substantially over the foreseeable future. The expected increase in expenses will be driven in large part by our ongoing activities, if and as we:
• continue to advance our Gene Therapy, Cellular Regeneration and Precision Medicine platforms; • continue preclinical development of our product candidates and initiate additional preclinical studies; • commence clinical trials of our product candidates; • build out our manufacturing facilities and establish our manufacturing capabilities, including developing our contract development and manufacturing relationships; • acquire and license technologies aligned with our Gene Therapy, Cellular Regeneration and Precision Medicine platforms; • seek regulatory approval of our product candidates that successfully complete clinical trials; • expand our operational, financial, and management systems and increase personnel, including personnel to support our preclinical and clinical development, manufacturing, and future commercialization efforts; • continue to develop, grow, perfect, enforce and defend our intellectual property portfolio; and • incur additional legal, accounting, and other expenses in operating our business, including the additional costs associated with operating as a public company.
Based on our current operating plan, we believe that our existing cash and cash equivalents, together with the net proceeds received from the IPO, will be sufficient to meet our working capital and capital expenditure needs through at least the next twelve months from the date of this Quarterly Report on Form 10-Q.
We have based this estimate on assumptions that may prove to be wrong, and we could utilize our available capital resources sooner than we expect. We may also raise additional financing on an opportunistic basis in the future. We expect to continue to expend significant resources for the foreseeable future.
In order to complete the development of our product candidates and commercialize our product candidates, if approved, we will require substantial additional funding. Until such time as we can generate significant revenue from sales of our product candidates, if ever, we expect to finance our operations through public or private equity offerings or debt financings or other capital sources, which may include strategic collaborations or other arrangements with third parties, or other sources of financing. We may not be able to raise additional capital on terms acceptable to us or at all. To the extent that we raise additional capital through the sale of equity or convertible debt securities, the ownership interest of our stockholders will be or could be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect the rights of our common stockholders. Debt financing and preferred equity financing, if available, may involve agreements that include covenants limiting or restricting our ability to take specific actions, including restricting our operations and limiting our ability to incur liens, issue additional debt, pay dividends, repurchase our common stock, make certain investments or engage in merger, consolidation, licensing or asset sale transactions. If we raise funds through strategic collaborations, partnerships and other similar arrangements with third parties, we may be required to grant rights to develop and market product candidates that we would otherwise prefer to develop and market ourselves. If we are unable to raise additional capital on acceptable terms when needed, our business, results of operations, and financial condition would be adversely affected.
Our ability to raise additional funds may be adversely impacted by potential
worsening global economic conditions and the recent disruptions to, and
volatility in, the credit and financial markets in
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Cash Flows
The following table summarizes our cash flows for each of the periods indicated:
Six Months Ended June 30, 2021 2020 (In thousands) Net cash provided by (used in): Operating activities$ (27,808 ) $ (15,512 ) Investing activities (7,559 ) 1,329 Financing activities 18,717 30,649
Net change in cash, cash equivalents
and restricted cash$ (16,650 ) $ 16,466 Operating Activities
Net cash used in operating activities for the six months ended
Net cash used in operating activities for the six months ended
Investing Activities
Net cash used in investing activities for the six months ended
Net cash provided by investing activities for the six months ended
Financing Activities
Net cash provided by financing activities for the six months ended
Net cash provided by financing activities for the six months ended
Contractual Obligations and Other Commitments
As of
Off-Balance Sheet Arrangements
Since inception, we have not engaged in any off-balance sheet arrangements as
defined in the rules and regulations of the
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Critical Accounting Policies and Estimates
Our management's discussion and analysis of the financial condition and results
of operations is based on our financial statements, which have been prepared in
accordance with the
During the six months ended
Recent Accounting Pronouncements
See Note 2 to our unaudited interim condensed financial statements for more information about recent accounting pronouncements, the timing of their adoption, and our assessment, to the extent we have made one yet, of their potential impact on our financial condition of results of operations.
Emerging Growth Company and Smaller Reporting Company Status
We are an emerging growth company, as defined in the Jumpstart Our Business
Startups Act of 2012 (JOBS Act). We will remain an emerging growth company until
the earliest to occur of: (i) the last day of the fiscal year in which we have
more than
The JOBS Act provides that an emerging growth company can take advantage of an extended transition period for complying with new or revised accounting standards, delaying the adoption of these accounting standards until they would apply to private companies. We have elected to use the 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 on which we (i) are no longer an emerging growth company and (ii) affirmatively and irrevocably opt out of the extended transition period provided in the JOBS Act. As a result, our financial statements may not be comparable to companies that comply with new or revised accounting pronouncements as of public company effective dates.
We are also a smaller reporting company, meaning that the market value of our
stock held by non-affiliates is less than
If we are a smaller reporting company at the time we cease to be an emerging growth company, we may continue to rely on exemptions from certain disclosure requirements that are available to smaller reporting companies. Specifically, as a smaller reporting company we may choose to present only the two most recent fiscal years of audited financial statements in our Annual Report on Form 10-K and, similar to emerging growth company's smaller reporting companies have reduced disclosure obligations regarding executive compensation.
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