Werewolf Therapeutics, Inc. — FY2021 Form 10-K
Reporting period: Fiscal year ended December 31, 2021. This is an annual filing; it does not provide standalone fourth-quarter results. Werewolf is a preclinical-stage oncology biotechnology company developing conditionally activated INDUKINE therapeutics using its PREDATOR platform. It reported no product revenue.
Key financial metrics
| Metric | FY2021 / Dec. 31, 2021 | FY2020 / Dec. 31, 2020 |
|---|---|---|
| Revenue | None | None |
| Research and development expense | $35.3 million | $16.6 million |
| General and administrative expense | $14.8 million | $5.8 million |
| Total operating expenses / operating loss | $50.1 million | $22.4 million |
| Net loss | $50.0 million | $15.0 million |
| Net loss attributable to common stockholders | $201.9 million | $28.2 million |
| Operating cash used | $42.9 million | $18.6 million |
| Cash and cash equivalents | $157.5 million | $92.6 million |
| Total assets | $179.3 million | $96.4 million |
| Total liabilities | $26.5 million | $7.2 million |
Amounts are rounded. Profitability and operating margins are not meaningful because the company had no revenue and incurred operating losses. Net loss attributable to common stockholders includes $151.9 million of noncash accretion of redeemable preferred stock to redemption value; the preferred stock converted to common stock upon the May 2021 IPO. Basic and diluted net loss per share attributable to common stockholders was $10.94 in 2021 and $28.08 in 2020.
Financing cash flow was $109.4 million, principally reflecting $109.2 million of net IPO proceeds; investing cash flow used $0.5 million. The company reported no outstanding term-loan borrowings: its undrawn loan facility expired in November 2021. Lease liabilities totaled $15.7 million at year-end; a new Watertown headquarters lease carries approximately $19.1 million of estimated base rent over its term.
Material changes versus FY2020
- Operating expenses rose $27.7 million, with R&D increasing $18.6 million and G&A increasing $9.1 million. Drivers included manufacturing and CRO work for planned IND submissions, higher staffing and stock compensation, and public-company costs, including insurance.
- Net loss increased by $34.9 million. FY2020 included a $7.3 million gain from remeasurement of a preferred-stock tranche liability; that liability had been settled in 2020.
- Cash increased by $65.0 million, chiefly from IPO proceeds, while operating cash use more than doubled as development spending expanded.
- The IPO closed in May 2021 at $16.00 per share for 7.5 million shares. Preferred stock converted into common stock at the IPO.
Outlook, commentary and principal risks
- Management estimated that year-end cash and cash equivalents would fund operations through at least the second quarter of 2023. It stated that available cash would not fund completion of development of its candidates and that additional financing will be needed. The runway estimate depends on assumptions that may prove incorrect.
- WTX-124 (IL-2) and WTX-330 (IL-12) remained preclinical. The company planned IND submissions in Q2 and Q3 2022, respectively, followed by Phase 1/1b trials, including evaluation in combination with pembrolizumab. WTX-613 (IFNα) remained preclinical, with an IND planned for the first half of 2023. These were plans, not achieved milestones.
- Management described positive preclinical findings for the candidates or corresponding surrogate molecules, including antitumor activity and favorable tolerability in animal models. No candidate had entered clinical development, so human safety and efficacy were unestablished.
- Key risks include clinical and regulatory failure or delays; manufacturing scale-up and reliance on contract manufacturers and CROs; need for substantial additional capital and potential dilution or rights concessions; competition; intellectual-property and license risks; and possible COVID-19-related disruption. Combination trials also depend on third-party drug supply and safety.
- The company reported no material legal proceedings and no material COVID-19 financial-statement impact or business disruption to date. It remediated previously reported internal-control material weaknesses and reported none at year-end 2021; the auditor did not provide an opinion on internal-control effectiveness.
Important facts for investors to verify
- Whether WTX-124 and WTX-330 IND submissions and trial starts occurred on the stated timelines, and whether subsequent clinical results support the preclinical rationale.
- Cash burn, updated cash runway, and the timing and terms of any additional financing or collaboration.
- Clinical-supply readiness, manufacturing quality and scale-up, and continued availability of contract manufacturers and combination drugs.
- Current status and scope of patent protection, including licensed rights and obligations to Harpoon and other counterparties.
- Whether the distinction between the $50.0 million GAAP net loss and $201.9 million loss attributable to common stockholders is understood in light of the preferred-stock accretion.