Tscan Therapeutics, Inc. annual report, FY2023

TScan Therapeutics, Inc. — FY2023 Form 10-K

Reporting period: Fiscal year ended December 31, 2023. This is an annual report, not a standalone Q4 report. TScan is a clinical-stage biopharmaceutical company developing engineered T-cell receptor (TCR-T) therapies; it has no approved products and has generated no product-sale revenue.

Financial performance and liquidity

Metric	2023	2022
Collaboration and license revenue	$21.0 million	$13.5 million
Research and development expense	$88.2 million	$59.8 million
General and administrative expense	$26.4 million	$20.4 million
Operating loss	$93.5 million	$66.6 million
Net loss	$89.2 million	$66.2 million
Basic and diluted net loss per share	$1.36	$2.75
Net cash used in operating activities	$61.4 million	$66.5 million

• Revenue rose primarily because of the Amgen collaboration, which contributed $14.2 million of recognized revenue, and $5.8 million recognized as the Novartis collaboration concluded. The $30 million Amgen upfront payment is being recognized over the research term; $15.8 million remained deferred at year-end.
• R&D expense increased $28.3 million, reflecting facility and equipment expansion, clinical-trial start-up and enrollment, personnel, and laboratory costs. G&A increased $6.0 million, mainly from legal and professional fees and facility costs.
• At December 31, 2023, cash and cash equivalents were $133.4 million and marketable securities were $58.7 million, totaling $192.0 million; restricted cash of $5.0 million was additional. Management expects available cash, cash equivalents, and marketable securities to fund planned operations into 2026, based on current assumptions.
• Investing activities used $60.8 million, including $77.6 million of marketable-security purchases, partly offset by $20.0 million of maturities, and $3.1 million of property and equipment purchases. Financing activities provided $135.4 million, primarily from the June 2023 offering.
• Debt included $30 million principal under the K2 HealthVentures loan; the balance-sheet carrying amount, including the final fee and discount effects, was approximately $30.0 million. The loan bears interest at 9.90% at year-end, matures in September 2026, and is secured by substantially all assets other than intellectual property. Operating lease liabilities totaled $62.4 million.
• Profit margins are not meaningful for this pre-commercial company; no product sales or product gross margin were reported. The net loss per share narrowed despite the larger net loss, with weighted-average shares increasing to 65.6 million from 24.0 million, partly reflecting the 2023 financing and the accounting treatment of pre-funded warrants.

Material changes and business developments

• The company completed a June 2023 public offering, receiving $134.7 million net from 23.3 million voting shares and 47.0 million pre-funded warrants. None of those warrants had been exercised by year-end. The company also authorized a $75 million at-the-market program but reported no sales under it through year-end.
• R&D spending increased substantially as clinical programs and manufacturing capacity expanded. TScan reported six solid-tumor TCR-T candidates in Phase 1 development and FDA clearance of the T-Plex IND, which enables investigation of multiplexed TCR-T treatment.
• The Novartis research term ended in March 2023. The Amgen Crohn’s disease collaboration began in May 2023; Amgen retains global development and commercialization rights. TScan may receive more than $500 million in success-based milestones and tiered single-digit royalties, subject to the agreement’s terms; these potential payments are not assured.

Outlook, commentary, and principal risks

• Management expects operating expenses to rise as research, preclinical work, clinical trials, manufacturing, and public-company costs grow. TScan expects to need substantial additional capital to advance candidates through approval and commercialization; the stated runway into 2026 does not fund the programs through regulatory approval.
• The Phase 1 umbrella study of TSC-100 and TSC-101 targets relapse prevention after allogeneic hematopoietic cell transplantation. In results reported in February 2024, eight treated patients had complete donor chimerism; one AML patient converted from MRD-positive to MRD-negative after TSC-101 and remained MRD-negative at the latest reported day-180 measurement. Six control patients received transplant alone, and two achieved complete donor chimerism. These early, small-cohort findings are preliminary and do not establish efficacy.
• The company reported that patients had reached the third and final dose level in both treatment arms with no dose-limiting toxicities to date. It anticipated expansion cohorts in Q3 2024, one-year data in 2024, and two-year relapse-prevention data in 2025. For the solid-tumor program, dosing was expected to start in Q1 2024, with initial single-agent and multiplex data anticipated in 2024 and longer-term response data in 2025. These are forward-looking plans, not guaranteed outcomes.
• Key risks include clinical failure or delay, safety risks of engineered T cells and transplantation, trial enrollment constraints, manufacturing scale-up and single-source supply dependencies, regulatory approval uncertainty, competition, intellectual-property protection, and dependence on external financing and collaborations.
• The K2HV loan imposes operating restrictions and a minimum unrestricted-cash covenant tied to recent cash burn. Failure to comply could trigger default remedies. Additional debt may further restrict flexibility; equity financing may dilute shareholders.
• No material legal proceedings were reported. Management concluded disclosure controls and internal control over financial reporting were effective as of year-end; the auditor did not provide an internal-control attestation because TScan is an emerging growth company.

Most important facts for investors to verify

• Whether the $192.0 million of year-end cash, cash equivalents, and marketable securities and the “into 2026” runway remain consistent with actual spending, trial costs, and financing needs.
• Clinical-trial updates, including patient numbers, follow-up duration, safety events, MRD outcomes, and whether early chimerism findings translate into durable relapse-prevention benefit.
• Progress and timing of solid-tumor trial dosing and multiplexed treatment, and whether manufacturing and enrollment support the announced timelines.
• Loan covenant compliance, repayment schedule, potential additional tranches, and the effect of interest and exit fees on cash needs.
• Potential dilution from outstanding pre-funded warrants, stock options, and any future equity or at-the-market issuance; confirm the current share count and warrant status.
• Recognition of Amgen collaboration revenue and the conditions, timing, and probability of future milestones and royalties; do not treat the stated milestone maximum as committed revenue.