Tempest Therapeutics, Inc. — Q1 2024 Form 10-Q
Reporting period: Three months ended March 31, 2024. Financial statements are unaudited. Tempest is a clinical-stage oncology company with no approved products and no product-sales revenue.
Key financial metrics
| Metric | Q1 2024 | Q1 2023 / comparison |
|---|---|---|
| Revenue | No product revenue | No product revenue |
| Research and development expense | $4.34 million | $4.68 million, down 7% |
| General and administrative expense | $3.63 million | $2.90 million, up 25% |
| Operating loss | $7.97 million | $7.58 million |
| Net loss | $7.90 million | $7.64 million |
| Net loss per share, basic and diluted | $0.36 | $0.55 |
| Cash used in operating activities | $7.19 million | $8.30 million |
| Cash and cash equivalents at period end | $32.33 million | $39.23 million at December 31, 2023 |
| Total assets / liabilities | $44.38 million / $23.75 million | $51.60 million / $24.84 million at December 31, 2023 |
| Loan payable, net of discounts and issuance costs | $10.60 million | $10.55 million at December 31, 2023 |
Operating cash burn averaged approximately $2.4 million per month in Q1. Cash, cash equivalents and restricted cash totaled $32.77 million at quarter end; the restricted-cash component was $0.39 million. Gross margin is not meaningful because the company has no product sales. Accumulated deficit was $173.17 million.
Material changes versus the prior comparable period
- R&D expense declined by $0.34 million, primarily reflecting lower outside services and candidate-specific research costs; stock-based compensation and depreciation within R&D increased.
- G&A expense rose by $0.73 million, which management attributed primarily to higher stock-based compensation and consulting services.
- Operating cash use improved by $1.12 million. Net loss increased by $0.27 million, while noncash adjustments and working-capital movements affected the cash-flow comparison.
- Net loss per share decreased to $0.36 from $0.55, while weighted-average shares increased to 22.23 million from 13.76 million.
- During Q1, Tempest raised approximately $0.25 million net through its ATM offering and issued shares under equity-plan awards for approximately $0.20 million.
Liquidity, debt and financing
- Management expects available cash to fund operations into the second quarter of 2025 and states it is sufficient for at least 12 months from issuance of the financial statements. The estimate depends on spending and development assumptions; the company expects to need substantial additional capital.
- The Oxford Finance loan carries a floating annual rate of 7.15% and matures August 1, 2025. Interest-only payments were extended through June 30, 2024; monthly principal payments of approximately $0.73 million are scheduled to begin July 1, 2024.
- Approximately $6.46 million of loan payable is classified as current. The filing reports $10.6 million total loan payable, net of debt discounts and issuance costs. The loan is secured by company assets, including intellectual property, and has covenants and restrictions.
- Up to $57.3 million remained available under the $100 million ATM program at March 31, 2024. Further equity financing could dilute stockholders; debt or partnering arrangements could restrict operations or require rights to be shared.
- Management says it may seek capital through debt, equity, potential merger opportunities or business development. No external financing source is committed.
Business outlook, management commentary and risks
- TPST-1120: Management is preparing to discuss a potential pivotal Phase 3 study in first-line hepatocellular carcinoma with the FDA during 2024, subject to FDA feedback. It expects updated results from the ongoing randomized study in 2024 and is evaluating other indications, including kidney cancer and cholangiocarcinoma.
- Management cited October 2023 results from the randomized Phase 1b/2 study: confirmed objective response rate of 30% for TPST-1120 plus atezolizumab and bevacizumab versus 13.3% for standard of care alone. The filing also reports exploratory findings in small subgroups, including seven patients with beta-catenin activating mutations. These are clinical-trial results, not proof of efficacy or regulatory approval.
- TPST-1495: The company plans to complete the ongoing Phase 1 combination arm in advanced endometrial cancer and report data in 2024. It also plans a Phase 2 study in familial adenomatous polyposis in 2024, subject to final consortium approval.
- Management expects continued losses and potentially higher R&D costs as programs advance. The timing and costs of trials, FDA requirements, patient enrollment, manufacturing, competition and financing availability could change plans or accelerate cash use.
- Key risks include dependence on additional financing, clinical and regulatory uncertainty, reliance on third-party research and manufacturing providers, competition, intellectual-property protection, and Oxford loan covenants and collateral rights. The company warns that failure to secure adequate capital could force it to delay, reduce or terminate development or operations.
- The October 2023 stockholder rights plan is due to expire October 10, 2024, or October 10, 2026 if approved by stockholders, unless earlier redeemed or exchanged. The company also reports it regained Nasdaq minimum-bid compliance after a 2023 notice, but warns continued listing is not assured.
- Management concluded disclosure controls were effective as of March 31, 2024 and reported no material change in internal control over financial reporting during the quarter.
Important facts for investors to verify
- Whether the FDA agrees with the proposed TPST-1120 Phase 3 path, and the timing and results of the expected 2024 trial update.
- Whether the TPST-1495 endometrial-cancer data and planned FAP study proceed on the stated timetable and receive required approvals.
- Actual cash burn and runway, especially after principal repayments begin in July 2024, and whether additional financing is secured on acceptable terms.
- Oxford loan terms, covenant compliance, repayment schedule and the lender’s security interest in company assets.
- Clinical-trial data maturity, patient numbers and subgroup limitations underlying management’s efficacy commentary; also monitor share issuance and potential dilution under the ATM program.