Tempest Therapeutics, Inc. annual report, FY2020

Business context and reporting period

This is Millendo Therapeutics, Inc.’s Form 10-K for the fiscal year ended December 31, 2020, filed March 29, 2021—not a Tempest Therapeutics 10-K. The filing reports annual results, not standalone fourth-quarter results. Millendo was a clinical-stage biopharmaceutical company, had no approved products, and generated no product-sales revenue.

Financial results and liquidity

At year-end, cash and cash equivalents were $38.2 million, plus $0.5 million of restricted cash; total assets were $43.4 million, total liabilities $9.7 million, and stockholders’ equity $33.7 million. Current assets of $40.9 million exceeded current liabilities of $8.0 million. Debt was approximately $0.3 million, primarily the non-interest-bearing Bpifrance advance. The filing provides no meaningful revenue margin measure because the company had no product revenue.

Material changes versus 2019

• Net loss narrowed by $8.2 million, principally as research and development and G&A expenses declined.
• Operating cash use fell by $10.8 million. Cash, cash equivalents and restricted cash declined by $24.9 million to $38.7 million, reflecting operating cash use partly offset by $5.4 million of financing proceeds.
• Livoletide development was discontinued in April 2020 after its Phase 2b trial failed to show a statistically significant improvement on the primary hyperphagia measure. Nevanimibe investment was stopped in June 2020 after interim Phase 2b results and amid a changing competitive environment.
• After year-end, Millendo discontinued MLE-301 investment in January 2021, citing Phase 1 pharmacokinetic and pharmacodynamic data and competition. Thus, by the filing date, it had stopped investment in all three principal programs.

Outlook, risks and unusual items

• Management stated year-end cash was expected to fund the then-current operating plan for at least 12 months. This outlook is conditional on the plan and strategic developments; the filing describes substantial uncertainty about future operations and financing.
• On March 29, 2021, Millendo signed a merger agreement with Tempest. If completed, Tempest’s business would become the combined company’s business; existing Millendo shareholders were expected to own approximately 18.5%, assuming approximately $30 million of financing. Completion was subject to stockholder, Nasdaq, registration and other conditions, including at least $25 million of financing. The merger had not closed as of the filing.
• If the merger fails, Millendo said it may pursue another transaction, resume development, or dissolve and liquidate. Liquidation proceeds, if any, and their timing were uncertain. Certain termination circumstances could require Millendo to pay a $1.4 million fee or reimburse expenses up to $1.0 million.
• A January 2021 restructuring planned workforce reductions of up to 85%; estimated termination and retention costs were approximately $5.5 million, substantially in cash. Management also noted the risk of employee attrition and execution disruption.
• COVID-19 created potential risks to operations, clinical development, financial markets and access to capital, although the company reported limited financial impact at that time. Three legacy shareholder lawsuits remained pending or stayed; potential losses were not estimable, and an adverse resolution of one could materially affect financial position or results.
• Auditors gave an unqualified opinion on the financial statements. Management reported disclosure controls and internal control over financial reporting effective at year-end; the auditor did not attest to internal-control effectiveness.

Important facts for investors to verify

• Whether the Tempest merger closed, whether the financing was completed, and the resulting ownership, share count and reverse-split terms.
• Actual cash runway after restructuring costs, transaction expenses and any changes in the operating plan; confirm the merger’s net-cash conditions.
• The status and financial effect of program closeouts, license terminations, lease commitments and the estimated $5.5 million restructuring costs.
• Developments in the legacy shareholder litigation and any resulting liabilities or reserves.
• Confirm the issuer identity: this filing is for Millendo Therapeutics, Inc. (Nasdaq: MLND), while the request metadata names Tempest Therapeutics, Inc.