Tenaya Therapeutics, Inc. — Q3 2023 Form 10-Q
Reporting period: Quarter and nine months ended September 30, 2023. Unaudited interim financial statements; amounts below are in U.S. dollars unless noted. Tenaya is a clinical-stage biotechnology company developing therapies for heart disease. It reported no product revenue and has no products approved for sale.
Financial results and position
| Metric | Q3 2023 | Q3 2022 | Nine months 2023 | Nine months 2022 |
|---|---|---|---|---|
| Revenue | None | None | None | None |
| Research and development expense | $23.1 million | $23.8 million | $75.2 million | $68.8 million |
| General and administrative expense | $7.8 million | $7.5 million | $24.6 million | $22.3 million |
| Total operating expenses | $30.9 million | $31.3 million | $99.7 million | $91.1 million |
| Net loss | $29.1 million | $30.7 million | $94.1 million | $90.1 million |
| Net loss per share, basic and diluted | $0.39 | $0.74 | $1.28 | $2.18 |
- For the nine months, operating cash use was $80.1 million, compared with $81.7 million in 2022. Investing activities provided $63.6 million, mainly from maturities of marketable securities; financing activities provided $3.7 million, mainly from ATM sales.
- At September 30, cash and cash equivalents were $82.2 million; marketable securities were $46.0 million; cash, cash equivalents and investments totaled $128.1 million. Accumulated deficit was $373.3 million.
- Total assets were $193.4 million and total liabilities were $28.5 million. The filing reports no borrowings; liabilities primarily include operating leases. Total operating lease liabilities were $12.0 million.
- No gross margin is presented because the company has no product revenue. For Q3, interest income was $1.8 million; for the nine months, it was $5.6 million.
Changes versus comparable periods
- Q3 net loss narrowed by $1.6 million year over year, as a $1.2 million increase in interest income and slightly lower operating expenses more than offset the operating loss.
- Nine-month net loss increased by $4.0 million, despite a $4.7 million increase in interest income, because operating expenses rose $8.7 million, or 10%.
- Nine-month R&D expense increased 9%, mainly due to higher personnel-related costs, including stock-based compensation; lower outside-services costs partly offset the increase. Nine-month G&A expense increased 10%, primarily due to higher stock-based compensation.
- Cash, cash equivalents and investments declined from $203.2 million at December 31, 2022 to $128.1 million at September 30, 2023. The prior-year period included substantially greater property and equipment purchases.
- The company raised $3.9 million net through its ATM program during the first nine months of 2023. It also had up to $75 million available under the ATM sales agreement, subject to applicable terms and market conditions.
Outlook, programs and risks
- Management said available cash, cash equivalents and investments should fund operations for at least 12 months following the filing. It also expects to need substantial additional capital to complete development and potentially commercialize candidates; future financing could dilute shareholders, restrict operations or require licensing rights.
- Management expected R&D and G&A expenses to remain generally flat for the remainder of 2023, while describing increasing expenses and operating losses as expected over the foreseeable future. This is not a profitability forecast.
- Post-quarter developments: In October 2023, Tenaya began dosing patients in the TN-201 Phase 1b trial, with initial data anticipated in 2024; FDA cleared the TN-401 IND for clinical testing; and the company reported positive Phase 1 healthy-participant data for TN-301. These are company-reported developments, not results contained in the September 30 financial statements. TN-401 received FDA Fast Track designation in November 2023.
- Principal risks include early-stage clinical and regulatory uncertainty, safety and efficacy risks, patient recruitment, gene-therapy manufacturing and scale-up, dependence on third-party service providers, competition, intellectual-property disputes, and the need for additional funding. The filing specifically notes potentially relevant third-party patent rights concerning TN-201 and certain AAV vectors; no infringement claim had been asserted against the company as of the report date.
- No material litigation was reported as of September 30, 2023. The company disclosed no material indemnification claims and no off-balance-sheet arrangements. In October 2023, it extended a laboratory sublease through November 2024, with total payments of $1.5 million.
Important facts for investors to verify
- Confirm the cash runway assumptions and the timing and terms of any additional financing; the stated runway is management’s estimate and depends on its operating plan.
- Track TN-201 trial enrollment, safety, and the timing and content of anticipated 2024 initial data.
- Verify progress and timelines for TN-401 clinical initiation and TN-301 development following the reported Phase 1 results.
- Assess quarterly cash burn, expense trends, ATM usage, potential dilution, and the remaining pre-funded warrants and equity-award overhang.
- Monitor gene-therapy manufacturing readiness, clinical supply, regulatory requirements, and developments involving the third-party patent rights identified in the filing.