Tenaya Therapeutics, Inc. — Q3 2021 Form 10-Q
Reporting period: Three and nine months ended September 30, 2021. Filed November 10, 2021. Tenaya is a preclinical-stage biotechnology company developing heart-disease therapies across gene therapy, cellular regeneration and precision medicine. It had no approved products and generated no revenue.
Financial performance and position
Amounts below are in USD millions, except per-share data. Margins are not meaningful because the company reported no revenue.
| Metric | Q3 2021 | Q3 2020 | Nine months 2021 | Nine months 2020 |
|---|---|---|---|---|
| Revenue | None | None | None | None |
| Research and development expense | 12.9 | 8.5 | 33.4 | 22.7 |
| General and administrative expense | 5.4 | 2.0 | 13.2 | 5.9 |
| Total operating expenses | 18.3 | 10.5 | 46.6 | 28.6 |
| Net loss | 18.3 | 10.3 | 46.6 | 28.1 |
| Basic and diluted net loss per share | $0.68 | $10.29 | $4.75 | $29.65 |
| Net cash used in operating activities | Not provided for quarter | Not provided for quarter | 44.5 | 25.0 |
At September 30, 2021, cash and cash equivalents were $117.1 million and marketable securities were $163.4 million, or $280.5 million combined. Current assets were $284.8 million; total assets were $331.8 million; total liabilities were $28.1 million; and stockholders’ equity was $303.7 million. The filing reports no debt balance. Operating lease liabilities totaled $16.2 million, including $23.0 million of undiscounted future minimum lease payments before adjustments. Accumulated deficit was $129.4 million.
Nine-month investing cash outflow was $176.0 million, primarily purchases of marketable securities ($163.4 million) and property and equipment ($12.6 million). Financing cash inflow was $209.0 million, principally IPO net proceeds of $188.6 million and Series C preferred-stock proceeds of $20.0 million.
Material changes versus comparable periods
- Q3 operating expenses increased 75% year over year and net loss increased 77%. For the first nine months, operating expenses rose 63% and net loss rose 66%.
- Higher R&D spending reflected increased facility and laboratory costs, headcount and external preclinical/CRO work. Higher G&A reflected increased staffing, public-company and IPO-related professional services, and facility costs.
- The August 2021 IPO raised $188.5 million net from 13.8 million shares at $15 per share. Existing preferred stock converted into 26.1 million common shares. The filing also reflects a July 2021 1-for-6 reverse stock split; historical share and per-share data were retrospectively adjusted.
- Cash and cash equivalents declined from $128.5 million at year-end 2020 to $117.1 million at September 30, 2021, while the company built a $163.4 million marketable-securities portfolio.
Outlook, commentary and risks
- Management expects continued and increasing losses and R&D spending. It believes cash, cash equivalents and marketable securities at September 30, 2021 will fund operations for at least 12 months after the filing date, but says substantial additional funding will be needed to complete development and potentially commercialize candidates.
- Management planned to submit an IND or CTA for TN-201, its MYBPC3 gene-therapy candidate for genetic hypertrophic cardiomyopathy, in 2022. It also planned a 2022 IND submission for TYA-11631, an HDAC6 inhibitor. Both were in IND-enabling studies. A global natural-history study for MYBPC3 mutation carriers began in November 2021; cGMP activities for TYA-11631 began in October 2021.
- Other disclosed programs—PKP2, DWORF and cardiac reprogramming—were at candidate-selection stage. The company was building a manufacturing facility expected to be operational in the first half of 2022 and had no company manufacturing track record; delays, scale-up and regulatory compliance are material execution risks.
- All programs were preclinical, and no clinical trials had begun. Key risks include scientific and clinical failure, uncertain gene-therapy regulation and safety, manufacturing and third-party supply constraints, COVID-19-related delays, competition, financing needs and dilution, and intellectual-property disputes. The filing specifically identifies third-party patent rights that could be asserted against TN-201 or certain AAV vectors.
- COVID-19 had caused modest research delays, including supplier lead-time issues and temporary academic-institution shutdowns; management said operations had largely resumed, while warning that future effects remained uncertain.
- The filing reports no material litigation, no material indemnification claims, and no material changes in contractual obligations from those previously disclosed in the IPO prospectus. Disclosure controls were assessed as effective; no material change in internal control over financial reporting was reported.
Investor verification priorities
- Confirm the cash runway assumptions against actual spending, planned clinical and manufacturing investment, and the company’s stated need for future financing.
- Track progress and regulatory interactions for the planned TN-201 and TYA-11631 submissions, and verify whether timelines or program priorities have changed.
- Assess completion, operational readiness, cGMP compliance and cost of the manufacturing facility, along with dependence on external suppliers and CROs.
- Review the scope and status of patent rights relevant to TN-201 and AAV vectors, plus license diligence, milestone and royalty obligations.
- Monitor dilution and potential share supply, including IPO lock-up expirations, equity awards and future fundraising.