Filing identity and reporting period
Important: The request identifies Tempest Therapeutics, Inc., but the supplied Form 10-Q is for Millendo Therapeutics, Inc. (Nasdaq: MLND), for the quarter ended September 30, 2020, filed November 9, 2020. This summary describes the supplied filing, not a Tempest filing.
Business context
Millendo was a clinical-stage biopharmaceutical company with no approved products and no product-sales revenue. Its principal active candidate was MLE-301, an NK3R antagonist being developed for menopausal vasomotor symptoms. The company initiated a Phase 1 trial in September 2020 and expected to begin a Phase 2 trial in 2021.
Financial results and liquidity
Amounts below are in millions of dollars unless otherwise stated. Results are unaudited.
| Metric | Q3 2020 | Q3 2019 | Nine months 2020 | Nine months 2019 |
|---|---|---|---|---|
| Revenue | None reported | None reported | None reported | None reported |
| Research and development expense | $2.7 | $7.3 | $16.7 | $19.5 |
| General and administrative expense | $3.4 | $4.4 | $12.1 | $13.1 |
| Operating loss | $6.1 | $11.8 | $28.8 | $32.6 |
| Net loss | $6.4 | $11.6 | $29.0 | $31.9 |
| Basic and diluted loss per share | $0.34 | $0.87 | $1.54 | $2.38 |
| Cash used in operating activities | Not provided for quarter | Not provided for quarter | $25.1 | $29.5 |
At September 30, 2020, cash and cash equivalents were $43.2 million and restricted cash was $0.5 million, or $43.8 million combined. Total assets were $48.8 million, total liabilities $9.0 million, and stockholders’ equity $39.8 million. Debt totaled approximately $0.3 million, including current and long-term portions. The company had an accumulated deficit of $237.7 million. Profit and operating margins are not meaningful given the absence of revenue.
Material changes versus prior periods
- Q3 net loss narrowed by $5.3 million year over year; nine-month net loss narrowed by $2.8 million. Lower R&D and G&A spending were partly offset by reduced interest income and higher foreign-currency losses.
- Q3 R&D expense fell 63% year over year, mainly because livoletide and nevanimibe development spending was curtailed; MLE-301 spending increased.
- Cash, cash equivalents and restricted cash declined from $63.5 million at year-end 2019 to $43.8 million at September 30, 2020. Operating cash use was partially offset by $5.7 million of net proceeds from an at-the-market stock offering.
Outlook, commentary and risks
- Management said its September 30 cash position was expected to fund planned operations into 2022, while also stating that plans could change and additional capital would be required to pursue regulatory approval and commercialization. The runway estimate excludes additional funding and potential business-development activities.
- The company discontinued livoletide for Prader-Willi syndrome in April after its Phase 2b trial failed to show statistically significant improvement on the primary hyperphagia measure. It ceased investing in nevanimibe for congenital adrenal hyperplasia in June after an interim Phase 2b review; one of 10 reported subjects met the primary endpoint. Millendo was exploring an out-license for nevanimibe.
- The company recorded $3.1 million of livoletide closeout costs and $1.1 million of restructuring termination benefits in Q2; additional Q3 expense reflected revisions to estimated closeout costs. It reported no expectation of future material expenses for either discontinued program.
- Positions representing approximately 30% of prior headcount were eliminated in Q2. Management engaged SVB Leerink to support a strategic review intended to develop an actionable plan to maximize stockholder value.
- COVID-19 could delay trial-site initiation, enrollment, assessments, supply, regulatory interactions and clinical timelines, and could impair access to financing. The company said it had not experienced significant regulatory-review delays to date and expected adequate MLE-301 supply for current work.
- Material risks include clinical and regulatory failure, competition in VMS, reliance on third-party manufacturers and trial operators, further financing needs and potential dilution, and license risks. The University of Michigan license for nevanimibe could become revocable beginning January 1, 2021 absent an extension. Several legacy shareholder lawsuits remained unresolved; potential losses were not estimable, and an adverse resolution of one class action could materially affect financial condition and results.
Important facts for investors to verify
- Confirm the issuer: the supplied filing is Millendo Therapeutics, Inc. (MLND), not Tempest Therapeutics, Inc.
- Check subsequent MLE-301 Phase 1 progress, safety and tolerability findings, and whether the anticipated Phase 2 start in 2021 occurred.
- Assess whether the stated cash runway into 2022 remains valid after changes in operating plans, trial costs, strategic-review outcomes and financing activity.
- Review developments in the strategic review and any nevanimibe licensing discussions, including the status of the University of Michigan license.
- Monitor litigation outcomes and any updated loss estimates, as well as COVID-19 effects on trials, suppliers and funding access.