Dyne Therapeutics, Inc. — Q3 2021 Form 10-Q
Reporting period: Three and nine months ended September 30, 2021. Amounts below are in U.S. dollars unless noted.
Business context
Dyne is a preclinical biotechnology company developing muscle-disease therapeutics using its FORCE platform. Its lead programs target myotonic dystrophy type 1 (DM1), Duchenne muscular dystrophy (DMD) and facioscapulohumeral dystrophy (FSHD). The company had no approved products, had not entered clinical development and reported no revenue.
Key financial metrics
| Metric | Q3 2021 | Q3 2020 | Nine months 2021 | Nine months 2020 |
|---|---|---|---|---|
| Revenue | None | None | None | None |
| Research and development expense | $36.5 million | $9.7 million | $79.0 million | $23.1 million |
| General and administrative expense | $6.3 million | $3.8 million | $19.1 million | $6.9 million |
| Total operating expenses | $42.8 million | $13.5 million | $98.1 million | $30.0 million |
| Net loss | $42.6 million | $13.9 million | $97.5 million | $30.8 million |
| Basic and diluted loss per share | $0.83 | $2.01 | $1.92 | $7.51 |
At September 30, 2021, cash and cash equivalents were $229.0 million and marketable securities were $178.5 million, totaling $407.5 million. Current assets were $424.7 million against current liabilities of $23.4 million. Accumulated deficit was $176.7 million.
Operating activities used $91.5 million in cash in the first nine months of 2021, versus $26.5 million in the comparable 2020 period. Investing activities used $137.7 million, primarily reflecting purchases of marketable securities, partly offset by maturities. Financing activities provided $157.7 million, mainly from the January 2021 follow-on offering. Cash, cash equivalents and restricted cash ended the period at $231.7 million.
No interest expense was recorded in 2021; the prior-year expense related to borrowings repaid in October 2020. The balance sheet included $34.0 million of operating lease liabilities, not conventional borrowing debt. No gross margin is applicable because the company had no revenue.
Changes versus the prior comparable period
- Q3 net loss increased to $42.6 million from $13.9 million; nine-month net loss increased to $97.5 million from $30.8 million.
- R&D was the main driver of higher expenses. Management attributed the increase primarily to external manufacturing and research, IND-enabling work and increased program activity and staffing.
- Loss per share was lower in absolute amount despite the larger net loss: the weighted-average share count rose substantially following the 2020 IPO and subsequent equity issuance.
- Marketable securities increased to $178.5 million from $44.5 million at year-end 2020, reflecting investment of available funds. A new Waltham facility lease was recognized in 2021, resulting in right-of-use assets of $36.9 million and lease liabilities.
Outlook, risks and other notable items
- Management estimated existing cash, cash equivalents and marketable securities would fund operating and capital requirements into the second half of 2024, and support planned IND submissions and initial clinical proof-of-concept readouts. This estimate depends on assumptions that may change.
- Planned timelines were an IND submission for DMD candidate DYNE-251 in Q4 2021, DM1 candidate DYNE-101 in Q1 2022, and FSHD candidate DYNE-301 in the second half of 2022. The company planned to dose patients in the DYNE-251 and DYNE-101 trials by mid-2022, subject to regulatory review and development progress.
- Management expected losses and expenses to rise as programs advance, clinical trials begin, manufacturing and staffing expand, and public-company costs continue. Additional capital may be needed; future financing could dilute shareholders or require restrictive terms or licensing concessions.
- Key risks include the unproven FORCE platform and preclinical-only pipeline; clinical, regulatory and manufacturing uncertainty; reliance on third parties and single-source suppliers for key product components; intellectual-property and licensing risks; limited rare-disease patient populations; competition; and potential COVID-19-related research, supply-chain or trial disruption. The company reported no material business disruption from COVID-19 to date.
- Lease commitments included an 8.5-year facility lease, with base rent beginning in April 2022 at approximately $0.4 million per month, increasing to $0.5 million. The company also disclosed contingent milestone and royalty obligations under a University of Mons license.
- After quarter-end, in November 2021, the company filed a shelf registration for up to $400 million of securities and entered into an at-the-market agreement allowing up to $150 million of common-stock sales, subject to the shelf becoming effective.
- Management stated disclosure controls and procedures were effective as of September 30, 2021, and reported no material change in internal control over financial reporting during the quarter.
Most important facts for investors to verify
- Whether the planned IND submissions, trial starts and patient-dosing timelines were achieved, and whether subsequent data support the platform and candidates.
- Whether cash use and development spending remain consistent with the stated runway into the second half of 2024.
- Progress and reliability of manufacturing suppliers, particularly the disclosed single-source dependencies.
- Any use of the shelf or at-the-market facility, and the resulting financing proceeds and share dilution.
- Changes in lease costs, license milestones, or other commitments, and any material developments in intellectual-property or regulatory risks.