TScan Therapeutics, Inc. — Q1 2024 Form 10-Q
Reporting period: Three months ended March 31, 2024. TScan is a clinical-stage biotechnology company developing engineered T-cell receptor (TCR-T) therapies for cancer. It has no approved products and has generated no product-sales revenue. Financial amounts below are in millions of dollars unless otherwise stated.
Financial results and liquidity
| Metric | Q1 2024 | Q1 2023 |
|---|---|---|
| Collaboration and license revenue | $0.6 | $6.8 |
| Research and development expense | $24.9 | $21.8 |
| General and administrative expense | $7.1 | $7.8 |
| Operating loss | $(31.4) | $(22.7) |
| Net loss | $(30.1) | $(22.6) |
| Net loss per share, basic and diluted | $(0.32) | $(0.93) |
| Net cash used in operating activities | $(29.3) | $(23.6) |
- Revenue fell $6.2 million year over year, primarily because the Novartis collaboration ended in Q1 2023. Q1 2024 revenue was from the Amgen collaboration.
- R&D expense increased $3.1 million, mainly from clinical study activity for TSC-100 and TSC-101 and solid-tumor trial start-up, as well as higher personnel costs. G&A declined $0.7 million.
- Interest and other income, net, was $2.2 million versus $1.1 million, reflecting higher interest income; interest expense was $1.0 million.
- Cash, cash equivalents and marketable securities totaled $162.8 million at March 31, 2024, excluding $5.0 million of restricted cash. Cash and equivalents were $140.5 million and marketable securities were $22.3 million.
- Current assets were $164.7 million and current liabilities $31.5 million. Long-term debt and accrued interest were $23.4 million on the balance sheet; the funded loan principal was $30.0 million, with a 9.90% stated rate and 12.82% effective rate.
- Investing activities provided $36.2 million, largely due to marketable-security maturities. Financing activities provided $0.3 million from stock-option exercises. The filing does not present gross profit or a gross margin measure.
Material changes and business developments
- Loss widened to $30.1 million from $22.6 million. The lower collaboration revenue and higher operating expenses drove the increase in operating loss; higher interest income partly offset it.
- Weighted-average shares used for loss per share rose to 94.9 million from 24.2 million. The filing includes 47.0 million pre-funded warrants from the June 2023 offering in the share calculation; the lower loss per share should therefore be read alongside this share-count change.
- After quarter-end, on April 24, 2024, the company completed an underwritten offering of voting shares and pre-funded warrants, reporting approximately $161.4 million in net proceeds. This is a subsequent event and is not included in March 31 cash balances.
- At March 31, 2024, accumulated deficit was $277.7 million. The company reported no material change in its operating leases and no material legal proceedings.
Outlook, risks and contingencies
- Management expects continuing significant operating losses and rising expenses as research, clinical development and manufacturing activities advance. The company expects no product revenue unless and until candidates are developed, approved and commercialized.
- Including the April offering proceeds, management estimates resources will fund its current operating plan into the fourth quarter of 2026. The estimate depends on assumptions that may prove incorrect; the filing also says additional capital will be required to complete development and commercialization.
- The pipeline includes TSC-100 and TSC-101 in a Phase 1 study for hematologic malignancies following allogeneic transplantation. Six solid-tumor candidates have entered Phase 1 development, and the FDA has cleared the T-Plex IND for multiplex TCR-T therapy. The company planned to activate additional clinical sites during 2024 and file additional IND applications.
- The Amgen agreement provides a $30 million upfront payment, recognized over an estimated three-year research term. More than $500 million in potential success-based milestones and tiered single-digit royalties are contingent and excluded from the current transaction price because achievement was assessed as uncertain. Amgen retains global development and commercialization rights for the collaboration.
- The K2 HealthVentures loan carries restrictive covenants, including a minimum unrestricted-cash requirement tied to trailing three-month average cash burn; it is secured by substantially all assets other than intellectual property. Conversion of outstanding principal could dilute shareholders. Only the first $30 million tranche had been drawn; additional tranches are conditional or uncommitted.
- Key risks include early-stage clinical uncertainty, patient enrollment and safety, the complexity and scalability of cell manufacturing, reliance on critical suppliers and third parties, regulatory delays, competition, intellectual-property protection, and the need for future financing. TCR-T risks include potential off-target effects, immune reactions, and complications in the transplant setting.
- Management reported disclosure controls and procedures were effective at the reasonable assurance level as of March 31, 2024; no material change in internal control over financial reporting was reported during the quarter.
Important facts for investors to verify
- Clinical-trial progress, enrollment, safety findings and timing for TSC-100, TSC-101, the solid-tumor candidates and T-Plex.
- Whether operating cash use and development spending remain consistent with management’s runway estimate through Q4 2026.
- The proceeds, issued shares and warrant terms of the April 2024 offering, and the resulting fully diluted share count.
- Compliance with K2 HealthVentures’ cash covenant, debt repayment terms and any conditions for additional loan tranches.
- Amgen collaboration progress, revenue recognition, and whether milestones or royalties become sufficiently probable to be recognized.