Tenaya Therapeutics, Inc. — Q2 2023 Form 10-Q
Reporting period: Three and six months ended June 30, 2023. Tenaya is a clinical-stage biotechnology company developing therapies for heart disease. It has no approved products and has generated no revenue.
Financial results and liquidity
| Metric | Q2 2023 | Q2 2022 | Six months 2023 | Six months 2022 |
|---|---|---|---|---|
| Revenue | None | None | None | None |
| Research and development expense | $26.5 million | $20.9 million | $52.1 million | $45.0 million |
| General and administrative expense | $8.6 million | $7.7 million | $16.7 million | $14.7 million |
| Net loss | $33.3 million | $28.4 million | $65.0 million | $59.5 million |
| Net loss per share, basic and diluted | $0.45 | $0.69 | $0.89 | $1.44 |
| Cash used in operating activities | Not provided quarterly | Not provided quarterly | $56.5 million | $54.2 million |
At June 30, 2023, cash and cash equivalents were $75.6 million and marketable securities were $76.1 million, totaling $151.6 million in cash, cash equivalents and investments. Total assets were $220.8 million; total liabilities were $30.8 million, including $13.1 million of operating lease liabilities. The filing reports no borrowings. Accumulated deficit was $344.2 million. Gross margins are not applicable because the company had no revenue.
Management believes available cash, cash equivalents and investments will fund operations for at least 12 months following the filing date. The company says it will need substantial additional funding to complete development and potentially commercialize its candidates.
Changes versus prior comparable periods
- Q2 operating expenses increased 23% year over year; R&D rose 27% and G&A rose 11%. Six-month operating expenses increased 15%.
- Q2 net loss widened by $4.9 million; six-month net loss widened by $5.6 million. Higher R&D personnel costs and facility and laboratory costs were principal drivers; six-month outside-services costs declined.
- Higher interest income partly offset operating losses: $1.8 million in Q2 versus $0.2 million, and $3.8 million for six months versus $0.3 million.
- Six-month operating cash use rose to $56.5 million from $54.2 million. Cash, cash equivalents and restricted cash declined by $19.7 million during the first half of 2023.
Outlook, development plans and risks
- TN-201: After FDA clearance to proceed, Tenaya expected to begin dosing patients in a Phase 1b trial in Q3 2023; initial data were anticipated in 2024. TN-201 has FDA orphan drug and Fast Track designations and European Commission orphan medicinal product designation.
- TN-301: Phase 1 in healthy adults was complete; topline data were anticipated in Q4 2023. The filing reported target engagement in the single-dose stage and no dose-limiting toxicities.
- TN-401: The company expected to submit an IND in the second half of 2023. It remained in IND-enabling development and had FDA orphan drug designation.
- Management expected R&D and G&A expenses to generally remain flat for the rest of 2023, while also stating that expenses and operating losses were expected to increase over the foreseeable future as programs advance.
- Funding may come from equity or debt offerings, collaborations, licensing or other sources; additional financing may dilute shareholders or constrain operations. If funding is unavailable, development programs could be delayed, reduced or terminated.
- Key risks include early-stage clinical and regulatory uncertainty, safety or efficacy setbacks, patient recruitment, gene-therapy manufacturing and scale-up, reliance on third parties, competition, and intellectual-property challenges. The company disclosed awareness of third-party patent rights that could be asserted in relation to TN-201 or certain AAV vectors; it said it believes it has defenses, but those defenses may not succeed.
- No material litigation was reported. The company reported effective disclosure controls and no material change in internal control over financial reporting during the quarter.
Investor facts to verify
- Check subsequent disclosures for whether TN-201 dosing, TN-301 topline results and the TN-401 IND submission occurred on the stated timelines.
- Track cash use and remaining liquidity against management’s 12-month runway estimate, including the timing and terms of any new financing.
- Assess the impact of the ATM offering: Tenaya sold 535,767 shares in the first half for net proceeds of $3.9 million under a program permitting up to $75 million in aggregate sales.
- Review dilution exposure: 9.5 million outstanding stock options and awards and 5.9 million outstanding pre-funded warrants were disclosed at June 30, 2023; the filing also lists additional shares available for awards and the employee stock purchase plan.
- Monitor clinical, manufacturing and intellectual-property developments, especially the patent risks identified for TN-201 and AAV vectors.