Tenaya Therapeutics, Inc. — Q2 2022 Form 10-Q
Reporting period: Three and six months ended June 30, 2022. Unaudited results; dollar amounts below are in millions unless noted.
Business context
Tenaya is a preclinical-stage biotechnology company developing therapies for heart disease through gene therapy, cellular regeneration and precision medicine platforms. It has generated no product revenue, and none of its programs had entered clinical trials by the filing date.
Financial performance and liquidity
| Metric | Q2 2022 | Q2 2021 | Six months 2022 | Six months 2021 |
|---|---|---|---|---|
| Revenue | None | None | None | None |
| Research and development expense | $20.9 | $10.9 | $45.0 | $20.5 |
| General and administrative expense | $7.7 | $4.3 | $14.7 | $7.8 |
| Total operating expenses | $28.6 | $15.2 | $59.8 | $28.3 |
| Net loss | $(28.4) | $(15.2) | $(59.5) | $(28.3) |
| Basic and diluted loss per share | $(0.69) | $(13.26) | $(1.44) | $(25.21) |
| Operating cash used | — | — | $(54.2) | $(27.8) |
At June 30, 2022, cash and cash equivalents were $31.0 million and marketable securities were $149.9 million, totaling approximately $180.9 million. Current assets were $185.7 million versus current liabilities of $18.7 million. Total liabilities were $32.1 million, principally operating lease liabilities; the filing reports no borrowings. Accumulated deficit was $215.0 million. No operating margin is meaningful because the company had no revenue.
Capital expenditures were $15.8 million for the first half, primarily for the Union City manufacturing and office facility. Cash, cash equivalents and restricted cash declined by $7.3 million during that period; this cash-flow measure excludes marketable securities. Management said available cash, cash equivalents and investments should fund operations for at least 12 months following the filing date, while noting that substantial additional capital will be needed to complete development and potentially commercialize products.
Changes versus prior comparable periods
- Q2 operating expenses rose 88% year over year; first-half expenses rose 111%. First-half net loss increased from $28.3 million to $59.5 million.
- First-half R&D expense increased $24.5 million, driven by outside services, facility and laboratory costs, and personnel-related costs. First-half G&A increased $6.9 million, including higher employee, professional-service and insurance costs.
- Loss per share is not directly comparable year over year: the weighted-average share count increased substantially following the 2021 IPO and preferred-stock conversion.
- Marketable securities had $0.6 million of unrealized losses in the first half. The company said it expected to hold securities in unrealized-loss positions to maturity or recovery and had not recorded impairment charges for other-than-temporary declines.
Outlook, developments and risks
- Management remained on track to submit INDs for TN-201, an AAV gene therapy for MYBPC3-related hypertrophic cardiomyopathy, and TN-301, an HDAC6 inhibitor, in the second half of 2022. These were plans, not completed submissions.
- TN-401, an AAV gene therapy for PKP2-related arrhythmogenic right ventricular cardiomyopathy, was entering IND-enabling studies; the company expected an IND submission in 2023. TN-201 and TN-401 were still preclinical.
- The Union City genetic-medicines manufacturing facility completed build-out and operational launch in Q2 and obtained a California drug manufacturing license in June to enable cGMP production. The company also reported starting cGMP manufacturing activities for TN-301 with a CDMO.
- Management expected R&D and G&A expenses to increase as programs advance, manufacturing operates and the public-company organization grows. Additional financing may be required; equity financing could dilute shareholders, while debt or collaborations could constrain operations or require granting rights.
- Key risks include early-stage development and clinical/regulatory uncertainty; manufacturing scale-up and quality; reliance on third parties and supply chains; competition for capital; and COVID-19-related delays. The company reported modest past research delays from supplier lead times and temporary academic-institution shutdowns, and said the pandemic’s future impact remained uncertain.
- The company recorded an approximately $2 million employee retention credit receivable in Q2, with the offsetting benefit included in operating expenses. It completed the Union City facility build-out and reclassified related equipment from construction in progress. No material litigation was reported.
Investor facts to verify
- Whether TN-201 and TN-301 IND submissions occurred on the stated timetable, and the status of any regulatory feedback or clinical-trial plans.
- Whether the new manufacturing facility can reliably produce clinical-grade material at planned scale and cost, including for TN-201 and TN-401.
- Cash and investment balances, operating cash burn, capital spending and updated runway relative to the stated minimum 12-month funding outlook.
- The basis, collection status and any subsequent adjustment of the approximately $2 million employee retention credit receivable.
- Potential dilution, financing needs and material changes in development spending, given rising losses and the absence of product revenue.