Business context and reporting period
This is Millendo Therapeutics, Inc.’s unaudited Form 10-Q for the three months ended March 31, 2021—not a Tempest Therapeutics filing. Millendo had discontinued development of its livoletide, nevanimibe and MLE-301 programs and was pursuing strategic alternatives. On March 29, 2021, it agreed to merge with privately held Tempest, subject to closing conditions and stockholder approvals.
Key financial metrics
Amounts below are in millions, except per-share data. Millendo reported no revenue in the presented statements; revenue-based margins are therefore not meaningful.
| Metric | Q1 2021 | Q1 2020 |
|---|---|---|
| Research and development expense | $2.2 | $7.5 |
| General and administrative expense | $6.4 | $4.6 |
| Operating loss | $8.6 | $12.1 |
| Net loss | $8.4 | $12.0 |
| Net loss per share, basic and diluted | $0.44 | $0.65 |
| Cash used in operating activities | $11.8 | $10.2 |
- At March 31, cash and cash equivalents were $26.8 million, marketable securities $0.4 million, and restricted cash $0.05 million; combined liquidity was approximately $27.3 million.
- Total assets were $31.7 million, total liabilities $6.1 million, and stockholders’ equity $25.6 million. Debt was approximately $0.2 million; operating lease liabilities totaled $2.2 million.
- Accumulated deficit was $253.4 million. The company had 19.0 million common shares outstanding at March 31.
Material changes versus the prior comparable period
- Net loss narrowed by 30% year over year, mainly as R&D expense fell $5.4 million following program discontinuations. R&D included $0.34 million of preclinical and clinical development expense, versus $5.53 million a year earlier.
- G&A increased 39.5% to $6.4 million, principally due to restructuring-related termination benefits and higher professional fees for the proposed merger.
- Operating cash use increased to $11.8 million from $10.2 million. Cash, cash equivalents and restricted cash declined by $11.8 million during the quarter.
- Cash and cash equivalents declined from $38.2 million at year-end 2020 to $26.8 million at March 31, 2021. The 2020 comparison included $5.5 million of net ATM equity proceeds; no such issuance proceeds were reported in Q1 2021.
Outlook, management commentary, risks and unusual items
- Management believed available cash, cash equivalents and restricted cash would fund current operations for at least 12 months after issuance of the statements. It also stated that substantial additional funding would be needed for continuing operations; cash needs depend materially on the strategic review and merger outcome.
- The planned merger’s stated pro forma ownership, assuming approximately $30 million of financing, was about 18.5% for pre-merger Millendo shareholders and 81.5% for pre-merger Tempest stockholders. The agreement requires at least $25 million of financing and provides for a Millendo reverse stock split of between 1-for-10 and 1-for-15. Closing also depends on other conditions, including stockholder votes, Nasdaq listing approval and an effective registration statement.
- If the merger does not close, Millendo said it could pursue liquidation, another strategic transaction, or—considered less likely—resume development activities. Liquidation proceeds available to stockholders would depend on debts, contractual obligations and reserves.
- The January 2021 restructuring planned workforce reductions of up to 85%; the majority were completed by April 15. Estimated termination and retention costs were $5.5 million, of which $4.2 million was recorded in Q1. Substantially all termination benefits are expected to be cash expenditures. The filing reported seven employees as of its filing date.
- Eight lawsuits relating to merger disclosures were filed after quarter-end, seeking, among other relief, to delay or block the merger or obtain damages. The filing also describes earlier shareholder litigation; potential losses were not estimable for the matters discussed.
- COVID-19 remained a potential source of business and financial uncertainty. Management said it had experienced limited financial effects at that time but warned that broader disruption could adversely affect the company.
- Management concluded disclosure controls and procedures were effective at a reasonable assurance level as of March 31, 2021. No material change in internal control over financial reporting was reported.
Important facts for investors to verify
- Whether the Tempest merger and associated financing closed, and the final exchange ratio, ownership split and reverse-split terms.
- Cash available at closing and subsequent cash burn, including actual restructuring and transaction costs; the runway statement is management’s estimate, not a guarantee.
- Whether any merger-related litigation, legacy litigation or other claims resulted in material costs or affected transaction timing.
- Whether management’s expected restructuring savings and the stated 12-month funding runway were achieved.