Dyne Therapeutics, Inc. — Q2 2021 Form 10-Q
Reporting period: Quarter and six months ended June 30, 2021. Unaudited results; filed August 5, 2021. Dyne is a pre-revenue biotechnology company developing oligonucleotide therapeutics for genetically driven muscle diseases using its FORCE platform.
Financial results and liquidity
| Metric | Q2 2021 | Q2 2020 | Six months 2021 | Six months 2020 |
|---|---|---|---|---|
| Revenue | $0 | $0 | $0 | $0 |
| Research and development | $23.9 million | $7.3 million | $42.5 million | $13.4 million |
| General and administrative | $6.3 million | $1.3 million | $12.8 million | $3.1 million |
| Total operating expenses | $30.2 million | $8.7 million | $55.3 million | $16.5 million |
| Net loss | $30.0 million | $9.0 million | $54.9 million | $16.9 million |
| Basic and diluted loss per share | $0.58 | $3.31 | $1.09 | $6.31 |
As of June 30, 2021, cash and cash equivalents were $258.4 million and marketable securities were $177.2 million, totaling $435.6 million. Current assets were $461.3 million; total liabilities were $14.6 million; stockholders’ equity was $452.6 million. The company reported no interest expense in 2021 and had repaid its bank loan in October 2020. Gross profit and operating margins are not applicable because Dyne had no revenue.
For the first half of 2021, operating activities used $64.5 million of cash, investing activities used $134.8 million, and financing activities provided $157.3 million, primarily from the January follow-on offering. Investing cash use chiefly reflects purchases of marketable securities, not operating expenditures alone. The company raised $157.2 million net by issuing 6.0 million shares in that offering.
Changes versus the prior comparable period
- Q2 net loss increased to $30.0 million from $9.0 million; first-half net loss rose to $54.9 million from $16.9 million.
- First-half R&D expense increased $29.1 million, mainly due to external manufacturing and research, program advancement and IND-enabling work, as well as higher staffing and stock-based compensation.
- First-half G&A expense increased $9.7 million, reflecting increased headcount, stock-based compensation, professional services and public-company costs.
- Cash, cash equivalents and marketable securities totaled $435.6 million at June 30, versus cash and cash equivalents of $300.9 million and marketable securities of $44.5 million at December 31, 2020; the increase reflects the follow-on financing and investment of funds in marketable securities.
Outlook, risks and notable items
- Management expects existing cash, cash equivalents and marketable securities to fund operating expenses and capital needs into the second half of 2024, and says liquidity is expected to support IND submissions and proof-of-concept data readouts in DM1, DMD and FSHD. These are estimates based on assumptions and could change.
- The company planned to submit IND applications for candidates in its DM1, DMD and FSHD programs between Q4 2021 and Q4 2022. All candidates remained in preclinical development; none had entered clinical development.
- Dyne expects substantial and increasing expenses and operating losses for the foreseeable future, has no product revenue, and may need additional capital. Financing may dilute shareholders or require restrictive terms or the licensing of valuable rights.
- Key risks include the unproven FORCE platform, preclinical and clinical-development uncertainty, dependence on third-party and single-source manufacturers, intellectual-property and licensing risks, competition, and potential COVID-19 effects. Management reported no material business disruption from COVID-19 to date but could not assess its overall future impact.
- A lease for approximately 68,187 square feet of additional laboratory and office space had not commenced by June 30. The expected commitment is $41.3 million; occupancy was anticipated in the second half of 2021. In June, a severance agreement with the former chief scientific officer modified equity awards and resulted in $0.4 million of Q2 stock-based compensation expense.
- Management concluded disclosure controls and procedures were effective at the reasonable-assurance level and reported no material change in internal control over financial reporting during the quarter.
Important facts for investors to verify
- Whether the planned IND submissions and proof-of-concept readouts remain on schedule, and whether preclinical findings support advancement.
- Whether the stated cash runway into the second half of 2024 remains reasonable as development spending and facility costs rise.
- Progress toward occupancy and the financial impact of the $41.3 million lease commitment.
- Changes in manufacturing capacity, supplier concentration, and any new financing, licensing or collaboration arrangements.
- Potential dilution from outstanding equity awards and future capital needs; the filing reported 51.3 million common shares outstanding at June 30, 2021.