Jasper Therapeutics, Inc. — Q3 2022 Form 10-Q
Reporting period: Three and nine months ended September 30, 2022. Jasper is a clinical-stage biotechnology company developing stem-cell conditioning therapies and engineered stem-cell approaches. It has no approved products and reported no product revenue.
Financial results and liquidity
| Metric | Q3 2022 | Q3 2021 | Nine months 2022 | Nine months 2021 |
|---|---|---|---|---|
| Revenue | No product revenue reported | No product revenue reported | No product revenue reported | No product revenue reported |
| Research and development expense | $9.0 million | $7.2 million | $25.3 million | $16.8 million |
| General and administrative expense | $3.7 million | $2.9 million | $12.1 million | $8.0 million |
| Total operating expenses | $12.7 million | $10.1 million | $37.4 million | $24.8 million |
| Net loss | $11.9 million | $3.4 million | $24.5 million | $21.6 million |
| Net loss per share, basic and diluted | $0.32 | $0.69 | $0.67 | $7.13 |
| Net cash used in operating activities | Not separately reported for quarter | Not separately reported for quarter | $33.2 million | $19.1 million |
As of September 30, 2022, cash and cash equivalents were $51.0 million, down from $84.7 million at December 31, 2021; cash, cash equivalents and restricted cash totaled $51.4 million. Current assets were $52.4 million and current liabilities $7.4 million. Total liabilities were $11.5 million, including $3.9 million of operating lease liabilities. The company reported no outstanding debt.
Margins are not meaningful because the company has no product revenue. Management and the financial statements state that existing cash is insufficient to fund operations for at least one year from issuance of the statements, and that substantial doubt exists about the company’s ability to continue as a going concern.
Material changes versus comparable periods
- Q3 operating expenses rose 26% year over year, reflecting increased R&D consulting, supplies, personnel and facility costs; lower contract manufacturing and third-party trial costs partly offset the increases. G&A rose 27%, principally from personnel and stock-based compensation.
- Q3 net loss widened to $11.9 million from $3.4 million. Other income fell to $0.8 million from $6.7 million, largely because fair-value gains on the earnout and warrant liabilities were much smaller than in Q3 2021.
- For the first nine months, operating expenses increased 51% and net loss increased 13%. The higher net loss reflected higher operating costs, partly offset by $13.0 million of other income, including non-cash fair-value gains on warrant and earnout liabilities.
- Operating cash use increased to $33.2 million from $19.1 million for the first nine months. Investing cash use was $0.5 million versus $1.7 million; financing provided less than $0.1 million in 2022, compared with $101.9 million in 2021, which included business-combination and PIPE proceeds.
Outlook, commentary and risks
- Management planned to initiate a registrational JSP191 study in acute myeloid leukemia patients undergoing stem-cell transplant by the end of Q1 2023, and a pilot study of JSP191 as a therapy for lower-risk myelodysplastic syndrome in Q1 2023. The company expected to complete enrollment in its Phase 1/2 SCID trial by mid-2023.
- Management reported preliminary clinical findings, including engraftment in seven of ten previously transplanted T-B-NK+ SCID patients and successful primary engraftment in the first 24 patients in the MDS/AML transplant study. These are early findings and do not establish efficacy or predict later trial results.
- Management expects losses and expenses to continue increasing as it advances clinical programs and research. It plans to seek additional capital through equity or debt financings, strategic alliances and licensing; financing is not assured, and a shortfall could force delays, reductions or discontinuation of programs.
- On November 10, 2022, after quarter-end, Jasper entered into an at-the-market sales agreement with Cantor Fitzgerald. The company may sell voting common stock under the agreement after filing a prospectus supplement; the agent’s commission is 3% of sales. The filing also describes a shelf registration statement with capacity subject to applicable limitations.
- On November 3, 2022, Jasper received a Nasdaq notice that its share price had remained below $1.00 for 30 consecutive business days. It had until May 2, 2023 to regain compliance; a reverse stock split was among the options it might consider. The notice was received after the reporting period.
- Key operating risks include dependence on JSP191, clinical-trial enrollment and execution, the unvalidated mRNA stem-cell graft platform, reliance on third parties and a single clinical-supply manufacturer, and regulatory, safety, intellectual-property and funding uncertainties. The company also cited possible COVID-19-related trial or supply disruptions and geopolitical and inflation-related risks.
- Fair-value gains on warrant and earnout liabilities reduced reported losses but are non-cash and depend on market-based valuation changes. No earnout trigger had occurred by September 30, 2022.
Important facts for investors to verify
- Current cash runway and the timing, amount and terms of any additional financing; in particular, whether the ATM offering has begun and how much equity may be sold.
- Progress against the stated JSP191 trial timelines, including enrollment, safety, efficacy and whether early results are confirmed in larger or later-stage studies.
- Whether Jasper regains Nasdaq’s $1.00 minimum-bid-price compliance by the deadline, and any effect of a reverse split or other action.
- Clinical-supply continuity and manufacturing capacity, including dependence on Lonza and availability of required trial materials.
- The effect of non-cash warrant and earnout fair-value changes on reported results, separately from underlying operating expenses and cash burn.
- Potential dilution from equity financing, outstanding options and warrants, and other reserved shares.