Tempest Therapeutics, Inc. — 2022 Form 10-K
Reporting period: Fiscal year ended December 31, 2022; comparisons are with 2021. The filing was signed March 22, 2023. Tempest is a clinical-stage oncology company with no approved products and no product-sales revenue.
Financial performance and position
| Metric | 2022 | 2021 |
|---|---|---|
| Revenue from product sales | None | None |
| Research and development expense | $22.5 million | $17.2 million |
| General and administrative expense | $12.1 million | $9.8 million |
| Operating loss | $34.6 million | $27.0 million |
| Net loss | $35.7 million | $28.3 million |
| Net loss per share, basic and diluted | $3.09 | $7.47 |
| Cash used in operating activities | $31.1 million | $26.0 million |
| Cash used in investing activities | $0.6 million | $0.1 million |
| Cash provided by financing activities | $11.4 million | $59.1 million |
At year-end, cash and cash equivalents were $31.2 million, total assets $46.1 million, current liabilities $7.3 million, total liabilities $28.0 million, and stockholders’ equity $18.1 million. The balance sheet reports no marketable securities. There was no income-tax provision, and margins are not meaningful because the company had no product revenue. Accumulated deficit was $135.8 million.
Oxford Finance debt was $10.4 million net of discounts and issuance costs. The loan matures August 1, 2025, bears a floating annual rate reported as 7.15%, and has interest-only payments through December 31, 2023, with a possible extension under specified conditions. Monthly principal payments of about $0.5 million begin January 2024. The loan is secured by company assets, including intellectual property. Operating lease liabilities totaled $11.7 million, including $1.4 million current.
Changes versus 2021
- Net loss increased by $7.4 million; operating expenses rose $7.7 million. R&D expense increased $5.3 million, primarily from greater outside research and development services and higher personnel costs. G&A increased $2.3 million, mainly from professional fees and insurance.
- Operating cash use increased $5.1 million. Year-end cash declined $20.6 million to $31.2 million.
- Financing cash inflow fell substantially from 2021, which included merger-related proceeds and $15.0 million of Oxford borrowing. In 2022, the company received approximately $14.5 million net from a PIPE financing and made a $5.0 million loan prepayment.
- Common shares outstanding rose from 6.9 million to 10.5 million during 2022; the PIPE also included pre-funded warrants exercisable for up to 3.2 million shares.
Business, outlook, and principal risks
- TPST-1120: Phase 1 data presented in 2022 included a reported 30% ORR among 10 patients in the two highest-dose cohorts combined with nivolumab. The global randomized Phase 1b/2 first-line HCC study with Roche’s atezolizumab and bevacizumab had fully enrolled, targeting 40 patients per arm; initial ORR data were expected in the first half of 2023. The filing describes these results as early clinical findings, not proof of efficacy.
- TPST-1495: The Phase 1 study was evaluating monotherapy and pembrolizumab combinations. Management reported dose-dependent exposure, target engagement, manageable observed safety, and tumor-burden reductions in some participants. Data were planned for 2023, subject to acceptance for presentation; endometrial-cancer combination ORR data were expected in 2024.
- Preclinical programs: Tempest planned to select a TREX-1 development candidate by the end of 2023 and advance a separate program against an undisclosed target. These programs had not yet been tested in human trials.
- Management stated that year-end cash was expected to fund current operating plans for at least 12 months from issuance of the financial statements. The company also stated it would need substantial additional capital; failure to obtain financing could require delaying, reducing, or ending development programs. Estimates depend on uncertain trial costs and timing.
- Key risks include clinical and regulatory failure or delay, uncertain safety and efficacy, reliance on third-party manufacturers and research organizations, competition, patent challenges, potential dilution, and Oxford loan covenants and collateral rights. The company had no commercial sales or marketing infrastructure.
- In March 2023, Tempest disclosed banking-system disruption risks following the failures of several banks. The filing states that SVB depositors were ultimately protected and that the company subsequently transferred its accounts to other institutions.
- Legacy shareholder litigation inherited through Millendo included a $15 million insurance-funded class-action settlement approved and dismissed in December 2022. Two related derivative matters had settlement agreements in principle but remained subject to court approval.
- The independent auditor issued an unqualified opinion on the financial statements. Management reported effective disclosure controls and internal control over financial reporting as of year-end and stated that previously identified material weaknesses had been remediated; the auditor was not engaged to attest to internal-control effectiveness.
Important facts for investors to verify
- Subsequent clinical-trial results, including the randomized TPST-1120 HCC comparison and whether results support further development.
- Actual cash use and financing needs relative to management’s stated minimum 12-month runway, plus access to any additional Oxford borrowing and compliance with loan terms.
- Potential dilution from future equity financing, the ATM program, outstanding pre-funded warrants, and equity-plan share reserves.
- TPST-1495 safety, dose selection, and clinical activity as larger or later-stage datasets become available; also progress toward a TREX-1 clinical candidate.
- Final court approval and financial consequences, if any, of the pending legacy derivative-action settlements.