Tenaya Therapeutics, Inc. — Q1 2022 Form 10-Q
Reporting period: Three months ended March 31, 2022. The unaudited interim financial statements are prepared under U.S. GAAP. Tenaya is a preclinical-stage biotechnology company developing therapies for heart disease; it has no approved products and has generated no revenue.
Key financial metrics
| Metric | Q1 2022 | Q1 2021 / prior balance-sheet date |
|---|---|---|
| Revenue | None | None |
| Research and development expense | $24.2 million | $9.6 million |
| General and administrative expense | $7.0 million | $3.5 million |
| Total operating expenses | $31.2 million | $13.1 million |
| Net loss | $31.1 million | $13.1 million |
| Net loss per share, basic and diluted | $0.75 | $11.93 |
| Operating cash used | $28.8 million | $15.8 million |
| Cash, cash equivalents and marketable securities | $213.5 million | — |
| Total assets | $281.5 million | $314.2 million at December 31, 2021 |
| Total liabilities | $32.4 million | $35.7 million at December 31, 2021 |
Figures are in U.S. dollars; income-statement and cash-flow amounts are for the three-month periods. There is no product revenue, so operating margins are not meaningful. The filing reports no debt; operating lease liabilities were $15.2 million, including current and noncurrent amounts. Current assets were $213.8 million and current liabilities $19.1 million at March 31, 2022.
Changes versus the prior comparable period
- Operating expenses rose 138% and net loss increased $18.0 million, or 137%, year over year.
- R&D expense increased 152%, mainly from higher outside services (+$5.7 million), facility and laboratory costs (+$4.5 million), and personnel-related costs (+$4.1 million).
- G&A expense increased 99%, principally due to employee-related costs, professional services, and insurance.
- Operating cash use increased by $13.0 million. Investing cash flow was $16.4 million provided, including $68.2 million of marketable-security maturities, offset by purchases of securities and $8.6 million of property and equipment. Financing cash flow was $0.015 million provided, versus $20.0 million in Q1 2021, primarily from preferred-stock issuance.
- Cash, cash equivalents and marketable securities declined from $251.3 million at December 31, 2021 to $213.5 million at March 31, 2022. The company recorded a $0.5 million unrealized loss on marketable securities in other comprehensive loss.
Outlook, commentary and risks
- Management expects existing cash, cash equivalents and investments to fund operations for at least 12 months after the filing date, but says substantial additional funding will be needed to complete development and potentially commercialize products. Future financing may dilute shareholders or impose restrictive terms.
- All programs remained preclinical. The company expected to submit IND applications for TN-201, a gene therapy for MYBPC3-related hypertrophic cardiomyopathy, and TN-301, an HDAC6 inhibitor, in the second half of 2022. It expected TN-401 to enter IND-enabling development and targeted an IND submission in 2023.
- Tenaya expected its Union City cGMP manufacturing facility to be operational in the first half of 2022. The build-out and production plans carry execution, regulatory, cost and supply-chain risks.
- Management said COVID-19 had caused modest R&D delays, principally from supplier lead times and temporary academic-site shutdowns; the ultimate effects remained uncertain.
- Key risks include early-stage development and clinical failure, regulatory uncertainty, manufacturing and third-party supply dependence, additional-capital needs, competition, and intellectual-property exposure. The filing specifically notes third-party patent rights that could be asserted regarding TN-201 or certain AAV vectors; Tenaya says it believes it has defenses, but litigation, licensing costs or development restrictions remain possible.
- The company reported no material litigation, no material indemnification claims, no off-balance-sheet arrangements, and no material changes in contractual obligations. Disclosure controls were assessed as effective, with no material quarterly change in internal control over financial reporting.
Most important facts for investors to verify
- Whether cash burn and spending growth remain consistent with the stated runway, and when additional financing may be required.
- Progress and timing of TN-201 and TN-301 IND submissions, TN-401 IND-enabling work, and any changes to program priorities.
- Whether the Union City manufacturing facility became operational on schedule and can supply clinical-grade material at planned scale.
- Any new clinical, regulatory, COVID-19, supply-chain or safety developments that could delay development or increase costs.
- Developments in the identified third-party patent risks, including any claims, licenses, or effects on TN-201 or AAV programs.