Jasper Therapeutics, Inc. — Q3 2021 Form 10-Q
Business context and reporting period
For the quarter and nine months ended September 30, 2021. Jasper is a clinical-stage biotechnology company developing conditioning agents and engineered hematopoietic stem cell therapies. Its lead candidate, JSP191, is in clinical development; the company has no approved products and generated no product revenue.
On September 24, 2021, Jasper completed its business combination with Amplitude Healthcare Acquisition Corporation (AMHC), accounted for as a reverse recapitalization. The company received $95.3 million of net proceeds from the transaction and concurrent PIPE financing. 2021 statements continue Old Jasper’s historical financial statements; AMHC’s operations are not presented as the accounting predecessor.
Key financial metrics
| Metric | Q3 2021 | Q3 2020 | Nine months 2021 | Nine months 2020 |
|---|---|---|---|---|
| Revenue | None | None | None | None |
| Research and development expense | $7.2 million | $4.5 million | $16.8 million | $11.2 million |
| General and administrative expense | $2.9 million | $1.5 million | $8.0 million | $3.5 million |
| Operating loss | $10.1 million | $6.0 million | $24.8 million | $14.7 million |
| Net loss | $3.4 million | $10.8 million | $21.6 million | $21.7 million |
| Net loss per share, basic and diluted | $0.69 | $6.14 | $7.13 | $12.81 |
Amounts are shown as losses. There are no meaningful revenue or gross-margin measures because Jasper has no product sales. Q3 2021 net loss included $6.2 million of income from a fair-value decrease in the earnout liability and $0.5 million of income from a decrease in warrant liability. These non-operating items substantially offset the higher operating loss.
- Cash and cash equivalents were $100.9 million at September 30, 2021, versus $19.8 million at December 31, 2020; cash, cash equivalents and restricted cash totaled $101.3 million.
- Nine-month operating cash use was $19.1 million, compared with $12.9 million in 2020. Investing cash use was $1.7 million, mainly for lab equipment and leasehold improvements.
- Nine-month financing provided $101.9 million, primarily from the business combination and PIPE, net of transaction expenses, and preferred-stock financing.
- Jasper reported no outstanding debt. Current liabilities were $9.2 million and total liabilities were $28.6 million at quarter-end. Operating lease liabilities totaled $3.0 million, including current and non-current portions.
Material changes versus prior comparable periods
Q3 operating expenses rose 40% year over year, driven by higher clinical-trial, manufacturing, personnel and public-company costs. Nine-month operating expenses increased 41%; R&D rose 33% and G&A rose 56%. Nine-month net loss was nearly unchanged from 2020 despite higher operating costs, principally because fair-value expense on the prior-period derivative liability was lower and 2021 included earnout and warrant fair-value gains. Comparisons also reflect different financing and transaction-related activity; the 2021 business combination closed late in the quarter.
Outlook, management commentary and risks
- Management said available cash was expected to fund operations for at least one year from the financial statements’ issuance date. It also said additional funding will be needed to continue development until profitability, which is uncertain; future capital access is not assured.
- Management expects expenses to increase as clinical programs advance, manufacturing and research expand, and public-company costs accrue. No specific financial guidance was provided.
- Clinical outlook disclosed: SCID Phase 1/2 enrollment was expected to finish by year-end 2022; MDS/AML Phase 1b enrollment was expected to finish in late 2021 to early 2022, with topline data anticipated in the first half of 2022; a severe autoimmune disease pilot was expected to begin enrolling in Q1 2022. These are forward-looking expectations, not guarantees.
- Management reported preliminary JSP191 results: five of the first six SCID patients reached a specified naïve T-cell level by two years post-transplant; in the MDS/AML dose-finding cohort, five of six patients had full donor chimerism and five of six had MRD elimination. The company cautioned that early clinical results may not predict later results.
- COVID-19 had slowed SCID trial enrollment in 2020, and could further disrupt enrollment, trial sites, suppliers, manufacturing or regulatory timelines. Jasper relies on third parties for trials and manufacturing, including a single-source clinical supplier, and identifies supply continuity as a risk.
- Jasper is substantially dependent on JSP191 and third-party licenses, including Amgen and Stanford. eHSCs remain an early, clinically unvalidated technology. Other key risks include clinical and regulatory failure, adverse events, competition, intellectual-property challenges and the need for future financing.
- The sponsor earnout covers 1.05 million escrowed shares tied to stock-price thresholds of $11.50, $15 and $18 during the period ending September 24, 2024. The related liability was $8.8 million at September 30, 2021. Public warrants covering approximately 5.0 million shares have an $11.50 exercise price and became exercisable October 24, 2021.
- No material legal proceedings were reported. Disclosure controls were assessed as effective; the company said it was designing and implementing internal financial-reporting controls following the business combination.
Important facts for investors to verify
- Progress and final, adequately sized data from the SCID and MDS/AML trials, including enrollment pace, safety and the stated 2022 milestones.
- Cash runway assumptions against operating cash use, planned development spending and the company’s stated need for additional financing.
- Clinical-supply capacity and reliance on Lonza and other external trial, manufacturing and research providers.
- Potential earnings volatility from remeasurement of warrant and earnout liabilities, and dilution from warrants, options, equity plans and escrowed shares.
- How the post-combination control environment develops, and whether preliminary clinical findings are confirmed in subsequent trials.