Tenaya Therapeutics, Inc. — Q1 2023 Form 10-Q
Reporting period: Three months ended March 31, 2023; filed May 10, 2023. Financial statements are unaudited. Tenaya is a clinical-stage biotechnology company developing heart-disease therapies and has no approved products or product revenue.
Financial performance and liquidity
| Metric | Q1 2023 | Q1 2022 / comparison |
|---|---|---|
| Revenue | $0; no revenue generated to date | $0 |
| Research and development expense | $25.6 million | $24.2 million; up 6% |
| General and administrative expense | $8.1 million | $7.0 million; up 16% |
| Total operating expenses | $33.7 million | $31.2 million; up 8% |
| Operating loss | $33.7 million | $31.2 million |
| Interest income | $2.0 million | $0.1 million |
| Net loss | $31.7 million | $31.1 million; loss increased 2% |
| Basic and diluted loss per share | $0.43 | $0.75 |
| Net cash used in operating activities | $30.3 million | $28.8 million |
| Cash, cash equivalents and marketable securities | $173.6 million at March 31, 2023 | $204.2 million fair value at December 31, 2022 |
Cash, cash equivalents and restricted cash declined by $22.7 million during the quarter. Investing activities provided $8.1 million, primarily reflecting net maturities of marketable securities; financing activities used $0.5 million. No conventional borrowings are reported. Operating lease liabilities totaled $14.1 million, including $3.7 million current and $10.4 million noncurrent. Stock-based compensation was $3.5 million, compared with $2.1 million in Q1 2022. Profit margins are not meaningful given the absence of revenue and continuing losses.
Material changes and business developments
- R&D expense rose $1.5 million, mainly from higher personnel-related costs, partly offset by lower outside-services costs. G&A rose $1.1 million, primarily from stock-based compensation.
- Higher interest rates and investment accretion increased interest income by $1.9 million year over year, partially offsetting operating losses.
- Management reported that the FDA cleared TN-201 for clinical testing in January 2023. The company expected to begin dosing in a Phase 1b trial in Q3 2023; TN-201 received FDA Fast Track designation in April 2023.
- TN-301 Phase 1 dosing was completed, with no dose-limiting toxicities reported; topline data were anticipated in the second half of 2023.
- TN-401 remained in IND-enabling studies; the company expected to submit an IND in the second half of 2023.
- No shares had been sold under the $75 million at-the-market program as of March 31, 2023. The company had raised $76.9 million net in a November 2022 follow-on offering.
Outlook, risks and contingencies
Management expected existing cash, cash equivalents and investments to fund operations for at least 12 months following the filing date. It also stated that substantial additional funding will be needed to complete development and potentially commercialize product candidates. No specific financial guidance was provided; management expects R&D and G&A expenses to increase as development, clinical trials, manufacturing and public-company activities continue.
Key risks include clinical and regulatory uncertainty, patient enrollment and trial delays, gene-therapy safety and manufacturing challenges, reliance on third parties, competition, intellectual-property disputes, and the need for additional capital. Further equity financing could dilute stockholders; financing or collaboration terms could constrain operations or require the company to grant rights to programs. The company reported no material litigation, no material indemnification claims, and no material changes in contractual commitments from its 2022 Form 10-K. Unrealized investment losses were attributed primarily to interest-rate changes, not credit risk; no credit-loss allowance was recorded.
Management concluded disclosure controls and procedures were effective as of quarter-end and reported no material change in internal control over financial reporting during the quarter.
Important facts for investors to verify
- Whether TN-201 dosing began on the expected Q3 2023 schedule and what the trial design, enrollment and safety updates show.
- Whether TN-301 topline results and the TN-401 IND submission arrived on the stated timelines, and how results affect development plans.
- Cash burn, investment balances and runway relative to the stated 12-month funding estimate; the company acknowledged that it will need additional capital.
- Potential dilution from the ATM program, outstanding pre-funded warrants and equity awards; no ATM shares or pre-funded warrants had been issued/exercised, respectively, by March 31, 2023.
- Exposure to third-party patent claims relevant to TN-201 and AAV vectors, and the company’s ability to manufacture clinical supplies at required quality and scale.