Business context and reporting period
The supplied filing is OvaScience, Inc.’s unaudited Form 10-Q for the quarter ended June 30, 2012—not a filing identified as Tempest Therapeutics, Inc. Investors should verify the issuer and filing before relying on this summary. OvaScience describes itself as a development-stage life-sciences company developing infertility treatments based on egg precursor cells. It had no significant revenue.
The company’s lead candidate, AUGMENT, was designed to add mitochondria from a patient’s egg precursor cells to her egg during IVF. OvaTure was an earlier-stage program intended to develop mature eggs from egg precursor cells.
Financial results and liquidity
| Metric | Three months ended June 30, 2012 | Six months ended June 30, 2012 |
|---|---|---|
| Revenue | None | None |
| Research and development expense | $1.351 million | $2.297 million |
| General and administrative expense | $1.883 million | $3.903 million |
| Total operating expenses / net loss | $3.234 million | $6.200 million |
| Net loss per share | $2.09 | $4.22 |
| Operating cash used | $4.736 million for the six-month period |
At June 30, 2012, cash was $34.067 million and total assets were $34.985 million. Current liabilities were $1.810 million; the filing reports no debt balance. Stockholders’ deficit was $8.017 million, and preferred stock was recorded at $41.192 million. No meaningful operating margin is available because the company had no revenue.
Cash increased by $29.526 million during the first six months, mainly because of $34.811 million in net financing cash flow, principally proceeds from the March 2012 Series B preferred-stock financing. Investing cash use was $0.549 million, including laboratory equipment purchases and restricted cash. The company reported $41.091 million of net preferred-stock proceeds from inception through June 30, 2012.
Material changes and unusual items
- Compared with the corresponding 2011 inception-to-June period, 2012 expenses and losses rose as the company expanded operations and began research and development. The periods are not directly comparable: the 2011 period covered only the company’s first months after incorporation, and it incurred no R&D expense.
- Six-month G&A included approximately $1.276 million of legal and accounting costs related to the Form 10 filing, which management did not expect to recur. G&A also rose with hiring, consulting, and public-company costs.
- In August 2012, after quarter-end, the company sold 897,554 common shares for $4.937 million gross proceeds and reported approximately $4.209 million in net proceeds. The preferred shares automatically converted into common stock upon completion. As of August 13, 2012, 14,262,276 common shares were outstanding.
- Management estimated that June 30 cash would fund operating expenses and capital expenditures at least through the end of 2013, assuming no product revenue; it cautioned that actual cash use could be faster than estimated.
Outlook, risks, and commitments
- Management planned to begin an AUGMENT study by the end of 2012 in up to 40 women aged 38–42 who had experienced prior IVF failures. If preliminary results were positive, it expected commercial activity in late 2013 and possible revenue beginning in the second half of 2014. These were plans and estimates, not assured outcomes.
- The company expected R&D spending and operating losses to increase. It estimated $3.6–$4.6 million to complete the AUGMENT study and begin commercial activity, contingent on its regulatory assumptions.
- A key uncertainty is whether the FDA would accept the company’s view that AUGMENT qualifies as a lower-risk 361 HCT/P and would not require premarket approval. A different classification could delay commercialization and materially raise development costs. The filing also describes scientific uncertainty, clinical-study and enrollment risks, potential safety issues, and uncertainty about patient and physician acceptance and reimbursement.
- The company had no committed external funding source and said additional financing might be needed. Further equity financing could dilute shareholders; debt, collaborations, or licensing could impose restrictions or require relinquishing rights.
- Contractual obligations disclosed at June 30 included $1.401 million in lease payments, $1.350 million under a manufacturing agreement, and $0.930 million in specified license payments. Additional MGH milestone payments of up to $10.520 million, royalties, and a $1.000 million payment upon certain financing or change-of-control events were excluded from the obligations table because their timing or likelihood could not be reasonably estimated.
- Management stated that disclosure controls were effective at the reasonable-assurance level and that no material legal proceedings were pending. The filing reports no off-balance-sheet arrangements.
Important facts for investors to verify
- Confirm issuer identity: the filing names OvaScience, Inc., while the request identifies Tempest Therapeutics, Inc.
- Check the status, design, enrollment, safety, and results of the planned AUGMENT study, and whether the stated development and commercialization timelines remain credible.
- Verify the FDA’s regulatory position on AUGMENT; the company’s 361 HCT/P assumption was not presented as an agency determination.
- Assess cash burn and runway against the company’s end-of-2013 estimate, including the effects of the August financing and planned spending increases.
- Review the August share issuance, preferred-stock conversion, resale-registration plans, and resulting dilution and potential selling pressure.
- Confirm the company’s ability to manufacture AUGMENT, meet lease and license obligations, and obtain future financing if needed.