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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

FORM 10-Q

 

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2021

OR

 

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ________to_________.

Commission File Number: 001-40187

 

PROMETHEUS BIOSCIENCES, INC.

(Exact name of Registrant as specified in its charter)

 

 

Delaware

 

82-4282653

(State or other jurisdiction of

incorporation or organization)

 

(I.R.S. Employer

Identification No.)

 

 

 

9410 Carroll Park Drive

San Diego, California

 

92121

(Address of principal executive offices)

 

(Zip Code)

 

Registrant’s telephone number, including area code: (858) 684-1300

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

 

Trading Symbol(s)

 

Name of each exchange on which registered

Common Stock, $0.0001 par value per share

 

RXDX

 

Nasdaq Global Select Market

 

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days:    Yes           No      

Indicate by check mark whether the Registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the Registrant was required to submit such files).    Yes           No      

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer

 

 

Accelerated filer

 

 

 

 

 

 

 

 

Non-accelerated filer

 

 

Smaller reporting company

 

 

 

 

 

 

 

 

Emerging growth company

 

 

 

 

 

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.    

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes   No 

As of November 8, 2021, the registrant had 38,939,220 shares of common stock ($0.0001 par value) outstanding.

 

 

 


 

TABLE OF CONTENTS

 

PART I. FINANCIAL INFORMATION

 

Item 1

 

Unaudited Condensed Consolidated Financial Statements

2

 

 

Unaudited Condensed Consolidated Balance Sheets

2

 

 

Unaudited Condensed Consolidated Statements of Operations

3

 

 

Unaudited Condensed Consolidated Statements of Convertible Preferred Stock and Stockholders’ Equity (Deficit)

4

 

 

Unaudited Condensed Consolidated Statements of Cash Flows

6

 

 

Notes to Unaudited Condensed Consolidated Financial Statements

7

Item 2

 

Management’s Discussion and Analysis of Financial Condition and Results of Operations

23

Item 3

 

Quantitative and Qualitative Disclosures About Market Risk

37

Item 4

 

Controls and Procedures

37

 

PART II. OTHER INFORMATION

 

Item 1

 

Legal Proceedings

38

Item 1A

 

Risk Factors

38

Item 2

 

Unregistered Sales of Equity Securities and Use of Proceeds

38

Item 3

 

Defaults Upon Senior Securities

38

Item 4

 

Mine Safety Disclosures

38

Item 5

 

Other Information

38

Item 6

 

Exhibits

39

 

 

Exhibit Index

 

 

 

Signatures

40

 

 

1

 


PART I. FINANCIAL INFORMATION

Item 1.Financial Statements (unaudited)

 

PROMETHEUS BIOSCIENCES, INC.

Unaudited Condensed Consolidated Balance Sheets

(in thousands, except share and par value amounts)

 

 

 

September 30,

2021

 

 

December 31,

2020

 

Assets

 

 

 

 

 

 

 

 

Current assets

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

279,116

 

 

$

54,201

 

Accounts receivable

 

 

679

 

 

 

1,086

 

Prepaid expenses and other current assets

 

 

7,313

 

 

 

2,169

 

Total current assets

 

 

287,108

 

 

 

57,456

 

Equipment, net

 

 

1,362

 

 

 

447

 

Deferred financing costs

 

 

 

 

 

1,730

 

Other assets

 

 

468

 

 

 

 

Total assets

 

$

288,938

 

 

$

59,633

 

Liabilities, Convertible Preferred Stock and Stockholders’ Equity (Deficit)

 

 

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

 

 

Accounts payable

 

$

1,663

 

 

$

958

 

Accrued compensation

 

 

3,311

 

 

 

2,722

 

Accrued expenses and other current liabilities

 

 

6,083

 

 

 

2,894

 

Amounts due to Nestlé, current—related party

 

 

 

 

 

5,675

 

Payable to PLI

 

 

475

 

 

 

1,130

 

Deferred revenue

 

 

3,561

 

 

 

1,876

 

Total current liabilities

 

 

15,093

 

 

 

15,255

 

Long-term debt, net

 

 

 

 

 

7,399

 

Deferred revenue, non-current

 

 

11,745

 

 

 

4,597

 

Preferred stock purchase right liability

 

 

 

 

 

3,900

 

Total liabilities

 

 

26,838

 

 

 

31,151

 

Commitments and contingencies (Note 9)

 

 

 

 

 

 

 

 

Convertible preferred stock—$0.0001 par value; No shares and 254,983,985 shares

   authorized at September 30, 2021 and December 31, 2020, respectively; No shares and

   160,864,434 shares issued and outstanding at September 30, 2021 and December 31,

   2020, respectively; liquidation preferences of $0 and $130,487 at September 30, 2021

   and December 31, 2020, respectively

 

 

 

 

 

126,023

 

Stockholders’ equity (deficit):

 

 

 

 

 

 

 

 

Preferred stock—$0.0001 par value; 40,000,000 shares and no shares authorized

   at September 30, 2021 and December 31, 2020, respectively; No shares issued

   and outstanding at September 30, 2021 and December 31, 2020

 

 

 

 

 

 

Common stock—$0.0001 par value; 400,000,000 shares and 325,000,000 shares

   authorized as of September 30, 2021 and December 31, 2020, respectively; 38,907,081

   shares and 1,768,325 shares issued at September 30, 2021 and December 31, 2020,

   respectively; 38,884,536 shares and 1,713,622 shares outstanding at September 30,

   2021 and December 31, 2020, respectively;

 

 

4

 

 

 

 

Additional paid-in capital

 

 

421,519

 

 

 

1,605

 

Accumulated deficit

 

 

(159,423

)

 

 

(99,146

)

Total stockholders’ equity (deficit)

 

 

262,100

 

 

 

(97,541

)

Total liabilities, convertible preferred stock and stockholders’ equity (deficit)

 

$

288,938

 

 

$

59,633

 

 

See accompanying notes.

2

 


 

PROMETHEUS BIOSCIENCES, INC.

Unaudited Condensed Consolidated Statements of Operations

(in thousands, except share and per share amounts)

 

 

 

Three Months Ended September 30,

 

 

Nine Months Ended September 30,

 

 

 

2021

 

 

2020

 

 

2021

 

 

2020

 

Collaboration revenue

 

$

1,006

 

 

$

359

 

 

$

2,092

 

 

$

766

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Research and development

 

 

17,551

 

 

 

4,652

 

 

 

38,863

 

 

 

13,840

 

General and administrative

 

 

10,248

 

 

 

3,173

 

 

 

21,088

 

 

 

7,370

 

Total operating expense

 

 

27,799

 

 

 

7,825

 

 

 

59,951

 

 

 

21,210

 

Loss from operations

 

 

(26,793

)

 

 

(7,466

)

 

 

(57,859

)

 

 

(20,444

)

Other income (expense), net:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest income

 

 

27

 

 

 

3

 

 

 

82

 

 

 

8

 

Interest expense

 

 

(13

)

 

 

(364

)

 

 

(861

)

 

 

(1,493

)

Loss on early extinguishment of debt

 

 

(554

)

 

 

 

 

 

(554

)

 

 

 

Change in fair value of preferred stock purchase right liability

 

 

 

 

 

 

 

 

(980

)

 

 

 

Change in fair value of preferred stock warrant liability

 

 

 

 

 

1

 

 

 

(105

)

 

 

(2

)

Total other income (expense), net

 

 

(540

)

 

 

(360

)

 

 

(2,418

)

 

 

(1,487

)

Loss from continuing operations

 

 

(27,333

)

 

 

(7,826

)

 

 

(60,277

)

 

 

(21,931

)

Income (loss) from discontinued operations

 

 

 

 

 

879

 

 

 

 

 

 

(6,584

)

Net loss

 

$

(27,333

)

 

$

(6,947

)

 

$

(60,277

)

 

$

(28,515

)

Net loss per share, basic and diluted:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Continuing operations

 

$

(0.70

)

 

$

(5.13

)

 

$

(2.09

)

 

$

(15.21

)

Discontinued operations

 

 

 

 

 

0.58

 

 

 

 

 

 

(4.57

)

Net loss per share, basic and diluted

 

$

(0.70

)

 

$

(4.55

)

 

$

(2.09

)

 

$

(19.78

)

Weighted average shares outstanding, basic and diluted

 

 

38,848,412

 

 

 

1,526,122

 

 

 

28,778,814

 

 

 

1,441,516

 

 

See accompanying notes.

3


 

PROMETHEUS BIOSCIENCES, INC.

Unaudited Condensed Consolidated Statements of Convertible Preferred Stock and Stockholders’ Equity (Deficit)

(in thousands, except share amounts)

 

 

 

Convertible

Preferred Stock

 

 

 

Common Stock

 

 

Additional

Paid-in

 

 

Accumulated

 

 

Total

Stockholders’

 

 

 

Shares

 

 

Amount

 

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Deficit

 

 

Equity (Deficit)

 

Balance at December 31, 2020

 

 

160,864,434

 

 

$

126,023

 

 

 

 

1,713,622

 

 

$

 

 

$

1,605

 

 

$

(99,146

)

 

$

(97,541

)

Issuance of Series D-2 convertible preferred

   stock for cash, net of issuance costs of $94

 

 

86,775,740

 

 

 

73,763

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Issuance of Series D-2 convertible preferred

   stock for settlement of deferred purchase

   price

 

 

7,219,560

 

 

 

6,144

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Reclassification of convertible preferred stock

   purchase right liability

 

 

 

 

 

4,880

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Conversion of convertible preferred stock into

   common stock at initial public offering

 

 

(254,859,734

)

 

 

(210,810

)

 

 

 

25,485,955

 

 

 

3

 

 

 

210,807

 

 

 

 

 

 

210,810

 

Issuance of shares of common stock in initial

   public offering for cash, net of issuance

   costs of $18,662

 

 

 

 

 

 

 

 

 

11,500,000

 

 

 

1

 

 

 

199,837

 

 

 

 

 

 

199,838

 

Reclassification of convertible preferred stock

   warrants

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

169

 

 

 

 

 

 

169

 

Issuance of common stock in exchange for

   services

 

 

 

 

 

 

 

 

 

500

 

 

 

 

 

 

3

 

 

 

 

 

 

3

 

Issuance of common stock upon exercise of

   stock options

 

 

 

 

 

 

 

 

 

56,645

 

 

 

 

 

 

64

 

 

 

 

 

 

64

 

Vesting of early exercised stock options

 

 

 

 

 

 

 

 

 

12,981

 

 

 

 

 

 

9

 

 

 

 

 

 

9

 

Stock-based compensation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

792

 

 

 

 

 

 

792

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(13,945

)

 

 

(13,945

)

Balance at March 31, 2021

 

 

 

 

$

 

 

 

 

38,769,703

 

 

$

4

 

 

$

413,286

 

 

$

(113,091

)

 

$

300,199

 

Issuance costs related to initial public offering

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(46

)

 

 

 

 

 

(46

)

Issuance of common stock upon exercise of

   stock options

 

 

 

 

 

 

 

 

 

54,561

 

 

 

 

 

 

62

 

 

 

 

 

 

62

 

Vesting of early exercised stock options

 

 

 

 

 

 

 

 

 

10,803

 

 

 

 

 

 

9

 

 

 

 

 

 

9

 

Stock-based compensation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,203

 

 

 

 

 

 

1,203

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(18,999

)

 

 

(18,999

)

Balance at June 30, 2021

 

 

 

 

$

 

 

 

 

38,835,067

 

 

$

4

 

 

$

414,514

 

 

$

(132,090

)

 

$

282,428

 

Issuance of common stock upon exercise of

   stock options

 

 

 

 

 

 

 

 

 

12,995

 

 

 

 

 

 

33

 

 

 

 

 

 

33

 

Issuance of common stock for consulting services

 

 

 

 

 

 

 

 

 

28,100

 

 

 

 

 

 

715

 

 

 

 

 

 

715

 

Vesting of early exercised stock options

 

 

 

 

 

 

 

 

 

8,374

 

 

 

 

 

 

7

 

 

 

 

 

 

7

 

Stock-based compensation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

6,250

 

 

 

 

 

 

6,250

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(27,333

)

 

 

(27,333

)

Balance at September 30, 2021

 

 

 

 

$

 

 

 

 

38,884,536

 

 

$

4

 

 

$

421,519

 

 

$

(159,423

)

 

$

262,100

 

4


 

 

 

 

Convertible

Preferred Stock

 

 

 

Common Stock

 

 

Additional

Paid-in

 

 

Accumulated

 

 

Total

Stockholders’

 

 

 

Shares

 

 

Amount

 

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Deficit

 

 

Deficit

 

Balance at December 31, 2019

 

 

58,145,867

 

 

$

43,740

 

 

 

 

1,351,380

 

 

$

 

 

$

483

 

 

$

(37,451

)

 

$

(36,968

)

Issuance of Series C convertible preferred

   stock for cash, net of issuance costs of $62

 

 

28,063,500

 

 

 

28,001

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Vesting of common shares issued to founders

 

 

 

 

 

 

 

 

 

18,281

 

 

 

 

 

 

 

 

 

 

 

 

 

Issuance of common stock upon exercise of

   stock options

 

 

 

 

 

 

 

 

 

23,750

 

 

 

 

 

 

12

 

 

 

 

 

 

12

 

Vesting of early exercised stock options

 

 

 

 

 

 

 

 

 

8,800

 

 

 

 

 

 

3

 

 

 

 

 

 

3

 

Stock-based compensation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

147

 

 

 

 

 

 

147

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(13,128

)

 

 

(13,128

)

Balance at March 31, 2020

 

 

86,209,367

 

 

$

71,741

 

 

 

 

1,402,211

 

 

$

 

 

$

645

 

 

$

(50,579

)

 

$

(49,934

)

Issuance of Series C convertible preferred stock

   upon release of escrow of acquisition-related

   contingent consideration

 

 

3,500,000

 

 

 

3,500

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Issuance of Series C convertible preferred stock

   for deferred purchase price

 

 

5,000,000

 

 

 

5,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Series C convertible preferred stock issuance

   costs

 

 

 

 

 

(12

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Vesting of common shares issued to founders

 

 

 

 

 

 

 

 

 

18,281

 

 

 

 

 

 

 

 

 

 

 

 

 

Issuance of common stock upon exercise of

   stock options