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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 June 30, 2022

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

 

81-4282653

(State or other jurisdiction of

incorporation or organization)

 

(I.R.S. Employer

Identification No.)

 

 

 

3050 Science Park Road

San Diego, California

 

92121

(Address of principal executive offices)

 

(Zip Code)

 

Registrant’s telephone number, including area code: (858) 422-4300

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 August 8, 2022, the registrant had 40,904,098 shares of common stock ($0.0001 par value) outstanding.

 

 

 


 

 

TABLE OF CONTENTS

 

PART I. FINANCIAL INFORMATION

 

Item 1

 

Unaudited Condensed Financial Statements

2

 

 

Unaudited Condensed Balance Sheets

2

 

 

Unaudited Condensed Statements of Operations and Comprehensive Loss

3

 

 

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

4

 

 

Unaudited Condensed Statements of Cash Flows

6

 

 

Notes to Unaudited Condensed Financial Statements

7

Item 2

 

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

24

Item 3

 

Quantitative and Qualitative Disclosures About Market Risk

35

Item 4

 

Controls and Procedures

35

 

PART II. OTHER INFORMATION

 

Item 1

 

Legal Proceedings

36

Item 1A

 

Risk Factors

36

Item 2

 

Unregistered Sales of Equity Securities and Use of Proceeds

36

Item 3

 

Defaults Upon Senior Securities

36

Item 4

 

Mine Safety Disclosures

36

Item 5

 

Other Information

36

Item 6

 

Exhibits

37

 

 

Exhibit Index

 

 

 

Signatures

38

 

 

1

 


 

PART I. FINANCIAL INFORMATION

Item 1.Financial Statements (unaudited)

 

PROMETHEUS BIOSCIENCES, INC.

Unaudited Condensed Balance Sheets

(in thousands, except share and par value amounts)

 

 

 

June 30,

2022

 

 

December 31,

2021

 

Assets

 

 

 

 

 

 

 

 

Current assets

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

95,959

 

 

$

257,254

 

Short term investments

 

 

115,823

 

 

 

 

Accounts receivable

 

 

1,865

 

 

 

1,079

 

Prepaid expenses and other current assets

 

 

5,703

 

 

 

7,050

 

Total current assets

 

 

219,350

 

 

 

265,383

 

Property and equipment, net

 

 

2,891

 

 

 

1,447

 

Right-of-use asset

 

 

14,377

 

 

 

 

Other assets

 

 

971

 

 

 

971

 

Total assets

 

$

237,589

 

 

$

267,801

 

Liabilities and Stockholders’ Equity

 

 

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

 

 

Accounts payable

 

$

462

 

 

$

1,153

 

Accrued compensation

 

 

2,854

 

 

 

5,378

 

Accrued expenses and other current liabilities

 

 

10,058

 

 

 

6,050

 

Payable to PLI

 

 

110

 

 

 

193

 

Deferred revenue

 

 

1,781

 

 

 

3,668

 

Lease liabilities, current portion

 

 

1,202

 

 

 

 

Total current liabilities

 

 

16,467

 

 

 

16,442

 

Deferred revenue, non-current

 

 

15,733

 

 

 

16,204

 

Lease liabilities, net of current portion

 

 

13,558

 

 

 

 

Total liabilities

 

 

45,758

 

 

 

32,646

 

Commitments and contingencies (Note 9)

 

 

 

 

 

 

 

 

Stockholders’ equity:

 

 

 

 

 

 

 

 

Preferred stock—$0.0001 par value; 40,000,000 shares authorized

   at June 30, 2022 and December 31, 2021; No shares issued

   and outstanding at June 30, 2022 and December 31, 2021

 

 

 

 

 

 

Common stock—$0.0001 par value; 400,000,000 shares authorized as of

   June 30, 2022 and December 31, 2021; 39,699,667

   shares and 38,960,716 shares issued at June 30, 2022 and December 31, 2021,

   respectively; 39,690,686 shares and 38,943,110 shares outstanding at June 30,

   2022 and December 31, 2021, respectively;

 

 

4

 

 

 

4

 

Additional paid-in capital

 

 

447,191

 

 

 

424,492

 

Accumulated other comprehensive loss

 

 

(310

)

 

 

 

Accumulated deficit

 

 

(255,054

)

 

 

(189,341

)

Total stockholders’ equity

 

 

191,831

 

 

 

235,155

 

Total liabilities and stockholders’ equity

 

$

237,589

 

 

$

267,801

 

 

See accompanying notes.

2

 


 

PROMETHEUS BIOSCIENCES, INC.

Unaudited Condensed Statements of Operations and Comprehensive Loss

(in thousands, except share and per share amounts)

 

 

 

Three Months Ended June 30,

 

 

Six Months Ended June 30,

 

 

 

2022

 

 

2021

 

 

2022

 

 

2021

 

Collaboration revenue

 

$

1,269

 

 

$

326

 

 

$

5,188

 

 

$

1,086

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Research and development

 

 

25,918

 

 

 

13,554

 

 

 

53,848

 

 

 

21,312

 

General and administrative

 

 

9,319

 

 

 

5,618

 

 

 

17,405

 

 

 

10,840

 

Total operating expense

 

 

35,237

 

 

 

19,172

 

 

 

71,253

 

 

 

32,152

 

Loss from operations

 

 

(33,968

)

 

 

(18,846

)

 

 

(66,065

)

 

 

(31,066

)

Other income (expense), net:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest income

 

 

321

 

 

 

37

 

 

 

352

 

 

 

55

 

Interest expense

 

 

 

 

 

(190

)

 

 

 

 

 

(848

)

Change in fair value of preferred stock purchase right liability

 

 

 

 

 

 

 

 

 

 

 

(980

)

Change in fair value of preferred stock warrant liability

 

 

 

 

 

 

 

 

 

 

 

(105

)

Total other income (expense), net

 

 

321

 

 

 

(153

)

 

 

352

 

 

 

(1,878

)

Net loss

 

 

(33,647

)

 

 

(18,999

)

 

 

(65,713

)

 

 

(32,944

)

Other comprehensive loss:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Unrealized loss on available-for-sale securities, net

 

 

(310

)

 

 

 

 

 

(310

)

 

 

 

Comprehensive loss

 

 

(33,957

)

 

 

(18,999

)

 

 

(66,023

)

 

 

(32,944

)

Net loss per share, basic and diluted

 

$

(0.86

)

 

$

(0.49

)

 

$

(1.68

)

 

$

(1.39

)

Weighted average shares outstanding, basic and diluted

 

 

39,242,839

 

 

 

38,813,865

 

 

 

39,125,850

 

 

 

23,660,559

 

 

See accompanying notes.

3


 

PROMETHEUS BIOSCIENCES, INC.

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

(in thousands, except share amounts)

 

 

 

Common Stock

 

 

Additional

Paid-in

 

 

Accumulated Other Comprehensive

 

 

Accumulated

 

 

Total

Stockholders’

 

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Loss

 

 

Deficit

 

 

Equity

 

Balance at December 31, 2021

 

 

38,943,110

 

 

$

4

 

 

$

424,492

 

 

$

 

 

$

(189,341

)

 

$

235,155

 

Issuance of common stock upon exercise of stock options

 

 

142,391

 

 

 

 

 

 

349

 

 

 

 

 

 

 

 

 

349

 

Vesting of early exercised stock options

 

 

4,311

 

 

 

 

 

 

6

 

 

 

 

 

 

 

 

 

6

 

Stock-based compensation

 

 

 

 

 

 

 

 

3,279

 

 

 

 

 

 

 

 

 

3,279

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(32,066

)

 

 

(32,066

)

Balance at March 31, 2022

 

 

39,089,812

 

 

$

4

 

 

$

428,126

 

 

$

 

 

$

(221,407

)

 

$

206,723

 

Issuance of common stock upon exercise of stock options

 

 

21,284

 

 

 

 

 

 

98

 

 

 

 

 

 

 

 

 

98

 

Issuance of common stock in public offerings, net of issuance costs of $1,184

 

 

555,297

 

 

 

 

 

 

13,979

 

 

 

 

 

 

 

 

 

13,979

 

Issuance of common stock under employee stock purchase plan

 

 

19,979

 

 

 

 

 

 

346

 

 

 

 

 

 

 

 

 

346

 

Vesting of early exercised stock options

 

 

4,314

 

 

 

 

 

 

6

 

 

 

 

 

 

 

 

 

6

 

Stock-based compensation

 

 

 

 

 

 

 

 

4,636

 

 

 

 

 

 

 

 

 

4,636

 

Unrealized loss on marketable securities

 

 

 

 

 

 

 

 

 

 

 

(310

)

 

 

 

 

 

(310

)

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(33,647

)

 

 

(33,647

)

Balance at June 30, 2022

 

 

39,690,686

 

 

$

4

 

 

$

447,191

 

 

$

(310

)

 

$

(255,054

)

 

$

191,831

 

 

4


 

 

PROMETHEUS BIOSCIENCES, INC.

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

(in thousands, except share amounts)

 

 

 

Convertible

Preferred Stock

 

 

 

Common Stock

 

 

Additional

Paid-in

 

 

Accumulated Other Comprehensive

 

 

Accumulated

 

 

Total

Stockholders’

 

 

 

Shares

 

 

Amount

 

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Loss

 

 

Deficit

 

 

(Deficit) Equity

 

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

 

 

See accompanying notes.

5


 

 

PROMETHEUS BIOSCIENCES, INC.

Unaudited Condensed Statements of Cash Flows

(in thousands)

 

 

Six Months Ended

June 30,

 

 

 

2022

 

 

2021

 

Cash flows from operating activities

 

 

 

 

 

 

 

 

Net loss

 

$

(65,713

)

 

$

(32,944

)

Adjustments to reconcile net loss to net cash used in operating activities:

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

248

 

 

 

95

 

Stock-based compensation expenses

 

 

7,915

 

 

 

1,995

 

Amortization of premiums and discounts on marketable securities, net

 

 

(158

)

 

 

 

Noncash lease expense

 

 

220

 

 

 

 

Change in fair value of preferred stock purchase right liability

 

 

 

 

 

980

 

Change in fair value of preferred stock warrant liability

 

 

 

 

 

105

 

Common stock issued in exchange for services

 

 

 

 

 

3

 

Noncash interest expense

 

 

 

 

 

540

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

 

Accounts receivable

 

 

(786

)

 

 

869

 

Prepaid expenses and other current assets

 

 

1,395

 

 

 

(4,815

)

Other assets

 

 

 

 

 

(468

)

Accounts payable

 

 

(539

)

 

 

1,143

 

Accrued compensation

 

 

(2,524

)

 

 

(325

)

Accrued expenses and other current liabilities

 

 

3,985

 

 

 

114

 

Payable to PLI

 

 

(83

)

 

 

(897

)

Deferred revenue

 

 

(2,357

)

 

 

9,254