10-Q
false0001826457--12-31Q20001826457us-gaap:ConvertiblePreferredStockMember2021-03-310001826457us-gaap:FairValueInputsLevel1Memberglue:PensionPlanAssetsMember2020-12-310001826457us-gaap:FairValueInputsLevel3Memberglue:PreferredStockTrancheObligationMember2021-06-300001826457glue:CommonStockOptionsMember2021-06-300001826457us-gaap:RestrictedStockMember2021-01-012021-06-300001826457us-gaap:RestrictedStockUnitsRSUMember2021-01-012021-06-300001826457glue:CommonStockOptionsMember2020-01-012020-06-300001826457us-gaap:FairValueInputsLevel3Memberglue:PreferredStockTrancheObligationMemberus-gaap:MeasurementInputPriceVolatilityMember2020-12-310001826457us-gaap:FairValueInputsLevel1Member2020-12-310001826457us-gaap:GeneralAndAdministrativeExpenseMember2020-04-012020-06-300001826457us-gaap:FairValueInputsLevel3Memberglue:PreferredStockTrancheObligationMember2021-01-012021-06-3000018264572020-01-012020-06-300001826457us-gaap:CommonStockMember2021-03-310001826457us-gaap:IPOMember2021-01-012021-06-300001826457us-gaap:ComputerEquipmentMember2021-06-300001826457us-gaap:FairValueInputsLevel3Memberglue:PriorSettlementOfPreferredStockTranchObligationMemberglue:PreferredStockTrancheObligationMemberus-gaap:MeasurementInputExpectedTermMember2020-01-012020-12-310001826457us-gaap:RestrictedStockMember2020-12-310001826457us-gaap:FairValueInputsLevel3Memberglue:PensionPlanAssetsMember2021-06-300001826457us-gaap:RetainedEarningsMember2020-03-310001826457glue:PreferredStockTrancheObligationMemberus-gaap:FairValueInputsLevel2Member2020-12-310001826457glue:TwoThousandTwentyOneStockIncentivePlanMember2021-06-300001826457us-gaap:RetainedEarningsMember2021-04-012021-06-300001826457us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-03-310001826457us-gaap:LeaseholdImprovementsMember2021-06-300001826457us-gaap:FairValueInputsLevel1Memberglue:PensionPlanAssetsMember2021-06-300001826457us-gaap:CommonStockMember2020-06-300001826457us-gaap:SubsequentEventMemberus-gaap:IPOMember2021-07-232021-07-230001826457us-gaap:ConvertiblePreferredStockMember2020-01-012020-06-300001826457glue:ICRMember2021-04-012021-06-3000018264572021-03-310001826457us-gaap:AdditionalPaidInCapitalMember2021-06-300001826457us-gaap:RetainedEarningsMember2021-03-310001826457glue:VersantVentureMember2020-04-012020-06-300001826457us-gaap:ConvertiblePreferredStockMember2021-06-300001826457us-gaap:AdditionalPaidInCapitalMember2020-12-310001826457glue:SeriesBConvertiblePreferredStockMember2020-09-300001826457glue:PreferredStockTrancheObligationMember2020-12-310001826457glue:ICRMember2021-06-300001826457glue:RidgelineMember2021-04-012021-06-300001826457glue:SeriesAConvertiblePreferredStockMember2020-04-012020-06-3000018264572021-04-012021-06-300001826457us-gaap:FairValueInputsLevel3Memberglue:PensionPlanAssetsMember2020-12-310001826457us-gaap:AdditionalPaidInCapitalMember2020-03-310001826457glue:RidgelineMember2020-04-012020-06-300001826457us-gaap:RetainedEarningsMember2019-12-310001826457glue:RidgelineMember2021-01-012021-06-300001826457glue:RidgelineMember2020-01-012020-06-300001826457us-gaap:ConvertiblePreferredStockMember2020-03-310001826457us-gaap:AccumulatedOtherComprehensiveIncomeMember2020-12-310001826457glue:UnvestedStockOptionMember2021-06-300001826457us-gaap:FairValueInputsLevel3Memberglue:PreferredStockTrancheObligationMember2020-12-310001826457glue:PensionPlanAssetsMemberus-gaap:FairValueInputsLevel2Member2020-12-310001826457glue:VersantVentureMember2021-01-012021-06-300001826457us-gaap:AdditionalPaidInCapitalMember2020-01-012020-03-310001826457us-gaap:FairValueInputsLevel2Member2021-06-300001826457us-gaap:CommonStockMember2020-12-310001826457us-gaap:FairValueInputsLevel3Memberglue:PreferredStockTrancheObligationMemberus-gaap:MeasurementInputExpectedDividendPaymentMember2020-12-310001826457glue:ICRMember2020-12-3100018264572019-12-310001826457us-gaap:ResearchAndDevelopmentExpenseMember2020-04-012020-06-3000018264572020-12-310001826457us-gaap:CommonStockMember2021-01-012021-03-310001826457us-gaap:MoneyMarketFundsMember2020-12-310001826457us-gaap:FurnitureAndFixturesMember2021-06-300001826457us-gaap:RestrictedStockMember2020-01-012020-06-300001826457us-gaap:ComputerEquipmentMember2020-12-3100018264572020-03-310001826457us-gaap:RetainedEarningsMember2020-06-300001826457us-gaap:MoneyMarketFundsMemberus-gaap:FairValueInputsLevel1Member2020-12-310001826457us-gaap:ConvertiblePreferredStockMember2021-04-012021-06-300001826457glue:SeriesA2ConvertiblePreferredStockMember2020-04-012020-06-300001826457us-gaap:FurnitureAndFixturesMember2020-12-310001826457glue:TwoThousandTwentyOneEmployeeStockPurchasePlanMember2021-06-300001826457us-gaap:CommonStockMember2020-03-310001826457glue:RidgelineMember2021-06-300001826457us-gaap:RestrictedStockMember2021-01-012021-06-300001826457us-gaap:FairValueInputsLevel1Member2021-06-3000018264572020-06-300001826457glue:LaboratoryEquipmentMember2020-12-310001826457us-gaap:CommonStockMember2020-04-012020-06-300001826457glue:RidgelineMember2020-12-310001826457glue:VersantVentureMember2020-12-310001826457glue:ICRMember2020-04-012020-06-300001826457us-gaap:RetainedEarningsMember2020-01-012020-03-310001826457glue:PreferredStockTrancheObligationMemberglue:SeriesBConvertiblePreferredStockMember2020-12-310001826457us-gaap:FairValueInputsLevel3Memberus-gaap:MoneyMarketFundsMember2020-12-3100018264572021-01-012021-06-300001826457glue:TwoThousandTwentyOneEmployeeStockPurchasePlanMember2021-01-012021-06-300001826457glue:PreferredStockTrancheObligationMemberus-gaap:FairValueInputsLevel1Member2020-12-310001826457glue:PensionPlanAssetsMember2020-12-310001826457us-gaap:AdditionalPaidInCapitalMember2021-03-3100018264572020-01-012020-03-310001826457us-gaap:RestrictedStockMember2020-12-310001826457glue:SeriesBConvertiblePreferredStockMember2020-09-012020-09-300001826457us-gaap:AdditionalPaidInCapitalMember2021-01-012021-03-310001826457us-gaap:CommonStockMember2019-12-310001826457us-gaap:FairValueInputsLevel3Memberglue:PreferredStockTrancheObligationMemberus-gaap:MeasurementInputExpectedTermMember2020-01-012020-12-310001826457glue:SeriesA2ConvertiblePreferredStockMember2020-04-012020-04-300001826457us-gaap:RetainedEarningsMember2020-04-012020-06-300001826457us-gaap:FairValueInputsLevel3Memberglue:PriorSettlementOfPreferredStockTranchObligationMemberus-gaap:MeasurementInputExpectedDividendPaymentMemberglue:PreferredStockTrancheObligationMember2020-12-310001826457us-gaap:RetainedEarningsMember2020-12-310001826457glue:LaboratoryEquipmentMember2021-06-300001826457glue:PreferredStockTrancheObligationMemberglue:SeriesBConvertiblePreferredStockMember2020-09-300001826457us-gaap:RetainedEarningsMember2021-06-300001826457us-gaap:FairValueInputsLevel3Memberglue:PriorSettlementOfPreferredStockTranchObligationMemberglue:PreferredStockTrancheObligationMemberus-gaap:MeasurementInputRiskFreeInterestRateMember2020-12-310001826457glue:SeriesA2ConvertiblePreferredStockMember2020-04-300001826457glue:PreferredStockTrancheObligationMemberglue:SeriesBConvertiblePreferredStockMember2021-02-280001826457glue:PensionPlanAssetsMember2021-06-300001826457us-gaap:FairValueInputsLevel3Memberus-gaap:MoneyMarketFundsMember2021-06-300001826457glue:UnvestedStockOptionMember2021-01-012021-06-300001826457glue:PensionPlanAssetsMemberus-gaap:FairValueInputsLevel2Member2021-06-300001826457us-gaap:IPOMember2021-06-300001826457us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-01-012021-03-310001826457us-gaap:GeneralAndAdministrativeExpenseMember2021-04-012021-06-3000018264572020-04-012020-06-300001826457glue:SeriesBConvertiblePreferredStockMember2021-01-012021-03-310001826457us-gaap:RestrictedStockUnitsRSUMember2020-01-012020-06-300001826457us-gaap:ResearchAndDevelopmentExpenseMember2021-04-012021-06-300001826457glue:VersantVentureMember2020-01-012020-06-300001826457us-gaap:CommonStockMember2021-06-012021-06-300001826457glue:CommonStockOptionsMember2020-12-3100018264572020-01-012020-12-310001826457glue:SeriesCConvertiblePreferredStockMember2021-03-012021-03-310001826457us-gaap:MoneyMarketFundsMemberus-gaap:FairValueInputsLevel1Member2021-06-300001826457us-gaap:SubsequentEventMemberus-gaap:IPOMember2021-07-230001826457us-gaap:ConvertiblePreferredStockMember2019-12-310001826457us-gaap:FairValueInputsLevel3Member2021-06-300001826457us-gaap:RetainedEarningsMember2021-01-012021-03-310001826457us-gaap:MoneyMarketFundsMemberus-gaap:FairValueInputsLevel2Member2020-12-310001826457us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-06-300001826457glue:VersantVentureMember2021-06-300001826457us-gaap:MoneyMarketFundsMemberus-gaap:FairValueInputsLevel2Member2021-06-300001826457us-gaap:LeaseholdImprovementsMember2020-12-310001826457us-gaap:FairValueInputsLevel3Memberglue:PreferredStockTrancheObligationMemberus-gaap:MeasurementInputRiskFreeInterestRateMember2020-12-310001826457us-gaap:CommonStockMember2021-04-012021-06-300001826457us-gaap:AdditionalPaidInCapitalMember2020-06-300001826457us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-04-012021-06-300001826457us-gaap:RestrictedStockMember2021-06-300001826457glue:ICRMember2021-01-012021-06-300001826457us-gaap:ConvertiblePreferredStockMember2021-01-012021-06-300001826457glue:SeriesCConvertiblePreferredStockMember2021-01-012021-03-310001826457us-gaap:MoneyMarketFundsMember2021-06-300001826457glue:PreferredStockTrancheObligationMemberglue:SeriesBConvertiblePreferredStockMember2021-02-012021-02-2800018264572021-01-012021-03-310001826457glue:VersantVentureMember2021-04-012021-06-300001826457glue:CommonStockOptionsMember2021-01-012021-06-300001826457glue:VersantVentureMember2021-01-012021-03-3100018264572021-08-100001826457us-gaap:ConvertiblePreferredStockMember2020-06-300001826457us-gaap:RestrictedStockMember2021-06-300001826457us-gaap:ConvertiblePreferredStockMember2020-12-310001826457us-gaap:FairValueInputsLevel3Member2020-12-310001826457us-gaap:AdditionalPaidInCapitalMember2020-04-012020-06-300001826457us-gaap:CommonStockMember2021-06-3000018264572021-06-300001826457glue:TwoThousandTwentyOneStockIncentivePlanMember2021-01-012021-06-300001826457us-gaap:AdditionalPaidInCapitalMember2021-04-012021-06-300001826457us-gaap:FairValueInputsLevel2Member2020-12-310001826457glue:ICRMember2020-01-012020-06-300001826457glue:SeriesCConvertiblePreferredStockMember2021-03-31utr:Rateiso4217:USDxbrli:sharesxbrli:purexbrli:sharesglue:PriceVolatilityiso4217:USD

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

 

FORM 10-Q

 

(Mark One)

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

For the quarterly period ended June 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: 001-40522

 

Monte Rosa Therapeutics, Inc.

(Exact Name of Registrant as Specified in its Charter)

 

 

Delaware

81-3766197

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer
Identification No.)

 

 

645 Summer Street, Suite 102

Boston, Massachusetts

02210

(Address of principal executive offices)

(Zip Code)

Registrant’s telephone number, including area code: (617) 949-2643

 

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, par value $0.0001 per share

 

GLUE

 

The 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, 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 10, 2021, the registrant had 46,381,919 shares of common stock, $0.0001 per share, outstanding.

 

 

 

 


Summary of the material risks associated with our business

 

Our business is subject to numerous material and other risks and uncertainties that you should be aware of in evaluating our business. These risks are described more fully in Part II, “Item 1A—Risk Factors,” and include, but are not limited to, the following:

We are a biotechnology company with a limited operating history and have not generated any revenue to date from drug sales, and may never become profitable
We have incurred significant operating losses since our inception and anticipate that we will incur continued losses for the foreseeable future
We are very early in our development efforts. All of our programs are still in the preclinical stages of drug discovery. If we are unable to commercialize our product candidates or experience significant delays in doing so, our business will be materially harmed
Our approach to the discovery and development of product candidates based on our QuEEN platform is novel, which makes it difficult to predict the time, cost of development and likelihood of successfully developing any products
We may not be successful in our efforts to identify or discover additional product candidates or we may expend our limited resources to pursue a particular product candidate or indication and fail to capitalize on product candidates or indications that may be more profitable or for which there is a greater likelihood of success
Even if we receive marketing authorization for our product candidates, we will be subject to extensive ongoing regulatory obligations and continued regulatory review, which may result in significant additional expense, and we may be subject to penalties if we fail to comply with regulatory requirements or experience unanticipated problems with our product candidates
If we are unable to obtain and maintain patent and other intellectual property protection for our technology and product candidates or if the scope of the intellectual property protection obtained is not sufficiently broad, our competitors could develop and commercialize technology and drugs similar or identical to ours, and our ability to successfully commercialize our technology and drugs may be impaired, and we may not be able to compete effectively in our market
We own patent applications related to our QuEEN platform, our CDK2 program, our NEK7 program, and our GSPT1 program, including GSPT1-directed MGDs, biomarkers related to these compounds, and methods of reading through nonsense mutations. We currently do not own any issued patents. Further, patent prosecution related to our pending patent applications is in the early stages and, as such, no patent examiner has yet fully scrutinized the merits of any of our pending patent applications
Our future success depends on our ability to retain key executives and to attract, retain and motivate qualified personnel
Business disruptions could seriously harm our future revenue and financial condition and increase our costs and expenses
We have identified material weaknesses in our internal control over financial reporting. If we are unable to successfully remediate these material weaknesses in our internal control over financial reporting, it could have an adverse effect on our company
Our executive officers, directors, principal stockholders and their affiliates own a significant percentage of our stock and are able to exercise significant influence over our company, which will limit your ability to influence corporate matters and could delay or prevent a change in corporate control

 

 

 

 

 

 

 

 

 

 

 


Special note regarding forward-looking statements



This Quarterly Report on Form 10-Q, or Quarterly Report, contains forward-looking statements which are made pursuant to the safe harbor provisions of Section 27A of the Securities Act of 1933, as amended, or the or the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act. All statements other than statements of historical facts contained in this Quarterly Report are forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as “may”, “will”, “should”, “expects”, “intends”, “plans”, “anticipates”, “believes”, “estimates”, “predicts”, “potential”, “continue” or the negative of these terms or other comparable terminology. These statements are not guarantees of future results or performance and involve substantial risks and uncertainties. Forward-looking statements in this Quarterly Report include, but are not limited to, statements about:


the initiation, timing, progress, results, cost and success of our current and future research and development programs and preclinical studies, including our expectations for our GSPT1-directed MGD molecules;

the initiation, timing, progress, results, cost and success of our future clinical trials, including statements regarding the period during which the results of the clinical trials will become available;
our ability to continue to develop our proprietary protein degradation platform called QuEEN and to expand our proteomics and translational medicine capabilities;
the potential advantages of our platform technology and product candidates;
the extent to which our scientific approach and platform technology may target proteins that have been considered undruggable or inadequately drugged;
our plans to submit an IND application to the FDA for our lead GSPT1-directed MGD product candidate and future product candidates;
the potential benefits of strategic collaborations and our ability to enter into strategic collaborations with third parties who have the expertise to enable us to further develop our biological targets, product candidates and platform technology;
our ability to obtain and maintain regulatory approval of our product candidates;
our ability to manufacture, including through third-party manufacturers, our product candidates for preclinical use, future clinical trials and commercial use, if approved;
our ability to commercialize our product candidates, including our ability to establish sales, marketing and distribution capabilities;
the rate and degree of market acceptance of our product candidates;
the size and growth potential of the markets for our product candidates, and our ability to serve those markets;
our ability to establish and maintain intellectual property rights covering our current and future product candidates and technologies;
the implementation of our business model and strategic plans for our business, product candidates, and technology;
estimates of our future expenses, revenues, capital requirements, and our needs for additional financing;
our ability to obtain funding for our operations necessary to complete further development and commercialization of our product candidates;
our financial performance;
developments in laws and regulations in the United States and foreign countries;
the success of competing therapies that are or may become available;
our ability to attract and retain key scientific or management personnel;
the impact of the COVID-19 pandemic on our business and operations; and

i


other risks and uncertainties, including those listed under the section entitled “Risk factors.”

 

Any forward-looking statements in this Quarterly Report reflect our current views with respect to future events and with respect to our future financial performance, and involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by these forward-looking statements. Factors that may cause actual results to differ materially from current expectations include, among other things, those described under Part II, Item 1A, “Risk Factors” and elsewhere in this Quarterly Report. Given these uncertainties, you should not place undue reliance on these forward-looking statements. Except as required by law, we assume no obligation to update or revise these forward-looking statements for any reason, even if new information becomes available in the future.

 

All of our forward-looking statements are as of the date of this Quarterly Report only. In each case, actual results may differ materially from such forward-looking information. We can give no assurance that such expectations or forward-looking statements will prove to be correct. An occurrence of or any material adverse change in one or more of the risk factors or risks and uncertainties referred to in this Quarterly Report or included in our other public disclosures or our other periodic reports or other documents or filings filed with or furnished to the Securities and Exchange Commission, or the SEC, could materially and adversely affect our business, prospects, financial condition and results of operations. Except as required by law, we do not undertake or plan to update or revise any such forward-looking statements to reflect actual results, changes in plans, assumptions, estimates or projections or other circumstances affecting such forward-looking statements occurring after the date of this Quarterly Report, even if such results, changes or circumstances make it clear that any forward-looking information will not be realized. Any public statements or disclosures by us following this Quarterly Report that modify or impact any of the forward-looking statements contained in this Quarterly Report will be deemed to modify or supersede such statements in this Quarterly Report.

 

We may from time to time provide estimates, projections and other information concerning our industry, the general business environment, and the markets for certain diseases, including estimates regarding the potential size of those markets and the estimated incidence and prevalence of certain medical conditions. Information that is based on estimates, forecasts, projections, market research or similar methodologies is inherently subject to uncertainties, and actual events, circumstances or numbers, including actual disease prevalence rates and market size, may differ materially from the information reflected in this Quarterly Report. Unless otherwise expressly stated, we obtained this industry, business information, market data, prevalence information and other data from reports, research surveys, studies and similar data prepared by market research firms and other third parties, industry, medical and general publications, government data, and similar sources, in some cases applying our own assumptions and analysis that may, in the future, prove not to have been accurate.

ii


Table of Contents

 

Page

PART I.

FINANCIAL INFORMATION

1

Item 1.

Financial Statements (Unaudited)

1

Condensed Consolidated Balance Sheets

1

Condensed Combined and Consolidated Statements of Operations and Comprehensive Loss

2

Condensed Combined and Consolidated Statements of Convertible Preferred Stock and
    Stockholders’ Deficit

3

Condensed Combined and Consolidated Statements of Cash Flows

4

Notes to the Condensed Combined and Consolidated Financial Statements

5

Item 2.

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

13

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

21

Item 4.

Controls and Procedures

21

 

 

 

PART II.

OTHER INFORMATION

23

Item 1.

Legal Proceedings

23

Item 1A.

Risk Factors

23

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

73

Item 3.

Defaults Upon Senior Securities

73

Item 4.

Mine Safety Disclosures

73

Item 5.

Other Information

73

Item 6.

Exhibits

74

Signatures

75

 

We have applied for various trademarks that we use in connection with the operation of our business. All other trade names, trademarks and service marks of other companies appearing in this Quarterly Report are the property of their respective holders. Solely for convenience, the trademarks and trade names in this Quarterly Report may be referred to without the ® and ™ symbols, but such references should not be construed as any indicator that their respective owners will not assert, to the fullest extent under applicable law, their rights thereto. We do not intend to use or display other companies’ trademarks and trade names to imply a relationship with, or endorsement or sponsorship of us by, any other companies.



From time to time, we may use our website, our Facebook page at Facebook.com/Monte-Rosa-Therapeutics, our Twitter at @MonteRosaTx and on our LinkedIn account at linkedin.com/company/monte-rosa-therapeutics to distribute material information. Our financial and other material information is routinely posted to and accessible on the Investors section of our website, available at www.monterosatx.com. Investors are encouraged to review the Investor Relations section of our website because we may post material information on that site that is not otherwise disseminated by us. Information that is contained in and can be accessed through our website, our Facebook page, our Twitter posts and our LinkedIn posts are not incorporated into, and does not form a part of, this Quarterly Report.



 

 

iii


Part I ─ Financial Information

Item 1. Financial Statements

Monte Rosa Therapeutics, Inc.

Condensed consolidated balance sheets

 

 

(in thousands, except share and per share amounts)

 

June 30,

 

 

December 31,

 

(unaudited)

 

2021

 

 

2020

 

Assets

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

357,060

 

 

$

41,699

 

Prepaid expenses and other current assets

 

 

1,229

 

 

 

1,892

 

Total current assets

 

 

358,289

 

 

 

43,591

 

Property and equipment, net

 

 

8,923

 

 

 

4,623

 

Restricted cash

 

 

1,729

 

 

 

1,164

 

Total assets

 

$

368,941

 

 

$

49,378

 

Liabilities, convertible preferred stock and stockholders’ deficit

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Accounts payable

 

$

7,463

 

 

$

7,066

 

Accrued expenses and other current liabilities

 

 

3,328

 

 

 

2,529

 

Preferred stock tranche obligations

 

 

 

 

 

19,680

 

Total current liabilities

 

 

10,791

 

 

 

29,275

 

Defined benefit plan liability

 

 

1,472

 

 

 

1,067

 

Total liabilities

 

 

12,263

 

 

 

30,342

 

Commitments and contingencies

 

 

 

 

 

 

Convertible preferred stock, $0.0001 par value; 10,000,000 shares authorized, an no shares issued and
   outstanding as of June 30, 2021; and
77,631,514 shares authorized and 53,631,514
   shares issued and outstanding as of December 31, 2020

 

 

 

 

 

67,764

 

Stockholders’ equity (deficit)

 

 

 

 

 

 

Common stock, $0.0001 par value; 500,000,000 shares authorized, 45,025,857 shares
   issued and
44,603,731 shares outstanding as of June 30, 2021; and 97,500,000
   shares authorized,
2,180,803 shares issued and 1,685,534 shares outstanding as of
   December 31, 2020

 

 

4

 

 

 

1

 

Additional paid-in capital

 

 

436,847

 

 

 

404

 

Accumulated other comprehensive loss

 

 

(1,415

)

 

 

(1,056

)

Accumulated deficit

 

 

(78,758

)

 

 

(48,077

)

Total stockholders’ equity (deficit)

 

 

356,678

 

 

 

(48,728

)

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

 

$

368,941

 

 

$

49,378

 

 

See accompanying notes to the condensed combined and consolidated financial statements.

 

1


Monte Rosa Therapeutics, Inc.

Condensed combined and consolidated statements of operations and comprehensive loss

 

(in thousands, except share and per share amounts)

 

Three months ended
June 30,

 

 

Six months ended
June 30,

 

(unaudited)

 

2021

 

 

2020

 

 

2021

 

 

2020

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

Research and development

 

$

14,637

 

 

$

4,855

 

 

$

23,910

 

 

$

8,670

 

General and administrative

 

 

3,486

 

 

 

541

 

 

 

5,717

 

 

 

1,019

 

Total operating expenses

 

 

18,123

 

 

 

5,396

 

 

 

29,627

 

 

 

9,689

 

Loss from operations

 

 

(18,123

)

 

 

(5,396

)

 

 

(29,627

)

 

 

(9,689

)

Other income (expense):

 

 

 

 

 

 

 

 

 

 

 

 

Interest income, net

 

 

14

 

 

 

1

 

 

 

20

 

 

 

(2

)

Foreign currency exchange gain (loss), net

 

 

(296

)

 

 

31

 

 

 

(114

)

 

 

25

 

Changes in fair value of preferred stock tranche obligations, net

 

 

 

 

 

 

 

 

(960

)

 

 

 

Total other (expense) income

 

 

(282

)

 

 

32

 

 

 

(1,054

)

 

 

23

 

Net loss

 

$

(18,405

)

 

$

(5,364

)

 

$

(30,681

)

 

$

(9,666

)

Provision for pension benefit obligation

 

 

(495

)

 

 

 

 

 

(359

)

 

 

 

Comprehensive loss

 

$

(18,900

)

 

$

(5,364

)

 

$

(31,040

)

 

$

(9,666

)

Reconciliation of net loss to net loss attributable to common stockholders

 

 

 

 

 

 

 

 

 

 

 

 

Net loss

 

$

(18,405

)

 

$

(5,364

)

 

$

(30,681

)

 

$

(9,666

)

Net loss per share attributable to common stockholders—basic and diluted

 

$

(3.63

)

 

$

(3.64

)

 

$

(9.03

)

 

$

(6.69

)

Weighted-average number of shares outstanding used in computing
   net loss per common share—basic and diluted

 

 

5,070,554

 

 

 

1,475,409

 

 

 

3,399,174

 

 

 

1,445,820

 

 

See accompanying notes to the condensed combined and consolidated financial statements.

 

 

 

2


Monte Rosa Therapeutics, Inc.

Condensed combined and consolidated statements of convertible preferred stock and stockholders’ equity (deficit)

 

 

 

Convertible
preferred stock

 

 

 

Common stock

 

 

 

 

 

 

 

 

 

 

 

 

 

(in thousands, except share
amounts)
(unaudited)

 

Shares

 

 

Amount

 

 

 

Shares

 

 

Amount

 

 

Additional
paid-in
capital

 

 

Accumulated
other
comprehensive
loss

 

 

Accumulated
deficit

 

 

Total
Stockholders’
equity (deficit)

 

Balance—January 1, 2020

 

 

19,250,000

 

 

 

18,950

 

 

 

 

1,416,230

 

 

 

50

 

 

 

 

 

 

 

 

 

(12,198

)

 

 

(12,148

)

Stock-based compensation expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

11

 

 

 

 

 

 

 

 

 

11

 

Net Loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(4,302

)

 

 

(4,302

)

Balance—March 31, 2020

 

 

19,250,000

 

 

$

18,950

 

 

 

 

1,416,230

 

 

$

50

 

 

 

11

 

 

$

 

 

$

(16,500

)

 

$

(16,439

)

Restricted common stock vesting

 

 

 

 

 

 

 

 

 

72,247

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Change in par value of common stock due to the Contribution and Exchange agreement

 

 

 

 

 

 

 

 

 

 

 

 

(50

)

 

 

50

 

 

 

 

 

 

 

 

 

 

Conversion of convertible note and accrued interest to Series A convertible preferred stock

 

 

754,280

 

 

 

754

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Issuance of Series A-2 convertible preferred stock, net of issuance costs of $178

 

 

9,627,234

 

 

 

12,322

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock-based compensation expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

97

 

 

 

 

 

 

 

 

 

97

 

Net Loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(5,364

)

 

 

(5,364

)

Balance—June 30, 2020

 

 

29,631,514

 

 

$

32,026

 

 

 

 

1,488,477

 

 

$

 

 

 

158

 

 

$

 

 

$

(21,864

)

 

$

(21,706

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance—January 1, 2021

 

 

53,631,514

 

 

$

67,764

 

 

 

 

1,685,534

 

 

$

1

 

 

$

404

 

 

$

(1,056

)

 

$

(48,077

)

 

$

(48,728

)

Restricted common stock vesting

 

 

 

 

 

 

 

 

 

36,565

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Issuance of Series B convertible preferred stock, net of issuance costs of $69

 

 

24,000,000

 

 

 

68,571

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Issuance of Series C convertible preferred stock, net of issuance costs of $163

 

 

32,054,521

 

 

 

94,837

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Provision for pension benefit obligation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

136

 

 

 

 

 

 

136

 

Stock-based compensation expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

252

 

 

 

 

 

 

 

 

 

252

 

Net Loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(12,276

)

 

 

(12,276

)

Balance—March 31, 2021

 

 

109,686,035

 

 

$

231,172

 

 

 

 

1,722,099

 

 

$

1

 

 

 

656

 

 

$

(920

)

 

$

(60,353

)

 

$

(60,616

)

Restricted common stock vesting

 

 

 

 

 

 

 

 

 

36,580

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Exercise of common stock options

 

 

 

 

 

 

 

 

 

76,950

 

 

 

 

 

 

128

 

 

 

 

 

 

 

 

 

128

 

Conversion of convertible preferred stock into common stock

 

 

(109,686,035

)

 

 

(231,172

)

 

 

 

31,068,102

 

 

 

2

 

 

 

231,170

 

 

 

 

 

 

 

 

 

231,172

 

Issuance of common stock in connection with initial public offering, net of issuance costs of $18.5 million

 

 

 

 

 

 

 

 

 

11,700,000

 

 

 

1

 

 

 

203,874

 

 

 

 

 

 

 

 

 

203,875

 

Provision for pension benefit obligation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(495

)

 

 

 

 

 

(495

)

Stock-based compensation expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,019

 

 

 

 

 

 

 

 

 

1,019

 

Net Loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(18,405

)

 

 

(18,405

)

Balance—June 30, 2021

 

 

 

 

$

 

 

 

 

44,603,731

 

 

$

4

 

 

 

436,847

 

 

$

(1,415

)

 

$

(78,758

)

 

$

356,678

 

 

See accompanying notes to the condensed combined and consolidated financial statements.

 

 

 

3


Monte Rosa Therapeutics, Inc.

Condensed combined and consolidated statements of cash flows

 

(in thousands)

 

Six months ended
June 30,

 

(unaudited)

 

2021

 

 

2020

 

Cash flows from operating activities:

 

 

 

 

 

 

Net loss

 

$

(30,681

)

 

$

(9,666

)

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

 

 

 

 

 

 

Stock-based compensation expense

 

 

1,271

 

 

 

108

 

Depreciation

 

 

741

 

 

 

143

 

Changes in fair value of preferred stock tranche obligations

 

 

960

 

 

 

 

Changes in operating assets and liabilities

 

 

 

 

 

 

Prepaid expenses and other current assets

 

 

663

 

 

 

(522

)

Accounts payable

 

 

(1,195

)

 

 

2,158

 

Accrued expenses and other current liabilities

 

 

844

 

 

 

191

 

Net cash used in operating activities

 

$

(27,397

)

 

$

(7,588

)

Cash flows from investing activities:

 

 

 

 

 

 

Purchases of property and equipment

 

 

(4,918

)

 

 

(1,273

)

Net cash used in investing activities

 

$

(4,918

)

 

$

(1,273

)

Cash flows from financing activities:

 

 

 

 

 

 

Proceeds from issuance of convertible preferred stock

 

 

143,000

 

 

 

12,500

 

Payment of convertible preferred stock issuance costs

 

 

(231

)

 

 

(178

)

Proceeds from initial public offering, net of underwriting discount of $15.6 million

 

 

206,739

 

 

 

 

Payment of initial public offering issuance costs

 

 

(1,395

)

 

 

 

Proceeds from exercise of employee stock options

 

 

128

 

 

 

 

Net cash provided by financing activities

 

$

348,241

 

 

$

12,322

 

Net increase in cash, cash equivalents and restricted cash

 

$

315,926

 

 

$

3,461

 

Cash, cash equivalents and restricted cash—beginning of period

 

 

42,863

 

 

 

9,245

 

Cash, cash equivalents and restricted cash—end of period

 

$

358,789

 

 

$

12,706

 

Reconciliation of cash, cash equivalents and restricted cash

 

 

 

 

 

 

Cash and cash equivalents

 

$

357,060

 

 

$

12,706

 

Restricted cash

 

 

1,729

 

 

 

 

Total cash, cash equivalents and restricted cash

 

$

358,789

 

 

$

12,706

 

Supplemental disclosure of noncash items

 

 

 

 

 

 

Conversion of convertible preferred stock into common stock

 

$

231,172

 

 

$

 

Settlement of preferred stock tranche obligation

 

$

20,640

 

 

$

 

Common stock issuance costs in accounts payable

 

$

1,469

 

 

$

 

Conversion of convertible note payable and accrued interest into Series A convertible preferred stock

 

$

 

 

$

754

 

Purchases of property and equipment in accounts payable

 

$

123

 

 

$

332

 

 

See accompanying notes to the condensed combined and consolidated financial statements.

 

 

 

4


Monte Rosa Therapeutics, Inc.

Notes to the condensed combined and consolidated financial statements

(unaudited)

1. Description of business, contribution and exchange, and liquidity

Business

Monte Rosa Therapeutics, Inc. is a biotechnology company developing a portfolio of novel small molecule precision medicines that employ the body’s natural mechanisms to selectively degrade therapeutically-relevant proteins. As used in these condensed combined and consolidated financial statements, unless the context otherwise requires, references to the Company or Monte Rosa refer to Monte Rosa Therapeutics, Inc. and its wholly owned subsidiaries Monte Rosa Therapeutics AG and Monte Rosa Therapeutics Securities Corp. The Company was incorporated in Delaware in November 2019 and is headquartered in Boston, Massachusetts with research operations in both Boston and Basel, Switzerland.

Contribution and exchange

Monte Rosa Therapeutics AG, a Swiss operating company, was incorporated in April 2018. Monte Rosa Therapeutics, Inc. was incorporated in November 2019. In 2020, Monte Rosa Therapeutics, Inc. and Monte Rosa Therapeutics AG, entities under common control since the incorporation of Monte Rosa Therapeutics, Inc., consummated a contribution and exchange agreement, or the Contribution and Exchange, whereby Monte Rosa Therapeutics, Inc. acquired the net assets and shareholdings of Monte Rosa Therapeutics AG via a one-for-one exchange of equity between Monte Rosa Therapeutics, Inc. and the shareholders of Monte Rosa Therapeutics AG in a common control reorganization. Accordingly, the historical financial information has been retrospectively adjusted to include the historical results and financial position of Monte Rosa Therapeutics, Inc. combined with Monte Rosa Therapeutics AG’s historical results and financial position, after the elimination of all intercompany accounts and transactions.

Initial Public Offering

In June 2021 the Company completed its initial public offering, or IPO, and issued an aggregate of 11,700,000 shares of common stock at a price to the public of $19.00 per share. The Company received aggregate net proceeds from the IPO of $203.9 million, after deducting underwriting discounts and commissions of $15.6 million and offering costs of $2.9 million. In connection with the IPO, the Company granted the underwriters a 30-day option to purchase an additional 1,755,000 shares. In July 2021, the underwriters exercised the option in full and the Company issued 1,755,000 shares of common stock for aggregate net proceeds of $31.0 million after deducting underwriter discounts and commissions of $2.3 million.

Immediately prior to consummation of the IPO, all outstanding shares of the Company's Series A, Series A-2, Series B and Series C convertible preferred stock were converted into 31,068,102 shares of common stock. The Company's common stock began trading on the Nasdaq Global Select Market on June 24, 2021 under the symbol “GLUE”.

Liquidity considerations

Since inception, the Company has devoted substantially all its efforts to business planning, research and development, recruiting management and technical staff, and raising capital and has financed its operations primarily through the issuance of convertible preferred shares.

The Company’s continued discovery and development of its product candidates will require significant additional research and development efforts, including extensive preclinical and clinical testing and regulatory approval prior to commercialization. These efforts require significant amounts of additional capital, adequate personnel and infrastructure and extensive compliance-reporting capabilities. Even if product development efforts are successful, it is uncertain when, if ever, the Company will realize significant revenue from product sales.

As of June 30, 2021, the Company had an accumulated deficit of $78.8 million. The Company has incurred losses and negative cash flows from operations since inception, including net losses of $30.7 million and $9.7 million for the six months ended June 30, 2021 and 2020, respectively. The Company expects that its operating losses and negative cash flows will continue for the foreseeable future as the Company continues to develop its product candidates. The Company currently expects that its cash and cash equivalents of $357.1 million as of June 30, 2021 will be sufficient to fund operating expenses and capital requirements for at least 12 months from the date the condensed combined and consolidated financial statements are issued. However, additional funding will be necessary to fund future discovery

5


research, pre-clinical and clinical activities. The Company will seek additional funding through public financings, debt financings, collaboration agreements, strategic alliances and licensing arrangements. Although it has been successful in raising capital in the past, there is no assurance that the Company will be successful in obtaining such additional financing on terms acceptable to it, if at all, and the Company may not be able to enter into collaborations or other arrangements. If the Company is unable to obtain funding, it could be forced to delay, reduce or eliminate its research and development programs, product portfolio expansion or commercialization efforts, which could adversely affect the Company’s business prospects, even the ability to continue operations.

Coronavirus pandemic

The coronavirus, or COVID-19, pandemic has spread worldwide, and has caused many governments to implement measures to slow the spread of the outbreak through quarantines, travel restrictions, heightened border scrutiny and other measures. The outbreak and government measures taken in response have also had a significant impact, both directly and indirectly, on businesses and commerce, as worker shortages have occurred; supply chains have been disrupted; facilities and production have been suspended; and demand for certain goods and services, such as medical services and supplies, has spiked, while demand for other goods and services, such as travel, has fallen. The future progression of the outbreak and its effects on the Company’s business and operations are uncertain. To date, our operations have not been significantly impacted by the COVID-19 pandemic.

The actual and perceived impact of the COVID-19 pandemic is changing daily, and its ultimate effect on the Company cannot be predicted. As a result, there can be no assurance that the Company will not experience additional negative impacts associated with COVID-19, which could be significant. The COVID-19 pandemic may negatively impact the Company’s business, financial condition and results of operations causing interruptions or delays in the Company’s programs and services.  

2. Summary of significant accounting policies

There have been no changes to the significant accounting policies as disclosed in Note 2 to the Company’s annual combined and consolidated financial statements for the year ended December 31, 2020 included in the final prospectus for the Company’s IPO filed pursuant to Rule 424(b)(4) under the Securities Act with the Securities and Exchange Commission, or SEC on June 25, 2021.

Unaudited Financial Information

The Company’s condensed combined and consolidated financial statements included herein have been prepared in conformity with accounting principles generally accepted in the United States of America, or GAAP, and pursuant to the rules and regulations of the SEC. In the Company’s opinion, the information furnished reflects all adjustments, all of which are of a normal and recurring nature, necessary for a fair presentation of the financial position and results of operations for the reported interim periods. The Company considers events or transactions that occur after the balance sheet date but before the financial statements are issued to provide additional evidence relative to certain estimates or to identify matters that require additional disclosure. The results of operations for interim periods are not necessarily indicative of results to be expected for the full year or any other interim period.

Recently issued accounting pronouncements

The Company has elected to use the extended transition period for complying with new or revised accounting standards as available under the Jumpstart Our Business Startups Act (JOBS Act).

 

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842), as amended, or ASU 2016-02, with guidance regarding the accounting for and disclosure of leases. The update requires lessees to recognize the liabilities related all leases, including operating leases, with a term greater than 12 months on the balance sheet. This update also requires lessees and lessors to disclose key information about their leasing transactions. This standard is effective for annual reporting periods beginning after December 15, 2021, and interim periods within annual periods beginning after December 15, 2022. Early adoption is permitted. The Company is currently assessing the potential impact of adopting ASU 2016-02 on its financial statements and financial statement disclosures.

In June 2016, the FASB issued Accounting Standards Update No. 2016-13, Financial Instruments-Credit Losses: Measurement of Credit Losses on Financial Instruments. ASU 2016-13 requires measurement and recognition of expected credit losses for financial assets. In April 2019, the FASB issued clarification to ASU 2016-13 within ASU 2019-04, Codification Improvements to Topic 326, Financial Instruments-Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments, or ASU 2016-13. The guidance is effective for fiscal years beginning after December 15, 2022. The Company is currently assessing the potential impact of adopting ASU 2016-13 on its financial statements and financial statement disclosures.

6


In December 2019, the FASB issued ASU 2019-12, Simplifying the Accounting for Income Taxes, or ASU 2019-12. ASU 2019-12 eliminates certain exceptions related to the approach for intra-period tax allocation, the methodology for calculating income taxes in an interim period and the recognition of deferred tax liabilities for outside basis differences. It also clarifies and simplifies other aspects of the accounting for income taxes. This guidance is effective for fiscal years beginning after December 15, 2021, and interim periods within fiscal years beginning after December 15, 2022. Early adoption is permitted. The Company is currently assessing the impact adoption of ASU 2019-12 will have on the financial statements and disclosures.

In August 2020, the FASB issued ASU No. 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging Contracts in Entity s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity. ASU 2020-06 will simplify the accounting for convertible instruments by reducing the number of accounting models for convertible debt instruments and convertible preferred stock. Limiting the accounting models results in fewer embedded conversion features being separately recognized from the host contract as compared with current GAAP. Convertible instruments that continue to be subject to separation models are (i) those with embedded conversion features that are not clearly and closely related to the host contract, that meet the definition of a derivative, and that do not qualify for a scope exception from derivative accounting and (ii) convertible debt instruments issued with substantial premiums for which the premiums are recorded as paid-in capital. ASU 2020-06 also amends the guidance for the derivatives scope exception for contracts in an entity’s own equity to reduce form-over-substance-based accounting conclusions. ASU 2020-06 will be effective for the Company beginning after December 15, 2023. Early adoption is permitted, but no earlier than fiscal years beginning after December 15, 2020, including interim periods within those fiscal years. The Company is currently assessing the impact adoption of ASU 2020-06 will have on its financial statements and disclosures.

  

3. Fair value measurements

The following tables present information about the Company’s financial assets and liabilities measured at fair value on a recurring basis and indicate the level of the fair value hierarchy utilized to determine such fair values (in thousands):

 

<

 

 

As of June 30, 2021

 

 

 

Level 1

 

 

Level 2

 

 

Level 3

 

 

Total

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Current assets

 

 

 

 

 

 

 

 

 

 

 

 

Money market funds

 

$

144,831

 

 

$

 

 

$

 

 

$

144,831

 

Pension plan assets(1)

 

 

 

 

 

1,850

 

 

 

 

 

 

1,850

 

Total assets measured at fair value

 

$

144,831

 

 

$

1,850

 

 

$

 

 

$

146,681

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

As of December 31, 2020

 

Current assets

 

 

 

 

 

 

 

 

 

 

 

 

Money market funds

 

$

38,712

 

 

$

 

 

$

 

 

$

38,712

 

Pension plan assets(1)

 

 

 

 

 

1,217

 

 

 

 

 

 

1,217

 

Total assets measured at fair value

 

$

38,712

 

 

$

1,217

 

 

$

 

 

$

39,929

 

Current liabilities