UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended
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:
(Exact name of registrant as specified in its charter)
(State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer |
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(Address of principal executive offices) |
(Zip Code) |
Registrant’s telephone number, including area code: (
Securities registered pursuant to Section 12(b) of the Act:
Title of each class |
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Trading Symbol(s) |
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Name of each exchange on which registered |
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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.
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).
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 |
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Accelerated filer |
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Smaller reporting company |
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Emerging growth company |
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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 5, 2024 the registrant had
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:
i
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.
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 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 new information becomes available in the future or 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.
TRADEMARKS
Solely for convenience, our trademarks and trade names in this report are sometimes referred to without the ® and ™ symbols, but such references should not be construed as any indicator that we will not assert, to the fullest extent under applicable law, our rights thereto.
ii
Table of Contents
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PART I. |
1 |
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Item 1. |
1 |
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1 |
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Condensed Consolidated Statements of Operations and Comprehensive Loss (Unaudited) |
2 |
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Condensed Consolidated Statements of Stockholders’ Equity (Unaudited) |
3 |
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4 |
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Notes to the Condensed Consolidated Financial Statements (Unaudited) |
5 |
Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
15 |
Item 3. |
24 |
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Item 4. |
24 |
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PART II. |
25 |
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Item 1. |
25 |
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Item 1A. |
25 |
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Item 2. |
27 |
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Item 3. |
27 |
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Item 4. |
27 |
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Item 5 |
27 |
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Item 6. |
28 |
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29 |
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iii
Part I ─ Financial Information
Item 1. Financial Statements
Monte Rosa Therapeutics, Inc.
Condensed consolidated balance sheets (unaudited)
(in thousands, except share and per share amounts) |
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June 30, |
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December 31, |
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(unaudited) |
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2024 |
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2023 |
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Assets |
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Current assets: |
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Cash and cash equivalents |
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$ |
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$ |
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Marketable securities |
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Accounts receivable |
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— |
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Other receivables |
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Prepaid expenses and other current assets |
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Total current assets |
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Property and equipment, net |
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Operating lease right-of-use assets |
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Restricted cash |
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Other long-term assets |
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Total assets |
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$ |
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$ |
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Liabilities and stockholders’ equity |
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Current liabilities: |
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Accounts payable |
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$ |
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$ |
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Accrued expenses and other current liabilities |
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Current deferred revenue |
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Current portion of operating lease liability |
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Total current liabilities |
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Deferred revenue, net of current |
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Defined benefit plan liability |
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Operating lease liability |
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Total liabilities |
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Stockholders’ equity |
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Preferred stock, $ |
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Common stock, $ |
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Additional paid-in capital |
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Accumulated other comprehensive loss |
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( |
) |
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( |
) |
Accumulated deficit |
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( |
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( |
) |
Total stockholders’ equity |
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Total liabilities and stockholders’ equity |
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$ |
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$ |
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See accompanying notes to the condensed consolidated financial statements.
1
Monte Rosa Therapeutics, Inc.
Condensed consolidated statements of operations and comprehensive loss (unaudited)
(in thousands, except share and per share amounts) |
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Three months ended |
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Six months ended |
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(unaudited) |
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2024 |
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2023 |
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2024 |
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2023 |
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Collaboration revenue |
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$ |
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$ |
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$ |
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$ |
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Operating expenses: |
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Research and development |
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General and administrative |
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Total operating expenses |
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Loss from operations |
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( |
) |
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( |
) |
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( |
) |
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( |
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Other income (expense): |
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Interest income |
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Foreign currency exchange gain (loss), net |
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( |
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( |
) |
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( |
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Gain on disposal of fixed assets |
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Loss on sale of marketable securities |
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( |
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Total other income |
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Net loss before income taxes |
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( |
) |
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( |
) |
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( |
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( |
) |
Provision for income taxes |
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( |
) |
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( |
) |
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( |
) |
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( |
) |
Net loss |
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$ |
( |
) |
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$ |
( |
) |
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$ |
( |
) |
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$ |
( |
) |
Net loss per share—basic and diluted |
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$ |
( |
) |
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$ |
( |
) |
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$ |
( |
) |
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$ |
( |
) |
Weighted-average number of shares outstanding used in computing |
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Comprehensive loss: |
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Net loss |
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$ |
( |
) |
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$ |
( |
) |
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$ |
( |
) |
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$ |
( |
) |
Other comprehensive income (loss): |
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Provision for pension benefit obligation |
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Unrealized gain (loss) on available-for-sale securities |
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( |
) |
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( |
) |
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( |
) |
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Comprehensive loss |
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$ |
( |
) |
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$ |
( |
) |
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$ |
( |
) |
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$ |
( |
) |
See accompanying notes to the condensed consolidated financial statements.
2
Monte Rosa Therapeutics, Inc.
Condensed consolidated statements of stockholders’ equity (unaudited)
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Common stock |
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(in thousands, except share amounts) |
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Shares |
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Amount |
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Additional |
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Accumulated |
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Accumulated |
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Total |
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||||||
Balance—January 1, 2023 |
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$ |
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$ |
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$ |
( |
) |
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$ |
( |
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|
$ |
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Restricted common stock vesting |
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— |
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— |
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— |
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— |
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— |
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Exercise of common stock options |
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— |
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— |
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— |
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Provision for pension benefit obligation |
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— |
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— |
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— |
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— |
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Stock-based compensation expense |
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— |
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— |
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— |
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— |
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Unrealized gain on available-for-sale securities |
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— |
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— |
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— |
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— |
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Net Loss |
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— |
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— |
|
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— |
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— |
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( |
) |
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( |
) |
Balance—March 31, 2023 |
|
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$ |
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$ |
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$ |
( |
) |
|
$ |
( |
) |
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$ |
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||||
Restricted common stock vesting |
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— |
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— |
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— |
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— |
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— |
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Exercise of common stock options |
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— |
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— |
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— |
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|||
Provision for pension benefit obligation |
|
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— |
|
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— |
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— |
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— |
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Stock-based compensation expense |
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— |
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— |
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— |
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— |
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Unrealized loss on available-for-sale securities |
|
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— |
|
|
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— |
|
|
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— |
|
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( |
) |
|
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— |
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( |
) |
Issuance of shares under employee stock purchase plan |
|
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— |
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— |
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— |
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|||
Net Loss |
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— |
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— |
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— |
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— |
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( |
) |
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( |
) |
Balance—June 30, 2023 |
|
|
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$ |
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$ |
|
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$ |
( |
) |
|
$ |
( |
) |
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$ |
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||||
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||||||
Balance—January 1, 2024 |
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$ |
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$ |
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$ |
( |
) |
|
$ |
( |
) |
|
$ |
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||||
Restricted common stock vesting |
|
|
|
|
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— |
|
|
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— |
|
|
|
— |
|
|
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— |
|
|
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— |
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Exercise of common stock options |
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|
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— |
|
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— |
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— |
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|||
Provision for pension benefit obligation |
|
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— |
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|
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— |
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|
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— |
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|
|
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— |
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Stock-based compensation expense |
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— |
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— |
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|
|
|
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— |
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— |
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||
Unrealized loss on available-for-sale securities |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
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( |
) |
|
|
— |
|
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( |
) |
Issuance of common stock pursuant to the at-the-market sales agreement |
|
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|
|
— |
|
|
|
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— |
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— |
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|||
Net Loss |
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|
— |
|
|
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— |
|
|
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— |
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|
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— |
|
|
|
( |
) |
|
|
( |
) |
Balance—March 31, 2024 |
|
|
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
||||
Restricted common stock vesting |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
Exercise of common stock options |
|
|
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|||
Provision for pension benefit obligation |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
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||
Stock-based compensation expense |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
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||
Unrealized loss on available-for-sale securities |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
— |
|
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|
( |
) |
Issuance of shares under employee stock purchase plan |
|
|
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— |
|
|
|
|
|
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— |
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|
— |
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|||
Issuance of common stock pursuant to the at-the-market sales agreement, net of issuance costs of $ |
|
|
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— |
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— |
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— |
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|||
Issuance of common stock pursuant to the Underwritten Public Offering, net of issuance cost of $ |
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— |
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— |
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||||
Issuance of pre-funded warrant, net of issuance costs of $ |
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— |
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— |
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— |
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— |
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Net Loss |
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— |
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— |
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— |
|
|
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— |
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|
( |
) |
|
|
( |
) |
Balance—June 30, 2024 |
|
|
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
||||
See accompanying notes to the condensed consolidated financial statements
3
Monte Rosa Therapeutics, Inc.
Condensed consolidated statements of cash flows (unaudited)
(in thousands) |
|
Six months ended |
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|||||
(unaudited) |
|
2024 |
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2023 |
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||
Cash flows from operating activities: |
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Net loss |
|
$ |
( |
) |
|
$ |
( |
) |
Adjustments to reconcile net loss to net cash used in operating activities |
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Stock-based compensation expense |
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Depreciation |
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Net accretion of discounts/premiums on marketable securities |
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( |
) |
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( |
) |
Loss on sale of marketable securities |
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Gain on disposal of property and equipment |
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( |
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Changes in operating assets and liabilities |
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Accounts receivable |
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( |
) |
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Other receivables |
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( |
) |
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Prepaid expenses and other current assets |
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( |
) |
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Accounts payable |
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( |
) |
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( |
) |
Accrued expenses and other current liabilities |
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( |
) |
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( |
) |
Defined benefit plan liability |
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|
( |
) |
|
|
|
|
Right-of-use assets and operating lease liabilities |
|
|
( |
) |
|
|
|
|
Deferred revenue |
|
|
|
|
|
|
||
Net cash used in operating activities |
|
$ |
( |
) |
|
$ |
( |
) |
Cash flows from investing activities: |
|
|
|
|
|
|
||
Purchases of property and equipment |
|
|
( |
) |
|
|
( |
) |
Proceeds from the sale of property and equipment |
|
|
|
|
|
|
||
Purchases of marketable securities |
|
|
( |
) |
|
|
( |
) |
Proceeds from sale of marketable securities |
|
|
|
|
|
|
||
Proceeds from maturities of marketable securities |
|
|
|
|
|
|
||
Net cash provided by (used in) investing activities |
|
$ |
( |
) |
|
$ |
|
|
Cash flows from financing activities: |
|
|
|
|
|
|
||
Proceeds from sale of common stock pursuant to the at-the-market sales agreement, net of underwriter's discount of $ |
|
|
|
|
|
|
||
Proceeds from underwritten public offering cost, net of underwriter's discount of $ |
|
|
|
|
|
|
||
Proceeds from the issuance of pre-funded warrants |
|
|
|
|
|
|
||
Payment of common stock and pre-funded warrant issuance costs |
|
|
( |
) |
|
|
|
|
Proceeds from exercise of employee stock options |
|
|
|
|
|
|
||
Proceeds from employee stock purchase plan |
|
|
|
|
|
|
||
Net cash provided by financing activities |
|
$ |
|
|
$ |
|
||
Net decrease in cash, cash equivalents and restricted cash |
|
$ |
( |
) |
|
$ |
( |
) |
Cash, cash equivalents and restricted cash—beginning of period |
|
|
|
|
|
|
||
Cash, cash equivalents and restricted cash—end of period |
|
$ |
|
|
$ |
|
||
Reconciliation of cash, cash equivalents and restricted cash |
|
|
|
|
|
|
||
Cash and cash equivalents |
|
$ |
|
|
$ |
|
||
Restricted cash |
|
|
|
|
|
|
||
Total cash, cash equivalents and restricted cash |
|
$ |
|
|
$ |
|
||
Supplemental disclosure of noncash items |
|
|
|
|
|
|
||
Reduction of right-of-use assets for lease incentives receivable |
|
$ |
|
|
$ |
|
||
Purchases of property and equipment in accounts payable and accrued expenses |
|
$ |
|
|
$ |
|
||
See accompanying notes to the condensed consolidated financial statements.
4
Monte Rosa Therapeutics, Inc.
Notes to the condensed consolidated financial statements
(unaudited)
1. Description of business 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 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, or Monte Rosa AG, and Monte Rosa Therapeutics Securities Corp. Monte Rosa Therapeutics AG, a Swiss operating company, was incorporated under the laws of Switzerland in April 2018. Monte Rosa Therapeutics, Inc. was incorporated in Delaware in November 2019. The Company is headquartered in Boston, Massachusetts with research operations in both Boston and Basel, Switzerland.
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 issuance and sale of convertible promissory notes, convertible preferred stock, public offerings of common stock, registered direct offerings, and through a collaboration with Roche.
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, 2024, the Company had an accumulated deficit of $
2. Summary of significant accounting policies
Basis of presentation
The accompanying consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the U.S., or GAAP, and are stated in U.S. dollars. Any reference in these notes to applicable guidance is meant to refer to the authoritative GAAP as found in the Accounting Standards Codification and Accounting Standards Updates, or ASUs, of the Financial Accounting Standards Board, or FASB. All intercompany balances and transactions have been eliminated in consolidation.
Unaudited Financial Information
The Company’s condensed consolidated financial statements included herein have been prepared in conformity with GAAP and pursuant to the rules and regulations of the Securities and Exchange Commission, or 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
5
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, or the JOBS Act.
In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, which is intended to provide enhanced segment disclosures. The standard will require disclosures about significant segment expenses and other segment items and identifying the Chief Operating Decision Maker and how they use the reported segment profitability measures to assess segment performance and allocate resources. These enhanced disclosures are required for all entities on an interim and annual basis, even if they have only a single reportable segment. The standard is effective for years beginning after December 15, 2023, and interim periods within annual periods beginning after December 15, 2024 and early adoption is permitted. The Company is currently in the process of evaluating the impact of this pronouncement on our related disclosures.
In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which is intended to provide enhancements to annual income tax disclosures. The standard will require more detailed information in the rate reconciliation table and for income taxes paid, among other enhancements. The standard is effective for years beginning after December 15, 2024 and early adoption is permitted. The impact of the adoption of this standard will be immaterial to the accompanying condensed consolidated financial statements.
\\\
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, 2024 |
|
|||||||||||||
|
|
Level 1 |
|
|
Level 2 |
|
|
Level 3 |
|
|
Total |
|
||||
Current assets |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Money market funds |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Pension plan assets |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Corporate debt securities |
|
|
|
|
|
|
|
|
|
|
|
|
||||
U.S Treasury securities |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total assets measured at fair value |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
|
|
As of December 31, 2023 |
|
|||||||||||||
|
|
Level 1 |
|
|
Level 2 |
|
|
Level 3 |
|
|
Total |
|
||||
Current assets |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Money market funds |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Pension plan assets |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Corporate debt securities |
|
|
|
|
|
|
|
|
|
|
|
|
||||
U.S Treasury securities |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total assets measured at fair value |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Money market funds are highly liquid investments and are actively traded. The pricing information on the Company’s money market funds are based on quoted prices in active markets for identical securities. This approach results in the classification of these securities as Level 1 of the fair value hierarchy.
The fair value of pension plan assets has been determined as the surrender value of the portfolio of active insured members held within the Columna Collective Foundation Group investment fund and are classified within Level 2 of the fair value hierarchy.
Marketable securities consist of corporate debt securities and U.S. Treasury securities which are classified as available-for-sale pursuant to ASC 320, Investments—Debt and Equity Securities. Marketable securities are classified within Level 2 of the fair value hierarchy because pricing inputs are other than quoted prices in active markets. The fair values of these investments are estimated by taking into consideration valuations obtained from third-party pricing services. The pricing services utilize industry standard valuation models, including both income- and market-based approaches, for which all significant inputs are observable, either directly or indirectly, to estimate fair value. These inputs include reported trades of and broker/dealer quotes on the same or similar securities, issuer credit spreads, benchmark securities based on historical data and other observable inputs.
There were
6
4. Marketable Securities
Marketable securities as of June 30, 2024 consisted of the following (in thousands):
|
|
Amortized |
|
|
Unrealized |
|
|
Unrealized |
|
|
Fair |
|
||||
|
|
Cost |
|
|
Gains |
|
|
Losses |
|
|
Value |
|
||||
Description |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Corporate debt securities |
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
|
|
|||
U.S Treasury securities |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|||
Total |
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|||
Market securities as of December 31, 2023 consisted of the following (in thousands):
|
|
Amortized |
|
|
Unrealized |
|
|
Unrealized |
|
|
Fair |
|
||||
|
|
Cost |
|
|
Gains |
|
|
Losses |
|
|
Value |
|
||||
Description |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Corporate debt securities |
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
|
|
|||
U.S Treasury securities |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|||
Total |
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|||
The Company evaluates securities for other-than-temporary impairments based on quantitative and qualitative factors, and considers the decline in market value as of June 30, 2024 to be primarily attributable to the then current economic and market conditions. The Company neither intends to sell these investments nor concludes that it is more-likely-than-not that the Company will have to sell them before recovery of their carrying values. The Company also believes that it will be able to collect both principal and interest amounts due to it at maturity.
5. Property and Equipment, net
Property and equipment, net, consist of the following (in thousands):
|
|
June 30, |
|
|
December 31, |
|
||
Laboratory equipment |
|
$ |
|
|
$ |
|
||
Computer hardware and software |
|
|
|
|
|
|
||
Furniture and fixtures |
|
|
|
|
|
|
||
Leasehold improvements |
|
|
|
|
|
|
||
Construction in process |
|
|
|
|
|
|
||
Total property and equipment, at cost |
|
$ |
|
|
$ |
|
||
Less: accumulated depreciation |
|
|
( |
) |
|
|
( |
) |
Property and equipment, net |
|
$ |
|
|
$ |
|
||
The following table summarizes depreciation expense incurred (in thousands):
|
|
Three months ended |
|
|
Six months ended |
|
||||||||||
|
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
||||
Depreciation expense |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
6. Accrued expenses and other current liabilities
Accrued expenses and other current liabilities consist of the following (in thousands):
|
|
June 30, |
|
|
December 31, |
|
||
|
|
2024 |
|
|
2023 |
|
||
Compensation and benefits |
|
$ |
|
|
$ |
|
||
Accrued research and development |
|
|
|
|
|
|
||
Other |
|
|
|
|
|
|
||
Total other current liabilities |
|
$ |
|
|
$ |
|
||
7
7. Leases
The Company determines if an arrangement is a lease at inception. Operating leases are included in operating lease right-of-use, or ROU, assets and operating lease liabilities in the condensed consolidated balance sheets. The Company has
ROU assets represent the right to use an underlying asset for the lease term and lease liabilities represent the obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. As the Company’s leases do not provide an implicit rate, management estimated the incremental borrowing rate based on the rate of interest the Company would have to pay to borrow a similar amount on a collateralized basis over a similar term. The Company uses its incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments.
Klybeckstrasse Lease
In March 2021, the Company entered into an operating lease agreement for office and lab space with Wincasa AG, or the landlord, that occupies approximately
Harrison Avenue Lease
In December 2021, the Company entered into a non-cancelable lease agreement for
Pursuant to the terms of the Harrison Avenue Lease, the landlord reimbursed the Company for $
The components of lease expense for the six months ended June 30, 2024 are as follows (in thousands):
|
|
Six months ended |
|
|||||
|
|
2024 |
|
|
2023 |
|
||
Operating lease expense |
|
$ |
|
|
$ |
|
||
Variable lease expense |
|
|
|
|
|
|
||
Total lease expense |
|
$ |
|
|
$ |
|
||
The variable lease expenses generally include common area maintenance and property taxes. For the six months ended June 30, 2024, $
The weighted average remaining lease term and discount rate related to the Company's leases are as follows:
|
|
June 30, |
|
|
December 31, |
|
||
Weighted average remaining lease term (years) |
|
|
|
|
|
|
||
Weighted average discount rate |
|
|
% |
|
|
% |
||
Supplemental cash flow information relating to the Company's leases for the six months ended June 30, 2024 are as follows (in thousands):
8
|
|
Six months ended |
|
|||||
|
|
2024 |
|
|
2023 |
|
||
Right-of-use assets obtained in exchange for operating lease obligations |
|
$ |
|
|
$ |
|
||
Cash paid for amounts included in the measurement of lease liabilities |
|
$ |
|
|
$ |
|
||
The amortization of the ROU assets for the six months ended June 30, 2024 and 2023 was $
Future minimum lease payments under non-cancelable leases as of June 30, 2024 for each of the years ending December 31 are as follows (in thousands):
Undiscounted lease payments |
|
|
|
|
2024 |
|
$ |
|
|
2025 |
|
|
|
|
2026 |
|
|
|
|
2027 |
|
|
|
|
2028 |
|
|
|
|
Thereafter |
|
|
|
|
Total undiscounted minimum lease payments |
|
|
|
|
Less: Imputed interest |
|
|
( |
) |
Total operating lease liability |
|
$ |
|
|
8. Commitments and contingencies
Legal Proceedings
From time to time, the Company may be subject to legal proceedings, claims and disputes that arise in the ordinary course of business. The Company accrues a liability for such matters when it is probable that future expenditures will be made and that such expenditures can be reasonably estimated. As of June 30, 2024, the Company is not a party to any litigation and does not have a contingency reserve established for any litigation liabilities.
9. Collaboration and license agreements
Roche Collaboration and License Agreement
Description
In October 2023, Monte Rose Therapeutics AG, a wholly-owned subsidiary of Monte Rosa Therapeutics, Inc, or the Company, entered into a collaboration and license agreement with Roche. Pursuant to the agreement, the parties will seek to identify and develop molecular glue degraders, or MGDs, against cancer or neurological disease targets using the Company’s proprietary drug discovery platform for an initial set of targets in oncology and neuroscience selected by Roche, with Roche having an option to expand the collaboration to include additional option targets, wherein a certain number of targets selected by Roche are subject to replacement rights owned by Roche. The Company will lead pre-clinical discovery and research activities with Roche leading late pre-clinical and clinical development activities.
Under the Agreement, Roche will have a worldwide, exclusive license under patents and know-how controlled by the Company to develop and commercialize products directed to applicable targets. The license exclusivity is subject to the Company’s retained rights solely to fulfill its obligations under the arrangement.
The research collaboration activities governed by the Agreement will be overseen by a joint research committee.
Unless earlier terminated, the Agreement will remain in effect for each product licensed under the Agreement until expiration of the royalty term for the applicable product. The parties have included termination provisions in the agreement, allowing termination of the Agreement in its entirety, on a country-by-country or a target-by-target basis.
Pricing
In November 2023, the Company received a $
9
As of June 30, 2024, the Company is due $
Accounting
This agreement represents a transaction with a customer and therefore is accounted for under ASC 606 Revenue From Contracts With Customers.
The Company determined that the development and commercialization licenses for each of the collaboration targets is neither capable of being distinct nor distinct within the context from the promised initial research services. In addition, the Company has determined that each target in the agreement is distinct from other targets because: (i) Roche can benefit from the license and research services for a given target on their own since the results related thereto can be evaluated discretely and (ii) the results of the research and development of each target does not affect either the Company’s ability to perform or Roche’s ability to assess the results for any other target. As such, the Company has identified certain performance obligations within the agreement as follows:
The total transaction price of the Roche Agreement is allocated to the performance obligations based on their relative standalone selling price. The Company developed the standalone selling price for the performance obligations included in the Roche Agreement by determining the total estimated costs to fulfill each performance obligation identified with the objective of determining the price at which it would sell such an item if it were to be sold regularly on a standalone basis. The allocated transaction price is recognized as revenue from collaboration agreements in one of two ways:
As of June 30, 2024, $
10. Equity
Undesignated Preferred Stock
The Company had
Common Stock
The Company had
Additionally, the Company has issued pre-funded warrants to purchase
10
The holders of common stock are entitled to dividends when and if declared by the board of directors, subject to the preferences applicable to any outstanding shares of preferred stock. The board of directors has
The holders of common stock are entitled to
The Company has issued restricted stock to founders, employees and consultants, and expense for this restricted stock is recognized on a straight-line basis (see Note 11). The restricted stock generally vests monthly over
As of June 30, 2024, and December 31, 2023, the Company has reserved the following shares of common stock for the vesting of restricted stock and exercise of stock options:
|
|
June 30, |
|
|
December 31, |
|
||
Options to purchase common stock |
|
|
|
|
|
|
||
Unvested restricted common stock awards |
|
|
|
|
|
|
||
Unvested restricted common stock units |
|
|
|
|
|
|
||
Pre-funded warrants |
|
|
|
|
|
|
||
|
|
|
|
|
|
|
||
At-the-Market Offering
In July 2022, the Company entered into a sales agreement, or the Sales Agreement, with Jefferies LLC, or Jefferies, pursuant to which the Company may offer and sell shares of its common stock having aggregate gross proceeds of up to $
Underwritten Public Offering
In May 2024, the Company entered into an underwriting agreement with TD Securities (USA) LLC, as representative of the several underwriters, related to an underwritten public offering, or the Offering, of
Registered Direct Offering
In October 2023, the Company sold in a registered direct offering pursuant to a securities purchase agreement pre-funded warrants to purchase
11. Stock-based compensation
2020 Stock incentive plan
The Company’s 2020 Stock Option and Grant Plan, or the 2020 Plan, provided for the Company to grant stock options, restricted stock and other stock awards, to employees, non-employee directors, and consultants. Upon the effectiveness of the 2021 Plan (as defined below), no further issuances were made under the 2020 Plan.
11
2021 Stock incentive plan
The Company’s 2021 Stock Option and Incentive Plan, or the 2021 Plan, was approved by the Company’s board of directors on May 28, 2021 and the Company’s stockholders on June 17, 2021 and became effective on the date immediately prior to the date on which the registration statement for the Company’s IPO was declared effective. The 2021 Plan provides for the grant of incentive stock options, non-qualified stock options, stock appreciation rights, restricted stock units, restricted stock awards, unrestricted stock awards, cash-based awards and dividend equivalent rights to the Company’s officers, employees, directors and consultants. The number of shares initially reserved for issuance under the 2021 Plan was
2021 Employee stock purchase plan
The Company’s 2021 Employee Stock Purchase Plan, or the 2021 ESPP, was approved by the Company’s board of directors on May 28, 2021 and the Company’s stockholders on June 17, 2021 and became effective on the date immediately prior to the date on which the registration statement for the Company’s IPO was declared effective. A total of
Stock option activity
The following summarizes stock option activity:
|
|
Number of |
|
|
Weighted |
|
|
Weighted |
|
|
Aggregate |
|
||||
Outstanding—December 31, 2023 |
|
|
|
|
$ |
|
|
|
|
|
$ |
|
||||
Granted |
|
|
|
|
|
|
|
|
— |
|
|
|
— |
|
||
Exercised |
|
|
( |
) |
|
|
|
|
|
— |
|
|
|
— |
|
|
Forfeited |
|
|
( |
) |
|
|
|
|
|
— |
|
|
|
— |
|
|
Outstanding—June 30, 2024 |
|
|
|
|
$ |
|
|
|
|
|
$ |
|
||||
Vested or expected to vest—June 30, 2024 |
|
|
|
|
$ |
|
|
|
|
|
$ |
|
||||
Exercisable—June 30, 2024 |
|
|
|
|
$ |
|
|
|
|
|
$ |
|
||||
The aggregate intrinsic value of options granted is calculated as the difference between the exercise price of the options and the estimated fair value of the Company’s common stock.
Restricted stock award activity
Unvested restricted stock awards were granted to employees under the 2020 Plan. Restricted stock awards generally vest over a four year period provided the individual remains in continuous service of the Company.
The following summarizes restricted stock award activity:
|
|
Number |
|
|
Weighted |
|
||
Unvested restricted stock awards as of December 31, 2023 |
|
|
|
|
$ |
|
||
Vested |
|
|
( |
) |
|
$ |
|
|
Unvested restricted stock awards as of June 30, 2024 |
|
|
|
|
$ |
|
||
The aggregate fair value of restricted stock awards that vested during the six months ended June 30, 2024 was immaterial and $
12
restricted stock awards that vested during the six months ended June 30, 2024 and 2023 was $
Restricted stock unit activity
Starting in 2022, the Company granted restricted stock units, or RSUs, to employees under the 2021 Plan. Each of the RSUs represents the right to receive one share of the Company’s common stock upon vesting. The RSUs will vest over two years provided the individual remains in continuous service of the Company. Accordingly, stock-based compensation expense for each RSU is recognized on a straight-line basis over the vesting term. The fair value of each RSU is based on the closing price of the Company’s common stock on the date of grant.
The following summarizes restricted stock unit activity:
|
|
Number |
|
|
Weighted |
|
||
Unvested restricted stock units as of December 31, 2023 |
|
|
|
|
$ |
|
||
Granted |
|
|
|
|
$ |
|
||
Vested |
|
|
( |
) |
|
$ |
|
|
Forfeited |
|
|
( |
) |
|
$ |
|
|
Unvested restricted stock units as of June 30, 2024 |
|
|
|
|
$ |
|
||
The aggregate fair value of restricted stock units that vested during the six months ended June 30, 2024 was $
Stock-based compensation expense
Stock-based compensation expense is classified as follows (in thousands):
|
|
Six months ended |
|
|||||
|
|
2024 |
|
|
2023 |
|
||
Research and development |
|
$ |
|
|
$ |
|
||
General and administrative |
|
|
|
|
|
|
||
Total stock-based compensation expense |
|
$ |
|
|
$ |
|
||
As of June 30, 2024 total unrecognized stock–based compensation cost related to unvested stock options and restricted stock units was $
12. Income taxes
During the six months ended June 30, 2024, the Company recorded an income tax provision of $
13. Net loss per common share
Basic and diluted net loss per share is calculated based upon the weighted-average number of shares of common stock outstanding during the period. Shares of the Company's common stock underlying pre-funded warrants are included in the
13
calculation of the basic and diluted earnings per share.
|
|
Three months ended |
|
|
Six months ended |
|
||||||||||
|
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
||||
Net loss |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
Net loss per share attributable to common stockholders—basic and diluted |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
Weighted-average number of common shares used in computing net loss |
|
|
|
|
|
|
|
|
|
|
|
|
||||
The following outstanding potentially dilutive securities have been excluded from the calculation of diluted net loss per common share, as their effect is anti-dilutive:
|
|
June 30 |
|
|
June 30 |
|
||
|
|
2024 |
|
|
2023 |
|
||
Stock options to purchase common stock |
|
|
|
|
|
|
||
Restricted common stock |
|
|
|
|
|
|
||
Restricted stock units |
|
|
|
|
|
|
||
14. Employee retirement plans
The Company, in compliance with Swiss Law, is contracted with the AXA Leben AG for the provision of pension benefits in a defined benefit plan. All benefits are organized in a semi-autonomous collective foundation within the framework of the contract with AXA. Insurance benefits due are paid directly to the entitled persons by AXA in the name of and for the account of the collective foundation. The pension plan is financed by contributions of both employees and employer. The contract between the Company and the collective foundation can be terminated by either side. In the event of a termination, the Company would have an obligation to find alternative pension arrangements for its employees. Because there is no guarantee that the employee pension arrangements would be continued under the same conditions, there is a risk, albeit remote, that a pension obligation may fall on the Company. The pension assets are pooled for all affiliated companies; the investment of assets is done by the governing bodies of the collective foundation.
The following table summarizes pension expense incurred (in thousands):
|
|
Three months ended |
|
|
Six months ended |
|
||||||||||
|
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
||||
Pension expense |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
In February 2021, the Company adopted a defined contribution plan intended to qualify under Section 401(k) of the Internal Revenue Code covering all eligible U.S. based employees of the Company. All employees are eligible to become participants of the plan immediately upon hire. Each active employee may elect, voluntarily, to contribute a percentage of their compensation to the plan each year, subject to certain limitations. The Company reserves the right, but is not obligated, to make additional contributions to this plan. The Company makes safe-harbor match contributions of
The following table summarizes defined contribution expenses incurred (in thousands):
|
|
Three months ended |
|
|
Six months ended |
|
||||||||||
|
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
||||
Defined contribution expense |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
14
Item 2. Management’s discussion and analysis of financial condition and results of operations
The following discussion and analysis should be read in conjunction with the unaudited condensed consolidated financial statements and related notes included elsewhere in this Quarterly Report. This discussion and analysis and other parts of this Quarterly Report contain forward-looking statements based upon current beliefs, plans and expectations that involve risks, uncertainties and assumptions, such as statements regarding our plans, objectives, expectations, intentions and projections. Our actual results and the timing of selected events could differ materially from those anticipated in these forward-looking statements as a result of several factors, including those set forth in “Part I, Item 1A, Risk Factors” in our 2023 Annual Report and under Part II, Item 1A, “Risk Factors” and elsewhere in this Quarterly Report. You should carefully read the “Risk Factors” section of this Quarterly Report to gain an understanding of the important factors that could cause actual results to differ materially from our forward-looking statements. Please also see the section entitled “Special note regarding forward-looking statements.”
Overview
We are a biotechnology company developing a portfolio of novel and proprietary MGDs. MGDs are small molecule drugs that employ the body’s natural protein destruction mechanisms to selectively degrade therapeutically-relevant proteins. MGDs work by inducing the engagement of defined surfaces identified on target proteins by an E3 ligase, such as cereblon. We have developed a proprietary and industry-leading protein degradation platform, called QuEENTM to enable our unique, target-centric, MGD discovery and development and our rational design of MGD products. We believe our small molecule MGDs may give us significant advantages over existing therapeutic modalities, including other protein degradation approaches. We prioritize our product development on therapeutic targets backed by strong biological and genetic rationale with the goal of discovering and developing novel medicines. On May 9, 2024, we announced a new discovery program for CCNE1 (Cyclin E1)-directed MGDs for the treatment of CCNE1-amplified tumors. CCNE1, a key component of the cell cycle and a known driver of many cancers, is generally considered an undruggable target by conventional modalities.
Monte Rosa Therapeutics AG, a Swiss operating company, was incorporated under the laws of Switzerland in April 2018. Monte Rosa Therapeutics, Inc was incorporated in Delaware in November 2019. We are headquartered in Boston, Massachusetts with research operations in both Boston and Basel, Switzerland.
Liquidity
To date, we have financed our operations primarily through the issuance and sale of convertible promissory notes, convertible preferred stock, public offerings of our common stock, registered direct offerings, and through our collaboration with Roche. From our inception through the date hereof, we raised an aggregate of $625.8 million of gross proceeds from such transactions. Since inception, we have had significant operating losses. Our primary use of cash is to fund operating expenses, which consist primarily of research and development expenditures and, to a lesser extent, general and administrative expenditures. Our net loss was $135.4 million and $108.5 million for the years ended December 31, 2023 and 2022, respectively, and our net loss was $62.3 million and $67.2 million for the six months ended June 30, 2024 and 2023, respectively. As of June 30, 2024, we had an accumulated deficit of $428.2 million and $267.1 million in cash, cash equivalents, restricted cash and marketable securities.
Impact of global economic and political developments
The development of our product candidates could be disrupted and materially adversely affected in the future by global economic or political developments. In addition, economic uncertainty in global markets caused by political instability and conflict, and economic challenges caused by global pandemics or other public health events, may lead to market disruptions, including significant volatility in commodity prices, credit and capital market instability and supply chain interruptions. Our business, financial condition and results of operations could be materially and adversely affected by negative impacts on the global economy and capital markets resulting from these global economic conditions, particularly if such conditions are prolonged or worsen.
15
Components of operating results
Collaboration Revenue
Collaboration revenue represents amounts earned from our Collaboration and License Agreement with Roche.
Research and development expenses
Our research and development expenses include:
Most of our research and development expenses have been related to the development of our QuEENTM platform and advancement of our GSPT1 program, advancement of our disclosed and undisclosed programs including for CDK2, NEK7, VAV1, and CCNE1. With the exception of costs incurred for research and development on behalf of third parties, we have not reported program costs since our inception because we have not historically tracked or recorded our research and development expenses on a program-by-program basis. We use our personnel and infrastructure resources across the breadth of our research and development activities, which are directed toward identifying and developing product candidates.
We expense all research and development costs in the periods in which they are incurred. Costs for certain research and development activities are recognized based on an evaluation of the progress to completion of specific tasks using information and data provided to us by our vendors and third-party service providers.
We expect our research and development expenses to increase substantially for the foreseeable future as we continue to invest in research and development activities related to developing our product candidates, including investments in manufacturing, as we advance our programs and conduct clinical trials. The process of conducting the necessary clinical research to obtain regulatory approval is costly and time-consuming, and the successful development of our product candidates is highly uncertain. As a result, we are unable to determine the duration and completion costs of our research and development projects, the costs of related clinical development costs or when and to what extent we will generate revenue from the commercialization and sale of any of our product candidates.
General and administrative expenses
Our general and administrative expenses consist primarily of personnel costs and other expenses for outside professional services, including legal fees relating to patent and corporate matters, professional fees for accounting, auditing, tax and administrative consulting services, insurance costs and other operating costs. We expect our general and administrative expenses to increase over the next several years to support our continued research and development activities, manufacturing activities, and the potential commercialization of our product candidates and development of commercial infrastructure. We also anticipate our general and administrative costs will increase and with respect to the hiring of additional personnel, fees to outside consultants, lawyers and accountants, and costs associated with being a public company, such as expenses related to services associated with maintaining compliance with Nasdaq listing rules and SEC reporting requirements, insurance and investor relations costs.
Non-operating income and (expense)
Our non-operating income and (expense) includes (i) interest earned on our investments, including principally U.S. government-backed money-market funds and marketable securities; (ii) gains and losses on transactions of our Swiss subsidiary denominated in currencies other than the U.S. Dollar; and (iii) realized losses on the sale of marketable securities.
16
Results of operations for the three months ended June 30, 2024 and 2023
The following sets forth our results of operations:
|
|
Three months ended |
|
|
|
|
||||||
(in thousands) |
|
2024 |
|
|
2023 |
|
|
Dollar change |
|
|||
Collaboration revenue |
|
$ |
4,695 |
|
|
$ |
— |
|
|
$ |
4,695 |
|
Operating expenses: |
|
|
|
|
|
|
|
|
|
|||
Research and development |
|
$ |
28,055 |
|
|
$ |
29,076 |
|
|
$ |
(1,021 |
) |
General and administrative |
|
|
9,282 |
|
|
|
8,145 |
|
|
|
1,137 |
|
Total operating expenses |
|
|
37,337 |
|
|
|
37,221 |
|
|
|
116 |
|
Loss from operations |
|
|
(32,642 |
) |
|
|
(37,221 |
) |
|
|
4,579 |
|
Other expense |
|
|
2,584 |
|
|
|
2,233 |
|
|
|
351 |
|
Net loss before income taxes |
|
|
(30,058 |
) |
|
|
(34,988 |
) |
|
|
4,930 |
|
Provision for income taxes |
|
|
(252 |
) |
|
|
(190 |
) |
|
|
(62 |
) |
Net loss |
|
$ |
(30,310 |
) |
|
$ |
(35,178 |
) |
|
$ |
4,868 |
|
Collaboration revenue
Collaboration revenue of $4.7 million for the three months ended June 30, 2024 represents revenue recorded under the Roche License and Collaboration Agreement. As of June 30, 2024, $19.6 million was classified as current deferred revenue on the condensed consolidated balance sheet.
Research and development expenses
Research and development expenses were comprised of:
|
|
Three months ended |
|
|
|
|
||||||
(in thousands) |
|
2024 |
|
|
2023 |
|
|
Dollar change |
|
|||
External research and development services |
|
$ |
10,520 |
|
|
$ |
12,717 |
|
|
$ |
(2,197 |
) |
Personnel costs |
|
|
9,914 |
|
|
|
9,407 |
|
|
|
507 |
|
Laboratory and related expenses |
|
|
2,118 |
|
|
|
2,422 |
|
|
|
(304 |
) |
Facility costs and other expenses |
|
|
5,503 |
|
|
|
4,530 |
|
|
|
973 |
|
Research and development expenses |
|
$ |
28,055 |
|
|
$ |
29,076 |
|
|
$ |
(1,021 |
) |
As of June 30, 2024, we had 103 employees engaged in research and development activities in our facilities in the U.S. and Switzerland. As of June 30, 2023, we had 107 research and development employees in our facilities in the U.S. and Switzerland.
Most of our research and development expenses were driven by the successful achievement of key milestones in our research and development organization, including the continuation of the MRT-2359 clinical study, the preparation of MRT-6160 to enter the clinic, the progression of our preclinical pipeline, and the continued development of the Company’s QuEEN™ discovery engine. Research and development expenses for the three months ended June 30, 2024 and 2023 included non-cash stock-based compensation expense of $2.6 million and $2.3 million, respectively.
General and administrative expenses
General and administrative expenses to support our business activities were comprised of:
|
|
Three months ended |
|
|
|
|
||||||
(in thousands) |
|
2024 |
|
|
2023 |
|
|
Dollar change |
|
|||
Personnel costs |
|
$ |
5,326 |
|
|
$ |
4,715 |
|
|
$ |
611 |
|
Professional services |
|
|
1,356 |
|
|
|
1,132 |
|
|
|
224 |
|
Facility costs and other expenses |
|
|
2,600 |
|
|
|
2,298 |
|
|
|
302 |
|
General and administrative expenses |
|
$ |
9,282 |
|
|
$ |
8,145 |
|
|
$ |
1,137 |
|
As of June 30, 2024 and 2023 we had 26 employees engaged in general and administrative activities, principally in our U.S. facility. Personnel and professional service costs increased in the year ended June 30, 2024 as compared to June 30, 2023 as a result of stock-based compensation expense and fees paid to consultants in order to support our growth and operations. General and administrative expenses for the three months ended June 30, 2024 and 2023 included non-cash stock-based compensation expense of $1.9 million and $1.9 million, respectively.
17
Other income (expense)
Other income (expense), net was comprised of:
|
|
Three months ended |
|
|||||
(in thousands) |
|
2024 |
|
|
2023 |
|
||
Interest income, net |
|
$ |
2,637 |
|
|
$ |
2,302 |
|
Foreign currency exchange gain (loss), net |
|
|
(53 |
) |
|
|
(93 |
) |
Gain on disposal of fixed assets |
|
|
— |
|
|
|
24 |
|
Other income |
|
$ |
2,584 |
|
|
$ |
2,233 |
|
Other income and expense for the three months ended June 30, 2024 and 2023 is primarily attributable to interest earned on marketable securities.
Results of operations for the six months ended June 30, 2024 and 2023
The following sets forth our results of operations:
|
|
Six months ended |
|
|
|
|
||||||
(in thousands) |
|
2024 |
|
|
2023 |
|
|
Dollar change |
|
|||
Collaboration revenue |
|
$ |
5,759 |
|
|
$ |
— |
|
|
$ |
5,759 |
|
Operating expenses: |
|
|
|
|
|
|
|
|
|
|||
Research and development |
|
|
55,081 |
|
|
|
55,831 |
|
|
|
(750 |
) |
General and administrative |
|
|
18,267 |
|
|
|
15,649 |
|
|
|
2,618 |
|
Total operating expenses |
|
|
73,348 |
|
|
|
71,480 |
|
|
|
1,868 |
|
Loss from operations |
|
|
(67,589 |
) |
|
|
(71,480 |
) |
|
|
3,891 |
|
Other expense |
|
|
5,646 |
|
|
|
4,454 |
|
|
|
1,192 |
|
Net loss before income taxes |
|
$ |
(61,943 |
) |
|
$ |
(67,026 |
) |
|
$ |
5,083 |
|
Provision for income taxes |
|
|
(335 |
) |
|
|
(190 |
) |
|
|
(145 |
) |
Net loss |
|
$ |
(62,278 |
) |
|
$ |
(67,216 |
) |
|
$ |
4,938 |
|
Collaboration revenue
Collaboration revenue of $5.8 million for the six months ended June 30, 2024 represents revenue recorded under the Roche License and Collaboration Agreement. As of June 30, 2024, $19.6 million was classified as current deferred revenue on the condensed consolidated balance sheet.
Research and development expenses
Research and development expenses were comprised of:
|
|
Six months ended |
|
|
|
|
||||||
(in thousands) |
|
2024 |
|
|
2023 |
|
|
Dollar change |
|
|||
External research and development services |
|
$ |
20,928 |
|
|
$ |
23,471 |
|
|
$ |
(2,543 |
) |
Personnel costs |
|
|
19,723 |
|
|
|
18,918 |
|
|
|
805 |
|
Laboratory and related expenses |
|
|
3,823 |
|
|
|
4,528 |
|
|
|
(705 |
) |
Facility costs and other expenses |
|
|
10,607 |
|
|
|
8,914 |
|
|
|
1,693 |
|
Research and development expenses |
|
$ |
55,081 |
|
|
$ |
55,831 |
|
|
$ |
(750 |
) |
As of June 30, 2024, we had 103 employees engaged in research and development activities in our facilities in the U.S. and Switzerland. As of June 30, 2023, we had 107 research and development employees in our facilities in the U.S. and Switzerland.
Most of our research and development expenses were driven by the successful achievement of key milestones in our research and development organization, including the continuation of the MRT-2359 clinical study, the preparation of MRT-6160 to enter the clinic, the progression of our preclinical pipeline, and the continued development of the Company’s QuEEN™ discovery engine. Research and development expenses for the six months ended June 30, 2024 and 2023 included non-cash stock-based compensation expense of $5.3 million and $4.4 million, respectively.
18
General and administrative expenses
General and administrative expenses to support our business activities were comprised of:
|
|
Six months ended |
|
|
|
|
||||||
(in thousands) |
|
2024 |
|
|
2023 |
|
|
Dollar change |
|
|||
Personnel costs |
|
$ |
10,741 |
|
|
$ |
9,330 |
|
|
$ |
1,411 |
|
Professional services |
|
|
3,278 |
|
|
|
2,173 |
|
|
|
1,105 |
|
Facility costs and other expenses |
|
|
4,248 |
|
|
|
4,146 |
|
|
|
102 |
|
General and administrative expenses |
|
$ |
18,267 |
|
|
$ |
15,649 |
|
|
$ |
2,618 |
|
As of June 30, 2024 and 2023 we had 26 employees engaged in general and administrative activities, principally in our U.S. facility. Personnel and professional service costs increased in the year ended June 30, 2024 as compared to June 30, 2023 as a result of increased stock-based compensation expense and fees paid to consultants in order to support our growth and operations. General and administrative expenses for the six months ended June 30, 2024 and 2023 included non-cash stock-based compensation expense of $4.1 million and $3.7 million, respectively.
Other income (expense)
Other income (expense), net was comprised of:
|
|
Six months ended |
|
|||||
(in thousands) |
|
2024 |
|
|
2023 |
|
||
Interest income, net |
|
$ |
5,079 |
|
|
$ |
4,739 |
|
Foreign currency exchange gain (loss), net |
|
|
567 |
|
|
|
(178 |
) |
Gain on disposal of fixed assets |
|
|
— |
|
|
|
24 |
|
Loss on sale of marketable securities |
|
|
— |
|
|
|
(131 |
) |
Other income |
|
$ |
5,646 |
|
|
$ |
4,454 |
|
The increase in interest and other income for the six months ended June 30, 2024, is due to the strengthening of the U.S. Dollar with respect to, principally, the Swiss Franc.
Liquidity and capital resources
Overview
Due to our significant research and development expenditures, we have generated operating losses since our inception. We have funded our operations primarily through the sale of convertible promissory notes, convertible preferred stock, public offerings of our common stock and through our collaboration with Roche. As of June 30, 2024, we had $267.1 million in cash, cash equivalents, restricted cash and marketable securities. We have incurred losses since our inception and, as of June 30, 2024, we had an accumulated deficit of $428.2 million. Our primary use of cash is to fund operating expenses, which consist primarily of research and development expenditures, and to a lesser extent, general and administrative expenditures. Cash used to fund operating expenses is impacted by the timing of when we pay these expenses, as reflected in the change in our outstanding accounts payable and accrued expenses.
At-the-Market Offering
On July 1, 2022, we filed a registration statement on Form S-3 (File No. 333-266003) with the SEC, which was declared effective on July 13, 2022, or the Shelf Registration Statement, in relation to the registration of common stock, preferred stock, debt securities, warrants and/or units of any combination thereof for the purposes of selling, from time to time, our common stock, debt securities or other equity securities in one or more offerings. We also simultaneously entered into a Sales Agreement, or the Sales Agreement, with Jefferies LLC, or Jefferies, to provide for the offering, issuance and sale of up to an aggregate amount of $100.0 million of our common stock from time to time in “at-the-market” offerings, or the ATM Program, under the Shelf Registration Statement and subject to the limitations thereof. We will pay to the Jefferies cash commissions of up to 3.0 percent of the aggregate gross proceeds of sales of common stock under the Sales Agreement. As of the date of this Quarterly Report on Form 10-Q, 2,612,514 shares have been sold pursuant to the ATM Program.
Underwritten Public Offering
In May 2024, we entered into an underwriting agreement with TD Securities (USA) LLC, as representative of the several underwriters, related to an underwritten public offering, or the Offering, of 10,638,476 shares of common stock at a price of $4.70 per share, and, in lieu of Common Stock to certain investors, pre-funded warrants to purchase 10,638,524 shares of Common Stock at a price of $4.6999 per pre-funded warrant The purchase price per share of each pre-funded warrant represents the per share public offering price for the common stock, minus the $0.0001 per share exercise price of such
19
pre-funded warrant.. The pre-funded warrants are immediately exercisable and may be exercised at any time until the pre-funded warrants are exercised in full. Aggregate gross proceeds from the Offering were $100 million, or aggregate net proceeds of $96.4 million after deducting the underwriter discounts, commissions, and other offering costs.
Registered Direct Offering
In October 2023, we sold in a registered direct offering pursuant to a securities purchase agreement pre-funded warrants to purchase 10,000,400 shares of the our common stock to an accredited investor at a purchase price of $2.4999 per pre-funded warrant for aggregate gross proceeds of $25.0 million. The pre-funded warrants are immediately exercisable at an exercise price of $0.0001 per share.
Cash flows
The following table summarizes our cash flows for the periods indicated:
|
|
Six months ended |
|
|||||
(in thousands) |
|
2024 |
|
|
2023 |
|
||
Net cash provided by (used in): |
|
|
|
|
|
|
||
Operating activities |
|
$ |
(65,932 |
) |
|
$ |
(48,730 |
) |
Investing activities |
|
|
(51,305 |
) |
|
|
38,876 |
|
Financing activities |
|
|
98,269 |
|
|
|
1,218 |
|
Net decrease in cash, cash equivalents and restricted cash |
|
$ |
(18,968 |
) |
|
$ |
(8,636 |
) |
Operating activities
Net cash used in operating activities of $65.9 million during the six months ended June 30, 2024, was attributable to our net loss of $62.3 million and decreases in our working capital of $6.8 million, partially off-set by non-cash charges of $12.2 million principally with respect to depreciation expense and stock-based compensation.
Net cash used in operating activities of $48.7 million during the six months ended June 30, 2023, was attributable to our net loss of $67.2 million off-set by an increase in our working capital of $10.4 million and non-cash charges of $8.1 million principally with respect to depreciation expense and stock-based compensation.
Investing activities
Cash used in investing activities of $51.3 million during the six months ended June 30, 2024 was primarily attributable to proceeds from the maturity of marketable securities of $82.1 million, offset by purchases of marketable securities of $130.0 million and purchases of property and equipment of $3.4 million.
Cash provided by investing activities of $38.9 million during the six months ended June 30, 2023 was primarily attributable to proceeds from the maturity of marketable securities of $76.7 million and proceeds from the sale of marketable securities of $45.6 million, offset by purchases of marketable securities of $67.8 million and purchases of property and equipment of $15.7 million.
Financing activities
Net cash provided by financing activities of $98.3 million for six months ended June 30, 2024 was primarily due the net proceeds from our Offering of $96.4 million.
Funding requirements
Any product candidates we may develop may never achieve commercialization and we anticipate that we will continue to incur losses for the foreseeable future. We expect that our research and development expenses, general and administrative expenses and capital expenditures will continue to increase. As a result, until such time, if ever, as we can generate substantial product revenue, we expect to finance our cash needs through a combination of equity offerings, debt financings or other capital sources, including potential collaborations, licenses and other similar arrangements. Our primary uses of capital are, and we expect will continue to be, compensation and related expenses, third-party clinical research, manufacturing and development services, costs relating to the build-out of our headquarters, laboratories and manufacturing facility, license payments or milestone obligations that may arise, laboratory and related supplies, clinical costs, manufacturing costs, legal and other regulatory expenses and general overhead costs.
Based upon our current operating plan, we believe that our existing cash, cash equivalents and marketable securities will enable us to fund our operating expenses and capital expenditure requirements for at least the next twelve months. We
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base this estimate on assumptions that may prove to be wrong, and we could utilize our available capital resources sooner than we currently expect.
We will continue to require additional financing to advance our current product candidates through clinical development, to develop, acquire or in-license other potential product candidates and to fund operations for the foreseeable future. We will continue to seek funds through equity offerings, debt financings or other capital sources, including potential collaborations, licenses and other similar arrangements. However, we may be unable to raise additional funds or enter into such other arrangements when needed on favorable terms or at all. If we do raise additional capital through public or private equity offerings, the ownership interest of our existing stockholders will be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect our stockholders’ rights. If we raise additional capital through debt financing, we may be subject to covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures or declaring dividends. Any failure to raise capital as and when needed could have a negative impact on our financial condition and on our ability to pursue our business plans and strategies. If we are unable to raise capital, we will need to delay, reduce or terminate planned activities to reduce costs.
Because of the numerous risks and uncertainties associated with research, development and commercialization of pharmaceutical products, we are unable to estimate the exact amount of our operating capital requirements. Our future funding requirements will depend on many factors, including, but not limited to:
Further, our operating plans may change, and we may need additional funds to meet operational needs and capital requirements for clinical trials and other research and development activities. We currently have no credit facility or committed sources of capital. Because of the numerous risks and uncertainties associated with the development and commercialization of our product candidates, we are unable to estimate the amounts of increased capital outlays and operating expenditures associated with our current and anticipated product development programs.
Critical accounting policies and significant judgments and estimates
Our unaudited interim condensed consolidated financial statements are prepared in accordance with generally accepted accounting principles in the U.S. The preparation of our unaudited interim condensed consolidated financial statements and related disclosures requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, costs and expenses, and the disclosure of contingent assets and liabilities in our condensed financial statements. We base our estimates on historical experience, known trends and events and various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. We evaluate our estimates and assumptions on an ongoing basis. However, even though we believe we have used reasonable estimates and assumptions in preparing our interim condensed consolidated financial statements, the future effects of global economic and political developments and any future public health events on our results of operations, cash flows, and financial position are unclear. Our actual results may differ from these estimates under different assumptions or conditions.
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Revenue Recognition
To date, our revenues have primarily consisted of consideration related to the Roche License and Collaboration Agreement, which we are accounting for under ASC 606. In accordance with ASC 606, we recognize revenue when our customers obtain control of promised goods or services, in an amount that reflects the consideration which we expect to receive in exchange for those goods or services.
To determine the appropriate amount of revenue to be recognized for arrangements determined to be within the scope of ASC 606, we perform the following five steps: (i) identification of the promised goods or services in the contract; (ii) determination of whether the promised goods or services are performance obligations including whether they are distinct in the context of the contract; (iii) measurement of the transaction price, including the assessment of the constraint on variable consideration; (iv) allocation of the transaction price to the performance obligations; and (v) recognition of revenue when, or as we satisfy each performance obligation.
As part of the accounting for arrangements under ASC 606, we must use significant judgment to determine the performance obligations based on the determination under step (ii) above. We also use judgment to determine whether milestones or other variable consideration, except for royalties and sales-based milestones, should be included in the transaction price as described below. We recognize revenue based on those amounts when, or as, the performance obligations under the contract are satisfied.
The transaction price is determined based on the consideration to which we will be entitled in exchange for transferring goods and services to the customer. To the extent the transaction price includes variable consideration, we estimate the amount of variable consideration that should be included in the transaction price utilizing either the expected value method or the most likely amount method, depending on the nature of the variable consideration. Variable consideration is included in the transaction price if, in management’s judgment, it is probable that a significant future reversal of cumulative revenue under the contract will not occur. Any estimates, including the effect of the constraint on variable consideration, are evaluated at each reporting period for any changes.
If the contract contains a single performance obligation, the entire transaction price is allocated to the single performance obligation. Contracts that contain multiple performance obligations require an allocation of the transaction price to each performance obligation on a relative standalone selling price basis unless the transaction price is variable and meets the criteria to be allocated entirely to a performance obligation or to a distinct service that forms part of a single performance obligation. The consideration to be received is allocated among the separate performance obligations based on relative standalone selling prices. Determining the standalone selling price of each performance obligation requires significant judgment and is discussed in further detail in Note 9.
We utilize judgment to assess the nature of the performance obligation to determine whether the performance obligation is satisfied over time or at a point in time and, if over time, the appropriate method of measuring progress. We evaluate the measure of progress each reporting period and, if necessary, adjust the measure of performance and related revenue recognition. The measure of progress, and the resulting periods over which revenue should be recognized, are subject to estimates by management and may change over the course of the arrangement, which are subject to review by the joint research committee, or JRC. Such a change could have a material impact on the amount of revenue we record in future periods. We concluded that the transfer of control to the customer for the performance obligation occurs over the time period that the research and development services are provided by us. We recognize revenue for the performance obligation as those services are provided using an input method, based on the cumulative costs incurred compared to the total estimated costs expected to be incurred to satisfy the performance obligation. The percentage of completion method is, in management’s judgment, the best measure of progress towards satisfying the performance condition.
At the inception of each arrangement that includes research, development or regulatory milestone payments, we evaluate whether the milestones are considered likely to be met and estimate the amount to be considered for inclusion in the transaction price using the most-likely-amount method. If it is probable that a significant reversal in the amount of cumulative revenue recognized would not occur, the associated milestone value is included in the transaction price. For milestone payments due upon events that are not within our control, such as regulatory approvals, we are not able to assert that it is likely that the regulatory approval will be granted and that it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur until those approvals are received. In making this assessment, we evaluate factors such as the scientific, clinical, regulatory, commercial, and other risks that must be overcome to achieve the particular milestone. There is considerable judgment involved in determining whether it is probable that a significant reversal in the amount of cumulative revenue recognized would not occur.
We reevaluate the transaction price and our total estimated costs expected to be incurred at the end of each reporting period and as uncertain events, such as changes to the expected timing and cost of certain research, development and manufacturing activities that we are responsible for, are resolved or other changes in circumstances occur. If necessary,
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we will adjust our estimate of the transaction price or our estimates of the total costs expected to be incurred. To date, we have not had any significant changes in our estimates.
Other than the Company's revenue recognition policy described above, there have been no significant changes to our critical accounting policies from those described in “Part II, Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in our 2023 Annual Report.
For a complete discussion of our significant accounting policies and recent accounting pronouncements, see Note 2 to our condensed consolidated financial statements appearing elsewhere in this Quarterly Report and Note 2 to our 2023 Annual Report.
Recently issued and adopted accounting pronouncements
Refer to Note 2, “Summary of Significant Accounting Policies,” in the accompanying notes to our and consolidated financial statements appearing elsewhere in this Quarterly Report on Form 10-Q for a discussion of recent accounting pronouncements.
Contractual obligations and commitments
During the three months ended June 30, 2024, there have been no material changes to our contractual obligations and commitments from those described under “Part II, Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in our Annual Report on Form 10-K for the year ended December 31, 2023, filed with the Securities and Exchange Commission on March 14, 2024.
Off-balance sheet arrangements
During the periods presented, we did not have, nor do we currently have, any off-balance sheet arrangements as defined under SEC rules.
Emerging growth company status
In April 2012, the Jumpstart Our Business Startups Act of 2012, or the JOBS Act, was enacted. Section 107 of the JOBS Act provides that an “emerging growth company” may take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. Therefore, an emerging growth company can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We have elected to avail ourselves of this extended transition period and, as a result, we may adopt new or revised accounting standards on the relevant dates on which adoption of such standards is required for non-public companies instead of the dates required for other public companies. However, we may early adopt these standards.
We will cease to be an emerging growth company on the date that is the earliest of (i) the last day of the fiscal year in which we have total annual gross revenues of $1.235 billion or more, (ii) the last day of our fiscal year following the fifth anniversary of the date of the closing of our initial public offering, or our IPO, (iii) the date on which we have issued more than $1.0 billion in nonconvertible debt during the previous three years or (iv) the date on which we are deemed to be a large, accelerated filer under the rules of the SEC.
We are also a “smaller reporting company,” meaning that the market value of our stock held by non-affiliates plus the aggregate amount of gross proceeds to us as a result of our IPO is less than $700 million and our annual revenue was less than $100 million during the most recently completed fiscal year. We may continue to be a smaller reporting company after our IPO if either (i) the market value of our stock held by non-affiliates is less than $250 million or (ii) our annual revenue was less than $100 million during the most recently completed fiscal year and the market value of our stock held by non-affiliates is less than $700 million. If we are a smaller reporting company at the time we cease to be an emerging growth company, we may continue to rely on exemptions from certain disclosure requirements that are available to smaller reporting companies. Specifically, as a smaller reporting company we may choose to present only the two most recent fiscal years of audited financial statements in our annual reports on Form 10-K and, similar to emerging growth companies, smaller reporting companies have reduced disclosure obligations regarding executive compensation.
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Item 3. Quantitative and qualitative disclosures about market risk
We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information required under this Item 3.
Item 4. Controls and procedures
Evaluation of Disclosure Controls and Procedures
Our management, with the participation of our principal executive officer and our principal financial officer have evaluated the effectiveness of our disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended, or the Exchange Act, as of June 30, 2024. The term “disclosure controls and procedures,” as defined in the Exchange Act, means controls and other procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the company’s management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.
Based on the evaluation of our disclosure controls and procedures as of June 30, 2024, our principal executive officer and principal financial officer concluded that our disclosure controls and procedures as of such date are effective at the reasonable assurance level.
Changes in Internal Control over Financial Reporting
There were no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during three months ended June 30, 2024 that materially affected, or were reasonably likely to materially affect, our internal control over financial reporting.
Inherent Limitations on Effectiveness of Controls
Our disclosure controls and procedures and internal control over financial reporting are designed to provide reasonable assurance of achieving the desired control objectives. Our management recognizes that any control system, no matter how well designed and operated, is based upon certain judgments and assumptions and cannot provide absolute assurance that its objectives will be met. Similarly, an evaluation of controls cannot provide absolute assurance that misstatements due to error or fraud will not occur or that all control issues and instances of fraud, if any, have been detected.
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Part II ─ Other Information
Item 1. Legal proceedings
From time to time, we may become subject to various legal proceedings and claims that arise in the ordinary course of our business activities. Although the results of litigation and claims cannot be predicted with certainty, as of June 30, 2024, we do not believe we are party to any claim or litigation the outcome of which, if determined adversely to us, would individually or in the aggregate be reasonably expected to have a material adverse effect on our business. Regardless of the outcome, litigation can have an adverse impact on us because of defense and settlement costs, diversion of management resources and other factors.
Item 1A. Risk factors
Investing in our common stock involves a high degree of risk. You should carefully consider the following risks and uncertainties, those risks and uncertainties discussed in “Part I, Item 1A, Risk Factors” in our 2023 Annual Report, as amended and supplemented by the information in our subsequent Quarterly Reports on Form 10-Q, together with all of the other information contained in this Quarterly Report, including our unaudited condensed consolidated financial statements and the related notes appearing elsewhere in this Quarterly Report. The risk factor disclosure in our 2023 Annual Report and subsequent Quarterly Reports on Form 10-Q is qualified by the information that is described in this Quarterly Report. If any of the risks described below or in our 2023 Annual Report actually occur, our business, prospects, operating results and financial condition could suffer materially. In such event, the trading price of our common stock could decline and you might lose all or part of your investment.
Other than as set forth below, there have been no material changes to the risk factors set forth in our 2023 Annual Report.
Risks related to our financial position and capital needs
We have incurred significant operating losses since our inception and anticipate that we will incur continued losses for the foreseeable future.
Since our inception, we have focused substantially all of our efforts and financial resources on developing our proprietary QuEENTM platform, our proprietary MGD library and our initial pipeline of product candidates. To date, we have financed our operations primarily through the issuance and sale of convertible promissory notes, convertible preferred stock, public offerings of our common stock, registered direct offerings, and through our collaboration with Roche. From our inception through the date hereof, we raised an aggregate of $625.8 million of gross proceeds from such transactions. As of June 30, 2024, our cash, cash equivalents, restricted cash and marketable securities were $267.1 million. We have incurred net losses in each year since our inception, and we had an accumulated deficit of $428.2 million as of June 30, 2024. For the years ended December 31, 2023 and 2022, we reported net losses of $135.4 million and $108.5 million, respectively. For the six months ended June 30, 2024 and 2023, we reported a net loss of $62.3 million and $67.2 million, respectively. Substantially all of our operating losses have resulted from costs incurred in connection with our research and initial pipeline programs and from general and administrative costs associated with our operations. We expect to continue to incur significant expenses and increasing operating losses over the next several years and for the foreseeable future. Our prior losses, combined with expected future losses, have had and will continue to have an adverse effect on our stockholders’ deficit and working capital. We expect our expenses to significantly increase in connection with our ongoing activities, as we:
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In addition, if we obtain marketing approval for our current or future product candidates, we will incur significant expenses relating to our commercialization of such product candidates via our sales, marketing, product manufacturing and distribution efforts. Because of the numerous risks and uncertainties associated with developing pharmaceutical drugs, including in light of economic slowdowns, we are unable to predict the extent of any future losses or when we will become profitable, if at all.
Even if we achieve profitability, we may not be able to sustain or increase our profitability on a quarterly or annual basis. Our failure to become and remain profitable would depress the value of our company and could impair our ability to raise capital, expand our business, maintain our development efforts, obtain product approvals, diversify our offerings or continue our operations. A decline in the value of our company could also cause you to lose all or part of your investment.
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Item 2. Unregistered sales of equity securities and use of proceeds
Recent sales of unregistered equity securities
None.
Item 3. Defaults upon senior securities
None.
Item 4. Mine safety disclosures
Not Applicable.
Item 5. Other information
Development Progress Update for MRT-6160
On May 9, 2024, we announced additional results from completed preclinical 28-day GLP toxicology studies of MRT-6160 in rats and non-human primates, or cynomolgus monkeys. The data demonstrated a highly favorable safety profile for MRT-6160 with no observable adverse effect level, or NOAEL, in cynomolgus monkeys of approximately 600-fold over predicted human efficacious exposure and in rat of approximately 1000-fold over predicted human efficacious exposure, including with no significant changes in peripheral immune cell compartments in cynomolgus monkeys, no impact on bone marrow, peripheral hematopoietic cells counts, GI tract, and no off-targets identified in in-vitro safety profiling, no genotoxicity, phototoxicity, or hERG activity. Studies also demonstrated robust VAV1 degradation and recovery in both low dose (0.5mg per kg per day) and high dose (30mg per kg per day) groups in cynomolgus monkeys.
Rule 10b5-1 Trading Plans
During the fiscal quarter ended on June 30, 2024, none of our directors and officers (as defined in Rule 16a-1(f) under the Exchange Act)
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Item 6. Exhibits
Exhibit Number |
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Description |
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3.1 |
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3.2 |
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3.3 |
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10.1*# |
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31.1* |
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32.1** |
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101.INS* |
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Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because XBRL tags are embedded within the Inline XBRL document. |
101.SCH* |
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Inline XBRL Taxonomy Extension Schema Document |
104* |
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Cover Page Interactive Data File (embedded within the Inline XBRL document) |
* Filed herewith.
** Deemed to be furnished with this Quarterly Report on Form 10-Q and will not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, except to the extent that the registrant specifically incorporates it by reference.
# Management contract or compensatory plan, contract, or arrangement.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
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Monte Rosa Therapeutics, Inc. |
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Date: August 8, 2024 |
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By: |
/s/ Markus Warmuth |
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Markus Warmuth |
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Chief Executive Officer |
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(Principal Executive Officer and Principal Financial Officer) |
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Exhibit 10.1
SECOND AMENDED AND RESTATED EMPLOYMENT AGREEMENT
This Amended and Restated Employment Agreement (this “Agreement”) is made between Monte Rosa Therapeutics, Inc., a Delaware corporation (the “Company”), and Jennifer Champoux (the “Executive”) and is effective as of May 28, 2024 (the “Effective Date”).
WHEREAS, the Company and the Executive are parties to prior Employment Agreements that became effective on June 28, 2021, and May 11, 2023 (the “Prior Employment Agreements”); and
WHEREAS, Executive and the Company (the “Parties”) desire to hereby amend and, in its entirety, restate the Prior Amended Employment Agreement to revise and/or to clarify certain terms set forth therein; and
NOW, THEREFORE, in consideration of the mutual covenants and agreements herein contained and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties agree as follows:
meaning that the Executive’s employment may be terminated by the Company or the Executive at any time and for any reason subject to the terms of this Agreement.
the Company’s business needs.
$450,000 per year. The Executive’s base salary shall be subject to periodic review by the Company. The base salary in effect at any given time is referred to herein as “Base Salary.” The Base Salary shall be payable in a manner that is consistent with the Company’s usual payroll practices for its executives.
2
death.
the Executive is disabled and unable to perform or expected to be unable to perform the essential functions of the Executive’s then existing position or positions under this Agreement with or without reasonable accommodation for a period of 180 days (which need not be consecutive) in any 12-month period. If any question shall arise as to whether during any period the Executive is disabled so as to be unable to perform the essential functions of the Executive’s then existing position or positions with or without reasonable accommodation, the Executive may, and at the request of the Company shall, submit to the Company a certification in reasonable detail by a physician selected by the Company to whom the Executive or the Executive’s guardian has no reasonable objection as to whether the Executive is so disabled or how long such disability is expected to continue, and such certification shall for the purposes of this Agreement be conclusive of the issue. The Executive shall cooperate with any reasonable request of the physician in connection with such certification. If such question shall arise and the Executive shall fail to submit such certification, the Company’s determination of such issue shall be binding on the Executive. Nothing in this Section 3(b) shall be construed to waive the
Executive’s rights, if any, under existing law including, without limitation, the Family and Medical Leave Act of 1993, 29 U.S.C. §2601 et seq. and the Americans with Disabilities Act, 42
U.S.C. §12101 et seq.
3
terminate the Executive’s employment hereunder at any time without Cause. Any termination by the Company of the Executive’s employment under this Agreement which does not constitute a termination for Cause under Section 3(c) and does not result from the death or disability of the Executive under Section 3(a) or (b) shall be deemed a termination without Cause.
or duties;
across-the-board salary reductions based on the Company’s financial performance similarly affecting all or substantially all senior management employees of the Company;
4
If the Company cures the Good Reason Condition during the Cure Period, Good Reason shall be deemed not to have occurred.
employment is terminated on account of disability under Section 3(b) or by the Company for Cause under Section 3(c), the date on which Notice of Termination is given; (iii) if the
Executive’s employment is terminated by the Company without Cause under Section 3(d), the date on which a Notice of Termination is given or the date otherwise specified by the Company in the Notice of Termination; (iv) if the Executive’s employment is terminated by the Executive under Section 3(e) other than for Good Reason, 30 days after the date on which a Notice of
Termination is given, and (v) if the Executive’s employment is terminated by the Executive under Section 3(e) for Good Reason, the date on which a Notice of Termination is given after the end of the Cure Period. Notwithstanding the foregoing, in the event that the Executive gives a Notice of Termination to the Company, the Company may unilaterally accelerate the Date of Termination and such acceleration shall not result in a termination by the Company for purposes of this Agreement.
Executive’s authorized representative or estate) (i) any Base Salary earned through the Date of Termination; (ii) unpaid expense reimbursements (subject to, and in accordance with, Section 2(c) of this Agreement); and (iii) any vested benefits the Executive may have under any employee benefit plan of the Company through the Date of Termination, which vested benefits shall be paid and/or provided in accordance with the terms of such employee benefit plans (collectively, the “Accrued Obligations”).
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the Executive’s rights under this Agreement, a reaffirmation of all of the Executive’s Continuing Obligations (as defined below), and, in the Company’s sole discretion, a one-year post- employment noncompetition agreement, and shall provide that if the Executive breaches any of the Continuing Obligations, all payments of the Severance Amount shall immediately cease (the “Separation Agreement”), and (ii) the Separation Agreement becoming irrevocable, all within 60 days after the Date of Termination (or such shorter period as set forth in the Separation Agreement), which shall include a seven (7) business day revocation period:
Company shall pay to the group health plan provider or the COBRA provider a monthly payment equal to the monthly employer contribution that the Company would have made to provide health insurance to the Executive if the Executive had remained employed by the Company until the earliest of (A) the twelve (12) month anniversary of the Date of Termination; (B) the date that the Executive becomes eligible for group medical plan benefits under any other employer’s group medical plan; or (C) the cessation of the Executive’s health continuation rights under COBRA; provided, however, that if the Company determines that it cannot pay such amounts to the group health plan provider or the COBRA provider (if applicable) without potentially violating applicable law (including, without limitation, Section 2716 of the Public Health Service Act), then the Company shall convert such payments to payroll payments directly to the Executive for the time period specified above. Such payments to the Executive shall be subject to tax-related deductions and withholdings and paid on the Company’s regular payroll dates.
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The amounts payable under Section 5, to the extent taxable, shall be paid out in substantially equal installments in accordance with the Company’s payroll practice over twelve (12) months commencing within 60 days after the Date of Termination; provided, however, that if the 60-day period begins in one calendar year and ends in a second calendar year, such payments, to the extent they qualify as “non-qualified deferred compensation” within the meaning of Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”), shall begin to be paid in the second calendar year by the last day of such 60-day period; provided, further, that the initial payment shall include a catch-up payment to cover amounts retroactive to the day immediately following the Date of Termination. Each payment pursuant to this Agreement is intended to constitute a separate payment for purposes of Treasury Regulation Section 1.409A-2(b)(2).
The Executive shall not be required to mitigate the amount of any payments provided for under this Section 5 or Section 6 of this Agreement by seeking other employment, and no payment shall be offset or reduced by the amount of any compensation or benefits provided to the Executive in any subsequent employment.
Executive’s employment is terminated either (a) by the Company without Cause as provided in Section 3(d), or (b) by the Executive for Good Reason as provided in Section 3(e), and (ii) the Date of Termination is on or within 12 months after the occurrence of the first event constituting a Change in Control (such period, the “Change in Control Period”). These provisions shall terminate and be of no further force or effect after the Change in Control Period.
Control Payment shall be reduced by the amount of the Restrictive Covenants Agreement Setoff, if applicable; and
The amounts payable under this Section 6(a), to the extent taxable, shall be paid or commence to be paid within 60 days after the Date of Termination; provided, however, that if the 60-day period begins in one calendar year and ends in a second calendar year, such payments to the
extent they qualify as “non-qualified deferred compensation” within the meaning of Section 409A of the Code, shall be paid or commence to be paid in the second calendar year by the last day of such 60-day period.
§1.280G-1, Q&A-24(b) or (c).
(c) Definitions. For purposes of this Agreement, “Change in Control” shall mean a “Sale Event” as defined in the Company’s 2021 Stock Option and Incentive Plan (as the same may be amended from time to time).
Executive’s separation from service, or (B) the Executive’s death. If any such delayed cash payment is otherwise payable on an installment basis, the first payment shall include a catch-up payment covering amounts that would otherwise have been paid during the six-month period but
for the application of this provision, and the balance of the installments shall be payable in accordance with their original schedule.
in-kind benefits provided or reimbursable expenses incurred in one taxable year shall not affect the in-kind benefits to be provided or the expenses eligible for reimbursement in any other taxable year (except for any lifetime or other aggregate limitation applicable to medical expenses). Such right to reimbursement or in-kind benefits is not subject to liquidation or exchange for another benefit.
1.409A-1(h).
Executive represents to the Company that the Executive’s execution of this Agreement, the
Executive’s employment with the Company and the performance of the Executive’s proposed duties for the Company will not violate any obligations the Executive may have to any such previous employer or other party. In the Executive’s work for the Company, the Executive will not disclose or make use of any information in violation of any agreements with or rights of any such previous employer or other party, and the Executive will not bring to the premises of the Company any copies or other tangible embodiments of non-public information belonging to or obtained from any such previous employment or other party.
(b) consents to service of process; and (c) waives any other requirement (whether imposed by statute, rule of court, or otherwise) with respect to personal jurisdiction or service of process.
termination of the Executive’s employment to the extent necessary to effectuate the terms contained herein.
[Signature page follows]
IN WITNESS WHEREOF, the parties have executed this Agreement effective on the Effective Date.
MONTE ROSA THERAPEUTICS, INC.
By: _/s/ Markus Warmuth____________
Chief Executive Officer
EXECUTIVE
/s/ Jennifer Champoux________________
Jennifer Champoux
Exhibit 31.1
CERTIFICATION PURSUANT TO
RULES 13a-14(a) AND 15d-14(a) UNDER THE SECURITIES EXCHANGE ACT OF 1934,
AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Markus Warmuth, certify that:
Date: August 8, 2024 |
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By: |
/s/ Markus Warmuth |
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Markus Warmuth |
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Chief Executive Officer |
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(Principal Executive Officer and Principal Financial Officer) |
Exhibit 32.1
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of Monte Rosa Therapeutics, Inc. (the “Company”) on Form 10-Q for the period ending June 30, 2024 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:
Date: August 8, 2024 |
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By: |
/s/ Markus Warmuth |
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Markus Warmuth |
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Chief Executive Officer |
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(Principal Executive Officer and Principal Financial Officer) |