UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
☒ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended September 30, 2022
OR
☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to .
Commission File No. 001-35890
Tempest Therapeutics, Inc.
(Exact Name of Registrant as Specified in its Charter)
Delaware | 45-1472564 | ||||
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(State or Other Jurisdiction of | (I.R.S. Employer | ||||
Incorporation or Organization) | Identification No.) | ||||
2000 Sierra Point Parkway, Suite | |||||
Brisbane, California |
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(Address of Principal Executive Offices) | (Zip Code) |
Registrant’s telephone number, including area code: (415)798-8589
(Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class | Trading | Name of each exchange | |||||||||||||||
Symbol(s) | on which registered | ||||||||||||||||
Common Stock, $0.001 par value | TPST | The Nasdaq Stock Market LLC |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer | ☐ | Accelerated filer | ☐ | ||||||||
Non-accelerated filer | ☒ | Smaller reporting company | ☒ | ||||||||
Emerging growth company | ☐ |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ☒
The number of shares of Registrant’s Common Stock, $0.001 par value per share, outstanding as of November 2, 2022May 4, 2023 was 10,517,099.
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Item 2. |
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Item 4. |
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Item 5. |
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Item 6. |
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2
3
4
Item 1 – Financial Statements
TEMPEST THERAPEUTICS, INC.
Condensed Consolidated Balance Sheets
(in thousands, except share and per share amounts)September 30,
2022
(Unaudited)December 31, 2021 Assets Current assets: Cash and cash equivalents $ 42,791 $ 51,829 Insurance recovery of legal settlement 15,200 15,000 Prepaid expenses and other current assets 2,266 2,134 Total current assets 60,257 68,963 Property and equipment, net 919 1,113 Operating lease right-of-use assets 1,312 3,051 Other non-current assets 683 111 Total assets $ 63,171 $ 73,238 Liabilities and stockholders’ equity Current liabilities: Accounts payable $ 925 $ 991 Accrued legal settlement 15,200 15,000 Accrued expenses 2,585 1,589 Current loan payable 3,500 — Current operating lease liabilities 871 1,442 Accrued compensation 859 912 Interest payable 119 92 Total current liabilities 24,059 20,026 Loan payable (net of discount and issuance costs of $489 and $756, respectively) 11,836 15,069 Operating lease liabilities, less current portion 503 2,026 Total liabilities 36,398 37,121 Commitments and contingencies (Note 6) Stockholders’ equity: Common stock, $0.001 par value per share; 100,000,000 shares authorized at September 30, 2022 and December 31, 2021; 10,517,099 and 6,910,324 shares issued and outstanding at September 30, 2022 and December 31, 2021, respectively 10 7 Additional paid-in capital 153,432 136,173 Accumulated deficit (126,669) (100,063) Total stockholders’ equity 26,773 36,117 Total liabilities and stockholders’ equity $ 63,171 $ 73,238
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| March 31, 2023 |
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| December 31, 2022 |
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Assets |
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Current assets: |
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Cash and cash equivalents |
| $ | 22,925 |
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| $ | 31,230 |
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Insurance recovery of legal settlement |
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| 450 |
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| 450 |
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Prepaid expenses and other current assets |
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| 1,298 |
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|
| 1,270 |
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Total current assets |
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| 24,673 |
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| 32,950 |
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Property and equipment — net |
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| 1,008 |
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| 1,060 |
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Operating lease right-of-use assets |
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| 11,219 |
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| 11,650 |
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Other noncurrent assets |
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| 429 |
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| 429 |
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Total assets |
| $ | 37,329 |
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| $ | 46,089 |
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Liabilities and stockholders’ equity |
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Current liabilities: |
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Accounts payable |
| $ | 1,157 |
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| $ | 1,108 |
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Accrued legal settlement |
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| 450 |
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| 450 |
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Accrued expenses |
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| 2,538 |
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| 2,961 |
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Current loan payable (net of discount and issuance costs of $58 and nil, respectively) |
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| 1,481 |
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|
| — |
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Current operating lease liabilities |
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| 1,325 |
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| 1,413 |
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Accrued compensation |
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| 456 |
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| 1,248 |
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Interest payable |
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| 104 |
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| 97 |
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Total current liabilities |
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| 7,511 |
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| 7,277 |
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Loan payable (net of discount and issuance costs of $351 and $454, respectively) |
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| 8,935 |
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| 10,371 |
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Operating lease liabilities, less current portion |
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| 9,918 |
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| 10,330 |
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Total liabilities |
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| 26,364 |
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| 27,978 |
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Commitments and contingencies (Note 5) |
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Stockholders’ equity: |
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Common stock, $0.001 par value; 100,000,000 shares authorized; 10,561,700 and 10,518,539 shares issued and outstanding at March 31, 2023 and December 31, 2022, respectively |
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| 11 |
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| 11 |
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Additional paid-in capital |
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| 154,362 |
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| 153,872 |
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Accumulated deficit |
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| (143,408 | ) |
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| (135,772 | ) |
Total stockholders’ equity |
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| 10,965 |
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| 18,111 |
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Total liabilities and stockholders’ equity |
| $ | 37,329 |
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| $ | 46,089 |
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See accompanying Notes to the Condensed Consolidated Financial Statements
5
Condensed Consolidated Statements of Operations and Comprehensive Loss
(Unaudited)
(in thousands, except share and per share amounts)
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
2022 | 2021 | 2022 | 2021 | ||||||||||||||||||||
Operating expenses: | |||||||||||||||||||||||
Research and development | $ | 5,973 | $ | 4,630 | $ | 16,733 | $ | 12,451 | |||||||||||||||
General and administrative | 2,798 | 3,106 | 8,973 | 7,197 | |||||||||||||||||||
Loss from operations | (8,771) | (7,736) | (25,706) | (19,648) | |||||||||||||||||||
Other (expense) income, net: | |||||||||||||||||||||||
Interest expense | (389) | (437) | (1,186) | (944) | |||||||||||||||||||
Interest and other (expense) income, net | 213 | 63 | 286 | 69 | |||||||||||||||||||
Total other (expense) income, net | (176) | (374) | (900) | (875) | |||||||||||||||||||
Provision for income taxes | — | — | — | — | |||||||||||||||||||
Net loss | $ | (8,947) | $ | (8,110) | $ | (26,606) | $ | (20,523) | |||||||||||||||
Net loss per share of common stock, basic and diluted | $ | (0.66) | $ | (1.21) | $ | (2.46) | $ | (7.49) | |||||||||||||||
Weighted-average shares of common stock outstanding, basic and diluted | 13,635,927 | 6,717,655 | 10,815,900 | 2,739,602 | |||||||||||||||||||
Other comprehensive income (loss): | |||||||||||||||||||||||
Foreign currency translation adjustment | — | (89) | — | (89) | |||||||||||||||||||
Comprehensive loss | $ | (8,947) | $ | (8,199) | $ | (26,606) | $ | (20,612) |
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| Three Months Ended March 31, |
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| 2023 |
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| 2022 |
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Operating expenses: |
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Research and development |
| $ | 4,678 |
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| $ | 5,109 |
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General and administrative |
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| 2,903 |
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| 3,052 |
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Loss from operations |
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| (7,581 | ) |
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| (8,161 | ) |
Other income (expense), net: |
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Interest expense |
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| (344 | ) |
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| (333 | ) |
Interest income and other income (expense), net |
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| 289 |
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| 3 |
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Total other income (expense), net |
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| (55 | ) |
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| (330 | ) |
Provision for income taxes |
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| — |
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| — |
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Net loss |
| $ | (7,636 | ) |
| $ | (8,491 | ) |
Net loss per share of common stock and pre-funded warrants, basic and diluted |
| $ | (0.55 | ) |
| $ | (1.18 | ) |
Weighted-average shares of common stock and pre-funded warrants outstanding, |
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| 13,763,173 |
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| 7,167,255 |
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See accompanying Notes to the Condensed Consolidated Financial Statements
6
Condensed Consolidated Statements of Stockholders’ Equity
(Unaudited)
(in thousands, except share amounts
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| Common Stock |
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| Additional |
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| Deficit |
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| Total |
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| Shares |
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| Amount |
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| Capital |
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| Accumulated |
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| Equity (Deficit) |
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BALANCE — December 31, 2022 |
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| 10,518,539 |
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| $ | 11 |
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| $ | 153,872 |
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| $ | (135,772 | ) |
| $ | 18,111 |
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Issuance of common stock for cash |
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| 43,161 |
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| — |
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| 44 |
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| — |
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| 44 |
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Share-based compensation |
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| — |
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| — |
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| 446 |
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| — |
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| 446 |
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Net loss |
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| — |
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| — |
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| — |
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| (7,636 | ) |
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| (7,636 | ) |
BALANCE — March 31, 2023 |
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| 10,561,700 |
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| $ | 11 |
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| $ | 154,362 |
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| $ | (143,408 | ) |
| $ | 10,965 |
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Three Months Ended March 31, 2022
Common Stock | Additional Paid-In Capital | Accumulated Other Comprehensive Loss | Accumulated Deficit | Total Stockholders' Equity | |||||||||||||||||||||||||||||||
Shares | Amount | ||||||||||||||||||||||||||||||||||
BALANCE — December 31, 2021 | 6,910,324 | $ | 7 | $ | 136,173 | $ | — | $ | (100,063) | $ | 36,117 | ||||||||||||||||||||||||
Issuance of common stock for cash, net of issuance cost of $44 | 262,770 | — | 1,403 | — | — | 1,403 | |||||||||||||||||||||||||||||
Share-based compensation | — | — | 328 | — | — | 328 | |||||||||||||||||||||||||||||
Net loss | — | — | — | — | (8,491) | (8,491) | |||||||||||||||||||||||||||||
BALANCE — March 31, 2022 | 7,173,094 | 7 | 137,904 | — | (108,554) | $ | 29,357 | ||||||||||||||||||||||||||||
Issuance of common stock for cash, net of issuance cost of $343 | 3,152,265 | 3 | 7,092 | — | — | 7,095 | |||||||||||||||||||||||||||||
Share-based compensation | — | — | 367 | — | — | 367 | |||||||||||||||||||||||||||||
Issuance of pre-funded warrants, net of issuance cost of $283 | — | — | 7,281 | — | — | 7,281 | |||||||||||||||||||||||||||||
Net loss | — | — | — | — | (9,168) | (9,168) | |||||||||||||||||||||||||||||
BALANCE — June 30, 2022 | 10,325,359 | 10 | 152,644 | — | (117,722) | 34,932 | |||||||||||||||||||||||||||||
Issuance of common stock for cash, net of issuance cost of $111 | 191,740 | — | 350 | — | — | 350 | |||||||||||||||||||||||||||||
Share-based compensation | — | — | 438 | — | — | 438 | |||||||||||||||||||||||||||||
Net loss | — | — | — | — | (8,947) | (8,947) | |||||||||||||||||||||||||||||
BALANCE — September 30, 2022 | 10,517,099 | 10 | 153,432 | — | (126,669) | 26,773 |
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| Common Stock |
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| Additional |
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| Deficit |
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| Total |
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| Shares |
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| Amount |
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| Capital |
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| Accumulated |
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| Equity (Deficit) |
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BALANCE — December 31, 2021 |
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| 6,910,324 |
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| $ | 7 |
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| $ | 136,173 |
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| $ | (100,063 | ) |
| $ | 36,117 |
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Issuance of common stock for cash, net of issuance |
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| 262,770 |
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| — |
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| 1,403 |
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| — |
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| 1,403 |
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Share-based compensation |
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| — |
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| — |
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| 328 |
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| — |
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| 328 |
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Net loss |
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| — |
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| — |
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| — |
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| (8,491 | ) |
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| (8,491 | ) |
BALANCE — March 31, 2022 |
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| 7,173,094 |
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| $ | 7 |
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| $ | 137,904 |
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| $ | (108,554 | ) |
| $ | 29,357 |
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See accompanying Notes to the Condensed Consolidated Financial Statements.
7
TEMPEST THERAPEUTICS, INC.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
(in thousands)
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| For the Three Months |
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| 2023 |
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| 2022 |
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Operating activities: |
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Net loss |
| $ | (7,636 | ) |
| $ | (8,491 | ) |
Adjustments to reconcile net loss to net cash used in operating activities: |
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Depreciation expense |
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| 125 |
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| 108 |
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Stock-based compensation expense |
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| 446 |
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| 328 |
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Non-cash lease expense |
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| 432 |
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| 311 |
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Non-cash interest and other expense, net |
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| 53 |
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| 64 |
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Changes in operating assets and liabilities: |
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Prepaid expenses and other assets |
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| (28 | ) |
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| 178 |
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Accounts payable |
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| 12 |
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| (323 | ) |
Accrued expenses and other liabilities |
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| (1,214 | ) |
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| 1,063 |
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Interest payable |
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| 7 |
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| 2 |
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Operating lease liabilities |
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| (500 | ) |
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| (347 | ) |
Cash used in operating activities |
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| (8,303 | ) |
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| (7,107 | ) |
Investing activities: |
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Purchase of property and equipment |
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| (46 | ) |
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| (3 | ) |
Cash used in investing activities |
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| (46 | ) |
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| (3 | ) |
Financing activities: |
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Proceeds from the issuance of common stock, net of issuance costs |
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| 44 |
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| 1,403 |
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Cash provided by financing activities |
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| 44 |
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| 1,403 |
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Net decrease in cash and cash equivalents |
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| (8,305 | ) |
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| (5,707 | ) |
Cash, cash equivalents and restricted cash at beginning of period |
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| 31,598 |
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| 51,829 |
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Cash, cash equivalents and restricted cash at end of period |
| $ | 23,293 |
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| $ | 46,122 |
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Supplemental disclosure of cash flow information: |
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Cash paid for interest |
| $ | 292 |
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| $ | 268 |
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Cash paid for income taxes |
| $ | 24 |
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| $ | — |
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Non-cash investing activities: Property and equipment in accounts payable |
| $ | — |
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| $ | 16 |
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See accompanying Notes to the Condensed Consolidated Financial Statements
8
Common Stock | Additional Paid-In Capital | Accumulated Other Comprehensive Loss | Accumulated Deficit | Total Stockholders' Equity | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Shares | Amount | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
BALANCE — December 31, 2020 | 498,224 | $ | 1 | $ | 2,967 | $ | — | $ | (71,761) | $ | (68,793) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Exercise of stock options | 4,368 | — | 20 | — | — | 20 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Vesting of early exercised stock options | 11,916 | — | 57 | — | — | 57 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Share-based compensation | — | — | 120 | — | — | 120 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net loss | — | — | — | — | (5,355) | (5,355) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
BALANCE — March 31, 2021 | 514,508 | $ | 1 | $ | 3,164 | $ | — | $ | (77,116) | $ | (73,951) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Exercise of stock options | 6,285 | — | 29 | — | — | 29 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Vesting of early exercised stock options | 8,314 | — | 39 | — | — | 39 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Conversion of preferred stock to common stock | 3,692,912 | 4 | 86,703 | — | — | 86,707 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Issuance of common stock for cash | 1,136,849 | 1 | 30,009 | — | — | 30,010 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Share-based compensation | — | — | 411 | — | — | 411 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Reverse capitalization transaction costs | — | — | (6,074) | — | — | (6,074) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Record pre-merger Millendo stockholders' equity and elimination of Millendo historical accumulated deficit | 1,269,446 | 1 | 18,000 | — | — | 18,001 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net loss | — | — | — | — | (7,058) | (7,058) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
BALANCE — June 30, 2021 | 6,628,314 | $ | 7 | $ | 132,281 | $ | — | $ | (84,174) | $ | 48,114 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Foreign currency translation adjustment | — | — | — | (89) | — | (89) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Exercise of stock options | 15,226 | — | 48 | — | — | 48 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Vesting of early exercised stock options | 8,631 | — | 37 | — | — | 37 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Issuance of common stock for cash, net of issuance cost of $349 | 248,424 | — | 3,513 | — | — | 3,513 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Share-based compensation | — | — | 296 | — | — | 296 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Reverse recapitalization transaction costs | — | — | (346) | — | — | (346) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Issuance of common stock warrants | — | — | 73 | — | — | 73 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net loss | — | — | — | — | (8,110) | (8,110) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
BALANCE — September 30, 2021 | 6,900,595 | $ | 7 | $ | 135,902 | $ | (89) | $ | (92,284) | $ | (43,536) |
For The Nine Months Ended September 30, | |||||||||||
2022 | 2021 | ||||||||||
Operating activities: | |||||||||||
Net loss | $ | (26,606) | $ | (20,523) | |||||||
Adjustments to reconcile net loss to net cash used in operating activities: | |||||||||||
Depreciation expense | 421 | 272 | |||||||||
Stock-based compensation expense | 1,133 | 827 | |||||||||
Non-cash lease expense | 854 | 589 | |||||||||
Non-cash interest and other expense, net | 267 | 516 | |||||||||
Changes in operating assets and liabilities: | |||||||||||
Prepaid expenses and other assets | (336) | 190 | |||||||||
Accounts payable | (89) | 1,130 | |||||||||
Accrued expenses and other liabilities | 946 | (363) | |||||||||
Interest payable | 27 | 89 | |||||||||
Operating lease liabilities | (1,210) | (699) | |||||||||
Cash used in operating activities | (24,593) | (17,972) | |||||||||
Investing activities: | |||||||||||
Purchase of property and equipment | (206) | (108) | |||||||||
Repayment of note receivable | — | 38 | |||||||||
Cash used in investing activities | (206) | (70) | |||||||||
Financing activities: | |||||||||||
Proceeds from the issuance of common stock, net of issuance costs | 8,849 | 33,474 | |||||||||
Proceeds from issuance of pre-funded warrants, net of issuance costs | 7,280 | — | |||||||||
Borrowings on loan payable | — | 15,000 | |||||||||
Payment of loan issuance costs | — | (93) | |||||||||
Cash acquired in connection with reverse recapitalization | — | 17,045 | |||||||||
Payment of reverse recapitalization transaction costs | — | (6,420) | |||||||||
Proceeds from option exercises | — | 66 | |||||||||
Cash provided by financing activities | 16,129 | 59,072 | |||||||||
Effect of exchange rate changes on cash | — | (89) | |||||||||
Net (decrease) increase in cash and cash equivalents | (8,670) | 40,941 | |||||||||
Cash, cash equivalents and restricted cash at beginning of period | 51,829 | 18,820 | |||||||||
Cash, cash equivalents and restricted cash at end of period | $ | 43,159 | $ | 59,761 | |||||||
Supplemental disclosure of cash flow information: | |||||||||||
Cash paid for interest | $ | 893 | 682 | ||||||||
Non-cash operating activities: Lease modification | $ | 884 | $ | — | |||||||
Non-cash investing activities: Property and equipment in accounts payable | $ | 4 | $ | — | |||||||
Non-cash financing activities: | |||||||||||
Vesting of early exercise stock options | $ | — | $ | 135 |
1.ORGANIZATION AND DESCRIPTION OF THE BUSINESS
Description of Business
—
Tempest Therapeutics, Inc. (“Tempest” or the “Company”) is a clinical-stage oncology company advancing small molecules that combine both tumor-targeted and immune-mediated mechanisms with the potential to treat a wide range of tumors. The Company’s two novel clinical programs are TPST-1120 and TPST-1495, antagonists of PPARα and EP2/EP4, respectively. Both programs are advancing through clinical trials designed to study the agents as monotherapies and in combination with other approved agents. Tempest is also developing an orally available inhibitor of TREX-1, a target that controls activation of the the cGAS/STING pathway. Tempest is headquartered in South San Francisco,Brisbane, California.
Agreement”) with Millendo Therapeutics, Inc. (“Millendo”).
Liquidity and Management Plans
—
The accompanying financial statements have been prepared assuming the Company will continue as a going concern. The Company has incurred operating losses since inception. The Company’s ultimate success depends on the outcomeAs of the ongoing researchMarch 31, 2023, we had cash and development activities.cash equivalents of $22.9 million. The Company has not yet generated product sales and as a result has experienced operating losses since inception. The Company expects to incur additional losses in the future to conduct research and development and will need to raise additional capital to fully implement management’s business plan. The Company intendscontinue operations. We intend to raise suchthe needed capital through the issuance of additional debt or equity, including in connection with potential merger opportunities, or through business development activities. Our ability to continue as a going concern is dependent upon our ability to successfully accomplish these plans and potentially through borrowings, strategic alliances with partner companiessecure sources of financing and other licensing transactions. However, if such financing is not available atultimately attain profitable operations. If we are unable to obtain adequate levels, the Company may needcapital, we could be forced to reevaluate its operating plans.cease operations. Management believes
On April 29, 2022, the Company completed a private investment in public equity (“PIPE”) financing from the sale of 3,149,912 shares of its common stock at a price per share of $2.36$2.36 and, and in lieu of shares of common stock, pre-funded warrants to purchase up to 3,206,020 shares of its common stock at a price per pre-funded warrant of $2.359$2.359 to EcoR1 Capital, LLC and Versant Venture Capital (the “PIPE Investors”). Net proceeds from the PIPE financings totaled approximately $14.5$14.5 million, after deducting offering expenses. The Company entered into a registration rights agreement (the “Registration Rights Agreement”) with the PIPE Investors pursuant to which the Company filed a registration statement with the SEC registering the resale of the 3,149,912 shares common stock and the 3,206,020 shares of common stock underlying the pre-funded warrants issued in the PIPE financing.
Significant Accounting Policies -- The Company’s significant accounting policies are described in Note 2, “Summary of Significant Accounting Policies,” in the Company’s Annual Report on Form 10-K filed with the U.S. Securities and Exchange Commission (“SEC”) on March 29, 2022.22, 2023. There have been no material changes to the significant accounting policies during the period ended September 30, 2022.March 31, 2023.
Basis of Presentation—The unaudited interim Condensed Consolidated Financial Statements have been prepared pursuant to the rules and regulations of the U.S. Securities and Exchange Commission. Accordingly, certain information and footnote disclosures normally included in annual financial statements prepared in accordance with GAAP have been omitted. These unaudited interim Condensed Consolidated Financial Statements should be read in conjunction with the Company’s audited consolidated financial statements and notes included in the company’s Annual Report on Form 10-K for the year ended December 31, 2021.2022.
9
Use of Estimates—The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of expenses during the reporting period. On an ongoing basis, the Company evaluates its estimates and assumptions, including those related to research and development accruals, recoverability of long-lived assets, right-of-use assets, lease obligations, stock-based compensation and income taxes uncertainties and valuation allowances. Management bases its estimates on historical experience and on various other assumptions that are believed to be 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. Actual results may differ from those estimates.
|
| As of March 31, 2023 |
| |||||||||||||
|
| Level 1 |
|
| Level 2 |
|
| Level 3 |
|
| Total |
| ||||
Cash and cash equivalents |
| $ | 22,925 |
|
| $ | — |
|
| $ | — |
|
| $ | 22,925 |
|
Total |
| $ | 22,925 |
|
| $ | — |
|
| $ | — |
|
| $ | 22,925 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
|
| As of December 31, 2022 |
| |||||||||||||
|
| Level 1 |
|
| Level 2 |
|
| Level 3 |
|
| Total |
| ||||
Cash and cash equivalents |
| $ | 31,230 |
|
| $ | — |
|
| $ | — |
|
| $ | 31,230 |
|
Total |
| $ | 31,230 |
|
| $ | — |
|
| $ | — |
|
| $ | 31,230 |
|
September 30, 2022 | |||||||||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | ||||||||||||||||||||
Cash and cash equivalents | $ | 42,791 | $ | — | $ | — | $ | 42,791 | |||||||||||||||
Total | $ | 42,791 | $ | — | $ | — | $ | 42,791 | |||||||||||||||
December 31, 2021 | |||||||||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | ||||||||||||||||||||
Cash and cash equivalents | $ | 51,829 | $ | — | $ | — | $ | 51,829 | |||||||||||||||
Total | $ | 51,829 | $ | — | $ | — | $ | 51,829 |
|
| March 31, |
|
| December 31, |
| ||
Prepaid expenses |
| $ | 594 |
|
| $ | 703 |
|
Prepaid research and development costs |
|
| 285 |
|
|
| 304 |
|
Other current assets |
|
| 419 |
|
|
| 263 |
|
Total |
| $ | 1,298 |
|
| $ | 1,270 |
|
September 30, | December 31, | ||||||||||
2022 | 2021 | ||||||||||
Prepaid expenses | $ | 998 | $ | 949 | |||||||
Prepaid research and development costs | 333 | 632 | |||||||||
Other current assets | 935 | 553 | |||||||||
Total | $ | 2,266 | $ | 2,134 |
|
| March 31, |
|
| December 31, |
| ||
Computer equipment and software |
| $ | 168 |
|
| $ | 168 |
|
Furniture and fixtures |
|
| 328 |
|
|
| 310 |
|
Lab equipment |
|
| 1,077 |
|
|
| 1,061 |
|
Leasehold improvements |
|
| 922 |
|
|
| 882 |
|
Property and equipment |
|
| 2,495 |
|
|
| 2,421 |
|
Less accumulated depreciation |
|
| (1,487 | ) |
|
| (1,361 | ) |
Property and equipment—net |
| $ | 1,008 |
|
| $ | 1,060 |
|
September 30, | December 31, | ||||||||||
2022 | 2021 | ||||||||||
Computer equipment and software | $ | 184 | $ | 156 | |||||||
Furniture and fixtures | 203 | 193 | |||||||||
Lab equipment | 937 | 748 | |||||||||
Leasehold improvements | 840 | 840 | |||||||||
Property and equipment | 2,164 | 1,937 | |||||||||
Less: accumulated depreciation | (1,245) | (824) | |||||||||
Property and equipment, net | $ | 919 | $ | 1,113 |
10
|
| March 31, |
|
| December 31, |
| ||
Accrued other liabilities |
| $ | 1,134 |
|
| $ | 756 |
|
Accrued clinical trial liability |
|
| 1,404 |
|
|
| 2,205 |
|
Total |
| $ | 2,538 |
|
| $ | 2,961 |
|
September 30, | December 31, | ||||||||||
2022 | 2021 | ||||||||||
Accrued other liabilities | $ | 1,314 | $ | 748 | |||||||
Accrued clinical trial liabilities | 1,271 | 841 | |||||||||
Total | $ | 2,585 | $ | 1,589 |
Facilities Lease Agreements—In February 2019, the Company entered into a 5-year office lease agreement for a 9,780 square feet facility inSouth San Francisco, California (“SSF Lease”).California. The original lease term expires on February 29, 2024.2024. In June 2022, the lease was amended to terminate early on January 31, 2023.2023. The amendment was not accounted for as a separate contract and the lease liability and the right-of-use asset were remeasured on the lease modification date.
On March 29, 2021, TempestTx, Inc. (“Private Tempest”) entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Millendo Therapeutics, Inc. (“Millendo”). On June 25, 2021, Private Tempest completed the merger with Millendo and as a result of the merger, with Millendo, the Company assumed Millendo’s noncancelable operating leases for office space which have remaining lease terms of approximately 1.5 years.1.1 years. In February 2019 and October 2018, Millendo entered into two noncancellable operating leases for office space in Ann Arbor, Michigan (“Ann Arbor Leases”) of which, one that Millendo took possession of in April 2019 and the other that Millendo took possession of in July 2019, respectively. One of its leases inThe Ann Arbor Michigan expiresLeases expire in June 2024 and the other expires in March 2024. There were no other leases assumed by the Company as of September 30, 2022.
Year Ending | Total Commitment | ||||
2022 (excluding the nine months ended September 30, 2022) | $ | 269 | |||
2023 | 875 | ||||
2024 | 302 | ||||
Total minimum lease payments | 1,446 | ||||
Less: imputed interest | (72) | ||||
Present value of operating lease obligations | 1,374 | ||||
Less: current portion | (871) | ||||
Non-current operating lease obligations | $ | 503 |
As of March 31, 2023 and December 31, 2022, the balance of the operating lease right of use assets were $11,219 and $11,650, respectively, and the related operating lease liability were $11,243 and $11,744, respectively, as shown in the accompanying consolidated balance sheets.
Rent expense was $710 and $359 for the three months ended March 31, 2023 and 2022, respectively.
As of March 31, 2023, future minimum lease payments forunder the Brisbane Lease as of September 30, 2022 areand Ann Arbor Leases were as follows: nil (2022), $1,738 (2023), $1,798 (2024), $1,861 (2025) and $10,331 (2026 and beyond).
|
|
|
| |
Year Ending |
| Total Commitment |
| |
2023 (excluding three months ended March 31, 2023) |
| $ | 1,912 |
|
2024 |
|
| 2,100 |
|
2025 |
|
| 1,861 |
|
2026 |
|
| 1,926 |
|
2027 |
|
| 1,994 |
|
2028 and beyond |
|
| 6,410 |
|
Total minimum lease payments |
|
| 16,203 |
|
Less: imputed interest |
|
| (4,960 | ) |
Present value of operating lease obligations |
|
| 11,243 |
|
Less: current portion |
|
| (1,325 | ) |
Noncurrent operating lease obligations |
| $ | 9,918 |
|
Related to this Brisbane Lease agreement, the Company entered into a letter of credit with a bank to deposit $368$368 in a separate account that is classified as restricted cash to serve as security rent deposit. This amount is included in other non-currentnoncurrent assets in the accompanying Condensed Consolidated Balance Sheets as of September 30, 2022.
11
Guarantees and Indemnifications—In the normal course of business, the Company enters into agreements that contain a variety of representations and provide for general indemnification. The Company’s exposure under these agreements is unknown because it involves claims that may be made against the Company in the future. To date, the Company has not paid any claims or been required to defend any action related to its indemnification obligations. As of September 30,March 31, 2023 and 2022, and December 31, 2021, the Company does not have any material indemnification claims that were probable or reasonably possible and consequently has not recorded related liabilities.
Legal Proceedings—Liabilities for loss contingencies arising from claims, assessments, litigation, fines, penalties, and other sources are recorded when it is probable that a liability has been incurred and the amount can be reasonably estimated. As a result of the merger with Millendo, the Company is party to various litigation matters given Millendo’s role as successor to OvaScience, Inc. (“OvaScience”). OvaScience merged with Millendo in 2018. Prior to the merger with Millendo, OvaScience was sued in three matters that are disclosed below.
On November 9, 2016, a purported shareholder derivative action was filed in Massachusetts State court (Cima v. Dipp) against OvaScience and certain former officers and directors of OvaScience and OvaScience alleging breach of fiduciary duties, unjust enrichment, abuse of control, gross mismanagement and waste of corporate assets for purported actions related to OvaScience’s January 2015 follow-on public offering. As of September 12, 2022, the parties have reached an agreement in principle and have executed a term sheet in connection with a settlement. On September 13, 2022, the parties filed a joint motion to stay the case pending settlement. On September 15, 2022, the court issued a 90 day90-day nisi order. The parties are in discussions regardingOn December 14, 2022, the court extended that order for 60 days to February 20, 2023. On February 17, 2023, the court extended the order until March 22, 2023 and set a potential attorney fee award. Ifcourt appearance for March 23, 2023. On March 23, 2023, the parties cannot reachcourt granted preliminary approval of the settlement and set a resolution regarding a fee award, any potential award will be determined by the Court.final fairness hearing for June 12, 2023. Any final settlement is subject to Court approval.
On July 27, 2017, a purported shareholder derivative complaint was filed in Massachusetts Federal court (Chiu v. Dipp) against OvaScience and certain former officers and directors of OvaScience alleging breach of fiduciary duties, unjust enrichment and violations of Section 14(a) of the Exchange Act. related to OvaScience’s January 2015 follow-on public offering and other public statements concerning OvaScience’s AUGMENT treatment. Following the Court’s dismissal of an amended complaint, the parties agreed that plaintiffs could file a second amended complaint and that the case would be stayed pending the resolution of the Dahhan Action. In May 2018, the court entered an order staying this case pending the resolution of the Dahhan Action. As of September 12, 2022, the parties have reached an agreement in principle and have executed a term sheet in connection with the settlement. On February 14, 2023, the parties informed the court that, subject to court approval, they had reached an agreement to settle Chiu v. Dipp as well as Cima v. Dipp. The parties arerequested a 90-day stay in discussions regardingorder to present the settlement to the state court in Cima v. Dipp first. On February 16, 2023, the Court granted the 90-day stay. On May 2, 2023 the Court extended the stay through July 12, 2023. Upon final approval of the Cima settlement, the Company expects that a potential attorney fee award. If the parties cannot reach a resolution regarding a fee award, any potential awardmotion to dismiss Chiu v. Dipp will also be determined by the Court. Any final settlement is subject to Court approval.filed.
12
On December 23, 2022, the Company entered into a First Amendment to the loan agreement. The amendment modified the agreement as follows: (i) each of the Company and Millendo Therapeutics US, Inc., a Delaware corporation and wholly owned subsidiary of the Company (“Millendo”), were joined as co-borrowers under the Loan Agreement; (ii) the interest-only repayment period was extended through December 31, 2023 (which interest-only period may be further extended through June 30, 2024 under certain circumstances); and (iii) a security interest in all of the assets of the Company, TempestTx and Millendo, including any intellectual property, was granted to the Lender. In addition, the Lender permitted a one-time prepayment in the amount of $5.0 million, which the Company paid on December 23, 2022.
Following the amendment to the loan agreement, the term loan matures on August 1, 2025 and has an annual floating interest rate of 7.15%7.15% which is an Index Rate plus 7%7.10%. Index Rate is the greater of (i) 30-day US LIBOR1-Month CME Term SOFR or (ii) 0.15%0.05%. Monthly principal payments of $500$513 will begin on MarchJanuary 1, 2023.2024. Related to this borrowing, the Company recorded loan discounts totaling $898$898 and paid $95$95 of debt issuance costs. These amounts would be amortized as additional interest expense over the life of the loan. As of September 30, 2022,March 31, 2023, the balance of the loan payable (net of debt issuance costs) was $15,336, of which $3,500 was classified as current and $11,836 was classified as non-current.$10.4 million. The carrying value of the loan approximates fair value (Level 2).
Common Stock
Series | Shares Authorized | Shares Issued and Outstanding | Per Share Liquidation Preference | Aggregate Liquidation Amount | Proceeds Net of Issuance Cost | Net Carrying Value | |||||||||||||||||||||||||||||
Series A | 17,000,000 | 17,000,000 | $ | 1.00 | $ | 17,000 | $ | 16,982 | $ | 16,982 | |||||||||||||||||||||||||
Series B | 25,186,738 | 25,186,738 | 1.00 | 25,187 | 24,943 | 12,235 | |||||||||||||||||||||||||||||
Series B-1 | 93,749,993 | 72,499,993 | 0.80 | 58,000 | 57,489 | 57,489 | |||||||||||||||||||||||||||||
135,936,731 | 114,686,731 | $ | 100,187 | $ | 99,414 | $ | 86,706 |
13
The A&R 2019 Plan had been adopted by the Company’s Board of Directors and one of the material changes was to increase the number of shares available for issuance by 1,132,252. The A&R 2019 Plan still includes the annual evergreen provision of automatically increasing on January 1st of each year the number of option shares available for issuance by 4% of the total number of shares of the Company's common stock outstanding on December 31 of the preceding calendar year, or a lesser number of shares as may be determined by the Board of Directors.
The Company measures employee and non-employee stock-based awards at grant date fair value and records compensation expense on a straight-line basis over the vesting period of the award.
As of September 30, 2022, 137,097March 31, 2023, 253,097 shares of common stock remained available for future issuance under the 2019 ESPP. As of September 30, 2022, 6,120During the three months ended March 31, 2023, 41,778 shares of common stock had been issued under the 2019 ESPP during the three and nine months ended September 30, 2022.
14
Prior to the merger with Millendo, the grant date fair market value of the shares of common stock underlying stock options has historically been determined by the Company’s Board of Directors. Up until the merger, there had been no public market for the Company’s common stock, and therefore the Board of Directors exercised reasonable judgment and considered a number of objective and subjective factors to determine the best estimate of the fair market value, which included valuations performed by an independent third-party, important developments in the Company’s operations, sales of convertible preferred stock, actual operating results, financial performance, the conditions in the life sciences industry, the economy in general, the stock price performance and volatility of comparable public companies, and the lack of liquidity of the Company’s common stock.
The following shows the stock option activities for the ninethree months ended September 30, 2022March 31, 2023 and 2021:2022:Total Options Outstanding Weighted-Average Exercise Price Balance—December 31, 2021 790,637 $ 32.82 Granted 903,527 3.35 Exercised — — Cancelled and forfeited (56,235) 266.80 Balance—September 30, 2022 1,637,929 8.72 Balance—December 31, 2020 452,165 $ 5.35 Assumed in reverse recapitalization 177,591 179.79 Granted 232,669 19.09 Exercised (25,871) 3.77 Cancelled and forfeited (100,459) 107.77 Balance—September 30, 2021 736,095 37.47
|
| Total |
|
| Weighted-Average |
| ||
Balance—December 31, 2022 |
|
| 1,553,041 |
|
| $ | 6.66 |
|
Granted |
|
| 623,550 |
|
|
| 1.23 |
|
Exercised |
|
| — |
|
|
| — |
|
Cancelled and forfeited |
|
| (29,180 | ) |
|
| 3.59 |
|
Balance—March 31, 2023 |
|
| 2,147,411 |
|
| $ | 5.13 |
|
|
|
|
|
|
|
| ||
Balance—December 31, 2021 |
|
| 790,637 |
|
| $ | 32.82 |
|
Granted |
|
| 303,125 |
|
|
| 5.26 |
|
Exercised |
|
| — |
|
|
| — |
|
Cancelled and forfeited |
|
| (17,202 | ) |
|
| 7.49 |
|
Balance—March 31, 2022 |
|
| 1,076,560 |
|
|
| 25.75 |
|
|
| Shares |
|
| Weighted |
|
| Weighted |
|
| Aggregate |
| ||||
Options outstanding |
|
| 2,147,411 |
|
|
| 8.73 |
|
| $ | 5.13 |
|
| $ | 676 |
|
Vested and expected to vest |
|
| 2,147,411 |
|
|
| 8.73 |
|
| $ | 5.13 |
|
| $ | 676 |
|
Exercisable |
|
| 558,724 |
|
|
| 7.47 |
|
| $ | 8.39 |
|
| $ | 28 |
|
Shares | Weighted Average Remaining Contractual Life (In Years) | Weighted Average Exercise Price | Aggregate Intrinsic Value | ||||||||||||||||||||
Options outstanding | 1,637,929 | 8.78 | $ | 8.72 | $ | — | |||||||||||||||||
Vested and expected to vest | 1,637,929 | 8.78 | $ | 8.72 | $ | — | |||||||||||||||||
Exercisable | 486,089 | 7.71 | $ | 15.22 | $ | — |
During the ninethree months ended September 30,March 31, 2023 and 2022, and 2021, the Company granted employees and non-employees stock options to purchase 903,527623,550 and 232,669303,125 shares of common stock with a weighted-average grant date fair value of $2.83$1.03 and $11.83$4.37 per share, respectively. As of September 30,March 31, 2023 and 2022, and 2021, total unrecognized compensation costs related to unvested employee stock options were $4,443$4,140 and $2,935,$3,992, respectively. These costs are expected to be recognized over a weighted-average period of approximately2.5 years 2.8and 3.2 years, and 1.4 years, respectively.
|
| 2023 |
|
| 2022 |
| ||
Expected term (in years) |
| 6 |
|
| 6 |
| ||
Expected volatility |
|
| 109 | % |
|
| 68 | % |
Risk-free interest rate |
|
| 3.9 | % |
| 1.5% - 1.7% |
| |
Dividends |
|
| — | % |
|
| — | % |
2022 | 2021 | ||||||||||
Expected term (in years) | 5.5 - 6.1 | 5.8 - 6.1 | |||||||||
Expected volatility | 110% - 112% | 67% - 68% | |||||||||
Risk-free interest rate | 1.5% - 3.4% | 0.9% - 1.1% | |||||||||
Dividends | —% | —% |
15
Expected Term—The expected term of options granted represents the period of time that the options are expected to be outstanding. Due to the lack of historical exercise history, the expected term of the Company’s employee stock options has been determined utilizing the simplified method for awards that qualify as plain-vanilla options.
Expected Volatility—The expected stock price volatility assumption was determined by examining the historical volatilities for industry peers.peers, as
Risk-Free Interest Rate—The risk-free interest rate assumption is based on the U.S. Treasury instruments whose term was consistent with the expected term of the Company’s stock options.
Dividends—The Company has not paid any cash dividends on common stock since inception and does not anticipate paying any dividends in the foreseeable future. Consequently, an expected dividend yield of zero was used.
|
| Three Months Ended March 31, |
| |||||
|
| 2023 |
|
| 2022 |
| ||
Research and development |
| $ | 146 |
|
| $ | 102 |
|
General and administrative |
|
| 300 |
|
|
| 226 |
|
Total |
| $ | 446 |
|
| $ | 328 |
|
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
2022 | 2021 | 2022 | 2021 | ||||||||||||||||||||
Research and development | $ | 148 | $ | 105 | $ | 375 | $ | 227 | |||||||||||||||
General and administrative | 290 | 191 | 758 | 600 | |||||||||||||||||||
Total | $ | 438 | $ | 296 | $ | 1,133 | $ | 827 |
|
| Three Months Ended March 31, |
| |||||
Numerator: |
| 2023 |
|
| 2022 |
| ||
Net loss |
| $ | (7,636 | ) |
| $ | (8,491 | ) |
Denominator: |
|
|
|
|
|
| ||
Weighted-average common shares outstanding |
|
| 13,763,173 |
|
|
| 7,167,255 |
|
Weighted-average shares used in computing basic and diluted net loss per share |
|
| 13,763,173 |
|
|
| 7,167,255 |
|
Net loss per share attributable to common stockholders—basic and diluted |
| $ | (0.55 | ) |
| $ | (1.18 | ) |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
Numerator: | 2022 | 2021 | 2022 | 2021 | |||||||||||||||||||
Net loss | $ | (8,947) | $ | (8,110) | $ | (26,606) | $ | (20,523) | |||||||||||||||
Denominator: | |||||||||||||||||||||||
Weighted-average common shares outstanding | 13,635,927 | 6,721,400 | 10,815,900 | 2,751,519 | |||||||||||||||||||
Less: Weighted-average unvested restricted shares and shares subject to repurchase | — | (3,745) | — | (11,917) | |||||||||||||||||||
Weighted-average shares used in computing basic and diluted net loss per share | 13,635,927 | 6,717,655 | 10,815,900 | 2,739,602 | |||||||||||||||||||
Net loss per share attributable to common stockholders—basic and diluted | $ | (0.66) | $ | (1.21) | $ | (2.46) | $ | (7.49) |
16
2022, and 2021, the Company excluded the following potential common shares from the computation of diluted net loss per share attributable to common stockholders because including them would have had an anti-dilutive effect:
As of September 30, | |||||||||||
2022 | 2021 | ||||||||||
Options to purchase common stock | 1,637,929 | 736,095 | |||||||||
Common stock warrants | 6,036 | 6,036 | |||||||||
Total | 1,643,965 | 742,131 |
|
| As of March 31, |
| |||||
|
| 2023 |
|
| 2022 |
| ||
Options to purchase common stock |
|
| 2,147,411 |
|
|
| 1,076,560 |
|
Common stock warrants |
|
| 6,036 |
|
|
| 6,036 |
|
|
| 2,153,447 |
|
|
| 1,082,596 |
|
17
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Overview
TPST-1120 is a selective antagonist of peroxisome proliferator-activated receptor alpha, or PPARα. Clinical data from initial Phase 1 trials, both as a monotherapy and in combination with an anti-PD1 therapy, nivolumab, were reported at a podium presentation at the CompanyAmerican Society of Clinical Oncology (ASCO) annual meeting in June 2022. RECIST responses were observed at the two highest TPST-1120 doses in combination with standard dose nivolumab for an objective response rate ("ORR") of those cohorts of 30% (3 of 10 patients), including in patients who previously progressed on anti-PD-1 (-L1) therapy. TPST-1120 is also being studied in an ongoing global randomized Phase 1b/2 trial in combination with the standard-of-care first-line regimen of atezolizumab and bevacizumab in patients with advanced or metastatic hepatocellular carcinoma, or HCC. The study has fully enrolled (targeting 40 patients in each arm), and early results from a February 2023 data cutoff were reported in April 2023 and demonstrated clinically meaningful improvement in multiple categories in the combination TPST-1120 arm when compared to the standard-of-care arm alone. Data from 40 patients in the TPST-1120 arm randomized per protocol against 29 evaluable (30 total) patients in the control arm showed a 74.4% and a 69.9% relative improvement in ORR in unconfirmed (30% vs. 17.2%) and confirmed (17.5% vs. 10.3%) responses, respectively. Additionally, 47.5% of the TPST-1120 arm patients remained on treatment vs. 23.3% in the control arm, while 80% of the TPST-1120 arm patients remained on study vs. 50% in the control arm. We expect more mature ORR data and potentially progression-free-survival (PFS) and overall survival (OS) data to be available in the 2nd half of 2023 or 1st half of 2024. Our second clinical program, TPST-1495, a dual antagonist of the EP2 and EP4 receptors of prostaglandin E2, is in an ongoing Phase 1 monotherapy and combination trial in solid tumors. Data from the TPST-1495 Phase 1 trial will be presented at the ASCO annual meeting in June 2023. Additionally, we have what we believe to be exciting third and fourth preclinical program focused on an undisclosed target that we believe may beprograms targeting the three prime repair exonuclease (“TREX-1”) and a novel oncology target.
We have no products approved for commercial sale and have not generated any revenue from product sales. From inception to September 30, 2022,March 31, 2023, we have raised $164.4$164.4 million, through the salesales of our capital securities.
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We expect to incur significant expenses and increasing operating losses for at least the next several years as we initiate and continue the clinical development of, and seek regulatory approval for, our product candidates and add personnel necessary to advance our pipeline of clinical-stage product candidates. In addition, operating as a publicly traded company will involve the hiring of additional financial and other personnel, upgrading our financial information and other systems, and incurring substantial costs associated with operating as a public company. We expect our operating losses will fluctuate significantly from quarter to quarter and year to year due to timing of clinical development programs and efforts to achieve regulatory approval.
19
Comparison of the three months ended September 30, 2022March 31, 2023 and 20212022
|
| Three Months Ended |
| |||||
|
| March 31, |
| |||||
|
| 2023 |
|
| 2022 |
| ||
|
| (in thousands) |
| |||||
Expenses: |
|
|
|
|
|
| ||
Research and development |
| $ | 4,678 |
|
| $ | 5,109 |
|
General and administrative |
|
| 2,903 |
|
|
| 3,052 |
|
Total expenses |
|
| 7,581 |
|
|
| 8,161 |
|
Operating loss |
|
| (7,581 | ) |
|
| (8,161 | ) |
Interest expense |
|
| (344 | ) |
|
| (333 | ) |
Interest income and other income (expense), net |
|
| 289 |
|
|
| 3 |
|
Provision for income taxes |
|
| — |
|
|
| — |
|
Net loss |
| $ | (7,636 | ) |
| $ | (8,491 | ) |
Three Months Ended September 30, | |||||||||||
2022 | 2021 | ||||||||||
(in thousands) | |||||||||||
Expenses: | |||||||||||
Research and development | $ | 5,973 | $ | 4,630 | |||||||
General and administrative | 2,798 | 3,106 | |||||||||
Total expenses | 8,771 | 7,736 | |||||||||
Operating loss | (8,771) | (7,736) | |||||||||
Interest expense | (389) | (437) | |||||||||
Interest and other (expense) income, net | 213 | 63 | |||||||||
Provision for income taxes | — | — | |||||||||
Net loss | $ | (8,947) | $ | (8,110) |
|
| Three Months Ended |
| |||||
|
| March 31, |
| |||||
|
| 2023 |
|
| 2022 |
| ||
|
| (in thousands) |
| |||||
TPST-1120 |
| $ | 817 |
|
| $ | 1,211 |
|
TPST-1495 |
|
| 843 |
|
|
| 1,078 |
|
Preclinical and other |
|
| 1,052 |
|
|
| 1,228 |
|
Total candidate specific research costs |
|
| 2,712 |
|
|
| 3,517 |
|
Personnel and other costs |
|
| 1,734 |
|
|
| 1,413 |
|
Stock-based compensation and depreciation |
|
| 232 |
|
|
| 179 |
|
Total research and development expenses |
| $ | 4,678 |
|
| $ | 5,109 |
|
20
Research and development expense increaseddecreased by $1.4$0.4 million to $6.0$4.7 million for the three months ended September 30, 2022,March 31, 2023, compared to the prior year period, which was primarily attributable to expandeda decrease in research and development effortscosts incurred from contract research organizations and third-party vendors, offset by an increase in personnel costs, as well as compensation expenses due to an increase in employee headcount.facilities expenses. The following table summarizes our research and development expenses for the three months ended September 30, 2022March 31, 2023 and 2021:
Three Months Ended September 30, | |||||||||||
2022 | 2021 | ||||||||||
(in thousands) | |||||||||||
Research and development outside services | $ | 4,054 | $ | 3,207 | |||||||
Compensation expense | 1,031 | 617 | |||||||||
Stock-based compensation expense | 148 | 106 | |||||||||
Consulting and professional services | 432 | 418 | |||||||||
Other expenses | 308 | 282 | |||||||||
Total research and development expense | $ | 5,973 | $ | 4,630 |
|
| Three Months Ended |
| |||||
|
| March 31, |
| |||||
|
| 2023 |
|
| 2022 |
| ||
|
| (in thousands) |
| |||||
Research and development outside services |
| $ | 2,292 |
|
| $ | 3,214 |
|
Compensation expense |
|
| 1,118 |
|
|
| 1,013 |
|
Stock-based compensation expense |
|
| 146 |
|
|
| 103 |
|
Consulting and professional services |
|
| 402 |
|
|
| 295 |
|
Other expenses |
|
| 720 |
|
|
| 484 |
|
Total research and development expense |
| $ | 4,678 |
|
| $ | 5,109 |
|
General and administrative expenses decreased by $0.3$0.1 million to $2.8$2.9 million for the three months ended September 30, 2022,March 31, 2023, compared to the prior year period. TheThe decrease was primarily due to a decrease of $0.3 million in consulting and professional services.
Nine Months Ended September 30, | |||||||||||
2022 | 2021 | ||||||||||
(in thousands) | |||||||||||
Expenses: | |||||||||||
Research and development | $ | 16,733 | $ | 12,451 | |||||||
General and administrative | 8,973 | 7,197 | |||||||||
Total expenses | 25,706 | 19,648 | |||||||||
Operating loss | (25,706) | (19,648) | |||||||||
Interest expense | (1,186) | (944) | |||||||||
Interest and other (expense) income, net | 286 | 69 | |||||||||
Provision for income taxes | — | — | |||||||||
Net loss | $ | (26,606) | $ | (20,523) |
Nine Months Ended September 30, | |||||||||||
2022 | 2021 | ||||||||||
(in thousands) | |||||||||||
Research and development outside services | $ | 10,954 | $ | 8,170 | |||||||
Compensation expense | 3,054 | 2,016 | |||||||||
Stock-based compensation expense | 375 | 227 | |||||||||
Consulting and professional services | 1,101 | 1,309 | |||||||||
Other expenses | 1,249 | 729 | |||||||||
Total research and development expense | $ | 16,733 | $ | 12,451 |
Overview
We believe our cash and cash equivalents as of September 30, 2022 and continued access to our term loanMarch 31, 2023 will fund our ongoing working capital, investing, and financing requirements for at least the next 12 months.
Loan Agreement with Oxford Finance
On January 15, 2021, we entered into a loan and security agreement with Oxford to borrow a term loan amount of $35.0 million to be funded in three tranches.tranches (the "Loan Agreement"). Tranche A of $15.0 million was funded on January 15, 2021. Tranche B of $10.0 million expired on March 31, 2022. Tranche C of $10.0 million is available at lender’sOxford’s option.
On December 23, 2022, the Company entered into a First Amendment to the Loan Agreement. The amendment modified the agreement as follows: (i) each of the Company and Millendo Therapeutics US, Inc., a Delaware corporation and wholly owned subsidiary of the Company (“Millendo”), were joined as co-borrowers under the Loan Agreement, (ii) the interest-only repayment period was extended through December 31, 2023 (which interest-only period may be further extended through June 30, 2024 under certain circumstances), and (iii) a security interest in the property of the Company, TempestTx and Millendo,
21
including any intellectual property, was granted to the Lender. In addition, the Lender permitted a one-time prepayment in the amount of $5.0 million which the Company paid on December 23, 2022.
The term loan matures on August 1, 2025 and has an annual floating interest rate of 7.15% which is an index rateIndex Rate plus 7%7.10%. The index rateIndex Rate is the greater of (i) 30-day US LIBOR1-Month CME Term SOFR or (ii) 0.15%0.05%. As of September 30, 2022, the balance of the loan payable (net of debt issuance costs) was $15.3 million, of which $3.5 million was classified as current and $11.8 million was classified as non-current.
At-the-Market Offering
On July 23, 2021, we entered into a sales agreement (the “Sales Agreement”) with Jefferies LLC (the “Agent”), pursuant to which we may sell, from time to time, up to an aggregate sales price of $100.0 million of our common stock through the Agent in a series of one or more ATM equity offerings. As of December 31, 2022, our calculated public float was less than $75.0 million. Under current SEC regulations, if at any time our public float is less than $75.0 million, and for so long as our public float remains less than $75.0 million, the amount we can raise through primary public offerings (the “ATM Program”).
PIPE Financing
In April 2022, we completed a PIPEprivate investment in public equity (“PIPE”) financing in which we soldfrom the sale of 3,149,912 shares of our common stock at a price per share of $2.36 and, in lieu of shares of common stock, pre-funded warrants to purchase up to 3,206,020 shares of itsour common stock at a price per pre-funded warrant of $2.359 to the PIPE Investors.EcoR1 Capital, LLC and Versant Venture Capital (the “PIPE Investors”). Net proceeds from the PIPE financings totaled approximately $14.5 million, after deducting offering expenses.
Nine Months Ended September 30, | |||||||||||
2022 | 2021 | ||||||||||
(in thousands) | |||||||||||
Cash used in operating activities | $ | (24,593) | $ | (17,972) | |||||||
Cash used in investing activities | (206) | (70) | |||||||||
Cash provided by financing activities | 16,129 | 59,072 | |||||||||
Effect of exchange rate changes on cash | $ | — | $ | (89) | |||||||
Net increase in cash and cash equivalents | $ | (8,670) | $ | 40,941 |
|
| Three Months Ended |
| |||||
|
| March 31, |
| |||||
|
| 2023 |
|
| 2022 |
| ||
|
| (in thousands) |
| |||||
Cash used in operating activities |
| $ | (8,303 | ) |
| $ | (7,107 | ) |
Cash used in investing activities |
|
| (46 | ) |
|
| (3 | ) |
Cash provided by financing activities |
|
| 44 |
|
|
| 1,403 |
|
Net decrease in cash and cash equivalents |
| $ | (8,305 | ) |
| $ | (5,707 | ) |
Cash flows used in operating activities
Cash used in operating activities for the ninethree months ended September 30, 2022March 31, 2023 was $24.6$8.3 million, consisting of a net loss of $26.6$7.6 million, add back of non-cash adjustments for depreciation, stock-based compensation, non-cash operating lease expense and other non-cash items totaling $2.7$1.1 million, plus changes in operating assets and liabilities of $0.6$1.7 million.
22
Cash used in operating activities for the ninethree months ended September 30, 2021March 31, 2022 was $18.0$7.1 million consisting of a net loss of $20.5$8.5 million, add back of non-cash adjustments for depreciation, stock-based compensation, non-cash operating lease expense and other non-cash items totaling $2.2$0.8 million, plus changes in operating assets and liabilities of $0.3$0.6 million.
Cash provided by financing activities for the ninethree months ended September 30,March 31, 2023 was related to proceeds from the issuance of common stock of $44 thousand.
Cash provided by financing activities for the three months ended March 31, 2022 was $16.1$1.4 million, primarily related to proceeds from the issuance of common stock of $8.8 million and pre-funded warrants of $7.3 million.
Funding Requirements
We believe that our available cash and cash equivalents are sufficient to fund existing and planned cash requirements for the next 12 months. Our primary uses of common stockcapital are, and we expect will continue to be, compensation and relatedexpenses, third-party clinical research and development services, clinical costs, legal and other regulatory expenses and general overhead costs. We have based our estimates on assumptions that may prove to be incorrect, and we could use our capital resources sooner than we currently expect.
Our future funding requirements will depend on many factors, including the following:
Further, our operating plan may change, and we may need additional funds to meet operational needs and capital requirements for clinical trials and other research and development expenditures. Because of the mergernumerous risks and uncertainties associated with Millendothe development and (iii) cashcommercialization of $17.0 million brought over by Millendo as a result our product candidates, we are unable to estimate the amounts of the merger, offset by payment of reverse recapitalization costs of $6.4 million.increased capital outlays and operating expenditures associated with our current and anticipated clinical studies.
Material Cash Requirements
23
Our material cash requirements as of March 31, 2023 primarily relate to the maturities of the principal obligations under our long-term debt, operating leases for office space, trade payables, and accrued expenses.As of March 31, 2023, we have $7.5 million payable within 12 months. Refer to Notes 5 and 6 to our consolidated financial statements for additional information. We expect our expenses to increase in connection with our ongoing development activities, particularly as we continue the research, development and clinical trials of, and seek regulatory approval for, our product candidates. In addition, subject to obtaining regulatory approval for our product candidates, we anticipate that we will need substantial additional funding in connection with our continuing operations.
There have been no significant changes to our critical accounting policies since December 31, 2021.2022. For a description of critical accounting policies that affect our significant judgments and estimates used in the preparation of our unaudited condensed consolidated financial statements, refer to Item 7 "Management's Discussion and Analysis of Financial Condition and Results of Operations" contained in our Annual Report on Form 10-K.
Recent Accounting Pronouncements
See Note 2 to our Condensed Consolidated Financial Statements for a description of recent accounting pronouncements applicable to our Condensed Consolidated Financial Statements.
Smaller Reporting Company Status
We are a smaller reporting company as defined in the Securities Exchange Act of 1934, as amended. We may take advantage of certain of the scaled disclosures available to smaller reporting companies and will be able to take advantage of these scaled disclosures for so long as (i) our voting and non-voting common stock held by nonaffiliates is less than $250.0 million measured on the last business day of our second fiscal quarter or (ii) our annual revenue is less than $100.0 million during the most recently completed fiscal year and our voting and non-voting common stock held by non-affiliates is less than $700.0 million measured on the last business day of our second fiscal quarter.
Item 3. Quantitative and Qualitative Disclosures about Market Risk
Item 4. Controls and Procedures
We maintain “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, that are designed to ensure that information required to be disclosed in the
24
reports that we file or submit under the Exchange Act is (1) recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms and (2) accumulated and communicated to our management, including our principal executive officer and principal financial officer, to allow timely decisions regarding required disclosure. Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures.
Our management, with the participation of our Chief Executive Officer (principal executive officer) and Vice-President, Strategy and Finance (principal financial officer), evaluated the effectiveness of our disclosure controls and procedures (as defined in the Securities Exchange Act of 1934 Rules 13a-15(e) orand 15d-15(e)) as required by paragraph (b) of under the Exchange Act Rules 13a-15 or 15d-15,Act), as of September 30, 2022.the end of the period covered by this Quarterly Report. Based on thesuch evaluation, of our disclosure controls and procedures as of September 30, 2022, our Chief Executive Officer and Vice-President, Strategy and Finance have concluded that as of such date,March 31, 2023, our disclosure controls and procedures were not effective at athe reasonable assurance level because of the material weaknesses in internal control over financial reporting set forth below; provided, however, that we have made improvements with respect to addressing such material weaknesses and will continue to execute on an existing plan to remedy them.
25
Item 1. Legal Proceedings
Item 1A. Risk Factors
26
27
Risks Related to Our Financial Position and adversely affected. Some of the more significant risks we face include the following:
We have a history of operating losses, and we may not achieve or sustain profitability. We anticipate that we will continue to incur losses for the foreseeable future. If we fail to obtain additional funding to conduct our planned research and development efforts, we could be forced to delay, reduce or eliminate our product development programs or commercial development efforts.
As of March 31, 2023, we had cash, cash equivalents and marketable securities of $22.9 million. We believe that our cash, cash equivalents and marketable securities as of March 31, 2023 will fund our current operating plans through at least the next 12 months from the date the financial statements were issued. We have based this assessment on assumptions that may prove to be wrong, and it is possible that we will not achieve the progress that we expect with these funds because the actual costs and timing of clinical development and regulatory and commercial activities are difficult to incur additional costs associated with operating as a public company. Accordingly,predict and are subject to substantial risks and delays, and that we will needuse our capital resources sooner than we currently expect. This estimate does not reflect any additional expenditures that may result from any further strategic transactions to obtainexpand and diversify our product pipeline, including acquisitions of assets, businesses, rights to products, product candidates or technologies or strategic alliances or collaborations that we may pursue. It also does not reflect the possibility that we may not be able to access a portion of our existing cash, cash equivalents and investments due to unforeseen market conditions. For example, on March 10, 2023, the Federal Deposit Insurance Corporation took control and was appointed receiver of Silicon Valley Bank. Similarly, on March 12, 2023, Signature Bank and Silvergate Capital Corp. were each swept into receivership. If other banks and financial institutions enter receivership or become insolvent in the future in response to financial conditions affecting the banking system and financial markets, our ability to access our existing cash, cash equivalents and investments may be threatened and could have a material adverse effect on our business and financial condition.
28
In any event, we will require substantial additional funding in connection withcapital to develop our continuing operations before any commercial revenue may occur.
Our ability to raise capital may be limited by applicable laws and regulations.
Using a shelf registration statement on favorable terms,Form S-3 to raise additional capital generally takes less time and is less expensive than other means, such as conducting an offering under a Form S-1 registration statement. However, our ability to raise capital using a shelf registration statement may be limited by, among other things, SEC rules and regulations. Under SEC rules and regulations, if at all;
Raising additional capital may cause dilution to our stockholders, restrict our operations or require us to relinquish proprietary rights.
Until such time, if any, includingever, as we can generate substantial product sales,revenue, we expect to finance our cash needs through public or private equity or debt financings, third-party funding, marketing manufacturing and distribution arrangements, as well as other collaborations, strategic alliances and licensing arrangements, or any combination of these approaches. We do not have any committed external source of funds. In July 2021, we entered into Sales Agreement, or the ATM Agreement, with Jefferies LLC, for anyan at-the-market offering program that allows us to sell up to an aggregate of $100 million of our product candidatescommon stock. To the extent that we raise additional capital through the sale of equity or convertible debt securities, your ownership interest may be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect your rights as a stockholder. In addition, we may issue equity or debt securities as consideration for which we receive marketing approval;obtaining rights to additional compounds.
•revenue,Debt and equity financings, if any, received from commercial sales ofavailable, may involve agreements that include covenants limiting or restricting our product candidates, should any ofability to take specific actions, such as redeeming our product candidates receive marketing approval; and
29
If we are unable to raise additional capital when needed, we may be required to delay, limit, reduce or terminate our drug development or future commercialization efforts, or grant rights to develop and market product candidates that we would otherwise develop and market ourselves.
Our ability to raise capital may be limited by applicable laws and regulations.
Using a shelf registration statement on Form S-3 to raise additional capital generally takes less time and is less expensive than other means, such as conducting an offering under a Form S-1 registration statement. However, our ability to raise capital using a shelf registration statement may be limited by, among other things, SEC rules and regulations. Under SEC rules and regulations, if our public float (the market value of our common stock held by non-affiliates) is less than $75.0 million, then the aggregate market value of securities sold by us or on our behalf under our Form S-3 in any 12-month period is limited to an aggregate of one-third of our public float. As our public float is currently less than $75.0 million, we are currently subject to this limitation. If our ability to utilize a Form S-3 registration statement for a primary offering of our securities is limited to one-third of our public float, we may conduct such an offering pursuant to an exemption from registration under the Securities Act or under a Form S-1 registration statement, and we would expect either of those alternatives to increase the cost of raising additional capital relative to utilizing a Form S-3 registration statement.
The terms of the Loan Agreement with Oxford Finance provide Oxford with a lien against all of our assets, including our intellectual property, and contains financial covenants and other restrictions on our actions that may limit our operational flexibility or otherwise adversely affect our results of operations.
In January 2021, we entered into a Loan Agreement with Oxford Finance that provided us with up to $35.0 million of borrowing capacity across three potential tranches, which was subsequently amended in December 2022. The initial tranche of $15.0 million was funded at the closing of the Loan Agreement. As of March 31, 2023, a total of $10.0 million in borrowing capacity remained available at the option of Oxford Finance. Our overall leverage and certain obligations and affirmative and negative covenants contained in the related documentation could adversely affect our financial health and business and future operations by limiting our ability to, among other things, satisfy our obligations under the Loan Agreement, refinance our debt on terms acceptable to us or at all, plan for and adjust to changing business, industry and market conditions, use our available cash flow to fund future acquisitions and make dividend payments, and obtain additional financing for working capital, to fund growth or for general corporate purposes, even when necessary to maintain adequate liquidity.
If we default under the Loan Agreement, Oxford Finance may accelerate all of our repayment obligations and exercise all of their rights and remedies under the Loan Agreement and applicable law, potentially requiring us to renegotiate our agreement on terms less favorable to us. In addition, since the borrowings under the Loan Agreement are secured by a lien on our assets, including our intellectual property, Oxford Finance would be able to foreclose on our assets if we do not expectcure any default or pay any amounts due and payable under the Loan Agreement. Further, if we are liquidated, the lenders’ right to repayment would be commercially available for many years, if at all. Accordingly, we will needsenior to continuethe rights of the holders of our common stock to rely on additional financingreceive any proceeds from the liquidation. Oxford Finance could declare a default upon the occurrence of an event of default, including events that they interpret as a material adverse change as defined in the Loan Agreement, payment defaults or breaches of certain affirmative and negative covenants, thereby requiring us to achieverepay the loan immediately. Any declaration by Oxford Finance of an event of default could significantly harm our business objectives, which may not be availableand prospects and could cause the price of our common stock to us on acceptabledecline. Additionally, if we raise any additional debt financing, the terms or at all.
Our limited operating history may make it difficult for you to evaluate the success of our business to date and to assess our future viability.
Our operations to date have been limited to organizing and staffing, business planning, raising capital, acquiring our technology, identifying potential product candidates, undertaking research and preclinical studies of our product candidates, manufacturing,
30
and establishing licensing arrangements. We have not yet demonstrated the ability to complete clinical trials of our product candidates, obtain marketing approvals, manufacture a commercial scale product or conduct sales and marketing activities necessary for successful commercialization. Consequently, any predictions you make about our future success or viability may not be as accurate as they could be if we had a longer operating history.
In addition, as a new business, we may encounter unforeseen expenses, difficulties, complications, delays and other known and unknown factors. We will need to transition from a company with a licensing and research focus to a company that is also capable of supporting clinical development and commercial activities. We may not be successful in such a transition.
Under Section 382 and Section 383 of the Code and corresponding provisions of state law, if a corporation undergoes an “ownership change,” its ability to use its pre-change NOL carryforwards and other pre-change tax attributes (such as research tax credits) to offset its post-change income or taxes may be limited. A Section 382 “ownership change” is generally defined as a greater than 50 percentage point change (by value) in its equity ownership by certain stockholders over a three-year period. We may have experienced ownership changes in the past, including as a result of the merger with Millendo, and may experience ownership changes in the future due to subsequent shifts in our stock ownership (some of which are outside of our control). Furthermore, the merger constituted an ownership change (within the meaning of Section 382 of the Code) of Millendo which may have eliminated or otherwise substantially limited our ability to use Millendo’s federal and state NOLs to offset our future taxable income. Consequently, even if we achieve profitability, we may not be able to utilize a material portion of Private Tempest’s, Millendo’s or our combined NOL carryforwards and other tax attributes, which could have a material adverse effect on cash flow and results of operations. Similar provisions of state tax law may also apply to limit our ability to use of accumulated state tax attributes. There is also a risk that due to regulatory changes, such as suspensions on the use of NOLs, or other unforeseen reasons, our existing NOLs could expire or otherwise be unavailable to offset future income tax liabilities.
Risks Related to Our Business and Strategy
31
believe that our future success is highly dependent upon the contributions of our senior management, particularly our Chief Executive Officer, Stephen Brady, our President, Thomas Dubensky and our Chief Medical Officer, Sam Whiting. The loss of services of Messrs. Brady, Dubensky or Whiting, or any of our other senior management, could delay or prevent the successful development of our product pipeline, completion of our planned clinical trials or the commercialization of our product candidates, if approved. The competition for qualified personnel in the biotechnology field is intense and as a result, we may be unable to continue to attract and retain qualified personnel necessary for the development of our business or to recruit suitable replacement personnel.
Many of the other biotechnology companies that we compete against for qualified personnel have greater financial and other resources, different risk profiles and a longer history in the industry than we do. They also may provide more diverse opportunities and better chances for career advancement. Some of these characteristics may be more appealing to high-quality candidates than what we have to offer. If we are unable to continue to attract and retain high-quality personnel, the rate and success at which we can discover and develop product candidates and our business will be limited.
32
Our failure to address these risks or other problems encountered in connection with our past or future acquisitions or strategic alliances could cause us to fail to realize the anticipated benefits of these transactions, cause us to incur unanticipated liabilities and harm the business generally. There is also a risk that future acquisitions will result in the incurrence of debt, contingent liabilities, amortization expenses or incremental operating expenses, any of which could harm our financial condition or results of operations.
33
•disruptions in enrollment of our clinical trials due to the ongoing COVID-19 pandemic.
34
or foreign regulatory authorities may not include data on secondary endpoints and may not provide us with a competitive advantage over other products approved for the same or similar indications.
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Moreover, because our product candidates represent unproven methods for cancer treatment, potential patients and their doctors may be inclined to use existing therapies rather than enroll patients in our clinical trials.
Preliminary or interim data also remain subject to audit and verification procedures that may result in the final data being materially different from the preliminary data we previously published. As a result, interim and preliminary data should be viewed with caution until the final data is available. Adverse differences between preliminary or interim data and final data could significantly harm our business prospects.
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Regulatory authorities also may approve a product candidate for more limited indications than requested or they may impose significant limitations in the form of narrow indications, warnings, contraindications or Risk Evaluation and Mitigation Strategies ("REMS"). These regulatory authorities may also grant approval subject to the performance of costly post-marketing clinical trials. In addition, regulatory authorities may not approve the labeling claims that are necessary or desirable for the successful commercialization of our product candidates. Any of the foregoing scenarios could materially harm the commercial prospects for our product candidates and adversely affect our business, financial condition, results of operations and prospects.
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significantly, including our ability to successfully sign collaboration or license agreements with external partners. Other treatments for cancers that utilize prostaglandin E2 antagonist or a PPARα antagonist or similar mechanism of action could also generate data that could adversely affect the clinical, regulatory or commercial perception of TPST-1495 and TPST-1120 and our other product candidates.
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Any product candidate for which we obtain marketing approval will be subject to extensive post-marketing regulatory requirements and could be subject to post-marketing restrictions or withdrawal from the market, and we may be subject to penalties if we fail to comply with regulatory requirements or if we experience unanticipated problems with our product candidates, when and if any of them are approved.
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The pricing, insurance coverage and reimbursement status of newly approved products is uncertain. Failure to obtain or maintain adequate coverage and reimbursement for our product candidates, if approved, could limit our ability to market those products and decrease our ability to generate product revenue.
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and, as a result, they may not cover or provide adequate payment for our product candidates. We expect to experience pricing pressures in connection with the sale of any of our product candidates due to the trend toward managed healthcare, the increasing influence of certain third-party payors, such as health maintenance organizations, and additional legislative changes. The downward pressure on healthcare costs in general, particularly prescription drugs and surgical procedures and other treatments, has become very intense. As a result, increasingly high barriers are being erected to the entry of new products into the healthcare market. Recently there have been instances in which third-party payors have refused to reimburse treatments for patients for whom the treatment is indicated in the FDA-approved product labeling. Even if we are successful in obtaining FDA approval to commercialize our product candidates, we cannot guarantee that we will be able to secure reimbursement for all patients for whom treatment with our product candidates is indicated.
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government agencies and public and private research institutions that conduct research, seek patent protection, and establish collaborative arrangements for research, development, manufacturing and commercialization.
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requirements for the potential launch of the product or to meet potential future demand. If our manufacturers are unable to produce sufficient quantities for clinical trials or for commercialization, commercialization efforts would be impaired, which would have an adverse effect on our business, financial condition, results of operations and prospects.
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can exist if there is a challenge to such ownership without regard to the merits of the challenge and industry and market conditions generally. The collaborator may also consider alternative product candidates or technologies for similar indications that may be available to collaborate on and whether such a collaboration could be more attractive than the one for our product candidate. The terms of any additional collaborations or other arrangements that we may establish may not be favorable to us. Collaborations are complex and time-consuming to negotiate and document. In addition, there have been a significant number of recent business combinations among large pharmaceutical companies that have resulted in a reduced number of potential future collaborators.
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Track designation or Breakthrough Therapy designation if it believes that the designation is no longer supported. These designations do not guarantee qualification for the FDA’s priority review procedures or a faster review or approval process.
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designation, the drug is entitled to a period of marketing exclusivity, which precludes FDA from approving another marketing application for the same drug and indication for that time period, except in limited circumstances. If a competitor is able to obtain orphan drug exclusivity prior to us for a product that constitutes the same active moiety and treats the same indications as our product candidates, we may not be able to obtain approval of our drug by the applicable regulatory authority for a significant period of time unless we are able to show that our drug is clinically superior to the approved drug. The applicable period is seven years in the United States.
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healthcare reform measures of the Biden administration will impact the ACA and our business. We are continuing to monitor any changes to the ACA that, in turn, may potentially impact our business in the future.
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our business. For example, over the last several years the U.S. government has shut down several times and certain regulatory agencies, such as the FDA, have had to furlough critical employees and stop critical activities.
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Agency – whose sole responsibility is to enforce the CPRA, which will further increase compliance risk. The provisions in the CPRA may apply to some of our business activities. The CCPA and CPRA may increase our compliance costs and potential liability. Some observers have noted that the CCPA could mark the beginning of a trend toward more stringent privacy legislation in the United States, which could increase our potential liability and adversely affect our business.
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Although we devote resources to protect our information systems, we realize that cyberattacks are a threat, and there can be no assurance that our efforts will prevent information security breaches that would result in business, legal, financial or reputational harm to us, or would have a material adverse effect on our results of operations and financial condition.
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Our operations and relationships with future customers, providers and third-party payors will be subject to applicable anti-kickback, fraud and abuse and other healthcare laws and regulations, which could expose us to penalties including criminal sanctions, civil penalties, contractual damages, reputational harm and diminished profits and future earnings.
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taxation of foreign earnings. Future guidance from the Internal Revenue Service and other tax authorities with respect to the Tax Act may affect us, and certain aspects of the Tax Act could be repealed or modified in future legislation. For example, the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”), modified certain provisions of the Tax Act. In addition, it is uncertain if and to what extent various states will conform to the Tax Act, the CARES Act, or any newly enacted federal tax legislation. The impact of changes under the Tax Act, the CARES Act, or future reform legislation could increase our future U.S. tax expense and could have a material adverse impact on our business and financial condition.
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We may in the future need to obtain licenses from third parties to advance our research or allow commercialization of product candidates Tempest may develop. It is possible that we may be unable to obtain any licenses at a reasonable cost or on reasonable terms, if at all. In either event, we may be required to expend significant time and resources to redesign our technology, product candidates, or the methods for manufacturing them or to develop or license replacement technology, all of which may not be feasible on a technical or commercial basis. If we are unable to do so, we may be unable to develop or commercialize the affected technology or product candidates.
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Office (the “USPTO”), or become involved in interference or derivation proceedings, or equivalent proceedings in foreign jurisdictions. Even if patents do successfully issue, third parties may challenge their inventorship, validity, enforceability or scope, including through opposition, revocation, reexamination, post-grant and inter partes review proceedings. An adverse determination in any such submission, proceeding or litigation may result in loss of patent rights, loss of exclusivity, or in patent claims being narrowed, invalidated or held unenforceable, which could limit our ability to stop others from using or commercializing similar or identical technology and products, or limit the duration of the patent protection of our technology and product candidates. Furthermore, even if they are unchallenged, our patents and patent applications may not adequately protect our intellectual property or prevent others from designing around our claims. Moreover, some of our owned and in-licensed patents and patent applications may be co-owned with third parties. If we are unable to obtain an exclusive license to any such third-party co-owners’ interest in such patents or patent applications, such co-owners may be able to license their rights to other third parties, including our competitors, and our competitors could market competing products and technology. In addition, we may need the cooperation of any such co-owners of our patents in order to enforce such patents against third parties, and such cooperation may not be provided to us. If the breadth or strength of protection provided by the patent applications we hold with respect to our product candidates is threatened, it could dissuade companies from collaborating with us to develop, and threaten our ability to commercialize, our product candidates. Further, if we encounter delays in development, testing, and regulatory review of new product candidates, the period of time during which we could market our product candidates under patent protection would be reduced or eliminated.
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The degree of future protection for our proprietary rights is uncertain because legal means afford only limited protection and may not adequately protect our rights or permit us to gain or keep our competitive advantage. For example:
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In addition, the in-licensing and acquisition of these technologies is a highly competitive area, and a number of more established companies are also pursuing strategies to license or acquire product candidates or technologies that we may consider attractive. These established companies may have a competitive advantage over us due to their size, cash resources and greater clinical development and commercialization capabilities. In addition, companies that perceive us to be a competitor may be unwilling to license rights to us. Furthermore, we may be unable to identify suitable product candidates or technologies within our area of focus. If we are unable to successfully obtain rights to suitable product candidates or technologies, our business and prospects could be materially and adversely affected.
In addition to patent protection, we rely upon know-how and trade secret protection, as well as non-disclosure agreements and invention assignment agreements with our employees, consultants and third-parties, to protect our confidential and proprietary information, especially where we do not believe patent protection is appropriate or obtainable.
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and our advice for best practices, in protecting our trade secrets. Despite these efforts, any of these parties may breach the agreements and disclose our proprietary information, including our trade secrets, and we may not be able to obtain adequate remedies for such breaches.
Our commercial success depends in part on our ability to develop, manufacture, market and sell our product candidates and use our proprietary technologies without infringing, misappropriating or otherwise violating the intellectual property or other proprietary rights of third parties. There is a substantial amount of litigation involving patents and other intellectual property rights in the biotechnology and pharmaceutical industries, as well as administrative proceedings for challenging patents, including interference, derivation, inter partes review, post grant review, and reexamination proceedings before the USPTO or oppositions and other comparable proceedings in foreign jurisdictions. We may be exposed to, or threatened with, future litigation by third parties having patent or other intellectual property rights alleging that our product candidates and/or proprietary technologies infringe, misappropriate or otherwise violate their intellectual property rights. Numerous U.S. and foreign issued patents and pending patent applications that are owned by third parties exist in the fields in which we are developing our product candidates. As the biotechnology and pharmaceutical industries expand and more patents are issued, the risk increases that our product candidates may give rise to claims of infringement of the patent rights of others. Moreover, it is not always clear to industry participants, including us, which patents cover various types of drugs, products or their methods of use or manufacture. Thus, because of the large number of patents issued and patent applications filed in our field, third parties may allege they have patent rights encompassing our product candidates, technologies or methods.
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In the event of a successful claim of infringement against us, we may have to pay substantial damages, including treble damages and attorneys’ fees for willful infringement, obtain one or more licenses from third parties, pay royalties or redesign our infringing products, which may be impossible or require substantial time and monetary expenditure. We cannot predict whether any license of this nature would be available at all or whether it would be available on commercially reasonable terms. Furthermore, even in the absence of litigation, we may need to obtain licenses from third parties to advance our research or allow commercialization of our product candidates and we may fail to obtain any of these licenses at a reasonable cost or on reasonable terms, if at all.
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the price of our common stock. Any of the foregoing could have a material adverse effect on our business financial condition, results of operations and prospects.
Many countries have compulsory licensing laws under which a patent owner may be compelled to grant licenses to third parties. In addition, many countries limit the enforceability of patents against government agencies or government contractors. In these countries, the patent owner may have limited remedies, which could materially diminish the value of such patent. If we are forced to grant a license to third parties with respect to any patents relevant to our business, our competitive position may be impaired, and our business, financial condition, results of operations and prospects may be adversely affected.
Geo-political actions in the United States and in foreign countries could increase the uncertainties and costs surrounding the prosecution or maintenance of our patent applications or those of any current or future licensors and the maintenance, enforcement or defense of our issued patents or those of any current or future licensors. For example, the United States and foreign government actions related to the Russia-Ukraine war may limit or prevent filing, prosecution and maintenance of patent applications in Russia. Government actions may also prevent maintenance of issued patents in Russia. These actions could result in abandonment or lapse of our patents or patent applications, resulting in partial or complete loss of patent rights in Russia. If such an event were to occur, it could have a material adverse effect on our business. In addition, a decree was adopted by the Russian government in March 2022, allowing Russian companies and individuals to exploit inventions owned by patentees that have citizenship or nationality in, are registered in, or have a predominately primary place of business or profit-making activities in the United States and other countries that Russia has deemed unfriendly without consent or compensation. Consequently, we would not be able to prevent third parties from practicing our inventions in Russia or from selling or importing products made using our inventions in and into Russia. Accordingly, our competitive position may be impaired, and our business, financial condition, results of operations and prospects may be adversely affected.
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Third parties may assert that our employees or consultants have wrongfully used or disclosed confidential information or misappropriated trade secrets.
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the way patent applications are prosecuted, redefine prior art and establish a new post-grant review system. The effects of these changes continue to evolve as the USPTO continues to promulgate new regulations and procedures in connection with the America Invents Act. In addition, the courts have yet to address many of these provisions and the applicability of the act and new regulations on the specific patents discussed in this filing have not been determined and would need to be reviewed. Moreover, the America Invents Act and our implementation could increase the uncertainties and costs surrounding the prosecution of our patent applications and the enforcement or defense of our issued patents.
As a further example, beginning June 1, 2023 European patent applications and patents may be subjected to the jurisdiction of the Unified Patent Court (UPC). Also, European patent applications will have the option, upon grant of a patent, of becoming a Unitary Patent, which will be subject to the jurisdiction of the UPC. The UPC and Unitary Patent are significant changes in European patent practice. As the UPC is a new court system, there is no precedent for the court, increasing the uncertainty of any litigation in the UPC. As a single court system can invalidate a European patent, we, where applicable, may opt out of the UPC and as such, each European patent would need to be challenged in each individual country.
Patent terms may be inadequate to protect our competitive position on our product candidates for an adequate amount of time.
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for using it, or a method for manufacturing it may be extended. U.S. and ex-U.S. law concerning patent term extensions and foreign equivalents continue to evolve. Even if we were to seek a patent term extension, it may not be granted because of, for example, the failure to exercise due diligence during the testing phase or regulatory review process, the failure to apply within applicable deadlines, the failure to apply prior to expiration of relevant patents, or any other failure to satisfy applicable requirements. Moreover, the applicable time period of extension or the scope of patent protection afforded could be less than we request. If we are unable to obtain patent term extension or term of any such extension is less than it requests, our competitors may obtain approval of competing products following our patent expiration sooner than expected, and our business, financial condition, results of operations and prospects could be materially harmed.
Intellectual property discovered through government funded programs may be subject to federal regulations such as “march-in”rights, certain reporting requirements and a preference for U.S.-based companies. Compliance with such regulations may limit our exclusive rights and limit our ability to contract with non-U.S. manufacturers.
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In the past, following periods of volatility in the market price of a company’s securities, stockholders have often instituted class action securities litigation against such companies. Furthermore, market volatility may lead to increased shareholder activism if we experience a market valuation that activists believe is not reflective of our intrinsic value. Activist campaigns that contest or conflict with our strategic direction or seek changes in the composition of our board of directors could have an adverse effect on our operating results and financial condition.
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Unstable market and economic conditions may have serious adverse consequences on our business, financial condition and share price.
The global economy, including credit and financial markets, has experienced extreme volatility and disruptions, including severely diminished liquidity and credit availability, declines in consumer confidence, declines in economic growth, increases in unemployment rates, increases in inflation rates and uncertainty about economic stability. For example, the macroeconomic uncertainty and volatile business environment have resulted in ongoing inflation, volatility in the capital markets, significantly reduced liquidity and credit availability, decreases in consumer demand and confidence, declines in economic growth, increases in unemployment rates and uncertainty about economic stability. Our general business strategy may be materially or adversely impacted by if these unpredictable and unstable market conditions continue. Additionally, the recent bank closures and the Russia-Ukraine war has created extreme volatility in the global capital markets and is expected to have further global economic consequences, including disruptions of the global supply chain and energy markets. Any such volatility and disruptions may have adverse consequences on us or the third parties on whom we rely. If the equity and credit markets deteriorate, including as a result of future bank closures or political unrest or war, it may make any necessary debt or equity financing more difficult to obtain in a timely manner or on favorable terms, more costly or more dilutive. Inflation can adversely affect us by increasing our costs, including salary costs. Any significant increases in inflation and related increase in interest rates could have a material adverse effect on our business, results of operations and financial condition. A weak or declining economy could also strain our suppliers and manufacturers, possibly resulting in supply and clinical trial disruption. Any of the foregoing could harm our business and we cannot anticipate all of the ways in which the current economic climate and financial market conditions could adversely impact our business.
Our common stock is thinly traded and our stockholders may be unable to sell their shares quickly or at market price.
Although we have had periods of high-volume daily trading in our common stock, generally our stock is thinly traded. As a consequence of this lack of liquidity, the trading of relatively small quantities of shares by existingour stockholders could cause ourmay disproportionately influence the price of those shares in either direction. Our common stock price to decline.
As of September 30,December 31, 2022, our executive officers, directors and stockholders, who hold greater than 5% of our outstanding common stock, beneficially own in the aggregate approximately 79% ofof our outstanding shares of common stock. As a result, if these persons were to choose to act together, they would be able to control or significantly influence all matters submitted to our stockholders for approval, as well as our management and affairs. For example, these persons, if they choose to act together, would control or significantly influence the election of directors and approval of any merger, consolidation or sale of all or substantially all of the company’s assets. This concentration of voting power could delay or prevent an acquisition on terms that other stockholders may desire.
We are a smaller reporting company, and the reduced reporting requirements applicable to smaller reporting companies may make our common stock less attractive to investors.
We are a “smaller reporting company” as defined in Section 12 of the Exchange Act. For as long as we continue to be a smaller reporting company, we may take advantage of exemptions from various reporting requirements that are applicable to other public companies that are not smaller reporting companies, including not being required to comply with the auditor attestation requirements of Section 404 of Sarbanes-Oxley Act of 2002, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and stockholder approval of any golden parachute payments not previously approved. We cannot predict if investors will find our common stock less attractive because we may rely on these exemptions.
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If some investors find our common stock less attractive as a result, there may be a less active trading market for our common stock and our stock price may be more volatile.
Risks Related to Our Status as a Public Company and Other General Matters
We expect to continue to incur increased costs as a result of operating as a public company, and our management is required to devote substantial time to compliance with our public company responsibilities and corporate governance practices.
If we fail to maintain proper and effective internal controls, our ability to produce accurate financial statements on a timely basis could be impaired.
We are subject to the reporting requirements of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), The Sarbanes-Oxley Act, the Dodd-Frank Wall Street Reform and Consumer Protection Act, and the rules and regulations of the stock market on which our common stock is listed. The Sarbanes-Oxley Act requires, among other things, that we maintain effective disclosure controls and procedures and internal control over financial reporting and that, after a transitional period, we furnish a report by management on, among other things, the effectiveness of our internal control over financial reporting. This assessment includes disclosure of any material weaknesses identified by our management in our internal control over financial reporting. However, due to recent changes in Securities and Exchange Commission (“SEC”) rules related to smaller reporting companies, Millendo was not required to have its auditors formally attest to the effectiveness of its internal control over financial reporting in connection with the Annual Report on Form 10-K for the year ended December 31, 2020. Additionally, weWe will not be required to have our auditors formally attest to the effectiveness of our internal control over financial reporting until we cease to be a smaller reporting company.
We may identify weaknesses in our system of internal financial and accounting controls and procedures that could result in a material misstatement of our financial statements. Our internal control over financial reporting will not prevent or detect all errors and all fraud. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the control system’s objectives will be met. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that misstatements due to error or fraud will not occur or that all control issues and instances of fraud will be detected.
If we are not able to comply with the requirements of Section 404 of the Sarbanes-Oxley Act (“Section 404”), in a timely manner, or if we are unable to maintain proper and effective internal controls, we may not be able to produce timely and accurate financial statements. If that were to happen, the market price of our stock could decline and we could be subject to sanctions or investigations by the stock exchange on which our common stock is listed, the SEC, or other regulatory authorities.
Additionally, as a privately held company, we were not required to evaluate our internal control over financial reporting in a manner that meets the standards of publicly traded companies required by Section 404. In connection with the preparation and audit of our financial statements as of and for the year ended December 31, 2020, a material weaknesses was identified in our internal control over financial reporting.reporting, which has been remediated. We cannot assure you that the material weaknesses identified will be remediated by us on the timelines currently anticipated, or at all, or that there will not be additional material weaknesses or significant
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effective, or if our independent registered public accounting firm determines we have a material weakness or significant deficiency in our internal control over financial reporting once that firm begins its reporting on internal control over financial reporting, investors may lose confidence in the accuracy and completeness of our financial reports, the market price of our common stock could decline, and we could be subject to sanctions or investigations by Nasdaq Stock Market, the SEC or other regulatory authorities. Failure to remedy any material weakness in our internal control over financial reporting, or to implement or maintain other effective control systems required of public companies, could also restrict our future access to the capital markets.
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such lawsuits against us and our directors, officers and other employees. Alternatively, if a court were to find the choice of forum provision contained in the bylaws to be inapplicable or unenforceable in an action, we may incur
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Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
None.
Item 3. Defaults upon Senior Securities
Item 4. Mine Safety Disclosures
Item 5. Other Information
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Item 6. Exhibits
The following exhibits are incorporated by reference or filed as part of this report.
Incorporation by Reference | ||||||||||||||||||||
Exhibit Number | Description of Exhibit | Form | File Number | Exhibit | Filing Date | Filed or Furnished Herewith | ||||||||||||||
2.1 | 8-K | 001-35890 | 2.1 | 3/29/2021 | ||||||||||||||||
3.1 | 10-Q | 001-35890 | 3.1 | 5/15/2019 | ||||||||||||||||
3.2 | 8-K | 001-35890 | 3.1 | 6/28/2021 | ||||||||||||||||
3.3 | 8-K | 001-35890 | 3.2 | 6/28/2021 | ||||||||||||||||
3.4 | 8-K | 001-35890 | 3.1 | 9/24/2021 | ||||||||||||||||
4.1 | 8-K | 001-35890 | 4.1 | 5/2/2022 | ||||||||||||||||
10.1 | X | |||||||||||||||||||
31.1 | X | |||||||||||||||||||
31.2 | X | |||||||||||||||||||
32.1^ | X | |||||||||||||||||||
101.INS | Inline XBRL Instance Document | X | ||||||||||||||||||
101.SCH | Inline XBRL Taxonomy Extension Schema Document | X | ||||||||||||||||||
101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document | X | ||||||||||||||||||
101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document | X | ||||||||||||||||||
101.LAB | Inline XBRL Taxonomy Extension Label Linkbase Document | X | ||||||||||||||||||
101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document | X | ||||||||||||||||||
104 | The cover page from the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2022, has been formatted in Inline XBRL. |
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| Incorporation by Reference | ||||
Exhibit Number | Description of Exhibit | Form | File Number | Exhibit | Filing Date | Filed or Furnished Herewith |
3.1 | Restated Certificate of Incorporation of the Registrant, as amended | 10-Q | 001-35890 | 3.1 | 5/15/2019 |
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3.2 | 8-K | 001-35890 | 3.1 | 6/28/2021 |
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3.3 | 8-K | 001-35890 | 3.2 | 6/28/2021 |
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3.4 | 8-K | 001-35890 | 3.1 | 9/24/2021 |
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31.1 |
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31.2 |
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32.1^ |
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| X | |
101.INS | Inline XBRL Instance Document |
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| X |
101.SCH | Inline XBRL Taxonomy Extension Schema Document |
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| X |
101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document |
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| X |
101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document |
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| X |
101.LAB | Inline XBRL Taxonomy Extension Label Linkbase Document |
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| X |
101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document |
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| X |
104 | The cover page from the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2023, has been formatted in Inline XBRL. |
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^ These certifications are being furnished solely to accompany this Quarterly Report pursuant to 18 U.S.C. Section 1350, and are not being filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and are not to be incorporated by reference into any filing of the Registrant, whether made before or after the date hereof, regardless of any general incorporation language in such filing.
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SIGNATURES
TEMPEST THERAPEUTICS, INC. | ||
By: | /s/ Stephen Brady | |
Stephen Brady | ||
Chief Executive Officer (Principal Executive Officer) | ||
By: | /s/ Nicholas Maestas | |
Nicholas Maestas | ||
Vice-President, Strategy and Finance (Principal | ||
Financial Officer) | ||
By: /s/ Nicholas Maestas
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