Cover
Cover - shares | 6 Months Ended | |
Jun. 30, 2023 | Aug. 04, 2023 | |
Document Information [Line Items] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Jun. 30, 2023 | |
Entity Transition Report | false | |
Entity File Number | 001-40445 | |
Entity Registrant Name | CENTESSA PHARMACEUTICALS PLC | |
Entity Incorporation, State or Country Code | X0 | |
Entity Tax Identification Number | 98-1612294 | |
Entity Address, Address Line One | 3rd Floor | |
Entity Address, Address Line Two | 1 Ashley Road | |
Entity Address, Address Line Three | Altrincham | |
Entity Address, City or Town | Cheshire | |
Entity Address, Postal Zip Code | WA14 2DT | |
Entity Address, Country | GB | |
Country Region | 44 | |
City Area Code | 7391 | |
Local Phone Number | 789784 | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | true | |
Entity Emerging Growth Company | true | |
Entity Ex Transition Period | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 97,402,945 | |
Amendment Flag | false | |
Document Fiscal Year Focus | 2023 | |
Document Fiscal Period Focus | Q2 | |
Entity Central Index Key | 0001847903 | |
Current Fiscal Year End Date | --12-31 | |
Ordinary Shares | ||
Document Information [Line Items] | ||
Title of 12(b) Security | Ordinary shares, nominal value £0.002 per share | |
Trading Symbol | CNTA | |
Security Exchange Name | NASDAQ | |
American Depositary Shares | ||
Document Information [Line Items] | ||
Title of 12(b) Security | American Depositary Shares, each representing one ordinary share, nominal value £0.002 per share | |
Trading Symbol | CNTA | |
Security Exchange Name | NASDAQ |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Thousands | Jun. 30, 2023 | Dec. 31, 2022 |
Current assets: | ||
Cash and cash equivalents | $ 145,220 | $ 393,644 |
Short-term investments | 158,367 | 0 |
Tax incentive receivable | 27,151 | 24,166 |
Prepaid expenses and other current assets | 19,675 | 19,937 |
Total current assets | 350,413 | 437,747 |
Property and equipment, net | 1,145 | 1,168 |
Operating lease right-of-use assets | 12,342 | 0 |
Deferred tax asset | 26,754 | 3,512 |
Other, net | 2,267 | 1,880 |
Total assets | 392,921 | 444,307 |
Current liabilities: | ||
Accounts payable | 11,085 | 13,836 |
Accrued expenses and other current liabilities | 22,782 | 24,502 |
Total current liabilities | 33,867 | 38,338 |
Long term debt | 73,300 | 69,800 |
Operating lease liabilities | 9,148 | 0 |
Total liabilities | 116,315 | 108,138 |
Commitments and contingencies (Note 6) | ||
Shareholders’ equity: | ||
Ordinary shares: £0.002 nominal value: 152,500,000 shares authorized, 95,299,673 issued and outstanding at June 30, 2023: 152,500,000 shares authorized, 94,843,391 issued and outstanding at December 31, 2022 | 266 | 265 |
Additional paid-in capital | 952,854 | 939,261 |
Accumulated other comprehensive loss | 946 | (1,497) |
Accumulated deficit | (677,460) | (601,860) |
Total shareholders' equity | 276,606 | 336,169 |
Total liabilities and shareholders' equity | $ 392,921 | $ 444,307 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - £ / shares | Jun. 30, 2023 | Dec. 31, 2022 |
Statement of Financial Position [Abstract] | ||
Common stock, nominal value (in pound sterling per share) | £ 0.002 | £ 0.002 |
Common stock, shares authorized (in shares) | 152,500,000 | 152,500,000 |
Common stock, shares issued (in shares) | 95,299,673 | 94,843,391 |
Common Stock, shares outstanding (in shares) | 95,299,673 | 94,843,391 |
Consolidated Statements of Oper
Consolidated Statements of Operations and Comprehensive Loss - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | |
Operating expenses: | ||||
Research and development | $ 33,673,000 | $ 53,651,000 | $ 66,499,000 | $ 90,504,000 |
General and administrative | 13,346,000 | 14,763,000 | 29,397,000 | 29,148,000 |
Change in fair value of contingent value rights | 0 | 0 | 0 | 1,980,000 |
Loss from operations | (47,019,000) | (68,414,000) | (95,896,000) | (121,632,000) |
Interest income | 2,059,000 | 25,000 | 4,590,000 | 129,000 |
Interest expense | (2,450,000) | (1,653,000) | (4,795,000) | (3,153,000) |
Other (expense) income, net | (1,527,000) | 5,359,000 | (2,873,000) | 5,555,000 |
Loss before income taxes | (48,937,000) | (64,683,000) | (98,974,000) | (119,101,000) |
Income tax (benefit) expense | (24,051,000) | (22,000) | (23,374,000) | 58,000 |
Net loss | (24,886,000) | (64,661,000) | (75,600,000) | (119,159,000) |
Other comprehensive income (loss): | ||||
Foreign currency translation adjustment | 762,000 | (1,124,000) | 1,660,000 | (1,830,000) |
Unrealized gain on available for sale securities, net of tax | 783,000 | 0 | 783,000 | 0 |
Other comprehensive income (loss) | 1,545,000 | (1,124,000) | 2,443,000 | (1,830,000) |
Total comprehensive loss | $ (23,341,000) | $ (65,785,000) | $ (73,157,000) | $ (120,989,000) |
Net loss per ordinary share - basic (in dollars per share) | $ (0.26) | $ (0.69) | $ (0.80) | $ (1.29) |
Net loss per ordinary share - diluted (in dollars per share) | $ (0.26) | $ (0.69) | $ (0.80) | $ (1.29) |
Weighted average ordinary shares outstanding - basic (in shares) | 95,162,734 | 94,109,089 | 95,050,940 | 92,317,172 |
Weighted average ordinary shares outstanding - diluted (in shares) | 95,162,734 | 94,109,089 | 95,050,940 | 92,317,172 |
Consolidated Statements of Shar
Consolidated Statements of Shareholders' Equity - USD ($) $ in Thousands | Total | Ordinary Shares | Additional paid-in capital | Accumulated Other Comprehensive Income (Loss) | Accumulated Deficit |
Ordinary shares, beginning balance (in shares) at Dec. 31, 2021 | 89,988,228 | ||||
Beginning balance at Dec. 31, 2021 | $ 491,554 | $ 252 | $ 876,267 | $ 688 | $ (385,653) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Issuance of ordinary shares to settle outstanding contingent value rights, net of employee withholding taxes (in shares) | 3,938,423 | ||||
Issuance of ordinary shares to settle outstanding contingent value rights, net of employee withholding taxes | 37,748 | $ 10 | 37,738 | ||
Stock option exercises (in shares) | 77,754 | ||||
Stock option exercises | 405 | 405 | |||
Share-based compensation expense | 11,321 | 11,321 | |||
Vesting of ordinary shares (in shares) | 267,512 | ||||
Vesting of ordinary shares | 0 | $ 1 | (1) | ||
Foreign currency translation adjustments | (1,830) | (1,830) | |||
Unrealized gain on available for sale securities, net of tax | 0 | ||||
Net loss | (119,159) | (119,159) | |||
Ordinary shares, ending balance (in shares) at Jun. 30, 2022 | 94,271,917 | ||||
Ending balance at Jun. 30, 2022 | 420,039 | $ 263 | 925,730 | (1,142) | (504,812) |
Ordinary shares, beginning balance (in shares) at Mar. 31, 2022 | 94,021,968 | ||||
Beginning balance at Mar. 31, 2022 | 480,151 | $ 262 | 920,058 | (18) | (440,151) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Stock option exercises (in shares) | 18,213 | ||||
Stock option exercises | 70 | 70 | |||
Share-based compensation expense | 5,603 | 5,603 | |||
Vesting of ordinary shares (in shares) | 231,736 | ||||
Vesting of ordinary shares | 0 | $ 1 | (1) | ||
Foreign currency translation adjustments | (1,124) | (1,124) | |||
Unrealized gain on available for sale securities, net of tax | 0 | ||||
Net loss | (64,661) | (64,661) | |||
Ordinary shares, ending balance (in shares) at Jun. 30, 2022 | 94,271,917 | ||||
Ending balance at Jun. 30, 2022 | $ 420,039 | $ 263 | 925,730 | (1,142) | (504,812) |
Ordinary shares, beginning balance (in shares) at Dec. 31, 2022 | 94,843,391 | 94,843,391 | |||
Beginning balance at Dec. 31, 2022 | $ 336,169 | $ 265 | 939,261 | (1,497) | (601,860) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Stock option exercises (in shares) | 3,776 | 3,776 | |||
Stock option exercises | $ 15 | 15 | |||
Share-based compensation expense | 14,403 | 14,403 | |||
Vesting of ordinary shares (in shares) | 616,729 | ||||
Vesting of ordinary shares | 0 | $ 1 | (1) | ||
Shares withheld to pay employee withholding tax on share-based compensation (in shares) | (164,223) | ||||
Shares withheld to pay employee withholding tax on share-based compensation | (824) | (824) | |||
Foreign currency translation adjustments | 1,660 | 1,660 | |||
Unrealized gain on available for sale securities, net of tax | 783 | 783 | |||
Net loss | $ (75,600) | (75,600) | |||
Ordinary shares, ending balance (in shares) at Jun. 30, 2023 | 95,299,673 | 95,299,673 | |||
Ending balance at Jun. 30, 2023 | $ 276,606 | $ 266 | 952,854 | 946 | (677,460) |
Ordinary shares, beginning balance (in shares) at Mar. 31, 2023 | 95,103,247 | ||||
Beginning balance at Mar. 31, 2023 | 293,261 | $ 266 | 946,168 | (599) | (652,574) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Stock option exercises (in shares) | 3,776 | ||||
Stock option exercises | 15 | 15 | |||
Share-based compensation expense | 7,213 | 7,213 | |||
Vesting of ordinary shares (in shares) | 284,437 | ||||
Shares withheld to pay employee withholding tax on share-based compensation (in shares) | (91,787) | ||||
Shares withheld to pay employee withholding tax on share-based compensation | (542) | (542) | |||
Foreign currency translation adjustments | 762 | 762 | |||
Unrealized gain on available for sale securities, net of tax | 783 | 783 | |||
Net loss | $ (24,886) | (24,886) | |||
Ordinary shares, ending balance (in shares) at Jun. 30, 2023 | 95,299,673 | 95,299,673 | |||
Ending balance at Jun. 30, 2023 | $ 276,606 | $ 266 | $ 952,854 | $ 946 | $ (677,460) |
Consolidated Statements of Sh_2
Consolidated Statements of Shareholders' Equity (Parenthetical) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended |
Jun. 30, 2023 | Jun. 30, 2023 | |
Statement of Stockholders' Equity [Abstract] | ||
Unrealized gain on available for sale securities, tax | $ 0.2 | $ 0.2 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2023 | Jun. 30, 2022 | |
Cash flows from operating activities: | ||
Net loss | $ (75,600) | $ (119,159) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Share-based compensation expense | 14,403 | 11,321 |
Depreciation and amortization | 326 | 60 |
Change in fair value of financial instruments | 3,500 | (6,320) |
Change in deferred taxes | (23,490) | 52 |
Changes in operating assets and liabilities: | ||
Tax incentive receivable | (1,835) | (5,300) |
Prepaid expenses and other assets | (731) | 872 |
Operating leases, net | (2,094) | 0 |
Accounts payable | (3,391) | 623 |
Accrued expenses and other liabilities | (2,988) | 7,957 |
Net cash used in operating activities | (91,900) | (109,894) |
Cash flows from investing activities: | ||
Purchases of investments in marketable securities | (157,337) | 0 |
Purchases of property and equipment | (98) | (469) |
Net cash used in investing activities | (157,435) | (469) |
Cash flows from financing activities: | ||
Proceeds from option exercises | 12 | 405 |
Other, net | 0 | (261) |
Net cash provided by financing activities | 12 | 144 |
Effect of exchange rate on cash and cash equivalents | 899 | (702) |
Net decrease in cash and cash equivalents | (248,424) | (110,921) |
Cash and cash equivalents at beginning of period | 393,644 | 595,082 |
Cash and cash equivalents at end of period | 145,220 | 484,161 |
Supplemental disclosure: | ||
Interest paid | 4,795 | 3,153 |
Income taxes paid | 2,706 | 862 |
Operating lease payments reducing operating lease liabilities | 393 | 0 |
ROU assets obtained in exchange for operating lease liabilities | 9,711 | 0 |
Non-cash investing and financing activities: | ||
Issuance of ordinary shares to settle outstanding contingent value rights | $ 0 | $ 39,680 |
Organization and Description of
Organization and Description of Business | 6 Months Ended |
Jun. 30, 2023 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Organization and Description of Business | Organization and Description of Business Centessa Pharmaceuticals plc (“Centessa” or “the Company”) is a clinical-stage pharmaceutical company that aims to discover, develop and ultimately deliver medicines that are transformational for patients. Centessa was incorporated on October 26, 2020 as a limited liability company under the laws of England and Wales. In connection with the IPO, it re-registered Centessa Pharmaceuticals Limited as an English public limited company and renamed it as Centessa Pharmaceuticals plc. Risks and Liquidity The Company is subject to risks common to other life science companies in various stages of development including, but not limited to, uncertainty of product development and commercialization, lack of marketing and sales history, development by its competitors of new technological innovations, dependence on key personnel, market acceptance of products, product liability, protection of proprietary technology, ability to raise additional financing and compliance with government regulations in the markets in which the Company is seeking approvals, including U.S. Food and Drug Administration (“FDA”) regulations. If the Company does not successfully advance its prog rams, into an d through human clinical trials and/or enter into collaborations for its programs and commercialize any of its product candidates, it may be unable to produce product revenue or achieve profitability. The Company has incurred losses and negative cash flows from operations since inception and the Company had an accumulated deficit of $(677.5) million as of June 30, 2023. The Company anticipates incurring additional losses until such time, if ever, that it can generate significant sales of the product candidates currently in development. Substantial additional capital will be needed by the Company to fund its operations and to develop its product candidates. The Company expects its existing cash, cash equivalents and short-term investments as of June 30, 2023 of $303.6 million will be sufficient to fund its expected operating expenses and capital expenditure requirements for at least the next twelve months from the date of issuance of these unaudited interim consolidated financial statements. Shelf Registration Statement On July 12, 2022, the Securities and Exchange Commission (“SEC”) declared effective the Company’s filed shelf registration statement on Form S-3 (“Shelf”), which covers the offering, issuance and sale of an amount up to $350.0 million in the aggregate of the Company’s ordinary shares, American Depository Shares representing ordinary shares, debt securities, warrants, and/or units or any combination thereof. The Company entered into a Sales Agreement, dated January 27, 2023, by and between Centessa Pharmaceuticals plc and Leerink Partners LLC (formerly SVB Securities LLC). As sales agent, Leerink Partners LLC will provide for the issuance and sale by the Company of up to $125.0 million of its ordinary shares represented by American Depository Shares from time to time in “at-the-market” offerings under the Shelf (“ATM Program”). As of June 30, 2023, the Company has not issued any securities under the ATM Program. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 6 Months Ended |
Jun. 30, 2023 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | Summary of Significant Accounting Policies The accompanying unaudited interim consolidated financial statements should be read in conjunction with the annual audited consolidated and combined financial statements of Centessa Pharmaceuticals plc (Successor) and the Centessa Predecessor Group (Predecessor) and related notes as of and for the year ended December 31, 2022 which can be found in our Annual Report on Form 10-K for the year ended December 31, 2022 (the “2022 Annual Report”). The Summary of Significant Accounting Policies included in the Company’s annual financial statements have not materially changed, except as set forth below. Basis of Presentation and Consolidation The accompanying unaudited interim consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”). Any reference in these notes to applicable guidance is meant to refer to GAAP as found in the Accounting Standards Codification (“ASC”) and Accounting Standards Updates (“ASUs”) promulgated by the Financial Accounting Standards Board (“FASB”). In the opinion of management, the accompanying unaudited interim consolidated financial statements include all normal and recurring adjustments (which consist primarily of accruals, estimates and assumptions that impact the financial statements) considered necessary to present fairly: • the Company’s financial position as of June 30, 2023 and as of December 31, 2022; • the Company’s results of operations for the three and six months ended June 30, 2023 and June 30, 2022; and • the Company’s cash flows for the six months ended June 30, 2023 and June 30, 2022. Operating results for the Company for the three and six months ended June 30, 2023 are not necessarily indicative of the results that may be expected for the full year. The unaudited interim consolidated financial statements presented herein do not contain all of the required disclosures under U.S. GAAP for annual financial statements. Notes to the financial statements which would substantially duplicate the disclosure contained in the audited financial statements for fiscal 2022 as reported in the 2022 Annual Report have been omitted. Therefore, these unaudited interim consolidated financial statements should be read in conjunction with the annual audited consolidated and combined financial state ments and related notes for Centessa Pharmaceuticals plc found in the Form 10-K filed with the SEC. The Company’s unaudited interim consolidated financial statements include the accounts of Centessa Pharmaceuticals plc, and its wholly owned subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation. Emerging Growth Company and Smaller Reporting Company We are an “emerging growth company,” as defined in the Jumpstart Our Business Startups Act (“JOBS Act”) enacted in April 2012. For so long as we remain an emerging growth company, we are permitted and intend to rely on certain exemptions from various public company reporting requirements, including not being required to have our internal control over financial reporting audited by our independent registered public accounting firm pursuant to Section 404(b) of the Sarbanes-Oxley Act of 2002, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and any golden parachute payments not previously approved. We will remain an emerging growth company until the earlier to occur of (1) the last day of the fiscal year that is five years following the closing of our initial public offering, (2) the last day of the fiscal year in which we have total annual gross revenues of at least $1.235 billion, (3) the last day of the fiscal year in which we are deemed to be a “large accelerated filer,” under the rules of the SEC, which means the market value of our equity securities that is held by non-affiliates exceeds $700 million as of the prior June 30th after we have been subject to the SEC’s periodic reporting requirements for at least twelve calendar months and have filed at least one annual report, and (4) the date on which we have issued more than $1.0 billion in non-convertible debt during the prior three-year period. In addition, the JOBS Act provides that an emerging growth company can take advantage of an extended transition period for complying with new or revised accounting standards. This provision allows an emerging growth company to delay the adoption of some accounting standards until those standards would otherwise apply to private companies. We are electing to utilize the extended transition period and, as a result, will comply with new or revised accounting standards on the relevant dates on which adoption of such standards is required for emerging growth companies. We are also a “smaller reporting company” as defined in the Securities Exchange Act of 1934 (“Exchange Act”). Even after we no longer qualify as an emerging growth company, we may still qualify as a “smaller reporting company” if the market value of our ordinary shares held by non-affiliates is below $250 million (or $560 million if our annual revenue is less than $100 million) as of June 30 in any given year. As a smaller reporting company, we are eligible for scaled disclosure relief from certain Regulation S-X and Regulation S-K requirements. Cash and Cash Equivalents The Company considers all highly liquid investments with original maturities of three months or less when purchased to be cash equivalents. Cash and cash equivalents include cash in readily available checking accounts, certificate of deposits, money market funds and U.S. Treasury securities. Short Term Investments The Company invests its excess cash in cash deposits, U.S. Treasury securities and SEC-registered money market funds. Securities with original maturities of three months or less when purchased are included in Cash and cash equivalents. The Company considers investments with original maturities greater than three months and remaining maturities less than one year to be short-term investments. As of June 30, 2023, all investments in U.S. Treasury securities were classified as available-for-sale securities, which are recorded at fair value. Unrealized holding gains and losses on available-for-sale securities are reported net of related income taxes in accumulated other comprehensive income until realized. Purchase premiums and discounts are amortized to interest income over the terms of the related securities. Concentrations of Credit Risk Financial instruments that potentially subject the Company to a concentration of credit risk consist of cash, cash equivalents and short-term investments. The Company’s cash, cash equivalents and short-term investments are held by financial institutions primarily in the United States and the United Kingdom. Amounts on deposit may at times exceed federally insured limits. Management believes that the financial institutions are financially sound, and accordingly, the Company does not believe that it is subject to unusual credit risk beyond the normal credit risk associated with commercial banking relationships. Reclassifications Certain amounts in the prior period financial statements have been reclassified to conform to the presentation of the current period financial statements. These reclassifications had no effect on previously reported net loss or comprehensive loss. Use of Estimates The preparation of unaudited interim consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the unaudited interim consolidated financial statements and the reported amounts of expenses during the reporting period. Actual results could differ from those estimates. Estimates and assumptions are periodically reviewed and the effects of revisions are reflected in the unaudited interim consolidated financial statements in the period they are determined to be necessary. Significant areas that require management’s estimates include share-based compensation assumptions, note purchase agreement assumptions, and accrued research and development expenses. Property and Equipment, net and Capitalized Software under Cloud Computing Arrangements Property and equipment are recorded at cost and are depreciated using the straight-line method over the estimated useful lives of the respective assets. Property and equipment includes computer equipment, furniture and office equipment. The costs of maintenance and repairs are expensed as incurred. Improvements and betterment that add new functionality or extend the useful life of the asset are capitalized. Depreciation expense for the six-month periods ended June 30, 2023 and June 30, 2022 were $121 thousand and $60 thousand, respectively. Costs related to the implementation of cloud computing arrangements that are service contracts incurred during the application development stage are capitalized and included in the same line item as a prepayment for corresponding hosting service fees. Capitalized costs are amortized over the shorter of its estimated useful life and the term of the hosting arrangement, including anticipated extensions. Costs incurred during the preliminary project stage and the post-implementation-operation stage are expensed as incurred. Hosting fees associated with hosting as a service arrangement are expensed on a straight line basis over the term of the hosting arrangement. Amortization expense for the six months ended June 30, 2023 was $204 thousand. Leases In accordance with ASU No. 2016-02, Leases (“ASC 842”) , the Company assesses whether an arrangement is a lease, or contains a lease at the inception of the arrangement. When an arrangement contains a lease, the Company categorizes leases with contractual terms longer than twelve months as either operating or finance. Finance leases are generally those leases that allow us to substantially utilize or pay for the entire asset over its estimated life. Assets acquired under finance leases are recorded in “Property and equipment, net.” All other leases are categorized as operating leases. The Company records right-of use ("ROU") assets and lease obligations for its finance and operating leases, which are initially recognized based on the discounted future lease payments over the term of the lease. As the rate implicit in the Company's leases may not be easily determinable, the Company uses its incremental borrowing rate to calculate the present value of the sum of the lease payments. Lease terms may include options to extend or terminate the lease. The Company will include such options in determining the lease term when it is reasonably certain that the Company will exercise such options. Operating and finance lease ROU assets are recognized net of any lease prepayments and incentives. The Company elected the practical expedient to not separate lease and non-lease components and, accordingly, accounts for them as a single lease component. Operating lease expense is recognized on a straight-line basis over the lease term. Finance lease expense is recognized based on the effective-interest method over the lease term. The Company elected not to recognize ROU assets and lease obligations for any short-term leases, which are defined as leases with an initial term of 12 months or less. Long-Lived Assets Long-lived assets, comprised of property and equipment and operating lease right-of-use assets, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to estimated undiscounted future cash flows expected to be generated by the asset. If the carrying amount of an asset exceeds its estimated undiscounted future cash flows, then an impairment charge is recognized for the amount by which the carrying value of the asset exceeds the estimated fair value of the asset. No impairments of long-lived assets for the six-month periods ended June 30, 2023 and 2022 were recognized by the Company. Note Purchase Agreement In October 2021, the Company entered into a Note Purchase Agreement (the “Note Purchase Agreement”) with Oberland Capital. Under the terms of the Note Purchase Agreement, Oberland Capital will purchase up to $300 million of 6.0 years, interest-only, senior secured notes (the “Notes”) from the Company including $75 million funded on October 4, 2021, $125 million available through 2023 at the Company’s option, and $100 million available to fund Mergers and Acquisitions (“M&A”), in-licensing, or other strategic transactions, at the option of the Company and Oberland Capital. In addition to interest payments on the principal, the Company is obligated to pay a milestone payment upon the Company’s first product to obtain regulatory approval and was obligated to pay revenue participation payments, starting on the date of the first commercial sale of lixivaptan. Since the Company’s discontinuation of the development of lixivaptan for the treatment of ADPKD, the revenue participation payment is no longer achievable. The Company evaluated the Notes and determined that the Notes include embedded derivatives that would otherwise require bifurcation as derivative liabilities. Neither the debt instrument nor any embedded features are required to be classified as equity. Therefore, the hybrid financial instrument comprised of the debt host and the embedded derivative liability may be accounted for under the fair value option. The Company elected to carry the Notes at fair value, and the debt instrument is outside the scope of ASC 480, Distinguishing Liabilities from Equity , and thus will be classified as a liability under ASC 470, Debt , in the Company’s financial statements. As the Company has elected to account for the Notes under the fair value option, debt issuance costs were immediately expensed. The fair value of the Note Purchase Agreement represents the present value of estimated future payments, including interest, principal as well as estimated payments that are contingent upon the achievement of specified milestones. The fair value of the Notes is based on the cumulative probability of the various estimated payments. The fair value measurement is based on significant Level 3 unobservable inputs such as the probability of achieving the milestones, anticipated timelines, probability and timing of an early redemption of all obligations under the Note Purchase Agreement and the discount rate. Any changes in the fair value of the liability in each reporting period are recognized in the consolidated statement of operations and comprehensive loss until it is settled. Net Loss Per Ordinary Share Basic loss per ordinary share is computed by dividing net loss by the aggregate weighted-average number of ordinary shares outstanding. Diluted loss per ordinary share includes the effect, if any, from the potential exercise or conversion of securities, such as convertible preferred shares, stock options, unvested restricted ordinary shares and convertible debt which would result in the issuance of incremental ordinary shares. For diluted net loss per ordinary share, the weighted-average number of ordinary shares is the same for basic net loss per ordinary share due to the fact that when a net loss exists, dilutive securities are not included in the calculation as the impact is anti-dilutive. The following potentially dilutive securities have been excluded from the computation of diluted weighted-average ordinary shares outstanding for the six months ended June 30, 2023 and June 30, 2022, as they would be anti-dilutive: Six Months Ended Six Months Ended Unvested ordinary shares 423,615 715,432 Restricted stock units 2,470,254 — Stock options 16,046,827 15,521,324 18,940,696 16,236,756 |
Fair Value Measurement
Fair Value Measurement | 6 Months Ended |
Jun. 30, 2023 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurement | Fair Value Measurement Fair value is the price that could be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. Fair value determination in accordance with applicable accounting guidance requires that a number of significant judgments be made. Additionally, fair value is used on a nonrecurring basis to evaluate assets for impairment or as required for disclosure purposes by applicable accounting guidance on disclosures about fair value of financial instruments. Depending on the nature of the assets and liabilities, various valuation techniques and assumptions are used when estimating fair value. The carrying amounts of certain of the Company’s financial instruments, including cash, prepaid expense and accounts payable, are shown at cost, which approximates fair value due to the short-term nature of these instruments. The Company follows the provisions of FASB ASC Topic 820, Fair Value Measurement , for financial assets and liabilities measured on a recurring basis. The guidance requires fair value measurements be classified and disclosed in one of the following three categories: Level 1: Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities. Level 2: Quoted prices in markets that are not active, or inputs which are observable, either directly or indirectly, for substantially the full term of the asset or liabilities. Level 3: Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (i.e., supported by little or no market activity). The following fair value hierarchy table presents information about the Company’s financial assets and liabilities measured at fair value on a recurring basis (amounts in thousands): Fair value measurement at reporting date using Quoted prices Significant Significant June 30, 2023 Assets Money Market fund $ 33,889 $ — $ — U.S. Treasury securities 158,367 — — Liabilities Note Purchase Agreement $ — $ — $ 73,300 December 31, 2022 Liabilities Note Purchase Agreement $ — $ — $ 69,800 We classify our investments in available-for-sale U.S. Treasury securities and the money market fund into Level 1 of the ASC Topic 820 hierarchy because fair values represent quoted market prices for identical or comparable instruments. The following represents the amortized cost bases and fair values of the Company’s U.S. Treasury securities and its money market fund as of June 30, 2023 (amounts in thousands): Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value Money Market fund, included in Cash and cash equivalents $ 33,889 $ — $ — $ 33,889 U.S. Treasury securities, included in: Short-term investments 157,337 1,036 (6) 158,367 Total U.S. Treasury securities $ 157,337 $ 1,036 $ (6) $ 158,367 For the Company's financial instruments measured at fair value on a recurring basis using significant unobservable inputs (Level 3), the following table provides a reconciliation of the beginning and ending balances for each category therein (amounts in thousands): Contingent Value Rights Note Purchase Agreement Balance at January 1, 2022 $ 37,700 $ 75,700 Change in fair value 1,980 (5,900) Settlement (39,680) — Balance at December 31, 2022 $ — $ 69,800 Change in fair value — 3,500 Balance at June 30, 2023 $ — $ 73,300 |
Balance Sheet Components
Balance Sheet Components | 6 Months Ended |
Jun. 30, 2023 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Balance Sheet Components | Balance Sheet Components Prepaid expenses and other current assets consist of the following (amounts in thousands): June 30, December 31, Research and development expenses $ 12,830 $ 11,321 Insurance related expenses 1,704 2,788 Value added tax receivable 1,272 2,557 Other 3,869 3,271 $ 19,675 $ 19,937 Accrued expenses and other current liabilities consist of the following (amounts in thousands): June 30, December 31, Research and development expenses $ 15,147 $ 10,795 Personnel related expenses 4,510 7,264 Professional fees 2,158 4,171 Income tax liability — 1,582 Operating lease liabilities 460 — Other 507 690 $ 22,782 $ 24,502 Property and equipment, net consisted of the following (amounts in thousands): June 30, December 31, Computer equipment $ 706 $ 442 Office furniture 724 — Other, primarily construction in progress — 890 Property and equipment, at cost 1,430 1,332 Less: Accumulated depreciation (285) (164) Property and equipment, net $ 1,145 $ 1,168 |
Debt
Debt | 6 Months Ended |
Jun. 30, 2023 | |
Debt Disclosure [Abstract] | |
Debt | Debt Debt as of June 30, 2023 and December 31, 2022 (in thousands): June 30, December 31, Note Purchase Agreement $ 73,300 $ 69,800 On October 1, 2021 (the “Signing Date”), the Company, as issuer, and certain of the Company’s wholly owned subsidiaries, as guarantors (the “Guarantors”), entered into a Note Purchase Agreement (the “Note Purchase Agreement”) with Oberland Capital Management LLC (the “Purchasers”) and Cocoon SA LLC (the “Agent”), an affiliate of Oberland Capital Management LLC, as agent for the Purchasers. On February 11, 2022, on November 7, 2022 and on June 23, 2023, the Company, the Guarantors, the Purchasers and the Agent agreed to certain amendments to the Note Purchase Agreement, memorialized in the “Amendment”, the “Second Amendment”, and the “Third Amendment” respectively. The Note Purchase Agreement, collectively with the amendments, is hereinafter referred to as the NPA. Under the NPA, the Purchasers agreed to purchase, and the Company agreed to sell, tranches of secured notes in the aggregate principal amount of up to $300 million as follows: (a) a secured note in the aggregate principal amount of $75 million, (the “First Purchase Note”), which was funded on October 4, 2021, (b) on and after the Signing Date until September 30, 2023, at the Company’s option, a secured note in the aggregate principal amount of $75 million (the “Second Purchase Note”), (c) on and after the Signing Date until December 31, 2023, at the Company’s option, a secured note in the aggregate principal amount of $50 million (the “Third Purchase Note”), and (d) one or more secured notes in the aggregate principal amount of up to $100 million at any time at the Company’s and Purchasers’ option, to be used to finance certain permitted acquisitions as described in the NPA (the “Fourth Purchase Notes” and collectively with the First Purchase Note, the Second Purchase Note and the Third Purchase Note, the “Notes”). The obligations of the Purchasers to purchase the Notes are subject to certain conditions precedent. The Notes will mature on the six-year anniversary of the First Purchase Date, unless earlier accelerated under the terms of the NPA. At maturity, the Company must repay the outstanding principal amount of the Notes, together with any accrued and unpaid interest thereon and other outstanding obligations thereunder. Interest is payable quarterly during the term of the Notes at a rate per annum equal to the sum of (a) the greater of (i) the Secured Overnight Financing Rate (“SOFR”) (which may be subject to replacement as contemplated by the NPA) and (ii) 0.25%; plus (b) 7.75% (which percentage is subject to adjustment as described in the NPA); provided that the interest rate shall never be less than 8.00%. The average interest rate over the six months ended June 30, 2023 was 12.7% per annum compared with an average interest rate of 8.4% per annum over the six months ended June 30, 2022. The Company’s obligations under the facility are secured by a first priority security interest in all assets of the Company and Guarantors, subject to variation in accordance with local law with respect to assets held by the Company and the Guarantors outside of the United States. Upon the first regulatory approval of any of the Company’s product candidates by either the FDA or the European Medicines Agency (“EMA”), the Company is obligated to pay the Purchasers an amount equal to 30% of the aggregate principal amount issued under the Notes by the Company (the “Milestone Payment”). The Milestone Payment shall be paid in quarterly installments over five years beginning on the earlier of (i) the date of the first commercial sale following such regulatory approval; and (ii) the six month anniversary of such regulatory approval. The Milestone Payment is triggered one time only, and applies only to the Company’s first product to obtain regulatory approval. The Company may redeem all, but not less than all, of the outstanding Notes (if any) and pay all other outstanding obligations under the NPA. On the applicable date, the Company shall repurchase the Notes by paying an amount of up to (i) 175% of the principal amount issued under the Notes if such repurchase occurs on or prior to the third anniversary of the First Purchase Date, (ii) 185% of the principal amount issued under the Notes if such repurchase occurs between the third and sixth anniversaries of the First Purchase Date, and (iii) 205% of the principal amount issued under the Notes if such repurchase occurs thereafter, in each case less specified deductions and exclusions described in the NPA, including amounts paid by the Company to the Purchasers in respect of certain asset sale or strategic transactions, the interest payments and the Milestone Payments (the “Final Payment Amount”). As of June 30, 2023, the cumulative payments under the NPA, including interest payments, totaled $13.6 million. Conversely, the Purchasers may require the Company to redeem any outstanding Notes by payment of the Final Payment Amount upon a sale, divestment or transfer of all or substantially all assets of the Company in a transaction or series of transactions or a change of control of the Company, a material breach of the NPA and related transaction documents, an event of default under the NPA or the tenth anniversary of the First Purchase Date (or such earlier date as described in the NPA). In addition, upon certain asset sales and similar strategic transactions by the Company with respect to its own or its subsidiaries’ assets or businesses as described in the NPA (other than a change of control described above), the Purchasers may require the Company to pay an amount in cash equal to up to 75% of the Net Proceeds (as defined in the NPA) received from such asset sales, subject to a $100 million deductible such that the Purchaser Agent will not collect any repurchase amounts until $100 million has been received by the Company from such sale event (the “Deductible”). The NPA contains customary affirmative and negative covenants, including with respect to notice obligations, limitations on new indebtedness, liens, investments and transactions with affiliates of the Company, restrictions on the payment of dividends, maintenance of collateral accounts in the amount of 90% of the aggregate outstanding principal amount of all issued Notes, maintenance of insurance and addition of new subsidiaries as obligors. It also contains customary representations and warranties in favor of the Purchasers and the Agent and customary events of default, which may cause the obligations of the Company to be accelerated. Such events include among others, failure to make payments when due, breach of covenants, insolvency, a cross-default to other indebtedness, a judgment event of default, and delisting of the Company’s securities from the Nasdaq Global Select Market. |
Commitments and Contingencies
Commitments and Contingencies | 6 Months Ended |
Jun. 30, 2023 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies Commitments As of June 30, 2023, the Company had non-cancellable commitments for purchase of clinical materials, contract manufacturing, maintenance, and committed funding of up to $33.2 million, of which the Company expects to pay $28.6 million within one year and $4.6 million over one to three years. The amount and timing of these payments vary depending on the rate of progress of development. Future clinical trial expenses have not been included within the purchase commitments because they are contingent on enrollment in clinical trials and the activities required to be performed by the clinical sites. Leases On February 7, 2022, the Company entered into an operating lease for its new corporate headquarters in Boston, Massachusetts (the “Boston Lease”). After a build out of the space, the Boston Lease commenced on March 31, 2023. The 10-year Boston Lease is for 18,922 square feet with a fixed annual rent of approximately $1.6 million commencing in 2023 and escalating to approximately $1.9 million by year 10 . The Boston Lease required the Company to issue a letter of credit in the amount of $0.7 million in favor of the landlord. The Company may, at its discretion, extend the Boston Lease for one extension term of five years. As of June 30, 2023, the Company has recognized an operating lease right-of-use asset, net of $12.3 million, including capitalized leasehold improvements that will be owned by the landlord, prepayments of rent, and a corresponding lease liability of $9.6 million. The Company intends to sublet a portion of the Boston Lease. The following table provides balance sheet information related to leases as of June 30, 2023 (amounts in thousands): June 30, 2023 Assets: Operating lease, right-of-use asset $ 12,342 Liabilities: Current portion of operating lease liabilities $ 460 Operating lease liabilities, net of current portion 9,148 Total operating lease liabilities $ 9,608 In calculating the present value of the lease payments, the Company elected to utilize its incremental borrowing rate based on the original term of the lease. The following table summarizes supplemental information related to leases as of June 30, 2023 (amount in thousands): June 30, 2023 Weighted-average remaining lease term 9.6 years Weighted-average discount rate 11.97 % The components of the Company’s lease costs are classified on its consolidated statements of operations as follows (amounts in thousands): Six Months Ended Six Months Ended Operating lease cost $ 499 $ — Variable lease cost 44 39 Short term lease cost 15 61 Total operating lease cost $ 558 $ 100 Future lease payments under non-cancelable operating leases as of June 30, 2023 were as follows (amounts in thousands): Operating Leases Year ending: 2023 $ 785 2024 1,602 2025 1,634 2026 1,667 2027 1,700 Thereafter 9,023 Total $ 16,411 Less: Imputed interest (6,803) Present value of lease liabilities $ 9,608 Less: current portion (460) Lease liabilities, net of current portion $ 9,148 Licensing and Collaborative Arrangements The Company is party to licensing and collaboration arrangements to develop and commercialize intellectual property. In aggregate, the Company may be obligated to make up to $44.4 million and $42.0 million in related development and commercial milestone payments, respectively, predominately related to agreements between Orexia Therapeutics Limited and collaboration partners. As of June 30, 2023, the Company had no significant milestone obligations recorded on its balance sheet under its license and collaborative arrangements. The Company expects that payments related to its licensing and collaboration arrangements in the next twelve months would not be material to the Company’s consolidated financial statements. Contingencies From time to time, the Company may have certain contingent liabilities that arise in the ordinary course of its business activities. The Company accrues a liability for such matters when it is probable that future expenditures will be made, and such expenditures can be reasonably estimated. Litigation On September 28, 2022 (“Original Complaint”), the Company and certain of its current and former officers were named as defendants in a proposed class-action lawsuit filed in the United States District Court for the Central District of California. The complaint generally alleges that the Company violated Sections 10(b) and 20(a) and Sections 11 and 15 of the Securities Act of 1933, as amended (the “Securities Act”) by allegedly making materially false and/or misleading statements, as well as allegedly failing to disclose material adverse facts relating to the safety profile and future clinical and commercial prospects of each of its lixivaptan and ZF874 programs, which caused the Company’s securities to trade at artificially inflated prices. On October 12, 2022, by order, the lawsuit was transferred to the United States District Court for the Southern District of New York. On February 10, 2023, an amended complaint was filed (“Amended Complaint”) in which our IPO underwriters were added as co-defendants. A number of the complaints set forth in the Original Complaint have been abandoned including with respect to intentional fraud theory and claims pursuant to Sections 10(b) or 20(a) of the Securities Exchange Act of 1934. The only claims alleged in the Amended Complaint are violations of Sections 11 and 15 of the Securities Act based on alleged misstatements in the S-1 filed by the Company in connection with its Initial Public Offering. The Amended Complaint also abandoned any claims concerning ZF874 and focuses entirely on lixivaptan. The Amended Complaint seeks damages and attorneys’ fees, among other things. The Company believes this lawsuit is without merit and intends to defend the case vigorously. Litigation is subject to inherent uncertainty and a court could ultimately rule against the Company. In addition, the defense of litigation and related matters are costly and may divert the attention of the Company’s management and other resources that would otherwise be engaged in other activities. The Company has not recorded an estimate of the possible loss associated with this legal proceeding due to the uncertainties related to both the likelihood and the amount of any possible loss or range of loss. |
Share-based Compensation
Share-based Compensation | 6 Months Ended |
Jun. 30, 2023 | |
Share-Based Payment Arrangement [Abstract] | |
Share-based Compensation | Share-based Compensation Centessa Pharmaceuticals plc Stock Option and Incentive Plan In January 2021, the Company’s board of directors approved the 2021 Stock Option and Incentive Plan (the “2021 Plan”). The 2021 Plan provides for the granting of ordinary shares, incentive stock options, non-qualified stock options, restricted share awards, restricted stock units and/or share appreciation rights to employees, directors, and other persons, as determined by the Company’s board of directors. The number of shares authorized under the 2021 Plan was increased in May 2021 at the time of the IPO, whereby the total number of shares authorized under the 2021 Plan was 20,026,816. Beginning on January 1, 2022 and each January 1 thereafter, the number of shares reserved and available for issuance under the 2021 Plan shall be cumulatively increased by 5% of the number of shares issued and outstanding on the immediately preceding December 31, or such lesser number as the board of directors may determine. Remaining shares available for future grants as of June 30, 2023 were 8,284,827. Share-based Compensation Expense The Company recorded share-based compensation expense in the following expense categories in the unaudited interim consolidated statements of operations and comprehensive loss (amounts in thousands): Three Months Ended Three Months Ended Six Months Ended Six Months Ended Research and development $ 3,255 $ 2,654 $ 6,539 $ 5,487 General and administrative 3,958 2,949 7,864 5,834 $ 7,213 $ 5,603 $ 14,403 $ 11,321 Stock Options The following table summarizes stock option activity for the six months ended June 30, 2023: Number of Shares Weighted-Average Exercise Price Per Share Weighted-Average Remaining Contractual Term Balance at January 1, 2023 14,688,996 $ 7.88 8.5 years Granted 2,818,300 $ 4.13 Exercised (3,776) $ 3.85 Forfeited (1,456,693) $ 8.39 Balance at June 30, 2023 16,046,827 $ 7.18 8.2 years Exercisable at June 30, 2023 6,858,127 $ 7.61 7.6 years Vested and expected to vest at June 30, 2023 16,046,827 $ 7.18 8.2 years The weighted-average grant date fair value of options granted was $2.87 per share for the six months ended June 30, 2023. As of June 30, 2023, the total unrecognized compensation expense related to unvested stock option awards was $38.5 million, which the Company expects to recognize over a weighted-average period of 2.3 years. Based on the trading price of $6.19 per ADS, which is the closing price as of June 30, 2023, the aggregate intrinsic value of options as of June 30, 2023 was $9.9 million. During the six months ended June 30, 2023, the fair value of each option was estimated on the date of grant using the weighted average assumptions in the table below: Expected term 6.0 years Expected stock price volatility 77.9 % Risk-free interest rate 3.6 % Expected dividend yield 0 % The Company uses the Black-Scholes option pricing model to value its stock option awards. The expected life of the stock options is estimated using the “simplified method,” as the Company has limited historical information from which to develop reasonable expectations about future exercise patterns and post-vesting employment termination behavior for its stock option grants. The simplified method is the midpoint between the vesting period and the contractual term of the option. For share price volatility, the Company uses comparable public companies as a basis for its expected volatility to calculate the fair value of option grants. The risk-free rate is based on the U.S. Treasury yield curve commensurate with the expected life of the option. Forfeitures of stock options are recognized in the period the forfeiture occurs. Restricted Share Awards and Units In connection with the acquisition of the Centessa subsidiaries in January 2021, the Company issued 379,905 ordinary shares subject to future vesting under its Restricted Stock Awards program. For the period subsequent to the acquisition, the Company issued an additional 833,897 ordinary shares subject to future vesting to an employee. The fair value of the awards were based upon the estimated fair value of the Company’s ordinary shares at the time of grant. The Board, following the recommendations of the Company’s Compensation Committee, grants service-based restricted stock unit awards under the Company’s Stock Incentive Plan to certain executive officers and employees of the Company to encourage employee retention. Periodic grants are made at fair market value, representing the NASDAQ market close quoted price on the day of the grant. The following table summarizes ordinary share activity related to the restricted stock programs for the six months ended June 30, 2023: Restricted Stock Awards Restricted Stock Units Number of Shares Weighted-Average Grant Date Fair Value Per Share Number of Shares Weighted-Average Grant Date Fair Value Per Share Unvested at January 1, 2023 599,421 1,804,760 Granted — n/a 1,427,225 $ 3.85 Vested (175,806) (440,924) Forfeited — (320,807) Unvested at June 30, 2023 423,615 2,470,254 Unrecognized compensation expense at June 30, 2023 (in thousands) $ 7,940 $ 10,463 Expected weighted average recognition period 1.8 years 2.4 years Employee Share Purchase Plan |
Related Party Transactions
Related Party Transactions | 6 Months Ended |
Jun. 30, 2023 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | Related Party Transactions Master Services agreements with drug discovery companies affiliated with David Grainger Certain Centessa subsidiaries entered into Master Services agreements with certain drug discovery companies affiliated with David Grainger, who was appointed as the Company’s Chief Innovation Officer in October 2021. These companies include RxCelerate Limited, RxBiologics Limited and The Foundry (Cambridge) Limited, of which David Grainger is a director and shareholder. The Company incurred research and development costs associated with these contracts as follows in the consolidated statements of operations and comprehensive loss (amounts in thousands): Three Months Ended Three Months Ended Six Months Ended Six Months Ended Research and development $ 2,292 $ 1,420 $ 4,614 $ 3,119 |
Income Taxes
Income Taxes | 6 Months Ended |
Jun. 30, 2023 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income TaxesThe Company recorded an income tax benefit of $24.1 million for the three months ended June 30, 2023 compared with an income tax benefit of $22.0 thousand for the three months ended June 30, 2022. The higher income tax benefit in the second quarter of 2023 was a result of the release of a valuation allowance as a result of an internal reorganization of its subsidiaries that occurred in the quarter. The Company regularly assesses its ability to realize its deferred tax assets. Assessing the realization of deferred tax assets requires significant judgment. In determining whether its deferred tax assets are more likely than not realizable, the Company evaluated all available positive and negative evidence, and weighed the evidence based on its objectivity. After consideration of the evidence, the Company believes it would more likely than not be able to utilize existing loss carryforwards and research and development tax credits to offset future income in the United States. The operating entity in the United States has a history of cumulative net profits as it carries out services for other entities in the group. |
Subsequent Event
Subsequent Event | 6 Months Ended |
Jun. 30, 2023 | |
Subsequent Events [Abstract] | |
Subsequent Event | Subsequent Event The Company filed a shelf registration statement on Form S-3 (“the Shelf”) with the Securities and Exchange Commission (SEC), which covers the offering, issuance and sale of an amount up to $350.0 million in the aggregate of our ordinary shares, American Depository Shares representing ordinary shares, debt securities, warrants, and/or units or any combination thereof. On July 12, 2022, the Shelf became effective. The Company entered into a Sales Agreement, dated January 27, 2023, by and between Centessa Pharmaceuticals plc and Leerink Partners LLC (formerly SVB Securities LLC). As sales agent, Leerink Partners LLC will provide for the issuance and sale by the Company of up to $125.0 million of its ordinary shares represented by American Depository Shares from time to time in “at-the-market” offerings under the Shelf, referred to as the ATM Program. In early August 2023, the Company sold 2,040,816 ordinary shares under the ATM Program, resulting in net proceeds to the Company of approximately $14.6 million. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 6 Months Ended |
Jun. 30, 2023 | |
Accounting Policies [Abstract] | |
Basis of Presentation and Consolidation | Basis of Presentation and Consolidation The accompanying unaudited interim consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”). Any reference in these notes to applicable guidance is meant to refer to GAAP as found in the Accounting Standards Codification (“ASC”) and Accounting Standards Updates (“ASUs”) promulgated by the Financial Accounting Standards Board (“FASB”). In the opinion of management, the accompanying unaudited interim consolidated financial statements include all normal and recurring adjustments (which consist primarily of accruals, estimates and assumptions that impact the financial statements) considered necessary to present fairly: • the Company’s financial position as of June 30, 2023 and as of December 31, 2022; • the Company’s results of operations for the three and six months ended June 30, 2023 and June 30, 2022; and • the Company’s cash flows for the six months ended June 30, 2023 and June 30, 2022. Operating results for the Company for the three and six months ended June 30, 2023 are not necessarily indicative of the results that may be expected for the full year. The unaudited interim consolidated financial statements presented herein do not contain all of the required disclosures under U.S. GAAP for annual financial statements. Notes to the financial statements which would substantially duplicate the disclosure contained in the audited financial statements for fiscal 2022 as reported in the 2022 Annual Report have been omitted. Therefore, these unaudited interim consolidated financial statements should be read in conjunction with the annual audited consolidated and combined financial state ments and related notes for Centessa Pharmaceuticals plc found in the Form 10-K filed with the SEC. The Company’s unaudited interim consolidated financial statements include the accounts of Centessa Pharmaceuticals plc, and its wholly owned subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation. |
Cash and Cash Equivalents | Cash and Cash Equivalents The Company considers all highly liquid investments with original maturities of three months or less when purchased to be cash equivalents. Cash and cash equivalents include cash in readily available checking accounts, certificate of deposits, money market funds and U.S. Treasury securities. |
Short Term Investments | Short Term Investments The Company invests its excess cash in cash deposits, U.S. Treasury securities and SEC-registered money market funds. Securities with original maturities of three months or less when purchased are included in Cash and cash equivalents. The Company considers investments with original maturities greater than three months and remaining maturities less than one year to be short-term investments. |
Concentrations of Credit Risk | Concentrations of Credit Risk Financial instruments that potentially subject the Company to a concentration of credit risk consist of cash, cash equivalents and short-term investments. The Company’s cash, cash equivalents and short-term investments are held by financial institutions primarily in the United States and the United Kingdom. Amounts on deposit may at times exceed federally insured limits. Management believes that the financial institutions are financially sound, and accordingly, the Company does not believe that it is subject to unusual credit risk beyond the normal credit risk associated with commercial banking relationships. |
Reclassifications | Reclassifications Certain amounts in the prior period financial statements have been reclassified to conform to the presentation of the current period financial statements. These reclassifications had no effect on previously reported net loss or comprehensive loss. |
Use of Estimates | Use of Estimates The preparation of unaudited interim consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the unaudited interim consolidated financial statements and the reported amounts of expenses during the reporting period. Actual results could differ from those estimates. Estimates and assumptions are periodically reviewed and the effects of revisions are reflected in the unaudited interim consolidated financial statements in the period they are determined to be necessary. Significant areas that require management’s estimates include share-based compensation assumptions, note purchase agreement assumptions, and accrued research and development expenses. |
Property and Equipment, net and Capitalized Software under Cloud Computing Arrangements | Property and Equipment, net and Capitalized Software under Cloud Computing ArrangementsProperty and equipment are recorded at cost and are depreciated using the straight-line method over the estimated useful lives of the respective assets. Property and equipment includes computer equipment, furniture and office equipment. The costs of maintenance and repairs are expensed as incurred. Improvements and betterment that add new functionality or extend the useful life of the asset are capitalized. Costs related to the implementation of cloud computing arrangements that are service contracts incurred during the application development stage are capitalized and included in the same line item as a prepayment for corresponding hosting service fees. Capitalized costs are amortized over the shorter of its estimated useful life and the term of the hosting arrangement, including anticipated extensions. Costs incurred during the preliminary project stage and the post-implementation-operation stage are expensed as incurred. Hosting fees associated with hosting as a service arrangement are expensed on a |
Leases | Leases In accordance with ASU No. 2016-02, Leases (“ASC 842”) , the Company assesses whether an arrangement is a lease, or contains a lease at the inception of the arrangement. When an arrangement contains a lease, the Company categorizes leases with contractual terms longer than twelve months as either operating or finance. Finance leases are generally those leases that allow us to substantially utilize or pay for the entire asset over its estimated life. Assets acquired under finance leases are recorded in “Property and equipment, net.” All other leases are categorized as operating leases. The Company records right-of use ("ROU") assets and lease obligations for its finance and operating leases, which are initially recognized based on the discounted future lease payments over the term of the lease. As the rate implicit in the Company's leases may not be easily determinable, the Company uses its incremental borrowing rate to calculate the present value of the sum of the lease payments. Lease terms may include options to extend or terminate the lease. The Company will include such options in determining the lease term when it is reasonably certain that the Company will exercise such options. Operating and finance lease ROU assets are recognized net of any lease prepayments and incentives. The Company elected the practical expedient to not separate lease and non-lease components and, accordingly, accounts for them as a single lease component. Operating lease expense is recognized on a straight-line basis over the lease term. Finance lease expense is recognized based on the effective-interest method over the lease term. The Company elected not to recognize ROU assets and lease obligations for any short-term leases, which are defined as leases with an initial term of 12 months or less. |
Long-Lived Assets | Long-Lived Assets Long-lived assets, comprised of property and equipment and operating lease right-of-use assets, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to estimated undiscounted future cash flows expected to be generated by the asset. If the carrying amount of an asset exceeds its estimated undiscounted future cash flows, then an impairment charge is recognized for the amount by which the carrying value of the asset exceeds the estimated fair value of the asset. No impairments of long-lived assets for the six-month periods ended June 30, 2023 and 2022 were recognized by the Company. |
Note Purchase Agreement | Note Purchase Agreement In October 2021, the Company entered into a Note Purchase Agreement (the “Note Purchase Agreement”) with Oberland Capital. Under the terms of the Note Purchase Agreement, Oberland Capital will purchase up to $300 million of 6.0 years, interest-only, senior secured notes (the “Notes”) from the Company including $75 million funded on October 4, 2021, $125 million available through 2023 at the Company’s option, and $100 million available to fund Mergers and Acquisitions (“M&A”), in-licensing, or other strategic transactions, at the option of the Company and Oberland Capital. In addition to interest payments on the principal, the Company is obligated to pay a milestone payment upon the Company’s first product to obtain regulatory approval and was obligated to pay revenue participation payments, starting on the date of the first commercial sale of lixivaptan. Since the Company’s discontinuation of the development of lixivaptan for the treatment of ADPKD, the revenue participation payment is no longer achievable. The Company evaluated the Notes and determined that the Notes include embedded derivatives that would otherwise require bifurcation as derivative liabilities. Neither the debt instrument nor any embedded features are required to be classified as equity. Therefore, the hybrid financial instrument comprised of the debt host and the embedded derivative liability may be accounted for under the fair value option. The Company elected to carry the Notes at fair value, and the debt instrument is outside the scope of ASC 480, Distinguishing Liabilities from Equity , and thus will be classified as a liability under ASC 470, Debt , in the Company’s financial statements. As the Company has elected to account for the Notes under the fair value option, debt issuance costs were immediately expensed. The fair value of the Note Purchase Agreement represents the present value of estimated future payments, including interest, principal as well as estimated payments that are contingent upon the achievement of specified milestones. The fair value of the Notes is based on the cumulative probability of the various estimated payments. The fair value measurement is based on significant Level 3 unobservable inputs such as the probability of achieving the milestones, anticipated timelines, |
Net Loss Per Ordinary Share | Net Loss Per Ordinary Share Basic loss per ordinary share is computed by dividing net loss by the aggregate weighted-average number of ordinary shares outstanding. Diluted loss per ordinary share includes the effect, if any, from the potential exercise or conversion of securities, such as convertible preferred shares, stock options, unvested restricted ordinary shares and convertible debt which would result in the issuance of incremental ordinary shares. For diluted net loss per ordinary share, the weighted-average number of ordinary shares is the same for basic net loss per ordinary share due to the fact that when a net loss exists, dilutive securities are not included in the calculation as the impact is anti-dilutive. |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
Accounting Policies [Abstract] | |
Schedule of Antidilutive Securities Excluded from Computation of Diluted Weighted-Average Ordinary Shares Outstanding | The following potentially dilutive securities have been excluded from the computation of diluted weighted-average ordinary shares outstanding for the six months ended June 30, 2023 and June 30, 2022, as they would be anti-dilutive: Six Months Ended Six Months Ended Unvested ordinary shares 423,615 715,432 Restricted stock units 2,470,254 — Stock options 16,046,827 15,521,324 18,940,696 16,236,756 |
Fair Value Measurement (Tables)
Fair Value Measurement (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
Fair Value Disclosures [Abstract] | |
Schedule of Fair Value, Financial Assets and Liabilities Measured on Recurring Basis | The following fair value hierarchy table presents information about the Company’s financial assets and liabilities measured at fair value on a recurring basis (amounts in thousands): Fair value measurement at reporting date using Quoted prices Significant Significant June 30, 2023 Assets Money Market fund $ 33,889 $ — $ — U.S. Treasury securities 158,367 — — Liabilities Note Purchase Agreement $ — $ — $ 73,300 December 31, 2022 Liabilities Note Purchase Agreement $ — $ — $ 69,800 |
Schedule of Debt Securities, Fair Value of U.S. Treasury Securities and Money Market Fund | The following represents the amortized cost bases and fair values of the Company’s U.S. Treasury securities and its money market fund as of June 30, 2023 (amounts in thousands): Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value Money Market fund, included in Cash and cash equivalents $ 33,889 $ — $ — $ 33,889 U.S. Treasury securities, included in: Short-term investments 157,337 1,036 (6) 158,367 Total U.S. Treasury securities $ 157,337 $ 1,036 $ (6) $ 158,367 |
Reconciliation of the Redemption Feature Measured at Fair Value on a Recurring Basis Using Significant Unobservable Inputs | For the Company's financial instruments measured at fair value on a recurring basis using significant unobservable inputs (Level 3), the following table provides a reconciliation of the beginning and ending balances for each category therein (amounts in thousands): Contingent Value Rights Note Purchase Agreement Balance at January 1, 2022 $ 37,700 $ 75,700 Change in fair value 1,980 (5,900) Settlement (39,680) — Balance at December 31, 2022 $ — $ 69,800 Change in fair value — 3,500 Balance at June 30, 2023 $ — $ 73,300 |
Balance Sheet Components (Table
Balance Sheet Components (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Schedule of Prepaid Expenses and Other Current Assets | Prepaid expenses and other current assets consist of the following (amounts in thousands): June 30, December 31, Research and development expenses $ 12,830 $ 11,321 Insurance related expenses 1,704 2,788 Value added tax receivable 1,272 2,557 Other 3,869 3,271 $ 19,675 $ 19,937 |
Schedule of Accrued Expenses and Other Current Liabilities | Accrued expenses and other current liabilities consist of the following (amounts in thousands): June 30, December 31, Research and development expenses $ 15,147 $ 10,795 Personnel related expenses 4,510 7,264 Professional fees 2,158 4,171 Income tax liability — 1,582 Operating lease liabilities 460 — Other 507 690 $ 22,782 $ 24,502 |
Schedule of Property and Equipment, Net | Property and equipment, net consisted of the following (amounts in thousands): June 30, December 31, Computer equipment $ 706 $ 442 Office furniture 724 — Other, primarily construction in progress — 890 Property and equipment, at cost 1,430 1,332 Less: Accumulated depreciation (285) (164) Property and equipment, net $ 1,145 $ 1,168 |
Debt (Tables)
Debt (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
Debt Disclosure [Abstract] | |
Schedule of Debt | Debt as of June 30, 2023 and December 31, 2022 (in thousands): June 30, December 31, Note Purchase Agreement $ 73,300 $ 69,800 |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
Commitments and Contingencies Disclosure [Abstract] | |
Schedule of Balance Sheet Information Related to Leases | The following table provides balance sheet information related to leases as of June 30, 2023 (amounts in thousands): June 30, 2023 Assets: Operating lease, right-of-use asset $ 12,342 Liabilities: Current portion of operating lease liabilities $ 460 Operating lease liabilities, net of current portion 9,148 Total operating lease liabilities $ 9,608 |
Schedule of Lease, Cost | The following table summarizes supplemental information related to leases as of June 30, 2023 (amount in thousands): June 30, 2023 Weighted-average remaining lease term 9.6 years Weighted-average discount rate 11.97 % The components of the Company’s lease costs are classified on its consolidated statements of operations as follows (amounts in thousands): Six Months Ended Six Months Ended Operating lease cost $ 499 $ — Variable lease cost 44 39 Short term lease cost 15 61 Total operating lease cost $ 558 $ 100 |
Schedule of Lessee, Operating Lease, Liability, Maturity | Future lease payments under non-cancelable operating leases as of June 30, 2023 were as follows (amounts in thousands): Operating Leases Year ending: 2023 $ 785 2024 1,602 2025 1,634 2026 1,667 2027 1,700 Thereafter 9,023 Total $ 16,411 Less: Imputed interest (6,803) Present value of lease liabilities $ 9,608 Less: current portion (460) Lease liabilities, net of current portion $ 9,148 |
Share-based Compensation (Table
Share-based Compensation (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
Share-Based Payment Arrangement [Abstract] | |
Summary of Share-based Compensation Expense | The Company recorded share-based compensation expense in the following expense categories in the unaudited interim consolidated statements of operations and comprehensive loss (amounts in thousands): Three Months Ended Three Months Ended Six Months Ended Six Months Ended Research and development $ 3,255 $ 2,654 $ 6,539 $ 5,487 General and administrative 3,958 2,949 7,864 5,834 $ 7,213 $ 5,603 $ 14,403 $ 11,321 |
Summary of Stock Option Activity | The following table summarizes stock option activity for the six months ended June 30, 2023: Number of Shares Weighted-Average Exercise Price Per Share Weighted-Average Remaining Contractual Term Balance at January 1, 2023 14,688,996 $ 7.88 8.5 years Granted 2,818,300 $ 4.13 Exercised (3,776) $ 3.85 Forfeited (1,456,693) $ 8.39 Balance at June 30, 2023 16,046,827 $ 7.18 8.2 years Exercisable at June 30, 2023 6,858,127 $ 7.61 7.6 years Vested and expected to vest at June 30, 2023 16,046,827 $ 7.18 8.2 years |
Schedule of Assumptions Used to Estimate Fair Value of Stock Option Awards | During the six months ended June 30, 2023, the fair value of each option was estimated on the date of grant using the weighted average assumptions in the table below: Expected term 6.0 years Expected stock price volatility 77.9 % Risk-free interest rate 3.6 % Expected dividend yield 0 % |
Summary of Replacement Equity Award Activity | The following table summarizes ordinary share activity related to the restricted stock programs for the six months ended June 30, 2023: Restricted Stock Awards Restricted Stock Units Number of Shares Weighted-Average Grant Date Fair Value Per Share Number of Shares Weighted-Average Grant Date Fair Value Per Share Unvested at January 1, 2023 599,421 1,804,760 Granted — n/a 1,427,225 $ 3.85 Vested (175,806) (440,924) Forfeited — (320,807) Unvested at June 30, 2023 423,615 2,470,254 Unrecognized compensation expense at June 30, 2023 (in thousands) $ 7,940 $ 10,463 Expected weighted average recognition period 1.8 years 2.4 years |
Related Party Transactions (Tab
Related Party Transactions (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
Related Party Transactions [Abstract] | |
Schedule of Related Party Transactions | The Company incurred research and development costs associated with these contracts as follows in the consolidated statements of operations and comprehensive loss (amounts in thousands): Three Months Ended Three Months Ended Six Months Ended Six Months Ended Research and development $ 2,292 $ 1,420 $ 4,614 $ 3,119 |
Organization and Description _2
Organization and Description of Business (Details) - USD ($) $ in Thousands | 6 Months Ended | |||
Jun. 30, 2023 | Jan. 27, 2023 | Dec. 31, 2022 | Jul. 12, 2022 | |
Subsidiary, Sale of Stock [Line Items] | ||||
Accumulated deficit | $ 677,460 | $ 601,860 | ||
Cash and cash equivalents and short-term investments | $ 303,600 | |||
Sufficient funding term (at least) | 12 months | |||
At-the-market | ||||
Subsidiary, Sale of Stock [Line Items] | ||||
Sale of stock, consideration receivable (up to) | $ 125,000 | $ 350,000 |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies - Property and Equipment, net (Details) - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2023 | Jun. 30, 2022 | |
Accounting Policies [Abstract] | ||
Depreciation expense | $ 121 | $ 60 |
Capitalized computer software, amortization | $ 204 |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies - Long-Lived Assets (Details) - USD ($) | 6 Months Ended | |
Jun. 30, 2023 | Jun. 30, 2022 | |
Accounting Policies [Abstract] | ||
Impairment, long-lived asset | $ 0 | $ 0 |
Summary of Significant Accoun_6
Summary of Significant Accounting Policies - Note Purchase Agreement (Details) - USD ($) $ in Millions | 1 Months Ended | ||
Feb. 11, 2022 | Oct. 31, 2021 | Oct. 04, 2021 | |
Debt Instrument [Line Items] | |||
Debt instrument, term | 6 years | ||
Oberland Capital | |||
Debt Instrument [Line Items] | |||
Note purchase agreement, value | $ 300 | $ 300 | $ 75 |
Note purchase agreement, amount available for funding at the option of the company | 125 | ||
Note purchase agreement, amount available for funding at the option of the company and counterparty | $ 100 | $ 100 | |
Oberland Capital | Senior Notes | |||
Debt Instrument [Line Items] | |||
Debt instrument, term | 6 years |
Summary of Significant Accoun_7
Summary of Significant Accounting Policies - Schedule of Antidilutive Securities Excluded from Computation of Diluted Weighted-Average Ordinary Shares Outstanding (Details) - shares | 6 Months Ended | |
Jun. 30, 2023 | Jun. 30, 2022 | |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Antidilutive securities excluded from computation of diluted weighted-average ordinary shares outstanding (in shares) | 18,940,696 | 16,236,756 |
Unvested ordinary shares | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Antidilutive securities excluded from computation of diluted weighted-average ordinary shares outstanding (in shares) | 423,615 | 715,432 |
Restricted stock units | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Antidilutive securities excluded from computation of diluted weighted-average ordinary shares outstanding (in shares) | 2,470,254 | 0 |
Stock options | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Antidilutive securities excluded from computation of diluted weighted-average ordinary shares outstanding (in shares) | 16,046,827 | 15,521,324 |
Fair Value Measurement - Schedu
Fair Value Measurement - Schedule of Fair Value, Financial Assets and Liabilities Measured on Recurring Basis (Details) - USD ($) $ in Thousands | Jun. 30, 2023 | Dec. 31, 2022 |
U.S. Treasury securities | ||
Assets | ||
U.S. Treasury securities | $ 158,367 | |
Quoted prices in active markets for identical assets (Level 1) | Fair Value, Recurring | ||
Liabilities | ||
Note Purchase Agreement | 0 | $ 0 |
Quoted prices in active markets for identical assets (Level 1) | Fair Value, Recurring | U.S. Treasury securities | ||
Assets | ||
U.S. Treasury securities | 158,367 | |
Quoted prices in active markets for identical assets (Level 1) | Fair Value, Recurring | Money Market fund | ||
Assets | ||
Money Market fund | 33,889 | |
Significant other observable inputs (Level 2) | Fair Value, Recurring | ||
Liabilities | ||
Note Purchase Agreement | 0 | 0 |
Significant other observable inputs (Level 2) | Fair Value, Recurring | U.S. Treasury securities | ||
Assets | ||
U.S. Treasury securities | 0 | |
Significant other observable inputs (Level 2) | Fair Value, Recurring | Money Market fund | ||
Assets | ||
Money Market fund | 0 | |
Significant unobservable inputs (Level 3) | Fair Value, Recurring | ||
Liabilities | ||
Note Purchase Agreement | 73,300 | $ 69,800 |
Significant unobservable inputs (Level 3) | Fair Value, Recurring | U.S. Treasury securities | ||
Assets | ||
U.S. Treasury securities | 0 | |
Significant unobservable inputs (Level 3) | Fair Value, Recurring | Money Market fund | ||
Assets | ||
Money Market fund | $ 0 |
Fair Value Measurement - Sche_2
Fair Value Measurement - Schedule of Debt Securities, Fair Value of U.S. Treasury Securities and Money Market Fund (Details) - USD ($) $ in Thousands | Jun. 30, 2023 | Dec. 31, 2022 |
Debt Securities, Available-for-Sale [Line Items] | ||
Money Market fund, included in Cash and cash equivalents, amortized cost | $ 145,220 | $ 393,644 |
Money Market fund | ||
Debt Securities, Available-for-Sale [Line Items] | ||
Money Market fund, included in Cash and cash equivalents, amortized cost | 33,889 | |
Money Market fund, included in Cash and cash equivalents, fair value | 33,889 | |
U.S. Treasury securities | ||
Debt Securities, Available-for-Sale [Line Items] | ||
U.S. Treasury securities, amortized cost | 157,337 | |
U.S. Treasury securities, gross unrealized gains | 1,036 | |
U.S. Treasury securities, gross unrealized losses | (6) | |
U.S. Treasury securities, fair value | 158,367 | |
U.S. Treasury securities | Short-term investments | ||
Debt Securities, Available-for-Sale [Line Items] | ||
U.S. Treasury securities, amortized cost | 157,337 | |
U.S. Treasury securities, gross unrealized gains | 1,036 | |
U.S. Treasury securities, gross unrealized losses | (6) | |
U.S. Treasury securities, fair value | $ 158,367 |
Fair Value Measurement - Reconc
Fair Value Measurement - Reconciliation of the Redemption Feature Measured at Fair Value on a Recurring Basis Using Significant Unobservable Inputs (Details) - USD ($) $ in Thousands | 6 Months Ended | 12 Months Ended |
Jun. 30, 2023 | Dec. 31, 2022 | |
Contingent Value Rights | ||
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | ||
Beginning balance | $ 0 | $ 37,700 |
Change in fair value | 0 | 1,980 |
Settlement | (39,680) | |
Ending balance | 0 | 0 |
Note Purchase Agreement | ||
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | ||
Beginning balance | 69,800 | 75,700 |
Change in fair value | (3,500) | 5,900 |
Settlement | 0 | |
Ending balance | $ 73,300 | $ 69,800 |
Fair Value Measurement - Narrat
Fair Value Measurement - Narrative (Details) $ in Millions | 6 Months Ended |
Jun. 30, 2023 USD ($) | |
Note Purchase Agreement | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |
Change in fair value | $ 3.5 |
Balance Sheet Components - Sche
Balance Sheet Components - Schedule of Prepaid Expenses and Other Current Assets (Details) - USD ($) $ in Thousands | Jun. 30, 2023 | Dec. 31, 2022 |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Research and development expenses | $ 12,830 | $ 11,321 |
Insurance related expenses | 1,704 | 2,788 |
Value added tax receivable | 1,272 | 2,557 |
Other | 3,869 | 3,271 |
Prepaid expenses and other current assets | $ 19,675 | $ 19,937 |
Balance Sheet Components - Sc_2
Balance Sheet Components - Schedule of Accrued Expenses and Other Current Liabilities (Details) - USD ($) $ in Thousands | Jun. 30, 2023 | Dec. 31, 2022 |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Research and development expenses | $ 15,147 | $ 10,795 |
Personnel related expenses | 4,510 | 7,264 |
Professional fees | 2,158 | 4,171 |
Income tax liability | 0 | 1,582 |
Operating lease liabilities | 460 | 0 |
Other | 507 | 690 |
Accrued expenses and other current liabilities | $ 22,782 | $ 24,502 |
Balance Sheet Components - Comp
Balance Sheet Components - Components of Property, Plant, and Equipment (Details) - USD ($) $ in Thousands | Jun. 30, 2023 | Dec. 31, 2022 |
Property, Plant and Equipment [Line Items] | ||
Property and equipment, at cost | $ 1,430 | $ 1,332 |
Less: Accumulated depreciation | (285) | (164) |
Property and equipment, net | 1,145 | 1,168 |
Computer equipment | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, at cost | 706 | 442 |
Office furniture | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, at cost | 724 | 0 |
Other, primarily construction in progress | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, at cost | $ 0 | $ 890 |
Debt - Schedule of Debt (Detail
Debt - Schedule of Debt (Details) - USD ($) $ in Thousands | Jun. 30, 2023 | Dec. 31, 2022 |
Note Purchase Agreement | ||
Debt Instrument [Line Items] | ||
Long-term debt, gross | $ 73,300 | $ 69,800 |
Debt - Narrative (Details)
Debt - Narrative (Details) - USD ($) | 1 Months Ended | 6 Months Ended | ||||
Nov. 07, 2022 | Feb. 11, 2022 | Oct. 31, 2021 | Jun. 30, 2023 | Jun. 30, 2022 | Oct. 04, 2021 | |
Debt Instrument [Line Items] | ||||||
Debt instrument, term | 6 years | |||||
Debt instrument, reference rate | 7.75% | |||||
Weighted average interest rate | 12.70% | 8.40% | ||||
Milestone payment, percent of aggregate principal amount issued under the notes | 30% | |||||
Milestone payment, period | 5 years | |||||
Cumulative payments under note purchase agreement, including interest | $ 13,600,000 | |||||
Note purchase agreement, deductible amount due to company | $ 100,000,000 | |||||
Note purchase agreement, percent of aggregate outstanding principal amount, cash balance required | 90% | |||||
Secured Overnight Financing Rate (SOFR) | ||||||
Debt Instrument [Line Items] | ||||||
Debt instrument, basis spread on variable rate | 0.25% | |||||
Note Purchase Agreement | ||||||
Debt Instrument [Line Items] | ||||||
Debt instrument, redemption price, percentage of principal amount redeemed | 75% | |||||
Note Purchase Agreement | Debt Instrument, Redemption, Period One | ||||||
Debt Instrument [Line Items] | ||||||
Debt instrument, redemption price, percentage | 175% | |||||
Note Purchase Agreement | Debt Instrument, Redemption, Period Two | ||||||
Debt Instrument [Line Items] | ||||||
Debt instrument, redemption price, percentage | 185% | |||||
Note Purchase Agreement | Debt Instrument, Redemption, Period Three | ||||||
Debt Instrument [Line Items] | ||||||
Debt instrument, redemption price, percentage | 205% | |||||
Oberland Capital | ||||||
Debt Instrument [Line Items] | ||||||
Note purchase agreement, value | $ 300,000,000 | $ 300,000,000 | $ 75,000,000 | |||
Note purchase agreement, amount available for funding at the option of the company and counterparty | 100,000,000 | $ 100,000,000 | ||||
Oberland Capital | Senior Notes | ||||||
Debt Instrument [Line Items] | ||||||
Debt instrument, term | 6 years | |||||
Oberland Capital | Second Purchase Note | ||||||
Debt Instrument [Line Items] | ||||||
Note purchase agreement, value | 75,000,000 | |||||
Oberland Capital | Third Purchase Note | ||||||
Debt Instrument [Line Items] | ||||||
Note purchase agreement, value | $ 50,000,000 | |||||
Oberland Capital | Interest Only, Senior Secured Notes | Senior Notes | ||||||
Debt Instrument [Line Items] | ||||||
Debt instrument, interest rate floor | 8% |
Commitments and Contingencies -
Commitments and Contingencies - Narrative (Details) | 12 Months Ended | |||
Dec. 31, 2023 USD ($) | Jun. 30, 2023 USD ($) | Dec. 31, 2022 USD ($) | Feb. 07, 2022 USD ($) ft² option | |
Lessee, Lease, Description [Line Items] | ||||
Purchase obligation | $ 33,200,000 | |||
Purchase obligation, to be paid, within one year | 28,600,000 | |||
Purchase obligation, to be paid, over one to four years | 4,600,000 | |||
Lease term | 10 years | |||
Area of real estate property | ft² | 18,922 | |||
Letter of credit outstanding | $ 700,000 | |||
Number of options to extend | option | 1 | |||
Lease, renewal term | 5 years | |||
Operating lease, right-of-use asset | 12,342,000 | $ 0 | ||
Operating lease liabilities | 9,608,000 | |||
Collaborative Arrangement, Transaction with Party to Collaborative Arrangement | ||||
Lessee, Lease, Description [Line Items] | ||||
Maximum aggregate development and regulatory milestone payments | 0 | |||
Collaborative Arrangement, Transaction with Party to Collaborative Arrangement | Orexia | ||||
Lessee, Lease, Description [Line Items] | ||||
Maximum aggregate development milestone payments | 44,400,000 | |||
Maximum aggregate commercial milestone payments | $ 42,000,000 | |||
Forecast | ||||
Lessee, Lease, Description [Line Items] | ||||
Rent expense | $ 1,600,000 | |||
Rent expense, year 10 | $ 1,900,000 |
Commitments and Contingencies_2
Commitments and Contingencies - Balance Sheet Information Related to Leases (Details) - USD ($) $ in Thousands | Jun. 30, 2023 | Dec. 31, 2022 |
Assets: | ||
Operating lease, right-of-use asset | $ 12,342 | $ 0 |
Liabilities: | ||
Current portion of operating lease liabilities | 460 | 0 |
Operating lease liabilities, net of current portion | 9,148 | $ 0 |
Present value of lease liabilities | $ 9,608 |
Commitments and Contingencies_3
Commitments and Contingencies - Cash Flow, Supplemental Disclosures (Details) | Jun. 30, 2023 |
Commitments and Contingencies Disclosure [Abstract] | |
Weighted-average remaining lease term | 9 years 7 months 6 days |
Weighted-average discount rate | 11.97% |
Commitments and Contingencies_4
Commitments and Contingencies - Components of Lease Expense (Details) - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2023 | Jun. 30, 2022 | |
Commitments and Contingencies Disclosure [Abstract] | ||
Operating lease cost | $ 499 | $ 0 |
Variable lease cost | 44 | 39 |
Short term lease cost | 15 | 61 |
Total operating lease cost | $ 558 | $ 100 |
Commitments and Contingencies_5
Commitments and Contingencies - Future Lease Payments under Non-Cancelable Operating Leases (Details) - USD ($) $ in Thousands | Jun. 30, 2023 | Dec. 31, 2022 |
Operating Leases | ||
2023 | $ 785 | |
2024 | 1,602 | |
2025 | 1,634 | |
2026 | 1,667 | |
2027 | 1,700 | |
Thereafter | 9,023 | |
Total | 16,411 | |
Less: Imputed interest | (6,803) | |
Present value of lease liabilities | 9,608 | |
Less: current portion | (460) | $ 0 |
Operating lease liabilities, net of current portion | $ 9,148 | $ 0 |
Share-based Compensation - Narr
Share-based Compensation - Narrative (Details) - USD ($) $ / shares in Units, $ in Millions | 1 Months Ended | 6 Months Ended | ||
Jan. 01, 2022 | Jan. 31, 2021 | Jun. 30, 2023 | May 31, 2021 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Weighted-average grant date fair value of options granted (in dollars per share) | $ 2.87 | |||
Unrecognized compensation expense related to unvested stock option awards | $ 38.5 | |||
Share price (in dollars per share) | $ 6.19 | |||
Aggregate intrinsic value of options | $ 9.9 | |||
Stock options | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Expected weighted average recognition period | 2 years 3 months 18 days | |||
Restricted Stock Awards | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Expected weighted average recognition period | 1 year 9 months 18 days | |||
Share-based payment awards issued in period (in shares) | 379,905 | |||
Restricted Stock Awards | Share-based Payment Arrangement, Employee | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Share-based payment awards issued in period (in shares) | 833,897 | |||
Employee Stock | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Common stock, shares reserved for future issuance (in shares) | 860,000 | 2,708,315 | ||
Share-based compensation, percentage of outstanding stock maximum | 1% | |||
Multiplier for initial number of shares reserved | 2 | |||
2021 Plan | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Number of shares authorized for equity incentive plan (in shares) | 20,026,816 | |||
Percent of additional shares authorized each year | 5% | |||
Shares available for grant (in shares) | 8,284,827 |
Share-based Compensation - Summ
Share-based Compensation - Summary of Share-Based Compensation Expense (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | |
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||||
Compensation expense recognized | $ 7,213 | $ 5,603 | $ 14,403 | $ 11,321 |
Research and development | ||||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||||
Compensation expense recognized | 3,255 | 2,654 | 6,539 | 5,487 |
General and administrative | ||||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||||
Compensation expense recognized | $ 3,958 | $ 2,949 | $ 7,864 | $ 5,834 |
Share-based Compensation - Su_2
Share-based Compensation - Summary of Stock Option Activity (Details) | 6 Months Ended | 12 Months Ended |
Jun. 30, 2023 $ / shares shares | Dec. 31, 2022 $ / shares shares | |
Number of Shares | ||
Beginning balance (in shares) | shares | 14,688,996 | |
Granted (in shares) | shares | 2,818,300 | |
Exercised (in shares) | shares | (3,776) | |
Forfeited (in shares) | shares | (1,456,693) | |
Ending balance (in shares) | shares | 16,046,827 | 14,688,996 |
Exercisable at end of period (in shares) | shares | 6,858,127 | |
Vested and expected to vest at end of period (in shares) | shares | 16,046,827 | |
Weighted-Average Exercise Price Per Share | ||
Beginning balance (in dollars per share) | $ / shares | $ 7.88 | |
Granted (in dollars per share) | $ / shares | 4.13 | |
Exercised (in dollars per share) | $ / shares | 3.85 | |
Forfeited (in dollars per share) | $ / shares | 8.39 | |
Ending balance (in dollars per share) | $ / shares | 7.18 | $ 7.88 |
Exercisable at end of period (in dollars per share) | $ / shares | 7.61 | |
Vested and expected to vest at end of period (in dollars per share) | $ / shares | $ 7.18 | |
Weighted-Average Remaining Contractual Term | ||
Options outstanding, weighted-average remaining contractual term | 8 years 2 months 12 days | 8 years 6 months |
Options exercisable, weighted-average remaining contractual term | 7 years 7 months 6 days | |
Options vested and expected to vest at end of period, weighted-average remaining contractual term | 8 years 2 months 12 days |
Share-based Compensation - Sche
Share-based Compensation - Schedule of Assumptions Used to Estimate Fair Value of Stock Option Awards (Details) - Stock options | 6 Months Ended |
Jun. 30, 2023 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Expected term | 6 years |
Expected stock price volatility | 77.90% |
Risk-free interest rate | 3.60% |
Expected dividend yield | 0% |
Share-based Compensation - Su_3
Share-based Compensation - Summary of Restricted Stock and Restricted Stock Unit, Activity (Details) $ / shares in Units, $ in Thousands | 6 Months Ended |
Jun. 30, 2023 USD ($) $ / shares shares | |
Restricted Stock Awards | |
Number of Shares | |
Unvested beginning balance (in shares) | 599,421 |
Granted (in shares) | 0 |
Vested (in shares) | (175,806) |
Forfeited (in shares) | 0 |
Unvested ending balance (in shares) | 423,615 |
Unrecognized compensation expense excluding options | $ | $ 7,940 |
Expected weighted average recognition period | 1 year 9 months 18 days |
Restricted stock units | |
Number of Shares | |
Unvested beginning balance (in shares) | 1,804,760 |
Granted (in shares) | 1,427,225 |
Vested (in shares) | (440,924) |
Forfeited (in shares) | (320,807) |
Unvested ending balance (in shares) | 2,470,254 |
Unrecognized compensation expense excluding options | $ | $ 10,463 |
Expected weighted average recognition period | 2 years 4 months 24 days |
Weighted-Average Grant Date Fair Value Per Share | |
Unvested beginning balance (in dollars per share) | $ / shares | |
Granted (in dollars per share) | $ / shares | 3.85 |
Unvested ending balance (in dollars per share) | $ / shares |
Related Party Transactions (Det
Related Party Transactions (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | |
Related Party Transaction [Line Items] | ||||
Research and development | $ 33,673 | $ 53,651 | $ 66,499 | $ 90,504 |
Master Service Agreements | Related Party | ||||
Related Party Transaction [Line Items] | ||||
Research and development | $ 2,292 | $ 1,420 | $ 4,614 | $ 3,119 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | |
Income Tax Disclosure [Abstract] | ||||
Income tax benefit | $ 24,051,000 | $ 22,000 | $ 23,374,000 | $ (58,000) |
Subsequent Event (Details)
Subsequent Event (Details) - At-the-market - USD ($) $ in Millions | Aug. 14, 2023 | Jan. 27, 2023 | Jul. 12, 2022 |
Subsequent Event [Line Items] | |||
Sale of stock, consideration receivable (up to) | $ 125 | $ 350 | |
Subsequent Event | |||
Subsequent Event [Line Items] | |||
Shares sold in offering (in shares) | 2,040,816 | ||
Aggregate net proceeds | $ 14.6 |