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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

 

 

FORM 10-Q

 

 

(Mark One)

 

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

For the quarterly period ended June 30, 2021

OR

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

For the transition period from    to   

Commission File Number: 001-39512

 

 

Metacrine, Inc.

(Exact Name of Registrant as Specified in its Charter)

 

 

Delaware

47-2297384

(State or other jurisdiction of

incorporation or organization)

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

3985 Sorrento Valley Blvd., Suite C

San Diego, California

92121

(Address of principal executive offices)

(Zip Code)

Registrant’s telephone number, including area code: (858) 369-7800

 

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

 

Trading

Symbol(s)

 

Name of each exchange on which registered

Common Stock, par value $0.0001 per share

 

MTCR

 

The Nasdaq Global Market

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.     Yes      No  

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).     Yes      No  

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer

 

  

Accelerated filer

 

 

 

 

 

Non-accelerated filer

 

  

Smaller reporting company

 

 

 

 

 

 

 

 

Emerging growth company

 

 

 

 

 

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).     Yes      No  

The number of outstanding shares of the registrant’s common stock on August 6, 2021 was 26,525,627.

 

 

 


 

Metacrine, Inc.

Table of Contents

 

 

 

Page

PART I. FINANCIAL INFORMATION

 

Item 1.

Financial Statements

1

Item 2.

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

17

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

22

Item 4.

Controls and Procedures

23

PART II. OTHER INFORMATION

 

Item 1.

Legal Proceedings

24

Item 1A.

Risk Factors

24

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

62

Item 3.

Defaults Upon Senior Securities

62

Item 4.

Mine Safety Disclosures

62

Item 5.

Other Information

62

Item 6.

Exhibits

62

 

 

 

 


 

PART I—FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

Metacrine, Inc.

Unaudited Condensed Consolidated Balance Sheets

(In thousands, except par value and share amounts)

 

 

 

June 30,

 

 

December 31,

 

 

 

2021

 

 

2020

 

Assets

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

17,147

 

 

$

24,393

 

Short-term investments

 

 

57,666

 

 

 

71,783

 

Prepaid expenses and other current assets

 

 

4,841

 

 

 

5,847

 

Total current assets

 

 

79,654

 

 

 

102,023

 

Property and equipment, net

 

 

488

 

 

 

634

 

Operating lease right-of-use asset

 

 

1,248

 

 

 

1,579

 

Total assets

 

$

81,390

 

 

$

104,236

 

Liabilities and Stockholders’ Equity

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

Accounts payable

 

$

261

 

 

$

334

 

Accrued liabilities

 

 

6,449

 

 

 

2,951

 

Current portion of operating lease liability

 

 

782

 

 

 

741

 

Total current liabilities

 

 

7,492

 

 

 

4,026

 

Operating lease liability, net of current portion

 

 

605

 

 

 

1,007

 

Long-term debt, net of debt discount

 

 

9,498

 

 

 

9,372

 

Other long-term liabilities

 

 

536

 

 

 

552

 

Commitments and contingencies (Note 3)

 

 

 

 

 

 

 

 

Stockholders’ equity:

 

 

 

 

 

 

 

 

Preferred stock, $0.0001 par value; authorized shares - 10,000,000 at June 30, 2021 and December 31, 2020, respectively; issued and outstanding shares - none at June 30, 2021 and December 31, 2020, respectively.

 

 

-

 

 

 

-

 

Common stock, $0.0001 par value; authorized shares – 200,000,000 at June 30, 2021 and December 31, 2020, respectively; issued shares – 26,521,080 and 26,005,934 at June 30, 2021 and December 31, 2020, respectively; outstanding shares – 26,505,924 and 25,969,442 at June 30, 2021 and December 31, 2020, respectively.

 

 

3

 

 

 

3

 

Additional paid-in-capital

 

 

214,348

 

 

 

210,021

 

Accumulated other comprehensive income

 

 

7

 

 

 

1

 

Accumulated deficit

 

 

(151,099

)

 

 

(120,746

)

Total stockholders’ equity

 

 

63,259

 

 

 

89,279

 

Total liabilities and stockholders’ equity

 

$

81,390

 

 

$

104,236

 

 

See accompanying notes to the unaudited condensed consolidated financial statements.

 

1


 

Metacrine, Inc.

Unaudited Condensed Consolidated Statements of Operations and Comprehensive Loss

(In thousands, except share and per share amounts)

 

 

 

Three Months Ended

 

 

Six Months Ended

 

 

 

June 30,

 

 

June 30,

 

 

 

2021

 

 

2020

 

 

2021

 

 

2020

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Research and development

 

$

11,368

 

 

$

7,395

 

 

$

22,225

 

 

$

13,756

 

General and administrative

 

 

3,992

 

 

 

1,793

 

 

 

7,688

 

 

 

3,394

 

Total operating expenses

 

 

15,360

 

 

 

9,188

 

 

 

29,913

 

 

 

17,150

 

Loss from operations

 

 

(15,360

)

 

 

(9,188

)

 

 

(29,913

)

 

 

(17,150

)

Other income (expense):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest income

 

 

27

 

 

 

134

 

 

 

63

 

 

 

363

 

Interest expense

 

 

(247

)

 

 

(254

)

 

 

(491

)

 

 

(507

)

Other expense

 

 

(5

)

 

 

(14

)

 

 

(12

)

 

 

(140

)

Total other income (expense)

 

 

(225

)

 

 

(134

)

 

 

(440

)

 

 

(284

)

Net loss

 

$

(15,585

)

 

$

(9,322

)

 

$

(30,353

)

 

$

(17,434

)

Other comprehensive loss:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Unrealized gain on available-for-sale securities, net

 

 

8

 

 

 

106

 

 

 

6

 

 

 

38

 

Comprehensive loss

 

$

(15,577

)

 

$

(9,216

)

 

$

(30,347

)

 

$

(17,396

)

Net loss per share, basic and diluted

 

$

(0.59

)

 

$

(3.64

)

 

$

(1.16

)

 

$

(6.87

)

Weighted average shares of common stock outstanding, basic and diluted

 

 

26,369,636

 

 

 

2,563,043

 

 

 

26,189,664

 

 

 

2,536,817

 

 

See accompanying notes to the unaudited condensed consolidated financial statements.

2


Metacrine, Inc.

Unaudited Condensed Consolidated Statements of Cash Flows

(In thousands)

 

 

 

Six Months Ended

 

 

 

June 30,

 

 

 

2021

 

 

2020

 

Operating activities:

 

 

 

 

 

 

 

 

Net loss

 

$

(30,353

)

 

$

(17,434

)

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

 

 

 

 

 

 

 

 

Depreciation

 

 

154

 

 

 

140

 

Stock-based compensation

 

 

3,106

 

 

 

1,360

 

Non-cash interest expense

 

 

126

 

 

 

141

 

Amortization (accretion) of premiums/discounts on investments, net

 

 

263

 

 

 

(80

)

Amortization of right-of-use asset

 

 

331

 

 

 

306

 

Change in fair value of warrant liability

 

 

-

 

 

 

120

 

Changes in operating assets and liabilities

 

 

 

 

 

 

 

 

Prepaid expenses and other current assets

 

 

1,006

 

 

 

(398

)

Accounts payable and accrued liabilities

 

 

3,425

 

 

 

64

 

Lease liability

 

 

(361

)

 

 

(275

)

Net cash used in operating activities

 

 

(22,303

)

 

 

(16,056

)

Investing activities:

 

 

 

 

 

 

 

 

Purchases of property and equipment

 

 

(8

)

 

 

(165

)

Purchases of short-term investments

 

 

(34,681

)

 

 

(7,944

)

Sales and maturities of short-term investments

 

 

48,541

 

 

 

25,890

 

Net cash provided by investing activities

 

 

13,852

 

 

 

17,781

 

Financing activities:

 

 

 

 

 

 

 

 

Proceeds from exercise of common stock options

 

 

1,059

 

 

 

11

 

Repurchase of unvested common stock

 

 

(1

)

 

 

(2

)

Proceeds from issuance of common stock from employee stock purchase plan

 

 

147

 

 

 

-

 

Payment of initial public offering costs

 

 

-

 

 

 

(272

)

Net cash provided by (used in) financing activities

 

 

1,205

 

 

 

(263

)

Net (decrease) increase in cash and cash equivalents

 

 

(7,246

)

 

 

1,462

 

Cash and cash equivalents at beginning of period

 

 

24,393

 

 

 

15,668

 

Cash and cash equivalents at end of period

 

$

17,147

 

 

$

17,130

 

Supplemental disclosure of cash flow information:

 

 

 

 

 

 

 

 

Cash paid for interest

 

$

367

 

 

$

369

 

Supplemental non-cash investing and financing activities:

 

 

 

 

 

 

 

 

Unpaid initial public offering costs

 

$

-

 

 

$

299

 

Vesting of common stock

 

$

15

 

 

$

49

 

 

See accompanying notes to the unaudited condensed consolidated financial statements.

 

 

3


 

 

Metacrine, Inc.

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

For the Six Months Ended June 30, 2021 and 2020

(In thousands, except share amounts)

 

 

 

 

Preferred Stock

 

 

Common Stock

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shares

 

 

Amount

 

 

Shares

 

 

Amount

 

 

Additional

paid-in

capital

 

 

Accumulated

other

comprehensive

income (loss)

 

 

Accumulated

deficit

 

 

Total

stockholders'

equity

 

Balance at December 31, 2020

 

 

 

 

$

 

 

 

25,969,442

 

 

$

3

 

 

$

210,021

 

 

$

1

 

 

$

(120,746

)

 

$

89,279

 

Stock-based compensation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

3,106

 

 

 

 

 

 

 

 

 

3,106

 

Exercise of stock options

 

 

 

 

 

 

 

 

466,811

 

 

 

 

 

 

1,059

 

 

 

 

 

 

 

 

 

1,059

 

Vesting of early exercised stock options

 

 

 

 

 

 

 

 

21,336

 

 

 

 

 

 

15

 

 

 

 

 

 

 

 

 

15

 

Issuance of common stock from employee stock purchase plan

 

 

 

 

 

 

 

 

48,335

 

 

 

 

 

 

147

 

 

 

 

 

 

 

 

 

147

 

Unrealized gain on investment securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

6

 

 

 

 

 

 

6

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(30,353

)

 

 

(30,353

)

Balance at June 30, 2021

 

 

 

 

$

 

 

 

26,505,924

 

 

$

3

 

 

$

214,348

 

 

$

7

 

 

$

(151,099

)

 

$

63,259

 

 

 

 

 

Convertible Preferred Stock

 

 

Common Stock

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shares

 

 

Amount

 

 

Shares

 

 

Amount

 

 

Additional

paid-in

capital

 

 

Accumulated

other

comprehensive

income (loss)

 

 

Accumulated

deficit

 

 

Total

stockholders'

deficit

 

Balance at December 31, 2019

 

 

85,093,688

 

 

$

122,465

 

 

 

2,484,848

 

 

$

 

 

$

5,164

 

 

$

41

 

 

$

(83,442

)

 

$

(78,237

)

Stock-based compensation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,360

 

 

 

 

 

 

 

 

 

1,360

 

Exercise of stock options

 

 

 

 

 

 

 

 

18,384

 

 

 

 

 

 

11

 

 

 

 

 

 

 

 

 

11

 

Vesting of early exercised stock options

 

 

 

 

 

 

 

 

97,141

 

 

 

 

 

 

49

 

 

 

 

 

 

 

 

 

49

 

Unrealized gain on investment securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

38

 

 

 

 

 

 

38

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(17,434

)

 

 

(17,434

)

Balance at June 30, 2020

 

 

85,093,688

 

 

$

122,465

 

 

 

2,600,373

 

 

$

 

 

$

6,584

 

 

$

79

 

 

$

(100,876

)

 

$

(94,213

)

 

See accompanying notes to the unaudited condensed consolidated financial statements.


4


 

 

Metacrine, Inc.

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

For the Three Months Ended June 30, 2021 and 2020

(In thousands, except share amounts)

 

 

 

 

Convertible Preferred Stock

 

 

Common Stock

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shares

 

 

Amount

 

 

Shares

 

 

Amount

 

 

Additional

paid-in

capital

 

 

Accumulated

other

comprehensive

income (loss)

 

 

Accumulated

deficit

 

 

Total

stockholders'

equity

 

Balance at March 31, 2021

 

 

 

 

$

 

 

 

26,209,327

 

 

$

3

 

 

$

212,172

 

 

$

(1

)

 

$

(135,514

)

 

$

76,660

 

Stock-based compensation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,586

 

 

 

 

 

 

 

 

 

1,586

 

Exercise of stock options

 

 

 

 

 

 

 

 

238,133

 

 

 

 

 

 

436

 

 

 

 

 

 

 

 

 

436

 

Vesting of early exercised stock options

 

 

 

 

 

 

 

 

10,129

 

 

 

 

 

 

7

 

 

 

 

 

 

 

 

 

7

 

Issuance of common stock from employee stock purchase plan

 

 

 

 

 

 

 

 

48,335

 

 

 

 

 

 

147

 

 

 

 

 

 

 

 

 

147

 

Unrealized gain on investment securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

8

 

 

 

 

 

 

8

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(15,585

)

 

 

(15,585

)

Balance at June 30, 2021

 

 

 

 

$

 

 

 

26,505,924

 

 

$

3

 

 

$

214,348

 

 

$

7

 

 

$

(151,099

)

 

$

63,259

 

 

 

 

 

Convertible Preferred Stock

 

 

Common Stock

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shares

 

 

Amount

 

 

Shares

 

 

Amount

 

 

Additional

paid-in

capital

 

 

Accumulated

other

comprehensive

income

 

 

Accumulated

deficit

 

 

Total

stockholders'

equity (deficit)

 

Balance at March 31, 2020

 

 

85,093,688

 

 

$

122,465

 

 

 

2,534,569

 

 

$

 

 

$

5,694

 

 

$

(27

)

 

$

(91,554

)

 

$

(85,887

)

Stock-based compensation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

857

 

 

 

 

 

 

 

 

 

857

 

Exercise of stock options

 

 

 

 

 

 

 

 

17,429

 

 

 

 

 

 

8

 

 

 

 

 

 

 

 

 

8

 

Vesting of early exercised stock options

 

 

 

 

 

 

 

 

48,375

 

 

 

 

 

 

25

 

 

 

 

 

 

 

 

 

25

 

Unrealized gain on investment securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

106

 

 

 

 

 

 

106

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(9,322

)

 

 

(9,322

)

Balance at June 30, 2020

 

 

85,093,688

 

 

$

122,465

 

 

 

2,600,373

 

 

$

 

 

$

6,584

 

 

$

79

 

 

$

(100,876

)

 

$

(94,213

)

 

See accompanying notes to the unaudited condensed consolidated financial statements.

 

 

 

 

 

 

 

5


 

 

Metacrine, Inc.

Notes to Unaudited Condensed Consolidated Financial Statements

Note 1. Organization and Summary of Significant Accounting Policies

Organization

Metacrine, Inc. (the “Company”) was incorporated in the state of Delaware on September 17, 2014 and is based in San Diego, California. The Company is a clinical-stage biopharmaceutical company focused on building an innovative pipeline of differentiated drugs to treat liver and gastrointestinal diseases.

Principles of Consolidation and Basis of Presentation

In May 2019, the Company established a wholly-owned Australian subsidiary, Metacrine, Pty Ltd, in order to conduct various clinical activities for its product candidates. The unaudited condensed consolidated financial statements include the accounts of the Company and Metacrine, Pty Ltd. The functional currency of both the Company and Metacrine, Pty Ltd is the U.S. dollar. Assets and liabilities that are not denominated in the functional currency are remeasured into U.S. dollars at foreign currency exchange rates in effect at the balance sheet date except for nonmonetary assets, which are remeasured at historical foreign currency exchange rates in effect at the date of transaction. Net realized and unrealized gains and losses from foreign currency transactions and remeasurement are reported in other income (expense) in the unaudited condensed consolidated statements of operations and comprehensive loss. Intercompany accounts and transactions have been eliminated in consolidation.

 

The Company’s unaudited condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) and applicable regulations of the U.S. Securities and Exchange Commission (“SEC”). The Company’s unaudited condensed consolidated financial statements should be read in conjunction with the audited financial statements included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2020 filed on March 18, 2021. Certain amounts in the unaudited condensed consolidated financial statements have been reclassified to conform to their current year presentation.

Initial Public Offering

On September 18, 2020, the Company closed its initial public offering (“IPO”) of 6,540,000 shares of common stock at a public offering price of $13.00 per share. The Company raised $76.9 million in net proceeds from the IPO after deducting underwriters&#