SEC Filing - Metacrine, Inc.

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mtcr-10q_20210630.htm

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

☐	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.

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.

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.

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.

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.

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.

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