SEC Filing - Metacrine, Inc.

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mtcr-10q_20210930.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 September 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 November 5, 2021 was 27,314,553.

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	23
Item 4.	Controls and Procedures	24
PART II. OTHER INFORMATION
Item 1.	Legal Proceedings	25
Item 1A.	Risk Factors	25
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	63
Item 3.	Defaults Upon Senior Securities	63
Item 4.	Mine Safety Disclosures	63
Item 5.	Other Information	63
Item 6.	Exhibits	63

PART I—FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

Metacrine, Inc.

Unaudited Condensed Consolidated Balance Sheets

(In thousands, except par value and share amounts)

	September 30,			December 31,
	2021			2020
Assets
Current assets:
Cash and cash equivalents	$	17,029		$	24,393
Short-term investments		44,699			71,783
Prepaid expenses and other current assets		3,852			5,847
Total current assets		65,580			102,023
Property and equipment, net		415			634
Operating lease right-of-use asset		1,077			1,579
Other non-current assets		438		-
Total assets	$	67,510		$	104,236
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	323		$	334
Accrued liabilities		8,770			2,951
Current portion of operating lease liability		804			741
Current portion of long-term debt		459			-
Total current liabilities		10,356			4,026
Operating lease liability, net of current portion		395			1,007
Long-term debt, net of debt discount		9,106			9,372
Other long-term liabilities		531			552
Commitments and contingencies (Note 3)
Stockholders’ equity:
Preferred stock, $0.0001 par value; authorized shares - 10,000,000 at September 30, 2021 and December 31, 2020, respectively; issued and outstanding shares - none at September 30, 2021 and December 31, 2020, respectively.		-			-
Common stock, $0.0001 par value; authorized shares – 200,000,000 at September 30, 2021 and December 31, 2020, respectively; issued shares – 26,540,753 and 26,005,934 at September 30, 2021 and December 31, 2020, respectively; outstanding shares – 26,535,218 and 25,969,442 at September 30, 2021 and December 31, 2020, respectively.		3			3
Additional paid-in-capital		216,544			210,021
Accumulated other comprehensive income		2			1
Accumulated deficit		(169,427	)		(120,746	)
Total stockholders’ equity		47,122			89,279
Total liabilities and stockholders’ equity	$	67,510		$	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						Nine Months Ended
	September 30,						September 30,
	2021			2020			2021			2020
Operating expenses:
Research and development	$	14,072		$	6,217		$	36,297		$	19,973
General and administrative		4,007			2,693			11,695			6,087
Total operating expenses		18,079			8,910			47,992			26,060
Loss from operations		(18,079	)		(8,910	)		(47,992	)		(26,060	)
Other income (expense):
Interest income		22			82			85			445
Interest expense		(252	)		(258	)		(743	)		(765	)
Other income (expense)		(19	)		32			(31	)		(108	)
Total other income (expense)		(249	)		(144	)		(689	)		(428	)
Net loss	$	(18,328	)	$	(9,054	)	$	(48,681	)	$	(26,488	)
Other comprehensive loss:
Unrealized gain (loss) on available-for-sale securities, net		(5	)		(65	)		1			(27	)
Comprehensive loss	$	(18,333	)	$	(9,119	)	$	(48,680	)	$	(26,515	)
Net loss per share, basic and diluted	$	(0.69	)	$	(1.41	)	$	(1.85	)	$	(6.89	)
Weighted average shares of common stock outstanding, basic and diluted		26,521,689			6,436,546			26,300,676			3,845,793

See accompanying notes to the unaudited condensed consolidated financial statements.

Metacrine, Inc.

Unaudited Condensed Consolidated Statements of Cash Flows

(In thousands)

	Nine Months Ended
	September 30,
	2021			2020
Operating activities:
Net loss	$	(48,681	)	$	(26,488	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation		227			217
Stock-based compensation		5,260			3,151
Non-cash interest expense		193			210
Amortization (accretion) of premiums/discounts on investments, net		320			(91	)
Amortization of right-of-use asset		502			463
Change in fair value of warrant liability		-			75
Changes in operating assets and liabilities
Prepaid expenses and other current assets		1,995			29
Accounts payable and accrued liabilities		5,407			(1,260	)
Lease liability		(549	)		(427	)
Net cash used in operating activities		(35,326	)		(24,121	)
Investing activities:
Purchases of property and equipment		(8	)		(172	)
Purchases of short-term investments		(39,176	)		(7,944	)
Sales and maturities of short-term investments		65,941			37,033
Net cash provided by investing activities		26,757			28,917
Financing activities:
Proceeds from issuance of common stock from initial public offering, net of issuance costs		-			77,750
Proceeds from exercise of common stock options		1,096			69
Repurchase of unvested common stock		(1	)		(2	)
Deferred issuance costs		(37	)		-
Proceeds from issuance of common stock from employee stock purchase plan		147			-
Net cash provided by financing activities		1,205			77,817
Net (decrease) increase in cash and cash equivalents		(7,364	)		82,613
Cash and cash equivalents at beginning of period		24,393			15,668
Cash and cash equivalents at end of period	$	17,029		$	98,281
Supplemental disclosure of cash flow information:
Cash paid for interest	$	552		$	554
Supplemental non-cash investing and financing activities:
Conversion of convertible preferred stock to common stock	$	-		$	122,465
Conversion of convertible preferred stock warrant to common stock warrant	$	-		$	259
Issuance costs in accounts payable and accrued liabilities	$	401		$	852
Vesting of common stock	$	20		$	73

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 Nine Months Ended September 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		—		—		—		—		5,260		—		—			5,260
Exercise of stock options		—		—		489,179		—		1,096		—		—			1,096
Vesting of early exercised stock options		—		—		28,262		—		20		—		—			20
Issuance of common stock from employee stock purchase plan		—		—		48,335		—		147		—		—			147
Unrealized gain on investment securities		—		—		—		—		—		1		—			1
Net loss		—		—		—		—		—		—		(48,681	)		(48,681	)
Balance at September 30, 2021		—	$	—		26,535,218	$	3	$	216,544	$	2	$	(169,427	)	$	47,122

	Convertible Preferred Stock						Common Stock
	Shares			Amount			Shares		Amount		Additional paid-in capital		Accumulated other comprehensive income (loss)			Accumulated deficit			Total stockholders' equity (deficit)
Balance at December 31, 2019		85,093,688		$	122,465			2,484,848	$	—	$	5,164	$	41		$	(83,442	)	$	(78,237	)
Issuance of common stock from initial public offering, net of issuance costs		—			—			6,540,000		1		76,897		—			—			76,898
Conversion of preferred stock to common stock from completion of initial public offering		(85,093,688	)		(122,465	)		16,685,014		2		122,463		—			—			122,465
Conversion of convertible preferred stock warrant to common stock warrant		—			—			—		—		259		—			—			259
Stock-based compensation		—			—			—		—		3,151		—			—			3,151
Exercise of stock options		—			—			54,266		—		69		—			—			69
Vesting of early exercised stock options		—			—			145,360		—		73		—			—			73
Unrealized loss on investment securities		—			—			—		—		—		(27	)		—			(27	)
Net loss		—			—			—		—		—		—			(26,488	)		(26,488	)
Balance at September 30, 2020		-		$	-			25,909,488	$	3	$	208,076	$	14		$	(109,930	)	$	98,163

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 September 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 June 30, 2021		—	$	—		26,505,924	$	3	$	214,348	$	7		$	(151,099	)	$	63,259
Stock-based compensation		—		—		—		—		2,154		—			—			2,154
Exercise of stock options		—		—		22,368		—		37		—			—			37
Vesting of early exercised stock options		—		—		6,926		—		5		—			—			5
Unrealized loss on investment securities		—		—		—		—		—		(5	)		—			(5	)
Net loss		—		—		—		—		—		—			(18,328	)		(18,328	)
Balance at September 30, 2021		—	$	—		26,535,218	$	3	$	216,544	$	2		$	(169,427	)	$	47,122

	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 June 30, 2020		85,093,688		$	122,465		2,600,373	$	—	$	6,584	$	79	$	(100,876	)	$	(94,213	)
Issuance of common stock from initial public offering, net of issuance costs		—			—		6,540,000		1		76,897		—		—			76,898
Conversion of preferred stock to common stock from completion of initial public offering		(85,093,688	)