10-Q
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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, 2022

OR

 

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

 

For the transition period from to

 

Commission File Number: 001-38871

 

Turning Point Therapeutics, Inc.

(Exact Name of Registrant as Specified in its Charter)

 

 

Delaware

46-3826166

(State or other jurisdiction of

incorporation or organization)

 

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

 

10628 Science Center Drive, Ste. 200

San Diego, California

92121

(Address of principal executive offices)

(Zip Code)

Registrant’s telephone number, including area code: (858) 926-5251

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, $0.0001 par value per share

TPTX

The Nasdaq Stock Market LLC

 

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

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

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

 

Large accelerated filer

 

 

Accelerated filer

 

 

 

 

 

Non-accelerated filer

 

 

Smaller reporting company

 

 

 

 

 

 

 

 

 

 

 

 

Emerging growth company

 

 

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

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

As of August 1, 2022, the registrant had 50,074,277 shares of common stock outstanding.


Table of Contents

 

 

 

Page

PART I.

FINANCIAL INFORMATION

 

Item 1.

Financial Statements (unaudited)

3

 

Condensed Balance Sheets

3

 

Condensed Statements of Operations and Comprehensive Loss

4

 

Condensed Statements of Stockholders’ Equity

5

 

Condensed Statements of Cash Flows

6

 

Notes to Unaudited Condensed Financial Statements

7

Item 2.

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

19

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

30

Item 4.

Controls and Procedures

30

PART II.

OTHER INFORMATION

 

Item 1.

Legal Proceedings

30

Item 1A.

Risk Factors

31

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

79

Item 3.

Defaults Upon Senior Securities

79

Item 4.

Mine Safety Disclosures

79

Item 5.

Other Information

79

Item 6.

Exhibits

80

SIGNATURES

81

 

 

 

2


PART I—FINANCIAL INFORMATION

Item 1. Financial Statements

 

Turning Point Therapeutics, Inc.

Condensed Balance Sheets

(In thousands, except share and par value amounts)

 

 

 

June 30,

 

 

December 31,

 

 

 

2022

 

 

2021

 

Assets

 

Unaudited

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

290,147

 

 

$

427,879

 

Marketable securities

 

 

528,139

 

 

 

553,703

 

Prepaid and other current assets

 

 

13,381

 

 

 

10,880

 

Total current assets

 

 

831,667

 

 

 

992,462

 

Property and equipment, net

 

 

5,046

 

 

 

3,822

 

Right-of-use lease assets

 

 

4,583

 

 

 

5,158

 

Other assets

 

 

2,039

 

 

 

2,021

 

Total assets

 

$

843,335

 

 

$

1,003,463

 

Liabilities and stockholders' equity

 

 

 

 

 

 

Liabilities:

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Accounts payable

 

$

7,934

 

 

$

5,656

 

Accrued expenses and other current liabilities

 

 

25,568

 

 

 

25,300

 

Accrued compensation

 

 

11,874

 

 

 

12,503

 

Current portion of operating lease liabilities

 

 

4,047

 

 

 

3,630

 

Total current liabilities

 

 

49,423

 

 

 

47,089

 

Operating lease liabilities, long-term

 

 

890

 

 

 

1,949

 

Commitments and contingencies (Note 8)

 

 

 

 

 

 

Stockholders' equity:

 

 

 

 

 

 

Preferred stock, $0.0001 par value; 10,000,000 shares authorized at June 30, 2022 and December 31, 2021, zero shares outstanding at June 30, 2022 and December 31, 2021

 

 

 

 

 

 

Common stock, $0.0001 par value; 200,000,000 shares authorized at June 30, 2022 and December 31, 2021; 49,885,036 and 49,582,638 shares issued and outstanding at June 30, 2022 and December 31, 2021, respectively

 

 

5

 

 

 

5

 

Additional paid-in capital

 

 

1,514,191

 

 

 

1,472,421

 

Accumulated other comprehensive loss

 

 

(6,914

)

 

 

(1,274

)

Accumulated deficit

 

 

(714,260

)

 

 

(516,727

)

Total stockholders' equity

 

 

793,022

 

 

 

954,425

 

Total liabilities and stockholders’ equity

 

$

843,335

 

 

$

1,003,463

 

 

See accompanying notes.

3


Turning Point Therapeutics, Inc.

Condensed Statements of Operations and Comprehensive Loss

(In thousands, except share and per share amounts)

(Unaudited)

 

 

 

Three Months Ended June 30,

 

 

Six Months Ended June 30,

 

 

 

2022

 

 

2021

 

 

2022

 

 

2021

 

Revenue

 

$

119

 

 

$

5,164

 

 

$

548

 

 

$

30,369

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

Research and development

 

 

86,788

 

 

 

44,650

 

 

 

141,838

 

 

 

85,913

 

General and administrative

 

 

37,695

 

 

 

17,171

 

 

 

58,009

 

 

 

37,162

 

Total operating expenses

 

 

124,483

 

 

 

61,821

 

 

 

199,847

 

 

 

123,075

 

Loss from operations

 

 

(124,364

)

 

 

(56,657

)

 

 

(199,299

)

 

 

(92,706

)

Other income, net

 

 

1,276

 

 

 

384

 

 

 

1,766

 

 

 

929

 

Net loss

 

 

(123,088

)

 

 

(56,273

)

 

 

(197,533

)

 

 

(91,777

)

Unrealized loss on marketable securities, net of tax

 

 

(1,522

)

 

 

(22

)

 

 

(5,640

)

 

 

(208

)

Comprehensive loss

 

$

(124,610

)

 

$

(56,295

)

 

$

(203,173

)

 

$

(91,985

)

Net loss per share, basic and diluted

 

$

(2.48

)

 

$

(1.14

)

 

$

(3.98

)

 

$

(1.87

)

Weighted-average common shares outstanding, basic and diluted

 

 

49,702,860

 

 

 

49,204,425

 

 

 

49,657,426

 

 

 

49,063,298

 

 

See accompanying notes.

4


Turning Point Therapeutics, Inc.

Condensed Statements of Stockholders’ Equity

(In thousands, except share amounts)

(Unaudited)

 

 

 

Common Stock

 

 

Additional
Paid-In

 

 

Accumulated
Other
Comprehensive

 

 

Accumulated

 

 

Total
Stockholders’

 

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Income (Loss)

 

 

Deficit

 

 

Equity

 

Balance at December 31, 2021

 

 

49,582,638

 

 

$

5

 

 

$

1,472,421

 

 

$

(1,274

)

 

$

(516,727

)

 

$

954,425

 

Issuance of common stock under equity incentive plans

 

 

81,835

 

 

 

 

 

 

396

 

 

 

 

 

 

 

 

 

396

 

Stock-based compensation expense

 

 

 

 

 

 

 

 

15,089

 

 

 

 

 

 

 

 

 

15,089

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(74,445

)

 

 

(74,445

)

Other comprehensive loss

 

 

 

 

 

 

 

 

 

 

 

(4,118

)

 

 

 

 

 

(4,118

)

Balance at March 31, 2022

 

 

49,664,473

 

 

 

5

 

 

 

1,487,906

 

 

 

(5,392

)

 

 

(591,172

)

 

 

891,347

 

Issuance of common stock under equity incentive plans

 

 

187,644

 

 

 

 

 

 

7,863

 

 

 

 

 

 

 

 

 

7,863

 

Issuance of common stock under employee stock purchase plan

 

 

32,919

 

 

 

 

 

 

1,111

 

 

 

 

 

 

 

 

 

1,111

 

Stock-based compensation expense

 

 

 

 

 

 

 

 

17,311

 

 

 

 

 

 

 

 

 

17,311

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(123,088

)

 

 

(123,088

)

Other comprehensive loss

 

 

 

 

 

 

 

 

 

 

 

(1,522

)

 

 

 

 

 

(1,522

)

Balance at June 30, 2022

 

 

49,885,036

 

 

$

5

 

 

$

1,514,191

 

 

$

(6,914

)

 

$

(714,260

)

 

$

793,022

 

 

 

 

Common Stock

 

 

Additional
Paid-In

 

 

Accumulated
Other
Comprehensive

 

 

Accumulated

 

 

Total
Stockholders’

 

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Income (Loss)

 

 

Deficit

 

 

Equity

 

Balance at December 31, 2020

 

 

48,678,540

 

 

$

5

 

 

$

1,389,860

 

 

$

209

 

 

$

(280,176

)

 

$

1,109,898

 

Issuance of common stock under equity incentive plans

 

 

438,500

 

 

 

 

 

 

9,679

 

 

 

 

 

 

 

 

 

9,679

 

Stock-based compensation expense

 

 

 

 

 

 

 

 

17,278

 

 

 

 

 

 

 

 

 

17,278

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(35,504

)

 

 

(35,504

)

Other comprehensive loss

 

 

 

 

 

 

 

 

 

 

 

(186

)

 

 

 

 

 

(186

)

Balance at March 31, 2021

 

 

49,117,040

 

 

 

5

 

 

 

1,416,817

 

 

 

23

 

 

 

(315,680

)

 

 

1,101,165

 

Issuance of common stock under equity incentive plans

 

 

253,037

 

 

 

 

 

 

8,398

 

 

 

 

 

 

 

 

 

8,398

 

Issuance of common stock under employee stock purchase plan

 

 

21,661

 

 

 

 

 

 

943

 

 

 

 

 

 

 

 

 

943

 

Stock-based compensation expense

 

 

 

 

 

 

 

 

13,295

 

 

 

 

 

 

 

 

 

13,295

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(56,273

)

 

 

(56,273

)

Other comprehensive loss

 

 

 

 

 

 

 

 

 

 

 

(21

)

 

 

 

 

 

(21

)

Balance at June 30, 2021

 

 

49,391,738

 

 

$

5

 

 

$

1,439,453

 

 

$

2

 

 

$

(371,953

)

 

$

1,067,507

 

 

 

 

See accompanying notes.

 

 

 

5


Turning Point Therapeutics, Inc.

Condensed Statements of Cash Flows

(In thousands)

(Unaudited)

 

 

 

Six Months Ended June 30,

 

 

 

2022

 

 

2021

 

Operating activities

 

 

 

 

 

 

Net loss

 

$

(197,533

)

 

$

(91,777

)

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

 

 

 

 

 

 

Stock-based compensation expense

 

 

32,400

 

 

 

30,573

 

Depreciation

 

 

803

 

 

 

518

 

Accretion of premium on marketable securities

 

 

1,423

 

 

 

2,771

 

Amortization of right-of-use operating lease asset

 

 

1,767

 

 

 

965

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

Prepaid expenses and other current assets

 

 

(2,501

)

 

 

(5,589

)

Other assets

 

 

(18

)

 

 

 

Accounts payable

 

 

2,225

 

 

 

1,612

 

Accrued expenses and other liabilities

 

 

(1,566

)

 

 

5,719

 

Accrued compensation

 

 

(629

)

 

 

(2,861

)

Net cash used in operating activities

 

 

(163,629

)

 

 

(58,069

)

 

 

 

 

 

 

 

Investing activities

 

 

 

 

 

 

Purchases of marketable securities

 

 

(164,537

)

 

 

(255,763

)

Sales and maturities of marketable securities

 

 

183,038

 

 

 

169,434

 

Purchases of property and equipment

 

 

(1,974

)

 

 

(874

)

Net cash provided by (used in) investing activities

 

 

16,527

 

 

 

(87,203

)

 

 

 

 

 

 

 

Financing activities

 

 

 

 

 

 

Proceeds from issuance of common stock under equity incentive plans

 

 

9,370

 

 

 

19,020

 

Net cash provided by financing activities

 

 

9,370

 

 

 

19,020

 

 

 

 

 

 

 

 

Net decrease in cash, cash equivalents and restricted cash

 

 

(137,732

)

 

 

(126,252

)

Cash, cash equivalents and restricted cash at the beginning of period

 

 

429,755

 

 

 

554,174

 

Cash, cash equivalents and restricted cash at the end of period

 

$

292,023

 

 

$

427,922

 

 

 

 

 

 

 

 

Supplemental disclosure of cash flow information:

 

 

 

 

 

 

Cash paid for income taxes

 

$

 

 

$

1

 

Supplemental disclosure of non-cash investing and financing information:

 

 

 

 

 

 

Purchases of property and equipment in accounts payable

 

$

53

 

 

$

250

 

Operating lease liabilities arising from obtaining right-of-use assets

 

$

1,192

 

 

$

3,544

 

 

See accompanying notes.

6


 

Turning Point Therapeutics, Inc.

Notes to Unaudited Condensed Financial Statements

1. Organization

Description of Business

Turning Point Therapeutics, Inc. (the Company) was organized in October 2013 and commenced operations in 2014. The Company is a clinical-stage precision oncology company designing and developing novel targeted therapies for cancer treatment. The Company’s principal operations are in the United States and the Company operates in one segment with its headquarters in San Diego, California.

The Company’s primary activities since inception have been to build infrastructure, conduct research and development, including clinical trials, perform business and financial planning, and raise capital.

Pending Acquisition by Bristol-Myers Squibb

On June 2, 2022, the Company entered into an Agreement and Plan of Merger (the Merger Agreement) with Bristol-Myers Squibb Company, a Delaware corporation (Bristol-Myers Squibb), and Rhumba Merger Sub Inc., a Delaware corporation and wholly owned subsidiary of Bristol-Myers Squibb (Purchaser). Under the terms of the Merger Agreement, and upon the terms and subject to the conditions thereof, on June 17, 2022, Purchaser commenced a cash tender offer (the Offer) to purchase all of the outstanding shares of the Company’s common stock for $76.00 per share, in cash, without interest and subject to applicable withholding of taxes. Following the completion of the Offer, Purchaser will merge with and into the Company (the Merger), with the Company continuing as the surviving corporation and as a wholly owned subsidiary of Bristol-Myers Squibb. The Merger is anticipated to close in the third quarter of 2022.

 

For each of the three and six months ended June 30, 2022, the Company recorded transaction costs of approximately $17.7 million in general and administrative expenses in the accompanying unaudited condensed statements of operations and comprehensive loss, primarily for outside legal and external financial advisory fees associated with the pending acquisition by Bristol-Myers Squibb.

Liquidity

The Company’s activities are subject to significant risks and uncertainties, including concentration on the Company’s lead development program, which has significant competition from cancer therapies in development by other companies or already approved for sale by the U.S. Food and Drug Administration.

The Company is subject to risks and uncertainties common to early-stage companies in the biotechnology industry, including, but not limited to, development by competitors of new technological innovations, dependence on key personnel, protection of proprietary technology, compliance with government regulations and the ability to secure additional capital to fund operations. Drug candidates currently under development will require significant additional research and development efforts, including extensive preclinical and clinical testing and regulatory approval prior to commercialization. These efforts require significant amounts of additional capital, adequate personnel and infrastructure and extensive compliance-reporting capabilities. Even if the Company’s drug development efforts are successful, it is uncertain when, if ever, the Company will realize significant revenue from product sales.

The COVID-19 pandemic and ongoing geopolitical events continue to evolve and have already resulted in a significant disruption of global financial markets. The Company’s ability to raise additional capital may be adversely impacted by potential worsening global economic conditions and further disruptions to, and volatility in, the credit and financial markets in the United States and worldwide resulting from the pandemic or geopolitical actions. If such further disruption occurs, the Company could experience an inability to access additional capital.

The Company determined that there are no conditions or events that raise substantial doubt about its ability to continue as a going concern for a period of at least twelve months from the date of issuance of these financial statements.

2. Summary of Significant Accounting Policies

Basis of Presentation

7

 


 

The accompanying unaudited condensed financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (U.S. GAAP) for interim financial information and pursuant to Form 10-Q and Article 10 of Regulation S-X of the Securities and Exchange Commission (SEC). Accordingly, since they are interim statements, the accompanying condensed financial statements do not include all of the information and notes required by U.S. GAAP for complete financial statements. These unaudited condensed financial statements should be read in conjunction with the audited financial statements and the notes thereto for the year ended December 31, 2021 included in the Company’s Annual Report on Form 10-K filed with the SEC. In the opinion of management, the unaudited condensed financial statements and notes thereto include all adjustments (consisting only of normal recurring adjustments) that are necessary for the fair presentation of the Company’s financial position and of the results of operations and cash flows for the periods presented. The operating results presented in these unaudited condensed financial statements are not necessarily indicative of the results that may be expected for any future periods.

Use of Estimates

The preparation of the Company’s financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses and the disclosure of contingent assets and liabilities in the Company’s financial statements and accompanying notes. The most significant estimates in the Company’s financial statements relate to determining the standalone selling prices of performance obligations associated with license and collaboration arrangements, accrued research and development expenses and stock-based compensation expenses. The Company bases these estimates on historical experience, knowledge of current events and actions it may undertake in the future, and on various other assumptions that are believed to be reasonable. Actual results may differ materially from these estimates and assumptions. Although the impact of the COVID-19 pandemic to the Company’s business and operating results presents additional uncertainty, the Company continues to use the best information available to update its critical accounting estimates.

Cash, Cash Equivalents and Restricted Cash

The following table presents a reconciliation of cash, cash equivalents and restricted cash to the amounts shown in the unaudited condensed statements of cash flows (in thousands):

 

 

June 30, 2022

 

 

June 30, 2021

 

Cash and cash equivalents

 

$

290,147

 

 

$

426,047

 

Restricted cash included in other assets

 

 

1,876

 

 

 

1,875

 

Total cash, cash equivalents and restricted cash

 

$

292,023

 

 

$

427,922

 

Concentration of Credit Risk

Substantially all of the Company’s cash, cash equivalent and marketable securities are held at two financial institutions. Due to the financial strength of the depository institutions, the Company believes these financial institutions represent minimal credit risk. Cash amounts held at financial institutions are insured by the Federal Deposit Insurance Corporation (FDIC) up to $250,000. At June 30, 2022, cash, cash equivalents and marketable securities totaling $818.0 million are either not subject to FDIC insurance, or exceed the FDIC insured limit. The Company’s cash, cash equivalents and marketable securities are invested in short term, high credit quality securities, and as a result, the Company believes represent a minimal credit risk.

Net Loss Per Share

Basic net loss per share is computed by dividing the net loss available to common stockholders by the weighted average number of common shares outstanding for the period, without consideration for common stock equivalents. Diluted net loss per share assumes the conversion, exercise or issuance of all potential common stock equivalents, unless the effect of inclusion would be anti-dilutive. For purposes of this calculation, common stock equivalents include the Company’s stock options, restricted stock units (RSUs) and performance stock units (PSUs). The Company excluded stock options to purchase common stock, RSUs and PSUs from the number of shares used to calculate diluted shares outstanding because the inclusion of these potentially dilutive securities would have been antidilutive.

8

 


 

Historical outstanding anti-dilutive securities not included in the diluted net loss per share calculation include the following:

 

 

Six Months Ended June 30,

 

 

 

2022

 

 

2021

 

Common stock options

 

 

6,266,363

 

 

 

5,406,931

 

RSUs

 

 

893,536

 

 

 

192,281

 

PSUs

 

 

234,284

 

 

 

188,518

 

Total

 

 

7,394,183

 

 

 

5,787,730

 

 

3. Marketable Securities

The Company invests its excess cash in marketable securities, including debt instruments of financial institutions, corporations with investment grade credit ratings, commercial paper and government agencies.

At June 30, 2022, marketable securities consisted of the following (in thousands):

 

 

 

Maturity

 

Amortized

 

 

Unrealized

 

 

 

 

 

 

in Years

 

Cost

 

 

Gains

 

 

Losses

 

 

Fair Value

 

U.S. Treasuries

 

2 years or less

 

$

348,544

 

 

$

 

 

$

(5,372

)

 

$

343,172

 

U.S. Government agency securities

 

2 years or less

 

 

87,115

 

 

 

 

 

 

(839

)

 

 

86,276

 

Non-U.S. Government agency securities

 

2 years or less

 

 

13,643

 

 

 

 

 

 

(184

)

 

 

13,459

 

Corporate debt securities

 

2 years or less

 

 

51,944

 

 

 

 

 

 

(461

)

 

 

51,483

 

Commercial paper

 

Less than 1

 

 

33,749

 

 

 

 

 

 

 

 

 

33,749

 

Total marketable securities

 

 

 

$

534,995

 

 

$

 

 

$

(6,856

)

 

$

528,139

 

 

At December 31, 2021, marketable securities consisted of the following (in thousands):

 

 

Maturity

 

Amortized

 

 

Unrealized

 

 

 

 

 

 

in Years

 

Cost