10-Q
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Table of Contents

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

 

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

For the quarterly period ended June 30, 2023

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 No. 001-35890

 

Tempest Therapeutics, Inc.

(Exact Name of Registrant as Specified in its Charter)

 

 

Delaware

45-1472564

(State or Other Jurisdiction of

(I.R.S. Employer

Incorporation or Organization)

Identification No.)

2000 Sierra Point Parkway, Suite 400

 

Brisbane, California

94005

(Address of Principal Executive Offices)

(Zip Code)

Registrant’s telephone number, including area code: (415) 798-8589

(Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report)

 

 

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

 

Title of each class

Trading

Name of each exchange

 

 

Symbol(s)

on which registered

 

Common Stock, $0.001 par value

 

TPST

 

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 Act). Yes ☐ No

The number of shares of Registrant’s Common Stock, $0.001 par value per share, outstanding as of August 7, 2023 was 13,324,065.

 


Table of Contents

 

INDEX TO FORM 10-Q

 

 

 

Page

Special Note Regarding Forward-Looking Statements

3

 

PART I — FINANCIAL INFORMATION

5

Item 1.

Financial Statements (unaudited):

5

 

Condensed Consolidated Balance Sheets as of June 30, 2023 and December 31, 2022

5

 

Condensed Consolidated Statements of Operations for the Three and Six Months Ended June 30, 2023 and 2022

6

 

Condensed Consolidated Statements of Stockholders’ Equity for the Three and Six Months Ended June 30, 2023 and 2022

7

 

Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2023 and 2022

8

 

Notes to Condensed Consolidated Financial Statements

9

Item 2.

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

19

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

27

Item 4.

Controls and Procedures

28

 

 

 

 

PART II — OTHER INFORMATION

29

Item 1.

Legal Proceedings

29

Item 1A.

Risk Factors

29

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

 

 

 

2


Table of Contents

 

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains forward-looking statements (including within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, and Section 27A of the Securities Act of 1933, as amended (the “Securities Act”)) about us and our industry that involve substantial risks and uncertainties. These statements may discuss goals, intentions and expectations as to future plans, trends, events, results of operations or financial condition, or otherwise, based on current beliefs of our management, as well as assumptions made by, and information currently available to, our management. Forward-looking statements generally include statements that are predictive in nature and depend upon or refer to future events or conditions, and include words such as “may,” “will,” “should,” “would,” “could”, “expect,” “anticipate,” “plan,” “likely,” “believe,” “estimate,” “intend,” and other similar expressions. Statements that are not historical facts are forward-looking statements. Forward-looking statements are based on current beliefs and assumptions that are subject to risks and uncertainties and are not guarantees of future performance. Actual results could differ materially from those contained in any forward-looking statement as a result of various factors, including, without limitation: our strategies, prospects, plans, expectations or objectives for future operations; the progress, scope or timing of the development of our product candidates; the benefits that may be derived from any future products or the commercial or market opportunity with respect to any of our future products; our ability to protect our intellectual property rights; our anticipated operations, financial position, ability to raise capital to fund operations, revenues, costs or expenses; statements regarding future economic conditions or performance; statements of belief and any statement of assumptions underlying any of the foregoing. These risks and uncertainties include, but are not limited to, the risks included in this Quarterly Report on Form 10-Q under Part II, Item 1A, “Risk Factors.” Other sections of this Quarterly Report on Form 10-Q, as well as our other disclosures and filings, include additional factors that could harm our business and financial performance. Moreover, we operate in a very competitive and rapidly changing environment. New risk factors emerge from time to time, and it is not possible for our management to predict all risk factors nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ from those contained in, or implied by, any forward-looking statements.

Given these uncertainties, you should not place undue reliance on these forward-looking statements. Also, forward-looking statements represent our estimates and assumptions only as of the date of this document. You should read this document with the understanding that our actual future results may be materially different from what we expect. Except as required by law, we do not undertake any obligation to update or revise any forward-looking statements contained in this report, whether as a result of new information, future events or otherwise.

Forward-looking statements contained in this Quarterly Report on Form 10-Q include, but are not limited to, statements about:

our expected future growth and our ability to manage such growth;
our ability to develop, obtain regulatory approval for and commercialize TPST-1495 and TPST-1120 and our future product candidates;
our estimates regarding expenses, future revenue, capital requirements and needs for additional financing;
the size and growth potential of the markets for our product candidates, and our ability to serve those markets;
the development, regulatory approval, efficacy and commercialization of competing products;
our ability to establish sales and marketing capabilities or enter into agreements with third parties to market and sell our product candidates;
our ability to retain regulatory approval for our product candidates or future product candidates in the United States and in any foreign countries in which we make seek to do business;
our ability to retain and hire our board of directors, senior management, or operational personnel;
our expectation regarding the period during which we will qualify as a smaller reporting company under the federal securities laws;
our ability to develop and maintain our corporate infrastructure, including our ability to design and maintain an effective system of internal controls;
our ability to remain in compliance with our obligations under our term loan with Oxford Finance LLC, or to obtain a waiver from Oxford for any failure to comply with the covenants contained in such term loan agreement;

3


Table of Contents

 

general economic, political, and market conditions and overall fluctuations in the financial markets in the United States and abroad, including as a result of bank failures, public health crises or geopolitical tensions; and
our expectations regarding our ability to obtain, maintain and enforce intellectual property protection for our products and technology, as well as our ability to operate our business without infringing, misappropriating or otherwise violating the intellectual property rights of others.

You should read this Quarterly Report on Form 10-Q as well as the documents that we reference in, and have filed as exhibits to, this report with the understanding that our actual future results, levels of activity, performance and achievements may be materially different from what we expect. We qualify all of our forward-looking statements by these cautionary statements.

Unless the context suggests otherwise, references in this Quarterly Report on Form 10-Q to “Tempest,” “the Company,” “we,” “us,” and “our” refer to Tempest Therapeutics, Inc. and, where appropriate, its subsidiaries.

4


Table of Contents

 

PART I – FINANCIAL INFORMATION

Item 1 – Financial Statements

TEMPEST THERAPEUTICS, INC.

Condensed Consolidated Balance Sheets

(in thousands, except share and per share amounts)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

June 30, 2023
(Unaudited)

 

 

December 31, 2022

 

Assets

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

17,604

 

 

$

31,230

 

Insurance recovery of legal settlement

 

 

 

 

 

450

 

Prepaid expenses and other current assets

 

 

931

 

 

 

1,270

 

Total current assets

 

 

18,535

 

 

 

32,950

 

Property and equipment — net

 

 

1,005

 

 

 

1,060

 

Operating lease right-of-use assets

 

 

10,804

 

 

 

11,650

 

Other noncurrent assets

 

 

398

 

 

 

429

 

Total assets

 

$

30,742

 

 

$

46,089

 

Liabilities and stockholders’ equity

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Accounts payable

 

$

868

 

 

$

1,108

 

Accrued legal settlement

 

 

 

 

 

450

 

Accrued expenses

 

 

2,454

 

 

 

2,961

 

Current loan payable (net of discount and issuance costs of $104 and nil, respectively)

 

 

2,974

 

 

 

 

Current operating lease liabilities

 

 

1,414

 

 

 

1,413

 

Accrued compensation

 

 

823

 

 

 

1,248

 

Interest payable

 

 

105

 

 

 

97

 

Total current liabilities

 

 

8,638

 

 

 

7,277

 

Loan payable (net of discount and issuance costs of $263 and $454, respectively)

 

 

7,484

 

 

 

10,371

 

Operating lease liabilities, less current portion

 

 

9,608

 

 

 

10,330

 

Total liabilities

 

 

25,730

 

 

 

27,978

 

Commitments and contingencies (Note 5)

 

 

 

 

 

 

Stockholders’ equity:

 

 

 

 

 

 

Common stock, $0.001 par value; 100,000,000 shares authorized; 12,583,833 and 10,518,539 shares issued and outstanding at June 30, 2023 and December 31, 2022, respectively

 

 

13

 

 

 

11

 

Additional paid-in capital

 

 

155,988

 

 

 

153,872

 

Accumulated deficit

 

 

(150,989

)

 

 

(135,772

)

Total stockholders’ equity

 

 

5,012

 

 

 

18,111

 

Total liabilities and stockholders’ equity

 

$

30,742

 

 

$

46,089

 

 

See accompanying Notes to the Condensed Consolidated Financial Statements

5


Table of Contents

 

TEMPEST THERAPEUTICS, INC.

Condensed Consolidated Statements of Operations

(Unaudited)

(in thousands, except share and per share amounts)

 

 

 

Three Months Ended June 30,

 

 

Six Months Ended June 30,

 

 

 

2023

 

 

2022

 

 

2023

 

 

2022

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

Research and development

 

$

4,416

 

 

$

5,651

 

 

$

9,094

 

 

$

10,760

 

General and administrative

 

 

3,054

 

 

 

3,123

 

 

 

5,957

 

 

 

6,175

 

Loss from operations

 

 

(7,470

)

 

 

(8,774

)

 

 

(15,051

)

 

 

(16,935

)

Other income (expense), net:

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense

 

 

(355

)

 

 

(464

)

 

 

(699

)

 

 

(797

)

Interest income and other income (expense), net

 

 

244

 

 

 

70

 

 

 

533

 

 

 

73

 

Total other income (expense), net

 

 

(111

)

 

 

(394

)

 

 

(166

)

 

 

(724

)

Provision for income taxes

 

 

 

 

 

 

 

 

 

 

 

 

Net loss

 

$

(7,581

)

 

$

(9,168

)

 

$

(15,217

)

 

$

(17,659

)

Net loss per share of common stock and pre-funded warrants, basic and diluted

 

$

(0.54

)

 

$

(0.79

)

 

$

(1.09

)

 

$

(1.88

)

Weighted-average shares of common stock and pre-funded warrants outstanding,
   basic and diluted

 

 

14,102,211

 

 

 

11,573,432

 

 

 

13,933,629

 

 

 

9,382,515

 

 

See accompanying Notes to the Condensed Consolidated Financial Statements

6


Table of Contents

 

TEMPEST THERAPEUTICS, INC.

Condensed Consolidated Statements of Stockholders’ Equity

(Unaudited)

(in thousands, except share amounts)

 

Three and Six Months Ended June 30, 2023

 

 

 

Common Stock

 

 

Additional
Paid-In

 

 

Deficit

 

 

Total
Stockholders'

 

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Accumulated

 

 

Equity (Deficit)

 

BALANCE — December 31, 2022

 

 

10,518,539

 

 

$

11

 

 

$

153,872

 

 

$

(135,772

)

 

$

18,111

 

Issuance of common stock for cash

 

 

43,161

 

 

 

 

 

 

44

 

 

 

 

 

 

44

 

Share-based compensation

 

 

 

 

 

 

 

 

446

 

 

 

 

 

 

446

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

(7,636

)

 

 

(7,636

)

BALANCE — March 31, 2023

 

 

10,561,700

 

 

$

11

 

 

$

154,362

 

 

$

(143,408

)

 

$

10,965

 

Issuance of common stock for cash, net of issuance cost of $30

 

 

537,546

 

 

 

1

 

 

 

1,185

 

 

 

 

 

 

1,186

 

Exercise of pre-funded warrants

 

 

1,484,174

 

 

 

1

 

 

 

 

 

 

 

 

 

1

 

Share-based compensation

 

 

 

 

 

 

 

 

440

 

 

 

 

 

 

440

 

Exercise of stock options

 

 

413

 

 

 

 

 

 

1

 

 

 

 

 

 

1

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

(7,581

)

 

 

(7,581

)

BALANCE — June 30, 2023

 

 

12,583,833

 

 

$

13

 

 

$

155,988

 

 

$

(150,989

)

 

$

5,012

 

 

 

Three and Six Months Ended June 30, 2022

 

 

 

Common Stock

 

 

Additional
Paid-In

 

 

Deficit

 

 

Total
Stockholders'

 

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Accumulated

 

 

Equity (Deficit)

 

BALANCE — December 31, 2021

 

 

6,910,324

 

 

$

7

 

 

$

136,173

 

 

$

(100,063

)

 

$

36,117

 

Issuance of common stock for cash, net of issuance
   cost of $
44

 

 

262,770

 

 

 

 

 

 

1,403

 

 

 

 

 

 

1,403

 

Share-based compensation

 

 

 

 

 

 

 

 

328

 

 

 

 

 

 

328

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

(8,491

)

 

 

(8,491

)

BALANCE — March 31, 2022

 

 

7,173,094

 

 

$

7

 

 

$

137,904

 

 

$

(108,554

)

 

$

29,357

 

Issuance of common stock for cash, net of issuance
   cost of $
343

 

 

3,152,265

 

 

 

3

 

 

 

7,092

 

 

 

 

 

 

7,095

 

Share-based compensation

 

 

 

 

 

 

 

 

367

 

 

 

 

 

 

367

 

Issuance of pre-funded warrants, net of issuance cost of $283

 

 

 

 

 

 

 

 

7,281

 

 

 

 

 

 

7,281

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

(9,168

)

 

 

(9,168

)

BALANCE — June 30, 2022

 

 

10,325,359

 

 

$

10

 

 

$

152,644

 

 

$

(117,722

)

 

$

34,932

 

 

See accompanying Notes to the Condensed Consolidated Financial Statements.

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TEMPEST THERAPEUTICS, INC.

Condensed Consolidated Statements of Cash Flows

(Unaudited)

(in thousands)

 

 

 

For the Six Months
Ended June 30,

 

 

 

2023

 

 

2022

 

Operating activities:

 

 

 

 

 

 

Net loss

 

$

(15,217

)

 

$

(17,659

)

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

 

 

 

 

 

 

Depreciation expense

 

 

208

 

 

 

220

 

Stock-based compensation expense

 

 

886

 

 

 

695

 

Non-cash lease expense

 

 

846

 

 

 

613

 

Non-cash interest and other expense, net

 

 

96

 

 

 

232

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

Prepaid expenses and other assets

 

 

370

 

 

 

447

 

Accounts payable

 

 

(240

)

 

 

438

 

Accrued expenses and other liabilities

 

 

(931

)

 

 

323

 

Interest payable

 

 

8

 

 

 

9

 

Operating lease liabilities

 

 

(721

)

 

 

(839

)

Cash used in operating activities

 

 

(14,695

)

 

 

(15,521

)

Investing activities:

 

 

 

 

 

 

Purchase of property and equipment

 

 

(163

)

 

 

(98

)

Cash used in investing activities

 

 

(163

)

 

 

(98

)

Financing activities:

 

 

 

 

 

 

Proceeds from the issuance of common stock, net of issuance costs

 

 

1,232

 

 

 

8,498

 

Proceeds from the issuance of pre-funded warrants, net of issuance costs

 

 

 

 

 

7,281

 

Cash provided by financing activities

 

 

1,232

 

 

 

15,779

 

Net decrease in cash and cash equivalents

 

 

(13,626

)

 

 

160

 

Cash, cash equivalents and restricted cash at beginning of period

 

 

31,598

 

 

 

51,829

 

Cash, cash equivalents and restricted cash at end of period

 

$

17,972

 

 

$

51,989

 

Supplemental disclosure of cash flow information:

 

 

 

 

 

 

Cash paid for interest

 

$

604

 

 

$

556

 

Cash paid for income taxes

 

$

104

 

 

$

 

Non-cash operating activities: Lease modification

 

$

 

 

$

884

 

Non-cash investing activities: Property and equipment in accounts payable

 

$

 

 

$

4

 

 

See accompanying Notes to the Condensed Consolidated Financial Statements

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TEMPEST THERAPEUTICS, INC.

Notes to the Condensed Consolidated Financial Statements

(Unaudited)

(Amounts are in thousands, except share and per share data)

1. ORGANIZATION AND DESCRIPTION OF THE BUSINESS

Description of Business

 

Tempest Therapeutics, Inc. (“Tempest” or the “Company”) is a clinical-stage oncology company advancing small molecules that combine both tumor-targeted and immune-mediated mechanisms with the potential to treat a wide range of tumors. The Company’s two novel clinical programs are TPST-1120 and TPST-1495, antagonists of PPARα and EP2/EP4, respectively. Both programs are advancing through clinical trials designed to study the agents as monotherapies and in combination with other approved agents. Tempest is also developing an orally available inhibitor of TREX-1, a target that controls activation of the cGAS/STING pathway. Tempest is headquartered in Brisbane, California.

 

Liquidity and Management Plans

 

The Company has not yet generated product sales and as a result has experienced operating losses since inception. As of June 30, 2023, the Company had cash and cash equivalents of $17.6 million. The Company expects to incur additional losses in the future as it advances its product candidates through clinical trials and, based on the Company’s business strategy, its existing cash and cash equivalents as of June 30, 2023 will not be sufficient to fund the Company’s projected operating expenses and capital expenditure requirements, and to meet its obligations as they come due, beyond the second quarter 2024. Accordingly, there is substantial doubt about the Company’s ability to continue to operate as a going concern. To continue to fund the operations of the Company beyond this time period, management has developed plans, which primarily consist of raising capital through the issuance of additional equity or debt, including identifying strategic collaborations, licensing or other arrangements to support development of the Company’s product candidates. There are no assurances that the Company's efforts to meet its operating cash flow requirements will be successful. If the Company is unable to obtain adequate capital, it will have to significantly delay, scale back or discontinue research and development programs, or it could be forced to cease operations.

These financial statements have been prepared on a going concern basis and do not include any adjustments to the amounts and classification of assets and liabilities that may be necessary in the event that the Company can no longer continue as a going concern.

PIPE Financing

On April 29, 2022, the Company completed a private investment in public equity (“PIPE”) financing from the sale of 3,149,912 shares of its common stock at a price per share of $2.36 and, and in lieu of shares of common stock, pre-funded warrants to purchase up to 3,206,020 shares of its common stock at a price per pre-funded warrant of $2.359 to EcoR1 Capital, LLC and Versant Venture Capital (the “PIPE Investors”). Net proceeds from the PIPE financings totaled approximately $14.5 million, after deducting offering expenses. The Company entered into a registration rights agreement with the PIPE Investors pursuant to which the Company filed a registration statement with the SEC registering the resale of the 3,149,912 shares common stock and the 3,206,020 shares of common stock underlying the pre-funded warrants issued in the PIPE financing.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Significant Accounting Policies -- The Company’s significant accounting policies are described in Note 2, “Summary of Significant Accounting Policies,” in the Company’s Annual Report on Form 10-K filed with the U.S. Securities and Exchange Commission (“SEC”) on March 22, 2023. There have been no material changes to the significant accounting policies during the period ended June 30, 2023.

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Table of Contents

 

Basis of Presentation—The unaudited interim Condensed Consolidated Financial Statements have been prepared pursuant to the rules and regulations of the U.S. Securities and Exchange Commission. Accordingly, certain information and footnote disclosures normally included in annual financial statements prepared in accordance with generally accepted accounting principles in the United States ("GAAP") have been omitted. These unaudited interim Condensed Consolidated Financial Statements should be read in conjunction with the Company’s audited Consolidated Financial Statements and notes included in the company’s Annual Report on Form 10-K for the year ended December 31, 2022.

The Company has prepared the accompanying Condensed Consolidated Financial Statements on the same basis as the audited financial statements, and the unaudited interim financial statements include, in the Company’s opinion, all adjustments, consisting only of normal recurring adjustments that the Company considers necessary for a fair presentation of its financial position and results of operations for these periods.

Use of Estimates—The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of expenses during the reporting period. On an ongoing basis, the Company evaluates its estimates and assumptions, including those related to research and development accruals, recoverability of long-lived assets, right-of-use assets, lease obligations, stock-based compensation and income taxes uncertainties and valuation allowances. Management bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from those estimates.

3. FAIR VALUE MEASUREMENTS

The following tables present the Company’s fair value hierarchy for assets measured at fair value on a recurring basis:

 

 

 

As of June 30, 2023

 

 

 

Level 1

 

 

Level 2

 

 

Level 3

 

 

Total

 

Cash and cash equivalents

 

$

17,604

 

 

$

 

 

$

 

 

$

17,604

 

Total

 

$

17,604

 

 

$

 

 

$

 

 

$

17,604

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

As of December 31, 2022

 

 

 

Level 1

 

 

Level 2

 

 

Level 3

 

 

Total

 

Cash and cash equivalents

 

$

31,230

 

 

$

 

 

$

 

 

$

31,230

 

Total

 

$

31,230

 

 

$

 

 

$

 

 

$

31,230

 

 

4. BALANCE SHEET COMPONENTS

Prepaid expenses and other current assets consist of the following:

 

 

 

June 30,
2023

 

 

December 31,
2022

 

Prepaid expenses

 

$

292

 

 

$

703

 

Prepaid research and development costs

 

 

246

 

 

 

304

 

Other current assets

 

 

393

 

 

 

263

 

Total

 

$

931

 

 

$

1,270

 

 

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Table of Contents

 

Property and equipment, net, consists of the following:

 

 

 

June 30,
2023

 

 

December 31,
2022

 

Computer equipment and software

 

$

163

 

 

$

168

 

Furniture and fixtures

 

 

328

 

 

 

310

 

Lab equipment

 

 

1,133

 

 

 

1,061

 

Leasehold improvements

 

 

946

 

 

 

882

 

Property and equipment

 

 

2,570

 

 

 

2,421

 

Less accumulated depreciation

 

 

(1,565

)

 

 

(1,361

)

Property and equipment—net

 

$

1,005

 

 

$

1,060

 

 

Depreciation expense for the three and six months ended June 30, 2023 were $83 and $208, respectively. Depreciation expense for the three and six months ended June 30, 2022 were $112 and $220, respectively.

Accrued expenses consist of the following:

 

 

 

June 30,
2023

 

 

December 31,
2022

 

Accrued other liabilities

 

$

1,003

 

 

$

756

 

Accrued clinical trial liability

 

 

1,451

 

 

 

2,205

 

Total

 

$

2,454

 

 

$

2,961

 

 

5. COMMITMENTS AND CONTINGENCIES

Facilities Lease Agreements—In February 2019, the Company entered into a 5-year office lease agreement for a 9,780 square feet facility in South San Francisco, California. The original lease term expires on February 29, 2024. In June 2022, the lease was amended to terminate early on January 31, 2023. The amendment was not accounted for as a separate contract and the lease liability and the right-of-use asset were remeasured on the lease modification date.

 

On March 29, 2021, TempestTx, Inc. (“Private Tempest”) entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Millendo Therapeutics, Inc. (“Millendo”). On June 25, 2021, Private Tempest completed the merger with Millendo and as a result of the merger, the Company assumed Millendo’s noncancelable operating leases for office space which have remaining lease terms of approximately 0.9 years. In February 2019 and October 2018, Millendo entered into two noncancellable operating leases for office space in Ann Arbor, Michigan (“Ann Arbor Leases”), one that Millendo took possession of in April 2019 and the other that Millendo took possession of in July 2019, respectively. The Ann Arbor Leases expire in June 2024 and March 2024.

 

In January 2022, the Company entered into a new 8-year office lease agreement for a 20,116 square feet facility in Brisbane, California ("Brisbane Lease"). The lease commenced in December 2022.

As of June 30, 2023 and December 31, 2022, the balance of the operating lease right of use assets were $10,804 and $11,650, respectively, and the related operating lease liability were $11,022 and $11,744, respectively, as shown in the accompanying Consolidated Balance Sheets.

 

Rent expense was $659 and $1,369 for three and six months ended June 30, 2023, respectively. Rent expense was $345 and $704 for three and six months ended June 30, 2022, respectively.

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Table of Contents

 

As of June 30, 2023, future minimum lease payments under the Brisbane Lease and Ann Arbor Leases were as follows:

 

 

 

 

 

Year Ending

 

Total Commitment

 

2023 (excluding six months ended June 30, 2023)

 

$

1,276

 

2024

 

 

2,100

 

2025

 

 

1,861

 

2026

 

 

1,926

 

2027

 

 

1,994

 

2028 and beyond

 

 

6,410

 

Total minimum lease payments

 

 

15,567