SEC Filing | Tempest Therapeutics

View:

Download DOC

Download PDF

Download XLS

Download XBRL

10-Q

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 September 30, 2023


☐	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 Symbol(s)	Name of each exchange on which registered
Common Stock, $0.001 par value	TPST	The Nasdaq Stock Market LLC
Series A Junior Participating Preferred Purchase Rights	N/A	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 November 7, 2023 was 19,247,495.

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 September 30, 2023 and December 31, 2022	5
	Condensed Consolidated Statements of Operations for the Three and Nine Months Ended September 30, 2023 and 2022	6
	Condensed Consolidated Statements of Stockholders’ Equity for the Three and Nine Months Ended September 30, 2023 and 2022	7
	Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 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, Use of Proceeds, and Issuer Purchases of Equity Securities	80
Item 3.	Defaults Upon Senior Securities	80
Item 4.	Mine Safety Disclosures	80
Item 5.	Other Information	80
Item 6.	Exhibits	81
Signatures

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;

•

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.

PART I – FINANCIAL INFORMATION

Item 1 – Financial Statements

TEMPEST THERAPEUTICS, INC.

Condensed Consolidated Balance Sheets

(in thousands, except share and per share amounts)




	September 30, 2023 (Unaudited)			December 31, 2022
Assets
Current assets:
Cash and cash equivalents	$	11,118		$	31,230
Insurance recovery of legal settlement		—			450
Prepaid expenses and other current assets		1,173			1,270
Total current assets		12,291			32,950
Property and equipment — net		921			1,060
Operating lease right-of-use assets		10,382			11,650
Other noncurrent assets		393			429
Total assets	$	23,987		$	46,089
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable	$	1,139		$	1,108
Accrued legal settlement		—			450
Accrued expenses		1,995			2,961
Current loan payable (net of discount and issuance costs of $65 and nil, respectively)		2,134			—
Current operating lease liabilities		1,117			1,413
Accrued compensation		931			1,248
Interest payable		106			97
Total current liabilities		7,422			7,277
Loan payable (net of discount and issuance costs of $255 and $454, respectively)		8,371			10,371
Operating lease liabilities, less current portion		9,384			10,330
Total liabilities		25,177			27,978
Commitments and contingencies (Note 5)
Stockholders’ equity:
Common stock, $0.001 par value; 100,000,000 shares authorized; 14,323,405 and 10,518,539 shares issued and outstanding at September 30, 2023 and December 31, 2022, respectively		14			11
Additional paid-in capital		156,571			153,872
Accumulated deficit		(157,775	)		(135,772	)
Total stockholders’ equity		(1,190	)		18,111
Total liabilities and stockholders’ equity	$	23,987		$	46,089

See accompanying Notes to the Condensed Consolidated Financial Statements

TEMPEST THERAPEUTICS, INC.

Condensed Consolidated Statements of Operations

(Unaudited)

(in thousands, except share and per share amounts)


	Three Months Ended September 30,						Nine Months Ended September 30,
	2023			2022			2023			2022
Operating expenses:
Research and development	$	4,221		$	5,973		$	13,315		$	16,733
General and administrative		2,371			2,798			8,328			8,973
Loss from operations		(6,592	)		(8,771	)		(21,643	)		(25,706	)
Other income (expense), net:
Interest expense		(373	)		(389	)		(1,072	)		(1,186	)
Interest income and other income (expense), net		179			213			712			286
Total other income (expense), net		(194	)		(176	)		(360	)		(900	)
Provision for income taxes		—			—			—			—
Net loss	$	(6,786	)	$	(8,947	)	$	(22,003	)	$	(26,606	)
Net loss per share of common stock and pre-funded warrants, basic and diluted	$	(0.48	)	$	(0.66	)	$	(1.57	)	$	(2.46	)
Weighted-average shares of common stock and pre-funded warrants outstanding, basic and diluted		14,121,805			13,635,927			14,059,008			10,815,900

See accompanying Notes to the Condensed Consolidated Financial Statements

TEMPEST THERAPEUTICS, INC.

Condensed Consolidated Statements of Stockholders’ Equity

(Unaudited)

(in thousands, except share amounts)

Three and Nine Months Ended September 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
Issuance of common stock for cash		20,961		—		20		—			20
Exercise of pre-funded warrants		1,718,611		1		—		—			1
Share-based compensation		—		—		563		—			563
Net loss		—		—		—		(6,786	)		(6,786	)
BALANCE — September 30, 2023		14,323,405	$	14	$	156,571	$	(157,775	)	$	(1,190	)

Three and Nine Months Ended September 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
Issuance of common stock for cash, net of issuance cost of $111		191,740		—		350		—			350
Share-based compensation		—		—		438		—			438
Net loss		—		—		—		(8,947	)		(8,947	)
BALANCE — September 30, 2022		10,517,099	$	10	$	153,432	$	(126,669	)	$	26,773

See accompanying Notes to the Condensed Consolidated Financial Statements.

TEMPEST THERAPEUTICS, INC.

Condensed Consolidated Statements of Cash Flows

(Unaudited)

(in thousands)


	For the Nine Months Ended September 30,
	2023			2022
Operating activities:
Net loss	$	(22,003	)	$	(26,606	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation expense		296			421
Stock-based compensation expense		1,449			1,133
Non-cash lease expense		1,268			854
Non-cash interest and other expense, net		142			267
Changes in operating assets and liabilities:
Prepaid expenses and other assets		152			(336	)
Accounts payable		28			(89	)
Accrued expenses and other liabilities		(1,281	)		946
Interest payable		9			27
Operating lease liabilities		(1,242	)		(1,210	)
Cash used in operating activities		(21,182	)		(24,593	)
Investing activities:
Purchase of property and equipment		(163	)		(206	)
Cash used in investing activities		(163	)		(206	)
Financing activities:
Proceeds from the issuance of common stock, net of issuance costs		1,253			8,849
Proceeds from the issuance of pre-funded warrants, net of issuance costs		—			7,280
Cash provided by financing activities		1,253			16,129
Net decrease in cash and cash equivalents		(20,092	)		(8,670	)
Cash, cash equivalents and restricted cash at beginning of period		31,598			51,829
Cash, cash equivalents and restricted cash at end of period	$	11,506		$	43,159
Supplemental disclosure of cash flow information:
Cash paid for interest	$	927		$	893
Cash paid for income taxes	$	152		$	—
Non-cash operating activities: Lease modification	$	—		$	884
Non-cash investing activities: Property and equipment in accounts payable	$	3		$	4

See accompanying Notes to the Condensed Consolidated Financial Statements

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 accompanying financial statements have been prepared assuming the Company will continue as a going concern. The Company has not yet generated product sales and as a result has experienced operating losses since inception. As of September 30, 2023, the Company had cash and cash equivalents of $11.1 million. Between October 12, 2023 and November 7, 2023, the Company raised $23.9 million of net proceeds through sales of common stock pursuant to the Company’s ATM program (as defined below). The net proceeds raised, in addition to the cash and cash equivalents available as of September 30, 2023, are sufficient to fund the Company's cash requirements for at least 12 months following the issuance of these financial statements. The Company expects to incur additional losses in the future as it advances its product candidates through clinical trials and will need to raise additional capital to continue operations.

ATM Program

On July 23, 2021, the Company entered into a sales agreement with Jefferies LLC, pursuant to which the Company may sell, from time to time at its sole discretion through Jefferies, as its sales agent, shares of its common stock having, up to an aggregate sales price of $100.0 million of its common stock through Jefferies (the “ATM Program”). Any shares of its common stock sold will be issued pursuant to the Company’s shelf registration statement on Form S-3 (File No. 333-257990). The Company will pay Jefferies a commission up to 3.0% of the gross sales proceeds of any shares of its common stock sold through Jefferies under the ATM Program and also has provided Jefferies with indemnification and contribution rights. As of September 30, 2023, we have sold an aggregate of 1,239,272 shares of our common stock for gross proceeds of approximately $7.0 million ($6.8 million net of commissions and estimated expenses) pursuant to the ATM Program. As of September 30, 2023, approximately $93.0 million remained available under the ATM Program. Between October 12, 2023 and November 7, 2023, the Company sold 4,923,790 shares of our common stock for gross proceeds of approximately $24.6 million ($23.9 million net of commissions and estimated expenses) pursuant to the ATM Program.

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. As of September 30, 2023, all pre-funded warrants had been exercised.

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 September 30, 2023.

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 September 30, 2023
	Level 1		Level 2		Level 3		Total
Cash and cash equivalents	$	11,118	$	—	$	—	$	11,118
Total	$	11,118	$	—	$	—	$	11,118

	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:


	September 30, 2023		December 31, 2022
Prepaid expenses	$	751	$	703
Prepaid research and development costs		190		304
Other current assets		232		263
Total	$	1,173	$	1,270

Property and equipment, net, consists of the following:


	September 30, 2023			December 31, 2022
Computer equipment and software	$	166		$	168
Furniture and fixtures		328			310
Lab equipment		1,133			1,061
Leasehold improvements		946			882
Property and equipment		2,573			2,421
Less accumulated depreciation		(1,652	)		(1,361	)
Property and equipment—net	$	921		$	1,060

Depreciation expense for the three and nine months ended September 30, 2023 were $88 and $296, respectively. Depreciation expense for the three and nine months ended September 30, 2022 were $201 and $421, respectively.

Accrued expenses consist of the following:


	September 30, 2023		December 31, 2022
Accrued other liabilities	$	953	$	756
Accrued clinical trial liability		1,042		2,205
Total	$	1,995	$	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 0.6 years. In February 2019 and October 2018, Millendo entered into two noncancelable 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 September 30, 2023 and December 31, 2022, the balance of the operating lease right of use assets were $10,382 and $11,650, respectively, and the related operating lease liability were $10,501 and $11,744, respectively, as shown in the accompanying Consolidated Balance Sheets.

Rent expense was $685 and $2,054 for three and nine months ended September 30, 2023, respectively. Rent expense was $274 and $978 for three and nine months ended September 30, 2022, respectively.

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



Year Ending	Total Commitment
2023 (excluding nine months ended September 30, 2023)	$	639
2024		2,100
2025		1,861
2026		1,926
2027		1,994
2028 and beyond		6,410
Total minimum lease payments		14,930
Less: imputed interest		(4,429	)
Present value of operating lease obligations		10,501
Less: current portion		(1,117	)
Noncurrent operating lease obligations	$	9,384

Related to this Brisbane Lease agreement, the Company entered into a letter of credit with a bank to deposit $388 in a separate account that is classified as restricted cash to serve as security rent deposit. This amount is included in other noncurrent assets in the accompanying Consolidated Balance Sheets as of September 30, 2023.

Guarantees and Indemnifications—In the normal course of business, the Company enters into agreements that contain a variety of representations and provide for general indemnification. The Company’s exposure under these agreements is unknown because it involves claims that may be made against the Company in the future. To date, the Company has not paid any claims or been required to defend any action related to its indemnification obligations. As of September 30, 2023 and December 31, 2022, the Company did not have any material indemnification claims that were probable or reasonably possible and consequently has not recorded related liabilities.

Legal Proceedings—Liabilities for loss contingencies arising from claims, assessments, litigation, fines, penalties, and other sources are recorded when it is probable that a liability has been incurred and the amount can be reasonably estimated. As a result of the merger with Millendo, the Company is party to various litigation matters given Millendo’s role as successor to OvaScience, Inc. (“OvaScience”). OvaScience merged with Millendo in 2018. Prior to the merger with Millendo, OvaScience was sued in three matters that are disclosed below.

On November 9, 2016, a purported shareholder derivative action was filed in Massachusetts State court (Cima v. Dipp) against OvaScience and certain former officers and directors of OvaScience and OvaScience alleging breach of fiduciary duties, unjust enrichment, abuse of control, gross mismanagement and waste of corporate assets for purported actions related to OvaScience’s January 2015 follow-on public offering. As of September 12, 2022, the parties have reached an agreement in principle and have executed a term sheet in connection with a settlement. On September 13, 2022, the parties filed a joint motion to stay the case pending settlement. On September 15, 2022, the court issued a 90-day nisi order. On December 14, 2022, the court extended that order for 60 days to February 20, 2023. On February 17, 2023, the court extended the order until March 22, 2023 and set a court appearance for March 23, 2023. On March 23, 2023, the court granted preliminary approval of the settlement and set a final fairness hearing for June 12, 2023. By order dated June 12, 2023, the court granted final approval of the settlement.

On July 27, 2017, a purported shareholder derivative complaint was filed in Massachusetts Federal court (Chiu v. Dipp) against OvaScience and certain former officers and directors of OvaScience alleging breach of fiduciary duties, unjust enrichment and violations of Section 14(a) of the Exchange Act. related to OvaScience’s January 2015 follow-on public offering and other public statements concerning OvaScience’s AUGMENT treatment. Following the court’s dismissal of an amended complaint, the parties agreed that plaintiffs could file a second amended complaint and that the case would be stayed pending the resolution of the Dahhan Action. In May 2018, the court entered an order staying this case pending the resolution of the Dahhan Action. As of September 12, 2022, the parties have reached an agreement in principle and have executed a term sheet in connection with the settlement. On February 14, 2023, the parties informed the court that, subject to court approval, they had reached an agreement to settle Chiu v. Dipp as well as Cima v. Dipp. The parties requested a 90-day stay in order to present the settlement to the state court in Cima v. Dipp first. On February 16, 2023, the court granted the 90-day stay. On May 2, 2023, the court extended the stay through July 12, 2023. After final approval of the Cima settlement, the parties filed a stipulation and proposed order to dismiss the Chiu Action with prejudice on June 27, 2023. By order dated July 5, 2023, the court dismissed the Chiu Action with prejudice.

6. LOAN PAYABLE

On January 15, 2021, the Company entered into a loan agreement with Oxford Finance LLC (the "Lender") to borrow a term loan amount of $35,000 to be funded in three tranches. Tranche A of $15,000 was wired to the Company on January 15, 2021. Tranche B of $10,000 expired on March 31, 2022. Tranche C of $10,000 is available at the Lender’s option.

On December 23, 2022, the Company entered into a First Amendment to the loan agreement. The amendment modified the agreement as follows: (i) each of the Company and Millendo, were joined as co-borrowers under the Loan Agreement; (ii) the interest-only repayment period was extended through December 31, 2023 (which interest-only period may be further extended through June 30, 2024 under certain circumstances); and (iii) a security interest in all of the assets of the Company, TempestTx and Millendo, including any intellectual property, was granted to the Lender. In addition, the Lender permitted a one-time prepayment in the amount of $5.0 million, which the Company paid on December 23, 2022.

Following the amendment to the loan agreement, the term loan matures on August 1, 2025 and has an annual floating interest rate of 7.15% which is an Index Rate plus 7.10%. Index Rate is the greater of (i) 1-Month CME Term SOFR or (ii) 0.05%. Subsequent to September 30, 2023, the Company achieved the circumstances necessary to extend the interest-only repayment period through June 30, 2024. The accompanying financial statements for the period ending September 30, 2023 have been prepared to reflect the extension of the interest-only repayment period. Monthly principal payments of $733 are required to begin on July 1, 2024. Related to this borrowing, the Company recorded loan discounts totaling $898 and paid $95 of debt issuance costs. These amounts would be amortized as additional interest expense over the life of the loan. As of September 30, 2023, the balance of the loan payable (net of debt issuance costs) was $10.5 million. The carrying value of the loan approximates fair value (Level 2).

For the three and nine months ended September 30, 2023, total interest expense was $373 and $1,073, respectively. For the three and nine months ended September 30, 2022, total interest expense was $389 and $1,186, respectively.

7. STOCKHOLDERS' EQUITY

Common Stock

The Company is authorized to issue 100,000,000 shares of common stock and 5,000,000 shares of preferred stock, each with a par value of $0.001 per share. Of the common stock shares authorized, 14,323,405 and

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents