QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
(State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) | |
(Address of principal executive offices) |
(Zip Code) |
Title of each class |
Trading Symbol(s) |
Name of each exchange on which registered | ||
☒ | Accelerated filer | ☐ | ||||
Non-accelerated filer |
☐ | Smaller reporting company | ||||
Emerging growth company |
Item |
Description |
Page |
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3 |
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Item 1. |
3 |
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Item 2. |
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Item 3. |
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Item 4. |
25 |
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Item 1. |
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Item 1A. |
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Item 2. |
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Item 3. |
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Item 4. |
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Item 5. |
26 |
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Item 6. |
26 |
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28 |
June 30, |
December 31, |
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2022 |
2021 |
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Assets |
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Current assets: |
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Cash and cash equivalents |
$ | $ | ||||||
Marketable securities |
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Prepaid expenses and other current assets |
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Total current assets |
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Property and equipment, net |
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Right-of-use |
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Total assets |
$ | $ | ||||||
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Liabilities and Stockholders’ Equity |
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Current liabilities: |
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Accounts payable |
$ | $ | ||||||
Accrued expenses |
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Lease liability |
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Total current liabilities |
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Long term liabilities: |
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Loan payable, net of discount |
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Lease liability |
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Total long term liabilities |
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Total liabilities |
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Stockholders’ equity: |
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Preferred stock, par value $ |
— | |||||||
Common stock, par value $ |
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Additional paid-in-capital |
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Accumulated other comprehensive loss |
( |
) | ( |
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Accumulated deficit |
( |
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Total stockholders’ equity |
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Total liabilities and stockholders’ equity |
$ | $ | ||||||
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Three Months Ended June 30, |
Six Months Ended June 30, |
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2022 |
2021 |
2022 |
2021 |
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Revenues: |
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Total revenues |
$ | $ | $ | $ | ||||||||||||
Operating expenses: |
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Research and development |
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General and administrative |
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Total operating expenses |
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Loss from operations |
( |
) | ( |
) | ( |
) | ( |
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Interest income |
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Interest expense |
( |
) | ( |
) | ||||||||||||
Other income |
— | — | ||||||||||||||
Net loss |
$ | ( |
) | $ | ( |
) | $ | ( |
) | $ | ( |
) | ||||
Net loss per common share: |
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Basic and diluted net loss per common share |
$ | ( |
) | $ | ( |
) | $ | ( |
) | $ | ( |
) | ||||
Basic and diluted weighted average number of common shares outstanding |
Three Months Ended June 30, |
Six Months Ended June 30, |
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2022 |
2021 |
2022 |
2021 |
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Net Loss |
$ | ( |
) | $ | ( |
) | $ | ( |
) | $ | ( |
) | ||||
Other comprehensive income (loss): |
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Unrealized gain (loss) on available-for-sale |
( |
) | ( |
) | ( |
) | ||||||||||
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Comprehensive loss |
$ | ( |
) | $ | ( |
) | $ | ( |
) | $ | ( |
) | ||||
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Additional paid-in Capital |
Accumulated other comprehensive income (loss) |
Accumulated deficit |
Total stockholders’ equity |
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Preferred stock |
Common stock |
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Shares |
Amount |
Shares |
Amount |
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Balance at December 31, 2021 |
$ | — | $ | $ | $ | ( |
) | $ | ( |
) | $ | |||||||||||||||||||||
Compensation expense related to stock options for services |
— | — | — | — | — | — | ||||||||||||||||||||||||||
Unrealized loss on marketable securities |
— | — | — | — | — | ( |
) | — | ( |
) | ||||||||||||||||||||||
Net loss |
— | — | — | — | — | — | ( |
) | ( |
) | ||||||||||||||||||||||
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Balance at March 31, 2022 |
$ | — | $ | $ | $ | ( |
) | $ | ( |
) | $ | |||||||||||||||||||||
Compensation expense related to stock options for services |
— | — | — | — | — | — | ||||||||||||||||||||||||||
Unrealized loss on marketable securities |
— | — | — | — | — | ( |
) | — | ( |
) | ||||||||||||||||||||||
Issuance of warrants |
— | — | — | — | — | — | ||||||||||||||||||||||||||
Net loss |
— | — | — | — | — | — | ( |
) | ( |
) | ||||||||||||||||||||||
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Balance at June 30, 2022 |
$ | — | $ | $ | $ | ( |
) | $ | ( |
) | $ | |||||||||||||||||||||
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Balance at December 31, 2020 |
$ | — | $ | $ | $ | $ | ( |
) | $ | |||||||||||||||||||||||
Issuance of common shares in equity offering, excluding to related parties, net of transaction costs |
— | — | — | — | ||||||||||||||||||||||||||||
Sale of common shares to related parties and exercise of common stock options, net of transaction costs |
— | — | — | — | — | |||||||||||||||||||||||||||
Compensation expense related to stock options for services |
— | — | — | — | — | — | ||||||||||||||||||||||||||
Unrealized loss on marketable securities |
— | — | — | — | — | ( |
) | — | ( |
) | ||||||||||||||||||||||
Net loss |
— | — | — | — | — | — | ( |
) | ( |
) | ||||||||||||||||||||||
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Balance at March 31, 2021 |
$ | — | $ | $ | $ | ( |
) | $ | ( |
) | $ | |||||||||||||||||||||
Issuance of common shares in equity offering, excluding to related parties, net of transaction costs |
— | — | — | — | ||||||||||||||||||||||||||||
Compensation expense related to stock options for services |
— | — | — | — | — | — | ||||||||||||||||||||||||||
Unrealized gain on marketable securities |
— | — | — | — | — | — | ||||||||||||||||||||||||||
Net loss |
— | — | — | — | — | — | ( |
) | ( |
) | ||||||||||||||||||||||
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Balance at June 30, 2021 |
$ | — | $ | $ | |
$ | $ | ( |
) | $ | |
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Six Months Ended June 30, |
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2022 |
2021 |
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Cash flows from operating activities: |
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Net loss |
$ | ( |
) | $ | ( |
) | ||
Adjustments to reconcile net loss to net cash used in operating activities: |
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Stock-based compensation expense |
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Depreciation and amortization expense |
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Amortization of debt issuance costs and discount |
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Changes in operating assets and liabilities: |
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Prepaid expenses and other current assets |
( |
) | ( |
) | ||||
Accounts payable |
( |
) | ||||||
Accrued expense |
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Accrued interest, net of interest received on maturity of investments |
( |
) | ||||||
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Net cash used in operating activities |
( |
) | ( |
) | ||||
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Cash flows from investing activities: |
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Purchases of marketable securities |
( |
) | ( |
) | ||||
Sales and maturities of marketable securities |
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Purchases of property and equipment, net of disposals |
( |
) | ( |
) | ||||
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Net cash provided by (used in) investing activities |
( |
) | ||||||
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Cash flows from financing activities: |
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Proceeds from issuances of stock, excluding related parties, net of transaction costs |
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Proceeds from the exercise of common stock options |
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Proceeds from issuance of loan payable |
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Payment of debt issuance costs |
( |
) | ||||||
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Net cash provided by financing activities |
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Net increase (decrease) in cash and cash equivalents |
( |
) | ||||||
Cash and cash equivalents at beginning of period |
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Cash and cash equivalents at end of period |
$ | $ | ||||||
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Supplemental disclosure of cash flow information: |
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Obtaining a right-of-use |
$ | $ |
Six Months Ended June 30, |
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2022 |
2021 |
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Common stock options |
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Preferred stock |
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Warrants |
June 30, 2022 |
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Unrealized |
Unrealized |
Fair |
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Cost |
gains |
losses |
Value |
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Cash and cash equivalents: |
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Cash (Level 1) |
$ | $ | — | $ | — | $ | ||||||||||
Money market funds (Level 1) |
— | — | ||||||||||||||
Corporate debt securities due within |
— | — | ||||||||||||||
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Total cash and cash equivalents |
— | — | ||||||||||||||
Marketable securities: |
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Corporate debt securities due within |
( |
) | ||||||||||||||
U.S. government and government sponsored entities due within |
— | ( |
) | |||||||||||||
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Total cash, cash equivalents and marketable securities |
$ | $ | $ | ( |
) | $ | |
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December 31, 2021 |
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Unrealized |
Unrealized |
Fair |
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Cost |
gains |
losses |
Value |
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Cash and cash equivalents: |
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Cash (Level 1) |
$ | $ | — | $ | — | $ | ||||||||||
Money market funds (Level 1) |
— | — | ||||||||||||||
Total cash and cash equivalents |
— | — | ||||||||||||||
Marketable securities: |
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Corporate debt securities due within |
( |
) | ||||||||||||||
Corporate debt securities due within |
( |
) | ||||||||||||||
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Total cash, cash equivalents and marketable securities |
$ | |
$ | $ | ( |
) | $ | |
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June 30, |
December 31, |
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2022 |
2021 |
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Contract research organization costs |
$ | |
$ | |
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Other clinical study related costs |
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Compensation and benefits |
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Professional fees |
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Other |
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Total accrued liabilities |
$ | $ | ||||||
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Period Ending June 30, 2022: |
Amount |
|||
2022 (remaining six months) |
$ | |||
2023 |
||||
2024 |
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Thereafter |
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$ | ||||
Less amount representing interest |
( |
) | ||
Less unamortized discount |
( |
) | ||
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Loans payable, net of discount |
$ | |||
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Shares |
Weighted average exercise price |
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Outstanding at January 1, 2022 |
$ | |||||||
Options granted |
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Options cancelled |
( |
) | ||||||
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Outstanding at June 30, 2022 |
$ | |||||||
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Exercisable at June 30, 2022 |
$ |
Three Months Ended June 30, |
Six Months Ended June 30, |
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2022 |
2021 |
2022 |
2021 |
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Stock-based compensation expense by type of award: |
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Stock options |
$ | $ | $ | $ | ||||||||||||
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Total stock-based compensation expense |
$ | $ | $ | $ | ||||||||||||
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Effect of stock-based compensation expense by line item: |
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Research and development |
$ | $ | $ | $ | ||||||||||||
General and administrative |
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Total stock-based compensation expense included in net loss |
$ | $ | $ | $ | ||||||||||||
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• | Anticipated or estimated future results, including the risks and uncertainties associated with our future operating performance and financial position; |
• | Our possible or assumed future results of operations and expenses, business strategies and plans (including ex-U.S. launch/partnering plans), capital needs and financing plans, including incurrence of indebtedness and compliance with debt covenants under the Loan and Security Agreement with Hercules Capital, Inc., as agent and lender, market trends, market sizing, competitive position, industry environment and potential growth opportunities, among other things; |
• | Our ability to delay certain research activities and related clinical expenses as necessary; |
• | Our clinical trials, including the anticipated timing of disclosure, presentations of data from, or outcomes from our trials, |
• | Research and development activities, and the timing and results associated with the future development of our lead product candidate, resmetirom (formerly known as MGL-3196), including projected market size, sector leadership, and patient treatment estimates for non-alcoholic steatohepatitis (“NASH”) and non-alcoholic fatty liver disease (“NAFLD”) patients; |
• | The timing and completion of projected future clinical milestone events, including enrollment, additional studies, top-line data and open label projections; |
• | Plans, objectives and timing for making a Subpart H (Accelerated Approval of New Drugs for Serious or Life-Threatening Illnesses) submission to FDA; |
• | Projections or objectives for obtaining accelerated or full approval for resmetirom for non-cirrhotic NASH patients and NASH patients with compensated cirrhosis; |
• | Our primary and key secondary study endpoints for resmetirom, and the potential for achieving such endpoints and projections, including NASH resolution, safety, fibrosis treatment, cardiovascular effects, and lipid treatment with resmetirom; |
• | Optimal dosing levels for resmetirom and projections regarding potential NASH or NAFLD and potential patient benefits with resmetirom, including future NASH resolution, safety, fibrosis treatment, cardiovascular effects, lipid treatment, and/or biomarker effects with resmetirom; |
• | The potential efficacy and safety of resmetirom for non-cirrhotic NASH patients and cirrhotic NASH patients; |
• | The potential for resmetirom to become the best-in-class first-to-market |
• | Anticipated or estimated future results of operations and expenses as we expand our resmetirom clinical development program and our commercial development program; |
• | Ex-U.S. launch/partnering plans; |
• | The ability to develop clinical evidence demonstrating the utility of non-invasive tools and techniques to screen and diagnose NASH and/or NAFLD patients; |
• | The predictive power of liver fat reduction with resmetirom, as measured by non-invasive tests, on NASH resolution and/or fibrosis reduction or improvement, and potential NASH or NAFLD patient risk profile benefits with resmetirom; |
• | The predictive power of liver fat, liver volume changes, or MAST scores for NASH and/or NAFLD patients; |
• | The predictive power of NASH resolution and/or liver fibrosis reduction or improvement with resmetirom using non-invasive tests, including the use of ELF, FibroScan, MRE and/or MRI-PDFF; |
• | The predictive power of non-invasive tests generally, including for purposes of diagnosing NASH, monitoring patient response to resmetirom, or recruiting and conducting a NASH clinical trial; |
• | Market demand for and acceptance of our products; |
• | Research, development and commercialization of new products; |
• | Obtaining and maintaining regulatory approvals, including, but not limited to, potential regulatory delays or rejections; |
• | Risks associated with meeting the objectives of our clinical studies, including, but not limited to our ability to achieve enrollment objectives concerning patient numbers (including an adequate safety database), outcomes objectives and/or timing objectives for our studies, any delays or failures in enrollment, the occurrence of adverse safety events, and the risks of successfully conducting trials that are substantially larger, and have patients with different disease states, than our past trials; |
• | Risks related to the effects of resmetirom’s mechanism of action and our ability to accomplish our business and business development objectives and realize the anticipated benefit of any such transactions; and |
• | Assumptions underlying any of the foregoing. |
• | salaries and related expense, including stock-based compensation; |
• | external expenses paid to clinical trial sites, contract research organizations, laboratories, database software and consultants that conduct clinical trials; |
• | expenses related to development and the production of nonclinical and clinical trial supplies, including fees paid to contract manufacturers; |
• | expenses related to preclinical studies; |
• | expenses related to compliance with drug development regulatory requirements; and |
• | other allocated expenses, which include direct and allocated expenses for depreciation of equipment and other supplies. |
Three Months Ended June 30, |
Increase / (Decrease) |
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2022 |
2021 |
$ |
% |
|||||||||||||
Research and Development Expenses |
$ | 58,499 | $ | 51,632 | 6,867 | 13 | % | |||||||||
General and Administrative Expenses |
11,774 | 10,110 | 1,664 | 16 | % | |||||||||||
Interest (Income) |
(323 | ) | (91 | ) | 232 | 255 | % | |||||||||
Interest Expense |
780 | — | 780 | 100 | % | |||||||||||
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|
|
|||||||||||||
$ | 70,730 | $ | 61,651 | 9,079 | 15 | % |
Six Months Ended June 30, |
Increase / (Decrease) |
|||||||||||||||
2022 |
2021 |
$ |
% |
|||||||||||||
Research and Development Expenses |
$ | 106,428 | $ | 97,402 | 9,026 | 9 | % | |||||||||
General and Administrative Expenses |
21,432 | 17,319 | 4,113 | 24 | % | |||||||||||
Interest (Income) |
(392 | ) | (251 | ) | 141 | 56 | % | |||||||||
Interest Expense |
780 | — | 780 | 100 | % | |||||||||||
Other (income) |
— | (273 | ) | (273 | ) | (100 | %) | |||||||||
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|
|
|
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$ | 128,248 | $ | 114,197 | 14,051 | 12 | % |
Six Months Ended June 30, |
||||||||
2022 |
2021 |
|||||||
Net cash used in operating activities |
$ | (107,273 | ) | $ | (90,310 | ) | ||
Net cash provided by (used in) investing activities |
75,162 | (60,789 | ) | |||||
Net cash provided by financing activities |
49,114 | 130,635 | ||||||
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|
|
|
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Net increase (decrease) in cash and cash equivalents |
$ | 17,003 | $ | (20,464 | ) |
Item 1. |
Legal Proceedings. |
Item 1A. |
Risk Factors. |
Item 2. |
Unregistered Sales of Equity Securities and Use of Proceeds. |
Item 3. |
Defaults Upon Senior Securities. |
Item 4. |
Mine Safety Disclosures. |
Item 5. |
Other Information. |
Item 6. |
Exhibits. |
# | Certain portions of this exhibit have been omitted pursuant to Item 601(b)(10)(iv) of Regulation S-K. |
* | The certifications attached as Exhibit 32.1 that accompany this Quarterly Report pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, shall not be deemed “filed” by the registrant for purposes of Section 18 of the Exchange Act and are not to be incorporated by reference into any of the registrant’s filings under the Securities Act or the Exchange Act, irrespective of any general incorporation language contained in any such filing. |
MADRIGAL PHARMACEUTICALS, INC. | ||||||
Date: August 4, 2022 | By: | /s/ Paul A. Friedman, M.D. | ||||
Paul A. Friedman, M.D. | ||||||
Chief Executive Officer and Chairman of the Board | ||||||
(Principal Executive Officer) | ||||||
Date: August 4, 2022 | By: | /s/ Alex G. Howarth | ||||
Alex G. Howarth | ||||||
Senior Vice President and Chief Financial Officer | ||||||
(Principal Financial and Accounting Officer) |