SEC Filing | Eliem Therapeutics, Inc.

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10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q

(Mark One)


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

For the quarterly period ended September 30, 2021


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

For the transition period from to

Commission File Number: 001-40708

ELIEM THERAPEUTICS, INC.

(Exact Name of Registrant as Specified in its Charter)


Delaware	82-2273741
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
23515 NE Novelty Hill Road, Suite B221 #125 Redmond, WA	98053
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: (425) 276-2300

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

Title of each class

Trading

Symbol(s)

Name of each exchange on which registered

Common Stock, par value $0.0001 per share

ELYM

The Nasdaq Stock Market LLC

(The Nasdaq Global Market)

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

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

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


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 ☒

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes ☒ No ☐

As of November 5, 2021, the registrant had 26,554,316 shares of common stock, $0.0001 par value per share, outstanding.

Table of Contents


		Page

PART I.	FINANCIAL INFORMATION	1

Item 1.	Condensed Consolidated Financial Statements (unaudited)	1
	Condensed Consolidated Balance Sheets	1
	Condensed Consolidated Statements of Operations and Comprehensive Loss	2
	Condensed Consolidated Statements of Redeemable Convertible Preferred Stock and Stockholders’ Equity (Deficit)	3
	Condensed Consolidated Statements of Cash Flows	5
	Notes to Unaudited Condensed Consolidated Financial Statements	6
Item 2.	Management’s Discussion and Analysis of Financial Results and Operations	18
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	29
Item 4.	Controls and Procedures	29


PART II.	OTHER INFORMATION	31

Item 1.	Legal Proceedings	31
Item 1A.	Risk Factors	31
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	75
Item 3.	Defaults Upon Senior Securities	76
Item 4.	Mine Safety Disclosures	76
Item 5.	Other Information	76
Item 6.	Exhibits	77
Signatures		78

PART I - FINANCIAL INFORMATION

Item 1. Condensed Consolidated Financial Statements (unaudited)

Eliem Therapeutics, Inc.

Condensed Consolidated Balance Sheets

(In thousands, except share and per share amounts)

(unaudited)


Assets	September 30, 2021			December 31, 2020
Current assets:
Cash and cash equivalents	$	62,819		$	20,487
Short-term marketable securities		83,199			—
Prepaid expenses and other current assets		12,614			1,511
Total current assets	$	158,632		$	21,998
Long-term marketable securities		23,619			—
Other long-term assets		—			2,633
Total assets	$	182,251		$	24,631
Liabilities, Redeemable Convertible Preferred Stock, and Stockholders’ Equity (Deficit)
Current liabilities:
Accounts payable		2,579			1,086
Accounts payable, related party		—			207
Accrued expenses		2,979			1,219
Accrued expenses, related party		32			—
Redeemable convertible preferred stock tranche liability		—			551
Total current liabilities	$	5,590		$	3,063
Total liabilities	$	5,590		$	3,063
Commitments and contingencies (Note 6)
Redeemable convertible preferred stock, $0.0001 par value, 10,000,000 and 12,909,389 shares authorized, 0 and 7,140,157 shares issued and outstanding with aggregate liquidation preference of $0 and $49,891 at September 30, 2021 and December 31, 2020, respectively		—			46,551
Stockholders’ equity (deficit):
Common stock, $0.0001 par value per share, 250,000,000 and 40,000,000 shares authorized; 26,199,262 and 3,418,751 shares issued and outstanding at September 30, 2021 and December 31, 2020, respectively		3			1
Additional paid-in capital		241,747			3,152
Accumulated other comprehensive income		(18	)		—
Accumulated deficit		(65,071	)		(28,136	)
Total stockholders’ equity (deficit)	$	176,661		$	(24,983	)
Total liabilities, redeemable convertible preferred stock, and stockholders’ equity (deficit)	$	182,251		$	24,631

The accompanying notes are an integral part of these condensed consolidated financial statements.

Eliem Therapeutics, Inc.

Condensed Consolidated Statements of Operations and Comprehensive Loss

(In thousands, except share and per share amounts)

(unaudited)


	Three Months Ended September 30,						Nine Months Ended September 30,
	2021			2020			2021			2020
Operating expenses:
Research and development	$	5,704		$	1,930		$	15,455		$	4,644
Research and development, related party		285			17			988			286
General and administrative		3,394			312			8,526			888
Total operating expenses		9,383			2,259			24,969			5,818
Loss from operations		(9,383	)		(2,259	)		(24,969	)		(5,818	)
Other income (expense):
Change in fair value of redeemable convertible preferred stock tranche liability		—			—			(11,718	)		—
Foreign currency gain (loss)		(252	)		1			(268	)		13
Other income, net		20			—			20			—
Total other income (expense)		(232	)		1			(11,966	)		13
Net loss	$	(9,615	)	$	(2,258	)	$	(36,935	)	$	(5,805	)
Accretion of redeemable convertible preferred stock to redemption value and cumulative preferred stock dividends		(1,322	)		(461	)		(4,548	)		(1,352	)
Net loss attributable to common stockholders	$	(10,937	)	$	(2,719	)	$	(41,483	)	$	(7,157	)
Net loss per share attributable to common stockholders, basic and diluted	$	(0.70	)	$	(1.46	)	$	(5.49	)	$	(3.85	)
Weighted-average number of shares outstanding used to compute net loss per share attributable to common stockholders, basic and diluted		15,585,611			1,863,860			7,554,300			1,859,713

Comprehensive loss:
Net loss	$	(9,615	)	$	(2,258	)	$	(36,935	)	$	(5,805	)
Other comprehensive loss:
Unrealized loss on investments, net of tax of $0		(18	)		—			(18	)		—
Comprehensive loss	$	(9,633	)	$	(2,258	)	$	(36,953	)	$	(5,805	)

The accompanying notes are an integral part of these condensed consolidated financial statements.

Eliem Therapeutics, Inc.

Condensed Consolidated Statements of Redeemable Convertible Preferred Stock and Stockholders’ Equity (Deficit)

(In thousands, except share amounts)

(unaudited)


	Redeemable Convertible Preferred Stock						Common Stock
	Shares			Amount			Shares		Amount		Additional Paid-in Capital		Accumulated Deficit			Accumulated Other Comprehensive Loss			Total Stockholders' Equity (Deficit)
Balance as of December 31, 2020		7,140,157		$	46,551			3,418,751	$	1	$	3,152	$	(28,136	)	$	—		$	(24,983	)
Series A-1 Preferred Stock Issuance (net of issuance costs of $22)		4,358,972			33,978			—		—		—		—			—			—
Reclassification of redeemable convertible preferred stock tranche liability upon settlement		—			12,269			—		—		—		—			—			—
Exercise of stock options and release of restricted stock awards		—			—			64,047		—		105		—			—			105
Stock-based compensation		—			—			—		—		297		—			—			297
Net loss		—			—			—		—		—		(18,601	)		—			(18,601	)
Balance as of March 31, 2021		11,499,129		$	92,798			3,482,798	$	1	$	3,554	$	(46,737	)	$	—		$	(43,182	)
Series B Preferred Stock Issuance (net of issuance costs of $39)		3,846,150			59,961			—		—		—		—			—			—
Exercise of stock options and release of restricted stock awards		—			—			7,158		—		6		—			—			6
Stock-based compensation		—			—			—		—		1,050		—			—			1,050
Net loss		—			—			—		—		—		(8,719	)		—			(8,719	)
Balance as of June 30, 2021		15,345,279		$	152,759			3,489,956	$	1	$	4,610	$	(55,456	)	$	—		$	(50,845	)
Proceeds from issuance of common stock in initial public offering (net of issuance costs of $8,856)		—			—			7,360,000		1		83,143		—			—		$	83,144
Conversion of redeemable convertible preferred stock to common stock upon initial public offering		(15,345,279	)		(152,759	)		15,345,279		1		152,758		—			—			152,759
Release of restricted stock awards		—			—			4,027						—			—			—
Stock-based compensation		—			—			—		—		1,236		—			—			1,236
Other comprehensive loss		—			—			—		—		—		—			(18	)		(18	)
Net loss		—			—			—		—		—		(9,615	)		—			(9,615	)
Balance as of September 30, 2021		—		$	—			26,199,262	$	3	$	241,747	$	(65,071	)	$	(18	)	$	176,661

The accompanying notes are an integral part of these condensed consolidated financial statements.

Eliem Therapeutics, Inc.

Condensed Consolidated Statements of Redeemable Convertible Preferred Stock and Stockholders’ Equity (Deficit)

(In thousands, except share amounts)

(unaudited)


	Redeemable Convertible Preferred Stock				Common Stock
	Shares		Amount		Shares		Amount		Additional Paid-in Capital			Accumulated Deficit			Accumulated Other Comprehensive Income		Total Stockholders' Equity (Deficit)
Balance as of December 31, 2019		3,999,133	$	26,174		1,852,797	$	1	$	1,905		$	(7,468	)	$	—	$	(5,562	)
Accretion of Series A and A-1 Preferred Stock		—		439		—		—		(439	)		—			—		(439	)
Release of restricted stock awards		—		—		4,170		—		—			—			—		—
Stock-based compensation		—		—		—		—		134			—			—		134
Net loss		—		—		—		—		—			(1,916	)		—		(1,916	)
Balance as of March 31, 2020		3,999,133	$	26,613		1,856,967	$	1	$	1,600		$	(9,384	)	$	—	$	(7,783	)
Accretion of Series A and A-1 Preferred Stock		—		452		—		—		(452	)		—			—		(452	)
Release of restricted stock awards		—		—		4,174		—		—			—			—		—
Stock-based compensation		—		—		—		—		51			—			—		51
Net loss		—		—		—		—		—			(1,631	)		—		(1,631	)
Balance as of June 30, 2020		3,999,133	$	27,065		1,861,141	$	1	$	1,199		$	(11,015	)	$	—	$	(9,815	)
Accretion of Series A and A-1 Preferred Stock		—		461		—		—		(461	)		—			—		(461	)
Release of restricted stock awards		—		—		4,175		—		—			—			—		—
Stock-based compensation		—		—		—		—		49			—			—		49
Net loss		—		—		—		—		—			(2,258	)		—		(2,258	)
Balance as of September 30, 2020		3,999,133	$	27,526		1,865,316	$	1		787		$	(13,273	)	$	—	$	(12,485	)

The accompanying notes are an integral part of these condensed consolidated financial statements.

Eliem Therapeutics, Inc.

Condensed Consolidated Statements of Cash Flows

(In thousands)

(unaudited)


	Nine Months Ended September 30,
	2021			2020
Cash flows from operating activities:
Net loss	$	(36,935	)	$	(5,805	)
Adjustments to reconcile net loss to net cash used in operating activities:
Stock-based compensation		2,583			234
Change in fair value of redeemable convertible preferred stock tranche liability