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 June 30, 2022


☐	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 August 11, 2022, the registrant had 26,567,681 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	19
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	76
Item 3.	Defaults Upon Senior Securities	77
Item 4.	Mine Safety Disclosures	77
Item 5.	Other Information	77
Item 6.	Exhibits	78
Signatures		79

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	June 30, 2022			December 31, 2021
Current assets:
Cash and cash equivalents	$	32,602		$	46,922
Short-term marketable securities		90,349			89,558
Prepaid expenses and other current assets		10,125			11,772
Total current assets	$	133,076		$	148,252
Operating lease right-of-use assets		697			—
Long-term marketable securities		11,701			24,919
Other long-term assets		4,631			70
Total assets	$	150,105		$	173,241
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable		1,061			1,404
Accounts payable, related party		21			—
Accrued expenses		6,072			4,588
Accrued expenses, related party		21			39
Operating lease liabilities		439			—
Total current liabilities	$	7,614		$	6,031
Other long-term liabilities		—			7
Operating lease liabilities, net of current portion		256			—
Total liabilities	$	7,870		$	6,038
Commitments and contingencies (Note 6)
Stockholders’ equity
Common stock, $0.0001 par value per share, 250,000,000 shares authorized; 26,567,681 shares issued and outstanding at June 30, 2022 and December 31, 2021, respectively		3			3
Additional paid-in capital		246,252			242,939
Accumulated other comprehensive loss		(604	)		(123	)
Accumulated deficit		(103,416	)		(75,616	)
Total stockholders’ equity	$	142,235		$	167,203
Total liabilities and stockholders’ equity	$	150,105		$	173,241

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 June 30,						Six Months Ended June 30,
	2022			2021			2022			2021
Operating expenses:
Research and development	$	8,740		$	5,478		$	16,851		$	9,751
Research and development, related party		29			315			178			703
General and administrative		4,932			2,914			9,804			5,132
Total operating expenses		13,701			8,707			26,833			15,586
Loss from operations		(13,701	)		(8,707	)		(26,833	)		(15,586	)
Other income (expense):
Change in fair value of redeemable convertible preferred stock tranche liability		—			—			—			(11,718	)
Foreign currency loss		(1,042	)		(12	)		(1,199	)		(16	)
Other income, net		147			—			232			—
Total other income (expense)		(895	)		(12	)		(967	)		(11,734	)
Net loss	$	(14,596	)	$	(8,719	)	$	(27,800	)	$	(27,320	)
Accretion of redeemable convertible preferred stock to redemption value and cumulative preferred stock dividends		—			(2,141	)		—			(3,226	)
Net loss attributable to common stockholders	$	(14,596	)	$	(10,860	)	$	(27,800	)	$	(30,546	)
Net loss per share attributable to common stockholders, basic and diluted	$	(0.56	)	$	(3.11	)	$	(1.06	)	$	(8.80	)
Weighted-average number of shares outstanding used to compute net loss per share attributable to common stockholders, basic and diluted		26,296,560			3,488,017			26,267,914			3,472,086

Comprehensive loss:
Net loss	$	(14,596	)	$	(8,719	)	$	(27,800	)	$	(27,320	)
Other comprehensive loss:
Unrealized loss on investments, net of tax of $0		(83	)		—			(481	)		—
Comprehensive loss	$	(14,679	)	$	(8,719	)	$	(28,281	)	$	(27,320	)

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

(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
Balance as of December 31, 2021		—	$	—		26,235,317	$	3	$	242,939	$	(75,616	)	$	(123	)	$	167,203
Vesting of restricted stock awards		—		—		9,451		—		—		—			—			—
Stock-based compensation		—		—		—		—		1,541		—			—			1,541
Other comprehensive loss		—		—		—		—		—		—			(398	)		(398	)
Net loss		—		—		—		—		—		(13,204	)		—			(13,204	)
Balance as of March 31, 2022		—	$	-		26,244,768	$	3	$	244,480	$	(88,820	)	$	(521	)	$	155,142
Vesting of restricted stock awards		—		—		82,633		—		—		—			—			—
Stock-based compensation		—		—		—		—		1,772		—			—			1,772
Other comprehensive loss		—		—		—		—		—		—			(83	)		(83	)
Net loss		—		—		—		—		—		(14,596	)		—			(14,596	)
Balance as of June 30, 2022		—	$	-		26,327,401	$	3	$	246,252	$	(103,416	)	$	(604	)	$	142,235

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 vesting 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 vesting 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	)

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)


	Six Months Ended June 30,
	2022			2021
Cash flows from operating activities:
Net loss	$	(27,800	)	$	(27,320	)
Adjustments to reconcile net loss to net cash used in operating activities:
Stock-based compensation		3,313			1,347
Non-cash operating lease expense		217			—
Change in fair value of redeemable convertible preferred stock tranche liability		—			11,718
Amortization of premiums and accretion of discounts on investments		293			—
Foreign currency loss (gain) from remeasurement		1,228			(166	)
Changes in operating assets and liabilities:
Prepaid expenses and other assets		1,646			(3,810	)
Long-term assets		(4,561	)		(192	)
Accounts payable		(343	)		871
Accrued liabilities		1,490			2,411
Accounts payable and accrued liabilities, related party		3			(80	)
Operating lease liabilities		(231	)		—
Net cash used in operating activities	$	(24,745	)	$	(15,221	)
Cash flows from investing activities:
Purchase of marketable securities		(34,507	)		—
Proceeds from maturities of marketable securities		46,160			—
Net cash provided by investing activities	$	11,653		$	—
Cash flows from financing activities:
Proceeds from issuance of redeemable convertible preferred stock, net of issuance costs		—			93,939
Proceeds from the exercise of stock options		—