10-Q
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11

 

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, 2022

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 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 10, 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

18

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

28

Item 4.

Controls and Procedures

28

 

 

 

 

 

 

PART II.

OTHER INFORMATION

30

 

 

 

Item 1.

Legal Proceedings

30

Item 1A.

Risk Factors

30

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

74

Item 3.

Defaults Upon Senior Securities

75

Item 4.

Mine Safety Disclosures

75

Item 5.

Other Information

75

Item 6.

Exhibits

76

Signatures

77

 

 

 

 


 

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, 2022

 

 

December 31, 2021

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

35,944

 

 

$

46,922

 

Short-term marketable securities

 

 

86,675

 

 

 

89,558

 

Prepaid expenses and other current assets

 

 

10,552

 

 

 

11,772

 

Total current assets

 

$

133,171

 

 

$

148,252

 

Operating lease right-of-use assets

 

 

585

 

 

 

 

Long-term marketable securities

 

 

6,961

 

 

 

24,919

 

Other long-term assets

 

 

141

 

 

 

70

 

Total assets

 

$

140,858

 

 

$

173,241

 

Liabilities and stockholders’ equity

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Accounts payable

 

 

1,494

 

 

 

1,404

 

Accrued expenses

 

 

4,434

 

 

 

4,627

 

Operating lease liabilities

 

 

352

 

 

 

 

Total current liabilities

 

$

6,280

 

 

$

6,031

 

Other long-term liabilities

 

 

 

 

 

7

 

Operating lease liabilities, net of current portion

 

 

219

 

 

 

 

Total liabilities

 

$

6,499

 

 

$

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 September 30, 2022 and December 31, 2021, respectively

 

 

3

 

 

 

3

 

Additional paid-in capital

 

 

248,035

 

 

 

242,939

 

Accumulated other comprehensive loss

 

 

(581

)

 

 

(123

)

Accumulated deficit

 

 

(113,098

)

 

 

(75,616

)

Total stockholders’ equity

 

$

134,359

 

 

$

167,203

 

Total liabilities and stockholders’ equity

 

$

140,858

 

 

$

173,241

 

 

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

1


 

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,

 

 

 

2022

 

 

2021

 

 

2022

 

 

2021

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

Research and development

 

$

4,258

 

 

$

5,989

 

 

$

21,287

 

 

$

16,443

 

General and administrative

 

 

4,490

 

 

 

3,394

 

 

 

14,294

 

 

 

8,526

 

Total operating expenses

 

 

8,748

 

 

 

9,383

 

 

 

35,581

 

 

 

24,969

 

Loss from operations

 

 

(8,748

)

 

 

(9,383

)

 

 

(35,581

)

 

 

(24,969

)

Other income (expense):

 

 

 

 

 

 

 

 

 

 

 

 

Change in fair value of redeemable convertible preferred stock tranche liability

 

 

 

 

 

 

 

 

 

 

 

(11,718

)

Foreign currency loss

 

 

(1,317

)

 

 

(252

)

 

 

(2,516

)

 

 

(268

)

Other income, net

 

 

383

 

 

 

20

 

 

 

615

 

 

 

20

 

Total other income (expense)

 

 

(934

)

 

 

(232

)

 

 

(1,901

)

 

 

(11,966

)

Net loss

 

$

(9,682

)

 

$

(9,615

)

 

$

(37,482

)

 

$

(36,935

)

Accretion of redeemable convertible preferred stock to redemption value and cumulative preferred stock dividends

 

 

 

 

 

(1,322

)

 

 

 

 

 

(4,548

)

Net loss attributable to common stockholders

 

$

(9,682

)

 

$

(10,937

)

 

$

(37,482

)

 

$

(41,483

)

Net loss per share attributable to common stockholders, basic and diluted

 

$

(0.37

)

 

$

(0.70

)

 

$

(1.43

)

 

$

(5.49

)

Weighted-average number of shares outstanding used to compute net loss per share attributable to common stockholders, basic and diluted

 

 

26,336,029

 

 

 

15,585,611

 

 

 

26,290,868

 

 

 

7,554,300

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Comprehensive loss:

 

 

 

 

 

 

 

 

 

 

 

 

Net loss

 

$

(9,682

)

 

$

(9,615

)

 

$

(37,482

)

 

$

(36,935

)

Other comprehensive loss:

 

 

 

 

 

 

 

 

 

 

 

 

Unrealized gain (loss) on investments, net of tax of $0

 

 

23

 

 

 

(18

)

 

 

(458

)

 

 

(18

)

Comprehensive loss

 

$

(9,659

)

 

$

(9,633

)

 

$

(37,940

)

 

$

(36,953

)

 

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

 

 

2


 

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

 

Vesting of restricted stock awards

 

 

 

 

 

 

 

 

 

20,970

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock-based compensation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,783

 

 

 

 

 

 

 

 

 

1,783

 

Other comprehensive income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

23

 

 

 

23

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(9,682

)

 

 

 

 

 

(9,682

)

Balance as of September 30, 2022

 

 

 

 

$

 

 

 

 

26,348,371

 

 

$

3

 

 

$

248,035

 

 

$

(113,098

)

 

$

(581

)

 

$

134,359

 

 

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

 

 

3


 

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