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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 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

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: 001-38890

Quince Therapeutics, Inc.

(Exact Name of Registrant as Specified in its Charter)

 

 

Delaware

90-1024039

( State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer
Identification No.)

601 Gateway Boulevard, Suite 1250.

South San Francisco, California

94080

(Address of principal executive offices)

(Zip Code)

Registrant’s telephone number, including area code: (415) 910-5717

 

 

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 $0.001 per share

 

QNCX

 

Nasdaq Global Select 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, 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 Exchange Act). Yes No

As of August 3, 2022, the registrant had 36,104,130 shares of common stock, $0.001 par value per share, outstanding.

 

 

 


 

Table of Contents

 

 

 

Page

PART I.

FINANCIAL INFORMATION

 

Item 1.

Financial Statements (Unaudited)

1

 

Condensed Consolidated Balance Sheets

1

 

Condensed Consolidated Statements of Operations and Comprehensive Loss

2

 

Condensed Consolidated Statements of Stockholders’ Equity

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 Condition and Results of Operations

24

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

38

Item 4.

Controls and Procedures

39

PART II.

OTHER INFORMATION

 

Item 1.

Legal Proceedings

40

Item 1A.

Risk Factors

40

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

86

Item 3.

Defaults Upon Senior Securities

86

Item 4.

Mine Safety Disclosures

86

Item 5.

Other Information

86

Item 6.

Exhibits

87

Signatures

89

 

i


 

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements.

Quince Therapeutics, Inc.

Condensed Consolidated Balance Sheets

(Unaudited)

(In thousands, except share and per share amounts)

 

 

 

June 30, 2022

 

 

December 31, 2021 (1)

 

ASSETS

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

46,928

 

 

$

69,724

 

Short term investments

 

 

47,736

 

 

 

37,078

 

Prepaid expenses and other current assets

 

 

4,706

 

 

 

4,871

 

Total current assets

 

 

99,370

 

 

 

111,673

 

Property and equipment, net

 

 

364

 

 

 

263

 

Operating lease right-of-use assets, net

 

 

328

 

 

 

1,165

 

Long term investments

 

 

11,029

 

 

 

19,933

 

Goodwill

 

 

825

 

 

 

 

Intangible asset

 

 

5,900

 

 

 

 

Other assets

 

 

47

 

 

 

194

 

Total assets

 

$

117,863

 

 

$

133,228

 

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Accounts payable

 

$

1,867

 

 

$

4,911

 

Accrued expenses and other current liabilities

 

 

4,083

 

 

 

9,311

 

Total current liabilities

 

 

5,950

 

 

 

14,222

 

Long-term financing lease liabilities

 

 

38

 

 

 

 

Long-term operating lease liabilities

 

 

95

 

 

 

420

 

Deferred tax liabilities

 

 

248

 

 

 

 

Total liabilities

 

 

6,331

 

 

 

14,642

 

 

 

 

 

 

 

 

Stockholders’ equity:

 

 

 

 

 

 

Preferred stock, $0.001 par value, 10,000,000 authorized, no shares issued and
   outstanding as of June 30, 2022 and December 31, 2021

 

 

 

 

 

 

Common stock, $0.001 par value, 100,000,000 shares authorized,
   
35,977,688 and 30,074,412 issued and outstanding as of June 30, 2022 and
   December 31, 2021, respectively

 

 

36

 

 

 

30

 

Additional paid in capital

 

 

386,766

 

 

 

355,234

 

Accumulated other comprehensive loss

 

 

(466

)

 

 

(79

)

Accumulated deficit

 

 

(274,804

)

 

 

(236,599

)

Total stockholders’ equity

 

 

111,532

 

 

 

118,586

 

Total liabilities and stockholders’ equity

 

$

117,863

 

 

$

133,228

 

 

 

 

 

 

 

 

 

(1) The balance sheet as of December 31, 2021 is derived from the audited financial statements as of that date

 

See accompanying notes.

1


 

Quince Therapeutics, Inc.

Condensed Consolidated Statements of Operations and Comprehensive Loss

(Unaudited)

(In thousands, except share and per share amounts)

 

 

 

Three Months Ended June 30,

 

 

Six Months Ended June 30,

 

 

 

2022

 

 

2021

 

 

2022

 

 

2021

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

Research and development

 

$

7,199

 

 

$

14,719

 

 

$

19,960

 

 

$

31,543

 

General and administrative

 

 

9,059

 

 

 

7,064

 

 

 

18,116

 

 

 

13,553

 

Total operating expenses

 

 

16,258

 

 

 

21,783

 

 

 

38,076

 

 

 

45,096

 

Loss from operations

 

 

(16,258

)

 

 

(21,783

)

 

 

(38,076

)

 

 

(45,096

)

Interest income

 

 

145

 

 

 

160

 

 

 

217

 

 

 

387

 

Other expense, net

 

 

(735

)

 

 

(131

)

 

 

(630

)

 

 

(131

)

Net loss before income tax benefit

 

 

(16,848

)

 

 

(21,754

)

 

 

(38,489

)

 

 

(44,840

)

Income tax benefit

 

 

284

 

 

 

 

 

 

284

 

 

 

 

Net loss

 

 

(16,564

)

 

 

(21,754

)

 

 

(38,205

)

 

 

(44,840

)

Other comprehensive income (loss):

 

 

 

 

 

 

 

 

 

 

 

 

Foreign currency translation adjustments

 

 

250

 

 

 

 

 

 

137

 

 

 

 

Unrealized loss on available for sales securities

 

 

(210

)

 

 

(72

)

 

 

(524

)

 

 

(196

)

Total comprehensive loss

 

$

(16,524

)

 

$

(21,826

)

 

$

(38,592

)

 

$

(45,036

)

Net loss per share - basic and diluted

 

$

(0.51

)

 

$

(0.74

)

 

$

(1.22

)

 

$

(1.52

)

Weighted average shares of common stock outstanding - basic and diluted

 

 

32,467,000

 

 

 

29,587,352

 

 

 

31,307,166

 

 

 

29,571,226

 

 

See accompanying notes.

2


 

Quince Therapeutics, Inc.

Condensed Consolidated Statements of Stockholders’ Equity

(Unaudited)

(In thousands, except share and per share amounts)

 

For the three months ended June 30, 2022 and 2021

 

 

 

Common Stock

 

 

Additional
Paid in

 

 

Accumulated Other
Comprehensive

 

 

Accumulated

 

 

Total Stockholders'

 

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Income / (Loss)

 

 

Deficit

 

 

Equity

 

Balance March 31, 2022

 

 

30,149,570

 

 

$

30

 

 

$

365,096

 

 

$

(506

)

 

$

(258,240

)

 

$

106,380

 

Issuance of common stock on exercise of stock options and vesting of restricted stock units

 

 

308,118

 

 

 

 

 

 

121

 

 

 

 

 

 

 

 

 

121

 

Stock based compensation

 

 

 

 

 

 

 

 

5,051

 

 

 

 

 

 

 

 

 

5,051

 

Share issuance in connection with acquisition of Novosteo, Inc.

 

 

5,520,000

 

 

 

6

 

 

 

16,498

 

 

 

 

 

 

 

 

 

16,504

 

Foreign currency translation adjustment

 

 

 

 

 

 

 

 

 

 

 

250

 

 

 

 

 

 

250

 

Other comprehensive loss

 

 

 

 

 

 

 

 

 

 

 

(210

)

 

 

 

 

 

(210

)

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

$

(16,564

)

 

 

(16,564

)

Balance June 30, 2022

 

 

35,977,688

 

 

$

36

 

 

$

386,766

 

 

$

(466

)

 

$

(274,804

)

 

$

111,532

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance March 31, 2021

 

 

29,575,944

 

 

$

29

 

 

$

326,006

 

 

$

189

 

 

$

(169,740

)

 

$

156,484

 

Exercise of stock options

 

 

79,842

 

 

 

1

 

 

 

671

 

 

 

 

 

 

 

 

 

672

 

Stock based compensation

 

 

 

 

 

 

 

 

6,750

 

 

 

 

 

 

 

 

 

6,750

 

Other comprehensive loss

 

 

 

 

 

 

 

 

 

 

 

(72

)

 

 

 

 

 

(72

)

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

$

(21,754

)

 

 

(21,754

)

Balance June 30, 2021

 

 

29,655,786

 

 

$

30

 

 

$

333,427

 

 

$

117

 

 

$

(191,494

)

 

$

142,080

 

 

See accompanying notes.

 

3


 

Quince Therapeutics, Inc.

Condensed Consolidated Statements of Stockholders’ Equity

(Unaudited)

(In thousands, except share and per share amounts)

 

For the six months ended June 30, 2022 and 2021

 

 

 

Common Stock

 

 

Additional
Paid in

 

 

Other
Comprehensive

 

 

Accumulated

 

 

Shareholders'

 

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Income / (Loss)

 

 

Deficit

 

 

Equity

 

Balance January 1, 2022

 

 

30,074,412

 

 

$

30

 

 

$

355,234

 

 

$

(79

)

 

$

(236,599

)

 

$

118,586

 

Issuance of common stock in connection with open market sales agreement, net of issuance costs of $19

 

 

51,769

 

 

 

 

 

 

608

 

 

 

 

 

 

 

 

 

608

 

Issuance of common stock on exercise of stock options and vesting of restricted stock units

 

 

331,507

 

 

 

 

 

 

134

 

 

 

 

 

 

 

 

 

134

 

Stock based compensation

 

 

 

 

 

 

 

 

14,292

 

 

 

 

 

 

 

 

 

14,292

 

Share issuance in connection with acquisition of Novosteo, Inc.

 

 

5,520,000

 

 

 

6

 

 

 

16,498

 

 

 

 

 

 

 

 

 

16,504

 

Foreign currency translation adjustment

 

 

 

 

 

 

 

 

 

 

 

137

 

 

 

 

 

 

137

 

Other comprehensive loss

 

 

 

 

 

 

 

 

 

 

 

(524

)

 

 

 

 

 

(524

)

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(38,205

)

 

 

(38,205

)

Balance June 30, 2022

 

 

35,977,688

 

 

$

36

 

 

$

386,766

 

 

$

(466

)

 

$

(274,804

)

 

$

111,532

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance January 1, 2021

 

 

29,543,222

 

 

$

29

 

 

$

318,574

 

 

$

313

 

 

$

(146,654

)

 

$

172,262

 

Exercise of stock options

 

 

112,564

 

 

 

1

 

 

 

1,112

 

 

 

 

 

 

 

 

 

1,113

 

Stock based compensation

 

 

 

 

 

 

 

 

13,741

 

 

 

 

 

 

 

 

 

13,741

 

Other comprehensive loss

 

 

 

 

 

 

 

 

 

 

 

(196

)

 

 

 

 

 

(196

)

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(44,840

)

 

 

(44,840

)

Balance June 30, 2021

 

$

29,655,786

 

 

$

30

 

 

$

333,427

 

 

$

117

 

 

$

(191,494

)

 

$

142,080

 

 

See accompanying notes.

4


 

Quince Therapeutics, Inc.

Condensed Consolidated Statements of Cash Flows

(Unaudited)

 

 

 

For The Six Months Ended June 30,

 

 

 

2022

 

 

2021

 

Cash flows from operating activities

 

 

 

 

 

 

Net Loss

 

$

(38,205

)

 

$

(44,840

)

Adjustments to reconcile net loss to net cash used in operating activities:

 

 

 

 

 

 

Non-cash rent expense

 

 

 

 

 

188

 

Stock based compensation

 

 

14,292

 

 

 

13,741

 

Depreciation and amortization

 

 

122

 

 

 

173

 

Impairment loss on operating lease

 

 

98

 

 

 

 

Loss on disposal of fixed assets

 

 

77

 

 

 

 

Amortization of premium on available for sale investments

 

 

175

 

 

442

 

Change in deferred tax liabilities due to acquisition of Novosteo, Inc.

 

 

(284

)

 

 

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

Prepaid expenses and other current assets

 

 

1,750

 

 

 

(1,851

)

Other assets

 

 

147

 

 

 

(106

)

Accounts payable

 

 

(4,664

)

 

 

3,638

 

Accrued expenses and other current liabilities

 

 

(5,014

)

 

 

(2,557

)

Net cash used in operating activities

 

 

(31,506

)

 

 

(31,172

)

Cash flow from investing activities:

 

 

 

 

 

 

Purchase of investments

 

 

(36,849

)

 

 

(25,165

)

Proceeds from maturities of investments

 

 

34,388

 

 

 

62,568

 

Cash acquired from Novosteo, Inc.

 

 

10,593

 

 

 

 

Proceeds from disposal of assets

 

 

35

 

 

 

 

Purchase of property and equipment

 

 

(5

)

 

 

(136

)

Net cash provided by investing activities

 

 

8,162

 

 

 

37,267