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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 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: 001-38890

 

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 November 4, 2022, the registrant had 36,130,306 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

37

Item 4.

Controls and Procedures

37

PART II.

OTHER INFORMATION

 

Item 1.

Legal Proceedings

38

Item 1A.

Risk Factors

38

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

84

Item 3.

Defaults Upon Senior Securities

84

Item 4.

Mine Safety Disclosures

84

Item 5.

Other Information

84

Item 6.

Exhibits

85

Signatures

86

 

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)

 

 

 

September 30, 2022

 

 

December 31, 2021 (1)

 

ASSETS

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

31,809

 

 

$

69,724

 

Short term investments

 

 

62,534

 

 

 

37,078

 

Prepaid expenses and other current assets

 

 

3,933

 

 

 

4,871

 

Total current assets

 

 

98,276

 

 

 

111,673

 

Property and equipment, net

 

 

375

 

 

 

263

 

Operating lease right-of-use assets, net

 

 

208

 

 

 

1,165

 

Long term investments

 

 

5,001

 

 

 

19,933

 

Intangible asset

 

 

5,900

 

 

 

 

Other assets

 

 

17

 

 

 

194

 

Total assets

 

$

109,777

 

 

$

133,228

 

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Accounts payable

 

$

1,181

 

 

$

4,911

 

Accrued expenses and other current liabilities

 

 

3,764

 

 

 

9,311

 

Total current liabilities

 

 

4,945

 

 

 

14,222

 

Long-term financing lease liabilities

 

 

19

 

 

 

 

Long-term operating lease liabilities

 

 

34

 

 

 

420

 

Deferred tax liabilities

 

 

248

 

 

 

 

Total liabilities

 

 

5,246

 

 

 

14,642

 

Stockholders’ equity:

 

 

 

 

 

 

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

 

 

 

 

 

 

Common stock, $0.001 par value, 100,000,000 shares authorized,
   
36,130,306 and 30,074,412 issued and outstanding as of September 30, 2022 and
   December 31, 2021, respectively

 

 

36

 

 

 

30

 

Additional paid in capital

 

 

387,473

 

 

 

355,234

 

Accumulated other comprehensive loss

 

 

(253

)

 

 

(79

)

Accumulated deficit

 

 

(282,725

)

 

 

(236,599

)

Total stockholders’ equity

 

 

104,531

 

 

 

118,586

 

Total liabilities and stockholders’ equity

 

$

109,777

 

 

$

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 September 30,

 

 

Nine Months Ended September 30,

 

 

 

2022

 

 

2021

 

 

2022

 

 

2021

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

Research and development

 

$

2,451

 

 

$

14,038

 

 

$

22,410

 

 

$

45,582

 

General and administrative

 

 

4,344

 

 

 

7,639

 

 

 

22,461

 

 

 

21,192

 

Goodwill impairment charge

 

 

825

 

 

 

 

 

 

825

 

 

 

 

Total operating expenses

 

 

7,620

 

 

 

21,677

 

 

 

45,696

 

 

 

66,774

 

Loss from operations

 

 

(7,620

)

 

 

(21,677

)

 

 

(45,696

)

 

 

(66,774

)

Interest income

 

 

315

 

 

 

128

 

 

 

532

 

 

 

515

 

Other expense, net

 

 

(616

)

 

 

(157

)

 

 

(1,246

)

 

 

(287

)

Net loss before income tax benefit

 

 

(7,921

)

 

 

(21,706

)

 

 

(46,410

)

 

 

(66,546

)

Income tax benefit

 

 

 

 

 

 

 

 

284

 

 

 

 

Net loss

 

 

(7,921

)

 

 

(21,706

)

 

 

(46,126

)

 

 

(66,546

)

Other comprehensive income (loss):

 

 

 

 

 

 

 

 

 

 

 

 

Foreign currency translation adjustments

 

 

343

 

 

 

18

 

 

 

481

 

 

 

18

 

Unrealized loss on available for sales securities

 

 

(130

)

 

 

(64

)

 

 

(655

)

 

 

(260

)

Total comprehensive loss

 

$

(7,708

)

 

$

(21,752

)

 

$

(46,300

)

 

$

(66,788

)

Net loss per share - basic and diluted

 

$

(0.22

)

 

$

(0.73

)

 

$

(1.41

)

 

$

(2.25

)

Weighted average shares of common stock outstanding - basic and diluted

 

 

35,612,749

 

 

 

29,767,376

 

 

 

32,758,132

 

 

 

29,637,328

 

 

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 September 30, 2022 and 2021

 

 

 

Common Stock

 

 

Additional
Paid in

 

 

Accumulated Other
Comprehensive

 

 

Accumulated

 

 

Total Stockholders'

 

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Income / (Loss)

 

 

Deficit

 

 

Equity

 

Balance June 30, 2022

 

 

35,977,688

 

 

$

36

 

 

$

386,766

 

 

$

(466

)

 

$

(274,804

)

 

$

111,532

 

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

 

 

152,618

 

 

 

 

 

 

13

 

 

 

 

 

 

 

 

 

13

 

Stock based compensation

 

 

 

 

 

 

 

 

694

 

 

 

 

 

 

 

 

 

694

 

Foreign currency translation adjustment

 

 

 

 

 

 

 

 

 

 

 

343

 

 

 

 

 

 

343

 

Other comprehensive loss

 

 

 

 

 

 

 

 

 

 

 

(130

)

 

 

 

 

 

(130

)

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(7,921

)

 

 

(7,921

)

Balance September 30, 2022

 

 

36,130,306

 

 

$

36

 

 

$

387,473

 

 

$

(253

)

 

$

(282,725

)

 

$

104,531

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance June 30, 2021

 

 

29,655,786

 

 

$

30

 

 

$

333,427

 

 

$

117

 

 

$

(191,494

)

 

$

142,080

 

Exercise of stock options

 

 

211,477

 

 

 

 

 

 

4,706

 

 

 

 

 

 

 

 

 

4,706

 

Stock based compensation

 

 

 

 

 

 

 

 

7,618

 

 

 

 

 

 

 

 

 

7,618

 

Foreign currency translation adjustment

 

 

 

 

 

 

 

 

 

 

 

18

 

 

 

 

 

 

18

 

Other comprehensive loss

 

 

 

 

 

 

 

 

 

 

 

(64

)

 

 

 

 

 

(64

)

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(21,706

)

 

 

(21,706

)

Balance September 30, 2021

 

 

29,867,263

 

 

$

30

 

 

$

345,751

 

 

$

71

 

 

$

(213,200

)

 

$

132,652

 

 

See accompanying notes.

3


 

 

Quince Therapeutics, Inc.

Condensed Consolidated Statements of Stockholders’ Equity

(Unaudited)

(In thousands, except share and per share amounts)

 

For the nine months ended September 30, 2022 and 2021

 

 

 

Common Stock

 

 

Additional
Paid in

 

 

Accumulated 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

 

 

484,125

 

 

 

 

 

 

148

 

 

 

 

 

 

 

 

 

148

 

Stock based compensation

 

 

 

 

 

 

 

 

14,986

 

 

 

 

 

 

 

 

 

14,986

 

Share issuance in connection with acquisition of Novosteo, Inc.

 

 

5,520,000

 

 

 

6

 

 

 

16,497

 

 

 

 

 

 

 

 

 

16,503

 

Foreign currency translation adjustment

 

 

 

 

 

 

 

 

 

 

 

481

 

 

 

 

 

 

481

 

Other comprehensive loss

 

 

 

 

 

 

 

 

 

 

 

(655

)

 

 

 

 

 

(655

)

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(46,126

)

 

 

(46,126

)

Balance September 30, 2022

 

 

36,130,306

 

 

$

36

 

 

$

387,473

 

 

$

(253

)

 

$

(282,725

)

 

$

104,531

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance January 1, 2021

 

 

29,543,222

 

 

$

29

 

 

$

318,574

 

 

$

313

 

 

$

(146,654

)

 

$

172,262

 

Exercise of stock options

 

 

324,041

 

 

 

1

 

 

 

5,817

 

 

 

 

 

 

 

 

 

5,818

 

Stock based compensation

 

 

 

 

 

 

 

 

21,360

 

 

 

 

 

 

 

 

 

21,360

 

Foreign currency translation adjustment

 

 

 

 

 

 

 

 

 

 

 

18

 

 

 

 

 

 

18

 

Other comprehensive loss

 

 

 

 

 

 

 

 

 

 

 

(260

)

 

 

 

 

 

(260

)

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(66,546

)

 

 

(66,546

)

Balance September 30, 2021

 

 

29,867,263

 

 

$

30

 

 

$

345,751

 

 

$

71

 

 

$

(213,200

)

 

$

132,652

 

See accompanying notes.

4


 

Quince Therapeutics, Inc.

Condensed Consolidated Statements of Cash Flows

(Unaudited)

(In thousands)

 

 

 

For the Nine Months Ended September 30,

 

 

 

2022

 

 

2021

 

Cash flows from operating activities

 

 

 

 

 

 

Net Loss

 

$

(46,126

)

 

$

(66,546

)

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

 

 

 

 

 

 

Non-cash rent expense

 

 

 

 

 

199

 

Stock based compensation

 

 

14,986

 

 

 

21,360

 

Depreciation and amortization

 

 

162

 

 

 

260

 

Impairment loss on operating lease

 

 

136

 

 

 

 

Loss on disposal of fixed assets

 

 

77

 

 

 

 

Non-cash goodwill impairment charge

 

 

825

 

 

 

 

Amortization of premium on available for sale investments

 

 

83

 

 

 

679

 

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

 

 

(284

)

 

 

 

Changes in operating assets and liabilities, net of acquisitions:

 

 

 

 

 

 

Prepaid expenses and other current assets

 

 

2,396

 

 

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