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ROC

 

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: 001-41498

 

THIRD HARMONIC BIO, INC.

(Exact Name of Registrant as Specified in its Charter)

 

 

Delaware

 

83-4553503

(State or other jurisdiction of

incorporation or organization)

 

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

 

 

 

300 Technology Square, 8th Floor

 

 

Cambridge, Massachusetts,

 

02139

(Address, including zip code of registrant’s principal executive offices)

 

(Zip Code)

 

Registrant's telephone number, including area code: (617) 915-6680

 

 

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

 

THRD

 

The Nasdaq Stock Market LLC

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

As of November 1, 2022, the registrant had 40,544,756 shares of common stock, $0.0001 par value per share, outstanding.

 

 


 

 


 

Table of Contents

 

 

 

Page

 

 

 

 

Special Note Regarding Forward-Looking Statements

1

 

 

 

PART I.

FINANCIAL INFORMATION

 

 

 

 

Item 1.

Financial Statements (Unaudited)

2

 

Condensed Consolidated Balance Sheets

2

 

Condensed Consolidated Statements of Operations

3

 

Condensed Consolidated Statements of Changes in Redeemable Convertible Preferred Stock and Stockholders’ Deficit

4

 

Condensed Consolidated Statements of Cash Flows

6

 

Notes to Unaudited Condensed Consolidated Financial Statements

7

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

19

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

28

Item 4.

Controls and Procedures

28

 

 

 

PART II.

OTHER INFORMATION

 

 

 

 

Item 1.

Legal Proceedings

29

Item 1A.

Risk Factors

29

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

73

Item 3.

Defaults Upon Senior Securities

73

Item 4.

Mine Safety Disclosures

73

Item 5.

Other Information

73

Item 6.

Exhibits

74

 

Signatures

75

 

 

 

i


 

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q (this “Quarterly Report”) contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, (the “Exchange Act”), and section 27A of the Securities Act of 1933, as amended (the “Securities Act”). All statements contained in this Quarterly Report other than statements of historical fact, including but not limited to statements regarding our future results of operations and financial position, business strategy, market size, potential growth opportunities, nonclinical and clinical development activities, efficacy and safety profile of THB001 and any other product candidates, potential therapeutic benefits and economic value of our product candidates, use of net proceeds from our initial public offering, our ability to maintain and recognize the benefits of certain designations received by product candidates, the timing and results of nonclinical studies and clinical trials, commercial collaboration with third parties, the expected impact of the ongoing COVID-19 pandemic on our operations, and the receipt and timing of potential regulatory designations, approvals and commercialization of product candidates, are forward-looking statements. The words “believe,” “may,” “will,” “potentially,” “estimate,” “continue,” “anticipate,” “predict,” “target,” “intend,” “could,” “would,” “should,” “project,” “plan,” “expect,” and similar expressions that convey uncertainty of future events or outcomes are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words.

These forward-looking statements are subject to a number of risks, uncertainties and assumptions, including those described in Part II, Item 1A, “Risk Factors,” and elsewhere in this Quarterly Report. Moreover, we operate in a very competitive and rapidly changing environment, and new risks emerge from time to time. It is not possible for our management to predict all risks, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements we may make. In light of these risks, uncertainties and assumptions, the forward-looking events and circumstances discussed in this Quarterly Report may not occur and actual results could differ materially and adversely from those anticipated or implied in the forward-looking statements.

You should not rely upon forward-looking statements as predictions of future events. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee that the future results, levels of activity, performance or events and circumstances reflected in the forward-looking statements will be achieved or occur. We undertake no obligation to update publicly any forward-looking statements for any reason after the date of this report to conform these statements to actual results or to changes in our expectations, except as required by law. You should read this Quarterly Report with the understanding that our actual future results, levels of activity, performance and events and circumstances may be materially different from what we expect.

Unless the context indicates otherwise, as used in this Quarterly Report on Form 10-Q, the terms “the Company,” “we,” “us,” and “our” refer to Third Harmonic Bio, Inc., a Delaware corporation, and its consolidated subsidiaries taken as a whole, unless otherwise noted. The mark “Third Harmonic Bio” is our registered common law trademark. This Quarterly Report contains additional trade names, trademarks and service marks of other companies, which are the property of their respective owners. We do not intend our use or display of other companies’ trade names, trademarks or service marks to imply a relationship with, or endorsement or sponsorship of us by, these other companies.

 

1


 

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements.

THIRD HARMONIC BIO, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except share and per share amounts)

(Unaudited)

 

 

 

December 31,
2021

 

 

September 30,
2022

 

Assets

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

128,280

 

 

$

299,516

 

Prepaid expenses and other current assets

 

 

884

 

 

 

4,053

 

Total current assets

 

 

129,164

 

 

 

303,569

 

Other assets

 

 

 

 

 

1,193

 

Total assets

 

$

129,164

 

 

$

304,762

 

Liabilities, redeemable convertible preferred stock and stockholders’ deficit

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Accounts payable

 

$

1,797

 

 

$

3,337

 

Accrued expenses and other current liabilities

 

 

3,889

 

 

 

3,003

 

Total current liabilities

 

 

5,686

 

 

 

6,340

 

Preferred stock tranche liability

 

 

 

 

 

 

Anti-dilution liability

 

 

 

 

 

 

Total liabilities

 

 

5,686

 

 

 

6,340

 

Commitments and contingencies (Note 11)

 

 

 

 

 

 

Series A-1 redeemable convertible preferred stock, par value $0.0001. 13,970,000 
    and
- shares authorized as of December 31, 2021 and September 30, 2022,
    respectively;
13,970,000 and - shares issued and outstanding as of December 31,
    2021 and September 30, 2022 respectively; liquidation preference of $
13,970 
    and $
- as of December 31, 2021, and September 30, 2022, respectively

 

 

12,574

 

 

 

 

Series A-2 redeemable convertible preferred stock, par value $0.0001. 13,750,000 
    and
- shares authorized as of December 31, 2021 and September 30, 2022,
    respectively;
13,750,000 and - shares issued and outstanding as of December 31,
    2021- and September 30, 2022, respectively; liquidation preference of $
22,000 
    and $
-, as of December 31, 2021, and September 30, 2022, respectively

 

 

19,476

 

 

 

 

Series A-3 redeemable convertible preferred stock, par value $0.0001. 7,812,501 
    and
- shares authorized as of December 31, 2021 and September 30, 2022,
    respectively;
7,812,501 and - shares issued and outstanding as of December 31,
    2021 and September 30, 2022, respectively; liquidation preference of $
20,000 
    and $
- as of December 31, 2021 and September 30, 2022, respectively

 

 

33,288

 

 

 

 

Series B redeemable convertible preferred stock, par value $0.0001. 14,091,689 
   and
- shares authorized as of December 31, 2021, and September 30, 2022
   respectively;
14,091,686 and - shares issued and outstanding as of December 31,
   2021, and September 30, 2022, respectively; liquidation preference of $
105,000 
   and $
- as of December 31, 2021, and September 30, 2022, respectively

 

 

104,846

 

 

 

 

Stockholders’ deficit:

 

 

 

 

 

 

Common stock, $0.0001 par value, 72,731,000 and 500,000,000 shares
   authorized at December 31, 2021 and September 30, 2022;
4,237,290 and
   
39,270,140 shares issued and outstanding at December 31, 2021 and
   September 30, 2022, respectively

 

 

1

 

 

 

4

 

Preferred stock, $0.0001 par value, - and 10,000,000 shares authorized at
    December 31, 2021 and September 30, 2022;
- and - shares issued and
    outstanding at December 31, 2021 and September 30, 2022, respectively

 

 

 

 

 

 

Additional paid-in capital

 

 

1,534

 

 

 

370,324

 

Accumulated deficit

 

 

(48,241

)

 

 

(71,906

)

Total stockholders’ (deficit) equity

 

 

(46,706

)

 

 

298,422

 

Total liabilities, redeemable convertible preferred stock and stockholders’ deficit

 

$

129,164

 

 

$

304,762

 

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

2


 

THIRD HARMONIC BIO, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except share and per share amounts)

(Unaudited)

 

 

 

Three Months Ended September 30,

 

 

Nine Months Ended September 30,

 

 

 

2021

 

 

2022

 

 

2021

 

 

2022

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

Research and development

 

$

4,917

 

 

$

4,757

 

 

$

11,463

 

 

$

15,150

 

General and administrative

 

 

780

 

 

 

3,831

 

 

 

1,790

 

 

 

9,008

 

Total operating expenses

 

 

5,697

 

 

 

8,588

 

 

 

13,253

 

 

 

24,158

 

Loss from operations

 

 

5,697

 

 

 

8,588

 

 

 

13,253

 

 

 

24,158

 

Other (income) expense, net:

 

 

 

 

 

 

 

 

 

 

 

 

Change in fair value of anti-dilution right liability

 

 

 

 

 

 

 

 

682

 

 

 

 

Change in fair value of preferred stock tranche liability

 

 

1,685

 

 

 

 

 

 

(105

)

 

 

 

Other (income)

 

 

(1

)

 

 

(383

)

 

 

(3

)

 

 

(493

)

Total other (income) expense, net

 

 

1,684

 

 

 

(383

)

 

 

574

 

 

 

(493

)

Net loss

 

$

7,381

 

 

$

8,205

 

 

$

13,827

 

 

$

23,665

 

Net loss per share of common stock, basic and diluted

 

$

0.90

 

 

$

0.69

 

 

$

3.46

 

 

$

2.26

 

Weighted-average common stock outstanding, basic and diluted

 

 

8,159,044

 

 

 

11,827,663

 

 

 

3,994,784

 

 

 

10,451,300

 

 

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

3


 

THIRD HARMONIC BIO, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN REDEEMABLE CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ DEFICIT

(In thousands, except share amounts)

(Unaudited)

 

 

 

Redeemable Convertible Preferred Stock

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Series A-1

 

 

Series A-2

 

 

Series A-3

 

 

 

Common Stock

 

 

 

Additional
Paid-In

 

 

Accumulated

 

 

Total
Stockholders’

 

 

 

Shares

 

 

Amount

 

 

Shares

 

 

Amount

 

 

Shares

 

 

Amount

 

 

 

Shares

 

 

Amount

 

 

 

Capital

 

 

Deficit

 

 

(Deficit) and Equity

 

Balance at December 31, 2020

 

 

12,746,961

 

 

$

11,008

 

 

 

6,875,000

 

 

$

7,691

 

 

 

 

 

$

 

 

 

 

3,866,138

 

 

$

1

 

 

 

$

274

 

 

 

(18,632

)

 

$

(18,357

)

Issuance of Series A-2 redeemable convertible preferred stock under Series A-2 Second Tranche, net of issuance costs of $40

 

 

 

 

 

 

 

 

6,875,000

 

 

 

11,785

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gain on extinguishment of Series A-2 redeemable convertible preferred stock tranche liability

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

750

 

 

 

 

 

 

750

 

Issuance of Series A-1 redeemable convertible preferred stock under anti-dilution liability

 

 

1,223,039

 

 

 

1,566

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Issuance of Series A-3 redeemable convertible preferred stock, net of issuance costs of $40

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,953,125

 

 

 

1,982

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Vesting of restricted stock

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

66,837

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock-based compensation expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

73

 

 

 

 

 

 

73

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(2,247

)

 

 

(2,247

)

Balance at March 31, 2021

 

 

13,970,000

 

 

$

12,574

 

 

 

13,750,000

 

 

$

19,476

 

 

 

1,953,125

 

 

$

1,982

 

 

 

 

3,932,975

 

 

$

1

 

 

 

$

1,097

 

 

 

(20,879

)

 

$

(19,781

)

Vesting of restricted stock

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

136,289

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock-based compensation expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

65

 

 

 

 

 

 

65

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(4,199

)

 

 

(4,199

)

Balance at June 30, 2021

 

 

13,970,000

 

 

$

12,574

 

 

 

13,750,000

 

 

$

19,476

 

 

 

1,953,125

 

 

$

1,982

 

 

 

 

4,069,264

 

 

$

1

 

 

 

$

1,162

 

 

 

(25,078

)

 

$

(23,915

)

Vesting of restricted stock

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

84,022

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock-based compensation expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

137

 

 

 

 

 

 

137

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(7,381

)

 

 

(7,381

)

Balance at September 30, 2021

 

 

13,970,000

 

 

$

12,574

 

 

 

13,750,000

 

 

$

19,476

 

 

 

1,953,125

 

 

$

1,982

 

 

 

 

4,153,286

 

 

$

1

 

 

 

$

1,299

 

 

 

(32,459

)

 

$

(31,159

)

 

4


 

THIRD HARMONIC BIO, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN REDEEMABLE CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ DEFICIT

(In thousands, except share amounts)

(Unaudited) (continued)

 

 

 

Statement of stockholders' equity (deficit)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Series A-1

 

 

Series A-2

 

 

Series A-3

 

 

 

Series B

 

 

 

Common Stock

 

 

Additional
Paid-In

 

 

Accumulated

 

 

Total
Stockholders’

 

 

 

Shares

 

 

Amount

 

 

Shares

 

 

Amount