UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM
(Mark One)
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended
or
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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:
(Exact Name of Registrant as Specified in its Charter)
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(State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) |
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(Address of principal executive offices) |
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Registrant’s telephone number, including area code: (
Securities registered pursuant to Section 12(b) of the Act:
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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.
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).
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.
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Large accelerated filer |
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Non-accelerated filer |
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Smaller reporting company |
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Emerging growth company |
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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
As of November 2, 2020, the registrant had
Spring Bank Pharmaceuticals, Inc.
INDEX
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PART I. FINANCIAL INFORMATION |
Page |
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Item 1. |
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3 |
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Consolidated Statements of Operations and Comprehensive Loss |
4 |
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5 |
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7 |
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8 |
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Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
23 |
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Item 3. |
33 |
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Item 4. |
33 |
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PART II. OTHER INFORMATION |
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Item 1. |
35 |
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Item 1A. |
35 |
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Item 6. |
36 |
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i
FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q contains forward-looking statements that involve substantial risks and uncertainties. All statements, other than statements of historical facts, contained in this Quarterly Report on Form 10-Q, including statements regarding our strategy, future operations, future financial position, projected costs, prospects, plans and objectives of management, are forward-looking statements. In some cases, you can identify forward-looking statements by terms such as “may,” “will,” “should,” “design,” “expect,” “seek,” “plan,” “anticipate,” “could,” “intend,” “target,” “project,” “believe,” “estimate,” “predict,” “potential” or “continue” or the negative of these terms or other similar expressions.
These forward-looking statements include, but are not limited to, statements about:
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our proposed combination with F-star Therapeutics Limited (“F-star”); |
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our ongoing and planned preclinical studies and clinical trials; |
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preclinical study data and clinical trial data and the timing of results of our ongoing clinical studies and/or trials; and |
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our estimates regarding prospects, strategies, expenses, operating capital requirements, results of operations and needs for additional financing. |
We may not actually achieve the plans, intentions or expectations disclosed in our forward-looking statements, and you should not place undue reliance on our forward-looking statements. Actual results or events could differ materially from the plans, intentions and expectations disclosed in the forward-looking statements we make. Factors that could cause actual results or events to differ materially from the forward-looking statements that we make include, but are not limited to, the following:
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•Our proposed business combination with F-star is subject to a number of closing conditions, including a condition requiring our stockholders to approve the issuance of Spring Bank common stock at the closing of the proposed combination, and it may never occur. Even if this proposed combination is completed, the number of shares of our common stock to be issued to the holders of share capital of F-star will be based on an exchange ratio formula that is subject to adjustment based on, among other things, the amount of our net cash upon the closing of the business combination and the amount of proceeds from a concurrent private placement conducted by F-star. This exchange ratio is not adjustable based on the value of our shares of common stock or on the value of the share capital of F-star. The proposed combination also contemplates that our stockholders as of a date prior to the closing of the business combination will receive two separate contingent value rights related to our STING programs. There can be no assurance that our stockholders will ever receive payment pursuant to these rights, and these rights may expire valueless. •We are very early in our development efforts and our product candidates may not be successful in later stage clinical trials. Results obtained in our preclinical studies and clinical trials to date are not necessarily indicative of results to be obtained in future clinical trials. As a result, our product candidates may never be approved as marketable therapeutics. •We rely, and expect to continue to rely, on third parties to conduct our clinical trials and to manufacture our product candidates for preclinical and clinical testing. These third parties may not perform satisfactorily, which could delay our product development activities. •If we are unable to adequately protect our proprietary technology or obtain and maintain issued patents which are sufficient to protect our product candidates, others could compete against us more directly, which would have a material adverse impact on our business, results of operations, financial condition and prospects. •Business interruptions resulting from the coronavirus disease 2019 (COVID-19) outbreak or similar public health crises could cause a disruption of the development of our product candidates and adversely impact our business. |
You should read this Quarterly Report on Form 10-Q and the documents that we have filed as exhibits to this Quarterly Report on Form 10-Q completely and with the understanding that our actual future results may be materially different from what we expect. You should also read carefully the risk factors described in our Annual Report on Form 10-K for the year ended December 31, 2019, our Quarterly Report on Form 10-Q for the quarter ended March 31, 2020 and our Quarterly Report on Form 10-Q for the quarter ended June 30, 2020, as filed with the Securities and Exchange Commission on February 14, 2020, May 7, 2020 and August 10, 2020, respectively, to better understand the risks and uncertainties inherent in our business and underlying any forward-looking statements. You are advised, however, to consult any further disclosures we make on related subjects in our subsequent Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, press releases, and our website. Any forward-looking statements that we make in this Quarterly Report on Form 10-Q speak only as of the date of this Quarterly Report on Form 10-Q, and we undertake no obligation to update such statements to reflect events or circumstances after the date of this Quarterly Report on Form 10-Q or to reflect the occurrence of unanticipated events.
2
PART I—FINANCIAL INFORMATION
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Item 1. |
Financial Statements. |
SPRING BANK PHARMACEUTICALS, INC.
CONSOLIDATED BALANCE SHEETS
(In Thousands, Except Share and Per Share Data)
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September 30, |
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December 31, |
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2020 |
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2019 |
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ASSETS |
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(unaudited) |
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Current assets: |
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Cash and cash equivalents |
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$ |
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$ |
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Marketable securities |
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Prepaid expenses and other current assets |
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Total current assets |
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Property and equipment, net |
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Operating lease right-of-use assets |
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Restricted cash |
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— |
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Other assets |
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Total |
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$ |
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$ |
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LIABILITIES AND STOCKHOLDERS’ EQUITY |
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Current liabilities: |
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Accounts payable |
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$ |
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$ |
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Accrued expenses and other current liabilities |
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Accrued interest payable |
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— |
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Operating lease liabilities, current |
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Total current liabilities |
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Convertible term loan, net of unamortized discount |
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— |
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Warrant liabilities |
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Operating lease liabilities, noncurrent |
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Other long-term liabilities |
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— |
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Total liabilities |
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Commitments and contingencies (Note 11) |
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Stockholders’ equity: |
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Preferred stock, $ 2020 and December 31, 2019; 2020 and December 31, 2019 |
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Common stock, $ 2020 and December 31, 2019; outstanding at September 30, 2020 and December 31, 2019, respectively |
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Additional paid-in capital |
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Accumulated deficit |
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( |
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Accumulated other comprehensive loss |
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( |
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( |
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Total stockholders’ equity |
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Total |
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$ |
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$ |
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See accompanying notes to consolidated financial statements.
3
SPRING BANK PHARMACEUTICALS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(Unaudited)
(In Thousands, Except Share and Per Share Data)
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For the Three Months Ended September 30, |
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For the Nine Months Ended September 30, |
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2020 |
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2019 |
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2020 |
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2019 |
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Operating expenses: |
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Research and development |
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$ |
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$ |
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$ |
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$ |
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General and administrative |
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Total operating expenses |
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Loss from operations |
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( |
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( |
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( |
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( |
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Other income (expense): |
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Interest income |
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Interest expense |
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— |
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( |
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( |
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( |
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Loss on extinguishment of convertible term loan |
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— |
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— |
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( |
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— |
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Change in fair value of warrant liabilities |
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( |
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Net loss |
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( |
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( |
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( |
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Unrealized gain/(loss) on marketable securities |
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( |
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( |
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( |
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Comprehensive loss |
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$ |
( |
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$ |
( |
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$ |
( |
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$ |
( |
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Net loss per common share - basic and diluted |
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$ |
( |
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$ |
( |
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$ |
( |
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$ |
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Weighted-average number of shares outstanding - basic and diluted |
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See accompanying notes to consolidated financial statements.
4
SPRING BANK PHARMACEUTICALS, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2020 AND 2019
(In Thousands, Except Share and Per Share Data)
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For the Three Months Ended |
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Common Stock |
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Additional Paid-in |
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Accumulated |
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Other Comprehensive |
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Total Stockholders’ |
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September 30, 2020 |
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Shares |
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Amount |
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Capital |
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Deficit |
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Income (Loss) |
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Equity |
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Balance at June 30, 2020 |
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$ |
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$ |
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$ |
( |
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$ |
( |
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$ |
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Stock-based compensation |
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— |
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— |
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— |
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— |
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Issuance of common stock for services rendered |
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— |
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— |
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— |
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Net unrealized gain on marketable securities |
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— |
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— |
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— |
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— |
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( |
) |
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( |
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Net loss |
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— |
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— |
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— |
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( |
) |
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— |
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( |
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Balance at September 30, 2020 |
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$ |
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$ |
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$ |
( |
) |
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$ |
( |
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$ |
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For the Three Months Ended |
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Common Stock |
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Additional Paid-in |
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Accumulated |
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Other Comprehensive |
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Total Stockholders’ |
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September 30, 2019 |
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Shares |
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Amount |
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Capital |
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Deficit |
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Income (Loss) |
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Equity |
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Balance at June 30, 2019 |
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$ |
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$ |
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$ |
( |
) |
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$ |
( |
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$ |
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Stock-based compensation |
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— |
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— |
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— |
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— |
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Issuance of common stock for services rendered |
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— |
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— |
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— |
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Issuance of warrants in connection with term loan |
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— |
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— |
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— |
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— |
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Issuance of warrants to a service provider |
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— |
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— |
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— |
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— |
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Offering costs in connection with common stock offering |
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— |
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— |
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— |
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— |
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Net unrealized loss on marketable securities |
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— |
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— |
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— |
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— |
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( |
) |
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( |
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Net loss |
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— |
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— |
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— |
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( |
) |
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— |
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( |
) |
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Balance at September 30, 2019 |
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$ |
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$ |
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$ |
( |
) |
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$ |
( |
) |
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$ |
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See accompanying notes to consolidated financial statements.
5
SPRING BANK PHARMACEUTICALS, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2020 AND 2019
(In Thousands, Except Share and Per Share Data)
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For the Nine Months Ended |
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Common Stock |
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Additional Paid-in |
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Accumulated |
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Other Comprehensive |
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Total Stockholders’ |
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September 30, 2020 |
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Shares |
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Amount |
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Capital |
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Deficit |
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Income (Loss) |
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Equity |
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Balance at December 31, 2019 |
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$ |
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$ |
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$ |
( |
) |
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$ |
( |
) |
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$ |
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Stock-based compensation |
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— |
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— |
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— |
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— |
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Issuance of common stock for services rendered |
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— |
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— |
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— |
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Issuance of common stock in connection with at-the-market offering, net of issuance costs |
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— |
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— |
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— |
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Convertible term loan warrant amendment |
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— |
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— |
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— |
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Net unrealized gain on marketable securities |
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— |
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— |
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— |
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— |
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Net loss |
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— |
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— |
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— |
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( |
) |
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— |
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( |
) |
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Balance at September 30, 2020 |
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$ |
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$ |
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$ |
( |
) |
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$ |
( |
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$ |
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For the Nine Months Ended |
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Common Stock |
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Additional Paid-in |
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Accumulated |
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Other Comprehensive |
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Total Stockholders’ |
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September 30, 2019 |
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Shares |
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Amount |
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Capital |
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Deficit |
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Income (Loss) |
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Equity |
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Balance at December 31, 2018 |
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$ |
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$ |
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$ |
( |
) |
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$ |
( |
) |
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$ |
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Stock-based compensation |
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— |
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— |
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— |
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— |
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Issuance of common stock for services rendered |
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— |
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— |
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— |
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Issuance of common stock in connection with at-the-market offering, net of issuance costs |
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— |
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— |
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— |
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Issuance of warrants in connection with term loan |
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— |
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— |
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— |
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— |
|
|
|
|
|
|
Issuance of warrants to a service provider |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
Offering costs in connection with common stock offering |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
Net unrealized loss on marketable securities |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
|
Net loss |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
|
Balance at September 30, 2019 |
|
|
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
|
See accompanying notes to consolidated financial statements.
6
SPRING BANK PHARMACEUTICALS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In Thousands)
|
|
|
For the Nine Months Ended September 30, |
|
|||||
|
|
|
2020 |
|
|
2019 |
|
||
|
Cash flows from operating activities: |
|
|
|
|
|
|
|
|
|
Net loss |
|
$ |
( |
) |
|
$ |
( |
) |
|
Adjustments for: |
|
|
|
|
|
|
|
|
|
Depreciation |
|
|
|
|
|
|
|
|
|
Loss on the disposal of property and equipment |
|
|
|
|
|
|
— |
|
|
Operating lease right-of-use asset amortization |
|
|
|
|
|
|
|
|
|
Change in fair value of warrant liabilities |
|
|
( |
) |
|
|
( |
) |
|
Loss on extinguishment of convertible term loan |
|
|
|
|
|
|
— |
|
|
Non-cash interest expense |
|
|
|
|
|
|
|
|
|
Non-cash investment expense |
|
|
( |
) |
|
|
( |
) |
|
Non-cash stock-based compensation |
|
|
|
|
|
|
|
|
|
Non-cash issuance of warrants to a service provider |
|
|
— |
|
|
|
|
|
|
Changes in operating assets and liabilities: |
|
|
|
|
|
|
|
|
|
Prepaid expenses and other current assets |
|
|
|
|
|
|
( |
) |
|
Other assets |
|
|
( |
) |
|
|
|
|
|
Accounts payable |
|
|
|
|
|
|
|
|
|
Accrued expenses and other liabilities |
|
|
( |
) |
|
|
( |
) |
|
Operating lease liabilities |
|
|
( |
) |
|
|
( |
) |
|
Net cash used in operating activities |
|
|
( |
) |
|
|
( |
) |
|
Cash flows from investing activities: |
|
|
|
|
|
|
|
|
|
Proceeds from sale of marketable securities |
|
|
|
|
|
|
|
|
|
Purchases of marketable securities |
|
|
( |
) |
|
|
( |
) |
|
Purchases of property and equipment |
|
|
( |
) |
|
|
( |
) |
|
Net cash provided by investing activities |
|
|
|
|
|
|
|
|
|
Cash flows from financing activities: |
|
|
|
|
|
|
|
|
|
Payment of convertible term loan and prepayment fee |
|
|
( |
) |
|
|
— |
|
|
Proceeds from term loan and warrants |
|
|
— |
|
|
|
|
|
|
Issuance costs in connection with term loan and warrants |
|
|
— |
|
|
|
( |
) |
|
Proceeds from issuance of common stock in connection with at-the-market offering, net of issuance costs |
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