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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, 2021

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: 001-37718

 

F-STAR THERAPEUTICS, INC.

(Exact Name of Registrant as Specified in its Charter)

 

 

Delaware

52-2386345

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer

Identification No.)

 

 

Eddeva B920 Babraham Research Campus

Cambridge, United Kingdom

CB22 3AT

(Address of principal executive offices)

(Zip Code)

Registrant’s telephone number, including area code: +44-1223-497400

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of Each Class

 

Trading

Symbol

 

Name of each exchange
on which registered

 

Common Stock, $0.0001 par value per share

FSTX

The Nasdaq Stock Market

(Nasdaq Capital 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

The number of shares of Registrant’s Common Stock outstanding as of November 8, 2021 was 20,624,494.

 

 

 


 

F-star Therapeutics, Inc.

INDEX

PART I. FINANCIAL INFORMATION

 

 

 

Page

 

 

 

 

Item 1.

Condensed Consolidated Financial Statements (Unaudited)

2

 

Condensed Consolidated Balance Sheets at September 30, 2021 and December 31, 2020

2

 

Condensed Consolidated Statements of Operations and Comprehensive Loss for the Three and Nine Months Ended September 30, 2021 and 2020

3

 

Condensed Consolidated Statement of Stockholders’ Equity for the Three and Nine Months Ended September 30, 2021 and 2020

4

 

Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2021, and 2020

6

 

Notes to Unaudited Condensed Consolidated Financial Statements

7

Item 2.

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

24

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

40

Item 4.

Controls and Procedures

40

 

 

 

 

PART II. OTHER INFORMATION

 

 

 

 

Item 1.

Legal Proceedings

42

Item 1A.

Risk Factors

42

Item 2

Unregistered Sales of Equity Securities and Use of Proceeds

43

Item 3

Defaults Upon Senior Securities

44

Item 4

Mine Safety Disclosures

44

Item 5

Other Information

44

Item 6.

Exhibits

44

Exhibit Index

45

Signatures

46

 

i


 

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements.

F-star Therapeutics, Inc.

Condensed Consolidated Balance Sheets

(In Thousands, Except Share and Per Share Amounts)

 

 

 

September 30,

 

 

December 31,

 

 

 

2021

 

 

2020

 

 

 

Unaudited

 

 

 

 

Assets

 

 

 

 

 

 

Current Assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

71,050

 

 

$

18,526

 

Other receivables

 

 

436

 

 

 

 

Prepaid expenses and other current assets

 

 

3,173

 

 

 

3,976

 

Tax incentive receivable

 

 

1,502

 

 

 

3,563

 

Total current assets

 

 

76,161

 

 

 

26,065

 

Property and equipment, net

 

 

1,011

 

 

 

789

 

Right of use asset

 

 

3,501

 

 

 

2,782

 

Goodwill

 

 

14,885

 

 

 

14,926

 

In-process research and development and intangible assets, net

 

 

18,790

 

 

 

18,986

 

Other long-term assets

 

 

450

 

 

 

61

 

Total assets

 

$

114,798

 

 

$

63,609

 

Liabilities and Stockholders’ Equity

 

 

 

 

 

 

Current Liabilities:

 

 

 

 

 

 

Accounts payable

 

$

1,569

 

 

$

4,597

 

Accrued expenses and other current liabilities

 

 

5,642

 

 

 

9,461

 

Contingent value rights

 

 

648

 

 

 

2,080

 

Lease obligations, current

 

 

976

 

 

 

539

 

Deferred revenue

 

 

 

 

 

300

 

Total current liabilities

 

 

8,835

 

 

 

16,977

 

Long term Liabilities:

 

 

 

 

 

 

Term debt

 

 

9,535

 

 

 

 

Lease obligations

 

 

2,875

 

 

 

2,622

 

Contingent value rights

 

 

2,899

 

 

 

440

 

Deferred tax liability

 

 

576

 

 

 

576

 

Total liabilities

 

 

24,720

 

 

 

20,615

 

Commitments and contingencies

 

 

 

 

 

 

Stockholders’ equity:

 

 

 

 

 

 

Preferred stock, $0.0001 par value; authorized, 10,000,000 shares at
   September 30, 2021 and December 31, 2020;
no shares issued or
   outstanding at September 30, 2021 and December 31, 2020

 

 

 

 

 

 

Common Stock, $0.0001 par value; authorized 200,000,000 shares at
   September 30, 2021 and December 31, 2020;
20,623,041 and 9,100,117
   shares issued and outstanding at September 30, 2021 and December 31, 2020

 

 

2

 

 

 

1

 

Additional paid-in capital

 

 

174,410

 

 

 

91,238

 

Accumulated other comprehensive loss

 

 

(1,142

)

 

 

(1,077

)

Accumulated deficit

 

 

(83,192

)

 

 

(47,168

)

Total stockholders’ equity

 

 

90,078

 

 

 

42,994

 

Total liabilities and stockholders’ equity

 

$

114,798

 

 

$

63,609

 

 

See accompanying notes to consolidated financial statements.

 

2


 

F-star Therapeutics, Inc.

Condensed Consolidated Statements of Operations and Comprehensive Loss

(Unaudited)

(In Thousands, Except Share and Per Share Amounts)

 

 

 

For the Three Months
Ended September 30,

 

 

For the Nine Months
Ended September 30,

 

 

 

2021

 

 

2020

 

 

2021

 

 

2020

 

License revenue

 

$

751

 

 

$

9,195

 

 

$

3,668

 

 

$

11,093

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

Research and development

 

 

5,113

 

 

 

5,321

 

 

 

20,536

 

 

 

10,695

 

General and administrative

 

 

5,239

 

 

 

7,261

 

 

 

18,169

 

 

 

13,805

 

Total operating expenses

 

 

10,352

 

 

 

12,582

 

 

 

38,705

 

 

 

24,500

 

Loss from operations

 

 

(9,601

)

 

 

(3,387

)

 

 

(35,037

)

 

 

(13,407

)

Other non-operating (expense) income:

 

 

 

 

 

 

 

 

 

 

 

 

Other income (expense)

 

 

(746

)

 

 

506

 

 

 

230

 

 

 

(1,164

)

Change in fair value of convertible debt

 

 

 

 

 

(446

)

 

 

 

 

 

(2,330

)

Change in fair value of contingent value
   rights

 

 

(444

)

 

 

 

 

 

(1,027

)

 

 

 

Loss before income taxes

 

 

(10,791

)

 

 

(3,327

)

 

 

(35,834

)

 

 

(16,901

)

Income tax expense

 

 

 

 

 

(124

)

 

 

(190

)

 

 

(171

)

Net loss

 

$

(10,791

)

 

$

(3,451

)

 

$

(36,024

)

 

$

(17,072

)

Net loss attributable to common stockholders

 

$

(10,791

)

 

$

(3,451

)

 

$

(36,024

)

 

$

(17,072

)

Basic and diluted adjusted net loss per common
   shares

 

$

(0.52

)

 

$

(1.88

)

 

$

(2.35

)

 

$

(9.34

)

Weighted-average number of shares
   outstanding, basic and diluted

 

 

20,617,822

 

 

 

1,832,194

 

 

 

15,300,433

 

 

 

1,828,597

 

Other comprehensive loss:

 

 

 

 

 

 

 

 

 

 

 

 

Net loss

 

$

(10,791

)

 

$

(3,451

)

 

$

(36,024

)

 

$

(17,072

)

Other comprehensive (loss) gain :

 

 

 

 

 

 

 

 

 

 

 

 

Foreign currency translation

 

 

117

 

 

 

14

 

 

 

(65

)

 

 

424

 

Total comprehensive loss

 

$

(10,674

)

 

$

(3,437

)

 

$

(36,089

)

 

$

(16,648

)

 

See accompanying notes to consolidated financial statements.

 

3


 

F-star Therapeutics, Inc.

Condensed Consolidated Statements of Stockholders’ Equity

For the three months ended September 30, 2021 and 2020

(Unaudited)

(In Thousands, Except Share Amounts)

 

 

 

Stockholders’ Equity

 

 

 

Common Shares

 

 

 

 

 

 

 

 

 

 

 

 

 

For the Three Months Ended September 30, 2021

 

Number of
Shares

 

 

Value

 

 

Capital in Excess
of par Value

 

 

Accumulated Other
Comprehensive
Loss

 

 

Accumulated
deficit

 

 

Total Stockholders’
Equity

 

Balance at June 30, 2021 as originally stated

 

 

20,586,562

 

 

$

2

 

 

$

172,895

 

 

$

(1,218

)

 

$

(72,686

)

 

$

98,993

 

Adjustment (see note 1)

 

 

 

 

 

 

 

 

 

 

$

(41

)

 

$

285

 

 

$

244

 

Revised balance at June 30, 2021

 

 

20,586,562

 

 

$

2

 

 

$

172,895

 

 

$

(1,259

)

 

$

(72,401

)

 

$

99,237

 

Equity adjustment from foreign currency translation

 

 

 

 

 

 

 

 

 

 

 

117

 

 

 

 

 

 

117

 

RSU vesting and stock option exercises

 

 

36,479

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Share-based compensation

 

 

 

 

 

 

 

 

1,515

 

 

 

 

 

 

 

 

 

1,515

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(10,791

)

 

 

(10,791

)

Balance at September 30, 2021

 

 

20,623,041

 

 

$

2

 

 

$

174,410

 

 

$

(1,142

)

 

$

(83,192

)

 

$

90,078

 

 

 

 

Stockholders’ Equity

 

 

 

Seed
preferred

 

 

Series A
preferred

 

 

Common Shares

 

 

 

 

 

 

 

 

 

 

 

 

 

For the Three Months Ended September 30, 2020

 

Number of
shares

 

 

Number of
shares

 

 

Number of
shares

 

 

Value

 

 

Capital in Excess
of par Value

 

 

Accumulated Other
Comprehensive Loss

 

 

Accumulated
deficit

 

 

Total Stockholders’
Equity

 

Balance at July 1, 2020

 

 

103,611

 

 

 

1,441,418

 

 

 

4,312,137

 

 

$

1

 

 

$

32,723

 

 

$

(1,224

)

 

$

(35,170

)

 

$

(3,670

)

Equity adjustment from foreign
   currency translation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

14

 

 

 

 

 

 

14

 

Share-based compensation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,194

 

 

 

 

 

 

 

 

 

1,194

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(3,451

)

 

 

(3,451

)

Balance at September 30, 2020

 

 

103,611

 

 

 

1,441,418

 

 

 

4,312,137

 

 

$

1

 

 

$

33,917

 

 

$

(1,210

)

 

$

(38,621

)

 

$

(5,913

)

 

See accompanying notes to consolidated financial statements.

4


 

F-star Therapeutics, Inc.

Condensed Consolidated Statements of Stockholders’ Equity

For the nine months ended September 30, 2021 and 2020

(Unaudited)

(In Thousands, Except Share Amounts)

 

 

 

Stockholders’ Equity

 

 

 

Common Shares

 

 

 

 

 

 

 

 

 

 

 

 

 

For the Nine Months Ended September 30, 2021

 

Number of
Shares

 

 

Value

 

 

Capital in Excess
of par Value

 

 

Accumulated Other
Comprehensive Loss

 

 

Accumulated
deficit

 

 

Total Stockholders’
Equity

 

Balance at December 31, 2020

 

 

9,100,117

 

 

$

1

 

 

$

91,238

 

 

$

(1,077

)

 

$

(47,168

)

 

$

42,994

 

Issuance of warrants in connection with term loan

 

 

 

 

 

 

 

 

326

 

 

 

 

 

 

 

 

 

326

 

Issuance of common stock in connection with
   at-the-market offering, net of issuance costs

 

 

979,843

 

 

 

 

 

 

9,115

 

 

 

 

 

 

 

 

 

9,115

 

Issuance of common stock in connection with
   public offering, net of issuance costs

 

 

10,439,347

 

 

 

1

 

 

 

68,177

 

 

 

 

 

 

 

 

 

68,178

 

Equity adjustment from foreign currency translation

 

 

 

 

 

 

 

 

 

 

 

(65

)

 

 

 

 

 

(65

)

RSU vesting and stock option exercises

 

 

103,734

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Share-based compensation

 

 

 

 

 

 

 

 

5,554

 

 

 

 

 

 

 

 

 

5,554

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(36,024

)

 

 

(36,024

)

Balance at September 30, 2021

 

 

20,623,041

 

 

$

2

 

 

$

174,410

 

 

$

(1,142

)

 

$

(83,192

)

 

$

90,078

 

 

 

 

Stockholders’ Equity

 

 

 

Seed
preferred

 

 

Series A
preferred

 

 

Common Shares

 

 

 

 

 

 

 

 

 

 

 

 

 

For the Nine Months Ended September 30, 2020

 

Number of
shares

 

 

Number of
shares

 

 

Number of
Shares

 

 

Value

 

 

Capital in Excess
of par Value

 

 

Accumulated Other
Comprehensive Loss

 

 

Accumulated
deficit

 

 

Total Stockholders’
Equity

 

Balance at December 31, 2019

 

 

103,611

 

 

 

1,441,418

 

 

 

4,128,441

 

 

$

1

 

 

$

31,718

 

 

$

(1,634

)

 

$

(21,549

)

 

$

8,536

 

Issuance of common stock for
   services rendered

 

 

 

 

 

 

 

 

10,972

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Issuance of common stock in connection
   with at-the-market offering,
   net of issuance costs

 

 

 

 

 

 

 

 

172,724

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Equity adjustment from foreign
   currency translation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

424

 

 

 

 

 

 

424

 

Share-based compensation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2,199

 

 

 

 

 

 

 

 

 

2,199

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(17,072

)

 

 

(17,072

)

Balance at September 30, 2020

 

 

103,611

 

 

 

1,441,418

 

 

 

4,312,137

 

 

$

1

 

 

$

33,917

 

 

$

(1,210

)

 

$

(38,621

)

 

$

(5,913

)

 

See accompanying notes to consolidated financial statements.

5


 

F-star Therapeutics, Inc.

Condensed Consolidated Statements of Cash Flows (Unaudited)

(In Thousands)

 

 

 

For the Nine Months Ended September 30,

 

 

 

2021

 

 

2020

 

Cash flows from operating activities:

 

 

 

 

 

 

Net loss

 

$

(36,024

)

 

$

(17,072

)

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

 

 

 

 

 

 

Share based compensation expense

 

 

5,554

 

 

 

2,199

 

Foreign currency (gain) loss

 

 

(66

)

 

 

968

 

(Gain) loss on disposal of property, plant and equipment

 

 

(9

)

 

 

7

 

Depreciation

 

 

435

 

 

 

887

 

Amortization of intangible assets

 

 

65

 

 

 

 

      Non-cash interest

 

 

42

 

 

 

815

 

Interest expense

 

 

69

 

 

 

 

Fair value adjustments

 

 

1,027

 

 

 

2,330

 

Operating right of use amortization

 

 

749

 

 

 

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

Other receivables

 

 

(444

)

 

 

 

Prepaid expenses and other current assets

 

 

800

 

 

 

1,254