false--12-310001831363Q20.07140001831363us-gaap:BridgeLoanMembertern:SeriesCConvertiblePreferredStockMember2020-12-012020-12-310001831363us-gaap:ConvertiblePreferredStockMember2021-01-012021-06-3000018313632020-01-012020-06-300001831363us-gaap:GeneralAndAdministrativeExpenseMember2021-01-012021-06-300001831363us-gaap:MoneyMarketFundsMember2021-06-300001831363us-gaap:RetainedEarningsMember2021-01-012021-03-310001831363tern:TwoThousandTwentyOneEmployeeStockPurchasePlanMember2021-02-280001831363us-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsRecurringMember2021-06-300001831363tern:SeriesAConvertiblePreferredStockMember2020-12-3100018313632020-04-012020-06-300001831363us-gaap:FairValueMeasurementsRecurringMember2021-06-300001831363tern:SeriesBConvertiblePreferredStockMembertern:LAVAffiliatesMember2020-12-310001831363tern:SharesAvailableForFutureGrantUnderEmployeeStockPurchasePlansMember2021-06-300001831363us-gaap:AdditionalPaidInCapitalMember2020-12-310001831363us-gaap:AccumulatedOtherComprehensiveIncomeMember2020-03-310001831363tern:TERNOneHundredAndOneLicenseAgreementWithEliLillyMember2020-04-012020-06-300001831363us-gaap:BridgeLoanMemberus-gaap:LoansPayableMembertern:SeriesCConvertiblePreferredStockMemberus-gaap:FairValueMeasurementsRecurringMember2020-01-012020-12-310001831363us-gaap:ResearchAndDevelopmentExpenseMember2020-01-012020-06-300001831363us-gaap:AdditionalPaidInCapitalMember2020-03-310001831363us-gaap:NoncontrollingInterestMember2020-04-012020-06-300001831363tern:AssignmentAgreementMember2021-01-012021-06-300001831363tern:SeriesBConvertiblePreferredStockMember2021-06-300001831363tern:SeriesCConvertiblePreferredStockMember2020-06-300001831363us-gaap:LoansPayableMembertern:TwoThousandAndTwentyNotesAndBridgeLoanMemberus-gaap:FairValueMeasurementsRecurringMember2020-01-012020-12-310001831363tern:SeriesAConvertiblePreferredStockMember2019-12-310001831363us-gaap:USGovernmentAgenciesDebtSecuritiesMember2021-06-300001831363tern:SeriesBConvertiblePreferredStockMember2020-06-300001831363tern:SeriesAConvertiblePreferredStockMember2021-01-012021-03-310001831363us-gaap:IPOMember2021-02-012021-02-280001831363tern:SharesAvailableForFutureGrantUnderIncentiveAwardPlansMember2020-12-310001831363tern:SeriesBConvertiblePreferredStockMember2018-10-012018-10-3100018313632020-06-300001831363us-gaap:ForeignGovernmentDebtSecuritiesMember2021-06-3000018313632020-12-310001831363us-gaap:CommonStockMember2020-06-300001831363us-gaap:CashMemberus-gaap:FairValueMeasurementsRecurringMember2021-06-300001831363us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-01-012021-03-310001831363us-gaap:RestrictedStockMember2020-01-012020-06-300001831363us-gaap:BridgeLoanMember2020-05-310001831363tern:TwoThousandAndTwentyNotesMembertern:SeriesCConvertiblePreferredStockMember2020-12-012020-12-310001831363us-gaap:RetainedEarningsMember2019-12-310001831363tern:OptionsOutstandingUnderIncentiveAwardPlansMember2020-12-310001831363tern:OptionsOutstandingUnderIncentiveAwardPlansMember2021-06-300001831363us-gaap:CommonStockMember2021-01-012021-03-310001831363us-gaap:ResearchAndDevelopmentExpenseMember2021-04-012021-06-300001831363us-gaap:CommercialPaperMember2021-06-300001831363tern:SeriesAConvertiblePreferredStockMember2020-06-300001831363tern:TERNOneHundredAndOneLicenseAgreementWithEliLillyMember2021-01-012021-06-300001831363tern:AssignmentAgreementMember2019-06-012019-06-300001831363us-gaap:RestrictedStockMember2020-12-310001831363us-gaap:NoncontrollingInterestMember2020-01-012020-03-310001831363tern:SeriesAConvertiblePreferredStockMembertern:LillyAsiaVenturesAffiliateMember2020-12-310001831363tern:SeriesCConvertiblePreferredStockMember2021-01-012021-03-310001831363us-gaap:CommonStockMember2021-04-012021-06-300001831363us-gaap:CommercialPaperMemberus-gaap:FairValueMeasurementsRecurringMember2021-06-300001831363us-gaap:RestrictedStockMember2021-01-012021-06-300001831363us-gaap:USGovernmentAgenciesDebtSecuritiesMemberus-gaap:FairValueMeasurementsRecurringMember2021-06-300001831363us-gaap:FairValueInputsLevel1Memberus-gaap:CashMemberus-gaap:FairValueMeasurementsRecurringMember2021-06-300001831363tern:TERNOneHundredAndOneLicenseAgreementWithEliLillyMember2021-04-012021-06-300001831363tern:HansohOptionAndLicenseAgreementMember2020-07-310001831363tern:SeriesAConvertiblePreferredStockMember2020-03-310001831363us-gaap:CommonStockMember2020-12-310001831363tern:SeriesBConvertiblePreferredStockMember2018-10-3100018313632021-01-012021-01-310001831363us-gaap:LoansPayableMemberus-gaap:BridgeLoanMemberus-gaap:FairValueMeasurementsRecurringMember2020-01-012020-12-310001831363us-gaap:NoncontrollingInterestMember2019-12-310001831363us-gaap:ResearchAndDevelopmentExpenseMembertern:TERNTwoHundredAndOneLicenseAgreementWithEliLillyMember2018-01-012018-12-3100018313632021-01-012021-06-300001831363us-gaap:AccumulatedOtherComprehensiveIncomeMember2019-12-310001831363tern:TwoThousandAndTwentyOneIncentiveAwardPlanMember2021-06-300001831363tern:AssignmentAgreementMember2020-04-012020-06-3000018313632021-02-280001831363us-gaap:EmployeeStockOptionMember2021-01-012021-06-300001831363us-gaap:AccountingStandardsUpdate201602Member2021-06-300001831363tern:TwoThousandAndTwentyNotesMember2020-05-310001831363tern:HansohOptionAndLicenseAgreementMember2020-07-012020-07-310001831363us-gaap:AccountingStandardsUpdate201613Member2021-06-300001831363us-gaap:RetainedEarningsMember2021-03-3100018313632021-04-012021-06-300001831363tern:SeriesCConvertiblePreferredStockMember2021-03-310001831363us-gaap:USGovernmentAgenciesDebtSecuritiesMemberus-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsRecurringMember2021-06-300001831363us-gaap:LoansPayableMembertern:SeriesCConvertiblePreferredStockMember2021-03-012021-03-310001831363us-gaap:EmployeeStockOptionMember2021-01-012021-06-300001831363us-gaap:AccumulatedOtherComprehensiveIncomeMember2020-06-300001831363tern:TERNTwoHundredAndOneLicenseAgreementWithEliLillyMember2020-04-012020-06-300001831363us-gaap:ResearchAndDevelopmentExpenseMember2020-04-012020-06-300001831363us-gaap:CommercialPaperMemberus-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsRecurringMember2021-06-300001831363us-gaap:LoansPayableMembertern:LAVSeriesAAndSeriesBPromissoryNoteMember2021-03-012021-03-310001831363tern:SeriesAConvertiblePreferredStockMembertern:LAVAffiliatesMember2020-12-310001831363us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-06-300001831363us-gaap:EmployeeStockOptionMember2020-01-012020-06-300001831363tern:SeriesBConvertiblePreferredStockMember2019-12-310001831363us-gaap:RetainedEarningsMember2021-04-012021-06-3000018313632021-01-012021-03-310001831363us-gaap:ForeignGovernmentDebtSecuritiesMemberus-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsRecurringMember2021-06-300001831363us-gaap:CommonStockMember2021-06-300001831363tern:SeriesAConvertiblePreferredStockMember2021-06-300001831363tern:SeriesBConvertiblePreferredStockMember2021-03-3100018313632021-08-060001831363us-gaap:CommonStockMember2020-04-012020-06-300001831363us-gaap:AccumulatedOtherComprehensiveIncomeMember2020-01-012020-03-310001831363tern:SharesAvailableForFutureGrantUnderIncentiveAwardPlansMember2021-06-300001831363us-gaap:LoansPayableMemberus-gaap:FairValueMeasurementsRecurringMember2020-12-310001831363tern:HansohOptionAndLicenseAgreementMembersrt:MaximumMember2020-07-012020-07-310001831363tern:ConversionOfOutstandingSharesOfConvertiblePreferredStockMember2020-12-310001831363tern:AssignmentAgreementMember2020-01-012020-06-300001831363tern:SeriesBConvertiblePreferredStockMember2020-03-310001831363tern:SeriesAConvertiblePreferredStockMember2017-04-012017-04-300001831363us-gaap:BridgeLoanMember2020-12-290001831363tern:SeriesCConvertiblePreferredStockMember2020-05-012020-05-310001831363us-gaap:RetainedEarningsMember2020-04-012020-06-300001831363us-gaap:CommonStockMember2021-03-310001831363tern:TERNTwoHundredAndOneLicenseAgreementWithEliLillyMember2021-04-012021-06-300001831363us-gaap:ForeignGovernmentDebtSecuritiesMemberus-gaap:FairValueMeasurementsRecurringMember2021-06-300001831363tern:LillyAsiaVenturesAffiliateMembertern:SeriesBConvertiblePreferredStockMember2020-12-310001831363us-gaap:RetainedEarningsMember2020-06-300001831363tern:OptionsToPurchaseConvertiblePreferredStockMember2021-01-012021-06-300001831363tern:SeriesBConvertiblePreferredStockMember2020-12-310001831363tern:TwoThousandAndTwentyNotesMember2020-12-012020-12-310001831363country:CNtern:TERNOneHundredAndOneLicenseAgreementWithEliLillyMember2018-02-012018-02-280001831363us-gaap:NoncontrollingInterestMember2021-06-300001831363tern:SeriesAConvertiblePreferredStockMember2021-03-310001831363us-gaap:FairValueMeasurementsRecurringMember2020-12-310001831363us-gaap:RetainedEarningsMember2020-03-310001831363us-gaap:CommonStockMember2019-12-310001831363us-gaap:ForeignCountryMember2020-01-012020-06-300001831363us-gaap:CorporateDebtSecuritiesMemberus-gaap:FairValueMeasurementsRecurringMember2021-06-300001831363us-gaap:LoansPayableMembertern:TwoThousandAndTwentyNotesMembertern:SeriesCConvertiblePreferredStockMemberus-gaap:FairValueMeasurementsRecurringMember2020-01-012020-12-310001831363us-gaap:AdditionalPaidInCapitalMember2021-06-300001831363tern:TERNTwoHundredAndOneLicenseAgreementWithEliLillyMember2021-01-012021-06-300001831363us-gaap:AdditionalPaidInCapitalMember2021-01-012021-03-310001831363us-gaap:EmployeeStockOptionMember2020-01-012020-12-310001831363tern:AssignmentAgreementMemberus-gaap:ResearchAndDevelopmentExpenseMember2019-01-012019-12-310001831363us-gaap:BridgeLoanMember2021-01-012021-06-300001831363tern:TwoThousandAndSeventeenIncentiveAwardPlanMember2021-02-012021-02-280001831363us-gaap:AdditionalPaidInCapitalMember2020-01-012020-03-310001831363tern:PWERMMethodMember2020-01-012020-12-310001831363us-gaap:RestrictedStockMember2021-01-012021-06-300001831363us-gaap:AdditionalPaidInCapitalMember2020-04-012020-06-300001831363us-gaap:AdditionalPaidInCapitalMember2021-04-012021-06-300001831363us-gaap:LoansPayableMemberus-gaap:FairValueMeasurementsRecurringMember2019-12-310001831363us-gaap:GeneralAndAdministrativeExpenseMember2021-04-012021-06-300001831363tern:TwoThousandAndTwentyNotesMember2020-05-012020-05-310001831363us-gaap:CommonStockMember2020-03-310001831363us-gaap:RestrictedStockMember2021-06-300001831363us-gaap:LoansPayableMembertern:LAVOptionExerciseMemberus-gaap:FairValueMeasurementsRecurringMember2020-01-012020-12-310001831363us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-04-012021-06-300001831363us-gaap:ForeignCountryMember2021-01-012021-06-3000018313632019-12-310001831363us-gaap:AdditionalPaidInCapitalMember2019-12-310001831363us-gaap:OtherExpenseMember2020-01-012020-12-310001831363tern:OptionsToPurchaseConvertiblePreferredStockMember2020-01-012020-06-300001831363tern:TwoThousandAndTwentyOneIncentiveAwardPlanMember2021-02-280001831363us-gaap:RetainedEarningsMember2020-12-310001831363us-gaap:EmployeeStockOptionMember2020-12-310001831363us-gaap:BridgeLoanMember2020-05-012020-05-310001831363us-gaap:AccountingStandardsUpdate201807Member2021-06-300001831363tern:SeriesBConvertiblePreferredStockMember2021-01-012021-03-310001831363us-gaap:NoncontrollingInterestMember2020-06-300001831363tern:SeriesCConvertiblePreferredStockMember2020-12-310001831363us-gaap:CorporateDebtSecuritiesMember2021-06-300001831363tern:SeriesCConvertiblePreferredStockMember2021-06-300001831363tern:TernsChinaBiotechnologyCompanyLimitedMembertern:SeriesBConvertiblePreferredStockMember2018-10-012018-10-310001831363us-gaap:RetainedEarningsMember2020-01-012020-03-310001831363us-gaap:NoncontrollingInterestMember2021-03-310001831363us-gaap:ResearchAndDevelopmentExpenseMember2021-01-012021-06-300001831363us-gaap:BridgeLoanMember2020-12-012020-12-310001831363us-gaap:FairValueInputsLevel1Memberus-gaap:MoneyMarketFundsMemberus-gaap:FairValueMeasurementsRecurringMember2021-06-300001831363us-gaap:ForeignCountryMember2020-04-012020-06-300001831363us-gaap:FairValueInputsLevel1Memberus-gaap:FairValueMeasurementsRecurringMember2020-12-310001831363us-gaap:ConvertiblePreferredStockMember2020-01-012020-06-300001831363us-gaap:FairValueInputsLevel1Memberus-gaap:FairValueMeasurementsRecurringMember2021-06-300001831363us-gaap:GeneralAndAdministrativeExpenseMember2020-01-012020-06-300001831363us-gaap:BridgeLoanMember2020-12-310001831363us-gaap:NoncontrollingInterestMember2020-12-310001831363tern:TERNOneHundredAndOneLicenseAgreementWithEliLillyMember2020-01-012020-06-300001831363us-gaap:AccumulatedOtherComprehensiveIncomeMember2020-12-310001831363us-gaap:LoansPayableMemberus-gaap:FairValueMeasurementsRecurringMember2020-01-012020-12-310001831363us-gaap:AdditionalPaidInCapitalMember2020-06-300001831363us-gaap:AdditionalPaidInCapitalMember2021-03-310001831363us-gaap:ForeignCountryMember2021-04-012021-06-3000018313632020-01-012020-03-310001831363us-gaap:NoncontrollingInterestMember2020-03-310001831363us-gaap:MoneyMarketFundsMemberus-gaap:FairValueMeasurementsRecurringMember2021-06-300001831363tern:SeriesAConvertiblePreferredStockMember2017-04-300001831363tern:SeriesCConvertiblePreferredStockMember2020-03-3100018313632020-03-310001831363us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-03-310001831363us-gaap:AccumulatedOtherComprehensiveIncomeMember2020-04-012020-06-300001831363tern:TERNTwoHundredAndOneLicenseAgreementWithEliLillyMember2018-03-012018-03-310001831363tern:TERNTwoHundredAndOneLicenseAgreementWithEliLillyMember2020-01-012020-06-300001831363us-gaap:IPOMember2021-02-2800018313632021-03-310001831363tern:SeriesAConvertiblePreferredStockMembertern:TernsChinaBiotechnologyCompanyLimitedMember2017-04-012017-04-3000018313632021-06-300001831363us-gaap:EmployeeStockOptionMember2021-06-300001831363us-gaap:FairValueInputsLevel3Memberus-gaap:FairValueMeasurementsRecurringMember2020-12-310001831363tern:AssignmentAgreementMember2021-04-012021-06-300001831363tern:SeriesCConvertiblePreferredStockMember2020-12-012020-12-310001831363tern:HansohOptionAndLicenseAgreementMember2020-01-012020-12-310001831363us-gaap:GeneralAndAdministrativeExpenseMember2020-04-012020-06-300001831363us-gaap:RetainedEarningsMember2021-06-300001831363us-gaap:FairValueInputsLevel2Memberus-gaap:CorporateDebtSecuritiesMemberus-gaap:FairValueMeasurementsRecurringMember2021-06-30xbrli:puretern:Planxbrli:sharesiso4217:CNYtern:Voteiso4217:USDxbrli:sharesiso4217:USD

 

 

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 June 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: 001-39926

 

Terns Pharmaceuticals, Inc.

(Exact Name of Registrant as Specified in its Charter)

 

 

Delaware

98-1448275

(State or other jurisdiction of

incorporation or organization)

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

1065 East Hillsdale Blvd., Suite 100

Foster City, California

94404

(Address of principal executive offices)

(Zip Code)

 

Registrant’s telephone number, including area code: (650525-5535

 

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, $0.0001 par value per share

 

TERN

 

The 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, 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 6, 2021, the registrant had 25,130,613 shares of common stock, $0.0001 par value per share, outstanding.

 

 

 


 

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains forward-looking statements concerning our business, operations and financial performance and condition, as well as our plans, objectives and expectations for our business, operations and financial performance and condition. Any statements contained herein that are not statements of historical facts may be deemed to be forward-looking statements. These statements involve known and unknown risks, uncertainties related to the global COVID-19 pandemic and other important factors that are in some cases beyond our control and may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements.

In some cases, you can identify forward-looking statements by terminology such as “aim,” “anticipate,” “assume,” “believe,” “contemplate,” “continue,” “could,” “due,” “estimate,” “expect,” “goal,” “intend,” “may,” “objective,” “plan,” “predict,” “potential,” “positioned,” “seek,” “should,” “target,” “will,” “would,” and other similar expressions that are predictions of or indicate future events and future trends, or the negative of these terms or other comparable terminology. These forward-looking statements include, but are not limited to, statements about:

our expectations regarding the potential market size and size of the potential patient populations for our single-agent and combination therapy candidates and any future single-agent and combination therapy candidates if approved for commercial use;
our clinical and regulatory development plans;
our expectations with regard to the results of our clinical studies, preclinical studies and research and development programs, including the timing and availability of data from such studies;
the timing of commencement of future nonclinical studies and clinical trials and research and development programs;
our ability to acquire, discover, develop and advance single-agent and combination therapy candidates into, and successfully complete, clinical trials;
our intentions and our ability to establish collaborations and/or partnerships;
the timing or likelihood of regulatory filings and approvals for our single-agent and combination therapy candidates;
our commercialization, marketing and manufacturing capabilities and expectations;
our intentions with respect to the commercialization of our single-agent and combination therapy candidates;
the pricing and reimbursement of our single-agent and combination therapy candidates, if approved;
the potential effects of COVID-19 on our preclinical and clinical programs and business;
the implementation of our business model and strategic plans for our business and single-agent and combination therapy candidates, including additional indications which we may pursue;
the scope of protection we are able to establish, maintain, protect and enforce for intellectual property rights covering our single-agent and combination therapy candidates including the projected terms of patent protection;
estimates of our expenses, future revenue, capital requirements, our needs for additional financing and our ability to obtain additional capital;
our future financial performance; and
developments and projections relating to our competitors and our industry, including competing products.

 

i


 

Table of Contents

 

Page

PART I.

FINANCIAL INFORMATION

 

Item 1.

Condensed Consolidated Financial Statements (Unaudited)

1

Condensed Consolidated Balance Sheets

1

Condensed Consolidated Statements of Operations and Comprehensive Loss

2

Condensed Consolidated Statements of Noncontrolling Interest, Convertible Preferred Stock and Stockholders’ Equity (Deficit)

3

Condensed Consolidated Statements of Cash Flows

4

Notes to Unaudited Condensed Consolidated Financial Statements

5

Item 2.

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

20

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

24

Item 4.

Controls and Procedures

24

PART II.

OTHER INFORMATION

 

Item 1.

Legal Proceedings

26

Item 1A.

Risk Factors

26

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

27

Item 3.

Defaults Upon Senior Securities

27

Item 4.

Mine Safety Disclosures

27

Item 5.

Other Information

27

Item 6.

Exhibits

28

Signatures

29

 

 

 

 

 

 

 

ii


 

PART I—FINANCIAL INFORMATION

Item 1. Condensed Consolidated Financial Statements (Unaudited).

Terns Pharmaceuticals, Inc.

Condensed Consolidated Balance Sheets

(Unaudited; in thousands, except share and per share data)

 

 

 

June 30, 2021

 

 

December 31, 2020

 

Assets

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

67,589

 

 

$

74,854

 

Marketable securities

 

 

117,495

 

 

 

 

Notes receivable

 

 

 

 

 

12,718

 

Deferred offering costs

 

 

 

 

 

2,137

 

Prepaid expenses and other current assets

 

 

1,788

 

 

 

1,160

 

Total current assets

 

 

186,872

 

 

 

90,869

 

Property and equipment, net

 

 

959

 

 

 

1,175

 

Other assets

 

 

176

 

 

 

246

 

Total assets

 

$

188,007

 

 

$

92,290

 

Liabilities, Convertible Preferred Stock and Stockholders’ Equity (Deficit)

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Accounts payable

 

$

1,688

 

 

$

935

 

Accrued expenses and other current liabilities

 

 

4,130

 

 

 

9,006

 

Loans payable

 

 

 

 

 

12,880

 

Total current liabilities

 

 

5,818

 

 

 

22,821

 

Deferred rent, net of current portion

 

 

193

 

 

 

220

 

Taxes payable, non-current

 

 

664

 

 

 

657

 

Total liabilities

 

 

6,675

 

 

 

23,698

 

Commitments and contingencies

 

 

 

 

 

 

Convertible preferred stock, $0.0001 par value; 10,000,000 and
   
188,029,084 shares authorized as of June 30, 2021 and December 31, 2020,
   respectively;
no shares issued or outstanding as of June 30, 2021;
   
12,958,452 shares issued and outstanding as of December 31, 2020

 

 

 

 

 

186,033

 

Stockholders’ equity (deficit):

 

 

 

 

 

 

Common stock, $0.0001 par value, 150,000,000 and 299,700,000 shares
   authorized at June 30, 2021 and December 31, 2020, respectively;
   
25,130,613 and 337,508 shares issued and outstanding as of
   June 30, 2021 and December 31, 2020, respectively

 

 

3

 

 

 

 

Additional paid-in capital

 

 

337,493

 

 

 

14,598

 

Accumulated other comprehensive loss

 

 

(174

)

 

 

(124

)

Accumulated deficit

 

 

(155,990

)

 

 

(131,915

)

Total stockholders’ equity (deficit)

 

 

181,332

 

 

 

(117,441

)

Total liabilities, convertible preferred stock
    and stockholders’ equity

 

$

188,007

 

 

$

92,290

 

 

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

1


 

Terns Pharmaceuticals, Inc.

Condensed Consolidated Statements of Operations and Comprehensive Loss

(Unaudited; in thousands, except share and per share data)

 

 

 

Three Months Ended June 30,

 

 

Six Months Ended June 30,

 

 

 

2021

 

 

2020

 

 

2021

 

 

2020

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

Research and development

 

$

5,961

 

 

$

7,611

 

 

$

14,696

 

 

$

14,855

 

General and administrative

 

 

4,857

 

 

 

2,486

 

 

 

9,418

 

 

 

4,665

 

Total operating expenses

 

 

10,818

 

 

 

10,097

 

 

 

24,114

 

 

 

19,520

 

Loss from operations

 

 

(10,818

)

 

 

(10,097

)

 

 

(24,114

)

 

 

(19,520

)

Other income:

 

 

 

 

 

 

 

 

 

 

 

 

Interest income

 

 

55

 

 

 

2

 

 

 

66

 

 

 

52

 

Other income, net

 

 

39

 

 

 

250

 

 

 

26

 

 

 

417

 

Total other income, net

 

 

94

 

 

 

252

 

 

 

92

 

 

 

469

 

Loss before income tax expense

 

 

(10,724

)

 

 

(9,845

)

 

 

(24,022

)

 

 

(19,051

)

Income tax expense

 

 

(14

)

 

 

 

 

 

(53

)

 

 

 

Net loss

 

 

(10,738

)

 

 

(9,845

)

 

 

(24,075

)

 

 

(19,051

)

Net loss attributable to non-controlling interest

 

 

 

 

 

(157

)

 

 

 

 

 

(362

)

Net loss attributable to common stockholders

 

$

(10,738

)

 

$

(9,688

)

 

$

(24,075

)

 

$

(18,689

)

 

 

 

 

 

 

 

 

 

 

 

 

Net loss per share attributable to common stockholders, basic and diluted

 

$

(0.43

)

 

$

(33.09

)

 

$

(1.19

)

 

$

(73.48

)

Weighted average common stock outstanding, basic and diluted

 

 

25,109,973

 

 

 

292,813

 

 

 

20,162,496

 

 

 

254,351

 

 

 

 

 

 

 

 

 

 

 

 

 

Other comprehensive loss:

 

 

 

 

 

 

 

 

 

 

 

 

Net loss

 

$

(10,738

)

 

$

(9,845

)

 

$

(24,075

)

 

$

(19,051

)

Unrealized gain (loss) on available-for-sale securities, net of tax

 

 

36

 

 

 

 

 

 

(7

)

 

 

 

Foreign exchange translation adjustment, net of tax

 

 

22

 

 

 

16

 

 

 

(43

)

 

 

(160

)

Comprehensive loss

 

 

(10,680

)

 

 

(9,829

)

 

 

(24,125

)

 

 

(19,211

)

Less: Comprehensive loss attributable to non-controlling interest

 

 

 

 

 

(157

)

 

 

 

 

 

(362

)

Comprehensive loss attributable to common stockholders

 

$

(10,680

)

 

$

(9,672

)

 

$

(24,125

)

 

$

(18,849

)

 

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

2


 

Terns Pharmaceuticals, Inc.

Condensed Consolidated Statements of Noncontrolling Interest, Convertible Preferred Stock and Stockholders’ Equity (Deficit)

(Unaudited; in thousands, except share data)

 

Three and Six Months Ended June 30, 2021

 

 

 

Non-
Controlling

 

 

Series A
Convertible
Preferred Stock

 

 

Series B
Convertible
Preferred Stock

 

 

Series C
Convertible
Preferred Stock

 

 

 

Common Stock

 

 

Additional
Paid-in

 

 

Accumulated
Other
Comprehensive

 

 

Accumulated

 

 

Total
Stockholders’
(Deficit)

 

 

 

Interest

 

 

Shares

 

 

Amount

 

 

Shares

 

 

Amount

 

 

Shares

 

 

Amount

 

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Loss

 

 

Deficit

 

 

Equity

 

Balances at December 31, 2020

 

$

 

 

 

2,857,142

 

 

$

30,000

 

 

 

2,600,645

 

 

$

68,995

 

 

 

7,500,665

 

 

$

87,038

 

 

 

 

337,508

 

 

$

 

 

$

14,598

 

 

$

(124

)

 

$

(131,915

)

 

$

(117,441

)

Conversion of preferred stock to common stock upon closing of the initial public offering

 

 

 

 

 

(2,857,142

)

 

 

(30,000

)

 

 

(2,600,645

)

 

 

(68,995

)

 

 

(7,500,665

)

 

 

(87,038

)

 

 

 

16,079,230

 

 

 

2

 

 

 

186,031

 

 

 

 

 

 

 

 

 

186,033

 

Sale of common stock in initial public offering, net of issuance costs of $3,339

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

8,625,000

 

 

 

1

 

 

 

133,022

 

 

 

 

 

 

 

 

 

133,023

 

Stock-based compensation expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,832

 

 

 

 

 

 

 

 

 

1,832

 

Unrealized loss on available-for-sale securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(43

)

 

 

 

 

 

(43

)

Foreign exchange translation adjustment

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(65

)

 

 

 

 

 

(65

)

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(13,337

)

 

 

(13,337

)

Balances at March 31, 2021

 

$

 

 

 

 

 

$

 

 

 

 

 

$

 

 

 

 

 

$

 

 

 

 

25,041,738

 

 

$

3

 

 

$

335,483

 

 

$

(232

)

 

$

(145,252

)

 

$

190,002

 

Exercise of stock options

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

17,446

 

 

 

 

 

 

101

 

 

 

 

 

 

 

 

 

101

 

Vesting of restricted stock

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

71,429

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock-based compensation expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,909

 

 

 

 

 

 

 

 

 

1,909

 

Unrealized gain on available-for-sale securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

36

 

 

 

 

 

 

36

 

Foreign exchange translation adjustment

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

22

 

 

 

 

 

 

22

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(10,738

)

 

 

(10,738

)

Balances at June 30, 2021

 

$

 

 

 

 

 

$

 

 

 

 

 

$

 

 

 

 

 

$

 

 

 

 

25,130,613

 

 

$

3

 

 

$

337,493

 

 

$

(174

)

 

$

(155,990

)

 

$

181,332

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three and Six Months Ended June 30, 2020

 

 

 

Non-
Controlling

 

 

Series A
Convertible
Preferred Stock

 

 

Series B
Convertible
Preferred Stock

 

 

Series C
Convertible
Preferred Stock

 

 

 

Common Stock

 

 

Additional
Paid-in

 

 

Accumulated
Other
Comprehensive

 

 

Accumulated

 

 

Total
Stockholders’

 

 

 

Interest

 

 

Shares

 

 

Amount

 

 

Shares

 

 

Amount

 

 

Shares

 

 

Amount

 

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Loss

 

 

Deficit

 

 

Deficit

 

Balances at December 31, 2019

 

$

14,117

 

 

 

2,089,285

 

 

$

21,938

 

 

 

2,384,195

 

 

$

73,029

 

 

 

 

 

$

 

 

 

 

215,890

 

 

$

 

 

$

1,208

 

 

$

(106

)

 

$

(91,862

)

 

$

(90,760

)

Stock-based compensation expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

202

 

 

 

 

 

 

 

 

 

202

 

Foreign exchange translation adjustment

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(176

)

 

 

 

 

 

(176

)

Net loss

 

 

(205

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(9,001

)

 

 

(9,001

)

Balances at March 31, 2020

 

$

13,912

 

 

 

2,089,285

 

 

$

21,938

 

 

 

2,384,195

 

 

$

73,029

 

 

 

 

 

$

 

 

 

 

215,890

 

 

$

 

 

$

1,410

 

 

$

(282

)

 

$

(100,863

)

 

$

(99,735

)

Vesting of restricted stock

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

83,333

 

 

 

 

 

 

23

 

 

 

 

 

 

 

 

 

23

 

Stock-based compensation expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

190

 

 

 

 

 

 

 

 

 

190

 

Capital discount on issuance of loans payable

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(87

)

 

 

 

 

 

 

 

 

(87

)

Foreign exchange translation adjustment

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

16

 

 

 

 

 

 

16

 

Net loss

 

 

(157

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(9,688

)

 

 

(9,688

)

Balances at June 30, 2020

 

$

13,755

 

 

 

2,089,285

 

 

$

21,938

 

 

 

2,384,195

 

 

$

73,029

 

 

 

 

 

$

 

 

 

 

299,223

 

 

$

 

 

$

1,536

 

 

$

(266

)

 

$

(110,551

)

 

$

(109,281

)

 

3


 

Terns Pharmaceuticals, Inc.

Condensed Consolidated Statements of Cash Flows

(Unaudited; in thousands)

 

 

 

Six Months Ended June 30,

 

 

 

2021

 

 

2020

 

Cash flows from operating activities:

 

 

 

 

 

 

Net loss

 

$

(24,075

)

 

$

(19,051

)

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

 

 

 

 

 

 

Stock-based compensation expense

 

 

3,741

 

 

 

392

 

Depreciation and amortization expense

 

 

291

 

 

 

187

 

Amortization on marketable securities, net

 

 

150

 

 

 

37

 

Change in deferred taxes and uncertain tax positions

 

 

38

 

 

 

131

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

Prepaid expenses and other current assets

 

 

(581

)

 

 

686

 

Other assets

 

 

(8

)

 

 

(89

)

Accounts payable

 

 

1,327

 

 

 

(1,556

)

Accrued expenses and other current liabilities

 

 

(3,932

)

 

 

3,168

 

Deferred rent

 

 

(27

)

 

 

(14

)

Net cash used in operating activities

 

 

(23,076

)

 

 

(16,109

)

Cash flows from investing activities:

 

 

 

 

 

 

Purchase of property and equipment

 

 

(66

)

 

 

(532

)

Purchase of investments

 

 

(137,593

)

 

 

(715

)

Proceeds from sales and maturities of investments

 

 

19,941

 

 

 

7,992

 

Net cash (used in) provided by investing activities

 

 

(117,718

)

 

 

6,745

 

Cash flows from financing activities:

 

 

 

 

 

 

Net proceeds from initial public offering

 

 

136,362