UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM
(Mark One)
QUARTERLY REPORT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended
OR
TRANSITION REPORT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF |
For the transition period from to
Commission File Number:
(Exact Name of Registrant as Specified in its Charter)
(State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer |
(Address of principal executive offices) |
(Zip Code) |
Registrant’s telephone number, including area code: (
Securities registered pursuant to Section 12(b) of the Act:
Title of each class |
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Trading Symbol(s) |
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Name of each exchange on which registered |
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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).
Ick 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 |
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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 July 29, 2021, the registrant had
Table of Contents
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Page |
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PART I. |
3 |
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Item 1. |
3 |
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3 |
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Condensed Consolidated Statements of Operations and Comprehensive Loss |
4 |
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5 |
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Consolidated Statements of Convertible Preferred Stock and Stockholders’ Equity |
6 |
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Notes to Unaudited Condensed Consolidated Financial Statements |
7 |
Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
16 |
Item 3. |
29 |
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Item 4. |
29 |
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PART II. |
29 |
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Item 2. |
30 |
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Item 6. |
31 |
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32 |
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FORWARD-LOOKING STATEMENTS
This report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act, that involve substantial risks and uncertainties. In some cases, you can identify forward-looking statements by the words “may,” “might,” “will,” “could,” “would,” “should,” “expect,” “intend,” “plan,” “objective,” “anticipate,” “believe,” “estimate,” “predict,” “project,” “potential,” “continue” and “ongoing,” or the negative of these terms, or other comparable terminology intended to identify statements about the future. These statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, levels of activity, performance or achievements to be materially different from the information expressed or implied by these forward-looking statements. Although we believe that we have a reasonable basis for each forward-looking statement contained in this report, we caution you that these statements are based on a combination of facts and factors currently known by us and our expectations of the future, about which we cannot be certain. Forward-looking statements include statements about:
You should refer to “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2020 and in "Item 1a. Risk Factors" below for a discussion of important factors that may cause our actual results to differ materially from those expressed or implied by our forward-looking statements. As a result of these factors, we cannot assure you that the forward-looking statements in this report will prove to be accurate. Furthermore, if our forward-looking statements prove to be inaccurate, the inaccuracy may be material. In light of the significant uncertainties in these forward-looking statements, you should not regard these statements as a representation or warranty by us or any other person that we will achieve our objectives and plans in any specified time frame, or at all. The forward-looking statements in this report represent our views as of the date of this report. We anticipate that subsequent events and developments may cause our views to change. However, while we may elect to update these forward-looking statements at some point in the future, we undertake no obligation to publicly update any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law. You should, therefore, not rely on these forward-looking statements as representing our views as of any date subsequent to the date of this report.
You should read this report and the documents that we reference in this report, completely and with the understanding that our actual future results may be materially different from what we expect. We qualify all of our forward-looking statements by these cautionary statements.
All brand names or trademarks appearing in this report are the property of their respective owners. Solely for convenience, the trademarks and trade names in this report are referred to without the symbols ® and TM, but such references should not be construed as any indication that their respective owners will not assert, to the fullest extent under applicable law, their rights thereto.
Unless the context requires otherwise, references in this report to “Landos,” the “Company,” “we,” “us,” and “our” refer to Landos Biopharma, Inc. and its subsidiaries.
PART I—FINANCIAL INFORMATION
Item 1. Financial Statements. (Unaudited)
Landos Biopharma, Inc.
Condensed Consolidated Balance Sheets
(Unaudited)
(in thousands, except share and per share amounts)
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June 30, |
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December 31, |
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2021 |
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2020 |
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Assets |
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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, available for sale |
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Incentive and tax receivables |
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Prepaid expenses and other current assets |
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2,598 |
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Deferred offering costs |
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Total current assets |
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Property, plant and equipment-net |
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Total assets |
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$ |
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$ |
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Liabilities, convertible preferred stock and stockholders’ (deficit) 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 liabilities |
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Other current liabilities |
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255 |
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Total current liabilities |
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Other liabilities |
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Total liabilities |
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Commitments and Contingencies |
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Convertible preferred stock, $ |
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Stockholders’ (deficit) equity: |
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Preferred stock, $ |
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Common stock, $ |
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Additional paid-in-capital |
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Accumulated other comprehensive gain (loss) |
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( |
) |
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Accumulated deficit |
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( |
) |
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( |
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Total stockholders' (deficit) equity |
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( |
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Total liabilities, convertible preferred stock and stockholders’ (deficit) equity |
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$ |
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$ |
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The accompanying notes are an integral part of these condensed consolidated financial statements.
3
Landos Biopharma, Inc.
Condensed Consolidated Statements of Operations and Comprehensive Loss
(Unaudited)
(in thousands, except share and per share amounts)
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Three Months Ended June 30, |
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Six Months Ended June 30, |
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2021 |
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2020 |
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2021 |
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2020 |
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$ |
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$ |
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Operating expenses: |
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Research and development |
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$ |
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General and administrative |
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Total operating expenses |
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Gain/(Loss) from operations |
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( |
) |
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( |
) |
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( |
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Other income (expenses): |
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R&D Incentive Income |
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Gain/(loss) from foreign exchange |
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( |
) |
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( |
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Other income, net |
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Other income (expense), net |
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Net income/(loss) |
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( |
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( |
) |
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( |
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Net income/(loss) per share, basic and diluted |
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( |
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( |
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( |
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Weighted-average shares used to compute net loss per share, basic |
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Weighted-average shares used to compute net loss per share, diluted |
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Net income/(loss) |
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( |
) |
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( |
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( |
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Unrealized gain/(loss) on available-for-sale securities |
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( |
) |
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( |
) |
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Comprehensive income/(loss) |
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( |
) |
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( |
) |
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( |
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The accompanying notes are an integral part of these condensed consolidated financial statements.
4
Landos Biopharma, Inc.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
(in thousands)
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Six Months Ended June 30, |
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2021 |
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2020 |
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CASH FLOWS FROM OPERATING ACTIVITIES: |
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Net income/(loss) |
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$ |
( |
) |
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$ |
( |
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Adjustments to reconcile net earnings to net cash used in operating activities: |
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Compensation expense related to vesting of common stock issued to Xontogeny |
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Depreciation of property and equipment |
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Accrued interest on marketable securities |
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Stock-based compensation expense |
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Net realized gain/(loss) on sale of marketable securities |
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Net (accretion of discount) amortization of premium on marketable securities |
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Gain/(loss) from foreign exchange |
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Other |
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Changes in operating assets and liabilities: |
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Incentive and tax receivables |
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( |
) |
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Prepaid expenses and other assets |
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( |
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( |
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Accounts payable |
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Other liabilities |
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( |
) |
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( |
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Net cash (used in) operating activities |
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( |
) |
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( |
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CASH FLOWS FROM INVESTING ACTIVITIES: |
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Purchase of property and equipment |
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( |
) |
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( |
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Purchase of available-for-sale marketable securities |
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( |
) |
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( |
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Proceeds from sales and maturities of marketable securities |
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Net cash (used in) provided by investing activities |
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( |
) |
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CASH FLOWS FROM FINANCING ACTIVITIES: |
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Net proceeds from initial public offering |
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Proceeds from exercise of stock options |
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Net cash provided by financing activities |
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Net change in cash and cash equivalents |
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( |
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Cash and cash equivalents at beginning of period |
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Effect of exchange rates on cash |
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( |
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Cash and cash equivalents at end of period |
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$ |
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$ |
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Supplemental non-cash disclosure: |
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Deferred offering costs included in accounts payable and accrued liabilities |
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$ |
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$ |
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Purchases of fixed assets in accounts payable |
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Reclassification of par to additional paid-in-capital |
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Reclassification of series A and B convertible preferred stock to common stock |
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Unrealized gain on available-for-sale marketable securities |
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The accompanying notes are an integral part of these condensed consolidated financial statements.
5
Landos Biopharma, Inc.
Consolidated Statements of Convertible Preferred Stock and Stockholders’ Equity
(Unaudited)
(in thousands, except share amounts)
|
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Convertible |
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Convertible |
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Common stock |
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Shares |
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Amounts |
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Shares |
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Amounts |
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Shares |
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Amounts |
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Additional |
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Tranche |
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Accumulated |
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Accumulated |
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Total |
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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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$ |
( |
) |
|
$ |
( |
) |
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$ |
( |
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|||||
Compensation expense related to vesting of common stock issued to Xontogeny |
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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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— |
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Unrealized gain / (loss) on available-for-sale 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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— |
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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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— |
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— |
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( |
) |
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— |
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( |
) |
Balance at March 31, 2020 |
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— |
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( |
) |
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( |
) |
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( |
) |
|||||||
Compensation expense related to vesting of common stock issued to Xontogeny |
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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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— |
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Unrealized gain / (loss) on available-for-sale 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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— |
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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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— |
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— |
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( |
) |
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— |
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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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Convertible |
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Common stock |
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Shares |
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Amounts |
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Shares |
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Amounts |
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Additional |
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Tranche |
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Accumulated |
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Accumulated |
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Total |
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Balance at December 31, 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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$ |
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$ |
( |
) |
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||||||||
Conversion of preferred stock to common stock upon closing of the initial public offering |
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( |
) |
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( |
) |
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— |
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— |
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— |
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Issuance of common stock, net of issuance costs |
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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 compensation expense |
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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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— |
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Exercise of Stock Options |
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— |
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— |
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— |
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— |
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— |
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Unrealized gain / (loss) on available-for-sale securities |
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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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( |
) |
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— |
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( |
) |
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Balance at March 31, 2021 |
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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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$ |
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Stock compensation expense |
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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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— |
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Exercise of Stock Options |
|
|
— |
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— |
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|
— |
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— |
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— |
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— |
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Unrealized gain / (loss) on available-for-sale securities |
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( |
) |
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( |
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Net income |
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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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— |
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Balance at June 30, 2021 |
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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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$ |
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The accompanying notes are an integral part of these consolidated financial statements.
6
Landos Biopharma, Inc.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
1. Organization and description of the business
Landos Biopharma, Inc. (“Landos”) is a late-clinical-stage biopharmaceutical company that utilizes its LANCE® Advanced A.I. platform to discover and develop novel oral therapeutics for patients with autoimmune diseases. To date LANCE® has discovered seven new mechanisms of action, including the LANCL2, NLRX1 and PLXDC2 immunometabolic pathways. These new pathways offer a unique and differentiated way to modulate dysregulated immune responses that are connected to autoimmune diseases, a market expected to reach $
The Company’s core expertise is in the development of therapeutic candidates that target novel pathways at the interface of immunity and metabolism. Based on our understanding of the role that cellular metabolic pathways have on modulating inflammatory responses, the Company aims to down-regulate these inflammatory responses by changing the metabolic processes in targeted cells.
The Company leverages its proprietary advanced AI-based precision medicine platform and growing reference datasets, which we refer to as our LANCE® advanced A.I. platform, to identify novel therapeutic targets and biomarkers based on predictions of immunometabolic function and create therapeutic candidates for autoimmune disease to engage those targets in areas of unmet medical need.
The Company utilizes its unique and proprietary animal models, which allows precise conduct of its research and development activities, as compared to other animal models available for purchase in the marketplace, to evaluate safety and efficacy profiles of its product candidates.
LANCE Platform and Expansible Inflammation & Immunology Pipeline
The Company’s LANCE platform accelerates the drug development process by shortening timelines and reducing costs. LANCE® has yielded 17 active preclinical and clinical programs through June 30, 2021. In addition, the Company expects LANCE® will continue to assist in developing new and novel product candidates to enhance the Company’s expansible inflammation & immunology (I&I) pipeline in the future.
Lead Therapeutic Assets and Clinical Trial Plans
Lead asset omilancor is a novel once-daily, oral, gut-restricted small molecule drug candidate that targets the LANCL2 pathway for the treatment of ulcerative colitis (“UC”), Crohn’s disease (“CD”), Eosinophilic Esophagitis (“EOE”) and topical formulations have been developed for psoriasis and atopic dermatitis.
The Company successfully completed a global Phase 2 clinical trial of omilancor for UC in 2020. And, in June 2021, the company successfully completed an End-of-Phase 2 meeting with the US FDA and secured agreement on the key elements necessary for regulatory approval. This has enabled the company to initiate clinical trial site feasibility studies for the planned pivotal global Phase 3 program of omilancor in UC that will consist of two concurrent global pivotal trials: PACIFY I and PACIFY II. The Company believes that the agreed upon inclusion criteria of the pending global Phase 3 program, if successful, may potentially make omilancor eligible to be prescribed to approximately
NX-13 is a novel, once-daily, oral, gut-restricted small molecule drug candidate for the treatment of inflammatory bowel disease, that targets the NLRX1 pathway. NX-13 is undergoing Phase 1b clinical testing in 40 UC patients with data readout expected in the first quarter of 2022.
Continued Drug Discovery and Pipeline Development Activities
The Company is a platform company that continues to discover innovative therapeutic targets, with the aim to begin clinical development of at least one new drug candidate in each of the next five years. The Company also has a robust pipeline of
7
Business Development and Financing Activities
We are actively seeking cash inflows from non-dilutive product candidate licensing activities to negotiate for up-front and milestone payments and potential royalty payments on future sales for our pipeline of product candidates while advancing our core programs to commercialization.
In May 2021, Landos received $
During February 2021, the Company completed its initial public offering (“IPO”) that resulted in net proceeds of $
We will need additional financing to initiate and complete our planned clinical trials, to continue and expand our research and development operations that support our planned discovery, development and clinical and regulatory activities, to adequately prepare for commercialization of our product candidates that may achieve regulatory approval in the future.
Liquidity and Capital Resources
As of June 30, 2021, the Company had cash, cash equivalents and marketable securities of $
2. Summary of significant accounting policies
Basis of presentation
Use of estimates
The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of expenses during the reporting period. Significant estimates and assumptions made in the accompanying consolidated financial statements include but are not limited to accrued liabilities, fair value of equity instruments, and uncertain tax positions. The Company evaluates its estimates and assumptions on an ongoing basis using historical experience and other factors and adjusts those estimates and assumptions when facts and circumstances dictate. Actual results could materially differ from those estimates
COVID-19
In March 2020, the World Health Organization declared the outbreak of the novel coronavirus disease (“COVID-19”) as a pandemic, and the Company expects its operations in all locations to be affected as the virus and its variants continue to proliferate. The Company has adjusted certain aspects of its operations to protect employees and customers while still meeting customers’ needs for vital technology. The Company will continue to monitor the situation closely and it is possible that further measures will be
8
implemented. In light of the uncertainty as to the severity and duration of the pandemic, the impact on the financial position of the company, if any, is uncertain at this time.
Revenue Recognition for Out-License Arrangements
Under ASC Topic 606, “Revenue from Contracts with Customers” (“Topic 606”), an entity recognizes revenue when its customer obtains control of promised goods or services, in an amount that reflects the consideration that the entity expects to receive in exchange for those goods or services. To determine revenue recognition for arrangements that an entity determines are within the scope of Topic 606, the entity performs the following five steps: (i) identify the contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price, including variable consideration, if any; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when (or as) the entity satisfies a performance obligation.
The Company assesses its license arrangements within the scope of Topic 606 in accordance with this framework as follows:
License revenue
The Company first assesses whether the goods or services promised within each contract are distinct to identify those that are performance obligations. This assessment involves subjective determinations and requires management to make judgments about the individual promised goods or services and whether such are separable from the other aspects of the contractual relationship. In assessing whether a promised good or service is distinct, and therefore a performance obligation, the Company considers factors such as the research, manufacturing and commercialization capabilities of the customer and the availability of the associated expertise in the general marketplace. The Company also considers the intended benefit of the contract in assessing whether a promised good or service is separately identifiable from other promises in the contract. If a promised good or service is not distinct, the Company is required to combine that good or service with other promised goods or services until it identifies a bundle of goods or services that is distinct. Arrangements that include rights to additional goods or services that are exercisable at a customer’s discretion are generally considered options. The Company assesses if these options provide a material right to the customer and if so, they are considered performance obligations.
The transaction price is determined and allocated to the identified performance obligations in proportion to their stand-alone selling prices (“SSP”) on a relative SSP basis. SSP is based on observable prices of the performance obligations or, when such prices are not observable, are estimated based on factors such as forecasted revenues or costs, development timelines, discount rates, and probabilities of technical and regulatory success.
If the consideration promised in a contract includes a variable amount, the Company estimates the amount of consideration to which it will be entitled in exchange for transferring the promised goods or services to a customer. The Company determines the amount of variable consideration by using the expected value method or the most likely amount method. The Company includes the amount of estimated variable consideration in the transaction price to the extent that it is probable that a significant reversal of cumulative revenue recognized will not occur. At the end of each subsequent reporting period, the Company re-evaluates the estimated variable consideration included in the transaction price and any related constraint, and if necessary, adjusts its estimate of the overall transaction price. Any such adjustments are recorded on a cumulative catch-up basis in the period of adjustment.
If an arrangement includes development, regulatory or commercial milestone payments, the Company evaluates whether the milestones are considered probable of being reached and estimates the amount to be included in the transaction price using the most likely amount method. If it is probable that a significant revenue reversal would not occur, the associated milestone value is included in the transaction price. Milestone payments that are not within the Company’s control or the licensee’s control, such as regulatory approvals, are generally not considered probable of being achieved until those approvals are received.
In determining the transaction price, the Company adjusts consideration for the effects of the time value of money if the timing of payments provides the Company with a significant benefit of financing. The Company does not assess whether a contract has a significant financing component if the expectation at contract inception is such that the period between payment by the licensee and the transfer of the promised goods or services to the licensees will be one year or less. For arrangements with licenses of intellectual property that include sales-based royalties, including milestone payments based on the level of sales, and the license is deemed to be the predominant item to which the royalties relate, the Company recognizes royalty revenue and sales-based milestones at the later of (i) when the related sales occur, or (ii) when the performance obligation to which the royalty has been allocated has been satisfied. The Company recognizes as revenue the amount of the transaction price that is allocated to the respective performance obligation