10-Q
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Table of Contents

 

 

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

FORM 10-Q

 

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2022

OR

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _________ to _________

Commission File Number: 001-38541

 

Magenta Therapeutics, Inc.

(Exact name of registrant as specified in its charter)

 

 

Delaware

81-0724163

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer

Identification No.)

 

 

100 Technology Square

Cambridge, Massachusetts

02139

(Address of principal executive offices)

(Zip Code)

(857) 242-0170

(Registrant’s telephone number, including area code)

 

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, $0.001 Par Value

MGTA

The Nasdaq Global 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, a 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 October 31, 2022, there were 60,555,520 shares of Common Stock, $0.001 par value per share, outstanding.

 

 

 


Table of Contents

 

Magenta Therapeutics, Inc.

INDEX

 

 

 

 

Page

 

PART I – FINANCIAL INFORMATION

 

 

 

Item 1. Financial Statements (unaudited)

5

Consolidated Balance Sheets

5

Consolidated Statements of Operations and Comprehensive Loss

6

Consolidated Statements of Stockholders’ Equity

7

Consolidated Statements of Cash Flows

9

Notes to Consolidated Financial Statements

10

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

20

Item 3. Quantitative and Qualitative Disclosures About Market Risk

29

Item 4. Controls and Procedures

29

 

 

PART II – OTHER INFORMATION

 

 

 

Item 1. Legal Proceedings

30

Item 1A. Risk Factors

30

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

78

Item 6. Exhibits

79

Signatures

80

 

 

2


Table of Contents

 

RISK FACTOR SUMMARY

The risk factors detailed in Item 1A entitled “Risk Factors” in this Quarterly Report on Form 10-Q are the risks that we believe are material to our investors and a reader should carefully consider them. Those risks are not all of the risks we face and other factors not presently known to us or that we currently believe are immaterial may also affect our business if they occur. The following is a summary of the risk factors detailed in Item 1A:

We are a clinical stage company with a limited operating history, have incurred significant losses since our inception and anticipate that we will continue to incur significant losses for the foreseeable future. We have no products approved for commercial sale and have not generated any revenue from product sales.
We will require additional capital to fund our operations, and if we fail to obtain necessary financing, we will not be able to complete the development and commercialization of our product candidates. Raising additional capital may cause dilution to our existing stockholders, restrict our operations or require us to relinquish rights to our technologies or product candidates.
Although we have initiated clinical trials for certain of our product candidates, we have not yet demonstrated an ability to successfully complete certain clinical trials of our product candidates, obtain marketing approvals, manufacture a commercial-scale medicine, or arrange for a third party to do so on our behalf, or conduct sales and marketing activities necessary for successful commercialization of our product candidates. We have never generated revenue from product sales and may never be profitable.
We are early in our development efforts for our product candidates. If we are unable to advance our product candidates through development, obtain regulatory approval and commercialize them, or if we experience significant delays in doing so, our business will be materially harmed.
The successful development of biopharmaceuticals and cell-based therapies is highly uncertain. Our ongoing and planned clinical trials or those of our collaborators involving our product candidates may reveal significant adverse events not seen in our preclinical and clinical studies and may result in a safety profile that could inhibit regulatory approval or market acceptance of any of our product candidates.
Stem cell transplant is a high-risk procedure with curative potential that may result in complications or adverse events for patients in our clinical trials or for patients that use any of our product candidates, if approved.
If we are not able to identify a safe and effective dose for any of our product candidates, including our antibody drug conjugates, or ADCs, such as MGTA-117 utilizing an amanitin toxin not previously tested in humans, we may need to delay, abandon or limit our development of any potential product candidates.
Clinical development involves a lengthy and expensive process, with an uncertain outcome. We may incur additional costs or experience delays in completing, or ultimately be unable to complete, the development and commercialization of any product candidates. If we encounter delays or difficulties enrolling patients in our clinical trials, our clinical development activities could be delayed or otherwise adversely affected.
The results of earlier studies and interim data from our ongoing studies may not be predictive of future clinical trial results, and we may fail to establish an adequate safety or efficacy profile to conduct advanced clinical trials or obtain regulatory approval for our product candidates.
If we are unable to successfully develop our current programs into a comprehensive portfolio of product candidates, or experience significant delays in doing so, we may not realize the full commercial potential of our current and future product candidates. We may expend our limited resources to pursue a particular product candidate or indication and fail to capitalize on product candidates or indications that may be more profitable or for which there is a greater likelihood of success.
We have no experience as a company in obtaining regulatory approval for a drug or biologic. Even if we complete the necessary clinical trials, we cannot predict when, or if, we will obtain regulatory approval to commercialize a product candidate we may develop, and any such approval may be for a narrower indication than we seek.
Because we are developing product candidates for the treatment of diseases in which there is little clinical experience using new technologies, there is increased risk that the U.S. Food and Drug Administration, or FDA, the European Medicines Agency, or EMA, or other regulatory authorities may not consider the endpoints of our clinical trials to provide clinically meaningful results, and these results may be difficult to analyze.
Even if we complete the necessary clinical trials, we cannot predict when, or if, we will obtain regulatory approval to commercialize a product candidate we may develop, and any such approval may be for a narrower indication than we seek.

 

3


Table of Contents

 

We rely on third parties to conduct our preclinical and clinical trials, process and product development and current Good Manufacturing Practices, or cGMP, and we will rely on them to perform other tasks for us. If these third parties do not successfully carry out their contractual duties, meet expected deadlines or comply with regulatory requirements, we may not be able to obtain regulatory approval for or commercialize our product candidates and our business could be substantially harmed.
We currently rely, and expect to continue to rely, on third parties to manufacture our clinical product supplies, and we intend to rely on third parties to produce and process our product candidates, if approved. This reliance increases the risk that we may not have sufficient quantities of our product candidates or may not be able to produce such quantities at an acceptable cost or quality level, which could delay, prevent or impair our development or commercialization efforts.
Any contamination in our or our third parties’ manufacturing process, shortages of raw materials or reagents or failure of any of our key suppliers to deliver necessary components of our product candidates could result in delays in our clinical development or marketing schedules.
We may never obtain FDA approval for any of our product candidates in the U.S., and even if we do, we may never obtain approval for or commercialize any of our product candidates in any other jurisdiction, which would limit our ability to realize their full market potential.
Even if our product candidates are approved by government regulators, the commercial success of any of our product candidates will depend upon the degree of market acceptance by physicians, patients, third-party payors and others in the medical community. Coverage and reimbursement may be limited or unavailable in certain market segments for our product candidates, if approved, which could make it difficult for us to sell any product candidates or therapies profitably.
We currently have no marketing and sales organization and have no experience in marketing products. If we are unable to establish marketing and sales capabilities or enter into agreements with third parties to market and sell our product candidates, we may not be able to generate product revenue.
We face substantial competition, including from companies with greater financial, technical, research, manufacturing, marketing, distribution and other resources than us, which may result in others discovering, developing or commercializing products before or more successfully than we do.
We are highly dependent on intellectual property licensed from third parties and termination of any of these licenses could result in the loss of significant rights, which would harm our business.
It is difficult and costly to protect our intellectual property and our proprietary technologies, and we may not be able to ensure their protection. If we are unable to obtain and maintain sufficient intellectual property protection for our product candidates, or our technologies, we may not be able to compete effectively in our markets and our business may be adversely affected.
We currently depend, and may in the future continue to depend, on collaborations with third parties for the research, development, and commercialization of certain of the product candidates we may develop. If any such collaborations are not successful, we may not be able to capitalize on the market potential of those product candidates and our business may be adversely affected.
We may not be successful in finding strategic collaborators for continuing development of certain of our product candidates or successfully commercializing or competing in the market for certain indications. If we are not able to establish collaborations on commercially reasonable terms, we may have to alter our development and commercialization plans.
The coronavirus, or COVID-19, pandemic or any future pandemic, epidemic or outbreak of any other highly infectious disease could have a material adverse effect on our business, financial condition and results of operations.
If we lose key personnel, or if we fail to recruit additional highly skilled personnel, our ability to develop our product candidates will be impaired and our business may be harmed.
The trading price of our common stock has been, and will likely continue to be, highly volatile. As a result of this volatility, investors may not be able to sell common stock at or above the purchase price and may lose some or all of their investment.

This section contains forward-looking statements. You should refer to the explanation of the qualifications and limitations on forward-looking statements in this Quarterly Report on Form 10-Q.

 

 

4


Table of Contents

 

PART I—FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS.

Magenta Therapeutics, Inc.

Consolidated Balance Sheets

(In thousands, except share and per share data)

(Unaudited)

 

 

 

 

 

 

 

September 30, 2022

 

 

December 31, 2021

 

Assets

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

59,028

 

 

$

131,650

 

Marketable securities

 

 

69,256

 

 

 

45,276

 

Prepaid expenses and other current assets

 

 

3,813

 

 

 

3,767

 

Total current assets

 

 

132,097

 

 

 

180,693

 

Restricted cash

 

 

1,780

 

 

 

1,780

 

Operating lease, right-of-use asset

 

 

23,930

 

 

 

 

Property and equipment, net

 

 

6,316

 

 

 

7,461

 

Total assets

 

$

164,123

 

 

$

189,934

 

 

 

 

 

 

 

 

Liabilities and Stockholders’ Equity

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Accounts payable

 

$

2,578

 

 

$

3,040

 

Accrued expenses and other current liabilities

 

 

6,722

 

 

 

7,823

 

Operating lease liability, current portion

 

 

3,621

 

 

 

 

Total current liabilities

 

 

12,921

 

 

 

10,863

 

Operating lease liability, net of current portion

 

 

27,177

 

 

 

 

Deferred rent

 

 

 

 

 

6,399

 

Total liabilities

 

 

40,098

 

 

 

17,262

 

Commitments and contingencies (Note 7)

 

 

 

 

 

 

Stockholders’ Equity:

 

 

 

 

 

 

Preferred stock, $0.001 par value; 10,000,000 shares authorized;
   
no shares issued or outstanding

 

 

 

 

 

 

      Common stock, $0.001 par value; 150,000,000 shares authorized; 60,555,520
         and
58,799,157 shares issued and outstanding as of September 30, 2022
         and December 31, 2021, respectively

 

 

61

 

 

 

59

 

Additional paid-in capital

 

 

506,277

 

 

 

498,210

 

Accumulated other comprehensive loss

 

 

(462

)

 

 

(30

)

Accumulated deficit

 

 

(381,851

)

 

 

(325,567

)

Total stockholders’ equity

 

 

124,025

 

 

 

172,672

 

Total liabilities and stockholders’ equity

 

$

164,123

 

 

$

189,934

 

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

 

 

5


Table of Contents

 

 

Magenta Therapeutics, Inc.

Consolidated Statements of Operations and Comprehensive Loss

(In thousands, except share and per share data)

(Unaudited)

 

 

 

Three Months Ended
September 30,

 

 

Nine Months Ended
September 30,

 

 

 

2022

 

 

2021

 

 

2022

 

 

2021

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

Research and development

 

$

11,201

 

 

$

10,795

 

 

$

39,351

 

 

$

33,652

 

General and administrative

 

 

6,052

 

 

 

7,450

 

 

 

19,819

 

 

 

20,900

 

Total operating expenses

 

 

17,253

 

 

 

18,245

 

 

 

59,170

 

 

 

54,552

 

Loss from operations

 

 

(17,253

)

 

 

(18,245

)

 

 

(59,170

)

 

 

(54,552

)

Interest and other income, net

 

 

1,190

 

 

 

818

 

 

 

2,886

 

 

 

2,708

 

Net loss

 

$

(16,063

)

 

$

(17,427

)

 

$

(56,284

)

 

$

(51,844

)

Net loss per share, basic and diluted

 

$

(0.27

)

 

$

(0.30

)

 

$

(0.95

)

 

$

(0.97

)

Weighted average common shares outstanding, basic and diluted

 

 

59,269,965

 

 

 

58,583,476

 

 

 

58,963,280

 

 

 

53,655,314

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Comprehensive loss:

 

 

 

 

 

 

 

 

 

 

 

 

Net loss

 

$

(16,063

)

 

$

(17,427

)

 

$

(56,284

)

 

$

(51,844

)

Other comprehensive income (loss):

 

 

 

 

 

 

 

 

 

 

 

 

Unrealized gains (losses) on marketable securities

 

 

140

 

 

 

(1

)

 

 

(432

)

 

 

24

 

Total other comprehensive income (loss)

 

 

140

 

 

 

(1

)

 

 

(432

)

 

 

24

 

Total comprehensive loss

 

$

(15,923

)

 

$

(17,428

)

 

$

(56,716

)

 

$

(51,820

)

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

 

 

6


Table of Contents

 

Magenta Therapeutics, Inc.

Consolidated Statements of Stockholders’ Equity

(In thousands, except share data)

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Additional

 

 

Other

 

 

 

 

 

Total

 

 

 

Common Stock

 

 

Paid-in

 

 

Comprehensive

 

 

Accumulated

 

 

Stockholders'

 

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Income (Loss)

 

 

Deficit

 

 

Equity

 

 

 

Three Months Ended September 30, 2022

 

Balances at June 30, 2022

 

 

58,848,861

 

 

$

59

 

 

$

502,009

 

 

$

(602

)

 

$

(365,788

)

 

$

135,678

 

Issuance of common stock under the ATM Program,
    net of commissions and offering costs

 

 

1,644,200

 

 

 

2

 

 

 

2,761

 

 

 

 

 

 

 

 

 

2,763

 

Vesting of restricted stock

 

 

62,459

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock-based compensation expense

 

 

 

 

 

 

 

 

1,507

 

 

 

 

 

 

 

 

 

1,507

 

Unrealized gains on marketable securities

 

 

 

 

 

 

 

 

 

 

 

140

 

 

 

 

 

 

140

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(16,063

)

 

 

(16,063

)

Balances at September 30, 2022

 

 

60,555,520

 

 

$

61

 

 

$

506,277

 

 

$

(462

)

 

$

(381,851

)

 

$

124,025

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended September 30, 2021

 

Balances at June 30, 2021

 

 

58,508,735

 

 

$

59

 

 

$

491,679

 

 

$

2

 

 

$

(288,848

)

 

$

202,892

 

Vesting of restricted stock

 

 

209,998

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Issuance of common stock upon exercise of
   stock options

 

 

58,538

 

 

 

 

 

 

425

 

 

 

 

 

 

 

 

 

425

 

Stock-based compensation expense

 

 

 

 

 

 

 

 

3,799

 

 

 

 

 

 

 

 

 

3,799

 

Unrealized losses on marketable securities

 

 

 

 

 

 

 

 

 

 

 

(1

)

 

 

 

 

 

(1

)

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(17,427

)

 

 

(17,427

)

Balances at September 30, 2021

 

 

58,777,271

 

 

$

59

 

 

$

495,903

 

 

$

1

 

 

$

(306,275

)

 

$

189,688

 

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

 

 

7


Table of Contents

 

 

Magenta Therapeutics, Inc.

Consolidated Statements of Stockholders’ Equity (Continued)

(In thousands, except share data)

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Additional

 

 

Other

 

 

 

 

 

Total

 

 

 

Common Stock

 

 

Paid-in

 

 

Comprehensive

 

 

Accumulated

 

 

Stockholders'

 

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Income (Loss)

 

 

Deficit

 

 

Equity

 

 

 

Nine Months Ended September 30, 2022

 

Balances at December 31, 2021

 

 

58,799,157

 

 

$

59

 

 

$

498,210

 

 

$

(30

)

 

$

(325,567

)

 

$

172,672

 

Issuance of common stock under the ATM Program,
    net of commissions and offering costs

 

 

1,644,200

 

 

 

2

 

 

 

2,761

 

 

 

 

 

 

 

 

 

2,763

 

Issuance of common stock under Employee
    Stock Purchase Plan

 

 

49,704

 

 

 

 

 

 

49

 

 

 

 

 

 

 

 

 

49

 

Vesting of restricted stock

 

 

62,459

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock-based compensation expense

 

 

 

 

 

 

 

 

5,257

 

 

 

 

 

 

 

 

 

5,257

 

Unrealized losses on marketable securities

 

 

 

 

 

 

 

 

 

 

 

(432

)

 

 

 

 

 

(432

)

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(56,284

)

 

 

(56,284

)

Balances at September 30, 2022

 

 

60,555,520

 

 

$

61

 

 

$

506,277

 

 

$

(462

)

 

$

(381,851

)

 

$

124,025

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Nine Months Ended September 30, 2021

 

Balances at December 31, 2020

 

 

48,533,135

 

 

$

49

 

 

$

398,311

 

 

$

(23

)

 

$

(254,431

)

 

$

143,906

 

Issuance of common stock upon private
   investment, net of offering costs

 

 

9,599,998

 

 

 

10

 

 

 

86,087

 

 

 

 

 

 

 

 

 

86,097

 

Vesting of restricted stock

 

 

218,464

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Issuance of common stock upon exercise of
   stock options

 

 

411,685

 

 

 

 

 

 

3,294

 

 

 

 

 

 

 

 

 

3,294

 

Issuance of common stock under Employee
    Stock Purchase Plan

 

 

13,989

 

 

 

 

 

 

86

 

 

 

 

 

 

 

 

 

86

 

Stock-based compensation expense

 

 

 

 

 

 

 

 

8,125

 

 

 

 

 

 

 

 

 

8,125

 

Unrealized gains on marketable securities

 

 

 

 

 

 

 

 

 

 

 

24

 

 

 

 

 

 

24

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(51,844

)

 

 

(51,844

)

Balances at September 30, 2021

 

 

58,777,271

 

 

$

59

 

 

$

495,903

 

 

$

1

 

 

$

(306,275

)

 

$

189,688

 

 

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

 

 

8


Table of Contents

 

Magenta Therapeutics, Inc.

Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)

 

 

 

Nine months ended September 30,

 

 

 

2022

 

 

2021

 

Cash flows from operating activities:

 

 

 

 

 

 

Net loss

 

$

(56,284

)

 

$

(51,844

)

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

 

 

 

 

 

 

Stock-based compensation expense

 

 

5,257

 

 

 

8,125

 

Depreciation and amortization expense

 

 

1,459

 

 

 

1,485

 

Loss on disposal of property and equipment

 

 

 

 

 

95

 

Noncash lease expense

 

 

2,158

 

 

 

 

Net amortization of premiums on marketable securities

 

 

306

 

 

 

630

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

   Prepaid expenses and other current assets

 

 

(46

)

 

 

(1,167

)

   Accounts payable

 

 

(