10-Q
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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

 

FORM 10-Q

 

(Mark One)

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

For the quarterly period ended September 30, 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: 001-41331

 

AN2 Therapeutics, Inc.

(Exact Name of Registrant as Specified in its Charter)

 

 

Delaware

82-0606654

(State or other jurisdiction of

incorporation or organization)

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


1800 El Camino Real, Suite D

Menlo Park, California

94027

(Address of principal executive offices)

(Zip Code)

Registrant’s telephone number, including area code: (650) 331-9090

 

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

 

ANTX

 

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 November 2, 2022, the registrant had 19,402,658 shares of common stock, $0.00001 par value per share, outstanding.

 

 

 

 


 

Table of Contents

 

 

 

Page

 

 

Special Note Regarding Forward Looking Statements

1

 

 

 

PART I.

FINANCIAL INFORMATION

 

 

 

 

Item 1.

Financial Statements (Unaudited)

3

 

Condensed Balance Sheets

3

 

Condensed Statements of Operations and Comprehensive Loss

4

 

Condensed Statements of Redeemable Convertible Preferred Stock and Stockholders’ Equity (Deficit)

5

 

Condensed Statements of Cash Flows

7

 

Notes to Unaudited Condensed Financial Statements

8

Item 2.

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

25

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

37

Item 4.

Controls and Procedures

38

 

 

 

PART II.

OTHER INFORMATION

41

 

 

 

Item 1.

Legal Proceedings

41

Item 1A.

Risk Factors

41

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

94

Item 3.

Defaults Upon Senior Securities

95

Item 4.

Mine Safety Disclosures

95

Item 5.

Other Information

95

Item 6.

Exhibits

96

Signatures

98

 

i


 

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains forward-looking statements. All statements other than statements of historical facts contained in this Quarterly Report on Form 10-Q (“Form 10-Q”), including statements regarding our future results of operations and financial position, business strategy, product candidates, planned preclinical and nonclinical studies and clinical trials, results of preclinical and nonclinical studies, clinical trials, research and development costs, regulatory approvals, timing and likelihood of success, as well as plans and objectives of management for future operations, are forward-looking statements. These statements involve known and unknown risks, uncertainties, 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 terms such as “may,” “will,” “should,” “would,” “expect,” “plan,” “anticipate,” “could,” “intend,” “target,” “project,” “believe,” “estimate,” “predict,” “potential,” or “continue,” or the negative of these terms or other similar expressions. Forward-looking statements contained in this Form 10-Q include, but are not limited to, statements about:

our use of the net proceeds from the initial public offering (“IPO”);
the initiation, timing, progress, and results of our preclinical and nonclinical studies and clinical trials, and our research and development programs, including the manufacture of clinical trial material and drug product for launch;
the ability of our pivotal Phase 2/3 clinical trial in mycobacterium avium complex (MAC”) lung disease to be sufficient for regulatory approval in the United States and Japan;
our ability to retain the continued service of our key professionals and to identify, hire, and retain additional qualified professionals;
our ability to advance product candidates into, and successfully complete, clinical trials;
the timing of and our ability to obtain and maintain regulatory approvals for our product candidates;
the commercialization of our product candidates, if approved;
the ability of epetraborole, if approved, to successfully compete with other therapies, including therapies currently in development;
the pricing, coverage, and reimbursement of our product candidates, if approved;
the implementation of our business model, strategic plans for our business, and product candidates;
the scope of protection we are able to establish and maintain for intellectual property rights covering our product candidates;
our ability to identify additional product candidates and advance them into clinical development;
our estimates regarding expenses, capital requirements, and needs for additional financing;
our financial performance; and
developments relating to our competitors and our industry.

 

 

1

 

 


 

We have based these forward-looking statements largely on our current expectations and projections about our business, the industry in which we operate and financial trends that we believe may affect our business, financial condition, results of operations, and prospects and these forward-looking statements are not guarantees of future performance or development. These forward-looking statements speak only as of the date of this Form 10-Q and are subject to a number of risks, uncertainties, and assumptions described in the section titled “Risk Factors” and elsewhere in this Form 10-Q. Because forward-looking statements are inherently subject to risks and uncertainties, some of which cannot be predicted or quantified, you should not rely on these forward-looking statements as predictions of future events. The events and circumstances reflected in our forward-looking statements may not be achieved or occur and actual results could differ materially from those projected in the forward-looking statements. Except as required by applicable law, we do not plan to publicly update or revise any forward-looking statements contained herein until after we distribute this Form 10-Q, whether as a result of any new information, future events, or otherwise.

In addition, statements that “we believe” and similar statements reflect our beliefs and opinions on the relevant subject. These statements are based upon information available to us as of the date of this Form 10-Q, and while we believe such information forms a reasonable basis for such statements, such information may be limited or incomplete, and our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all potentially available relevant information. These statements are inherently uncertain, and you are cautioned not to unduly rely upon these statements.

 

 

2

 

 


 

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements.

AN2 THERAPEUTICS, INC.

CONDENSED BALANCE SHEETS

(in thousands, except share and per share amounts)

(unaudited)

 

 

September 30,
2022

 

 

December 31,
2021

 

Assets

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

28,802

 

 

$

12,097

 

Short-term investments

 

 

75,580

 

 

 

46,458

 

Prepaid expenses and other current assets

 

 

2,841

 

 

 

1,551

 

Right-of-use asset, net

 

 

73

 

 

 

 

Total current assets

 

 

107,296

 

 

 

60,106

 

Deferred offering costs

 

 

 

 

 

1,724

 

Long-term investments

 

 

1,992

 

 

 

3,486

 

Other assets, long-term

 

 

720

 

 

 

 

Total assets

 

$

110,008

 

 

$

65,316

 

Liabilities, redeemable convertible preferred stock, and stockholders’ equity (deficit)

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

Accounts payable

 

$

1,440

 

 

$

1,063

 

Accrued compensation

 

 

1,106

 

 

 

916

 

Accrued liabilities

 

 

1,805

 

 

 

1,399

 

Operating lease liabilities

 

 

73

 

 

 

 

Options subject to repurchase, short-term

 

 

8

 

 

 

17

 

Total current liabilities

 

 

4,432

 

 

 

3,395

 

Options subject to repurchase, long-term

 

 

3

 

 

 

13

 

Total liabilities

 

 

4,435

 

 

 

3,408

 

Commitments and contingencies (Note 8)

 

 

 

 

 

 

Redeemable convertible preferred stock: $0.00001 par value; 0 and 11,409,536 shares authorized at September 30, 2022 and December 31, 2021, respectively, 0 and 11,409,488 shares issued and outstanding at September 30, 2022 and December 31, 2021; aggregate liquidation preference $0 and $103,064 at September 30, 2022 and December 31, 2021, respectively

 

 

 

 

 

109,319

 

Stockholders’ equity (deficit):

 

 

 

 

 

 

Preferred stock, $0.00001 par value; 10,000,000 and 0 shares authorized at September 30, 2022 and December 31, 2021, respectively; no shares issued and outstanding at September 30, 2022 and December 31, 2021

 

 

 

 

 

 

Common stock, $0.00001 par value; 500,000,000 and 17,166,642 shares authorized at September 30, 2022 and December 31, 2021, respectively; 19,402,658 and 2,730,298 shares issued and outstanding at September 30, 2022 and December 31, 2021, respectively

 

 

 

 

 

 

Additional paid-in capital

 

 

183,995

 

 

 

 

Accumulated other comprehensive loss

 

 

(541

)

 

 

(27

)

Accumulated deficit

 

 

(77,881

)

 

 

(47,384

)

Total stockholders’ equity (deficit)

 

 

105,573

 

 

 

(47,411

)

Total liabilities, redeemable convertible preferred stock, and stockholders’ equity (deficit)

 

$

110,008

 

 

$

65,316

 

 

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

 

 

3

 

 


 

AN2 THERAPEUTICS, INC.

CONDENSED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

(in thousands, except share and per share amounts)

(unaudited)

 

 

 

Three Months Ended September 30,

 

 

Nine Months Ended September 30,

 

 

 

2022

 

 

2021

 

 

2022

 

 

2021

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

Research and development

 

$

7,428

 

 

$

5,345

 

 

$

19,759

 

 

$

10,844

 

Research and development—related party

 

 

1,000

 

 

 

 

 

 

1,000

 

 

 

250

 

General and administrative

 

 

3,342

 

 

 

1,587

 

 

 

9,027

 

 

 

2,886

 

Total operating expenses

 

 

11,770

 

 

 

6,932

 

 

 

29,786

 

 

 

13,980

 

Loss from operations

 

 

(11,770

)

 

 

(6,932

)

 

 

(29,786

)

 

 

(13,980

)

Interest income

 

 

466

 

 

 

25

 

 

 

721

 

 

 

42

 

Other expense

 

 

(35

)

 

 

(36

)

 

 

(49

)

 

 

(60

)

Net loss

 

 

(11,339

)

 

 

(6,943

)

 

 

(29,114

)

 

 

(13,998

)

Accretion to redemption value and cumulative dividends on preferred stock

 

 

 

 

 

(1,925

)

 

 

(1,820

)

 

 

(4,590

)

Net loss attributable to common stockholders

 

$

(11,339

)

 

$

(8,868

)

 

$

(30,934

)

 

$

(18,588

)

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

 

$

(0.59

)

 

$

(3.35

)

 

$

(2.21

)

 

$

(7.06

)

Weighted-average number of shares used in computing net loss per share, basic and diluted

 

 

19,347,148

 

 

 

2,643,879

 

 

 

13,987,862

 

 

 

2,632,919

 

Other comprehensive loss:

 

 

 

 

 

 

 

 

 

 

 

 

Unrealized loss on investments

 

 

(181

)

 

 

(3

)

 

 

(514

)

 

 

(3

)

Comprehensive loss

 

$

(11,520

)

 

$

(6,946

)

 

$

(29,628

)

 

$

(14,001

)

 

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

 

 

4

 

 


 

AN2 THERAPEUTICS, INC.

CONDENSED STATEMENTS OF REDEEMABLE CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ EQUITY (DEFICIT)

(in thousands, except share and per share amounts)

(unaudited)

 

 

 

Redeemable
Convertible
Preferred Stock

 

 

 

Common Stock

 

 

Additional
Paid-In

 

 

Accumulated
Other
Comprehensive

 

 

Accumulated

 

 

Total
Stockholders’

 

 

 

Shares

 

 

Amount

 

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Loss

 

 

Deficit

 

 

Equity (Deficit)

 

Balances at December 31, 2021

 

 

11,409,488

 

 

$

109,319

 

 

 

 

2,730,298

 

 

$

 

 

$

 

 

$

(27

)

 

$

(47,384

)

 

$

(47,411

)

Accretion to redemption value and cumulative dividends on preferred stock

 

 

 

 

 

1,820

 

 

 

 

 

 

 

 

 

 

(437

)

 

 

 

 

 

(1,383

)

 

 

(1,820

)

Conversion of convertible preferred stock into common stock

 

 

(11,409,488

)

 

 

(111,139

)

 

 

 

11,409,488

 

 

 

 

 

 

111,139

 

 

 

 

 

 

 

 

 

111,139

 

Issuance of common stock upon initial public offering, net of underwriters' commission and offering costs of $8.1 million

 

 

 

 

 

 

 

 

 

4,600,000

 

 

 

 

 

 

60,836

 

 

 

 

 

 

 

 

 

60,836

 

Vesting of early exercised stock options

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

14

 

 

 

 

 

 

 

 

 

14

 

Repurchase of early exercised stock options

 

 

 

 

 

 

 

 

 

(27,128

)

 

 

 

 

 

(11

)

 

 

 

 

 

 

 

 

(11

)

Stock-based compensation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

449

 

 

 

 

 

 

 

 

 

449

 

Unrealized gain (loss) on available-for-sale investments

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(131

)

 

 

 

 

 

(131

)

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(7,655

)

 

 

(7,655

)

Balances at March 31, 2022

 

 

 

 

$

 

 

 

 

18,712,658

 

 

$

 

 

$

171,990

 

 

$

(158

)

 

$

(56,422

)

 

$

115,410

 

Issuance of common stock upon exercise of the underwriter's option to purchase common stock in connection with the initial public offering, net of underwriters' commission and offering costs of $0.8 million

 

 

 

 

 

 

 

 

 

690,000

 

 

 

 

 

 

9,530

 

 

 

 

 

 

 

 

 

9,530

 

Vesting of early exercised stock options

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

3

 

 

 

 

 

 

 

 

 

3

 

Stock-based compensation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,242

 

 

 

 

 

 

 

 

 

1,242

 

Unrealized gain on available-for-sale investments

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(202

)

 

 

 

 

 

(202

)

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(10,120

)

 

 

(10,120

)

Balances at June 30, 2022

 

 

 

 

$

 

 

 

 

19,402,658

 

 

$

 

 

$

182,765

 

 

$

(360

)

 

$

(66,542

)

 

$

115,863

 

Vesting of early exercised stock options

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2

 

 

 

 

 

 

 

 

 

2

 

Stock-based compensation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,228

 

 

 

 

 

 

 

 

 

1,228

 

Unrealized gain on available-for-sale investments

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(181

)

 

 

 

 

 

(181

)

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(11,339

)

 

 

(11,339

)

Balances at September 30, 2022

 

 

 

 

$

 

 

 

 

19,402,658

 

 

$

 

 

$

183,995

 

 

$

(541

)

 

$

(77,881

)

 

$

105,573

 

 

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

 

 

5

 

 


 

AN2 THERAPEUTICS, INC.

CONDENSED STATEMENTS OF REDEEMABLE CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ Equity (DEFICIT)

(in thousands, except share and per share amounts)

(unaudited)

 

 

 

Redeemable
Convertible
Preferred Stock

 

 

 

Common Stock

 

 

Additional
Paid-In

 

 

Accumulated
Other
Comprehensive

 

 

Accumulated

 

 

Total
Stockholders’

 

 

 

Shares

 

 

Amount

 

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Loss

 

 

Deficit

 

 

Equity (Deficit)

 

Balance at December 31, 2020

 

 

6,076,196

 

 

$

23,070

 

 

 

 

2,707,468

 

 

$

 

 

$

 

 

$

 

 

$

(20,319

)

 

$

(20,319

)

Issuance of Series B redeemable convertible preferred stock at $15 per share for cash, net of issuance costs of $266

 

 

5,333,292

 

 

 

79,734

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Issuance of common stock upon the exercise of stock options

 

 

 

 

 

 

 

 

 

22,830

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Vesting of early exercised stock options

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

6

 

 

 

 

 

 

 

 

 

6

 

Stock-based compensation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

8

 

 

 

 

 

 

 

 

 

8

 

Accretion to redemption value and cumulative dividends on preferred stock

 

 

 

 

 

761

 

 

 

 

 

 

 

 

 

 

(14

)

 

 

 

 

 

(747

)

 

 

(761

)

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(2,048

)

 

 

(2,048

)

Balances at March 31, 2021

 

 

11,409,488

 

 

$

103,565

 

 

 

 

2,730,298

 

 

$