10-Q
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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 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, 2022

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

For the transition period from to

Commission File No. 001-38800

 

Harpoon Therapeutics, Inc.

(Exact name of registrant as specified in its charter)

 

 

Delaware

 

47-3458693

(State or other jurisdiction of

incorporation or organization)

 

(I.R.S. Employer

Identification No.)

 

131 Oyster Point Blvd, Suite 300

South San Francisco, CA 94080

(Address of principal executive offices)

Registrant’s telephone number, including area code: (650) 443-7400

 

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, par value $0.0001 per share

 

HARP

 

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 definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act:

 

Large accelerated filer

 

Accelerated filer

Non-accelerated filer

 

Smaller reporting company

 

 

 

Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No

The number of outstanding shares of the Registrant’s common stock, par value $0.0001, as of July 29, 2022 was 33,106,768.

 

 


 

HARPOON THERAPEUTICS, INC.

QUARTERLY REPORT ON FORM 10-Q

FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2022

 

TABLE OF CONTENTS

 

Page

 

Special Note Regarding Forward-Looking Statements

3

 

 

 

PART I. FINANCIAL INFORMATION

 

 

 

 

Item

 

 

1.

Condensed Financial Statements (unaudited):

4

 

 

a. Condensed Balance Sheets as of June 30, 2022 and December 31, 2021

4

 

 

b. Condensed Statements of Operations and Comprehensive Loss for the Three and Six Months Ended June 30, 2022 and 2021

5

 

 

c. Condensed Statements of Stockholders’ Equity for the Three and Six Months Ended June 30, 2022 and 2021

6

 

 

d. Condensed Statements of Cash Flows for the Six Months Ended June 30, 2022 and 2021

7

 

 

e. Notes to Condensed Financial Statements

8

2.

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

23

3.

Quantitative and Qualitative Disclosures About Market Risk

35

4.

Controls and Procedures

35

 

 

 

 

PART II. OTHER INFORMATION

 

1.

Legal Proceedings

36

1A.

Risk Factors

36

2.

Unregistered Sales of Equity Securities and Use of Proceeds

82

3.

Defaults Upon Senior Securities

82

4.

Mine Safety Disclosures

82

5.

Other Information

82

6.

Exhibits

83

 

Signatures

84

 

2


 

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains forward-looking statements that involve risks and uncertainties. All statements other than statements of historical facts contained in this Quarterly Report on Form 10-Q are forward-looking statements. In some cases, you can identify forward-looking statements by words such as “anticipate,” “believe,” “contemplate,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “potential,” “predict,” “project,” “seek,” “should,” “target,” “will” or “would,” or the negative of these words or other comparable terminology. These forward-looking statements include, but are not limited to, statements about:

the timing of the initiation, progress, safety profiles and expected results of our preclinical studies, clinical trials and our research and development programs, as affected by various factors, including patient enrollment, rate of dose escalation and available drug supply, including impacts on the manufacturing supply chain due to the COVID-19 pandemic;
our ability to advance product candidates into, and successfully complete, preclinical studies and clinical trials;
the timing or likelihood of regulatory filings and approvals;
the commercialization of our product candidates, if approved;
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 technology platforms, including TriTAC, ProTriTAC and TriTAC-XR and our product candidates, including the projected terms of patent protection;
our ability to enter into strategic arrangements and/or collaborations and the potential benefits of such arrangements;
our ability to retain the continued service of our key executives and to identify, hire and retain additional qualified professionals;
our estimates regarding the market opportunity for our product candidates;
our estimates regarding expenses, capital requirements and needs for additional financing and our ability to obtain additional capital;
our financial performance;
the ongoing effects of the COVID-19 pandemic on our business, including impacts on the manufacturing supply chain, results of operations and financial performance; and
developments relating to our competitors and our industry, including competing therapies.

These forward-looking statements are based on our management’s current expectations, estimates, forecasts and projections about our business and the industry in which we operate, and management’s beliefs and assumptions and are not guarantees of future performance or development. These forward-looking statements are subject to a number of risks, uncertainties and assumptions, including those described in the "Risk Factor Summary" below, under the heading “Risk Factors” and elsewhere in this report. Moreover, we operate in a very competitive and rapidly changing environment, and new risks emerge from time to time. It is not possible for our management to predict all risks, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements we may make. In light of these risks, uncertainties and assumptions, the forward-looking events and circumstances discussed in this report may not occur and actual results could differ materially and adversely from those anticipated or implied in the forward-looking statements.

In addition, statements that “we believe” and similar statements reflect our beliefs and opinions on the relevant subject. These statements are based on information available to us as of the date of this report. While we believe that information provides a reasonable basis for these statements, that information may be limited or incomplete. Our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all relevant information.

You should not rely upon forward-looking statements as predictions of future events. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee that the future results, levels of activity, performance, or events and circumstances reflected in the forward-looking statements will be achieved or occur. We undertake no obligation to update publicly any forward-looking statements for any reason after the date of this report to conform these statements to new information, actual results or changes in our expectations, except as required by law.

 

Unless the context otherwise requires, references in this Quarterly Report on Form 10-Q to the “company,” “Harpoon,” “we,” “us” and “our” refer to Harpoon Therapeutics, Inc.“TriTAC” is a registered trademark and “Harpoon Therapeutics,” “Harpoon,” the Harpoon logo and ProTriTAC are among the trademarks owned by Harpoon Therapeutics, Inc. This report also contains trademarks and trade names that are property of their respective owners.

3


 

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

 

HARPOON THERAPEUTICS, INC.

Condensed Balance Sheets

(unaudited)

(in thousands, except share and per share data)

 

 

 

June 30,

 

 

December 31,

 

 

 

2022

 

 

2021

 

Assets

 

 

 

 

 

 

Current assets

 

 

 

 

 

 

Cash and cash equivalents

 

$

68,568

 

 

$

44,687

 

Short-term marketable securities

 

 

21,585

 

 

 

90,411

 

Prepaid expenses and other current assets

 

 

3,884

 

 

 

2,597

 

Total current assets

 

 

94,037

 

 

 

137,695

 

Property and equipment, net

 

 

8,247

 

 

 

9,248

 

Long-term marketable securities

 

 

 

 

 

1,522

 

Operating lease right-of-use asset

 

 

5,798

 

 

 

6,127

 

Other assets

 

 

869

 

 

 

860

 

Total assets

 

$

108,951

 

 

$

155,452

 

Liabilities and stockholders' equity

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

Accounts payable

 

 

2,790

 

 

 

2,666

 

Accrued liabilities

 

 

17,162

 

 

 

17,362

 

Deferred revenue, current

 

 

36,504

 

 

 

37,462

 

Operating lease liabilities, current

 

 

1,767

 

 

 

1,649

 

Total current liabilities

 

 

58,223

 

 

 

59,139

 

Deferred revenue, noncurrent

 

 

14,454

 

 

 

27,705

 

Operating lease liabilities, net of current portion

 

 

9,632

 

 

 

10,538

 

Total liabilities

 

 

82,309

 

 

 

97,382

 

Commitments and contingencies (Note 6)

 

 

 

 

 

 

Stockholders' equity

 

 

 

 

 

 

Common stock, $0.0001 par value; 150,000,000 shares authorized at June 30, 2022 and December 31, 2021; 33,105,312 shares and 32,765,788 shares issued and outstanding at June 30, 2022 and December 31, 2021, respectively

 

 

4

 

 

 

4

 

Additional paid-in capital

 

 

349,158

 

 

 

342,905

 

Accumulated other comprehensive loss

 

 

(56

)

 

 

(47

)

Accumulated deficit

 

 

(322,464

)

 

 

(284,792

)

Total stockholders' equity

 

 

26,642

 

 

 

58,070

 

Total liabilities and stockholders' equity

 

$

108,951

 

 

$

155,452

 

 

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

4


 

HARPOON THERAPEUTICS, INC.

Condensed Statements of Operations and Comprehensive Loss

(unaudited)

(in thousands, except share and per share data)

 

 

 

For the Three Months Ended June 30,

 

 

For the Six Months Ended June 30,

 

 

 

2022

 

 

2021

 

 

2022

 

 

2021

 

Revenue

 

 

 

 

 

 

 

 

 

 

 

 

Collaboration and license revenue

 

$

8,303

 

 

$

5,838

 

 

$

14,209

 

 

$

14,845

 

Total revenue

 

 

8,303

 

 

 

5,838

 

 

 

14,209

 

 

 

14,845

 

Operating expenses

 

 

 

 

 

 

 

 

 

 

 

 

Research and development

 

 

20,651

 

 

 

18,271

 

 

 

41,469

 

 

 

34,487

 

General and administrative

 

 

5,063

 

 

 

4,335

 

 

 

10,464

 

 

 

8,939

 

Litigation settlement

 

 

 

 

 

 

 

 

 

 

 

49,954

 

Total operating expenses

 

 

25,714

 

 

 

22,606

 

 

 

51,933

 

 

 

93,380

 

Loss from operations

 

 

(17,411

)

 

 

(16,768

)

 

 

(37,724

)

 

 

(78,535

)

Interest income, net

 

 

104

 

 

 

62

 

 

 

144

 

 

 

156

 

Other expense, net

 

 

(44

)

 

 

(58

)

 

 

(92

)

 

 

(108

)

Net loss

 

 

(17,351

)

 

 

(16,764

)

 

 

(37,672

)

 

 

(78,487

)

Other comprehensive loss:

 

 

 

 

 

 

 

 

 

 

 

 

Net unrealized gain (loss) on marketable securities

 

 

32

 

 

 

16

 

 

 

(9

)

 

 

(4

)

Comprehensive loss

 

$

(17,319

)

 

$

(16,748

)

 

$

(37,681

)

 

$

(78,491

)

Net loss per share, basic and diluted

 

 

(0.53

)

 

 

(0.52

)

 

$

(1.14

)

 

$

(2.45

)

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

 

 

33,036,873

 

 

 

32,505,777

 

 

 

32,958,711

 

 

 

32,044,767

 

 

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

5


 

HARPOON THERAPEUTICS, INC.

Condensed Statements of Stockholders’ Equity

(unaudited)

(in thousands, except share data)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Additional

 

 

Accumulated Other

 

 

 

 

 

Total

 

 

Common Stock

 

 

Paid-In

 

 

Comprehensive

 

 

Accumulated

 

 

Stockholders'

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Loss

 

 

Deficit

 

 

Equity

 

Balances at December 31, 2021

 

32,765,788

 

 

$

4

 

 

$

342,905

 

 

$

(47

)

 

$

(284,792

)

 

$

58,070

 

Issuance of common stock under equity incentive plans
   including exercise of stock options

 

309,905

 

 

 

 

 

 

830

 

 

 

 

 

 

 

 

 

830

 

Vesting of early exercisable stock options

 

1,728

 

 

 

 

 

 

3

 

 

 

 

 

 

 

 

 

3

 

Stock-based compensation

 

 

 

 

 

 

 

2,843

 

 

 

 

 

 

 

 

 

2,843

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

(20,321

)

 

 

(20,321

)

Unrealized loss on marketable securities

 

 

 

 

 

 

 

 

 

 

(41

)

 

 

 

 

 

(41

)

Balances at March 31, 2022

 

33,077,421

 

 

 

4

 

 

 

346,581

 

 

 

(88

)

 

 

(305,113

)

 

 

41,384

 

Issuance of common stock under equity
   incentive plans including exercise
   of stock options

 

26,163

 

 

 

 

 

 

53

 

 

 

 

 

 

 

 

 

53

 

Vesting of early exercisable stock options

 

1,728

 

 

 

 

 

 

3

 

 

 

 

 

 

 

 

 

3

 

Stock-based compensation

 

 

 

 

 

 

 

2,521

 

 

 

 

 

 

 

 

 

2,521

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

(17,351

)

 

 

(17,351

)

Unrealized gain on marketable securities

 

 

 

 

 

 

 

 

 

 

32

 

 

 

 

 

 

32

 

Balances at June 30, 2022

 

33,105,312

 

 

$

4

 

 

$

349,158

 

 

$

(56

)

 

$

(322,464

)

 

$

26,642

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Additional

 

 

Accumulated Other

 

 

 

 

 

Total

 

 

Common Stock

 

 

Paid-In

 

 

Comprehensive

 

 

Accumulated

 

 

Stockholders'

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Income (Loss)

 

 

Deficit

 

 

Equity

 

Balances at December 31, 2020

 

25,553,172

 

 

$

3

 

 

$

221,904

 

 

$

3

 

 

$

(168,071

)

 

$

53,839

 

Issuance of common stock in follow-on offering,
   net of underwriter discounts, commissions and
   issuance costs of $
7,400

 

6,764,704

 

 

 

1

 

 

 

107,581

 

 

 

 

 

 

 

 

 

107,582

 

Issuance of common stock under equity incentive plans
   including exercise of stock options

 

113,538

 

 

 

 

 

 

561

 

 

 

 

 

 

 

 

 

561

 

Vesting of early exercisable stock options

 

7,319

 

 

 

 

 

 

6

 

 

 

 

 

 

 

 

 

6

 

Stock-based compensation

 

 

 

 

 

 

 

2,136

 

 

 

 

 

 

 

 

 

2,136

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

(61,724

)

 

 

(61,724

)

Unrealized loss on marketable securities

 

 

 

 

 

 

 

 

 

 

(20

)

 

 

 

 

 

(20

)

Balances at March 31, 2021

 

32,438,733

 

 

 

4

 

 

 

332,188

 

 

 

(17

)

 

 

(229,795

)

 

 

102,380

 

Issuance of common stock pursuant to ATM facility,
  net of offering costs

 

138,153

 

 

 

 

 

 

2,767

 

 

 

 

 

 

 

 

 

2,767

 

Issuance of common stock under equity incentive plans
   including exercise of stock options

 

56,934

 

 

 

 

 

 

186

 

 

 

 

 

 

 

 

 

186

 

Vesting of early exercisable stock options

 

5,456

 

 

 

 

 

 

5

 

 

 

 

 

 

 

 

 

5

 

Stock-based compensation

 

 

 

 

 

 

 

2,338

 

 

 

 

 

 

 

 

 

2,338

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

(16,764

)

 

 

(16,764

)

Unrealized gain on marketable securities

 

 

 

 

 

 

 

 

 

 

16

 

 

 

 

 

 

16

 

Balances at June 30, 2021

 

32,639,276

 

 

 

4

 

 

 

337,484

 

 

 

(1

)

 

 

(246,559

)

 

 

90,928

 

 

6


 

HARPOON THERAPEUTICS, INC.

Condensed Statements of Cash Flows

(unaudited)

(in thousands)

 

 

 

Six Months Ended June 30,

 

 

 

2022

 

 

2021

 

Cash flows from operating activities

 

 

 

 

 

 

Net loss

 

$

(37,672

)

 

$

(78,487

)

Adjustments to reconcile net loss to net cash provided by (used in) operating activities

 

 

 

 

 

 

Stock-based compensation expense

 

 

5,364

 

 

 

4,473

 

Depreciation and amortization

 

 

1,152

 

 

 

1,098

 

Non-cash lease expense

 

 

329

 

 

 

160

 

Net amortization of discounts on marketable securities

 

 

446

 

 

 

1,168

 

Changes in operating assets and liabilities

 

 

 

 

 

 

Prepaid expenses and other assets

 

 

(1,287

)

 

 

(937

)

Other assets

 

 

(10

)

 

 

382

 

Accounts payable

 

 

125

 

 

 

426

 

Accrued liabilities

 

 

(290

)

 

 

2,500

 

Deferred revenue

 

 

(14,209

)

 

 

(14,846

)

Operating lease liabilities

 

 

(789

)

 

 

(580

)

Net cash used in operating activities

 

 

(46,841

)

 

 

(84,643

)

Cash flows from investing activities

 

 

 

 

 

 

Purchases of property and equipment

 

 

(53

)

 

 

(45

)

Purchases of marketable securities

 

 

(11,509

)

 

 

(100,469

)

Maturities of marketable securities

 

 

81,402

 

 

 

130,304

 

Net cash provided by investing activities

 

 

69,840

 

 

 

29,790

 

Cash flows from financing activities

 

 

 

 

 

 

Proceeds from follow-on offering, net of issuance costs

 

 

 

 

 

107,581

 

Proceeds from issuance of common stock in connection with employee benefit plans

 

 

882

 

 

 

748

 

Proceeds from issuance of common stock, net of issuance cost

 

 

 

 

 

2,767

 

Net cash provided by financing activities

 

 

882

 

 

 

111,096

 

Net increase in cash, cash equivalents, and restricted cash

 

 

23,881

 

 

 

56,243

 

Cash, cash equivalents, and restricted cash at beginning of period

 

 

45,360

 

 

 

21,637

 

Cash, cash equivalents, and restricted cash at end of period

 

$

69,241

 

 

$

77,880

 

Supplemental disclosures of non-cash investing and financing information

 

 

 

 

 

 

Purchases of property and equipment included in accrued liabilities and accounts payable

 

$

98

 

 

$

 

Reclassification of employee stock liability to equity upon vesting

 

$

6

 

 

$

12

 

Deferred offering costs included in accounts payable and accrued liabilities

 

$

 

 

$

8

 

 

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

7


 

HARPOON THERAPEUTICS, INC.

Notes to the Condensed Financial Statements

(unaudited)

 

1. Organization

Description of Business

Harpoon Therapeutics, Inc. (the “Company”) is a clinical-stage immunotherapy company developing a novel class of T cell engagers that harness the power of the body’s immune system to treat patients suffering from cancer and other diseases. T cell engagers are engineered proteins that direct a patient’s own T cells to kill target cells that express specific proteins, or antigens, carried by the target cells. Using a proprietary Tri-specific T cell Activating Construct (“TriTAC”), platform, the Company is developing a pipeline of novel T cell engagers, or TriTACs, initially focused on the treatment of solid tumors and hematologic malignancies. The Company is also developing its ProTriTAC platform, which builds upon the core elements of the TriTAC platform by utilizing a prodrug approach designed to allow T cell engagers to address cancer targets that would otherwise be limited by on-target toxicities. The Company's third proprietary technology platform, extended release TriTAC-XR, is designed to mitigate cytokine release syndrome. The Company was incorporated in Delaware in March 2015 and is headquartered in South San Francisco, California.

Follow-On Offering

In January 2021, the Company sold an aggregate of 6,764,704 shares of its common stock for $107.6 million in net proceeds after deducting underwriting discounts and commissions and offering expenses. The offering was made pursuant to the Company’s shelf registration statement on Form S-3 (File No. 333-237175), declared effective by the SEC on April 23, 2020, a base prospectus dated April 23, 2020 and the related prospectus supplement dated January 6, 2021.

Liquidity

Since inception, the Company has incurred significant losses and has negative cash flows from operations. As of June 30, 2022, the Company had an accumulated deficit of $322.5 million. Management expects to continue to incur additional substantial losses in the foreseeable future as a result of the Company’s research and development activities.

As of June 30, 2022, the Company had cash, cash equivalents, and marketable securities of $90.2 million, which is available to fund future operations. The Company believes as of June 30, 2022 that its cash, cash equivalents and marketable securities provide sufficient capital resources to continue its operations for at least 12 months from the issuance date of the accompanying condensed financial statements. The Company will need to raise additional capital to support the completion of its research and development activities. The Company’s activities are subject to significant risks and uncertainties, including failing to secure additional funding to continue to operationalize the Company’s current technology and to advance the development of its product candidates.

2. Summary of Significant Accounting Policies