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 September 30, 2021

OR

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

For the transition period from to

Commission File Number: 001-40431

 

DAY ONE BIOPHARMACEUTICALS, INC.

(Exact Name of Registrant as Specified in its Charter)

 

 

 

 

Delaware

83-2415215

(State or other jurisdiction of

incorporation or organization)

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

 

 

395 Oyster Point Blvd., Suite 217

South San Francisco, CA

94080

(Address of principal executive offices)

(Zip Code)

(650) 484-0899

(Registrant’s telephone number, including area code)

 

N/A

(Former name, former address and former fiscal year, if changed since last report)

 

Securities registered pursuant to Section 12(b) of the Act:

 

 

 

 

Title of each class

 

Trading Symbol

 

Name of each exchange on which registered

 

Common Stock, par value $0.0001 per share

DAWN

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, 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, the registrant had 61,928,939 shares of common stock, $0.0001 par value per share, outstanding.

 

 


 

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act, and section 27A of the Securities Act of 1933, as amended, or the Securities Act. All statements contained in this Quarterly Report other than statements of historical fact, including statements regarding our future results of operations and financial position, business strategy, market size, potential growth opportunities, nonclinical and clinical development activities, efficacy and safety profile of our product candidates, potential therapeutic benefits and economic value of our product candidates, use of net proceeds from our public offerings, our ability to maintain and recognize the benefits of certain designations received by product candidates, the timing and results of nonclinical studies and clinical trials, commercial collaboration with third parties, and our ability to recognize milestone and royalty payments from commercialization agreements, the expected impact of the COVID-19 pandemic on our operations, and the receipt and timing of potential regulatory designations, approvals and commercialization of product candidates, are forward-looking statements. The words “believe,” “may,” “will,” “potentially,” “estimate,” “continue,” “anticipate,” “predict,” “target,” “intend,” “could,” “would,” “should,” “project,” “plan,” “expect,” and similar expressions that convey uncertainty of future events or outcomes are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words.

These forward-looking statements are subject to a number of risks, uncertainties and assumptions, including those described in Item 1A, “Risk Factors” and elsewhere in this Quarterly 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 Quarterly Report may not occur and actual results could differ materially and adversely from those anticipated or implied in the forward-looking statements.

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 actual results or to changes in our expectations, except as required by law. You should read this Quarterly Report with the understanding that our actual future results, levels of activity, performance and events and circumstances may be materially different from what we expect.

Unless the context indicates otherwise, as used in this Quarterly Report on Form 10-Q, the terms “Day One,” “the Company,” “we,” “us,” and “our” refer to Day One Biopharmaceuticals, Inc., a Delaware corporation, and its consolidated subsidiaries taken as a whole, unless otherwise noted. “Day One” and all product candidate names are our common law trademarks. This Quarterly Report contains additional trade names, trademarks and service marks of other companies, which are the property of their respective owners. We do not intend our use or display of other companies’ trade names, trademarks or service marks to imply a relationship with, or endorsement or sponsorship of us by, these other companies.

 

 


 

Table of Contents

 

 

 

 

 

 

Page

PART I.

FINANCIAL INFORMATION

4

Item 1.

Interim Consolidated Financial Statements (Unaudited)

4

 

Condensed Consolidated Balance Sheets

4

 

Condensed Consolidated Statements of Operations and Comprehensive Loss

5

 

Condensed Consolidated Statements of Convertible Preferred Stock and Stockholders’ Equity/Members’ (Deficit)

6

 

Condensed Consolidated Statements of Cash Flows

7

 

Notes to Condensed Consolidated Financial Statements

8

Item 2.

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

21

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

32

Item 4.

Controls and Procedures

32

PART II.

OTHER INFORMATION

33

Item 1.

Legal Proceedings

33

Item 1A.

Risk Factors

33

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

88

Item 3.

Defaults Upon Senior Securities

88

Item 4.

Mine Safety Disclosures

88

Item 5.

Other Information

88

Item 6.

Exhibits

89

Signatures

90

 

3


 

PART I-FINANCIAL INFORMATION

Condensed Consolidated Balance Sheets

(in thousands, except share amounts)

(unaudited)

 

 

 

September 30,
2021

 

 

December 31,
2020

 

Assets

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

297,160

 

 

$

43,728

 

Prepaid expenses and other current assets

 

 

6,151

 

 

 

1,343

 

Total current assets

 

 

303,311

 

 

 

45,071

 

Property and equipment, net

 

 

62

 

 

 

77

 

Operating lease right-of-use asset

 

 

273

 

 

 

406

 

Deposits and other long-term assets

 

 

137

 

 

 

107

 

Total assets

 

 

303,783

 

 

 

45,661

 

Liabilities, redeemable convertible preferred shares, redeemable convertible
   noncontrolling interest and stockholders’ equity/members’ (deficit)

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Accounts payable

 

$

683

 

 

$

202

 

Accrued expenses and other current liabilities

 

 

5,161

 

 

 

1,596

 

Current portion of operating lease liabilities

 

 

202

 

 

 

198

 

Total current liabilities

 

 

6,046

 

 

 

1,996

 

Operating lease liabilities, long-term

 

 

65

 

 

 

204

 

Total liabilities

 

 

6,111

 

 

 

2,200

 

Commitments and contingencies (Note 8)

 

 

 

 

 

 

Redeemable convertible preferred shares, no par value; no shares authorized,
   issued and outstanding at September 30, 2021;
22,851,257 shares authorized,
   issued and outstanding at December 31, 2020

 

 

 

 

 

91,964

 

Redeemable convertible noncontrolling interest

 

 

 

 

 

5,702

 

Stockholders’ equity/members’ (deficit)

 

 

 

 

 

 

Preferred stock, 10,000,000 shares authorized, $0.0001 par value, no shares
   issued and outstanding at September 30, 2021;
No shares authorized,
   issued, and outstanding at December 31, 2020

 

 

 

 

 

 

Common shares, no par value; no shares authorized, issued and outstanding at
   September 30, 2021;
28,887,127 shares authorized and 6,035,869 shares at
   December 31st, 2020

 

 

 

 

 

2,000

 

Common stock, 500,000,000 shares authorized, $0.0001 par value, 61,928,939 shares
   issued and outstanding at September 30, 2021;
No shares authorized, issued,
   and outstanding at December 31, 2020

 

 

6

 

 

 

 

Additional paid-in-capital

 

 

403,214

 

 

 

 

Incentive shares, no par value; no shares authorized, issued and outstanding
   at September 30, 2021;
4,312,540 shares authorized and 4,112,012 shares
   issued and outstanding at December 31, 2020

 

 

 

 

 

637

 

Accumulated deficit

 

 

(105,548

)

 

 

(56,842

)

Total stockholders’ equity/members’ (deficit)

 

 

297,672

 

 

 

(54,205

)

Total liabilities, redeemable convertible preferred shares, redeemable
   convertible noncontrolling interest and Stockholders' equity/members' (deficit)

 

$

303,783

 

 

$

45,661

 

 

See accompanying notes to the condensed consolidated financial statements.

 

4


 

Condensed Consolidated 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,

 

 

 

2021

 

 

2020

 

 

2021

 

 

2020

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

Research and development

 

$

9,849

 

 

$

2,537

 

 

$

32,395

 

 

$

4,935

 

General and administrative

 

 

9,392

 

 

 

1,024

 

 

 

18,373

 

 

 

2,703

 

Total operating expenses

 

 

19,241

 

 

 

3,561

 

 

 

50,768

 

 

 

7,638

 

Loss from operations

 

 

(19,241

)

 

 

(3,561

)

 

 

(50,768

)

 

 

(7,638

)

Interest expense

 

 

(6

)

 

 

(9

)

 

 

(19

)

 

 

(22

)

Other expense

 

 

7

 

 

 

(1

)

 

 

(29

)

 

 

(5

)

Changes in fair value of derivative tranche liability

 

 

 

 

 

(271

)

 

 

 

 

 

(578

)

Net loss and comprehensive loss

 

 

(19,240

)

 

 

(3,842

)

 

 

(50,816

)

 

 

(8,243

)

Net loss attributable to redeemable convertible noncontrolling
   interests

 

 

 

 

 

(1,018

)

 

 

(2,109

)

 

 

(2,113

)

Exchange of redeemable noncontrolling interest shares –
   deemed dividend

 

 

 

 

 

 

 

 

(99,994

)

 

 

 

Net loss attributable to common share members/common
   stockholders

 

$

(19,240

)

 

$

(2,824

)

 

$

(148,701

)

 

$

(6,130

)

Net loss per share, basic and diluted

 

$

(0.33

)

 

$

(0.50

)

 

$

(4.98

)

 

$

(1.12

)

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

 

 

57,514,218

 

 

 

5,601,511

 

 

 

29,859,883

 

 

 

5,456,733

 

 

See accompanying notes to the condensed consolidated financial statements.

5


 

Condensed Consolidated Statements of Redeemable Convertible Preferred Shares, Redeemable Noncontrolling Interest and
Stockholders’ Equity/ Members’ (Deficit)

(in thousands, except share amounts)

(unaudited)

 

 

 

Redeemable Convertible
Preferred Shares

 

 

Redeemable
Noncontrolling

 

 

 

Common Stock

 

 

Common Shares

 

 

Incentive Shares

 

 

Additional
Paid-In

 

 

Accumulated

 

 

Stockholders' Equity/Members'

 

 

 

Shares

 

 

Amount

 

 

Interest

 

 

 

Shares

 

 

Amount

 

 

Shares

 

 

Amount

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Deficit

 

 

(Deficit)

 

Balance at December 31, 2020

 

 

22,851,257

 

 

$

91,964

 

 

$

5,702

 

 

 

 

 

 

$

 

 

 

6,035,869

 

 

$

2,000

 

 

 

4,112,012

 

 

$

637

 

 

$

 

 

$

(56,842

)

 

$

(54,205

)

Issuance of Series B redeemable
   convertible preferred shares for
   cash, net of issuance costs of $
243

 

 

9,638,141

 

 

 

129,757

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Share-based compensation expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

538

 

 

 

 

 

 

 

 

 

538

 

Issuance of incentive shares

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

874,335

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss attributable to redeemable
   noncontrolling interest

 

 

 

 

 

 

 

 

(919

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss attributable to Day One
   Biopharmaceuticals Holding
   Company, LLC members

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(15,182

)

 

 

(15,182

)

Balance at March 31, 2021

 

 

32,489,398

 

 

$

221,721

 

 

$

4,783

 

 

 

 

 

 

$

 

 

 

6,035,869

 

 

$

2,000

 

 

 

4,986,352

 

 

$

1,175

 

 

$

 

 

$

(72,024

)

 

$

(68,849

)

Issuance of incentive shares

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2,085,460

 

 

 

 

 

 

 

 

 

 

 

 

 

Cancellations of incentive shares

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(265,596

)

 

 

 

 

 

 

 

 

 

 

 

 

Net loss attributable to Day One
   Biopharmaceuticals Holding
   Company, LLC members

 

 

 

 

 

 

 

 

(1,191

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Conversion of redeemable
   convertible preferred, common,
   and incentive shares into common
   stock

 

 

(32,489,398

)

 

 

(221,721

)

 

 

 

 

 

 

43,958,557

 

 

 

4

 

 

 

(6,035,869

)

 

 

(2,000

)

 

 

(6,806,216

)

 

 

(1,175

)

 

 

224,892

 

 

 

 

 

 

221,721

 

Conversion of redeemable
   noncontrolling interest to common
   stock

 

 

 

 

 

 

 

 

(3,592

)

 

 

 

6,470,382

 

 

 

1

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

3,592

 

 

 

 

 

 

3,592

 

Common stock issued in IPO, net of
   issuance costs of $
16,995

 

 

 

 

 

 

 

 

 

 

 

 

11,500,000

 

 

 

1

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

167,044

 

 

 

 

 

 

167,045

 

Share-based compensation expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2,537

 

 

 

 

 

 

2,537

 

Net loss attributable to common members/stockholders

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(14,284

)

 

 

(14,284

)

Balance at June 30, 2021

 

 

 

 

$

 

 

$

 

 

 

 

61,928,939

 

 

$

6

 

 

 

 

 

$

 

 

 

 

 

$

 

 

$

398,065

 

 

$

(86,308

)

 

$

311,763

 

Share-based compensation expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

5,149

 

 

 

 

 

 

5,149

 

Net loss attributable to common members/stockholders

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(19,240

)

 

 

(19,240

)

Balance at September 30, 2021

 

 

 

 

$

 

 

$

 

 

 

 

61,928,939

 

 

$

6

 

 

 

 

 

$

 

 

 

 

 

$

 

 

$

403,214

 

 

$

(105,548

)

 

$

297,672

 

 

 

 

Redeemable
Convertible
Preferred Shares

 

 

Redeemable
Noncontrolling

 

 

 

Common Shares

 

 

Incentive Shares

 

 

Additional
Paid-In

 

 

Accumulated

 

 

Stockholders' Equity/Members'

 

 

 

Shares

 

 

Amount

 

 

Interest

 

 

 

Shares

 

 

Amount

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Deficit

 

 

(Deficit)

 

Balance at December 31, 2019

 

 

12,502,752

 

 

$

30,504

 

 

$

5,487

 

 

 

 

6,035,869

 

 

$

2,000

 

 

 

1,488,421

 

 

$

111

 

 

$

 

 

$

(12,784

)

 

$

(10,673

)

Issuance of incentive shares

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

528,211

 

 

 

 

 

 

 

 

 

 

 

 

 

Cancellations of incentive shares

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(477,582

)

 

 

 

 

 

 

 

 

 

 

 

 

Share-based compensation expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

59

 

 

 

 

 

 

 

 

 

59

 

Net loss attributable to redeemable
   convertible noncontrolling interest

 

 

 

 

 

 

 

 

(457

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss attributable to Day One
   Biopharmaceuticals Holding
   Company, LLC members

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1,535

)

 

 

(1,535

)

Balance at March 31, 2020

 

 

12,502,752

 

 

$

30,504

 

 

$

5,030

 

 

 

 

6,035,869