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, 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: 001-40431

 

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.)

 

 

2000 Sierra Point Parkway, Suite 501

Brisbane, CA

94005

(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 November 2, 2022, the registrant had 73,549,526 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 and other global events, including the recent war in Ukraine, 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 Condensed Consolidated Financial Statements (Unaudited)

4

 

Condensed Consolidated Balance Sheets

4

 

Condensed Consolidated Statements of Operations

5

 

Condensed Consolidated Statements of Comprehensive Loss

6

 

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

7

 

Condensed Consolidated Statements of Cash Flows

8

 

Notes to Condensed Consolidated Financial Statements

9

Item 2.

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

24

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

35

Item 4.

Controls and Procedures

35

PART II.

OTHER INFORMATION

36

Item 1.

Legal Proceedings

36

Item 1A.

Risk Factors

36

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

97

Item 3.

Defaults Upon Senior Securities

98

Item 4.

Mine Safety Disclosures

98

Item 5.

Other Information

98

Item 6.

Exhibits

99

Signatures

100

 

3


 

PART I-FINANCIAL INFORMATION

Day One Biopharmaceuticals, Inc.

Condensed Consolidated Balance Sheets

(in thousands, except share amounts)

(unaudited)

 

 

 

September 30,
2022

 

 

December 31,
2021

 

Assets

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

120,864

 

 

$

284,309

 

Short-term investments

 

 

253,477

 

 

 

 

Prepaid expenses and other current assets

 

 

6,172

 

 

 

5,059

 

      Total current assets

 

 

380,513

 

 

 

289,368

 

Property and equipment, net

 

 

35

 

 

 

57

 

Operating lease right-of-use asset

 

 

864

 

 

 

227

 

Deposits and other long-term assets

 

 

449

 

 

 

169

 

     Total assets

 

$

381,861

 

 

$

289,821

 

Liabilities and stockholders’ equity

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Accounts payable

 

$

3,973

 

 

$

1,744

 

Accrued expenses and other current liabilities

 

 

13,836

 

 

 

6,709

 

Current portion of operating lease liabilities

 

 

462

 

 

 

204

 

      Total current liabilities

 

 

18,271

 

 

 

8,657

 

Long-term portion of lease liabilities

 

 

514

 

 

 

16

 

      Total liabilities

 

 

18,785

 

 

 

8,673

 

Commitments and contingencies (Note 6)

 

 

 

 

 

 

Stockholders’ equity:

 

 

 

 

 

 

Common stock, $0.0001 par value; 500,000,000 shares authorized as of September 30, 2022 and December 31, 2021; 73,511,923 and 61,952,292 shares issued and outstanding as of September 30, 2022 and December 31, 2021, respectively

 

 

7

 

 

 

6

 

Additional paid-in-capital

 

 

593,020

 

 

 

408,629

 

Accumulated other comprehensive loss

 

 

(392

)

 

 

 

Accumulated deficit

 

 

(229,559

)

 

 

(127,487

)

           Total stockholders’ equity

 

 

363,076

 

 

 

281,148

 

           Total liabilities and stockholders' equity

 

$

381,861

 

 

$

289,821

 

 

See accompanying notes to the condensed consolidated financial statements.

 

4


 

Day One Biopharmaceuticals, Inc.

Condensed Consolidated Statements of Operations

(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

 

$

22,035

 

 

$

9,849

 

 

$

59,598

 

 

$

32,395

 

General and administrative

 

 

17,664

 

 

 

9,392

 

 

 

44,568

 

 

 

18,373

 

Total operating expenses

 

 

39,699

 

 

 

19,241

 

 

 

104,166

 

 

 

50,768

 

Loss from operations

 

 

(39,699

)

 

 

(19,241

)

 

 

(104,166

)

 

 

(50,768

)

Interest income (expense), net

 

 

1,895

 

 

 

(6

)

 

 

2,086

 

 

 

(19

)

Other income (expense), net

 

 

9

 

 

 

7

 

 

 

8

 

 

 

(29

)

Net loss

 

 

(37,795

)

 

 

(19,240

)

 

 

(102,072

)

 

 

(50,816

)

Net loss attributable to redeemable convertible noncontrolling interest

 

 

 

 

 

 

 

 

 

 

 

(2,109

)

Exchange of redeemable noncontrolling interest shares – deemed dividend

 

 

 

 

 

 

 

 

 

 

 

(99,994

)

Net loss attributable to common stockholders/members

 

$

(37,795

)

 

$

(19,240

)

 

$

(102,072

)

 

$

(148,701

)

Net loss per share, basic and diluted

 

$

(0.53

)

 

$

(0.33

)

 

$

(1.61

)

 

$

(4.98

)

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

 

 

71,008,993

 

 

 

57,514,218

 

 

 

63,522,774

 

 

 

29,859,883

 

 

See accompanying notes to the condensed consolidated financial statements.

 

5


 

Day One Biopharmaceuticals, Inc.

Condensed Consolidated Statements of Comprehensive Loss

(in thousands)

(unaudited)

 

 

 

Three Months Ended
September 30,

 

 

Nine Months Ended
September 30,

 

 

 

2022

 

 

2021

 

 

2022

 

 

2021

 

Net loss

 

$

(37,795

)

 

$

(19,240

)

 

$

(102,072

)

 

$

(50,816

)

Other comprehensive loss:

 

 

 

 

 

 

 

 

 

 

 

 

Unrealized loss on available-for-sale securities

 

 

(389

)

 

 

 

 

 

(392

)

 

 

 

Total comprehensive loss

 

$

(38,184

)

 

$

(19,240

)

 

$

(102,464

)

 

$

(50,816

)

 

See accompanying notes to the condensed consolidated financial statements.

6


 

Day One Biopharmaceuticals, Inc.

Condensed Consolidated Statements of Redeemable Convertible Preferred Shares,

Redeemable Noncontrolling Interest and Stockholders’ Equity/ Members’ (Deficit)

(in thousands, except share amounts)

(unaudited)

 

 

 

Common Shares

 

 

Additional
Paid-In

 

 

Accumulated Other

 

 

Accumulated

 

 

Total Stockholders'

 

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Comprehensive Loss

 

 

Deficit

 

 

Equity

 

Balance at December 31, 2021

 

 

61,952,292

 

 

$

6

 

 

$

408,629

 

 

$

 

 

$

(127,487

)

 

$

281,148

 

Share-based compensation expenses

 

 

 

 

 

 

 

 

6,202

 

 

 

 

 

 

 

 

 

6,202

 

Unvested common stock forfeiture

 

 

(40,363

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss attributable to common stockholders

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(27,747

)

 

 

(27,747

)

Balance at March 31, 2022

 

 

61,911,929

 

 

 

6

 

 

 

414,831

 

 

 

 

 

 

(155,234

)

 

 

259,603

 

Issuance of common stock pursuant to follow-on offering, net of issuance costs of $10,864

 

 

11,500,000

 

 

 

1

 

 

 

161,609

 

 

 

 

 

 

 

 

 

161,610

 

Issuance of common stock pursuant to
   Employee Stock Purchase Plan

 

 

49,171

 

 

 

 

 

 

320

 

 

 

 

 

 

 

 

 

320

 

Share-based compensation expenses

 

 

 

 

 

 

 

 

5,631

 

 

 

 

 

 

 

 

 

5,631

 

Unrealized loss on available-for-sale securities

 

 

 

 

 

 

 

 

 

 

 

(3

)

 

 

 

 

 

(3

)

Net loss attributable to common stockholders/members'

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(36,530

)

 

 

(36,530

)

Balance at June 30, 2022

 

 

73,461,100

 

 

 

7

 

 

 

582,391

 

 

 

(3

)

 

 

(191,764

)

 

 

390,631

 

Issuance of common stock upon exercise of
   stock options

 

 

130,899

 

 

 

 

 

 

2,053

 

 

 

 

 

 

 

 

 

2,053

 

Issuance of common stock upon release of
   restricted stock units

 

 

51,030

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Unvested common stock forfeiture

 

 

(131,106

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Share-based compensation expenses

 

 

 

 

 

 

 

 

8,576

 

 

 

 

 

 

 

 

 

8,576

 

Unrealized loss on available-for-sale securities

 

 

 

 

 

 

 

 

 

 

 

(389

)

 

 

 

 

 

(389

)

Net loss attributable to common stockholders/members'

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(37,795

)

 

 

(37,795

)

Balance at September 30, 2022

 

 

73,511,923

 

 

$

7

 

 

$

593,020

 

 

$

(392

)

 

$

(229,559

)

 

$

363,076

 

 

 

 

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

)