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CRO 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 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, 2020

or

 

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

 

For the transition period from                      to                      

Commission File Number: 001-36070

 

Five Prime Therapeutics, Inc.

(Exact name of registrant as specified in its charter)

 

 

Delaware

 

26-0038620

(State or other jurisdiction of

incorporation or organization)

 

(IRS Employer

Identification No.)

111 Oyster Point Boulevard

South San Francisco, California 94080

(415) 365-5600

(Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices)

 

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 $0.001 per share

FPRX

The Nasdaq Stock Market LLC

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 30, 2020, the number of outstanding shares of the registrant’s common stock was 38,037,666.

 

 

 

 

 


 

TABLE OF CONTENTS

 

 

PART I.

  

 

FINANCIAL INFORMATION

  

4

 

  

 

Item 1.

  

 

Unaudited Financial Statements

  

4

 

  

 

  

 

Balance Sheets as of September 30, 2020 and December 31, 2019

  

4

 

  

 

  

 

Statements of Operations for the Three and Nine Months Ended September 30, 2020 and 2019

  

5

 

  

 

  

 

Statements of Comprehensive Loss for the Three and Nine Months Ended September 30, 2020 and 2019

  

6

 

  

 

  

 

Statements of Stockholders’ Equity for the Three and Nine Months Ended September 30, 2020 and 2019

  

7

 

 

 

 

 

Statements of Cash Flows for the Nine Months Ended September 30, 2020 and 2019

 

8

 

  

 

  

 

Notes to Financial Statements

  

9

 

  

 

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 6.

  

 

Exhibits

  

66

 

Signatures

  

67

In this report, unless otherwise stated or the context otherwise indicates, references to “Five Prime,” “the company,” “we,” “us,” “our” and similar references refer to Five Prime Therapeutics, Inc. The Five Prime logo is our registered trademark. This report also contains registered marks, trademarks and trade names of other companies. All other trademarks, registered marks and trade names appearing in this report are the property of their respective holders.

 

 

 

2


 

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS AND INDUSTRY DATA

This Quarterly Report on Form 10-Q, or this report, contains forward-looking statements. In some cases, you can identify these statements by forward-looking words such as “believe,” “may,” “will,” “estimate,” “continue,” “anticipate,” “intend,” “could,” “would,” “project,” “plan,” “expect,” or similar expressions, or the negative or plural of these words or expressions. These forward-looking statements include statements concerning the following:

 

the impact of the COVID-19 pandemic and its effects on our operations, research and development and clinical trials and potential disruption in the operations and business of third-party manufacturers, contract research organizations, other service providers, and collaborators with whom we conduct business;

 

our estimates regarding our expenses, revenues, anticipated capital requirements and needs for additional financing;

 

our receipt of future milestone payments and/or royalties, and the timing of such payments;

 

our or our partners’ ability to timely advance product candidates into and through clinical data readouts and successful completion of clinical trials;

 

the timing of the initiation, progress and results of preclinical studies and research and development programs;

 

our expectations regarding the potential safety, efficacy or clinical utility of our product candidates;

 

the implementation, timing and likelihood of success of our plans to develop companion diagnostics for our product candidates;

 

our ability to establish and maintain collaborations and necessary licenses;

 

the implementation of our business model and strategic plans for our business, product candidates and technology;

 

the scope of protection we establish and maintain for intellectual property rights covering our product candidates and technology;

 

the size of patient populations targeted by products we or our partners develop and market adoption of such products by physicians and patients;

 

the extent of protein overexpression or gene amplification in certain patient populations;

 

the timing or likelihood of regulatory filings and approvals for products we or our partners develop;

 

the ability to negotiate adequate pricing, coverage and adequate reimbursement for our product candidates with third parties and government authorities;

 

developments relating to our competitors and our industry;

 

our expectations regarding licensing, acquisitions and strategic operations; and

 

political, social and economic instability, natural disasters or public health epidemics in countries where we or our collaborators conduct activities related to our business.

These forward-looking statements are only current predictions and are subject to known and unknown risks, uncertainties and other factors that may cause our or our industry’s actual results, levels of activity, performance or achievements to be materially different from those anticipated by such statements. We discuss many of these risks in greater detail under the heading “Risk Factors” and elsewhere in this report. 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 future results, levels of activity, performance or achievements. Except as required by law, we are under no duty to update or revise any of the forward-looking statements in this report, whether as a result of new information, future events or otherwise, after the date of this report.

We obtained the industry, market and competitive position data in this report from our own internal estimates and research as well as from industry and general publications and research surveys and studies conducted by third parties. While we believe that the information in each of these publications, surveys and studies is reliable, we have not independently verified market and industry data from third-party sources. While we believe our internal estimates and research are reliable and the market definitions we use are appropriate, such estimates, research and definitions have not been verified by any independent source.

 

 

3


 

PART I. FINANCIAL INFORMATION

 

Item 1. Unaudited Financial Statements

FIVE PRIME THERAPEUTICS, INC.

Balance Sheets

(In thousands, except share and per share amounts)

 

 

September 30,

 

 

December 31,

 

 

2020

 

 

2019

 

 

(Unaudited)

 

 

(Note 1)

 

Assets

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

Cash and cash equivalents

$

36,019

 

 

$

55,800

 

Marketable securities

 

75,350

 

 

 

100,580

 

Receivables from collaborative partners

 

1,483

 

 

 

4,097

 

Income tax receivable

 

6,630

 

 

 

 

Prepaid and other current assets

 

3,793

 

 

 

6,243

 

Total current assets

 

123,275

 

 

 

166,720

 

Restricted cash

 

1,543

 

 

 

1,543

 

Property and equipment, net

 

11,691

 

 

 

22,534

 

Operating lease, right-of-use assets

 

19,854

 

 

 

30,934

 

Other long-term assets

 

4,018

 

 

 

2,411

 

Total assets

$

160,381

 

 

$

224,142

 

 

 

 

 

 

 

 

 

Liabilities and stockholders' equity

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

Accounts payable

$

396

 

 

$

1,184

 

Accrued personnel-related expenses

 

5,174

 

 

 

6,805

 

Other accrued liabilities

 

12,028

 

 

 

9,659

 

Operating lease obligations, current portion

 

4,198

 

 

 

4,080

 

Deferred revenue, current portion

 

1,251

 

 

 

1,296

 

Total current liabilities

 

23,047

 

 

 

23,024

 

Deferred revenue, long-term portion

 

 

 

 

5,113

 

Operating lease obligations, long-term portion

 

42,103

 

 

 

45,532

 

Stockholders' equity:

 

 

 

 

 

 

 

Common stock, $0.001 par value; 100,000,000 shares authorized, 36,589,525

   issued and 35,620,167 outstanding at September 30, 2020; 36,280,368 issued and

  35,219,791 outstanding at December 31, 2019.

 

36

 

 

 

35

 

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

   outstanding

 

 

 

 

 

Additional paid-in capital

 

590,544

 

 

 

582,243

 

Accumulated other comprehensive income

 

10

 

 

 

78

 

Accumulated deficit

 

(495,359

)

 

 

(431,883

)

Total stockholders' equity

 

95,231

 

 

 

150,473

 

Total liabilities and stockholders' equity

$

160,381

 

 

$

224,142

 

 

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

 

 

 

4


 

FIVE PRIME THERAPEUTICS, INC.

Statements of Operations

(In thousands, except per share amounts)

 (Unaudited)

 

 

Three Months Ended

 

 

 

Nine Months Ended

 

 

September 30,

 

 

 

September 30,

 

 

2020

 

 

2019

 

 

 

2020

 

 

2019

 

Revenue:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Collaboration revenue

$

2,048

 

 

$

2,984

 

 

 

$

8,886

 

 

$

11,664

 

License revenue

 

 

 

 

 

 

 

 

5,000

 

 

 

 

Total revenue

 

2,048

 

 

 

2,984

 

 

 

 

13,886

 

 

 

11,664

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Research and development

 

21,446

 

 

 

26,948

 

 

 

 

52,575

 

 

 

88,126

 

General and administrative

 

13,712

 

 

 

13,206

 

 

 

 

32,198

 

 

 

33,377

 

Total operating expenses

 

35,158

 

 

 

40,154

 

 

 

 

84,773

 

 

 

121,503

 

Loss from operations

 

(33,110

)

 

 

(37,170

)

 

 

 

(70,887

)

 

 

(109,839

)

Interest income

 

59

 

 

 

1,100

 

 

 

 

783

 

 

 

3,996

 

Other (expense) income, net

 

(2

)

 

 

1

 

 

 

 

(2

)

 

 

(2

)

Loss before income tax

 

(33,053

)

 

 

(36,069

)

 

 

 

(70,106

)

 

 

(105,845

)

Income tax benefit

 

6,630

 

 

 

 

 

 

 

6,630

 

 

 

 

Net loss

 

(26,423

)

 

 

(36,069

)

 

 

 

(63,476

)

 

$

(105,845

)

Basic and diluted net loss per common share

$

(0.74

)

 

$

(1.03

)

 

 

$

(1.79

)

 

$

(3.03

)

Weighted-average shares used to compute basic and diluted net loss per common share

 

35,521

 

 

 

34,996

 

 

 

 

35,404

 

 

 

34,901

 

 

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

 

 

 

5


 

FIVE PRIME THERAPEUTICS, INC.

Statements of Comprehensive Loss

(In thousands)

 (Unaudited)

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

September 30,

 

 

September 30,

 

 

2020

 

 

2019

 

 

2020

 

 

2019

 

Net loss

$

(26,423

)

 

$

(36,069

)

 

$

(63,476

)

 

$

(105,845

)

Other comprehensive (loss) gain:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Unrealized (loss) gain on marketable securities

 

(12

)

 

 

(63

)

 

 

(68

)

 

 

185

 

Comprehensive loss

$

(26,435

)

 

$

(36,132

)

 

$

(63,544

)

 

$

(105,660

)

 

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

 

 

 

6


 

FIVE PRIME THERAPEUTICS, INC.

Statements of Stockholders’ Equity

(In thousands, except share amounts)

 (Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Additional

 

 

Other

 

 

 

 

 

 

Total

 

 

 

Common Stock

 

 

Paid-In

 

 

Comprehensive

 

 

Accumulated

 

 

Stockholders'

 

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Income (Loss)

 

 

Deficit

 

 

Equity

 

Balances at December 31, 2019

 

 

35,219,791

 

 

$

35

 

 

$

582,243

 

 

$

78

 

 

$

(431,883

)

 

$

150,473

 

Issuance of common stock under equity incentive plans

 

 

169,324

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Repurchase of shares to satisfy tax withholding obligations

 

 

(65,059

)

 

 

 

 

 

(277

)

 

 

 

 

 

 

 

 

(277

)

Stock-based compensation expense

 

 

 

 

 

 

 

 

4,482

 

 

 

 

 

 

 

 

 

4,482

 

Other comprehensive loss

 

 

 

 

 

 

 

 

 

 

 

(19

)

 

 

 

 

 

(19

)

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(20,116

)

 

 

(20,116

)

Balances at March 31, 2020

 

 

35,324,056

 

 

$

35

 

 

$

586,448

 

 

$

59

 

 

$

(451,999

)

 

$

134,543

 

Issuance of common stock under equity incentive plans

 

 

192,759

 

 

 

 

 

 

299

 

 

 

 

 

 

 

 

 

299

 

Repurchase of shares to satisfy tax withholding obligations

 

 

(35,591

)

 

 

 

 

 

(103

)

 

 

 

 

 

 

 

 

(103

)

Stock-based compensation expense

 

 

 

 

 

 

 

 

2,179

 

 

 

 

 

 

 

 

 

2,179

 

Other comprehensive loss

 

 

 

 

 

 

 

 

 

 

 

(37

)

 

 

 

 

 

(37

)

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(16,937

)

 

 

(16,937

)

Balances at June 30, 2020

 

 

35,481,224

 

 

$

35

 

 

$

588,823

 

 

$

22

 

 

$

(468,936

)

 

$

119,944

 

Issuance of common stock under equity incentive plans

 

 

202,182

 

 

 

 

 

 

29

 

 

 

 

 

 

 

 

 

29

 

Issuance of common stock under at-the-market equity offerings

 

 

6,500

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Repurchase of shares to satisfy tax withholding obligations

 

 

(69,739

)

 

 

1

 

 

 

(369

)

 

 

 

 

 

 

 

 

(368

)

Stock-based compensation expense

 

 

 

 

 

 

 

 

2,061

 

 

 

 

 

 

 

 

 

2,061

 

Other comprehensive loss

 

 

 

 

 

 

 

 

 

 

 

(12

)

 

 

 

 

 

(12

)

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(26,423

)

 

 

(26,423

)

Balances at September 30, 2020

 

 

35,620,167

 

 

$

36

 

 

$

590,544

 

 

$

10

 

 

$

(495,359

)

 

$

95,231

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Additional

 

 

Other

 

 

 

 

 

 

Total

 

 

 

Common Stock

 

 

Paid-In

 

 

Comprehensive

 

 

Accumulated

 

 

Stockholders'

 

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Income (Loss)

 

 

Deficit

 

 

Equity

 

Balances at December 31, 2018

 

 

34,745,721

 

 

$

34

 

 

$

559,892

 

 

$

(106

)

 

$

(294,681

)

 

$

265,139

 

Issuance of common stock under equity incentive plans

 

 

150,666

 

 

 

 

 

 

222

 

 

 

 

 

 

 

 

 

222

 

Repurchase of shares to satisfy tax withholding obligations

 

 

(57,703

)

 

 

 

 

 

(670

)

 

 

 

 

 

 

 

 

(670

)

Stock-based compensation expense

 

 

 

 

 

 

 

 

4,872

 

 

 

 

 

 

 

 

 

4,872

 

Other comprehensive gain

 

 

 

 

 

 

 

 

 

 

 

148

 

 

 

 

 

 

148

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(35,385

)

 

 

(35,385

)

Balances at March 31, 2019

 

 

34,838,684

 

 

$

34

 

 

$

564,316

 

 

$

42

 

 

$

(330,066

)

 

$

234,326

 

Issuance of common stock under equity incentive plans

 

 

131,586

 

 

 

 

 

772

 

 

 

 

 

 

 

772

 

Repurchase of shares to satisfy tax withholding obligations

 

 

(5,957

)

 

 

 

 

(58

)

 

 

 

 

 

 

(58

)

Stock-based compensation expense

 

 

 

 

 

 

5,863

 

 

 

 

 

 

 

5,863

 

Other comprehensive gain

 

 

 

 

 

 

 

 

100

 

 

 

 

 

100

 

Net loss

 

 

 

 

 

 

 

 

 

 

(34,391

)

 

 

(34,391

)

Balances at June 30, 2019

 

 

34,964,313

 

 

$

34

 

 

$

570,893

 

 

$

142

 

 

$

(364,457

)

 

$

206,612

 

Issuance of common stock under equity incentive plans

 

 

264,419

 

 

 

 

 

 

4

 

 

 

 

 

 

 

 

 

4

 

Repurchase of shares to satisfy tax withholding obligations

 

 

(129,632

)

 

 

 

 

 

(706

)

 

 

 

 

 

 

 

 

(706

)

Stock-based compensation expense

 

 

 

 

 

 

 

 

8,656

 

 

 

 

 

 

 

 

 

8,656

 

Other comprehensive loss

 

 

 

 

 

 

 

 

 

 

 

(63

)

 

 

 

 

 

(63

)

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(36,069

)

 

 

(36,069

)

Balances at September 30, 2019

 

 

35,099,100

 

 

$

34

 

 

$

578,847

 

 

$

79

 

 

$

(400,526

)

 

$

178,434

 

 

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

7


 

FIVE PRIME THERAPEUTICS, INC.

Statements of Cash Flows

(In thousands)

 (Unaudited)

 

 

Nine Months Ended

 

 

 

September 30,

 

 

 

2020

 

 

2019

 

Operating activities

 

 

 

 

 

 

 

 

Net loss

 

$

(63,476

)

 

$

(105,845

)

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

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

2,701

 

 

 

3,850

 

Impairment of fixed assets

 

 

5,036

 

 

 

 

Impairment of ROU assets

 

 

8,792