ngm-10q_20190930.htm

 

 

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, 2019

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: 001-38853

 

NGM BIOPHARMACEUTICALS, INC.

(Exact Name of Registrant as Specified in its Charter)

 

Delaware

26-1679911

(State or other jurisdiction of

incorporation or organization)

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

333 Oyster Point Boulevard

South San Francisco, CA

94080

(Address of principal executive offices)

(Zip Code)

Registrant’s telephone number, including area code: (650) 243-5555

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

Title of Each Class of Securities Registered

Trading Symbol

Name of Each Exchange on which Securities are Registered

Common Stock, par value $0.001 per share

NGM

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, 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 8, 2019, the registrant had 66,654,589 shares of common stock, $0.001 par value per share, outstanding.

 

 

 


Table of Contents

 

 

 

 

 

Page

PART I.

 

FINANCIAL INFORMATION

 

1

Item 1.

 

Financial Statements (Unaudited)

 

1

 

 

Condensed Consolidated Balance Sheets

 

1

 

 

Condensed Consolidated Statements of Operations

 

2

 

 

Condensed Consolidated Statements of Comprehensive Loss

 

3

 

 

Condensed Consolidated Convertible Preferred Stock and Stockholders’ Equity (Deficit)

 

4

 

 

Condensed Consolidated Statements of Cash Flows

 

6

 

 

Notes to Unaudited Condensed Consolidated Financial Statements

 

7

Item 2.

 

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

 

29

Item 3.

 

Quantitative and Qualitative Disclosures About Market Risk

 

42

Item 4.

 

Controls and Procedures

 

42

PART II.

 

OTHER INFORMATION

 

43

Item 1.

 

Legal Proceedings

 

43

Item 1A.

 

Risk Factors

 

43

Item 2.

 

Unregistered Sales of Equity Securities and Use of Proceeds

 

84

Item 3.

 

Defaults Upon Senior Securities

 

85

Item 4.

 

Mine Safety Disclosures

 

85

Item 5.

 

Other Information

 

85

Item 6.

 

Exhibits

 

86

Signatures

 

87

 

 

 

i


PART I—FINANCIAL INFORMATION

Item 1. Financial Statements.

NGM BIOPHARMACEUTICALS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

(In Thousands, Except Share Amounts)

 

 

 

September 30,

 

 

December 31,

 

 

 

2019

 

 

2018*

 

Assets

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

303,016

 

 

$

56,923

 

Short-term marketable securities

 

 

53,557

 

 

 

149,710

 

Related party receivable from collaboration

 

 

 

 

 

3,669

 

Prepaid expenses and other current assets

 

 

7,747

 

 

 

4,255

 

Total current assets

 

 

364,320

 

 

 

214,557

 

Property and equipment, net

 

 

20,485

 

 

 

23,893

 

Restricted cash

 

 

1,874

 

 

 

2,249

 

Deferred IPO costs

 

 

 

 

 

2,292

 

Other non-current assets

 

 

3,936

 

 

 

3,094

 

Total assets

 

$

390,615

 

 

$

246,085

 

Liabilities, convertible preferred stock and stockholders' equity (deficit)

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

Accounts payable

 

$

4,457

 

 

$

5,775

 

Accrued liabilities

 

 

18,605

 

 

 

14,003

 

Deferred rent, current

 

 

2,792

 

 

 

2,683

 

Deferred revenue, current

 

 

14,624

 

 

 

19,025

 

Total current liabilities

 

 

40,478

 

 

 

41,486

 

Deferred rent, non-current

 

 

10,118

 

 

 

12,221

 

Deferred revenue, non-current

 

 

 

 

 

3,942

 

Early exercise stock option liability

 

 

833

 

 

 

1,559

 

Convertible preferred stock warrant liability

 

 

 

 

 

198

 

Total liabilities

 

 

51,429

 

 

 

59,406

 

Commitments and contingencies (Note 7)

 

 

 

 

 

 

 

 

Convertible preferred stock, $0.001 par value;

   96,268,206 shares authorized as of September 30, 2019 and

   December 31, 2018; zero and 47,267,466 shares issued and outstanding

   as of September 30, 2019 and December 31, 2018, respectively;

   aggregate liquidation preference of $0 and $277,774 at September 30, 2019

   and December 31, 2018, respectively

 

 

 

 

 

294,874

 

Stockholders' equity (deficit):

 

 

 

 

 

 

 

 

Common stock, $0.001 par value; 129,000,000 shares authorized as of

   September 30, 2019 and December 31, 2018; 66,155,613 and 6,937,890

   shares issued and outstanding as of September 30, 2019 and

   December 31, 2018, respectively

 

 

66

 

 

 

7

 

Additional paid-in capital

 

 

519,224

 

 

 

39,258

 

Accumulated other comprehensive gain (loss)

 

 

99

 

 

 

(267

)

Accumulated deficit

 

 

(180,203

)

 

 

(147,193

)

Total equity (deficit)

 

 

339,186

 

 

 

(108,195

)

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

 

$

390,615

 

 

$

246,085

 

 

*The condensed consolidated balance sheet as of December 31, 2018 has been derived from the audited financial statements as of that date.

 

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

1


NGM BIOPHARMACEUTICALS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

(In Thousands, Except Share and Per Share Amounts)

 

 

 

 

Three Months Ended September 30,

 

 

Nine Months Ended September 30,

 

 

 

 

2019

 

 

2018

 

 

2019

 

 

2018

 

Related party revenue

 

 

$

21,568

 

 

$

20,815

 

 

$

72,461

 

 

$

61,546

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Research and development

 

 

 

28,953

 

 

 

24,473

 

 

 

87,299

 

 

 

66,773

 

General and administrative

 

 

 

5,612

 

 

 

4,811

 

 

 

17,208

 

 

 

12,143

 

Total operating expenses

 

 

 

34,565

 

 

 

29,284

 

 

 

104,507

 

 

 

78,916

 

Loss from operations

 

 

 

(12,997

)

 

 

(8,469

)

 

 

(32,046

)

 

 

(17,370

)

Interest income

 

 

 

1,984

 

 

 

966

 

 

 

5,138

 

 

 

2,609

 

Other income (expense), net

 

 

 

96

 

 

 

(14

)

 

 

54

 

 

 

103

 

Net loss

 

 

$

(10,917

)

 

$

(7,517

)

 

$

(26,854

)

 

$

(14,658

)

Net loss per common share, basic and diluted

 

 

$

(0.17

)

 

$

(1.15

)

 

$

(0.60

)

 

$

(2.33

)

Weighted average shares used to compute net loss per

   common share, basic and diluted

 

 

 

65,948,207

 

 

 

6,525,660

 

 

 

44,828,596

 

 

 

6,285,905

 

 

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

 

2


NGM BIOPHARMACEUTICALS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(Unaudited)

(In Thousands)

 

 

 

 

Three Months Ended September 30,

 

 

Nine Months Ended September 30,

 

 

 

 

2019

 

 

2018

 

 

2019

 

 

2018

 

Net Loss

 

 

$

(10,917

)

 

$

(7,517

)

 

$

(26,854

)

 

$

(14,658

)

Other comprehensive gain (loss), net of tax:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net unrealized gain (loss) on available-for-sale marketable

   securities

 

 

 

(3

)

 

 

161

 

 

 

366

 

 

 

94

 

Total comprehensive loss

 

 

$

(10,920

)

 

$

(7,356

)

 

$

(26,488

)

 

$

(14,564

)

 

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

3


NGM BIOPHARMACEUTICALS, INC.

CONDENSED CONSOLIDATED CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ EQUITY (DEFICIT)

(Unaudited)

(In Thousands)

 

 

 

Convertible

Preferred Stock

 

 

 

Common Stock

 

 

Additional

Paid-In

 

 

Other

Comprehensive

 

 

Accumulated

 

 

Total

Stockholders'

 

 

 

Shares

 

 

Amount

 

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Gain (Loss)

 

 

Deficit

 

 

Equity(Deficit)

 

Balance at December 31, 2018

 

 

47,267

 

 

$

294,874

 

 

 

 

6,733

 

 

$

7

 

 

$

39,258

 

 

$

(267

)

 

$

(147,193

)

 

$

(108,195

)

Issuance of common stock to

   participants in 401(k) Plan

 

 

 

 

 

 

 

 

 

8

 

 

 

 

 

 

98

 

 

 

 

 

 

 

 

 

98

 

Issuance of common stock upon

   exercise of stock options

 

 

 

 

 

 

 

 

 

80

 

 

 

 

 

 

279

 

 

 

 

 

 

 

 

 

279

 

Vesting of common stock from early

   exercises

 

 

 

 

 

 

 

 

 

34

 

 

 

 

 

 

237

 

 

 

 

 

 

 

 

 

237

 

Stock-based compensation expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2,605

 

 

 

 

 

 

 

 

 

2,605

 

Changes in unrealized gain on

   available-for-sale securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

222

 

 

 

 

 

 

222

 

Net exercise of preferred stock

   warrant to Series A preferred

   stock

 

 

16

 

 

 

198

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cumulative effect adjustment upon

   adoption of ASU 2014-09

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(6,156

)

 

 

(6,156

)

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(8,268

)

 

 

(8,268

)

Balance at March 31, 2019

 

 

47,283

 

 

$

295,072

 

 

 

 

6,855

 

 

$

7

 

 

$

42,477

 

 

$

(45

)

 

$

(161,617

)

 

$

(119,178

)

Conversion of Series A, B, C, D, E

   convertible preferred stock to

   common stock concurrent with

   initial public offering

 

 

(47,283

)

 

 

(295,072

)

 

 

 

47,283

 

 

 

47

 

 

 

295,025

 

 

 

 

 

 

 

 

 

295,072

 

Issuance of common stock upon

   initial public offering, net of

   issuance cost

 

 

 

 

 

 

 

 

 

7,521

 

 

 

8

 

 

 

107,748

 

 

 

 

 

 

 

 

 

107,756

 

Issuance of common stock upon

   private placement

 

 

 

 

 

 

 

 

 

4,122

 

 

 

4

 

 

 

65,943

 

 

 

 

 

 

 

 

 

65,947

 

Issuance of common stock upon

   exercise of stock options

 

 

 

 

 

 

 

 

 

86

 

 

 

 

 

 

258

 

 

 

 

 

 

 

 

 

258

 

Vesting of common stock from early

   exercises

 

 

 

 

 

 

 

 

 

32

 

 

 

 

 

 

245

 

 

 

 

 

 

 

 

 

245

 

Stock-based compensation expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

3,552

 

 

 

 

 

 

 

 

 

3,552

 

Changes in unrealized gain on

   available-for-sale securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

147

 

 

 

 

 

 

147

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(7,669

)

 

 

(7,669

)

Balance at June 30, 2019

 

 

 

 

 

 

 

 

 

65,899

 

 

$

66

 

 

$

515,248

 

 

$

102

 

 

$

(169,286

)

 

$

346,130

 

Issuance of common stock upon

   exercise of stock options

 

 

 

 

 

 

 

 

 

116

 

 

 

 

 

 

643

 

 

 

 

 

 

 

 

 

643

 

Vesting of common stock from early

   exercises

 

 

 

 

 

 

 

 

 

32

 

 

 

 

 

 

244

 

 

 

 

 

 

 

 

 

244

 

Stock-based compensation expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

3,089

 

 

 

 

 

 

 

 

 

3,089

 

Changes in unrealized loss on

   available-for-sale securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(3

)

 

 

 

 

 

(3

)

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(10,917

)

 

 

(10,917

)

Balance at September 30, 2019

 

 

 

 

 

 

 

 

 

66,047

 

 

$

66

 

 

$

519,224

 

 

$

99

 

 

$

(180,203

)

 

$

339,186

 

 

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


4


NGM BIOPHARMACEUTICALS, INC.

CONDENSED CONSOLIDATED CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ DEFICIT

(Unaudited)

(In Thousands)

 

 

 

Convertible

Preferred Stock

 

 

 

Common Stock

 

 

Additional

Paid-In

 

 

Other

Comprehensive

 

 

Accumulated

 

 

Total

Stockholders'

 

 

 

Shares

 

 

Amount

 

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Gain (Loss)

 

 

Deficit

 

 

Deficit

 

Balance at December 31, 2017

 

 

47,267

 

 

$

294,874

 

 

 

 

6,105

 

 

$

6

 

 

$

26,147

 

 

$

(431

)

 

$

(146,700

)

 

$

(120,978

)

Issuance of common stock upon

   exercise of stock options

 

 

 

 

 

 

 

 

 

35

 

 

 

 

 

 

71

 

 

 

 

 

 

 

 

 

71

 

Vesting of common stock from early

   exercises

 

 

 

 

 

 

 

 

 

35

 

 

 

 

 

 

108

 

 

 

 

 

 

 

 

 

108

 

Repurchase of common stock

 

 

 

 

 

 

 

 

 

(23

)

 

 

 

 

 

(185

)

 

 

 

 

 

 

 

 

(185

)

Stock-based compensation expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2,179

 

 

 

 

 

 

 

 

 

2,179

 

Changes in unrealized loss on

   available-for-sale securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(223

)

 

 

 

 

 

(223

)

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(3,941

)

 

 

(3,941

)

Balance at March 31, 2018

 

 

47,267

 

 

$

294,874

 

 

 

 

6,152

 

 

$

6

 

 

$

28,320

 

 

$

(654

)

 

 

(150,641

)

 

$

(122,969

)

Issuance of common stock to

   participants in 401(k) Plan

 

 

 

 

 

 

 

 

 

11

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Issuance of common stock upon

   exercise of stock options

 

 

 

 

 

 

 

 

 

81

 

 

 

1

 

 

 

163

 

 

 

 

 

 

 

 

 

164

 

Vesting of common stock from early

   exercises

 

 

 

 

 

 

 

 

 

31

 

 

 

 

 

 

108

 

 

 

 

 

 

 

 

 

108

 

Stock-based compensation expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2,292

 

 

 

 

 

 

 

 

 

2,292

 

Changes in unrealized gain on

   available-for-sale securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

156

 

 

 

 

 

 

156

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(3,200

)

 

 

(3,200

)

Balance at June 30, 2018

 

 

47,267

 

 

$

294,874

 

 

 

 

6,275

 

 

$

7

 

 

$

30,883

 

 

$

(498

)

 

 

(153,841

)

 

$

(123,449

)

Issuance of common stock upon

   exercise of stock options

 

 

 

 

 

 

 

 

 

296

 

 

 

 

 

 

1,986

 

 

 

 

 

 

 

 

 

1,986

 

Vesting of common stock from early

   exercises

 

 

 

 

 

 

 

 

 

50

 

 

 

 

 

 

250

 

 

 

 

 

 

 

 

 

250

 

Stock-based compensation expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2,975

 

 

 

 

 

 

 

 

 

2,975

 

Changes in unrealized gain on

   available-for-sale securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

161

 

 

 

 

 

 

161

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(7,517

)

 

 

(7,517

)

Balance at September 30, 2018

 

 

47,267

 

 

$

294,874

 

 

 

 

6,621

 

 

$

7

 

 

$

36,094

 

 

$

(337

)

 

 

(161,358

)

 

$

(125,594

)

 

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

 

5


NGM BIOPHARMACEUTICALS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(In Thousands)

 

 

 

Nine Months Ended September 30,

 

 

 

2019

 

 

2018

 

Cash flows from operating activities

 

 

 

 

 

 

 

 

Net loss

 

$

(26,854

)

 

$

(14,658

)

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

 

 

 

 

 

 

 

 

Depreciation

 

 

5,838

 

 

 

5,332

 

Amortization of discount on marketable securities

 

 

(1,024

)

 

 

(456

)

Stock-based compensation expenses

 

 

9,360

 

 

 

7,449

 

Early exercised stock options

 

 

 

 

 

1,885

 

Change in fair value of convertible preferred stock warrant liability

 

 

 

 

 

77

 

Other non-cash expenses

 

 

98

 

 

 

 

Changes in operating assets and liabilities

 

 

 

 

 

 

 

 

Receivable from related party collaboration

 

 

3,669

 

 

 

 

Prepaid expenses and other assets

 

 

(4,334

)

 

 

(647

)

Accounts payable

 

 

(1,318

)

 

 

968

 

Accrued expenses and other liabilities

 

 

4,485

 

 

 

549

 

Deferred rent

 

 

(1,994

)

 

 

(1,305

)

Deferred revenue

 

 

(14,499

)

 

 

(13,799

)

Net cash used in operating activities

 

 

(26,573

)

 

 

(14,605

)

Cash flows from investing activities

 

 

 

 

 

 

 

 

Purchase of marketable securities