cnst-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: 001-38584

 

CONSTELLATION PHARMACEUTICALS, INC.

(Exact name of registrant as specified in its charter)

 

 

Delaware

26-1741721

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer

Identification Number)

 

 

215 First Street, Suite 200

Cambridge, Massachusetts

02142

(Address of principal executive offices)

(Zip code)

(617) 714-0555

(Registrant’s telephone number, including area code)

 

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, $0.0001 par value per share

 

CNST

 

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 31, 2019, the registrant had 33,535,749 shares of common stock, $0.0001 par value per share, outstanding.

 

 


FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains forward-looking statements, which reflect our current views with respect to, among other things, our operations and financial performance. All statements other than statements of historical facts contained in this Quarterly Report on Form 10-Q, including statements regarding our strategy, future operations, future financial position, future revenue, projected costs, prospects, plan, objectives of management and expected market growth are forward-looking statements. You can identify these forward-looking statements by the use of words such as “outlook,” “believes,” “expects,” “potential,” “continues,” “may,” “will,” “should,” “seeks,” “approximately,” “predicts,” “intends,” “plans,” “estimates,” “anticipates” or the negative version of these words or other comparable words. Such forward-looking statements are subject to various risks and uncertainties. Accordingly, there are or will be important factors that could cause actual outcomes or results to differ materially from those indicated in these statements. We believe these factors include but are not limited to those described under “Risk Factors” and include, among other things:

 

our ongoing clinical trials, including our Phase 1b/2 clinical trial of CPI-1205 for the treatment of metastatic castration-resistant prostate cancer in combination with either enzalutamide or abiraterone acetate, which we refer to as ProSTAR; our Phase 1/2 clinical trial of CPI-0209 and our Phase 2 clinical trial of CPI-0610 as a monotherapy or in combination with ruxolitinib in patients with myelofibrosis, which we refer to as MANIFEST;

 

the initiation, timing, progress and results of our current and future preclinical studies and clinical trials and our research and development programs;

 

our plans to develop and, if approved, subsequently commercialize CPI-0610, CPI-1205, CPI-0209 and any other product candidates, including in combination with other drugs and therapies;

 

the timing of and our ability to submit applications for, obtain and maintain regulatory approvals for CPI-0610, CPI-1205, CPI-0209 and other product candidates;

 

our expectations regarding our ability to fund our operating expenses and capital expenditure requirements with our cash, cash equivalents and marketable securities;

 

the potential advantages of our product candidates;

 

the rate and degree of market acceptance and clinical utility of our products;

 

our estimates regarding the potential market opportunity for our product candidates;

 

our commercialization, marketing and manufacturing capabilities and strategy;

 

our intellectual property position;

 

our ability to identify products, product candidates or technologies with significant commercial potential that are consistent with our commercial objectives;

 

our estimates regarding expenses, future revenue, timing of any future revenue, capital requirements and needs for additional financing;

 

the impact of government laws and regulations;

 

our competitive position;

 

developments relating to our competitors and our industry;

 

our ability to maintain and establish collaborations or obtain additional funding; and;

 

our expectations regarding the time during which we will be an emerging growth company and a smaller reporting company under the Jumpstart Our Business Startups Act of 2012.

We may not actually achieve the plans, intentions or expectations disclosed in our forward-looking statements, and you should not place undue reliance on our forward-looking statements. Actual results or events could differ materially from the plans, intentions and expectations disclosed in the forward-looking statements we make. We have included important factors in the cautionary statements included in this Quarterly Report on Form 10-Q, particularly in the “Risk Factors” section, that we believe could cause actual results or events to differ materially from the forward-looking statements that we make. Our forward-looking statements do not reflect the potential impact of any future acquisitions, mergers, dispositions, collaborations, joint ventures or investments we may make or enter into.

You should read this Quarterly Report on Form 10-Q and the documents that we have filed as exhibits to this Quarterly Report on Form 10-Q completely and with the understanding that our actual future results may be materially different from what we expect. The forward-looking statements contained in this Quarterly Report on Form 10-Q are made as of the date of this Quarterly Report on Form 10-Q, and we do not assume any obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by applicable law.

2


Constellation Pharmaceuticals, Inc.

Table of Contents

 

 

 

 

 

Page

 

 

PART I – FINANCIAL INFORMATION

 

 

 

 

 

 

 

Item 1.

 

Condensed Consolidated Financial Statements (Unaudited)

 

4

 

 

Condensed Consolidated Balance Sheets (Unaudited) as of September 30, 2019 and December 31, 2018

 

4

 

 

Condensed Consolidated Statements of Operations and Comprehensive Loss (Unaudited) For the Three and Nine Months Ended September 30, 2019 and 2018

 

5

 

 

Condensed Consolidated Statements of Preferred Stock and Stockholders’ Equity (Deficit) (Unaudited) For the Three and Nine Months Ended September 30, 2019 and 2018

                  

6

 

 

Condensed Consolidated Statements of Cash Flows (Unaudited) For the Nine Months Ended September 30, 2019 and 2018

 

8

 

 

Notes to Unaudited Condensed Consolidated 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

 

34

Item 4.

 

Controls and Procedures

 

35

 

 

 

 

 

 

 

PART II – OTHER INFORMATION

 

 

 

 

 

 

 

Item 1.

 

Legal Proceedings

 

36

Item 1A.

 

Risk Factors

 

36

Item 2.

 

Unregistered Sales of Equity Securities and Use of Proceeds

 

73

Item 6.

 

Exhibits

 

74

 

 

 

 

 

Signatures

 

75

 

 

3


PART I—FINANCIAL INFORMATION

Item 1. Financial Statements

CONSTELLATION PHARMACEUTICALS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except share and per share amounts)

(Unaudited)

 

 

 

September 30, 2019

 

 

December 31, 2018

 

Assets

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

78,977

 

 

$

114,592

 

Marketable securities

 

 

10,089

 

 

 

 

Prepaid expenses and other current assets

 

 

3,144

 

 

 

2,711

 

Total current assets

 

 

92,210

 

 

 

117,303

 

Property and equipment, net

 

 

1,149

 

 

 

1,210

 

Deferred offering costs

 

 

61

 

 

 

 

Restricted cash

 

 

425

 

 

 

425

 

Operating lease, right-of-use assets

 

 

11,372

 

 

 

 

Total assets

 

$

105,217

 

 

$

118,938

 

 

 

 

 

 

 

 

 

 

Liabilities and Stockholders' Equity

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

Accounts payable

 

$

4,983

 

 

$

5,723

 

Accrued expenses and other current liabilities

 

 

10,389

 

 

 

8,937

 

Current portion of lease liabilities - operating lease

 

 

2,382

 

 

 

 

Total current liabilities

 

 

17,754

 

 

 

14,660

 

Long-term debt, net of current portion and discount

 

 

29,603

 

 

 

 

Operating lease liabilities, net of current portion

 

 

9,481

 

 

 

 

Deferred rent, net of current portion

 

 

 

 

 

118

 

Other long-term liabilities

 

 

227

 

 

 

2

 

Total liabilities

 

 

57,065

 

 

 

14,780

 

Stockholders' equity:

 

 

 

 

 

 

 

 

Preferred stock, $0.001 par value; 5,000,000 shares authorized; no shares issued

   or outstanding at September 30, 2019 and December 31, 2018

 

 

 

 

 

 

Common stock, $0.0001 par value; 200,000,000 shares authorized at September 30,

   2019 and December 31, 2018,  respectively; 25,866,632 and 25,803,475 shares

   issued at September 30, 2019 and December 31, 2018, respectively; 25,866,547 and

   25,803,135 shares outstanding at September 30, 2019 and December 31, 2018,

   respectively

 

 

3

 

 

 

3

 

Additional paid-in capital

 

 

343,327

 

 

 

337,992

 

Accumulated other comprehensive gain

 

 

1

 

 

 

 

Accumulated deficit

 

 

(295,179

)

 

 

(233,837

)

Total stockholders' equity

 

 

48,152

 

 

 

104,158

 

Total liabilities and stockholders' equity

 

$

105,217

 

 

$

118,938

 

 

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

 

4


CONSTELLATION PHARMACEUTICALS, INC.

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,

 

 

 

2019

 

 

2018

 

 

2019

 

 

2018

 

Revenue

 

$

 

 

$

 

 

$

 

 

$

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Research and development

 

 

16,241

 

 

 

12,733

 

 

 

47,873

 

 

 

32,143

 

General and administrative

 

 

4,810

 

 

 

3,680

 

 

 

14,125

 

 

 

8,469

 

Total operating expenses

 

 

21,051

 

 

 

16,413

 

 

 

61,998

 

 

 

40,612

 

Loss from operations

 

 

(21,051

)

 

 

(16,413

)

 

 

(61,998

)

 

 

(40,612

)

Other income (expense):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest income

 

 

507

 

 

 

482

 

 

 

1,914

 

 

 

859

 

Interest expense

 

 

(605

)

 

 

(7

)

 

 

(1,258

)

 

 

(228

)

Total other income (expense), net

 

 

(98

)

 

 

475

 

 

 

656

 

 

 

631

 

Net loss attributable to common stockholders

 

$

(21,149

)

 

$

(15,938

)

 

$

(61,342

)

 

$

(39,981

)

Other comprehensive gain (loss):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Unrealized gain (loss) on marketable securities

 

 

(10

)

 

 

 

 

 

1

 

 

 

 

Total other comprehensive gain (loss):

 

$

(10

)

 

$

 

 

$

1

 

 

$

 

Comprehensive loss

 

$

(21,159

)

 

$

(15,938

)

 

$

(61,341

)

 

$

(39,981

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss per share attributable to common stockholders, basic

   and diluted

 

$

(0.82

)

 

$

(0.81

)

 

$

(2.38

)

 

$

(5.45

)

Weighted average common shares outstanding, basic and diluted

 

 

25,829,105

 

 

 

19,619,239

 

 

 

25,814,593

 

 

 

7,332,052

 

 

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

 

5


CONSTELLATION PHARMACEUTICALS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF PREFERRED STOCK AND STOCKHOLDERS’ EQUITY (DEFICIT)

(In thousands, except share and per share amounts)

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

 

 

 

 

 

Convertible Preferred Stock

 

 

 

 

 

 

 

 

 

 

Additional

 

 

Other

 

 

 

 

 

 

 

 

Total

 

 

 

(Series A, B, D, E, E-1 and F)

 

 

Common Stock

 

 

Paid-in

 

 

Comprehensive

 

 

Accumulated

 

 

 

 

Stockholders'

 

 

 

Shares

 

 

Amount

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Gain

 

 

Deficit

 

 

 

 

Equity

 

Balances at December 31, 2018

 

 

 

 

$

 

 

 

25,803,135

 

 

$

3

 

 

$

337,992

 

 

$

 

 

$

(233,837

)

 

 

 

$

104,158

 

Stock-based compensation expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,313

 

 

 

 

 

 

 

 

 

 

 

1,313

 

Vesting of common stock issued upon early

   exercise of unvested options

 

 

 

 

 

 

 

 

85

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock option exercises

 

 

 

 

 

 

 

 

3,754

 

 

 

 

 

 

21

 

 

 

 

 

 

 

 

 

 

 

 

21

 

Unrealized gain on marketable securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

9

 

 

 

 

 

 

 

 

9

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(19,426

)

 

 

 

 

(19,426

)

Balances at March 31, 2019 (unaudited)

 

 

 

 

$

 

 

 

25,806,974

 

 

$

3

 

 

$

339,326

 

 

$

9

 

 

$

(253,263

)

 

 

 

$

86,075

 

Stock-based compensation expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,797

 

 

 

 

 

 

 

 

 

 

 

1,797

 

Vesting of common stock issued upon early

   exercise of unvested options

 

 

 

 

 

 

 

 

85

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock option exercises

 

 

 

 

 

 

 

 

12,364

 

 

 

 

 

 

77

 

 

 

 

 

 

 

 

 

 

 

77

 

Unrealized gain on marketable securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2

 

 

 

 

 

 

 

 

2

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(20,767

)

 

 

 

 

(20,767

)

Balances at June 30, 2019 (unaudited)

 

 

 

 

$

 

 

 

25,819,423

 

 

$

3

 

 

$

341,200

 

 

$

11

 

 

$

(274,030

)

 

 

 

$

67,184

 

Issuance of common stock from the Jefferies

   sales agreement (net of issuance costs,

   $0.2 million)

 

 

 

 

 

 

 

 

39,506

 

 

 

 

 

 

145

 

 

 

 

 

 

 

 

 

 

 

145

 

Stock-based compensation expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,948

 

 

 

 

 

 

 

 

 

 

 

1,948

 

Vesting of common stock issued upon early

   exercise of unvested options

 

 

 

 

 

 

 

 

85

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock option exercises

 

 

 

 

 

 

 

 

7,533

 

 

 

 

 

 

34

 

 

 

 

 

 

 

 

 

 

 

34

 

Unrealized gain on marketable securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(10

)

 

 

 

 

 

 

 

(10

)

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(21,149

)

 

 

 

 

(21,149

)

Balances at September 30, 2019 (unaudited)

 

 

 

 

$

 

 

 

25,866,547

 

 

$

3

 

 

$

343,327

 

 

$

1

 

 

$

(295,179

)

 

 

 

$

48,152

 

 

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

6


CONSTELLATION PHARMACEUTICALS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF PREFERRED STOCK AND STOCKHOLDERS’ EQUITY (DEFICIT) (CONTINUED)

(In thousands, except share and per share amounts)

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

 

 

 

 

 

Convertible Preferred Stock

 

 

 

 

 

 

 

 

 

 

Additional

 

 

Other

 

 

 

 

 

 

 

 

Total

 

 

 

(Series A, B, D, E, E-1 and F)

 

 

Common Stock

 

 

Paid-in

 

 

Comprehensive

 

 

Accumulated

 

 

 

 

Stockholders'

 

 

 

Shares

 

 

Amount

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Gain

 

 

Deficit

 

 

 

 

Equity (Deficit)

 

Balances at December 31, 2017

 

 

118,867,177

 

 

$

173,228

 

 

 

962,898

 

 

$

 

 

$

8,079

 

 

$

 

 

$

(173,912

)

 

 

 

$

(165,833

)

Issuance of Series F convertible preferred

   stock, net of issuance costs of $132

 

 

68,500,000

 

 

 

68,368

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock-based compensation expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

585

 

 

 

 

 

 

 

 

 

 

 

585

 

Vesting of common stock issued upon early

   exercise of unvested options

 

 

 

 

 

 

 

 

408

 

 

 

 

 

 

3

 

 

 

 

 

 

 

 

 

 

 

3

 

Repayment of promissory notes issued

   upon early exercise of unvested options

 

 

 

 

 

 

 

 

229,357

 

 

 

 

 

 

290

 

 

 

 

 

 

 

 

 

 

 

290

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(12,102

)

 

 

 

 

(12,102

)

Balances at March 31, 2018 (unaudited)

 

 

187,367,177

 

 

$

241,596

 

 

 

1,192,663

 

 

$

 

 

$

8,957

 

 

$

 

 

$

(186,014

)

 

 

 

$

(177,057

)

Issuance of Series F convertible preferred

   stock, net of issuance costs of $12

 

 

31,250,000

 

 

 

31,238

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock-based compensation expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

687

 

 

 

 

 

 

 

 

 

 

 

687

 

Vesting of common stock issued upon

   early exercise of unvested options

 

 

 

 

 

 

 

 

86

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock option exercises

 

 

 

 

 

 

 

 

22,088

 

 

 

 

 

 

96

 

 

 

 

 

 

 

 

 

 

 

96

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(11,941

)

 

 

 

 

(11,941

)

Balances at June 30, 2018 (unaudited)

 

 

218,617,177

 

 

$

272,834

 

 

 

1,214,837

 

 

$

 

 

$

9,740

 

 

$

 

 

$

(197,955

)

 

 

 

$

(188,215

)

Conversion of convertible preferred

   stock into common stock upon closing

   of the initial public offering

 

 

(218,617,177

)

 

 

(272,834

)

 

 

20,501,927

 

 

 

2

 

 

 

272,832

 

 

 

 

 

 

 

 

 

 

 

272,834

 

Conversion of preferred stock warrants

   to common stock warrants upon

   closing of initial public offering

 

 

 

 

 

 

 

 

 

 

 

 

 

 

364

 

 

 

 

 

 

 

 

 

 

 

364

 

Issuance of common stock sold in initial

   public offering, net of underwriting

   discounts, commissions and offering costs

 

 

 

 

 

 

 

 

4,000,000

 

 

 

1

 

 

 

52,162

 

 

 

 

 

 

 

 

 

 

 

52,163

 

Stock-based compensation expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,244

 

 

 

 

 

 

 

 

 

 

 

1,244

 

Vesting of common stock issued upon

   early exercise of unvested options

 

 

 

 

 

 

 

 

85

 

 

 

 

 

 

1

 

 

 

 

 

 

 

 

 

 

 

1

 

Exercise of common stock warrant

 

 

 

 

 

 

 

 

51,032

 

 

 

 

 

 

79

 

 

 

 

 

 

 

 

 

 

 

79

 

Stock option exercises

 

 

 

 

 

 

 

 

16,561

 

 

 

 

 

 

31

 

 

 

 

 

 

 

 

 

 

 

31

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(15,938

)

 

 

 

 

(15,938

)

Balances at September 30, 2018 (unaudited)

 

 

 

 

$

 

 

 

25,784,442

 

 

$

3

 

 

$

336,453

 

 

$

 

 

$

(213,893

)

 

 

 

$

122,563

 

 

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

 

7


CONSTELLATION PHARMACEUTICALS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

 

 

 

Nine Months Ended September 30,

 

 

 

2019

 

 

2018

 

Cash flows from operating activities:

 

 

 

 

 

 

 

 

Net loss

 

$

(61,342

)

 

$

(39,981

)

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

 

 

 

 

 

 

 

 

Depreciation and amortization expense

 

 

564

 

 

 

415

 

Stock-based compensation expense

 

 

5,058

 

 

 

2,516

 

Non-cash interest expense

 

 

306

 

 

 

45

 

Amortization and accretion on marketable securities

 

 

(645

)

 

 

 

Change in fair value of preferred stock warrant liability

 

 

 

 

 

110

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

 

Prepaid expenses and other current assets

 

 

(321

)

 

 

(2,219

)

Operating lease, right-of-use assets