SEC Filing | Constellation Pharmaceuticals

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cnst-10q_20200930.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, 2020

☐	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

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 23, 2020, the registrant had 47,575,521 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 2 clinical trial of CPI-0610, MANIFEST, our Phase 1b/2 clinical trial of CPI-1205 and our Phase 1/2 clinical trial of CPI-0209;

•

our plans to advance our clinical-stage product candidates into later stage trials, including our plans to conduct a Phase 3 trial of CPI-0610, MANIFEST-2;

•

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-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-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;

•

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

•

our manufacturing, commercialization and marketing 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

•

the impact of the COVID-19 pandemic on our ability to enroll and monitor patients in our clinical trials, collect data, secure needed supplies, initiate new clinical trials, meet our current milestones and timeline, and continue to successfully execute on our plans and operations.

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.

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, 2020 and December 31, 2019	4
	Condensed Consolidated Statements of Operations and Comprehensive Loss (Unaudited) For the Three and Nine Months Ended September 30, 2020 and 2019	5
	Condensed Consolidated Statements of Stockholders’ Equity (Unaudited) For the Three and Nine Months Ended September 30, 2020 and 2019	6
	Condensed Consolidated Statements of Cash Flows (Unaudited) For the Nine Months Ended September 30, 2020 and 2019	8
	Notes to Unaudited Condensed Consolidated Financial Statements	9
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	19
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	30
Item 4.	Controls and Procedures	30

	PART II – OTHER INFORMATION

Item 1.	Legal Proceedings	32
Item 1A.	Risk Factors	32
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	72
Item 6.	Exhibits	73

Signatures		74

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, 2020			December 31, 2019
Assets
Current assets:
Cash and cash equivalents	$	116,996		$	334,332
Marketable securities		372,358			49,602
Prepaid expenses and other current assets		5,112			3,055
Total current assets		494,466			386,989
Property and equipment, net		1,395			971
Restricted cash		425			425
Operating lease, right-of-use assets		8,710			10,745
Other assets		453			—
Total assets	$	505,449		$	399,130

Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable	$	5,371		$	7,278
Accrued expenses and other current liabilities		17,190			12,915
Current portion of long-term debt, net of discount		5,670			—
Current portion of lease liabilities - operating lease		3,043			2,562
Total current liabilities		31,274			22,755
Long-term debt, net of current portion and discount		24,088			29,642
Operating lease liabilities, net of current portion		6,438			8,759
Other long-term liabilities		879			390
Total liabilities		62,679			61,546
Stockholders' equity:
Preferred stock, $0.001 par value; 5,000,000 shares authorized; no shares issued or outstanding at September 30, 2020 and December 31, 2019, respectively		—			—
Common stock, $0.0001 par value; 200,000,000 shares authorized at September 30, 2020 and December 31, 2019, respectively; 47,573,249 and 41,719,039 shares issued and outstanding at September 30, 2020 and December 31, 2019, respectively		5			4
Additional paid-in capital		850,991			656,973
Accumulated other comprehensive gain (loss)		134			(6	)
Accumulated deficit		(408,360	)		(319,387	)
Total stockholders' equity		442,770			337,584
Total liabilities and stockholders' equity	$	505,449		$	399,130

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

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,
	2020			2019			2020			2019
Operating expenses:
Research and development	$	25,443		$	16,241		$	68,145		$	47,873
General and administrative		7,935			4,810			20,803			14,125
Total operating expenses		33,378			21,051			88,948			61,998
Loss from operations		(33,378	)		(21,051	)		(88,948	)		(61,998	)
Other income (expense):
Interest income		459			507			2,549			1,914
Gain on disposal of equipment		—			—			29			—
Interest expense		(857	)		(605	)		(2,564	)		(1,258	)
Total other income (expense), net		(398	)		(98	)		14			656
Loss before income taxes		(33,776	)		(21,149	)		(88,934	)		(61,342	)
Income tax expense		—			—			39			—
Net loss	$	(33,776	)	$	(21,149	)	$	(88,973	)	$	(61,342	)
Net loss per share attributable to common stockholders, basic and diluted	$	(0.71	)	$	(0.82	)	$	(2.02	)	$	(2.38	)
Weighted average number of common shares used in net loss per share attributable to common stockholders, basic and diluted		47,534,964			25,829,105			43,976,371			25,814,593

Comprehensive loss:
Net loss	$	(33,776	)	$	(21,149	)	$	(88,973	)	$	(61,342	)
Other comprehensive gain (loss):
Unrealized gain (loss) on marketable securities		(121	)		(10	)		140			1
Total other comprehensive gain (loss)	$	(121	)	$	(10	)	$	140		$	1
Comprehensive loss	$	(33,897	)	$	(21,159	)	$	(88,833	)	$	(61,341	)

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

CONSTELLATION PHARMACEUTICALS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(In thousands, except share and per share amounts)

(Unaudited)

							Accumulated
					Additional		Other						Total
	Common Stock				Paid-in		Comprehensive			Accumulated			Stockholders'
	Shares		Amount		Capital		Gain (Loss)			Deficit			Equity
Balances at December 31, 2019		41,719,039	$	4	$	656,973	$	(6	)	$	(319,387	)	$	337,584
Stock-based compensation expense		—		—		2,559		—			—			2,559
Stock option exercises		103,025		—		911		—			—			911
Unrealized loss on marketable securities		—		—		—		(84	)		—			(84	)
Net loss		—		—		—		—			(25,444	)		(25,444	)
Balances at March 31, 2020		41,822,064	$	4	$	660,443	$	(90	)	$	(344,831	)	$	315,526
Stock-based compensation expense		—		—		3,635		—			—			3,635
Issuance of common stock from public offering, net of underwriting discounts and commissions		5,500,000		1		180,726		—			—			180,727
Stock option exercises		177,968		—		1,501		—			—			1,501
Unrealized gain on marketable securities		—		—		—		345			—			345
Net loss		—		—		—		—			(29,753	)		(29,753	)
Balances at June 30, 2020		47,500,032	$	5	$	846,305	$	255		$	(374,584	)	$	471,981
Stock-based compensation expense		—		—		4,219		—			—			4,219
Stock option exercises		73,217		—		467		—			—			467
Unrealized loss on marketable securities		—		—		—		(121	)		—			(121	)
Net loss		—		—		—		—			(33,776	)		(33,776	)
Balances at September 30, 2020		47,573,249	$	5	$	850,991	$	134		$	(408,360	)	$	442,770

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

CONSTELLATION PHARMACEUTICALS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (CONTINUED)

(In thousands, except share and per share amounts)

(Unaudited)

							Accumulated
					Additional		Other						Total
	Common Stock				Paid-in		Comprehensive			Accumulated			Stockholders'
	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		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		25,819,423	$	3	$	341,200	$	11		$	(274,030	)	$	67,184
Issuance of common stock from the Open Market 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		—		—		—			—			—
Exercise of common stock warrant		—		—		—					—			—
Stock option exercises		7,533		—		34		—			—			34
Unrealized loss on marketable securities		—		—		—		(10	)		—			(10	)
Net loss		—		—		—		—			(21,149	)		(21,149	)
Balances at September 30, 2019		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.

CONSTELLATION PHARMACEUTICALS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

	Nine Months Ended September 30,
	2020			2019
Cash flows from operating activities:
Net loss	$	(88,973	)	$	(61,342	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization expense		434			564
Stock-based compensation expense		10,413