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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, 2021  

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: 001-39273

 

Lyra Therapeutics, Inc.

(Exact Name of Registrant as Specified in its Charter)

 

 

Delaware

84-1700838

(State or other jurisdiction of

incorporation or organization)

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

480 Arsenal Way

Watertown, MA

02472

(Address of principal executive offices)

(Zip Code)

Registrant’s telephone number, including area code: (617393-4600

 

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(s)

 

Name of each exchange on which registered

Common Stock, $0.001 par value per share

 

LYRA

 

The Nasdaq Global 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, 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 1, 2021, the registrant had 13,004,578 shares of common stock, $0.001 par value per share, outstanding.

 

 

 

 


 

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains forward-looking statements. We intend such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in Section 27A of the Securities Act of 1933, as amended, or the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act. All statements other than statements of historical facts contained in this Quarterly Report on Form 10-Q are forward looking statements, including but not limited to statements regarding:

 

our plans to develop and commercialize our product candidates;

 

the timing of our ongoing or planned clinical trials for LYR-210, LYR-220, and any future product candidates;

 

the timing of and our ability to obtain and maintain regulatory approvals for LYR-210, LYR-220, and any future product candidates;

 

the clinical utility of our product candidates;

 

our commercialization, marketing, and manufacturing capabilities and strategy;

 

our expectations about the willingness of healthcare professionals to use LYR-210, LYR-220, and any future product candidates;

 

our expectations regarding the development and commercialization of LYR-210 pursuant to the terms of the LianBio License Agreement;

 

our intellectual property position;

 

our competitive position and developments and projections relating to our competitors or our industry;

 

our ability to identify, recruit, and retain key personnel;

 

the impact of laws and regulations;

 

risks associated with the COVID-19 pandemic, which may adversely impact our business and clinical trials;

 

our expectations regarding the time during which we will be an emerging growth company under the Jumpstart Our Business Startups Act, or the JOBS Act;

 

our plans to identify additional product candidates with significant commercial potential that are consistent with our commercial objectives;

 

our estimates and statements regarding our future revenue, future results of operations, and financial position;

 

our business strategy;

 

our research and development costs; and

 

the plans and objectives of management for future operations.

These statements involve known and unknown risks, uncertainties and other important factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements.

 


In some cases, you can identify forward-looking statements by terms such as “may,” “will,” “should,” “expect,” “plan,” “anticipate,” “could,” “intend,” “target,” “project,” “contemplate,” “believe,” “estimate,” “predict,” “potential”, would,’or “continue” or the negative of these terms or other similar expressions, although not all forward-looking statements contain these words. The forward-looking statements in this Quarterly Report on Form 10-Q are only predictions and are based largely on our current expectations and projections about future events and financial trends that we believe may affect our business, financial condition, and results of operations. These forward-looking statements speak only as of the date of this Quarterly Report on Form 10-Q and are subject to a number of known and unknown risks, uncertainties, and assumptions, including those described under the sections in this Quarterly Report on Form 10-Q entitled “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and elsewhere in this Quarterly Report on Form 10-Q. Because forward-looking statements are inherently subject to risks and uncertainties, some of which cannot be predicted or quantified and some of which are beyond our control, you should not rely on these forward-looking statements as predictions of future events. The events and circumstances reflected in our forward-looking statements may not be achieved or occur and actual results could differ materially from those projected in the forward-looking statements.

Moreover, we operate in an evolving environment. New risk factors and uncertainties may emerge from time to time, and it is not possible for management to predict all risk factors and uncertainties. You should read this Quarterly Report on Form 10-Q and the documents that we reference in 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. We qualify all of our forward-looking statements by these cautionary statements. Except as required by applicable law, we do not plan to publicly update or revise any forward-looking statements contained herein, whether as a result of any new information, future events, changed circumstances, or otherwise.

 

 

 


 

Summary Risk Factors

Our business is subject to numerous risks and uncertainties, including those described in Part II, Item 1A. “Risk Factors” in this Quarterly Report on Form 10-Q. You should carefully consider these risks and uncertainties when investing in our common stock. The principal risks and uncertainties affecting our business include the following:

 

we have a limited operating history and a history of escalating operating losses, which may make it difficult to evaluate the prospects for our future viability;

 

we have incurred significant losses since inception and expect to incur significant additional losses for the foreseeable future, and we may never achieve profitability;

 

we will need significant additional funding in order to complete development of and obtain regulatory approval for our product candidates and commercialize our products, if approved;

 

our business is highly dependent on the success of our most advanced product candidate, LYR-210, which will require significant additional clinical testing before we can seek regulatory approval and potentially launch commercial sales, and if LYR-210 does not receive regulatory approval or is not successfully commercialized, or is significantly delayed in doing so, our business will be harmed;

 

managing our obligations under our license and other strategic agreements may divert management time and attention, causing delays or disruptions to our business;

 

our operating activities may be restricted by certain covenants in our license and strategic agreements, which could limit our development and commercial opportunities;

 

failure to obtain marketing approval in international jurisdictions would prevent our products from being marketed in such jurisdictions;

 

we have entered into a collaboration agreement, and may enter into other collaboration agreements, that place the development and commercialization of our product candidates outside our control, require us to relinquish important rights or may otherwise be on terms unfavorable to us, and if our collaborations are not successful, our product candidates may not reach their full market potential;

 

clinical trials required for our product candidates are expensive and time-consuming, their outcome is uncertain, and if our clinical trials do not meet safety or efficacy endpoints in these evaluations, or if we experience significant delays in these trials, our ability to commercialize our product candidates and our financial position will be impaired;

 

developments by competitors may render our products or technologies obsolete or non-competitive or may reduce the size of our markets;

 

the successful commercialization of our product candidates will depend in part on the extent to which governmental authorities and health insurers establish coverage, adequate reimbursement levels and pricing policies, and the failure to obtain or maintain coverage and adequate reimbursement for our product candidates, if approved, could limit our ability to market those products and decrease our ability to generate revenue;

 

even if either LYR-210 or LYR-220 receives marketing approval, it may fail to achieve market acceptance by physicians, patients, third-party payors or others in the medical community necessary for commercial success;

 

we will rely on third parties for the manufacture of materials for our research programs, pre-clinical studies and clinical trials and we do not have long-term contracts with any of these parties, which increases the risk that we will not have sufficient quantities of such materials, product candidates, or any therapies that we may develop and commercialize, or that such supply will not be available to us at an acceptable cost, which could delay, prevent, or impair our development or commercialization efforts;

 

we rely on third parties to conduct our pre-clinical studies and clinical trials, and any failure by a third party to conduct the clinical trials according to GCPs and in a timely manner may delay or prevent our ability to seek or obtain regulatory approval for or commercialize our product candidates;

 


 

if we are unable to obtain, maintain or adequately protect our intellectual property rights, we may not be able to compete effectively in our markets;

 

if we lose key management or scientific personnel, cannot recruit qualified employees, directors, officers or other significant personnel or experience increases in our compensation costs, our business may materially suffer; and

 

the pandemic caused by COVID-19 could adversely impact our business and operations, including our clinical trials.

 

 

 


 

Table of Contents

 

 

 

Page

PART I.

FINANCIAL INFORMATION

2

Item 1.

Condensed Consolidated Financial Statements (unaudited)

2

 

Condensed Consolidated Balance Sheets

2

 

Condensed Consolidated Statements of Operations and Comprehensive Loss

3

 

Condensed Consolidated Statements of Redeemable 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

20

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 2.

Unregistered Sales of Equity Securities and Use of Proceeds

87

Item 3.

Defaults Upon Senior Securities

87

Item 4.

Mine Safety Disclosures

87

Item 5.

Other Information

87

Item 6.

Exhibits

88

Signatures

89

 

 

 


 

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements.

 

LYRA THERAPEUTICS, INC.

Condensed Consolidated Balance Sheets

(unaudited)

(in thousands, except share and per share data)

 

 

 

September 30,

 

 

December 31,

 

 

 

2021

 

 

2020

 

Assets

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

58,131

 

 

$

74,593

 

Prepaid expenses and other current assets

 

 

2,755

 

 

 

1,324

 

Total current assets

 

 

60,886

 

 

 

75,917

 

Property and equipment, net

 

 

4,706

 

 

 

2,165

 

Operating lease right-of-use assets

 

 

1,596

 

 

 

2,301

 

Restricted cash

 

 

329

 

 

 

329

 

Other assets

 

 

245

 

 

 

118

 

Total assets

 

$

67,762

 

 

$

80,830

 

Liabilities and Stockholders’ Equity

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

Accounts payable

 

$

2,912

 

 

$

922

 

Accrued expenses and other current liabilities

 

 

3,968

 

 

 

2,977

 

Operating lease liabilities

 

 

1,052

 

 

 

985

 

Deferred revenue

 

 

9,841

 

 

 

 

Total current liabilities

 

 

17,773

 

 

 

4,884

 

Operating lease liabilities, net of current portion

 

 

656

 

 

 

1,454

 

Deferred revenue, net of current portion

 

 

2,145

 

 

 

 

Total liabilities

 

 

20,574

 

 

 

6,338

 

Commitments and contingencies (Note 9)

 

 

 

 

 

 

 

 

Stockholders’ equity:

 

 

 

 

 

 

 

 

Common stock, $0.001 par value; 200,000,000 shares authorized at

   September 30, 2021 and December 31, 2020; 13,004,578 and 12,932,377 shares issued

   and outstanding at September 30, 2021 and December 31, 2020, respectively

 

 

13

 

 

 

13

 

Additional paid-in capital

 

 

226,955

 

 

 

224,363

 

Accumulated deficit

 

 

(179,780

)

 

 

(149,884

)

Total stockholders’ equity

 

 

47,188

 

 

 

74,492

 

Total liabilities and stockholders’ equity

 

$

67,762

 

 

$

80,830

 

 

See accompanying notes to unaudited condensed consolidated financial statements.

2


LYRA THERAPEUTICS, INC.

Condensed Consolidated Statements of Operations and Comprehensive Loss

(unaudited)

(in thousands, except share and per share data)

 

 

 

Three Months Ended

September 30,

 

 

Nine Months Ended

September 30,

 

 

 

2021

 

 

2020

 

 

2021

 

 

2020

 

Collaboration revenue

 

$

14

 

 

$

 

 

$

14

 

 

$

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Research and development

 

 

7,077

 

 

 

3,712

 

 

 

19,352

 

 

 

8,779

 

General and administrative

 

 

4,018

 

 

 

2,651

 

 

 

10,639

 

 

 

6,377

 

Total operating expenses

 

 

11,095

 

 

 

6,363

 

 

 

29,991

 

 

 

15,156

 

Loss from operations

 

 

(11,081

)

 

 

(6,363

)

 

 

(29,977

)

 

 

(15,156

)

Other income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest income

 

 

26

 

 

 

29

 

 

 

81

 

 

 

50

 

Total other income

 

 

26

 

 

 

29

 

 

 

81

 

 

 

50

 

Net loss

 

$

(11,055

)

 

$

(6,334

)

 

$

(29,896

)

 

$

(15,106

)

Comprehensive loss

 

$

(11,055

)

 

$

(6,334

)

 

$

(29,896

)

 

$

(15,106

)

Net loss per share attributable to common stockholders—basic and

   diluted

 

$

(0.85

)

 

$

(0.49

)

 

$

(2.30

)

 

$

(2.13

)

Weighted-average common shares outstanding—basic and diluted

 

 

13,001,514

 

 

 

12,924,682

 

 

 

12,979,837

 

 

 

7,133,967

 

 

See accompanying notes to unaudited condensed consolidated financial statements.

 

 

3


 

 

LYRA THERAPEUTICS, INC.

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

(unaudited)

(in thousands, except share amounts)

 

 

Three Months Ended September 30,

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Redeemable Convertible

Preferred Stock

 

 

 

Common Stock

 

 

Additional

Paid-In

 

 

Accumulated

 

 

Total

Stockholders’

 

 

 

Shares

 

 

Value

 

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Deficit

 

 

Equity (Deficit)

 

Balance at June 30, 2020

 

 

 

 

$

 

 

 

 

12,924,563

 

 

$

13

 

 

$

223,339

 

 

$

(136,529

)

 

$

86,823

 

Issuance costs related to issuance of common

   stock from initial public offering

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(44

)

 

 

 

 

 

(44

)

Exercise of common stock options

 

 

 

 

 

 

 

 

 

254

 

 

 

 

 

 

1

 

 

 

 

 

 

1

 

Stock-based compensation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

468

 

 

 

 

 

 

468

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(6,334

)

 

 

(6,334

)

Balance at September 30, 2020

 

 

 

 

$

 

 

 

 

12,924,817

 

 

$

13

 

 

$

223,764

 

 

$

(142,863

)

 

$

80,914

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at June 30, 2021

 

 

 

 

$

 

 

 

 

13,001,105

 

 

$

13

 

 

$

226,211

 

 

$

(168,725

)

 

$

57,499

 

Exercise of common stock options

 

 

 

 

 

 

 

 

 

3,473

 

 

 

 

 

 

11

 

 

 

 

 

 

11

 

Stock-based compensation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

733

 

 

 

 

 

 

733

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(11,055

)

 

 

(11,055

)

Balance at September 30, 2021

 

 

 

 

$

 

 

 

 

13,004,578

 

 

$

13

 

 

$

226,955

 

 

$

(179,780

)

 

$

47,188

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

4


 

 

 

Nine Months Ended September 30,

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Redeemable

Convertible

Preferred Stock

 

 

 

Common Stock

 

 

Additional

Paid-In

 

 

Accumulated

 

 

Total

Stockholders’

 

 

 

Shares

 

 

Value

 

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Deficit

 

 

Equity (Deficit)

 

Balance at December 31, 2019

 

 

209,119,674

 

 

$

130,666

 

 

 

 

230,860

 

 

$

 

 

$

4,419

 

 

$

(127,757

)

 

$

(123,338

)

Issuance of Series C redeemable convertible

   preferred stock, net of issuance costs

   of $201

 

 

78,306,611

 

 

 

29,446

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accretion of convertible preferred stock to

   redemption value

 

 

 

 

 

115

 

 

 

 

 

 

 

 

 

 

(115

)

 

 

 

 

 

(115

)

Issuance of common stock warrants in

   conjunction with sale of Series C

   redeemable convertible preferred stock

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

740

 

 

 

 

 

 

740

 

Conversion of redeemable convertible

   preferred stock to common stock

   upon closing of initial public offering

 

 

(287,426,285

)

 

 

(160,227

)

 

 

 

8,335,248

 

 

 

8

 

 

 

160,219

 

 

 

 

 

 

160,227

 

Issuance of common stock from initial

   public offering, net of issuance

   costs of $7,072

 

 

 

 

 

 

 

 

 

4,025,000

 

 

 

4

 

 

 

57,280

 

 

 

 

 

 

57,284

 

Vesting of restricted common stock

 

 

 

 

 

 

 

 

 

19,661

 

 

 

 

 

 

 

 

 

 

 

 

 

Issuance of common stock upon exercise of

   warrants

 

 

 

 

 

 

 

 

 

313,794

 

 

 

1

 

 

 

(1

)

 

 

 

 

 

 

Exercise of common stock options

 

 

 

 

 

 

 

 

 

254

 

 

 

 

 

 

1

 

 

 

 

 

 

1

 

Stock-based compensation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,221

 

 

 

 

 

 

1,221

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(15,106

)

 

 

(15,106

)

Balance at September 30, 2020

 

 

 

 

$

 

 

 

 

12,924,817

 

 

$

13

 

 

$

223,764

 

 

$

(142,863

)

 

$

80,914

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at December 31, 2020

 

 

 

 

$

 

 

 

 

12,932,377

 

 

$

13

 

 

$

224,363

 

 

$

(149,884

)

 

$

74,492

 

Exercise of common stock options

 

 

 

 

 

 

 

 

 

72,201

 

 

 

 

 

 

604

 

 

 

 

 

 

604

 

Stock-based compensation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,988

 

 

 

 

 

 

1,988

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(29,896

)

 

 

(29,896

)

Balance at September 30, 2021

 

 

 

 

$

 

 

 

 

13,004,578

 

 

$

13

 

 

$

226,955

 

 

$

(179,780

)

 

$

47,188

 

 

See accompanying notes to unaudited condensed consolidated financial statements.

 

 

5


 

 

LYRA THERAPEUTICS, INC.

Condensed Consolidated Statements of Cash Flows

(unaudited)

(in thousands)

 

 

 

Nine Months Ended September 30,

 

 

 

2021

 

 

2020

 

Cash flows from operating activities:

 

 

 

 

 

 

 

 

Net loss

 

$

(29,896

)

 

$

(15,106

)

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

 

 

 

 

 

 

 

 

Stock-based compensation

 

 

1,988

 

 

 

1,221

 

Depreciation expense

 

 

723

 

 

 

54

 

Gain on disposal of assets

 

 

 

 

 

(45

)

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

 

Prepaid expenses and other current assets

 

 

(1,431

)

 

 

(1,689

)

Operating lease right-of-use assets

 

 

705

 

 

 

666

 

Accounts payable

 

 

1,167

 

 

 

141

 

Accrued expenses and other current liabilities

 

 

966

 

 

 

150

 

Operating lease liabilities

 

 

(731

)

 

 

(667

)

Deferred revenue

 

 

11,986

 

 

 

 

Net cash used in operating activities

 

 

(14,523

)

 

 

(15,275

)

Cash flows from investing activities:

 

 

 

 

 

 

 

 

Purchases of property and equipment

 

 

(2,302

)

 

 

(674

)

Net cash used in investing activities

 

 

(2,302

)

 

 

(674

)

Cash flows from financing activities:

 

 

 

 

 

 

 

 

Proceeds from the sale of Series C redeemable convertible preferred stock

 

 

 

 

 

30,392

 

Payment of offering costs related to sale of Series C redeemable convertible preferred

   stock

 

 

 

 

 

(206

)

Proceeds from initial public offering, net of underwriting discounts

 

 

 

 

 

59,892

 

Payment of initial public offering costs

 

 

 

 

 

(2,383

)

Payment of deferred offering expenses

 

 

(241

)

 

 

 

Proceeds from exercise of stock options

 

 

604

 

 

 

1

 

Net cash provided by financing activities

 

 

363

 

 

 

87,696

 

Net (decrease) increase in cash and cash equivalents

 

 

(16,462

)

 

 

71,747

 

Cash and cash equivalents and restricted cash, beginning of period

 

 

74,922

 

 

 

10,137

 

Cash and cash equivalents and restricted cash, end of period

 

$

58,460

 

 

$

81,884

 

Supplemental disclosure of non-cash financing and investing activities:

 

 

 

 

 

 

 

 

Property and equipment purchases included in accounts payable

 

$

1,049

 

 

$

17

 

Conversion of redeemable convertible preferred stock

 

$

 

 

$

160,227

 

Allocation of Series C redeemable convertible preferred stock to common stock warrant

 

$

 

 

$

740

 

Series C redeemable convertible preferred stock stock issuance costs

    included in accounts payable and accrued expense

 

$

 

 

$

1

 

Accretion of redeemable convertible preferred stock to redemption value

 

$

 

 

$

115

 

Right-of-use asset obtained in exchange of operating lease obligations

 

$

 

 

$

13

 

Deferred offering costs included in accounts payable and accrued expense

 

$

4

 

 

$

 

 

See accompanying notes to unaudited condensed consolidated financial statements.

 

6


 

LYRA THERAPEUTICS, INC.

Notes to Condensed Consolidated Financial Statements

(unaudited)

1. Organization and Basis of Presentation

Lyra Therapeutics, Inc. (the “Company”) is a clinical-stage therapeutics company focused on the development and commercialization of novel integrated drug and delivery solutions for the localized treatment of patients with ear, nose and throat (“ENT”) diseases. The Company’s proprietary technology platform, XTreo, is designed to precisely and consistently deliver medicines directly to the affected tissue for sustained periods with a single administration. The Company’s initial product candidates, LYR-210 and LYR-220, are bioresorbable polymeric matrices designed to be administered in a brief, non-invasive, in-office procedure and intended to deliver up to six months of continuous drug therapy to the sinonasal passages for the treatment of chronic rhinosinusitis (“CRS”). The Company was incorporated as a Delaware corporation on November 21, 2005 and is located in Watertown, Massachusetts.

The Company is subject to risks common to companies in the therapeutics and pharmaceutical industry, including but not limited to, risks of failure of preclinical studies and clinical trials, the need to obtain marketing approval for any drug product candidate that it may identify and develop, the need to successfully commercialize and gain market acceptance of its product candidates, dependence on key personnel, protection of proprietary technology, compliance with government regulations, development by competitors of technological innovations, reliance on third party manufacturers, ability to transition from pilot-scale manufacturing to large-scale production of products and the need to obtain adequate additional financing to fund the development of its product candidates.

Prior to our initial public offering (“IPO”), the Company has funded its operations with proceeds from sales of redeemable convertible preferred stock and funding from government contracts. The Company has incurred recurring net losses since inception and had net losses of approximately $29.9 million and $15.1 million for the nine months ended September 30, 2021 and 2020, respectively. In addition, the Company has an accumulated deficit of approximately $179.8 million at September 30, 2021. The Company expects to continue to generate operating losses for the foreseeable future. At September 30, 2021, the Company had approximately $58.1 million of cash and cash equivalents.

On May 5, 2020, the Company completed its IPO, in which the Company issued and sold 4,025,000 shares of its common stock, including 525,000 shares pursuant to the full exercise of the underwriters’ option to purchase additional shares, at a public offering price of $16.00 per share, for aggregate gross proceeds of $64.4 million. The Company received approximately $57.3 million in net proceeds after deducting underwriting discounts and offering expenses paid by the Company.

The Company believes that its cash and cash equivalents as of September 30, 2021 will be sufficient to fund the Company’s operating plan for a period of at least one year from the issuance date of the condensed consolidated financial statements. The Company will need additional financing to support its continuing operations and pursue its growth strategy. Until such time as the Company can generate significant revenue from product sales, if ever, it expects to finance its operations through a combination of equity or debt financings, collaboration agreements, strategic alliances and licensing arrangements. The Company may be unable to raise additional funds or enter into such other agreements when needed on favorable terms or at all.  The inability to obtain funding as and when needed would have a negative impact on the Company’s financial condition and ability to pursue its business strategies. If the Company is unable to obtain funding when needed, the Company could be forced to delay, reduce or eliminate some or all of its research and development programs, product portfolio expansion or commercialization efforts, which could adversely affect its business prospects, or the Company may be unable to cont