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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 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 001-39538

 

GRAYBUG VISION, INC.

(Exact name of Registrant as specified in its Charter)

 

 

Delaware

 

45-2120079

(State or other jurisdiction

of incorporation or organization)

 

(I.R.S. Employer

Identification No.)

 

203 Redwood Shores Parkway, Suite 620

Redwood City, CA 94065

(Address of principal executive offices including zip code)

Registrant’s telephone number, including area code: (650487-2800

 

275 Shoreline Drive, Suite 450, Redwood City, CA 94065

(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, par value $0.0001 per share

 

GRAY

 

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  

The number of shares of the Registrant’s common stock outstanding as of November 8, 2021 was 21,319,635.

 

 

 

 

 


 

 

Table of Contents

 

 

 

 

Page

 

 

PART I—FINANCIAL INFORMATION

 

Item 1.

 

Financial Statements

 

 

 

Condensed Balance Sheets (See Note 2)

4

 

 

Condensed Statements of Operations (unaudited)

5

 

 

Condensed Statements of Comprehensive Loss (unaudited)

6

 

 

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

7

 

 

Condensed Statements of Cash Flows (unaudited)

9

 

 

Notes to the Condensed Financial Statements (unaudited)

10

Item 2.

 

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

16

Item 3.

 

Quantitative and Qualitative Disclosures About Market Risk

25

Item 4.

 

Controls and Procedures

25

 

 

 

 

 

 

PART II—OTHER INFORMATION

 

Item 1.

 

Legal Proceedings

26

Item 1A.

 

Risk Factors

26

Item 2.

 

Unregistered Sales of Equity Securities and Use of Proceeds

68

Item 3.

 

Defaults Upon Senior Securities

68

Item 4.

 

Mine Safety Disclosures

68

Item 5.

 

Other Information

68

Item 6.

 

Exhibits

69

SIGNATURES

70

 

In this Quarterly Report on Form 10-Q, “we,” “our,” “us,” “Graybug” and the “Company” refer to Graybug Vision, Inc. This report contains references to trademarks belonging to other entities, which are the property of their respective holders. We do not intend our use or display of other companies’ trade names or trademarks to imply a relationship with, or endorsement or sponsorship of us by, any other companies.

 

 

 

 

 

2


 

 

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains forward-looking statements within 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 present and historical facts contained in this Quarterly Report on Form 10-Q, including statements regarding our future results of operations and financial position, business strategy, prospective products, planned preclinical studies and clinical trials, regulatory approvals, research and development costs, and timing and likelihood of success, as well as plans and objectives of management for future operations, may be 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” or “continue” or the negative of these terms or other similar expressions, although not all forward-looking statements contain these words.

Forward-looking statements are based on our management’s beliefs and assumptions and on information currently available to us. Such statements are subject to a number of known and unknown risks, uncertainties and assumptions, and actual results may differ materially from those expressed or implied in the forward-looking statements due to various factors, including, but not limited to, those identified in Part I. Item 2. “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and Part II. Item 1A “Risk Factors.” These risks and uncertainties include, but are not limited to:

 

our recently completed clinical trial of GB-102 and our planned clinical trials of GB-401;

 

our ability to identify and secure partner funding of further clinical trials of GB-102;

 

the success, cost and timing of our development activities, preclinical studies and clinical trials;

 

the translation of our preclinical results and data and early clinical trial results into future clinical trials in humans;

 

the effects of the ongoing COVID-19 pandemic, and the corresponding responses of businesses and governments, on our business and financial results;

 

the timing or likelihood of regulatory filings and approvals;

 

our ability to receive the required regulatory approvals to market and sell our products in the United States and other countries;

 

our ability to develop sales and marketing capabilities;

 

the rate and degree of market acceptance of any products we are able to commercialize;

 

the effects of increased competition as well as innovations by new and existing competitors in our market;

 

our ability to obtain funding for our operations;

 

our ability to establish and maintain collaborations;

 

our ability to effectively manage our anticipated growth;

 

our ability to maintain, protect and enhance our intellectual property rights and proprietary technologies;

 

our ability to operate our business without infringing the intellectual property rights and proprietary technology of third parties;

 

costs associated with defending intellectual property infringement, product liability and other claims;

 

regulatory developments in the United States and other foreign countries;

 

our ability to attract and retain qualified employees;

 

our expectations regarding the period during which we qualify as an emerging growth company under the JOBS Act; and

 

statements regarding future revenue, hiring plans, expenses, capital expenditures, capital requirements and stock performance.

You should read this Quarterly Report on Form 10-Q and the documents that we reference herein 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.

3


 

 

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements.

 

 

 

GRAYBUG VISION, INC.

Condensed Balance Sheets

(in thousands)

 

 

 

 

September 30,

2021

 

 

December 31,

2020

 

 

 

(unaudited)

 

 

(See Note 2)

 

Assets

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

11,452

 

 

$

33,418

 

Short-term investments

 

 

61,102

 

 

 

61,615

 

Prepaid expenses and other current assets

 

 

1,942

 

 

 

4,207

 

Total current assets

 

 

74,496

 

 

 

99,240

 

Property and equipment, net

 

 

2,113

 

 

 

1,946

 

Prepaid expenses and other non-current assets

 

 

29

 

 

 

608

 

Total assets

 

$

76,638

 

 

$

101,794

 

Liabilities and Stockholders’ Equity

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

Accounts payable

 

$

2,066

 

 

$

2,513

 

Accrued research and development

 

 

264

 

 

 

1,356

 

Other current liabilities

 

 

2,160

 

 

 

3,128

 

Total current liabilities

 

 

4,490

 

 

 

6,997

 

Deferred rent, long-term portion

 

 

12

 

 

 

11

 

Total liabilities

 

 

4,502

 

 

 

7,008

 

Commitments and contingencies (Note 5)

 

 

 

 

 

 

 

 

Stockholders’ equity:

 

 

 

 

 

 

 

 

Preferred stock

 

 

 

 

 

 

Common stock

 

 

2

 

 

 

2

 

Additional paid-in capital

 

 

232,641

 

 

 

228,155

 

Accumulated deficit

 

 

(160,513

)

 

 

(133,367

)

Accumulated other comprehensive income (loss)

 

 

6

 

 

 

(4

)

Total stockholders’ equity

 

 

72,136

 

 

 

94,786

 

Total liabilities and stockholders’ equity

 

$

76,638

 

 

$

101,794

 

 

See accompanying notes to unaudited condensed financial statements.

4


 

GRAYBUG VISION, INC.

Condensed Statements of Operations

(in thousands, except share and per share amounts)

(Unaudited)

 

 

 

Three Months Ended September 30,

 

 

Nine Months Ended September 30,

 

 

 

2021

 

 

2020

 

 

2021

 

 

2020

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Research and development

 

$

4,021

 

 

$

4,757

 

 

$

14,635

 

 

$

15,474

 

General and administrative

 

 

3,996

 

 

 

2,064

 

 

 

12,611

 

 

 

5,183

 

Total operating expenses

 

 

8,017

 

 

 

6,821

 

 

 

27,246

 

 

 

20,657

 

Loss from operations

 

 

(8,017

)

 

 

(6,821

)

 

 

(27,246

)

 

 

(20,657

)

Interest income

 

 

28

 

 

 

3

 

 

 

100

 

 

 

120

 

Change in fair value of preferred stock tranche obligation

 

 

 

 

 

2,102

 

 

 

 

 

 

2,158

 

Net loss

 

 

(7,989

)

 

 

(4,716

)

 

 

(27,146

)

 

 

(18,379

)

Cumulative dividends on convertible preferred stock

 

 

 

 

 

(2,396

)

 

 

 

 

 

(7,189

)

Net loss attributable to common stockholders

 

$

(7,989

)

 

$

(7,112

)

 

$

(27,146

)

 

$

(25,568

)

Net loss per common share—basic and diluted

 

$

(0.38

)

 

$

(2.52

)

 

$

(1.28

)

 

$

(13.74

)

Weighted-average number of shares outstanding used in

   computing net loss per common share—basic and diluted

 

 

21,287,498

 

 

 

2,818,349

 

 

 

21,153,185

 

 

 

1,861,229

 

 

 

See accompanying notes to unaudited condensed financial statements.

 

5


 

 

GRAYBUG VISION, INC.

Condensed Statements of Comprehensive Loss

(in thousands)

(Unaudited)

 

 

 

Three Months Ended September 30,

 

 

Nine Months Ended September 30,

 

 

 

2021

 

 

2020

 

 

2021

 

 

2020

 

Net loss

 

$

(7,989

)

 

$

(4,716

)

 

$

(27,146

)

 

$

(18,379

)

Unrealized gain (loss) on available-for-sale securities, net of tax

 

 

 

 

 

 

 

 

10

 

 

 

(3

)

Comprehensive loss

 

$

(7,989

)

 

$

(4,716

)

 

$

(27,136

)

 

$

(18,382

)

 

See accompanying notes to unaudited condensed financial statements.

 

 

 

6


 

 

GRAYBUG VISION, INC.

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

(in thousands, except share amounts)

(Unaudited)

 

 

 

Convertible

Preferred Stock

 

 

 

Common Stock

 

 

Additional

Paid-In

 

 

Accumulated

 

 

Accumulated

Other

Comprehensive

 

 

Total

Stockholders’

 

 

 

Shares

 

 

Amount

 

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Deficit

 

 

Income (Loss)

 

 

Equity

 

Balance—December 31, 2020

 

 

 

 

$

 

 

 

 

20,979,265

 

 

$

2

 

 

$

228,155

 

 

$

(133,367

)

 

$

(4

)

 

$

94,786

 

Stock issued on exercise of stock

   options

 

 

 

 

 

 

 

 

 

76,679

 

 

 

 

 

 

92

 

 

 

 

 

 

 

 

 

92

 

Stock-based compensation expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,129

 

 

 

 

 

 

 

 

 

1,129

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(11,449

)

 

 

 

 

 

(11,449

)

Unrealized gain on available-for-sale

   securities, net of tax

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

4

 

 

 

4

 

Balance—March 31, 2021

 

 

 

 

$

 

 

 

 

21,055,944

 

 

$

2

 

 

$

229,376

 

 

$

(144,816

)

 

$

 

 

$

84,562

 

Stock issued on exercise of stock

   options

 

 

 

 

 

 

 

 

 

228,732

 

 

 

 

 

 

495

 

 

 

 

 

 

 

 

 

495

 

Stock-based compensation expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,312

 

 

 

 

 

 

 

 

 

1,312

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(7,708

)

 

 

 

 

 

(7,708

)

Unrealized gain on available-for-sale

   securities, net of tax

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

6

 

 

 

6

 

Balance—June 30, 2021

 

 

 

 

$

 

 

 

 

21,284,676

 

 

$

2

 

 

$

231,183

 

 

$

(152,524

)

 

$

6

 

 

$

78,667

 

Stock issued on exercise of stock

   options

 

 

 

 

 

 

 

 

 

11,915

 

 

 

 

 

 

27

 

 

 

 

 

 

 

 

 

27

 

Issuance of common stock upon

   vesting of restricted stock units

 

 

 

 

 

 

 

 

 

20,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock-based compensation expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,431

 

 

 

 

 

 

 

 

 

1,431

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(7,989

)

 

 

 

 

 

(7,989

)

Balance—September 30, 2021

 

 

 

 

$

 

 

 

 

21,316,591

 

 

$

2

 

 

$

232,641

 

 

$

(160,513

)

 

$

6

 

 

$

72,136

 

 

See accompanying notes to unaudited condensed financial statements.

7


 

GRAYBUG VISION, INC.

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

(in thousands, except share amounts)

(Unaudited)

 

 

 

Convertible

Preferred Stock

 

 

 

Common Stock

 

 

Additional

Paid-In

 

 

Accumulated

 

 

Accumulated

Other

Comprehensive

 

 

Total

Stockholders’

 

 

 

Shares

 

 

Amount

 

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Deficit

 

 

Income (Loss)

 

 

Deficit

 

Balance—December 31, 2019

 

 

117,809,883

 

 

$

131,363

 

 

 

 

1,371,467

 

 

$

 

 

$

2,879

 

 

$

(105,836

)

 

$

3

 

 

$

(102,954

)

Stock issued on exercise of stock

   options

 

 

 

 

 

 

 

 

 

5,446

 

 

 

 

 

 

11

 

 

 

 

 

 

 

 

 

11

 

Stock-based compensation expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

226

 

 

 

 

 

 

 

 

 

226

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(7,794

)

 

 

 

 

 

(7,794

)

Unrealized loss on available-for-sale

   securities, net of tax

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(3

)

 

 

(3

)

Balance—March 31, 2020

 

 

117,809,883

 

 

$

131,363

 

 

 

 

1,376,913

 

 

$

 

 

$

3,116

 

 

$

(113,630

)

 

$

 

 

$

(110,514

)

Stock issued on exercise of stock

   options

 

 

 

 

 

 

 

 

 

5,287

 

 

 

 

 

 

12

 

 

 

 

 

 

 

 

 

12

 

Stock-based compensation expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

214

 

 

 

 

 

 

 

 

 

214

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(5,869

)

 

 

 

 

 

(5,869

)

Balance—June 30, 2020

 

 

117,809,883

 

 

 

131,363

 

 

 

 

1,382,200

 

 

 

 

 

 

3,342

 

 

 

(119,499

)

 

 

 

 

 

(116,157

)

Issuance of common stock upon the

   initial public offering, net

 

 

 

 

 

 

 

 

 

 

 

5,625,000

 

 

$

1

 

 

$

79,528

 

 

$

 

 

$

 

 

$

79,529

 

Conversion of convertible preferred

   stock into common stock upon the initial public offering

 

 

(117,809,883

)

 

$

(131,363

)

 

 

 

13,085,913

 

 

$

1

 

 

$

131,362

 

 

$

 

 

$

 

 

$

131,363

 

Stock issued on exercise of stock

   options

 

 

 

 

 

 

 

 

 

42,402

 

 

 

 

 

 

54

 

 

 

 

 

 

 

 

 

54

 

Stock-based compensation expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

561

 

 

 

 

 

 

 

 

 

561

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(4,716

)

 

 

 

 

 

(4,716

)

Balance—September 30, 2020

 

 

 

 

 

 

 

 

 

20,135,515

 

 

 

2

 

 

 

214,847

 

 

 

(124,215

)

 

 

 

 

 

90,634

 

 

See accompanying notes to unaudited condensed financial statements.

 

 

8


 

 

GRAYBUG VISION, INC.

Condensed Statements of Cash Flows

(in thousands)

(Unaudited)

 

 

 

Nine Months Ended September 30,

 

 

 

2021

 

 

2020

 

Operating activities:

 

 

 

 

 

 

 

 

Net loss

 

$

(27,146

)

 

$

(18,379

)

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

 

 

 

 

 

 

 

 

Stock-based compensation expense

 

 

3,872

 

 

 

1,001

 

Depreciation

 

 

383

 

 

 

284

 

Change in fair value of preferred stock tranche obligation

 

 

 

 

 

(2,158

)

Accretion of premium and discounts on investments, net

 

 

74

 

 

 

(17

)

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

 

Prepaid expenses and other current and non-current assets

 

 

2,844

 

 

 

227

 

Accounts payable

 

 

(513

)

 

 

(1,204

)

Accrued research and development

 

 

(1,092

)

 

 

(1,310

)

Other current and non-current liabilities

 

 

(968

)

 

 

(747

)

Deferred rent, long term portion

 

 

1

 

 

 

10

 

Net cash used in operating activities

 

 

(22,545

)

 

 

(22,293

)

Investing activities:

 

 

 

 

 

 

 

 

Purchases of property and equipment

 

 

(484

)

 

 

(197

)

Purchases of investments

 

 

(72,610

)

 

 

 

Maturity of investments

 

 

73,059

 

 

 

20,100

 

Net cash (used in) provided by investing activities

 

 

(35

)

 

 

19,903

 

Financing activities:

 

 

 

 

 

 

 

 

Proceeds from issuance of common stock upon initial public offering, net of underwriting discounts and commissions.

 

 

 

 

 

83,700

 

Proceeds from exercise of stock options

 

 

614

 

 

 

77

 

Payment of offering costs