ck0001734517-10q_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: 001-39067

 

VIELA BIO, INC.

(Exact Name of Registrant as Specified in its Charter)

 

 

Delaware

82-4187338

(State or other jurisdiction of

(I.R.S. Employer

incorporation or organization)

Identification No.)

 

 

One MedImmune Way

 

First Floor, Area Two

 

Gaithersburg, MD

20878

(Address of principal executive offices)

(Zip Code)

 

Registrant’s telephone number, including area code: (240) 558-0038

 

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

 

VIE

 

The 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 November 14, 2019, the registrant had 50,962,060 shares of common stock, $0.001 par value per share, outstanding.

 

 

 

 


Table of Contents

 

 

 

Page

 

Special Note Regarding Forward-Looking Statements

1

PART I.

FINANCIAL INFORMATION

3

Item 1.

Financial Statements (Unaudited)

3

 

Balance Sheets

3

 

Statements of Operations and Comprehensive Loss

4

 

Statements of Convertible Preferred Stock and Stockholder’s Deficit

5

 

Statements of Cash Flows

7

 

Notes to Unaudited Financial Statements

8

Item 2.

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

26

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

36

Item 4.

Controls and Procedures

37

 

 

 

PART II.

OTHER INFORMATION

38

Item 1.

Legal Proceedings

38

Item 1A.

Risk Factors

38

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

82

Item 3.

Defaults Upon Senior Securities

83

Item 4.

Mine Safety Disclosures

83

Item 5.

Other Information

83

Item 6.

Exhibits

84

Signatures

85

 

 

 

 

All brand names, trademarks or service marks appearing in this quarterly report are the property of their respective owners. Registrant’s use or display of another party’s trademark, service mark, trade dress or product in this quarterly report is not intended to, and does not, imply a relationship with, or endorsement or sponsorship of, the registrant by such other party.

 

 

 

i


 

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains forward-looking statements that involve risks and uncertainties. All statements other than statements of historical facts contained in in this Form 10-Q are forward-looking statements. In some cases, you can identify forward-looking statements by words such as “anticipate,” “believe,” “contemplate,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “potential,” “predict,” “project,” “seek,” “should,” “target,” “will,” “would,” or the negative of these words or other comparable terminology. These forward-looking statements include, but are not limited to, statements about:

 

our ability to successfully commercialize and market inebilizumab and/or our other product candidates, if approved;

 

our ability to contract with third-party suppliers, manufacturers and other service providers and their ability to perform adequately;

 

the potential market size, opportunity and growth potential for inebilizumab and/or our other product candidates, if approved;

 

our ability to build our own sales and marketing capabilities, or seek collaborative partners, to commercialize inebilizumab and/or our other product candidates, if approved;

 

our ability to obtain funding for our operations;

 

the initiation, timing, progress and results of our pre-clinical studies and clinical trials, and our research and development programs;

 

our ability to retain the continued service of our key professionals and to identify, hire and retain additional qualified professionals;

 

our ability to advance product candidates into, and successfully complete, clinical trials;

 

our ability to recruit and enroll suitable patients in our clinical trials;

 

the timing or likelihood of the accomplishment of various scientific, clinical, regulatory filings and approvals and other product development objectives;

 

the pricing and reimbursement of our product candidates, if approved;

 

the degree of market acceptance of inebilizumab and/or our other product candidates by physicians, patients, third-party payors and others in the medical community;

 

the rate and degree of market acceptance of our product candidates, if approved;

 

the implementation of our business model, strategic plans for our business, product candidates and technology;

 

the scope of protection we are able to establish and maintain for intellectual property rights covering our product candidates and technology;

 

developments relating to our competitors and our industry;

 

the accuracy of our estimates regarding expenses, capital requirements and needs for additional financing; and

 

our financial performance.

These forward-looking statements are subject to a number of risks, uncertainties and assumptions, including those described in the “Risk Factors” section and elsewhere in this Form 10-Q. Moreover, we operate in a very competitive and rapidly changing environment, and new risks emerge from time to time. It is not possible for our management to predict all risks, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements we may make. In light of these risks, uncertainties and assumptions, the forward-looking events and circumstances discussed in this Form 10-Q may not occur and actual results could differ materially and adversely from those anticipated or implied in the forward-looking statements.

You should not rely upon forward-looking statements as predictions of future events. Although we believe that the expectations reflected in the forward-looking statements are reasonable as of the date of this Form 10-Q, we cannot guarantee that the future results, levels of activity, performance or events and circumstances reflected in the forward-

1


looking statements will be achieved or occur. We undertake no obligation to update publicly any forward-looking statements for any reason after the date of this Form 10-Q to conform these statements to new information, actual results or to changes in our expectations, except as required by law.

You should read this Form 10-Q and the documents that we reference in this Form 10-Q and have filed with the Securities and Exchange Commission, or SEC, as exhibits to this Form 10-Q with the understanding that our actual future results, levels of activity, performance, and events and circumstances may be materially different from what we expect.

2


 

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements.

VIELA BIO, INC.

BALANCE SHEETS

(In thousands, except share and per share amounts)

(Unaudited)

 

 

 

September 30,

2019

 

 

December 31,

2018

 

Assets

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

155,747

 

 

$

126,898

 

Marketable securities

 

 

42,495

 

 

 

 

Receivable from stockholders

 

 

 

 

 

12,000

 

Accounts receivable

 

 

5,128

 

 

 

 

Prepaid and other current assets

 

 

4,577

 

 

 

456

 

Total current assets

 

 

207,947

 

 

 

139,354

 

Marketable securities, non-current

 

 

24,915

 

 

 

 

Property and equipment, net

 

 

905

 

 

 

473

 

Other assets

 

 

73

 

 

 

 

Total assets

 

$

233,840

 

 

$

139,827

 

Liabilities, redeemable convertible preferred stock and stockholders’ deficit

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

Accounts payable

 

$

5,660

 

 

$

1,142

 

Accrued expenses

 

 

7,487

 

 

 

2,769

 

Related party liability

 

 

13,100

 

 

 

12,054

 

Total current liabilities

 

$

26,247

 

 

 

15,965

 

Commitments and contingencies (Note 11)

 

 

 

 

 

 

 

 

Series A-1 preferred stock, $.001 par value; 14,225,324 shares authorized, issued

   and outstanding as of September 30, 2019 and December 31, 2018

 

 

142,253

 

 

 

142,253

 

Series A-2 preferred stock, $.001 par value; 17,000,000 shares authorized, issued

   and outstanding as of September 30, 2019 and December 31, 2018

 

 

170,000

 

 

 

170,000

 

Series A-3 preferred stock, $.001 par value; 4,705,882 shares authorized, issued and

   outstanding as of September 30, 2019; 6,470,588 shares authorized and no shares

   issued or outstanding as of December 31, 2018

 

 

80,000

 

 

 

 

Series B preferred stock, $.001 par value; 4,687,500 shares authorized, issued and

   outstanding as of September 30, 2019; no shares authorized, issued or outstanding as

   of December 31, 2018

 

 

75,000

 

 

 

 

Total redeemable convertible preferred stock

 

 

467,253

 

 

 

312,253

 

Stockholders’ deficit:

 

 

 

 

 

 

 

 

Common stock, $.001 par value; 46,159,941 and 41,254,509 shares authorized as

   of September 30, 2019 and December 31, 2018; 872,324 and 10 shares issued

   and outstanding as of September 30, 2019 and December 31, 2018

 

 

1

 

 

 

 

Additional paid-in capital

 

 

5,498

 

 

 

1,879

 

Accumulated other comprehensive loss

 

 

(30

)

 

 

 

Accumulated deficit

 

 

(265,129

)

 

 

(190,270

)

Total stockholders’ deficit

 

 

(259,660

)

 

 

(188,391

)

Total liabilities, redeemable convertible preferred stock and stockholders’ deficit

 

$

233,840

 

 

$

139,827

 

 

 

 

 

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

 

3


 

VIELA BIO, INC.

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:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

License revenue

 

$

 

 

$

 

 

$

20,000

 

 

$

 

Total revenue

 

 

 

 

 

 

 

 

20,000

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Research and development

 

 

38,700

 

 

 

13,928

 

 

 

72,113

 

 

 

28,892

 

General and administrative

 

 

10,230

 

 

 

2,401

 

 

 

24,575

 

 

 

4,399

 

Acquisition of in-process research and development

 

 

 

 

 

 

 

 

 

 

 

143,333

 

Total operating expenses

 

 

48,930

 

 

 

16,329

 

 

 

96,688

 

 

 

176,624

 

Loss from operations

 

 

(48,930

)

 

 

(16,329

)

 

 

(76,688

)

 

 

(176,624

)

Other income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest income

 

 

520

 

 

 

647

 

 

 

1,829

 

 

 

1,408

 

Total other income

 

 

520

 

 

 

647

 

 

 

1,829

 

 

 

1,408

 

Net loss

 

$

(48,410

)

 

$

(15,682

)

 

$

(74,859

)

 

$

(175,216

)

Net loss per share attributable to common stockholders—

   basic and diluted

 

$

(65

)

 

$

(1,568,200

)

 

$

(150

)

 

$

(17,521,600

)

Weighted average common shares outstanding—

   basic and diluted

 

 

749,539

 

 

 

10

 

 

 

497,924

 

 

 

10

 

Other comprehensive loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Change in unrealized gains losses on marketable securities, net

 

$

(30

)

 

$

 

 

$

(30

)

 

$

 

Total other comprehensive loss

 

 

(30

)

 

 

 

 

 

(30

)

 

 

 

Total comprehensive loss

 

$

(48,440

)

 

$

(15,682

)

 

$

(74,889

)

 

$

(175,216

)

 

 

 

 

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

 

 

4


 

 

VIELA BIO, INC. STATEMENTS OF REDEEMABLE CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ DEFICIT

(In thousands, except share and per share amounts)

(Unaudited)

 

 

For the Three Months Ended September 30,

 

 

 

Redeemable convertible preferred stock

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Additional

 

 

other

 

 

 

 

 

 

Total

 

 

 

Series A-1

 

 

Series A-2

 

 

Series A-3

 

 

Series B

 

 

Common stock

 

 

paid-in

 

 

comprehensive

 

 

Accumulated

 

 

stockholders'

 

 

 

Shares

 

 

Amount

 

 

Shares

 

 

Amount

 

 

Shares

 

 

Amount

 

 

Shares

 

 

Amount

 

 

Shares

 

 

Amount

 

 

capital

 

 

loss

 

 

deficit

 

 

deficit

 

Balances at June 30, 2019

 

 

14,225,324

 

 

$

142,253

 

 

 

17,000,000

 

 

$

170,000

 

 

 

 

 

$

 

 

 

4,687,500

 

 

$

75,000

 

 

 

724,795

 

 

$

1

 

 

$

4,190

 

 

$

 

 

$

(216,719

)

 

$

(212,528

)

Stock-based compensation expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

931

 

 

 

 

 

 

 

 

 

931

 

Issuance of common stock for stock options exercised

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

132,529

 

 

 

 

 

 

377

 

 

 

 

 

 

 

 

 

377

 

Issuance of common stock upon vesting of RSAs

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

15,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Issuance of preferred stock

 

 

 

 

 

 

 

 

 

 

 

 

 

 

4,705,882

 

 

 

80,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(48,410

)

 

 

(48,410

)

Other comprehensive loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(30

)

 

 

 

 

 

(30

)

Balances at September 30, 2019

 

 

14,225,324

 

 

$

142,253

 

 

 

17,000,000

 

 

$

170,000

 

 

 

4,705,882

 

 

$

80,000

 

 

 

4,687,500

 

 

$

75,000

 

 

 

872,324

 

 

$

1

 

 

$

5,498

 

 

$

(30

)

 

$

(265,129

)

 

$

(259,660

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balances at June 30, 2018

 

 

14,225,324

 

 

$

142,253

 

 

 

14,000,000

 

 

$

140,000

 

 

 

 

 

$

 

 

 

 

 

$

 

 

 

10

 

 

$

 

 

$

688

 

 

$

 

 

$

(159,534

)

 

$

(158,846

)

Stock-based compensation expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

580

 

 

 

 

 

 

 

 

 

580

 

Issuance of common stock for stock options exercised

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Issuance of common stock upon vesting of RSAs

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Issuance of preferred stock

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(15,682

)

 

 

(15,682

)

Balances at September 30, 2018

 

 

14,225,324

 

 

$

142,253

 

 

 

14,000,000

 

 

$

140,000

 

 

 

 

 

$

 

 

 

 

 

$

 

 

 

10

 

 

$

 

 

$

1,268

 

 

$

 

 

$

(175,216

)

 

$

(173,948

)

 

 

 

 

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

 


5


 

 

 

 

For the Nine Months Ended September 30,

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

 

 

 

Redeemable convertible preferred stock

 

 

 

 

 

Additional

 

 

other

 

 

 

 

 

 

Total

 

 

 

Series A-1

 

 

Series A-2

 

 

Series A-3

 

 

Series B

 

 

Common stock

 

 

paid-in

 

 

comprehensive

 

 

Accumulated

 

 

stockholders'

 

 

 

Shares

 

 

Amount

 

 

Shares

 

 

Amount

 

 

Shares

 

 

Amount

 

 

Shares

 

 

Amount

 

 

Shares

 

 

Amount

 

 

capital

 

 

loss

 

 

deficit

 

 

deficit

 

Balances at December 31, 2018

 

 

14,225,324

 

 

$

142,253

 

 

 

17,000,000

 

 

$

170,000

 

 

 

 

 

$

 

 

 

 

 

$

 

 

 

10

 

 

$

 

 

$

1,879

 

 

$

 

 

$

(190,270

)

 

$

(188,391

)

Stock-based compensation expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2,218

 

 

 

 

 

 

 

 

 

2,218

 

Issuance of common stock for stock options exercised

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

493,525

 

 

 

1

 

 

 

1,401

 

 

 

 

 

 

 

 

 

1,402

 

Issuance of common stock upon vesting of RSAs

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

378,789

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Issuance of preferred stock

 

 

 

 

 

 

 

 

 

 

 

 

 

 

4,705,882

 

 

 

80,000

 

 

 

4,687,500

 

 

 

75,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(74,859

)

 

 

(74,859

)

Other comprehensive loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(30

)

 

.

 

 

 

(30

)

Balances at September 30, 2019

 

 

14,225,324

 

 

$

142,253

 

 

 

17,000,000

 

 

$

170,000

 

 

 

4,705,882

 

 

$

80,000

 

 

 

4,687,500

 

 

$

75,000

 

 

 

872,324

 

 

$

1

 

 

$

5,498

 

 

$

(30

)

 

$

(265,129

)

 

$

(259,660

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balances at December 31, 2017

 

 

 

 

$

 

 

 

 

 

$

 

 

 

 

 

$

 

 

 

 

 

$

 

 

 

10

 

 

$

 

 

$