Full Press Release Details
INDEX TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
| Page | ||||
| UNAUDITED CONDENSED FINANCIAL STATEMENTS: | ||||
| Unaudited Condensed Balance Sheets as of September 30, 2023 and December 31, 2022 | 2 | |||
| Unaudited Condensed Statements of Operations for the Nine Months Ended September 30, 2023 and 2022 | 3 | |||
| Unaudited Condensed Statements of Changes in Convertible Preferred Stock/Units and Stockholders Deficit/Members Deficit for the Nine Months Ended September 30, 2023 and 2022 | 4 | |||
| Unaudited Condensed Statements of Cash Flows for the Nine Months Ended September 30, 2023 and 2022 | 5 | |||
| Notes to Unaudited Condensed Financial Statements | 6 |
TOURMALINE BIO, INC.
Condensed Balance Sheets
(In thousands, except share and per share data)
| September 30, 2023 | December 31, 2022 | |||||||
| Assets | ||||||||
| Current assets | ||||||||
| Cash and cash equivalents | $ | 78,043 | $ | 8,258 | ||||
| Prepaid expenses | 1,619 | 54 | ||||||
| Total current assets | 79,662 | 8,312 | ||||||
| Property and equipment, net | 94 | 81 | ||||||
| Restricted cash | 227 | 216 | ||||||
| Operating lease right-of-use asset | 396 | 489 | ||||||
| Deferred offering costs | 4,756 | |||||||
| Total assets | $ | 85,135 | $ | 9,098 | ||||
| Liabilities, convertible preferred stock and stockholders deficit | ||||||||
| Current liabilities | ||||||||
| Accounts payable | $ | 1,014 | $ | 401 | ||||
| Accrued expenses and other current liabilities | 3,238 | 800 | ||||||
| Operating lease liability, current | 220 | 162 | ||||||
| Total current liabilities | 4,472 | 1,363 | ||||||
| Operating lease liability, non-current | 233 | 342 | ||||||
| Other liabilities | 65 | |||||||
| Total liabilities | 4,770 | 1,705 | ||||||
| Commitments and Contingencies (Note 11) | ||||||||
| Series A convertible preferred stock, $0.0001 par value 128,148,529 shares authorized, issued and outstanding as of September 30, 2023 and 27,125,000 shares authorized, issued and outstanding December 31, 2022 | 127,772 | 27,125 | ||||||
| Stockholders deficit | ||||||||
| Common stock, $0.0001 par value 231,000,000 shares authorized and 19,589,325 shares issued and outstanding as of September 30, 2023, 50,000,000 shares authorized and 10,875,000 shares issued and outstanding and December 31, 2022 | 1 | |||||||
| Additional paid-in capital | 1,741 | 195 | ||||||
| Accumulated deficit | (49,149 | ) | (19,927 | ) | ||||
| Total stockholders deficit | (47,407 | ) | (19,732 | ) | ||||
| Total liabilities, convertible preferred stock and stockholders deficit | $ | 85,135 | $ | 9,098 |
The accompanying notes are an integral part of these condensed financial statements.
TOURMALINE BIO, INC.
Condensed Statements of Operations
(In thousands, except share and per share amounts)
| Nine Months Ended September 30, | ||||||||
| 2023 | 2022 | |||||||
| Operating expenses: | ||||||||
| Research and development | $ | 24,353 | $ | 13,733 | ||||
| General and administrative | 6,166 | 1,048 | ||||||
| Total operating expenses | 30,519 | 14,781 | ||||||
| Loss from operations | (30,519 | ) | (14,781 | ) | ||||
| Other income, net | 1,297 | |||||||
| Net loss | $ | (29,222 | ) | $ | (14,781 | ) | ||
| Net loss per share attributable to common stockholders, basic and diluted | $ | (2.35 | ) | $ | (1.36 | ) | ||
| Weighted-average shares used in computing net loss per share attributable to common stockholders, basic and diluted | 12,456,670 | 10,875,000 |
The accompanying notes are an integral part of these condensed financial statements.
TOURMALINE BIO, INC.
Condensed Statements of Changes in Convertible Preferred Stock/Units and Stockholders Deficit/Members Deficit
(In thousands, except share data)
| Series A Convertible Preferred Stock | Common Stock | Additional Paid-In Capital | Accumulated Deficit | Total Stockholders Deficit | ||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | |||||||||||||||||||||||||
| Balance as of December 31, 2022 | 27,125,000 | $ | 27,125 | 10,875,000 | $ | $ | 195 | $ | (19,927 | ) | $ | (19,732 | ) | |||||||||||||||
| Issuance of Series A convertible preferred stock, net of issuance costs | 92,200,000 | 91,823 | ||||||||||||||||||||||||||
| Issuance of Series A convertible preferred stock pursuant to anti-dilution provision of the Pfizer License Agreement | 8,823,529 | 8,824 | ||||||||||||||||||||||||||
| Stock-based compensation expense | 1,515 | 1,515 | ||||||||||||||||||||||||||
| Issuance of common stock from exercise of stock options, including early exercises | 8,714,325 | 1 | 6 | 7 | ||||||||||||||||||||||||
| Vesting of early exercised stock options | 25 | 25 | ||||||||||||||||||||||||||
| Net loss | (29,222 | ) | (29,222 | ) | ||||||||||||||||||||||||
| Balance as of September 30, 2023 | 128,148,529 | $ | 127,772 | 19,589,325 | $ | 1 | $ | 1,741 | $ | (49,149 | ) | $ | (47,407 | ) |
| Series A Convertible Preferred Units | Series A Convertible Preferred Stock | Common Units | Common Stock | Additional Paid-In Capital | Accumulated Deficit | Total Members Deficit/ Stockholders Deficit | ||||||||||||||||||||||||||||||||||||||
| Units | Amount | Shares | Amount | Units* | Amount | Shares | Amount | |||||||||||||||||||||||||||||||||||||
| Balance as of December 31, 2021* | $ | $ | 10,875,000 | $ | $ | $ | (226 | ) | $ | (226 | ) | |||||||||||||||||||||||||||||||||
| Conversion of common units to common stock* | (10,875,000 | ) | 10,875,000 | |||||||||||||||||||||||||||||||||||||||||
| Issuance of Series A convertible preferred units | 27,125,000 | 27,125 | ||||||||||||||||||||||||||||||||||||||||||
| Conversion of Series A convertible preferred units to Series A convertible preferred stock | (27,125,000 | ) | (27,125 | ) | 27,125,000 | 27,125 | ||||||||||||||||||||||||||||||||||||||
| Net loss | (14,781 | ) | (14,781 | ) | ||||||||||||||||||||||||||||||||||||||||
| Balance as of September 30, 2022 | $ | 27,125,000 | $ | 27,125 | $ | 10,875,000 | $ | $ | $ | (15,007 | ) | $ | (15,007 | ) |
The accompanying notes are an integral part of these condensed financial
TOURMALINE BIO, INC.
Condensed Statements of Cash Flows
| Nine Months Ended September 30, | ||||||||
| 2023 | 2022 | |||||||
| Cash flows from operating activities: | ||||||||
| Net loss | $ | (29,222 | ) | $ | (14,781 | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| In-process research and development expense | 8,824 | 12,125 | ||||||
| Stock-based compensation expense | 1,515 | |||||||
| Non-cash lease expense | 93 | |||||||
| Depreciation expense | 22 | 1 | ||||||
| Other non-cash items | 10 | |||||||
| Changes in operating assets and liabilities: | ||||||||
| Prepaid expenses | (1,565 | ) | (83 | ) | ||||
| Accounts payable | 551 | 40 | ||||||
| Accrued expenses and other liabilities | 1,044 | 737 | ||||||
| Net cash used in operating activities | (18,728 | ) | (1,961 | ) | ||||
| Cash flows from investing activities: | ||||||||
| Purchases of property and equipment | (54 | ) | (13 | ) | ||||
| Acquisition of in-process research and development | (5,000 | ) | ||||||
| Net cash used in investing activities | (54 | ) | (5,013 | ) | ||||
| Cash flows from financing activities: | ||||||||
| Proceeds from issuance of Series A convertible preferred stock, net of issuance costs | 91,823 | 20,000 | ||||||
| Proceeds from exercise of stock options | 144 | |||||||
| Payment of deferred offering costs | (3,389 | ) | ||||||
| Proceeds from issuance of related party note payable | 250 | |||||||
| Repayment of related party notes payable | (400 | ) | ||||||
| Net cash provided by financing activities | 88,578 | 19,850 | ||||||
| Net increase in cash, cash equivalents, and restricted cash | 69,796 | 12,876 | ||||||
| Cash, cash equivalents, and restricted cash Beginning of period | 8,474 | 150 | ||||||
| Cash, cash equivalents, and restricted cash End of period | $ | 78,270 | $ | 13,026 | ||||
| Reconciliation of cash, cash equivalents, and restricted cash: | ||||||||
| Cash and cash equivalents | 78,043 | $ | 12,810 | |||||
| Restricted cash | 227 | 216 | ||||||
| Total cash, cash equivalents, and restricted cash | $ | 78,270 | $ | 13,026 | ||||
| Supplemental Disclosures of Non-Cash Items: | ||||||||
| Issuance of Series A convertible preferred stock pursuant to Pfizer License Agreement | $ | 8,824 | $ | 7,125 | ||||
| Purchases of property and equipment included in accounts payable and accrued expenses | $ | $ | 3 | |||||
| Unpaid deferred offering costs included in accounts payable and accrued expenses | $ | 1,366 | $ |
The accompanying notes are an integral part of these condensed financial statements.
TOURMALINE BIO, INC.
Notes to Condensed Financial Statements
(in thousands, except share, per share data, and percentages)
Tourmaline Bio, Inc. (the Company ) is a late-stage biotechnology company that is developing transformative medicines that dramatically improve the
lives of patients with life-altering immune diseases. The Company is developing TOUR006, a fully human monoclonal antibody that selectively binds to interleukin-6, a key proinflammatory cytokine involved in
the pathogenesis of many autoimmune and inflammatory disorders. Founded on September 17, 2021, the Company is headquartered in New York City.
The Company has incurred recurring losses
since its inception, including a net loss of $29,222 and $14,781 for the nine months ended September 30, 2023 and 2022, respectively. In addition, the Company had an accumulated deficit of $49,149 as of September 30, 2023. The Company
expects to continue to generate operating losses for the foreseeable future. Through September 30, 2023, the Company has been financed primarily through the issuance of its Series A convertible preferred stock. As the Company continues its
expansion, it will rely on additional financing, however, there can be no assurance that any additional financing will be available to the Company on acceptable terms, if at all. If events or circumstances occur such that the Company does not obtain
additional financing, it will most likely be required to reduce its plans and/or certain discretionary spending, which could have a material adverse effect on the Company s ability to achieve its intended business objectives.
The Company s future operations are highly dependent on a combination of factors, including (1) the timely and successful completion of additional
financing discussed above; (2) the success of the Company s research and development programs; (3) the Company s ability to manage growth of the organization; (4) the Company s ability to protect the Company s
technology and product candidates; and, ultimately, (5) regulatory approval and market acceptance of the Company s product candidates.
accompanying condensed financial statements do not include any adjustments that might be necessary if it were unable to continue as a going concern. Management believes that it has sufficient working capital on hand to fund operations through at
least the next twelve months from the date of the issuance of these condensed financial statements.
Macroeconomic Considerations
Worldwide economic conditions remain uncertain and the Company continues to monitor the impact of macroeconomic conditions, including those related to COVID-19, the Russia-Ukraine war, hostilities in the Middle East, inflation and rising interest rates. The effect of macroeconomic conditions may not be fully reflected in the Company s results of operations
until future periods. If, however, economic uncertainty increases or the global economy worsens, the Company s business, financial condition and results of operations may be harmed.
Although the Company does not believe that inflation has had a material impact on its financial position or results of operations to date, the Company may
experience increases in the near future on its operating costs, including its labor costs and research and development costs, due to supply chain constraints, consequences associated with COVID-19, the ongoing
conflict between Russia and Ukraine, hostilities in the Middle East, employee availability and wage increases, which may result in additional stress on its working capital resources.
On June 22, 2023, the Company
entered into an Agreement and Plan of Merger (the Merger Agreement ) with Talaris Therapeutics, Inc. ( Talaris ), a Delaware company, pursuant to which, among other matters, Terrain Merger Sub, Inc., a direct, wholly owned
subsidiary of Talaris ( Merger Sub ), will merge with and into the Company, with the Company surviving as a wholly-owned subsidiary of Talaris (such transaction, the Merger ), whereby all of the Company s shares would be
exchanged by Talaris for shares of Talaris common stock, subject to certain assumptions, including, but not limited to, (a) Talaris net cash as of the closing being approximately $67,500, (b) the Company raising approximately $75,000 in a
pre-closing financing, (c) a valuation for Talaris equal to $82,500 and (d) a valuation for the Company equal to $230,000. Simultaneous with the execution and delivery of the Merger Agreement, the
Company also entered into a Securities Purchase Agreement (the Pre-Closing Financing Agreement ) with
TOURMALINE BIO, INC.
Notes to Condensed Financial Statements
(in thousands, except share, per share data, and percentages)
various entities and investors to purchase shares of common stock in connection with a private placement for aggregate gross proceeds to the Company of $75,000 that is expected to close
contemporaneously with the Merger (the Pre-Closing Financing ). As outlined in Note 13, the Company subsequently consummated the Merger and the Pre-Closing
Financing. The Merger is expected to be accounted for as a reverse recapitalization in accordance with United States Generally Accepted Accounting Principles ( GAAP ).
Basis of Presentation
The accompanying unaudited
condensed balance sheet as of September 30, 2023, the condensed statements of operations and condensed statements of convertible preferred stock/units and stockholders deficit/members deficit for the nine months ended
September 30, 2023 and 2022, and the condensed statements of cash flows for the nine months ended September 30, 2023 and 2022, are unaudited. The balance sheet as of December 31, 2022 was derived from the audited financial statements
as of and for the year ended December 31, 2022. The unaudited interim condensed financial statements have been prepared on a basis consistent with the audited annual financial statements as of and for the year ended December 31, 2022, and,
in the opinion of management, reflect all adjustments, consisting solely of normal recurring adjustments, necessary for the fair presentation of the Company s financial position as of September 30, 2023. The financial data and other
information disclosed in these notes related to the nine months ended September 30, 2023 and 2022 are also unaudited. The condensed results of operations for the nine months ended September 30, 2023 are not necessarily indicative of the
results to be expected for the full year ending December 31, 2023 or any other period.
The accompanying unaudited condensed financial statements
have been prepared in accordance with GAAP for interim financial information and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP
for complete financial statements. In the opinion of management, all adjustments considered necessary for a fair presentation have been included. These condensed financial statements should be read in conjunction with the financial statements as of
and for the year ended December 31, 2022 and related notes thereto included in the final prospectus on Form 424(b)(3) filed with the United States Securities and Exchange Commission on September 15, 2023.
Significant Accounting Policies
material changes in the Company s significant accounting policies from those disclosed in the audited financial statements and related notes thereto as of and for the year ended December 31, 2022 included in the in the final prospectus on
Form 424(b)(3) filed with the United States Securities and Exchange Commission on September 15, 2023 outside of the following:
The Company considers all highly liquid investments with an original maturity of three months or less at the date of purchase to be cash
equivalents. As of September 30, 2023, cash and cash equivalents consisted of cash on deposit held in an operating account and money market fund holdings. As of December 31, 2022, the Company did not hold any cash equivalents.
Fair Value Measurements
Certain assets and liabilities
are carried at fair value under GAAP. Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an
orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. Financial assets and liabilities carried
at fair value are to be classified and disclosed in one of the following three levels of the fair value hierarchy, of which the first two are considered observable and the last is considered unobservable:
TOURMALINE BIO, INC.
Notes to Condensed Financial Statements
(in thousands, except share, per share data, and percentages)
The Company s cash equivalents are carried at fair value, determined according to the fair value hierarchy described above (see Note 4).
Deferred Offering Costs
Deferred offering costs consist
of accounting fees and legal fees that are directly associated with the Merger and Pre-Closing Financing, as described further in Note 1 and Note 13. Upon consummation of the Merger, these costs will be
recorded as a reduction of additional paid-in capital.
Basic and Diluted Net Loss per Share
Basic and diluted net loss per share attributable to common stockholders is presented in conformity with the two-class
method required for participating securities. The Company considers its Series A convertible preferred stock and common stock issued subject to repurchase (related to early exercised stock options) to be participating securities. Net loss is
attributed to common stockholders and participating securities based on their participation rights. Net loss attributable to common stockholders is not allocated to the Series A convertible preferred stock or common stock issued subject to
repurchase as these holders do not have a contractual obligation to share in any losses.
method, basic net loss per share attributable to common stockholders is computed by dividing the net loss attributable to common stockholders by the weighted-average number of shares of common stock outstanding during the period.
Diluted net loss per share attributable to common stockholders includes the effect, if any, from common stock issued subject to repurchase and the potential
exercise or conversion of securities such as convertible preferred stock and stock options, which would result in the issuance of incremental shares of common stock. The Company has not adjusted its weighted average number of common shares
outstanding in the calculation of diluted loss per share attributable to common stockholders as the Company reported a net loss for all periods presented and the effect of the aforementioned securities is anti-dilutive.
The following table sets forth the computation of basic and diluted net loss per share attributable to common stockholders:
| Nine Months Ended September 30, | ||||||||
| 2023 | 2022 | |||||||
| Numerator: | ||||||||
| Net loss attributable to common stockholders | $ | (29,222) | $ | (14,781) | ||||
| Denominator: | ||||||||
| Weighted-average shares used in computing net loss per share attributable to common stockholders, basic and diluted | 12,456,670 | 10,875,000 | ||||||
| Net loss per share attributable to common stockholders, basic and diluted | $ | (2.35 | ) | $ | (1.36 | ) |
TOURMALINE BIO, INC.
Notes to Condensed Financial Statements
(in thousands, except share, per share data, and percentages)