sldb-10q_20180930.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, 2018

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: 001-38360

 

Solid Biosciences Inc.

(Exact Name of Registrant as Specified in its Charter)

 

 

Delaware

90-0943402

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer

Identification No.)

 

 

141 Portland Street, Fifth Floor

Cambridge, MA

02139

(Address of principal executive offices)

(Zip Code)

Registrant’s telephone number, including area code: (617) 337-4680

 

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, 2018, the registrant had 35,432,460 shares of common stock, $0.001 par value per share, outstanding.

 

 

 

 

 

 


 

Table of Contents

 

 

 

Page

PART  I.

FINANCIAL INFORMATION

2

Item 1.

Financial Statements (Unaudited)

2

 

Condensed Consolidated Balance Sheets at September 30, 2018 and December 31, 2017

2

 

Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2018 and 2017

3

 

Condensed Consolidated Statements of Comprehensive Loss for the three and nine months ended September 30, 2018 and 2017

4

 

Condensed Consolidated Statements of Preferred Units and Stockholders’/Members’ Equity/(Deficit) for the nine months ended September 30, 2018 and the year ended December 31, 2017

5

 

Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2018 and 2017

6

 

Notes to the 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

30

Item 4.

Controls and Procedures

31

PART II.

OTHER INFORMATION

32

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

72

 

Signatures

73

 

1


 

PART I—FINANCIAL INFORMATION

Item 1. Condensed Consolidated Financial Statements (unaudited)

SOLID BIOSCIENCES INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(unaudited, in thousands, except share and per share data)

 

 

 

September 30,

 

 

December 31,

 

 

 

2018

 

 

2017

 

Assets

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

129,137

 

 

$

52,080

 

Available-for-sale-securities

 

 

16,232

 

 

 

17,014

 

Prepaid expenses and other current assets

 

 

3,062

 

 

 

1,499

 

Restricted cash

 

 

 

 

 

65

 

Total current assets

 

 

148,431

 

 

 

70,658

 

Property and equipment, net

 

 

7,935

 

 

 

2,429

 

Other non-current assets

 

 

209

 

 

 

 

Restricted cash

 

 

237

 

 

 

 

Deferred offering costs

 

 

 

 

 

3,106

 

Total assets

 

$

156,812

 

 

$

76,193

 

Liabilities, Preferred Units and Stockholders’ / Members’ Equity / (Deficit)

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

Accounts payable

 

$

4,804

 

 

$

5,066

 

Accrued expenses and other current liabilities

 

 

5,833

 

 

 

6,205

 

Total current liabilities

 

 

10,637

 

 

 

11,271

 

Other non-current liabilities

 

 

1,102

 

 

 

 

Total liabilities

 

 

11,739

 

 

 

11,271

 

Commitments and contingencies (Note 10)

 

 

 

 

 

 

 

 

Series 2 Senior Preferred Units, no units authorized at September 30, 2018 and 4,886,000 units

   authorized at December 31, 2017; no units issued and outstanding at September 30, 2018 and

   4,886,000 units issued and outstanding at December 31, 2017

 

 

 

 

 

55,002

 

Series 1 Senior Preferred Units, no units authorized at September 30, 2018 and 2,500,000 units

   authorized at December 31, 2017; no units issued and outstanding at September 30, 2018 and

   2,500,000 units issued and outstanding at December 31, 2017

 

 

 

 

 

25,000

 

Junior Preferred Units, no units authorized at September 30, 2018 and 4,414,356 units authorized

   at December 31, 2017; no units issued and outstanding at September 30, 2018 and 4,414,356

   units issued and outstanding at December 31, 2017

 

 

 

 

 

44,177

 

Stockholders’ / Members’ equity / (deficit):

 

 

 

 

 

 

 

 

Series A, B, C and D Common Units, no units authorized at September 30, 2018 and 20,189,509

   units authorized at December 31, 2017; no units issued and outstanding at September 30, 2018

   and 19,438,552 units issued and outstanding at December 31, 2017

 

 

 

 

 

65,014

 

Preferred stock, $0.001 par value; 10,000,000 shares authorized at September 30, 2018 and no

   shares authorized at December 31, 2017; no shares issued and outstanding at

   September 30, 2018 and December 31, 2017

 

 

 

 

 

 

Common stock, $0.001 par value; 300,000,000 shares authorized at September 30, 2018 and no

   shares authorized at December 31, 2017; 35,432,460 shares issued and outstanding at

   September 30, 2018 and no shares issued and outstanding at December 31, 2017

 

 

35

 

 

 

 

Additional paid-in capital

 

 

322,179

 

 

 

 

Accumulated other comprehensive loss

 

 

(6

)

 

 

(13

)

Accumulated deficit

 

 

(177,135

)

 

 

(124,258

)

Total stockholders’/members’ equity/(deficit)

 

 

145,073

 

 

 

(59,257

)

Total liabilities, preferred units and stockholders’/members’ equity

 

$

156,812

 

 

$

76,193

 

 

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

2


 

SOLID BIOSCIENCES INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited, in thousands, except share and per share data)

 

 

 

Three Months Ended September 30,

 

 

Nine Months Ended September 30,

 

 

 

2018

 

 

2017

 

 

2018

 

 

2017

 

Revenue

 

$

 

 

$

 

 

$

 

 

$

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Research and development

 

 

14,680

 

 

 

10,619

 

 

 

40,203

 

 

 

27,959

 

General and administrative

 

 

4,470

 

 

 

3,077

 

 

 

13,098

 

 

 

11,737

 

Total operating expenses

 

 

19,150

 

 

 

13,696

 

 

 

53,301

 

 

 

39,696

 

Loss from operations

 

 

(19,150

)

 

 

(13,696

)

 

 

(53,301

)

 

 

(39,696

)

Other income (expense):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revaluation of preferred unit tranche rights

 

 

 

 

 

(88

)

 

 

 

 

 

(68

)

Interest income

 

 

92

 

 

 

51

 

 

 

237

 

 

 

165

 

Other income

 

 

38

 

 

 

228

 

 

 

187

 

 

 

908

 

Total other income (expense), net

 

 

130

 

 

 

191

 

 

 

424

 

 

 

1,005

 

Net loss

 

 

(19,020

)

 

 

(13,505

)

 

 

(52,877

)

 

 

(38,691

)

Net loss attributable to non-controlling interest

 

 

 

 

 

 

 

 

 

 

 

(1,060

)

Net loss attributable to Solid Biosciences Inc.

 

 

(19,020

)

 

 

(13,505

)

 

 

(52,877

)

 

 

(37,631

)

Accretion of preferred units to redemption value

 

 

 

 

 

 

 

 

 

 

 

(959

)

Redemption of preferred units

 

 

 

 

 

 

 

 

 

 

 

15,685

 

Redemption of redeemable interest from non-controlling interest in

   Solid GT

 

 

 

 

 

 

 

 

 

 

 

(1,925

)

Net loss attributable to common stockholders

 

$

(19,020

)

 

$

(13,505

)

 

$

(52,877

)

 

$

(24,830

)

Net loss per share attributable to common stockholders, basic and diluted

 

$

(0.55

)

 

$

(0.79

)

 

$

(1.61

)

 

$

(1.99

)

Weighted average shares of common stock outstanding, basic and diluted

 

 

34,539,001

 

 

 

17,096,280

 

 

 

32,800,126

 

 

 

12,446,769

 

 

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

3


 

SOLID BIOSCIENCES INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(unaudited, in thousands)

 

 

 

Three Months Ended September 30,

 

 

Nine Months Ended September 30,

 

 

 

2018

 

 

2017

 

 

2018

 

 

2017

 

Net loss

 

$

(19,020

)

 

$

(13,505

)

 

$

(52,877

)

 

$

(38,691

)

Other comprehensive loss:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Unrealized gain (loss) on available-for-sale securities

 

 

4

 

 

 

(1

)

 

 

7

 

 

 

(26

)

Comprehensive loss

 

 

(19,016

)

 

 

(13,506

)

 

 

(52,870

)

 

 

(38,717

)

Comprehensive loss attributable to non-controlling interest

 

 

 

 

 

 

 

 

 

 

 

(1,060

)

Comprehensive loss attributable to Solid Biosciences Inc.

 

$

(19,016

)

 

$

(13,506

)

 

$

(52,870

)

 

$

(37,657

)

 

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

 

 

4


 

SOLID BIOSCIENCES INC.

CONDENSED CONSOLIDATED STATEMENTS OF PREFERRED UNITS AND STOCKHOLDERS’/MEMBERS’ EQUITY/(DEFICIT)

(unaudited, in thousands, except share / unit data)

 

 

Redeemable

Preferred

Units

 

Amount

 

Series 2

Senior

Preferred

Units

 

Amount

 

Series 1

Senior

Preferred

Units

 

Amount

 

Junior

Preferred

Units

 

Amount

 

Series A, B, C

and D

Common

Units

 

Amount

 

Common

Stock

 

Amount

 

Additional

paid

in capital

 

Accumulated

other

comprehensive

income (loss)

 

Accumulated

Deficit

 

Total

Members’/

Stockholders’

Equity

(Deficit)

 

Non-controlling

Interest

 

Total

Equity

(Deficit)

 

Balance at December 31, 2016

 

17,100,000

 

$

71,649

 

 

 

 

 

 

 

 

 

 

 

 

 

 

5,123,917

 

$

558

 

 

 

 

 

 

 

$

23

 

$

(84,941

)

$

(84,360

)

$

46,474

 

$

(37,886

)

Issuance of Series 1 senior preferred units, net of

   issuance costs of $500 and tranche right of $459

 

 

 

 

 

 

 

 

 

2,500,000

 

$

24,041

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accretion of Series 1 senior preferred units to

   redemption value

 

 

 

 

 

 

 

 

 

 

 

959

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(959

)

 

(959

)

 

 

 

(959

)

Redemption of preferred units

 

 

 

(15,685

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

15,685

 

 

15,685

 

 

 

 

15,685

 

Equity-based compensation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

5,030

 

 

 

 

 

 

 

 

 

 

 

 

5,030

 

 

300

 

 

5,330

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(52,118

)

 

(52,118

)

 

(1,060

)

 

(53,178

)

Issuance of Series B common units in exchange for

   Series A common units

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1,301,520

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Issuance of Series D common units in exchange for

   Series A common units

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(160,954

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Issuance of Series A common units in exchange for

   redeemable preferred units

 

(17,100,000

)

 

(55,964

)

 

 

 

 

 

 

 

 

 

 

 

 

 

12,219,299

 

 

55,964

 

 

 

 

 

 

 

 

 

 

 

 

55,964

 

 

 

 

55,964

 

Issuance of junior preferred units in redemption of

   Class D non-controlling interest in Solid GT

 

 

 

 

 

 

 

 

 

 

 

 

 

4,414,356

 

$

44,177

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1,925

)

 

(1,925

)

 

(42,252

)

 

(44,177

)

Issuance of Series C common units in exchange for

   Class B non-controlling interest in Solid GT

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,635,916

 

 

2,053

 

 

 

 

 

 

 

 

 

 

 

 

2,053

 

 

(2,053

)

 

 

Issuance of Series D common units in exchange for

   Class C non-controlling interest in Solid GT

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,083,205

 

 

1,409

 

 

 

 

 

 

 

 

 

 

 

 

1,409

 

 

(1,409

)

 

 

Issuance of Series D common units

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

838,689

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Issuance of Series 2 senior preferred units,

 

 

 

 

 

 

 

4,886,000

 

$

55,002

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Unrealized loss on available for sale securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(36

)

 

 

 

(36

)

 

 

 

(36

)

Balance at December 31, 2017

 

 

 

 

 

4,886,000

 

$

55,002

 

 

2,500,000

 

$

25,000

 

 

4,414,356

 

$

44,177

 

 

19,438,552

 

$

65,014

 

 

 

$

 

$

 

$

(13

)

$

(124,258

)

$

(59,257

)

 

 

$

(59,257

)

Conversion of units into shares of common stock

 

 

 

 

 

(4,886,000

)

 

(55,002

)

 

(2,500,000

)

 

(25,000

)

 

(4,414,356

)

 

(44,177

)

 

(19,429,620

)

 

(65,180

)

 

26,498,559

 

 

26

 

 

189,333

 

 

 

 

 

 

124,179

 

 

 

 

124,179

 

Issuance of common stock upon initial public

   offering, net of issuance costs of $4,592

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

8,984,375

 

$

9

 

 

129,087

 

 

 

 

 

 

129,096

 

 

 

 

129,096

 

Equity-based compensation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

166

 

 

 

 

 

 

 

 

3,759

 

 

 

 

 

 

3,925

 

 

 

 

3,925

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(52,877

)

 

(52,877

)

 

 

 

(52,877

)

Repurchase of common units/ shares of common

   stock

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(8,932

)

 

 

 

(50,474

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Unrealized loss on available for sale securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

7

 

 

 

 

7

 

 

 

 

7

 

Balance at September 30, 2018

 

 

 

 

 

 

$

 

 

 

$

 

 

 

$

 

 

 

$

 

 

35,432,460

 

$

35

 

$

322,179

 

$

(6

)

$

(177,135

)

$

145,073

 

$

 

$

145,073

 

 

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

 

 

5


 

SOLID BIOSCIENCES INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited, in thousands)

 

 

 

Nine Months Ended

September 30,

 

 

 

2018

 

 

 

 

2017

 

Cash flows from operating activities:

 

 

 

 

 

 

 

 

 

 

Net loss

 

$

(52,877

)

 

 

 

$

(38,691

)

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

 

 

 

 

 

 

 

 

 

 

Amortization of (discount)/premium on available-for-sale securities

 

 

(52

)

 

 

 

 

194

 

Equity-based compensation expense

 

 

3,925

 

 

 

 

 

4,507

 

Depreciation expense

 

 

1,085

 

 

 

 

 

225

 

(Gain) / loss on sale of property and equipment

 

 

(3

)

 

 

 

 

 

Revaluation of tranche liability

 

 

 

 

 

 

 

68

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

 

 

 

Proceeds from landlord lease incentive for tenant improvements

 

 

823

 

 

 

 

 

 

Prepaid expenses and other current and non-current assets

 

 

(1,772

)

 

 

 

 

1,132

 

Accounts payable

 

 

(107

)

 

 

 

 

2,279

 

Accrued expenses and other current and non-current liabilities

 

 

185

 

 

 

 

 

1,044

 

Net cash used in operating activities

 

 

(48,793

)

 

 

 

 

(29,242

)

Cash flows from investing activities:

 

 

 

 

 

 

 

 

 

 

Purchases of property and equipment

 

 

(6,339

)

 

 

 

 

(1,950

)

Proceeds from sale and maturities of available-for-sale securities

 

 

19,585

 

 

 

 

 

26,350

 

Purchases of available-for-sale securities

 

 

(18,744

)

 

 

 

 

(11,143

)

Net cash (used in) provided by investing activities

 

 

(5,498

)

 

 

 

 

13,257

 

Cash flows from financing activities:

 

 

 

 

 

 

 

 

 

 

Proceeds from issuance of Series 1 Senior Preferred units

 

 

 

 

 

 

 

24,500

 

Proceeds from initial public offering of common stock, net of commissions

   and underwriting discounts

 

 

133,688

 

 

 

 

 

 

Payment of deferred offering costs

 

 

(2,168

)

 

 

 

 

(1,179

)

Net cash provided by financing activities

 

 

131,520

 

 

 

 

 

23,321

 

Net increase in cash, cash equivalents and restricted cash

 

 

77,229

 

 

 

 

 

7,336

 

Cash, cash equivalents, and restricted cash at beginning of period

 

 

52,145

 

 

 

 

 

7,843

 

Cash, cash equivalents, and restricted cash at end of period

 

$

129,374

 

 

 

 

$

15,179

 

Supplemental disclosure of non-cash investing and financing activities:

 

 

 

 

 

 

 

 

 

 

Conversion of Series A, B, C and D common units into shares of common stock

 

$

65,180

 

 

 

 

 

 

Conversion of Series 2 Senior Preferred units into shares of common stock

 

$

55,002

 

 

 

 

 

 

Conversion of Series 1 Senior Preferred units into shares of common stock

 

$

25,000

 

 

 

 

 

 

Conversion of Junior Preferred units into shares of common stock

 

$

44,177