tars-20210930

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2021


☐			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: 001-39614

TARSUS PHARMACEUTICALS, INC.

(Exact name of Registrant as specified in its charter)


Delaware						81-4717861
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification Number)


15440 Laguna Canyon Road, Suite 160
Irvine, California						92618
(Address of principal executive offices)						(Zip Code)

(949) 409-9820

(Registrant's telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol	Name of each exchange on which registered
Common Stock, $0.0001 par value per share	TARS	The Nasdaq Global Market LLC (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, 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 ☒

20,676,992 shares of common stock, $0.0001 par value, outstanding as of November 4, 2021.

Table of Contents

TABLE OF CONTENTS


Part I - Financial Information			1
Item 1. Financial Statements (Unaudited)			1
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations			23
Item 3. Quantitative and Qualitative Disclosures About Market Risk			35
Item 4. Controls and Procedures			35
Part II - Other Information			36
Item 1. Legal Proceedings			36
Item 1A. Risk Factors			36
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			36
Item 3. Defaults Upon Senior Securities			36
Item 4. Mine Safety Disclosures			36
Item 5. Other Information			36
Item 6. Exhibits			37
Signatures			38

Table of Contents

PART I—FINANCIAL INFORMATION

Item I. Financial Statements (Unaudited)

TARSUS PHARMACEUTICALS, INC.

INDEX TO THE FINANCIAL STATEMENTS


			Pages
Condensed Balance Sheets			F-2
Condensed Statements of Operations and Comprehensive (Loss) Income			F-3
Condensed Statements of Preferred Stock and Stockholders’ Equity (Deficit)			F-4
Condensed Statements of Cash Flows			F-5
Notes to Condensed Financial Statements			F-6

F-1

Table of Contents

TARSUS PHARMACEUTICALS, INC.

CONDENSED BALANCE SHEETS

(In thousands, except share and par value amounts)



	September 30, 2021		December 31, 2020
	(unaudited)
Assets
Current assets:
Cash and cash equivalents	$	183,801	$	168,129
Restricted cash	—		20


Other receivables	139		20
Prepaid expenses and other current assets	3,148		2,486
Total current assets	187,088		170,655
Property and equipment, net of accumulated depreciation	519		548
Operating lease right-of-use asset	1,190		688
Other assets	1,615		81
Total assets	$	190,412	$	171,972
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable and other accrued liabilities	$	8,119	$	4,347
Accrued payroll and benefits	2,246		1,040
Total current liabilities	10,365		5,387
Other long-term liabilities	905		605
Total liabilities	11,270		5,992
Commitments and contingencies (Note 9)
Stockholders’ equity:
Preferred stock, $0.0001 par value; 10,000,000 authorized at September 30, 2021 and December 31, 2020; no shares issued and outstanding at September 30, 2021 and December 31, 2020	—		—
Common stock, $0.0001 par value; 200,000,000 shares authorized; 20,714,228 shares issued and 20,671,079 outstanding, which excludes 43,149 shares subject to repurchase at September 30, 2021 (unaudited); 20,502,576 shares issued and 20,323,301 outstanding, which excludes 179,375 shares subject to repurchase at December 31, 2020	4		4
Additional paid-in capital	210,959		198,821
Accumulated deficit	(31,821)		(32,845)
Total stockholders’ equity	179,142		165,980
Total liabilities and stockholders’ equity	$	190,412	$	171,972

See accompanying notes to these unaudited condensed financial statements.

F-2

Table of Contents

TARSUS PHARMACEUTICALS, INC.

CONDENSED STATEMENTS OF OPERATIONS AND COMPREHENSIVE (LOSS) INCOME

(Unaudited)

(In thousands, except share and per share amounts)


	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
Revenues:
License fees	$	708	$	—	$	53,067	$	—
Collaboration revenue	532		—		3,622		—
Total revenues (Note 9)	1,240		—		56,689		—
Operating expenses:
Cost of license fees and collaboration revenue	65		—		2,099		—
Research and development	10,209		7,991		33,674		11,239
General and administrative	6,671		2,150		18,625		4,282
Total operating expenses	16,945		10,141		54,398		15,521
(Loss) income from operations before other income (expense) and income taxes	(15,705)		(10,141)		2,291		(15,521)
Other income (expense):
Interest income, net	8		4		24		178
Other income (expense), net	5		—		(68)		—
Change in fair value of equity warrant rights (Note 9)	(346)		—		(1,222)		—
Total other (expense) income	(333)		4		(1,266)		178
Benefit (provision) for income taxes	341		(1)		(1)		(1)
Net (loss) income and comprehensive (loss) income	$	(15,697)	$	(10,138)	$	1,024	$	(15,344)
Net (loss) income per share
Basic	$	(0.76)	$	(3.71)	$	0.05	$	(5.73)
Diluted	$	(0.76)	$	(3.71)	$	0.05	$	(5.73)
Weighted-average shares outstanding
Basic	20,641,285		2,729,685		20,511,973		2,677,315
Diluted	20,641,285		2,729,685		22,032,487		2,677,315

See accompanying notes to these unaudited condensed financial statements.

F-3

Table of Contents

TARSUS PHARMACEUTICALS, INC.

CONDENSED STATEMENTS OF PREFERRED STOCK AND STOCKHOLDERS’ EQUITY (DEFICIT)

(Unaudited)

(In thousands, except share data)


	Preferred Stock			Common Stock			Additional Paid-In Capital		Accumulated Deficit		Total Stockholders’ Equity
	Shares	Amount		Shares	Amount
Balance as of December 31, 2020	—	$	—	20,323,201	$	4	$	198,821	$	(32,845)	$	165,980
Net income	—	—		—	—		—		10,376		10,376
Recognition of stock-based compensation expense	—	—		—	—		1,363		—		1,363
Exercise of vested stock options	—	—		13,773	—		19		—		19
Shares issued as consideration for in-license rights (Note 8(b))	—	—		187,500	—		5,494		—		5,494
Balance as of March 31, 2021	—	$	—	20,524,474	$	4	$	205,697	$	(22,469)	$	183,232
Net income	—	—		—	—		—		6,345		6,345
Recognition of stock-based compensation expense	—	—		—	—		2,794		—		2,794
Lapse of repurchase rights related to common stock issued pursuant to stock option exercises prior to vesting	—	—		49,222	—		99		—		99
Exercise of vested stock options	—	—		255	—		1		—		1
Balance as of June 30, 2021	—	$	—	20,573,951	$	4	$	208,591	$	(16,124)	$	192,471
Net loss	—	—		—	—		—		(15,697)		(15,697)
Recognition of stock-based compensation expense	—	—		—	—		2,119		—		2,119
Lapse of repurchase rights related to common stock issued pursuant to stock option exercises prior to vesting	—	—		87,004	—		174		—		174
Exercise of vested stock options	—	—		10,124	—		75		—		75
Balance as of September 30, 2021	—	$	—	20,671,079	$	4	$	210,959	$	(31,821)	$	179,142


	Preferred Stock			Common Stock			Additional Paid-In Capital		Accumulated Deficit		Total Stockholders’ Deficit
	Shares	Amount		Shares	Amount
Balance as of December 31, 2019	8,249,939	$	63,402	2,646,619	$	2	$	27	$	(6,034)	$	(6,005)
Net loss	—	—		—	—		—		(1,957)		(1,957)
Recognition of stock-based compensation expense	—	—		—	—		4		—		4
Lapse of repurchase rights related to common stock issued pursuant to stock option exercises prior to vesting	—	—		4,300	—		—		—		—
Balance as of March 31, 2020	8,249,939	$	63,402	2,650,919	$	2	$	31	(7,991)		$	(7,958)
Net loss	—	—		—	—		—		(3,250)		(3,250)
Recognition of stock-based compensation expense	—	—		—	—		173		—		173
Exercise of vested stock options	—	—		1,077	—		—		—		—
Balance as of June 30, 2020

SEC Form 10-Q filed by Tarsus Pharmaceuticals, Inc.