10-Q

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

Emerging growth company

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 June 30, 2024


☐	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: 001-40227

FINCH THERAPEUTICS GROUP, INC.

(Exact Name of Registrant as Specified in its Charter)


Delaware	82-3433558
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

75 State Street, Suite 100 Boston, Massachusetts	02109
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: (617) 229-6499

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

    FNCH

    The Nasdaq Stock Market LLC

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.

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 August 9, 2024 there were 1,605,763 outstanding shares of the registrant’s common stock, par value $0.001 per share.

FINCH THERAPEUTICS GROUP, INC.

FORM 10-Q

For the quarterly period ended June 30, 2024

Table of Contents


		Page

	SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS	ii
	SPECIAL NOTE REGARDING COMPANY REFERENCES	ii
	SPECIAL NOTE REGARDING TRADEMARKS	ii

PART I.	FINANCIAL INFORMATION	1
Item 1.	Condensed Consolidated Financial Statements (Unaudited)	1
	Condensed Consolidated Balance Sheets as of June 30, 2024 and December 31, 2023	1
	Condensed Consolidated Statements of Operations for the Three and Six Months Ended June 30, 2024 and 2023	2
	Condensed Consolidated Statements of Stockholders’ Equity for the Three and Six Months Ended June 30, 2024 and 2023	3
	Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2024 and 2023	4
	Notes to Condensed Consolidated Financial Statements	5
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	13
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	18
Item 4.	Controls and Procedures	18
PART II.	OTHER INFORMATION	20
Item 1.	Legal Proceedings	20
Item 1A.	Risk Factors	20
Item 5.	Other Information	22
Item 6.	Exhibits	22
	Signatures	23

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains forward-looking statements that involve substantial risks and uncertainties because they relate to events and depend on circumstances that may or may not occur in the future. All statements other than statements of historical facts contained in this Quarterly Report on 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” or “would,” or the negative of these words or other comparable terminology. These forward-looking statements include, but are not limited to, statements about:

•

our expectations with respect to our microbiome technology and related portfolio of intellectual property and microbiome assets, and our objectives to realize the value of our intellectual property estate through licensing our technology to collaboration partners and enforcing our patent rights against third parties using infringing technologies;

•

the initiation, timing, progress and results of our efforts to prosecute, enforce and license our patent portfolio;

•

our estimates regarding expenses, future revenue, capital requirements and needs for additional financing;

•

our intellectual property position, including the scope of protection we are able to establish, maintain and enforce for intellectual property rights covering product candidates developed using our microbiome technology;

•

our ability to fund our working capital requirements and to obtain additional funding for our operations; and

•

our financial performance.

These forward-looking statements are based on our management’s current expectations, estimates, forecasts and projections about our business and the industry in which we operate, and are not guarantees of future performance or development. These forward-looking statements are subject to a number of risks, uncertainties and assumptions, including those described under “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2023 and in any other reports we file with the Securities and Exchange Commission, including this Quarterly Report on Form 10-Q. Moreover, we operate in a 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 report may not occur and actual results could differ materially and adversely from those anticipated or implied in the forward-looking statements.

In addition, statements that “we believe” and similar statements reflect our beliefs and opinions on the relevant subject. These statements are based upon information available to us as of the date of this report, and while we believe such information forms a reasonable basis for such statements, such information may be limited or incomplete, and our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all potentially available relevant information. These statements are inherently uncertain and investors are cautioned not to unduly rely upon these statements.

You should read this Quarterly Report on Form 10-Q completely and with the understanding that our actual future results may be materially different from what we expect. Although we believe that the expectations reflected in our forward-looking statements are reasonable, we cannot guarantee that the future results, levels of activity, performance, or events and circumstances reflected in our forward-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 report to conform these statements to new information, actual results or changes in our expectations, except as required by law. We qualify all of our forward-looking statements by these cautionary statements.

SPECIAL NOTE REGARDING COMPANY REFERENCES

Unless the context otherwise requires, references in this Quarterly Report on Form 10-Q to “FTG,” the “Company,” “we,” “us” and “our” refer to Finch Therapeutics Group, Inc., and its subsidiaries.

SPECIAL NOTE REGARDING TRADEMARKS

All trademarks, trade names and service marks appearing in this Quarterly Report on Form 10-Q are the property of their respective owners.

PART I—FINANCIAL INFORMATION

Item 1. Condensed Consolidated Financial Statements.

FINCH THERAPEUTICS GROUP, INC.

Condensed Consolidated Balance Sheets

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


	June 30, 2024			December 31, 2023
Assets
Current assets:
Cash and cash equivalents	$	16,035		$	25,124
Prepaid expenses and other current assets		1,244			723
Total current assets		17,279			25,847
Property and equipment, net		507			594
Operating right-of-use assets		25,441			26,584
Restricted cash, non-current		2,349			2,348
Total assets	$	45,576		$	55,373
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	29		$	141
Accrued expenses and other current liabilities		2,339			2,220
Operating lease liabilities, current		2,094			1,723
Total current liabilities		4,462			4,084
Operating lease liabilities, non-current		26,895			28,403
Total liabilities		31,357			32,487
Commitments and contingencies (Note 8)
Preferred stock (undesignated), $0.001 par value; 10,000,000 shares authorized and no shares issued and outstanding as of June 30, 2024 and December 31, 2023		—			—
Stockholders’ equity:
Common stock, $0.001 par value; 200,000,000 shares authorized and 1,605,763 shares issued and outstanding as of June 30, 2024 and December 31, 2023		2			2
Additional paid-in capital		373,322			373,279
Accumulated deficit		(359,105	)		(350,395	)
Total stockholders’ equity		14,219			22,886
Total liabilities and stockholders’ equity	$	45,576		$	55,373

See notes to unaudited condensed consolidated financial statements.

FINCH THERAPEUTICS GROUP, INC.

Condensed Consolidated Statements of Operations

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


	Three Months Ended June 30,						Six Months Ended June 30,
	2024			2023			2024			2023
Revenue:
Collaboration revenue	$	—		$	—		$	—		$	107
Total revenue		—			—			—			107
Operating expenses:
Research and development		—			203			—			7,199
General and administrative		6,109			8,877			11,273			18,494
Impairment of in-process research and development		—			—			—			32,900
Impairment of long-lived assets		—			—			—			13,141
Restructuring		—			801			34			4,037
Total operating expenses		6,109			9,881			11,307			75,771
Net loss from operations		(6,109	)		(9,881	)		(11,307	)		(75,664	)
Other income, net:
Interest income, net		227			420			507			845
Gain on lease termination		—			752			—			752
Loss on loan extinguishment		—			—			—			(1,366	)
Gain on sale and disposal of fixed assets, net		—			754			—			617
Sublease and other income		1,048			1,005			2,090			2,058
Total other income, net		1,275			2,931			2,597			2,906
Loss before income taxes		(4,834	)		(6,950	)		(8,710	)		(72,758	)
Income tax benefit		—			—			—			3,461
Net loss	$	(4,834	)	$	(6,950	)	$	(8,710	)	$	(69,297	)
Net loss per share attributable to common stockholders—basic and diluted (Note 11)	$	(3.01	)	$	(4.33	)	$	(5.42	)	$	(43.21	)
Weighted-average common stock outstanding—basic and diluted		1,605,763			1,604,795			1,605,763			1,603,811

See notes to unaudited condensed consolidated financial statements.

FINCH THERAPEUTICS GROUP, INC.

Condensed Consolidated Statements of Stockholders’ Equity

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


	Common Stock $0.001 Par Value				Additional		Accumulated			Total Stockholders’
	Shares		Amount		Paid-in Capital		Deficit			Equity
Balance, January 1, 2023		1,601,717	$	2	$	371,350	$	(275,641	)	$	95,711
Vesting of restricted stock units		3,044		—		—		—			—
Stock-based compensation		—		—		1,180		—			1,180
Net loss		—		—		—		(62,347	)		(62,347	)
Balance, March 31, 2023		1,604,761		2		372,530		(337,988	)		34,544
Stock-based compensation		—		—		300		—			300
Net loss		—		—		—		(6,950	)		(6,950	)
Balance, June 30, 2023		1,604,761	$	2	$	372,830	$	(344,938	)	$	27,894


	Common Stock $0.001 Par Value				Additional		Accumulated			Total Stockholders’
	Shares		Amount		Paid-in Capital		Deficit			Equity
Balance, January 1, 2024		1,605,763	$	2	$	373,279	$	(350,395	)	$	22,886
Stock-based compensation		—		—		28		—			28
Net loss		—		—		—		(3,876	)		(3,876	)
Balance, March 31, 2024		1,605,763		2		373,307		(354,271	)		19,038
Stock-based compensation		—		—		15		—			15
Net loss		—		—		—		(4,834	)		(4,834	)
Balance, June 30, 2024		1,605,763	$	2	$	373,322	$	(359,105	)	$	14,219

See notes to unaudited condensed consolidated financial statements.

FINCH THERAPEUTICS GROUP, INC.

Condensed Consolidated Statements of Cash Flows

(Unaudited, in thousands)


	Six Months Ended June 30,
	2024			2023
Cash used in operating activities:
Net loss	$	(8,710	)	$	(69,297	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation expense		87			1,424
Stock-based compensation expense		43			1,480
Impairment of in-process research and development		—			32,900
Impairment of long-lived assets		—			13,141
Gain on lease termination		—			(752	)
Loss on loan extinguishment		—			1,366
Gain on sale and disposal of property and equipment		—			(617	)
Non-cash operating lease and interest cost		1,143			1,939
Benefit for deferred income taxes		—			(3,461	)
Changes in operating assets and liabilities:
Accounts receivable		—			144
Prepaid expenses and other current assets		(521	)		921
Other non-current assets		—			4,033
Accounts payable		(112	)		(664	)
Accrued expenses and other current liabilities		119			(2,676	)
Other non-current liabilities		—			(50	)
Operating lease liabilities		(1,137	)		(2,369	)
Net cash used in operating activities		(9,088	)		(

SEC Form 10-Q filed by Finch Therapeutics Group Inc.