LYRA Lyra Therapeutics Inc

 

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

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: 001-39273

 

Lyra Therapeutics, Inc.

(Exact Name of Registrant as Specified in its Charter)

 

 

Delaware	84-1700838
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
480 Arsenal Way Watertown, MA	02472
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: (617) 393-4600

 

N/A

(Former name, former address and former fiscal year, if changed since last report)

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		LYRA		The Nasdaq Global 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 August 1, 2024, the registrant had 65,456,735 shares of common stock, $0.001 par value per share, outstanding.

 

 

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SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. We intend such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in Section 27A of the Securities Act of 1933, as amended, or the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act. All statements other than statements of historical fact contained in this Quarterly Report on Form 10-Q are forward-looking statements, including but not limited, to statements regarding:

These statements are neither promises nor guarantees, but involve known and unknown risks, uncertainties and other important factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements.

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In some cases, you can identify forward-looking statements by terms such as “may,” “will,” “should,” “expect,” “plan,” “anticipate,” “could,” “intend,” “target,” “project,” “contemplate,” “believe,” “estimate,” “predict,” “potential,” “would” or “continue” or the negative of these terms or other similar expressions, although not all forward-looking statements contain these words or expressions. The forward-looking statements in this Quarterly Report on Form 10-Q are only predictions and are based largely on our current expectations and projections about future events and financial trends that we believe may affect our business, financial condition, and results of operations. These forward-looking statements speak only as of the date of this Quarterly Report on Form 10-Q and are subject to a number of known and unknown risks, uncertainties, and assumptions, including those described under the sections in this Quarterly Report on Form 10-Q entitled “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and elsewhere in this Quarterly Report on Form 10-Q. Because forward-looking statements are inherently subject to risks and uncertainties, some of which cannot be predicted or quantified and some of which are beyond our control, you should not rely on these forward-looking statements as predictions of future events. The events and circumstances reflected in our forward-looking statements may not be achieved or occur and actual results could differ materially from those projected in the forward-looking statements.

Moreover, we operate in an evolving environment. New risk factors and uncertainties may emerge from time to time, and it is not possible for management to predict all risk factors and uncertainties. You should read this Quarterly Report on Form 10-Q and the documents that we reference in 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. We qualify all of our forward-looking statements by these cautionary statements. While we may elect to update such forward-looking statements at some point in the future, we disclaim any obligation to do so, even if subsequent events cause our views to change.

Unless the context requires otherwise, we use the terms “Lyra,” “the Company,” “we,” “us,” “our” and similar designations in this Quarterly Report on Form 10-Q to refer to Lyra Therapeutics, Inc. and its wholly owned subsidiary, Lyra Therapeutics Securities Corporation.

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Summary Risk Factors

Our business is subject to numerous risks and uncertainties, including those described in Part II, Item 1A. “Risk Factors” in this Quarterly Report on Form 10-Q. You should carefully consider these risks and uncertainties when investing in our common stock. The principal risks and uncertainties affecting our business include the following:

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Table of Contents

 

		Page
PART I.	FINANCIAL INFORMATION	2
Item 1.	Condensed Consolidated Financial Statements (unaudited)	2
	Condensed Consolidated Balance Sheets	2
	Condensed Consolidated Statements of Operations and Comprehensive Loss	3
	Condensed Consolidated Statements of Stockholders’ Equity	4
	Condensed Consolidated Statements of Cash Flows	5
	Notes to Condensed Consolidated Financial Statements	6
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	19
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	32
Item 4.	Controls and Procedures	32
PART II.	OTHER INFORMATION	33
Item 1.	Legal Proceedings	33
Item 1A.	Risk Factors	33
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	83
Item 3.	Defaults Upon Senior Securities	83
Item 4.	Mine Safety Disclosures	83
Item 5.	Other Information	83
Item 6.	Exhibits	84
Signatures		85

 

 

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PART I—FINANCIAL INFORMATION

Item 1. Financial Statements.

 

LYRA THERAPEUTICS, INC.

Condensed Consolidated Balance Sheets

(unaudited)

(in thousands, except share data)

 

		June 30,				December 31,
		2024				2023
Assets
Current assets:
Cash and cash equivalents		$	31,905			$	22,353
Short-term investments			35,593				80,400
Prepaid expenses and other current assets			1,937				2,068
Total current assets			69,435				104,821
Property and equipment, net			1,665				2,043
Operating lease right-of-use assets			21,490				33,233
Restricted cash			1,992				1,392
Other assets			—				1,111
Total assets		$	94,582			$	142,600
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable		$	4,971			$	3,131
Restructuring liability			3,127				—
Accrued expenses and other current liabilities			6,095				9,374
Operating lease liabilities			4,269				5,434
Deferred revenue			814				1,658
Total current liabilities			19,276				19,597
Operating lease liabilities, net of current portion			32,479				21,447
Deferred revenue, net of current portion			11,850				12,136
Total liabilities			63,605				53,180
Commitments and contingencies (Note 13)
Stockholders’ equity:
Preferred stock, $0.001 par value, 10,000,000 shares authorized at June 30, 2024    and December 31, 2023; no shares issued and outstanding at June 30, 2024 and    December 31, 2023			—				—
Common stock, $0.001 par value; 200,000,000 shares authorized at    June 30, 2024 and December 31, 2023; 65,455,735 and 57,214,550 shares issued    and outstanding at June 30, 2024 and December 31, 2023, respectively			65				57
Additional paid-in capital			412,854				400,685
Accumulated other comprehensive income (loss), net of tax			(4	)			33
Accumulated deficit			(381,938	)			(311,355	)
Total stockholders’ equity			30,977				89,420
Total liabilities and stockholders’ equity		$	94,582			$	142,600

 

See accompanying notes to unaudited condensed consolidated financial statements.

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LYRA THERAPEUTICS, INC.

Condensed Consolidated Statements of Operations and Comprehensive Loss

(unaudited)

(in thousands, except share and per share data)

		Three Months Ended June 30,								Six Months Ended June 30,
		2024				2023				2024				2023
Collaboration revenue		$	598			$	458			$	1,130			$	868
Operating expenses:
Research and development			13,264				10,799				31,502				23,395
General and administrative			5,139				4,570				10,957				9,697
Impairment of property and equipment			1,883				1,592				1,883				1,592
Impairment of right-of-use assets			22,836				—				22,836				—
Restructuring and other related charges			6,450				—				6,450				—
Total operating expenses			49,572				16,961				73,628				34,684
Loss from operations			(48,974	)			(16,503	)			(72,498	)			(33,816	)
Other income:
Interest income			855				897				1,941				1,969
Total other income			855				897				1,941				1,969
Loss before income tax expense			(48,119	)			(15,606	)			(70,557	)			(31,847	)
Income tax expense			(12	)			(12	)			(26	)			(26	)
Net loss			(48,131	)			(15,618	)			(70,583	)			(31,873	)
Other comprehensive loss:
Unrealized holding loss on short-term investments, net of tax			(29	)			(15	)			(37	)			(37	)
Comprehensive loss		$	(48,160	)		$	(15,633	)		$	(70,620	)		$	(31,910	)
Net loss per share attributable to common stockholders— basic and diluted		$	(0.74	)		$	(0.36	)		$	(1.09	)		$	(0.79	)
Weighted-average common shares outstanding—   basic and diluted			65,459,678				43,676,387				64,739,520				40,273,472

 

See accompanying notes to unaudited condensed consolidated financial statements.

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LYRA THERAPEUTICS, INC.

Condensed Consolidated Statements of Stockholders’ Equity

(unaudited)

(in thousands, except share amounts)

		Common Stock								Additional Paid-In				Accumulated Other Comprehensive				Accumulated				Total Stockholders’
		Shares				Amount				Capital				Loss, net of tax				Deficit				Equity
Balance at December 31, 2022			31,827,659			$	32			$	329,387			$	10			$	(248,675	)		$	80,754
Exercise of common stock options			2,115				—				4				—				—				4
Issuance of common stock upon RSU   vesting			7,041				—				—				—				—				—
Unrealized loss on available-for-sale securities			—				—				—				(22	)			—				(22	)
Stock-based compensation			—				—				1,610				—				—				1,610
Net loss			—				—				—				—				(16,255	)			(16,255	)
Balance at March 31, 2023			31,836,815			$	32			$	331,001			$	(12	)		$	(264,930	)		$	66,091
Issuance of common stock and pre-funded warrants,   net of issuance costs of $3,332			17,652,962			$	18			$	46,650				—				—			$	46,668
Exercise of common stock options			55,262				—				97				—				—				97
Unrealized loss on available-for-sale securities			—				—				—				(15	)			—				(15	)
Stock-based compensation			—				—				1,354				—				—				1,354
Net loss			—				—				—				—				(15,618	)			(15,618	)
Balance at June 30, 2023			49,545,039			$	50			$	379,102			$	(27	)		$	(280,548	)		$	98,577
		Common Stock								Additional Paid-In				Accumulated Other Comprehensive				Accumulated				Total Stockholders’
						Amount				Capital				Loss, net of tax				Deficit				Equity
Balance at December 31, 2023			57,214,550			$	57			$	400,685			$	33			$	(311,355	)		$	89,420
Exercise of common stock options			918				—				3				—				—				3
Shares issued under ATM, net of issuance costs of $150			1,041,666				1				4,849				—				—				4,850
Exercise of pre-funded warrants			1,255,500				1				1				—				—				2
Exercise of common stock warrants			1,424,272				2				3,806				—				—				3,808
Issuance of common stock upon RSU   vesting			27,869				—				—				—				—				—
Unrealized loss on available-for-sale securities			—				—				—				(8	)			—				(8	)
Stock-based compensation			—				—				1,881				—				—				1,881
Net loss			—				—				—				—				(22,452	)			(22,452	)
Balance at March 31, 2024			60,964,775			$	61			$	411,225			$	25			$	(333,807	)		$	77,504
Exercise of pre-funded warrants			4,490,876			$	4			$	4				—				—			$	8
Exercise of common stock options			84				—				—				—				—				—
Unrealized loss on available-for-sale securities			—				—				—				(29	)			—				(29	)
Stock-based compensation			—				—				1,625				—				—				1,625
Net loss			—				—				—				—				(48,131	)			(48,131	)
Balance at June 30, 2024			65,455,735			$	65			$	412,854			$	(4	)		$	(381,938	)		$	30,977

See accompanying notes to unaudited condensed consolidated financial statements.

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LYRA THERAPEUTICS, INC.

Condensed Consolidated Statements of Cash Flows

(unaudited)

(in thousands)

		Six Months Ended June 30,
		2024				2023
Cash flows from operating activities:
Net loss		$	(70,583	)		$	(31,873	)
Adjustments to reconcile net loss to net cash used in operating activities:
Stock-based compensation			3,286				2,964
Depreciation expense			281				261
Impairment of property and equipment			1,883				1,592
Write-off of deferred financing costs			140				—
Impairment of right-of-use assets			22,836				—
Net amortization of premium on short-term investments			(1,608	)			(1,352	)
Changes in operating assets and liabilities:
Prepaid expenses and other current assets			131				1,135
Operating lease right-of-use assets			227				803
Other assets			1,111				(2,527	)
Accounts payable			1,818				3,189
Accrued expenses and other current liabilities			(2,502	)			(2,928	)
Restructuring Liability			3,127				—
Operating lease liabilities			(1,453	)			(528	)
Deferred revenue			(1,130	)			(868	)
Net cash used in operating activities			(42,436	)			(30,132	)
Cash flows from investing activities:
Purchases of property and equipment			(2,345	)			(116	)
Purchases of short-term investments			(35,141	)			(29,930	)
Maturity of short-term investments			81,519				34,800
Net cash provided by investing activities			44,033				4,754
Cash flows from financing activities:
Proceeds from sale of common stock, purchase warrants and pre-funded warrants, net of       issuance costs			8,819				50,000
Payment of deferred offering costs			(267	)			(2,912	)
Proceeds from exercise of stock options			3				101
Net cash provided by financing activities			8,555				47,189
Net increase in cash, cash equivalents and restricted cash			10,152				21,811
Cash, cash equivalents and restricted cash, beginning of period			23,745				33,942
Cash, cash equivalents and restricted cash, end of period		$	33,897			$	55,753
Supplemental disclosure of non-cash financing and investing activities:
Property and equipment purchases included in accounts payable		$	64			$	54
Other assets included in accounts payable and other current liabilities		$	—			$	505
Right of Use Asset in Exchange for Lease Liability		$	13,667			$	—
Prepaid expenses for right-of-use asset included in operating lease liabilities		$	440			$	—
Deferred offering costs included in accounts payable and accrued expenses		$	23			$	420

 

See accompanying notes to unaudited condensed consolidated financial statements.

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