SEC Filing | Silverback Therapeutics Inc

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10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 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, 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 001-39756

Silverback Therapeutics, Inc.

(Exact name of Registrant as specified in its Charter)



Delaware	81-1489190
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

500 Fairview Ave N, Suite 600 Seattle, Washington	98109
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: (206) 456-2900

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, par value $0.0001 per share	SBTX	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 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 November 8, 2021 there were 35,076,083 shares of registrant’s common stock, $0.0001 par value per share, outstanding.

Table of Contents

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

SUMMARY OF RISKS ASSOCIATED WITH OUR BUSINESS



		Page
PART I	FINANCIAL INFORMATION
Item 1.	Financial Statements (Unaudited)	6
	Condensed Balance Sheets	6
	Condensed Statements of Operations and Comprehensive Loss	7
	Condensed Statements of Redeemable Convertible Preferred Stock and Stockholders’ Equity (Deficit)	8
	Condensed Statements of Cash Flows	10
	Notes to Unaudited Condensed Financial Statements	11
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	22
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	31
Item 4.	Controls and Procedures	32

PART II	OTHER INFORMATION
Item 1.	Legal Proceedings	33
Item 1A.	Risk Factors	33
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	81
Item 3.	Defaults Upon Senior Securities	82
Item 4.	Mine Safety Disclosures	82
Item 5.	Other Information	82
Item 6.	Exhibits	83

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q (this “Quarterly Report”) contains forward-looking statements that involve risks and uncertainties. We make such forward-looking statements pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 and other federal securities laws. All statements other than statements of historical facts contained in this Quarterly Report 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,” “would,” or the negative of these words or other comparable terminology. These forward-looking statements include, but are not limited to, statements about:



our plans to research, develop, and commercialize SBT6050 and any future product candidates;



our ability to obtain and maintain regulatory approval of product candidates arising from our ImmunoTAC technology platform, including SBT6050, in any of the indications for which we plan to develop them;



our ability to obtain funding for our operations, including funding necessary to commence and complete the clinical trials, conduct additional manufacturing, and conduct preclinical studies of any of our product candidates, including SBT6050;



the success, cost, and timing of our research and development activities, including our ongoing and planned clinical trials and preclinical studies;



the size of the markets for our product candidates, and our ability to serve those markets;



our ability to successfully commercialize our product candidates;



the rate and degree of market acceptance of our product candidates;



our ability to develop and maintain sales and marketing capabilities, whether alone or with potential future collaborators;



regulatory developments in the United States and foreign countries;



the performance of our third-party service providers, including our contract research organizations, suppliers, and manufacturers;



the safety, efficacy, and market success of competing therapies that are or become available;



our ability to attract and retain key scientific and management personnel;



our ability to attract and retain collaborators with development, regulatory and commercialization expertise;



our expectations regarding the period during which we qualify as an emerging growth company under the Jumpstart Our Business Startups Act of 2012;



the accuracy of our estimates regarding expenses, future revenues, capital requirements and needs for additional financing;



our expectations regarding our ability to obtain and maintain intellectual property protection for our product candidates and our ability to operate our business without infringing upon the intellectual property rights of others;



the impact of the COVID-19 pandemic on our business and operations; and



other risks and uncertainties, including those described under Part II, Item 1A, “Risk Factors” of this Quarterly Report.

Any forward-looking statements in this Quarterly Report reflect our current views with respect to future events or to our future financial performance and involve known and unknown risks, uncertainties and other 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 these forward-looking statements. Factors that may cause actual results to differ materially from current expectations include, among other things, those listed under Part II, Item 1A, “Risk Factors” of this Quarterly Report. Given these uncertainties, you should not place undue reliance on these forward-looking statements. Except as required by law, we assume no obligation to update or revise these forward-looking statements for any reason, even if new information becomes available in the future.

Unless the context otherwise indicates, references in this Quarterly Report to the terms “Silverback”, “the Company”, “we”, “our” and “us” refer to Silverback Therapeutics, Inc., and references to our “common stock” refers to our voting common stock.

SUMMARY OF RISKS ASSOCIATED WITH OUR BUSINESS

An investment in shares of our common stock involves a high degree of risk. Below is a list of the more significant risks associated with our business. This summary does not address all of the risks that we face. Additional discussion of the risks listed in this summary, as well as other risks that we face, are set forth under Part II, Item 1A, “Risk Factors” in this Quarterly Report. Some of the material risks associated with our business include the following:



We have a limited operating history, have incurred net losses since our inception, and anticipate that we will continue to incur significant losses for the foreseeable future. We may never generate any revenue or become profitable or, if we achieve profitability, may not be able to sustain it.



The COVID-19 pandemic could continue to adversely impact our business, including our ongoing and planned clinical trials, supply chain, and business development activities.



Preclinical and clinical development is a lengthy, expensive, and uncertain process. The results of preclinical studies and early clinical trials are not always predictive of future results. Any product candidate that we advance into clinical trials, including SBT6050, may not achieve favorable results in later clinical trials, if any, or receive marketing approval.



Serious adverse events of our product candidates have been observed in our clinical trials, and other serious adverse events, undesirable side effects, or unexpected properties may be observed during development or after approval, which could lead to the discontinuation of our clinical development programs, refusal by regulatory authorities to approve our product candidates or, if discovered following marketing approval, revocation of marketing authorizations or limitations on the use of our product candidates thereby limiting the commercial potential of such product candidate.



The market opportunities for our product candidates may be relatively small as it will be limited to those patients who are ineligible for or have failed prior treatments and our estimates of the prevalence of our target patient populations may be inaccurate.



Our product candidates are based on novel technologies, which make it difficult to predict the timing, results and cost of product candidate development and likelihood of obtaining regulatory approval.



If we are required by the U.S. Food and Drug Administration (FDA) to obtain approval of a companion diagnostic in connection with approval of any of our product candidates, and we do not obtain or face delays in obtaining FDA approval of a diagnostic device or test, we will not be able to commercialize such product candidate and our ability to generate revenue will be materially impaired.



Even if we obtain regulatory approval for our product candidates, they will remain subject to ongoing regulatory oversight. Additionally, our product candidates, if approved, could be subject to labeling and other restrictions on marketing or withdrawal from the market, and we may be subject to penalties if we fail to comply with regulatory requirements or if we experience unanticipated problems with our product candidates, when and if any of them are approved.



We contract with third parties for the manufacture and supply of certain of our product candidates for use in preclinical testing and clinical trials and will rely on third parties for commercial supply, which supply may become limited or interrupted at any time or may not be of satisfactory quality and quantity.



Any approved products may fail to achieve the degree of market acceptance by physicians, patients, hospitals, cancer treatment centers, healthcare payors, and others in the medical community necessary for commercial success.



If the market opportunities for any of our product candidates are smaller than we believe they are, our revenue may be adversely affected, and our business may suffer.



If we are unable to obtain and maintain sufficient intellectual property protection for our platform technologies and product candidates, or if the scope of the intellectual property protection is not sufficiently broad, our competitors could develop and commercialize products similar or identical to ours, and our ability to successfully commercialize our products may be adversely affected.



We may not realize the benefits of any acquisitions, in-license, or strategic alliances that we enter into.



We may rely on trade secret and proprietary know-how, which can be difficult to trace and enforce, and if we are unable to protect the confidentiality of our trade secrets, our business and competitive position would be harmed.



If any of our product candidates are approved for marketing and commercialization and we are unable to establish sales and marketing capabilities or enter into agreements with third parties to sell and market our product candidates, we will be unable to successfully commercialize our product candidates if and when they are approved.



We face substantial competition, which may result in others discovering, developing, or commercializing products more quickly or marketing them more successfully than us.



We are highly dependent on our key personnel, and if we are not successful in attracting and retaining highly qualified personnel, we may not be able to successfully implement our business strategy.



The price of our common stock is subject to volatility related or unrelated to our operations.



We are currently party to an in-license agreement under which we were granted rights to manufacture certain components of our product candidates. If we breach our obligations under these agreements, we may be required to pay damages, lose our rights to these technologies or both, which would adversely affect our business and prospects.

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements (Unaudited)

Silverback Therapeutics, Inc.

Condensed Balance Sheets

(in thousands, except share and par value data)


	September 30,			December 31,
	2021			2020
	(unaudited)
Assets
Current assets:
Cash and cash equivalents	$	300,660		$	386,569
Prepaid expenses and other current assets		4,695			4,087
Total current assets		305,355			390,656
Investments		39,938			—
Restricted cash		350			350
Right-of-use asset		5,011			2,180
Property and equipment, net		1,907			1,618
Total assets	$	352,561		$	394,804
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable	$	1,720		$	2,583
Accrued expenses		12,537			5,278
Term loan payable, net		—			844
Current portion of lease liability		1,090			896
Total current liabilities		15,347			9,601
Lease liability, net of current portion		5,080			2,326
Total liabilities		20,427			11,927
Commitments and contingencies (Note 10)
Stockholders’ equity:
Preferred Stock, $0.0001 par value per share; 10,000,000 shares 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 per share; 200,000,000 shares authorized at September 30, 2021 and December 31, 2020, 35,067,751 and 34,801,537 shares issued and 35,037,136 and 34,701,274 shares outstanding at September 30, 2021 and December 31, 2020, respectively		4			3
Additional paid-in capital		494,916			479,608
Accumulated other comprehensive loss		(34	)		—
Accumulated deficit		(162,752	)		(96,734	)
Total stockholders’ equity		332,134			382,877
Total liabilities, and stockholders’ equity	$	352,561		$	394,804

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

Silverback Therapeutics, Inc.

Condensed Statements of Operations and Comprehensive Loss

(in thousands, except share and per share data)

(unaudited)


	Three Months Ended September 30,						Nine Months Ended September 30,
	2021			2020			2021			2020
Operating expenses:
Research and development	$	15,641		$	6,200			45,630		$	15,740
General and administrative		7,040			1,912			20,447			4,077
Total operating expenses		22,681			8,112			66,077			19,817
Loss from operations		(22,681	)		(8,112	)		(66,077	)		(19,817	)
Interest income (expense), net		26			(4	)		59			(45	)
Net loss	$	(22,655	)	$	(8,116	)		(66,018	)	$	(19,862	)
Unrealized loss on available-for-sale securities		(34	)		—			(34	)		—
Comprehensive loss attributable to common stockholders	$	(22,689	)	$	(8,116	)		(66,052	)	$	(19,862	)
Net loss per share applicable to common stockholders, basic and diluted	$	(0.65	)	$	(11.97	)	$	(1.89	)	$	(29.53	)
Weighted-average shares used in computing net loss per share attributable to common stockholders, basic and diluted		35,001,466			678,048			34,884,656			672,531

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

Silverback Therapeutics, Inc.

Condensed Statements of Redeemable Convertible Preferred Stock and Stockholders’ Equity (Deficit)

(in thousands, except share data)

(unaudited)


	Redeemable Convertible Preferred Stock				Common Stock				Additional Paid-in		Accumulated Other			Accumulated			Total Stockholders’
	Shares		Amount		Shares		Amount		Capital		Comprehensive Income			Deficit			Equity
Balance as of December 31, 2020		—	$	—		34,701,274	$	3	$	479,608	$	—		$	(96,734	)	$	382,877
Exercise of common stock options and vesting of early exercised common stock options		—		—		125,930		—		254		—			—			254
Stock-based compensation		—		—		—		—		4,285		—			—			4,285
Net loss and comprehensive loss		—		—		—		—		—		—			(18,867	)		(18,867	)
Balance as of March 31, 2021		—	$	—		34,827,204	$	3	$	484,147	$	—		$	(115,601	)	$	368,549
Exercise of common stock options, shares issued under the employee stock purchase plan, and vesting of early exercised common stock options		—		—		135,881		1		866		—			—			867
Stock-based compensation		—		—		—		—		4,730		—			—			4,730
Net loss and comprehensive loss		—		—		—		—		—		—			(24,496	)		(24,496	)
Balance as of June 30, 2021		—	$	—		34,963,085	$	4	$	489,743	$	—		$	(140,097	)	$	349,650
Exercise of common stock options and vesting of early exercised common stock options		—		—		74,051		—		154		—			—			154
Stock-based compensation		—		—		—		—		5,019		—			—			5,019
Net loss and comprehensive loss		—		—		—		—		—		(34	)		(22,655	)		(22,689	)
Balance as of September 30, 2021		—	$	—		35,037,136	$	4	$	494,916	$	(34	)	$	(162,752	)	$	332,134

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

Silverback Therapeutics, Inc.

Condensed Statements of Redeemable Convertible Preferred Stock and Stockholders’ Equity (Deficit)

(in thousands, except share data)

(unaudited)


	Redeemable Convertible Preferred Stock				Common Stock				Additional Paid-in		Accumulated Other		Accumulated			Total Stockholders’ 'Equity
	Shares		Amount		Shares		Amount		Capital		Comprehensive Income		Deficit			(Deficit)
Balance as of December 31, 2019		15,714,283	$	53,174		664,431	$	—	$	5,010	$	—	$	(63,787	)	$	(58,777	)
Issuance of Series B redeemable convertible preferred stock for cash, net of $76 in issuance costs (Note 7)		10,027,666		21,458		—		—		—		—		—			—
Issuance of Series B redeemable convertible preferred stock upon conversion of convertible notes		4,673,388		10,095		—		—		—		—		—			—
Exercise of common stock options and vesting of early exercised common stock options		—		—		5,350		—		6		—		—			6
Stock-based compensation		—		—		—		—		47		—		—			47
Net loss and comprehensive loss		—		—		—		—		—		—		(5,279	)		(5,279	)
Balance as of March 31, 2020		30,415,337	$	84,727		669,781	$	—	$	5,063	$	—	$	(69,066	)	$	(64,003	)
Proceeds received in advance of issuance of Series B redeemable convertible preferred stock (Note 7)		—		12,048		—		—		—		—		—			—
Exercise of common stock options and vesting of early exercised common stock options		—		—		1,843		—		2		—		—			2
Stock-based compensation		—		—		—		—		128		—		—			128
Net Loss and comprehensive income		—		—		—		—		—		—		(6,467	)		(6,467	)
Balance as of June 30, 2020		30,415,337	$	96,775		671,624	$	—	$	5,193	$	—	$	(75,533	)	$	(70,340	)
Issuance of Series B convertible preferred stock for cash (Note 7)		21,732,862		34,895		—		—		—		—		—			—
Issuance of Series C convertible preferred stock for cash, net of $53 in issuance cost (Note 7)		24,926,685		84,897		—		—		—		—		—			—
Exercise of common stock options and vesting of early exercised common stock options		—		—		12,754		—		16		—		—			16
Stock-based compensation		—		—		—		—		191		—		—			191
Net loss and comprehensive loss		—		—		—		—		—		—		(8,116	)		(8,116	)
Balance as of September 30, 2020		77,074,884	$	216,567		684,378	$	—	$	5,400	$	—	$	(83,649	)	$	(78,249	)

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

Silverback Therapeutics, Inc.

Condensed Statements of Cash Flows

(in thousands)

(unaudited)


	For the Nine Months Ended September 30,
	2021			2020
Cash flows from operating activities:
Net loss	$	(66,018	)	$	(19,862	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation expense		596			448
Stock-based compensation		14,034			366
Non-cash lease expense		903			797
Amortization of debt issuance costs		2			28
Changes in operating assets and liabilities:
Prepaid expenses and other current assets		(608	)		(313	)
Accounts payable and accrued expenses		6,422			(914	)
Lease liability		(786	)		(650	)
Net cash used in operating activities		(45,455	)		(20,100	)
Cash flows from investing activities:
Purchases of available-for-sale securities		(39,971	)		—
Purchase of property and equipment		(822	)		(670	)
Net cash used in investing activities		(40,793	)		(670	)
Cash flows from financing activities:
Proceeds from issuance of redeemable convertible preferred stock, net of issuance costs		—			153,401
Principal payments on term loan payable		(846	)		(467	)
Proceeds from exercise of common stock options and employee stock purchase plan		1,185			177
Net cash provided by financing activities		339			153,111
Change in cash, cash equivalents, and restricted cash		(85,909	)		132,341
Cash, cash equivalents, and restricted cash at beginning of period		386,919			10,526
Cash, cash equivalents, and restricted cash at end of period	$	301,010		$	142,867
Supplemental disclosure of cash flow information:
Right-of-use assets and lease liabilities recognized	$	3,733		$	—
Deferred offering costs included in accounts payable and accrued liabilities	$	—		$	1,020
Issuance of Series B redeemable convertible preferred stock upon conversion of convertible notes	$	—		$	10,095

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

Silverback Therapeutics, Inc.

Notes to Unaudited Condensed Financial Statements

1. Nature of Business

Silverback Therapeutics, Inc. (“Silverback” or “the Company”) is a clinical-stage biopharmaceutical company focused on leveraging its proprietary ImmunoTAC technology platform to develop systemically delivered and tissue targeted therapeutics for the treatment of cancer, chronic viral infections, and other serious diseases. The Company’s platform enables it to strategically pair proprietary linker-payloads that modulate key disease-modifying pathways with monoclonal antibodies directed at specific disease sites. The Company was formed in Seattle, Washington and incorporated in the state of Delaware on January 4, 2016.

Initial Public Offering and Related Transaction

On December 3, 2020, the Company’s registration statement on Form S-1 (File No. 333-250009) for its initial public offering of common stock (“IPO”) was declared effective by the Securities and Exchange Commission (“SEC”). On December 8, 2020, the Company issued and sold 13,225,000 shares of common stock in the IPO at a public offering price of $21.00 per share, resulting in net proceeds of $255.3 million after deducting underwriting discounts and commissions and offering expenses paid by the Company.

In connection with the IPO, all 77,074,884 shares of redeemable convertible preferred stock outstanding at the time of the IPO converted into 20,758,098 shares of the Company’s common stock.

Risks and Uncertainties

The Company is subject to a number of inherent risks which include, but are not limited to, the need to obtain adequate additional funding, possible failure of clinical trials or other events demonstrating a lack of clinical safety or efficacy of its product candidates, dependence on key personnel, reliance on third-party service providers for manufacturing drug product and conducting clinical trials, the ability to successfully secure its proprietary technology, and risks related to the regulatory approval and commercialization of a product candidate. Additionally, the development and commercialization of new drug products is highly competitive. Products or technologies developed by compe