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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, 2022

☐ 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: 001-38663

Gritstone bio, Inc.

(Exact Name of Registrant as Specified in its Charter)


Delaware		47-4859534
(State or Other Jurisdiction of Incorporation or Organization)		(I.R.S. Employer Identification No.)

5959 Horton Street, Suite 300 Emeryville, California		94608
(Address of Principal Executive Offices)		(Zip Code)

(510) 871-6100

(Registrant’s Telephone Number, Including Area Code)

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, $0.0001 par value per share

GRTS

The 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 ☒

As of November 1, 2022, there were 83,366,277 shares of the registrant’s common stock, par value $0.0001 per share, outstanding.

Gritstone bio, Inc.

Table of Contents


		Page
PART I. FINANCIAL INFORMATION		1
Item 1.	Financial Statements (unaudited)	1
	Condensed Consolidated Balance Sheets as of September 30, 2022 and December 31, 2021	1
	Condensed Consolidated Statements of Operations and Comprehensive Loss for the Three and Nine Months Ended September 30, 2022 and 2021	2
	Condensed Consolidated Statements of Stockholders’ Equity for the Three and Nine Months Ended September 30, 2022 and 2021	3
	Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2022 and 2021	5
	Notes to Condensed Consolidated Financial Statements (unaudited)	6
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	32
Item 3.	Quantitative and Qualitative Disclosures About Market Risks	45
Item 4.	Controls and Procedures	45

PART II. OTHER INFORMATION		46
Item 1.	Legal Proceedings	46
Item 1A.	Risk Factors	46
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	46
Item 3.	Defaults Upon Senior Securities	46
Item 4.	Mine Safety Disclosures	46
Item 5.	Other Information	46
Item 6.	Exhibits	47

SIGNATURES		48

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

Gritstone bio, Inc.

Condensed Consolidated Balance Sheets

(Unaudited)

(In thousands, except share amounts and par value)


	September 30,			December 31,
	2022			2021
Assets
Current assets:
Cash and cash equivalents	$	64,909		$	93,287
Marketable securities		74,900			108,346
Restricted cash		6,727			11,285
Prepaid expenses and other current assets		6,891			7,672
Total current assets		153,427			220,590
Long-term restricted cash		5,290			6,005
Property and equipment, net		21,672			21,622
Lease right-of-use assets		19,321			22,920
Deposits and other long-term assets		5,532			2,352
Long-term marketable securities		—			4,617
Total assets	$	205,242		$	278,106
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable	$	2,885		$	4,230
Accrued compensation		6,708			6,925
Accrued liabilities		2,670			411
Accrued research and development expenses		5,037			3,706
Lease liabilities, current portion		6,325			7,483
Deferred revenue, current portion		8,688			17,201
Total current liabilities		32,313			39,956
Other liabilities, noncurrent		49			—
Lease liabilities, net of current portion		16,752			18,936
Deferred revenue, net of current portion		—			3,128
Debt, noncurrent		19,281			—
Total liabilities		68,395			62,020
Commitments and contingencies (Notes 6, 8, and 9)
Stockholders’ equity:
Preferred stock, $0.0001 par value; 10,000,000 shares authorized; no shares issued and outstanding at September 30, 2022 and December 31, 2021		—			—
Common stock, $0.0001 par value; 300,000,000 shares authorized at September 30, 2022 and December 31, 2021; 73,134,051 and 69,047,878 shares issued and outstanding at September 30, 2022 and December 31, 2021, respectively		20			20
Additional paid-in capital		626,889			617,523
Accumulated other comprehensive loss		(281	)		(73	)
Accumulated deficit		(489,781	)		(401,384	)
Total stockholders’ equity		136,847			216,086
Total liabilities and stockholders’ equity	$	205,242		$	278,106

See accompanying notes to the unaudited condensed consolidated financial statements.

Gritstone bio, Inc.

Condensed Consolidated Statements of Operations and Comprehensive Loss

(Unaudited)

(In thousands, except share and per share amounts)


	Three Months Ended September 30,						Nine Months Ended September 30,
	2022			2021			2022			2021
Revenues:
Collaboration and license revenues	$	436		$	2,401		$	7,942		$	44,937
Grant revenues		2,585			213			7,741			213
Total revenues		3,021			2,614			15,683			45,150
Operating expenses:
Research and development		26,436			24,396			81,983			71,324
General and administrative		6,462			6,373			22,209			19,251
Total operating expenses		32,898			30,769			104,192			90,575
Loss from operations		(29,877	)		(28,155	)		(88,509	)		(45,425	)
Interest income		462			37			663			112
Interest expense		(551	)		—			(551	)		—
Net loss		(29,966	)		(28,118	)		(88,397	)		(45,313	)
Other comprehensive gain (loss):
Unrealized gain (loss) on marketable securities		129			(7	)		(208	)		7
Comprehensive loss	$	(29,837	)	$	(28,125	)	$	(88,605	)	$	(45,306	)
Net loss per share, basic and diluted	$	(0.35	)	$	(0.36	)	$	(1.02	)	$	(0.59	)
Weighted-average number of shares used in computing net loss per share, basic and diluted		86,597,405			77,775,497			86,441,212			76,837,503

See accompanying notes to the unaudited condensed consolidated financial statements.

Gritstone bio, Inc.

Condensed Consolidated Statements of Stockholders’ Equity

(Unaudited)

(In thousands, except share amounts)

Three Months Ended September 30, 2022:


	Common Stock				Additional Paid-In		Accumulated Other Comprehensive			Accumulated			Total Stockholders’
	Shares		Amount		Capital		Gain (Loss)			Deficit			Equity
Balance at June 30, 2022		73,006,089	$	20	$	623,583	$	(410	)	$	(459,815	)	$	163,378
Issuance of common stock under the ATM equity offering program, net of issuance costs of $48		95,000		—		197		—			—			197
Issuance of common stock upon exercise of stock options		32,962		—		45		—			—			45
Stock-based compensation		—		—		3,064		—			—			3,064
Unrealized gain on marketable securities		—		—		—		129			—			129
Net loss		—		—		—		—			(29,966	)		(29,966	)
Balance at September 30, 2022		73,134,051	$	20	$	626,889	$	(281	)	$	(489,781	)	$	136,847

Three Months Ended September 30, 2021:


	Common Stock				Additional Paid-In		Accumulated Other Comprehensive			Accumulated			Total Stockholders’
	Shares		Amount		Capital		Gain (Loss)			Deficit			Equity
Balance at June 30, 2021		49,433,361	$	18	$	522,290	$	14		$	(343,497	)	$	178,825
Issuance of common stock under the ATM equity offering program, net of issuance costs of $49		55,062		—		602		—			—			602
Issuance of common stock under private investment in public entity (“PIPE”) financing, net of issuance costs of $2,269		5,000,000		1		52,731		—			—			52,732
Issuance of common stock for warrant exercises		9,555,876		1		39		—			—			40
Issuance of common stock upon exercise of stock options		207,282		—		1,062		—			—			1,062
Stock-based compensation		—		—		2,819		—			—			2,819
Unrealized loss on marketable securities		—		—		—		(7	)		—			(7	)
Net loss		—		—		—		—			(28,118	)		(28,118	)
Balance at September 30, 2021		64,251,581	$	20	$	579,543	$	7		$	(371,615	)	$	207,955

Continued on next page.

See accompanying notes to the unaudited condensed consolidated financial statements.

Gritstone bio, Inc.

Condensed Consolidated Statements of Stockholders’ Equity

(Unaudited)

(In thousands, except share amounts)

Nine Months Ended September 30, 2022:


	Common Stock				Additional Paid-In			Accumulated Other Comprehensive			Accumulated			Total Stockholders’
	Shares		Amount		Capital			Gain (Loss)			Deficit			Equity
Balance at December 31, 2021		69,047,878	$	20	$	617,523		$	(73	)	$	(401,384	)	$	216,086
Issuance of common stock under the ATM equity offering program, net of issuance costs of $48		95,000		—		197			—			—			197
Issuance of common stock for warrant exercises		3,442,567		—		34			—			—			34
Issuance of common stock upon restricted stock units vesting		215,350		—		—			—			—			—
Tax payments related to shares withheld for vested restricted stock units		—		—		(890	)		—			—			(890	)
Issuance of common stock upon exercise of stock options		140,000		—		145			—			—			145
Issuance of common stock under the ESPP		193,256		—		331			—			—			331
Stock-based compensation		—		—		9,549			—