IRulya Therapeutics Inc 10-Q for FY2025 Q1
IRulya Therapeutics Inc. (IRLA)
10-Q
2025-05-13
For: 2025-03-31
View Original
Added on
April 05, 2026
About this 10-Q
IRulya Therapeutics Inc filed this 10-Q on May 13, 2025, covering the quarter ended March 31, 2025 (FY2025 Q1).
Headline figures
Quarter ended March 31, 2025, as reported in this filing, compared with the same period a year earlier where the filing states it.
- Net loss
- $15.03M
- compared with a net loss of $11.15M a year earlier
- Diluted EPS
- -$0.34
- compared with -$0.26 a year earlier
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 March 31, 2025
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: 001-38890
________________________________________________________
(Exact name of registrant as specified in its charter)
________________________________________________________
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | ||||
| (Address of principal executive offices) | (Zip Code) | ||||
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 | ||||||||||||
Securities registered pursuant to Section 12(g) of the Act: None
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 x No o
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 x No o
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 | o | Accelerated filer | o | |||||||||||
| x | 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. o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No x
As of May 6, 2025, the registrant had 45,468,782 shares of common stock, $0.001 par value per share, outstanding.
Table of Contents
| Page | ||||||||
Item 1. | ||||||||
PART II. | OTHER INFORMATION | |||||||
Item 1. | ||||||||
Item 2. | ||||||||
Item 3. | ||||||||
Item 4. | ||||||||
Item 5. | ||||||||
Item 6. | ||||||||
1
Special Note Regarding Forward-Looking Statements
This Quarterly Report on Form 10-Q contains forward-looking statements. All statements other than statements of historical facts contained in this report, including statements regarding our future results of operations and financial position, business strategy, drug candidates, planned preclinical studies and clinical trials, research and development costs, regulatory approvals, timing and likelihood of success, as well as plans and objectives of management for future operations, are forward-looking statements. In some cases, forward-looking statements may be identified by words such as "believe," "may," "will," "estimate," "continue," "anticipate," "intend," "could," "would," "expect," "objective," "plan," "potential," "seek," "grow," "target," "if," and similar expressions intended to identify forward-looking statements.
We have based these forward-looking statements largely on our current expectations and projections about future events and trends that we believe may affect our financial condition, results of operations, business strategy, short-term and long-term business operations and objectives and financial needs. These forward-looking statements are subject to known and unknown risks, uncertainties and assumptions, including risks described in the section titled “Risk Factors” set forth in Part II, Item 1A of this Quarterly Report on Form 10-Q and in our other filings with the Securities and Exchange Commission (the "SEC"). 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 future events and trends discussed in this Quarterly Report on Form 10-Q may not occur, and actual results may differ materially and adversely from those anticipated or implied in the forward-looking statements. Forward-looking statements contained in this Quarterly Report on Form 10-Q include, but are not limited to, statements about:
•our ability to successfully execute on our current strategic direction;
•future research and development activities, including the scope, success, cost and timing of any future development activities, preclinical studies and clinical trials, including clinical trials of eDSP or other pipeline compounds we advance through the drug development process;
•the timing and focus of any potential future clinical trials, and the reporting of data from those trials;
•our ability and timing of seeking and obtaining FDA and any other regulatory approvals for our drug candidates;
•the willingness of the FDA or other regulatory authorities to accept any future completed or planned clinical and preclinical studies and other work, as the basis for review and approval of our drug candidates for their respective indications;
•whether regulatory authorities determine that additional trials or data are necessary in order to accept a new drug application for review and/or approval;
•the ability of any future clinical trials to demonstrate safety and efficacy of eDSP and other drug candidates, and other positive results;
•our financial performance;
•our ability to continue as a going concern, the sufficiency of our existing cash and cash equivalents to fund our future operating expenses and capital expenditure requirements;
•the accuracy of our estimates regarding expenses, future revenue, capital requirements, and needs for additional financing;
•our expectations related to the use of our available cash;
•our ability to service our debt obligations and maintain compliance with associated covenants;
•our ability to obtain funding for our operations, including funding necessary to develop and commercialize our drug candidates;
•our expectations regarding the potential market size and the size of the patient populations for our drug candidates, if approved for commercial use, and the potential market opportunities for commercializing our drug candidates;
•our plans relating to commercializing our drug candidates, if approved;
•our plans and ability to establish sales, marketing and distribution infrastructure to commercialize any drug candidates for which we obtain approval;
2
•our ability to attract and retain key scientific and clinical personnel;
•our ability to contract with third-party suppliers and manufacturers and their ability to perform adequately;
•our reliance on third parties to conduct clinical trials of our drug candidates, and for the manufacture of our drug candidates for preclinical studies and clinical trials;
•dependence upon the integrity of our supply chain, including multiple single-source suppliers;
•our reliance on third-party suppliers for certain of our raw materials and components;
•our ability to expand our drug candidates into additional indications and patient populations;
•the success of competing therapies that are or may become available;
•the beneficial characteristics, safety and efficacy of our drug candidates;
•governmental or regulatory delays, information requests, clinical holds, and regulatory developments in the United States and other jurisdictions;
•our ability to obtain and maintain regulatory approval of our drug candidates, and any related restrictions, limitations and/or warnings in the label of any approved drug candidate;
•our ability to obtain and maintain CE Certificates of conformity for the medical device components of our eDSP System in accordance with applicable legislation governing medical devices;
•our ability to transition CE Certifications under the previous Medical Device Directive, to a regulatory framework under MDR;
•our plans and ability to obtain or protect intellectual property rights, including extensions of existing patent terms where available;
•the scope of protection we are able to establish and maintain for intellectual property rights covering our drug candidates and technology;
•potential claims relating to our intellectual property;
•our ability to grow our organization and increase the size of our facilities to meet our anticipated growth; and
•our ability to maintain compliance with Nasdaq listing requirements.
We caution you that the foregoing list may not contain all of the forward-looking statements made in this Quarterly Report on Form 10-Q.
You should not rely upon forward-looking statements as predictions of future events. The events and circumstances reflected in the forward-looking statements may not be achieved or occur. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. Except as required by law, we do not intend to update any of these forward-looking statements after the date of this Quarterly Report on Form 10-Q or to conform these statements to actual results or revised expectations.
You should read this Quarterly Report on Form 10-Q with the understanding that our actual future results, levels of activity, performance and events and circumstances may be materially different from what we expect.
This Quarterly Report on Form 10-Q contains estimates, projections and other information concerning our industry, our business and the markets for our drug candidates. We obtained the industry, market and similar data set forth in this report from our own internal estimates and research and from academic and industry research, publications, surveys and studies conducted by third parties, including governmental agencies. Information that is based on estimates, forecasts, projections, market research or similar methodologies is inherently subject to uncertainties and actual events or circumstances may differ materially from events and circumstances that are assumed in this information. While we believe that the data we use from third parties are reliable, we have not separately verified these data. Further, while we believe our internal research is reliable, such research has not been verified by any third party. You are cautioned not to give undue weight to any such information, projections and estimates.
3
DEFINED TERMS
Unless the context requires otherwise, references to “Quince,” “the Company,” “we,” “us,” or “our” in this Quarterly Report on Form 10-Q refer to Quince Therapeutics, Inc. and its consolidated subsidiaries. We also have used several other terms in this Quarterly Report on Form 10-Q, most of which are explained or defined below.
| Abbreviated Term | Defined Term | ||||
| AIDE | Autologous Intracellular Drug Encapsulation | ||||
| ASC | Accounting Standards Codification | ||||
| ASU | Accounting Standards Update | ||||
| A-T | Ataxia-Telangiectasia | ||||
| ATTeST | Ataxia Telangiectasia Trial with the eDSP System | ||||
| the Code | Internal Revenue Code of 1986, as amended | ||||
CODM | Chief Operating Decision Maker | ||||
| COVID-19 | Coronavirus disease | ||||
| Credits | Tax credits | ||||
| CRO | Contract Research Organization | ||||
CTR | European Union pharmaceutical legislation known as the Clinical Trials Regulation | ||||
Debt Agreement | Unsecured line of credit agreement between EryDel and the European Investment Bank, which the Company guaranteed on October 20, 2023 in connection with the EryDel Acquisition | ||||
| DMD | Duchenne muscular dystrophy | ||||
| DSP | Dexamethasone Sodium Phosphate | ||||
| EC | European Commission | ||||
| EryDel | Quince Therapeutics, S.p.A (previously named EryDel S.p.A.) | ||||
| eDSP | Encapsulated dexamethasone sodium phosphate encapsulated in patient's own red blood cells (previously referred to as EryDex) | ||||
eDSP System | Automated combination product to encapsulate dexamethasone sodium phosphate in red blood cells | ||||
EIB | European Investment Bank | ||||
| EU | European Union | ||||
EIB Loan | Unsecured line of credit between EryDel and the European Investment Bank | ||||
| Exchange Act | Securities Exchange Act of 1934, as amended | ||||
| FASB | Financial Accounting Standards Board | ||||
| FDA | United States Food and Drug Administration | ||||
| GAAP | generally accepted accounting principles in the United States | ||||
| GMP | Good Manufacturing Practice | ||||
| HHS | United States Department of Health and Human Services | ||||
| ICARS | International Cooperative Ataxia Rating Scale | ||||
| IPR&D | In-process Research and Development | ||||
| IRA | Inflation Reduction Act of 2022 | ||||
| Lighthouse | Lighthouse Pharmaceuticals, Inc. | ||||
| MAA | Marketing Authorization Application | ||||
| MDR | Medical Devices Regulation 2017/745 | ||||
| MPEEM | Multi-Period Excess Earnings Method | ||||
| Nasdaq | The Nasdaq Stock Market LLC | ||||
| NDA | New Drug Application | ||||
4
| NEAT | eDSP Phase 3 Clinical Trial (Neurological Effects of eDSP on Subjects with A-T) | ||||
| Novosteo | Novosteo, Inc. | ||||
OLE | Open-Label Extension Clinical Trial | ||||
| PD | Pharmacodynamic | ||||
| PK | Pharmacokinetic | ||||
| PRF | Purdue Research Foundation | ||||
| R&D | Research and Development | ||||
| RBC | Red Blood Cell | ||||
| RSA | Restricted Stock Awards | ||||
| RSU | Restricted Stock Units | ||||
| SAE | Serious Adverse Event | ||||
| Sarbanes-Oxley Act | The Sarbanes-Oxley Act of 2002 | ||||
| SEC | United States Securities and Exchange Commission | ||||
| Securities Act | Securities Act of 1933 | ||||
| SPA | Special Protocol Assessment | ||||
5
PART I—FINANCIAL INFORMATION
Item 1. Financial Statements.
QUINCE THERAPEUTICS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In thousands except share amounts)
| March 31, 2025 | December 31, 2024 | ||||||||||
| ASSETS | |||||||||||
| Current assets: | |||||||||||
| Cash and cash equivalents | $ | $ | |||||||||
| Short-term investments | |||||||||||
| Prepaid expenses and other current assets | |||||||||||
| Total current assets | |||||||||||
| Property and equipment, net | |||||||||||
| Operating lease right-of-use assets | |||||||||||
| Intangible assets | |||||||||||
| Other assets | |||||||||||
| Total assets | $ | $ | |||||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||||||
| Current liabilities: | |||||||||||
| Accounts payable | $ | $ | |||||||||
| Accrued expenses and other current liabilities | |||||||||||
| Total current liabilities | |||||||||||
| Long-term debt | |||||||||||
| Long-term operating lease liabilities | |||||||||||
| Long-term contingent consideration | |||||||||||
| Deferred tax liabilities | |||||||||||
| Other long-term liabilities | |||||||||||
| Total liabilities | |||||||||||
| Stockholders’ equity: | |||||||||||
Preferred stock, $ | |||||||||||
Common stock, $ | |||||||||||
| Additional paid in capital | |||||||||||
| Accumulated other comprehensive income (loss) | ( | ||||||||||
| Accumulated deficit | ( | ( | |||||||||
| Total stockholders’ equity | |||||||||||
| Total liabilities and stockholders’ equity | $ | $ | |||||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
1
QUINCE THERAPEUTICS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(Unaudited)
(In thousands, except share and per share amounts)
| Three Months Ended March 31, | |||||||||||||||||||||||
| 2025 | 2024 | ||||||||||||||||||||||
| Operating expenses: | |||||||||||||||||||||||
| Research and development | $ | $ | |||||||||||||||||||||
| General and administrative | |||||||||||||||||||||||
| Fair value adjustment for contingent consideration | |||||||||||||||||||||||
| Total operating expenses | |||||||||||||||||||||||
| Loss from operations | ( | ( | |||||||||||||||||||||
| Fair value adjustment for long-term debt | ( | ( | |||||||||||||||||||||
| Interest income | |||||||||||||||||||||||
| Other expense, net | ( | ( | |||||||||||||||||||||
| Net loss before provision for income taxes | ( | ( | |||||||||||||||||||||
| Income tax expense | ( | ( | |||||||||||||||||||||
| Net loss | ( | ( | |||||||||||||||||||||
| Other comprehensive loss: | |||||||||||||||||||||||
| Foreign currency translation adjustments | ( | ||||||||||||||||||||||
Unrealized gain (loss) on available-for-sale securities | ( | ||||||||||||||||||||||
| Total comprehensive loss | $ | ( | $ | ( | |||||||||||||||||||
| Net loss per share - basic and diluted | $ | ( | $ | ( | |||||||||||||||||||
| Weighted average shares of common stock outstanding - basic and diluted | |||||||||||||||||||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
2
QUINCE THERAPEUTICS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(Unaudited)
(In thousands, except share and per share amounts)
| For the three months ended March 31, 2025 and 2024 | ||||||||||||||||||||||||||||||||||||||
| Common Stock | Additional Paid in | Accumulated Other Comprehensive Income / (Loss) | Accumulated Deficit | Total Stockholders' Equity | ||||||||||||||||||||||||||||||||||
| Shares | Amount | |||||||||||||||||||||||||||||||||||||
| Balance as of December 31, 2024 | $ | $ | $ | ( | $ | ( | $ | |||||||||||||||||||||||||||||||
| Issuance of common stock on exercise of stock options | — | — | — | |||||||||||||||||||||||||||||||||||
| Stock based compensation | — | — | — | — | ||||||||||||||||||||||||||||||||||
| Foreign currency translation adjustment | — | — | — | — | ||||||||||||||||||||||||||||||||||
| Unrealized gain (loss) on available for sale investments | — | — | — | ( | — | ( | ||||||||||||||||||||||||||||||||
| Net loss | — | — | — | — | ( | ( | ||||||||||||||||||||||||||||||||
| Balance as of March 31, 2025 | $ | $ | $ | $ | ( | $ | ||||||||||||||||||||||||||||||||
| Balance as of December 31, 2023 | $ | $ | $ | $ | ( | $ | ||||||||||||||||||||||||||||||||
| Issuance of common stock on exercise of stock options | — | — | — | |||||||||||||||||||||||||||||||||||
| Stock based compensation | — | — | — | — | ||||||||||||||||||||||||||||||||||
| Foreign currency translation adjustment | — | — | — | ( | — | ( | ||||||||||||||||||||||||||||||||
| Unrealized gain (loss) on available for sale investments | — | — | — | — | ||||||||||||||||||||||||||||||||||
| Net loss | — | — | — | — | ( | ( | ||||||||||||||||||||||||||||||||
| Balance as of March 31, 2024 | $ | $ | $ | $ | ( | $ | ||||||||||||||||||||||||||||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
3
QUINCE THERAPEUTICS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In thousands)
Three Months Ended March 31, | |||||||||||
| 2025 | 2024 | ||||||||||
| Cash flows from operating activities | |||||||||||
| Net Loss | $ | ( | $ | ( | |||||||
| Adjustments to reconcile net loss to net cash used in operating activities: | |||||||||||
| Stock based compensation | |||||||||||
| Depreciation and amortization | |||||||||||
| Change in the fair value of contingent consideration liabilities | |||||||||||
| Change in fair value of long-term debt | |||||||||||
| Amortization of discount on available-for-sale investments | ( | ( | |||||||||
| Changes in operating assets and liabilities, net of acquisitions: | |||||||||||
| Prepaid expenses and other current assets | ( | ||||||||||
| Right of use assets, operating leases and operating lease liabilities | ( | ||||||||||
| Other assets | ( | ||||||||||
| Accounts payable | |||||||||||
| Accrued expenses and other current liabilities | ( | ||||||||||
| Net cash used in operating activities | ( | ( | |||||||||
| Cash flow from investing activities: | |||||||||||
| Purchase of investments | ( | ( | |||||||||
| Proceeds from maturities of investments | |||||||||||
| Purchase of property and equipment | ( | ( | |||||||||
| Net cash provided by investing activities | |||||||||||
| Cash flows from financing activities: | |||||||||||
| Proceeds from issuance of common stock upon exercise of stock options | |||||||||||
| Net cash provided by financing activities | |||||||||||
| Effect of exchange rate changes on cash | |||||||||||
Net increase in cash and cash equivalents | |||||||||||
Cash and cash equivalents at beginning of period | |||||||||||
| Cash and cash equivalents at end of period | $ | $ | |||||||||
Supplemental disclosures of cash flow information: | |||||||||||
Cash interest payment on long-term debt | ( | ||||||||||
| Right-of-use assets obtained in exchange for new operating lease liabilities | $ | ||||||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
4
QUINCE THERAPEUTICS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
Note 1. Organization
Description of Business
Quince Therapeutics, Inc. is a late-stage biotechnology company dedicated to unlocking the power of a patient’s own biology for the treatment of rare diseases.
The Company's proprietary AIDE technology is an innovative drug/device combination platform that uses an automated process to encapsulate a drug into a patient’s own red blood cells. Our Phase 3 lead asset, eDSP, leverages the AIDE technology to encapsulate DSP into a patient’s own red blood cells, and is targeted to treat a rare pediatric neurodegenerative disease, A-T.
Liquidity and Capital Resources
The Company has incurred losses and negative cash flows from operations since inception and expects to continue to generate operating losses for the foreseeable future. As of March 31, 2025, the Company had an accumulated deficit of $391.5 million. Since inception through March 31, 2025, the Company has funded operations primarily with the net proceeds from the issuance of convertible promissory notes, from the issuance of redeemable convertible preferred stock, from the net proceeds from the Company’s initial public offering (the “IPO”) and from the net proceeds of the private investment in public equity transaction (“PIPE Financing”). As of March 31, 2025, the Company had cash, cash equivalents, and short-term investments of $31.6 million.
The Company evaluated whether there are conditions and events, considered in the aggregate, that raise substantial doubt about our ability to continue as a going concern within one year after the date that these unaudited condensed consolidated financial statements are issued. The transition to profitability is dependent upon the successful development, approval and commercialization of our product candidate, and the achievement of a level of revenues adequate to support our cost structure. Based on its current operating plan, the Company believes that its cash and cash equivalents balance as of March 31, 2025 will not be sufficient to fund operations and capital expenditures for at least the twelve months following the issuance of these unaudited condensed consolidated financial statements, and the Company will need to obtain additional funding. The Company intends to obtain additional funding through available financing sources which may include additional public offerings of common stock, private financing of debt or equity, and/or the pursuit of strategic partnerships, licensing arrangements or collaborations. Management’s belief with respect to the Company's ability to fund operations is based on estimates that are subject to risks and uncertainties. If actual results are different from management’s estimates, the Company may need to seek additional funding sooner than would otherwise be expected. There can be no assurance that the Company will be able to obtain additional funding on acceptable terms, if at all. If the Company is unable to obtain sufficient funding, it may be required to delay development efforts, limit activities and reduce research and development costs, which could adversely affect its business prospects. Because of the uncertainty in securing additional funding and the insufficient amount of cash and cash equivalent resources as of March 31, 2025, management concluded that substantial doubt exists with respect to the Company's ability to continue as a going concern within one year after the date that these unaudited condensed consolidated financial statements are issued.
The accompanying unaudited condensed consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and satisfaction of liabilities in the ordinary course of business. The unaudited condensed consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might result from the outcome of this uncertainty.
In connection with the acquisition of EryDel on October 20, 2023 (the “EryDel Acquisition”), the Company became a guarantor in respect of an unsecured line of credit between EryDel and the European Investment Bank (the “EIB Loan” or “Debt Agreement” ). As of March 31, 2025, the Company had 10.0 million euros ($10.8 million) outstanding on the EIB Loan, with an original requirement to maintain a minimum cash balance of 14.65 million euros ($15.8 million) until full repayment (the “Minimum Cash Covenant”). The Company could voluntarily prepay, and in cases of default or change in control, EIB could accelerate the debt. In November 2024, the Company amended the Debt Agreement (the “Amendment”), waiving the Minimum Cash Covenant from January 1, 2025, to December 31, 2025, or until its restoration. As of March 31, 2025, the Minimum Cash Covenant had not been restored. Under the terms of the Amendment, the
5
Company agreed to amendments requiring monthly cash balance reporting, restrictions on acquisitions, quarterly payments of 2 % out of the total 9 % deferred interest during the waiver period, and a one-time fee of 20 thousand euros ($22 thousand).
Management expects to incur additional losses in the future to fund the Company's operations and conduct product research and development and may need to raise additional capital to fully implement its business plan. The Company may raise additional capital through the issuance of equity securities, debt financings or other sources including out-licensing or partnerships, in order to further implement its business plan. However, if such financing is not available when needed and at adequate levels, the Company will need to reevaluate its operating plan and may be required to delay the development of product candidates.
Note 2. Summary of Significant Accounting Policies
Basis of Consolidation
The accompanying unaudited condensed consolidated financial statements include the accounts of Quince Therapeutics, Inc. and its wholly owned subsidiaries. All intercompany balances and transactions have been eliminated upon consolidation.
Basis of Presentation
The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with GAAP for interim financial information and pursuant to the instructions of the SEC on Form 10-Q and Article 8 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the management’s opinion, all adjustments (consisting only of normal recurring adjustments) considered necessary for a fair presentation of the results of operations and cash flows for the periods presented have been included.
The condensed consolidated balance sheet as of March 31, 2025, the condensed consolidated statements of operations and comprehensive loss for the three months ended March 31, 2025 and 2024, the condensed consolidated statements of stockholders’ equity for the three months ended March 31, 2025 and 2024, the condensed consolidated statements of cash flows for the three months ended March 31, 2025 and 2024, and the financial data and other financial information disclosed in the notes to the condensed consolidated financial statements are unaudited. These financial statements should be read in conjunction with the audited financial statements and notes thereto for the year ended December 31, 2024 included in the Company’s Form 10-K filed with the SEC on March 24, 2025. The results of operations for the three months ended March 31, 2025 are not necessarily indicative of the results to be expected for the year ending December 31, 2025 or for any other future annual or interim period.
Risks and Uncertainties
Use of Estimates
The preparation of the Company’s consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, and expenses, as well as related disclosure of contingent assets and liabilities. The most significant estimates used in the Company’s consolidated financial statements relate to the determination of the fair value of identifiable assets and liabilities in connection with business combinations including associated intangible assets and goodwill, contingent consideration, accruals for research and development costs, useful lives of long-lived assets, stock-based compensation and related assumptions, the incremental borrowing rate for leases and income tax uncertainties, including a valuation allowance for deferred tax assets, eligibility of expenses for the Australia research and development refundable tax credits, impairment of intangible assets, including
6
goodwill; and contingencies. The Company bases its estimates on historical experience and on various other market specific and other relevant assumptions that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results could differ materially from the Company’s estimates.
Foreign Currency Translation and Transactions
The functional currency of the Company’s wholly-owned subsidiaries are the Euro and Australian Dollar. The Company's financial results and financial position are translated into U.S. dollars using exchange rates at balance sheet dates for assets and liabilities and using average exchange rates for income and expenses. The resulting translation differences are presented as a separate component of accumulated other comprehensive income (loss), as a separate component of equity.
Foreign currency transactions are translated into the functional currencies using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses, resulting from the settlement of such transactions and from the re-measurement of monetary assets and liabilities denominated in foreign currencies using exchange rates at balance sheet date and non-monetary assets and liabilities using historical exchange rates, are recognized in the condensed consolidated statements of operations and comprehensive loss.
Segment Information
The Company manages its business activities on a consolidated basis and operates as one
Intangible Assets
Definite lived Intangible Assets
Intangible assets with a definite useful life are amortized on a straight-line basis over the estimated useful life of the related assets. The Company regularly reviews whether current conditions or events suggest that the carrying values of its acquired definite lived intangible assets might not be recoverable. When such conditions are identified, an estimate of the undiscounted future cash flows from these assets, or relevant asset groupings, is compared to their carrying value to determine if an impairment exists. If an impairment is identified, the loss is calculated as the difference between the carrying value of the intangible asset and its fair value, which is based on the net present value of the estimated future cash flows.
Indefinite lived Intangible Assets
Intangible assets with an indefinite useful life are not amortized. Intangible assets acquired in a business combination or an acquisition that are used in research and development activities (regardless of whether they have an alternative future use) shall be considered indefinite lived until the completion or abandonment of the associated research and development efforts. Intangible assets acquired in a business combination are initially recorded at fair value. During the period that those assets are considered indefinite lived, they shall not be amortized but shall be tested for impairment. Once the research and development efforts are completed or abandoned, the entity shall determine the useful life of the assets. An indefinite lived intangible asset shall be tested for impairment annually and more frequently if events or changes in circumstances indicate that it is more likely than not that the asset is impaired. The Company first assesses qualitative factors to determine whether it is more likely than not that the fair value of the intangible asset is less than its carrying amount. If that is the case, the Company performs a quantitative impairment test, and, if the carrying amount of the Company exceeds its fair value, then
7
the Company will recognize an impairment charge for the amount by which its carrying amount exceeds its fair value, not to exceed the carrying amount of the intangible asset. Qualitative factors to be considered include but are not limited to:
•Cost factors such as increases in raw materials, labor, or other costs that have a negative effect on future expected earnings and cash flows
•Legal/regulatory factors or progress and results of clinical trials
•Other relevant entity-specific events such as changes in management, key personnel, strategy, or customers; contemplation of bankruptcy; or litigation that could affect significant inputs used to determine the fair value of the indefinite-lived intangible asset
•Industry and market considerations such as a deterioration in the environment in which an entity operates, an increased competitive environment
•Macroeconomic conditions such as deterioration in general economic conditions, limitations on accessing capital, fluctuations in foreign exchange rates, or other developments in equity and credit markets that could affect significant inputs used to determine the fair value of the indefinite-lived intangible asset.
Contingent Consideration
Cash, Cash Equivalents and Investments
The Company considers all highly liquid investments with maturities of three months or less when purchased to be cash equivalents. Cash equivalents include marketable securities. Management determines the appropriate classification of its investments in debt securities at the time of purchase and at the end of each reporting period. Investments with maturities beyond three months at the date of purchase and which mature at, or less than twelve months from the balance sheet date are classified as short-term investments. Collectively, cash equivalents, short-term investments and long-term investments are considered available-for-sale and are recorded at fair value. Unrealized gains and losses are recorded as a component of other comprehensive income (loss) in the consolidated statements of operations and included as a separate component of consolidated statements of stockholders’ equity. Realized gains and losses are included in interest income in the consolidated statements of operations and comprehensive loss.
Premiums (discounts) are amortized (accreted) over the life of the related investment as an adjustment to yield using the straight-line interest method. Dividend and interest income are recognized when earned. These amounts are recorded in “interest income” in the consolidated statements of operations and comprehensive loss.
8
Recently Adopted Accounting Pronouncements
There were no new accounting standards adopted during the three months ended March 31, 2025.
Recent Accounting Pronouncements Not Yet Adopted
The following are new accounting pronouncements that the Company is evaluating for future impacts on its financial statements:
ASU 2023-09, Improvements to Income Tax Disclosures (ASC 740). In December 2024, the FASB issued this ASU to establish new income tax disclosure requirements in addition to modifying and eliminating certain existing requirements. Under this ASU, entities must consistently categorize and provide greater disaggregation of information in the rate reconciliation. They must also further disaggregate income taxes paid. The ASU is effective beginning after December 2025 under a prospective approach. Early adoption is permitted. The Company is evaluating the disclosure requirements related to the new standard.
ASU 2024-03, Disaggregation of Income Statement Expenses (“DISE”). In November 2024, the FASB issued a new accounting standard to improve the disclosures about an entity’s expenses and address requests from investors for more detailed information about the types of expenses included in commonly presented expense captions. The new standard is effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027, with retrospective application permitted. The Company is evaluating the disclosure requirements related to the new standard.
All other newly issued accounting pronouncements not yet effective have been deemed either immaterial or not applicable.
Note 3. Fair Value Measurements
The fair value of the Company's financial instruments reflects the amounts that the Company estimates that it would receive in connection with the sale of an asset or pay in connection with the transfer of a liability in an orderly transaction between market participants at the measurement date (exit price). The Company discloses and recognizes the fair value of the assets and liabilities using a hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to valuations based upon unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to valuations based upon unobservable inputs that are significant to the valuation (Level 3 measurements). The guidance establishes three levels of the fair value hierarchy as follows:
Level 1 - Inputs that reflect unadjusted quoted prices in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date.
Level 2 - Inputs other than quoted prices that are observable for the assets or liability either directly or indirectly, including inputs in markets that are not considered to be active.
Level 3 - Inputs that are unobservable. Assets and liabilities measured at fair value are classified in their entirety based on the lowest level of input that is significant to the fair value measurement.
The Company's financial instruments are carried in the accompanying consolidated balance sheets at amounts that approximate fair value.
The Company's assessment of the significance of a particular input to the fair value measurement in its entirety requires management to make judgments and consider factors specific to the asset or liability. The Company recognizes transfers between levels of the fair value hierarchy as of the end of the reporting period. There were no transfers within the hierarchy during the three months ended March 31, 2025 and year ended December 31, 2024.
The Company elected the fair value option for the EIB Loan guaranteed by the Company in connection with the EryDel Acquisition. The Company adjusted the EIB Loan to fair value through the change in fair value of debt in the accompanying consolidated statements of operations and comprehensive loss. Subsequent unrealized gains and losses on items for which the fair value option is elected are reported in earnings. The Company will breakout any change in value
9
due to credit loss in accumulated other comprehensive loss. For the three months ended March 31, 2025 and year ended December 31, 2024, there was no change in value due to credit loss.
Financial assets and liabilities subject to fair value measurements on a recurring basis and the level of inputs used in such measurements by major security type as of March 31, 2025 and December 31, 2024 are presented in the following tables (in thousands):
Fair Value Measurements as of March 31, 2025 | |||||||||||||||||||||||
| Total | Level 1 | Level 2 | Level 3 | ||||||||||||||||||||
| Assets: | |||||||||||||||||||||||
| Money market funds | $ | $ | $ | $ | |||||||||||||||||||
| Government and agency notes | |||||||||||||||||||||||
| Total Assets | $ | $ | $ | $ | |||||||||||||||||||
| Liabilities: | |||||||||||||||||||||||
| Contingent consideration | |||||||||||||||||||||||
| Long-term debt | |||||||||||||||||||||||
| Total | $ | $ | $ | $ | |||||||||||||||||||
| Fair Value Measurements as of December 31, 2024 | |||||||||||||||||||||||
| Total | Level 1 | Level 2 | Level 3 | ||||||||||||||||||||
| Assets: | |||||||||||||||||||||||
| Money market funds | $ | $ | $ | $ | |||||||||||||||||||
| Government and agency notes | |||||||||||||||||||||||
| Total Assets | $ | $ | $ | $ | |||||||||||||||||||
| Liabilities: | |||||||||||||||||||||||
| Contingent consideration | |||||||||||||||||||||||
| Long-term debt | |||||||||||||||||||||||
| Total | $ | $ | $ | $ | |||||||||||||||||||
The Company classifies government and agency notes as Level 2 investments as the Company uses quoted prices for similar assets sourced from certain third-party pricing services. The third-party pricing services generally utilize industry standard valuation models for which all significant inputs are observable, either directly or indirectly, to estimate the price or fair value of the securities. The primary input generally includes reported trades of or quotes on the same or similar securities. The Company does not make additional judgments or assumptions made to the pricing data sourced from the third-party pricing services.
Level 3 Assets and Liabilities
Contingent Consideration
The following table reflects the changes in present value of acquisition related accrued earnouts of contingent consideration liability using significant unobservable inputs (Level 3) for the three months ended March 31, 2025 and 2024:
| 2025 | 2024 | ||||||||||
Beginning contingent consideration balance, December 31 | $ | $ | |||||||||
| Change in fair value of contingent consideration | |||||||||||
Ending contingent consideration balance, March 31 | $ | $ | |||||||||
To estimate the fair value of the contingent consideration, the Company used a probability-weighted discounted cash flow model with an expected present value valuation technique with significant unobservable fair value inputs and is therefore classified as a Level 3 measurement. The estimates of fair value are uncertain and changes in the estimated inputs may result in significant adjustments to the fair value. The unobservable inputs consisted of the expected timing of milestone
10
completion dates, probability of achievement, and discount rate. The change in the fair value of the contingent consideration is primarily driven by the passage of time related to the contingent consideration earnout.
The following table summarizes the assumptions used in the valuation of the contingent consideration (in thousands except for percentages):
| March 31, 2025 | December 31, 2024 | ||||||||||
| Expected timing of milestones completion dates | 2026 - 2038 | 2026 - 2038 | |||||||||
Discount rate | |||||||||||
Probability of achievement | |||||||||||
Long-term Debt
The following table presents the changes in the fair value of the Level 3 EIB Loan for the three months ended March 31, 2025:
(in thousands) | |||||
| Balance as of December 31, 2024 | $ | ||||
| Change in fair value | |||||
| Interest payment | ( | ||||
| Due to foreign currency translation | |||||
| Balance as of March 31, 2025 | $ | ||||
To estimate the fair value of the EIB Loan, the Company used an expected present value valuation technique with significant unobservable inputs resulting in classification as a Level 3 measurement. The estimate of fair value is uncertain and changes in the estimated inputs may result in significant adjustments to the fair value. The unobservable inputs consisted of discount rate which includes the credit quality of the Company and credit spreads for comparable debt.
The following table summarizes the assumptions including the unobservable inputs related to the Company's long-term debt (in thousands except for percentages):
| March 31, 2025 | December 31, 2024 | ||||||||||
| Discount rate | |||||||||||
Note 4. Cash, Cash Equivalents and Investments
The following tables categorize the fair values of cash, cash equivalents and investments measured at fair value on a recurring basis on our balance sheets (in thousands):
| March 31, 2025 | December 31, 2024 | ||||||||||
| Cash and cash equivalents: | |||||||||||
| Cash | $ | $ | |||||||||
| Money market funds | |||||||||||
| Total cash and cash equivalents | $ | $ | |||||||||
| Short-term investments: | |||||||||||
| Government and agency notes | |||||||||||
| Total short-term investments | $ | $ | |||||||||
The Company's investments are classified as available-for-sale securities. As of March 31, 2025, the weighted average remaining contractual maturities of available-for-sale securities was approximately 2 months. The unrealized gain (loss) activity related to the Company’s available-for-sale securities is included in the Company’s accumulated other
11
comprehensive income. There were no no no available-for-sale securities in loss positions as of March 31, 2025. No other-than-temporary impairments on these securities were recognized for the three months ended March 31, 2025 and 2024.
The Company periodically assesses its investment in available-for-sale securities for impairment losses and credit losses. The amount of credit losses is determined by comparing the difference between the present value of future cash flows expected to be collected on these securities and the amortized cost. Factors considered in assessing credit losses include the position in the capital structure, vintage and amount of collateral, delinquency rates, current credit support, and geographic concentration. There have been no
For available-for-sale debt securities in an unrealized loss position, the Company first assesses whether it intends to sell, or it is more likely than not that it will be required to sell the security before recovery of its amortized cost basis. If either of the criteria regarding intent or requirement to sell is met, the security’s amortized cost basis is written down to fair value and recognized in interest and other income, net in the statement of operations and comprehensive loss. If neither criteria is met, the Company evaluates whether the decline in fair value is related to credit-related factors or other factors. In making this assessment, management considers the extent to which fair value is less than amortized cost, any changes to the rating of the security by a rating agency, and adverse conditions specifically related to the security, among other factors. Credit-related impairment losses, limited by the amount that the fair value is less than the amortized cost basis, are recorded through an allowance for credit losses in interest and other income, net.
Any unrealized losses from declines in fair value below the amortized cost basis as a result of non-credit factors are recognized in accumulated other comprehensive income, net of tax as a separate component of stockholders’ equity, along with unrealized gains. Realized gains and losses and declines in fair value, if any, on available-for-sale securities are included in interest and other income, net in the statement of operations and comprehensive loss.
For purposes of identifying and measuring credit-related impairments, the Company’s policy is to exclude applicable accrued interest from both the fair value and amortized cost basis of the related security. The Company has elected to write-off uncollectible accrued interest receivable balances in a timely manner, which is defined by the Company as when interest due becomes 90 days delinquent. The accrued interest write-off will be recorded by reversing interest income. Accrued interest receivable is recorded in other current assets on the balance sheets.
The following table summarizes the available-for-sale securities (in thousands):
Fair Value Measurements as of March 31, 2025 | |||||||||||||||||||||||
| Amortized Cost | Unrealized Gains | Unrealized Losses | Fair Value | ||||||||||||||||||||
| Money market funds | $ | $ | — | $ | — | $ | |||||||||||||||||
| Government and agency notes | |||||||||||||||||||||||
| Total cash equivalents and investments | $ | $ | $ | $ | |||||||||||||||||||
| Classified as: | |||||||||||||||||||||||
| Cash equivalents (original maturities within 90 days) | $ | ||||||||||||||||||||||
| Short-term investments (maturities within one year) | |||||||||||||||||||||||
| Total cash equivalents and investments | $ | ||||||||||||||||||||||
12
| Fair Value Measurements as of December 31, 2024 | |||||||||||||||||||||||
Amortized Cost | Unrealized Gains | Unrealized Losses | Fair Value | ||||||||||||||||||||
| Money market funds | $ | $ | — | $ | — | $ | |||||||||||||||||
| Government and agency notes | |||||||||||||||||||||||
| Total cash equivalents and investments | $ | $ | $ | $ | |||||||||||||||||||
| Classified as: | |||||||||||||||||||||||
| Cash equivalents (original maturities within 90 days) | $ | ||||||||||||||||||||||
| Short-term investments (maturities within one year) | |||||||||||||||||||||||
| Total | $ | ||||||||||||||||||||||
Note 5. Balance Sheet Components
Prepaid Expenses and Other Current Assets
Prepaid expenses and other current assets consist of the following (in thousands):
| March 31, 2025 | December 31, 2024 | ||||||||||
| Prepaid research and development expenses | $ | $ | |||||||||
| Short-term Italian research and development refundable tax credit | |||||||||||
| Prepaid insurance | |||||||||||
| Prepaid expenses | |||||||||||
| Other current assets | |||||||||||
| Total prepaid expenses and other current assets | $ | $ | |||||||||
The Company is eligible to obtain an R&D tax credit as companies in Italy that invest in eligible research and development activities, regardless of the legal form and economic sector in which they operate, can benefit from a R&D tax credit. Such tax credits can only be used to offset payments of certain taxes and contributions (e.g., social contributions, VAT payables, registration fees, income and withholding taxes and other tax-related items that companies usually pay monthly). The Company recognized reductions to R&D expense of $0.3 million for the three months ended March 31, 2025, and $0.4 million reductions for the three months ended March 31, 2024.
Other Assets
Other assets consisted of the following (in thousands):
| March 31, 2025 | December 31, 2024 | ||||||||||
| Long-term Italian research and development refundable tax credit | $ | $ | |||||||||
| VAT receivable | |||||||||||
| Equity investments in Lighthouse Pharmaceuticals, Inc. | |||||||||||
| Total other assets | $ | $ | |||||||||
13
Property and Equipment, Net
Property and equipment, net consist of the following (in thousands):
| March 31, 2025 | December 31, 2024 | ||||||||||
| Computer equipment | $ | $ | |||||||||
| Computer software | |||||||||||
| Lab equipment | |||||||||||
| Leasehold improvement | |||||||||||
| Office furniture | |||||||||||
| Less: accumulated amortization and depreciation | ( | ( | |||||||||
| Property and equipment, net | $ | $ | |||||||||
Accrued Expenses and Other Current Liabilities
Accrued expenses and other current liabilities consist of the following (in thousands):
| March 31, 2025 | December 31, 2024 | ||||||||||
| Personnel expenses | $ | $ | |||||||||
| Research and development expenses | |||||||||||
| Professional fees | |||||||||||
| Current portion of operating lease liabilities | |||||||||||
| Other | |||||||||||
| Total accrued expenses and other current liabilities | $ | $ | |||||||||
For the three months ended March 31, 2025 and 2024, the severance accrual activity was as follows (in thousands):
| March 31, 2025 | March 31, 2024 | ||||||||||
| Beginning accrued severance | |||||||||||
| Incurred during the period | |||||||||||
| Severance paid during the period | ( | ( | |||||||||
| Ending accrued severance | $ | $ | |||||||||
During the three months ended March 31, 2025 and 2024, the Company incurred severance costs related to personnel separation, reflecting payments made and accrued to departing employees.
Note 6. Leases
In January 2024, the Medolla Lease Agreement for the office space was renegotiated. The new Medolla Lease Agreement includes an additional space and commenced on February 1, 2024, and will end on January 31, 2030, substituting the Medolla Lease Agreement commenced in June 2018.
The Company recognizes lease expense on a straight-line basis over the term of its operating lease. During the three months ended March 31, 2025 and 2024, the Company recorded lease expense of $35 thousand and $22 thousand, respectively.
14
Supplemental balance sheet information related to leases as follows (in thousands except lease terms and discount rates):
| March 31, 2025 | December 31, 2024 | ||||||||||
| Assets: | |||||||||||
| Operating lease right of use asset, net | $ | $ | |||||||||
| Liabilities: | |||||||||||
| Long-term operating lease liability | |||||||||||
| Total lease liabilities | $ | $ | |||||||||
| Other information: | |||||||||||
| Weighted average remaining lease term | |||||||||||
| Weighted average discount rate | % | % | |||||||||
Future minimum lease payments under lease agreements as of March 31, 2025, were as follows (in thousands):
| Fiscal Year | |||||
| 2025 (remainder of the year) | $ | ||||
| 2026 | |||||
| 2027 | |||||
| 2028 | |||||
| 2029 | |||||
| Total lease payments | |||||
| Less: imputed interest | ( | ||||
| Total remaining lease liability | $ | ||||
Note 7. Long-term Debt
In connection with the acquisition of EryDel on October 20, 2023, the Company became a guarantor in respect of the EIB Loan. The EIB Loan was amended and restated as of the acquisition date. The EIB Loan provides for maximum borrowings of 30.0 million euro through four tranches; tranche A, 3.0 million euro; tranche B, 7.0 million euro; tranche C, 10.0 million euro; and tranche D, 10.0 million euro. Each tranche is subject to conditions precedent related to the Company’s business and capitalization. As of March 31, 2025, only tranches A and B have been drawn. All amounts due under tranche A and B are payable on their maturity date of August 2026. Tranche C and D are payable in equal installments of principal together with all amounts outstanding under the tranches on the repayment date. The first repayment date of tranche C shall fall not earlier than twelve months from the disbursement date of such tranche. The last repayment date of tranche C and tranche D shall fall not later than 5 years from the disbursement date of tranche C and tranche D, respectively. The EIB Loan bears interest at fixed rates for each tranche and is payable on the maturity date for each Tranche (with the exception of 2 % cash interest which shall accrue and be payable quarterly during fiscal year 2025 pursuant to the terms of the Amendment, which shall correspondingly reduce the deferred interest rate accruing during such period). The fixed rates range from 7.0 % to 9.0 % per annum. As of March 31, 2025, principal of 10.0 million euros ($10.8 million) was outstanding on the EIB Loan and it is recorded as Long-term debt on the consolidated balance sheet at fair value with imputed interest of 9.0 % included.
The original Debt Agreement requires the Company to maintain the Minimum Cash Covenant of 14.65 million euros ($15.8 million) until the outstanding obligations under the Debt Agreement, together with accrued interest and all other amounts accrued or outstanding under the agreement, is repaid in full. Furthermore, the Company may at any time voluntarily prepay, in whole or in part, together with certain fees as set forth in the Debt Agreement, the outstanding obligations under the Debt Agreement. In the event of a default or a change in control, as specified in the Debt Agreement, EIB may, subject to certain grace periods, accelerate the outstanding obligations under the EIB Loan.
In November 2024, the Company entered into the Amendment of the Debt Agreement with EIB which waives the Minimum Cash Covenant from January 1, 2025 and up to the earlier of December 31, 2025, or the date the Minimum Cash
15
Covenant is restored. As of March 31, 2025, the Minimum Cash Covenant had not been restored. Under the terms of the Amendment, the Company agreed to amendments requiring monthly reporting of cash balances and additional limitations on certain permitted acquisitions. Additionally, during the waiver period, the Company agreed to convert 2 % out of the total 9 % deferred interest on Tranches A and B to be payable quarterly, with the first payment made on March 31, 2025, and a one-time fee of 20 thousand euros $22 thousand in connection with the Amendment.
For the three months ended March 31, 2025, the Company paid $53,000 in interest payments related to the Amendment.
The Debt Agreement includes a provision for additional remuneration to be paid in addition to interest. The amount of additional remuneration to be paid is equal to 2.5 % of revenue up to 125.0 million euros, plus 1.85 % of revenue between 125.0 and 250.0 million euros, plus 1.0 % of revenue in excess of 250.0 million euros, multiplied by a varying percentage based on how many tranches have been drawn. The varying percentage is equal to 30.0 % in the event tranche A has been drawn, 50.0 % in the event tranche A and B have been drawn, 80.0 % in the event tranche A, B and C have been drawn, and 100.0 % in the event all four tranches have been drawn. The additional remuneration is payable for seven years , during the period January 1, 2026, through December 31, 2032. In the event of an occurrence of an event of default or prepayment, the Company may be required to pay an additional remuneration buyout fee.
The Company elected to account for the EIB Loan at fair value, which requires the EIB Loan to be recorded at fair value at issuance and at the end of each reporting period. Gains or losses upon remeasurement are to be recorded in other expense, net in the consolidated statements of operations and comprehensive income. The Company presents separately in other comprehensive income the portion of the total change in the fair value of the EIB Loan that results from a change in instrument-specific credit risk. The EIB Loan’s fair value at the date it was assumed adjusted its carrying value based on using a discounted cash flow analysis with a discount rate based on a yield curve that was adjusted for credit rating. The change in fair value as of March 31, 2025 was determined using a discounted cash flow analysis discounted at the market yield. The significant inputs used to measure the market yield as of March 31, 2025 relative to the date the EIB Loan was assumed was the change in credit quality of the Company, the change in credit spreads for comparable debt instruments, and the change in the risk-free rate. As of March 31, 2025, the fair value of the EIB Loan is $15.3 million, which includes a fair value adjustment of $0.4 million and foreign currency translation of $0.6 million during the three months ended March 31, 2025.
Future minimum principal payments, as of March 31, 2025 are as follows (in thousands):
| Quarter Ended March 31, 2025 | Amount | |||||||
| 2025 | $ | |||||||
| 2026 | ||||||||
| 2027 and thereafter | ||||||||
| Total future payments | ||||||||
| Imputed interest and fair value adjustments | ||||||||
| Total Debt as of March 31, 2025 | $ | |||||||
Note 8. Common Stock
Equity Transactions
On December 18, 2024, the Company entered into a Controlled Equity OfferingSM Sales Agreement, with Cantor Fitzgerald & Co. and H.C. Wainwright & Co., LLC, or the Agents, relating to the sale of shares of the Company's common stock, par value $0.001 per share. In accordance with the terms of this agreement, the Company may offer and sell up to $21.9 million of shares of common stock.
During the three months ended March 31, 2025, the Company sold zero shares of common stock.
Note 9. Stock-Based Compensation
The Company operates three stock-based compensation plans as of March 31, 2025:
•2019 Equity Incentive Plan (Quince)
•2019 Equity Incentive Plan (Novosteo)
16
•2022 Inducement Plan (Quince)
2019 Equity Incentive Plan (Quince)
On December 4, 2014, the Company’s stockholders approved the 2014 Stock Plan (“2014 Plan”), and on April 25, 2019 amended, restated and re-named the 2014 Plan as the 2019 Equity Incentive Plan (the “Quince 2019 Plan”), which became effective as of May 7, 2019, the day prior to the effectiveness of the registration statement filed in connection with the IPO. The remaining shares available for issuance under the 2014 Plan were added to the shares reserved for issuance under the Quince 2019 Plan.
The Quince 2019 Plan provides for the grant of stock options (including incentive stock options and non-qualified stock options), stock appreciation rights, restricted stock, RSUs, performance units, and performance shares to the Company’s employees, directors, and consultants. As of March 31, 2025, the maximum aggregate number of shares that may be issued under the Quince 2019 Plan is 13,515,484 shares of the Company’s common stock. In addition, the number of shares available for issuance under the Quince 2019 Plan will be annually increased on the first day of each fiscal years beginning with fiscal 2020, by an amount equal to the least of (i) 2,146,354 shares of common stock; (ii) 4 % of the outstanding shares of its common stock as of the last day of its immediately preceding fiscal year; and (iii) such other amount as the Board of Directors may determine.
The Quince 2019 Plan may be amended, suspended or terminated by the Board of Directors at any time, provided such action does not impair the existing rights of any participant, subject to stockholder approval of any amendment to the Quince 2019 Plan as required by applicable law or listing requirements. Unless sooner terminated by the Company's Board of Directors, the Quince 2019 Plan will automatically terminate on April 23, 2029.
As of March 31, 2025, the Company had 1,169,969 shares available for future issuance under the Quince 2019 Plan.
Stock Options
Stock options under the Quince 2019 Plan may be granted for periods of up to 10 years and at prices no less than 100 % of the fair market value of the shares on the date of grant. If, at the time of grant, the optionee directly owns stocks representing more than 10 % of the voting power of all our outstanding capital stock, the exercise price for these options must be at least 110 % of the fair value of the underlying common stock. Stock options granted to employees and non-employees generally have a maximum term of ten years and vest over four years from the vesting commencement date, of which 25 % vest on the one-year anniversary of the vesting commencement date, and 75 % vest in equal monthly installments over the remaining three years or monthly vesting over 3 to 4 years. We may grant options with different vesting terms from time to time. Unless an employee's or non-employee's termination is due to cause, disability or death, upon termination of service, any unexercised vested options will be forfeited at the end of the three months from the termination date or expiration of the option, whichever is earlier.
Activity for service-based stock options under the Quince 2019 Plan is as follows:
Number of Options and Unvested Shares | Weighted Average Exercise Price | Weighted average remaining contractual life (years) | Aggregate intrinsic value | ||||||||||||||||||||
| (In thousands) | |||||||||||||||||||||||
| Balance as of December 31, 2024 | $ | $ | |||||||||||||||||||||
| Options granted | — | — | |||||||||||||||||||||
| Options exercised | ( | — | |||||||||||||||||||||
| Options cancelled / forfeited | ( | — | — | ||||||||||||||||||||
| Balance as of March 31, 2025 | $ | $ | |||||||||||||||||||||
| Options vested and expected to vest as of March 31, 2025 | |||||||||||||||||||||||
| Options exercisable as of March 31, 2025 | $ | $ | |||||||||||||||||||||
For the three months ended March 31, 2025 and 2024, the Company recognized stock-based compensation expense of $0.9 million and $0.8 million, respectively, related to options granted to employees and non-employees. The compensation
17
expense is allocated on a departmental basis, based on the classification of the option holder. No 7.9 million, which is expected to be recognized over the remaining estimated vesting period of 3.01 years.
2019 Equity Incentive Plan (Novosteo)
On May 19, 2022, in accordance with the terms of Agreement and Plan of Merger and Reorganization between the Company, Novosteo, Inc., and the other parties thereto, the Company assumed the 2019 Novosteo, Inc. Equity Incentive Plan (the "2019 Novosteo Plan"). The 2019 Novosteo Plan provides for the grant of stock options (including incentive stock options and non-qualified stock options), stock appreciation rights, restricted stock, RSUs, performance units, and performance shares to the Novosteo legacy employees. On the closing date, each outstanding Novosteo stock option granted under Novosteo’s equity compensation plans was converted into a corresponding stock option with the number of shares underlying such option and the applicable exercise price adjusted based on the exchange ratio of 0.0911 . Each such converted stock option continues to be subject to substantially the same terms and conditions as applied to the corresponding Novosteo stock option prior to the Acquisition. The maximum aggregate number of shares that may be issued under the 2019 Novosteo Plan is 544,985 shares of the Company’s common stock.
The 2019 Novosteo Plan may be amended, suspended or terminated by the Board of Directors at any time, provided such action does not impair the existing rights of any participant, subject to stockholder approval of any amendment to the 2019 Novosteo Plan as required by applicable law or listing requirements. Unless sooner terminated by the Board of Directors, the 2019 Novosteo Plan will automatically terminate on May 20, 2029.
Stock options under the 2019 Novosteo Plan may be granted for periods of up to 10 years and at prices no less than 100 % of the fair market value of the shares on the date of grant. If, at the time of grant, the optionee directly owns stocks representing more than 10 % of the voting power of all our outstanding capital stock, the exercise price for these options must be at least 110 % of the fair value of the underlying common stock. Stock options granted to employees and non-employees generally have a maximum term of ten years and vest over four years from the vesting commencement date, of which 25 % vest on the one-year anniversary of the vesting commencement date, and 75 % vest in equal monthly installments over the remaining three years or monthly vesting over 3 to 4 years. We may grant options with different vesting terms from time to time. Unless an employee's or non-employee's termination is due to cause, disability or death, upon termination of service, any unexercised vested options will be forfeited at the end of the three months from the termination date or expiration of the option, whichever is earlier.
As of March 31, 2025, the Company had 246,797 shares available for future issuance under the 2019 Novosteo Plan.
Activity for service-based stock options under the 2019 Novosteo Plan is as follows:
Number of Options and Unvested Shares | Weighted Average Exercise Price | Weighted average remaining contractual life (years) | Aggregate intrinsic value | ||||||||||||||||||||
| (In thousands) | |||||||||||||||||||||||
| Balance as of December 31, 2024 | $ | $ | |||||||||||||||||||||
| Options granted | — | — | |||||||||||||||||||||
| Options exercised | — | ||||||||||||||||||||||
| Options cancelled / forfeited | — | — | |||||||||||||||||||||
| Balance as of March 31, 2025 | $ | $ | |||||||||||||||||||||
| Options vested and expected to vest as of March 31, 2025 | |||||||||||||||||||||||
| Options exercisable as of March 31, 2025 | $ | $ | |||||||||||||||||||||
For the three months ended March 31, 2025 and 2024, the Company recognized stock-based compensation expense of $49 thousand and $49 thousand, respectively, related to options granted to employees and non-employees for the 2019 Novosteo Plan. The compensation expense is allocated on a departmental basis, based on the classification of the option holder. No
18
comprehensive loss for stock-based compensation arrangements. As of March 31, 2025, total unamortized employee stock-based compensation was $0.2 million, which is expected to be recognized over the remaining estimated vesting period of 0.98 years.
Restricted Stock Awards
| Restricted Stock Awards Outstanding | |||||||||||
Number of Shares | Weighted Average Grant Date Fair Value | ||||||||||
| Unvested - December 31, 2024 | $ | ||||||||||
| RSAs granted | |||||||||||
| RSAs vested | ( | ||||||||||
| RSAs cancelled | |||||||||||
| Unvested - March 31, 2025 | $ | ||||||||||
For the three months ended March 31, 2025 and 2024, the Company recognized stock-based compensation expense of $79 thousands and $80 thousands, respectively, related to restricted stock awards. The compensation expense is allocated on a departmental basis, based on the classification of the award holder. No 0.1 million and $0.1 million for the three months ended March 31, 2025 and 2024, respectively. As of March 31, 2025, total unamortized employee stock-based compensation was $0.2 million, which is expected to be recognized over the remaining estimated vesting period of 0.50 years.
2022 Inducement Plan
On May 9, 2022, the Company's Board of Directors approved 4,000,000 shares of common stock that may be offered or issued under the Quince Therapeutics, Inc. 2022 Inducement Plan (the "2022 Inducement Plan"). The 2022 Inducement Plan was adopted by the independent members of the Board of Directors without stockholder approval pursuant to Rule 5635(c)(4) of the Nasdaq Listing Rules (“Nasdaq Rule 5635(c)(4)”). In accordance with Nasdaq Rule 5635(c)(4), awards under those plans may only be made to an employee who has not previously been an employee or member of the Board of Directors or of any board of directors of any parent or subsidiary of the Company, or following a bona fide period of non-employment by the Company or a parent or subsidiary, if he or she is granted such award in connection with his or her commencement of employment with the Company or a subsidiary and such grant is an inducement material to his or her entering into employment with the Company or such subsidiary. The terms and conditions of the 2022 Inducement Plan are substantially similar to those of the Quince 2019 Plan.
Options under the 2022 Inducement Plan may be granted for periods of up to 10 years at prices no less than 100 % of the fair market value of the shares on the date of grant. Options granted to employees may have different performance goals or other vesting provisions (including continued employment) in accordance with the applicable award agreement. Unless an employee's termination service is due to disability or death, upon termination of service, any unexercised vested options will be forfeited at the end of the three months from the date of termination or expiration of the option, whichever is earlier.
As of March 31, 2025, the Company had 1,666,694 shares available for future issuance under the 2022 Inducement Plan.
19
Activity for service-based stock options under the 2022 Inducement Plan is as follows:
Number of Options and Unvested Shares | Weighted Average Exercise Price | Weighted average remaining contractual life (years) | Aggregate intrinsic value | ||||||||||||||||||||
| (In thousands) | |||||||||||||||||||||||
| Balance as of December 31, 2024 | $ | ||||||||||||||||||||||
| Options granted | — | — | |||||||||||||||||||||
| Options exercised | — | — | |||||||||||||||||||||
| Options cancelled / forfeited | — | — | |||||||||||||||||||||
| Balance as of March 31, 2025 | $ | ||||||||||||||||||||||
| Options vested and expected to vest as of March 31, 2025 | |||||||||||||||||||||||
| Options exercisable as of March 31, 2025 | $ | ||||||||||||||||||||||
For the three months ended March 31, 2025 and 2024, the Company recognized stock-based compensation expense of $0.3 million and $0.3 million, respectively, related to options granted to employees for the 2022 Inducement Plan. The compensation expense is allocated on a departmental basis, based on the classification of the option holder. No 1.5 million, which is expected to be recognized over the remaining estimated vesting period of 1.14 years.
Stock-Based Compensation Expense
The following table summarizes employee and non-employee stock-based compensation expense for the three months ended March 31, 2025 and 2024 and the allocation within the consolidated statements of operations and comprehensive loss (in thousands):
| Three Months Ended March 31, | |||||||||||||||||||||||
| 2025 | 2024 | ||||||||||||||||||||||
| General and administrative expense | $ | $ | |||||||||||||||||||||
| Research and development expense | |||||||||||||||||||||||
| Total stock-based compensation | $ | $ | |||||||||||||||||||||
Note 10. Income Taxes
The Company has a history of losses and expects to incur a loss for 2025. The Company maintains a full valuation allowance against its net deferred tax assets as the Company believes it is not more likely than not that the benefit will be realized. The primary difference between the effective tax rate and the statutory tax rate relates to the change in valuation allowance.
The Company recorded $47 thousand of tax expense for the three months ended March 31, 2025 primarily related to foreign withholding tax and interest on the uncertain tax position liability.
20
Note 11. Net Loss Per Share
Basic and diluted net loss per common share is determined by dividing the net loss by the weighted-average common shares outstanding during the period, as follows (net loss in thousands):
| Three Months Ended March 31, | |||||||||||||||||||||||
| 2025 | 2024 | ||||||||||||||||||||||
| Numerator: | |||||||||||||||||||||||
| Net loss | $ | ( | $ | ( | |||||||||||||||||||
| Denominator: | |||||||||||||||||||||||
| Weighted average common shares outstanding | |||||||||||||||||||||||
| Net loss per share, basic and diluted | $ | ( | $ | ( | |||||||||||||||||||
The following outstanding potentially dilutive shares have been excluded from the calculation of diluted net loss per share for the periods presented because including them would have been antidilutive:
| March 31, | |||||||||||
| 2025 | 2024 | ||||||||||
| Stock options issued and outstanding | |||||||||||
| Restricted stock awards | |||||||||||
| Total | |||||||||||
Note 12. Intangible Assets
EryDel Intangible Assets
The following table provides details of the carrying amount of the Company's indefinite-lived intangible asset (in thousands):
(in thousands) | |||||
| In-process research and development: | |||||
| Balance as of December 31, 2024 | $ | ||||
| Foreign currency translation adjustments | |||||
| Balance as of March 31, 2025 | $ | ||||
The following table provides details of the carrying amount of the Company's finite-lived intangible asset (in thousands, except useful life):
| As of March 31, 2025 | As of December 31, 2024 | ||||||||||||||||||||||||||||||||||||||||
| Useful life | Cost | Accumulated Amortization | Net Carrying Value | Cost | Accumulated Amortization | Net Carrying Value | |||||||||||||||||||||||||||||||||||
| Finite life intangible assets: | |||||||||||||||||||||||||||||||||||||||||
| Trade name | $ | $ | ( | $ | $ | $ | ( | $ | |||||||||||||||||||||||||||||||||
| Foreign currency translation adjustments | ( | ||||||||||||||||||||||||||||||||||||||||
| Total | $ | $ | |||||||||||||||||||||||||||||||||||||||
The Company performs annual impairment reviews of its intangible assets during the fourth fiscal quarter or more frequently if appropriate. As of March 31, 2025, the Company did not incur any impairment losses related to its EryDel intangible assets. The remaining amortization period for the trade name is 19.6 years as of March 31, 2025.
21
Note 13. Segment Information
The Company manages its business activities on a consolidated basis and operates as one
The Company’s Chief Executive Officer, who is the CODM, reviews financial information on a consolidated basis for purposes of allocating and evaluating financial performance. The CODM evaluates the Company’s performance and resource allocation by analyzing consolidated net loss, as reported on the consolidated statement of operations. This assessment involves comparing net loss across prior periods, the Company's forecast, and total expenditures related to eDSP product development and the ongoing Phase 3 NEAT clinical trial.
The measure of segment assets reviewed by the CODM is the consolidated total assets, as reported on the consolidated balance sheet. The following table presents the measure of segment assets regularly provided to the CODM (in thousands):
| March 31, 2025 | December 31, 2024 | ||||||||||
| Cash, cash equivalents and short-term investments | |||||||||||
The following table presents financial information, including significant segment expenses, which are regularly provided to the CODM and included within consolidated net loss (in thousands):
| Three Months Ended March 31, | ||||||||||||||
| 2025 | 2024 | |||||||||||||
| Research and development: | ||||||||||||||
| Personnel | $ | $ | ||||||||||||
| Stock-based compensation | ||||||||||||||
| Clinical and contract manufacturing | ||||||||||||||
| Other | ( | ( | ||||||||||||
| General and administrative: | ||||||||||||||
| Personnel | ||||||||||||||
| Stock-based compensation | ||||||||||||||
| Consulting and professional costs | ||||||||||||||
| Other | ||||||||||||||
| Fair value adjustment for contingent consideration | ||||||||||||||
| Total operating expenses | ||||||||||||||
| Loss from operations | ( | ( | ||||||||||||
| Other segment items | ( | |||||||||||||
| Net loss | $ | ( | $ | ( | ||||||||||
Other segment items within net loss include fair value adjustment for long-term debt, interest income, other expense, net, and income tax (expense) benefit.
The Company’s long-lived assets consist primarily of property, plant and equipment, net, and operating lease right-of-use assets are maintained in Italy. As of March 31, 2025 and December 31, 2024, no individual country other than the U.S. accounted for 10% or more of these assets.
22
Note 14. Subsequent Events .
During April and through May 12, 2025, the Company utilized its ATM program to raise net proceeds of approximately $2.9 million by issuing 2,766,549 shares of common stock. The Controlled Equity OfferingSM Sales Agreement was entered into on December 18, 2024, with Cantor Fitzgerald & Co. and H.C. Wainwright & Co., LLC, or the Agents, relating to the sale of shares of the Company's common stock, par value $0.001 per share. In accordance with the terms of this agreement, the Company may offer and sell up to $21.9 million of shares of common stock.
23
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
You should read the following discussion and analysis of our financial condition and results of operations together with our unaudited condensed consolidated financial statements and related notes, included in “Part I. Item 1. Financial Statements” of this Quarterly Report on Form 10-Q. This discussion contains forward-looking statements that involve risk and uncertainties, such as statements of our plans, objectives, expectations, and intentions, that are based on the beliefs of our management. Our actual results could differ materially from those discussed in these forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those discussed in the “Risk Factors” section of this Quarterly Report on Form 10-Q and our Annual Report on Form 10-K. Unless the context requires otherwise, references in this Quarterly Report on Form 10-Q to the “Company,” “Quince,” “we,” “us,” and “our” refer to Quince Therapeutics, Inc. and its consolidated subsidiaries.
Overview
We are a late-stage biotechnology company dedicated to unlocking the power of a patient’s own biology for the treatment of rare diseases. Our proprietary AIDE technology is an innovative drug/device combination platform that uses an automated process to encapsulate a drug into a patient’s own red blood cells. Red blood cells have several characteristics that make them an excellent vehicle for drug delivery potential including better safety and tolerability, enhanced tissue distribution, reduced immunogenicity, and prolongation of circulating half-life. Our AIDE technology is designed to harness many of these benefits to allow for new and improved therapeutic options for patients living with high unmet medical needs. eDSP is the first product in development that leverages our AIDE technology and is composed of DSP encapsulated in autologous red blood cells targeted to treat a rare pediatric neurodegenerative disease, A-T. DSP is a corticosteroid well-described for its anti-inflammatory properties, but is also coupled with serious adverse events, including adrenal suppression. eDSP is designed to maintain the well-described efficacy of DSP while reducing or eliminating the significant adverse events that accompany chronic corticosteroid treatment. The altered biodistribution, pharmacokinetics, and pharmacodynamics of eDSP enabled by autologous red blood cells may, therefore, improve the safety profile, and maintain or increase the desired therapeutic effect of DSP.
Currently, there are no approved treatments for A-T and the global market, based on our internal estimates and assumptions, represents a more than $1 billion peak commercial opportunity. We believe this makes eDSP an ideal lead asset to demonstrate the clinical and commercial potential of our AIDE technology.
We intend to focus our development expertise and financial resources toward advancing a Phase 3 NEAT clinical trial, which is an international multicenter, randomized, double-blind, placebo-controlled study to evaluate the neurological effects of eDSP on patients with A-T. As of May 13, 2025, 63 participants have been enrolled in the Phase 3 NEAT clinical trial of eDSP, including 56 participants in the six to nine year-old primary analysis population and seven participants aged 10 years or older. 30 participants have entered the OLE study.
Absent additional funding to extend our cash runway beyond the first quarter of 2026, we are contemplating an early conclusion of enrollment for our pivotal Phase 3 NEAT clinical trial by the end of June 2025 to align the reporting of topline results with the our existing cash runway in early 2026. Several factors contribute to this potential shift in strategy, including slower than anticipated enrollment, uncertain macroeconomic environment, challenging academic site environment, and an operationally well-executed study with limited withdrawals and low rates of missing data and procedural deviations. The combination of these factors leads us to now consider concluding enrollment prior to reaching the pre-specified target of 86 patients in the primary analysis population. The potential to conclude enrollment at the end of June 2025 is expected to provide an approximate 80% power to determine a statistically significant difference in the primary endpoint. Additionally, this timeline would allow the company to report topline results by early 2026 while maintaining a positive cash balance. If additional funding is secured in the near term, we intend to continue enrollment as previously planned targeting 86 patients with A-T ages six to nine years old in the primary analysis population. Assuming positive results from the NEAT study, we plan to submit applications for approval in the U.S. and Europe in the second half of 2026.
24
Financial Overview
Our strategic focus is to apply our resources and capital toward the advancement of our proprietary AIDE technology platform and Phase 3 lead asset, eDSP, targeted to treat A-T.
Components of Results of Operations
Operating Expenses
Our operating expenses since inception have consisted primarily of R&D activities and G&A costs.
Research and Development Expenses
Our research and development expenses consist of expenses incurred in connection with the research and development of our research programs. These expenses include payroll and personnel expenses, including stock-based compensation, for our research and product development employees, laboratory supplies, product licenses, consulting costs, contract research, regulatory, quality assurance, preclinical and clinical expenses, allocated rent, facilities costs and depreciation. We expense both internal and external research and development costs as they are incurred. Non-refundable advance payments and deposits for services that will be used or rendered for future research and development activities are recorded as prepaid expenses and recognized as an expense as the related services are performed.
We expect our research and development expenses to remain in the current levels as we continue our Phase 3 NEAT clinical trial and expand into new indications, including Phase 2 study in DMD.
General and Administrative
General and administrative expenses consist principally of personnel-related costs, including payroll and stock-based compensation, for personnel in executive, finance, human resources, business and corporate development, and other administrative functions, professional fees for legal, consulting, insurance and accounting services, allocated rent and other facilities costs, depreciation, and other general operating expenses not otherwise classified as research and development expenses.
Fair Value Adjustment for Contingent Consideration
We record fair value adjustment for contingent consideration primarily due to the expected timing of achieving various milestones, and the passage of time related to the contingent consideration earnout resulting from the EryDel Acquisition. Changes in the fair value of the contingent consideration obligations may result from changes in probability assumptions with respect to the likelihood of achieving the various contingent payment obligations.
Fair Value Adjustment for Long-term Debt
We record fair value adjustment for long-term debt primarily due to the passage of time and the interest accrued for the loan with the EIB.
Interest Income
Interest income consists primarily of interest earned on our short-term and long-term investments portfolio.
Other Expense, net
Other income (expense), net consists primarily of the effects of foreign currency exchange rates.
Critical Accounting Estimates
For a description of our significant accounting policies, see Note 2 to our consolidated financial statements.
25
Of our policies, the following are considered critical to an understanding of our consolidated financial statements as they require the application of subjective and complex judgment, involving critical accounting estimates and assumptions impacting our consolidated financial statements:
•Research and Development Expenses
•Identifiable Intangible Assets
•Contingent Consideration
•Long-term Debt
For a discussion about the critical accounting estimates and assumptions impacting our consolidated financial statements, see the Critical Accounting Estimates section within MD&A of our Annual Report on Form 10-K for the year ended December 31, 2024, filed with the SEC on March 24, 2025.
Results of Operations
Comparison of the three months ended March 31, 2025 to the three months ended March 31, 2024
The following sets forth our results of operations for the three months ended March 31, 2025 and 2024 (in thousands, except for percentages):
| Three Months Ended March 31, | Change | ||||||||||||||||||||||
| 2025 | 2024 | $ | % | ||||||||||||||||||||
| Operating expenses: | |||||||||||||||||||||||
| Research and development | $ | 8,145 | $ | 3,702 | $ | 4,443 | 120 | % | |||||||||||||||
| General and administrative | 4,789 | 4,971 | (182) | (4) | % | ||||||||||||||||||
| Fair value adjustment for contingent consideration | 1,924 | 2,545 | (621) | (24) | % | ||||||||||||||||||
| Total operating expenses | 14,858 | 11,218 | 3,640 | 32 | % | ||||||||||||||||||
| Loss from operations | (14,858) | (11,218) | (3,640) | 32 | % | ||||||||||||||||||
| Fair value adjustment for long-term debt | (444) | (388) | (56) | 14 | % | ||||||||||||||||||
| Interest income | 406 | 887 | (481) | (54) | % | ||||||||||||||||||
| Other expense, net | (87) | (399) | 312 | (78) | % | ||||||||||||||||||
| Net loss before provision for income taxes | (14,983) | (11,118) | (3,865) | 35 | % | ||||||||||||||||||
| Income tax expense | (47) | (31) | (16) | 52 | % | ||||||||||||||||||
| Net loss | $ | (15,030) | $ | (11,149) | $ | (3,881) | 35 | % | |||||||||||||||
Research and Development Expenses (in thousands, except for percentages):
| Three Months Ended March 31, | Change | ||||||||||||||||||||||
| 2025 | 2024 | $ | % | ||||||||||||||||||||
| Direct research and development expenses: | |||||||||||||||||||||||
eDSP | $ | 6,228 | $ | 2,797 | $ | 3,431 | 123 | % | |||||||||||||||
| Other direct research costs | 79 | (110) | 189 | (172) | % | ||||||||||||||||||
| Indirect research and development expenses: | |||||||||||||||||||||||
| Personnel related (including stock-based compensation) | 1,755 | 893 | 862 | 97 | % | ||||||||||||||||||
| Facilities and other research and development expenses | 83 | 122 | (39) | (32) | % | ||||||||||||||||||
| Total research and development expenses | $ | 8,145 | $ | 3,702 | $ | 4,443 | 120 | % | |||||||||||||||
Research and development expenses were $8.1 million for the three months ended March 31, 2025, compared to $3.7 million for the three months ended March 31, 2024, an increase of $4.4 million.
26
The costs for eDSP development increased by $3.4 million compared to the same period from the prior year due to the ramping up and continuation costs related to our Phase 3 NEAT clinical trial and OLE. This increase was primarily due to clinical trial costs of $6.2 million and $0.1 million in manufacturing costs.
Our personnel related costs increased by $0.9 million during the three months ended March 31, 2025 as compared to the three months ended March 31, 2024, mainly as a result of incurring a $0.4 million severance costs and $0.3 million in allocated stock-based compensation costs.
Facilities and other research and development expenses decreased by $39 thousand for the three months ended March 31, 2025, as compared to the three months ended March 31, 2024 primarily due to a decrease in storage and facilities expenses.
General and Administrative Expenses
General and administrative expenses decreased by $0.2 million for the three months ended March 31, 2025 as compared to the three months ended March 31, 2024. The change in general and administrative expenses is primarily due to a decrease of $0.1 million in consulting and professional expenses and $0.2 million in other professional and administrative expenses. These decreases were partially offset by an increase of $0.1 million in personnel-related expenses.
Fair Value Adjustment for Contingent Consideration
For the three months ended March 31, 2025, we recorded a fair value adjustment for contingent consideration which resulted in a $1.9 million increase primarily due to the passage of time. We owe no further payments to EryDel shareholders for development-related milestones.
Fair Value Adjustment for Long-term Debt
For the three months ended March 31, 2025, we recorded a fair value adjustment for long-term debt which resulted in a $0.4 million charge primarily due to the passage of time and the interest accrued and paid for the loan with the EIB.
Interest Income
Interest income decreased by $0.5 million for the three months ended March 31, 2025, as compared to the three months ended March 31, 2024. The change was due to decreased yields on our investment portfolio and decreased average balances.
Other Expense, net
Other expense, net decreased by $0.3 million for the three months ended March 31, 2025 primarily due to the effects resulting from changes in foreign exchange rates.
Income Tax
We recorded tax expense of $47 thousand for the three months ended March 31, 2025 and $31 thousand for the three months ended March 31, 2024. Tax expense is primarily driven by foreign withholding tax, interest on uncertain tax position liability and net of tax benefit from decrease in EryDel's deferred tax liabilities.
Liquidity and Capital Resources
We have not generated any revenue and we have never been profitable. To date, we have financed our operations primarily through the issuance and sale of convertible promissory notes and redeemable convertible preferred stock and common stock. From inception through March 31, 2025, we received net proceeds of approximately $304.2 million from the issuance of redeemable convertible preferred stock, convertible promissory notes and common stock.
We have incurred net losses since the commencement of our operations. As of March 31, 2025, we had an accumulated deficit of $391.5 million. We incurred a net loss of $15.0 million in the three months ended March 31, 2025. We do not expect to generate product revenue unless and until we obtain marketing approval for and commercialize a drug candidate, and we cannot assure you that we will ever generate significant revenue or profits.
27
We evaluated whether there are conditions and events, considered in the aggregate, that raise substantial doubt about our ability to continue as a going concern within one year after the date that the unaudited condensed consolidated financial statements are issued. We have incurred losses and generated negative operating cash flows since our inception and anticipate that we will continue to incur losses for at least the next several years. The transition to profitability is dependent upon the successful development, approval and commercialization of our product candidate, and the achievement of a level of revenues adequate to support our cost structure. As of March 31, 2025, we had cash, cash equivalents and short-term investments of $31.6 million. Based on our current operating plan, we believe that our cash and cash equivalents balance as of March 31, 2025 will not be sufficient to fund operations and capital expenditures for the twelve months following the filing of this Quarterly Report on Form 10-Q, and we will need to obtain additional funding. We intend to obtain additional funding through available financing sources which may include additional public offerings of common stock, private financing of debt or equity, and/or the pursuit of strategic partnerships, licensing arrangements or collaborations. Management’s belief with respect to our ability to fund operations is based on estimates that are subject to risks and uncertainties. If actual results are different from management’s estimates, we may need to seek additional funding sooner than would otherwise be expected. There can be no assurance that we will be able to obtain additional funding on acceptable terms, if at all. If we are unable to obtain sufficient funding, we may be required to delay development efforts, limit activities and reduce research and development costs, which could adversely affect our business prospects. Because of the uncertainty in securing additional funding and the insufficient amount of cash and cash equivalent resources as of March 31, 2025, we concluded that substantial doubt exists with respect to our ability to continue as a going concern within one year after the date that these unaudited condensed consolidated financial statements are issued.
Our cash, cash equivalents, and marketable debt securities are held in a variety of deposit accounts, interest-bearing accounts, U.S government securities, debt securities in government-sponsored entities, and money market funds. Cash in excess of immediate requirements is invested with a view toward liquidity and capital preservation, and we seek to minimize the potential effects of concentration and credit risk. Our cash equivalents and short-term investments are held in money market funds, certificate of deposits, and government agency obligations.
While we currently believe that our existing cash, cash equivalents and investments will be sufficient to fund our planned operations through Phase 3 NEAT topline results expected in early 2026, that assumption does not include any costs or cash expenditures associated with initiating additional programs.
Capital Resources
Our primary use of cash is to fund operating expenses, which consist primarily of research and development expenditures related to eDSP, the initiation and continuation of the Phase 3 NEAT clinical trial and OLE, and general and administrative expenditures. Cash used to fund operating expenses is impacted by the timing of when we pay these expenses, as reflected in the change in our outstanding accounts payable and accrued expenses.
We expect that we will require additional capital to develop our drug candidates and fund operations for the foreseeable future. We may seek to raise capital through private or public equity or debt financings, collaborative or other arrangements with other companies, or through other sources of financing. Adequate additional funding may not be available to us on acceptable terms or at all. Our failure to raise capital as and when needed could have a negative impact on our financial condition and our ability to pursue our business strategies. We anticipate that we will need to raise substantial additional capital, the requirements of which will depend on many factors, including:
•the progress, costs, trial design, results of and timing of our Phase 3 NEAT clinical trial and any potential future trials;
•the outcome, costs and timing of seeking and obtaining FDA and any other regulatory approvals;
•payment of future milestones to EryDel shareholders and payments to the EIB in respect of obligations under the EIB Loan;
•the number and characteristics of drug candidates that we pursue;
•our ability to maintain, expand and defend the scope of our intellectual property portfolio, including the amount and timing of any payments we may be required to make, or that we may receive, in connection with the licensing, filing, prosecution, defense and enforcement of any patents or other intellectual property rights;
•our need and ability to retain management and hire scientific and clinical personnel;
•the effect of competing drugs and drug candidates and other market developments;
28
•our need to implement additional internal systems and infrastructure, including financial and reporting systems; and
•the economic and other terms, timing of and success of any collaboration, licensing or other arrangements into which we may enter in the future.
If we raise additional funds by issuing equity securities, our stockholders will experience dilution. Any future debt financing into which we enter may impose upon us additional covenants that restrict our operations, including limitations on our ability to incur liens or additional debt, pay dividends, repurchase our common stock, make certain investments and engage in certain merger, consolidation or asset sale transactions. Any debt financing or additional equity that we raise may contain terms that are not favorable to us or our stockholders. If we are unable to raise additional funds when needed, we may be required to delay, reduce, or terminate some or all of our development programs and clinical trials. We may also be required to sell or license to others rights to our drug candidates in certain territories or indications that we would prefer to develop and commercialize ourselves.
Financing
Equity Financing
On December 18, 2024, the Company entered into a Controlled Equity OfferingSM Sales Agreement, with Cantor Fitzgerald & Co. and H.C. Wainwright & Co., LLC, or the Agents, relating to the sale of shares of our common stock, par value $0.001 per share. In accordance with the terms of this agreement, the Company may offer and sell up to $21.9 million of shares of common stock.
During the three months ended March 31, 2025, we did not sell any shares of common stock pursuant to the Sales Agreement. During April and through May 12, 2025, the Company utilized its ATM program to raise net proceeds of approximately $2.9 million by issuing 2,766,549 shares of common stock.
In connection with the acquisition of EryDel on October 20, 2023, we guaranteed the EIB Loan. The EIB Loan was amended and restated as of the acquisition date. The EIB Loan provides for maximum borrowings of 30.0 million euro through four tranches; tranche A, 3.0 million euro; tranche B, 7.0 million euro; tranche C, 10.0 million euro; and tranche D, 10.0 million euro. Each tranche is subject to conditions precedent related to our business and capitalization. As of March 31, 2025, only tranches A and B have been drawn. All amounts due under tranche A and B are payable on their maturity date of August 2026. Tranche C and D are payable in equal installments of principal together with all amounts outstanding under the tranches on the repayment dates specified in the relevant disbursement offer. The first repayment date of tranche C shall fall not earlier than twelve months from the disbursement date of such tranche. The last repayment date of tranche C and tranche D shall fall not later than 5 years from the disbursement date of tranche C and tranche D, respectively. The EIB Loan bears interest at fixed rates for each tranche and both principal and interest are payable on the maturity date for each tranche (with the exception of 2% cash interest which shall accrue and be payable quarterly during fiscal year 2025 pursuant to the terms of the Amendment, which shall correspondingly reduce the deferred interest rate accruing during such period). The fixed rates range from 7.0% to 9.0% per annum. As of March 31, 2025, principal of 10.0 million euros ($10.8 million) was outstanding on the EIB Loan and it is recorded as Long-term debt on the consolidated balance sheet at fair value with imputed interest of 9.0% included.
We may voluntarily prepay, in whole or in part with a prepayment premium. In the event of an occurrence of an event of default, a change in control and certain other prepayment events, as specified in the Debt Agreement, we will be required to prepay the outstanding EIB Loan together with an additional remuneration buyout fee, as specified in the Debt Agreement. The Debt Agreement includes a provision for additional remuneration to be paid in addition to interest. The amount of additional remuneration to be paid is equal to 2.5% of revenue up to 125.0 million euros, plus 1.85% of revenue between 125.0 and 250.0 million euros, plus 1.0% of revenue in excess of 250.0 million euros, multiplied by a varying percentage based on how many tranches have been drawn. The varying percentage is equal to 30.0% in the event tranche A has been drawn, 50.0% in the event tranche A and B have been drawn, 80.0% in the event tranche A, B and C have been drawn, and 100.0% in the event all four tranches have been drawn. The additional remuneration is payable for seven years, during the period January 1, 2026, through December 31, 2032. In the event of an occurrence of an event of default or prepayment, we may be required to pay an additional remuneration buyout fee.
The Debt Agreement requires us to maintain a minimum cash balance of 14.65 million euros ($15.8 million) until the outstanding obligations under the Debt Agreement, together with accrued interest and all other amounts accrued or outstanding under the agreement, is repaid in full (the “Minimum Cash Covenant”). In November 2024, we entered into an
29
amendment (the “Amendment”) of the Debt Agreement with EIB which waives the Minimum Cash Covenant from January 1, 2025, and up to the earlier of December 31, 2025, or the date the Minimum Cash Covenant is restored (such period, the “Waiver Period”). Under the terms of the Amendment, we agreed to amendments requiring monthly reporting of cash balances and additional limitations on certain permitted acquisitions. Additionally, solely during the waiver period, 2% cash interest on the outstanding principal amounts of tranches A and B are payable on March 31, 2025, June 30, 2025, September 30, 2025 and December 31, 2025, reducing the total deferred interest on tranches A and B to 7% for the duration of the Waiver Period, and a one-time fee of 20,000 euros in connection with the Amendment. As of March 31, 2025, we have been in compliance with all covenants under the Debt Agreement.
Cash Flows
The following table sets forth the primary sources and uses of cash and cash equivalents for each of the periods presented below (in thousands):
| Three Months Ended March 31, | |||||||||||
| 2025 | 2024 | ||||||||||
| Net cash (used in) provided by: | |||||||||||
| Operating activities | $ | (9,601) | $ | (8,353) | |||||||
| Investing activities | 10,898 | 8,914 | |||||||||
| Financing activities | 87 | 190 | |||||||||
| Effect of exchange rate changes on cash | 175 | 310 | |||||||||
Net increase in cash and cash equivalents | $ | 1,559 | $ | 1,061 | |||||||
Operating Activities
Net cash used in operating activities was $9.6 million for the three months ended March 31, 2025. Cash used in operating activities was primarily due to our net loss of $15.0 million for the period, adjusted for $3.4 million of non-cash items, including $1.9 million change in the fair value of contingent consideration liabilities, $1.4 million in stock-based compensation, $0.4 million change in the fair value of the EIB Loan and a net decrease in our operating assets of $1.1 million, offset by a net increase in our accounts payable, and accrued expenses and other current liabilities of $0.9 million.
Net cash used in operating activities was $8.4 million for the three months ended March 31, 2024. Cash used in operating activities was primarily due to our net loss of $11.1 million for the period, adjusted for $3.6 million of non-cash items, including $2.5 million change in the fair value of contingent consideration liabilities, $1.3 million in stock-based compensation, and a net decrease in accounts payable, accrued expenses and other current liabilities of $0.3 million, partially offset by increases in our current assets of $0.5 million.
Investing Activities
Cash provided by investing activities was $10.9 million for the three months ended March 31, 2025, primarily related to the maturities of short-term investments of $13.0 million, and the purchase of investments of $2.0 million.
Cash provided by investing activities was $8.9 million in the three months ended March 31, 2024, primarily related to the maturities of short-term investments of $48.2 million, and the purchase of investments of $39.3 million.
Financing Activities
Cash used in financing activities was $0.1 million for the three months ended March 31, 2025, which consisted of net proceeds from the exercise of stock options in the period.
Cash provided by financing activities was $0.2 million in the three months ended March 31, 2024, which consisted of net proceeds from the exercise of stock options in the period.
30
Contractual Obligations and Commitments
Our contractual obligations primarily consist of our obligations under non-cancellable operating leases and other purchase obligations.
We enter into contracts in the normal course of business with third party contract organizations for clinical trials, non-clinical studies and testing, manufacturing, and other services and products for operating purposes. The amount and timing of the payments under these contracts varies based upon the timing of the services. We have recorded accrued expense of approximately $5.3 million in our condensed consolidated balance sheet for expenditures incurred by these vendors as of March 31, 2025. We have approximately $22.8 million in cancellable future operating expense commitments based on existing contracts as of March 31, 2025. These obligations will be satisfied in the normal course of business, but generally no longer than 12 months. As of March 31, 2025, the fair value of the EIB Loan is $15.3 million and it is recorded as long-term debt on the condensed consolidated balance sheet at fair value. As of March 31, 2025, the fair value of long-term contingent consideration on our books for the earnout related to the EryDel Acquisition is $58.6 million, refer to Note 3 to the condensed consolidated financial statements for further details.
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act, and are not required to provide the information required under this item.
Item 4. Controls and Procedures.
Evaluation of Disclosure Controls and Procedures
Our disclosure controls and procedures are designed to ensure that information required to be disclosed by us in reports that we file or submit under the Exchange Act, is recorded, communicated to our management to allow timely decisions regarding required disclosure, summarized and reported within the time periods specified in the SEC's rules and forms. Any disclosure controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objective and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures.
Under the supervision and with the participation of our management, including the Chief Executive Officer and Principal Financial Officer, we conducted an evaluation of the effectiveness of our disclosure controls and procedures, as such term is defined under Rules 13a-15(e) and 15d-15(e) under the Exchange Act, as of March 31, 2025. Based on that evaluation, the Chief Executive Officer and Principal Financial Officer have concluded that, as of such date, our disclosure controls and procedures were effective.
Changes in Internal Control over Financial Reporting
There have been no changes in our internal control over financial reporting during the quarter ended March 31, 2025 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
31
PART II—OTHER INFORMATION
Item 1. Legal Proceedings.
From time to time, we may become involved in legal proceedings arising in the ordinary course of business. We are not currently a party to any litigation or legal proceedings that, in the opinion of our management, are likely to have a material adverse effect on our business. Regardless of outcome, litigation can have an adverse impact on us because of defense and settlement costs, diversion of management resources, negative publicity and reputational harm, and other factors.
Item 1A. Risk Factors.
In addition to the other information set forth in this report, you should carefully consider the factors discussed in "Part I, Item 1A. Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2024, which could materially affect our business, financial condition or future results. We may be unable for many reasons, including those that are beyond our control, to implement our business strategy successfully. The occurrence of any single risk or any combination of risks could materially and adversely affect our business, financial condition, results of operations, cash flows and the trading price of our common stock. As of the date of this report there has been no material change in any of the risk factors described in our Annual Report on Form 10-K for the fiscal year ended December 31, 2024.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
None.
Item 3. Defaults Upon Senior Securities.
Not Applicable.
Item 4. Mine Safety Disclosures.
Not applicable.
Item 5. Other Information
32
Item 6. Exhibits.
The exhibits filed or furnished as part of this Quarterly Report on Form 10-Q are set forth on the Exhibit Index, timely and successful completion which Exhibit Index is incorporated herein by reference.
Exhibit Number | Description | Incorporated by Reference | ||||||||||||||||||||||||||||||
| Form | Filing Date | Number | Filed Herewith | |||||||||||||||||||||||||||||
| 3.1 | 8-K | 5/13/2019 | 001-38890 | |||||||||||||||||||||||||||||
| 3.2 | 8-K | 8/1/2022 | 001-38890 | |||||||||||||||||||||||||||||
| 3.3 | 8-K | 8/1/2022 | 001-38890 | |||||||||||||||||||||||||||||
| 31.1 | X | |||||||||||||||||||||||||||||||
| 31.2 | X | |||||||||||||||||||||||||||||||
| 32.1# | X | |||||||||||||||||||||||||||||||
| 32.2# | X | |||||||||||||||||||||||||||||||
| 101.INS | Inline XBRL Instance Document | X | ||||||||||||||||||||||||||||||
| 101.SCH | Inline XBRL Taxonomy Extension Schema Document | X | ||||||||||||||||||||||||||||||
| 101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document | X | ||||||||||||||||||||||||||||||
| 101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document | X | ||||||||||||||||||||||||||||||
| 101.LAB | Inline XBRL Taxonomy Extension Label Linkbase Document | X | ||||||||||||||||||||||||||||||
| 101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document | X | ||||||||||||||||||||||||||||||
| 104 | Cover Page Interactive Data File, formatted in Inline XBRL (included in Exhibit 101) | |||||||||||||||||||||||||||||||
# In accordance with Item 601(b)(32)(ii) of Regulation S-K and SEC Release Nos. 33-8238 and 34-47986, Final Rule: Management's Reports on Internal Control Over Financial Reporting and Certification of Disclosure in Exchange Act Periodic Reports, the certifications furnished in Exhibits 32.1 and 32.2 hereto are deemed to accompany this Quarterly Report on Form 10-Q and will not be deemed “filed” for purpose of Section 18 of the Exchange Act. Such certifications will not be deemed to be incorporated by reference into any filing under the Securities Act or the Exchange Act, except to the extent that the registrant specifically incorporates it by reference.
33
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| Quince Therapeutics, Inc. | ||||||||
Date: May 13, 2025 | By: | /s/ Dirk Thye | ||||||
| Dirk Thye | ||||||||
| Chief Executive Officer and Chief Medical Officer | ||||||||
| (Principal Executive Officer) | ||||||||
Date: May 13, 2025 | By: | /s/ Brendan Hannah | ||||||
| Brendan Hannah | ||||||||
| Chief Business Officer, Chief Operating Officer, and Chief Compliance Officer | ||||||||
| (Principal Financial Officer) | ||||||||
34
Exhibit 31.1
CERTIFICATION PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Dirk Thye, certify that:
1.I have reviewed this Quarterly Report on Form 10-Q of Quince Therapeutics, Inc. for the quarter ended March 31, 2025;
2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
Date: May 13, 2025 | /s/ Dirk Thye | ||||
| Dirk Thye | |||||
| Chief Executive Officer and Chief Medical Officer (Principal Executive Officer) | |||||
Exhibit 31.2
CERTIFICATION PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Brendan Hannah, certify that:
1.I have reviewed this Quarterly Report on Form 10-Q of Quince Therapeutics, Inc. for the quarter ended March 31, 2025;
2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
Date: May 13, 2025 | /s/ Brendan Hannah | ||||
| Brendan Hannah | |||||
Chief Business Officer, Chief Operating Officer, and Chief Compliance Officer (Principal Financial Officer) | |||||
Exhibit 32.1
CERTIFICATION PURSUANT TO SECTION 906 OF
THE SARBANES-OXLEY ACT OF 2002 (18 U.S.C. SECTION 1350)
In connection with the Quarterly Report of Quince Therapeutics, Inc. (the “Company”) on Form 10-Q for the quarter ended March 31, 2025 as filed with the Securities and Exchange Commission on the date hereof to which this Certification is attached as Exhibit 32.1 (the “Report”), I certify, pursuant to Rule 13a-149b) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:
(1)The Report fully complies with the requirements of Section 13(a) or 15(d) of the Exchange Act; and
(2)The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
Date: May 13, 2025 | By: | /s/ Dirk Thye | ||||||
| Dirk Thye | ||||||||
| Chief Executive Officer and Chief Medical Officer | ||||||||
| (Principal Executive Officer) | ||||||||
This certification accompanies the Form 10-Q to which it relates, is not deemed filed with the Securities and Exchange Commission and is not to be incorporated by reference into any filing of the Company under the Securities Act of 1933, as amended, or the Exchange Act (whether made before or after the date of the Form 10-Q), irrespective of any general incorporation language contained in such filing.
Exhibit 32.2
CERTIFICATION PURSUANT TO SECTION 906 OF
THE SARBANES-OXLEY ACT OF 2002 (18 U.S.C. SECTION 1350)
In connection with the Quarterly Report of Quince Therapeutics, Inc. (the “Company”) on Form 10-Q for the quarter ended March 31, 2025 as filed with the Securities and Exchange Commission on the date hereof to which this Certification is attached as Exhibit 32.2 (the “Report”), I certify, pursuant to Rule 13a-149b) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:
(1)The Report fully complies with the requirements of Section 13(a) or 15(d) of the Exchange Act; and
(2)The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
Date: May 13, 2025 | By: | /s/ Brendan Hannah | ||||||
| Brendan Hannah | ||||||||
| Chief Business Officer, Chief Operating Officer, and Chief Compliance Officer | ||||||||
| (Principal Financial Officer) | ||||||||
This certification accompanies the Form 10-Q to which it relates, is not deemed filed with the Securities and Exchange Commission and is not to be incorporated by reference into any filing of the Company under the Securities Act of 1933, as amended, or the Exchange Act (whether made before or after the date of the Form 10-Q), irrespective of any general incorporation language contained in such filing.