Scholar Rock Holding Corp 10-Q for FY2021 Q1

Scholar Rock Holding Corp (SRRK)

10-Q 2021-05-13 For: 2021-03-31

Added on April 07, 2026

About this 10-Q

Scholar Rock Holding Corp filed this 10-Q on May 13, 2021, covering the quarter ended March 31, 2021 (FY2021 Q1).

Headline figures

Quarter ended March 31, 2021, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $4.71M; down 6.4% from $5.03M a year earlier
Net loss: $27.67M; compared with a net loss of $17.07M a year earlier

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Delaware	82-3750435
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

301 Binney Street, 3rd Floor Cambridge, Massachusetts	02142
(Address of principal executive offices)	(Zip Code)


Title of each class	Trading symbol(s)	Name of each exchange on which registered
Common Stock, par value $0.001 per share	SRRK	The Nasdaq Global Select Market


Large accelerated filer	☐	Accelerated filer	☐

Non-accelerated filer	☒	Smaller reporting company	☒

		Emerging growth company	☒

	Page
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)	5
Consolidated Balance Sheets as of March 31, 2021 and December 31, 2020	5
Consolidated Statements of Operations and Comprehensive Loss for the Three Months Ended March 31, 2021 and 2020	6
Consolidated Statements of Stockholders’ Equity for the Three Months Ended March 31, 2021 and 2020	7
Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2021 and 2020	8
Notes to Consolidated Financial Statements	9
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	17
Item 3. Quantitative and Qualitative Disclosures About Market Risk	29
Item 4. Controls and Procedures	29

PART II. OTHER INFORMATION
Item 1. Legal Proceedings	30
Item 1A. Risk Factors	31
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	82
Item 3. Defaults Upon Senior Securities	82
Item 4. Mine Safety Disclosures	82
Item 5. Other Information	82
Item 6. Exhibits	83
SIGNATURES	84


	March 31,		December 31,
	2021		2020
Assets
Current assets:
Cash and cash equivalents	$	159,108	$	160,358
Marketable securities		155,581		180,673
Prepaid expenses and other current assets		3,803		3,373
Total current assets		318,492		344,404
Property and equipment, net		8,925		8,121
Operating lease right-of-use asset		29,675		32,261
Restricted cash		2,498		2,498
Other long-term assets		996		1,021
Total assets	$	360,586	$	388,305
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	2,196	$	3,409
Accrued expenses		14,553		14,958
Operating lease liability		5,670		5,366
Deferred revenue		47,301		18,816
Other current liabilities		235		15
Total current liabilities		69,955		42,564
Long-term portion of operating lease liability		25,324		27,093
Long-term debt		24,763		24,680
Other long-term liabilities		4		5
Long-term portion of deferred revenue		—		33,193
Total liabilities		120,046		127,535
Commitments and contingencies (Note 7)
Stockholders’ equity:
Preferred stock, $0.001 par value; 10,000,000 shares authorized at March 31, 2021 and December 31, 2020; no shares issued and outstanding at March 31, 2021 and December 31, 2020		—		—
Common stock, $0.001 par value; 150,000,000 shares authorized; 34,398,390 and 34,152,470 shares issued and outstanding as of March 31, 2021 and December 31, 2020, respectively		34		34
Additional paid-in capital		512,485		505,069
Accumulated other comprehensive income (loss)		23		(2)
Accumulated deficit		(272,002)		(244,331)
Total stockholders’ equity		240,540		260,770
Total liabilities and stockholders’ equity	$	360,586	$	388,305


☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


	Three Months Ended March 31,
	2021		2020
Revenue	$	4,708	$	5,030
Operating expenses:
Research and development		22,549		16,902
General and administrative		9,366		5,822
Total operating expenses		31,915		22,724
Loss from operations		(27,207)		(17,694)
Other income (expense), net		(464)		624
Net loss	$	(27,671)	$	(17,070)
Net loss per share, basic and diluted	$	(0.76)	$	(0.58)
Weighted average common shares outstanding, basic and diluted		36,380,438		29,527,349

Comprehensive loss:
Net loss	$	(27,671)	$	(17,070)
Other comprehensive income:
Unrealized gain on marketable securities		25		197
Total other comprehensive income		25		197
Comprehensive loss	$	(27,646)	$	(16,873)


						Accumulated
				Additional		Other				Total
	Common Stock			Paid‑in		Comprehensive		Accumulated		Stockholders’
	Shares	Amount		Capital		Income (Loss)		Deficit		Equity
Balance at December 31, 2020	34,152,470	$	34	$	505,069	$	(2)	$	(244,331)	$	260,770
Unrealized gain on marketable securities	—		—		—		25		—		25
Exercise of stock options	245,920		—		2,743		—		—		2,743
Equity-based compensation expense	—		—		4,673		—		—		4,673
Net Loss	—		—		—		—		(27,671)		(27,671)
Balance at March 31, 2021	34,398,390	$	34	$	512,485	$	23	$	(272,002)	$	240,540

						Accumulated
				Additional		Other				Total
	Common Stock			Paid‑in		Comprehensive		Accumulated		Stockholders’
	Shares	Amount		Capital		Income		Deficit		Equity
Balance at December 31, 2019	29,792,922	$	30	$	270,682	$	37	$	(157,848)	$	112,901
Unrealized gain on marketable securities	—		—		—		197		—		197
Exercise of stock options	40,252		—		405		—		—		405
Equity-based compensation expense	—		—		2,214		—		—		2,214
Net loss	—		—		—		—		(17,070)		(17,070)
Balance at March 31, 2020	29,833,174	$	30	$	273,301	$	234	$	(174,918)	$	98,647


	Three Months Ended
	March 31,
	2021		2020
Cash flows from operating activities:
Net loss	$	(27,671)	$	(17,070)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		590		391
Amortization of debt discount and debt issuance costs		83		—
Loss on disposal of property and equipment		24		—
Equity-based compensation		4,673		2,214
Amortization/accretion of investment securities		248		(177)
Non-cash operating lease expense		1,537		259
Change in operating assets and liabilities:
Accounts receivable		—		25,000
Prepaid expenses and other current assets		619		(806)
Other assets		25		(732)
Accounts payable		(1,228)		1,089
Accrued expenses		506		(2,234)
Operating lease liabilities		(1,465)		(268)
Deferred revenue		(4,708)		(5,030)
Other liabilities		223		—
Net cash (used in) provided by operating activities		(26,544)		2,636
Cash flows from investing activities:
Purchases of property and equipment		(2,312)		(209)
Purchases of marketable securities		(30,131)		(19,400)
Maturities of marketable securities		55,000		75,700
Net cash provided by investing activities		22,557		56,091
Cash flows from financing activities:
Proceeds from stock option exercises		2,743		405
Other		(6)		(6)
Net cash provided by financing activities		2,737		399
Net (decrease) increase in cash, cash equivalents and restricted cash		(1,250)		59,126
Cash, cash equivalents and restricted cash, beginning of period		162,856		38,806
Cash, cash equivalents and restricted cash, end of period	$	161,606	$	97,932
Supplemental disclosure of non-cash items:
Property and equipment purchases in accounts payable and accrued expenses	$	473	$	10
Supplemental cash flow information:
Cash paid for interest	$	491	$	—


	As of March 31,
	2021		2020
Cash and cash equivalents	$	159,108	$	95,434
Restricted cash		2,498		2,498
	$	161,606	$	97,932


	Fair Value Measurements at March 31, 2021
	Total		Level 1		Level 2		Level 3
Assets:
Money market funds, included in cash and cash equivalents	$	144,887	$	144,887	$	—	$	—
U.S. Treasury obligations, included in cash and cash equivalents		—		—		—		—
Marketable securities:
U.S. Treasury obligations		155,581		155,581		—		—
Total assets	$	300,468	$	300,468	$	—	$	—


	Fair Value Measurements at December 31, 2020
	Total		Level 1		Level 2		Level 3
Assets:
Money market funds, included in cash and cash equivalents	$	119,841	$	119,841	$	—	$	—
U.S. Treasury obligations, included in cash and cash equivalents		9,998		9,998		—		—
Marketable securities:
U.S. Treasury obligations		180,673		180,673		—		—
Total assets	$	310,512	$	310,512	$	—	$	—


			Gross
	Amortized		Unrealized				Estimated
	Cost		Gains		Losses		Fair Value
Marketable securities available-for-sale:
U.S. Treasury obligations	$	155,558	$	23	$	—	$	155,581
Total available-for-sale securities	$	155,558	$	23	$	—	$	155,581


	As of
	March 31,		December 31,
	2021		2020
Accrued external research and development expense	$	8,327	$	5,387
Accrued payroll and related expenses		3,269		6,663
Accrued professional and consulting expense		1,858		1,141
Accrued other		820		476
Accrued payable for property and equipment		279		1,291
	$	14,553	$	14,958



	As of March 31, 2021
		Unrecognized expense (in thousands)	Period of recognition (years)
Restricted Stock Awards	$	150	0.4
Restricted Stock Units		14,223	3.8
Stock Options		60,498	2.8
	$	74,871


		Weighted
		Average Fair
		Value per Share
	Number of Shares	at Issuance
Restricted stock awards as of December 31, 2020	57,969	$	5.77
Vested	(24,283)	$	5.77
Restricted stock awards as of March 31, 2021	33,686	$	5.77


		Weighted
		Average Grant
	Number of Units	Date Fair Value
Restricted stock units as of December 31, 2020	—	$	—
Granted	259,007	$	59.80
Forfeited	(11,940)	$	59.16
Restricted stock units as of March 31, 2021	247,067	$	59.83


				Weighted
		Weighted		Average
	Number of	Average		Remaining	Aggregate
	Shares	Exercise Price		Contractual Term	Intrinsic Value
				(in years)	(in thousands)
Outstanding as of December 31, 2020	3,679,931	$	14.96	8.01	$	123,600
Granted	970,639	$	59.38
Exercised	(245,920)	$	11.15
Cancelled	(120,657)	$	28.25
Outstanding as of March 31, 2021	4,283,993	$	24.87	8.29	$	118,628
Options exercisable as of March 31, 2021	870,143	$	14.42	7.64	$	31,532


	For Three Months Ended
	March 31,
	2021
Lease Cost:
Operating lease cost	$	2,154
Variable lease cost		608
Total lease cost	$	2,762


	Three Months Ended March 31,				Change
	2021		2020		$		%
Revenue	$	4,708	$	5,030	$	(322)	(6.4)	%
Operating expenses:
Research and development		22,549		16,902		5,647	33.4	%
General and administrative		9,366		5,822		3,544	60.9	%
Total operating expenses		31,915		22,724		9,191	40.4	%
Loss from operations		(27,207)		(17,694)		(9,513)	53.8	%
Other income (expense), net		(464)		624		(1,088)	(174.4)	%
Net loss	$	(27,671)	$	(17,070)	$	(10,601)	62.1	%

		Incorporated by Reference to:
Exhibit Number	Description	Form	File No.	Exhibit No.	Filing Date
3.1	Amended and Restated Certificate of Incorporation of the Registrant	S-1/A	333-224493	3.2	May 8, 2018
3.2	Amendment to Amended and Restated Certificate of Incorporation of the Registrant	S-1/A	333-224493	3.1.1	May 14, 2018
3.3	Amended and Restated By-laws of the Registrant	S-1/A	333-224493	3.4	May 8, 2018
4.1	Investors’ Rights Agreement among the Registrant and certain of its stockholders, dated December 22, 2017	S-1	333-224493	4.1	April 27, 2018
4.2	Specimen Stock Certificate evidencing shares of common stock	S-1/A	333-224493	4.2	May 14, 2018
4.3	Amended and Restated Warrant to Purchase Stock, by and between Silicon Valley Bank and the Registrant, dated December 22, 2017	S-1	333-224493	4.3	April 27, 2018
31.1*	Certification of Principal Executive Officer Pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934
31.2*	Certification of Principal Financial Officer Pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934
32.1**	Certification of Principal Executive Officer and Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS	XBRL Instance Document
101.SCH	XBRL Taxonomy Extension Schema Document
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document
101.LAB	XBRL Taxonomy Extension Label Linkbase Document
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document
104	Cover Page Interactive Data File (formatted as inline XBRL with applicable taxonomy extension information contained in Exhibits 101.*)



	SCHOLAR ROCK HOLDING CORPORATION

Date: May 13, 2021	By:	/s/ Stuart A. Kingsley
		Stuart A. Kingsley President and Chief Executive Officer (Principal Executive Officer)
Date: May 13, 2021	By:	/s/ Edward H. Myles
		Edward H. Myles Chief Financial Officer and Head of Business Operations (Principal Financial Officer)


Date: May 13, 2021	/s/ Stuart A. Kingsley
	Stuart A. Kingsley
	President and Chief Executive Officer (Principal Executive Officer)


Date: May 13, 2021	/s/ Edward H. Myles
	Edward H. Myles
	Chief Financial Officer and Head of Business Operations (Principal Financial Officer)