howl-20240331

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, 2024


☐			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 001-40366

______________________________________________________________________________________

WEREWOLF THERAPEUTICS, INC.

(Exact name of registrant as specified in its charter)

______________________________________________________________________________________


Delaware			82-3523180
(State or other jurisdiction of incorporation or organization)			(I.R.S. Employer Identification No.)

200 Talcott Ave, 2nd Floor Watertown, Massachusetts (Address of principal executive offices)			02472 (Zip Code)

Registrant’s telephone number, including area code: (617) 952‑0555

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

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $0.0001 par value per share	HOWL	The Nasdaq Global Select Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S‑T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non‑accelerated filer, a smaller reporting company, or an emerging growth company.

See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b‑2 of the Exchange Act.

Large accelerated filer

☐

Accelerated filer

☐

Non‑accelerated filer

☒

Smaller reporting company

☒

Emerging growth company

☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☒

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b‑2 of the Exchange Act). Yes ☐ No ☒

As of April 29, 2024, there were 43,455,367 shares of common stock, $0.0001 par value per share, outstanding.

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		Page
PART I. FINANCIAL INFORMATION

Item 1.	Financial Statements (unaudited)	4
	Condensed Consolidated Balance Sheets as of March 31, 2024 and December 31, 2023	4
	Condensed Consolidated Statements of Operations for the Three Months Ended March 31, 2024 and 2023	5
	Condensed Consolidated Statements of Stockholders’ Equity for the Three Months Ended March 31, 2024 and 2023	6
	Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2024 and 2023	7
	Notes to Condensed Consolidated Financial Statements	8
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	17
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	26
Item 4.	Controls and Procedures	26

PART II. OTHER INFORMATION

Item 1A.	Risk Factors	28

Item 5.	Other Information	81
Item 6.	Exhibits	83

SIGNATURES

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References to Werewolf

Throughout this Quarterly Report on Form 10-Q, or Quarterly Report, the “Company,” “Werewolf,” “Werewolf Therapeutics,” “we,” “us,” “our,” and similar references, except where the context requires otherwise, refer to Werewolf Therapeutics, Inc. and its consolidated subsidiary, and “board of directors” refers to the board of directors of Werewolf Therapeutics, Inc.

Cautionary Note Regarding Forward-Looking Statements and Industry Data

This Quarterly Report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, or the Exchange Act, that involve substantial risks and uncertainties. All statements other than statements of historical facts contained in this Quarterly Report, including statements regarding our strategy, future operations, future financial position, future revenue, projected costs, prospects, plans, objectives of management and expected market growth, are forward-looking statements.

The words “aim,” “anticipate,” “believe,” “contemplate,” “continue,” “could,” “estimate,” “expect,” “goal,” “intend,” “may,” “might,” “objective,” “ongoing,” “plan,” “potential,” “predict,” “project,” “should,” “target,” “will,” “would,” or the negative of these words or other similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. These forward-looking statements include, among other things, statements about:

•the initiation, timing, progress and results of our research and development programs, preclinical studies and ongoing and planned clinical trials, including the anticipated timing of data announcements;

•our estimates regarding expenses, capital requirements, need for additional financing and the period over which we believe our existing cash and cash equivalents will be sufficient to fund our operating expenses and capital expenditure requirements;

•our plans to develop and, if approved, subsequently commercialize product candidates;

•the timing of and our ability to submit applications and obtain and maintain regulatory approvals for product candidates;

•the potential advantages of our PREDATOR platform and our ability to use our platform to identify and develop future product candidates;

•our estimates regarding the potential market opportunities for our product candidates;

•our commercialization, marketing and manufacturing capabilities and strategy;

•our intellectual property position and our expectations regarding our ability to obtain and maintain intellectual property protection;

•our ability to identify additional products, product candidates or technologies with significant commercial potential that are consistent with our commercial objectives;

•the impact of government laws and regulations;

•our competitive position and expectations regarding developments and projections relating to our competitors and any competing therapies that are or become available; and

•developments and expectations regarding developments and projections relating to our competitors and our industry.

There are a number of important risks and uncertainties that could cause our actual results to differ materially from those indicated by forward-looking statements. We may not actually achieve the plans, intentions or expectations disclosed in our forward-looking statements, and you should not place undue reliance on our forward-looking statements. Actual results or events could differ materially from the plans, intentions and expectations disclosed in the forward-looking statements we make. We have included important factors in the cautionary statements included in this Quarterly Report, particularly in Part II, Item 1A. “Risk Factors”, that we believe could cause actual results or events to differ materially from the forward-looking statements that we make. New risk factors and uncertainties may emerge from time to time, and it is not possible for management to predict all risk factors and uncertainties, 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 make. Our forward-looking statements do not reflect the potential impact of any future acquisitions, mergers, dispositions, collaborations, joint ventures or investments that we may make or enter into.

You should read this Quarterly Report and the documents that we have filed or incorporated by reference as exhibits to this Quarterly Report completely and with the understanding that our actual future results may be materially different from what we expect. The forward-looking statements contained in this Quarterly Report are made as of the date of this Quarterly Report, and

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we do not assume any obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by applicable law.

In addition, statements that “we believe” and similar statements reflect our beliefs and opinions on the relevant subject. These statements are based upon information available to us as of the date of this Quarterly Report, and while we believe such information forms a reasonable basis for such statements, such information may be limited or incomplete. Our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all potentially available relevant information. These statements are inherently uncertain, and you are cautioned not to unduly rely on these statements.

Trademarks and Trade names

We own or have rights to trademarks, service marks and trade names that we use in connection with the operation of our business, including our corporate name, logos and website names. The service marks and trademarks that we own include the marks PREDATOR™ and INDUKINE™. Other trademarks, service marks and trade names appearing in this Quarterly Report are the property of their respective owners. Solely for convenience, some of the trademarks, service marks and trade names referred to in this Quarterly Report are listed without the ® and ™ symbols, but we will assert, to the fullest extent under applicable law, our rights to our trademarks, service marks and trade names.

Risk Factor Summary

Our business is subject to numerous risks that, if realized, could materially and adversely affect our business, financial condition, results of operations and future growth prospects. These risks are discussed more fully in Part II, Item 1A. “Risk Factors” in this Quarterly Report. These risks include, but are not limited to, the following:

•We have a limited operating history, have incurred significant operating losses since our inception and expect to incur significant losses for the foreseeable future.

•We have no products approved for commercial sale and have not generated any revenue from product sales. We may never generate any revenue from product sales or become profitable or, if we achieve profitability, we may not be able to sustain it.

•We will need to obtain substantial additional funding to finance our operations and complete the development and any commercialization of WTX-124, WTX-330 and any future product candidates.

•We are early in our development efforts and our current product candidates will require successful completion of preclinical and clinical development before we can seek regulatory approval for any product candidates.

•Our business is highly dependent on the success of our initial INDUKINE molecules, which are in the early stages of development and will require significant additional preclinical and clinical development before we can seek regulatory approval for and launch a product commercially.

•Our approach to the discovery and development of product candidates based on our PREDATOR platform is unproven, and we do not know whether we will be able to develop any products of commercial value.

•Manufacturing INDUKINE molecules is subject to risk since they are a novel class of multi-domain biologics that include protease cleavable linkers, and they have never been produced on a commercial scale. We may be unable to manufacture INDUKINE molecules at the scale needed for clinical development and commercial production on a timely basis or at all.

•Preclinical studies and clinical trials are expensive, time-consuming and difficult to design and implement, and involve uncertain outcomes.

•We may encounter substantial delays in the commencement or completion, or termination or suspension, of our clinical trials, which could result in increased costs to us, delay or limit our ability to generate revenue and adversely affect our commercial prospects.

•If we experience delays or difficulties in the enrollment of patients in clinical trials, our clinical development activities could be delayed or otherwise adversely affected.

•We are developing WTX-124, and could develop WTX-330 and potentially future product candidates, in combination with third-party drugs, some of which may still be in development, and we will have limited or no control over the safety, supply, regulatory status or regulatory approval of such drugs.

•We face substantial competition, which may result in others discovering, developing or commercializing products before or more successfully than we do.

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•We rely, and expect to continue to rely, on third parties to conduct our preclinical studies and clinical trials. If these third parties do not successfully carry out their contractual duties or meet expected deadlines or comply with regulatory requirements, we may not be able to obtain regulatory approval of or commercialize any product candidates.

•The manufacturing of biologics is complex, and we do not have our own clinical manufacturing capabilities. We will rely on third parties to produce preclinical, clinical and commercial supplies of all current and any future product candidates.

•We rely on our license agreement with Harpoon Therapeutics, Inc. for patent rights with respect to our product candidates and may in the future acquire additional third-party intellectual property rights on which we may similarly rely. We face risks with respect to such reliance, including the risk that we could lose these rights that are important to our business if we fail to comply with our obligations under these licenses.

•Our proprietary position in part depends upon patents that are manufacturing, formulation or method-of-use patents, which may not prevent a competitor or other third party from using the same product candidate for another use.

•In the past, we have identified material weaknesses in our internal control over financial reporting, and if we are unable to implement and maintain effective internal control over financial reporting in the future, investors may lose confidence in the accuracy and completeness of our financial reports, and the market price of our common stock may be materially adversely affected.

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PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

Werewolf Therapeutics, Inc.

Condensed Consolidated Balance Sheets (unaudited)

(amounts in thousands, except share and per share amounts)


	March 31, 2024		December 31, 2023
Assets
Current assets:
Cash and cash equivalents	$	139,189	$	134,343
Prepaid expenses and other current assets	2,320		2,677
Other receivables	775		1,350
Total current assets	142,284		138,370
Property and equipment, net	7,529		7,958
Restricted cash and cash equivalents, net of current portion	21,027		21,023
Operating lease right of use asset	6,512		6,888
Other assets	248		594
Total assets	$	177,600	$	174,833
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable	$	1,594	$	1,336
Accrued expenses and other current liabilities	6,215		8,860
Operating lease liability, current	1,236		1,608
Deferred revenue, current	502		907
Note payable, current	11,667		6,667
Total current liabilities	21,214		19,378
Operating lease liability, net of current portion	10,620		10,992
Deferred revenue, net of current portion	431		433
Note payable, net of discount, issuance costs, and current portion	27,748		32,656

Total liabilities	60,013		63,459
Commitments and contingencies
Stockholders’ equity:
Preferred stock, $0.0001 par value, 5,000,000 shares authorized as of March 31, 2024 and December 31, 2023; no shares issued or outstanding as of March 31, 2024 and December 31, 2023	—		—
Common stock, $0.0001 par value, 200,000,000 shares authorized as of March 31, 2024 and December 31, 2023; 43,282,371 and 39,107,048 shares issued and outstanding as of March 31, 2024 and December 31, 2023, respectively	4		4
Additional paid-in capital	477,849		455,443
Accumulated deficit	(360,266)		(344,073)
Total stockholders’ equity	117,587		111,374
Total liabilities and stockholders’ equity	$	177,600	$	174,833

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

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Werewolf Therapeutics, Inc.

Condensed Consolidated Statements of Operations (unaudited)

(amounts in thousands, except share and per share amounts)


	Three Months Ended March 31,
	2024		2023
Revenue:
Collaboration revenue	$	742	$	4,464
Operating expenses:
Research and development	12,908		11,706
General and administrative	4,996		4,981
Total operating expenses	17,904		16,687
Operating loss	(17,162)		(12,223)
Other income:
Interest income	1,973		1,519
Interest expense	(1,003)		(172)
Other expense, net	(1)		(1,106)
Total other income	969		241
Net loss	$	(16,193)	$	(11,982)
Net loss per common share, basic and diluted	$	(0.39)	$	(0.34)

Weighted-average common shares outstanding, basic and diluted	41,607,279		34,784,682

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

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Werewolf Therapeutics, Inc.

Condensed Consolidated Statements of Stockholders’ Equity (unaudited)

(amounts in thousands, except share amounts)


	Common Stock			Additional Paid-in Capital		Accumulated Deficit		Total Stockholders’ Equity
	Shares	Amount
Balance at December 31, 2023	39,107,048	$	4	$	455,443	$	(344,073)	$	111,374
Issuance of common stock from at the market offering, net of issuance costs of $985	4,169,324	—		20,089		—		20,089
Stock-based compensation expense	—	—		2,305		—		2,305
Stock option exercises	5,999	—		12		—		12
Net loss	—	—		—		(16,193)		(16,193)
Balance at March 31, 2024	43,282,371	$	4	$	477,849	$	(360,266)	$	117,587












	Common Stock			Additional Paid-in Capital		Accumulated Deficit		Total Stockholders’ Equity
	Shares	Amount
Balance at December 31, 2022	31,515,074	$	3	$	429,039	$	(306,705)	$	122,337
Issuance of common stock from at the market offering, net of issuance cost of $370	3,824,249	—		8,610		—		8,610

Stock-based compensation expense	—	—		2,108		—		2,108

Net loss	—	—		—		(11,982)		(11,982)
Balance at March 31, 2023	35,339,323	$	3	$	439,757	$	(318,687)	$	121,073

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

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Werewolf Therapeutics, Inc.

Condensed Consolidated Statements of Cash Flows (unaudited)

(amounts in thousands)


	Three Months Ended March 31,
	2024		2023
Operating activities:
Net loss	$	(16,193)	$	(11,982)
Adjustments to reconcile net loss to net cash used in operating activities:
Stock-based compensation expense	2,305		2,108
Depreciation expense	464		425
Non-cash interest expense	92		13
Non-cash lease expense	376		336
Change in fair value of success payment liability	—		(1,021)
Amortization of debt issuance costs	—		60
Changes in operating assets and liabilities:
Prepaid expenses and other assets	704		1,425
Other receivables	575		673

Accounts payable, accrued expenses and other liabilities	(2,469)		903

Deferred revenue	(407)		(2,343)
Operating lease liability	(744)		(495)

Net cash used in operating activities	(15,297)		(9,898)
Investing activities:
Purchases of property and equipment	(111)		(168)
Net cash used in investing activities	(111)		(168)
Financing activities:
Proceeds from at the market offering of common stock, net of issuance costs	20,247		8,623
Proceeds from drawdown of term loans	—		40,000

Proceeds from stock option exercises	12		—

Net cash provided by financing activities	20,259		48,623
Net increase in cash, cash equivalents and restricted cash and cash equivalents	4,851		38,557
Cash, cash equivalents and restricted cash and cash equivalents—beginning of period	155,577		130,529
Cash, cash equivalents and restricted cash and cash equivalents—end of period	$	160,428	$	169,086

Reconciliation of cash, cash equivalents and restricted cash and cash equivalents to the condensed consolidated balance sheets
Cash and cash equivalents	$	139,189	$	147,868
Prepaid expenses and other current assets	212		207
Restricted cash and cash equivalents, net of current portion	21,027		21,011
Total cash, cash equivalents and restricted cash and cash equivalents	$	160,428	$	169,086

Supplemental disclosure of cash flow information:
Cash paid for interest	$	910	$	—
Supplemental disclosure of non-cash investing and financing activities:
Purchases of property and equipment in accounts payable and accrued expenses	$	—	$	79
Issuance costs in accounts payable and accrued expenses	$	194	$	17

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

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Werewolf Therapeutics, Inc.

Notes to Condensed Consolidated Financial Statements

(unaudited)

1. Nature of Business

Werewolf Therapeutics, Inc. was incorporated in the state of Delaware in October 2017. As used throughout these unaudited, condensed consolidated financial statements, the terms “Werewolf,” “we,” “us,” and “our” refer to the business of Werewolf Therapeutics, Inc., and its wholly owned subsidiary. We are an innovative biopharmaceutical company pioneering the development of therapeutics engineered to stimulate the body’s immune system for the treatment of cancer. Our headquarters are located in Watertown, Massachusetts.

Since inception, we have devoted substantially all of our efforts and financial resources to organizing and staffing the company; business planning; raising capital; developing and optimizing our platform technology; identifying potential product candidates; enhancing our intellectual property portfolio; undertaking research, preclinical studies, and clinical trials; and enabling manufacturing for our development programs. We are subject to risks and uncertainties common to early-stage companies in the biotechnology industry including, but not limited to, technical risks associated with the successful research, development and manufacturing of product candidates, development by competitors of new technological innovations, dependence on key personnel, protection of proprietary technology, compliance with government regulations and the ability to secure additional capital to fund operations. Current and future programs will require significant research and development efforts, including extensive preclinical and clinical testing and regulatory approval prior to commercialization. These efforts require significant amounts of additional capital, adequate personnel and infrastructure. Even if our product development efforts are successful, it is uncertain when, if ever, we will realize significant revenue from product sales.

We had cash and cash equivalents of $139.2 million at March 31, 2024. We expect that our cash and cash equivalents will enable us to fund our operating expenses and capital expenditure requirements for at least twelve months from the date of issuance of the condensed consolidated financial statements in this Form 10-Q. However, additional funding will be necessary beyond this point to fund future preclinical and clinical activities. We expect to finance our future cash needs through a combination of equity or debt financings, collaboration agreements, strategic alliances and licensing arrangements.

2. Summary of Significant Accounting Policies

Basis of Presentation and Consolidation

The accompanying condensed consolidated financial statements as of March 31, 2024 and December 31, 2023, and for the three months ended March 31, 2024 and 2023, have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission (the “SEC”) and generally accepted accounting principles in the United States of America (“GAAP”) as found in the Accounting Standards Codification (“ASC”) and Accounting Standards Updates (“ASU”) of the Financial Accounting Standards Board (“FASB”) for condensed consolidated financial information. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, these condensed consolidated financial statements reflect all normal recurring adjustments which are necessary for a fair presentation of our financial position and results of our operations, as of and for the periods presented. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto contained in our Annual Report on Form 10-K for the year ended December 31, 2023 filed with the SEC on March 7, 2024 (the “2023 Annual Report”).

The information presented in the condensed consolidated financial statements and related notes as of March 31, 2024, and for the three months ended March 31, 2024 and 2023, is unaudited. The December 31, 2023 condensed consolidated balance sheet included herein was derived from the audited financial statements as of that date, but does not include all disclosures, including notes, required by GAAP for complete financial statements.

Interim results for the three months ended March 31, 2024 are not necessarily indicative of the results that may be expected for the fiscal year ending December 31, 2024, or any future period.

The accompanying condensed consolidated financial statements include the accounts of Werewolf Therapeutics, Inc. and its wholly owned subsidiary, Werewolf Therapeutics Mass Securities, Inc. All intercompany transactions and balances have been eliminated in consolidation.

Summary of Significant Accounting Policies

The significant accounting policies and estimates used in the preparation of the condensed consolidated financial statements are described in our audited financial statements as of and for the year ended December 31, 2023, and the notes thereto, which are included in the 2023 Annual Report. There have been no material changes in our significant accounting policies during the three months ended March 31, 2024.

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Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Significant estimates and assumptions reflected in these condensed consolidated financial statements include, but are not limited to, those related to revenue recognition, accrued expenses, assumptions used in the valuation of stock-based compensation expense and income taxes. Actual results could differ from those estimates.

Recent Accounting Pronouncements

In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures (“ASU No. 2023-09”), which enhances the transparency and decision usefulness of income tax disclosures primarily related to rate reconciliation and income taxes paid. The provisions of ASU No. 2023-09 are effective for fiscal years beginning after December 15, 2024, with early adoption permitted, and are required to be applied on a prospective basis. Our management is currently evaluating the impact that this standard will have on our consolidated financial statements.

Other accounting standards that have been issued or proposed by the FASB or other standards-setting bodies that do not require adoption until a future date are not expected to have a material impact on our consolidated financial statements upon adoption.

Subsequent Events

We have evaluated subsequent events and transactions that occurred after the balance sheet date up to the date that the financial statements were issued. Other than as described in these condensed consolidated financial statements, we did not identify any subsequent events that require adjustment or disclosure in the condensed consolidated financial statements.

3. Collaboration and License Agreement

Detailed description of the contractual terms and our accounting for the agreement described below is included in our audited financial statements and notes in the 2023 Annual Report.

During the three months ended March 31, 2024, we continued to perform under our exclusive global collaboration and license agreement (the “Collaboration Agreement”) with Jazz Pharmaceuticals Ireland Limited ("Jazz"), pursuant to which we recognize revenue utilizing the cost-to-cost input method, which best depicts the research and development services performed for the customer. As a result, we recognize revenue from the transaction price over time as research and development services are performed. The following table summarizes research and development costs incurred and revenue recognized in connection with our performance under the Collaboration Agreement:


	Three Months Ended March 31,
	2024		2023
	(in thousands)
Revenue recognized	$	742	$	4,464
Cost incurred	$	335	$	2,121

The following table presents changes in our contract liabilities during the three months ended March 31, 2024:


	Balance as of December 31, 2023		Additions		Reductions		Balance as of March 31, 2024
	(in thousands)
Contract liabilities:
Deferred revenue	$	1,340	$	—	$	(407)	$	933

SEC Form 10-Q filed by Werewolf Therapeutics Inc.