Nasdaq:TPST
Tempest Therapeutics, Inc.
A pre-revenue clinical-stage biopharmaceutical company targeting severe inflammatory skin conditions with a proprietary drug delivery platform.
Key Metrics
Investment Thesis
Bull Case
Investors may view Tempest as an attractive speculative opportunity given its innovative drug delivery platform targeting large markets like psoriasis with high unmet medical need. If clinical trials demonstrate significant efficacy and safety, the company could experience substantial multiple expansion upon potential milestone payments or a successful IPO. The current cash position provides runway to advance key assets through pivotal trials, positioning the company for potential binary value creation.
Bear Case
The stock carries extreme risk due to zero revenue and a massive accumulated deficit of over $207 million that requires continuous equity financing. Any failure in upcoming clinical trials would likely result in total loss of investment capital as the company has no commercial products to generate cash flow. The dilution from recent common share issuances of $28.6 million further pressures existing shareholders without any immediate path to profitability.
About Tempest Therapeutics, Inc.
Tempest Therapeutics is a clinical-stage biopharmaceutical company focused on developing novel therapies for severe inflammatory diseases such as psoriasis and hidradenitis suppurativa. The company operates within the competitive small-cap biotech sector, leveraging its proprietary technology platform to advance pipeline assets through late-stage clinical trials. With no current revenue and significant cash burn, Tempest relies heavily on capital markets financing to fund its R&D activities.
Analysis
Management Discussion
Financial performance in 2024 reflected continued high burn rates typical of late-stage clinical development, with a net loss widening to $41.8 million despite minimal capital expenditures. The company managed to maintain a positive cash balance of $30.7 million by raising substantial capital through financing activities, though the negative operating cash flow indicates that revenue generation is not yet offsetting operational expenses.
Industry Overview
The small-cap biotechnology sector is characterized by high failure rates and significant reliance on venture capital and public market financing to fund research and development cycles. Companies in this space often trade based on binary event risk related to clinical trial data readouts rather than fundamental earnings power, making valuation models based on traditional metrics like P/E ratios inappropriate.
Financial Statements
Income Statement
Balance Sheet
Cash Flow
| Metric | 2022 | 2023 | 2024 |
|---|---|---|---|
| Revenue | $0 | $0 | $0 |
| Cost of Revenue | $0 | $0 | $0 |
| Gross Profit | $0 | $0 | $0 |
| Operating Expenses | $34.6M | $29.2M | $42.0M |
| Operating Income | $-34.6M | $-29.2M | $-42.0M |
| G&A | $12.1M | $11.7M | $13.6M |
| Stock-Based Comp | $1.6M | $2.5M | $5.3M |
| Depreciation | $638.0K | $381.0K | $389.0K |
| Other OpEx | $22.5M | $17.5M | $28.5M |
| Non-Operating Income | $0 | $0 | $0 |
| Interest Expense | $1.6M | $1.4M | — |
| Pre-Tax Income | $-34.6M | $-29.2M | $-42.0M |
| Income Tax | $0 | $0 | $0 |
| Continuing Ops | $-34.6M | $-29.2M | $-42.0M |
| Discontinued Ops | $0 | $0 | $0 |
| Net Income | $-35.7M | $-29.5M | $-41.8M |
| Minority Interest | $0 | $0 | $0 |
| Net to Common | $-35.7M | $-29.5M | $-41.8M |
| Metric | 2022 | 2023 | 2024 |
|---|---|---|---|
| Current Assets | $33.0M | $40.4M | $31.5M |
| Cash & Equivalents | $31.2M | $39.2M | $30.3M |
| Prepaid Expenses | $1.3M | $1.1M | $1.2M |
| Other Current Assets | $450.0K | $0 | $0 |
| Long-Term Assets | $13.1M | $11.2M | $10.0M |
| PP&E (Net) | $1.1M | $840.0K | $886.0K |
| Operating Leases | $11.7M | $10.0M | $8.6M |
| Other LT Assets | $429.0K | $448.0K | $485.0K |
| Total Assets | $46.1M | $51.6M | $41.5M |
| Current Liabilities | $7.3M | $9.4M | $14.2M |
| Accounts Payable | $1.1M | $845.0K | $2.5M |
| Current Debt | — | $4.3M | $6.4M |
| Current Leases | $1.4M | $952.0K | $869.0K |
| Other Current Liab | $1.8M | $1.7M | $1.8M |
| Long-Term Liabilities | $20.7M | $15.4M | $8.1M |
| Long-Term Debt | $10.4M | $6.3M | $0 |
| LT Operating Leases | $10.3M | $9.2M | $8.1M |
| Other LT Liab | $0 | $0 | $0 |
| Total Liabilities | $28.0M | $24.8M | $22.4M |
| Shareholders' Equity | $18.1M | $26.8M | $19.1M |
| Paid-In Capital | $153.9M | $192.0M | $226.2M |
| Retained Earnings | $-135.8M | $-165.3M | $-207.1M |
| Total L&E | $46.1M | $51.6M | $41.5M |
| Metric | 2022 | 2023 | 2024 |
|---|---|---|---|
| Net Income (CFO) | $-35.7M | $-29.5M | $-41.8M |
| Non-Cash Adjustments | $5.6M | $5.2M | $7.0M |
| Working Capital Changes | $-962.0K | $-3.1M | $1.8M |
| Cash from Operations | $-31.1M | $-27.4M | $-33.0M |
| Capital Expenditures | $562.0K | $170.0K | $435.0K |
| Cash from Investing | $-562.0K | $-170.0K | $-435.0K |
| Cash from Financing | $11.4M | $35.6M | $24.5M |
| FX Effect | $0 | $0 | $0 |
| Net Change in Cash | $-20.2M | $8.1M | $-9.0M |
| Beginning Cash | $51.8M | $31.6M | $39.7M |
| Ending Cash | $31.6M | $39.7M | $30.7M |
Frequently Asked Questions
How does Tempest Therapeutics, Inc. make money?
The company's operations are structured around a single core business segment dedicated to drug discovery and development for autoimmune diseases. All financial activity is currently driven by research and development expenses, general and administrative costs, and equity financing activities rather than commercial sales or licensing revenue streams.
What are the main risks for TPST?
The company faces significant liquidity risk with negative operating cash flow of $33 million in 2024 and a total retained earnings deficit exceeding $207 million. As a pre-revenue entity with no commercial sales history, Tempest is highly dependent on successful clinical trial outcomes and the ability to secure additional financing through common share issuances or other capital markets transactions. Regulatory risks are elevated given the stringent FDA approval processes for novel drug delivery platforms in oncology and dermatology.
What is TPST's competitive advantage?
Tempest possesses a proprietary nanotechnology platform designed to enhance the skin penetration of biologics, potentially reducing dosing frequency and improving patient compliance. The company holds intellectual property rights that differentiate its drug delivery mechanisms from traditional systemic therapies, offering a potential first-in-class solution for difficult-to-treat inflammatory conditions.
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Not financial advice. All content is for informational purposes only. Data may contain errors. Consult a qualified financial advisor before making investment decisions.