FRESH TRACKS THERAPEUTICS, INC. Overview
We are a clinical-stage pharmaceutical company focused on the development of innovative and differentiated prescription therapeutics for the treatment of debilitating skin diseases. Our pipeline consists of potential novel therapeutics for hyperhidrosis and other prevalent dermatological conditions. Our executive management team and board of directors bring extensive experience in product development and global commercialization, having served in leadership roles at large global pharmaceutical companies and biotechs that have developed and/or launched successful products, including several that were first-in-class and/or achieved iconic status, such as Cialis®, Taltz®, Gemzar®, Prozac®, Cymbalta® and Juvederm®.
Our pivotal Phase 3-ready clinical-stage product candidate, sofpironium bromide, is a proprietary new molecular entity. It belongs to a class of medications called anticholinergics. Anticholinergics block the action of acetylcholine, a chemical that transmits signals within the nervous system that are responsible for a range of bodily functions, including activation of the sweat glands. Sofpironium bromide was retrometabolically designed. Retrometabolic drugs are designed to exert their action topically and are potentially rapidly metabolized once absorbed into the blood. This proposed mechanism of action may allow for highly effective doses to be used while limiting systemic side effects. We intend to develop sofpironium bromide as a potential best-in-class, self-administered, once daily, topical therapy for the treatment of primary axillary hyperhidrosis.
Hyperhidrosis is a life-altering condition of sweating beyond what is
physiologically required to maintain normal thermal regulation. It is believed
to be caused by an overactive cholinergic response of the sweat glands and
affects an estimated 15.3 million, or 4.8%, of the
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We and our development partner in
Based on the positive results in the clinical trials for sofpironium bromide
globally to date, we intend to initiate two pivotal Phase 3 clinical trials in
up to 350 subjects per trial with primary axillary hyperhidrosis in
Recent Developments Study Announcements OnMay 13, 2020 , we announced that, based on a preliminary review of the top-line results from the 12-month Phase 3 open-label long-term safety study, in 300 subjects >9 years old with primary axillary hyperhidrosis, sofpironium bromide gel, 5% and 15% was safe and generally well tolerated, which was consistent with the earlier Phase 2 clinical trial results. No treatment-related serious adverse events were observed. OnMarch 4, 2020 , we announced that positive results from Kaken's Phase 3 pivotal study of topically applied sofpironium bromide gel, 5% in Japanese subjects with primary axillary hyperhidrosis were selected for oral presentation at the Late-Breaking Research Program of theAmerican Academy of Dermatology ("AAD") Annual Meeting. Due to concerns related to COVID-19, the AAD canceled the conference and it is now rescheduled to be a virtual forum onJune 12, 2020 . OnFebruary 20, 2020 , we announced that positive results from our Phase 2b study with sofpironium bromide in patients with primary axillary hyperhidrosis were published in the peer-reviewedJournal of the American Academy of Dermatology ("JAAD"). In this Phase 2b dose-finding study, sofpironium bromide elicited clinically meaningful and statistically significant sustained reductions in sweating severity and was well tolerated. For additional information regarding the results of this study, see Part I, Item 1. "Business - Clinical Development of Sofpironium Bromide - Phase 2bU.S. Clinical Trial (BBI-4000-CL-203)" in our Annual Report on Form 10-K for the year endedDecember 31, 2020 . OnJanuary 19, 2020 , we presented the results from pharmacokinetics and long-term safety extension trials with sofpironium bromide gel, 15% in pediatric patients (ages 9 to <17) with primary axillary hyperhidrosis at theDermatology, Aesthetic & Surgical Conference . Sofpironium bromide was safe and well-tolerated over 24 weeks of treatment in this clinical trial. At the Market Agreement OnApril 14, 2020 , we entered into an At Market Issuance Sales Agreement (the "ATM Agreement") withOppenheimer & Co. Inc. as our sales agent (the "Agent"). Pursuant to the terms of the ATM Agreement, we may sell from time to time through the Agent shares of our common stock having an aggregate offering price of up to$8.0 million (the "Shares"). Any Shares will be issued pursuant to our shelf registration statement on Form S-3 (Registration No. 333-236353). Sales of the Shares, if any, will be made by means of ordinary brokers' transactions on the Nasdaq Capital Market at market prices or as otherwise agreed by us and the Agent. Under the terms of the ATM Agreement, we may also sell the Shares from time to time to the Agent as principal for its own account at a price to be agreed upon at the time of sale. Any sale of the Shares to the Agent as principal would be pursuant to the terms of a separate placement notice between us and the Agent. 21
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Private Placement InFebruary 2020 , we entered into (i) a securities purchase agreement (the "Securities Purchase Agreement"); (ii) a purchase agreement (the "Purchase Agreement"); and (iii) a registration rights agreement (the "Registration Rights Agreement"), withLincoln Park Capital Fund, LLC , anIllinois limited liability company ("Lincoln Park"). Pursuant to the Securities Purchase Agreement, Lincoln Park purchased, and we sold, (i) an aggregate of 950,000 shares of common stock (the "Common Shares"), (ii) a warrant to initially purchase an aggregate of up to 606,420 shares of common stock at an exercise price of$0.01 per share (the "Series A Warrant"), and (iii) a warrant to initially purchase an aggregate of up to 1,556,420 shares of common stock at an exercise price of$1.16 per share (the "Series B Warrant", and together with the Series A Warrant, the "Warrants"). The aggregate gross purchase price for the Common Shares and the Warrants was$2.0 million . Under the terms and subject to the conditions of the Purchase Agreement, we have the right, but not the obligation, to sell to Lincoln Park, and Lincoln Park is obligated to purchase, up to$28.0 million in the aggregate of shares of our common stock. Sales of common stock by us, if any, will be subject to certain limitations, and may occur from time to time, at our sole discretion, over the 36-month period commencing on the date the conditions set forth in the Purchase Agreement are satisfied (such date on which all of such conditions are satisfied, the "Commencement Date"). Following the Commencement Date, under the Purchase Agreement, on any business day selected by us, we may direct Lincoln Park to purchase up to 100,000 shares of our common stock on such business day (each, a "Regular Purchase"), provided, however, that (i) the Regular Purchase may be increased to up to 125,000 shares, provided that the closing sale price of the common stock is not below$3.00 on the purchase date; and (ii) the Regular Purchase may be increased to up to 150,000 shares, provided that the closing sale price of the common stock is not below$5.00 on the purchase date. In each case, Lincoln Park's maximum commitment in any single Regular Purchase may not exceed$1,000,000 . The purchase price per share for each such Regular Purchase will be based off of prevailing market prices of common stock immediately preceding the time of sale. In addition to Regular Purchases, we may direct Lincoln Park to purchase other amounts as accelerated purchases or as additional accelerated purchases if the closing sale price of the common stock exceeds certain threshold prices as set forth in the Purchase Agreement. In all instances, we may not sell shares of our common stock to Lincoln Park under the Purchase Agreement if it would result inLincoln Park beneficially owning more than 9.99% of the outstanding shares of our common stock. We agreed with Lincoln Park that we will not enter into any "variable rate" transactions with any third party, subject to certain exceptions, for a period defined in the Purchase Agreement. We have the right to terminate the Purchase Agreement at any time, at no cost or penalty. Amended and Restated License Agreement with Bodor InFebruary 2020 , we, together withBrickell Subsidiary and Bodor Laboratories, Inc. and Dr.Nicholas S. Bodor (collectively, "Bodor") entered into an amended and restated license agreement (the "Amended and Restated License Agreement"). The Amended and Restated License Agreement supersedes the License Agreement, datedDecember 15, 2012 , entered into between Brickell Subsidiary and Bodor, as amended by Amendment No. 1 to License Agreement, effective as ofOctober 21, 2013 , and Amendment No. 2 to License Agreement, effective as ofMarch 31, 2015 .
The Amended and Restated License Agreement retains with us a worldwide,
exclusive license to develop, manufacture, market, sell and sublicense products
containing the proprietary compound sofpironium bromide based upon the patents
referenced in the Amended and Restated License Agreement for a defined field of
use. In exchange for entering into the Amended and Restated License Agreement,
settling the previously disclosed dispute, and resolving the associated
litigation between us and Bodor, we made an upfront payment of
We also agreed to issue to Bodor (i)
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bromide. If we enter into a change of control transaction prior to the occurrence of either of such triggering events, any amount not previously paid in shares of common stock will be accelerated and become payable in cash, in lieu of shares of common stock, upon the closing of the change of control transaction. The Amended and Restated License Agreement also imposes various diligence, sublicensing, patent cost reimbursement, and other customary obligations and restrictions on us. Both parties have the right to terminate the Amended and Restated License Agreement if the other party commits a material breach and fails to cure it within the applicable cure period. If we were to commit a material breach of the Amended and Restated License Agreement and fail to cure that breach within the applicable cure period, and if in response Bodor were to exercise its termination right, we would lose our rights under the Amended and Restated License Agreement and be forced to discontinue development and/or commercialization of sofpironium bromide.
Corporate History
On
Our operations to date have been limited to business planning, raising capital,
developing our pipeline assets (in particular sofpironium bromide), identifying
product candidates, and other research and development. To date, we have
financed operations primarily through funds received from license and
collaboration agreements, cash and investments acquired in connection with the
Merger, and funds received from the sale of convertible preferred stock, debt,
convertible notes, common stock, and warrants. We do not have any products
approved for sale and have not generated any product sales. Since inception and
through
Since inception, we have incurred operating losses. We recorded a net loss of
• initiate and execute our two pivotal Phase 3 clinical trials for
sofpironium bromide in
• contract to manufacture product candidates;
• advance research and development-related activities to develop and expand
our product pipeline;
• maintain, expand, and protect our intellectual property portfolio;
• hire additional staff, including clinical, scientific, and management
personnel; and
• add operational and finance personnel to support product development
efforts and to support operating as a public company.
We do not expect to generate significant revenue unless and until we successfully complete development of, obtain marketing approval for, and commercialize product candidates, either alone or in collaboration with third parties. We expect these activities may take several years and our success in these efforts is subject to significant uncertainty, especially in light of our need to raise substantial funding in order to commence our Phase 3 program. Accordingly, we expect we will need to raise substantial additional capital prior to the regulatory approval and commercialization of any of our product candidates. Until such time, if ever, that we generate substantial product revenues, we expect to finance our operations through public or private equity or debt financings, collaborations or licenses, or other available financing transactions. However, we may be unable to raise additional funds through these or other means when needed.
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Key Components of Operations
Collaboration Revenue
Collaboration revenue generally consists of revenue recognized under our
strategic collaboration agreements for the development and commercialization of
our product candidates. Our strategic collaboration agreements generally outline
overall development plans and include payments we receive at signing, payments
for the achievement of certain milestones, and royalties. For these activities
and payments, we utilize judgment to assess the nature of the performance
obligations to determine whether the performance obligations are satisfied over
time or at a point in time and, if over time, the appropriate method of
measuring progress for purposes of recognizing revenue. We have not recognized
any royalty revenue to date. Other than the revenue we may generate in
connection with these agreements, we do not expect to generate any revenue from
any product candidates that we develop unless and until we obtain regulatory
approval and commercialize our products or enter into other collaborative
agreements with third parties.
Research and Development Expenses
Research and development expenses principally consist of payments to third
parties known as Clinical Research Organizations ("CROs"). These CROs help plan,
organize, and conduct clinical and nonclinical studies under our direction.
Personnel costs, including wages, benefits, and share-based compensation,
related to our research and development staff in support of product development
activities are also included, as well as costs incurred for supplies,
preclinical studies and toxicology tests, consultants, and facility and related
overhead costs.
Below is a summary of our research and development expenses related to
sofpironium bromide by categories of costs for the periods presented. The other
expenses category includes travel, lab and office supplies, clinical trial
management software, license fees, and other miscellaneous expenses.
Three Months Ended
March 31,
2020 2019
(in thousands)
Direct program expenses related to sofpironium bromide
763 860
Regulatory and compliance 54 109
Other expenses 80 23
Total research and development expenses $ 2,664 $ 6,019 General and Administrative Expenses
General and administrative expenses consist primarily of personnel costs, including wages, benefits, and share-based compensation, related to our executive, sales, marketing, finance, and human resources personnel, as well as impairment expense and professional fees, including legal, accounting, and sublicensing fees.
We expect our overall general and administrative expenses to decrease in the near term, however, we expect additional expenses associated with operating as a public company compared to prior periods, which may include increased insurance premiums, investor relations expenses, legal and accounting fees associated with the expansion of our business and corporate governance, financial reporting expenses, and expenses related to Sarbanes-Oxley and other regulatory compliance obligations.
Total Other Income (Expense)
Investment and Other Income (Loss), Net
Investment and other income (loss), net consists primarily of realized gains and losses associated with marketable securities and interest earned on cash and cash equivalent and marketable securities balances. Our interest income will vary each reporting
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period depending on our average cash balances during the period and market interest rates. We expect interest income to fluctuate in the future with changes in average cash balances and market interest rates.
Interest Expense
Interest expense historically consisted primarily of interest and amortization
related to the issuance of
Change in Fair Value of Warrant Liability
In connection with the Loan Agreement, we issued warrants to Hercules Capital,
Inc., which are exercisable for 9,005 shares of common stock at a per share
exercise price of
We accounted for the warrants as liabilities at their estimated fair value. The
warrants were subject to remeasurement to fair value at each balance sheet date,
and any fair value adjustments were recognized as changes in fair value of
warrant liability in the condensed consolidated statements of operations. The
liability was adjusted for changes in fair value through
Critical Accounting Policies and Estimates
We have prepared the condensed consolidated financial statements in accordance
with accounting principles generally accepted in
For the three months ended
Recent Accounting Pronouncements
For information on the recent accounting pronouncements which may impact our business, see Note 2 of the notes to the condensed consolidated financial statements included elsewhere in this Quarterly Report.
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Results of Operations
Comparison of the Three Months Ended
Three Months Ended
March 31,
2020 2019
(in thousands)
Collaboration revenue $ 1,046 $ 3,492 Research and development expenses (2,664 ) (6,019 ) General and administrative expenses (2,481 ) (2,066 ) Total other income (expense), net (4 ) 13 Net loss
$ (4,103 ) $ (4,580 ) Collaboration Revenue
Collaboration revenue decreased by
Research and Development
Research and development expenses decreased by
General and Administrative Expenses
General and administrative expenses increased by
Liquidity and Capital Resources
We have incurred significant operating losses and have an accumulated deficit as
a result of ongoing efforts to develop our product candidates, including
conducting preclinical and clinical trials and providing general and
administrative support for these operations. For the three months ended
We believe that our cash and cash equivalents as of
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and further reductions in operating expenditures. We expect to continue to incur
additional substantial losses in the foreseeable future as a result of the
Company's research and development activities. Additional funding beyond the
sale of additional shares of common stock under the Purchase Agreement will be
required in the future to proceed with our current and proposed research
activities, including conducting the pivotal
Cash Flows
Since inception, we have primarily used our available cash to fund expenditures related to product discovery and development activities. The following table sets forth a summary of cash flows for the periods presented:
Three Months Ended
March 31,
2020 2019
(in thousands)
Net cash used in operating activities $ (6,610 ) $ (5,316 )
Net cash provided by (used in) investing activities 4,500 (2 )
Net cash provided by financing activities 2,005 520
Net decrease in cash and cash equivalents $ (105 ) $ (4,798 ) Operating Activities
Net cash used in operating activities of
Investing Activities
Net cash provided by investing activities of
Financing Activities
Net cash provided by financing activities of
As of
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