ELOXX PHARMACEUTICALS, INC. The following information should be read in conjunction with the consolidated financial statements and related notes thereto included in this Quarterly Report on Form 10-Q (this "Report").
Except for the historical information contained in this Report, the matters discussed herein may be deemed to be forward-looking statements that involve risks and uncertainties. We make such forward-looking statements pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 and other federal securities laws. In this Report, words such as "may," "expect," "anticipate," "estimate," "intend," and similar expressions (as well as other words or expressions referencing future events, conditions or circumstances) are intended to identify forward-looking statements.
Our actual results and the timing of certain events may differ materially from the results discussed, projected, anticipated, or indicated in any forward-looking statements. We caution you that forward-looking statements are not guarantees of future performance and that our actual results of operations, financial condition and liquidity, and the development of the industry in which we operate may differ materially from the forward-looking statements contained in this Report. In addition, even if our results of operations, financial condition and liquidity, and the development of the industry in which we operate are consistent with the forward-looking statements contained in this Report, they may not be predictive of results or developments in future periods.
The following information and any forward-looking statements should be
considered in light of factors discussed elsewhere in this Report, including
those risks identified under Item 1A., Risk Factors. In many instances, dollar
amounts contained in the narrative descriptions in the following section of this
Report are stated in approximate values, pursuant to generally accepted rounding
conventions. We caution readers not to place undue reliance on any
forward-looking statements made by us, which speak only as of the date they are
made. We disclaim any obligation, except as specifically required by law and the
rules of the
Company Overview
We are a clinical-stage biopharmaceutical company developing novel ribonucleic
acid (RNA)-modulating drug candidates, each designed to be a eukaryotic
ribosomal selective glycoside (ERSG), formulated to treat rare and ultra-rare
premature stop codon diseases. Premature stop codons are point mutations that
disrupt the stability of the impacted messenger RNA (mRNA) and the protein
synthesis from that mRNA. As a consequence, patients with premature stop codon
diseases have reduced levels of, or no, protein from a gene whose product
performs an essential function. This type of mutation accounts for some of the
most severe phenotypes across genetic diseases. Nonsense mutations have been
identified in over 1,800 rare and ultra-rare diseases. Read-through therapeutic
development is focused on increasing mRNA stability and enabling functional
protein synthesis. As opposed to a typical gene therapy approach of targeting a
single, unique mutation in a target disease, this small molecule strategy
enables targeting an entire class of mutations across the rare disease
landscape. Our small molecule approach has the potential to address a range of
different premature stop codons in a single gene since our ERSG compounds are
targeted to the ribosomes. ELX-02, our lead investigational drug product
candidate, is a small molecule designed to restore production of full-length
functional proteins. ELX-02 is in clinical development for systemic
administration for cystic fibrosis. ELX-02 is an investigational drug that has
not been approved by any global regulatory body. In addition, during 2019 we
announced new programs studying ERSG compounds for autosomal dominant polycystic
kidney disease (ADPKD) and in rare inherited retinal disorders (IRDs) by
intravitreal administration with an initial focus on Usher Syndrome. We hold
worldwide development and commercialization rights to ELX-02 and other novel
compounds in our read-through library, for all indications, in all territories,
under a license from the
During 2019, we advanced our clinical program for ELX-02 into Phase 2 studies in cystic fibrosis and nephropathic cystinosis. We also completed a renal impairment study with ELX-02 in subjects with mild, moderate, and severe renal impairment. The results from the renal impairment study provide support for both continuing our clinical development programs and evaluating the suitability of our ERSG library for development in additional renal diseases, including ADPKD. Our preclinical candidate pool consists of a library of novel ERSG drug candidates identified based on read-through potential and cytoplasmic ribosomal selectivity.
Our research and development strategy targets rare or ultra-rare diseases where a high unmet medical need exists, a nonsense mutation-bearing patient population is established, preclinical read-through can be established in predictive personalized medicine models, and a defined path through Orphan Drug development, regulatory approval, patient access and commercialization is identified. We believe patient advocacy is an important element of patient focused drug development, and we seek opportunities to collaborate with patient advocacy groups throughout the discovery and development process.
17
--------------------------------------------------------------------------------
Our current clinical program for our lead investigational drug product candidate, ELX-02, includes Phase 2 studies in cystic fibrosis.
We intend to be the global leader in the application of the science of translational read-through and the associated pathway of nonsense mediated decay (NMD). We believe that expanding our expertise across these basic science areas of mRNA regulation, ribosomal function, and protein translation forms a solid foundation to support our discovery and development activities. Our ERSG compounds modulate the activity of the ribosome, a ribonucleoprotein complex of RNAs and proteins responsible for protein production (a process also known as translation). These novel small molecule ERSG compounds are designed to allow the ribosome to read-through a nonsense mutation in mRNA (which is transcribed from the DNA sequence), to restore the translation process to produce full-length, functional proteins and increase the amount of mRNA that would otherwise be degraded as part of a phenomenon called nonsense mediated mRNA decay. As our ERSG compounds target the general mechanism for protein production in the cell, we believe they have the potential to treat numerous genetic diseases where nonsense mutations have impaired gene function. Since nonsense mutations may occur at different positions within a given gene, a potential advantage of the small molecule ERSG approach is being able to use one molecule to address a range of mutations within a given disease state. Our subcutaneously injected ERSG molecules have the potential to be self-administered for systemic disease and to be active across many of the body's tissues.
We believe that our library of related novel small molecules holds the potential
to be disease-modifying therapies that may change the course of numerous of
genetic diseases and improve the lives of patients. Our early preclinical data
in animal models of nonsense mutations suggests that drug product candidates
from our read-through compound ERSG library may have potential beneficial
effects for each of the following diseases: cystic fibrosis, nephropathic
cystinosis, ADPKD, a variety of IRDs (including Usher Syndrome), primary ciliary
dyskinesia, mucopolysaccharidosis type 1, Duchenne muscular dystrophy and Rett
syndrome, and have demonstrated the potential for beneficial effects in multiple
organs such as the brain, eye, kidney, muscles and others. Of the novel
compounds in our
Our scientific manuscript titled "ELX-02 generates protein via premature stop
codon read-through without inducing native stop codon read-through protein" has
been accepted for publication by the
Currently, the clinical programs for our lead investigational drug candidate,
ELX-02, are focused on development for cystic fibrosis patients with diagnosed
nonsense mutations. We have completed a Phase 1 single ascending dose (SAD)
trial at sites in
Our Phase 2 cystinosis trial involved two sequential cohorts with three
escalating doses in three patients per cohort. The first cohort enrolled three
homozygous W138X patients ages 23 to 38, with prior kidney transplants and
varying degrees of renal insufficiency. In
The clear indications of biologic activity in this study provide human clinical proof of concept for ELX-02 and de-risk other clinical applications of our ERSG library using this dosage range. These encouraging results also provide a basis for expansion to studies of additional kidney diseases caused by nonsense mutations, such as ADPKD.
18
--------------------------------------------------------------------------------
Our Phase 2 cystic fibrosis clinical trial program for ELX-02 is being conducted
at leading global investigator sites in
In
We are also evaluating the suitability of our ERSG library for development in
rare renal diseases associated with nonsense mutations, such as ADPKD. ADPKD is
a relatively common inherited genetic kidney disease occurring in between one in
400 and one in 1,000 patients and is the fourth leading cause of end-stage renal
disease in
We continue to progress our ERSG pipeline in IRDs, another area of high unmet
medical need, that are associated with vision loss and blindness. There are over
300 IRDs associated with nonsense mutations. We recently reported on a critical
milestone demonstrating that several of our library compounds successfully reach
retinal disorder-relevant tissue layers and can restore protein production in an
animal model. These data support that our ERSG compounds are suitable for
reaching and promoting read-through in target cells within the retina. We had
planned to present these data at the
We believe there is a significant unmet medical need in the treatment of cystic
fibrosis patients carrying nonsense mutations on one or both alleles of the CFTR
gene. Cystic fibrosis is the most prevalent genetic disease in the western world
and there are no currently approved therapies that target the impairment
associated with Class 1 CFTR mutations. We believe that nonsense mutations may
impact a similar proportion of patients diagnosed with cystinosis. Given the
high proportion of pediatric patients in many rare orphan diseases, we intend to
apply for relevant Orphan Drug incentives in the
On
19
--------------------------------------------------------------------------------
COVID-19
The outbreak of COVID-19 and the preventative or protective actions that we, our employees, consultants, suppliers, CROs, and other partners or governments may take may significantly disrupt our business operations. We are diligently working to ensure that we can operate with minimal disruption, and to mitigate the impact of the pandemic on our employees' health and safety and that of the patients in our clinical trials. However, there remains a risk that we or our employees, contractors, suppliers, and other partners may be prevented from conducting business activities for an indefinite period of time, including due to a substantial percentage of personnel contracting the virus or due to shutdowns that may be requested or mandated by governmental authorities. Given the interconnectivity of the global economy and the possible rate of future global transmission, the full extent to which the pandemic could affect the global economy is unknown and its impact may extend beyond the areas which are currently known by us to be impacted.
We continue to monitor our operations and applicable government recommendations, and we have made modifications to our normal operations as a result of the COVID-19 pandemic, including requiring employees to work remotely. Notwithstanding these measures, the COVID-19 pandemic could affect the health and availability of our workforce as well as those of the third parties we rely on. If members of our management and other key personnel in critical functions across our organization are unable to perform their duties or have limited availability due to COVID-19, we may not be able to execute on our business strategy and our operations may be adversely impacted. We may also experience limitations in employee resources, including because of illness of employees or their families or the desire of employees to avoid contact with individuals or large groups of people. In addition, we have experienced and will continue to experience disruptions to our business operations resulting from quarantines, self-isolations and travel and other restrictions on our employees which may impact their ability to perform their job responsibilities.
The extent and severity of the impact of the current global crisis on our business and clinical trials will be determined largely by the ability of patients in our clinical trials to access trial sites, CRO personnel to administer our drug in accordance with our protocols and our ability to monitor and communicate effectively with the CROs, trial sites and principal investigators. In addition, the impact of the COVID-19 pandemic on the operations of the FDA and other health authorities may delay potential advancement of our product candidates.
Critical Accounting Policies and Use of Estimates
Our management's discussion and analysis of financial condition and results of
operations is based on our unaudited condensed consolidated financial
statements, which have been prepared in accordance with accounting principles
generally accepted in
The critical accounting policies that we believe impact significant judgments
and estimates used in the preparation of our financial statements presented in
this Report are described in "Management's Discussion and Analysis of Financial
Condition and Results of Operations" in our 2019 Annual Report on Form 10-K.
There have been no material changes to our critical accounting policies through
20
--------------------------------------------------------------------------------
Results of Operations
The following table summarizes our results of operations for each of the periods
presented (in thousands):
Three Months Ended
March 31, Change
2020 2019 $ %
Operating expenses:
Research and development, net $ 4,549 $ 6,019 $ (1,470 ) (24 ) %
General and administrative 5,224 5,958 (734 ) (12 ) %
Restructuring charges 3,994 - 3,994 -
Total operating expenses 13,767 11,977 1,790 15 %
Loss from operations (13,767 ) (11,977 ) (1,790 ) 15 %
Other expense (income), net 179 (60 ) 239 (398 ) %
Net loss $ (13,946 ) $ (11,917 ) $ (2,029 ) 17 %
Research and development expense
Research and development expenses were
General and administrative expenses
General and administrative expenses were
Restructuring charges
Restructuring charges of
Other expense (income), net
We recorded
Liquidity and Capital Resources
Liquidity is the ability of a company to generate funds to support its current
and future operations, satisfy its obligations, and otherwise operate on an
ongoing basis. Significant factors in the management of liquidity are funds
generated by operations, levels of accounts receivable and accounts payable and
capital expenditures. Since our inception and through
Although the impact of the COVID-19 pandemic on clinical operations and
enrollment cannot fully be determined, we believe that our cash, cash
equivalents, and marketable securities of
21
--------------------------------------------------------------------------------
operations through at least the next 12 months from the issuance of this
Quarterly Report on Form 10-Q. Since our inception, we have incurred significant
operating losses. Our net losses were
• advance ELX-02 further into clinical trials;
• continue to experience delays in enrollment and completion of our clinical
trials due to the COVID-19 pandemic or otherwise;
• continue the preclinical development of our research programs and advance
candidates into clinical trials;
• identify additional product candidates and advance them into preclinical
development;
• pursue regulatory authorization to conduct clinical trials of additional
product candidates;
• seek marketing approvals for our product candidates that successfully
complete clinical trials;
• establish a sales, marketing and distribution infrastructure to
commercialize any product candidates for which we obtain marketing
approval;
• maintain, expand and protect our intellectual property portfolio;
• hire additional clinical, regulatory, management and scientific personnel;
• add operational, financial and management information systems and
personnel, including personnel to support product development;
• acquire or in-license other product candidates and technologies; and
• operate as a public company.
We may never achieve profitability, and unless and until we do, we will continue
to need to raise additional cash to fund our operations. On
Management intends to fund future operations through private or public debt or equity financing transactions and may seek additional capital through arrangements with strategic partners or from other sources. If we are unable to obtain financing, we will evaluate options which may include reducing or deferring operating expenses, which may have a material adverse effect on our operations and future prospects.
Principal Financing Activities
On
On
22
--------------------------------------------------------------------------------
On
Cash Flows
The following table summarizes our sources and uses of cash for each of the periods presented (in thousands):
Three Months Ended
March 31,
2020 2019
Net cash used in operating activities $ (11,924 ) $ (9,188 )
Net cash provided by (used in) investing activities 15,789 (8,942 )
Net cash (used in) provided by financing activities (483 ) 14,100
Our operating activities used cash of
Our investing activities provided cash of
Our financing activities used cash of
Equity Sales Agreement
In
23
--------------------------------------------------------------------------------
Off-Balance Sheet Arrangements
During the periods presented, we did not have, and we do not have, any off-balance sheet arrangements, as such term is defined under Item 303 of Regulation S-K, that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenue or expense, results of operations, liquidity, capital expenditures or capital resources that is material to investors.
24
--------------------------------------------------------------------------------
© Edgar Online, source
