APREA THERAPEUTICS, INC. You should read the following discussion and analysis of our financial condition
and results of operations together with the unaudited financial information and
notes thereto included in this Quarterly Report on Form 10-Q. Some of the
information contained in this discussion and analysis or set forth elsewhere in
this Quarterly Report, including information with respect to our plans and
strategy for our business and related financing, including forward-looking
statements that involve risks and uncertainties. As a result of many factors,
including those factors set forth in the "Risk Factors" section of this
Quarterly Report and in our Annual Report on Form 10-K for the year ended
Overview
We are a biopharmaceutical company focused on developing novel synthetic lethality-based cancer therapeutics that target DNA damage response (DDR) pathways. Our approach is built upon a platform of integrated discovery technologies to enrich our pipeline with novel targets in synthetic lethality and cancer treatment. Together with our expertise in small molecule drug discovery, we are applying the capabilities of our discovery platform to the development of new precision oncology therapies and the identification of patient populations most likely to benefit.
Prior to the acquisition of Atrin, we were engaged in the clinical development
of cancer therapeutics that reactivate the mutant p53 tumor suppressor protein.
In
DDR Overview
Cells are continuously exposed to endogenous and exogenous stress that can lead to DNA damage. To counter this lethal threat, cells have mechanisms to detect DNA damage, activate the appropriate repair pathway or, if irreparable, induce cell cycle arrest or apoptosis. These DDR processes are vital for cell survival.
Cancer cells rely on various alternative pathways to repair and resist DNA damage and replication stress. Many of these DDR-related genes are mutated across cancers, as loss of the DDR pathway allows cancer cells to rapidly evolve and grow out of control. Notably, functional loss of these pathways also creates a vulnerability in these cancers because mutation or loss of some DDR genes increases reliance on other DDR genes to support continued cancer cell growth. When mutation or loss of two DDR genes leads to cell death, the interplay between these genes is synthetic lethality. Importantly, selective targeting of specific members of the DDR pathway represents an attractive potential therapeutic approach for the treatment of cancer. Furthermore, because genes that are mutated in cancers continue to function normally in healthy tissues, this treatment approach can potentially reduce drug-induced toxicity while maintaining anti-cancer activity.
Leveraging synthetic lethality in therapeutic targeting of DDR represents an emerging strategy to treat a broad spectrum of cancers that currently lack effective treatments. Our team was the first to identify ATR as a drug target that synergistically kills cancer cells based on one of their most fundamental characteristics, oncogene expression. Aprea's development pipeline is based on our discovery platforms and a rationally designed series of novel molecules. We have
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developed highly selective small molecule regulators of DDR proteins that play fundamental roles in these response pathways.
Platform of Integrated Discovery Technologies
Our drug discovery and development processes integrate three unique platforms: Repli-Biom, ATRIZE™ and SCET™. These integrated technologies provide us with the opportunity to enrich our pipeline with novel targets in synthetic lethality and cancer treatment. In addition, by utilizing our integrated technologies we have identified cancer-associated gene alterations that can lead to increased sensitivity to Aprea's DDR inhibitors and may provide future opportunities for improved efficacy and tolerability in cancer treatment.
Repli-Biom
Repli-Biom identifies proteins that cancer cells use to resist the effects of drug treatment. This integrated proteomic, genomic and machine learning approach identifies response factors that both participate in the molecular response to drug treatment and are highly mutated in cancers.
Absence of these resistance factors predict sensitivity to drug treatment, thus potentially promoting durable drug responses. In addition, this approach is being used to identify novel combination therapy approaches and new drug targets to advance Aprea's drug development programs.
ATRIZE
ATRIZE is an innovative, high-throughput system to detect disruption of DNA synthesis and DDR activation, and thus is ideal for screening DDR inhibitors. ATRIZE may significantly reduce the time required to discover active drug candidates and optimize their design for precision cancer therapy.
SCET
SCET is a medicinal chemistry cyclization approach to generate highly potent and selective enzyme inhibitors. The SCET approach enables the design and synthesis of novel conformationally-constrained drug candidates with potentially higher affinity and specificity for the target enzyme. By utilizing this approach, we believe that we have developed highly potent and specific anticancer drug candidates with decreased off-target activities.
DDR Product Candidates
ATRN-119
Ataxia Telangiectasia and Rad3-related (ATR) and Checkpoint Kinase 1 (CHK1) are critical DNA damage response kinases that prevent the collapse of replication forks into DNA double strand breaks (DSBs). ATR is one of several key regulators of the response to defective DNA replication and DNA damage, which occurs more commonly in cancer cells than in normal cells.
In response to these cancer-associated genomic insults, ATR is activated to inhibit progression to cellular division and prevent the assembly of the SLX1-SLX4, MUS81-EME1 and XPF-ERCC1 (SMX) endonuclease (DNA cutting) complex. When ATR is inhibited, the SMX complex is inappropriately activated, promoting the cutting of replication forks into DSBs. In association with ATR's fundamental roles in these replication responses, cells with increased oncogenic stress, p53 mutations and deficiencies in DDR pathways are predicted to have increased sensitivity to ATR inhibition. Accordingly, ATR inhibition is also predicted to sensitize cells to DNA-damaging chemotherapy, radiotherapy and PARP inhibitor treatments, making ATR inhibitors particularly attractive for the development of novel combination therapies.
We have developed an orally bioavailable, highly potent and selective macrocyclic small molecule inhibitor of ATR (ATRN-119) that has the potential to have less toxicity to normal tissues while continuing to capitalize on cancer
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vulnerabilities due to oncogenic stress and DDR pathway defects. ATRN-119 has received FDA IND approval (IND #141317) for a first-in-human clinical trial for cancer patients. This clinical trial is expected to begin in the third quarter of 2022.
ATRN-119 and related second-generation candidates were discovered by Atrin. We believe the selectivity and toxicology profiles of ATRN-119 may be differentiated from other ATR inhibitors currently being developed by other companies and we are planning to study ATRN-119 as both a monotherapy and in combination with standard of care in Phase 1/2 clinical trials in solid tumor malignancies. We currently retain worldwide development and commercialization rights to all of our ATR inhibitor product candidates.
ATRN-W1051
WEE1 kinase is a key regulator of multiple phases of the cell cycle, most prominently in progression from G1 to S phase and from S/G2 to M phase through inhibitory phosphorylation of CDK2 and CDK1, respectively. Thus, when WEE1 is inhibited, both G1-S and G2-M checkpoints are abrogated, leading to premature S-phase and M-phase entry. Notably, the replication stress caused by cyclin E1 overexpression is transformed into toxic levels of DSBs and cancer cell death when WEE1 is inhibited. These findings suggest cyclin E overexpression as a cancer-associated vulnerability that may be capitalized on by WEE1 inhibitors.
We have discovered and initiated development of an orally bioavailable, highly potent and selective small molecule WEE1 inhibitor, ATRN-W1051, that is distinct from other WEE1 inhibitors based on its potentially superior pharmacokinetic properties and selectivity regarding common off-targets (PLK1/2/3). ATRN-W1051 is currently in preclinical development, and we anticipate commencing IND-enabling studies in the second half of 2022.
ATRN-W1051 was discovered by Atrin. We believe the selectivity profile of ATRN-W1051 may be differentiated from other WEE1 inhibitors currently being developed by other companies and we are planning to study ATRN-W1051 as both a monotherapy and in combination with standard of care for the treatment of multiple cancers. We currently retain worldwide development and commercialization rights to ATRN-W1051.
p53 Reactivator Programs
Eprenetapopt
APR-246, or eprenetapopt, is a small molecule p53 reactivator that has been
tested in clinical trials for solid tumors and for hematologic malignancies,
including myelodysplastic syndromes, or MDS, and acute myeloid leukemia, or AML.
Eprenetapopt has received Orphan Drug and Fast Track designations from the FDA
for MDS, Fast Track designation from the FDA for AML, and Orphan Drug
designation from the
While we currently have no ongoing clinical trials of eprenetapopt, we have received clearance from FDA to proceed under our existing INDs with new Phase 1 dose-optimization clinical trials in relapsed/refractory MDS/AML and Richter's transformed NHL, including initial testing of a new oral formulation of eprenetapopt.
Phase 1 Relapsed/Refractory MDS/AML Trial- In the first quarter of 2022, we
received clearance from the FDA to proceed under our existing IND of a clinical
? trial in relapsed/refractory (R/R) MDS/AML. The trial is designed to determine
the optimal pharmacologically active dose of eprenetapopt in combination with
azacitidine in relapsed/refractory (R/R) MDS/AML.
Phase 1 NHL Trial-In the first quarter of 2022 we received clearance from FDA
to proceed under our existing IND with a clinical trial in relapsed/refractory
(R/R) TP53 mutant Richter's transformed NHL. Richter's transformed NHL is a
? subset of CLL that is characterized by significantly more aggressive disease.
The trial is designed to seek to determine the optimal pharmacologically active
dose of eprenetapopt in combination with venetoclax and rituximab. The trial
includes administration of an oral formulation of eprenetapopt as part of a
monotherapy lead-in phase. Under the trial protocol,
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pharmacokinetic data following oral administration would be collected to assess
exposure relative to intravenous administration and to inform potential future
clinical opportunities of an oral dosage form of eprenetapopt.
Prior Developments in p53 Clinical Trials
On
clinical hold on the clinical trials of eprenetapopt in combination with
azacitidine in our Phase 3 frontline MDS clinical trial, our Phase 2 MDS/AML
Post-Transplant clinical trial and our Phase 1/2 AML clinical trial. The
concerns referred to the safety and efficacy data from the Phase 3 frontline
MDS clinical trial. In particular, the FDA requested more information related
to a potential risk-reward imbalance between the combination of eprenetapopt
and azacitidine versus azacitidine alone as it relates to increased serious
adverse events in the Phase 3 frontline clinical trial in MDS. At the time of
the clinical hold announcement the MDS, AML and post-transplant maintenance
trials had all completed enrollment. Patients
? treatment could continue to receive study treatment. In
discussed with FDA the data and analyses from the Phase 3 trial and reached
preliminary agreement on proposals for new clinical trials in myeloid
malignancies. In the first quarter of 2022, FDA informed us that it would
continue the partial clinical hold on these three clinical trials, allowing
patients currently on and benefiting from treatment to continue with treatment,
but prohibiting enrollment of new patients. As all trials had already achieved
full enrollment and primary endpoint readout, we had no plans to enroll new
patients into any of these trials. These trials have been concluded and there
are no patients receiving eprenetapopt in any of these trials. FDA has given us
clearance to proceed under our existing myeloid malignancy IND with a new
clinical trial in relapsed/refractory MDS and AML.
On
eprenetapopt in patients with non-Hodgkin lymphoma. The
to the safety and efficacy data from the Phase 3 frontline MDS clinical trial
in our myeloid malignancy program. In particular, the FDA requested more
information related to a potential risk-reward imbalance between the
combination of eprenetapopt and azacitidine versus azacitidine alone as it
relates to increased serious adverse events in the Phase 3 frontline clinical
? trial in MDS. At the time of the clinical hold announcement the NHL trial had
enrolled one patient. Patients
continue to receive study treatment and no additional patients could be
enrolled until the clinical hold was resolved. There are currently no patients
receiving eprenetapopt in this trial. In
requested data and analyses from the Phase 3 trial and proposed amendments for
clinical trials to proceed in our lymphoid malignancy program. FDA lifted the
clinical hold in
Next Generation Programs APR-548
APR-548 is a second generation p53 reactivator that is a unique analog of eprenetapopt. APR-548 exhibits high oral bioavailability in preclinical testing and is being developed in an oral dosage form.
Phase 1 MDS/AML Trial-We initiated a Phase 1 clinical trial testing APR-548 in
? relapsed/refractory MDS and AML. Enrollment in the first dosing cohort was
completed. There are currently no patients receiving APR-548 in this trial and
enrollment into the trial has been closed.
Corporate Background
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We have devoted substantially all of our resources to developing our product
candidates, including eprenetapopt, building our intellectual property
portfolio, business planning, raising capital and providing general and
administrative support for these operations. To date, we have financed our
operations primarily through private placements of preferred stock and the net
proceeds received from the initial public offering (IPO) of our common stock.
Through
On
Under the terms of the Merger agreement, at the closing of the Merger, Aprea
issued to the securityholders of Atrin, 1,117,394 shares of the common stock of
Aprea, par value
Pursuant to the Merger Agreement, Aprea held its annual stockholders' meeting
(the "Stockholders' Meeting") on
Since our inception, we have incurred significant losses on an aggregate basis.
Our ability to generate product revenue sufficient to achieve profitability will
depend on the successful development and eventual commercialization of one or
more of our product candidates. Our net losses were
We anticipate that our expenses will increase substantially if and as we:
? conduct our planned clinical trials and additional preclinical research;
? initiate and continue research and preclinical and clinical development of our
other product candidates;
? seek to identify and develop additional product candidates;
? seek marketing approvals for any of our product candidates that successfully
complete clinical trials, if any;
? establish a sales, marketing, manufacturing and distribution infrastructure to
commercialize any products for which we may obtain marketing approval;
? require the manufacture of larger quantities of our product candidates for
clinical development and potential commercialization;
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? maintain, expand, protect and enforce our intellectual property portfolio;
? acquire or in-license other drugs and technologies;
? defend against any claims of infringement, misappropriation or other violation
of third-party intellectual property;
? hire and retain additional clinical, quality control and scientific personnel;
and
add operational, financial and management information systems and personnel, ? including personnel to support our drug development, any future
commercialization efforts and our operation as a public company.
Furthermore, if we obtain marketing approval for any of our product candidates, we expect to incur significant commercialization expenses related to product manufacturing, marketing, sales and distribution.
As a result, we will need additional financing to support our continuing operations. Until such time as we can generate significant revenue from product sales, if ever, we expect to finance our operations through a combination of public or private equity or debt financings or other sources, which may include collaborations with third parties. We may be unable to raise additional funds or enter into other agreements or arrangements when needed on favorable terms, or at all. If we fail to raise capital or enter into such agreements as and when needed, we may have to significantly delay, scale back or discontinue the development or commercialization of one or more of our product candidates.
Because of the numerous risks and uncertainties associated with product development, we are unable to predict the timing or amount of increased expenses or when or if we will be able to achieve or maintain profitability. Even if we are able to generate revenue from product sales, we may not become profitable. If we fail to become profitable or are unable to sustain profitability on a continuing basis, then we may be unable to continue our operations at planned levels and be forced to reduce or terminate our operations.
As of
The COVID-19 pandemic
The novel coronavirus outbreak (COVID-19) has been declared a "Public Health
Emergency of International Concern" by the
There are many uncertainties regarding the COVID-19 pandemic, and we are closely
monitoring the impact of the pandemic on all aspects of our business, including
how it will impact our clinical trials, employees, suppliers, vendors and
business partners. While the pandemic did not materially affect our financial
results and business operations for the three and six months ended
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Components of our results of operations
Revenue
We have not generated any revenue from product sales and do not expect to generate any revenue from the sale of products in the near future. If our development efforts for any of our product candidates are successful and result in marketing approval or collaboration or license agreements with third parties, we may generate revenue in the future from a combination of product sales or payments from collaboration or license agreements that we may enter into with third parties.
Operating expenses
Our expenses since inception have consisted solely of research and development costs and general and administrative costs.
Research and development expenses
Research and development expenses consist primarily of costs incurred for our research activities, including our discovery efforts, and the development of our product candidates, and include:
expenses incurred under agreements with third parties, including contract
research organizations, or CROs, that conduct research, preclinical activities ? and clinical trials on our behalf as well as contract manufacturing
organizations, or CMOs, that manufacture our product candidates for use in our
preclinical and clinical trials;
? salaries, benefits and other related costs, including stock-based compensation
expense, for personnel engaged in research and development functions;
? costs of outside consultants, including their fees, stock-based compensation
and related travel expenses;
? costs of laboratory supplies and acquiring, developing and manufacturing
preclinical study and clinical trial materials;
? expenses related to compliance with regulatory requirements; and
facility-related expenses, which include direct depreciation costs and ? allocated expenses for rent and maintenance of facilities and other operating
costs.
We expense research and development costs as incurred. We recognize costs for certain development activities, such as clinical trials, based on an evaluation of the progress to completion of specific tasks using data such as patient enrollment, clinical site activations, or information provided to us by our vendors and our clinical investigative sites. Payments for these activities are based on the terms of the individual agreements, which may differ from the pattern of costs incurred, and are reflected in our financial statements as prepaid or accrued research and development expenses.
We typically use our employee and infrastructure resources across our development programs. We track outsourced development costs and payments made to our research partners by product candidate or development program, but we do not allocate personnel costs or other internal costs to specific development programs or product candidates.
Research and development activities are central to our business model. Product candidates in later stages of clinical development generally have higher development costs than those in earlier stages of clinical development, primarily due to the increased size and duration of later-stage clinical trials. We expect that our research and development expenses will continue to increase for the foreseeable future as we initiate clinical trials for ATRN-119 and other product candidates and continue to discover and develop additional product candidates.
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We cannot determine with certainty the duration and costs of planned clinical trials of our product candidates or if, when, or to what extent we will generate revenue from the commercialization and sale of any our product candidates for which we obtain marketing approval. We may never succeed in obtaining marketing approval for any of our product candidates. The duration, costs and timing of clinical trials and development of our product candidates will depend on a variety of factors, including:
the scope, rate of progress, expense and results of any future clinical trials ? of our product candidates and other research and development activities that we
may conduct;
? uncertainties in clinical trial design and patient enrollment rates;
? significant and changing government regulation and regulatory guidance;
? the timing and receipt of, and any limitations imposed by regulatory bodies on,
any marketing approvals; and
? the expense of filing, prosecuting, defending and enforcing any patent claims
and other intellectual property rights.
A change in the outcome of any of these variables with respect to the
development of a product candidate could mean a significant change in the costs
and timing associated with the development of that product candidate. For
example, if the
General and administrative expenses
General and administrative expenses consist primarily of salaries and other related costs, including stock-based compensation, for personnel in our executive, finance, corporate and business development and administrative functions. General and administrative expenses also include legal fees relating to patent and corporate matters; professional fees for accounting, auditing, tax and consulting services; insurance costs; travel expenses; and facility-related expenses, which include direct depreciation costs and allocated expenses for rent and maintenance of facilities and other operating costs.
We expect that our general and administrative expenses will increase in the
future as a result of the costs associated with the Merger as well as the
expansion of operations subsequent to the Merger, as we increase our headcount
to support personnel in research and development and to support our operations
generally, and as we increase our research and development activities and
activities related to the potential commercialization of our product candidates.
We also expect to continue to incur increased expenses associated with being a
public company, including costs of accounting, audit, legal, regulatory and
tax-related services associated with maintaining compliance with exchange
listing and
Acquired in-process research and development ("IPR&D") expense resulted from the
Atrin acquisition in
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Other income and expense
Interest income and expense
Interest income consists of income earned on our cash and cash equivalents. Interest expense consists of the interest component associated with our facility leases. Our interest income initially increased as our cash and cash equivalents were higher due to the cash proceeds received from our IPO. Such interest income is subsequently decreasing as (i) our cash balance decreases as we continue to fund operations and (ii) a decrease in interest rates.
Foreign currency gain
Our consolidated financial statements are presented in
Income taxes
We have not recorded any
Critical accounting policies and use of estimates
Our management's discussion and analysis of financial condition and results of
operations is based on our financial statements, which have been prepared in
accordance with generally accepted accounting principles in
While our significant accounting policies are described in more detail in the notes to our financial statements, we believe that the following accounting policies are those most critical to the judgments and estimates used in the preparation of our financial statements.
Accrued research and development expenses
As part of the process of preparing our financial statements, we are required to estimate our accrued research and development expenses at each balance sheet. This process involves reviewing open contract and purchase orders, communicating with our personnel to identify services that have been performed on our behalf and estimating the level of service performed and the associated costs incurred for the services when we have not yet been invoiced or otherwise notified of the actual costs. The majority of our service providers invoice us in arrears for services performed, on a pre-determined schedule or when contractual milestones are met; however, some require advanced payments. We make estimates of our accrued expenses as of each balance sheet date in our financial statements based on facts and
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circumstances known to us at that time. Examples of estimated accrued research and development expenses include fees paid to:
? CROs in connection with performing research activities on our behalf and
conducting preclinical studies and clinical trials on our behalf;
? investigative sites or other service providers in connection with clinical
trials;
? vendors in connection with preclinical and clinical development activities; and
? vendors related to product manufacturing and development and distribution of
preclinical and clinical supplies.
We base our expenses related to preclinical studies and clinical trials on our estimates of the services received and efforts expended pursuant to quotes and contracts with CROs that conduct and manage preclinical studies and clinical trials on our behalf. The financial terms of these agreements are subject to negotiation, vary from contract to contract and may result in uneven payment flows. There may be instances in which payments made to our vendors will exceed the level of services provided and result in a prepayment of the expense. Payments under some of these contracts depend on factors such as the successful enrollment of patients and the completion of clinical trial milestones. In accruing fees, we estimate the time period over which services will be performed, enrollment of patients, number of sites activated and the level of effort to be expended in each period. If the actual timing of the performance of services or the level of effort varies from our estimate, we adjust the accrual or amount of prepaid expense accordingly. Although we do not expect our estimates to be materially different from amounts actually incurred, our understanding of the status and timing of services performed relative to the actual status and timing of services performed may vary and may result in us reporting amounts that are too high or too low in any particular period. To date, we have not made any material adjustments to our prior estimates of accrued research and development expenses.
Stock-based compensation
We measure stock options and other stock-based awards granted to employees and directors based on their fair value on the date of the grant and recognize compensation expense of those awards, over the requisite service period, which is generally the vesting period of the respective award. We apply the straight-line method of expense recognition to all awards with only service-based vesting conditions and apply the graded-vesting method to all awards with performance-based vesting conditions or to awards with both service-based and performance-based vesting conditions.
For stock-based awards granted to non-employees, compensation expense is recognized over the period during which services are rendered by such non-employees until completed in accordance with the FASB issued ASU No. 2018-07, Compensation-Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting. The new standard largely aligns the accounting for share-based payment awards issued to employees and nonemployees by expanding the scope of ASC 718 to apply to nonemployee share-based transactions, as long as the transaction is not effectively a form of financing.
We estimate the fair value of each stock option grant on the date of grant using the Black-Scholes option-pricing model, which uses as inputs the fair value of our common stock and assumptions we make for the volatility of our common stock, the expected term of our stock options, the risk-free interest rate for a period that approximates the expected term of our stock options and our expected dividend yield.
We also award restricted stock units ("RSUs") to employees and directors. RSUs are generally subject to forfeiture if employment terminates prior to completion of the vesting restrictions. We expense the cost of the RSUs, which is determined to be the fair market value of the shares of common stock underlying the RSUs at the date of grant, ratably over the period during which the vesting restrictions lapse.
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Emerging growth company and smaller reporting company status
We are an emerging growth company (EGC), as defined in the JOBS Act. Under this act, emerging growth companies are permitted to delay adopting new or revised accounting standards applicable to public companies until those standards would otherwise apply to private companies. We have irrevocably elected not to avail ourselves of this exemption from new or revised accounting standards and, therefore, will be subject to the same new or revised accounting standards as other public companies that are not emerging growth companies.
We may remain classified as an EGC until the end of the fiscal year in which the
fifth anniversary of our IPO occurs, although if the market value of our common
stock that is held by non-affiliates exceeds
We are also a "smaller reporting company," as such term is defined in Rule 12b-2
of the Exchange Act, meaning that the market value of our common stock held by
non-affiliates is less than
Results of operations
Comparison of the three months ended
Three Months Ended June 30,
2022 2021 Change
Operating expenses:
Research and development $ 6,811,609 $ 6,654,257 $ 157,352
General and administrative 15,633,738 3,343,325 12,290,413
Acquired in-process research and development 76,020,184 - 76,020,184
Total operating expenses 98,465,531 9,997,582 88,467,949
Other income (expense):
Interest expense 52,491 (588) 53,079
Foreign currency gain (loss) 154,566 (252,843) 407,409
Total other income (expense) 207,057 (253,431) 460,488
Net loss $ (98,258,474) $ (10,251,013) $ (88,007,461) Research and development expenses
Three Months Ended June 30,
2022 2021 Change
APR-246 $ 3,597,971 $ 3,662,149 $ (64,178)
Other early-stage development programs 364,966 1,309,067 (944,101)
Unallocated research and development expenses 2,848,672 1,683,041 1,165,631
Total research and development expenses
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Research and development expenses for the three months ended
? an increase of
post-transplant MDS/AML clinical trial;
an increase of
? clinical trial of eprenetapopt with azacitidine for frontline treatment of TP53
mutant MDS;
? an increase of
clinical trial;
These increases were offset, in part by the following:
? a decrease of
tumor trial;
a decrease of
trial in relapsed/refractory TP53 mutant chronic lymphoid leukemia (CLL)
? assessing eprenetapopt with venetoclax and rituximab and eprenetapopt with
ibrutinib in order to further assess eprenetapopt in hematological
malignancies; and
a decrease of
? scale-up of manufacturing activities for the anticipated commercial production
of eprenetapopt;
General and administrative expenses
General and administrative expenses for the three months ended
an increase of
? increase in non-cash stock-based compensation expense was related to the
accelerated vesting of all outstanding and unvested stock options and RSUs in
connection with the Atrin acquisition.
Acquired IPR&D expense was
Other income and expense
Foreign currency gain for the three months ended
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Comparison of the six months ended
Six months ended June 30,
2022 2021 Change
Operating expenses:
Research and development $ 10,901,186 $ 13,418,105 $ (2,516,919)
General and administrative 19,619,036 6,769,158 12,849,878
Acquired in-process research and development 76,020,184 - 76,020,184
Total operating expenses 106,540,406 20,187,263 86,353,143
Other income (expense):
Interest expense 54,462 (1,645) 56,107
Foreign currency gain 290,777 269,140 21,637
Total other income (expense) 345,239 267,495 77,744
Net loss $ (106,195,167) $ (19,919,768) $ (86,275,399) Research and development expenses
Six months ended June 30,
2022 2021 Change
APR-246 $ 4,639,594 $ 7,465,322 $ (2,825,728)
Other early-stage development programs 1,068,600 2,425,067 (1,356,467)
Unallocated research and development expenses 5,192,992 3,527,716 1,665,276
Total research and development expenses
Research and development expenses for the six months ended
? a decrease of
tumor trial;
a decrease of
? scale-up of manufacturing activities for the anticipated commercial production
of eprenetapopt;
a decrease of
trial in relapsed/refractory TP53 mutant chronic lymphoid leukemia (CLL)
? assessing eprenetapopt with venetoclax and rituximab and eprenetapopt with
ibrutinib in order to further assess eprenetapopt in hematological
malignancies; and
? a decrease of
These decreases were offset, in part by the following:
? an increase of
post-transplant MDS/AML clinical trial;
General and administrative expenses
General and administrative expenses for the six months ended
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an increase of
? increase in non-cash stock-based compensation expense was related to the
accelerated vesting of all outstanding and unvested stock options and RSUs in
connection with the Atrin acquisition; and
? an increase of
acquisition activities.
Acquired IPR&D expense was
Other income and expense
Foreign currency gain for the six months ended
Liquidity and capital resources
Since our inception, we have incurred significant losses on an aggregate basis.
We have not yet commercialized any of our product candidates, which are in
various phases of preclinical and clinical development, and we do not expect to
generate revenue from sales of any products for several years, if at all. To
date, we have financed our operations primarily through private placements of
our preferred and common stock and the net proceeds received from the initial
public offering (IPO) of our common stock. Through
Cash flows
The following table summarizes our sources and uses of cash for each of the periods presented:
Six months ended June 30,
2022 2021
Net cash provided by (used in):
Operating activities $ (14,397,942) $ (19,273,988)
Investing activities - -
Financing activities - -
Net increase in cash and cash equivalents
Operating activities.
Cash used in operating activities resulted primarily from our net losses
adjusted for non-cash charges and changes in components of working capital. Net
cash used in operating activities was
Investing activities.
No cash was used in investing activities for the six months endedJune 30, 2022 or 2021. 30 Table of Contents Financing activities.
No cash was provided by financing activities for the six months ended
Funding requirements
We expect our expenses to increase in connection with our ongoing and planned development activities. In addition, we have incurred and continue to incur additional costs associated with operating as a public company. We expect that our expenses will increase substantially if and as we:
? initiate and conduct clinical trials and additional preclinical research for
our product candidates;
? seek to identify and develop additional product candidates;
? seek marketing approvals for any of our product candidates that successfully
complete clinical trials, if any;
? establish a sales, marketing, manufacturing and distribution infrastructure to
commercialize any products for which we may obtain marketing approval;
? require the manufacture of larger quantities of our product candidates for
clinical development and potentially commercialization;
? maintain, expand, protect and enforce our intellectual property portfolio;
? acquire or in-license other drugs and technologies;
? defend against any claims of infringement, misappropriation or other violation
of third-party intellectual property;
? hire and retain additional clinical, quality control and scientific personnel;
? build out new facilities or expand existing facilities to support our ongoing
development activity;
add operational, financial and management information systems and personnel, ? including personnel to support our drug development, any future
commercialization efforts and our transition to a public company; and
? continue to operate as a public company.
As of
Because of the numerous risks and uncertainties associated with the development of our product candidates and programs and because the extent to which we may enter into collaborations with third parties for development of our product candidates is unknown, we are unable to estimate the timing and amounts of increased capital outlays and operating expenses associated with completing the research and development of our product candidates. Our future capital requirements will depend on many factors, including:
? the scope, progress, results and costs of our planned clinical trials, drug
discovery and preclinical research for our product candidates;
? the number of future product candidates that we pursue and their development
requirements;
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? the costs, timing and outcome of regulatory review of our product candidates;
the extent to which we acquire or invest in assets or businesses, products and
technologies, including entering into or maintaining licensing or collaboration ? arrangements for product candidates on favorable terms, and although we
recently completed the Merger and may continue to explore such opportunities
from time to time during the normal course of business, we currently have no
commitments or agreements to complete any such transactions];
the costs and timing of future commercialization activities, including drug
sales, marketing, manufacturing and distribution, for any of our product ? candidates for which we receive marketing approval, to the extent that such
sales, marketing, manufacturing and distribution are not the responsibility of
any collaborator that we may have at such time;
? the amount of revenue, if any, received from commercial sales of our product
candidates, should any of our product candidates receive marketing approval;
? the impact of COVID-19 on the financial markets in general and on our business
in particular;
the costs of preparing, filing and prosecuting patent applications, ? maintaining, protecting and enforcing our intellectual property rights and
defending intellectual property-related claims;
? our headcount growth and associated costs as we expand our business operations
and our research and development activities; and
? the costs of operating as a public company.
Developing drug products, including conducting preclinical studies and clinical trials, is a time-consuming, expensive and uncertain process that takes years to complete, and we may never generate the necessary data or results required to obtain marketing approval for any product candidates or generate revenue from the sale of any products for which we may obtain marketing approval. In addition, our product candidates, if approved, may not achieve commercial success. Our commercial revenues, if any, will be derived from sales of drugs that we do not expect to be commercially available for many years, if ever. Accordingly, we will need to obtain substantial additional funds to achieve our business objectives.
Adequate additional funds may not be available to us on acceptable terms, or at all. We do not currently have any committed external source of funds. To the extent that we raise additional capital through the sale of equity or convertible debt securities, ownership interests in our securities may be diluted, and the terms of these securities may include liquidation or other preferences and anti-dilution protections that could adversely affect the rights of our common stockholders. Additional debt or preferred equity financing, if available, may involve agreements that include restrictive covenants that may limit our ability to take specific actions, such as incurring debt, making capital expenditures or declaring dividends, which could adversely impact our ability to conduct our business, and may require the issuance of warrants, which could potentially dilute existing ownership interest.
If we raise additional funds through collaborations, strategic alliances or licensing arrangements with third parties, we may have to relinquish valuable rights to our technology, future revenue streams, research programs, or product candidates or grant licenses on terms that may not be favorable to us. If we are unable to raise additional funds through equity or debt financings or collaborations, strategic alliances or licensing arrangements with third parties when needed, we may be required to delay, limit, reduce and/or terminate our product development programs or any future commercialization efforts or grant rights to develop and market product candidates that we would otherwise prefer to develop and market ourselves.
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Contractual obligations and commitments
For additional details regarding our contractual obligations, see Note 3 "Leases" to our condensed consolidated financial statements appearing elsewhere in this Quarterly Report on Form 10-Q.
Shelf Registration Statement
On
Recent accounting pronouncements
From time to time, new accounting pronouncements are issued by the
We do not believe that any recently issued, but not yet effective accounting pronouncements, if adopted, would have a material impact on our financial statements.
Off-balance sheet arrangements
We did not have during the periods presented, and we do not currently have, any
off-balance sheet arrangements, as defined in the rules and regulations of the
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