What changed in this filing

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Item 2. Management’s Discussion and Analysis

2021-08-09 compared with 2021-05-13 · 57 added, 31 removed, 198 unchanged (31% of the section changed)

6 unchanged sentences

Please also see the section titled “Special Note Regarding Forward-Looking Statements.”

In less than four years, we have matured into a clinical-stage biopharmaceutical company focused on the discovery, development and commercialization of innovative treatments for severe, rare muscle disorders for which there is significant unmet medical need.

We are a clinical-stage biopharmaceutical company focused on the discovery, development and commercialization of innovative treatments for severe, rare muscle disorders for which there is significant unmet medical need.

Guided by our holistic drug discovery approach to targeting the muscle as an organ, we have combined our foundational expertise in muscle biology and small molecule engineering to build our proprietary, muscle focused drug discovery platform.

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We have incurred significant losses since the commencement of our operations.

Our net losses were $6.8 million and $3.2 million for the three months ended March 31, 2021 and 2020, respectively, and we expect to continue to incur significant losses for the foreseeable future as we advance our product candidates through preclinical development and

clinical trials and seek regulatory approval of our product candidates.

Our net losses were $10.4 million and $17.2 million for the three and six months ended June 30, 2021, respectively and $4.0 million and $7.1 million for the three and six months ended June 30, 2020, respectively, and we expect to continue to incur significant losses for the

foreseeable future as we advance our product candidates through preclinical development and clinical trials and seek regulatory approval of our product candidates.

Our net losses may fluctuate significantly from period to period, depending on the timing of and expenditures on our planned research and development activities.

As of March 31, 2021, we had an accumulated deficit of $41.0 million.

As of June 30, 2021, we had an accumulated deficit of $51.3 million.

To date, we have financed our operations primarily through private placements of convertible preferred stock and an initial public offering (IPO) of our common stock.

From inception through March 31, 2020, these private placements have provided gross proceeds of $160.7 million and the IPO generated net proceeds of $186.1 million after deducting underwriting discounts and commissions and offering costs of $16.3 million.

From inception through June 30, 2020, these private placements have provided gross proceeds of $160.7 million and the IPO generated net proceeds of $186.1 million after deducting underwriting discounts and commissions and offering costs of $16.3 million.

We believe that our existing cash and cash equivalents and marketable securities of $299.2 million will enable us to fund our planned operating expenses and capital expenditure requirements through at least the next 24 months.

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Results of Operations

Comparison of the three months ended March 31, 2021 and 2020

The following table summarizes our results of operations for the three months ended March 31, 2021 and 2020:

Three months ended March 31,

Comparison of the three months ended June 30, 2021 and 2020

The following table summarizes our results of operations for the three months ended June 30, 2021 and 2020:

Three months ended June 30,

(in thousands)

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The following table summarizes our research and development expenses:

Three months ended March 31,

Three months ended June 30,

(in thousands)

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Total research and development expenses

Research and development expenses were $5.4 million and $3.0 million for the three months ended March 31, 2021 and 2020, respectively.

The increase of $2.4 million was primarily driven by $0.6 million of higher external research and development expenses related to our Phase 1 clinical trial of EDG-5506, an increase of $0.7 million related to increased drug discovery and pre-clinical development of our other programs and an increase of $1.0 million in employee-related costs, due largely to an increased employee headcount to support the growth of our research and development programs.

Research and development expenses were $7.9 million and $3.6 million for the three months ended June 30, 2021 and 2020, respectively.

The increase of $4.3 million was primarily driven by $2.6 million of higher external research and development expenses related to our Phase 1 clinical trial of EDG-5506, an increase of $0.4 million related to increased drug discovery and preclinical development of our other programs and an increase of $1.3 million in employee-related costs, due largely to an increased employee headcount to support the growth of our research and development programs.

General and administrative expenses

General and administrative expenses were $1.5 million and $0.3 million for the three months ended March 31, 2021 and 2020, respectively.

The increase of $1.2 million was primarily related to $0.7 million in increased employee-related costs from increased headcount and $0.5 million in increased professional and consulting costs.

General and administrative expenses were $2.6 million and $0.3 million for the three months ended June 30, 2021 and 2020, respectively.

The increase of $2.3 million was primarily related to the cost related to operating as a public company, including $0.9 million in increased employee-related costs from increased headcount, $0.7 million in increased directors and officers insurance and $0.7 million in increased professional and consulting costs.

Interest income

Interest income was $42,000 and $63,000 for the three months ended March 31, 2021 and 2020, respectively.

The decrease of $21,000 was the result of lower interest rates for the first three months of 2021 as compared to the first three months of 2020, resulting in lower interest income earned from our cash and cash equivalents and marketable securities.

Interest income was $107,000 and $3,000 for the three months ended June 30, 2021 and 2020, respectively.

The increase of $104,000 was the result of higher cash and marketable securities balances from the proceeds of our IPO in 2021 as compared to our cash balances in 2020, resulting in higher interest income earned.

Comparison of the six months ended June 30, 2021 and 2020

The following table summarizes our results of operations for the six months ended June 30, 2021 and 2020:

Six months ended June 30,

(in thousands)

Operating expenses:

Research and development

General and administrative

Total operating expenses

Loss from operations

Interest income

Research and development expenses

The following table summarizes our research and development expenses:

Six months ended June 30,

(in thousands)

External research and development expenses:

EDG-5506 clinical program

Discovery and preclinical

Internal and other unallocated costs

Total research and development expenses

Research and development expenses were $13.2 million and $6.6 million for the six months ended June 30, 2021 and 2020, respectively.

The increase of $6.6 million was primarily driven by $3.4 million of higher external research and development expenses related to our Phase 1 clinical trial of EDG-5506, an increase of $1.1 million related to increased drug discovery and preclinical development of our other programs and an increase of $2.1 million in employee-related costs, due largely to an increased employee headcount to support the growth of our research and development programs.

General and administrative expenses

General and administrative expenses were $4.1 million and $0.6 million for the six months ended June 30, 2021 and 2020, respectively.

The increase of $3.5 million was primarily related to the cost related to operating as a public company, including $1.7 million in increased employee-related costs from increased headcount, $0.8 million in increased directors and officers insurance and $1.0 million in increased professional and consulting costs.

Interest income

Interest income was $149,000 and $66,000 for the six months ended June 30, 2021 and 2020, respectively.

The increase of $83,000 was the result of higher cash and marketable securities balances from the proceeds of our IPO in 2021 as compared to our cash balances in 2020, resulting in higher interest income earned.

Liquidity and Capital Resources

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We have funded our operations to date primarily with proceeds from the sale of convertible preferred stock and the initial public offering of our common stock.

Through March 31, 2021, we had received gross proceeds of $160.7 million from the sale of convertible preferred stock and $186.1 million in net proceeds from the initial public offering of our common stock after deducting underwriting discounts and commissions and offering costs of $16.3 million.

As of March 31, 2021, we had cash, cash equivalents and marketable securities in the amount of $309.9 million.

Through June 30, 2021, we had received gross proceeds of $160.7 million from the sale of convertible preferred stock and $186.1 million in net proceeds from the initial public offering of our common stock after deducting underwriting discounts, commissions and offering costs of $16.3 million.

As of June 30, 2021, we had cash, cash equivalents and marketable securities in the amount of $299.2 million.

The following table summarizes our sources and uses of cash for each of the periods presented:

Three months ended March 31,

Six months ended June 30,

(in thousands)

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Net cash provided by financing activities

Net increase in cash and cash equivalents

Net decrease in cash and cash equivalents

Operating activities

Cash used in operating activities in the three months ended March 31, 2021 was primarily driven by our net loss for the period of $6.8 million, and was also impacted by changes in operating assets and liabilities which decreased net working capital by $0.4 million.

Cash used in operating activities was also reduced by non-cash charges of $0.4 million relating to depreciation and stock-based compensation expense.

Cash used in operating activities in the three months ended March 31, 2020 was primarily driven by our net loss for the period of $3.2 million, and was also impacted by changes in operating assets and liabilities which decreased net working capital by $0.4 million.

Cash used in operating activities was also impacted by non-cash charges of $0.1 million relating to depreciation and stock-based compensation expense.

Cash used in operating activities in the six months ended June 30, 2021 was primarily driven by our net loss for the period of $17.2 million, and was also impacted by changes in operating assets and liabilities which increased net working capital by $0.2 million.

Cash used in operating activities was reduced by non-cash charges of $1.1 million relating to stock-based compensation expense of $1.0 million and depreciation of $0.1 million.

Cash used in operating activities in the six months ended June 30, 2020 was primarily driven by our net loss for the period of $7.1 million, and was also impacted by changes in operating assets and liabilities which decreased net working capital by $0.2 million.

Cash used in operating activities was reduced by non-cash charges of $0.2 million relating to stock-based compensation expense of $0.1 million and depreciation of $0.1 million.

Investing activities

Cash used in investing activities during the three months ended March 31, 2021 amounted to $64.8 million which was due to $64.7 million in purchases of marketable securities and $0.1 million for purchases of equipment.

Cash used in investing activities during the three months ended March 31, 2020 amounted to $9,000 and was for purchases of equipment.

Cash used in investing activities during the six months ended June 30, 2021 amounted to $224.7 million which was due to $231.8 million in purchases of marketable securities and $0.1 million for purchases of equipment, which was partially offset by $7.2 million in maturities of marketable securities.

Cash used in investing activities during the six months ended June 30, 2020 amounted to $0.2 million and was for purchases of equipment.

Financing activities

Net cash provided by financing activities during the three months ended March 31, 2021 was $187.0 million, primarily consisting of cash proceeds from the initial public offering of the Company’s common stock.

Net cash provided by financing activities during the six months ended June 30, 2021 was $186.1 million, primarily consisting of cash proceeds from the initial public offering of the Company’s common stock.

In addition, we generated cash proceeds of $30,000 from the issuance of common stock upon the exercise of stock options and paid $0.1 million in preferred stock issuance costs.

There was no cash provided by financing activities during the three months ended March 31, 2020 as the proceeds from employee option exercises were not received until the following quarter.

Net cash provided by financing activities during the six months ended June 30, 2020 was $0.1 million which was generated from cash proceeds from the issuance of common stock upon the exercise of stock options.

Funding requirements

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Contractual Obligations and Commitments

The following table summarizes our contractual obligations as of March 31, 2021:

The following table summarizes our contractual obligations as of June 30, 2021:

Payments Due by Period

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Our critical accounting policies are described in the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Policies and Significant Judgments and Estimates” in our final prospectus for our IPO filed pursuant to Rule 424(b)(4) under the Securities Act with the SEC on March 26, 2021 and the notes to the financial statements appearing elsewhere in this Quarterly Report on Form 10-Q.

During the three months ended March 31, 2021, there were no material changes to our critical accounting policies from those discussed in our final prospectus filed on March 26, 2021.

During the three and six months ended June 30, 2021, there were no material changes to our critical accounting policies from those discussed in our final prospectus filed on March 26, 2021.

Recently Issued Accounting Pronouncements

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We are also a “smaller reporting company,” meaning that the market value of our stock held by non-affiliates is less than $700 million and our annual revenue was less than $100 million during the most recently completed fiscal year.

We may continue to be a smaller reporting company if either (1) the market value of our stock held by non-affiliates is less than $250 million or (2) our annual revenue was less than $100 million during the most recently completed fiscal year

and the market value of our stock held by non-affiliates is less than $700 million.

If we are a smaller reporting company at the time we cease to be an emerging growth company, we may continue to rely on exemptions from certain disclosure requirements that are available to smaller reporting companies.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis