What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2021-11-10 compared with 2021-08-09 · 43 added, 40 removed, 215 unchanged (28% of the section changed)

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Our lead candidate, EDG-5506, is an orally administered allosteric, selective, fast myofiber (type II) myosin small molecule inhibitor designed to address the root cause of dystrophinopathies including Duchenne muscular dystrophy (DMD) and Becker muscular dystrophy (BMD), and is currently in a Phase 1 clinical trial.

We have developed and characterized a library of selective fast skeletal myosin inhibitors exhibiting a broad range of pharmacological and PK properties.

We have developed and characterized a library of selective fast skeletal myosin inhibitors exhibiting a broad range of pharmacological and pharmacokinetic (PK) properties.

We are characterizing EDG-6289 as a faster onset alternative to EDG-5506 for the treatment of movement disorders, including muscle spasticity associated with multiple sclerosis, cerebral palsy and stroke.

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We believe our programs also offer substantial opportunities for us to expand into related rare diseases for which there are limited or no approved treatments.

The Company announced in October 2021 positive topline results from the multiple ascending dose (MAD) portion of a first-in-human Phase 1, healthy volunteer (HV), clinical trial assessing the safety, tolerability, PK and pharmacodynamics of escalating doses of EDG-5506, an orally administered small molecule myosin inhibitor designed to protect injury-susceptible fast skeletal muscle fibers in dystrophinopathies such as DMD and BMD.

Based on these favorable results, the Company anticipates initiation of Phase 2 trials in individuals with BMD in the first half of 2022 and DMD in the second half of 2022.

Moreover, the Company has also started dosing individuals with BMD as part of the ongoing Phase 1b clinical trial.

The Company also expects to initiate a follow-on open-label study in BMD patients in the first quarter of 2022 to explore the above parameters over 3 months.

Since our inception in 2017, we have devoted substantially all of our focus and financial resources to discovering, identifying and developing potential product candidates, including advancing our development programs, conducting preclinical studies of our product candidates and initiating a clinical trial, organizing and staffing our company, business planning, raising capital and securing related intellectual property rights.

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We will need substantial additional funding to support our continuing operations and pursue our development and commercialization strategy.

Until such time that we can generate significant revenue from product sales, if ever, we expect to finance our operations through the sale of equity, debt financings or other capital sources, including income from collaborations, strategic partnerships or marketing, distribution or licensing arrangements with third parties or from grants from organizations and foundations.

distribution or licensing arrangements with third parties or from grants from organizations and foundations.

We may be unable to raise additional funds or to enter into such other agreements or arrangements when needed on favorable terms, or at all.

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

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 were $12.9 million and $30.1 million for the three and nine months ended September 30, 2021, respectively and $3.6 million and $10.8 million for the three and nine months ended September 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 June 30, 2021, we had an accumulated deficit of $51.3 million.

As of September 30, 2021, we had an accumulated deficit of $64.3 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 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.

From inception through September 30, 2021, 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 $290.5 million will enable us to fund our planned operating expenses and capital expenditure requirements through at least the next 12 months.

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Accordingly, businesses have adjusted, reduced or suspended operating activities.

Beginning the week of March 16, 2020, the majority of our workforce began working from home.

Disruptions caused by the COVID-19 pandemic, including the effects of the stay-at-home orders and work-from-home policies, have impacted productivity, have resulted in increased operational expenses, certain adjustments to the operations of our clinical trial, delays in the enrollment of new patients at our clinical trial site, and delays in certain supply chain activities and collecting and analyzing data from patients in our clinical trial, and may further disrupt our business and delay our development programs and regulatory timelines, the magnitude of which will depend, in part, on the length and severity of the restrictions and other limitations on our ability to conduct business in the ordinary course.

As a result, research and development expenses and general and administrative expenses may vary significantly if there is an increased impact from COVID-19 on the costs and timing associated with the conduct of our clinical trial and other related business activities.

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We expect that significant additional spending will be required to progress EDG-5506 through the remainder of the clinical development phases.

These expenses will primarily consist of expenses for the administration of clinical studies as well as manufacturing costs for clinical material supply.

These expenses will primarily consist of expenses for the administration of clinical trials as well as manufacturing costs for clinical material supply.

We track our direct research and development expenses on a program-by-program basis once a lead compound has been selected and clinical trials have been initiated.

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Results of Operations

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,

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

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

Three months ended September 30,

(in thousands)

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The following table summarizes our research and development expenses:

Three months ended June 30,

Three months ended September 30,

(in thousands)

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Total research and development expenses

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.

Research and development expenses were $9.9 million and $3.2 million for the three months ended September 30, 2021 and 2020, respectively.

The increase of $6.6 million was primarily driven by $3.1 million of higher external research and development expenses related to our Phase 1 clinical trial of EDG-5506, an increase of $1.2 million related to increased drug discovery and preclinical development of our other programs and an increase of $2.3 million in employee-related costs, due largely to an increased employee headcount and stock-based compensation to support the growth of our research and development programs.

General and administrative expenses

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.

General and administrative expenses were $3.2 million and $0.4 million for the three months ended September 30, 2021 and 2020, respectively.

The increase of $2.8 million was primarily related to the cost related to operating as a public company, including $1.1 million in increased employee-related costs from increased headcount and stock-based compensation, $0.7 million in increased directors and officers insurance and $1.0 million in increased professional and consulting and other administrative costs.

Interest income

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

Interest income was $127,000 and $1,000 for the three months ended September 30, 2021 and 2020, respectively.

The increase of $126,000 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,

Comparison of the nine months ended September 30, 2021 and 2020

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

Nine months ended September 30,

(in thousands)

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The following table summarizes our research and development expenses:

Six months ended June 30,

Nine months ended September 30,

(in thousands)

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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.

Research and development expenses were $23.1 million and $9.8 million for the nine months ended September 30, 2021 and 2020, respectively.

The increase of $13.3 million was primarily driven by $6.2 million of higher external research and development expenses related to our Phase 1 clinical trial of EDG-5506, an increase of $2.6 million related to increased drug discovery and preclinical development of our other programs and an increase of $4.4 million in employee-related costs, due largely to an increased employee headcount and stock-based compensation 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.

General and administrative expenses were $7.3 million and $1.0 million for the nine months ended September 30, 2021 and 2020, respectively.

The increase of $6.3 million was primarily related to the cost related to operating as a public company, including $2.8 million in increased employee-related costs from increased headcount and stock-based compensation, $1.5 million in increased directors and officers insurance and $2.0 million in increased professional and consulting costs and other administrative costs.

Interest income

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

Interest income was $276,000 and $67,000 for the nine months ended September 30, 2021 and 2020, respectively.

The increase of $209,000 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.

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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 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.

Through September 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 September 30, 2021, we had cash, cash equivalents and marketable securities in the amount of $290.5 million.

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

Six months ended June 30,

Nine months ended September 30,

(in thousands)

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Net cash provided by financing activities

Net decrease in cash and cash equivalents

Net (decrease) increase in cash and cash equivalents

Operating activities

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 in the nine months ended September 30, 2021 was primarily driven by our net loss for the period of $30.1 million, and was also impacted by changes in operating assets and liabilities which decreased net working capital by $3.3 million.

Cash used in operating activities was reduced by non-cash charges of $2.7 million relating to stock-based compensation expense of $2.5 million and depreciation of $0.2 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 in the nine months ended September 30, 2020 was primarily driven by our net loss for the period of $10.8 million, and was also impacted by changes in operating assets and liabilities which decreased net working capital by $0.5 million.

Cash used in operating activities was reduced by non-cash charges of $0.3 million relating to stock-based compensation expense of $0.2 million and depreciation of $0.1 million.

Investing activities

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.

Cash used in investing activities during the nine months ended September 30, 2021 amounted to $256.4 million which was due to $273.2 million in purchases of marketable securities and $0.6 million for purchases of equipment, which was partially offset by $17.4 million in maturities of marketable securities.

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

Financing activities

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.

Net cash provided by financing activities during the nine months ended September 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 $67,000 from the issuance of common stock upon the exercise of stock options and paid $0.1 million in preferred stock issuance costs.

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.

Net cash provided by financing activities during the nine months ended September 30, 2020 was $25.3 million which was generated from cash proceeds from the issuance of Series B-2 convertible preferred stock for $25.1 million and the issuance of common stock upon the exercise of stock options for $0.2 million.

Funding requirements

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Contractual Obligations and Commitments

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

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

Payments Due by Period

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Operating lease commitments (1)

(1) Reflects minimum payments due for office and laboratory space in Boulder, Colorado leased under an operating lease that was amended in June 2020 and expires in August 2021, and laboratory space in Portland, Oregon, leased under a short-term arrangement with renewal options.

(1) Reflects minimum payments due for office and laboratory space in Boulder, Colorado leased under an operating lease that was amended in August 2021 and expires in August 2022, and laboratory space in Portland, Oregon, leased under a short-term arrangement with renewal options.

We have exclusively licensed intellectual property from The Ohio State Innovation Foundation (OSIF) pursuant to a license agreement effective November 20, 2020.

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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 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.

During the three and nine months ended September 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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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