What changed in this filing

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Item 2. Management’s Discussion and Analysis

2022-11-03 compared with 2022-08-04 · 48 added, 44 removed, 203 unchanged (31% of the section changed)

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While EDG-002 is an important preclinical program to us, we have not needed to devote significant financial resources to this program to date since it is still in preclinical development and has not yet advanced into clinical trials.

In October 2021, we announced positive topline results from the MAD portion of a first-in-human Phase 1, HV clinical trial.

In October 2021, we announced positive topline results from the multiple ascending dose (MAD) portion of a first-in-human Phase 1, HV clinical trial.

In addition, in January 2022, we announced positive topline results from the BMD, or Phase 1b, portion of a first-in-human Phase 1 clinical trial assessing the safety, tolerability, PK and PD of EDG-5506.

We have fully enrolled an open-label, single-center study that will assess the safety and PK of EDG-5506 over one year in adults with BMD and in June 2022, announced positive interim 2-month results from the ongoing study .

We initiated a Phase 2 trial in individuals with BMD in July 2022 and anticipate initiation of a Phase 2 trial in boys with DMD in the second half of 2022.

We have fully enrolled an open-label, single-center study that will assess the safety and PK of EDG-5506 over one year in adults with BMD and in October 2022, announced positive interim 6-month results from the ongoing study .

We initiated a Phase 2 clinical trial in individuals with BMD in July 2022 and initiated our Phase 2 clinical trial in children with DMD in October 2022.

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.

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.

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 $16.1 million and $30.7 million for the three and six months ended June 30, 2022, respectively and $10.4 million and $17.2 million for the three and six months ended June 30, 2021, 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 $17.5 million and $48.2 million for the three and nine months ended September 30, 2022, respectively and $12.9 million and $30.1 million for the three and nine months ended September 30, 2021, 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, 2022, we had an accumulated deficit of $107.7 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, 2022, these private placements have provided gross proceeds of $160.7 million and the IPO generated net proceeds of $186.1 million.

As of September 30, 2022, we had an accumulated deficit of $125.2 million.

To date, we have financed our operations primarily through private placements of convertible preferred stock, and public offerings of our common stock.

From inception through September 30, 2022, these private placements have provided gross proceeds of $160.7 million, and the initial public offering and follow-on public offering of our common stock have generated net proceeds of $315.3 million.

We believe that our existing cash and cash equivalents and marketable securities of $364.8 million will enable us to fund our planned operating expenses and capital expenditure requirements through at least the next 12 months.

In March 2020, the World Health Organization declared the novel coronavirus disease (COVID-19) outbreak a global pandemic.

To limit the spread of COVID-19, governments have taken various actions including the issuance of stay-at-home orders and physical distancing guidelines.

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

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 well as the spread, severity and potential resurgence of COVID-19, the impact of new COVID-19 variants, and vaccination deployment efforts.

To limit the spread of COVID-19, governments took various actions including the issuance of stay-at-home orders and physical distancing guidelines.

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

Disruptions caused by the COVID-19 pandemic, including the effects of the stay-at-home orders and work-from-home policies, have impacted our 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.

As the COVID-19 pandemic continues and new variants emerge, it 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 any restrictions and other limitations on our ability to conduct business in the ordinary course as well as the spread, severity and potential resurgence of COVID-19, the impact of new COVID-19 variants, and vaccination deployment efforts.

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.

We are carefully monitoring the pandemic and the potential length and depth of the resulting economic impact on its financial condition and results of operations.

We are also monitoring other macro-economic and geopolitical developments, such as the Russia-Ukraine conflict, inflation, cybersecurity risks and sanctions so that the Company can be prepared to react to new developments as they arise.

We are carefully monitoring these developments, as well as the COVID-19 pandemic, and the resulting economic impact.

Components of Our Results of Operations

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Product candidates in later stages of clinical development generally have higher development costs than those in earlier stages, primarily due to the increased size and duration of later-stage clinical trials.

We initiated a Phase 2 clinical trial in individuals with BMD in July 2022 and a Phase 2 clinical trial in children with DMD in October 2022.

As a result, we expect that our research and development expenses will increase substantially over the next several years as we advance EDG-5506 through clinical trials and additional product candidates enter clinical trials;

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We are also unable to predict when, if ever, we will generate revenue from our product candidates to offset these expenses.

Our expenditures on current and future preclinical and clinical development programs are subject to numerous uncertainties in timing and cost to completion.

Our expenditures on current and future preclinical and clinical development programs are subject

to numerous uncertainties in timing and cost to completion.

The duration, costs and timing of preclinical studies and clinical trials and development of our product candidates will depend on a variety of factors, including:

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Results of Operations

Comparison of the three months ended June 30, 2022 and 2021

The following table summarizes our results of operations for the three months ended June 30, 2022 and 2021:

Three months ended June 30,

Comparison of the three months ended September 30, 2022 and 2021

The following table summarizes our results of operations for the three months ended September 30, 2022 and 2021:

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 $12.4 million and $7.9 million for the three months ended June 30, 2022 and 2021, respectively.

The increase of $4.5 million was primarily driven by $0.6 million of higher external research and development expenses related to our EDG-5506 clinical program including clinical trial costs and product candidate manufacturing costs to support current and future trials, an increase of $2.4 million related to increased drug discovery and preclinical development of our EDG-002 program and an increase of $1.6 million in employee-related costs to support the growth of our research and development programs.

Research and development expenses were $13.9 million and $9.9 million for the three months ended September 30, 2022 and 2021, respectively.

The increase of $4.0 million was primarily driven by an increase of $2.4 million related to increased drug discovery and preclinical development of our EDG-002 program, an increase of $1.5 million in employee-related costs to support the growth of our research and development programs and an increase of $0.2 million of higher external research and development expenses related to our EDG-5506 clinical program including clinical trial costs and product candidate manufacturing costs to support current and future trials.

General and administrative expenses

General and administrative expenses were $4.1 million and $2.6 million for the three months ended June 30, 2022 and 2021, respectively.

General and administrative expenses were $4.4 million and $3.2 million for the three months ended September 30, 2022 and 2021, respectively.

The increase of $1.2 million was primarily due to $1.1 million in increased employee-related costs from increased headcount and stock-based compensation and $0.1 million in increased professional and consulting and other administrative costs.

Interest income

Interest income was $424,000 and $107,000 for the three months ended June 30, 2022 and 2021, respectively.

The increase of $317,000 was primarily due to higher interest rates on our marketable securities balances during the three months ended June 30, 2022, as compared to the three months ended June 30, 2021.

Comparison of the six months ended June 30, 2022 and 2021

The following table summarizes our results of operations for the six months ended June 30, 2022 and 2021:

Six Months Ended

Interest income was $0.8 million and $0.1 million for the three months ended September 30, 2022 and 2021, respectively.

The increase of $0.6 million was primarily due to higher interest rates on our marketable securities balances during the three months ended September 30, 2022, as compared to the three months ended September 30, 2021.

Comparison of the nine months ended September 30, 2022 and 2021

The following table summarizes our results of operations for the nine months ended September 30, 2022 and 2021:

Nine months ended September 30,

(in thousands)

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The following table summarizes our research and development expenses:

Six Months Ended

Nine months ended September 30,

(in thousands)

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Total research and development expenses

Research and development expenses were $23.5 million and $13.2 million for the six months ended June 30, 2022 and 2021, respectively.

The increase of $10.3 million was primarily driven by $2.0 million of higher external research and development expenses related to our EDG-5506 clinical program including clinical trial costs and product candidate manufacturing costs to support current and future trials, an increase of $4.6 million related to increased drug discovery and preclinical development of our EDG-002 program and an increase of $3.7 million in employee-related costs to support the growth of our research and development programs.

Research and development expenses were $37.4 million and $23.1 million for the nine months ended September 30, 2022 and 2021, respectively.

The increase of $14.3 million was primarily driven by an increase of $6.7 million related to increased drug discovery and preclinical development of our EDG-002 program, an increase of $5.2 million in employee-related costs to support the growth of our research and development programs and $2.4 million of higher external research and development expenses related to our EDG-5506 clinical program including clinical trial costs and product candidate manufacturing costs to support current and future trials.

General and administrative expenses

General and administrative expenses were $7.8 million and $4.1 million for the six months ended June 30, 2022 and 2021, respectively.

General and administrative expenses were $12.2 million and $7.3 million for the nine months ended September 30, 2022 and 2021, respectively.

The increase of $4.9 million was primarily related to $2.8 million in increased employee-related costs from increased headcount, $1.5 million in increased professional and consulting costs and $0.6 million in increased directors and officers insurance.

Interest income

Interest income was $590,000 and $149,000 for the six months ended June 30, 2022 and 2021, respectively.

The increase of $441,000 was primarily due to higher interest rates on our marketable securities balances during the six months ended June 30, 2022, as compared to the six months ended June 30, 2021.

Interest income was $1.4 million and $0.3 million for the nine months ended September 30, 2022 and 2021, respectively.

The increase of $1.1 million was primarily due to higher interest rates on our marketable securities balances during the nine months ended September 30, 2022, as compared to the nine months ended September 30, 2021.

Liquidity and Capital Resources

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Since our inception, we have not generated any revenue and have incurred significant operating losses and negative cash flows from our operations.

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, 2022, 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.

As of June 30, 2022, we had cash, cash equivalents and marketable securities in the amount of $248.4 million.

To date, we have financed our operations primarily through private placements of convertible preferred stock and public offerings of our common stock.

As of September 30, 2022, we had cash, cash equivalents and marketable securities in the amount of $364.8 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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Operating activities

Cash used in operating activities during the six months ended June 30, 2022 was primarily driven by our net loss for the period of $30.7 million, and was also impacted by changes in operating assets and liabilities which increased net working capital by $3.5 million.

Cash used in operating activities during the nine months ended September 30, 2022 was primarily driven by our net loss for the period of $48.2 million, and was also impacted by changes in operating assets and liabilities which increased net working capital by $1.4 million.

Cash used in operating activities was reduced by non-cash charges of $8.9 million relating to stock-based compensation expense of $7.2 million, amortization of premium and accretion of discounts, net on marketable securities of $1.2 million, depreciation of $0.3 million and amortization of right-of-use asset of $0.2 million.

Cash used in operating activities during 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 decreased net working capital by $0.2 million.

Cash used in operating activities during 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.

Investing activities

Cash provided by investing activities during the six months ended June 30, 2022 amounted to $31.3 million which was due to $96.6 million in maturities of marketable securities and $13.3 million in sales of marketable securities, which was partially offset by $77.7 million in purchases of marketable securities and $0.9 million 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, $7.2 million in maturities of marketable securities and $0.1 million for purchases of equipment.

Cash provided by investing activities during the nine months ended September 30, 2022 amounted to $5.0 million which was due to $126.9 million in maturities of marketable securities and $26.0 million in sales of marketable securities, which was partially offset by $145.7 million in purchases of marketable securities and $2.3 million for purchases of equipment.

Cash used in investing activities during the nine months ended September 30, 2021 amounted to $256.3 million which was due to $273.2 million in purchases of marketable securities, $17.4 million in maturities of marketable securities and $0.6 million for purchases of equipment.

Financing activities

Cash provided by financing activities during the six months ended June 30, 2022 was $0.3 million, which was due to cash proceeds of $328,000 from the issuance of common stock upon the exercise of stock options, $254,000 for the payment of deferred offering costs and $178,000 in proceeds from the employee stock purchase plan.

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.

Cash provided by financing activities during the nine months ended September 30, 2022 was $130.0 million, which was due to $129.7 million in net proceeds from the September 2022 Offering, cash proceeds of $0.4 million from the issuance of common stock upon the exercise of stock options, $0.3 million for the payment of deferred offering costs and $0.2 million in proceeds from the employee stock purchase plan.

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 $0.1 million from the issuance of common stock upon the exercise of stock options and paid $0.1 million in preferred stock issuance costs.

Funding requirements

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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 Estimates” in our Annual Report on Form 10-K filed with the SEC on February 24, 2022 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, 2022, there were no material changes to our critical accounting estimates from those discussed in our Annual Report on Form 10-K filed on February 24, 2022.

During the three and nine months ended September 30, 2022, there were no material changes to our critical accounting estimates from those discussed in our Annual Report on Form 10-K filed on February 24, 2022.

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