What changed in this filing

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Item 2. Management’s Discussion and Analysis

2021-08-04 compared with 2021-05-11 · 48 added, 37 removed, 183 unchanged (32% of the section changed)

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Research has shown that viral infections can provoke dysregulated activation of the TF pathway, resulting in abnormal systemic coagulation and related inflammation, leading to potential organ failure and mortality.

For this reason, rNAPc2 was tested as a therapeutic in non-human primates, or NHPs, in studies against lethal doses of the Ebola and Marburg viruses, where it showed evidence of efficacy in the form of mortality reduction, decreases in inflammatory biomarkers and, evidence of reduced disseminated intravascular coagulation, or DIC.

DIC is a serious condition that causes abnormal blood clotting throughout the body's blood vessels.

SARS-CoV-2 is a new coronavirus identified in late 2019 that belongs to a family of enveloped RNA viruses that include Middle East Respiratory Syndrome (MERS) and Severe Acute Respiratory Syndrome (SARS-CoV-1), both of which caused serious human infections of the respiratory system.

The disease caused by the SARS-CoV-2 virus has been designated COVID-19.

Since this outbreak was first reported in late 2019, there have been over 157 million confirmed cases of COVID-19 and over 3 million deaths worldwide attributed to the virus (as of May 2021).

According to the World Health Organization, since this outbreak was first reported in late 2019, there have been over 190 million confirmed cases of COVID-19 and over 4 million deaths worldwide attributed to the virus (as of July 2021).

COVID-19 is associated with a high incidence of both arterial and venous coagulation-related adverse events in large and small blood vessels.

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The underlying pathology of CAC is believed to result from thrombo-inflammatory processes triggered by the viral infection.

A commonly used biomarker for assessing the presence of abnormal coagulation is a D-dimer test, which is elevated (greater than 0.5) in nearly 70% of hospitalized COVID-19 patients and is associated with adverse clinical outcomes.

A commonly used biomarker for assessing the presence of abnormal coagulation is a D-dimer test, which is elevated (greater than 0.5) in approximately 40% to 75% of hospitalized COVID-19 patients and is associated with adverse clinical outcomes.

Some researchers believe that this and other evidence points to dysregulation of TF pathways in COVID-19 patients that result in the development of thrombotic complications.

As a result of the observed role of coagulation disorders in COVID-19, patients who are hospitalized with the disease are commonly giving anti-coagulant therapy, in particular heparin.

We believe that there is a medical need for a COVID-19 therapy that provides anticoagulation therapy and directly inhibits the TF pathway and the inflammatory and viral dissemination processes that may be initiated by TF.

rNAPc2 has shown potential in addressing the coagulation disorder caused by severe viral infections.

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Taken together, we believe this evidence suggests that rNAPc2 may have therapeutic benefits for patients with serious COVID-19 infections and the accompanying high risk of thrombosis.

To our knowledge, rNAPc2 is the only NME anticoagulant, and the only tissue factor inhibitor, currently under evaluation for COVID-19.

To our knowledge, rNAPc2 is the only New Molecular Entity anticoagulant, and the only tissue factor inhibitor, currently under evaluation for COVID-19.

As a therapeutic aimed at a host response to a disease syndrome, we believe rNAPc2 potentially could be used in combination with other antiviral drugs.

We believe its potential efficacy is not linked to a specific viral genome and may not be diminished by genetic drift or the development of new strains of the SARS-CoV-2 virus.

We believe its potential efficacy is not linked to a specific viral genome and may not be diminished by the development of new strains of the SARS-CoV-2 virus through mutation, such as the Delta variant that is now widespread.

As a therapeutic addressing a disease, we believe rNAPc2 may have broad spectrum potential against multiple pathogens that have disease elements in common with COVID‑19, such as other coronaviruses and other RNA viruses.

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We initiated the Phase 2b clinical trial of rNAPc2 (AB201), ASPEN-COVID-19, in patients hospitalized with COVID-19 in the fourth quarter of 2020.

We anticipate announcing topline data from this approximately 100 patient Phase 2b clinical trial in the third quarter of 2021.

In July 2021, ASPEN-COVID-19 clinical trial target enrollment increased from 100 to 160 patients in order to maximize the sample size for determining if there are differences in the two rNAPc2 dose regimens being investigated, to minimize variance in the standard of care heparin control arm, in recognition of the study being conducted in different geographic regions and to potentially account for evolving changes in the clinical course of COVID-19.

We anticipate announcing topline data from this approximately 160 patient international Phase 2b clinical trial in the fourth quarter of 2021.

We are evaluating rNAPc2 as a treatment for patients hospitalized with COVID-19 who are at high risk for thrombotic complications, as indicated by elevated D-dimer levels.

The Phase 2b clinical trial is designed to be a randomized comparison of two-dose regimens of rNAPc2 versus heparin prescribed per local standard of care.

The primary endpoint of the clinical trial is the change in D-dimer level from baseline to Day 8.

The primary endpoint of the clinical trial is the change in D-dimer level from baseline to Day 8 relative to standard of care heparin .

If Phase 2b results indicate a favorable effect on D-dimer levels and safety is confirmed, following FDA review of the data and identification of the proposed Phase 3 rNAPc2 dose, we anticipate that clinical investigative sites will begin enrolling patients in a planned Phase 3 clinical trial.

The primary endpoint of Phase 3 is planned to be clinical recovery as measured by the Adaptive COVID-19 Treatment Trial ordinal scale, with secondary endpoints that include D-dimer levels and the number of

thrombotic events.

We believe the Phase 3 clinical trial will be event driven, with an estimated requirement of 450 patients.

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Our rNAPc2 development plans, including the timeline, depend on our ability to enroll patients during the COVID-19 pandemic, the results of our Phase 2b clinical trial, FDA guidance, and availability of drug product, all of which are currently uncertain.

We own the clinical development program of rNAPc2, including Phase 2 clinical trials.

We own the clinical development program of rNAPc2, including the Phase 2 clinical development.

If rNAPc2 is successfully developed, we believe it will have intellectual property protection, including 12 years of market exclusivity as an innovative biologic product under FDA law in the United States, 10 years data protection exclusivity in the European Union, or EU, and potentially patent protection in addition to this.

We have filed an international patent application for the use of rNAPc2 in COVID-19 and plan to prosecute this patent in the United States and other markets.

If this patent issues in the United States, we believe it could provide intellectual property protection into approximately 2040.

We plan to pursue strategic co-development and partnering opportunities for rNAPc2 development and commercialization.

In July 2021, we entered into a patent assignment agreement, or the Agreement, with the University Medical Center of Johannes Gutenberg University Mainz , Germany.

Under the terms of the Agreement, we received exclusive world-wide patent rights relating to the use of rNAPc2 as a potential treatment for COVID-19, and other indications, based on the research and discoveries from Univ.-Prof.

Wolfram Ruf, the Scientific Director and Alexander von Humboldt Professor at the Center for Thrombosis and Hemostasis (CTH) of the University Medical Center Mainz, and his collaborators.

We have upfront and potential milestone obligations to the University Medical Center Mainz that could total approximately €1.6 million and royalty obligations in the low single digit range, if rNAPc2 receives regulatory approval and is commercialized.

The term of the Agreement extends to the date of expiration of the last to expire of any of the assigned patents.

Gencaro™ (bucindolol hydrochloride) for Atrial Fibrillation

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There are currently few approved or effective drug therapies to treat AF or HF in this patient population.

Our development plan for Gencaro is based on our recent analysis of the Phase 2b clinical trial of Gencaro for the prevention of AF in HF patients, known as GENETIC-AF.

Our development plan for Gencaro is based on our recently published analysis of the Phase 2b clinical trial of Gencaro for the prevention of AF in HF patients, known as GENETIC-AF.

This analysis showed novel results for Gencaro in patients in the clinical trial with EF’s of 40% and higher.

We are planning a new design for a Phase 3 pivotal clinical trial of Gencaro based on this analysis that addresses what we believe are important clinical assessments, including the total amount of time that a patient experiences AF, known as AF burden, maintenance of normal sinus rhythm, rhythm control interventions such as electrical cardioversion, catheter ablation and use of anti-arrhythmic drugs and drug-related complications such as bradycardia.

The Phase 3 pivotal clinical trial of Gencaro conducted under an SPA will include secondary endpoints that are intended to capture some of this new information, such as a reduction in the need to deploy rhythm control interventions including electrical cardioversion, catheter ablation and use of anti-arrhythmic drugs and avoidance of drug-related complications such as bradycardia.

Based on these analyses, we were issued a United States patent in February 2021 for the use of Gencaro in this patient population.

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Maintenance of rhythm control after a successful AF catheter ablation;

Effective rate control with lower risk of treatment-limiting bradycardia;

Effective rate control with lower risk of treatment-limiting, adverse event producing bradycardia;

Reduction in symptoms and improvement in quality of life;

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If we are unable to obtain sufficient financing or are unable to complete a strategic transaction, we may discontinue our development activities on rNAPc2 or Gencaro or discontinue our operations .

We believe our cash and cash equivalents as of March 31, 2021 will be sufficient to fund our operations through the end of fiscal year 2022, including the projected costs for the rNAPc2 ( AB201) Phase 2b clinical trial.

We believe our cash and cash equivalents as of June 30, 2021 will be sufficient to fund our operations through the end of fiscal year 2022, including the projected costs for the rNAPc2 ( AB201) Phase 2b clinical trial.

Conducting a Phase 3 rNAPc2 clinical trial or the Phase 3 PRECISION-AF trial would likely require additional financing.

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Research and development, or R&D, expense is comprised primarily of personnel costs, clinical development, manufacturing process development, and regulatory activities and costs.

Our R&D expense continues to be almost entirely generated by our activities relating to the development of Gencaro.

R&D expense for the three months ended March 31, 2021 was $2.9 million compared to $0.4 million for the corresponding period of 2020, an increase of $2.5 million.

Clinical expense increased approximately $1.7 million for the three months ended March 31, 2021, as compared to the corresponding periods of 2020.

Manufacturing process development costs increased approximately $0.6 million for the three months ended March 31, 2021, as compared to the corresponding periods of 2020.

Our R&D expense is almost entirely generated by our activities relating to the development of rNAPc2 (AB201).

R&D expense for the three months ended June 30, 2021 was $3.6 million compared to $0.4 million for the corresponding period of 2020, an increase of $3.2 million.

R&D expense for the six months ended June 30, 2021 was $6.5 million compared to $0.7 million for the corresponding period of 2020, an increase of approximately $5.7 million.

Clinical expense increased approximately $1.7 million and $3.3 million for the three and six months ended June 30, 2021, as compared to the corresponding periods of 2020.

Manufacturing process development costs increased approximately $1.2 million and $1.7 million for the three and six months ended June 30, 2021, as compared to the corresponding periods of 2020.

The increase was related to the initiation of our rNAPc2 (AB201) clinical trial in the second half of 2020.

The remaining increase is primarily a result of higher outside services and consulting costs.

R&D personnel costs increased approximately $0.2 million for the three months ended March 31, 2021, as compared to the corresponding period of 2020.

R&D expense in 2021 is expected to be higher than 2020, as we continue our rNAPc2 (AB201) Phase 2b clinical trial.

R&D personnel costs increased approximately $0.3 million and $0.5 million for the three and six months ended June 30, 2021, as compared to the corresponding periods of 2020.

R&D expense in 2021 is expected to be higher than 2020, as we continue our rNAPc2 (AB201) international Phase 2b clinical trial.

General and Administrative Expenses

General and administrative, or G&A, expenses primarily consist of personnel costs, consulting and professional fees, insurance, facilities and depreciation expenses, and various other administrative costs.

G&A expenses were $1.2 million for the three months ended March 31, 2021 compared to $1.0 million for the corresponding period of 2020, an increase of $0.3 million.

The $0.3 million increase was primarily a result of higher personnel costs in 2021.

G&A expenses in 2021 are expected to be consistent with those in 2020 as we maintain administrative activities to support our ongoing operations.

G&A expenses were $1.3 million for the three months ended June 30, 2021 compared to $0.9 million for the corresponding period of 2020, an increase of $0.3 million.

G&A expenses were $2.5 million for the six months ended June 30, 2021 compared to $1.9 million for the corresponding period of 2020, an increase of $0.6 million The increases were primarily a result of higher personnel costs in 2021.

G&A expenses in the second half of 2021 are expected to be consistent with the first half of 2021 as we maintain administrative activities to support our ongoing operations.

Interest and Other Income

Interest and other income was $2,000 and $24,000 in the three months ended March 31, 2021 and 2020, respectively.

Interest and other income was $3,000 and $2,000 in the three months ended June 30, 2021 and 2020, respectively.

Interest and other income was $5,000 and $26,000 in the three months ended June 30, 2021 and 2020, respectively.

Interest income for the remainder of 2021 is expected to be negligible.

Interest Expense

Interest expense was $4,000 for the three months ended March 31, 2020.

Interest expense was $3,000 and $7,000 for the three and six months ended June 30, 2020.

Based on our current capital structure, interest expense for the remainder of 2021 is expected to be negligible.

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Cash and cash equivalents

As of March 31, 2021, we had total cash and cash equivalents of $66.9 million, as compared to $49.1 million as of December 31, 2020.

The net increase of $17.9 million primarily reflects the net proceeds of $23.0 million from the issuance of common stock, offset by $5.2 million of cash used in operating activities during the three months ended March 31, 2021.

As of June 30, 2021, we had total cash and cash equivalents of $63.2 million, as compared to $49.1 million as of December 31, 2020.

The net increase of $14.1 million primarily reflects the net proceeds of $23.1 million from the issuance of common stock, offset by $8.9 million of cash used in operating activities during the six months ended June 30, 2021.

Cash Flows from Operating, Investing and Financing Activities

Three Months Ended March 31,

Six Months Ended June 30,

(in thousands)

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Financing activities

Net increase (decrease) in cash and cash equivalents

Net cash used in operating activities for the three months ended March 31, 2021 increased $3.5 million compared with the same period in 2020.

Net increase in cash and cash equivalents

Net cash used in operating activities for the six months ended June 30, 2021 increased $6.2 million compared with the same period in 2020.

This was primarily due to higher outflows related to changes in operating assets and liabilities and a higher net loss in 2021, as discussed in Results of Operations above.

Net cash used in investing activities for the three months ended March 31, 2021 was $6,000 for the purchase of property and equipment.

Net cash used in investing activities for the three months ended March 31, 2020 was $3,000 for the purchase of property and equipment.

Net cash provided by financing activities was $23.0 million for the three months ended March 31, 2021 related to net proceeds from sales of our common stock in our “at the market” equity offering in the period.

There were no financing activities for the three months ended March 31, 2020.

Net cash used in investing activities for the six months ended June 30, 2021 was $22,000 for the purchase of property and equipment.

Net cash used in investing activities for the six months ended June 30, 2020 was $6,000 for the purchase of property and equipment.

Net cash provided by financing activities was $23.1 million for the six months ended June 30, 2021 related to net proceeds from sales of our common stock in our “at the market” equity offering in the period.

Net cash provided by financing activities was $5.4 million for the six months ended June 30, 2020 representing $5.5 million in net proceeds from sales of our common stock in our registered direct equity offering in the period, less $0.1 million of payments on a vendor finance arrangement.

Sources and Uses of Capital

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However, if the pandemic continues to be a severe worldwide crisis, it could have a material adverse effect on our business, results of operations, financial condition and cash flows.

Our ability to execute our development program s in accordance with our projected time line depends on a number of factors, including, but not limited to, the following:

Our ability to execute our development programs in accordance with our projected time line depends on a number of factors, including, but not limited to, the following:

the costs and timing for the potential additional clinical trials in order to gain possible regulatory approval for rNAPc2, Gencaro or any other product candidate;

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the terms and conditions of our existing collaborative and licensing agreements.

We believe our cash and cash equivalents balance as of March 31, 2021 will be sufficient to fund our operations through the end of fiscal year 2022.

We believe our cash and cash equivalents balance as of June 30, 2021 will be sufficient to fund our operations through the end of fiscal year 2022.

Conducting a Phase 3 rNAPc2 clinical trial or the Phase 3 PRECISION-AF trial would likely require additional financing .

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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