What changed in this filing

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Item 2. Management’s Discussion and Analysis

2023-11-07 compared with 2023-08-09 · 55 added, 56 removed, 246 unchanged (31% of the section changed)

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Some of the information contained in this discussion and analysis or set forth elsewhere in this Quarterly Report on Form 10-Q, including information with respect to our plans and strategy for our business and related financing, includes forward-looking statements that involve risks and uncertainties.

As a result of many factors, including those factors set forth in the “Risk Factors” sections of our Annual Report on Form 10-K for the year ended December 31, 2022, our Quarterly Report on Form 10-Q for the quarter ended March 31, 2023 and this Quarterly Report on Form 10-Q for the quarter ended June 30, 2023, our actual results could differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis.

As a result of many factors, including those factors set forth in the “Risk Factors” sections of our Annual Report on Form 10-K for the year ended December 31, 2022, our Quarterly Report on Form 10-Q for the quarter ended March 31, 2023, our Quarterly Report on Form 10-Q for the quarter ended June 30, 2023 and this Quarterly Report on Form 10-Q for the quarter ended September 30, 2023, our actual results could differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis.

We are a clinical-stage biopharmaceutical company translating insights from genetic epilepsies into the development of therapies for central nervous system, or CNS, disorders characterized by neuronal excitation-inhibition imbalance.

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For our most advanced product candidate under the Cerebrum™ platform, ulixacaltamide (also known as PRAX-944), topline results from the Phase 2b Essential1 clinical trial in essential tremor, or ET, were announced in the first quarter of 2023.

We intend to initiate two Phase 3 studies in ET in the fourth quarter of 2023, with topline results expected in the second half of 2024.

We initiated the PRAX-562 Phase 2 EMBOLD study in the first quarter of 2023 and expect to announce topline results in the fourth quarter of 2023.

We initiated our Phase 3 studies in ET in the fourth quarter of 2023, with enrollment expected to complete in the first half of 2024 and topline results expected in the second half of 2024.

We initiated the PRAX-562 Phase 2 EMBOLD study in the first quarter of 2023 and expect to announce topline results in the first half of 2024.

We also announced positive results from our PRAX-628 Phase 1 study in May 2023.

In June 2023, we initiated a Phase 2 proof of concept study evaluating PRAX-628 in patients with a Photo Paroxysmal Response, or PPR, with results anticipated by year-end 2023.

In June 2023, we initiated a Phase 2 proof of concept study evaluating PRAX-628 in patients with a Photo Paroxysmal Response, or PPR, with results anticipated in the fourth quarter of 2023.

Upon completion of the PPR study, we plan to initiate a Phase 2 study in focal epilepsy in the first half of 2024.

For our most advanced product candidate under the Solidus™ platform, PRAX-222, we initiated the first dose cohort of our EMBRAVE study in the second quarter of 2023 and expect to announce topline results in the second half of 2023.

For our most advanced product candidate under the Solidus™ platform, elsunersen (also known as PRAX-222), we completed dosing in the first cohort of the EMBRAVE study and announced preliminary data from the first dose cohort in October 2023.

We were incorporated in 2015 and commenced operations in 2016.

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We are a development stage company and we have not generated any revenue from product sales, and do not expect to do so for several years, if at all.

All of our product candidates are still in preclinical and clinical development.

All of our product candidates are still in preclinical and clinical

Our ability to generate product revenue sufficient to achieve profitability will depend heavily on the successful development and eventual commercialization of one or more of our product candidates, if approved.

have incurred recurring operating losses since inception, including a net loss of $71.8 million for the six months ended June 30, 2023.

As of June 30, 2023, we had an accumulated deficit of $602.4 million.

We have incurred recurring operating losses since inception, including a net loss of $96.4 million for the nine months ended September 30, 2023.

As of September 30, 2023, we had an accumulated deficit of $627.0 million.

We expect to incur significant expenses and operating losses for the foreseeable future as we expand our research and development activities.

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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 June 30, 2023, we had cash and cash equivalents of $124.3 million.

We believe that our cash and cash equivalents as of June 30, 2023 will enable us to fund our operating expenses and capital expenditures into the first quarter of 2025.

We have based this analysis on our current financial needs and ongoing research and development plans, which are limited to advancing product candidates through, but not beyond, their current clinical trials and our ulixacaltamide Phase 3 clinical trials in ET.

As of September 30, 2023, we had cash and cash equivalents of $101.1 million.

We believe that our cash and cash equivalents as of September 30, 2023 will enable us to fund our operating expenses and capital expenditures into the first quarter of 2025.

We have based our assessment on assumptions that may prove to be wrong, and we could use our capital resources sooner than we currently expect.

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We have not generated any revenue from the sale of products since inception and do not expect to generate any revenue from the sale of products for several years, if at all.

As discussed in Note 7 to our condensed

consolidated financial statements, we entered into an Option and License Agreement, or the Collaboration Agreement, with UCB Biopharma SRL, or UCB, in December 2022.

We recognized $0.8 million and $1.5 million of collaboration revenue from the Collaboration Agreement during the three and six ended June 30, 2023, respectively.

As discussed in Note 7 to our condensed consolidated financial statements, we entered into an Option and License Agreement, or the Collaboration Agreement, with UCB Biopharma SRL, or UCB, in December 2022.

We recognized $0.5 million and $1.9 million of collaboration revenue from the Collaboration Agreement during the three and nine months ended September 30, 2023, respectively.

Operating Expenses

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Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2023 2022 2023 2022

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A change in any of these variables with respect to the development of any of our product candidates would significantly change the costs, timing and viability associated with the development of that product candidate.

For example, if the FDA or another regulatory authority were to delay our planned start of clinical trials or require us to conduct clinical trials or other testing beyond those that we currently expect, or if we experience significant delays in enrollment in any of our planned clinical trials, we could be required to expend significant additional financial resources and time to complete our clinical development activities.

enrollment in any of our planned clinical trials, we could be required to expend significant additional financial resources and time to complete our clinical development activities.

We may never obtain regulatory approval for any of our product candidates.

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administrative travel expenses;

and facility-related expenses,

which include direct depreciation costs and allocated expenses for office rent and other operating costs, such as information technology.

and facility-related expenses, which include direct depreciation costs and allocated expenses for office rent and other operating costs, such as information technology.

Costs to secure and defend our IP are expensed as incurred and are classified as general and administrative expenses.

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Our income tax provision may be significantly affected by changes to our estimates.

There was no income tax provision recognized for the three and six months ended June 30, 2023 and 2022.

There was no income tax provision recognized for the three and nine months ended September 30, 2023 and 2022.

Results of Operations

Comparison of the Three Months Ended June 30, 2023 and 2022

Comparison of the Three Months Ended September 30, 2023 and 2022

The following table summarizes our condensed consolidated statements of operations for each period presented (in thousands):

Three Months Ended

June 30, Change

September 30, Change

Collaboration revenue $ 468 $ — $ 468

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Three Months Ended

June 30, Change

September 30, Change

$ 5,832 $ 16,293 $ (10,461)

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• $10.5 million decrease in expense related to our Cerebrum™ platform, driven primarily by:

◦ $4.2 million decrease in spend for our ulixacaltamide program, primarily due to prior year Phase 1 spending and decreased activity related to our Essential1 study, partially offset by costs related to Essential3 study start up activities;

◦ $2.9 million decrease in clinical-related spend for our PRAX-114 program due to our strategic realignment in the second quarter of 2022;

◦ $1.4 million decrease in spend for our PRAX-562 program, primarily related to prior year manufacturing spend and Phase 1 trial spend, partially offset by current quarter costs related to the EMBOLD Phase 2 clinical trial;

◦ $3.7 million decrease in spend for our ulixacaltamide program, primarily due to prior year manufacturing and Phase 1 spend, as well as decreased activity related to our Essential1 study;

◦ $1.4 million decrease in activities for our earlier stage assets;

◦ $0.7 million increase in spend for our PRAX-628 Phase 1 clinical trial.

• $5.7 million increase in expense related to our Solidus™ platform, driven primarily by a $6.9 million milestone payment due to Ionis Pharmaceuticals Inc., or Ionis, upon initiation of our PRAX-222 EMBRAVE study, offset by decreased activities for our earlier stage assets;

◦ $0.6 million decrease in clinical-related spend for our PRAX-628 Phase 1 clinical trial.

• $0.8 million decrease in expense related to our Solidus™ platform, primarily related to prior year PRAX-222 toxicology spend and clinical study spend, partially offset by current quarter spend for our EMBRAVE Phase 2 clinical trial;

• $1.9 million decrease in personnel-related costs due to decreased headcount.

• $0.2 million decrease in indirect expenses, none of which were individually significant.

General and Administrative Expense

The $5.1 million decrease in general and administrative expenses was primarily attributable to the following:

• $3.6 million decrease in consulting expenses and professional fees;

• $2.5 million decrease in personnel costs due to decreased headcount;

• $1.9 million decrease in consulting expenses and professional fees, and

• $0.7 million decrease in other general and administrative expenses.

Other income for the three months ended June 30, 2023 and 2022 was comprised of interest income on our cash, cash equivalents and marketable securities and investment premium and discount amortization.

Comparison of the Six Months Ended June 30, 2023 and 2022

Other income for the three months ended September 30, 2023 was comprised of interest income on our cash and cash equivalents.

Other income for the three months ended September 30, 2022 was comprised of interest income on our cash, cash equivalents and marketable securities and investment premium and discount amortization.

Comparison of the Nine Months Ended September 30, 2023 and 2022

The following table summarizes our condensed consolidated statements of operations for each period presented (in thousands):

Six Months Ended

June 30, Change

Nine Months Ended

September 30, Change

Collaboration revenue $ 1,932 $ — $ 1,932

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The following table summarizes our research and development expenses for each period presented, along with the changes in those items (in thousands):

Six Months Ended

June 30, Change

Nine Months Ended

September 30, Change

$ 23,857 $ 76,720 $ (52,863)

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◦ $29.0 million decrease in clinical-related spend for our PRAX-114 program due to our strategic realignment in the second quarter of 2022;

◦ $10.2 million decrease in spend for our PRAX-562 program primarily related to prior year manufacturing spend and Phase 1 trial spending, partially offset by costs related to our EMBOLD Phase 2 clinical trial in 2023;

◦ $4.9 million decrease in spend for our ulixacaltamide program, primarily due to prior year manufacturing spend as well as Phase 2a and Phase 1 trial spend, partially offset by increased Essential1 study activity in 2023;

◦ $4.0 million decrease in activities for our earlier stage assets;

◦ $2.8 million increase in spend for our PRAX-628 Phase 1 clinical trial.

◦ $11.6 million decrease in spend for our PRAX-562 program primarily related to prior year manufacturing spend and Phase 1 trial spending, partially offset by costs for our EMBOLD Phase 2 clinical trial in 2023;

◦ $9.1 million decrease in spend for our ulixacaltamide program, primarily due to prior year Phase 2a and Phase 1 trial spend, prior year manufacturing costs and decreased spend in the current year related to our Essential1 trial, partially offset by startup costs related to our Essential3 study;

◦ $5.4 million decrease in activities for our earlier stage assets due to prioritization of our clinical-stage programs;

◦ $2.2 million increase in clinical-related spend for our PRAX-628 program driven by our Phase 1 clinical trial and our Phase 2 PPR clinical trial.

• $8.8 million decrease in personnel-related costs due to decreased headcount;

• $3.3 million increase in expense related to our Solidus™ platform, driven primarily by initiation of the PRAX-222 EMBRAVE study in 2023 and associated $6.9 million milestone due to Ionis, partially offset by manufacturing expenses incurred in the prior year and a $2.0 million license fee expensed and paid to Ionis

in January 2022 upon exercise of our exclusive option to obtain the rights and license to further develop and commercialize PRAX-222;

• $2.4 million increase in expense related to our Solidus™ platform, primarily driven by costs associated with the initiation of the PRAX-222 EMBRAVE study in 2023 and associated milestone payment earned by Ionis Pharmaceuticals, Inc., or Ionis, partially offset by manufacturing expenses incurred in the prior year and a $2.0 million license fee earned by Ionis in 2022;

• $0.9 million increase in indirect expenses, none of which were individually significant.

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• $5.6 million decrease in personnel-related costs due to decreased headcount;

• $1.6 million decrease in other general and administrative expenses, including insurance costs.

Other income for the six months ended June 30, 2023 and 2022 was comprised of interest income on our cash, cash equivalents and marketable securities and investment premium and discount amortization.

• $2.3 million decrease in other general and administrative expenses.

Other income for the nine months ended September 30, 2023 and 2022 was comprised of interest income on our cash, cash equivalents and marketable securities and investment premium and discount amortization.

Liquidity and Capital Resources

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To date, we have financed our operations primarily with proceeds from the issuance of redeemable convertible preferred stock and from the sale of common stock through an initial public offering, follow-on public offerings and at-the-market offerings under our shelf registration statement.

From inception through June 30, 2023, we have raised $613.6 million in aggregate cash proceeds from such transactions, net of issuance costs.

As of June 30, 2023, we had cash and cash equivalents of $124.3 million.

From inception through September 30, 2023, we have raised $613.6 million in aggregate cash proceeds from such transactions, net of issuance costs.

As of September 30, 2023, we had cash and cash equivalents of $101.1 million.

In November 2021, we entered into an Open Market Sale Agreement, or the Sales Agreement, with Jefferies LLC, or Jefferies, to provide for the offering, issuance and sale of up to an aggregate amount of $125.0 million of common stock from time to time in at-the-market offerings for which Jefferies acted as sales agent.

We terminated the Sales Agreement in June 2023.

During the three months ended June 30, 2023, we issued and sold 5,888,128 shares under the Sales Agreement for aggregate net proceeds of $6.0 million after deducting commissions.

During the six months ended June 30, 2023, we issued and sold 14,291,937 shares under the sales agreement for aggregate net proceeds of $24.1 million.

During the nine months ended September 30, 2023, we issued and sold 14,291,937 shares under the sales agreement for aggregate net proceeds of $24.1 million.

We issued and sold a total of 18,279,207 shares under the Sales Agreement for aggregate net proceeds of $40.7 million after deducting commissions and offering expenses payable by us.

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The following table provides information regarding our cash flows for each period presented (in thousands):

Six Months Ended

Nine Months Ended

September 30,

Net cash (used in) provided by:

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The cash used in operating activities resulted primarily from our net losses adjusted for non-cash charges and changes in operating assets and liabilities, which are primarily the result of increased expenses and timing of vendor payments.

During the six months ended June 30, 2023, net cash used in operating activities of $64.1 million was primarily due to our $71.8 million net loss and $6.3 million in changes in operating assets and liabilities primarily related to decreases in accrued expenses and accounts payable, partially offset by $14.0 million of non-cash charges primarily related to stock-based compensation.

During the six months ended June 30, 2022, net cash used in operating activities of $111.3 million was primarily due to our $128.9 million net loss, partially offset by $16.7 million of non-cash charges primarily related to stock-based compensation, and $0.9 million in changes in operating assets and liabilities primarily related to an increase in accounts payable and a decrease in prepaid expenses and other current assets.

During the nine months ended September 30, 2023, net cash used in operating activities of $87.3 million was primarily due to our $96.4 million net loss and $11.0 million in changes in operating assets and liabilities primarily related to decreases in accrued expenses and accounts payable, partially offset by $20.1 million of non-cash charges primarily related to stock-based compensation.

During the nine months ended September 30, 2022, net cash used in operating activities of $156.2 million was primarily due to our $172.9 million net loss and $7.3 million in changes in operating assets and liabilities primarily related to a decrease in accrued expenses, partially offset by $23.9 million of non-cash charges primarily related to stock-based compensation.

Investing Activities

During the six months ended June 30, 2023, net cash provided by investing activities of $39.0 million was related to maturities of marketable securities.

During the six months ended June 30, 2022, net cash provided by investing activities of $26.3 million was primarily related to maturities of marketable securities, partially offset by purchases of marketable securities.

During the nine months ended September 30, 2023, net cash provided by investing activities of $39.0 million was primarily related to maturities of marketable securities.

During the nine months ended September 30, 2022, net cash provided by investing activities of $74.3 million was primarily related to maturities of marketable securities, partially offset by purchases of marketable securities.

Financing Activities

During the six months ended June 30, 2023, net cash provided by financing activities of $87.7 million consisted primarily of net proceeds from at-the-market offerings and our June 2023 follow-on public offering.

During the six months ended June 30, 2022, net cash provided by financing activities of $1.7 million consisted primarily of net proceeds from at-the-market offerings of $1.4 million and proceeds from purchases of common stock under our employee stock purchase plan and from the exercise of stock options.

During the nine months ended September 30, 2023, net cash provided by financing activities of $87.7 million consisted primarily of net proceeds from at-the-market offerings and our June 2023 follow-on public offering.

During the nine months ended September 30, 2022, net cash provided by financing activities of $5.1 million consisted of net proceeds from at-the-market offerings of $4.3 million and proceeds from purchases of common stock under our employee stock purchase plan and from the exercise of stock options, partially offset by the payment of issuance costs for our at-the-market offerings and the payment of taxes related to the vesting of restricted stock units.

Plan of Operation and Future Funding Requirements

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• experience any delays or encounter any issues with any of the above, including but not limited to failed studies, complex results, safety issues or other regulatory challenges.

We are unable to estimate the exact amount of our working capital requirements, but based on our current operating plan, we believe that our cash and cash equivalents as of June 30, 2023 will enable us to fund our operating expenses and capital expenditure requirements into the first quarter of 2025.

We are unable to estimate the exact amount of our working capital requirements, but based on our current operating plan, we believe that our cash and cash equivalents as of September 30, 2023 will enable us to fund our operating expenses and capital expenditure requirements into the first quarter of 2025.

However, we have based this estimate on assumptions that may prove to be wrong and we could exhaust our capital resources sooner than we expect.

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In addition, our product candidates, if approved, may not achieve commercial success.

Our commercial revenues, if any, will be derived from sales of products that we do not expect to be commercially available for many years, if ever.

Our commercial revenues, if any, will be derived

from sales of products 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.

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We do not currently have any committed external source of funds.

Market volatility could also adversely impact our ability to access capital as

and when needed.

Market volatility could also adversely impact our ability to access capital as and when needed.

To the extent that we raise additional capital through the sale of equity or convertible debt securities, the ownership interest of our existing stockholders will be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect the rights of holders of our common stock.

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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