What changed in this filing

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Item 2. Management’s Discussion and Analysis

2024-08-13 compared with 2024-05-13 · 89 added, 41 removed, 230 unchanged (36% 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, 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” section of our Annual Report on Form 10-K for the year ended December 31, 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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Through this approach, we have established a diversified, multimodal CNS portfolio with four clinical-stage product candidates across movement disorders and epilepsy.

For our most advanced product candidate under the Cerebrum™ platform, ulixacaltamide (formerly known as PRAX-944), we expect to announce topline results from the Phase 3 Essential3 clinical trials in essential tremor, or ET, in the second half of 2024.

Within our PRAX-628 program, we announced positive results from our Phase 2a Photo-Paroxysmal Response study in the first quarter of 2024 and plan to initiate the first of two efficacy studies of PRAX-628 in focal onset seizures in the second half of 2024, with topline results expected in 2025.

We plan to initiate a second PRAX-628 efficacy study in focal onset seizures in the first half of 2025, with topline results expected in the first half of 2026.

Our PRAX-562 Phase 2 EMBOLD study was initiated in the first quarter of 2023, with cohorts in SCN2A-DEE and SCN8A-DEE;

For our most advanced product candidate under the Cerebrum™ platform, ulixacaltamide (formerly known as PRAX-944), our Phase 3 Essential3 clinical trials in essential tremor, or ET, are ongoing.

We are planning to conduct an interim analysis in the fourth quarter of 2024, with topline results anticipated shortly thereafter.

Within our PRAX-628 program, we announced positive results from our Photo-Paroxysmal Response ("PPR") study in the first quarter of 2024, and plan to initiate four studies to generate patient eligibility, efficacy, safety and pharmacokinetics (PK) data for the program.

We plan to initiate an observational study of PRAX-628 in patients with epilepsy in the third quarter of 2024, as well as three efficacy studies.

The first efficacy study will be an open label eight-week study in patients with focal onset seizures or generalized epilepsy to be initiated in the second half of 2024, with topline results expected in the first half of 2025.

We also plan to initiate a double-blind, placebo-controlled, 12-week study in focal onset seizures in the fourth quarter of 2024, with topline results expected in the second half of 2025, and plan to initiate a third efficacy study in the first half of 2025.

Our relutrigine (formerly known as PRAX-562) Phase 2 EMBOLD study was initiated in the first quarter of 2023, with two cohorts in SCN2A-DEE and SCN8A-DEE;

topline results are expected for both cohorts in the third quarter of 2024.

For our most advanced product candidate under the Solidus™ platform, elsunersen (formerly known as PRAX-222), we shared results from Part 1 of the EMBRAVE study in the fourth quarter of 2023, and are currently completing multiple global regulatory interactions in anticipation of starting the pivotal phase of the program later in 2024.

For our most advanced product candidate under the Solidus™ platform, elsunersen (formerly known as PRAX-222), we shared results from Part 1 of the EMBRAVE study in the fourth quarter of 2023, and have initiated the first arm of our global confirmatory study in Brazil.

We are currently completing multiple global regulatory interactions to further expand the pivotal phase of the program later in 2024.

We were incorporated in 2015 and commenced operations in 2016.

Since inception, we have devoted substantially all of our resources to developing our preclinical and clinical product candidates, building our intellectual property, or IP, portfolio, business planning, raising capital and providing general and administrative support for these operations.

We employ a “virtual” research and development model, relying heavily upon external consultants, collaborators, contract development and manufacturing organizations and contract research organizations, or CROs, to conduct our preclinical and clinical activities.

We employ a “virtual” research and development model, relying heavily upon external consultants, collaborators, contract development and manufacturing organizations and contract research

organizations, or CROs, to conduct our preclinical and clinical activities.

Since inception, we have financed our operations primarily with proceeds from the sale and issuance of equity securities.

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

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.

We have incurred recurring operating losses since inception, including a net loss of $39.6 million for the three months ended March 31, 2024.

As of March 31, 2024, we had an accumulated deficit of $693.5 million.

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.

We have incurred recurring operating losses since inception, including a net loss of $72.2 million for the six months ended June 30, 2024.

As of June 30, 2024, we had an accumulated deficit of $726.2 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 March 31, 2024, we had cash, cash equivalents and marketable securities of $243.3 million.

We expect that our cash, cash equivalents, and marketable securities as of March 31, 2024, together with proceeds from our follow-on public offering in April 2024.

will be sufficient to fund our operating expenditures and capital expenditure requirements necessary to advance our research efforts and clinical trials into 2027.

As of June 30, 2024, we had cash, cash equivalents and marketable securities of $433.8 million.

We expect that our cash, cash equivalents and marketable securities as of June 30, 2024 will be sufficient to fund our operating expenditures and capital expenditure requirements necessary to advance our research efforts and clinical trials into 2027.

The analysis included consideration of our current financial needs and ongoing research and development plans.

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Reverse Stock Split

On November 28, 2023, we filed a Certificate of Amendment to our Amended and Restated Certificate of Incorporation with the Secretary of State of the State of Delaware to effect a 1-for-15 reverse stock split of our

common stock, or the Reverse Stock Split.

The Reverse Stock Split became effective at 5:00 p.m., Eastern Time, on November 28, 2023, or the Effective Time.

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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 $0.4 million of collaboration revenue from the Collaboration Agreement during the three months ended March 31, 2024.

We recognized $0.4 million and $0.8 million, respectively, of collaboration revenue from the Collaboration Agreement during the three and six months ended June 30, 2024, compared to $0.8 million and $1.5 million, respectively, during the three and six months ended June 30, 2023.

Operating Expenses

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Payments for these activities are based on the terms of the individual agreements, which may differ from the pattern of costs incurred, and are reflected in our condensed consolidated balance sheets as prepaid expenses or accrued expenses.

Non-refundable advance payments for goods or services to be received in the future for use in research and development activities are deferred and capitalized, even when there is no alternative future use for the research and development.

Non-refundable advance payments for goods or services to be received

in the future for use in research and development activities are deferred and capitalized, even when there is no alternative future use for the research and development.

The capitalized amounts are expensed as the related goods are delivered or the services are performed.

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Three Months Ended

June 30, Six Months Ended

2024 2023 2024 2023

$ 14,967 $ 6,890 $ 27,752 $ 18,025

1,680 9,922 2,870 13,524

Personnel-related (including stock-based compensation) 8,450 6,778 19,402 14,904

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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 months ended March 31, 2024 and 2023.

There was no income tax provision recognized for the three and six months ended June 30, 2024 and 2023.

Results of Operations

Comparison of the Three Months Ended March 31, 2024 and 2023

Comparison of the Three Months Ended June 30, 2024 and 2023

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

Three Months Ended

March 31, Change

June 30, Change

Collaboration revenue $ 357 $ 781 $ (424)

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Three Months Ended

March 31, Change

June 30, Change

$ 14,967 $ 6,890 $ 8,077

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The $1.6 million increase in research and development expenses was primarily attributable to the following:

• $2.8 million increase in personnel-related costs, primarily due to increased stock-based compensation expense;

• $8.1 million increase in expense related to our Cerebrum™ platform, driven primarily by:

◦ a $5.2 million increase in spend for our ulixacaltamide program due to Essential3 study activity;

◦ a $1.6 million decrease in spend for our PRAX-628 program due to prior year clinical-related spend;

◦ a $1.0 million decrease in activities for our earlier stage assets due to prioritization of clinical-stage programs;

◦ a $8.6 million increase in spend for our ulixacaltamide program due to Essential3 study activity and Phase 1 trial spend, partially offset by prior year spend for our Essential1 study;

◦ a $0.4 million increase in spend for our PRAX-562 program related to our EMBOLD Phase 2 clinical trial;

◦ a $0.6 million decrease in spend for our PRAX-628 program, primarily related to prior year clinical-related spend, partially offset by current quarter startup costs associated with our Phase 2 efficacy studies in focal onset seizures;

◦ a $0.4 million decrease in activities for our earlier stage assets.

• $8.2 million decrease in expense within our Solidus™ platform for elsunersen, driven by a prior year milestone payment of $6.9 million due to Ionis Pharmaceuticals Inc., or Ionis, upon initiation of our EMBRAVE study, as well as prior year EMBRAVE study activity and toxicology-related spend;

• $1.7 million increase in personnel-related costs.

General and Administrative Expense

The $0.5 million increase in general and administrative expenses is due primarily to increased personnel-related costs.

Other income for the three months ended June 30, 2024 and 2023 was comprised of interest income on our cash, cash equivalents, and marketable securities and investment premium and discount amortization.

Results of Operations

Comparison of the Six Months Ended June 30, 2024 and 2023

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

Six Months Ended

June 30, Change

Collaboration revenue $ 788 $ 1,464 $ (676)

Operating expenses:

Research and development 54,244 51,118 3,126

General and administrative 25,918 23,397 2,521

Total operating expenses 80,162 74,515 5,647

Loss from operations (79,374) (73,051) (6,323)

Other income:

Other income, net 7,144 1,284 5,860

Total other income 7,144 1,284 5,860

Net loss $ (72,230) $ (71,767) $ (463)

Collaboration Revenue

The $0.7 million decrease in collaboration revenue is associated with a decrease in the revenue recorded under the Collaboration Agreement with UCB that was executed in December 2022.

Changes in revenue recognized each period reflect timing of research services provided and costs incurred.

Research and Development Expense

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

$ 27,752 $ 18,025 $ 9,727

2,870 13,524 (10,654)

Personnel-related (including stock-based compensation) 19,402 14,904 4,498

Other indirect research and development expenses 4,220 4,665 (445)

Total research and development expenses $ 54,244 $ 51,118 $ 3,126

The $3.1 million increase in research and development expenses was primarily attributable to the following:

• $9.7 million increase in expense related to our Cerebrum™ platform, driven primarily by:

◦ a $13.7 million increase in spend for our ulixacaltamide program, primarily due to clinical-related activities for our Phase 3 program in ulixacaltamide, partially offset by prior year Essential1 study activity;

◦ a $2.2 million decrease in PRAX-628 clinical-related spend due to prior year Phase 1 study activity;

◦ a $1.5 million decrease in activities for our earlier stage assets;

◦ a $0.3 million decrease in spend for our PRAX-562 program.

• $2.4 million decrease in expense related to our Solidus™ platform, primarily related to prior year toxicology and clinical pharmacology spend for elsunersen;

• $10.7 million decrease in expense within our Solidus™ platform for elsunersen, driven by a prior year milestone payment of $6.9 million due to Ionis upon initiation of our EMBRAVE study, as well as prior year EMBRAVE study activity and toxicology-related spend;

• $4.5 million increase in personnel-related costs, including stock-based compensation expense;

• $0.4 million decrease in indirect expenses, none of which were individually significant.

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• $3.7 million increase in personnel-related costs mainly due to increased stock-based compensation expense;

• $0.9 million decrease in consulting expenses and professional fees.

Other income for the three months ended March 31, 2024 and 2023 was comprised of interest income on our cash, cash equivalents, and marketable securities and investment premium and discount amortization.

• $1.1 million decrease in professional expenses mainly due to decreased consulting and legal expe nse.

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, common stock and pre-funded warrants through follow-on public offerings and common stock from at-the-market offerings under our shelf registration statement.

From inception through March 31, 2024, we have raised $785.3 million in aggregate cash proceeds from such transactions, net of issuance costs.

As of March 31, 2024, we had cash and cash equivalents and marketable securities of $243.3 million.

From inception through June 30, 2024, we have raised $1.0 billion in aggregate cash proceeds from such transactions, net of issuance costs.

As of June 30, 2024, we had cash, cash equivalents and marketable securities of $433.8 million.

In November 2021, we entered into an Open Market Sale Agreement, or the 2021 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.

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Total net proceeds generated from the offering were approximately $63.4 million, after deducting underwriting discounts, commissions and other offering expenses payable by us.

As of June 30, 2024, all warrants associated with this offering were exercised on a cashless basis with no proceeds received by the Company.

In December 2023, we entered into an Open Market Sale Agreement, or the 2023 Sales Agreement, with Jefferies, to provide for the offering, issuance and sale of up to an aggregate amount of $75.0 million of common stock in at-the-market offerings.

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Total net proceeds generated from the offering were approximately $161.6 million, after deducting underwriting discounts, commissions and other offering expenses payable by us.

As of June 30, 2024, 152,145 warrants associated with this offering were exercised on a cashless basis with no cash proceeds received by the Company.

In March 2024, we entered into an Open Market Sale Agreement, or the 2024 Sales Agreement, with Jefferies, to provide for the offering, issuance, and sale of up to an aggregate amount of $150.0 million of common stock in at-the-market offerings.

During the three months ended March 31, 2024, we issued and sold an aggregate of 17,662 shares under the 2024 Sales Agreement for aggregate net proceeds of $0.9 million, after deducting commissions and offering expenses payable by us.

During the six months ended June 30, 2024, we issued and sold an aggregate of 17,662 shares under the 2024 Sales Agreement for aggregate net proceeds of $0.9 million, after deducting commissions and offering expenses payable by us.

We did not make any sales under the 2024 Sales Agreement during the three months ended June 30, 2024.

On April 2, 2024, we completed a public offering of:

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

Three Months Ended

Six Months Ended

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 three months ended March 31, 2024, net cash used in operating activities of $20.9 million was primarily due to our $39.6 million net loss, partially offset by $1.5 million in changes in operating assets and liabilities primarily related to an increase in accounts payable and $17.2 million of non-cash charges primarily related to stock-based compensation.

During the three months ended March 31, 2023, net cash used in operating activities of $32.8 million was primarily due to our $37.5 million net loss and $3.3 million in changes in operating assets and liabilities primarily related to a decrease in accrued expenses, partially offset by $7.9 million of non-cash charges primarily related to stock-based compensation.

During the six months ended June 30, 2024, net cash used in operating activities of $48.1 million was primarily due to our $72.2 million net loss, partially offset by $2.2 million in changes in operating assets and liabilities primarily related to increases in accounts payable and accrued expenses, and $21.9 million of non-cash charges primarily related to stock-based compensation.

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.

Investing Activities

During the three months ended March 31, 2024, net cash used in investing activities of $91.2 million was related to purchases of marketable securities.

During the three months ended March 31, 2023, net cash provided by investing activities of $34.0 million was related to maturities of marketable securities.

During the six months ended June 30, 2024, net cash used in investing activities of $287.1 million was primarily related to purchases of marketable securities partially offset by maturities of marketable securities.

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.

Financing Activities

During the three months ended March 31, 2024, net cash provided by financing activities of $182.8 million consisted primarily of net proceeds from our January 2024 follow-on public offering, our at-the-market offerings and our collaboration and license agreement with Tenacia.

During the three months ended March 31, 2023, net cash provided by financing activities of $18.1 million consisted of net proceeds from at-the-market offerings.

During the six months ended June 30, 2024, net cash provided by financing activities of $399.1 million consisted primarily of net proceeds from our January 2024 and April 2024 follow-on public offerings, our at-the-market offerings and our collaboration and license agreement with Tenacia.

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.

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, cash equivalents, and marketable securities as of March 31, 2024, together with proceeds from our April 2024 public offering, will be sufficient to fund our operating expenses and capital expenditure requirements into 2027.

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, cash equivalents, and marketable securities as of June 30, 2024 will be sufficient to fund our operating expenses and capital expenditure requirements into 2027.

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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The preparation of these condensed consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements, as well as the reported expenses incurred during the reporting periods.

Our estimates are based on our historical experience and on various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources.

apparent from other sources.

Actual results may differ from these estimates under different assumptions or conditions.

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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