Aprea Therapeutics, Inc. — Q2 2022 Form 10-Q
Reporting period: Three and six months ended June 30, 2022. Aprea is a clinical-stage oncology biopharmaceutical company with no product revenue. Its strategy shifted toward DNA damage response (DDR) programs following its May 16 acquisition of Atrin Pharmaceuticals.
Financial performance and liquidity
| Metric | Q2 2022 | Q2 2021 | Six months 2022 | Six months 2021 |
|---|---|---|---|---|
| Revenue | None | None | None | None |
| Research and development expense | $6.8 million | $6.7 million | $10.9 million | $13.4 million |
| General and administrative expense | $15.6 million | $3.3 million | $19.6 million | $6.8 million |
| Acquired in-process R&D expense | $76.0 million | — | $76.0 million | — |
| Net loss | $98.3 million | $10.3 million | $106.2 million | $19.9 million |
| Net loss per share, basic and diluted | $4.34 | $0.48 | $4.77 | $0.94 |
At June 30, cash and cash equivalents were $39.1 million, down from $53.1 million at December 31, 2021. First-half operating cash use was $14.4 million, versus $19.3 million a year earlier; there was no cash provided by financing or used in investing activities in either period. Management believes cash will fund operations and capital requirements through the end of 2023, subject to assumptions that may prove inaccurate.
Total current assets were $40.5 million and current liabilities $7.7 million, including $4.0 million of accounts payable, $3.5 million of accrued expenses and $0.2 million of current lease liabilities. The filing reports no borrowings; lease liabilities were the principal disclosed obligations. No revenue means operating margins are not meaningful. Accumulated deficit was $287.3 million.
Material changes and unusual items
- The Atrin asset acquisition was accounted for as an asset acquisition. Aprea issued 1,117,394 common shares and 2,949,630 Series A preferred shares, each convertible into 10 common shares, and assumed Atrin options. The $76.0 million acquired IPR&D charge reflects an acquired asset with no alternative future use; it is a nonrecurring acquisition-related expense.
- Q2 G&A expense rose by $12.3 million year over year, primarily from $14.8 million of stock-based compensation, including accelerated vesting related to the acquisition. First-half stock-based compensation was $16.9 million, versus $3.7 million in 2021.
- R&D declined year over year for the first half as legacy eprenetapopt trials and related manufacturing activities were wound down. The Swedish research facility closure and workforce reduction generated about $1.1 million of severance and benefits expense; about $0.8 million remained accrued at quarter-end.
- Current liabilities exceeded neither current assets nor cash; the company reported a substantial preferred-stock balance issued in the acquisition. The filing states that stockholders approved conversion of the preferred shares on July 28, 2022.
Outlook, commentary and risks
Aprea’s lead program is ATRN-119, an ATR inhibitor with FDA IND approval; the company expected its Phase 1 trial to begin in Q3 2022. ATRN-W1051, a preclinical WEE1 inhibitor, was expected to enter IND-enabling studies in the second half of 2022. These are forward-looking expectations, not reported outcomes.
The prior lead program, eprenetapopt (APR-246), failed its pivotal Phase 3 MDS primary endpoint in 2020. FDA partial holds continued for three myeloid studies, which were concluded; the company reported no patients receiving treatment in those trials. FDA had cleared new Phase 1 studies in relapsed/refractory MDS/AML and Richter’s transformed NHL, but Aprea’s primary focus moved to Atrin’s programs.
The company has never generated product revenue, expects continuing losses, and states that additional financing will be needed. If funding is unavailable, it may reduce or curtail development. Key risks include clinical and regulatory failure, trial delays or enrollment difficulties, reliance on third parties and a single drug-substance/product manufacturer, competition, intellectual-property challenges, and possible dilution or restrictions from future financing. COVID-19 had not materially affected Q2 or first-half 2022 results, but future effects remained uncertain. No material legal proceedings or provision for contingent losses were reported; management said disclosure controls were effective.
Key facts for investors to verify
- Whether ATRN-119’s Phase 1 trial began on the expected schedule and what subsequent safety, enrollment and data milestones are disclosed.
- Whether ATRN-W1051 advanced into IND-enabling studies as planned.
- Cash burn, spending plans and the assumptions supporting management’s runway estimate through year-end 2023, including the timing and terms of any financing.
- The potential dilution from preferred-stock conversion, assumed options and other outstanding equity awards.
- Execution and costs of the Atrin integration and Swedish facility/workforce wind-down, as well as the status of legacy eprenetapopt programs and related contingent value rights.