Aura Biosciences, Inc. — Q2 2023 Form 10-Q
Reporting period: Three and six months ended June 30, 2023. Aura is a clinical-stage biotechnology company with no approved products and no revenue to date. Its lead and only product candidate is belzupacap sarotalocan (bel-sar), a targeted therapy in development for ocular and urologic cancers.
Financial performance and liquidity
| Metric | Q2 2023 | Q2 2022 | First half 2023 | First half 2022 |
|---|---|---|---|---|
| Revenue | None | None | None | None |
| Research and development expense | $15.1 million | $9.5 million | $29.5 million | $17.8 million |
| General and administrative expense | $5.2 million | $4.3 million | $10.2 million | $8.8 million |
| Total operating expenses / operating loss | $20.3 million | $13.8 million | $39.7 million | $26.6 million |
| Net loss | $18.3 million | $13.5 million | $35.8 million | $26.3 million |
| Basic and diluted loss per share | $0.48 | $0.46 | $0.95 | $0.90 |
At June 30, 2023, cash and cash equivalents were $47.7 million and marketable securities were $114.3 million, totaling $162.0 million. Total current assets were $166.2 million and current liabilities were $8.9 million. Total liabilities were $26.3 million, consisting largely of operating lease liabilities; the company reported no long-term debt. Stockholders’ equity was $166.4 million and accumulated deficit was $246.7 million. There is no meaningful revenue-based margin to report.
For the first half, net cash used in operating activities was $31.1 million, investing activities used $45.5 million, and financing activities provided $2.7 million. Cash, cash equivalents and restricted cash declined $73.9 million to $48.5 million; this reflects investment of funds in marketable securities as well as operating cash use.
Material changes versus prior comparable periods
- Q2 operating expenses rose $6.5 million year over year, and net loss widened $4.8 million. For the first half, operating expenses rose $13.1 million and net loss widened $9.5 million.
- R&D expense was the principal driver of higher costs: clinical-trial, manufacturing-development and personnel expenses increased as the Phase 2 study progressed and Phase 3 start-up activities began. G&A also increased, mainly from personnel and corporate costs.
- Interest income increased substantially, to $2.0 million in Q2 and $4.0 million for the first half, compared with $0.3 million in each prior-year period, partly offsetting the higher operating loss.
- Weighted-average shares outstanding increased to 37.9 million in Q2 from 29.3 million, reflecting prior equity issuance and other share activity; loss per share nevertheless increased.
Outlook, clinical progress and risks
- Management expects operating losses and expenses to continue, with costs rising as clinical development advances. It estimates existing cash and marketable securities can fund operations into the second half of 2025. Separately, the financial-statement liquidity note says resources are expected to cover expenses and capital expenditures for at least 12 months from the statements’ issuance date. These statements differ in specificity and should be reconciled against the assumptions underlying the runway estimate.
- Bel-sar’s global Phase 3 trial for early-stage choroidal melanoma is planned to enroll approximately 100 patients, randomized among high-dose, low-dose and sham groups. Start-up activities were underway, with first-patient dosing targeted for the second half of 2023. Updated Phase 2 efficacy data with 12 months’ median follow-up were expected in the second half of 2023.
- The company cited interim Phase 2 results presented in February 2023: among eight patients receiving the intended three-cycle regimen, reported tumor control was 8/8 and visual acuity was preserved in 7/8 after an average of nine months’ follow-up. These interim results are small-sample, non-pivotal data and are not proof of efficacy in a pivotal trial.
- A Phase 2 study of bel-sar for choroidal metastasis was planned for 2024; enrollment had begun in a Phase 1 NMIBC trial, with data anticipated in 2024. Bel-sar has FDA fast-track designations for choroidal melanoma, choroidal metastasis and NMIBC, and orphan-drug designations for uveal melanoma. Designations do not assure approval or a faster review.
- Key risks include dependence on bel-sar, no completed pivotal trials or commercial experience, regulatory and clinical uncertainty, potential adverse effects including pigmentary changes and vision loss, and reliance on third-party clinical and manufacturing providers. The company relies on a single source for certain bel-sar manufacturing inputs and reported prior minor supply-chain delays.
- Additional capital will likely be needed beyond the stated runway; equity financing could dilute shareholders, while debt or collaborations could impose restrictions or require relinquishing rights. The Boston office and laboratory lease has estimated undiscounted payments of $32.4 million through 2032. The filing reports no material litigation and no subsequent events requiring disclosure.
Important facts for investors to verify
- Whether the Phase 3 trial started on the stated timetable, its enrollment and design, and whether subsequent efficacy and safety results support the interim findings.
- The assumptions and consistency behind management’s cash-runway estimates, and quarterly operating cash use as Phase 3 spending increases.
- Bel-sar’s manufacturing scale-up, supply continuity and regulatory comparability, given reliance on third parties and single-source inputs.
- Potential dilution from the remaining at-the-market offering capacity and other financing needs; the company sold 169,200 shares under its ATM in the first half of 2023 for $2.1 million gross.
- Whether the company can advance additional indications without materially increasing costs or diverting resources from its lead program.