Aura Biosciences, Inc. — Q2 2022 Form 10-Q
Reporting period: Quarter and six months ended June 30, 2022. The unaudited filing was signed August 11, 2022. Aura is a clinical-stage biotechnology company with no approved products and no product revenue. Its lead and only product candidate is belzupacap sarotalocan (AU-011).
Financial performance and position
| Metric | Q2 2022 | Q2 2021 | Six months 2022 | Six months 2021 |
|---|---|---|---|---|
| Revenue | $0 | $0 | $0 | $0 |
| Research and development expense | $9.5 million | $6.6 million | $17.8 million | $10.8 million |
| General and administrative expense | $4.3 million | $2.2 million | $8.8 million | $3.9 million |
| Total operating expenses | $13.8 million | $8.8 million | $26.6 million | $14.7 million |
| Net loss | $13.5 million | $8.9 million | $26.3 million | $14.8 million |
| Net loss per share, basic and diluted | $0.46 | $28.53 | $0.90 | $49.49 |
| Net cash used in operating activities | Not presented by quarter | $25.8 million | $11.6 million |
The per-share comparisons with 2021 are not directly comparable: the 2021 periods had substantially fewer weighted-average common shares, and the net loss attributable to common stockholders included preferred-stock dividend accruals. Margins are not meaningful because Aura had no revenue.
- Liquidity at June 30, 2022: Cash and cash equivalents of $53.8 million and marketable securities of $68.3 million, totaling $122.1 million. Current assets were $127.7 million and current liabilities $5.8 million.
- Cash flows for the first half: Operating activities used $25.8 million; investing activities used $68.9 million, primarily for marketable securities; financing activities provided $0.3 million, primarily from option exercises. Cash, cash equivalents, and restricted cash decreased by $94.4 million.
- Debt and other obligations: The filing reports no long-term debt. Total liabilities were $5.9 million, including lease liabilities and a $0.07 million warrant liability. A new Boston office and laboratory lease has estimated initial-term payments of $35.2 million over 10 years; it commenced August 1, 2022 and was not included in the June 30 lease-liability balance.
Material changes versus the prior comparable period
- Q2 operating expenses rose $5.0 million year over year; first-half operating expenses rose $11.9 million. Management attributed the increases mainly to higher research and development personnel costs, clinical and preclinical activity, and public-company and personnel costs in general and administrative expenses.
- First-half net loss increased $11.5 million to $26.3 million. First-half operating cash use increased $14.2 million to $25.8 million.
- Cash and cash equivalents declined from $149.1 million at December 31, 2021 to $53.8 million at June 30, 2022, while the company invested in $68.3 million of marketable securities. Total cash and marketable securities were $122.1 million at quarter-end.
- Accumulated deficit increased to $178.4 million from $152.1 million at year-end 2021. Marketable securities recorded $0.1 million of unrealized losses in the first half.
Outlook, management commentary, and risks
- Management said existing cash and marketable securities were expected to fund operations into 2024; the notes also state they were expected to cover operating and capital requirements for at least 12 months from issuance of the statements. These are estimates based on assumptions, and the company says additional capital will be needed beyond its current resources.
- Aura planned to present six-to-twelve-month safety and efficacy data from its Phase 2 dose-escalation trial in 2022 and decide on the administration route for a pivotal trial in the second half of 2022. It also planned to file a U.S. IND for choroidal metastases in the second half of 2022 and initiate a Phase 1 NMIBC trial in Q3 2022, with initial data expected in 2023. These are forward-looking plans, not reported outcomes.
- Management reported that prior Phase 1b/2 intravitreal-trial data showed statistically significant reduction in tumor growth rate in patients with prior active growth and tumor control with visual-acuity preservation in a majority of patients. These are company-reported clinical findings; pivotal trials had not yet been initiated or completed.
- Key risks include reliance on AU-011 as the sole product candidate; clinical, regulatory, and commercialization uncertainty; reliance on third parties for trials and manufacturing, including single-source supply dependencies; need for further financing and potential dilution; and competition, intellectual-property, and market-acceptance risks.
- COVID-19 had caused minor manufacturing delays from a vendor supply constraint, according to management; the filing warns that further disruption could affect trials, suppliers, and timelines. The filing also describes general economic and capital-market uncertainty.
- No material litigation was reported. Management concluded disclosure controls and procedures were effective as of June 30, 2022, and reported no material change in internal control over financial reporting during the quarter.
Important facts for investors to verify
- Whether the planned 2022 AU-011 data, route-of-administration decision, choroidal-metastases IND, and NMIBC trial milestones occurred as described.
- The clinical evidence supporting AU-011’s potential benefit and safety, including visual outcomes and reported pigmentary changes and vision loss, and how results compare with future pivotal-trial data.
- Whether the stated runway into 2024 remains achievable given operating cash use, rising development costs, and the company’s financing needs.
- The financial and operational implications of the $35.2 million Boston lease and the company’s plans for its new facilities.
- Progress in transferring commercial manufacturing, and whether supply concentration or vendor constraints could delay development.