Eledon Pharmaceuticals, Inc. — Q3 2022 Form 10-Q
Reporting period: Quarter and nine months ended September 30, 2022. Eledon is a clinical-stage biopharmaceutical company developing tegoprubart, an anti-CD40L antibody, for transplant rejection, autoimmune disease and ALS. It has no approved products and has not generated product sales revenue.
Financial performance and position
| Metric | Q3 2022 | Q3 2021 | Nine months 2022 | Nine months 2021 |
|---|---|---|---|---|
| Revenue | No product revenue | No product revenue | No product revenue | No product revenue |
| Research and development expense | $7.452m | $7.658m | $19.830m | $17.553m |
| General and administrative expense | $3.146m | $2.848m | $9.910m | $9.929m |
| Total operating expenses | $10.598m | $10.506m | $29.740m | $27.482m |
| Net loss | $10.471m | $9.817m | $29.582m | $25.700m |
| Net loss per share | $0.73 | $0.66 | $2.07 | $1.73 |
| Operating cash used | Not separately stated | Not separately stated | $18.944m | $19.705m |
- Liquidity: Cash and cash equivalents were $65.889m at September 30, 2022, down from $84.833m at December 31, 2021. Working capital was $61.3m; accumulated deficit was $144.5m.
- Debt and liabilities: The filing reports no outstanding debt or committed credit facility. Total liabilities were $8.493m, including $6.280m current liabilities and $0.839m in operating lease liabilities.
- Margins: Not meaningful because the company had no product revenue.
- Cash flows: Net cash used in operations was $18.944m for the first nine months, while financing activities used no cash. Cash declined by $18.944m over the period.
Material changes versus prior comparable periods
- Q3 operating expenses rose $0.092m year over year; net loss increased $0.654m. The absence of a 2022 income tax benefit, compared with a $0.686m benefit in Q3 2021, contributed to the higher quarterly loss.
- Nine-month operating expenses increased $2.258m and net loss increased $3.882m year over year. R&D rose $2.277m, mainly from clinical development, consulting and personnel costs, partly offset by lower manufacturing costs. 2021 included a $1.775m income tax benefit that did not recur.
- Nine-month operating cash use was $0.761m lower than in 2021, despite the higher net loss.
- Common shares outstanding were 13,756,788 at September 30, versus 14,306,788 at year-end 2021, following an exchange of 550,000 common shares for Series X1 preferred stock. The company also reported warrants exercisable for 1,145,631 common shares and preferred-stock warrants convertible into 2,789,301 common shares, subject to stated restrictions.
Outlook, development updates and risks
- Management stated that cash was expected to cover anticipated needs for at least 12 months from issuance of the statements, but warned that estimates could prove incorrect and additional capital would be needed to continue development and fund operations beyond that period.
- The company specifically said it lacked sufficient liquidity to continue tegoprubart clinical development for ALS without additional financing. Its Phase 2a ALS study was completed in May 2022, with positive topline safety and tolerability results; the study was not designed or powered to establish efficacy.
- In kidney transplantation, the Phase 1b study’s first subject was dosed in July 2022, and the FDA cleared a Phase 2 trial. For islet transplantation, the Phase 2a study had enrolled no subjects by September 30; the Canadian site was closed to concentrate resources in the United States. For IgA nephropathy, the first subject was dosed in May 2022; the planned open-label study is up to 42 subjects over 96 weeks.
- No formal financial guidance was provided. Management expected expenses to increase as clinical programs advance and said additional financing may be required. The ATM program had up to $14.8m of permitted capacity as of September 30 under SEC “baby shelf” limits; no shares had been sold under it by that date.
- Key risks include clinical and regulatory uncertainty, need for financing and potential dilution, trial enrollment or execution delays, reliance on contract manufacturers and CROs, competition, and potential effects of COVID-19, inflation, rising interest rates and broader market disruption.
- The company reported no material legal proceedings and no contingent liabilities requiring accrual at September 30. Management concluded disclosure controls were effective at a reasonable assurance level.
Most important facts for investors to verify
- Whether cash runway remains consistent with management’s 12-month estimate and what financing or partnering options are available, especially for ALS development.
- Progress, enrollment, safety and data timing for the kidney transplant, islet transplant and IgA nephropathy studies.
- Potential dilution from future equity financing, outstanding common and preferred warrants, and the availability and use of ATM capacity.
- Whether rising clinical-development costs, trial delays or manufacturing constraints alter spending plans or the stated cash outlook.