Larimar Therapeutics, Inc. — Q3 2022 Form 10-Q
Reporting period: Quarter and nine months ended September 30, 2022. Larimar is a clinical-stage biotechnology company developing CTI-1601, a frataxin replacement therapy for Friedreich’s ataxia (FA). It has not generated product revenue.
Financial results and position
| Metric | Three months ended Sept. 30, 2022 | Nine months ended Sept. 30, 2022 |
|---|---|---|
| Revenue | No product revenue | No product revenue |
| Research and development expense | $5.6 million | $17.0 million |
| General and administrative expense | $2.9 million | $9.1 million |
| Total operating expenses | $8.5 million | $26.1 million |
| Net loss | $8.3 million | $25.9 million |
| Basic and diluted loss per share | $0.37 | $1.32 |
- For the nine months, operating cash use was $20.9 million, investing cash use was $38.7 million, and financing provided $75.6 million. Cash, cash equivalents and restricted cash increased by $16.0 million.
- At September 30, cash and cash equivalents were $86.0 million and marketable debt securities were $38.7 million; together these provided approximately $124.7 million for operations. Current assets were $127.1 million and current liabilities $9.4 million.
- Total liabilities were $14.4 million, including $5.6 million of operating lease liabilities. The filing reports no debt borrowings. Stockholders’ equity was $118.7 million.
- Operating margins are not meaningful because the company had no product revenue and incurred operating losses.
Changes versus prior comparable periods
- Q3 operating expenses fell $8.2 million year over year and net loss narrowed by $8.5 million. Nine-month operating expenses declined $15.3 million and net loss narrowed by $15.6 million.
- The main driver was lower R&D spending: down $8.4 million in Q3 and $15.1 million over nine months. Management attributed the reductions mainly to lower drug-manufacturing, nonclinical and clinical-trial costs, following the earlier clinical hold. G&A was slightly higher in Q3 and slightly lower for the nine-month period.
- The September 2022 public offering generated $75.2 million in net proceeds from 25.6 million shares sold at $3.15 per share. Shares outstanding increased from 17.7 million at December 31, 2021 to 43.3 million at September 30, 2022.
Outlook, developments and risks
- In September 2022, the FDA lifted the full clinical hold on CTI-1601 but imposed a partial hold, clearing only the 25 mg cohort of a four-week, placebo-controlled Phase 2 dose-exploration trial. Additional cohorts or trials require FDA review of the 25 mg cohort data; the company does not know when, or if, the partial hold will be lifted.
- The trial had been initiated, with top-line data expected in the second half of 2023. The study is intended to further assess safety, pharmacokinetics and pharmacodynamics and inform dose selection.
- Management expects cash, cash equivalents and marketable debt securities to fund forecast operating and capital needs for at least 12 months from the November 10, 2022 filing date. It expects continued operating losses and says additional capital will be needed over time; future financing may dilute shareholders or require unfavorable terms.
- Clinical, regulatory and manufacturing execution are key uncertainties. The filing cites prior non-human-primate study mortalities, possible further FDA requirements or delays, trial enrollment and COVID-19 impacts, dependence on third-party providers, competition, and risks to future financing. No material litigation was reported.
- After quarter-end, on November 10, 2022, Larimar established a $50 million at-the-market offering program, subject to SEC effectiveness of its registration statement. No shares had been sold under it as of the filing date.
Important facts for investors to verify
- FDA status and the conditions for starting additional CTI-1601 cohorts or trials.
- Timing and results of the Phase 2 25 mg cohort, including whether the second-half 2023 data expectation changes.
- Cash burn, investment balances and the stated minimum 12-month runway against actual development costs.
- Potential dilution from the November 2022 ATM and other future financing needs.
- Clinical safety, manufacturing readiness and whether key vendors can support further development.