Larimar Therapeutics, Inc. — FY 2022 Form 10-K
Reporting period: Fiscal year ended December 31, 2022; filed March 14, 2023. Larimar is a clinical-stage biotechnology company developing treatments for rare diseases. Its lead and only clinical-stage candidate is CTI-1601, a subcutaneous fusion protein intended to deliver frataxin to mitochondria in patients with Friedreich’s ataxia (FA). The filing reports annual results, not separate fourth-quarter results.
Financial and operating performance
| Metric | 2022 | 2021 | Change |
|---|---|---|---|
| Revenue | None | None | No product revenue |
| Research and development expense | $24.3 million | $38.4 million | Down $14.1 million |
| General and administrative expense | $12.3 million | $12.1 million | Up $0.2 million |
| Total operating expenses | $36.5 million | $50.5 million | Down $13.9 million |
| Net loss | $35.4 million | $50.6 million | Loss narrowed $15.3 million |
| Basic and diluted net loss per share | $1.37 | $2.95 | Loss per share narrowed |
| Net cash used in operating activities | $27.6 million | $42.1 million | Use decreased $14.5 million |
Gross margin is not applicable because the company had no product sales. The R&D expense reduction primarily reflected lower drug manufacturing, nonclinical and clinical costs; increased personnel and stock-based compensation partly offset these savings. Other income was $1.2 million in 2022, compared with net other expense of $0.2 million in 2021.
At year-end, cash and cash equivalents were $26.8 million and marketable securities were $91.6 million, totaling $118.4 million; restricted cash was an additional $1.3 million. Total assets were $126.4 million, total liabilities $15.5 million and stockholders’ equity $110.9 million. The balance sheet lists lease liabilities but no financial debt. The company reported $5.9 million of accrued R&D expense, an estimate highlighted as a critical audit matter. Cash, cash equivalents and restricted cash declined $43.3 million during 2022, including $91.0 million of net cash used in investing activities, largely reflecting purchases of marketable securities.
Material changes and financing
- In September 2022, Larimar sold 25.6 million common shares in an underwritten offering for net proceeds of $75.2 million. Shares outstanding rose to 43.3 million at year-end from 17.7 million a year earlier.
- In November 2022, the company established a new at-the-market offering program for up to $50 million; no shares had been sold under it by the filing date.
- The FDA’s full clinical hold on CTI-1601 was lifted in September 2022, but a partial hold remained. The first 25 mg cohort of a Phase 2 dose-exploration trial was allowed to proceed.
Outlook, risks and unusual items
Management said year-end cash, cash equivalents and marketable securities were expected to fund planned operating expenses and capital needs for at least 12 months from issuance of the financial statements. It also stated that additional capital will be needed to support future operations; financing may not be available on acceptable terms and could dilute shareholders or require the company to limit development.
- The Phase 2 trial’s additional cohorts and other CTI-1601 trials depend on FDA review of the first cohort’s data and review by the independent data monitoring committee. Management expected a trial update in the second quarter of 2023 and top-line data in the second half of 2023; these were forward-looking expectations, not reported outcomes.
- The FDA’s original 2021 clinical hold followed mortalities in the two highest dose groups of a 26-week non-human-primate toxicology study. The cause and regulatory implications remain central risks; further development may be delayed, restricted or stopped.
- Phase 1 studies showed dose-dependent increases in FXN in measured peripheral tissues and no serious adverse events in those trials. These early findings do not establish efficacy or predict later safety outcomes.
- Competition increased when the FDA approved omaveloxolone for FA on February 28, 2023, after the fiscal year-end. The filing notes potential effects on patient recruitment, market opportunity and expedited regulatory designations.
- Larimar relies on third parties for manufacturing and clinical trials, has no commercial infrastructure, and faces clinical, regulatory, manufacturing, intellectual-property and future-financing risks. Its leases include a Boston office lease that is sublet through 2029.
- The company reported no material pending litigation. The independent auditor issued an unqualified opinion on the financial statements; management concluded disclosure controls and internal control over financial reporting were effective at year-end. The auditor did not express an opinion on internal control.
Important facts for investors to verify
- Whether the FDA permits further CTI-1601 cohorts or trials after reviewing the 25 mg cohort and safety information, and whether any additional nonclinical work is required.
- The final Phase 2 safety, pharmacokinetic and pharmacodynamic results, including whether measured FXN changes translate into clinical benefit.
- Actual cash burn and financing needs relative to management’s stated minimum 12-month runway, including any use of the $50 million ATM program.
- The effect of the September 2022 share issuance and future equity financing on dilution and per-share value.
- Manufacturing readiness, supply continuity, and the status and cost of developing the planned lyophilized drug product.
- How competition, including approved omaveloxolone, affects trial enrollment, regulatory pathways and eventual commercial prospects.