Azitra, Inc. — Q1 2024 Form 10-Q
Reporting period: Three months ended March 31, 2024. Azitra is an early-stage clinical biopharmaceutical company developing engineered microbes and related therapies for skin diseases. It has not commenced commercial operations and reported no product revenue.
Financial results and liquidity
| Metric | Q1 2024 | Q1 2023 |
|---|---|---|
| Revenue | $0 | $113,300 |
| Research and development expense | $1.47 million | $829,035 |
| General and administrative expense | $1.49 million | $843,012 |
| Operating loss | $2.96 million | $1.56 million |
| Net loss | $2.93 million | $2.46 million |
| Operating cash flow | $(3.02) million | $(1.30) million |
| Cash and cash equivalents, March 31 | Approximately $3.0 million | — |
Revenue in Q1 2023 was related-party service revenue under the Bayer joint development agreement; none was recorded in Q1 2024. Operating expenses rose 77%, with R&D up 78% as the company advanced its Netherton and CTAR programs, and G&A up 77%, primarily due to payroll and public-company-related costs. The prior-year net loss included $800,000 of convertible-note fair-value expense and $89,832 of interest expense; those items did not recur in Q1 2024. No revenue-based margin is meaningful for the quarter.
At March 31, total assets were $6.07 million, current liabilities were $1.26 million, and working capital was approximately $2.3 million. Total liabilities were $1.74 million, mainly lease liabilities; the filing reports no outstanding convertible notes. Operating and finance lease liabilities totaled approximately $804,000. In February, Azitra completed a follow-on offering of 16,667,000 shares at $0.30 per share, receiving $4.29 million net. Shares outstanding increased from 12.10 million at year-end to 28.80 million at March 31.
Outlook, risks, and notable matters
- Management says available cash is insufficient for its planned operations over the next 12 months and identifies substantial doubt about the company’s ability to continue as a going concern. It expects to seek additional equity or debt financing, licensing income, or industry partnerships; availability and terms are uncertain. Additional financing could dilute shareholders or require concessions over company assets or programs.
- Management expects R&D spending to increase with clinical trials and continued product development. It expects initial ATR-12 Phase 1b safety results in the second half of 2024; it plans to file an IND for ATR-04 in mid-2024 and, subject to FDA clearance, begin a Phase 1b trial in the fourth quarter of 2024. ATR-01 IND filing is targeted for the second half of 2025.
- Azitra reports a material weakness in disclosure controls related to inadequate segregation of accounting functions. Management concluded disclosure controls were ineffective as of March 31, 2024 and intends to add accounting staff. It reported no material changes to internal control over financial reporting during the quarter.
- The company reported no material changes to the risk factors in its 2023 Form 10-K. Its business remains exposed to clinical and regulatory development risks, financing needs, and dependence on partnerships and third parties.
Key facts for investors to verify
- Reconcile cash figures: the balance sheet reports $3,001,158 at March 31, while the cash-flow statement reports $3,000,244; the filing text does not explain the $914 difference.
- Track financing needs, cash burn, and progress toward resolving the going-concern uncertainty.
- Monitor ATR-12 safety results and the timing and regulatory status of planned ATR-04 and ATR-01 milestones.
- Assess remediation of the accounting-segregation material weakness and any updates on control effectiveness.
- Consider the dilution from the February offering and potential future equity or convertible financing.