TransCode Therapeutics, Inc. — Q1 2024 Form 10-Q
Reporting period: Three months ended March 31, 2024; interim financial statements are unaudited. The filing was signed May 15, 2024.
Business context
TransCode is a pre-revenue oncology biotechnology company developing RNA-based therapeutics using its nanoparticle delivery platform. Its lead candidate, TTX-MC138, targets miRNA-10b. The company treated one patient in a Phase 0 study and reported receiving FDA authorization in April 2024 to proceed with a Phase I/II trial, which it expected to begin in mid-2024. Other disclosed programs remain preclinical.
Key financial metrics
| Metric | Q1 2024 / March 31, 2024 | Comparable period / December 31, 2023 |
|---|---|---|
| Revenue | No product or other operating revenue | No revenue reported |
| Research and development expense | $1.76 million | $2.59 million in Q1 2023 |
| General and administrative expense | $1.53 million | $2.30 million in Q1 2023 |
| Total operating expenses | $3.29 million | $4.89 million in Q1 2023 |
| Net loss | $3.33 million | $4.82 million in Q1 2023 |
| Basic and diluted loss per share | $0.65 | $259.07 in Q1 2023 |
| Cash | $4.91 million | $2.77 million at December 31, 2023 |
| Operating cash flow | $(3.94) million | $(4.51) million in Q1 2023 |
| Current assets / current liabilities | $6.71 million / $2.71 million | $4.46 million / $3.49 million at December 31, 2023 |
| Total liabilities / stockholders’ equity | $2.71 million / $4.58 million | $3.53 million / $1.64 million at December 31, 2023 |
There is no meaningful operating margin to report given the absence of revenue. The company reported no debt outstanding other than lease liabilities; lease liabilities totaled approximately $339,000 at March 31. Cash used in investing activities was $4,000. Financing activities provided $6.09 million, principally from common-stock sales. The per-share loss comparison is affected by the January 2024 1-for-40 reverse stock split and substantial changes in weighted-average shares.
Changes versus the prior comparable period
- Operating expenses declined by approximately $1.60 million, or 33%, year over year; R&D and G&A expenses both decreased. Management attributed the reductions mainly to lower compensation, consulting, materials and other costs, following restructuring, partly offset by higher clinical, IND-enabling and related expenses.
- Net loss narrowed by approximately $1.49 million. Operating cash use declined by approximately $576,000 year over year.
- Cash increased from year-end, primarily because of $6.09 million in net financing proceeds; the company continued to consume cash in operations.
- Common shares outstanding rose from 627,448 at December 31, 2023 to 5,808,053 at March 31, 2024. The January financing also included 11,885,246 common-stock purchase warrants exercisable at $1.22 per share. The filing reported 6,622,053 shares outstanding as of May 10, 2024.
Outlook, risks and unusual items
- Liquidity and going concern: Management said March 31 cash was expected to fund operating and capital needs only into approximately Q3 2024, and not for 12 months from the financial-statement date. The company concluded that substantial doubt exists about its ability to continue as a going concern without additional capital. Further financing is uncertain and may dilute shareholders or carry restrictive terms; failure to raise funds could lead to program reductions, delays or termination, or restructuring.
- Nasdaq listing: The company regained compliance with the Nasdaq stockholders’ equity requirement after its January financing, but remained subject to a panel monitor through January 2025. On May 7, 2024, Nasdaq notified it that it had not regained the $1.00 minimum bid-price compliance and that its shares were subject to delisting. The company requested a hearing scheduled for June 25, 2024; the outcome was uncertain. Delisting could reduce liquidity and hinder future fundraising.
- Clinical and funding execution: The planned Phase I/II study, manufacturing, patient enrollment, regulatory review and dependence on external research and manufacturing vendors carry substantial timing, cost and outcome risks. The completed NIH SBIR award ended in March 2024. Applications for potential additional SBIR funding were submitted, but awards were not assured.
- Collaborations and commitments: TransCode is negotiating with MD Anderson about planned work and future payments under a collaboration with a stated commitment of up to $10 million. No additional payments were due until terms were renegotiated and work began. A January 2024 research collaboration with Debiopharm will evaluate targeted mRNA delivery constructs; the filing gives no financial value for this collaboration.
- Other items: The company recorded a $55,000 foreign-exchange loss. It disclosed a disputed investment-bank claim for fees, with no clear claim amount in the filing. It also reported that disclosure controls were not effective and that material weaknesses in internal control over financial reporting remained unremediated.
- Management changes: Following a December 2023 restructuring and workforce reduction, CEO Michael Dudley resigned effective January 13, 2024; CFO Thomas Fitzgerald became interim CEO while retaining the CFO role. The company appointed Daniel Vlock, M.D., as chief medical officer in March.
Important facts for investors to verify
- Current cash runway, cash burn and financing plans, including any subsequent financing or material changes to the Q3 2024 runway estimate.
- Outcome of the Nasdaq hearing and the company’s ongoing compliance with both bid-price and stockholders’ equity requirements.
- Clinical-trial start, enrollment, safety and delivery results for TTX-MC138, and whether the anticipated mid-2024 timing changed.
- Potential dilution from outstanding warrants and pre-funded warrants, and the share count after March 31, 2024.
- Revised MD Anderson payment and work terms, any SBIR award decisions, and the status or potential exposure from the disputed investment-bank fee claim.
- Progress and validation of remediation efforts for the disclosed material weaknesses and ineffective disclosure controls.