Cadrenal Therapeutics, Inc. — Form 10-K Summary
Business context and reporting period
Cadrenal Therapeutics is a development-stage biopharmaceutical company incorporated on January 25, 2022. This Form 10-K covers the period from inception through December 31, 2022; therefore, there is no prior comparable operating period. The company focuses on tecarfarin, an investigational oral vitamin K antagonist intended to prevent systemic thromboembolism in patients with end-stage renal disease and atrial fibrillation.
Cadrenal acquired tecarfarin-related assets and rights from HESP LLC on April 1, 2022. Tecarfarin has been evaluated in 11 prior clinical trials involving more than 1,003 individuals, but the company has not yet conducted its own pivotal trial or submitted an NDA.
Financial performance, liquidity and capital structure
| Metric | January 25–December 31, 2022 |
|---|---|
| Revenue | $0; the company has not generated operating revenue |
| General and administrative expense | $2.31 million |
| Research and development expense | $392,859 |
| Total operating expenses | $2.70 million |
| Loss from operations | $2.70 million |
| Net loss | $6.71 million |
| Net loss per share, basic and diluted | $0.85 loss |
| Cash used in operating activities | $1.20 million |
| Cash at December 31, 2022 | $32,586 |
| Total assets | $778,174 |
| Total debt, net of debt discounts | $597,068 |
| Total liabilities | $6.33 million |
| Stockholders’ deficit | $5.55 million |
The net loss included $4.90 million of non-cash expenses, including $3.91 million from changes in the fair value of derivative liabilities and $928,049 of stock-based compensation. The derivative liability arose from embedded conversion and redemption features in convertible notes and was expected to be derecognized when the notes converted into equity in connection with the January 2023 IPO.
At December 31, 2022, the company had negative working capital of approximately $606,881 and an accumulated deficit of $6.71 million. Management stated that the financial statements were prepared on a going-concern basis and that additional financing will be required to execute the development plan.
On January 24, 2023, Cadrenal completed an IPO of 1.4 million shares at $5.00 per share, generating $7.0 million of gross proceeds and approximately $5.4 million of net proceeds. As of March 27, 2023, the company reported cash of approximately $4.1 million and no debt following conversion or repayment of pre-IPO notes.
Material changes versus the prior comparable period
- No prior comparable period is available because Cadrenal was incorporated in January 2022.
- The company acquired the tecarfarin assets in April 2022 and recorded $220,095 of research and development expense for the asset acquisition and related transaction costs.
- Operating expenses reflected the company’s formation, hiring, public-company preparation, consulting, stock compensation and development activities.
- Pre-IPO financing consisted primarily of convertible notes and a November 2022 non-convertible note and warrant financing. These instruments were converted or repaid following the IPO.
- The company became publicly traded on Nasdaq under the ticker CVKD in January 2023.
Guidance, outlook, commentary and risks
Management plans to advance tecarfarin into a pivotal Phase 3 ACTOR AF trial for patients with end-stage renal disease and atrial fibrillation. The planned study is expected to enroll approximately 540 subjects, with approximately 492 evaluable subjects, and use time to first major adverse cardiovascular event as the primary efficacy assessment.
The filing contains inconsistent timing references for trial initiation. The Business section refers to the first half of 2024, while the MD&A and other sections refer to the second half of 2023. Investors should confirm the current expected start date in subsequent filings.
Management estimates approximately $45 million will be required to complete the pivotal Phase 3 trial and incur other expenditures necessary to submit an NDA. The company expects to use approximately $3 million of IPO proceeds for CMC, research and development, and trial preparation, implying at least $42 million of additional funding for enrollment and trial completion. Management also estimates approximately $15 million of general and administrative expenses over the following three years.
- Tecarfarin has FDA orphan drug designation and received FDA Fast Track designation on January 13, 2023. Neither designation assures approval, exclusivity or a specific development timeline.
- The prior EMBRACE-AC Phase 2/3 trial did not demonstrate superiority to warfarin on its primary TTR endpoint. Tecarfarin TTR was 72.3% versus 71.5% for warfarin, with a p-value of 0.51.
- The company has no approved products, no commercial product revenue and only one investigational product candidate.
- The company relies on third parties for clinical trials and currently has no long-term manufacturing or supply agreement for tecarfarin.
- Two issued U.S. patents directed to tecarfarin are scheduled to expire in 2024, subject to potential patent-term extensions. The company has not completed a freedom-to-operate analysis.
- Cadrenal expects continuing operating losses and will need substantial equity, debt, licensing, collaboration or other financing. Future equity financing could dilute existing holders.
- The company has limited operating history, three full-time employees as of March 2023, significant dependence on management, and substantial regulatory, clinical, manufacturing, reimbursement and competitive risks.
- Quang Pham beneficially controlled approximately 54.15% of outstanding common stock as of March 28, 2023; officers, directors and principal stockholders collectively controlled approximately 70.1%.
Important facts investors should verify
- Current cash balance, quarterly cash burn and the expected financing runway after the January 2023 IPO.
- The definitive Phase 3 ACTOR AF protocol, FDA feedback and actual trial initiation date, particularly given the filing’s conflicting timing disclosures.
- Total projected Phase 3 and NDA-related costs, including whether the $45 million estimate remains reasonable.
- Enrollment progress, site activation, manufacturing readiness and availability of clinical-trial supplies.
- Any additional FDA requirements arising from review of historical third-party trial data or the planned pivotal protocol.
- Status of the two U.S. patents, potential patent-term extensions and the company’s freedom-to-operate assessment.
- Terms and potential dilution from future equity or debt financings, stock options, warrants and registered resale shares.
- Progress and economics of the Lee’s Pharmaceutical license, including potential milestone payments of approximately $52 million and royalties of 9% to 15% on specified net sales.
- Related-party payments, including compensation and consulting arrangements involving executive officers and directors.