Edgewise Therapeutics, Inc. — Q2 2022 Form 10-Q
Reporting period: Quarter and six months ended June 30, 2022. The unaudited filing was signed August 4, 2022. Edgewise is a clinical-stage biopharmaceutical company developing treatments for rare muscle disorders. It has no approved products and has not generated revenue.
Financial performance and position
| Metric | Q2 2022 | Q2 2021 | Six months 2022 | Six months 2021 |
|---|---|---|---|---|
| Revenue | None | None | None | None |
| Research and development expense | $12.4 million | $7.9 million | $23.5 million | $13.2 million |
| General and administrative expense | $4.1 million | $2.6 million | $7.8 million | $4.1 million |
| Net loss | $16.1 million | $10.4 million | $30.7 million | $17.2 million |
| Basic and diluted loss per share | $0.32 | $0.21 | $0.62 | $0.67 |
| Operating cash used | Not stated for quarter | Not stated for quarter | $28.8 million | $15.8 million |
At June 30, 2022, cash and cash equivalents were $18.3 million and marketable securities were $230.1 million, or approximately $248.4 million combined. Total assets were $257.4 million, total liabilities $11.0 million, and stockholders’ equity $246.4 million. The company reported no borrowings or material debt. Working capital was approximately $244.1 million. No product margins are reported because there are no product sales.
Cash and cash equivalents increased $2.8 million in the first half. Investing activities provided $31.3 million, mainly from security maturities and sales, partly offset by purchases; financing activities provided $0.3 million. Accumulated deficit was $107.7 million. Available-for-sale securities had $2.3 million of unrealized losses at period-end, primarily attributed to interest-rate and market-credit-spread changes, rather than increased credit risk in specific securities.
Changes versus comparable periods
- Q2 operating expenses rose $6.0 million year over year; first-half expenses rose $14.0 million. R&D increases reflected EDG-5506 clinical and manufacturing activity, EDG-002 discovery and preclinical work, and higher personnel costs.
- Q2 net loss increased $5.7 million year over year; first-half net loss increased $13.6 million. Higher interest income partially offset operating expense growth.
- First-half operating cash use increased $13.0 million year over year. The prior-year period included $186.1 million of IPO financing proceeds; there were no IPO proceeds in 2022.
- Accumulated other comprehensive loss widened from $0.5 million at year-end 2021 to $2.3 million, primarily reflecting unrealized investment losses.
- The company adopted lease accounting standard ASC 842 in January 2022 and recorded a new Boulder operating lease, with a $1.7 million lease liability net of tenant-improvement receivable at June 30.
Programs, outlook, and risks
- EDG-5506: Lead oral candidate for dystrophinopathies, including Becker muscular dystrophy (BMD) and Duchenne muscular dystrophy (DMD). The company reported positive interim two-month results in June from its ongoing open-label BMD study, initiated a Phase 2 BMD trial in July 2022, and anticipated starting a Phase 2 trial in boys with DMD in the second half of 2022.
- EDG-002: Preclinical cardiac program initially targeting inherited hypertrophic cardiomyopathy. The company planned to initiate IND-enabling studies in 2022. It said it had paused development of EDG-5440 after IND-enabling studies, citing EDG-5506’s profile to date.
- Management expects significant losses and expenses to continue, with R&D spending expected to increase as clinical trials and other programs advance. The company believes its June 30 cash and marketable securities will fund its current operating plan and liquidity needs for at least 12 months from issuance of the financial statements; it also states that current resources will not fund product candidates through regulatory approval.
- A shelf registration permits offerings up to $400 million; a related at-the-market program permits sales of up to $125 million of common stock. No shares had been sold under the ATM program as of June 30. Additional financing may dilute shareholders or impose restrictive terms; the company has no committed external funding source.
- Clinical and regulatory outcomes remain uncertain. Key risks include reliance on EDG-5506, early-stage development, trial enrollment and execution, safety and efficacy, competition, third-party manufacturing and research providers, intellectual-property challenges, and the need for additional capital. COVID-19 had previously affected trial enrollment, operations, supply activities, and data collection; further impacts were uncertain. Inflation and geopolitical developments, including the Russia-Ukraine conflict, were also identified as risks.
- The filing reports no material legal proceedings and no material changes to market-risk disclosures. Management concluded disclosure controls were effective at a reasonable assurance level and reported no material change in internal control over financial reporting during the quarter.
Important facts for investors to verify
- Progress, enrollment, timing, and final results for EDG-5506 Phase 2 trials, including the planned DMD trial; interim clinical findings are preliminary and may change.
- Whether EDG-002 advances into IND-enabling studies and how its development priorities and costs evolve.
- Cash burn and runway against the company’s stated 12-month funding horizon, particularly as trial and manufacturing expenses rise.
- Any ATM or other securities issuance, resulting dilution, and whether additional financing becomes necessary.
- Potential COVID-19, inflation, supply-chain, enrollment, regulatory, and intellectual-property effects on development timelines and costs.