TransCode Therapeutics, Inc. — FY2021 Form 10-K
Business context and reporting period. This annual report covers the fiscal year ended December 31, 2021, and was filed March 31, 2022. TransCode is a pre-revenue, preclinical oncology company developing RNA therapeutics and diagnostics using its iron-oxide nanoparticle delivery platform. Its lead candidate, TTX-MC138, is designed to target miRNA-10b in metastatic cancers. The company completed its IPO in July 2021.
Financial and operating performance
| Metric | FY2021 | FY2020 |
|---|---|---|
| Revenue | $0 | $0 |
| Research and development expense | $2.754 million | $0.284 million |
| General and administrative expense | $3.397 million | $0.442 million |
| Total operating expenses / operating loss | $6.151 million / $(6.151) million | $0.727 million / $(0.727) million |
| Net loss | $(6.843) million | $(2.344) million |
| Basic and diluted loss per share | $(0.81) | $(0.51) |
| Net cash used in operating activities | $(5.267) million | $(0.493) million |
| Cash at year-end | $20.826 million | $0.828 million |
Gross and operating margins are not meaningful because the company reported no revenue. At December 31, 2021, current assets were $22.732 million and current liabilities were $2.534 million. Stockholders’ equity was $20.404 million. The company reported no debt at year-end; its convertible notes and accrued interest converted into common stock at the IPO. It had an accumulated deficit of $10.305 million.
Material changes versus FY2020
- Net loss increased by $4.500 million as operations expanded after the IPO. R&D expense rose by $2.470 million and G&A expense by $2.955 million, reflecting increased research activity, personnel, laboratory costs, public-company expenses, and insurance.
- Operating cash use increased to $5.267 million from $0.493 million. Financing provided $25.517 million in 2021, primarily from the IPO, versus $1.117 million in 2020, primarily from convertible notes.
- The IPO raised $28.75 million gross and approximately $25.4 million net. The company issued 7,187,500 shares; outstanding notes converted into 1,068,135 shares. Year-end common shares outstanding were 12,904,574.
- FY2021 included $0.278 million of grant income and an $0.867 million noncash charge from the change in fair value of derivative liabilities. Those derivative liabilities were extinguished when the notes converted at the IPO.
Outlook, commentary, and key risks
- Management expected year-end cash plus anticipated SBIR funding to support operations into the first quarter of 2023, but stated existing cash would not fund a full 12 months from the financial-statement date. Management expects to need additional capital; availability and terms are uncertain.
- The independent auditor issued an unmodified opinion but included a going-concern explanatory paragraph, citing recurring losses, operating cash use, and the need for additional capital.
- Management planned a radiolabeled microdose Phase 0 first-in-human study of TTX-MC138 in patients with advanced solid tumors, using PET-MRI to assess delivery and biodistribution. The company anticipated pursuing an eIND and completing IND-enabling work; the timing and FDA authorization were not assured. Other programs remained preclinical.
- Management described encouraging animal-model results for TTX-MC138 and TTX-siPDL1. These are preclinical findings and do not establish safety or efficacy in humans.
- Key risks include early-stage development and clinical failure, reliance on TTX-MC138, financing and dilution risk, reliance on external manufacturers and research organizations, COVID-19-related disruption, competition, and dependence on licensed intellectual property. The company also disclosed limited foreign IP protection for TTX-MC138.
- Material weaknesses in internal control over financial reporting remained unremediated, and management concluded disclosure controls and procedures were ineffective at year-end. Remediation was underway; the company could not assure when it would be complete.
- No material litigation was reported. The company reported a 2021 phishing incident that it believed had no material financial impact. No non-cancelable operating lease payments were reported at year-end; the laboratory arrangement was cancelable on 90 days’ notice.
Most important facts for investors to verify
- Cash runway assumptions, receipt and timing of remaining SBIR award funds, and plans and terms for additional financing.
- Whether the eIND is submitted and authorized, and whether the planned Phase 0 study begins; verify the study design, enrollment, and clinical delivery results.
- Progress on IND-enabling studies, manufacturing readiness, and any changes to development timelines or costs.
- Independent evidence and limitations behind reported animal-study results, and whether human results support the proposed therapeutic rationale.
- Progress in remediating internal-control weaknesses and any subsequent financing, share issuance, or material changes to cash needs.