Aprea Therapeutics, Inc. — Form 10-Q Summary
Reporting period: Quarter ended September 30, 2020; comparisons are with the three and nine months ended September 30, 2019 unless noted. The filing was signed November 6, 2020. Aprea is a clinical-stage biopharmaceutical company developing cancer therapies that reactivate mutant p53.
Financial performance and liquidity
| Metric | Q3 2020 | Q3 2019 | Nine months 2020 | Nine months 2019 |
|---|---|---|---|---|
| Revenue | No product revenue | No product revenue | No product revenue | No product revenue |
| Research and development expense | $8.8 million | $4.9 million | $28.6 million | $12.9 million |
| General and administrative expense | $3.5 million | $2.3 million | $10.0 million | $4.7 million |
| Total operating expenses | $12.2 million | $7.2 million | $38.6 million | $17.6 million |
| Net loss | $12.3 million | $6.2 million | $38.1 million | $15.0 million |
| Net loss per share, basic and diluted | $0.58 | $5.29 | $1.80 | $12.72 |
As of September 30, 2020, cash and cash equivalents were $101.1 million, down from $130.1 million at December 31, 2019. Nine-month operating cash use was $28.6 million; investing cash use was $9,419 and financing cash provided was $151,000. Management expects existing cash to fund operations and capital expenditures into 2023, subject to assumptions that may prove inaccurate. The company reported no debt; lease liabilities totaled $377,000, including current and noncurrent portions. Current assets were $102.4 million and current liabilities were $13.7 million. Gross margin and operating margin are not meaningful because the company had no product revenue.
Accumulated deficit was $128.6 million. Stockholders’ equity was $89.0 million. The company reported no income tax expense, with a full valuation allowance against net deferred tax assets.
Material changes versus prior comparable periods
- Q3 operating expenses increased $5.0 million and net loss widened $6.1 million year over year. For the first nine months, operating expenses increased $21.0 million and net loss widened $23.1 million.
- Higher research and development spending, particularly on eprenetapopt, drove most of the increase. Nine-month eprenetapopt R&D expense rose to $22.5 million from $9.5 million.
- General and administrative expense rose, reflecting public-company insurance, stock-based compensation, personnel, and pre-commercialization activity. Some prior-year IPO preparation legal and consulting costs did not recur.
- Cash declined by $28.9 million from year-end 2019, mainly reflecting operating cash use and exchange-rate effects. Nine-month operating cash use increased from $12.0 million in 2019 to $28.6 million in 2020.
- Q3 foreign currency results shifted from a $975,000 gain in 2019 to a $75,000 loss in 2020; nine-month foreign currency gain declined to $284,000 from $2.6 million.
Outlook, developments, and risks
- Eprenetapopt (APR-246): The pivotal Phase 3 trial with azacitidine for frontline TP53-mutant MDS completed enrollment of 154 patients in June 2020. Management expected top-line data by year-end 2020 and planned NDA and MAA submissions in 2021. These were expectations, not assured outcomes.
- Other eprenetapopt programs include a fully enrolled post-transplant Phase 2 trial, ongoing AML and solid-tumor trials, and a planned CLL trial. In the AML trial’s 12-patient lead-in, no dose-limiting toxicities were observed; the trial was expanded to evaluate additional combinations.
- APR-548: FDA clearance to initiate Phase 1 trials was received in October 2020, after the quarter. Enrollment was anticipated to begin in Q1 2021.
- Companion diagnostic: An August 2020 agreement with Invivoscribe provides for development of an in-vitro diagnostic assay, with payments of up to $13.2 million subject to milestones and reimbursement of specified expenses.
- COVID-19: Screening and enrollment in some trials initially declined in April and May, then returned to expected levels. The company reported no clinical-supply disruption to date and no material effect on financial results or operations for the quarter or nine months, but noted continuing uncertainty around trials, suppliers, and regulators.
- Clinical and development risks: Eprenetapopt remains investigational; pivotal results, regulatory approval, safety, patient enrollment, companion-diagnostic development, manufacturing, reimbursement, and commercial adoption are uncertain. The filing describes serious adverse events in multiple trials and investigator-assessed deaths possibly related to study drugs; causation remains uncertain.
- Other key risks: The company relies on a single third-party manufacturer for eprenetapopt active ingredient and has no redundant supply arrangement. The chemical structure of eprenetapopt is in the public domain, so its patent portfolio relies on method-of-use, formulation, dosing, manufacturing, and combination claims. The company expects further losses and may need additional financing; future financing could dilute shareholders or require concessions.
- The company reported no material legal proceedings and no provision for contingent losses at September 30, 2020. Management judged disclosure controls effective at a reasonable level and reported no material quarterly change in internal control over financial reporting.
Important facts for investors to verify
- Whether the Phase 3 MDS trial met its endpoints and the timing, completeness, and regulatory implications of final data.
- Whether planned 2021 NDA and MAA submissions proceeded, and whether regulators required additional studies or imposed conditions.
- Actual cash burn, updated runway, and the funding required for clinical programs and the Invivoscribe diagnostic milestones.
- Updated safety information, including the context and attribution of serious adverse events and reported deaths.
- Continuity and quality of eprenetapopt API supply, and the strength, scope, and duration of relevant patent protection.
- Effects of COVID-19 or other disruptions on enrollment, trial execution, manufacturing, and regulatory review.