Aprea Therapeutics, Inc. — Q2 2020 Form 10-Q
Reporting period: Quarter and six months ended June 30, 2020. Aprea is a clinical-stage biopharmaceutical company developing cancer therapies that reactivate mutant p53. It had no product revenue and no approved products.
Financial results and liquidity
| Metric | Q2 2020 | Q2 2019 | Six months 2020 | Six months 2019 |
|---|---|---|---|---|
| Revenue | $0 | $0 | $0 | $0 |
| Research and development | $10.7 million | $4.3 million | $19.8 million | $8.0 million |
| General and administrative | $3.8 million | $1.6 million | $6.6 million | $2.3 million |
| Net loss | $16.4 million | $5.3 million | $25.8 million | $8.7 million |
| Net loss per share, basic and diluted | $0.78 | $4.45 | $1.22 | $7.43 |
| Cash used in operating activities | Not separately stated | Not separately stated | $17.2 million | $9.2 million |
- Cash and cash equivalents were $112.9 million at June 30, 2020, down from $130.1 million at December 31, 2019. Management said cash should fund operating expenses and capital expenditures into 2023, subject to assumptions that may prove inaccurate.
- Six-month cash decreased $17.0 million; investing activities used $10,144 and financing activities provided $150,949, primarily from stock-option exercises.
- Total assets were $114.8 million and stockholders’ equity was $100.1 million. Total liabilities were $14.7 million, including $427,453 of lease liabilities. The filing reports no borrowings or other debt; margins are not meaningful because the company had no revenue.
- Accumulated deficit was $116.3 million at June 30, 2020. The company reported no income tax expense and a full valuation allowance against deferred tax assets.
Material changes versus prior comparable periods
- Operating expenses increased 144% year over year in Q2 to $14.5 million; six-month expenses rose to $26.4 million from $10.3 million. Management attributed most of the increase to advancing APR-246 clinical development, with higher public-company, insurance, personnel, and stock-compensation costs also contributing.
- Quarterly net loss increased to $16.4 million from $5.3 million, reflecting higher operating expenses and a $1.9 million foreign-currency loss, compared with a $0.7 million gain in Q2 2019. For the first half, the company recorded a $0.4 million foreign-currency gain, down from $1.6 million a year earlier.
- Operating cash use increased to $17.2 million from $9.2 million for the first half. The comparable 2019 period included $5.0 million of net proceeds from Series C preferred stock; 2020 financing cash flow was limited to stock-option exercises.
Outlook, developments, and risks
- The pivotal Phase 3 trial of eprenetapopt (APR-246) plus azacitidine in TP53-mutant MDS completed enrollment of 154 patients in Q2. Management expected top-line data by year-end 2020.
- Other eprenetapopt studies included investigator-led Phase 1b/2 trials, a Phase 2 post-transplant maintenance trial, and a Phase 1 trial in TP53-mutant AML evaluating eprenetapopt with venetoclax, with or without azacitidine.
- APR-548 remains preclinical. Although the company filed an IND, it said additional information requested by the FDA was needed before human trials could begin.
- COVID-19 initially reduced screening and enrollment at some clinical sites; by the filing date, screening and eligible-patient levels had returned to expected levels. The company reported no clinical-supply disruption to date, but said the pandemic’s future effects remained uncertain.
- In August 2020, after quarter-end, Aprea agreed to work with Invivoscribe on an eprenetapopt companion diagnostic. Payments could total up to $13.2 million, subject to milestones, plus reimbursement of specified expenses.
- Safety is a material development risk. The filing lists serious adverse events in ongoing trials and reports investigator assessments of two deaths as possibly related to both eprenetapopt and azacitidine, one possibly related to eprenetapopt, and four possibly related to azacitidine. The company noted that underlying disease, comorbidities, or other treatments may have contributed.
- Other key risks include Phase 3 or regulatory failure, trial delays or enrollment challenges, reliance on a single API manufacturer for APR-246, financing needs after the projected runway, and limited patent protection: the chemical structure of APR-246 is in the public domain and the company relies on method-of-use, formulation, dosing, and other claims.
- The company had no material legal proceedings and no recorded provision for contingent losses. Management said disclosure controls were effective as of June 30, 2020.
Most important facts for investors to verify
- Whether the Phase 3 eprenetapopt trial produced the anticipated results and whether regulatory submissions and approvals followed.
- Whether cash burn, trial spending, and the Invivoscribe milestone obligations remain consistent with the stated runway into 2023.
- Whether COVID-19, manufacturing capacity, or FDA requests delayed trials, data collection, APR-548 development, or companion-diagnostic work.
- The interpretation and evolving incidence of serious adverse events and deaths reported in clinical trials.
- The durability and scope of APR-246’s patent protection and the company’s ability to secure financing without material dilution or reduced development activity.