Aprea Therapeutics, Inc. — 2019 Form 10-K Summary
Business context and reporting period
Annual report for the year ended December 31, 2019, filed March 27, 2020. Aprea is a clinical-stage biopharmaceutical company developing cancer therapies intended to reactivate mutant p53. Its lead candidate, APR-246 (eprenetapopt), was in clinical development, including a pivotal Phase 3 trial for TP53-mutant myelodysplastic syndromes (MDS). The company had no approved products or product sales. It completed its IPO in October 2019 and its corporate reorganization in September 2019.
Key financial metrics
| Metric | 2019 | 2018 |
|---|---|---|
| Revenue | No product revenue | No product revenue |
| Research and development expense | $21.0 million | $14.2 million |
| General and administrative expense | $8.6 million | $2.3 million |
| Total operating expenses | $29.5 million | $16.5 million |
| Net loss | $28.1 million | $15.5 million |
| Net cash used in operating activities | $26.7 million | $15.3 million |
| Cash and cash equivalents at year-end | $130.1 million | $65.7 million |
| Working capital at year-end | $124.0 million | $61.1 million |
| Total liabilities at year-end | $9.4 million | $4.9 million |
Operating margin is not meaningful because the company had no revenue. Year-end liabilities included approximately $0.5 million of operating lease liabilities; the filing reports no off-balance-sheet arrangements. Management estimated existing cash would fund operating and capital needs into 2023, subject to assumptions and clinical-development spending. The independent auditor issued an unmodified opinion on the 2019 consolidated financial statements; it did not opine on internal control effectiveness.
Material changes versus the prior comparable period
- Net loss increased by $12.5 million year over year. R&D expense rose by $6.8 million, primarily as APR-246 advanced into Phase 3 and other programs progressed.
- G&A expense increased by $6.3 million, driven mainly by reorganization, IPO and public-company readiness costs, as well as personnel and stock-based compensation.
- Operating cash use increased by $11.5 million. Financing provided $92.6 million, including approximately $86.9 million of IPO proceeds net of offering costs and $5.6 million from Series C preferred stock.
- Preferred stock converted into common stock in connection with the IPO; year-end stockholders’ equity was $124.2 million, versus a deficit of $51.4 million in 2018.
Outlook, management commentary, risks and unusual items
- Management expected Phase 3 enrollment completion in early 2020 and top-line data in the second half of 2020. COVID-19 had already reduced screening and enrollment, and could delay trial completion and data availability. The filing also cited possible disruption to trial sites, regulators and the single-source APR-246 API supply chain.
- Management expected French Phase 1b/2 trial top-line complete-remission results in the first half of 2020; planned to start enrollment in NHL and solid-tumor trials in the second half of 2020; and targeted an APR-548 IND submission in the first half of 2020. These are forward-looking plans, not achieved milestones.
- In interim, response-evaluable investigator-sponsored studies combining APR-246 with azacitidine reported U.S. objective response and complete remission rates of 88% and 59% (41 evaluable patients, November 2019 cutoff), and French rates of 66% and 53% (38 evaluable patients, December 2019 cutoff). These were not results from the randomized pivotal Phase 3 trial and remain subject to confirmation.
- Safety merits attention: the filing describes serious adverse events across trials and reports deaths investigators considered possibly related to APR-246 and/or azacitidine. The causal relationship and comparative risk are not established by the reported information.
- The company had accumulated losses of $90.5 million and expected continued operating losses and a need for additional funding. Its principal risks include clinical and regulatory failure, patient enrollment delays, competition, reimbursement uncertainty, intellectual-property limits (APR-246’s chemical structure is in the public domain), and dependence on third-party manufacturing, including a single API manufacturer.
- Foreign-currency movements generated a $1.3 million gain in 2019, while foreign-currency translation reduced other comprehensive income by $2.8 million. These are not recurring product revenues.
Important facts for investors to verify
- Current status and final results of the pivotal Phase 3 trial, including enrollment, endpoint outcomes, COVID-related delays and any regulatory updates.
- Final and peer-reviewed efficacy and safety data from the U.S. and French studies; confirm patient denominators, analysis populations, follow-up and investigator-attributed deaths.
- Cash balance, quarterly operating cash burn, updated runway assumptions and any financing, collaboration or dilution since year-end 2019.
- Whether APR-246 supply has been diversified and whether manufacturing capacity and clinical-trial supply remain adequate.
- Reconcile IPO proceeds: the filing cites approximately $90.9 million after underwriting discounts but before other offering expenses in one section, and approximately $86.9 million net in the cash-flow and equity statements.