Entera Bio Ltd. Q3 2023 Form 10-Q Summary
Business Context and Reporting Period
Entera Bio Ltd. is an Israel-based clinical-stage biopharmaceutical company developing orally delivered peptides and therapeutic proteins. Its lead candidates are EB613 for osteoporosis and EB612 for hypoparathyroidism. The company also develops its oral delivery platform through internal programs and collaborations. This unaudited Form 10-Q covers the three and nine months ended September 30, 2023, compared with the corresponding 2022 periods.
Financial Performance and Position
| Metric | Three Months Ended September 30 | Nine Months Ended September 30 |
|---|---|---|
| Revenue | $0 million, versus $0.008 million | $0 million, versus $0.120 million |
| Research and development expense | $1.370 million, versus $1.413 million | $3.510 million, versus $4.497 million |
| General and administrative expense | $1.028 million, versus $1.460 million | $3.457 million, versus $5.512 million |
| Operating loss | $2.386 million, versus $2.865 million | $6.928 million, versus $9.949 million |
| Net loss | $2.379 million, versus $3.067 million | $6.894 million, versus $10.036 million |
| Loss per share | $0.08, versus $0.11 | $0.24, versus $0.35 |
| Net cash used in operating activities | Not separately provided | $4.693 million, versus $10.488 million |
- Gross profit was zero in both 2023 periods because the company had no revenue.
- At September 30, 2023, cash and cash equivalents were $7.585 million, compared with $12.309 million at December 31, 2022. Including restricted deposits, total cash and cash equivalents were $7.676 million.
- Total assets were $8.565 million and total liabilities were $2.329 million. The filing does not report material conventional debt; liabilities primarily comprise accounts payable, accrued expenses and operating lease obligations.
- Accumulated deficit was $102.391 million, compared with $95.497 million at year-end 2022.
- Shareholders’ equity declined to $6.236 million from $11.754 million at December 31, 2022.
- Cash used in investing activities was $0.012 million and cash provided by financing activities was $0.005 million for the first nine months of 2023.
Material Changes Versus the Prior Comparable Period
- Revenue declined to zero following completion of the third year of Amgen preclinical research services and termination of the Amgen agreement effective May 2, 2023. The company has not generated product sales.
- Nine-month research and development expense decreased 22%, primarily because of lower preclinical activity, materials, share-based compensation and a prior-year one-time separation payment. These reductions were partly offset by higher clinical expenses for the Phase 1 pharmacokinetic study of the new-generation platform and new EB612 formulations.
- Nine-month general and administrative expense decreased 37%, reflecting lower employee compensation, professional fees, consulting costs and directors’ and officers’ insurance.
- Nine-month operating cash burn decreased by $5.795 million, primarily due to the lower operating loss and more favorable working-capital changes.
- The company entered into an OPKO research collaboration in September 2023 involving oral formulations of long-acting GLP-2 and oxyntomodulin analogs. The work began in October 2023 and had no financial impact at September 30, 2023.
- The company extended its Jerusalem office lease through June 2028, subject to early termination options. The present value of operating lease liabilities was $0.402 million at September 30, 2023.
- IPO warrants exercisable for 700,000 ordinary shares expired on July 2, 2023.
Guidance, Outlook, Risks and Unusual Items
- Management estimates that available funds will support operations into the third quarter of 2024 under current plans, including completion of the new-generation platform Phase 1 study and the OPKO GLP-2/OXM research. This estimate excludes funding required for the proposed EB613 Phase 3 osteoporosis study and related comparative study.
- The financial statements disclose substantial doubt about the company’s ability to continue as a going concern. Management expects to require additional equity, debt, collaboration or licensing financing, and no committed external funding source is in place.
- Initiation of the EB613 Phase 3 study depends on further FDA discussions regarding qualification of a total-hip bone mineral density endpoint and the availability of additional funding. Failure to obtain financing could delay, limit or terminate development programs and operations.
- EB612 Phase 1 pharmacokinetic work for new formulations began in May 2023, with initial results expected during the fourth quarter of 2023.
- Clinical, regulatory, manufacturing, intellectual-property and commercialization risks remain significant. Positive early-stage results may not predict later-stage outcomes, and the FDA may require additional studies or changes to the development plans.
- The company’s principal operations and research facilities are in Israel. The October 2023 war between Israel and Hamas may disrupt personnel, facilities, suppliers, clinical development, financing access and the broader Israeli economy; the duration and effects were not predictable as of the filing date.
- The company has tax-loss carryforwards of approximately $72.5 million in Israel and $0.156 million in the United States, but maintains a full valuation allowance against related deferred tax assets.
- There were no material legal proceedings reported, and management stated that disclosure controls and procedures were effective as of September 30, 2023.
Important Facts for Investors to Verify
- Whether the company secures sufficient financing before its projected cash runway ends and on what terms, including potential shareholder dilution.
- The final FDA position on the EB613 Phase 3 design, total-hip BMD endpoint and timing of study initiation.
- Results from the EB612 and new-generation platform Phase 1 pharmacokinetic studies.
- The ongoing cash-burn rate and whether cost reductions can be sustained without slowing clinical development.
- The scientific, financial and strategic progress of the OPKO collaboration and any future licensing or partnering arrangements.
- The operational and financing effects of the Israel-Hamas conflict and any resulting disruption to employees, facilities, suppliers or clinical programs.