Edgewise Therapeutics, Inc. — Q2 2023 Form 10-Q
Reporting period: Quarter and six months ended June 30, 2023. Unaudited results. Edgewise is a clinical-stage biopharmaceutical company with no approved products and no product revenue to date.
Business context and pipeline
- Lead candidate EDG-5506 is being studied for Duchenne and Becker muscular dystrophy. Phase 2 trials CANYON (Becker) and LYNX (Duchenne) were underway. Management anticipated starting the potentially registrational GRAND CANYON Becker cohort in the second half of 2023.
- In June 2023, the company reported positive interim 12-month results from the open-label ARCH study in adults with Becker. The filing cautions that interim and topline data may change after further review.
- EDG-7500 is in nonclinical development for hypertrophic cardiomyopathy; management planned a Phase 1 trial in late 2023, subject to IND clearance. The EDG-003 cardiovascular program remained in discovery.
Financial performance and liquidity
| Metric | Q2 2023 | Q2 2022 | Six months 2023 | Six months 2022 |
|---|---|---|---|---|
| Revenue | None | None | None | None |
| Research and development expense | $19.6m | $12.4m | $39.4m | $23.5m |
| General and administrative expense | $5.8m | $4.1m | $11.6m | $7.8m |
| Total operating expenses | $25.3m | $16.5m | $51.0m | $31.3m |
| Interest income | $3.9m | $0.4m | $6.7m | $0.6m |
| Net loss | $21.5m | $16.1m | $44.3m | $30.7m |
| Net loss per share, basic and diluted | $0.34 | $0.32 | $0.70 | $0.62 |
At June 30, 2023, cash and cash equivalents were $31.8m and available-for-sale marketable securities were $278.1m; management reported combined liquidity of $309.9m. Accumulated deficit was $188.9m. Total liabilities were $19.2m, including $5.6m of operating lease liabilities; no borrowings are reported. Current assets were $317.0m and current liabilities $14.4m. Profitability and operating margins are not meaningful because the company had no revenue and incurred losses.
For the first half, operating cash use was $43.1m, compared with $28.8m in 2022. Investing activities provided $52.5m, principally reflecting maturities and sales of securities, partly offset by securities purchases and $5.1m of property and equipment purchases. Financing activities provided $0.4m. Cash and cash equivalents increased $9.8m to $31.8m; this change should be viewed alongside the company’s marketable securities portfolio.
Material changes and management commentary
- Q2 operating expenses rose $8.8m year over year. R&D increased $7.2m, driven by higher personnel and stock-based compensation, EDG-5506 trial activity and manufacturing; G&A rose $1.7m, mainly from personnel and professional costs.
- First-half R&D expense increased $15.9m, including higher EDG-5506 clinical costs, internal personnel-related costs, and EDG-7500/EDG-003 discovery and preclinical spending. Higher interest income partially offset expense growth.
- Management expects significant losses and rising R&D spending as programs advance. It believes existing cash, cash equivalents and marketable securities will fund planned operations and capital expenditures for at least 12 months from the financial statement issuance date, but states that substantial additional capital will be needed for longer-term development and potential commercialization.
- A June 2023 ATM agreement permits sales of up to $125m of common stock; no shares had been sold under it by June 30. The existing shelf registration permits up to $400m of equity and debt offerings. Future financing may dilute shareholders or impose restrictive terms.
- On July 27, 2023, after quarter-end, the company gave notice to terminate its OSIF license because the licensed technology was no longer relevant to its business; termination was to take effect 90 days after notice.
Risks, contingencies and controls
- Key risks include clinical and regulatory failure or delay, limited rare-disease patient pools and enrollment challenges, dependence on third-party manufacturers and CROs, competition, intellectual-property disputes, and the need for future financing. EDG-5506 had reported mild, transient dizziness and somnolence in prior studies; dose-limiting somnolence was observed at 135 mg in the single-ascending-dose trial.
- The company notes risks from inflation, banking and credit-market instability, cybersecurity, and potential disruptions to trials or supply chains. It reported no material legal proceedings pending or threatened and no material litigation during the first half.
- Disclosure controls and procedures were assessed as effective at a reasonable assurance level as of June 30, 2023; no material change in internal control over financial reporting was reported for the quarter.
Most important facts for investors to verify
- Subsequent, complete ARCH results and the design, enrollment, milestones and readouts for CANYON, LYNX and GRAND CANYON.
- Whether EDG-7500 obtains IND clearance and advances on the stated Phase 1 timeline.
- Actual cash burn, investment portfolio value and maturity profile, and whether the stated 12-month runway remains adequate as trial spending rises.
- Any use of the ATM or other financing, and resulting dilution or financing terms.
- Effectiveness and timing of the OSIF license termination and any resulting obligations or intellectual-property implications.