PepGen Inc. — FY2023 Form 10-K
Reporting period: Fiscal year ended December 31, 2023. PepGen is a clinical-stage biotechnology company developing peptide-conjugated oligonucleotide therapies using its Enhanced Delivery Oligonucleotide (EDO) platform. It has no approved products and has generated no product revenue.
Financial performance and liquidity
| Metric | FY2023 | FY2022 |
|---|---|---|
| Revenue | No product revenue | No product revenue |
| Research and development expense | $68.1 million | $54.1 million |
| General and administrative expense | $16.6 million | $14.2 million |
| Total operating expenses / operating loss | $84.8 million | $68.3 million |
| Interest income | $6.4 million | $2.8 million |
| Net loss | $78.6 million | $69.1 million |
| Net loss per share, basic and diluted | $3.30 | $4.42 |
| Net cash used in operating activities | $69.0 million | $59.3 million |
At year-end, cash and cash equivalents were $80.8 million and marketable securities were $29.6 million, totaling $110.4 million. Current assets were $112.7 million; total liabilities were $34.6 million, including $20.1 million of operating lease liabilities. No borrowings are reported on the presented balance sheet. The company reported an accumulated deficit of $181.5 million. Margins are not meaningful because the company had no revenue.
Cash, cash equivalents and restricted cash declined by $100.9 million during 2023. Investing cash outflow was $32.0 million, principally reflecting $29.4 million of marketable-security purchases and $2.6 million of property and equipment purchases. Management expects available resources, including subsequent financing proceeds, to fund operations into 2026; this estimate depends on assumptions and may change.
Changes versus prior year
- Net loss increased by $9.5 million, while operating expenses rose $16.5 million. R&D expense increased $14.0 million, reflecting higher program, clinical, manufacturing, personnel and facility costs.
- Operating cash use increased $9.7 million. Investing cash use rose to $32.0 million, largely because the company began purchasing marketable securities.
- Interest income increased $3.6 million, partially offsetting higher operating costs. FY2022 included a $3.7 million tax expense associated with transferring intellectual property to the parent company; FY2023 tax expense was $0.1 million.
- Cash and cash equivalents fell from $181.8 million to $80.8 million; year-end marketable securities were $29.6 million.
Programs, outlook and risks
- PGN-EDO51, DMD: The Phase 1 healthy-volunteer study was completed in 2022. CONNECT1 Phase 2 patient dosing began in January 2024, with the first 5 mg/kg cohort fully enrolled. The company expected preliminary safety, exon-skipping and dystrophin data in mid-2024. MHRA clearance for the multinational CONNECT2 Phase 2 study was received in February 2024. An accelerated-approval path is a possibility, not assured.
- PGN-EDODM1, DM1: FDA clinical hold, announced in May 2023, was lifted in October 2023; Health Canada and MHRA also cleared the study. FREEDOM Phase 1 dosing began in December 2023. Preliminary data were expected in the second half of 2024, and a Phase 2 study was planned for that half-year. FDA Fast Track designation was announced in February 2024.
- Other pipeline: PGN-EDO53 remained preclinical; the company planned IND/CTA-enabling work in 2024. PGN-EDO45 and PGN-EDO44 were also preclinical programs.
- Management expects R&D expense to increase in 2024 as clinical studies advance. PepGen relies on third parties for manufacturing and research, has no commercial infrastructure, and expects continued losses and a need for additional funding over time.
- Notable safety monitoring includes transient kidney-biomarker elevations and hypomagnesemia observed in the PGN-EDO51 Phase 1 study; one participant at 15 mg/kg experienced a non-life-threatening serious adverse event involving kidney biomarkers. The filing also describes transient creatinine elevations in nonhuman-primate studies. Later-stage patient results may differ from early clinical and preclinical findings.
- Key risks include clinical-trial failure or delay, regulatory uncertainty, financing and dilution risk, reliance on contract manufacturers, competition, and uncertain patent protection. No material legal proceedings were reported. Management stated disclosure controls and internal control over financial reporting were effective as of year-end; the auditor did not provide an internal-control attestation under the applicable exemption.
Important facts for investors to verify
- Whether reported patient-trial results met prespecified safety and pharmacology objectives, particularly dystrophin production for PGN-EDO51 and splicing correction and functional measures for PGN-EDODM1.
- Whether safety monitoring identifies clinically significant kidney effects, magnesium changes or other adverse events with repeat dosing.
- Whether the stated runway into 2026 remains credible as trial enrollment, manufacturing needs and development spending evolve.
- The effects of the February 2024 ATM and follow-on offerings: they generated $86.8 million in net proceeds before offering costs; shares outstanding rose from 23.8 million at year-end to 32.4 million as of March 1, 2024.
- Progress on CONNECT2, FREEDOM and planned FREEDOM2-DM1 studies, and any regulatory feedback relevant to accelerated approval.