Aprea Therapeutics, Inc. — FY2022 Form 10-K
Reporting period: Year ended December 31, 2022; filed March 30, 2023. This is an annual report, not a standalone fourth-quarter report.
Business context
Aprea is a clinical-stage oncology company developing synthetic-lethality cancer therapies targeting DNA-damage-response pathways. In May 2022, it acquired Atrin Pharmaceuticals and shifted its primary focus to Atrin’s pipeline. Its lead candidate, ATRN-119, is an ATR inhibitor in a Phase 1/2a trial; ATRN-1051, a WEE1 inhibitor, was in IND-enabling studies. The company reported no approved products and no product revenue.
Financial and liquidity highlights
| Metric | FY2022 / Dec. 31, 2022 | Comparison |
|---|---|---|
| Revenue | None | No product revenue in prior periods |
| Net loss | $112.7 million | $37.1 million in FY2021; $53.5 million in FY2020 |
| Research and development expense | $16.4 million | $23.9 million in FY2021 |
| General and administrative expense | $21.0 million | $13.6 million in FY2021 |
| Acquired in-process R&D expense | $76.0 million | Relates to the Atrin acquisition; no comparable FY2021 charge |
| Operating cash used | $25.0 million | $37.7 million in FY2021 |
| Cash and cash equivalents | $28.8 million | $53.1 million at Dec. 31, 2021 |
| Total current assets / current liabilities | $30.2 million / $3.2 million | Working capital of approximately $27.0 million |
| Debt | No borrowings reported | Total liabilities were $3.2 million, principally accounts payable and accruals |
The FY2022 net loss increased mainly because of the $76.0 million acquired IPR&D charge and higher stock-based compensation. The charge was noncash; operating cash use fell year over year despite the larger reported loss. Stock-based compensation was $17.0 million, compared with $7.8 million in FY2021. No meaningful commercial margins were reported because the company had no product sales.
Cash fell by $24.3 million during FY2022. Financing activities provided $0.7 million, primarily from at-the-market share sales; investing activities used no cash. The company said cash at year-end plus net proceeds from its February 2023 offering would fund operations and capital needs into the third quarter of 2024, subject to assumptions. The February offering raised approximately $4.8 million net.
Material changes and notable events
- The Atrin acquisition closed May 16, 2022. Consideration included common and convertible preferred shares; the acquisition was accounted for as an asset acquisition, with the acquired IPR&D expensed because it had no alternative future use.
- Research and development expense declined as legacy p53-program trials and related activities were wound down; G&A rose, including acquisition-related legal costs. Accelerated vesting tied to the acquisition contributed to higher stock compensation.
- The company’s former p53 candidate eprenetapopt had failed its pivotal Phase 3 primary endpoint in 2020. Aprea reported no ongoing or planned trials for its mutant-p53 reactivators and redirected resources to the Atrin assets.
- A one-for-20 reverse stock split took effect February 10, 2023. The company also sold 1,050,000 shares in a February 2023 public offering.
- After year-end, COO Gregory Korbel agreed to leave effective March 31, 2023, with a transition period through April 30 and $195,000 in separation payments, subject to stated conditions.
Outlook, commentary and principal risks
- Aprea anticipated ATRN-119 Phase 1 tolerability and pharmacokinetic data in Q1 2024. The planned Phase 2a expansion would follow dose selection. It anticipated filing an IND for ATRN-1051 by the end of 2023 and was exploring combination approaches, including ATRN-119 with PARP inhibitors.
- These milestones are forward-looking and depend on clinical results, enrollment, regulatory review, manufacturing and financing. Preclinical findings do not establish human safety or efficacy; ATRN-119’s proposed tolerability advantages remain unproven clinically.
- The company expects continued losses and says substantial additional funding will be needed. Its runway estimate could prove incorrect; future equity financing could dilute shareholders, and partnership financing could require relinquishing rights.
- Manufacturing is outsourced, with limited or single-source supply arrangements for some assets. Clinical delays, patient enrollment challenges, adverse events, competition, intellectual-property disputes, regulatory requirements and reimbursement or pricing pressure are significant risks.
- The filing disclosed that all cash, cash equivalents, restricted cash and available-for-sale investments were held with Silicon Valley Bank. It discussed the bank’s March 2023 closure and broader financial-system uncertainty; investors should review the filing’s full discussion of access to funds and counterparty risk.
- Management reported effective disclosure controls and internal control over financial reporting as of year-end. The independent auditor gave an unqualified opinion on the financial statements but did not audit internal-control effectiveness; the company cited its emerging-growth-company exemption.
Important facts for investors to verify
- Current cash, financing needs and whether the stated runway into Q3 2024 remains achievable.
- ATRN-119 enrollment, safety, pharmacokinetics and timing of reported clinical data; whether projected milestones have been met.
- Progress and regulatory readiness of ATRN-1051, including the status of its anticipated IND filing.
- Cash concentration and access to funds, plus any updates to banking arrangements after the SVB events described in the filing.
- Share-count and dilution effects of the acquisition consideration, preferred-share conversions, reverse split and subsequent offering.
- Whether the acquisition-related expense, stock-based compensation and other unusual items recur, and how much ongoing spending supports the current pipeline.