Entera Bio Ltd. Form 10-K Summary
Reporting period: Fiscal year ended December 31, 2023. The filing is an annual Form 10-K, not a standalone fourth-quarter report. Entera Bio is an Israel-based clinical-stage biotechnology company developing oral peptide and protein-replacement therapies using its N-Tab technology. Its lead programs are EB613 for osteoporosis and EB612 for hypoparathyroidism.
Business Context and Development Status
- EB613 is an oral once-daily PTH(1-34) tablet intended for post-menopausal women with low bone mineral density and high-risk osteoporosis without prior fracture.
- EB613’s 161-patient Phase 2 study met its primary pharmacodynamic endpoint and secondary BMD endpoints. The FDA agreed that a 24-month placebo-controlled Phase 3 study using Total Hip BMD as the primary endpoint could support an NDA, subject to regulatory and funding requirements.
- Entera delayed initiation of the EB613 Phase 3 study while awaiting FDA qualification of the ASBMR-FNIH SABRE BMD surrogate endpoint and related statistical guidance. An update was expected in 2024.
- EB612 is an oral PTH replacement candidate for hypoparathyroidism. The company is testing newer N-Tab formulations intended to support once- or twice-daily dosing and is collaborating with a third party on another peptide for the indication.
- In September 2023, Entera entered a research collaboration with OPKO Biologics to develop oral GLP-2 and oxyntomodulin tablets. In vivo PK/PD data were expected in 2024.
- The company had 19 employees at December 31, 2023, including 17 full-time employees, with 15 in research and development.
Financial Performance and Key Metrics
| U.S. dollars in thousands, except per-share data | 2023 | 2022 | Change |
|---|---|---|---|
| Revenue | $0 | $134 | Down 100% |
| Research and development expense | $4,510 | $5,848 | Down 22.8% |
| General and administrative expense | $4,430 | $7,253 | Down 38.9% |
| Operating loss | $8,891 | $13,017 | Improved by $4,126 |
| Net loss | $8,889 | $13,071 | Improved by $4,182 |
| Basic and diluted loss per share | $0.31 | $0.45 | Improved |
| Net cash used in operating activities | $7,310 | $12,499 | Improved by $5,189 |
| Cash and cash equivalents at year-end | $11,019 | $12,309 | Down $1,290 |
| Accumulated deficit | $104,386 | $95,497 | Increased by $8,889 |
There was no product revenue. The 2022 revenue primarily reflected preclinical research and development services under the former Amgen collaboration, which was terminated effective May 2, 2023. No milestone revenue was recognized in 2023.
Research and development expense declined primarily because of lower preclinical activity, materials costs and employee compensation, partially offset by higher costs for the Phase 1 PK study involving the new-generation platform and EB612 formulations. General and administrative expense declined due to lower compensation, professional fees, board fees and directors’ and officers’ insurance costs.
Share-based compensation expense was $1.689 million in 2023, compared with $2.247 million in 2022. The company reported no debt balance in the consolidated balance sheet; its principal contractual financing obligations were operating leases totaling $454,000 in future undiscounted payments as of December 31, 2023.
Cash Flow, Liquidity and Capitalization
- Operating cash burn was $7.3 million in 2023. Investing cash use was $17,000, and financing activities provided $6.036 million.
- Financing proceeds primarily consisted of approximately $5.8 million net proceeds from the December 2023 private placement of shares, pre-funded warrants and warrants.
- The December 2023 offering included 7,916,879 investor warrants exercisable at $1.00 per share for five years. If exercised for cash, these warrants could provide approximately $7.9 million of additional proceeds, although exercise is not assured.
- Shares outstanding increased from 28.81 million at December 31, 2022 to 35.48 million at March 1, 2024, reflecting the private placement and related securities.
- Management estimated that cash and cash equivalents would fund current operations through the second quarter of 2025, including ongoing R&D, completion of the new-generation Phase 1 study and OPKO collaborative work. This estimate excludes the cost of the proposed EB613 Phase 3 study.
- Management and the independent auditor reported substantial doubt about the company’s ability to continue as a going concern. Additional financing or strategic collaborations are required, and the filing states that no committed external funding source exists other than the ATM program.
Material Changes Versus the Prior Comparable Period
- Revenue fell from $134,000 to zero following termination of the Amgen collaboration.
- Operating loss decreased 31.6%, and net loss decreased 32.0%, primarily due to reduced R&D and general and administrative spending.
- Operating cash burn improved from $12.5 million to $7.3 million, but year-end cash still declined by approximately $1.3 million.
- The company raised approximately $6.6 million gross in a December 2023 private placement, resulting in significant share-count and warrant dilution.
- Entera added the OPKO GLP-2 and oxyntomodulin research collaboration and continued development of new EB612 formulations.
- The company regained Nasdaq’s $1.00 minimum bid-price compliance in February 2024 after receiving an additional compliance period in December 2023.
Guidance, Outlook, Risks and Unusual Items
- Management expects continued operating losses and significant additional funding needs for clinical development, particularly the EB613 Phase 3 program.
- EB613 Phase 3 timing depends on regulatory clarification, endpoint qualification, study readiness and financing. The filing does not provide a clear Phase 3 budget.
- The company has never obtained regulatory approval for a product, completed a pivotal trial or generated commercial product revenue.
- Key risks include clinical failure, uncertain regulatory review, safety findings, patient enrollment, manufacturing scale-up, reliance on contract manufacturers and collaborators, intellectual-property challenges, reimbursement uncertainty and competition from injectable or other therapies.
- The company’s principal operations and many employees are in Israel. Entera stated that the Israel-Hamas War had not materially affected operations through the filing date, but warned that the duration and intensity of the conflict, military reserve service and regional instability could disrupt personnel, manufacturing, clinical programs and financing.
- Israeli Innovation Authority obligations include potential royalties on future sales, generally beginning at 3%, and restrictions on transferring IIA-funded technology or manufacturing outside Israel. The disclosed royalty amount before interest and potential increases was approximately $460,000 at December 31, 2023.
- The company paid $83,000 of IIA royalties through December 31, 2023 and paid an additional $13,000 liability in February 2024.
- On January 1, 2024, the company granted 758,331 options to non-executive directors. Additional consulting arrangements and restricted stock unit grants were entered into in February 2024.
- The filing states that disclosure controls and internal control over financial reporting were effective as of December 31, 2023. The auditor was not required to provide an internal-control attestation because Entera is a non-accelerated filer.
Most Important Facts for Investors to Verify
- Whether the company raises sufficient capital or secures a strategic partner to fund the EB613 Phase 3 trial.
- Current cash burn, updated cash runway and any subsequent equity, debt, ATM or warrant-financing activity.
- FDA and SABRE endpoint qualification developments and the actual timing and design of the EB613 Phase 3 study.
- Results of the new-generation EB612 PK study and the OPKO GLP-2 and oxyntomodulin in vivo PK/PD programs.
- Potential dilution from outstanding options, pre-funded warrants, investor warrants, broker warrants and finder warrants.
- Whether Entera maintains Nasdaq listing compliance and whether it receives additional notices concerning the minimum bid price.
- Material effects of the Israel-Hamas War, military service, supply-chain conditions or third-party manufacturing issues on operations and clinical timelines.
- Future revenue potential, recognizing that the company had no product sales revenue and no approved product as of the filing date.