Edgewise Therapeutics, Inc. — Q1 2022 Form 10-Q
Reporting period: Three months ended March 31, 2022. Financial statements are unaudited. Edgewise is a clinical-stage biopharmaceutical company developing treatments for rare muscle disorders; it has no approved products and has generated no revenue.
Key financial metrics
| Metric | Q1 2022 | Q1 2021 / comparison |
|---|---|---|
| Revenue | None | None |
| Research and development expense | $11.1 million | $5.4 million; up $5.8 million |
| General and administrative expense | $3.7 million | $1.5 million; up $2.2 million |
| Total operating expenses | $14.8 million | $6.9 million; up $8.0 million |
| Net loss | $14.7 million | $6.8 million |
| Net loss per share, basic and diluted | $0.30 | $4.37 |
| Net cash used in operating activities | $12.6 million | $6.1 million |
| Cash and cash equivalents | $34.5 million | $15.6 million at Dec. 31, 2021 |
| Marketable securities | $231.4 million | $265.2 million at Dec. 31, 2021 |
| Cash, cash equivalents and marketable securities | $265.8 million | — |
| Total assets / total liabilities | $272.7 million / $12.4 million | — |
| Debt | None outstanding | — |
Revenue-based margins are not applicable because the company has no product revenue. Net loss per share is not directly comparable year over year: the 2021 weighted-average share count was much lower, before the IPO share conversion and issuance were reflected for a full period. Q1 2022 comprehensive loss was $16.1 million, including $1.4 million of unrealized losses on available-for-sale securities, primarily attributed to interest-rate and market-credit-spread changes.
Changes versus the prior comparable period
- Operating expenses more than doubled, led by higher EDG-5506 clinical and manufacturing costs, expanded discovery and preclinical work, increased personnel costs, and public-company costs.
- R&D spending rose $5.8 million: $1.8 million for the EDG-5506 clinical program, $2.3 million for discovery and preclinical work, and $1.7 million for internal personnel-related costs.
- G&A increased $2.2 million, primarily from employee-related costs and stock-based compensation, directors’ and officers’ insurance, and professional and administrative costs.
- Operating cash use increased to $12.6 million from $6.1 million. Investing activities provided $31.4 million, mainly from marketable-security maturities and sales; financing activities provided $0.1 million, primarily stock-option exercises. Cash and cash equivalents increased by $18.9 million during the quarter.
Outlook, commentary and notable items
- Management estimated existing cash, cash equivalents and marketable securities would fund operations and liquidity needs for at least 12 months from issuance of the financial statements. The company expects significant future losses and increased R&D spending; it will need substantial additional capital to develop candidates and pursue commercialization.
- EDG-5506 completed Phase 1, with positive topline results previously announced for the healthy-volunteer multiple-ascending-dose portion and the BMD Phase 1b portion. The company anticipated Phase 2 trials in BMD in Q2 2022 and DMD in the second half of 2022. Its one-year open-label BMD study was fully enrolled.
- EDG-5440 and EDG-002 remained preclinical. The company planned to initiate IND-enabling studies for EDG-002 in 2022.
- After quarter-end, the company filed a shelf registration statement allowing up to $400 million in securities offerings and established an at-the-market program to sell up to $125 million of common stock. The shelf became effective May 5, 2022. Any sales could dilute existing shareholders; no ATM sales are reported in the supplied filing text.
- The company entered a new Boulder office and laboratory lease with an initial 8.2-year term and approximately $3.3 million of undiscounted lease payments. It also provided a $0.8 million standby letter of credit, subject to a potential reduction to $0.5 million after 36 months if specified conditions are met.
- COVID-19 had disrupted trial operations, enrollment, supply-chain activities, and data collection and analysis, creating potential for further delays and cost variability. Other major risks include clinical and regulatory uncertainty, dependence on EDG-5506, reliance on third-party manufacturers and CROs, competition, and the need for further financing.
- No material legal proceedings were pending or threatened, and management concluded disclosure controls and procedures were effective at a reasonable-assurance level. The company reported no material change in internal control over financial reporting during the quarter.
Important facts for investors to verify
- Whether the planned BMD and DMD Phase 2 trials began on schedule, and the current enrollment, design, safety and data-readout timelines.
- Whether available liquidity and operating costs remain consistent with management’s stated runway, especially as clinical programs advance.
- Whether the company has sold shares under the $125 million ATM program, and the resulting dilution and cash proceeds.
- Whether EDG-5506 clinical findings remain positive as additional data are collected and verified, and whether COVID-19 or manufacturing issues affect execution.
- The extent of unrealized marketable-security losses and any subsequent changes in portfolio value or liquidity.