Larimar Therapeutics, Inc. — Q3 2021 Form 10-Q
Reporting period: Three and nine months ended September 30, 2021. Larimar is a clinical-stage biotechnology company developing treatments for rare diseases. It has no product revenue; its lead candidate is CTI-1601 for Friedreich’s ataxia (FA).
Financial performance and liquidity
| Metric | Q3 2021 | Q3 2020 | Nine months 2021 | Nine months 2020 |
|---|---|---|---|---|
| Revenue | $0 | $0 | $0 | $0 |
| Research and development expense | $14.0m | $6.9m | $32.1m | $20.8m |
| General and administrative expense | $2.7m | $3.4m | $9.3m | $7.6m |
| Total operating expenses | $16.7m | $10.3m | $41.4m | $28.4m |
| Net loss | $16.8m | $10.3m | $41.5m | $28.3m |
| Net loss per share, basic and diluted | $0.92 | $0.64 | $2.48 | $2.69 |
Margins are not meaningful because the company had no revenue. For the nine months, operating cash use was $34.2m, compared with $32.3m in 2020. Investing activities provided $17.7m and financing activities provided $19.9m, primarily from ATM share sales. At September 30, cash and cash equivalents were $71.5m and marketable debt securities were $6.5m, totaling $78.0m; current assets were $81.3m. Total liabilities were $15.9m, including $6.1m of operating lease liabilities. No borrowings are reported. Accumulated deficit was $107.1m.
In July, Larimar sold 2.34m shares through its at-the-market program for $19.9m net proceeds. Approximately $29.2m of capacity remained under the program as of November 10, 2021. Management said available cash, cash equivalents and marketable securities were expected to fund operations for at least 12 months from issuance of the financial statements.
Changes versus prior comparable periods
- Q3 R&D expense increased $7.1m year over year, mainly from higher clinical-supply manufacturing costs; clinical-trial costs declined. G&A decreased $0.7m, principally due to lower professional fees, partly offset by higher stock-based compensation.
- Nine-month R&D expense increased $11.3m, reflecting higher manufacturing, non-clinical and laboratory, personnel, stock-based compensation and clinical-trial costs. G&A increased $1.7m, driven mainly by stock compensation, public-company costs and personnel, partly offset by lower professional fees.
- Nine-month net loss grew by $13.2m. Cash used in operations rose by $1.8m. Comparisons are affected by the 2020 merger and related financing; Chondrial is the accounting acquirer, and its results are presented as historical results before the merger.
Outlook, risks and unusual items
- Larimar reported positive topline Phase 1 SAD and MAD findings: daily CTI-1601 injections for up to 13 days increased FXN levels dose-dependently in evaluated tissues, and no serious adverse events were reported in those trials.
- The FDA placed the CTI-1601 program on clinical hold on May 25, 2021 after mortalities at the highest dose levels in a 180-day non-human-primate toxicology study. Dosing in that study was completed in July; data analysis was ongoing. The company anticipated an FDA response no earlier than Q1 2022 and said further data or testing may be required.
- Larimar expected to begin its Jive open-label extension and pediatric MAD trials in the first half of 2022, conditional on the toxicology results and FDA response. Timing could change; no interventional trials had patients enrolled or enrolling as of the report.
- The company expects continuing operating losses and needs additional capital over time. Funding may come from equity, debt, collaborations or other arrangements, but may not be available on acceptable terms. Increased expenses, clinical and regulatory uncertainty, manufacturing scale-up and reliance on a small number of third-party manufacturers are key risks.
- COVID-19-related restrictions, supply disruptions and trial delays remain possible. The filing reports no material pending or threatened legal proceedings and states disclosure controls were effective.
Investor verification priorities
- Review subsequent FDA communications, the completed primate toxicology findings, and whether the clinical hold was lifted and on what conditions.
- Confirm the timing and status of the planned Jive and pediatric trials, and any changes to the clinical development plan.
- Track quarterly operating cash use, cash runway, additional financing needs, and ATM share sales and resulting dilution.
- Assess manufacturing readiness and supply concentration, including progress on the planned lyophilized product formulation.