Business Context and Reporting Period
The provided filing is Aileron Therapeutics, Inc.’s unaudited Form 10-Q for the quarter ended March 31, 2021, not Rein Therapeutics, Inc. Aileron is a clinical-stage oncology company developing ALRN-6924, an MDM2/MDMX dual inhibitor intended to protect healthy cells from chemotherapy in patients with p53-mutated cancers. Common stock trades on the Nasdaq Capital Market under “ALRN.”
Financial Highlights
| Metric | Q1 2021 | Q1 2020 | Change |
|---|---|---|---|
| Revenue | $0 | $0 | None |
| Research and development expense | $4.316 million | $4.069 million | +$0.247 million |
| General and administrative expense | $2.673 million | $2.807 million | -$0.134 million |
| Total operating expenses | $6.989 million | $6.876 million | +$0.113 million |
| Net loss | $6.975 million | $6.748 million | Loss increased $0.227 million |
| Net loss per share | $0.08 | $0.24 | Improved due primarily to share-count increase |
| Operating cash flow | $(6.476) million | $(5.672) million | Cash use increased $0.804 million |
At March 31, 2021, cash and cash equivalents were $19.283 million, investments were $44.068 million, and total cash, cash equivalents and investments were $63.351 million. Total assets were $64.671 million and stockholders’ equity was $61.419 million. Total liabilities were $3.252 million, including $0.384 million of PPP loan obligations and $0.217 million of operating lease liabilities.
Cash, cash equivalents and restricted cash increased by $11.669 million during the quarter. Financing activities provided $55.604 million, primarily from equity issuances; investing activities used $37.459 million, mainly for purchases of short-term investments.
Material Changes Versus the Prior Comparable Period
- Research and development expense increased 6.1% to $4.316 million, primarily because of higher ALRN-6924 clinical development spending, partly offset by lower employee, facility and other development costs.
- General and administrative expense declined 4.8% to $2.673 million, reflecting lower headcount and facility costs, partly offset by higher professional-services spending.
- Net loss increased 3.4% to $6.975 million. The prior-year quarter included a $66,000 gain on sale of property and equipment and higher interest income.
- Equity financing materially strengthened liquidity. During the quarter, the company issued 46.4 million common shares and recorded approximately $59.0 million of gross proceeds, or $55.6 million of net financing cash flow after issuance costs and related deductions.
- Shares outstanding increased from 43.8 million at December 31, 2020 to 90.2 million at March 31, 2021, creating substantial dilution for existing holders.
Guidance, Outlook, Risks and Unusual Items
- Management expected to initiate a randomized, placebo-controlled, double-blind Phase 1b ALRN-6924 trial in p53-mutated non-small cell lung cancer during the second quarter of 2021, with interim data from 10 to 20 patients targeted by year-end 2021 and topline results for approximately 60 patients targeted for mid-2022.
- Management expected to present results from the Phase 1b small-cell lung cancer trial and the healthy-volunteer study during the second half of 2021.
- Based on the current operating plan, management stated that the $63.4 million of cash, cash equivalents and investments at March 31, 2021 would fund operating expenses into the second half of 2023. Management also stated that these resources would not fund completion of all planned development or commercialization activities.
- The company has no product revenue and expects continuing losses and negative operating cash flow for the foreseeable future. Additional equity, debt, collaboration or licensing financing will be required; financing may be unavailable or dilutive.
- COVID-19 had not significantly affected the quarter’s results, but it had delayed the healthy-volunteer study, contributed to higher-than-expected screening failures in the small-cell lung cancer trial, and could disrupt patient enrollment, suppliers, regulatory activities and clinical timelines.
- ALRN-6924 remains the company’s primary product candidate, making the company highly dependent on its clinical, regulatory and commercial success. Key risks include clinical failure, adverse events, enrollment challenges, companion-diagnostic requirements, third-party manufacturing dependence, intellectual-property challenges and competition, including recently approved trilaciclib.
- The company entered into a sublease beginning April 1, 2021, with an approximate monthly base rent of $12,000 through March 31, 2023, subject to earlier termination conditions.
- The company reported no material legal proceedings and no off-balance-sheet arrangements. Management concluded that disclosure controls and procedures were effective as of March 31, 2021.
Important Facts for Investors to Verify
- Confirm the issuer identity: the supplied filing is for Aileron Therapeutics, Inc., whereas the request identifies Rein Therapeutics, Inc.
- Verify the timing, enrollment, interim results and final results of the planned NSCLC and healthy-volunteer studies.
- Assess whether the stated cash runway into the second half of 2023 remains valid after changes in trial scope, spending, enrollment, financing and market conditions.
- Review the substantial equity dilution from the January 2021 registered direct offering, ATM sales and Lincoln Park Capital transactions, as well as remaining financing capacity.
- Evaluate clinical efficacy and safety data for ALRN-6924, including the significance of preliminary results and the historical tumor lysis syndrome death disclosed from an earlier AML/MDS trial.
- Monitor the potential requirement for, and development of, a p53 companion diagnostic and the company’s ability to obtain regulatory approval.
- Review third-party manufacturing capacity, supply continuity and the impact of COVID-19 or other disruptions on clinical execution.