Business Context and Reporting Period
The filing is Aileron Therapeutics, Inc.’s unaudited Form 10-Q for the quarter and six months ended June 30, 2021. The request metadata identifies Rein Therapeutics, Inc.; this discrepancy should be verified. Aileron is a clinical-stage oncology company focused on ALRN-6924, an MDM2/MDMX dual inhibitor being developed as a chemoprotective agent for patients with p53-mutated cancers.
During the second quarter, Aileron initiated a randomized, double-blind, placebo-controlled Phase 1b trial in advanced p53-mutated non-small cell lung cancer. The company also continued a healthy-volunteer study and planned to present final small-cell lung cancer Phase 1b results and initial healthy-volunteer results in the third quarter of 2021.
Financial Performance and Position
| Metric | Three Months Ended June 30, 2021 | Three Months Ended June 30, 2020 | Six Months Ended June 30, 2021 | Six Months Ended June 30, 2020 |
|---|---|---|---|---|
| Revenue | $0 | $0 | $0 | $0 |
| Research and development expense | $3.853 million | $2.488 million | $8.169 million | $6.557 million |
| General and administrative expense | $2.156 million | $1.912 million | $4.829 million | $4.719 million |
| Total operating expenses | $6.009 million | $4.400 million | $12.998 million | $11.276 million |
| Net loss | $5.686 million | $4.390 million | $12.661 million | $11.138 million |
| Net loss per share | $0.06 | $0.14 | $0.15 | $0.38 |
There were no meaningful operating margins because the company generated no revenue and remained loss-making. Six-month research and development expense increased by $1.612 million, primarily due to higher clinical-development spending for ALRN-6924, partly offset by completion of a prior Phase 2a expansion cohort and lower drug-development, research and facility costs.
- Six-month cash used in operating activities was $10.239 million, compared with $10.744 million in the prior-year period.
- Investing activities used $42.257 million, primarily reflecting $51.105 million of investment purchases, partly offset by $9.000 million of investment maturities or sales.
- Financing activities provided $55.630 million, mainly from common-stock issuances.
- Cash, cash equivalents and restricted cash increased to $10.773 million at June 30, 2021, from $7.639 million at December 31, 2020.
- Cash, cash equivalents and investments totaled $59.479 million at June 30, 2021.
- Total assets were $60.531 million and total liabilities were $4.401 million at June 30, 2021.
- The Paycheck Protection Program loan was forgiven in full in May 2021, producing approximately $0.304 million of other income during the six-month period.
- The company reported no material legal proceedings and no off-balance-sheet arrangements.
Material Changes Versus the Prior Comparable Period
- Quarterly operating expenses increased 36.6%, and six-month operating expenses increased 15.3%, driven primarily by increased research and development activity.
- Quarterly net loss increased by $1.296 million, while six-month net loss increased by $1.523 million.
- Despite higher absolute losses, quarterly and six-month loss per share improved because the weighted-average share count increased substantially following equity financings.
- Common shares outstanding increased from 43.8 million at December 31, 2020 to 90.5 million at June 30, 2021. The company raised approximately $55.6 million net from common-stock issuances during the first six months.
- Investments increased from $6.759 million at year-end 2020 to $48.731 million at June 30, 2021, reflecting deployment of financing proceeds into short-term investments.
- The company entered into a new office sublease beginning April 1, 2021, with a term extending no later than March 31, 2023 and monthly base rent of approximately $12 thousand.
Guidance, Outlook, Risks and Unusual Items
Management stated that its cash, cash equivalents and investments of approximately $59.5 million at June 30, 2021 were expected to fund operating expenses into the second half of 2023 under the current operating plan. Management also stated that these resources would not fund all planned activities or completion of ALRN-6924 development and commercialization, and that substantial additional financing will be required.
- Management expected to report interim safety data from the NSCLC trial late in the fourth quarter of 2021 and top-line results in mid-2022.
- The company expected to present final Phase 1b SCLC results and initial healthy-volunteer results in the third quarter of 2021.
- Planned investments include chemistry, manufacturing and controls development and a potential p53 companion diagnostic.
- Key risks include clinical-trial failure or delay, patient-enrollment challenges, uncertain regulatory approval, the possible need for a companion diagnostic, reliance on contract research organizations and third-party manufacturers, intellectual-property disputes, competition and the need for additional capital.
- COVID-19 had not materially affected second-quarter results, but it had previously delayed the healthy-volunteer study, contributed to higher-than-expected screening failures in the SCLC trial and could disrupt enrollment, supplies, regulatory activities and financing.
- The company relies on a limited number of third-party manufacturers and had no redundant supply arrangement for ALRN-6924’s active pharmaceutical ingredient.
- The company expects continuing operating losses and has an accumulated deficit of $231.953 million at June 30, 2021. Profitability may never be achieved.
- Nasdaq listing compliance remains a risk, although the company stated it had remained compliant with the $1.00 minimum bid-price requirement since June 2020.
Important Facts for Investors to Verify
- Confirm whether the filing pertains to Aileron Therapeutics, Inc. or Rein Therapeutics, Inc.; the filing text consistently identifies Aileron and ticker ALRN.
- Verify enrollment progress, interim safety data and final results for the NSCLC, SCLC and healthy-volunteer studies.
- Assess whether the projected cash runway into the second half of 2023 remains valid after actual trial spending and any changes to development plans.
- Monitor additional equity financing, dilution and use of the remaining ATM and Lincoln Park Capital financing capacity.
- Review regulatory feedback regarding the ALRN-6924 development program and the potential requirement for a p53 companion diagnostic.
- Evaluate the durability of third-party manufacturing and supply arrangements for ALRN-6924.
- Confirm continued Nasdaq Capital Market listing compliance and the impact of outstanding warrants, options and other potentially dilutive securities.