Entrada Therapeutics, Inc. — Q3 2022 Form 10-Q
Reporting period: Three and nine months ended September 30, 2022; filed November 7, 2022. Entrada is a preclinical-stage biotechnology company developing intracellular therapeutics using its Endosomal Escape Vehicle (EEV) platform. It has not generated revenue or initiated clinical studies.
Financial performance and position
| Metric | Q3 2022 | Q3 2021 | Nine months 2022 | Nine months 2021 |
|---|---|---|---|---|
| Revenue | $0 | $0 | $0 | $0 |
| Research and development expense | $19.0m | $10.5m | $50.9m | $23.6m |
| General and administrative expense | $7.0m | $3.9m | $20.7m | $9.1m |
| Total operating expenses | $25.9m | $14.4m | $71.7m | $32.7m |
| Net loss | $25.1m | $14.4m | $70.0m | $32.7m |
| Net loss per share, basic and diluted | $0.80 | $9.78 | $2.24 | $24.18 |
Cash flow: Net cash used in operating activities was $66.5m for the first nine months of 2022, versus $30.3m in 2021. Investing activities used $167.4m, primarily reflecting purchases of marketable securities, net of maturities; financing provided $0.1m, mainly from stock-option exercises. Cash, cash equivalents and restricted cash were $57.3m at September 30.
Liquidity and balance sheet: Cash and cash equivalents were $53.3m and marketable securities were $162.3m, totaling $215.6m of cash, cash equivalents and marketable securities. Total assets were $274.5m; total liabilities were $41.2m, including $28.0m of operating lease obligations. The filing reports no borrowings or other financial debt. Accumulated deficit was $163.7m. Available-for-sale securities had $2.7m of unrealized losses recorded in accumulated other comprehensive loss; the company attributed these mainly to interest-rate changes and expected recovery at maturity.
Margins: Not meaningful because the company had no revenue.
Changes versus the prior comparable period
- Q3 net loss increased by $10.7m year over year; nine-month net loss increased by $37.3m.
- R&D expense rose $8.4m in Q3 and $27.4m for the nine-month period, mainly from higher external preclinical and discovery costs and increased R&D headcount.
- G&A expense rose $3.1m in Q3 and $11.6m for the nine-month period, reflecting higher personnel, public-company insurance and professional-service costs.
- Interest and other income was $0.8m in Q3 and $1.7m for nine months, versus expense in the 2021 comparable periods, primarily due to interest earned on cash and investments.
- The company adopted lease accounting standard ASC 842 in 2022, recognizing operating lease right-of-use assets and liabilities. It also invested in marketable securities; none were held at year-end 2021.
Outlook, commentary and risks
- Management expected the September 30 cash, cash equivalents and marketable securities balance to fund operating expenses and capital spending into the second half of 2024. The financial-statement liquidity note separately says those resources are expected to cover at least the next 12 months from issuance; both statements are qualified by assumptions and uncertainty.
- Management expected operating losses and negative operating cash flows to continue, with R&D spending rising as programs advance. The company expects to need additional financing and may pursue equity, debt, collaborations, licensing or other arrangements; funding may be unavailable or dilutive or require relinquishing rights.
- Pipeline plans: submit the first IND for ENTR-601-44, for DMD patients amenable to exon 44 skipping, in Q4 2022; subject to regulatory feedback and potential clearance, initiate a single-ascending-dose study in healthy volunteers, with initial clinical data anticipated in the second half of 2023. An IND for ENTR-701 for DM1 was planned for the second half of 2023. The company also expected to nominate a second DMD candidate for exon 45 skipping in Q4 2022. These are forward-looking plans, not reported achievements.
- Key risks include the unproven EEV approach, preclinical and regulatory uncertainty, dependence on lead programs, manufacturing scale-up and third-party providers, competition, intellectual-property protection, patient recruitment, and access to capital. Inflation, capital-market conditions and possible COVID-19-related disruption could also affect costs, operations or financing.
- A new Boston lease for approximately 81,442 square feet has a term of about 10 years once commenced. The accounting commencement date had not occurred by September 30, 2022, so it was excluded from reported lease liabilities. Existing operating lease liabilities were $28.0m; the new lease adds future occupancy commitments. No material litigation was reported, and management concluded disclosure controls were effective as of quarter-end.
Investor verification priorities
- Check progress and timing of the ENTR-601-44 IND, regulatory feedback, planned first clinical study and anticipated initial data; verify the ENTR-701 and exon 45 program milestones.
- Reconcile the liquidity runway statements: MD&A projects funding into the second half of 2024, while the financial-statement note states at least 12 months from issuance.
- Monitor operating cash burn and rising R&D costs against the $215.6m September 30 cash and investment balance, including any subsequent financing or collaboration.
- Track the new headquarters lease build-out, reimbursement of reported pre-commencement costs, commencement timing and resulting lease obligations.
- Review marketable-security values and unrealized losses, as well as the company’s ability to preserve capital while advancing its preclinical programs.