Aura Biosciences, Inc. — Q1 2022 Form 10-Q
Reporting period: Three months ended March 31, 2022. The filing was signed May 12, 2022. Aura is a clinical-stage biotechnology company developing AU-011, its lead virus-like drug conjugate, initially for primary choroidal melanoma. The company reported no product revenue and has no approved products.
Financial performance and liquidity
| Metric | Q1 2022 | Q1 2021 / comparison |
|---|---|---|
| Revenue | None | None |
| Research and development expense | $8.3 million | $4.2 million; increased $4.1 million |
| General and administrative expense | $4.5 million | $1.7 million; increased $2.8 million |
| Total operating expenses / operating loss | $12.8 million | $5.9 million |
| Net loss | $12.8 million | $5.9 million |
| Net loss per share, basic and diluted | $0.44 | $20.62 |
| Net cash used in operating activities | $15.2 million | $5.1 million |
| Cash and cash equivalents | $108.4 million | $149.1 million at December 31, 2021 |
| Marketable securities | $24.9 million | None reported at December 31, 2021 |
| Current assets / current liabilities | $139.6 million / $5.0 million | At March 31, 2022 |
| Total liabilities | $5.3 million | Includes $0.8 million of operating lease liabilities and $0.1 million warrant liability |
Cash, cash equivalents and marketable securities totaled $133.3 million at quarter-end. Net cash used in investing activities was $25.5 million, including $24.9 million of marketable-security purchases and $0.6 million of property and equipment purchases. Financing provided $17,000, primarily from option exercises; there was no reported debt balance. Profitability and operating margins are not meaningful because Aura had no revenue and incurred operating losses.
Material changes and management outlook
- Operating expenses more than doubled year over year. R&D growth reflected AU-011 manufacturing and development costs and higher personnel expenses; G&A growth reflected staffing and public-company costs.
- Management said the existing cash and marketable securities were expected to fund operations into 2024, subject to assumptions that could prove incorrect. The financial-statement note separately states that resources were expected to cover operating expenses and capital expenditures for at least 12 months from issuance. The filing says additional capital will be needed beyond the current funding horizon and that available funding terms or availability are uncertain.
- Clinical plans included presenting six- to twelve-month safety and efficacy data for the ongoing AU-011 suprachoroidal Phase 2 dose-escalation trial during 2022, deciding on route of administration, and initiating a pivotal trial in the second half of 2022.
- Aura also planned a U.S. IND filing for choroidal metastases and initiation of a Phase 1a trial in non-muscle invasive bladder cancer in the second half of 2022, with bladder-cancer trial data planned for 2023.
- Management cited prior Phase 1b/2 intravitreal-trial results, including reduced tumor growth in patients with prior active growth and tumor control with visual-acuity preservation in a majority of patients. These early results do not establish pivotal-trial success or regulatory approval.
Risks, contingencies and unusual items
- Aura has accumulated losses of $165.0 million, expects continued losses, and depends heavily on AU-011, its only product candidate at the time of filing. It has not completed a pivotal trial or commercialized a product.
- Development, regulatory approval and commercialization are uncertain. AU-011 involves a biologic, laser activation and delivery devices, creating added regulatory and manufacturing complexity. The company also identified potential trial, patient-enrollment, safety and manufacturing-transfer delays.
- Aura relies on third parties for clinical work and manufacturing and reported single-source reliance for key AU-011 materials and manufacturing stages. It had experienced minor manufacturing delays from a vendor supply constraint.
- COVID-19 and broader supply-chain or economic disruptions could affect trials, vendors, manufacturing and access to additional capital. Aura said its business had not been materially affected by COVID-19 to date.
- Potential future financing could dilute shareholders, add debt restrictions or require the company to grant rights to its technology or candidates. No committed external funding source was reported.
- Clinical-stage program risks include possible adverse effects; the filing identifies pigmentary changes around the tumor margin and vision loss among side effects observed in AU-011 trials.
- The company disclosed no material litigation, no material subsequent events, and no material changes to internal control over financial reporting. Management concluded disclosure controls were effective as of March 31, 2022.
Key facts investors should verify
- Whether the planned 2022 trial updates, route-of-administration decision, pivotal-trial start and additional-indication milestones were achieved, and how final data compare with reported early results.
- Whether the stated funding horizon into 2024 remains supportable; review cash burn, trial and manufacturing costs, and any need for new financing.
- Progress and risks in transferring AU-011 manufacturing to commercial-scale production, including the company’s single-source dependencies.
- Future regulatory requirements for AU-011 and its delivery and laser components, and any changes to trial design, timing or eligible patient population.
- Potential dilution from equity awards and future financing. The filing reported 29,217,236 common shares outstanding at March 31, 2022 and 29,259,976 at May 9, 2022.