Eledon Pharmaceuticals, Inc. — Q2 2022 Form 10-Q
Reporting period: Quarter and six months ended June 30, 2022; filed August 11, 2022. Eledon is a clinical-stage biopharmaceutical company with no approved products or product-sales revenue. Its lead candidate is tegoprubart, an anti-CD40L antibody being developed for transplant rejection, autoimmune disease and ALS.
Financial performance and position
| Metric | Q2 2022 / June 30, 2022 | Comparable period / prior year-end |
|---|---|---|
| Revenue | None reported | None reported |
| Research and development expense | $5.7 million for Q2; $12.4 million for six months | $4.2 million and $9.9 million, respectively, in 2021 |
| General and administrative expense | $3.5 million for Q2; $6.8 million for six months | $3.7 million and $7.1 million, respectively, in 2021 |
| Net loss | $9.2 million for Q2; $19.1 million for six months | $7.4 million and $15.9 million, respectively, in 2021 |
| Loss per share | $0.65 for Q2; $1.34 for six months | $0.50 and $1.07, respectively, in 2021 |
| Operating cash used | $14.4 million for six months | $12.6 million in 2021 |
| Cash and cash equivalents | $70.5 million | $84.8 million at December 31, 2021 |
| Working capital | $69.5 million | Not stated for the comparable date |
| Total liabilities | $5.3 million, including $0.6 million in operating lease liabilities | $6.6 million at December 31, 2021 |
There is no product revenue, so a revenue-based margin is not applicable. The company reported no conventional borrowing or credit facility; liabilities include leases and a deferred tax liability. Accumulated deficit was $134.0 million.
Material changes versus prior comparable periods
- Q2 operating expenses increased $1.3 million year over year, principally from higher R&D spending; Q2 net loss widened $1.9 million. For the first half, operating expenses rose $2.2 million and net loss widened $3.2 million.
- Six-month R&D expense increased $2.5 million, primarily due to clinical development costs, consulting and personnel; lower clinical-material production costs partly offset the increase. G&A declined $0.3 million, mainly due to lower personnel costs.
- Six-month operating cash use increased $1.8 million year over year. Cash declined $14.4 million from year-end 2021; there was no financing cash flow in the first half of 2022.
Outlook, development, risks and contingencies
- Management said cash on hand was expected to fund anticipated needs for at least 12 months from the financial statements’ issuance. However, the company said it could not continue ALS clinical development without additional financing. It expects ongoing losses and requires further capital to advance its programs.
- In May 2022, Eledon reported positive topline Phase 2a ALS results: the study met safety and tolerability endpoints, with no drug-related serious adverse events reported. Biomarker changes and a trend in ALS functional decline were exploratory; the study was not designed or powered to establish clinical efficacy.
- The first participant in the Phase 2a IgA nephropathy study was dosed in May 2022. The kidney-transplant Phase 1b and islet-transplant Phase 2a studies had not enrolled participants by June 30, 2022.
- The company cited clinical-development uncertainty, patient enrollment, reliance on contract manufacturers and research organizations, COVID-19-related disruption, inflation and market volatility, and the risk that financing may not be available on acceptable terms. Failure to raise funds could delay or suspend programs and dilute shareholders.
- The ATM program had not been used through June 30, 2022; the company stated that the baby-shelf rules limited available sales to $14.5 million at that date.
- No material legal proceedings or contingencies requiring accrual were reported. The filing states there were no material changes in internal control over financial reporting and management considered disclosure controls effective.
Important facts for investors to verify
- Current cash runway and expected spending, especially whether financing is secured to continue ALS development.
- Full clinical results and follow-up from the ALS Phase 2a study, and the design, enrollment and milestones of subsequent studies.
- Enrollment and timing updates for the kidney-transplant, islet-transplant and IgA nephropathy programs.
- Actual use and remaining capacity of the ATM program, and potential dilution from future equity financing or outstanding warrants and preferred securities.
- Whether clinical, manufacturing, regulatory or macroeconomic delays change the company’s stated cash-needs outlook.