Larimar Therapeutics, Inc. — Q1 2021 Form 10-Q
Reporting period: Three months ended March 31, 2021; filed May 10, 2021. Larimar is a clinical-stage biotechnology company developing treatments for rare diseases. Its lead candidate, CTI-1601, is an investigational therapy for Friedreich’s ataxia. The company reported no product revenue.
Financial results and liquidity
| Metric | Q1 2021 | Q1 2020 |
|---|---|---|
| Revenue | None | None |
| Research and development expense | $9.0 million | $5.0 million |
| General and administrative expense | $3.1 million | $1.7 million |
| Total operating expenses | $12.1 million | $6.7 million |
| Net loss | $12.1 million | $6.7 million |
| Basic and diluted loss per share | $0.76 | $1.10 |
| Cash used in operating activities | $11.2 million | $8.9 million |
At March 31, 2021, cash and cash equivalents were $62.2 million and marketable debt securities were $19.2 million, totaling $81.4 million available for operations. Restricted cash was an additional $1.3 million. Total assets were $93.0 million and total liabilities were $14.2 million, including $6.4 million of operating lease liabilities. The filing reports no financial borrowings. There were no cash flows from financing activities in Q1 2021; investing activities provided $5.3 million, primarily from maturities of marketable securities. Gross margin is not applicable because the company had no revenue.
Changes versus prior comparable period
- Net loss increased by $5.4 million year over year, as operating expenses rose by $5.4 million.
- R&D expense increased $4.0 million, primarily due to clinical trial costs, clinical supply manufacturing, personnel, stock compensation, toxicology studies, and laboratory costs. Both SAD and MAD trials and related analysis were underway in Q1 2021, compared with the SAD trial in Q1 2020.
- G&A expense increased $1.5 million, mainly reflecting public-company insurance and legal/consulting costs, higher stock compensation, and increased headcount; lower merger-related accounting and audit expense partially offset the increase.
- Operating cash use increased $2.3 million. The year-over-year comparison reflects Chondrial’s historical results before the May 2020 merger; the merger was accounted for as a reverse acquisition, with Chondrial as the accounting acquirer.
Outlook, commentary, and risks
- Management expected to announce MAD trial topline results in Q2 2021 and planned to initiate the JIVE open-label extension and a pediatric MAD trial in the second half of 2021, subject to available nonclinical information and other conditions.
- Preliminary SAD data indicated single doses up to 100 mg appeared generally well tolerated; reported injection-site events were mild and transient, with no serious adverse events. The filing cautions that topline or preliminary results may differ materially from final data.
- Nonclinical studies reported mortality in an ongoing 180-day nonhuman-primate study at the highest dose levels. The company said it had informed the FDA and was continuing dosing and data evaluation. A mortality in a separate 90-day study was attributed to bacterial meningitis and assessed as unrelated to the drug.
- Management expected cash, cash equivalents, and marketable securities to fund operations for at least 12 months from issuance of the interim financial statements. The company expects ongoing losses and rising R&D and G&A costs and may need additional financing; financing may be unavailable or dilutive. It had not generated revenue and did not expect product sales for several years, if at all.
- COVID-19 had temporarily halted Phase 1 trials in 2020; dosing later resumed and both Phase 1 trials were completed. Further disruptions, including travel or hospital restrictions, could delay future studies.
- Other key risks include clinical and regulatory uncertainty, manufacturing scale-up and reliance on a small number of third-party manufacturers, competition, intellectual-property protection, and the ability to retain personnel. The company reported no material pending legal proceedings and no material change to other previously disclosed risk factors apart from the preliminary-data risk.
Important facts for investors to verify
- Final MAD trial safety and efficacy data, and how they compare with preliminary disclosures.
- Regulatory feedback and whether the reported nonhuman-primate mortality affects the timing or design of further clinical studies.
- Progress and timing of the planned JIVE and pediatric trials, including any COVID-19-related or recruitment delays.
- Cash burn, subsequent financing activity, and whether the stated minimum 12-month runway remains valid as development spending increases.
- Manufacturing capacity, supply continuity, and progress toward the planned lyophilized drug product.