ARS Pharmaceuticals, Inc. quarterly report, Q3 FY2021

Filing identity and reporting period

Important metadata discrepancy: The supplied filing is Silverback Therapeutics, Inc.’s Form 10-Q for the quarter ended September 30, 2021, not an ARS Pharmaceuticals, Inc. filing. The summary below reflects Silverback’s filing.

Business context and reporting period

Silverback was a clinical-stage biopharmaceutical company developing tissue-targeted therapeutics using its ImmunoTAC platform. Its lead candidate, SBT6050, was in a Phase 1/1b trial; SBT6290 and SBT8230 were in preclinical development. The filing covers the third quarter and nine months ended September 30, 2021; financial statements are unaudited.

Financial results and liquidity

At September 30, 2021, cash and cash equivalents were $300.7 million, investments were $39.9 million, and restricted cash was $0.35 million, totaling approximately $340.9 million. Total assets were $352.6 million and total liabilities were $20.4 million, including $6.2 million in lease liabilities. The $3.5 million term loan was fully repaid in May 2021. The company reported an accumulated deficit of $162.8 million. Gross margin is not applicable because the company had no revenue.

For the first nine months, investing activities used $40.8 million, principally for purchases of available-for-sale securities; financing activities provided $0.3 million. Cash, cash equivalents, and restricted cash decreased by $85.9 million. Management stated that available cash, cash equivalents, restricted cash, and investments were expected to fund anticipated cash requirements for at least 12 months after issuance of the financial statements; its operating-plan estimate was funding into 2024.

Material changes versus prior comparable periods

• Q3 operating expenses rose 180% year over year to $22.7 million; nine-month operating expenses rose 233% to $66.1 million.
• Nine-month R&D expense increased $29.9 million, reflecting greater SBT6050 and preclinical-program spending and increased personnel costs.
• Nine-month G&A expense increased $16.4 million, mainly from higher personnel costs, insurance, legal, and professional fees, including costs of operating as a public company.
• Nine-month net cash used in operations increased to $45.5 million from $20.1 million. The company also invested $40.0 million in securities; the comparable 2020 period included $153.4 million of net preferred-stock proceeds, while 2021 financing cash flow was $0.3 million.

Outlook, commentary, risks, and unusual items

• Management expected operating losses and expenses to continue increasing as clinical and preclinical development advanced. The company anticipated needing substantial additional financing to develop and commercialize its candidates; future equity financing could dilute shareholders, while debt or collaborations could impose restrictions or require rights to be relinquished.
• For SBT6050, the company reported early pharmacodynamic evidence and early signals of antitumor activity in interim data, but also serious safety events. At doses above 0.3 mg/kg with pembrolizumab, dose-limiting toxicities included hypotension and cytokine release syndrome. One patient receiving 0.45 mg/kg plus pembrolizumab died after serious adverse events; the investigator attributed the death to Grade 5 hypotension considered related to SBT6050. Patients in the pembrolizumab dose-escalation arm were dose-reduced to 0.3 mg/kg as applicable.
• The company selected 0.3 mg/kg for planned SBT6050 expansion cohorts with Libtayo in gastroesophageal and non-small cell lung cancers, anticipated to begin in Q4 2021. It also anticipated a Phase 1/2 combination study in Q1 2022. These were forward-looking plans, not reported completions.
• The company said it submitted an IND for SBT6290 in Q4 2021 and anticipated beginning clinical development in Q1 2022. SBT8230 was in development for chronic hepatitis B.
• COVID-19 could affect trial enrollment, sites, suppliers, manufacturing, timelines, and financing; the extent of impact remained uncertain. The company relied on third parties for clinical-trial and manufacturing activities.
• A securities class action was filed November 5, 2021, after quarter-end, alleging misleading statements about SBT6050’s clinical and commercial prospects. Damages sought were unspecified. The company said the outcome and any loss could not be reasonably estimated and recorded no liability as of September 30, 2021.
• Disclosure controls were assessed as effective at the reasonable assurance level, with no material change in internal control over financial reporting reported for the quarter.

Important facts for investors to verify

• Confirm the intended issuer: this source is Silverback Therapeutics, not ARS Pharmaceuticals.
• Review the full SBT6050 safety and efficacy data, including the fatal event, dose reductions, and any subsequent trial or regulatory updates.
• Assess whether the stated cash runway into 2024 remains valid in light of actual spending, trial progress, and financing needs.
• Check the status and potential financial impact of the securities class action filed after quarter-end.
• Verify progress against the company’s stated SBT6050 and SBT6290 clinical-development plans and the effects of COVID-19 or supply constraints.