Aura Biosciences, Inc. — Q3 2022 Form 10-Q
Reporting period: Quarter and nine months ended September 30, 2022. Aura is a clinical-stage biotechnology company developing cancer therapies and has not generated product revenue.
Business context and development
The company’s lead and only product candidate is belzupacap sarotalocan (AU-011), being developed for ocular cancers, including early-stage choroidal melanoma, and non-muscle invasive bladder cancer (NMIBC). Aura reported that the FDA had granted Fast Track Designation for choroidal melanoma and NMIBC, and Orphan Drug Designation for uveal melanoma.
Management reported that it had finalized the design of a global Phase 3 trial for first-line early-stage choroidal melanoma. Six-month interim Phase 2 data for suprachoroidal administration were presented in October 2022: the company reported tumor growth-rate reduction (p=0.0007), visual acuity preservation and no treatment-related serious adverse events as of August 19, 2022. Aura initiated enrollment in a Phase 1 NMIBC trial in September 2022 and planned initial data in 2023. It also planned a U.S. IND filing for choroidal metastasis in Q4 2022.
Financial performance and liquidity
| Metric | Q3 2022 | Q3 2021 | Nine months 2022 | Nine months 2021 |
|---|---|---|---|---|
| Revenue | None | None | None | None |
| Research and development expense | $11.3m | $6.4m | $29.1m | $17.2m |
| General and administrative expense | $4.8m | $2.5m | $13.6m | $6.4m |
| Total operating expenses | $16.1m | $8.9m | $42.7m | $23.6m |
| Net loss | $15.9m | $8.8m | $42.2m | $23.6m |
| Net loss per share | $0.54 | $28.33 | $1.44 | $77.93 |
| Cash used in operating activities | Not stated for quarter | Not stated for quarter | $36.6m | $20.3m |
Losses increased as research and development activity, manufacturing development, staffing and public-company costs grew. No operating margin is meaningful because Aura had no revenue.
At September 30, 2022, cash and cash equivalents were $61.1m and marketable securities were $50.4m, totaling $111.5m. Current assets were $115.9m and current liabilities were $10.0m. Accumulated deficit was $194.3m. The company reported no long-term debt; operating lease liabilities totaled $21.1m, including $2.9m current. Contractual operating lease payments totaled $34.7m.
Cash, cash equivalents and restricted cash declined by $87.2m during the first nine months. Investing activities used $51.0m, primarily reflecting purchases of marketable securities; operating activities used $36.6m. Management said existing cash and securities were expected to fund operations into 2024; the financial-statement note separately stated they were sufficient for at least 12 months from issuance.
Material changes, outlook and risks
- Compared with the first nine months of 2021, operating expenses rose $19.1m and net loss rose $18.6m. R&D expense increased $11.9m, principally due to personnel, preclinical, clinical and manufacturing-development costs; G&A increased $7.2m, including public-company costs.
- Marketable securities were $50.4m at quarter-end, versus none at December 31, 2021. Their unrealized loss was $0.1m; the statements also report a $0.3m loss on disposal of assets, associated with termination of a prior lease.
- In August 2022, Aura terminated a prior lease and paid a $0.3m termination expense. A new Boston office and laboratory lease commenced in August, with a 10-year initial term and estimated payments of $35.2m over that term.
- On November 1, 2022, Aura filed a shelf registration for up to $250m of securities and established an at-the-market program for up to $75m of common stock. No shares had been sold and no proceeds received under these arrangements through November 10, 2022.
- Management expects continued operating losses and increased spending as clinical programs advance. The company may need additional capital; financing could dilute shareholders, impose restrictions, or require it to relinquish rights. Its runway estimate depends on assumptions and could prove shorter than expected.
- Key risks include dependence on AU-011, the absence of completed pivotal trials or commercial products, regulatory and clinical uncertainty, reliance on third-party manufacturers and a single source for certain manufacturing inputs, and possible trial or supply delays. Aura reported only minor manufacturing delays to date from a vendor supply constraint and said COVID-19 had not materially affected its business to date.
Most important facts for investors to verify
- Progress, enrollment, final results and safety data from AU-011 trials, particularly the planned Phase 3 study; interim data are preliminary and may change.
- Whether the planned choroidal metastasis IND filing and 2023 NMIBC data timing were achieved, and any subsequent regulatory feedback.
- Actual quarterly cash burn, investment maturities and whether the stated runway into 2024 remains achievable.
- Use of the $250m shelf and $75m ATM, including any resulting share dilution.
- Manufacturing scale-up, supply continuity and the financial and operational impact of the new long-term lease.