Inhibikase Therapeutics, Inc. — Form 10-Q Summary
Reporting period: Three and nine months ended September 30, 2022. The filing was signed November 14, 2022. Inhibikase is a clinical-stage pharmaceutical company developing therapies for Parkinson’s disease, related neurodegenerative disorders and stable-phase chronic myelogenous leukemia.
Business Context and Programs
- Lead candidate IkT-148009 is a c-Abl inhibitor being developed for Parkinson’s disease and multiple system atrophy.
- The Phase 2a “201” Parkinson’s study began in May 2022. As of November 1, 2022, 16 of 34 selected sites were open and 11 of 120 planned patients had been randomized.
- IkT-001Pro, a prodrug of imatinib mesylate for stable-phase CML, received FDA IND clearance in August 2022. The company planned a dose-finding and dose-equivalence study in up to 56 healthy volunteers.
Financial Performance and Position
| Metric | Three Months Ended September 30 | Nine Months Ended September 30 |
|---|
| Grant revenue | $7,291 versus $328,459 in 2021 | $59,874 versus $3,098,661 in 2021 |
| Research and development expense | $2,981,653 versus $3,154,553 | $8,980,827 versus $7,968,846 |
| SG&A expense | $1,538,737 versus $1,644,946 | $4,872,681 versus $4,854,494 |
| Loss from operations | $(4,513,099) versus $(4,471,040) | $(13,793,634) versus $(9,724,679) |
| Net loss | $(4,494,563) versus $(4,471,197) | $(13,775,103) versus $(9,744,444) |
| Basic and diluted loss per share | $(0.18) versus $(0.18) | $(0.55) versus $(0.61) |
- The company has generated no revenue from commercial product sales; grant revenue represented more than 90% of total revenue and was primarily from the U.S. government.
- At September 30, 2022, cash and cash equivalents were $5.8 million and marketable securities were $20.8 million, consisting of U.S. Treasury obligations. Working capital was $24.8 million.
- Total assets were $28.6 million, total liabilities were $3.4 million and stockholders’ equity was $25.1 million.
- Debt was substantially eliminated: notes payable declined from $248,911 at December 31, 2021 to zero at September 30, 2022 after settlement of the CEO note on January 3, 2022.
- Operating lease obligations totaled $374,068, including $142,048 current and $232,020 non-current, related primarily to the Lexington, Massachusetts office lease through July 2025.
Cash Flow and Liquidity
| Cash Flow Item | Nine Months Ended September 30, 2022 | Nine Months Ended September 30, 2021 |
|---|
| Operating activities | $(13,794,729) | $(10,201,234) |
| Investing activities | $(20,968,717) | $0 |
| Financing activities | $(204,769) | $41,093,671 |
| Net change in cash | $(34,968,215) | $30,892,437 |
| Ending cash and cash equivalents | $5,781,918 | $44,845,950 |
- The principal investing outflow was $20.7 million for purchases of marketable securities; equipment purchases were $243,255.
- The company had approximately $385,888 of active grants, with $300,386 remaining available in U.S. Treasury accounts as of November 1, 2022.
- Management estimated that working capital would fund normal operations through February 2024, but stated that the estimate could change materially depending on the FDA clinical hold and the cost of restarting or completing the Parkinson’s trial.
- The company expects substantial additional losses and anticipates needing additional capital beyond February 2024 through equity, debt, grants, licensing or collaboration arrangements.
Material Changes Versus Prior Comparable Period
- Grant revenue fell 97.8% for the quarter and 98.1% for the nine-month period as resources shifted from grant-funded research toward Parkinson’s clinical development.
- Nine-month research and development expense increased 12.7%, primarily due to higher compensation, external research services and consultants, and legal costs.
- Nine-month operating loss increased 41.8% and net loss increased 41.4%, reflecting substantially lower grant revenue and higher research and development spending.
- Cash declined sharply because of operating losses and the purchase of Treasury securities; the company ended the period with a larger combined cash and marketable-securities balance but significantly less cash on hand.
- The company entered into a $9.8 million at-the-market equity program in May 2022, but had sold no shares under the program as of September 30, 2022.
Outlook, Risks and Subsequent Events
- FDA clinical hold: In November 2022, after reviewing the MSA IND, the FDA placed the IkT-148009 Parkinson’s disease and MSA programs on clinical hold. The company was awaiting the formal clinical hold letter and could not yet fully assess the impact on liquidity, trial timing or costs.
- If the hold is lifted, the company expects that the 201 Parkinson’s trial may need to recommence enrollment and that completion costs could exceed prior expectations.
- The clinical hold is the principal near-term operational and financing uncertainty. The company’s ability to continue development depends on regulatory resolution, additional capital and successful clinical execution.
- Other risks include the absence of approved products or product revenue, recurring losses, dependence on grants and external financing, clinical-trial and regulatory uncertainty, COVID-19 and supply-chain disruption, inflation, geopolitical instability and intellectual-property risks.
- Nasdaq notified the company in July 2022 that its common stock failed the $1.00 minimum bid-price requirement. The initial compliance period ran through January 23, 2023; as of November 14, 2022, compliance had not been regained.
- Management reported effective disclosure controls and no material change in internal control over financial reporting during the quarter. No legal proceedings were reported.
Important Facts for Investors to Verify
- Obtain and assess the FDA’s formal clinical hold letter, including the required remediation and expected timeline for lifting the hold.
- Reconcile the company’s projected cash runway with the clinical hold, potential trial restart costs and expected monthly operating cash burn.
- Monitor enrollment, site activation and safety data for the 201 Parkinson’s study and development milestones for the IkT-001Pro 501 study.
- Track additional financing activity, including potential ATM sales, dilution, debt or licensing transactions.
- Verify Nasdaq minimum bid-price compliance and any subsequent extension, reverse split or delisting risk.
- Assess whether grant revenue remains available to offset research and development spending, given the substantial year-over-year decline.
