Larimar Therapeutics, Inc. — Q2 2021 Form 10-Q
Reporting period: Three and six months ended June 30, 2021. Larimar is a clinical-stage biotechnology company with no approved products or product revenue. Its lead candidate, CTI-1601, is being developed for Friedreich’s ataxia. Financial statements reflect the Chondrial business as accounting acquirer in the 2020 reverse asset acquisition; year-over-year comparisons may therefore not be fully comparable.
Financial performance and liquidity
| Metric | Q2 2021 | Q2 2020 | Six months 2021 | Six months 2020 |
|---|---|---|---|---|
| Revenue | None | None | None | None |
| Research and development expense | $9.1 million | $8.9 million | $18.1 million | $13.9 million |
| General and administrative expense | $3.4 million | $2.5 million | $6.6 million | $4.2 million |
| Net loss | $12.6 million | $11.3 million | $24.7 million | $18.0 million |
| Net loss per share, basic and diluted | $0.79 | $1.21 | $1.54 | $2.33 |
| Cash used in operating activities | — | — | $22.0 million | $21.1 million |
At June 30, 2021, cash and cash equivalents were $70.6 million; the company held no marketable debt securities at that date. Restricted cash of $1.3 million was held separately. Total liabilities were $13.4 million, primarily including $6.3 million of operating lease liabilities; the filing reports no borrowings. Stockholders’ equity was $67.5 million. With no revenue, profit margins are not applicable.
Operating expenses rose year over year: six-month R&D increased $4.2 million, mainly from clinical-trial, toxicology and personnel costs, partly offset by lower clinical-supply manufacturing costs. Six-month G&A increased $2.4 million, reflecting personnel, stock compensation and public-company-related professional fees. Operating cash use was broadly similar to the prior period. Investing cash flow was $24.5 million provided, principally from marketable-security maturities; there was no financing cash flow in the first half of 2021.
Outlook, risks and notable developments
- In May, Larimar reported Phase 1 proof-of-concept: daily CTI-1601 dosing for up to 13 days produced dose-dependent increases in frataxin in evaluated tissues. No serious adverse events were reported in the SAD or MAD trials.
- On May 25, 2021, the FDA placed the CTI-1601 clinical program on hold after Larimar reported deaths at the highest dose levels in an ongoing 180-day non-human-primate toxicology study. The FDA requested the full study report and barred new clinical trials pending review. Dosing in that study was completed in July; data were being analyzed. The timing and conditions for lifting the hold remain uncertain.
- Management expected to initiate the Jive open-label extension and pediatric MAD trials in the first half of 2022, subject to the hold being lifted. It also described a non-interventional healthy-volunteer study as planned for the second half of 2021.
- Management expected cash, cash equivalents and marketable securities available as of the filing date to fund operations for at least 12 months from issuance of the interim financial statements. In July, after quarter-end, Larimar sold 2,342,720 shares through its ATM program for net proceeds of $19.9 million; up to $29.2 million remained available under the program as of August 10. Further capital will likely be needed, and financing may dilute shareholders or be unavailable on acceptable terms.
- COVID-19, clinical and regulatory uncertainty, manufacturing scale-up and reliance on a small number of third-party manufacturers could delay development or increase costs. The company reported no material pending or threatened legal proceedings and no material changes to its other previously disclosed risk factors.
Investor facts to verify
- FDA review of the completed long-term primate toxicology study, the cause and significance of the reported deaths, and the requirements and timing for lifting the clinical hold.
- Whether the planned 2021 and first-half 2022 studies can proceed, and any revised trial timelines or additional testing requirements.
- Cash runway and expected spending, including the effect of the July ATM issuance and any future equity financing or dilution.
- Whether Phase 1 frataxin findings translate into sustained clinical benefit and an acceptable safety profile with longer-duration dosing.
- Manufacturing readiness, supply continuity, and potential license-related milestone payments of up to $2.6 million in aggregate.