Aprea Therapeutics, Inc. — Q1 2022 Form 10-Q
Reporting period: Three months ended March 31, 2022; financial statements are unaudited. Dollar amounts are in U.S. dollars. Aprea was a clinical-stage biotechnology company developing cancer therapeutics, with no product revenue. On May 16, 2022, after quarter-end, it completed its acquisition of Atrin Pharmaceuticals, which is expected to shift the company’s primary focus to DNA damage response (DDR) oncology programs.
Financial results and liquidity
| Metric | Q1 2022 | Q1 2021 |
|---|---|---|
| Revenue | None | None |
| Research and development expense | $4.1 million | $6.8 million |
| General and administrative expense | $4.0 million | $3.4 million |
| Total operating expenses | $8.1 million | $10.2 million |
| Net loss | $7.9 million | $9.7 million |
| Net loss per share, basic and diluted | $0.36 | $0.46 |
| Net cash used in operating activities | $5.5 million | $11.5 million |
| Cash and cash equivalents at period-end | $47.7 million | $77.6 million |
- No meaningful gross or operating margin is reported because the company had no revenue.
- At March 31, 2022, total assets were $50.3 million, total liabilities $6.7 million, and stockholders’ equity $43.6 million. Liabilities included $2.0 million of accounts payable, $4.5 million of accrued expenses, and $0.2 million current plus $0.03 million noncurrent lease liabilities. The filing reports no borrowing debt.
- Cash declined from $53.1 million at December 31, 2021. Aprea said its March 31 cash was expected to fund operations and capital needs into the second half of 2023, subject to assumptions.
Material changes versus the prior comparable period
- Operating expenses fell $2.1 million, primarily as R&D expense declined $2.7 million amid reduced activity and wind-down of eprenetapopt trials. G&A rose $0.6 million, mainly from legal costs and stock-based compensation.
- Net loss improved by $1.7 million. Foreign currency gain was $0.1 million versus $0.5 million a year earlier, partly offsetting the lower operating costs.
- Operating cash use declined by $6.0 million, reflecting lower losses and changes in operating assets and liabilities. No cash was used in investing activities or provided by financing activities in either quarter.
- Accumulated deficit reached $189.1 million at March 31, 2022, compared with $181.1 million at year-end 2021.
Outlook, developments, and risks
- Development and regulatory status: Aprea reported no ongoing eprenetapopt clinical trials. The FDA continued a partial hold on three myeloid malignancy trials, prohibiting new enrollment; the trials had completed enrollment and were concluded. FDA clearance was received for new studies in relapsed/refractory MDS/AML and Richter’s transformed NHL. APR-548 enrollment was closed, with no patients receiving treatment.
- Atrin acquisition: Aprea issued 1,117,394 common shares and 2,949,630 non-voting Series A preferred shares. Subject to stockholder approval, each preferred share converts into 10 common shares. On an as-converted basis, former Atrin holders would own approximately 58.8% and pre-acquisition Aprea holders approximately 41.2%. Aprea anticipated first-patient enrollment in an ATRN-119 Phase 1/2a trial in the second half of 2022; ATRN-W1051 remained preclinical.
- Contingent value rights: Eligible Aprea holders of record on May 13, 2022 were to receive CVRs that may provide stock and/or cash from proceeds, if any, from disposition of legacy assets during the two years after the acquisition.
- Funding and capital risk: Aprea expected continued losses and said it would need additional financing. It warned that if stockholders do not timely approve conversion of Series A preferred shares, holders may be able to require cash settlement at fair value; a significant settlement could materially affect results and raise substantial doubt about the ability to continue as a going concern within one year of the report. The reported cash-runway estimate predates the acquisition and may not reflect its subsequent financing or operating effects.
- Key risks include clinical-trial failure or delay, regulatory uncertainty, integration challenges, future financing availability and dilution, and potential COVID-19-related disruption. The company stated COVID-19 had not materially affected Q1 results or operations, but future effects were uncertain. No material legal proceedings or contingent-loss provision were reported; management judged disclosure controls effective.
Important facts for investors to verify
- Post-acquisition cash, cash burn, financing needs, and whether the second-half-2023 runway estimate remains applicable.
- Stockholder approval and terms for conversion of the Series A preferred shares, including potential cash-settlement exposure and resulting dilution.
- Timing and execution of the ATRN-119 trial, development plans for ATRN-W1051, and costs of integrating Atrin.
- Disposition and proceeds, if any, from legacy assets that could determine CVR payments.
- Current status and implications of eprenetapopt trial holds, prior trial outcomes, and any future regulatory or clinical developments.