Edgewise Therapeutics, Inc. — Q3 2023 Form 10-Q
Reporting period: Quarter and nine months ended September 30, 2023. Edgewise is a clinical-stage biopharmaceutical company developing treatments for genetic muscle and cardiac disorders. It has no approved products, has generated no revenue, and has never been profitable.
Financial performance and position
| Metric | Q3 2023 | Q3 2022 | Nine months 2023 | Nine months 2022 |
|---|---|---|---|---|
| Revenue | $0 | $0 | $0 | $0 |
| Research and development expense | $23.8 million | $13.9 million | $63.2 million | $37.4 million |
| General and administrative expense | $5.7 million | $4.4 million | $17.3 million | $12.2 million |
| Total operating expense | $29.5 million | $18.3 million | $80.5 million | $49.6 million |
| Interest income | $3.7 million | $0.8 million | $10.5 million | $1.4 million |
| Net loss | $25.7 million | $17.5 million | $70.0 million | $48.2 million |
| Basic and diluted loss per share | $0.41 | $0.34 | $1.10 | $0.96 |
Margins are not meaningful because the company reported no revenue. Net cash used in operating activities was $65.1 million for the first nine months of 2023, versus $40.8 million a year earlier. Investing activities provided $75.9 million, primarily reflecting net marketable-security maturities and sales; financing activities provided $0.2 million. Cash and cash equivalents increased by $11.0 million to $33.0 million, while cash, cash equivalents and marketable securities totaled $289.7 million at September 30, 2023. Accumulated deficit was $214.6 million.
Total liabilities were $20.9 million, including $5.5 million of operating lease liabilities; the filing reports no borrowings or other financial debt. Current assets were $297.9 million and current liabilities $16.3 million. The company stated that available cash and marketable securities should fund its planned operations and capital needs for at least 12 months from issuance of the financial statements. It also says substantial additional capital will be needed to advance development and potentially commercialize candidates.
Material changes and business developments
- Q3 operating expenses rose $11.2 million year over year; nine-month expenses rose $30.9 million. Higher R&D spending reflected increased staffing and stock-based compensation, expanded EDG-5506 trial activity and manufacturing, and EDG-7500’s progression into clinical testing. Higher interest income partly offset the increase in expenses.
- EDG-5506 is being studied in Phase 2 trials for dystrophinopathies and other muscle disorders. The Becker CANYON study was fully enrolled; GRAND CANYON, a potentially registrational Becker cohort, began in September 2023. The company reported positive interim 12-month results from the open-label ARCH study in June 2023.
- EDG-7500 began a Phase 1 study in healthy adults in September 2023 for potential treatment of hypertrophic cardiomyopathy. The company planned a Phase 1b study in obstructive HCM for the first half of 2024.
- After quarter-end, in October 2023, the company expanded enrollment in the Duchenne LYNX trial and announced the FOX Phase 2 placebo-controlled trial for children and adolescents previously treated with gene therapy.
- Shares outstanding were 63,460,939 at September 30, 2023, compared with 63,257,376 at December 31, 2022. The company had not sold shares under its $125 million at-the-market program as of September 30, 2023.
Outlook, risks and other notable items
- Management expects R&D spending to increase as clinical programs advance, trials expand, manufacturing continues and additional personnel are hired. The filing provides no revenue or earnings guidance; future clinical costs and timing remain uncertain.
- Key risks include clinical safety and efficacy uncertainty, trial enrollment and execution, regulatory approval, competition, reliance on third-party manufacturers and research organizations, intellectual-property challenges, and the need for additional financing. Equity financing could dilute stockholders; acceptable financing may not be available.
- The company disclosed a July 2023 notice terminating its Ohio State Innovation Foundation license because the technology was no longer relevant to its business; termination became effective October 25, 2023.
- Nasdaq notified the company in July 2023 that it was out of compliance with an audit-committee composition requirement. The company said it intended to regain compliance within the applicable cure period, no later than June 19, 2024, subject to the timing of its next annual meeting.
- No material legal proceedings were pending or threatened, and management concluded disclosure controls were effective at a reasonable assurance level. The company cited macroeconomic, banking-sector, inflation and geopolitical uncertainties, among other risks.
Important facts for investors to verify
- Current cash and marketable-security balances, operating cash use, and the assumptions behind management’s stated minimum 12-month runway.
- Clinical-trial enrollment, timelines and final data for EDG-5506, including Becker studies and the expanded Duchenne program; assess interim ARCH findings against complete data.
- EDG-7500 Phase 1 progress and the timing and design of the planned Phase 1b HCM study.
- Progress toward Nasdaq audit-committee compliance and any subsequent use of the ATM facility or other financing.
- Effects of the OSIF license termination and whether any other intellectual-property rights or third-party claims could affect development.