TransCode Therapeutics, Inc. — Q1 2022 Form 10-Q
Reporting period: Three months ended March 31, 2022; balance-sheet comparisons are with December 31, 2021. TransCode is an early-stage oncology biopharmaceutical company preparing for its first clinical trial. Its lead candidate, TTX-MC138, is designed to target miR-10b in metastatic cancers. The company has no approved products and has generated no revenue.
Financial results and liquidity
| Metric | Q1 2022 | Q1 2021 / comparison |
|---|---|---|
| Revenue | $0 | $0 |
| Research and development expense | $1.882 million | $0.264 million; up $1.618 million |
| General and administrative expense | $1.596 million | $0.186 million; up $1.410 million |
| Total operating expenses / operating loss | $3.478 million | $0.449 million / loss; expenses increased $3.028 million |
| Net loss | $3.470 million | $4.485 million |
| Basic and diluted loss per share | $0.27 | $0.97 loss per share |
| Net cash used in operating activities | $3.949 million | $0.522 million |
| Cash at period end | $16.853 million | $20.826 million at December 31, 2021 |
| Total assets | $18.850 million | $22.938 million at December 31, 2021 |
| Total liabilities | $1.849 million | $2.534 million at December 31, 2021 |
| Debt | None outstanding | None outstanding |
Margins are not meaningful because the company reported no revenue. Cash declined by $3.973 million during the quarter; investing activities used $31,000, and financing activities provided $6,000. The filing reports current assets of $18.635 million and current liabilities of $1.849 million.
Material changes and management commentary
- Operating expenses rose substantially as the company expanded R&D, personnel, and public-company operations after its July 2021 IPO. Management attributed higher R&D costs mainly to materials, personnel, and regulatory work; G&A growth reflected insurance, personnel, and public-company costs.
- Net loss improved year over year despite the higher operating loss, principally because Q1 2021 included noncash charges for changes in fair value of derivative and warrant liabilities and interest expense. Those liabilities were extinguished in connection with the IPO and no comparable charges were recorded in Q1 2022.
- Management plans a microdose Phase 0 study of radiolabeled TTX-MC138 in 10 patients with advanced solid tumors, using PET-MRI to assess delivery to metastases and other tissues. It also plans IND-enabling work to support a Phase I/II program. These are plans, not reported clinical results.
- The company received a $2.393 million NIH SBIR award expected to fund a research partnership through March 2024. It had requested the next tranche and expected it in Q2 2022, but receipt and timing are not assured.
Outlook, risks, and contingencies
- Runway and going concern: Management estimated that cash, together with expected SBIR funding, would support operations and capital requirements into Q1 2023. It cautioned that the estimate depends on assumptions and that existing cash was not expected to cover a full 12 months from the financial-statement date. The filing identifies substantial doubt about the company’s ability to continue as a going concern without additional capital.
- The company expects continuing losses and rising expenses as it advances preclinical work and clinical development. Additional financing will be required; equity financing could dilute shareholders, while debt or partnerships could impose restrictions or require the company to surrender rights. If funding is unavailable, it may need to scale back, delay, or discontinue programs.
- Key development risks include preclinical or clinical failure, delays in regulatory review or enrollment, reliance on third-party manufacturers and research organizations, intellectual-property dependence, and possible COVID-19-related disruptions.
- Disclosure controls and procedures were deemed ineffective as of March 31, 2022, due to an unremediated material weakness in internal control over financial reporting. No material changes to internal control were reported during the quarter.
- No pending legal actions were reported. The company reported no debt and no off-balance-sheet arrangements. Its laboratory-space agreement was extended through December 31, 2022; specified commitments from April through December totaled $93,877.
Important facts for investors to verify
- Whether the next SBIR funding tranche was received, and whether cash runway remains consistent with management’s Q1 2023 estimate.
- Progress and regulatory status of the planned TTX-MC138 microdose Phase 0 study and IND-enabling work; the filing reports plans, not trial outcomes.
- Quarterly cash burn and R&D commitments, including payments to CROs and CMOs, as development activity expands.
- Remediation of the disclosed material weakness and improvement in disclosure controls.
- Future financing needs, potential dilution, and any changes to the company’s going-concern assessment.