Aprea Therapeutics, Inc. — Q2 2021 Form 10-Q
Reporting period: Quarter and six months ended June 30, 2021. Aprea is a clinical-stage biopharmaceutical company developing cancer treatments that reactivate mutant p53; it has no product revenue and remains dependent on external financing and successful clinical development.
Financial performance and liquidity
- Revenue: None; the company does not expect product sales in the near term.
- Q2 2021: Operating expenses were $10.0 million, including R&D of $6.7 million and G&A of $3.3 million. Net loss was $10.3 million ($0.48 per share), versus $16.4 million ($0.78 per share) in Q2 2020.
- First half 2021: Operating expenses were $20.2 million (R&D $13.4 million; G&A $6.8 million); net loss was $19.9 million ($0.94 per share), versus $25.8 million ($1.22 per share) in first half 2020. No meaningful operating margin is reported given the absence of revenue.
- Cash flow: Operating cash use was $19.3 million for the six months, compared with $17.2 million in 2020. There was no investing or financing cash flow in first half 2021.
- Balance sheet at June 30: Cash and cash equivalents were $69.8 million, down from $89.0 million at December 31, 2020. Total assets were $71.5 million; total liabilities were $10.6 million; stockholders’ equity was $61.0 million. Liabilities were primarily accounts payable, accrued expenses and leases; the filing reports no conventional borrowings. Current lease liability was $199,219.
- The company reported an accumulated deficit of $163.9 million. It believes existing cash will fund operations and capital requirements into 2023, subject to assumptions that could prove incorrect. It has a $350 million shelf registration and a $50 million ATM program; no ATM sales had occurred by June 30, 2021.
Changes versus comparable periods
- Q2 operating expenses declined $4.5 million year over year, mainly because R&D fell $4.0 million as the pivotal MDS trial completed enrollment in 2020 and spending on eprenetapopt development, regulatory work and manufacturing scale-up decreased. G&A declined $0.4 million.
- First-half operating expenses decreased $6.2 million year over year, driven by a $6.4 million R&D reduction, partly offset by a $0.2 million increase in G&A. G&A included higher non-cash stock-based compensation.
- Net loss improved in both comparisons, while first-half operating cash use increased by $2.1 million. Currency effects were also material to quarterly comparisons: Q2 foreign-currency loss was $0.3 million versus $1.9 million in 2020.
Clinical outlook, risks and contingencies
- Regulatory holds after quarter-end: On August 4, 2021, the FDA placed a partial clinical hold on eprenetapopt plus azacitidine trials in myeloid malignancies; no new patients may enroll until resolved, though benefiting patients may continue treatment. On August 11, the FDA placed a clinical hold on the eprenetapopt lymphoid-malignancy trial; the one patient on treatment may continue if benefiting. The company said it would work with the FDA to address questions. These developments occurred after June 30.
- Phase 3 frontline MDS: The trial had failed its predefined complete-remission primary endpoint, announced in December 2020. The company reported a numerically higher CR rate in the eprenetapopt combination arm, but the difference was not statistically significant. Based on initial FDA feedback and the partial hold, management said it believed there was no registrational pathway for this trial and was considering withdrawing Breakthrough Therapy designation.
- Other clinical data: The company reported positive Phase 2 post-transplant results: 1-year relapse-free survival of 58% and overall survival of 79% in 33 patients. In a Phase 1/2 AML study, the eprenetapopt/venetoclax/azacitidine regimen met its CR endpoint in the trial design; among 30 evaluable patients, CR was 37% and CR/CRi was 53%. These are company-reported interim results, not evidence of regulatory approval.
- The company expects significant expenses and losses to continue and will need additional financing; no committed external funding source was disclosed. Additional capital may dilute shareholders or impose restrictive terms, and failure to obtain funding could delay, scale back or end development programs.
- Other risks include clinical and regulatory uncertainty, trial enrollment and data integrity, manufacturing and commercialization challenges, foreign exchange exposure, and COVID-19-related disruption. Management reported no material COVID-19 impact on the period’s operations or results and no clinical-supply disruption to date.
- No material legal proceedings or contingent-loss provision were reported. Management stated disclosure controls were effective as of June 30, 2021.
Important facts for investors to verify
- FDA questions, scope and resolution timing for both clinical holds, and any impact on enrollment, patients or trial plans.
- Whether any viable regulatory path remains for eprenetapopt following the failed Phase 3 endpoint and the company’s stated initial FDA feedback.
- Whether additional clinical data confirm the reported post-transplant and AML results, including follow-up duration and patient outcomes.
- Cash burn, actual runway versus the company’s “into 2023” estimate, and whether the shelf or ATM is used to raise capital.
- How reduced eprenetapopt development spending and increased spending on other programs affect future R&D costs and operating plans.