Larimar Therapeutics, Inc. — Q2 2022 Form 10-Q
Reporting period: Three and six months ended June 30, 2022. Larimar is a clinical-stage biotechnology company developing CTI-1601 for Friedreich’s ataxia (FA). It had no product revenue and no commercialized products.
Financial performance and liquidity
| Metric | Q2 2022 | Six months 2022 | Comparable 2021 period |
|---|---|---|---|
| Revenue | None | None | None |
| Research and development expense | $5.6 million | $11.5 million | $9.1 million and $18.1 million |
| General and administrative expense | $3.0 million | $6.1 million | $3.4 million and $6.6 million |
| Total operating expenses | $8.7 million | $17.6 million | $12.5 million and $24.6 million |
| Net loss | $8.7 million | $17.6 million | $12.6 million and $24.7 million |
| Net loss per share, basic and diluted | $0.47 | $0.96 | $0.79 and $1.54 |
- Six-month operating cash use was $15.0 million, versus $22.0 million in 2021. Investing activities used $35.3 million, primarily for purchases of marketable securities; there were no financing cash flows.
- At June 30, cash and cash equivalents were $19.7 million and marketable debt securities were $35.2 million, totaling approximately $54.9 million available for operations. Restricted cash of $1.3 million was excluded from that total. Cash, cash equivalents and restricted cash together were $21.1 million.
- Management expected available cash, cash equivalents and marketable securities to fund operating and capital needs for at least 12 months from the financial statements’ issuance. The company reported an accumulated deficit of $133.9 million and expects continued operating losses and a need for additional capital.
- No debt was reported; operating lease liabilities totaled $5.7 million. Gross margin is not applicable because the company had no product sales.
Changes versus prior periods
- Q2 net loss improved by $3.9 million year over year; six-month net loss improved by $7.1 million. Lower R&D spending was the main driver, reflecting lower nonclinical, clinical-trial and clinical-supply manufacturing costs. G&A also declined modestly, principally due to lower professional fees.
- Cash and cash equivalents fell from $70.1 million at December 31, 2021 to $19.7 million at June 30, 2022, while marketable debt securities rose from none to $35.2 million. The company purchased securities during the period, so the cash decline should be viewed alongside the securities balance.
- Outstanding common shares were 17,710,450 at both June 30, 2022 and December 31, 2021. The ATM program had approximately $29.2 million of capacity remaining.
Outlook, risks and notable developments
- The FDA clinical hold on CTI-1601, imposed in May 2021 following mortalities at the highest dose levels in a 26-week non-human-primate toxicology study, remained unresolved. In February 2022, the FDA said additional data were needed.
- After the quarter, Larimar held a Type C meeting with the FDA in Q3 2022 and planned to submit a further response later that quarter. It proposed a four-week Phase 2 dose-exploration study using lower doses before an open-label extension. The company stated it did not know when, or whether, the hold would be lifted; the proposed study was subject to FDA feedback and agreement.
- Earlier Phase 1 SAD and MAD trials showed dose-dependent increases in frataxin in evaluated tissues, with no serious adverse events reported in those trials. These results do not resolve the later toxicology-related hold or establish safety and efficacy for extended dosing.
- There is no formal financial guidance. Management expects R&D and G&A expenses to continue and may reduce spending if timelines or other assumptions change. If additional financing is unavailable on acceptable terms, the company may delay, curtail or discontinue programs or seek collaboration arrangements that could require giving up rights.
- Key risks include regulatory and clinical uncertainty, manufacturing and vendor dependence, competition, access to capital, and possible clinical or supply-chain disruption from COVID-19 and geopolitical events. The filing reported no material pending or threatened litigation and no off-balance-sheet arrangements.
Important facts for investors to verify
- What additional toxicology or other data the FDA requires to resolve the CTI-1601 hold, and whether it accepts the proposed lower-dose Phase 2 study design and timing.
- Whether the stated minimum 12-month cash runway remains valid as clinical plans and spending evolve, and what financing may be needed afterward.
- How much of the ATM capacity is ultimately used, and the resulting dilution and proceeds.
- Whether lower-dose, longer-duration CTI-1601 treatment can demonstrate acceptable safety and meaningful frataxin increases in patients.