Filing identity and reporting period
Important mismatch: The supplied filing is Edge Therapeutics, Inc.’s Form 10-Q for the quarter ended September 30, 2018, filed November 1, 2018. It does not identify PDS Biotechnology Corp. as the registrant; confirm the intended company and filing before relying on this summary.
Edge was a clinical-stage biotechnology company with no commercial product revenue. Its research and development activities had been halted or suspended while it pursued strategic alternatives.
Financial results and condition
| Metric | Q3 2018 | Q3 2017 | Nine months 2018 | Nine months 2017 |
|---|---|---|---|---|
| Revenue | No commercial revenue | No commercial revenue | No commercial revenue | No commercial revenue |
| Research and development expense | $0.3 million | $6.9 million | $15.6 million | $23.5 million |
| General and administrative expense | $3.3 million | $4.0 million | $11.3 million | $12.4 million |
| Net loss | $4.3 million | $11.3 million | $37.8 million | $37.0 million |
| Loss per share, basic and diluted | $0.14 | $0.37 | $1.21 | $1.23 |
| Cash used in operating activities | Not separately presented | Not separately presented | $31.0 million | $31.5 million |
- Q3 operating expenses fell 59% year over year, mainly as trial-related R&D spending declined following the NEWTON 2 discontinuation. Nine-month operating expenses rose 3%, reflecting $7.5 million of restructuring costs and a $2.7 million equipment impairment.
- At September 30, cash and cash equivalents were $36.8 million, versus $88.1 million at December 31, 2017. Total assets were $37.7 million; current liabilities were $6.7 million, including a $5.2 million restructuring reserve. Stockholders’ equity was $31.0 million.
- The company had no debt at quarter-end after repaying $20.0 million of principal in June, plus $0.9 million of back-end fees and $0.1 million of accrued interest. Nine-month financing cash outflow was $20.3 million.
- Management said existing cash was expected to cover anticipated requirements for at least the next 12 months. This was a forward-looking estimate subject to risks and assumptions. Margins are not meaningful because the company reported no commercial revenue.
Material developments, outlook, and risks
- The independent monitoring committee recommended stopping the Phase 3 NEWTON 2 study after interim analysis indicated a low probability of meeting its primary endpoint if fully enrolled. Edge discontinued the study and ceased EG-1962 development; research on other candidates was suspended. The committee reported no EG-1962 safety concern.
- In the reported final study analysis, favorable Day 90 outcomes occurred in 46% of EG-1962-treated subjects and 43% of nimodipine-treated subjects. The severe-subgroup results favored EG-1962 but were not statistically significant; the study was not powered for subgroup significance.
- Edge was exploring alternatives including a merger, asset or company sale, acquisition or licensing, or another transaction, with Piper Jaffray as financial advisor. There was no defined timetable or assurance of a transaction. The company reduced its workforce from 37 to 14 and expected further reductions. It estimated about $6.5 million in annualized savings, potentially offset in part by outsourced-service costs.
- Unusual charges included $7.5 million of nine-month restructuring expense and a $2.7 million impairment of manufacturing equipment associated with EG-1962. The restructuring reserve was $5.2 million at quarter-end. Operating lease obligations totaled about $1.9 million.
- A purported securities class action filed in April 2018 alleged misleading statements concerning the likelihood of NEWTON 2 failing its futility analysis; damages were unspecified, and the company said it intended to defend the case.
- Nasdaq had notified Edge of audit committee composition noncompliance and a bid price below $1.00 for 30 consecutive business days. The filing said the company had until March 4, 2019 to regain minimum bid-price compliance and warned of possible delisting.
Important facts for investors to verify
- Whether this is the intended issuer: the supplied 10-Q is for Edge Therapeutics, not PDS Biotechnology Corp.
- Current status and outcome of the strategic alternatives review, including any transaction, sale, or dissolution.
- Cash runway relative to actual post-quarter spending, restructuring payments, and costs of winding down the trial.
- Developments in the securities litigation and Nasdaq listing compliance.
- Final NEWTON 2 results and the distinction between overall results and non-significant subgroup findings.