Rein Therapeutics, Inc. annual report, FY2021

Aileron Therapeutics, Inc. Form 10-K Summary

Filing identity: The supplied filing is for Aileron Therapeutics, Inc. (Nasdaq: ALRN), not Rein Therapeutics, Inc. It reports the fiscal year ended December 31, 2021; the filing does not present a separate fourth-quarter-only financial summary.

Business Context and Reporting Period

Aileron is a clinical-stage oncology company developing ALRN-6924, an MDM2/MDMX dual inhibitor intended to protect healthy cells from chemotherapy-induced toxicities in patients with p53-mutated cancers. The company has no approved products and has generated no product-sales revenue.

  • Completed a Phase 1b small-cell lung cancer trial in 2021; 39 patients were enrolled and 38 were evaluable.
  • Continued a randomized, placebo-controlled Phase 1b trial in p53-mutated non-small-cell lung cancer.
  • Planned a Phase 1b breast cancer trial, subject to funding.
  • Had nine full-time employees at December 31, 2021.

Financial Metrics

Metric20212020Change
Revenue$0$0No change
Research and development expense$17.0 million$11.2 million+$5.8 million
General and administrative expense$9.6 million$9.3 million+$0.3 million
Total operating expenses$26.6 million$20.5 million+$6.1 million
Loss from operations$(26.6) million$(20.5) millionLoss increased
Other income (expense), net$0.4 million$(0.7) million+$1.1 million
Net loss$(26.2) million$(21.2) millionLoss increased by $5.0 million
Net loss per share$(0.29)$(0.61)Improved due primarily to share issuance
Cash used in operating activities$(23.8) million$(20.5) millionUse increased by $3.3 million
Cash, cash equivalents and investments$45.9 million$13.8 millionIncreased by $32.1 million

At December 31, 2021, cash and cash equivalents were $3.6 million, investments were $42.3 million, total assets were $48.5 million, total liabilities were $4.6 million, and stockholders’ equity was $43.9 million. The company had no outstanding PPP loan after forgiveness in May 2021 and had operating lease liabilities totaling approximately $0.2 million.

Material Changes Versus the Prior Comparable Period

  • Research and development spending increased 52%, primarily because of the NSCLC Phase 1b trial.
  • General and administrative expense increased modestly as employee costs rose, partly offset by lower facility costs.
  • Cash from financing activities increased to $55.7 million from $15.8 million, primarily reflecting equity financing.
  • During January 2021, the company raised approximately $35.9 million gross in a registered direct offering, $9.7 million gross under its prior at-the-market agreement, and later generated $10.9 million gross under a new ATM agreement.
  • Common shares outstanding increased from 43.8 million at year-end 2020 to 90.6 million at year-end 2021, creating substantial dilution.
  • Other income in 2021 included approximately $0.4 million from PPP loan forgiveness and a gain on disposal of fixed assets. The 2020 other expense included a non-cash $0.8 million charge related to terminating the former headquarters lease.
  • Cash used in investing activities was $35.9 million in 2021, reflecting purchases of short-term investments substantially exceeding sales or maturities.

Guidance, Outlook, Commentary and Risks

Management stated that the $45.9 million of cash, cash equivalents and investments at December 31, 2021 was expected to fund operating expenses into the fourth quarter of 2023 under the then-current operating plan. The company also stated that additional funding would be required to complete development or commercialization of ALRN-6924.

  • Management expected continued operating losses and no near-term product revenue.
  • The NSCLC trial planned to enroll 60 patients, with interim data anticipated in the second quarter of 2022 and topline results anticipated in the fourth quarter of 2022.
  • Additional healthy-volunteer pharmacology data were expected in the second half of 2022.
  • A breast cancer Phase 1b trial was planned for the first half of 2022, with interim data anticipated in the fourth quarter of 2022.
  • COVID-19 disrupted site activation and patient enrollment, particularly in Eastern Europe, and could continue to affect trials, supply chains, regulatory activities and financing access.
  • The company relies on third parties for clinical research, manufacturing, fill-and-finish, storage and distribution. The active pharmaceutical ingredient was sourced from a single contract manufacturer, with no redundant supply arrangement in place at year-end.
  • A companion diagnostic to identify p53-mutated cancer patients may be required for marketing approval, but the company had limited internal diagnostic-development capabilities.
  • The company received a Nasdaq deficiency notice in December 2021 because its common-stock bid price had remained below $1.00 for 30 consecutive business days. It had until June 6, 2022 to regain compliance, with a potential additional compliance period subject to Nasdaq requirements.
  • The company had substantial historical losses, including an accumulated deficit of $245.5 million, and may need to raise capital through equity, debt, collaborations or licensing transactions. Additional financing could dilute stockholders or require relinquishment of rights.
  • Clinical efficacy and safety remain unproven in later-stage trials. The company faces competition from approved and developing chemoprotective therapies, including trilaciclib.
  • As of December 31, 2021, the company reported no material legal proceedings and management concluded that disclosure controls and internal control over financial reporting were effective at a reasonable assurance level.

Investor Verification Checklist

  • Confirm that the intended issuer is Aileron Therapeutics rather than Rein Therapeutics.
  • Verify the current cash runway, subsequent financing activity and whether the company remained compliant with Nasdaq’s minimum bid-price requirement after June 6, 2022.
  • Review subsequent clinical data for the NSCLC and breast cancer programs, including enrollment, efficacy, safety and endpoint changes.
  • Assess dilution from the 2021 equity offerings, the ATM agreement, the Lincoln Park equity facility, outstanding warrants and stock options.
  • Verify whether a companion diagnostic is required and the status, cost and regulatory pathway of its development.
  • Review the company’s dependence on single-source API manufacturing and the effects of COVID-19, geopolitical events and supply-chain disruptions.
  • Reconcile the reported cash runway with ongoing research and development spending, expected trial costs and the need for additional capital.