PepGen Inc. — FY2022 Form 10-K
Reporting period: Fiscal year ended December 31, 2022. This is an annual report; the supplied filing does not provide a separate Q4 income statement or cash-flow summary. Amounts below are in U.S. dollars.
Business context
PepGen is a clinical-stage biotechnology company developing peptide-conjugated oligonucleotide medicines using its Enhanced Delivery Oligonucleotide (EDO) platform. It has no approved products and has not generated product revenue. Its lead candidate, PGN-EDO51 for Duchenne muscular dystrophy (DMD), completed a Phase 1 study in healthy volunteers in Q3 2022. PGN-EDODM1 for myotonic dystrophy type 1 (DM1), and three additional DMD programs, remained preclinical.
Financial performance and position
| Metric | FY2022 / Dec. 31, 2022 | FY2021 / Dec. 31, 2021 |
|---|---|---|
| Revenue | None | None |
| Research and development expense | $54.1 million | $19.0 million |
| General and administrative expense | $14.2 million | $8.1 million |
| Total operating expenses / operating loss | $68.3 million / $(68.3) million | $27.1 million / $(27.1) million |
| Net loss | $(69.1) million | $(27.3) million |
| Operating cash flow | $(59.3) million | $(22.6) million |
| Cash and cash equivalents | $181.8 million | $132.9 million |
| Total assets | $217.4 million | $143.6 million |
Profitability and operating margins are not meaningful because the company has no revenue and is loss-making. FY2022 net loss included $2.9 million of net other income, mainly interest income, and a $3.7 million income-tax expense related to transferring intellectual property from its UK subsidiary to the U.S. parent. Cash used in investing activities was $3.8 million, primarily for property and equipment. Financing provided $112.2 million, principally from the May 2022 IPO; net IPO proceeds were $110.2 million.
No borrowings are reported. The balance sheet included $24.5 million of operating lease liabilities ($5.6 million current and $19.0 million non-current); undiscounted future minimum lease payments were $33.9 million. The company estimated its cash would fund planned operations into early 2025, subject to assumptions and execution. It expects to need additional financing to advance development and commercialization.
Changes, outlook, and material risks
- Losses increased from $27.3 million to $69.1 million year over year. R&D expense rose with pipeline work, preclinical and manufacturing costs, PGN-EDO51 clinical costs, and higher headcount. G&A increased with staffing, public-company costs, and facility expansion.
- Management expected two PGN-EDO51 Phase 2 studies to open in 2023: an open-label Canadian study and a global randomized study, the latter subject to regulatory clearance. Initial safety, exon-skipping, and dystrophin data were anticipated in 2024. A Phase 1 DM1 study was also expected to begin in the first half of 2023, with data anticipated in 2024. These are forward-looking plans, not reported outcomes.
- In the healthy-volunteer PGN-EDO51 Phase 1 study (32 adult men; single doses of 1–15 mg/kg), the company reported dose-dependent target engagement and tissue concentration. At 15 mg/kg, one participant had a non-life-threatening serious adverse event involving kidney biomarkers; changes were described as transient and reversible. Mild to moderate hypomagnesemia occurred in two participants at that dose. The company planned to monitor magnesium and kidney measures in future trials.
- The company reported strong preclinical activity for its candidates, but clinical benefit in patients has not been established. It highlighted the uncertainty of translating preclinical and healthy-volunteer results, as well as clinical, regulatory, manufacturing, competition, intellectual-property, patient-enrollment, and financing risks. It relies on third-party manufacturers and research organizations.
- A new Boston office and laboratory lease commenced in December 2022. The lease runs approximately 9.2 years, with base rent beginning in March 2023 and increasing over the term.
- As a subsequent event, the filing stated that after Silicon Valley Bank’s March 2023 closure, PepGen had full access to and control over its cash and cash equivalents as of the financial-statement filing date.
Most important facts for investors to verify
- Whether PGN-EDO51 patient trials began as planned and whether upcoming patient data support safety, repeat-dose tolerability, and meaningful dystrophin production.
- Whether kidney biomarker changes and hypomagnesemia recur, worsen, or require dose modification in patient studies.
- Whether the anticipated early-2025 cash runway remains valid as trial, manufacturing, lease, and other costs develop, and what financing may be required.
- Whether PGN-EDODM1 advances into clinical testing and whether its preclinical mechanism and durability translate to patients.
- The status and scope of licensed and company-owned patent protection, third-party manufacturing capacity, and the terms of the Oxford/MRC license.
- The reported statements were audited by KPMG, which issued an unqualified opinion. Management said disclosure controls were effective at the reasonable-assurance level; the filing did not include management’s internal-control assessment or an auditor attestation because of the newly public company transition period.