Business context and reporting period
Edgewise Therapeutics, Inc. is a clinical-stage biopharmaceutical company developing treatments for rare muscle disorders. This unaudited Form 10-Q covers the quarter and nine months ended September 30, 2022. The company had no approved products and had generated no revenue.
EDG-5506, its lead candidate for Duchenne and Becker muscular dystrophy, had completed Phase 1; the company started a Phase 2 Becker muscular dystrophy trial in July 2022 and a Phase 2 trial in children with Duchenne muscular dystrophy in October 2022. EDG-002 remained preclinical.
Financial performance and position
Amounts below are in millions of dollars except per-share data.
| Metric | Q3 2022 | Q3 2021 | Nine months 2022 | Nine months 2021 |
|---|---|---|---|---|
| Revenue | None | None | None | None |
| Research and development expense | $13.9 | $9.9 | $37.4 | $23.1 |
| General and administrative expense | $4.4 | $3.2 | $12.2 | $7.3 |
| Total operating expense | $18.3 | $13.1 | $49.6 | $30.4 |
| Net loss | $17.5 | $12.9 | $48.2 | $30.1 |
| Basic and diluted loss per share | $(0.34) | $(0.26) | $(0.96) | $(0.90) |
Margins are not meaningful because the company had no revenue. Interest income was $0.8 million for Q3 and $1.4 million for the nine-month period.
At September 30, 2022, cash and cash equivalents were $109.7 million and available-for-sale marketable securities were $255.1 million, totaling $364.8 million. Current assets were $370.1 million and current liabilities $13.3 million. Total liabilities were $15.7 million, including $66,000 of debt principal and $2.6 million of lease liabilities. Accumulated deficit was $125.2 million.
For the first nine months, operating cash outflow was $40.8 million, investing activities provided $5.0 million, and financing activities provided $130.0 million. Financing included $129.2 million net proceeds from the September 2022 stock offering.
Material changes versus prior comparable periods
- Q3 operating expenses rose $5.2 million year over year; nine-month expenses rose $19.2 million. The company attributed the increases primarily to EDG-002 discovery and preclinical work, higher employee costs, and EDG-5506 clinical development and manufacturing.
- Net loss increased $4.5 million for Q3 and $18.1 million for the nine-month period compared with 2021.
- Cash, cash equivalents and marketable securities rose from $280.8 million at December 31, 2021 to $364.8 million, principally reflecting the September equity offering. Common shares outstanding increased from 49.5 million at year-end 2021 to 63.2 million at September 30, 2022.
- Unrealized losses on available-for-sale securities contributed $1.7 million of other comprehensive loss for the nine months, primarily associated with interest-rate and market credit-spread changes, rather than increased credit risk in specific securities.
Outlook, commentary and risks
- Management said existing cash, equivalents and marketable securities were expected to fund operations in the normal course and meet liquidity needs for at least 12 months from issuance of the financial statements. The company nevertheless expects substantial additional capital will be needed over time; future financing may dilute shareholders or impose restrictive terms.
- Management expects research and development expense to increase substantially as EDG-5506 advances through trials, additional candidates progress, and the company hires personnel. The filing gives no specific revenue, earnings or expense guidance.
- On October 13, 2022, the company reported positive six-month interim results from the ongoing ARCH open-label study in adults with Becker muscular dystrophy. These were interim data subject to further review and verification; the filing cautions that preliminary results may differ from final results.
- The company reported positive topline results from earlier EDG-5506 Phase 1 studies, but emphasized that clinical success and regulatory approval remain uncertain. Risks include trial enrollment and execution, safety or efficacy outcomes, reliance on third-party manufacturers and CROs, competition, intellectual-property challenges, and COVID-19-related operational or supply disruptions. Inflation and geopolitical developments were also being monitored.
- The company reported no material legal proceedings pending or threatened. Management concluded disclosure controls were effective at a reasonable assurance level as of September 30, 2022, with no material change in internal control over financial reporting during the quarter.
Important facts for investors to verify
- Progress, enrollment, safety data and future readouts for the BMD and DMD Phase 2 trials, and the full and verified ARCH study results.
- Whether the $364.8 million liquidity balance and management’s stated 12-month funding horizon remain adequate as clinical and operating costs rise.
- Cash burn trends, especially the growth in R&D spending, and any additional financing or dilution.
- Manufacturing supply continuity and the effect of enrollment, site, or supply-chain delays on trial timelines.
- Development status and timing for EDG-002, including whether planned IND-enabling work proceeded.