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
| Metric | 2021 | 2020 | Change |
|---|---|---|---|
| Revenue | $0 | $0 | No 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) million | Loss increased |
| Other income (expense), net | $0.4 million | $(0.7) million | +$1.1 million |
| Net loss | $(26.2) million | $(21.2) million | Loss 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) million | Use increased by $3.3 million |
| Cash, cash equivalents and investments | $45.9 million | $13.8 million | Increased 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.