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Aerpio Pharmaceuticals(AADI) - 2021 Q4 - Annual Report
2022-03-16 16:00
Financial Performance - For the fiscal year ended December 31, 2021, Aadi Bioscience recorded revenue of $1.1 million and a net loss of $110.1 million[283]. - Total revenue for the year ended December 31, 2021, was $1.1 million, a decrease of 92.3% compared to $14.6 million in 2020[305]. - The net loss for the year ended December 31, 2021, was $110.1 million, compared to a net loss of $3.5 million in 2020[313]. - Cash used in operating activities for the year ended December 31, 2021, was $22.4 million, an increase from $12.7 million in 2020[314]. - The net and comprehensive loss for 2021 was $110,090,000, compared to a loss of $3,478,000 in 2020, reflecting an increase in loss of approximately 3061.5%[347]. - The net loss per share attributable to common stockholders for 2021 was $(12.41), a significant increase from $(1.76) in 2020[347]. Revenue Sources - The company recognized $14.0 million in revenue from the EOC License Agreement in December 2020, with potential additional payments of up to $257.0 million upon achieving certain milestones[296]. - License revenue for the year ended December 31, 2021, was $1.0 million, a significant decrease from $14.0 million in 2020, attributed to the timing of FDA approval milestones[306]. - The company recognized $1.0 million in license revenue from EOC for achieving the FDA approval milestone on November 22, 2021[363]. - The company is eligible for an additional $257.0 million in milestone and royalty payments upon achieving specific development, regulatory, and sales milestones[421]. Expenses and Liabilities - Research and development expenses increased to $19.7 million in 2021, up 31.3% from $15.0 million in 2020, primarily due to increased clinical drug manufacturing costs and external clinical development expenses[309]. - General and administrative expenses rose significantly to $18.5 million in 2021, an increase of 777.4% compared to $2.1 million in 2020, driven by increased headcount and costs associated with being a public company[309]. - Total operating expenses for 2021 were $112.34 million, up from $17.13 million in 2020, primarily due to a $74.16 million impairment of acquired contract intangible assets[347]. - Total liabilities decreased from $31.3 million in 2020 to $21.5 million in 2021, with current liabilities dropping from $30.1 million to $15.3 million[344]. Cash and Liquidity - As of December 31, 2021, Aadi Bioscience had cash and cash equivalents of $149.0 million, which are expected to support operations into 2024[292]. - Cash and cash equivalents at the end of 2021 were $148,989,000, up from $4,455,000 at the end of 2020, marking an increase of approximately 3341.5%[353]. - The company raised $155 million from PIPE investors, resulting in net proceeds of $145.4 million after deducting expenses[356]. - Cash acquired in connection with the merger was $29,700,000, contributing positively to the cash flow[353]. Merger and Corporate Structure - The merger with Aerpio Pharmaceuticals was completed on August 26, 2021, with a reverse stock split of 15:1 occurring prior to the merger[356]. - The company accounted for the merger as a reverse asset acquisition, resulting in no goodwill recognized on the balance sheet[322]. - A total of 5,776,660 shares of common stock were issued to holders of Private Aadi common stock at the closing of the merger[356]. - The Company entered into a Contingent Value Rights Agreement, allowing CVR Holders to receive rights to certain net proceeds from a license agreement with Gossamer Bio, Inc.[356]. Impairments and Valuation - Aadi Bioscience incurred a non-cash impairment charge of $74.2 million in 2021 to adjust the carrying amount of a contract intangible asset to its estimated fair value of $3.9 million[291]. - The company recognized an impairment of $74.2 million on the acquired contract intangible asset, adjusting its carrying amount to an estimated fair value of $3.9 million[322]. - The estimated fair value of total consideration given in the Merger was $110.4 million, based on 3,208,718 shares of common stock at a fair value of $33.00 per share[408]. Research and Development Focus - Aadi's lead drug product, FYARRO, is focused on precision therapies for diseases driven by the mTOR pathway activation[355]. - The company expects research and development costs to increase in 2022 due to anticipated expenses related to the PRECISION 1 trial[291]. - Research and development expenses for the year ended December 31, 2021, amounted to $657,000, while general and administrative expenses were $1.449 million, totaling $2.106 million[330]. Stock and Equity - The company issued and sold 11,852,862 shares of common stock to PIPE Investors for total gross proceeds of $155 million during the merger[286]. - The weighted average number of common shares outstanding increased to 8,923,369 in 2021 from 2,542,358 in 2020, reflecting the impact of stock issuances[347]. - The Company has a total operating lease liability of $605,000 as of December 31, 2021, up from $125,000 in 2020[417]. Tax and Regulatory Matters - The company did not record a current or deferred income tax expense for the years ended December 31, 2021, and 2020, due to net and comprehensive losses[444]. - The Company has accrued expenses of $4.8 million and $3.3 million for clinical and contract manufacturing vendors as of December 31, 2021 and 2020, respectively[452]. - The balance of gross unrecognized tax benefits increased from $2.4 million in 2020 to $2.7 million in 2021[448].
Aerpio Pharmaceuticals(AADI) - 2021 Q3 - Quarterly Report
2021-11-09 16:00
Product Development - The company is developing ABI-009, a precision therapy for genetically defined cancers with mTOR pathway gene alterations [153]. - ABI-009's NDA for treating advanced malignant PEComa was accepted by the FDA with a PDUFA target action date of November 26, 2021 [154]. - The company plans to initiate the PRECISION 1 trial for ABI-009 in tumor-agnostic TSC1 & TSC2 alterations by early 2022 [156]. Financial Performance - Total revenue for the three months ended September 30, 2021, was $0, compared to $0.231 million in 2020, and for the nine months ended September 30, 2021, it was $0.120 million compared to $0.431 million in 2020, indicating a decrease in grant revenue [181]. - Net loss for the three months ended September 30, 2021, was $87.088 million, compared to a net loss of $2.892 million in 2020, and for the nine months ended September 30, 2021, it was $94.100 million compared to $11.498 million in 2020 [191]. - As of September 30, 2021, the company had an accumulated deficit of $126.7 million and expects to continue incurring significant expenses and operating losses due to ongoing research and development activities [191]. Expenses - Research and development expenses for the three months ended September 30, 2021, were $5.754 million, an increase of 142% from $2.395 million in 2020, driven by increased clinical drug manufacturing costs [183]. - General and administrative expenses for the three months ended September 30, 2021, were $7.401 million, a significant increase from $0.499 million in 2020, primarily due to compensation related to the Merger and increased headcount [185]. - Research and development expenses are expected to increase substantially as the company advances its product candidates through clinical trials [175]. - General and administrative expenses are anticipated to rise due to expansion of operating activities and costs associated with being a public company [177]. Cash Flow - Cash and cash equivalents as of September 30, 2021, totaled $161.4 million, which is expected to support operations into 2024 [192]. - Net cash used in operating activities for the nine months ended September 30, 2021, was $9.995 million, compared to $9.426 million in 2020, primarily due to net losses and changes in working capital [193]. - Cash provided by financing activities for the nine months ended September 30, 2021, was $141.716 million, significantly higher than $1.194 million in 2020, driven by PIPE Financing [199]. Mergers and Acquisitions - The company completed a merger with Aadi Subsidiary, Inc. on August 26, 2021, and changed its name to Aadi Bioscience, Inc. [158]. - The merger was accounted for as a reverse asset acquisition, resulting in no goodwill recognized on the balance sheet [209]. - The excess purchase price over the fair value of acquired assets and liabilities was $78.1 million, leading to an impairment of $74.2 million on the contract intangible asset, adjusting its value to $3.9 million [210]. Impairments and Taxation - An impairment of $74.2 million was recognized for an acquired contract intangible asset, reducing its fair value to $3.9 million [178]. - The company has not recorded any U.S. federal or state income tax benefits for net losses incurred since its formation in 2011 [180]. - Deferred tax assets have been fully offset by a valuation allowance, primarily comprised of federal and state tax net operating losses (NOLs) [224]. - The company has not recorded any U.S. federal or state income tax benefits for net losses incurred since its formation in 2011, due to uncertainty in realizing a benefit [224]. Stock-Based Compensation - For the three months ended September 30, 2021, total stock-based compensation expense was $648,000, compared to $34,000 in the same period of 2020 [221]. - As of September 30, 2021, total unamortized stock-based compensation was $13.9 million, expected to be recognized over a weighted average period of 3.15 years [221]. Research and Development Contracts - The company has entered into contracts with various organizations for research and development activities, which can be modified or canceled upon written notice, incurring liabilities for costs incurred to date [202]. - The license agreement with Gossamer Bio includes potential payments based on development milestones and sales-based royalties, with fair value determined using a risk-adjusted discounted cash flow model [211]. - Research and development costs are estimated based on patient enrollment and services provided, with significant estimates made for accrued liabilities and prepaid expenses [213]. Reporting and Compliance - The company is classified as a smaller reporting company and is not required to provide additional market risk information [225].
Aerpio Pharmaceuticals(AADI) - 2020 Q3 - Quarterly Report
2020-11-10 13:32
PART I. FINANCIAL INFORMATION [Condensed Consolidated Financial Statements](index=4&type=section&id=Item%201.%20Condensed%20Consolidated%20Financial%20Statements) This section presents Aerpio Pharmaceuticals' unaudited condensed consolidated financial statements, showing a **$47.3 million** cash increase and **$0.4 million** net income for the nine-month period, driven by **$15.0 million** license revenue [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) The balance sheet shows total assets increased to **$49.8 million** by September 30, 2020, primarily due to a rise in cash and cash equivalents to **$47.3 million**, alongside increased stockholders' equity Condensed Consolidated Balance Sheet Highlights (Unaudited) | Account | September 30, 2020 | December 31, 2019 | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | $47,281,986 | $38,524,536 | | Total current assets | $49,583,292 | $39,570,475 | | **Total assets** | **$49,830,378** | **$39,936,786** | | **Liabilities & Equity** | | | | Total current liabilities | $2,511,959 | $3,334,005 | | **Total liabilities** | **$2,511,959** | **$3,401,443** | | **Total stockholders' equity** | **$47,318,419** | **$36,535,343** | [Condensed Consolidated Statements of Operations and Comprehensive (Loss) Income](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20%28Loss%29%20Income) The company reported **$0.4 million** net income for the nine months ended September 30, 2020, a significant turnaround from a **$18.8 million** net loss, driven by **$15.0 million** in license revenue Statement of Operations Highlights (Unaudited) | Metric | Nine Months Ended Sep 30, 2020 | Nine Months Ended Sep 30, 2019 | | :--- | :--- | :--- | | License revenue | $15,000,000 | $0 | | Research and development | $9,363,602 | $10,695,109 | | General and administrative | $6,356,821 | $8,215,456 | | Total operating expenses | $15,720,423 | $19,786,849 | | Loss from operations | ($720,423) | ($19,786,849) | | **Net and comprehensive (loss) income** | **$402,346** | **($18,824,371)** | | **Net (loss) income per share (basic)** | **$0.01** | **($0.46)** | [Condensed Consolidated Statements of Stockholders' Equity](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Stockholders%27%20Equity) Total stockholders' equity increased to **$47.3 million** by September 30, 2020, primarily due to **$9.3 million** in net proceeds from common stock issuance and **$0.4 million** net income - Total stockholders' equity grew to **$47,318,419** as of September 30, 2020, up from **$36,535,343** at January 1, 2020[11](index=11&type=chunk) - In the third quarter of 2020, the company issued **6,523,655 shares** of common stock, resulting in net proceeds of **$9,340,842** after issuance costs[11](index=11&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Net cash used in operating activities significantly decreased to **$0.6 million** for the nine months ended September 30, 2020, with **$9.3 million** from financing, increasing cash and cash equivalents to **$47.3 million** Cash Flow Summary (Unaudited) | Activity | Nine Months Ended Sep 30, 2020 | Nine Months Ended Sep 30, 2019 | | :--- | :--- | :--- | | Net cash used in operating activities | ($564,367) | ($18,987,454) | | Net cash used in investing activities | ($19,025) | ($236,953) | | Net cash provided by financing activities | $9,340,842 | $0 | | **Net increase (decrease) in cash** | **$8,757,450** | **($19,224,407)** | | **Cash and cash equivalents, end of period** | **$47,281,986** | **$43,389,603** | [Notes to Condensed Consolidated Financial Statements (Unaudited)](index=8&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements%20%28Unaudited%29) These notes detail the company's focus on Tie2 activation, clinical pipeline, **$15.0 million** Gossamer license revenue, **$9.3 million** equity raise, and projected cash sufficiency through Q4 2022 - The company is developing razuprotafib for Glaucoma (Phase 2) and COVID-19 associated ARDS (two Phase 2 trials)[17](index=17&type=chunk) - In May 2020, the company received a one-time payment of **$15.0 million** from an amendment to its license agreement with Gossamer, which was recognized as revenue[18](index=18&type=chunk)[72](index=72&type=chunk) - During Q3 2020, the company sold **6,523,655 shares** of common stock under its Sales Agreement, receiving net proceeds of **$9.3 million**[18](index=18&type=chunk) - Management believes existing cash of approximately **$47.3 million** at September 30, 2020, will be sufficient to fund its current operating plan through the fourth quarter of 2022[18](index=18&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=21&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses financial condition and operations, highlighting clinical program progress, **$15.0 million** license revenue driving improved results, and **$47.3 million** cash expected to fund operations through Q4 2022 [Operating Overview](index=21&type=section&id=Operating%20Overview) Aerpio focuses on Tie2 activation for ocular diseases and ARDS, with lead candidate razuprotafib in Phase 2 trials for glaucoma and COVID-19 ARDS, alongside other pipeline programs - Initiated a Phase 2 clinical trial for razuprotafib in glaucoma in June 2020, with topline results expected in **December 2020 or early January 2021**[80](index=80&type=chunk) - Initiated two Phase 2 trials for razuprotafib in COVID-19 associated ARDS: the I-SPY COVID Trial and the RESCUE trial[83](index=83&type=chunk) - The RESCUE trial is supported by up to **$5.1 million** in reimbursement from the Medical Technology Enterprise Consortium (MTEC)[83](index=83&type=chunk) - Gossamer Bio plans to initiate a Phase 2 study of the licensed compound GB004 in patients with mild-to-moderate UC in the **second half of 2020**[86](index=86&type=chunk) [Results of Operations](index=25&type=section&id=Results%20of%20Operations) For the nine months ended September 30, 2020, **$15.0 million** license revenue and reduced R&D and G&A expenses led to a net income, a significant improvement from the prior year's net loss Comparison of Operating Results (Unaudited) | Metric | Nine Months Ended Sep 30, 2020 | Nine Months Ended Sep 30, 2019 | | :--- | :--- | :--- | | License Revenue | $15,000,000 | $0 | | R&D Expense | $9,363,602 | $10,695,109 | | G&A Expense | $6,356,821 | $8,215,456 | | Other Income | $897,378 | $0 | | **Net Income (Loss)** | **$402,346** | **($18,824,371)** | - R&D expenses for Q3 2020 increased by **$1.1 million (40.1%)** YoY due to spending on the Phase 2 glaucoma program and the I-SPY and RESCUE trials[101](index=101&type=chunk) - G&A expenses for the nine months ended Sep 30, 2020 decreased by **$1.9 million (22.6%)** YoY, primarily due to lower employee-related expenses, legal fees, and stock-based compensation[105](index=105&type=chunk) [Liquidity and Capital Resources](index=26&type=section&id=Liquidity%20and%20Capital%20Resources) As of September 30, 2020, the company held **$47.3 million** in cash, with **$9.3 million** raised from equity, expected to fund operations through Q4 2022, while exploring strategic alternatives - The company had cash and cash equivalents of **$47.3 million** as of September 30, 2020[110](index=110&type=chunk) - Management believes existing cash will fund planned operations through the **fourth quarter of 2022**[110](index=110&type=chunk) - During Q3 2020, the company sold **6,523,655 shares** of common stock under its Sales Agreement, receiving net proceeds of **$9.3 million**[113](index=113&type=chunk) - The company continues to explore a range of strategic alternatives, which may include acquisition, merger, asset sale, or other transactions, but there is no assurance a transaction will occur[113](index=113&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=28&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) As a smaller reporting company, Aerpio Pharmaceuticals, Inc. is not required to provide market risk disclosures - The company is a smaller reporting company and is not required to provide the information required by this Item[123](index=123&type=chunk) [Controls and Procedures](index=29&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that the company's disclosure controls and procedures were effective as of September 30, 2020, with no material changes in internal control over financial reporting during the quarter - Management concluded that the company's disclosure controls and procedures were effective as of September 30, 2020[125](index=125&type=chunk) - There were no material changes in internal control over financial reporting during the quarter ended September 30, 2020[126](index=126&type=chunk) PART II. OTHER INFORMATION [Legal Proceedings](index=30&type=section&id=Item%201.%20Legal%20Proceedings) As of the filing date, the company is not involved in any material legal proceedings, while acknowledging potential future claims in the ordinary course of business - The company is not currently involved in any material legal proceedings[128](index=128&type=chunk) [Risk Factors](index=30&type=section&id=Item%201A.%20Risk%20Factors) This section outlines significant risks, including dependence on razuprotafib, COVID-19 impacts, clinical development uncertainties, intellectual property protection, reliance on third parties, financing needs, and market competition [Risks Related to the COVID-19 Pandemic](index=30&type=section&id=Risks%20Related%20to%20the%20COVID-19%20Pandemic) The COVID-19 pandemic poses substantial risks, potentially harming R&D, delaying clinical trials due to patient enrollment issues, site monitoring interruptions, and supply chain disruptions - The COVID-19 pandemic could seriously harm research, development, and commercialization efforts, increase costs, and adversely affect financial results[130](index=130&type=chunk) - The pandemic may delay clinical trials due to the diversion of healthcare resources, travel limitations interrupting site monitoring, and interruptions in global shipping of trial materials[132](index=132&type=chunk)[133](index=133&type=chunk) [Risks Related to Clinical Development](index=31&type=section&id=Risks%20Related%20to%20Clinical%20Development) The company's success depends heavily on razuprotafib, facing risks of unfavorable clinical results, regulatory approval challenges, patient enrollment difficulties, and the non-predictive nature of early trial outcomes - The business depends heavily on the success of its lead product candidate, razuprotafib, which may never be approved or commercialized[134](index=134&type=chunk) - Difficulties in enrolling patients in clinical trials could delay or prevent the development of product candidates[138](index=138&type=chunk) - Positive results from early-stage clinical trials are not necessarily predictive of results in future, larger clinical trials[141](index=141&type=chunk) [Risks Related to Our Financial Position and Need for Additional Capital](index=47&type=section&id=Risks%20Related%20to%20Our%20Financial%20Position%20and%20Need%20for%20Additional%20Capital) The company faces ongoing losses and requires substantial additional financing, with failure to secure capital potentially delaying or terminating programs, and strategic alternative exploration carrying inherent uncertainties and costs - The company has a limited operating history and has incurred significant losses since inception, anticipating continued losses for the foreseeable future[182](index=182&type=chunk)[183](index=183&type=chunk) - Substantial additional financing is required, and a failure to obtain it could force the company to delay, limit, or terminate product development[189](index=189&type=chunk) - The exploration of strategic alternatives may not result in a transaction and the process could adversely impact the business and stock price[188](index=188&type=chunk) [Risks Related to Commercialization](index=50&type=section&id=Risks%20Related%20to%20Commercialization) Commercial success is uncertain, depending on market acceptance, facing intense competition, lacking internal sales infrastructure, and requiring adequate third-party payor coverage and reimbursement - Commercial success depends on attaining significant market acceptance from physicians, patients, and third-party payors[193](index=193&type=chunk) - The company faces substantial competition from larger, more established companies with greater financial and technical resources[195](index=195&type=chunk) - The company lacks a sales, marketing, and distribution infrastructure, and building one or partnering with third parties presents significant challenges[197](index=197&type=chunk) - Limited or unavailable coverage and reimbursement from payors could make it difficult to sell products profitably[202](index=202&type=chunk) [Exhibits](index=65&type=section&id=Item%206.%20Exhibits) This section lists exhibits filed with the Form 10-Q, including Sarbanes-Oxley certifications from key officers and XBRL data files - The report includes certifications from the Principal Executive Officer and Principal Financial Officer pursuant to Sections 302 and 906 of the Sarbanes-Oxley Act[249](index=249&type=chunk) - XBRL Instance Document and related taxonomy files are included as exhibits[249](index=249&type=chunk)
Aerpio Pharmaceuticals(AADI) - 2020 Q2 - Quarterly Report
2020-08-12 12:48
UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2020 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ______________ to ______________ Commission File Number: 001-38560 Aerpio Pharmaceuticals, Inc. (Exact Name of Registrant as Specified in its Charter) Delaware E ...
Aerpio Pharmaceuticals(AADI) - 2020 Q1 - Quarterly Report
2020-05-07 12:52
Financial Performance - For the three months ended March 31, 2020, total operating expenses were $4,114,933, a decrease of 53.5% compared to $8,841,293 for the same period in 2019[85]. - The net and comprehensive loss for the three months ended March 31, 2020, was $3,918,663, compared to a loss of $8,492,825 for the same period in 2019, indicating a 53.8% improvement[85]. - Net loss for Q1 2020 was $3.9 million, a decrease from a net loss of $8.5 million in Q1 2019[91]. - Net cash used in operating activities for Q1 2020 was $3.9 million, compared to $9.1 million in Q1 2019[94]. - Total other income for Q1 2020 was $196,270, a decrease from $348,468 in Q1 2019[88]. Operating Expenses - Research and development expenses for the three months ended March 31, 2020, were $1,829,042, down from $5,586,251 in the prior year, reflecting a reduction of 67.2%[85]. - General and administrative expenses decreased to $2,285,891 for the three months ended March 31, 2020, compared to $3,255,042 for the same period in 2019, a reduction of 29.8%[85]. - Research and development expenses for Q1 2020 decreased by approximately $3.8 million or 67.3% compared to Q1 2019[87]. - General and administrative expenses for Q1 2020 decreased by approximately $1.0 million or 29.8% compared to Q1 2019[88]. Cash Position - As of March 31, 2020, the company had cash reserves of $34.6 million as of March 31, 2020, which are expected to fund operations through at least the second quarter of 2021[78]. - Cash and cash equivalents as of March 31, 2020, were $34.6 million, with an accumulated deficit of $146.2 million[91]. - The company anticipates that existing cash and cash equivalents will support operations through at least Q2 2021[91]. Strategic Plans - The company plans to initiate a Phase 2 clinical trial for its glaucoma program in Q3 2020, with results expected in Q1 2021, subject to potential delays due to COVID-19[74]. - The company is developing ARP-1536, a humanized monoclonal antibody for diabetic vascular complications, and a bispecific antibody targeting both VEGF and VE-PTP[77]. - The company continues to explore strategic alternatives, including potential acquisitions or mergers, to maximize stockholder value[91]. Clinical Trials - In the TIME-2b trial, subcutaneous AKB-9778 showed a 21% reduction in Urine Albumin-Creatinine Ratio (UACR) from baseline, indicating potential benefits in diabetic kidney disease[75]. Other Financial Information - The company recorded a severance expense of $1.9 million in 2019 due to a realignment plan and leadership changes[78]. - There were no investing cash flows in Q1 2020, and no financing cash flows during the same period[95][96]. - No shares of common stock had been sold under the Controlled Equity Offering Sales Agreement as of March 31, 2020[91].
Aerpio Pharmaceuticals(AADI) - 2019 Q4 - Annual Report
2020-03-16 20:31
Part I [Business](index=4&type=section&id=Item%201.%20Business) Aerpio Pharmaceuticals develops Tie2 pathway compounds for ocular and diabetic diseases, with lead candidate AKB-9778 for glaucoma, and is exploring strategic alternatives to maximize shareholder value [Overview](index=4&type=section&id=Overview) - Aerpio is a biopharmaceutical company focused on developing compounds that activate the Tie2 pathway for treating ocular diseases and diabetic complications[6](index=6&type=chunk) - The Phase 2b trial of subcutaneous AKB-9778 for non-proliferative diabetic retinopathy (NPDR) did not meet its primary endpoint[6](index=6&type=chunk) - Based on observed reductions in intraocular pressure (IOP), the company has developed a topical ocular formulation of AKB-9778 for open-angle glaucoma (OAG) and initiated a Phase 1b trial in June 2019[6](index=6&type=chunk) - The company has licensed AKB-4924 (now GB004) to Gossamer Bio, Inc. for the treatment of inflammatory bowel disease (IBD). Gossamer is responsible for all further development and commercialization[6](index=6&type=chunk) [Our Strategy](index=5&type=section&id=Our%20Strategy) - Advance the development of AKB-9778 for open-angle glaucoma, with plans for a Phase 2 clinical trial with results expected in Q1 2021[8](index=8&type=chunk) - Explore strategic options for further development of AKB-9778 in diabetic nephropathy, based on positive UACR data from two clinical trials[9](index=9&type=chunk) - Advance preclinical assets ARP-1536 (monoclonal antibody) and a bispecific antibody for diabetic vascular complications and macular edema[10](index=10&type=chunk) - Engaged financial advisors in October 2019 to explore strategic alternatives, including potential acquisition, merger, or asset sale, to maximize stockholder value[10](index=10&type=chunk) - Implemented a realignment plan in April 2019, reducing the workforce by approximately **41%** to conserve cash for ongoing clinical trials[11](index=11&type=chunk) [Product Pipeline](index=5&type=section&id=Product%20Pipeline) - The company's lead product, AKB-9778, is a first-in-class small molecule inhibitor of vascular endothelial protein tyrosine phosphatase (VE-PTP), which activates the Tie2 pathway[15](index=15&type=chunk)[25](index=25&type=chunk) - In a Phase 1b trial for OAG, topical AKB-9778 added to standard prostaglandin therapy showed a **statistically significant**, placebo-corrected decrease in IOP on Day 7[21](index=21&type=chunk)[23](index=23&type=chunk) - ARP-1536 is a humanized monoclonal antibody in preclinical development targeting VE-PTP, similar to AKB-9778, for diabetic vascular complications[28](index=28&type=chunk) - A bispecific antibody that binds both VEGF and VE-PTP is in development for wet AMD and diabetic macular edema[29](index=29&type=chunk) - AKB-4924 (GB004), a selective HIF-1 alpha stabilizer, was licensed to Gossamer Bio for IBD. Gossamer expects Phase 1b results in ulcerative colitis patients in the first half of 2020[30](index=30&type=chunk) [Intellectual Property](index=12&type=section&id=Intellectual%20Property) Patent Portfolio as of December 31, 2019 | Category | U.S. Patents | U.S. Pending Applications | Foreign Patents | Foreign Pending Applications | | :--- | :--- | :--- | :--- | :--- | | **Total Owned** | 32 | 26 | 274 | 103 | | **ARP-1536 Related** | 7 | 8 | 44 | 36 | | **AKB-9778 Related** | 25 | 18 | 230 | 67 | - Patents and applications cover compositions of matter, methods of use, formulations, and methods of manufacture, with expected expiration dates from 2027 to 2039, excluding potential extensions[34](index=34&type=chunk) - The core composition of matter patents for both ARP-1536 and AKB-9778 are set to expire in 2027, without accounting for possible patent term adjustments or extensions[34](index=34&type=chunk) [Government Regulation](index=13&type=section&id=Government%20Regulation) - The company's products are subject to extensive regulation by the FDA in the United States and other government authorities internationally, covering manufacturing, clinical development, marketing, and pricing[39](index=39&type=chunk) - The FDA approval process for a new drug generally involves extensive nonclinical studies, an Investigational New Drug (IND) application, and multi-phase human clinical trials (Phase 1, 2, 3) to establish safety and efficacy before submitting a New Drug Application (NDA) or Biologics License Application (BLA)[40](index=40&type=chunk)[43](index=43&type=chunk) - The company may seek expedited review programs such as Fast Track Designation, Priority Review, or Breakthrough Therapy Designation to accelerate FDA review and approval[50](index=50&type=chunk) - In the European Union, medicines can be authorized via a centralized procedure through the European Medicines Agency (EMA) or through national authorization procedures. New chemical entities can qualify for **eight years** of data exclusivity and an additional **two years** of market exclusivity[64](index=64&type=chunk)[65](index=65&type=chunk)[67](index=67&type=chunk) - Sales of approved products will depend on coverage and reimbursement from third-party payors, who are increasingly challenging prices and examining cost-effectiveness. The Affordable Care Act (ACA) and other legislative measures continue to create uncertainty and potential downward pressure on drug pricing[69](index=69&type=chunk)[71](index=71&type=chunk) [Risk Factors](index=26&type=section&id=Item%201A.%20Risk%20Factors) The company faces significant financial, clinical, regulatory, and market risks, including substantial losses, reliance on its lead candidate, and stock volatility - **Financial Risks:** The company has a history of significant net losses (**$23.3 million** in 2019) and an accumulated deficit of **$142.2 million** as of year-end 2019. It will require substantial additional financing to continue development, and failure to obtain it could force termination of programs[81](index=81&type=chunk)[84](index=84&type=chunk) - **Clinical & Regulatory Risks:** The business heavily depends on the success of AKB-9778. The subcutaneous formulation failed its primary endpoint in a Phase 2b trial for NPDR. The new topical formulation for glaucoma faces a lengthy and uncertain clinical and regulatory process[93](index=93&type=chunk)[95](index=95&type=chunk) - **Third-Party Reliance:** Aerpio relies on third-party CROs for clinical trials and contract manufacturers for product supply. Any failure by these third parties to perform adequately could delay or derail development and commercialization[107](index=107&type=chunk)[109](index=109&type=chunk) - **Strategic Risks:** The ongoing exploration of strategic alternatives may not result in a transaction and could be disruptive to business operations and employee retention. A corporate restructuring in April 2019 reduced the workforce by **41%**, which may have unanticipated negative consequences[87](index=87&type=chunk) - **Market & Stock Risks:** The company faces competition from major pharmaceutical companies with greater resources. If approved, its products may not achieve market acceptance or adequate reimbursement. The company's stock price is highly volatile, and it faces a risk of being delisted from the Nasdaq Capital Market for failing to meet the minimum bid price requirement[143](index=143&type=chunk)[163](index=163&type=chunk)[164](index=164&type=chunk) [Properties](index=60&type=section&id=Item%202.%20Properties) The company's corporate headquarters are located in a leased 7,580 square foot office space in Cincinnati, Ohio. The lease for this facility is set to expire on July 31, 2021 - Corporate headquarters are located in a 7,580 square foot leased office space in Cincinnati, Ohio[179](index=179&type=chunk) - The current lease expires on July 31, 2021[179](index=179&type=chunk) [Legal Proceedings](index=61&type=section&id=Item%203.%20Legal%20Proceedings) As of the filing date of this Annual Report on Form 10-K, Aerpio Pharmaceuticals, Inc. is not involved in any material legal proceedings - The company is not currently involved in any material legal proceedings[181](index=181&type=chunk) Part II [Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=62&type=section&id=Item%205.%20Market%20for%20Registrant%27s%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) The company's common stock trades on Nasdaq under 'ARPO', experienced price volatility in 2019, and does not plan to pay dividends - The company's common stock trades on the Nasdaq Capital Market under the symbol "ARPO"[184](index=184&type=chunk) 2019 Common Stock Price Range | Quarter | High | Low | | :--- | :--- | :--- | | First | $4.25 | $0.88 | | Second | $1.16 | $0.85 | | Third | $0.90 | $0.61 | | Fourth | $0.70 | $0.45 | - As of March 9, 2020, there were 125 stockholders of record[186](index=186&type=chunk) - The company has never declared or paid cash dividends and does not plan to in the foreseeable future[187](index=187&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=63&type=section&id=Item%207.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) In 2019, Aerpio shifted focus to glaucoma, incurred a **$23.3 million** net loss, reduced expenses, and holds **$38.5 million** cash, sufficient through Q2 2021 [Results of Operations](index=66&type=section&id=Results%20of%20Operations) Consolidated Operations (Years Ended December 31) | Line Item | 2019 | 2018 | | :--- | :--- | :--- | | License revenue, and other | $0 | $20,157,430 | | Research and development | $12,824,402 | $17,852,756 | | General and administrative | $9,756,185 | $13,485,918 | | Restructuring expense | $1,863,495 | $0 | | **Total operating expenses** | **$24,444,082** | **$31,338,674** | | **Loss from operations** | **($24,444,082)** | **($11,181,244)** | | **Net and comprehensive loss** | **($23,270,514)** | **($10,396,635)** | - Research and development expenses decreased by **$5.0 million** (**28.2%**) in 2019 due to lower spending on clinical trials (TIME-2b completion vs. Phase 1 Glaucoma initiation) and reduced R&D personnel costs[210](index=210&type=chunk) - General and administrative expenses decreased by **$3.7 million** (**27.7%**) in 2019, primarily due to a **$2.5 million** decrease in stock-based compensation and lower employee-related expenses following the company's restructuring[211](index=211&type=chunk) - Restructuring expenses of **$1.9 million** were recorded in 2019 due to a reduction in headcount, with no similar expenses in 2018[212](index=212&type=chunk) [Liquidity and Capital Resources](index=67&type=section&id=Liquidity%20and%20Capital%20Resources) Key Financial Position Data (as of December 31) | Metric | 2019 | 2018 | | :--- | :--- | :--- | | Cash and cash equivalents | $38.5 million | $62.6 million | | Accumulated deficit | $142.2 million | $119.0 million | - The company believes its existing cash and cash equivalents of **$38.5 million** will be sufficient to fund planned operations at least through the second quarter of 2021[218](index=218&type=chunk) Summary of Cash Flows (Years Ended December 31) | Activity | 2019 | 2018 | | :--- | :--- | :--- | | Net cash used in operating activities | ($23,852,522) | ($5,808,046) | | Net cash used in investing activities | ($236,952) | ($37,912) | | Net cash provided by financing activities | $0 | $48,195,859 | | **Net (decrease) increase in cash** | **($24,089,474)** | **$42,349,901** | | Cash at end of year | $38,524,536 | $62,614,010 | - Net cash used in operating activities was significantly higher in 2019 (**$23.9 million**) compared to 2018 (**$5.8 million**), as 2018 results were offset by the **$20.0 million** upfront payment from the Gossamer License Agreement[219](index=219&type=chunk)[222](index=222&type=chunk) - Financing activities provided **$48.1 million** in 2018 from an underwritten public offering, with no similar financing activity in 2019[224](index=224&type=chunk) [Consolidated Financial Statements and Supplementary Data](index=73&type=section&id=Item%208.%20Consolidated%20Financial%20Statements%20and%20Supplementary%20Data) Audited consolidated financial statements for 2019 and 2018 show a **$23.3 million** net loss in 2019, with total assets decreasing to **$39.9 million** [Consolidated Balance Sheets](index=76&type=section&id=Consolidated%20Balance%20Sheets) Consolidated Balance Sheet Data (as of December 31) | Account | 2019 | 2018 | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | $38,524,536 | $62,614,010 | | Total current assets | $39,570,475 | $63,984,083 | | **Total assets** | **$39,936,786** | **$64,123,492** | | **Liabilities & Equity** | | | | Total current liabilities | $3,334,005 | $5,456,917 | | Total liabilities | $3,401,443 | $5,456,917 | | Total stockholders' equity | $36,535,343 | $58,666,575 | | **Total liabilities and stockholders' equity** | **$39,936,786** | **$64,123,492** | [Consolidated Statements of Operations and Comprehensive Loss](index=77&type=section&id=Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Loss) Consolidated Statement of Operations Data (Years Ended December 31) | Account | 2019 | 2018 | | :--- | :--- | :--- | | License revenue, and other | $0 | $20,157,430 | | Research and development | $12,824,402 | $17,852,756 | | General and administrative | $9,756,185 | $13,485,918 | | Restructuring expense | $1,863,495 | $0 | | Loss from operations | ($24,444,082) | ($11,181,244) | | **Net and comprehensive loss** | **($23,270,514)** | **($10,396,635)** | | **Net loss per share (basic and diluted)** | **($0.57)** | **($0.31)** | [Consolidated Statements of Cash Flows](index=79&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Consolidated Statement of Cash Flows Data (Years Ended December 31) | Activity | 2019 | 2018 | | :--- | :--- | :--- | | Net cash used in operating activities | ($23,852,522) | ($5,808,046) | | Net cash used in investing activities | ($236,952) | ($37,912) | | Net cash provided by financing activities | $0 | $48,195,859 | | **Net (decrease) increase in cash** | **($24,089,474)** | **$42,349,901** | | Cash at end of year | $38,524,536 | $62,614,010 | [Controls and Procedures](index=97&type=section&id=Item%209A.%20Controls%20and%20Procedures) Management concluded that disclosure controls and internal control over financial reporting were effective as of December 31, 2019 - Management concluded that the company's disclosure controls and procedures were effective at the reasonable assurance level as of December 31, 2019[336](index=336&type=chunk) - Based on an evaluation using the COSO framework, management concluded that the company's internal control over financial reporting was effective as of December 31, 2019[337](index=337&type=chunk) - There were no changes in internal control over financial reporting during the fourth quarter of 2019 that materially affected, or are reasonably likely to materially affect, these controls[339](index=339&type=chunk) Part III [Directors, Executive Officers and Corporate Governance](index=99&type=section&id=Item%2010.%20Directors%2C%20Executive%20Officers%20and%20Corporate%20Governance) The information required for this item is incorporated by reference from the company's definitive proxy statement for its 2020 Annual Meeting of Stockholders - Information is incorporated by reference from the Definitive Proxy Statement[342](index=342&type=chunk) [Executive Compensation](index=99&type=section&id=Item%2011.%20Executive%20Compensation) The information required for this item is incorporated by reference from the company's definitive proxy statement for its 2020 Annual Meeting of Stockholders - Information is incorporated by reference from the Definitive Proxy Statement[343](index=343&type=chunk) [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=99&type=section&id=Item%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Stockholder%20Matters) The information required for this item is incorporated by reference from the company's definitive proxy statement for its 2020 Annual Meeting of Stockholders - Information is incorporated by reference from the Definitive Proxy Statement[343](index=343&type=chunk) [Certain Relationships and Related Transactions, and Director Independence](index=99&type=section&id=Item%2013.%20Certain%20Relationships%20and%20Related%20Transactions%2C%20and%20Director%20Independence) The information required for this item is incorporated by reference from the company's definitive proxy statement for its 2020 Annual Meeting of Stockholders - Information is incorporated by reference from the Definitive Proxy Statement[344](index=344&type=chunk) [Principal Accounting Fees and Services](index=99&type=section&id=Item%2014.%20Principal%20Accounting%20Fees%20and%20Services) The information required for this item is incorporated by reference from the company's definitive proxy statement for its 2020 Annual Meeting of Stockholders - Information is incorporated by reference from the Definitive Proxy Statement[344](index=344&type=chunk) Part IV [Exhibits, Financial Statement Schedules](index=100&type=section&id=Item%2015.%20Exhibits%2C%20Financial%20Statement%20Schedules) This section lists the consolidated financial statements included in the report and provides an index of all exhibits filed with the Form 10-K - The consolidated financial statements required by this item are located in a separate section beginning on page 73 of the report[347](index=347&type=chunk) - An index of exhibits is provided, listing key documents such as the Certificate of Incorporation, By-laws, Warrant Agreements, equity incentive plans, the Gossamer License Agreement, and various employment agreements[349](index=349&type=chunk)[350](index=350&type=chunk)[351](index=351&type=chunk)
Aerpio Pharmaceuticals(AADI) - 2019 Q3 - Quarterly Report
2019-11-07 21:21
UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2019 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ______________ to ______________ Commission File Number: 001-38560 Aerpio Pharmaceuticals, Inc. (Exact Name of Registrant as Specified in its Charter) Delaw ...