Praxis Precision Medicines, Inc. (NASDAQ:PRAX) Q1 2022 Earnings Conference Call May 9, 2022 4:30 PM ET Company Participants Marcio Souza – President and Chief executive Officer Bernard Ravina – Chief Medical Officer Alex Kane – Vice President Investor Relations and Corporate Communications Conference Call Participants Lauren Riaz – Piper Sandler Laura Chico – Wedbush Securities Yasmeen Rahimi – Piper Sandler Ritu Baral – Cowen & Company Myles Minter – William Blair Douglas Tsao – H.C. Wainwright Operat ...

[Cover Page and General Information](index=1&type=section&id=Cover%20Page) [Filing Details](index=1&type=section&id=Filing%20Details) This document is a Quarterly Report on Form 10-Q filed by PRAXIS PRECISION MEDICINES, INC. for the quarterly period ended March 31, 2022 - Filing Type: Quarterly Report on Form 10-Q[1](index=1&type=chunk)[2](index=2&type=chunk) - Reporting Period: For the quarterly period ended March 31, 2022[2](index=2&type=chunk) [Registrant Information](index=1&type=section&id=Registrant%20Information) PRAXIS PRECISION MEDICINES, INC. is incorporated in Delaware with its principal executive offices in Boston, MA. Its common stock trades on The Nasdaq Global Select Market under the symbol PRAX - Registrant Name: PRAXIS PRECISION MEDICINES, INC[2](index=2&type=chunk) - State of Incorporation: Delaware[2](index=2&type=chunk) - Trading Symbol: PRAX on The Nasdaq Global Select Market[4](index=4&type=chunk) [Securities and Filer Status](index=1&type=section&id=Securities%20and%20Filer%20Status) The registrant is a large accelerated filer and has filed all required reports and interactive data files. As of May 6, 2022, there were 45,511,773 shares of common stock outstanding - Filer Status: Large accelerated filer[5](index=5&type=chunk) - Compliance: Filed all required reports and submitted Interactive Data Files during the preceding 12 months[4](index=4&type=chunk) Common Stock Outstanding | Date | Shares Outstanding | |:-----------|:-------------------| | May 6, 2022 | 45,511,773 | [Special Note Regarding Forward-Looking Statements](index=3&type=section&id=SPECIAL%20NOTE%20REGARDING%20FORWARD-LOOKING%20STATEMENTS) [Nature of Forward-Looking Statements](index=3&type=section&id=Nature%20of%20Forward-Looking%20Statements) This section highlights that the report contains forward-looking statements based on management's beliefs and assumptions, which involve known and unknown risks and uncertainties that could cause actual results to differ materially from expectations - Forward-looking statements are based on management's beliefs and assumptions and relate to future events or operational/financial performance[7](index=7&type=chunk) - Such statements involve known and unknown risks, uncertainties, and other factors that may cause actual results to differ materially[7](index=7&type=chunk) - Readers are cautioned not to place undue reliance on these statements, as they are only predictions[8](index=8&type=chunk) [Risk Factors and Uncertainties](index=3&type=section&id=Risk%20Factors%20and%20Uncertainties) Key factors that could cause actual results to differ include the success and timing of product candidate development, intellectual property protection, funding ability, commercialization, regulatory developments, and the impact of global events like COVID-19 and the conflict in Ukraine - Success, cost, and timing of product candidate development activities and clinical trials[9](index=9&type=chunk) - Ability to obtain and maintain intellectual property protection for product candidates[9](index=9&type=chunk) - Ability to obtain funding for operations, including development and commercialization[9](index=9&type=chunk) - Regulatory developments in the United States and foreign countries[9](index=9&type=chunk) - Effect of the COVID-19 pandemic and the ongoing conflict in Ukraine on business operations[9](index=9&type=chunk) - Actual results may differ materially from current expectations due to risks listed in the 'Risk Factors' section of the Annual Report on Form 10-K and this 10-Q[10](index=10&type=chunk) [PART I. FINANCIAL INFORMATION](index=6&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) [Item 1. Financial Statements (Unaudited)](index=6&type=section&id=Item%201.%20Financial%20Statements%20(Unaudited)) This section presents the unaudited condensed consolidated financial statements for Praxis Precision Medicines, Inc., including the balance sheets, statements of operations, comprehensive loss, stockholders' equity, and cash flows, along with detailed notes explaining the company's business, accounting policies, and specific financial line items [Condensed Consolidated Balance Sheets](index=6&type=section&id=Condensed%20Consolidated%20Balance%20Sheets%20as%20of%20March%2031,%202022%20and%20December%2031,%202021) The balance sheet shows a decrease in total assets from $292.7 million at December 31, 2021, to $239.5 million at March 31, 2022, primarily driven by a reduction in cash and cash equivalents. Total liabilities increased, while total stockholders' equity decreased significantly Condensed Consolidated Balance Sheet Highlights (Amounts in thousands) | Metric | March 31, 2022 | December 31, 2021 | |:-----------------------------|:---------------|:------------------| | Cash and cash equivalents | $77,854 | $138,704 | | Marketable securities | $144,662 | $137,207 | | Total current assets | $234,473 | $287,409 | | Total assets | $239,504 | $292,747 | | Total current liabilities | $45,223 | $38,434 | | Total liabilities | $48,482 | $41,935 | | Total stockholders' equity | $191,022 | $250,812 | - Cash and cash equivalents decreased by **$60.85 million (43.87%)** from December 31, 2021, to March 31, 2022[17](index=17&type=chunk) - Total stockholders' equity decreased by **$59.79 million (23.84%)** over the three-month period[17](index=17&type=chunk) [Condensed Consolidated Statements of Operations](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20for%20the%20Three%20Months%20Ended%20March%2031,%202022%20and%202021) The company reported a significant increase in net loss for the three months ended March 31, 2022, to $68.7 million, compared to $27.4 million in the prior year, primarily due to a substantial rise in research and development expenses Condensed Consolidated Statements of Operations Highlights (Amounts in thousands) | Metric | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | |:-----------------------------|:----------------------------------|:----------------------------------| | Research and development | $52,652 | $17,929 | | General and administrative | $16,197 | $9,490 | | Total operating expenses | $68,849 | $27,419 | | Net loss | $(68,717) | $(27,373) | | Net loss per share (basic & diluted) | $(1.51) | $(0.71) | - Net loss increased by **$41.34 million (151.04%)** year-over-year[21](index=21&type=chunk) - Research and development expenses increased by **$34.72 million (193.67%)** year-over-year[21](index=21&type=chunk) [Condensed Consolidated Statements of Comprehensive Loss](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Loss%20for%20the%20Three%20Months%20Ended%20March%2031,%202022%20and%202021) The comprehensive loss for the three months ended March 31, 2022, was $69.1 million, an increase from $27.5 million in the prior year, primarily driven by the higher net loss and increased unrealized losses on marketable securities Condensed Consolidated Statements of Comprehensive Loss (Amounts in thousands) | Metric | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | |:------------------------------------------|:----------------------------------|:----------------------------------| | Net loss | $(68,717) | $(27,373) | | Net unrealized losses on marketable securities, net of tax | $(430) | $(86) | | Comprehensive loss | $(69,147) | $(27,459) | - Comprehensive loss increased by **$41.69 million (151.82%)** year-over-year[24](index=24&type=chunk) [Condensed Consolidated Statements of Stockholders' Equity](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Stockholders'%20Equity%20for%20the%20Three%20Months%20Ended%20March%2031,%202022%20and%202021) Stockholders' equity decreased from $250.8 million at December 31, 2021, to $191.0 million at March 31, 2022, mainly due to the net loss incurred during the period, partially offset by stock-based compensation and proceeds from at-the-market offerings Condensed Consolidated Statements of Stockholders' Equity Highlights (Amounts in thousands) | Metric | Balance at Dec 31, 2021 | Balance at Mar 31, 2022 | |:------------------------------------------|:------------------------|:------------------------| | Total Stockholders' Equity | $250,812 | $191,022 | | Stock-based compensation expense | — | $7,886 | | Issuance of common stock (at-the-market) | — | $1,368 | | Net loss | — | $(68,717) | - Accumulated deficit increased from **$316.6 million** to **$385.3 million**, reflecting the net loss[27](index=27&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=11&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows%20for%20the%20Three%20Months%20Ended%20March%2031,%202022%20and%202021) Net cash used in operating activities significantly increased to $54.1 million for the three months ended March 31, 2022, from $25.7 million in the prior year, reflecting higher net losses. Investing activities also used cash, while financing activities provided a small net inflow Condensed Consolidated Statements of Cash Flows (Amounts in thousands) | Cash Flow Activity | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | |:-----------------------------------|:----------------------------------|:----------------------------------| | Net cash used in operating activities | $(54,109) | $(25,722) | | Net cash used in investing activities | $(8,550) | $(140,010) | | Net cash provided by financing activities | $1,209 | $276 | | Decrease in cash, cash equivalents and restricted cash | $(61,450) | $(165,456) | | Cash, cash equivalents and restricted cash, end of period | $78,270 | $131,752 | - Net cash used in operating activities increased by **$28.39 million (110.37%)** year-over-year[34](index=34&type=chunk) - Cash, cash equivalents and restricted cash decreased by **$61.45 million** during the quarter[34](index=34&type=chunk) [Notes to Condensed Consolidated Financial Statements](index=12&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) These notes provide essential context to the financial statements, detailing the company's business, significant accounting policies, and specific financial line items such as marketable securities, accrued expenses, equity, and stock-based compensation. They also address the company's liquidity and going concern considerations [Nature of the Business](index=12&type=section&id=Nature%20of%20the%20Business) Praxis Precision Medicines, Inc. is a clinical-stage biopharmaceutical company focused on developing therapies for CNS disorders by translating genetic insights. The company has a broad CNS portfolio with three clinical-stage product candidates and expects multiple topline readouts and new clinical programs in 2022. The company has incurred recurring losses since inception and relies on additional capital to fund operations - Praxis is a clinical-stage biopharmaceutical company developing therapies for CNS disorders characterized by neuronal excitation-inhibition imbalance[36](index=36&type=chunk) - The company has three clinical-stage product candidates across psychiatric disorders, movement disorders, and epilepsy, with multiple topline readouts and two new clinical development programs anticipated in **2022**[36](index=36&type=chunk) - The company has incurred recurring losses, with a net loss of **$68.7 million** for the three months ended March 31, 2022, and an accumulated deficit of **$385.3 million**[40](index=40&type=chunk) - Existing cash, cash equivalents, and marketable securities of **$222.5 million** are expected to fund operations for at least one year from the issuance date of the financial statements[41](index=41&type=chunk) [Summary of Significant Accounting Policies](index=13&type=section&id=Summary%20of%20Significant%20Accounting%20Policies) The financial statements are prepared in conformity with GAAP, and interim financial information is unaudited but includes all necessary recurring adjustments. Management uses estimates and assumptions, particularly for R&D expenses and stock-based compensation, which may differ from actual results - Condensed consolidated financial statements are prepared in conformity with GAAP[43](index=43&type=chunk) - Unaudited interim financial statements reflect all normal recurring adjustments necessary for fair statement[45](index=45&type=chunk) - Significant estimates include accrued and prepaid research and development expenses, stock-based compensation, and recoverability of net deferred tax assets[47](index=47&type=chunk) [Marketable Securities](index=14&type=section&id=Marketable%20Securities) The company's investment portfolio consists of available-for-sale securities, primarily corporate debt, U.S. government agency debt, and commercial paper. As of March 31, 2022, the total fair value was $144.7 million, with unrealized losses primarily due to changes in market interest rates, which are considered temporary Marketable Securities Portfolio (Amounts in thousands) | Category | March 31, 2022 Fair Value | December 31, 2021 Fair Value | |:---------------------------------------|:--------------------------|:-----------------------------| | Corporate debt securities | $65,750 | $83,712 | | Debt securities issued by U.S. government agencies | $46,005 | $12,103 | | Commercial paper | $32,907 | $34,993 | | Total available-for-sale securities | $144,662 | $137,207 | - As of **March 31, 2022**, the company had **15** securities with a total fair market value of **$90.8 million** in an unrealized loss position, considered temporary[50](index=50&type=chunk) [Fair Value Measurements](index=14&type=section&id=Fair%20Value%20Measurements) The company categorizes financial assets measured at fair value using a three-level hierarchy. As of March 31, 2022, cash equivalents (money market funds) and U.S. government agency debt securities were primarily Level 1, while corporate debt securities and commercial paper were Level 2 - Financial assets are categorized into Level 1 (quoted prices in active markets), Level 2 (quoted prices for similar assets or unobservable inputs), and Level 3 (significant unobservable inputs)[52](index=52&type=chunk)[55](index=55&type=chunk) Fair Value Hierarchy of Financial Assets (Amounts in thousands) | Asset Category | March 31, 2022 Total Fair Value | Level 1 | Level 2 | |:-----------------------------------|:--------------------------------|:--------|:--------| | Money market funds | $44,165 | $44,165 | $0 | | Corporate debt securities | $65,750 | $0 | $65,750 | | Debt securities (U.S. government) | $46,005 | $46,005 | $0 | | Commercial paper | $32,907 | $0 | $32,907 | | Total | $188,827 | $90,170 | $98,657 | [Accrued Expenses](index=15&type=section&id=Accrued%20Expenses) Total accrued expenses increased to $30.9 million at March 31, 2022, from $26.8 million at December 31, 2021, primarily driven by a significant increase in accrued external research and development expenses Accrued Expenses (Amounts in thousands) | Category | March 31, 2022 | December 31, 2021 | |:---------------------------------------|:---------------|:------------------| | Accrued external research and development expenses | $26,092 | $17,763 | | Accrued personnel-related expenses | $2,341 | $7,180 | | Accrued other | $2,496 | $1,901 | | Total accrued expenses | $30,929 | $26,844 | - Accrued external research and development expenses increased by **$8.33 million (46.89%)** from December 31, 2021, to March 31, 2022[54](index=54&type=chunk) [Commitments and Contingencies](index=15&type=section&id=Commitments%20and%20Contingencies) The company entered into a sublease agreement for office space in Boston in May 2021, expiring in January 2026, which qualifies as an operating lease. A letter of credit secured by restricted cash was issued for the security deposit - Sublease agreement for office space in Boston, MA, entered in **May 2021**, expires **January 31, 2026**[55](index=55&type=chunk) - The lease is classified as an operating lease, with base rent increasing approximately **2%** annually[55](index=55&type=chunk) [Common Stock and Preferred Stock](index=16&type=section&id=Common%20Stock%20and%20Preferred%20Stock) As of March 31, 2022, the company had 150,000,000 shares of common stock authorized, with 45,506,482 shares issued and outstanding. Additionally, 10,000,000 shares of undesignated preferred stock were authorized but none were issued or outstanding Common Stock and Preferred Stock Authorization and Issuance | Stock Type | Authorized Shares | Issued & Outstanding (March 31, 2022) | |:---------------|:------------------|:--------------------------------------| | Common Stock | 150,000,000 | 45,506,482 | | Preferred Stock| 10,000,000 | 0 | Shares Reserved for Future Issuance | Category | March 31, 2022 | December 31, 2021 | |:---------------------------------------------|:---------------|:------------------| | Shares reserved for exercise of outstanding stock options | 7,862,576 | 6,468,501 | | Shares reserved for future awards under the 2020 Stock Option and Incentive Plan | 3,014,484 | 2,667,780 | | Shares reserved for future awards under the 2020 Employee Stock Purchase Plan | 981,306 | 654,204 | | Shares reserved for vesting of restricted stock units | 840,277 | 440,079 | | Total shares of authorized common stock reserved for future issuance | 12,698,643 | 10,230,564 | [Stock-Based Compensation](index=16&type=section&id=Stock-Based%20Compensation) Total stock-based compensation expense for the three months ended March 31, 2022, was $7.9 million, an increase from $4.7 million in the prior year. This includes expenses related to restricted stock units and stock options, with significant unrecognized compensation costs remaining Stock-Based Compensation Expense (Amounts in thousands) | Category | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | |:-----------------------------|:----------------------------------|:----------------------------------| | Research and development | $3,214 | $2,318 | | General and administrative | $4,672 | $2,348 | | Total stock-based compensation expense | $7,886 | $4,666 | - Total unrecognized compensation cost related to unvested restricted stock units was **$20.9 million**, expected to be recognized over **3.32 years**[63](index=63&type=chunk) - Total unrecognized compensation cost related to unvested stock options was **$70.0 million**, expected to be recognized over **2.76 years**[65](index=65&type=chunk) [Net Loss per Share](index=18&type=section&id=Net%20Loss%20per%20Share) For the three months ended March 31, 2022, the basic and diluted net loss per share was $(1.51), compared to $(0.71) in the prior year. Potential common shares from stock options, restricted stock units, and ESPP were excluded from diluted EPS calculations as they were anti-dilutive Net Loss per Share | Metric | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | |:------------------------------------------|:----------------------------------|:----------------------------------| | Net loss per share attributable to common stockholders, basic and diluted | $(1.51) | $(0.71) | Anti-Dilutive Potential Common Shares | Category | March 31, 2022 | March 31, 2021 | |:---------------------------------------|:---------------|:---------------| | Outstanding stock options | 7,862,576 | 6,648,367 | | Unvested restricted stock units | 840,277 | 328,363 | | Potential shares issuable under the 2020 ESPP | 30,341 | — | | Total anti-dilutive shares | 8,733,194 | 6,976,730 | [Related Party Transactions](index=18&type=section&id=Related%20Party%20Transactions) The company has a Cooperation and License Agreement with RogCon Inc. since September 2019, granting an exclusive worldwide license for SCN2A gene mutation therapies. Praxis reimburses RogCon for R&D costs, with $0.3 million accrued as of March 31, 2022 - Exclusive worldwide license agreement with RogCon Inc. for SCN2A gene mutation therapies[68](index=68&type=chunk) - Praxis reimburses RogCon for R&D activities; **$0.3 million** accrued as of **March 31, 2022**[68](index=68&type=chunk) [Subsequent Events](index=18&type=section&id=Subsequent%20Events) The company has reviewed events occurring after the balance sheet date up to the issuance of the financial statements and concluded that no subsequent events require disclosure - No subsequent events requiring disclosure have occurred between the balance sheet date and the issuance of the financial statements[69](index=69&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=19&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on the company's financial condition and results of operations, highlighting its clinical-stage biopharmaceutical focus, pipeline progress, significant operating losses, and liquidity challenges. It details the increase in R&D and G&A expenses, cash flow trends, and future funding requirements [Overview](index=19&type=section&id=Overview) Praxis is a clinical-stage biopharmaceutical company focused on CNS disorders, with a broad portfolio across Psychiatry, Movement Disorders, and Epilepsy. The company has three clinical-stage candidates (PRAX-114, PRAX-944, PRAX-562) and expects multiple clinical readouts and new program initiations in 2022. It has incurred significant operating losses and will require substantial additional funding [Business Description and Pipeline](index=19&type=section&id=Business%20Description%20and%20Pipeline) Praxis is a clinical-stage biopharmaceutical company translating genetic insights into therapies for CNS disorders. It has a broad portfolio with three clinical-stage product candidates (PRAX-114 for MDD/PTSD, PRAX-944 for ET/PD, PRAX-562 for Developmental and Epileptic Encephalopathies) and a robust preclinical pipeline. Key clinical readouts are expected in 2022, and new clinical programs are anticipated - Clinical-stage biopharmaceutical company focused on CNS disorders, leveraging genetic insights[72](index=72&type=chunk) - Psychiatry: PRAX-114 for MDD (Phase 2/3 Aria, Phase 2 Acapella, Phase 2 PTSD) with topline results expected in **Q2/Q3 2022** and **H2 2022**[73](index=73&type=chunk) - Movement Disorders: PRAX-944 for Essential Tremor (Phase 2a positive results, Phase 2b Essential1 Study topline in **H2 2022**) and Parkinson's Disease (Phase 2 study initiation in **H2 2022**)[74](index=74&type=chunk)[75](index=75&type=chunk) - Epilepsy: PRAX-562 (Phase 2 initiation in **H2 2022**), PRAX-222 (IND on clinical hold), PRAX-628 (Phase 1 initiation in **Q4 2022**, Phase 2 in **2023**)[76](index=76&type=chunk) [Financial Performance and Outlook](index=20&type=section&id=Financial%20Performance%20and%20Outlook) The company has not generated revenue from product sales and incurred a net loss of $68.7 million for the three months ended March 31, 2022, with an accumulated deficit of $385.3 million. Significant operating losses are expected to continue as R&D activities expand, requiring substantial additional funding beyond existing cash, which is projected to last into Q3 2023 - No revenue from product sales since inception; significant operating losses incurred, including a **$68.7 million** net loss for **Q1 2022**[78](index=78&type=chunk) - Accumulated deficit of **$385.3 million** as of **March 31, 2022**[78](index=78&type=chunk) - Existing cash, cash equivalents, and marketable securities (**$222.5 million**) are expected to fund operations into **Q3 2023**, but substantial additional funding will be needed[82](index=82&type=chunk) [COVID-19 Business Update](index=21&type=section&id=COVID-19%20Business%20Update) The COVID-19 pandemic has caused some disruptions and increased risks, particularly affecting patient enrollment in clinical trials, though it has not significantly impacted overall clinical trial timelines to date. The company continues to monitor the situation and its potential adverse effects on business and financial condition - COVID-19 pandemic has caused disruptions and increased risks, including slower patient enrollment in some clinical trials[83](index=83&type=chunk) - No significant impact on overall clinical trial timelines to date, but potential for material adverse effects on business and financial condition remains[83](index=83&type=chunk) [Financial Operations Overview](index=21&type=section&id=Financial%20Operations%20Overview) This section outlines the company's revenue strategy, operating expense categories (R&D and G&A), other income sources, and income tax policy. It emphasizes that R&D costs are expensed as incurred and are a significant portion of total expenses, while the company has not recorded income tax benefits due to recurring losses [Revenue](index=21&type=section&id=Revenue) The company has not generated any revenue since inception and does not anticipate product sales revenue for several years. Future revenue, if any, will depend on successful product candidate development, marketing approval, or collaboration/license agreements - No revenue generated from product sales since inception; none expected for several years[84](index=84&type=chunk) - Future revenue contingent on successful product development, marketing approval, or collaboration/license agreements[84](index=84&type=chunk) [Operating Expenses](index=21&type=section&id=Operating%20Expenses) Operating expenses are primarily driven by research and development (R&D) and general and administrative (G&A) costs. R&D expenses, expensed as incurred, include personnel, third-party agreements, regulatory compliance, and manufacturing costs, with a significant portion being external. G&A expenses cover personnel, legal, accounting, commercial, and IP protection costs - Research and development expenses are expensed as incurred and include costs for portfolio development, discovery, clinical development, and manufacturing technology[85](index=85&type=chunk)[86](index=86&type=chunk) - General and administrative expenses include personnel, legal, accounting, commercial, and IP protection costs[92](index=92&type=chunk) - R&D expenses are expected to increase as product candidates advance through development and new candidates are discovered[88](index=88&type=chunk) - G&A expenses are anticipated to increase with headcount growth to support R&D and potential commercialization[93](index=93&type=chunk) [Other Income](index=23&type=section&id=Other%20Income) Other income, net, primarily consists of interest income generated from the company's cash, cash equivalents, and marketable securities, along with the amortization of investment premiums and discounts - Other income, net, comprises interest income from cash, cash equivalents, and marketable securities, and amortization of investment premiums and discounts[94](index=94&type=chunk) [Income Taxes](index=24&type=section&id=Income%20Taxes) The company has not recorded U.S. federal or state income tax benefits due to recurring net losses and uncertainty of realizing a benefit from deferred tax assets. The income tax provision for the reported periods was not material - No U.S. federal or state income tax benefits recorded due to recurring net losses and uncertainty of benefit realization[95](index=95&type=chunk) - Income tax provision for the three months ended March 31, 2022 and 2021 was not material[95](index=95&type=chunk) [Results of Operations](index=24&type=section&id=Results%20of%20Operations) This section details the financial performance for the three months ended March 31, 2022, compared to the same period in 2021, showing a significant increase in net loss driven by higher research and development and general and administrative expenses [Comparison of the Three Months Ended March 31, 2022 and 2021](index=24&type=section&id=Comparison%20of%20the%20Three%20Months%20Ended%20March%2031,%202022%20and%202021) Total operating expenses increased by $41.4 million, leading to a net loss of $68.7 million in Q1 2022, up from $27.4 million in Q1 2021. This was primarily due to a substantial increase in R&D expenses Consolidated Statements of Operations Summary (Amounts in thousands) | Metric | 2022 | 2021 | Change | |:-----------------------------|:------------|:------------|:------------| | Research and development | $52,652 | $17,929 | $34,723 | | General and administrative | $16,197 | $9,490 | $6,707 | | Total operating expenses | $68,849 | $27,419 | $41,430 | | Net loss | $(68,717) | $(27,373) | $(41,344) | - Net loss increased by **$41.34 million (151.04%)** year-over-year[96](index=96&type=chunk) [Research and Development Expense Analysis](index=24&type=section&id=Research%20and%20Development%20Expense%20Analysis) Research and development expenses increased by $34.7 million to $52.7 million in Q1 2022, primarily driven by increased clinical-related spending across psychiatry ($11.2M), epilepsy ($9.3M), and movement disorders ($7.5M) franchises, as well as higher personnel-related costs Research and Development Expenses by Franchise (Amounts in thousands) | Category | 2022 | 2021 | Change | |:---------------------------------------|:------------|:------------|:------------| | Psychiatry | $14,438 | $3,201 | $11,237 | | Epilepsy | $14,264 | $4,926 | $9,338 | | Movement disorders | $9,104 | $1,577 | $7,527 | | Other exploratory CNS indications | $2,191 | $663 | $1,528 | | Personnel-related (including stock-based compensation) | $11,141 | $6,505 | $4,636 | | Other indirect research and development expenses | $1,514 | $1,057 | $457 | | Total research and development expenses | $52,652 | $17,929 | $34,723 | - Psychiatry: **$11.2 million** increase due to PRAX-114 Phase 2/3 Aria and Acapella clinical trials[98](index=98&type=chunk) - Epilepsy: **$9.3 million** increase for PRAX-562 Phase 2 and PRAX-222 clinical trials, preclinical activities, and a **$2.0 million** license fee to Ionis Pharmaceuticals[98](index=98&type=chunk) - Movement disorders: **$7.5 million** increase for PRAX-944 Phase 2 Essential1 clinical trial[98](index=98&type=chunk) [General and Administrative Expense Analysis](index=25&type=section&id=General%20and%20Administrative%20Expense%20Analysis) General and administrative expenses increased by $6.7 million, primarily due to a $5.0 million increase in personnel-related costs (including $2.4 million in stock-based compensation) driven by increased headcount, and a $1.7 million increase in other G&A expenses - General and administrative expenses increased by **$6.7 million**[99](index=99&type=chunk) - Personnel-related costs increased by **$5.0 million**, including **$2.4 million** in stock-based compensation, due to increased headcount[104](index=104&type=chunk) - Other general and administrative expenses increased by **$1.7 million**[104](index=104&type=chunk) [Other Income Analysis](index=25&type=section&id=Other%20Income%20Analysis) Other income for the three months ended March 31, 2022 and 2021, consisted of interest income from cash, cash equivalents, and marketable securities, as well as investment premium and discount amortization - Other income comprised interest income on cash, cash equivalents, and marketable securities, and investment premium/discount amortization[99](index=99&type=chunk) [Liquidity and Capital Resources](index=25&type=section&id=Liquidity%20and%20Capital%20Resources) The company has historically incurred significant losses and negative cash flows, financing operations primarily through equity sales. As of March 31, 2022, it had $222.5 million in cash, cash equivalents, and marketable securities, projected to fund operations into Q3 2023. Substantial additional funding will be required to support increasing R&D activities and potential commercialization [Sources of Liquidity](index=25&type=section&id=Sources%20of%20Liquidity) Praxis has funded operations primarily through equity sales, raising $517.8 million net from inception through March 31, 2022. As of March 31, 2022, the company held $222.5 million in cash, cash equivalents, and marketable securities. An at-the-market offering facility with Jefferies LLC provided $1.4 million in net proceeds during Q1 2022 - Operations financed primarily by equity sales, raising **$517.8 million** net from inception through **March 31, 2022**[101](index=101&type=chunk) Cash, Cash Equivalents and Marketable Securities | Date | Amount (in millions) | |:---------------|:---------------------| | March 31, 2022 | $222.5 | - Issued and sold **70,410 shares** for **$1.4 million** net proceeds under an at-the-market offering during **Q1 2022**[102](index=102&type=chunk) [Historical Cash Flows](index=25&type=section&id=Historical%20Cash%20Flows) Net cash used in operating activities increased significantly to $54.1 million in Q1 2022 from $25.7 million in Q1 2021, driven by higher net losses. Investing activities used $8.6 million, primarily for marketable securities, while financing activities provided $1.2 million, mainly from at-the-market offerings and stock option exercises Cash Flow Summary (Amounts in thousands) | Cash Flow Activity | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | |:-----------------------------------|:----------------------------------|:----------------------------------| | Operating activities | $(54,109) | $(25,722) | | Investing activities | $(8,550) | $(140,010) | | Financing activities | $1,209 | $276 | | Net decrease in cash, cash equivalents and restricted cash | $(61,450) | $(165,456) | - Net cash used in operating activities increased due to higher net losses, partially offset by non-cash charges and changes in operating assets/liabilities[105](index=105&type=chunk)[106](index=106&type=chunk) - Net cash provided by financing activities in **Q1 2022** included **$1.4 million** from at-the-market offerings and **$0.3 million** from stock option exercises[109](index=109&type=chunk) [Plan of Operation and Future Funding Requirements](index=26&type=section&id=Plan%20of%20Operation%20and%20Future%20Funding%20Requirements) The company expects substantial increases in expenses due to ongoing R&D activities and clinical trials, leading to continued operating losses and negative cash flows. Existing capital is projected to fund operations into Q3 2023, but significant additional funds will be required. The ability to secure future funding on acceptable terms is uncertain and critical for business objectives - Expenses are expected to increase substantially with ongoing R&D activities and clinical trials, leading to continued operating losses[111](index=111&type=chunk) - Existing cash, cash equivalents, and marketable securities are estimated to fund operations into **Q3 2023**[113](index=113&type=chunk) - Substantial additional funds are required, which may be raised through equity, debt, or collaborations, but availability and terms are uncertain[115](index=115&type=chunk)[116](index=116&type=chunk) [Critical Accounting Policies and Significant Judgments and Estimates](index=28&type=section&id=Critical%20Accounting%20Policies%20and%20Significant%20Judgments%20and%20Estimates) The preparation of financial statements requires management to make estimates and assumptions that affect reported asset and liability amounts and expenses. There have been no changes to the critical accounting policies previously disclosed in the 2021 Annual Report on Form 10-K - Financial statements require management estimates and assumptions affecting reported amounts[119](index=119&type=chunk) - No changes to critical accounting policies from those described in the **2021** Annual Report on Form 10-K[120](index=120&type=chunk) [Recently Issued Accounting Pronouncements](index=28&type=section&id=Recently%20Issued%20Accounting%20Pronouncements) The company has reviewed recently issued accounting standards and determined that they will not have a material impact on its condensed consolidated financial statements or current operations, except as disclosed in Note 2 - Recently issued accounting pronouncements are not expected to have a material impact on financial statements or operations, except as noted in Note 2[121](index=121&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=28&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company's primary market risk exposure is interest rate sensitivity, affecting its cash, cash equivalents, and marketable securities. Due to the short-term and low-risk nature of its investment portfolio, a 100 basis point change in market interest rates is not expected to have a material impact on its financial position or results of operations - Primary market risk exposure is interest rate sensitivity, affecting cash, cash equivalents, and marketable securities[122](index=122&type=chunk) - A **100 basis point** change in market interest rates is not expected to materially impact the investment portfolio or financial results due to the short-term, low-risk nature of instruments[122](index=122&type=chunk) [Item 4. Controls and Procedures](index=28&type=section&id=Item%204.%20Controls%20and%20Procedures) Management, including the CEO and CFO, evaluated the effectiveness of the company's disclosure controls and procedures as of March 31, 2022, concluding they were effective at a reasonable assurance level. There were no material changes in internal control over financial reporting during the period [Management's Evaluation of Disclosure Controls and Procedures](index=28&type=section&id=Management's%20Evaluation%20of%20Our%20Disclosure%20Controls%20and%20Procedures) The CEO and CFO evaluated the effectiveness of disclosure controls and procedures as of March 31, 2022, and concluded they were effective at the reasonable assurance level, ensuring information required for SEC filings is recorded, processed, summarized, and reported timely - Disclosure controls and procedures are designed to ensure timely and accurate reporting of information required by the Exchange Act[123](index=123&type=chunk) - Management, including CEO and CFO, concluded that disclosure controls and procedures were effective at the reasonable assurance level as of **March 31, 2022**[124](index=124&type=chunk)[125](index=125&type=chunk) [Changes in Internal Control Over Financial Reporting](index=29&type=section&id=Changes%20in%20Internal%20Control%20Over%20Financial%20Reporting) There were no changes in the company's internal control over financial reporting during the period covered by this Quarterly Report on Form 10-Q that have materially affected, or are reasonably likely to materially affect, its internal control over financial reporting - No material changes in internal control over financial reporting occurred during the quarter[126](index=126&type=chunk) [PART II. OTHER INFORMATION](index=30&type=section&id=PART%20II.%20OTHER%20INFORMATION) [Item 1. Legal Proceedings](index=30&type=section&id=Item%201.%20Legal%20Proceedings) As of the filing date, Praxis Precision Medicines, Inc. is not a party to any material legal matters or claims. However, the company acknowledges that it may become involved in legal proceedings in the ordinary course of business, which could adversely impact it due to defense costs, management diversion, and other factors - Not a party to any material legal matters or claims as of the filing date[129](index=129&type=chunk) - May become party to legal matters in the ordinary course of business, which could have an adverse impact[129](index=129&type=chunk) [Item 1A. Risk Factors](index=30&type=section&id=Item%201A.%20Risk%20Factors) This section updates and should be read in conjunction with the risk factors from the 2021 Annual Report on Form 10-K. It emphasizes the lengthy, complex, and uncertain nature of preclinical and clinical drug development, the high attrition rate, and the potential for delays or failures due to various factors, including regulatory holds (e.g., PRAX-222 IND), trial design limitations, and international operational risks - Preclinical and clinical drug development is lengthy, complex, expensive, and has an uncertain outcome, with a high rate of attrition[131](index=131&type=chunk)[132](index=132&type=chunk) - The FDA placed the Investigational New Drug (IND) application for PRAX-222 on clinical hold in **April 2022**, which could delay development[135](index=135&type=chunk) - Delays can arise from inability to generate sufficient preclinical data, regulatory consensus, patient recruitment, manufacturing issues, or clinical holds[133](index=133&type=chunk) - Open-label studies may exaggerate therapeutic effects and are subject to investigator bias, potentially not replicating results in placebo-controlled trials[134](index=134&type=chunk) - International operations introduce risks such as differing regulatory requirements, challenges in enforcing IP rights (e.g., Russia's decree), and geopolitical events like the Ukraine conflict[137](index=137&type=chunk)[141](index=141&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=33&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company did not make any unregistered sales of equity securities during the three months ended March 31, 2022. Information regarding the use of proceeds from its October 2020 initial public offering (IPO) is also noted, and no repurchases of common stock were made during the period - No unregistered sales of equity securities during the three months ended **March 31, 2022**[143](index=143&type=chunk) - No repurchases of common stock during the three months ended **March 31, 2022**[145](index=145&type=chunk) - The company completed its IPO in **October 2020**, issuing **11,500,000 shares** at **$19.00 per share**[144](index=144&type=chunk) [Item 3. Defaults Upon Senior Securities](index=33&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) This item is not applicable to the company for the reporting period - Not applicable[146](index=146&type=chunk) [Item 4. Mine Safety Disclosures](index=33&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company for the reporting period - Not applicable[147](index=147&type=chunk) [Item 5. Other Information](index=33&type=section&id=Item%205.%20Other%20Information) There is no other information to report under this item - None[148](index=148&type=chunk) [Item 6. Exhibits](index=34&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Quarterly Report on Form 10-Q, including corporate governance documents (Amended and Restated Certificate of Incorporation, Bylaws), certifications from executive officers (302 and 906 certifications), and Inline XBRL documents - Exhibit 3.1: Amended and Restated Certificate of Incorporation[149](index=149&type=chunk) - Exhibit 3.2: Amended and Restated Bylaws[149](index=149&type=chunk) - Exhibit 31.1 & 31.2: Certifications of Principal Executive Officer and Principal Financial Officer (Section 302)[149](index=149&type=chunk) - Exhibit 32.1: Certification of Principal Executive Officer and Principal Financial Officer (Section 906)[149](index=149&type=chunk) - Exhibits 101.INS, 101.SCH, 101.CAL, 101.DEF, 101.LAB, 101.PRE: Inline XBRL Taxonomy Extension Documents[149](index=149&type=chunk) - Exhibit 104: Cover Page Interactive Data File[149](index=149&type=chunk) [Signatures](index=35&type=section&id=Signatures) The report is duly signed on behalf of PRAXIS PRECISION MEDICINES, INC. by Marcio Souza, Chief Executive Officer and Director, and Timothy Kelly, Chief Financial Officer, on May 9, 2022 - Signed by Marcio Souza (CEO and Director) and Timothy Kelly (CFO) on **May 9, 2022**[154](index=154&type=chunk)

Financial Data and Key Metrics Changes - The company reported a higher-than-expected screen fail rate in their clinical trials, indicating that their eligibility criteria were effective in selecting appropriate patients [8][52] - Management expressed confidence in the patient population and the trial's design, suggesting that the assumptions made during the study setup are holding true [9][30] Business Line Data and Key Metrics Changes - The company is focusing on the Aria study for moderate to severe major depressive disorder (MDD), with expectations of maintaining statistical significance in results reported at Day 29 [30][31] - The Phase 2a study showed a 50% improvement in anxiety measures, indicating a potential for concomitant anxiety treatment in the Aria study population [19] Market Data and Key Metrics Changes - The company is addressing a significant unmet need in the essential tremor market, estimating around 3 million patients, and is developing multiple treatment options to cater to different patient needs [42][43] - The management highlighted the importance of understanding the market dynamics and regulatory frameworks for their products, particularly in the context of perimenopausal depression [70] Company Strategy and Development Direction - The company aims to initiate a Phase III trial later this year, focusing on the efficacy and safety of their treatments [31][39] - There is a strategic emphasis on developing treatments for rare diseases and mental health conditions, reflecting a commitment to addressing significant health challenges [93][94] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the impact of global events on mental health, emphasizing the importance of their work in this area [94] - The company is optimistic about the upcoming data readouts and the potential for their treatments to meet patient needs effectively [93][95] Other Important Information - The company is utilizing advanced compliance measures in their trials to ensure patient adherence to treatment protocols [22] - Management is exploring the potential for combination therapies to enhance treatment efficacy in essential tremor patients [42][43] Q&A Session Summary Question: How homogeneous is the patient population in the Aria study? - Management indicated that the eligibility criteria were effective, resulting in a higher-than-expected screen fail rate, which is a positive sign for patient selection [8][52] Question: What steps are being taken to ensure patient compliance during the trial? - The company has implemented various measures, including working with AiCure to monitor patient engagement and compliance throughout the study [22] Question: What are the expectations for the Day 29 results? - Management expects to see maintenance of effect and possibly statistical significance at Day 29, with a focus on the primary endpoints [30][31] Question: Can you discuss the Essential1 study and its expected outcomes? - The Essential1 study is designed to provide data for dose selection for future Phase III trials, focusing on safety, tolerability, and efficacy measures [37][39] Question: What is the long-term strategy for essential tremor treatments? - The company plans to develop multiple treatment options to address different patient needs within the essential tremor market, emphasizing the large unmet need [42][43] Question: What are the main causes of screen failures in the trials? - The primary cause of screen failures is the inability to confirm the HAM-D17 scores, highlighting the importance of accurate patient selection [68]

CORPORATE OVERVIEW FEBRUARY 2022 CONFIDENTIAL PAGE 1 PAGE 1 Forward-looking statements This presentation may contain "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995 relating to our business, operations, and financial conditions, including but not limited to express or implied statements regarding the current beliefs, expectations and assumptions regarding the future of our business, future plans and strategies, our development plans, our preclinical an ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 FORM 10-K (Mark One) ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2021 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: 001-39620 PRAXIS PRECISION MEDICINES, INC. (Exact Name of Registrant as Specified in its Charter) Delaware 47-5195942 (St ...

Financial Data and Key Metrics Changes - As of the end of Q3 2021, Praxis had $314 million in cash and investments, down from $339 million at the end of Q2 2021, representing a quarter-over-quarter decrease of approximately $25 million [49] - Operating expenses for Q3 were approximately $44.8 million, an increase of roughly $8.3 million from the prior quarter, primarily driven by higher R&D expenses [51][52] Business Line Data and Key Metrics Changes - The company is advancing multiple CNS drug programs, with a focus on PRAX-114 for major depressive disorder (MDD) and PRAX-944 for essential tremor (ET) [10][14] - The ongoing PRAX-114 registration trial and the initiation of Phase 2 studies for PRAX-562 and PRAX-944 are key developments in the pipeline [18][24] Market Data and Key Metrics Changes - The company anticipates a catalyst-rich period with multiple clinical trial readouts expected in the coming year, including studies for PRAX-114 in PTSD and ET [19][25] - The market for treatments addressing essential tremor and PTSD is significant, with an estimated 11 million adults in the U.S. affected by PTSD alone [31] Company Strategy and Development Direction - Praxis emphasizes a foundation approach to drug development based on four pillars: validating targets through genetics, leveraging translational tools, applying rigorous development paths, and implementing patient-guided strategies [10][14] - The company aims to bring its first ASO (antisense oligonucleotide) to the clinic early next year, marking a significant milestone in its development strategy [102] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the ongoing progress of their clinical programs and the potential for significant advancements in treating CNS disorders [102] - The company is focused on maintaining a strong cash position to support its growing pipeline and operational needs into 2023 [49][50] Other Important Information - Praxis plans to host a Movement Disorder Day in December 2021 to discuss ongoing efforts in essential tremor and the potential of PRAX-944 [20][21] - The company has surpassed 100 full-time employees and moved to new headquarters in Boston, reflecting its growth and operational expansion [103] Q&A Session Summary Question: Inquiry about endpoints in the Aria and Acapella study - Management clarified that they do not plan to change the endpoints based on preclinical and clinical data, emphasizing the importance of maintaining patients on the drug for longer periods to ensure benefits [58] Question: Safety profile and sedation rates in the Aria study - Management indicated that the safety profile of PRAX-114 is well tolerated, with no significant next-day somnolence observed in trials [64] Question: Expectations for upcoming open label data from PRAX-944 - Management expects to present data focusing on upper limb tremor, with a goal of achieving similar or improved results compared to previous trials [67] Question: Powering assumptions for the Acapella study - Management explained that Acapella is not powered for accuracy but aims to explore lower doses that may generate similar effects with fewer side effects [73] Question: Nausea rates in the faster titration Phase 1 study for PRAX-944 - Management reported that nausea rates were similar across different titration schedules, indicating a consistent safety profile [79] Question: Rationale for flexed dosing in the PTSD study - Management stated that the flexed dosing approach allows for better understanding of patient responses and tolerability, which is crucial for developing effective treatment strategies [98]

PRAXIS 3 Q 2 0 2 1 CORPORATE UPDATE N o v e m b e r 2 0 2 1 PAGE 1 Forward-looking statements This presentation may contain "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995 relating to our business, operations, and financial conditions, including but not limited to express or implied statements regarding the current beliefs, expectations and assumptions regarding the future of our business, future plans and strategies, our development plans, our preclin ...

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, 2021 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: 001-39620 PRAXIS PRECISION MEDICINES, INC. (Exact Name of Registrant as Specified in its Charter) Delaware 47-5195942 (State or o ...

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, 2021 OR PRAXIS PRECISION MEDICINES, INC. TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 (Exact Name of Registrant as Specified in its Charter) For the transition period from to (State or other jurisdiction of incorporation or organization) (I.R.S. E ...

C O R P O R A T E OVERVIEW M a y 2 0 2 1 PAGE 1 CONFIDENTIAL PAGE 1 Forward-looking statements This presentation may contain "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995 relating to our business, operations, and financial conditions, including but not limited to express or implied statements regarding the current beliefs, expectations and assumptions regarding the future of our business, future plans and strategies, our development plans, our precli ...