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, 2022 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 ...

PRAXIS 0 CORPORATE OVERVIEW November 2022 Forward-looking statements 2 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 and clinical resul ...

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, 2022 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 ...

Pipeline Overview - Praxis is developing new classes of treatments inspired by the genetics of epilepsy, targeting common and rare diseases connected by neuronal imbalance[3, 6, 11] - Praxis has a broad CNS portfolio with uncorrelated program risk and a deep early-stage pipeline enabling continuous advancement of new programs[16] - Praxis anticipates a milestone-rich second half of 2022, including Phase 2a Part B topline results for PRAX-944 in Essential Tremor (ET), initiating a Phase 2 trial for PRAX-944 in Parkinson's Disease (PD), and initiating a Phase 2 study for PRAX-222 in SCN2A-DEE[17, 22, 27] PRAX-944 for Movement Disorders - The US ET market represents a $4B+ opportunity[37] - Approximately 50% of patients discontinue medication due to limited efficacy and poor tolerability[33] - PRAX-944 is a differentiated, selective T-type calcium channel blocker with potential for effectiveness across a range of neuronal activity levels[42] - In a Phase 2a study, patients treated with PRAX-944 showed a 42% mean improvement in modified ADLs from baseline, while withdrawal of PRAX-944 resulted in regression to baseline severity with a 139% worsening[48] Epilepsy Portfolio - Praxis is delivering first and best-in-class precision medicines for 25,000+ rare epilepsy patients[75] - The US diagnosed prevalence for rare epilepsy programs represents a $742 million market in 2021 sales, estimated to grow to $1.5 billion in 2026[76] - Preclinical and emerging clinical data demonstrate PRAX-562 will be a first- and best-in-class NaV blocker for DEEs[78] - In Part A of Phase 1 study, dosing with 90 mg of PRAX-562 over 28 days resulted in concentrations that exceeded the EC50 in the MES model by 13-fold[94]

PART I. FINANCIAL INFORMATION This section presents the company's unaudited financial statements and management's analysis of its financial condition and operational results [Item 1. Financial Statements (Unaudited)](index=7&type=section&id=Item%201.%20Financial%20Statements%20(Unaudited)) This section presents the unaudited condensed consolidated financial statements for Praxis Precision Medicines, Inc., including balance sheets, statements of operations, comprehensive loss, stockholders' equity, and cash flows, along with accompanying notes. The company reported a significant net loss and accumulated deficit, highlighting its early-stage nature and ongoing need for capital [Condensed Consolidated Balance Sheets](index=7&type=section&id=Condensed%20Consolidated%20Balance%20Sheets%20as%20of%20June%2030%2C%202022%20and%20December%2031%2C%202021) This section provides a snapshot of the company's financial position at specific dates, detailing assets, liabilities, and stockholders' equity Condensed Consolidated Balance Sheet Highlights (Amounts in thousands) | Metric | June 30, 2022 | December 31, 2021 | | :-------------------------------- | :------------ | :------------------ | | Total current assets | $175,580 | $287,409 | | Total assets | $180,417 | $292,747 | | Total current liabilities | $38,538 | $38,434 | | Total liabilities | $41,548 | $41,935 | | Total stockholders' equity | $138,869 | $250,812 | [Condensed Consolidated Statements of Operations](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20for%20the%20Three%20and%20Six%20Months%20Ended%20June%2030%2C%202022%20and%202021) This section details the company's revenues, expenses, and net loss over specific periods, reflecting operational performance Condensed Consolidated Statements of Operations Highlights (Amounts in thousands, except per share data) | Metric | Three Months Ended June 30, 2022 | Three Months Ended June 30, 2021 | Six Months Ended June 30, 2022 | Six Months Ended June 30, 2021 | | :------------------------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Research and development | $43,620 | $25,678 | $96,272 | $43,607 | | General and administrative | $16,774 | $10,805 | $32,971 | $20,295 | | Total operating expenses | $60,394 | $36,483 | $129,243 | $63,902 | | Net loss | $(60,194) | $(36,401) | $(128,911) | $(63,774) | | Net loss per share, basic and diluted | $(1.32) | $(0.88) | $(2.83) | $(1.59) | [Condensed Consolidated Statements of Comprehensive Loss](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Loss%20for%20the%20Three%20and%20Six%20Months%20Ended%20June%2030%2C%202022%20and%202021) This section presents the company's net loss and other comprehensive income/loss components, showing total comprehensive loss Condensed Consolidated Statements of Comprehensive Loss Highlights (Amounts in thousands) | Metric | Three Months Ended June 30, 2022 | Three Months Ended June 30, 2021 | Six Months Ended June 30, 2022 | Six Months Ended June 30, 2021 | | :------------------------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net loss | $(60,194) | $(36,401) | $(128,911) | $(63,774) | | Net unrealized (losses) gains on marketable securities, net of tax | $(74) | $36 | $(504) | $(50) | | Comprehensive loss | $(60,268) | $(36,365) | $(129,415) | $(63,824) | [Condensed Consolidated Statements of Stockholders' Equity](index=10&type=section&id=Condensed%20Consolidated%20Statements%20of%20Stockholders%27%20Equity%20for%20the%20Three%20and%20Six%20Months%20Ended%20June%2030%2C%202022%20and%202021) This section outlines changes in the company's equity accounts, including common stock, additional paid-in capital, and accumulated deficit Changes in Stockholders' Equity (Six Months Ended June 30, 2022) (Amounts in thousands, except share data) | Item | Shares | Amount (Common Stock) | Additional Paid-In Capital | Accumulated Deficit | Accumulated Other Comprehensive Loss | Total Stockholders' Equity | | :------------------------------------------ | :------- | :-------------------- | :------------------------- | :------------------ | :----------------------------------- | :------------------------- | | Balance at December 31, 2021 | 45,300,514 | $5 | $567,598 | $(316,615) | $(176) | $250,812 | | Stock-based compensation expense | — | — | $15,497 | — | — | $15,497 | | Issuance of common stock from at-the-market public offerings, net of issuance costs | 70,410 | — | $1,368 | — | — | $1,368 | | Net loss | — | — | — | $(128,911) | — | $(128,911) | | Balance at June 30, 2022 | 45,575,406 | $5 | $585,070 | $(445,526) | $(680) | $138,869 | [Condensed Consolidated Statements of Cash Flows](index=12&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows%20for%20the%20Six%20Months%20Ended%20June%2030%2C%202022%20and%202021) This section details the cash inflows and outflows from operating, investing, and financing activities over specific periods Condensed Consolidated Statements of Cash Flows Highlights (Six Months Ended June 30) (Amounts in thousands) | Cash Flow Activity | 2022 | 2021 | | :----------------- | :---------- | :---------- | | Operating activities | $(111,318) | $(55,735) | | Investing activities | $26,340 | $(164,239) | | Financing activities | $1,713 | $99,661 | | Net decrease in cash, cash equivalents and restricted cash | $(83,265) | $(120,313) | | Cash, cash equivalents and restricted cash, end of period | $56,455 | $176,895 | [Notes to Condensed Consolidated Financial Statements](index=13&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) This section provides detailed explanations and additional information supporting the condensed consolidated financial statements [1. Nature of the Business](index=13&type=section&id=1.%20Nature%20of%20the%20Business) This section provides details on 1. nature of the business - Praxis Precision Medicines, Inc. is a clinical-stage biopharmaceutical company focused on developing therapies for central nervous system (CNS) disorders, specifically those characterized by neuronal excitation-inhibition imbalance. The company leverages genetic insights and a precision approach to target rare and prevalent neurological disorders[37](index=37&type=chunk) - The company has incurred significant losses since its inception, with a **net loss of $128.9 million** for the six months ended June 30, 2022, and an **accumulated deficit of $445.5 million**. It anticipates continued operating losses and will require additional capital to fund future operations[41](index=41&type=chunk)[42](index=42&type=chunk) - As of June 30, 2022, the company's **cash, cash equivalents, and marketable securities totaled $165.4 million**, expected to fund operations for at least one year from the financial statement issuance date[42](index=42&type=chunk) [2. Summary of Significant Accounting Policies](index=14&type=section&id=2.%20Summary%20of%20Significant%20Accounting%20Policies) This section provides details on 2. summary of significant accounting policies - The condensed consolidated financial statements are prepared in conformity with GAAP and reflect normal recurring adjustments. Management uses estimates and assumptions, such as for accrued **R&D** expenses and stock-based compensation, which may differ from actual results[44](index=44&type=chunk)[46](index=46&type=chunk)[48](index=48&type=chunk) - No recently issued accounting pronouncements are expected to have a material impact on the financial statements[49](index=49&type=chunk) [3. Marketable Securities](index=15&type=section&id=3.%20Marketable%20Securities) This section provides details on 3. marketable securities Marketable Securities Portfolio (Amounts in thousands) | Security Type | Cost (June 30, 2022) | Estimated Fair Value (June 30, 2022) | Cost (December 31, 2021) | Estimated Fair Value (December 31, 2021) | | :-------------------------------- | :------------------- | :--------------------------- | :----------------------- | :--------------------------- | | Corporate debt securities | $45,039 | $44,430 | $83,881 | $83,712 | | Commercial paper | $32,958 | $32,958 | $34,993 | $34,993 | | Debt securities issued by U.S. government agencies | $32,048 | $31,977 | $12,111 | $12,103 | | Other debt securities | — | — | $6,398 | $6,399 | | Total available-for-sale securities | $110,045 | $109,365 | $137,383 | $137,207 | - As of June 30, 2022, the company held **13 securities** with a total fair market value of **$76.4 million** in an unrealized loss position, primarily due to changes in market interest rates. Management believes these losses are temporary and expects full recovery at maturity[51](index=51&type=chunk) [4. Fair Value Measurements](index=15&type=section&id=4.%20Fair%20Value%20Measurements) This section provides details on 4. fair value measurements Financial Assets Measured at Fair Value (Amounts in thousands) | Asset Type | Level 1 (June 30, 2022) | Level 2 (June 30, 2022) | Total (June 30, 2022) | | :-------------------------------- | :---------------------- | :---------------------- | :-------------------- | | Money market funds | $35,552 | — | $35,552 | | Corporate debt securities | — | $44,430 | $44,430 | | Commercial paper | — | $32,958 | $32,958 | | Debt securities issued by U.S. government agencies | $31,977 | — | $31,977 | | **Total** | **$67,529** | **$77,388** | **$144,917** | - The company categorizes financial assets measured at fair value using a hierarchy: Level 1 for unadjusted quoted prices in active markets and Level 2 for quoted prices for similar assets or inputs observable indirectly[53](index=53&type=chunk)[54](index=54&type=chunk) [5. Accrued Expenses](index=16&type=section&id=5.%20Accrued%20Expenses) This section details the company's accrued liabilities, including research and development and personnel-related expenses Accrued Expenses (Amounts in thousands) | Accrued Expense Type | June 30, 2022 | December 31, 2021 | | :-------------------------------- | :------------ | :------------------ | | Accrued external research and development expenses | $20,067 | $17,763 | | Accrued personnel-related expenses | $2,420 | $7,180 | | Accrued other | $3,281 | $1,901 | | **Total accrued expenses** | **$25,768** | **$26,844** | [6. Commitments and Contingencies](index=16&type=section&id=6.%20Commitments%20and%20Contingencies) This section provides details on 6. commitments and contingencies - The company has a sublease agreement for office space in Boston, MA, expiring January 31, 2026, with annual rent increases of approximately **2%**. A letter of credit secures the security deposit, reflected as restricted cash[56](index=56&type=chunk) [7. Common Stock and Preferred Stock](index=17&type=section&id=7.%20Common%20Stock%20and%20Preferred%20Stock) This section provides details on 7. common stock and preferred stock Shares Reserved for Future Issuance | Category | June 30, 2022 | December 31, 2021 | | :------------------------------------------ | :------------ | :------------------ | | Shares reserved for exercise of outstanding stock options | 9,826,672 | 6,468,501 | | Shares reserved for future awards under the 2020 Stock Option and Incentive Plan | 957,739 | 2,667,780 | | Shares reserved for future awards under the 2020 Employee Stock Purchase Plan | 929,661 | 654,204 | | Shares reserved for vesting of restricted stock units | 856,287 | 440,079 | | **Total shares of authorized common stock reserved for future issuance** | **12,570,359**| **10,230,564** | - As of June 30, 2022, the company had **150,000,000** authorized common shares (**$0.0001** par value) with **45,575,406 shares** issued and outstanding. No preferred stock was issued or outstanding[18](index=18&type=chunk)[57](index=57&type=chunk)[59](index=59&type=chunk) [8. Stock-Based Compensation](index=17&type=section&id=8.%20Stock-Based%20Compensation) This section provides details on 8. stock-based compensation Stock-Based Compensation Expense (Amounts in thousands) | Category | Three Months Ended June 30, 2022 | Three Months Ended June 30, 2021 | Six Months Ended June 30, 2022 | Six Months Ended June 30, 2021 | | :-------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Research and development | $2,987 | $2,031 | $6,201 | $4,349 | | General and administrative | $4,624 | $3,369 | $9,296 | $5,717 | | **Total stock-based compensation expense** | **$7,611** | **$5,400** | **$15,497** | **$10,066** | - As of June 30, 2022, total unrecognized compensation cost for unvested restricted stock units was **$18.6 million** (weighted-average period of **3.11 years**) and for unvested stock options was **$65.3 million** (weighted-average period of **2.59 years**)[64](index=64&type=chunk)[66](index=66&type=chunk) [9. Net Loss per Share](index=19&type=section&id=9.%20Net%20Loss%20per%20Share) This section provides details on 9. net loss per share Potential Common Shares Excluded from Diluted Net Loss per Share Calculation | Category | Three Months Ended June 30, 2022 | Six Months Ended June 30, 2022 | | :------------------------------------------ | :------------------------------- | :----------------------------- | | Outstanding stock options | 9,826,672 | 9,826,672 | | Unvested restricted stock units | 856,287 | 856,287 | | Potential shares issuable under the 2020 ESPP | 55,244 | 55,244 | | **Total excluded shares** | **10,738,203** | **10,738,203** | [10. Related Party Transactions](index=19&type=section&id=10.%20Related%20Party%20Transactions) This section provides details on 10. related party transactions - Praxis has a Cooperation and License Agreement with RogCon Inc. for SCN2A gene-related epilepsy and neurodevelopmental disorders. As of June 30, 2022, **$0.3 million** in accrued expenses were due to RogCon under this agreement[69](index=69&type=chunk) [11. Restructuring](index=19&type=section&id=11.%20Restructuring) This section provides details on 11. restructuring - In June 2022, the company initiated a **strategic realignment** to focus on Movement Disorders and Epilepsy franchises, resulting in a **workforce reduction**. **Total costs of $1.0 million** were incurred, with **$0.6 million** in **R&D** and **$0.4 million** in **G&A** expenses, primarily for severance and benefits[70](index=70&type=chunk)[71](index=71&type=chunk) - As of June 30, 2022, **$0.5 million** of these costs were paid, with the remaining **$0.5 million** included in accrued expenses and expected to be disbursed by December 31, 2022[72](index=72&type=chunk) [12. Subsequent Events](index=19&type=section&id=12.%20Subsequent%20Events) This section provides details on 12. subsequent events - The company concluded that no subsequent events requiring disclosure occurred between the balance sheet date and the issuance of the condensed consolidated financial statements[73](index=73&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=20&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on the company's financial condition and operational results, highlighting its clinical-stage status, significant losses, and strategic realignment. It details the financial performance for the three and six months ended June 30, 2022, and discusses liquidity, capital resources, and future funding requirements [Overview](index=20&type=section&id=Overview) This section provides details on overview - Praxis is a clinical-stage biopharmaceutical company focused on CNS disorders, with a broad portfolio including three clinical-stage product candidates across movement disorders, epilepsy, and psychiatric disorders[75](index=75&type=chunk) - Key pipeline updates include expected topline results from the Phase 2b trial for PRAX-944 in essential tremor (**Q4 2022**), initiation of Phase 2 studies for PRAX-562 in rare pediatric DEEs (**H2 2022**), and initiation of a first-in-patient study for PRAX-222 (**H2 2022**) after an FDA clinical hold resolution[76](index=76&type=chunk)[77](index=77&type=chunk) - The Phase 2/3 Aria Study for PRAX-114 in major depressive disorder did not meet its primary endpoint, leading to the discontinuation of further enrollment in related psychiatric studies[79](index=79&type=chunk) - The company has incurred a **net loss of $128.9 million** for the six months ended June 30, 2022, and an **accumulated deficit of $445.5 million**, expecting significant operating losses for the foreseeable future[81](index=81&type=chunk) [Restructuring](index=22&type=section&id=Restructuring) This section provides details on restructuring - In June 2022, Praxis underwent a **strategic realignment** to concentrate resources on its Movement Disorders and Epilepsy franchises, resulting in a **workforce reduction**[86](index=86&type=chunk) - The **realignment incurred $1.0 million** in costs, with **$0.6 million** recognized in **R&D** and **$0.4 million** in **G&A** expenses, primarily for employee severance and benefits. **$0.5 million** of these costs were paid by June 30, 2022, with the remainder expected by December 31, 2022[87](index=87&type=chunk)[88](index=88&type=chunk) [COVID-19 Business Update](index=22&type=section&id=COVID-19%20Business%20Update) This section provides details on covid-19 business update - The COVID-19 pandemic has caused some disruptions and increased risks, including slower patient enrollment in clinical trials, but has not significantly impacted overall clinical trial timelines or had material financial impacts to date[89](index=89&type=chunk) - The company continues to monitor the pandemic and evolve its business continuity plans, acknowledging potential future adverse effects on its business, financial condition, and results of operations due to global economic slowdown and healthcare system disruptions[89](index=89&type=chunk) [Financial Operations Overview](index=22&type=section&id=Financial%20Operations%20Overview) This section provides an overview of the company's revenue, operating expenses, other income, and income tax policies [Revenue](index=22&type=section&id=Revenue) This section provides details on revenue - Praxis has not generated any revenue from product sales since its inception and does not anticipate doing so for several years, if at all, as all product candidates are in preclinical or clinical development[90](index=90&type=chunk) [Operating Expenses](index=22&type=section&id=Operating%20Expenses) This section details the company's research and development and general and administrative expenses [Research and Development Expense](index=23&type=section&id=Research%20and%20Development%20Expense) This section provides details on research and development expense Research and Development Expenses by Franchise (Amounts in thousands) | Franchise/Category | Three Months Ended June 30, 2022 | Three Months Ended June 30, 2021 | Six Months Ended June 30, 2022 | Six Months Ended June 30, 2021 | | :------------------------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Psychiatry | $11,314 | $6,640 | $25,752 | $9,841 | | Epilepsy | $10,685 | $5,839 | $24,949 | $10,765 | | Movement disorders | $8,411 | $3,795 | $17,515 | $5,372 | | Other exploratory CNS indications | $248 | $819 | $2,439 | $1,482 | | Personnel-related (including stock-based compensation) | $10,735 | $6,745 | $21,876 | $13,250 | | Other indirect research and development expenses | $2,227 | $1,840 | $3,741 | $2,897 | | **Total research and development expenses** | **$43,620** | **$25,678** | **$96,272** | **$43,607** | - **R&D** expenses are expensed as incurred, with external development costs recognized based on task completion. A significant portion of **R&D** costs are external, reflecting the company's 'virtual' **R&D** model[92](index=92&type=chunk)[93](index=93&type=chunk) - The company expects **R&D** expenses to be maintained or increase as product candidates advance through development, new candidates are discovered, manufacturing capabilities are built, and therapeutic areas expand[95](index=95&type=chunk) [General and Administrative Expense](index=24&type=section&id=General%20and%20Administrative%20Expense) This section provides details on general and administrative expense - General and administrative expenses primarily include personnel-related costs (salaries, benefits, stock-based compensation) for executive, finance, legal, commercial, and administrative functions, as well as professional fees, insurance, and facility-related expenses[98](index=98&type=chunk) - These expenses are anticipated to increase with headcount growth to support **R&D** and potential commercialization, along with additional IP-related expenses[100](index=100&type=chunk) [Other Income](index=26&type=section&id=Other%20Income) This section provides details on other income - Other income, net, consists of interest income from **cash, cash equivalents, and marketable securities**, and amortization of investment premiums and discounts[101](index=101&type=chunk) [Income Taxes](index=26&type=section&id=Income%20Taxes) This section provides details on income taxes - The company has not recorded U.S. federal or state income tax benefits due to recurring **net losses** since inception and uncertainty of realizing future benefits. The income tax provision for the reported periods was not material[102](index=102&type=chunk) [Results of Operations](index=26&type=section&id=Results%20of%20Operations) This section compares the company's financial performance for the three and six months ended June 30, 2022 and 2021 [Comparison of the Three Months Ended June 30, 2022 and 2021](index=26&type=section&id=Comparison%20of%20the%20Three%20Months%20Ended%20June%2030%2C%202022%20and%202021) This section provides details on comparison of the three months ended june 30, 2022 and 2021 Consolidated Statements of Operations Highlights (Three Months Ended June 30) (Amounts in thousands) | Metric | 2022 | 2021 | Change | | :------------------------ | :---------- | :---------- | :---------- | | Research and development | $43,620 | $25,678 | $17,942 | | General and administrative| $16,774 | $10,805 | $5,969 | | Total operating expenses | $60,394 | $36,483 | $23,911 | | Net loss | $(60,194) | $(36,401) | $(23,793) | [Comparison of the Six Months Ended June 30, 2022 and 2021](index=27&type=section&id=Comparison%20of%20the%20Six%20Months%20Ended%20June%2030%2C%202022%20and%202021) This section provides details on comparison of the six months ended june 30, 2022 and 2021 Consolidated Statements of Operations Highlights (Six Months Ended June 30) (Amounts in thousands) | Metric | 2022 | 2021 | Change | | :------------------------ | :---------- | :---------- | :---------- | | Research and development | $96,272 | $43,607 | $52,665 | | General and administrative| $32,971 | $20,295 | $12,676 | | Total operating expenses | $129,243 | $63,902 | $65,341 | | Net loss | $(128,911) | $(63,774) | $(65,137) | - The **$52.7 million** increase in **R&D** expenses was driven by increased clinical-related spend across psychiatry (**$15.9M**), epilepsy (**$14.2M**, including a **$2.0M** license fee to Ionis Pharmaceuticals), and movement disorders (**$12.1M**), alongside an **$8.6 million** increase in personnel-related costs[108](index=108&type=chunk) - The **$12.7 million** increase in **G&A** expenses was primarily due to an **$8.4 million** increase in personnel-related costs and a **$3.6 million** increase in professional fees, including legal and patent-related work[109](index=109&type=chunk) [Liquidity and Capital Resources](index=28&type=section&id=Liquidity%20and%20Capital%20Resources) This section provides details on liquidity and capital resources [Sources of Liquidity](index=28&type=section&id=Sources%20of%20Liquidity) This section provides details on sources of liquidity - Since inception, Praxis has funded operations primarily through equity issuances, raising **$517.8 million** in **aggregate cash proceeds** (net of issuance costs) through June 30, 2022[111](index=111&type=chunk) - As of June 30, 2022, the company held **$165.4 million** in **cash, cash equivalents, and marketable securities**[111](index=111&type=chunk) - Under an Open Market Sale Agreement with Jefferies LLC, the company sold **70,410 shares** for **$1.4 million net proceeds** during the six months ended June 30, 2022, with a total of **$8.4 million** raised from **462,407 shares** since the agreement's inception[112](index=112&type=chunk)[113](index=113&type=chunk) [Historical Cash Flows](index=29&type=section&id=Historical%20Cash%20Flows) This section provides details on historical cash flows Summary of Cash Flows (Six Months Ended June 30) (Amounts in thousands) | Cash Flow Activity | 2022 | 2021 | | :----------------- | :---------- | :---------- | | Operating activities | $(111,318) | $(55,735) | | Investing activities | $26,340 | $(164,239) | | Financing activities | $1,713 | $99,661 | | Net decrease in cash, cash equivalents and restricted cash | $(83,265) | $(120,313) | [Plan of Operation and Future Funding Requirements](index=29&type=section&id=Plan%20of%20Operation%20and%20Future%20Funding%20Requirements) This section provides details on plan of operation and future funding requirements - The company expects substantial increases in expenses due to ongoing **R&D** activities and clinical trials, leading to continued operating losses and negative operating cash flows[121](index=121&type=chunk) - The **strategic realignment** in June 2022, focusing on Movement Disorders and Epilepsy, is expected to reduce future operating expenses and extend the cash runway[122](index=122&type=chunk) - **Current cash, cash equivalents, and marketable securities of $165.4 million** are projected to fund operating expenses and capital expenditures into the **first quarter of 2024**[123](index=123&type=chunk) - Future funding requirements are highly dependent on the scope, progress, and costs of preclinical and clinical development, regulatory approvals, commercialization activities, and intellectual property protection[124](index=124&type=chunk)[126](index=126&type=chunk) [Critical Accounting Policies and Significant Judgments and Estimates](index=31&type=section&id=Critical%20Accounting%20Policies%20and%20Significant%20Judgments%20and%20Estimates) This section provides details on critical accounting policies and significant judgments and estimates - There have been no changes to the critical accounting policies from those described in the company's Annual Report on Form 10-K filed on February 28, 2022[131](index=131&type=chunk) [Recently Issued Accounting Pronouncements](index=31&type=section&id=Recently%20Issued%20Accounting%20Pronouncements) This section provides details on recently issued accounting pronouncements - The company does not expect any recently issued accounting pronouncements to have a material impact on its condensed consolidated financial statements[132](index=132&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=31&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section addresses the company's exposure to market risks, primarily interest rate sensitivity, given its holdings in cash, cash equivalents, and marketable securities - The company's primary market risk exposure is interest rate sensitivity, affecting its **cash, cash equivalents, and marketable securities**, which are invested in money market funds or U.S. Treasury and government agency obligations[134](index=134&type=chunk) - Due to the short-term nature and low-risk profile of its investment portfolio, a **100 basis point** change in market interest rates is not expected to have a material impact on the fair market value of the portfolio or financial results[134](index=134&type=chunk) [Item 4. Controls and Procedures](index=32&type=section&id=Item%204.%20Controls%20and%20Procedures) This section outlines management's evaluation of the company's disclosure controls and procedures and reports on any changes in internal control over financial reporting [Management's Evaluation of Our Disclosure Controls and Procedures](index=32&type=section&id=Management%27s%20Evaluation%20of%20Our%20Disclosure%20Controls%20and%20Procedures) This section provides details on management's evaluation of our disclosure controls and procedures - As of June 30, 2022, management, including the CEO and CFO, concluded that the company's disclosure controls and procedures were effective at a reasonable assurance level[136](index=136&type=chunk) [Changes in Internal Control Over Financial Reporting](index=32&type=section&id=Changes%20in%20Internal%20Control%20Over%20Financial%20Reporting) This section provides details on changes in internal control over financial reporting - There were no changes in internal control over financial reporting during the period covered by this Quarterly Report on Form 10-Q that materially affected, or are reasonably likely to materially affect, the company's internal control over financial reporting[137](index=137&type=chunk) PART II. OTHER INFORMATION This section covers legal proceedings, risk factors, equity sales, and other miscellaneous disclosures [Item 1. Legal Proceedings](index=33&type=section&id=Item%201.%20Legal%20Proceedings) This section states that the company is not currently involved in any material legal matters or claims, but acknowledges the potential for future claims arising in the ordinary course of business - As of the report date, Praxis Precision Medicines, Inc. is not a party to any material legal matters or claims[140](index=140&type=chunk) - The company recognizes that it may become involved in legal matters and claims in the ordinary course of business, which could adversely impact its operations due to defense and settlement costs, and diversion of management resources[140](index=140&type=chunk) [Item 1A. Risk Factors](index=33&type=page&id=Item%201A.%20Risk%20Factors) This comprehensive section details the significant risks and uncertainties that could materially affect Praxis Precision Medicines, Inc.'s business, financial condition, and operating results. It covers risks related to financial position, product development, regulatory approval, commercialization, legal compliance, intellectual property, dependence on third parties, employee matters, data privacy, tax laws, and common stock investment [Risks Related to Our Financial Position and Need for Additional Capital](index=33&type=section&id=Risks%20Related%20to%20Our%20Financial%20Position%20and%20Need%20for%20Additional%20Capital) This section outlines risks associated with the company's financial health and its ongoing need for external funding [Risks Related to Past Financial Condition](index=33&type=section&id=Risks%20Related%20to%20Past%20Financial%20Condition) This section provides details on risks related to past financial condition - Praxis is a clinical-stage biopharmaceutical company with no approved products and has incurred significant losses since inception, including a **net loss of $128.9 million** for the six months ended June 30, 2022, and an **accumulated deficit of $445.5 million**[142](index=142&type=chunk) - The company anticipates continued significant losses as it expands research and development, seeks regulatory approvals, and invests in its pipeline and infrastructure[142](index=142&type=chunk)[143](index=143&type=chunk) [Risks Related to Future Financial Condition](index=34&type=section&id=Risks%20Related%20to%20Future%20Financial%20Condition) This section provides details on risks related to future financial condition - Praxis will require substantial additional funding to continue preclinical and clinical development and potential commercialization of its product candidates, with **current capital** expected to fund operations only into **Q1 2024**[145](index=145&type=chunk)[147](index=147&type=chunk) - Failure to raise additional capital on favorable terms could force delays, reductions, or elimination of product development programs or commercialization efforts, and may lead to dilution for existing stockholders if equity financing is pursued[146](index=146&type=chunk)[150](index=150&type=chunk)[151](index=151&type=chunk) [Risks Related to Research and Development and the Biopharmaceutical Industry](index=37&type=section&id=Risks%20Related%20to%20Research%20and%20Development%20and%20the%20Biopharmaceutical%20Industry) This section details the inherent risks in drug development, from preclinical stages to regulatory approval [Risks Related to Preclinical and Clinical Development](index=37&type=section&id=Risks%20Related%20to%20Preclinical%20and%20Clinical%20Development) This section provides details on risks related to preclinical and clinical development - Drug development is a lengthy, complex, and expensive process with uncertain outcomes; preclinical and early clinical trial results may not predict success in later stages, and product candidates can fail at any point[165](index=165&type=chunk) - Regulatory approval processes are unpredictable, and Praxis has no prior experience submitting an NDA. Product candidates may fail to receive approval due to issues with trial design, efficacy, safety, or manufacturing[160](index=160&type=chunk)[161](index=161&type=chunk)[162](index=162&type=chunk) - Undesirable side effects from product candidates could delay or prevent regulatory approval, limit commercial potential, or lead to significant negative consequences post-approval, including withdrawal from the market[175](index=175&type=chunk)[179](index=179&type=chunk) - Difficulties in patient enrollment for clinical trials, influenced by factors like eligibility criteria, patient proximity, and competing trials, could lead to significant delays, increased costs, or abandonment of trials[181](index=181&type=chunk)[182](index=182&type=chunk)[185](index=185&type=chunk) - Interim, topline, and preliminary data from clinical trials are subject to change upon comprehensive review and audit, and may differ materially from final results, potentially impacting regulatory approval and commercialization[187](index=187&type=chunk)[189](index=189&type=chunk) [Risks Related to Regulatory Approval](index=45&type=section&id=Risks%20Related%20to%20Regulatory%20Approval) This section provides details on risks related to regulatory approval - Obtaining regulatory approval in one jurisdiction does not guarantee approval in others, and foreign regulatory processes can involve different requirements, additional trials, and longer review periods[201](index=201&type=chunk)[202](index=202&type=chunk) - Product candidates may be regulated as controlled substances, subjecting them to significant restrictions on manufacture, use, sale, and distribution by agencies like the DEA, potentially limiting commercial potential[204](index=204&type=chunk)[205](index=205&type=chunk)[207](index=207&type=chunk) - The company is exposed to product liability lawsuits from clinical testing or commercialization, which could divert resources, halt trials, incur substantial liabilities, or limit commercialization, despite maintaining insurance coverage[208](index=208&type=chunk)[209](index=209&type=chunk)[210](index=210&type=chunk) [Risks Related to the Commercialization of our Product Candidates](index=47&type=section&id=Risks%20Related%20to%20the%20Commercialization%20of%20our%20Product%20Candidates) This section addresses challenges in marketing and selling approved products, including regulatory compliance and market acceptance [Risks Related to Post-Marketing Regulatory Requirements](index=48&type=section&id=Risks%20Related%20to%20Post-Marketing%20Regulatory%20Requirements) This section provides details on risks related to post-marketing regulatory requirements - Any approved product candidates will be subject to extensive ongoing post-marketing regulatory requirements, including manufacturing, labeling, advertising, and safety reporting, with potential for restrictions or market withdrawal if non-compliance or unforeseen problems occur[217](index=217&type=chunk)[218](index=218&type=chunk)[221](index=221&type=chunk)[222](index=222&type=chunk) - The FDA and other regulatory agencies strictly enforce prohibitions on off-label promotion. Improper promotion could lead to significant liability, fines, and restrictions on promotional conduct[225](index=225&type=chunk)[226](index=226&type=chunk) [Risks Related to Sales, Marketing and Competition](index=50&type=section&id=Risks%20Related%20to%20Sales%2C%20Marketing%20and%20Competition) This section provides details on risks related to sales, marketing and competition - Commercial success depends on significant market acceptance by physicians, patients, and third-party payors. Lack of acceptance could limit revenue and profitability[227](index=227&type=chunk)[228](index=228&type=chunk) - Failure to obtain or maintain adequate coverage and reimbursement from third-party payors (governmental and private) for approved products could limit market access and revenue generation[229](index=229&type=chunk)[230](index=230&type=chunk)[232](index=232&type=chunk) - Governments outside the U.S. often impose strict price controls and reimbursement limitations, which could adversely affect revenues and profitability in foreign markets[237](index=237&type=chunk) - Praxis lacks an internal sales and marketing organization and commercialization experience. Building these capabilities is expensive and risky, and reliance on third parties may result in lower profitability or ineffective market penetration[239](index=239&type=chunk)[240](index=240&type=chunk) - The biopharmaceutical industry is highly competitive, with many competitors possessing greater resources and experience. Competitors may achieve regulatory approval sooner or develop superior therapies, negatively impacting Praxis's market share and financial condition[211](index=211&type=chunk)[212](index=212&type=chunk)[214](index=214&type=chunk)[215](index=215&type=chunk) [Risks Related to Ongoing Regulatory and Legal Compliance](index=53&type=section&id=Risks%20Related%20to%20Ongoing%20Regulatory%20and%20Legal%20Compliance) This section covers risks associated with adhering to healthcare laws, data protection, and international regulations [Risks Related to Healthcare and Related Laws](index=53&type=section&id=Risks%20Related%20to%20Healthcare%20and%20Related%20Laws) This section provides details on risks related to healthcare and related laws - Upon commercialization, Praxis will be subject to extensive federal, state, and foreign healthcare fraud and abuse laws (e.g., Anti-Kickback Statute, False Claims Act, HIPAA, Sunshine Act). Non-compliance could lead to significant sanctions, fines, and reputational harm[241](index=241&type=chunk)[242](index=242&type=chunk)[243](index=243&type=chunk)[244](index=244&type=chunk) - The company is subject to evolving U.S. federal and state, and foreign data protection laws (e.g., GDPR, CCPA, CPRA) governing personal information. Failure to comply could result in liability, reputational damage, and increased compliance costs[247](index=247&type=chunk)[248](index=248&type=chunk)[249](index=249&type=chunk)[250](index=250&type=chunk)[251](index=251&type=chunk)[252](index=252&type=chunk)[253](index=253&type=chunk)[254](index=254&type=chunk)[256](index=256&type=chunk) - Ongoing healthcare legislative and regulatory reforms, such as the ACA and subsequent amendments, could adversely affect the business by impacting coverage, reimbursement, and drug pricing[257](index=257&type=chunk)[258](index=258&type=chunk)[259](index=259&type=chunk)[260](index=260&type=chunk)[261](index=261&type=chunk)[262](index=262&type=chunk)[263](index=263&type=chunk) - Inadequate funding or disruptions at regulatory agencies (e.g., FDA, SEC) could hinder their ability to review and approve new products in a timely manner, negatively impacting Praxis's business[264](index=264&type=chunk)[265](index=265&type=chunk)[266](index=266&type=chunk) [Risks Related to International Regulations](index=59&type=section&id=Risks%20Related%20to%20International%20Regulations) This section provides details on risks related to international regulations - EU drug marketing and reimbursement regulations, including governmental price controls and anti-kickback provisions, could significantly impact the pricing and usage of products in European member states[267](index=267&type=chunk)[268](index=268&type=chunk)[269](index=269&type=chunk)[270](index=270&type=chunk) - Uncertainty surrounding Brexit may create instability in international markets, currency fluctuations, and increased complexity in regulatory compliance for medicinal products in the UK and EU, potentially delaying commercialization[271](index=271&type=chunk)[272](index=272&type=chunk)[273](index=273&type=chunk)[274](index=274&type=chunk) - International operations are subject to laws like the U.S. Foreign Corrupt Practices Act (FCPA) and export control regulations. Non-compliance could lead to fines, criminal sanctions, and damage to reputation and business prospects[275](index=275&type=chunk)[276](index=276&type=chunk)[277](index=277&type=chunk)[278](index=278&type=chunk)[279](index=279&type=chunk) - Failure to comply with environmental, health, and safety laws and regulations, particularly concerning hazardous materials, could result in fines, penalties, and substantial costs, potentially harming research and development efforts[280](index=280&type=chunk)[281](index=281&type=chunk)[282](index=282&type=chunk) [Risks Related to Our Intellectual Property](index=61&type=section&id=Risks%20Related%20to%20Our%20Intellectual%20Property) This section discusses risks concerning the protection, enforcement, and licensing of the company's intellectual property [Risks Related to Licensed Intellectual Property](index=61&type=section&id=Risks%20Related%20to%20Licensed%20Intellectual%20Property) This section provides details on risks related to licensed intellectual property - Praxis's success depends on obtaining and maintaining patent, trademark, and trade secret protection for its technologies and product candidates. The patenting process is expensive, time-consuming, and uncertain, with risks of patents being narrowed, invalidated, or unenforceable[283](index=283&type=chunk)[284](index=284&type=chunk)[285](index=285&type=chunk)[286](index=286&type=chunk) - The company may not be the first to file patent applications or invent the technology, leading to priority disputes. Recent patent reform legislation (America Invents Act) increases uncertainties and costs in patent prosecution and enforcement[287](index=287&type=chunk)[288](index=288&type=chunk)[290](index=290&type=chunk)[291](index=291&type=chunk) - Failure to protect trade secrets through non-disclosure agreements and security measures could harm the company's competitive position if proprietary information is disclosed, misappropriated, or independently developed by others[297](index=297&type=chunk)[298](index=298&type=chunk)[299](index=299&type=chunk)[300](index=300&type=chunk) - Third-party claims of intellectual property infringement could prevent or delay product discovery and development, leading to expensive litigation, substantial damages, or the need to obtain costly licenses[301](index=301&type=chunk)[303](index=303&type=chunk)[304](index=304&type=chunk) [Risks Related to Patent Laws and Protection](index=68&type=section&id=Risks%20Related%20to%20Patent%20Laws%20and%20Protection) This section provides details on risks related to patent laws and protection - Maintaining patent protection requires compliance with various procedural and fee payment requirements; non-compliance can lead to abandonment or lapse of patent rights[320](index=320&type=chunk)[321](index=321&type=chunk) - Issued patents covering product candidates could be found invalid or unenforceable if challenged in court or by the USPTO, potentially leading to loss of patent protection and adverse impact on commercialization[322](index=322&type=chunk) - Changes in U.S. patent laws or their interpretation, such as the America Invents Act, could increase uncertainties and costs in patent prosecution and enforcement, potentially diminishing the value of patents[324](index=324&type=chunk)[326](index=326&type=chunk)[327](index=327&type=chunk) - Limited foreign intellectual property rights and weaker protection laws in some countries may hinder the ability to prevent infringement or marketing of competing products globally[328](index=328&type=chunk)[329](index=329&type=chunk)[330](index=330&type=chunk) - Patent terms may be inadequate to protect competitive position due to the long development and regulatory review process, potentially leading to early competition upon patent expiration[331](index=331&type=chunk)[332](index=332&type=chunk) - Failure to obtain patent term extension and data exclusivity for product candidates could materially harm the business by allowing competitors to enter the market sooner[333](index=333&type=chunk) [Risks Related to Our Dependence on Third Parties](index=71&type=section&id=Risks%20Related%20to%20Our%20Dependence%20on%20Third%20Parties) This section highlights risks arising from reliance on external partners for research, manufacturing, and supply chain management [Risks Related to Third Parties Generally](index=71&type=section&id=Risks%20Related%20to%20Third%20Parties%20Generally) This section provides details on risks related to third parties generally - Praxis relies heavily on third parties (CROs, laboratories, clinical investigators) for preclinical and clinical trials. Unsatisfactory performance, termination of engagements, or non-compliance with GCPs could delay or prevent regulatory approval and commercialization[335](index=335&type=chunk)[336](index=336&type=chunk)[337](index=337&type=chunk)[338](index=338&type=chunk) - Switching or adding third parties for studies is costly and time-consuming, potentially causing delays. Reliance on third parties for drug supply storage and distribution also poses risks to clinical development and commercialization[339](index=339&type=chunk)[340](index=340&type=chunk) [Risks Related to Third-Party Manufacturers](index=72&type=section&id=Risks%20Related%20to%20Third-Party%20Manufacturers) This section provides details on risks related to third-party manufacturers - The company relies on third-party manufacturers for product candidates, increasing the risk of insufficient quantities or unacceptable costs, which could delay or impair development and commercialization efforts[341](index=341&type=chunk) - Reliance on third-party manufacturers entails risks such as failure to meet schedules, comply with cGMP, or maintain quality control, potentially leading to regulatory sanctions, supply disruptions, and adverse effects on profit margins[342](index=342&type=chunk)[343](index=343&type=chunk)[344](index=344&type=chunk) - Inability of third-party manufacturers to scale production or optimize processes could increase manufacturing costs and delay commercialization[345](index=345&type=chunk) [Risks Related to Third-Party Suppliers](index=73&type=section&id=Risks%20Related%20to%20Third-Party%20Suppliers) This section provides details on risks related to third-party suppliers - Praxis depends on third-party suppliers for key raw materials, some of which are sole sources. Loss of these suppliers or their inability to provide adequate materials could cause significant delays in clinical trials and commercialization[346](index=346&type=chunk)[347](index=347&type=chunk) [Risks Related to Collaborations](index=74&type=section&id=Risks%20Related%20to%20Collaborations) This section provides details on risks related to collaborations - Dependence on third-party collaborators for **R&D** and commercialization of product candidates carries risks, including limited control over resources, potential intellectual property disputes, and collaborators' failure to perform or pursue development[348](index=348&type=chunk)[349](index=349&type=chunk) - Competition for collaborations is significant, and failure to secure favorable terms or integrate product candidates into existing operations could lead to delays, increased expenditures, or inability to generate revenue[350](index=350&type=chunk)[351](index=351&type=chunk) [Risks Related to Employee Matters, Managing Our Business and Operations](index=76&type=section&id=Risks%20Related%20to%20Employee%20Matters%2C%20Managing%20Our%20Business%20and%20Operations) This section addresses risks related to human capital, operational management, and business continuity [Risks Related to Business Operations](index=76&type=section&id=Risks%20Related%20to%20Business%20Operations) This section provides details on risks related to business operations - Business interruptions from the COVID-19 pandemic or similar outbreaks may adversely affect operations, including clinical trial enrollment, regulatory reviews, and supply chains, despite current mitigation efforts[354](index=354&type=chunk)[355](index=355&type=chunk)[356](index=356&type=chunk)[357](index=357&type=chunk) - International operations expose the company to economic, political, and regulatory risks, including inflation, changing foreign regulations, intellectual property enforcement challenges, and geopolitical instability (e.g., Russia-Ukraine conflict)[358](index=358&type=chunk)[359](index=359&type=chunk) [Risks Related to Employees](index=77&type=section&id=Risks%20Related%20to%20Employees) This section provides details on risks related to employees - The company heavily depends on its executive officers and key personnel. The loss of their services, or inability to attract and retain highly qualified managerial, scientific, and medical personnel in a competitive industry, would materially harm the business[360](index=360&type=chunk)[361](index=361&type=chunk)[362](index=362&type=chunk)[365](index=365&type=chunk) - Employees, contractors, and collaborators may engage in misconduct or improper activities, including non-compliance with regulatory standards or fraudulent conduct, which could lead to significant liability, regulatory sanctions, and reputational damage[366](index=366&type=chunk)[367](index=367&type=chunk) - Expected organizational growth, particularly in regulatory affairs and sales/marketing, may lead to difficulties in management, operational mistakes, loss of business opportunities, and increased expenses if not effectively managed[368](index=368&type=chunk)[369](index=369&type=chunk) [Risks Related to Data Privacy](index=80&type=section&id=Risks%20Related%20to%20Data%20Privacy) This section provides details on risks related to data privacy - Cyber-attacks or failures in IT systems (internal or third-party) could result in information theft, data corruption, and significant business disruption, potentially leading to violations of privacy laws, litigation, and reputational harm[370](index=370&type=chunk)[371](index=371&type=chunk) - Reliance on cloud-based software services means any disruption, interference, or unfavorable changes in terms of service by cloud providers could negatively affect operations, business, and reputation[372](index=372&type=chunk)[373](index=373&type=chunk)[374](index=374&type=chunk)[375](index=375&type=chunk) [Risks Related to Tax Laws](index=81&type=section&id=Risks%20Related%20to%20Tax%20Laws) This section provides details on risks related to tax laws - Changes in U.S. federal, state, and local tax laws, including potential increases in corporate income tax rates or new minimum taxes, could adversely affect the company's business and financial condition[376](index=376&type=chunk)[377](index=377&type=chunk) - The company's ability to use its U.S. federal and state net operating loss (NOL) carryforwards and tax credits may be limited by future taxable income generation and potential '**ownership changes**' under Sections 382 and 383 of the Code[378](index=378&type=chunk)[379](index=379&type=chunk)[380](index=380&type=chunk)[381](index=381&type=chunk) [Risks Related to Our Common Stock](index=82&type=section&id=Risks%20Related%20to%20Our%20Common%20Stock) This section outlines risks pertinent to investing in the company's common stock, including price volatility and dilution [Risks Related to Investment in Securities](index=82&type=section&id=Risks%20Related%20to%20Investment%20in%20Securities) This section provides details on risks related to investment in securities - The company's stock price has been and is likely to remain highly volatile, influenced by clinical trial results, regulatory decisions, competition, financial performance, and broader market conditions, potentially leading to loss of investment[382](index=382&type=chunk)[383](index=383&type=chunk)[384](index=384&type=chunk) - Lack of research coverage by industry analysts or unfavorable reports could negatively impact stock price and trading volume[385](index=385&type=chunk) - Praxis does not intend to pay dividends, so stockholder returns will be limited to stock appreciation, and future financing arrangements may restrict dividend payments[386](index=386&type=chunk) - Future issuances of additional capital stock for financings, acquisitions, or incentive plans will dilute existing stockholders' **ownership interests** and could reduce the per-share value of common stock[387](index=387&type=chunk) - Executive officers, directors, and principal stockholders collectively own a significant percentage of **voting stock** (approx. **62.2%** as of Dec 31, 2021), allowing them to exert control over stockholder-approved matters, which could adversely affect the stock price[388](index=388&type=chunk)[389](index=389&type=chunk) [Risks Related to Our Controls and Reporting Requirements](index=84&type=section&id=Risks%20Related%20to%20Our%20Controls%20and%20Reporting%20Requirements) This section provides details on risks related to our controls and reporting requirements - Operating as a public company incurs significant legal, accounting, and compliance costs, requiring substantial management time and potentially diverting resources from core business activities[389](index=389&type=chunk)[390](index=390&type=chunk) - As a smaller reporting company, reduced disclosure obligations may make common stock less attractive to some investors, potentially leading to a less active trading market and increased stock price volatility[391](index=391&type=chunk) - Failure to maintain an effective system of internal control over financial reporting could lead to inaccurate financial reports, fraud, loss of investor confidence, and restatements, harming the business and stock price[392](index=392&type=chunk)[393](index=393&type=chunk)[394](index=394&type=chunk) - Disclosure controls and procedures, while designed for reasonable assurance, may not prevent or detect all errors or acts of fraud due to inherent limitations like faulty judgments, simple errors, or circumvention[395](index=395&type=chunk) - Management has broad discretion over **cash** and **cash equivalents**, and ineffective use of these funds could result in financial losses, stock price decline, and delays in product development[396](index=396&type=chunk) [Risks Related to Charter and Bylaws](index=85&type=section&id=Risks%20Related%20to%20Charter%20and%20Bylaws) This section provides details on risks related to charter and bylaws - Anti-takeover provisions in the company's charter documents and Delaware law (Section 203) could delay or prevent a change of control or changes in the board of directors, potentially limiting the market price of common stock[397](index=397&type=chunk)[398](index=398&type=chunk)[399](index=399&type=chunk) - Bylaw provisions designating Delaware courts as the exclusive forum for certain actions may limit stockholders' ability to choose a favorable judicial forum, potentially discouraging lawsuits against the company or its management[400](index=400&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=86&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section reports on the company's unregistered equity sales and the use of proceeds from its public offerings - The company did not make any sales of unregistered equity securities during the three months ended June 30, 2022[401](index=401&type=chunk) - The initial public offering (IPO) in October 2020 involved the issuance and sale of **11,500,000 shares** of common stock at **$19.00** per share[402](index=402&type=chunk) [Item 3. Defaults Upon Senior Securities](index=87&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) This section states that there are no reportable defaults upon senior securities - This item is not applicable, indicating no defaults upon senior securities[404](index=404&type=chunk) [Item 4. Mine Safety Disclosures](index=87&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This section indicates that there are no mine safety disclosures required for the company - This item is not applicable, indicating no mine safety disclosures[405](index=405&type=chunk) [Item 5. Other Information](index=87&type=section&id=Item%205.%20Other%20Information) This section states that there is no other information to report - No other information is reported under this item[406](index=406&type=chunk) [Item 6. Exhibits](index=88&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed as part of the Quarterly Report on Form 10-Q, including corporate documents, agreements, and certifications - The exhibits include the Amended and Restated Certificate of Incorporation, Amended and Restated Bylaws, a Transition Agreement with Bernard Ravina, and various certifications (e.g., Principal Executive Officer, Principal Financial Officer)[408](index=408&type=chunk) - Certain certifications (Exhibit 32.1) are deemed to accompany the report but are not 'filed' for Section 18 purposes and are not incorporated by reference unless specifically stated[408](index=408&type=chunk) [Signatures](index=89&type=section&id=Signatures) This section contains the required signatures of the registrant's authorized officers, confirming the submission of the report - The report is signed on behalf of Praxis Precision Medicines, Inc. by Marcio Souza, Chief Executive Officer and Director, and Timothy Kelly, Chief Financial Officer, on August 8, 2022[413](index=413&type=chunk)

PRAXIS ● CORPORATE OVERVIEW May 2022 Forward-looking statements 2 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 and clinical results an ...

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 ...