Edgewise Therapeutics(EWTX) - 2024 Q2 - Quarterly Report

Part I Financial Information Item 1. Financial Statements Unaudited financials show increased assets and a wider net loss due to R&D, with strong liquidity from equity offerings Condensed Balance Sheets Balance sheets reflect a substantial increase in total assets and equity, primarily from recent capital raises Condensed Balance Sheet Data (in thousands) | Account | June 30, 2024 (Unaudited) | December 31, 2023 | | :--- | :--- | :--- | | Cash and cash equivalents | $43,485 | $86,097 | | Marketable securities | $468,266 | $232,296 | | Total Assets | $531,647 | $340,035 | | Total Liabilities | $21,173 | $21,205 | | Total Stockholders' Equity | $510,474 | $318,830 | - The significant increase in total assets and stockholders' equity from December 31, 2023, to June 30, 2024, was primarily driven by capital raised from equity offerings during the period[11][12][22] Condensed Statements of Operations and Comprehensive Loss Operating statements show increased R&D expenses leading to a wider net loss, partially offset by higher interest income Operating Results Comparison (in thousands, except per share data) | Metric | Three Months Ended June 30, 2024 | Three Months Ended June 30, 2023 | Six Months Ended June 30, 2024 | Six Months Ended June 30, 2023 | | :--- | :--- | :--- | :--- | :--- | | Research and development | $30,680 | $19,559 | $58,374 | $39,435 | | General and administrative | $7,427 | $5,780 | $14,486 | $11,608 | | Loss from operations | ($38,107) | ($25,339) | ($72,860) | ($51,043) | | Interest income | $6,610 | $3,870 | $12,838 | $6,736 | | Net loss | ($31,497) | ($21,469) | ($60,022) | ($44,307) | | Net loss per share | ($0.34) | ($0.34) | ($0.66) | ($0.70) | - Operating expenses, particularly Research and Development, increased significantly year-over-year for both the three and six-month periods, driving a wider net loss. The net loss per share remained stable for the quarter and slightly improved for the six-month period due to a higher number of weighted-average shares outstanding from recent equity financings[13] Condensed Statements of Cash Flows Cash flow statements indicate increased operating cash burn, offset by significant financing activities for marketable securities Cash Flow Summary for Six Months Ended June 30 (in thousands) | Cash Flow Activity | 2024 | 2023 | | :--- | :--- | :--- | | Net cash used in operating activities | ($54,697) | ($43,060) | | Net cash (used in) provided by investing activities | ($230,940) | $52,484 | | Net cash provided by financing activities | $243,025 | $390 | - For the first six months of 2024, the company's operating cash burn increased to $54.7 million. A significant cash inflow of $243.0 million from financing activities, primarily from a stock offering, was largely used to purchase $368.6 million in marketable securities[17][22] Notes to Condensed Financial Statements Notes detail the company's biopharmaceutical focus, accumulated deficit, recent equity raises, and liquidity outlook - The company is a clinical-stage biopharmaceutical firm focused on severe muscle diseases, with lead candidates sevasemten (EDG-5506) and EDG-7500[18] - As of June 30, 2024, the company had an accumulated deficit of $304.8 million and cash, cash equivalents, and marketable securities of $511.8 million[20] - In January 2024, the company raised net proceeds of $231.9 million from an underwritten registered direct offering. In May 2024, a new "at the market offering" (ATM) program was established for up to $175 million[22] - Management believes existing cash, cash equivalents, and marketable securities are sufficient to fund operations for at least the next 12 months from the issuance of the financial statements[24] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses advancing clinical programs, increased R&D expenses, strong liquidity from equity offerings, and upcoming transition to a large accelerated filer Results of Operations Operating results show substantial R&D expense increases from expanded clinical trials, alongside higher G&A costs, partially offset by interest income R&D Expense Breakdown - Three Months Ended June 30 (in thousands) | Program | 2024 | 2023 | Change | | :--- | :--- | :--- | :--- | | Sevasemten clinical program | $12,647 | $7,501 | $5,146 | | EDG-7500 clinical program | $5,077 | $— | $5,077 | | Discovery and preclinical | $2,548 | $3,984 | ($1,436) | | Internal costs | $10,408 | $8,074 | $2,334 | | Total R&D Expenses | $30,680 | $19,559 | $11,121 | R&D Expense Breakdown - Six Months Ended June 30 (in thousands) | Program | 2024 | 2023 | Change | | :--- | :--- | :--- | :--- | | Sevasemten clinical program | $24,767 | $14,693 | $10,074 | | EDG-7500 clinical program | $9,090 | $— | $9,090 | | Discovery and preclinical | $4,080 | $9,435 | ($5,355) | | Internal costs | $20,437 | $15,307 | $5,130 | | Total R&D Expenses | $58,374 | $39,435 | $18,939 | - General and administrative expenses increased by $1.6 million for the three-month period and $2.9 million for the six-month period, primarily due to higher personnel-related costs from increased headcount and stock-based compensation[88][92] Liquidity and Capital Resources Strong liquidity is maintained by $511.8 million in cash and marketable securities, primarily from equity offerings, with a new ATM program for future capital needs - As of June 30, 2024, the company had cash, cash equivalents, and marketable securities of $511.8 million[94] - The company believes its existing cash will fund planned operating expenses and capital requirements for at least the next 12 months[75][107] - In May 2024, the company established a new "at the market offering" (Leerink ATM) to sell up to $175 million of common stock[102] Item 3. Quantitative and Qualitative Disclosures About Market Risk As a smaller reporting company, the company is exempt from providing market risk disclosures - The company is a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and is not required to provide the information under this item[115] Item 4. Controls and Procedures Management concluded disclosure controls and procedures were effective, with no material changes to internal control over financial reporting - Management concluded that the company's disclosure controls and procedures were effective as of June 30, 2024[116] - No changes in internal control over financial reporting occurred during the quarter that have materially affected, or are reasonably likely to materially affect, internal controls[117] Part II Other Information Item 1. Legal Proceedings The company is not currently involved in any material legal proceedings - The company reports that it is not currently a party to any material legal proceedings[119] Item 1A. Risk Factors Extensive risks include limited operating history, dependence on lead candidate sevasemten, need for capital, clinical development uncertainties, and reliance on third parties - The company is substantially dependent on the success of its lead product candidate, sevasemten (EDG-5506)[121][156] - The company has a limited operating history, has incurred significant net losses since inception, and will require substantial additional capital to finance operations, which may cause dilution to stockholders[121][127][133] - Clinical drug development is a lengthy, expensive, and uncertain process. The results of preclinical and early clinical trials may not be predictive of future results, and product candidates may cause serious adverse events[121][163][173] - The company relies on third parties to conduct clinical trials and manufacture product candidates, which introduces risks related to performance, quality, and supply chain continuity[122][374][379] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds No unregistered equity sales occurred, and proceeds from various offerings were used as planned for operations and R&D, with unspent funds invested - There were no unregistered sales of equity securities in the period[429] - The use of proceeds from the IPO ($186.1 million net), follow-on offering ($129.2 million net), ATM program ($59.4 million net), and January 2024 offering ($231.9 million net) has not materially changed from the plans outlined in their respective prospectuses[429][431][433][434] Other Items (Items 3, 4, 5, 6) The company reports no defaults on senior securities, mine safety disclosures are not applicable, and no other information to disclose - Item 3, Defaults Upon Senior Securities: None[434] - Item 4, Mine Safety Disclosures: Not applicable[434] - Item 5, Other Information: None[434]