Elevation Oncology(US:ELEV)2024-11-06 12:00Part I Financial Information Condensed Consolidated Financial Statements (unaudited) These unaudited statements provide a snapshot of Elevation Oncology's financial position, operations, and cash flows as of and for the period ended September 30, 2024 Condensed Consolidated Balance Sheets The balance sheets show an increase in total assets and stockholders' equity as of September 30, 2024, primarily due to marketable securities and equity offerings, alongside a rise in total liabilities Condensed Consolidated Balance Sheet Summary (in thousands) | Account | September 30, 2024 | December 31, 2023 | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $48,202 | $49,255 | | Marketable securities | $54,868 | $33,852 | | Total Assets | $106,302 | $89,091 | | Liabilities & Equity | | | | Total current liabilities | $5,926 | $4,145 | | Long-term debt, net | $31,021 | $30,137 | | Total Liabilities | $36,947 | $34,282 | | Total Stockholders' Equity | $69,355 | $54,809 | Condensed Consolidated Statements of Operations and Comprehensive Loss The statements of operations show a reduced net loss for the nine months ended September 30, 2024, primarily due to the absence of prior-year restructuring charges, despite increased research and development expenses driven by the EO-3021 program Statement of Operations Summary (in thousands, except per share data) | Metric | Nine Months Ended Sep 30, 2024 | Nine Months Ended Sep 30, 2023 | | :--- | :--- | :--- | | Research and development | $21,950 | $20,743 | | General and administrative | $12,111 | $11,649 | | Restructuring charges | $0 | $5,107 | | Loss from operations | ($34,061) | ($37,499) | | Net loss | ($34,049) | ($37,805) | | Net loss per share | ($0.60) | ($1.14) | Condensed Consolidated Statements of Cash Flows The cash flow statements indicate net cash used in operating and investing activities, largely offset by cash provided from financing activities, resulting in a net decrease in cash and cash equivalents for the nine months ended September 30, 2024 Cash Flow Summary (in thousands) | Activity | Nine Months Ended Sep 30, 2024 | Nine Months Ended Sep 30, 2023 | | :--- | :--- | :--- | | Net cash used in operating activities | ($26,162) | ($43,999) | | Net cash (used in) provided by investing activities | ($19,833) | $4,983 | | Net cash provided by financing activities | $44,942 | $47,977 | | (Decrease) increase in cash | ($1,053) | $8,961 | Notes to Condensed Consolidated Financial Statements These notes provide detailed disclosures on the company's business, significant accounting policies, liquidity, debt arrangements, equity offerings, and contingent milestone payment obligations from licensing agreements - The company is focused on developing antibody-drug conjugates (ADCs), with its lead candidate EO-3021 targeting Claudin 18.2 in a Phase 1 trial and a second program targeting HER320 - As of September 30, 2024, the company had $103.1 million in cash, cash equivalents, and marketable securities, expected to fund operations for at least the next 12 months23 - In March 2024, the company amended its loan agreement with K2 HealthVentures, extending the interest-only period to June 1, 2026, and issuing additional warrants, resulting in a $0.9 million loss from debt extinguishment5766 - The company has significant potential future milestone payment obligations, including up to $148.0 million for development/regulatory milestones and $1.0 billion for commercial milestones for EO-3021, plus up to $365.5 million for its HER3-ADC program101117 Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides management's perspective on the company's financial condition and operational results, detailing business strategy, financial performance, liquidity, and critical accounting policies Business Overview Elevation Oncology is an innovative oncology company focused on developing antibody-drug conjugates (ADCs), with its lead candidate EO-3021 in Phase 1 trials and plans for combination therapies and a second HER3-ADC program - The lead product candidate, EO-3021, a Claudin 18.2-targeting ADC, is in a Phase 1 clinical trial for solid tumors and has received Fast Track designation from the FDA for gastric and GEJ cancer124 - Initial Phase 1 data for EO-3021 in gastric/GEJ cancer patients showed an objective response rate (ORR) of 42.8% and a disease control rate (DCR) of 71.4% in the higher Claudin 18.2 expression sub-group132133 - The company plans to expand the EO-3021 Phase 1 trial to evaluate combinations with ramucirumab (VEGFR2 inhibitor) and dostarlimab (PD-1 inhibitor), with dosing expected by year-end 2024126 - The second program is a HER3-targeting ADC, with plans to nominate a development candidate in the second half of 2024136 Results of Operations Operating results for the nine months ended September 30, 2024, show a decreased net loss primarily due to the absence of prior-year restructuring charges, despite increased research and development expenses driven by the EO-3021 program Comparison of Results of Operations (in thousands) | Period | Research & Development | General & Administrative | Restructuring Charges | Net Loss | | :--- | :--- | :--- | :--- | :--- | | Q3 2024 | $9,388 | $3,841 | $0 | $(12,881) | | Q3 2023 | $7,422 | $3,498 | $0 | $(10,636) | | 9M 2024 | $21,950 | $12,111 | $0 | $(34,049) | | 9M 2023 | $20,743 | $11,649 | $5,107 | $(37,805) | - The $2.0 million increase in R&D expenses for Q3 2024 vs Q3 2023 was primarily due to a $2.5 million expense for in-licensing technology and a $1.9 million increase in EO-3021 program costs, partially offset by a $2.4 million decrease in manufacturing costs156 - The net loss for the nine months ended Sep 30, 2024, decreased by $3.8 million compared to the prior year, primarily due to the absence of $5.1 million in restructuring charges incurred in 2023161164 Liquidity and Capital Resources As of September 30, 2024, the company held $103.1 million in cash and marketable securities, expected to fund operations into 2026, with past funding primarily from equity offerings and a debt facility - The company believes its cash, cash equivalents, and marketable securities totaling $103.1 million as of September 30, 2024, will be sufficient to fund operations into 2026170180 Cash Flow Summary for Nine Months Ended Sep 30, 2024 (in thousands) | Activity | Amount | | :--- | :--- | | Cash used in operating activities | $(26,162) | | Cash used in investing activities | $(19,833) | | Cash provided by financing activities | $44,942 | - During the nine months ended September 30, 2024, the company raised net proceeds of approximately $44.2 million from its at-the-market (ATM) offering170 Quantitative and Qualitative Disclosures About Market Risk The company's primary market risk is interest rate sensitivity on its cash and marketable securities, though a 10% change is not expected to have a material effect, and there is no significant foreign currency risk - The company's main market risk is interest rate sensitivity on its $103.1 million of cash, cash equivalents, and marketable securities, where a 10% change in interest rates is not expected to have a material effect193 Controls and Procedures Management concluded that the company's disclosure controls and procedures were effective as of September 30, 2024, with no material changes in internal control over financial reporting during the quarter - The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of September 30, 2024197 - No material changes in internal control over financial reporting occurred during the third quarter of 2024198 Part II Other Information Legal Proceedings The company reports no legal proceedings to disclose for the period - The company reports no legal proceedings200 Risk Factors This section outlines significant risks, including limited operating history, high dependency on lead product candidate EO-3021, clinical trial challenges, regulatory hurdles, reliance on third-party manufacturers, competition, intellectual property protection, and stock price volatility - The company has a limited operating history, has incurred $230.0 million in accumulated deficit as of September 30, 2024, and expects to incur continued losses203214 - The business is highly dependent on the success of its lead product candidate, EO-3021, which has not completed clinical development204238 - The company relies on third parties, including some in China, for clinical supply manufacturing, increasing risks related to supply chain, quality, and geopolitical tensions209373374 - In September 2024, the company received a Nasdaq notice for failing to meet the $1.00 minimum bid price requirement, potentially leading to delisting557 Unregistered Sales of Equity Securities and Use of Proceeds The company reports no unregistered sales of equity securities during the period - There were no unregistered sales of equity securities in the period573 Defaults Upon Senior Securities The company reports no defaults upon senior securities - There were no defaults upon senior securities573 Mine Safety Disclosures This item is not applicable to the company - Not applicable573 Other Information The company reports no other information for the period - None573 Exhibits This section provides an index of exhibits filed with the Form 10-Q, including CEO and CFO certifications and XBRL data files - The report includes required certifications from the Principal Executive Officer and Principal Financial Officer (Exhibits 31.1, 31.2, 32) and XBRL interactive data files575