Aileron Therapeutics(ALRN) - 2024 Q3 - Quarterly Report

Clinical Development - Company is focused on developing novel therapies for orphan pulmonary and fibrosis indications, with two product candidates in clinical development: LTI-03 and LTI-01 [71] - LTI-03 demonstrated statistically significant reductions in profibrotic proteins in Cohort 1 of the Phase 1b trial, with GAL-7 (p=0.0014), TSLP (p=0.0223), and Col-1α1 (p=0.0489) showing significant decreases [73] - In Cohort 2 of the Phase 1b trial, LTI-03 showed dose-dependent trends in five biomarkers, including COL1A1 and CXCL7, indicating active pharmacodynamics [73] - Company plans to initiate a Phase 2 clinical trial for LTI-03 following positive results from the Phase 1b trial [73] Financial Performance - Revenue for the three months ended September 30, 2024 was $0, with a net loss of $5.8 million, compared to a net loss of $1.8 million for the same period in 2023, representing an increase in loss of $4.0 million [85] - Research and development expenses for the three months ended September 30, 2024 were $3.7 million, a significant increase from less than $0.1 million in the same period in 2023, primarily due to clinical programs acquired in the Lung Acquisition [86] - General and administrative expenses increased to $2.3 million for the three months ended September 30, 2024, up from $2.0 million in the same period in 2023, driven by increased employee-related expenses [87] - Total operating expenses for the three months ended September 30, 2024 were $6.1 million, compared to $2.0 million for the same period in 2023, reflecting an increase of $4.1 million [85] - For the nine months ended September 30, 2024, research and development expenses were $10.9 million, compared to $2.0 million for the same period in 2023, an increase of $8.9 million due to the Lung Acquisition [92] - General and administrative expenses for the nine months ended September 30, 2024 were $11.4 million, up from $6.0 million in the same period in 2023, reflecting an increase of $5.4 million [93] - The net cash used in operating activities for the nine months ended September 30, 2024 was $17.5 million, primarily due to a net loss of $21.9 million [98] - Cash used in operating activities for the nine months ended September 30, 2024, was $(17.5) million, compared to $(9.4) million for the same period in 2023 [100] Cash Position and Funding Needs - As of September 30, 2024, the company reported cash and cash equivalents of $17.7 million, which may not be sufficient to fund operations for the next twelve months, raising concerns about going concern [76] - The company expects to continue incurring significant expenses and operating losses as it advances clinical development of its lead product candidates, LTI-03 and LTI-01 [96] - The company anticipates needing additional capital to fund operations, which may be obtained through equity or debt financings, strategic collaborations, or licensing arrangements [96] - Net cash provided by financing activities for the nine months ended September 30, 2024, was $17.8 million, primarily due to an offering in May 2024, while there were no financing activities in the same period of 2023 [101] - As of September 30, 2024, the company had cash and cash equivalents of $17.7 million, which is expected to fund operations into June 2025 [102] - The company may need to obtain substantial additional funding to support ongoing operations and product development, with potential impacts from global economic conditions [104] - The company anticipates that additional financing may be required, which could lead to dilution for existing stockholders or increased fixed payment obligations [104] Acquisition and Strategic Focus - Company acquired Lung Therapeutics, Inc. on October 31, 2023, issuing 344,345 shares of common stock and 19,903 shares of Series X non-voting convertible preferred stock [74] - Following the Lung Acquisition, the company shifted its focus to developing first-in-class medicines for significant unmet medical needs in orphan pulmonary and fibrosis indications [74] - The company is focused on expanding its research pipeline and internal R&D capabilities, which may require significant capital investment [102] Accounting and Reporting - There were no material changes to critical accounting estimates during the three and nine months ended September 30, 2024, compared to the previous fiscal year [105] - The company is classified as a "smaller reporting company," which allows it to rely on certain exemptions from disclosure requirements [107] - The company has no cash provided by investing activities for the nine months ended September 30, 2024, compared to $16.3 million in the same period of 2023 [101]