Apogee Therapeutics(US:APGE)2024-08-12 11:00PART I: FINANCIAL INFORMATION Condensed Consolidated Financial Statements (Unaudited) Apogee Therapeutics' unaudited interim financial statements reflect increased cash and marketable securities from a stock offering and a growing net loss due to higher R&D Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | June 30, 2024 | December 31, 2023 | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $307,299 | $118,316 | | Marketable securities (Current & Long-term) | $482,324 | $277,143 | | Total Assets | $800,657 | $401,404 | | Liabilities & Equity | | | | Total Liabilities | $27,018 | $21,491 | | Total Stockholders' Equity | $773,639 | $379,913 | Condensed Consolidated Statement of Operations Highlights (in thousands) | Item | 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 | $33,206 | $13,946 | $61,922 | $22,401 | | General and administrative | $10,916 | $4,939 | $20,381 | $9,142 | | Loss from operations | $(44,122) | $(18,885) | $(82,303) | $(31,543) | | Interest income, net | $10,306 | $— | $16,393 | $133 | | Net loss | $(33,816) | $(18,885) | $(65,910) | $(31,410) | | Net loss per share | $(0.60) | $(3.78) | $(1.24) | $(6.28) | Condensed Consolidated Statement of Cash Flows Highlights (in thousands) | Cash Flow Activity | Six Months Ended June 30, 2024 | Six Months Ended June 30, 2023 | | :--- | :--- | :--- | | Net cash used in operating activities | $(60,936) | $(25,127) | | Net cash used in investing activities | $(200,451) | $— | | Net cash provided by financing activities | $450,370 | $(1,694) | - The company is a clinical-stage biotechnology firm focused on inflammatory and immunology (I&I) indications like atopic dermatitis (AD), asthma, and COPD, having funded operations through preferred unit and common stock sales without generating revenue3644 - The company believes its existing cash, cash equivalents, and marketable securities of approximately $789.6 million as of June 30, 2024, are sufficient to fund operations through at least the next 12 months from the financial statement issuance date46 Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses Apogee's business, pipeline advancements, financial results, and liquidity, noting a strengthened cash position and increased R&D expenses Overview and Pipeline Update Apogee advanced APG777 into Phase 2, APG808 into Phase 1, and plans APG990 for Phase 1, securing $450.0 million from a March 2024 offering - APG777 (anti-IL-13): Dosing commenced in a Phase 2 clinical trial for moderate-to-severe Atopic Dermatitis (AD) in May 2024, with topline 16-week data from Part A expected in the second half of 2025165 - APG808 (anti-IL-4Rα): A Phase 1 trial was initiated in March 2024, with interim Phase 1 PK and safety data expected in Q4 2024 and initial proof-of-concept data in asthma anticipated in H1 2025169 - APG990 (anti-OX40L): A development candidate was nominated in May 2024, and the company plans to initiate a Phase 1 clinical trial in healthy volunteers in Q3 2024168 - APG333 (anti-TSLP): A development candidate is planned to be nominated by the end of 2024, with a Phase 1 trial expected to start in 2025170 - In March 2024, the company completed a public offering, selling 7,790,321 shares of common stock for aggregate net proceeds of $450.0 million173 Results of Operations Operating expenses, especially R&D, significantly increased due to clinical advancements and personnel costs, while interest income rose sharply Comparison of Operating Results (in thousands) | Period | R&D Expense | G&A Expense | Loss from Operations | Net Loss | | :--- | :--- | :--- | :--- | :--- | | Q2 2024 | $33,206 | $10,916 | $(44,122) | $(33,816) | | Q2 2023 | $13,946 | $4,939 | $(18,885) | $(18,885) | | H1 2024 | $61,922 | $20,381 | $(82,303) | $(65,910) | | H1 2023 | $22,401 | $9,142 | $(31,543) | $(31,410) | R&D Expense Breakdown - Six Months Ended June 30 (in thousands) | Program/Category | 2024 | 2023 | | :--- | :--- | :--- | | APG777 | $14,094 | $11,773 | | APG808 | $6,172 | $— | | APG990 | $10,883 | $— | | Unallocated R&D Costs | $13,004 | $8,784 | | Personnel-related | $17,769 | $1,844 | | Total R&D | $61,922 | $22,401 | - The increase in R&D expenses for H1 2024 was driven by advancing the pipeline, including a $2.0 million milestone payment for APG808's first dosing in a Phase 1 trial and a $1.0 million milestone for APG990's development candidate nomination, with personnel-related R&D costs increasing by $15.9 million due to higher headcount and share-based compensation227 - General and administrative expenses for H1 2024 increased by $11.2 million compared to H1 2023, primarily due to an $8.2 million increase in personnel costs and a $3.2 million increase in other expenses related to operational expansion and public company costs228 Liquidity and Capital Resources As of June 30, 2024, the company held $307.3 million cash and $482.3 million marketable securities, sufficient to fund operations into Q1 2028 Cash Position and Recent Financing (in millions) | Item | Amount | | :--- | :--- | | Cash and cash equivalents (June 30, 2024) | $307.3 | | Marketable securities (June 30, 2024) | $482.3 | | Net proceeds from July 2023 IPO | $315.4 | | Net proceeds from March 2024 Offering | $450.0 | - Based on the current operating plan, the company estimates its existing cash, cash equivalents, and marketable securities will fund operating expenses and capital expenditure requirements into the first quarter of 2028245273 - Net cash used in operating activities for the six months ended June 30, 2024, was $60.9 million, primarily due to the net loss of $65.9 million, adjusted for non-cash items like equity-based compensation233235 - Net cash provided by financing activities was $450.4 million for the six months ended June 30, 2024, mainly from the March 2024 public offering238 Quantitative and Qualitative Disclosures About Market Risk As a smaller reporting company, Apogee Therapeutics is exempt from providing market risk disclosures - The company is a smaller reporting company as defined in Rule 12b-2 of the Exchange Act and is not required to provide the information under this item256 Controls and Procedures Management concluded the company's disclosure controls were effective as of June 30, 2024, with no material changes to internal controls - Management concluded that as of June 30, 2024, the company's disclosure controls and procedures were effective at the reasonable assurance level257 - There were no changes in the company's internal control over financial reporting during the quarter ended June 30, 2024, that have materially affected, or are reasonably likely to materially affect, internal controls258 PART II: OTHER INFORMATION Legal Proceedings The company is not currently involved in any material legal proceedings, and management anticipates no material adverse effects - The company is not currently a party to any material legal proceedings261 Risk Factors This section details substantial investment risks, including Apogee's limited operating history, lead program dependence, and need for additional capital - The company is a clinical-stage entity with a limited operating history, no approved products, and a history of significant losses, making it difficult to evaluate its future success263266 - Substantial additional capital will be required to finance operations, and failure to raise capital when needed could force delays or elimination of development programs263268 - The company is substantially dependent on the success of its most advanced programs, APG777, APG808, and APG990, which are still in clinical development and may not be successful263295 - The company relies on third parties, such as Paragon for discovery and WuXi Biologics for manufacturing, and any failure by these parties to perform could negatively impact the business263327336 - The company's ability to protect its patents and proprietary rights is uncertain, and it may face costly infringement claims263359 Unregistered Sales of Equity Securities and Use of Proceeds This section details the use of $315.4 million net proceeds from the July 2023 IPO for clinical trials and R&D, with no material change - On July 18, 2023, the company completed its IPO, receiving net proceeds of approximately $315.4 million447449 - The net proceeds are being used to fund clinical trials and manufacturing for APG777, APG808, and APG990, as well as other R&D activities and general corporate purposes450452 - There has been no material change in the intended use of proceeds from the IPO as described in the prospectus452 Defaults Upon Senior Securities No defaults upon senior securities are reported - No defaults upon senior securities are reported453 Mine Safety Disclosures This item is not applicable to the company - This item is not applicable to the company454 Other Information No directors or executive officers adopted, modified, or terminated Rule 10b5-1 trading plans during Q2 2024 - During the three months ended June 30, 2024, none of the Company's directors or executive officers adopted, modified or terminated any trading plan under Rule 10b5-1(c)455 Exhibits This section lists exhibits filed with the Quarterly Report on Form 10-Q, including stock plan amendments, license agreements, and officer certifications - The report includes several exhibits, such as amendments to the 2023 Employee Stock Purchase Plan, license agreements with MIL 6T, LLC, and certifications by the CEO and CFO458