Entera Bio(ENTX) - 2021 Q4 - Annual Report

PART I Business Entera Bio is a clinical-stage biopharmaceutical company developing orally delivered large molecule therapeutics, with lead candidates EB613 for osteoporosis and EB612 for hypoparathyroidism Overview - Entera Bio is a clinical-stage biopharmaceutical company developing orally delivered large molecule therapeutics, with a proprietary platform tested on numerous molecules[13] - The company's lead product candidates are EB613 for osteoporosis and EB612 for hypoparathyroidism, both oral formulations of parathyroid hormone (PTH)[13] - EB613 has completed a Phase 2 trial for osteoporosis and the company is preparing for a pivotal Phase 3 study. An End-of-Phase 2 meeting with the FDA was held in December 2021[13] - Entera entered into a research collaboration and license agreement with Amgen in December 2018 to use its oral delivery platform for inflammatory diseases[13] Our Pipeline Product Candidate Development Pipeline | Program | Target Indication | Development Stage | Partner | Next Milestone | | :--- | :--- | :--- | :--- | :--- | | EB613 (PTH) | Osteoporosis | Pre-Phase 3 | - | Phase 3 start H2 2022 | | EB612 (PTH) | Hypoparathyroidism | Phase 2 | - | Human PK/PD 2022 | | EB613 (PTH) | Non-union fractures | Pre-Phase 1/2 | - | Phase 1/2 | | GLP-2 | Short bowel syndrome | Preclinical | - | Large animal studies | | hGH | GH deficiency | Preclinical | - | Large animal studies | | Undisclosed | Anti-inflammatory | Preclinical | AMGEN | Undisclosed | Our Strategy - Advance EB613 into a pivotal Phase 3 trial for osteoporosis in 2022, following positive Phase 2 results[18] - Advance EB612 for hypoparathyroidism, with plans to initiate a Phase 2b/3 clinical trial after additional formulation and development activities[20] - Establish commercial partnerships for large-population indications like osteoporosis, while potentially retaining commercial rights for orphan indications like hypoparathyroidism[20] - Leverage the technology platform through collaborations, similar to the existing agreement with Amgen, to generate non-dilutive funding[20] - Identify and develop additional oral versions of FDA-approved injectable large molecules, such as the new research program for an oral GLP-2 analog[20] Our Product Candidates - EB613 for Osteoporosis: Completed a Phase 2 dose-ranging trial with final BMD results reported in Q2 2021. An End-of-Phase 2 meeting with the FDA was held in December 2021, with Phase 3 initiation expected in 2022[24] - EB612 for Hypoparathyroidism: Successfully completed a Phase 2a trial (results reported 2015) and a Phase 2b PK/PD trial comparing it to Natpara (results reported Q3 2019). An improved formulation was selected in Q4 2021[24] - The 2.5 mg dose of EB613 was selected for the pivotal Phase 3 study based on Phase 2 results, which showed a statistically significant dose response in lumbar spine BMD and an adverse event profile similar to Forteo®[32][33] - EB612 has received orphan drug designation from both the FDA and EMA for the treatment of hypoparathyroidism[20][45] Intellectual Property - The company holds issued patents covering its core compositions (protein, absorption enhancer, protease inhibitor) in the U.S., Europe, Japan, China, and other jurisdictions, with expected expiration in August 2029[48] - Pending patent applications cover specific oral administration technologies and methods of treatment for osteoporosis and hypoparathyroidism, which, if issued, are expected to expire between 2036 and 2037[49] - Eleven provisional patent applications were filed in 2022 covering new discoveries for oral delivery of large molecules, with potential expiration in 2043[49] Competition - For osteoporosis (EB613), key competitors include established treatments like Eli Lilly's Forteo® (injectable PTH) and Amgen's Prolia® and EVENITY®[52] - For hypoparathyroidism (EB612), the primary competitor is Takeda's Natpara® (injectable PTH 1-84), which has orphan drug exclusivity in the U.S. (expired Jan 2022) and EU. Ascendis Pharma is also developing a long-acting PTH in Phase 3[53][127] Government Regulation and Product Approval - The company's products are regulated by the FDA in the U.S. and comparable authorities abroad, requiring extensive preclinical and clinical trials (Phase 1, 2, 3) to establish safety and efficacy before marketing approval[58][59] - The company plans to utilize the 505(b)(2) regulatory pathway for EB613 in the U.S., which allows reliance on existing data for an approved drug (like Forteo®), potentially enabling the use of Bone Mineral Density (BMD) as a primary endpoint instead of fracture reduction[30] - EB612 has received Orphan Drug Designation in the U.S. and EU, which can provide benefits like tax credits, fee waivers, and a period of market exclusivity post-approval[71][81] - The company is also subject to healthcare laws regarding fraud and abuse (e.g., Anti-Kickback Statute), pricing and reimbursement policies, and data privacy regulations like GDPR and HIPAA[87][88][116] Risk Factors The company faces significant financial, developmental, and regulatory risks, including recurring losses, a substantial accumulated deficit, and a going concern warning - The company has a history of significant net losses, including $12.2 million in 2021, and an accumulated deficit of $82.4 million as of December 31, 2021[97] - Management and the independent registered public accounting firm have raised substantial doubt about the company's ability to continue as a going concern, with existing cash sufficient to fund operations only into the fourth quarter of 2022[97] - All product candidates, including the most advanced (EB613 and EB612), are still in development and have not yet completed the large-scale pivotal trials required for regulatory approval[96][103] - The COVID-19 pandemic poses a risk of adversely affecting business operations, including potential disruptions to clinical trials and supply chains[96][113] - The company is highly dependent on its ability to form collaborations for development and commercialization, and on third parties for manufacturing and conducting clinical trials[96][141] - Risks related to its location in Israel include IIA grant restrictions on manufacturing and technology transfer, as well as potential business disruptions from political and military instability in the Middle East[167][169] Properties The company leases 622 square meters of office and laboratory space in Jerusalem, Israel, with the current lease expiring on June 30, 2023 - Leases 622 square meters of office and laboratory space in Jerusalem, Israel[176] - The lease agreement expires on June 30, 2023[176] PART II Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities The company's Ordinary Shares and IPO Warrants trade on the Nasdaq Capital Market, with no history of cash dividends and plans to retain earnings for operations - Ordinary Shares trade under the symbol 'ENTX' and IPO Warrants trade under 'ENTXW' on the Nasdaq Capital Market[177] - The company has never declared or paid cash dividends and does not plan to in the foreseeable future, retaining earnings for business development[177] Management's Discussion and Analysis of Financial Condition and Results of Operations The company reported a $12.2 million net loss in 2021, with an $82.4 million accumulated deficit, and auditors expressed substantial doubt about its going concern, with $24.9 million cash projected to fund operations into Q4 2022 Results of Operations Comparison of Operations (Years Ended December 31) | Financial Metric | 2021 (in thousands) | 2020 (in thousands) | Change (%) | | :--- | :--- | :--- | :--- | | Revenues | $571 | $365 | 56% | | Cost of Revenues | $373 | $300 | 24% | | R&D Expenses, Net | $6,771 | $6,382 | 6% | | G&A Expenses | $5,690 | $4,851 | 17% | | Operating Loss | $12,217 | $11,168 | 9% | | Net Loss | $12,187 | $11,216 | 9% | | Loss Per Share | $0.47 | $0.67 | -30% | - The increase in R&D expenses in 2021 was primarily due to costs for materials, production, and preclinical activities in preparation for the EB613 Phase 3 trial[193] - The increase in G&A expenses in 2021 was mainly attributed to higher share-based compensation, legal and accounting costs, and D&O insurance[193] Liquidity and Capital Resources - The company's independent auditor has expressed substantial doubt about its ability to continue as a going concern due to recurring losses and negative cash flows[193][195] - As of December 31, 2021, the company had cash and cash equivalents of $24.9 million, which is expected to fund operations into the fourth quarter of 2022[193] - In 2021, the company sold an aggregate of 4.3 million Ordinary Shares under its ATM Programs, raising net proceeds of approximately $25 million[194][197] Cash Flow Summary (Years Ended December 31) | Cash Flow Activity | 2021 (in thousands) | 2020 (in thousands) | | :--- | :--- | :--- | | Net Cash used in operating activities | $(9,063) | $(10,557) | | Net Cash used in investing activities | $(17) | $(53) | | Net Cash provided by financing activities | $25,381 | $4,051 | Financial Statements and Supplementary Data This section presents the company's audited consolidated financial statements, showing cash and cash equivalents increased to $24.9 million in 2021, a net loss of $12.2 million, and the auditor's substantial doubt about going concern Consolidated Balance Sheet Data (as of December 31) | Account | 2021 (in thousands) | 2020 (in thousands) | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $24,892 | $8,593 | | Total current assets | $25,329 | $9,109 | | Total Assets | $25,987 | $9,722 | | Liabilities & Equity | | | | Total current liabilities | $3,161 | $1,841 | | Total liabilities | $3,422 | $2,212 | | Total Shareholders' Equity | $22,565 | $7,510 | Consolidated Statement of Operations Data (Years Ended December 31) | Account | 2021 (in thousands) | 2020 (in thousands) | | :--- | :--- | :--- | | Revenues | $571 | $365 | | Gross Profit | $198 | $65 | | Total Operating Expenses | $12,415 | $11,233 | | Operating Loss | $(12,217) | $(11,168) | | Net Loss | $(12,187) | $(11,216) | - The independent auditor's report explicitly states that the company's recurring losses from operations and cash outflows raise substantial doubt about its ability to continue as a going concern[214] PART III Directors, Executive Compensation, and Corporate Governance Information for Items 10-14, covering directors, executive compensation, corporate governance, and related matters, is incorporated by reference from the company's 2022 Proxy Statement - Information regarding directors, executive officers, corporate governance, executive compensation, security ownership, related transactions, and accountant fees is incorporated by reference from the company's 2022 Proxy Statement[293][294] PART IV Exhibits, Financial Statement Schedules This section lists exhibits filed with the Annual Report, including corporate governance documents, material contracts, and certifications, with no financial statement schedules filed - This section contains a list of all exhibits filed with the 10-K, including the company's Articles of Association, material agreements, and required certifications[297][299] - No financial statement schedules were filed with this report[298]