Evelo Biosciences(US:EVLO)2023-08-14 12:14Financial Position - As of June 30, 2023, Evelo Biosciences had cash and cash equivalents of $7.6 million, a decrease of 84.1% from $47.9 million as of December 31, 2022[23]. - Total current liabilities increased significantly to $55.5 million from $12.4 million as of December 31, 2022, primarily due to the current portion of debt[23]. - The accumulated deficit as of June 30, 2023, was $575.7 million, an increase from $529.2 million as of December 31, 2022[23]. - As of June 30, 2023, the company has a cash and cash equivalents balance of $7.62 million, down from $92.01 million in the same period of 2022, indicating a significant decrease of approximately 91.7%[53]. - The company reported a substantial doubt about its ability to continue as a going concern within one year due to insufficient cash resources and the need for additional funding[36]. - The company has $1.2 million in restricted cash as of June 30, 2023, consistent with the previous year[52]. - As of June 30, 2023, the total debt was reported at $43,915 thousand after accounting for a debt discount of $1,085 thousand[83]. - The company has identified conditions that raise substantial doubt about its ability to continue as a going concern without raising additional capital or restructuring existing debt[208]. Operating Performance - The net loss for the three months ended June 30, 2023, was $21.1 million, compared to a net loss of $30.6 million for the same period in 2022, representing a 30.3% improvement[25]. - Total operating expenses for the three months ended June 30, 2023, were $19.6 million, a decrease of 33.8% from $29.6 million in the same period of 2022[25]. - Research and development expenses for the six months ended June 30, 2023, were $30.9 million, down 23.7% from $40.5 million in the same period of 2022[25]. - The net loss for the six months ended June 30, 2023, was $46.4 million, a decrease of $14.0 million compared to a net loss of $60.4 million for the same period in 2022[155]. - Total operating expenses decreased by $13.9 million to $44.5 million for the six months ended June 30, 2023, down from $58.3 million in 2022[155]. - General and administrative (G&A) expenses were $4.9 million for the three months ended June 30, 2023, compared to $8.4 million in 2022, driven by a reduction in personnel-related costs and stock-based compensation[151]. - The company expects to continue incurring operating losses and negative cash flows for the foreseeable future[35]. Research and Development - Evelo has not generated any product or license revenue to date, focusing primarily on research and development[34]. - Research and development (R&D) expenses decreased to $13.0 million for the three months ended June 30, 2023, down from $21.2 million in 2022, primarily due to reduced spending on inflammation programs and personnel costs[149]. - The company expects R&D expenses to continue increasing in the foreseeable future as it implements its business strategy and advances clinical trials for product candidates[141]. - The company anticipates continuing to control spending in R&D while prioritizing key clinical programs and potentially expanding into additional therapeutic areas as resources permit[150]. - The company has commenced a Phase 1/2 trial for EDP2939, with topline results expected in early Q4 2023[123]. - EDP1815 showed a PASI-50 response rate of 29% compared to 12% for placebo in a Phase 2 trial, with statistical significance (p=0.027)[126]. - The company discontinued further development of EDP1815 for atopic dermatitis after all cohorts failed to meet the primary endpoint due to high placebo response rates[128]. Capital and Funding - The company intends to obtain additional funding through public offerings, private financing, and strategic partnerships, but there is no assurance that it will secure funding on acceptable terms[36]. - The company raised approximately $25.5 million in a private placement by issuing 11,025,334 shares of common stock at a price of $2.31 per share on July 7, 2023[93]. - The company has incurred significant operating losses, with a net loss of $46.4 million for the six months ended June 30, 2023, compared to a net loss of $60.4 million for the same period in 2022[193][195]. - The company expects to incur significant expenses and operating losses for the foreseeable future, particularly as it conducts clinical trials and scales manufacturing capabilities[219]. - The company anticipates needing additional funding to complete the development of its product candidates and commercialize products if approved[219]. - The company has entered into a Loan and Security Agreement with Horizon Technology Finance Corporation for term loans of up to $45.0 million, which were fully drawn down[182]. - The interest on the outstanding loan balance accrues at a variable annual rate of at least 11%[183]. Stock and Corporate Governance - The company conducted a 1-for-20 reverse stock split on June 29, 2023, retroactively adjusting all share amounts in the financial statements[38]. - The company remains classified as an "emerging growth company" and a "smaller reporting company," allowing it to take advantage of reduced reporting requirements[46][48]. - The company has authorized 200 million shares of common stock, with no dividends declared for common stockholders unless approved by the board of directors[91]. - The company appointed two new board members, Jeff Moore and Alec Reynolds, while four directors stepped down, reducing the board size to seven[134]. Impairments and Charges - An impairment charge of $1.6 million was recorded for long-lived assets related to the EDP1815 program, reducing their carrying amount from $2.1 million to an estimated fair value of $0.5 million[67]. - An impairment charge of $1.6 million was recorded for property and equipment due to the halted development of EDP1815 in atopic dermatitis[152]. - The company incurred a severance charge of $0.3 million during the three months ended June 30, 2023, as part of a workforce reduction strategy[149]. - The company reduced its workforce by 48 employees, approximately 45% of total headcount, resulting in charges of $0.5 million and $3.1 million for the three and six months ended June 30, 2023, respectively[110].