Evelo Biosciences(US:EVLO)2023-11-09 22:06Financial Performance - Net loss for the three months ended September 30, 2023, was $12,364,000, compared to a net loss of $30,564,000 for the same period in 2022, reflecting a reduction of approximately 59.5%[25] - Net loss for the nine months ended September 30, 2023, was $58.8 million, a decrease of $32.2 million compared to a net loss of $91.0 million for the same period in 2022[166] - The net loss for the three months ended September 30, 2023, was $12.4 million, a decrease of $18.2 million from a net loss of $30.6 million in the same period of 2022[159] - Basic and diluted net loss per share for Q3 2023 was $(0.71), significantly better than $(5.66) in Q3 2022[114] Cash and Liquidity - Cash and cash equivalents decreased from $70,209,000 at the end of September 2022 to $18,059,000 at the end of September 2023, a decline of approximately 74.3%[33] - As of September 30, 2023, Evelo Biosciences had cash and cash equivalents of $17.3 million and an accumulated deficit of $588.0 million[37] - Cash used in operating activities for the nine months ended September 30, 2023, was $50.5 million, a decrease from $78.0 million in the same period of 2022[208][210] - The company reported a net decrease in cash, cash equivalents, and restricted cash of $31.0 million for the three months ended September 30, 2023[207] Operating Expenses - Total operating expenses for the nine months ended September 30, 2023, were $55,657,000, down from $87,379,000 for the same period in 2022, a decrease of approximately 36.3%[25] - Total operating expenses decreased by $17.9 million to $11.2 million for the three months ended September 30, 2023, compared to $29.1 million in the same period of 2022[158] - General and administrative expenses were $15.8 million for the nine months ended September 30, 2023, compared to $24.9 million in 2022, reflecting a decrease of $9.1 million[169] - General and administrative (G&A) expenses decreased to $3.9 million for the three months ended September 30, 2023, from $7.1 million in 2022, driven by a $2.4 million decrease in personnel-related costs[162] Research and Development - Research and development expenses for the nine months ended September 30, 2023, were $37,399,000, down from $62,470,000 for the same period in 2022, a decrease of about 40.2%[25] - Research and development (R&D) expenses were $6.5 million for the three months ended September 30, 2023, down from $21.9 million in 2022, primarily due to a $11.2 million decrease in inflammation programs spending[160] - R&D expenses are expected to decrease in the near future as the company halts further development of product candidates while exploring strategic alternatives[148] Debt and Financing - The company has a loan agreement with Horizon Technology Finance Corporation for $45.0 million, with interest accruing at a variable rate of at least 11%[79] - As of September 30, 2023, total debt was $33.948 million, with minimum future loan payments totaling $35.0 million due by 2027[92] - The company has a Loan and Security Agreement with Horizon for up to $45.0 million, with an interest rate of at least 11%[194][195] - The company anticipates needing additional capital to fund operations, as current cash resources are insufficient for the next twelve months[178] Strategic Alternatives and Future Outlook - Evelo is exploring strategic alternatives to inform future financial and clinical development plans due to substantial doubt about its ability to continue as a going concern within one year[38] - The company has not generated any product or license revenue to date and expects operating losses and negative cash flows to continue for the foreseeable future[36] - The company is currently facing liquidity issues and is considering various options, including potential workforce reductions and seeking relief in U.S. Bankruptcy Courts[204] - The company has reported net losses since inception, with a total net loss of $58.808 million for the nine months ended September 30, 2023, compared to $90.986 million in the same period of 2022[114] Stock and Equity - The weighted average number of common shares outstanding increased from 3,976,438 for the nine months ended September 30, 2022, to 9,546,129 for the same period in 2023, an increase of about 140.5%[25] - The company completed a private placement on July 7, 2023, raising approximately $25.5 million by issuing 11,025,334 shares at $2.31 per share[101] - The company has 423,536 unvested RSUs as of September 30, 2023, with a weighted-average grant date fair value of $10.29[109] - Stock-based compensation expense related to restricted stock units (RSUs) was $1.2 million for the three months ended September 30, 2023, compared to $0.2 million for the same period in 2022[109] Impairments and Losses - An impairment charge of $1.6 million was recorded for long-lived assets related to the EDP1815 program, reducing the carrying amount from $2.1 million to a fair value of $0.5 million[70] - The company recognized a loss on disposal of $0.2 million from furniture and fixtures and office equipment due to the sublease termination, along with a $0.6 million loss from leasehold improvements[71] - The company incurred a severance charge of $1.6 million during the nine months ended September 30, 2023, due to workforce reduction[167] Clinical Development - EDP2939 did not achieve the primary endpoint in the Phase 2 clinical study for moderate psoriasis, leading to the decision to cease its development[130][137] - The company announced the suspension of development for EDP2939 on October 17, 2023, following the failure to meet primary endpoints in clinical trials[174] - EDP1815 has been studied in over 800 patients and has shown a safety profile comparable to placebo[138] - The company is exploring strategic alternatives for EDP1815 and the SINTAX platform following the Phase 2 study results[130]