Evelo Biosciences(EVLO) - 2022 Q3 - Quarterly Report

Financial Performance - Total current assets increased to $72,327 million as of September 30, 2022, compared to $71,026 million as of December 31, 2021, reflecting a growth of 1.83%[17] - Total liabilities decreased to $77,002 million from $79,204 million, a reduction of 2.77%[17] - Net loss for the three months ended September 30, 2022, was $30,564 million, an improvement from a net loss of $33,730 million in the same period of 2021, representing a decrease in loss of 6.43%[19] - For the nine months ended September 30, 2022, the net loss was $90.986 million, a slight improvement from a net loss of $93.524 million in the same period of 2021[27] - The company reported a net loss of $30.564 million for the three months ended September 30, 2022, with a net loss per share of $(0.28)[90] - The company reported a net loss of $91.0 million for the nine months ended September 30, 2022, with an accumulated deficit of $505.7 million[132] - The company concluded that there is substantial doubt about its ability to continue as a going concern for at least one year from the date of the financial statements issued for the period ended September 30, 2022[186] Expenses - Research and development expenses for the three months ended September 30, 2022, were $21,928 million, down from $22,599 million in 2021, a decrease of 2.97%[19] - Total operating expenses decreased to $29,054 million for the three months ended September 30, 2022, compared to $32,710 million in 2021, a decline of 11.93%[19] - General and administrative expenses for the three months ended September 30, 2022, were $7.1 million, down $3.0 million from $10.1 million in 2021, driven by lower personnel costs and stock-based compensation[167] - Research and development expenses for the nine months ended September 30, 2022, were $62.5 million, down $2.3 million from $64.8 million in 2021, due to completion of certain programs[172] - General and administrative expenses for the nine months ended September 30, 2022, were $24.9 million, an increase of $1.8 million from $23.1 million in 2021, primarily due to higher personnel-related costs[173] Cash Flow and Financing - Cash and cash equivalents rose to $69,053 million as of September 30, 2022, compared to $68,441 million as of December 31, 2021, an increase of 0.90%[17] - The company reported a net cash used in operating activities of $78.0 million for the nine months ended September 30, 2022, primarily due to a net loss of $91.0 million[188] - Net cash provided by financing activities for the nine months ended September 30, 2022, was $79.9 million, consisting of net proceeds from the issuance of common stock and the exercise of stock options[193] - The company plans to raise additional capital through public offerings, private financing, and strategic partnerships to meet its obligations[186] - The company has drawn down the full $45.0 million available under its amended loan and security agreement with K2 HealthVentures LLC[141] Research and Development - Research and development costs are expensed as incurred, reflecting ongoing investment in product development[48] - The company has not generated any product or license revenue to date, focusing primarily on R&D[30] - EDP1815 is in Phase 2 clinical trials for atopic dermatitis, with a primary endpoint of achieving a 50% improvement in Eczema Area and Severity Index (EASI) score at week 16[105] - EDP2939 is set to enter a Phase 1/2 trial, with dosing for healthy volunteers anticipated in Q1 2023 and data from psoriasis patients expected in the second half of 2023[125] - The company plans to increase expenses significantly to support ongoing and new clinical trials, including EDP1815 and EDP2939, and to enhance manufacturing capabilities[133] Strategic Partnerships and Agreements - The company entered into a collaborative commercialization and license agreement with ALJ, granting an exclusive license for EDP1815 for a one-time fee of $7.5 million, with future profits and losses shared equally[55] - The company has a strategic collaboration with ALJ for EDP1815 in the Middle East, Turkey, and Africa, involving a 50:50 profit share arrangement[126] - The company has recognized no revenue under the ALJ Agreement to date, with the $7.5 million upfront fee recorded as deferred revenue[56] Compliance and Regulatory Matters - The company identified non-compliance with certain provisions of its loan agreement, but K2 HealthVentures waived all identified Events of Default[141] - The ongoing COVID-19 pandemic has impacted the company's operations and may affect patient enrollment in clinical trials[142] - The company expects interest expense on its outstanding loan to increase as interest rates rise[159] - Regulatory approvals for product candidates that successfully complete clinical trials are a key focus for the company[214]