MoonLake Immunotherapeutics(MLTX) - 2022 Q3 - Quarterly Report

Financial Performance - MoonLake Immunotherapeutics has incurred significant losses since inception and expects to continue incurring substantial losses for the foreseeable future [150]. - The net loss for Q3 2022 was $14.7 million, a 134.4% increase compared to a net loss of $6.3 million in Q3 2021 [177]. - For the nine months ended September 30, 2022, total operating expenses were $48.4 million, up 23.1% from $39.3 million in the same period of 2021 [184]. - The net loss for the nine months ended September 30, 2022, was $48.0 million, representing a 22.2% increase from $39.3 million in the same period of 2021 [184]. - The company anticipates ongoing fluctuations in net losses due to the timing of clinical trials and expenditures on research and development activities [172]. - The company expects to incur significant expenses and operating losses for at least the next five years as it continues clinical development and seeks regulatory approval for its product candidate [193]. Cash and Funding - As of September 30, 2022, the company had $41.2 million in cash and cash equivalents, with total cash, cash equivalents, and short-term marketable securities amounting to $83.5 million, sufficient to fund operations into the second half of 2024 [155]. - Net cash used in operating activities was $44.3 million for the nine months ended September 30, 2022, compared to $27.7 million in the same period of 2021 [197]. - Net cash provided by financing activities was $119.7 million for the nine months ended September 30, 2022, significantly higher than $28.3 million in the same period of 2021 [199]. - The company anticipates that its available cash will be sufficient to fund operating expenses and capital expenditure requirements into the second half of 2024 [192]. Research and Development - The company has not generated any revenue from product sales to date and will depend on the successful development and commercialization of its product SLK for future revenue [154][163]. - Research and development expenses for Q3 2022 were $9.0 million, a significant increase of 1,247.9% compared to $0.7 million in Q3 2021 [178]. - The company expects to incur significant additional research and development expenses as it progresses into Phase 3 clinical trials for SLK [167]. - Research and development expenses for the nine months ended September 30, 2022, were $30.7 million, slightly up from $30.5 million in the same period of 2021 [185]. - The company is substantially dependent on the success of its novel tri-specific nanobody, sonelokimab, licensed from Merck Healthcare KGaA [150]. Clinical Trials and Product Development - In the Phase 2b clinical trial for SLK, 57% of patients achieved total skin clearance after 24 weeks, demonstrating significant efficacy compared to placebo [152]. - The company plans to develop SLK for inflammatory diseases driven by IL-17A and IL-17F, with initial target diseases including hidradenitis suppurativa and psoriatic arthritis [153]. - The primary endpoint data readout for the Phase 2 trials in hidradenitis suppurativa is expected in mid-2023, while enrollment for psoriatic arthritis trials is anticipated to commence before the end of 2022 [153]. - The company has not completed any clinical trials and has no products approved for commercial sale [147][154]. Operating Expenses - Total operating expenses for Q3 2022 reached $14.8 million, reflecting a 135.7% increase from $6.3 million in Q3 2021 [177]. - General and administrative expenses for Q3 2022 were $5.7 million, slightly up by 2.7% from $5.6 million in Q3 2021 [179]. - General and administrative expenses increased to $17.7 million for the nine months ended September 30, 2022, compared to $8.8 million for the same period in 2021, reflecting an increase of $8.9 million [186]. - Operating expenses are expected to fluctuate significantly from year to year based on the timing of clinical development programs and regulatory approval efforts [156]. Other Financial Information - The company recognized a foreign currency transaction gain of $344,914 for the nine months ended September 30, 2022 [175]. - The company recognized $352,227 in other income for the nine months ended September 30, 2022, a significant increase from an expense of $25,839 in the same period of 2021 [187]. - An income tax expense of $25,354 was recorded for the nine months ended September 30, 2022, related to the U.K. subsidiary, with no tax recorded in the same period of 2021 [188]. - Total contractual obligations as of September 30, 2022, amounted to $37.7 million, with $27.3 million due within one year [200]. Regulatory and Compliance - The company is utilizing the extended transition period under the JOBS Act, which may affect comparability with other public companies [218]. - The company will cease to be an emerging growth company when total annual gross revenue reaches $1.235 billion or more [220]. - The company may still qualify as a "smaller reporting company" after losing its emerging growth status, allowing it to maintain some disclosure exemptions [221]. - The company is not required to provide quantitative and qualitative disclosures about market risk as a smaller reporting company [222].