Entrada Therapeutics(TRDA) - 2022 Q4 - Annual Report

PART I Business Entrada Therapeutics develops EEV platform-based medicines for rare neuromuscular diseases, with lead candidate ENTR-601-44 for DMD on FDA clinical hold Overview - Entrada aims to establish Endosomal Escape Vehicle (EEV) therapeutics as a new class of medicines for intracellular targets, initially focusing on rare neuromuscular diseases like Duchenne muscular dystrophy (DMD) and myotonic dystrophy type 1 (DM1)[29] - The company's most advanced candidate, ENTR-601-44 for DMD (exon 44 skipping), received a clinical hold notice from the FDA in December 2022 regarding its IND application. Entrada is working to resolve the hold and is exploring global options to initiate a healthy volunteer trial in 2023[30][39] - A second DMD candidate, ENTR-601-45 (exon 45 skipping), was selected in January 2023, with a planned IND submission in Q4 2024[30][40] - Entrada entered into a strategic collaboration with Vertex Pharmaceuticals for its DM1 program, ENTR-701. The deal includes a $223.7 million upfront payment, a $26.3 million equity investment, and potential milestones up to $485 million[31][44] Our Strategy - Rapidly advance EEV-PMO therapeutic candidates for neuromuscular diseases, starting with DMD (exons 44, 45, 51, 50) and DM1 (in collaboration with Vertex)[52] - Leverage the modularity of the EEV platform to build a broad development portfolio across multiple diseases, including Pompe disease and indications outside of neuromuscular disorders[52] - Continuously invest in and expand the EEV Platform to optimize chemistries for various modalities like oligonucleotides, antibodies, and enzymes, and explore novel constructs for gene editing and mRNA delivery[52] - Selectively evaluate strategic partnerships to maximize the therapeutic potential of the EEV Platform and accelerate program development[53] Our Platform - The EEV Platform is designed to overcome the challenge of intracellular drug delivery, as approximately 75% of disease-causing targets are located inside cells[58] - EEVs are small cyclic peptides that bind to the cell's phospholipid bilayer, triggering endocytosis. Once inside the early endosome, EEVs facilitate the escape of the conjugated therapeutic into the cell's cytosol[63][67] - Preclinical studies suggest EEVs enable approximately 50% of the conjugated material to escape the endosome, a significant improvement over the less than 2% observed in studies of current biologics[67][73] - The platform is modular and versatile, capable of delivering a range of therapeutic payloads from small oligonucleotides (1 kDa) to large proteins (600 kDa) via multiple administration routes (IV, SQ, IM, IT)[73][75] Our Development Portfolio - The development portfolio leverages the EEV platform across RNA, antibody, and enzyme-based programs, with an initial focus on neuromuscular diseases[79] - The Duchenne Muscular Dystrophy (DMD) franchise includes ENTR-601-44 (exon 44), ENTR-601-45 (exon 45), and research efforts for exon 51 and 50 skipping populations[80][85] - The Myotonic Dystrophy Type 1 (DM1) program, ENTR-701, is partnered with Vertex and aims to address the underlying cause of the disease by targeting CUG triplet repeats[151][156] - Beyond neuromuscular diseases, the company is exploring opportunities in immunology (targeting IRF5), ocular diseases, and metabolic diseases (ENTR-501 for MNGIE)[47][48][49] Competition - In DMD, Entrada competes with approved exon-skipping therapies from Sarepta and Nippon Shinyaku, as well as clinical and preclinical programs from Sarepta, Avidity, Dyne, PepGen, and gene therapies from Pfizer and Sarepta[190][191] - In DM1, where no therapies are approved, competitors include clinical-stage programs from Avidity (AOC-1001) and Dyne (DYNE-101), and preclinical programs from PepGen, Design Therapeutics, and Vertex[192] - In Pompe disease, competition includes approved ERTs and development-stage programs from Amicus, Astellas, Bayer, Roche, and others, including GYS1 inhibitors from Maze Therapeutics, Aro Biotherapeutics, and Avidity[193] Intellectual Property - As of February 28, 2023, Entrada's patent portfolio consists of 52 distinct patent families, including 104 pending applications and 66 granted patents (owned and exclusively licensed) in the U.S. and foreign jurisdictions[198] - The patent estate covers the EEV Platform, proprietary conjugates (enzyme, peptide, oligonucleotide), methods of treatment, and manufacturing aspects, with patent expirations expected between 2036 and 2043, excluding extensions[199] - The company has an exclusive, worldwide license agreement with Ohio State Innovation Foundation (OSIF) for key cell-penetrating peptide technologies, requiring diligence, milestone payments up to $7.95 million, and low single-digit royalties[209][211] - In addition to patents, the company relies on trade secrets and confidentiality agreements to protect its proprietary technology and know-how[196][207] Manufacturing - Entrada does not own or operate manufacturing facilities and relies on third-party contract manufacturing organizations (CMOs) for the supply of its therapeutic candidates[214] - The company expects to continue using CMOs for IND-enabling studies, clinical trials, and potential commercial activities, but may consider establishing its own facility in the future[214] - All third-party manufacturers are required to comply with current Good Manufacturing Practice (cGMP) regulations, and Entrada has personnel to oversee these contracted activities[215][216] Government Regulation - The company's therapeutic candidates are subject to extensive regulation by the FDA in the U.S. and comparable authorities abroad, covering research, development, manufacturing, and marketing[217][218] - The U.S. approval process involves preclinical testing, submitting an Investigational New Drug (IND) application, conducting Phase 1-3 clinical trials, and submitting a New Drug Application (NDA) or Biologics License Application (BLA)[221][225][232] - The FDA offers expedited programs such as Fast Track, Breakthrough Therapy, Priority Review, and Accelerated Approval for drugs treating serious conditions with unmet medical needs, which the company may pursue[250][254] - Outside the U.S., particularly in the European Union, the company must comply with separate regulatory requirements for clinical trials and marketing authorization, which are now distinct for Great Britain following Brexit[279][297] Human Capital Resources - As of February 28, 2023, Entrada had 130 full-time employees, with 102 engaged in research and development[311] - The company focuses on creating a high-performing, inclusive, and diverse workforce. As of February 28, 2023, the workforce was approximately 53% women and 54% from minority groups, with over 60% of senior leadership being women or minorities[313] Risk Factors Entrada faces substantial risks including financial instability, development uncertainties, regulatory hurdles, and intense competition Risks Related to Our Limited Operating History, Financial Position and Capital Requirements - The company has a limited operating history, has incurred significant operating losses since its 2016 inception, and expects these losses to continue. Net losses were $94.6 million in 2022 and $51.2 million in 2021, with an accumulated deficit of $188.3 million as of December 31, 2022[319][320] - Entrada will require substantial additional financing to fund its development programs and commercialization efforts. Failure to obtain necessary capital could force delays, reductions, or termination of its operations[325] - The company's cash runway is projected into the second half of 2025, based on existing cash and proceeds from the Vertex agreement, but this is based on assumptions that may prove wrong[326] Risks Related to the Discovery, Development and Regulatory Approval of Our Therapeutic Candidates - The FDA has placed the IND application for the lead candidate, ENTR-601-44, on clinical hold, requesting additional information. Failure to resolve the hold satisfactorily could prevent or delay the initiation of clinical trials in the U.S.[338][349] - The company's EEV therapeutic candidates are based on a novel, unproven approach, making it difficult to predict development time, cost, and the likelihood of regulatory approval. No EEV-based products have been approved to date[342] - The business is highly dependent on the success of its lead programs, particularly ENTR-601-44. Any safety, efficacy, or manufacturing issues with this candidate could diminish the value of the entire EEV platform and harm development plans for other candidates like ENTR-601-45 and ENTR-701[340] - Preclinical results are not necessarily predictive of clinical trial outcomes. The company has not yet tested any candidates in human trials, and they may not show favorable safety or efficacy[345] Risks Related to Our Reliance on Third Parties - The company relies on third parties, such as CMOs and CROs, for product manufacturing, research, and clinical testing. Poor performance by these third parties could delay or compromise development programs[406] - Manufacturing EEV-based therapeutics is novel and complex. The company may face difficulties in scaling up manufacturing, which could delay or stop the supply of materials for clinical trials[416][418] - Collaboration agreements, such as the one with Vertex for ENTR-701, pose risks. The company has limited control over the resources its partners dedicate, and partners may not perform as expected or could terminate the agreements[430][431][434] - Reliance on third parties requires sharing trade secrets, increasing the risk of misappropriation or disclosure, which could impair the company's competitive position[426] Risks Related to Commercialization of Our Therapeutic Candidates - The commercial success of any approved therapeutic candidate depends on market acceptance by physicians, patients, and payors, which is uncertain[443] - The company faces significant competition from larger, better-funded companies with existing therapies and development programs in DMD, DM1, and Pompe disease[451][452][453] - Obtaining adequate coverage and reimbursement from government and private payors is critical for commercial success. Unfavorable pricing regulations or reimbursement policies could harm the business[445][446] Risks Related to Our Business Operations and Industry - Future success depends on retaining key employees and attracting qualified personnel in a highly competitive industry, particularly in the Boston area[456][457] - Healthcare reform legislation, such as the Inflation Reduction Act of 2022 (IRA), could increase the difficulty and cost of obtaining marketing approval and may lead to downward pressure on drug prices[464][467] - The business is vulnerable to security breaches of its IT systems, which could compromise sensitive data, disrupt development programs, and result in liability[471][472] - The company is subject to complex anti-kickback, fraud and abuse, and data privacy laws (e.g., HIPAA, GDPR), and violations could lead to significant penalties and reputational harm[482][498] Risks Related to Our Intellectual Property - The company's success depends on its ability to obtain and maintain patent protection for its EEV platform and therapeutic candidates. The patent prosecution process is complex and uncertain, and issued patents may be challenged or circumvented[501] - The company relies on licenses from third parties, such as OSIF, for key intellectual property. Failure to comply with license obligations could result in the loss of these rights, which are important to the business[508] - The company may not be able to protect its intellectual property rights globally, as laws in some foreign jurisdictions are less protective than in the U.S.[517] - The company relies on trade secrets, and if it is unable to protect their confidentiality, its business and competitive position could be harmed[530] Risks Related to Ownership of Our Common Stock - The market price of the company's common stock is likely to be highly volatile due to factors such as clinical trial results, regulatory actions, and broader market conditions[585] - Principal stockholders and management own a significant percentage of the stock (approximately 80.7% as of Dec 31, 2022), enabling them to exert significant control over matters requiring stockholder approval[594] - The company is an "emerging growth company" and a "smaller reporting company," allowing it to take advantage of reduced reporting requirements, which may make its stock less attractive to some investors[600][604] - Anti-takeover provisions in the company's charter and bylaws, along with Delaware law, could discourage or prevent a change in control, potentially depressing the stock price[606] Unresolved Staff Comments Not applicable - The company reports no unresolved staff comments[628] Properties Entrada's Boston HQ leases 42,046 sq ft, with a new 81,442 sq ft lease secured for future consolidation - The company leases approximately 42,046 square feet for its current headquarters in Boston, MA, with the lease expiring on November 30, 2025[630] - In March 2022, the company entered into a new lease for approximately 81,442 square feet of office and lab space in Boston, which will become its new headquarters[631] Legal Proceedings As of December 31, 2022, the company was not party to any material legal proceedings - The company reports that it is not currently a party to any material legal proceedings[633] Mine Safety Disclosures Not applicable - The company reports no mine safety disclosures[634] PART II Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Entrada's common stock trades on Nasdaq (TRDA) since Oct 2021, with no dividends paid and a recent Vertex private placement - The company's common stock has traded on the Nasdaq Global Market under the symbol "TRDA" since its IPO on October 29, 2021[637] - The company has never declared or paid cash dividends and does not plan to in the foreseeable future[639] - In a private placement that closed on February 8, 2023, Vertex Pharmaceuticals purchased 1,618,613 shares of common stock for approximately $26.3 million ($16.26 per share)[641] - The net proceeds from the November 2021 IPO were approximately $190.7 million, and there has been no material change in the planned use of these funds[642][643][644] Reserved Not applicable - This item is not applicable[647] Management's Discussion and Analysis of Financial Condition and Results of Operations Entrada reported a $94.6 million net loss in 2022 due to higher R&D and G&A, projecting cash runway into H2 2025 with Vertex proceeds Overview - The company is a preclinical biotechnology firm focused on its EEV platform for intracellular therapeutics, with lead programs in DMD and a collaboration with Vertex for DM1[649] - The IND for its lead candidate, ENTR-601-44, was placed on clinical hold by the FDA in December 2022[650] - Net Loss and Accumulated Deficit (in thousands) | Metric | 2022 | 2021 | | :--- | :--- | :--- | | Net Loss | $94,600 | $51,200 | | Accumulated Deficit (as of Dec 31) | $188,300 | $93,700 | - The company believes its cash, cash equivalents, and marketable securities of $188.7 million as of December 31, 2022, combined with proceeds from the Vertex Agreement, will fund operations into the second half of 2025[660] Results of Operations - Operating Expenses and Net Loss (in thousands) | (in thousands) | Year ended Dec 31, 2022 | Year ended Dec 31, 2021 | Change | | :--- | :--- | :--- | :--- | | Research and development | $ 66,609 | $ 35,926 | $ 30,683 | | General and administrative | $ 30,639 | $ 15,201 | $ 15,438 | | Total operating expenses | $ 97,248 | $ 51,127 | $ 46,121 | | Loss from operations | $ (97,248) | $ (51,127) | $ (46,121) | | Net loss | $ (94,616) | $ (51,158) | $ (43,458) | - Research and development expenses increased by $30.7 million in 2022, primarily due to an $18.1 million increase in external costs for advancing the ENTR-601-44 and ENTR-701 programs, and a $12.6 million increase in internal costs from higher headcount and facilities expenses[696][698] - General and administrative expenses increased by $15.4 million in 2022, driven by a $7.4 million increase in personnel-related costs, a $4.8 million increase in professional services fees, and a $2.6 million increase in other administrative costs like insurance[697][699] Liquidity and Capital Resources - As of December 31, 2022, the company had $188.7 million in cash, cash equivalents, and marketable securities. This was supplemented by a $250 million payment from Vertex in February 2023[702] - Cash Flow Summary (in thousands) | (in thousands) | Year Ended Dec 31, 2022 | Year Ended Dec 31, 2021 | | :--- | :--- | :--- | | Net cash used in operating activities | $ (93,786) | $ (50,862) | | Net cash used in investing activities | $ (148,650) | $ (4,580) | | Net cash provided by financing activities | $ 479 | $ 307,461 | - Net cash used in operating activities increased to $93.8 million in 2022 from $50.9 million in 2021, primarily due to the higher net loss[705][706] - Net cash provided by financing activities was $307.5 million in 2021, mainly from the IPO and Series B Preferred Stock sale, compared to only $0.5 million in 2022 from stock option exercises and ESPP purchases[708][709] Quantitative and Qualitative Disclosures About Market Risk As a smaller reporting company, Entrada Therapeutics is not required to provide the information for this item - The company is a smaller reporting company and is not required to provide the information under this item[727] Financial Statements and Supplementary Data This section presents Entrada's audited consolidated financial statements for 2022 and 2021, including key financial statements and notes Consolidated Balance Sheets - Consolidated Balance Sheets (In thousands) | (In thousands) | December 31, 2022 | December 31, 2021 | | :--- | :--- | :--- | | Total Assets | $ 252,056 | $ 305,833 | | Cash and cash equivalents | $ 45,157 | $ 291,064 | | Marketable securities | $ 143,555 | $ — | | Total Liabilities | $ 39,502 | $ 7,115 | | Total Stockholders' Equity | $ 212,554 | $ 298,718 | Consolidated Statements of Operations and Comprehensive Loss - Consolidated Statements of Operations and Comprehensive Loss (In thousands, except per share data) | (In thousands, except per share data) | Year Ended Dec 31, 2022 | Year Ended Dec 31, 2021 | | :--- | :--- | :--- | | Research and development | $ 66,609 | $ 35,926 | | General and administrative | $ 30,639 | $ 15,201 | | Loss from operations | $ (97,248) | $ (51,127) | | Net loss | $ (94,616) | $ (51,158) | | Net loss per share, basic and diluted | $ (3.02) | $ (8.16) | Consolidated Statements of Cash Flows - Consolidated Statements of Cash Flows (In thousands) | (In thousands) | Year Ended Dec 31, 2022 | Year Ended Dec 31, 2021 | | :--- | :--- | :--- | | Net cash used in operating activities | $ (93,786) | $ (50,862) | | Net cash used in investing activities | $ (148,650) | $ (4,580) | | Net cash provided by financing activities | $ 479 | $ 307,461 | | Net (decrease) increase in cash, cash equivalents and restricted cash | $ (241,957) | $ 252,019 | | Cash, cash equivalents and restricted cash at end of year | $ 49,107 | $ 291,064 | Changes in and Disagreements with Accountants on Accounting and Financial Disclosure None - The company reports no changes in or disagreements with accountants on accounting and financial disclosure[870] Controls and Procedures Management concluded disclosure controls and internal control over financial reporting were effective as of December 31, 2022 - Management concluded that the company's disclosure controls and procedures were effective as of December 31, 2022[872] - Management concluded that the company's internal control over financial reporting was effective as of December 31, 2022, based on the COSO framework[873] - No material changes in internal control over financial reporting occurred during the quarter ended December 31, 2022[874] Other Information None - The company reports no other information[875] Disclosure Regarding Foreign Jurisdictions that Prevent Inspections Not applicable - This item is not applicable[876] PART III Directors, Executive Officers and Corporate Governance Information for this item is incorporated by reference from the 2023 Annual Meeting of Stockholders proxy statement - Information for this item is incorporated by reference from the company's definitive proxy statement for its 2023 Annual Meeting of Stockholders[878] Executive Compensation Information for this item is incorporated by reference from the 2023 Annual Meeting of Stockholders proxy statement - Information for this item is incorporated by reference from the company's definitive proxy statement for its 2023 Annual Meeting of Stockholders[881] Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters Information for this item is incorporated by reference from the 2023 Annual Meeting of Stockholders proxy statement - Information for this item is incorporated by reference from the company's definitive proxy statement for its 2023 Annual Meeting of Stockholders[882] Certain Relationships and Related Transactions, and Director Independence Information for this item is incorporated by reference from the 2023 Annual Meeting of Stockholders proxy statement - Information for this item is incorporated by reference from the company's definitive proxy statement for its 2023 Annual Meeting of Stockholders[883] Principal Accounting Fees and Services Information for this item is incorporated by reference from the 2023 Annual Meeting of Stockholders proxy statement - Information for this item is incorporated by reference from the company's definitive proxy statement for its 2023 Annual Meeting of Stockholders[884] PART IV Exhibits and Financial Statement Schedules This section lists all exhibits filed with the Form 10-K, including governance documents, material contracts, and certifications - Lists all exhibits filed with the annual report, including governance documents, material contracts, and required certifications[887] - Financial statement schedules are omitted because the information is either not applicable or already included in the financial statements and notes[890] Form 10-K Summary Not applicable - This item is not applicable[891]