PART I. FINANCIAL INFORMATION [Item 1. Financial Statements (unaudited)](index=5&type=section&id=Item%201.%20Financial%20Statements%20(unaudited)) The unaudited financial statements show increased total assets to $57.1 million driven by financing activities, alongside a growing net loss of $17.5 million for the first half of 2020 [Condensed Consolidated Balance Sheet](index=5&type=section&id=Condensed%20Consolidated%20Balance%20Sheet) As of June 30, 2020, total assets increased to $57.1 million, primarily driven by a substantial rise in cash and cash equivalents reflecting recent financing activities Condensed Consolidated Balance Sheet Highlights (in thousands) | Balance Sheet Item | June 30, 2020 | December 31, 2019 | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | $51,885 | $9,899 | | Short-term investments | $2,001 | $26,345 | | Total current assets | $55,598 | $38,958 | | **Total assets** | **$57,087** | **$41,780** | | **Liabilities & Equity** | | | | Total current liabilities | $5,509 | $5,032 | | **Total liabilities** | **$6,227** | **$6,060** | | **Total stockholders' equity** | **$50,860** | **$35,720** | [Condensed Consolidated Statements of Operations](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) The company reported increased operating and net losses for the three and six-month periods ended June 30, 2020, compared to 2019, due to higher research and development expenses Condensed Consolidated Statements of Operations (in thousands, except per share data) | Metric | Three Months Ended June 30, 2020 | Three Months Ended June 30, 2019 | Six Months Ended June 30, 2020 | Six Months Ended June 30, 2019 | | :--- | :--- | :--- | :--- | :--- | | Research and development | $6,750 | $5,160 | $12,039 | $9,357 | | General and administrative | $2,803 | $2,165 | $5,555 | $4,302 | | **Total operating expenses** | **$9,553** | **$7,325** | **$17,594** | **$13,659** | | Loss from operations | $(9,553) | $(7,325) | $(17,594) | $(13,659) | | **Net loss** | **$(9,508)** | **$(7,131)** | **$(17,460)** | **$(13,169)** | | Net loss per share | $(0.53) | $(0.62) | $(1.03) | $(1.24) | [Condensed Consolidated Statements of Cash Flows](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) For the first six months of 2020, a net cash increase of $41.7 million was driven by $31.9 million in financing activities, offsetting cash used in operations Cash Flow Summary for Six Months Ended June 30 (in thousands) | Cash Flow Activity | 2020 | 2019 | | :--- | :--- | :--- | | Net cash used in operating activities | $(14,455) | $(12,325) | | Net cash provided by (used in) investing activities | $24,310 | $(14,229) | | Net cash provided by financing activities | $31,889 | $20,875 | | **Net increase (decrease) in cash** | **$41,744** | **$(5,679)** | [Notes to Condensed Consolidated Financial Statements](index=10&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) The notes detail the company's focus on edasalonexent for DMD, significant financing activities raising over $31 million, and management's belief that current cash is sufficient for at least twelve months - The company's lead program is edasalonexent, an oral small molecule for the treatment of Duchenne muscular dystrophy (DMD), which has received orphan drug, fast track, and rare pediatric disease designations from the FDA[18](index=18&type=chunk) - In January 2020, the company raised **net proceeds of $24.6 million** from an underwritten public offering of 5,290,000 shares of common stock[21](index=21&type=chunk) - During the first six months of 2020, the company sold 1,100,001 shares through its ATM Programs, generating **net proceeds of $7.3 million**[20](index=20&type=chunk) - As of June 30, 2020, the company had **$53.9 million in cash, cash equivalents, and short-term investments**, which is believed to be sufficient to fund operations for at least the next twelve months[24](index=24&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=17&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the focus on developing edasalonexent, rising expenses due to clinical trial activities, and a strengthened liquidity position providing a cash runway through Q3 2021 [Overview](index=17&type=section&id=Overview) Catabasis is a clinical-stage biopharmaceutical company focused on its lead product candidate, edasalonexent, with top-line Phase 3 trial results expected in Q4 2020 - The company's lead product candidate is edasalonexent, an oral small molecule for treating Duchenne muscular dystrophy (DMD)[57](index=57&type=chunk) - The Phase 3 PolarisDMD trial completed enrollment with 131 boys, and **top-line results are expected in the fourth quarter of 2020**, with a goal to submit an NDA in 2021[58](index=58&type=chunk) - Contingency plans for the COVID-19 pandemic have been implemented for clinical trials, including delivery of study drugs to homes and use of telehealth, though the full impact on timelines remains uncertain[60](index=60&type=chunk) [Results of Operations](index=22&type=section&id=Results%20of%20Operations) Operating expenses increased for the three and six months ended June 30, 2020, driven by higher costs for the edasalonexent program and commercialization activities Comparison of Operating Expenses (in thousands) | Expense Category | Q2 2020 | Q2 2019 | Change | 6 Months 2020 | 6 Months 2019 | Change | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Research & development | $6,750 | $5,160 | $1,590 | $12,039 | $9,357 | $2,682 | | General & administrative | $2,803 | $2,165 | $638 | $5,555 | $4,302 | $1,253 | | **Total operating expenses** | **$9,553** | **$7,325** | **$2,228** | **$17,594** | **$13,659** | **$3,935** | - The increase in R&D expenses for the six months ended June 30, 2020 was primarily due to a **$1.6 million increase in costs for the edasalonexent program** and a $0.6 million increase in employee-related expenses[90](index=90&type=chunk) - The increase in G&A expenses for the six months ended June 30, 2020 was mainly attributable to a **$0.9 million increase in consulting and professional services** for ongoing commercialization activities[91](index=91&type=chunk) [Liquidity and Capital Resources](index=24&type=section&id=Liquidity%20and%20Capital%20Resources) The company's liquidity was significantly strengthened by raising $31.9 million in the first half of 2020, providing sufficient capital to fund operations through Q3 2021 - As of June 30, 2020, the company had **$53.9 million in cash, cash equivalents and short-term investments**[93](index=93&type=chunk) - The company raised **net proceeds of $24.6 million** from the January 2020 public offering and **$7.3 million from ATM offerings** in the first six months of 2020[94](index=94&type=chunk)[95](index=95&type=chunk) - Existing cash is expected to be **sufficient to support operating expenses through the third quarter of 2021** and beyond a potential NDA filing[103](index=103&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=27&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company's primary market risk is interest rate sensitivity on its investment portfolio, which is not considered material due to the portfolio's short-term, low-risk nature - The company's primary market risk exposure is interest rate sensitivity on its **$53.9 million portfolio** of cash, cash equivalents, and short-term investments[111](index=111&type=chunk) - Due to the short-term and low-risk nature of the investment portfolio, an immediate **10% change in interest rates is not expected to have a material effect**[111](index=111&type=chunk) [Controls and Procedures](index=27&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that the company's disclosure controls and procedures were effective as of June 30, 2020, with no material changes to internal controls during the quarter - Management concluded that as of June 30, 2020, the company's **disclosure controls and procedures were effective** at the reasonable assurance level[114](index=114&type=chunk) - **No material changes** were made to the company's internal control over financial reporting during the three months ended June 30, 2020[116](index=116&type=chunk) PART II. OTHER INFORMATION [Risk Factors](index=28&type=section&id=Item%201A.%20Risk%20Factors) The company faces substantial risks related to its need for additional funding, heavy dependence on a single product candidate, and uncertainties from the COVID-19 pandemic [Risks Related to Financial Position and Need for Capital](index=28&type=section&id=Risks%20Related%20to%20Financial%20Position%20and%20Need%20for%20Capital) The company requires substantial additional funding to continue operations, with existing cash projected to last only through Q3 2021 and a history of significant losses - The company will need **substantial additional funding** and could be forced to delay, reduce, or eliminate product development or commercialization efforts if unable to raise capital[119](index=119&type=chunk) - Existing cash, cash equivalents, and short-term investments are expected to **fund operations through the third quarter of 2021**, but this estimate is based on assumptions that may prove wrong[124](index=124&type=chunk) - The company has incurred significant losses since inception, with an **accumulated deficit of $241.1 million** as of June 30, 2020, and expects to incur significant losses for at least the next several years[131](index=131&type=chunk) [Risks Related to Discovery, Development and Commercialization](index=31&type=section&id=Risks%20Related%20to%20Discovery,%20Development%20and%20Commercialization) The company's prospects depend almost entirely on the success of its lead candidate, edasalonexent, which faces risks from the COVID-19 pandemic and substantial competition - The company is **heavily dependent on the success of its single lead product candidate**, edasalonexent, and any setback would substantially harm the business[139](index=139&type=chunk)[140](index=140&type=chunk) - The **COVID-19 pandemic may delay clinical trials** and disrupt regulatory activities, and the use of telehealth assessments could impact the FDA's view of data integrity[143](index=143&type=chunk)[145](index=145&type=chunk) - The company faces **substantial competition** from approved DMD therapies like EXONDYS 51, VYONDYS 53, and EMFLAZA, as well as from numerous other companies developing treatments[192](index=192&type=chunk)[194](index=194&type=chunk) [Risks Related to Dependence on Third Parties](index=45&type=section&id=Risks%20Related%20to%20Dependence%20on%20Third%20Parties) The company relies on third-party CROs and CMOs, including sole-source suppliers, for critical clinical trial and manufacturing functions, creating significant operational risk - The company relies on third parties, such as CROs, to conduct its clinical trials, **limiting its control over these activities** while remaining responsible for compliance with standards like cGCPs[220](index=220&type=chunk)[221](index=221&type=chunk)[222](index=222&type=chunk) - The company relies on third-party contract manufacturers, including **single-source suppliers** for its active pharmaceutical ingredient and a key starting raw material, which increases the risk of manufacturing delays and supply interruptions[225](index=225&type=chunk)[228](index=228&type=chunk)[229](index=229&type=chunk) - The company expects to seek collaborations for development and commercialization, but may not be able to establish them on reasonable terms, which could force it to **alter or delay its plans**[211](index=211&type=chunk)[212](index=212&type=chunk) [Risks Related to Intellectual Property](index=50&type=section&id=Risks%20Related%20to%20Intellectual%20Property) The company's success hinges on its ability to obtain and defend patent protection for its products, which is an uncertain process, and it also faces risks related to trade secret protection - The company's ability to successfully commercialize its products depends on obtaining and maintaining sufficient patent protection, but the **patent process is highly uncertain** and patents may be challenged or circumvented[235](index=235&type=chunk)[237](index=237&type=chunk) - The company may become involved in **expensive and time-consuming lawsuits** to protect its patents or defend against claims that it infringes on the intellectual property of others[244](index=244&type=chunk)[246](index=246&type=chunk) - The company relies on trade secrets for its technology platform, which are at risk of being disclosed or independently developed by competitors if **confidentiality agreements are breached**[242](index=242&type=chunk)[243](index=243&type=chunk) [Risks Related to Regulatory Approval and Other Legal Compliance](index=55&type=section&id=Risks%20Related%20to%20Regulatory%20Approval%20and%20Other%20Legal%20Compliance) The company faces a lengthy and uncertain regulatory approval process, extensive ongoing regulation post-approval, and complex compliance requirements for healthcare and data privacy laws - The **marketing approval process is expensive, time-consuming, and uncertain**, and the company may be unable to obtain approvals for its product candidates[263](index=263&type=chunk) - Recently enacted and future healthcare legislation may increase the difficulty and cost of obtaining marketing approval and could **negatively affect product pricing and reimbursement**[289](index=289&type=chunk)[290](index=290&type=chunk) - The company is subject to complex global privacy and data security requirements, such as the GDPR, and **failure to comply could result in significant fines** and penalties[309](index=309&type=chunk)[310](index=310&type=chunk) [Exhibits](index=74&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the report, including the company's stock incentive plan and certifications required by the Sarbanes-Oxley Act - The report includes certifications from the principal executive officer and principal financial officer pursuant to **Sections 302 and 906 of the Sarbanes-Oxley Act of 2002**[361](index=361&type=chunk) [Signatures](index=76&type=section&id=SIGNATURES) The report was duly signed and authorized on August 10, 2020, by the company's Treasurer and Vice President of Finance - The Form 10-Q was **signed on August 10, 2020**, by Noah C Clauser, Treasurer and Vice President of Finance[362](index=362&type=chunk)[363](index=363&type=chunk)

Edasalonexent's Potential in DMD - Edasalonexent, an oral NF-κB inhibitor, shows promise in slowing disease progression and preserving muscle function in Duchenne Muscular Dystrophy (DMD)[5] - The Phase 3 PolarisDMD trial, designed for global registration, is fully enrolled, with top-line results expected in Q4 2020[5, 16] - The PolarisDMD trial enrolled 131 patients across 8 countries[19] - The Phase 3 PolarisDMD trial and Phase 2 MoveDMD trial have similar baseline characteristics, supporting the assumptions on which the Phase 3 trial was powered[36, 37] Clinical Trial Results - Phase 2 MoveDMD trial and open-label extension demonstrated clinically meaningful slowing of disease progression with edasalonexent[24] - Edasalonexent significantly improved the rate of change of MRI T2 compared to the off-treatment control period in the Phase 2 MoveDMD trial and open-label extension[28] - Muscle enzymes significantly decreased on edasalonexent, supporting a positive impact on muscle health in the Phase 2 MoveDMD trial and open-label extension[27] - Edasalonexent showed potential for positive cardiac effects in DMD, with a significant decrease in mean resting heart rate in the Phase 2 MoveDMD trial and open-label extension[31, 33] Market and Commercial Opportunity - DMD affects approximately 1 in 3,500-5,000 males worldwide[38] - Approximately 15,000 males in the US and 19,000 males in the EU are affected by DMD[39]

Drug Development - The company is focused on developing edasalonexent, an oral small molecule for treating Duchenne muscular dystrophy (DMD), which has received orphan drug and fast track designations from the FDA [57]. - The Phase 3 PolarisDMD trial for edasalonexent completed enrollment in September 2019 with 131 boys, exceeding the target of 125 [58]. - Top-line results from the Phase 3 PolarisDMD trial are expected in Q4 2020, with plans to submit a New Drug Application in 2021 [58]. - The company initiated a partnership with Duchenne UK, receiving over $600,000 in funding for a planned Phase 2 trial of edasalonexent in non-ambulatory DMD patients [63]. - The GalaxyDMD trial was launched in March 2019 to provide long-term safety data following the Phase 3 trial [59]. - The company is exploring edasalonexent for other indications, including dysferlinopathy, through a collaboration with the Jain Foundation [64]. - CAT-5571, developed for cystic fibrosis, has completed investigational new drug application-enabling activities [65]. Financial Performance - Research and development expenses for the three months ended March 31, 2020, totaled $5.289 million, compared to $4.197 million for the same period in 2019, reflecting an increase of approximately 26% [74]. - General and administrative expenses rose by $0.6 million to $2.8 million for the three months ended March 31, 2020, marking a 29% increase from the previous year [86]. - Total operating expenses for the three months ended March 31, 2020, were $8.0 million, up from $6.3 million in the same period of 2019, reflecting a $1.7 million increase [83]. - The net loss for the three months ended March 31, 2020, was $7.95 million, compared to a net loss of $6.04 million for the same period in 2019, an increase of $1.91 million [83]. - The company has an accumulated deficit of $231.5 million as of March 31, 2020, reflecting ongoing operating losses since inception [97]. Cash and Investments - As of March 31, 2020, the company had $55.1 million in cash, cash equivalents, and short-term investments, which are expected to support operations beyond a potential NDA filing into the third quarter of 2021 [98]. - Net cash used in operating activities was $7.0 million for the three months ended March 31, 2020, compared to $6.6 million for the same period in 2019 [92]. - Net cash provided by financing activities was $25.6 million during the three months ended March 31, 2020, primarily from net proceeds of $24.5 million from a public offering [95]. - The company raised an aggregate of $300.3 million from various financing activities since inception through March 31, 2020 [88]. - As of March 31, 2020, the company had cash, cash equivalents, and short-term investments totaling $55.1 million, an increase from $36.2 million as of December 31, 2019 [106]. - The company's cash equivalents as of March 31, 2020, included corporate debt securities and money market funds [106]. - Short-term investments as of March 31, 2020, consisted of corporate debt securities and U.S. reverse repurchase agreements [106]. Market Risk - The primary exposure to market risk is interest rate sensitivity, which is influenced by changes in U.S. interest rates [106]. - An immediate 10% change in interest rates would not have a material effect on the fair market value of the investment portfolio and interest income due to the low risk profile of the investments [106]. - As of March 31, 2020, the company had no material liabilities denominated in foreign currencies [107]. Research and Development Costs - The company anticipates significant increases in research and development costs due to the Phase 3 PolarisDMD trial and preparation for registration of edasalonexent [77]. - Total direct expenses for the edasalonexent program since inception amount to $52.6 million, while CAT-5571 has incurred $4.2 million [74]. - Research and development expenses increased by $1.1 million to $5.3 million for the three months ended March 31, 2020, representing a 26% increase compared to the same period in 2019 [84].

Catabasis Pharmaceuticals Inc. (CATB) Q4 2019 Earnings Conference Call March 10, 2020 8:30 AM ET Company Participants Andrea Matthews - Vice President, Corporate Affairs Jill Milne - Chief Executive Officer Joanne Donovan - Chief Medical Officer Andrew Komjathy - Chief Commercial Officer Andy Nichols - Chief Scientific Officer Noah Clauser - Vice President, Finance Conference Call Participants Liana Moussatos - Wedbush Securities Hartaj Singh - Oppenheimer Operator Ladies and gentlemen, thank you for standi ...

Use these links to rapidly review the document TABLE OF CONTENTS PART IV Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 FORM 10-K (Mark One) ý ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2019 or o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number: 001-37467 Catabasis Pharmaceuticals, Inc. (Exac ...

Catabasis Pharmaceuticals Inc. (CATB) Q3 2019 Earnings Conference Call November 7, 2019 8:30 AM ET Company Participants Andrea Matthews – Vice President-Corporate Affairs Jill Milne – Chief Executive Officer Joanne Donovan – Chief Medical Officer Andrew Komjathy – Chief Commercial Officer Andy Nichols – Chief Scientific Officer Noah Clauser – Vice President-Finance Conference Call Participants Joel Beatty – Citi Jackie Yan – Oppenheimer and Company. Operator Ladies and gentlemen, thank you for standing-by a ...

PART I—FINANCIAL INFORMATION [Item 1. Financial Statements](index=5&type=section&id=Item%201.%20Financial%20Statements) This section presents the unaudited condensed consolidated financial statements, highlighting asset growth, net losses, and significant financing activities for the period ended September 30, 2019 [Condensed Consolidated Balance Sheets](index=5&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) As of September 30, 2019, total assets increased to **$43.8 million**, driven by cash and investments, while liabilities rose to **$5.6 million** and equity grew to **$38.3 million** Condensed Consolidated Balance Sheet Data (in thousands) | Account | Sep 30, 2019 | Dec 31, 2018 | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | $17,765 | $15,294 | | Short-term investments | $22,850 | $22,276 | | Total current assets | $42,726 | $38,915 | | Total assets | $43,834 | $39,169 | | **Liabilities & Equity** | | | | Total current liabilities | $5,561 | $4,171 | | Total liabilities | $5,561 | $4,227 | | Accumulated deficit | ($216,987) | ($197,304) | | Total stockholders' equity | $38,273 | $34,942 | [Condensed Consolidated Statements of Operations](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) The company reported a net loss of **$6.5 million** for Q3 2019 and **$19.7 million** for the nine-month period, primarily due to increased research and development expenses with no operational revenue Operating Results (in thousands, except per share data) | Metric | Q3 2019 | Q3 2018 | Nine Months 2019 | Nine Months 2018 | | :--- | :--- | :--- | :--- | :--- | | Research and development | $4,697 | $3,897 | $14,054 | $13,383 | | General and administrative | $1,985 | $2,111 | $6,287 | $6,900 | | Total operating expenses | $6,682 | $6,008 | $20,341 | $20,283 | | Loss from operations | ($6,682) | ($6,008) | ($20,341) | ($20,283) | | Net loss | ($6,514) | ($5,679) | ($19,683) | ($19,810) | | Net loss per share | ($0.56) | ($0.80) | ($1.80) | ($4.54) | [Condensed Consolidated Statements of Cash Flows](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Net cash used in operating activities totaled **$18.8 million** for the nine months ended September 30, 2019, primarily offset by **$21.8 million** in financing activities, resulting in a **$2.5 million** net cash increase Cash Flow Summary for Nine Months Ended Sep 30 (in thousands) | Cash Flow Activity | 2019 | 2018 | | :--- | :--- | :--- | | Net cash used in operating activities | ($18,799) | ($18,196) | | Net cash used in investing activities | ($578) | ($22,999) | | Net cash provided by financing activities | $21,848 | $44,702 | | **Net increase in cash** | **$2,471** | **$3,507** | [Notes to Condensed Consolidated Financial Statements](index=10&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) These notes detail the company's focus on edasalonexent for DMD, significant capital raises of **$18.5 million** and **$3.2 million**, adoption of ASC 842, and a **$40.6 million** cash position expected to fund operations through 2020 - The company's lead program is edasalonexent for the treatment of Duchenne muscular dystrophy (DMD), which has received orphan drug, fast track, and rare pediatric disease designations from the FDA[22](index=22&type=chunk) - In February 2019, the company raised net proceeds of **$18.5 million** through an underwritten public offering of common stock and warrants[25](index=25&type=chunk) - The company believes its cash, cash equivalents, and short-term investments of **$40.6 million** as of September 30, 2019, are sufficient to fund operations through 2020[27](index=27&type=chunk) - Upon adopting the new lease accounting standard (ASC Topic 842) on January 1, 2019, the company recognized a lease liability and a right-of-use asset of approximately **$1.9 million**[43](index=43&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=19&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the clinical development of edasalonexent, including the completed Phase 3 PolarisDMD trial, increased R&D expenses, and the company's financial position strengthened by **$21.7 million** in equity offerings, with **$40.6 million** cash expected to fund operations through 2020 [Overview](index=19&type=section&id=Overview) This overview details the company's focus on edasalonexent for DMD, the completed enrollment of the Phase 3 PolarisDMD trial with **131 boys**, and anticipated top-line results in Q4 2020 for a 2021 NDA submission - The global Phase 3 PolarisDMD trial for edasalonexent completed enrollment with **131 boys**, exceeding the target of 125[86](index=86&type=chunk) - Top-line results from the PolarisDMD trial are expected in the fourth quarter of 2020, with a goal to file a New Drug Application (NDA) in 2021[86](index=86&type=chunk) - The GalaxyDMD open-label extension trial was initiated in March 2019 to provide longer-term safety data to support registration filings[91](index=91&type=chunk) [Results of Operations](index=23&type=section&id=Results%20of%20Operations) R&D expenses increased to **$4.7 million** in Q3 2019 and **$14.1 million** for the nine-month period due to the PolarisDMD trial, while G&A expenses decreased, resulting in a stable net loss of **$19.7 million** for the nine months Comparison of Operating Expenses (in thousands) | Expense Category | Q3 2019 | Q3 2018 | Change | Nine Months 2019 | Nine Months 2018 | Change | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Research & Development | $4,697 | $3,897 | +$800 | $14,054 | $13,383 | +$671 | | General & Administrative | $1,985 | $2,111 | -$126 | $6,287 | $6,900 | -$613 | - The increase in R&D expenses for both the three and nine-month periods was primarily attributable to increased costs to support the edasalonexent program due to activities associated with conducting the PolarisDMD trial[114](index=114&type=chunk)[120](index=120&type=chunk) [Liquidity and Capital Resources](index=24&type=section&id=Liquidity%20and%20Capital%20Resources) As of September 30, 2019, the company held **$40.6 million** in cash and investments, bolstered by **$18.5 million** and **$3.2 million** from equity offerings, sufficient to fund operations through 2020, despite an accumulated deficit of **$217.0 million** - As of September 30, 2019, the company had **$40.6 million** in cash, cash equivalents, and short-term investments[123](index=123&type=chunk) - The company raised net proceeds of **$18.5 million** from the February 2019 public offering and **$3.2 million** from its ATM program during the first nine months of 2019[125](index=125&type=chunk)[126](index=126&type=chunk) - Existing cash is expected to be sufficient to support operating expenses through 2020, but the company will need to raise additional capital for future operations[134](index=134&type=chunk)[135](index=135&type=chunk) [Item 3. Quantitative and Qualitative Disclosures about Market Risk](index=28&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) The company's primary market risk is interest rate sensitivity on its **$40.6 million** cash and investment portfolio, which is not expected to be materially affected by a 10% interest rate change due to its short-term, low-risk nature - The company's primary market risk is interest rate sensitivity related to its cash, cash equivalents, and short-term investments of **$40.6 million**[143](index=143&type=chunk) - Due to the short-term and low-risk nature of the investment portfolio, a 10% change in interest rates is not expected to have a material effect on its fair market value[143](index=143&type=chunk) [Item 4. Controls and Procedures](index=28&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that the company's disclosure controls and procedures were effective as of September 30, 2019, with no material changes to internal control over financial reporting during the third quarter - Management concluded that as of September 30, 2019, the company's disclosure controls and procedures were effective at the reasonable assurance level[146](index=146&type=chunk) - There were no material changes in internal control over financial reporting during the three months ended September 30, 2019[148](index=148&type=chunk) PART II—OTHER INFORMATION [Item 1A. Risk Factors](index=29&type=section&id=Item%201A.%20Risk%20Factors) The company faces substantial risks including financial instability, dependence on edasalonexent, clinical development uncertainties, reliance on third parties, intense competition, intellectual property challenges, regulatory hurdles, and common stock volatility and dilution [Risks Related to Financial Position and Need for Capital](index=29&type=section&id=Risks%20Related%20to%20Financial%20Position%20and%20Need%20for%20Capital) The company requires substantial additional funding beyond 2020, has a history of significant operating losses with an accumulated deficit of **$217.0 million**, and faces potential dilution or program delays if capital is not secured - The company will need substantial additional funding and could be forced to delay, reduce, or eliminate product development or commercialization efforts if unable to raise capital[151](index=151&type=chunk) - Existing cash, cash equivalents, and short-term investments are expected to fund operations only through 2020[156](index=156&type=chunk) - The company has incurred significant losses since inception, with an accumulated deficit of **$217.0 million** as of September 30, 2019, and expects to incur significant losses for at least the next several years[166](index=166&type=chunk) [Risks Related to Product Development and Commercialization](index=32&type=section&id=Risks%20Related%20to%20Product%20Development%20and%20Commercialization) The company's success hinges on edasalonexent, facing lengthy, expensive, and uncertain clinical development, intense competition in the DMD market, and risks of limited market acceptance or unfavorable pricing even if approved - The company is substantially dependent on the success of its single product candidate, edasalonexent, and any setback would materially harm the business[174](index=174&type=chunk)[175](index=175&type=chunk) - Clinical drug development is a lengthy and expensive process with an uncertain outcome, and early positive results may not be predictive of future success[185](index=185&type=chunk)[192](index=192&type=chunk) - The company faces substantial competition in the DMD space from approved therapies like EXONDYS 51 and EMFLAZA, as well as from numerous companies in late-stage development[222](index=222&type=chunk)[223](index=223&type=chunk) [Risks Related to Dependence on Third Parties](index=41&type=section&id=Risks%20Related%20to%20Dependence%20on%20Third%20Parties) The company's heavy reliance on third-party CROs and CMOs for clinical trials and manufacturing introduces risks of performance failures, delays, non-compliance, and significant business harm if key partners are lost - The company relies on third parties, such as contract research organizations (CROs), to conduct its clinical trials, limiting its control over these activities while remaining responsible for regulatory compliance[250](index=250&type=chunk)[253](index=253&type=chunk) - The company has no manufacturing facilities and relies on third-party contractors for the manufacture of its product candidates, increasing risks related to supply sufficiency, cost, and quality[256](index=256&type=chunk)[257](index=257&type=chunk) [Risks Related to Intellectual Property](index=44&type=section&id=Risks%20Related%20to%20Intellectual%20Property) The company's success depends on obtaining and maintaining patent protection, which is uncertain and vulnerable to challenges, and faces risks of expensive and time-consuming intellectual property litigation - The company's ability to successfully commercialize its products depends on obtaining and maintaining sufficient patent protection, which is an uncertain, expensive, and time-consuming process[265](index=265&type=chunk)[266](index=266&type=chunk) - The company may become involved in expensive and time-consuming lawsuits to protect its patents or defend against claims of infringing the intellectual property of others[275](index=275&type=chunk)[278](index=278&type=chunk) [Risks Related to Regulatory Approval and Legal Compliance](index=48&type=section&id=Risks%20Related%20to%20Regulatory%20Approval%20and%20Legal%20Compliance) The company faces a lengthy and uncertain regulatory approval process, ongoing post-approval regulations, potential adverse impacts from healthcare reform on pricing and reimbursement, and risks of significant penalties for non-compliance with complex healthcare laws - The marketing approval process is expensive, time-consuming, and uncertain, and the company may be unable to obtain approvals for its product candidates[297](index=297&type=chunk) - Healthcare reform measures, such as changes to the ACA and drug pricing initiatives, could increase costs, reduce reimbursement, and harm the business[326](index=326&type=chunk)[333](index=333&type=chunk) - The company is subject to complex healthcare laws, including anti-kickback statutes and data privacy regulations like GDPR, with non-compliance potentially leading to significant penalties[342](index=342&type=chunk)[350](index=350&type=chunk) [Risks Related to Our Common Stock](index=59&type=section&id=Risks%20Related%20to%20Our%20Common%20Stock) The company's common stock faces high price volatility, potential delisting risk from Nasdaq due to minimum bid price requirements, substantial dilution from outstanding warrants, and no anticipated dividends, relying solely on capital appreciation for investor returns - The company's stock price is likely to be highly volatile, and an active trading market may not be sustained[378](index=378&type=chunk)[380](index=380&type=chunk) - The company faces a risk of being delisted from The Nasdaq Stock Market if it fails to meet continued listing requirements, such as the minimum **$1.00** bid price[379](index=379&type=chunk) - A significant number of outstanding warrants to purchase common stock could cause substantial dilution and have a negative effect on the market price if exercised[392](index=392&type=chunk)[393](index=393&type=chunk) [Item 6. Exhibits](index=64&type=section&id=Item%206.%20Exhibits) This section lists exhibits filed with the Quarterly Report on Form 10-Q, including a Sublease Agreement, Sarbanes-Oxley certifications, and XBRL data files - The exhibits filed with the report include a new Sublease Agreement, officer certifications pursuant to Sarbanes-Oxley Sections 302 and 906, and XBRL instance documents[407](index=407&type=chunk)

Catabasis Pharmaceuticals Inc. (CATB) Q2 2019 Earnings Conference Call August 8, 2019 8:30 AM ET Company Participants Jill Milne - Chief Executive Officer Noah Clauser - Vice President, Finance Joanne Donovan - Senior Vice President, Clinical Development, Chief Medical Officer Andrew Nichols - Chief Scientific Officer Andrea Matthews - Vice President, Corporate Affairs Conference Call Participants Hartaj Singh - Oppenheimer Joel Beatty - Citi Operator Good day ladies and gentlemen and welcome to the Q2 201 ...