10-Q
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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

 

FORM 10-Q

 

(Mark One)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2022

OR

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: 001-38130

 

Aileron Therapeutics, Inc.

(Exact Name of Registrant as Specified in its Charter)

 

 

Delaware

 

13-4196017

(State or other jurisdiction of

incorporation or organization)

 

(I.R.S. Employer

Identification No.)

 

 

285 Summer Street, Suite 101

Boston, MA

 

02210

(Address of principal executive offices)

 

(Zip Code)

Registrant’s telephone number, including area code: (617) 995-0900

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

Trading Symbol

Name of each exchange on which registered

Common Stock, $0.001 par value per share

ALRN

The Nasdaq Capital Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer

 

 

Accelerated filer

 

 

 

 

 

Non-accelerated filer

 

 

Smaller reporting company

 

 

 

 

 

 

 

 

 

Emerging growth company

 

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No

As of October 28, 2022, the registrant had 90,823,597 shares of common stock, $0.001 par value per share, outstanding.

 

 

 


 

Table of Contents

 

 

 

 

Page

PART I.

 

FINANCIAL INFORMATION

 

3

Item 1.

 

Financial Statements (Unaudited)

 

3

 

 

Condensed Balance Sheets

 

3

 

 

Condensed Statements of Operations and Comprehensive Loss

 

4

 

 

Condensed Statement of Stockholders’ Equity

 

5

 

 

Condensed Statements of Cash Flows

 

6

 

 

Notes to Financial Statements

 

7

Item 2.

 

Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

17

Item 3.

 

Quantitative and Qualitative Disclosures About Market Risk

 

27

Item 4.

 

Controls and Procedures

 

27

PART II.

 

OTHER INFORMATION

 

29

Item 1.

 

Legal Proceedings

 

29

Item 1A.

 

Risk Factors

 

29

Item 6.

 

Exhibits

 

31

 

 

Signatures

 

32

 

1


 

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS AND INDUSTRY DATA

This Quarterly Report on Form 10-Q contains forward-looking statements that involve substantial risks and uncertainties. All statements, other than statements of historical facts, contained in this Quarterly Report on Form 10-Q, including statements regarding our strategy, future operations, future financial position, future revenue, projected costs, prospects, plans and objectives of management and expected market growth are forward-looking statements. The words “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “potential,” “predict,” “project,” “should,” “target,” “would” and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words.

These forward-looking statements include, among other things, statements about:

our plans to develop and commercialize ALRN-6924, including the potential benefits thereof;
our clinical trials for ALRN-6924, whether conducted by us or by any future collaborators, including with respect to the design of the trials or the timing of initiation of these trials and of the anticipated results;
our expectations regarding our ability to fund our operating expenses and capital expenditure requirements with our cash, cash equivalents and investments;
our estimates regarding expenses, future revenue, capital requirements and needs for additional financing;
the timing of and our ability to obtain and maintain marketing approvals for ALRN-6924;
the rate and degree of market acceptance and clinical utility of any products for which we receive marketing approval;
our commercialization, marketing and manufacturing capabilities and strategy;
our intellectual property position and strategy;
our plans to enter into collaborations for the development and commercialization of ALRN-6924 and any additional product candidates;
potential benefits of any future collaboration;
developments relating to our competitors and our industry;
the impact of government laws and regulations;
the impact the coronavirus pandemic may have on the timing of our clinical development and on our operations; and
our ability to maintain our listing on the Nasdaq Capital Market.

We may not actually achieve the plans, intentions or expectations disclosed in our forward-looking statements, and you should not place undue reliance on our forward-looking statements. Actual results or events could differ materially from the plans, intentions and expectations disclosed in the forward-looking statements we make. We have included important factors in the cautionary statements in our Annual Report on Form 10-K and in this Quarterly Report on Form 10-Q, particularly in the “Risk Factors” section, that could cause actual results or events to differ materially from the forward-looking statements that we make. Our forward-looking statements do not reflect the potential impact of any future acquisitions, mergers, dispositions, collaborations, joint ventures or investments that we may make or enter into.

You should read this Quarterly Report on Form 10-Q and the documents that we reference herein and have filed or incorporated by reference hereto completely and with the understanding that our actual future results may be materially different from what we expect. We do not assume any obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.

This Quarterly Report on Form 10-Q includes statistical and other industry and market data that we obtained from industry publications and research, surveys and studies conducted by third parties. Industry publications and third-party research, surveys and studies generally indicate that their information has been obtained from sources believed to be reliable, although they do not guarantee the accuracy or completeness of such information.

2


 


PART I—FINANCIAL INFORMATION

Item 1. Financial Statements.

AILERON THERAPEUTICS, INC.

CONDENSED BALANCE SHEETS (UNAUDITED)

(In thousands, except share and per share data)

 

 

 

September 30,
2022

 

 

December 31,
2021

 

Assets

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

4,839

 

 

$

3,600

 

Investments

 

 

20,638

 

 

 

42,333

 

Prepaid expenses and other current assets

 

 

1,552

 

 

 

2,219

 

Restricted cash

 

 

25

 

 

 

25

 

Total current assets

 

 

27,054

 

 

 

48,177

 

Operating lease, right-of-use asset

 

 

70

 

 

 

152

 

Other non-current assets

 

 

24

 

 

 

24

 

Property and equipment, net

 

 

84

 

 

 

128

 

Total assets

 

$

27,232

 

 

$

48,481

 

Liabilities and Stockholders’ Equity

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Accounts payable

 

$

945

 

 

$

1,210

 

Accrued expenses and other current liabilities

 

 

3,524

 

 

 

3,205

 

Operating lease liability, current portion

 

 

67

 

 

 

93

 

Total current liabilities

 

 

4,536

 

 

 

4,508

 

Operating lease liability, net of current portion

 

 

 

 

 

69

 

Total liabilities

 

 

4,536

 

 

 

4,577

 

Commitments and contingencies (Note 11)

 

 

 

 

 

 

Stockholders’ equity:

 

 

 

 

 

 

Preferred stock, $0.001 par value; 5,000,000 shares authorized and no shares
   issued and outstanding at September 30, 2022 and December 31, 2021, respectively

 

 

 

 

 

 

Common stock, $0.001 par value; 300,000,000 shares authorized at
   September 30, 2022 and December 31, 2021;
90,823,597 and 90,573,597 shares issued and outstanding at September 30, 2022 and December 31, 2021, respectively

 

 

91

 

 

 

91

 

Additional paid-in capital

 

 

290,941

 

 

 

289,282

 

Accumulated other comprehensive loss

 

 

(98

)

 

 

(13

)

Accumulated deficit

 

 

(268,238

)

 

 

(245,456

)

Total stockholders’ equity

 

 

22,696

 

 

 

43,904

 

Total liabilities and stockholders’ equity

 

$

27,232

 

 

$

48,481

 

 

The accompanying notes are an integral part of these condensed financial statements.

3


 

AILERON THERAPEUTICS, INC.

CONDENSED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS (UNAUDITED)

(In thousands, except share and per share data)

 

 

 

Three Months Ended September 30,

 

 

Nine Months Ended September 30,

 

 

 

2022

 

 

2021

 

 

2022

 

 

2021

 

Revenue

 

$

 

 

$

 

 

$

 

 

$

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

Research and development

 

 

4,239

 

 

 

4,278

 

 

 

15,565

 

 

 

12,447

 

General and administrative

 

 

2,243

 

 

 

2,513

 

 

 

7,379

 

 

 

7,342

 

Total operating expenses

 

 

6,482

 

 

 

6,791

 

 

 

22,944

 

 

 

19,789

 

Loss from operations

 

 

(6,482

)

 

 

(6,791

)

 

 

(22,944

)

 

 

(19,789

)

Interest income

 

 

110

 

 

 

21

 

 

 

180

 

 

 

54

 

Other income (expense), net

 

 

4

 

 

 

66

 

 

 

(18

)

 

 

370

 

Net loss

 

 

(6,368

)

 

 

(6,704

)

 

 

(22,782

)

 

 

(19,365

)

Net loss per share — basic and diluted

 

$

(0.07

)

 

$

(0.07

)

 

$

(0.25

)

 

$

(0.22

)

Weighted average common shares outstanding—basic and diluted

 

 

90,823,597

 

 

 

90,548,972

 

 

 

90,774,146

 

 

 

88,211,362

 

Comprehensive loss:

 

 

 

 

 

 

 

 

 

 

 

 

Net loss

 

$

(6,368

)

 

$

(6,704

)

 

$

(22,782

)

 

$

(19,365

)

Other comprehensive loss:

 

 

 

 

 

 

 

 

 

 

 

 

Unrealized gain (loss) on investments, net of tax of $0

 

 

3

 

 

 

(5

)

 

 

(85

)

 

 

3

 

Total other comprehensive income (loss)

 

 

3

 

 

 

(5

)

 

 

(85

)

 

 

3

 

Total comprehensive loss

 

$

(6,365

)

 

$

(6,709

)

 

$

(22,867

)

 

$

(19,362

)

 

The accompanying notes are an integral part of these condensed financial statements.

4


 

AILERON THERAPEUTICS, INC.

CONDENSED STATEMENT OF STOCKHOLDERS’ EQUITY (UNAUDITED)

(In thousands, except share and per share data)

 

 

 

Common Stock

 

 

Additional

 

 

Accumulated
Other

 

 

 

 

 

Total

 

 

 

Shares

 

 

Par
Value

 

 

Paid-in
Capital

 

 

Comprehensive
Loss

 

 

Accumulated
Deficit

 

 

Stockholders'
Equity

 

Balances at December 31, 2021

 

 

90,573,597

 

 

$

91

 

 

$

289,282

 

 

$

(13

)

 

$

(245,456

)

 

$

43,904

 

RSUs vested, net of shares repurchased for tax

 

 

250,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

0

 

Stock-based compensation expense

 

 

 

 

 

 

 

 

689

 

 

 

 

 

 

 

 

 

689

 

Unrealized loss on investments

 

 

 

 

 

 

 

 

 

 

 

(62

)

 

 

 

 

 

(62

)

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(8,422

)

 

 

(8,422

)

Balances at March 31, 2022

 

 

90,823,597

 

 

$

91

 

 

$

289,971

 

 

$

(75

)

 

$

(253,878

)

 

$

36,109

 

Stock-based compensation expense

 

 

 

 

 

 

 

 

528

 

 

 

 

 

 

 

 

 

528

 

Unrealized loss on investments

 

 

 

 

 

 

 

 

 

 

 

(26

)

 

 

 

 

 

(26

)

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(7,992

)

 

 

(7,992

)

Balances at June 30, 2022

 

 

90,823,597

 

 

$

91

 

 

$

290,499

 

 

$

(101

)

 

$

(261,870

)

 

$

28,619

 

Stock-based compensation expense

 

 

 

 

 

 

 

 

442

 

 

 

 

 

 

 

 

 

442

 

Unrealized gain on investments

 

 

 

 

 

 

 

 

 

 

 

3

 

 

 

 

 

 

3

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(6,368

)

 

 

(6,368

)

Balances at September 30, 2022

 

 

90,823,597

 

 

$

91

 

 

$

290,941

 

 

$

(98

)

 

$

(268,238

)

 

$

22,696

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balances at December 31, 2020

 

 

43,804,175

 

 

$

44

 

 

$

231,412

 

 

$

(2

)

 

$

(219,292

)

 

$

12,162

 

Issuance of common stock

 

 

46,406,382

 

 

 

46

 

 

 

59,042

 

 

 

 

 

 

 

 

 

59,088

 

Issuance costs

 

 

 

 

 

 

 

 

(3,482

)

 

 

 

 

 

 

 

 

(3,482

)

Stock-based compensation expense

 

 

 

 

 

 

 

 

631

 

 

 

 

 

 

 

 

 

631

 

Unrealized loss on investments

 

 

 

 

 

 

 

 

 

 

 

(5

)

 

 

 

 

 

(5

)

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(6,975

)

 

 

(6,975

)

Balances at March 31, 2021

 

 

90,210,557

 

 

$

90

 

 

$

287,603

 

 

$

(7

)

 

$

(226,267

)

 

$

61,419

 

Exercise of stock options

 

 

67,357

 

 

 

 

 

 

47

 

 

 

 

 

 

 

 

 

47

 

Issuance costs

 

 

 

 

 

 

 

 

(24

)

 

 

 

 

 

 

 

 

(24

)

RSU's vested, net of shares withheld

 

 

250,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

0

 

Stock-based compensation expense

 

 

 

 

 

 

 

 

361

 

 

 

 

 

 

 

 

 

361

 

Unrealized gain on investments

 

 

 

 

 

 

 

 

 

 

 

13

 

 

 

 

 

 

13

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(5,686

)

 

 

(5,686

)

Balances at June 30, 2021

 

 

90,527,914

 

 

$

90

 

 

$

287,987

 

 

$

6

 

 

$

(231,953

)

 

$

56,130

 

Exercise of stock options

 

 

44,641

 

 

 

1

 

 

 

26

 

 

 

 

 

 

 

 

 

27

 

Stock-based compensation expense

 

 

 

 

 

 

 

 

661

 

 

 

 

 

 

 

 

 

661

 

Unrealized gain on investments

 

 

 

 

 

 

 

 

 

 

 

(5

)

 

 

 

 

 

(5

)

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(6,704

)

 

 

(6,704

)

Balances at September 30, 2021

 

 

90,572,555

 

 

$

91

 

 

$

288,674

 

 

$

1

 

 

$

(238,657

)

 

$

50,109

 

 

The accompanying notes are an integral part of these condensed financial statements.

5


 

AILERON THERAPEUTICS, INC.

CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)

(In thousands)

 

 

 

Nine Months Ended September 30,

 

 

 

2022

 

 

2021

 

Cash flows from operating activities:

 

 

 

 

 

 

Net loss

 

$

(22,782

)

 

$

(19,365

)

Adjustments to reconcile net loss to net cash used in operating activities:

 

 

 

 

 

 

Depreciation and amortization expense

 

 

126

 

 

 

81

 

Forgiveness of paycheck protection program loan

 

 

 

 

 

(387

)

Net amortization of premiums and discounts on investments

 

 

(85

)

 

 

212

 

Stock-based compensation expense

 

 

1,659

 

 

 

1,653

 

Gain on sale of property and equipment

 

 

 

 

 

(66

)

Changes in operating assets and liabilities:

 

 

 

 

 

 

Prepaid expenses and other current assets

 

 

667

 

 

 

(238

)

Other assets

 

 

 

 

 

(24

)

Accounts payable

 

 

(265

)

 

 

(564

)

Operating lease liabilities

 

 

(95

)

 

 

(36

)

Accrued expenses and other current liabilities

 

 

319

 

 

 

1,235

 

Net cash used in operating activities

 

 

(20,456

)