Frequency Therapeutics, Inc. (Nasdaq: FREQ) today announced
business updates and financial results for the second quarter ended
June 30, 2023.
In July, the Company announced that it entered into a definitive
merger agreement with Korro Bio, Inc., a leading RNA editing
company focused on the discovery and development of novel genetic
medicines. After the anticipated consummation of the merger, the
combined company will operate under Korro Bio, Inc. with a focus on
the advancement of Korro Bio’s portfolio of RNA editing programs
and will trade on Nasdaq under the ticker symbol “KRRO.” The merger
is expected to close in the fourth quarter of 2023, subject to
approval by Frequency Therapeutics’ stockholders and other
customary closing conditions.
Frequency Therapeutics continues to explore strategic
alternatives for its pre-clinical remyelination program for
multiple sclerosis. If it has not otherwise monetized its
remyelination program by the closing of the merger, Frequency
Therapeutics stockholders of record will be issued a contingent
value right (CVR) for each outstanding share of Frequency
Therapeutics common stock held by such Frequency Therapeutics
stockholder prior to the closing of the proposed merger. The CVR
would represent the right to receive certain cash payments from
proceeds received by Frequency Therapeutics related to the
program.
Second Quarter 2023 Financial Results
Cash Position: As of June 30, 2023, Frequency had cash,
cash equivalents and marketable securities of $46.5 million
(excluding restricted cash). In April, the Company prepaid all
outstanding loans, eliminating its debt burden.
Research and Development Expenses: Research and
development expenses were $4.6 million for the three months ended
June 30, 2023, as compared to $13.3 million for the comparable
period of 2022. Research and development expenses were $15.9
million for the six months ended June 30, 2023, as compared to
$27.1 million for the comparable period of 2022. Excluding
stock-based compensation expense of $0.2 million for the three
months ended June 30, 2023 and $1.0 million for the six months
ended June 30, 2023, research and development expenses for the
three and six months ended June 30, 2023, were $4.4 million and
$14.9 million, respectively.
General and Administrative Expenses: General and
administrative expenses were $7.2 million for the three months
ended June 30, 2023, as compared to $8.0 million for the comparable
period of 2022. General and administrative expenses were $16.4
million for the six months ended June 30, 2023, as compared to
$17.5 million for the comparable period of 2022. Excluding
stock-based compensation expense of $2.7 million for the three
months ended June 30, 2023 and $5.3 million for the six months
ended June 30, 2023, general and administrative expenses for the
three and six months ended June 30, 2023 were $4.5 million and
$11.1 million, respectively.
Net Loss: Net loss was $10.8 million for the three months
ended June 30, 2023, as compared to $21.3 million for the
comparable period of 2022. Net loss was $30.3 million for the six
months ended June 30, 2023, as compared to $44.7 million for the
comparable period of 2022. The period over period decreases in net
loss were primarily due to the discontinuation of the Company’s
hearing program in Q1 2023.
Forward-Looking Statements
This press release contains forward-looking statements within
the meaning of the Private Securities Litigation Reform Act of
1995. All statements contained in this press release that do not
relate to matters of historical fact should be considered
forward-looking statements, including statements regarding the
proposed transaction involving Frequency Therapeutics and Korro Bio
including the conditions to, and timing of, closing of the proposed
transaction, possible strategic alternatives for the Company’s MS
program, the combined company’s expected cash, cash equivalents and
marketable securities, the listing of the combined company on
Nasdaq, the parties’ ability to consummate the proposed
transaction, the CVR, the potential of RNA editing, the development
and treatment potential of Korro Bio’s approach and its OPERA
platform, the potential sale of Frequency Therapeutics’
pre-clinical remyelination program for multiple sclerosis,
including the timing of any sale, the treatment potential of
Frequency Therapeutics’ pre-clinical remyelination program for
multiple sclerosis, and the sufficiency of the Company’s capital
resources.
These forward-looking statements are based on management’s
current expectations. These statements are neither promises nor
guarantees, but involve known and unknown risks, uncertainties and
other important factors that may cause actual results, performance
or achievements to be materially different from any future results,
performance or achievements expressed or implied by the
forward-looking statements, including, but not limited to, the
following: the ability of Frequency and Korro Bio to integrate
their businesses successfully and to achieve anticipated synergies;
the possibility that other anticipated benefits of the proposed
merger transaction will not be realized, including without
limitation, anticipated revenues, expenses, earnings and other
financial results, and growth and expansion of the combined
company’s operations, and the anticipated tax treatment of the
combination; potential litigation relating to the proposed merger
transaction that could be instituted against Frequency, Korro Bio
or their respective directors; possible disruptions from the
proposed merger transaction that could harm Frequency’s and/or
Korro Bio’s respective businesses; the ability of Frequency and
Korro Bio to retain, attract and hire key personnel; potential
adverse reactions or changes to relationships with customers,
employees, suppliers or other parties resulting from the completion
of the proposed merger transaction; potential business uncertainty,
including changes to existing business relationships, during the
pendency of the proposed merger transaction that could affect
Frequency’s or Korro Bio’s financial performance; certain
restrictions during the pendency of the proposed merger transaction
that may impact Frequency’s or Korro Bio’s ability to pursue
certain business opportunities or strategic transactions;
legislative, regulatory and economic developments; unpredictability
and severity of catastrophic events, including, but not limited to,
acts of terrorism or outbreak of war or hostilities, as well as
management’s response to any of the aforementioned factors
These and other important factors discussed under the caption
“Risk factors” in the Company’s Form S-4 filed with the Securities
and Exchange Commission (SEC) on July 27, 2023, the Company’s Form
10-Q filed with the SEC on August 10, 2023, and its other reports
filed with the SEC could cause actual results to differ materially
from those indicated by the forward-looking statements made in this
press release. Any such forward-looking statements represent
management’s estimates as of the date of this press release. While
the Company may elect to update such forward-looking statements at
some point in the future, it disclaims any obligation to do so,
even if subsequent events cause its views to change. These
forward-looking statements should not be relied upon as
representing the Company’s views as of any date subsequent to the
date of this press release.
About Frequency Therapeutics
Headquartered in Lexington, Mass., Frequency Therapeutics is
pioneering a new category in regenerative medicine that aims to
restore human function by developing therapeutics that activate a
person’s innate regenerative potential within the body through the
activation of progenitor cells. The Company’s lead preclinical
program is designed to activate oligodendrocyte precursor cells
with the goal of driving remyelination and potential functional
recovery for individuals living with multiple sclerosis. For more
information, visit www.frequencytx.com.
Frequency Therapeutics,
Inc.
Consolidated Statements of
Operations
(in thousands, except share
and per share amounts)
(unaudited)
Three Months Ended
June 30,
Six Months Ended
June 30,
2023
2022
2023
2022
Operating expenses:
Research and development
$
4,594
$
13,273
$
15,949
$
27,054
General and administrative
7,237
8,000
16,393
17,477
Total operating expenses
11,831
21,273
32,342
44,531
Loss from operations
(11,831
)
(21,273
)
(32,342
)
(44,531
)
Interest income
346
425
869
520
Interest expense
-
(208
)
(284
)
(386
)
Other income (expense), net
694
(227
)
1,447
(260
)
Loss before income taxes
(10,791
)
(21,283
)
(30,310
)
(44,657
)
Income tax
(5
)
(2
)
(29
)
(14
)
Net loss
$
(10,796
)
$
(21,285
)
$
(30,339
)
$
(44,671
)
Net loss per share attributable to common
stockholders-basic and diluted
$
(0.30
)
$
(0.61
)
$
(0.85
)
$
(1.28
)
Weighted-average shares of common stock
outstanding-basic and diluted
35,800,821
34,976,409
35,563,754
34,894,001
Frequency Therapeutics,
Inc.
Consolidated Balance Sheet
Data
(in thousands)
(unaudited)
June 30, 2023
December 31, 2022
Cash, cash equivalents and marketable
securities
$
46,478
$
83,097
Working capital
40,051
66,467
Total assets
79,383
121,238
Total liabilities
33,975
52,043
Accumulated deficit
(292,004
)
(261,665
)
Total stockholders' equity
45,408
69,195
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Investor and Media Contact: Frequency Therapeutics Email:
investors@frequencytx.com
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