$71.0 million cash balance at the end of 2022
expected to provide cash runway into 2025
Acquired Bioniz Therapeutics, including two
first-in-class clinical-stage assets, EQ101 and EQ102, and
proprietary product discovery platform
Initiated Phase 2 clinical study of EQ101 in
alopecia areata and first-in-human clinical study of EQ102
Entered into strategic partnership and an
option and asset purchase agreement with Ono Pharmaceutical for the
development and commercialization rights to itolizumab, including
an upfront payment of $26.4 million, development funding, and
approximately $139 million1 in potential option exercise and
milestone payments
Equillium, Inc. (Nasdaq: EQ), a clinical-stage biotechnology
company leveraging a deep understanding of immunobiology to develop
novel therapeutics to treat severe autoimmune and inflammatory
disorders with high unmet medical need, today announced financial
results for the fourth quarter and full year 2022 and provided
corporate and clinical development updates.
“Equillium achieved several significant objectives during 2022,
and in the process transformed into a company with a newly
diversified pipeline including two wholly-owned, first-in-class
clinical-stage assets, a proprietary drug discovery platform and a
strong balance sheet expected to fund our development programs
through multiple key milestones,” said Bruce Steel, chief executive
officer at Equillium. “We acquired Bioniz Therapeutics in February
last year expanding our pipeline with two multi-cytokine
inhibitors, EQ101 and EQ102, that we have since advanced into a
Phase 2 clinical study in subjects with alopecia areata and a
first-in-human clinical study in healthy volunteers to be followed
by patients with celiac disease, respectively. We plan to announce
data from both studies in the second half of this year. Based on
the initiation of EQUATOR, our pivotal study of itolizumab in
first-line acute graft-versus-host disease, and positive interim
data from the EQUALISE study of itolizumab in patients with lupus
nephritis, we secured a strategic partnership with Ono
Pharmaceutical under which they purchased an exclusive option to
acquire our rights for the development and commercialization of
itolizumab. The partnership came with payments to Equillium
totaling $38.6 million during December 2022, funding of itolizumab
research and development costs during the option period, and
potential future option exercise and milestone payments totaling
approximately $139 million1. Based on our strong cash balance and
significantly reduced operating burn resulting from the Ono
partnership, we expect to be able to fund operations into 2025, and
potentially beyond if Ono exercises its option. We look forward to
upcoming data from the EQ101 and EQ102 development programs and
continuing to advance itolizumab under our Ono partnership.”
2022 Corporate Highlights:
- Acquired Bioniz Therapeutics, adding a proprietary product
discovery platform and significantly expanding the company’s
pipeline of novel immunomodulatory drug candidates, including two
first-in-class clinical-stage assets: EQ101, a tri-specific
inhibitor of IL-2, IL-9 and IL-15, and EQ102, a bi-specific
inhibitor of IL-15 and IL-21.
- Entered into an option and asset purchase agreement with Ono
Pharmaceutical for the exclusive option to acquire our development
and commercialization rights to itolizumab. Equillium received an
upfront payment of $26.4 million and is also eligible to receive up
to approximately $139 million1 in option exercise and payments for
achieving certain development and commercialization milestones.
Equillium will be responsible for conducting all research and
development of itolizumab, which will be funded by Ono on a
quarterly basis commencing July 1, 2022 through the option
period.
- Appointed Barbara Troupin, M.D., to Equillium’s board of
directors.
2022 Clinical Highlights:
- Initiated a multicenter, Phase 2 open-label, proof-of-concept
clinical study of EQ101 in adult subjects with at least 35% scalp
hair loss due to alopecia areata. Approximately 30 subjects will be
enrolled in the study where they will be dosed intravenously once
weekly for 24 weeks. Subcutaneous formulation development of EQ101
is ongoing and expected to be ready for subsequent clinical
studies.
- Initiated a Phase 1 first-in-human randomized, double-blind,
placebo-controlled clinical study of EQ102 administered
subcutaneously in single ascending dose (SAD) and multiple
ascending dose (MAD) cohorts in up to 64 healthy volunteers.
- Initiated EQUATOR, a pivotal Phase 3 randomized, double-blind
clinical study of up to 200 patients to assess the efficacy and
safety of itolizumab versus placebo as a first-line therapy for
acute graft-versus-host disease (aGVHD) in combination with
corticosteroids.
- Announced positive interim results from the Type B portion of
the EQUALISE study of itolizumab in subjects with lupus
nephritis
Anticipated Upcoming Milestones:
- EQ101: Phase 2 clinical study in subjects with alopecia areata
– initial data anticipated in 2H 2023, topline data anticipated in
mid-2024
- EQ102: Phase 1 first-in-human study in healthy volunteers and
subjects with celiac disease – SAD/MAD data anticipated in 2H 2023,
celiac disease patient data anticipated in 2024
- Itolizumab: EQUALISE lupus nephritis topline data anticipated
in 1H 2024, EQUATOR aGVHD interim review anticipated in 2024
Fourth Quarter and Full Year 2022 Financial Results
Revenue for the fourth quarter and full year of 2022 was
$15.8 million and was derived from the company’s asset purchase
agreement with Ono. There was no revenue recognized in the year
ended December 31, 2021.
Research and development (R&D) expenses for the
fourth quarter of 2022 were $8.5 million, compared with $7.5
million for the same period in 2021. For the full year of 2022,
R&D expenses were $37.5 million, compared with $26.4 million
for the full year of 2021. The year-over-year increase in R&D
expenses was driven by start-up costs related to our Phase 3
EQUATOR clinical study and to a lesser extent start-up costs
related to our EQ101 and EQ102 clinical studies, an increase in
non-clinical research expenses and employee compensation and
benefits, offset by a greater estimated Australian R&D Tax
Incentive benefit and lower costs associated with our other
itolizumab clinical studies.
General and administrative (G&A) expenses for the
fourth quarter of 2022 were $5.2 million, compared with $2.8
million for the same period in 2021. For the full year of 2022,
G&A expenses were $17.2 million, compared with $11.4 million
for the full year of 2021. The year-over-year increase was
primarily driven by increased legal expenses related to business
development activities, greater headcount and consulting expenses,
the non-cash write-off of issuance costs related to certain
financings where future proceeds were unlikely, and greater
overhead expenses.
Net Income for the fourth quarter of 2022 was $2.8
million, or $0.08 per basic share and diluted share, compared with
a net loss of $10.6 million, or $(0.36) per basic and diluted share
for the same period in 2021. Net loss for the full year of 2022 was
$62.4 million, or $(1.85) per basic and diluted share, compared
with a net loss of $39.1 million, or $(1.36) per basic and diluted
share for the full year of 2021. The increase in net loss for the
full year of 2022 compared to the full year of 2021 was driven
primarily by greater operating expenses, including a non-cash
in-process R&D expense related to the acquisition of Bioniz in
2022, partially offset by revenue recognized in the fourth quarter
of 2022 related to the Ono partnership.
Cash, cash equivalents and short-term investments totaled
$71.0 million as of December 31, 2022, compared to $80.7 million as
of December 31, 2021. Cash provided by operating activities in the
fourth quarter of 2022 was $27.7 million. Non-GAAP Adjusted Cash
Used in Operations in the fourth quarter of 2022 was $5.2 million,
which excludes the one-time upfront payment from Ono and is further
adjusted by incorporating only the development funding received
from Ono pertaining to itolizumab development costs in the fourth
quarter of 2022. Equillium believes that its cash, cash equivalents
and short-term investments will be sufficient to fund its currently
planned operations into 2025.
Use of Non-GAAP Financial Measures (Unaudited)
In this release, we use the metric of Adjusted Cash Used in
Operations, which is a non-GAAP financial measure and is not
calculated in accordance with generally accepted accounting
principles in the United States (GAAP). Adjusted Cash Used in
Operations reflects adjustments to net cash provided by (used in)
operating activities to exclude the effects of any one-time
payments from Ono and quarterly development funding received in but
unrelated to the period, and add any quarterly development funding
amounts receivable related to development costs in the period.
We believe Adjusted Cash Used in Operations is a useful metric
to investors as a supplement to GAAP measures in the assessment of
our operating cash burn because it removes the effects of any
one-time payments, which are not indicative of our ongoing cash
flow from operations, and it provides better matching of the timing
of itolizumab development funding payments with the associated
itolizumab development costs. However, Adjusted Cash Used in
Operations may fluctuate significantly from quarter to quarter, and
the estimate provided for one quarter should not be assumed to be
representative of other quarters. In addition, this non-GAAP
financial measure may be different from non-GAAP financial measures
used by other companies, even when the same or similarly titled
terms are used to identify such measures, limiting their usefulness
for comparative purposes.
This non-GAAP financial measure is not meant to be considered in
isolation or used as a substitute for net cash provided by (used
in) operating activities reported in accordance with GAAP; should
be considered in conjunction with our financial information
presented in accordance with GAAP; has no standardized meaning
prescribed by GAAP; is unaudited; and is not prepared under any
comprehensive set of accounting rules or principles. In addition,
from time to time in the future, there may be other items that we
may exclude for purposes of this non-GAAP financial measure, and we
may in the future cease to exclude items that we have historically
excluded for purposes of this non-GAAP financial measure. Likewise,
we may determine to modify the nature of adjustments to arrive at
this non-GAAP financial measure. Because of the non-standardized
definitions of non-GAAP financial measures, the non-GAAP financial
measure as used by us in this press release and the accompanying
reconciliation table has limits in its usefulness to investors and
may be calculated differently from, and therefore may not be
directly comparable to, similarly titled measures used by other
companies. Accordingly, investors should not place undue reliance
on non-GAAP financial measures. Reconciliations of this non-GAAP
financial measure to the most directly comparable GAAP financial
measure are presented in the table at the end of this release.
About Multi-Cytokine Platform and EQ101 & EQ102
Our proprietary multi-cytokine platform generates rationally
designed composite peptides that selectively block key cytokines at
the shared receptor level targeting pathogenic cytokine
redundancies and synergies while preserving non-pathogenic
signaling. This approach is expected to avoid the broad
immuno-suppression and off-target safety liabilities that may be
associated with other therapeutic classes, such as Janus kinase
inhibitors. Many immune-mediated diseases are driven by the same
combination of dysregulated cytokines, and we believe identifying
the key cytokines for these diseases will allow us to target and
develop customized treatment strategies for multiple autoimmune and
inflammatory diseases.
Current platform assets include EQ101, a first-in-class,
selective, tri-specific inhibitor of IL-2, IL-9 and IL-15, and
EQ102, a first-in-class, selective, bi-specific inhibitor of IL-15
and IL-21.
About Itolizumab
Itolizumab is a clinical-stage, first-in-class anti-CD6
monoclonal antibody that selectively targets the CD6-ALCAM
signaling pathway to selectively downregulate pathogenic T effector
cells while preserving T regulatory cells critical for maintaining
a balanced immune response. This pathway plays a central role in
modulating the activity and trafficking of T cells that drive a
number of immuno-inflammatory diseases.
About Equillium
Equillium is a clinical-stage biotechnology company leveraging a
deep understanding of immunobiology to develop novel therapeutics
to treat severe autoimmune and inflammatory disorders with high
unmet medical need. The company’s pipeline consists of the
following novel first-in-class immunomodulatory assets targeting
immuno-inflammatory pathways. EQ101: a tri-specific cytokine
inhibitor that selectively targets IL-2, IL-9, and IL-15; currently
under evaluation in a Phase 2 proof-of-concept clinical study of
patients with alopecia areata. EQ102: a bi-specific cytokine
inhibitor that selectively targets IL-15 and IL-21; currently under
evaluation in a Phase 1 first-in-human clinical study to include
healthy volunteers and celiac disease patients. Itolizumab: a
monoclonal antibody that targets the CD6-ALCAM signaling pathway
which plays a central role in the modulation of effector T cells;
currently under evaluation in a Phase 3 clinical study of patients
with acute graft-versus-host disease (aGVHD) and a Phase 1b
clinical study of patients with lupus/lupus nephritis. Equillium
acquired rights to itolizumab through an exclusive partnership with
Biocon Limited and has entered a strategic partnership with Ono
Pharmaceutical Co., Ltd. for the development and commercialization
of itolizumab under an option and asset purchase agreement.
For more information, visit www.equilliumbio.com.
Forward Looking Statements
Statements contained in this press release regarding matters
that are not historical facts are "forward-looking statements"
within the meaning of the Private Securities Litigation Reform Act
of 1995. Forward-looking statements may be identified by the use of
words such as "anticipate", "believe", “could”, “continue”,
"expect", "estimate", “may”, "plan", "outlook", “future” and
"project" and other similar expressions that predict or indicate
future events or trends or that are not statements of historical
matters. Because such statements are subject to risks and
uncertainties, many of which are outside of Equillium’s control,
actual results may differ materially from those expressed or
implied by such forward-looking statements. Such statements
include, but are not limited to, statements regarding Equillium’s
plans and expected timing for developing EQ101 and EQ102 including
the expected timing of initiating, completing and announcing
further results from Phase 2 and Phase 1 clinical studies,
respectively, the potential for any of Equillium’s ongoing or
planned clinical studies to show safety or efficacy, the benefit of
treating patients with aGVHD or lupus/lupus nephritis with
itolizumab, Equillium’s plans and expected timing for developing
itolizumab including the expected timing of initiating, completing
and announcing further results from the EQUATE, EQUATOR and
EQUALISE studies, Equillium’s anticipated timing of regulatory
review and feedback, the potential benefits and risks of the
transactions contemplated by the asset purchase agreement entered
into between Equillium and Ono, including the possibility that Ono
does not exercise the option, Equillium receives no further
payments under the asset purchase agreement other than those
already received, the fluctuation of the foreign exchange rate,
Equillium’s cash runway, and Equillium’s plans and expected timing
for developing its product candidates and potential benefits of its
product candidates. Risks that contribute to the uncertain nature
of the forward-looking statements include: Equillium’s ability to
execute its plans and strategies; risks related to performing
clinical studies; the risk that interim results of a clinical study
do not necessarily predict final results and that one or more of
the clinical outcomes may materially change as patient enrollment
continues, following more comprehensive reviews of the data, and as
more patient data become available; potential delays in the
commencement, enrollment and completion of clinical studies and the
reporting of data therefrom; the risk that studies will not be
completed as planned; Equillium’s plans and product development,
including the initiation and completion of clinical studies and the
reporting of data therefrom; whether the results from clinical
studies will validate and support the safety and efficacy of
Equillium’s product candidates; risks related to Ono’s financial
condition, willingness to continue to fund the development of
itolizumab, and decision to exercise its option to purchase
itolizumab or terminate the asset purchase agreement; changes in
the competitive landscape; uncertainties related to Equillium’s
capital requirements; and having to use cash in ways or on timing
other than expected and the impact of market volatility on cash
reserves. These and other risks and uncertainties are described
more fully under the caption "Risk Factors" and elsewhere in
Equillium's filings and reports, which may be accessed for free by
visiting the Securities and Exchange Commission’s website at
www.sec.gov and on Equillium’s website under the heading
“Investors.” Investors should take such risks into account and
should not rely on forward-looking statements when making
investment decisions. All forward-looking statements contained in
this press release speak only as of the date on which they were
made. Equillium undertakes no obligation to update such statements
to reflect events that occur or circumstances that exist after the
date on which they were made, except as required by law.
________________________
1 Option exercise payment is denominated in Japanese yen (5
billion) and subject to currency exchange rates at the time of
payment (U.S. dollar amount estimated above is based on the
exchange rate as quoted by MUFG Bank, Ltd. on March 16, 2023).
R&D funding and milestone payments are denominated in U.S.
dollars.
Equillium, Inc.
Condensed Consolidated Balance
Sheets
(In thousands)
(unaudited)
December 31,
December 31,
2022
2021
Assets
Cash, cash equivalents and short-term
investments
$
71,023
$
80,711
Accounts receivable
2,838
-
Prepaid expenses and other assets
3,369
3,049
Operating lease right-of-use assets
1,191
1,645
Total assets
$
78,421
$
85,405
Current liabilities
Accounts payable and other current
liabilities
$
17,338
$
8,915
Current portion of deferred revenue
14,700
-
Total current liabilities
32,038
8,915
Long-term deferred revenue
10,378
-
Other long-term liabilities
4,063
9,985
Total liabilities
46,479
18,900
Total stockholders' equity
31,942
66,505
Total liabilities and stockholders'
equity
$
78,421
$
85,405
Equillium, Inc.
Condensed Consolidated
Statements of Operations
(In thousands, except share
and per share data)
(unaudited)
Three Months Ended December
31,
Year Ended December
31,
2022
2021
2022
2021
Revenue
$
15,759
$
-
$
15,759
$
-
Operating expenses:
Research and development
8,525
7,549
37,547
26,379
Acquired in-process research and
development
-
-
23,049
-
General and administrative
5,192
2,838
17,239
11,407
Total operating expenses
13,717
10,387
77,835
37,786
Income (loss) from operations
2,042
(10,387
)
(62,076
)
(37,786
)
Other income (expense), net
731
(234
)
(352
)
(1,266
)
Net income (loss)
$
2,773
$
(10,621
)
$
(62,428
)
$
(39,052
)
Net income (loss) per common share, basic
and diluted
$
0.08
$
(0.36
)
$
(1.85
)
$
(1.36
)
Weighted-average number of common shares
outstanding, basic and diluted
34,366,926
29,411,242
33,727,945
28,806,310
The table below presents the reconciliation of Adjusted Cash
Used in Operations, which is a non-GAAP financial measure. See "Use
of Non-GAAP Financial Measures (Unaudited)" above for further
information regarding the company's use of non-GAAP financial
measures.
Equillium, Inc.
Reconciliation of Non-GAAP
Financial Measures
(In thousands)
(unaudited)
Three Months Ended December
31,
Year Ended December
31,
2022
2021
2022
2021
Adjusted Cash Used in
Operations
Net cash provided by (used in) operating
activities (GAAP)
$
27,725
$
(10,133
)
$
(8,733
)
$
(32,081
)
Ono upfront payment1
(26,377
)
-
(26,377
)
-
Cash received for development funding from
Ono unrelated to the period2
(9,373
)
-
(3,220
)
-
Receivable for development funding from
Ono in the period3
2,838
-
2,838
-
Adjusted Cash Used in Operations
(Non-GAAP)
$
(5,187
)
$
(10,133
)
$
(35,492
)
$
(32,081
)
________________________
1.
We received a one-time payment of $26.4
million from Ono in exchange for the option to acquire our rights
for the development and commercialization of itolizumab. In
accordance with GAAP, it was included in net cash provided by (used
in) operating activities in the period received. We have excluded
receipt of the upfront payment from Adjusted Cash Used in
Operations.
2.
During the three months ended December 31,
2022, the company received $9.4 million in cash for development
funding from Ono, which included $6.2 million related to itolizumab
development costs for the third quarter of 2022 and $3.2 million as
an advance payment for itolizumab development costs for the first
quarter of 2023. For the three months ended December 31, 2022, we
have excluded such $9.4 million of cash received for itolizumab
development funding since it was unrelated to itolizumab
development costs in the period. For the year ended December 31,
2022, we have excluded the $3.2 million of cash received as an
advance payment for itolizumab development costs for the first
quarter of 2023 since it was unrelated to itolizumab development
costs in the period.
3.
This reflects an unbilled receivable
amount as of December 31, 2022, related to itolizumab development
costs in the fourth quarter of 2022. We add this amount as a timing
adjustment since the amount relates to development costs in the
three months ended December 31, 2022.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230323005616/en/
Investor & Media Contact Equillium, Inc. Michael
Moore Vice President, Investor Relations Officer & Head of
Corporate Communications 619-302-4431 ir@equilliumbio.com
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