AN2 Therapeutics Inc
For the period ended Sep 30, 2024. Filed Nov 13, 2024.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Sep 30, 2024 · Filed Nov 13, 2024
ANTX$4.00+1.1%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-06-30; filed 2024-08-13.
0000950170-24-096243
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-09-30; filed 2024-11-13.
0000950170-24-126282
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 79 previous paragraphs and 85 current paragraphs.
58 unchanged; 17 reworded; 10 added; 4 removed; 0 previous and 0 current paragraphs rearranged.
Tables are not compared: 5 previous and 5 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (10)
Current report
After announcing these results, we commenced further review of the Phase 2 data to determine the best path forward for this program. To date, we have identified nominally statistically significant outcomes in two patient-reported-outcome (PRO) analyses that suggest clinical improvement in epetraborole patients over placebo patients. The first—a prespecified secondary endpoint of the Quality of Life (Bronchiectasis) (QoL-B) PRO—indicates that patients on epetraborole showed statistically significant symptom improvement when calculated using its least squares mean (LSM) method. Of note, this is the same endpoint Insmed, Inc. recently announced as the primary endpoint in its ENCORE Phase 3 trial for treatment-naïve MAC. The second—a post-hoc LSM calculation of the MACrO2 PRO results—also showed statistically significant clinical symptom improvement in epetraborole patients vs. placebo. We believe these two findings provide potential clinical proof of concept and that improvements in two PRO measures appear to align with FDA’s recommendation, reflected in a recent guidance document, that trials to support drug approvals in NTM utilize PRO-based clinical outcomes as the primary endpoint. We will continue our data analysis and plan to request an End-of-Phase-2 meeting with FDA in the first half of 2025 to discuss the potential for re-initiating a pivotal Phase 3 trial in TR-MAC.
Current report
As we continue to evaluate future development opportunities for epetraborole in NTM, we have advanced our pipeline programs. In 2025, we anticipate initiating a Phase 1 trial in Chagas disease and a Phase 2 proof-of-concept trial in melioidosis. We also anticipate progressing our earlier-stage programs in oncology and infectious disease toward producing up to three development compounds in 2025.
Current report
On August 8, 2024, we also announced a reduction of approximately 50% of our workforce, which was approved by the Board in connection with our planned restructuring following discontinuation of the EBO-301 study and to further extend our operating capital. In connection with the workforce reduction, we recognized severance and other charges of $2.2 million for each of the three and nine months ended September 30, 2024, primarily consisting of $2.6 million related to severance payments and other employee termination-related expenses, partially offset by a $0.4 million reduction in stock-based compensation expense as a result of applying modification accounting for consulting agreements entered into with certain terminated employees. We expect that the workforce reduction will be substantially complete by the end of 2024.
Current report
Our restructuring charges consist primarily of employee severance payments and other employee termination-related expenses, offset by a reduction in stock-based compensation expense related to consulting agreements entered into with certain terminated employees.
Current report
Restructuring charges were $2.2 million for the three months ended September 30, 2024, consisting of $2.6 million in severance payments and other employee termination-related expenses, partially offset by a $0.4 million reduction in stock-based compensation expense as a result of applying modification accounting for consulting agreements entered into with certain terminated employees. There were no restructuring charges in the three months ended September 30, 2023.
Current report
Comparison of the Nine Months Ended September 30, 2024 and 2023
Current report
Research and development expenses were $35.1 million for the nine months ended September 30, 2024 compared to $40.0 million for the nine months ended September 30, 2023. The decrease of $4.9 million was primarily due to decreases in CMC expenses, clinical trial costs, preclinical and research study expenses, and other expenses, partially offset by increases in consulting and outside services and personnel-related expenses. CMC expenses decreased by $3.7 million primarily due to completion of the intermediate and registration batch manufacturing activities in 2023 and reduced development activities for epetraborole following termination of the EBO-301 trial. Clinical trials expenses decreased by $1.0 million due to completion of the Phase 2 portion and termination of the Phase 3 portion of the EBO-301 trial. Preclinical and research study expenses decreased by $0.9 million primarily due to a decrease in epetraborole-related activities and contract research, partially offset by an increase in early-stage research projects. Other expenses decreased by $0.3 million. These expenses were partially offset by an increase of $0.9 million in consulting and outside services to support our contract and early-stage research efforts and personnel-related expenses increase by $0.1 million. During the nine months ended September 30, 2024, a total reimbursement of $2.0 million of operating expenses was recognized related to our funding arrangements. During the nine months ended September 30, 2023, a total of $0.7 million reimbursement of operating expenses was recognized related to our funding arrangements, primarily related to CMC activities and research studies.
Current report
General and administrative expenses were $10.9 million for the nine months ended September 30, 2024 and 2023.
Current report
Restructuring charges were $2.2 million for the nine months ended September 30, 2024, consisting of $2.6 million in severance payments and other employee termination-related expenses, partially offset by a $0.4 million reduction in stock-based compensation expense as a result of applying modification accounting for consulting agreements entered into with certain terminated employees. There were no restructuring charges in the nine months ended September 30, 2023.
Current report
Cash Provided by (Used In) Investing Activities
Removed paragraphs (4)
Previous report
Comparison of the Six Months Ended June 30, 2024 and 2023
Previous report
Research and development expenses were $26.8 million for the six months ended June 30, 2024 compared to $25.5 million for the six months ended June 30, 2023. The increase of $1.3 million was primarily due to increases in clinical trial costs, personnel-related expenses, and consulting and outside services, partially offset by lower chemistry manufacturing and controls (“CMC”) expenses and lower costs associated with research studies. Clinical trials expenses increased by $3.3 million due to increased costs associated with our Phase 2/3 clinical trial in early 2024 due to an increase in enrollment and other activities. Personnel-related costs increased by $1.3 million due to increased research and development headcount, higher bonuses based on target performance achievement, and stock-based compensation expense. Consulting and outside services increased by $1.1 million to support our clinical trial and research activities. These increases were partially offset by a decrease of $4.2 million in costs related to CMC activities due to completion of certain registration batch manufacturing activities in 2023, a decrease of $0.1 million in costs related to research and preclinical studies, and a $0.1 million decrease in other expenses, including rent, utilities, and information technology expenses. During the six months ended June 30, 2024, a total reimbursement of $0.9 million of operating expenses was recognized related to our funding arrangements.
Previous report
General and administrative expenses were $7.4 million for the six months ended June 30, 2024 compared to $7.1 million for the six months ended June 30, 2023. The increase of $0.3 million was primarily attributable to a $0.6 million increase in personnel-related costs primarily related to higher salaries, higher bonuses based on target performance achievement, and stock-based compensation expense and a $0.1 million increase in professional and outside services, partially offset by a $0.3 million decrease in directors and officers liability insurance premiums and a $0.1 million decrease in facility-related expenses, including rent, utilities, and information technology expenses.
Previous report
Cash Provided by Investing Activities
Reworded paragraphs (17)
Previous wording
The following discussion and analysis of our financial condition as of June 30, 2024 and results of operations for the three and six months ended June 30, 2024 and 2023 should be read in conjunction with our condensed financial statements and related notes thereto included elsewhere in this Quarterly Report on Form 10-Q (“Form 10-Q”) and our audited financial statements and the related notes thereto included as a part of our Annual Report on Form 10-K for the year ended December 31, 2023. Except as otherwise indicated herein or as the context otherwise requires, references in this Form 10-Q to “AN2” “the Company,” “we,” “us” and “our” refer to AN2 Therapeutics, Inc.
Current wording
The following discussion and analysis of our financial condition as of September 30, 2024 and results of operations for the three and nine months ended September 30, 2024 and 2023 should be read in conjunction with our condensed financial statements and related notes thereto included elsewhere in this Quarterly Report on Form 10-Q (“Form 10-Q”) and our audited financial statements and the related notes thereto included as a part of our Annual Report on Form 10-K for the year ended December 31, 2023. Except as otherwise indicated herein or as the context otherwise requires, references in this Form 10-Q to “AN2” “the Company,” “we,” “us” and “our” refer to AN2 Therapeutics, Inc.
Previous wording
We are a biopharmaceutical company focused on discovering and developing novel small molecule therapeutics derived from its boron chemistry platform. AN2 has a pipeline of boron-based compounds in development for Chagas disease, non-tuberculous mycobacterial (“NTM”) lung disease and melioidosis, and early-stage programs focused on targets in infectious diseases and oncology.
Current wording
We are a biopharmaceutical company focused on discovering and developing novel small molecule therapeutics derived from our boron chemistry platform. AN2 has a pipeline of boron-based compounds in development for Chagas disease, non-tuberculous mycobacterial (“NTM”) and melioidosis, along with early-stage programs focused on targets in infectious diseases and oncology.
Previous wording
Since launching operations in November 2019, we have devoted substantially all of our resources to developing our initial product candidate, epetraborole, which we were developing for treatment-refractory Mycobacterium avium complex (“MAC”) lung disease, a form of NTM lung disease. On August 8, 2024, we announced topline results from the Phase 2 part of the EBO-301 Phase 2/3 study evaluating epetraborole on top of optimized background regimen (“OBR”) in treatment-refractory MAC lung disease. The Phase 2 part of the study met its primary objective of demonstrating the potential validation of a novel patient-reported outcome (PRO) tool and a higher PRO-based clinical response rate in the epetraborole + OBR arm (39.5%) vs. placebo + OBR (25.0%; treatment difference 13.9%, p=0.19). However, sputum culture conversion at Month 6, a key secondary endpoint, was similar between treatment arms (13.2% in epetraborole + OBR vs. 10.0% placebo + OBR; treatment difference 3.4%, p=0.64). Based on these results, we decided to terminate the EBO-301 trial. We will evaluate the results from the EBO-301 study to inform decisions regarding potential future development of epetraborole for NTM lung disease.
Current wording
Since launching operations in November 2019, we have devoted substantially all of our R&D resources to developing our initial product candidate, epetraborole, which we are developing for treatment-refractory Mycobacterium avium complex (“MAC”) lung disease, a form of NTM lung disease. On August 8, 2024, we announced topline results from the Phase 2 part of the EBO-301 Phase 2/3 study evaluating epetraborole on top of optimized background regimen (“OBR”) in treatment-refractory MAC lung disease. The Phase 2 part of the study met its primary objective of demonstrating the potential validation of a novel patient-reported outcome (PRO) tool and a higher PRO-based clinical response rate in the epetraborole + OBR arm (39.5%) vs. placebo + OBR (25.0%; treatment difference 13.9%, p=0.19). Sputum culture conversion at Month 6, a key secondary endpoint, was similar between treatment arms (13.2% in epetraborole + OBR vs. 10.0% placebo + OBR; treatment difference 3.4%, p=0.64). Epetraborole was generally well tolerated in the trial.
Previous wording
We do not have any products approved for sale and have not generated any revenue since inception. Our net losses were $31.1 million and $31.1 million for the six months ended June 30, 2024 and 2023, respectively. As of June 30, 2024, we had an accumulated deficit of $185.5 million. We have funded our operations from the sale and issuance of redeemable convertible preferred stock and proceeds from our initial public offering (“IPO”), “at-the-market” equity offering program (“ATM Offering”) and an underwritten offering (the “Underwritten Offering”). From November 2019 through October 2020, we raised an aggregate of $12.0 million from the sale of Series A redeemable convertible preferred stock. In March 2021, we raised an aggregate of $80.0 million from the sale of Series B redeemable convertible preferred stock. In March and April 2022, we completed our IPO, with gross proceeds of $79.4 million and net proceeds of $70.4 million, net of underwriting discounts, commissions and offering expenses. In June 2023, we raised gross proceeds of $20.0 million from the ATM Offering and net proceeds of $19.1 million, after deducting commissions and offering expenses. In August 2023, we raised gross proceeds of $70.0 million from the Underwritten Offering and net proceeds of $65.5 million, after deducting commissions and offering expenses.
Current wording
We do not have any products approved for sale and have not generated any revenue since inception. Our net losses were $43.8 million and $47.8 million for the nine months ended September 30, 2024 and 2023, respectively. As of September 30, 2024, we had an accumulated deficit of $198.3 million. We have funded our operations from the sale and issuance of redeemable convertible preferred stock and proceeds from our initial public offering (“IPO”), “at-the-market” equity offering program (“ATM Offering”) and an underwritten offering (the “Underwritten Offering”). From November 2019 through October 2020, we raised an aggregate of $12.0 million from the sale of Series A redeemable convertible preferred stock. In March 2021, we raised an aggregate of $80.0 million from the sale of Series B redeemable convertible preferred stock. In March and April 2022, we completed our IPO, with gross proceeds of $79.4 million and net proceeds of $70.4 million, net of underwriting discounts, commissions and offering expenses. In June 2023, we raised gross proceeds of $20.0 million from the ATM Offering and net proceeds of $19.1 million, after deducting commissions and offering expenses. In August 2023, we raised gross proceeds of $70.0 million from the Underwritten Offering and net proceeds of $65.5 million, after deducting commissions and offering expenses.
Previous wording
As of June 30, 2024, we had cash, cash equivalents, and investments of $104.5 million. We believe that our available cash will be sufficient to fund our planned operations through at least twelve months following the date of this Form 10-Q.
Current wording
As of September 30, 2024, we had cash, cash equivalents, and investments of $93.4 million. We believe that our available cash will be sufficient to fund our planned operations under the current operating plan through at least twelve months following the date of this Form 10-Q.
Previous wording
Our general and administrative expenses consist primarily of payroll and personnel-related expenses, including salaries and bonuses, payroll taxes, employee benefit costs, and non-cash stock-based compensation. Other general and administrative expenses include legal costs of pursuing patent protection of our intellectual property, and professional service fees for auditing, tax, general legal services, and other external consulting and vendor services. We expect our general and administrative expenses to continue to increase in the future, including expenses related to legal, accounting, regulatory, and tax-related services associated with maintaining compliance with requirements of The Nasdaq Stock Market LLC and the SEC, directors and officers liability insurance premiums, and investor relations activities.
Current wording
Our general and administrative expenses consist primarily of payroll and personnel-related expenses, including salaries and bonuses, payroll taxes, employee benefit costs, and non-cash stock-based compensation. Other general and administrative expenses include legal costs of pursuing patent protection of our intellectual property, and professional service fees for auditing, tax, general legal services, and other external consulting and vendor services. We expect our general and administrative expenses to continue to increase in the future, including expenses related to legal, accounting, regulatory, and tax-related services associated with maintaining compliance with requirements of The Nasdaq Stock Market LLC and the Securities and Exchange Commission ("SEC"), directors and officers liability insurance premiums, and investor relations activities.
Previous wording
Research and development expenses were $12.1 million for the three months ended June 30, 2024 compared to $13.5 million for the three months ended June 30, 2023. The decrease of $1.4 million was primarily due to decreases in chemistry manufacturing and controls (“CMC”) expenses, clinical trial costs and other costs, partially offset by increases in personnel-related expenses and consulting and outside services expenses. CMC costs decreased by $1.9 million due to completion of certain registration batch manufacturing activities in 2023. Clinical trials expenses decreased by $0.4 million due to decreased expenses for completed Phase 1 clinical trials, partially offset by increased expenses for the Phase 2/3 clinical trial due to increased enrollment and activities. Other expenses decreased by $0.1 million, including rent, utilities, and information technology expenses. These decreases were partially offset by an increase of $0.5 million in consulting and outside services to support our clinical trial and research activities and an increase of $0.5 million in personnel-related costs due to increased research and development headcount, higher bonuses based on target performance achievement, and stock-based compensation expense. During the three months ended June 30, 2024, a total reimbursement of $0.5 million of operating expenses was recognized related to our funding arrangements.
Current wording
Research and development expenses were $8.3 million for the three months ended September 30, 2024 compared to $14.4 million for the three months ended September 30, 2023. The decrease of $6.1 million was primarily due to decreases in clinical trial costs, personnel-related expenses, preclinical and research study expenses, consulting and outside services and other costs, partially offset by increases in chemistry manufacturing and controls (“CMC”) expenses. Clinical trials expenses decreased by $4.3 million primarily as a result of the termination of our EBO-301 trial. Personnel-related expenses decreased by $1.2 million primarily as a result of our restructuring activities. Preclinical and research study expenses decreased by $0.8 million primarily due to the timing of non-dilutive funding expense offsets and reprioritization of certain research programs. Other costs decreased by $0.3 million and consulting and outside services decreased by $0.1 million. These decreases were partially offset by an increase of $0.6 million in CMC costs due to increased CMC activities related to the Chagas and melioidosis programs, partially offset by lower costs due to completion of certain intermediate and registration batch manufacturing activities in 2023. During the three months ended September 30, 2024, a total reimbursement of $1.1 million of operating expenses was recognized related to our funding arrangements. During the three months ended September 30, 2023, a total of $0.4 million reimbursement of operating expenses was recognized related to our funding arrangements, primarily related to CMC activities and research studies.
Previous wording
General and administrative expenses were $3.7 million for the three months ended June 30, 2024 compared to $3.0 million for the three months ended June 30, 2023. The increase of $0.7 million was primarily attributable to a $0.4 million increase in professional and outside services, a $0.3 million increase in personnel-related costs primarily related to higher salaries, higher bonuses based on target performance achievement, and stock-based compensation expense.
Current wording
General and administrative expenses were $3.5 million for the three months ended September 30, 2024 compared to $3.8 million for the three months ended September 30, 2023. The decrease of $0.3 million was primarily attributable to a $0.3 million decrease in professional services expenses.
Previous wording
Other income, net was $3.1 million for the six months ended June 30, 2024 compared to $1.5 million for the six months ended June 30, 2023. The increase of $1.6 million was due to higher interest rates and higher cash, cash equivalents, and investment balances in 2024 as compared to 2023.
Current wording
Other income, net was $1.3 million for the three months ended September 30, 2024 compared to $1.5 million for the three months ended September 30, 2023. The decrease of $0.2 million was due to lower cash, cash equivalents, and investment balances in 2024 as compared to 2023.
Previous wording
Other income, net was $1.4 million for the three months ended June 30, 2024 compared to $0.8 million for the three months ended June 30, 2023. The increase of $0.6 million was due to higher interest rates and higher cash, cash equivalents, and investment balances in 2024 as compared to 2023.
Current wording
Other income, net was $4.4 million for the nine months ended September 30, 2024 compared to $3.0 million for the nine months ended September 30, 2023. The increase of $1.4 million was due to higher interest rates and higher cash, cash equivalents, and investment balances in 2024 as compared to 2023.
Previous wording
We have incurred net losses since our inception. For the six months ended June 30, 2024 and 2023, we had net losses of $31.1 million and $31.1 million, respectively, and we expect to incur substantial additional losses in future periods. As of June 30, 2024, we had an accumulated deficit of $185.5 million. As of June 30, 2024, we had cash, cash equivalents, and investments of $104.5 million. Based on our current business plan, we believe that our available cash will be sufficient to fund our planned operations for at least 12 months following the date of this Form 10-Q.
Current wording
We have incurred net losses since our inception. For the nine months ended September 30, 2024 and 2023, we had net losses of $43.8 million and $47.8 million, respectively, and we expect to incur substantial additional losses in future periods. As of September 30, 2024, we had an accumulated deficit of $198.3 million. As of September 30, 2024, we had cash, cash equivalents, and investments of $93.4 million. Based on our current business plan, we believe that our available cash will be sufficient to fund our planned operations for at least 12 months following the date of this Form 10-Q.
Previous wording
Net cash used in operating activities was $32.0 million for the six months ended June 30, 2024, which consisted of a net loss of $31.1 million, primarily due to the use of funds to develop our initial drug product candidate, and a net decrease of $3.6 million in our net operating assets and liabilities, partially offset by $2.7 million in non-cash charges. The net decrease in our operating assets and liabilities was primarily due to an increase in accrued liabilities, accounts payable, and other current liabilities and a decrease in prepaid expenses and other assets. The non-cash charges consisted of stock-based compensation expense of $4.7 million, partially offset by net accretion of discounts on investments of $2.0 million.
Current wording
Net cash used in operating activities was $44.0 million for the nine months ended September 30, 2024, which consisted of a net loss of $43.8 million, primarily due to the use of funds to develop our initial drug product candidate, and a net decrease of $4.0 million in our net operating assets and liabilities, partially offset by $3.8 million in non-cash charges. The net decrease in our operating assets and liabilities was primarily due to a decrease in accrued liabilities, accrued compensation, and accounts payable, and an increase in other current liabilities. The non-cash charges consisted of stock-based compensation expense of $6.5 million, partially offset by net accretion of discounts on investments of $2.7 million.
Previous wording
Net cash used in operating activities was $24.4 million for the six months ended June 30, 2023, which consisted of a net loss of $31.1 million, due to the use of funds to develop our initial drug product candidate, offset by a net decrease of $3.6 million in our net operating assets and liabilities and $3.1 million in non-cash charges. The net decrease in our operating assets and liabilities was primarily due to an increase of $4.0 million in accounts payable, accrued compensation and accrued liabilities due to an increase in accrued research and development expenses, partially offset by an increase of $0.4 million in prepaid expenses. The non-cash charges consisted of stock-based compensation expense of $4.0 million, partially offset by net accretion of discounts on investments of $0.9 million.
Current wording
Net cash used in operating activities was $36.2 million for the nine months ended September 30, 2023, which consisted of a net loss of $47.8 million, due to the use of funds to develop our initial drug product candidate, partially offset by a net decrease of $6.9 million in our net operating assets and liabilities and $4.7 million in non-cash charges. The net decrease in our operating assets and liabilities was primarily due to an increase in accrued liabilities, accounts payable and other current liabilities. The non-cash charges consisted of stock-based compensation expense of $6.2 million, partially offset by net accretion of discounts on investments of $1.5 million.
Previous wording
Net cash provided by investing activities was $42.8 million for the six months ended June 30, 2024, which primarily consisted of $55.3 million in proceeds from the maturity of investments, partially offset by $12.6 million in purchases of investments.
Current wording
Net cash provided by investing activities was $61.5 million for the nine months ended September 30, 2024, which primarily consisted of $83.8 million in proceeds from the maturity of investments, partially offset by $22.3 million in purchases of investments.
Previous wording
Net cash provided by investing activities was $18.8 million for the six months ended June 30, 2023, which primarily consisted of $45.9 million in proceeds from the maturity of investments, partially offset by $27.1 million in purchases of investments.
Current wording
Net cash used in investing activities was $43.7 million for the nine months ended September 30, 2023, which primarily consisted of $112.3 million in purchases of investments, partially offset by $68.6 million in proceeds from the maturity of investments.
Previous wording
Net cash provided by financing activities was $0.3 million for the six months ended June 30, 2024, which consisted of $0.1 million in proceeds from the issuance of common stock under the employee stock purchase plan and $0.2 million from the exercise of stock options.
Current wording
Net cash provided by financing activities was $0.4 million for the nine months ended September 30, 2024, which consisted of $0.2 million in proceeds from the issuance of common stock under the employee stock purchase plan and $0.2 million from the exercise of stock options.
Previous wording
Net cash provided by financing activities was $19.3 million for the six months ended June 30, 2023, which consisted of $19.1 million in net proceeds from issuance of common stock under the ATM Offering, and $0.2 million in proceeds from the issuance of common stock under the employee stock purchase plan.
Current wording
Net cash provided by financing activities was $85.3 million for the nine months ended September 30, 2023, which consisted of $65.8 million in net proceeds from issuance of common stock under the Underwritten Offering, $19.1 million in net proceeds from issuance of common stock under the ATM Offering, $0.4 million in proceeds from the issuance of common stock under the employee stock purchase plan and exercise of stock options.