Praxis Precision Medicines Inc

Previous wording

You should read the following discussion and analysis of our financial condition and results of operations together with our condensed consolidated financial statements and related notes appearing elsewhere in this Quarterly Report on Form 10-Q and the audited financial information and the notes thereto included in our Annual Report on Form 10-K, which was filed with the Securities and Exchange Commission (the "SEC") on March 5, 2024. Some of the information contained in this discussion and analysis or set forth elsewhere in this Quarterly Report on Form 10-Q, including information with respect to our plans and strategy for our business and related financing, includes forward-looking statements that involve risks and uncertainties. As a result of many factors, including those factors set forth in the “Risk Factors” sections of our Annual Report on Form 10-K for the year ended December 31, 2023, our actual results could differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis.

Current wording

You should read the following discussion and analysis of our financial condition and results of operations together with our condensed consolidated financial statements and related notes appearing elsewhere in this Quarterly Report on Form 10-Q and the audited financial information and the notes thereto included in our Annual Report on Form 10-K, which was filed with the Securities and Exchange Commission (the "SEC") on March 5, 2024. Some of the information contained in this discussion and analysis or set forth elsewhere in this Quarterly Report on Form 10-Q, including information with respect to our plans and strategy for our business and related financing, includes forward-looking statements that involve risks and uncertainties. As a result of many factors, including those factors set forth in the “Risk Factors” section of our Annual Report on Form 10-K for the year ended December 31, 2023, our actual results could differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis.

Previous wording

Our platforms utilize a deliberate, pragmatic and patient-guided approach, leveraging a suite of translational tools, including novel transgenic and predictive translational animal models and electrophysiology markers, to enable an efficient path to proof-of-concept in patients. Through this approach, we have established a diversified, multimodal CNS portfolio with four clinical-stage product candidates across movement disorders and epilepsy. For our most advanced product candidate under the Cerebrum™ platform, ulixacaltamide (formerly known as PRAX-944), we expect to announce topline results from the Phase 3 Essential3 clinical trials in essential tremor, or ET, in the second half of 2024. Within our PRAX-628 program, we announced positive results from our Phase 2a Photo-Paroxysmal Response study in the first quarter of 2024 and plan to initiate the first of two efficacy studies of PRAX-628 in focal onset seizures in the second half of 2024, with topline results expected in 2025. We plan to initiate a second PRAX-628 efficacy study in focal onset seizures in the first half of 2025, with topline results expected in the first half of 2026. Our PRAX-562 Phase 2 EMBOLD study was initiated in the first quarter of 2023, with cohorts in SCN2A-DEE and SCN8A-DEE; topline results are expected for both cohorts in the third quarter of 2024. For our most advanced product candidate under the Solidus™ platform, elsunersen (formerly known as PRAX-222), we shared results from Part 1 of the EMBRAVE study in the fourth quarter of 2023, and are currently completing multiple global regulatory interactions in anticipation of starting the pivotal phase of the program later in 2024.

Current wording

Our platforms utilize a deliberate, pragmatic and patient-guided approach, leveraging a suite of translational tools, including novel transgenic and predictive translational animal models and electrophysiology markers, to enable an efficient path to proof-of-concept in patients. Through this approach, we have established a diversified, multimodal CNS portfolio with four clinical-stage product candidates across movement disorders and epilepsy. For our most advanced product candidate under the Cerebrum™ platform, ulixacaltamide (formerly known as PRAX-944), our Phase 3 Essential3 clinical trials in essential tremor, or ET, are ongoing. We are planning to conduct an interim analysis in the fourth quarter of 2024, with topline results anticipated shortly thereafter. Within our PRAX-628 program, we announced positive results from our Photo-Paroxysmal Response ("PPR") study in the first quarter of 2024, and plan to initiate four studies to generate patient eligibility, efficacy, safety and pharmacokinetics (PK) data for the program. We plan to initiate an observational study of PRAX-628 in patients with epilepsy in the third quarter of 2024, as well as three efficacy studies. The first efficacy study will be an open label eight-week study in patients with focal onset seizures or generalized epilepsy to be initiated in the second half of 2024, with topline results expected in the first half of 2025. We also plan to initiate a double-blind, placebo-controlled, 12-week study in focal onset seizures in the fourth quarter of 2024, with topline results expected in the second half of 2025, and plan to initiate a third efficacy study in the first half of 2025. Our relutrigine (formerly known as PRAX-562) Phase 2 EMBOLD study was initiated in the first quarter of 2023, with two cohorts in SCN2A-DEE and SCN8A-DEE; topline results are expected for both cohorts in the third quarter of 2024. For our most advanced product candidate under the Solidus™ platform, elsunersen (formerly known as PRAX-222), we shared results from Part 1 of the EMBRAVE study in the fourth quarter of 2023, and have initiated the first arm of our global confirmatory study in Brazil. We are currently completing multiple global regulatory interactions to further expand the pivotal phase of the program later in 2024.

Previous wording

We are a development stage company and we have not generated any revenue from product sales, and do not expect to do so for several years, if at all. All of our product candidates are still in preclinical and clinical development. Our ability to generate product revenue sufficient to achieve profitability will depend heavily on the successful development and eventual commercialization of one or more of our product candidates, if approved. We have incurred recurring operating losses since inception, including a net loss of $39.6 million for the three months ended March 31, 2024. As of March 31, 2024, we had an accumulated deficit of $693.5 million. We expect to incur significant expenses and operating losses for the foreseeable future as we expand our research and development activities. In addition, our losses from operations may fluctuate significantly from quarter-to-quarter and year-to-year, depending on the timing of our clinical trials and our expenditures on other research and development activities. We anticipate that our expenses will be maintained or increased in connection with our ongoing activities, as we:

Current wording

We are a development stage company and we have not generated any revenue from product sales, and do not expect to do so for several years, if at all. All of our product candidates are still in preclinical and clinical development. Our ability to generate product revenue sufficient to achieve profitability will depend heavily on the successful development and eventual commercialization of one or more of our product candidates, if approved. We have incurred recurring operating losses since inception, including a net loss of $72.2 million for the six months ended June 30, 2024. As of June 30, 2024, we had an accumulated deficit of $726.2 million. We expect to incur significant expenses and operating losses for the foreseeable future as we expand our research and development activities. In addition, our losses from operations may fluctuate significantly from quarter-to-quarter and year-to-year, depending on the timing of our clinical trials and our expenditures on other research and development activities. We anticipate that our expenses will be maintained or increased in connection with our ongoing activities, as we:

Previous wording

As of March 31, 2024, we had cash, cash equivalents and marketable securities of $243.3 million. We expect that our cash, cash equivalents, and marketable securities as of March 31, 2024, together with proceeds from our follow-on public offering in April 2024. will be sufficient to fund our operating expenditures and capital expenditure requirements necessary to advance our research efforts and clinical trials into 2027. The analysis included consideration of our current financial needs and ongoing research and development plans. We have based this estimate on assumptions that may provide to be wrong, and we could exhaust our available capital resources sooner than we expect. See “—Liquidity and Capital Resources.”

Current wording

As of June 30, 2024, we had cash, cash equivalents and marketable securities of $433.8 million. We expect that our cash, cash equivalents and marketable securities as of June 30, 2024 will be sufficient to fund our operating expenditures and capital expenditure requirements necessary to advance our research efforts and clinical trials into 2027. The analysis included consideration of our current financial needs and ongoing research and development plans. We have based this estimate on assumptions that may provide to be wrong, and we could exhaust our available capital resources sooner than we expect. See “—Liquidity and Capital Resources.”

Previous wording

We have not generated any revenue from the sale of products since inception and do not expect to generate any revenue from the sale of products for several years, if at all. As discussed in Note 7 to our condensed consolidated financial statements, we entered into an Option and License Agreement, or the Collaboration Agreement, with UCB Biopharma SRL, or UCB, in December 2022. We recognized $0.4 million of collaboration revenue from the Collaboration Agreement during the three months ended March 31, 2024.

Current wording

We have not generated any revenue from the sale of products since inception and do not expect to generate any revenue from the sale of products for several years, if at all. As discussed in Note 7 to our condensed consolidated financial statements, we entered into an Option and License Agreement, or the Collaboration Agreement, with UCB Biopharma SRL, or UCB, in December 2022. We recognized $0.4 million and $0.8 million, respectively, of collaboration revenue from the Collaboration Agreement during the three and six months ended June 30, 2024, compared to $0.8 million and $1.5 million, respectively, during the three and six months ended June 30, 2023.

Previous wording

Since our inception, we have not recorded any U.S. federal or state income tax benefits for the net losses we have incurred in each year or for our earned research and development tax credits due to our uncertainty of realizing a benefit from those items. Income taxes are determined at the applicable tax rates adjusted for non-deductible expenses, research and development tax credits and other permanent differences. Our income tax provision may be significantly affected by changes to our estimates. There was no income tax provision recognized for the three months ended March 31, 2024 and 2023.

Current wording

Since our inception, we have not recorded any U.S. federal or state income tax benefits for the net losses we have incurred in each year or for our earned research and development tax credits due to our uncertainty of realizing a benefit from those items. Income taxes are determined at the applicable tax rates adjusted for non-deductible expenses, research and development tax credits and other permanent differences. Our income tax provision may be significantly affected by changes to our estimates. There was no income tax provision recognized for the three and six months ended June 30, 2024 and 2023.

Previous wording

The $0.3 million decrease in collaboration revenue is associated with a decrease in the revenue recorded under the Collaboration Agreement with UCB that was executed in December 2022. Changes in revenue recognized each period reflect timing of research services provided and costs incurred.

Current wording

The $0.4 million decrease in collaboration revenue is associated with a decrease in the revenue recorded under the Collaboration Agreement with UCB that was executed in December 2022. Changes in revenue recognized each period reflect timing of research services provided and costs incurred.

Previous wording

The $1.5 million increase in research and development expenses was primarily attributable to the following:

Current wording

The $1.6 million increase in research and development expenses was primarily attributable to the following:

Previous wording

•$1.7 million increase in expense related to our Cerebrum™ platform, driven primarily by:

Current wording

•$8.1 million increase in expense related to our Cerebrum™ platform, driven primarily by:

Previous wording

◦a $5.2 million increase in spend for our ulixacaltamide program due to Essential3 study activity;

Current wording

◦a $8.6 million increase in spend for our ulixacaltamide program due to Essential3 study activity and Phase 1 trial spend, partially offset by prior year spend for our Essential1 study;

Previous wording

◦a $1.6 million decrease in spend for our PRAX-628 program due to prior year clinical-related spend;

Current wording

◦a $2.2 million decrease in PRAX-628 clinical-related spend due to prior year Phase 1 study activity;

Previous wording

◦a $1.0 million decrease in activities for our earlier stage assets due to prioritization of clinical-stage programs; and

Current wording

◦a $1.5 million decrease in activities for our earlier stage assets; and

Previous wording

◦a $0.7 million decrease in spend for our PRAX-562 program.

Current wording

◦a $0.3 million decrease in spend for our PRAX-562 program.

Previous wording

•$0.6 million decrease in indirect expenses, none of which were individually significant.

Current wording

•$0.4 million decrease in indirect expenses, none of which were individually significant.

Previous wording

The $2.0 million increase in general and administrative expenses was primarily attributable to the following:

Current wording

The $2.5 million increase in general and administrative expenses was primarily attributable to the following:

Previous wording

•$2.9 million increase in personnel-related costs mainly due to increased stock-based compensation expense; and

Current wording

•$3.7 million increase in personnel-related costs mainly due to increased stock-based compensation expense; and

Previous wording

To date, we have financed our operations primarily with proceeds from the issuance of redeemable convertible preferred stock and from the sale of common stock through an initial public offering, common stock and pre-funded warrants through follow-on public offerings and common stock from at-the-market offerings under our shelf registration statement. From inception through March 31, 2024, we have raised $785.3 million in aggregate cash proceeds from such transactions, net of issuance costs. As of March 31, 2024, we had cash and cash equivalents and marketable securities of $243.3 million.

Current wording

To date, we have financed our operations primarily with proceeds from the issuance of redeemable convertible preferred stock and from the sale of common stock through an initial public offering, common stock and pre-funded warrants through follow-on public offerings and common stock from at-the-market offerings under our shelf registration statement. From inception through June 30, 2024, we have raised $1.0 billion in aggregate cash proceeds from such transactions, net of issuance costs. As of June 30, 2024, we had cash, cash equivalents and marketable securities of $433.8 million.

Previous wording

On June 21, 2023, we completed a public offering of: (i) an aggregate of 4,296,646 shares of common stock at a public offering price of $14.25 per share, including the underwriters' full exercise of their option to purchase 619,979 additional shares of common stock, and (ii) pre-funded warrants to purchase 470,000 shares of common stock at a public offering price of $14.2485 per share. The purchase prices per share for each pre-funded warrant represents the per share offering price for the common stock, less the $0.0015 per share exercise price for each underlying share. Total net proceeds generated from the offering were approximately $63.4 million, after deducting underwriting discounts, commissions and other offering expenses payable by us.

Current wording

On June 21, 2023, we completed a public offering of: (i) an aggregate of 4,296,646 shares of common stock at a public offering price of $14.25 per share, including the underwriters' full exercise of their option to purchase 619,979 additional shares of common stock, and (ii) pre-funded warrants to purchase 470,000 shares of common stock at a public offering price of $14.2485 per share. The purchase prices per share for each pre-funded warrant represents the per share offering price for the common stock, less the $0.0015 per share exercise price for each underlying share. Total net proceeds generated from the offering were approximately $63.4 million, after deducting underwriting discounts, commissions and other offering expenses payable by us. As of June 30, 2024, all warrants associated with this offering were exercised on a cashless basis with no proceeds received by the Company.

Previous wording

On January 16, 2024, we completed a public offering of: (i) an aggregate of 3,802,025 shares of our common stock at a public offering price of $35.50 per share, including the underwriters' full exercise of their option to purchase 633,750 additional shares of common stock, and (ii) pre-funded warrants to purchase 1,056,725 shares of common stock at a public offering price of $35.4999 per share of common stock underlying the warrants. The purchase price per share of each pre-funded warrant represents the per share offering price for the common stock, less the $0.0001 per share exercise price of each underlying share. Total net proceeds generated from the offering were approximately $161.6 million, after deducting underwriting discounts, commissions and other offering expenses payable by us.

Current wording

On January 16, 2024, we completed a public offering of: (i) an aggregate of 3,802,025 shares of our common stock at a public offering price of $35.50 per share, including the underwriters' full exercise of their option to purchase 633,750 additional shares of common stock, and (ii) pre-funded warrants to purchase 1,056,725 shares of common stock at a public offering price of $35.4999 per share of common stock underlying the warrants. The purchase price per share of each pre-funded warrant represents the per share offering price for the common stock, less the $0.0001 per share exercise price of each underlying share. Total net proceeds generated from the offering were approximately $161.6 million, after deducting underwriting discounts, commissions and other offering expenses payable by us. As of June 30, 2024, 152,145 warrants associated with this offering were exercised on a cashless basis with no cash proceeds received by the Company.

Previous wording

In March 2024, we entered into an Open Market Sale Agreement, or the 2024 Sales Agreement, with Jefferies, to provide for the offering, issuance, and sale of up to an aggregate amount of $150.0 million of common stock in at-the-market offerings. During the three months ended March 31, 2024, we issued and sold an aggregate of 17,662 shares under the 2024 Sales Agreement for aggregate net proceeds of $0.9 million, after deducting commissions and offering expenses payable by us.

Current wording

In March 2024, we entered into an Open Market Sale Agreement, or the 2024 Sales Agreement, with Jefferies, to provide for the offering, issuance, and sale of up to an aggregate amount of $150.0 million of common stock in at-the-market offerings. During the six months ended June 30, 2024, we issued and sold an aggregate of 17,662 shares under the 2024 Sales Agreement for aggregate net proceeds of $0.9 million, after deducting commissions and offering expenses payable by us. We did not make any sales under the 2024 Sales Agreement during the three months ended June 30, 2024.

Previous wording

On April 2, 2024, we completed a public offering of: (i) an aggregate of 3,849,558 shares of our common stock at a public offering price of $56.50 per share, including the underwriters' full exercise of their option to purchase 530,973 additional shares of common stock, and (ii) pre-funded warrants to purchase 221,238 shares of common stock at a public offering price of $56.4999 per share of common stock underlying the warrants. The purchase price per share for each pre-funded warrant represents the per share offering price for the common stock, less the $0.0001 per share exercise price of each underlying share. Total net proceeds generated from the offering were approximately $215.8 million, after deducting underwriting discounts, commissions and other offering expenses payable by us.

Current wording

On April 2, 2024, we completed a public offering of: (i) an aggregate of 3,849,558 shares of our common stock at a public offering price of $56.50 per share, including the underwriters' full exercise of their option to purchase 530,973 additional shares of common stock, and (ii) pre-funded warrants to purchase 221,238 shares of common stock at a public offering price of $56.4999 per share of common stock underlying the warrants. The purchase price per share for each pre-funded warrant represents the per share offering price for the common stock, less the $0.0001 per share exercise price of each underlying share. Total net proceeds generated from the offering were approximately $216.0 million, after deducting underwriting discounts, commissions and other offering expenses payable by us.

Previous wording

During the three months ended March 31, 2024, net cash used in operating activities of $20.9 million was primarily due to our $39.6 million net loss, partially offset by $1.5 million in changes in operating assets and liabilities primarily related to an increase in accounts payable and $17.2 million of non-cash charges primarily related to stock-based compensation.

Current wording

During the six months ended June 30, 2024, net cash used in operating activities of $48.1 million was primarily due to our $72.2 million net loss, partially offset by $2.2 million in changes in operating assets and liabilities primarily related to increases in accounts payable and accrued expenses, and $21.9 million of non-cash charges primarily related to stock-based compensation.

Previous wording

During the three months ended March 31, 2023, net cash used in operating activities of $32.8 million was primarily due to our $37.5 million net loss and $3.3 million in changes in operating assets and liabilities primarily related to a decrease in accrued expenses, partially offset by $7.9 million of non-cash charges primarily related to stock-based compensation.

Current wording

During the six months ended June 30, 2023, net cash used in operating activities of $64.1 million was primarily due to our $71.8 million net loss and $6.3 million in changes in operating assets and liabilities primarily related to decreases in accrued expenses and accounts payable, partially offset by $14.0 million of non-cash charges primarily related to stock-based compensation.

Previous wording

During the three months ended March 31, 2024, net cash used in investing activities of $91.2 million was related to purchases of marketable securities.

Current wording

During the six months ended June 30, 2024, net cash used in investing activities of $287.1 million was primarily related to purchases of marketable securities partially offset by maturities of marketable securities.

Previous wording

During the three months ended March 31, 2023, net cash provided by investing activities of $34.0 million was related to maturities of marketable securities.

Current wording

During the six months ended June 30, 2023, net cash provided by investing activities of $39.0 million was related to maturities of marketable securities.

Previous wording

During the three months ended March 31, 2024, net cash provided by financing activities of $182.8 million consisted primarily of net proceeds from our January 2024 follow-on public offering, our at-the-market offerings and our collaboration and license agreement with Tenacia.

Current wording

During the six months ended June 30, 2024, net cash provided by financing activities of $399.1 million consisted primarily of net proceeds from our January 2024 and April 2024 follow-on public offerings, our at-the-market offerings and our collaboration and license agreement with Tenacia.

Previous wording

During the three months ended March 31, 2023, net cash provided by financing activities of $18.1 million consisted of net proceeds from at-the-market offerings.

Current wording

During the six months ended June 30, 2023, net cash provided by financing activities of $87.7 million consisted primarily of net proceeds from at-the-market offerings and our June 2023 follow-on public offering.

Previous wording

We are unable to estimate the exact amount of our working capital requirements, but based on our current operating plan, we believe that our cash, cash equivalents, and marketable securities as of March 31, 2024, together with proceeds from our April 2024 public offering, will be sufficient to fund our operating expenses and capital expenditure requirements into 2027. However, we have based this estimate on assumptions that may prove to be wrong and we could exhaust our capital resources sooner than we expect.

Current wording

We are unable to estimate the exact amount of our working capital requirements, but based on our current operating plan, we believe that our cash, cash equivalents, and marketable securities as of June 30, 2024 will be sufficient to fund our operating expenses and capital expenditure requirements into 2027. However, we have based this estimate on assumptions that may prove to be wrong and we could exhaust our capital resources sooner than we expect.