Transcode Therapeutics, Inc. SEC 10-Q Report

Transcode Therapeutics, Inc., a biotechnology company focused on developing RNA-based therapeutics for oncology, has released its Form 10-Q report for the quarter ended September 30, 2024. The report provides a comprehensive overview of the company's financial performance, clinical progress, strategic initiatives, and the challenges it faces as it advances its therapeutic candidates through clinical trials.

Financial Highlights

• Net Loss: $(2.3) million for the three months ended September 30, 2024, reflecting ongoing operating expenses without revenue generation.
• Net Loss: $(10.8) million for the nine months ended September 30, 2024, indicating continued investment in research and development activities.
• Net Loss Per Share: $(0.16) for the three months ended September 30, 2024, compared to $(48.44) for the same period in 2023, due to an increase in the number of shares outstanding.
• Net Loss Per Share: $(1.21) for the nine months ended September 30, 2024, compared to $(273.66) for the same period in 2023, reflecting the impact of share issuances.

Business Highlights

• Phase 0 Clinical Trial Results: Transcode Therapeutics completed a Phase 0 clinical trial for its lead therapeutic candidate, TTX-MC138, which demonstrated delivery to metastatic lesions in patients with advanced solid tumors. Preliminary data showed significant inhibition of the molecular target miRNA-10b and accumulation in metastatic tumors, with no adverse reactions reported.
• Phase 1 Clinical Trial Initiation: Following encouraging results from the Phase 0 trial, Transcode received FDA approval to proceed with a Phase I/II clinical trial for TTX-MC138. The trial commenced in the third quarter of 2024, focusing on dose-escalation and dose-expansion in patients with advanced solid tumors.
• SBIR Awards: Transcode received a Direct to Phase II SBIR Award from the National Cancer Institute to support IND-enabling and clinical trial activities for TTX-MC138, totaling nearly $2 million over two years. This funding is intended to advance the clinical development of the company's lead candidate.
• Platform Delivery Focus: Transcode is leveraging its TTX delivery platform to develop targeted RNA-based therapeutics for oncology, with a focus on overcoming delivery challenges faced by existing lipid and liposomal nanoparticle platforms.
• Pipeline Development: In addition to TTX-MC138, Transcode is advancing other preclinical programs, including TTX-siPDL1, TTX-RIGA, TTX-CRISPR, and TTX-mRNA, which are designed to utilize the TTX delivery mechanism for improved cancer treatment outcomes.
• Future Outlook: Transcode plans to continue the development of its therapeutic candidates and explore strategic partnerships. The company aims to secure additional funding to support ongoing operations and clinical trials, with a focus on advancing its lead candidate, TTX-MC138, through the clinical pipeline.

Strategic Initiatives

• Strategic Focus: Transcode Therapeutics, Inc. is focused on advancing its lead therapeutic candidate, TTX-MC138, through clinical trials. The company has initiated a Phase I/II clinical trial following promising results from a Phase 0 trial. Additionally, Transcode is exploring strategic partnerships and has received a Direct to Phase II SBIR Award from the National Cancer Institute to support clinical trial activities. The company is also pursuing the development of other therapeutic candidates, including TTX-siPDL1 and TTX-RIGA, as part of its broader oncology platform strategy.
• Capital Management: Transcode has been actively managing its capital through various equity offerings. In 2024, the company raised approximately $6.1 million through a registered direct offering and $2.4 million through a public offering. The company has also issued warrants in connection with these offerings. As of September 30, 2024, Transcode had approximately $1.9 million in cash and plans to continue raising additional capital through sales of equity or debt to fund its operations. The company has not declared or paid any dividends and has effected a reverse stock split to maintain compliance with Nasdaq listing requirements.
• Future Outlook: Transcode anticipates continued operating losses as it advances its clinical programs and seeks additional funding to support its operations. The company plans to leverage its recent NIH Award to further its clinical trial activities and is exploring additional non-dilutive funding opportunities. Transcode is also focused on regaining compliance with Nasdaq listing requirements and is considering strategic cost reduction measures if necessary. The company aims to achieve sustainable growth through successful clinical development and strategic partnerships.

Challenges and Risks

• Financial Challenges: The company faces significant financial challenges, with cash reserves of approximately $1.9 million as of September 30, 2024, which are expected to fund operations only into late 2024. This raises substantial doubt about the company's ability to continue as a going concern. The company is actively seeking additional capital, but there is no assurance that such funding will be available on acceptable terms. Failure to secure additional funding could lead to significant delays, scaling back, or discontinuation of development programs.
• Operational Restructuring: The company is dealing with operational restructuring, including a reduction in headcount from 19 employees at the end of 2022 to 8 employees by September 30, 2024. This restructuring is part of efforts to streamline operations and reduce expenses, but it may impact the company's ability to execute its business strategy effectively.
• Market Risks: The company is exposed to market risks related to interest rate changes and foreign currency exchange rate fluctuations, particularly with the Euro. Although a 5% change in the Euro exchange rate is not expected to have a material effect on operations, the company has not entered into any hedging contracts to mitigate this risk. As the business develops, foreign currency fluctuations could have a more significant impact on results.
• Regulatory Risks: The company is at risk of losing its Nasdaq listing due to non-compliance with several Nasdaq Listing Rules, including the Bid Price Rule, Equity Rule, and Shareholder Approval Rule. The company has been granted a formal extension to regain compliance, but failure to do so could result in delisting, making the stock less liquid and adversely affecting its value. Delisting would also materially limit the company's ability to raise additional equity capital.
• Going Concern Risks: The company has identified conditions that raise substantial doubt about its ability to continue operations in the near term. It may need to seek an in-court or out-of-court restructuring of its liabilities, which could result in a total loss of investment for holders of common stock and other securities.
• Financial Position and Capital Needs: The company is also facing challenges related to its financial position and the need to raise additional capital. If unable to secure sufficient funds, the company may be forced to amend, delay, limit, reduce, or terminate its development programs and operations. This financial uncertainty is compounded by the potential impact of global economic and political developments, such as conflicts in Ukraine and the Middle East, and the ongoing effects of the COVID-19 pandemic, which could disrupt operations and adversely affect financial conditions.

SEC Filing: Transcode Therapeutics, Inc. [ RNAZ ] - 10-Q - Nov. 14, 2024