Frequency Therapeutics Provides Business Updates and Q3 2021 Financial Results

November 20, 2021

LEXINGTON, MASSACHUSSETTS — Frequency Therapeutics, Inc. (Nasdaq: FREQ), a clinical-stage regenerative medicine company focused on developing therapeutics to activate a person’s innate regenerative potential to restore function, has announced business updates and financial results for the third quarter ended September 30, 2021.

“Frequency has made significant operational progress throughout this year, highlighted by the initiation of a Phase 2b study (FX-322-208) of FX-322, our lead program for sensorineural hearing loss (SNHL). We have designed this study following careful analysis of multiple completed FX-322 exploratory clinical studies, and through this work, we’ve increased our understanding of the specific patient etiologies and severities where hearing benefits were observed. We have also reached alignment with the U.S. Food and Drug Administration (FDA) on speech perception as the primary efficacy endpoint that we believe helps de-risk future development activities,” said David L. Lucchino, Frequency’s Chief Executive Officer.

“At our recent R&D event, we detailed results from our completed FX-322 clinical studies, showing all of the data demonstrating a clear signal of clinical benefit in a significant segment of individuals with SNHL. We also showed how the breadth of our clinical efforts informed the inclusion criteria of our ongoing FX-322-208 Phase 2b study. Furthermore, we were excited to introduce two new research programs, the first a pre-clinical development candidate to treat SNHL that can reach deeper into the cochlea and which may provide the opportunity to treat different patient populations. The second is a novel candidate for remyelination in MS that has shown significant remyelinating effect in vivo and has the potential to provide a highly differentiated offering compared to currently approved MS treatments.”

–David L. Lucchino, Frequency CEO


FX-322 Clinical Study Overview and Recent Corporate Highlights


FX-322-208 Phase 2b Study in Acquired SNHL: In October, Frequency announced that the first subject was dosed in a new Phase 2b study of acquired SNHL. FX-322-208 is a randomized, placebo-controlled, multi-center study designed to evaluate the impact of a single administration of FX-322 on speech perception in approximately 124 subjects with SNHL.

The study’s primary endpoint is speech perception, a measure of sound clarity and understanding speech. FX-322-208 will include subjects with hearing loss associated with either noise-induced or sudden SNHL. The FDA, in a recent Type-C meeting with the company, agreed that speech perception is an acceptable primary efficacy endpoint.

A variety of other listening tests, including multiple measures of speech perception and pure tone thresholds, will also be assessed. Based on learnings from prior studies, extensive study design elements have been included in FX-322-208 to mitigate potential bias and help ensure the consistency of baseline hearing assessments.

Since 2018, Frequency has run exploratory learning studies with the aim of determining the optimal patient populations where FX-322 may restore lost hearing. Given the diversity of etiologies and severities and the heterogeneity of hearing loss, this comprehensive approach was utilized to narrow in on the target population for further development. Data from these studies has enabled Frequency to design the FX-322-208 study inclusive of the hearing loss etiologies and severities where speech perception improvements were observed in prior FX-322 clinical studies.

To date, 169 individuals have been dosed with FX-322 across previous studies and no drug-related serious adverse events have been reported. The company is also planning in Q4 2021 to report data from its FX-322-113 Phase 1b study in subjects with severe SNHL.


Introduction of FX-345, a Second Sensory Hair Cell Regeneration Program for SNHL: In November, Frequency announced a new, highly potent, investigational therapeutic candidate for SNHL called FX-345. Pharmacokinetic measures and human modeling data suggest that administration of FX-345 can result in therapeutically active drug levels in a larger portion of the cochlea, which would enable Frequency to explore the potential for a hearing restoration therapeutic that could address a broad set of hearing loss severities and etiologies.

FX-345 is a combination of two small molecules, including a more potent GSK3 inhibitor. An investigational new drug (IND) application for FX-345 is anticipated in Q2 2022.


Pre-clinical Program for Remyelination in Multiple Sclerosis: In November, Frequency also announced a discovery effort to remyelinate neurons in the central nervous system to treat MS. The company has identified a new biological target relevant to myelination, and demonstrated that modulation of this target drives robust oligodendrocyte differentiation and expression of myelin proteins in vitro.

Frequency developed multiple novel chemical entities that induce robust remyelination in vivo, including FREQ-162, which is its most advanced compound to date. A single dose of FREQ-162 induces robust increases in oligodendrocyte differentiation throughout the brain and significant remyelination in extensively demyelinated, aged mice. The Company is progressing these assets in dose range finding studies and IND-enabling toxicology studies in order to advance the program into clinical trials. FREQ-162 is one of several compounds Frequency has discovered that show potent remyelination activity. Remyelination is believed to slow or even reverse progression of disability in MS patients.


November 9 R&D Event: Frequency hosted an investor event on November 9, where management and key opinion leaders reviewed detailed FX-322 clinical study results and discussed the design of the ongoing FX-322-208 Phase 2b study. Management also presented research findings for FX-345 and its remyelination program. An archived replay of the webcast is available on the Investors & Media section of the Frequency Therapeutics website.


Third Quarter 2021 Financial Results


Cash Position: Cash, cash equivalents and marketable securities as of September 30, 2021 were $160.5 million (excluding restricted cash), as compared to $220.3 million as of December 31, 2020. Based on current plans and assumptions, the company expects its existing cash, cash equivalents and marketable securities will be sufficient to fund its operations into late 2023. This guidance does not include potential future milestones which could be received from Astellas for continued FX-322 development.

Revenue: Revenue was $14.1 million for the nine months ending September 30, 2021 compared to $27.0 million in the comparable period of 2020. The company had no revenue in the three months ending September 30, 2021 compared to $11.2 million in the comparable period of 2020.

Research & Development Expenses: Research and development expenses were $15.7 million and $48.2 million for the three and nine month periods ending September 30, 2021, respectively, as compared to $10.2 million and $25.6 million for the comparable periods of 2020. The increase was due to increased costs related to the company’s lead product candidate, FX-322, including external development costs related to the company’s ongoing trials for FX-322, as well as increased personnel-related costs due to additional headcount to support the growth of Frequency’s research and development organization. Excluding stock-based compensation expense of $2.8 million and $7.4 million for the three and nine months ending September 30, 2021, research and development expenses for the three and nine months ending September 30, 2021 were $12.9 million and $40.8 million, respectively.

General and Administrative Expenses: General and administrative expenses were $9.3 million and $28.6 million for the three and nine months ending September 30, 2021, respectively, as compared to $6.5 million and $18.7 million for the comparable periods of 2020. The increase was primarily due to an increase in personnel-related costs, including stock-based compensation, for additional headcount required to support the growth of the Company as well as costs associated with being a public company, primarily comprised of professional fees. Excluding stock-based compensation expense of $3.1 million and $9.2 million for the three and nine months ending September 30, 2021, general and administrative expenses for the three and nine months ending September 30, 2021 were $6.2 million and $19.4 million, respectively.

Net Loss: Net loss was $25.2 million and $63.2 million for the three and nine months ending September 30, 2021, as compared to $5.3 million and $16.3 million for the comparable periods of 2020. The increase in net loss reflects the increase in research and development costs associated with the growth of Frequency’s research and development organization as well as the increase in general and administrative expenses required to support the growth of Frequency as a public company.


About Frequency Therapeutics

Frequency Therapeutics is leading a new category in regenerative medicine that aims to restore function – first in hearing loss and then in multiple sclerosis– by developing therapeutics that activate a person’s innate regenerative potential within the body through the activation of progenitor cells. Frequency’s hearing research focuses on cochlear restoration and auditory repair, and its lead asset, FX-322, is a small-molecule product candidate that is the first to show statistically significant and clinically meaningful hearing improvements in clinical trials for sensorineural hearing loss. Frequency is also following early restorative signals in MS to develop medicines with the same underlying regenerative science being brought to hearing loss.

Headquartered in Lexington, Mass., Frequency has an ex-U.S. license and collaboration agreement with Astellas Pharma Inc. for FX-322, as well as additional collaboration and licensing agreements with academic and nonprofit research organizations including Massachusetts Eye and Ear, Mass General Brigham, the Massachusetts Institute of Technology, the Scripps Research Institute and Cambridge Enterprises Limited.


Source: Frequency Therapeutics

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