WOBURN, MASSACHUSETTS — Frequency Therapeutics, Inc. (Nasdaq: FREQ), a clinical-stage biotechnology company focused on harnessing the body’s innate biology to repair or reverse damage caused by a broad range of degenerative diseases, has announced business updates and financial results for the third quarter ending September 30, 2019.
“This has been a tremendously productive period for Frequency as we commenced our Phase 2a study, received Fast Track designation for FX-322, and completed key financings that we believe will enable us to advance our hearing program and further diversify our portfolio as we apply our progenitor cell activation platform in numerous disease areas. We have opened all U.S. sites for our Phase 2a study of FX-322 and remain on track to report top-line data in the second half of next year. We believe FX-322 has the potential to be a restorative, disease-modifying treatment for the millions of patients with hearing loss, with the aim of improving hearing function, including speech intelligibility. We also continue to advance our multiple sclerosis development efforts and remain focused on moving our remyelination program into the clinic in the second half of 2021.”
–Frequency Therapeutics CEO, David Lucchino
Recent Business Highlights:
- Initiation of FX-322 Phase 2a Study for Sensorineural Hearing Loss (October 2019): The Phase 2a clinical trial is a multi-center, randomized, double-blind, placebo-controlled, single- and repeat-dose study of FX-322, expected to enroll approximately 96 adults aged 18 to 65 with stable sensorineural hearing loss at 12 sites in the U.S. Patients will be randomized to one of four groups, each of which will receive four injections, once per week, at weekly intervals starting at the initial visit. The key efficacy endpoints of this trial are word recognition (WR), words-in-noise (WIN), and standard pure tone audiometry. Exploratory efficacy endpoints are extended high frequency pure tone audiometry, the Tinnitus Functional Index (TFI), and the Hearing Handicap Inventory in Adults (HHIA).
- FX-322 Fast Track Designation (October 2019): The United States Food and Drug Administration (FDA) granted Fast Track designation for FX-322. This designation is intended to facilitate development of new therapies for serious conditions with unmet medical need, expedite review, and enable more frequent engagement between the Company and the FDA regarding study planning and design.
- Completion of Initial Public Offering (October 2019): Frequency completed an initial public offering of 6,325,000 shares of common stock, which included the partial exercise of the underwriters’ over-allotment option for 325,000 shares, at the offering price of $14.00 per share for total gross proceeds of approximately $88.6 million, before deducting underwriting discounts and commissions and other offering expenses. Frequency common stock began trading on the Nasdaq Global Select Market on October 3, 2019 under the ticker symbol “FREQ.” J.P. Morgan, Goldman Sachs and Cowen were joint book-running managers for the offering.
- Presentation of FX-322 Phase 1/2 Data (September 2019): At the American Academy of Otolyrangology – Head and Neck Surgery annual meeting, Frequency presented data from the Phase 1/2 study of FX-322 in which a statistically significant and clinically meaningful improvement in key measures of hearing loss, including clarity of sound and word understanding, was observed. In addition, FX-322 was observed to be well-tolerated with no serious adverse effects. The Company also presented preclinical and clinical data from the Phase 1/2 study at the 2nd Annual International Symposium on Inner Ear Therapeutics (ISIET) in Hanover, Germany in November.
- Strengthened Leadership Team (August 2019): Frequency expanded its leadership team with the addition of Dana Hilt, M.D., as Chief Medical Officer, William Chin, M.D. as head of Clinical and Translational Science; Jason Glashow as head of Corporate Affairs; Jeff Hrkach, Ph.D., as head of Technology Development; and Michael Bookman as Deputy General Counsel.
- Completion of Crossover Financing (July 2019): The Company completed a $62 million private financing led by Perceptive Advisors and a syndicate that included Deerfield Management, RTW Investments, and Mizuho Securities Principal Investment.
- License and Collaboration Agreement with Astellas (July 2019): Frequency entered into a license and collaboration agreement with Astellas Pharma, Inc. (Astellas) for FX-322. Frequency received an $80 million upfront payment with the potential of up to $545 million in future milestone payments as well as double-digit royalties. Astellas obtained the exclusive rights to develop and commercialize FX-322 in ex-U.S. markets; Frequency retains U.S. rights.
Third Quarter 2019 Financial Results
Cash Position: Cash, cash equivalents and short-term marketable securities at September 30, 2019 were $165.3 million, as compared to $42.2 million at December 31, 2018. Cash, cash equivalents and short-term marketable securities at September 30, 2019 do not include the net proceeds of the Company’s initial public offering, $79.2 million, which closed in October 2019. Based on its current plans, the Company expects its existing cash, cash equivalents and short-term marketable securities, including the proceeds from its October initial public offering, will be sufficient to fund its operations into 2022.
Revenue: Revenue was $24.2 million for the third quarter of 2019. The Company had no revenue in the comparable period of 2018. In accordance with the Company’s revenue recognition policy, the $80.0 million upfront payment received from Astellas under the license and collaboration agreement in July 2019 is being recognized as revenue over the period from the execution of the agreement until Frequency meets its obligation to complete a Phase 2a clinical trial for FX-322.
Royalties: Royalty expense was $16.0 million for the third quarter of 2019, representing the royalty to the Massachusetts Institute of Technology on the $80 million upfront payment from Astellas.
Research & Development Expenses: Research and development expenses were $5.2 million for the third quarter of 2019 as compared to $3.5 million for the third quarter of 2018. The increase of $1.7 million was primarily due to increased costs related to the Company’s lead product candidate, FX-322, including external development costs as the Company prepared to commence a Phase 2a clinical trial 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.
General and Administrative Expenses: General and administrative expenses were $4.3 million for the third quarter of 2019 as compared to $1.5 million for the third quarter of 2018. The increase of $2.8 million 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 increased cost for consulting and professional fees.
Net Loss: Net loss was $0.6 million for the third quarter of 2019 as compared to $5.1 million for the third quarter of 2018. The decrease of $4.5 million was primarily due to the impact of recognizing $24.2 million of revenue under the Astellas license and collaboration agreement which was partially offset by the $16.0 million royalty expense and increases in research and development and general and administrative expenses.
About Frequency Therapeutics
Frequency Therapeutics is a leader in the development of medicines designed to activate progenitor cells within the body to treat degenerative diseases. The Company’s progenitor cell activation (PCA) approach stimulates progenitor cells to create functional tissue with the aim of developing disease modifying therapies. The Company’s lead product candidate, FX-322, is designed to regenerate auditory hair cells to restore hearing function. In a FX-322 Phase 1/2 study, statistically significant and clinically meaningful improvements in key measures of hearing function in patients with sensorineural hearing loss were observed. The Company also is evaluating additional diseases where its PCA approach could create functional tissue, including a development program in multiple sclerosis.
Headquartered in Woburn, Mass., Frequency has a license and collaboration agreement with Astellas Pharma Inc. for FX-322, for which it retains U.S. rights, as well as additional collaboration agreements with academic and nonprofit research organizations including The Scripps Research Institute, Massachusetts Eye and Ear, and the Massachusetts Institute of Technology.
Source: Frequency Therapeutics