Eloxx Pharmaceuticals, Inc. [ELOX] Filings

10-Q 1 elox-20220930.htm 10-Q 10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2022

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number: 001-31326

ELOXX PHARMACEUTICALS, INC.

(Exact name of registrant as specified in its charter)

Delaware

84-1368850

(State or other jurisdiction of
incorporation or organization)

(I.R.S. Employer
Identification Number)

480 Arsenal Way

Watertown, Massachusetts 02472

(Address of principal executive offices) (Zip Code)

781-577-5300

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Securities Exchange Act of 1934:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $0.01 par value per share	ELOX	The Nasdaq Capital Market

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer	☐	Accelerated filer	☐

Non-accelerated filer	☒	Smaller reporting company	☒

		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

On November 8, 2022, the registrant had 86,656,221 shares of common stock, $0.01 par value per share, outstanding.

ELOXX PHARMACEUTICALS, INC.

TABLE OF CONTENTS


		Page
	Special Note Regarding Forward-Looking Statements	3

	Market and Industry Data	4


	Risk Factor Summary	5

	PART I. FINANCIAL INFORMATION	6

Item 1.	Condensed Consolidated Financial Statements (unaudited)	6

	Balance Sheets as of September 30, 2022 and December 31, 2021	6

	Statements of Operations for the Three and Nine Months ended September 30, 2022 and 2021	7

	Statements of Cash Flows for the Nine Months ended September 30, 2022 and 2021	8

	Statements of Stockholders’ (Deficit) Equity for the Three and Nine Months ended September 30, 2022 and 2021	9

	Notes to Financial Statements	11

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	21

Item 3.	Quantitative and Qualitative Disclosures about Market Risk	27

Item 4.	Controls and Procedures	27

	PART II. OTHER INFORMATION	28

Item 1.	Legal Proceedings	28

Item 1A.	Risk Factors	28

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	60

Item 3.	Defaults Upon Senior Securities	60

Item 4.	Mine Safety Data	60

Item 5.	Other Information	60

Item 6.	Exhibits	61

	SIGNATURES	63

Special Note Regarding Forward-Looking Statements

Eloxx Pharmaceuticals, Inc., together with its subsidiaries, is collectively referred to herein as “we,” “our,” “us,” “Eloxx” or the “Company”. Hyperlinks and web addresses are provided as a convenience and for informational purposes only. Eloxx bears no responsibility for the security or content of external websites.

This Quarterly Report on Form 10-Q, and information incorporated herein, contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. We intend such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in Section 27A of the Securities Act of 1933, as amended (the “Securities Act”) and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). All statements other than statements of present and historical facts contained in this Quarterly Report on Form 10-Q, including without limitation statements regarding our strategy, future operations, future financial position, future revenues, projected costs, prospects, plans and objectives of management, are forward-looking statements. Without limiting the foregoing, in some cases, you can identify forward-looking statements by terms such as “aim,” “may,” “will,” “would,” “should,” “expect,” “exploring,” “plan,” “anticipate,” “could,” “intend,” “target,” “project,” “contemplate,” “believe,” “estimate,” “predict,” “potential,” “seeks,” or “continue” or the negative of these terms or other similar expressions, although not all forward-looking statements contain these words. No forward-looking statement is a guarantee of future results, performance, or achievements, and one should avoid placing undue reliance on such statements.

Forward-looking statements are based on our management’s beliefs and assumptions and on information currently available to us. Such beliefs and assumptions may or may not prove to be correct. Additionally, such forward-looking statements are subject to a number of known and unknown risks, uncertainties and assumptions, and actual results may differ materially from those expressed or implied in the forward-looking statements due to various factors, including, but not limited to:

•

risks related to our ability to obtain the capital necessary to fund our operations;

•

risks related to our dependence on our lead product candidate, ELX-02 and our ability to progress any product candidates in preclinical or clinical trials;

•

risks related to our ability to obtain adequate financing in the future through product licensing, grants, public or private equity or debt financing or otherwise;

•

the length and expense of preclinical and clinical trial development, the uncertainty of clinical trial results and the fact that positive results from preclinical studies are not always indicative of positive clinical results;

•

risks related to the scope, rate and progress of our preclinical studies and clinical trials and other research and development activities;

•

risks related to the competition for patient enrollment from drug candidates in development;

•

the impact of the global COVID-19 pandemic on our clinical trials, operations, vendors, suppliers and employees;

•

risks related to regulatory approvals and other requirements applicable to our product candidates;

•

risks relating to the cost of filing, prosecuting, defending and enforcing any patent claims and other intellectual property rights;

•

general business conditions, regulatory environment, competition and market for our products;

•

business abilities and judgment of personnel, and the availability of qualified personnel; and

•

those identified in Part I, Item 2. “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” Part II, Item 1A. “Risk Factors” in this Quarterly Report on Form 10-Q and Part II, Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations of our Annual Report on Form 10-K for the fiscal year ended December 31, 2021 (the “2021 Annual Report”).

Moreover, we operate in an evolving environment. New risk factors and uncertainties may emerge from time to time, and it is not possible for management to predict all risks and uncertainties.

Although we believe the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, level of activity, performance or achievements. You should not rely upon forward-looking statements as predictions of future events. All forward-looking statements speak only as of the date of this Quarterly Report on Form 10-Q.

Unless required by law, we will not undertake and we specifically disclaim any obligation to release publicly the result of any revisions which may be made to any forward-looking statements to reflect events or circumstances after the date of such statements or to reflect the occurrence of events, whether or not anticipated. In that respect, we wish to caution readers not to place undue reliance on any such forward-looking statements, which speak only as of the date they are made.

MARKET AND INDUSTRY DATA

This Quarterly Report on Form 10-Q and the other documents incorporated herein by reference include statistical and other industry and market data that we obtained from industry publications and research, surveys and studies conducted by third parties. Industry publications and third-party research, surveys and studies generally indicate that their information has been obtained from sources believed to be reliable, although they do not guarantee the accuracy or completeness of such information. While we believe these industry publications and third-party research, surveys and studies are reliable, we have not independently verified such data and disclaim responsibility for its content.

RISK FACTOR SUMMARY

The following is a summary of the principal risks of an investment in our common stock. This summary does not list all the risks that we face. Additional discussion of the risks summarized below follow directly under the heading “Risk Factors” and should be carefully considered, together with other information in our 2021 Annual Report and our other filings with the SEC before making an investment decision regarding our common stock.

•

We are heavily dependent on the success of our lead product candidate, ELX-02. If ELX-02 does not achieve positive results during development or suffers any material development delays, it may adversely impact the commercial viability of ELX-02 and our business.

•

We will need substantial additional funding by the end of the first half of 2023. If we are unable to raise capital when needed, we would be forced to delay, reduce, or eliminate our product development programs or commercialization efforts.

•

Preclinical and clinical drug development is a lengthy and expensive process, with an uncertain outcome. Our preclinical and clinical programs may experience delays or may never advance, which would adversely affect ability to further advance clinical development, obtain regulatory approvals or commercialize our product candidates on a timely basis or at all, which could have an adverse effect on our business.

•

We and our collaborating partners may be subject, directly or indirectly, to federal and state healthcare fraud and abuse and false claims laws and regulations. If we or our collaborating partners are unable to comply, or have not fully complied, with such laws, we could face substantial penalties.

•

Our product candidates, including ELX-02, may cause adverse events or have other properties that could delay or prevent their regulatory approval or limit the scope of any approved label or market acceptance.

•

Even though we have received orphan drug designation from the FDA for ELX-02 for the treatment of cystic fibrosis, cystinosis, MPS I, and Rett syndrome, we may not be able to maintain the benefits of orphan drug designation or obtain orphan drug marketing exclusivity for ELX-02 or any of our other product candidates for Alport syndrome or other indications.

•

A Fast Track Designation by the FDA, even if granted for any of our product candidates, may not lead to a faster development or regulatory review or approval process, and does not increase the likelihood that our product candidates will receive marketing approval.

•

We may find it difficult to recruit and enroll patients in our clinical trials, which could cause significant delays in the completion of such trials or may cause us to abandon one or more clinical trials.

•

If we are unable to develop and commercialize our product candidates, our business will be adversely affected.

•

We have incurred significant operating losses since our inception and anticipate that we will continue to incur substantial operating losses for the foreseeable future. We may never achieve or maintain profitability.

•

Our recurring losses from operations raise substantial doubt regarding our ability to continue as a going concern.

•

If we fail to adequately protect or enforce our intellectual property rights or secure rights to third party patents, the value of our intellectual property rights would diminish, and our business, competitive position and results of operations would suffer.

•

If we infringe the rights of third parties, we could be prevented from selling products, forced to pay damages and required to defend against litigation which could result in substantial costs and may have a material adverse effect on our business, results of operations and financial condition.

•

Maintaining and improving our financial controls and the requirements of being a public company may strain our resources, divert management’s attention and affect our ability to attract and retain qualified board members.

•

Our ability to use our net operating losses to offset future taxable income may be subject to certain limitations.

•

Our stock price may be volatile, and purchasers of our common stock could incur substantial losses.

PART I. FINANCIAL INFORMATION

Item 1. Condensed Consolidated Financial Information

ELOXX PHARMACEUTICALS, INC. AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except share and per share data)


	September 30, 2022			December 31, 2021
ASSETS
Current assets:
Cash and cash equivalents	$	24,554		$	42,268
Restricted cash		263			299
Prepaid expenses and other current assets		854			913
Total current assets		25,671			43,480
Property and equipment, net		215			216
Operating lease right-of-use asset		993			1,443
Total assets	$	26,879		$	45,139

LIABILITIES AND STOCKHOLDERS’ (DEFICIT) EQUITY
Current liabilities:
Accounts payable	$	1,595		$	1,379
Accrued expenses		4,518			4,196
Current portion of long-term debt		2,530			—
Advances from collaboration partners		12,223			3,723
Derivative liabilities		116			—
Current portion of operating lease liability		698			657
Total current liabilities		21,680			9,955
Long-term debt, net of current portion		9,863			11,996
Operating lease liability		318			804
Total liabilities		31,861			22,755
Commitments and contingencies
Stockholders’ (deficit) equity:
Preferred stock, $0.01 par value per share, 5,000,000 shares authorized, no shares issued or outstanding as of September 30, 2022 and December 31, 2021		—			—
Common stock, $0.01 par value per share, 500,000,000 shares authorized, 87,077,587 and 87,071,324 shares issued and 86,656,221 and 86,649,958 shares outstanding as of September 30, 2022 and December 31, 2021, respectively		871			871
Common stock in treasury, at cost, 421,366 shares as of both September 30, 2022 and December 31, 2021		(2,190	)		(2,190	)
Additional paid-in capital		264,406			262,026
Accumulated deficit		(268,069	)		(238,323	)
Total stockholders’ (deficit) equity		(4,982	)		22,384
Total liabilities and stockholders’ (deficit) equity	$	26,879		$	45,139

See accompanying notes to unaudited condensed consolidated financial statements

ELOXX PHARMACEUTICALS, INC. AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except share and per share data)


	Three Months Ended September 30,						Nine Months Ended September 30,
	2022			2021			2022			2021
Operating expenses:
Research and development	$	4,880		$	5,210		$	20,430		$	14,987
General and administrative		2,262			5,035			7,961			16,731
In process research and development		—			—			—			22,670
Total operating expenses		7,142			10,245			28,391			54,388
Loss from operations		(7,142	)		(10,245	)		(28,391	)		(54,388	)
Other expense (income), net		366			(360	)		1,355			249
Net loss	$	(7,508	)	$	(9,885	)	$	(29,746	)	$	(54,637	)

Net loss per share, basic and diluted	$	(0.09	)	$	(0.11	)	$	(0.34	)	$	(0.85	)
Weighted average number of shares of common stock used in computing net loss per share, basic and diluted		86,656,221			86,208,754			86,653,811			64,428,187

See accompanying notes to unaudited condensed consolidated financial statements

ELOXX PHARMACEUTICALS, INC. AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)


	Nine Months Ended September 30,
	2022			2021
Cash flows from operating activities:
Net loss	$	(29,746	)	$	(54,637	)
Adjustments to reconcile net loss to net cash used in operating activities:
Acquired in-process research and development		—			22,670
Stock-based compensation		2,380			7,567
Depreciation		67			86
Amortization of operating lease right-of-use asset		450			672
Amortization of debt discount		397			298
Loss on sales and disposals of property and equipment		—			84
Change in fair value of derivative liabilities		116			—
Gain on extinguishment of debt		—			(808	)
Loss on extinguishment of debt		—			268
Changes in operating assets and liabilities:
Prepaid expenses and other assets		59			631
Accounts payable		216			410
Accrued expenses		322			(649	)
Merger related costs paid		—			(1,003	)
Operating lease liabilities		(445	)		(659	)
Net cash used in operating activities		(26,184	)		(25,070	)
Cash flows from investing activities:
Purchases of property and equipment		(66	)		(69	)
Cash acquired in merger transaction		—			2,145
Net cash (used in) provided by investing activities		(66	)		2,076
Cash flows from financing activities:
Proceeds from advances from collaboration partners		8,500			2,918
Proceeds from underwritten public offerings, net of issuance costs		—			47,718
Proceeds from debt financing obligations		—			11,910
Repayment of term loan principal		—			(11,383	)
Payment for settlement of taxes upon vesting of restricted stock units		—			(238	)
Proceeds from exercises of stock options		—			23
Net cash provided by financing activities		8,500			50,948
(Decrease) Increase in cash, cash equivalents and restricted cash		(17,750	)		27,954
Cash, cash equivalents and restricted cash at the beginning of the period		42,567			24,724
Cash, cash equivalents and restricted cash at the end of the period	$	24,817		$	52,678

Reconciliation of cash, cash equivalents and restricted cash to condensed consolidated balance sheets:
Cash and cash equivalents	$	24,554		$	52,432
Restricted cash		263			246
Total cash, cash equivalents and restricted cash	$	24,817		$	52,678

Supplemental disclosure of cash flow activities:
Issuance of common stock in merger transaction	$	—		$	22,335
Cash paid for interest	$	968		$	415

See accompanying notes to unaudited condensed consolidated financial statements

ELOXX PHARMACEUTICALS, INC. AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ (DEFICIT) EQUITY

(in thousands, except share data)


	Common stock						Treasury stock
	Shares		Amount		Additional paid-in capital		Shares			Amount			Accumulated deficit			Total stockholders' (deficit) equity
Balance at December 31, 2021		86,649,958	$	871	$	262,026		(421,366	)	$	(2,190	)	$	(238,323	)	$	22,384
Vesting of restricted stock units		3,131		—		—		—			—			—			—
Stock-based compensation expense		—		—		922		—			—			—			922
Net loss		—		—		—		—			—			(11,620	)		(11,620	)
Balance at March 31, 2022		86,653,089	$	871	$	262,948		(421,366	)	$	(2,190	)	$	(249,943	)	$	11,686
Vesting of restricted stock units		3,132		—		—		—			—			—			—
Stock-based compensation expense		—		—		744		—			—			—			744
Net loss		—		—		—		—			—			(10,618	)		(10,618	)
Balance at June 30, 2022		86,656,221	$	871	$	263,692	$	(421,366	)	$	(2,190	)	$	(260,561	)	$	1,812
Stock-based compensation expense		—		—		714		—			—			—			714
Net loss		—		—		—		—			—			(7,508	)		(7,508	)
Balance at September 30, 2022		86,656,221	$	871	$	264,406		(421,366	)	$	(2,190	)	$	(268,069	)	$	(4,982	)

See accompanying notes to unaudited condensed consolidated financial statements

ELOXX PHARMACEUTICALS, INC. AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ (DEFICIT) EQUITY

(in thousands, except share data)


	Common stock						Treasury stock
	Shares		Amount		Additional paid-in capital		Shares			Amount			Accumulated deficit			Total stockholders' equity
Balance at December 31, 2020		40,157,187	$	404	$	183,250		(193,735	)	$	(1,828	)	$	(171,596	)	$	10,230
Vesting of restricted stock units		57,687		—		—		(23,883	)		(94	)		—			(94	)
Stock-based compensation expense		—		—		1,308		—			—			—			1,308
Net loss		—		—		—		—			—			(8,694	)		(8,694	)
Balance at March 31, 2021		40,214,874	$	404	$	184,558		(217,618	)	$	(1,922	)	$	(180,290	)	$	2,750

Eloxx Pharmaceuticals, Inc. [ELOX] Filings
10-Q	[2022-11-10]
10-Q	[2022-08-12]
10-Q	[2022-05-06]
10-K	[2022-03-30]
10-Q	[2021-11-08]
10-Q	[2021-08-16]
10-Q	[2021-05-07]
10-K	[2021-03-12]
10-Q	[2020-11-06]
10-Q	[2020-08-07]
10-Q	[2020-05-08]
10-K	[2020-03-06]
10-Q	[2019-11-06]
10-Q	[2019-08-07]
10-Q	[2019-05-09]
10-K	[2019-03-14]
10-Q	[2018-11-08]
10-Q	[2018-08-10]
10-Q	[2018-05-10]
10-K	[2018-03-16]
10-Q	[2017-11-14]
10-K	[2017-10-13]
10-Q	[2017-05-22]
10-Q	[2017-02-10]
10-Q	[2016-11-14]
10-K	[2016-10-13]
10-Q	[2016-05-12]
10-Q	[2016-02-16]
10-Q	[2015-11-16]
10-K	[2015-10-09]
S-1	[2015-10-09]
10-Q	[2015-05-14]
10-Q	[2015-02-17]
10-Q	[2014-11-14]
10-K	[2014-09-29]
10-Q	[2014-05-09]
10-Q	[2014-02-14]
10-Q	[2013-11-14]
S-1	[2013-10-17]
10-K	[2013-09-11]
S-1	[2013-07-17]
10-Q	[2013-05-15]
10-Q	[2013-02-14]
10-Q	[2012-11-14]
10-K	[2012-09-28]
10-Q	[2012-05-14]
10-Q	[2012-02-14]