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$APLT
·
10-Q
Applied Therapeutics, Inc. · Aug 13, 5:25 PM ET
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Applied Therapeutics, Inc. 10-Q
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Contents
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1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Operations and Business
Risks and Uncertainties
Use of Estimates
Significant Accounting Policies
Recent Accounting Pronouncements
2. LICENSE AGREEMENT
Columbia University
3. FAIR VALUE MEASUREMENTS
4. PREPAID EXPENSES AND OTHER CURRENT ASSETS
5. ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES
6. STOCK‑BASED COMPENSATION
Equity Incentive Plans
7. STOCKHOLDERS’ EQUITY
As of June 30, 2025, and December 31, 2024, the authorized capital stock of the Company consisted of 250,000,000 shares of common stock, par value $0.0001 per share and 10,000,000 shares of preferred stock, par value $0.0001 per share.
Common Stock
8. WARRANTS
Warrants Issued with June 2022 Offering
Warrants Issued with March 2024 Private Placement
9. LEASES
10. INCOME TAXES
11. BENEFIT PLANS
The Company established a defined contribution savings plan under Section 401(k) of the Internal Revenue Code in 2018. This plan covers substantially all employees who meet minimum age and service requirements and allows participants to defer a portion of their annual compensation on a pre‑tax basis. Matching contributions to the plan may be made at the discretion of the Company’s Board. The Company made approximately $0.1 million and $0.4 million, respectively, in matching contributions to the plan during each of the three and six months ended June 30, 2025. The Company made approximately $0.2 million in matching contributions to the plan during each of the three and six months ended June 30, 2024.
12. NET LOSS PER COMMON SHARE
13. RELATED PARTIES
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
Overview
Components of Our Results of Operations
Results of Operations
Liquidity and Capital Resources
Contractual Obligations and Commitments
We lease certain assets under noncancelable operating leases, which expire through 2029. The leases relate primarily to office space. As of June 30, 2025, aggregate future minimum commitments under these office leases are $3.5 million through 2029, excluding any related common area maintenance charges and real estate taxes.
Critical Accounting Policies and Significant Judgments and Estimates
Off‑Balance Sheet Arrangements
Recently Issued Accounting Pronouncements
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
Item 4. Controls and Procedures.
Evaluation of Disclosure Controls and Procedures.
Previously Reported Material Weakness in Internal Control over Financial Reporting
Item 1. Legal Proceedings.
Item 1A. Risk Factors.
Risks Related to Our Financial Position and Capital Needs
Risks Related to the Development and Commercialization of Our Product Candidates
We received a Warning Letter from the FDA for our NDA filed in December 2023 for our AT-007-1002 study. Failure to resolve the matters addressed in the Warning Letter could negatively impact our company’s ability to undertake clinical trials in the future or timely complete future NDA submissions.
In November 2024, we received a Warning Letter from the FDA relating to our AT-007-1002 study. The letter identified issues related to electronic data capture and also referred to a dosing error in the dose-escalation phase of our study resulting in slightly lower levels than targeted in a limited number of patients. We responded to the Warning Letter in a timely manner and our response contained various remediation measures. We are closely working with our clinical team, consultants, and employees to develop and implement a plan that addresses FDA’s concerns. Such actions have and will continue to increase our expenses, and the extent of those costs is still unknown.
If we are unable to sufficiently establish to the FDA that current or future clinical trials conducted by us would be in accordance with FDA regulations, we may be subject to enforcement action by the FDA including being subject to the FDA’s Application Integrity Policy. This policy would require third-party validation of the integrity of the raw data underlying any of our future filings to the FDA before those filings would be accepted for consideration. Such a requirement would be onerous and require significant additional time and expense, including unforeseen costs, for the clinical development and potential approval of any product candidates that we are currently developing and may wish to develop in the future. These requirements would make it difficult for us to attempt to restart the development of any of our former product candidates or commence the development of any new product candidates. Further, we could be subject to additional actions from the FDA that may negatively impact our ability to enter into clinical trials or submit an NDA in the future.
We recently received a Complete Response Letter from the FDA for our NDA for govorestat (AT-007) for the treatment of Classic Galactosemia, one of our lead product candidates, and we are currently evaluating our development program for Classic Galactosemia and SORD Deficiency, and do not currently know if govorestat will ever receive regulatory approval for any indication, which is necessary before it can be commercialized.
If we do not receive regulatory approval for govorestat (AT-007) for the treatment of Classic Galactosemia or SORD Deficiency or any other indication and we are not able to commercialize govorestat, we may not generate revenue for several years, if at all, and we may never generate sufficient revenue to achieve and sustain profitability. We need approval from the FDA prior to marketing our product candidates in the U.S. In December 2023, we submitted our first NDA to the FDA seeking approval for govorestat. In February 2024, the FDA accepted the filing of the NDA and the NDA was granted Priority Review status. In November 2024, the FDA issued a Complete Response Letter for the NDA. The Complete Response Letter indicates that the FDA completed its review of the application and determined that is unable to approve the NDA in its current form, citing deficiencies in the clinical application and failure to reach statistical significance on primary endpoints. Following receipt of the Complete Response Letter, we also withdrew the
MAA to the EMA for govorestat for the treatment of Classic Galactosemia, as we believed more time was needed to acquire further data to support a European MAA. We are in the planning stages of determining our next steps with respect to our govorestat development program. Further clinical development of govorestat for any indications may require us to complete additional and more extensive clinical trials, which will be costly and time consuming. The amount and timing of the increased costs related to our clinical trials is difficult to predict due to the uncertainty inherent in the timing of clinical trial initiations, the rate of patient enrollment and the detailed design of future trials. If we continue our clinical development program for govorestat, we may not obtain necessary approvals from the FDA even if our trials demonstrate favorable results. The data we collect from any additional clinical trials may not demonstrate sufficient safety and efficacy to support regulatory approval of govorestat in which case we would experience potentially significant delays in, or be required to abandon, development of that product candidate. If we continue our clinical development program for govorestat, we will have fewer resources to devote to the research and development of our other product candidates and development stage programs. If we decide to terminate any further development of govorestat, we will be dependent upon the success of our other product candidates in our pipeline or other compounds we may in-license and the size of the potential markets for such other product candidates may not be as significant as the potential markets for govorestat, and we may not be able to monetize it.
Our other indications and development stage programs are in various stages of development. In light of recent regulatory developments, we will be closely examining the ongoing SORD Deficiency clinical development program and will continue to work with the FDA on the data needed to support an appropriate regulatory pathway for the drug, including ongoing work to provide the FDA with support for the potential use of the accelerated approval pathway for govorestat for the treatment of SORD Deficiency. We plan to meet with the FDA to discuss whether an NDA can be submitted based on the current data package and/or potential additional supporting data. However, there is no guarantee that the FDA will agree with this strategy, and the agency may require additional costly preclinical or clinical trials to support an NDA. There is also the risk that these additional trials will not be successful.
Risks Related to Regulatory Compliance
We expect that these and other healthcare reform measures that may be adopted in the future may result in more rigorous coverage criteria and in additional downward pressure on the price that we receive for any approved drug, which could have an adverse effect on demand for our product candidates if they are approved. Any reduction in
reimbursement from Medicare or other government programs may result in a similar reduction in payments from private payors. The implementation of cost containment measures or other healthcare reforms may prevent us from being able to generate revenue, attain profitability or commercialize our product candidates.
Risks Related to Our Dependence on Third Parties
One of our clinical investigators received a warning letter from the FDA following a site inspection. Failure to resolve the matters addressed in the warning letter and any similar issues at other clinical trial sites could negatively impact the continuance of our govorestat clinical program, our ability to rely on the data collected in our clinical trials for regulatory submissions and approval, and our ability to undertake clinical trials in the future or timely complete future NDA submissions.
In November 2024, one of our clinical investigators received a warning letter (the "Clinical Investigator Warning Letter") from the FDA relating to our AT-007-1002 study, following a site inspection in April 2024. The inspection was conducted as a part of the FDA’s Bioresearch Monitoring Program. The Clinical Investigator Warning Letter identified issues with the clinical investigator’s compliance with the FDA requirements and regulations governing clinical investigations. Specifically, the Clinical Investigator Warning Letter cited deviations from the investigational plan. If we are unable to sufficiently establish to the FDA that our current or future clinical trials are and will be conducted in accordance with FDA requirements, Applied (and our clinical investigators) may be subject to additional FDA enforcement action including being subject to the FDA’s Application Integrity Policy. For more information on the Warning Letter we received from the FDA and the implications of being subject to the FDA’s Application Integrity Policy, please see “Risks Related to Our Operations, Employee Matters and Managing Growth – We received a Warning Letter from the FDA for our NDA filed in December 2023 for our AT-007-1002 study. Failure to resolve the matters addressed in the Warning Letter could negatively impact our company’s ability to undertake clinical trials in the future or timely complete future NDA submissions.”
Risks Related to Our Intellectual Property
Risks Related to Our Business Operations, Employee Matters and Managing Growth
Risks Related to Ownership of Our Common Stock
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Item 3. Defaults Upon Senior Securities.
Item 4. Mine Safety Disclosures.
Item 5. Other Information.
Item 6. Exhibits.
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