Axcella Health Inc.

For the third quarter and nine months ended September 30, 2022, research and development expense was $13.3 million and $43.7 million, up from $10.1 million and $30.7 million in the comparable 2021 periods, driven mainly by initiation of the long COVID and EMMPACT trials. General and administrative expense was $3.9 million and $12.3 million, down from $4.8 million and $14 million, largely due to lower non-cash stock-based compensation. Net loss was $17.8 million, or $0.34 per share, for Q3 and $58.2 million, or $1.19 per share, for the first nine months, versus $15.6 million, or $0.41 per share, and $46.7 million, or $1.23 per share, a year earlier. Cash and marketable securities were about $25.4 million at September 30, 2022, versus $55 million at December 31, 2021. The company raised approximately $34.2 million in a registered direct financing, including $6 million from cancellation of indebtedness tied to conversion of promissory notes, and said current cash is sufficient to meet operating needs into 2023. On guidance, management said long COVID regulatory feedback from the MHRA is expected this year and the company hopes to advance the clinical program in the near term next year; for NASH, enrollment is continuing and still projected to close in 2023.

Bill Hinshaw framed the quarter as a period of major clinical progress, emphasizing positive top-line data in long COVID and encouraging interim results in NASH. He repeatedly described AXA1125 as a differentiated, multi-targeted asset with strong safety, and said the company sees it as positioned for complex diseases such as long COVID and NASH. His tone was upbeat and confident, especially around the size of the long COVID opportunity and the potential to broaden the pipeline.

Bob Crane focused on liquidity and the financing. He said Axcella ended the quarter with about $25.4 million in cash and marketable securities, then raised approximately $34.2 million on October 13, including $6 million from debt cancellation related to Flagship Pioneering notes. He said the financing strengthens the balance sheet and that cash should fund operating needs into 2023. He also detailed the quarterly expense mix: R&D rose to $13.3 million from $10.1 million and G&A fell to $3.9 million from $4.8 million, while net loss widened year over year to $17.8 million from $15.6 million.

Analysts asked about the regulatory path for long COVID, the primary endpoint for a Phase 3 study, NASH enrollment timing, financing strategy, and the Type 2 diabetes subgroup in NASH. Management said it does not usually comment in detail on regulatory interactions, but confirmed initial MHRA engagement and expects to communicate feedback this year. On endpoints, the company said it plans to carry forward fatigue and a physical-function measure, but the six-minute walk test is unlikely to remain because it may not reflect patient experience. On funding, management said it is considering collaborators, investors, and other strategic options, while saying it is well positioned to execute the next long COVID trial. For NASH, management said enrollment is continuing well and still expected to close in 2023; it also said the Type 2 diabetes subgroup results were consistent with the overall trial so far and remain a potential differentiator.