S-1/A: TransCode Therapeutics Announces Reverse Stock Split and Public Offering to Bolster Oncology Pipeline

TransCode Therapeutics implements a 1-for-40 reverse stock split and launches a public offering of common stock and warrants to advance its oncology-focused RNA therapeutic platform.

Summary

• TransCode Therapeutics has announced a 1-for-40 reverse stock split of its common stock, effective January 16, 2024.
• The company is offering up to 1,500,000 shares of common stock along with warrants to purchase an equal number of shares, or pre-funded warrants as an alternative.
• Each share or pre-funded warrant is offered with a common stock purchase warrant to buy one share of common stock.
• The assumed public offering price is $5.00 per share and accompanying warrant, based on the January 12, 2024, closing price adjusted for the reverse split.
• The offering will terminate on January 31, 2024, unless terminated earlier at the company's discretion.
• The company intends to use the net proceeds for product development activities, including clinical trials for TTX-MC138, and for working capital.
• The company is currently not in compliance with Nasdaq's stockholders' equity requirement and faces potential delisting if compliance is not regained.
• The company plans to file an IND application with the FDA in the first quarter of 2024 seeking approval to conduct a Phase 1/II clinical trial with TTX-MC138 in patients with advanced solid tumors.

Sentiment

Score: 4

Explanation: The document contains both positive and negative elements. The reverse stock split and public offering are aimed at improving the company's financial position, but the risk of delisting and the going concern warning are significant concerns. The potential of the TTX-MC138 program is a positive, but it is still in early stages.

Positives

• The company is planning to file an IND application with the FDA in the first quarter of 2024 seeking approval to conduct a Phase 1/II clinical trial with TTX-MC138 in patients with advanced solid tumors.
• The company has completed IND-enabling toxicity studies in support of the IND.
• The company has ongoing discussions with potential strategic partners involving a variety of our therapeutic candidates and hope to complete a partnering agreement with respect to one or more therapeutic candidates sometime in 2024.

Negatives

• The company is not in compliance with Nasdaq's stockholders' equity requirement and faces potential delisting if compliance is not regained.
• The company has identified conditions and events that raise substantial doubt about our ability to continue operations in the near-term and our independent registered public accounting firm has expressed substantial doubt about our ability to continue as a going concern.
• The company may need to seek an in-court or out-of-court restructuring of our liabilities, including potentially a bankruptcy proceeding, or to substantially reduce or totally cease our operations.

Risks

• The company's low cash position and need for additional capital to fund operations, research, development, clinical trials, and commercialization of products.
• The company's business is highly dependent on the success of TTX-MC138, its lead therapeutic candidate, which is at the early stages of development.
• A potential delisting of the company's common stock from trading on the Nasdaq Capital Market.
• The company's ability to continue as a going concern.
• The results and timing of the company's preclinical and clinical trial activities.
• The company's ability to expand its therapeutic candidate portfolio through internal research and development or the acquisition or in-licensing of intellectual property assets.
• The therapeutic benefits, effectiveness and safety of the company's therapeutic candidates.
• The company's ability to receive regulatory approval for its therapeutic candidates in the United States, Europe and other geographies.
• The expected regulatory approval pathway for the company's therapeutic candidates.
• Potential changes in regulatory requirements, and delays or negative outcomes from the regulatory approval process.
• The company's reliance on third-parties for the planning, conduct and monitoring of clinical trials, for the manufacture of clinical drug supplies and drug product and for other requirements.
• The company's estimates of the size and characteristics of the markets that may be addressed by its therapeutic candidates.
• Market acceptance of the company's therapeutic candidates that are approved for marketing in the United States or other countries.
• The company's ability to successfully manufacture and commercialize its therapeutic candidates.
• The safety and efficacy of therapeutics marketed by the company's competitors that are targeted to indications which its therapeutic candidates have been developed to treat.
• The company's ability to utilize its proprietary technological approach to develop and commercialize its therapeutic candidates.
• The company's heavy dependence on licensed intellectual property, including its ability to source and maintain licenses from third-party owners.
• The company's ability to protect its intellectual property and operate its business without infringing the intellectual property rights of others.
• The company's ability to attract, retain and motivate key personnel.
• The company's ability to generate revenue and become profitable.
• The company's reliance on third-party manufacturers to manufacture and release its drug substance and drug product that meets with its designated specifications.
• The company's dependance on contract research organizations and other institutions to manage its clinical trials.
• The company's ability to initiate and complete its clinical trials.
• Potential collaborations to license and commercialize any therapeutic candidates for which the company receives regulatory approval in the future in or outside of the United States.
• Clinical development involves a lengthy; complex and expensive process; with an uncertain outcome, and the results of preclinical studies, manufacturing, and early-stage clinical trials of the company's therapeutic candidates may not be predictive of the results of later-stage clinical trials.
• The company may incur additional costs or experience delays in completing, or ultimately be unable to complete, the development, manufacturing and commercialization of TTX-MC138 or any of its other therapeutic candidates.
• Quality problems could delay or prevent delivery of the company's materials for clinical trials or to the market.
• Changes in methods of therapeutic candidate manufacturing or formulation may result in additional costs or delays.
• The company's therapeutic candidates may cause undesirable side effects or death or have other properties that could halt their clinical development, prevent their regulatory approval, limit their commercial potential or result in significant negative consequences.
• If the company is unable to advance its therapeutic candidates to clinical development, obtain regulatory approval and ultimately commercialize its therapeutic candidates or if it experiences significant delays in doing so, its business will be materially harmed.
• The company expects to rely on third-parties to manufacture and supply materials it requires for research and development, preclinical studies and clinical trials which could result in supplies that are limited or interrupted or which may not be of satisfactory quantity or quality or other delays or disruptions.
• Ongoing healthcare legislative and regulatory reform measures may have a material adverse effect on the company's business and results of operations.
• The company faces substantial competition, which may result in others discovering, developing or commercializing products before or more successfully than it does.
• The price of the company's common stock may be volatile and fluctuate substantially, which could result in substantial losses for purchasers of its common stock.
• The company has broad discretion in the use of the net proceeds from this offering and may not use them effectively.
• Investors may incur dilution in the net tangible book value of the shares purchased in the offering.
• The company has identified material weaknesses in its internal control over financial reporting. If it is unable to remediate these material weaknesses, or if it identifies additional material weaknesses in the future or otherwise fails to maintain an effective system of internal controls, it may not be able to accurately or timely report its financial condition or results of operations, which may adversely affect its business and the trading price of its common stock.

Future Outlook

The company plans to file an IND application with the FDA in the first quarter of 2024 seeking approval to conduct a Phase 1/II clinical trial with TTX-MC138 in patients with advanced solid tumors.

Industry Context

The global metastatic cancer treatment market is expected to reach $136.9 billion by 2032 (July 6, 2023 /PRNewswire/ Allied Market Research report, titled, Metastatic Cancer Drugs Market).

Comparison to Industry Standards

• The company faces competition from major biotechnology and biopharmaceutical companies, specialty biotechnology and biopharmaceutical companies, and other biotechnology and biopharmaceutical companies worldwide.
• Companies that we are aware of with targeted therapeutics in the treatment of various cancers include Ionis, Moderna, Alnylam, BioNTech, Dicerna, Siranomics, among others which have therapeutic candidates in various stages of preclinical and clinical developments.
• Arrowhead Pharmaceuticals is a clinical stage company with a pipeline of investigational RNAi therapeutics.
• The company knows of no other companies currently in clinical development with miRNA therapeutics targeting metastatic disease.

Management Changes

Stakeholder Impact

• Shareholders may experience dilution due to the public offering.
• Shareholders face the risk of a decline in stock price due to market volatility and potential delisting.
• Employees may be affected by the restructuring and potential future cost reduction strategies.
• The company's ability to develop and commercialize its therapeutic candidates could impact patients with cancer.

Next Steps

• The company plans to file an IND application with the FDA in the first quarter of 2024 seeking approval to conduct a Phase 1/II clinical trial with TTX-MC138 in patients with advanced solid tumors.
• The company has ongoing discussions with potential strategic partners involving a variety of our therapeutic candidates and hope to complete a partnering agreement with respect to one or more therapeutic candidates sometime in 2024.

Key Dates

Keywords

reverse stock split, public offering, oncology, RNA therapeutics, TTX-MC138, clinical trials, FDA, warrants, stockholders equity, delisting, metastatic cancer, biotechnology