Akouos, Inc. (NASDAQ: AKUS) is a precision genetic medicine company dedicated to developing gene therapies with the potential to restore, improve, and preserve high-acuity physiologic hearing for individuals living with disabling hearing loss worldwide. The company has built a proprietary platform that incorporates adeno-associated virus (AAV) variants and a novel delivery approach, positioning it at the forefront of the genetic medicine field targeting inner ear conditions.
Business Overview
Akouos was founded in 2016 and has since made significant strides in advancing its pipeline of product candidates. The company's lead program, AK-OTOF, is focused on the treatment of otoferlin gene (OTOF)-mediated hearing loss, a monogenic form of sensorineural hearing loss. In September 2022, Akouos received clearance from the U.S. Food and Drug Administration (FDA) for its investigational new drug (IND) application for AK-OTOF, paving the way for the initiation of a planned Phase 1/2 clinical trial.In addition to AK-OTOF, Akouos is developing AK-antiVEGF for the treatment of vestibular schwannoma, a tumor that can cause hearing loss. The company expects to submit an IND for AK-antiVEGF to the FDA in 2023. Beyond these lead programs, Akouos has a portfolio of earlier-stage programs targeting various inner ear conditions, leveraging its proprietary platform to address both monogenic and complex etiologies.
Akouos' approach to gene therapy is unique, as it involves the delivery of genetic material directly to the cochlea, the organ responsible for hearing. This novel delivery method, which the company is developing in-house, aims to overcome the challenges associated with traditional systemic administration of gene therapies. By targeting the inner ear, Akouos hopes to maximize the therapeutic potential of its product candidates while minimizing the risk of off-target effects.
Financials
Akouos' financial performance reflects the company's early-stage nature and its focus on research and development. For the fiscal year ended December 31, 2021, the company reported an annual net loss of $86.7 million, with no revenue generated. This loss was primarily driven by $61.8 million in research and development expenses and $16.1 million in general and administrative expenses.The company's annual operating cash flow for the same period was negative $63.7 million, and its annual free cash flow was negative $72.8 million. These negative cash flow figures are indicative of Akouos' ongoing investment in the development of its product candidates and the expansion of its platform capabilities.
As of September 30, 2022, Akouos had cash, cash equivalents, and marketable securities of $169.3 million, providing the company with a strong liquidity position to fund its operations and development activities. However, the company's high cash burn rate, with $58.1 million used in operating activities during the first nine months of 2022, suggests that Akouos will need to continue seeking additional funding to support its long-term growth.
Quarterly Performance
In the third quarter of 2022, Akouos reported a net loss of $19.8 million, compared to a net loss of $22.9 million in the same period of 2021. The decrease in net loss was primarily due to a $3.5 million reduction in research and development expenses, partially offset by a $0.8 million increase in general and administrative expenses.The company's research and development expenses for the third quarter of 2022 were $13.9 million, down from $17.4 million in the prior-year period. This decrease was mainly attributable to timing of manufacturing activities and a reduction in spending related to the development of Akouos' novel delivery approach.
General and administrative expenses for the third quarter of 2022 were $6.3 million, up from $5.5 million in the same quarter of 2021. The increase was primarily driven by a $0.9 million rise in personnel-related costs, including stock-based compensation.
Akouos' cash, cash equivalents, and marketable securities stood at $169.3 million as of September 30, 2022, compared to $234.0 million as of December 31, 2021. The decrease in the company's cash position was due to the $58.1 million used in operating activities during the first nine months of 2022, partially offset by $7.2 million in net proceeds from the company's at-the-market equity offering program. However, it should be noted that there appears to be a discrepancy in the reported figures, as the total decrease in cash position is not fully accounted for by the provided information.
Regulatory and Clinical Milestones
Akouos' key regulatory and clinical milestones include the recent clearance of its IND application for AK-OTOF by the FDA in September 2022. This milestone paves the way for the initiation of the company's planned Phase 1/2 clinical trial for AK-OTOF, which is expected to commence in the near future.Additionally, Akouos plans to submit an IND for its AK-antiVEGF program targeting vestibular schwannoma to the FDA in 2023. This will be a significant step forward in the development of the company's pipeline, as it aims to address another inner ear condition with a high unmet medical need.
Risks and Challenges
As an early-stage biotechnology company, Akouos faces several risks and challenges that are common in the industry. These include the inherent uncertainties of drug development, the potential for delays or failures in clinical trials, the need for substantial additional funding to support its operations, and the competitive landscape in the genetic medicine space.The company's reliance on its proprietary platform and novel delivery approach also introduces additional risks, as the successful translation of these technologies from preclinical to clinical development is not guaranteed. Regulatory hurdles, manufacturing complexities, and the potential for unexpected safety or efficacy issues could all impact Akouos' ability to advance its product candidates.
Furthermore, the company's limited operating history and lack of revenue-generating products add to the uncertainty surrounding its long-term prospects. Akouos will need to continue demonstrating the viability of its approach and the potential of its pipeline to attract the necessary funding and partnerships to sustain its growth.
Outlook
Akouos is at a critical juncture in its development as it prepares to initiate its first clinical trial for AK-OTOF and advances its AK-antiVEGF program towards an IND submission. The company's unique approach to genetic medicine, targeting the inner ear, has the potential to address significant unmet needs in the treatment of hearing loss and other inner ear conditions.However, Akouos will need to navigate the challenges inherent in drug development, secure additional funding, and continue to execute on its strategic priorities to realize the full potential of its platform and pipeline. The company's strong cash position and the anticipated progress of its lead programs provide a solid foundation, but the path ahead remains uncertain.