Aptinyx Inc. (NASDAQ:APTX) is a clinical-stage biopharmaceutical company that has recently faced significant challenges, leading to the decision to dissolve the company. The company's focus had been on the discovery, development, and commercialization of novel, proprietary, synthetic small molecules for the treatment of nervous system disorders. However, after disappointing results from its clinical trials and a strategic review, Aptinyx has determined that the best path forward is to pursue a plan of liquidation and dissolution.

Business Overview

Aptinyx was founded in 2015 and had been developing product candidates that work through a novel mechanism: modulation of N-methyl-D-aspartate receptors (NMDArs), which are vital to normal and effective brain and nervous system functions. The company's lead product candidates included NYX-2925, NYX-783, and NYX-458, which were being evaluated for the treatment of various neurological and psychiatric disorders.

Financials

Aptinyx has struggled financially in recent years, reporting an annual net loss of $64.1 million in its most recent fiscal year. The company has not generated any revenue, with its annual revenue remaining at $0. Its annual operating cash flow and free cash flow were both negative $59.7 million.

In the first quarter of 2023, Aptinyx reported a net loss of $21.1 million, compared to a net loss of $19.8 million in the same period of the prior year. Research and development expenses increased to $16.1 million, up from $13.6 million in the prior-year quarter, primarily due to impairment charges related to the company's clinical supply agreements. General and administrative expenses decreased to $4.2 million, down from $5.8 million in the prior-year quarter.

Discontinued Clinical Programs

Aptinyx's challenges came to a head in early 2023 when the company discontinued the development of its product candidates NYX-458 and NYX-783 following disappointing results from clinical trials. The company's NYX-458 program, which was being evaluated for the treatment of cognitive impairment associated with Parkinson's disease and dementia with Lewy bodies, did not demonstrate clinically meaningful improvements over placebo in an exploratory Phase 2 study. Similarly, the company's NYX-783 program, which was being evaluated for the treatment of post-traumatic stress disorder (PTSD), did not show sufficient improvements on the study's primary endpoint to support continued development.

Strategic Restructuring and Dissolution

In light of these setbacks and the company's financial condition, Aptinyx implemented a strategic restructuring plan in February 2023 to preserve capital and reduce operating costs. This included the elimination of approximately 60% of the company's workforce and the early termination of the ongoing Phase 2b study of NYX-783 in PTSD.

Following a review of strategic alternatives, Aptinyx's board of directors unanimously approved a plan of liquidation and dissolution of the company on May 4, 2023. This plan is subject to stockholder approval, and if approved, the company will file a certificate of dissolution with the State of Delaware. The decision to pursue dissolution was made after the company was unable to identify a merger partner or purchaser for the company or its assets.

Liquidity

As of March 31, 2023, Aptinyx had cash and cash equivalents of $44.6 million. The company has also recently completed a voluntary prepayment of $27.5 million to fully repay its outstanding term loan with K2 HealthVentures LLC.

However, the company's ability to continue as a going concern is in doubt, as it has incurred significant operating losses and negative cash flows from operations since inception. Aptinyx does not expect to generate any revenue from product sales, and the company's future capital requirements will depend on the scope, timing, and expense of its ongoing activities, including the wind-down of its operations.

Risks and Challenges

Aptinyx faces several risks and uncertainties as it moves forward with the plan of dissolution. These include the potential for unanticipated costs related to the defense, satisfaction, or settlement of lawsuits or other claims; the amounts necessary to resolve claims of any creditors or other third parties; and delays in the liquidation and dissolution or other winding-up process. Additionally, the company may continue to incur expenses from operations, including directors' and officers' insurance, payments to service providers and any continuing employees or consultants, taxes, and legal, accounting, and consulting fees related to its filing obligations with the SEC.

Outlook

Aptinyx's decision to pursue dissolution is a difficult but necessary step in the face of its recent clinical and financial challenges. The company's stockholders will need to approve the plan of dissolution, and if approved, the timing and amount of any distributions to stockholders remain uncertain. Aptinyx's future is now focused on the orderly wind-down of its operations and the maximization of value for its shareholders, rather than the continued development of its drug candidates. As the company navigates this process, investors will need to closely monitor the developments and potential outcomes for Aptinyx.