AN2 Therapeutics, Inc. (NASDAQ:ANTX) is a clinical-stage biopharmaceutical company focused on developing treatments for rare, chronic, and serious infectious diseases with high unmet needs. The company's initial product candidate, epetraborole, is under development as a once-daily, oral treatment for patients with non-tuberculous mycobacterial (NTM) lung disease.

Business Overview

AN2 Therapeutics was incorporated in the state of Delaware in February 2017 and began operations in November 2019. The company is based in Menlo Park, California and went public in March 2022, trading on the Nasdaq Global Select Market under the symbol "ANTX". Since launching operations, AN2 Therapeutics has devoted substantially all of its resources to developing its initial product candidate, epetraborole, and other product candidates, as well as business planning, hiring personnel, raising capital, and providing general and administrative support.

Epetraborole: A Promising Treatment for NTM Lung Disease

AN2 Therapeutics' lead product candidate, epetraborole, is being developed as a once-daily, oral treatment for patients with NTM lung disease. NTM lung disease is a rare, chronic, and progressive infectious disease caused by bacteria known as mycobacteria that leads to irreversible lung damage and can be fatal. Epetraborole has broad spectrum antimycobacterial activity through inhibition of an essential and universal step in bacterial protein synthesis. Its novel mechanism of action is enabled by boron chemistry, which is the company's core technology approach.

Epetraborole has received Fast Track designation by the U.S. Food and Drug Administration (FDA) to investigate the treatment of treatment-refractory Mycobacterium avium complex (MAC) lung disease. It has also been designated as a Qualified Infectious Disease Product (QIDP) for treatment-refractory MAC lung disease by the FDA and has received orphan drug designation from the FDA and orphan medicinal product designation from the European Commission for the treatment of NTM lung disease.

Based on clinical and preclinical data generated with epetraborole, its novel mechanism of action, and the convenience associated with once-daily, oral dosing, the company believes that epetraborole has the potential to become an important component of a multi-drug treatment regimen for patients suffering from NTM lung disease.

Clinical Development of Epetraborole

AN2 Therapeutics is currently conducting a Phase 2/3 seamless design trial to study epetraborole for treatment-refractory MAC lung disease. The Phase 2 portion of the trial has completed enrollment, with topline data expected in August 2024. In February 2024, the company voluntarily paused enrollment of the Phase 3 portion of the trial pending review of further study data and discussion with the FDA after observing potentially lower than anticipated efficacy in blinded aggregate data from the Phase 2 portion of the trial.

The company continues to progress in areas that will allow for timely commercialization of epetraborole, if approved. AN2 Therapeutics completed the manufacturing of active pharmaceutical ingredient (API) for registration batches in the third quarter of 2023, and has completed manufacturing of drug product registration batches in the first quarter of 2024. The company has also completed a Phase 1 thorough QT study (EBO-104) clinical trial required for registration.

Financials

For the year ended December 31, 2023, AN2 Therapeutics reported a net loss of $64.7 million. The company did not generate any revenue during this period. For the three months ended March 31, 2023, the company reported a net loss of $16.6 million.

As of March 31, 2023, AN2 Therapeutics had cash, cash equivalents, and investments of $118.1 million. The company believes that its available cash will be sufficient to fund its planned operations through at least twelve months following the date of the latest quarterly report.

Funding and Liquidity

AN2 Therapeutics has funded its operations to date primarily through the sale and issuance of redeemable convertible preferred stock, proceeds from its initial public offering (IPO), an "at-the-market" equity offering program, and an underwritten offering.

In March and April 2022, the company completed its IPO, with gross proceeds of $79.4 million and net proceeds of $70.4 million, net of underwriting discounts, commissions and offering expenses. In June 2023, AN2 Therapeutics raised gross proceeds of $20.0 million from the "at-the-market" equity offering program and net proceeds of $19.1 million, after deducting commissions and offering expenses. In August 2023, the company raised gross proceeds of $70.0 million from an underwritten offering and net proceeds of $65.5 million, after deducting commissions and offering expenses.

The company expects that its operating expenses will increase significantly as it advances its current and future product candidates through preclinical, nonclinical, and clinical development, seeks regulatory approval, and prepares for and, if approved, proceeds to commercialization. AN2 Therapeutics anticipates that it will need substantial additional funding in connection with its continuing operations and planned activities.

Risks and Challenges

As a clinical-stage biopharmaceutical company, AN2 Therapeutics faces several risks and challenges, including:

1. Dependence on the success of epetraborole: The company's business currently depends heavily on the successful development, regulatory approval, and commercialization of epetraborole. Failure to obtain regulatory approval or successfully commercialize epetraborole could significantly harm the company's business and growth prospects.

2. Clinical trial risks: The company may experience delays or difficulties in the enrollment of patients in clinical trials, which could delay the execution of its business plans or prevent the company from obtaining regulatory approvals.

3. Manufacturing and supply chain risks: AN2 Therapeutics relies on third-party service providers, including contract research organizations and contract manufacturing organizations, to carry out its preclinical, nonclinical and clinical development, and to manufacture and supply the materials to be used during the development and commercialization of its product candidates. Disruptions in the company's supply chain or the failure of these third parties to perform could adversely affect the company's business.

4. Competitive landscape: The company faces substantial competition from other pharmaceutical and biotechnology companies, which may result in others discovering, developing, or commercializing products before or more successfully than AN2 Therapeutics.

5. Regulatory and compliance risks: The company's operations are subject to extensive regulation by the FDA, the PMDA, and other comparable regulatory authorities. Failure to comply with applicable regulations could result in significant fines, penalties, and other legal or regulatory actions.

6. Intellectual property risks: The company's success depends in part on its ability to obtain and maintain patent and other intellectual property protection for its technology and product candidates. If the company is unable to do so, its competitors could develop and commercialize technology and drugs similar or identical to the company's, which could impair its ability to successfully commercialize its product candidates.

Outlook

Despite the challenges, AN2 Therapeutics remains focused on advancing epetraborole and its other product candidates through clinical development and towards potential regulatory approval and commercialization. The company's novel approach to treating rare, chronic, and serious infectious diseases, combined with the promising data generated with epetraborole to date, position it as a company to watch in the biopharmaceutical industry. As AN2 Therapeutics continues to execute on its strategic priorities, investors will closely monitor the progress of the company's clinical trials, regulatory interactions, and overall financial performance.