Applied Therapeutics, Inc. (NASDAQ:APLT) is a clinical-stage biopharmaceutical company at the forefront of developing novel therapeutics to address high unmet medical needs across a diverse pipeline of drug candidates. With a relentless focus on innovation and patient-centric approach, Applied Therapeutics has emerged as a trailblazer in the rare disease landscape.

Business Overview and Chronology

Incorporated in Delaware in January 2016, Applied Therapeutics was founded with the mission to develop a pipeline of novel product candidates against validated molecular targets in indications of high unmet medical need. The company's initial focus was on the development of small molecule inhibitors of the enzyme aldose reductase, which has been implicated in multiple diseases.

In 2016, Applied Therapeutics entered into a license agreement with Columbia University, obtaining an exclusive, royalty-bearing license to certain patents and know-how related to its aldose reductase inhibitor program. This agreement provided the company with the intellectual property rights to develop and commercialize compounds including AT-007, AT-001, and AT-003.

Over the subsequent years, Applied Therapeutics dedicated its efforts to advancing its aldose reductase inhibitor program, conducting preclinical studies and initiating early-stage clinical trials for its lead product candidates. The company worked diligently to overcome historical limitations in aldose reductase inhibition by designing more potent and selective inhibitors, addressing the challenges of non-selective, non-specific inhibition that had previously resulted in limited efficacy and significant off-target safety effects.

In 2019, Applied Therapeutics expanded its pipeline by entering into an additional license agreement with Columbia University for a portfolio of PI3 kinase inhibitor compounds, including AT-104. This strategic move broadened the company's potential therapeutic reach. However, in 2022, the company made the decision to discontinue further development of AT-104 due to regulatory changes impacting the PI3 kinase inhibitor class of compounds.

Throughout its development journey, Applied Therapeutics has focused on conducting clinical trials for its key programs: AT-007 in rare metabolic diseases, AT-001 in diabetic cardiomyopathy, and AT-003 in diabetic retinopathy. These efforts have laid the groundwork for the company's future development and regulatory milestones, positioning Applied Therapeutics as a significant player in the rare disease treatment landscape.

Financials

Despite the challenges inherent in developing novel therapies, Applied Therapeutics has maintained a robust financial profile. As of the latest reported quarter (Q3 2024), the company had cash and cash equivalents of $98.9 million, providing a solid foundation to advance its clinical programs.

The company's financial ratios paint a picture of a well-managed organization. The current ratio, a measure of liquidity, stands at 1.06, indicating the ability to meet short-term obligations. Additionally, the quick ratio of 1.06 suggests a strong capacity to cover current liabilities with the most liquid assets.

In terms of profitability, Applied Therapeutics has been strategically investing in its research and development efforts, with R&D expenses accounting for a significant portion of its total expenses. As the company navigates the clinical trial process and regulatory milestones, it has reported net losses, which is typical for a clinical-stage biopharmaceutical company.

For the most recent quarter (Q3 2024), Applied Therapeutics reported revenue of $122,000, a net loss of $68,591,000, and negative operating cash flow of $23,330,000. The free cash flow for the quarter was also negative at $23,330,000. These figures reflect the company's continued investment in research and development activities, as it does not currently generate significant revenue.

The company's debt-to-equity ratio stands at 0, indicating a conservative approach to financing its operations. This financial strategy provides flexibility and reduces financial risk as the company progresses through its clinical development stages.

Liquidity

Applied Therapeutics' liquidity position remains strong, as evidenced by its robust cash reserves and favorable liquidity ratios. The company's current ratio and quick ratio of 1.06 demonstrate its ability to cover short-term obligations and maintain financial flexibility. This solid liquidity position provides Applied Therapeutics with the necessary resources to continue advancing its clinical programs and support its ongoing operations.

Recent Developments and Outlook

The third quarter of 2024 marked a transformative period for Applied Therapeutics, with significant progress on its key programs. The company announced that the New Drug Application (NDA) for its lead candidate, govorestat (AT007), for the treatment of Classic Galactosemia, was under Priority Review by the FDA. Additionally, the Marketing Authorization Application (MAA) for govorestat in Europe was under review by the European Medicines Agency (EMA). The FDA has set a Prescription Drug User Fee Act (PDUFA) target action date of November 28, 2024, for the Galactosemia NDA, while the EMA decision is expected in the first quarter of 2025.

Furthermore, Applied Therapeutics announced plans to submit an NDA for govorestat in the treatment of SORD Deficiency under the FDA's Accelerated Approval Program in early 2025. This strategic decision underscores the company's commitment to addressing the unmet needs of patients suffering from this rare neurological disorder.

In January 2023, Applied Therapeutics entered into an exclusive licensing agreement with Advanz Pharma for the commercialization of AT-007 in Europe for the treatment of Galactosemia and SORD Deficiency. This agreement provides for potential milestone payments and royalties, which could contribute to the company's future revenue streams.

The company has also made significant progress with its other product candidates. AT-001 (Caficrestat), a novel ARI with broad systemic exposure and peripheral nerve permeability, is being developed for the treatment of diabetic cardiomyopathy (DbCM). Applied Therapeutics completed a Phase 3 registrational trial of AT-001 in DbCM in January 2024, with the results showing a strong trend in stabilizing cardiac functional capacity.

Additionally, the company is developing AT-003, a novel ARI designed to cross through the back of the eye when dosed orally, for the treatment of diabetic retinopathy (DR). This diversified pipeline demonstrates Applied Therapeutics' commitment to addressing multiple areas of unmet medical need.

Risks and Challenges

As a clinical-stage biopharmaceutical company, Applied Therapeutics faces a range of risks inherent to the industry. The success of its programs is contingent upon navigating the complex regulatory landscape, successfully completing clinical trials, and obtaining necessary approvals. Delays or setbacks in the development and commercialization process could significantly impact the company's financial performance and future prospects.

Additionally, the highly competitive nature of the rare disease and orphan drug markets presents ongoing challenges. Applied Therapeutics must continue to differentiate its product candidates, demonstrate superior efficacy and safety profiles, and secure favorable pricing and reimbursement strategies to maintain a competitive edge.

Industry Trends

The rare disease drug market is experiencing robust growth, with expectations of a compound annual growth rate (CAGR) of approximately 11.5% from 2022 to 2030. This growth is driven by several factors, including increasing disease awareness, favorable regulatory environments, and advancements in drug development technologies. Applied Therapeutics is well-positioned to capitalize on these trends with its focus on rare metabolic diseases and innovative approach to drug development.

Conclusion

Applied Therapeutics has established itself as a trailblazer in the rare disease treatment landscape, leveraging its innovative approach to address significant unmet medical needs. With a robust pipeline, strong financial position, and transformative developments in its lead programs, the company is poised to make a lasting impact on the lives of patients suffering from rare and devastating conditions. As Applied Therapeutics continues to navigate the clinical and regulatory landscape, it remains a company to watch in the rapidly evolving biopharmaceutical industry.