Fresh Tracks Therapeutics, Inc. (FRTX) is a clinical-stage pharmaceutical company that has found itself at a crossroads, forced to navigate a complex and uncertain path forward. The company’s journey has been marked by both promise and setbacks, as it has strived to develop innovative and differentiated prescription therapeutics aimed at transforming patient lives.
Business Overview and History
Fresh Tracks Therapeutics, formerly known as Brickell Biotech, Inc., was founded in 2009 and headquartered in Boulder, Colorado. The company’s mission was to disrupt existing treatment paradigms in the fields of autoimmune, inflammatory, and other debilitating diseases. Over the years, Fresh Tracks built a diverse pipeline of product candidates targeting these conditions.
The company’s lead development-stage program was FRTX-2.00, a novel, potent, highly selective, and orally bioavailable potential first-in-class DYRK1A inhibitor. This compound showed promising results in various preclinical and clinical models, particularly for potential applications in atopic dermatitis and rheumatoid arthritis. FRTX-2.00 aimed to restore immune balance in patients with dysregulated immune systems and is covered by a composition of matter patent issued in the U.S., Japan, China, and other key countries through at least 2038, subject to potential patent term extensions and adjustments.
In addition to FRTX-2.00, the company’s pipeline included FRTX-10.00, a preclinical-stage Stimulator of Interferon Genes (STING) inhibitor candidate for the potential treatment of autoimmune, inflammatory, and rare genetic diseases. FRTX-10.00 is a novel, potent, and orally bioavailable covalent STING inhibitor that specifically targets the palmitoylation site of STING. Excessive STING signaling is linked to numerous high unmet-need diseases, ranging from autoimmune disorders to interferonopathies. As of the date of the 10-Q filing, Fresh Tracks had two pending PCT applications and pending applications in the U.S., Japan, Europe, and other key countries related to FRTX-10.00.
In 2021, Fresh Tracks significantly expanded its portfolio by acquiring exclusive global rights to a cutting-edge platform of next-generation kinase inhibitors. This acquisition included molecules targeting LRRK2, CDC2-like kinase, and TTK protein kinase, which had potential applications in neuroinflammatory conditions, autoimmunity, inflammation, and oncology. Some of these drug candidates have the potential to penetrate the blood-brain barrier, presenting an opportunity to address neuroinflammatory conditions. Compounds from the next-generation kinase inhibitor platform are covered by pending U.S. and foreign composition of matter patent applications.
To further strengthen its position, Fresh Tracks entered into several strategic licensing and collaboration agreements. In August 2021, the company acquired exclusive, worldwide rights to research, develop, and commercialize FRTX-2.00 and other next-generation kinase inhibitors through a licensing agreement with Voronoi Inc. This agreement includes potential milestone payments of up to $211 million for the DYRK1A inhibitor program and up to $107.5 million for the next-generation kinase inhibitor platform, as well as tiered royalty payments.
Additionally, in February 2022, Fresh Tracks entered into an exclusive license agreement with Carna Biosciences, Inc., granting it exclusive, worldwide rights to Carna’s portfolio of novel STING inhibitors. This agreement includes potential milestone payments of up to $258 million and tiered royalty payments.
Despite these strategic moves, Fresh Tracks faced significant operational challenges. The company incurred substantial operating losses since its inception due to heavy investments in research and development activities. These financial pressures ultimately led to difficult decisions regarding the company’s future.
Financials
Financial Overview
As of the company’s most recent quarterly report, Fresh Tracks had cash and cash equivalents of $12.02 million as of September 30, 2023, compared to $8.68 million as of December 31, 2022. The company reported total revenue of $8.01 million for the nine months ended September 30, 2023, up from $4.89 million in the same period of the prior year.
For the full fiscal year 2022, Fresh Tracks reported revenue of $6.94 million, with a net loss of $21.10 million. Operating cash flow for 2022 was negative $19.34 million, and free cash flow was negative $19.38 million.
In the most recent quarter (Q3 2023), the company recognized $7.94 million in revenue, a significant increase from $486,000 in Q3 2022. This increase was primarily due to $7.94 million in contract revenue recognized from the buyout of remaining payments owed to the company under the Asset Purchase Agreement with Botanix. Net loss for Q3 2023 was $1.24 million, with operating cash flow and free cash flow both at negative $1.12 million.
However, Fresh Tracks has continued to operate at a significant loss, with a net loss of $4.46 million for the nine months ended September 30, 2023, compared to a net loss of $16.57 million in the same period of 2022. The company’s research and development expenses decreased by $8.27 million during this period, driven primarily by the completion of its Phase 1 clinical trial for FRTX-2.00 and the cessation of its Phase 3 pivotal clinical program for sofpironium bromide.
General and administrative expenses also decreased by $854,000 for the nine months ended September 30, 2023, primarily due to lower legal and compliance fees, partially offset by increased licensing fees related to the company’s agreements with Bodor Laboratories, Inc.
In July 2023, Fresh Tracks entered into an amendment to its asset purchase agreement with Botanix, which provided for a one-time payment of $6.60 million to the company and $1.70 million on behalf of the company to Bodor Laboratories, in exchange for terminating any remaining payment obligations under the original agreement.
Liquidity
Fresh Tracks’ liquidity position has been a significant concern. As of September 30, 2023, the company had $12.02 million in cash and cash equivalents, which represents a slight improvement from the $8.68 million reported at the end of 2022. However, given the company’s ongoing operational losses and the decision to pursue liquidation and dissolution, this cash position is primarily intended to cover the costs associated with winding down operations and potential distributions to shareholders.
The company’s financial ratios provide further insight into its liquidity position. As of September 30, 2023, Fresh Tracks had a debt-to-equity ratio of 0, indicating no outstanding debt or credit facilities. The current ratio and quick ratio were both 6.98, suggesting a strong short-term liquidity position. However, these ratios should be interpreted with caution given the company’s decision to pursue liquidation and dissolution.
Challenges and the Path Forward
Fresh Tracks’ decision to pursue the liquidation and dissolution of the company was driven by a comprehensive strategic alternatives process that failed to yield a satisfactory outcome. The company faced a number of challenges, including the inability to secure necessary financing for potential merger or reverse merger partners, as well as the unsuccessful outreach to various other counterparties and investors.
In September 2023, Fresh Tracks announced a proposed plan of liquidation and dissolution and its intent to discontinue all clinical and preclinical development programs. The company also decided to reduce its workforce, except for certain employees, consultants, and advisors who will supervise or facilitate the dissolution and wind down of the company. This decision came after the company’s board of directors and executive management team conducted an extensive process to explore and evaluate strategic alternatives, including four unsuccessful attempts to find a merger or reverse merger partner.
Furthermore, Fresh Tracks has struggled to maintain its listing on the Nasdaq Capital Market. In October 2023, the company received a notice from Nasdaq informing it that the exchange staff had determined to delist the company’s common stock, citing the company’s status as a public shell and its noncompliance with various listing requirements.
If Fresh Tracks’ stockholders approve the proposed liquidation and dissolution, the company plans to distribute all remaining cash to shareholders over time. However, the timing and amount of any such distributions are uncertain, as the company must first resolve any outstanding liabilities and potential claims before making any payouts. The company plans to hold a special meeting of stockholders on November 16, 2023, to seek approval of the liquidation and dissolution.
Risks and Uncertainties
Fresh Tracks’ path forward is fraught with significant risks and uncertainties. The company’s ability to successfully navigate the liquidation and dissolution process, as well as the timing and amount of any distributions to shareholders, are subject to a number of factors, including the ultimate resolution of the company’s liabilities and potential claims, the costs associated with winding down operations, and the discretion of the company’s board of directors.
Additionally, the delisting of Fresh Tracks’ common stock from the Nasdaq Capital Market could further impact the liquidity and trading of the company’s shares, potentially reducing the value that shareholders may ultimately receive.
The company’s management has concluded that substantial doubt exists about its ability to continue as a going concern for a period of twelve months from the date of the 10-Q filing, as a result of the planned dissolution. This assessment underscores the significant challenges and uncertainties facing Fresh Tracks as it moves forward with its liquidation plans.
Conclusion
Fresh Tracks Therapeutics has found itself at a critical juncture, forced to make the difficult decision to pursue the liquidation and dissolution of the company after an extensive strategic alternatives process failed to yield a viable path forward. The company’s journey has been marked by both promise and setbacks, as it has navigated the challenges of developing innovative therapeutic candidates in a highly competitive and regulated industry.
Despite initial promise with its lead candidates FRTX-2.00 and FRTX-10.00, as well as its platform of next-generation kinase inhibitors, Fresh Tracks was ultimately unable to overcome the significant financial and operational challenges it faced. The company’s decision to discontinue all clinical and preclinical development programs marks the end of its efforts to bring potentially transformative therapies to patients suffering from autoimmune, inflammatory, and other debilitating diseases.
As Fresh Tracks moves forward with its plans to wind down operations, the company and its shareholders face a significant degree of uncertainty and risk. The timing and amount of any distributions to shareholders will depend on the successful resolution of the company’s liabilities and potential claims, as well as the discretion of the board of directors.
Despite the challenges facing Fresh Tracks, the company’s legacy and the efforts of its dedicated team may serve as an inspiration to others in the industry as they strive to transform patient lives through the development of groundbreaking therapies. The story of Fresh Tracks Therapeutics serves as a reminder of the inherent risks and difficulties in the pharmaceutical industry, where even promising scientific advancements can be derailed by financial and operational challenges.
Disclaimer: This article is for informational purposes only. It does not constitute financial, legal, or other types of advice. While every effort has been made to ensure the accuracy of the information presented here, the author and the publisher do not make any guarantees about the completeness, reliability, and accuracy of this information.