Business Overview and History

Genprex, Inc. is a clinical-stage gene therapy company that is pioneering the development of revolutionary therapies for patients with cancer and diabetes. With a robust pipeline of innovative treatments and a seasoned leadership team, Genprex is poised to make a significant impact on the healthcare landscape.

Genprex was incorporated in Delaware in April 2009, originally founded to commercialize a portfolio of intellectual property licensed from Introgen Research Institute (IRI), a Texas-based technology company. Rodney Varner, who later became Genprex's President, CEO, and Chairman of the Board in August 2012, formed IRI. In 2011, Genprex agreed to assume certain contractual and other obligations of IRI in consideration for the sublicense rights, expertise, and assistance associated with certain technologies and intellectual property originally licensed from MD Anderson Cancer Center. This included an agreement to pay royalties on sales of certain licensed products.

The company's oncology platform utilizes its proprietary Oncoprex Delivery System, a non-viral lipid-based nanoparticle technology, to deliver tumor suppressor gene-expressing plasmids to cancer cells. This innovative approach aims to interrupt cell signaling pathways, re-establish apoptosis, and enhance the immune response against cancer cells.

The company's lead oncology drug candidate, Reqorsa (quaratusugene ozeplasmid), is being developed in combination with prominent, approved cancer drugs to treat Non-Small Cell Lung Cancer (NSCLC) and Small Cell Lung Cancer (SCLC). Reqorsa has demonstrated multimodal effects on cancer cells, including impacting their metabolism, reducing cell growth, and increasing the immune response. Genprex has exclusive worldwide licenses from The University of Texas MD Anderson Cancer Center for the therapeutic use of the TUSC2 gene, the key component of Reqorsa.

In the diabetes space, Genprex has exclusively licensed multiple technologies from the University of Pittsburgh related to the development of gene therapy products for both Type 1 and Type 2 diabetes. The company's GPX-2 is being developed using a novel approach that involves the administration of an adeno-associated virus (AAV) vector containing the Pdx1 and MafA genes directly into the pancreatic duct. This therapy is designed to transform alpha cells into functional beta-like cells in Type 1 diabetes, and to replenish and rejuvenate exhausted beta cells in Type 2 diabetes.

Genprex's Acclaim clinical trials in NSCLC and SCLC have garnered significant attention, with the Acclaim-1 and Acclaim-3 trials receiving FDA Fast Track and Orphan Drug Designations. The company is currently enrolling and treating patients in the Phase 1 dose escalation portion of the Acclaim-3 trial, which is evaluating Reqorsa in combination with Genentech's Tecentriq (atezolizumab) as maintenance therapy for patients with extensive-stage SCLC. Additionally, Genprex is enrolling and treating patients in the Phase 2a expansion portion of the Acclaim-1 trial, which is assessing Reqorsa in combination with AstraZeneca's Tagrisso (osimertinib) for patients with late-stage NSCLC.

In September 2024, Genprex announced that it is considering various strategic alternatives and opportunities to enhance stockholder value, including evaluating ways to optimize its clinical and research programs and operational strategies. This includes the potential transfer of the company's diabetes clinical development program and diabetes gene therapy assets into a new, initially wholly-owned subsidiary, NewCo, which would focus on developing and commercializing GPX-2.

Financial Overview

Genprex is a clinical-stage company and, as such, has not yet generated revenue from product sales. The company has funded its operations primarily through the sale and issuance of capital stock, including through its At-The-Market (ATM) offering program and registered direct offerings.

For the fiscal year 2023, Genprex reported an annual net loss of $30.86 million and an annual operating cash flow of -$24.74 million. The company's annual free cash flow for 2023 was -$24.81 million.

As of September 30, 2024, Genprex had $1.49 million in cash and cash equivalents. The company's net loss for the three months ended September 30, 2024, was $4.32 million, and for the nine months ended September 30, 2024, was $16.78 million, compared to a net loss of $24.93 million for the same nine-month period in 2023. This decrease in net loss was primarily due to the implementation of expense reduction strategies by the company's leadership, which included reducing travel expenses, the number of professional service providers, and headcount.

Genprex's research and development expenses for the three months ended September 30, 2024, were $2.76 million, and for the nine months ended September 30, 2024, were $7.70 million, compared to $13.90 million for the same nine-month period in 2023. This decrease was largely attributable to changes in contract development and manufacturing organizations (CDMOs), which significantly reduced manufacturing expenses, as well as a reduction in share-based compensation for R&D personnel and the implementation of other expense reduction initiatives.

The company's general and administrative expenses for the three months ended September 30, 2024, were $1.57 million, and for the nine months ended September 30, 2024, were $9.14 million, compared to $11.17 million for the same nine-month period in 2023. This decrease was primarily due to the implementation of expense reduction strategies, which included reduced travel expenses, a lower number of professional service providers, and a reduction in headcount.

Genprex's cash used in operating activities for the nine months ended September 30, 2024, was $13.28 million, compared to $19.77 million for the same period in 2023. This decrease was largely driven by the company's expense reduction initiatives.

During the nine months ended September 30, 2024, Genprex raised $2.12 million in net proceeds from sales under its ATM offering program and $5.80 million in net proceeds from a registered direct offering.

Liquidity

As of September 30, 2024, Genprex had $1.49 million in cash and cash equivalents. The company's primary source of liquidity has been through the sale and issuance of capital stock, including its ATM offering program and registered direct offerings. Genprex's ability to continue operations and fund its research and development activities is dependent on its ability to raise additional capital through equity offerings, debt financings, or potential licensing and collaboration arrangements.

Genprex's debt-to-equity ratio is 0, as the company currently has no debt. The current ratio and quick ratio are both 0.855, indicating that the company's short-term liquidity position may be challenging. The company expects its current cash on hand will be sufficient to fund its expenditure requirements for its current operations and planned clinical trial activities into December 2024. However, Genprex will need to raise additional capital in the future to continue funding its development and operations.

Risks and Challenges

As a clinical-stage gene therapy company, Genprex faces several risks and challenges common to the biopharmaceutical industry. These include the inherent uncertainty of the drug development process, the potential for delays or setbacks in clinical trials, regulatory approval hurdles, and the need for ongoing capital to fund operations and further development.

The company's reliance on third-party suppliers and manufacturers also introduces risks related to the supply chain and the ability to scale production as needed. Additionally, Genprex's success is dependent on the continued protection and expansion of its intellectual property portfolio, which is subject to the inherent risks and uncertainties of the patent system.

Furthermore, as Genprex explores strategic alternatives for its diabetes program, including the potential formation of a wholly-owned subsidiary, the company faces execution risks and uncertainties around the successful implementation of such a transaction.

Outlook and Conclusion

Genprex is at the forefront of gene therapy research, with a promising pipeline of treatments for cancer and diabetes. The company's Acclaim clinical trials in lung cancer have garnered significant attention and support from regulatory agencies, while its diabetes program continues to advance through preclinical development.

The company's oncology platform, particularly its lead candidate Reqorsa, has shown promising early data, including a partial remission response in the Acclaim-3 trial. The FDA's granting of Fast Track Designation for both the Acclaim-1 and Acclaim-3 trial combinations further underscores the potential of Genprex's approach.

In the diabetes space, Genprex plans to request guidance from the FDA in the first half of 2025 on the nonclinical studies needed to file an Investigational New Drug (IND) application and initiate first-in-human studies for its diabetes program. This represents a significant milestone in the company's diabetes gene therapy development.

Despite the challenges faced by clinical-stage biotechnology companies, Genprex's seasoned leadership team, innovative technologies, and strategic collaborations position the company for potential long-term success. The company's focus on expense reduction and operational efficiency, as evidenced by the decreased net losses and reduced operating expenses, demonstrates a commitment to prudent financial management.

As Genprex navigates the complexities of drug development and explores strategic initiatives, investors will be closely watching the company's progress and ability to deliver on its promising pipeline of life-changing therapies. The coming months and years will be crucial for Genprex as it advances its clinical trials, seeks to secure additional funding, and potentially restructures its diabetes program through the creation of a new subsidiary.