Business Overview and History
Third Harmonic Bio, Inc. (THRD) is a clinical-stage biopharmaceutical company dedicated to developing innovative therapies for dermal, respiratory, and gastrointestinal inflammatory diseases. Founded in 2019, the company has rapidly progressed its lead candidate, THB335, through the clinical development pipeline, with promising results that have positioned it as a potential frontrunner in the treatment of mast cell-mediated disorders.
Third Harmonic Bio was established in 2019 as a Delaware corporation, with offices in San Francisco, California and Cambridge, Massachusetts. The company's primary focus has been the development of innovative therapies for inflammatory diseases, particularly those mediated by mast cells. In its early years, Third Harmonic Bio devoted substantially all of its efforts and financial resources to organizing and staffing the company, business planning, raising capital, establishing its intellectual property portfolio, acquiring or discovering product candidates, and conducting research and development activities.
During this time, the company faced several challenges. In 2021, Third Harmonic Bio identified a material weakness in its internal control over financial reporting related to a lack of segregation of duties, certain system limitations in its accounting software, and an overall control environment due to insufficient internal resources with appropriate accounting and finance knowledge and expertise. The company has been working to remediate this material weakness by implementing new accounting systems and hiring additional qualified accounting and finance employees.
A significant milestone was achieved in 2022 when Third Harmonic Bio completed its initial public offering, raising approximately $198 million in gross proceeds. This provided the company with the capital to advance its lead product candidate, THB001, into clinical development. However, in December 2022, the company faced a setback when it announced the discontinuation of its Phase 1b clinical trial of THB001 in chronic inducible urticaria following the observation of asymptomatic liver transaminitis in two patients enrolled in the first dose cohort. This led to a re-evaluation of the company's development plans and a pivot to a next-generation oral small molecule KIT inhibitor product candidate, THB335.
In June 2019, Third Harmonic Bio entered into an exclusive, worldwide licensing agreement with Novartis Pharma AG to acquire the rights to develop and commercialize THB335 and other KIT inhibitor compounds. This strategic partnership provided the company with access to a robust preclinical data package and enabled it to rapidly advance the program into clinical trials.
After completing comprehensive nonclinical studies, Third Harmonic Bio received clearance from the U.S. Food and Drug Administration (FDA) in May 2024 to initiate a first-in-human Phase 1 clinical trial evaluating the safety, pharmacokinetics, and pharmacodynamics of THB335 in healthy volunteers. The company is currently on track to report results from this single-ascending-dose and multiple-ascending-dose (SAD/MAD) study in the first quarter of 2025, which will pave the way for a planned Phase 2 trial in chronic spontaneous urticaria (CSU), with potential expansion into additional mast cell-mediated disorders.
Financials and Liquidity
As of September 30, 2024, Third Harmonic Bio reported a strong cash and cash equivalents position of $296.1 million, providing the company with ample runway to advance its lead program and explore future pipeline opportunities. The company's net loss for the nine months ended September 30, 2024, was $32.4 million, compared to a net loss of $24.0 million for the same period in the previous year.
Third Harmonic Bio has been successful in raising capital to fund its operations, including a $198.2 million initial public offering completed in September 2022. In October 2023, the company filed a shelf registration statement, which allows it to offer up to $400 million in additional securities, further strengthening its financial flexibility.
The company's balance sheet remains healthy, with a current ratio of 50.0 and a quick ratio of 50.0 as of September 30, 2024, indicating a strong liquidity position. Third Harmonic Bio's tangible book value stood at $269.1 million at the end of the third quarter, reflecting the robust nature of its financial foundation.
For the fiscal year 2023, Third Harmonic Bio reported revenue of $0, a net loss of $30.8 million, operating cash flow of -$20.4 million, and free cash flow of -$20.6 million. In the most recent quarter (Q3 2024), the company reported revenue of $0, net income of $13.8 million, operating cash flow of -$8.2 million, and free cash flow of -$8.2 million. The improvement in net income for the quarter compared to the previous year was primarily due to an increase in interest income.
The company's debt-to-equity ratio stood at 0.032 as of September 30, 2024, indicating a low level of debt relative to equity. Third Harmonic Bio does not have any available credit lines or other debt facilities, relying primarily on its cash reserves to fund operations.
It's important to note that Third Harmonic Bio currently operates only in the United States and does not break out performance by geographic markets.
Regulatory Milestones and Clinical Progress
The clearance of Third Harmonic Bio's Investigational New Drug (IND) application by the FDA in May 2024 was a significant milestone, paving the way for the initiation of the company's first-in-human clinical trial of THB335. The Phase 1 SAD/MAD study is designed to evaluate the safety, pharmacokinetics, and pharmacodynamics of the KIT inhibitor in healthy volunteers, with the goal of establishing a dosing regimen to advance the program into later-stage trials.
The company's decision to prioritize the development of THB335 in CSU, with plans for potential expansion into other mast cell-mediated disorders, is a strategic move that leverages the product candidate's mechanism of action and the unmet medical need in this therapeutic area. CSU, a debilitating skin condition characterized by the recurrent appearance of hives, affects an estimated 0.5-1% of the global population and is currently underserved by existing treatment options.
By focusing on CSU as the initial indication, Third Harmonic Bio aims to rapidly progress THB335 through clinical development and potentially bring a much-needed new treatment option to patients suffering from this chronic condition. The successful completion of the Phase 1 study and the subsequent initiation of a Phase 2 trial in CSU will be crucial milestones for the company in the coming years.
Competitive Landscape and Risks
The competitive landscape in the treatment of mast cell-mediated inflammatory diseases is dynamic, with several companies, both large pharmaceutical and specialty biopharmaceutical firms, actively pursuing novel therapeutic approaches. Competitors include Novartis with its KIT inhibitor remibrutinib, Celldex Therapeutics with barzolvolimab, and Jasper Therapeutics with briquilimab, among others.
While Third Harmonic Bio's THB335 has demonstrated promising preclinical data, the company faces the inherent risks associated with clinical drug development, including the potential for unexpected safety or efficacy issues, regulatory hurdles, and competition from other advanced-stage programs. Additionally, the company's reliance on its partnership with Novartis and the potential for future collaborations or licensing agreements adds an element of uncertainty to its long-term strategy.
To mitigate these risks, Third Harmonic Bio has strengthened its internal capabilities, including the expansion of its leadership team and the implementation of robust risk management and quality control processes. The company's strong cash position and the flexibility provided by its shelf registration statement also contribute to its ability to navigate the challenges of the biopharmaceutical industry.
Product Pipeline
Third Harmonic Bio's primary product candidate is THB335, a potent, highly selective, oral, small molecule KIT inhibitor that is in development for the treatment of mast cell-mediated diseases, with an initial focus on chronic spontaneous urticaria (CSU). THB335 is the company's next-generation KIT inhibitor, designed to retain the potency and selectivity profile of its prior product candidate, THB001, while incorporating structural modifications intended to mitigate hepatotoxicity risk and provide a differentiated metabolic, distribution, and physiochemical profile.
Key attributes of THB335 include:
1. Nanomolar potency against KIT
- High degree of selectivity against closest related kinases
- No evidence of reactive metabolite formation observed to date
- High oral bioavailability and metabolic stability
- Improved peripheral restriction compared to THB001
- Improved solubility and reduced lipophilicity
- Favorable pharmacokinetic profile with long circulating half-life
In nonclinical studies, THB335 demonstrated dose-dependent mast cell depletion and in vitro efficacy across different tissue types, supporting its potential to treat a range of mast cell-mediated skin, respiratory, and gastrointestinal conditions. The company's recent FDA clearance to initiate a first-in-human Phase 1 clinical trial of THB335 in healthy volunteers marks a significant step forward in its development program.
Conclusion
Third Harmonic Bio's focus on developing innovative therapies for mast cell-driven inflammatory diseases positions the company as a promising player in an underserved therapeutic area. The advancement of its lead candidate, THB335, through the clinical pipeline, coupled with the company's robust financial standing and regulatory milestones, underscores its potential to address the significant unmet needs of patients suffering from conditions like chronic spontaneous urticaria.
The company's strong cash position of $296.1 million as of September 30, 2024, provides a solid foundation to support the ongoing development of THB335 and potential expansion into additional indications. With the Phase 1 clinical trial underway and initial results expected in the first quarter of 2025, Third Harmonic Bio is poised for potential value-creating catalysts in the near term.
As Third Harmonic Bio continues to execute on its strategic priorities, investors will closely monitor the company's progress in the coming quarters, particularly the anticipated data readout from the ongoing Phase 1 trial of THB335. The success of this trial will be crucial in determining the company's trajectory and its potential to bring a novel treatment option to patients suffering from mast cell-mediated inflammatory diseases.