Business Overview and History
Forte Biosciences, Inc. is a clinical-stage biopharmaceutical company dedicated to developing innovative therapies for autoimmune and autoimmune-related diseases. With its lead candidate FB102 progressing through clinical trials, Forte is positioning itself at the forefront of addressing significant unmet medical needs in areas such as celiac disease, vitiligo, and alopecia areata.
Forte Biosciences was founded in 2017 as a privately held company in Delaware. Initially, the company focused on the development of FB-401, a topical live biotherapeutic product for the treatment of atopic dermatitis. However, in September 2021, Forte announced that the clinical trial of FB-401 failed to meet its primary endpoint, leading the company to cease further development of this product candidate and conduct a strategic review process to evaluate alternative paths forward.
In response to this setback, Forte made the strategic decision in 2022 to shift its focus to the development of FB102, a proprietary anti-CD122 monoclonal antibody with potential applications across various autoimmune and autoimmune-related indications. This pivot was a critical turning point for the company, as CD122 is a key regulator of natural killer (NK) cells and certain T-cell subsets, making it an attractive target for modulating the immune system in autoimmune conditions.
To support this new direction, Forte merged with Tocagen, Inc., a publicly traded biotechnology company, in June 2020. This strategic move provided Forte with access to the public markets and additional capital to advance its new lead program. The merger also resulted in Forte’s listing on the Nasdaq stock exchange, enhancing its ability to secure funding for its ongoing clinical development efforts.
In 2023, Forte achieved a significant milestone by completing a successful Phase 1 healthy volunteer trial for FB102. The trial demonstrated a good safety profile and significant reductions in the NK cell pharmacodynamic marker, paving the way for the company to initiate a patient-based trial in celiac disease in the third quarter of 2024. To further support the development of FB102, Forte raised $25 million through a private placement financing in July 2023.
Throughout its history, Forte has faced significant challenges, including the failure of its initial lead program FB-401 and the need to pivot the company’s focus to a new product candidate in FB102. However, the successful completion of the FB102 Phase 1 trial and the injection of capital from the 2023 private placement have positioned Forte to advance its autoimmune-focused pipeline and overcome past setbacks.
Financial Overview
As of September 30, 2024, Forte reported cash and cash equivalents of $16.4 million, which the company believes will not be sufficient to fund its planned operations for at least the next twelve months. To address this, Forte completed a $53 million private placement financing in November 2024, which was oversubscribed by leading healthcare institutional investors. This transformative funding event has positioned Forte to continue advancing the clinical development of FB102 across multiple autoimmune indications.
For the nine months ended September 30, 2024, Forte reported a net loss of $28.3 million, with no revenue generated during the period. The company’s research and development expenses for the nine-month period amounted to $16.0 million, while general and administrative expenses totaled $13.3 million. Forte’s cash burn rate during this period was approximately $20.7 million.
It’s important to note that Forte has incurred net losses every year since its inception in 2017, which is common for a clinical-stage biopharmaceutical company focused on developing novel therapies. The company’s ability to generate revenue and achieve profitability will ultimately depend on the successful development and commercialization of its product candidates, particularly FB102.
For the most recent fiscal year ended December 31, 2023, Forte reported no revenue and a net loss of $31,476,000. The company’s operating cash flow (OCF) for the same period was negative $28,706,000, and its free cash flow (FCF) was negative $28,794,000.
In the most recent quarter ended September 30, 2024, Forte again reported no revenue and a net loss of $8,392,000. The quarterly OCF and FCF were both negative $8,133,000. As the company had no revenue in the prior year quarter, a year-over-year change calculation is not applicable.
Forte does not report performance by geographic markets. As a small cap company, it appears to operate solely in the United States.
Liquidity
Forte’s liquidity position has been significantly strengthened by the recent $53 million private placement financing completed in November 2024. This injection of capital has provided the company with the necessary resources to fund its ongoing clinical development programs and operational expenses for the foreseeable future. However, as a clinical-stage company with no current revenue streams, Forte will need to carefully manage its cash resources and may require additional financing in the future to support its long-term growth and development plans.
As of September 30, 2024, Forte reported cash and cash equivalents of $16.36 million. The company has no debt, resulting in a debt-to-equity ratio of 0. Forte’s current ratio and quick ratio as of the same date were both 2.06, indicating a healthy short-term liquidity position.
The company does not have any disclosed credit facilities or credit lines. Forte’s ability to fund its operations and complete the development and potential commercialization of FB102 or any future product candidates will depend on securing additional capital through public or private equity offerings, debt financings, or other sources.
Clinical Pipeline and Progress
Forte’s lead product candidate, FB102, is currently being evaluated in a Phase 1b clinical trial for the treatment of celiac disease. The study is designed to assess the safety, tolerability, and potential efficacy of FB102 in patients with celiac disease. Topline results from this trial are expected in the second quarter of 2025.
In addition to the celiac disease program, Forte is exploring the potential of FB102 across other autoimmune and autoimmune-related indications, including vitiligo and alopecia areata. These conditions are driven by the aberrant activation of the immune system, making them well-suited targets for Forte’s CD122-targeted approach.
The company’s decision to prioritize the development of FB102 over its previous lead candidate, FB-401, reflects its strategic focus on addressing significant unmet medical needs in the autoimmune disease space. This shift has been bolstered by the promising preclinical data, which has demonstrated FB102’s ability to modulate key immune cell populations involved in the pathogenesis of various autoimmune disorders.
Forte’s commitment to advancing its clinical pipeline is further evidenced by its ongoing collaboration with leading academic institutions and clinical experts in the fields of celiac disease, vitiligo, and alopecia areata. These partnerships have provided the company with valuable insights and guidance as it navigates the complex landscape of autoimmune drug development.
The primary objective of the Phase 1 trial was to assess the safety, tolerability, and pharmacokinetics of single and multiple ascending doses of FB102 in healthy volunteers. Three cohorts of single and two cohorts of multiple ascending doses were successfully completed, demonstrating a good safety profile with no dose-limiting toxicities observed. FB102 also showed significant reductions, greater than 70%, in the NK cell pharmacodynamic marker.
Based on the successful completion of the Phase 1 healthy volunteer cohorts, Forte initiated a patient-based trial in celiac disease in the third quarter of 2024. Celiac disease is an autoimmune disease triggered by consuming gluten, resulting in damage to the small intestine.
In addition to celiac disease, Forte believes FB102 has potentially broad applications in other autoimmune and autoimmune-related indications, including vitiligo, alopecia areata, type 1 diabetes, and graft-versus-host disease. These indications are also mediated primarily by NK and CD8 T cells, which are targeted by FB102’s mechanism of action.
Risks and Challenges
As a clinical-stage biopharmaceutical company, Forte faces a number of risks and challenges that are inherent to the industry. These include the inherent uncertainty of the drug development process, the potential for clinical trial failures, regulatory hurdles, and the need to secure additional funding to support its ongoing operations and clinical programs.
Specifically, Forte’s ability to successfully develop and commercialize FB102 is contingent on a number of factors, including positive results from its ongoing and future clinical trials, obtaining regulatory approvals, and effectively navigating the competitive landscape in the autoimmune disease space. Additionally, the company’s reliance on third-party manufacturers and contract research organizations introduces operational and supply chain risks that could impact its development timelines and cost structure.
Furthermore, Forte’s limited operating history and history of net losses may raise concerns about its long-term viability among investors and potential partners. The company’s ability to achieve profitability will depend on its success in advancing FB102 and potentially other pipeline candidates through the clinical and regulatory pathways, as well as its ability to secure additional funding to support its operations.
The company was previously involved in litigation related to a private placement completed in 2023. While this litigation has since been resolved, it underscores the potential legal and regulatory risks that Forte may face as it continues to raise capital and advance its clinical programs.
Outlook and Conclusion
Forte Biosciences’ pivot to the development of FB102 has positioned the company as a promising player in the autoimmune disease treatment landscape. The company’s progress in initiating a Phase 1b clinical trial for celiac disease, as well as its plans to explore FB102’s potential in other autoimmune indications, have garnered the attention of key investors and industry experts.
The recent $53 million private placement financing has provided Forte with the necessary resources to advance its clinical programs and explore strategic opportunities. As the company continues to navigate the challenges inherent to drug development, its ability to execute on its clinical and regulatory strategy will be crucial in determining its long-term success.
Investors and analysts will be closely monitoring Forte’s progress, particularly the upcoming topline results from the celiac disease trial, which could serve as a significant catalyst for the company. Additionally, any advancements in the development of FB102 for other autoimmune conditions will be closely watched, as Forte seeks to establish itself as a leader in this rapidly evolving therapeutic area.
Overall, Forte Biosciences’ focus on innovative autoimmune therapies, its promising lead candidate FB102, and its recent financing success have positioned the company as a compelling investment opportunity for those seeking exposure to the rapidly growing autoimmune disease treatment market. However, potential investors should carefully consider the risks associated with investing in a clinical-stage biopharmaceutical company, including the need for additional capital, the uncertainty of clinical trial outcomes, and the competitive landscape in the autoimmune disease space.
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.