Longboard Pharmaceuticals, Inc. (NASDAQ: LBPH) is a clinical-stage biopharmaceutical company at the forefront of developing innovative treatments for a range of neurological diseases. With a focus on centrally-acting G protein-coupled receptor (GPCR) targeted therapies, Longboard is poised to make a significant impact in addressing the unmet medical needs of patients suffering from debilitating neurological conditions.
Business Overview and History
Longboard Pharmaceuticals was incorporated in January 2020 as a wholly-owned subsidiary of Arena Pharmaceuticals, Inc. (Arena). The company was established to advance a portfolio of centrally acting product candidates designed to be highly selective for specific G protein-coupled receptors (GPCRs). These small molecule product candidates were discovered from Arena's platform, representing over 20 years of world-class GPCR research.
In October 2020, Longboard completed a $56 million private placement of its Series A convertible preferred stock, marking a significant milestone in its early funding. Later that year, the company entered into a license agreement, services agreement, and royalty purchase agreement with Arena to obtain an exclusive, royalty-bearing, worldwide license to develop and commercialize bexicaserin (LP352) and LP659.
Longboard's journey as a public company began in March 2021 with its initial public offering, which raised $76.2 million in net proceeds. These funds were earmarked for advancing the development of its two lead product candidates, bexicaserin and LP659. In March 2022, Arena was acquired by Pfizer, Inc., potentially impacting Longboard's existing agreements and partnerships.
Since its inception, Longboard has focused intensively on research and development activities, organizing and staffing the company, business planning, raising capital, in-licensing intellectual property rights, and establishing its intellectual property portfolio. As of December 31, 2023, the company had accumulated a deficit of $140.6 million, reflecting its ongoing investments in drug development.
Longboard's lead asset, bexicaserin (LP352), is an oral, centrally-acting 5-HT2C receptor superagonist being developed for the treatment of seizures associated with developmental and epileptic encephalopathies (DEEs), a group of rare and severe neurological disorders. In the first quarter of 2024, the company announced positive topline data from its Phase 1b/2a PACIFIC study, which demonstrated a median reduction of approximately 60% in countable motor seizures in highly refractory participants with Dravet syndrome, Lennox-Gastaut syndrome, and other DEEs.
Building on this success, Longboard received Breakthrough Therapy designation from the FDA for bexicaserin in the treatment of seizures associated with DEEs for patients aged two years and older. This designation underscores the significant unmet need in this patient population and the potential of bexicaserin to provide a much-needed therapeutic option.
In the third quarter of 2024, Longboard initiated its global Phase 3 DEEp OCEAN study, which is designed to evaluate the efficacy and safety of bexicaserin in a broad DEE patient population, including Dravet syndrome and Lennox-Gastaut syndrome, among others. The company plans to enroll approximately 320 participants aged 2 to 65 years in this pivotal trial.
Longboard's second clinical-stage asset, LP659, is a highly selective S1P receptor modulator that the company believes has the potential to address a range of rare neurological disorders. In the second quarter of 2024, Longboard reported positive results from a Phase 1 single-ascending dose (SAD) study, which demonstrated a favorable safety and tolerability profile for LP659. The company plans to initiate a Phase 1 multiple-ascending dose (MAD) study for LP659 in the first quarter of 2025 to further evaluate the drug's potential.
Financial Performance
As a clinical-stage biopharmaceutical company, Longboard has not yet generated any revenue from product sales. The company's financial performance has been primarily driven by its research and development (R&D) activities, which have been funded through a combination of equity financing and non-dilutive sources.
For the fiscal year ended December 31, 2023, Longboard reported no revenue and a net loss of $54.4 million. The company's operating cash flow (OCF) and free cash flow (FCF) for the same period were both negative $50.9 million.
For the nine months ended September 30, 2024, Longboard reported a net loss of $61.3 million, compared to a net loss of $39.4 million for the same period in the prior year. The increase in net loss was largely attributed to higher R&D expenses related to the advancement of the company's pipeline, particularly the bexicaserin program.
In the most recent quarter ended September 30, 2024, Longboard reported no revenue and a net loss of $24.5 million, representing an 89% increase in net loss year-over-year. The company's OCF and FCF for the quarter were both negative $20.6 million. The significant increase in net loss was primarily driven by higher research and development expenses related to the advancement of bexicaserin and LP659.
Liquidity
Longboard ended the third quarter of 2024 with $288.4 million in cash, cash equivalents, and short-term investments, providing the company with a strong financial position to execute on its clinical development plans. The company's management has stated that the existing cash resources are expected to fund operations into 2027, allowing Longboard to focus on the further advancement of bexicaserin and LP659 without the immediate need for additional financing.
As of September 30, 2024, Longboard had no outstanding debt, resulting in a debt-to-equity ratio of 0. The company has a credit facility with Silicon Valley Bank, although details about the size of the credit line or any amounts drawn were not provided. Longboard's strong liquidity position is further evidenced by its current ratio and quick ratio, both of which stand at 15.97, indicating a robust ability to meet short-term obligations.
Regulatory Milestones and Upcoming Catalysts
In addition to the Breakthrough Therapy designation for bexicaserin in DEEs, Longboard has also received Rare Pediatric Disease and Orphan Drug designations for the treatment of Dravet syndrome, a severe and rare form of DEE. These designations underscore the high unmet medical need in this patient population and may provide the company with various regulatory incentives, including potential priority review and accelerated approval pathways.
Looking ahead, Longboard's key upcoming milestones include the completion of enrollment for the global Phase 3 DEEp OCEAN study of bexicaserin, as well as the initiation and progress of the Phase 1 MAD study for LP659. Additionally, the company plans to provide further updates on the clinical development of its pipeline and the strategic direction of the company at an upcoming Investor and Analyst Day in September 2024.
The company is preparing to initiate a global Phase 3 program for bexicaserin, which will include two pivotal studies - one for Dravet syndrome and one DEE study that will include Lennox-Gastaut and all other DEEs. Longboard plans to initiate this Phase 3 program in the second half of 2024. For LP659, the company plans to initiate a Phase 1 multiple-ascending dose (MAD) study in the first quarter of 2025, with the final indication to be pursued depending on the results of this study.
Risks and Challenges
As a clinical-stage biopharmaceutical company, Longboard faces a number of risks and challenges that are common to the industry. These include the inherent uncertainties of drug development, the potential for clinical trial failures, regulatory hurdles, and competition from other therapies in development.
Specifically, Longboard's lead candidate, bexicaserin, is targeting a rare and severe patient population, which may present challenges in patient enrollment and retention for its ongoing and planned clinical trials. Additionally, the company's second asset, LP659, is still in the early stages of development, and the outcome of the upcoming Phase 1 MAD study will be crucial in determining the drug's potential and the company's future plans for this program.
Longboard also faces the risk of potential delays or setbacks due to the ongoing COVID-19 pandemic, which could impact its clinical trial operations and timelines. Furthermore, the company's reliance on its partnership with Pfizer (the parent company of Arena Pharmaceuticals) for the development and commercialization of its licensed assets, including bexicaserin and LP659, introduces additional risks and dependencies.
Despite these challenges, Longboard's experienced management team, robust pipeline, and strong financial position position the company to navigate the complexities of the biopharmaceutical industry and potentially deliver transformative therapies to patients in need.
Conclusion
Longboard Pharmaceuticals is a clinical-stage biopharmaceutical company that is making significant strides in the development of novel therapies for neurological disorders. With its lead candidate, bexicaserin, progressing through a global Phase 3 study in DEEs and its second asset, LP659, advancing through early-stage clinical trials, Longboard is poised to address significant unmet medical needs and create value for its shareholders.
The company's strategic focus on centrally-acting GPCR-targeted therapies, its experienced leadership team, and its strong financial position provide a solid foundation for Longboard to execute on its clinical development plans and potentially bring transformative treatments to patients suffering from debilitating neurological conditions.
As Longboard continues to navigate the challenges of drug development, investors will closely follow the progress of its pipeline, the results of its upcoming clinical trials, and the company's ability to forge strategic partnerships that can further bolster its commercial potential. With a cash runway extending into 2027 and promising clinical data from its lead programs, Longboard Pharmaceuticals remains well-positioned to advance its innovative pipeline and potentially reshape the treatment landscape for patients with severe neurological disorders.