Edge Therapeutics, Inc. (NASDAQ: EDGE) is a clinical-stage biotechnology company that discovers, develops and seeks to commercialize novel, hospital-based therapies capable of transforming treatment paradigms for the management of acute, life-threatening conditions.

 

On May 1st, the company announced financial results for the quarter ended March 31, 2018. EDGE reported cash, cash equivalents and marketable securities of $75.0 million, compared with $88.1 million as of December 31, 2017. Based on the current plans, management expects cash and cash equivalents to be sufficient to fund operations over the near to medium term.

 

On April 30, 2018, Edge announced that its Board of Directors is conducting a comprehensive review of strategic alternatives focused on maximizing stockholder value. In conjunction with the exploration of strategic alternatives, Edge intends to streamline its operations in order to preserve its cash resources. Edge has retained Piper Jaffray & Co. to act as its financial advisor to assist with this review process. Potential strategic alternatives that may be explored or evaluated as part of this review include, but are not limited to, an acquisition, merger, business combination or other strategic transaction involving Edge.

 

Prior to this on March 28th, the company announced that a pre-specified interim analysis performed on data from the Day 90 visit of the first 210 subjects randomized and treated in the Phase 3 NEWTON 2 study of EG-1962 in adults with aneurysmal subarachnoid hemorrhage (aSAH) demonstrated a low probability of achieving a statistically significant difference compared to the standard of care in the study’s primary endpoint, if the study is fully enrolled.

 

Based on the DMC recommendation, Edge has decided to discontinue the NEWTON 2 study and has taken steps to notify health authorities and clinical investigators participating in the study. Edge will perform analyses of the cumulative unblinded data from the NEWTON 2 study to understand the basis for this outcome better.

 

As per management, Edge will assess the next steps for the company but anticipates in the near term reducing the scope of its operations, including the size of its workforce, in order to preserve its cash resources, which were $75.0 million as of March 31, 2018.

 

Analyst tracking the stock is positive about the outcome of EG-1964/1965, but both the programs are at a very nascent stage right now. The near-term comfort is that the cost-cutting initiatives and lower research cost put the liquidity position of EDGE in a good position.

 

The company’s stock has fallen significantly after it announced disappointing results. However, the substantial dip seen in the stock on the back of the news could be used as a buying opportunity. Also, any positive communication about the remaining pipeline could be a positive driver for the company.

 

About

Edge Therapeutics, Inc., a clinical-stage biotechnology company, discovers, develops, and seeks to commercialize hospital-based therapies for acute life-threatening neurological and other conditions. Its lead product includes EG-1962 (clinicals halted), a polymer-based microparticle used for the treatment of aneurysmal subarachnoid hemorrhage. The company is also developing EG-1964, as a prophylactic treatment for the management of chronic subdural hematoma to prevent recurrent bleeding on the surface of the brain; and EG-1965, for the prevention of post-operative atrial fibrillation. Edge Therapeutics, Inc. was founded in 2009 and is headquartered in Berkeley Heights, New Jersey.

 

Key Pipeline:

Latest Quarter Financial position: 

• Cash Position: Cash, cash equivalents and marketable securities as of March 31, 2018, were $75.0 million, compared with $88.1 million as of December 31, 2017.
• Operating Expenses:  Research and development (R&D) expenses were $12.7 million in the first quarter of 2018, compared to $7.6 million in the first quarter of 2017. The increase in R&D expense was primarily due to an increase in external expenses related to EG-1962 clinical development and estimated study close down costs for the NEWTON 2 study. General and administrative (G&A) expenses were $4.7 million for the three months ended March 31, 2018, compared to $4.2 million in the comparable period in 2017. The increase in G&A expense was largely due to increases in personnel-related costs, legal fees, professional fees and marketing costs.
• Net Loss: Net loss of $20.8 million for the first quarter ended March 31, 2018, included non-cash impairment charges of $2.7 million related to the write-down of machinery and equipment, and compared to net loss of $12.2 million for the comparable period in 2017.

 

Key risk factors and potential stock drivers:

• The company recently terminated a phase 3 trial based on a recommendation by the Data Monitoring Committee. Therefore, successful developments for the existing pipeline would continue to remain a critical stock sensitivity factor for the company.
• EDGE is a clinical-stage company and expects to incur substantial operating losses during the next stages of corporate development.
• Company’s ability to maintain its liquidity and financial flexibility to fund its incremental capital requirements would continue to remain a critical stock sensitivity factor.
• The biotech space is a high-risk sector due to uncertainties associated with the novel drug development. Any adversities related with the same could upset the stock performance significantly.

 

Stock Chart:

Comments:

• On Wednesday, June 20th, 2018, EDGE was at $1.13, on volume of 475K shares exchanging hands. Market capitalization is $34.371 million. The current RSI is 46.41
• In the past 52 weeks, shares of EDGE have traded as low as $0.84 and as high as $17.77
• At $1.13, shares of EDGE are trading above its 50-day moving average (MA) at $1.03 and below its 200-day moving average (MA) at $8.81.
• The present support and resistance levels for the stock are at $1.01 & $1.16 respectively.

 

 

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