Entrada Therapeutics Inc.
11/06/2025 | Press release | Distributed by Public on 11/06/2025 06:06
Quarterly Report for Quarter Ending September 30, 2025 (Form 10-Q)
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
You should read the following discussion and analysis of our financial condition and results of operations together with the condensed consolidated financial statements and related notes appearing elsewhere in this Quarterly Report on Form 10-Q ("Quarterly Report") and the audited financial information and the notes thereto included in the Company's Annual Report on Form 10-K, which was filed with the Securities and Exchange Commission (the "SEC") on February 27, 2025 ("Annual Report"). Some of the information contained in this discussion and analysis or set forth elsewhere in this Quarterly Report, including information with respect to our plans and strategy for our business, includes forward-looking statements that involve risks and uncertainties. As a result of many factors, including those factors set forth in the "Cautionary Note Regarding Forward-Looking Statements"and "Risk Factors" section of this Quarterly Report, our actual results could differ materially from the results described in, or implied by, the forward-looking statements contained in the following discussion and analysis. You should carefully read the "Cautionary Note Regarding Forward-Looking Statements"and "Risk Factors" sections of this Quarterly Report to gain an understanding of the important factors that could cause actual results to differ materially from our forward-looking statements contained in the following discussion and analysis.
Overview
We are a clinical-stage biopharmaceutical company aiming to transform the lives of patients by establishing a new class of medicines that engage intracellular targets that have long been considered inaccessible. Our Endosomal Escape Vehicle (EEV™)-therapeutics are designed to enable the efficient intracellular delivery of a wide range of therapeutics into a variety of organs and tissues, resulting in an improved therapeutic index. Leveraging this proprietary, versatile and modular approach, we are advancing a robust development portfolio of RNA- and protein-based programs for the potential treatment of neuromuscular and ocular diseases, among others. Our lead oligonucleotide programs are in development for the potential treatment of people living with Duchenne muscular dystrophy (DMD) who are exon 44, 45, 50 and 51 skipping amenable. We currently have two product candidates, ENTR-601-44 and ENTR-601-45, in clinical development and have filed for UK regulatory clearance for a third, ENTR-601-50, in the third quarter of 2025. We expect to file for EU regulatory clearance in the second half of 2026 and initiate the study by the end of 2026. We expect to submit for regulatory clearance for a fourth product candidate, ENTR-601-51 in 2026. We reported positive preliminary data in healthy volunteers from a Phase 1 clinical trial of ENTR-601-44 in 2024, have fully enrolled the first cohort of patients in the global Phase 1/2 multiple ascending dose (MAD) portion of the study and anticipate reporting data in the second quarter of 2026. We have dosed the first patient in our Phase 1/2 clinical trial for ENTR-601-45, and we anticipate data from the first patient cohort in mid-2026. We have also partnered with Vertex Pharmaceuticals Incorporated ("Vertex") to develop a clinical-stage program, VX-670, for myotonic dystrophy type 1. As of September 30, 2025, we had cash, cash equivalents and marketable securities of $326.8 million. Based on our current operating plans, we believe that our cash, cash equivalents and marketable securities as of September 30, 2025 will be sufficient to fund our operations into the third quarter of 2027.
By year end, we expect to have three clinical-stage programs in our DMD franchise (ENTR-601-44, ENTR-601-45, ENTR-601-50), complementing the ongoing progress of our VX-670 partnership with Vertex.
Key business updates include:
Development Pipeline
Since January 2025, Entrada has advanced multiple clinical programs in people living with Duchenne muscular dystrophy (DMD) in the U.K., EU and U.S. The clinical trial programs include:
•ELEVATE-44-201: Completed enrollment of Cohort 1 of the global Phase 1/2 multiple ascending dose (MAD) portion of the clinical study of ENTR-601-44 in ambulatory patients living with DMD who are amenable to exon 44 skipping. An independent Data Monitoring Committee (DMC) has reviewed initial data from the eight patients enrolled in Cohort 1 of the blinded, placebo-controlled MAD portion of the study and supports continuation without any protocol modifications. Multiple clinical trial sites in the U.K. and EU have been activated and are dosing patients. We expect to report data from Cohort 1 (6 mg/kg patient dose) during the second quarter of 2026, with data from Cohort 2 and Cohort 3 (up to 12 mg/kg and 18 mg/kg) to follow.
•ELEVATE-44-102: Planned Phase 1b MAD clinical study of ENTR-601-44 in ambulatory and non-ambulatory adults living with DMD. The study will run in the U.S. and is on track to initiate in the first half of 2026.
•ELEVATE-45-201: Initiated dosing in a global Phase 1/2 MAD clinical study of ENTR-601-45 in ambulatory patients living with DMD who are amenable to exon 45 skipping. The study received authorization in the U.K.
(March 2025) and EU (May 2025). We expect to report data from Cohort 1 (5 mg/kg) in mid-2026, with data from Cohort 2 and Cohort 3 (up to 10 mg/kg and 15 mg/kg) to follow.
•ENTR-601-50 and ENTR-601-51: We filed for UK regulatory clearance for ENTR-601-50 in the third quarter of 2025. We expect to file in the EU in the second half of 2026 and initiate the study by the end of 2026. We expect to submit regulatory applications for ENTR-601-51 in 2026.
Entrada has also filed multiple regulatory drug designation requests that support the development of drugs for rare, serious, and unmet medical needs. In 2022, the FDA granted Orphan Drug Designation to ENTR-601-44.
Beyond DMD, we see continued progress in both partnered and wholly-owned efforts:
•VX-670: Vertex continues to enroll and dose the MAD portion of the global Phase 1/2 clinical trial of VX-670 in people with DM1, which will assess both safety and efficacy. Vertex is on track to complete enrollment and dosing in the trial in the first half of 2026.
•We have generated positive preclinical data from programs outside of our neuromuscular franchise, which include new moieties. We now have a growing ocular franchise, with two ocular programs in lead optimization and additional targets in the research phase. We expect to share our first clinical candidate in ocular disease later in 2025.
Components of Our Results of Operations
Revenue
Substantially all of our revenue to date has been derived from the Vertex Agreement. We do not expect to generate any revenue from the sale of products unless and until such time that our product candidates have advanced through clinical development and regulatory approval, if ever. If our development efforts for our therapeutic candidates are successful and result in regulatory approval or we successfully enter into collaboration or license arrangements with third parties, we may generate revenue in the future from product sales, payments from collaboration or license arrangements including those that we may enter into with third parties, or any combination thereof.
Operating Expenses
Research and Development Expenses
Research and development expenses consist primarily of costs incurred for our research activities, including our discovery efforts, and the development of our programs. These expenses include:
•personnel-related expenses, including salaries, related benefits, and stock-based compensation expense for individuals engaged in research and development functions;
•expenses incurred in connection with our research programs and development of our therapeutic candidates, including those incurred under agreements with third parties, such as consultants, contractors, and contract research organizations ("CROs") to conduct preclinical studies and clinical trials;
•the cost of developing and validating our manufacturing process for use in our preclinical studies and clinical trials, including the cost of raw materials used in our research and development activities, and engaging with third party contract manufacturing organizations ("CMOs");
•costs incurred in connection with the performance of research and development activities under the Vertex Agreement;
•the cost of laboratory supplies and research materials;
•the costs of payments made under third-party licensing agreements and related future payments should certain development and regulatory milestones be achieved; and
•facilities, depreciation and other direct and allocated expenses, including rent and other operating costs, incurred as a result of our research and development activities.
We expense research and development costs as incurred. Non-refundable advance payments that we make for goods or services to be received in the future for use in research and development activities are recorded as prepaid expenses. The prepaid amounts are expensed as the related goods are delivered or the services are performed, or when it is no longer expected that the goods will be delivered or the services rendered. Upfront payments under license agreements
are expensed upon receipt of the license and annual maintenance fees under license agreements are expensed in the period in which they are incurred. Milestone payments under license agreements are accrued, with a corresponding expense being recognized, in the period in which the milestone is determined to be probable of achievement and the related amount is reasonably estimable.
Our research and development costs are primarily devoted to supporting our neuromuscular program development efforts. Our direct, external research and development expenses consist primarily of fees paid to outside consultants, CROs, CMOs and research laboratories in connection with our process development, manufacturing and clinical development activities. Our direct external research and development expenses also include fees incurred under license and intellectual property purchase agreements. We expect to track these external research and development costs on a program-by-program basis as we identify specific programs and product candidates to advance into clinical development.
We do not allocate employee costs, costs associated with our development efforts and facilities, including depreciation or other indirect costs, to specific programs because these costs are deployed across multiple programs and, as such, are not separately classified. We use internal resources and third-party consultants primarily to conduct our research and development activities as well as for managing our process development, manufacturing and clinical development activities.
Therapeutic candidates in later stages of clinical development generally have higher development costs than those in earlier stages of clinical development, primarily due to the increased size and duration of later-stage clinical trials. We expect that our research and development expenses will increase substantially in connection with our platform development efforts and planned preclinical and planned and current clinical development activities in the near term and in the future. We further expect that the research and development expenses of our programs will increase in the near term as we initiate or continue CTA/IND-enabling activities for our therapeutic candidates. Therefore, we cannot reasonably estimate or know the nature, timing, and costs of the efforts that will be necessary to complete the preclinical and clinical development of any of our therapeutic candidates. The successful development of our therapeutic candidates is highly uncertain. This is due to the numerous risks and uncertainties associated with product development, including the following:
•the scope, timing, rate of progress and expenses of our ongoing and potential future research activities, including preclinical and CTA/IND-enabling studies, clinical trials and other research and development activities we decide to pursue;
•the successful initiation, enrollment and completion of clinical trials under current good clinical practices ("GCPs");
•the timing of filing and acceptance of INDs or comparable foreign applications that allow commencement of future clinical trials for our therapeutic candidates;
•whether our therapeutic candidates show safety and efficacy in our clinical trials and an acceptable risk-benefit profile in the intended populations;
•our ability to hire and retain key research and development personnel to meet our strategic goals;
•our ability to successfully develop, obtain regulatory and marketing approvals of our therapeutic candidates for the expected indications and patient populations;
•our ability to establish and maintain agreements with third-party manufacturers for clinical supply for our clinical trials and commercial manufacturing, if our therapeutic candidates are approved;
•commercializing therapeutic candidates, if and when approved, whether alone or in collaboration with others;
•our ability to maintain a continued acceptable safety, tolerability and efficacy profile of our therapeutic candidates following approval;
•our ability to establish new licensing or collaboration arrangements to support our potential therapeutic candidates on favorable business terms;
•any decisions we make to discontinue, delay or modify our programs to focus on others;
•obtaining, maintaining, protecting and enforcing patent and trade secret protection and regulatory exclusivity for our therapeutic candidates; and
•obtaining and maintaining adequate coverage and reimbursement from third party payors.
A change in the outcome of any of these variables with respect to the development of any of our therapeutic candidates could significantly change the costs and timing associated with the development of that therapeutic candidate. We may never succeed in obtaining regulatory approval for any of our therapeutic candidates.
General and Administrative Expenses
General and administrative expenses consist primarily of salaries and personnel-related costs, including stock-based compensation, for our personnel in executive, legal, finance and accounting, corporate and business development, human resources and other administrative functions. General and administrative expenses also include: legal fees relating to intellectual property and corporate matters; professional fees paid for accounting, auditing, consulting and tax services; insurance costs; travel expenses; information technology expenses; and facility costs not otherwise included in research and development expenses.
We anticipate that our general and administrative expenses will increase in the future as we increase our headcount and expand our facilities to support our continued research activities and development of our programs and EEV Platform.
Interest and Other Income (Expense)
Interest and other income (expense) consists primarily of interest earned on our invested cash equivalents and marketable securities, gains and losses on disposal of fixed assets and gains and losses on foreign currency transactions.
Income Taxes
Provision for income tax expense (benefit) recorded in any interim period is based on the estimated effective tax rate for the fiscal year for those tax jurisdictions that can be reliably estimated. Our calculation of the estimated effective tax rate requires us to estimate pre-tax income by tax jurisdiction as well as total tax expense (benefit) for the fiscal year. Accordingly, the annual estimated effective tax rate is subject to adjustment if there are changes to the initial estimates of total tax expense (benefit) or pre-tax income.
Critical Accounting Policies and Significant Judgments and Estimates
Our management's discussion and analysis of financial condition and results of operations is based on our financial statements, which have been prepared in accordance with generally accepted accounting principles in the United States. The preparation of our financial statements and related disclosures requires us to make judgments, estimates and assumptions that affect the reported amounts of assets and liabilities, costs and expenses and the disclosure of contingent assets and liabilities in our financial statements. We base our estimates on historical experience, known trends and events and various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. We evaluate our estimates and assumptions on an ongoing basis. Our actual results may differ from these estimates under different assumptions or conditions.
There have been no material changes to our critical accounting policies and estimates from those reported in the Annual Report, except as described further in Note 2 Summary of Significant Accounting Policies in the condensed consolidated financial statements elsewhere in this Quarterly Report.
Results of Operations
Comparison of the three months ended September 30, 2025 and 2024
| Three Months Ended September 30, | |||||||||||||||||
| (in thousands) | 2025 | 2024 | Change | ||||||||||||||
| Collaboration revenue | $ | 1,614 | $ | 19,570 | $ | (17,956) | |||||||||||
| Operating expenses: | |||||||||||||||||
| Research and development | 38,361 | 31,257 | 7,104 | ||||||||||||||
| General and administrative | 10,304 | 9,971 | 333 | ||||||||||||||
| Total operating expenses | 48,665 | 41,228 | 7,437 | ||||||||||||||
|
(Loss) income from operations
|
(47,051) | (21,658) | (25,393) | ||||||||||||||
| Other income: | |||||||||||||||||
| Interest and other income | 3,571 | 5,766 | (2,195) | ||||||||||||||
| Total other income | 3,571 | 5,766 | (2,195) | ||||||||||||||
|
(Loss) income before provision for income taxes
|
(43,480) | (15,892) | (27,588) | ||||||||||||||
|
Provision for (benefit from) income taxes
|
654 | (1,860) | 2,514 | ||||||||||||||
|
Net (loss) income
|
$ | (44,134) | $ | (14,032) | $ | (30,102) | |||||||||||
Collaboration Revenue
Collaboration revenue was $1.6 million for the three months ended September 30, 2025 and $19.6 million for the three months ended September 30, 2024. The decrease of $18.0 million was primarily a result of fewer costs incurred for VX-670 during the three months ended September 30, 2025 as compared to the three months ended September 30, 2024, as we substantially completed our research plan activities for VX-670 during the first quarter of 2025.
Research and Development Expenses
| Three Months Ended September 30, | |||||||||||||||||
| (in thousands) | 2025 | 2024 | Change | ||||||||||||||
| Direct research and development expenses | |||||||||||||||||
| ENTR-601-44 | $ | 7,451 | $ | 3,561 | $ | 3,890 | |||||||||||
| ENTR-601-45 | 3,543 | 2,972 | 571 | ||||||||||||||
| ENTR-601-50 | 3,164 | 2,734 | 430 | ||||||||||||||
| ENTR-601-51 | 2,807 | 122 | 2,685 | ||||||||||||||
| Collaboration services | 534 | 1,802 | (1,268) | ||||||||||||||
| Other preclinical and discovery | 1,281 | 1,828 | (547) | ||||||||||||||
| Unallocated research and development expenses | |||||||||||||||||
| Personnel related (including stock-based compensation) | 11,549 | 10,875 | 674 | ||||||||||||||
| Facility related and other | 8,032 | 7,363 | 669 | ||||||||||||||
| Total research and development expenses | $ | 38,361 | $ | 31,257 | $ | 7,104 | |||||||||||
Research and development expenses were $38.4 million for the three months ended September 30, 2025, compared to $31.3 million for the three months ended September 30, 2024. The increase of $7.1 million in research and development expenses was primarily attributable to:
•an increase of $5.8 million in direct research and development expenses, driven by additional costs incurred related to the progress of our Duchenne programs, partially offset by fewer costs incurred related to our collaboration with Vertex; and
•an increase of $1.3 million in unallocated research and development expenses driven by an increase in personnel costs of $0.7 million and an increase in facilities related costs of $0.7 million. Personnel costs are inclusive of
stock-based compensation expense of $2.3 million and $2.1 million for the three months ended September 30, 2025 and 2024, respectively.
We expect that our research and development expenses will increase as we advance ENTR-601-44 and ENTR-601-45 through clinical trials, ENTR-601-50 into clinical trials, ENTR-601-51 through preclinical development and into clinical trials, and continue to perform discovery work for future product candidates.
General and Administrative Expenses
General and administrative expenses for the three months ended September 30, 2025 were $10.3 million, compared to $10.0 million for the three months ended September 30, 2024. The increase of $0.3 million was primarily attributable to an increase in professional services to support our growth, as well as an increase in personnel costs, inclusive of stock-based compensation expense of $2.8 million and $2.7 million for the three months ended September 30, 2025 and 2024, respectively.
Interest and Other Income, net
Total interest and other income, net was $3.6 millionfor the three months ended September 30, 2025, compared to $5.8 millionof interest and other income for the three months ended September 30, 2024. The decrease was driven by changes in interest earned from debt securities and money market funds as well as a decrease in the amount of marketable securities held.
Provision for Income Taxes
We recorded an income tax provision of $0.7 million for the three months ended September 30, 2025 and an income tax benefit of $1.9 million for the three months ended September 30, 2024. For the three months ended September 30, 2025 the income tax provision recorded was primarily driven by adjustments made upon the finalization of tax returns. For the three months ended September 30, 2024, the income tax benefit recorded was primarily driven by the $75 million clinical advancement milestone achieved in the first quarter of 2024 and the application of ASC 740 interim reporting guidance.
Comparison of the nine months ended September 30, 2025 and 2024
| Nine Months Ended September 30, | |||||||||||||||||
| (in thousands) | 2025 | 2024 | Change | ||||||||||||||
| Collaboration revenue | $ | 24,122 | $ | 173,384 | $ | (149,262) | |||||||||||
| Operating expenses: | |||||||||||||||||
| Research and development | 108,312 | 91,900 | 16,412 | ||||||||||||||
| General and administrative | 31,500 | 28,606 | 2,894 | ||||||||||||||
| Total operating expenses | 139,812 | 120,506 | 19,306 | ||||||||||||||
|
(Loss) income from operations
|
(115,690) | 52,878 | (168,568) | ||||||||||||||
| Other income: | |||||||||||||||||
| Interest and other income | 11,936 | 14,346 | (2,410) | ||||||||||||||
| Total other income | 11,936 | 14,346 | (2,410) | ||||||||||||||
|
(Loss) income before provision for income taxes
|
(103,754) | 67,224 | (170,978) | ||||||||||||||
|
Provision for (benefit from) income taxes
|
832 | 2,729 | (1,897) | ||||||||||||||
|
Net (loss) income
|
$ | (104,586) | $ | 64,495 | $ | (169,081) | |||||||||||
Collaboration Revenue
Collaboration revenue was $24.1 million for the nine months ended September 30, 2025 and $173.4 million for the nine months ended September 30, 2024. The decrease of $149.3 million was primarily a result of fewer costs incurred for VX-670 during the nine months ended September 30, 2025, as we substantially completed our research plan activities for VX-670 during the first quarter of 2025.
Research and Development Expenses
| Nine Months Ended September 30, | |||||||||||||||||
| (in thousands) | 2025 | 2024 | Change | ||||||||||||||
| Direct research and development expenses | |||||||||||||||||
| ENTR-601-44 | $ | 18,343 | $ | 9,072 | $ | 9,271 | |||||||||||
| ENTR-601-45 | 10,978 | 6,098 | 4,880 | ||||||||||||||
| ENTR-601-50 | 5,896 | 8,593 | (2,697) | ||||||||||||||
| ENTR-601-51 | 6,488 | 238 | 6,250 | ||||||||||||||
| Collaboration services | 1,937 | 9,186 | (7,249) | ||||||||||||||
| Other preclinical and discovery | 3,762 | 5,767 | (2,005) | ||||||||||||||
| Unallocated research and development expenses | |||||||||||||||||
| Personnel related (including stock-based compensation) | 37,536 | 30,687 | 6,849 | ||||||||||||||
| Facility related and other | 23,372 | 22,259 | 1,113 | ||||||||||||||
| Total research and development expenses | $ | 108,312 | $ | 91,900 | $ | 16,412 | |||||||||||
Research and development expenses were $108.3 million for the nine months ended September 30, 2025, compared to $91.9 million for the nine months ended September 30, 2024. The increase of $16.4 million in research and development expenses was primarily attributable to:
•an increase of $8.5 million in direct research and development expenses, driven by additional costs incurred related to the progress of our Duchenne programs, partially offset by fewer costs incurred related to our collaboration with Vertex;
•an increase of $6.8 million in personnel related costs, inclusive of $1.7 million in costs associated with our strategic workforce reduction for the nine months ended September 30, 2025 and stock-based compensation expense of $6.8 million and $5.8 million for the nine months ended September 30, 2025 and 2024, respectively; and
•an increase of $1.1 million in facility related and other costs to support our expanding operations.
We expect that our research and development expenses will increase as we advance ENTR-601-44 and ENTR-601-45 through clinical trials, ENTR-601-50 into clinical trials, ENTR-601-51 through preclinical development and into clinical trials, and continue to perform discovery work for future product candidates.
General and Administrative Expenses
General and administrative expenses for the nine months ended September 30, 2025 were $31.5 million, compared to $28.6 million for the nine months ended September 30, 2024. The increase of $2.9 million was primarily attributable to an increase in personnel costs, inclusive of $0.2 million in costs associated with our strategic workforce reduction during the nine months ended September 30, 2025, and stock-based compensation expense of $8.5 million and $7.5 million for the nine months ended September 30, 2025 and 2024, respectively.
Interest and Other Income, net
Total interest and other income, net was $11.9 millionfor the nine months ended September 30, 2025, compared to $14.3 millionof interest and other income for the nine months ended September 30, 2024. The decrease was driven by changes in interest earned from debt securities and money market funds as well as a decrease in the amount of marketable securities held.
Provision for Income Taxes
We recorded an income tax provision of $0.8 million for the nine months ended September 30, 2025 and an income tax provision of $2.7 million for the nine months ended September 30, 2024. For the nine months ended September 30, 2025, the income tax provision recorded was primarily driven by adjustments made upon the finalization of tax returns.
For nine months ended September 30, 2024, the income tax provision recorded was primarily driven by the $75 million clinical advancement milestone achieved in the first quarter of 2024.
Liquidity and Capital Resources
Overview
Since our inception, we have devoted substantially all our resources to research and development efforts relating to our EEV Platform, advancing development of our portfolio of programs and general and administrative support for these operations, including raising capital.
Since inception, we have incurred significant net losses. As of September 30, 2025, we had an accumulated deficit of $233.9 million. Other than the recognition of revenue related to collaboration payments, we expect to continue to generate operating losses and negative operating cash flows for the foreseeable future as we advance our platform and therapeutic candidates. We will not generate any revenue from product sales unless and until we successfully complete clinical development and obtain regulatory approval for one or more therapeutic candidates, if ever. If we obtain regulatory approval for any therapeutic candidates, we expect to incur significant expenses related to developing our internal commercialization capability to support product sales, marketing and distribution.
Furthermore, we expect to incur additional costs associated with operating as a public company, including significant legal, accounting, investor relations and other expenses. As a result, we will need substantial additional funding to support our continuing operations and pursue our growth strategy, as we advance therapeutic candidates through preclinical and, if successful, into clinical development, seek regulatory approval, prepare for and, if any therapeutic candidates are approved, proceed to commercialization and operate as a public company. Until such time as we can generate significant revenue from product sales, if ever, we expect to finance our operations through the sale of equity, debt financings or other capital sources, including potential collaborations with other companies or other strategic transactions.
If we are unable to obtain funding, we will be forced to delay, reduce, or eliminate some or all of our research and development programs, product portfolio expansion and ultimate commercialization efforts, which would adversely affect our business prospects, or we may be unable to continue operations. Although we continue to pursue these plans, we may not be successful in obtaining sufficient funding on terms acceptable to us to fund continuing operations, if at all.
Because of the numerous risks and uncertainties associated with product development, we are unable to predict the timing or amount of increased expenses or when or if we will be able to achieve or maintain profitability. Even if we can generate product sales, we may not become profitable. If we fail to become profitable or are unable to sustain profitability on a continuing basis, we may be unable to continue our operations at planned levels and be forced to reduce or terminate our operations.
As of September 30, 2025, we had cash, cash equivalents and marketable securities of $326.8 million. Based on our current operating plans, we believe that our cash, cash equivalents and marketable securities as of September 30, 2025 will be sufficient to fund our operations into the third quarter of 2027. We have based this estimate on assumptions that may prove to be wrong, and we could exhaust our available capital resources sooner than we expect. To finance our operations beyond that point we will need to raise additional capital, which cannot be assured.
Sources of Liquidity
Since our inception, we have raised over $850.0 million of gross proceeds from sales of stock to leading biotechnology investors and from the Vertex Agreement. As of September 30, 2025, we had cash, cash equivalents and marketable securities of $326.8 million.
In September 2023, we entered into a sales agreement (the "Sales Agreement") with TD Securities (USA) LLC (f/k/a Cowen and Company, LLC) (the "Sales Agent") under which we may, from time to time, issue and sell shares of our common stock having aggregate sales proceeds of up to $150.0 million, in a series of one or more ATM equity offerings (the "2023 ATM Program"). The Sales Agent is not required to sell any specific share amounts but acts as our sales agent, using commercially reasonable efforts consistent with its normal trading and sales practices. Pursuant to the Sales Agreement, any shares will be sold pursuant to the shelf registration statement on Form S-3 (File No. 333-268099) previously filed by the Company with the Securities and Exchange Commission (the "SEC") on November 1, 2022 and declared effective by the SEC on November 7, 2022 (the "Prior Registration Statement"). The Company plans to file a shelf registration statement on Form S-3, including a sales agreement prospectus contained therein, to replace the Prior
Registration Statement that will expire on November 7, 2025, in accordance with applicable SEC regulations. Pursuant to Rule 415(a)(6) under the Securities Act, the offering of securities under the Prior Registration Statement will be deemed terminated as of the date of effectiveness of the new registration statement. Our common stock will be sold at prevailing market prices at the time of the sale, and as a result, prices may vary. As of September 30, 2025 we have not sold any shares of common stock under the 2023 ATM Program.
In June 2024, we entered into a securities purchase agreement with a limited number of investors relating to a registered direct offering (the "June 2024 Offering") of 3,367,003 shares of our common stock at a purchase price of $14.85 per share and, in lieu of common stock to certain investors who so chose, pre-funded warrants (the "Pre-Funded Warrants") to purchase 3,367,003 shares of common stock at a purchase price of $14.8499 per Pre-Funded Warrant, which represents the price per share at which the shares of common stock were sold to the investors in the June 2024 Offering, minus $0.0001, which is the exercise price of each Pre-Funded Warrant. The June 2024 Offering was made pursuant to the Prior Registration Statement. The aggregate net proceeds from the sale of common stock and Pre-Funded Warrants in the June 2024 Offering were approximately $99.6 million, after deducting offering expenses payable by us. We will receive nominal proceeds, if any, from the exercise of the Pre-Funded Warrants.
Cash Flows
The following table summarizes our cash flows for each of the periods presented:
| Nine Months Ended September 30, | |||||||||||
| (in thousands) | 2025 | 2024 | |||||||||
|
Net cash used in operating activities
|
$ | (96,309) | $ | (9,952) | |||||||
|
Net cash provided by (used in) investing activities
|
87,689 | (81,163) | |||||||||
| Net cash provided by financing activities | 695 | 101,562 | |||||||||
|
Net (decrease) increase in cash, cash equivalents and restricted cash
|
$ | (7,925) | $ | 10,447 | |||||||
Operating Activities
For the nine months ended September 30, 2025, net cash used in operating activities was $96.3 million and was driven by our net loss of $104.6 million, net cash used in changes in our operating assets and liabilities of $7.2 million, adjustments for non-cash expenses relating to stock-based compensation expense of $15.3 million and depreciation expense of $3.2 million, and adjustments for non-cash income relating to accretion of premiums and discounts of $3.0 million.
For the nine months ended September 30, 2024, net cash used in operating activities was $10.0 million and was driven by our net income of $64.5 million, net cash used in changes in our operating assets and liabilities of $83.0 million, adjustments for non-cash expenses relating to stock-based compensation expense of $13.2 million and depreciation expense of $2.8 million, and adjustments for non-cash income relating to accretion of premiums and discounts of $7.5 million.
Investing Activities
Net cash provided by investing activities was $87.7 million for the nine months ended September 30, 2025, consisting primarily of $212.1 million from the maturities of marketable securities, partially offset by $123.1 million in purchases of marketable securities and $1.3 million of purchases of property and equipment.
Net cash used in investing activities was $81.2 million for the nine months ended September 30, 2024, consisting primarily of $373.2 million in purchases of marketable securities and $2.5 million of purchases of property and equipment, partially offset by $294.5 million from the maturities of marketable securities.
Financing Activities
Net cash provided by financing activities was $0.7 million for the nine months ended September 30, 2025, consisting of $0.4 million in proceeds from stock option exercises and $0.3 million from the issuance of common stock under our employee stock purchase plan.
Net cash provided by financing activities was $101.6 million for the nine months ended September 30, 2024, consisting of $99.6 million of proceeds from sales of our common stock and pre-funded warrants, $1.7 million in proceeds from stock option exercises and $0.3 million from the issuance of common stock under our employee stock purchase plan.
Future Funding Requirements
We expect to incur significant expenses and operating losses for the foreseeable future as we advance the preclinical and, if successful, the clinical development of our programs. Our operating expenses and future funding requirements are expected to increase substantially as we continue to advance our portfolio of programs. Based on our current operating plans, we believe that our cash, cash equivalents and marketable securities as of September 30, 2025 will be sufficient to fund our operations into the third quarter of 2027. We have based this estimate on assumptions that may prove to be wrong, and we could utilize our available capital resources sooner than we expect.
Because of the numerous risks and uncertainties associated with research, development, and commercialization of our candidates, we are unable to estimate the exact amount of our working capital requirements. Our future capital requirements will depend on many factors, including costs associated with:
•the continuation of our current research programs and our clinical and preclinical development of therapeutic candidates from our current research programs;
•advancing our existing and future therapeutic candidates into clinical development;
•initiating preclinical studies and clinical trials for any therapeutic candidates we identify and develop or expand development of existing programs into additional indications;
•maintaining, expanding, enforcing, defending and protecting our intellectual property portfolio and providing reimbursement of third-party expenses related to our patent portfolio;
•timing of manufacturing for our therapeutic candidates and commercial manufacturing if any therapeutic candidate is approved;
•establishing and maintaining clinical and commercial supply for the development and manufacture of our therapeutic candidates;
•seeking regulatory and marketing approvals for any of our therapeutic candidates that we develop, if any;
•seeking to identify, establish and maintain additional collaborations and license agreements, and the success of those collaborations and license agreements;
•ultimately establishing a sales, marketing and distribution infrastructure to commercialize any platforms for which we may obtain marketing approval, either by ourselves or in collaboration with others;
•generating revenue from commercial sales of therapeutic candidates we may develop for which we receive marketing approval;
•hiring additional personnel, including research and development, clinical and commercial personnel, to meet our strategic goals;
•adding operational, financial and management information systems and personnel, including personnel to support our product development;
•achieving sufficient market acceptance, coverage and adequate reimbursement from third-party payors and adequate market share and revenue for any approved products;
•acquiring or in-licensing products, intellectual property, and technologies; and
•the ongoing costs of operating as a public company and recent increases in inflationary rates.
Until such time, if ever, as we can generate substantial product revenue to support our cost structure, we expect to finance our cash needs through a combination of equity offerings, debt financings, collaborations, and other similar arrangements. To the extent that we raise additional capital through the sale of equity or convertible debt securities, the ownership interest of our stockholders could be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect the rights of our common stockholders. Debt financing and equity financing, if available, may involve agreements that include covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures, or declaring dividends. If we raise funds through collaborations or other similar arrangements with third parties, we may have to relinquish valuable rights to our technologies, future revenue
streams, research programs or therapeutic candidates or grant licenses on terms that may not be favorable to us and/or may reduce the value of our common stock. If we are unable to raise additional funds when needed, we may be required to delay, limit, reduce or terminate our product development or future commercialization efforts or grant rights to develop and market our therapeutic candidates even if we would otherwise prefer to develop and market such therapeutic candidates ourselves.
Contractual Obligations and Commitments
Lease Commitments
During the nine months ended September 30, 2025, there were no material changes to our lease commitments from those described in Note 11, Leases, of our financial statements in the Annual Report.
Purchase and Other Obligations
We enter into contracts in the normal course of business with CROs, third-party manufacturers, and other third parties for preclinical research studies and testing and manufacturing services. These contracts do not contain minimum purchase commitments and are cancellable by us upon prior written notice. Payments due upon cancellation consist only of payments for services provided or expenses incurred, including non-cancelable obligations of our service providers, up to the date of cancellation.
We have also entered into license agreements under which we are obligated to make certain payments. During the nine months ended September 30, 2025, there were no material changes to our commitments and contingencies related to our license agreements from those described in "Business-Intellectual property- License agreement with The Ohio State University" and Note 10, Commitments and Contingencies,to our financial statements in the Annual Report. For additional information regarding our license agreements, refer to Note 11, Commitments and Contingencies,to our condensed consolidated financial statements in this Quarterly Report.
Reduction in Force
On April 29, 2025, our board of directors approved a strategic plan, designed to increase the focus of our resources on our expanding portfolio of clinical candidates in Duchenne muscular dystrophy ("DMD") and key preclinical programs. In connection with the new strategic plan, we reduced our workforce by approximately 20% (the "Reduction"). As a result of the Reduction, we incurred charges of $1.9 million, primarily consisting of one-time severance payments and employee termination-related benefits during the nine months ended September 30, 2025. $1.7 million of the charge was recorded as research and development expenses and $0.2 million of the charge was recorded as general and administrative expenses. We do not expect to incur additional charges related to the Reduction.
Emerging Growth Company and Smaller Reporting Company Status
We are an "emerging growth company," ("EGC"), under the Jumpstart Our Business Startups Act of 2012 (the "JOBS Act"). Section 107 of the JOBS Act provides that an EGC can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act of 1933, as amended (the "Securities Act"), for complying with new or revised accounting standards. Thus, an EGC can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We have elected to avail ourselves of delayed adoption of new or revised accounting standards and, therefore, we will be subject to the same requirements to adopt new or revised accounting standards as private entities.
As an EGC, we may, and intend to, take advantage of certain exemptions and reduced reporting requirements under the JOBS Act. Subject to certain conditions, as an EGC:
•we may present only two years of audited financial statements and only two years of related Management's Discussion and Analysis of Financial Condition and Results of Operations;
•we may avail ourselves of the exemption from providing an auditor's attestation report on our system of internal controls over financial reporting pursuant to Section 404(b) of the Sarbanes-Oxley Act of 2002, as amended (the "Sarbanes-Oxley Act");
•we may avail ourselves of the exemption from complying with any requirement that may be adopted by the Public Company Accounting Oversight Board ("PCAOB") regarding mandatory audit firm rotation or a supplement to
the auditor's report providing additional information about the audit and the financial statements, known as the auditor discussion and analysis;
•we may provide reduced disclosure about our executive compensation arrangements; and
•we may not require nonbinding advisory votes on executive compensation or stockholder approval of any golden parachute payments.
We will remain an EGC until the earliest to occur of (i) the last day of the fiscal year following the fifth anniversary of the completion of our initial public offering ("IPO"), (ii) the last day of the fiscal year in which we have total annual gross revenues of $1.235 billion or more, (iii) the date on which we have issued more than $1.0 billion in non-convertible debt during the previous rolling three-year period or (iv) the date on which we are deemed to be a large accelerated filer under the Securities Exchange Act of 1934, as amended (the "Exchange Act").
We are also a "smaller reporting company" because the market value of our stock held by non-affiliates was less than $250 million as of June 30, 2025. We may continue to be a smaller reporting company if either (i) the market value of our stock held by non-affiliates is less than $250 million or (ii) our annual revenue was less than $100 million during the most recently completed fiscal year and the market value of our stock held by non-affiliates is less than $700 million. If we are a smaller reporting company at the time we cease to be an emerging growth company, we may continue to rely on exemptions from certain disclosure requirements that are available to smaller reporting companies. Specifically, as a smaller reporting company we may choose to present only the two most recent fiscal years of audited financial statements in our Annual Report and, similar to emerging growth companies, smaller reporting companies have reduced disclosure obligations regarding executive compensation.
Recently Issued Accounting Pronouncements
See Note 2, Summary of Significant Accounting Policiesto our condensed consolidated financial statements included elsewhere in this Quarterly Report.
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