Name: Eliem Therapeutics, Inc. Q2 2023 Earnings Call
Start: 2023-07-20T00:00:00.000Z

Executive Summary

Pre-revenue biotech; Q2 2023 total operating expenses fell 51% year over year to $6.714M, net loss narrowed to $5.220M, and diluted EPS improved to $(0.19) from $(0.56) in Q2 2022, driven by program pauses and restructuring .
Company announced strategic review and halted further development of its Kv7 program; engaged Leerink Partners as advisor; preliminary unaudited cash, cash equivalents and marketable securities were ~$102.6M as of June 30, 2023 .
Guidance effectively lowered: Q1 guidance cited cash runway into 2027; Q2 shifted to “at least the next twelve months” from filing date amid strategic review; expected restructuring cost outlook raised to ~$16.9M from ~$16.6M .
Key potential stock reaction catalyst: formal exploration of strategic alternatives with ~$102.6M cash and paused R&D programs, introducing optionality (sale/merger) alongside risks (liquidation or limited program value attribution) .

What Went Well and What Went Wrong

Operating expenses declined sharply: Q2 2023 total opex $6.714M vs $13.701M in Q2 2022 (−51%), primarily from pausing ETX‑155 and prior discontinuation of ETX‑810 .
Interest income benefited from higher rates: Q2 2023 interest income net $1.110M vs $0.147M in Q2 2022; management cited increased investment yields .
Positive FX impact: Q2 2023 foreign currency swing to +$0.384M from a $(1.042)M loss in prior year, driven by GBP/USD changes affecting R&D tax credit remeasurement .
Quote: “We are excited to advance our Kv7 program forward with ETX‑123… With a strong balance sheet funding operations into 2027” (Q4/Year-end PR) .

Reduced UK R&D tax credits: credits declined due to rate changes, reducing offsets to R&D expense; management flagged lower credits and overall decline in qualifying R&D .
Restructuring expenses: Q2 recorded ~$0.7M restructuring costs (incl. $0.2M ROU impairment), with year-to-date restructuring of $16.5M through Q2 across severance, benefits, and stock-based comp .
Internal control weaknesses: disclosure controls “not effective” due to material weaknesses in control environment and formal policies; remediation ongoing .
Strategic uncertainty: halted Kv7 development and strategic review may lead to limited value attribution to pipeline or potential dissolution risk, as disclosed in risk factors .

Metric	Q4 2022	Q1 2023	Q2 2023
Revenues ($USD Millions)	$0.0 (no product revenue)	$0.0 (no product revenue)	$0.0 (no product revenue)
Research & Development ($USD Millions)	$4.927	$5.720	$3.688
General & Administrative ($USD Millions)	$4.627	$17.718	$3.026
Total Operating Expenses ($USD Millions)	$9.554	$23.438	$6.714
Interest Income, net ($USD Millions)	$0.760	$0.900	$1.110
Foreign Currency Gain/(Loss) ($USD Millions)	$1.032	$0.248	$0.384
Net Loss ($USD Millions)	$(7.762)	$(22.290)	$(5.220)
Diluted EPS ($USD)	$(0.29)	$(0.84)	$(0.19)

Balance sheet and liquidity KPIs:

KPI	Q4 2022	Q1 2023	Q2 2023
Cash & Equivalents ($USD Millions)	$43.585	$34.437	$25.294
Short-term Marketable Securities ($USD Millions)	$79.981	$74.935	$77.339
Cash + ST Marketable ($USD Millions)	$123.566	$109.372	$102.633
Total Assets ($USD Millions)	$134.992	$122.085	$116.274
Accrued Expenses ($USD Millions)	$5.047	$3.587	$2.255
Restructuring Liability ($USD Millions)	—	$1.287	$0.767
Weighted Avg Shares (Basic/Diluted)	26.373M	26.492M	26.841M

Segment breakdown:

KPIs:

Workforce reduction ~55% tied to restructuring (completed substantially in H1 2023) .
Material weaknesses in ICFR identified; remediation actions underway .

Metric	Period	Previous Guidance	Current Guidance	Change
Cash runway	As of Q1 2023 filing	Fund operations into 2027	Sufficient for at least next 12 months from Q2 filing date	Lowered
Restructuring aggregate cost	FY 2023	~$16.6M expected	~$16.9M expected; remaining ~$0.4M largely by Q3 2023	Raised
Kv7/ETX‑123 program status	2023	Advance ETX‑123; Phase 1 planned H1 2024	Halt further development of Kv7 program amid strategic alternatives	Paused/Halted
Strategic advisor	2023	Not disclosed	Leerink Partners engaged	New disclosure

Topic	Previous Mentions (Q4 2022 PR, Q1 2023 10-Q)	Current Period (Q2 2023 10-Q/8-K)	Trend
R&D execution	Advancing Kv7 program; ETX‑123 IND-enabling; Phase 1 planned H1 2024	Paused Kv7 development; strategic review initiated	Negative/Paused
Cash runway	“Into 2027” post reorg	“≥12 months” from filing date	Shortened runway view
FX/macro impact	FX loss in 2022; modest gain Q1 2023	FX gain in Q2 2023	Improving FX
Regulatory/legal (controls)	Material weaknesses disclosed; remediation underway	Material weaknesses remain; remediation continues	Ongoing
Restructuring	Plan approved; ~55% workforce reduction; $15.8M Q1 costs	$0.7M Q2 costs; cumulative $16.5M through Q2	Winding down

“We are excited to advance our Kv7 program forward with ETX‑123… With a strong balance sheet funding operations into 2027, we are in an optimal position to execute on ETX‑123 and the Kv7 program.” — Andrew Levin, Executive Chairman (March 6, 2023) .
“Determination to halt further development of its Kv7 program and to conduct a comprehensive exploration of strategic alternatives focused on maximizing shareholder value.” (July 20, 2023) .
Liquidity disclosure: “cash, cash equivalents, and marketable securities of $102.6M as of June 30, 2023… sufficient to meet projected operating requirements for at least the next twelve months” .

No Q2 2023 earnings call transcript located for ELYM within the period; we searched but did not find a Q2 transcript or call materials [ListDocuments results; none returned for earnings-call-transcript for ELYM between 2023-04-01 and 2023-09-30].

Wall Street consensus via S&P Global (Capital IQ) was unavailable for ELYM due to missing CIQ mapping; as a pre-revenue biotech, EPS and revenue estimates were not retrieved. Values from S&P Global could not be obtained; therefore, comparisons to consensus are not provided (GetEstimates error indicates unavailable mapping).

Strategic optionality vs. execution risk: Process may culminate in sale/merger or liquidation; counterparties may ascribe minimal value to ETX‑123/ETX‑155 given program pauses and cash-centric profile .
Expense discipline evident: Q2 opex down 51% YoY; net loss narrowed; interest income and FX tailwinds provided offsets .
Liquidity strong but guidance shortened: ~$102.6M cash & investments, yet runway guidance now “≥12 months,” reflecting strategic review uncertainty .
Controls risk persists: Material weaknesses in ICFR remain; monitor remediation and potential impacts on reporting quality .
R&D visibility limited: Kv7 program halted; near-term clinical catalysts unlikely absent strategic transaction; prior plan for H1 2024 Phase 1 no longer in place .
Restructuring largely complete: Remaining ~$0.4M expected by Q3; operating expense base reduced; watch for sublease impacts and ongoing leasing obligations .
Trading implications: Strategic review headlines can drive event-risk; stock likely trades on transaction probability and cash value vs. burn trajectory; absence of consensus estimates reduces traditional beat/miss catalysts .

Sources: Q2 2023 Form 10‑Q (filed Aug 10, 2023) –; Q1 2023 Form 10‑Q (filed May 11, 2023) –; 8‑K press releases (Mar 6, 2023; Jul 20, 2023) – –.