Executive Summary

Q1 2022: development-stage with no revenue; net loss narrowed to $9.4M and diluted EPS $(0.17); operating expenses fell to $6.3M from $8.9M in Q1 2021; non‑cash warrant liabilities expense was $1.3M; net cash used in operations was $5.4M; cash rose to $23.5M after a March PIPE financing .
Prior quarter (Q4 2021): net loss $8.5M; diluted EPS $(0.16); R&D $4.2M; G&A $4.4M; cash was $17.0M at year‑end .
Going concern: management concluded “substantial doubt” exists about the ability to continue as a going concern without additional capital; company outlines funding alternatives but has no arrangements in place as of the filing .
Near-term catalyst: top‑line Phase 2b INSPIRE data for IRX‑2 in head & neck cancer expected in Q3 2022; this readout is a key stock catalyst for clinical viability and partnering optionality .
Leadership change post‑quarter: CEO Howard J. Federoff resigned effective May 26, 2022; Matthew Angel appointed interim CEO, with option accelerations and severance detailed in the agreement .

What Went Well and What Went Wrong

What Went Well

Operating discipline: total operating expenses declined to $6.3M in Q1 2022 (vs. $8.9M in Q1 2021) primarily on lower transaction costs and controlled R&D/G&A pace .
Strengthened liquidity: completed a $12.0M gross PIPE on March 9, 2022, lifting quarter‑end cash to $23.5M despite $5.4M operating cash burn .
Strategic pipeline focus: management reiterated platform strategy in engineered cellular and genetic medicines (iMSC, NoveSlice gene-editing, ToRNAdo LNPs) and identified IRX‑2 data timing, anchoring 2022 milestones .
- “We believe that we have created a leading platform company in cell, gene‑editing and cytokine therapies, with a broad and deep pipeline.” – CEO Howard J. Federoff .

What Went Wrong

Going concern and capital constraints: management flagged substantial doubt about continuing as a going concern over the next 12 months absent new financing; variable‑rate issuance is restricted for one year post‑PIPE .
Non‑cash warrant liabilities hit P&L: warrant liabilities recognized under ASC 815‑40 added $1.3M of expense in Q1 2022 (fair value at issuance exceeded proceeds and remeasurement losses) .
Legal and controls headwinds: accrued ~$0.8M for legal matters and identified material weaknesses in disclosure controls; late 10‑Q filing triggered $0.2M liquidated damages accrual under the PIPE registration rights .

Financial Results

Income Statement vs Prior Year and Prior Quarter

Metric	Q1 2021	Q4 2021	Q1 2022
Revenues ($USD Millions)	$0.00	$0.00	$0.00
Operating Expenses ($USD Millions)	$8.92	$9.11	$6.30
Net Loss ($USD Millions)	$18.52	$8.46	$9.38
Diluted EPS ($USD)	$(0.67)	$(0.16)	$(0.17)
Weighted Avg Shares (Millions)	27.80	52.04	53.63

Operating Detail – Trend Across Last Two Quarters and Current Quarter

Metric ($USD Millions)	Q3 2021	Q4 2021	Q1 2022
R&D Expense	$1.47	$4.18	$1.78
G&A Expense	$4.26	$4.35	$4.51
Transaction Costs	$0.00	$0.00	$0.00
Warrant Liabilities Expense	$0.00	$0.00	$1.32
Loss on Sale of NTN Assets	$0.00	$0.00	$0.00
Loss on Non‑controlling Investment	$0.00	$0.00	$0.62
Other (Expense) / Income, net	$0.28	$0.65	$(1.14)

Balance Sheet Highlights

Metric	Dec 31, 2021	Mar 31, 2022
Cash and Equivalents ($USD Millions)	$16.99	$23.50
Total Assets ($USD Millions)	$31.53	$35.38
Total Liabilities ($USD Millions)	$6.02	$18.07
Warrant Liabilities ($USD Millions)	$0.00	$13.32

Cash Flow KPIs

Metric	Q1 2021	Q1 2022
Net Cash Used in Operating Activities ($USD Millions)	$(3.43)	$(5.43)

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Revenue	FY/Q1 2022	None provided	None provided	Maintained (no guidance)
Operating Expenses	FY/Q1 2022	None provided	None provided	Maintained (no guidance)
Cash Runway / Liquidity	Next 12 months	Not quantified	Substantial doubt to continue as going concern without additional capital; exploring equity/debt/collaborations/grants	—
Pipeline Timing (IRX‑2)	Q3 2022	N/A	Top‑line Phase 2b INSPIRE data expected Q3 2022	New timing reaffirmed

Earnings Call Themes & Trends

(Note: No Q1 2022 earnings call transcript available.)

Topic	Previous Mentions (Q3 2021)	Previous Mentions (Q4 2021)	Current Period (Q1 2022)	Trend
Engineered cellular/genetic platform	Detailed strategy on iMSC, NoveSlice, ToRNAdo; acquisition of Novellus to build platform	Reinforced platform ambition in press release narrative	Continued emphasis on gene‑editing/iMSC pipeline and LNP delivery	Steady, execution focus
IRX‑2 clinical program	INSPIRE Phase 2b fully populated; multiple combo studies outlined	Awaiting readout, highlighted as 2022 catalyst	Top‑line INSPIRE data guided to Q3 2022	Imminent catalyst
Liquidity/capital structure	Equity lines with Lincoln Park; cash $24.4M at Q3	Year‑end cash $17.0M	$12.0M PIPE; cash $23.5M; going concern raised	Tightening; capital raise needed
Controls & compliance	No material weakness discussion in Q3 2021	—	Material weaknesses; late filing liquidated damages accrued	Deteriorated; remediation underway
Legal/regulatory	Shareholder and consultant litigation disclosed	—	Ongoing matters; $0.8M legal accrual	Persistent headwind

Management Commentary

“2021 was a transformational year…We believe that we have created a leading platform company in cell, gene‑editing and cytokine therapies, with a broad and deep pipeline.” – Howard J. Federoff, M.D., Ph.D., President & CEO .
“We began 2022 with the launch of our new research and development facilities in San Diego…We believe that our Nasdaq listing better aligns Brooklyn with industry peers…acknowledges and further validates our approach and technology.” – Howard J. Federoff .

Q&A Highlights

No Q1 2022 earnings call transcript was available; no analyst Q&A themes or guidance clarifications could be extracted.

Estimates Context

S&P Global/Capital IQ consensus EPS and revenue estimates for Q1 2022 were unavailable; an attempt to retrieve estimates resulted in an error due to platform limits. Comparisons to Wall Street consensus cannot be made for this period [GetEstimates error].

Key Takeaways for Investors

Liquidity watch: despite $23.5M cash post‑PIPE, management’s going‑concern language and variable‑rate issuance restrictions heighten financing risk; monitor next capital actions and potential collaborations .
Non‑cash volatility: warrant liabilities accounting can introduce P&L noise; expect quarter‑to‑quarter swings as fair value is remeasured .
Cost trajectory: opex fell versus prior year; workforce reduction and focused spend should continue to moderate burn, but legal and controls remediation costs are offsets .
Clinical catalyst: IRX‑2 Phase 2b INSPIRE top‑line data in Q3 2022 is the primary near‑term driver for sentiment and potential partnering; size positioning accordingly .
Governance/leadership: CEO transition to interim leadership may drive strategic updates; review incentive structures and execution continuity .
Trading implications (short term): expect event‑driven volatility around INSPIRE readout and financing updates; warrant liability remeasurement can affect headline EPS.
Medium‑term thesis: value hinges on validating the IRX‑2 program and advancing iMSC/gene‑editing platform toward INDs while stabilizing capital structure and remediating internal controls .

References:

Eterna Therapeutics Inc. (ERNA)·Q1 2022 Earnings Summary