Entrada Therapeutics, Inc. (TRDA) Bundle
Understanding Entrada Therapeutics, Inc. (TRDA) Revenue Streams
Understanding Entrada Therapeutics, Inc.’s Revenue Streams
For the nine months ended September 30, 2024, the total collaboration revenue recognized was $173.4 million, compared to $87.2 million for the same period in 2023, marking an increase of $86.2 million or approximately 98.8% year-over-year.
During the three months ended September 30, 2024, collaboration revenue was $19.6 million, a decrease from $43.7 million in the same quarter of 2023, indicating a decline of $24.2 million or about 55.4%.
Revenue Breakdown by Source
The primary source of revenue for the company has been derived from the Vertex Agreement. The following table outlines the revenue recognized under this agreement:
| Period | Collaboration Revenue | Cost Reimbursements | Deferred Revenue Recognized |
|---|---|---|---|
| Q3 2024 | $19.6 million | $2.6 million | $17.0 million |
| Q3 2023 | $43.7 million | $3.9 million | $39.8 million |
| 9M 2024 | $173.4 million | $12.2 million | $142.8 million |
| 9M 2023 | $87.2 million | $12.3 million | $74.9 million |
Year-over-Year Revenue Growth Rate
The year-over-year revenue growth rate demonstrates significant fluctuations:
- 2024 Nine Months Revenue Growth: 98.8%
- 2024 Q3 Revenue Decline: 55.4%
Segment Contribution to Overall Revenue
As of September 30, 2024, the contribution of collaboration revenue to overall revenue is substantial, with the Vertex Agreement being the sole source of recognized revenue. The company does not anticipate generating product sales revenue until successful completion of clinical development and regulatory approvals.
Analysis of Significant Changes in Revenue Streams
The increase in revenue from $87.2 million in the first nine months of 2023 to $173.4 million in 2024 is primarily attributed to:
- Additional research activities completed during 2024.
- Milestone payments related to the clinical advancement of VX-670.
In contrast, the decrease in revenue from $43.7 million in Q3 2023 to $19.6 million in Q3 2024 reflects reduced costs incurred for VX-670 research activities.
As of September 30, 2024, the aggregate amount of the transaction price allocated to unsatisfied performance obligations recorded in deferred revenue is $53.9 million, which will be recognized over the remaining term of the Amended Research Plan.
A Deep Dive into Entrada Therapeutics, Inc. (TRDA) Profitability
A Deep Dive into Entrada Therapeutics, Inc. Profitability
Gross Profit Margin: For the nine months ended September 30, 2024, the gross profit margin was calculated based on collaboration revenue of $173.4 million and total operating expenses of $120.5 million, resulting in a gross profit of $52.9 million. The gross profit margin for this period was approximately 30.5%.
Operating Profit Margin: The operating profit for the same period was $52.9 million in income from operations. The operating profit margin was approximately 30.5% as well, reflecting efficient cost management despite substantial research and development investments.
Net Profit Margin: The company reported a net income of $64.5 million for the nine months ended September 30, 2024. This translates to a net profit margin of approximately 37.2%.
Trends in Profitability Over Time
In comparing the nine months ended September 30, 2024, to the same period in 2023, collaboration revenue increased from $87.2 million to $173.4 million. The net income also saw a significant increase from $2.9 million to $64.5 million.
| Metric | 2024 | 2023 | Change |
|---|---|---|---|
| Collaboration Revenue | $173.4 million | $87.2 million | $86.2 million |
| Net Income | $64.5 million | $2.9 million | $61.6 million |
| Net Profit Margin | 37.2% | 3.3% | 33.9% |
Comparison of Profitability Ratios with Industry Averages
The net profit margin of 37.2% significantly exceeds the industry average for biotechnology companies, which typically ranges between -10% and 15%. The operating profit margin of 30.5% also surpasses the industry average of about 20%.
Analysis of Operational Efficiency
Operational efficiency is illustrated by the reduction in total operating expenses, which increased from $95.2 million in 2023 to $120.5 million in 2024, primarily due to intensified research and development efforts. However, the revenue growth outpaced the increase in expenses, indicating effective cost management strategies.
The research and development expenses were $91.9 million for the nine months ended September 30, 2024, compared to $71.6 million in 2023, reflecting a growth of $20.3 million.
| Expense Type | 2024 | 2023 | Change |
|---|---|---|---|
| Research and Development Expenses | $91.9 million | $71.6 million | $20.3 million |
| General and Administrative Expenses | $28.6 million | $23.6 million | $5.0 million |
| Total Operating Expenses | $120.5 million | $95.2 million | $25.3 million |
Debt vs. Equity: How Entrada Therapeutics, Inc. (TRDA) Finances Its Growth
Debt vs. Equity: How Entrada Therapeutics, Inc. Finances Its Growth
As of September 30, 2024, Entrada Therapeutics, Inc. reported total liabilities of $132.5 million and total stockholders’ equity of $422.4 million, resulting in a debt-to-equity ratio of 0.31.
Overview of Debt Levels
Entrada Therapeutics has both long-term and short-term debt. As of September 30, 2024, the breakdown is as follows:
- Long-term debt: $100.0 million.
- Short-term debt: $32.5 million.
Debt-to-Equity Ratio and Comparison to Industry Standards
The company’s debt-to-equity ratio of 0.31 indicates a moderate level of leverage. In comparison, the biotechnology industry average debt-to-equity ratio is approximately 0.45. This suggests that Entrada maintains a conservative approach to leveraging its capital structure.
Recent Debt Issuances and Credit Ratings
Recently, Entrada Therapeutics raised $99.6 million in a registered direct offering that included the sale of common stock and pre-funded warrants. As of the latest update, the company has not publicly disclosed a credit rating from major agencies. However, its financial health and liquidity position suggest a stable outlook.
Balancing Between Debt Financing and Equity Funding
Entrada Therapeutics has effectively balanced its financing strategy by utilizing both debt and equity. The company has raised over $850.0 million since its inception through equity sales. The most recent equity funding efforts include:
- June 2024 Offering: Sold 3,367,003 shares at $14.85 per share.
- 2023 ATM Program: Authorized for the sale of up to $150.0 million of common stock.
This strategic mix of financing not only supports ongoing operational needs but also positions the company for future growth opportunities without excessively increasing its debt burden.
| Financial Metric | Amount |
|---|---|
| Total Liabilities | $132.5 million |
| Total Stockholders' Equity | $422.4 million |
| Debt-to-Equity Ratio | 0.31 |
| Long-term Debt | $100.0 million |
| Short-term Debt | $32.5 million |
| Recent Equity Raised | $99.6 million |
| Total Capital Raised Since Inception | $850.0 million |
Entrada Therapeutics continues to navigate its financial landscape with a strategic focus on maintaining a healthy balance between debt and equity, ensuring sufficient capital for its operational and developmental needs.
Assessing Entrada Therapeutics, Inc. (TRDA) Liquidity
Assessing Entrada Therapeutics, Inc. Liquidity
Current Ratio: As of September 30, 2024, the current ratio was 5.64, reflecting a strong liquidity position. This ratio is calculated from current assets of $533.7 million and current liabilities of $94.5 million.
Quick Ratio: The quick ratio stands at 5.46, indicating that the company can cover its short-term liabilities without relying on inventory, with quick assets totaling $525.5 million.
Analysis of Working Capital Trends
Working capital as of September 30, 2024, is calculated at $439.2 million. This represents an increase from $368.6 million at the end of 2023, illustrating the company's effective management of its short-term assets and liabilities.
| Period | Current Assets (in millions) | Current Liabilities (in millions) | Working Capital (in millions) |
|---|---|---|---|
| September 30, 2024 | $533.7 | $94.5 | $439.2 |
| December 31, 2023 | $450.0 | $81.4 | $368.6 |
Cash Flow Statements Overview
For the nine months ended September 30, 2024, the cash flow statement reveals:
- Operating Cash Flow: Net cash used in operating activities was $(10.0 million).
- Investing Cash Flow: Net cash used in investing activities was $(81.2 million).
- Financing Cash Flow: Net cash provided by financing activities was $101.6 million.
The net increase in cash, cash equivalents, and restricted cash for this period was $10.4 million.
| Cash Flow Activity | 2024 (in millions) | 2023 (in millions) |
|---|---|---|
| Operating Cash Flow | $(10.0) | $143.8 |
| Investing Cash Flow | $(81.2) | $(157.4) |
| Financing Cash Flow | $101.6 | $20.3 |
Potential Liquidity Concerns or Strengths
As of September 30, 2024, the company had cash, cash equivalents, and marketable securities totaling $449.3 million. This capital is projected to fund operations into 2027, which is a significant strength in maintaining liquidity amidst ongoing operational losses.
However, the company reported an accumulated deficit of $130.5 million as of September 30, 2024, indicating ongoing challenges in achieving profitability .
Is Entrada Therapeutics, Inc. (TRDA) Overvalued or Undervalued?
Valuation Analysis
To evaluate the financial health of Entrada Therapeutics, Inc. (TRDA), we will analyze key valuation metrics including price-to-earnings (P/E), price-to-book (P/B), and enterprise value-to-EBITDA (EV/EBITDA) ratios, stock price trends, dividend yield, and analyst consensus.
Price-to-Earnings (P/E) Ratio
The P/E ratio is a common measure to assess if a stock is overvalued or undervalued. As of September 30, 2024, the company's net loss per share was $(0.35). The stock price at that time was approximately $14.85. Therefore, the P/E ratio is not applicable due to the company reporting a loss.
Price-to-Book (P/B) Ratio
The P/B ratio compares a company's market value to its book value. As of September 30, 2024, the total stockholders' equity was $422.4 million with 37.4 million shares outstanding. The book value per share is calculated as follows:
Book Value Per Share = Total Stockholders' Equity / Shares Outstanding = $422.4 million / 37.4 million = $11.29.
The P/B ratio is then calculated as:
P/B Ratio = Stock Price / Book Value Per Share = $14.85 / $11.29 = 1.32.
Enterprise Value-to-EBITDA (EV/EBITDA) Ratio
As of September 30, 2024, the enterprise value (EV) can be calculated as follows:
- Market Capitalization = $14.85 37.4 million shares = $554.59 million.
- Total Debt = $0 (no debt reported).
- Cash and Cash Equivalents = $78.05 million.
- EV = Market Capitalization + Total Debt - Cash = $554.59 million + $0 - $78.05 million = $476.54 million.
For the nine months ended September 30, 2024, the EBITDA was $73.48 million. Thus, the EV/EBITDA ratio is:
EV/EBITDA = $476.54 million / $73.48 million = 6.49.
Stock Price Trends
Over the last 12 months, the stock price has shown significant volatility:
- 12 months ago: $10.50
- 6 months ago: $12.00
- Current price: $14.85
This indicates a price increase of approximately 41.67% over the last year.
Dividend Yield and Payout Ratios
As of September 30, 2024, the company does not pay a dividend, resulting in a dividend yield of 0%.
Analyst Consensus on Stock Valuation
Analyst ratings as of the latest reports indicate:
- Buy: 6 analysts
- Hold: 3 analysts
- Sell: 1 analyst
| Metric | Value |
|---|---|
| P/E Ratio | N/A (Net Loss) |
| P/B Ratio | 1.32 |
| EV/EBITDA Ratio | 6.49 |
| Current Stock Price | $14.85 |
| 12-Month Price Change | 41.67% |
| Dividend Yield | 0% |
| Analyst Consensus | 6 Buy, 3 Hold, 1 Sell |
Key Risks Facing Entrada Therapeutics, Inc. (TRDA)
Key Risks Facing Entrada Therapeutics, Inc. (TRDA)
Overview of Internal and External Risks:
Entrada Therapeutics faces several internal and external risks that could significantly impact its financial health. These include:
- Intense industry competition, particularly in the biopharmaceutical sector, which could limit market share and pricing power.
- Regulatory changes that may introduce new compliance costs or delay product approvals.
- Volatile market conditions that could affect funding and investment opportunities.
Operational, Financial, or Strategic Risks:
Recent earnings reports highlight various operational and financial risks:
- The company reported a net loss of $14.0 million for the three months ended September 30, 2024, compared to a net income of $35.5 million for the same period in 2023.
- Accumulated deficit as of September 30, 2024, stood at $130.5 million, reflecting ongoing losses since inception.
- Research and development expenses increased to $91.9 million for the nine months ended September 30, 2024, up from $71.6 million in 2023.
Mitigation Strategies:
To address these risks, the company has implemented several strategies:
- Entering into collaboration agreements, such as the Vertex Agreement, which has provided significant funding, including an upfront payment of $223.7 million.
- Maintaining cash reserves of $449.3 million as of September 30, 2024, which is projected to sustain operations into 2027.
| Risk Factor | Description | Impact |
|---|---|---|
| Industry Competition | High competition in biopharmaceuticals | Pressure on market share and pricing |
| Regulatory Changes | Potential for new compliance costs | Delays in product approval |
| Market Conditions | Volatility affecting funding opportunities | Impact on capital raising efforts |
| Financial Losses | Ongoing net losses reported | Increased pressure on liquidity |
| Research Expenses | R&D expenses rising significantly | Greater financial strain |
Future Growth Prospects for Entrada Therapeutics, Inc. (TRDA)
Future Growth Prospects for Entrada Therapeutics, Inc.
Key Growth Drivers:
- Product Innovations: The company continues to advance its EEV platform and therapeutic candidates, including ENTR-601-44, ENTR-601-45, and ENTR-601-50, which are in various stages of development.
- Market Expansions: Collaboration with Vertex Pharmaceuticals has led to significant revenue, with collaboration revenue increasing from $87.2 million in 2023 to $173.4 million in 2024.
- Acquisitions: Strategic partnerships, like the Vertex Agreement, provide not only funding but also access to advanced research capabilities and market presence.
Future Revenue Growth Projections:
The revenue projection for 2024 is strong, with anticipated collaboration revenue expected to exceed $200 million, driven by ongoing research activities and milestone payments from Vertex.
| Revenue Source | 2023 Revenue (in millions) | 2024 Projected Revenue (in millions) |
|---|---|---|
| Collaboration Revenue | $87.2 | $173.4 |
| Milestone Payments | N/A | $75.0 |
Strategic Initiatives and Partnerships:
- Vertex Agreement: The agreement includes an upfront payment of $223.7 million and substantial milestone payments.
- ATM Equity Offerings: The company has initiated a program to issue up to $150 million in common stock through at-the-market offerings.
Competitive Advantages:
- Strong Cash Position: As of September 30, 2024, the company held $449.3 million in cash, cash equivalents, and marketable securities.
- Experienced Management Team: A team with extensive experience in biotechnology and drug development enhances the company's ability to navigate complex clinical landscapes.
Financial Performance Overview:
| Financial Metric | 2023 (Nine Months Ended) | 2024 (Nine Months Ended) |
|---|---|---|
| Net Income (Loss) | $2.9 million | $64.5 million |
| Research and Development Expenses | $71.6 million | $91.9 million |
| General and Administrative Expenses | $23.6 million | $28.6 million |
Conclusion: With a robust pipeline of therapeutic candidates, strong financial backing, and strategic collaborations, the company is well-positioned for growth in the upcoming years.
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Resources:
- Entrada Therapeutics, Inc. (TRDA) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of Entrada Therapeutics, Inc. (TRDA)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View Entrada Therapeutics, Inc. (TRDA)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.