Business context and reporting period
The supplied filing is resTORbio, Inc.’s unaudited Form 10-Q for the quarter ended March 31, 2018; it is not an Adicet Bio filing. resTORbio was a clinical-stage biopharmaceutical company developing treatments for aging-related conditions. Its lead candidate, RTB101, was being studied alone and with everolimus to reduce respiratory tract infections in older adults. The company had no product revenue.
Financial results and liquidity
| Metric | Q1 2018 | Q1 2017 |
|---|---|---|
| Revenue | None | None |
| Research and development expense | $8.1 million | $3.3 million |
| General and administrative expense | $2.1 million | $0.1 million |
| Operating expenses | $10.2 million | $3.4 million |
| Other income, primarily interest | $0.3 million | None |
| Net loss | $9.9 million | $3.4 million |
| Basic and diluted loss per share | $0.46 | $1.20 |
| Cash used in operating activities | $7.3 million | $0.3 million |
At March 31, 2018, cash and cash equivalents were $135.7 million, total assets $137.2 million, total liabilities $6.9 million, and accumulated deficit $43.6 million. The company reported no debt or credit facility. Operating cash use included a $9.9 million net loss, partly offset by $1.2 million of stock-based compensation and changes in operating liabilities. Investing cash use was $0.3 million, mainly for equipment. Financing provided $89.9 million, primarily from the IPO. The company reported $0.5 million of restricted cash separately from cash and cash equivalents.
Material changes versus the prior comparable period
- Net loss increased to $9.9 million from $3.4 million, reflecting higher clinical development spending and public-company and staffing costs. R&D expense rose to $8.1 million from $3.3 million; Q1 2017 included $3.2 million in expense for the Novartis license.
- G&A expense rose to $2.1 million from $63,000, including personnel and professional services costs.
- The January 2018 IPO generated approximately $89.4 million in stated net proceeds. Preferred stock converted into 15.9 million common shares; common shares issued and outstanding were 28.0 million at quarter-end.
- Cash and cash equivalents increased from $53.3 million at year-end 2017 to $135.7 million at March 31, 2018.
Outlook, risks, contingencies and unusual items
- Management expected top-line results from the ongoing Phase 2b RTB101 trial in the second half of 2018. It said available cash was expected to fund the operating plan through 2020, including a subsequent pivotal Phase 3 program and NDA filing only if the Phase 2b and Phase 3 programs were successful. These estimates depend on assumptions and may change.
- The company expected increasing R&D and G&A expenses and continued operating losses, and anticipated needing additional financing. It warned that financing may not be available on acceptable terms or at all, potentially requiring delayed, reduced or suspended development activities.
- The Novartis license carries potential clinical, regulatory and commercial milestone payments, including up to $125 million in commercial milestones, plus tiered royalties. No unpaid milestones or royalties were reported as achieved or probable at quarter-end.
- A research funding agreement with the Silverstein Foundation provided $0.5 million for RTB101-related research. The amount was recorded as a funding advance because no qualifying expenses had yet been incurred; repayment is required if the company successfully conducts a positive Phase 3 trial for Parkinson’s disease. A company director is a foundation co-founder and trustee.
- The company entered a Boston office lease with approximately $0.7 million in minimum rent commitments. It reported no material legal proceedings, no material changes to previously disclosed risk factors, and effective disclosure controls.
- Market risks included interest-rate exposure on short-term investments and possible foreign-currency fluctuations; management said a 100-basis-point rate change would not materially affect portfolio fair value.
Important facts for investors to verify
- Confirm the filing identity: the supplied document names resTORbio, Inc., not Adicet Bio, Inc.
- Track Phase 2b trial timing and results, and whether further pivotal trials or regulatory filings proceed.
- Assess cash burn against management’s through-2020 runway estimate, including future clinical, manufacturing and public-company costs.
- Review potential financing needs and the dilution or other terms associated with any future capital raise.
- Monitor Novartis milestone and royalty obligations and the conditions for repayment of the Silverstein Foundation advance.
- Reconcile reported IPO proceeds: the filing states approximately $89.4 million net proceeds, while the cash flow statement reports $89.9 million of financing proceeds for the quarter.