Graybug Vision, Inc. — Q3 2020 Form 10-Q
Filing identity caveat: The request identifies CalciMedica, Inc., but the supplied filing is for Graybug Vision, Inc. (Nasdaq: GRAY). The summary below reflects Graybug’s filing, not CalciMedica’s.
Business context and reporting period
Unaudited results cover the quarter and nine months ended September 30, 2020, compared with the corresponding 2019 periods. Graybug is a clinical-stage biopharmaceutical company developing sustained-release treatments for retinal and optic nerve diseases. It had no approved products or product revenue and devoted substantially all resources to research and development.
Lead candidate GB-102 is being developed for wet age-related macular degeneration (wet AMD) and diabetic macular edema (DME). The company completed its IPO in September 2020; all outstanding preferred stock converted into common stock, and a 9.0058-for-1 reverse stock split was effected.
Financial results and liquidity
| Metric | Three months ended September 30, 2020 | Nine months ended September 30, 2020 | Comparable 2019 period |
|---|---|---|---|
| Revenue | None | None | None |
| Research and development expense | $4.8 million | $15.5 million | $8.4 million and $22.6 million |
| General and administrative expense | $2.1 million | $5.2 million | $2.0 million and $4.4 million |
| Total operating expenses | $6.8 million | $20.7 million | $10.4 million and $27.0 million |
| Net loss | $4.7 million | $18.4 million | $10.2 million and $26.8 million |
| Net loss attributable to common stockholders | $7.1 million | $25.6 million | $12.3 million and $31.4 million |
| Basic and diluted loss per share | $2.52 | $13.74 | $9.30 and $24.10 |
There were no revenue or operating margins to report. Lower operating expenses and net losses versus 2019 were principally associated with reduced R&D spending; common-stockholder losses also include cumulative preferred dividends. The 2020 results included a $2.2 million gain from the fair-value change and expiration of the preferred-stock tranche obligation.
At September 30, cash and cash equivalents were $95.0 million, with no short-term investments, versus cash and short-term investments totaling $36.0 million at December 31, 2019. Total assets were $98.4 million and total liabilities were $7.8 million; the filing reports no credit facility or committed capital source. Nine-month operating cash use was $22.3 million, investing cash provided was $19.9 million, and financing cash provided was $81.5 million. Financing included $83.7 million of IPO proceeds net of underwriting discounts and commissions, partly offset by $2.3 million of offering-cost payments.
The September IPO raised $79.5 million net after underwriting discounts, commissions and offering expenses. In October, underwriters exercised their full option, adding approximately $12.6 million net; total IPO proceeds including that option were approximately $92.1 million. Management said cash and cash equivalents, together with the October proceeds, were expected to fund operating and capital requirements beyond the next 12 months.
Changes, outlook and material risks
- Quarterly R&D expense fell 43% and nine-month R&D expense fell 31% year over year. Management attributed the declines mainly to completion in 2019 of manufacturing clinical supplies for the GB-102 Phase 2b trial and no primary manufacturing activity in the 2020 periods.
- G&A expense increased 5% for the quarter and 18% for the nine months, largely reflecting IPO-related professional services.
- Management expected continued losses and rising R&D, G&A and capital expenditures. No revenue or profitability guidance was provided. The company said it would continue to need additional financing to advance development; future financing may be unavailable or dilutive, and spending might need to be reduced if funding cannot be obtained.
- Graybug expected topline results from the GB-102 wet AMD Phase 2b trial in the first half of 2021. It also described planned development of GB-103 for diabetic retinopathy and GB-401 for primary open-angle glaucoma; timing and success remain uncertain.
- The 2 mg GB-102 dose was discontinued across programs after anterior-chamber medication events, including two serious ocular adverse events in one Phase 2a patient. The 1 mg dose was selected; the filing cautions that early-stage results may not predict pivotal-trial outcomes.
- COVID-19 had caused minor patient-dosing delays and could disrupt trial activity, suppliers, manufacturing, hiring or regulatory timelines. As of the filing, vendors and manufacturers were operating without anticipated supply interruption, but the broader impact remained uncertain.
- Other material risks include clinical and regulatory failure, manufacturing scale-up and third-party dependence, competition, intellectual-property protection and sunitinib patent expiry expected in 2021. The company reported no material legal proceedings or probable or reasonably possible material indemnification claims.
Most important facts to verify
- Confirm the intended issuer: the supplied 10-Q is Graybug Vision’s, not CalciMedica’s.
- Check subsequent disclosures for GB-102 Phase 2b results and any changes to the stated first-half 2021 timing.
- Track cash burn and financing needs against the company’s “beyond 12 months” runway statement, including actual use of October IPO proceeds.
- Review clinical safety and efficacy by dose, trial delays, and any changes in development plans for GB-103 and GB-401.
- Assess dilution, including shares issued in the IPO and option exercise, equity-plan authorizations and future financing needs.