MeiraGTx Holdings plc — Q1 2021 Form 10-Q
Reporting period: Three months ended March 31, 2021; compared with the three months ended March 31, 2020. Amounts are in U.S. dollars unless stated otherwise.
Business context
MeiraGTx is a clinical-stage gene therapy company with six programs in clinical development and additional preclinical and research programs, focused initially on inherited retinal diseases, neurodegenerative diseases and xerostomia. It has no approved products and has not generated product sales revenue. Janssen, a Johnson & Johnson company, collaborates on retinal disease programs and is a related party. In January 2021, MeiraGTx completed the acquisition of manufacturing facilities in Shannon, Ireland.
Financial performance and liquidity
| Metric | Q1 2021 | Q1 2020 |
|---|---|---|
| License revenue, related party | $4.6 million | $4.2 million |
| General and administrative expense | $9.9 million | $11.8 million |
| Research and development expense | $16.7 million | $8.1 million |
| Total operating expenses | $26.6 million | $19.9 million |
| Loss from operations | $22.0 million | $15.7 million |
| Net loss | $23.6 million | $15.7 million |
| Basic and diluted loss per share | $0.54 | $0.43 |
| Net cash provided by (used in) operating activities | $9.1 million | $(12.4) million |
| Net cash used in investing activities | $18.9 million | $4.0 million |
Revenue was amortization of Janssen’s prior upfront payment, not product sales. The filing does not present a gross margin measure. Q1 2021 operating cash flow benefited substantially from collections of Janssen receivables and tax incentives; management cautions that positive operating cash flow is not typical or assured.
At March 31, 2021, cash and cash equivalents were $199.4 million, accounts receivable from Janssen were $12.0 million, current assets were $230.1 million and current liabilities were $53.5 million. Total liabilities were $118.9 million, including $22.8 million of lease obligations; the filing does not report conventional borrowings. Accumulated deficit was $284.6 million. Cash decreased by $9.6 million during the quarter.
Material changes versus prior year
- Net loss increased by $7.9 million, primarily reflecting higher R&D spending and higher foreign currency losses, partly offset by lower G&A expense.
- R&D expense increased by $8.6 million, including higher clinical and preclinical costs, payroll, license fees and depreciation; Janssen research funding offset a smaller amount of expense than in Q1 2020.
- G&A expense declined by $1.9 million, principally due to lower payroll-related costs and share-based compensation, partly offset by higher insurance, facilities and consulting costs.
- Operating cash flow improved from an outflow of $12.4 million to an inflow of $9.1 million, mainly due to changes in collaboration-related receivables and reimbursements. Investing outflow rose with facility-related spending and investments.
- Foreign currency loss increased to $1.6 million from $0.8 million; foreign currency translation shifted from a $3.9 million gain to a $0.3 million loss.
Outlook, management commentary and risks
- Management estimates cash, together with expected Janssen research funding and milestone payments, will fund operating and capital expenditure requirements into the middle of 2023. The filing also states cash on hand should cover at least the next 12 months. Both estimates depend on assumptions and actual spending or funding could differ.
- Management expects expenses to rise as programs advance and manufacturing capacity expands. Planned milestones included preparing to initiate the Phase 3 Lumeos trial of AAV-RPGR; anticipating a Phase 3 AAV-RPE65 trial in the second half of 2021; continuing AAV-AQP1 enrollment with completion expected in 2021 and a Phase 2 study planned for the second half of 2022; and filing an AAV-GAD IND in Q3 2021. These are expectations, not assured outcomes.
- The FDA granted Fast Track designation to AAV-CNGA3 in January 2021. MeiraGTx and Janssen had completed dosing adults and pediatric patients in the AAV-CNGA3 Phase 1/2 dose-escalation study and expected to update on further CNGB3/CNGA3 studies later in 2021.
- Key risks include continued losses and the need for additional capital; clinical, regulatory and gene-therapy safety uncertainty; manufacturing scale-up and capacity constraints; reliance on Janssen and other third parties; competition and intellectual property risks; and possible COVID-19 disruption to trials, operations or capital access. COVID-19 had not materially affected Q1 2021 results or operations, but future effects were uncertain.
- The company reported no material legal proceedings and no subsequent events. Management concluded disclosure controls were effective at the end of the quarter; no material changes in internal control over financial reporting were reported.
Important facts for investors to verify
- Whether the projected runway into mid-2023 remains supported by actual cash use, Janssen reimbursements and future funding.
- Progress, enrollment, safety and data for the planned Phase 3 trials and other clinical milestones.
- The timing and amount of Janssen receivables, research funding, milestones and related-party revenue recognition.
- Whether the Shannon facilities achieve operational readiness, regulatory compliance and the expected manufacturing capacity.
- Future R&D spending, foreign-exchange exposure and the company’s need and ability to raise additional capital.