MeiraGTx Holdings plc — Q2 2020 Form 10-Q
Reporting period: Quarter and six months ended June 30, 2020. MeiraGTx is a clinical-stage gene therapy company with six clinical programs, preclinical programs, and a cGMP manufacturing facility in London. It reported no product sales; reported revenue was primarily amortization of the Janssen collaboration upfront payment.
Financial performance and position
| Metric | Q2 2020 | Q2 2019 | Six months 2020 | Six months 2019 |
|---|---|---|---|---|
| License revenue | $2.5 million | $2.0 million | $6.7 million | $2.8 million |
| Operating expenses | $27.7 million | $23.2 million | $47.6 million | $44.7 million |
| Operating loss | $25.2 million | $21.2 million | $40.9 million | $41.9 million |
| Net loss | $25.4 million | $20.8 million | $41.1 million | $38.8 million |
| Basic and diluted loss per share | $0.69 | $0.63 | $1.12 | $1.26 |
| Operating cash flow | Not provided by quarter | $(25.3) million | $60.4 million |
- Janssen research and development reimbursements, recorded as offsets to R&D expense, were $10.6 million in Q2 and $24.6 million for the six months.
- At June 30, cash and cash equivalents were $194.8 million, down from $227.2 million at December 31, 2019. Total assets were $290.6 million; shareholders’ equity was $172.8 million.
- Current assets were $235.2 million versus current liabilities of $46.7 million. Total liabilities were $117.8 million, including $20.7 million of lease obligations and $73.7 million of deferred Janssen revenue. The filing reports no borrowings or other conventional debt balance.
- Six-month investing cash outflow was $7.0 million, mainly property and equipment purchases. Financing cash inflow was $0.2 million; unlike 2019, there was no private placement proceeds in the period.
Material changes versus comparable periods
- Q2 operating expenses rose $4.5 million year over year, primarily as R&D expense increased $6.4 million. This included $7.7 million of non-cash Emrys acquired R&D expense and higher clinical manufacturing costs, partly offset by increased Janssen research funding. G&A declined $1.9 million, primarily from lower payroll costs.
- For the first half, operating expenses increased $2.9 million. Operating loss narrowed by $1.0 million, but net loss widened by $2.3 million, chiefly reflecting a $1.1 million foreign-exchange loss in 2020 versus a $3.0 million gain in 2019.
- Operating cash flow shifted from $60.4 million provided in first-half 2019 to $25.3 million used in first-half 2020. The prior-year inflow included the $100 million Janssen upfront payment. 2019 financing cash flow also included $80 million gross proceeds from a private placement.
- Cash declined by $32.1 million in the first half of 2020. Research and development tax incentive receivable fell to $6.8 million from $12.0 million at year-end.
Outlook, developments and risks
- Management estimated cash and expected Janssen research funding would fund operating expenses and capital requirements into 2022, while the notes also state cash on hand should cover at least the next 12 months from issuance. Both estimates depend on assumptions; management warns funds could be used sooner. The company expects continued substantial losses and additional capital needs.
- Management expected R&D costs to increase, including with planned advancement of AAV-RPGR into the Phase 3 Lumeos trial. The company and Janssen expected to advance the program based on preliminary Phase 1/2 results; no assurance of Phase 3 timing or success is provided.
- In July 2020, the company reported six-month data from 10 participants in the AAV-RPGR dose-escalation trial, describing retinal-sensitivity improvements in low- and intermediate-dose cohorts. These were preliminary clinical results, subject to further data and verification.
- AAV-AQP1 enrollment in the AQUAx study resumed after pandemic-related disruption; preliminary data were anticipated by year-end 2020. AAV-GAD manufacturing was ongoing, with an IND filing expected in early 2021 following clinical-material release.
- COVID-19 had not materially affected financial results or operations in the first half, according to the company. Future effects remained uncertain, with potential disruption to trials, enrollment, manufacturing, facilities, and access to capital.
- On August 4, 2020, after quarter-end, the company agreed to purchase two Shannon, Ireland properties for €18 million (approximately $21.2 million) for a second viral-vector facility and its first plasmid facility. It paid a 20% deposit of approximately $4.3 million; closing and completion remained subject to stated conditions and schedules.
- Emrys was acquired in April for approximately $7.7 million in share consideration. The acquired in-process R&D was expensed immediately. In connection with the transaction, certain Vector merger milestone and royalty obligations were terminated and waived.
- Key risks include clinical and regulatory uncertainty, manufacturing scale-up and supply constraints, continued operating losses and financing needs, reliance on Janssen, foreign-exchange exposure, and potential COVID-19 effects. The company disclosed no material legal proceedings and no new material commitments during the six months.
Key facts for investors to verify
- Whether the preliminary AAV-RPGR findings translate into robust, durable efficacy and support Phase 3 readiness.
- Whether the reported runway into 2022 remains realistic after ongoing cash burn, planned trials, manufacturing expansion, and the Ireland property commitments.
- The timing, scale, and conditions of Janssen research funding, and the assumptions underlying collaboration revenue recognition and cost reimbursement.
- Whether COVID-19 or other clinical, regulatory, manufacturing, or supply-chain issues alter trial enrollment and development timelines.
- Completion and operational readiness of the Shannon facilities, including total project costs beyond the disclosed purchase price and deposit.