Monopar Therapeutics Inc. — Q3 2018 Form 10-Q
Reporting period: Quarter and nine months ended September 30, 2018. Amounts are in U.S. dollars unless noted.
Business context
Monopar is a pre-revenue biopharmaceutical company developing oncology therapies. Its candidates are Validive (Phase 3-ready, for severe oral mucositis associated with chemoradiotherapy), MNPR-201 (Phase 2 clinical stage) and MNPR-101 (pre-IND stage). The company reported no clinical trials in progress during the periods presented.
Financial results and liquidity
| Metric | Q3 2018 | Q3 2017 | Nine months 2018 | Nine months 2017 |
|---|---|---|---|---|
| Revenue | $0 | $0 | $0 | $0 |
| Research and development expense | $304,000 | $181,000 | $1,253,000 | $626,000 |
| General and administrative expense | $364,000 | $215,000 | $1,151,000 | $739,000 |
| Net loss | $640,000 | $14,877,000 | $2,337,000 | $15,841,000 |
| Operating cash flow | Not stated for quarter | Not stated for quarter | $(2,161,000) | $(1,811,000) |
- At September 30, cash and cash equivalents were $7.62 million; total assets were $7.89 million. Current liabilities, consisting of accounts payable and accrued expenses, were $312,000. The filing reports no debt.
- Cash used in operations was $2.16 million for the first nine months of 2018. Cash and restricted cash together declined by $2.16 million; the $800,000 previously held in escrow was released in September and reclassified as cash equivalents.
- The accumulated deficit was $20.8 million. Management estimated available resources would cover minimum obligations through November 2019; elsewhere the filing describes minimal operations funded through at least November 2019 or through December 2019.
- Gross margins are not meaningful because the company had no revenue. Basic and diluted net loss per share was $(0.07) for Q3 2018 and $(0.25) for the first nine months of 2018.
Material changes versus comparable periods
- Q3 net loss fell substantially from 2017, principally because Q3 2017 included $14.50 million of in-process research and development expense related to the Validive license fee and MNPR-201 acquisition. There was no such expense in 2018.
- Excluding that prior-year acquisition-related charge, operating expenses increased: R&D and G&A rose in both the quarter and nine-month period. The company attributed increases mainly to staffing and compensation, Validive trial preparation materials, public-company legal and audit costs, and expanded facilities.
- Nine-month operating cash use increased by approximately $350,000 year over year. There were no financing proceeds in the first nine months of 2018, compared with $9.53 million in 2017 from stock sales and the Gem transaction.
- Common shares outstanding were 9,291,421 at September 30, unchanged from year-end 2017. Outstanding options totaled 1,085,896, including 467,304 granted and 40,000 forfeited during the period.
Outlook, risks and contingencies
- Management intended to begin a Validive Phase 3 program in the first half of 2019, following FDA feedback on the proposed protocol and statistical analysis plan. The planned adaptive trial included an interim analysis about 12 months after first dosing and a confirmatory trial planned to follow.
- Management said MNPR-201’s completed Phase 2 trial showed six-month progression-free survival of 38%; it compared this with historical doxorubicin values of 23%–33%. This is not presented as a head-to-head comparison. MNPR-101 IND-enabling work was described as nearly complete; a pre-IND meeting was anticipated after securing a clinical-material manufacturer.
- The company expected operating expenses to rise, particularly to support Validive Phase 3 planning and initiation, and said additional capital would be needed for future development. It may seek equity, debt, collaborations or grants; financing could dilute shareholders or require granting rights to candidates or technology. The stated runway is for minimum or minimal operations, not necessarily full planned development.
- Potential Onxeo obligations for Validive include up to $108 million in development, regulatory and sales milestones and 5%–10% royalties on net sales. XOMA milestone payments for MNPR-101 could total up to $14.925 million. No milestones had been achieved or payments accrued under either agreement as of the filing.
- The filing identifies clinical, regulatory, manufacturing, funding, competition and intellectual-property risks. No material legal proceedings or claims were reported. The company disclosed related-party transactions, including payments to executives and directors with ties to significant shareholders. Disclosure controls were assessed as effective, with no material change in internal control reported.
Important facts for investors to verify
- Whether the FDA feedback, trial design, funding and manufacturing arrangements support the planned Validive Phase 3 timing and budget.
- Whether the cash runway estimate covers only minimum operations or can support planned clinical development; note the filing’s November-versus-December 2019 runway references.
- Potential financing needs, dilution from equity issuance and the effect of the 1.09 million outstanding options.
- Development progress and funding requirements for MNPR-201 and MNPR-101, including the clinical-material manufacturer dependency for MNPR-101.
- Milestone and royalty terms under the Onxeo and XOMA agreements, and the company’s related-party ownership, governance and payment arrangements.