Molecular Partners AG — FY2021 Form 20-F Summary
Reporting period: Fiscal year ended December 31, 2021; this is an annual filing, not a standalone fourth-quarter report. The company reports in Swiss francs (CHF) under IFRS as issued by the IASB. The financial statements received an unqualified audit opinion from KPMG.
Business context
Molecular Partners is a clinical-stage biopharmaceutical company developing designed ankyrin repeat protein (DARPin) therapeutics, principally for infectious disease and oncology, with an ophthalmology program. It had no approved products and no product-sales revenue in 2021. Its business depends on research and development and collaboration payments, milestones, and potential future royalties. The company listed ADSs on Nasdaq in June 2021; each ADS represents one common share.
Key financial results
| CHF millions, except per-share data | 2021 | 2020 |
|---|---|---|
| Revenue and other income | 9.8 | 9.3 |
| Research and development expense | 55.7 | 56.1 |
| Selling, general and administrative expense | 17.5 | 11.6 |
| Operating loss | (63.4) | (58.3) |
| Net loss attributable to shareholders | (63.8) | (62.8) |
| Basic and diluted loss per share | (CHF 2.06) | (CHF 2.51) |
| Net cash used in operating activities | (91.0) | (29.0) |
2021 revenue consisted mainly of CHF 9.3 million from the Amgen collaboration, plus CHF 0.4 million of other income. Operating expenses rose 8% to CHF 73.2 million. R&D expense was broadly stable, while SG&A increased 51%, primarily due to Nasdaq listing costs, professional services, and administrative personnel. Net financial expense improved to CHF 0.4 million from CHF 4.4 million, mainly reflecting lower foreign-exchange losses; this partly offset the higher operating loss.
Operating cash use increased substantially, reflecting the net loss and working-capital movements, including lower contract liabilities and higher receivables. Investing activities used CHF 22.2 million, principally for short-term deposits; financing activities provided CHF 50.6 million, mainly from share issuance following the U.S. IPO. Cash and cash equivalents were CHF 71.8 million at year-end, down from CHF 133.7 million. Including short-term time deposits, liquidity was CHF 132.8 million, compared with CHF 173.7 million in 2020.
At year-end, total assets were CHF 172.7 million, shareholders’ equity CHF 107.3 million, and total liabilities CHF 65.4 million. The company reported no short- or long-term borrowings; lease liabilities were CHF 6.0 million. Current assets were CHF 164.2 million and current liabilities CHF 46.9 million. The company had CHF 212.2 million of Swiss tax-loss carryforwards and recognized no deferred tax asset for them.
Material developments and comparison
- Net loss was broadly similar to 2020, increasing by CHF 1.0 million, while operating loss widened by CHF 5.1 million as higher SG&A outweighed slightly lower R&D costs.
- Operating cash outflow rose by CHF 62.0 million year over year. The company attributed the 2021 use partly to working-capital changes, including the timing and accounting of collaboration-related balances.
- The June 2021 U.S. IPO issued 3.0 million ADSs at $21.25 each and generated approximately $55.9 million in net proceeds. Shares outstanding at December 31, 2021 were reported as 32.3 million in the cover-page disclosure; the financial statements distinguish shares issued from shares registered in the Swiss commercial register.
- In August 2021 AbbVie terminated the abicipar license and collaboration agreement, returning global development and commercial rights to Molecular Partners. The FDA had issued a Complete Response Letter in 2020; the company was evaluating next steps.
- The University of Zurich base patents for DARPin technology expired in September 2021, except for one U.S. patent, and the exclusive license was terminated effective October 2021. The company noted potential competitive and intellectual-property implications.
Outlook, management commentary, and risks
Management stated that year-end liquidity, together with approximately CHF 169 million received from Novartis in January 2022, was expected to fund operating and capital requirements into 2025. The January receipts included the CHF 150 million ensovibep option-exercise payment and CHF 18.6 million (USD 20 million) upfront payment under the radioligand collaboration. Management anticipated an operating profit and positive operating cash flow for 2022, while cautioning that these outcomes were not assured and that R&D investment would continue.
- Ensovibep: Novartis exercised its option in January 2022 after positive Phase 2 results, taking responsibility for further development and commercialization. The filing reports a 78% relative reduction in hospitalization/ER visits or death across trial arms versus placebo. Novartis requested FDA emergency use authorization in February 2022; a Phase 3 trial was expected. These are subsequent developments, not 2021 recognized revenue for the option exercise.
- Other programs: MP0310 was in Phase 1 with Amgen; MP0317 dosed its first patient in Phase 1 in late 2021; the company planned to initiate MP0533 Phase 1 in 2022. A December 2021 Novartis radioligand collaboration carries up to USD 560 million in potential milestones and tiered royalties, contingent on future achievements and sales.
- Key operating risks: continued losses and cash burn; uncertain clinical and regulatory outcomes; dependence on partners for licensed programs; clinical-trial enrollment and COVID-19 disruption; manufacturing and supply risks; competition, reimbursement and pricing pressures; and foreign-exchange exposure. The company had no currency hedges outstanding at year-end.
- Other notable items: the auditor identified revenue recognition for the Amgen collaboration as a critical audit matter because estimating remaining project costs requires judgment. The company reported no legal proceedings expected to have a material adverse effect. Disclosure controls were deemed effective; management’s internal-control assessment and auditor attestation were not included because of applicable transition and emerging-growth-company exemptions.
Most important facts for investors to verify
- Whether Novartis’s ensovibep development, regulatory review, and potential commercialization progress as planned, and what the eventual economics and royalties are in eligible territories.
- Whether the stated funding runway into 2025 remains valid against actual operating cash burn, R&D commitments, and any new financing needs.
- How 2022 collaboration receipts and the FOPH reservation fee are recognized in revenue, and whether management’s 2022 profit and cash-flow expectations are achieved.
- Clinical updates and safety findings for MP0310, MP0317, and MP0533, including the significance of infusion-related reactions reported for MP0310.
- The status and commercial prospects of abicipar following the FDA Complete Response Letter and the return of rights from AbbVie.
- The strength and scope of post-expiry DARPin intellectual-property protection, including the remaining U.S. base patent and newer product-specific patent families.