Pliant Therapeutics, Inc. — Q3 2021 Form 10-Q
Reporting period: Three and nine months ended September 30, 2021. Pliant is a clinical-stage biotechnology company developing therapies for fibrosis; it had no product-sale revenue. Financial figures below are in U.S. dollars unless stated otherwise.
Financial performance and liquidity
| Metric | Three months ended Sept. 30, 2021 | Three months ended Sept. 30, 2020 | Nine months ended Sept. 30, 2021 | Nine months ended Sept. 30, 2020 |
|---|---|---|---|---|
| Related-party revenue | $1.6 million | $4.8 million | $5.6 million | $37.4 million |
| Research and development expense | $21.1 million | $16.9 million | $58.8 million | $48.3 million |
| General and administrative expense | $7.7 million | $4.6 million | $19.7 million | $11.6 million |
| Net loss | $27.0 million | $16.5 million | $72.7 million | $22.5 million |
| Net loss per share, basic and diluted | $0.75 | $0.47 | $2.03 | $1.36 |
- Lower collaboration revenue drove much of the year-over-year increase in losses: 2020 included a $25 million Novartis milestone recognized in the first quarter, as well as more development-service revenue. Revenue also declined because PLN-1474 Phase 1 development work had largely concluded by 2021.
- Higher R&D spending reflected clinical-trial activity, particularly for PLN-74809, and increased employee and manufacturing costs. Higher G&A reflected employee costs and public-company expenses.
- Operating cash use was $55.6 million for the first nine months, versus $20.8 million in 2020. Investing activities provided $47.9 million, mainly reflecting investment maturities and purchases; financing provided $2.0 million, primarily from stock-option exercises. Cash and cash equivalents decreased by $5.7 million.
- At September 30, 2021, cash and cash equivalents were $45.2 million and short-term investments were $175.8 million, or $221.0 million combined. Total assets were $234.1 million, total liabilities $13.7 million, and stockholders’ equity $220.4 million. Accumulated deficit was $190.6 million.
- The company reported no outstanding debt. Profit margins are not meaningful for this pre-commercial, loss-making business.
Business developments and outlook
- PLN-74809: The wholly owned oral integrin inhibitor is being studied for idiopathic pulmonary fibrosis (IPF) and primary sclerosing cholangitis (PSC). Interim results from an open-label Phase 2a PET imaging study reported lung target engagement up to 98% and above 50% across tested doses. The filing describes these results as supportive of further evaluation, not proof of clinical benefit.
- The company reported IPF Phase 2a enrollment on track for completion by year-end 2021, with topline results anticipated by mid-2022. PSC trial enrollment was expected to finish by mid-2022. Additional Phase 1b dose data were anticipated in Q1 2022. These were management expectations as of the filing date, not guarantees.
- Results from a Phase 1 drug-drug interaction study indicated no meaningful impact on drug concentrations; management said PLN-74809 may be usable with nintedanib or pirfenidone without dose adjustments.
- PLN-1474: The Novartis-partnered liver fibrosis candidate completed Phase 1 in March 2021 and its IND was transferred to Novartis in Q1 2021. Novartis is responsible for subsequent development, manufacturing and commercialization. Pliant remains eligible for up to $391 million in additional contingent milestone payments and royalties, subject to milestones and sales.
- Management expected R&D and G&A expenses to rise as clinical programs and operations expand. Based on its then-current plan, it expected existing cash, cash equivalents and investments to fund planned operations into 2023, while stating that additional capital would be required to complete clinical development of its programs.
- Pliant entered an at-the-market sales agreement allowing up to $150 million of common-stock sales; it had not sold shares under the agreement as of the filing. Such sales could dilute existing shareholders.
Risks, contingencies and unusual items
- Clinical outcomes, regulatory approval and commercial success remain uncertain; the company expects continued losses and has no approved products or product-sale revenue. Its approach to targeting integrins and TGF-β signaling is not yet clinically validated.
- COVID-19 had delayed trials and contributed to slower-than-expected enrollment; further disruption could extend timelines and increase costs. Patient recruitment, safety findings, manufacturing supply and third-party execution are additional risks. Pliant disclosed reliance on a sole supplier for PLN-74809.
- Cash runway depends on clinical costs, timelines and other operating needs. The company may need further financing; equity financing could dilute shareholders, while debt or collaborations could impose restrictions or require relinquishing rights.
- Novartis milestone and royalty receipts depend on development, regulatory and commercial achievements; no contingent payment was recognized in the first nine months of 2021.
- No material legal proceedings were disclosed. Management said disclosure controls were effective at a reasonable assurance level and reported no material change in internal control over financial reporting during the quarter.
Most important facts for investors to verify
- Whether PLN-74809 trials met the enrollment and data timelines anticipated in this filing, and whether later results demonstrate safety and clinically meaningful efficacy.
- Whether the PET target-engagement findings translate into patient benefit; the reported interim study was open-label and involved a small planned cohort.
- Actual cash burn, remaining liquidity and the assumptions supporting the projected runway into 2023, including the timing and cost of trials.
- Novartis’s progress with PLN-1474 and the conditions, timing and likelihood of any future milestone or royalty receipts.
- Any use of the $150 million ATM facility, other financing, or equity-plan issuances and their potential dilution.