Replimune Group, Inc. — Form 10-Q Summary
Reporting period: Three months ended June 30, 2021 (the first quarter of Replimune’s fiscal year ending March 31, 2022). Filed August 6, 2021. Replimune is a clinical-stage biotechnology company developing oncolytic immunotherapies; it has no approved products and generated no product revenue.
Financial performance and liquidity
| Metric | Three months ended June 30, 2021 | Prior-year period |
|---|---|---|
| Revenue | None | None |
| Research and development expense | $18.6 million | $12.2 million |
| General and administrative expense | $8.8 million | $5.7 million |
| Total operating expenses / operating loss | $27.4 million | $17.8 million |
| Net loss | $27.3 million | $17.5 million |
| Basic and diluted net loss per share | $0.53 | $0.44 |
| Net cash used in operating activities | $18.3 million | $15.1 million |
Gross margin is not applicable because the company had no product sales. Net loss increased by $9.8 million year over year, primarily as operating expenses rose $9.5 million. R&D expense increased $6.4 million, including higher personnel costs and spending on RP2 and RP3; direct RP1 costs declined. G&A expense increased $3.2 million, reflecting added personnel, stock-based compensation and commercial-readiness work. Stock-based compensation was $6.3 million versus $2.5 million.
At June 30, 2021, cash and cash equivalents were $192.5 million and short-term investments were $265.8 million, totaling $458.3 million. Current assets were $464.6 million and current liabilities were $15.0 million. Total liabilities were $44.7 million, including $33.1 million of operating and finance lease liabilities. No debt principal was outstanding; the Hercules facility had been repaid and terminated in December 2020. Operating cash burn was partly offset by $27.3 million of net proceeds from investment sales and maturities; financing cash flow was $1.1 million, primarily from option exercises. The quarter-end cash, cash equivalents and restricted cash balance was $194.2 million.
Material changes and operating developments
- R&D investment expanded across RP2 and RP3 clinical development and manufacturing process work, while RP1 direct program expense was lower than in the prior-year quarter.
- Management reported that its approximately 63,000-square-foot Framingham manufacturing facility was fully operational, while noting execution, validation and efficiency risks.
- Common shares issued and outstanding were 46.7 million at June 30, 2021, compared with 46.6 million at March 31, 2021. Potential dilution includes outstanding options and warrants; 5.3 million pre-funded warrants had not been exercised.
- The company reported no material changes to contractual obligations, no material legal proceedings and no off-balance-sheet arrangements.
Outlook, commentary and risks
Management expects continued significant operating losses and rising expenses as it advances RP1, RP2 and RP3, develops its manufacturing capability and builds commercial infrastructure. It stated that June 30 liquidity was expected to fund planned operating expenses and capital expenditures into the second half of 2024, excluding any FDA- or regulator-required confirmatory trial. Separately, the financial-statement note says available cash and investments were expected to cover at least 12 months from issuance. Management cautions that these estimates depend on assumptions and actual cash needs may be higher; no committed external funding source was disclosed.
- RP1: CERPASS, a registration-directed Phase 2 trial in cutaneous squamous cell carcinoma with Regeneron’s cemiplimab, was enrolling; enrollment was expected to finish around mid-2022, with a primary data readout expected in late 2022. The anti-PD-1-failed melanoma IGNYTE cohort was also expected to complete enrollment around mid-2022 and report data in late 2022. Management noted that the intended filing analysis timing could extend by about six months from year-end 2022 to document response durability. The FDA indicated that compelling data might be considered for accelerated approval, while a randomized trial was preferred and a confirmatory trial would be required under that pathway.
- Additional RP1 cohort updates were anticipated: initial data for anti-PD-1-failed non-melanoma skin cancer and NSCLC in the first quarter of 2022. The transplant-recipient ARTACUS trial had slower enrollment, partly attributed to COVID-19; initial data was expected in the first quarter of 2022.
- RP2 and RP3: Updated RP2 data was expected in the second half of 2021; initial RP3 monotherapy data was expected in the first quarter of 2022. A multi-tumor Phase 2 program focused on liver metastases was planned for around mid-2022, with details expected in the first quarter of 2022.
- Key risks: Clinical efficacy, safety and regulatory uncertainty; potential need for additional or confirmatory trials; patient enrollment and COVID-19 delays; reliance on third-party trial services and anti-PD-1 supply; manufacturing scale-up and compliance; competition; and possible need for additional capital, with resulting dilution or restrictions. COVID-19 had not caused a prolonged material business disruption to date, but had affected enrollment in some studies and could disrupt trials, suppliers and operations.
Management said disclosure controls were effective at a reasonable assurance level as of June 30, 2021, and no material change in internal control over financial reporting occurred during the quarter. Previously identified material weaknesses were reported as remediated by March 31, 2021.
Important facts for investors to verify
- Whether clinical trial enrollment, data releases and potential filing timelines remain on schedule, particularly for CERPASS and IGNYTE.
- Whether clinical results support the company’s registration strategy and what confirmatory evidence regulators will require.
- Whether the stated runway into the second half of 2024 remains achievable, especially if a confirmatory trial is needed or development costs rise.
- Progress in validating and operating the in-house manufacturing facility, and continued access to contract manufacturing and collaborator-supplied anti-PD-1 therapies.
- Potential dilution from equity financing, equity awards, outstanding options and unexercised pre-funded warrants.