Business context and reporting period
Replimune Group, Inc. is a clinical-stage biotechnology company developing oncolytic immunotherapies. This Form 10-K reports the fiscal year ended March 31, 2021, with fiscal 2020 as the comparable year; it is not a calendar-year 2020 Q4 filing. The filing also provides unaudited quarterly results, including the quarter ended March 31, 2021. Replimune had no approved products and no product-sales revenue.
Financial and operating highlights
Amounts below are in U.S. dollars; annual figures are for the years ended March 31.
| Metric | FY2021 | FY2020 |
|---|---|---|
| Revenue from product sales | None | None |
| Research and development expense | $56.8 million | $38.8 million |
| General and administrative expense | $23.2 million | $17.4 million |
| Total operating expenses | $80.0 million | $56.2 million |
| Net loss | $80.9 million | $52.6 million |
| Net loss per share, basic and diluted | $1.75 | $1.54 |
| Cash used in operating activities | $61.4 million | $60.6 million |
- Quarter ended March 31, 2021: operating expenses were $22.2 million, net loss was $21.5 million, and loss per share was $0.42. In the comparable quarter ended March 31, 2020, those figures were $16.4 million, $15.8 million, and $0.41, respectively.
- At March 31, 2021, cash and cash equivalents were $182.5 million and short-term investments were $293.8 million, totaling $476.3 million. Total current assets were $483.7 million and current liabilities were $14.5 million.
- Total liabilities were $44.4 million, including $33.3 million in operating and finance lease liabilities. The $10.0 million Hercules term loan was repaid in December 2020; no term-loan balance remained at year-end.
- Financing activities provided $372.5 million in cash, primarily from common-stock and pre-funded-warrant offerings. Investing activities used $188.8 million, largely reflecting purchases of short-term securities funded by offering proceeds.
- No gross-profit or operating-margin measure is meaningful or reported because the company had no product sales. The company reported no income-tax benefit on its losses.
Material changes versus the prior comparable period
- Net loss increased by $28.2 million, while total operating expenses rose by $23.8 million. R&D expense increased by $18.0 million, mainly from advancing RP1 trials, starting or expanding RP2/RP3 development, and higher R&D staffing and manufacturing-facility costs. G&A increased by $5.8 million, including personnel and facility-related costs.
- Operating cash use was broadly similar year over year. The larger investing cash outflow chiefly reflected increased investment purchases, rather than a comparable increase in operating cash burn.
- Cash and short-term investments rose to $476.3 million from $168.6 million. Equity financing increased shares outstanding; 46.6 million shares were outstanding at March 31, 2021, versus 36.7 million a year earlier.
- The company recorded a $0.9 million loss on extinguishment of debt in connection with repaying the Hercules facility. Total other expense was $0.9 million in FY2021, compared with $3.6 million of other income in FY2020.
Outlook, commentary, risks and unusual items
- Management estimated that cash, cash equivalents and short-term investments would fund planned operating expenses and capital needs into the second half of 2024. The estimate depends on assumptions that may prove incorrect; the filing also states that funds should cover at least 12 months from issuance of the financial statements. The company expects continued operating losses and rising expenses and may need additional financing.
- Key development plans included a 2022 primary readout from the RP1 CERPASS Phase 2 CSCC trial and the registration-directed IGNYTE melanoma cohort. Initial RP2 combination data were expected in mid-2021; initial RP3 and ARTACUS data were expected in the second half of 2021. These are management expectations, not guaranteed outcomes.
- The FDA indicated that compelling data from the anti-PD-1-failed melanoma cohort could be considered for accelerated approval, while noting that a randomized controlled trial is preferred and a randomized confirmatory trial would be required for accelerated approval.
- Management described early RP1 and RP2 clinical activity as promising, but the cited response data came from relatively small cohorts and require further clinical validation. All candidates remain investigational and could fail to demonstrate sufficient safety or efficacy.
- COVID-19 disrupted trial enrollment, particularly in the transplant-recipient ARTACUS study, and could affect trial operations, suppliers, manufacturing and regulatory timelines. Competition, dependence on collaborators for checkpoint-inhibitor supply, manufacturing execution, reimbursement and future financing are material risks.
- The Framingham manufacturing facility was described as fully operational, but the company noted risks around validation, operating costs, supply and achieving expected efficiencies. Future equity issuance may dilute existing holders; the company also had an unused at-the-market program of up to $62.5 million.
- Previously reported material weaknesses in internal control over financial reporting were reported remediated as of March 31, 2021; management assessed disclosure controls and internal control as effective. The independent auditor audited the financial statements but did not audit internal control effectiveness. The filing reports no material legal proceedings.
Most important facts for investors to verify
- Whether the RP1 trial designs, endpoints, enrollment and expected 2021–2022 data milestones remain on schedule, and how complete response and overall response results develop in larger cohorts.
- Cash burn, operating runway and the assumptions behind management’s estimate of funding into the second half of 2024, including the effects of clinical expansion and manufacturing-facility costs.
- Current cash and investment balances, lease obligations, financing needs, pre-funded warrants and any subsequent share issuance or dilution.
- Whether the FDA’s feedback and any future trial data support a regulatory filing, and what confirmatory-trial requirements may apply.
- Progress in validating and scaling in-house manufacturing, continued access to nivolumab and cemiplimab, and the continuing effects of COVID-19 on enrollment and supply.