Filing summary
Entity and period: The supplied filing is OvaScience, Inc.’s unaudited Form 10-Q for the quarter ended September 30, 2016—not a Tempest Therapeutics filing. Verify the issuer before relying on this summary.
Business context and results
OvaScience was developing fertility treatments based on EggPC cells. Its AUGMENT treatment was offered through select international IVF clinics; OvaPrime was in clinical studies, and OvaTure remained in development. The company reported limited treatment revenue and continuing operating losses.
| Metric | Q3 2016 | Nine months 2016 | Comparable 2015 |
|---|---|---|---|
| Revenue | $0.197 million | $0.532 million | $0.075 million and $0.120 million, respectively |
| Operating loss | $18.964 million | $58.644 million | $17.772 million and $51.759 million, respectively |
| Net loss | $19.291 million | $59.617 million | $17.922 million and $52.618 million, respectively |
| Net loss per share | $0.54 | $1.92 | $0.66 and $1.95, respectively |
For the nine months, research and development expense was $16.932 million and selling, general and administrative expense was $38.276 million. Revenue remained far below costs of revenue ($3.968 million for nine months); the filing does not present a gross-margin percentage.
Financial position and cash flow
- At September 30, 2016, cash and cash equivalents were $50.480 million and short-term investments were $80.515 million, totaling approximately $131.0 million. Working capital was $122.188 million.
- Total liabilities were $12.521 million; the balance sheet reports no debt. Nine-month operating cash use was $46.765 million, investing cash use $0.134 million, and financing cash inflow $54.155 million. Cash ended the period at $50.480 million.
- Management said existing cash, cash equivalents, and short-term investments were expected to fund its current operating plan for at least 12 months, while cautioning that assumptions could prove incorrect. The company expected continued significant expenses and losses.
Changes, outlook, and risks
- Revenue increased year over year, but remained limited. Nine-month net loss rose by $6.999 million. Commercial expansion drove higher costs of revenue and R&D; SG&A rose modestly for the nine-month period.
- A June 2016 stock offering raised $53.9 million net from 8,222,500 shares. Shares outstanding increased to 35,607,059 at September 30, 2016, from 27,296,747 at year-end 2015.
- Four of nine contracted clinics or clinic networks had conducted commercial AUGMENT treatments; two more had completed preceptorship training. Management said onboarding could take six to nine months on average and expected Q4 revenue to reflect fewer Q3 biopsies and possible enrollment in non-revenue-generating trials.
- The company expected to begin enrollment in a controlled, randomized, double-blind AUGMENT study in Q1 2017 and anticipated initial data in the second half of 2017. It also expected to update the OvaPrime path forward by year-end 2016 and anticipated final data from the IVI Group pilot trial in the second half of 2017.
- Management cited substantial funding needs, uncertain development and commercialization outcomes, regulatory and market-acceptance risks, and possible future dilution or unfavorable financing terms. A securities class action related to the January 2015 offering remained pending; potential losses could not be estimated. No material changes to previously disclosed risk factors were reported.
- After quarter-end, on November 3, 2016, the company entered an at-the-market sales agreement allowing up to $50 million of common stock sales; sales were discretionary and not assured.
Key facts investors should verify
- Confirm the issuer: the filing identifies OvaScience, Inc., although the request metadata names Tempest Therapeutics, Inc.
- Check subsequent clinical-trial enrollment and results, regulatory status, and the commercial uptake and economics of AUGMENT.
- Assess cash burn against management’s stated 12-month runway, including whether the ATM program was used and the resulting dilution.
- Review developments and any estimated exposure in the securities class action.
- Validate the timing and assumptions behind management’s stated clinical and commercial outlook.