Trevi Therapeutics, Inc. — Q3 2023 Form 10-Q
Reporting period: Three and nine months ended September 30, 2023; filed November 9, 2023. Trevi is a clinical-stage biotechnology company developing Haduvio (oral extended-release nalbuphine). It has no approved products and has generated no product revenue.
Financial performance and position
| Metric | Q3 2023 | Q3 2022 | Nine months 2023 | Nine months 2022 |
|---|---|---|---|---|
| Revenue | $0 | $0 | $0 | $0 |
| Research and development | $6.3m | $5.8m | $17.2m | $15.5m |
| General and administrative | $2.7m | $2.6m | $7.8m | $7.7m |
| Total operating expenses | $9.0m | $8.4m | $25.0m | $23.3m |
| Net loss | $7.7m | $8.3m | $21.2m | $23.6m |
| Basic and diluted loss per share | $0.08 | $0.12 | $0.21 | $0.44 |
| Net cash used in operating activities | Not stated for quarter | Not stated for quarter | $25.4m | $21.8m |
At September 30, 2023, cash and cash equivalents were $26.0m and marketable securities were $62.9m, totaling $88.9m in liquid resources. Working capital was approximately $88.8m. The company had no term-loan borrowings after repaying the SVB loan in May 2023; lease liabilities totaled approximately $1.4m. No operating margin is meaningful given the absence of revenue.
Nine-month investing cash flow was $46.6m provided, largely from maturities of marketable securities; financing cash flow was $7.9m used, chiefly for debt repayment. Cash and cash equivalents increased $13.4m to $26.0m during the nine months.
Material changes versus comparable periods
- Q3 net loss narrowed by $0.6m year over year even as operating expenses rose $0.6m. Higher interest income and lower interest expense more than offset the operating-cost increase.
- Nine-month net loss narrowed by $2.4m, while operating expenses rose $1.7m. The improvement principally reflected $3.0m more net interest income, $0.5m lower interest expense, and $0.4m of other income related to CARES Act employee-retention tax credits.
- R&D expense increased mainly from startup and consulting costs for chronic-cough programs and higher personnel costs; reduced spending on completed PRISM and CANAL trial activity partly offset the increases.
- Operating cash use increased $3.5m year over year. The 2022 period included substantial equity financing; 2023 financing cash flow instead included repayment of the SVB loan.
- Common shares issued and outstanding increased to 63.9m from 59.9m at December 31, 2022. At September 30, 2023, 45.3m shares were reserved for outstanding warrants and pre-funded warrants.
Outlook, development, and risks
- Management stated that existing cash, cash equivalents, and marketable securities were expected to fund operating expenses and capital requirements into 2026. That estimate excludes the cost of any additional prurigo nodularis trials. Trevi has no committed external funding and expects to need additional capital to complete development and pursue its strategy.
- For chronic cough associated with idiopathic pulmonary fibrosis (IPF), Trevi reported positive Phase 2 CANAL results and was preparing a Phase 2b dose-ranging study and a Phase 1b respiratory-physiology study. At the time of the filing, initiation was planned for Q4 2023 and Q1 2024, respectively, subject to regulatory discussions; an IND is required before U.S. trial sites can proceed.
- Trevi reported initiating the Phase 2a RIVER trial for refractory chronic cough in November 2023, after quarter-end. The planned study is approximately 60 subjects, with topline data expected in the second half of 2024.
- After positive Phase 2b/3 PRISM results in prurigo nodularis, Trevi said another Phase 3 trial would likely be needed for regulatory submissions. It planned to seek an FDA end-of-Phase-2 meeting and was exploring a strategic collaboration; future trial costs are not included in the stated runway estimate. In preliminary 52-week open-label extension results, 151 subjects completed the extension; treatment-related adverse events led to discontinuation in 13%, and 13 subjects had serious adverse events, two considered potentially treatment-related.
- The human abuse-potential study was delayed by a worldwide shortage of IV butorphanol. Supply was secured in October 2023; Trevi expected to begin the second part in Q1 2024 and report topline results in the second half of 2024. FDA review agreed with the selected comparator dose.
- Key risks include clinical-trial and enrollment uncertainty, opioid-related respiratory-depression and other safety risks, possible REMS or controlled-substance restrictions, reliance on third-party manufacturers and a single nalbuphine active-ingredient supplier, and the need for substantial additional financing. The supplier, Mallinckrodt, filed for bankruptcy again in August 2023; the effect on supply was uncertain. Trevi also cited potential dilution from outstanding warrants and future equity issuance.
- The filing reports no material legal proceedings. Management concluded disclosure controls and procedures were effective as of September 30, 2023.
Investor verification priorities
- Confirm the current status, regulatory requirements, enrollment pace, and data timelines for the IPF, RIVER, and HAP studies, including whether planned dates were met.
- Assess the assumptions behind the projected runway into 2026, particularly trial spending, any prurigo nodularis program costs, and the timing and terms of future financing.
- Review the PRISM extension safety and efficacy data and Trevi’s plans following FDA discussions, including whether a partner or another Phase 3 trial is pursued.
- Track nalbuphine drug-substance supply, Mallinckrodt’s restructuring, and progress qualifying alternate suppliers.
- Evaluate potential dilution and ownership effects from outstanding warrants and pre-funded warrants. The reported weighted-average share count includes pre-funded warrants; it should not be confused with the 63.9m common shares issued and outstanding at quarter-end.