Trevi Therapeutics, Inc. — FY2022 Form 10-K
Reporting period: Fiscal year ended December 31, 2022. The filing is an annual report, not a standalone fourth-quarter report; Q4-only financial results are not clearly provided in the filing text. Filed March 16, 2023.
Business context
Trevi is a clinical-stage biopharmaceutical company with no approved products or product-sale revenue. Its development efforts are focused on Haduvio (oral extended-release nalbuphine) for chronic cough, including in adults with idiopathic pulmonary fibrosis (IPF), and prurigo nodularis.
Financial and operating results
| Metric | FY2022 | FY2021 |
|---|---|---|
| Revenue | None | None |
| Research and development expense | $19.8 million | $23.0 million |
| General and administrative expense | $10.1 million | $9.5 million |
| Total operating expenses | $29.9 million | $32.5 million |
| Net loss | $29.2 million | $33.9 million |
| Net loss per share, basic and diluted | $0.45 | $1.49 |
| Net cash used in operating activities | $28.2 million | $28.9 million |
Cash, cash equivalents and marketable securities totaled $120.5 million at year-end 2022 ($12.6 million cash and equivalents; $107.9 million marketable securities), versus $36.8 million cash and equivalents at year-end 2021. Total assets were $123.0 million and total liabilities were $15.6 million. Outstanding loan principal was $8.2 million; the balance-sheet carrying amount of term debt was $9.2 million, including accrued final payment fee and unamortized discounts. The loan is due in full by February 1, 2024.
The company reported no product revenue, so commercial margins are not applicable. Operating cash burn remained substantial. Cash flows also included $107.4 million used in investing activities, largely net purchases of marketable securities, and $111.3 million provided by financing activities, primarily equity offerings and warrant exercises.
Changes versus FY2021
- Net loss narrowed by $4.8 million, while operating expenses declined by $2.6 million. R&D expense fell 13.7%, mainly as blinded portions of the PRISM and CANAL trials were completed; startup work for planned trials partly offset the reduction.
- G&A expense increased $0.6 million, reflecting higher market research, personnel and professional fees, partly offset by lower stock-based compensation.
- Other income and expense improved by $2.2 million, largely due to higher interest income on cash and securities and a $0.3 million employment-tax credit; 2021 included a $0.4 million commitment-fee expense. Net loss per share decreased, but the weighted-average share count rose substantially, in part following financing and warrant exercises.
- Trevi raised approximately $55.0 million gross in an April 2022 private placement and approximately $58.1 million gross in the September/October 2022 offering. These financings increased liquidity but also expanded the share and warrant overhang.
Clinical progress, outlook and risks
- IPF cough: In the 38-subject Phase 2 CANAL trial, Haduvio reduced daytime cough frequency by 75.1% from baseline versus 22.6% with placebo, a 52.5% placebo-adjusted change (p<0.0001). Management reported positive key secondary outcomes and a safety profile generally consistent with prior experience. Trevi was discussing next-trial design with regulators and planned to initiate trials in the second half of 2023, subject to agreement and submission of a U.S. IND.
- Refractory chronic cough: Trevi planned to initiate a Phase 2 trial in the U.K. in the third quarter of 2023.
- Prurigo nodularis: In the 353-subject Phase 2b/3 PRISM trial, 25% of Haduvio subjects versus 14% of placebo subjects met the primary itch-response endpoint at week 14 (p=0.0157); all three key secondary endpoints were also reported statistically significant. Discontinuations during the 14-week blinded portion were higher with Haduvio (36.9%) than placebo (19.3%). The open-label extension was completed in Q1 2023 and results were under analysis. Trevi expected another Phase 3 trial would be needed for applications and planned FDA discussions; it was exploring a strategic collaboration.
- Safety and regulatory uncertainty: Haduvio contains nalbuphine, whose labeling carries an opioid-class warning for serious respiratory depression. The company highlighted potential opioid-related side effects and was conducting a human abuse liability study, with top-line data expected by year-end 2023. FDA requirements could include a REMS or controlled-substance scheduling, potentially limiting use and increasing costs.
- Liquidity and financing: Management stated that year-end resources could fund operations and capital requirements into 2026, but that estimate excludes the cost of additional prurigo nodularis trials and depends on assumptions. The financial-statement note separately states that resources were expected to cover at least 12 months from the March 16, 2023 issuance date. Trevi expects significant future spending and has no committed external funding; additional financing may be required and may dilute shareholders or constrain operations.
- SVB exposure: The filing reports that Silicon Valley Bank was closed by regulators on March 10, 2023 and operated as Silicon Valley Bridge Bank under FDIC receivership. Trevi said it had operational difficulties with SVB’s cash-management platform and that moving accounts could trigger a loan default. The loan is secured by substantially all assets other than intellectual property, which is subject to a negative pledge.
- Other key risks: Trevi depends on a single nalbuphine drug-substance supplier and third-party manufacturers, has no commercial manufacturing infrastructure, and faces clinical enrollment, trial-design, competition, reimbursement and patent-protection risks. The company reported no material legal proceedings. Its auditor issued an unqualified opinion on the financial statements; management reported effective disclosure controls and internal control over financial reporting, without auditor attestation.
Important facts for investors to verify
- Current cash, investment liquidity and actual burn rate against the stated runway, including the costs and timing of planned trials.
- Any subsequent SVB loan amendments, repayment status, cash-account location and resolution of potential default risk.
- Regulatory feedback and final design, dose selection, U.S. IND status and launch timing for planned cough trials.
- Full PRISM open-label extension results, the FDA’s evidence requirements and whether a further Phase 3 trial or partner is secured.
- Human abuse liability and respiratory-safety findings, and any resulting REMS or controlled-substance requirements.
- Potential dilution from outstanding warrants, equity facilities and future financing; the filing lists 48.3 million warrant shares reserved at year-end 2022.