Business context and reporting period
Trevi Therapeutics, Inc. is a clinical-stage biopharmaceutical company with no product revenue. Its sole product candidate, Haduvio (nalbuphine extended release), is being developed for prurigo nodularis-related chronic pruritus, chronic cough in patients with idiopathic pulmonary fibrosis (IPF), and levodopa-induced dyskinesia in Parkinson’s disease. This unaudited Form 10-Q covers the three months ended March 31, 2021; financial amounts below are in U.S. dollars unless noted.
Key financial metrics
| Metric | Q1 2021 | Q1 2020 or prior balance |
|---|---|---|
| Revenue | None | None |
| Research and development expense | $5.589 million | $6.019 million |
| General and administrative expense | $2.500 million | $2.620 million |
| Total operating expenses / operating loss | $8.089 million / $(8.089) million | $8.639 million / $(8.639) million |
| Net loss | $(8.371) million | $(8.473) million |
| Basic and diluted loss per share | $(0.43) | $(0.48) |
| Operating cash used | $(7.578) million | $(4.673) million |
| Cash and cash equivalents | $41.570 million | $45.001 million at Dec. 31, 2020 |
| Term loan principal | $14.0 million | $14.0 million |
| Total assets / total liabilities | $42.864 million / $19.179 million | $47.131 million / $19.849 million at Dec. 31, 2020 |
Margins are not meaningful because the company had no revenue. Accumulated deficit was $155.348 million at quarter-end. The balance-sheet term-loan carrying amount was $14.099 million, including accrued final payment fee and debt discounts.
Material changes versus the prior comparable period
- Operating expenses declined $0.550 million year over year. R&D expense fell $0.430 million, primarily from lower clinical development costs, partly offset by increased PRISM trial activity, personnel, consulting and professional fees. G&A expense declined $0.120 million, mainly due to lower stock-based compensation.
- Net loss improved slightly, by $0.102 million, but other expense shifted to $0.297 million from $0.157 million of other income. Q1 2021 included $0.294 million of term-loan interest expense and lower interest income.
- Operating cash use increased to $7.578 million from $4.673 million, driven in part by working-capital movements, including a $1.215 million reduction in accounts payable.
- The company sold 1,367,621 shares through its ATM program during the quarter, generating $4.4 million gross proceeds and $4.178 million net cash proceeds. Cumulative ATM sales through March 31 totaled 2,055,497 shares and $7.6 million gross proceeds.
Outlook, management commentary, risks and unusual items
- Liquidity and going concern: Management stated that March 31 cash was expected to fund operations into the second quarter of 2022, but also concluded that cash would not fund the current business plan for at least 12 months from the May 13, 2021 financial-statement issuance date. The filing identifies substantial doubt about the company’s ability to continue as a going concern absent additional capital; planned financing is not considered probable enough to alleviate that doubt.
- Debt and financing condition: The $14 million SVB loan is interest-only until March 2022, then repayable in 24 monthly installments, with all obligations due February 1, 2024 and a $1.2 million final payment fee. It is secured by substantially all assets, with an IP negative pledge. Failure to meet specified equity-raise requirements, including raising $12 million by June 30, 2021, could require cash collateral equal to 100% of outstanding principal. The filing does not establish whether the requirement was ultimately met.
- Clinical outlook: PRISM’s planned enrollment increased from 240 to 360 after a sample-size re-estimation. About 255 participants had enrolled at more than 60 global sites. Management expected enrollment completion in the second half of 2021 and topline results about four months afterward, subject to pandemic-related uncertainty. CANAL enrollment in the UK had resumed at some sites after COVID-19 pauses; the company stopped plans to open German sites and focused on UK enrollment. A Phase 2 LID protocol had been written, but next steps were deferred pending PRISM and CANAL results.
- Clinical and regulatory uncertainty: The prior Phase 2 prurigo nodularis trial failed to meet its primary endpoint. The filing cautions that its small sample, discontinuations and design differences may limit its predictive value for PRISM. The FDA had questioned the reliability of that Phase 2 study and recommended an additional dose-ranging study; management believed PRISM plus another Phase 3 trial would be needed to support an application.
- COVID-19: Pandemic-related site suspensions, slower recruitment, remote monitoring and possible supply, regulatory and operational disruptions could further delay trials and increase costs.
- Other material risks: Haduvio may cause opioid-related adverse effects, including respiratory depression; an abuse-liability study could lead to REMS requirements or controlled-substance classification. Mallinckrodt, the sole disclosed nalbuphine active-ingredient supplier, filed for bankruptcy protection, and Trevi had not qualified an alternate source. Rutgers had asserted that Trevi was not meeting license diligence obligations and could seek termination if unresolved. The company reported no material legal proceedings.
Important facts for investors to verify
- Whether Trevi raised the SVB-required $12 million by June 30, 2021, and whether any cash-collateral or other loan consequences followed.
- Actual cash runway and subsequent financing, including dilution and the remaining capacity under the $12 million ATM program.
- PRISM enrollment completion, topline timing and results, and any resulting Phase 3 or FDA requirements.
- CANAL enrollment progress and whether pandemic conditions changed its completion timeline or cost.
- Status of the Rutgers diligence dispute and continued access to the licensed rights.
- Continuity of nalbuphine supply following Mallinckrodt’s bankruptcy and qualification of alternate suppliers.