Trevi Therapeutics, Inc. — Q3 2020 Form 10-Q
Reporting period: Quarter and nine months ended September 30, 2020. Trevi is a clinical-stage biopharmaceutical company developing Haduvio (nalbuphine ER); it has no product revenue and is not profitable.
Financial results and liquidity
Amounts below are in millions of dollars, except per-share data.
| Metric | Q3 2020 | Q3 2019 | Nine months 2020 | Nine months 2019 |
|---|---|---|---|---|
| Revenue | None | None | None | None |
| Research and development expense | $4.8 | $5.7 | $15.8 | $14.5 |
| General and administrative expense | $2.4 | $2.0 | $7.5 | $5.4 |
| Total operating expenses | $7.2 | $7.7 | $23.3 | $19.9 |
| Net loss | $7.4 | $7.4 | $23.2 | $19.5 |
| Basic and diluted loss per share | $0.41 | $0.41 | $1.30 | $2.09 |
- Q3 operating expenses decreased $0.4 million year over year, mainly as lower clinical-development spending—including COVID-related pauses and completion of the liver-disease study—more than offset higher G&A.
- Nine-month operating expenses increased $3.4 million, reflecting greater PRISM trial and clinical-supply activity and higher public-company and stock-based compensation costs. The 2019 per-share loss also reflected preferred-stock accretion and dividends before the IPO conversion.
- Net cash used in operations was $20.1 million for the first nine months of 2020, versus $16.9 million in 2019. Investing used $0.03 million; financing provided $16.1 million, principally from a $14.0 million term loan and $2.5 million gross ATM proceeds.
- Cash and cash equivalents were $53.3 million at September 30, 2020, down from $57.3 million at year-end 2019. Total assets were $55.9 million; stockholders’ equity was $35.6 million. The balance sheet showed $13.8 million of term-loan debt and $0.2 million of related derivative liability. No operating margin is meaningful given the absence of revenue.
Business developments, outlook and risks
- PRISM trial: The independent Data Monitoring Committee recommended continuing the Phase 2b/3 prurigo nodularis trial and increasing enrollment from 240 to 360 to preserve statistical power. About 190 subjects were enrolled, with more than 60 active sites and approximately 80% screening patients. Management expected enrollment completion in Q3 2021 and top-line results in Q4 2021, subject to pandemic uncertainty.
- Other programs: COVID-19 interruptions affected the Phase 2 chronic-cough trial in IPF patients; some sites resumed screening and enrollment in Q4 2020, while others could remain delayed or withdraw. The liver-impairment study’s single-dose portion was completed without reported serious adverse events; the company considered its data sufficient for further planning. A Phase 2 LID protocol was written, but resources were prioritized for PRISM and IPF cough.
- Cash outlook: Management estimated September 30 cash would fund operations into the first half of 2022; the financial-statement note separately states cash was expected to cover operating and capital needs for at least 12 months from issuance (November 12, 2020). The company expects substantial ongoing losses and says additional funding will be needed; no committed external funding source was in place.
- Debt and financing: The August 2020 SVB loan carries floating interest with a 4.25% floor, interest-only payments until March 2022, and principal repayment in 24 installments thereafter; the full balance is due February 2024. A qualifying PRISM result plus sufficient financing triggers a higher rate (at least 6.25%). The loan includes a $1.2 million final payment fee, security over substantially all assets except IP (subject to a negative pledge), and potential cash-collateral requirements tied to equity-raise conditions. The ATM program permits up to $12 million of sales; approximately $2.5 million gross had been sold by quarter-end.
- Supply and other contingencies: Mallinckrodt, Trevi’s sole nalbuphine hydrochloride drug-substance supplier, filed for bankruptcy protection in October 2020. Trevi said the supply impact was uncertain and alternatives had not been qualified. The risk-factor disclosure also reports Rutgers asserted Trevi was not meeting license diligence obligations and could seek termination if unresolved. Trevi reported no material legal proceedings.
- Other material risks include prior failure of a Phase 2 prurigo nodularis trial to meet its primary endpoint, enrollment and placebo-response uncertainty, potential opioid-related safety or controlled-substance restrictions, regulatory and manufacturing uncertainty, and dependence on future financing. The company reported effective disclosure controls and no material change in internal control over financial reporting during the period.
Key investor verification points
- Check actual PRISM enrollment progress, the effect of the 360-subject target, and whether the stated enrollment and data timelines were achieved.
- Monitor IPF trial site participation and enrollment following COVID-19 interruptions.
- Verify continuity and qualification of nalbuphine supply after Mallinckrodt’s bankruptcy filing.
- Review the status and potential consequences of the Rutgers diligence dispute and the applicable license rights.
- Track cash burn, future financing needs, ATM dilution, and compliance with SVB equity-raise, collateral and debt covenants.
- Assess whether clinical data and regulatory feedback address the prior Phase 2 efficacy and endpoint concerns, and whether additional trials or safety studies are required.