Vera Therapeutics, Inc. — Q3 2023 Form 10-Q
Reporting period: Three and nine months ended September 30, 2023. The unaudited filing was dated November 9, 2023. Vera is a clinical-stage biotechnology company with no approved products and no product-sales revenue.
Business context
Vera’s lead candidate, atacicept, is being developed for immunological diseases, including IgA nephropathy (IgAN) and lupus nephritis (LN). Its other clinical-stage candidate is MAU868 for BK virus infection. Management is prioritizing the pivotal Phase 3 ORIGIN 3 trial of atacicept in IgAN; enrollment in the LN Phase 3 trial and resources for MAU868 were deferred.
Financial results and liquidity
Amounts below are in millions of dollars, except per-share data. Vera generates no product revenue, so revenue margins are not meaningful.
| Metric | Q3 2023 | Q3 2022 | Nine months 2023 | Nine months 2022 |
|---|---|---|---|---|
| Revenue | None | None | None | None |
| Research and development expense | $16.1 | $19.7 | $57.4 | $42.3 |
| General and administrative expense | $5.7 | $5.6 | $17.5 | $15.0 |
| Total operating expenses | $21.8 | $25.2 | $75.0 | $57.3 |
| Net loss | $20.1 | $24.7 | $70.3 | $56.6 |
| Basic and diluted loss per share | $0.45 | $0.91 | $1.67 | $2.16 |
| Net cash used in operating activities | Not stated by quarter | $67.0 | $46.4 |
At September 30, 2023, cash and cash equivalents were $27.4 million and marketable securities were $132.5 million, or approximately $159.9 million combined. The accumulated deficit was $283.4 million. Total assets were $175.6 million; total liabilities were $51.9 million; and stockholders’ equity was $123.7 million.
Debt had a $25.0 million principal balance and a $25.042 million net carrying amount. The loan bears a floating rate based on SOFR plus 8.25 percentage points, subject to an 8.25% floor; the reported effective rates were approximately 14.7%. Maturity was extended to December 2027, with interest-only payments through December 2026. An additional $25 million could be drawn under the facility by December 29, 2023, subject to its terms.
Changes versus comparable periods
- Q3 operating expenses fell $3.5 million year over year and net loss narrowed by $4.6 million. Lower R&D spending, including the absence of a $3.7 million MAU868 license/milestone expense recorded in Q3 2022 and reduced clinical-trial expense during the LN pause, drove the decline.
- Nine-month operating expenses rose $17.7 million and net loss widened by $13.7 million. Higher contract manufacturing and related activities for atacicept, including manufacturing-process transfer and clinical supply, and higher personnel costs were the main drivers.
- Nine-month operating cash use increased to $67.0 million from $46.4 million. Financing provided $108.7 million, primarily from the February 2023 follow-on offering, which generated $107.7 million net proceeds.
- Class A shares outstanding increased from 27.8 million at December 31, 2022 to 44.4 million at September 30, 2023, primarily reflecting the follow-on offering.
- Interest income increased substantially with higher balances of higher-yielding securities, partly offset by increased interest expense.
Outlook, commentary and risks
- Management expects continued operating losses and negative operating cash flows for at least the next several years, with expenses expected to rise as the IgAN Phase 3 trial advances and manufacturing, staffing and other development needs grow.
- The filing contains differing runway statements: the financial-statement note says cash, cash equivalents and marketable securities should fund operations and capital needs for at least 12 months after issuance; MD&A says those resources plus available credit should fund operations until early 2026. Investors should note that the latter depends on access to the undrawn loan capacity and management’s operating assumptions.
- Management reported no significant financial impact from geopolitical and macroeconomic developments during Q3, but cited potential effects from inflation, interest rates, capital-market conditions, supply-chain disruption and clinical or regulatory delays.
- Key risks include clinical-trial efficacy and safety uncertainty, recruitment and retention, regulatory approval, reliance on third-party and single-source manufacturers, competition, intellectual-property and licensing obligations, and the need for substantial additional capital. The filing states there were no material legal proceedings and no material changes to contractual obligations during the period.
- Atacicept’s reported Phase 2b ORIGIN results were positive at 24 weeks, with further proteinuria reductions at 36 weeks; the 150 mg group also showed a statistically significant eGFR difference versus placebo at 36 weeks. The study continued into an open-label period, so ongoing and final data remain important to monitor.
Important facts for investors to verify
- Clarify the basis and assumptions behind the filing’s different runway estimates, and confirm the status and availability of the remaining $25 million loan capacity.
- Track ORIGIN 3 enrollment, timing and results, and any updates on LN development or renewed investment in MAU868.
- Assess whether rising atacicept manufacturing and clinical-development spending changes the cash-burn trajectory or financing needs.
- Review future clinical data, safety findings and regulatory feedback; preliminary or interim results may change as data are verified.
- Monitor potential dilution from future equity financing and the loan’s floating-rate cost, covenants and default provisions.