vTv Therapeutics Inc. — Q2 2022 Form 10-Q
Reporting period: Quarter and six months ended June 30, 2022. vTv is a clinical-stage pharmaceutical company focused on metabolic and inflammatory diseases; its lead candidate is TTP399 for type 1 diabetes (T1D). It has not generated product sales and has not achieved profitable operations.
Key financial results
| Metric | Q2 2022 | Q2 2021 | Six months 2022 | Six months 2021 |
|---|---|---|---|---|
| Revenue | $9,000 | $9,000 | $2.009 million | $996,000 |
| Research and development expense | $2.205 million | $2.437 million | $5.338 million | $5.540 million |
| General and administrative expense | $1.831 million | $2.242 million | $7.179 million | $4.406 million |
| Operating loss | $4.027 million | $4.670 million | $10.508 million | $8.950 million |
| Net loss attributable to vTv | $3.151 million | $608,000 | $10.158 million | $4.849 million |
| Basic and diluted loss per Class A share | $0.04 | $0.01 | $0.15 | $0.08 |
At June 30, 2022, cash and cash equivalents were $17.863 million; a $11.941 million promissory note receivable and $5.772 million in long-term investments were also reported. Total liabilities were $29.599 million, including $18.669 million of long-term contract liabilities. There was no notes payable balance. Stockholders’ deficit attributable to vTv was $8.526 million, and accumulated deficit was $253.303 million.
For the six months, operating cash used was $315,000, compared with $9.297 million in 2021; investing cash used was $21,000 and financing cash provided was $4.784 million. Cash increased by $4.448 million to $17.863 million. The low operating cash use reflected working-capital movements and G42 transaction proceeds, rather than profitable operations.
Material changes and unusual items
- First-half revenue included a $2.0 million Huadong development milestone, recognized when the related performance obligation was satisfied. Q2 revenue remained nominal.
- First-half G&A expense rose $2.773 million, mainly from legal and severance costs, despite lower payroll following a December 2021 restructuring.
- Other expense swung from income in the prior-year periods, primarily reflecting a $3.401 million first-half unrealized loss on the Reneo investment; Reneo investment value fell to $1.527 million from $4.928 million at year-end 2021.
- On May 31, vTv issued G42 10,386,274 Class A shares for a stated $25.0 million purchase price: $12.5 million cash and a $12.5 million note due by May 31, 2023. The transaction also resulted in $18.669 million of deferred contract liabilities. The filing reports the note at $11.941 million on the balance sheet.
- Class A shares outstanding increased to 77.329 million from 66.943 million at year-end; the G42 issuance was a major component. MacAndrews & Forbes affiliates held approximately 59.4% of combined voting power.
Outlook, risks and contingencies
- Management stated that existing cash and planned resources were expected to fund operations into the third quarter of 2023, including TTP399 clinical development. The filing explicitly says substantial doubt exists about the company’s ability to continue as a going concern.
- Potential funding sources include the G42 note, a post-quarter $10.0 million CinPax investment (comprising $6.0 million cash and a $4.0 million note due November 22, 2022), up to $37.3 million remaining under the Cantor ATM, approximately 9.4 million additional shares available under the Lincoln Park arrangement, and possible licensing or monetization of programs. Access to equity financing depends on stock price and trading volume and may dilute shareholders.
- Management planned two pivotal, placebo-controlled TTP399 trials in approximately 1,000 T1D patients, expected to start in Q4 2022. The FDA agreed on hypoglycemia events as the primary endpoint and had granted Breakthrough Therapy Designation. Trial timing, enrollment, results, regulatory approval and funding remain uncertain.
- G42’s affiliate Cogna is to collaborate on TTP399 Phase 3 trials and may develop and commercialize the product in a specified territory. If FDA approval is obtained, G42 may elect a $30.0 million payment in cash or shares; the company also could owe significant Novo Nordisk milestones and royalties under its license.
- Subsequent to quarter-end, Paul Sekhri became CEO effective August 1, 2022. The filing reports no material legal proceedings, no defaults upon senior securities, and no material changes to previously disclosed risk factors.
Most important facts to verify
- Whether the G42 $12.5 million note and CinPax $4.0 million note are collected on schedule, and the timing and availability of other financing.
- Actual TTP399 pivotal-trial start, enrollment, costs, results and regulatory milestones versus the stated plan.
- Whether the company’s stated cash runway and going-concern assumptions remain valid as spending and financing conditions change.
- Potential dilution from ATM and Lincoln Park sales, the G42 contingent $30.0 million consideration, and the post-quarter CinPax warrant for up to 1.2 million shares.
- How much of the $18.669 million deferred contract liability is recognized as Cogna-related performance obligations are completed, and whether collaboration funding offsets trial costs as anticipated.