Structure Therapeutics Inc. Form 10-K Summary
Business Context and Reporting Period
Annual report for the fiscal year ended December 31, 2022, filed March 30, 2023. Structure Therapeutics is a Cayman Islands clinical-stage biopharmaceutical company developing oral small-molecule therapeutics using structure-based drug discovery and computational chemistry, with a focus on GPCR targets in metabolic, pulmonary and cardiovascular diseases.
- Lead candidate GSBR-1290 targets GLP-1R for type 2 diabetes and obesity. Phase 1 single-ascending-dose testing was completed in September 2022; the FDA allowed the Phase 1b IND in September 2022.
- ANPA-0073 targets APJR for idiopathic pulmonary fibrosis and pulmonary arterial hypertension. Phase 1 single- and multiple-ascending-dose studies were completed in September 2022.
- LTSE-2578 targets LPA1R for idiopathic pulmonary fibrosis; a development candidate was selected in January 2023.
- The company had 68 full-time employees at December 31, 2022, including 45 in research and development.
Financial and Operating Metrics
| Metric | 2022 | 2021 | Change |
|---|---|---|---|
| Revenue | $0 | $0 | No product or collaboration revenue |
| Research and development expense | $36.2 million | $29.1 million | Up 24% |
| General and administrative expense | $16.4 million | $8.6 million | Up 91% |
| Total operating expenses | $52.6 million | $37.7 million | Up 39% |
| Loss from operations | $(52.6) million | $(37.7) million | Higher loss |
| Net loss | $(51.3) million | $(38.0) million | Higher loss |
| Net loss attributable to ordinary shareholders | $(52.8) million | $(43.8) million | Higher loss |
| Basic and diluted loss per share | $(5.51) | $(5.38) | More negative |
| Net cash used in operating activities | $(46.1) million | $(32.2) million | Greater cash use |
Because the company had no revenue, gross margin and operating margin are not meaningful. The accumulated deficit was $117.0 million at year-end. Cash, cash equivalents and short-term investments totaled $90.8 million, consisting of $26.1 million of cash and cash equivalents and $64.8 million of short-term investments. Total liabilities were $13.0 million, primarily accounts payable and accrued expenses; the filing does not report outstanding borrowings at year-end. A previously available $8.0 million Silicon Valley Bank term-loan facility expired unused.
Investing activities used $62.1 million, primarily for net purchases of short-term investments. Financing activities provided $29.0 million, primarily from the April 2022 issuance of Series B preferred shares. The company had $2.5 million of share-based compensation expense in 2022 and $7.4 million of unrecognized expense related to unvested options at year-end.
Material Changes Versus the Prior Comparable Period
- Research and development spending increased $7.1 million, primarily from higher personnel, consulting and laboratory costs and increased development activity. GSBR-1290 spending rose to $18.8 million from $11.7 million, while ANPA-0073 spending declined to $3.4 million from $7.3 million.
- General and administrative expense increased $7.8 million as the company expanded its infrastructure and prepared for public-company requirements.
- Net loss increased $13.3 million, while operating cash burn increased $14.0 million.
- Short-term investments increased substantially from $2.0 million to $64.8 million, while cash and cash equivalents declined from $105.3 million to $26.1 million.
- In April 2022, the company raised $33.0 million in gross proceeds from Series B preferred shares.
- After year-end, the company completed its IPO on February 7, 2023, selling 12,351,000 ADSs at $15.00 per ADS for net proceeds of approximately $166.7 million. Each ADS represents three ordinary shares, and all preferred shares converted into 67,018,087 ordinary shares.
Guidance, Outlook, Risks and Unusual Items
- Management expects continued significant operating losses and negative cash flows for the foreseeable future and expects research and development and public-company costs to increase.
- Based on the current operating plan, management expects year-end 2022 liquidity plus the IPO proceeds to fund projected operations through at least 2025, although the estimate is dependent on assumptions that may prove incorrect.
- Management planned to transition GSBR-1290 into a Phase 2a proof-of-concept study in the second half of 2023 and expected topline Phase 1b and Phase 2a data in the second half of 2023. A Phase 2b study was anticipated in 2024, subject to favorable Phase 2a results.
- ANPA-0073 was expected to undergo formulation bridging work in Australia and potentially enter a Phase 2 study in 2024. LTSE-2578 was expected to enter first-in-human testing in 2024.
- GSBR-1290 was generally tolerated in Phase 1, but gastrointestinal adverse events, including nausea, vomiting, diarrhea, dehydration and decreased appetite, showed dose-related trends. The company also observed an apparent dose-related increase in heart rate.
- The company reported liver necrosis in a 13-week non-human-primate toxicology study across treatment and control groups; management and the FDA did not attribute the findings to GSBR-1290, but the FDA could disagree or require additional action.
- The company relies on third parties for clinical research, manufacturing and supply. WuXi STA was identified as the single-source supplier for active pharmaceutical ingredients and drug products, and the company had no long-term manufacturing supply agreements.
- The company identified material weaknesses in financial reporting controls involving staffing, segregation of duties and IT general controls. Disclosure controls were ineffective as of December 31, 2022. Management stated that remediation could extend beyond December 31, 2023.
- COVID-19, supply-chain disruption, inflation, interest rates, bank failures, geopolitical conflict, China-related regulation, data-security requirements, clinical-trial execution, regulatory approval, intellectual-property protection and competition remain material risks.
- The company had no material legal proceedings reported and no material indemnification claims recorded at year-end.
Most Important Facts an Investor Should Verify
- Whether GSBR-1290 demonstrates clinically meaningful efficacy and acceptable gastrointestinal, cardiovascular and long-term safety in Phase 2 and later trials.
- Whether the company’s post-IPO cash runway remains consistent with management’s stated expectation through at least 2025 after incorporating actual spending and trial expansion.
- Whether the identified material weaknesses have been remediated and whether subsequent filings report any control deficiencies or financial restatements.
- The final regulatory interpretation of the non-human-primate liver findings and any additional studies or restrictions required by the FDA.
- Manufacturing continuity, backup suppliers, formulation changes and the cost and timing of scaling clinical and potential commercial production.
- The competitive position of oral GLP-1 small molecules relative to injectable and oral peptide therapies and competing programs from larger pharmaceutical companies.
- The effect of dilution from the IPO, equity incentives, registration rights and potential future financing needs.