MeiraGTx Holdings plc — Q3 2022 Form 10-Q
Business and period. MeiraGTx is a clinical-stage gene therapy company with six programs in clinical development, preclinical programs, and manufacturing facilities in the UK and Ireland. This unaudited filing covers the three and nine months ended September 30, 2022; comparisons are with the corresponding 2021 periods. The company had no product sales.
Financial results
| Metric | Q3 2022 | Q3 2021 | Nine months 2022 | Nine months 2021 |
|---|---|---|---|---|
| License revenue, all related party | $4.8m | $6.9m | $21.2m | $16.7m |
| Operating expenses | $27.6m | $29.5m | $96.5m | $81.7m |
| Operating loss | $22.8m | $22.6m | $75.3m | $65.1m |
| Net loss | $37.3m | $25.9m | $102.3m | $69.6m |
| Basic and diluted loss per share | $0.83 | $0.59 | $2.29 | $1.58 |
| Cash used in operating activities | Not stated for quarter | Not stated for quarter | $56.8m | $29.4m |
Revenue and margins. License revenue is recognized from the Janssen collaboration’s upfront and milestone payments; Janssen research and development reimbursements are recorded as offsets to R&D expense, not revenue. The filing reports no product revenue and does not present a gross margin.
Balance sheet and liquidity. At September 30, cash and cash equivalents were $114.7m, accounts receivable from Janssen were $23.7m, and current assets and current liabilities were $155.0m and $72.4m, respectively. Shareholders’ equity was $122.7m and accumulated deficit was $442.9m. The company reported a $75.0m gross term loan, with $70.8m presented net of discount, plus $1.6m accrued interest. The loan bears a floating rate of 10% plus one-month SOFR (13.04% at quarter-end), matures August 2026, and is interest-only during its term. Lease obligations totaled $21.1m, all operating lease liabilities at quarter-end.
For the nine-month period, investing cash outflow was $36.5m, mainly for property and equipment; financing cash inflow was $70.4m, primarily from the loan. Cash declined by $22.9m from year-end 2021. Management estimated funding into Q4 2024 based on quarter-end cash, expected Janssen funding and milestone payments, and the subsequent $25.0m private placement. The filing cautions that estimates depend on assumptions and funds could be used sooner.
Changes and notable items
- Q3 net loss widened by $11.3m year over year, despite a $1.9m decline in operating expenses. Lower R&D expense reflected increased Janssen research funding; higher G&A partially offset this.
- For the first nine months, net loss widened by $32.7m and operating expenses increased $14.8m. R&D rose $10.4m and G&A rose $4.3m, reflecting expanded research, clinical, manufacturing and personnel costs.
- Foreign currency losses increased to $12.8m in Q3 and $25.9m for nine months, primarily unrealized remeasurement losses as the U.S. dollar strengthened against sterling and the euro. Foreign currency translation gains in other comprehensive income partly offset these losses but do not reduce net loss.
- On August 2, 2022, the company drew a $75.0m secured loan; a further $25.0m tranche is at the lender’s discretion. Perceptive received warrants for up to 700,000 ordinary shares at exercise prices of $15 and $20. The debt is secured by the London and Shannon manufacturing facilities, specified cash and subsidiary equity.
- After quarter-end, on November 9, JJDC agreed to buy 3,742,514 shares at $6.68 per share for gross proceeds of approximately $25.0m.
Outlook, programs and risks
- Management expects continued substantial losses and higher development and operating costs. It expects R&D funding under the Janssen agreement to offset some costs; future financing may be required, and acceptable financing may not be available.
- The Phase 3 LUMEOS trial of botaretigene sparoparvovec for X-linked retinitis pigmentosa was actively dosing patients. Management reported positive Phase 1/2 data presented in October 2022, including functional improvements at six months and an acceptable, manageable safety profile; these are clinical findings, not approval or proof of Phase 3 success.
- Management planned to present AAV-hAQP1 Phase 1 data in Q4 2022 and expected to initiate a randomized, placebo-controlled Phase 2 study in the coming months. AAV-GAD Phase 1 was dosing patients under a new IND. The filing also anticipated a Phase 3 trial of AAV-RPE65.
- The loan includes covenants requiring enrollment in a Phase 3 AAV-RPGR trial by June 30, 2023 and Shannon facility GMP compliance by December 31, 2023, along with other restrictions. Default could increase interest, accelerate repayment and expose collateral to enforcement.
- Key risks include clinical and regulatory uncertainty for gene therapies, trial delays or safety issues, manufacturing capacity and GMP compliance, reliance on Janssen and other third parties, foreign-exchange and floating-rate exposure, competition, and the need for additional capital. The company reported no material legal proceedings; management said disclosure controls were effective and no material changes to internal control occurred in the quarter.
Important facts for investors to verify
- Cash runway assumptions: collection of Janssen receivables and anticipated collaboration funding, milestones, and the $25.0m JJDC placement; reconcile management’s stated runway into Q4 2024 with actual cash use and financing availability.
- Progress and results of LUMEOS and the anticipated AAV-RPE65 Phase 3 trial, including trial enrollment, endpoints, safety and regulatory feedback.
- Compliance with the Perceptive loan covenants, particularly the RPGR Phase 3 enrollment and Shannon GMP deadlines, and the cost and restrictions associated with the secured, floating-rate debt.
- Whether the reported foreign-exchange losses recur and how currency movements affect cash, expenses and reported results.
- Actual spending and milestones across the clinical portfolio and manufacturing facilities; the filing provides no assurance that development timelines, financing needs or projected runway will be achieved.