REGENXBIO Inc. — Q1 2021 Form 10-Q
Reporting period: Three months ended March 31, 2021; comparisons are with Q1 2020 unless noted. REGENXBIO is a clinical-stage gene therapy company that develops its own candidates and licenses its NAV platform. Zolgensma, marketed by Novartis, was the platform’s only commercially available product.
Financial performance and liquidity
| Metric | Q1 2021 | Q1 2020 |
|---|---|---|
| Revenue | $18.9 million | $17.6 million |
| Operating expenses | $62.9 million | $55.3 million |
| Operating loss | $44.0 million | $37.7 million |
| Net loss | $50.1 million | $40.0 million |
| Net loss per share | $1.20 | $1.08 |
| Cash used in operating activities | $41.1 million | $35.6 million |
- Revenue increased 7% to $18.9 million. Zolgensma royalties rose to $18.3 million from $10.0 million; the comparison was partly offset by $7.2 million of non-recurring Ultragenyx license revenue in Q1 2020.
- R&D expense increased 7% to $39.7 million, primarily due to personnel, clinical and regulatory, and facility costs; lower RGX-314 manufacturing costs partly offset the increase. G&A expense rose 20% to $17.8 million, mainly due to professional services and personnel costs.
- At March 31, cash and cash equivalents were $291.5 million and marketable securities were $365.0 million, totaling $656.5 million. Total assets were $879.4 million; stockholders’ equity was $554.5 million.
- Operating cash outflow was $41.1 million. Investing activities used $214.2 million, including $31.0 million of property and equipment purchases, largely for the new headquarters and manufacturing facility. Financing activities provided $208.4 million, primarily from a January public offering that generated $216.1 million net proceeds.
- The balance sheet included a $190.5 million liability for the sale of future Zolgensma royalties to HCR, including $28.8 million current. This royalty financing generated non-cash interest expense of $6.7 million in the quarter. Operating lease liabilities totaled $76.9 million.
Material changes and unusual items
- Net loss widened by $10.1 million, reflecting higher operating expenses and $6.7 million in non-cash interest expense on the HCR royalty arrangement. Improved investment results versus Q1 2020, which included $5.1 million of Prevail securities losses, partly offset these items.
- Shares issued and outstanding rose from 37.5 million at December 31, 2020 to 42.5 million at March 31, 2021, primarily following the January offering.
- Property and equipment, net, increased to $89.3 million from $56.5 million, primarily reflecting facility construction and equipment investment.
Outlook, management commentary and risks
- Management said available cash, cash equivalents and marketable securities were expected to fund operations for at least 12 months from the filing date. The company expects ongoing losses and higher R&D, G&A and capital spending; it anticipates needing additional capital over time.
- Management expected remaining net capital expenditures for the new Rockville facility to be in the mid-double-digit millions, extending into 2022. Timing and cost are uncertain; COVID-19 had already delayed construction and could further affect operations, trials and partners.
- RGX-314’s pivotal subretinal wet AMD program was underway, with a potential BLA filing expected in 2024 if trials support it. Interim AAVIATE data were expected in 2021; initial ALTITUDE data were also expected in 2021. The company planned to submit an RGX-202 IND in mid-2021.
- RGX-121 had begun dosing in additional cohorts and a second trial. RGX-181 remained on FDA clinical hold while the company evaluated the agency’s requests; a program update was expected in the second half of 2021. RGX-381’s update was also expected in the second half of 2021.
- Abeona had not paid $28.0 million in contractual license fees. REGENXBIO reported $30.1 million gross receivable, including accrued interest, and an $8.2 million credit-loss allowance. Arbitration had been held in March 2021, with the decision pending; collection and timing remained uncertain.
- Other key risks include clinical and regulatory uncertainty, reliance on licensees and Zolgensma-related revenue, the possibility that milestone payments will not be achieved, and the company’s ability to secure future financing. Management reported disclosure controls were effective at a reasonable assurance level and no material change in internal control during the quarter.
Key facts for investors to verify
- Whether Zolgensma royalties and other license revenue remain sufficient and how revenue concentration evolves.
- Clinical trial enrollment, safety and efficacy results, regulatory milestones, and the stated program timelines.
- The Abeona arbitration outcome, collectability of the receivable, and any effect on the credit-loss allowance.
- Cash burn, capital needs, and the remaining cost and schedule for the new facility.
- Future royalty payments to HCR, the estimated effective interest rate, and the balance and terms of the royalty liability.