Jaguar Health, Inc. — Q1 2023 Form 10-Q
Reporting period: Three months ended March 31, 2023; comparisons are with Q1 2022 unless noted. Jaguar is a commercial-stage pharmaceutical company developing plant-based human and animal health products. Its principal marketed products include Mytesi and Canalevia-CA1.
Financial performance and liquidity
| Metric | Q1 2023 | Q1 2022 or prior date |
|---|---|---|
| Product revenue | $1.972 million | $2.625 million; down 24.9% |
| Gross profit / gross margin | $1.627 million / approximately 82.5% | $2.170 million / approximately 82.7% |
| Operating expenses | $11.817 million | $14.379 million |
| Operating loss | $9.845 million | $11.754 million |
| Net loss | $12.397 million | $18.164 million |
| Net loss attributable to common stockholders | $12.202 million; $2.39 per share | $17.986 million; $23.10 per share |
| Cash used in operating activities | $9.945 million | $7.695 million |
| Cash | $14.367 million at March 31 | $5.469 million at December 31, 2022 |
| Notes payable, net of discount | $33.165 million | $33.627 million at December 31, 2022 |
Current assets were $32.361 million and current liabilities were $31.096 million at quarter-end. Stockholders’ equity was $7.660 million, versus a $1.356 million deficit at year-end; accumulated deficit was $279.150 million. Cash increased by $8.898 million, largely because of $17.865 million net proceeds from the ATM equity offering and $1.232 million of investment from noncontrolling interests. No cash was used in investing activities.
Material changes and management commentary
- Revenue declined primarily due to lower Mytesi sales following the transition to a closed specialty-pharmacy distribution model and related inventory drawdown. Mytesi gross sales fell $598,000; net product revenue also reflected $560,000 of Medicaid and other program rebates.
- Operating expenses declined 17.8%. Research and development was nearly flat at $4.775 million: increased clinical and contract manufacturing costs were largely offset by lower personnel costs. Sales and marketing fell 33.5%, and general and administrative expenses fell 21.7%.
- Net loss improved by $5.767 million, reflecting lower operating expenses and interest expense and no debt-extinguishment loss in Q1 2023, compared with a $2.815 million loss in Q1 2022. Interest expense was $2.181 million, down from $4.194 million.
- Management reported completion of patient enrollment in the pivotal Phase 3 OnTarget trial of crofelemer for prevention of diarrhea in adults receiving targeted cancer therapy. The company also described plans for investigator-initiated proof-of-concept studies in rare gastrointestinal conditions. The filing provides no specific financial guidance.
Outlook, risks, contingencies, and subsequent events
- Going concern: The company states that its cash is not sufficient to fund its operating plan for one year from issuance, that it has an immediate need to raise cash, and that substantial doubt exists about its ability to continue as a going concern. It expects continued losses and negative operating cash flows; additional financing may not be available on acceptable terms or in time.
- Debt and financing: Royalty-interest arrangements and other borrowings carry substantial repayment obligations, some linked to product sales and subject to minimum payments. The Streeterville note is measured at fair value; its reported fair value was $8.198 million at March 31, above its $6.221 million unpaid principal balance. Q1 financing relied heavily on ATM share issuance.
- Development and commercial risks: Results depend on clinical and regulatory outcomes, product acceptance, financing, and the ability to sustain commercialization. The company also identifies dependence on a limited number of suppliers: one contract manufacturer for Mytesi API and one for finished products. Two distributors accounted for 79% of Q1 revenue, and those customers represented 92% of accounts receivable at quarter-end.
- Contingencies and commitments: No material legal proceedings or material accruals for active legal matters were reported. Commitments include a remaining 149-kilogram crofelemer purchase commitment and clinical-trial services under an agreement reduced to approximately $6.0 million.
- Subsequent events: After quarter-end, the company reported additional ATM proceeds, a May 2023 private placement for approximately $1.86 million involving Series G preferred stock and warrants for up to 6.85 million common shares, and a standstill agreement that temporarily permits deferral of royalty payments subject to its terms. It also disclosed a new Nasdaq minimum-bid-price deficiency, with a compliance deadline of November 6, 2023; delisting remains a risk if compliance is not regained.
- The company effected a 1-for-75 reverse stock split in January 2023, and the filing retroactively adjusts share and per-share data. It reported that its disclosure controls and internal control over financial reporting were effective as of March 31, 2023.
Important facts for investors to verify
- Available financing and cash runway, given management’s explicit going-concern warning and quarterly operating cash use of $9.945 million.
- Terms, maturities, minimum payments, and potential dilution associated with royalty-interest debt, ATM sales, Series G preferred stock, and related warrants.
- OnTarget Phase 3 results and the timing and regulatory path for crofelemer programs, including European rare-disease initiatives.
- Progress toward Nasdaq’s minimum-bid-price requirement and the risk of delisting.
- Whether Mytesi revenue stabilizes after the specialty-pharmacy transition, and the company’s exposure to concentrated customers and suppliers.