Outlook Therapeutics, Inc. — Form 10-Q
Reporting period: Fiscal third quarter and nine months ended June 30, 2022; comparative periods ended June 30, 2021. The company is a pre-commercial biopharmaceutical developer focused on ONS-5010, an ophthalmic bevacizumab formulation for retinal diseases.
Financial performance and position
| Metric | Three months ended June 30, 2022 | Nine months ended June 30, 2022 | Comparable 2021 period |
|---|---|---|---|
| Revenue | No product revenue | No product revenue | No product revenue |
| Research and development expense | $11.25 million | $33.34 million | $8.55 million and $29.02 million |
| General and administrative expense | $5.77 million | $15.74 million | $2.93 million and $9.27 million |
| Operating loss | $17.02 million | $49.08 million | $11.47 million and $38.29 million |
| Net loss | $17.54 million | $51.71 million | $12.20 million and $39.76 million |
| Net loss per share | $0.08 | $0.25 | $0.07 and $0.27 |
| Operating cash used | Not separately provided for quarter | $46.42 million | $45.26 million |
Margins are not meaningful because the company had no product sales. Cash and cash equivalents were $26.02 million at June 30, 2022, versus $14.48 million at September 30, 2021. Total assets were $38.59 million; current liabilities were $18.43 million. The balance sheet reported $10.46 million of net debt, all classified as current; principal and accrued interest on the remaining unsecured note totaled $10.85 million and was due January 1, 2023.
For the nine months, financing activities provided $57.97 million, including equity issuance and debt proceeds, partly offset by debt repayments. Cash increased by $11.54 million over the period. No product-sales revenue or profit was reported.
Changes and notable items
- Quarterly net loss increased by $5.34 million year over year; nine-month net loss increased by $11.95 million. Higher development spending and pre-launch/general costs were key drivers.
- Nine-month R&D expense rose $4.32 million, including increased BLA-related fees and stock-based compensation. G&A expense rose $6.47 million, reflecting increased headcount, professional fees, stock compensation, insurance and other costs.
- In November 2021, the company raised approximately $54.0 million net in an underwritten stock offering and issued 46.0 million shares; it also sold shares through its ATM program. Common shares outstanding increased from 176.46 million at September 30, 2021 to 225.94 million at June 30, 2022.
- The company prepaid a prior amended convertible note on June 30, 2022 for $12.93 million, including $1.55 million of interest. The remaining unsecured note bears 9.5% interest, compounding daily, and matures January 1, 2023.
Outlook, risks and contingencies
- The FDA BLA for ONS-5010, submitted in March 2022, was voluntarily withdrawn in May to provide additional requested information. Management said it had confirmed the information needed to resubmit by September 2022. That was a stated plan, not an assurance of resubmission or approval.
- Management estimated June 30 cash would fund operations into the first calendar quarter of 2023. The filing states there is substantial doubt about the company’s ability to continue as a going concern; additional financing is required, with no assurance it will be available. Potential actions include equity or debt financing, licensing or collaborations, and renegotiating note maturity. Failure to secure funding could force reductions or pauses in development or other severe actions.
- Clinical and manufacturing activities were reported active. The company intends to pursue additional ONS-5010 trials for other indications after anticipated wet AMD approval and planned regulatory submissions in other markets. These plans depend on regulatory outcomes, financing and execution.
- The filing identifies regulatory, clinical, manufacturing-vendor, commercialization, reimbursement, competition, financing and potential COVID-19 disruption risks. It added risks related to the Russia-Ukraine conflict and possible effects on markets, supply chains and access to capital; no material operational interruption had been experienced as of the filing.
- No material pending legal proceedings were reported. Management concluded disclosure controls and procedures were effective as of June 30, 2022; no material change in internal control over financial reporting was reported.
Investor verification priorities
- Check whether the BLA was resubmitted on the stated timetable, FDA review status, and any subsequent regulatory requests or decisions.
- Verify current cash, monthly cash burn, financing raised or committed, and the status or refinancing of the January 2023 note; the runway estimate is based on assumptions.
- Assess the terms and dilution from equity or convertible financing, including the ATM program and outstanding warrants and options.
- Track ONS-5010 clinical, manufacturing and commercialization milestones, and whether additional trials or market launches require funding beyond available resources.
- Review subsequent filings for changes to going-concern disclosures, debt obligations, contingencies and the risks identified in this report.