REGENXBIO Inc. — Q1 2023 Form 10-Q
Reporting period: Three months ended March 31, 2023. REGENXBIO is a clinical-stage gene-therapy company that develops product candidates using its NAV AAV platform and licenses the platform to partners. Amounts below are in U.S. dollars; financial statement figures are in millions unless stated otherwise.
Financial performance and liquidity
| Metric | Q1 2023 | Q1 2022 / prior balance |
|---|---|---|
| License and royalty revenue | $19.1 | $22.2 |
| Operating expenses | $85.3 | $93.7 |
| Operating loss | $(66.2) | $(71.5) |
| Net loss | $(66.7) | $(76.7) |
| Basic and diluted loss per share | $(1.53) | $(1.79) |
| Net cash used in operating activities | $(80.9) | $(55.9) |
| Cash, cash equivalents and marketable securities | $473.5 at March 31, 2023 | $565.2 at December 31, 2022 |
Revenue was entirely license and royalty revenue; the company reported no product sales. Zolgensma royalties were $16.1 million, down from $21.5 million, while other license and royalty revenue increased to $3.0 million from $0.7 million. The filing attributes the Zolgensma decline to lower reported sales, particularly in Europe, where price mix and other one-time factors affected results.
Research and development expense rose to $58.5 million from $55.6 million; general and administrative expense was broadly unchanged at $22.6 million. Cost of revenues fell to $4.1 million from $15.7 million, mainly because Q1 2022 included a non-recurring $9.2 million charge related to the Penn license amendment. Investment income increased to $2.2 million from $0.8 million, and interest expense declined to $2.8 million from $6.1 million.
Operating cash use increased by $25.0 million year over year, reflecting working-capital movements, including higher amounts due from AbbVie and decreases in accrued expenses and payables. Investing activities provided $63.1 million, largely from maturities of marketable securities; financing activities used $9.0 million, principally royalty payments to HCR. Cash, cash equivalents and restricted cash totaled $72.1 million at quarter-end.
Total liabilities were $282.7 million, including $127.1 million related to the sale of future Zolgensma royalties to HCR and $93.3 million in operating lease liabilities. The filing does not report conventional borrowings as a separate debt balance. Current assets were $389.2 million and current liabilities were $112.3 million. Management said available cash and marketable securities were expected to fund operations and commitments for at least 12 months from the report date.
Material changes and notable items
- Net loss narrowed by $10.0 million year over year, but operating cash use increased by $25.0 million.
- AbbVie became responsible for the majority of ABBV-RGX-314 development expenses beginning January 1, 2023. REGENXBIO recorded $18.3 million of net cost reimbursements from AbbVie in Q1, largely reducing R&D expense; $18.2 million was due from AbbVie at quarter-end.
- The HCR royalty-sale liability declined from $137.6 million at year-end to $127.1 million. Q1 royalty payments to HCR were $13.0 million and interest expense recognized under the arrangement was $2.5 million.
- Accounts receivable included a $4.3 million gross receivable from Abeona, due by November 2024 and fully offset by an allowance for credit losses. The company said it intends to pursue collection.
- Available-for-sale securities had $10.8 million of aggregate unrealized losses at quarter-end; the company reported no credit-loss allowance, citing investment-grade holdings and its intent and ability to hold them until recovery.
Outlook, programs and risks
- Management expects continuing losses for at least the next several years and continued significant R&D, G&A and capital expenditures. It may need additional financing; future funding needs depend on trial outcomes, regulatory progress, manufacturing investment, collaboration arrangements and revenue from partners’ products.
- For ABBV-RGX-314, the filing describes expanded pivotal-trial enrollment and additional global sites, with regulatory submissions expected from late 2025 through the first half of 2026. Additional interim data from the AAVIATE and ALTITUDE trials was expected in the second half of 2023.
- RGX-202 was recruiting in the AFFINITY DUCHENNE trial, with initial data expected in the second half of 2023. The FDA granted Fast Track designation in April 2023.
- RGX-121’s pivotal CAMPSIITE program was expected to complete enrollment in the first half of 2023, with a potential BLA filing in 2024 using the accelerated approval pathway. RGX-381’s first-in-human trial was on track to begin in Q2 2023.
- Key risks include clinical and regulatory uncertainty, development and manufacturing costs, dependence on licensees and collaborators, concentration of revenue among a small number of partners, potential termination of licenses, intellectual-property risks, and the possibility that financing may not be available on acceptable terms. Zolgensma royalty revenue is also subject to product sales and the HCR royalty arrangement.
- The company reported no material changes to previously disclosed risk factors, no material pending legal actions expected to adversely affect it, no off-balance-sheet arrangements, and effective disclosure controls as of March 31, 2023.
Important facts for investors to verify
- Whether Zolgensma sales and REGENXBIO’s related royalty revenue stabilize or continue to decline.
- Whether AbbVie reimbursements and its assumption of most ABBV-RGX-314 development costs materially affect future cash burn.
- Clinical-trial enrollment, safety and efficacy updates, manufacturing readiness, and the stated program timelines, particularly for ABBV-RGX-314, RGX-202 and RGX-121.
- Cash runway assumptions against operating cash use, capital spending and the possibility of additional financing.
- Changes in the HCR royalty liability and effective interest-rate estimate, plus collection prospects for the Abeona receivable.