Rallybio Corporation — Form 10-Q Summary
Reporting period: Quarter and nine months ended September 30, 2022; filed November 7, 2022. Rallybio is a clinical-stage biotechnology company developing therapies for severe and rare diseases. It has no approved products and has never generated commercial product revenue.
Financial Position and Results
| Metric | Three months ended September 30 | Nine months ended September 30 |
|---|---|---|
| Research and development expense | $12.1 million, versus $5.0 million | $29.9 million, versus $20.8 million |
| General and administrative expense | $6.8 million, versus $5.0 million | $20.9 million, versus $12.5 million |
| Total operating expenses | $18.9 million, versus $10.0 million | $50.8 million, versus $33.3 million |
| Net loss | $18.4 million, or $0.60 per share | $50.5 million, or $1.65 per share |
| Net loss in prior comparable period | $10.2 million, or $0.37 per share | $34.6 million, or $1.44 per share |
- Rallybio had no revenue; therefore, gross and operating margins are not meaningful.
- Interest and other income was $0.6 million in the quarter and $1.2 million for the nine months, primarily reflecting higher interest income from marketable securities.
- Loss on the Exscientia joint venture was $0.1 million for the quarter and $0.9 million for the nine months.
- At September 30, 2022, cash and cash equivalents were $51.7 million, marketable securities were $80.7 million, and total cash, cash equivalents and marketable securities were $132.4 million.
- Total assets were $143.7 million and stockholders’ equity was $131.9 million. Accumulated deficit was $144.5 million.
- The filing reports no debt or credit facility. Operating lease liabilities totaled $0.6 million, including $0.2 million current and $0.4 million noncurrent.
- Net cash used in operating activities was $42.0 million for the nine months, compared with $35.6 million in the prior-year period. Net cash used in investing activities was $81.5 million, primarily from purchases of highly rated debt securities. Financing cash flow was negative $0.1 million, versus $84.6 million of IPO proceeds in the prior-year period.
Material Changes Versus Prior Comparable Period
- Quarterly net loss increased by $8.2 million, while nine-month net loss increased by $15.9 million, driven by higher clinical development, manufacturing, personnel, share-based compensation and public-company costs.
- Quarterly R&D expense increased $7.2 million, primarily from RLYB212, RLYB116 and R&D personnel costs. Nine-month R&D expense increased $9.1 million, including a $3.1 million nonrecurring in-process research and development charge related to the RLYB331 license.
- General and administrative expense increased $1.7 million for the quarter and $8.4 million for the nine months, principally due to increased headcount, share-based compensation and public-company expenses.
- In May 2022, Rallybio acquired worldwide exclusive rights from Sanofi to KY1066, renamed RLYB331. The agreement included a $3.0 million upfront payment, potential development and regulatory milestones of up to $43.0 million, commercial milestones of up to $150.0 million for the first indication, and mid- to high-single-digit royalties on net sales.
- The company adopted new lease accounting and recognized approximately $0.7 million of right-of-use assets and lease liabilities at adoption.
- Unrealized losses on available-for-sale securities totaled $0.4 million at September 30, 2022 and were recorded in other comprehensive loss; management reported no credit-loss allowance.
Pipeline, Outlook and Risks
- RLYB212 is the lead monoclonal antibody program for prevention of FNAIT. A Phase 1b proof-of-concept study was expanded in the third quarter to evaluate a broader dose range. Preliminary data reported during the quarter indicated rapid and complete elimination of transfused HPA-1a-positive platelets in subjects studied, with more than a 90% reduction in mean platelet elimination half-life versus placebo. The company expected to discuss broader proof-of-concept data in the first quarter of 2023.
- RLYB116, a subcutaneous complement C5 inhibitor for PNH and generalized myasthenia gravis, was in Phase 1 development. The filing also describes positive topline results announced in November 2022, after the quarter-end, including greater than 99% free-C5 reduction at the 100 mg dose and a terminal half-life exceeding 300 hours. A multiple-ascending-dose Phase 1 study was expected to begin in the first quarter of 2023.
- RLYB331 remained preclinical, with IND-enabling activities underway. RLYB114 was preclinical, and the Exscientia collaboration was pursuing an ENPP1 small-molecule candidate for hypophosphatasia.
- Management expected existing cash, cash equivalents and marketable securities to fund operating expenses and capital requirements into the first quarter of 2024, subject to assumptions regarding development costs and timing. The filing also states that current resources will not fund any product candidate through regulatory approval.
- Rallybio implemented cash-preservation initiatives, including reviewing discretionary expenses and managing the timing of selected preclinical activities, while stating that planned clinical development of RLYB212 and RLYB116 was not affected.
- The company will require substantial additional capital and has no committed external financing source. In August 2022, it established a $300.0 million shelf registration and a $100.0 million at-the-market equity program; no shares had been sold under the ATM program as of September 30, 2022.
- Principal risks include continued losses and cash burn, dilution or unfavorable terms from future financing, early-stage clinical failure or safety findings, regulatory delays, patient-enrollment challenges in rare diseases, reliance on CROs and contract manufacturers, supply-chain and COVID-19 disruptions, competition, intellectual-property challenges, companion-diagnostic requirements and uncertain market access or reimbursement.
- Management reported effective disclosure controls as of September 30, 2022. The filing did not include management’s report or an auditor attestation on internal control over financial reporting because of emerging-growth-company transition provisions. No material legal proceedings or off-balance-sheet arrangements were reported.
Most Important Facts to Verify
- Whether RLYB212’s preliminary Phase 1b findings are confirmed by complete, audited data and support a registrational development path.
- Whether RLYB116’s early pharmacodynamic and tolerability results are replicated in multiple-dose studies and in target patient populations.
- The actual quarterly cash burn and whether the projected runway to the first quarter of 2024 remains valid as clinical spending increases.
- The timing, size and terms of future financing, including potential use of the $100.0 million ATM program and related dilution.
- Progress and cost implications of RLYB331’s IND-enabling program, including future milestone and royalty obligations.
- Clinical-trial enrollment, manufacturing capacity, regulatory feedback and any continuing impact from COVID-19 or broader supply-chain disruptions.