REGENXBIO Inc. — Q1 2024 Form 10-Q
Reporting period: Three months ended March 31, 2024. REGENXBIO is a clinical-stage gene-therapy company whose revenue comes primarily from licensing and royalties; it has no commercial sales of its own products. Financial amounts below are in U.S. dollars.
Financial performance and liquidity
| Metric | Q1 2024 | Q1 2023 / comparison |
|---|---|---|
| Revenue | $15.6 million | $19.1 million; down $3.5 million (18%) |
| Operating expenses | $79.5 million | $85.3 million; down $5.8 million |
| Operating loss | $63.9 million | $66.2 million |
| Net loss | $63.3 million; $1.38 per share | $66.7 million; $1.53 per share |
| Operating cash flow | $(55.5) million | $(80.9) million |
| Cash, cash equivalents and marketable securities | $380.5 million at March 31 | Management says this is sufficient for at least 12 months from issuance of the financial statements |
- Zolgensma royalties were $15.2 million, down from $16.1 million. Other license and royalty revenue was $0.4 million versus $3.0 million, principally reflecting non-recurring development milestone revenue in Q1 2023.
- Research and development expense declined to $54.8 million from $58.5 million; general and administrative expense declined to $18.3 million from $22.6 million. Lower manufacturing, personnel and professional-services costs were partly offset by higher clinical-trial activity.
- Investment income was $2.5 million. Interest expense was $2.0 million, mainly associated with the sale of future Zolgensma royalties.
- The March public offering of common stock and pre-funded warrants generated approximately $131.1 million in net proceeds. Common shares issued and outstanding were 49.0 million at quarter-end, up from 44.0 million at December 31, 2023; 1.52 million pre-funded warrants remained outstanding at quarter-end.
- Operating cash burn improved year over year, partly due to lower expenses and greater AbbVie cost reimbursements. The company still expects regular operating cash outflows and losses for at least several years.
Balance sheet and material changes
- Total assets were $629.2 million and total liabilities were $238.5 million at March 31, 2024. Current assets were $395.4 million versus current liabilities of $110.2 million.
- The liability from the sale of future royalties to HCR was $83.3 million, including $38.6 million current. The arrangement directs specified Zolgensma royalties to HCR up to contractual caps; the company estimates an 8.2% effective interest rate. This is a royalty-related liability, not a conventional borrowing balance.
- Revenue declined, but net loss narrowed by $3.3 million year over year, mainly as lower operating expenses and improved other income more than offset lower revenue.
- A March 2024 offering brought in new equity capital. In April, a holder exercised pre-funded warrants for 197,000 shares, after quarter-end.
- A New York office sublease prompted a $2.1 million impairment charge ($1.4 million of lease right-of-use assets and $0.7 million of property and equipment). The company remains responsible for its original lease; sublease payments were expected to begin in mid-2024.
Outlook, programs and risks
- Management expects quarter-end cash and marketable securities to fund operations for at least 12 months from the financial statements’ issuance date, based on its current business plan. It also says additional capital will be needed to achieve its objectives; financing may be unavailable or require unfavorable terms.
- ABBV-RGX-314: Enrollment in the pivotal ATMOSPHERE and ASCENT wet-AMD trials was described as on track, with U.S. and European regulatory submissions expected in the first half of 2026. The company expected an AAVIATE data update in Q3 2024. For diabetic retinopathy, it expected an FDA end-of-Phase-II meeting in Q1 2025 and initiation of a pivotal trial in the first half of 2025. AbbVie bears the majority of development expenses from 2023 under the collaboration.
- RGX-202: Management reported interim data including 20.9% microdystrophin expression versus control at three months in a dose-level-2 patient, and no serious adverse events in treated patients as of May 3, 2024. It planned to enroll up to seven patients at the selected pivotal dose through early Q3 2024, hold an FDA meeting in early Q3 and start a pivotal trial in late Q3 or early Q4 2024. These are forward-looking expectations, not guaranteed outcomes.
- RGX-121: The pivotal phase of CAMPSIITE reportedly achieved its primary endpoint. The company planned to complete activities supporting a BLA submission in 2024, using cerebrospinal-fluid D2S6 as a proposed surrogate endpoint for accelerated approval.
- A November 2023 prioritization and restructuring reduced the workforce by approximately 15%, prioritizing ABBV-RGX-314, RGX-202 and RGX-121 while the company pursues strategic alternatives for other clinical-stage programs. Remaining restructuring cash payments were expected by Q3 2024.
- Key risks include clinical and regulatory uncertainty, dependence on partners and licensees, revenue concentration in Zolgensma royalties, ongoing cash burn and potential need for financing. The filing reports an accumulated deficit of $768.4 million. Zolgensma sales reported by Novartis were $295 million in Q1 2024, down 5% year over year.
- A $4.7 million receivable from Abeona, due by November 2024, was fully reserved for credit losses. The company said it intends to pursue collection. Management reported no pending legal actions expected to have a material adverse effect and no material changes to previously disclosed risk factors.
Important facts for investors to verify
- Clinical-trial enrollment, safety and efficacy updates, FDA feedback, and whether the stated pivotal-trial and BLA timelines are met.
- Actual cash burn versus management’s runway estimate, including the impact of trial costs, restructuring savings and any further financing or dilution.
- Zolgensma sales and royalty trends, and the timing and amount of payments to HCR under the royalty-sale agreement.
- Collection of the Abeona settlement receivable and whether its full allowance remains appropriate.
- Progress on strategic alternatives for deprioritized programs and any material changes in collaboration or licensing arrangements.