Rallybio Corporation — FY2021 Form 10-K Summary
Reporting period: Fiscal year ended December 31, 2021. This is an annual Form 10-K rather than a standalone fourth-quarter filing. Rallybio is a clinical-stage biotechnology company focused on therapies for severe and rare diseases and has not commercialized any products.
Business Context and Pipeline
- FNAIT prevention: RLYB212, a monoclonal anti-HPA-1a antibody, entered a Phase 1 first-in-human trial in Germany in the fourth quarter of 2021. RLYB211, a polyclonal antibody, remained in a Phase 1/2 trial and generated data supporting rapid clearance of HPA-1a-positive platelets.
- Complement disorders: RLYB116 is a potential subcutaneous C5 inhibitor targeting PNH and generalized myasthenia gravis. Regulatory approval for an Australian Phase 1 trial was obtained in Q4 2021; the trial began in Q1 2022. RLYB114 remained in preclinical development for ophthalmic disorders.
- Discovery programs: Two rare-metabolic-disease programs were being pursued through joint ventures with Exscientia, including an ENPP1 inhibitor program for hypophosphatasia.
- The company had 35 full-time employees at December 31, 2021 and operates through third-party manufacturers, contract research organizations and other vendors.
Financial and Liquidity Highlights
| Metric | FY2021 | FY2020 | Change |
|---|---|---|---|
| Revenue | None; no product commercialization revenue | None | — |
| Research and development expense | $26.9 million | $17.6 million | +$9.3 million |
| General and administrative expense | $18.7 million | $7.7 million | +$11.1 million |
| Total operating expenses | $45.6 million | $25.3 million | +$20.3 million |
| Net loss | $47.0 million | $26.4 million | Loss increased by $20.6 million |
| Net loss per share | $1.84 | $1.52 | Loss per share increased |
| Operating cash flow | $(45.5) million | $(22.0) million | Use increased by $23.5 million |
| Investing cash flow | $(2.3) million | $(2.1) million | Use increased by $0.3 million |
| Financing cash flow | $83.0 million | $144.9 million | Decrease of $61.9 million |
| Cash and cash equivalents | $175.3 million | $140.2 million | +$35.1 million |
| Accumulated deficit | $94.0 million | $47.0 million | Increased by $47.0 million |
Rallybio completed its IPO in August 2021, issuing 7.13 million shares at $13.00 per share. Gross proceeds were $92.7 million and net proceeds were approximately $83.0 million. The company reported no material debt or credit facility. Contractual operating lease obligations totaled $0.8 million, including $0.2 million due within one year.
Management stated that the $175.3 million of cash and cash equivalents at December 31, 2021 was expected to fund operating expenses and capital requirements for at least the next 18 months from the filing date. The financial statements also state that current cash would not fund any product candidate through regulatory approval, indicating a need for substantial additional capital.
Material Changes Versus FY2020
- R&D expense increased 53%, driven primarily by higher RLYB212 and RLYB114 development and manufacturing costs and increased personnel costs. RLYB212 spending increased to $10.9 million from $3.7 million.
- G&A expense increased 144%, reflecting higher headcount, share-based compensation, professional fees and costs of operating as a public company.
- Net loss increased 78% to $47.0 million, while operating cash burn more than doubled.
- Cash increased despite the larger operating loss because of the $83.0 million IPO proceeds.
- Rallybio transitioned to a public-company structure through a June 2021 reorganization and July 2021 liquidation of Rallybio Holdings before the IPO.
Guidance, Outlook, Risks and Unusual Items
- Management expects operating losses and negative cash flows to continue as clinical, preclinical, manufacturing and regulatory activities expand. No revenue or profitability guidance was provided.
- The company expected Phase 1b proof-of-concept data for RLYB212 in the third quarter of 2022, IND-enabling studies for the Exscientia ENPP1 program in the second half of 2022, and an RLYB114 IND submission in the first half of 2023.
- Key risks include failure or delay in clinical trials, limited enrollment in rare-disease studies, uncertain efficacy and safety, regulatory rejection, required companion diagnostics, manufacturing and supply constraints, reliance on CROs and CMOs, intellectual-property challenges, competition and inability to obtain additional financing.
- COVID-19 could disrupt clinical-site activities, enrollment, manufacturing, shipping, regulatory interactions and capital markets, although the company reported no material impairment or significant operational impact through the filing date.
- RLYB211 depends on plasma from donors with anti-HPA-1a antibodies, creating a potential long-term supply constraint if the program succeeds.
- Rallybio held a 50% interest in the Exscientia joint venture and recorded a $1.5 million loss on the investment in both FY2021 and FY2020.
- Share-based compensation expense increased to $3.6 million from $0.7 million. Unrecognized compensation expense at year-end totaled approximately $17.1 million for stock options, restricted stock awards and restricted stock units.
- RLYB211 and RLYB212 had received U.S. orphan-drug and rare-pediatric-disease designations; these designations do not guarantee approval, exclusivity or a priority review voucher.
Important Facts for Investors to Verify
- Confirm the latest cash runway and expected timing and terms of future financing, since management states that additional capital will be required through regulatory approval.
- Verify enrollment, safety, pharmacokinetic and proof-of-concept results for the RLYB212 Phase 1 and Phase 1b programs and subsequent regulatory plans.
- Assess whether RLYB211 clinical findings in healthy male participants translate to prevention of FNAIT in pregnant women.
- Track the RLYB116 Phase 1 results in healthy participants and the timing of patient studies in PNH and generalized myasthenia gravis.
- Review the company’s ability to secure scalable manufacturing, particularly for RLYB211 and its third-party CMO network.
- Evaluate the need for and regulatory status of FNAIT screening or companion diagnostic testing.
- Review dilution from outstanding options, restricted shares, equity plans and potential future equity offerings.
- Consider that the company has no approved products, no commercial revenue, substantial accumulated losses and no established path to profitability.