vTv Therapeutics Inc. — FY2020 Form 10-K
Reporting period: Fiscal year ended December 31, 2020. vTv is a clinical-stage pharmaceutical company developing small-molecule candidates for metabolic and inflammatory diseases. It had no approved products and no product-sales revenue.
Financial performance and liquidity
| Metric | 2020 | 2019 |
|---|---|---|
| Revenue | $6.414 million | $2.764 million |
| Research and development expense | $11.015 million | $15.119 million |
| General and administrative expense | $7.251 million | $8.537 million |
| Operating loss | $11.852 million | $20.892 million |
| Net loss before noncontrolling interest | $12.802 million | $21.938 million |
| Net loss attributable to vTv Therapeutics Inc. | $8.499 million | $13.044 million |
| Basic and diluted loss per Class A share | $0.18 | $0.59 |
| Cash used in operating activities | $18.000 million | $23.018 million |
- Revenue chiefly reflected the Anteris license: $2.0 million upfront plus a $4.2 million fair value assigned to Anteris preferred stock. These amounts are not recurring product revenue or equivalent to cash receipts.
- Lower R&D spending primarily reflected the completion of the Simplici-T1 study and reduced azeliragon trial activity. Lower compensation costs also contributed to reduced R&D and G&A expenses. Operating margins are not a meaningful measure for this pre-commercial company.
- Cash and cash equivalents were $5.747 million at year-end, versus $1.777 million a year earlier. Current assets were $7.215 million and current liabilities $6.390 million. Long-term investments of $6.725 million were primarily minority equity interests in Reneo and Anteris, not cash.
- The $20 million venture loan was fully repaid by December 31, 2020. Notes payable were $84,000, consisting of short-term financing; the filing reports no remaining balance under the venture loan.
- Financing activities provided $19.470 million, principally from equity issuances, while cash used in operations was $18.000 million. Year-end stockholders’ deficit was $80.102 million; redeemable noncontrolling interest was $83.895 million. Accumulated deficit was $290.036 million.
Material changes and development milestones
- Net loss attributable to vTv narrowed from $13.044 million to $8.499 million, while revenue increased by $3.650 million. The year-over-year improvement also reflects lower R&D, G&A and interest expense.
- In February 2020, vTv reported that the Phase 2 Simplici-T1 study of TTP399 met its primary objective, with statistically significant HbA1c improvement versus placebo. The company reported no diabetic ketoacidosis in either arm and no severe hypoglycemia in the TTP399 arm.
- The FDA’s 2020 written feedback supported planning two placebo-controlled six-month TTP399 trials, the first in approximately 400 participants, and a six-month open-label extension. vTv was also conducting a mechanistic Phase 1 study; top-line results were expected in the second or third quarter of 2021.
- The Phase 2 Elevage study of azeliragon in mild Alzheimer’s disease and type 2 diabetes failed its primary cognition objective. vTv discontinued development for Alzheimer’s disease and was evaluating other possible indications.
- vTv was conducting a multiple-ascending-dose Phase 1 study of psoriasis candidate HPP737 and expected to complete it in the second quarter of 2021. A planned TTP273 trial for cystic-fibrosis-related diabetes depended on finding a funding partner.
- In December 2020, Anteris licensed HPP971 worldwide. The agreement provides up to $151 million in potential development, regulatory and sales milestones, royalties, and a minority equity interest; these potential payments depend on future development and commercial success.
Outlook, risks and unusual items
- Going concern: Management said available cash, ATM capacity and amounts raised under the Lincoln Park agreement through February 24, 2021 were expected to fund operations only through the end of the third quarter of 2021. The company stated that substantial doubt existed about its ability to continue as a going concern. The auditor’s report includes a going-concern emphasis; the financial statements were not adjusted for the possible outcome.
- vTv expected continued losses and needed substantial additional funding. Financing timing and availability were uncertain; equity issuance could dilute shareholders, while partnerships could require relinquishing rights. The filing reports $5.5 million of ATM availability as of February 24, 2021. After year-end, Lincoln Park purchased 3.5 million shares for $8.0 million gross proceeds.
- COVID-19 did not significantly affect 2020 financial results, according to management, but precautions affected clinical-trial timelines and could continue to affect trials, partners, vendors and financing access.
- In January 2021, Huadong amended its license to remove vTv’s obligation to sponsor and contribute up to $3.0 million toward a Phase 2 multi-region trial; the amendment also reduced potential development and regulatory milestone payments by $3.0 million.
- Key risks include clinical-trial failure or delay, regulatory uncertainty, reliance on third-party manufacturers and a limited supplier base, dependence on collaborators, and continued need for capital. MacAndrews held approximately 77.4% of combined voting power at year-end, and additional share issuance could dilute holders.
- Revenue is concentrated in a small number of collaboration customers: three accounted for all 2020 revenue. The company reported no material legal proceedings and no material COVID-related financial impact for the year.
Investor verification priorities
- Confirm actual cash runway, subsequent financing, share issuance and dilution, and whether funding is sufficient to conduct planned TTP399 trials.
- Track FDA alignment, final design, financing and timing for TTP399 registrational studies, along with results from the mechanistic study.
- Review HPP737 Phase 1 tolerability findings and whether vTv secures funding or a partner for the planned TTP273 trial.
- Assess progress by Anteris, Huadong, Reneo and Newsoara; distinguish contingent milestones and royalties from recognized revenue and cash received.
- Monitor the going-concern disclosure and the effects of MacAndrews’ voting control and potential future equity issuance.