Voyager Therapeutics, Inc. — Q2 2020 Form 10-Q
Reporting period: Three and six months ended June 30, 2020. The unaudited filing was signed August 10, 2020. Voyager is a clinical-stage gene therapy company focused on severe neurological diseases; it reported no product-sales revenue.
Financial performance and liquidity
| Metric | Q2 2020 | Q2 2019 | Six months 2020 | Six months 2019 |
|---|---|---|---|---|
| Collaboration revenue | $28.7m | $46.1m | $46.7m | $51.3m |
| Research and development expense | $29.4m | $28.6m | $61.7m | $53.4m |
| General and administrative expense | $8.2m | $8.3m | $18.4m | $18.0m |
| Operating loss | $9.0m | Operating income $9.2m | $33.4m | $20.1m |
| Net loss | $8.7m | Net income $11.2m | $32.9m | $16.0m |
| Net loss per share, diluted | $(0.23) | $0.29 | $(0.89) | $(0.46) |
Amounts are in U.S. dollars. No product gross margin is reported because there were no product sales. Interest income was $0.3m in Q2 and $1.3m for the first half, down from $2.1m and $3.2m, respectively, in 2019.
- Cash and investments: At June 30, cash and cash equivalents were $144.3m and marketable securities were $86.8m, including $85.3m of current U.S. Treasury notes. Cash, cash equivalents and marketable debt securities totaled $229.7m. Cash, cash equivalents and restricted cash totaled $146.1m.
- Cash flow: First-half operating cash use was $50.0m, compared with $93.6m provided in 2019. Investing activities provided $107.2m, principally from security maturities; financing activities provided $2.2m.
- Balance sheet and debt: Current assets were $246.7m and current liabilities $67.5m; total liabilities were $220.6m, including deferred revenue and lease liabilities. The filing reports no borrowings or other financial debt. Existing operating lease liabilities were $32.6m; a new facility lease carries an additional expected obligation of approximately $25.6m that was not yet recorded as a lease liability.
- Losses and runway: Accumulated deficit was $345.6m. Management expected existing cash, cash equivalents and marketable debt securities, together with expected Neurocrine cost reimbursements, to fund planned expenses and capital needs into mid-2022.
Material changes versus comparable periods
- Q2 collaboration revenue fell $17.4m year over year, largely because Q2 2019 included $30.2m of revenue recognized following the Sanofi Genzyme collaboration termination. Higher Neurocrine and AbbVie research-service and reimbursement revenue partly offset the decline.
- First-half collaboration revenue decreased $4.5m, as the $31.6m of Sanofi-related revenue recognized in 2019 was partly offset by higher Neurocrine and AbbVie revenue.
- First-half R&D expense rose $8.3m, mainly from higher employee and contractor compensation ($6.0m) and facility costs ($1.8m). First-half net loss widened by $16.9m.
- Operating cash flow shifted from a large inflow in 2019, which included $106.1m of deferred-revenue growth from collaboration upfront payments, to cash use in 2020; deferred revenue declined by $27.7m in the first half.
Outlook, management commentary and risks
- Clinical plans: Voyager and Neurocrine expected RESTORE-1 Parkinson’s trial screening to resume in the second half of 2020. Enrollment was expanded to approximately 85 patients, with 2:1 randomization to treatment or sham surgery; the amendments lengthen the enrollment period. RESTORE-2 was expected to begin in the first half of 2021. Voyager expected to file the VY-HTT01 Huntington’s disease IND in the second half of 2020 and, following FDA clearance, begin a first-in-human trial.
- COVID-19: The pandemic had slowed RESTORE-1 enrollment and led to a temporary screening pause, reduced laboratory activity and delays or termination of some non-critical preclinical experiments. Further effects on trials, timelines, reimbursements, supplies and operations remained uncertain.
- AbbVie terminations after quarter-end: Both the Tau and Alpha-Synuclein collaborations were terminated effective August 3, 2020. Voyager was relieved of future research and development obligations and was not required to repay upfront payments, but forfeited future option, milestone and royalty opportunities. The company expected to recognize the remaining deferred revenue under both agreements in the second half of 2020. Voyager said it was evaluating how to advance these programs, independently or with other partners.
- Other unusual items and contingencies: In June 2020, the Sanofi Genzyme termination resulted in $28.7m of recognized revenue, net of a $10m payment already made and a further $10m milestone payment expected upon filing a Huntington’s-related IND. The company anticipated filing that IND before year-end. No material legal proceedings or litigation reserves were reported at June 30.
- Key risks: Voyager has no approved products and expects continued operating losses and a need for additional funding. Its runway depends in part on Neurocrine reimbursements. Principal risks include clinical and regulatory uncertainty, trial enrollment and surgical delivery, manufacturing scale and comparability, reliance on collaborators and third-party suppliers, competition, intellectual-property protection, and the effects of COVID-19. Management reported disclosure controls effective at the reasonable-assurance level and no material change in internal control over financial reporting during the quarter.
Important facts for investors to verify
- Whether RESTORE-1 screening resumed as expected, enrollment progressed, and the amended trial can meet its endpoints and support the anticipated RESTORE-2 timeline.
- Whether Voyager filed the VY-HTT01 IND in the second half of 2020 and whether FDA review permits the planned first-in-human study.
- How the AbbVie terminations affect the company’s pipeline, future collaboration revenue, program costs and the expected second-half recognition of deferred revenue.
- Whether Neurocrine reimbursements and Voyager’s operating plan support the stated mid-2022 cash runway, particularly as operating cash use and R&D spending evolve.
- The timing and cash impact of the Sanofi Genzyme $10m Huntington’s-related milestone, the approximately $25.6m unrecorded Hayden Avenue lease commitment, and any future financing or share dilution.