Immunocore Holdings plc — Q1 2024 Form 10-Q
Reporting period: Three months ended March 31, 2024. Unaudited consolidated financial statements are prepared under U.S. GAAP. Immunocore is a commercial-stage biotechnology company whose marketed product is KIMMTRAK; it also develops candidates using its ImmTAX platform.
Key financial metrics
| Metric | Q1 2024 | Q1 2023 / comparison |
|---|---|---|
| Total revenue | $70.5 million | $54.7 million; up 29.0% |
| KIMMTRAK net product revenue | $70.3 million | $51.6 million; up 36.4% |
| Collaboration revenue | $0.2 million | $3.1 million |
| Research and development expense | $57.5 million | $36.6 million; up 57.1% |
| Selling, general and administrative expense | $39.3 million | $32.6 million; up 20.6% |
| Operating loss | $26.5 million | $14.7 million |
| Net loss / loss per share | $24.4 million / $0.49 | $19.4 million / $0.40 |
| Operating cash flow | $(4.6) million | $10.5 million provided |
| Cash and cash equivalents | $832.8 million at March 31 | $442.6 million at December 31, 2023 |
| Working capital | $770.7 million | $389.8 million at December 31, 2023 |
| Interest-bearing debt | $437.5 million carrying amount | $48.0 million at December 31, 2023 |
Cost of product revenue was $0.2 million and described by management as not material. Interest income was $8.2 million; interest expense was $3.2 million. Total assets were $994.0 million and shareholders’ equity was $359.5 million at quarter-end.
Material changes and drivers
- KIMMTRAK revenue increased primarily due to higher U.S. sales volume and expansion into additional countries. Q1 product revenue was $50.0 million in the United States, $19.0 million in Europe, and $1.4 million internationally.
- R&D expense rose $20.9 million, primarily from increased external spending on PRAME programs, including Phase 3 trial activity. SG&A increased $6.7 million, mainly from higher employee-related costs, including the internalized U.S. salesforce.
- Collaboration revenue fell following the Genentech agreement to wind down co-funding and the completion of Immunocore’s performance obligation under that collaboration by year-end 2023.
- Operating cash flow shifted from cash provided to cash used, primarily due to higher clinical trial expenditures, partly offset by higher revenue and net interest income.
Outlook, financing, and risks
- In February 2024, the company issued $402.5 million principal amount of 2.50% convertible senior notes due 2030, receiving net proceeds of $389.1 million. The notes are senior unsecured obligations; the initial conversion price was $94.70 per ADS.
- The company also had a $50 million Pharmakon loan bearing 9.75% interest. It said it intended to use part of the notes proceeds to repay this loan in full in Q4 2024; as of the filing, it had not done so. The Pharmakon loan is secured by company assets, and the company reported covenant compliance. A further $50 million tranche was available through June 30, 2024.
- Management expects existing cash and anticipated KIMMTRAK revenue to fund operating and capital requirements for at least twelve months from the filing date. It expects continued significant expenses and operating losses, with R&D spending expected to increase; additional financing may be needed for longer-term development.
- In February, Immunocore agreed with Bristol Myers Squibb to sponsor and fund a registrational Phase 3 trial of brenetafusp plus nivolumab in first-line advanced cutaneous melanoma; BMS will provide nivolumab. The filing said the trial was expected to initiate in Q2 2024.
- Key risks include clinical and regulatory uncertainty, KIMMTRAK market acceptance and reimbursement, estimates for rebates and chargebacks, foreign-exchange movements, macroeconomic and supply-chain disruption, and possible need for future capital. A 20% change in certain rebate and chargeback assumptions would have changed Q1 product revenue by $15.5 million. The company recorded a $5.4 million net increase in accrued revenue deductions related to prior-period sales.
- The company reported KIMMTRAK approval in 38 countries and launches in 17 countries. It reported no material legal proceedings and no material changes to previously disclosed risk factors.
Important facts for investors to verify
- Whether KIMMTRAK growth and market expansion continue, and how much reported revenue is affected by future rebates, chargebacks, pricing negotiations, or estimate revisions.
- Progress, enrollment, costs, and results for the brenetafusp Phase 3 program and other clinical programs.
- Whether the Pharmakon loan is repaid as intended, and the resulting debt, interest, collateral, and potential dilution implications of the convertible notes.
- How operating cash use and rising R&D and commercial expenses compare with management’s stated cash runway and longer-term funding needs.
- Foreign-exchange sensitivity: management estimated a five-percentage-point exchange-rate movement would change the carrying value of net financial assets and liabilities held in foreign currencies by $10.5 million.