Immunovant, Inc. — Form 10-Q Summary
Business context and reporting period
Immunovant is a clinical-stage biopharmaceutical company developing batoclimab and IMVT-1402, fully human monoclonal antibodies targeting the neonatal Fc receptor (FcRn) for autoimmune diseases. The filing covers the three and nine months ended December 31, 2022, the third quarter of fiscal 2023. The financial statements are unaudited and prepared under U.S. GAAP.
Batoclimab is being developed for myasthenia gravis, thyroid eye disease, chronic inflammatory demyelinating polyneuropathy and Graves’ disease. IMVT-1402 is an earlier-stage program; the company planned to initiate a Phase 1 trial in early calendar 2023, subject to IND clearance.
Financial performance and liquidity
| Metric | Three months ended Dec. 31, 2022 | Three months ended Dec. 31, 2021 | Nine months ended Dec. 31, 2022 | Nine months ended Dec. 31, 2021 |
|---|---|---|---|---|
| Revenue | $0 | $0 | $0 | $0 |
| Research and development expense | $42.3 million | $29.8 million | $108.4 million | $69.8 million |
| Acquired in-process R&D | $10.0 million | $0 | $10.0 million | $0 |
| General and administrative expense | $11.8 million | $11.5 million | $35.6 million | $39.0 million |
| Total operating expenses | $64.0 million | $41.3 million | $154.0 million | $108.8 million |
| Net loss | $63.2 million | $41.4 million | $151.5 million | $109.6 million |
| Basic and diluted loss per share | $0.49 | $0.36 | $1.26 | $1.02 |
| Net cash used in operating activities | Not separately provided | Not separately provided | $132.4 million | $73.2 million |
Because the company has no revenue, conventional revenue-based margins are not meaningful. The company expects substantial operating losses and negative cash flows for the foreseeable future.
- Cash and cash equivalents were $432.6 million at December 31, 2022, compared with $493.8 million at March 31, 2022.
- Cash and cash equivalents included $339.7 million invested in high-quality government-related money market funds.
- Accumulated deficit was $506.9 million; total stockholders’ equity was $414.7 million.
- Total liabilities were $41.6 million, consisting primarily of accounts payable, accrued expenses and operating lease liabilities. The filing does not report outstanding debt financing.
- Cash used in investing activities was $0.2 million, primarily for property and equipment.
- Cash provided by financing activities was $70.7 million, principally from the October 2022 equity offering.
- Management expected existing cash at December 31, 2022 to fund operating and capital requirements for at least the next 12 months and stated that, based on current plans, funding could extend into the second half of calendar 2025. The company also states that additional capital will be required to complete development and commercialization.
Material changes versus the prior comparable period
- Third-quarter net loss increased by $21.8 million, or approximately 53%, to $63.2 million. Nine-month net loss increased by $42.0 million, or approximately 38%, to $151.5 million.
- Third-quarter R&D expense increased $12.5 million, driven by higher batoclimab clinical and manufacturing activities, IMVT-1402 development, and increased personnel costs.
- Nine-month R&D expense increased $38.6 million, reflecting Phase 3 MG activity, Phase 2b CIDP activity, manufacturing preparation and higher headcount.
- The company recognized a $10.0 million acquired in-process R&D expense for achieving its second development and regulatory milestone under the HanAll Agreement. The related amount was recorded in accounts payable and was expected to be paid in the fiscal 2023 fourth quarter.
- General and administrative expense declined $3.4 million for the nine-month period, primarily because of lower financial advisory, legal and other professional fees, partly offset by higher personnel and information technology costs.
- Operating cash use increased $59.2 million year over year to $132.4 million for the nine months, reflecting higher clinical-development spending and working-capital requirements.
- In October 2022, the company issued 12.5 million common shares at $6.00 per share, generating approximately $70.2 million of net proceeds. Shares outstanding increased to 129.3 million at December 31, 2022 from 116.5 million at March 31, 2022.
Guidance, outlook, risks and unusual items
- Management expected R&D expenses to increase as it advances Phase 3 MG and TED programs, the pivotal Phase 2b CIDP trial, a planned Graves’ disease trial and the IMVT-1402 Phase 1 trial.
- Expected development milestones included batoclimab MG top-line data in the second half of calendar 2024, TED top-line data in the first half of calendar 2025, CIDP initial data in the first half of calendar 2024, and Graves’ disease initial results in the second half of calendar 2023.
- Batoclimab clinical development had previously been paused because of treatment-related elevations in total cholesterol and LDL in some subjects. The company resumed development but identified lipid and albumin effects as continuing safety and regulatory risks.
- The HanAll Agreement provides licensed rights to batoclimab and IMVT-1402 in specified territories. Up to $432.5 million of additional development, regulatory and sales milestones remained after $20.0 million of milestones achieved as of December 31, 2022, plus tiered royalties ranging from the mid-single digits to mid-teens on licensed-product net sales.
- The Samsung manufacturing agreement carried an estimated remaining minimum purchase obligation of approximately $33.1 million, including $1.1 million expected in fiscal 2023, $13.7 million in fiscal 2024 and $18.3 million in fiscal 2026.
- A putative securities class action concerning alleged misstatements about batoclimab safety remained pending. The company had not recorded a liability because a loss was not reasonably estimable and an unfavorable outcome was not determined to be probable.
- Key risks include clinical-trial failure or delays, adverse safety findings, regulatory non-approval, patient enrollment and retention, dependence on contract manufacturers and CROs, loss or breach of the HanAll license, intense competition, intellectual-property challenges, cybersecurity and privacy risks, macroeconomic volatility and the need for additional financing.
- Roivant Sciences Ltd. held approximately 56.7% of the voting power as of January 27, 2023, giving it significant control over shareholder and board matters.
- On February 1, 2023, the board approved a 2023 Inducement Plan reserving 5.0 million common shares for equity awards to eligible new employees.
Most important facts for investors to verify
- Progress, enrollment, safety findings and timing of data readouts for the MG, TED, CIDP, Graves’ disease and IMVT-1402 trials.
- Whether batoclimab’s LDL, cholesterol and albumin effects affect trial design, labeling, regulatory approval or commercial positioning.
- Cash burn relative to the $432.6 million cash balance and whether additional financing will be required before planned clinical milestones.
- Timing and amount of future HanAll milestone payments, the remaining $33.1 million Samsung commitment and other manufacturing obligations.
- Status and potential financial exposure of the securities class action litigation.
- Potential dilution from future equity offerings, outstanding options and restricted stock units, and the effect of Roivant’s controlling ownership.
- Competitive developments, including approved and late-stage FcRn inhibitors and competing therapies in the targeted autoimmune indications.