Disc Medicine, Inc. — Q1 2024 Form 10-Q
Reporting period: Three months ended March 31, 2024; financial statements are unaudited. Disc Medicine is a clinical-stage biopharmaceutical company developing treatments for hematologic diseases. It has no approved products and has generated no product revenue.
Financial performance and position
| Metric | Q1 2024 | Q1 2023 / comparison |
|---|---|---|
| Revenue | None | None |
| Research and development expense | $23.7 million | $20.2 million; up $3.5 million |
| General and administrative expense | $7.8 million | $4.9 million; up $2.8 million |
| Total operating expenses | $31.5 million | $25.1 million; up $6.3 million |
| Interest income | $4.5 million | $2.4 million |
| Net loss | $26.9 million | $22.8 million |
| Net loss per share, basic and diluted | $1.09 | $1.20 |
| Net cash used in operating activities | $33.6 million | $35.5 million |
| Cash and cash equivalents at period end | $342.6 million | $360.4 million at Dec. 31, 2023 |
Gross margin and operating margin are not meaningful because the company has no revenue. Increased research and development spending primarily reflected greater bitopertin clinical and manufacturing activity and higher personnel costs, partly offset by lower DISC-3405 expense because Q1 2023 included a $10.0 million upfront license fee. General and administrative growth was mainly personnel-related, including higher stock-based compensation. Stock-based compensation totaled $4.1 million, versus $1.0 million a year earlier.
Cash, cash equivalents and restricted cash declined by $17.8 million during the quarter. Financing provided $15.9 million, primarily from $14.8 million of net ATM proceeds; investing used $0.1 million. The company reported $16.1 million of total liabilities, including $2.0 million of operating lease liabilities, and no debt balance. Accumulated deficit was $215.6 million. Current assets were $351.9 million and current liabilities $14.9 million.
Weighted-average shares increased to 24.81 million from 18.95 million. The lower loss per share year over year therefore occurred despite a larger net loss and reflected the higher share count. The company sold 234,449 shares through its ATM program in the quarter; 24,695,885 shares were outstanding at March 31 and 24,721,666 at May 6, 2024.
Material changes and business developments
- Management said existing cash was expected to fund planned operating expenses and capital expenditures well into 2026. The financial-statement note separately states cash would fund planned requirements for at least 12 months from issuance. The longer runway is an estimate based on assumptions and is not assured.
- Bitopertin is being studied in Phase 2 trials for erythropoietic porphyrias, including EPP and XLP; an NIH-sponsored trial in Diamond-Blackfan Anemia began in July 2023. The filing notes that AURORA topline data were presented in April 2024, after quarter-end, but does not provide a clear efficacy result in the supplied filing text. Further analyses of AURORA and BEACON were anticipated in Q2 2024, with regulatory interactions on potential EPP registrational endpoints expected in the second half of 2024.
- DISC-0974 is in Phase 1b/2 studies for anemia of myelofibrosis and non-dialysis-dependent chronic kidney disease. Additional interim data were anticipated in Q2 2024 for myelofibrosis and in the second half of 2024 for CKD.
- DISC-3405 is in a Phase 1 trial in healthy volunteers; interim data were anticipated during 2024. DISC-0998 remained preclinical.
Outlook, risks and contingencies
The company expects operating losses and negative operating cash flows to continue and research and development and general and administrative costs to increase as its programs advance. It expects to need substantial additional funding over time; future equity financing could dilute stockholders, while debt or collaboration arrangements could impose restrictions or require surrendering rights. No committed external source of funding was disclosed.
Key risks include clinical-trial failure or delay, uncertain interpretation of interim data, patient enrollment, regulatory requirements, reliance on CROs and manufacturers, single-source supply risks, competition, and intellectual-property protection. The company disclosed that the Roche-licensed bitopertin composition-of-matter patent expires in 2025. It also depends on licensed technology and could owe material contingent milestone and royalty payments to licensors, including Roche, AbbVie and Mabwell; the filing says relevant future payments depend on milestones or sales and are not included in its contractual-obligations table. Operating lease commitments totaled $2.3 million.
No material legal proceedings or material indemnification claims were reported. The company reported effective disclosure controls as of March 31, 2024 and no material change in internal control over financial reporting during the quarter. The filing also notes adoption of Rule 10b5-1 trading plans by the CEO and General Counsel during the period.
Important facts for investors to verify
- Review the complete April 2024 AURORA topline results and subsequent analyses, including safety, efficacy and implications for registrational trial design.
- Track actual cash use against management’s “well into 2026” runway estimate and the shorter runway language in the financial-statement note.
- Monitor interim data and timelines for BEACON, DISC-0974 and DISC-3405, and whether regulatory feedback changes planned studies or endpoints.
- Assess future financing needs, ATM issuance and resulting dilution; verify share count and equity-compensation growth.
- Evaluate the impact of the 2025 bitopertin patent expiration and the timing, terms and likelihood of contingent license milestones and royalties.