MeiraGTx Holdings plc — FY2019 Form 10-K
Reporting period: Year ended December 31, 2019; filed March 11, 2020. MeiraGTx is a clinical-stage gene therapy company with six programs in clinical development, no approved products and no product sales revenue.
Financial results and liquidity
| Metric | FY2019 | FY2018 |
|---|---|---|
| License revenue | $13.3 million | None |
| Operating expenses | $71.6 million | $78.1 million |
| Operating loss | $58.3 million | $78.1 million |
| Net loss | $54.7 million | $82.9 million |
| Basic and diluted loss per ordinary share | $1.65 | $4.47 |
| Operating cash flow | +$20.0 million | −$58.9 million |
| Investing cash flow | −$9.4 million | −$11.3 million |
| Financing cash flow | +$148.2 million | +$130.0 million |
- The $13.3 million of revenue reflects amortization of the $100 million upfront payment under the Janssen collaboration, not product sales. Janssen-funded research and development reimbursements of $27.3 million were recorded as an offset to R&D expense.
- R&D expense, net of collaboration funding and UK tax credits, was $24.9 million, down from $33.6 million. G&A expense increased to $46.7 million from $44.5 million. Operating expenses fell overall, while operating loss narrowed with the new collaboration revenue.
- Net loss improved by $28.1 million, also reflecting a $7.0 million swing in foreign currency results—from a $3.8 million loss to a $3.2 million gain—and the absence of the prior-year warrant revaluation loss.
- Cash and cash equivalents were $227.2 million at year-end 2019, versus $68.1 million a year earlier. The cash-flow statement reports $227.4 million including restricted cash. Current assets were $269.0 million and current liabilities $49.2 million.
- Operating cash flow turned positive largely because of the Janssen upfront payment and increases in deferred revenue and other liabilities; it should not be read as evidence of recurring operating cash generation. The company also raised $155.2 million gross from 2019 share offerings and private placement, with $147.7 million net proceeds.
- The filing reports no debt outstanding other than ordinary-course payables and accruals. Lease obligations totaled approximately $23.2 million, including $1.7 million current. Total liabilities were $133.1 million and shareholders’ equity was $190.8 million. Profit margins are not meaningful given the company’s losses and pre-commercial status.
Material changes and business developments
- MeiraGTx entered a Janssen collaboration covering AAV-RPGR, AAV-CNGB3 and AAV-CNGA3, receiving a $100 million upfront payment. Janssen has global commercialization rights to those three programs; the agreement also provides development and commercialization funding, potential milestones up to $340 million and untiered 20% royalties on net sales. Separate research-program options may carry high-teens royalties and milestones.
- Ophthalmology R&D spending rose to $14.0 million from $7.1 million, and manufacturing spending to $12.8 million from $5.2 million; net reported R&D declined largely due to collaboration funding and tax credits.
- The company completed its acquisition of Arthrogen in October 2019 for approximately $0.56 million in cash. The acquisition was described as not significant to the consolidated financial statements.
- Year-end cash and equity increased substantially following collaboration proceeds and equity financing. Ordinary shares outstanding rose to 36.8 million at December 31, 2019 from 27.4 million at December 31, 2018.
Outlook, commentary and risks
- Management estimated that year-end cash and expected Janssen research funding would fund operating expenses and capital expenditures into 2022; the filing cautions that this estimate depends on assumptions and capital could be used sooner. The financial-statement note separately states cash was expected to cover expenses for at least 12 months from issuance.
- Management expects continued losses and increasing development, clinical, manufacturing and public-company costs; profitability and product revenue remain uncertain. Additional capital may be required, with potential dilution or less favorable financing or collaboration terms.
- For 2020, management expected AAV-RPGR trial data and regulatory discussions; further progress in CNGB3/CNGA3 trials; discussions with regulators on the path for AAV-RPE65; initial AAV-AQP1 trial data in the second half of 2020; and an AAV-GAD IND filing in the second half of 2020. These are expectations, not guaranteed milestones.
- The company planned a second cGMP viral-vector facility and an in-house cGMP plasmid facility, with construction of the vector facility expected to begin in mid-2020 and plasmid operations anticipated by year-end 2020. Execution, cost, scale-up and regulatory qualification are risks.
- Reported AAV-RPE65 Phase 1/2 results met the primary safety and tolerability endpoint and showed statistically significant improvements on several secondary visual-function measures. The company said it would discuss the regulatory pathway with agencies; the candidate was not approved. The AAV-RPGR study was ongoing, with data expected in 2020.
- Key risks include clinical-trial failure or delay, gene-therapy safety and long-term effects, regulatory uncertainty, manufacturing and third-party plasmid supply, competition, intellectual-property disputes, reimbursement and future financing. The filing also identifies COVID-19-related business interruptions as a possible risk. Foreign-exchange movements are unhedged; management said a 10% unfavorable currency movement would not significantly increase net loss at year-end.
- No material legal proceedings were reported. Management concluded disclosure controls and internal control over financial reporting were effective; the auditor did not attest to internal controls because the company qualified as an emerging growth company.
Important facts for investors to verify
- Whether clinical data, regulatory feedback and development timelines support the stated 2020 milestones, particularly for AAV-RPGR, AAV-RPE65 and AAV-AQP1.
- Whether cash runway into 2022 remains valid after actual trial spending, facility investment and the timing and extent of Janssen reimbursements.
- The terms, execution and economics of the Janssen collaboration, including funded costs, option decisions, milestone conditions and future royalty obligations.
- Progress, costs and regulatory readiness of the planned manufacturing facilities, and continued dependence on third-party plasmid supply.
- Potential dilution from equity compensation and future financing; also reconcile cash and cash equivalents with the separately reported restricted-cash-inclusive total.