PLIANT THERAPEUTICS, INC. annual report, FY2022

Pliant Therapeutics, Inc. — 2022 Form 10-K

Reporting period: Fiscal year ended December 31, 2022. The filing was signed March 9, 2023. Pliant is a clinical-stage biopharmaceutical company developing therapies for fibrosis; it had no approved products and no product-sale revenue.

Financial performance and liquidity

Metric	2022	2021
Revenue	$9.7 million	$7.6 million
Research and development expense	$96.9 million	$77.5 million
General and administrative expense	$39.9 million	$27.6 million
Operating loss	$127.2 million	$97.5 million
Net loss	$123.3 million	$97.3 million
Net loss per share, basic and diluted	$2.94	$2.71
Net cash used in operating activities	$94.6 million	$75.4 million

• Revenue increased 27.9%, primarily reflecting a $4.0 million Novartis research-target opt-in milestone, partly offset by lower PLN-1474 service revenue.
• Operating expenses rose 30.2%; R&D growth reflected higher employee costs, outside research services and facilities expenses. G&A growth reflected personnel and professional-services costs.
• Cash, cash equivalents and short-term investments totaled $331.2 million at year-end; total current assets were $340.3 million and current liabilities $23.9 million. Stockholders’ equity was $313.3 million.
• Long-term debt was $9.9 million at year-end, from a $10.0 million Oxford term loan. The loan bears interest at one-month SOFR plus 8.5%; the reported effective rate was 12.69%. Monthly interest-only payments were scheduled through July 2026, followed by principal and interest payments.
• Financing cash flow was $226.9 million, chiefly from the July 2022 stock offering and Oxford loan. Investing cash outflow was $150.2 million, mainly reflecting purchases of short-term investments; cash and cash equivalents declined by $18.0 million.
• The company reported no product-sales revenue, so a product gross margin is not applicable. It reported a $338.4 million accumulated deficit and expects continued losses.

Material changes and business developments

• Bexotegrast is the wholly owned lead candidate for idiopathic pulmonary fibrosis (IPF) and primary sclerosing cholangitis (PSC). The company reported positive 12-week interim Phase 2a INTEGRIS-IPF findings in July 2022 and January 2023, including tolerability and exploratory efficacy signals. These are interim, early-stage findings; final 24-week data were expected in Q2 2023.
• Novartis discontinued PLN-1474 development as part of a strategic realignment and gave notice in February 2023 to terminate the collaboration. Rights to PLN-1474 and research targets were to revert to Pliant effective April 18, 2023. Pliant would lose future milestone, royalty and research-funding eligibility under the agreement; it estimated $1.4 million of aggregate research funding remained available at year-end, with services expected to be substantially complete.
• In January 2023, the FDA cleared the IND for PLN-101095, a candidate for solid tumors resistant to immune checkpoint inhibitors. Pliant expected to begin a Phase 1 trial in Q2 2023. A preclinical muscular-dystrophy program was undergoing IND-enabling work, with an IND expected in 2023.
• In July 2022, Pliant raised approximately $215.4 million net from a public offering. A subsequent January 2023 offering generated approximately $269.9 million net. Including the January offering, management expected existing resources to fund projected operations into the second half of 2026, while noting that estimates depend on assumptions and do not cover all possible development needs.

Outlook, risks and unusual items

• Management expected 2023 milestones to include final INTEGRIS-IPF data, initiation of a Phase 2b IPF trial, initiation of a PLN-101095 Phase 1 trial and topline PSC Phase 2a data. These are expectations, not assurances; the filing provides no product-revenue guidance.
• Management expected R&D and G&A spending to increase as programs advance. It stated that additional capital would be required to complete clinical development of current programs, despite the projected runway.
• Principal risks include clinical failure or adverse safety findings, trial-enrollment delays, regulatory uncertainty, reliance on third-party CROs and manufacturers, and dependence on a sole supplier for bexotegrast with supply exposure in Asia, including China. COVID-19-related trial and supply-chain disruptions, competition, intellectual-property challenges and future financing or dilution are also cited.
• Oxford’s loan is secured by substantially all assets, excluding intellectual property but including related payment rights and proceeds. The agreement also includes restrictions on certain business and financing actions. The filing reported no financial covenants.
• Short-term investments had $2.0 million of unrealized losses at year-end; the company reported no other-than-temporary impairment. No material legal proceedings were reported. Deloitte issued an unqualified opinion on the financial statements; it identified accrued and prepaid R&D estimates as a critical audit matter. Management reported effective disclosure controls and internal control over financial reporting; the auditor did not provide an internal-control audit opinion.

Important facts for investors to verify

• Review the full INTEGRIS-IPF and INTEGRIS-PSC data, including endpoints, duration, patient numbers, statistical analyses and safety findings; distinguish exploratory signals from registrational evidence.
• Confirm the status, timing and financing requirements of planned bexotegrast, PLN-101095 and muscular-dystrophy studies, including whether timelines changed after the filing.
• Assess the consequences of Novartis’s termination: rights transfer, remaining service revenue, development plans for PLN-1474 and any replacement partnership.
• Track cash burn, investment balances, Oxford loan terms and management’s runway assumptions; consider dilution from the January 2023 offering and future equity awards or financing.
• Evaluate manufacturing continuity and clinical supply risks, especially the bexotegrast sole-source dependency, and review future disclosures for any supplier changes or disruptions.