Rocket Pharmaceuticals, Inc. — Q1 2024 Form 10-Q
Reporting period: Three months ended March 31, 2024. Rocket is a clinical-stage gene-therapy company with no approved products and no product revenue.
Financial performance and liquidity
| Metric | Q1 2024 | Q1 2023 / comparison |
|---|---|---|
| Revenue | $0 | $0 |
| Research and development expense | $45.2 million | $46.4 million |
| General and administrative expense | $22.1 million | $15.8 million |
| Total operating expenses | $67.4 million | $62.2 million |
| Net loss | $62.1 million | $58.3 million |
| Net loss per share, basic and diluted | $0.66 | $0.73 |
| Net cash used in operating activities | $56.9 million | $57.6 million |
With no revenue, operating and profit margins are not meaningful. Net loss increased $3.7 million year over year: lower R&D expense was more than offset by higher G&A, including commercial-preparation and legal costs. Other income increased to $5.3 million, primarily reflecting interest income and a $1.1 million reduction in the fair value of warrant liabilities.
At March 31, cash and cash equivalents were $35.3 million and investments were $295.0 million, totaling $330.3 million. The company separately reported $8.6 million of investment-maturity receivables; including these, resources were $338.9 million. Management expects available resources to fund operating expenses and capital expenditures into 2026. Current assets were $345.2 million versus current liabilities of $33.0 million. Accumulated deficit was $1.02 billion.
Net cash, cash equivalents and restricted cash fell $20.6 million during the quarter. Investing activities provided $35.0 million, mainly from investment maturities exceeding purchases; financing activities provided $1.2 million from option exercises. There were no ATM share sales in Q1. No conventional borrowings are reported; lease liabilities totaled $25.9 million, including $21.2 million of finance lease liabilities and $4.8 million of operating lease liabilities.
Material changes and business developments
- R&D expense decreased $1.1 million, mainly due to lower manufacturing and development costs, partly offset by higher compensation, professional fees, laboratory costs, stock compensation and clinical-trial costs.
- G&A expense increased $6.3 million, including $3.3 million of commercial-preparation costs and $1.5 million of legal costs.
- Cash used in operations was broadly stable year over year. The company issued no ATM shares in the quarter, compared with $17.2 million in net ATM proceeds in Q1 2023.
- Shares issued and outstanding were 90.6 million at quarter-end; the company reported 90.8 million outstanding as of May 1, 2024. The weighted-average diluted-loss-per-share denominator includes pre-funded warrants, so it differs from period-end shares.
Outlook, milestones and risks
- RP-L201 (severe LAD-I): FDA review time for the BLA was extended by three months to June 30, 2024, to review clarifying manufacturing information. FDA indicated an advisory committee meeting was not needed.
- RP-L102 (Fanconi anemia): EMA accepted the marketing authorization application on April 2, 2024. Rocket anticipated an FDA BLA filing in the first half of 2024.
- RP-A501 (Danon disease): Phase 2 enrollment and treatment were ongoing in the U.S.; EU and UK trial applications received approval in January 2024.
- Other programs: RP-A601 for PKP2-ACM was in an ongoing Phase 1 study. Rocket said it was initiating a 10-patient Phase 2 pivotal study for RP-L301 (PKD) and planned to submit an IND for BAG3-DCM in 2024.
- Management expects R&D and G&A spending to increase as programs advance, trials expand, manufacturing investment continues and the company prepares for potential commercialization. No specific financial guidance was provided.
- Key risks include clinical and regulatory uncertainty, trial enrollment and timing, manufacturing and CMC requirements, intellectual-property protection, competition and the need for future financing. Additional equity financing could dilute shareholders. A 100-basis-point immediate increase in interest rates was estimated to reduce the fair value of interest-sensitive securities by $1.3 million.
- The company reported no material changes to previously disclosed risk factors, no material litigation expected to have an adverse effect, and effective disclosure controls as of March 31, 2024.
Important facts for investors to verify
- Progress and outcome of the RP-L201 FDA review, including the June 30, 2024 PDUFA date and any further CMC requests.
- Whether Rocket completed its anticipated RP-L102 FDA filing and the timing and requirements of subsequent review.
- Enrollment, safety, efficacy and regulatory milestones across the Danon disease, PKP2-ACM and PKD programs.
- Quarterly operating cash burn, investment maturities and whether management’s stated runway into 2026 remains achievable as spending rises.
- Potential share dilution from equity financing, outstanding options and warrants, and the company’s remaining ATM capacity.