Rocket Pharmaceuticals, Inc. — 2022 Form 10-K
Reporting period: Fiscal year ended December 31, 2022. This is an annual filing; it does not provide a separate Q4 income statement. Rocket is a clinical-stage gene-therapy company with no approved products and no product-sales revenue.
Financial performance and position
| Metric | 2022 | 2021 |
|---|---|---|
| Revenue | $0 | $0 |
| Research and development expense | $165.6 million | $125.5 million |
| General and administrative expense | $58.8 million | $41.8 million |
| Total operating expenses / operating loss | $224.3 million / $(224.3) million | $167.2 million / $(167.2) million |
| Net loss | $(221.9) million | $(169.1) million |
| Net loss per share, basic and diluted | $(3.26) | $(2.67) |
| Net cash used in operating activities | $(178.1) million | $(121.2) million |
| Cash, cash equivalents and investments | $399.7 million | $388.7 million |
Operating expenses rose 34% year over year, while net loss increased $52.8 million. R&D growth reflected higher manufacturing and development costs, laboratory supplies, staffing, direct materials and professional fees; lower license-related expense partly offset the increase. G&A growth included commercial preparation, added personnel and Renovacor acquisition costs. The company reported no operating margin because it had no revenue.
At year-end, current assets were $364.1 million and current liabilities were $39.2 million. Total liabilities were $62.1 million, including $21.0 million of finance lease liabilities; the filing reports no convertible notes outstanding. Cash, cash equivalents and restricted cash were $141.9 million, with the remainder of reported cash and investments held as investments. Management estimated existing resources would fund operating expenses and capital expenditures through 2024.
Financing generated $155.3 million of net cash in 2022: $108.1 million from an October public offering and $46.6 million net proceeds from the at-the-market program. The company issued shares in both financings and issued additional shares for the Renovacor acquisition. Shares outstanding were 79.1 million at year-end, versus 64.5 million a year earlier.
Business, pipeline and material developments
- Rocket develops lentiviral-vector therapies for Fanconi anemia (RP-L102), LAD-I (RP-L201) and pyruvate kinase deficiency (RP-L301), and AAV therapies for Danon disease (RP-A501) and PKP2 arrhythmogenic cardiomyopathy (RP-A601). Renovacor, acquired December 1, 2022, added a BAG3 dilated cardiomyopathy program.
- RP-L102, Fanconi anemia: Management reported that the Phase 2 primary endpoint had been achieved, with phenotypic correction in at least six of 10 evaluable patients with at least 12 months of follow-up. Rocket anticipated a BLA filing in Q4 2023.
- RP-L201, LAD-I: All nine treated patients were reported alive and clinically stable; the filing cites 100% estimated overall survival at 12 months and reductions in hospitalizations and severe infections. Rocket anticipated a BLA filing in Q2 2023.
- RP-L301, PKD: Two adult patients had normalized hemoglobin, transfusion independence and improved quality-of-life measures through 24 months. Pediatric enrollment was ongoing; a pivotal Phase 2 trial was anticipated to begin in Q4 2023.
- RP-A501, Danon disease: The Phase 1 dataset included seven patients. Reported interim biomarker, imaging and functional improvements were based on small cohorts and follow-up that varied by patient. Following a serious complement-mediated TMA event at the higher dose, Rocket and the FDA focused further dosing on the lower dose and revised safety measures. Rocket anticipated starting an initial component of a global pivotal study in Q2 2023, subject to continued FDA dialogue. The FDA granted RMAT designation in February 2023.
- Other programs: Rocket anticipated filing an IND for RP-A601 in Q2 2023 and for BAG3-DCM in the first half of 2024. It discontinued Rocket-sponsored development of RP-L401 in December 2021 and returned the program to academic innovators.
Outlook, risks and unusual items
Management expects R&D spending to rise as programs advance and manufacturing and clinical work expand. Profitability depends on successful development, regulatory approval, manufacturing scale-up and commercialization; the company says it may never become profitable and expects to need additional capital over the longer term. The stated runway through 2024 is an estimate, not a guarantee.
- Clinical and regulatory risk: Trials are small and ongoing; early or interim findings may not predict final results. Approval, timing, trial designs and endpoints remain uncertain, including FDA agreement on pivotal-study plans.
- Safety risk: Danon development previously faced an FDA clinical hold after a TMA event at the higher dose. Gene-therapy immune reactions and other delayed adverse effects remain material concerns. One RP-L102 patient developed T-cell lymphoblastic lymphoma; the company reported negligible vector markings in the tumor and said the findings indicated it was not caused by lentiviral insertion.
- Manufacturing and execution: Rocket began in-house AAV cGMP manufacturing and reported two RP-A501 batches, but has limited company manufacturing experience. It continues to rely on third parties for lentiviral products and some other activities.
- Capital and dilution: Continued operating losses and cash use may require further financing, potentially diluting shareholders. RTW Investments beneficially owned approximately 25.2% of outstanding shares, according to the filing.
- Acquisition: Renovacor was acquired for approximately $72.3 million in stock, assumed awards and warrants. The acquisition added $25.2 million of intangible assets and $8.3 million of goodwill; integration and development benefits are uncertain.
- Controls and audit: The auditor gave unqualified opinions on the financial statements and internal control over financial reporting. R&D accrual estimates were identified as a critical audit matter because vendor service progress and billing may not align.
Important facts for investors to verify
- Actual cash, investment balances, operating cash burn and financing needs relative to management’s runway estimate through 2024.
- Final, patient-level trial results and safety follow-up for RP-L102, RP-L201, RP-L301 and RP-A501, including whether reported interim findings are confirmed.
- FDA feedback, trial designs and timing for anticipated BLA submissions and pivotal studies.
- In-house manufacturing readiness, product comparability and capacity, and dependence on external suppliers.
- Share dilution from equity offerings, acquisition-related securities, options and warrants, and any future capital raises.