REGENXBIO Inc. — Q2 2023 Form 10-Q
Business context and reporting period. Clinical-stage gene therapy company; this unaudited filing covers the quarter and six months ended June 30, 2023. Revenue is primarily from licensing and royalties, with Zolgensma royalties the largest source. REGENXBIO reported no revenue from sales of its own products.
Financial results and liquidity
Amounts below are in millions, except per-share data and percentages.
| Metric | Q2 2023 | Q2 2022 | Six months 2023 | Six months 2022 |
|---|---|---|---|---|
| Revenue | $20.0 | $32.6 | $39.1 | $54.9 |
| Operating expenses | $93.1 | $95.2 | $178.4 | $188.9 |
| Operating loss | $(73.1) | $(62.5) | $(139.3) | $(134.1) |
| Net loss | $(72.1) | $(68.2) | $(138.7) | $(144.9) |
| Net loss per share | $(1.66) | $(1.58) | $(3.19) | $(3.37) |
| Operating cash used | Not stated quarterly | Not stated quarterly | $128.2 | $117.7 |
Margins. Approximate gross margin, calculated as revenue less cost of revenues divided by revenue, was 52.6% in Q2 2023 versus 60.3% in Q2 2022, and 65.3% for the first half of 2023 versus 47.7% in the first half of 2022.
Liquidity and obligations. At June 30, cash, cash equivalents and marketable securities totaled $415.4 million, compared with $565.2 million at December 31, 2022. Cash, cash equivalents and restricted cash were $70.9 million. Total assets were $682.5 million and stockholders’ equity was $405.9 million. The balance sheet reports no conventional borrowings; it includes a $116.3 million liability related to the sale of future Zolgensma royalties and $91.6 million of operating lease liabilities. Management said available cash and securities should fund operations for at least 12 months from the filing date.
Material changes versus comparable periods
- Q2 revenue fell $12.7 million year over year; first-half revenue fell $15.8 million. Zolgensma royalties declined to $19.0 million for Q2 and $35.1 million for the first half, from $28.4 million and $49.9 million, respectively. Novartis reported lower Zolgensma sales, while global treated-patient numbers were described as relatively stable.
- Q2 net loss widened by $3.9 million, although first-half net loss narrowed by $6.2 million. The first-half operating loss increased by $5.2 million.
- First-half R&D expense rose $1.8 million to $118.4 million, while G&A rose $3.2 million to $46.3 million. AbbVie became responsible for the majority of ABBV-RGX-314 development expenses beginning in 2023, increasing reported net cost reimbursements and reducing company-funded program costs.
- First-half cost of revenues decreased $15.1 million, partly because 2022 included a non-recurring $9.2 million charge related to the Penn license amendment. Interest expense fell $9.1 million, primarily reflecting a lower royalty-sale liability and revised estimates of future royalty payments.
- Operating cash use increased $10.6 million year over year. Investing cash inflow of $118.3 million mainly reflected maturities of marketable securities and should not be read as operating cash generation.
Outlook, commentary and risks
- Management expects ongoing losses and significant R&D and G&A spending for the foreseeable future; the company has an accumulated deficit of $580.3 million and may need additional capital. The stated 12-month runway depends on its current business plan and assumptions.
- ABBV-RGX-314 pivotal wet AMD trials were enrolling; the company expected global regulatory submissions in late 2025 through the first half of 2026. July 2023 interim clinical updates were reported after quarter-end and are not Q2 results.
- RGX-121 enrollment was complete for 10 patients, with a BLA filing targeted for 2024 using the accelerated approval pathway; the FDA granted RMAT designation in May 2023. These are forward-looking plans, not assured outcomes.
- The company expected to report further RGX-202 trial data in 2023. It also expected an IND filing for its Duchenne exon-skipping program in the first half of 2025. Development, regulatory review, manufacturing, trial results and commercialization remain uncertain.
- Potential license milestones total up to $1.55 billion, but are contingent on development, approvals and sales; the filing says some or all may never be achieved. Revenue is concentrated among a small number of licensees, and licenses may be terminated.
- The company reported no material change to previously disclosed risk factors, no pending legal action it believed could reasonably be expected to have a material adverse effect, and effective disclosure controls at a reasonable assurance level.
Important facts for investors to verify
- Whether Zolgensma sales and royalties stabilize or continue to decline, and how this affects revenue and payments under the royalty-sale agreement.
- Whether the $415.4 million cash-and-securities balance and stated runway remain adequate as clinical, manufacturing and capital needs evolve.
- Trial enrollment, safety, efficacy and regulatory timelines for ABBV-RGX-314 and other lead programs; distinguish post-quarter updates from results reported for Q2.
- Progress toward the RGX-121 2024 BLA target and the assumptions supporting accelerated approval.
- Collection of the Abeona receivable: the remaining $5.0 million payment is due by November 2024 or earlier upon a specified transaction, and the company recorded a full allowance for credit losses against its discounted receivable.
- Future expense sharing and reimbursements under the AbbVie collaboration, as well as the dilution or financing terms if additional capital is required.