REGENXBIO Inc. — Q2 2022 Form 10-Q
Reporting period: Quarter and six months ended June 30, 2022. Financial statements are unaudited. REGENXBIO is a clinical-stage gene-therapy company whose revenue comes primarily from licensing its NAV AAV platform and royalties; it had no commercial product sales of its own.
Key financial metrics
Amounts below are in millions of dollars, except per-share data.
| Metric | Q2 2022 | Q2 2021 | Six months 2022 | Six months 2021 |
|---|---|---|---|---|
| Revenue | $32.6 | $22.0 | $54.9 | $40.9 |
| Operating expenses | $95.2 | $74.3 | $188.9 | $137.2 |
| Operating loss | $(62.5) | $(52.2) | $(134.1) | $(96.3) |
| Net loss | $(68.2) | $(57.6) | $(144.9) | $(107.8) |
| Basic and diluted loss per share | $(1.58) | $(1.36) | $(3.37) | $(2.56) |
| Operating cash used | $(117.7) | $(80.1) | ||
| Investing cash used | $(91.7) | $(206.4) | ||
| Financing cash used/provided | $(14.5) | $205.1 |
- Q2 revenue included $28.4 million of Zolgensma royalties; first-half royalties were $49.9 million. The company reported that Zolgensma sales increased 20% in Q2 and 17% in the first half year over year, in U.S. dollars.
- At June 30, cash and cash equivalents were $121.4 million and marketable securities were $560.7 million, totaling $682.0 million. Total assets were $953.4 million, liabilities $322.9 million, and stockholders’ equity $630.5 million.
- The company reported a $155.3 million liability related to its sale of future Zolgensma royalties to HCR, including $41.1 million current. It also reported $85.7 million of non-current operating lease liabilities. The filing does not present conventional borrowings as a separate debt balance.
- Management said available cash, cash equivalents and marketable securities were expected to fund operations and capital requirements for at least 12 months from the report date, based on its current business plan.
- Available-for-sale securities recorded an unrealized loss of $12.2 million in the first half, reflected in other comprehensive loss. The company reported no credit-loss allowance on those securities.
Material changes versus prior comparable periods
- Q2 revenue rose $10.6 million year over year, primarily from higher Zolgensma royalties. First-half revenue increased $13.9 million.
- First-half net loss widened by $37.1 million. First-half operating expenses increased $51.7 million, including higher R&D spending and a one-time $9.2 million cost-of-revenue charge related to the Penn license amendment.
- R&D expense rose $15.1 million in Q2 and $31.0 million in the first half. The company cited increased clinical-trial, manufacturing, personnel and facility costs, partly offset by AbbVie cost reimbursements of $5.2 million for Q2 and $8.1 million for the first half.
- First-half operating cash use increased $37.5 million year over year. Investing cash use fell substantially, while financing shifted from $205.1 million provided in 2021—primarily from a public stock offering—to $14.5 million used in 2022.
- Cash, cash equivalents and restricted cash declined by $223.8 million during the first half. The company also reported $12.2 million of first-half unrealized investment losses in other comprehensive loss.
Outlook, commentary and risks
- Management expects continued losses and increased R&D and G&A spending for the foreseeable future; the company has an accumulated deficit of $306.1 million and may need additional capital over time. It cautioned that actual cash use could exceed current estimates.
- RGX-314: enrollment was ongoing in pivotal subretinal-delivery trials ATMOSPHERE and ASCENT, which management expected to support a BLA submission in 2024. AbbVie is expected to assume the majority of RGX-314 development expenses beginning January 1, 2023 under the collaboration terms.
- RGX-202: the company anticipated dosing the first patient in its AFFINITY DUCHENNE trial in the first half of 2023. RGX-121: the company intended to file a BLA in 2024 using the accelerated approval pathway, subject to development and regulatory outcomes.
- Key uncertainties include clinical and regulatory success, trial timing and costs, manufacturing capacity, access to financing, and dependence on licensees and collaborators. Revenue is concentrated among a small number of licensees, and licenses may be terminable by licensees.
- The company identified COVID-19 as a possible source of trial, manufacturing and business disruption, although it said results for the reported periods were not significantly affected. It reported no material changes to previously disclosed risk factors and no pending legal actions it believed could reasonably be expected to have a material adverse effect.
- Potential license milestones of up to $1.57 billion were contingent on development, regulatory and sales achievements; some or all may never be realized. The HCR royalty arrangement’s estimated effective interest rate was 17.0%, and future interest expense depends on royalty forecasts and payment timing.
Investor verification checklist
- Check subsequent Zolgensma sales, royalty receipts, and the effect of royalty payments to HCR on cash and the related liability.
- Track RGX-314 trial progress and the stated 2024 BLA target, as well as the planned RGX-202 trial start and RGX-121 regulatory path.
- Assess quarterly cash burn, investment maturities, capital spending, and whether the stated 12-month liquidity expectation remains supported.
- Review the Penn payment obligations and the non-recurring $9.2 million charge, and confirm how AbbVie cost sharing develops after 2022.
- Monitor collection of the Abeona settlement receivable: $5.0 million was due in November 2022 and another $5.0 million by November 2024 or an earlier specified transaction; the company recorded a $4.0 million allowance against the non-current receivable.
- Note that the filing revised the presentation of 2021 cash flows for royalty-sale payments; the company said the classification error was immaterial and did not affect prior-period earnings, assets or liabilities.