Solid Biosciences Inc. annual report, FY2022

Solid Biosciences Inc. — FY2022 Form 10-K

Reporting period: Fiscal year ended December 31, 2022; filed March 23, 2023. This is an annual report, not a standalone fourth-quarter report. Solid is a clinical-stage gene therapy company with no product sales.

Business context and programs

The company focuses on neuromuscular and cardiac diseases. Its lead Duchenne muscular dystrophy program is preclinical SGT-003. In December 2022, Solid acquired AavantiBio, adding preclinical programs AVB-202-TT for Friedreich’s ataxia and AVB-401 for BAG3-mediated dilated cardiomyopathy, plus other cardiac assets. Solid completed enrollment of nine patients in the SGT-001 IGNITE DMD Phase I/II trial; its development program has otherwise concluded, with long-term follow-up continuing.

Key financial metrics

MetricFY2022FY2021
Revenue$8.1 million$13.6 million
Research and development expense$78.4 million$58.7 million
General and administrative expense$28.9 million$27.1 million
Restructuring expense$7.2 million—
Operating loss$106.5 million$72.3 million
Net loss$86.0 million$72.2 million
Net loss per share, basic and diluted$10.10$10.14
Cash, cash equivalents and available-for-sale securities at year-end$213.7 million$207.8 million
Cash used in operating activities$98.0 million$77.8 million

All reported revenue was collaboration revenue, primarily under the Ultragenyx agreement; Solid reported no product revenue. FY2022 year-end cash and securities exclude $1.8 million of restricted cash. The company reported no debt outstanding, though it had finance liabilities and lease obligations. Total liabilities were $48.6 million, including $26.2 million of operating lease liabilities and $2.4 million of finance lease liabilities.

Changes versus the prior year and unusual items

  • Revenue declined $5.5 million, or 41%, as contracted Ultragenyx research services were completed in the second quarter and remaining deferred revenue was recognized.
  • R&D expense rose $19.7 million, or 34%, mainly from increased SGT-003 manufacturing and development activity, other programs, facilities and lab supplies.
  • Operating cash use increased $20.2 million. Net financing cash of $74.8 million included $72.6 million of net proceeds from the December private placement.
  • Solid recorded an $18.2 million gain on its AavantiBio acquisition: acquired net assets were valued at $27.4 million against $9.2 million of consideration. Acquisition-related costs of $4.9 million were included in G&A.
  • The company issued 10.6 million shares in the December private placement and 1.35 million shares as acquisition consideration. It also effected a 1-for-15 reverse stock split in October 2022.

Outlook, management commentary and principal risks

Management expected year-end cash, cash equivalents and available-for-sale securities to fund operating expenses and capital requirements into 2025, based on its then-current plan and assumptions. The company expects continuing losses and says it will need additional funding to continue beyond that period; no committed external funding source was disclosed.

  • Management anticipated filing an IND for SGT-003 in the second half of 2023 and, subject to clearance, initiating patient dosing in late 2023. AVB-202-TT development was ongoing, with preclinical studies planned for 2023; AVB-401 remained preclinical.
  • Key execution risks include clinical and regulatory uncertainty, gene-therapy safety and immune responses, manufacturing scale-up and third-party supply dependence, patient recruitment, and integration of AavantiBio.
  • Solid disclosed a prior FDA clinical hold on SGT-001, lifted in October 2020, and a drug-related serious adverse event in 2021. The filing emphasizes that future safety events or regulatory delays could affect development.
  • Workforce reductions of approximately 35% in April and 18% in December 2022 accompanied strategic changes and the acquisition. The company reported 87 full-time employees at year-end.
  • Management reported effective disclosure controls and internal control over financial reporting as of year-end. The auditor expressed an unqualified opinion on the financial statements but did not audit internal control effectiveness.

Important facts for investors to verify

  • Whether SGT-003’s IND and clinical-start milestones were achieved, and the status and results of its supporting manufacturing and preclinical work.
  • Current cash runway versus the company’s estimate through 2025, including subsequent spending, financing and dilution.
  • Progress, costs and milestones for AVB-202-TT and AVB-401 following the AavantiBio acquisition.
  • Details of the $18.2 million bargain-purchase gain and the acquired assets and liabilities supporting the valuation.
  • Ultragenyx collaboration activity and any future milestone, royalty, cost-sharing or option decisions; FY2022 revenue was tied to completed services, not product sales.
  • Potential effects of restructuring, long-term lease commitments, manufacturing capacity and future capital needs.