Filing identity and reporting period
The supplied filing is Mast Therapeutics, Inc.’s unaudited Form 10-Q for the quarter and six months ended June 30, 2015—not a filing under the name Savara Inc. Investors should verify the issuer and any corporate-name or successor relationship before relying on this summary.
Mast was a clinical-stage biopharmaceutical company with no product sales or significant revenue. Its programs included vepoloxamer (MST-188) and AIR001.
Financial performance and liquidity
| Metric | Three months ended June 30, 2015 | Six months ended June 30, 2015 |
|---|---|---|
| Revenue | $0 | $0 |
| Research and development | $7.7 million | $13.8 million |
| Selling, general and administrative | $2.4 million | $6.0 million |
| Operating loss | $10.2 million | $19.8 million |
| Net loss | $10.2 million ($0.06 per share) | $19.8 million ($0.12 per share) |
| Net cash used in operating activities | Not presented for the quarter | $15.9 million |
At June 30, cash and cash equivalents were $21.2 million and available-for-sale investment securities were $22.2 million, for combined cash, cash equivalents and investments of $43.4 million. Current assets were $44.8 million versus current liabilities of $10.8 million. Total liabilities were $14.2 million; the filing reported no material borrowings at quarter-end. The company had an accumulated deficit of $254.9 million. Operating margins are not meaningful because the company had no revenue.
Material changes versus prior comparable periods
- Second-quarter R&D expense increased 60.5% to $7.7 million year over year, principally due to vepoloxamer research-related manufacturing, higher EPIC study costs, and other nonclinical expenses.
- For the first six months, R&D rose 51.4% to $13.8 million; SG&A rose 29.2% to $6.0 million. Six-month net loss increased from $13.5 million in 2014 to $19.8 million in 2015. The prior-year period included a $0.5 million bargain-purchase gain related to the Aires acquisition.
- Six-month operating cash use rose to $15.9 million from $13.3 million. Financing cash inflow declined to $2.0 million from $11.9 million.
- Common shares outstanding increased to 163.6 million at June 30 from 159.5 million at December 31, 2014.
Outlook, developments and risks
- Management expected June 30 resources, together with borrowing under a subsequent debt facility, to fund operations for at least 12 months. It forecast $18–$20 million of operating expenses for the second half of 2015, excluding share-based compensation, and said further capital would be needed to complete development and commercialization.
- After quarter-end, Mast borrowed $5.0 million under a Hercules facility of up to $15.0 million, receiving approximately $4.8 million net of fees. The additional $10.0 million tranche was conditional on clinical milestones and at least $15.0 million in qualifying partnership or equity proceeds. The loan bears interest at a stated formula with an 8.95% floor, is secured by substantially all assets other than intellectual property (but includes related proceeds), and includes restrictive covenants and a potential final payment of up to $712,500. A lender warrant for 853,658 shares at $0.41 was issued; it would increase if the second tranche is drawn.
- Management reported more than 70% enrollment in the 388-patient pivotal Phase 3 EPIC study of vepoloxamer and expected top-line results in the first quarter of 2016. It planned a Phase 2 chronic heart failure study in the third quarter of 2015.
- Mast shifted its vepoloxamer development plan toward stroke and began winding down its Phase 2 acute limb ischemia study. It expected savings from stopping that study to more than offset 2015 stroke-program costs. AIR001 was being studied in institution-sponsored Phase 2a HFpEF trials; preliminary Mayo Clinic data were anticipated in the second half of 2015.
- Key risks include clinical or regulatory failure or delay, manufacturing and third-party dependency, continued operating losses, and the need for additional financing. The filing also notes potential dilution from equity and warrants, and collateral and covenant risks under the post-quarter debt facility. The company reported no material pending legal proceedings, effective disclosure controls, and no material impairment of goodwill or acquired in-process R&D in the assessments described.
Important facts for investors to verify
- Confirm the filing issuer: the document identifies Mast Therapeutics, Inc., while the request names Savara Inc.
- Check subsequent filings for actual EPIC enrollment, results, and regulatory developments, and for progress or changes in the HFpEF and stroke programs.
- Verify cash runway against actual spending, financing needs, and whether the conditional Hercules second tranche became available or was drawn.
- Assess potential dilution from outstanding options and warrants, ATM and shelf offerings, and the lender warrant.
- Review debt terms, collateral coverage, covenant compliance, and any later amendments or repayments.