Filing summary
Entity note: The supplied filing is Mast Therapeutics, Inc.’s unaudited Form 10-Q for the quarter ended June 30, 2013—not a filing under the name Savara Inc. The company reported that it changed its name from ADVENTRX Pharmaceuticals, Inc. to Mast Therapeutics in March 2013.
Business context and reporting period
Mast was a development-stage biopharmaceutical company focused primarily on MST-188, an investigational therapy for diseases involving microcirculatory insufficiency. It had no product sales or significant ongoing revenue and reported that it devoted substantially all resources to research and development. Results cover the three and six months ended June 30, 2013, with comparisons to 2012; financial statements are unaudited.
Key financial metrics
| Metric | Q2 2013 | Six months 2013 | Prior comparable period |
|---|---|---|---|
| Revenue | $0 | $0 | $0 in 2012 |
| Research and development expense | $2.84 million | $6.28 million | $2.11 million and $4.32 million in 2012, respectively |
| Selling, general and administrative expense | $2.10 million | $4.21 million | $1.87 million and $3.92 million in 2012, respectively |
| Operating loss | $4.95 million | $10.55 million | $4.22 million and $8.39 million in 2012, respectively |
| Net loss | $4.94 million; $0.09 per share | $10.52 million; $0.21 per share | $4.21 million and $0.09 per share; $8.36 million and $0.18 per share in 2012, respectively |
| Net cash used in operating activities | Not presented separately | $9.16 million | $7.40 million in the first half of 2012 |
At June 30, 2013, cash and cash equivalents were $44.97 million and short-term investments were $8.45 million, for combined cash and investments of $53.42 million. Total current assets were $54.12 million; current liabilities were $3.33 million; total liabilities were $5.94 million, including a $2.61 million deferred tax liability. No interest expense was reported for the quarter or first half, and the balance sheet lists no outstanding notes payable or debt. Revenue was nil, so operating margins are not meaningful.
Cash increased by $22.47 million in the first half. Operating activities used $9.16 million, investing activities provided $5.54 million, and financing activities provided $26.10 million. The financing inflow principally reflected the June public offering, which generated $28.1 million gross proceeds and $25.7 million net proceeds.
Material changes versus the prior period
- First-half net loss increased to $10.52 million from $8.36 million; operating loss increased to $10.55 million from $8.39 million.
- First-half R&D expense rose 45% to $6.28 million, primarily as clinical-study costs increased with the EPIC sickle cell disease study and TQT study. Lower nonclinical and manufacturing costs following discontinuation of ANX-514 partly offset the increase.
- First-half operating cash use increased to $9.16 million from $7.40 million.
- The June offering issued 56.195 million common shares and warrants to buy up to 28.098 million more shares. Common shares outstanding were 102.710 million at June 30, versus 47.719 million issued at December 31, 2012.
- The SynthRx acquisition milestone liability was settled in May 2013; the company issued 250,000 milestone shares. It reported no remaining contingent liability at June 30.
Outlook, commentary, and risks
- Management expected cash, cash equivalents, and short-term investments to fund the currently planned level of operations for at least 12 months from June 30, but cautioned that spending, trial progress, or unexpected costs could shorten the runway. It expected significant losses to continue and said additional capital would be needed to support planned activities and development through commercialization.
- The pivotal Phase 3 EPIC study was enrolling, with a planned 388 participants at approximately 70 medical centers. Management expected enrollment completion in 2015 and estimated external clinical-study fees of approximately $20 million.
- The company planned to submit a Phase 2 acute limb ischemia study protocol to the FDA in Q3 2013 and expected to start the study in late 2013 or early 2014, subject partly to FDA input. It estimated enrollment of approximately 60 patients and external study fees of $2–4 million.
- In July 2013, after the quarter, the company announced that the TQT study met its primary endpoint: MST-188 did not show an adverse effect on cardiac repolarization and was generally well tolerated in the study. This was a company-reported study update, not a financial-period result.
- Key risks include clinical efficacy and safety uncertainty, regulatory requirements or delays, dependence on third-party manufacturers and CROs, limited intellectual-property protection, competition, and the need for future financing. Management also noted that the June equity financing may trigger limits on the use of tax-loss carryforwards.
Important facts for investors to verify
- Confirm the issuer identity: the supplied 10-Q names Mast Therapeutics, Inc., not Savara Inc.
- Check subsequent EPIC enrollment, results, regulatory feedback, and whether the stated study timelines and cost estimates changed.
- Assess cash burn and runway against the company’s 12-month estimate, including planned study spending and future financing needs.
- Review dilution from the June offering, the 28.098 million warrants exercisable at $0.65 through June 2018, and potential SynthRx milestone shares.
- Verify the full risk-factor disclosures and subsequent developments concerning manufacturing, regulatory approval, intellectual property, and tax attributes.