Business context and reporting period
Trevi Therapeutics, Inc. filed its Form 10-K for the fiscal year ended December 31, 2020. The company is a clinical-stage biopharmaceutical developer with no approved products or product sales. Its lead candidate, Haduvio (extended-release nalbuphine), is being developed for pruritus associated with prurigo nodularis and chronic cough in patients with idiopathic pulmonary fibrosis (IPF); development for levodopa-induced dyskinesia in Parkinson’s disease is at an earlier planning stage. The filing provides annual comparisons, not standalone fourth-quarter financial results.
Financial performance and position
| Metric | FY 2020 | FY 2019 |
|---|---|---|
| Product revenue | None | None |
| Research and development expense | $22.3 million | $19.3 million |
| General and administrative expense | $10.2 million | $7.3 million |
| Total operating expenses / operating loss | $32.5 million | $26.6 million |
| Net loss | $32.8 million | $26.1 million |
| Basic and diluted loss per share | $1.81 | $2.28 |
| Cash used in operating activities | $29.0 million | $23.1 million |
As of December 31, 2020, cash and cash equivalents were $45.0 million, total assets were $47.1 million, and stockholders’ equity was $27.3 million. The company has no product revenue, so sales-based margins are not meaningful. It reported an accumulated deficit of $147.0 million and stated that it expects continuing losses.
Debt: Trevi borrowed $14.0 million under a Silicon Valley Bank term loan in August 2020; its year-end carrying value was $14.0 million (approximately $13.95 million). Interest is floating, with principal repayment scheduled to begin in March 2022 in 24 installments; the balance is due February 1, 2024. Substantially all assets other than intellectual property secure the loan, and failure to meet specified equity-raising requirements may require cash collateral equal to outstanding principal. A $1.2 million final payment fee is due upon repayment.
Material changes versus the prior comparable period
- Net loss increased by $6.7 million, while operating expenses rose by $5.8 million. R&D expense increased mainly from higher PRISM trial activity and clinical supplies; G&A increased largely due to stock compensation and public-company costs.
- Operating cash use increased by $5.9 million. Financing provided $16.7 million in 2020, principally from the SVB loan and at-the-market (ATM) share sales, versus $73.2 million in 2019, which included IPO and private-placement proceeds.
- Cash declined from $57.3 million to $45.0 million. The company also began carrying term debt and a related derivative liability in 2020.
Outlook, management commentary, risks and unusual items
- PRISM: Following a July 2020 sample-size re-estimation, the independent monitoring committee recommended continuing the trial and increasing its target enrollment from 240 to 360 to maintain statistical power. About 240 subjects were enrolled and more than 60 sites were active at the filing’s reporting point. Management expected enrollment completion in Q3 2021 and top-line data in Q4 2021, subject to pandemic-related uncertainty. An additional Phase 3 trial is expected to be needed for an application.
- CANAL: The Phase 2 IPF cough trial was interrupted by COVID-19-related site pauses, including a renewed UK pause in December 2020. The protocol was amended to reduce in-person visits, and Trevi was seeking approval to add German sites.
- Prior clinical evidence: In the earlier 63-patient prurigo nodularis Phase 2 trial, the primary endpoint did not show a statistically significant treatment-placebo difference. The company highlighted favorable secondary and post hoc completer analyses; these analyses were not powered for statistical significance and do not establish the outcome of PRISM.
- Funding: Management estimated year-end cash would fund operating and capital needs into Q2 2022, but stated the estimate depended on assumptions and that substantial additional funding would be required. After year-end, through March 24, 2021, Trevi sold 1.37 million additional ATM shares for $4.4 million gross proceeds. Further equity financing could dilute shareholders.
- Key operating risks: COVID-19 may delay trials, enrollment, regulatory activity or supply. Trevi relies on third parties and a single active-ingredient supplier, Mallinckrodt, which filed for bankruptcy protection in October 2020; the impact on supply was uncertain. The company also reported that Rutgers had asserted Trevi was not meeting license diligence obligations and could seek termination if unresolved.
- Product and financing risks: Haduvio is the company’s sole product candidate. Potential opioid-related safety, abuse-liability, labeling, REMS or controlled-substance requirements could constrain development or commercialization. The SVB loan includes restrictive covenants, a conditional interest-rate increase tied to positive PRISM data and financing, and default remedies that could include acceleration.
Important facts for investors to verify
- Whether PRISM enrollment, timing and data reporting met management’s stated targets, and the full primary-endpoint results and safety findings.
- Whether the FDA requires the additional Phase 3 trial and what other studies or regulatory requirements, including abuse-liability and cardiac-safety work, remain.
- Cash runway after subsequent ATM proceeds, expected trial costs, and the timing and terms of any additional financing.
- Whether nalbuphine supply remains available following Mallinckrodt’s bankruptcy filing and whether alternate suppliers are qualified.
- The status and potential resolution of Rutgers’ diligence assertion, and compliance with SVB loan covenants and equity-raise conditions.