Trevi Therapeutics, Inc. — Q3 2019 Form 10-Q
Reporting period: Three and nine months ended September 30, 2019. Trevi is a clinical-stage biopharmaceutical company developing oral extended-release nalbuphine (nalbuphine ER); it had no product revenue and no approved products.
Financial performance and liquidity
| Metric | Q3 2019 | Q3 2018 | Nine months 2019 | Nine months 2018 |
|---|---|---|---|---|
| Revenue | None | None | None | None |
| Research and development expense | $5.65m | $3.75m | $14.52m | $9.55m |
| General and administrative expense | $2.00m | $1.21m | $5.36m | $2.93m |
| Total operating expenses | $7.65m | $4.96m | $19.88m | $12.48m |
| Net loss | $7.37m | $5.65m | $19.51m | $14.56m |
| Net loss per common share | $0.41 | $16.22 | $2.09 | $41.68 |
Amounts are losses per share. Gross margin and operating margin are not meaningful because the company had no revenue. Per-share comparisons are affected by the May 2019 IPO, conversion of preferred stock, and resulting share-count change.
- Cash and cash equivalents were $63.5m at September 30, 2019, versus $7.2m at December 31, 2018. Total assets were $66.0m and stockholders’ equity was $60.7m.
- Operating cash use was $16.9m for the first nine months, compared with $13.6m a year earlier. Investing cash use was negligible; financing provided $73.2m.
- No term-loan borrowings remained. The $0.675m loan success fee was paid in May 2019; operating lease liabilities totaled $0.378m.
- Current assets of $65.5m exceeded current liabilities of $5.0m. The filing reports an accumulated deficit of $107.7m.
Changes versus the prior comparable period
- Q3 operating expenses increased $2.7m year over year, led by higher clinical development spending. Nine-month operating expenses increased $7.4m, including a $5.0m rise in R&D and a $2.4m rise in G&A.
- Management attributed increased R&D spending mainly to greater activity in the PRISM prurigo nodularis study, the IPF chronic-cough study, and the chronic-liver-disease study. Higher G&A reflected public-company costs, staffing, and stock-based compensation.
- Net loss increased $1.7m in Q3 and $5.0m for the nine-month period. Other income improved year over year, partly because 2018 included fair-value charges on preferred-stock financing tranches and term-loan interest expense, while 2019 benefited from more interest income after the IPO.
Business update, outlook, and risks
- PRISM: Phase 2b/3 trial of nalbuphine ER for pruritus associated with prurigo nodularis, planned for approximately 240 patients. About 30% of target enrollment was reached; enrollment was slower than expected because of competing trials and slower European site start-ups. Top-line data were expected in the second half of 2020, with a sample-size re-estimation expected around mid-2020.
- IPF chronic cough: Phase 2 trial underway in the UK, with enrollment expected to complete in the first half of 2020 and top-line data expected in the second half of 2020. The company expected to activate remaining sites by year-end 2019.
- Other programs: The single-ascending-dose portion of the Phase 1b hepatic-impairment study was completed in mild and moderate impairment, with no serious adverse events reported. Trevi planned a Phase 2 study in PBC-related pruritus and intended to submit an IND for a Phase 2 LID study in Parkinson’s disease in the coming months.
- Management said cash was expected to fund operations through at least the end of Q1 2021. Separately, the financial-statement note says cash was expected to cover requirements for at least 12 months from the November 14, 2019 issuance date. The company cautioned that estimates depend on assumptions and said additional funding would be needed to complete development; no committed external funding source was available.
- Trevi expected substantial spending on clinical trials, an additional Phase 3 trial for prurigo nodularis, manufacturing development, possible new indication studies, and public-company operations. Failure to obtain financing could force delays, reductions, or discontinuation of programs.
- Key development risks include the prior Phase 2 prurigo nodularis study failing its primary endpoint, enrollment delays, possible sample-size increases, subjective patient-reported itch measures and placebo response, and the potential need for further trials. Nalbuphine ER may also face opioid-related safety, labeling, abuse-potential, and possible controlled-substance or REMS requirements.
- The company reported no material legal proceedings and no material change in internal control over financial reporting; management concluded disclosure controls were effective. The independent auditor’s prior-year report had included a going-concern explanatory paragraph, which Trevi noted could recur in a subsequent audit.
Important facts for investors to verify
- Whether PRISM enrollment accelerated, the mid-2020 sample-size re-estimation outcome, and the timing and results of the expected 2020 data readouts.
- The cash-burn trajectory and reconciliation of the stated runway through Q1 2021 with the note’s “at least 12 months” estimate, including the financing needed beyond that period.
- Whether nalbuphine ER’s clinical safety and efficacy, including opioid-related risks and trial discontinuation patterns, support further development and regulatory submissions.
- How much additional clinical evidence and spending regulators require, including the planned additional Phase 3 and supportive safety studies.
- Potential dilution and share-supply effects following the IPO, preferred-stock conversion, and expiration of lock-up agreements on November 3, 2019.