Vera Therapeutics, Inc. — Q2 2023 Form 10-Q
Reporting period: Three and six months ended June 30, 2023. Unaudited interim results; filed August 10, 2023.
Business context and reporting period
Vera is a clinical-stage biotechnology company developing treatments for serious immunological diseases. It has no approved products and has generated no product revenue. Its lead candidate, atacicept, is being developed for IgA nephropathy (IgAN) and lupus nephritis (LN); MAU868 is being developed for BK virus infection.
Vera reported positive 24-week topline results and 36-week secondary results from the Phase 2b ORIGIN trial of atacicept in IgAN. The company initiated the pivotal Phase 3 ORIGIN 3 trial. MAU868’s Phase 2 results in kidney transplant recipients indicated tolerability and clinically meaningful antiviral activity through 36 weeks. Vera said it was prioritizing ORIGIN 3, delaying LN Phase 3 enrollment and commitment of resources to MAU868.
Key financial metrics
| Metric | Q2 2023 / June 30, 2023 | Comparable period / prior date |
|---|---|---|
| Revenue | No product revenue | No product revenue |
| Research and development expense | $16.2 million for Q2; $41.3 million for H1 | $10.1 million for Q2 2022; $22.7 million for H1 2022 |
| General and administrative expense | $5.7 million for Q2; $11.9 million for H1 | $4.9 million for Q2 2022; $9.4 million for H1 2022 |
| Net loss | $20.2 million for Q2; $50.2 million for H1 | $14.9 million for Q2 2022; $31.9 million for H1 2022 |
| Net loss per share, basic and diluted | $0.46 for Q2; $1.23 for H1 | $0.55 for Q2 2022; $1.24 for H1 2022 |
| Operating cash used | $44.1 million for H1 | $28.0 million for H1 2022 |
| Cash, cash equivalents and marketable securities | $181.0 million | $114.7 million at December 31, 2022 |
| Debt | $25.0 million principal; $25.0 million net carrying amount approximately | $25.0 million principal at December 31, 2022 |
| Accumulated deficit | $263.3 million | $213.1 million at December 31, 2022 |
Margins are not meaningful because Vera has no product revenue. Total operating expenses rose 46% in Q2 and 66% in H1 year over year. R&D expense rose 61% in Q2 and 82% in H1, mainly reflecting atacicept manufacturing and supply work, increased R&D headcount, and clinical activity including ORIGIN 3. G&A expense increased 16% in Q2 and 26% in H1, primarily due to personnel costs.
H1 investing cash outflow was $74.2 million, mainly reflecting purchases of marketable securities, partly offset by maturities and sales. H1 financing cash inflow was $108.4 million, principally from the February 2023 follow-on offering. Cash, cash equivalents and restricted cash decreased by $9.9 million during H1.
The Oxford loan bears variable interest at adjusted SOFR plus 8.25 percentage points, subject to an 8.25% floor. The company extended the loan’s maturity to December 2027 and its interest-only period to December 2026; a 7% final payment fee applies. The filing reports up to $25 million of additional borrowing capacity available through December 2023, subject to the facility’s terms.
Outlook, risks and other notable items
Management expects continued operating losses and negative operating cash flows for at least the next several years. It states that cash and marketable securities at June 30, 2023 are sufficient for at least 12 months; elsewhere, management says those resources together with available credit are expected to fund operations until early 2026. These are management estimates, depend on assumptions and are not a guarantee of runway.
Key risks include clinical, regulatory and manufacturing uncertainty; reliance on third-party and single-source suppliers; competition and patient-enrollment challenges; and the need for substantial additional capital. Failure to raise funds on acceptable terms could force program delays, reductions or termination. The loan is secured by company assets and includes operating restrictions and default provisions. The company has significant contingent milestone and royalty obligations under its atacicept and MAU868 license arrangements.
Vera reported no material legal proceedings and no material changes in internal control over financial reporting during the quarter. Management concluded disclosure controls were effective as of June 30, 2023. The filing notes that a 100-basis-point interest-rate change was not expected to materially affect the fair value of marketable securities, but interest rates affect investment income and debt expense.
Important facts for investors to verify
- ORIGIN 3 enrollment, execution, and future clinical updates, including whether earlier atacicept results are confirmed in the pivotal trial.
- Cash-burn trajectory and the assumptions underlying management’s stated runway through early 2026, including availability and timing of the remaining credit facility.
- Whether prioritizing IgAN delays or changes the development plans for LN and MAU868.
- Atacicept and MAU868 safety, regulatory requirements, manufacturing supply, and the financial impact of license milestones, royalties, and debt terms.
- Potential dilution from future equity financing; the February 2023 offering issued 16.4 million shares for approximately $107.7 million in net proceeds.