vTv Therapeutics Inc. — Q2 2020 Form 10-Q
Reporting period: Three and six months ended June 30, 2020. Unaudited consolidated results include vTv Therapeutics Inc. and its operating subsidiary, vTv LLC. The company is a clinical-stage pharmaceutical developer and has not generated product-sales revenue.
Financial performance and liquidity
| Metric | Q2 2020 | Q2 2019 | Six months 2020 | Six months 2019 |
|---|---|---|---|---|
| Revenue | $0 | $1.828m | $0.008m | $2.749m |
| Research and development expense | $2.509m | $4.228m | $6.713m | $7.050m |
| General and administrative expense | $1.695m | $2.392m | $4.145m | $4.778m |
| Operating loss | $4.204m | $4.792m | $10.850m | $9.079m |
| Net loss attributable to vTv Therapeutics Inc. | $3.368m | $2.882m | $8.092m | $5.037m |
| Basic and diluted loss per Class A share | $0.07 | $0.10 | $0.18 | $0.34 |
Revenue is license- and collaboration-related, not product sales. No revenue-based margin is meaningful. Q2 operating expenses fell 36% year over year, but parent-attributable net loss increased; for the six-month period, operating loss and parent-attributable net loss also worsened. Lower interest expense and operating costs were offset by much lower collaboration revenue and a $0.928m loss from the fair-value change in related-party warrants (versus $1.196m income in the first half of 2019).
- Cash and liquidity: Cash and cash equivalents were $6.392m at June 30, versus $1.777m at year-end 2019; the prior-year-end balance also included $2.5m restricted cash, released after loan amendments. Six-month operating cash use was $10.354m; financing provided $12.469m, including $7.280m net ATM proceeds and $7.0m from related-party stock sales. Cash, cash equivalents and restricted cash increased $2.115m.
- Debt: Notes payable were $4.543m, all classified current at June 30; carrying amount includes an accrued final payment. The loan bears floating interest at 10.5% plus any one-month LIBOR above 0.5% and is secured by substantially all assets, including intellectual property subject to exceptions. The July 29, 2020 amendment extended the first-tranche maturity to September 1, 2020 and the second tranche to January 1, 2021, changed payment terms, removed minimum-cash requirements, and increased the second-tranche final payment by about $0.1m.
- Balance sheet: Total assets were $10.628m and total liabilities $16.778m. Redeemable noncontrolling interest was $63.378m; stockholders’ deficit was $69.528m. The company had an accumulated deficit of $268.9m.
Business developments, outlook and risks
- TTP399: The company reported positive Phase 2 results in February 2020, including statistically significant HbA1c improvement versus placebo. After FDA written feedback, it was discussing the next development steps. Management expected to start a six-month trial by year-end 2020 and a second six-month trial 9–12 months later, with an open-label extension in the first trial. Estimated development-plan cost, including pivotal trials and manufacturing work, was $75m–$90m; plans remained subject to further FDA feedback and financing.
- Azeliragon: The Phase 2 Elevage study in mild Alzheimer’s disease patients with type 2 diabetes was affected by COVID-19-related site disruption and slower enrollment. The company planned to stop new enrollment by September 30, 2020, targeting approximately 50 participants, and continued to target topline results in Q2 2021. Management said the reduced enrollment was expected to leave the study adequately powered for its primary cognition endpoint.
- Other programs: The company was planning a Phase 1b/2 TTP273 study in cystic-fibrosis-related diabetes and advancing preclinical Nrf2/Bach1 modulators. Reneo reported positive preliminary Phase 1 results for REN001, licensed from vTv, and FDA orphan-drug designation for primary mitochondrial myopathy.
- Going concern: Management stated that available cash, $3.0m of remaining Letter Agreement funding and $5.4m remaining ATM capacity, if fully utilized, were expected to fund operations only through September 2020. The filing concludes that substantial doubt exists about the company’s ability to continue as a going concern. Additional financing is required; timing and availability were unknown. Potential approaches included equity offerings, direct investments and partnering/licensing arrangements, with possible dilution or loss of valuable rights.
- COVID-19 and development risk: COVID-19 had not significantly affected reported first-half financial results, but delayed Elevage screening and enrollment. Future trial progress, partner activity, supply and manufacturing, regulatory interactions, and access to capital remained uncertain.
- Related-party financing and ownership: MacAndrews affiliates held approximately 81.4% of combined voting power. The company issued 2.638m Class A shares through the ATM in the first half and 4.375m shares to MacAndrews under Letter Agreements. Related-party warrant liability rose to $3.529m from $2.601m, with fair-value movements affecting earnings.
Most important facts for investors to verify
- Whether the company obtained financing after the stated September 2020 cash runway, and the resulting dilution, funding terms or going-concern developments.
- Repayment and compliance status for the amended loan, including the September 2020 and January 2021 maturities and final payments.
- Actual FDA-aligned TTP399 trial design, start dates, funding requirements and whether the projected $75m–$90m plan changed.
- Elevage enrollment, study completion and timing/results relative to the Q2 2021 target, including the effect of reduced enrollment and COVID-19.
- Future milestone, royalty or collaboration receipts: first-half 2020 revenue was only $8,000, while $1.056m of contract liabilities remained deferred at June 30.
- Potential dilution from ATM sales, remaining Letter Agreement shares and exchangeable noncontrolling interests; the filing reported 47.96m Class A and 23.09m Class B shares outstanding at June 30.