Voyager Therapeutics, Inc. — Q1 2019 Form 10-Q
Reporting period: Three months ended March 31, 2019. Amounts are in U.S. dollars; financial statement figures below are in millions unless noted.
Business context and reporting period
Voyager is a clinical-stage gene therapy company developing AAV-based treatments for severe neurological diseases. It had no approved products and generated no product sales; collaboration agreements were its source of revenue. Its lead clinical program, VY-AADC for Parkinson’s disease, was being evaluated in two Phase 1 studies and the RESTORE-1 Phase 2 trial.
Key financial metrics
| Metric | Q1 2019 | Q1 2018 / comparison |
|---|---|---|
| Collaboration revenue | $5.2 | $0.9 |
| Research and development expense | $24.8 | $14.9 |
| General and administrative expense | $9.7 | $7.2 |
| Total operating expenses | $34.5 | $22.0 |
| Operating loss | $(29.3) | $(21.1) |
| Net loss | $(27.2) | $(19.9) |
| Basic and diluted loss per share | $(0.81) | $(0.63) |
| Net cash provided by operating activities | $125.2 | $48.6 |
| Cash, cash equivalents and marketable debt securities at March 31 | $358.5 | $155.8 at December 31, 2018 |
Operating cash flow included a $148.6 million increase in deferred revenue, primarily from collaboration upfront payments; it should not be read as recurring operating cash generation. Cash and cash equivalents alone were $113.3 million, with $245.2 million of current Treasury securities and $1.3 million of non-current marketable equity securities. Total assets were $411.3 million, total liabilities $310.7 million, and stockholders’ equity $100.7 million. Accumulated deficit was $296.2 million.
No product gross margin is reported because Voyager had no product sales. The filing does not identify conventional borrowings as a material funding source. Lease liabilities were recognized following adoption of the new lease standard; the company disclosed $50.0 million of future minimum operating lease payments.
Material changes versus the prior comparable period
- Revenue increased $4.3 million, mainly reflecting the new AbbVie alpha-synuclein and Neurocrine collaborations, which began in February and March 2019, respectively.
- R&D expense rose $10.0 million, chiefly from external research and development, employee and contractor costs, and expanded facilities. G&A expense increased $2.5 million, mainly from compensation and legal costs.
- Net loss widened by $7.2 million. Higher collaboration revenue and other income did not offset increased operating expenses.
- Voyager received a $65.0 million upfront payment under the AbbVie alpha-synuclein agreement and a $165.0 million Neurocrine upfront payment, including a $50.0 million equity investment. Neurocrine also received 4,179,728 shares, increasing issued and outstanding shares to 36,575,983 from 32,364,895 at year-end 2018.
- Deferred revenue rose substantially, reflecting upfront payments not yet recognized as revenue. Reported deferred revenue was $262.0 million at quarter-end, current and non-current combined.
Outlook, management commentary, risks and unusual items
- Management estimated existing cash, cash equivalents and marketable debt securities, together with expected Neurocrine development-cost reimbursements, would fund operating and capital needs into mid-2022. This is an estimate, not a guarantee; Voyager expects continued losses and rising expenses.
- Neurocrine funds agreed development activities for four programs. After specified clinical data events, Voyager may elect to co-develop and co-commercialize the Parkinson’s and Friedreich’s ataxia programs under cost- and profit-sharing arrangements, or accept milestones and royalties under alternative rights structures.
- RESTORE-1 was planned to enroll 75–100 patients in a randomized, double-blind, placebo-surgery-controlled Phase 2 trial. The filing says the FDA had indicated that two adequate and well-controlled trials are suggested for Parkinson’s disease; the FDA feedback and transfer of the clinical program’s sponsorship to Neurocrine could require protocol changes, additional filings, costs or delays.
- Voyager reported preliminary favorable tolerability and clinical observations from its earlier VY-AADC studies. The filing also reports 12-month PD-1102 results presented in May 2019, after the quarter: eight patients, no reported serious adverse events, and observed improvements in motor-function measures. These small, open-label studies do not establish efficacy in a controlled trial.
- Major risks include clinical and regulatory uncertainty, manufacturing scale-up and comparability, surgical delivery risks, dependence on collaboration partners, potential need for future financing, and competition. The filing specifically notes the change from HEK 293 to baculovirus/Sf9 manufacturing for later VY-AADC trials and possible differences in results.
- Voyager transferred V-TAG’s 510(k) clearance to supplier MRI Interventions (MRIC) in March 2019. The filing reports that MRIC’s auditors expressed substantial doubt about MRIC’s ability to continue as a going concern, creating a potential device-supply and trial-timing risk if alternatives cannot be arranged.
- Lease accounting adoption on January 1, 2019 added an approximately $31.0 million right-of-use asset and $36.7 million lease liability. The company reported no material litigation and no off-balance-sheet arrangements.
Most important facts for investors to verify
- Whether RESTORE-1 enrollment, FDA feedback, sponsorship transfer and the potential need for a second controlled trial change the development timeline or costs.
- Whether VY-AADC’s Phase 1 observations are reproduced in controlled studies, including with the different manufacturing process and delivery approach.
- How quickly collaboration upfront payments are recognized, how much Neurocrine reimburses, and whether collaboration partners exercise options or continue funding programs.
- Whether the stated mid-2022 runway remains supportable as spending rises and clinical and manufacturing plans evolve.
- Whether MRIC can meet supply and regulatory obligations for ClearPoint and V-TAG, and whether Voyager has workable alternative suppliers.
- The extent of dilution and future financing needs; the filing also disclosed an effective shelf registration and remaining capacity under an at-the-market sales agreement.