Monopar Therapeutics Inc. — Q2 2020 Form 10-Q
Reporting period: Quarter and six months ended June 30, 2020. Monopar is a clinical-stage biopharmaceutical company developing oncology therapies; it reported no product revenue and has no approved drugs.
Financial performance and liquidity
| Metric | Q2 2020 | Q2 2019 | Six months 2020 | Six months 2019 |
|---|---|---|---|---|
| Revenue | No product revenue | No product revenue | No product revenue | No product revenue |
| Research and development expense | $0.83 million | $0.33 million | $1.18 million | $1.16 million |
| General and administrative expense | $0.63 million | $0.60 million | $1.42 million | $1.17 million |
| Total operating expenses | $1.46 million | $0.93 million | $2.60 million | $2.34 million |
| Net loss | $1.45 million | $0.91 million | $2.54 million | $2.28 million |
| Basic and diluted loss per share | $0.14 | $0.10 | $0.24 | $0.25 |
- Six-month operating cash use was $2.12 million, compared with $1.74 million in 2019. Cash and cash equivalents were $12.55 million at June 30, down from $13.21 million at December 31, 2019.
- At June 30, current assets were $12.73 million and current liabilities were $0.57 million. Total liabilities were $0.65 million, including a $122,400 Paycheck Protection Program (PPP) loan; the filing reports no other material debt.
- Financing activities provided $1.45 million in the first half, including approximately $1.42 million of cash proceeds from common-stock sales under the ATM sales agreement and the $122,400 PPP loan.
- Management estimated available funds would support planned operations through September 2021, based on resources available as of July 31, 2020. Management reported no substantial doubt about the company’s ability to continue as a going concern.
Material changes and business developments
- Q2 net loss increased by approximately $540,000 year over year, largely reflecting higher R&D costs associated with camsirubicin trial preparation and manufacturing, Validive planning, and added R&D personnel and compensation. First-half net loss rose by approximately $255,000.
- First-half R&D expense was nearly flat year over year: increased camsirubicin and personnel costs were largely offset by lower Validive planning and manufacturing costs. G&A increased, mainly due to stock-based compensation, professional fees and public-company costs.
- The company revised Validive’s planned adaptive Phase 3 trial to a sequential Phase 2b/3 design, aiming to enroll the first patient in the second half of 2020. Progression to Phase 3 depends on Phase 2b interim results and additional financing or a suitable partner; management anticipated needing millions or tens of millions of dollars for that stage.
- Monopar’s GEIS collaboration planned a randomized Phase 2 camsirubicin-versus-doxorubicin trial in approximately 170 advanced soft-tissue-sarcoma patients, with enrollment anticipated in the second half of 2020. Monopar expected to contribute study drug and supplemental support averaging $2 million to $3 million annually.
- In June, Monopar entered a 50/50 development collaboration with NorthStar to explore radio-immunotherapeutics using MNPR-101 for severe COVID-19. Initial financial commitments were described as nominal; additional contributions require mutual agreement.
Outlook, risks and contingencies
- Monopar expects continued operating losses and higher expenses as it advances Validive and camsirubicin and supports MNPR-101. It expects to seek funding through equity or debt financing, collaborations and grants; equity financing could dilute existing shareholders.
- COVID-19 could disrupt trial enrollment, clinical sites, manufacturing and fundraising. The company said market volatility had made substantial near-term fundraising more challenging, and the pandemic’s duration and financial impact could not be estimated clearly.
- The PPP loan is subject to SBA forgiveness conditions. Monopar intended to apply for forgiveness; if not forgiven, the loan bears 1% annual interest and repayment was expected to begin about seven months after receipt.
- Validive’s Onxeo license includes potential development, regulatory and sales milestone payments of up to $108 million and royalties of 5%–10% on net sales. The MNPR-101 license includes potential XOMA milestones of up to $14.925 million. No milestones had been reached by June 30, 2020.
- The filing reports no asserted legal claims and no off-balance-sheet arrangements. The company identified COVID-19 as an updated risk factor and cautioned that its financing and clinical-development plans were uncertain.
Investor verification priorities
- Verify cash-burn assumptions supporting the stated runway through September 2021 and the timing and amount of financing required for Validive Phase 3.
- Check whether Validive enrollment began as planned, what interim Phase 2b results showed, and whether Monopar secured a financing or pharmaceutical partner.
- Confirm the timing and progress of the GEIS camsirubicin trial and the actual level of Monopar’s future cost commitments.
- Verify the PPP loan’s forgiveness outcome and assess further ATM or other equity issuance and resulting dilution.
- Track COVID-19-related effects on trials, manufacturing and fundraising, as well as development progress and costs for the NorthStar collaboration.