Replimune Group, Inc. — Form 10-Q summary
Reporting period: Fiscal second quarter and six months ended September 30, 2021; comparative periods ended September 30, 2020. The filing was signed November 4, 2021. Replimune is a clinical-stage biotechnology company developing oncolytic immunotherapies; it reported no product revenue.
Financial highlights
| Metric | Three months ended September 30, 2021 | Six months ended September 30, 2021 | Comparison with 2020 |
|---|---|---|---|
| Revenue | None | None | No product sales in either period |
| Research and development expense | $19.9 million | $38.5 million | Up 42% and 47%, respectively |
| General and administrative expense | $9.3 million | $18.2 million | Up 66% and 61%, respectively |
| Total operating expenses | $29.2 million | $56.6 million | Up 49% and 51%, respectively |
| Net loss | $29.4 million | $56.7 million | Compared with $20.1 million and $37.6 million losses |
| Basic and diluted net loss per share | $0.56 | $1.09 | Compared with $0.46 and $0.90 loss per share |
| Net cash used in operating activities | Not separately reported for the quarter | $41.3 million | Compared with $32.3 million |
There is no meaningful revenue or profit margin to assess because the company has no approved products and no sales revenue. Increased spending reflected expanded clinical development, manufacturing process and technology-transfer work, and higher personnel and stock-based compensation costs. Quarterly R&D spending allocated to RP1 fell year over year, while RP2 and unallocated R&D costs increased.
Balance sheet, liquidity and funding
- At September 30, 2021, cash and cash equivalents were $160.0 million and short-term investments were $275.8 million, totaling $435.8 million. Current assets were $444.4 million versus current liabilities of $16.6 million.
- Total assets were $503.5 million; total liabilities were $46.1 million; accumulated deficit was $249.8 million.
- No debt was outstanding. Lease liabilities totaled $32.9 million, including $27.1 million for finance leases and $5.8 million for operating leases.
- Six-month operating cash use was $41.3 million. Investing activities provided $15.9 million, primarily reflecting net maturities and sales of short-term investments; financing activities provided $2.3 million, primarily from stock-option exercises. Cash, cash equivalents and restricted cash decreased by $22.5 million.
- Management estimated that existing cash, cash equivalents and short-term investments would fund planned operations into the second half of 2024, excluding any FDA- or regulator-required confirmatory trial. This is an estimate based on assumptions, not a committed funding source. The notes also state that liquidity is expected to cover at least 12 months from issuance.
The company has no product revenue and expects continuing losses and increasing expenses. It may need additional capital; equity financing could dilute shareholders, while debt or collaborations could impose restrictions or require rights concessions. The company had not used its $62.5 million at-the-market program during the quarter. In the six months ended September 30, 2020, financing cash flow included substantial proceeds from a follow-on offering; there were no comparable offering proceeds in the 2021 period.
Clinical programs, outlook and risks
- RP1: The company continued development as monotherapy and in combination with anti-PD-1 therapies. CERPASS, a registration-directed Phase 2 trial in cutaneous squamous cell carcinoma with Regeneron, was expected to complete enrollment in mid-2022, with primary data readout anticipated in late 2022. The 125-patient anti-PD-1-failed melanoma cohort in IGNYTE was also expected to complete enrollment in mid-2022; initial interim data were anticipated in late 2022, with the primary analysis expected in mid-2023.
- Other RP1 cohorts: Enrollment continued in non-melanoma skin cancer and other cohorts. The company revised the MSI-H/dMMR cohort to focus on anti-PD-1-failed disease. Changes intended to improve enrollment in the NSCLC cohort pushed its initial data timing later in 2022 than previously expected. COVID-19 had slowed enrollment in ARTACUS, a trial in solid-organ transplant recipients; initial data were expected in the first quarter of 2022.
- RP2 and RP3: The initial 30-patient RP2 combination trial was fully enrolled, with updated data expected in the second half of 2021. An RP2 expansion was planned for patients with liver metastases. RP3 dosing had begun; initial single-agent data were expected in the first quarter of 2022, and a combination cohort was expected to start enrolling in early 2022. A broader RP2 and/or RP3 program for prevalent tumor types was planned around mid-2022, with details expected in the first quarter of 2022.
- Regulatory and development uncertainty: The FDA had indicated that sufficiently compelling IGNYTE data in anti-PD-1-failed melanoma might be considered for accelerated approval, while noting that a randomized confirmatory trial would be required. Approval is not assured; trial outcomes, enrollment, manufacturing readiness, regulator requirements and access to collaborator-supplied anti-PD-1 drugs remain important uncertainties.
- COVID-19 and operations: The company reported no prolonged material business disruption to date, but warned of potential trial delays, supply interruptions and reduced productivity. Its approximately 63,000-square-foot Massachusetts manufacturing facility was described as fully operational, though transfer, validation, regulatory and execution risks remain.
- Other items: A post-quarter UK lease added approximately 2,951 square feet for research, laboratory and office use at annual base rent of £82,000, with rent scheduled to begin February 2022. Amended executive employment agreements were entered into November 2, 2021. Management said disclosure controls were effective; previously identified material weaknesses were reported as remediated in fiscal 2021. No material legal proceedings or off-balance-sheet arrangements were reported.
Key facts for investors to verify
- Whether clinical enrollment and data-readout timelines are being met, particularly for CERPASS, IGNYTE, ARTACUS and the NSCLC cohort.
- Whether the cash runway estimate remains valid as trial, manufacturing and pre-commercial spending grows, and the potential cost and timing of any confirmatory trial excluded from the estimate.
- Progress in validating and scaling the company’s manufacturing facility, including any impact on clinical supply or trial schedules.
- How increased spending, stock-based compensation and potential future financing affect cash burn and shareholder dilution; the filing’s weighted-average share count includes pre-funded warrants that had not been exercised.
- Whether collaboration drug supply and COVID-19-related enrollment or supply disruptions change development plans.