Trevi Therapeutics, Inc. — Q2 2021 Form 10-Q
Reporting period: Three and six months ended June 30, 2021. Financial amounts below are in millions of dollars unless otherwise indicated. Trevi is a clinical-stage biopharmaceutical company developing Haduvio (nalbuphine ER); it has no approved products and has generated no product revenue.
Key financial metrics
| Metric | Q2 2021 | Q2 2020 | Six months 2021 | Six months 2020 |
|---|---|---|---|---|
| Revenue | None | None | None | None |
| Research and development expense | $6.498 | $4.921 | $12.087 | $10.940 |
| General and administrative expense | $2.669 | $2.492 | $5.169 | $5.112 |
| Total operating expenses | $9.167 | $7.413 | $17.256 | $16.052 |
| Net loss | $(9.794) | $(7.384) | $(18.165) | $(15.857) |
| Basic and diluted loss per share | $(0.49) | $(0.41) | $(0.92) | $(0.89) |
| Cash used in operating activities | Not separately stated | Not separately stated | $(15.476) | $(13.109) |
Gross margin and operating margin are not meaningful for this pre-revenue company. No formal revenue or profit guidance is provided.
Liquidity, debt, and capital
- Cash and cash equivalents were $36.425 million at June 30, 2021, down from $45.001 million at December 31, 2020. Management said this cash was expected to fund operations into Q2 2022, but not for 12 months from the financial statements’ issuance date without additional capital.
- Management concluded that substantial doubt exists about Trevi’s ability to continue as a going concern; it did not consider planned financing sufficient to alleviate that doubt.
- SVB term-loan principal was $14.0 million; the balance-sheet carrying amount was $14.245 million, including accrued final payment fee and discounts. The loan matures February 1, 2024; principal installments begin March 2022. It is secured by substantially all assets other than intellectual property, which is subject to a negative pledge.
- A July 6, 2021 loan amendment, after quarter-end, requires at least $15.0 million in net equity proceeds by October 31, 2021 and additional proceeds by June 30, 2022 to fund a planned second Phase 3 trial and operations. Failure to meet specified milestones may require cash collateral equal to outstanding principal; falling below $20.0 million of qualifying cash before milestones are met may require collateralization of all amounts owed.
- Trevi raised $6.972 million net through ATM sales during the first half. It also entered a 24-month agreement allowing, but not requiring, sales of up to $15 million of stock to Lincoln Park, subject to contractual and Nasdaq limits. It issued 170,088 commitment shares.
Material changes versus comparable periods
- Q2 operating expenses rose $1.754 million, or about 24%, year over year; net loss increased $2.410 million, or about 33%. Higher R&D reflected increased staffing, PRISM trial activity and enrollment, clinical supplies, and consulting and professional fees.
- For the first half, operating expenses rose $1.204 million, or about 8%, and net loss increased $2.308 million, or about 15%. Higher personnel, stock-based compensation, and professional fees were partly offset by lower clinical development costs, including completion of a Phase 1b liver-disease trial.
- First-half operating cash use increased by $2.367 million year over year. Financing activities provided $6.900 million, mainly from ATM sales; cash declined by $8.576 million overall.
- Interest expense of $0.590 million was recorded in the first half of 2021, primarily due to the SVB loan; there was no comparable loan interest expense in 2020. A $0.375 million commitment-share expense was also recorded in 2021.
Business outlook, commentary, and risks
- PRISM: Phase 2b/3 trial for prurigo nodularis-associated pruritus. Following a sample-size re-estimation, the enrollment target increased from 240 to 360; approximately 285 subjects had enrolled. Trevi expected enrollment completion in the second half of 2021 and top-line data in the first half of 2022, subject to COVID-19-related uncertainty.
- CANAL: Phase 2 chronic-cough trial in IPF. COVID-19 interruptions and UK site constraints delayed activity; top-line data were expected in the first half of 2022, subject to uncertainty.
- Trevi had prepared a Phase 2 protocol for levodopa-induced dyskinesia but planned to determine next steps after PRISM and CANAL data. It also extended the Rutgers clinical-trial commencement deadline for that program to December 31, 2022.
- Management expects substantial future spending on trials, a potential additional Phase 3 study, manufacturing development, and other development work. Financing may require equity, debt, partnerships, or other transactions; unavailable or unfavorable funding could force delays, reductions, or abandonment of programs.
- Key risks include trial failure or enrollment delays, COVID-19 disruption, Haduvio safety and opioid-related labeling or controlled-substance restrictions, dependence on third-party trial and manufacturing providers, and reliance on a single nalbuphine active-ingredient supplier whose parent filed for bankruptcy protection in 2020.
- The filing reports no material legal proceedings. Management said disclosure controls were effective at the reasonable-assurance level and reported no material change in internal control over financial reporting during Q2.
Important facts for investors to verify
- Whether Trevi met the SVB equity-raise and cash-balance requirements, and the resulting effect on available working capital and loan collateral.
- Actual PRISM enrollment completion and top-line results, including whether results support a second Phase 3 trial.
- CANAL trial restart, enrollment, site participation, and data timing amid possible renewed COVID-19 restrictions.
- Updated cash runway and financing needs, including dilution and share-sale capacity under the ATM and Lincoln Park arrangements.
- Availability and continuity of nalbuphine drug-substance supply and any implications from the supplier’s bankruptcy proceedings.