Voyager Therapeutics, Inc. — Q3 2019 Form 10-Q
Reporting period: Three and nine months ended September 30, 2019. 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 revenue; reported revenue was from collaborations.
Financial results
| Metric | Q3 2019 | Q3 2018 | Nine months 2019 | Nine months 2018 |
|---|---|---|---|---|
| Collaboration revenue | $20.4 million | $2.1 million | $71.7 million | $5.6 million |
| Research and development | $29.8 million | $16.6 million | $83.2 million | $48.0 million |
| General and administrative | $8.5 million | $6.6 million | $26.4 million | $25.6 million |
| Operating loss | $17.8 million | $21.1 million | $37.9 million | $67.9 million |
| Net loss | $15.0 million | $20.3 million | $31.0 million | $65.8 million |
| Net loss per share, basic and diluted | $0.41 | $0.63 | $0.87 | $2.06 |
- Q3 total other income was $2.8 million, including $1.8 million interest income. Nine-month total other income was $6.9 million. No material income-tax benefit was recorded in 2019.
- As of September 30, cash and cash equivalents were $82.6 million and marketable securities were $226.8 million, including $224.8 million of current U.S. Treasury notes. Cash, cash equivalents and marketable debt securities totaled $307.4 million. Total current assets were $327.6 million and current liabilities were $80.2 million.
- Total liabilities were $268.1 million, including $211.6 million of deferred revenue and $34.8 million of operating lease liabilities. The filing reports no conventional borrowings; it also records a $1.0 million non-current research-and-development financing liability.
- Nine-month operating cash flow was positive $72.0 million, investing cash flow was negative $116.9 million, and financing cash flow was positive $80.7 million. Cash, cash equivalents and restricted cash increased $35.8 million to $83.4 million. Operating cash flow was driven substantially by upfront collaboration receipts recorded as deferred revenue, rather than operating profitability.
- Gross profit and operating margins are not separately presented; product sales had not begun.
Changes versus the prior comparable period
- Collaboration revenue increased sharply, largely reflecting the Neurocrine collaboration, the new AbbVie alpha-synuclein collaboration, and revenue recognized on termination of the Sanofi Genzyme agreement. Nine-month revenue included $31.8 million from Sanofi Genzyme, $31.1 million from Neurocrine, $8.1 million from AbbVie tau and $0.7 million from AbbVie alpha-synuclein.
- R&D rose $13.1 million in Q3 and $35.2 million year to date, primarily from external program costs, increased staff and facility costs. Nine-month G&A was broadly stable year over year.
- Net losses narrowed year over year, but collaboration revenue is not recurring product revenue and included significant collaboration-related and termination accounting effects.
- Cash and marketable securities increased from $155.8 million at December 31, 2018 to $309.4 million at September 30, 2019, supported by collaboration funding and Neurocrine’s $50.0 million equity investment. Common shares outstanding rose to 36.8 million from 32.4 million.
Outlook, commentary and notable items
- Management said existing cash, cash equivalents and marketable debt securities, together with expected Neurocrine development-cost reimbursements, should fund operating and capital needs into mid-2022. This estimate depends on spending, program progress and collaboration reimbursements; the company expects significant future expenses and losses and may need additional funding.
- RESTORE-1, a randomized, double-blind, placebo-surgery-controlled Phase 2 trial of VY-AADC for Parkinson’s disease, was ongoing, with planned enrollment of 75–100 patients. Enrollment in the separate Phase 1b and posterior-trajectory Phase 1 studies was complete; follow-up continued. The filing describes preliminary earlier-trial findings as encouraging, but these small, open-label studies do not establish efficacy in the controlled trial.
- Voyager expected, subject to successful preclinical studies, to file an IND for Huntington’s candidate VY-HTT01 in the first half of 2020 and to screen and enroll the first patient in a planned trial during 2020. It no longer expected to file an IND for VY-SOD102 in 2019 and intended to seek a partner for the ALS program.
- In June 2019, Voyager terminated its Sanofi Genzyme collaboration, paid $10.0 million and agreed to a further $10.0 million payment upon a specified Huntington’s IND filing, plus potential sublicensing payments and royalties. Termination returned worldwide Huntington’s rights to Voyager; ex-U.S. Friedreich’s ataxia rights were transferred to Neurocrine. Voyager recognized $28.7 million of revenue at termination, with additional Sanofi-related revenue bringing nine-month recognition to $31.8 million.
- Voyager adopted lease accounting in 2019, recognizing a right-of-use asset and lease liabilities. Future minimum lease payments were $47.2 million, with $34.8 million recorded as the lease liability.
- Key risks include clinical-trial failure or delay, uncertainty around gene-therapy safety and regulation, manufacturing comparability after changing VY-AADC production from HEK 293 cells to a baculovirus/Sf9 system, and FDA feedback suggesting two adequate, well-controlled trials may be needed for Parkinson’s disease. Delivery-device supply is also a risk: MRIC manufactures ClearPoint and V-TAG, and Voyager disclosed MRIC’s financing and going-concern concerns.
- The filing reports no material legal proceedings, no off-balance-sheet arrangements, and effective disclosure controls as of September 30, 2019. Management stated that a 100-basis-point interest-rate change would not materially affect portfolio fair value.
Important facts for investors to verify
- Whether RESTORE-1 enrollment, execution and eventual results support the earlier open-label VY-AADC findings, and how FDA feedback affects the development plan.
- Whether preclinical results support the anticipated VY-HTT01 IND timing and whether Voyager secures a partner for VY-SOD102.
- How much of reported revenue and operating cash flow reflects upfront, deferred or termination-related collaboration accounting versus reimbursed current-period work.
- Whether Neurocrine reimbursements and the stated mid-2022 cash runway remain valid as program spending and collaboration activity evolve.
- Whether the manufacturing-process transition and MRIC’s ability to supply ClearPoint/V-TAG create trial timing, comparability or continuity risks.