Voyager Therapeutics, Inc. — Q3 2015 Form 10-Q
Reporting period: Three and nine months ended September 30, 2015. The interim financial statements are unaudited. Voyager is a clinical-stage gene therapy company developing AAV-based treatments for central nervous system diseases; it had no product sales.
Financial results and liquidity
Amounts below are in millions, except per-share data.
| Metric | Q3 2015 | Q3 2014 | Nine months 2015 | Nine months 2014 |
|---|---|---|---|---|
| Collaboration revenue | $4.94 | — | $12.40 | — |
| Research and development expense | $6.48 | $2.40 | $18.46 | $5.94 |
| General and administrative expense | $2.48 | $1.26 | $6.75 | $3.93 |
| Operating loss | $(4.02) | $(3.66) | $(12.81) | $(9.87) |
| Net loss | $(3.92) | $(4.01) | $(22.39) | $(11.63) |
| Net loss attributable to common stockholders | $(6.91) | $(4.41) | $(29.47) | $(12.49) |
| Basic and diluted loss per share | $(5.25) | $(6.45) | $(25.36) | $(21.41) |
Revenue came entirely from the Genzyme collaboration; there was no product revenue or gross margin to report. Common-stockholder losses include preferred-stock accretion and, in 2015, accrued preferred dividends.
- Balance sheet at September 30: Cash and cash equivalents of $66.5 million and marketable securities of $94.1 million, totaling $160.6 million in cash, cash equivalents and securities. Total assets were $166.4 million; total liabilities were $64.7 million, including $59.8 million deferred collaboration revenue. No debt balance is shown.
- Cash flow, nine months: Operating activities provided $50.9 million, primarily reflecting the Genzyme upfront payment and deferred revenue; investing activities used $95.2 million, largely for securities purchases; financing activities provided $103.8 million, principally from preferred-stock issuances. Cash increased $59.5 million to $66.5 million.
- Funding after quarter-end: On November 16, 2015, Voyager completed its IPO at $14 per share, raising estimated net proceeds of $72.7 million. Preferred stock converted into 17.6 million common shares. Management estimated existing cash, cash equivalents and marketable securities would fund operations and capital needs for at least 24 months; the estimate predates the IPO proceeds.
Changes versus prior comparable periods
- Q3 collaboration revenue was $4.94 million, versus none in Q3 2014. Nine-month revenue was $12.40 million, all recognized under the Genzyme agreement.
- R&D expense rose to $18.46 million for the first nine months from $5.94 million, driven mainly by process and platform development, external research and development, and employee-related costs. G&A expense increased to $6.75 million from $3.93 million.
- Nine-month net loss widened to $22.39 million from $11.63 million. A $9.75 million non-cash charge from remeasuring Series A preferred-stock tranche rights contributed to the 2015 loss; that liability was settled in February 2015, so no further remeasurement was expected.
- Cash and securities grew substantially following collaboration and preferred-stock funding. The company also began holding a portfolio of U.S. Treasury and government-agency securities.
Outlook, collaboration, risks and notable items
- VY-AADC01, for advanced Parkinson’s disease, was in an open-label Phase 1b trial. Voyager aimed to generate human proof-of-concept data in the second half of 2016 and said it aimed to submit an IND for a preclinical program in 2017. These are management targets, not assured outcomes.
- Voyager anticipated rising R&D and public-company costs and continued operating losses. Management said additional funding would eventually be needed, notwithstanding its estimated 24-month runway.
- The February 2015 Genzyme agreement included a $65 million upfront payment and options covering several programs. It offered up to $645 million in aggregate regulatory and commercial milestones, plus tiered royalties, if applicable milestones are achieved and products are commercialized. Most options require proof-of-principle human studies before exercise; Genzyme can terminate for convenience. Future payments are contingent and not assured.
- Key risks include clinical failure or delay, uncertain safety and efficacy of gene therapy, surgical-delivery risks, manufacturing scale-up and reliance on third parties (including a sole vector supplier), regulatory uncertainty, intellectual-property challenges, and reliance on Genzyme for all reported revenue.
- The filing disclosed three procedure-related hemorrhages in an earlier VY-AADC01 trial. In the ongoing Phase 1b trial, one patient had a pulmonary embolism and related arrhythmia attributed to the procedure and prolonged immobility, not the therapy. The filing describes use of the ClearPoint System as intended to improve delivery visualization and reduce hemorrhage risk.
- The company reported no litigation and no off-balance-sheet arrangements. It stated that disclosure controls were effective as of September 30, 2015.
Important facts for investors to verify
- Confirm the clinical status, safety updates, enrollment and data timing for VY-AADC01, including whether the 2016 proof-of-concept target was met.
- Track R&D cash burn against the stated runway, including the effect of the November 2015 IPO proceeds and subsequent spending.
- Review Genzyme option decisions, collaboration performance obligations, deferred-revenue recognition and any contingent milestone or royalty prospects.
- Assess manufacturing capacity, supplier concentration and the availability of clinical-grade AAV vector supply.
- Reconcile inconsistent figures in the filing’s narrative: the financial statements report nine-month 2015 net loss of $22.389 million and accumulated deficit of $47.178 million, while a risk-factor passage gives different amounts ($18.5 million and $41.5 million). The financial statements provide the clearer reported values.
- Consider the substantial post-IPO share-count change: 5.75 million IPO shares were sold and 17.65 million shares were issued upon preferred-stock conversion; the filing cautions that this affects per-share comparability.