Structure Therapeutics Inc. — Q2 2023 Form 10-Q
Reporting period: Three and six months ended June 30, 2023. The unaudited statements are prepared under U.S. GAAP. Structure is a clinical-stage biopharmaceutical company developing oral small-molecule medicines; it has no approved products and has generated no product revenue.
Financial results and liquidity
Amounts below are in millions of U.S. dollars unless otherwise noted.
| Metric | Q2 2023 | Q2 2022 | Six months 2023 | Six months 2022 |
|---|---|---|---|---|
| Revenue | None | None | None | None |
| Research and development expense | $19.4 | $10.2 | $32.5 | $18.7 |
| General and administrative expense | $6.6 | $3.8 | $13.1 | $8.2 |
| Total operating expenses | $26.0 | $14.0 | $45.6 | $26.9 |
| Net loss | $23.3 | $13.9 | $41.3 | $27.0 |
| Net loss per ordinary share, basic and diluted | $0.20 | $1.64 | $0.44 | $3.09 |
| Interest and other income, net | $2.8 | $0.1 | $4.5 | Less than $0.1 |
- At June 30, cash and cash equivalents were $40.6 million and short-term investments were $184.0 million, or $224.6 million combined, versus $90.8 million at December 31, 2022. Total current assets were $228.2 million; total liabilities were $15.0 million. No borrowings are shown on the balance sheet; operating lease liabilities were $0.1 million.
- For the first half, operating cash use was $37.2 million, investing cash use was $117.7 million (primarily net purchases of short-term investments), and financing provided $169.4 million, primarily from the IPO. Cash and cash equivalents increased $14.5 million to $40.6 million.
- Accumulated deficit was $158.2 million. The company reported no gross profit or operating margins because it had no product revenue.
- Management estimates existing cash, cash equivalents and short-term investments will fund operations through at least 2025, based on its current plan and assumptions. The filing also states they are sufficient for at least 12 months from issuance of the financial statements. Management expects significant and increasing expenses and losses and says substantial additional capital will be needed over time.
Material changes versus the prior comparable period
- Q2 operating expenses rose 86% year over year; R&D increased 91%, primarily reflecting advancement of the GLP-1R franchise and other programs, plus increased personnel. First-half operating expenses rose 70%, with R&D up 74%.
- Q2 net loss increased $9.3 million year over year. First-half net loss increased $14.2 million. Higher interest income, reflecting higher interest rates and larger cash and investment balances, partly offset operating losses.
- The February 2023 IPO generated approximately $166.7 million in net proceeds. Preferred shares converted into ordinary shares at closing, and the company reported 114.8 million ordinary and non-voting ordinary shares outstanding as of August 3, 2023.
- Short-term investments increased to $184.0 million from $64.8 million at year-end. The company reported $0.4 million of gross unrealized losses on short-term investments at June 30, primarily related to interest-rate changes; it reported no credit-loss allowance or impairment loss.
Outlook, management commentary and risks
- GSBR-1290: The company initiated its Phase 2a study in May 2023 and reported that enrollment was recently complete. It expected topline results from the Phase 1b multiple-ascending-dose study and Phase 2a study in the latter half of Q4 2023. A tablet formulation bridging study was planned before year-end 2023, in preparation for a planned global Phase 2b study in 2024.
- Other programs: ANPA-0073, for idiopathic pulmonary fibrosis and pulmonary arterial hypertension, completed Phase 1 single- and multiple-ascending-dose studies; further preclinical work and a formulation-bridging PK study were planned. The company selected an LPA1R antagonist development candidate in January 2023 and expected to begin a first-in-human study in 2024. Other pipeline work includes next-generation GLP-1R combinations.
- The company cautioned that a 13-week GSBR-1290 nonhuman-primate toxicology study showed low-to-moderate liver necrosis across all dose groups, including control. The findings were not attributed to GSBR-1290, but the FDA could disagree or take action that delays the program.
- Key risks include early-stage clinical and preclinical development, uncertain safety and efficacy outcomes, reliance on third parties for trials and manufacturing, and a single-source supplier for active ingredients and drug product. Clinical and preclinical studies have been or are planned outside the U.S.; U.S. regulators may not accept foreign-trial data.
- Other material risks include competition, additional financing needs and potential dilution, geopolitical and regulatory uncertainty related to China, and uncertainty around Australian R&D tax credits. Management said it had not seen a significant financial impact from recent geopolitical or macroeconomic developments during the first half, but future effects remain uncertain.
- Financial reporting controls: Management concluded disclosure controls were not effective as of June 30, 2023 because material weaknesses remained in staffing and control environment, segregation of duties, and IT general controls. The weaknesses had not caused a material misstatement in the statements presented; remediation was ongoing and could extend beyond year-end 2023.
- Commitments and contingencies: No material legal proceedings or probable or reasonably possible material indemnification claims were reported. Three new leases were signed in June 2023, with expected commencement dates from August 2023 to February 2024; their stated annual base rents were approximately $0.5 million, $0.7 million and $0.3 million, respectively.
Important facts for investors to verify
- Whether the planned Q4 2023 GSBR-1290 topline results were delivered on schedule, and the full efficacy, safety and tolerability data—not only preliminary results.
- Whether the liver findings in the nonhuman-primate study affect regulatory plans, and whether the planned formulation-bridging and Phase 2b timelines remain achievable.
- Actual operating cash burn, investment balances and runway against the company’s estimate through at least 2025; the estimate depends on assumptions and may change.
- Progress in hiring and testing remediation of the disclosed material weaknesses before the next annual reporting cycle.
- Manufacturing continuity and supply-chain exposure, particularly the reliance on WuXi STA, as well as China-related regulatory and operational developments.
- Potential share-supply and dilution effects: the filing noted that lock-up restrictions on a substantial number of shares expired beginning August 2, 2023, and reported 12.0 million options outstanding at June 30.