MeiraGTx Holdings plc — Q2 2022 Form 10-Q
Reporting period: Three and six months ended June 30, 2022. Amounts below are in U.S. dollars; financial statement figures are in millions unless stated otherwise.
Business context and reporting period
MeiraGTx is a clinical-stage gene therapy company with six programs in clinical development, preclinical programs, and manufacturing facilities in the UK and Ireland. It reported no product-sales revenue; reported license revenue and research funding relate principally to its Janssen collaboration. Financial statements are unaudited.
Financial performance and liquidity
| Metric | Q2 2022 | Q2 2021 | Six months 2022 | Six months 2021 |
|---|---|---|---|---|
| License revenue, related party | 10.8 | 5.1 | 16.4 | 9.7 |
| Operating expenses | 34.5 | 25.6 | 68.9 | 52.2 |
| Loss from operations | (23.8) | (20.5) | (52.5) | (42.5) |
| Net loss | (34.0) | (20.1) | (65.0) | (43.7) |
| Basic and diluted loss per share | (0.76) | (0.46) | (1.46) | (0.99) |
| Cash used in operating activities | — | — | (36.1) | (12.2) |
Q2 research and development expense was 24.0 million, up 8.8 million year over year; general and administrative expense was 10.5 million, broadly unchanged. No product gross margin is reported because the company had no product sales.
- At June 30, cash and cash equivalents were 72.1 million, versus 137.7 million at year-end 2021. Current assets were 104.4 million and current liabilities 67.5 million, or working capital of approximately 36.9 million.
- First-half investing cash outflow was 26.5 million, primarily for property, plant and equipment. Cash declined 65.1 million during the half.
- Accumulated deficit was 405.6 million; shareholders’ equity was 142.0 million. Lease obligations totaled approximately 22.7 million. The June 30 balance sheet predates the new term loan described below.
- Management said 15.9 million of Janssen receivables was expected to be collected in Q3 2022.
Material changes and unusual items
- Six-month license revenue rose 6.7 million, reflecting greater amortization of Janssen’s upfront and milestone payments. Janssen research and development reimbursements are recorded as offsets to R&D expense, not revenue: 29.3 million in first-half 2022 versus 30.2 million in 2021.
- R&D expense increased 15.2 million for the half, principally from clinical-trial manufacturing, payroll, share-based compensation, facilities, and clinical and preclinical activity; lower Janssen research funding also contributed.
- Foreign-currency losses were 10.4 million in Q2 and 13.1 million in the first half, primarily unrealized remeasurement losses on intercompany balances as the U.S. dollar strengthened. Foreign-currency translation gains in other comprehensive income partly offset the reported comprehensive loss but did not reverse the income-statement losses.
- Share-based compensation was 14.9 million in the first half, versus 10.0 million in 2021.
Outlook, financing, and principal risks
- Management expects continuing losses and rising development costs. It estimated that cash at June 30, expected Janssen research funding and milestone payments, and the subsequent loan proceeds would fund operating and capital needs into Q4 2024. This is an estimate based on assumptions; the company may use funds faster and expects to need additional capital.
- On August 2, 2022, after quarter-end, the company closed a 75 million senior secured, interest-only term loan with Perceptive, maturing August 2, 2026. Interest is a 10% margin plus one-month SOFR, subject to a 1% SOFR floor. An additional 25 million tranche may be requested within two years but is at the lender’s discretion. The loan is secured by manufacturing facilities in London and Shannon, 3 million of cash, specified accounts and subsidiary equity; it includes restrictive covenants. Perceptive received warrants for up to 700,000 shares at exercise prices of 15 and 20 dollars.
- Management reported positive topline Phase 1/2 data in June for botaretigene sparoparvovec in X-linked retinitis pigmentosa, with improvements across multiple vision endpoints at six months versus the untreated control arm and no dose-limiting events reported. These were topline results; the filing cautions that preliminary data may change. The company was enrolling in the Phase 3 Lumeos trial and targeted a BLA filing in 2024.
- Other stated milestones included Janssen’s planned achromatopsia Phase 2b trial starts in 2022 and early 2023; planned AAV-hAQP1 Phase 1 data and Phase 2 initiation in Q4 and by year-end 2022, respectively; anticipated AAV-GAD enrollment in the second half of 2022; and planned gene-regulation data and first-in-human studies. These are forward-looking plans, not assured outcomes.
- Key risks include continued cash burn and financing availability; high-cost, uncertain clinical development and regulatory approval; reliance on Janssen and other third parties; manufacturing capacity and compliance; gene-therapy safety and long-term effects; foreign-exchange exposure; and loan covenants and collateral. A 10% unfavorable currency movement was estimated to add approximately 18.5 million to first-half foreign-exchange loss. The company said COVID-19 did not materially affect first-half results or operations, but future effects remain uncertain.
Important facts for investors to verify
- Whether the Janssen receivable was collected and research funding, reimbursements, and potential milestones continue as expected.
- Final, complete MGT009 data and progress, enrollment, safety, and regulatory feedback for the Phase 3 Lumeos trial and the targeted 2024 BLA filing.
- Actual cash burn, capital spending, and whether management’s Q4 2024 runway estimate remains supportable.
- The loan’s effective interest cost, covenant compliance, collateral implications, and whether the optional 25 million tranche becomes available.
- Progress and timing for the other clinical and gene-regulation milestones, including whether preliminary plans were achieved.
- The scale and recurrence of foreign-exchange losses and the company’s exposure to sterling and euro movements.
The filing states that disclosure controls were effective at the reasonable-assurance level, that there were no material legal proceedings, and that there were no material changes in internal control over financial reporting during the quarter.