Filing and reporting period
Important identification note: The request names Neurogene Inc., but the supplied Form 10-Q is for Neoleukin Therapeutics, Inc. (Nasdaq: NLTX). It reports unaudited results for the quarter ended March 31, 2022, with comparisons to the quarter ended March 31, 2021.
Neoleukin is a pre-revenue biopharmaceutical company developing de novo protein immunotherapies. Its lead candidate, NL-201, was in a Phase 1 trial for advanced solid tumors.
Financial results and liquidity
| Metric | Q1 2022 | Q1 2021 / comparison |
|---|---|---|
| Revenue | None reported | None reported |
| Research and development expense | $10.7 million | $9.7 million; up 10% |
| General and administrative expense | $4.7 million | $5.2 million; down 11% |
| Total operating expenses | $15.4 million | $14.9 million; up 3% |
| Net loss | $15.4 million | $15.0 million |
| Net loss per share, basic and diluted | $0.28 | $0.27 |
| Net cash used in operating activities | $14.1 million | $13.4 million |
| Cash used in investing activities | $0.5 million | $1.1 million |
No meaningful product gross margin is reported because the company had no product revenue. Cash and cash equivalents were $128.1 million at March 31, 2022, down from $142.5 million at December 31, 2021. Cash, cash equivalents, and restricted cash totaled $128.9 million; restricted cash was $0.9 million. Working capital was $122.8 million, and accumulated deficit was $408.8 million.
Total liabilities were $19.0 million, primarily accounts payable, accrued liabilities, and operating lease liabilities. The filing reports lease obligations, but no conventional borrowings or other funded debt. Management estimated existing cash would fund planned operations through 2023, subject to significant uncertainty and possible earlier financing needs.
Changes and business developments
R&D expense increased mainly because of NL-201 clinical-trial costs and advancement of other technology programs. The increase was partly offset by lower prior-year spending on Seattle facilities and the NL-CVX1 program, which was suspended in June 2021. G&A expense declined mainly due to lower personnel- and facility-related costs. Operating cash use increased year over year.
In January 2022, Neoleukin announced a clinical collaboration with Merck to evaluate NL-201 with pembrolizumab (KEYTRUDA). The Phase 1 study was planned to enroll up to 252 patients, with monotherapy and combination arms. The company also planned a Phase 1 study in hematological malignancies, with timing dependent on data from the ongoing solid-tumor study. The filing provides no clear financial terms for the Merck collaboration.
At March 31, 2022, 42.5 million common shares were issued and outstanding, and 12.7 million pre-funded warrants were outstanding. The company had an ATM agreement permitting up to $40 million of common-stock sales, but had made no sales under it through the quarter-end.
Outlook, risks, and other matters
Neoleukin expects significant losses and operating expenses to continue and does not expect near-term product revenue. Management said additional capital will be needed to support operations and development; financing may be unavailable or dilutive, and failure to raise funds could force delays, reductions, or termination of programs.
Key risks include NL-201’s early development stage and uncertain safety or efficacy; the unproven de novo protein-design platform; reliance on third-party clinical research organizations, manufacturers, and suppliers; clinical enrollment, regulatory, and supply-chain delays; and the effects of COVID-19, inflation, and geopolitical and economic conditions. NL-201 could also produce cytokine-related toxicities or immune responses. The filing notes that its IND had initially been placed on clinical hold, which was later lifted.
The company reported no legal proceedings expected by management to have a material adverse effect. Management concluded disclosure controls were effective at a reasonable assurance level and reported no material change in internal control over financial reporting during the quarter.
Investor verification checklist
- Confirm the issuer: this filing is for Neoleukin Therapeutics, not Neurogene Inc.
- Check the cash runway assumptions behind management’s estimate that funds would last through 2023, and monitor burn rate and financing activity.
- Review subsequent NL-201 trial safety, dosing, enrollment, and efficacy updates, including progress toward the planned combination and hematological-malignancy studies.
- Verify the Merck collaboration’s terms and any resulting costs, obligations, or milestones; those terms are not clear in the supplied filing text.
- Assess potential dilution from the ATM facility, outstanding options and RSUs, and the 12.7 million pre-funded warrants.
- Reconcile reported common shares outstanding with the weighted-average share count used in loss-per-share calculations; the filing says pre-funded warrants are included in that calculation.