Trevi Therapeutics, Inc. — Q2 2023 Form 10-Q
Reporting period: Three and six months ended June 30, 2023. Trevi is a clinical-stage biopharmaceutical company developing Haduvio (oral nalbuphine ER), its sole product candidate, for chronic cough in idiopathic pulmonary fibrosis (IPF), other chronic cough indications, and prurigo nodularis. The company has no approved products and has generated no product revenue.
Financial results and liquidity
| Metric | Q2 2023 | Q2 2022 | Six months 2023 | Six months 2022 |
|---|---|---|---|---|
| Revenue | None | None | None | None |
| Research and development expense | $5.8m | $5.1m | $10.8m | $9.7m |
| General and administrative expense | $2.5m | $2.7m | $5.1m | $5.1m |
| Total operating expenses / operating loss | $8.4m | $7.8m | $15.9m | $14.8m |
| Net loss | $7.1m | $8.1m | $13.5m | $15.4m |
| Net loss per share, basic and diluted | $0.07 | $0.14 | $0.14 | $0.34 |
All amounts are in U.S. dollars. No operating margins are meaningful because Trevi has no revenue. Q2 and first-half net losses narrowed year over year, while operating losses increased, reflecting higher R&D costs. Improved net results were mainly due to substantially higher interest income on cash and investments, along with lower interest expense; Q2 2023 also included other income.
- Liquidity: Cash and cash equivalents of $13.8m plus marketable securities of $80.4m totaled $94.2m at June 30, 2023, down from $120.5m at December 31, 2022.
- Cash flow: Operating activities used $18.1m in the first half, versus $13.3m in the prior-year period. Investing activities provided $28.6m, primarily from security maturities; financing activities used $9.4m, principally for debt repayment. Cash and cash equivalents ended at $13.8m.
- Debt: The company repaid the remaining SVB term loan on May 9, 2023. The $6.5m payoff included $5.2m principal, a $1.2m final payment fee, and accrued interest and prepayment premium. No borrowings remained at June 30.
- Runway and financing: Management stated that existing cash, cash equivalents and marketable securities are expected to fund operating expenses and capital expenditure requirements into 2026. The estimate excludes the cost of any additional prurigo nodularis trials and depends on assumptions; Trevi says additional funding will be needed. The filing also states the funds are sufficient for at least 12 months from issuance of the statements.
Material changes versus prior periods
- First-half R&D expense rose $1.1m year over year, primarily from consulting and professional fees and personnel costs associated with planned chronic-cough trials. Lower clinical-development costs partly offset the increase following completion of the blinded PRISM portion and CANAL trial.
- First-half operating cash use increased $4.8m year over year. The company’s investment maturities and loan repayment drove a different investing and financing cash-flow profile than in 2022, when equity financing provided $55.4m of net financing cash.
- The company expanded its New Haven office lease in March 2023 and entered into a furniture finance lease, increasing recognized lease assets and liabilities.
- Common shares outstanding were 63.1m at June 30, 2023, compared with 59.9m at year-end 2022. The reported weighted-average share count was approximately 98.7m, including pre-funded warrants for per-share loss calculations. A substantial number of warrants remain outstanding.
Outlook, developments and risks
- Chronic cough: Trevi reported positive Phase 2 CANAL results in IPF, including a statistically significant reduction in daytime cough frequency and positive key secondary outcomes. It was preparing a Phase 2b dose-ranging IPF trial (approximately 150–200 participants) and a Phase 1b respiratory-physiology study in IPF patients. Subject to regulatory discussions, it intended to initiate these studies in the second half of 2023. The company also planned a Phase 2a refractory chronic cough trial of approximately 60 participants, with initiation expected in Q3 2023.
- Prurigo nodularis: Trevi reported positive primary and key secondary endpoint results from the Phase 2b/3 PRISM trial. It completed the open-label extension in Q1 2023 and was analyzing results. Management expects an additional Phase 3 trial may be needed for regulatory submissions, plans to seek an FDA end-of-Phase-2 meeting, and is exploring a strategic collaboration. Current runway estimates exclude any additional prurigo nodularis trial costs.
- Human abuse potential study: Part one is complete and data were submitted to the FDA for review. Part two is delayed because of a U.S. shortage of IV butorphanol, the comparator drug. The company was uncertain when or whether supply would be available; this delays anticipated year-end results and could require agreement with the FDA on another comparator or additional trials.
- Key development risks: Haduvio remains investigational, and positive earlier-stage results may not predict later success. Trial enrollment delays, regulatory requirements, safety findings, competition for participants, and reliance on third-party trial and manufacturing providers could delay or raise development costs. Nalbuphine carries an opioid-class warning for serious respiratory depression; REMS requirements or controlled-substance scheduling could constrain use and commercialization. Trevi also relies on a single supplier for nalbuphine active ingredient.
- Funding and dilution: Trevi has incurred substantial losses and expects increasing expenses. It has no committed external funding and may need additional equity, debt, collaboration or licensing financing. The June 2023 shelf registration statement permits offerings of up to $200m, and a proposed ATM program allows up to $75m in common-stock sales, subject to the shelf becoming effective. Through August 10, 2023, it had sold an additional 750,000 shares for $1.8m gross under its existing ATM. Financing could dilute shareholders or require relinquishing rights.
- Other items: Trevi said it had access to its cash and investments following the March 2023 SVB closure and did not expect material operational disruption. It recorded $0.2m of CARES Act employee-retention tax-credit income in the first half. No material legal proceedings were reported. Disclosure controls were assessed as effective.
Important facts for investors to verify
- Whether the planned IPF, refractory chronic cough and respiratory-physiology studies began on the intended timelines, and their eventual design, enrollment and results.
- Availability of IV butorphanol or an acceptable alternative for the HAP study, and the timing and implications of its results for REMS or controlled-substance status.
- FDA feedback on the PRISM results, the need and cost of another prurigo nodularis Phase 3 trial, and progress toward a strategic collaboration.
- Actual quarterly cash burn and whether management’s runway estimate through 2026 remains achievable, particularly if trial plans or costs change.
- Effect of future ATM or other financing activity, outstanding warrants and potential share issuance on dilution and capital-raising capacity.
- Supply continuity for nalbuphine active ingredient and any changes in manufacturing, safety or regulatory requirements.