Trevi Therapeutics, Inc. — Q3 2022 Form 10-Q
Reporting period: Quarter and nine months ended September 30, 2022. Trevi is a clinical-stage biopharmaceutical company developing Haduvio (oral extended-release nalbuphine); it had no product revenue and is dependent on this sole product candidate.
Financial performance and position
| Metric | Q3 2022 | Q3 2021 | Nine months 2022 | Nine months 2021 |
|---|---|---|---|---|
| Revenue | None | None | None | None |
| Research and development | $5.8 million | $4.7 million | $15.5 million | $16.8 million |
| General and administrative | $2.6 million | $2.2 million | $7.7 million | $7.4 million |
| Total operating expenses | $8.4 million | $6.9 million | $23.3 million | $24.2 million |
| Net loss | $8.3 million | $7.3 million | $23.6 million | $25.4 million |
| Net loss per share | $0.12 | $0.34 | $0.44 | $1.25 |
Gross margin and operating margin are not meaningful because the company had no revenue. Q3 loss widened year over year as operating expenses increased; for the nine-month period, lower R&D spending more than offset higher G&A, reducing the net loss. Higher interest income partly offset expenses in both comparisons.
- Liquidity: September 30 cash and cash equivalents were $66.6 million, marketable securities were $59.0 million, and total current assets were $127.3 million. The securities were available-for-sale and had remaining maturities under one year. Current liabilities were $14.6 million.
- Cash flow: Nine-month operating cash use was $21.8 million, versus $22.7 million a year earlier. Investing cash use was $59.1 million, mainly reflecting purchases of marketable securities. Financing provided $110.7 million, primarily from equity offerings and warrant exercises. Cash increased $29.7 million to $66.6 million.
- Debt: SVB term-loan principal outstanding was $9.9 million; the balance-sheet carrying amount was $10.8 million, including the accrued final payment fee and net of discounts. The loan matures February 1, 2024, is secured by substantially all assets except intellectual property, and bears floating-rate interest. The weighted-average rate was 6.97% for Q3 2022.
- Equity and dilution: The September offering generated $51.2 million net proceeds at its September closing; a subsequent partial option exercise generated about $3.1 million gross in October. As of September 30, 48.3 million shares were issuable under outstanding warrants, including pre-funded warrants. Common shares outstanding were 58.3 million at quarter-end and 59.9 million as of November 10, 2022.
Material changes and operating developments
- Q3 R&D increased $1.1 million year over year, primarily from startup costs and increased CANAL trial activity, partly offset by reduced PRISM blinded-trial costs. Nine-month R&D decreased $1.3 million, largely because the blinded portion of PRISM was completed in Q2, partly offset by planned-trial startup costs.
- Q3 G&A rose $0.4 million, mainly due to intellectual-property legal fees and market research. Nine-month G&A rose $0.3 million.
- Interest income rose as cash and marketable-security balances and yields increased. Financing included the April 2022 private placement and September 2022 offering; warrant exercises also generated $11.8 million during the first nine months.
- On August 3, SVB confirmed that positive PRISM data satisfied the applicable loan milestone and that cash-collateralization requirements were no longer in effect. The April equity financing had also terminated other milestone and minimum-cash requirements.
Outlook, commentary, and principal risks
- Clinical outlook: Trevi reported positive full-set Phase 2 CANAL results in September in 38 adults with IPF-related chronic cough. Haduvio reduced daytime cough frequency by 75.1% from baseline versus 22.6% with placebo, a 52.5% placebo-adjusted change (p<0.0001); key secondary measures also favored Haduvio. The company planned to discuss next-trial design with FDA and, subject to alignment and filing an IND, aimed to start IPF-cough trials in the first half of 2023. A Phase 2 refractory chronic cough trial was anticipated in 2023.
- Prurigo nodularis: The Phase 2b/3 PRISM trial met its primary and three key secondary endpoints. At week 14, 25% of Haduvio subjects versus 14% of placebo subjects achieved the primary itch reduction endpoint (p=0.0157). The open-label extension was expected to finish in Q1 2023; Trevi planned an FDA end-of-Phase-2 meeting in Q1 2023 and anticipated another Phase 3 trial may be needed. The company said additional funding would be needed before commencing that trial.
- Safety and competition: Reported trial safety was generally consistent with known effects; nausea, dizziness, constipation, fatigue and somnolence were among commonly observed events. In PRISM, treatment discontinuations were 36.9% with Haduvio versus 19.3% with placebo; reported serious adverse events were not considered treatment-related by investigators. Haduvio’s opioid mechanisms raise potential risks including respiratory depression, psychiatric effects, withdrawal, misuse and possible controlled-substance classification or FDA-required risk-management measures. Dupixent was approved for prurigo nodularis in September 2022.
- Funding outlook: The filing states that September 30 cash, cash equivalents and marketable securities of $125.6 million were expected to fund operations and capital needs for at least 12 months. Elsewhere, incorporating the October option proceeds, management estimated funding into 2026, subject to FDA agreement on planned IPF-cough trials; that estimate excludes the cost of any additional prurigo nodularis trial. Trevi has no committed external funding source and warned that trial costs or timing could require additional financing, delay or curtail programs, or cause abandonment of development efforts.
- Other risks: The company has sustained losses since inception, with an accumulated deficit of $204.6 million, and does not expect near-term product revenue. Risks include uncertain clinical and regulatory outcomes, enrollment delays, COVID-19-related disruption, reliance on third-party trial and manufacturing providers, dependence on a single nalbuphine active-ingredient supplier, floating-rate debt, equity dilution and substantial outstanding warrants. Management reported disclosure controls were effective; no material legal proceedings were reported.
Important facts for investors to verify
- Whether FDA discussions support the planned IPF-cough trial design and first-half 2023 start, including the required IND.
- PRISM open-label extension results, FDA feedback, and the design, timing and funding needs of any additional Phase 3 trial.
- Whether the stated runway into 2026 remains supportable under updated trial plans, particularly if prurigo nodularis development advances.
- Current SVB loan balance, floating interest costs, repayment schedule and February 2024 maturity obligations.
- Potential dilution and market overhang from pre-funded warrants, common warrants, equity plans and registered resale shares.
- Human abuse-liability study findings and any resulting FDA or DEA requirements, alongside safety and tolerability in later-stage trials.