4D Molecular Therapeutics, Inc. — Q1 2023 Form 10-Q
Reporting period: Three months ended March 31, 2023; comparisons are with the three months ended March 31, 2022 unless otherwise noted. The company is a clinical-stage gene-therapy developer and has no products approved for sale.
Key financial metrics
| Metric | Q1 2023 | Q1 2022 / prior date |
|---|---|---|
| Collaboration and license revenue | $0.3 million | $1.2 million |
| Research and development expense | $22.4 million | $19.4 million |
| General and administrative expense | $8.0 million | $8.2 million |
| Total operating expenses | $30.4 million | $27.6 million |
| Loss from operations | $30.1 million | $26.4 million |
| Net loss | $28.7 million | $26.3 million |
| Basic and diluted net loss per share | $0.88 | $0.82 |
| Net cash used in operating activities | $27.9 million | $23.6 million |
| Cash and cash equivalents | $78.6 million | $52.4 million at Dec. 31, 2022 |
| Marketable securities | $123.3 million | $166.1 million at Dec. 31, 2022 |
| Total assets | $244.0 million | $261.8 million at Dec. 31, 2022 |
| Total liabilities | $25.4 million | $30.5 million at Dec. 31, 2022 |
Cash, cash equivalents and marketable securities totaled approximately $201.9 million at quarter-end. The company reported no conventional borrowings in the provided balance sheet; operating lease liabilities were $15.7 million, including $2.7 million current. Revenue is collaboration and license revenue, not product sales; profit margins are not meaningful given the company’s pre-commercial stage and low revenue.
Material changes versus the prior comparable period
- Revenue declined 76%, primarily because less revenue was recognized under the uniQure agreements.
- R&D expense rose 16%, mainly from higher personnel costs, facility and other R&D costs, and clinical trial spending. G&A expense decreased 3%.
- Net loss increased by $2.3 million, or 9%. Higher interest income—$1.4 million versus $0.1 million—partly offset the higher operating loss.
- Operating cash use increased by $4.4 million. Investing activities provided $43.1 million, mainly from maturities of marketable securities; financing activities provided $11.0 million, including $9.6 million net proceeds from ATM share sales.
- Accumulated deficit was $343.2 million at March 31, 2023. The company sold 487,934 shares through its ATM program during the quarter for $9.6 million net.
Outlook, risks and unusual items
- Management expects operating losses and negative operating cash flows to continue, with R&D and G&A expenses expected to increase as programs advance. The company said quarter-end cash and marketable securities were sufficient to fund planned operations for at least one year from issuance of the financial statements; this estimate depends on assumptions and is not a guarantee.
- After quarter-end, the company completed a May 2023 public offering of 8.625 million shares at $16 per share, producing $129.1 million in net proceeds. This subsequent financing is not included in March 31 balances.
- The pipeline includes five clinical-stage candidates—4D-150, 4D-710, 4D-310, 4D-125 and 4D-110—and two preclinical candidates, 4D-175 and 4D-725. The filing provides no clear quantified financial guidance or specific near-term clinical milestones in the supplied text.
- On April 21, 2023, the company acquired worldwide rights to sCFH for its 4D-175 research program with no upfront payment; future development, regulatory and sales milestones and royalties may be payable to Aevitas and the University of Pennsylvania.
- The company gave notice to terminate a University of California/University of Pennsylvania license agreement; termination was effective May 23, 2023. The filing does not detail the program-level financial impact.
- Key risks include clinical and regulatory failure, manufacturing and supply constraints, reliance on external partners, and the need for additional financing. The company noted that Charles River Laboratories suspended shipments of non-human primates from Cambodia after receiving a U.S. Department of Justice subpoena; constrained supply or higher prices could delay or increase the cost of research and preclinical work.
- The Cystic Fibrosis Foundation agreement includes potential change-of-control payments and future payments tied to commercialization. The related derivative liability was $0.2 million at quarter-end. Operating lease commitments totaled $20.1 million in undiscounted future minimum payments.
- No material legal proceedings were outstanding at March 31, 2023. Management reported disclosure controls and procedures were effective and no material change in internal control over financial reporting during the quarter.
Important facts for investors to verify
- Whether the May offering’s $129.1 million net proceeds materially extend the cash runway relative to the company’s stated one-year estimate, considering projected trial, R&D and manufacturing spending.
- Clinical progress, safety and enrollment for the five clinical-stage candidates, and any resulting changes to program timelines or spending.
- Whether non-human-primate supply constraints affect preclinical work, and the status of manufacturing capacity and external suppliers.
- The continuing revenue and economic value of the uniQure collaboration, and the consequences of the license termination and 4D-175 rights acquisition.
- Potential dilution from equity issuance and outstanding options; the filing reports 33,236,768 shares outstanding at March 31 and 33,260,378 as of May 5, 2023, before the May offering.