Trevi Therapeutics, Inc. — FY2021 Form 10-K
Reporting period: Fiscal year ended December 31, 2021. The filing reports annual results, not standalone fourth-quarter results. Filed March 17, 2022.
Business context
Trevi is a clinical-stage biopharmaceutical company with no marketed products or product revenue. Its sole product candidate, oral extended-release nalbuphine (Haduvio), is being developed for pruritus associated with prurigo nodularis and chronic cough in patients with idiopathic pulmonary fibrosis (IPF). The company retains worldwide development and commercial rights.
Financial performance and liquidity
| Metric | FY2021 / Dec. 31, 2021 | FY2020 / Dec. 31, 2020 |
|---|---|---|
| Revenue | None | None |
| Research and development expense | $23.0 million | $22.3 million |
| General and administrative expense | $9.5 million | $10.2 million |
| Total operating expenses | $32.5 million | $32.5 million |
| Net loss | $33.9 million | $32.8 million |
| Net loss per share, basic and diluted | $1.49 | $1.81 |
| Cash used in operating activities | $28.9 million | $29.0 million |
| Cash and cash equivalents | $36.8 million | $45.0 million |
| Total assets | $38.5 million | $47.1 million |
| Total liabilities | $21.4 million | $19.8 million |
| Stockholders’ equity | $17.1 million | $27.3 million |
As a pre-revenue company, Trevi reported operating and net losses rather than positive profit or operating margins. The $33.9 million net loss included $1.5 million of net other expense, chiefly interest expense. Cash provided by financing activities was $20.8 million, including $13.7 million net proceeds from October private placements and $7.5 million net ATM proceeds.
The SVB term loan had $14.0 million of principal outstanding at year-end; its balance-sheet carrying value was $14.5 million, including accrued final-payment fees and unamortized discounts. Principal repayment installments began March 2022, with the loan due in full February 2024. The debt is secured by substantially all assets other than intellectual property, which is subject to a negative pledge.
Material changes and operating developments
- Total operating expenses were nearly unchanged year over year. R&D increased 2.9%, reflecting higher personnel and related costs, while lower clinical-trial supply purchases partly offset increases. G&A declined 6.6%, mainly from lower market research and stock-based compensation.
- Net loss increased by $1.2 million, or about 3.6%, principally as higher interest expense and other expense offset the slight reduction in operating expenses.
- Cash declined $8.2 million during 2021, compared with a $12.3 million decline in 2020; operating cash use was broadly stable.
- In October 2021, Trevi raised approximately $14.8 million gross through private placements, issuing common shares and warrants. Outstanding warrants could result in substantial future dilution.
Outlook, commentary and key risks
- Going concern and funding: Management and the auditor identified substantial doubt about Trevi’s ability to continue as a going concern. At filing, management said year-end cash was not expected to fund operations for 12 months from issuance of the financial statements. Management estimated cash would fund operations into the fourth quarter of 2022, subject to assumptions and without giving effect to possible SVB cash-collateral rights. Additional financing is required; none was committed.
- SVB conditions: Failure to obtain positive PRISM data or raise sufficient equity proceeds by June 30, 2022 to fund a planned second Phase 3 trial and operations could require cash collateral equal to 100% of outstanding loan principal. Falling below $20 million of unrestricted, unencumbered cash held with SVB before milestone conditions are satisfied could also trigger collateral requirements. The company met a separate 2021 equity-raising condition.
- Prurigo nodularis: PRISM enrollment increased from a planned 240 to 360 after a sample-size re-estimation; enrollment completed January 31, 2022. Top-line data were expected in Q2 2022. Trevi believed an additional Phase 3 trial would be needed to support applications if results were successful.
- IPF cough: A February 2022 interim CANAL analysis of 26 subjects reported a 52% placebo-adjusted reduction in daytime cough events (p<0.0001). Enrollment was stopped early in March at approximately 40 subjects; full efficacy and safety data were expected in Q3 2022. These are post-year-end interim results, not FY2021 financial results, and may not predict the final analysis or future trials.
- Development and safety risks: Haduvio is investigational, and the earlier prurigo nodularis Phase 2 trial did not meet its primary endpoint; supportive completer analyses were post hoc. Risks include trial enrollment and retention, COVID-19 disruption, uncertain regulatory approval, opioid-related adverse effects and possible restrictions or controlled-substance classification.
- Supply and competition: Trevi relies on third parties and a single supplier, Mallinckrodt, for active ingredient; Mallinckrodt’s bankruptcy and reorganization create supply uncertainty. Competitors are developing treatments in both target indications.
- Other items: Trevi had no material legal proceedings. It regained Nasdaq’s minimum bid-price compliance on March 16, 2022 after receiving a deficiency notice in January. Management reported effective disclosure controls and internal control over financial reporting; the auditor did not attest to internal controls, consistent with the company’s exemption.
Investor verification priorities
- Check subsequent filings and company updates for PRISM top-line results, the planned confirmatory trial, and regulatory feedback.
- Review the full CANAL dataset and safety results, and whether the interim findings are confirmed in further development.
- Verify current cash runway, financing raised or required, and whether SVB milestone and cash-collateral conditions have been met.
- Assess debt repayment obligations, potential final payment fee, and the effect of outstanding warrants and future equity issuance on dilution.
- Monitor active-ingredient supply arrangements, alternative supplier qualification, and Haduvio’s opioid-related safety, abuse-liability and regulatory requirements.