Disc Medicine, Inc. — Q3 2023 Form 10-Q
Reporting period: Three and nine months ended September 30, 2023. Unaudited results are compared with the corresponding 2022 periods. Disc Medicine is a clinical-stage biopharmaceutical company developing treatments for hematologic diseases; it has no approved products and has not generated product revenue.
Financial results and liquidity
Amounts below are in millions of dollars, except per-share data.
| Metric | Q3 2023 | Q3 2022 | Nine months 2023 | Nine months 2022 |
|---|---|---|---|---|
| Revenue | None | None | None | None |
| Research and development expense | $14.4 | $7.9 | $46.7 | $23.4 |
| General and administrative expense | $4.5 | $2.6 | $14.7 | $9.0 |
| Total operating expenses / operating loss | $19.0 | $10.5 | $61.4 | $32.5 |
| Net loss | $14.1 | $16.2 | $52.9 | $35.6 |
| Net loss per share, basic and diluted | $0.58 | $16.82 | $2.45 | $37.73 |
- Q3 other income was $4.9 million, including $4.8 million of interest income. This helped reduce net loss versus Q3 2022, which included a $5.9 million derivative-liability fair-value expense. Nine-month 2023 other income was $8.6 million; it included a $1.5 million expense from the change in fair value of the contingent value right (CVR) liability.
- Cash and cash equivalents were $370.5 million at September 30, 2023, versus $194.6 million at December 31, 2022. Cash, cash equivalents and restricted cash totaled $370.7 million.
- For the first nine months, operating cash use was $55.7 million, investing cash use was $0.1 million, and financing provided $231.6 million. Financing proceeds primarily reflected public and registered direct offerings and at-the-market sales.
- Total liabilities were $17.5 million, including $2.0 million of operating lease liabilities and a $1.5 million CVR liability. No debt balance is reported. Current assets were $374.3 million and current liabilities $14.4 million.
- Accumulated deficit was $165.1 million. The company expects continuing operating losses and negative operating cash flows. Management stated that cash resources were expected to fund planned needs well into 2026; the financial-statement note also says cash should cover planned requirements for at least 12 months from issuance.
Material changes versus prior periods
- Nine-month operating expenses rose $29.0 million year over year, with R&D up $23.3 million and G&A up $5.7 million. Higher R&D reflected the DISC-3405 program, including the $10.0 million Mabwell upfront payment, increased bitopertin clinical and manufacturing activity, and higher R&D staffing. G&A growth reflected headcount and public-company costs.
- Q3 R&D expense increased $6.5 million, mainly from bitopertin development, DISC-3405 and personnel costs. DISC-0974 Q3 expense decreased by $0.5 million.
- Cash increased substantially following 2023 equity financings. The company completed a $147.9 million-net follow-on offering, a $62.4 million-net registered direct offering, and received $19.5 million net from ATM sales through September 30.
- Common shares outstanding increased from 17.4 million at December 31, 2022 to 24.1 million at September 30, 2023, reflecting offerings and other share issuances.
Outlook, programs and risks
- Bitopertin: Phase 2 BEACON trial in EPP and XLP is underway in Australia; the company expected to present data from all patients at the December 2023 ASH meeting. Phase 2 AURORA trial in EPP is underway in the U.S., with topline data expected in early 2024. The company planned to request an FDA end-of-Phase-2 meeting in 2024. An NIH-sponsored DBA trial enrolled its first patient in July 2023.
- DISC-0974: Phase 1b/2 trials are underway in myelofibrosis anemia and non-dialysis-dependent CKD anemia. Initial myelofibrosis data were expected at ASH 2023; initial data from the 28 mg CKD cohort were expected in December 2023.
- DISC-3405: Received FDA fast track designation for polycythemia vera in September 2023. The first patient in its Phase 1 trial was dosed in October 2023; a $5.0 million Mabwell milestone payment became due upon trial initiation.
- In October 2023, the company gave notice to terminate its Aurigene license, effective January 2024. It also established a new ATM program for up to $59.7 million; no shares had been sold under it as of the financial statements’ issuance date.
- Development is early-stage and costly, and clinical results, regulatory approval, patient enrollment, manufacturing supply, third-party performance and intellectual-property protection are significant uncertainties. The company says additional capital may be needed; future equity financing could dilute shareholders. It also notes that the Australian BEACON trial data may not be accepted by U.S. or other regulators.
- The company has no product revenue and does not expect product sales in the near future. Its stated cash runway depends on assumptions that may prove inaccurate. No material legal proceedings were reported.
Investor facts to verify
- Confirm subsequent clinical updates and final, verified data for BEACON, AURORA, DISC-0974 and DISC-3405 against the preliminary timelines described in the filing.
- Assess cash burn and whether the projected runway into 2026 remains supported as trial, manufacturing and staffing costs grow.
- Track the $5.0 million Mabwell milestone, other contingent license milestones and royalties, and the financial implications of terminating the Aurigene license.
- Review share-count changes, remaining financing capacity and potential dilution, including activity under the new $59.7 million ATM program.
- Evaluate whether the CVR liability or proceeds from disposition of Gemini’s legacy assets change; no such proceeds had been received as of September 30, 2023.