MeiraGTx Holdings plc — Q3 2020 Form 10-Q
Reporting period: Quarter ended September 30, 2020; financial results are compared with the same quarter and nine-month period of 2019. MeiraGTx is a clinical-stage gene-therapy company with six clinical programs and preclinical programs. It has no approved products and has not generated product-sales revenue.
Financial performance and liquidity
| Metric | Q3 2020 | Q3 2019 | Nine months 2020 | Nine months 2019 |
|---|---|---|---|---|
| License revenue, related party | $5.1 million | $3.6 million | $11.8 million | $6.3 million |
| Operating expenses | $13.5 million | $14.5 million | $61.1 million | $59.2 million |
| Operating loss | $8.4 million | $10.9 million | $49.3 million | $52.8 million |
| Net loss | $6.4 million | $10.5 million | $47.5 million | $49.3 million |
| Basic and diluted loss per share | $0.17 | $0.30 | $1.29 | $1.53 |
- License revenue is amortization of Janssen’s $100 million upfront payment; it is not product revenue. Janssen research and development reimbursements are generally recorded as offsets to research and development expense.
- Q3 net loss improved year over year, with lower general and administrative costs and higher license revenue; a $1.9 million foreign-currency gain also contributed. Nine-month net loss improved modestly despite higher operating expenses, with revenue growth and interest income partly offset by lower foreign-currency gains.
- Nine-month operating cash flow was a use of $34.4 million, versus cash provided of $42.0 million in 2019, when the Janssen upfront payment drove cash generation. Investing activities used $26.8 million; financing activities provided $13.3 million, mainly from the at-the-market share offering.
- At September 30, cash and cash equivalents were $179.1 million, plus $0.3 million of restricted cash. Working capital was approximately $171.3 million ($217.9 million current assets less $46.6 million current liabilities). Total liabilities were $114.0 million, including $19.2 million of operating lease obligations; the filing reports no conventional borrowing balance.
- Accumulated deficit was $250.6 million. The company reported no meaningful product gross margin; product sales have not begun.
Material changes and notable items
- Cash and cash equivalents declined from $227.2 million at December 31, 2019. The company issued 993,448 shares through its ATM program during the first nine months, receiving $13.2 million gross; approximately $61.8 million of ATM capacity remained.
- MeiraGTx acquired Emrys Bio in April for stock consideration valued at $7.7 million. It treated the transaction as an asset acquisition and expensed the acquired in-process research and development immediately.
- The company entered agreements to acquire two manufacturing properties in Shannon, Ireland for approximately $21.2 million. It closed on the first building in August and expected to close on the second when construction was complete, then anticipated in December 2020. The second building remained subject to completion terms, including potential liquidated damages and a deposit-refund termination right.
- Foreign-currency movements were material to reported comprehensive results: Q3 included a $4.1 million translation loss, while nine-month translation income was $0.3 million.
Outlook, commentary and risks
- Management estimated that cash, cash equivalents, restricted cash and expected Janssen research funding would fund operating expenses and capital expenditures into 2022. This is an estimate based on assumptions; the filing warns that resources could be used sooner and additional financing may be needed.
- Management expected expenses to rise as clinical development and manufacturing capacity expand, including planned advancement of AAV-RPGR into the Phase 3 Lumeos trial. The company may seek equity or debt financing, collaborations, licensing arrangements or other capital; additional funding may be unavailable or dilutive.
- Clinical milestones cited included preparation with Janssen to initiate the pivotal AAV-RPGR Phase 3 trial; preliminary first-cohort AQUAx data expected by the end of 2020; and an AAV-GAD IND filing expected in the first half of 2021, subject to release of clinical material. These are expectations, not guarantees.
- Management said construction and commissioning of the Shannon plasmid facility were expected to finish by year-end 2020 and the viral-vector facility by year-end 2021. London’s cGMP facility was recertified by the UK regulator in Q2 2020.
- COVID-19 had not materially affected financial results or operations through the nine months ended September 30, 2020, but clinical-site continuity measures were in place and future effects remained uncertain. Risks include clinical delays, enrollment and supply-chain disruption, manufacturing scale-up and regulatory uncertainty, competition, intellectual-property disputes, foreign-exchange volatility and the need for additional capital.
- No material legal proceedings or subsequent events were reported. Management concluded disclosure controls were effective; no material change in internal control over financial reporting was reported.
Investor verification points
- Monitor cash burn, Janssen reimbursements and the assumptions supporting the stated runway into 2022.
- Verify timing and progress of Lumeos, AQUAx and AAV-GAD milestones, including any changes arising from COVID-19 or regulators.
- Track completion, commissioning and costs of both Shannon facilities, and the company’s manufacturing capacity and supply reliability.
- Assess potential dilution from future ATM or other financing, and the status of remaining ATM capacity.
- Review clinical data as it matures: the company noted that interim and preliminary results may change upon further data collection and verification.