Pliant Therapeutics, Inc. — Q2 2022 Form 10-Q
Reporting period: Three and six months ended June 30, 2022. Pliant is a clinical-stage biopharmaceutical company developing fibrosis therapies. It had no product-sales revenue; reported revenue came from its Novartis collaboration.
Financial performance and position
Amounts below are in millions, except per-share data. Net losses and expenses are shown as positive amounts in the table for readability.
| Metric | Q2 2022 | Q2 2021 | Six months 2022 | Six months 2021 |
|---|---|---|---|---|
| Revenue | $4.99 | $1.79 | $6.24 | $3.96 |
| Research and development expense | $26.34 | $19.22 | $47.22 | $37.75 |
| General and administrative expense | $8.30 | $5.48 | $16.88 | $12.04 |
| Operating loss | $29.64 | $22.90 | $57.85 | $45.82 |
| Net loss | $29.55 | $22.83 | $57.65 | $45.69 |
| Basic and diluted net loss per share | $(0.82) | $(0.64) | $(1.59) | $(1.28) |
- Q2 revenue rose $3.20 million year over year, primarily from a $4.0 million Novartis research-target validation fee, partly offset by lower collaboration research-service revenue. Six-month revenue increased $2.28 million for the same reason.
- Q2 R&D expense increased $7.12 million, mainly from third-party preclinical and manufacturing costs and employee-related costs; lower clinical-trial costs partly offset the increase. Six-month R&D rose $9.47 million, including a $10.59 million increase in outside and consulting costs, partly offset by a $4.03 million decrease in clinical-trial expense.
- Q2 G&A expense increased $2.82 million; the six-month increase was $4.83 million. The company cited employee-related costs, professional services and charitable contributions.
- Profit margins are not meaningful indicators for this pre-commercial company; the filing reports no product sales and continuing operating losses.
Cash, liquidity and debt
- At June 30, 2022, cash and cash equivalents were $25.07 million and short-term investments were $138.53 million, for combined liquidity of $163.60 million, versus $200.60 million at December 31, 2021.
- Six-month operating cash use was $44.89 million, compared with $33.07 million in 2021. Investing activities provided $8.03 million, primarily reflecting investment maturities net of purchases; financing activities provided $10.27 million, including the $10.0 million Oxford loan draw.
- The Oxford facility provides up to $100 million. Pliant drew $10 million at closing; additional tranches are subject to availability, development milestones and, in one case, lender discretion. The loan is secured by substantially all current and future assets, bears interest at one-month term SOFR plus 8.5% subject to an agreed floor and cap, and has interest-only payments through July 2026, subject to extension provisions. The June 30 balance was $9.87 million net of debt issuance costs.
- Management estimated existing resources, proceeds from the July offering and available or contingent Oxford borrowing would fund projected operating requirements into the middle of 2025. The estimate depends on assumptions and may change with spending needs and development progress.
Developments, outlook and risks
- Clinical programs: The company reported exploratory, dose-dependent effects on forced vital capacity and quantitative lung fibrosis in its INTEGRIS-IPF Phase 2a trial; it also reported that the candidate was well tolerated in the trial. Enrollment in the 320 mg IPF Phase 2a study was complete, with interim 12-week data anticipated in early 2023. Topline Phase 2a PSC data were expected in the first half of 2023.
- Regulatory and pipeline: The filing’s highlights report Fast Track designation for PLN-74809 for PSC; elsewhere, the risk discussion says it received Fast Track designation for IPF in April 2022. The filing also expected IND submissions for oncology and muscular-dystrophy programs by year-end 2022.
- Novartis collaboration: Novartis opted into a research program and received an exclusive license to compounds for an integrin research target, triggering a $4.0 million payment recognized as Q2 revenue and receivable. Pliant reported $387 million of further contingent milestone payments eligible under the agreement, plus potential royalties.
- Subsequent financing: On July 15, 2022, Pliant completed an offering of 12,432,432 shares at $18.50 per share, including the underwriters’ overallotment, generating approximately $215.7 million net proceeds. The offering increases the share count and dilutes existing holders.
- Outlook and principal risks: Pliant expects significant losses and rising R&D and G&A spending. Key risks include clinical efficacy, safety and enrollment uncertainty; reliance on third-party manufacturers and clinical service providers; dependence on Novartis for PLN-1474; competition; the need for further capital; and Oxford loan restrictions and repayment obligations. COVID-19 could continue to affect trials, suppliers and operations.
- No material legal proceedings were reported. Management concluded disclosure controls were effective at a reasonable assurance level and reported no material change in internal control over financial reporting during the quarter.
Important facts for investors to verify
- Progress and results from the 320 mg IPF study and PSC trial against the stated 2023 data timelines, including whether exploratory findings translate into clinically meaningful outcomes.
- Cash burn and whether the projected mid-2025 runway remains achievable as clinical and preclinical spending increases.
- Availability and terms of remaining Oxford loan tranches, including milestone conditions, floating-rate exposure and collateral restrictions.
- Execution and dilution effects of the July 2022 equity offering, and any subsequent equity issuance or use of the at-the-market program.
- Novartis development progress, future collaboration funding and milestone eligibility; contingent payments are not guaranteed revenue.
- The filing’s differing references to Fast Track designation for PSC and IPF, and the status of the expected pipeline IND submissions.