Solid Biosciences Inc. — Q1 2021 Form 10-Q
Reporting period: Three months ended March 31, 2021. Solid Biosciences is a clinical-stage biotechnology company focused on Duchenne muscular dystrophy (Duchenne). Its lead candidate, SGT-001, is being studied in the IGNITE DMD Phase I/II trial; it has no approved products and has not generated product sales.
Financial performance and liquidity
| Metric | Q1 2021 | Q1 2020 |
|---|---|---|
| Collaboration revenue | $3.3 million | None |
| Research and development expense | $14.2 million | $19.7 million |
| General and administrative expense | $6.0 million | $5.3 million |
| Total operating expenses | $20.2 million | $26.9 million |
| Operating loss | $16.9 million | $26.9 million |
| Net loss | $16.9 million | $26.7 million |
| Net loss per share, basic and diluted | $0.19 | $0.56 |
| Cash used in operating activities | $21.4 million | $29.3 million |
Revenue was from the Ultragenyx collaboration and related R&D cost reimbursement; the company reported no product revenue. The filing does not provide a meaningful product gross margin. R&D expense fell by $5.5 million, mainly because SGT-001 manufacturing costs declined $3.8 million and clinical costs declined $0.2 million, alongside lower unallocated R&D spending. G&A increased $0.8 million; Q1 2020 included $1.9 million of restructuring charges that did not recur.
At March 31, 2021, cash and cash equivalents were $268.5 million, up from $154.7 million at year-end. Total assets were $285.3 million, total liabilities $32.3 million, and stockholders’ equity $253.0 million. The company reported no debt outstanding. Liabilities included $17.7 million of deferred revenue related to Ultragenyx, of which $10.7 million was current. The March public offering generated approximately $134.9 million in net proceeds from 25 million shares. Financing activities provided $135.2 million; investing activities used $0.04 million.
Management estimated that available cash would fund operating expenses and capital requirements into the fourth quarter of 2022. The financial-statement liquidity discussion also says cash should fund operations for at least 12 months from issuance. The company expects continued operating losses and says it will need additional funding to continue beyond its estimated runway.
Developments, outlook and risks
- The FDA lifted the IGNITE DMD clinical hold in October 2020, and treatment resumed in February 2021. In March, the seventh patient was dosed under an amended safety protocol and had transient, manageable adverse events that were not serious.
- After quarter-end, in April 2021, an eighth patient experienced an inflammatory response classified as a serious adverse event and considered drug-related by the investigator. The company reported that laboratory values had returned to or were trending toward normal at the 30-day follow-up and said it was reviewing the event with the FDA and data safety monitoring board.
- After quarter-end, the company reported long-term biopsy findings from three patients, describing durable microdystrophin expression. These are limited clinical observations, not evidence of established clinical benefit.
- In May 2021, the company announced SGT-003, a preclinical Duchenne gene-transfer candidate using a novel capsid and its microdystrophin construct. The filing provides no clinical results for SGT-003.
- The Ultragenyx agreement licenses specified microdystrophin products while Solid retains rights to its other microdystrophin uses, including SGT-001. The agreement provides for cost reimbursement, potential milestones and royalties, and options for Solid to share development costs and income or losses. Ultragenyx may terminate for convenience on 90 days’ notice.
- Management expects R&D expenses to rise as it advances SGT-001 and develops SGT-003 and other candidates. The company cautions that clinical, regulatory, manufacturing and enrollment costs and timing are uncertain; it may seek further equity, debt, collaboration or licensing funding, which may not be available on acceptable terms.
- Key risks include prior serious adverse events and the possibility of further events or a renewed clinical hold; uncertain efficacy and regulatory approval for gene therapy; manufacturing scale, yield and third-party supply; competition; intellectual-property and licensing risks; COVID-19 disruption; and potential dilution or limitations from future financing. No material legal proceedings were reported.
Material changes versus the prior comparable period
Q1 2021 net loss narrowed by $9.8 million year over year, reflecting lower operating expenses and new collaboration revenue, partly offset by higher G&A and a shift from interest income to a small interest expense. Operating cash use also decreased by $7.9 million. The March offering materially strengthened cash resources but increased shares outstanding.
Important facts for investors to verify
- Subsequent FDA and DSMB assessments of the April serious adverse event, any protocol changes, and the status and pace of IGNITE DMD enrollment and dosing.
- Whether reported biopsy and biomarker observations translate into durable functional benefit, based on complete, verified clinical data.
- Actual cash burn and the assumptions underlying management’s runway estimate, including the difference between the stated “at least twelve months” and “into the fourth quarter of 2022.”
- Future development plans, costs and funding needs for SGT-001, SGT-003 and the Ultragenyx collaboration, including any option decisions or milestone and royalty prospects.
- Share-count and dilution effects from the March offering, outstanding pre-funded warrants and equity awards, and any future financing.