Solid Biosciences Inc. — Q2 2020 Form 10-Q
Business context and reporting period. This unaudited quarterly report covers the three and six months ended June 30, 2020. Solid Biosciences is a clinical-stage biotechnology company developing treatments for Duchenne muscular dystrophy; it has no approved products and has generated no revenue. Its lead candidate, SGT-001, is being studied in the Phase I/II IGNITE DMD trial, which remained on FDA clinical hold.
Key financial metrics
| Metric | Q2 2020 / June 30, 2020 | Comparable period / prior year-end |
|---|---|---|
| Revenue | $0 | $0 in Q2 2019 |
| Research and development expense | $13.4 million | $21.6 million in Q2 2019 |
| General and administrative expense | $5.5 million | $5.4 million in Q2 2019 |
| Net loss | $19.0 million; $0.39 per share | $26.5 million; $0.76 per share in Q2 2019 |
| Six-month net loss | $45.7 million; $0.95 per share | $56.1 million; $1.61 per share in H1 2019 |
| Cash and cash equivalents | $40.4 million | $76.0 million at Dec. 31, 2019 |
| Cash used in operations, six months | $42.3 million | $52.2 million in H1 2019 |
| Total assets / total liabilities | $58.0 million / $17.3 million | $103.5 million / $23.4 million at Dec. 31, 2019 |
| Debt | No debt outstanding | Lease liabilities remain: $5.3 million operating and $0.8 million finance |
Gross margin is not applicable because the company reported no revenue. Cash, cash equivalents and restricted cash declined by $35.6 million in H1 2020. The company held no available-for-sale securities at June 30, 2020.
Material changes versus the prior comparable period
- Q2 operating expenses fell $8.0 million year over year, led by an $8.2 million reduction in R&D; Q2 net loss narrowed by $7.5 million.
- H1 R&D decreased $11.8 million year over year, including lower SGT-001 manufacturing costs and reduced personnel and facility costs after restructuring. Spending on other candidates also declined as the company prioritized SGT-001.
- H1 G&A fell $1.6 million. H1 2020 included $1.9 million of restructuring charges; no such charges were recorded in H1 2019.
- Cash and cash equivalents declined $35.6 million from year-end 2019. The company reported no financing cash flows in H1 2020.
Outlook, commentary and risks
- Runway and going concern: Management expected June 30 cash to fund operating expenses and capital needs into Q1 2021. The company disclosed substantial doubt about its ability to continue as a going concern within twelve months of issuance and said additional funding is required, with no committed external funding source. Financing may not be available on acceptable terms or at all.
- SGT-001 regulatory status: In July 2020, after quarter-end, FDA maintained the clinical hold and requested further manufacturing information, updated safety and efficacy data for all trial participants, and direction on total viral load per patient. Management was evaluating next steps and continuing discussions with FDA; timing or resumption of the trial is uncertain.
- Safety and trial risk: The hold followed a serious adverse event in a participant dosed at the higher dose, involving complement activation, low platelets and red blood cells, acute kidney injury, and cardiopulmonary insufficiency. The event resolved, but FDA’s requests and the possibility of additional studies or manufacturing changes could delay or prevent development.
- Expense outlook: Management expected R&D expense to decrease in calendar 2020 because of the January restructuring, while noting costs could rise if clinical development resumes or other programs advance. No revenue or profitability guidance was provided.
- Other risks: COVID-19 could disrupt trials, enrollment, suppliers, manufacturing, and financing. The company also highlighted gene-therapy safety, manufacturing-scale-up, competition, intellectual-property, and future financing risks. It reported no material legal claims as of June 30 and no material change in internal financial controls during Q2.
Most important facts for investors to verify
- Any subsequent FDA communications, the status of the clinical hold, and requirements or timing for a possible trial restart.
- Updated safety and efficacy data for all IGNITE DMD participants, including how the reported adverse event and requested total viral load affect the program.
- Current cash burn, financing plans and terms, and whether cash runway remains consistent with the Q1 2021 estimate.
- Manufacturing process progress, reproducibility and supply capacity for SGT-001, including any additional funding needs.
- Impact of restructuring and reduced non-lead-program spending on the company’s ability to execute its development plans.