Filing identity and reporting period
Important mismatch: The supplied filing is Millendo Therapeutics, Inc.’s Form 10-K for the fiscal year ended December 31, 2018—not a Tempest Therapeutics, Inc. filing. It reports annual results; separate fourth-quarter figures are not provided in the supplied text.
Millendo was a clinical-stage biopharmaceutical company developing treatments for orphan endocrine diseases. On December 7, 2018, OvaScience completed a reverse merger with private Millendo, adopted Millendo’s business, and changed its name to Millendo Therapeutics. The financial statements treat private Millendo as the accounting acquirer.
Financial results and liquidity
| Metric | FY 2018 | FY 2017 |
|---|---|---|
| Product revenue | None | None |
| Research and development expense | $14.4 million | $14.5 million |
| General and administrative expense | $8.7 million | $6.0 million |
| Net loss | $27.2 million | $84.6 million |
| Net cash used in operating activities | $23.6 million | $20.3 million |
- At year-end, cash and cash equivalents were $73.3 million, marketable securities were $4.4 million, and restricted cash was $0.5 million. Management cited $77.7 million of cash, cash equivalents and marketable securities.
- Total assets were $84.1 million and total liabilities were $11.0 million. Debt was approximately $0.6 million, consisting of the Bpifrance advance; the prior Comerica term loan had been repaid in 2017.
- Operating margin is not meaningful: the company had no product revenue and reported operating losses.
- Management said available cash was expected to fund planned operations into the second half of 2020, through anticipated livoletide Phase 2b topline results and completion of the nevanimibe Phase 2b CAH study.
Changes versus the prior year
- Net loss narrowed by $57.4 million, chiefly because 2017 included a $63.8 million noncash acquired in-process research and development charge for livoletide. The reduction does not indicate profitability; operating cash use increased by $3.3 million.
- R&D expense was broadly flat. Lower spending on discontinued candidate MLE4901 was offset by development spending on livoletide and nevanimibe and increased personnel costs.
- G&A increased $2.7 million, and Millendo recorded $3.8 million of merger-related professional fees and severance in 2018.
- Cash and securities rose substantially following the merger and financings. Financing activities provided $77.7 million, including $33.3 million of cash acquired in the merger, $38.8 million of net private-placement proceeds and $8.0 million from convertible notes that converted into shares.
Outlook, risks and unusual items
- Pipeline: Livoletide is being developed for Prader-Willi syndrome (PWS). A Phase 2 trial enrolled 47 patients; the overall comparison did not reach conventional statistical significance (p=0.097), while a prespecified analysis of 38 home-resident patients was statistically significant (p=0.034). The filing reported that the pivotal Phase 2b/3 trial began in March 2019, after year-end, with Phase 2b topline results expected in the first half of 2020.
- Nevanimibe is being developed for congenital adrenal hyperplasia (CAH) and endogenous Cushing’s syndrome (CS). The Phase 2 CAH trial showed activity in seven of 10 patients, but was small and not designed for formal statistical analysis. The CAH Phase 2b trial began in 2018, with results expected in the first half of 2020. CS Phase 2 enrollment was ongoing and slower than anticipated.
- The company had no approved products and had never generated product-sales revenue. It expected continued operating losses and stated it would need additional capital beyond its current plans; future financing might not be available on acceptable terms and could dilute shareholders or restrict operations.
- Key execution risks include clinical-trial results and enrollment, regulatory requirements, manufacturing scale-up through contract manufacturers, reimbursement and pricing, competition, and dependence on licensed intellectual property. FDA discussions indicated the Phase 2b PWS portion might not alone support approval, and additional data, including pediatric data, might be required.
- Legacy OvaScience securities and shareholder litigation remained a contingency. The company said potential losses could not be estimated for certain cases; the Dahhan class action was in discovery. Merger-related lawsuits had largely been dismissed or voluntarily withdrawn, while fee demands were being negotiated.
- Management concluded disclosure controls were effective, but did not assess internal control over financial reporting for 2018 because of the merger and major changes to operations and systems. It planned its first assessment as of December 31, 2019.
Most important facts to verify
- Confirm the issuer: this filing is for Millendo Therapeutics, not Tempest Therapeutics.
- Review the original financial statements and notes for the merger accounting, cash and marketable securities, financing proceeds, and the $63.8 million 2017 acquisition-related charge.
- Check subsequent clinical-trial disclosures against the stated 2020 milestones; the livoletide Phase 2b/3 initiation occurred after the 2018 reporting year.
- Monitor cash burn, financing needs, and actual progress toward the stated runway.
- Follow trial enrollment and results, regulatory feedback, manufacturing supply, litigation developments, and the planned internal-control assessment.