Trevi Therapeutics, Inc. — Q2 2022 Form 10-Q
Reporting period: Three and six months ended June 30, 2022. Trevi is a clinical-stage biopharmaceutical company developing Haduvio (oral extended-release nalbuphine), its sole product candidate, for prurigo nodularis and chronic cough in adults with idiopathic pulmonary fibrosis (IPF). It has no product revenue and is not profitable.
Financial and liquidity summary
| Metric | Q2 2022 / June 30, 2022 | Comparable period / prior balance |
|---|---|---|
| Revenue | No product revenue | No product revenue |
| Research and development expense | $5.1 million for Q2; $9.7 million for six months | $6.5 million and $12.1 million, respectively, in 2021 |
| General and administrative expense | $2.7 million for Q2; $5.1 million for six months | $2.7 million and $5.2 million, respectively, in 2021 |
| Net loss | $8.1 million for Q2; $15.4 million for six months | $9.8 million and $18.2 million, respectively, in 2021 |
| Net loss per share | $0.14 for Q2; $0.34 for six months | $0.49 and $0.92, respectively, in 2021 |
| Cash, cash equivalents and marketable securities | $78.9 million | $36.8 million cash and equivalents at December 31, 2021; no marketable securities then reported |
| Operating cash flow | $(13.3) million for six months | $(15.5) million in 2021 |
| Term loan | $11.7 million principal outstanding; $12.4 million balance-sheet carrying amount | $14.0 million principal outstanding at December 31, 2021 |
Margins are not meaningful because the company has no product sales. At June 30, cash and cash equivalents were $24.7 million and marketable securities were $54.2 million, including $1.0 million classified as non-current. Total current assets were $79.9 million versus current liabilities of $15.4 million.
For the six months, investing activities used $54.2 million, primarily to purchase marketable securities. Financing activities provided $55.4 million, mainly from the April private placement and warrant exercises; the company repaid $2.3 million of term-loan principal.
Material changes and developments
- Q2 net loss narrowed by $1.7 million year over year; six-month net loss narrowed by $2.8 million. Lower R&D expense was the primary operating expense change, reflecting reduced clinical supply purchases, recruitment costs, consulting and professional fees, and certain prior-year personnel costs.
- In April 2022, Trevi raised approximately $55.0 million gross (approximately $51.8 million net) through a private placement of common stock and pre-funded warrants. The transaction triggered the amended term-loan interest rate and ended specified cash-collateralization triggers tied to equity proceeds and minimum cash.
- Shares issued and outstanding were 39.7 million at June 30, 2022, compared with 28.5 million at year-end 2021. The filing also reports 24.4 million outstanding pre-funded warrants from the April financing; these are included in weighted-average shares for loss-per-share calculations.
- After quarter-end, Trevi received approximately $4.1 million from exercise of 3.0 million October 2021 warrants. On August 3, SVB confirmed PRISM data satisfied the applicable positive-data requirement and that cash-collateralization requirements were no longer in effect.
Clinical outlook, management commentary and risks
- Prurigo nodularis: Trevi reported positive Phase 2b/3 PRISM results in June. At week 14, 25% of Haduvio-treated subjects versus 14% of placebo subjects achieved the primary endpoint of at least a four-point WI-NRS improvement (p=0.0157). Key secondary endpoints were statistically significant. The open-label extension was expected to finish in Q1 2023; Trevi anticipated needing another Phase 3 trial and planned to request an FDA end-of-Phase-2 meeting.
- IPF chronic cough: A February interim analysis of the Phase 2 CANAL trial showed a 52% placebo-adjusted reduction in geometric mean daytime cough events (p<0.0001; interim N=26). Enrollment ended early at approximately 40 participants, and full efficacy and safety results were expected in Q3 2022. Trevi planned an FDA discussion in Q3 and was preparing a subsequent trial, expected to be Phase 2b/3 subject to FDA discussions.
- Cash runway and funding: Management estimated existing resources, including the July warrant proceeds, would fund operations into Q4 2023; this estimate excludes the cost of any additional prurigo nodularis trial and depends on assumptions that may prove inaccurate. Trevi expects substantial development spending and says additional funding will be needed to complete development and pursue its strategy. No external funding source is committed.
- Debt: The SVB loan is secured by substantially all assets other than intellectual property, which is subject to a negative pledge. Principal and accrued amounts are due February 1, 2024; the agreement also includes a $1.2 million final payment fee and a floating interest rate. Higher prime rates could increase debt service.
- Key risks: Clinical and regulatory uncertainty, trial enrollment and retention, possible additional studies, opioid-related safety and potential abuse-control restrictions, reliance on third-party manufacturers and a single nalbuphine active-ingredient supplier, and the need for future capital. COVID-19 had caused trial-site restrictions and delays. The company reported no material legal proceedings.
- Other notable item: Chief Development Officer William Forbes notified Trevi on August 8 that he would step down effective September 1, 2022, and agreed to continue as a consultant.
Important facts for investors to verify
- Review the full PRISM and CANAL datasets, including discontinuations, adverse events, analysis methods and whether results support further pivotal trials.
- Confirm the FDA’s feedback on required study design, endpoints, trial count and regulatory pathway for both indications; the filing’s timelines are expectations, not guarantees.
- Assess the runway estimate against planned trial costs, the excluded potential prurigo nodularis trial, ongoing cash burn and the company’s stated need for additional financing.
- Check the term-loan amortization, floating-rate exposure, collateral terms and February 2024 maturity against available liquidity.
- Assess potential dilution and share overhang from outstanding pre-funded warrants, common warrants, equity plans and the expanded $62.0 million ATM authorization.
- Monitor nalbuphine supply continuity following the supplier’s emergence from bankruptcy and Trevi’s progress in qualifying alternate sources.