Outlook Therapeutics, Inc. — FY2021 Form 10-K
Reporting period: Fiscal year ended September 30, 2021; this is an annual report, not a standalone fourth-quarter report. The filing was signed December 23, 2021.
Business context and progress
Outlook is a clinical-stage biopharmaceutical company whose lead and only actively developed candidate is ONS-5010 (LYTENAVA, bevacizumab-vikg), an investigational ophthalmic formulation intended for wet age-related macular degeneration (wet AMD), with potential future use in diabetic macular edema (DME) and branch retinal vein occlusion (BRVO). The company has no approved products, product-sales revenue, or established sales organization.
All three wet AMD studies intended to support the initial U.S. biologics license application (BLA) were complete. NORSE TWO, the pivotal Phase 3 trial, met its primary and key secondary efficacy endpoints according to the company. NORSE SEVEN, comparing vial and pre-filled-syringe presentations, began enrolling in November 2021.
Financial results and liquidity
| Metric | FY2021 | FY2020 |
|---|---|---|
| Product-sales revenue | $0 | $0 |
| Research and development expense | $39.0 million | $26.3 million |
| General and administrative expense | $12.8 million | $10.0 million |
| Operating loss | $51.7 million | $36.8 million |
| Net loss | $53.2 million | $35.2 million |
| Net cash used in operating activities | $54.3 million | $31.8 million |
There is no product-sales gross margin to report. R&D spending increased mainly as the company completed NORSE TWO and NORSE THREE and pursued manufacturing scale-up and process work for the planned BLA. G&A rose, including from higher stock-based compensation and professional fees. FY2020 included a $3.3 million tax benefit from selling New Jersey tax attributes; FY2021 had $2,000 of income tax expense.
At September 30, 2021, cash and cash equivalents were $14.5 million, current assets $21.5 million, current liabilities $6.8 million, total assets $22.8 million, total liabilities $18.2 million, and stockholders’ equity $4.6 million. Debt was $11.8 million, including a $10.9 million unsecured note and a $0.9 million Paycheck Protection Program loan. The company reported an accumulated deficit of $342.9 million.
After year-end, the company reported approximately $3.5 million net proceeds from ATM share sales, $10.0 million net proceeds from a new unsecured note, and $54.0 million net proceeds from a public offering of 46 million shares. Management expected year-end cash plus these proceeds to fund operations through anticipated BLA approval in the first calendar quarter of 2023. This funding does not cover the substantial capital the company expects to need for commercialization and operations after launch.
Material changes, outlook, and risks
- Clinical results: In NORSE TWO’s primary intent-to-treat analysis, 41.7% of ONS-5010 patients versus 23.1% of ranibizumab patients gained at least 15 letters of best-corrected visual acuity (p=0.0052). Mean visual-acuity improvement was 11.2 versus 5.8 letters (p=0.0043). Results are company-reported; regulatory approval is not assured.
- Plans and timing: The filing anticipated submitting the wet AMD BLA in Q1 2022 and approval in Q1 2023. Management planned to initiate the FDA-agreed BRVO and DME registration trials in 2023, after anticipated wet AMD approval. These are forward-looking expectations, not guarantees.
- Funding and dilution: The company has sustained losses and negative operating cash flow since inception, expects further losses, and says additional funding is needed for post-launch commercialization. Financing may dilute shareholders or impose restrictive debt terms. The November 2021 offering materially increased the share count; an affiliate of major shareholder BioLexis purchased 16 million shares.
- Debt terms: In November 2021, the existing note maturity was extended to January 1, 2023; its rate increases to 10% from January 1, 2022, and the lender may redeem some or all of the balance for common shares beginning July 1, 2022, subject to limits. The new $10.2 million-face-value note carries 9.5% interest and also matures January 1, 2023.
- Execution and market risks: Outlook depends heavily on ONS-5010, FDA and foreign approvals, third-party manufacturers and clinical vendors, reimbursement, market adoption, and securing sufficient commercialization resources or partners. Competition includes approved anti-VEGF drugs and continued off-label use of repackaged Avastin. COVID-19 had caused some NORSE TWO enrollment delay; management reported no significant financial impact in FY2021 but warned of possible future disruption.
- Other items: A Liomont contract dispute was settled; Outlook paid $625,000 in April 2021 and may owe a further $750,000 upon specified future events. The company’s $0.9 million PPP loan was not forgiven, and management disclosed potential eligibility, repayment, penalty, and reputational risks. BioLexis and an affiliate held approximately 36% of common stock at September 30, 2021 and had board-designation rights.
The independent auditor issued an unqualified opinion on the consolidated financial statements. Management concluded disclosure controls and internal control over financial reporting were effective as of September 30, 2021; the auditor was not required to attest to internal-control effectiveness.
Investor verification points
- Confirm subsequent FDA filings, review milestones, and any changes to the anticipated BLA approval timeline.
- Review complete NORSE trial data, including safety, manufacturing comparability, and any regulatory requests for additional evidence.
- Reconcile cash, operating burn, debt service, and financing proceeds after September 30, 2021; assess funding needs through launch and commercialization.
- Assess the dilution and potential share impact of the public offering, outstanding warrants, equity awards, and noteholder conversion/redemption rights.
- Verify manufacturing readiness, supply capacity, reimbursement prospects, commercialization plans, and the status of any strategic-partner discussions.
- Check the conditions attached to the contingent Liomont settlement payment and the remaining PPP loan obligations.