Trevi Therapeutics, Inc. — Q2 2020 Form 10-Q
Reporting period: Quarter and six months ended June 30, 2020. Financial statements are unaudited; dollar amounts below are in millions unless noted. Trevi is a clinical-stage biopharmaceutical company with no product revenue, developing oral extended-release nalbuphine (Haduvio).
Financial performance and liquidity
| Metric | Q2 2020 | Q2 2019 | Six months 2020 | Six months 2019 |
|---|---|---|---|---|
| Revenue | None | None | None | None |
| Research and development expense | $4.9 | $5.5 | $10.9 | $8.9 |
| General and administrative expense | $2.5 | $1.9 | $5.1 | $3.4 |
| Total operating expenses | $7.4 | $7.4 | $16.1 | $12.2 |
| Net loss | $7.4 | $7.3 | $15.9 | $12.1 |
| Loss per share, basic and diluted | $0.41 | $0.63 | $0.89 | $2.32 |
- Operating cash use was $13.1 for the six months, versus $9.2 in the prior-year period. Investing cash use was $0.01; financing cash flow was approximately zero, compared with $73.4 provided in the first half of 2019, which included IPO and private-placement proceeds.
- Cash and cash equivalents were $44.2 at June 30, down from $57.3 at December 31, 2019. Current assets were $46.3 and current liabilities $6.8. Accumulated deficit was $130.1.
- No term-loan borrowings were outstanding at June 30; the prior loan had been repaid and terminated. Margins are not meaningful because the company had no revenue.
Changes versus prior comparable periods
- Q2 operating expenses were essentially flat year over year. R&D declined $0.6, primarily because COVID-19 interrupted activity in the IPF chronic-cough study; G&A increased $0.6, including higher stock compensation and public-company costs.
- For the first half, operating expenses rose $3.8 and net loss increased $3.7. R&D rose $2.1, mainly from increased PRISM trial activity and clinical-trial supplies; G&A rose $1.7, mainly from public-company expenses and stock-based compensation.
- Lower interest income reduced Q2 other income year over year. The prior-year periods also included non-cash expense from remeasurement of the loan success-fee obligation, which was paid and terminated in 2019.
Clinical outlook, financing and risks
- PRISM: The Phase 2b/3 trial of Haduvio for pruritus associated with prurigo nodularis continued after an independent monitoring committee recommended increasing planned enrollment from 240 to 360 to maintain statistical power. At filing, about 155 subjects were enrolled and more than 60 sites were active; management expected enrollment completion in Q3 2021 and topline results in Q4 2021. These timelines were subject to COVID-19 disruption.
- Other programs: COVID-19 had suspended enrollment and treatment in the Phase 2 IPF chronic-cough study; Trevi planned to restart enrollment in the second half of 2020 after protocol changes to reduce in-person visits. The single-dose portion of a Phase 1b hepatic-impairment study was complete, with no serious adverse events reported. Trevi planned to prepare a Phase 2 study in PBC-related pruritus and an IND for a Parkinson’s disease dyskinesia study, while prioritizing PRISM and IPF.
- Funding outlook: The notes state that June 30 cash was expected to fund expenses and capital needs for at least 12 months from the August 13 financial-statement issuance date. Separately, management said cash, subsequent ATM proceeds and anticipated loan proceeds were expected to fund operations into the first half of 2022. The company anticipated substantial further development costs and would need additional funding beyond that period; no revenue or profitability guidance was provided.
- Subsequent financing: After quarter-end, Trevi sold 385,823 shares through its ATM program for $2.2 gross proceeds through August 13, before estimated fees of $0.1. On August 13, Silicon Valley Bank agreed to provide a $14.0 term loan, which Trevi expected to receive the following week. It bears floating interest of at least 4.25%, with principal installments beginning March 2022 and final maturity February 2024; repayment also carries a $1.2 final fee. The loan is secured by substantially all assets other than IP, which is subject to a negative pledge. Failure to meet specified equity-raise requirements may require cash collateral equal to outstanding principal.
- Key risks and contingencies: COVID-19 could delay trials, enrollment, regulatory work or supply. PRISM’s larger enrollment target and the need for an additional Phase 3 trial before an NDA increase expected costs. Trevi disclosed that an earlier Phase 2 prurigo-nodularis trial failed its primary endpoint; efficacy, safety, enrollment and regulatory outcomes remain uncertain. Haduvio may also face opioid-related safety, labeling, abuse-potential or controlled-substance concerns. The company relies on third parties, including a single nalbuphine drug-substance supplier. Clinical, licensing and lease commitments may require future payments; termination costs may apply to some outsourced services. No material legal proceedings were reported.
Important facts for investors to verify
- Whether PRISM enrollment, the 360-subject target and expected 2021 data timing remain achievable, and what the final trial results show.
- Whether the SVB loan was funded as expected, the precise outstanding balance and terms, and compliance with its equity-raise and cash-collateral conditions.
- Cash use and runway against management’s first-half 2022 estimate, including additional trial costs and financing needs.
- Progress restarting the IPF study and any material changes to the planned PBC or Parkinson’s disease programs.
- Potential dilution from ATM share sales and stock awards, as well as material safety, regulatory, supply and licensing developments.