Rocket Pharmaceuticals(RCKT) - 2024 Q2 - Quarterly Report

Part I - Financial Information Financial Statements The company reported no revenue for the periods ended June 30, 2024, and 2023. A net loss of $69.6 million was recorded for the second quarter of 2024, an increase from the $65.7 million loss in the same period of 2023. Total assets decreased to $446.4 million from $566.3 million at the end of 2023, primarily due to cash used in operations. Total stockholders' equity also decreased to $384.6 million from $492.6 million over the same period. Cash flow from operations was a net use of $110.7 million for the first six months of 2024 Consolidated Balance Sheets Consolidated Balance Sheet Highlights (in thousands) | Balance Sheet Item | June 30, 2024 (unaudited) | December 31, 2023 | | :--- | :--- | :--- | | Cash and cash equivalents | $38,607 | $55,904 | | Investments | $240,218 | $351,591 | | Total Assets | $446,411 | $566,341 | | Total current liabilities | $37,592 | $48,505 | | Total Liabilities | $61,776 | $73,767 | | Total Stockholders' Equity | $384,635 | $492,574 | Consolidated Statements of Operations - The company generated no revenue in the reported periods[12] Consolidated Statements of Operations Highlights (in thousands, except per share data) | Metric | Q2 2024 | Q2 2023 | H1 2024 | H1 2023 | | :--- | :--- | :--- | :--- | :--- | | Research and development | $46,345 | $51,383 | $91,572 | $97,754 | | General and administrative | $27,367 | $17,374 | $49,515 | $33,197 | | Loss from operations | $(73,712) | $(68,757) | $(141,087) | $(130,951) | | Net Loss | $(69,646) | $(65,701) | $(131,700) | $(124,036) | | Net Loss Per Share | $(0.74) | $(0.82) | $(1.40) | $(1.55) | Consolidated Statements of Cash Flows Cash Flow Summary for Six Months Ended June 30 (in thousands) | Cash Flow Activity | 2024 | 2023 | | :--- | :--- | :--- | | Net cash used in operating activities | $(110,679) | $(108,429) | | Net cash provided by (used in) investing activities | $90,658 | $(5,515) | | Net cash provided by financing activities | $2,714 | $18,525 | | Net change in cash, cash equivalents and restricted cash | $(17,307) | $(95,419) | Notes to Consolidated Financial Statements - The company is a late-stage biotechnology firm developing gene therapies for rare diseases, with three clinical-stage lentiviral (LV) programs (Fanconi Anemia, LAD-I, Pyruvate Kinase Deficiency) and two clinical-stage adeno-associated virus (AAV) programs (Danon Disease, PKP2-ACM)[18][19] - As of June 30, 2024, the company had an accumulated deficit of $1.09 billion. Management expects its current cash, cash equivalents, and investments of $278.8 million will be sufficient to fund operations into 2026[24] - Total unrecognized stock-based compensation expense as of June 30, 2024, was $82.6 million, which is expected to be recognized over a weighted average period of 1.87 years[62] Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the company's focus on developing gene therapies for rare diseases and provides updates on its clinical pipeline. Key developments include the FDA issuing a Complete Response Letter (CRL) for RP-L201 (LAD-I) requesting additional CMC information, and the EMA's acceptance of the MAA for RP-L102 (Fanconi Anemia). The company has aligned with the FDA on pivotal trial designs for RP-A501 (Danon Disease) and RP-L301 (PKD). R&D expenses decreased slightly while G&A expenses increased significantly, driven by commercial preparation activities. The company confirms its cash runway is expected to last into 2026 Pipeline Overview - The FDA issued a Complete Response Letter (CRL) for the RP-L201 (LAD-I) Biologics License Application (BLA), requesting limited additional Chemistry, Manufacturing, and Controls (CMC) information. The company is in the process of submitting the requested information[90][140] - The European Medicines Agency (EMA) accepted the Marketing Authorization Application (MAA) for RP-L102 for the treatment of Fanconi Anemia in April 2024. A U.S. regulatory filing is anticipated in 2024[90][134] - For the Danon Disease program (RP-A501), the company has reached alignment with the FDA on a global Phase 2 pivotal trial design and enrollment is ongoing[113][116] - The company has initiated a Phase 1 study for RP-A601 for Plakophilin-2 Arrhythmogenic Cardiomyopathy (PKP2-ACM) after receiving FDA clearance for its IND[122] - For the Pyruvate Kinase Deficiency program (RP-L301), the company has aligned with the FDA on a 10-patient, single-arm Phase 2 pivotal trial design to support accelerated approval[147] Results of Operations Comparison of Operating Expenses (in thousands) | Expense Category | Q2 2024 | Q2 2023 | Change | H1 2024 | H1 2023 | Change | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Research & Development | $46,345 | $51,383 | $(5,038) | $91,572 | $97,754 | $(6,182) | | General & Administrative | $27,367 | $17,374 | $9,993 | $49,515 | $33,197 | $16,318 | - The $5.0 million decrease in Q2 2024 R&D expenses was mainly due to a $9.1 million reduction in manufacturing, development, and direct costs, partially offset by increased professional fees and clinical trial costs[171] - The $10.0 million increase in Q2 2024 G&A expenses was primarily driven by a $6.2 million increase in commercial preparation expenses, $1.8 million in legal expenses, and $0.8 million in non-cash stock compensation[172] Liquidity and Capital Resources - As of June 30, 2024, the company had $278.8 million in cash, cash equivalents, and investments. Management expects these funds are sufficient to support operating expenses and capital requirements into 2026[179] - The company has an accumulated deficit of $1.09 billion as of June 30, 2024, and has funded operations primarily through equity sales[179] - For the six months ended June 30, 2024, net cash used in operating activities was $110.7 million. Net cash provided by financing activities was $2.7 million, solely from the exercise of stock options[181][183][186] Quantitative and Qualitative Disclosures About Market Risk The company's primary market risk exposure is related to interest rate fluctuations affecting its portfolio of cash, cash equivalents, and marketable securities, which consist of U.S. treasury securities and corporate bonds. The company does not use derivative instruments to hedge this risk - A hypothetical uniform increase of 100 basis points (1%) in market interest rates from June 30, 2024 levels would result in a decline of approximately $0.9 million in the fair value of the company's interest-sensitive marketable securities[191] Controls and Procedures Management, including the principal executive and financial officers, evaluated the company's disclosure controls and procedures and concluded they were effective as of June 30, 2024. There were no material changes in internal control over financial reporting during the quarter - The principal executive officer and principal financial officer concluded that the company's disclosure controls and procedures were effective at a reasonable assurance level as of the end of the period[193] - No changes in internal control over financial reporting occurred during the quarter that have materially affected, or are reasonably likely to materially affect, the company's internal control over financial reporting[196] Part II - Other Information This section addresses other required disclosures. The company reports no material legal proceedings, no material changes to its risk factors from the 2023 Form 10-K, and no unregistered sales of equity securities during the period. Additionally, no directors or officers adopted or terminated a Rule 10b5-1 trading arrangement Legal Proceedings The company is not party to any claim or litigation that is expected to have a material adverse effect on its business, although it may be subject to various legal proceedings that arise in the ordinary course of business - The company does not believe it is party to any litigation that would have a material adverse effect on its business[198] Risk Factors There have been no material changes from the risk factors previously disclosed in the company's Annual Report on Form 10-K for the year ended December 31, 2023 - No material changes from the risk factors disclosed in the 2023 Form 10-K are reported[199] Unregistered Sales of Equity Securities, Use of Proceeds and Issuer Purchases of Equity Securities The company reported no unregistered sales of equity securities, use of proceeds, or issuer purchases of equity securities during the period - None reported for the period[199] Other Information During the second quarter of 2024, none of the company's directors or officers adopted or terminated a Rule 10b5-1 trading arrangement or a non-Rule 10b5-1 trading arrangement - No directors or officers adopted or terminated a "Rule 10b5-1 trading arrangement" or "non-Rule 10b5-1 trading arrangement" during the three months ended June 30, 2024[200] Exhibits This section lists all exhibits filed with the Quarterly Report on Form 10-Q, including certifications by the Principal Executive Officer and Principal Financial Officer