Barinthus(BRNS) - 2024 Q2 - Quarterly Report

Part I - Financial Information Financial Statements This section presents the unaudited condensed consolidated financial statements for the period ended June 30, 2024, including the balance sheet, statement of operations, statement of cash flows, and accompanying notes Condensed Consolidated Balance Sheets As of June 30, 2024, total assets decreased to $186.7 million from $214.5 million, primarily due to a reduction in cash, cash equivalents, and restricted cash from $142.1 million to $117.8 million, while total liabilities slightly increased and stockholders' equity declined | | As of June 30, 2024 (in thousands) | As of December 31, 2023 (in thousands) | | :--- | :--- | :--- | | Total Current Assets | $131,879 | $156,905 | | Total Assets | $186,749 | $214,506 | | Total Current Liabilities | $15,589 | $12,598 | | Total Liabilities | $29,959 | $27,511 | | Total Stockholders' Equity | $156,790 | $186,995 | Condensed Consolidated Statements of Operations and Comprehensive Loss For Q2 2024, the company reported no license revenue, with net loss narrowing to $16.9 million from $23.8 million year-over-year due to reduced operating expenses, resulting in a six-month net loss of $32.5 million | Metric (in thousands, except per share) | Three Months Ended June 30, 2024 | Three Months Ended June 30, 2023 | Six Months Ended June 30, 2024 | Six Months Ended June 30, 2023 | | :--- | :--- | :--- | :--- | :--- | | Total Revenue | $0 | $334 | $0 | $802 | | Total Operating Expenses | $18,863 | $26,671 | $35,982 | $48,623 | | Loss from Operations | $(18,286) | $(26,337) | $(35,200) | $(47,821) | | Net Loss | $(16,943) | $(23,824) | $(32,463) | $(42,047) | | Net Loss Per Share (basic & diluted) | $(0.43) | $(0.62) | $(0.83) | $(1.10) | Condensed Consolidated Statements of Cash Flows For the six months ended June 30, 2024, net cash used in operating activities increased to $23.8 million, while net cash used in investing activities significantly decreased to $0.5 million, with financing activities providing $0.9 million | Cash Flow Activity (in thousands) | Six Months Ended June 30, 2024 | Six Months Ended June 30, 2023 | | :--- | :--- | :--- | | Net cash used in operating activities | $(23,828) | $(20,131) | | Net cash used in investing activities | $(500) | $(5,530) | | Net cash provided by financing activities | $861 | $1,717 | | Net decrease in cash | $(24,316) | $(21,355) | Notes to Condensed Consolidated Financial Statements The notes confirm the company's going concern status with sufficient cash for at least the next twelve months, detail a June 2024 pipeline prioritization that triggered an impairment assessment with no impairment found, and report $0.8 million in grant income from CEPI - The company expects its cash, cash equivalents, and restricted cash of $117.8 million will be sufficient to fund current operations for at least the next twelve months from the financial statement issuance date[16] - In June 2024, the company prioritized its pipeline to focus on VTP-300 for chronic Hepatitis B and VTP-1000 for celiac disease. This led to an impairment assessment for intangible assets and goodwill, but management determined their carrying amounts were recoverable[31][49][96] - The company received $1.6 million in proceeds from the CEPI Funding Agreement for the VTP-500 (MERS) program and recognized $0.8 million as other operating income during the six months ended June 30, 2024[34][36] - As of June 30, 2024, the company had a contingent consideration liability of $1.9 million related to the acquisition of Avidea Technologies, Inc., which is fair valued at each reporting period[47] Management's Discussion and Analysis (MD&A) Management discusses the strategic shift to prioritize VTP-300 and VTP-1000 programs, highlighting a reduced net loss driven by lower G&A expenses, and confirms cash runway into Q2 2026 with future funding plans Overview and Strategic Update Barinthus Bio, a clinical-stage biopharmaceutical company, strategically prioritized VTP-300 for chronic hepatitis B and VTP-1000 for celiac disease in June 2024, anticipating continued net losses as clinical programs advance - The company is prioritizing a pipeline of two key product candidates: VTP-300 for chronic hepatitis B virus (HBV) infection and VTP-1000 for celiac disease[63] - The company has an effective Shelf Registration Statement on Form S-3 for up to $200.0 million and an "at-the-market" (ATM) sales agreement for up to $75.0 million, under which it has raised net proceeds of $3.8 million as of June 30, 2024[65] - The company expects its existing cash, cash equivalents, and restricted cash will fund operating expenses and capital expenditure requirements into the second quarter of 2026[68] Recent Developments and Pipeline In June 2024, the company presented positive interim Phase 2 data for VTP-300 in chronic hepatitis B, with further updates expected in Q4 2024, and anticipates IND acceptance and Phase 1 initiation for VTP-1000 in Q3 2024 | Priority Program | Indication | Status/Anticipated Milestones | | :--- | :--- | :--- | | VTP-300 | Chronic Hepatitis B (HBV) | Phase 2b interim analysis & Phase 2a interim results (Q4 2024) | | VTP-1000 | Celiac Disease | IND acceptance & Phase 1 initiation (Q3 2024) | - Interim data from the HBV003 trial showed robust T cell responses and that 76% of participants were eligible for NUC discontinuation[74] - Interim data from the IM-PROVE II trial (in partnership with Arbutus Biopharma) showed 20% of participants in the VTP-300 group had undetectable HBsAg at week 72, compared to none in the placebo group[76] Results of Operations Q2 2024 net loss decreased to $16.9 million from $23.8 million in Q2 2023, driven by a $5.9 million reduction in G&A expenses and a $1.9 million decrease in R&D expenses, reflecting pipeline shifts and workforce reduction impacts | Expense Category (in thousands) | Three Months Ended June 30, 2024 | Three Months Ended June 30, 2023 | Change | | :--- | :--- | :--- | :--- | | Research and development | $11,662 | $13,543 | $(1,881) | | General and administrative | $7,201 | $13,128 | $(5,927) | | Total operating expenses | $18,863 | $26,671 | $(7,808) | - The decrease in R&D expenses for Q2 2024 was primarily due to a $1.5 million reduction in VTP-200 (HPV) program costs and a $1.6 million reduction in preclinical studies for the SNAP platform[102] - The decrease in G&A expenses for Q2 2024 was mainly due to a $4.1 million reduction in net foreign exchange loss, a $0.6 million decrease in professional costs, and a $0.6 million decrease in insurance costs[104] - For the six months ended June 30, 2024, G&A expenses decreased by $12.1 million year-over-year, primarily due to a gain on foreign exchange of $1.1 million compared to a loss of $7.7 million in the prior year period[113] Liquidity and Capital Resources As of June 30, 2024, the company held $117.8 million in cash, cash equivalents, and restricted cash, sufficient to fund operations into Q2 2026, with primary funding from equity placements, grants, and license payments, and plans for additional capital - As of June 30, 2024, the company had cash, cash equivalents and restricted cash of $117.8 million[118] - The company expects its existing cash and other financial resources will enable it to fund operating expenses and capital expenditure requirements into the second quarter of 2026[131] | Cash Flow Summary (in thousands) | Six Months Ended June 30, 2024 | Six Months Ended June 30, 2023 | | :--- | :--- | :--- | | Net cash used in operating activities | $(23,828) | $(20,131) | | Net cash used in investing activities | $(500) | $(5,530) | | Net cash provided by financing activities | $861 | $1,717 | Quantitative and Qualitative Disclosure About Market Risk The company's primary market risk stems from foreign currency exchange rate fluctuations, particularly between USD and Pound Sterling, with interest rate risk considered minimal - The company is subject to risk from fluctuations in foreign currency exchange rates, specifically the Pound Sterling, Euro, Swiss Franc, and Australian Dollar, against its reporting currency, the U.S. Dollar[136] - A hypothetical 10% weakening in the U.S. dollar relative to the Pound Sterling would have resulted in a material change to expenses denominated in Pound Sterling[138] - Interest rate risk is not significant as the company has no major interest-bearing liabilities and a hypothetical 10% change in interest rates would not have a material impact[139] Controls and Procedures As of June 30, 2024, the company's CEO and CFO concluded that disclosure controls and procedures were effective, with no material changes to internal control over financial reporting during the quarter - Management, including the CEO and CFO, concluded that as of June 30, 2024, the company's disclosure controls and procedures were effective[142] - No change in internal control over financial reporting occurred during the quarter that has materially affected, or is reasonably likely to materially affect, internal controls[143] Part II - Other Information Legal Proceedings As of June 30, 2024, the company is not party to any legal proceedings expected to have a material adverse effect on its business - The company does not believe it is party to any claim or litigation that would be reasonably expected to have a material adverse effect on its business[145] Risk Factors The company states there have been no material changes to the risk factors previously disclosed in its Annual Report on Form 10-K filed on March 20, 2024 - There have been no material changes from the risk factors previously disclosed in the most recent Annual Report on Form 10-K[146] Unregistered Sales of Equity Securities and Use of Proceeds The company reported no unregistered sales of equity securities during the three and six months ended June 30, 2024, and confirmed no material change in the planned use of IPO net proceeds - No unregistered sales of equity securities were made during the three and six months ended June 30, 2024[151] - There has been no material change in the planned use of the net proceeds from the IPO as described in the final prospectus[153]