Trevi Therapeutics(TRVI) - 2020 Q3 - Quarterly Report

PART I. FINANCIAL INFORMATION Financial Statements Trevi Therapeutics, Inc. presents its unaudited condensed consolidated financial statements for the periods ended September 30, 2020, covering balance sheets, operations, equity, cash flows, and notes - The company is a clinical-stage biopharmaceutical firm developing Haduvio for chronic pruritus, chronic cough in IPF, and LID in Parkinson's disease[31] - The company has incurred recurring losses since inception, reporting a net loss of $23.2 million for the nine months ended September 30, 2020, and an accumulated deficit of $137.5 million[34] - Management anticipates $53.3 million in cash and cash equivalents as of September 30, 2020, will fund operations for at least the next 12 months from the financial statements' issuance date[34] Condensed Consolidated Balance Sheets Condensed Consolidated Balance Sheet Highlights (in thousands) | Balance Sheet Item | September 30, 2020 | December 31, 2019 | | :--- | :--- | :--- | | Cash and cash equivalents | $53,293 | $57,313 | | Total current assets | $55,209 | $59,552 | | Total assets | $55,879 | $60,001 | | Total current liabilities | $6,103 | $5,199 | | Term loan | $13,798 | $0 | | Total liabilities | $20,261 | $5,456 | | Total stockholders' equity | $35,618 | $54,545 | | Total liabilities and stockholders' equity | $55,879 | $60,001 | Condensed Consolidated Statements of Operations Condensed Consolidated Statements of Operations (in thousands, except per share data) | Line Item | Three Months Ended Sep 30, 2020 | Three Months Ended Sep 30, 2019 | Nine Months Ended Sep 30, 2020 | Nine Months Ended Sep 30, 2019 | | :--- | :--- | :--- | :--- | :--- | | Research and development | $4,828 | $5,650 | $15,768 | $14,516 | | General and administrative | $2,416 | $2,000 | $7,528 | $5,363 | | Total operating expenses | $7,244 | $7,650 | $23,296 | $19,879 | | Loss from operations | ($7,244) | ($7,650) | ($23,296) | ($19,879) | | Net loss | ($7,378) | ($7,365) | ($23,235) | ($19,513) | | Basic and diluted net loss per common share | ($0.41) | ($0.41) | ($1.30) | ($2.09) | Condensed Consolidated Statements of Cash Flows Condensed Consolidated Statements of Cash Flows (in thousands) | Cash Flow Activity | Nine Months Ended Sep 30, 2020 | Nine Months Ended Sep 30, 2019 | | :--- | :--- | :--- | | Net cash used in operating activities | ($20,076) | ($16,891) | | Net cash used in investing activities | ($27) | ($9) | | Net cash provided by financing activities | $16,083 | $73,213 | | Net cash increase (decrease) | ($4,020) | $56,313 | | Cash and cash equivalents at end of period | $53,293 | $63,515 | - Financing activities in the first nine months of 2020 were primarily driven by $14.0 million in term loan proceeds and $2.4 million from at-the-market sales, contrasting with $51.2 million from the 2019 IPO and $14.0 million from a private placement[29] Notes to Unaudited Condensed Consolidated Financial Statements - In August 2020, the company secured a $14.0 million term loan from Silicon Valley Bank, collateralized by most assets excluding intellectual property, with interest-only payments until March 2022[55] - The company initiated an ATM offering in June 2020 to sell up to $12.0 million of common stock, having sold 466,758 shares for $2.5 million in gross proceeds by September 30, 2020[73] - Licensing agreements with Endo Pharmaceuticals and Rutgers include potential future milestone payments of up to $1.0 million to Endo and $331 thousand to Rutgers, plus sales-based royalties[91][97] Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the company's financial condition and operational results, detailing Haduvio's clinical development, COVID-19 impacts, financial performance for the three and nine months ended September 30, 2020, and liquidity Overview - The company is conducting a Phase 2b/3 PRISM trial for Haduvio in prurigo nodularis patients, with the trial size increased from 240 to 360 subjects after re-estimation[108] - PRISM trial enrollment is anticipated to complete in Q3 2021, with top-line data in Q4 2021, subject to COVID-19 pandemic uncertainties that previously halted patient screening[108] - The Phase 2 trial for chronic cough in IPF patients was impacted by COVID-19, with enrollment halted and resumed, as the company prioritizes completing both the PRISM and this Phase 2 trial[109][113] Results of Operations Comparison of Operating Results for the Three Months Ended September 30 (in thousands) | Line Item | 2020 | 2019 | Change | | :--- | :--- | :--- | :--- | | Research and development | $4,828 | $5,650 | ($822) | | General and administrative | $2,416 | $2,000 | $416 | | Total operating expenses | $7,244 | $7,650 | ($406) | | Net loss | ($7,378) | ($7,365) | ($13) | - For the three months ended September 30, 2020, R&D expenses decreased by $0.8 million, mainly due to Phase 1b trial completion and paused Phase 2 IPF trial enrollment, partially offset by increased PRISM trial activity[132] Comparison of Operating Results for the Nine Months Ended September 30 (in thousands) | Line Item | 2020 | 2019 | Change | | :--- | :--- | :--- | :--- | | Research and development | $15,768 | $14,516 | $1,252 | | General and administrative | $7,528 | $5,363 | $2,165 | | Total operating expenses | $23,296 | $19,879 | $3,417 | | Net loss | ($23,235) | ($19,513) | ($3,722) | - For the nine months ended September 30, 2020, R&D expenses increased by $1.3 million due to PRISM trial activity and clinical trial supply purchases, while G&A expenses rose by $2.2 million from public company costs and higher stock-based compensation[136][137] Liquidity and Capital Resources - As of September 30, 2020, the company held $53.3 million in cash and cash equivalents[141] - The company expects its current cash and cash equivalents to fund operations and capital expenditures into the first half of 2022[118][153] - Recent financing includes a $14.0 million term loan from SVB in August 2020 and $2.5 million in gross proceeds from an ATM sales agreement by September 30, 2020[142][143] - Substantial additional funding will be required for ongoing operations, including completing the PRISM trial, conducting an additional Phase 3 trial, and potential commercial launch activities[120][151][152] Quantitative and Qualitative Disclosures About Market Risk As a smaller reporting company, Trevi Therapeutics, Inc. is exempt from providing disclosures on quantitative and qualitative market risk - Disclosure for this item is not required for smaller reporting companies[162] Controls and Procedures Management, including the CEO and CFO, concluded the company's disclosure controls and procedures were effective as of September 30, 2020, with no material changes to internal control over financial reporting - The CEO and CFO concluded the company's disclosure controls and procedures were effective at a reasonable assurance level as of September 30, 2020[163] - No material changes to internal control over financial reporting occurred during the nine months ended September 30, 2020[164] PART II. OTHER INFORMATION Legal Proceedings The company is not currently subject to any material legal proceedings - The company is not subject to any material legal proceedings[166] Risk Factors This section details numerous risks, including COVID-19 impacts on trials, significant losses, capital needs, dependence on Haduvio, reliance on third parties for manufacturing and trials, and intellectual property and regulatory challenges - The COVID-19 pandemic has delayed clinical trials, including the Phase 2b/3 PRISM trial, by halting patient enrollment and may cause further operational and supply chain disruptions[168][170] - The company has a history of significant losses, with a $137.5 million accumulated deficit as of September 30, 2020, requiring substantial additional funding for Haduvio's development and commercialization[173][179] - The business is entirely dependent on the successful development and commercialization of its sole product candidate, Haduvio[189] - The company relies on a single supplier, Mallinckrodt, for Haduvio's active ingredient, and Mallinckrodt's October 2020 bankruptcy filing creates future supply uncertainty[260] Unregistered Sales of Equity Securities and Use of Proceeds The company reports no unregistered equity sales in Q3 2020 and details the use of approximately $11.0 million from its May 2019 IPO for Haduvio's development and general corporate purposes - There were no unregistered sales of equity securities during the three months ended September 30, 2020[398] - From the May 2019 IPO's $48.2 million net proceeds, approximately $11.0 million has been used by September 30, 2020, for Haduvio's development and general corporate purposes[400][402] Exhibits This section lists exhibits filed with the Form 10-Q, including the Loan and Security Agreement with Silicon Valley Bank, officer certifications, and XBRL data files