HOOKIPA Pharma(HOOK) - 2019 Q1 - Quarterly Report

PART I. FINANCIAL INFORMATION Item 1. Financial Statements This section presents HOOKIPA Pharma Inc.'s unaudited condensed consolidated financial statements, including balance sheets, statements of operations, cash flows, and notes, for Q1 2019 and 2018 Condensed Consolidated Balance Sheets Total assets significantly increased to $102.0 million by March 31, 2019, driven by cash, while liabilities and stockholders' deficit also grew Condensed Consolidated Balance Sheets (in thousands) | | March 31, 2019 | December 31, 2018 | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $70,508 | $48,580 | | Total current assets | $84,903 | $62,311 | | Total assets | $101,980 | $68,251 | | Liabilities and Stockholders' Equity (Deficit) | | | | Total current liabilities | $15,094 | $14,695 | | Total liabilities | $29,989 | $23,852 | | Redeemable convertible preferred stock | $142,048 | $104,774 | | Total stockholders' deficit | ($70,057) | ($60,375) | Condensed Consolidated Statements of Operations Q1 2019 saw the first revenue of $2.2 million from collaboration, but operating expenses more than doubled, leading to a $9.3 million net loss Condensed Consolidated Statements of Operations (in thousands) | | Three months ended March 31, 2019 | Three months ended March 31, 2018 | | :--- | :--- | :--- | | Revenue from collaboration and licensing | $2,235 | $0 | | Research and development | ($10,179) | ($4,969) | | General and administrative | ($2,711) | ($1,480) | | Loss from operations | ($10,655) | ($6,449) | | Net loss | ($9,329) | ($4,573) | | Net loss per share—basic and diluted | ($9.27) | ($5.02) | Condensed Consolidated Statements of Cash Flows Net cash used in operations increased to $12.1 million in Q1 2019, while financing activities provided $35.2 million, resulting in a $22.7 million cash increase Condensed Consolidated Statements of Cash Flows (in thousands) | | Three months ended March 31, 2019 | Three months ended March 31, 2018 | | :--- | :--- | :--- | | Net cash used in operating activities | ($12,056) | ($4,972) | | Net cash used in investing activities | ($400) | ($262) | | Net cash provided by financing activities | $35,157 | $6,879 | | Net increase in cash and cash equivalents | $22,701 | $1,645 | Notes to Condensed Consolidated Financial Statements These notes detail accounting policies, the Gilead collaboration, Series D Preferred Stock issuance, and the subsequent $74.8 million IPO proceeds - The company is a clinical-stage biopharmaceutical firm developing immunotherapeutics for infectious diseases and cancers using its proprietary arenavirus platform[26] - In June 2018, the company entered a collaboration with Gilead Sciences, Inc. for HBV and HIV vaccine programs, receiving a $10.0 million upfront payment and recognizing $2.2 million revenue in Q1 2019[60][61][146] - In February 2019, the company issued 257,000 shares of Series D Preferred Stock for gross proceeds of $37.4 million[82] - Subsequent to quarter end, on April 23, 2019, the company closed its IPO of 6,000,000 shares at $14.00 per share, receiving net proceeds of approximately $74.8 million[115] Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses Q1 2019 financial performance, highlighting $2.2 million revenue from Gilead, increased R&D, and strong liquidity bolstered by the IPO Results of Operations Q1 2019 revenue reached $2.2 million from Gilead, but R&D expenses rose to $10.2 million, widening the net loss to $9.3 million Comparison of Results of Operations (in thousands) | | Three months ended March 31, 2019 | Three months ended March 31, 2018 | | :--- | :--- | :--- | | Revenue from collaboration and licensing | $2,235 | $0 | | Research and development | ($10,179) | ($4,969) | | General and administrative | ($2,711) | ($1,480) | | Net loss | ($9,329) | ($4,573) | - The increase in R&D expenses was primarily driven by preparation costs for clinical trials for the HB-201 and HB-202 oncology programs and expansion of earlier-stage programs[147] Liquidity and Capital Resources As of March 31, 2019, the company had $70.5 million in cash, further strengthened by $74.8 million net IPO proceeds, expected to fund operations for 12+ months - As of March 31, 2019, the company had cash and cash equivalents of $70.5 million[156] - In April 2019, the company completed its IPO, raising net proceeds of $74.8 million[121][156] - Existing cash and cash equivalents are expected to fund operating expenses and capital expenditure requirements for at least the next 12 months[168] Contractual Obligations as of March 31, 2019 (in thousands) | | Total | Remainder of 2019 | 2020 - 2021 | 2022 - 2023 | Thereafter | | :--- | :--- | :--- | :--- | :--- | :--- | | Lease commitments | $9,032 | $1,351 | $3,790 | $3,753 | $138 | | CMO commitments | $14,588 | $5,929 | $8,659 | $0 | $0 | | Debt obligations | $8,151 | $0 | $2,125 | $3,646 | $2,380 | | Total | $31,771 | $7,280 | $14,574 | $7,399 | $2,518 | Quantitative and Qualitative Disclosures About Market Risk The company faces market risks primarily from foreign currency exchange rates (USD vs. EUR) and minor interest rate fluctuations - The company's primary market risks are related to foreign currency exchange rates (USD vs. EUR) and changes in interest rates[188] Controls and Procedures Disclosure controls were ineffective as of March 31, 2019, due to material weaknesses in accounting resources and segregation of duties, with remediation underway - Management concluded that disclosure controls and procedures were not effective as of March 31, 2019[191] - Two material weaknesses were identified: 1) insufficient resources with appropriate accounting knowledge and experience, and 2) insufficient segregation of duties in finance and accounting[192][196] - The company is implementing measures to remediate these weaknesses, including hiring additional qualified accounting personnel and formalizing internal controls[194] PART II. OTHER INFORMATION Legal Proceedings The company is not currently involved in any material legal proceedings - As of the reporting date, the company is not involved in any material legal proceedings[198] Risk Factors Significant risks include clinical-stage financial needs, reliance on its novel platform and third parties, regulatory complexities, IP protection, and internal control weaknesses - Financial risks include a history of significant losses, the need for substantial additional financing, and the possibility of never achieving profitability[200][205] - Business and industry risks involve the potential failure of its single clinical-stage product candidate (HB-101), the novelty of its TheraT technology, and challenges in patient enrollment and market acceptance[218][240][248] - The company is highly dependent on its collaboration with Gilead for HIV and HBV programs and relies on third-party CROs and CMOs for clinical trials and manufacturing[284][297][301] - Risks related to stock ownership include stock price volatility and the identification of material weaknesses in internal control over financial reporting, which could adversely affect investor confidence[397][420] Unregistered Sales of Equity Securities and Use of Proceeds In February 2019, $37.4 million was raised from Series D preferred stock, and the April 2019 IPO generated $74.8 million net proceeds, unused as of quarter-end - In February 2019, the company raised $37.4 million from the sale of Series D preferred stock[428] - The company's IPO in April 2019 generated net proceeds of $74.8 million. No proceeds were used as of the quarter's end[429][430][431] Defaults Upon Senior Securities The company reports no defaults upon senior securities Mine Safety Disclosures This item is not applicable to the company Other Information This item is not applicable to the company Exhibits This section lists exhibits filed with the Quarterly Report on Form 10-Q, including governance documents and officer certifications