HOOKIPA Pharma(HOOK) - 2020 Q1 - Quarterly Report

PART I. FINANCIAL INFORMATION This section provides the unaudited financial statements, management's discussion and analysis, and other financial disclosures Financial Statements (Unaudited) The unaudited financial statements for Q1 2020 show an increased net loss and decreased total assets, reflecting R&D and cash flow changes Condensed Consolidated Balance Sheets The balance sheets as of March 31, 2020, show decreased total assets and equity, primarily due to reduced cash and net loss Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | March 31, 2020 | December 31, 2019 | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $104,454 | $113,151 | | Total current assets | $120,716 | $128,017 | | Total assets | $135,967 | $143,745 | | Liabilities & Equity | | | | Total current liabilities | $15,385 | $14,755 | | Total liabilities | $26,985 | $25,846 | | Total stockholders' equity (deficit) | $108,982 | $117,899 | Condensed Consolidated Statements of Operations and Comprehensive Loss The statements of operations show increased revenue but a wider net loss in Q1 2020 due to higher operating expenses Condensed Consolidated Statements of Operations (in thousands, except per share data) | Metric | Three months ended March 31, 2020 | Three months ended March 31, 2019 | | :--- | :--- | :--- | | Revenue from collaboration and licensing | $3,696 | $2,235 | | Research and development | $(11,526) | $(10,179) | | General and administrative | $(4,629) | $(2,711) | | Loss from operations | $(12,459) | $(10,655) | | Net loss | $(10,926) | $(9,329) | | Net loss per share — basic and diluted | $(0.43) | $(9.27) | Condensed Consolidated Statements of Cash Flows Cash flow statements show reduced cash used in operations but a net decrease in cash due to lower financing inflows in Q1 2020 Condensed Consolidated Statements of Cash Flows Highlights (in thousands) | Activity | Three months ended March 31, 2020 | Three months ended March 31, 2019 | | :--- | :--- | :--- | | Net cash used in operating activities | $(7,128) | $(12,056) | | Net cash used in investing activities | $(199) | $(400) | | Net cash provided by (used in) financing activities | $(1,284) | $35,157 | | Net increase (decrease) in cash, cash equivalents and restricted cash | $(8,611) | $22,701 | Notes to Condensed Consolidated Financial Statements The notes detail accounting policies, business nature, and financial commitments, including the impact of the COVID-19 pandemic - The company is a clinical-stage biopharmaceutical company developing immunotherapeutics based on its proprietary arenavirus platform for infectious diseases and cancers[30] - Management expects that its cash and cash equivalents as of May 14, 2020, will be sufficient to fund operations for at least the next 12 months, though additional funding will be required to achieve long-term development and commercialization objectives[37][38] - Under the Gilead agreement for HBV and HIV programs, the company received a $10.0 million upfront payment in 2018 and a $4.0 million milestone payment in Q1 2020. Revenue is recognized over the performance period. In Q1 2020, the company recognized $3.7 million in revenue from this agreement, including $2.7 million from cost reimbursements[76][78][79] - As of March 31, 2020, the company has total non-cancellable obligations of $11.3 million under contracts with Contract Manufacturing Organizations (CMOs), with $8.5 million due in the remainder of 2020[125] - The COVID-19 pandemic is impacting clinical trial enrollment, particularly the Phase 2 trial for HB-101. The company has taken mitigation steps, including applying for government support in Austria and implementing temporary salary reductions for officers, directors, and most employees[139] Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the company's financial performance, liquidity, and operational progress, highlighting the impact of the COVID-19 pandemic Overview This overview details the company's clinical-stage programs, strategic partnerships, and the operational impact of the COVID-19 pandemic - Lead infectious disease candidate HB-101 is in a Phase 2 trial for CMV, but enrollment has been suspended at nearly all trial sites due to the COVID-19 pandemic[143] - Lead oncology candidate HB-201 is in a Phase 1/2 trial for HPV16+ cancers, with preliminary results expected in late 2020 or early 2021. An IND application for HB-202 is planned for the first half of 2020[144] - The company has taken measures to preserve liquidity due to COVID-19, including officers and directors waiving at least 25% of their cash salaries and most employees agreeing to a temporary 20% salary reduction for Q2 2020[151] Results of Operations Results of operations show increased revenue but a wider net loss in Q1 2020, driven by higher R&D and G&A expenses Comparison of Results of Operations (in thousands) | Metric | Three months ended March 31, 2020 | Three months ended March 31, 2019 | | :--- | :--- | :--- | | Revenue from collaboration and licensing | $3,696 | $2,235 | | Research and development | $(11,526) | $(10,179) | | General and administrative | $(4,629) | $(2,711) | | Loss from operations | $(12,459) | $(10,655) | | Net loss | $(10,926) | $(9,329) | Research and Development Expenses by Program (in thousands) | Program | Three months ended March 31, 2020 | Three months ended March 31, 2019 | | :--- | :--- | :--- | | HB-101 | $1,345 | $1,201 | | HB-201/202 | $1,954 | $3,066 | | Gilead partnered programs | $1,665 | $758 | | Other and earlier-stage programs | $1,909 | $2,497 | | Sub-total direct expenses | $6,873 | $7,522 | | Internal research and development expenses | $4,653 | $2,657 | | Total research and development expenses | $11,526 | $10,179 | Liquidity and Capital Resources The company's liquidity is supported by $104.9 million in cash, expected to fund operations for 12 months, with long-term financing required - As of March 31, 2020, the company had cash, cash equivalents and restricted cash of $104.9 million[184] - The company expects its existing cash and cash equivalents will be sufficient to fund operating expenses and capital expenditure requirements for at least the next 12 months[198] Summary of Cash Flows (in thousands) | Activity | Three months ended March 31, 2020 | Three months ended March 31, 2019 | | :--- | :--- | :--- | | Net cash used in operating activities | $(7,128) | $(12,056) | | Net cash used in investing activities | $(199) | $(400) | | Net cash provided by (used in) financing activities | $(1,284) | $35,157 | Contractual Obligations as of March 31, 2020 (in thousands) | Commitment | Total | Less Than 1 Year | 1 - 3 Years | 4 - 5 Years | | :--- | :--- | :--- | :--- | :--- | | Lease commitments | $7,380 | $1,952 | $3,848 | $1,580 | | CMO commitments | $11,294 | $8,463 | $2,831 | $— | | Debt obligations | $5,912 | $— | $3,577 | $2,335 | | Total | $24,586 | $10,415 | $10,256 | $3,915 | Quantitative and Qualitative Disclosures About Market Risk The company's market risk primarily stems from foreign currency exchange rates and interest rate fluctuations, though the latter is not material - The company's primary market risks are related to foreign currency exchange rates (specifically the euro) and changes in interest rates on its cash and cash equivalents[215] Controls and Procedures Management concluded disclosure controls were effective as of March 31, 2020, having remediated prior material weaknesses - Management concluded that the company's disclosure controls and procedures were effective at a reasonable assurance level as of March 31, 2020[220] - During Q1 2020, the company completed the remediation of two material weaknesses identified in 2017 and 2018 related to insufficient accounting resources and inadequate segregation of duties[221][222][223] PART II. OTHER INFORMATION This section provides disclosures on legal proceedings, risk factors, equity sales, and other miscellaneous information Legal Proceedings The company is not currently involved in any material legal proceedings - The company is not currently involved in any material legal proceedings[227] Risk Factors This section details new risk factors, primarily the adverse effects of the COVID-19 pandemic on clinical trials and operations - A new risk factor has been added detailing the adverse effects of the COVID-19 pandemic on the business[228] - Key impacts of COVID-19 include: - Suspension of patient enrollment in the HB-101 Phase 2 trial - Potential delays in manufacturing and supply chain due to third-party disruptions - Slower response times from regulatory agencies like the FDA - Increased cybersecurity risk and potential productivity impacts from remote work[229][231][232] Unregistered Sales of Equity Securities and Use of Proceeds This section reports no unregistered equity sales in Q1 2020 and updates on the use of $74.6 million IPO proceeds - There were no unregistered sales of equity securities in Q1 2020[236] - The company received net proceeds of $74.6 million from its April 2019 IPO. There has been no material change in the planned use of these proceeds[237][238][239] Defaults Upon Senior Securities There were no defaults upon senior securities reported - None[240] Mine Safety Disclosures This section is not applicable to the company's operations - Not applicable[241] Other Information This section contains no other material information - Not applicable[242] Exhibits This section lists the exhibits filed with the Quarterly Report on Form 10-Q, including officer certifications and XBRL data - The exhibits filed with the report include officer certifications pursuant to the Sarbanes-Oxley Act and XBRL data files[245]