vTv Therapeutics(VTVT) - 2020 Q1 - Quarterly Report

PART I – FINANCIAL INFORMATION Covers financial statements, management's discussion, market risks, and internal controls for the period Item 1. Financial Statements Details the company's Q1 2020 financial performance, including a significant revenue decline, increased net loss, and a widened stockholders' deficit Condensed Consolidated Balance Sheets Reports a decrease in total assets and cash, alongside a widened stockholders' deficit as of March 31, 2020 Condensed Consolidated Balance Sheet Highlights (in thousands) | Balance Sheet Item | March 31, 2020 (Unaudited) | December 31, 2019 | | :--- | :--- | :--- | | Cash and cash equivalents | $406 | $1,777 | | Total current assets | $3,502 | $2,838 | | Total assets | $7,389 | $9,266 | | Total current liabilities | $11,970 | $13,381 | | Total liabilities | $17,014 | $18,106 | | Total stockholders' deficit | $(61,821) | $(49,023) | Condensed Consolidated Statements of Operations Details Q1 2020 operations, showing sharp revenue drop and increased net loss from higher R&D 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 | $8 | $921 | | Research and development | $4,204 | $2,822 | | General and administrative | $2,450 | $2,386 | | Operating loss | $(6,646) | $(4,287) | | Net loss attributable to vTv Therapeutics Inc. | $(4,724) | $(2,155) | | Net loss per share (basic and diluted) | $(0.11) | $(0.26) | Condensed Consolidated Statements of Cash Flows Shows stable operating cash outflow, decreased financing cash inflow, and a net cash decrease for Q1 2020 Condensed Consolidated Statements of Cash Flows Highlights (in thousands) | Cash Flow Activity | Three Months Ended March 31, 2020 | Three Months Ended March 31, 2019 | | :--- | :--- | :--- | | Net cash used in operating activities | $(5,560) | $(5,450) | | Net cash provided by financing activities | $4,189 | $8,726 | | Net (decrease) increase in cash | $(1,371) | $3,276 | | Total cash, cash equivalents and restricted cash, end of period | $2,906 | $7,459 | Notes to Unaudited Consolidated Financial Statements Provides critical details on accounting policies, a going concern warning, and subsequent financing events - Management has substantial doubt about the Company's ability to continue as a going concern, as current cash and available funds are projected to meet liquidity requirements only into June 2020[28] - On April 1, 2020, the company amended its Loan Agreement to extend maturity dates, provide for three months of interest-only payments, and temporarily eliminate the minimum cash balance requirement until July 1, 2020[107][108][109] - On April 24, 2020, the company entered into a sales agreement for a Controlled Equity Offering (ATM) to sell up to $13.0 million of its Class A common stock[111] - As of March 31, 2020, MacAndrews & Forbes Incorporated and its affiliates controlled approximately 84.4% of the combined voting power of the company's outstanding common stock[86] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Covers clinical pipeline, COVID-19 impact, financial performance, and critical liquidity concerns - The company's pipeline is led by TTP399 for type 1 diabetes, which showed positive Phase 2 results, and azeliragon for mild Alzheimer's in patients with type 2 diabetes, currently in a Phase 2 study (Elevage Study)[114][115] - The COVID-19 pandemic may delay the screening and enrollment for the Elevage Study, potentially impacting the timing of results, which are expected in the first half of 2021[115][118] - The company has substantial doubt about its ability to continue as a going concern, with current cash and available funding projected to meet liquidity requirements only into September 2020[137][153] Research and Development Expenses by Project (in thousands) | Project | Three Months Ended March 31, 2020 | Three Months Ended March 31, 2019 | | :--- | :--- | :--- | | Azeliragon | $2,401 | $703 | | TTP399 | $400 | $600 | | Other projects | $70 | $191 | | Indirect R&D expense | $1,333 | $1,328 | | Total R&D expense | $4,204 | $2,822 | Item 3. Quantitative and Qualitative Disclosures About Market Risk Assesses interest rate risk from floating-rate debt and minimal risk from cash investments - The company is exposed to interest rate risk through its Loan Agreement, which bears a floating interest rate of 10.5% plus the amount by which one-month LIBOR exceeds 0.5%[160] - Market risk from the investment portfolio is considered minimal as it consists of cash and cash equivalents with short-term maturities[161] Item 4. Controls and Procedures Confirms effective disclosure controls and procedures as of March 31, 2020, with no material changes - The CEO and CFO concluded that as of March 31, 2020, the company's disclosure controls and procedures were effective[163] - No changes were made to the internal control over financial reporting during the most recent fiscal quarter that would have a material effect[166] PART II – OTHER INFORMATION Covers legal proceedings, updated risk factors, equity sales, and a list of filed exhibits Item 1. Legal Proceedings States that the company is not currently involved in any material legal proceedings - The company is not currently involved in any material legal proceedings[168] Item 1A. Risk Factors Highlights significant risks from COVID-19 to operations, clinical trials, and financial stability - The COVID-19 pandemic is identified as a significant risk that could negatively impact the global economy, disrupt supply chains, and create market volatility[170] - The pandemic could specifically affect FDA operations, leading to delays in meetings for planned clinical trials, and slow patient enrollment in ongoing trials like the Elevage study[174][176] - COVID-19 may also hinder the ability of license partners to continue development, which could delay or prevent the achievement of milestones and associated payments to the company[177] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds Reports no new unregistered equity sales in Q1 2020 and notes dividend payment restrictions - No unregistered sales of equity securities occurred in Q1 2020 that were not already disclosed[178] Item 6. Exhibits Lists the various documents and certifications filed as exhibits with the Form 10-Q - Key exhibits filed include the Second Amendment to the Venture Loan and Security Agreement and certifications from the CEO and CFO[182]