GH Research PLC(US:GHRS)2025-02-27 12:32PART I Key Information This section details the significant risks associated with the company's business, financial position, and operations, highlighting its clinical-stage status, history of losses, funding needs, and uncertainties in clinical trials and regulatory approvals, particularly the clinical hold on GH001 IND by the FDA Risk Factors This subsection provides a detailed summary of the principal risks facing the company, including financial losses, funding needs, the FDA clinical hold on GH001 IND, drug development uncertainty, controlled substance classification, reliance on third parties, intellectual property, and potential adverse U.S. tax consequences as a PFIC - The company is a clinical-stage biopharmaceutical firm with significant losses, expecting them to continue. Net losses were $39.0 million in 2024 and $35.6 million in 2023, with an accumulated deficit of $106.4 million as of December 31, 202441 - The FDA has placed a clinical hold on the study proposed in the IND for GH001, requiring additional toxicology studies and device information, which presents a material risk to clinical development efforts in the U.S3964 - The company's product candidates, GH001 and GH002, contain mebufotenin, a Schedule I controlled substance in the U.S. This classification requires a complex and uncertain rescheduling process by the DEA for commercialization, which could cause significant delays39146148 - The company relies entirely on third parties for the development and manufacturing of its nonclinical and clinical trial supplies, including the active pharmaceutical ingredients and medical devices. Any failure by these third parties could significantly harm operations41312 - The company believes it was a Passive Foreign Investment Company (PFIC) for the 2024 taxable year and anticipates being a PFIC in 2025, which could result in adverse U.S. federal income tax consequences for U.S. investors41365 Information on the Company This section provides a comprehensive overview of GH Research PLC, a clinical-stage biopharmaceutical company focused on developing mebufotenin-based therapies for depression, detailing its history, business strategy, product pipeline, market opportunities, intellectual property, regulatory landscape, third-party manufacturing reliance, and organizational structure History and Development of the Company GH Research PLC was incorporated in Ireland on March 29, 2021, as a holding company for GH Research Ireland Limited, which was founded in 2018, with its principal business in Dublin, Ireland, and primary expenditures since 2022 focused on research and development - GH Research PLC was incorporated in Ireland on March 29, 2021, to act as a holding company for GH Research Ireland Limited, which was originally incorporated on October 16, 2018394 Business Overview The company focuses on developing proprietary mebufotenin therapies, GH001 (inhalable) and GH002 (intravenous), for Treatment-Resistant Depression (TRD) and other psychiatric disorders, with key clinical progress including the completion of a Phase 2b trial for GH001 in TRD and ongoing development of a proprietary aerosol delivery device, despite a significant FDA clinical hold on the GH001 IND - The company's lead product candidate is GH001, a proprietary inhalable mebufotenin therapy for TRD. The double-blind phase of its Phase 2b trial (GH001-TRD-201) has been completed397404 - The FDA placed the GH001 IND on clinical hold in September 2023, requesting additional toxicology studies and device information. The company completed the requested toxicology studies and plans to submit a complete response to the FDA in mid-2025404492493 GH001-TRD-201 Phase 2b Double-Blind Efficacy Results (Day 8) | Metric | GH001 (N=40) | Placebo (N=41) | P-value | | :--- | :--- | :--- | :--- | | MADRS Change from Baseline | -15.2 points | +0.3 points | <0.0001 | | Remission Rate (MADRS ≤ 10) | 52.5% | 2.4% | <0.0001 | | Response Rate (MADRS ≥50% reduction) | 65.0% | 2.4% | <0.0001 | - The company is also developing GH002, an intravenous mebufotenin formulation, and has completed a Phase 1 trial in healthy volunteers. It is exploring GH001 for additional indications, including Bipolar II Disorder and Postpartum Depression, with completed Phase 2a trials showing positive results405455460 - The company relies on Contract Development and Manufacturing Organizations (CDMOs) for API synthesis and product manufacturing and is developing a proprietary delivery device for GH001 with a CDMO513 Organizational Structure As of December 31, 2024, GH Research PLC has one subsidiary, GH Research Ireland Limited, which is incorporated in Ireland and handles the company's clinical operations and research and development activities - The company has one subsidiary, GH Research Ireland Limited, which is 100% owned and responsible for clinical operations and R&D626627 Property, Plants and Equipment The company leases two office facilities in Dublin, Ireland, totaling 497 square meters, which management believes are adequate for current and short-term needs - The company leases two office spaces in Dublin, Ireland: one of 106 square meters and another of 391 square meters628 Operating and Financial Review and Prospects This section analyzes the company's financial condition and results of operations, noting its clinical-stage status with no revenue and significant losses, expecting increased expenses with advancing clinical trials, and confirming sufficient liquidity from equity financings for at least the next 12 months Operating Results The company reported a net loss of $39.0 million in 2024, an increase from $35.6 million in 2023, driven by a $5.2 million increase in R&D expenses to $35.0 million in 2024 for GH001 clinical development, and a $3.9 million increase in G&A expenses to $15.3 million in 2024 due to higher professional fees and headcount, offset by net finance income and a foreign exchange gain Consolidated Results of Operations (in USD thousands) | | Year Ended December 31, | | | :--- | :--- | :--- | | | 2024 | 2023 | | Research and development | (35,016) | (29,821) | | General and administrative | (15,296) | (11,401) | | Loss from operations | (50,312) | (41,222) | | Net finance income | 9,222 | 8,256 | | Foreign exchange gain/(loss) | 2,129 | (2,621) | | Loss for the year | (38,961) | (35,587) | - R&D expenses increased by $5.2 million to $35.0 million in 2024, primarily due to increased clinical development activities for GH001, which saw its expenses rise by $7.0 million654656 - General and administrative expenses rose by $3.9 million to $15.3 million in 2024, driven by higher external costs (professional fees) and increased employee expenses from a larger headcount660 Liquidity and Capital Resources The company has funded its operations primarily through equity financings, holding $182.6 million in cash, equivalents, and marketable securities as of December 31, 2024, which management believes is sufficient for at least the next 12 months, supplemented by an additional $139.8 million raised from a public offering in 2025 Cash and Liquidity Position (in USD millions) | | Dec 31, 2024 | Dec 31, 2023 | | :--- | :--- | :--- | | Cash, cash equivalents, other financial assets and marketable securities | $182.6 | $222.7 | Summary of Cash Flows (in USD thousands) | | Year Ended December 31, 2024 | Year Ended December 31, 2023 | | :--- | :--- | :--- | | Net cash used in operating activities | (42,285) | (33,336) | | Net cash from/(used in) investing activities | 65,135 | (54,100) | | Net cash used in financing activities | (304) | (204) | - The company believes its existing cash and marketable securities will be sufficient to fund operating expenses and capital requirements for at least the next 12 months674 - In 2025, the company received net cash proceeds of $139.8 million from a public offering of its ordinary shares665997 Directors, Senior Management and Employees This section details the company's leadership, compensation practices, and employee base, providing biographical information for executive officers and non-executive directors, outlining aggregate compensation, the Share Option Plan, employment agreements, Board composition, committee structures, and employee numbers Directors and Senior Management The company's leadership includes Velichka Valcheva as Chief Executive Officer since September 2024 and Florian Schönharting as Chairman of the Board of Directors, with an executive team comprising a Managing Director, VP of Finance, and COO, and a four-member Board of Directors - Velichka Valcheva has served as Chief Executive Officer since September 2024, having previously been Chief Medical Officer682 - Florian Schönharting, a co-founder, serves as the Chairman of the Board of Directors686 Compensation For the year ended December 31, 2024, the total compensation for directors and executive officers was $3.4 million, with options for 1,043,120 ordinary shares granted to this group, and the Share Option Plan amended to increase available shares to 2,202,704 ordinary shares, alongside employment agreements with key executives - Aggregate compensation paid to directors and executive officers for the year ended December 31, 2024, was $3.4 million690 - In 2024, options to purchase an aggregate of 1,043,120 ordinary shares were granted to directors and executive officers under the Share Option Plan691 - The Share Option Plan was amended in 2024 to increase the number of shares available for grants by 999,970, bringing the total issuable under the plan to 2,202,704 ordinary shares693696 Board Practices The Board of Directors has four members, three of whom are independent: Michael Forer, Dermot Hanley, and Duncan Moore, with a one-year term for each director, and has established an Audit Committee, a Nominating and Corporate Governance Committee, and a Remuneration Committee, following Irish home country governance practices as a foreign private issuer - The Board of Directors has four members, three of whom are independent: Michael Forer, Dermot Hanley, and Duncan Moore705 - The Board has established an Audit Committee, a Nominating and Corporate Governance Committee, and a Remuneration Committee708 - The Audit Committee consists of Dermot Hanley (Chair), Michael Forer, and Duncan Moore, all of whom are independent and considered 'audit committee financial experts'709 Employees As of December 31, 2024, the company had 50 employees, with 34 dedicated to research and development activities, and the remainder providing administrative, business, and operational support, with no employees represented by labor unions and good employee relations - As of December 31, 2024, the company had 50 employees, with 34 dedicated to research and development activities718 Major Shareholders and Related Party Transactions This section discloses the company's major shareholders and related party transactions, noting that as of February 15, 2025, executive officers, directors, and 5% holders beneficially owned approximately 77.3% of the company's ordinary shares, with Chairman Florian Schönharting holding 23.9%, and outlines the company's indemnification policy for directors and a related person transaction policy requiring approval or ratification by the Board of Directors or a designated committee - As of February 15, 2025, officers, directors, and 5% shareholders collectively held approximately 77.3% of the company's ordinary shares347 Principal Shareholders (as of Feb 15, 2025) | Shareholder | Percentage Ownership | | :--- | :--- | | Florian Schönharting (Chairman) | 23.9% | | BVF | 16.8% | | RA Capital | 10.8% | | Lynx1 Capital Management LP | 10.2% | | Theis Terwey | 10.0% | | RTW Investments LP | 5.4% | | All executive officers and directors as a group | 24.3% | - The company has adopted a related person transaction policy requiring approval or ratification by the Board of Directors or a designated committee for any such transactions729 Financial Information This section contains the company's consolidated financial statements, prepared in accordance with IFRS Accounting Standards, noting that the company has never paid cash dividends and does not intend to in the foreseeable future, retaining funds for business development, with any future dividends subject to Irish law regarding distributable reserves - The company's financial statements are prepared in accordance with IFRS Accounting Standards731 - The company has never paid cash dividends and does not intend to in the foreseeable future, retaining funds for business development. Any dividend payments would be subject to Irish law regarding distributable reserves733734 - As of December 31, 2024, the company was not a party to any material litigation732 Additional Information This section covers supplementary details including material contracts, exchange controls, and taxation, noting generally no restrictions on capital movement in Ireland but highlighting the new FDI Act effective in 2025 that may impact acquisitions by non-EEA parties, and outlining potential U.S. federal income tax consequences for U.S. Holders, including the company's likely PFIC status, and Irish tax implications Exchange Controls There are currently no general restrictions on the export or import of capital in Ireland; however, the Screening of Third Country Transactions Act 2023 (FDI Act), effective in 2025, will require prior approval for certain transactions involving acquiring parties from outside the EEA and Switzerland, which could affect the ability of such parties to acquire the company's shares or assets - Ireland's Screening of Third Country Transactions Act 2023 (FDI Act), effective in 2025, will require prior approval for certain transactions involving acquiring parties from outside the EEA and Switzerland, potentially impacting acquisitions of the company's shares or assets389747 Taxation This subsection details the material U.S. and Irish tax consequences for shareholders, with a key issue for U.S. Holders being the company's likely classification as a Passive Foreign Investment Company (PFIC) for 2024 taxable year and PFIC in 2025, potentially leading to adverse U.S. federal income tax consequences for U.S. Holders, and Irish tax implications including a 1% Irish stamp duty on share transfers outside of DTC and a 25% Irish dividend withholding tax (DWT) - The company believes it was a Passive Foreign Investment Company (PFIC) for its 2024 taxable year and anticipates being a PFIC in 2025, which could result in adverse U.S. federal income tax consequences for U.S. Holders755 - The company will endeavor to provide the necessary information for U.S. Holders to make a Qualified Electing Fund (QEF) election for the 2024 taxable year to mitigate adverse PFIC tax consequences762 - Transfers of ordinary shares outside of the DTC system may be subject to a 1% Irish stamp duty, payable by the transferee780782 - Dividends paid by the company would be subject to a 25% Irish dividend withholding tax (DWT), although exemptions are available for shareholders resident in the U.S. and other treaty countries who provide the necessary documentation782785 Quantitative and Qualitative Disclosures About Market Risk The company is exposed to several market risks, primarily foreign exchange risk, credit risk, and interest rate risk, with a 10% weakening/strengthening of the USD against the EUR impacting pre-tax loss by $2.3 million higher/lower loss before tax for 2024, and a 50 basis point increase/decrease in interest rates impacting comprehensive loss by $0.3 million higher/lower total comprehensive loss for 2024 - The company is exposed to foreign exchange risk, primarily between the U.S. dollar and the euro. A 10% weakening/strengthening of the USD against the EUR would have resulted in a $2.3 million higher/lower loss before tax for 2024801804 - Credit risk is managed by holding cash at banks with a minimum S&P rating of A- and investing in investment-grade bonds and money market funds805971 - The company is exposed to interest rate risk on its marketable securities. A 50 basis point increase/decrease in interest rates would have resulted in a $0.3 million higher/lower total comprehensive loss for 2024807977 Controls and Procedures This section addresses the company's internal controls, with management concluding that disclosure controls and procedures were effective as of December 31, 2024, and internal control over financial reporting was effective as of December 31, 2024, based on the COSO framework, noting the remediation of previously identified material weaknesses and exemption from the auditor attestation report on internal control over financial reporting as an emerging growth company - Management concluded that the company's disclosure controls and procedures were effective as of December 31, 2024816 - Management concluded that the company's internal control over financial reporting was effective as of December 31, 2024, based on the COSO framework818819 - The company has remediated the material weaknesses in internal control over financial reporting that were previously identified in the fiscal year ended December 31, 2023. Remediation efforts included hiring qualified professionals and implementing improved processes and IT controls822823 - As an emerging growth company, this annual report does not include an auditor attestation report on internal control over financial reporting820 Corporate Governance and Other Matters This section covers various governance topics, including the Board's determination that Dermot Hanley, Michael Forer, and Duncan Moore are 'audit committee financial experts' and independent, the adoption of a Code of Business Conduct and Ethics, the company's adherence to Irish corporate governance practices instead of certain Nasdaq rules as a foreign private issuer, and the establishment of an insider trading policy and a cybersecurity risk management program overseen by management and the audit committee - The Board has determined that Dermot Hanley, Michael Forer, and Duncan Moore are 'audit committee financial experts' and independent824 - The company has adopted a Code of Business Conduct and Ethics applicable to all employees, officers, and directors825 - As a foreign private issuer, the company follows Irish corporate governance practices instead of certain Nasdaq rules, including those for director nominations, compensation committee composition, and shareholder approval for certain equity issuances833844 - The company has a cybersecurity risk management program overseen by management and the audit committee, utilizing a third-party IT service provider for implementation and monitoring840841842843 PART III Financial Statements This section presents the company's audited consolidated financial statements for the three years ended December 31, 2024, prepared in conformity with IFRS Accounting Standards, including the report of the independent registered public accounting firm, PricewaterhouseCoopers, and the consolidated statements of comprehensive loss, financial position, changes in equity, and cash flows, along with detailed notes Consolidated Statement of Comprehensive Loss (in USD thousands) | | 2024 | 2023 | 2022 | | :--- | :--- | :--- | :--- | | Research and development | (35,016) | (29,821) | (20,484) | | General and administrative | (15,296) | (11,401) | (10,070) | | Loss from operations | (50,312) | (41,222) | (30,554) | | Loss for the year | (38,961) | (35,587) | (22,456) | | Total comprehensive loss for the year | (41,188) | (33,154) | (29,030) | Consolidated Statement of Financial Position (in USD thousands) | | Dec 31, 2024 | Dec 31, 2023 | | :--- | :--- | :--- | | Total assets | 188,273 | 226,300 | | Cash and cash equivalents | 100,791 | 78,420 | | Marketable securities | 62,446 | 88,667 | | Total liabilities | 9,322 | 7,332 | | Total equity | 178,951 | 218,968 | - The company's basic and diluted loss per share was ($0.75) for 2024, compared to ($0.68) in 2023 and ($0.43) in 2022996 - The company has not recognized any deferred tax assets for its unused tax losses of $102.8 million as of December 31, 2024, due to uncertainty about generating sufficient future taxable profits936