MoonLake Immunotherapeutics(US:MLTX)2025-05-12 20:04PART I. FINANCIAL INFORMATION Financial Statements (Unaudited) This section presents the unaudited condensed consolidated financial statements for Q1 2025, highlighting a significant increase in operating loss due to higher R&D expenses and new long-term debt Condensed Consolidated Balance Sheets Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $271,566 | $180,426 | | Total current assets | $506,264 | $474,289 | | Total assets | $511,262 | $477,933 | | Liabilities & Equity | | | | Long-term debt | $73,022 | $— | | Total liabilities | $98,681 | $24,542 | | Total equity | $412,581 | $453,391 | | Total liabilities and equity | $511,262 | $477,933 | - Total assets increased to $511.3 million, primarily due to a rise in cash and cash equivalents. Total liabilities saw a substantial increase to $98.7 million from $24.5 million, driven by the new $73.0 million long-term debt facility8 Condensed Consolidated Statements of Operations and Comprehensive Loss Operating Results Comparison (in thousands, except per share data) | Metric | Three Months Ended Mar 31, 2025 | Three Months Ended Mar 31, 2024 | | :--- | :--- | :--- | | Research and development | $(36,459) | $(13,014) | | General and administrative | $(11,026) | $(6,806) | | Operating loss | $(47,485) | $(19,820) | | Net loss | $(40,559) | $(13,975) | | Basic and diluted net loss per share | $(0.63) | $(0.22) | - The net loss for Q1 2025 widened significantly to $40.6 million from $14.0 million in Q1 2024. This was primarily driven by a 180% increase in Research and Development expenses as the company advanced its clinical programs11212 Condensed Consolidated Statements of Changes In Equity - Total equity decreased from $453.4 million on January 1, 2025, to $412.6 million on March 31, 2025. The reduction was mainly caused by the net loss of $39.9 million attributable to controlling interests and a $2.6 million other comprehensive loss, partially offset by $2.3 million in share-based compensation16 Condensed Consolidated Statements of Cash Flows Cash Flow Summary (in thousands) | Activity | Three Months Ended Mar 31, 2025 | Three Months Ended Mar 31, 2024 | | :--- | :--- | :--- | | Net cash used in operating activities | $(38,140) | $(14,948) | | Net cash provided by (used in) investing activities | $56,246 | $(28,804) | | Net cash provided by financing activities | $73,122 | $50,978 | | Net change in cash and cash equivalents | $91,140 | $7,272 | - Cash from financing activities was $73.1 million, primarily from $73.0 million in net proceeds from a new long-term debt agreement. Cash used in operations increased to $38.1 million due to higher R&D spending19233 Notes to Condensed Consolidated Financial Statements - The company is a clinical-stage biotechnology firm focused on a single asset, Sonelokimab (SLK), for inflammatory skin and joint diseases22 - On March 31, 2025, the company entered into a loan and security agreement for a credit facility of up to $500.0 million, drawing an initial tranche of $75.0 million808385 - As of March 31, 2025, the company has committed expenses of $205.6 million for clinical development and manufacturing services. Additionally, potential future milestone payments for the SLK license could reach up to €299.6 million157158 - Share-based compensation expense for Q1 2025 was $2.3 million, primarily from the ESPP and the 2022 Equity Incentive Plan135137 Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the significant increase in operating loss, driven by a 180.2% rise in R&D expenses for Q1 2025, while highlighting a strong liquidity position and a new $500 million debt facility, sufficient to fund operations into 2028 - The company's focus is on developing its single asset, Sonelokimab (SLK), for various inflammatory diseases, with ongoing Phase 3 trials in hidradenitis suppurativa (HS) and psoriatic arthritis (PsA)172174 - Key upcoming milestones include primary endpoint data from the VELA program (HS) around September 2025, a planned first BLA submission in 2026, and a potential first commercial launch in the U.S. in 2027175180 Operating Expense Comparison (in thousands) | Expense Category | Q1 2025 | Q1 2024 | Change | Change % | | :--- | :--- | :--- | :--- | :--- | | Research and development | $(36,459) | $(13,014) | $(23,445) | 180.2% | | General and administrative | $(11,026) | $(6,806) | $(4,220) | 62.0% | | Total operating expenses | $(47,485) | $(19,820) | $(27,665) | 139.6% | - The increase in R&D expenses was primarily due to advancing clinical trials (VELA and IZAR programs), increased manufacturing costs, and higher consulting and personnel costs212 - The company believes its existing cash, cash equivalents, and short-term marketable securities, totaling $480.1 million, along with its new debt facility, are sufficient to fund operations and capital expenditures into 2028182218 Contractual Obligations as of March 31, 2025 (in thousands) | Obligation Type | Total | Less than 1 year | 1 to 5 Years | More than 5 years | | :--- | :--- | :--- | :--- | :--- | | Purchase obligations | $205,604 | $150,395 | $55,209 | $— | | Lease commitments | $2,697 | $1,515 | $1,182 | $— | | Long-term debt obligations | $113,794 | $6,172 | $26,850 | $80,772 | | Total | $322,095 | $158,082 | $83,241 | $80,772 | Quantitative and Qualitative Disclosures About Market Risk The company's primary market risks are interest rate and foreign currency fluctuations, with management deeming a hypothetical 10% interest rate change immaterial due to short-term investments and no speculative derivative use - The company is exposed to interest rate risk on its cash, cash equivalents, and short-term marketable securities totaling $480.1 million, and on its $73.0 million of variable rate debt239242 - Management believes a hypothetical 10% change in interest rates would not materially affect financial results, as investments are short-term and can be held to maturity240 - Foreign currency transaction losses were minimal, amounting to $35 thousand for Q1 2025210 Controls and Procedures Based on an evaluation conducted by management, including the CEO and CFO, the company's disclosure controls and procedures were deemed effective at a reasonable assurance level as of March 31, 2025. There were no material changes to the company's internal control over financial reporting during the quarter - Management, including the CEO and CFO, concluded that the company's disclosure controls and procedures were effective as of March 31, 2025245 - No changes in internal control over financial reporting occurred during the quarter that have materially affected, or are reasonably likely to materially affect, internal controls246 PART II. OTHER INFORMATION Legal Proceedings The company states that it is not currently involved in any material legal proceedings - The company is not currently subject to any material legal proceedings249 Risk Factors This section outlines significant risks, including dependence on its single product candidate SLK, regulatory approval uncertainty, need for additional capital, geopolitical disruptions, and restrictive debt covenants - The company's success is substantially dependent on its single product candidate, Sonelokimab (SLK)168251 - The regulatory approval process for SLK is complex, time-consuming, and inherently unpredictable, with no guarantee of success259 - Geopolitical events, global economic conditions, and potential disruptions at the FDA and other government agencies due to funding shortages or policy changes could hinder development and commercialization256262264 - The company has a history of significant operating losses and will require substantial additional capital, which may not be available on favorable terms252253 - The new Loan and Security Agreement contains covenants that could restrict operations and force early repayment if an event of default occurs267268 Unregistered Sales of Equity Securities and Use of Proceeds The company reported no unregistered sales of equity securities or specific use of proceeds during the quarter - None reported for the period271 Defaults Upon Senior Securities The company reported no defaults upon its senior securities - None reported272 Mine Safety Disclosures This item is not applicable to the company's business operations - Not applicable275 Other Information The company disclosed that none of its directors or executive officers adopted or terminated a Rule 10b5-1 trading arrangement during the first quarter of 2025 - No directors or executive officers adopted or terminated a Rule 10b5-1 trading arrangement during the three months ended March 31, 2025276 Exhibits This section lists all exhibits filed with the Form 10-Q, including key documents such as the Loan and Security Agreement with Hercules Capital, Inc., and certifications by the CEO and CFO - Key exhibits filed include the Loan and Security Agreement dated March 31, 2025, and officer certifications pursuant to the Sarbanes-Oxley Act278