HilleVax(HLVX) - 2023 Q2 - Quarterly Report

PART I FINANCIAL INFORMATION Financial Statements (Unaudited) The unaudited financial statements for H1 2023 show a $54.8 million net loss, with cash decreasing to $244.1 million due to operations and capital expenditures Condensed Consolidated Balance Sheets As of June 30, 2023, total assets decreased to $286.5 million, liabilities increased to $67.8 million, and equity declined to $218.8 million Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | June 30, 2023 | December 31, 2022 | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $158,375 | $279,401 | | Marketable securities | $85,675 | $0 | | Total current assets | $253,039 | $290,613 | | Total assets | $286,522 | $317,211 | | Liabilities & Equity | | | | Total current liabilities | $18,338 | $13,046 | | Long-term debt, net | $24,835 | $14,792 | | Total liabilities | $67,759 | $49,982 | | Total stockholders' equity | $218,763 | $267,229 | | Total liabilities and stockholders' equity | $286,522 | $317,211 | Condensed Consolidated Statements of Operations and Comprehensive Loss Net losses for Q2 and H1 2023 were $27.9 million and $54.8 million, respectively, with operating loss widening due to increased R&D expenses Statement of Operations Summary (in thousands, except per share data) | Metric | Q2 2023 | Q2 2022 | 6 Months 2023 | 6 Months 2022 | | :--- | :--- | :--- | :--- | :--- | | Research and development | $22,953 | $8,826 | $46,117 | $15,037 | | General and administrative | $7,231 | $3,982 | $13,026 | $6,585 | | Loss from operations | ($30,184) | ($12,808) | ($59,143) | ($24,122) | | Total other income (expense) | $2,282 | ($41,121) | $4,352 | ($97,694) | | Net loss | ($27,902) | ($53,929) | ($54,791) | ($121,816) | | Net loss per share | ($0.74) | ($2.03) | ($1.45) | ($7.30) | Condensed Consolidated Statements of Cash Flows Cash decreased by $121.0 million in H1 2023, driven by $38.4 million used in operations and $92.9 million in investing activities Cash Flow Summary (in thousands) | Activity | Six Months Ended June 30, 2023 | Six Months Ended June 30, 2022 | | :--- | :--- | :--- | | Net cash used in operating activities | ($38,371) | ($23,925) | | Net cash used in investing activities | ($92,933) | ($2,500) | | Net cash provided by financing activities | $10,278 | $218,102 | | Net (decrease) increase in cash | ($121,026) | $191,677 | Notes to Condensed Consolidated Financial Statements Notes detail the HIL-214 vaccine, Takeda license, Hercules loan, and ATM program, confirming sufficient capital for 12 months - The company is a biopharmaceutical firm focused on developing and commercializing novel vaccines, with its initial candidate being HIL-214. It has funded operations through convertible notes, debt, and its May 2022 IPO[20][23] - Under the Takeda License, HilleVax is obligated to pay a $7.5 million development milestone, up to $150.0 million in sales milestones, and tiered royalties on net sales of HIL-214 products[80] - The company entered a loan agreement with Hercules Capital for up to $75.0 million. As of June 30, 2023, $25.0 million has been borrowed. A June 2023 amendment modified the borrowing conditions and periods for the remaining tranches[90][91] - In May 2023, the company established an At-the-Market (ATM) equity offering program to sell up to $100.0 million of common stock. No shares had been sold under this program as of June 30, 2023[98] Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses HIL-214 development, a $54.8 million net loss, increased operating expenses, and $244.1 million in capital for 12 months - The company's primary focus is HIL-214, a vaccine candidate for norovirus-induced acute gastroenteritis. The Phase 2b trial, NEST-IN1, is ongoing, with top-line safety and efficacy data expected in mid-2024[114] - The company believes its existing cash, cash equivalents, and marketable securities of $244.1 million as of June 30, 2023, are sufficient to fund operations for at least the next 12 months[118][143] Results of Operations Operating expenses rose in H1 2023, with R&D up $31.1 million and G&A up $6.4 million, while net loss decreased due to non-recurring adjustments Comparison of Operating Expenses (in thousands) | Expense Category | 6 Months 2023 | 6 Months 2022 | Change | | :--- | :--- | :--- | :--- | | Research and development | $46,117 | $15,037 | $31,080 | | General and administrative | $13,026 | $6,585 | $6,441 | | Total operating expenses | $59,143 | $24,122 | $35,021 | - The increase in R&D expenses for the six months ended June 30, 2023, was primarily due to $22.6 million in clinical development expenses for HIL-214 and a $6.9 million increase in personnel-related costs[139] - The increase in G&A expenses for the six months ended June 30, 2023, was mainly driven by a $4.0 million increase in personnel-related costs and $1.5 million in facility and other expenses[141] Liquidity and Capital Resources The company holds $244.1 million in liquidity, funded by IPO proceeds and a Hercules loan, with a $100 million ATM program for future needs - The company has a term loan facility of up to $75.0 million with Hercules Capital. In June 2023, it borrowed an additional $10.0 million, bringing the total outstanding balance to $25.3 million (including PIK interest)[144][145][148] - On May 12, 2023, the company entered into an At-the-Market (ATM) Sales Agreement to offer and sell up to $100.0 million of its common stock. As of June 30, 2023, no sales have been made under this agreement[151] - The company expects its existing cash, cash equivalents, and marketable securities will be sufficient to complete enrollment and dosing in the Phase 2b NEST-IN1 study and report top-line data[152] Quantitative and Qualitative Disclosures About Market Risk This section is not applicable as the company qualifies as a smaller reporting company - Not applicable to a smaller reporting company[169] Controls and Procedures Management concluded disclosure controls were effective as of June 30, 2023, with no material changes to internal controls - Management concluded that as of June 30, 2023, the company's disclosure controls and procedures were effective[170] - No changes in internal control over financial reporting occurred during the quarter ended June 30, 2023, that have materially affected, or are reasonably likely to materially affect, internal controls[171] PART II OTHER INFORMATION Legal Proceedings The company is not currently subject to any material legal proceedings - The company is not currently subject to any material legal proceedings[173] Risk Factors No material changes to risk factors previously disclosed in the 2022 Annual Report on Form 10-K - There have been no material changes to the risk factors disclosed in the Annual Report on Form 10-K for the year ended December 31, 2022[174] Unregistered Sales of Equity Securities and Use of Proceeds No unregistered sales; $97.1 million of $209.5 million IPO proceeds used for general corporate purposes and HIL-214 development - The company's IPO on May 3, 2022, resulted in net proceeds of approximately $209.5 million[177] - As of June 30, 2023, approximately $97.1 million of the IPO proceeds have been used for general corporate purposes, including the clinical development of HIL-214[178] Other Information No other information is required to be reported for this period - None[182]