HOOKIPA Pharma(HOOK) - 2023 Q3 - Quarterly Report

PART I. FINANCIAL INFORMATION Financial Statements (Unaudited) This section presents the unaudited condensed consolidated financial statements for the nine months ended September 30, 2023, showing a net loss of $56.8 million and $107.7 million in cash. Condensed Consolidated Balance Sheets The balance sheet as of September 30, 2023, shows total assets decreased to $164.0 million, while liabilities slightly increased and equity decreased due to net loss. Condensed Consolidated Balance Sheet Highlights (in thousands) | | September 30, 2023 | December 31, 2022 | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $ 107,676 | $ 112,488 | | Total current assets | $ 139,471 | $ 147,196 | | Total assets | $ 164,010 | $ 170,454 | | Liabilities and Stockholders' Equity | | | | Total current liabilities | $ 40,576 | $ 35,632 | | Total liabilities | $ 68,959 | $ 67,937 | | Total stockholders' equity | $ 95,051 | $ 102,517 | | Total liabilities and stockholders' equity | $ 164,010 | $ 170,454 | Condensed Consolidated Statements of Operations and Comprehensive Loss For the nine months ended September 30, 2023, revenue increased to $12.7 million, but net loss widened to $56.8 million due to higher R&D expenses. Condensed Consolidated Statements of Operations Highlights (in thousands, except per share data) | | Three Months Ended Sep 30, 2023 | Three Months Ended Sep 30, 2022 | Nine Months Ended Sep 30, 2023 | Nine Months Ended Sep 30, 2022 | | :--- | :--- | :--- | :--- | :--- | | Revenue from collaboration and licensing | $ 6,867 | $ 2,230 | $ 12,722 | $ 6,421 | | Research and development | (24,625) | (18,286) | (65,262) | (51,053) | | General and administrative | (4,912) | (4,937) | (14,259) | (14,935) | | Loss from operations | (22,670) | (20,993) | (66,799) | (59,567) | | Net loss | (19,066) | (18,280) | (56,762) | (52,604) | | Net loss per share — basic and diluted | $ (0.17) | $ (0.25) | $ (0.64) | $ (0.83) | Condensed Consolidated Statements of Convertible Preferred Stock and Stockholders' Equity Stockholders' equity decreased to $95.1 million due to a $56.8 million net loss, partially offset by $46.3 million from a June 2023 public offering. - On June 5, 2023, the company closed a public offering of common stock and Series A-2 convertible preferred stock, raising net proceeds of $46.2 million after deducting underwriting discounts and offering expenses[117] - In May 2023, stockholders converted an aggregate of 1,327 shares of Series A and 5,000 shares of Series A-1 convertible preferred stock into a total of 6,327,000 shares of common stock[128] Condensed Consolidated Statements of Cash Flows Net cash used in operating activities increased to $46.3 million, while financing activities provided $44.4 million, resulting in a $5.6 million net cash decrease. Summary of Cash Flows (in thousands) | | Nine months ended September 30, 2023 | Nine months ended September 30, 2022 | | :--- | :--- | :--- | | Net cash used in operating activities | $ (46,300) | $ (33,134) | | Net cash used in investing activities | $ (3,737) | $ (4,418) | | Net cash provided by financing activities | $ 44,421 | $ 72,467 | Notes to Condensed Consolidated Financial Statements Detailed notes explain accounting policies, revenue sources from Gilead ($5.1 million) and Roche ($7.6 million), and confirm sufficient cash for 12 months. - The company expects its cash and cash equivalents will be sufficient to fund its operating expenses, capital expenditure requirements and debt service payments through at least 12 months from the issuance date of the financial statements[44] - For the nine months ended September 30, 2023, the company recognized $5.1 million in revenue from its collaboration with Gilead and $7.6 million from its collaboration with Roche[220] - As of September 30, 2023, the company had total non-cancellable obligations under contracts with contract manufacturing organizations (CMOs) of $9.3 million[149] Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the company's financial results, liquidity, and capital resources, highlighting increased revenue and R&D expenses, with sufficient cash for 12 months. Overview HOOKIPA, a clinical-stage biopharmaceutical company, develops immunotherapeutics with oncology and infectious disease programs, funded by equity and collaborations. - Preliminary data from the Phase 2 trial of HB-200 in combination with pembrolizumab for 1st line HPV16+ head and neck cancer showed a 42% objective response rate and 74% disease control rate[167] - The collaboration with Roche for HB-700 and a second program could yield up to approximately $930 million in future milestone payments plus royalties, with a $10.0 million milestone achieved in Q1 2023[171] - The collaboration with Gilead for HBV and HIV programs has potential for significant milestone payments and royalties, with Gilead funding the HIV program through a Phase 1b clinical trial[173] Results of Operations Revenue increased by $6.3 million and R&D expenses rose by $14.2 million for the nine months ended September 30, 2023, leading to a higher net loss. Comparison of Results for the Nine Months Ended September 30 (in thousands) | | 2023 | 2022 | Change ($) | | :--- | :--- | :--- | :--- | | Revenue from collaboration and licensing | $ 12,722 | $ 6,421 | +$6,301 | | Research and development | (65,262) | (51,053) | +$14,209 | | General and administrative | (14,259) | (14,935) | -$676 | | Loss from operations | (66,799) | (59,567) | +$7,232 | | Net loss | (56,762) | (52,604) | +$4,158 | - The $14.2 million increase in R&D expenses for the nine months ended Sep 30, 2023, was primarily driven by higher clinical study expenses for the HB-200 program and increased spending for Gilead and Roche partnered programs[224] Liquidity and Capital Resources The company had $108.1 million in cash as of September 30, 2023, which is expected to fund operations for at least 12 months, with future funding needs anticipated. - As of September 30, 2023, the company had cash, cash equivalents, and restricted cash of $108.1 million[235] - The company believes its existing cash and cash equivalents will enable it to fund operating expenses and capital expenditure requirements for at least the next 12 months[251] - Net cash used in operating activities for the nine months ended Sep 30, 2023 was $46.3 million, compared to $33.1 million for the same period in 2022[253][254] Quantitative and Qualitative Disclosures About Market Risk The company faces market risks primarily from foreign currency exchange rate fluctuations (USD vs. Euro) and interest rate changes, though interest rate exposure is not material. - The company's primary market risks are foreign currency exchange rate fluctuations, specifically between the U.S. dollar and the euro, due to its Austrian subsidiary[267] - The company is also exposed to interest rate risk, but does not believe it has material exposure to changes in the fair value of its investment portfolio due to the nature of its cash and cash equivalent holdings[268] Controls and Procedures Management concluded that disclosure controls were effective as of September 30, 2023, with no material changes to internal control over financial reporting. - Management concluded that the company's disclosure controls and procedures were effective at a reasonable assurance level as of September 30, 2023[274] - There were no changes in internal control over financial reporting during the third quarter of 2023 that have materially affected, or are reasonably likely to materially affect, internal controls[275] PART II. OTHER INFORMATION Legal Proceedings The company reports a favorable outcome in a patent proceeding, with European Patent No. 3218504 maintained as granted. - A third-party opposition to European Patent No. 3218504, which is exclusively licensed to the company and covers its replicating arenavirus platform, was dismissed by the European Patent Office (EPO), and the patent was maintained as granted[277] Risk Factors No material changes to the company's risk factors were reported compared to the Annual Report on Form 10-K for 2022. - There have been no material changes to the Company's risk factors as disclosed in its Annual Report on Form 10-K for the year ended December 31, 2022[279] Unregistered Sales of Equity Securities and Use of Proceeds No unregistered sales of equity securities were reported during the period. - None reported for the period[280] Other Information No directors or officers adopted, terminated, or modified Rule 10b5-1 trading arrangements during the third quarter of 2023. - During the three months ended September 30, 2023, none of the Company's directors or officers adopted, terminated or modified a Rule 10b5-1 trading arrangement[284] Exhibits This section lists various corporate governance documents, certifications, and Inline XBRL data files filed as exhibits with the Form 10-Q. - The report includes a list of filed exhibits, such as the Certificate of Incorporation, Bylaws, officer certifications (302 and 906), and XBRL interactive data files[286]