Rocket Pharmaceuticals(US:RCKT)2023-05-05 20:41PART I - FINANCIAL INFORMATION Financial Statements The company reported no revenue in Q1 2023, with net loss increasing to $58.3 million and total assets decreasing Consolidated Balance Sheets Total assets decreased to $514.8 million as of March 31, 2023, primarily due to reduced cash and cash equivalents Consolidated Balance Sheet Highlights (in thousands) | Account | March 31, 2023 | December 31, 2022 | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $64,579 | $140,517 | | Investments | $295,462 | $259,153 | | Total current assets | $338,033 | $364,060 | | Total assets | $514,757 | $551,807 | | Liabilities & Stockholders' Equity | | | | Total current liabilities | $31,206 | $39,169 | | Total liabilities | $55,881 | $62,121 | | Total stockholders' equity | $458,876 | $489,686 | | Accumulated deficit | $(772,110) | $(713,775) | Consolidated Statements of Operations The company reported no revenue and a net loss of $58.3 million for Q1 2023, driven by increased operating expenses Statement of Operations Summary (in thousands, except per share data) | Metric | Q1 2023 | Q1 2022 | | :--- | :--- | :--- | | Revenue | $0 | $0 | | Research and development expenses | $46,371 | $30,794 | | General and administrative expenses | $15,823 | $11,770 | | Total operating expenses | $62,194 | $42,564 | | Loss from operations | $(62,194) | $(42,564) | | Net loss | $(58,335) | $(42,982) | | Net loss per share - basic and diluted | $(0.73) | $(0.67) | Consolidated Statements of Cash Flows Net cash used in operating activities increased to $57.6 million in Q1 2023, with overall cash decreasing by $75.9 million Cash Flow Summary (in thousands) | Activity | Q1 2023 | Q1 2022 | | :--- | :--- | :--- | | Net cash used in operating activities | $(57,560) | $(39,223) | | Net cash used in investing activities | $(36,721) | $(62,995) | | Net cash provided by financing activities | $18,343 | $76 | | Net change in cash, cash equivalents and restricted cash | $(75,938) | $(102,142) | | Cash, cash equivalents and restricted cash at end of period | $65,919 | $131,895 | Notes to Consolidated Financial Statements Notes detail the company's gene therapy business, financial risks, accounting policies, cash runway, and acquisition details - The company is a clinical-stage biotechnology firm focused on gene therapies for rare diseases, with three clinical-stage ex vivo LV programs (FA, LAD-I, PKD) and an in vivo AAV program for Danon disease32 - The company has incurred losses since inception, with an accumulated deficit of $772.1 million as of March 31, 2023. Existing cash, cash equivalents, and investments of $360.0 million are expected to fund operations into the first half of 202535 - Through its at-the-market (ATM) offering program, the company sold 0.9 million shares for net proceeds of $17.2 million during Q1 2023. Cumulatively, the program has raised $63.8 million in net proceeds3664 - The acquisition of Renovacor on December 1, 2022, was accounted for as a business combination with a total consideration of $72.3 million, resulting in $25.2 million of IPR&D intangible assets and $8.3 million of goodwill909195 Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses gene therapy pipeline advancements, Q1 2023 financial results with a $58.3 million net loss, and a cash runway into H1 2025 Pipeline Overview The company's gene therapy pipeline shows progress with RMAT designation for Danon Disease, IND filings, and BLA submissions targeted for 2023 - Danon Disease (RP-A501): Received RMAT designation from the FDA. The company anticipates initiating the initial component of a global pivotal study in Q2 2023129 - PKP2-ACM (RP-A601): The company anticipates filing an Investigational New Drug (IND) application in the second quarter of 2023134 - BAG3-DCM: The company plans to submit an IND for its BAG3-DCM program in the first half of 2024139 - Fanconi Anemia (RP-L102): The primary endpoint in the pivotal Phase 2 study has been achieved. The company anticipates filing a Biologics License Application (BLA) in the fourth quarter of 2023147148 - LAD-I (RP-L201): Data showed 100% overall survival at 12 months post-infusion. The company anticipates filing a BLA in the second quarter of 2023154155 - PKD (RP-L301): Enrollment in the Phase 1 study is complete. Initiation of the Phase 2 pivotal trial is anticipated in the fourth quarter of 2023161 Results of Operations Q1 2023 R&D expenses increased by $15.6 million to $46.4 million, and G&A expenses rose by $4.1 million to $15.8 million Comparison of Operations (in thousands) | Item | Q1 2023 | Q1 2022 | Change | | :--- | :--- | :--- | :--- | | Research and development | $46,371 | $30,794 | $15,577 | | General and administrative | $15,823 | $11,770 | $4,053 | | Loss from operations | $(62,194) | $(42,564) | $(19,630) | | Net loss | $(58,335) | $(42,982) | $(15,353) | - The $15.6 million increase in R&D expenses was driven by higher manufacturing and development costs ($2.8 million), compensation and benefits from increased headcount ($6.6 million), direct materials ($0.9 million), and laboratory supplies ($0.9 million)184 - The $4.1 million increase in G&A expenses was primarily due to increases in commercial preparation expenses ($1.1 million), compensation and benefits ($0.7 million), and non-cash stock compensation ($1.1 million)185 Liquidity and Capital Resources The company had $360.0 million in cash and investments as of March 31, 2023, expected to fund operations into H1 2025 - As of March 31, 2023, the company had $360.0 million in cash, cash equivalents, and investments. These resources are expected to fund operating expenses and capital requirements into the first half of 2025189 Cash Flow Summary (in thousands) | Activity | Q1 2023 | Q1 2022 | | :--- | :--- | :--- | | Net cash used in operating activities | $(57,560) | $(39,223) | | Net cash used in investing activities | $(36,721) | $(62,995) | | Net cash provided by financing activities | $18,343 | $76 | - Cash used in operations in Q1 2023 was $57.6 million, resulting from a net loss of $58.3 million, adjusted for non-cash items like stock-based compensation ($8.9 million) and changes in operating assets and liabilities192 Quantitative and Qualitative Disclosures About Market Risk Market risk is primarily from cash and marketable securities, invested in high-quality instruments, with immaterial interest rate risk - The company's market risk is mainly confined to its cash and marketable securities, which are invested in high-quality instruments like U.S. treasury securities and corporate bonds200 - The company maintains cash balances at financial institutions that may exceed federally insured limits, posing a potential risk of loss given the instability of financial institutions201 Controls and Procedures Management concluded that disclosure controls and procedures were effective as of March 31, 2023, with no material changes - Management concluded that as of March 31, 2023, the company's disclosure controls and procedures were effective at a reasonable assurance level202 - No changes in internal control over financial reporting occurred during the quarter that have materially affected, or are reasonably likely to materially affect, these controls204 PART II - OTHER INFORMATION Legal Proceedings The company is not currently party to any legal proceedings expected to have a material adverse effect - The Company does not believe it is party to any claim or litigation that would have a material adverse effect on its business205 Risk Factors No material changes to the risk factors previously disclosed in the company's 2022 Form 10-K - There have been no material changes from the risk factors previously disclosed in the company's 2022 Form 10-K206 Unregistered Sales of Equity Securities and Use of Proceeds No unregistered sales of equity securities or use of proceeds to report - None207 Exhibits This section lists exhibits filed with the Quarterly Report on Form 10-Q, including agreements and certifications