Replimune(US:REPL)2023-08-03 12:11PART I - FINANCIAL INFORMATION This section provides the unaudited condensed consolidated financial statements and management's discussion and analysis for the quarter ended June 30, 2023 Condensed Consolidated Financial Statements (Unaudited) This section presents the unaudited condensed consolidated financial statements, including balance sheets, statements of operations, and cash flows, reporting a net loss of $49.6 million for the quarter ended June 30, 2023 Condensed Consolidated Balance Sheets The balance sheet shows a decrease in total assets to $603.9 million from $646.6 million at the end of the previous quarter, primarily due to a reduction in cash and cash equivalents Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | June 30, 2023 | March 31, 2023 | | :--- | :--- | :--- | | Cash and cash equivalents | $106,481 | $146,590 | | Short-term investments | $432,619 | $436,796 | | Total Assets | $603,891 | $646,591 | | Total current liabilities | $32,242 | $33,825 | | Total Liabilities | $89,862 | $91,299 | | Accumulated deficit | $(535,043) | $(485,488) | | Total Stockholders' Equity | $514,029 | $555,292 | Condensed Consolidated Statements of Operations For the three months ended June 30, 2023, the company reported a net loss of $49.6 million, or ($0.75) per share, compared to a net loss of $42.3 million, or ($0.78) per share, for the same period in 2022 Statement of Operations Summary (in thousands, except per share data) | Metric | Three Months Ended June 30, 2023 | Three Months Ended June 30, 2022 | | :--- | :--- | :--- | | Research and development | $40,437 | $29,478 | | Selling, general and administrative | $15,211 | $11,398 | | Total operating expenses | $55,648 | $40,876 | | Loss from operations | $(55,648) | $(40,876) | | Investment income | $6,186 | $343 | | Net loss | $(49,555) | $(42,253) | | Net loss per common share | $(0.75) | $(0.78) | Condensed Consolidated Statements of Cash Flows Net cash used in operating activities was $48.6 million for the three months ended June 30, 2023, a significant increase from $33.5 million in the prior-year period, primarily due to a higher net loss Cash Flow Summary (in thousands) | Cash Flow Activity | Three Months Ended June 30, 2023 | Three Months Ended June 30, 2022 | | :--- | :--- | :--- | | Net cash used in operating activities | $(48,588) | $(33,455) | | Net cash provided by investing activities | $7,361 | $5,315 | | Net cash provided by financing activities | $1,105 | $32,522 | | Net (decrease) increase in cash | $(40,109) | $6,297 | Notes to Unaudited Condensed Consolidated Financial Statements These notes detail the company's clinical-stage biotechnology business, its liquidity assessment, and significant collaboration and loan agreements - The company is a clinical-stage biotechnology firm focused on tumor-directed oncolytic immunotherapies, acknowledging risks like the need for additional capital and regulatory approval2324 - Despite recurring losses and an accumulated deficit of $535.0 million, the company expects existing cash to fund operations for at least 12 months from the issuance date25 - In October 2022, the company secured a Loan Agreement with Hercules Capital for up to $200.0 million, with an initial draw of $30.0 million, and an amendment in June 20233839 - Collaboration agreements include receiving nivolumab from BMS for RP1 and RP2 trials, and a cost-sharing agreement with Regeneron for the Phase 2 CERPASS trial, with reimbursements completed in June 2022848694 Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the company's clinical program advancements for RP1, RP2, and RP3, increased operating expenses, and liquidity, projecting cash to fund operations into the second half of 2025 Overview Replimune, a clinical-stage biotech, is advancing its oncolytic immunotherapy candidates RP1, RP2, and RP3, with key RP1 data readouts anticipated in Q4 2023 and new Phase 2 collaborations initiated - Topline data for the registration-directed CERPASS trial (RP1 in CSCC) is now expected in early Q4 2023, a revision from Q3 2023 due to slower independent review read rates113 - Snapshot data for all 141 patients in the IGNYTE trial (RP1 in anti-PD-1 failed melanoma) is on track for Q4 2023, with evaluation for potential dual launch with CERPASS115 - Phase 2 development for RP2 and/or RP3 is progressing with signal-finding studies in collaboration with Roche (for CRC and HCC) and BMS (for SCCHN)124 Results of Operations The company's net loss increased to $49.6 million for the quarter ended June 30, 2023, from $42.3 million in the prior-year period Comparison of Operating Expenses (in thousands) | Expense Category | Three Months Ended June 30, 2023 | Three Months Ended June 30, 2022 | Change | | :--- | :--- | :--- | :--- | | Research and development | $40,437 | $29,478 | $10,959 | | Selling, general and administrative | $15,211 | $11,398 | $3,813 | | Total operating expenses | $55,648 | $40,876 | $14,772 | - Increased RP1 program costs resulted from more clinical trial sites, higher patient enrollment, increased data management, and reduced cost-sharing from Regeneron162 - SG&A expenses rose due to a $2.8 million increase in personnel costs and a $1.3 million increase in other variable costs, including pre-launch sales and marketing programs165 Liquidity and Capital Resources As of June 30, 2023, the company had $539.1 million in cash, cash equivalents, and short-term investments, with management believing these funds are sufficient to support operations into the second half of 2025 - As of June 30, 2023, the company held $539.1 million in cash, cash equivalents, and short-term investments170 - Net cash used in operating activities increased to $48.6 million for the quarter, up from $33.5 million in the prior-year period, primarily due to a higher net loss172173 - Based on the current operating plan, existing cash resources are expected to fund operations into the second half of 2025179294 Quantitative and Qualitative Disclosures About Market Risk The company states that this section is not applicable to its business at this time - The company has determined this item is not applicable203 Controls and Procedures Management, including the Chief Executive Officer and Chief Accounting Officer, evaluated the company's disclosure controls and procedures and concluded they were effective at a reasonable assurance level as of June 30, 2023 - As of June 30, 2023, the CEO and Chief Accounting Officer concluded that the company's disclosure controls and procedures were effective204 - No material changes to internal control over financial reporting occurred during the quarter206 PART II - OTHER INFORMATION This section covers other required disclosures, including legal proceedings, risk factors, and exhibits Legal Proceedings The company reports that it is not currently a party to any material legal proceedings - The company is not currently a party to any material legal proceedings209 Risk Factors This section details significant risks, including uncertainties in clinical development, regulatory approval, reliance on third parties, capital needs, competition, and intellectual property challenges - The company's product candidates are in early development and may never receive regulatory approval or become commercially viable213 - The company has a history of net losses, anticipates increasing future losses, and will require additional financing to achieve its objectives284 - Development and commercialization depend on successful collaborations with partners like BMS and Regeneron for checkpoint blockade therapy supply222312 - Risks exist in transferring manufacturing to the new in-house facility, including potential delays, higher expenses, and failure to achieve anticipated efficiencies334 - The company is involved in an inter partes review petition with the USPTO challenging an Amgen Inc. patent, which could impact its freedom to operate304 Unregistered Sales of Equity Securities and Use of Proceeds The company reported no unregistered sales of equity securities during the period covered by the report - The company reports None for this item400 Defaults Upon Senior Securities The company reports that this item is not applicable - The company reports Not applicable for this item401 Mine Safety Disclosure The company reports that this item is not applicable - The company reports Not applicable for this item402 Other Information The company reported no other information required to be disclosed in this section - The company reports None for this item403 Exhibits This section lists the exhibits filed with the 10-Q, including the First Amendment to the Loan and Security Agreement with Hercules Capital and a Separation Agreement with former CFO Jean Franchi - Exhibit 10.1 is the First Amendment to the Loan and Security Agreement with Hercules Capital, dated June 28, 2023405 - Exhibits 10.2 and 10.3 are the Separation Agreement and Consulting Agreement with former CFO Jean Franchi, dated May 18, 2023405