Replimune(REPL) - 2024 Q2 - Quarterly Report

PART I FINANCIAL INFORMATION This section presents the company's unaudited financial statements, management's analysis, market risk, and internal controls Condensed Consolidated Financial Statements (Unaudited) The company reported a net loss of $109.6 million for the six months ended September 30, 2023, driven by increased R&D, maintaining $496.8 million in cash and investments Condensed Consolidated Balance Sheets (Unaudited) | | September 30, 2023 (Thousands USD) | March 31, 2023 (Thousands USD) | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $75,996 | $146,590 | | Short-term investments | $420,765 | $436,796 | | Total current assets | $508,175 | $592,603 | | Total assets | $562,398 | $646,591 | | Liabilities and Stockholders' Equity | | | | Total current liabilities | $39,832 | $33,825 | | Total liabilities | $97,226 | $91,299 | | Accumulated deficit | $(595,087) | $(485,488) | | Total stockholders' equity | $465,172 | $555,292 | Condensed Consolidated Statements of Operations (Unaudited) | | Three Months Ended Sep 30, 2023 (Thousands USD) | Three Months Ended Sep 30, 2022 (Thousands USD) | Six Months Ended Sep 30, 2023 (Thousands USD) | Six Months Ended Sep 30, 2022 (Thousands USD) | | :--- | :--- | :--- | :--- | :--- | | Research and development | $49,101 | $28,834 | $89,538 | $58,312 | | Selling, general and administrative | $14,730 | $12,745 | $29,941 | $24,143 | | Loss from operations | $(63,831) | $(41,579) | $(119,479) | $(82,455) | | Net loss | $(60,044) | $(43,102) | $(109,599) | $(85,355) | | Net loss per common share | $(0.90) | $(0.79) | $(1.65) | $(1.57) | Condensed Consolidated Statements of Cash Flows (Unaudited) | | Six Months Ended Sep 30, 2023 (Thousands USD) | Six Months Ended Sep 30, 2022 (Thousands USD) | | :--- | :--- | :--- | | Net cash used in operating activities | $(92,178) | $(66,665) | | Net cash provided by investing activities | $20,044 | $5,351 | | Net cash provided by financing activities | $1,543 | $39,945 | | Net (decrease) increase in cash | $(70,594) | $(17,018) | - The company is a clinical-stage biotechnology firm focused on developing oncolytic immunotherapies to treat cancer, subject to risks common to early-stage biotech companies, including the need for significant additional capital and regulatory approval for its product candidates[24][25] - The company has a Loan and Security Agreement with Hercules Capital, Inc. for a term loan facility of up to $200.0 million, with an initial $30.0 million borrowed in October 2022[39] - Collaboration agreements are in place with Bristol-Myers Squibb (BMS), Regeneron, Roche, and Incyte for the supply of combination therapies in various clinical trials[83][86][93] Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the company's oncolytic immunotherapy platform, highlighting increased R&D expenses, higher net loss, and strong liquidity of $496.8 million expected to fund operations into late 2025 Overview This section provides an overview of Replimune's clinical-stage oncolytic immunotherapy platform and lead product candidates - Replimune is a clinical-stage biotechnology company developing a portfolio of oncolytic immunotherapies based on its proprietary RPx platform, which uses an engineered strain of herpes simplex virus 1 (HSV-1)[113][115] - The lead product candidate, RP1, is in a registration-directed Phase 2 trial (CERPASS) for cutaneous squamous cell carcinoma (CSCC), with a Biologics License Application (BLA) submission expected in Q2 2024, assuming positive data[116] - The IGNYTE trial for anti-PD-1 failed cutaneous melanoma has completed enrollment of 140 patients, with a BLA submission planned for Q3 2024 based on this trial[118] - The pipeline includes RP2 and RP3, which are being evaluated in various tumor types like hepatocellular carcinoma (HCC) and colorectal cancer (CRC) in collaboration with partners such as Roche and BMS[122][126] Results of Operations This section details the company's operating results, highlighting changes in research and development and selling, general and administrative expenses Comparison of Operating Results (Three Months Ended Sep 30) | | 2023 (Thousands USD) | 2022 (Thousands USD) | Change (Thousands USD) | | :--- | :--- | :--- | :--- | | Research and development | $49,101 | $28,834 | $20,267 | | Selling, general and administrative | $14,730 | $12,745 | $1,985 | | Loss from operations | $(63,831) | $(41,579) | $(22,252) | | Net loss | $(60,044) | $(43,102) | $(16,942) | - R&D expenses increased by $20.3 million for the three months ended Sep 30, 2023, primarily due to increased clinical trial site and patient enrollment for RP1, higher manufacturing efforts, and an $8.2 million increase in personnel-related costs[157][158][160] - SG&A expenses increased by $2.0 million for the three months ended Sep 30, 2023, mainly due to a $1.1 million increase in personnel costs from hiring for pre-launch planning and building commercial infrastructure, and a $0.9 million increase in sales and marketing costs[161] Comparison of Operating Results (Six Months Ended Sep 30) | | 2023 (Thousands USD) | 2022 (Thousands USD) | Change (Thousands USD) | | :--- | :--- | :--- | :--- | | Research and development | $89,538 | $58,312 | $31,226 | | Selling, general and administrative | $29,941 | $24,143 | $5,798 | | Loss from operations | $(119,479) | $(82,455) | $(37,024) | | Net loss | $(109,599) | $(85,355) | $(24,244) | Liquidity and Capital Resources This section discusses the company's cash position, operating cash flow, and projected liquidity runway - As of September 30, 2023, the company had cash, cash equivalents, and short-term investments of $496.8 million[173] - Net cash used in operating activities was $92.2 million for the six months ended September 30, 2023, compared to $66.7 million for the same period in 2022, primarily due to a higher net loss[175][177] - Based on the current operating plan, existing cash is expected to fund operations and capital expenditure requirements into the second half of 2025[185] Quantitative and Qualitative Disclosures About Market Risk The company has indicated that this section is not applicable for this reporting period - Not applicable[209] Controls and Procedures Management concluded the company's disclosure controls and procedures were effective as of September 30, 2023, with no material changes in internal control over financial reporting - The Chief Executive Officer and Chief Accounting Officer concluded that the company's disclosure controls and procedures were effective as of September 30, 2023[211] - There have been no changes in internal control over financial reporting for the three months ended September 30, 2023, that have materially affected, or are reasonably likely to materially affect, internal controls[213] PART II OTHER INFORMATION This section covers legal proceedings, risk factors, equity sales, defaults, and exhibits related to the company's operations 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 proceedings[216] Risk Factors This section outlines significant risks including early-stage product development, clinical trial uncertainty, regulatory approval challenges, competition, financial losses, and the need for additional capital Risks Related to Product Development This section outlines risks associated with early-stage product development, clinical trial outcomes, and platform dependency - All product candidates are in early stages of development and may not receive regulatory approval or become commercially viable; preclinical and early clinical trial results are not predictive of later-stage outcomes[220][222] - Development of product candidates in combination with third-party drugs (e.g., anti-PD-1 therapies) presents challenges, including reliance on supply and the regulatory status of those drugs[229][232] - An underlying problem with the proprietary RPx platform could adversely affect the entire pipeline, as all current product candidates are based on this platform[234] Risks Related to Regulatory Approval This section addresses risks concerning the lengthy and unpredictable regulatory approval process and potential post-marketing restrictions - The regulatory approval process is lengthy, unpredictable, and the company may never obtain approval for its product candidates; even if approved, the indications may be limited[237][240] - Undesirable side effects could delay or prevent regulatory approval, result in a more restrictive label, or lead to post-marketing restrictions[242] - The company is subject to ongoing regulatory review even after approval, which can result in significant expense and limit how products are manufactured and marketed[253] Risks Related to Commercialization This section covers risks related to market competition, lack of commercial infrastructure, and challenges in achieving market acceptance and reimbursement - The company faces significant competition from other biopharmaceutical companies that may have greater resources and develop products more quickly[268] - The company currently lacks a commercial infrastructure and may be unable to establish effective marketing, sales, and distribution capabilities, which could limit revenue[273] - Successful commercialization depends on achieving broad market acceptance and securing adequate reimbursement from government and private payors, which is uncertain[280][284] Risks Related to Financial Position and Need for Additional Capital This section highlights risks from the company's limited operating history, continuous net losses, and the necessity for additional financing - The company has a limited operating history, has incurred net losses since inception, and anticipates substantial and increasing net losses for the foreseeable future[291] - The company will require additional financing to achieve its goals, and failure to obtain this capital could force it to delay, limit, or terminate its development programs[297] - All product candidates are in early stages of development and may never receive regulatory approval or become commercially viable; the company has a history of losses and expects them to continue[220][291] - The company's ability to commercialize its products depends on successfully transitioning manufacturing to its in-house facility and maintaining relationships with third-party suppliers and collaborators like BMS and Regeneron[218][319] - The company faces risks related to protecting its intellectual property and potential infringement claims from third parties, such as the recently settled matter with Amgen which now requires royalty payments[303][311] - The company will require additional financing to achieve its goals, and failure to obtain necessary capital could force delays or termination of product development or commercialization efforts[297] Unregistered Sales of Equity Securities and Use of Proceeds The company reported no unregistered sales of equity securities during the period - None[407] Defaults Upon Senior Securities The company has indicated that this section is not applicable - Not applicable[408] Mine Safety Disclosure The company has indicated that this section is not applicable - Not applicable[409] Other Information The company reported no other information for this period - None[410] Exhibits This section lists exhibits filed with the Form 10-Q, including employment agreements and CEO/CFO certifications - Exhibits filed include employment agreements, stock option agreements, and CEO/CFO certifications required under Sections 302 and 906 of the Sarbanes-Oxley Act[412]