Replimune(REPL) - 2023 Q2 - Quarterly Report

PART I FINANCIAL INFORMATION Item 1. Financial Statements The unaudited financial statements detail Replimune Group, Inc.'s financial position and performance, highlighting increased operating expenses and net losses Condensed Consolidated Balance Sheets | | September 30, 2022 | March 31, 2022 | | :--- | :--- | :--- | | Total current assets | $379,390 | $403,977 | | Total assets | $436,095 | $461,192 | | Total current liabilities | $23,537 | $20,756 | | Total liabilities | $52,023 | $49,963 | | Total stockholders' equity | $384,072 | $411,229 | Amounts in thousands - As of September 30, 2022, the company's cash, cash equivalents, and short-term investments totaled $371.8 million, a decrease from $395.7 million as of March 31, 2022[10] Condensed Consolidated Statements of Operations | | Three Months Ended Sep 30, 2022 | Three Months Ended Sep 30, 2021 | Six Months Ended Sep 30, 2022 | Six Months Ended Sep 30, 2021 | | :--- | :--- | :--- | :--- | :--- | | Research and development | $28,834 | $19,902 | $58,312 | $38,456 | | Selling, general and administrative | $12,745 | $9,345 | $24,143 | $18,172 | | Total operating expenses | $41,579 | $29,247 | $82,455 | $56,628 | | Loss from operations | ($41,579) | ($29,247) | ($82,455) | ($56,628) | | Net loss | ($43,102) | ($29,355) | ($85,355) | ($56,666) | | Net loss per common share | ($0.79) | ($0.56) | ($1.57) | ($1.09) | Amounts in thousands, except per share amounts - Operating expenses increased significantly year-over-year for both the three and six-month periods, driven by higher research and development costs and selling, general, and administrative expenses, leading to a wider net loss[13] Condensed Consolidated Statements of Comprehensive Loss | | Three Months Ended Sep 30, 2022 | Six Months Ended Sep 30, 2022 | | :--- | :--- | :--- | | Net loss | ($43,102) | ($85,355) | | Foreign currency translation gain | $2,330 | $4,067 | | Comprehensive loss | ($40,691) | ($81,451) | Amounts in thousands Condensed Consolidated Statements of Stockholders' Equity - Total stockholders' equity decreased from $411.2 million at March 31, 2022, to $384.1 million at September 30, 2022. The decrease was primarily due to the net loss of $85.4 million for the six-month period, partially offset by proceeds from the issuance of common stock through ATM sales ($37.4 million) and stock option exercises[18] Condensed Consolidated Statements of Cash Flows | | Six Months Ended Sep 30, 2022 | Six Months Ended Sep 30, 2021 | | :--- | :--- | :--- | | Net cash used in operating activities | ($66,665) | ($41,275) | | Net cash provided by investing activities | $5,351 | $15,940 | | Net cash provided by financing activities | $39,945 | $2,270 | | Net decrease in cash, cash equivalents and restricted cash | ($17,018) | ($22,549) | Amounts in thousands - Cash used in operating activities increased to $66.7 million for the six months ended September 30, 2022, from $41.3 million in the prior year period, mainly due to a larger net loss. Cash from financing activities was significantly higher at $39.9 million, driven by $37.4 million in proceeds from ATM stock sales[21] Notes to Unaudited Condensed Consolidated Financial Statements - The company is a clinical-stage biotechnology firm focused on oncolytic immunotherapy. It has incurred recurring losses since inception, with a net loss of $85.4 million for the six months ended September 30, 2022, and an accumulated deficit of $396.6 million. Management believes current cash, equivalents, and investments are sufficient to fund operations for at least the next 12 months[24][26] - During the six months ended September 30, 2022, the company sold 2,026,438 shares of common stock through its At-The-Market (ATM) programs, raising gross proceeds of $38.7 million[47][51] - The company has collaboration agreements with Bristol-Myers Squibb (BMS) for the supply of nivolumab and with Regeneron for the supply of cemiplimab and cost-sharing for the CERPASS trial. A dispute with Regeneron has led the company to stop recording cost-sharing reimbursements since July 2022[75][78][82] - Subsequent to the quarter end, on October 6, 2022, the company entered into a Loan and Security Agreement with Hercules Capital for a term loan facility of up to $200.0 million, drawing an initial $30.0 million[91] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the company's clinical-stage oncolytic immunotherapy development, detailing increased operating losses from expanded clinical trials and personnel costs, while maintaining a strong liquidity position Overview - Replimune is a clinical-stage biotechnology company developing tumor-directed oncolytic immunotherapies from its proprietary RPx platform, with three product candidates: RP1, RP2, and RP3[100][102] - The lead candidate, RP1, is in a registration-directed Phase 2 trial (CERPASS) for cutaneous squamous cell carcinoma (CSCC), with topline data expected in H1 2023. Another registration-directed Phase 2 cohort in the IGNYTE trial is evaluating RP1 in anti-PD-1 failed melanoma, with a data snapshot from the first 75 patients expected in late 2022[102][103][105] - RP2 and RP3 are being evaluated in Phase 1 trials, with plans to initiate Phase 2 development in H1 2023 for tumor types such as head and neck, hepatocellular, and colorectal cancers. An update on these programs is expected by year-end 2022[110][111][112] Results of Operations | | Three Months Ended Sep 30, 2022 | Three Months Ended Sep 30, 2021 | Change | | :--- | :--- | :--- | :--- | | Research and development | $28,834 | $19,902 | $8,932 | | General and administrative | $12,745 | $9,345 | $3,400 | | Total operating expenses | $41,579 | $29,247 | $12,332 | | Net loss | ($43,102) | ($29,355) | ($13,747) | Amounts in thousands | | Six Months Ended Sep 30, 2022 | Six Months Ended Sep 30, 2021 | Change | | :--- | :--- | :--- | :--- | | Research and development | $58,312 | $38,456 | $19,856 | | General and administrative | $24,143 | $18,172 | $5,971 | | Total operating expenses | $82,455 | $56,628 | $25,827 | | Net loss | ($85,355) | ($56,666) | ($28,689) | Amounts in thousands - R&D expenses for the six months ended Sep 30, 2022 increased by $19.9 million YoY to $58.3 million. This was driven by a $7.6 million increase in RP1 program costs due to trial site expansion and reduced cost-sharing from Regeneron, a $6.9 million increase in the RP3 program, and a $6.8 million increase in personnel-related costs[147][148] - SG&A expenses for the six months ended Sep 30, 2022 increased by $6.0 million YoY to $24.1 million, primarily due to a $2.5 million increase in personnel-related costs from hiring, including for pre-launch commercial planning[149] Liquidity and Capital Resources - As of September 30, 2022, the company had $371.8 million in cash, cash equivalents, and short-term investments[153] - Net cash used in operating activities for the six months ended September 30, 2022, was $66.7 million, an increase from $41.3 million in the prior-year period, primarily due to a higher net loss[156] - In October 2022, the company secured a $200 million non-dilutive debt financing agreement with Hercules Capital. Management believes existing cash plus available funds from this facility will fund operations into calendar 2025[163] Item 3. Quantitative and Qualitative Disclosures About Market Risk The company indicates this section is not applicable for the reporting period - This section is not applicable[185] Item 4. Controls and Procedures Management concluded the company's disclosure controls and procedures were effective as of September 30, 2022, with no material changes in internal controls - Based on an evaluation as of September 30, 2022, the Chief Executive Officer and Chief Financial Officer concluded that the company's disclosure controls and procedures were effective[186] - There were no changes in internal control over financial reporting during the quarter ended September 30, 2022, that have materially affected, or are reasonably likely to materially affect, internal controls[188] PART II OTHER INFORMATION Item 1. Legal Proceedings The company reports it is not currently a party to any material legal proceedings - The company is not currently a party to any material legal proceedings[191] Item 1A. Risk Factors This section outlines significant risks including early-stage product development, clinical trial failures, reliance on collaborations, manufacturing challenges, competition, and the need for additional financing - All product candidates are in early development stages and may never receive regulatory approval or become commercially viable. A fundamental problem with the underlying RPx platform could force discontinuation of all pipeline candidates[195][196] - The company's product candidates are designed for use in combination with third-party drugs like nivolumab (BMS) and cemiplimab (Regeneron). The company has limited control over the supply and regulatory status of these drugs, and any issues could delay development[204][207] - The company has a history of net losses ($396.6 million accumulated deficit as of Sep 30, 2022) and will require substantial additional financing to achieve its goals. Failure to obtain capital could force delays or termination of programs[261][267] - The company faces intellectual property risks and may become involved in litigation. On November 2, 2022, the company filed a petition for inter partes review with the USPTO to invalidate certain claims of a patent held by Amgen Inc[278] - The transition of manufacturing to the new in-house facility in Framingham, MA, presents risks. Delays or issues with process transfer, comparability analysis, and regulatory approval could disrupt the supply of product candidates for clinical trials[310] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds The company reported no unregistered sales of equity securities during the period - None[377] Item 6. Exhibits This section lists the exhibits filed with the Form 10-Q, including the Loan and Security Agreement and CEO/CFO certifications - Lists exhibits filed with the report, including required CEO/CFO certifications and the new Loan and Security Agreement with Hercules Capital, Inc[382]