Solid Biosciences(SLDB) - 2021 Q3 - Quarterly Report

PART I. FINANCIAL INFORMATION Item 1. Financial Statements (Unaudited) This section presents unaudited financial statements reflecting increased equity from a public offering and new collaboration revenue Condensed Consolidated Balance Sheets The balance sheet reflects a substantial increase in total assets and stockholders' equity, driven by a public offering Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | Sep 30, 2021 | Dec 31, 2020 | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $109,676 | $154,744 | | Available-for-sale securities | $120,084 | $— | | Total current assets | $238,810 | $158,901 | | Total assets | $248,986 | $171,169 | | Liabilities & Equity | | | | Total current liabilities | $22,542 | $24,480 | | Total liabilities | $25,623 | $39,083 | | Total stockholders' equity | $223,363 | $132,086 | Condensed Consolidated Statements of Operations Operations show new collaboration revenue and reduced R&D expenses, resulting in a lower net loss compared to the prior year Statement of Operations Summary (in thousands, except per share data) | Metric | Q3 2021 | Q3 2020 | 9 Months 2021 | 9 Months 2020 | | :--- | :--- | :--- | :--- | :--- | | Collaboration revenue | $3,537 | $— | $10,466 | $— | | Research and development | $14,425 | $16,045 | $44,144 | $49,158 | | General and administrative | $7,143 | $5,181 | $19,924 | $15,957 | | Loss from operations | $(18,031) | $(21,226) | $(53,602) | $(67,059) | | Net loss | $(17,983) | $(21,246) | $(53,578) | $(66,927) | | Net loss per share | $(0.16) | $(0.44) | $(0.51) | $(1.39) | Condensed Consolidated Statements of Cash Flows Cash flows indicate significant financing from a stock issuance, offset by cash used for investments and operations Cash Flow Summary (Nine Months Ended Sep 30, in thousands) | Cash Flow Activity | 2021 | 2020 | | :--- | :--- | :--- | | Net cash used in operating activities | $(56,890) | $(57,906) | | Net cash (used in) provided by investing activities | $(121,262) | $6,660 | | Net cash provided by financing activities | $134,919 | $— | | Net decrease in cash, cash equivalents and restricted cash | $(43,233) | $(51,246) | Notes to the Condensed Consolidated Financial Statements Notes detail the IGNITE DMD trial status, the Ultragenyx collaboration, and the company's sufficient liquidity for the next twelve months - The company's lead product candidate, SGT-001, is in a Phase I/II clinical trial (IGNITE DMD) which was previously on clinical hold by the FDA and resumed patient treatment in February 2021[25] - The company believes its cash, cash equivalents, and available-for-sale securities of $229.8 million as of September 30, 2021, are sufficient to fund operations for at least twelve months[30] - The collaboration with Ultragenyx resulted in recognizing $10.5 million of related party collaboration revenue for the nine months ended September 30, 2021[61] - In March 2021, the company completed a public offering of 25,000,000 shares of common stock, receiving net proceeds of approximately $134.9 million[76][109] Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the clinical progress of SGT-001, financial performance improvements, and a cash runway into Q2 2023 Overview The company focuses on its SGT-001 trial for Duchenne, manages a recent adverse event, and advances its next-gen SGT-003 candidate - The eighth patient in the IGNITE DMD trial experienced a serious adverse event, which has since fully resolved, and a strengthened risk mitigation plan has been submitted to the FDA[91][92][93] - Long-term biopsy data from patients 4-6 demonstrated durable and widespread expression of microdystrophin protein at 1 to 2 years post-dosing[95] - The company is advancing a next-generation program, SGT-003, and is targeting an IND submission in early 2023[99] - As of September 30, 2021, the company had cash, cash equivalents, and available-for-sale securities of $229.8 million, expected to fund operations into the second quarter of 2023[110] Results of Operations Financial results improved due to new collaboration revenue and lower R&D costs, despite an increase in G&A expenses Comparison of Results (in thousands) | Metric | 9 Months 2021 | 9 Months 2020 | Change | | :--- | :--- | :--- | :--- | | Collaboration Revenue | $10,466 | $— | $10,466 | | Research & Development | $44,144 | $49,158 | $(5,014) | | General & Administrative | $19,924 | $15,957 | $3,967 | | Net Loss | $(53,578) | $(66,927) | $13,349 | - The $5.0 million decrease in R&D expenses was primarily due to a $6.4 million decrease in SGT-001 manufacturing costs, partially offset by higher personnel expenses[137] - The $3.9 million increase in G&A expenses was due to a $2.2 million increase in corporate expenses and a $1.7 million increase in personnel-related expenses[138] Liquidity and Capital Resources The company's liquidity is strong following recent equity financing, providing a cash runway into the second quarter of 2023 - The company raised net proceeds of approximately $134.9 million from a public offering in March 2021[147] - As of September 30, 2021, the company had cash, cash equivalents and available-for-sale securities of $229.8 million and no debt outstanding[148] - The company expects its current cash position will be sufficient to fund operations into the second quarter of 2023, but will need to raise additional funds to operate beyond that time[155] Quantitative and Qualitative Disclosures About Market Risk The company's primary market risk from interest rate changes on its short-term investments is considered immaterial - The company's primary market risk is interest rate sensitivity on its cash equivalents and available-for-sale securities[165] - Due to the short-term nature of its investment portfolio, the company does not expect a 10% change in interest rates to have a material impact on its financial position[165] Controls and Procedures Management concluded that disclosure controls and procedures were effective, with no material changes to internal controls - Management concluded that as of September 30, 2021, the company's disclosure controls and procedures were effective at the reasonable assurance level[166] - No material changes in internal control over financial reporting occurred during the three months ended September 30, 2021[167] PART II. OTHER INFORMATION Legal Proceedings The company is not currently involved in any material legal proceedings - As of September 30, 2021, the company is not aware of any material legal proceedings[82][170] Risk Factors Key risks include a history of net losses, clinical development challenges, manufacturing reliance, and intellectual property dependencies - Financial risks include a history of significant net losses ($458.1M accumulated deficit) and the need for additional funding beyond Q2 2023[174][177][179] - Clinical development risks are high, highlighted by the previous FDA clinical hold on the IGNITE DMD trial for SGT-001 due to a serious adverse event[192] - The company has limited manufacturing experience and relies on third parties, facing risks of production problems, delays, and regulatory compliance issues[266] - The business is heavily dependent on intellectual property licensed from universities, which imposes diligence obligations and may be subject to government 'march-in' rights[347][385] Unregistered Sales of Equity Securities and Use of Proceeds The company issued unregistered stock options as inducement awards to two new employees during the third quarter of 2021 - On July 1, 2021, granted an option to purchase 235,000 shares at an exercise price of $3.77 per share to a new employee[424] - On August 16, 2021, granted an option to purchase 118,000 shares at an exercise price of $2.51 per share to a new employee[425] Exhibits This section lists all exhibits filed with the report, including stock plans, agreements, and officer certifications Signatures The report is formally signed and authorized by the company's CEO and interim CFO