Solid Biosciences(SLDB) - 2022 Q1 - Quarterly Report

PART I. FINANCIAL INFORMATION Item 1. Financial Statements (Unaudited) Q1 2022 net loss of $25.3 million, decreased assets, and April 2022 restructuring with 35% workforce reduction Condensed Consolidated Balance Sheet Data (in thousands) | Account | March 31, 2022 | December 31, 2021 | | :--- | :--- | :--- | | Cash and cash equivalents | $129,711 | $119,136 | | Available-for-sale securities | $50,339 | $88,643 | | Total Assets | $207,556 | $232,380 | | Total current liabilities | $21,744 | $23,601 | | Total Liabilities | $22,045 | $24,169 | | Total Stockholders' Equity | $185,511 | $208,211 | Condensed Consolidated Statements of Operations (in thousands) | Account | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | | :--- | :--- | :--- | | Collaboration revenue - related party | $1,925 | $3,335 | | Research and development | $19,945 | $14,206 | | General and administrative | $7,352 | $6,015 | | Loss from operations | ($25,372) | ($16,886) | | Net loss | ($25,328) | ($16,900) | | Net loss per share | ($0.22) | ($0.19) | Condensed Consolidated Statements of Cash Flows (in thousands) | Activity | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | | :--- | :--- | :--- | | Net cash used in operating activities | ($27,190) | ($21,366) | | Net cash provided by (used in) investing activities | $37,743 | ($35) | | Net cash provided by financing activities | $22 | $135,154 | - In April 2022, the company implemented a corporate restructuring to prioritize its key programs, SGT-001 and SGT-003, involving a headcount reduction of approximately 35%, with estimated restructuring costs of $1.7 million for severance and employee benefits[83] Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses strategic shifts, including a 35% workforce reduction to extend cash runway, and Q1 2022 net loss of $25.3 million from increased R&D - The company's lead product candidate is SGT-001, a gene transfer therapy for Duchenne, with enrollment in the Phase I/II IGNITE DMD trial complete and two-year data suggesting durable benefit[90][91][94] - In April 2022, the company announced a strategic shift to a commercially scaled, transient transfection-based manufacturing process for SGT-001 and narrowed its R&D focus to SGT-001, SGT-003, and next-generation capsids[92] - As part of the April 2022 reorganization, the company reduced its headcount by approximately 35%, expected to extend the cash runway into the second quarter of 2024, based on $180.1 million in cash, cash equivalents, and available-for-sale securities as of March 31, 2022[93][102] Comparison of Operating Results (in thousands) | Line Item | Q1 2022 | Q1 2021 | Change | % Change | | :--- | :--- | :--- | :--- | :--- | | Collaboration Revenue | $1,925 | $3,335 | ($1,410) | (42%) | | R&D Expenses | $19,945 | $14,206 | $5,739 | 40% | | G&A Expenses | $7,352 | $6,015 | $1,337 | 22% | | Net Loss | ($25,328) | ($16,900) | ($8,428) | 50% | Research & Development Expenses Breakdown (in thousands) | Program | Q1 2022 | Q1 2021 | Change | % Change | | :--- | :--- | :--- | :--- | :--- | | SGT-001 | $5,422 | $6,173 | ($751) | (12)% | | SGT-003 and other programs | $3,364 | $192 | $3,172 | 1652% | | Unallocated R&D | $11,159 | $7,841 | $3,318 | 42% | | Total R&D Expenses | $19,945 | $14,206 | $5,739 | 40% | Quantitative and Qualitative Disclosures About Market Risk The company faces market risk from interest rate changes on short-term investments, with a 10% change not materially impacting financial position - The company's primary market risk exposure is interest income sensitivity related to its cash equivalents and available-for-sale securities[145] - Due to the short-term nature of its investment portfolio, a 10% change in interest rates is not expected to materially impact the company's financial condition[145] Controls and Procedures Management concluded disclosure controls were effective as of March 31, 2022, with no material changes to internal control over financial reporting - As of March 31, 2022, the President and Chief Executive Officer and the interim Chief Financial Officer concluded that the company's disclosure controls and procedures were effective at the reasonable assurance level[146] - No material changes to the company's internal control over financial reporting occurred during the first quarter of 2022[147] PART II. OTHER INFORMATION Legal Proceedings The company reports that it is not a party to any material legal proceedings - As of the filing date, the company states there are no material legal proceedings[150] Risk Factors The company faces significant financial, developmental, manufacturing, commercial, and IP risks, including a history of losses and novel gene therapies - Financial Risks: The company has a history of significant net losses ($25.3M in Q1 2022) and an accumulated deficit of $502.1M, and will require additional funding to continue operations beyond its current cash runway[154][158] - Clinical Development Risks: SGT-001 and SGT-003 are based on novel gene transfer technology, making development time and cost difficult to predict, and the IGNITE DMD trial was previously placed on clinical hold by the FDA[153][172][175] - Manufacturing & Commercialization Risks: The company has limited gene transfer manufacturing experience and relies on third parties, posing risks of performance, regulatory compliance, and supply disruption, with a planned shift to a new manufacturing process for SGT-001 potentially requiring additional studies[155][249][256] - Intellectual Property Risks: The business heavily relies on in-licensed patents, which the company may not control the prosecution and enforcement of, and they could be challenged, invalidated, or circumvented by competitors[155][328][334] - Competition Risk: The company faces significant competition from larger, better-funded companies like Pfizer and Sarepta Therapeutics, which have Duchenne gene therapy candidates in later stages of clinical development (Phase III)[235][236] Unregistered Sales of Equity Securities and Use of Proceeds On January 3, 2022, the company issued an inducement grant of 131,400 stock options and 65,700 restricted stock units - On January 3, 2022, the company granted a new employee an option for 131,400 shares and 65,700 restricted stock units as an inducement award under Nasdaq Listing Rule 5635(c)(4)[403] Other Information On April 25, 2022, the Board approved a restructuring plan with a 35% workforce reduction, costing $1.7 million, to extend cash runway into Q2 2024 - On April 25, 2022, the Board approved a restructuring plan to reduce the workforce by approximately 35% to prioritize key programs and extend the cash runway into Q2 2024[405][406] - The company estimates total restructuring costs of approximately $1.7 million, primarily for severance and employee termination benefits, to be paid mostly during 2022[407] - A retention program was approved for remaining key employees, including cash bonuses and stock option grants for the Chief Legal Officer and Chief Scientific Officer[408] Exhibits The section lists exhibits filed with Form 10-Q, including CEO/CFO certifications and Inline XBRL documents for financial reporting - The filing includes CEO and CFO certifications pursuant to Sections 302 and 906 of the Sarbanes-Oxley Act[410] - Inline XBRL Instance, Schema, and other related taxonomy documents are included as exhibits for interactive data[410] Signatures The report was signed on April 27, 2022, by Ilan Ganot (CEO) and Stephen DiPalma (Interim CFO) - The report was signed on April 27, 2022, by Ilan Ganot (CEO) and Stephen DiPalma (Interim CFO)[413]