Trevi Therapeutics(US:TRVI)2021-08-12 20:09PART I. FINANCIAL INFORMATION Financial Statements (Unaudited) This section presents unaudited financial statements, highlighting growing net losses, decreased cash, and management's substantial doubt about the company's ability to continue as a going concern Condensed Consolidated Balance Sheet Data (in thousands of US dollars) | | June 30, 2021 | December 31, 2020 | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $36,425 | $45,001 | | Total current assets | $38,480 | $46,269 | | Total assets | $39,149 | $47,131 | | Liabilities and Stockholders' Equity | | | | Total current liabilities | $9,410 | $5,555 | | Total liabilities | $21,413 | $19,849 | | Accumulated deficit | $(165,142) | $(146,977) | | Total stockholders' equity | $17,736 | $27,282 | Condensed Consolidated Statements of Operations Data (in thousands of US dollars) | | Three Months Ended June 30, | Six Months Ended June 30, | | :--- | :--- | :--- | | | 2021 | 2020 | 2021 | 2020 | | Research and development | $6,498 | $4,921 | $12,087 | $10,940 | | General and administrative | $2,669 | $2,492 | $5,169 | $5,112 | | Loss from operations | $(9,167) | $(7,413) | $(17,256) | $(16,052) | | Net loss | $(9,794) | $(7,384) | $(18,165) | $(15,857) | | Basic and diluted net loss per common share | $(0.49) | $(0.41) | $(0.92) | $(0.89) | - The company has incurred recurring losses and negative cash flows since inception, with an accumulated deficit of $165.1 million as of June 30, 2021, and expects continued losses30 - Management concluded substantial doubt exists about the company's ability to continue as a going concern, with $36.4 million cash insufficient for 12 months of operations31 Management's Discussion and Analysis of Financial Condition and Results of Operations This section details Haduvio's clinical trial progress, increasing operating losses, significant liquidity challenges, and recent financing efforts Overview - The company is a clinical-stage biopharmaceutical firm developing Haduvio (nalbuphine ER) for neurologically mediated conditions like chronic pruritus and cough122 - The Phase 2b/3 PRISM trial for prurigo nodularis increased enrollment to 360 subjects, with top-line data expected in H1 2022, similar to the COVID-19 delayed CANAL trial for chronic cough in IPF124125 - The company has a history of net losses, with an accumulated deficit of $165.1 million as of June 30, 2021, and anticipates no revenue until Haduvio's approval128 - Management concluded substantial doubt exists about the company's ability to continue as a going concern due to insufficient cash for the next 12 months of operations133 Results of Operations Comparison of Operating Results (in thousands of US dollars) | | Three Months Ended June 30, | Six Months Ended June 30, | | :--- | :--- | :--- | | | 2021 | 2020 | 2021 | 2020 | | Research and development | $6,498 | $4,921 | $12,087 | $10,940 | | General and administrative | $2,669 | $2,492 | $5,169 | $5,112 | | Net loss | $(9,794) | $(7,384) | $(18,165) | $(15,857) | - For the three months ended June 30, 2021, R&D expenses increased by $1.6 million, driven by higher personnel costs and increased PRISM trial activity148 - For the six months ended June 30, 2021, R&D expenses increased by $1.1 million due to higher personnel, stock-based compensation, and consulting fees152 Liquidity and Capital Resources Cash Flow Summary (in thousands of US dollars) | | Six Months Ended June 30, | | :--- | :--- | | | 2021 | 2020 | | Net cash used in operating activities | $(15,476) | $(13,109) | | Net cash provided by (used in) financing activities | $6,900 | $(12) | | Net decrease in cash and cash equivalents | $(8,576) | $(13,133) | - As of June 30, 2021, the company held $36.4 million in cash and cash equivalents168 - The company secured a $14.0 million term loan with SVB in August 2020, with a July 2021 amendment requiring $15.0 million in net equity proceeds by October 31, 2021, to avoid loan collateralization158159 - In June 2021, the company entered a common stock purchase agreement with Lincoln Park Capital Fund, LLC, allowing the sale of up to $15.0 million in common stock over 24 months160 - Existing cash is projected to fund operations into Q2 2022, excluding potential cash collateralization under the SVB loan if milestones are unmet179 Quantitative and Qualitative Disclosures About Market Risk As a smaller reporting company, the company is exempt from providing quantitative and qualitative market risk disclosures - As a smaller reporting company, Trevi Therapeutics is not required to provide quantitative and qualitative disclosures about market risk188 Controls and Procedures Management concluded that disclosure controls were effective as of June 30, 2021, with no material changes to internal financial reporting controls - Management, including the CEO, concluded the company's disclosure controls and procedures were effective at a reasonable assurance level as of June 30, 2021189 - No material changes occurred in the company's internal control over financial reporting during the quarter ended June 30, 2021190 PART II. OTHER INFORMATION Legal Proceedings The company reports no current exposure to any material legal proceedings - The company reports it is not subject to any material legal proceedings192 Risk Factors This section outlines substantial risks, including financial instability, dependence on Haduvio, clinical trial uncertainties, and reliance on third parties Risks Related to Financial Position and Need for Additional Capital - The company has a history of significant losses, with an accumulated deficit of $165.1 million as of June 30, 2021, and anticipates increasing future losses200 - Substantial doubt exists about the company's ability to continue as a going concern, with existing cash funding operations only into Q2 2022206210 - The company requires substantial additional funding; the SVB Term Loan mandates raising at least $15.0 million in net equity proceeds by October 31, 2021, to avoid loan collateralization207214 Risks Related to the Development and Commercialization of Haduvio - The company is entirely dependent on the successful development and commercialization of Haduvio, its sole product candidate220 - Clinical development is lengthy and uncertain; Haduvio's Phase 2 trial for prurigo nodularis failed its primary endpoint, with FDA noting unreliable findings due to small size and high discontinuation226232257 - The company experienced clinical trial enrollment delays, including the Phase 2b/3 PRISM trial, impacted by COVID-19 and an increased target from 240 to 360 subjects238240 - Haduvio, a mixed opioid receptor agonist/antagonist, may cause psychiatric effects, respiratory depression, and abuse potential, possibly leading to a restrictive label or controlled substance classification244251252 Risks Related to Dependence on Third Parties - The company relies on third parties, including CROs, for clinical trials, with limited control over their performance292 - The company relies on contract manufacturers for Haduvio, including single supplier Mallinckrodt for active drug substance, whose October 2020 bankruptcy filing creates supply uncertainty296299 Risks Related to Our Intellectual Property - The company's business relies on licenses from Endo Pharmaceuticals and Rutgers University; non-compliance could lead to loss of critical Haduvio development and commercialization rights311312 - The company's ability to secure and maintain Haduvio patent protection is uncertain, as competitors may develop similar products or challenge existing patents315322 Risks Related to Regulatory Approval and Other Legal Compliance Matters - The company plans to use the Section 505(b)(2) regulatory pathway, but FDA approval is not guaranteed, potentially leading to longer and costlier development343345 - The regulatory approval process is expensive, time-consuming, and uncertain, with authorities having discretion to require additional trials or deny approval348350 - The company is subject to complex healthcare laws, including anti-kickback, false claims, and data privacy laws like GDPR and CCPA, with potential for significant penalties for violations382391393 Unregistered Sales of Equity Securities and Use of Proceeds This section details no unregistered equity sales in Q2 2021, except for Lincoln Park, and updates on IPO proceeds use for Haduvio development - Except for shares issued to Lincoln Park Capital Fund, LLC, the company did not sell or issue any unregistered equity securities during the three months ended June 30, 2021441 - As of June 30, 2021, the company used approximately $35.5 million of its May 2019 IPO net proceeds for Haduvio development and general corporate purposes445 Exhibits This section lists exhibits filed with the Form 10-Q, including agreements with Lincoln Park Capital and SVB, and officer certifications Filed Exhibits | Exhibit No. | Description | | :--- | :--- | | 10.1 | Purchase Agreement with Lincoln Park Capital Fund, LLC | | 10.2 | Registration Rights Agreement with Lincoln Park Capital Fund, LLC | | 10.3 | First Amendment to Loan and Security Agreement with Silicon Valley Bank | | 10.4 | First Amendment to Exclusive License Agreement with Rutgers | | 31.1 | Certification of Principal Executive Officer and Principal Financial Officer (Sec. 302) | | 32.1 | Certification of Principal Executive Officer and Principal Financial Officer (Sec. 906) | Signatures - The report was signed on August 12, 2021, by Jennifer L Good, President and CEO, and Christopher Galletta, Controller and Treasurer449451