VTV THERAPEUTICS INC. As used in this Quarterly Report on Form 10-Q, the "Company", the "Registrant",
"we" or "us" refer to
Overview
We are a clinical-stage pharmaceutical company focused on treating metabolic and
inflammatory diseases to minimize their long-term complications and improve the
lives of patients. We have an innovative pipeline of first-in-class small
molecule clinical and pre-clinical drug candidates for the treatment of a wide
range of diseases. Our pipeline is led by our programs for the treatment of type
1 diabetes (TTP399) and for psoriasis (HPP737). We completed the Simplici-T1
Study, an adaptive Phase 1b/2 study supported by
We are also conducting a multiple ascending dose Phase 1 study of HPP737, an orally administered phosphodiesterase type 4 ("PDE4") inhibitor, to assess the pharmacokinetics, pharmacodynamics, safety and tolerability of HPP737 in healthy volunteers as part of our psoriasis program. The goal of this study is to confirm the maximum tolerated dose with minimal or no gastrointestinal ("GI") intolerance in the form of nausea, vomiting or diarrhea. We expect to complete this study in the third quarter of 2021.
In addition to our internal development programs, we are furthering the clinical development of four other programs: a small molecule GLP-1r agonist, the PDE4 inhibitor, HPP737, a PPAR-? agonist, and an Nrf2 activator through partnerships with pharmaceutical partners via licensing arrangements.
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The following table summarizes our current drug candidates and their respective stages of development:
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* Chronic obstructive pulmonary disease
Our Type 1 Diabetes Program -TTP399
We are conducting a phase 1 mechanistic study of TTP399 in patients with type 1 diabetes to determine the impact of TTP399 on ketone body formation during a period of acute insulin withdrawal. We proposed the mechanistic study to the FDA and the FDA recommended that the study be performed in support of the planned pivotal trials. The results of this mechanistic study will provide additional evidence to support the effects of TTP399 on diabetic ketoacidosis ("DKA") in patients with type 1 diabetes. We expect to report top-line results in the third quarter of 2021.
On
Our Psoriasis Program - HPP737
We are conducting a multiple ascending dose Phase 1 study of HPP737, an orally administered phosphodiesterase type 4 ("PDE4") inhibitor, to assess the pharmacokinetics, pharmacodynamics, safety and tolerability of HPP737 in healthy volunteers as part of our psoriasis development program. The goal of this study is to continue multiple-dose escalation to define a maximum tolerated dose characterized by minimal or no gastrointestinal intolerance (i.e., nausea, vomiting or diarrhea). We expect to report top-line results from this study in the third quarter of 2021. Based upon the outcome of the multiple-dose escalation study, we plan to initiate a phase 2 study to investigate HPP737 as a potential treatment of moderate to severe plaque psoriasis.
Holding Company Structure
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Financial Overview Revenue
To date, we have not generated any revenue from drug sales. Our revenue has been primarily derived from up-front proceeds and research fees under collaboration and license agreements.
In the future, we may generate revenue from a combination of product sales, license fees, milestone payments and royalties from the sales of products developed under licenses of our intellectual property. We expect that any revenue we generate will fluctuate from quarter to quarter as a result of the timing and amount of license fees, milestone and other payments, and the amount and timing of payments that we receive upon the sale of our products, to the extent any are successfully commercialized. If we fail to complete the development of our drug candidates in a timely manner or obtain regulatory approval for them, our ability to generate future revenue and our results of operations and financial position will be materially adversely affected.
Research and Development Expenses
Since our inception, we have focused our resources on our research and development activities, including conducting preclinical studies and clinical trials, manufacturing development efforts and activities related to regulatory filings for our drug candidates. We recognize research and development expenses as they are incurred. Our direct research and development expenses consist primarily of external costs such as fees paid to investigators, consultants, central laboratories and clinical research organizations ("CRO(s)") in connection with our clinical trials, and costs related to acquiring and manufacturing clinical trial materials. Our indirect research and development costs consist primarily of cash and share-based compensation costs, the cost of employee benefits and related overhead expenses for personnel in research and development functions. Since we typically use our employee and infrastructure resources across multiple research and development programs such costs are not allocated to the individual projects.
From our inception, including our predecessor companies, through
Our research and development expenses by project for the three months ended
Three Months Ended March 31,
2021 2020
Direct research and development expense:
Azeliragon $ 712 $ 2,401
TTP399 268 400
HPP737 1,055 44
Other projects 76 26
Indirect research and development expense 993 1,333
Total research and development expense $ 3,104 $ 4,204 We plan to continue to incur significant research and development expenses for the foreseeable future as we continue the development of TTP399 and HPP737 and further advance the development of our other drug candidates, subject to the availability of additional funding.
The successful development of our clinical and preclinical drug candidates is highly uncertain. At this time, we cannot reasonably estimate the nature, timing or costs of the efforts that will be necessary to complete the remainder of the development of any of our clinical or preclinical drug candidates or the period, if any, in which material net cash inflows from these drug candidates may commence. This is due to the numerous risks and uncertainties associated with the development of our drug candidates, including:
• the uncertainty of the scope, rate of progress and expense of our ongoing,
as well as any additional, clinical trials and other research and
development activities;
• the potential benefits of our candidates over other therapies;
• our ability to market, commercialize and achieve market acceptance for any
of our drug candidates that we are developing or may develop in the
future;
• future clinical trial results;
• our ability to enroll patients in our clinical trials;
• the timing and receipt of regulatory approvals, if any; and
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• the filing, prosecuting, defending and enforcing of patent claims and
other intellectual property rights, and the expense of doing so.
A change in the outcome of any of these variables with respect to the development of a drug candidate could mean a significant change in the costs and timing associated with the development of that drug candidate. For example, if the FDA or another regulatory authority were to require us to conduct clinical trials beyond those that we currently anticipate will be required for the completion of clinical development of a drug candidate, or if we experience significant delays in enrollment in any of our clinical trials, we could be required to expend significant additional financial resources and time with respect to the development of that drug candidate.
General and Administrative Expenses
General and administrative expenses consist primarily of salaries, benefits and related costs for employees in executive, finance, corporate development, human resources and administrative support functions. Other significant general and administrative expenses include accounting and legal services, expenses associated with obtaining and maintaining patents, cost of various consultants, occupancy costs and information systems.
Interest Expense
Interest expense primarily consists of cash and non-cash interest expense
related to our Venture Loan and Security Agreement (the "Loan Agreement") with
Horizon Technology Finance Corporation and
Results of Operations
Comparison of the three months ended
The following table sets forth certain information concerning our results of operations for the periods shown:
(dollars in thousands) Three Months Ended March 31, Statement of operations data: 2021 2020 Change Revenue$ 987 $ 8 $ 979 Operating expenses: Research and development 3,103 4,204 (1,101 ) General and administrative 2,164 2,450 (286 ) Total operating expenses 5,267 6,654 (1,387 ) Operating loss (4,280 ) (6,646 ) 2,366 Interest income 1 12 (11 ) Interest expense - (168 ) 168 Other expense, net (1,648 ) (363 ) (1,285 ) Loss before income taxes (5,927 ) (7,165 ) 1,238 Income tax provision 15 - 15 Net loss before noncontrolling interest (5,942 ) (7,165 ) 1,223
Less: net loss attributable to noncontrolling (1,701 ) (2,441 ) 740
interest
Net loss attributable to
Revenue
Revenue for the three months ended
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Research and Development Expenses
Research and development expenses were
General and Administrative Expenses
General and administrative expenses were
Interest Expense
Interest expense was
Liquidity and Capital Resources
Liquidity and Going Concern
As of
ATM Offering
We have entered into the Sales Agreement with
Lincoln Park Purchase Agreement
We have entered into the LPC Purchase Agreement, pursuant to which we have the
right to sell to Lincoln Park shares of the Company's Class A Common Stock
having an aggregate value of up to
Over the 36-month term of the LPC Purchase Agreement, we have the right, but not
the obligation, from time to time, in its sole discretion, to direct Lincoln
Park to purchase up to 250,000 shares per day (the "Regular Purchase Share
Limit") of the Class A Common Stock (each such purchase, a "Regular Purchase").
The Regular Purchase Share Limit will increase to 275,000 shares per day if the
closing price of the Class A Common Stock on the applicable purchase date is not
below
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purchase price for shares of Class A Common Stock to be purchased by Lincoln Park under a Regular Purchase will be equal to the lower of (in each case, subject to the adjustments described in the LPC Purchase Agreement): (i) the lowest sale price for the Class A Common Stock on the applicable purchase date and (ii) the arithmetic average of the three lowest closing sales prices for the Class A Common Stock during the 10 consecutive trading days prior to the purchase date.
If we direct Lincoln Park to purchase the maximum number of shares of Class A Common Stock that we may sell in a Regular Purchase, then in addition to such Regular Purchase, and subject to certain conditions and limitations in the LPC Purchase Agreement, we may direct Lincoln Park to make an "accelerated purchase" and an "additional accelerated purchase", each of an additional number of shares of Class A Common Stock which may not exceed the lesser of: (i) 300% of the number of shares purchased pursuant to the corresponding Regular Purchase and (ii) 30% of the total number of shares of the Common Stock traded during a specified period on the applicable purchase date as set forth in the LPC Purchase Agreement. The purchase price for such shares will be the lesser of (i) 97% of the volume weighted average price of the Class A Common Stock over a certain portion of the date of sale as set forth in the LPC Purchase Agreement and (ii) the closing sale price of the Class A Common Stock on the date of sale (an "Accelerated Purchase"). Under certain circumstances and in accordance with the LPC Purchase Agreement, we may direct Lincoln Park to purchase shares in multiple Accelerated Purchases on the same trading day.
The LPC Purchase Agreement also prohibits us from directing Lincoln Park to
purchase any shares of its Class A Common Stock if those shares, when aggregated
with all other shares of Class A Common Stock then beneficially owned by Lincoln
Park and its affiliates, would result in
Cash Flows
Three Months Ended
March 31,
2021 2020
(dollars in thousands)
Net cash used in operating activities $ (5,299 ) $ (5,560 )
Net cash provided by financing activities 8,001 4,189
Net increase (decrease) in cash and cash equivalents $ 2,702 $ (1,371 )
Operating Activities
For the three months ended
Investing Activities
There were no cash flows from investing activities for the three months ended
Financing Activities
For the three months ended
Future Funding Requirements
To date, we have not generated any revenue from drug product sales. We do not know when, or if, we will generate any revenue from drug product sales. We do not expect to generate revenue from drug sales unless and until we obtain regulatory approval of and commercialize any of our drug candidates. At the same time, we expect our expenses to continue or to increase in connection with our ongoing development activities, particularly as we continue the research, development and clinical trials of, and seek regulatory approval for, our drug candidates. In addition, subject to obtaining regulatory approval of any of our drug candidates, we expect to incur significant commercialization expenses for product sales, marketing, manufacturing and distribution. We anticipate that we will need substantial additional funding in connection with our continuing operations.
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Based on our current operating plan, we believe that our current cash and cash
equivalents, availability under the ATM Offering and amounts raised under the
LPC Purchase Agreement through
Our future capital requirements will depend on many factors, including:
• The progress, costs, results and timing of our planned trial(s) to
evaluate TTP399 as a potential treatment of type 1 diabetes and our
planned trial(s) of HPP737 as a potential treatment of psoriasis;
• the willingness of the FDA to rely upon our completed and planned clinical
and preclinical studies and other work, as the basis for review and
approval of our drug candidates;
• the outcome, costs and timing of seeking and obtaining FDA and any other
regulatory approvals;
• the number and characteristics of drug candidates that we pursue,
including our drug candidates in preclinical development;
• the ability of our drug candidates to progress through clinical
development successfully;
• our need to expand our research and development activities;
• the costs associated with securing, establishing and maintaining
commercialization capabilities;
• the costs of acquiring, licensing or investing in businesses, products,
drug candidates and technologies;
• our ability to maintain, expand and defend the scope of our intellectual
property portfolio, including the amount and timing of any payments we may
be required to make, or that we may receive, in connection with the
licensing, filing, prosecution, defense and enforcement of any patents or
other intellectual property rights;
• our need and ability to hire additional management and scientific and
medical personnel;
• the effect of competing technological and market developments;
• our need to implement additional internal systems and infrastructure,
including financial and reporting systems;
• the economic and other terms, timing and success of our existing licensing
arrangements and any collaboration, licensing or other arrangements into
which we may enter in the future;
• the amount of any payments we are required to make to M&F TTP Holdings Two
LLC in the future under the Tax Receivable Agreement; and
• the impact and duration of the COVID-19 outbreak / pandemic.
Until such time, if ever, as we can generate substantial revenue from drug sales, we expect to finance our cash needs through a combination of equity offerings, debt financings, marketing and distribution arrangements and other collaborations, strategic alliances and licensing arrangements. We do not currently have any committed external source of funds other than those available through the ATM Offering and LPC Purchase Agreement. In addition, we are evaluating several financing strategies to fund the on-going and future clinical trials of TTP399 and HPP737, including direct equity investments and future public offerings of our common stock. To the extent that we raise additional capital through the sale of equity or convertible debt securities, the ownership interests of our common stockholders will be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect the rights of our common stockholders. Debt financing and preferred equity financing, if available, may involve agreements that include covenants that will further limit or restrict our ability to take specific actions, such as incurring additional debt, making capital expenditures or declaring dividends. If we raise additional funds through collaborations, strategic alliances or marketing, distribution or licensing arrangements with third parties, we may be required to relinquish valuable rights to our technologies, future revenue streams or drug candidates or grant licenses on terms that may not be favorable to us. If we are unable to obtain additional funding,
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we could be forced to delay, reduce or eliminate our research and development programs or commercialization efforts, or pursue one or more alternative strategies, such as restructuring, any of which could adversely affect our business prospects.
Off-Balance Sheet Arrangements
As of
Discussion of Critical Accounting Policies
For a discussion of our critical accounting policies and estimates, please refer
to Part II, Item 7. "Management's Discussion and Analysis of Financial Condition
and Results of Operations" in our Annual Report on Form 10-K for the year ended
Forward-Looking Statements
This quarterly report includes certain forward-looking statements within the meaning of the federal securities laws regarding, among other things, our management's intentions, plans, beliefs, expectations or predictions of future events, which are considered forward-looking statements. You should not place undue reliance on those statements because they are subject to numerous uncertainties and factors relating to our operations and business environment, all of which are difficult to predict and many of which are beyond our control. Forward-looking statements include information concerning our possible or assumed future results of operations, including descriptions of our business strategy. These statements often include words such as "may," "will," "should," "believe," "expect," "outlook", "anticipate," "intend," "plan," "estimate" or similar expressions. These statements are based upon assumptions that we have made in light of our experience in the industry, as well as our perceptions of historical trends, current conditions, expected future developments and other factors that we believe are appropriate under the circumstances. As you read this quarterly report, you should understand that these statements are not guarantees of performance or results. They involve known and unknown risks, uncertainties and assumptions, including those described under the heading "Risk Factors" under Item 1A of Part I in our Annual Report on Form 10-K and under Item 1A of Part II of this Quarterly Report on Form 10-Q. Although we believe that these forward-looking statements are based upon reasonable assumptions, you should be aware that many factors, including those described under the heading "Risk Factors" under Item 1A of Part I in our Annual Report on Form 10-K and under Item 1A of Part II of this Quarterly Report on Form 10-Q, could affect our actual financial results or results of operations and could cause actual results to differ materially from those in the forward-looking statements.
Our forward-looking statements made herein are made only as of the date of this quarterly report. We expressly disclaim any intent, obligation or undertaking to update or revise any forward-looking statements made herein to reflect any change in our expectations with regard thereto or any change in events, conditions or circumstances on which any such statements are based. All subsequent written and oral forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by the cautionary statements contained in this quarterly report.
Effect of Recent Accounting Pronouncements
See discussion of recent accounting pronouncements in Note 2, "Summary of Significant Accounting Policies", to the Condensed Consolidated Financial Statements in this Form 10-Q.
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