NGM Biopharmaceuticals, Inc. (NASDAQ:NGM) is a biopharmaceutical company focused on discovering and developing novel, potentially life-changing medicines based on scientific understanding of key biological pathways underlying grievous diseases with critical unmet or underserved patient need. The company has generated a diverse portfolio of product candidates ranging from early discovery to Phase 2b development.

Financials

For the full year 2022, NGM reported annual revenue of $4,417,000 and a net loss of $142,375,000. The company's annual operating cash flow was -$132,202,000, and its annual free cash flow was -$133,454,000. These financial results reflect NGM's continued investment in its robust R&D pipeline to advance its promising therapeutic candidates.

In the third quarter of 2023, NGM reported related party revenue of $582,000, a decrease of $7,329,000 compared to the same period in 2022. This decrease was primarily due to a reduction in R&D funding received from the company's collaboration partner, Merck. For the first nine months of 2023, NGM's related party revenue was $4,252,000, down $32,900,000 from the same period in 2022.

NGM's research and development expenses decreased by $23,164,000 and $38,195,000 in the third quarter and first nine months of 2023, respectively, compared to the same periods in 2022. This was largely due to a decrease in expenses related to the company's clinical trials, manufacturing activities, and personnel-related costs.

General and administrative expenses decreased by $1,438,000 and $857,000 in the third quarter and first nine months of 2023, respectively, compared to the same periods in 2022. This moderate decline was primarily attributable to the workforce restructuring implemented by the company in the second quarter of 2023.

NGM's net loss was $28,797,000 and $114,705,000 for the third quarter and first nine months of 2023, respectively, compared to $47,261,000 and $126,230,000 for the same periods in 2022. The improvement in net loss was driven by the decrease in operating expenses, partially offset by the reduction in related party revenue.

As of September 30, 2023, NGM had $166,045,000 in cash, cash equivalents, and short-term marketable securities, providing the company with the financial resources to continue advancing its pipeline.

Business Overview

NGM's pipeline is focused on several therapeutic areas, including oncology, ophthalmology, cardiovascular and metabolic diseases, and liver diseases. The company's most advanced product candidates are in Phase 2 development.

Solid Tumor Oncology Programs

NGM's solid tumor oncology programs, including NGM707, NGM831, NGM438, and NGM120, are the primary focus of the company's execution efforts and resources. These programs are wholly-owned by NGM and aim to improve patient immune responses to tumors through various mechanisms.

NGM707 is a dual antagonist monoclonal antibody designed to inhibit the ILT2 and ILT4 receptors, which are believed to play a role in suppressing anti-tumor immunity. The company is conducting a Phase 1/2 clinical trial evaluating NGM707 as a monotherapy and in combination with pembrolizumab.

NGM831 is an antagonist antibody that targets the ILT3 receptor and its interaction with fibronectin, which may act as a stromal checkpoint to repress myeloid cell function and inhibit anti-tumor immunity. NGM is conducting a Phase 1/1b trial to evaluate NGM831 as a monotherapy and in combination with pembrolizumab.

NGM438 is an antagonist antibody designed to inhibit the LAIR1 receptor, which binds to collagens in the tumor stroma and creates an immunosuppressive tumor microenvironment. The company is evaluating NGM438 as a monotherapy and in combination with pembrolizumab in a Phase 1/1b trial.

NGM120 is an antagonist antibody that binds to the GFRAL receptor and is designed to block the effects of elevated GDF15, which may reduce tumor growth and improve survival in certain cancer types. NGM is conducting a Phase 1/2 trial to assess NGM120's effect on cancer and cancer-related cachexia.

Additional Programs

Due to the need to conserve capital and prioritize focused execution, the development of NGM621, aldafermin, NGM313, and NGM936 is primarily dependent on NGM's ability to secure potential future business development arrangements with third-party partners. In the absence of such arrangements, the company is unlikely to advance these programs unless its portfolio prioritization changes and it is able to secure additional capital.

NGM621 is a monoclonal antibody designed to inhibit complement C3 for the treatment of geographic atrophy secondary to age-related macular degeneration. Aldafermin is an engineered FGF19 analog that has shown promise in treating compensated cirrhosis due to non-alcoholic steatohepatitis (NASH). NGM313 is an agonistic antibody that selectively activates the FGFR1c/KLB pathway to regulate insulin sensitivity, blood glucose, and liver fat. NGM936 is a bispecific T cell engager therapeutic candidate for the treatment of hematologic malignancies.

Merck Collaboration and Business Development

NGM's collaboration with Merck has historically provided substantial financial support, enabling the company to broaden and accelerate its research efforts. However, under the amended and restated collaboration agreement, Merck's R&D funding has been significantly reduced, and for the period starting October 1, 2023, the funding is expected to be minimal.

Pursuing business development arrangements has been a key component of NGM's strategy. The company is seeking partnerships with third-party partners to progress the development of its product candidates, particularly those outside of its solid tumor oncology programs. Securing such arrangements will be crucial for the advancement of NGM's pipeline, as the company's own financial resources are limited.

Risks and Challenges

NGM faces several risks and challenges common to the biopharmaceutical industry, including the inherent uncertainty of clinical development, regulatory approval processes, manufacturing complexities, and competition from other therapies. The company's reliance on third-party partners and service providers, such as contract research organizations and contract manufacturing organizations, also introduces additional risks.

The company's ability to raise additional capital through public or private equity or debt offerings, or to secure favorable business development arrangements, will be critical to its continued operations and the advancement of its pipeline. Failure to do so could result in significant delays, scaling back, or even abandonment of some or all of NGM's product candidates.

Outlook and Conclusion

NGM's focus on its solid tumor oncology programs, coupled with its efforts to secure business development arrangements for its other pipeline assets, positions the company as a promising player in the biopharmaceutical industry. The company's robust discovery engine and biology-centric approach have generated a diverse portfolio of product candidates, several of which are in advanced stages of development.

While NGM faces the typical challenges of a clinical-stage biotech company, its strong financial position and the potential of its pipeline make it an intriguing investment opportunity for those willing to navigate the inherent risks of the sector. As the company continues to execute on its strategic priorities and navigate the evolving landscape, investors will closely monitor its progress and ability to deliver on its promising pipeline.