Candel Therapeutics, Inc. — FY2022 Form 10-K
Reporting period: Fiscal year ended December 31, 2022. The filing was signed March 30, 2023. Candel is a clinical-stage biopharmaceutical company developing viral immunotherapies; it has no approved products and has not generated product-sale revenue.
Financial performance and position
| Metric | FY2022 / Dec. 31, 2022 | FY2021 / Dec. 31, 2021 |
|---|---|---|
| Revenue | $0.125 million, entirely research and development service revenue from a related-party license arrangement | $0.125 million |
| Research and development expense | $20.787 million | $15.178 million |
| General and administrative expense | $14.060 million | $10.673 million |
| Total operating expenses | $34.847 million | $25.851 million |
| Loss from operations | $(34.722) million | $(25.726) million |
| Net loss | $(18.794) million | $(36.124) million |
| Net loss per share, basic and diluted | $(0.65) | $(1.91) |
| Net cash used in operating activities | $(31.419) million | $(22.218) million |
| Cash and cash equivalents | $70.058 million | $82.642 million |
| Long-term debt and other long-term debt | $20.850 million | $0.560 million |
Operating expenses rose as research and clinical activity, staffing, and public-company costs increased. The smaller reported net loss was primarily due to a $16.370 million noncash gain from revaluing warrant liabilities, compared with an $11.421 million noncash expense in 2021; it did not reflect an improvement in operating results. No meaningful product gross margin is available because the company has no product sales.
Cash used in investing activities was $1.297 million, principally for fixed-asset purchases; financing provided $19.974 million, primarily from the SVB term loan. Cash and cash equivalents declined by $12.742 million during the year. Current assets were $71.945 million and current liabilities were $5.615 million at year-end.
Material changes and development updates
- CAN-2409, localized prostate cancer: The Phase 3 trial under an FDA Special Protocol Assessment was fully enrolled with 711 patients in September 2021; topline results were expected at the end of 2024. A 187-patient Phase 2 active-surveillance trial was also fully enrolled; topline results were expected in Q4 2024, with additional follow-up needed to accrue sufficient endpoint events.
- CAN-2409, NSCLC: The open-label Phase 2 trial is evaluating treatment with continued checkpoint inhibitors. Company-reported preliminary data included a 77% disease-control rate (20/26) in the progressive-disease cohort and a 13% overall response rate (4/30) across cohorts. Further updated data were expected in Q3 2023.
- CAN-2409, pancreatic cancer: In March 2023, after year-end, the company paused new enrollment in its randomized Phase 2 trial, subject to additional funding. Initial data were still expected in Q4 2023.
- CAN-3110, recurrent high-grade glioma: The ongoing investigator-sponsored Phase 1 trial had treated 51 patients. Company-reported results included no observed dose-limiting toxicity and median overall survival of 11.6 months among the first 41 patients at the stated cutoff. The company prioritized CAN-3110 in recurrent glioma and chose not to pursue a Phase 3 CAN-2409 glioma trial.
Outlook, financing, risks and unusual items
- Management estimated existing cash would fund the current operating plan into Q2 2024, based on assumptions that may prove incorrect. The company expects continued operating losses and says substantial additional funding will be needed.
- The company borrowed $20.0 million under its SVB facility in February 2022; an additional milestone-based $5.0 million was not drawn by its December 31, 2022 deadline. The loan bears a floating rate, has principal payments beginning February 2024, and matures January 1, 2026. The filing describes uncertainty about access to undrawn SVB funds following the bank’s March 2023 closure.
- A $200 million shelf registration and $75 million at-the-market program were in place; no ATM sales had been made as of the filing. Equity issuance could dilute shareholders.
- Periphagen asserted that Candel failed to meet development-effort obligations under a license agreement; Candel disputes the claim. Arbitration and the contractual dispute process were ongoing. An adverse decision could require a specified payment or put the license at risk.
- Principal business risks include clinical-trial failure or delay, regulatory uncertainty (including that the prostate-trial SPA does not guarantee approval), manufacturing and supply dependence, competition, and the need for additional capital. Reported clinical results are preliminary and may change with further follow-up or analysis.
- The company reported that material weaknesses in internal financial controls identified for 2021 and 2020 were remediated in 2022 and that management considered controls effective at year-end. The auditor did not provide an internal-control attestation.
Important facts for investors to verify
- Cash runway assumptions, forecast spending, and financing needs, particularly after the pancreatic trial enrollment pause and the SVB closure.
- Final, regulator-accepted results and safety data for the CAN-2409 prostate Phase 3 and active-surveillance trials, including timing and endpoint analyses.
- Full patient follow-up, denominators, durability, and safety underlying the preliminary NSCLC and CAN-3110 disclosures.
- Status and potential consequences of the Periphagen dispute, including any effect on licensed rights or payment obligations.
- Debt terms, interest-rate exposure, repayment schedule, and the potential dilution from outstanding warrants, options, and future equity financing.