CRESCENT BIOPHARMA, INC. quarterly report, Q1 FY2018

Business context and reporting period

Entity discrepancy: The metadata names Crescent BioPharma, Inc., but the supplied filing is GlycoMimetics, Inc.’s Form 10-Q for the quarter ended March 31, 2018, filed May 3, 2018. This summary reflects the supplied filing, not Crescent BioPharma.

GlycoMimetics was a clinical-stage biotechnology company with no approved products or commercial drug sales. Its programs included GMI-1271, GMI-1359 and rivipansel, which was licensed to Pfizer.

Financial results and position

Cash and cash equivalents were $242.63 million at March 31, 2018, versus $123.92 million at year-end 2017. The company raised approximately $128.4 million net in a March public offering of 8.05 million shares at $17 per share. Total liabilities were $9.38 million, primarily current operating liabilities and deferred rent; the filing reports no debt. Current assets were $246.11 million and current liabilities $8.70 million. No product gross margin was reported because the company had no product revenue.

Material changes and operating developments

• R&D expense rose mainly because of increased GMI-1271 clinical-supply manufacturing costs ($4.89 million versus $1.06 million). Clinical-development expense declined as enrollment in the Phase 1/2 AML trial had ended.
• G&A expense increased mainly due to legal and patent costs.
• Operating cash use increased year over year; financing cash flow was $128.93 million, compared with $3.67 million in Q1 2017. Cash increased by $118.71 million during the quarter.
• Weighted-average shares increased to 35.16 million from 23.48 million; the filing reports a smaller per-share loss despite the higher total net loss.
• Adoption of ASC 606 had no material impact on prior periods or reported line items.

Outlook, risks and contingencies

• Management expected cash to fund operations at least 12 months after filing and also said it believed available cash could fund operations through preliminary results of the planned GMI-1271 Phase 3 trial. Management cautioned that estimates depend on assumptions and cash could be used sooner than expected.
• The planned randomized Phase 3 trial of GMI-1271 in relapsed/refractory AML was expected to enroll approximately 380 patients, with enrollment targeted for Q3 2018 and preliminary results expected by the end of 2020. Initial topline results from the GMI-1271 multiple-myeloma trial were anticipated in Q1 2019.
• Management expected R&D and G&A expenses to increase. The company remained dependent on external financing and uncertain development, regulatory and commercialization outcomes; additional financing could dilute shareholders or be unavailable on acceptable terms.
• Potential Pfizer milestones and royalties were contingent on future development, approvals and sales; none were received in Q1 2018. The company owed the University of Basel 10% of future rivipansel milestone and royalty receipts.
• No material legal proceedings, material changes to previously reported risk factors, or off-balance-sheet arrangements were reported. Disclosure controls were considered effective; no material internal-control changes were reported.

Important facts for investors to verify

• Confirm the intended issuer: the supplied filing is for GlycoMimetics, Inc., not Crescent BioPharma, Inc.
• Review the GMI-1271 Phase 3 start, enrollment progress, trial costs and timing of results against management’s stated expectations.
• Assess cash burn and runway assumptions, particularly in light of management’s expectation of rising development costs.
• Track Pfizer’s rivipansel development and any potential milestone or royalty events; these payments are uncertain.
• Consider dilution from the March 2018 offering and any future equity or debt financing.