Celcuity Inc. — FY2021 Form 10-K
Reporting period: Year ended December 31, 2021; this is an annual report, not a standalone fourth-quarter filing. Celcuity is a clinical-stage biotechnology company developing gedatolisib and its CELsignia companion-diagnostic platform. It has not generated revenue.
Financial performance and liquidity
| Metric | FY2021 | FY2020 | Change |
|---|---|---|---|
| Revenue | $0 | $0 | None |
| Research and development expense | $25.8 million | $7.7 million | +235% |
| General and administrative expense | $2.6 million | $1.9 million | +39% |
| Total operating expenses | $28.4 million | $9.6 million | +197% |
| Net loss | $29.6 million | $9.5 million | Loss increased $20.1 million |
| Net loss per share, basic and diluted | $2.21 | $0.92 | Loss per share increased |
| Cash used in operating activities | $20.3 million | $7.1 million | Cash use increased |
Margins are not meaningful because the company reported no revenue. There is no operating profit or positive operating cash flow.
- Cash and cash equivalents were $84.3 million at year-end, versus $11.6 million a year earlier. Management said cash was expected to fund its current operating plan for at least 12 months from the March 23, 2022 filing date.
- Current assets were $85.4 million and current liabilities were $2.5 million. Total liabilities were $17.2 million, including $14.6 million of non-current debt net of discounts and issuance costs.
- The $15 million Innovatus term loan is secured by substantially all company assets, carries an effective interest rate of 11.36%, and matures in 2026. It permits interest-only payments for 36 months, potentially 48 months if conditions are met. Up to $10 million in additional tranches is conditional on milestones. The lender also has a limited conversion right.
- Financing activities provided $93.0 million in 2021, mainly from two follow-on stock offerings that generated $78.5 million net and the $14.4 million net loan proceeds. Shares outstanding rose from 10.3 million to 14.9 million.
Material changes and unusual items
- R&D expense rose substantially, driven in part by the Pfizer gedatolisib license: $5 million cash upfront and $5 million in Celcuity stock were expensed in 2021. The company also incurred clinical, transfer, personnel, and patent costs.
- Interest expense increased to $1.3 million from $120, primarily due to the Innovatus loan; $0.6 million was non-cash interest.
- The Pfizer license grants exclusive worldwide rights to develop and commercialize gedatolisib. It also carries up to $335 million in development and commercial milestones and tiered royalties in the low-to-mid teens on sales.
- The company recorded no income-tax benefit because deferred tax assets were fully offset by a valuation allowance.
Outlook, commentary, and principal risks
- Management expects R&D and G&A spending to increase as it advances gedatolisib, develops CELsignia tests, and conducts trials; commercialization would also increase sales and marketing costs.
- Celcuity planned to initiate the VIKTORIA-1 Phase 3 gedatolisib trial in the first half of 2022. The trial was designed to enroll 651 patients with advanced HR+/HER2-negative breast cancer. The FDA granted gedatolisib Fast Track designation in January 2022; this does not assure approval or a faster review.
- Preliminary Phase 1b results included a 62% aggregate objective response rate and 92% clinical benefit rate in the expansion population. The filing cautions that the data came from Pfizer and had not been independently reviewed or fully cleaned and verified; the filing describes differing data-cutoff dates in its discussion.
- Five CELsignia-related Phase 2 trials were underway with partners. COVID-19-related enrollment delays pushed expected interim FACT-1 and FACT-2 results to the first half of 2023, with final results expected about nine months later.
- Key risks include clinical-trial failure or delay, patient-enrollment challenges, reliance on Pfizer and other third parties, financing needs and potential dilution, dependence on the gedatolisib license, competition, uncertain diagnostic adoption and reimbursement, and evolving regulation of laboratory-developed tests. The company also relies on one Minneapolis laboratory with no redundant facility.
- The independent auditor issued an unqualified opinion on the financial statements. Management reported effective disclosure controls and internal control over financial reporting as of year-end; auditor attestation was not required under the company’s emerging-growth-company status.
Important facts for investors to verify
- Whether VIKTORIA-1 began on schedule, its enrollment pace, and subsequent safety and efficacy updates.
- Finalized and independently verified gedatolisib Phase 1b data, including resolution of the filing’s cutoff-date descriptions.
- Actual cash burn and remaining runway relative to trial and development costs, as well as access to the conditional loan tranches.
- Any shares sold under the $50 million Jefferies at-the-market agreement announced in February 2022; none had been sold as of the filing.
- Progress and results of CELsignia partner trials, regulatory requirements, reimbursement coverage, and whether anticipated diagnostic pricing can be achieved.
- Potential milestone and royalty obligations under the Pfizer license and the loan’s covenants, collateral, interest, and conversion provisions.