Cellectar Biosciences, Inc. — Q1 2018 Form 10-Q
Reporting period: Three months ended March 31, 2018. Cellectar is a clinical-stage biopharmaceutical company developing cancer treatments using its phospholipid drug conjugate (PDC) platform. It reported no product revenue and has not generated revenue from product sales.
Financial performance and liquidity
| Metric | Q1 2018 | Q1 2017 / comparison |
|---|---|---|
| Revenue | None reported | None reported |
| Research and development expense | $2.124 million | $1.857 million; up 14% |
| General and administrative expense | $1.329 million | $0.955 million; up 39% |
| Total operating expenses / operating loss | $3.454 million | $2.812 million |
| Net loss | $3.476 million | $2.891 million |
| Net loss per share | $0.21 | $0.24 |
| Cash used in operating activities | $3.184 million | $2.987 million in the cash-flow statement |
Cash and cash equivalents were $6.820 million at March 31, down from $10.006 million at December 31, 2017; restricted cash was a further $55,000. Current assets were $7.645 million and current liabilities $2.108 million. Total liabilities were $2.109 million, primarily accounts payable and accrued liabilities; capital lease obligations totaled approximately $4,500. Stockholders’ equity was $7.452 million and accumulated deficit was $87.825 million. Gross or operating margins are not meaningful because the company reported no revenue.
R&D expense rose mainly from increased preclinical spending, partly offset by lower purchased services and depreciation. G&A rose primarily due to consulting, legal and marketing costs; the company also recorded about $81,000 of one-time personnel costs related to outsourcing manufacturing. Headcount declined from 15 at year-end 2017 to 10 at March 31, 2018. Weighted-average shares increased to 16.808 million from 12.010 million; the lower reported loss per share does not reflect lower net losses.
Business developments, outlook and risks
- Lead candidate CLR 131 was being studied in Phase 1 and Phase 2 trials for relapsed or refractory multiple myeloma and other B-cell malignancies. The company reported 18 patients dosed in the Phase 1 study; results described included one partial response in the fourth cohort. Preliminary pooled overall-survival data of 15 months were not final, as median survival had not been reached for all patients.
- Cohort 5 was enrolling to assess a split-dose regimen; management expected completion by the end of Q2 2018. The company planned to start a pediatric Phase 1 study and a head-and-neck cancer study combining CLR 131 with external-beam radiation in the second half of 2018.
- The pipeline also included preclinical CLR 1700 and CLR 1900 programs and collaborative PDC programs CLR 1800, CLR 2000, CLR 2100 and CLR 2200. The company received orphan-drug designations for CLR 131 in neuroblastoma and rhabdomyosarcoma; a rare pediatric disease designation for neuroblastoma was granted after quarter-end.
- Management estimated that March 31 cash would fund operations into early Q1 2019 at budgeted levels. Continuing the operating plan beyond then depends on obtaining additional funding through equity or debt, a strategic transaction or other means. The filing states there is substantial doubt about the company’s ability to continue as a going concern within one year of issuance of the financial statements. Failure to raise funds could require reduced activities or cessation of operations.
- Principal risks include clinical and regulatory failure, ongoing operating losses and cash burn, dependence on additional financing, dilution or restrictions associated with financing, and the need to establish manufacturing and eventual commercialization capabilities. The company expects losses to continue for the foreseeable future. It reported no legal proceedings expected to materially affect the financial statements.
Most important facts to verify
- Funding runway and financing plans, given the stated early-Q1-2019 cash horizon and going-concern uncertainty.
- Clinical-trial enrollment, safety and efficacy results for CLR 131; preliminary survival data are not final, and planned study start dates are forward-looking.
- The cash-flow comparison: the cash-flow statement reports Q1 2017 operating cash use of $2.987 million, while MD&A states approximately $3.184 million for that period.
- Potential dilution: 11.787 million warrants were outstanding at March 31, plus preferred shares convertible into about 616,000 common shares, stock options and restricted stock.
- Whether the reported expense increases and manufacturing outsourcing affect future cash requirements and operating plans.