Business context and reporting period
Corvus Pharmaceuticals, Inc. filed this unaudited Form 10-Q for the quarter ended September 30, 2020. It is a clinical-stage biopharmaceutical company developing oncology therapies and CPI-006 for COVID-19; it had generated no product revenue. Its principal clinical candidates were ciforadenant, CPI-006 and CPI-818.
Financial performance and liquidity
Amounts below are in millions except per-share data. There are no product revenues, so operating margins are not meaningful.
| Metric | Q3 2020 | Q3 2019 | Nine months 2020 | Nine months 2019 |
|---|---|---|---|---|
| Revenue | $0 | $0 | $0 | $0 |
| Research and development expense | $6.619 | $8.996 | $24.639 | $29.055 |
| General and administrative expense | $3.226 | $2.517 | $9.242 | $8.359 |
| Net loss | $9.796 | $11.004 | $33.342 | $35.625 |
| Basic and diluted net loss per share | $0.33 | $0.37 | $1.13 | $1.21 |
At September 30, cash and cash equivalents were $22.976 million and marketable securities were $28.385 million, totaling $51.361 million, versus $77.982 million at December 31, 2019. Nine-month operating cash use was $26.571 million, compared with $28.811 million in 2019. Investing activities provided $44.306 million, mainly reflecting net maturities and sales of marketable securities; financing activities provided $0.087 million. Accumulated deficit was $250.487 million. No borrowings were reported; operating lease liabilities totaled $2.537 million.
Management said available cash, cash equivalents and marketable securities should fund planned operations for at least 12 months from issuance of the financial statements. However, Corvus did not expect current resources to fund all ongoing or planned development through commercialization and expects to need additional capital. A $50 million at-the-market equity program was available, but no shares had been sold under it by September 30.
Material changes versus prior comparable periods
Q3 net loss improved by $1.208 million year over year, and nine-month net loss improved by $2.283 million. Lower R&D expense drove the improvement: nine-month R&D fell $4.416 million, including lower CPI-818 and ciforadenant spending, partly offset by higher CPI-006 costs. G&A increased $0.883 million over nine months, primarily due to professional services. Interest income and other expense, net, declined $1.250 million over nine months, reflecting lower interest rates and investment balances. Cash and marketable securities decreased by approximately $26.6 million from year-end 2019.
Outlook, commentary and risks
- Management expected increased R&D spending as clinical development continued and anticipated ongoing losses. Clinical and regulatory outcomes, timing and costs remain uncertain.
- Corvus reported interim CPI-006 COVID-19 Phase 1 results in 15 patients: antibody responses and increases in memory cells were observed, 14 patients had been discharged with improvement, and no drug-related safety issues had been reported at that time. The company planned to complete the study and report results in Q4 2020 and said it intended to begin a pivotal randomized study before year-end if the remaining data supported it. These were early, limited results, not proof of efficacy.
- Corvus expected to meet with the FDA in December 2020 to discuss design and plans for a potential ciforadenant pivotal study in advanced refractory renal cell cancer using a biomarker. Oncology enrollment goals for 2020 were largely met in Q1, but the company paused CPI-182 IND-enabling work and manufacturing scale-up in mid-March because of COVID-19. It had not reported clinical supply-chain disruption at filing.
- In October 2020, Corvus launched Angel Pharmaceuticals with approximately $41 million of investor funding, including $6.6 million subject to customary conditions. That cash was not available to Corvus. Angel received rights to develop and commercialize ciforadenant, CPI-006 and CPI-818 in Greater China and global rights to Corvus’s preclinical BTK programs; Corvus initially retained a 49.7% stake. Accounting for the transaction was still being finalized.
- Key risks include clinical-trial failure or delay, regulatory uncertainty, dependence on third-party manufacturers and research organizations, future financing needs and potential COVID-19 disruption. Corvus disclosed no material legal proceedings. Management reported disclosure controls were effective as of September 30, 2020.
Important facts for investors to verify
- Whether operating cash use and clinical spending remain consistent with the stated minimum 12-month liquidity outlook, and when additional financing may be needed.
- Final CPI-006 COVID-19 trial results, including safety and clinical outcomes, and whether evidence supports a pivotal trial.
- FDA feedback and subsequent clinical plans for ciforadenant in refractory renal cell cancer, including the proposed biomarker strategy.
- Angel Pharmaceuticals’ final funding, completion of conditional investment, transaction accounting and progress on licensed programs.
- Potential effects of COVID-19, trial execution, manufacturing dependence and future equity issuance on development timelines and shareholder dilution.