Corvus Pharmaceuticals, Inc. — Q1 2017 Form 10-Q
Reporting period: Three months ended March 31, 2017. Corvus is a clinical-stage immuno-oncology company with no product revenue; its lead candidate is CPI-444. Financial statements are unaudited.
Financial results and liquidity
| Metric | Q1 2017 | Q1 2016 |
|---|---|---|
| Revenue | None | None |
| Research and development expense | $13.5 million | $5.4 million |
| General and administrative expense | $2.7 million | $1.0 million |
| Total operating expenses | $16.2 million | $6.4 million |
| Net loss | $16.0 million | $6.3 million |
| Basic and diluted net loss per share | $0.79 | $5.39 |
| Net cash used in operating activities | $12.7 million | $5.6 million |
- At March 31, 2017, cash and cash equivalents were $10.5 million and marketable securities were $111.6 million, totaling $122.1 million, versus $134.9 million at December 31, 2016. The securities were U.S. Treasury securities, with maximum remaining maturity of eight months.
- Total assets were $127.1 million; total liabilities were $8.9 million, including $7.6 million of current liabilities. No debt or borrowings are reported in the supplied filing text.
- Accumulated deficit was $83.9 million, compared with $67.9 million at year-end. Stockholders’ equity was $118.2 million.
- Operating cash use was partly offset by $18.2 million of net investing cash inflow, primarily maturities of marketable securities. Financing provided $8,000, mainly option exercises. Cash increased $5.4 million during the quarter.
- Margins are not meaningful because Corvus had no revenue. Interest income was $0.2 million.
Changes versus the prior comparable period
- Net loss increased by $9.7 million; operating expenses rose by $9.8 million. R&D increased $8.1 million and G&A increased $1.7 million.
- R&D spending on CPI-444 rose $5.4 million, including $2.1 million in additional clinical-trial costs and a $3.0 million Vernalis milestone payment following expansion of a renal-cell-cancer cohort. CPX-006 costs rose $1.8 million, mainly due to manufacturing; headcount and related costs also increased.
- Operating cash use increased $7.1 million year over year. The 2016 quarter included $64.3 million of financing proceeds, primarily from the IPO; Q1 2017 had no comparable equity financing.
Outlook, developments and risks
- Management stated existing cash, cash equivalents and marketable securities should fund planned expenditures and obligations for at least the next 12 months. It also said these resources are not expected to fund CPI-444’s full clinical and development program through commercialization; additional capital may be required. Further financing could dilute shareholders, add debt obligations or require granting rights to candidates.
- Corvus was enrolling patients in the CPI-444 Phase 1/1b trial, including single-agent and Tecentriq combination cohorts. CPX-006 was in IND-enabling studies, with a Phase 1 trial planned for early 2018; an ITK candidate was also in IND-enabling studies, with a Phase 1 trial planned for 2018. Candidate selection for the A2B program was expected in 2017.
- On May 1, 2017, after quarter-end, Corvus signed a new Genentech collaboration for a randomized, controlled Phase 1b/2 study of CPI-444 plus Tecentriq in up to 65 second-line NSCLC patients resistant or refractory to prior anti-PD(L)-1 therapy. Enrollment was expected to begin in the second half of 2017; Genentech will manage study operations, and Corvus retains global CPI-444 development and commercialization rights.
- The filing disclosed two possibly drug-related serious adverse events in the CPI-444/Tecentriq trial: Grade 3 autoimmune hemolytic anemia and Grade 4 aseptic meningoencephalitis. Both resolved after treatment discontinuation. The filing emphasizes that safety and efficacy evidence remains limited and clinical outcomes are uncertain.
- Key risks include clinical-trial failure or delays, enrollment and safety issues, dependence on third-party manufacturers and trial operators, regulatory approval uncertainty, competition, reliance on licensed intellectual property, and the need for future financing. Corvus reported no material legal proceedings and no off-balance-sheet arrangements. Management said disclosure controls were effective as of March 31, 2017.
Most important facts for investors to verify
- Whether the CPI-444 trial produces credible safety and efficacy results, including in expanded cohorts and combination treatment.
- Progress, enrollment timing and study execution for the planned Genentech Phase 1b/2 NSCLC trial.
- Cash burn relative to the stated 12-month funding horizon, and the timing, terms and potential dilution of any required financing.
- Whether CPX-006, the ITK program and the A2B program meet the stated development milestones and timelines.
- Vernalis license obligations, including future contingent milestones and royalties; the filing states potential aggregate milestones exceed $200 million for all indications.