Citius Pharmaceuticals, Inc. — FY2021 Form 10-K
Reporting period: Fiscal year ended September 30, 2021 (not a standalone fourth-quarter report). Filed December 15, 2021. Citius is a clinical-stage specialty pharmaceutical company with no product revenue.
Financial performance and liquidity
| Metric | FY2021 | FY2020 |
|---|---|---|
| Revenue | $0 | $0 |
| Operating expenses | $23.53 million | $17.71 million |
| Operating loss | $23.53 million | $17.71 million |
| Net loss | $23.05 million | $17.55 million |
| Net loss applicable to common stockholders | $24.51 million | $17.55 million |
| Net cash used in operations | $24.25 million | $16.93 million |
- With no revenue, gross margin and operating margin are not meaningful. Net loss per common share was $0.23 versus $0.45; weighted-average shares rose to 108.6 million from 39.2 million. FY2021 common-stockholder loss includes a $1.45 million deemed dividend from extending warrants.
- Cash and cash equivalents were $70.07 million at year-end, versus $13.86 million a year earlier; working capital was approximately $68.8 million. Management estimated funds would support operations through March 2023.
- Financing activities provided $120.47 million, principally from equity offerings and warrant exercises. Investing activities used $40.01 million, including $40 million for the E7777 license. The company reported no outstanding notes payable; total liabilities were $9.65 million, including lease liabilities and a $4.99 million deferred tax liability.
- Total assets were $142.43 million and total equity was $132.78 million. Accumulated deficit was $96.05 million. The company had 145.98 million common shares outstanding at September 30, 2021, plus 40.21 million shares underlying warrants and 5.76 million underlying options.
Changes versus FY2020
- Net loss increased $5.51 million (about 31%), as R&D rose $3.43 million to $12.24 million and G&A rose $1.74 million to $9.84 million. R&D growth primarily reflected NoveCite spending, including its $5 million license payment, and $0.74 million of E7777-related expense.
- Mino-Lok R&D decreased to $3.53 million from $6.21 million, mainly because fewer registration-batch costs were incurred. Halo-Lido R&D also declined, to $0.86 million from $1.65 million.
- Operating cash use increased by $7.32 million. The company raised substantially more equity financing and acquired the E7777 in-process R&D asset for $40 million.
Business, outlook and key risks
- Pipeline: Mino-Lok, an antibiotic catheter-lock candidate, was in Phase 3. Its 75% interim analysis in June 2021 led the independent data monitoring committee to recommend continuing without protocol changes or identified safety concerns. The trial was expected to complete in 2022; the filing described a potential FDA BLA filing by the end of 2022.
- I/ONTAK (E7777): Citius acquired exclusive development and commercialization rights in most markets for CTCL. Eisai was responsible for completing the ongoing Phase 3 trial and BLA-enabling CMC work. The license involves substantial future milestones, royalties and cost-reimbursement obligations; the filing describes a $40 million upfront payment and potential additional payments to Dr. Reddy’s and Eisai.
- Other programs: Halo-Lido was in development, with an IND filing anticipated in December 2021 and a Phase 2b study planned by March 2022. Mino-Wrap remained preclinical, with an IND anticipated in 2022. NoveCite’s iPSC-derived cell therapy for ARDS remained preclinical; its master cell bank work was completed during FY2021.
- Management expected R&D expense to increase in FY2022 as it advanced Mino-Lok, Halo-Lido, ARDS, Mino-Wrap and E7777. Additional capital may be needed after the estimated March 2023 runway; future financing, regulatory approvals and product commercialization are not assured.
- COVID-19 had disrupted hospitals and slowed the Mino-Lok trial; the company warned of possible further delays, higher costs and effects on fundraising. Other major risks include clinical and regulatory failure, reliance on contract research and manufacturing organizations, lack of sales infrastructure, reimbursement and market-acceptance uncertainty, competition, potential dilution, and Nasdaq listing compliance.
- There were no material litigation matters reported. The auditor issued an unqualified opinion and reported no critical audit matters. Management concluded disclosure controls and internal control over financial reporting were effective as of September 30, 2021.
Important facts for investors to verify
- Current Mino-Lok trial enrollment, completion timing, final results and any FDA submission status.
- Actual cash burn and financing needs compared with management’s March 2023 runway estimate.
- All-in I/ONTAK economics, including the upfront payment, milestones, royalties, trial/BLA reimbursements and required development commitments.
- Potential dilution from outstanding warrants, options and future equity issuance; confirm the terms and exercise prices of these securities.
- Whether planned Halo-Lido and Mino-Wrap development milestones occurred, and the status of NoveCite’s preclinical and manufacturing program.
- Whether COVID-related trial delays, contract-manufacturer issues, regulatory requirements or commercialization and reimbursement barriers materially change development timelines or costs.