Filing summary: Coronado Biosciences, Inc. — Q1 2012
Entity note: The filing provided is for Coronado Biosciences, Inc., not Fortress Biotech, Inc. It covers the quarter ended March 31, 2012 and was signed May 15, 2012.
Business context
Coronado was a development-stage biopharmaceutical company focused on immunotherapies for autoimmune disease and cancer. Its principal candidates were TSO (CNDO-201), including development for Crohn’s disease, and CNDO-109 for acute myeloid leukemia. The company had not begun planned principal operations and had recognized no revenue since inception.
Financial results and position
| Metric | Q1 2012 | Q1 2011 |
|---|---|---|
| Revenue | $0 | $0 |
| Research and development expense | $4.581 million | $1.246 million |
| General and administrative expense | $2.000 million | $0.593 million |
| Operating loss | $6.581 million | $22.545 million |
| Net loss | $6.556 million | $22.543 million |
| Net loss per common share | $0.35 | $4.71 |
| Cash used in operating activities | $5.425 million | $1.784 million |
- At March 31, 2012, cash and cash equivalents were $17.735 million, down $5.425 million from year-end 2011. Total current assets were $18.043 million; current liabilities were $3.843 million.
- Total liabilities were $4.593 million, including a $0.750 million related-party note due in December 2013 or earlier upon a merger transaction. The note is fixed-rate; the filing reports no marketable securities.
- Accumulated development-stage deficit was $63.130 million. No gross margin is reported because the company had no revenue.
- Contractual obligations totaled $16.132 million, excluding contingent milestone payments: $6.074 million due within one year and $7.558 million in one to three years. These included projected sublicense fees and purchase and other obligations.
Changes, outlook, and risks
- Q1 net loss was substantially lower than the prior-year loss, chiefly because Q1 2011 included $20.706 million of acquired in-process R&D expense related to the Asphelia asset purchase. In contrast, Q1 2012 R&D expense rose $3.335 million, reflecting increased TSO and CNDO-109 development costs, milestones, and staffing; G&A rose $1.407 million amid expanded activity and public-company costs.
- Management estimated that existing cash would fund operations into the fourth quarter of 2012 under its current business plan. It expected substantial future development spending and said additional financing would be required. The filing states that these circumstances raise substantial doubt about the company’s ability to continue as a going concern; no financial-statement adjustments for that uncertainty were recorded.
- In February 2012, the company reported that its 36-patient Phase 1 TSO Crohn’s study found TSO safe and well tolerated, with no serious adverse events. In April, after quarter-end, it reported that an interim review of Falk’s Phase 2 study found no safety concerns and a positive efficacy trend; the study was to continue with an increased sample size. These are preliminary clinical findings, not evidence of established efficacy.
- The company planned, subject to FDA discussions, to start its own Phase 2 TSO Crohn’s trial in Q3 2012, with initial results expected in the second half of 2013. It planned to initiate a CNDO-109 Phase 1/2 trial in the second half of 2012.
- The March 2012 collaboration with Falk and OvaMed provided Coronado exclusive regional rights to specified TSO data and licenses. Coronado paid Falk €1 million (about $1.4 million) in March, paid another €1.5 million (about $2.0 million) in April, and expected a final €2.5 million payment (about $3.3 million) in the second half of 2013, plus a 1% royalty on specified regional net sales.
- Key risks include the need for additional capital on acceptable terms, clinical and regulatory uncertainty, dependence on third-party manufacturers, and reliance on OvaMed as the sole TSO supplier at one German facility. Failure to obtain funding could force delays, reductions, or termination of development programs.
Important facts for investors to verify
- Confirm the issuer: the supplied filing is Coronado Biosciences, not Fortress Biotech.
- Assess cash runway against actual spending, the stated fourth-quarter 2012 runway estimate, and the company’s financing needs.
- Track subsequent financing, dilution, and payment of the disclosed milestones and contractual obligations.
- Verify trial progress, enrollment, interim and final results, and regulatory decisions; the TSO efficacy signal described was preliminary.
- Review the status of TSO supply arrangements and the company’s dependence on OvaMed and other third-party providers.
- The filing reports 18,604,245 common shares issued and outstanding at March 31, 2012, and 18,625,749 shares outstanding as of May 15, 2012; verify subsequent share counts and potential dilution from options and warrants.