Catalyst Biosciences, Inc. — Q3 2020 Form 10-Q
Filing identity: The filing is for Catalyst Biosciences, Inc. (NASDAQ: CBIO), not Gyre Therapeutics, Inc. The company name in the request metadata does not match the filing.
Business context and reporting period
Unaudited results cover the quarter and nine months ended September 30, 2020; balance-sheet comparisons are with December 31, 2019. Catalyst is a clinical-stage biopharmaceutical company developing protease-based candidates for hematologic and complement-mediated disorders. It had no approved products and no product-sales revenue. Its principal programs included MarzAA for hemophilia, DalcA for hemophilia B, an early-stage Factor IX gene-therapy construct, and a Biogen-partnered anti-C3 program for dry age-related macular degeneration.
Financial results
| Metric | Three months ended September 30 | Nine months ended September 30 |
|---|---|---|
| License and collaboration revenue | 2020: $0.9 million; 2019: none | 2020: $18.9 million; 2019: none |
| Research and development expense | 2020: $12.2 million; 2019: $9.9 million | 2020: $38.4 million; 2019: $33.1 million |
| General and administrative expense | 2020: $3.8 million; 2019: $3.3 million | 2020: $11.9 million; 2019: $10.2 million |
| Operating loss | 2020: $16.1 million; 2019: $13.2 million | 2020: $38.5 million; 2019: $43.3 million |
| Net loss | 2020: $16.0 million; 2019: $12.7 million | 2020: $37.3 million; 2019: $41.6 million |
| Basic and diluted loss per share | 2020: $0.73; 2019: $1.06 | 2020: $2.05; 2019: $3.47 |
Q3 collaboration and license costs totaled $0.9 million, slightly exceeding the $0.9 million of reported revenue. Nine-month costs totaled $7.1 million against $18.9 million revenue; the revenue included Biogen’s $15.0 million upfront license payment. No product gross margin is reported.
At September 30, cash and cash equivalents were $24.9 million, short-term investments $78.0 million, and long-term investments $1.2 million, totaling $104.1 million. Current assets were $108.0 million and current liabilities $16.8 million. Total liabilities were $17.7 million, including $1.4 million of operating lease liabilities; the filing reports no borrowings or other debt. Accumulated deficit was $295.9 million.
For the first nine months, operating cash use was $32.9 million, investing cash use was $17.9 million, and financing cash inflow was $60.4 million. Financing included approximately $60.0 million net proceeds from February and June public offerings. Cash, cash equivalents and restricted cash increased $9.6 million to $24.9 million.
Material changes versus the prior comparable periods
- Q3 net loss increased by $3.3 million year over year as operating expenses rose 29%, while nine-month net loss declined by $4.2 million, primarily alongside the $18.9 million of Biogen revenue.
- Nine-month R&D expense rose 16%, with higher preclinical research and personnel costs; G&A rose 16%, principally due to professional services.
- Cash and investments increased from $76.9 million at year-end 2019 to $104.1 million, supported by the two 2020 equity offerings. Shares issued and outstanding rose from 12.0 million to 22.1 million.
- Interest and other income declined year over year, reflecting lower investment income, partly offset for the nine-month period by a $0.7 million contingent payment related to a prior asset sale.
Outlook, commentary and risks
- Management expected existing cash, cash equivalents and investments to fund requirements for at least 12 months from the filing date. It expected continued losses for several years and anticipated higher R&D expense as programs advance. Future funding could involve equity or debt, licensing, collaborations or partnerships; availability and terms are uncertain.
- Management was preparing MarzAA’s Phase 3 MAA-304 trial and expected first-patient enrollment by year-end 2020; it also planned a Phase 1/2 MarzAA study by year-end. These were expectations, not reported completed milestones.
- The completed DalcA Phase 2b study reported protective FIX levels in all participants after 28 days of daily dosing; one participant withdrew after injection-site reactions. No serious adverse events or thrombotic events were reported.
- COVID-19 could delay recruitment, site activation, data analysis, research, manufacturing and regulatory timelines, and could increase costs. Management said it was monitoring the effects; the full impact was uncertain.
- Firm AGC manufacturing work orders totaled $21.6 million, with $13.4 million of payment obligations remaining at September 30. The company also had potential milestone obligations under Pfizer and ISU Abxis agreements. Biogen milestones of up to $340 million and sales royalties are contingent and not assured.
- Biogen funded specified preclinical and manufacturing research services and controlled clinical development and commercialization for the licensed anti-C3 program. Biogen could terminate at will with 60 days’ notice.
- The filing reports no material legal proceedings and no off-balance-sheet arrangements. Management judged disclosure controls effective as of September 30, 2020.
Important facts for investors to verify
- Confirm the issuer: the supplied filing is Catalyst Biosciences, not Gyre Therapeutics.
- Check subsequent updates to cash runway, operating cash use, and any additional financing or dilution.
- Verify actual timing, enrollment and results for MarzAA trials, and subsequent DalcA development plans.
- Assess COVID-19 effects on clinical execution and the $13.4 million remaining AGC manufacturing commitment.
- Review the terms, termination rights, milestones and royalty economics of the Biogen and Mosaic arrangements; future contingent payments are not guaranteed.