Century Therapeutics, Inc. — Q1 2023 Form 10-Q
Reporting period: Three months ended March 31, 2023. Amounts below are in U.S. dollars; financial statement figures are in millions unless noted. The company is a clinical-stage cell-therapy biotechnology company with no approved products or product sales.
Business context and strategy
Century is developing allogeneic iPSC-derived cell therapies for hematologic and solid-tumor cancers. It began dosing patients in February 2023 in the Phase 1 ELiPSE-1 trial of CNTY-101 for relapsed or refractory CD19-positive B-cell malignancies. Bristol Myers Squibb (BMS) collaboration programs are also ongoing.
In January 2023, the company reprioritized its portfolio: it paused investment in CNTY-103 and a hematologic malignancy discovery program, focused resources on CNTY-101, and prioritized CNTY-102 and CNTY-107. It reduced its workforce by approximately 25%, closed lab operations in Seattle and Hamilton, Ontario, and consolidated research in Philadelphia.
Financial results and liquidity
| Metric | Q1 2023 | Q1 2022 |
|---|---|---|
| Collaboration revenue | $1.7 | $1.1 |
| Research and development expense | $24.9 | $21.2 |
| General and administrative expense | $8.9 | $7.3 |
| Total operating expenses | $33.8 | $38.5 |
| Operating loss | $32.1 | $37.4 |
| Net loss | $31.3 | $37.5 |
| Net loss per share, basic and diluted | $0.53 | $0.66 |
| Net cash used in operating activities | $29.2 | Net cash provided: $86.8 |
Revenue was collaboration revenue, primarily recognized under the BMS agreement; the company reported no product-sale revenue. There is no meaningful product gross margin reported. The lower operating and net losses versus the prior year reflect, in part, the absence of the $10.0 million in-process R&D charge recorded in Q1 2022 and higher interest income. R&D and G&A expenses increased year over year.
At March 31, 2023, cash and cash equivalents were $86.8 million and investments were $248.0 million, totaling approximately $334.8 million; restricted cash was $2.0 million. Total assets were $456.2 million, total liabilities $179.1 million, and stockholders’ equity $277.2 million. The balance sheet reported $10.3 million of debt, net, and $41.7 million of operating lease liabilities. The Hercules loan was repaid in full on May 1, 2023 for $10.6 million, including principal, interest, and fees.
Operating cash use was $29.2 million, compared with $86.8 million of operating cash provided in Q1 2022, when the BMS collaboration generated substantial deferred revenue. Investing activities provided $31.3 million, primarily reflecting net sales of investment securities; financing activities provided $0.4 million. Cash, cash equivalents, and restricted cash increased $2.6 million during the quarter.
Management said available cash, cash equivalents, and investments were expected to fund operating and capital requirements into 2026, based on current plans and assumptions. The financial statements also state that management believed resources were adequate for at least 12 months from issuance. The company expects further losses and anticipates needing additional financing; it cautioned that capital may not be available on acceptable terms.
Material changes and management commentary
- R&D expense rose $3.7 million, mainly from personnel and facility costs, partly offset by lower collaboration costs. The quarter included $2.0 million of cash severance and related costs and a $0.6 million noncash stock-compensation charge related to the restructuring.
- G&A expense increased $1.6 million, primarily due to personnel, stock compensation, IT, and facility costs.
- Interest income increased to $2.6 million from $0.3 million, reflecting higher rates on cash and investments. Interest expense was $0.4 million; management expected it to decrease after the May loan repayment.
- The BMS agreement’s recognized transaction price was $123.2 million at March 31, 2023, of which $116.3 million remained deferred. Potential development, regulatory, and sales milestones and royalties are contingent and not assured.
Guidance, risks, contingencies, and unusual items
No specific financial guidance was provided. Management expects expenses and operating losses to increase as it advances clinical and preclinical programs, develops manufacturing capabilities, and supports operations. Management’s runway estimate depends on assumptions that may prove incorrect.
Key risks include clinical and regulatory uncertainty, dependence on CNTY-101 and third-party collaborators and manufacturers, the need for additional capital, competition, intellectual-property risks, and potential disruption from macroeconomic conditions or banking instability. The company reported that risk factors were not materially changed from its 2022 Form 10-K. It stated there were no pending legal matters expected to have a material adverse effect.
The company recorded $1.2 million of income tax expense despite its net loss, citing taxable collaboration revenue and limits on R&D deductions; it maintains a full valuation allowance against U.S. deferred tax assets. Management reported effective disclosure controls as of March 31, 2023 and no material change in internal control over financial reporting during the quarter.
Important facts for investors to verify
- Progress, safety, and efficacy data from the Phase 1 ELiPSE-1 trial and development timelines for CNTY-101, CNTY-102, and CNTY-107.
- Whether the stated cash runway into 2026 remains achievable after updated spending, clinical, manufacturing, and restructuring plans.
- Cash and investment balances, investment liquidity and credit exposure, and the effects of ongoing operating cash burn.
- Completion and full cost of the May 1, 2023 Hercules loan repayment, and the resulting effect on liquidity and interest expense.
- Future BMS collaboration progress, option decisions, and any milestone or royalty payments; these are contingent rather than guaranteed.
- Execution and costs of the workforce reduction, lab closures, and portfolio prioritization, including any effect on program timelines.