Business context and reporting period
Nurix Therapeutics is a clinical-stage biopharmaceutical company developing small-molecule therapies through its DELigase platform. This Form 10-Q covers the quarter and six months ended May 31, 2021 (fiscal 2021 Q2), compared with the same periods in 2020; this differs from the “2020 Q2” period in the request metadata. Nurix had no approved products and generated no product-sales revenue.
NX-2127 was in a Phase 1 trial with sites recruiting patients. Management expected Phase 1 trials for NX-5948, NX-1607 and DeTIL-0255 to begin in the second half of calendar 2021.
Financial results and liquidity
Amounts below are in millions of dollars, except per-share data. Revenue consists of collaboration revenue.
| Metric | Three months ended May 31, 2021 | Three months ended May 31, 2020 | Six months ended May 31, 2021 | Six months ended May 31, 2020 |
|---|---|---|---|---|
| Collaboration revenue | $7.1 | $4.2 | $12.1 | $7.0 |
| Research and development expense | $26.0 | $14.1 | $49.0 | $27.1 |
| General and administrative expense | $7.5 | $3.3 | $14.0 | $5.7 |
| Total operating expenses | $33.5 | $17.4 | $63.0 | $32.8 |
| Operating loss | $(26.4) | $(13.2) | $(50.9) | $(25.8) |
| Net income (loss) | $(26.4) | $7.6 | $(50.7) | $(4.8) |
| Basic and diluted loss per share | $(0.60) | $0.00 | $(1.23) | $(1.32) |
Operating expenses substantially exceeded collaboration revenue in both 2021 periods; the filing does not present a product gross margin. Revenue increased as collaboration research activity and spending scaled up. R&D growth reflected higher headcount, research and preclinical activity, and clinical-trial enrollment costs. G&A growth reflected headcount and public-company professional expenses. Interest and other income was modest.
At May 31, 2021, cash and cash equivalents were $188.2 million, short-term investments $197.8 million, and long-term investments $110.4 million, totaling $496.5 million in cash, cash equivalents and investments. Current assets were $396.3 million versus current liabilities of $46.8 million. Total liabilities were $119.8 million, primarily deferred collaboration revenue; the filing reports no borrowings. Accumulated deficit was $154.4 million.
For the six months, operating cash outflow was $23.5 million, investing cash outflow $59.5 million, and financing cash inflow $151.8 million, mainly from the March 2021 follow-on offering. Cash, cash equivalents and restricted cash increased $68.9 million to $188.4 million. The company raised approximately $150.1 million net in that offering. Management said existing cash, cash equivalents and investments were expected to fund operations for at least 12 months following issuance of the financial statements.
Changes, outlook and notable items
- Six-month net loss widened to $50.7 million from $4.8 million, while operating loss nearly doubled. The 2020 comparison included a $20.6 million income-tax benefit related principally to CARES Act NOL carrybacks and a tax adjustment; 2021 recorded modest tax expense.
- Q2 2020 EPS was revised: the filing states that the previously reported $2.03 basic and diluted EPS was corrected to $0.00, reflecting preferred-stock dividend allocation and inclusion of dilutive options. The company assessed the error as not material to previously issued financial statements.
- Collaboration revenue was $7.1 million in Q2 2021: $3.7 million from Gilead and $3.3 million from Sanofi. Deferred revenue at May 31 included $40.2 million for Gilead and $65.7 million for Sanofi. Sanofi paid $22.0 million in January 2021 to expand the collaboration from three to five targets; Gilead payments included $2.5 million in Q2 2021.
- March 2021 follow-on equity issuance increased common shares outstanding; 44.4 million shares were outstanding at May 31. The company reported no declared dividends.
- Management expected losses and expenses to increase as clinical programs, research, manufacturing preparation, personnel and public-company costs expand. Further capital will be needed for long-term development and commercialization; future financing could dilute shareholders or impose restrictive terms.
- A July 8, 2021 lease for approximately 19,320 square feet of additional San Francisco laboratory and office space is a subsequent event. Rent is approximately $0.1 million per month beginning December 2021, plus operating and other charges.
- COVID-19 had minimal impact on current operations and no material effect on the reported interim financial statements, according to management, but future effects remain uncertain. The company relies on third-party and, in some cases, single-source manufacturers and suppliers.
- Disclosure controls were deemed ineffective as of May 31, 2021 because of an unremediated material weakness in financial reporting controls. Management was implementing systems and control improvements; remediation was not yet validated.
- The filing reports no pending or threatened litigation as of May 31, 2021 and no material off-balance-sheet arrangements. Operating lease commitments were $15.3 million as of that date.
Important facts for investors to verify
- Progress, enrollment, safety and clinical data for NX-2127, and whether planned 2021 trial starts for NX-5948, NX-1607 and DeTIL-0255 occurred on schedule.
- Cash burn and investment balances relative to the stated 12-month runway, including the timing of collaboration receipts and any need for additional financing.
- Whether collaboration research progresses to partner target selections, milestones or future royalties; potential milestone totals are contingent, not assured revenue.
- Status of the material weakness remediation and the effectiveness of financial reporting controls in subsequent filings.
- Manufacturing and supply continuity, intellectual-property protections and third-party patent claims; the filing notes that its drug-candidate patent portfolio was at an early stage and did not then include issued patents covering its candidates.