Nurix Therapeutics, Inc. — Form 10-Q Summary
Reporting period: Fiscal first quarter ended February 28, 2021, compared with the three months ended February 29, 2020. The filing is for 2021, notwithstanding the “2020 Q1” request metadata. Financial statements are unaudited; amounts below are in U.S. dollars unless stated otherwise.
Business context and reporting period
Nurix is a clinical-stage biopharmaceutical company developing small-molecule therapies that modulate cellular protein levels using its DELigase platform. It has no approved products and has not generated product-sales revenue. Its wholly owned programs include BTK degraders NX-2127 and NX-5948, the CBL-B inhibitor NX-1607, and the cell-therapy candidate DeTIL-0255; it also conducts partnered discovery programs with Sanofi and Gilead.
Financial performance and position
| Metric | Three months ended February 28, 2021 | Comparable 2020 period |
|---|---|---|
| Collaboration revenue | $5.0 million | $2.9 million |
| Research and development expense | $23.0 million | $13.0 million |
| General and administrative expense | $6.5 million | $2.5 million |
| Operating loss | $24.5 million | $12.6 million |
| Net loss | $24.3 million | $12.4 million |
| Basic and diluted loss per share | $0.63 | $3.50 |
| Operating cash flow | $8.1 million provided | $41.0 million provided |
- Revenue grew 75%, principally as Sanofi collaboration research activity scaled up. Revenue comprised $2.7 million from Gilead and $2.3 million from Sanofi.
- Operating expenses rose 91.6%; R&D increased 77.4% and G&A increased 166.5%. Management attributed the increases to higher headcount and stock compensation, greater discovery and preclinical activity, clinical-program preparation, and public-company costs.
- Operating loss was approximately 489% of revenue, reflecting the company’s pre-commercial stage. Net loss nearly doubled year over year. Per-share loss comparisons are affected by the IPO and the large change in weighted-average shares.
- At February 28, 2021, cash and cash equivalents were $126.4 million; short- and long-term investments totaled $253.9 million; combined cash, cash equivalents and investments were $380.3 million. Total assets were $396.7 million and accumulated deficit was $128.0 million.
- Current assets were $310.8 million versus current liabilities of $48.0 million. The balance sheet reports no interest-bearing debt line item. Liabilities included $110.5 million of deferred revenue, reflecting collaboration payments not yet recognized as revenue.
- Operating cash flow fell from $41.0 million to $8.1 million. The 2021 inflow was supported by a $17.0 million increase in deferred revenue and a $7.5 million decrease in contract assets; it should not be read as evidence of operating profitability. Investing cash use was $2.4 million and financing cash provided was $1.4 million.
Material changes, outlook, and risks
- Sanofi paid $22 million in January 2021 to expand its collaboration from three targets to five and amended the research term. The company reported $69.0 million of Sanofi deferred revenue at quarter-end. Gilead-related deferred revenue was $41.4 million.
- After quarter-end, Nurix completed a March 2021 follow-on offering of 5.175 million shares at $31 per share, receiving approximately $150.1 million net. This was not included in the February 28 balance sheet. Management stated that resources at quarter-end were expected to fund operations for at least 12 months; the subsequent offering added capital.
- Clinical outlook: NX-2127 had FDA clearance and was recruiting patients in a Phase 1 trial. Management anticipated Phase 1 starts in the second half of 2021 for NX-5948, NX-1607 and DeTIL-0255. Timing is forward-looking and subject to development, regulatory, enrollment, manufacturing and other risks.
- Management expects losses and expenses to rise as programs advance and public-company infrastructure expands; substantial additional funding will be needed for the longer-term development and commercialization plan. Potential future collaboration milestones and royalties are contingent, not assured.
- COVID-19 had no material effect on the reported quarter’s financial statements, and management said its operational impact to date was minimal; future effects on trials, suppliers, manufacturing and regulatory timelines remained uncertain. The company relies on third-party, in some cases single-source, manufacturers and suppliers.
- A material weakness in internal control over financial reporting remained unremediated at February 28, 2021; management concluded disclosure controls were not effective. The weakness involved undocumented controls and procedures, including IT general controls, segregation of duties and financial close processes. Management reported remediation work was ongoing and said the financial statements fairly presented the periods shown after additional review procedures.
- Risk disclosures emphasize early-stage clinical and scientific uncertainty, potential adverse effects, competition, dependence on collaborators, financing needs, and intellectual-property exposure. The filing identifies a third-party patent that may be asserted against CTM candidates, including NX-2127; Nurix stated it believed it had defenses. Preclinical GLP testing of NX-1607 noted one severe uveitis instance at the highest dose. No material pending or threatened litigation was reported at quarter-end.
Most important facts for investors to verify
- Progress, safety findings, enrollment and timelines for the NX-2127 Phase 1 trial and the planned 2021 clinical starts for NX-5948, NX-1607 and DeTIL-0255.
- Cash burn and runway relative to the $380.3 million quarter-end cash-and-investment balance, the March offering proceeds, and the timing and costs of planned trials.
- Whether collaboration research activity, deferred-revenue recognition and any future milestone payments develop as expected; milestone and royalty amounts are contingent.
- Remediation and independent testing of the disclosed material weakness, and whether disclosure controls and internal controls are ultimately judged effective.
- Manufacturing and supply continuity, COVID-19-related disruptions, and the status and potential implications of the identified third-party patent risk.