NextCure, Inc. — Q2 2022 Form 10-Q
Reporting period: Quarter and six months ended June 30, 2022. NextCure is a clinical-stage biopharmaceutical company developing immunomedicines; it has no product-sales revenue and expects continuing losses as it funds research and clinical development.
Financial results and liquidity
| Metric | Q2 2022 | Q2 2021 | Six months 2022 | Six months 2021 |
|---|---|---|---|---|
| Revenue | No product revenue | No product revenue | No product revenue | No product revenue |
| Research and development expense | $12.8 million | $11.9 million | $27.8 million | $24.3 million |
| General and administrative expense | $5.3 million | $6.0 million | $11.1 million | $10.9 million |
| Net loss | $17.9 million | $18.0 million | $38.5 million | $34.5 million |
| Net loss per share, basic and diluted | $0.65 | $0.65 | $1.39 | $1.25 |
| Operating cash used | Not separately stated | Not separately stated | $29.9 million | $31.1 million |
- At June 30, 2022, cash and cash equivalents were $28.2 million and marketable securities were $157.3 million, totaling $185.5 million excluding restricted cash. Management expects these funds to support planned operations into the first quarter of 2024, based on assumptions that may prove incorrect.
- Current assets were $193.0 million and current liabilities were $5.7 million. Total liabilities were $8.2 million; the balance sheet reported no debt. The term loan was paid in full and closed in August 2021.
- Six-month investing cash inflow was $45.6 million, primarily reflecting net proceeds from marketable securities; financing cash inflow was $0.1 million. Cash, cash equivalents and restricted cash increased $15.8 million.
- Accumulated deficit was $225.5 million. The company reported $2.3 million of accumulated unrealized losses on marketable securities. Operating margins are not meaningful because the company has no product revenue.
Changes versus the prior comparable period
- Q2 net loss was nearly unchanged year over year, but six-month net loss increased $4.0 million. Six-month operating expenses rose $3.7 million, primarily from higher R&D spending.
- Six-month R&D expense increased $3.5 million, with higher clinical and laboratory-related costs. NC410 and discovery/preclinical program spending increased; NC318 spending was broadly stable.
- Q2 G&A expense declined $0.7 million, mainly due to lower legal and recruiting costs and payroll-tax refunds. Six-month G&A increased $0.2 million.
- Six-month operating cash use improved by $1.2 million versus 2021. Marketable securities fell from $207.3 million at year-end 2021 to $157.3 million at June 2022, while cash and cash equivalents rose from $12.3 million to $28.2 million.
Outlook, risks and notable matters
- Management expects substantial ongoing R&D and operating losses and says additional capital will be needed. Financing may include equity or debt offerings, collaborations, strategic alliances or licensing; funding may not be available on acceptable terms. Failure to obtain funding could delay, reduce or end development activities.
- Planned development milestones included further NC318 Phase 2 data in Q4 2022; further NC410 Phase 1 data and initial NC762 Phase 1 data in the second half of 2022; and a planned NC525 IND submission in Q4 2022. These are management expectations, not assurances.
- COVID-19-related disruption at clinical sites has slowed enrollment and delayed trials and results; further infection increases could again affect enrollment and timelines.
- Marketable securities were corporate bonds with $2.3 million of gross unrealized losses at quarter-end. Management attributed losses primarily to market conditions, considered them temporary, and stated it did not intend or expect to be required to sell before maturity.
- Three legal matters were disclosed: a securities class action, a related shareholder derivative action, and the Immunaccel trade-secrets and related claims action. The company intends to defend them but said it cannot estimate a reasonably possible loss or range of loss.
- Disclosure controls were assessed as effective at the reasonable-assurance level; no material change in internal control over financial reporting was reported for the quarter.
Key facts for investors to verify
- Whether clinical enrollment, data updates and the NC525 IND timeline met the stated expectations, and what the results imply for each program.
- Whether the estimated cash runway into Q1 2024 remains supportable given trial spending, operating cash use and financing needs.
- Developments in the disclosed litigation and any change in the company’s ability to estimate potential exposure.
- Changes in marketable-security values, R&D spending, and potential use of the unused $75 million at-the-market sales agreement.