Exicure, Inc. — FY 2022 Form 10-K
Reporting period: Year ended December 31, 2022; filed March 27, 2023. This is an annual report, not a standalone fourth-quarter report. Exicure had historically been a biotechnology company developing spherical nucleic acid therapies. In September 2022, it halted R&D, wound down preclinical programs, reduced its workforce by approximately 66%, and shifted to exploring strategic alternatives.
Financial results and position
| Metric | FY 2022 | FY 2021 |
|---|---|---|
| Revenue | $28.8 million | $(0.5) million |
| Operating expenses | $30.7 million | $62.1 million |
| Operating loss | $(1.8) million | $(62.5) million |
| Net loss | $(2.6) million | $(64.1) million |
| Loss per share | $(0.56) | $(21.70) |
| Net cash used in operations | $(35.7) million | $(34.8) million |
- FY 2022 collaboration revenue comprised $11.1 million from AbbVie and $17.7 million from Ipsen. The revenue largely reflects recognition of previously deferred amounts when the collaborations terminated in December 2022; it did not represent new cash receipts and is not expected to recur. Exicure had no current revenue source after those terminations.
- R&D expense fell 60% to $19.8 million, and general and administrative expense fell 17% to $10.9 million, reflecting reduced program activity and staffing. The company reported no product revenue.
- At December 31, 2022, cash and cash equivalents were $8.6 million; cash, cash equivalents, and restricted cash totaled $9.8 million. Total assets were $23.3 million, liabilities $8.4 million, and stockholders’ equity $14.9 million.
- Exicure repaid its MidCap debt in full in March 2022, including $7.5 million principal and an approximately $0.5 million exit fee. It reported no outstanding debt at year-end. The Chicago lease liability totaled $7.3 million.
- Operating cash use was $35.7 million. Investing activities provided $4.7 million and financing activities used $3.1 million; cash, cash equivalents, and restricted cash decreased by $34.1 million during the year.
- The filing reports an accumulated deficit of $191.5 million in narrative disclosures, but the balance sheet presents accumulated deficit of $172.6 million. The filing text does not provide a clear reconciliation; investors should verify this apparent inconsistency.
Material changes, outlook, and risks
- The company’s 2022 net loss narrowed substantially from 2021, primarily because collaboration revenue was recognized and R&D costs declined. The collaboration revenue increase was an accounting effect, not recurring operating revenue.
- On February 24, 2023, CBI USA’s private placement closed, providing $5.4 million gross proceeds, or approximately $4.6 million net. CBI USA became the beneficial owner of approximately 50.4% of outstanding shares, resulting in a change of control. A warrant holder exercised a change-of-control put right for an approximately $0.8 million cash payment; the obligation remained outstanding at filing.
- Management stated that year-end liquidity, including the February 2023 financing, might fund operations into early Q4 2023, but emphasized that the estimate is uncertain. Additional financing is needed within months; there is substantial doubt about the company’s ability to continue as a going concern, and failure to obtain funding could lead to bankruptcy.
- Management is exploring transactions in biotechnology and other industries, including potential reverse mergers, share exchanges, acquisitions, or investments. It gave no specific transaction guidance and cautioned that no transaction is assured; it does not expect near-term significant value from historical assets.
- Key risks include lack of revenue and committed financing, execution and dilution risks from future financing, possible Nasdaq delisting, controlled-company governance and conflicts, leadership continuity, and uncertainty around strategic alternatives. The company had received Nasdaq deficiency notices, including around bid price, equity, and audit committee composition.
- Material legal contingencies include a putative securities class action and related shareholder derivative suits. The class action damages are not quantified in the filing; derivative cases were stayed pending developments in the class action.
- The financial statements received an unqualified audit opinion, with an explicit going-concern emphasis. Management reported disclosure controls and internal control over financial reporting effective as of year-end; the auditor did not provide an ICFR attestation.
Important facts for investors to verify
- Current cash runway, actual cash burn, and the timing and terms of any new financing.
- Use of the February 2023 net proceeds, including settlement of the $0.8 million warrant put, and resulting liquidity.
- Progress and terms of any strategic transaction, asset sale, or out-license, and whether it creates value for common shareholders.
- Nasdaq listing compliance, including audit committee independence and minimum bid-price requirements.
- Outcome and potential financial exposure from the securities class action and derivative litigation.
- The accumulated-deficit discrepancy between the narrative disclosure and balance sheet, and the post-placement share count and potential dilution.