Xilio Therapeutics, Inc. — Q1 2024 Form 10-Q
Business context and reporting period
Xilio is a clinical-stage biotechnology company developing tumor-activated immuno-oncology therapies. This unaudited filing covers the three months ended March 31, 2024; balance-sheet figures are as of that date. The company has no approved products and has not generated product-sales revenue.
Key financial metrics
| Metric | Q1 2024 | Q1 2023 / comparison |
|---|---|---|
| Revenue recognized | $0 | No product revenue; no Gilead agreement revenue recognized in Q1 |
| Research and development expense | $10.4 million | $16.1 million |
| General and administrative expense | $6.1 million | $7.4 million |
| Restructuring expense | $0.9 million | None |
| Total operating expenses / operating loss | $17.5 million | $23.5 million |
| Other income, net | $0.3 million | $0.9 million |
| Net loss | $17.2 million; $0.62 per share | $22.6 million; $0.83 per share |
| Cash used in operating activities | $10.5 million | $25.3 million |
- Cash and cash equivalents were $34.0 million at quarter-end, versus $44.7 million at December 31, 2023. Restricted cash was an additional $2.8 million.
- Current assets were $69.2 million, including a $30.0 million Gilead receivable for an upfront payment received in April. Current liabilities were $31.6 million, including $21.7 million of deferred revenue. Total liabilities were $56.8 million; stockholders’ equity was $25.8 million.
- The company repaid all amounts outstanding under its PacWest loan in Q1; no loan principal remained at quarter-end. Operating lease liabilities totaled $8.9 million.
- Q1 operating cash use was lower year over year, but included substantial working-capital effects, including $39.1 million of deferred revenue and the $30.0 million license receivable. It should not be read as a stand-alone measure of recurring cash burn.
Material changes and notable transactions
- Operating expenses fell $6.0 million year over year. R&D decreased $5.7 million, primarily from lower early-program, XTX301 and personnel costs and a $2.0 million Roche cost-sharing credit; XTX202 clinical costs increased $1.4 million. G&A decreased $1.3 million, partly due to lower personnel and professional fees.
- In March, Xilio granted Gilead an exclusive global license to XTX301 and specified other IL-12 molecules. Xilio is to conduct development through an initial planned Phase 2 dose expansion. Gilead may elect to assume development and commercialization responsibilities after delivery of a specified data package, subject to a $75.0 million transition fee.
- The agreement provided for a $30.0 million upfront payment, received in April, and a Q1 Gilead stock purchase of approximately $13.5 million gross. Xilio is also eligible for up to $517.5 million in development, regulatory and sales milestones, potential further equity proceeds, and tiered royalties from high single digits to mid-teens. These contingent amounts are not assured; milestones were excluded from the Q1 revenue transaction price.
- April financing brought approximately $11.3 million gross from an existing-investor private placement and approximately $3.3 million gross from an additional Gilead investment. The financings included prefunded warrants, creating potential dilution.
- In March, Xilio reprioritized its portfolio, focusing on XTX301 and XTX101, advancing selected bispecific and cell-engager programs preclinically, and discontinuing further investment in XTX202 as a monotherapy while exploring combination opportunities. The workforce reduction affected 15 employees, about 21% of the pre-reduction workforce; it was completed in April.
Outlook, risks and unusual items
- Management estimates that quarter-end cash, the April Gilead upfront payment and approximately $14.6 million of April private-placement proceeds will fund planned operating and capital needs into Q2 2025. This estimate depends on assumptions that may prove incorrect.
- The filing states there is substantial doubt about the company’s ability to continue as a going concern because available resources may not fund operations for at least 12 months from issuance of the financial statements. Management expects to seek additional capital or transactions; failure to obtain funding could lead to further cost reductions or delays, limits or eliminations of programs.
- Key business risks include early-stage clinical and preclinical uncertainty, safety or efficacy setbacks, trial enrollment and regulatory delays, reliance on third parties and a single China-based CDMO, potential supply or trade disruptions, competition, intellectual-property dependence, and further financing and dilution risk.
- Restructuring charges were $0.9 million; severance and benefit-continuation payments were expected to be completed by the end of Q3 2024. Management cautions that anticipated savings may not be fully realized.
- Nasdaq notified Xilio in January of a minimum-bid-price deficiency; the company reported regaining compliance on April 12, 2024. Continued compliance is not assured.
- Management reported disclosure controls were effective at a reasonable assurance level as of March 31, 2024, with no material Q1 changes in internal control over financial reporting.
Important facts for investors to verify
- Whether cash use, operating milestones and updated forecasts support the stated runway into Q2 2025, and whether additional financing is required.
- Clinical progress and safety data for XTX101 and XTX301, and the strategy and funding implications for XTX202 and preclinical programs.
- Gilead agreement conditions, timing and likelihood of any transition fee, milestones, further equity purchases and royalties; distinguish contingent potential payments from cash received.
- Potential dilution from April common-stock issuances and prefunded warrants, and any future Gilead placements.
- Actual savings, remaining costs and operational effects of the portfolio reprioritization and workforce reduction.
- Reliance on the China-based CDMO and exposure to manufacturing, regulatory, geopolitical and trade risks.