Candel Therapeutics, Inc. — Q3 2023 Form 10-Q
Reporting period: Quarter and nine months ended September 30, 2023. The unaudited financial statements are consolidated. Candel is a clinical-stage biopharmaceutical company developing viral immunotherapies; it has no approved products and has generated no product-sale revenue.
Financial performance and liquidity
| Metric | Q3 2023 | Q3 2022 | Nine months 2023 | Nine months 2022 |
|---|---|---|---|---|
| Revenue | $0 | $31,000 | $0 | $94,000 |
| Research and development expense | $5.845 million | $5.376 million | $17.248 million | $15.815 million |
| General and administrative expense | $3.016 million | $3.536 million | $10.825 million | $10.900 million |
| Operating loss | $8.861 million | $8.881 million | $28.073 million | $26.621 million |
| Net loss | $8.435 million | $8.688 million | $26.844 million | $13.711 million |
| Basic and diluted loss per share | $0.29 | $0.30 | $0.93 | $0.48 |
| Net cash used in operating activities | Not separately reported for quarter | Not separately reported for quarter | $26.822 million | $24.534 million |
- At September 30, cash and cash equivalents were $42.983 million, down from $70.058 million at December 31, 2022. Restricted cash was $0.266 million. Total assets were $50.061 million; stockholders’ equity was $23.022 million.
- Cash, cash equivalents and restricted cash declined $27.075 million over the first nine months. Investing activities used $0.253 million; there were no financing cash flows in the 2023 period.
- Total liabilities were $27.039 million. Bank term-loan carrying value was $20.439 million, with $6.100 million classified as current; other long-term debt was $0.725 million. The bank loan carries a floating rate (effective rate 10.91% at September 30), principal payments begin February 2024, and it matures January 2026.
- No product gross margin is reported because the company has no product sales. Operating margins are not meaningful for this pre-commercial company.
Changes versus the prior comparable periods
- Q3 net loss narrowed by $0.253 million, although operating expenses were nearly unchanged. Higher interest income and a larger favorable warrant fair-value change helped offset interest expense.
- Nine-month net loss increased by $13.133 million. The principal comparison factor was the much smaller non-cash warrant-liability gain in 2023 ($1.449 million versus $13.626 million in 2022); operating loss also increased by $1.452 million.
- Nine-month R&D expense rose $1.433 million, principally from higher clinical development and manufacturing/regulatory costs and fixed-asset-related expense. G&A was essentially flat, with lower insurance and recruiting costs offset by higher employee-related costs.
- The 2023 nine-month period had no financing inflow, compared with $19.938 million of financing cash flow, primarily loan proceeds, in 2022. The $0.2 million manufacturing-equipment impairment recorded in Q3 was an unusual item.
Outlook, programs and material risks
- Funding: Management expects September 30 cash to fund the current operating plan into Q2 2024, but states that substantial doubt exists about the company’s ability to continue as a going concern for one year after issuance of the financial statements. Additional funding is required; no external funding source is committed. Financing may dilute shareholders or require unfavorable terms, and failure to raise funds could force program delays, reductions or cancellations.
- CAN-2409: The enrolled Phase 3 prostate-cancer trial is expected to report topline data in Q4 2024; an enrolled Phase 2 active-surveillance prostate trial also has topline data expected in Q4 2024. The FDA Special Protocol Assessment does not assure approval. The company expects NSCLC Phase 2 topline overall-survival data in Q2 2024, assuming data are mature. September 2023 interim NSCLC results included 40 evaluable patients; survival was not mature, and the open-label findings are preliminary. The pancreatic-cancer Phase 2 trial paused new enrollment in March 2023, subject to additional funding; interim survival results involved small patient numbers and require confirmation.
- CAN-3110 and research: CAN-3110 is in an investigator-sponsored Phase 1 trial for recurrent high-grade glioma. The company expects updated data from its repeat-dosing extension in the second half of 2024. The enLIGHTEN platform and UPenn collaboration remain early-stage research efforts.
- Key risks: Clinical efficacy and safety remain unproven; trial outcomes, regulatory timing, manufacturing scale-up, patient enrollment, competition, reimbursement and intellectual-property rights are uncertain. The company also faces variable-rate debt costs and potential dilution. Reported interim or topline clinical data may change as follow-up and verification continue.
- Other items: A Periphagen arbitration dispute was resolved by a June 2023 license amendment; rights to specified NT-3 and Gene Transfer Neuro-Assets reverted to Periphagen. Management reported disclosure controls effective at the reasonable-assurance level and no material change in internal control over financial reporting during the quarter.
Important facts for investors to verify
- Cash runway assumptions and the timing, amount and terms of additional financing; reconcile the stated Q2 2024 runway with the going-concern substantial-doubt disclosure.
- Whether CAN-2409 NSCLC survival data mature as anticipated for Q2 2024, and the final outcomes and regulatory relevance of all interim clinical findings.
- Progress and final data timing for both prostate trials, including any FDA engagement or changes to the Phase 3 protocol or endpoint.
- Funding needs and enrollment plans for the paused pancreatic trial and the CAN-3110 repeat-dosing extension.
- Debt service, floating interest-rate exposure, and the potential cash and dilution effects of warrants, options, and future financing.