Cellectar Biosciences, Inc. — Q3 2022 Form 10-Q
Reporting period: Quarter and nine months ended September 30, 2022. Cellectar is a clinical-stage biopharmaceutical company developing cancer treatments using its phospholipid drug conjugate platform. It reported no revenue and continues to fund research and development and corporate operations through external financing.
Financial results and liquidity
| Metric | Q3 2022 | Q3 2021 | Nine months 2022 | Nine months 2021 |
|---|---|---|---|---|
| Revenue | None reported | None reported | None reported | None reported |
| Research and development expense | $5.38 million | $3.94 million | $13.77 million | $13.20 million |
| General and administrative expense | $2.44 million | $1.88 million | $7.63 million | $5.01 million |
| Net loss | $7.81 million | $5.82 million | $21.39 million | $18.20 million |
| Basic and diluted loss per share | $1.28 | $0.97 | $3.50 | $3.39 |
| Cash used in operating activities | Not separately reported for the quarter | $17.81 million | $18.06 million |
- At September 30, cash and cash equivalents were $17.79 million, down from $35.70 million at December 31, 2021. Current assets were $18.76 million and current liabilities $6.52 million.
- Total liabilities were $6.57 million, including $0.20 million in lease liabilities; the filing reports no borrowing or other material debt balance. Stockholders’ equity was $12.75 million.
- No meaningful revenue or operating margin was reported; operating loss equaled operating expenses. Accumulated deficit was $172.28 million.
Material changes and notable developments
- Q3 operating expenses rose 34% year over year, and net loss widened 34%. R&D increased 37%, mainly from pivotal-trial activity and manufacturing and production sourcing costs. G&A increased 29%, principally from professional fees and public-company costs.
- For the first nine months, total costs and expenses rose 17.5%. R&D increased 4% as higher manufacturing and preclinical costs were partly offset by lower clinical and general R&D costs; G&A increased 52%, reflecting professional fees, travel and personnel costs.
- Operating cash use was slightly lower year over year, but cash declined by $17.92 million over the nine months. There were no financing proceeds during that period.
- In October 2022, the company completed a registered direct offering and concurrent private placements, raising approximately $10.7 million gross and $9.7 million net. The transactions included common shares, pre-funded warrants and common warrants, and the company suspended sales under its ATM program pending a new prospectus supplement. Common shares outstanding were 9,385,272 as of October 31, 2022, versus 6,110,119 at September 30; the securities issued and issuable may materially dilute existing holders.
- A 1-for-10 reverse stock split became effective July 21, 2022. Financial statements and share data give retroactive effect to the split.
- In October, the company settled its intellectual-property lawsuit with Wisconsin Alumni Research Foundation and two former associates, securing a non-exclusive license to the patents at issue.
Outlook, risks and contingencies
- Management said September cash, supplemented by the October financing, was expected to fund basic budgeted operations into Q4 2023. Continued execution beyond that period depends on obtaining further capital through equity or debt offerings, a strategic transaction or other sources. The filing states that the company’s ability to continue as a going concern within one year of issuance is subject to substantial doubt; there is no assurance additional funding will be available.
- The company expects operating losses to continue. It reported an accumulated deficit of approximately $172.3 million and negative operating cash flows since inception.
- COVID-19-related site resourcing and patient concerns have materially delayed enrollment in the pivotal CLOVER-WaM study. Further disruptions could delay clinical programs, affect suppliers and clinical supply, increase costs or impede financing.
- The independent monitoring committee recommended that CLOVER-WaM continue as planned after its interim safety and futility review of the first 10 patients. Iopofosine remains under evaluation in multiple myeloma, Waldenstrom’s macroglobulinemia, pediatric cancers and other settings; clinical outcomes and regulatory approval remain uncertain.
- Reported iopofosine adverse events include fatigue and cytopenias; the filing notes infections in fewer than 4% of patients and at least one fatality possibly attributed to treatment. Clinical trials may reveal additional safety concerns.
- The company received a $1.98 million NCI grant in September 2022 to expand its pediatric high-grade glioma study. Ordinary-course legal matters were not expected to materially affect the financial statements; the specific intellectual-property dispute was settled in October.
- Management reported disclosure controls and procedures were effective as of September 30, 2022, with no significant changes in internal control over financial reporting during the quarter.
Key facts investors should verify
- Whether the October financing proceeds and cash burn support the stated runway, and when additional capital may be required.
- The terms, exercise and expiration conditions, and potential dilution from the October common warrants and pre-funded warrants.
- Enrollment pace, interim and final results, and safety findings for CLOVER-WaM and other iopofosine studies, including the impact of recruitment delays.
- Whether manufacturing, clinical supply and other operating costs remain elevated, and how these affect cash use.
- The continuing implications of the going-concern disclosure, including access to financing and the company’s ability to meet Nasdaq listing requirements.