Cellectar Biosciences, Inc. — Q2 2021 Form 10-Q
Reporting period: Three and six months ended June 30, 2021. Cellectar is a clinical-stage biopharmaceutical company developing cancer therapies using its phospholipid drug conjugate (PDC) platform. It reported no revenue in the presented statements.
Financial performance and liquidity
| Metric | Q2 2021 | Q2 2020 | Six months 2021 | Six months 2020 |
|---|---|---|---|---|
| Research and development expense | $4.63 million | $2.47 million | $9.26 million | $5.08 million |
| General and administrative expense | $1.40 million | $1.16 million | $3.13 million | $2.50 million |
| Total costs and expenses | $6.03 million | $3.62 million | $12.39 million | $7.58 million |
| Net loss | $6.03 million | $3.61 million | $12.39 million | $7.57 million |
| Basic and diluted loss per share | $0.11 | $0.26 | $0.25 | $0.65 |
- Six-month operating cash use was $11.63 million, versus $6.56 million in the prior-year period. Investing cash use was $0.01 million; financing provided $1.25 million, mainly from warrant exercises.
- Cash and cash equivalents were $46.78 million at June 30, down from $57.17 million at December 31, 2020. Total assets were $47.74 million and total liabilities were $3.75 million; stockholders’ equity was $43.98 million.
- Liabilities consisted principally of accounts payable and accrued liabilities of $3.39 million and lease liabilities totaling approximately $0.36 million. The filing reports no outstanding loan balance; the $184,000 PPP loan and accrued interest were forgiven in December 2020.
- Management said cash was expected to fund basic budgeted operations for at least 12 months from the filing of the financial statements. Funding beyond that depends on raising capital, a strategic transaction, or other financing; success is not assured.
- Margins are not meaningful for this pre-revenue company. The filing does not provide a revenue or gross-margin value.
Material changes versus the prior comparable periods
- Q2 R&D expense rose 88% year over year, mainly due to clinical project costs, including activity associated with the pivotal Waldenström’s macroglobulinemia (WM) study. Six-month R&D increased 82%.
- Q2 G&A expense increased 21%; six-month G&A increased 25%, with higher professional fees and insurance, and higher personnel costs in the six-month comparison.
- Six-month net loss increased to $12.39 million from $7.57 million, and operating cash use increased to $11.63 million from $6.56 million.
- Common shares outstanding rose from 45.44 million at December 31, 2020 to 55.27 million at June 30, 2021, reflecting preferred-share conversions, warrant exercises and limited ATM issuance. At August 4, 2021, 61.10 million shares were outstanding.
Outlook, development updates and risks
- CLR 131 was being studied in a pivotal Phase 2 WM trial, a Phase 2B study in relapsed/refractory multiple myeloma, and a Phase 1 pediatric cancer study. The company also reported that a Phase 1 head-and-neck cancer study had resumed enrollment after a COVID-19-related suspension.
- The filing describes positive earlier-stage findings, including responses in WM and multiple myeloma cohorts, but these are clinical-study results and do not establish approval or commercial success. The filing states that the CLOVER-WaM study was planned as a single-arm pivotal study of 50 patients.
- Management said the company had not experienced significant COVID-19 impacts to date, but the pandemic could affect trial recruitment, CLR 131 supply and access to financing. The company also identified disruption at its sole CLR 131 supplier as a risk.
- The business has incurred losses since inception and expects continued operating losses. Additional financing may be needed to execute plans beyond the stated basic-operating runway. Cash balances may exceed FDIC insurance limits.
- Potential dilution includes outstanding warrants covering approximately 16.08 million shares, 4.70 million outstanding options, and preferred shares convertible into common stock. On July 23, 2021, 453.7037 Series D preferred shares converted into 4,537,037 common shares.
- The filing reports no legal proceedings and no material changes to internal control over financial reporting; management concluded disclosure controls were effective as of June 30, 2021. It refers investors to the risk factors in the 2020 Form 10-K.
- The filing gives inconsistent expected timing for the final CLR 131 Phase 1 clinical study report: one passage says the second half of 2021 and another says the first half of 2021.
Important facts for investors to verify
- Whether the cash runway estimate remains valid as clinical spending and financing needs evolve, and what funding alternatives are available.
- Enrollment, safety, efficacy and regulatory progress in the CLR 131 WM, multiple myeloma and pediatric studies, including the pivotal study’s execution and data timing.
- Current share count and the potential impact of preferred conversions, warrants, options and future equity issuance.
- Whether the CLR 131 supply chain, including its sole supplier, can support planned trials, and whether COVID-19 affects enrollment or operations.
- Clarification of the conflicting clinical study report timing stated in the filing.