Exicure, Inc. — Q3 2022 Form 10-Q
Reporting period: Three and nine months ended September 30, 2022. Unaudited consolidated results. Exicure is an early-stage biotechnology company with no approved products; reported revenue is from research collaborations.
Business context and strategy
On September 26, 2022, Exicure announced a plan to wind down preclinical programs, suspend all R&D activities—including partnered programs—and reduce its workforce by approximately 66%. It is pursuing out-licensing and other strategic alternatives to maximize stockholder value. The SCN9A program was suspended after a non-human-primate study did not achieve desired target engagement.
Financial performance and liquidity
| Metric | Q3 2022 | Q3 2021 | Nine months 2022 | Nine months 2021 |
|---|---|---|---|---|
| Collaboration revenue | $2.0 million | $(3.7) million | $7.1 million | $(2.6) million |
| Research and development expense | $4.8 million | $16.5 million | $18.7 million | $37.6 million |
| General and administrative expense | $2.4 million | $2.9 million | $8.8 million | $8.9 million |
| Operating loss | $(5.2) million | $(23.1) million | $(20.4) million | $(49.1) million |
| Net loss | $(5.2) million | $(23.5) million | $(21.0) million | $(50.3) million |
| Basic and diluted loss per share | $(1.04) | $(8.01) | $(4.66) | $(17.14) |
Revenue improvement versus 2021 principally reflects a prior-year $4.5 million negative cumulative revenue adjustment under the AbbVie collaboration, related to a change in estimated work. Q3 2022 revenue comprised $1.4 million from Ipsen and $0.6 million from AbbVie. Lower R&D spending reflected reduced program activity and headcount, including programs previously suspended or wound down. Exicure reported no product revenue; product gross margin is not applicable.
At September 30, 2022, cash and cash equivalents were $15.6 million; cash, cash equivalents and restricted cash totaled $16.8 million. Short-term investments were nil. Total assets were $28.9 million, current liabilities $25.7 million, and total liabilities $32.6 million. Stockholders’ equity was negative $3.7 million, with a current-asset shortfall versus current liabilities of approximately $8.5 million. The filing reports no debt outstanding after repayment of the $7.5 million MidCap principal and $0.5 million exit fee in March 2022. Deferred collaboration revenue was $21.8 million, classified as current.
For the nine months, operating cash use was $28.4 million, investing activities provided $4.5 million, and financing activities used $3.1 million. Cash, cash equivalents and restricted cash declined by $27.0 million. The filing’s balance sheet shows accumulated deficit of $191.0 million, while the going-concern note and MD&A state $209.9 million; this discrepancy should be checked against the original filing.
Changes, outlook and key risks
- Management expected R&D expense for full-year 2022 to decline approximately 55% versus 2021. It estimated existing cash and cash equivalents would fund operating expenses and capital needs into Q2 2023, but cautioned that assumptions could prove wrong.
- Management concluded substantial doubt exists about the company’s ability to continue as a going concern and said substantial additional financing is needed. The filing warns that without the September 2022 private placement, bankruptcy protection might be required in the near term, potentially leaving common stockholders with little or no value.
- The September PIPE was proposed, not reported as closed: 3.4 million shares at $1.60 per share, approximately $5.44 million gross proceeds, subject to closing conditions including stockholder approval. CBI USA would own approximately 50.4% after closing and gain proportional board nomination rights. Exicure also completed a May 2022 placement, receiving approximately $4.9 million net.
- Nasdaq had notified Exicure that stockholders’ equity did not meet the $2.5 million continued-listing minimum. A compliance plan submitted October 6 was under review; delisting remained a risk. The company had regained bid-price compliance following a 1-for-30 reverse stock split.
- Risks include the outcome of strategic-transaction and out-licensing efforts, dilution and control changes from financing, clinical and preclinical uncertainty, collaboration revenue-estimate changes, macroeconomic and COVID-19 effects, and pending securities and derivative litigation. Derivative cases were stayed; the securities class action remained pending.
Important facts for investors to verify
- Whether the CBI USA PIPE closed, received stockholder approval, and provided the expected net proceeds.
- Nasdaq’s decision on the compliance plan and Exicure’s subsequent stockholders’ equity and listing status.
- Actual cash use and runway after the R&D suspension, restructuring costs, and any strategic transactions.
- The accumulated-deficit inconsistency in the filing and the timing and assumptions supporting collaboration revenue recognition.
- Progress on out-licensing or asset sales, and developments in the disclosed litigation.