Xilio Therapeutics, Inc. — Q2 2023 Form 10-Q
Business context and reporting period. This unaudited quarterly report covers the three and six months ended June 30, 2023. Xilio is a clinical-stage biotechnology company developing tumor-activated immuno-oncology therapies using its GPS platform. Its clinical-stage candidates are XTX101 (anti-CTLA-4), XTX202 (IL-2) and XTX301 (IL-12). The company has no approved products and has generated no product revenue.
Financial results and position
| Metric | Q2 2023 | Q2 2022 | Six months 2023 | Six months 2022 |
|---|---|---|---|---|
| Revenue | None | None | None | None |
| Research and development expense | $13.2 million | $16.2 million | $29.3 million | $31.2 million |
| General and administrative expense | $6.9 million | $8.3 million | $14.3 million | $14.6 million |
| Total operating expenses / operating loss | $20.1 million | $24.6 million | $43.6 million | $45.8 million |
| Other income (expense), net | $0.8 million | $(0.1) million | $1.6 million | $(0.2) million |
| Net loss | $(19.4) million | $(24.6) million | $(42.0) million | $(46.0) million |
| Net loss per share, basic and diluted | $(0.70) | $(0.90) | $(1.53) | $(1.68) |
Margins and profitability: Not meaningful because the company reported no revenue. It expects significant operating losses and negative operating cash flows to continue.
- Cash and liquidity: Cash and cash equivalents were $75.4 million at June 30, 2023, down from $120.4 million at December 31, 2022. Restricted cash was $1.6 million; cash, cash equivalents and restricted cash totaled $77.0 million.
- Cash flow: For the first half of 2023, operating cash use was $41.8 million, investing cash use was $0.5 million and financing cash use was $2.7 million. Total cash, cash equivalents and restricted cash decreased by $45.0 million.
- Debt: The PacWest term loan had $7.2 million outstanding at June 30, 2023, including $7.1 million current on the balance sheet. The variable rate was 8.50%; monthly principal and interest payments began in January 2023, and the loan matures June 30, 2024. Substantially all borrower assets other than intellectual property secure the loan. The company reported covenant compliance.
- Balance sheet: Total assets were $92.4 million, total liabilities $25.0 million and stockholders’ equity $67.4 million. Accumulated deficit was $291.1 million.
Material changes versus the prior comparable periods
- Q2 operating expenses declined $4.4 million and net loss narrowed $5.3 million year over year. For the first half, operating expenses declined $2.1 million and net loss narrowed $4.0 million.
- Lower XTX101 and XTX301 spending, largely reflecting the timing of manufacturing and other development work, contributed to the expense reductions. XTX202 clinical development spending increased; first-half R&D personnel costs also increased.
- Other income improved primarily because higher interest rates increased interest earned on cash and cash equivalents.
- First-half operating cash use increased to $41.8 million from $37.6 million in 2022, despite the lower net loss, reflecting working-capital movements and non-cash items.
- Cash and cash equivalents fell $45.0 million from year-end 2022. The company repaid $2.8 million of debt principal during the first half.
Outlook, commentary and key risks
- Runway and going concern: Management estimated that June 30 cash would fund planned operating expenses and capital expenditures into the end of Q2 2024, subject to assumptions that could prove wrong. The company stated that cash was not expected to fund operations for at least 12 months from issuance of the financial statements; management therefore disclosed substantial doubt about its ability to continue as a going concern.
- Financing plans: Management expects to seek additional capital through equity or debt financing, collaborations, partnerships or licensing transactions; no assurance is given that financing will be available on acceptable terms. The $250 million shelf registration and up-to-$75 million at-the-market sales agreement were available, but no shares had been sold under the sales agreement through the filing date.
- Potential consequences: If additional capital is unavailable, the company may delay, reduce or eliminate programs or other operating costs. Equity financing could dilute shareholders; partnerships or licensing could require relinquishing valuable rights.
- Development risks: All programs are early-stage. Clinical outcomes, timelines, patient enrollment, regulatory review, manufacturing and supply are uncertain. Preliminary trial findings may change as more data are collected and verified. The filing cites a preliminary XTX101 partial response in one patient and preliminary XTX202 intratumoral pharmacodynamic data from four patients, neither of which establishes efficacy.
- Other notable risks: Xilio relies on third parties for clinical work and manufacturing, including a single current manufacturer with significant operations in China. Safety or supply issues, competition, intellectual-property and licensing risks, and dependence on combination drugs could affect development. Inflation had not materially affected the reported statements, but could increase costs.
- Other disclosures: The company reported effective disclosure controls at June 30, 2023 and no material change in internal control over financial reporting during the quarter. No specific material litigation contingency is quantified in the provided filing text.
Investor facts to verify
- Whether cash burn and clinical-program spending remain consistent with the stated runway estimate, and whether new financing or cost reductions are needed.
- Whether the going-concern uncertainty is resolved through financing, partnerships or operating changes.
- Subsequent verified clinical data, safety findings and trial progress for XTX101, XTX202 and XTX301; distinguish preliminary results from final, audited data.
- PacWest loan repayment requirements, interest-rate exposure and maturity in June 2024.
- Any changes to manufacturing arrangements, China-related exposure, collaboration terms, licensing obligations or share issuance under the shelf/ATM program.