Nuvation Bio Inc. — Q3 2022 Form 10-Q
Reporting period: Three and nine months ended September 30, 2022; filed November 3, 2022. Financial statements are unaudited. Nuvation Bio is a clinical-stage oncology biopharmaceutical company and has no approved products or product revenue.
Financial performance and position
| Metric | Q3 2022 | Q3 2021 | Nine months 2022 | Nine months 2021 |
|---|---|---|---|---|
| Revenue | $0 | $0 | $0 | $0 |
| Research and development expense | $21.3m | $17.1m | $70.9m | $47.0m |
| General and administrative expense | $8.0m | $5.7m | $24.5m | $16.7m |
| Net loss | $27.2m | $22.0m | $83.4m | $61.7m |
| Net loss per share | $0.12 | $0.11 | $0.39 | $0.32 |
| Operating cash used | Not separately stated | Not separately stated | $79.9m | $44.7m |
Balance sheet at September 30: Cash and cash equivalents were $138.7m and marketable securities were $535.3m, for combined cash, cash equivalents and marketable securities of $673.9m. Current assets were $681.4m; total assets $686.5m; total liabilities $18.6m; and stockholders’ equity $667.9m. The filing reports no borrowings or financial debt; liabilities principally include leases, accrued expenses, accounts payable and warrant liabilities. Operating lease liabilities totaled $4.5m.
Cash flow: Investing activities provided $85.3m, mainly reflecting $468.2m of security sale proceeds less $382.6m of purchases. Financing activities provided $0.9m, from option exercises and the employee stock purchase plan. Cash and cash equivalents increased $6.3m during the nine-month period. The company reported no gross profit or operating margin because it had no revenue.
Changes versus comparable periods
- Q3 operating expenses rose $6.5m year over year; nine-month expenses increased $31.7m. Management attributed the nine-month R&D increase primarily to greater third-party research, manufacturing and clinical costs, higher personnel costs, and restructuring charges.
- Net loss increased $5.2m in Q3 and $21.6m for the first nine months. Nine-month other income was helped by a $9.9m non-cash gain from the lower fair value of warrant liabilities and higher interest income; these partly offset higher operating expenses.
- Unrealized losses on available-for-sale securities were $8.1m at September 30, primarily attributed to interest-rate changes. Management stated it did not consider these losses impairments.
- Operating cash use increased $35.2m year over year for the first nine months. The prior-year financing inflow included $624.8m of net merger proceeds; there were no comparable merger proceeds in 2022.
Outlook, developments and risks
- Management said available cash, cash equivalents and marketable securities should fund commitments for at least 12 months after issuance of the financial statements. It expects continuing operating losses and negative operating cash flows and says additional funding may ultimately be needed; actual spending may differ from estimates.
- NUV-868, an oral BET inhibitor, was in a Phase 1 study in advanced solid tumors, with enrollment ongoing. Management expected to begin Phase 1b combination studies by year-end 2022. The filing provides no later results or updated schedule.
- On August 1, 2022, the company discontinued NUV-422 clinical development after a uveitis safety signal in its Phase 1/2 monotherapy study, following an internal risk-benefit review that considered FDA feedback. It reduced its workforce by 30 employees, approximately 35%. Restructuring costs were $7.4m, with $3.2m accrued at quarter-end; substantially all accrued costs were expected to be paid by year-end.
- Key risks include clinical and regulatory uncertainty, safety events, reliance on third-party research and manufacturing providers, competition, intellectual-property protection, future financing needs, and possible disruptions to trials or supply chains. COVID-19 had not materially affected operations to date, but future effects remained uncertain.
- Disclosure controls and procedures were assessed as effective at September 30, 2022; the company reported no material change in internal control over financial reporting during the quarter. No significant pending legal proceedings were reported.
Important facts for investors to verify
- Subsequent NUV-868 trial progress, enrollment, safety findings and timing of planned combination studies.
- Whether the NUV-422 discontinuation and restructuring are complete, and whether the recorded restructuring accrual covers final costs.
- Cash burn and investment portfolio values, including the effect of interest rates and the timing of security maturities or sales.
- Whether the stated 12-month liquidity runway remains adequate as development plans and spending evolve, and the terms or dilution implications of any future financing.
- Potential dilution: 23.4m stock options were outstanding at quarter-end, in addition to warrants and shares available under equity plans.