Cellectar Biosciences, Inc. — Q3 2021 Form 10-Q
Business context and period. Cellectar is a clinical-stage biotechnology company developing cancer therapies using its phospholipid drug conjugate (PDC) platform. This report covers the quarter and nine months ended September 30, 2021. The company reported no revenue and continues to incur losses while funding research and development.
Financial performance and position
| Metric | Three months ended Sept. 30, 2021 | Three months ended Sept. 30, 2020 | Nine months ended Sept. 30, 2021 | Nine months ended Sept. 30, 2020 |
|---|---|---|---|---|
| Revenue | No revenue reported | No revenue reported | No revenue reported | No revenue reported |
| Research and development expense | $3.94 million | $2.68 million | $13.20 million | $7.77 million |
| General and administrative expense | $1.88 million | $1.23 million | $5.01 million | $3.73 million |
| Net loss | $5.82 million | $3.91 million | $18.20 million | $11.48 million |
| Basic and diluted loss per share | $0.10 | $0.15 | $0.34 | $0.69 |
| Cash used in operating activities | Not separately stated | Not separately stated | $18.06 million | $10.06 million |
Cash and cash equivalents were $40.34 million at September 30, 2021, versus $57.17 million at December 31, 2020. Total assets were $41.95 million and total liabilities were $3.37 million, including $0.33 million of lease liabilities. The filing reports no outstanding borrowing at quarter-end; the approximately $184,000 PPP loan was forgiven in December 2020. Operating margins are not meaningful given the absence of reported revenue.
Stockholders’ equity was $38.59 million, down from $54.79 million at year-end 2020. Common shares outstanding rose to 61.10 million from 45.44 million, mainly reflecting conversion of Series D preferred shares. The company also reported 16.08 million outstanding warrants and 4.68 million outstanding stock options, potential sources of future dilution.
Material changes versus the prior comparable period
- Third-quarter R&D expense increased 47% year over year, primarily from higher clinical project costs. For the nine-month period, R&D increased 70%, including approximately $5.17 million of additional clinical project costs, principally related to the Waldenstrom’s macroglobulinemia (WM) pivotal study.
- Third-quarter G&A expense increased 54%; the nine-month increase was 34%. The company attributed increases to professional fees, stock-based compensation, insurance and personnel costs.
- Nine-month net loss widened by $6.73 million year over year, and operating cash use rose by approximately $7.99 million.
- Cash declined by $16.82 million from December 31, 2020. The company received $1.21 million from warrant exercises and approximately $35,000 net from ATM share sales during the nine months; preferred-share conversions were noncash.
Outlook, commentary and risks
- Management said the September 30 cash balance was sufficient for basic budgeted operations for at least 12 months from the November 8, 2021 filing date. Continuing operations beyond that period depend on obtaining additional funding through equity, debt, a strategic transaction or other sources; there is no assurance funding will be available.
- COVID-19-related resourcing constraints at trial sites and patient concerns have materially delayed recruitment and enrollment in the CLOVER-WaM pivotal study. Further effects on enrollment, study timelines, clinical supply and financing remain uncertain.
- Iopofosine is being evaluated in the CLOVER-WaM Phase 2 pivotal study, a Phase 2B multiple myeloma study and the CLOVER-2 pediatric Phase 1 study. The filing describes ongoing clinical and preclinical programs but provides no formal financial guidance or commercialization timetable.
- On October 15, 2021, the company sued former director and executive officer Jamey Weichert and former employee and consultant Anatoly Pinchuk, alleging diversion of company intellectual property and breaches of contractual and fiduciary duties. Cellectar seeks damages, injunctive relief and fees. The filing says the disputed IP does not directly affect current clinical studies but could potentially enhance future research, development and commercialization. The litigation’s outcome is uncertain.
- Other identified risks include dependence on additional financing, clinical development and regulatory uncertainty, reliance on a sole iopofosine supplier, intellectual-property protection, and potential drug-pricing reforms. Management stated disclosure controls were effective and reported no material change in internal control over financial reporting during the quarter.
Important facts for investors to verify
- Cash runway assumptions and the timing, amount and terms of any future financing.
- CLOVER-WaM enrollment progress and the continuing effect of COVID-19 on trial execution.
- Current clinical evidence, safety findings and regulatory milestones for iopofosine and other pipeline programs.
- Potential dilution from warrants, options and remaining convertible preferred shares.
- Developments and potential consequences of the intellectual-property lawsuit.