Corvus Pharmaceuticals, Inc. — Q1 2021 Form 10-Q
Reporting period: Three months ended March 31, 2021. Corvus is a clinical-stage biopharmaceutical company developing immune-modulating therapies; it reported no product revenue.
Financial results and liquidity
| Metric | Q1 2021 | Q1 2020 / comparison |
|---|---|---|
| Revenue | None | None |
| Research and development expense | $8.23 million | $10.16 million; down $1.93 million |
| General and administrative expense | $3.25 million | $3.11 million; up $0.15 million |
| Total operating expenses | $11.48 million | $13.27 million; down $1.79 million |
| Net loss | $11.58 million | $12.94 million |
| Basic and diluted loss per share | $0.34 | $0.44 |
| Net cash used in operating activities | $8.79 million | $9.35 million |
| Cash, cash equivalents and marketable securities | $67.97 million at March 31 | $44.26 million at December 31, 2020 |
| Total assets / total liabilities | $109.24 million / $14.85 million | $85.53 million / $13.38 million at December 31, 2020 |
There is no meaningful gross or operating margin to report because the company had no revenue. Financing activities provided $32.59 million, principally from a February follow-on offering that generated approximately $32.0 million net, plus $0.6 million net from its at-the-market program. Cash and cash equivalents ended the quarter at $45.10 million. The company reported operating lease liabilities of $2.05 million in total; the filing does not report material debt borrowings.
Management said available cash, cash equivalents and marketable securities should fund planned operations and obligations for at least 12 months from issuance of the statements. It also said these resources are not expected to cover completion of all ongoing and planned development through commercialization, and additional financing will be needed to meet longer-term objectives.
Material changes and business developments
- Net loss narrowed by $1.36 million year over year, mainly as total operating expenses declined. R&D spending fell, while G&A increased slightly.
- Program spending shifted: CPI-006 R&D costs rose to $4.00 million from $2.66 million, mainly due to higher clinical-trial costs and a licensing expense associated with starting its COVID-19 Phase 3 trial. Ciforadenant and CPI-818 costs declined year over year.
- The February 2021 offering issued 9.78 million shares at $3.50 per share and raised approximately $32.0 million net. Common shares outstanding increased to 38.31 million from 28.37 million at year-end. The ATM program had $48.1 million of capacity remaining at quarter-end.
- Corvus holds an approximately 49.7% interest in Angel Pharmaceuticals, which has rights to develop and commercialize three clinical-stage candidates in Greater China. Angel’s approximately $41 million outside investment is not available for Corvus’s use. Corvus recorded a $0.1 million equity-method loss in the quarter.
Outlook, commentary and risks
- Pipeline: CPI-006 was in a planned 1,000-patient Phase 3 trial in hospitalized COVID-19 patients, with enrollment expected to complete in Q4 2021 and an interim safety and futility analysis planned. CPI-818 was in Phase 1/1b testing for T-cell lymphomas. Ciforadenant development included a planned Phase 2 study in first-line metastatic renal cell cancer with pembrolizumab and lenvatinib, expected to enroll approximately 60 patients.
- Management expects substantial ongoing R&D and G&A spending and losses. Clinical outcomes, regulatory review, trial timing and future spending are uncertain; there is no assurance any candidate will be approved or commercialized.
- COVID-19 had not significantly disrupted oncology trial enrollment to date, according to management, but the company warned of possible enrollment, site, supply, monitoring and regulatory delays, as well as effects on financing.
- Corvus relies on third parties for clinical trials and manufacturing and has no internal manufacturing or commercial sales infrastructure. Additional financing may cause dilution, add debt obligations or require the company to partner or curtail programs.
- The filing describes clinical and regulatory uncertainty, potential adverse events, competition, intellectual-property and licensing risks, and dependence on collaborators. No material legal proceedings were reported. Management concluded disclosure controls were effective at the reasonable-assurance level, with no material change in internal control over financial reporting.
Important facts for investors to verify
- Progress, enrollment and safety findings from the CPI-006 Phase 3 COVID-19 trial, including whether enrollment and the interim analysis meet stated expectations.
- Cash burn, spending plans and the basis for management’s at-least-12-month liquidity estimate; distinguish this from funding needed through commercialization.
- Potential dilution from the February offering, the remaining ATM capacity and future financing requirements.
- Clinical progress and data quality for CPI-818 and ciforadenant, including the planned renal-cell-cancer study and Angel Pharmaceuticals’ development plans.
- Reliance on external manufacturers and trial partners, and any material effects of COVID-19, safety findings, regulatory decisions or licensing obligations.