Corvus Pharmaceuticals, Inc. — Q2 2018 Form 10-Q
Reporting period: Quarter and six months ended June 30, 2018. Corvus is a clinical-stage oncology company with no product revenue; its programs include CPI-444, CPI-006 and CPI-818.
Financial results
Amounts in millions of dollars, except per-share data. Operating margins are not meaningful because the company reported no revenue.
| Metric | Q2 2018 | Q2 2017 | Six months 2018 | Six months 2017 |
|---|---|---|---|---|
| Revenue | None | None | None | None |
| Research and development expense | $9.715 | $12.386 | $21.818 | $25.884 |
| General and administrative expense | $2.543 | $2.788 | $5.084 | $5.507 |
| Total operating expenses | $12.258 | $15.174 | $26.902 | $31.391 |
| Net loss | $11.631 | $14.981 | $25.932 | $31.017 |
| Basic and diluted loss per share | $0.40 | $0.73 | $1.01 | $1.52 |
| Operating cash used | Not presented quarterly | Not presented quarterly | $21.934 | $24.459 |
- At June 30, 2018, cash and cash equivalents were $28.1 million and marketable securities were $105.2 million, totaling $133.2 million. Total current assets were $134.4 million; current liabilities were $9.8 million.
- Total assets were $137.9 million, total liabilities $10.5 million, stockholders’ equity $127.4 million and accumulated deficit $149.5 million. The balance sheet reports no debt balance.
- Six-month investing cash outflow was $60.0 million, primarily reflecting $99.5 million of marketable-security purchases offset by $39.5 million of maturities. Financing provided $64.9 million, principally from the March follow-on offering. Cash and cash equivalents declined $17.0 million during the period.
Changes versus prior comparable periods
- Q2 net loss narrowed by $3.4 million year over year; six-month net loss narrowed by $5.1 million. Lower R&D expense was the main contributor.
- Six-month CPI-444 R&D costs fell $6.2 million, including because the prior-year period included a $3.0 million Vernalis milestone payment and had higher clinical-trial costs. CPI-006 costs declined modestly; CPI-818 costs increased as manufacturing work advanced.
- The March 2018 follow-on offering raised approximately $64.9 million net and increased shares outstanding. The company received no proceeds from its at-the-market program during the first half of 2018.
- Cash, cash equivalents and marketable securities increased from $90.1 million at December 31, 2017 to $133.2 million at June 30, 2018, largely reflecting the offering and investment of funds in marketable securities.
Outlook, commentary and risks
- Management expected available cash, cash equivalents and marketable securities to fund planned expenditures and obligations for at least 12 months from issuance of the financial statements. It also stated those resources would not fund CPI-444 or CPI-006 development through commercialization; additional capital will be needed, and may not be available on acceptable terms.
- Corvus expects continued losses and increased development spending. No numerical revenue or earnings guidance was provided.
- Development plans included ongoing CPI-444 and CPI-006 trials, CPI-818 IND-enabling work, and an expected CPI-818 IND submission and Phase 1 start in early 2019. The CPI-444 RCC trial was amended to enroll up to 50 additional combination-treatment patients.
- Management disclosed possible or drug-related serious adverse events in CPI-444 combination treatment, including hemolytic anemia, encephalitis, hepatitis, pneumonitis, mucositis and dermatitis. CPI-006 human safety data remained limited; no serious adverse events had been observed to date, but follow-up was short.
- Key risks include clinical efficacy and safety uncertainty, trial delays or enrollment challenges, dependence on third-party manufacturers and trial operators, competition, intellectual-property and licensing risks, and future financing needs. The company reported no material legal proceedings and no off-balance-sheet arrangements.
- Potential Vernalis milestone payments exceed $200 million across indications, contingent on clinical, regulatory and sales milestones; the filing does not present these as current debt. Facility lease commitments totaled $2.9 million at June 30, 2018.
Important facts for investors to verify
- Whether CPI-444 and CPI-006 trial enrollment, safety findings and efficacy data support the stated development plans.
- Whether the projected cash runway remains adequate as trial, manufacturing and other spending changes; the stated 12-month runway is not a path to commercialization.
- Future financing needs, potential dilution and any use of the remaining at-the-market offering capacity.
- Manufacturing supply continuity and the timing and cost of CPI-818 development and its planned early-2019 IND submission.
- Material changes in contingent license milestones, collaboration arrangements or lease and other commitments.