Century Therapeutics, Inc. — Q3 2022 Form 10-Q
Reporting period: Quarter and nine months ended September 30, 2022; filed November 10, 2022. Century is a clinical-stage cell-therapy biotechnology company with no products approved for sale. Its programs use induced pluripotent stem cell-derived immune cells.
Financial performance and liquidity
| Metric | Q3 2022 | Q3 2021 | Nine months 2022 | Nine months 2021 |
|---|---|---|---|---|
| Collaboration revenue | $2.2 million | — | $4.7 million | — |
| Research and development expense | $25.9 million | $19.5 million | $71.6 million | $53.9 million |
| General and administrative expense | $8.1 million | $6.3 million | $23.6 million | $13.1 million |
| Net loss | $30.7 million | $26.0 million | $99.3 million | $67.6 million |
| Net loss per share, basic and diluted | $0.53 | $0.48 | $1.72 | $2.72 |
- Q3 operating loss was $31.7 million; nine-month operating loss was $100.5 million. Product sales and product margins are not applicable, as the company has no marketed products.
- At September 30, cash and cash equivalents were $111.4 million and investments were $283.9 million, totaling $395.3 million. Current assets were $361.6 million and current liabilities were $26.9 million.
- Nine-month operating cash flow was positive $37.0 million, versus cash used of $64.7 million in 2021. The 2022 result was driven mainly by $118.5 million of collaboration deferred revenue, not operating profitability. Investing activities used $8.9 million; financing activities provided $27.1 million.
- Long-term debt, net, was $10.2 million, including $4.0 million current. The $10 million Hercules loan carried a 12.55% interest rate at quarter-end and matures April 1, 2024. Long-term operating lease liabilities were $36.6 million.
- Accumulated deficit was $487.4 million. The company recorded $10 million of in-process R&D expense for rights to Japan under its FCDI arrangements.
Material changes and business developments
- Q3 revenue of $2.2 million and nine-month revenue of $4.7 million came from the Bristol Myers Squibb (BMS) collaboration; there was no collaboration revenue in the comparable 2021 periods.
- Q3 net loss increased by $4.7 million year over year; the nine-month loss increased by $31.6 million. Higher R&D and G&A spending drove the increase, partly offset by collaboration revenue and higher interest income. Nine-month R&D rose $17.7 million, principally due to personnel, facilities, and laboratory costs; lower FCDI collaboration costs partly offset the rise.
- The January 2022 BMS agreement included a non-refundable $100 million upfront payment and research and license-option obligations. At September 30, $118.5 million remained deferred; $109.0 million was allocated to option rights and $9.5 million to remaining R&D services. BMS also purchased $50 million of common stock; $26.8 million was reported as financing proceeds, with the remaining amount treated as a collaboration-related equity premium.
- In August, the FDA notified Century that the ELiPSE-1 study may proceed to assess CNTY-101 in patients with relapsed or refractory CD19-positive B-cell malignancies. Management said it anticipated trial initiation imminently. CNTY-102, CNTY-103, and other programs remained in development.
Outlook, risks, and contingencies
- Management estimated that September 30 cash, cash equivalents, and investments would fund operating and capital needs into 2025, while the financial-statement liquidity note states the company believes resources are adequate for at least 12 months from issuance. Management cautioned that its estimates depend on assumptions and capital could be exhausted sooner than expected.
- The company expects losses and expenses to increase as it advances clinical and preclinical programs, builds manufacturing capabilities, and expands operations. It expects to need additional financing; availability and terms are uncertain. A $150 million at-the-market sales agreement was available, with no sales made as of the filing.
- Key risks include clinical, regulatory, manufacturing, and funding uncertainty; reliance on FCDI for technology and manufacturing; dependence on BMS collaboration performance; competition and intellectual-property risks; and possible COVID-19, supply-chain, labor, inflation, and market disruptions.
- Potential milestone, royalty, and licensing payments under agreements are contingent on future events and were not included in contractual-obligation totals. Lease payments totaled $95.2 million undiscounted. The company reported no material pending legal matters and no material changes to its previously disclosed risk factors.
Investor verification points
- Reconcile the stated runway “into 2025” with the note’s “at least the next 12 months” assessment, and review cash-burn assumptions.
- Track CNTY-101 trial initiation, enrollment, safety findings, and subsequent clinical milestones.
- Monitor recognition and use of BMS collaboration proceeds, option decisions, and any milestone or royalty receipts.
- Assess rising R&D and facility costs, manufacturing execution and FCDI dependence, and potential financing or dilution under the sales agreement.
- Verify debt repayment timing and interest exposure, plus contingent milestone, royalty, and lease obligations.