Exicure, Inc. — Q1 2021 Form 10-Q
Reporting period: Three months ended March 31, 2021; filed May 12, 2021. Exicure is a clinical-stage biotechnology company developing spherical nucleic acid (SNA)-based therapeutics. Its lead programs included preclinical XCUR-FXN for Friedreich’s ataxia and Phase 1b/2 cavrotolimod (AST-008) for advanced solid tumors. The company had no approved products or product-sale revenue.
Key financial metrics
Amounts in millions except per-share data; unaudited.
| Metric | Q1 2021 | Q1 2020 / prior date |
|---|---|---|
| Collaboration revenue | $1.0 | $9.2 |
| Research and development expense | $10.3 | $6.1 |
| General and administrative expense | $2.9 | $2.6 |
| Operating loss | $(12.2) | Operating income $0.5 |
| Net loss / income | $(12.5) | $1.2 |
| Basic and diluted earnings (loss) per share | $(0.14) | $0.01 |
| Net cash used in operating activities | $(14.8) | $(7.8) |
| Cash and cash equivalents | $34.3 | $33.3 at Dec. 31, 2020 |
| Short-term investments | $33.1 | $48.8 at Dec. 31, 2020 |
| Cash, cash equivalents and restricted cash | $35.5 | $34.5 at Dec. 31, 2020 |
| Total assets | $87.9 | $100.4 at Dec. 31, 2020 |
| Long-term debt, net carrying value | $16.7 | $16.6 at Dec. 31, 2020 |
| Stockholders’ equity | $50.0 | $61.5 at Dec. 31, 2020 |
Gross margin is not presented; revenue was collaboration revenue, not product sales. Cash, cash equivalents and short-term investments totaled approximately $67.4 million; including $1.2 million of restricted cash, the total was approximately $68.6 million. Cash-flow investing inflows of $15.3 million principally reflected proceeds from investment maturities or sales; financing inflows of $0.5 million were from option exercises.
Material changes versus the prior comparable period
- Revenue fell $8.2 million, or 89%, primarily because less progress was recorded against projected hours for AbbVie collaboration services. Deferred AbbVie revenue was $7.3 million at quarter-end, expected to be recognized over the next 12 months as services are performed.
- R&D expense rose $4.2 million, or 69%, reflecting increased staffing and research activity, clinical development and manufacturing work, and higher facility costs. R&D headcount rose from 36 to 54 year over year.
- G&A expense increased $0.3 million, or 12%. Operating results moved from income to loss, and net results declined by $13.6 million.
- Operating cash use increased $7.0 million, principally from higher working-capital use. The company reported a $1.0 million increase in cash, cash equivalents and restricted cash during the quarter, with investment maturities and sales supporting cash flow.
Outlook, developments and risks
- Management said existing working capital, including amounts borrowed and available under the MidCap facility, was expected to fund current plans for at least 12 months from the report date. This depends on operating assumptions; additional financing may be needed, and availability or acceptable terms are not assured.
- MidCap debt principal outstanding was $17.5 million, with a further $7.5 million tranche available from April 1 through September 30, 2021, subject to conditions. The loan bears interest at 6.25% plus the greater of 1.50% or one-month LIBOR; principal installments begin in October 2022 and maturity is October 2025. Debt is secured by substantially all assets other than intellectual property, which is subject to a negative pledge.
- Management expected to file an IND for XCUR-FXN in Q4 2021 and begin a Phase 1b trial in the first half of 2022. These are forward-looking targets, not assured outcomes.
- For cavrotolimod, the company expected interim Phase 2 results in mid-2021 and overall response rate results in the first half of 2022. The latter timeline had shifted from year-end 2021 amid enrollment and site-startup delays attributed in part to COVID-19. As of April 22, 2021, 20 sites were open and 7 more were pending activation; 20 Phase 2 patients had received 32 mg. Across 40 patients treated at all reported doses, 2 had treatment-related serious adverse events.
- Cavrotolimod received FDA Fast Track designations for specified Merkel cell carcinoma and cutaneous squamous cell carcinoma programs, and Orphan Drug Designation for Merkel cell carcinoma. These designations do not assure approval or a faster review.
- Principal risks include clinical and regulatory failure or delay, patient enrollment and COVID-19 disruptions, dependence on third-party research and manufacturing providers, uncertain access to capital, potential dilution, debt covenants and collateral, and the early-stage, unproven nature of SNA therapeutics. The company expected R&D expenses to increase during 2021 and did not expect product revenue for the foreseeable future.
- The company reported no material legal proceedings and no off-balance-sheet arrangements. Management concluded disclosure controls were effective and reported no material change in internal control over financial reporting during the quarter.
Important facts for investors to verify
- Reconcile the accumulated-deficit disclosures: the balance sheet reports $118.4 million at March 31, 2021, while the notes and MD&A describe $137.3 million since inception. The filing text does not provide a clear reconciliation.
- Confirm the availability and conditions for drawing the remaining $7.5 million MidCap tranche, and assess its interest, repayment, security and covenant implications.
- Track actual cavrotolimod enrollment, safety findings and result timing against the stated targets, including COVID-19-related delays.
- Track XCUR-FXN IND-enabling progress and whether the projected IND filing and Phase 1b start occur.
- Assess cash burn and financing needs against management’s 12-month runway estimate; the company had ATM capacity but reported no ATM share sales through March 31, 2021.