Celcuity Inc. — Q1 2022 Form 10-Q
Reporting period: Three months ended March 31, 2022. The unaudited financial statements are prepared under U.S. GAAP. Celcuity is a clinical-stage biotechnology company developing gedatolisib and its CELsignia companion diagnostic platform; it has generated no revenue to date.
Key financial metrics
| Metric | Q1 2022 | Q1 2021 / prior period |
|---|---|---|
| Revenue | None | None |
| Research and development expense | $6.70 million | $2.24 million; up 199% |
| General and administrative expense | $0.81 million | $0.56 million; up 46% |
| Total operating expenses | $7.51 million | $2.79 million; up 169% |
| Operating loss | $7.51 million | $2.79 million |
| Interest expense | $0.44 million | Negligible |
| Net loss | $7.93 million | $2.79 million; loss increased 184% |
| Basic and diluted net loss per share | $0.53 | $0.25 |
| Net cash used in operating activities | $5.93 million | $2.52 million |
| Cash and cash equivalents | $78.30 million at March 31, 2022 | $84.29 million at December 31, 2021 |
| Total assets | $79.93 million | $85.91 million at December 31, 2021 |
| Total liabilities | $18.39 million | $17.20 million at December 31, 2021 |
| Accumulated deficit | $63.86 million | $55.93 million at December 31, 2021 |
Operating cash use increased year over year, principally reflecting higher operating expenses. Investing cash use was $0.01 million; financing cash use was $0.05 million. Cash declined by $5.99 million during the quarter. The filing reports no income tax benefit. Gross margin is not applicable because the company had no revenue.
Material changes and capital structure
- R&D expense rose by $4.46 million, primarily due to gedatolisib development, existing clinical trials, and work to prepare the VIKTORIA-1 Phase 3 study. G&A increased by $0.26 million, including higher employee costs, insurance, and public-company professional fees.
- Interest expense increased following the April 2021 Innovatus loan. The loan carries an 11.61% effective interest rate; the company elected to pay 2.7% of interest in kind. At March 31, debt had a $14.82 million carrying value, against $15.00 million initial principal, and included accrued PIK interest and a final fee. The loan is secured by substantially all company assets; Celcuity was no longer eligible to draw the $5 million Term B tranche.
- On February 4, 2022, Celcuity established a Jefferies at-the-market program for up to $50 million, with a 3% commission. No shares had been sold under it by the filing date.
- After quarter-end, on May 15, 2022, Celcuity entered into an agreement for a proposed $100 million private placement of common and convertible preferred stock with warrant coverage, before fees and expenses. Closing is conditional, including on a U.S. patient receiving a first dose in VIKTORIA-1 by December 31, 2022, and other customary conditions. The terms may result in dilution.
Outlook, developments, and risks
- Management expects to initiate VIKTORIA-1, an open-label randomized Phase 3 trial of gedatolisib regimens for HR+/HER2- advanced breast cancer after prior CDK4/6 therapy, in mid-2022. The FDA granted gedatolisib Fast Track designation in January 2022; this does not assure faster review or approval.
- Management expects R&D and G&A expenses to increase as it advances gedatolisib, CELsignia tests, clinical trials, and business development. It stated that cash on hand was expected to fund operations and obligations for at least the next 12 months; the proposed private placement was not yet closed.
- COVID-19-related enrollment delays affected ongoing trials. Interim FACT-1 and FACT-2 results were expected in the first half of 2023, with final results approximately nine months later; further delays remain possible.
- Celcuity reported preliminary results from the Pfizer-sponsored B2151009 Phase 1b study, including objective response rates of 32%–85% across expansion arms and median progression-free survival of 31.1 months in first-line patients and 12.9 months in the specified prior-CDK4/6 arm. The company cautioned that Pfizer-provided data had not completed data cleaning and verification and could change.
- Pfizer’s license for gedatolisib entails potential development and commercial milestone payments up to $335 million and tiered royalties in the low-to-mid teens. Timing and achievement of milestones are uncertain.
- Principal risks include clinical-trial success, enrollment and regulatory uncertainty, reliance on third parties and Pfizer-licensed intellectual property, future financing needs, lack of revenue and profitability, CELsignia adoption and reimbursement, competition, and COVID-19 disruption. The company is dependent on clinical and commercial progress and may need additional capital.
Important facts for investors to verify
- Whether VIKTORIA-1 began on schedule, its enrollment progress, and subsequent efficacy and safety results.
- Whether the conditional $100 million private placement closed, its final proceeds and security terms, and resulting dilution; also whether the ATM program was used.
- Cash burn, available liquidity, and compliance with the Innovatus loan’s minimum-cash and other covenants.
- Progress and timing of FACT-1 and FACT-2 results, and whether the preliminary B2151009 data withstand final data verification.
- Clinical, regulatory, partnering, reimbursement, and commercialization progress for gedatolisib and CELsignia, including potential Pfizer milestones and royalties.