Cellectar Biosciences, Inc. — Q1 2020 Form 10-Q
Reporting period: Three months ended March 31, 2020. Cellectar is a clinical-stage biopharmaceutical company developing cancer therapies using its phospholipid drug conjugate (PDC) platform. It had no product revenue and reported operating expenses rather than sales-based margins.
Financial performance and position
| Metric | Q1 2020 | Q1 2019 or comparison |
|---|---|---|
| Revenue | No product revenue reported | No product revenue reported |
| Research and development expense | $2.62 million | $2.31 million, up 13% |
| General and administrative expense | $1.34 million | $1.32 million, relatively unchanged |
| Total operating expenses / loss from operations | $3.96 million | $3.63 million |
| Net loss | $3.96 million | $3.62 million |
| Basic and diluted loss per share | $0.42 | $0.76 |
| Cash used in operating activities | $3.51 million | $2.82 million |
| Cash and cash equivalents at period end | $7.09 million | $10.61 million at Dec. 31, 2019 |
R&D growth reflected higher general R&D costs, including personnel, and increased clinical project costs; manufacturing and preclinical costs were broadly steady. The lower loss per share versus Q1 2019 occurred despite a higher net loss, with weighted-average shares rising to 9.39 million from 4.77 million.
At March 31, 2020, total assets were $8.69 million, total liabilities $3.44 million, and stockholders’ equity $5.25 million. Liabilities included $2.94 million of accounts payable and accrued liabilities and $502,000 of lease liabilities. The filing reports no conventional borrowings at quarter-end; a $184,000 PPP loan was received on April 21, after the reporting date.
Business, clinical programs, and notable developments
- Lead candidate CLR 131 was being evaluated in Phase 2 studies in relapsed/refractory hematologic malignancies and Phase 1 studies in multiple myeloma and pediatric cancers. The company also described a Phase 1 head-and-neck cancer study, which was suspended due to COVID-19.
- Management reported positive Phase 2 CLOVER-1 data announced in February 2020, including reported overall response rates of 34.5% among multiple myeloma patients at the stated combined dose groups and 42% among non-Hodgkin lymphoma patients at the stated dose groups. These are company-reported clinical results, not financial measures.
- The Phase 1 multiple myeloma dose-escalation study was reported as successfully completed, with CLR 131 described as safe and tolerated at total-body doses above 80 mCi. The company planned to complete the final study report and close-out later in 2020.
- The company also had preclinical and partnered programs, including CLR 1900 and collaborations involving other PDC candidates. No development revenue was reported in the quarter.
Liquidity, outlook, and risks
Cash declined by $3.52 million in Q1, principally reflecting operating cash use and capital purchases. Management said March 31 cash was expected to fund budgeted operations into the first quarter of 2021. Continuing operations beyond that point depend on obtaining additional funding through equity or debt offerings, a strategic transaction, or other sources; there is no assurance funding will be available on acceptable terms or in time.
The filing states that recurring losses, an accumulated deficit of approximately $115.64 million, and expected future operating losses raise substantial doubt about the company’s ability to continue as a going concern. The financial statements do not include adjustments that could result from the outcome of this uncertainty.
COVID-19 could delay clinical-trial recruitment or conduct, disrupt CLR 131 supply and other supply-chain activity, increase costs, affect development timelines, and impede access to financing. The company said it continued enrolling patients, but the pandemic’s duration and effects were uncertain. The April PPP loan was potentially forgivable if program conditions were met; the company said it intended to use the funds consistently with program requirements but could not assure forgiveness.
Management reported effective disclosure controls as of March 31, 2020 and no significant changes in internal control over financial reporting. The company reported no material legal proceedings.
Investor facts to verify
- Whether Cellectar obtains financing before its stated cash runway ends, and the resulting dilution, debt, or strategic terms.
- Actual cash burn and whether spending or clinical plans change from budget assumptions.
- Effects of COVID-19 on trial enrollment, the suspended head-and-neck study, CLR 131 supply, and program timelines.
- Further clinical data for CLR 131, including response durability, safety, and results across indications and dosing regimens.
- Whether the PPP loan qualifies for full or partial forgiveness and the repayment obligation for any unforgiven amount.
- Potential dilution from the 9.27 million outstanding warrants and 884,464 outstanding stock options reported at March 31, 2020.