Cellectar Biosciences, Inc. — Q3 2020 Form 10-Q
Reporting period: Three and nine months ended September 30, 2020, compared with the corresponding 2019 periods. Cellectar is a clinical-stage biopharmaceutical company developing cancer therapies using its phospholipid drug conjugate (PDC) platform. It reported no product revenue and expects continued operating losses.
Financial results and liquidity
| Metric | Q3 2020 | Q3 2019 | Nine months 2020 | Nine months 2019 |
|---|---|---|---|---|
| Revenue | No product revenue | No product revenue | No product revenue | No product revenue |
| Research and development | $2.684 million | $2.704 million | $7.766 million | $6.822 million |
| General and administrative | $1.226 million | $1.260 million | $3.725 million | $3.972 million |
| Net loss | $3.910 million | $3.904 million | $11.479 million | $10.713 million |
| Basic and diluted loss per share | $0.15 | $0.42 | $0.69 | $1.51 |
| Cash used in operating activities | Not separately presented | Not separately presented | $10.064 million | $9.013 million |
At September 30, cash and cash equivalents were $18.842 million, versus $10.615 million at December 31, 2019. Total assets were $20.697 million, total liabilities $4.473 million, and stockholders’ equity $16.224 million. Long-term liabilities included a $184,000 PPP loan and lease liabilities; the filing does not present a separate interest-bearing debt total beyond these items. No operating margin is meaningful given the absence of revenue.
Financing provided $18.336 million net cash during the first nine months, chiefly from the June public offering; investing activities used $45,000. The company said cash should fund basic budgeted operations for at least 12 months from filing, but funding beyond that depends on additional financing, a strategic transaction, or other sources. Its accumulated deficit was $123.160 million.
Changes versus prior periods
- Q3 R&D expense declined about 1% year over year, as lower clinical and manufacturing costs offset higher personnel-related general R&D costs.
- Nine-month R&D expense rose about 12%, primarily from higher personnel-related and clinical study costs; manufacturing and preclinical costs declined.
- Nine-month G&A expense fell about 6%, primarily due to lower stock-based compensation.
- Nine-month net loss increased about 7%, while operating cash use increased by about $1.1 million.
- Cash rose by $8.227 million from year-end, primarily reflecting the June 2020 offering. The offering issued 14.602 million common shares and warrants, with approximately $18.3 million in net proceeds. Common shares outstanding increased from 9.387 million at December 31, 2019 to 26.814 million at September 30, 2020.
Business update, outlook, and risks
- CLR 131: The lead candidate was being evaluated in the CLOVER-1 Phase 2 adult study and CLOVER-2 Phase 1 pediatric study. CLOVER-1 was enrolling expansion cohorts for triple-class-refractory multiple myeloma and BTK-inhibitor-failed Waldenström’s macroglobulinemia. The company reported a 40% overall response rate in 15 triple-class-refractory patients treated at 60 mCi or greater; this is company-reported clinical data, not an approval or proof of efficacy.
- Management reported an FDA Type B meeting to discuss the registrational path for priority adult hematology indications and planned to initiate a pivotal study in Q4 2020. The filing also expected the final report from the completed Phase 1 multiple-myeloma study in the first half of 2021.
- The company reported continued enrollment in its clinical studies overall. However, a head-and-neck cancer study had been suspended due to COVID-19 and subsequently reopened. COVID-19 could further disrupt patient recruitment, clinical timelines, CLR 131 supply, and access to financing.
- The company expects operating losses for the foreseeable future and has no products on the market. Clinical failure, regulatory delays, manufacturing or supplier disruption, and inability to raise capital could require it to delay, reduce, or discontinue programs. Management noted the prior-year auditor’s going-concern explanatory paragraph; management’s current liquidity estimate is at least 12 months for basic budgeted operations from filing, not a guarantee of longer-term funding.
- The approximately $184,000 PPP loan may be forgivable if program conditions are met; the company said it believed its use of proceeds would qualify but could not assure forgiveness.
- No material legal proceedings were reported. Management said disclosure controls were effective and reported no significant changes in internal control over financial reporting.
Important facts for investors to verify
- Whether the stated cash runway remains adequate relative to actual operating burn and clinical-development plans, and what financing is needed after that period.
- Progress and timing of the planned pivotal CLR 131 study, including regulatory alignment, enrollment, and clinical outcomes.
- Whether the reported response and safety data are sustained in larger or later-stage trials; cytopenias were the most frequently reported adverse events, with some grade 3-or-higher hematologic toxicities.
- Potential further dilution: 17.938 million warrants were outstanding at September 30, 2020, in addition to 1.184 million stock options.
- Effects of COVID-19 on clinical trials, product supply, and financing, and whether the PPP loan is ultimately forgiven.