Corvus Pharmaceuticals, Inc. — Q2 2021 Form 10-Q
Reporting period: Quarter and six months ended June 30, 2021. Corvus is a clinical-stage biopharmaceutical company developing oncology and immune-modulating drug candidates. It reported no product revenue; operating margins are therefore not meaningful.
Financial results and liquidity
Amounts below are in millions except per-share data.
| Metric | Q2 2021 | Q2 2020 | Six months 2021 | Six months 2020 |
|---|---|---|---|---|
| Revenue | None | None | None | None |
| Research and development expense | $9.1 | $7.9 | $17.3 | $18.0 |
| General and administrative expense | $2.2 | $2.9 | $5.4 | $6.0 |
| Net loss | $11.8 | $10.6 | $23.3 | $23.5 |
| Net loss per share, basic and diluted | $0.28 | $0.36 | $0.61 | $0.80 |
- At June 30, cash and cash equivalents were $58.9 million and marketable securities were $7.5 million, totaling $66.5 million. Total current liabilities were $12.4 million; total liabilities were $13.0 million. The filing reports no borrowings.
- Six-month operating cash use was $21.4 million, versus $18.8 million in 2020. Investing activities provided $20.1 million, primarily from security maturities; financing activities provided $43.8 million, including $32.0 million net proceeds from a February offering and $11.8 million from the ATM program.
- Accumulated deficit was $246.5 million. Shareholders’ equity was $96.4 million. Common shares outstanding increased to 42.4 million from 28.4 million at year-end 2020, principally reflecting equity offerings.
Material changes and business developments
- Q2 R&D expense increased $1.2 million year over year, driven mainly by mupadolimab clinical-trial and manufacturing costs, including the COVID-19 Phase 3 trial. For the first half, R&D declined $0.7 million, as lower spending on ciforadenant, CPI-818, other programs and unallocated costs more than offset higher mupadolimab costs.
- Q2 net loss increased $1.1 million year over year; the first-half net loss improved by $0.2 million. Lower interest income and a $0.6 million first-half equity-method loss from Angel Pharmaceuticals affected 2021 results.
- On July 15, 2021, after the quarter-end, Corvus announced it discontinued the mupadolimab Phase 3 COVID-19 trial because vaccines were reducing serious infection and hospitalization. The company said the decision was not related to safety or efficacy; 40 patients had enrolled, too few for definitive conclusions.
- Corvus reported interim CPI-818 responses in T-cell lymphoma, including one complete and one partial response among seven PTCL patients in data reported in December 2020; both were ongoing as of the stated data cutoff. It began enrolling an expansion cohort testing mupadolimab with pembrolizumab in HPV-positive head and neck cancer.
Outlook, risks and unusual items
- Management said available cash, cash equivalents and short-term marketable securities should fund planned operations for at least 12 months from issuance of the financial statements. It also said resources are insufficient to fund all development programs through commercialization and that additional capital will be needed.
- Corvus expects significant ongoing, and potentially increasing, R&D and operating expenses and losses. It gave no specific financial forecast. Funding options may include equity, debt or collaborations, with potential dilution, debt obligations or relinquishment of product rights.
- Key risks include clinical-trial uncertainty and enrollment delays, COVID-19 disruption, reliance on contract manufacturers and research organizations, regulatory approval risk, competition, and the need for further financing.
- A $1.4 million foreign-currency translation adjustment increased the recorded Angel investment and accumulated other comprehensive income; $0.9 million related to 2020. Management concluded the out-of-period adjustment was not material to the affected prior periods.
- Corvus owns approximately 49.7% of Angel Pharmaceuticals, accounted for under the equity method. Angel’s outside investment proceeds are not available to Corvus. Corvus reported no material legal proceedings or material changes to contractual obligations outside the ordinary course.
Important facts for investors to verify
- Post-quarter status and subsequent results of the discontinued COVID-19 trial, and whether the planned later-2021 data analysis was reported.
- Clinical progress, enrollment, safety and efficacy data for mupadolimab in cancer, CPI-818, and the planned ciforadenant RCC study.
- Cash burn and financing needs relative to management’s stated minimum 12-month runway; remaining ATM capacity was $36.6 million at June 30, 2021.
- Potential further share dilution and the development progress and economics of Corvus’s Angel Pharmaceuticals relationship.
- The basis and period treatment of the Angel foreign-currency translation adjustment.