Corvus Pharmaceuticals, Inc. — Q1 2020 Form 10-Q
Reporting period: Three months ended March 31, 2020; balance-sheet figures are as of March 31, 2020, compared with December 31, 2019. Interim financial statements are unaudited. Corvus is a clinical-stage oncology company and reported no product revenue.
Financial results and liquidity
| Metric | Q1 2020 | Q1 2019 / prior date |
|---|---|---|
| Revenue | None | None |
| Research and development expense | $10.16 million | $9.42 million |
| General and administrative expense | $3.11 million | $2.89 million |
| Total operating expenses | $13.27 million | $12.31 million |
| Net loss | $12.94 million | $11.64 million |
| Net loss per share, basic and diluted | $0.44 | $0.40 |
| Cash used in operating activities | $9.35 million | $8.99 million |
| Cash, cash equivalents and marketable securities | $68.71 million | $77.98 million at Dec. 31, 2019 |
- Net loss widened by $1.29 million year over year as operating expenses rose $0.96 million and net interest income and other items fell $0.33 million. No revenue means operating margins are not meaningful.
- R&D rose $0.74 million: CPI-006 program costs increased $1.60 million, partly offset by lower CPI-818 costs ($0.86 million) and ciforadenant costs ($0.13 million). G&A increased $0.22 million, mainly from professional services.
- Cash and cash equivalents were $23.50 million and marketable securities were $45.21 million at quarter-end. Operating cash outflow was partly offset by $27.70 million of investing cash inflow, principally net maturities and sales of marketable securities; this was portfolio movement, not operating cash generation.
- Total assets were $73.80 million; total liabilities were $13.76 million, including $2.98 million of operating lease liabilities. The filing reports no material debt; lease commitments remain. Accumulated deficit was $230.08 million.
Business, outlook and material developments
- Lead clinical programs are ciforadenant, CPI-006 and CPI-818; CPI-182 is preclinical, and CPI-935 is an A2B receptor antagonist development program. The company has not established commercial manufacturing or sales capabilities.
- Management said existing cash, cash equivalents and marketable securities should fund planned operations and obligations for at least 12 months from issuance of the statements. It also said current resources are not expected to fund the lead programs through commercialization; further financing will be needed. Equity financing could dilute holders, while debt or partnerships could impose obligations or require rights concessions.
- In March 2020, Corvus entered an at-the-market sales agreement for up to $50 million in gross proceeds, with Jefferies compensation of up to 3% of sales. No shares had been sold under the agreement by March 31.
- COVID-19 had not materially affected trial enrollment or drug supply as of the filing: 2020 enrollment goals were largely completed, scheduled visits and essential data collection generally continued, and management believed existing drug inventories could support trials through 2020. The company paused CPI-182 IND-enabling work and scale-up manufacturing in mid-March because of the pandemic; future disruption remained uncertain.
- Management expected to present initial data from a 25-patient RCC cohort at the May 2020 ASCO virtual meeting, updated CPI-006 data at SITC in November 2020, and updated CPI-818 data at ASH in December 2020. It also planned FDA discussions on a potential biomarker-based pivotal ciforadenant study. These are stated plans, not assurances of completion or outcome.
- Risks include clinical and regulatory uncertainty, possible adverse events, reliance on third-party manufacturers and trial operators, competition, intellectual-property and licensing risks, and the need for additional capital. The filing describes possible drug-related serious adverse events in ciforadenant combination trials and adverse events in CPI-006 testing; trial sizes and follow-up were limited. Future clinical effects and COVID-19 impacts were uncertain.
- Contingent license milestones and royalties are not recorded as balance-sheet liabilities. Corvus reported no material legal proceedings and no material changes to contractual obligations outside the ordinary course. Management concluded disclosure controls were effective as of March 31, 2020.
Key facts for investors to verify
- Whether operating cash burn, trial spending and the assumed 12-month liquidity runway remain consistent with current plans, and when additional financing may be required.
- Whether the ATM facility has been used since quarter-end, and the resulting proceeds, share issuance and dilution.
- Clinical data, safety updates, enrollment and regulatory feedback for ciforadenant, CPI-006 and CPI-818, including whether announced presentation and FDA-discussion plans occurred.
- Whether COVID-19 or other factors affected trial conduct, drug supply, CPI-182 development, or the timing and cost of programs after March 31, 2020.
- Potential future milestone and royalty obligations under the Vernalis, Scripps and Monash licenses, which are contingent and excluded from reported liabilities.