CytomX Therapeutics, Inc. — Q2 2022 Form 10-Q
Reporting period: Quarter and six months ended June 30, 2022. Financial statements are unaudited. CytomX is a clinical-stage oncology biotechnology company with no approved products; revenue is primarily from collaboration agreements.
Financial results and liquidity
| Metric | Q2 2022 | Q2 2021 | Six months 2022 | Six months 2021 |
|---|---|---|---|---|
| Revenue | $18.2 million | $16.3 million | $35.3 million | $32.3 million |
| Research and development expense | $31.2 million | $26.1 million | $61.7 million | $48.5 million |
| General and administrative expense | $11.7 million | $9.4 million | $22.3 million | $18.6 million |
| Net loss | $24.2 million | $19.2 million | $48.1 million | $34.8 million |
| Net loss per share, basic and diluted | $0.37 | $0.30 | $0.73 | $0.55 |
| Cash used in operating activities | Not separately stated | Not separately stated | $75.6 million | $58.1 million |
At June 30, 2022, cash, cash equivalents and short-term investments totaled $228.2 million, down from $305.2 million at December 31, 2021. Total assets were $260.1 million; total liabilities were $211.4 million; stockholders’ equity was $48.7 million. Accumulated deficit was $581.8 million. The filing reports no financial debt; liabilities included deferred revenue and operating lease obligations. Gross margin is not presented and is not a useful measure for this pre-commercial company.
Operating cash use increased year over year, reflecting the larger net loss and working-capital movements, including $33.3 million of deferred revenue recognized during the first half. Deferred revenue was $161.7 million at June 30, versus $194.9 million at year-end. Revenue is recognized as collaboration performance obligations are fulfilled, so revenue growth does not necessarily represent equivalent new cash receipts.
Changes versus prior comparable periods
- Q2 revenue rose $1.9 million year over year; first-half revenue rose $3.0 million. Higher AbbVie revenue from project progress more than offset lower Amgen revenue, which reflected a lower percentage of completion for CX-904. Bristol Myers Squibb revenue was unchanged.
- First-half R&D expense increased $13.2 million, primarily due to personnel costs and laboratory contract services supporting preclinical and clinical programs. First-half G&A expense increased $3.7 million, mainly from personnel and professional services.
- First-half net loss widened by $13.3 million, while operating cash use increased by $17.4 million. Cash, cash equivalents and investments fell by $77.0 million from year-end.
Outlook, pipeline and notable developments
- Management stated that existing capital resources were expected to fund operations into 2025 under its current operating plan, while also noting it expects to need additional funding and that financing may not be available on acceptable terms.
- After quarter-end, CytomX reported Phase 2 topline results for praluzatamab ravtansine (CX-2009): Arm A met its primary objective-response-rate threshold of greater than 10%; Arm B in triple-negative breast cancer did not pass the futility boundary. Enrollment in Arms B and C was to stop. The company said it would not advance the program alone and would seek a partner. In Arm A, 30% discontinued due to adverse events; grade 3 or worse ocular and neuropathic toxicities were 15% and 10%, respectively.
- On July 13, 2022, the company announced a restructuring and approximately 40% workforce reduction to prioritize its emerging preclinical and early clinical pipeline and collaborations. Completion was expected in Q4 2022; estimated charges were approximately $10 million, primarily severance and employee-related costs, in Q3 and Q4. Management expected expenses to decline over time.
- CX-2029 enrollment was complete in three solid-tumor cohorts; the DLBCL cohort was deprioritized and had enrolled no patients. A squamous non-small cell lung cancer data update was expected in Q4 2022; E/GEJ data were still maturing.
- Partnered CX-904 entered Phase 1, with the first patient dosed in May 2022. IND submissions for wholly owned CX-801 and CX-2051 were planned for the second half of 2023.
- Key risks include clinical failure or delays, adverse effects, reliance on collaborators and third-party manufacturers, uncertain access to future capital, and possible COVID-19-related trial or supply-chain disruption. The company has no in-house manufacturing capability and relies on third parties.
Contingencies and controls
- A patent-infringement lawsuit filed by Vytacera Bio in Delaware seeks unspecified damages. Claim construction was ruled on in May 2022; no new case deadlines had been set. CytomX considers the case without merit and recorded no liability accrual.
- California was examining the company’s 2017 and 2018 revenue-apportionment tax positions. No adjustments had been proposed; the company could not estimate the resolution date or potential impact, but did not expect a material effect.
- Management concluded disclosure controls and procedures were effective at the reasonable-assurance level as of June 30, 2022. No material change in internal control over financial reporting was reported for the quarter.
Key facts for investors to verify
- Whether the stated runway into 2025 remains achievable after the restructuring, future trial decisions and any changes in collaboration funding or spending.
- Final, audited clinical data and safety results for praluzatamab ravtansine, including whether a development partner is secured.
- Timing and results of the CX-2029 cohort update, and subsequent progress and safety data for CX-904.
- Actual restructuring costs, workforce-reduction completion, and realized savings versus management’s estimates.
- Collaboration revenue recognition, deferred-revenue balances and milestone timing, which depend on research progress and partner decisions.
- Developments in the Vytacera litigation and California tax examination, neither of which had a clear quantified potential exposure in the filing.