Century Therapeutics, Inc. — Q3 2023 Form 10-Q
Reporting period: Three and nine months ended September 30, 2023. Dollar amounts below are in millions unless otherwise noted.
Business context
Century is a clinical-stage biotechnology company developing induced pluripotent stem cell (iPSC)-derived cell therapies for cancer and other diseases. It has no approved products and has not generated product-sale revenue; reported revenue is from collaborations. Its lead candidate, CNTY-101, is in a Phase 1 trial for relapsed or refractory CD19-positive B-cell malignancies.
Financial performance and liquidity
| Metric | Q3 2023 | Q3 2022 | Nine months 2023 | Nine months 2022 |
|---|---|---|---|---|
| Collaboration revenue | $0.1 | $2.2 | $2.0 | $4.7 |
| Research and development expense | $22.8 | $25.9 | $70.4 | $71.6 |
| Total operating expenses | $35.8 | $34.0 | $104.8 | $105.2 |
| Operating loss | $35.6 | $31.7 | $102.8 | $100.5 |
| Net loss | $32.7 | $30.7 | $97.3 | $99.3 |
| Net loss per share, basic and diluted | $0.55 | $0.53 | $1.65 | $1.72 |
At September 30, cash and cash equivalents were $55.3 million and investments were $229.0 million, totaling approximately $284.3 million. Current assets were $173.7 million and current liabilities $20.4 million. Total liabilities were $178.3 million, including $47.6 million of operating lease liabilities and $116.0 million of deferred revenue. The company had no long-term debt outstanding after repaying its Hercules loan in May 2023.
For the first nine months, operating cash use was $62.1 million, versus $37.0 million of cash provided in the prior-year period. Investing activities provided $42.5 million, primarily reflecting net sales of investment securities; financing activities used $9.4 million, mainly for debt repayment. Cash, cash equivalents and restricted cash ended the period at $57.3 million. Gross margin is not meaningful because the company has no product sales.
Changes versus the prior comparable period
- Q3 collaboration revenue fell $2.1 million year over year; nine-month revenue fell $2.7 million. The company says collaboration revenue varies with the timing and amount of work performed.
- Q3 net loss widened by $2.0 million, as lower collaboration revenue and a $4.0 million in-process research and development charge outweighed lower R&D expense and higher interest income. Nine-month net loss improved by $2.0 million, partly due to higher interest income and lower in-process R&D expense, despite a $4.2 million impairment charge and higher taxes.
- Nine-month operating cash flow shifted from a $37.0 million inflow to a $62.1 million outflow. The prior-year period included substantial collaboration-related deferred revenue cash flows.
- Interest income rose to $9.2 million for the nine months, from $2.4 million, reflecting higher rates earned on cash and investments. Debt-related interest expense declined, and the loan was fully repaid.
Outlook, management commentary and risks
- Management estimates that existing cash, cash equivalents and investments can fund operating expenses and capital expenditures into 2026, based on current plans and assumptions. The filing also says the company believes it has adequate resources for at least the next 12 months; actual cash needs may differ, and additional financing will likely be needed.
- In January 2023, Century reprioritized its portfolio: it paused CNTY-103 and a hematologic-malignancy discovery program, prioritized CNTY-101 and accelerated CNTY-102 and CNTY-107, and continued partnered programs with Bristol Myers Squibb. The restructuring reduced the workforce by approximately 25% and closed Seattle and Hamilton lab operations, consolidating research in Philadelphia.
- The company recorded $4.2 million of long-lived-asset impairment following a decision to exit a Philadelphia lab lease early, and $4.0 million of Q3 in-process R&D expense for an FCDI license covering iPSC-derived therapies for inflammatory and autoimmune diseases. The workforce reduction generated $2.0 million of cash severance costs and $0.6 million of non-cash stock-based compensation in the nine-month period; no related liabilities remained at quarter-end.
- In November 2023, after quarter-end, Century reported preliminary results from one CNTY-101 trial patient: a complete response ongoing five months after first infusion, with the treatment described as well tolerated. This is an early, single-patient case and not evidence of established efficacy.
- Key risks include clinical and regulatory uncertainty, dependence on CNTY-101 and collaboration/manufacturing partners, the need for additional capital, competition, and the possibility that development costs or timing differ from expectations. Management reported effective disclosure controls and no material changes in internal control during the quarter. The company reported no material change in risk factors from its 2022 Form 10-K and no pending legal matter expected to have a material adverse effect.
Important facts for investors to verify
- Whether the stated runway into 2026 remains achievable as clinical, manufacturing and facility spending evolves, and what financing may be required.
- Further CNTY-101 clinical data, including patient numbers, durability, safety and the impact of lymphodepletion; the November case report is preliminary.
- Progress and funding responsibilities under the Bristol Myers Squibb collaboration, including option exercises, milestones and the timing of deferred revenue recognition.
- Execution and costs of the portfolio reprioritization, lab consolidation, lease exit and expansion into autoimmune indications.
- Cash burn, investment balances and exposure to changes in interest rates or disruptions at financial institutions.