Century Therapeutics, Inc. — Q2 2023 Form 10-Q
Reporting period: Three and six months ended June 30, 2023. Financial statements are unaudited. Century is a clinical-stage cell-therapy biotechnology company and has no approved products or product-sales revenue.
Financial results and liquidity
Amounts below are in millions of dollars, except per-share data.
| Metric | Q2 2023 | Q2 2022 | Six months 2023 | Six months 2022 |
|---|---|---|---|---|
| Collaboration revenue | $0.1 | $1.4 | $1.8 | $2.5 |
| Research and development expense | $22.7 | $24.5 | $47.6 | $45.7 |
| General and administrative expense | $8.2 | $8.3 | $17.1 | $15.6 |
| Operating loss | $(35.1) | $(31.4) | $(67.2) | $(68.8) |
| Net loss | $(33.3) | $(31.0) | $(64.6) | $(68.5) |
| Basic and diluted loss per share | $(0.56) | $(0.54) | $(1.10) | $(1.19) |
- At June 30, cash and cash equivalents were $64.4 million, investments were $236.5 million, and restricted cash was $2.0 million. Cash, cash equivalents and investments totaled approximately $301.0 million.
- Six-month operating cash use was $48.5 million, versus $61.2 million of operating cash provided in the prior-year period. The 2022 inflow included $120.7 million of deferred collaboration revenue from Bristol Myers Squibb (BMS), so the comparison is not a like-for-like indication of operating cash generation.
- Current assets were $161.3 million and current liabilities were $19.2 million. The company reported no long-term debt at quarter-end after paying off its Hercules loan on May 1, 2023; operating lease liabilities totaled $42.0 million.
- Accumulated deficit was $583.7 million. With no product sales, product-level margins are not applicable; the filing does not provide a meaningful product gross margin.
Material changes versus the prior comparable period
- Q2 revenue declined by $1.3 million year over year, while six-month revenue declined by $0.6 million, reflecting recognition under the BMS collaboration agreement.
- Q2 net loss widened by $2.3 million year over year, primarily alongside a $4.2 million long-lived-asset impairment and lower collaboration revenue; higher interest income partly offset the impact. Six-month net loss narrowed by $3.9 million, helped by higher interest income and the absence of the $10.0 million in-process R&D charge recorded in 2022.
- Six-month R&D expense increased $1.9 million, as higher personnel and facility costs outweighed reduced FCDI collaboration work. G&A increased $1.6 million, which management attributed primarily to one-time restructuring-related charges.
- Interest income increased to $5.7 million for the first half from $1.0 million, reflecting higher interest rates on cash and investments. Six-month income tax expense rose to $2.2 million from $0.03 million; the company cited taxable collaboration revenue and limits on U.S. R&D deductions.
Business developments, outlook and risks
- Century began dosing patients in its Phase 1 ELiPSE-1 trial of CNTY-101 in February 2023. In January, it prioritized CNTY-101 and accelerated work on CNTY-102 and CNTY-107; it paused investment in CNTY-103 and a hematologic-malignancy discovery program. The reorganization reduced the workforce by approximately 25%, closed Seattle and Hamilton lab operations, and consolidated research in Philadelphia.
- The Q2 impairment followed a decision to exit one Philadelphia lab lease early and consolidate facilities. The charge was $4.2 million, relating to property and equipment and right-of-use assets.
- Management said cash, cash equivalents and investments were expected to fund operating expenses and capital needs into 2026, based on current plans and assumptions. The liquidity note separately states the company believes it has adequate resources for at least 12 months from issuance. Management expects continuing losses, higher future expenses and a need for additional financing; actual cash needs or runway could differ, and financing may not be available on acceptable terms.
- The BMS collaboration included a $100 million upfront payment in 2022, options to license programs, potential development and regulatory milestones, sales milestones and royalties. At June 30, 2023, $116.2 million remained in deferred collaboration revenue, including $6.9 million current. The milestone and royalty amounts are contingent and are not assured.
- Key risks include early-stage clinical and preclinical development, reliance on CNTY-101 and third-party collaborators and manufacturers, regulatory and manufacturing uncertainty, competition, and the need to raise capital. The company also identifies banking access and market volatility as risks. It reported no material change to the risk factors in its 2022 Form 10-K, no material pending legal claims, and effective disclosure controls as of quarter-end.
Most important facts for investors to verify
- Whether CNTY-101 clinical progress and the development of CNTY-102 and CNTY-107 support the reprioritized pipeline and management’s assumptions.
- How actual operating cash use compares with the projected runway into 2026, and whether additional capital will be needed sooner.
- The timing and amount of revenue recognized from BMS, and whether any collaboration options, milestones or royalties become payable or receivable.
- Whether facility consolidation and the workforce reduction deliver expected cost savings, and whether further impairment or restructuring charges arise.
- Whether the filing’s financing, collaboration and facility obligations, including $86.8 million in undiscounted future lease payments, change the company’s cash requirements.