Century Therapeutics, Inc. — Q1 2022 Form 10-Q
Reporting period: Three months ended March 31, 2022; balance-sheet comparisons are to December 31, 2021. Century is a pre-commercial biotechnology company developing iPSC-derived cell therapies for cancer. It reported no product sales and remains loss-making.
Key financial results
| Metric | Q1 2022 | Q1 2021 / comparison |
|---|---|---|
| Collaboration revenue | $1.058 million | None |
| Research and development expense | $21.196 million | $15.374 million |
| General and administrative expense | $7.298 million | $2.688 million |
| In-process R&D expense | $10.000 million | None |
| Net loss | $37.513 million | $18.348 million |
| Net loss per share, basic and diluted | $0.66 | $2.39 |
| Operating cash flow | $86.753 million provided | $22.179 million used |
Amounts are in U.S. dollars. No meaningful product gross margin was reported. The improvement in loss per share reflects a substantially larger weighted-average share count after the 2021 IPO and should not be read as improved underlying profitability.
- Liquidity: Cash and cash equivalents were $126.039 million; short- and long-term investments totaled $340.341 million. Together, these were $466.380 million, versus $358.793 million at year-end 2021. Current assets were $365.262 million and current liabilities $21.976 million.
- Cash flow: Investing activities used $44.037 million, primarily for net investment purchases and property and equipment. Financing activities provided $26.878 million, principally from Bristol Myers Squibb’s stock purchase.
- Debt: Long-term debt, net, was $10.018 million at March 31; no current debt was reported. The loan bears a floating rate, reported at 9.55% at quarter-end.
- Other balance-sheet items: Total assets were $550.308 million, total liabilities $163.644 million, and stockholders’ equity $386.664 million. Accumulated deficit was $425.679 million. Unrealized investment losses of $1.986 million contributed to comprehensive loss.
Material changes and business developments
- In January 2022, Century entered a research, development and commercialization collaboration with Bristol Myers Squibb (BMS), initially covering programs for acute myeloid leukemia and multiple myeloma. BMS paid a non-refundable $100 million upfront fee and purchased 2,160,760 Century shares for $50 million.
- The collaboration’s stated transaction price at March 31 was approximately $123.2 million, including the upfront payment and a $23.2 million equity premium. Of this, $1.058 million had been recognized as collaboration revenue and $122.129 million was deferred, including $6.379 million current and $115.750 million non-current.
- BMS has options to license development candidates and add up to two further programs. Potential payments include up to $235 million in development and regulatory milestones per licensed program, up to $500 million in sales milestones per licensed product, and tiered royalties. These amounts are contingent and were not recognized as revenue at quarter-end.
- Century paid FCDI $10 million to amend license rights to include Japan, recorded as in-process R&D expense. R&D expense increased mainly with staffing, laboratory activity and facilities; G&A rose with personnel, public-company, insurance and professional costs.
- Property and equipment, net, increased to $64.681 million, including $35.920 million of construction in progress.
Outlook, risks and contingencies
- Management expects losses and expenses to increase as it advances preclinical and clinical development, expands manufacturing capabilities and supports its operations. It expects to require additional financing in the future; there is no assurance financing will be available on acceptable terms.
- The filing gives differing cash-runway formulations: the financial-statement note says resources are adequate for at least 12 months from issuance, while MD&A says cash, cash equivalents and investments at March 31 are expected to fund operating and capital requirements into 2025. Management cautions that its estimates rely on assumptions that may prove incorrect.
- The pipeline is in development, with no approved products. Key uncertainties include clinical and regulatory success, manufacturing scale-up, dependence on FCDI and other third parties, competition, intellectual-property protection, and the ability to retain personnel and raise capital. COVID-19-related disruption and supply-chain or labor effects remain uncertain; the company reported modest prior delays in discovery and development.
- At March 31, the Hercules loan had a four-year term and no longer had a minimum cash requirement after specified milestones were achieved. A May 2022 amendment, after quarter-end, extended the principal maturity to May 1, 2023 and imposed a $25 million monthly minimum unrestricted cash balance. The loan is secured by substantially all assets other than intellectual property.
- Contractual commitments included operating lease payments of $29.196 million and scheduled debt payments including end-of-term fee of $10.395 million. A 10-year lease expected to commence in June 2022 would add approximately $17.3 million of future payments not recorded on the March 31 balance sheet.
- Management reported no material pending legal proceedings and no material changes to the risk factors in its 2021 Form 10-K. Disclosure controls were assessed as effective at a reasonable assurance level.
Most important facts for investors to verify
- Reconcile collaboration revenue: the financial statements report $1.058 million, while the MD&A narrative says $1.2 million.
- Clarify the runway assumptions behind the “at least 12 months” statement versus the “into 2025” estimate, including expected operating spend and capital expenditures.
- Track BMS program progress, option decisions, milestone constraints and the timing of deferred-revenue recognition; the quarter’s positive operating cash flow was primarily driven by collaboration cash received in advance, not recurring operating receipts.
- Assess the May 2022 loan amendment’s maturity, minimum-cash covenant and related liquidity implications, alongside the uncommenced lease obligations.
- Monitor R&D and G&A growth, clinical-development timelines, manufacturing capacity, and Century’s future financing needs and potential dilution.