Century Therapeutics, Inc. — Q2 2021 Form 10-Q
Reporting period: Three and six months ended June 30, 2021. The company is a preclinical biotechnology business developing iPSC-derived cell therapies for cancer. It has no approved products and has generated no revenue.
Financial performance and position
Amounts below are in millions of dollars, except per-share data.
| Metric | Q2 2021 | Q2 2020 | Six months 2021 | Six months 2020 |
|---|---|---|---|---|
| Revenue | None | None | None | None |
| Research and development expense | $18.9 | $8.5 | $34.3 | $16.4 |
| General and administrative expense | $4.1 | $2.3 | $6.8 | $4.4 |
| Total operating expenses | $23.0 | $15.5 | $41.1 | $25.5 |
| Net loss | $23.3 | $15.3 | $41.6 | $25.0 |
| Net loss per share, basic and diluted | $1.93 | $2.05 | $4.26 | $3.34 |
As of June 30, 2021, cash and cash equivalents were $272.3 million and marketable securities were $167.8 million, totaling $440.0 million. Current assets were $402.6 million and current liabilities were $21.2 million. Total liabilities were $48.0 million, including $9.8 million of net long-term debt and $15.3 million of lease liabilities. The company reported a $334.0 million accumulated deficit.
For the six months, operating cash use was $40.7 million, investing cash use was $130.7 million, and financing cash provided was $418.1 million. Investing outflows principally reflected net purchases of fixed-maturity securities and $12.5 million of property and equipment purchases. Financing inflows included $221.2 million of net IPO proceeds and $159.6 million from the Series C preferred financing. The company also collected a $31.9 million subscription receivable.
Changes versus the prior comparable period
- Q2 R&D expense increased $10.4 million, primarily from greater personnel, laboratory, facility and FCDI collaboration costs. Q2 G&A expense increased $1.8 million, including higher personnel and stock-based compensation costs.
- Q2 net loss increased $8.0 million. For the six months, net loss increased $16.6 million; the 2020 comparison included a $4.7 million write-off of acquired in-process research and development, while 2021 included interest expense on the Hercules loan.
- Cash and investments increased substantially following the IPO and Series C financing. Preferred shares converted into common stock when the IPO closed in June; 54.4 million common shares were issued and outstanding at June 30.
Outlook, risks and unusual items
- Management estimates existing cash, cash equivalents and marketable securities will fund operating expenses and capital expenditures through 2024. It expects losses and expenses to rise as research, preclinical work, clinical preparation and manufacturing capabilities expand; additional financing may be needed, and the runway estimate depends on assumptions that may prove incorrect.
- All candidates remain preclinical. The company expected to submit an IND for CNTY-101 in mid-2022 and for CNTY-103 in the first half of 2023. These are forward-looking plans, not assured milestones.
- The company reported modest COVID-19-related delays in discovery and development, mainly from temporary partial shutdowns at certain CROs and academic institutions. It warned that the pandemic and new variants could again disrupt operations, suppliers and development timelines.
- The $10.0 million Hercules loan bears a floating rate, reported as 9.55% at June 30, 2021, and matures in 2024. The company was in compliance with its loan provisions. Additional tranches are conditional, and the third is at the lender’s discretion.
- Future lease payments of approximately $17.3 million for a facility lease commencing in January 2022 were not yet recorded on the balance sheet. The filing also describes contingent development, regulatory and commercial milestone and royalty obligations under collaboration and license agreements; timing and likelihood were uncertain.
- Key risks include clinical and regulatory uncertainty, complex cell-therapy manufacturing, reliance on FCDI and other third parties, limited patent protection, potential future capital needs, and possible COVID-19 disruption. Bayer holds rights to bid on certain research products, including CNTY-101 and CNTY-103, under an option agreement.
- The filing reports no pending legal matters expected to have a material adverse effect. Management concluded disclosure controls were effective at a reasonable assurance level and reported no material quarterly change in internal control over financial reporting.
Important facts for investors to verify
- Whether cash use, planned spending and development milestones remain consistent with management’s projected funding runway through 2024.
- Progress toward the stated IND timelines, and any effects of preclinical results, manufacturing readiness or regulatory feedback.
- Terms, milestones and operational dependence associated with FCDI, Bayer’s product rights, the Hercules loan and the uncommenced facility lease.
- Current patent filings and ownership, given the company’s disclosure that it had no issued patents related to its product candidates and that its patent portfolio was at an early stage.
- The filing’s cover page marks “No” for having filed all required Exchange Act reports during the preceding 12 months; investors may wish to confirm the applicability and context of this response for the newly public company.