NextCure, Inc. — Q1 2022 Form 10-Q
Reporting period: Three months ended March 31, 2022. NextCure is a clinical-stage biopharmaceutical company developing immunotherapies for cancer and other immune-related diseases. It has no approved products and has not generated product-sales revenue.
Financial performance and liquidity
| Metric | Q1 2022 | Q1 2021 / prior date |
|---|---|---|
| Revenue | No product-sales revenue | No product-sales revenue |
| Research and development expense | $15.0 million | $12.4 million |
| General and administrative expense | $5.7 million | $4.8 million |
| Net loss | $20.6 million; $0.74 per share | $16.5 million; $0.60 per share |
| Net cash used in operating activities | $15.4 million | $13.9 million |
| Cash, cash equivalents and marketable securities | $201.3 million, excluding restricted cash | $219.6 million at December 31, 2021 |
| Total liabilities | $8.8 million | $9.0 million at December 31, 2021 |
Operating expenses rose about 20.5% year over year, while net loss increased about 24.6%. Research and development expense increased $2.6 million, driven by higher clinical and laboratory costs; G&A increased $0.9 million, primarily from personnel costs. Other income declined to $0.2 million from $0.7 million, reflecting lower investment balances and interest rates. With no product revenue, profit margins are not meaningful.
At March 31, 2022, current assets were $208.9 million and current liabilities were $6.4 million. Cash, cash equivalents and restricted cash totaled $10.7 million; marketable securities were $190.7 million. The portfolio consisted of corporate bonds, including $2.2 million of gross unrealized losses; management considered the losses temporary and said it did not intend, and was not likely required, to sell before maturity. The filing reports no term-loan payment in Q1 2022; total liabilities primarily include accounts payable, accruals and deferred rent.
Business developments, outlook and risks
- Management expects existing cash, cash equivalents and marketable securities to fund planned operations into the first quarter of 2024. This is based on assumptions that could prove incorrect; the company expects ongoing losses and will need additional funding.
- NC318: management expects further Phase 2 monotherapy data in Q4 2022. A Yale-led Phase 2 combination study with pembrolizumab anticipates initial data in the second half of 2022. NC318 dosing was revised to 800 mg weekly in 2021; the Phase 2 study includes screening for S15-positive patients.
- NC410: further Phase 1 data expected in the second half of 2022. NC762: initial Phase 1 data expected in the second half of 2022. NC525: an IND submission is planned for Q4 2022.
- Management expects R&D spending to increase as trials and discovery programs advance, and G&A costs to rise with staffing, public-company compliance and related expenses. Future development timing and costs depend on enrollment, clinical results, regulation, manufacturing and other factors.
- COVID-19 previously strained trial sites, slowed enrollment and delayed trials and results; any renewed rise in infections could continue to affect enrollment. The company says laboratory operations have mostly continued without interruption.
- Three lawsuits are disclosed: a securities class action, a related shareholder derivative action, and a trade-secret misappropriation action. The company intends to defend them but cannot estimate reasonably possible losses or a range of loss.
- The company reported effective disclosure controls as of March 31, 2022, no material change in internal control over financial reporting, and no material updates to its previously disclosed risk factors.
Investor verification points
- Track actual cash burn and spending against the stated runway into Q1 2024, and assess the timing and terms of any additional financing.
- Verify the timing, enrollment, safety and efficacy updates for NC318, NC410 and NC762, and progress toward the NC525 IND filing.
- Monitor marketable-security values and liquidity, including the effect of interest-rate movements on unrealized losses.
- Follow the status and potential financial impact of the three disclosed legal matters; the filing does not quantify potential losses.
- Assess whether COVID-19, clinical-trial execution, regulatory requirements or manufacturing constraints alter development plans or spending.