NextCure, Inc. — Form 10-Q Summary
Reporting period: Quarter ended September 30, 2022; financial statements are unaudited. NextCure is a clinical-stage biopharmaceutical company developing immunomedicines and has no products approved for commercial sale.
Financial performance and liquidity
Amounts below are in millions, except per-share data.
| Metric | Q3 2022 | Q3 2021 | Nine months 2022 | Nine months 2021 |
|---|---|---|---|---|
| Product revenue | $0 | $0 | $0 | $0 |
| Research and development expense | $13.5 | $13.6 | $41.4 | $37.9 |
| General and administrative expense | $5.7 | $4.9 | $16.8 | $15.8 |
| Net loss | $(18.9) | $(17.9) | $(57.4) | $(52.5) |
| Basic and diluted loss per share | $(0.68) | $(0.65) | $(2.07) | $(1.90) |
- Cash and investments: $169.2 million at September 30, 2022, excluding $39,000 of restricted cash: $31.1 million cash and cash equivalents and $138.2 million marketable securities.
- Cash flow: Operating activities used $44.9 million in the first nine months of 2022, compared with $43.8 million in the same 2021 period. Investing activities provided $63.5 million, largely from net maturities of marketable securities; financing activities provided $0.1 million.
- Balance sheet: Total assets were $189.9 million, total liabilities $8.4 million, and stockholders’ equity $181.5 million. Current liabilities were $5.9 million. The filing reports no term-loan payments in 2022; the loan was paid in full in August 2021.
- Margins: Not meaningful, as the company reported no product revenue. Other income, primarily investment interest, was $0.3 million for the quarter and $0.7 million for the nine-month period.
Material changes and business developments
- Year-to-date operating expenses rose $4.4 million versus 2021, while net loss increased $5.0 million. R&D expense increased $3.4 million, principally because of higher clinical costs, especially for NC410; G&A increased $1.0 million, mainly due to personnel costs.
- NC410: The company said it initiated a Phase 1b/2 combination trial with pembrolizumab in October 2022. Its earlier Phase 1 dose-escalation study enrolled 40 patients; the company reported tolerability up to 200 mg every two weeks and stable disease lasting more than 12 weeks in eight patients.
- NC525: The FDA cleared the IND, and the company expected to begin a Phase 1 study in the first quarter of 2023.
- NC762: The company reported initiating a Phase 1b expansion study in October, selecting patients based on B7-H4 expression.
- NC318: The filing states that in November 2022 the company announced it would wind down its amended Phase 2 monotherapy study after seeing no responses in that portion. It planned to ensure current participants had access to NC318 and continue support for Yale’s investigator-initiated combination study. This is a reported subsequent development, not a Q3 operating result.
Outlook, risks, and contingencies
- Management estimated current cash, cash equivalents, and marketable securities would fund planned operations into mid-2025, while cautioning that assumptions could prove incorrect. The company expects continued losses and negative operating cash flow and anticipates substantial R&D spending.
- Additional capital will be needed; potential sources include equity or debt financing, collaborations, and licensing arrangements. The company warned that unavailable or unacceptable financing could force it to delay, reduce, or discontinue development programs. It had not sold shares under its $75 million at-the-market sales agreement as of September 30, 2022.
- Marketable securities had $2.4 million of unrealized losses at September 30, including $59.0 million of fair value in a continuous loss position for more than 12 months. Management attributed losses primarily to market conditions, considered them temporary, and stated it did not expect to need to sell the securities before maturity.
- Risks include clinical and regulatory uncertainty, patient enrollment and trial delays, COVID-19 effects, reliance on third parties, competition, and the need for additional financing. The filing reported no material updates to the risk factors in the 2021 Form 10-K.
- Three lawsuits were disclosed: a securities class action, a shareholder derivative action, and a trade-secrets and related claims action. Motions to dismiss remained pending in the described proceedings; the company said it could not estimate a reasonably possible loss or range of loss.
- Management concluded disclosure controls were effective at a reasonable-assurance level and reported no material change in internal control over financial reporting during the quarter.
Investor facts to verify
- Whether the cash runway estimate to mid-2025 remains supportable as trial spending and enrollment progress.
- NC410, NC525, and NC762 trial timelines, enrollment, safety findings, and efficacy data; in particular, NC525’s planned Phase 1 start.
- NC318 wind-down plans and the status and results of Yale’s combination trial.
- Marketable-security maturity, liquidity, and potential effects of further interest-rate or credit-market changes.
- Developments and any potential financial exposure in the disclosed litigation.