Xilio Therapeutics, Inc. — Q3 2023 Form 10-Q
Reporting period: Three and nine months ended September 30, 2023. Xilio is a clinical-stage biotechnology company developing tumor-activated immunotherapies. It has no product-sales revenue and expects no product revenue for several years, if ever.
Financial performance and position
| Metric | Q3 2023 | Q3 2022 | Nine months 2023 | Nine months 2022 |
|---|---|---|---|---|
| Revenue | $0 | $0 | $0 | $0 |
| Research and development expense | $11.1m | $13.0m | $40.4m | $44.2m |
| General and administrative expense | $6.3m | $7.2m | $20.6m | $21.8m |
| Total operating expenses | $17.4m | $20.2m | $61.0m | $66.0m |
| Net loss | $16.7m | $19.8m | $58.7m | $65.8m |
| Net loss per share, basic and diluted | $0.61 | $0.72 | $2.14 | $2.40 |
| Operating cash used | Not stated quarterly | Not stated quarterly | $55.2m | $57.5m |
There are no meaningful revenue or gross-margin figures because the company has not generated product revenue. Other income, net was $0.6m for Q3 and $2.3m for the nine-month period, primarily reflecting interest income, partly offset by debt interest expense.
- At September 30, 2023, cash and cash equivalents were $59.8m, down from $120.4m at December 31, 2022. Restricted cash was $1.6m.
- Total assets were $77.8m; total liabilities were $25.3m; and stockholders’ equity was $52.5m.
- Cash, cash equivalents and restricted cash declined $60.6m in the first nine months. Investing activities used $0.5m; financing activities used $4.9m, including $5.0m of debt principal repayments.
- Note payable was $5.0m at September 30, 2023, bearing an 8.75% variable interest rate and maturing June 30, 2024. The company reported compliance with loan covenants. The loan is secured by substantially all borrower assets other than intellectual property, subject to exceptions.
Changes versus the comparable period
- Q3 net loss improved by $3.0m year over year; nine-month net loss improved by $7.0m. Lower operating expenses and higher other income contributed.
- Nine-month R&D expense fell $3.8m. Lower XTX101 and XTX301 costs were partly offset by higher XTX202, early-program and personnel costs. The comparisons were affected by the timing of manufacturing and preclinical work.
- Q3 XTX101 R&D expense was a net credit of $1.0m, principally reflecting a $2.0m Roche cost-sharing payment recorded as a reduction of R&D expense. The earned amount was included in prepaid expenses and other current assets at quarter-end.
- Nine-month G&A expense declined $1.2m, mainly from lower personnel-related and facility-related costs. Other income rose $2.0m over the nine-month period, principally because of higher interest income and lower debt interest expense following principal repayments.
Outlook, financing and key risks
- Going concern: Management estimated that September 30 cash would fund planned operating expenses and capital expenditures into the end of Q2 2024. The filing states cash is not expected to cover at least twelve months from issuance of the financial statements and identifies substantial doubt about the company’s ability to continue as a going concern.
- Management intends to seek additional capital through equity or debt financing, collaborations, partnerships or licensing transactions. No assurance is given that financing will be available on acceptable terms. Without sufficient capital, Xilio may reduce, delay or eliminate operating and R&D costs or consider strategic alternatives, including asset or technology sales or divestitures.
- Xilio had a $250m universal shelf registration statement and a sales agreement allowing up to $75m of common-stock sales. As of the filing date, it had not sold shares under the sales agreement. Equity financing could dilute existing holders; debt or licensing transactions could impose restrictions or require giving up valuable rights.
- Clinical-stage candidates are XTX101 (anti-CTLA-4; Phase 1), XTX202 (IL-2; Phase 1/2) and XTX301 (IL-12; Phase 1). Development, clinical outcomes, regulatory approval and commercialization remain uncertain. The company reported a July 2023 Roche collaboration to evaluate XTX101 with atezolizumab in a Phase 1/2 trial; Roche shares specified costs and supplies its drug, while Xilio sponsors the study and retains global XTX101 rights.
- Key risks include early-stage clinical programs, potential adverse effects or trial delays, dependence on third-party manufacturers and CROs, reliance on a single manufacturer with significant China operations, access to combination drugs, competition, and patent and in-license risks. Xilio also notes that interim clinical data can change as more data are collected and verified.
- Management said inflation had not materially affected the reported financial statements, but labor and supply costs could rise. No quantitative full-year financial guidance is provided.
- Disclosure controls and procedures were assessed as effective at a reasonable assurance level as of September 30, 2023; the filing reports no material change in internal control over financial reporting during the quarter.
Investor facts to verify
- Whether Xilio secures financing or a strategic transaction in time to address the stated going-concern doubt and extend its runway beyond Q2 2024.
- Actual cash burn, use of the shelf or sales agreement, and any dilution or financing terms after the reporting date.
- Clinical-trial enrollment, safety and efficacy updates for XTX101, XTX202 and XTX301, including whether preliminary results hold as data mature.
- Roche cost-sharing receipts and trial progress, and the remaining $5.0m loan repayment schedule through its June 2024 maturity.
- Whether manufacturing, supply, intellectual-property or licensing developments change development timelines or costs.