Xilio Therapeutics, Inc. — Q1 2023 Form 10-Q
Business context and reporting period. This unaudited quarterly report covers the three months ended March 31, 2023. Xilio is a clinical-stage biotechnology company developing tumor-activated immuno-oncology therapies using its GPS platform. Its clinical-stage candidates are XTX101 (anti-CTLA-4), XTX202 (IL-2) and XTX301 (IL-12). The company has no approved products and has not generated product revenue.
Key financial metrics
| Metric | Q1 2023 / March 31, 2023 | Comparable period / prior year-end |
|---|---|---|
| Revenue | None | None reported |
| Research and development expense | $16.1 million | $14.9 million in Q1 2022 |
| General and administrative expense | $7.4 million | $6.3 million in Q1 2022 |
| Total operating expenses | $23.5 million | $21.2 million in Q1 2022 |
| Net loss | $22.6 million; $0.83 per share | $21.4 million; $0.78 per share in Q1 2022 |
| Net cash used in operating activities | $25.3 million | $20.8 million in Q1 2022 |
| Cash and cash equivalents | $93.3 million | $120.4 million at December 31, 2022 |
| Current assets / current liabilities | $97.0 million / $16.2 million | $124.5 million / $21.1 million at December 31, 2022 |
| Note payable | $8.2 million carrying value; $8.3 million outstanding principal | $9.8 million carrying value at December 31, 2022 |
| Accumulated deficit | $271.8 million | $249.1 million at December 31, 2022 |
Margins are not meaningful because the company has no product revenue. Q1 other income was $0.9 million, versus $0.1 million of other expense in Q1 2022, primarily reflecting higher interest income. Cash, cash equivalents and restricted cash together were $94.8 million at quarter-end. Investing cash outflow was $0.2 million; financing cash outflow was $1.7 million, primarily debt principal repayments.
Material changes versus comparable periods
- Operating expenses increased $2.3 million year over year: R&D rose $1.2 million, mainly from higher personnel costs, and G&A rose $1.1 million, including higher personnel and consulting expenses.
- Net loss increased $1.3 million year over year despite the favorable $1.0 million change in other income and expense.
- Operating cash use increased $4.4 million year over year. Cash and cash equivalents declined $27.1 million from year-end 2022, reflecting operating cash use, capital spending and debt repayments.
- During Q1, Xilio opened sites and began screening patients for the XTX301 Phase 1 trial. XTX101 was in an ongoing Phase 1 trial; XTX202 was in an ongoing Phase 1/2 trial.
Outlook, risks and unusual items
- Management estimates existing cash and cash equivalents will fund operating expenses and capital expenditures into the end of Q2 2024. This estimate depends on assumptions that may prove incorrect. The company expects continued operating losses and negative operating cash flow and says substantial additional capital will be needed.
- The company expects R&D and G&A costs to increase as programs advance and operations expand. It does not expect product-sale revenue for several years, if ever, and provides no specific revenue or earnings guidance.
- The PacWest loan carried an 8.25% variable interest rate at March 31, 2023, with monthly principal and interest payments underway and maturity on June 30, 2024. The loan is secured by substantially all borrower assets other than intellectual property; the company reported covenant compliance at quarter-end.
- On May 5, 2023, after quarter-end, the subsidiary amended and restated the PacWest agreement, including permitting up to $5 million in aggregate deposits outside PacWest. The filing reports no other change to the quarter-end debt balance from this amendment.
- A $250 million universal shelf and a sales agreement allowing up to $75 million of at-the-market common-stock sales were available; no shares had been sold under the sales agreement through the filing date.
- Principal risks include clinical and regulatory failure or delay, unexpected safety effects, uncertain efficacy of the company’s unproven platform, dependence on third-party CROs and a single manufacturing partner with significant operations in China, reliance on licensed intellectual property, competition, and inability to raise capital on acceptable terms. Equity financing could dilute existing holders.
- Management concluded disclosure controls and procedures were effective at the reasonable-assurance level as of March 31, 2023; no material change in internal control over financial reporting was reported for the quarter.
Important facts for investors to verify
- Whether clinical enrollment, safety and efficacy data for XTX101, XTX202 and XTX301 support continued development and stated timelines.
- Whether the cash runway estimate through the end of Q2 2024 remains achievable given actual trial, manufacturing and operating costs, and whether additional financing is required sooner.
- The current PacWest loan terms, payment schedule, variable-rate exposure and compliance status following the May 5, 2023 amendment.
- Whether the company uses its shelf registration or ATM facility, and the resulting dilution and available cash runway.
- Whether manufacturing capacity and supply—including China-related exposure—and key intellectual-property licenses remain secure on acceptable terms.