Nuvation Bio Inc. — FY2022 Form 10-K
Reporting period: Fiscal year ended December 31, 2022. This is an annual filing; it does not provide a standalone fourth-quarter financial summary. Financial amounts below are in U.S. dollars.
Business context
Nuvation Bio is a clinical-stage oncology biopharmaceutical company with no approved products and no product revenue. Its lead clinical candidate, NUV-868, is an oral, BD2-selective BET inhibitor. The company also develops preclinical drug-drug conjugate (DDC) candidates. It relies on third parties for research, clinical trials, manufacturing, and supply.
Financial performance and liquidity
| Metric | FY2022 / Dec. 31, 2022 | FY2021 / Dec. 31, 2021 |
|---|---|---|
| Revenue | No product revenue | No product revenue |
| Research and development expense | $87.8 million | $69.0 million |
| General and administrative expense | $31.9 million | $24.3 million |
| Total operating expenses | $119.7 million | $93.3 million |
| Operating loss | $119.7 million | $93.3 million |
| Net loss | $104.2 million | $86.8 million |
| Basic and diluted net loss per share | $0.48 | $0.44 |
| Cash used in operating activities | $96.1 million | $68.2 million |
| Cash, cash equivalents and marketable securities | $661.0 million | $765.4 million |
Revenue and profit margins are not applicable because the company has no product sales and incurred operating losses. FY2022 net loss increased by $17.4 million; operating expenses rose by $26.4 million. R&D expense growth principally reflected higher research, manufacturing and clinical-trial costs, personnel costs, and restructuring and contract-termination costs. G&A growth principally reflected personnel-related costs, including stock-based compensation.
At year-end, cash and cash equivalents were $101.1 million and marketable securities were $559.9 million. Current assets were $667.3 million versus current liabilities of $13.2 million. Total liabilities were $17.1 million, including $4.3 million of operating lease liabilities and $0.9 million of warrant liability; the filing reports no borrowings. Management said existing cash, cash equivalents and marketable securities were expected to fund operations for at least 12 months after issuance of the financial statements. This estimate depends on assumptions and may change.
Other income, net, was $15.5 million in FY2022 versus $6.5 million in FY2021, including a $10.2 million non-cash gain from the change in warrant fair value and $7.4 million of interest income. The company reported a $4.3 million unrealized loss on available-for-sale securities in other comprehensive loss.
Material changes and operating developments
- NUV-868: FDA-cleared IND in January 2022; Phase 1 monotherapy dose escalation began in March and was ongoing at year-end. A Phase 1b combination study with olaparib and enzalutamide began in December 2022. The company plans to consider Phase 2 testing after determining the recommended Phase 2 dose.
- NUV-422: Development was discontinued in August 2022 after a safety signal of uveitis emerged in a Phase 1/2 study. The company reduced its workforce by 30 employees, approximately 35%, and recorded $7.4 million of restructuring costs, primarily contract termination costs. The restructuring was substantially completed by year-end.
- DDC platform: The company had nominated an undisclosed DDC clinical candidate and intended to submit an IND by year-end 2023. DDC programs remained preclinical.
- Cash used in operations increased by $27.9 million year over year. Cash and investments decreased from $765.4 million to $661.0 million.
Outlook, risks and unusual items
Management expects significant expenses and operating losses to continue and says substantial additional funding may eventually be needed. The company had an accumulated deficit of $267.0 million. Its plans and financial outlook depend on clinical progress, regulatory outcomes, trial enrollment, manufacturing and supply, and its ability to obtain financing. The filing provides no revenue or earnings guidance.
- Clinical-stage development carries substantial uncertainty; earlier preclinical or clinical results may not predict later results. NUV-868 had not yet established clinical efficacy in this filing.
- The DDC platform is novel and unproven in clinical trials. The company has no in-house manufacturing capabilities and relies on third-party CROs and, in some cases, single-source manufacturers.
- Competition, intellectual-property challenges, regulatory requirements, healthcare pricing and reimbursement, and the ability to attract and retain personnel could affect development and commercialization.
- Stock-based compensation was $16.3 million in FY2022. At year-end, approximately 22.9 million options were outstanding; potential equity issuance and dilution are relevant investor considerations.
- The company reported effective disclosure controls and effective internal control over financial reporting as of December 31, 2022. KPMG issued an unqualified opinion on the consolidated financial statements; it did not audit internal control effectiveness.
- After year-end, the company petitioned the Delaware Court of Chancery to validate its amended charter and shares issued in reliance on it. The court entered the requested order on March 14, 2023. The company reported no material legal proceedings.
Important facts for investors to verify
- Subsequent NUV-868 trial updates, including safety, tolerability, enrollment, dose selection and any evidence of efficacy.
- Whether the planned DDC IND submission occurred and the resulting clinical-development timeline and costs.
- Cash burn, investment portfolio value and management’s runway assumptions as development spending changes.
- Whether discontinued programs or restructuring create further costs, and how future pipeline priorities affect spending.
- Potential dilution from outstanding options, equity plans and other securities, as well as the voting and acquisition rights attached to Class B shares.