Celcuity Inc. — Q3 2023 Form 10-Q
Reporting period: Three and nine months ended September 30, 2023. Celcuity is a clinical-stage oncology biotechnology company developing gedatolisib and its CELsignia companion diagnostic platform. It has not generated revenue and remains unprofitable.
Key financial metrics
| Metric | Q3 2023 / September 30, 2023 | Comparable period / prior year-end |
|---|---|---|
| Revenue | None | None to date |
| Operating expenses | $18.9 million for Q3; $46.5 million for nine months | $10.6 million and $27.8 million, respectively, in 2022 |
| Net loss | $18.4 million for Q3; $44.9 million for nine months | $10.9 million and $28.8 million, respectively, in 2022 |
| Net loss per share | $0.83 for Q3; $2.05 for nine months | $0.75 and $1.95, respectively, in 2022 |
| Cash and cash equivalents | $25.8 million | $24.6 million at December 31, 2022 |
| Short-term investments | $108.2 million | $144.0 million at December 31, 2022 |
| Operating cash flow | $(35.3) million for nine months | $(26.5) million in 2022 |
| Debt | $35.0 million principal outstanding; $36.5 million carrying value including accrued PIK interest, net of costs and discount | $35.0 million principal and $35.0 million carrying value at December 31, 2022 |
Gross margin is not applicable because the company had no revenue. Interest income was $5.5 million for the first nine months of 2023, versus $0.4 million in 2022; interest expense was $3.9 million versus $1.4 million. Total assets were $142.4 million and stockholders’ equity was $92.9 million at quarter-end. No income tax benefit was recorded.
Material changes versus prior comparable periods
- Q3 operating expenses rose 78% year over year, and nine-month expenses rose 68%. Research and development drove most of the increase, primarily due to VIKTORIA-1 Phase 3 trial activity.
- Net loss increased 69% for Q3 and 56% for the nine-month period. Higher interest income partly offset operating losses, while interest expense increased mainly following the December 2022 funding of a $20 million loan tranche.
- Cash used in operations increased to $35.3 million for the first nine months. Cash and investments together were $133.9 million at September 30, compared with $168.6 million at year-end 2022.
- Common shares outstanding increased to 22.4 million from 21.7 million at year-end 2022. Preferred-stock conversions and employee equity activity contributed to share-count changes.
Outlook, developments and risks
- VIKTORIA-1, a Phase 3 trial of gedatolisib-based regimens for HR+/HER2- advanced breast cancer, was enrolling patients. Management expects R&D and general and administrative expenses to increase as trials and development activities expand.
- Management expected to initiate the CELC-G-201 Phase 1b/2 trial of gedatolisib plus darolutamide for metastatic castration-resistant prostate cancer in Q1 2024. The FDA had cleared the IND, and Bayer agreed to supply darolutamide at no cost.
- The FACT-2 Phase 2 study in early-stage triple-negative breast cancer was terminated after new FDA-approved treatment options adversely affected enrollment and made the study infeasible. FACT-1 interim results were expected in the first half of 2024.
- After quarter-end, a private placement of pre-funded warrants closed on October 20, 2023, generating approximately $50 million gross proceeds before expenses. The warrants are exercisable for up to 5.75 million shares at a $0.001 exercise price; the investors paid $8.699 per warrant. The company expects to use net proceeds for gedatolisib development and general corporate purposes.
- Management stated that cash, cash equivalents, investments and available Innovatus borrowings were expected to fund operations and obligations for at least 12 months, based on its current plan. The estimate depends on assumptions; the company may need additional capital, which could dilute shareholders or impose restrictive terms.
- The Innovatus facility permits up to $75 million in loans; $35 million principal was outstanding at quarter-end, with additional tranches subject to clinical milestones, financial covenants and other conditions. Future principal payments, including accrued PIK interest, total approximately $37.1 million and are scheduled for 2025–2027.
- The Pfizer gedatolisib license includes potential development and commercial milestone payments of up to $335 million and tiered royalties in the low-to-mid teens on sales. Key risks include clinical and regulatory outcomes, trial cost and enrollment uncertainty, commercialization and reimbursement, competition, financing needs, and reliance on partners.
Important facts for investors to verify
- VIKTORIA-1 enrollment, trial timelines and future clinical readouts, including FACT-1 and CELC-G-201 progress.
- Cash burn and runway assumptions, including the effect of the October 2023 financing and any future financing needs.
- Conditions and availability of remaining Innovatus loan tranches, debt repayment terms and accumulated PIK interest.
- Potential dilution from the October warrant issuance, existing warrants, preferred stock and equity compensation.
- Clinical-trial cost estimates and the impact of enrollment, site activity or changes in clinical-service estimates on reported expenses.