CNS Pharmaceuticals, Inc. — 2021 Form 10-K
Reporting period: Fiscal year ended December 31, 2021; filed March 3, 2022. This is an annual report, not a standalone fourth-quarter report. CNS is a clinical-stage oncology company with no approved products and no product-sales revenue.
Financial performance and liquidity
| Metric | 2021 | 2020 |
|---|---|---|
| Revenue from product sales | None | None |
| General and administrative expense | $4.68 million | $4.39 million |
| Research and development expense | $9.35 million | $5.06 million |
| Net loss | $14.04 million | $9.46 million |
| Basic and diluted loss per share | $0.53 | $0.57 |
| Cash used in operating activities | $13.54 million | $7.32 million |
- At year-end, cash and cash equivalents were $5.00 million, working capital was $5.34 million, total assets were $8.76 million, and total liabilities were $2.14 million.
- Current notes payable were $387,794, related to short-term insurance financing. The filing reports no material off-balance-sheet arrangements.
- Cash fell from $14.04 million at year-end 2020. The company reported an accumulated deficit of $34.98 million and continuing operating losses.
- In January 2022, CNS raised approximately $11.5 million gross, or $10.6 million net, through a private placement that included common shares and warrants. Management said available funds were expected to support planned operations into the first quarter of 2023, but not beyond. It estimated needing another $12–16 million to complete the Berubicin trial and about $4 million for near-term WP1244/WP1874 preclinical work, in addition to working capital.
Material changes and business developments
- R&D expense increased by approximately $4.28 million, primarily reflecting drug development and clinical-trial costs. Net loss increased by approximately $4.58 million.
- CNS began enrolling patients in its randomized Berubicin trial in the second quarter of 2021 and dosed the first patient in the third quarter. The planned study compares Berubicin with Lomustine in recurrent glioblastoma, with an estimated 243 participants and 2:1 randomization. Overall survival is the primary endpoint.
- The FDA granted Berubicin Fast Track Designation in July 2021. Berubicin had previously received Orphan Drug Designation. Neither designation guarantees approval.
- CNS paid the remaining $800,000 under a UTMDACC-sponsored research agreement; the work produced WP1874, a salt form of WP1244 that CNS plans to prioritize within that portfolio.
Outlook, risks, and unusual items
- Going concern: The auditor highlighted substantial doubt about CNS’s ability to continue as a going concern, citing recurring operating losses. Management’s plans depend on additional financing; the financial statements contain no adjustments for a possible failure to continue as a going concern.
- Clinical and regulatory uncertainty: Berubicin remains investigational. The company’s favorable discussion of earlier Phase 1 observations is based on limited historical data and is not an FDA assessment of efficacy. Further trials may fail, be delayed, or require additional funding or studies.
- Funding and dilution: CNS expects continued losses and relies on future equity, debt, collaborations, or other financing. Additional share issuance could dilute existing holders. Its post-year-end financing included warrants that could add to the share count.
- Related parties and collection: Founder-affiliated HPI and WPD are counterparties to licensing, supply, and other arrangements. At year-end, CNS had invoiced WPD $656,938 for Berubicin product and related costs but recorded no receivable because of collectability concerns. WPD paid $131,073 after year-end; the company said it was working to resolve the remaining amounts.
- Intellectual property and operations: Licensed U.S. Berubicin patents expired in March 2020, leaving Orphan Drug exclusivity as the company’s primary stated protection, subject to exceptions. CNS depends on third-party manufacturers and has no sales organization.
- Controls and listing: Management found internal control over financial reporting ineffective due to inadequate segregation of duties and insufficient formal documentation. CNS also disclosed that its stock was below Nasdaq’s $1 minimum bid-price requirement, with an initial compliance deadline of August 17, 2022; a reverse split was among the options it might consider.
Important facts for investors to verify
- Berubicin trial enrollment, interim-analysis timing, safety findings, and whether the study can demonstrate a statistically significant overall-survival benefit.
- Cash runway and the amount, timing, and terms of additional financing needed to complete the trial and fund other programs.
- Collection of the remaining WPD invoices and any further related-party transactions or changes to those arrangements.
- Progress in remediating the material weakness in internal controls and CNS’s status under Nasdaq listing requirements.
- The practical scope of Berubicin’s intellectual-property and potential orphan-drug protection, including any additional patent filings.