Corbus Pharmaceuticals Holdings, Inc. — Q3 2021 Form 10-Q Summary
Business context and reporting period
Corbus is an immunology-focused biotechnology company developing therapies for inflammation, fibrosis, metabolism and immuno-oncology. Its pipeline includes lenabasum, CB1 inverse agonists, CB2 agonists and anti-integrin antibodies CRB-601 and CRB-602. This unaudited Form 10-Q covers the three and nine months ended September 30, 2021, compared with the corresponding 2020 periods.
Key financial metrics
| Metric | Three months ended Sept. 30 | Nine months ended Sept. 30 |
|---|---|---|
| Revenue from awards and licenses | $0.1 million vs. $1.2 million | $0.9 million vs. $3.3 million |
| Research and development expense | $8.7 million vs. $27.5 million | $30.7 million vs. $82.2 million |
| General and administrative expense | $5.3 million vs. $7.7 million | $16.2 million vs. $23.1 million |
| Operating loss | $13.9 million vs. $34.0 million | $46.0 million vs. $102.0 million |
| Net loss | $2.2 million, or $0.02/share, vs. $34.9 million, or $0.43/share | $35.4 million, or $0.29/share, vs. $102.7 million, or $1.37/share |
| Net cash used in operating activities | Not separately reported | $38.5 million vs. $81.5 million |
Product revenue has not been generated. Revenue was primarily recognized from the Cystic Fibrosis Foundation award. Operating margins remain deeply negative; a meaningful product gross margin is not available because the company has no product sales.
At September 30, 2021, cash and cash equivalents were $37.1 million, marketable securities were $69.7 million and restricted cash was $0.7 million. Total current assets were $111.7 million versus current liabilities of $17.1 million, producing working capital of approximately $94.5 million. The company reported an accumulated deficit of $339.5 million.
Long-term debt, net of discount, was $18.6 million. The K2 HealthVentures loan had $20.0 million of principal outstanding plus an approximately $1.2 million final payment, with maturity in August 2024. The company was in compliance with its loan covenants at quarter-end. Operating lease liabilities totaled $7.4 million.
Material changes versus the prior comparable period
- Quarterly R&D expense declined by $18.8 million, primarily because lenabasum clinical, manufacturing and related development activities were winding down.
- Nine-month R&D expense declined by $51.5 million, while G&A expense declined by $6.9 million.
- Net loss improved substantially, primarily because of lower operating expenses and approximately $12.3 million of refundable foreign R&D tax credits recognized in other income.
- The company purchased $77.3 million of marketable securities during the first nine months, resulting in $70.2 million of net investing cash outflow.
- The company raised approximately $60.7 million of gross proceeds, or $58.9 million net of issuance costs, through its at-the-market equity offering during the first nine months. Shares outstanding increased to 125.2 million from 98.9 million at December 31, 2020.
- The company entered into the Milky Way and UCSF license agreements for anti-integrin programs. Upfront payments and related in-process research and development costs increased 2021 R&D expense by approximately $2.2 million.
- A $0.6 million impairment charge was recorded in the third quarter for leasehold improvements after entering into a sublease.
- The K2 derivative liability declined from $0.8 million to $0.1 million, producing a $0.7 million fair-value gain in the first nine months.
Guidance, outlook, commentary and risks
Management expects operating expenses to continue declining after completion of major systemic sclerosis and cystic fibrosis studies in 2020 and the dermatomyositis study in 2021. However, significant losses are expected to continue for at least the next several years as the company funds clinical and preclinical programs, manufacturing and research activities.
Management stated that cash, cash equivalents, marketable securities and restricted cash of approximately $107.5 million at September 30, 2021, together with the expected $2.5 million final CFF milestone, should fund planned operations and capital requirements into the first quarter of 2024. The filing also states that the company will need significant additional capital and may pursue equity, debt, collaboration, grants or other financing. Future funding may be unavailable or dilutive, and insufficient funding could delay, reduce or eliminate clinical and preclinical programs.
The Phase 3 dermatomyositis study of lenabasum, completed in June 2021, did not meet its primary or secondary endpoints. Corbus was seeking FDA feedback on a potential path forward. Topline results from an NIH-sponsored Phase 2 systemic lupus erythematosus study were expected by the end of 2021. For CRB-601, first patient dosing in a solid-tumor program was anticipated in the first half of 2023, subject to IND filing.
The final $2.5 million CFF milestone was billed in October 2021 after submission of the final clinical study report; payment remained subject to CFF acceptance. COVID-19 continued to pose potential risks to operations, clinical development timelines and supply chains. Other principal risks include recurring losses, dependence on additional financing, clinical and regulatory failure, intellectual-property challenges, reliance on third parties, retention of key personnel and uncertainty regarding commercialization.
Most important facts for investors to verify
- Whether CFF accepted the final clinical study report and paid the $2.5 million milestone.
- The impact of the failed dermatomyositis Phase 3 study and the FDA’s position on further lenabasum development.
- Progress, regulatory timing and funding requirements for CRB-601 and CRB-602.
- Actual cash burn and whether the stated runway into the first quarter of 2024 remains achievable.
- Future equity or debt financing needs, potential dilution and the remaining capacity under the $150 million at-the-market facility.
- Compliance with K2 loan covenants and the company’s ability to meet debt and lease obligations.
- The filing’s liquidity figures: approximately $106.9 million of cash, cash equivalents and marketable securities, or approximately $107.5 million including restricted cash.