Exicure, Inc. — FY2021 Form 10-K
Reporting period: Fiscal year ended December 31, 2021; filed March 25, 2022. Exicure is an early-stage biotechnology company developing spherical nucleic acid (SNA) therapies. It has no approved products and no product sales.
Business context and strategy
In December 2021, Exicure committed to wind down its cavrotolimod (AST-008) immuno-oncology program and its XCUR-FXN Friedreich’s ataxia program, and to focus resources on preclinical SCN9A therapy for neuropathic pain, partnered neuroscience programs with Ipsen (Huntington’s disease and Angelman syndrome), partnered hair-loss programs with AbbVie, and other undisclosed candidates. The company reduced its workforce by approximately 50%, with layoffs implemented through January 2022.
Financial performance and position
| Metric | FY2021 | FY2020 |
|---|---|---|
| Collaboration revenue | $(0.5) million | $16.6 million |
| Research and development expense | $49.0 million | $32.1 million |
| General and administrative expense | $13.1 million | $10.0 million |
| Operating loss | $(62.5) million | $(25.4) million |
| Net loss | $(64.1) million | $(24.7) million |
| Basic and diluted loss per share | $(0.72) | $(0.28) |
| Net cash used in operating activities | $(34.8) million | $(39.3) million |
FY2021 collaboration revenue was negative because a revised AbbVie work plan and increased estimated project hours led to a $2.8 million cumulative revenue reversal; Ipsen contributed $2.3 million of recognized revenue. Exicure received Ipsen’s $20 million upfront payment in 2021, which was deferred and recognized as work is performed. Deferred revenue totaled $28.8 million at year-end. No milestone or royalty revenue had been recognized.
Cash, cash equivalents, short-term investments and restricted cash totaled $48.3 million at December 31, 2021, versus $83.3 million a year earlier. This included $34.6 million cash and cash equivalents, $4.5 million short-term investments and $9.2 million restricted cash. The company reported total assets of $64.9 million, total liabilities of $53.6 million and stockholders’ equity of $11.2 million. Year-end debt principal was $7.5 million; Exicure repaid the remaining balance, plus an approximately $0.5 million exit fee, on March 15, 2022. A significant portion of restricted cash was subject to bank-account requirements under the debt agreement and a lease-related letter of credit.
Operating expenses increased 48%, primarily reflecting higher clinical development costs, including work on programs subsequently wound down, and higher personnel and facility costs. Cash from financing was $1.1 million, as registered offering proceeds were largely offset by $10 million of debt prepayment. Investing activities provided $43.1 million, mainly from net maturities of available-for-sale securities. Margins are not meaningful for this pre-revenue business.
Outlook, risks and unusual items
- Management estimated existing cash and cash equivalents would fund operations into the fourth quarter of 2022, but stated additional financing was needed. The financial statements and auditor’s report raise substantial doubt about the company’s ability to continue as a going concern; there were no committed additional funding sources.
- Management expected 2022 R&D expense to decrease approximately 30–35% from 2021 following restructuring. Exicure planned initial in-vivo SCN9A animal results by year-end 2022 and targeted therapeutic-candidate selection in the second half of 2023. It anticipated potential preclinical milestones from the Ipsen and AbbVie collaborations in 2023; these are not assured.
- Key risks include the early and uncertain stage of the pipeline, dependence on partners and third-party manufacturers, potential clinical and supply-chain delays related to COVID-19, the need for further capital, and potential dilution or loss of program rights if funding is unavailable.
- Exicure disclosed an internal investigation finding that a former neuroscience group leader misreported efficacy data in at least three XCUR-FXN experiments. The data appeared in public presentations and SEC filings from January through August 2021. The company said the conduct was isolated, did not affect other programs or require financial-statement changes, and it intended to strengthen data-integrity procedures. A securities class action and two derivative lawsuits concerning related allegations were pending; damages were not quantified.
- Nasdaq notified the company that its share price was below the $1 minimum bid-price requirement, with an initial compliance deadline of June 28, 2022. The filing reported the stock had not regained compliance as of filing. The December 2021 registered direct offering raised approximately $10.2 million net and included shares and warrants, creating potential dilution.
- After year-end, the CEO changed and several directors resigned. The board also approved repricing eligible employee, executive and director options to the April 1, 2022 closing share price; the company expected to record the impact in the second quarter of 2022.
Most important facts for investors to verify
- Current cash, restricted-cash availability, burn rate and financing runway following the March 2022 debt repayment; the stated runway estimate is not a guarantee.
- Whether Exicure regained Nasdaq’s minimum bid-price compliance and whether further equity financing or dilution occurred.
- Progress and results of SCN9A preclinical work, and whether Ipsen or AbbVie options, milestones or additional payments were achieved.
- Updates on the securities and derivative litigation, data-integrity controls, and any consequences of the XCUR-FXN investigation.
- The filing gives conflicting accumulated-deficit figures: the balance sheet reports $170.1 million at December 31, 2021, while narrative risk disclosure states $188.9 million. Verify the correct figure against the filed financial statements and subsequent disclosures.