Xilio Therapeutics, Inc. — Q2 2022 Form 10-Q
Reporting period: Three and six months ended June 30, 2022. Xilio is a clinical-stage biotechnology company developing tumor-selective cancer immunotherapies using its GPS platform. Its lead candidates, XTX101 and XTX202, were in Phase 1 trials; XTX301 was in preclinical development.
Financial results and liquidity
| Metric | Q2 2022 | Q2 2021 | Six months 2022 | Six months 2021 |
|---|---|---|---|---|
| Revenue | None; the company has not generated product revenue | |||
| Research and development expense | $16.2 million | $17.7 million | $31.2 million | $29.4 million |
| General and administrative expense | $8.3 million | $5.3 million | $14.6 million | $10.2 million |
| Net loss | $24.6 million | $23.2 million | $46.0 million | $39.8 million |
| Net loss per share | $0.90 | $31.48 | $1.68 | $55.16 |
| Cash used in operating activities | Not presented quarterly | $37.6 million | $42.9 million |
The per-share comparison reflects the 2021 IPO and conversion of preferred shares into common stock; share amounts were retroactively adjusted for the 1-for-9.5 reverse split. As a pre-revenue company, conventional profit margins are not meaningful.
- Cash and cash equivalents were $159.4 million at June 30, 2022, down from $198.1 million at December 31, 2021. Cash, cash equivalents and restricted cash totaled $161.0 million.
- Management expected existing cash to fund operating expenses and capital expenditures into the first half of 2024. This estimate is subject to assumptions and risks; the company expects continued losses and negative operating cash flows and will need additional capital.
- Notes payable totaled $9.7 million net of discount ($3.3 million current; $6.4 million long-term). The $10.0 million principal loan bears a variable rate, 5.0% as of June 30, and matures June 30, 2024. The company reported covenant compliance and could request up to an additional $10.0 million before December 31, 2022.
- Total assets were $178.1 million, total liabilities $33.9 million, and stockholders’ equity $144.2 million. No income tax provision or benefit was recorded.
Material changes versus prior periods
- Q2 net loss increased $1.4 million year over year; first-half net loss increased $6.1 million.
- First-half R&D expense rose $1.8 million. Higher XTX301 development and manufacturing, personnel, and other program costs were partly offset by lower XTX202 manufacturing and preclinical costs compared with the prior-year period.
- First-half G&A expense rose $4.4 million, mainly from increased headcount, equity compensation, and public-company costs; professional and consulting fees declined.
- Q2 R&D expense decreased $1.5 million, primarily because prior-year XTX202 manufacturing and preclinical activity was higher. Q2 G&A increased $3.0 million.
- First-half operating cash use improved to $37.6 million from $42.9 million, while investing cash use increased to $1.0 million from $0.6 million. The prior-year period included $144.9 million of net preferred-stock financing proceeds; first-half 2022 financing cash use was less than $0.1 million.
Outlook, risks and unusual items
- The company planned to submit an IND for XTX301 in Q4 2022. It anticipated no product-sale revenue for at least several years, if ever, and expected expenses and operating losses to continue.
- Key uncertainties include clinical and preclinical outcomes, safety, enrollment and trial timing, regulatory approvals, manufacturing and reliance on third parties, competition, intellectual-property protection, and access to additional capital. The company also cited potential COVID-19 effects, inflation, workforce constraints, and China-related supply and trade risks.
- Q2 and first-half G&A included $0.6 million of non-recurring equity compensation related to modification of previously issued stock options.
- Disclosure controls and procedures were assessed as effective at the reasonable-assurance level as of June 30, 2022; no material change in internal control over financial reporting was reported for the quarter.
Investor verification points
- Track clinical updates and timelines for XTX101 and XTX202, and whether the planned XTX301 IND submission occurred.
- Compare actual cash burn and spending with the stated runway into the first half of 2024; assess financing needs and potential dilution.
- Monitor R&D spending by program, including manufacturing and clinical-trial costs, and the effect of higher G&A and equity compensation.
- Review the PacWest loan terms, interest-rate exposure, repayment schedule, collateral, and whether the additional borrowing option is used.
- Evaluate trial safety, enrollment, third-party manufacturing and supply concentration, and the company’s ability to obtain regulatory and intellectual-property protections.