Candel Therapeutics, Inc. — Q2 2023 Form 10-Q
Reporting period: Three and six months ended June 30, 2023. Candel is a clinical-stage biopharmaceutical company developing viral immunotherapies; it has no approved products and has not generated product-sales revenue.
Financial performance and liquidity
Amounts below are in millions, except per-share data.
| Metric | Q2 2023 | Q2 2022 | Six months 2023 | Six months 2022 |
|---|---|---|---|---|
| Revenue | $0 | $0.031 | $0 | $0.063 |
| Research and development expense | $5.934 | $5.022 | $11.403 | $10.438 |
| General and administrative expense | $3.645 | $3.762 | $7.809 | $7.364 |
| Operating loss | $(9.579) | $(8.753) | $(19.212) | $(17.739) |
| Net loss | $(9.614) | $(4.149) | $(18.409) | $(5.023) |
| Basic and diluted loss per share | $(0.33) | $(0.14) | $(0.64) | $(0.17) |
| Net cash used in operating activities | Not stated for quarter | Not stated for quarter | $(18.014) | $(15.150) |
- Cash and cash equivalents were $51.9 million at June 30, 2023, down from $70.1 million at December 31, 2022. Including restricted cash, period-end cash was $52.2 million.
- Current assets were $53.4 million and current liabilities $8.2 million. Stockholders’ equity was $30.8 million; accumulated deficit was $117.5 million.
- The company reported $21.1 million of debt in MD&A: a $20.0 million SVB term loan principal balance and a $1.0 million Periphagen note. The term loan’s net carrying value was $20.4 million. Its effective interest rate was 10.55% at June 30, 2023; principal installments begin February 2024, and the loan matures January 2026.
- No product-sales margins are reported because there are no product sales. Operating expenses are primarily R&D and G&A.
Material changes versus prior period
- Q2 net loss increased by $5.5 million year over year; six-month net loss increased by $13.4 million. Operating expenses rose $0.8 million in Q2 and $1.4 million over six months.
- R&D costs increased, mainly from higher employee-related, clinical development, manufacturing and regulatory costs. Six-month G&A also increased, chiefly from employee compensation and professional fees, partly offset by lower insurance and recruiting costs.
- Warrant fair-value income was substantially lower than in 2022: $0.1 million in Q2 2023 versus $5.0 million in Q2 2022, and $0.9 million for the first half versus $13.3 million. This noncash item materially affected the year-over-year net-loss comparison.
- Interest income increased with higher returns on cash equivalents, while interest expense increased as variable borrowing rates rose. Six-month cash used in operations increased to $18.0 million; no financing cash was raised in the period, compared with $19.9 million of term-loan proceeds in first-half 2022.
Outlook, developments and risks
- Management estimates existing cash will fund the current operating plan into the second quarter of 2024, but states that substantial doubt exists about the company’s ability to continue as a going concern for the one-year period following issuance of the financial statements. Additional funding is required; no external funding source is committed. Equity or debt financing, grants, collaborations or licensing may be pursued, with potential dilution or concessions of rights.
- CAN-2409: topline data from the fully enrolled Phase 3 prostate-cancer trial and Phase 2 active-surveillance trial are expected in Q4 2024. The NSCLC Phase 2 trial’s topline overall-survival data are expected in Q2 2024; additional clinical and biomarker data were expected in Q3 2023. The FDA granted fast track designation for CAN-2409 with pembrolizumab in specified Stage III/IV NSCLC. The FDA’s Special Protocol Assessment for the prostate trial does not assure approval.
- The CAN-2409 Phase 2 pancreatic-cancer trial paused new enrollment in March 2023 pending additional funding; initial clinical data were still expected in Q4 2023.
- CAN-3110 is in an investigator-sponsored Phase 1 trial for recurrent high-grade glioma. The company reported encouraging preliminary survival and biomarker observations, while noting that further studies and follow-up are ongoing. An extension is evaluating repeat dosing.
- On June 7, 2023, an amendment with Periphagen resolved an arbitration dispute. Rights to NT-3 and Gene Transfer Neuro-Assets reverted to Periphagen; Candel retained specified oncology rights to remaining licensed IP.
- Key risks include clinical efficacy and safety uncertainty, regulatory and manufacturing delays, reliance on third parties and licensed IP, future financing needs, variable-rate debt, and possible dilution. The company reported no other litigation management considers probable to have a material adverse effect. Disclosure controls were assessed as effective at the reasonable-assurance level.
Most important facts for investors to verify
- Whether the company raises sufficient capital, on acceptable terms, to fund operations beyond its stated runway and address the going-concern uncertainty.
- Upcoming trial data and timelines for CAN-2409 and CAN-3110, including whether preliminary results hold with longer follow-up and final analyses.
- The extent and timing of any additional enrollment pauses, spending changes or program prioritization tied to financing.
- SVB loan terms, rising interest costs and principal repayment requirements beginning in 2024.
- Potential dilution: 7.5 million warrants were outstanding, in addition to 6.4 million stock options and 0.6 million unvested restricted shares; these securities were excluded from diluted loss per share as anti-dilutive.