Celcuity Inc. 10-Q Summary: Period Ended June 30, 2020
Business Context and Reporting Period
Celcuity Inc. is a clinical-stage biotechnology company developing companion diagnostics using its proprietary CELsignia platform to identify cancer sub-types in living tumor cells. The company has not generated any revenue to date. This report covers the quarterly and six-month periods ended June 30, 2020. The company is classified as an emerging growth company and a smaller reporting company.
Key Financial Metrics
| Metric | Six Months Ended June 30, 2020 | Six Months Ended June 30, 2019 |
|---|---|---|
| Revenue | $0 | $0 |
| Net Loss | $(4,448,984) | $(3,566,086) |
| Net Loss Per Share (Basic & Diluted) | $(0.43) | $(0.35) |
| Cash and Cash Equivalents (End of Period) | $15,430,559 | $14,917,690 |
| Net Cash Used in Operating Activities | $(3,389,646) | $(2,816,953) |
| Total Assets | $16,702,450 | $20,280,800 (Dec 31, 2019) |
| Accumulated Deficit | $(21,296,390) | $(16,847,406) (Dec 31, 2019) |
Material Changes vs. Prior Period
- Operating Expenses: Total operating expenses increased by approximately 19% to $4.52 million for the six months ended June 30, 2020, compared to $3.82 million in the prior year period.
- Research and Development (R&D): Increased 18% to $3.61 million, driven primarily by a $0.52 million increase in compensation-related expenses, including $0.36 million in non-cash stock-based compensation.
- General and Administrative (G&A): Increased 21% to $0.91 million, primarily due to higher non-cash stock-based compensation.
- Interest Income: Decreased significantly by 70% to $75,834 for the six-month period, attributed to lower market interest rates compared to the prior year.
- Liquidity: Cash and cash equivalents decreased by approximately $3.3 million during the six-month period, primarily due to net cash used in operating activities.
Outlook, Risks, and Management Commentary
- Capital Resources: Management believes current cash of approximately $15.4 million is sufficient to fund operations for at least the next twelve months. The company entered into an At-The-Market (ATM) issuance agreement on June 5, 2020, allowing for the sale of up to $10 million in common stock. Approximately $0.15 million was raised through this facility in the quarter.
- Clinical Trials: The company is conducting two interventional clinical trials (FACT-1 and FACT-2) for HER2-negative breast cancer. Due to the COVID-19 pandemic, patient enrollment has been delayed. Interim results are now expected in the second half of 2021, with final results approximately nine months later.
- COVID-19 Impact: The pandemic has caused delays in clinical trial enrollment and reduced the flow of tumor tissue specimens from clinical sites. While the laboratory remains operational, workforce constraints and remote work policies may impact productivity.
- Future Development: The company expects to complete development of a new CELsignia test for RAS signaling in breast and ovarian cancer by the end of 2020. It also plans to launch additional tests for nine new potential cancer sub-types over the coming years.
Key Facts for Investor Verification
- Revenue Status: Verify that the company has generated zero revenue to date and relies entirely on capital raises and existing cash reserves.
- Cash Burn Rate: Confirm the sustainability of the current cash balance ($15.4M) against the reported operating cash burn of ~$3.4M per six months.
- Clinical Trial Timelines: Monitor the impact of COVID-19 on the revised timelines for the FACT-1 and FACT-2 trials, specifically the delay of interim results to late 2021.
- Stock-Based Compensation: Note that a significant portion of the increase in operating expenses is non-cash stock-based compensation ($0.89M for the six months), which impacts net loss but not immediate cash flow.
- ATM Facility: Track the utilization of the $10 million ATM facility as a primary source of future liquidity.