Celcuity Inc. — Q3 2022 Form 10-Q
Reporting period: Three and nine months ended September 30, 2022. Celcuity is a clinical-stage biotechnology company developing gedatolisib and its CELsignia diagnostic platform. It has generated no revenue to date.
Financial results and liquidity
| Metric | Q3 2022 | Q3 2021 | Nine months 2022 | Nine months 2021 |
|---|---|---|---|---|
| Revenue | $0 | $0 | $0 | $0 |
| Research and development expense | $9.62 million | $4.96 million | $24.69 million | $20.27 million |
| General and administrative expense | $1.02 million | $0.64 million | $3.07 million | $1.77 million |
| Net loss | $10.89 million | $6.03 million | $28.79 million | $22.85 million |
| Basic and diluted loss per share | $0.75 | $0.41 | $1.95 | $1.78 |
| Cash used in operating activities | Not separately stated | Not separately stated | $26.53 million | $14.19 million |
At September 30, 2022, cash and cash equivalents were $57.48 million, total assets were $65.29 million, total liabilities were $21.77 million, and stockholders’ equity was $43.53 million. Accumulated deficit was $84.72 million. The company reported approximately $15.0 million of long-term debt, including accrued payment-in-kind interest and fees net of unamortized costs and discount. It had no material revenue or profit margins to report.
Management stated that cash on hand, based on its current business plan, was expected to fund operations and obligations for at least the next 12 months. Cash declined $26.80 million during the first nine months of 2022. The $5.86 million increase in prepaid assets was a major operating cash use; financing activities used $0.23 million in the period.
Changes versus prior comparable periods
- Q3 operating expenses rose 90% to $10.64 million, and net loss increased 81% to $10.89 million. R&D expense increased 94%, primarily from existing clinical trials and activities supporting VIKTORIA-1.
- For the first nine months, operating expenses increased 26% and net loss increased 26%. R&D rose $4.42 million despite the prior-year period including a $10 million Pfizer license expense; other R&D costs increased as clinical and trial-startup activity expanded.
- Interest expense increased to $1.43 million for nine months, reflecting a full-year-to-date period under the loan and a higher interest rate. Interest income also increased, to $0.39 million, with higher market rates.
- Cash was $57.48 million versus $84.29 million at December 31, 2021. The prior-year nine-month cash flow included substantial equity-offering and loan proceeds; 2022 had no comparable large financing inflow through September 30.
Outlook, developments, and risks
- Celcuity initiated the Phase 3 VIKTORIA-1 study of gedatolisib in HR+/HER2- advanced breast cancer in 2022; 200 sites had been selected and the first site activated in Q3. The protocol includes multiple treatment arms based on PIK3CA status. Gedatolisib received FDA Breakthrough Therapy Designation in July 2022; the designation does not assure faster approval or eventual approval.
- The company amended its Innovatus facility in August 2022 to provide up to $75 million in term loans. The additional tranches are conditional on the private placement, clinical milestones, and financial covenants. The facility is secured by company assets and carries interest, fees, and potential lender conversion rights.
- A $100 million private placement agreement remained contingent on, among other conditions, the first VIKTORIA-1 patient receiving treatment at a U.S. site by December 31, 2022; investors could terminate if that milestone was not met by then. The filing does not report that the placement had closed by September 30.
- After quarter-end, on October 12, the company sold 500,000 shares under its Jefferies at-the-market agreement, producing $5.2 million gross and $4.8 million net proceeds.
- COVID-19-related enrollment delays were expected to push interim results from the FACT-1 and FACT-2 CELsignia Phase 2 trials to mid-2023, with final results approximately nine months later. Further trial or collaboration delays remained possible.
- Management expects R&D and G&A expenses to increase as development, trials, infrastructure, and potential commercialization activities advance. Key risks include clinical-trial execution and enrollment, regulatory approval, access to additional capital, dependence on Pfizer-licensed gedatolisib rights, commercialization and reimbursement uncertainty for CELsignia, competition, and COVID-19 disruption.
- Unusual item: an amendment to the representative’s warrant reduced exercisable shares from 138,000 to 70,000 and extended the exercise period to September 2025. Its estimated incremental value of approximately $272,000 was treated as a deemed dividend and increased reported loss per share by $0.02.
Most important facts to verify
- Whether VIKTORIA-1 achieved the U.S. first-patient dosing milestone by December 31, 2022, and whether the $100 million private placement subsequently closed.
- Actual cash runway and burn relative to management’s at-least-12-month estimate, including the effect of trial spending and the October ATM proceeds.
- Availability and conditions of each undrawn Innovatus tranche, including financial covenants, fees, and potential conversion or repayment obligations.
- Updated enrollment, timelines, and results for VIKTORIA-1 and the delayed FACT-1 and FACT-2 trials.
- Whether CELsignia tests can demonstrate clinical utility, secure pharmaceutical partners, and obtain regulatory acceptance and reimbursement.