Celcuity Inc. — Q1 2021 Form 10-Q
Reporting period: Three months ended March 31, 2021; unaudited. Celcuity is a clinical-stage biotechnology company developing its CELsignia companion diagnostic platform and, beginning in April 2021, the drug candidate gedatolisib. The company reported no revenue and has not generated revenue to date.
Financial performance and liquidity
| Metric | Q1 2021 | Q1 2020 | Change |
|---|---|---|---|
| Revenue | None | None | — |
| Research and development expense | $2.24 million | $1.85 million | Up 21% |
| General and administrative expense | $0.56 million | $0.46 million | Up 20% |
| Total operating expenses / operating loss | $2.79 million / ($2.79 million) | $2.31 million / ($2.31 million) | Expenses and loss up 21% |
| Net loss | ($2.79 million) | ($2.25 million) | Loss increased 24% |
| Net loss per share, basic and diluted | ($0.25) | ($0.22) | — |
| Net cash used in operations | $2.52 million | $1.83 million | Cash use increased |
- At March 31, 2021, cash and cash equivalents were $34.94 million, versus $11.64 million at December 31, 2020. Current assets were $35.71 million and current liabilities $1.17 million.
- Stockholders’ equity was $35.17 million; accumulated deficit was $29.11 million. The filing reports no product revenue, so gross profit and operating margins are not applicable.
- Quarter-end liabilities included $12,660 of finance lease liabilities and $200,795 of operating lease liabilities. No material conventional borrowings were reported at quarter-end.
- Cash increased by $23.30 million, principally due to $25.81 million net proceeds from a February follow-on equity offering. The company sold 1,971,100 shares at $14 per share, raising approximately $25.8 million net of discounts and expenses. Q1 ATM sales were small; the ATM agreement was terminated in February.
Material changes and business developments
- R&D expense rose by $0.39 million, mainly from clinical validation and laboratory studies, operational activity, and business development. G&A increased by $0.09 million, primarily from public-company professional fees and directors’ and officers’ insurance.
- Cash interest income fell to $388 from $63,851, primarily reflecting lower market interest rates.
- After quarter-end, on April 8, 2021, Celcuity obtained exclusive worldwide rights to develop and commercialize gedatolisib from Pfizer. It paid a $5 million upfront fee and issued Pfizer $5 million of stock (349,406 shares). Further development and commercial milestones may total up to $330 million, plus tiered royalties in the low-to-mid teens.
- Also after quarter-end, Innovatus funded a $15 million tranche under a loan facility of up to $25 million; additional $5 million tranches depend on milestones and equity-proceeds conditions. The five-year loans are secured by all company assets, accrue interest at the greater of prime or 3.25% plus 5.70%, and carry a 4.5% final fee. Innovatus has a limited conversion right; warrants are issuable with each funded tranche. These transactions are not reflected in March 31 cash or liabilities.
Outlook, management commentary, and risks
- Management said March 31 cash was expected to fund ordinary-course needs for at least 12 months. It also expects R&D and G&A spending to rise as it advances CELsignia tests, clinical trials, gedatolisib, and commercialization preparations; additional capital may be needed.
- Management planned, subject to FDA feedback, to start a Phase 2/3 trial of gedatolisib with palbociclib and endocrine therapy in ER-positive/HER2-negative advanced or metastatic breast cancer in the first half of 2022. Supporting evidence cited includes preliminary Phase 1b results, not definitive confirmatory evidence: an aggregate 60% objective response rate and 75% clinical benefit rate among 88 evaluable patients. Reported serious treatment-emergent events included Grade 3/4 neutropenia in 67%, stomatitis in 27%, and rash in 20%; gedatolisib was discontinued in 10% overall.
- COVID-19-related enrollment delays pushed expected interim FACT-1 and FACT-2 results to late 2021 or early 2022, with final results approximately nine months later. The pandemic also reduced access to tumor tissue and may slow research, trials, and prospective collaborations.
- Key risks include clinical and regulatory uncertainty for CELsignia and gedatolisib, ability to secure pharmaceutical partnerships and reimbursement, adoption by clinicians and patients, competition, intellectual-property protection, financing needs, and reliance on third-party clinical sites and service providers. Clinical-trial accrual estimates and costs may differ from actual results.
- The company reported no material litigation, no off-balance-sheet arrangements, and effective disclosure controls as of March 31, 2021.
Most important facts for investors to verify
- Whether the preliminary gedatolisib response and safety results are confirmed in larger, controlled trials, and whether planned FDA discussions support the Phase 2/3 timetable.
- Actual enrollment, interim and final readout timing for FACT-1, FACT-2, and other CELsignia-selected trials, including the continuing effects of COVID-19.
- Cash runway after the $5 million Pfizer upfront payment and the $15 million Innovatus draw, including interest, fees, collateral, covenants, and the conditions for additional loan tranches.
- Potential dilution from the Pfizer equity issuance, Innovatus conversion right and warrants, and future financing needs.
- Whether CELsignia tests can secure regulatory acceptance, reimbursement, commercial adoption, and durable pharmaceutical collaborations; the filing provides no current revenue base against which to assess commercialization.