Corbus Pharmaceuticals Holdings, Inc. — Form 10-Q Summary
Business Context and Reporting Period
Corbus Pharmaceuticals is a clinical-stage biotechnology company developing immune modulators for immuno-oncology, fibrosis, obesity and related metabolic diseases. Its pipeline includes anti-integrin antibodies CRB-601 and CRB-602, second-generation CB1 inverse agonists, and lenabasum, a CB2 agonist. This report covers the three and six months ended June 30, 2022, and was filed August 9, 2022.
The company has not generated product-sales revenue, has incurred recurring losses since inception, and reports an accumulated deficit of approximately $372.4 million at June 30, 2022.
Financial Performance and Position
| Metric | Three Months Ended June 30 | Six Months Ended June 30 |
|---|---|---|
| Revenue | $0 in 2022; $0.1 million in 2021 | $0 in 2022; $0.8 million in 2021 |
| Research and development expense | $2.5 million; $11.3 million in 2021 | $5.8 million; $22.0 million in 2021 |
| General and administrative expense | $4.8 million; $5.6 million in 2021 | $10.1 million; $10.9 million in 2021 |
| Litigation settlement expense | $5.0 million; none in 2021 | $5.0 million; none in 2021 |
| Net loss | $13.2 million, or $0.11 per share | $22.7 million, or $0.18 per share |
| Cash flow from operations | Not separately disclosed for the quarter | $(22.8) million |
Operating margins are not meaningful because revenue was zero in 2022. The six-month operating loss was $20.9 million, compared with $32.1 million in 2021. Other expense was $1.8 million for the six months, including interest expense of $0.9 million and foreign exchange losses of $0.5 million.
At June 30, 2022, cash and cash equivalents were $25.8 million, investments were $47.5 million, and restricted cash was $0.7 million. Total current assets were $75.2 million and current liabilities were $15.6 million, producing working capital of approximately $59.6 million. Stockholders’ equity was $49.5 million.
Total debt had a net carrying value of approximately $19.1 million, including the K2 HealthVentures secured loan. The loan’s principal, including the final payment, was $21.2 million, with $7.5 million classified as current. The loan matures August 1, 2024, bears interest at 10% at June 30, 2022, and is secured by substantially all company assets. The company was in compliance with its debt covenants.
Material Changes Versus the Prior Comparable Period
- Net loss declined to $13.2 million from $17.1 million for the quarter and to $22.7 million from $33.2 million for the six-month period.
- Research and development expense declined substantially, primarily because lenabasum clinical studies were completed or winding down, along with lower compensation, consulting and license-related costs.
- General and administrative expense declined modestly, although legal costs increased.
- A $5.0 million litigation settlement charge was recorded in 2022 relating to Venn Therapeutics. The settlement was paid May 26, 2022, and all claims were dismissed with prejudice.
- Revenue from the Cystic Fibrosis Foundation award ended after the related research and development activities were completed in 2021. No additional revenue is expected from that award.
- Cash increased by approximately $0.8 million during the first six months, as operating cash usage was more than offset by net proceeds from investment maturities and sales. No common stock was sold under the company’s at-the-market facility in 2022.
- Shares outstanding increased slightly to 125.3 million from 125.2 million at December 31, 2021, primarily from restricted stock vesting.
Guidance, Outlook, Risks and Unusual Items
Management expects expenses to continue declining in 2022 because of completed lenabasum studies and reduced personnel, but expects significant operating losses to continue for at least the next several years. The company does not plan additional clinical studies for lenabasum and intends to seek licensing partners for future development.
CRB-601 is in development for solid tumors and was scheduled for an FDA investigational new drug submission in the first half of 2023. CRB-602 remains at the discovery stage, while the CB1 inverse agonist program is progressing through preclinical studies and regulatory pathway evaluation.
Management stated that cash, cash equivalents and investments of approximately $73.3 million at June 30, 2022 were expected to fund operations and capital requirements into the first quarter of 2024 based on current plans. The company also states that it will need significant additional capital and may pursue equity, debt, collaboration, grant or other financing. Financing may be unavailable or dilutive, and insufficient funding could delay, scale back or eliminate clinical and preclinical activities.
The company’s public float was approximately $37.5 million as of the filing date, subjecting it to the SEC “baby shelf” limitation. Based on the filing, it could sell no more than approximately $12.5 million of securities under a shelf registration statement in any 12-month period while the public float remains below $75 million.
Potential obligations include up to $18.4 million in milestones per compound under the Jenrin license, $53.0 million under the Milky Way license and $153.0 million under the UCSF license, in addition to royalties. No milestone payments had been made under these agreements as of June 30, 2022. Operating lease payments totaled approximately $7.8 million before imputed interest, partially offset by expected sublease inflows of approximately $1.1 million.
Management reported effective disclosure controls and no material change in internal control over financial reporting. The filing states that there were no material changes to the risk factors included in the 2021 Form 10-K.
Important Facts for Investors to Verify
- Verify the company’s actual cash runway against the stated first-quarter 2024 estimate, including the timing of debt amortization beginning under the K2 facility.
- Monitor the need, size, timing and potential dilution of future financing, particularly given the baby shelf restriction and continuing operating losses.
- Track the CRB-601 IND submission and subsequent clinical development milestones, as well as progress of CRB-602 and the CB1 program.
- Assess whether any licensing or partnering transaction for lenabasum can generate cash and trigger payments to the Cystic Fibrosis Foundation.
- Review the $21.2 million K2 debt obligation, its security interests, variable interest rate and August 2024 maturity.
- Evaluate potential license milestone and royalty obligations, which could become material if programs advance or are partnered.
- Reconcile the filing’s liquidity references: approximately $73.3 million of cash, cash equivalents and investments versus approximately $74.0 million including restricted cash.