CytomX Therapeutics, Inc. — Q1 2021 Form 10-Q
Reporting period: Three months ended March 31, 2021; unaudited. CytomX is a clinical-stage oncology biotechnology company developing antibody-based therapies using its Probody platform. It has no products approved for sale and depends mainly on collaboration revenue and financing.
Financial performance
| Metric | Q1 2021 | Q1 2020 |
|---|---|---|
| Revenue | $16.0 million | $49.6 million |
| Research and development expense | $22.4 million | $42.8 million |
| General and administrative expense | $9.2 million | $9.6 million |
| Operating loss | $15.6 million | $2.8 million |
| Net income (loss) | $(15.6) million | $12.2 million |
| Operating cash flow | $(29.9) million | $(49.7) million |
- Revenue fell $33.6 million year over year, chiefly because Q1 2020 included recognition of part of AbbVie’s $40 million CD71 development milestone and a $10 million Bristol Myers Squibb milestone. Q1 2021 revenue included $1.2 million from AbbVie, $2.6 million from Amgen, $4.8 million from Astellas and $7.4 million from BMS.
- Q1 2020 net income reflected a $13.9 million income tax benefit from CARES Act net operating loss carrybacks; no income tax benefit was recorded in Q1 2021. CytomX reported an accumulated deficit of $465.7 million at March 31, 2021.
- R&D expense decreased $20.4 million, mainly due to lower collaboration sublicense fees and lower laboratory, manufacturing and clinical-trial activity. G&A expense declined $0.3 million. Interest income was $0.1 million, down from $1.1 million, primarily due to lower interest rates.
- Cash, cash equivalents and short-term investments totaled $393.8 million at March 31, 2021, versus $316.1 million at December 31, 2020. The quarter-end balance comprised $329.7 million of cash and cash equivalents and $64.1 million of short-term investments.
- Cash increased by $137.8 million during the quarter, including $108.7 million net financing proceeds, primarily from a January–February public offering. The offering issued 16.4 million shares for approximately $107.7 million in net proceeds.
- No borrowings are reported. Total liabilities were $288.1 million, including $245.9 million of deferred revenue and $24.1 million of operating lease liabilities. Current assets were $400.0 million and current liabilities $98.0 million. The filing does not present a gross margin measure.
Material changes and business developments
- Revenue mix shifted substantially from Q1 2020, when milestone recognition drove higher AbbVie and BMS revenue, to Q1 2021, when Astellas and BMS were the largest reported contributors. Deferred revenue was $245.9 million at quarter end, expected to be recognized over time, with timing subject to collaboration progress and other factors.
- In February 2021, CytomX amended its BMS agreement: BMS retained exclusive worldwide rights for up to five oncology targets, the target-selection period was extended, and CytomX may receive up to $1.779 billion in contingent milestones plus royalties. CytomX will no longer receive research and development service fees under the arrangement. Potential milestones remained fully constrained from revenue recognition.
- The company completed its underwritten public offering, increasing shares outstanding to 65.0 million at March 31, 2021 from 48.3 million at December 31, 2020.
Outlook, commentary and risks
- Management expects existing capital resources to fund operations for at least 12 months from issuance of the financial statements, but says additional funding will be needed in the future. The company expects significant losses to continue; operating results and revenue may fluctuate with collaboration activity, milestones and research spending.
- Management expected initial data from the Phase 2 studies of praluzatamab ravtansine (CX-2009) and CX-2029 in Q4 2021. CX-2009 was being studied in breast cancer arms, including monotherapy and combination treatment; CX-2029 was being studied across four cancer cohorts.
- Manufacturing delays meant CytomX no longer expected to submit an IND for CX-2043 in 2021. It planned to file an IND for partnered candidate CX-904 in late 2021.
- Key risks include clinical-trial safety, efficacy and enrollment uncertainty; dependence on collaborators and third-party manufacturers; manufacturing and supply interruptions; COVID-19-related disruption; potential future financing and dilution; and competition. The company specifically cites known hematologic toxicities with CX-2029 and ocular toxicity with CX-2009.
- A patent infringement lawsuit filed by Vytacera Bio in Delaware seeks unspecified damages; discovery was ongoing. CytomX considers the suit without merit, intends to defend it and had recorded no accrual.
- Management stated disclosure controls were effective as of March 31, 2021, with no material change in internal control over financial reporting during the quarter.
Most important facts for investors to verify
- Whether the planned Q4 2021 clinical data became available and how the results, safety profile and enrollment compare with expectations.
- Whether CX-2043 manufacturing delays and the CX-904 IND timeline affected development plans.
- Whether collaboration milestones, partner decisions and deferred-revenue recognition support future revenue, given the prior-year milestone-driven comparison.
- How quickly cash is being used as trials advance, and whether additional financing is required; the stated runway is an estimate based on management’s operating plan.
- Developments in the Vytacera litigation and any material changes to manufacturing, COVID-19 or other clinical-trial risks.