Imunon, Inc. (formerly Celsion Corporation) — Q3 2022 Form 10-Q
Reporting period: Quarter and nine months ended September 30, 2022. Financial statements are unaudited. The company changed its name to Imunon and began trading as IMNN on September 21, 2022.
Business context and outlook
Imunon is a clinical-stage biotechnology company developing nucleic-acid therapies and vaccines. Its lead candidate, GEN-1, is in Phase II development for advanced ovarian cancer; its PLACCINE platform is in preclinical development, including SARS-CoV-2 vaccine studies. The OVATION 2 trial completed enrollment of 110 patients in September 2022; topline results were expected in the first half of 2024.
Financial results and liquidity
| Metric | Q3 2022 | Q3 2021 | Nine months 2022 | Nine months 2021 |
|---|---|---|---|---|
| Licensing revenue | $125,000 | $125,000 | $375,000 | $375,000 |
| Operating expenses | $6.30 million | $5.19 million | $18.37 million | $15.89 million |
| Operating loss | $6.17 million | $5.06 million | $17.99 million | $15.52 million |
| Net loss | $6.15 million | $5.41 million | $22.67 million | $16.55 million |
| Basic and diluted loss per share | $0.87 | $0.94 | $3.42 | $3.12 |
Revenue was licensing revenue recognized from a prior Hisun agreement, not product sales. Gross margin is not presented as a meaningful operating measure. Q3 research and development expense was $2.41 million, down 2.4% year over year; general and administrative expense was $3.89 million, up 43.1%, primarily due to higher legal fees. Nine-month R&D rose 14.4% to $8.73 million, while G&A increased 16.7% to $9.64 million, chiefly reflecting higher professional fees.
- Cash and investments: At September 30, cash and cash equivalents were $26.94 million, short-term investments $10.41 million, and interest receivable $0.03 million. Another $6.0 million was restricted as collateral for the SVB loan. Management reported $43.4 million in total cash, investments, interest receivable, and restricted cash.
- Cash flow: Nine-month operating cash use was $18.07 million; investing activities provided $19.15 million, largely reflecting investment maturities and sales; financing activities provided $6.28 million.
- Liquidity: Current assets were $40.19 million and current liabilities $8.46 million, for working capital of $31.73 million. Management estimated about $3.5 million of potential future proceeds from New Jersey net operating loss sales and believed available resources could fund operations into 2025.
- Debt: SVB loan carrying value was approximately $5.99 million, secured by the $6.0 million restricted-cash account. The loan bears a variable WSJ Prime-based rate, reported as 6.25% at the filing date; scheduled principal payments begin in 2023. Nine-month interest expense was $4.88 million, including $4.55 million associated with the redeemed preferred stock.
Material changes and notable items
- Nine-month net loss increased by $6.12 million year over year. The increase included a one-time $4.55 million preferred-stock-related charge in Q1 2022; operating expenses also rose by $2.48 million.
- The company raised $28.5 million gross through redeemable preferred stock in January 2022, then redeemed all of it in March for 105% of stated value. It recognized the related $4.55 million expense, including redemption premium, placement fees, and legal fees.
- An April 2022 common-stock offering generated $7.0 million gross. The company reported 7.10 million common shares outstanding at September 30 and 7.43 million as of November 9. After quarter-end, it sold 329,511 shares under its ATM agreement for net proceeds of $494,445 through November 7.
- The company effected a 1-for-15 reverse stock split in March 2022. Investment securities declined to $10.41 million from $29.80 million at year-end 2021; the filing reports $17.45 million of net cash proceeds from investment sales and maturities during the first nine months.
- No impairment was recorded for the $13.37 million ovarian-cancer in-process R&D asset after the company’s September review. The $5.40 million earn-out milestone liability was unchanged.
Risks, contingencies, and management commentary
Management expects continued operating losses and states that additional financing may be needed sooner or in greater amounts than anticipated. If sufficient funds are unavailable, the company may have to delay, reduce, or terminate research, clinical, manufacturing, or commercialization activities. Potential financing may dilute shareholders or require unfavorable terms. Management also cites clinical-development and regulatory uncertainty, patient enrollment, market volatility, inflation, supply-chain pressures, COVID-19, and geopolitical conditions as risks. The company reported no material changes to the risk factors in its 2021 Form 10-K.
Four proceedings remain disclosed: a securities class action, a derivative shareholder action, a books-and-records demand, and an arbitration concerning ThermoDox manufacturing invoices. The company says it intends to contest them; likelihood of loss and any possible loss range could not be determined. The filing reported effective disclosure controls as of September 30, 2022.
Most important facts for investors to verify
- Whether the OVATION 2 topline-results timing and clinical outcomes matched the stated first-half 2024 expectation.
- Actual cash burn, financing needs, and whether the projected runway into 2025 remains achievable, including realization of planned New Jersey NOL-sale proceeds.
- Subsequent share issuance, ATM usage, and resulting dilution; note the share count had increased by November 9.
- Progress and costs of GEN-1 and PLACCINE development, and any material regulatory, trial, or manufacturing updates.
- Developments in the four legal matters and any change in potential financial exposure.