Lyell Immunopharma, Inc. — Q2 2023 Form 10-Q
Reporting period: Three and six months ended June 30, 2023. Lyell is a clinical-stage cell therapy company with no products approved for sale and no product-sales revenue.
Financial performance and position
| Metric | Q2 2023 | Q2 2022 | Six months 2023 | Six months 2022 |
|---|---|---|---|---|
| Revenue | $0.027 million | $35.7 million | $0.092 million | $36.3 million |
| Research and development | $47.5 million | $43.7 million | $92.1 million | $79.5 million |
| General and administrative | $19.0 million | $30.5 million | $38.3 million | $64.9 million |
| Net loss | $63.9 million | $36.3 million | $130.8 million | $104.5 million |
| Operating cash used | Not stated for quarter | Not stated for quarter | $85.4 million | $92.2 million |
- At June 30, cash and cash equivalents were $224.4 million and marketable securities were $408.3 million, for combined liquidity of $632.7 million. Total assets were $835.4 million; total liabilities were $98.5 million; stockholders’ equity was $736.9 million.
- Lyell had no debt outstanding. Current liabilities were $34.4 million. Operating lease liabilities totaled $66.1 million, including $5.9 million current; undiscounted lease payments were $89.1 million.
- Six-month investing cash flow was $185.1 million provided, primarily reflecting net sales and maturities of marketable securities; financing cash flow provided $1.1 million. Cash, cash equivalents and restricted cash increased $100.8 million to $224.7 million.
- Gross margin is not meaningful for this pre-commercial company. Six-month loss per share was $0.52, versus $0.43 in 2022.
Material changes and notable items
- Revenue fell sharply because GSK terminated its collaboration in December 2022 and Lyell expects no further revenue from it. The 2022 comparison included a $35.3 million revenue adjustment following a change in estimated project costs; substantially all 2022 revenue was related-party revenue.
- Six-month R&D expense increased $12.6 million, mainly from personnel, clinical-trial and research costs and expanded manufacturing and development capabilities. G&A decreased $26.6 million, primarily due to lower stock-based compensation and legal and consulting costs. Six-month stock-based compensation was $28.1 million, down from $44.4 million.
- Lyell recorded $12.9 million of investment impairment in the first half: $10.0 million in Q1 and $2.9 million in Q2, including a full impairment of its PACT Pharma Series D investment. Higher interest income partly offset operating losses, while impairment contributed to the first-half net loss increase.
Outlook, risks and contingencies
- Management expects existing cash, cash equivalents and marketable securities to fund operations into 2026; the financial-statement liquidity note separately states resources should cover at least the next 12 months from issuance. The company anticipates ongoing losses and expects to need additional capital to complete development.
- LYL797 and LYL845 were in Phase 1 trials, with initial data expected in 2024. An IND submission for preclinical candidate LYL119 was expected in the first half of 2024. These are forward-looking expectations, not reported outcomes.
- Key risks include clinical efficacy and safety uncertainty, enrollment and manufacturing challenges, reliance on third parties and specialized materials, regulatory uncertainty, and the possibility of needing dilutive or otherwise costly financing. Management cited macroeconomic, inflation, supply-chain and financial-market uncertainty.
- Success-payment liabilities were $3.8 million; no payments had been triggered. Agreements with Fred Hutch and Stanford allow potential payments of up to $400 million combined at specified share-price thresholds, payable in cash or, at Lyell’s option, publicly traded shares.
- An unused at-the-market program permits up to $200 million of share sales. Lease and collaboration commitments and possible future contingent payments are additional cash demands. The company reported no material legal proceedings and no material change in internal control over financial reporting during the quarter; management judged disclosure controls effective.
Important facts for investors to verify
- Progress, enrollment, safety and timing of data from the LYL797 and LYL845 Phase 1 trials, and the LYL119 IND timeline.
- Whether the stated runway into 2026 remains supportable as clinical, manufacturing and operating spending evolves, and whether additional financing is needed.
- Further changes in investment valuations or impairments, and the assumptions underlying the success-payment liabilities and contingent obligations.
- Potential dilution from equity compensation, the unused ATM facility, or settlement of success payments in shares.
- Manufacturing capacity, facility qualification, patient-specific supply reliability and clinical-trial enrollment trends.