Nurix Therapeutics, Inc. — Form 10-K Summary
Period clarification: The filing is the annual report for the fiscal year ended November 30, 2021, not a standalone 2020 Q4 filing. The figures below are annual unless otherwise noted.
Business context and reporting period
Nurix is a clinical-stage biopharmaceutical company developing small-molecule therapies that modulate cellular protein levels using its DELigase platform. Its four wholly owned clinical-stage programs are NX-2127 and NX-5948, BTK degraders for relapsed or refractory B-cell malignancies; NX-1607, an oral CBL-B inhibitor for immuno-oncology; and DeTIL-0255, an investigational cell therapy using NX-0255 ex vivo. The company had no approved products and generated no product-sales revenue.
Financial performance and position
| Metric | FY2021 | FY2020 |
|---|---|---|
| Collaboration revenue | $29.8 million | $17.8 million |
| Research and development expense | $116.4 million | $66.5 million |
| General and administrative expense | $31.2 million | $16.3 million |
| Total operating expenses | $147.6 million | $82.8 million |
| Operating loss | $117.9 million | $65.0 million |
| Net loss | $117.2 million | $43.2 million |
| Basic and diluted loss per share | $2.73 | $2.76 |
| Net cash used in operating activities | $84.4 million | $0.1 million |
Collaboration revenue increased 66.9%, mainly from greater research activity and milestone-related revenue under the Sanofi and Gilead agreements. R&D expense rose 75.1% as staffing, discovery and preclinical work, manufacturing preparation, and clinical trial startup and enrollment increased. G&A expense rose 91.3%, including higher personnel, stock-based compensation, and public-company costs. The company’s operating loss exceeded collaboration revenue; a product-based profit margin is not applicable because there were no product sales.
At November 30, 2021, cash and cash equivalents were $80.5 million, short- and long-term investments totaled $352.4 million, and cash, cash equivalents and investments totaled $432.9 million. Current assets were $311.1 million, current liabilities $66.3 million, and working capital $244.9 million. No borrowings are reported in the balance sheet; operating lease liabilities totaled $13.0 million. The company reported an accumulated deficit of $220.9 million.
FY2021 investing cash outflow was $108.3 million, largely reflecting investment purchases net of maturities and sales; financing cash inflow was $153.9 million, primarily from the March 2021 follow-on offering. The offering generated approximately $150.2 million net proceeds. In 2020, operating cash flow was close to breakeven partly because collaboration cash receipts increased deferred revenue. Management said existing cash, cash equivalents and investments were expected to fund operations for at least 12 months after the filing’s financial statements were issued.
Material changes versus the prior comparable period
- Net loss increased to $117.2 million from $43.2 million, while collaboration revenue rose to $29.8 million from $17.8 million.
- Operating cash use increased substantially, from $0.1 million to $84.4 million, as research and development activity expanded.
- FY2020 included a $20.5 million income tax benefit, primarily related to CARES Act NOL carrybacks and changes in uncertain tax-benefit reserves. FY2021 had a $0.1 million tax expense; this makes reported net-loss comparisons less representative of operating trends.
- Nurix raised approximately $150.2 million net in a March 2021 common-stock offering. It also had an at-the-market facility permitting up to $150 million in stock sales, none sold under it as of November 30, 2021.
- Cash and investments rose from $372.0 million at November 30, 2020 to $432.9 million at November 30, 2021, notwithstanding operating cash use, supported by financing proceeds.
Outlook, commentary, risks and unusual items
Management expected to advance all four clinical programs during 2022. It anticipated identifying an NX-2127 Phase 1b expansion dose and beginning disease-specific cohorts around mid-2022, with clinical updates in the second half of 2022. It expected initial NX-1607 findings around mid-2022 and initial NX-5948 and DeTIL-0255 findings in the second half of 2022; these are forward-looking expectations, not guaranteed outcomes. The company also anticipated starting NX-5948 enrollment in the first half of 2022. The filing reported early NX-2127 evidence of oral bioavailability and BTK degradation in circulating B cells among the first six patients at the two lowest doses, including a clinical response in the first patient; this is preliminary early-stage evidence.
Sanofi and Gilead had provided $300.5 million in aggregate non-dilutive funding to date. As of November 30, 2021, Nurix was eligible for up to approximately $2.5 billion in potential future Sanofi payments and $2.3 billion in potential Gilead payments, plus royalties, subject to contractual conditions and milestones. These potential amounts are not committed funding or assured revenue. Collaboration revenue recognition relies on estimated costs to complete, particularly internal employee resources; this was identified by the auditor as a critical audit matter.
- Funding and development: Nurix expects continuing losses and substantial future funding needs. Clinical candidates are early-stage, and safety, efficacy, regulatory approval, and commercial success are uncertain.
- Manufacturing and trials: The company relies on third-party manufacturers and research organizations, has no long-term supply arrangements for key materials, and identified potential COVID-19-related disruption risks.
- Intellectual property: As of the filing, the company reported pending patent applications but no issued patents it owned or licensed covering its drug candidates. It also disclosed a third-party patent that could be alleged to cover CTMs including NX-2127 or NX-5948.
- Financial controls: Management and the auditor concluded internal control over financial reporting was ineffective at November 30, 2021 due to material weaknesses in IT general controls and segregation of duties for reconciliations and manual journal entries. The weaknesses did not result in reported financial-statement misstatements; remediation was ongoing.
- Other items: The company reported no material legal proceedings. Its 2021 operating lease commitments totaled $17.6 million undiscounted, including future lease payments; the balance sheet recorded $13.0 million of lease liabilities.
Important facts for investors to verify
- Whether clinical updates and enrollment timelines for NX-2127, NX-5948, NX-1607, and DeTIL-0255 were achieved, and what final patient-level safety and efficacy data show.
- How quickly cash and investments are being consumed as clinical programs expand, and whether additional financing or ATM stock sales are needed.
- Whether Sanofi or Gilead achieve contractual milestones, and the timing and conditions for any resulting payments; distinguish contingent potential payments from cash already received.
- Progress in remediating the disclosed internal-control material weaknesses and the auditor’s assessment in subsequent filings.
- Patent prosecution and freedom-to-operate developments, including the disclosed third-party patent concern for CTMs.
- Whether manufacturing capacity, trial enrollment, or COVID-19 effects alter development costs or timelines.