Calidi Biotherapeutics, Inc. — Q1 2024 Form 10-Q
Reporting period: Three months ended March 31, 2024. The unaudited statements are prepared under U.S. GAAP. Calidi is a clinical-stage immuno-oncology company developing cell-based delivery platforms for oncolytic viruses; it has no products approved for sale and reported no product revenue.
Financial results and liquidity
| Metric | Q1 2024 | Q1 2023 |
|---|---|---|
| Revenue | No product revenue | No product revenue |
| Research and development expense | $2.743 million | $2.622 million |
| General and administrative expense | $4.009 million | $2.792 million |
| Operating loss | $6.752 million | $5.414 million |
| Net loss | $7.225 million | $6.462 million |
| Basic and diluted loss per share | $0.20 | $0.75 |
| Cash used in operating activities | $3.831 million | $3.107 million |
Margins are not meaningful because the company has no product revenue. At March 31, 2024, cash was $1.143 million and restricted cash was $0.218 million; current liabilities were $14.953 million and the reported working-capital deficit was approximately $13.0 million. Total liabilities were $21.978 million, including debt with a net carrying value of $7.611 million. Accumulated deficit was $106.8 million.
Q1 financing activities provided $3.013 million, primarily from $3.0 million of convertible-note proceeds and a $0.2 million related-party bridge loan, partly offset by financing costs. Cash and restricted cash declined $0.806 million during the quarter.
Changes versus the prior comparable period
- Net loss increased $0.763 million, or 12%; operating expenses rose $1.338 million, or 25%.
- R&D expense increased $0.121 million, or 5%, reflecting higher consulting, regulatory, and personnel costs, partly offset by lower laboratory spending.
- G&A expense increased $1.217 million, or 44%, mainly due to higher legal and insurance costs, partly offset by lower salaries and benefits.
- Other expense declined to $0.469 million from $1.044 million. Lower fair-value-related expense partly offset the absence of $0.691 million of CIRM grant income recognized in Q1 2023.
- Operating cash use increased $0.724 million to $3.831 million.
Outlook, risks, contingencies and notable items
- Going concern: Management said available resources were insufficient to fund operations for at least 12 months after issuance of the financial statements, raising substantial doubt about the company’s ability to continue as a going concern. The filing further states that cash available as of May 10 was insufficient to continue operations through June 2024 without additional short-term capital. Calidi expects continued losses and negative cash flows and will need further financing; financing may not be available on acceptable terms.
- Subsequent financing: On April 18, 2024, the company closed a public offering of 13,232,500 common-stock units and 1,965,000 pre-funded-warrant units at an effective combined price of $0.40, for approximately $6.1 million gross proceeds before fees and expenses. The filing does not state net proceeds. A $1.0 million convertible note converted into restricted shares in connection with the offering; a separate $1.5 million note was repaid April 19.
- Potential dilution: The offering and outstanding or issuable warrants, convertible notes, options, and registered resale securities may dilute existing holders. The company also agreed to seek shareholder approval for a reverse stock split in a 1-for-10 to 1-for-50 range and related share-issuance matters; the meeting was scheduled for June 6, 2024.
- Development outlook: Management expected a Phase 1b trial of CLD-101 for newly diagnosed high-grade glioma to begin in Q3 2024, and a Phase 1 trial of CLD-201/SNV1 for advanced solid tumors in the second half of 2024. The CLD-101 recurrent-glioma study had begun treating patients in May 2023 and was enrolling cohort 4 in January 2024. These are stated plans, not assurances of timing or results.
- Debt and related parties: Debt carrying value was $7.611 million, with a reported weighted-average interest rate of approximately 13.5%. Certain term notes bear interest as high as 24%; $2.455 million of related-party term notes, including accrued interest, was classified as current at quarter-end. Several financing and deferred-compensation arrangements involve related parties.
- Commitments and legal matters: The filing reports manufacturing and supplier commitments of approximately $6.9 million in the notes, with approximately $6.5 million incurred; the MD&A separately cites $0.4 million of supplier commitments. The difference is not clearly reconciled in the filing text. Other items include a $0.5 million severance payment due June 2024 and ongoing litigation, including a former finance officer’s claims. A physician dispute was settled with restricted shares and warrants.
- Other material risks: Clinical, regulatory, manufacturing, intellectual-property, capital-raising, market-volatility, and dilution risks could materially affect results. Management stated disclosure controls were effective at the reasonable-assurance level as of March 31, 2024, with no material quarterly change in internal control over financial reporting.
Most important facts for investors to verify
- Current cash runway after the April offering, net proceeds after fees, and whether additional financing is required.
- Debt balances, near-term payment obligations, and the terms and potential conversion dilution of notes and warrants.
- Actual progress and funding for the planned CLD-101 and CLD-201 clinical trials.
- The reconciliation of supplier commitments reported as $6.9 million in the notes versus $0.4 million in the MD&A.
- Reverse-split and share-issuance vote outcomes, post-offering share count, and potential dilution from resale registrations and equity-linked securities.
- Developments in the pending litigation and the company’s ability to meet its going-concern assumptions.