Celcuity Inc. — Q2 2023 Form 10-Q
Business context and reporting period. Clinical-stage biotechnology company developing gedatolisib, a pan-PI3K/mTOR inhibitor, and its CELsignia diagnostic platform. The unaudited quarter and six-month periods ended June 30, 2023; the filing was signed August 11, 2023. Celcuity has not generated revenue.
Financial performance and position
| Metric | Q2 2023 | Q2 2022 | Six months 2023 | Six months 2022 |
|---|---|---|---|---|
| Revenue | $0 | $0 | $0 | $0 |
| Research and development | $13.7 million | $8.4 million | $25.0 million | $15.1 million |
| General and administrative | $1.3 million | $1.2 million | $2.6 million | $2.0 million |
| Total operating expenses | $15.1 million | $9.6 million | $27.6 million | $17.1 million |
| Net loss | $14.6 million | $10.0 million | $26.5 million | $17.9 million |
| Basic and diluted loss per share | $0.66 | $0.67 | $1.22 | $1.20 |
- Cash flow: Operating cash used was $22.5 million in H1 2023 versus $17.2 million in H1 2022. Investing activities provided $30.0 million, primarily reflecting net maturities of investments; financing activities provided $0.2 million. Cash and cash equivalents rose $7.7 million to $32.2 million.
- Liquidity: At June 30, 2023, cash, cash equivalents and short-term investments totaled approximately $146.2 million, including $114.0 million of investments. Current assets were $152.8 million and current liabilities $7.1 million.
- Debt: $35.0 million of loan principal was outstanding; carrying value was $36.0 million after accrued payment-in-kind interest and debt costs. Future principal payments, including incurred PIK interest, total $36.6 million, due in 2025–2027. Interest expense was $2.6 million in H1 2023, including $1.0 million of non-cash expense.
- Margins: Not meaningful because the company reported no revenue. Accumulated deficit was $122.8 million at June 30, 2023.
Material changes versus prior comparable periods
- Q2 operating expenses increased 57%, and net loss increased 46%. For H1, operating expenses increased 61%, and net loss increased 48%.
- R&D was the main driver: it rose 64% in Q2 and 66% in H1, primarily due to VIKTORIA-1 Phase 3 trial activity. Management expects R&D spending to continue increasing.
- Interest expense rose substantially, reflecting higher rates and the additional $20 million Term B borrowing funded in December 2022. Higher interest income from larger investment balances and market rates partly offset this expense.
- Common shares outstanding increased to 22.1 million from 21.7 million at December 31, 2022; preferred shares converted into common shares during the period. The company also has substantial outstanding warrants and options.
Outlook, risks, and notable items
- Clinical programs: VIKTORIA-1, a Phase 3 trial of gedatolisib regimens in HR+/HER2− advanced breast cancer, was enrolling patients across selected international sites. Four Phase 2 trials are evaluating other targeted therapies in patients selected using CELsignia.
- Trial timing: Celcuity reported delays in FACT-1 and FACT-2 enrollment and expects interim results in the first half of 2024, with final results approximately nine months later. Further delays remain possible.
- Cash runway: Management believes cash, investments and available Innovatus borrowings will fund operations and obligations for at least the next 12 months. This estimate depends on assumptions; the company may need additional capital, which may not be available on acceptable terms and could dilute shareholders or impose restrictive terms.
- Financing availability: The Innovatus agreement permits additional borrowing tranches subject to clinical milestones, financial covenants and other conditions. The company also had $44.8 million available under its Jefferies at-the-market agreement.
- Pfizer license: The gedatolisib agreement includes development and commercial milestone payments of up to $335 million and tiered royalties in the low-to-mid teens on sales, subject to specified adjustments.
- Other risks and contingencies: Success depends on clinical outcomes, regulatory approvals, commercial adoption, reimbursement, partner relationships and access to capital. One material non-cancelable clinical research commitment was approximately $2.0 million. Celcuity reported no legal proceedings expected to have a material adverse effect.
- Controls: Management concluded disclosure controls were effective; no material change in internal control over financial reporting was reported during Q2.
Key facts for investors to verify
- VIKTORIA-1 enrollment pace, trial execution, and subsequent efficacy and safety updates.
- FACT-1 and FACT-2 timelines and whether interim results arrive in the first half of 2024 as expected.
- Quarterly cash burn, investment balances, and the assumptions underlying management’s at-least-12-month runway estimate.
- Innovatus borrowing conditions, covenants, repayment schedule and accrued PIK interest; any need for additional capital.
- Potential dilution from warrants, options, equity sales and preferred-stock conversions, and the financial implications of Pfizer milestones and royalties.