Cellectar Biosciences, Inc. — Q2 2019 Form 10-Q
Reporting period: Quarter and six months ended June 30, 2019. Cellectar is a clinical-stage biopharmaceutical company developing cancer therapies using its phospholipid drug conjugate platform. It reported no product revenue and is funding research and clinical development primarily through securities offerings.
Financial results and liquidity
| Metric | Q2 2019 | Q2 2018 | Six months 2019 | Six months 2018 |
|---|---|---|---|---|
| Research and development expense | $1.81 million | $1.72 million | $4.12 million | $3.80 million |
| General and administrative expense | $1.39 million | $1.18 million | $2.71 million | $2.56 million |
| Total operating costs and expenses | $3.20 million | $2.90 million | $6.83 million | $6.36 million |
| Net loss | $3.19 million | $2.92 million | $6.81 million | $6.40 million |
| Basic and diluted loss per share | $0.46 | $1.69 | $1.15 | $3.75 |
Revenue and profit margins are not applicable because the filing reports no product revenue and continuing losses. Six-month cash used in operating activities was $5.47 million, compared with $5.73 million in 2018. Cash and cash equivalents were $16.85 million at June 30, 2019, versus $13.26 million at December 31, 2018; the MD&A gives the prior-period figure as $13.31 million including restricted cash. Total liabilities were $3.15 million, including $576,000 of lease liabilities; the filing reports no material borrowings.
In May 2019, the company raised approximately $10 million gross, or $9.02 million net, through common stock and warrant offerings. It ended the quarter with $15.99 million of stockholders’ equity and an accumulated deficit of $104.40 million.
Changes versus the prior comparable period
- Q2 net loss increased by approximately $267,000 year over year; six-month net loss increased by approximately $413,000.
- Q2 R&D expense rose 5%, mainly from pediatric-trial startup and increased clinical-trial recruitment and manufacturing costs. Six-month R&D rose 8%; lower preclinical and general R&D costs partly offset higher clinical costs.
- Q2 G&A expense rose 18%, primarily due to consulting, investor-relations and other public-company costs. Six-month G&A rose 6%, with personnel, public-company and rent costs partly offset by lower legal fees and restructuring charges.
- Cash increased principally because of the May offering. Common shares outstanding increased from 4.73 million at year-end to 9.39 million at June 30, alongside warrant issuance and preferred-stock conversions.
Outlook, developments and risks
- Management said available cash was expected to fund basic budgeted operations for at least 12 months from the filing of the financial statements. The company expects continuing operating losses and may need additional financing; there is no assurance funding will be available on acceptable terms or in time. Its prior-year audit report included a going-concern explanatory paragraph.
- CLR 131 was being evaluated in a Phase 2 study across relapsed or refractory B-cell malignancies and Phase 1 studies in multiple myeloma and pediatric cancers. Management expected top-line Phase 2 CLOVER-1 data in Q4 2019. The filing reported encouraging interim findings, but these were early clinical results and not evidence of approval or commercial success.
- The FDA granted Fast Track designation for CLR 131 in multiple myeloma in May 2019 and in DLBCL in July 2019. The filing also described plans for a head-and-neck cancer trial in Q4 2019. These are development milestones, not guarantees of regulatory approval.
- CLR 131 was no longer subject to the supplier CPDC’s import alert for the company’s existing INDs after FDA exemptions. Cellectar nevertheless identifies dependence on key suppliers, clinical and regulatory uncertainty, future financing needs, competition and the possibility that candidates may fail as material risks.
- The May financing included immediately exercisable five-year Series F and Series G warrants, each with a $2.40 exercise price. Potential dilution is significant: the filing listed 9.32 million outstanding warrants at June 30, 2019, in addition to options and convertible preferred shares.
- The company reported no material litigation. It adopted lease accounting standard ASC 842 in 2019; adoption had no material net impact on the income statement. Management stated disclosure controls were effective and reported no significant change in internal control over financial reporting.
Important facts for investors to verify
- Whether cash use and clinical-development spending remain consistent with the stated minimum 12-month operating runway, and when further financing may be required.
- Full results and timing for CLOVER-1 and the Phase 1 studies, including safety, efficacy, enrollment and trial costs.
- Warrant and preferred-stock terms, potential share issuance, and the resulting dilution from future exercises or financings.
- Continued CLR 131 supply, manufacturing capacity and the status of planned trials and regulatory interactions.