Corbus Pharmaceuticals Holdings, Inc. — Q1 2023 Form 10-Q Summary
Business context and reporting period
Corbus Pharmaceuticals Holdings, Inc. is a precision oncology company developing CRB-701, a Nectin-4 antibody-drug conjugate, and CRB-601, an anti-integrin monoclonal antibody targeting TGFβ activation. The company is also seeking partners for further development of CRB-913, a preclinical obesity program. The filing covers the three months ended March 31, 2023. Corbus has not generated product revenue, has incurred recurring losses since inception, and operates as a single reportable segment.
Financial performance and liquidity
| Metric | Q1 2023 | Q1 2022 | Change |
|---|---|---|---|
| Revenue | $0 | $0 | No change |
| Research and development expense | $13.4 million | $3.3 million | +$10.1 million |
| General and administrative expense | $3.9 million | $5.2 million | -$1.3 million |
| Total operating expenses | $17.3 million | $8.5 million | +$8.8 million |
| Net loss | $17.7 million | $9.4 million | Loss increased by $8.3 million |
| Net loss per share | $4.24 | $2.26 | Loss per share increased |
| Net cash used in operating activities | $15.1 million | $10.6 million | Use increased by $4.5 million |
At March 31, 2023, cash and cash equivalents were $7.3 million, investments were $36.9 million, and total cash, cash equivalents, investments, and restricted cash were approximately $44.9 million. Working capital was approximately $31.5 million. The company reported an accumulated deficit of approximately $409.8 million.
Total liabilities were $35.2 million, including approximately $19.0 million of net carrying value for the K2 secured term loan. The loan has a principal and final payment obligation totaling $21.6 million, matures August 1, 2024, and carried a 13.25% interest rate at March 31, 2023. The company was in compliance with its debt covenants.
Material changes versus the prior comparable period
- Research and development expense increased primarily because of the $7.5 million CSPC license payment for CRB-701, a $1.2 million UCSF development milestone, and higher manufacturing costs as CRB-601 advanced toward clinical development.
- General and administrative expense declined primarily due to lower Venn Therapeutics litigation costs, lower stock-based compensation, and lower insurance premiums.
- Operating cash usage increased, while investing cash flow was positive because of proceeds from sales and maturities of marketable securities.
- On February 14, 2023, Corbus completed a 1-for-30 reverse stock split. On March 7, 2023, Nasdaq confirmed that the company had regained compliance with the minimum bid price requirement and that the delisting matter was closed.
- In February 2023, Corbus entered into the CSPC License Agreement for exclusive rights to develop and commercialize CRB-701 in the United States, Canada, the European Union, the United Kingdom, and Australia.
- Common shares outstanding increased to 4,215,133 at March 31, 2023 from 4,171,297 at December 31, 2022, primarily due to stock-option exercises.
Guidance, outlook, risks, and unusual items
- Management expects total 2023 expenses to remain generally consistent with 2022, with higher research and development expense as programs progress and lower other operating expenses because certain 2022 legal and settlement costs are not expected to recur.
- Management expects CRB-701 to support a U.S. clinical trial beginning in mid-2024, subject to bridging data from the ongoing Phase 1 trial in China.
- CRB-601 is scheduled for an IND submission in the second half of 2023, with first-patient enrollment in a Phase 1 study expected by the end of 2023.
- Management states that cash, cash equivalents, and investments of approximately $44.2 million at March 31, 2023 should fund operations and capital requirements through at least the second quarter of 2024 based on planned expenditures. The company nevertheless expects to require significant additional capital and may need to delay, scale back, or discontinue activities if financing is unavailable.
- The CSPC arrangement includes a $7.5 million upfront payment, up to $130 million of development and regulatory milestones, up to $555 million of commercial milestones, and low double-digit royalties on net sales. The company paid $5.0 million during Q1 2023 and recorded the full upfront obligation, including $2.5 million in other long-term liabilities.
- The company recorded a material weakness in internal control over financial reporting related to the completeness, accuracy, and timeliness of accruals for upfront payments and issue fees under licensing agreements. Disclosure controls and procedures were therefore concluded to be ineffective as of March 31, 2023.
- On May 7, 2023, the board ratified the issuance of 36,757 shares on March 8 and 7,079 shares on March 20 after determining that the shares had been issued on a pre-reverse-split basis and could constitute defective corporate acts or putative stock.
- Key risks include continued operating losses, dependence on additional financing, clinical and regulatory uncertainty, intellectual-property protection, reliance on third parties, potential dilution, debt obligations, and the possibility that product candidates may never achieve approval or commercial success.
Important facts for investors to verify
- Available liquidity and the company’s financing plan relative to projected cash burn through and after the second quarter of 2024.
- Progress toward the CRB-601 IND submission and the planned CRB-701 U.S. clinical trial.
- Terms, milestones, royalty obligations, and future cash requirements under the CSPC, UCSF, Milky Way, and Jenrin license agreements.
- Remediation of the reported material weakness in internal control over financial reporting.
- Repayment schedule and covenant compliance for the K2 secured loan, including the August 2024 maturity and variable interest rate.
- Resolution and legal effect of the ratification of the post-reverse-split stock-option exercises.