CytomX Therapeutics, Inc. — Q2 2021 Form 10-Q
Reporting period: Quarter and six months ended June 30, 2021. Unaudited U.S. GAAP interim results. CytomX is a clinical-stage oncology biopharmaceutical company developing antibody-based therapies using its Probody platform. It has no approved products or product-sales revenue.
Financial results and liquidity
Amounts in $ millions, except per-share data.
| Metric | Q2 2021 | Q2 2020 | Six months 2021 | Six months 2020 |
|---|---|---|---|---|
| Revenue | 16.3 | 16.6 | 32.3 | 66.2 |
| Research and development | 26.1 | 24.1 | 48.5 | 66.9 |
| General and administrative | 9.4 | 8.7 | 18.6 | 18.3 |
| Operating loss | (19.2) | (16.1) | (34.8) | (18.9) |
| Net loss | (19.2) | (15.7) | (34.8) | (3.5) |
| Basic and diluted loss per share | $(0.30) | $(0.34) | $(0.55) | $(0.08) |
- Q2 revenue was down $0.3 million year over year; first-half revenue fell $33.9 million. The decline mainly reflects milestone revenue recognized from AbbVie and Bristol Myers Squibb (BMS) in 2020, partly offset by growing Astellas collaboration revenue.
- Q2 R&D expense increased $2.0 million, largely due to timing of manufacturing, laboratory and tissue-sampling activity. First-half R&D expense declined $18.4 million, primarily because 2020 included substantial sublicense and clinical/manufacturing costs.
- First-half 2020 net loss was comparatively low in part because it included a $13.9 million income-tax benefit from CARES Act net operating loss carrybacks. CytomX reported no income-tax benefit in the first half of 2021.
- Cash, cash equivalents and investments totaled $366.1 million at June 30, 2021, versus $316.1 million at December 31, 2020. Cash and cash equivalents were $256.1 million; short- and long-term investments were $10.0 million and $99.9 million, respectively.
- First-half operating cash use was $58.1 million, compared with $47.4 million provided in the prior-year period. Investing activities provided $13.0 million; financing activities provided $109.4 million, including $107.7 million net proceeds from a January/February follow-on stock offering.
- Total assets were $402.4 million and total liabilities were $271.5 million. The filing reports no conventional borrowings; liabilities included $230.6 million of deferred revenue and $23.3 million of operating lease liabilities. Accumulated deficit was $484.9 million.
- Management stated that available capital was expected to fund planned operations for at least 12 months from issuance of the financial statements, while also noting that additional funding will be needed in the future. No gross-profit margin is presented.
Material changes and business developments
- Shares outstanding increased from 48.3 million at December 31, 2020 to 65.2 million at June 30, 2021, primarily reflecting the 16.4 million-share follow-on offering. This raised $107.7 million net and diluted existing shareholders.
- Collaboration revenue remains the company’s sole reported revenue source. Q2 revenue was led by BMS ($7.4 million), Astellas ($4.9 million), AbbVie ($2.1 million) and Amgen ($1.9 million).
- Deferred revenue declined from $261.1 million at year-end 2020 to $230.6 million at June 30, 2021, as amounts received under existing agreements were recognized. The filing estimates recognition through 2025 across major collaborations, subject to actual progress and other factors.
Outlook, risks and contingencies
- Management expected initial data from the praluzatamab ravtansine (CX-2009) Phase 2 study in 2022, citing COVID-19-related site-initiation and enrollment delays. Initial CX-2029 Phase 2 data were expected in Q4 2021. CytomX was working toward an IND filing for partnered CX-904 in late 2021; FDA written responses to its pre-IND questions were expected in Q3 2021.
- Management expects significant ongoing losses and R&D investment. Timing and costs of development are uncertain, and future funding may require additional collaborations, equity or debt financing, or spending reductions. Any equity financing could further dilute shareholders.
- Key risks include clinical-trial failure, delays or adverse safety findings; COVID-19 effects on enrollment, research and operations; dependence on collaborators and third-party clinical and manufacturing providers; manufacturing scale-up and supply continuity; regulatory and reimbursement uncertainty; competition; and intellectual-property disputes.
- A patent-infringement lawsuit filed by Vytacera Bio in Delaware alleges infringement involving Probody technology used in basic research applications and seeks unspecified damages. CytomX considers the case without merit and intends to defend it; discovery was ongoing. No liability accrual was recorded, and the potential loss range was not reasonably estimable.
- Management reported effective disclosure controls and procedures as of June 30, 2021, with no material change in internal control over financial reporting during the quarter. The filing reports no off-balance-sheet arrangements and no material change in contractual obligations.
Important facts for investors to verify
- Whether trial enrollment and data timelines for CX-2009, CX-2029 and CX-904 remain on schedule, and whether COVID-19 or other factors cause further delays.
- Whether the $366.1 million of cash and investments and management’s stated runway remain adequate as trial spending and operating losses evolve.
- How collaboration progress, milestone timing and deferred-revenue recognition affect future revenue and operating cash flow, particularly given the 2020 milestone-driven comparison.
- Clinical efficacy, safety and tolerability data for the pipeline, including risks associated with targets expressed in healthy tissues and the Probody platform’s still-developing clinical evidence.
- Developments in the Vytacera litigation, manufacturing and supply-chain reliability, and the need and terms of future financing.