Corvus Pharmaceuticals, Inc. — Q3 2021 Form 10-Q
Reporting period: Three and nine months ended September 30, 2021; unaudited. Corvus is a clinical-stage biopharmaceutical company developing oncology and immune-modulating therapies. It reported no product revenue, so gross margin is not applicable.
Financial highlights
| Metric | Q3 2021 | Q3 2020 | Nine months 2021 | Nine months 2020 |
|---|---|---|---|---|
| Revenue | None | None | None | None |
| Research and development | $7.0m | $6.6m | $24.3m | $24.6m |
| General and administrative | $2.1m | $3.2m | $7.5m | $9.2m |
| Total operating expenses | $9.0m | $9.8m | $31.8m | $33.9m |
| Net loss | $10.7m | $9.8m | $34.0m | $33.3m |
| Basic and diluted loss per share | $0.24 | $0.33 | $0.84 | $1.13 |
| Cash used in operating activities | Not separately provided for quarter | $29.9m | $26.6m |
Q3 net loss increased despite lower total operating expenses, chiefly reflecting a $1.7m share of losses from Angel Pharmaceuticals, in which Corvus held approximately 49.7%. The nine-month loss also included $2.3m of Angel-related equity-method losses. Lower reported loss per share versus 2020 coincided with a larger weighted-average share count.
At September 30, 2021, Corvus had $72.3m cash and cash equivalents and $4.0m marketable securities, or $76.3m combined, versus $44.3m at December 31, 2020. Total assets were $119.3m; total liabilities were $14.2m; and accumulated deficit was $257.1m. The filing reports no borrowings or other financial debt; operating lease liabilities totaled $3.9m. Nine-month financing cash inflow was $62.1m, primarily from a February follow-on offering ($32.0m net) and at-the-market stock sales ($29.0m net). Shares outstanding rose from 28.4m at year-end 2020 to 46.5m at September 30, 2021.
Material developments and outlook
- Pipeline: Mupadolimab, CPI-818, and ciforadenant were in clinical development. Corvus began enrolling expansion cohorts of up to 15 patients each for mupadolimab in advanced HPV-positive head and neck cancer and relapsed/refractory NSCLC, in combination with pembrolizumab.
- COVID-19 Phase 3 trial: Corvus discontinued the mupadolimab trial in July 2021 as COVID-19 vaccines were reducing serious infections and hospitalizations; the decision was not attributed to safety or efficacy concerns. Preliminary results from 40 participants favored treatment cohorts on the primary endpoint, but the filing states the data were not sufficiently powered for statistical significance.
- CPI-818: Angel Pharmaceuticals received China IND approval in October 2021 and planned to start a Phase 1/1b trial in early 2022.
- Ciforadenant: Corvus planned a Phase 2 first-line metastatic renal-cell-cancer study with the Kidney Cancer Consortium, targeting up to 60 patients. The filing gives no specific start date.
- Liquidity outlook: Management expected existing cash, cash equivalents, and marketable securities to fund planned operations for at least 12 months from issuance of the financial statements. It also stated resources would not fund all ongoing and planned development through commercialization and that additional financing would be required. The company expects continued losses and increased development spending.
Risks, contingencies, and unusual items
- Key risks include clinical-trial outcomes and delays, patient enrollment, regulatory approval, reliance on third-party manufacturers and research organizations, and the need for additional capital. Financing may dilute shareholders or be unavailable on acceptable terms.
- COVID-19 could disrupt trial enrollment, sites, supplies, and regulatory interactions, and affect access to capital.
- In Q2, Corvus recorded a $0.9m out-of-period foreign-currency translation adjustment related to 2020; management concluded it was not material to the 2020 or Q1 2021 financial statements.
- The September 2021 lease amendment extended the facility lease to February 2025 and increased the recognized right-of-use asset and lease liability by $2.4m. Corvus also subleased space to Angel and recognized $0.1m sublease income in Q3.
- Future milestone and royalty payments under licensing agreements are contingent and not recorded as balance-sheet liabilities. Corvus reported no material legal proceedings and no material changes in internal control over financial reporting; management said disclosure controls were effective.
Important facts for investors to verify
- Whether the preliminary COVID-19 trial findings are confirmed by final data, noting the small sample and lack of statistical power.
- Clinical progress, enrollment, safety, and timelines for mupadolimab, CPI-818, and ciforadenant, including Angel’s China programs.
- Cash burn and runway relative to planned trial costs, and the timing, terms, and dilution effects of any further financing.
- Angel Pharmaceuticals’ performance and Corvus’ related-party arrangements, equity-method losses, and licensing economics.
- Potential manufacturing, supply, and COVID-19 disruptions, as well as contingent licensing milestones and royalties.