Corbus Pharmaceuticals Holdings, Inc. — FY2022 Form 10-K Summary
Business context and reporting period
Corbus is a development-stage precision oncology and biotechnology company reporting for the year ended December 31, 2022. It has no approved products and has never generated product revenue. Its primary pipeline consisted of CRB-601, an anti-integrin monoclonal antibody targeting TGFβ activation in solid tumors, and CRB-913, a preclinical CB1 inverse agonist for obesity. CRB-701 was licensed from CSPC after year-end, on February 12, 2023, and therefore was not part of the 2022 operating results.
At December 31, 2022, the Company had 33 full-time employees and operated primarily as a single business segment. Its common stock traded on The Nasdaq Capital Market under CRBP.
Financial performance and liquidity
| Metric | 2022 | 2021 | Change |
|---|---|---|---|
| Revenue from awards | $0 | $0.9 million | Down $0.9 million |
| Research and development expense | $16.1 million | $36.4 million | Down $20.3 million |
| General and administrative expense | $18.7 million | $20.4 million | Down $1.7 million |
| Litigation settlement expense | $5.0 million | $0 | New expense |
| Operating loss | $39.8 million | $56.0 million | Improved $16.2 million |
| Other income/(expense), net | $(2.5) million | $10.3 million | Down $12.9 million |
| Net loss | $42.3 million | $45.6 million | Improved $3.3 million |
| Basic and diluted loss per share | $(10.15) | $(11.15) | Improved $1.00 |
| Net cash used in operations | $37.5 million | $48.2 million | Improved $10.6 million |
Cash, cash equivalents and investments totaled approximately $59.2 million at year-end; including restricted cash, total cash, cash equivalents and restricted cash were $59.9 million. Cash and investments declined from approximately $97.6 million at December 31, 2021, primarily because of operating cash use and the absence of 2021 equity financing proceeds. Working capital was approximately $47.5 million, based on current assets of $60.2 million and current liabilities of $12.6 million.
Total debt included approximately $20.0 million of principal under the K2 HealthVentures loan, with a net carrying amount of $18.8 million and a stated maturity of August 1, 2024. The loan bears interest at a variable rate, which was 12.75% at December 31, 2022, is secured by substantially all assets other than intellectual property, and includes financial and operating covenants. The Company was in compliance with the covenants at year-end.
Material changes versus the prior comparable period
- R&D expense fell 56%, mainly because lenabasum clinical studies were completed or scaled back, reducing clinical, data analysis, compensation, consulting and licensing costs. Toxicology spending for CRB-601 increased.
- G&A expense decreased 8%, primarily from lower compensation costs, partially offset by higher legal costs.
- The Company recorded a $5.0 million settlement expense related to the Venn Therapeutics litigation. The settlement was paid in May 2022, and the claims were dismissed with prejudice.
- Other income declined substantially because refundable foreign R&D credits were approximately $12.3 million lower than in 2021. The Company expected to receive the 2022 credits in the first half of 2023.
- Net cash used in operations improved to $37.5 million from $48.2 million, while investing activities provided $30.1 million, primarily from sales and maturities of investments.
- The October 2022 amendment to the K2 loan deferred principal repayments from September 2022 to September 2023, with a further six-month deferral available if the Company raises at least $30 million of net capital.
- The Company created Series A preferred stock to facilitate approval of a reverse stock split. The preferred shares were redeemed upon the February 14, 2023 effectiveness of a 1-for-30 reverse stock split.
Guidance, outlook, risks and unusual items
Management stated that year-end cash, cash equivalents and investments of approximately $59.2 million were expected to fund operations and capital requirements through the second quarter of 2024 based on planned expenditures. The financial statements state that the Company expects continuing operating losses and will require substantial additional capital. Management expected R&D expense to increase in 2023 as pipeline assets move into clinical development, while G&A expense was expected to decrease because litigation costs were not expected to recur.
- CRB-601: The Company planned to submit an IND in the second half of 2023 and expected to enroll the first Phase 1 patient by year-end 2023.
- CRB-701: Under the February 2023 CSPC license, Corbus obtained exclusive rights in the United States, Canada, the European Union, the United Kingdom and Australia. It planned to bridge CSPC’s China Phase 1 data to support a U.S. trial beginning in mid-2024.
- CRB-913: The program remained preclinical, and Corbus was seeking a partner to fund further development.
- Lenabasum: Phase 3 studies in dermatomyositis and systemic sclerosis failed to meet primary endpoints, and a sponsored Phase 2 systemic lupus erythematosus study failed to demonstrate efficacy versus placebo. The Company does not plan additional clinical studies.
- The CSPC agreement requires a $7.5 million upfront payment, low-double-digit royalties on net sales, up to $130 million of development and regulatory milestones, and up to $555 million of commercial milestones.
- Key risks include the need for additional financing, continuing losses, uncertain clinical and regulatory outcomes, dependence on CROs and contract manufacturers, reliance on CSPC for CRB-701 supply and development support, intellectual property and licensing obligations, U.S.-China geopolitical and trade risks, and potential stockholder dilution.
- Nasdaq compliance was a material market risk. After a reverse split and a Nasdaq hearing, the Company reported regaining compliance with the $1.00 minimum bid-price requirement on March 7, 2023; continued compliance was not assured.
Most important facts for investors to verify
- Whether the approximately $59.2 million of cash, cash equivalents and investments remains sufficient to reach the stated second-quarter 2024 funding horizon after the CSPC upfront payment and planned clinical spending.
- The timing, cost and regulatory status of the CRB-601 IND and Phase 1 program.
- Whether CSPC’s China Phase 1 data for CRB-701 will support the planned U.S. development strategy and whether the U.S. trial can begin on the targeted timetable.
- The terms and liquidity impact of the K2 loan, including the approximately $21.6 million principal and final payment obligations, variable interest rate, covenants and potential conversion features.
- The availability, timing and terms of additional financing and the resulting dilution or seniority of new securities.
- The failure history of lenabasum and the extent to which remaining development assets can produce commercially viable products.
- Potential milestone, royalty and other obligations under the CSPC, UCSF, Jenrin, Milky Way and Cystic Fibrosis Foundation agreements.
- Post-year-end effects of the 1-for-30 reverse stock split, preferred-stock redemption and Nasdaq compliance status.