Corvus Pharmaceuticals, Inc. — Q3 2019 Form 10-Q
Reporting period: Quarter and nine months ended September 30, 2019. Corvus is a clinical-stage oncology biopharmaceutical company with no product sales or operating revenue. Its three clinical-stage candidates are ciforadenant, CPI-006 and CPI-818.
Financial performance and liquidity
Amounts are in millions of dollars, except per-share data.
| Metric | Q3 2019 | Q3 2018 | Nine months 2019 | Nine months 2018 |
|---|---|---|---|---|
| Revenue | None | None | None | None |
| Research and development | $9.0 | $8.4 | $29.1 | $30.2 |
| General and administrative | $2.5 | $2.8 | $8.4 | $7.9 |
| Total operating expenses | $11.5 | $11.1 | $37.4 | $38.1 |
| Net loss | $11.0 | $10.5 | $35.6 | $36.4 |
| Basic and diluted loss per share | $0.37 | $0.36 | $1.21 | $1.35 |
| Cash used in operating activities | Not stated for quarter | Not stated for quarter | $28.8 | $32.7 |
- At September 30, 2019, cash and cash equivalents were $9.1 million and marketable securities were $77.4 million, totaling $86.4 million, down from $114.6 million at December 31, 2018. Accumulated deficit was $206.1 million.
- Current assets were $87.8 million and current liabilities were $9.5 million. The filing reports no debt; lease liabilities were $3.4 million in total, including $0.8 million current.
- Nine-month investing cash use was $1.3 million, largely reflecting marketable-security purchases and maturities; financing provided $0.02 million. Cash and cash equivalents declined $30.1 million during the period.
Changes versus comparable periods
- Q3 operating expenses rose $0.4 million year over year, with R&D up $0.6 million and G&A down $0.3 million. Net loss widened by $0.5 million.
- For the first nine months, operating expenses declined $0.6 million and net loss improved $0.8 million. R&D fell $1.1 million, mainly as ciforadenant trial and manufacturing costs declined; CPI-818 and unallocated employee and overhead costs increased.
- Nine-month operating cash use improved by $3.9 million year over year. Financing cash flow was materially lower than in 2018, when the company raised $64.9 million net in a follow-on offering.
Outlook, management commentary and risks
- Management believed existing cash, cash equivalents and marketable securities would fund planned expenditures and obligations for at least 12 months from issuance of the financial statements. However, Corvus said current resources would not fund all three candidates through commercialization and that additional capital would be required.
- Management expected R&D spending to increase as clinical trials and drug manufacturing continue. Funding may come from equity, debt or collaborations; these could dilute shareholders, impose repayment obligations or require the company to surrender product rights. Funding may not be available on acceptable terms.
- Clinical updates: ciforadenant had been administered to more than 300 patients; the Genentech Morpheus NSCLC trial was in follow-up. CPI-006’s recommended dose was selected at 18 mg/kg, with disease expansion underway in monotherapy and dose escalation continuing in combination. CPI-818’s Phase 1/1b trial began in March 2019; early clinical and preclinical data were anticipated in December 2019.
- Management reported preliminary activity and tolerability observations for its candidates, but emphasized that trials are early and outcomes are uncertain. Reported CPI-006 adverse events included Grade 3 anemia and hyponatremia at 24 mg/kg; the filing also describes serious adverse events observed in ciforadenant trials, including in combination treatment.
- Key risks include clinical failure or delay, patient enrollment, safety findings, reliance on third-party manufacturers and trial operators, regulatory approval, intellectual-property and licensing obligations, competition, and dependence on additional financing. Corvus had no material legal proceedings and reported no material change in internal control over financial reporting; disclosure controls were considered effective.
Important facts for investors to verify
- Cash runway assumptions and the timing, amount and terms of future financing needs.
- Enrollment, follow-up, safety findings and efficacy evidence for ciforadenant, CPI-006 and CPI-818, including whether anticipated data presentations occurred.
- Whether planned R&D increases, manufacturing needs or trial changes alter the company’s cash-burn outlook.
- The status and remaining capacity of the Cowen at-the-market offering: the filing says no proceeds were received during the first nine months of 2019, while separately reporting cumulative sales of 52,569 shares for approximately $0.9 million gross proceeds as of September 30, 2019.
- Potential milestone, royalty and other contingent obligations under the Vernalis and Scripps licenses, as well as lease commitments.