CytomX Therapeutics, Inc. — Q3 2018 Form 10-Q
Reporting period: Quarter and nine months ended September 30, 2018; financial statements are unaudited. CytomX is a clinical-stage oncology biopharmaceutical company developing Probody therapeutics. It had no approved products or product-sale revenue.
Financial highlights
| Metric | Q3 2018 | Q3 2017 | Nine months 2018 | Nine months 2017 |
|---|---|---|---|---|
| Total revenue | $12.5 million | $24.1 million | $48.0 million | $44.6 million |
| Research and development expense | $27.5 million | $28.9 million | $75.6 million | $71.6 million |
| General and administrative expense | $8.1 million | $6.2 million | $24.5 million | $18.0 million |
| Operating loss | $(23.2) million | $(11.0) million | $(52.1) million | $(45.0) million |
| Net loss | $(23.4) million | $(10.2) million | $(52.4) million | $(43.7) million |
| Basic and diluted loss per share | $(0.53) | $(0.28) | $(1.29) | $(1.19) |
Revenue fell 48% year over year in Q3, mainly because Q3 2017 included a $14.0 million AbbVie milestone recognized under the prior revenue standard. Nine-month revenue rose 8% year over year, with higher BMS revenue and the 2018 Amgen collaboration contribution partly offset by lower AbbVie and ImmunoGen revenue. The company remains loss-making; conventional profit margins are not meaningful.
- Revenue by partner: Q3 / nine months 2018: AbbVie $2.8 million / $16.3 million; Amgen $1.5 million / $4.4 million; BMS $8.2 million / $24.6 million; ImmunoGen nil / $1.5 million; Pfizer nil / $1.4 million.
- Liquidity at September 30: Cash and cash equivalents were $259.8 million and short-term investments were $204.8 million, totaling $464.6 million. Total current assets were $472.5 million and current liabilities $86.3 million.
- Cash flows, nine months: Operating cash used was $46.8 million, versus $148.4 million provided in 2017; investing cash used was $9.9 million; financing cash provided was $138.9 million. The 2018 financing total included $134.6 million net proceeds from a July stock offering. The prior-year operating inflow was largely driven by BMS’s $200 million collaboration upfront payment.
- Balance sheet: Total liabilities were $325.1 million, including $289.4 million of deferred revenue. The filing reports no borrowings or debt balance. Accumulated deficit was $282.7 million. Shares outstanding were 45.0 million as of November 2, 2018.
Material changes and accounting
- Operating expenses for the first nine months increased $10.5 million year over year, including higher R&D clinical and laboratory costs and higher personnel-related G&A costs. R&D rose $4.0 million and G&A rose $6.5 million.
- CytomX adopted ASC 606 on January 1, 2018 using the cumulative-effect method; prior-year figures were not restated. Adoption increased opening deferred revenue and accumulated deficit by $10.9 million. Under ASC 606, nine-month 2018 revenue was $48.0 million, versus $55.9 million it would have been under ASC 605; the filing attributes the difference mainly to the timing of recognition of the AbbVie CD71 milestone.
- In May, FDA clearance of the CX-2029 IND triggered a $21.0 million AbbVie milestone, net of the related sublicense fee. Under ASC 606, $10.8 million was recognized through September based on progress, with the remainder deferred.
Outlook, risks and other notable items
- Management said existing capital resources should fund operations for at least the next 12 months, based on its current operating plan, but also said additional funding will be needed in the future. Spending may rise as trials advance; additional financing may be unavailable or dilutive.
- The pipeline includes wholly owned CX-072 (PD-L1) and CX-2009 (CD166) in Phase 1/2 trials, partnered CX-2029 (CD71) in Phase 1/2, and BMS’s Phase 1/2 CTLA-4 program. CytomX filed an IND for wholly owned CX-188 (PD-1) in October 2018; clearance and trial initiation remained subject to conditions. Initial CX-2009 clinical data were expected in the first half of 2019.
- Clinical, regulatory and commercial outcomes remain highly uncertain. The filing highlights risks including early-stage trial failure, adverse events, patient-enrollment delays, reliance on collaborators and third-party manufacturers, and the unproven Probody platform. Management also reported that transfer of CX-2009 drug-substance manufacturing from ImmunoGen was ongoing and not yet complete.
- The company has no internal manufacturing capability and relies on outside suppliers. It reported no material legal proceedings and no material change in contractual obligations from its 2017 Form 10-K.
- Management stated disclosure controls were effective at September 30, 2018. CytomX expected to cease being an emerging growth company at year-end 2018 and to face auditor attestation requirements for its 2018 annual report.
Important facts for investors to verify
- How ASC 606 affects collaboration revenue timing and deferred revenue, particularly AbbVie milestones and the BMS agreement.
- Whether the stated minimum 12-month cash runway remains valid as trial costs, enrollment and development plans evolve.
- Clinical progress, safety findings and the timing of CX-2009 data, as well as CX-188 IND clearance and trial start.
- Completion and reliability of the CX-2009 manufacturing transfer and continued supply for clinical programs.
- Future financing needs, potential dilution, collaborator decisions, and milestone or royalty payments that remain contingent.