Century Therapeutics, Inc. — Q2 2022 Form 10-Q
Reporting period: Quarter and six months ended June 30, 2022; filed August 11, 2022. Century is a clinical-stage cell-therapy biotech with no approved products and no product sales. Amounts below are in millions unless stated otherwise.
Financial results and liquidity
| Metric | Q2 2022 | Q2 2021 | Six months 2022 | Six months 2021 |
|---|---|---|---|---|
| Collaboration revenue | $1.4 | $0 | $2.5 | $0 |
| Research and development expense | $24.5 | $18.9 | $45.7 | $34.3 |
| General and administrative expense | $8.3 | $4.1 | $15.6 | $6.8 |
| Net loss | $31.0 | $23.3 | $68.5 | $41.6 |
| Net loss per share | $0.54 | $1.93 | $1.19 | $4.26 |
- Cash and investments: $429.4 at June 30, comprising $112.8 cash and equivalents and $316.6 investments. Current assets were $383.8.
- Cash flows, first six months: $61.2 provided by operating activities, versus $40.7 used in 2021; $31.5 used in investing and $26.9 provided by financing. Operating cash inflow was principally due to $120.7 of deferred collaboration revenue, so it should not be read as recurring operating cash generation.
- Debt and leases: $10.0 principal outstanding under the Hercules term loan, with a 10.3% interest rate at June 30 and maturity in 2024. Operating lease liabilities totaled $31.2. Total liabilities were $174.6, including $120.7 deferred revenue.
- Profitability and margins: The company remained loss-making; product gross margin is not applicable because there were no product sales. Accumulated deficit was $456.7.
Material changes versus the comparable period
- Q2 net loss widened by $7.7; first-half net loss widened by $26.9. First-half operating expenses increased $30.2, reflecting higher R&D and G&A spending and a $10.0 Japan-territory license amendment charge.
- R&D expense rose with expanded headcount, research and laboratory activity, and facilities. Spending on FCDI collaboration work fell as its scope narrowed primarily to CNTY-101 clinical supply manufacturing.
- G&A increased with staffing, public-company costs, insurance, professional fees, IT and facilities.
- Per-share losses were lower than prior-year comparatives despite greater net losses; weighted-average shares increased substantially following the 2021 IPO, affecting the comparison.
Collaboration, outlook, and risks
- In January 2022, Century entered a research and license collaboration with Bristol Myers Squibb (BMS) covering initial AML and multiple myeloma programs, with options for up to two more. BMS paid a $100.0 upfront cash amount and separately bought $50.0 of Century common stock. The filing reports a $123.2 collaboration transaction price including a $23.2 equity premium; $2.5 had been recognized as revenue through June 30, with $120.7 deferred. Potential development, regulatory and sales milestones and royalties are contingent and are not guaranteed.
- Century paid $10.0 to amend its FCDI arrangements to obtain Japan territory rights associated with the BMS collaboration; the amount was expensed as in-process R&D.
- Management expects continued losses and increased expenses as it advances its cell-therapy platform and candidates, including CNTY-101, CNTY-102 and CNTY-103, and develops manufacturing capabilities. The company has no product revenue and expects to need additional financing in the future.
- Management’s MD&A says June 30 cash, equivalents and investments are expected to fund operating and capital requirements into 2025, subject to assumptions. The financial-statement liquidity note separately states resources are adequate for at least 12 months from issuance. These statements differ in specificity; neither guarantees the runway.
- On July 1, 2022, Century established a sales agreement allowing up to $150.0 of common-stock sales through Cowen; no shares had been sold under it by the filing date.
- Key risks include clinical and regulatory uncertainty, capital-raising needs, manufacturing and third-party dependence (including FCDI), competition, intellectual-property matters, and possible disruption from COVID-19 and macroeconomic conditions. The filing reports modest pandemic-related delays. Risk factors were unchanged from the 2021 Form 10-K; management reported no material pending legal claims and effective disclosure controls.
Most important facts to verify
- Whether the BMS collaboration progresses to option exercises, milestones, royalties, or additional programs, and how much deferred revenue is recognized over time.
- Whether cash burn, capital spending and development costs remain consistent with management’s stated runway, particularly given the different runway formulations in the filing.
- Whether Century uses the $150.0 Cowen equity facility, and the resulting dilution and proceeds.
- Progress, timing and costs for clinical development and manufacturing plans, including reliance on FCDI and the status of key candidates.
- Hercules loan terms, floating-rate exposure, repayment obligations and any effect of debt covenants or the lien on company assets.