NextCure, Inc. — Q2 2023 Form 10-Q
Reporting period: Three and six months ended June 30, 2023; financial statements are unaudited. NextCure is a clinical-stage biopharmaceutical company developing immunomedicines. It has no product sales revenue and expects ongoing operating losses as it advances its clinical programs.
Financial performance and position
| Metric | Q2 2023 | Q2 2022 | Six months 2023 | Six months 2022 |
|---|---|---|---|---|
| Revenue | No product revenue | No product revenue | No product revenue | No product revenue |
| Research and development expense | $13.4 million | $12.8 million | $25.1 million | $27.8 million |
| General and administrative expense | $5.7 million | $5.3 million | $11.1 million | $11.1 million |
| Net loss | $17.9 million | $17.9 million | $34.0 million | $38.5 million |
| Net loss per share, basic and diluted | $0.64 | $0.65 | $1.22 | $1.39 |
| Net cash used in operating activities | Not separately stated for the quarter | $29.5 million | $29.9 million |
For the six months, other income was $2.3 million, primarily interest income. No gross margin is reported because the company has no product sales. At June 30, 2023, cash and cash equivalents were $22.0 million and marketable securities were $108.6 million, totaling $130.6 million. Total assets were $153.4 million, total liabilities $15.0 million, and stockholders’ equity $138.4 million. The filing does not disclose conventional borrowings; it reports operating lease liabilities with a present value of $6.9 million.
Six-month investing cash inflow was $24.8 million, mainly from net sales and maturities of marketable securities; financing cash inflow was $0.1 million. Cash and cash equivalents declined $4.6 million from year-end 2022. Current assets were $135.3 million versus current liabilities of $7.8 million.
Material changes and business developments
- Q2 operating expenses rose $1.0 million year over year, primarily as R&D increased $0.6 million, mainly due to the NC410 combination trial; G&A increased $0.4 million.
- Six-month operating expenses fell $2.7 million year over year. R&D declined $2.8 million, primarily reflecting discontinued NC318 clinical development and lower NC525 costs; G&A was broadly flat.
- Six-month net loss narrowed by $4.6 million, helped by lower operating expenses and higher interest income. Q2 net loss was nearly unchanged.
- In February 2023, NextCure initiated a Phase 1 trial of NC525. Effective April 1, 2023, it and LegoChem designated their first co-development product under a collaboration providing for 50/50 cost sharing; costs incurred through June 30 were not material.
- Common shares outstanding were 27.84 million at June 30, 2023, compared with 27.77 million at December 31, 2022.
Outlook, risks and contingencies
Management said the $130.6 million of cash, cash equivalents and marketable securities was expected to fund planned operations into mid-2025, subject to assumptions that could prove incorrect. The liquidity note separately states funds are expected to cover at least the next 12 months from issuance of the financial statements. The company expects continued losses and negative operating cash flows, and substantial spending on NC410, NC762, NC525 and other R&D. Additional financing will be required; access to capital on acceptable terms is not assured. If funding is unavailable, trials or other development activities may be delayed, reduced or discontinued.
NC410 is in Phase 1/2 development, including a Phase 1b/2 combination study with pembrolizumab; NC762 is in Phase 1/2 development; NC525 is in Phase 1. The filing provides no specific new clinical outcome guidance in this excerpt. Clinical, regulatory, enrollment, manufacturing, financing and commercialization uncertainties remain material risks.
Marketable securities had $0.9 million of aggregate unrealized losses at June 30, 2023; $19.4 million of fair value was in a continuous unrealized loss position for over 12 months. Management attributed losses primarily to higher interest rates and considered them temporary, stating it did not intend or expect to be required to sell before maturity.
A securities class action was dismissed in July 2023, with plaintiffs’ appeal deadline then set for August 11, 2023. A related derivative action remained stayed pending further litigation scheduling; the company said it could not estimate a reasonably possible loss. A trade-secrets and related claims action was dismissed with prejudice after settlement in June 2023; the settlement was described as not material.
Key facts for investors to verify
- Whether the stated mid-2025 cash runway remains supported by actual spending, trial timelines and financing needs.
- Clinical progress, enrollment, safety and costs for NC410, NC762 and NC525, and the implications of the discontinued NC318 program.
- Future cash burn and R&D spending, including the effects of the LegoChem collaboration and other development commitments.
- Marketable-securities maturities and unrealized-loss exposure, as well as any changes in financing plans or use of the $75 million at-the-market sales agreement, under which no shares had yet been sold.
- Developments in the derivative litigation and any appeal of the dismissed securities class action.