Business context and reporting period
Exicure, Inc. is an early-stage biotechnology company developing spherical nucleic acid (SNA) therapies for neurological disorders and hair loss. This unaudited Form 10-Q covers the quarter and six months ended June 30, 2022. Its programs included preclinical SCN9A pain research and partnered programs with Ipsen and AbbVie; the company had no approved products or product-sales revenue.
Financial performance and position
| Metric | Q2 2022 | Q2 2021 | Six months 2022 | Six months 2021 |
|---|---|---|---|---|
| Collaboration revenue | $2.471 million | $0.079 million | $5.036 million | $1.076 million |
| Research and development expense | $6.749 million | $10.843 million | $13.889 million | $21.105 million |
| General and administrative expense | $3.205 million | $3.098 million | $6.367 million | $5.990 million |
| Operating loss | $7.483 million | $13.862 million | $15.220 million | $26.019 million |
| Net loss | $7.470 million | $14.269 million | $15.818 million | $26.746 million |
| Loss per share, basic and diluted | $1.66 | $4.86 | $3.71 | $9.12 |
Revenue was entirely collaboration revenue. Ipsen contributed $1.775 million in Q2 and $3.854 million for the first half; AbbVie contributed $0.696 million and $1.182 million, respectively. No gross margin is reported, and product-sales margins are not applicable.
At June 30, cash and cash equivalents were $21.198 million, short-term investments were $0.997 million, and restricted cash was $1.200 million—$23.395 million combined. Current assets were $24.721 million versus current liabilities of $19.656 million. Stockholders’ equity was $1.163 million; total liabilities were $35.792 million, including deferred revenue and lease obligations. The company repaid its $7.5 million MidCap loan and approximately $0.506 million exit fee in March; no long-term debt remained at quarter-end.
For the six months, operating cash use was $21.834 million, investing activities provided $3.491 million, and financing activities used $3.103 million. Cash, cash equivalents and restricted cash declined $21.446 million to $22.398 million. The May private placement generated approximately $5.0 million gross proceeds (about $4.9 million net).
Material changes versus the prior comparable period
- First-half revenue increased $3.960 million, principally from the Ipsen collaboration, which began in 2021; Q2 revenue rose $2.392 million year over year.
- First-half R&D expense declined 34%, reflecting the December 2021 restructuring and reduced clinical and other program activity. G&A increased 6%, primarily due to legal and retention-award costs.
- First-half net loss narrowed by $10.928 million. The company attributed lower losses principally to reduced operating expenses; debt repayment eliminated Q2 interest expense.
- Cash and cash equivalents plus short-term investments and restricted cash fell from $48.3 million at December 31, 2021 to $23.4 million at June 30, 2022. The decline included operating cash use and debt repayment.
Outlook, risks and unusual items
- Going concern and runway: Management stated that substantial doubt exists about the company’s ability to continue as a going concern and that additional financing is needed. It estimated existing cash and cash equivalents would fund operating expenses and capital needs only into early Q1 2023; actual runway may be shorter. Financing may require equity issuance, partnerships, licensing or other strategic transactions, with possible dilution or surrender of program rights.
- Cost outlook: Management expected 2022 R&D expense to decrease approximately 35–40% versus 2021 due to restructuring. It also expects continuing losses and no product revenue for the foreseeable future.
- Program changes: XCUR-FXN was indefinitely suspended and cavrotolimod (AST-008) was being wound down following the December 2021 strategic measures. Management said it was exploring strategic alternatives, including potential out-licensing or sale of assets; no transaction was assured.
- Collaboration estimates: Revenue recognition depends on estimates of project hours. The company cautioned that revisions, particularly under the AbbVie agreement, could reduce revenue in future periods. Deferred collaboration revenue was $23.790 million at quarter-end.
- Listing and capital: A 1-for-30 reverse stock split took effect June 29, 2022. Nasdaq confirmed bid-price compliance on July 19, but the filing anticipated a separate stockholders’ equity deficiency notice because quarter-end equity was below Nasdaq’s $2.5 million requirement.
- Legal matters: A putative securities class action and three shareholder derivative suits concerning alleged statements and oversight matters were disclosed. The derivative cases were stayed; alleged damages were not quantified.
- Other risks: Clinical and regulatory uncertainty, reliance on collaborators and third-party manufacturers, potential COVID-19-related delays, competition, financing availability and Nasdaq listing requirements could materially affect operations.
Important facts for investors to verify
- Whether Exicure secured financing or strategic transactions sufficient to address the stated going-concern uncertainty and runway into early 2023.
- Its subsequent Nasdaq stockholders’ equity compliance status, and any related plan, extension or delisting proceedings.
- Actual spending, cash runway and progress on the SCN9A program and partnered Ipsen and AbbVie work against the reduced-cost plan.
- Whether collaboration effort estimates change, affecting recognition of the $23.790 million deferred revenue balance.
- Developments in the securities and derivative litigation, and any potential financial or operational impact.
- The filing reports accumulated deficit of $185.885 million on the balance sheet but describes $204.7 million in narrative disclosures; verify the appropriate figure and its explanation.