Exicure, Inc. — Q1 2022 Form 10-Q
Reporting period: Three months ended March 31, 2022. The financial statements are unaudited. Exicure is an early-stage biotechnology company with no approved products; its programs use spherical nucleic acid (SNA) technology and are at preclinical or clinical-development stages.
Financial performance and position
| Metric | Q1 2022 | Q1 2021 / prior period |
|---|---|---|
| Collaboration revenue | $2.565 million | $0.997 million; up 157% |
| Research and development expense | $7.140 million | $10.262 million; down 30% |
| General and administrative expense | $3.162 million | $2.892 million; up 9% |
| Operating loss | $7.737 million | $12.157 million |
| Net loss | $8.348 million | $12.477 million |
| Loss per share, basic and diluted | $0.07 | $0.14 |
| Net cash used in operating activities | $12.756 million | $14.809 million |
There was no product-sales revenue. Collaboration revenue comprised $2.080 million from Ipsen and $0.485 million from AbbVie. No gross margin was reported; the filing does not provide a meaningful product-sales margin.
At March 31, cash and cash equivalents were $23.890 million, short-term investments $2.494 million, and restricted cash $1.200 million, or $27.584 million in total liquidity. Current assets were $29.182 million and current liabilities $21.361 million. The company repaid its $7.500 million MidCap principal and a $0.506 million exit fee on March 15; no current debt remained at quarter-end. Lease liabilities remained.
Changes and notable items
- Revenue increased mainly because Q1 2022 included Ipsen collaboration revenue; AbbVie revenue fell 51% year over year. Revenue recognition depends on estimates of project hours, and revisions could reduce revenue in future periods.
- R&D spending fell following December 2021 restructuring and reduced program activity. The company said it expects 2022 R&D expense to be approximately 35%–40% below 2021.
- Lower R&D activity included the wind-down of cavrotolimod (AST-008) and indefinite suspension of XCUR-FXN. Management described efforts to out-license cavrotolimod.
- Cash, cash equivalents, short-term investments and restricted cash declined from $48.3 million at December 31, 2021 to $27.6 million at March 31, 2022. Operating cash use was partly offset by investment maturities; financing outflows primarily reflected debt repayment.
- Common shares outstanding increased from 108.8 million at year-end to 122.8 million at March 31, principally after exercise of 14 million pre-funded warrants for $14,000. Warrants to purchase a further 17.3 million shares at $0.2701 remained outstanding.
Outlook, risks and contingencies
Going concern: Management concluded substantial doubt exists about the company’s ability to continue as a going concern for one year after issuance of the financial statements. It said existing resources, including expected gross proceeds from the May 2022 financing, were expected to fund operations and capital needs into the first quarter of 2023; this estimate depends on assumptions and may prove insufficient. Additional financing is necessary, and failure to obtain it could force program delays, reductions, terminations or asset-rights concessions.
On May 9, 2022, the company agreed to a private placement of 26,021,111 shares at $0.1937 per share, for approximately $5 million gross proceeds before expenses. Closing was expected around May 19, subject to customary conditions. The proceeds were intended to support the SCN9A preclinical program and general purposes. The lead investor also received director-nomination and board-observer rights, subject to stated conditions.
Nasdaq had notified the company that its share price was below the $1.00 minimum bid requirement. The initial compliance deadline was June 28, 2022; the company had not regained compliance as of the filing date, creating a risk of delisting.
Risks include early-stage development and uncertain clinical outcomes, dependence on collaborators and third-party research and manufacturing providers, COVID-19-related research or supply disruptions, limited financing alternatives, and potential dilution from future capital raises. The company disclosed a putative securities class action and shareholder derivative suits alleging misleading statements and fiduciary-duty breaches; alleged damages were not quantified. The filing also reports that the Board approved an option repricing effective April 1, 2022, with the impact expected in Q2.
Management reported disclosure controls and procedures were effective at the reasonable-assurance level as of March 31, 2022, with no material changes to internal control over financial reporting during the quarter.
Important facts for investors to verify
- Whether the May 2022 private placement closed as planned, its net proceeds, and the resulting share count and dilution.
- Actual cash runway and quarterly cash burn relative to management’s estimate of funding into Q1 2023.
- Progress on Nasdaq bid-price compliance and any resulting listing action.
- Development priorities and milestones for SCN9A and the Ipsen and AbbVie programs, including any collaborator decisions or payments.
- Potential financial or operational effects of the securities and derivative litigation and the option repricing.
- The filing gives accumulated deficit as approximately $197.3 million in narrative disclosures, while the March 31 balance sheet shows accumulated deficit of $178.415 million; investors should verify this apparent inconsistency.