Xilio Therapeutics, Inc. — Q3 2021 Form 10-Q
Business context and period. This unaudited quarterly report covers the three and nine months ended September 30, 2021. Xilio is a clinical-stage biotechnology company developing tumor-selective cancer immunotherapies using its GPS platform. It had no product revenue and reported no commercial products.
Financial performance and position
| Metric | Q3 2021 | Q3 2020 | Nine months 2021 | Nine months 2020 |
|---|---|---|---|---|
| Revenue | $0 | $0 | $0 | $0 |
| Research and development expense | $10.5m | $11.5m | $39.8m | $26.2m |
| General and administrative expense | $5.5m | $3.2m | $15.7m | $7.7m |
| Total operating expenses | $16.0m | $14.6m | $55.5m | $34.0m |
| Net loss | $16.3m | $14.8m | $56.1m | $34.4m |
| Operating cash used | Not stated for quarter | Not stated for quarter | $63.6m | $23.4m |
Amounts are rounded; the filing reports financial statement figures in thousands. Net loss per share was $21.27 for Q3 2021 and $76.18 for the first nine months of 2021; the filing presents reverse-split-adjusted amounts and weighted-average shares from the pre-IPO capital structure. Profit margins are not meaningful because the company had no revenue.
At September 30, 2021, cash and cash equivalents were $99.8m, compared with $19.2m at December 31, 2020. Current assets were $105.6m and current liabilities $12.9m. Total liabilities were $34.3m; notes payable had a $9.6m carrying value, with $10.0m of principal due in 2023–2024. The company also reported operating lease liabilities of $11.1m. It was in compliance with loan covenants at quarter-end.
For the first nine months, investing cash outflow was $0.7m and financing cash inflow was $144.8m, principally from net proceeds of $50.2m from Series B and $94.7m from Series C preferred stock. Operating cash use increased substantially from the prior-year period, reflecting larger losses and working-capital changes.
Material changes versus prior periods
- Q3 net loss rose $1.4m year over year, although operating expenses increased $1.3m: lower R&D spending was more than offset by higher G&A.
- Nine-month net loss increased $21.7m year over year. R&D increased $13.6m, particularly for XTX202, personnel, and early programs; G&A increased $7.9m, including personnel and professional fees.
- In September 2021, Xilio refinanced its $10.0m PacWest term loan. The amended facility provides interest-only payments through December 31, 2022, extends maturity to June 30, 2024, and allows a request for up to $10.0m of additional borrowing before the end of 2022.
Outlook, commentary, and risks
- Management expected cash at September 30, together with subsequent IPO proceeds, to fund operating expenses and capital expenditures into 2024. This estimate is subject to assumptions and the company expects continuing losses and negative operating cash flows; further financing may be needed.
- After quarter-end, the IPO closed October 26, with the underwriters’ additional-share option exercised November 1. Xilio sold 8,119,106 shares at $16.00 per share and reported approximately $116.3m in net proceeds. Outstanding preferred stock converted into 18,398,248 common shares. The IPO also triggered payment of a $0.8m PacWest fee.
- Development milestones disclosed: XTX101’s Phase 1/2 trial in advanced solid tumors began in September 2021; the FDA cleared XTX202’s IND in October 2021, with a Phase 1/2 trial anticipated in Q1 2022. Xilio targeted an IND submission for XTX301 in the second half of 2022; XTX401 remained preclinical. These are plans, not assured outcomes.
- Key risks include early-stage clinical and preclinical uncertainty, potential safety issues, manufacturing and single-CMO dependence, reliance on third-party trials and combination drugs, competition, intellectual-property and licensing risks, and possible COVID-19-related supply or trial disruption. The company cautions that interim clinical data may change as more data become available.
- Other notable items: the company effected a 1-for-9.5 reverse stock split on October 15, 2021. It reported no material legal proceedings and no income tax provision or benefit; it maintains a full valuation allowance against deferred tax assets.
Most important facts for investors to verify
- Whether clinical progress and safety data for XTX101 and XTX202 support the stated development timelines.
- Whether actual cash burn, trial costs, and capital expenditures remain consistent with management’s runway estimate into 2024.
- The terms, repayment requirements, and potential use of the additional PacWest borrowing capacity.
- Manufacturing capacity and continuity, particularly given reliance on a single manufacturer and external suppliers.
- Whether licensing, intellectual-property, regulatory, or clinical-trial risks materially affect the programs’ prospects.