What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2022-11-09 compared with 2022-08-01 · 232 added, 311 removed, 562 unchanged (49% of the section changed)

4 unchanged sentences

(In thousands, except par value)

September 30,

Current assets:

20 unchanged sentences

10,631  

Operating lease obligations, long-term portion

6 unchanged sentences

300,000 shares authorized;

101,284 and 101,303 shares issued at June 30, 2022 and December 31, 2021, respectively;

100,968 and 100,832 shares outstanding at June 30, 2022 and December 31, 2021, respectively

101,286 and 101,303 shares issued at September 30, 2022 and December 31, 2021, respectively;

101,032 and 100,832 shares outstanding at September 30, 2022 and December 31, 2021, respectively

Additional paid-in-capital

17 unchanged sentences

Three Months Ended

Six Months Ended

September 30,

Nine Months Ended

September 30,

Operating expenses:

Research and development

$ 5,862  

$ 2,905  

$ 10,278  

$ 7,609  

General and administrative

In-process R&D

50,618  

Total operating expenses

55,689  

16,169  

63,025  

Loss from operations

( 8,987 )  

( 55,689 )  

( 16,169 )  

Other income (expense), net

( 102 )  

Loss before income tax expense

( 8,494 )  

( 55,791 )  

( 15,656 )  

Income tax expense

( 13 )  

$ ( 8,494 )  

$ ( 55,804 )  

$ ( 15,656 )  

Net loss per share - basic and diluted

$ ( 0.08 )  

$ ( 1.07 )  

$ ( 0.16 )  

Basic and diluted weighted average shares outstanding

100,947  

51,913  

100,903  

51,582  

Other comprehensive loss:

$ ( 8,494 )  

$ ( 55,804 )  

$ ( 15,656 )  

Unrealized loss on marketable securities

( 512 )  

Comprehensive loss

$ ( 9,006 )  

$ ( 55,804 )  

$ ( 16,168 )  

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

4 unchanged sentences

(In thousands)

Comprehensive

Accumulated Other Comprehensive

Stockholders'

23 unchanged sentences

126,928  

Comprehensive

Vesting of share-based awards

Stock-based compensation

Exercise of common stock options

Unrealized loss on marketable securities

( 129 )  

( 11,975 )  

Balance at September 30, 2022

101,032  

$ 377,967  

$ ( 641 )  

$ ( 261,220 )  

$ 116,116  

Accumulated Other Comprehensive

Stockholders'

24 unchanged sentences

28,875  

Vesting of share-based awards

Stock-based compensation

( 5,975 )  

Balance at September 30, 2021

61,760  

$ 244,490  

$ ( 220,608 )  

$ 23,888  

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

3 unchanged sentences

(In thousands)

For the Six Months

Ended June 30,

For the Nine Months

Ended September 30,

Cash flows from operating activities:

7 unchanged sentences

Amortization of premium and discount on marketable securities

Charge for in-process R&D

( 190 )  

Write-off of in-process R&D

50,618  

ROU asset amortization

13 unchanged sentences

( 117,332 )  

Proceeds from sale or maturities of marketable securities

12,760  

Asset acquisition costs

3 unchanged sentences

Cash flows from financing activities:

Repayment of borrowings

Net cash used in financing activities

Proceeds from issuance of common stock

Repayment of borrowings under loan

Net cash provided by (used in) financing activities

Net change in cash, cash equivalents and restricted cash

8 unchanged sentences

Cash paid for interest

Supplemental disclosure of cash flow information

ROU asset acquired through operating leases

3 unchanged sentences

$ 50,300  

Fixed asset costs included in accounts payable

Purchase of securities included in accrued expenses  

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

2 unchanged sentences

Notes to Unaudited Condensed Consolidated Financial Statements

Nature of Business and Basis of Presentation

Compass Therapeutics, Inc.

9 unchanged sentences

References to Compass or the Company herein include Compass Therapeutics, Inc.

and its wholly-owned subsidiaries. 

The Company was incorporated as Olivia Ventures, Inc.

1 unchanged sentence

Prior to the Company’s reverse merger with Compass Therapeutics LLC (the “Merger”), Olivia was a “shell company”

(as defined in Rule 12b - 2 of the Securities Exchange Act of 1934, as amended).  

The Company is subject to risks and uncertainties common to companies in the biotechnology and pharmaceutical industries.

2 unchanged sentences

In addition, the Company is dependent upon the services of its employees and consultants.

In the opinion of management, the accompanying unaudited condensed consolidated financial statements include all normal and recurring adjustments (which consist primarily of accruals, estimates and assumptions that impact the financial statements) considered necessary to present fairly the Company’s consolidated financial position as of June 30, 2022 and its consolidated results of operations, comprehensive loss and changes in stockholders’

equity for the three and six months ended June 30, 2022 and 2021 and cash flows for the six months ended June 30, 2022 and 2021.

Operating results for the six months ended June 30, 2022 are not necessarily indicative of the results that may be expected for the year ending December 31, 2022.

In the opinion of management, the accompanying unaudited condensed consolidated financial statements include all normal and recurring adjustments (which consist primarily of accruals, estimates and assumptions that impact the financial statements) considered necessary to present fairly the Company’s consolidated financial position as of September 30, 2022 and its consolidated results of operations, comprehensive loss and changes in stockholders’

equity for the three and nine months ended September 30, 2022 and 2021 and cash flows for the nine months ended September 30, 2022 and 2021.

Operating results for the nine months ended September 30, 2022 are not necessarily indicative of the results that may be expected for the year ending December 31, 2022.

The unaudited condensed consolidated financial statements include the accounts of Compass Therapeutics, Inc.

2 unchanged sentences

The condensed consolidated balance sheet at December 31, 2021 has been derived from the audited consolidated financial statements at that date but does not include all of the information and footnotes required by GAAP for complete financial statements.

Accordingly, these condensed consolidated financial statements should be read in conjunction with the Company’s audited financial statements in the Company’s 

Annual Report on Form 10 -K  

for the year ended December 31, 2021 ( the “Annual Report”).

Accordingly, these condensed consolidated financial statements should be read in conjunction with the Company’s audited financial statements in the Company’s Annual Report on Form 10 -K for the year ended December 31, 2021 ( the “Annual Report”).

Since our inception, we have devoted substantially all of our efforts to organizing and staffing our Company, business planning, raising capital, research and development activities, building our intellectual property portfolio and providing general and administrative support for these operations.

To date, we have funded our operations primarily with proceeds from the sale of our equity securities and borrowings from debt arrangements. 

Through June 30, 2022, we have received $ 329.0 million in gross proceeds from the sale of equity securities. 

As of June 30, 2022, we had cash, cash equivalents and marketable securities of $ 132.0 million.

Based on our research and development plans, we expect that such cash resources will enable us to fund our operating expenses and capital expenditure requirements into the second half of 2024.

Through September 30, 2022, we have received $ 329.0 million in gross proceeds from the sale of equity securities. 

As of September 30, 2022, we had cash, cash equivalents and marketable securities of $ 120.6 million.

On November 2, 2022, the Company issued additional common stock pursuant to a private investment in public equity ("PIPE") offering with gross proceeds of $80.3 million (see Note 11 ).

Based on our research and development plans, we expect that such cash resources will enable us to fund our operating expenses and capital expenditure requirements into 2026.

COVID- 19 Update

3 unchanged sentences

There have been delays in sourcing of selected supplies required for the manufacturing of material to be used in our future clinical trials, and these delays have impacted and may continue to impact the timing of our future clinical trials.

We expect that COVID- 19 may continue to directly or indirectly impact (i) our employees and business operations or personnel at third -party suppliers and other vendors in the U.S.

We expect that COVID- 19 may continue to directly or indirectly impact:

(i) our employees and business operations or personnel at third -party suppliers and other vendors in the U.S.

and other countries;

2 unchanged sentences

We are continuing to assess the potential impact of the COVID- 19 pandemic on our current and future business and operations, including our expenses and clinical trials, as well as on our industry and the healthcare system.

Summary of Significant Accounting Policies

There have been no material changes to the significant accounting policies previously disclosed in the Company’s Annual Report, except as noted below.

3 unchanged sentences

Fair value is based on available market information including quoted market prices, broker or dealer quotations, or other observable inputs.

Recently Adopted Accounting Pronouncements

The Company adopted ASU 2019 - 12, Simplifying the Accounting for Income Taxes , on January 1, 2022. 

The Company accounts for income taxes pursuant to FASB ASC Topic 740, Income Taxes .

Under FASB ASC Topic 740, deferred tax assets and liabilities are determined based on temporary differences between the bases of certain assets and liabilities for income tax and financial reporting purposes.

The deferred tax assets and liabilities are classified according to the financial statement classification of the assets and liabilities generating the differences.

The Company maintains a valuation allowance with respect to deferred tax assets.

The Company establishes a valuation allowance based upon the potential likelihood of realizing the deferred tax asset and taking into consideration the Company’s financial position and results of operations for the current period.

Future realization of the deferred tax benefit depends on the existence of sufficient taxable income within the carry-forward period under the federal tax laws.

The adoption of ASU 2019 - 12 did not have any impact on the Company’s condensed consolidated financial statement presentation or disclosures.

Accounting Pronouncements not yet adopted

12 unchanged sentences

The Company is currently evaluating the impact of this standard on its financial statements and related disclosures.

Recently Adopted Accounting Pronouncements

The Company adopted ASU 2019 - 12, Simplifying the Accounting for Income Taxes , on January 1, 2022.

The Company accounts for income taxes pursuant to FASB ASC Topic 740, Income Taxes .

The deferred tax assets and liabilities are classified according to the financial statement classification of the assets and liabilities generating the differences.

The Company maintains a valuation allowance with respect to deferred tax assets.

Future realization of the deferred tax benefit depends on the existence of sufficient taxable income within the carry-forward period under the federal tax laws.

The adoption of ASU 2019 - 12 did not have any impact on the Company’s condensed consolidated financial statement presentation or disclosures.

Marketable Securities

7 unchanged sentences

The Company classifies marketable securities that are available for use in current operations as current assets on the condensed consolidated balance sheet.

The following tables summarize marketable securities held at June 30, 2022 ( in thousands):

Fair Value Measurements as of June 30, 2022 Using:

The following tables summarize marketable securities held at September 30, 2022 ( in thousands):

Fair Value Measurements as of September 30, 2022 Using:

Amortized Cost

Unrealized gains

Unrealized Losses

Corporate bonds

$ 73,184  

$ ( 416 )  

$ 72,768  

Commercial paper

22,713  

( 52 )  

22,661  

Certificates of Deposit

( 20 )  

Asset-backed securities

( 24 )  

$ 106,292  

$ ( 512 )  

$ 105,780  

June 30, 2022

September 30, 2022

Maturing in one year or less

$ 88,480  

Maturing after one year through two years

17,300  

Maturing after two years

$ 105,780  

There were no marketable securities as of December 31, 2021.

 Fair Value Measurements

The following tables represent the Company’s financial assets that are measured at fair value on a recurring basis and indicate the level of the fair value hierarchy utilized to determine such fair values (in thousands):

Fair Value Measurements as of June 30, 2022 Using:

Fair Value Measurements as of September 30, 2022 Using:

Quoted Prices in

Active Markets for

Active Markets

Identical Assets

1 unchanged sentence

Corporate bonds

$ 72,768  

Commercial paper

22,661  

Certificates of deposit

Asset-backed securities

Money market funds (cash equivalents)

11,301  

$ 33,962  

$ 83,119  

$ 117,081  

Cash and cash equivalents

Fair Value Measurements as of December 31, 2021 Using:

Quoted Prices in

Active Markets for

Active Markets

Identical Assets

Significant Other

Money market funds (cash equivalents)

$ 130,005  

 Property and Equipment

Cash and cash equivalents

        Property and Equipment

Property and equipment consist of the following (in thousands):

September 30,

Leasehold improvements

3 unchanged sentences

Property and equipment, net

Depreciation expense for the six months ended June 30, 2022 and 2021 was $ 0.4 million and $ 0.3 million, respectively.

 Accrued Expenses

Depreciation expense for the three months ended September 30, 2022 and 2021 was $ 0.2 million and $ 0.1 million, respectively.

Depreciation expense for the nine months ended September 30, 2022 and 2021 was $ 0.6 million and $ 0.4 million, respectively.   

        Accrued Expenses

Accrued expenses consist of the following (in thousands):

September 30,

Compensation and benefits

$ 1,601  

Project expenses

Accrued milestone

Marketable securities not settled

Total accrued expenses

$ 3,301  

$ 8,775  

 Commitments and Contingencies

The Company adopted ASU 2016 - 02, Leases (Topic 842 ) , effective January 1, 2021, using the modified retrospective transition method, in which the new standard is applied as of the date of initial adoption.

12 unchanged sentences

The Facility lease contains scheduled rent increases over the lease term.

The discount rate used for the Facility lease is 6.25 %, and the remaining lease term of the Facility lease is two years and 11 months as of June 30, 2022.

The discount rate used for the Facility lease is 6.25 %, and the remaining lease term of the Facility lease is two years and eight months as of September 30, 2022.

The table below presents the undiscounted cash flows for the lease term.

7 unchanged sentences

Operating lease obligations, long-term portion

$ 2,444  

Milestone payments

As part of the ABL Bio Agreement, the Company is obligated to pay certain development milestone payments. 

As part of the ABL Bio Agreement (see Note 10 ), the Company is obligated to pay certain development milestone payments.

In the fourth quarter of 2021, the Company was notified of the completion of Phase 1 of the clinical trial for CTX- 009.

As a result, the Company is obligated to pay a $ 6.0 million milestone payment to ABL Bio after the delivery and review of the final report related to the clinical trial.

See Note 10 for additional information on the ABL Bio Agreement.

 Stock-Based Compensation

Stock-based compensation expense for the three and six months ended June 30, 2022 and 2021 was classified in the condensed consolidated statement of operations as follows:

Three Months Ended June 30,

Six Months Ended June 30,

In the third quarter of 2022, the Company paid a $ 6.0 million milestone payment to ABL Bio based on delivery of the final report related to completion of Phase 1 of the clinical trial.

        Stock-Based Compensation

Stock-based compensation expense for the three and nine months ended September 30, 2022 and 2021 was classified in the condensed consolidated statement of operations as follows:

Three Months Ended September 30,

Nine Months Ended September 30,

(000’s)

2 unchanged sentences

General and administrative

$ 1,444  

$ 3,018  

$ 1,856  

As of June 30, 2022, remaining unrecognized stock-based compensation cost from all plans to be recognized in future periods totaled $ 12.6 million.

As of September 30, 2022, remaining unrecognized stock-based compensation cost from all plans to be recognized in future periods totaled $ 11.5 million.

Restricted Stock:

Prior to the adoption of the 2020 Plan, the Company issued restricted stock.

A summary of the Company’s restricted stock activity during the six months ended June 30, 2022 is as follows:

A summary of the Company’s restricted stock activity during the nine months ended September 30, 2022 is as follows:

Weighted Average Fair Value

(000 ’

Unvested, December 31, 2021

$ 1.76  

( 136 )  

$ 1.82  

Forfeited or canceled

( 20 )  

$ 1.77  

Unvested, June 30, 2022

$ 1.74  

As of June 30, 2022, the total unrecognized compensation cost related to stock compensation expense for restricted stock is $ 0.5 million, expected to be recognized over a weighted average period of 1.3 years.

Unvested, September 30, 2022

As of September 30, 2022, the total unrecognized compensation cost related to stock compensation expense for restricted stock is $ 0.4 million, expected to be recognized over a weighted average period of 1.1 years.

In June 2020, the Company’s board of directors adopted the 2020 Stock Option and Incentive Plan (the “2020 Plan”) and reserved 2.9 million shares of common stock for issuance under this plan.

1 unchanged sentence

The increase on January 1, 2022 was 4.2 million shares.

As of June 30, 2022, 2.2 million shares remain available for future grant.

As of September 30, 2022, 2.2 million shares remain available for future grant.

The 2020 Plan authorizes the board of directors or a committee of the board to grant incentive stock options, nonqualified stock options, restricted stock awards and restricted stock units ("RSUs") to eligible officers, employees, consultants and directors of the Company.

2 unchanged sentences

The following table summarizes the stock option activity for the 2020 Plan:

Number of  

Term (in years)

Outstanding at December 31, 2021

$ 4.99  

$ 2.29  

Forfeited/cancelled

( 244 )  

$ 4.06  

Outstanding at June 30, 2022

$ 3.97  

Vested at June 30, 2022

$ 4.86  

For the six months ended June 30, 2022, the weighted average grant date fair value for options granted was $ 2.29 .

The intrinsic value for options vested as of June 30, 2022, was $ 47 thousand. 

As of June 30, 2022, the total unrecognized compensation cost related to outstanding options was $ 8.2 million, to be recognized over a weighted average period of 3.0 years.

For the six months ended June 30, 2021, the weighted average grant date fair value for options granted was $ 3.95 .

There was no intrinsic value for options vested as of June 30, 2021.

The weighted average assumptions used in the Black-Scholes pricing model to determine the fair value of stock options granted during the six months ended June 30, 2022 and 2021 were as follows:

Six Months Ended June 30,

Forfeited/canceled

Outstanding at September 30, 2022

Vested at September 30, 2022

For the nine months ended September 30, 2022, the weighted average grant date fair value for options granted was $ 2.30 .

The intrinsic value for options vested as of September 30, 2022, was $ 19 thousand.

As of September 30, 2022, the total unrecognized compensation cost related to outstanding options was $ 7.5 million, to be recognized over a weighted average period of 2.8 years.

For the nine months ended September 30, 2021, the weighted average grant date fair value for options granted was $ 3.82 .

There was no intrinsic value for options vested as of September 30, 2021.

The weighted average assumptions used in the Black-Scholes pricing model to determine the fair value of stock options granted during the nine months ended September 30, 2022 and 2021 were as follows:

Nine Months Ended September 30,

Expected term (in years)

Risk-free rate

1.93 %  

Expected volatility

90.3 %  

Expected dividend yield

 The following table summarizes the RSU activity for the 2020 Plan:

Average Price

1 unchanged sentence

Unvested, December 31, 2021

$ 3.83  

$ 4,596  

Forfeited or canceled

Unvested, June 30, 2022

$ 3.83  

$ 4,596  

Unvested, September 30, 2022

Weighted average price per share is the weighted grant price based on the closing market price of each of the stock grants.

The weighted average fair value is the weighted average share price times the number of shares.

As of June 30, 2022, remaining unrecognized compensation cost related to RSUs to be recognized in future periods totaled $ 3.9 million, which is expected to be recognized over a weighted average period of 3.4 years.

Other Income (Expense)

As of September 30, 2022, remaining unrecognized compensation cost related to RSUs to be recognized in future periods totaled $ 3.6 million, which is expected to be recognized over a weighted average period of 3.1 years.

       Other Income (Expense)

Other income (expense) consisted of the following:

Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

Interest income

$ 1,066  

Interest expense

1 unchanged sentence

Realized gain on disposal of equipment

( 44 )  

Total other income (expense)

$ ( 121 )  

 License, Research and Collaboration Agreements

 Collaboration Agreements

 ABL Bio Corporation ("ABL Bio") Agreement

$ 1,136  

     License, Research and Collaboration Agreements

Collaboration Agreements

ABL Bio Corporation ("ABL Bio") Agreement

In November 2018, the Company's wholly-owned subsidiary, TRIGR, and ABL Bio, a South Korean biotechnology company, entered into an exclusive global (excluding South Korea) license agreement (the “TRIGR License Agreement”) which granted TRIGR a license to ABL001, ABL Bio’s bispecific antibody targeting DLL4 and VEGF-A (renamed CTX- 009 ).

Under the terms of the agreement, ABL Bio and TRIGR would jointly develop CTX- 009, with ABL Bio responsible for development of CTX- 009 throughout the end of Phase 1 clinical trials and TRIGR responsible for the development of CTX- 009 from Phase 2 and onward.

ABL Bio received a $ 5 million upfront payment and is eligible to receive up to $ 110 million of development and regulatory milestone payments, up to $ 295 million of commercial milestone payments and tiered single-digit royalties on net sales of CTX- 009 in Oncology.

As of June 30, 2022, the Company has $ 6.0 million in accounts payable related to a development milestone for completion of Phase 1.

ABL Bio is also eligible to receive up to $ 185 million in development, regulatory and commercial milestone payments and tiered, single-digit royalties on net sales of CTX- 009 in Ophthalmology.

The financial terms of the agreement were amended in May 2021 but remain substantially similar to the terms in the TRIGR License Agreement.

ABL Bio received a $ 5 million upfront payment, a $ 6 million development milestone for the completion of Phase 1 clinical trials and is eligible to receive a total of up to $ 110 million of development and regulatory milestone payments, up to $ 295 million of commercial milestone payments and tiered single-digit royalties on net sales of CTX- 009 in Oncology.

As a result of the TRIGR acquisition in 2021, the TRIGR License Agreement was assigned to the Company and the Company has assumed all the rights and liabilities of the agreement.

In May 2021, TRIGR and ABL Bio terminated license agreements to several preclinical assets.

As a result of the return of these assets to ABL Bio and termination of the license agreements, the Company is eligible to receive royalty payments if ABL Bio develops or licenses two bispecific antibodies that were previously licensed to TRIGR.

Adimab Agreement

1 unchanged sentence

The agreement includes provisions for payment of royalties at rates ranging in the single digits as a percentage of future net sales within a specified term from the first commercial sale.

There were no milestone payments made during the first six months of 2022.

As of June 30, 2022, future potential milestone payments in connection with this agreement amounted to $ 2.0 million.

Other License and Research Agreements

There were no milestone payments made during the first nine months of 2022.

As of September 30, 2022, future potential milestone payments in connection with this agreement amounted to $ 2.0 million.

      Other License and Research Agreements

FUJIFILM Diosynth Biotechnologies ("Fujifilm ”

The Company entered into a scope of work (“SOW”) under a master services agreement with Fujifilm on July 20, 2020.

The Company made cash payments of $ 488 thousand and recorded $ 2.2 million in research and development expense during the three months ended June 30, 2022 related to this agreement.

The Company made cash payments of $ 0.5 million and recorded $ 2.8 million in research and development expense during the six months ended June 30, 2022.

As of June 30, 2022, future expense and payments in connection with the SOW amounted to approximately $ 0.6 million.

The Company made no cash payments and recorded $ 89 thousand in research and development expense during the three months ended September 30, 2022 related to this agreement.

The Company made cash payments of $ 0.5 million and recorded $ 2.9 million in research and development expense during the nine months ended September 30, 2022.

As of September 30, 2022, future payments in connection with the SOW amounted to approximately $ 0.6 million and future expenses amounted to less than $ 100 thousand. 

      Subsequent events

On November 2, 2022, the Company and certain accredited investors (each an “Investor”

and collectively, the “Investors”) entered into a securities purchase agreement (the “Securities Purchase Agreement”) pursuant to which the Company agreed to sell and issue to the Investors in a PIPE financing an aggregate of 25,000,000 shares of the Company’s common stock at a purchase price of $ 3.21 per share.

The gross proceeds to the Company from the PIPE are $ 80.3 million, before deducting fees to the placement agents and other offering expenses payable by the Company.

This transaction closed on November 4, 2022.

Management ’

1 unchanged sentence

The following discussion of the financial condition and results of operations of Compass Therapeutics, Inc.

should be read in conjunction with the financial statements and the notes to those statements included in this Quarterly Report on Form 10-Q for the period ended June 30, 2022.

should be read in conjunction with the financial statements and the notes to those statements included in this Quarterly Report on Form 10-Q for the period ended September 30, 2022.

Some of the information contained in this discussion and analysis, including information with respect to our plans and strategy for our business, includes forward-looking statements that involve risk, uncertainties and assumptions.

13 unchanged sentences

Consideration payable to TRIGR shareholders at closing totaled an aggregate of 10,265,133 shares of our common stock (after giving effect to elimination of fractional shares that would otherwise be issued).

In addition, TRIGR shareholders are eligible to receive up to $9 million, representing earnout payments which are dependent on certain events, including a $5 million earnout which is dependent on biologics license application approval of a product candidate acquired in the transaction, renamed CTX-009.

As part of this $9 million in earnout payments to the TRIGR shareholders, $2 million represented a milestone payment that was remitted to TRIGR shareholders in the fourth quarter of 2021, with up to $7 million of eligible earnout payments remaining.

In addition, TRIGR shareholders are eligible to receive up to $9 million, representing earnout payments which are dependent on certain events.

We currently have two product candidates in the clinical stage of development:

CTX-009 and CTX-471.

In addition, a third product candidate, CTX-8371, is expected to enter the clinic in the first half of 2023.

In addition, a third product candidate, CTX-8371, is expected to enter the clinic in 2023.

A summary of these product candidates is presented below.

We are also developing a portfolio of bispecific and monoclonal antibody product candidates which derive from our in-house antibody discovery and development platforms.

For a more detailed description, see our Annual Report on Form 10-K for the fiscal year ended December 31, 2021 .

For a more detailed description, see our 

Annual Report on Form 10-K for the fiscal year ended December 31, 2021 .

CTX-009 (a.k.a.

9 unchanged sentences

or “cholangiocarcinoma”) in South Korea.

The study has been enrolling patients with unresectable advanced, metastatic, or relapsed BTC who have received one or two prior systemic therapies.

This Phase 2 study has a Simon 2 stage adaptive design where 3 partial responses ("PRs") among the first 21 patients enrolled in the first stage of the study will advance the study to the second stage.

As of April 14, 2022, there were ten PRs observed among the 24 patients enrolled, and therefore, the criteria to advance the study to its second stage was met.

The study is being conducted at four leading medical centers in South Korea.

The study enrolled patients with unresectable advanced, metastatic, or relapsed BTC who have received one or two prior systemic therapies.

This Phase 2 study has a Simon 2 stage adaptive design.

first stage of the study, three partial responses (“PRs”) need to be observed among the patients dosed in order for the study to advance to the second stage.

As of April 14, 2022, the first stage was fully enrolled, and there were ten PRs observed among the 24 patients enrolled and dosed, and therefore, the criteria to advance the study to its second stage was met.

The study is being conducted at four leading medical centers in South Korea and as of September 30, 2022, is still ongoing.

We submitted an Investigational New Drug (“IND”) application to the U.S.

1 unchanged sentence

and South Korea.

The FDA cleared our IND application in January 2022, enabling the Company to initiate a global Phase 2 clinical trial for CTX-009 in combination with paclitaxel in patients with advanced BTC in the United States and South Korea.

The FDA cleared our IND application in January 2022.

Interim Data from Combination Clinical Trial of CTX-009 in BTC in South Korea

Preliminary Activity Data Summary

As of April 14th, 2022, the first stage of the study has been fully enrolled, and all 24 patients have been dosed.

Of the 24 patients, there were 10 PR's, 9 of which have been confirmed by RECIST 1.1 and one PR pending confirmation, leading to a preliminary overall response rate ("ORR") of 42%. 

As of April 14, 2022, the first stage of the study has been fully enrolled, and all 24 patients have been dosed.

Of the 24 patients, there were 10 PRs, 9 of which have been confirmed by RECIST 1.1 and one PR pending confirmation, leading to a preliminary overall response rate ("ORR") of 42%. 

Two patients are not evaluable for response, and 22 of the 24 patients have had stable disease or better with a decline in tumor burden observed in all 22 evaluable patients leading to a clinical benefit rate ("CBR") of 92%. 

1 unchanged sentence

The interim waterfall plot below depicts the best response for 22 of the 24 patients in the study as of April 14, 2022 (two patients did not reach their week 8 scan):

The swimmer plot below depicts the duration that each patient has been on treatment as of April 14, 2022:

12 unchanged sentences

PROGRAM UPDATE –

We anticipate initiating a Phase 2/3 trial in patients with advanced BTC in the U.S.

in the third quarter of 2022.

Following initial conversations with the FDA and considering the data from our BTC Phase 2 study, we have proposed a randomized, controlled Phase 2/3 study of CTX-009 in combination with paclitaxel versus paclitaxel alone in adult patients with unresectable, advanced, metastatic or recurrent biliary tract cancers, who have received one prior systemic chemotherapy regimen. 

Following initial conversations with the FDA and considering the data from our BTC Phase 2 study, we submitted a protocol to the FDA for a randomized Phase 2/3 study in the United States in adult patients with unresectable, advanced, metastatic or recurrent biliary tract cancers who have received one prior systemic chemotherapy regimen.

The study is designed to assess the safety and efficacy of the combination of CTX-009 and paclitaxel versus paclitaxel alone.

A schema of the study design is provided below.

The study will enroll 120 patients which will be randomized in a 2:1 ratio to receive CTX-009 plus paclitaxel (n=80) or paclitaxel alone (n=40).

The proposed primary endpoint is overall response rate (ORR).

We also plan to initiate a Phase 2 trial in patients with advanced metastatic colorectal cancer in the U.S.

in the fourth quarter of 2022.

The protocol for this study is currently under internal review.  

The primary endpoint of the study is overall response rate (“ORR”).

The study can be found on clinicaltrials.gov.

In September 2022, we received additional feedback from the FDA to our study protocol.

Depending on the study’s results, this study could serve as a registrational study to support BLA submission.

Additionally, we are in the process of initiating a Phase 2 study for CTX-009 in patients with advanced metastatic colorectal cancer.

This study will assess the safety and efficacy of CTX-009 as a monotherapy in the third and fourth line of treatment.

The study can be found on clinicaltrials.gov. 

Development Strategy for CTX-009

1 unchanged sentence

We chose BTC as our lead indication based on activity observed in the Phase 1b and Phase 2 studies, lack of effective therapies for this patient population and the potential for a straight-forward regulatory route to approval.

Our proposed Phase 2/3 study for CTX-009 and paclitaxel   is targeting the advanced general BTC patient population, including all four anatomical subtypes of the disease.

Considering the response rate observed with CTX-009 in the general BTC patient population in the Phase 1b and Phase 2 combination trials summarized above, our initial discussions with the FDA, and the proposed randomized design detailed above, we believe that we would be in a position to submit a BLA application in 2024.

The second indication we plan on pursuing is advanced colorectal cancer.

Colorectal cancer patients who progress on front line therapy is significant in size and could be well-served by novel and effective therapies.

Accordingly, we plan on initiating a Phase 2 monotherapy clinical trial of CTX-009 in the third line setting in patients with colorectal cancer.

Taking into consideration the activity of regorafenib, which is approved in the third line setting in colorectal cancer, and the activity seen with the small molecule KRAS G12C inhibitors, sotorasib and adagrasib in colorectal patients harboring the G12C mutation, and the response rates observed with CTX-009 in the Phase 1a monotherapy trial in colorectal cancer patients, we believe that we can advance CTX-009 into a Phase 2 study in the third line setting in colorectal cancer with ORR and DOR as potential endpoints for accelerated approval.

We have not yet discussed this plan with regulatory agencies, including the FDA.

The timing of the initiation of the clinical trials in the United States depends, among other things, on the availability of clinical drug product for the studies, communications with the FDA, FDA allowance for each of the proposed studies to proceed and the availability of cash resources to support such trials. 

These plans remain preliminary and are subject to feedback from regulatory agencies.

While our IND has been cleared for the Phase 2 trial of CTX-009 in combination with paclitaxel in patients with BTC, and we had initial communications with the FDA, we have not yet discussed with the FDA or other regulatory agencies the proposed design of the colorectal trial or other potential studies or the regulatory path for BLA submission for CTX-009.

We intend to explore the potential of CTX-009 in additional indications, based on data from preclinical models, potential biomarkers such as DLL4 and clinical data from CTX-009 studies providing suggestions of activity of CTX-009 in additional indications such as gastric cancer, pancreatic cancer, renal cell cancer, prostate cancer and ovarian cancer.

In addition, we are developing a plan to study the combination of CTX-009 with our novel bispecific checkpoint blocker, CTX-8371, and with other checkpoint blockers, such as pembrolizumab and nivolumab.

Additionally, we plan to study the combination of CTX-009 with our novel CD137 agonistic antibody, CTX-471, which is currently undergoing a Phase 1b clinical trial in patients with advanced solid tumors.

Our Phase 2/3 study for CTX-009 in combination with paclitaxel is targeting the second line BTC patient population, including all four anatomical subtypes of the disease.

In the United States, there are over 18,000 BTC patients diagnosed each year.

The only therapies launched in the last two decades for the second and third line BTC patients are targeted therapies (FGFR2 inhibitors, IDH1 inhibitors and MSI-high tumors) that may address less than 15% of this patient population combined.

The second indication we are pursuing for CTX-009 is advanced colorectal cancer.

There are over 150,000 colorectal cancer patients diagnosed in the United States each year, and approximately one third (~ 50,000 patients) progress to the third line of treatment.

The therapies available in the third line (trifluridine/tipiracil;

regorafenib) have each demonstrated less than 2% overall response rate with limited efficacy.

Moreover, targeted therapies recently approved or in development, such as the small molecule KRAS G12C inhibitors, sotorasib and adagrasib, are only targeting 1-3% of the colorectal cancer patients.

Accordingly, we are initiating a Phase 2 monotherapy clinical trial of CTX-009 in the third and fourth line settings in patients with advanced colorectal cancer with ORR as the primary endpoint of this study.

We intend to explore the potential of CTX-009 in additional indications, based on preclinical and clinical data from CTX-009 studies.

These studies combined suggest the potential of CTX-009 as a therapy for gastric cancer, ovarian cancer, pancreatic cancer and renal cell cancer. 

In addition, we are developing a plan to study the combination of CTX-009 with our novel bispecific checkpoint blocker, CTX-8371, or with other checkpoint blockers, such as pembrolizumab and nivolumab.

Additionally, we plan to study the combination of CTX-009 with our novel CD137 agonistic antibody, CTX-471.

The timing of the initiation of our clinical trials in the United States depends, among other things, on the availability of clinical drug product for the studies, communications with the FDA, FDA allowance for each of the proposed studies to proceed and the availability of cash resources to support such trials. 

CTX-471 - a monoclonal antibody agonist of CD137

8 unchanged sentences

The dose expansion stage of the trial is currently ongoing and nearing completion.

As of February 25, 2022, 49 patients with 15 different cancers have been enrolled in the study and 38 of those patients are evaluable.

Of the 38 evaluable patients, 3 patients had a PR;

the first two have been confirmed by RECIST 1.1 and the third PR is unconfirmed.

As of September 30, 2022, 60 patients with 18 different cancers have been enrolled in the study and 50 of those patients are evaluable.

There are six patients remaining on the study.

Four patients had a PR;

three of the four have been confirmed by RECIST 1.1 and the fourth PR is unconfirmed and will remain unconfirmed.

In addition, 27 patients have reached stable disease, leading to a preliminary ORR of 8% and a CBR of 62%.

There has been one treatment-related serious adverse event (“SAE”) in the Phase 1b dose expansion stage of the trial.

This event was identical to the dose-limiting toxicity seen in the Phase 1a study (thrombocytopenia with elevated liver function tests and elevated C-reactive protein).

The first PR observed in the study was in a patient with advanced small cell lung cancer who had a PR at week 17 and this response has been confirmed at week 25.

This patient has now been dosed with CTX-471 for more than 20 months with a durable PR.

In October 2021, a second PR was observed in a patient with metastatic melanoma who was previously treated with nivolumab and progressed on nivolumab.

In December 2021, a third PR was observed in a patient with metastatic melanoma of mucosal origin who was previously treated with first-line regimen of ipilimumab plus nivolumab followed by second-line nivolumab as a monotherapy.

After progressing on the prior regimens, the patient had joined CTX-471 study with multiple metastases at baseline.

This patient reached a PR based on a 58% decline in linear tumor burden at week 17.

This PR was not confirmed.

There have been two treatment-related serious adverse events (“SAE”) in the Phase 1b dose expansion stage of the trial.

One event was identical to the dose-limiting toxicity seen in the Phase 1a study (thrombocytopenia with elevated liver function tests and elevated C-reactive protein) and the second SAE was an event of pneumonitis. 

Both events resolved.

PROGRAM UPDATE –

The dose-expansion cohorts are now fully enrolled.

In July 2022, we observed a fourth PR in the ongoing Phase 1b monotherapy study of CTX-471 in a patient with mesothelioma.

This response is pending confirmation.

There was one additional SAE.

We have observed a single case of pneumonitis, a common adverse event associated with checkpoint inhibitors.

There were no other treatment-related Grade 3 and above SAEs during the second quarter.

In the fourth quarter of 2022, we expect to complete the dose expansion stage of our Phase 1b study and begin a combination study with CTX-471 and a commercially available PD-1 blocker in patients who have progressed following initial response to a PD-1 regimen.

These plans are subject to feedback from regulatory agencies.

On October 11, 2022, we announced a clinical trial collaboration and supply agreement with Merck & Co.

(“Merck”) to evaluate CTX-471 in combination with KEYTRUDA®

(pembrolizumab).

Under the agreement, we are the study sponsor, Merck will provide the clinical supply of KEYTRUDA and together, we will form a Joint Development Committee to review the clinical trial results.

In November 2022, we began screening patients for this combination arm of the Phase 1b study to include CTX-471 combined with KEYTRUDA in patients who have progressed following initial response to a PD-1 regimen.

CTX-8371 - a bispecific antibody that targets PD-1 and PD-L1

2 unchanged sentences

In mouse xenografts, treatment with CTX-8371 led to significantly greater tumor growth control and longer survival than treatment with a PD-1 inhibitor alone, a PD-L1 inhibitor alone or the combination of PD-1 and PD-L1 inhibitors. 

IND-enabling studies with CTX-8371 were initiated in August 2020 and are generally progressing well.

IND-enabling studies with CTX-8371 were initiated in August 2020 and toxicology studies in non-human primates are ongoing.

Our contract development manufacturing organization, Fujifilm Diosynth Biotechnologies (see Note 10 to the financial statements contained in this Form 10-Q for further description of Fujifilm agreement) experienced delays with its supply chain management, leading to a delay in the good manufacturing practice (“GMP”) manufacturing of CTX-8371.

The GMP manufacturing campaign of CTX-8371 was completed in the second quarter of 2022.

Based on the timeline for the remaining IND-enabling activities, we are currently targeting an IND submission for CTX-8371 in the first quarter of 2023.

In April 2022, the Company presented preclinical data on CTX-8371 involving a unique mechanism of action ("MOA") that involves cleavage of cell surface PD-1, at the 2022 American Association for Cancer Research ("AACR") annual meeting.

A summary of the results are as follows:

Treatment with CTX-8371 led to PD-1 loss from the surface of intra-tumoral T cells in tumor-bearing transgenic hPD-1/h-PD-L1 mice, and on peripheral blood T cells in cynomolgus monkeys.

This unique MOA differentiates CTX-8371 from marketed inhibitors targeting either PD-1 or PD-L1.

Clearance and half-life of CTX-8371 were within the expected ranges for a human IgG1 antibody in non-human primates (NHP) with a linear pharmacokinetics ("PK").

Treatment with CTX-8371 in the aggressive MC38-hPD-L1 colorectal mouse model led to a dose-proportional reduction in tumor volume and a complete eradication of tumors at the highest dose.

Taken together, the murine and cynomolgus monkey PK data, receptor occupancy data, and in vivo efficacy data in murine models will be used to calculate the predicted human efficacious dose range for CTX-8371.

PROGRAM UPDATE - CTX-8371

We completed our GMP manufacturing campaign in the second quarter of 2022. 

We remain on track for an IND submission in the first quarter of 2023.

Pending the results of the toxicology studies in non-human primates, we anticipate filing of an IND and initiating first-in-human study in the first half of 2023.

Operating Activities

We have funded our operations primarily with proceeds from the sale of our equity securities.

Through June 30, 2022, we have received $329.0 million in gross proceeds from the sale of our equity securities.

Through September 30, 2022, we have received $329.0 million in gross proceeds from the sale of our equity securities. 

We have incurred significant operating losses since inception and have not generated any revenue from the sale of products and we do not expect to generate any revenue from the sale of products in the near future, if at all.

Our ability to generate product revenue sufficient to achieve profitability will depend heavily on the successful development and eventual commercialization of our treatments and any future product candidates.

Our net losses were $8.5 million and $55.8 million for the three months ended June 30, 2022 and 2021, respectively.

Our net losses were $15.7 million and $63.2 million for the six months ended June 30, 2022 and 2021, respectively.

We had an accumulated deficit of $249.2 million at June 30, 2022.

Our net losses were $12.0 million and $6.0 million for the three months ended September 30, 2022 and 2021, respectively.

Our net losses were $27.6 million and $69.2 million for the nine months ended September 30, 2022 and 2021, respectively.

We had an accumulated deficit of $261.2 million at September 30, 2022.

We expect to continue to incur significant expenses for at least the next several years as we advance through clinical development, develop additional product candidates and seek regulatory approval of any product candidates that complete clinical development.

2 unchanged sentences

Until such time as we can generate significant revenue from product sales, if ever, we expect to finance our operations through equity and debt financings, or other capital sources, which may include collaborations with other companies or other strategic transactions.

As of June 30, 2022, we had $132.0 million in cash, cash equivalents and marketable securities.

Based on our research and development plans, we expect that such cash resources will enable us to fund our operating expenses and capital expenditure requirements into the second half of 2024.

As of September 30, 2022, we had $120.6 million in cash, cash equivalents and marketable securities.

On November 2, 2022, we entered into a securities purchase agreement ("the "Securities Purchase Agreement") with certain accredited investors (each an "Investor" and collectively, the "Investors") pursuant to which we agreed to sell and issue to the Investors in a private investment in public equity ("PIPE") financing an aggregate of 25,000,000 shares of our common stock at a purchase price of $3.21 per share.

The gross proceeds to us from the PIPE are $80.3 million, before deducting fees to the placement agents and other offering expenses payable by us.

Based on our research and development plans, we expect that such cash resources will enable us to fund our operating expenses and capital expenditure requirements into 2026. 

Because of the numerous risks and uncertainties associated with product development, we are unable to predict the timing or amount of increased expenses or when, or if, we will be able to achieve or maintain profitability.

19 unchanged sentences

expenses incurred under agreements with organizations that support our platform program development;

Contract Manufacturing Organizations (“CMOs”) that are primarily engaged to provide drug substance and product for our clinical trials, research and development programs, as well as investigative sites and consultants that conduct our clinical trials, nonclinical studies and other scientific development services;

Contract Manufacturing Organizations (“CMOs”) that are primarily engaged to provide drug substance and product for our clinical trials, research and development programs, as well as investigative sites and consultants that conduct our clinical trials, nonclinical studies and other scientific development services;

the cost of acquiring and manufacturing nonclinical and clinical trial materials, including manufacturing registration and validation batches;

19 unchanged sentences

Results of Operations

Comparison of the Three Months Ended June 30, 2022 and 2021

The following table summarizes our results of operations for the three months ended June 30, 2022 and 2021:

Three Months Ended June 30,

Comparison of the Three Months Ended September 30, 2022 and 2021

The following table summarizes our results of operations for the three months ended September 30, 2022 and 2021:

Three Months Ended September 30,

(000’s)

2 unchanged sentences

General and administrative

In-process R&D

Total operating expenses

4 unchanged sentences

Research and Development Expenses

Research and development expenses increased by $3.0 million, or 102%, for the three months ended June 30, 2022 compared to the three months ended June 30, 2021.

The increase primarily came from an increase in manufacturing expense of $1.8 million and clinical expense of $1.2 million and as compared to the same period in 2021.

We track outsourced development, outsourced personnel costs and other research and development costs of specific programs.

Research and development expenses increased by $6.6 million, or 210%, for the three months ended September 30, 2022 compared to the three months ended September 30, 2021.

The increase primarily came from an increase in the purchase and manufacturing of drug substance for the CTX-009 program of $4.3 million and toxicological studies for CTX-8371 of $1.1 million as compared to the same period in 2021. 

We track outsourced development, personnel costs and other research and development costs of specific programs.

Research and development expenses are summarized by program in the table below:

Three Months Ended June 30,

Three Months Ended September 30,

(000’s)

2 unchanged sentences

General and Administrative Expenses

General and administrative expenses increased by $1.0 million, or 44%, to $3.1 million for the three months ended June 30, 2022 as compared to the same period in 2021.

The increase primarily came from an increase of $0.5 million of stock compensation expense and $0.4 million of personnel expenses.

In-Process R&D

In the second quarter of 2021, we acquired TRIGR Therapeutics, Inc., whose primary asset is CTX-009, an anti-DLL4 x VEGF-A bispecific antibody.

As we expense research and development costs as incurred, the cost of this acquisition was expensed to In-Process R&D.

See our 

Annual Report on Form 10-K for the fiscal year ended December 31, 2021 for further information description of the accounting of this transaction.) There were no In-Process R&D expenses for the three months ended June 30, 2022.

General and administrative expenses increased by $0.1 million, or 4%, to $2.8 million for the three months ended September 30, 2022 as compared to the same period in 2021.

Other Income (Expense)

For the three months ended June 30, 2022, other income (expense) consists of interest income of $424 thousand and gain on disposal of assets of $69 thousand. 

The increase in interest income was due to the investment in marketable securities and the increase in interest rates.

For the three months ended June 30, 2021, the primary component was interest expense of $111 thousand related to a term loan facility with Pacific Western Bank, Inc.

(the "Credit Facility") which we extinguished in the fourth quarter of 2021.

See our 

Annual Report on Form 10-K for the fiscal year ended December 31, 2021 for further information on the Credit Facility).

For the three months ended September 30, 2022, other income (expense) consists of interest income of $0.6 million. 

The increase in interest income was due to the investment of our cash in marketable securities.

For the three months ended September 30, 2021, the primary component was interest expense of $0.1 million related to a term loan facility with Pacific Western Bank, Inc.

(the “Credit Facility”) which we extinguished in the fourth quarter of 2021.

See our Annual Report on Form 10-K for the fiscal year ended December 31, 2021 for further information on the Credit Facility.

Income Tax Expense

During the three months ended June 30, 2022, we recognized no income tax expense.

 During the three months ended June 30, 2021, we recognized $13 thousand of income tax expense.

Comparison of the Six Months Ended June 30, 2022 and 2021

The following table summarizes our results of operations for the six months ended June 30, 2022 and 2021:

Six Months Ended June 30,

During the three months ended September 30, 2022 and 2021, we recognized no income tax expense.

Comparison of the Nine Months Ended September 30, 2022 and 2021

The following table summarizes our results of operations for the nine months ended September 30, 2022 and 2021:

Nine Months Ended September 30,

(000’s)

9 unchanged sentences

Research and Development Expenses

Research and development expenses increased by $2.7 million, or 35%, for the six months ended June 30, 2022 compared to the six months ended June 30, 2021.

The increase primarily came from an increase in manufacturing expense of $1.4 million and clinical expense of $1.5 million as compared to the same period in 2021.

We track outsourced development, outsourced personnel costs and other research and development costs of specific programs.

Research and development expenses increased by $9.3 million, or 86%, for the nine months ended September 30, 2022 compared to the nine months ended September 30, 2021.

The increase primarily came from an increase in the purchase and manufacturing of drug substance for program CTX-009 of $4.1 million, clinical costs for program CTX-009 of $1.0 million, manufacturing of drug substance for program CTX-8371 of $1.6 million and toxicological studies for CTX-8371 of $1.1 million as compared to the same period in 2021.

We track outsourced development, personnel costs and other research and development costs of specific programs.

Research and development expenses are summarized by program in the table below:

Six Months Ended June 30,

Nine Months Ended September 30,

(000’s)

2 unchanged sentences

General and Administrative Expenses

General and administrative expenses increased by $1.1 million, or 22%, to $5.9 million for the six months ended June 30, 2022, as compared to the same period in 2021.

General and administrative expenses increased by $1.2 million, or 16%, to $8.7 million for the nine months ended September 30, 2022, as compared to the same period in 2021.

The increase primarily came from an increase of $1.2 million of stock compensation expense.

In-Process R&D

1 unchanged sentence

As we expense research and development costs as incurred, the cost of this acquisition was expensed to In-Process R&D.

See our 

See our Annual Report on Form 10-K for the fiscal year ended December 31, 2021 for further information description of the accounting of this transaction.

There were no In-Process R&D expenses for the nine months ended September 30, 2022.

Other income (expense)

For the six months ended June 30, 2022, other income (expense) consists of interest of $443 thousand and gain on disposal of assets of $70 thousand.

For the six months ended June 30, 2021, the primary component was interest expense of $253 thousand related to a term loan facility with Pacific Western Bank, Inc.

(the "Credit Facility") which we extinguished in the fourth quarter of 2021.

See our  

Annual Report on Form 10-K for the fiscal year ended December 31, 2021 for further information on the Credit Facility).

For the nine months ended September 30, 2022, other income (expense) consists of interest of $1.1 million and gain on disposal of assets of $70 thousand. 

For the nine months ended September 30, 2021, the primary component was interest expense of $0.3 million related to the Credit Facility which we extinguished in the fourth quarter of 2021.

See our Annual Report on Form 10-K for the fiscal year ended December 31, 2021 for further information on the Credit Facility.

Income Tax Expense

During the six months ended June 30, 2022, we recognized no income tax expense.

 During the six months ended June 30, 2021, we recognized $13 thousand of income tax expense.

During the nine months ended September 30, 2022, we recognized no income tax expense.

During the nine months ended September 30, 2021, we recognized $13 thousand of income tax expense.

Liquidity and Capital Resources

We have funded our operations primarily with proceeds from the sale of our equity securities (in addition, we received borrowings from the Credit Facility, which was extinguished in the fourth quarter of 2021).

Through June 30, 2022, we have received $329.0 million in gross proceeds from the sale of equity securities.

As of June 30, 2022, we had cash, cash equivalents and marketable securities of $132.0 million.

Through September 30, 2022, we have received $329.0 million in gross proceeds from the sale of equity securities.

As of September 30, 2022, we had cash, cash equivalents and marketable securities of $120.6 million. 

In November 2022, we completed a PIPE financing with gross proceeds of $80.3 million.

(see Note 11 to the financial statements contained in this Form 10-Q for further description of this transaction).

Funding Requirements

19 unchanged sentences

The following table shows a summary of our cash flows for the periods indicated:

Six Months Ended June 30,

Nine Months Ended September 30,

(000’s)

1 unchanged sentence

Cash used in investing activities

Cash used in financing activities

Cash provided by (used in) financing activities

Net change in cash, cash equivalents and restricted cash

Operating Activities

During the six months ended June 30, 2022, we used $12.5 million of cash in operating activities, resulting from our net loss of $15.7 million, offset by non-cash charges of $4.0 million and the change in operating assets and liabilities of $0.9 million.

During the nine months ended September 30, 2022, we used $23.5 million of cash in operating activities, resulting from our net loss of $27.6 million, offset by non-cash charges and the change in operating assets and liabilities of $4.1 million.

Our non-cash charges are primarily from share-based compensation expense of $4.3 million and depreciation and amortization (including ROU asset amortization) of $1.4 million.

During the six months ended June 30, 2021, we used $11.5 million of cash in operating activities, resulting from our net loss of $63.2 million, offset by non‑cash charges of $53.3 million and the change in operating assets and liabilities of $1.6 million.

Our non‑cash charges are primarily from the TRIGR acquisition expense of in-process R&D of $50.6 million, depreciation and amortization (including ROU asset amortization) of $0.8 million and share-based compensation expense of $1.9 million.  

During the nine months ended September 30, 2021, we used $15.0 million of cash in operating activities, resulting from our net loss of $69.2 million, offset by non-cash charges of $54.7 million.

Our non-cash charges are from the TRIGR acquisition expense of in-process R&D of $50.6 million, share-based compensation expense of $2.8 million and depreciation and amortization of $0.4 million.

Investing Activities

During the six months ended June 30, 2022, we used $105.7 million of cash in investing activities which primarily related to $105.8 million used to purchase marketable securities.

During the six months ended June 30, 2021, we used $0.6 million of cash in investing activities.

During the nine months ended September 30, 2022, we used $104.6 million of cash in investing activities which primarily related to $117.3 million used to purchase marketable securities offset by the proceeds from sale or maturities of marketable securities of $12.8 million.

During the nine months ended September 30, 2021, cash used in investing activities was $1.0 million which was primarily attributed to $0.8 million in leasehold improvements and purchases of equipment.

Financing Activities

We had no financing activities during the six months ended June 30, 2022.

During the six months ended June 30, 2021, we had $3.8 million in payments under the Credit Facility.

During the nine months ended September 30, 2022, we had a small number of options exercised for $5 thousand.

During the nine months ended September 30, 2021, we had $5.6 million in payments under the Credit Facility.

Future Funding Requirements

13 unchanged sentences

our need to implement additional internal systems and infrastructure, including financial and reporting systems.

We believe that our existing cash and marketable securities as of filing of the form 10-Q will enable us to fund our operating expenses and capital expenditure requirements into the second half of 2024 based on our current plans, which may change based on clinical or preclinical results.

These plans include initiation and completion of a Phase 2/3 clinical trial of CTX-009 with paclitaxel in BTC, initiation of a Phase 2 trial of CTX-009 in colorectal cancer, completion of the ongoing Phase 1b clinical trial of CTX-471, initiation of a Phase 1b combination trial for CTX-471 with commercially available PD-1, and commencement of the planned Phase 1 development of CTX-8371, subject to satisfactory completion of IND-enabling activities for that product candidate. 

We believe that our existing cash and marketable securities as of filing of the form 10-Q will enable us to fund our operating expenses and capital expenditure requirements into 2026 based on our current plans, which may change based on clinical or preclinical results.

These plans include initiation and completion of a Phase 2/3 clinical trial of CTX-009 in combination with paclitaxel in BTC, initiation of a Phase 2 trial of CTX-009 in colorectal cancer, completion of the ongoing Phase 1b clinical trial of CTX-471, initiation of a Phase 1b combination trial for CTX-471 with KEYTRUDA and commencement of the planned Phase 1 development of CTX-8371, subject to satisfactory completion of IND-enabling activities for that product candidate. 

We expect that we will require additional funding to complete the clinical development of CTX-009, CTX-471 and CTX-8371, commercialize our product candidates, if we receive regulatory approval, and pursue in-licenses or acquisitions of other product candidates.

If we receive regulatory approval for CTX-009, CTX-471 or CTX-8371 or other product candidates, we expect to incur significant commercialization expenses related to product manufacturing, sales, marketing and distribution, depending on where we choose to commercialize ourselves.

Until such time, if ever, as we can generate substantial product revenue, we expect to finance our cash needs through a combination of equity and debt financings, collaborations, strategic alliances, and marketing, distribution or licensing arrangements with third parties.

6 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements