Chimerix(US:CMRX)2023-11-01 16:00Part I - Financial Information Item 1. Financial Statements This section presents the unaudited consolidated financial statements for Chimerix, Inc. as of September 30, 2023, and for the three and nine-month periods then ended, including balance sheets, statements of operations, changes in stockholders' equity, and cash flows, along with accompanying notes Consolidated Balance Sheets Consolidated Balance Sheet Summary (in thousands) | Account | Sep 30, 2023 | Dec 31, 2022 | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $14,118 | $25,842 | | Short-term investments | $180,357 | $191,492 | | Total current assets | $200,622 | $228,138 | | Total assets | $225,282 | $279,341 | | Liabilities & Stockholders' Equity | | | | Total current liabilities | $15,510 | $20,415 | | Total liabilities | $16,979 | $22,484 | | Total stockholders' equity | $208,303 | $256,857 | | Total liabilities and stockholders' equity | $225,282 | $279,341 | Consolidated Statements of Operations and Comprehensive (Loss) Income Consolidated Statements of Operations (in thousands, except per share data) | Metric | Three Months Ended Sep 30, 2023 | Three Months Ended Sep 30, 2022 | Nine Months Ended Sep 30, 2023 | Nine Months Ended Sep 30, 2022 | | :--- | :--- | :--- | :--- | :--- | | Total revenues | $11 | $32,555 | $320 | $33,010 | | Total operating expenses | $26,700 | $20,576 | $72,575 | $69,135 | | (Loss) income from operations | ($26,689) | $11,646 | ($72,255) | ($36,572) | | Gain on sale of business, net | $— | $229,670 | $— | $229,670 | | Net (loss) income | ($23,986) | $241,362 | ($63,934) | $193,127 | | Net (loss) income per share, basic | ($0.27) | $2.75 | ($0.72) | $2.21 | | Net (loss) income per share, diluted | ($0.27) | $2.75 | ($0.72) | $2.17 | Consolidated Statements of Stockholders' Equity (Deficit) - Total stockholders' equity decreased from $256.9 million at December 31, 2022, to $208.3 million at September 30, 2023, primarily driven by a net loss of $63.9 million for the nine-month period, partially offset by share-based compensation of $15.2 million2426 Consolidated Statements of Cash Flows Consolidated Statements of Cash Flows Summary (in thousands) | Activity | Nine Months Ended Sep 30, 2023 | Nine Months Ended Sep 30, 2022 | | :--- | :--- | :--- | | Net cash used in operating activities | ($54,500) | ($26,879) | | Net cash provided by investing activities | $42,530 | $298,436 | | Net cash provided by (used in) financing activities | $246 | ($12,693) | | Net (decrease) increase in cash and cash equivalents | ($11,724) | $258,864 | - The significant decrease in cash from investing activities in 2023 compared to 2022 is primarily due to the absence of proceeds from the sale of TEMBEXA, which generated $234.0 million in 202226 Notes to the Consolidated Financial Statements - The company is focused on developing imipridones as selective cancer therapies, with dordaviprone (ONC201) for H3 K27M-mutant glioma as its lead program54 - On September 26, 2022, the company sold its worldwide rights to TEMBEXA® to an affiliate of Emergent BioSolutions Inc. for an upfront payment of approximately $238 million and potential future milestones and royalties, resulting in a net gain on sale of $229.7 million in Q3 20221575132 Share-based Compensation Expense (in thousands) | Period | Research & Development | General & Administrative | Total | | :--- | :--- | :--- | :--- | | Three Months Ended Sep 30, 2023 | $1,739 | $6,141 | $7,880 | | Three Months Ended Sep 30, 2022 | $2,097 | $1,722 | $3,819 | | Nine Months Ended Sep 30, 2023 | $5,619 | $9,585 | $15,204 | | Nine Months Ended Sep 30, 2022 | $5,827 | $5,293 | $11,120 | - In December 2022, the company restructured its operations, including a workforce reduction of 20 full-time employees, resulting in termination benefit expenses of $1.9 million138 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the company's financial condition and results of operations, focusing on its transition to a cancer-focused biopharmaceutical company developing imipridones like dordaviprone (ONC201), highlighting decreased revenue post-TEMBEXA sale, increased operating expenses, and sufficient liquidity Overview - The company's primary focus is on developing imipridones as a new class of selective cancer therapies, with the lead candidate, dordaviprone (ONC201), in a Phase 3 ACTION trial for H3 K27M-mutant glioma, with interim data expected in 2025143170 - The early-stage pipeline includes ONC206, currently in Phase 1 dose escalation trials for CNS tumors, with dose escalation expected to be completed in the first half of 2024146 Results of Operations Comparison of Nine Months Ended September 30, 2023 and 2022 (in thousands) | Account | 2023 | 2022 | $ Change | % Change | | :--- | :--- | :--- | :--- | :--- | | Total revenues | $320 | $33,010 | ($32,690) | (99.0)% | | Research and development | $53,144 | $52,350 | $794 | 1.5% | | General and administrative | $19,431 | $16,785 | $2,646 | 15.8% | | Loss from operations | ($72,255) | ($36,572) | ($35,683) | 97.6% | | Net (loss) income | ($63,934) | $193,127 | ($257,061) | (133.1)% | - The 99% decrease in revenue for the nine months ended Sep 30, 2023, is primarily due to the absence of revenue from international TEMBEXA procurement agreements secured in 2022215 - The 15.8% increase in G&A expenses for the nine-month period was mainly due to a $4.3 million increase in non-cash stock compensation related to the CEO transition, offset by a $1.7 million decrease in legal and operational expenses from the 2022 Asset Sale191192 Comparison of Three Months Ended September 30, 2023 and 2022 (in thousands) | Account | 2023 | 2022 | $ Change | % Change | | :--- | :--- | :--- | :--- | :--- | | Total revenues | $11 | $32,555 | ($32,544) | (100.0)% | | Research and development | $17,396 | $15,263 | $2,133 | 14.0% | | General and administrative | $9,304 | $5,313 | $3,991 | 75.1% | | (Loss) income from operations | ($26,689) | $11,646 | ($38,335) | (329.2)% | | Net (loss) income | ($23,986) | $241,362 | ($265,348) | (109.9)% | - The 14.0% increase in R&D expenses for Q3 2023 was driven by a $2.5 million increase in costs for the ONC201 ACTION Phase 3 study195219 Liquidity and Capital Resources - As of September 30, 2023, the company had approximately $217.0 million in capital available to fund operations, which is believed to be sufficient for at least the next 12 months250224 - The company has a $50.0 million secured revolving loan facility with Silicon Valley Bank, but availability of future advances was suspended in September 2022 following the TEMBEXA asset sale, with no amount drawn down as of September 30, 2023251 - Net cash used in operating activities for the nine months ended Sep 30, 2023, was $54.5 million, primarily due to the $63.9 million net loss253 Item 3. Quantitative and Qualitative Disclosures About Market Risk The company's primary market risk exposure is interest income sensitivity from its investment portfolio, but due to the short-term duration and low-risk profile of its investments, a 10% change in interest rates is not expected to have a material effect on its financial condition or cash flows, and inflation is also not considered material - The company's main market risk is interest income sensitivity, but due to the short-term nature and low-risk profile of its investment portfolio, an immediate 10% change in interest rates is not expected to have a material effect on the portfolio's fair market value230 - Inflation is not believed to have had a material effect on the results of operations for the three and nine months ended September 30, 2023 and 2022231 Item 4. Controls and Procedures Management, including the principal executive and financial officers, evaluated the company's disclosure controls and procedures and concluded they were effective as of September 30, 2023, with no material changes to internal control over financial reporting identified during the third quarter of 2023 - The principal executive officer and principal financial officer concluded that as of September 30, 2023, the company's disclosure controls and procedures were effective259 - There were no changes to the company's internal control over financial reporting during the third quarter of 2023 that materially affected, or are reasonably likely to materially affect, internal controls260 Part II - Other Information Item 1. Legal Proceedings The company reports no material legal proceedings during the period - The company reported no material legal proceedings262 Item 1A. Risk Factors This section details significant risks to the company's business, financial condition, and stock price, including a history of significant losses, dependence on successful clinical development and regulatory approval of ONC201, reliance on third parties, potential future funding needs, competition, intellectual property, government contracts, data security, and stock price volatility - Financial Risks: The company has a history of significant losses (except for Q3 2022 due to the Asset Sale) and anticipates incurring significant losses for the foreseeable future, potentially needing to raise additional capital which could be dilutive or on unfavorable terms237264 - Clinical & Regulatory Risks: The company's success is highly dependent on the successful clinical development, regulatory approval, and commercialization of its product candidates, particularly ONC201, with no guarantee of successful clinical trials or regulatory approval263311 - Third-Party Reliance Risks: The company relies on third-party manufacturers for drug supply and CROs for clinical trials, and any disruption, delay, or failure by these third parties could significantly harm development and commercialization efforts339378 - Commercialization Risks: The company currently lacks a sales and marketing organization and may be unable to generate significant revenue even if products are approved, as success depends on market acceptance, pricing, and reimbursement from third-party payers352380 - Intellectual Property Risks: The company's ability to compete depends on obtaining and protecting intellectual property rights, but patents may not be issued, or if issued, may be challenged or invalidated396424 - Data Privacy & IT Risks: The company processes sensitive personal and business data, subjecting it to numerous evolving data privacy and security laws (e.g., GDPR, HIPAA), where a compromise of its IT systems could lead to regulatory action, litigation, and business disruption497503 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds The company reports no unregistered sales of equity securities during the period - The company reported no unregistered sales of equity securities513 Item 3. Defaults Upon Senior Securities The company reports that this item is not applicable - Not applicable545 Item 4. Mine Safety Disclosures The company reports that this item is not applicable - Not applicable561 Item 5. Other Information The company reports no other information required to be disclosed during the period - The company reported no other information514 Item 6. Exhibits This section lists the exhibits filed as part of the quarterly report, including certifications by the principal executive and financial officers and XBRL data files - This section lists the exhibits filed with the report, including officer certifications and Inline XBRL documents516562