Corbus Pharmaceuticals(CRBP) - 2021 Q3 - Quarterly Report

PART I — FINANCIAL INFORMATION Item 1. Financial Statements This section presents Corbus Pharmaceuticals' unaudited condensed consolidated financial statements, including balance sheets, statements of operations, equity, and cash flows, with explanatory notes Condensed Consolidated Balance Sheets Total assets increased to $119.6 million, liabilities decreased to $41.9 million, and stockholders' equity grew to $77.6 million by September 30, 2021 Condensed Consolidated Balance Sheet Highlights (in thousands) | Balance Sheet Item | Sep 30, 2021 (Unaudited) | Dec 31, 2020 | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $37,119 | $85,433 | | Marketable securities | $69,744 | $0 | | Total current assets | $111,667 | $92,075 | | Total assets | $119,574 | $102,295 | | Liabilities & Equity | | | | Accounts payable | $2,546 | $7,381 | | Accrued expenses | $13,368 | $22,005 | | Total current liabilities | $17,144 | $31,898 | | Long-term debt, net | $18,551 | $18,029 | | Total liabilities | $41,945 | $57,020 | | Total stockholders' equity | $77,629 | $45,275 | Condensed Consolidated Statements of Operations and Comprehensive Loss Net loss significantly narrowed to $2.2 million in Q3 2021 and $35.4 million for nine months, driven by reduced R&D expenses and increased other income Statement of Operations Highlights (in thousands, except per share data) | Metric | Q3 2021 | Q3 2020 | Nine Months 2021 | Nine Months 2020 | | :--- | :--- | :--- | :--- | :--- | | Revenue from awards and licenses | $97 | $1,231 | $882 | $3,279 | | Research and development | $8,696 | $27,523 | $30,682 | $82,157 | | General and administrative | $5,277 | $7,682 | $16,191 | $23,120 | | Operating loss | $(13,875) | $(33,974) | $(45,991) | $(101,998) | | Other income (expense), net | $11,699 | $(921) | $10,611 | $(660) | | Net loss | $(2,176) | $(34,895) | $(35,380) | $(102,657) | | Net loss per share | $(0.02) | $(0.43) | $(0.29) | $(1.37) | Condensed Consolidated Statement of Stockholders' Equity Stockholders' equity increased to $77.6 million, primarily due to $59.1 million in common stock issuance proceeds, partially offset by net loss - For the nine months ended September 30, 2021, the company issued 25.5 million shares of common stock, raising net proceeds of $59.1 million after issuance costs[22] - The increase in stockholders' equity was offset by a net loss of $35.4 million for the nine-month period[22] Condensed Consolidated Statements of Cash Flows Net cash used in operations was $38.5 million, investing used $70.2 million, and financing provided $60.1 million, resulting in a $48.7 million net cash decrease Cash Flow Summary (Nine Months Ended Sep 30, in thousands) | Cash Flow Activity | 2021 | 2020 | | :--- | :--- | :--- | | Net cash used in operating activities | $(38,481) | $(81,461) | | Net cash used in investing activities | $(70,239) | $(537) | | Net cash provided by financing activities | $60,055 | $133,140 | | Net (decrease) increase in cash | $(48,665) | $51,142 | Notes to Unaudited Condensed Consolidated Financial Statements Notes detail the company's drug development focus, liquidity outlook, new license agreements, and secured loan terms - The company is focused on developing medicines targeting inflammation, fibrosis, metabolism, and immuno-oncology, with a pipeline including small molecules and anti-integrin monoclonal antibodies[28] - Management expects its cash, cash equivalents, and marketable securities of approximately $106.9 million at September 30, 2021, to be sufficient to meet operating requirements for at least twelve months from the filing date[32] - In Q3 2021, the company received $12.3 million in cash for refundable research and development tax credits from a foreign taxing authority, which was recorded as other income[64] - The company entered into a $50 million secured loan agreement with K2 HealthVentures in July 2020, receiving an initial $20 million tranche, maturing in August 2024[92] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses financial performance, liquidity, and business outlook, highlighting reduced operating expenses and pipeline developments, with capital sufficient into Q1 2024 Overview Corbus, an immunology company, details its diverse pipeline, including anti-integrin mAbs and lenabasum, and recent licensing activities - The company's pipeline includes anti-integrin monoclonal antibodies (CRB-601, CRB-602), lenabasum (CB2 agonist), CB1 inverse agonists, and novel CB2 agonists[159][160] - The Phase 3 study of lenabasum in dermatomyositis, completed in June 2021, did not meet its primary or secondary endpoints[161] - In May 2021, the company licensed CRB-602 from Milky Way BioPharma and CRB-601 from the University of California, San Francisco (UCSF) to expand its anti-integrin mAb program[165][166] Results of Operations Financial results improved in 2021 due to significant reductions in R&D and G&A expenses, and a boost from refundable R&D tax credits Change in Operating Expenses (Q3 2021 vs Q3 2020) | Expense Category | Change (in millions) | Primary Driver | | :--- | :--- | :--- | | Research & Development | $(18.8) | Lower clinical trial expenses for lenabasum | | General & Administrative | $(2.4) | Lower compensation and consulting expenses | Change in Operating Expenses (Nine Months 2021 vs 2020) | Expense Category | Change (in millions) | Primary Driver | | :--- | :--- | :--- | | Research & Development | $(51.5) | Lower clinical, manufacturing, and compensation costs | | General & Administrative | $(6.9) | Decreases in compensation, marketing, and consulting costs | - Other income for Q3 2021 increased by $12.6 million year-over-year, primarily due to the receipt of approximately $12.3 million in refundable R&D tax credits from a foreign authority[182] Liquidity and Capital Resources The company held $107.5 million in liquid assets, sufficient to fund operations into Q1 2024, but anticipates needing additional capital for long-term development - The company's cash, cash equivalents, marketable securities, and restricted cash totaled approximately $107.5 million at September 30, 2021[196] - Management projects the current cash position is sufficient to fund operations into the first quarter of 2024[196] - For the nine months ended September 30, 2021, the company raised approximately $60.1 million in net cash from financing activities, primarily through its "at the market" offering[193] - The company will need to raise significant additional capital to continue funding operations and clinical trials for lenabasum and other candidates[197] Critical Accounting Policies and Estimates This section outlines critical accounting policies requiring significant judgment, including stock-based compensation, R&D accruals, lease accounting, revenue, and derivative liabilities - Key areas requiring significant estimates include stock-based compensation, accrued R&D expenses, lease accounting, revenue recognition, and derivative liabilities[200] - Accrued R&D expenses are estimated based on services performed by CROs and contract manufacturers, involving judgment on service completion when invoices are not yet received[204][205][206] Item 3. Quantitative and Qualitative Disclosures About Market Risk The company deems this section not applicable, indicating no material exposure to market risks requiring disclosure - The company states this item is 'Not Applicable'[219] Item 4. Controls and Procedures Management concluded that disclosure controls and procedures were effective, with no material changes to internal control over financial reporting during the quarter - The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of the end of the period[220] - No changes in internal control over financial reporting occurred during the quarter that materially affected, or are reasonably likely to materially affect, internal controls[221] PART II — OTHER INFORMATION Item 1. Legal Proceedings The company reports that it is not currently a party to any material legal proceedings - The company is not currently subject to any material legal proceedings[223] Item 1A. Risk Factors The company states that there have been no material changes to the risk factors disclosed in its Annual Report on Form 10-K for the year ended December 31, 2020 - There have been no material changes in or additions to the risk factors included in the Annual Report on Form 10-K for the year ended December 31, 2020[224] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds The company reports no unregistered sales of equity securities during the reporting period - None reported[226] Item 6. Exhibits This section lists the exhibits filed with the Form 10-Q, which include a separation agreement, an amendment to an employment agreement, and required officer certifications and XBRL data files - Exhibits filed include a separation agreement, an amendment to an employment agreement, and certifications by the CEO and CFO[236][237][239]