Cellectar Biosciences(CLRB) - 2024 Q1 - Quarterly Report

PART I. FINANCIAL INFORMATION Financial Statements Q1 2024 financials reflect increased cash and assets from financing, a $21.6 million net loss, and going concern doubts without additional funding Condensed Consolidated Balance Sheets As of March 31, 2024, cash and total assets significantly increased to $40.0 million and $42.9 million respectively, driven by financing activities, shifting to positive stockholders' equity Condensed Consolidated Balance Sheet Highlights (Unaudited) | Account | March 31, 2024 | December 31, 2023 | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $40,031,181 | $9,564,988 | | Total current assets | $41,368,365 | $10,453,213 | | TOTAL ASSETS | $42,908,439 | $12,075,580 | | Liabilities & Stockholders' Equity | | | | Total current liabilities | $16,267,944 | $12,937,624 | | TOTAL LIABILITIES | $16,742,293 | $13,431,627 | | Total stockholders' equity (deficit) | $26,166,146 | $(1,356,047) | Condensed Consolidated Statements of Operations Q1 2024 net loss increased to $21.6 million, driven by higher operating expenses and a $9.9 million non-cash warrant revaluation loss, with basic and diluted net loss per share at $0.74 Condensed Consolidated Statements of Operations (Unaudited, Three Months Ended March 31) | Account | 2024 | 2023 | | :--- | :--- | :--- | | Research and development | $7,377,940 | $6,654,094 | | General and administrative | $4,623,546 | $2,051,207 | | Total costs and expenses | $12,001,486 | $8,705,301 | | LOSS FROM OPERATIONS | $(12,001,486) | $(8,705,301) | | Loss on valuation of warrants | $(9,900,000) | — | | NET LOSS | $(21,581,637) | $(8,581,267) | | BASIC AND DILUTED NET LOSS PER SHARE | $(0.74) | $(0.76) | Condensed Consolidated Statements of Cash Flows Q1 2024 saw $13.4 million cash used in operations, offset by $43.8 million from financing, resulting in a net cash increase of $30.5 million and a quarter-end balance of $40.0 million Condensed Consolidated Statements of Cash Flows (Unaudited, Three Months Ended March 31) | Cash Flow Activity | 2024 | 2023 | | :--- | :--- | :--- | | Cash used in operating activities | $(13,361,641) | $(7,183,670) | | Cash used in investing activities | $(21,633) | — | | Cash provided by financing activities | $43,849,467 | $3 | | NET INCREASE (DECREASE) IN CASH | $30,466,193 | $(7,183,667) | Notes to Condensed Consolidated Financial Statements Notes detail the company's biopharmaceutical business, an accumulated deficit of $239.1 million, and substantial doubt about its going concern ability beyond Q4 2024 without additional funding - The company is a late-stage clinical biopharmaceutical company focused on its proprietary phospholipid drug conjugate (PDC™) delivery platform for cancer treatment[23] - As of March 31, 2024, the company had an accumulated deficit of approximately $239.1 million and expects to continue generating operating losses[24] - Management believes its cash balance is adequate to fund operations into the fourth quarter of 2024, but this raises "substantial doubt about the Company's ability to continue as a going concern" without obtaining additional funding[24][25] - In January 2024, the company received net proceeds of $42.8 million from the exercise of Tranche A warrants, which were triggered by the release of positive topline data from the CLOVER WaM trial[51] - The fair value of outstanding warrant liabilities increased from $3.7 million at year-end 2023 to $8.8 million at March 31, 2024, resulting in a non-cash loss of $9.9 million for the quarter[60][62] Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the company's late-stage biopharmaceutical focus, positive CLOVER-WaM study results, increased R&D and G&A expenses, and the need for additional capital beyond Q4 2024 Overview and Clinical Pipeline The company's lead drug, iopofosine I 131, showed positive pivotal CLOVER-WaM study results with a 61% MRR, exceeding the 20% hurdle, and holds multiple FDA and European designations for various cancers - The CLOVER-WaM pivotal study in r/r Waldenstrom's macroglobulinemia met its primary endpoint with a major response rate (MRR) of 61%, surpassing the FDA-agreed statistical hurdle of 20%[88] - In the CLOVER-WaM study, the overall response rate (ORR) was 75.6%, and 100% of patients experienced disease control. Responses were durable, with median duration of response not yet reached[88] - Iopofosine has received multiple regulatory designations, including FDA Fast Track for WM and MM, and Orphan Drug Designation for WM, MM, and several pediatric sarcomas[91] - A Phase 1 investigator-initiated study combining iopofosine with external beam radiation in recurrent head and neck cancer showed a 64% complete remission rate and a 73% ORR[127] Results of Operations Q1 2024 R&D expenses increased by 11% to $7.4 million due to manufacturing costs, while G&A expenses surged 125% to $4.6 million for commercialization infrastructure Research and Development Costs Comparison (Three Months Ended March 31) | Category | 2024 | 2023 | Variance | | :--- | :--- | :--- | :--- | | Clinical project costs | $2,693,000 | $2,625,000 | $68,000 | | Manufacturing and related costs | $3,313,000 | $1,914,000 | $1,399,000 | | Pre-clinical project costs | $21,000 | $183,000 | $(162,000) | | General R&D costs | $1,351,000 | $1,932,000 | $(581,000) | | Total R&D Expense | $7,378,000 | $6,654,000 | $724,000 | - General and administrative expense increased by $2.6 million (125%) year-over-year, primarily due to costs associated with developing commercialization infrastructure[131] Liquidity and Capital Resources The company ended Q1 2024 with $40.0 million cash, sufficient to fund operations into Q4 2024, but requires additional funding for continued operations beyond that period - As of March 31, 2024, the company's consolidated cash balance was approximately $40.0 million[132] - The current cash balance is believed to be adequate to fund budgeted operations into the fourth quarter of 2024, but the company must raise additional capital to continue beyond that point[132] Controls and Procedures As of March 31, 2024, disclosure controls and procedures were deemed ineffective due to material weaknesses in fair value accounting, segregation of duties, and stock-based compensation controls, with remediation ongoing - Management concluded that disclosure controls and procedures were not effective as of March 31, 2024[135] - A material weakness was identified related to the failure to design and maintain effective controls for applying fair value methodologies to Level 3 instruments[136] - A material weakness exists due to a limited number of finance and accounting staff, making it difficult to maintain appropriate segregation of duties[137] - A material weakness was identified in the recording of stock-based compensation due to inadequately designed internal controls[138] PART II. OTHER INFORMATION Legal Proceedings The company is not involved in any legal proceedings anticipated to materially affect its financial statements - The company does not anticipate that the outcome of ordinary course legal matters and disputes will materially affect its financial statements[146] Risk Factors No new risk factors are disclosed; investors are directed to those previously outlined in the Annual Report on Form 10-K - The report refers to the Risk Factors previously disclosed in the Form 10-K filed with the SEC on March 27, 2024[147] Exhibits The report includes required CEO and CFO certifications under Sarbanes-Oxley Sections 302 and 906, along with Interactive Data Files (XBRL) - Exhibits filed with the Form 10-Q include CEO and CFO certifications (Exhibits 31.1, 31.2, 32.1) and Interactive Data Files (Exhibits 101, 104)[153]