On November 14, 2022 Exicure, Inc. (Nasdaq: XCUR), an early-stage biotechnology company historically focused on developing nucleic acid therapies targeting ribonucleic acid against validated targets, reported financial results for the quarter ended September 30, 2022 and provided an update on its business strategy and corporate progress (Press release, Exicure, NOV 14, 2022, View Source [SID1234623984]).
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Corporate Update
•As previously reported, on September 26, 2022, the Company announced its commitment to a plan to wind down the Company’s existing preclinical programs, including the development of its SCN9A program, to suspend all of its research and development activities, including suspension of all partnered programs, and to implement a reduction in force where the Company reduced approximately 66% of its then-existing workforce, as well as other cost-cutting measures (collectively, the "Plan"). The purpose of the Plan was to decrease expenses, thereby, extending the Company’s cash runway, and enable the Company to maintain a streamlined organization to support key corporate functions while it continues to actively pursue strategic alternatives to maximize stockholder value.
•The reduction in force announced on September 26, 2022 is now substantially complete.
•The Company continues to actively pursue out-license opportunities for its clinical asset, cavrotolimod, as well as for its preclinical candidates, including the SCN9A program for neuropathic pain, and to pursue all strategic alternatives with the goal of maximizing stockholder value.
•As also previously reported, on September 26, 2022, the Company entered into a securities purchase agreement with CBI USA, Inc. ("CBI USA"), pursuant to which it agreed to issue and sell to CBI USA in a private placement an aggregate of 3,400,000 shares of Exicure’s common stock, par value $0.0001 per share, at a purchase price of $1.60 per share (the "Private Placement").
◦The Private Placement is expected to close in the fourth quarter of 2022, subject to the satisfaction of certain closing conditions, including the Company’s stockholders voting in favor of the Private Placement. On November 10, 2022, the Company has filed and mailed its definitive proxy statement in connection with the special meeting to be held on December 15, 2022 at which the Company’s stockholders will be asked to vote on approval of the Private Placement.
◦Immediately following the closing of the Private Placement, CBI USA will hold approximately 50.4% of the shares of the Company’s common stock. The Company expects to receive aggregate gross proceeds from the Private Placement of approximately $5.4 million, before deducting estimated offering expenses payable by Exicure.
"We look forward to the possibility of working with CBI USA to potentially pursue strategic transactions," commented Matthias Schroff, Ph.D., Chief Executive Officer of Exicure. "While awaiting shareholder approval of the private placement transaction with CBI USA, Exicure continues to explore strategic alternatives for its existing clinical and preclinical programs to maximize stockholder value."
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Third Quarter 2022 Financial Results
Cash Position: Cash, cash equivalents and short-term investments, and restricted cash were $16.8 million as of September 30, 2022, as compared to $48.3 million as of December 31, 2021. The Company expects that its existing cash and cash equivalents (which excludes expected proceeds from the Private Placement as the Private Placement has not closed) will enable it to fund its current operations into the second quarter of 2023.
Revenue: Revenue was $2.0 million for the quarter ended September 30, 2022, reflecting an increase of $5.7 million from revenue of $(3.7) million for the quarter ended September 30, 2021. The increase in collaboration revenue of $5.7 million is mostly due to an increase in revenue related to the Company’s collaboration with AbbVie, Inc. ("AbbVie") of $5.1 million, as well as an increase in revenue related to the Company’s collaboration with Ipsen Biopharm Limited of $0.6 million. Revenue recognized under the Company’s collaboration with AbbVie for the three months ended September 30, 2021 reflected the cumulative catchup adjustment (reduction) of revenue of $(4.5) million in connection with the change in estimate that resulted from a change in workplan during the third quarter of 2021.
Research and Development (R&D) Expense: Research and development expenses were $4.8 million for the quarter ended September 30, 2022, as compared to $16.5 million for the quarter ended September 30, 2021. The decrease in R&D expense for the three months ended September 30, 2022 of approximately $11.7 million reflects fewer clinical, preclinical, and discovery program activities and a reduction in headcount resulting from the strategic restructuring activities and discontinuation of cavrotolimod program that were announced in December 2021.
General and Administrative (G&A) Expense: General and administrative expenses were $2.4 million for the quarter ended September 30, 2022, as compared to $2.9 million for the quarter ended September 30, 2021. The decrease in G&A expense of approximately $0.5 million for the three months ended September 30, 2022 was mostly due lower compensation and related costs in connection with a lower headcount during the period resulting from the restructuring activities that were announced in December 2021 and lower accrued bonus expense in the current year period resulting from the reduction of the estimated 2022 bonus liability, as well as lower accounting costs. These lower costs in the current year period were partially offset by higher legal, consultant, and advisory costs incurred.
Net Loss: The Company had a net loss of $5.2 million for the quarter ended September 30, 2022, as compared to a net loss of $23.5 million for the quarter ended September 30, 2021. The decrease in net loss was primarily driven by lower R&D expense and higher non-cash revenue during the period.
Going Concern: Given the Company’s current cash position, operating plans and forecasted negative cash flows from operating activities over the next twelve months, management believes there is substantial doubt regarding the Company’s ability to continue as a going concern within one year after the date that its unaudited condensed consolidated financial statements for the quarter ended September 30, 2022 are issued. The Company will require substantial additional financing to address the Company’s working capital and other financing needs to pursue its business strategy. There is a significant likelihood that, without the consummation of the Private Placement, the Company will need to seek bankruptcy protection in the near term, which may result in its stockholders receiving no or very little value in respect of their shares of the Company’s common stock.