This Quarterly Report on Form 10-Q may contain "forward-looking statements" within the meaning ofthe United States federal securities laws. All statements other than statements of historical fact are forward-looking statements, including, without limitation: • our expectations regarding business disruptions and related risks resulting from the ongoing worldwide coronavirus pandemic known as COVID-19; • our expectations regarding sufficiency of cash resources, cash expenditures, sources of cash flows and other projections, product manufacturing and sales, research and development expenses, general and administrative expenses and additional losses;
• our ability to obtain funding for our operations;
• the timing of, and our ability to develop, commercialize, and obtain regulatory approval of pacritinib and other development programs we may pursue in the future; • the design of our clinical trials and anticipated enrollment, and the progress and potential of pacritinib and other development programs we may pursue in the future; • the safety, effectiveness and potential benefits and indications of pacritinib and any other product candidates we may develop in the future; • the timing of and results from clinical trials and pre-clinical development activities, including those related to pacritinib and any other product candidates we may develop in the future; • our ability to advance product candidates, including pacritinib and any other product candidates we may develop in the future, into and successfully complete clinical trials; • our ability to achieve profitability, including our ability to effectively implement cost reduction strategies and realize anticipated cost savings from those efforts;
• our expectations regarding federal, state and foreign regulatory requirements;
• the rate and degree of market acceptance and clinical utility of pacritinib or any other product candidates we may develop in the future; • our and our collaborators' ability to obtain and maintain regulatory approvals for pacritinib or any other product candidates we may develop in the future, and the timing of such approvals;
• our ability to maintain and establish collaborations;
• our expectations regarding market risk, including interest rate changes and foreign currency fluctuations; • our ability to protect our intellectual property and operate our business without infringing upon the intellectual property rights of others;
• the impact of government laws and regulations;
• our ability to negotiate, integrate, and implement collaborations, acquisitions and other strategic transactions; • our ability to engage and retain the employees required to advance our development activities and grow our business; • developments relating to our competitors and our industry, including the success of competing therapies that are or become available; and • those risk factors identified in this Quarterly Report on Form 10-Q under the heading Risk Factors and in other filings we periodically make with theU.S. Securities and Exchange Commission , or theSEC .
In some cases, forward-looking statements can be identified by terms such as "anticipates," "believes," "continue," "could," "estimates," "expects," "intends," "may," "plans," "potential," "predicts," "projects," "should" or "will" or the negative thereof, variations thereof and similar expressions. Such statements are based on management's current expectations
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and are subject to risks and uncertainties, which may cause actual results to
differ materially from those set forth in the forward-looking statements. There
can be no assurance that such expectations or any of the forward-looking
statements will prove to be correct, and actual results could differ materially
from those projected or assumed in the forward-looking statements. We urge you
to carefully review the disclosures we make concerning risks and other factors
that may affect our business and operating results, including those discussed
below and elsewhere in this Quarterly Report on Form 10-Q and those made under
Part I, Item 1, "Business," Part I, Item 1A, "Risk Factors," Part II, Item 7,
"Management's Discussion and Analysis of Financial Condition and Results of
Operations," and elsewhere in our Annual Report on Form 10-K for the fiscal year
ended
In addition, statements that "we believe" and similar statements reflect our beliefs and opinions on the relevant subject. These statements are based upon information available to us as of the date of this report, and while we believe such information forms a reasonable basis for such statements, such information may be limited or incomplete, and our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all potentially available relevant information. These statements are inherently uncertain and investors are cautioned not to unduly rely upon these statements.
We do not intend to update any of the forward-looking statements after the date of this Quarterly Report on Form 10-Q to conform these statements to actual results or changes in our expectations. Readers are cautioned not to place undue reliance on these forward-looking statements, which apply only as of the date of this Quarterly Report on Form 10-Q.
In this Quarterly Report on Form 10-Q, all references to "we," "us," "our," the
"Company" and "CTI" mean
OVERVIEW
We are a biopharmaceutical company focused on the acquisition, development and commercialization of novel targeted therapies for blood-related cancers that offer a unique benefit to patients and their healthcare providers. Our goal is to build a profitable company by generating income from products we develop and commercialize, either alone or with partners. We concentrate our efforts on treatments that target blood-related cancers where there is an unmet medical need. In particular, we are focused on evaluating pacritinib, our sole product candidate currently in active development, for the treatment of adult patients with myelofibrosis. In addition, we have recently started developing pacritinib for use in hospitalized patients with severe COVID-19, in response to the COVID-19 pandemic.
Pacritinib is an investigational oral kinase inhibitor with specificity for JAK2, FLT3, IRAK1 and CSF1R. The JAK family of enzymes is a central component in signal transduction pathways, which are critical to normal blood cell growth and development, as well as inflammatory cytokine expression and immune responses. Mutations in these kinases have been shown to be directly related to the development of a variety of blood-related cancers, including myeloproliferative neoplasms, leukemia and lymphoma. In addition to myelofibrosis, the kinase profile of pacritinib suggests its potential therapeutic utility in conditions such as acute myeloid leukemia, or AML, myelodysplastic syndrome, or MDS, chronic myelomonocytic leukemia, or CMML, and chronic lymphocytic leukemia, or CLL, due to its inhibition of c-fms, IRAK1, JAK2 and FLT3. We believe pacritinib has the potential to be delivered as a single agent or in combination therapy regimens.
In
In
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randomized, double-blind, placebo-controlled multicenter study will compare
pacritinib plus Standard of Care, or SOC, versus placebo plus SOC in
hospitalized patients with severe COVID-19, including those with a current or
prior diagnosis of cancer. The primary endpoint of the trial will assess the
proportion of patients who progress to invasive mechanical ventilation and/or
extracorporeal membrane oxygenation or die by Day 28. We commenced enrollment of
PRE-VENT in the second quarter of 2020 in
Patients enrolled in PRE-VENT will be randomized 1:1 to receive pacritinib (400 mg once daily on Day 1, then 200 mg twice daily from Day 2 to Day 14) plus SOC or placebo plus SOC. Assigned treatment will continue up to Day 14 or until the patient experiences intolerable adverse events, withdraws consent, initiates another investigational therapy or until the study is terminated. Assigned therapy may be given for an additional seven days (for a total of 21 days) at the discretion of the investigator and with medical monitor approval. In the event of hospital discharge, patients will complete treatment with the assigned therapy as an outpatient.
As a JAK2, IRAK-1 and CSF-1R inhibitor, pacritinib may ameliorate the effects of cytokine storm, a pathological immune reaction that can be triggered by viral infection and can lead to serious complications, including acute respiratory distress syndrome. Multiple inflammatory cytokines are upregulated in patients with severe COVID-19, including IL-1 and IL-6, and some patients have evidence of over-active macrophage activation. As a JAK2/IRAK-1 inhibitor, pacritinib may ameliorate the effects of cytokine storm via inhibition of IL-6 and IL-1 signaling. Furthermore, as a CSF-1R inhibitor, pacritinib may mitigate effects of macrophage activation syndrome.
We face numerous risks in connection with clinical development of pacritinib generally and with respect to attempts to expedite the FDA regulatory approval process specifically. For more information, see Item 1A-Risk Factors-Risks Related to the Development, Clinical Testing and Regulatory Approval of Our Product Candidates.
We have historically funded our operations through the sale of equity
securities, funding received from our licensees and collaborators and debt
financing. We do not expect to achieve or sustain profitability for the
foreseeable future. We had a net loss of
We have incurred significant operating losses to date and expect to continue to incur significant expenses and operating losses for at least the next 12 to 24 months. We anticipate that our expenses will increase as we:
•continue our research and clinical development of pacritinib;
•seek regulatory and marketing approvals for pacritinib if we successfully complete the remainder of its anticipated clinical development paths; and
•maintain, protect and expand our intellectual property portfolio.
Factors Affecting Performance
Research and Development Activities
We will need to commit significant time and resources to develop our current and any future product candidates. Our sole product candidate currently in active development, pacritinib, is currently in clinical development in two clinical trial pathways. Many drugs in human clinical trials fail to demonstrate the desired safety and efficacy characteristics. We are unable to provide the nature, timing and estimated costs of the efforts necessary to complete the development of pacritinib because, among other reasons, we cannot predict with any certainty the pace of patient enrollment of our clinical trials, which is a function of many factors, including the availability and proximity of patients with the relevant condition and the availability of the compounds for use in the applicable trials. We rely on third parties to conduct clinical trials, which may result in delays or failure to complete trials if the third parties fail to perform or meet applicable standards.
Additionally, we continue to evaluate and manage the impact of the COVID-19 global pandemic on our operations and the conduct of our clinical trials, including considerations of the vulnerable nature of the patient population participating in our trials, reduced or halted activities at our clinical trial sites, and an increase in fatalities or other adverse events due to medical problems related to the COVID-19 global pandemic and the benefits of continued patient access to pacritinib. Even after a
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clinical trial is enrolled, preclinical and clinical data can be interpreted in different ways, which could delay, limit or preclude regulatory approval and advancement of this compound through the development process.
Regulatory agencies, including the FDA and EMA, regulate many aspects of a product candidate's life cycle, including research and development and preclinical and clinical testing. We or regulatory authorities may suspend clinical trials at any time on the basis that the participants are being exposed to unacceptable health risks. In addition, based on our interactions with regulatory authorities we have, and may in the future, seek changes to the protocol of clinical trials if we believe such changes may enhance the probability of approval or are necessary to protect patient safety. Such changes, if any, would impact the size, timing and cost of clinical development. Even if a product candidate progresses successfully through initial human testing in clinical trials, it may fail in later stages of development, including as a result of a failure to adequately demonstrate safety or efficacy to the satisfaction of applicable regulatory authorities. A number of companies in the pharmaceutical industry, including us, have suffered significant setbacks in advanced clinical trials, even after reporting promising results in earlier trials. For these reasons, among others, we cannot estimate the date on which clinical development of any product candidate will be completed, if ever, or when we will be able to begin commercializing pacritinib to generate material net cash inflows. In order to generate revenue from any of these compounds, any product candidate needs to be developed to a stage that will enable us to commercialize, sell or license related marketing rights to third parties.
We may also enter into collaboration agreements for the development and commercialization of our product candidates. We cannot control the amount and timing of resources our collaborators devote to product candidates, which may also result in delays in the development or marketing of products. Because of these risks and uncertainties, we cannot accurately predict when or whether we will successfully complete the development of any of our product candidates or the ultimate product development costs.
The risks and uncertainties associated with completing development on schedule and the consequences to operations, financial position and liquidity if the project is not timely completed are discussed in more detail in our risk factors, which can be found in Part II, Item 1A, "Risk Factors" of this report.
Financial Summary
Our license and contract revenues reflect the earned amount of upfront payments
and milestone payments under our product collaborations. Total revenues were
As of
RESULTS OF OPERATIONS
Three and six months ended
License and Contract Revenues
License and contract revenues are summarized as follows (in thousands):
Three Months Ended Six Months Ended June 30, June 30, 2020 2019 2020 2019 Servier Development services revenue $ - $ - $ -$ 99 Royalty revenue - 180 - 342 Other revenue - 236 - 615 Total $ -$ 416 $ -$ 1,056
License and contract revenue for the six months ended
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Operating costs and expenses
Research and development expenses. Our research and development expenses for compounds under development and preclinical development were as follows (in thousands): Three Months Ended Six Months Ended June 30, June 30, 2020 2019 2020 2019 Compounds: Pacritinib$ 4,856 $ 4,254 $ 6,591 $ 7,418 PIXUVRI - 364 - 939 Unallocated operating expenses 1,343 1,738 2,872 3,171
Total research and development expenses
Costs for our compounds include external direct expenses such as principal
investigator fees, charges from contract research organizations, or CROs, and
contract manufacturing fees incurred for preclinical, clinical, manufacturing
and regulatory activities associated with preparing the compounds for
submissions of NDAs or similar regulatory filings to the FDA, the EMA or other
regulatory agencies outside
Research and development expenses decreased to
General and administrative expenses. General and administrative expenses were
Restructuring expenses. In
Other operating expense. Other operating expense of
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Significant Accounting Policies - Italian Value Added Tax Receivable for further
details. There was no such expense for the three months ended
Non-operating income and expenses
Interest income. Interest income was
Interest expense. Interest expense was
Amortization of debt discount and issuance costs. Amortization of debt discount
and issuance costs of
Loss on dissolution of majority-owned subsidiary. A loss of
LIQUIDITY AND CAPITAL RESOURCES
Sources of Liquidity
We have funded our operations from proceeds from sales and issuance of equity
securities, payments pursuant to license and collaboration agreements and the
incurrence of debt. As of
Rights offering. In
Common Stock Offering. In
Loan Agreement. In
Historical Cash Flows
Net cash used in operating activities. Net cash used in operating activities
increased to
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milestone of TRISENOX. These cash receipts in 2019 were offset by a
Net cash provided by investing activities. Net cash provided by investing
activities was
Net cash provided by (used in) financing activities. Net cash provided by
financing activities was
In
Capital Resources
We have prepared our condensed consolidated financial statements assuming that
we will continue as a going concern, which contemplates realization of assets
and the satisfaction of liabilities in the normal course of business. We believe
that, as of the date of the filing of this Quarterly Report on Form 10-Q, our
present financial resources will be sufficient to fund our operations into the
fourth quarter of 2021. However, we have incurred net losses since inception and
expect to generate losses for the foreseeable future, primarily due to research
and development costs for pacritinib. Because of our reacquisition of worldwide
rights for pacritinib, we are no longer eligible to receive cost sharing or
milestone payments for pacritinib's development from Baxalta, and losses related
to research and development for pacritinib have increased. We have historically
funded our operations through equity financings, borrowings and funds obtained
under product collaborations, any or all of which may not be available to us in
the future. As of
Financial resource forecasts are subject to change as a result of a variety of
risks and uncertainties. Changes in manufacturing, developments in and expenses
associated with our clinical trials and the other factors identified under
"Capital Requirements" below may consume capital resources earlier than planned.
Additionally, following our and
Capital Requirements
We will need to acquire additional funds in order to develop our business and continue the development of pacritinib. We may seek to raise such capital through public or private equity financings, partnerships, collaborations, joint ventures, disposition of assets, debt financings or restructurings, bank borrowings or other sources of financing. However, we have a limited number of authorized shares of common stock available for issuance and additional funding may not be available on favorable terms or at all. If additional funds are raised by issuing equity securities, substantial dilution to existing stockholders may result. If we fail to obtain additional capital when needed, our ability to operate as a going concern will be harmed, and we may be required to delay, scale back or eliminate some or all of our research and development programs and/or reduce our general and administrative expenses, be unable to attract and retain highly qualified personnel, be unable to obtain and maintain contracts necessary to continue our operations and at affordable rates with competitive terms, refrain from making our contractually required payments when due (including debt payments) and/or be forced to cease operations, liquidate our assets and possibly seek bankruptcy protection. Our future capital requirements will depend on many factors, including:
• disruptions or other delays to our business and clinical trials resulting
from the ongoing worldwide coronavirus
pandemic known as COVID-19;
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• developments in and expenses associated with our research and development activities; • changes in manufacturing; • our clinical development plans and any changes that we may initiate or that may be requested by the FDA or other regulators;
• regulatory approval developments;
• our ability to generate sales of any approved product;
• our ability to execute appropriate collaborations for development and commercialization activities; • our ability to reach milestones triggering payments under certain of our contractual arrangements;
• acquisitions of compounds or other assets;
• litigation and other disputes;
• competitive market developments; and
• other unplanned business developments.
LICENSE AGREEMENTS AND MILESTONE ACTIVITIES
For information regarding our license agreements and milestone activities,
please see Part I, Item 1, "Business - License Agreements" of our Annual Report
on Form 10-K for the year ended
CRITICAL ACCOUNTING POLICIES
The preparation of financial statements in conformity with GAAP requires
estimates and assumptions that affect the reported amounts of assets and
liabilities, revenues and expenses and related disclosure in the preparation of
our condensed consolidated financial statements and accompanying notes. Our
critical accounting policies are those that significantly impact our financial
condition and results of operations and require the most difficult, subjective
or complex judgments, often as a result of the need to make estimates about the
effect of matters that are inherently uncertain. Because of this uncertainty,
actual results may vary from these estimates. For a discussion of our critical
accounting estimates, please see Part II, Item 7, "Management's Discussion and
Analysis of Financial Condition and Results of Operations" of our Annual Report
on Form 10-K for the year ended
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