Chemocentryx Earnings 2020-03-31

Balance Sheet	Income Statement	Cash Flow
Assets, Equity	Rev, G Profit, Net Income	Ops, Inv, Fin

10-Q 1 ccxi-10q_20200331.htm 10-Q ccxi-10q_20200331.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

Form 10-Q

(Mark One)

☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2020

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number: 001-35420

ChemoCentryx, Inc.

(Exact Name of Registrant as Specified in its Charter)


Delaware	94-3254365
(State or Other Jurisdiction of Incorporation or Organization)	(I.R.S. Employer Identification No.)

850 Maude Avenue Mountain View, California	94043
(Address of Principal Executive Offices)	(Zip Code)

(650) 210-2900

(Registrant’s Telephone Number, Including Area Code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $0.001 per share	CCXI	The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ☒ Yes ☐ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☐	Accelerated filer	☒
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13 (a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

The number of outstanding shares of the registrant’s common stock, par value $0.001 per share, as of April 30, 2020 was 61,854,015.

CHEMOCENTRYX, INC.

QUARTERLY REPORT ON FORM 10-Q

For the quarterly period ended March 31, 2020

Table of Contents


PART I. FINANCIAL INFORMATION		Page

Item 1.	Financial Statements (Unaudited)	3

	Condensed Consolidated Balance Sheets – March 31, 2020 and December 31, 2019	3

	Condensed Consolidated Statements of Operations – Three Months Ended March 31, 2020 and 2019	4

	Condensed Consolidated Statements of Comprehensive Loss – Three Months Ended March 31, 2020 and 2019	5

	Condensed Consolidated Statements of Stockholders’ Equity – Three Months Ended March 31, 2020 and 2019	6

	Condensed Consolidated Statements of Cash Flows – Three Months Ended March 31, 2020 and 2019	7

	Notes to Condensed Consolidated Financial Statements	8

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	19

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	26

Item 4.	Controls and Procedures	27

PART II. OTHER INFORMATION

Item 1.	Legal Proceedings	28

Item 1A.	Risk Factors	28

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	29

Item 3.	Defaults Upon Senior Securities	29

Item 4.	Mine Safety Disclosures	29

Item 5.	Other Information	29

Item 6.	Exhibits	29

EXHIBIT INDEX		30

SIGNATURES		31

PART I. FINANCIAL INFORMATION

Item 1.

Financial Statements

CHEMOCENTRYX, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except share and par value data)

(unaudited)

	March 31,			December 31,
	2020			2019
Assets
Current assets:
Cash and cash equivalents	$	59,436		$	39,179
Short-term investments		124,255			133,607
Accounts receivable, other		153			176
Accounts receivable from related party		15			—
Prepaid expenses and other current assets		2,810			1,400
Total current assets		186,669			174,362
Property and equipment, net		2,746			2,154
Long-term investments		5,140			29,454
Operating lease right-of-use assets		1,407			1,704
Other assets		1,340			1,409
Total assets	$	197,302		$	209,083
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	2,371		$	1,532
Accrued and other current liabilities		14,811			19,806
Deferred revenue from related party		40,764			37,742
Total current liabilities		57,946			59,080
Long-term debt, net		24,178			19,786
Non-current deferred revenue from related party		54,234			63,095
Other non-current liabilities		783			1,122
Total liabilities		137,141			143,083
Commitments (Note 7)
Stockholders’ equity:
Preferred stock, $0.001 par value, 10,000,000 shares authorized; no shares issued and outstanding		—			—
Common stock, $0.001 par value, 200,000,000 shares authorized; 61,792,661 and 60,234,784 shares issued and outstanding at March 31, 2020 and December 31, 2019, respectively		62			60
Additional paid-in capital		511,571			495,624
Note receivable		(16	)		(16	)
Accumulated other comprehensive income		217			318
Accumulated deficit		(451,673	)		(429,986	)
Total stockholders’ equity		60,161			66,000
Total liabilities and stockholders’ equity	$	197,302		$	209,083

See accompanying notes.

CHEMOCENTRYX, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share data)

(unaudited)

	Three Months Ended March 31,
	2020			2019
Revenue:
Collaboration and license revenue from related party	$	5,855		$	8,327
Grant revenue		153			—
Total revenue		6,008			8,327

Operating expenses:
Research and development		19,311			15,354
General and administrative		8,820			5,501
Total operating expenses		28,131			20,855
Loss from operations		(22,123	)		(12,528	)
Other income (expense):
Interest income		984			1,121
Interest expense		(548	)		(542	)
Total other income, net		436			579
Net loss	$	(21,687	)	$	(11,949	)
Basic and diluted net loss per common share	$	(0.35	)	$	(0.23	)
Shares used to compute basic and diluted net loss per common share		61,295			52,395

See accompanying notes.

CHEMOCENTRYX, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(in thousands)

(unaudited)

	Three Months Ended March 31,
	2020			2019
Net loss	$	(21,687	)	$	(11,949	)
Unrealized gain (loss) on available-for-sale securities		(101	)		194
Comprehensive loss	$	(21,788	)	$	(11,755	)

See accompanying notes.

CHEMOCENTRYX, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(in thousands, except share data)

(unaudited)

	Common Stock					Additional Paid-In			Note			Accumulated Other Comprehensive			Accumulated			Total Stockholders'
	Shares			Amount		Capital			Receivable			Income (Loss)			Deficit			Equity
Balance as of December 31, 2019		60,234,784		$	60	$	495,624		$	(16	)	$	318		$	(429,986	)	$	66,000
Net loss		-			-		-			-			-			(21,687	)		(21,687	)
Unrealized loss on investments		-			-		-			-			(101	)		-			(101	)
Issuance of common stock under equity incentive plans		1,645,869			2		14,797			-			-			-			14,799
Repurchased shares upon vesting of restricted stock units for tax withholdings		(87,992	)		-		(3,480	)		-			-			-			(3,480	)
Employee stock-based compensation		-			-		4,374			-			-			-			4,374
Compensation expense related to options granted to consultants		-			-		256			-			-			-			256
Balance as of March 31, 2020		61,792,661		$	62	$	511,571		$	(16	)	$	217		$	(451,673	)	$	60,161

	Common Stock					Additional Paid-In			Note			Accumulated Other Comprehensive			Accumulated			Total Stockholders'
	Shares			Amount		Capital			Receivable			Income (Loss)			Deficit			Equity
Balance as of December 31, 2018		50,652,238		$	51	$	389,398		$	(16	)	$	(198	)	$	(374,497	)	$	14,738
Net loss		-			-		-			-			-			(11,949	)		(11,949	)
Unrealized gain on investments		-			-		-			-			194			-			194
Issuance of common stock through Equity Distribution Agreement, net of issuance costs		6,491,196			6		73,270			-			-			-			73,276
Issuance of common stock under equity incentive plans		690,100			1		2,851			-			-			-			2,852
Repurchased shares upon vesting of restricted stock units for tax withholdings		(107,619	)		-		(1,174	)		-			-			-			(1,174	)
Employee stock-based compensation		-			-		2,662			-			-			-			2,662
Compensation expense related to options granted to consultants		-			-		40			-			-			-			40
Balance as of March 31, 2019		57,725,915		$	58	$	467,047		$	(16	)	$	(4	)	$	(386,446	)	$	80,639

See accompanying notes.

CHEMOCENTRYX, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(unaudited)

	Three Months Ended March 31,
	2020			2019
Operating activities
Net loss	$	(21,687	)	$	(11,949	)
Adjustments to reconcile net loss to net cash used in operating activities:
Stock-based compensation		4,630			2,702
Depreciation of property and equipment		143			141
Amortization of right-of-use assets		297			239
Non-cash interest income, net		155			(436	)
Changes in assets and liabilities:
Accounts receivable, other		23			—
Accounts receivable due from related party		(15	)		1,891
Prepaids and other current assets		(754	)		(1,778	)
Other assets		69			180
Accounts payable		1,042			327
Other liabilities		(5,510	)		(1,443	)
Deferred revenue from related party		(5,839	)		(8,160	)
Net cash used in operating activities		(27,446	)		(18,286	)
Investing activities
Purchases of property and equipment, net		(868	)		(46	)
Purchases of investments		(11,434	)		(75,235	)
Sales of investments		—			4,967
Maturities of investments		44,330			65,170
Net cash provided by (used in) investing activities		32,028			(5,144	)
Financing activities
Proceeds from issuance of common stock		—			73,276
Proceeds from exercise of stock options		14,797			2,573
Employees' tax withheld and paid for restricted stock units		(3,480	)		(1,174	)
Borrowings under credit facility agreement, net of issuance costs		4,358			—
Net cash provided by financing activities		15,675			74,675
Net increase in cash, cash equivalents and restricted cash		20,257			51,245
Cash, cash equivalents and restricted cash at beginning of period		40,259			28,088
Cash, cash equivalents and restricted cash at end of period	$	60,516		$	79,333
Supplemental disclosures of cash flow information
Cash paid for interest	$	407		$	422
Right-of-use assets obtained in exchange for lease obligations ⁽¹⁾	$	—		$	1,301
Purchases of property and equipment, net recorded in accounts payable	$	(132	)	$	—

(1)	Amount for the three months ended March 31, 2019 include the transition adjustment of $1,301 for the adoption of Accounting Standards Update (ASU) No. 2016-02, Leases (Topic 842).

See accompanying notes.

CHEMOCENTRYX, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2020

(unaudited)

1.	Description of Business

ChemoCentryx, Inc. (the Company) commenced operations in 1997. The Company is a biopharmaceutical company focused on the development and commercialization of new medications targeted at inflammatory disorders, autoimmune diseases and cancer. The Company’s principal operations are in the United States and it operates in one segment.

Unaudited Interim Financial Information

The financial information filed is unaudited. The Condensed Consolidated Financial Statements included in this report reflect all adjustments (consisting only of normal recurring adjustments) that the Company considers necessary for the fair statement of the results of operations for the interim periods covered and of the financial condition of the Company at the date of the interim balance sheet. The December 31, 2019 Condensed Consolidated Balance Sheet was derived from audited financial statements. The results for interim periods are not necessarily indicative of the results for the entire year or any other interim period. The Condensed Consolidated Financial Statements should be read in conjunction with the Company’s financial statements and the notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019 filed with the Securities and Exchange Commission on March 10, 2020.

2.	Summary of Significant Accounting Policies

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States (GAAP) requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results could differ from these estimates.

Concentration of Credit Risk

The Company invests in a variety of financial instruments and, by its policy, limits the amount of credit exposure with any one issuer, industry or geographic area.

Accounts receivable are typically unsecured and are concentrated in the pharmaceutical industry and government sector. Accordingly, the Company may be exposed to credit risk generally associated with pharmaceutical companies and government funded entities. The Company has not historically experienced any significant losses due to concentration of credit risk.

Total accounts receivable consists of the following (in thousands):

	March 31,		December 31,
	2020		2019
Vifor (International) Ltd., and/or its affiliates, or collectively, Vifor	$	15	$	—
U.S. Food and Drug Administration		153		176
	$	168	$	176

Net Loss Per Share

Basic net loss per common share is computed by dividing net loss attributable to common stockholders by the weighted-average number of common shares outstanding during the period, without consideration for common stock equivalents.

Diluted net loss per share is computed by dividing net loss attributable to common stockholders by the sum of the weighted-average number of common shares outstanding and dilutive common stock equivalent shares outstanding for the period. The Company’s potentially dilutive common stock equivalent shares, which include incremental common shares issuable upon (i) the exercise of outstanding stock options and warrants, (ii) vesting of restricted stock units (RSUs) and restricted stock awards (RSAs), and (iii) the purchase from contributions to the 2012 Employee Stock Purchase Plan (the ESPP), (calculated based on the treasury stock method), are only included in the calculation of diluted net loss per share when their effect is dilutive.

For the three months ended March 31, 2020 and 2019, the following potentially dilutive securities were excluded from the calculation of diluted net loss per share due to their anti-dilutive effect:

	Three Months Ended March 31,
	2020		2019
Options to purchase common stock, including purchases from contributions to ESPP		8,466,444		11,073,806
Restricted stock units		419,409		374,352
Restricted stock awards		30,896		27,278
Warrants to purchase common stock		150,000		150,000
		9,066,749		11,625,436

Comprehensive Loss

Comprehensive loss comprises net loss and other comprehensive income (loss). For the periods presented, other comprehensive income (loss) consists of unrealized gains and losses on the Company’s available-for-sale securities. For the three months ended March 31, 2020, there were no sales of investments and therefore there were no reclassifications of comprehensive loss. For the three months ended March 31, 2019, amounts reclassified from accumulated other comprehensive income (loss) to net loss for unrealized gains (losses) on available-for-sale securities were not significant, and were recorded as part of other income, net in the Condensed Consolidated Statements of Operations.

Recent Accounting Pronouncements

In June 2016, the Financial Accounting Standard Board issued ASU 2016-13, Financial Instruments – Credit Losses: Measurement of Credit Losses on Financial Instruments. The new standard replaces the incurred loss impairment methodology under the current standard with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. The Company is required to use a forward-looking expected credit loss model for accounts receivable and other financial instruments. Credit losses relating to available-for-sale debt securities will also be recorded through an allowance for credit losses rather than as a reduction in the amortized cost basis of the securities. The new standard became effective for the Company on January 1, 2020. The Company’s adoption on January 1, 2020 did not have a material impact on the consolidated financial statements.

The Company has reviewed other recent accounting pronouncements and concluded they are either not applicable to the business or that no material effect is expected on the consolidated financial statements as a result of future adoption.

3.	Cash Equivalents, Restricted Cash and Investments

Cash, Cash Equivalents and Restricted Cash

The following table provides a reconciliation of cash, cash equivalents and restricted cash shown in the Condensed Consolidated Statements of Cash Flows (in thousands):

	March 31,		December 31,
	2020		2019
Cash and cash equivalents	$	59,436	$	39,179
Restricted cash included in Other assets		1,080		1,080
Total cash, cash equivalents and restricted cash	$	60,516	$	40,259

Restricted cash as of March 31, 2020 was held as collateral for stand-by letters of credit issued by the Company to its landlord in connection with the lease of the Company’s facility in San Carlos, California. See “Note 7. Commitments” for additional information of this lease.

Cash Equivalents and Investments

The amortized cost and fair value of cash equivalents and investments at March 31, 2020 and December 31, 2019 were as follows (in thousands):

	March 31, 2020
	Amortized		Gross Unrealized					Fair
	Cost		Gains		Losses			Value
Money market fund	$	58,649	$	—	$	—		$	58,649
U.S. treasury securities		28,077		241		—			28,318
Commercial paper		15,915		—		—			15,915
Asset-backed securities		15,089		42		(4	)		15,127
Corporate debt securities		70,097		26		(88	)		70,035
Total available-for-sale securities	$	187,827	$	309	$	(92	)	$	188,044

Classified as:
Cash equivalents								$	58,649
Short-term investments									124,255
Long-term investments									5,140
Total available-for-sale securities								$	188,044

December 31, 2019

Amortized

Gross Unrealized

Fair

Cost

Gains

Losses

Value

Money market fund

Price	6.60	EPS	-1
Shares	58	P/E	-8
MCap	384	P/FCF	-8
Net Debt	-17	EBIT	-49
TEV	367	TEV/EBIT	-7
TTM 2019-09-30, in MM, except price, ratios

10-Q	2020-03-31	Filed 2020-05-11
10-K	2019-12-31	Filed 2020-03-10
10-Q	2019-09-30	Filed 2019-11-04
10-Q	2019-06-30	Filed 2019-08-05
10-Q	2019-03-31	Filed 2019-05-06
10-K	2018-12-31	Filed 2019-03-11
10-Q	2018-09-30	Filed 2018-11-08
10-Q	2018-06-30	Filed 2018-08-09
10-Q	2018-03-31	Filed 2018-05-09
10-K	2017-12-31	Filed 2018-03-12
10-Q	2017-09-30	Filed 2017-11-07
10-Q	2017-06-30	Filed 2017-08-08
10-Q	2017-03-31	Filed 2017-05-10
10-K	2016-12-31	Filed 2017-03-14
10-Q	2016-09-30	Filed 2016-11-08
10-Q	2016-06-30	Filed 2016-08-09
10-Q	2016-03-31	Filed 2016-05-10
10-K	2015-12-31	Filed 2016-03-14
10-Q	2015-09-30	Filed 2015-11-09
10-Q	2015-06-30	Filed 2015-08-07
10-Q	2015-03-31	Filed 2015-05-08
10-K	2014-12-31	Filed 2015-03-13
10-Q	2014-09-30	Filed 2014-11-06
10-Q	2014-06-30	Filed 2014-08-08
10-Q	2014-03-31	Filed 2014-05-09
10-K	2013-12-31	Filed 2014-03-14
10-Q	2013-09-30	Filed 2013-11-12
10-Q	2013-06-30	Filed 2013-08-13
10-Q	2013-03-31	Filed 2013-05-14
10-K	2012-12-31	Filed 2013-03-14
10-Q	2012-09-30	Filed 2012-11-13
10-Q	2012-06-30	Filed 2012-08-10
10-Q	2012-03-31	Filed 2012-05-10
10-K	2011-12-31	Filed 2012-03-30

8-K	2020-06-10
8-K	2020-05-21
8-K	2020-05-18
8-K	2020-05-11
8-K	2020-05-08
8-K	2020-04-06
8-K	2020-03-10
8-K	2020-03-03
8-K	2020-01-15
8-K	2020-01-08
8-K	2019-11-25
8-K	2019-11-04
8-K	2019-08-05
8-K	2019-07-31
8-K	2019-05-23
8-K	2019-05-06
8-K	2019-03-27
8-K	2019-03-25
8-K	2019-03-17
8-K	2019-03-11
8-K	2019-03-04
8-K	2019-01-30
8-K	2019-01-24
8-K	2019-01-05
8-K	2018-12-04
8-K	2018-11-08
8-K	2018-08-09
8-K	2018-06-06
8-K	2018-05-21
8-K	2018-05-09
8-K	2018-03-09
8-K	2018-03-05
8-K	2018-01-03
8-K	2017-12-28

EX-10.1	ccxi-ex101_17.htm
EX-10.2	ccxi-ex102_16.htm
EX-10.3	ccxi-ex103_15.htm
EX-31.1	ccxi-ex311_7.htm
EX-31.2	ccxi-ex312_6.htm
EX-32.1	ccxi-ex321_10.htm
EX-32.2	ccxi-ex322_9.htm

CCXI 10Q Quarterly Report

Chemocentryx Earnings 2020-03-31