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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, 2021

or

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.)

 

 

835 Industrial Road

San Carlos, California

94070

(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 23, 2021 was 69,749,569.

 

 

 


 

 

CHEMOCENTRYX, INC.

 

QUARTERLY REPORT ON FORM 10-Q

For the quarterly period ended March 31, 2021

Table of Contents

 

 

 

 

PART I. FINANCIAL INFORMATION

Page

 

 

 

Item 1.

Financial Statements (Unaudited)

3

 

 

 

 

Condensed Consolidated Balance Sheets – March 31, 2021 and December 31, 2020

3

 

 

 

 

Condensed Consolidated Statements of Operations – Three Months Ended March 31, 2021 and 2020

4

 

 

 

 

Condensed Consolidated Statements of Comprehensive Loss – Three Months Ended March 31, 2021 and 2020

5

 

 

 

 

Condensed Consolidated Statements of Stockholders’ Equity – Three Months Ended March 31, 2021 and 2020

6

 

 

 

 

Condensed Consolidated Statements of Cash Flows – Three Months Ended March 31, 2021 and 2020

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

25

 

 

 

Item 4.

Controls and Procedures

26

 

 

PART II. OTHER INFORMATION

 

 

 

 

Item 1.

Legal Proceedings

27

 

 

 

Item 1A.

Risk Factors

27

 

 

 

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

27

 

 

 

Item 3.

Defaults Upon Senior Securities

27

 

 

 

Item 4.

Mine Safety Disclosures

27

 

 

 

Item 5.

Other Information

27

 

 

 

Item 6.

Exhibits

27

 

 

EXHIBIT INDEX

28

 

 

SIGNATURES

29

 

2


 

 

PART I. FINANCIAL INFORMATION

Item 1.

Financial Statements

CHEMOCENTRYX, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except share and par value data)

 

 

 

March 31,

 

 

December 31,

 

 

 

2021

 

 

2020

 

 

 

(unaudited)

 

 

 

 

Assets

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

68,548

 

 

$

32,297

 

Short-term investments

 

 

307,736

 

 

 

404,273

 

Accounts receivable, other

 

 

130

 

 

 

137

 

Accounts receivable from related party

 

 

10,012

 

 

 

32

 

Prepaid expenses and other current assets

 

 

4,215

 

 

 

4,831

 

Total current assets

 

 

390,641

 

 

 

441,570

 

Property and equipment, net

 

 

33,117

 

 

 

25,160

 

Long-term investments

 

 

47,875

 

 

 

23,800

 

Operating lease right-of-use assets

 

 

26,017

 

 

 

26,911

 

Other assets

 

 

1,462

 

 

 

1,458

 

Total assets

 

$

499,112

 

 

$

518,899

 

Liabilities and Stockholders’ Equity

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

Accounts payable

 

$

10,926

 

 

$

12,875

 

Accrued and other current liabilities

 

 

21,156

 

 

 

19,794

 

Long-term debt, current

 

 

9,609

 

 

 

6,302

 

Deferred revenue from related party

 

 

13,039

 

 

 

12,587

 

Total current liabilities

 

 

54,730

 

 

 

51,558

 

Long-term debt, net

 

 

14,866

 

 

 

18,099

 

Non-current deferred revenue from related party

 

 

23,337

 

 

 

24,000

 

Non-current lease liabilities

 

 

44,112

 

 

 

38,671

 

Other non-current liabilities

 

 

1,063

 

 

 

958

 

Total liabilities

 

 

138,108

 

 

 

133,286

 

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;

  69,742,493 and 69,452,466 shares issued and outstanding at

  March 31, 2021 and December 31, 2020, respectively

 

 

70

 

 

 

69

 

Additional paid-in capital

 

 

876,017

 

 

 

870,788

 

Note receivable

 

 

(16

)

 

 

(16

)

Accumulated other comprehensive income (loss)

 

 

(14

)

 

 

114

 

Accumulated deficit

 

 

(515,053

)

 

 

(485,342

)

Total stockholders’ equity

 

 

361,004

 

 

 

385,613

 

Total liabilities and stockholders’ equity

 

$

499,112

 

 

$

518,899

 

 

See accompanying notes.

3


 

CHEMOCENTRYX, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share data)

(unaudited)

 

 

 

Three Months Ended

March 31,

 

 

 

2021

 

 

2020

 

Revenue:

 

 

 

 

 

 

 

 

Collaboration and license revenue from related party

 

$

10,223

 

 

$

5,855

 

Grant revenue

 

 

130

 

 

 

153

 

Total revenue

 

 

10,353

 

 

 

6,008

 

 

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

 

Research and development

 

 

23,418

 

 

 

19,311

 

General and administrative

 

 

16,262

 

 

 

8,820

 

Total operating expenses

 

 

39,680

 

 

 

28,131

 

Loss from operations

 

 

(29,327

)

 

 

(22,123

)

Other income (expense):

 

 

 

 

 

 

 

 

Interest income

 

 

305

 

 

 

984

 

Interest expense

 

 

(689

)

 

 

(548

)

Total other income (expense), net

 

 

(384

)

 

 

436

 

Net loss

 

$

(29,711

)

 

$

(21,687

)

Basic and diluted net loss per common share

 

$

(0.43

)

 

$

(0.35

)

Shares used to compute basic and diluted net loss per

    common share

 

 

69,608

 

 

 

61,295

 

 

See accompanying notes.

4


 

CHEMOCENTRYX, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

 

(in thousands)

(unaudited)

 

 

 

Three Months Ended

March 31,

 

 

 

2021

 

 

2020

 

Net loss

 

$

(29,711

)

 

$

(21,687

)

Unrealized loss on available-for-sale securities

 

 

(128

)

 

 

(101

)

Comprehensive loss

 

$

(29,839

)

 

$

(21,788

)

 

See accompanying notes.

5


 

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, 2020

 

 

69,452,466

 

 

 

 

$

69

 

 

 

 

$

870,788

 

 

 

 

$

(16

)

 

 

 

$

114

 

 

 

 

$

(485,342

)

 

 

 

$

385,613

 

Net loss

 

 

-

 

 

 

 

 

-

 

 

 

 

 

-

 

 

 

 

 

-

 

 

 

 

 

-

 

 

 

 

 

(29,711

)

 

 

 

 

(29,711

)

Unrealized loss on investments

 

 

-

 

 

 

 

 

-

 

 

 

 

 

-

 

 

 

 

 

-

 

 

 

 

 

(128

)

 

 

 

 

-

 

 

 

 

 

(128

)

Issuance of common stock under

    equity incentive plans and employee

    stock purchase plans

 

 

370,987

 

 

 

 

 

1

 

 

 

 

 

2,162

 

 

 

 

 

-

 

 

 

 

 

-

 

 

 

 

 

-

 

 

 

 

 

2,163

 

Repurchased shares upon vesting of

    restricted stock units for tax

    withholdings

 

 

(80,960

)

 

 

 

 

-

 

 

 

 

 

(5,013

)

 

 

 

 

-

 

 

 

 

 

-

 

 

 

 

 

-

 

 

 

 

 

(5,013

)

Employee stock-based compensation

 

 

-

 

 

 

 

 

-

 

 

 

 

 

7,840

 

 

 

 

 

-

 

 

 

 

 

-

 

 

 

 

 

-

 

 

 

 

 

7,840

 

Compensation expense related to

    options granted to consultants

 

 

-

 

 

 

 

 

-

 

 

 

 

 

240

 

 

 

 

 

-

 

 

 

 

 

-

 

 

 

 

 

-

 

 

 

 

 

240

 

Balance as of March 31, 2021

 

 

69,742,493

 

 

 

 

$

70

 

 

 

 

$

876,017

 

 

 

 

$

(16

)

 

 

 

$

(14

)

 

 

 

$

(515,053

)

 

 

 

$

361,004

 

 

 

 

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

 

 

See accompanying notes.

 


6


 

 

CHEMOCENTRYX, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

 

(in thousands)

(unaudited)

 

 

 

Three Months Ended

March 31,

 

 

 

2021

 

 

2020

 

Operating activities

 

 

 

 

 

 

 

 

Net loss

 

$

(29,711

)

 

$

(21,687

)

Adjustments to reconcile net loss to net cash used in

   operating activities:

 

 

 

 

 

 

 

 

Stock-based compensation

 

 

8,080

 

 

 

4,630

 

Depreciation of property and equipment

 

 

117

 

 

 

143

 

Non-cash lease expense

 

 

594

 

 

 

297

 

Non-cash interest expense, net

 

 

997

 

 

 

155

 

Changes in assets and liabilities:

 

 

 

 

 

 

 

 

Accounts receivable, other

 

 

7

 

 

 

23

 

Accounts receivable due from related party

 

 

(9,980

)

 

 

(15

)

Prepaids and other current assets

 

 

583

 

 

 

(754

)

Other assets

 

 

(4

)

 

 

69

 

Accounts payable

 

 

1,201

 

 

 

1,042

 

Operating lease liabilities

 

 

6,342

 

 

 

(321

)

Other liabilities

 

 

418

 

 

 

(5,189

)

Deferred revenue from related party

 

 

(211

)

 

 

(5,839

)

Net cash used in operating activities

 

 

(21,567

)

 

 

(27,446

)

Investing activities

 

 

 

 

 

 

 

 

Purchases of property and equipment, net

 

 

(10,880

)

 

 

(868

)

Purchases of investments

 

 

(95,278

)

 

 

(11,434

)

Maturities of investments

 

 

166,826

 

 

 

44,330

 

Net cash provided by investing activities

 

 

60,668

 

 

 

32,028

 

Financing activities

 

 

 

 

 

 

 

 

Proceeds from exercise of stock options and employee stock purchase plan

 

 

2,163

 

 

 

14,797

 

Employees' tax withheld and paid for with restricted stock units

 

 

(5,013

)

 

 

(3,480

)

Borrowings under credit facility agreement, net of issuance costs

 

 

 

 

 

4,358

 

Net cash (used in) provided by financing activities

 

 

(2,850

)

 

 

15,675

 

Net increase in cash, cash equivalents and restricted cash

 

 

36,251

 

 

 

20,257

 

Cash, cash equivalents and restricted cash at beginning of period

 

 

33,377

 

 

 

40,259

 

Cash, cash equivalents and restricted cash at end of period

 

$

69,628

 

 

$

60,516

 

Supplemental disclosures of cash flow information

 

 

 

 

 

 

 

 

Cash paid for interest

 

$

509

 

 

$

407

 

Right-of-use assets obtained in exchange for lease obligations

 

$

(300

)

 

$

 

Purchases of property and equipment, net recorded in

   accounts payable and accrued liabilities

 

$

(2,807

)

 

$

(132

)

 

See accompanying notes.

7


 

CHEMOCENTRYX, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2021

(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 targeting 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, 2020 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, 2020 filed with the Securities and Exchange Commission on March 1, 2021.

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.

 

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.

 

8


 

 

For the three months ended March 31, 2021 and 2020, the following potentially dilutive securities were excluded from the calculation of diluted net loss per share due to their anti-dilutive effect (in thousands):

 

 

Three Months Ended

March 31,

 

 

2021

 

 

2020

 

Options to purchase common stock, including purchases

   from contributions to ESPP

 

7,483

 

 

 

8,467

 

Restricted stock units

 

425

 

 

 

419

 

Restricted stock awards

 

14

 

 

 

31

 

Warrants to purchase common stock

 

150

 

 

 

150

 

 

 

8,072

 

 

 

9,067

 

 

Comprehensive Loss

Comprehensive loss comprises net loss and other comprehensive loss. For the periods presented, other comprehensive loss consists of unrealized losses on the Company’s available-for-sale securities.   For the three months ended March 31, 2021 and 2020, there were no sales of investments and therefore there were no reclassifications of comprehensive income.  

Recent Accounting Pronouncements

The Company has reviewed 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,

 

 

 

2021

 

 

2020

 

Cash and cash equivalents

 

$

68,548

 

 

$

32,297

 

Restricted cash included in Other assets

 

 

1,080

 

 

 

1,080

 

Total cash, cash equivalents and restricted cash

 

$

69,628

 

 

$

33,377

 

 

9


 

 

Restricted cash as of March 31, 2021 and December 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 on this lease.

Cash Equivalents and Investments

The amortized cost and fair value of cash equivalents and investments at March 31, 2021 and December 31, 2020 were as follows (in thousands):

 

 

 

March 31, 2021

 

 

 

Amortized

 

 

Gross Unrealized

 

 

Fair

 

 

 

Cost

 

 

Gains

 

 

Losses

 

 

Value

 

Money market fund

 

$

62,830

 

 

$

 

 

$

 

 

$

62,830

 

U.S. treasury securities

 

 

113,345

 

 

 

36

 

 

 

 

 

 

113,381

 

Non-U.S. government securities

 

 

11,902

 

 

 

 

 

 

(12

)

 

 

11,890

 

Commercial paper

 

 

115,388

 

 

 

 

 

 

 

 

 

115,388

 

Asset-backed securities

 

 

32,172

 

 

 

3

 

 

 

(12

)

 

 

32,163

 

Corporate debt securities

 

 

82,818

 

 

 

8

 

 

 

(37

)

 

 

82,789

 

Total available-for-sale securities

 

$

418,455

 

 

$

47

 

 

$

(61

)

 

$

418,441