ctic-20220630

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q


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

For the quarterly period ended: June 30, 2022


☐			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 000-28386

CTI BIOPHARMA CORP.

(Exact name of registrant as specified in its charter)


Delaware						91-1533912
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification No.)

3101 Western Avenue
Suite 800
Seattle
Washington						98121
(Address of principal executive offices)						(Zip Code)

(206) 282-7100

(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	CTIC	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 (§232.405 of this chapter) 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 ☒

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date:


Class						Outstanding at August 1, 2022
Common Stock, par value $0.001 per share						114,385,307

CTI BIOPHARMA CORP.

TABLE OF CONTENTS


						PAGE
PART I - FINANCIAL INFORMATION

ITEM 1: Financial Statements (unaudited)						4

Condensed Balance Sheets						4

Condensed Statements of Operations						5

Condensed Statements of Comprehensive Loss						6

Condensed Statements of Changes in Stockholders' (Deficit) Equity						7

Condensed Statements of Cash Flows						8

Notes to Condensed Financial Statements						9

ITEM 2: Management’s Discussion and Analysis of Financial Condition and Results of Operations						18

ITEM 3: Quantitative and Qualitative Disclosures about Market Risk						26

ITEM 4: Controls and Procedures						26

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						28

ITEM 3: Defaults upon Senior Securities						28

ITEM 4: Mine Safety Disclosures						28

ITEM 5: Other Information						28

ITEM 6: Exhibits						29

Signatures						30

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements

CTI BIOPHARMA CORP.

CONDENSED BALANCE SHEETS

(In thousands, except share amounts)

(unaudited)


	June 30, 2022		December 31, 2021

ASSETS
Current assets:
Cash and cash equivalents	$	66,091	$	65,446

Short-term investments	29,779		—
Accounts receivable, net	8,159		—

Inventories	702		—
Prepaid expenses and other current assets	2,641		2,933
Total current assets	107,372		68,379
Property and equipment, net	—		176
Intangible assets, net	24,289		—
Other assets	2,873		3,879
Total assets	$	134,534	$	72,434

LIABILITIES AND STOCKHOLDERS' (DEFICIT) EQUITY
Current liabilities:
Accounts payable	$	3,097	$	3,891
Accrued expenses	25,967		12,720

Current portion of long-term debt	—		47,380
Other current liabilities	725		2,660
Total current liabilities	29,789		66,651

Long-term debt	47,662		—
Royalty financing obligation	59,716		—
Other liabilities	2,641		2,016
Total liabilities	139,808		68,667
Commitments and contingencies
Stockholders' equity:
Preferred stock, $0.001 par value per share:
Authorized shares - 33,333 as of June 30, 2022 and December 31, 2021
Series O Preferred Stock, 12,575 shares issued and outstanding as of June 30, 2022 and December 31, 2021 (Aggregate liquidation preference of $25,150 as of June 30, 2022 and December 31, 2021)	—		—
Series X Preferred Stock, 3,383 shares and 3,794 shares issued and outstanding as of June 30, 2022 and December 31, 2021, respectively (Aggregate liquidation preference of $33,830 and $37,940 as of June 30, 2022 and December 31, 2021, respectively.)	—		—
Series X1 Preferred Stock, 600 shares issued and outstanding as of June 30, 2022 and December 31, 2021 (Aggregate liquidation preference of $15,000 as of June 30, 2022 and December 31, 2021)	—		—
Common stock, $0.001 par value per share:
Authorized shares - 266,500,000 as of June 30, 2022 and December 31, 2021
Issued and outstanding shares - 114,130,834 and 99,763,922 as of June 30, 2022 and December 31, 2021, respectively	114		100
Additional paid-in capital	2,480,427		2,429,582
Accumulated other comprehensive loss	(71)		—
Accumulated deficit	(2,485,744)		(2,425,915)


Total stockholders' (deficit) equity	(5,274)		3,767
Total liabilities and stockholders' equity	$	134,534	$	72,434

See accompanying notes.

CTI BIOPHARMA CORP.

CONDENSED STATEMENTS OF OPERATIONS

(In thousands, except per share amounts)

(unaudited)


	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021

Net product sales	$	12,329	$	—	$	14,624	$	—


Operating costs and expenses:
Cost of sales	917		—		1,195		—
Research and development	8,705		9,293		16,753		18,737
Selling, general and administrative	21,590		10,213		39,636		17,839

Other operating expenses	—		—		11,023		—
Total operating costs and expenses	31,212		19,506		68,607		36,576
Loss from operations	(18,883)		(19,506)		(53,983)		(36,576)
Non-operating expenses:
Interest expense, net	(3,761)		(167)		(5,824)		(354)




Foreign exchange loss	(10)		(2)		(22)		(11)
Total non-operating expenses	(3,771)		(169)		(5,846)		(365)


Net loss	$	(22,654)	$	(19,675)	$	(59,829)	$	(36,941)



Basic and diluted net loss per common share	$	(0.21)	$	(0.21)	$	(0.57)	$	(0.44)


Shares used in calculation of basic and diluted net loss per common share	108,529		92,341		104,205		84,398

See accompanying notes.

CTI BIOPHARMA CORP.

CONDENSED STATEMENTS OF COMPREHENSIVE LOSS

(In thousands)

(unaudited)


	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
Net loss	$	(22,654)	$	(19,675)	$	(59,829)	$	(36,941)
Other comprehensive (loss) income:



Change in unrealized (loss) gain on marketable securities	(71)		1		(71)		(2)
Other comprehensive (loss) income	(71)		1		(71)		(2)
Comprehensive loss	$	(22,725)	$	(19,674)	$	(59,900)	$	(36,943)

See accompanying notes.

CTI BIOPHARMA CORP.

CONDENSED STATEMENTS OF CHANGES IN STOCKHOLDERS' (DEFICIT) EQUITY

(In thousands)

(unaudited)


							Additional		Accumulated Other				Total
	Preferred Stock			Common Stock			Paid-in		Comprehensive		Accumulated		Stockholders'
	Shares	Amount		Shares	Amount		Capital		Income (loss)		Deficit		Equity (Deficit)
Balance at January 1, 2022	17	$	—	99,764	$	100	$	2,429,582	$	—	$	(2,425,915)	$	3,767
Issuance of common stock, net (At-the-market equity facility)	—	—		794	1		3,750		—		—		3,751
Equity-based compensation	—	—		—	—		1,679		—		—		1,679
Exercise of stock options	—	—		60	—		61		—		—		61
Net loss	—	—		—	—		—		—		(37,175)		(37,175)

Balance at March 31, 2022	17	$	—	100,618	$	101	$	2,435,072	$	—	$	(2,463,090)	$	(27,917)
Issuance of common stock, net (At-the-market equity facility)	—	—		8,587	8		41,459		—		—		41,467
Conversion of Series X preferred stock to common stock	—	—		4,110	4		(4)		—		—		—
Equity-based compensation	—	—		—	—		2,539		—		—		2,539
Exercise of stock options and shares issued under employee stock purchase plan	—	—		816	1		1,361		—		—		1,362
Net loss	—	—		—	—		—		—		(22,654)		(22,654)
Other comprehensive loss	—	—		—	—		—		(71)		—		(71)
Balance at June 30, 2022	17	$	—	114,131	$	114	$	2,480,427	$	(71)	$	(2,485,744)	$	(5,274)


							Additional		Accumulated Other				Total
	Preferred Stock			Common Stock			Paid-in		Comprehensive		Accumulated		Stockholders'
	Shares	Amount		Shares	Amount		Capital		Income (loss)		Deficit		Equity
Balance at January 1, 2021	17	$	—	75,897	$	76	$	2,367,958	$	2	$	(2,328,007)	$	40,029
Issuance of common stock, net (At-the-market equity facility)	—	—		858	1		2,961		—		—		2,962
Equity-based compensation	—	—		—	—		932		—		—		932
Cancellation of restricted stock	—	—		(4)	—		—		—		—		—
Net loss	—	—		—	—		—		—		(17,266)		(17,266)
Other comprehensive loss	—	—		—	—		—		(3)		—		(3)
Balance at March 31, 2021	17	$	—	76,751	$	77	$	2,371,851	$	(1)	$	(2,345,273)	$	26,654
Issuance of common stock and Series X1 preferred stock, net of issuance costs	1	—		16,400	16		53,537		—		—		53,553
Equity-based compensation	—	—		—	—		988		—		—		988
Exercise of stock options and shares issued under employee stock purchase plan	—	—		159	—		185		—		—		185
Net loss	—	—		—	—		—		—		(19,675)		(19,675)
Other comprehensive income	—	—		—	—		—		1		—		1
Balance at June 30, 2021	18	$	—	93,310	$	93	$	2,426,561	$	—	$	(2,364,948)	$	61,706

See accompanying notes.

CTI BIOPHARMA CORP.

CONDENSED STATEMENTS OF CASH FLOWS

(In thousands)

(unaudited)


	Six Months Ended June 30,
	2022		2021
Operating activities
Net loss	$	(59,829)	$	(36,941)
Adjustments to reconcile net loss to net cash used in operating activities:

Equity-based compensation	4,218		1,920
Imputed interest expense on royalty financing obligation	2,885		—
Depreciation and amortization	887		263









Other	4		(76)
Changes in operating assets and liabilities:
Accounts receivable, net	(8,159)		—

Inventories	(702)		—
Prepaid expenses and other assets	751		494

Accounts payable, accrued expenses and other liabilities	9,724		(30)




Net cash used in operating activities	(50,221)		(34,370)
Investing activities

Milestone payment to S*BIO Pte Ltd.	(25,000)		—
Purchases of short-term investments	(29,788)		—
Proceeds from maturities of short-term investments	—		12,000

Net cash (used in) provided by investing activities	(54,788)		12,000
Financing activities
Gross proceeds from public offering of common stock and Series X1 preferred stock	—		56,000
Cash paid for offering costs (public offering of common stock and Series X1 preferred stock)	—		(2,433)
Gross proceeds from common stock sales under at-the-market equity facility	46,936		3,064
Cash paid for issuance costs (at-the-market equity facility)	(1,409)		(310)




Gross proceeds from DRI Royalty Financing Agreement	60,000		—
Cash paid for issuance costs (DRI Royalty Financing Agreement)	(1,284)		—
Principal payments on Silicon Valley Bank debt	—		(2,667)



Proceeds from stock option exercises	660		144
Proceeds from sales of common stock under employee stock purchase plan	751		59

Net cash provided by financing activities	105,654		53,857


Net increase in cash and cash equivalents	645		31,487
Cash and cash equivalents at beginning of period	65,446		40,394
Cash and cash equivalents at end of period	$	66,091	$	71,881

Supplemental disclosure of cash flow information
Cash paid during the period for interest	$	2,843	$	129


Supplemental disclosure of noncash activities




Conversion of preferred stock to common stock	$	4,110	$	—

See accompanying notes.

CTI BIOPHARMA CORP.

NOTES TO CONDENSED FINANCIAL STATEMENTS

(unaudited)

1. Description of Business and Summary of Significant Accounting Policies

CTI BioPharma Corp., also referred to in these interim financial statements as “we,” “us,” “our,” the “Company” and “CTI,” is a commercial biopharmaceutical company focused on the acquisition, development and commercialization of novel targeted therapies for blood-related cancers where there is a significant unmet medical need. Our goal is to build a profitable company by generating income from products we develop and commercialize, either alone or with partners. We have one commercially approved product, VONJO® (pacritinib), which received accelerated approval on February 28, 2022 from the U.S. Food and Drug Administration, or FDA, in the United States, for the treatment of adult patients with intermediate or high-risk primary or secondary (post-polycythemia vera or post-essential thrombocythemia) myelofibrosis with a platelet count below 50 x 109/L. We commercially launched VONJO in March 2022. We are conducting the Phase 3 PACIFICA study of VONJO in patients with myelofibrosis and severe thrombocytopenia as a post-marketing requirement.

We operate in a highly regulated and competitive environment. The manufacturing and marketing of pharmaceutical products requires approval from, and is subject to ongoing oversight by, the FDA, the European Medicines Agency, or the EMA, in the EU, and comparable agencies in other countries. Obtaining approval for a new therapeutic product is never certain, may take many years and may involve the expenditure of substantial resources.

Basis of Presentation

The accompanying unaudited financial information as of and for the three and six months ended June 30, 2022 and 2021 has been prepared in accordance with accounting principles generally accepted in the U.S., or U.S. GAAP, for interim financial information and with the instructions to the Quarterly Report on Form 10-Q and Article 10 of Regulation S-X. In the opinion of management, such financial information includes all adjustments (consisting only of normal recurring adjustments) considered necessary for a fair presentation of our financial position at such dates and the operating results and cash flows for such periods. Operating results for the three and six months ended June 30, 2022 are not necessarily indicative of the results that may be expected for the entire year or for any other subsequent interim period.

Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been omitted pursuant to the rules of the U.S. Securities and Exchange Commission, or the SEC. These unaudited condensed financial statements and related notes should be read in conjunction with our audited financial statements for the year ended December 31, 2021 included in our Annual Report on Form 10-K filed with the SEC on March 31, 2022.

The condensed balance sheet at December 31, 2021 has been derived from the audited financial statements at that date, but does not include all of the information and footnotes required by U.S. GAAP for complete financial statements.

Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires estimates and assumptions that affect the reported amounts of assets and liabilities, revenues and expenses, and related disclosures in the condensed financial statements and accompanying notes. Estimates are used for, but not limited to, evaluation of going concern and classification of liabilities, net product sales, clinical accruals, intangible assets, interest expense on royalty financing obligation, income taxes, commitments and contingencies, equity-based compensation and the collectability of receivables. Given the global economic climate and additional or unforeseen effects from the ongoing COVID-19 pandemic, these estimates are becoming more challenging, and actual results could differ materially from those estimates. See Part I, Item 2, “Management’s Discussion and Analysis of Financial Condition and Results of Operations - Critical Accounting Policies and Estimates” in this Quarterly Report on Form 10-Q for further information.

Liquidity

The accompanying condensed financial statements have been prepared assuming that we will continue as a going concern, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business within one year after the date the condensed financial statements are issued. Our management evaluates whether there are conditions or events, considered in aggregate, that raise substantial doubt about our ability to continue as a going concern within one year after the date that the financial statements are issued.

Based on our evaluation completed pursuant to Accounting Standards Update No. 2014-15, Presentation of Financial Statements-Going Concern (Subtopic 205-40): Disclosure of Uncertainties about an Entity's Ability to Continue as a Going Concern, we expect that our present financial resources, along with expected cash receipts from net product sales of VONJO and up to $25.0 million in contractual funding commitments from DRI receivable upon achieving minimum net product sales of VONJO, will be sufficient to meet our obligations as they come due and to fund our operations for at least one year after the date that this Quarterly Report on Form 10-Q is filed with the SEC. Accordingly, the conditions that previously raised substantial doubt about our ability to continue as a going concern as of the date of the filing of our Quarterly Report on Form 10-Q as of and for the three months ended March 31, 2022, have been alleviated.

Over the next year and in the normal course of business, we expect to conduct research, development, testing and regulatory compliance activities with respect to other development pathways for pacritinib. We expect continued increases in revenues from VONJO as wholesalers build supply to manage patient refills and new subscriber demand. While we have seen strong refill demand, we may not be able to accurately predict the market acceptance or growth trajectory of VONJO's revenues. We project operating expenses, when offset against our projected revenues, will result in operating losses for the foreseeable future. We have incurred a net operating loss every year since our formation and expect to continue to incur net losses for the foreseeable future. As of June 30, 2022, we had an accumulated deficit of $2.5 billion, and our available cash, cash equivalents and short-term investments were $95.9 million.

While we expect to operate as a going concern for at least one year after the date that this Quarterly Report on Form 10-Q is filed with the SEC, we will require additional capital in order to pursue our longer-term strategic objectives. We expect to satisfy our capital needs through existing capital balances, revenues from VONJO, and some combination of public or private equity financings, partnerships, collaborations, joint ventures, 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 commercialization efforts and/or reduce our selling, 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, be unable to or elect to 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: our ability to generate sales of VONJO; the cost of ongoing organization of our commercial infrastructure and distribution capabilities; our ability to reach milestones triggering payments to be made or received under certain of our contractual arrangements; the cost of manufacturing VONJO; the cost of manufacturing clinical supplies of our product candidates or of establishing commercial supplies of any products that we may develop in the future; developments in and expenses associated with our research and development activities; our clinical development plans and any changes that we may initiate or that may be requested by the FDA or other regulators as we seek approval for products that we may develop in the future; acquisitions or collaborations with respect to compounds or other assets; competitive market developments; disruptions or other delays to our business and clinical trials resulting from ongoing worldwide current events; and other unplanned business developments.

In addition, our ability to comply with covenants under our Credit Agreement, or the Credit Agreement, with Drug Royalty III LP 2, or DRI, may be affected by events beyond our control, and we may not be able to meet those covenants. A breach of any of these covenants, including a material adverse change in our business, operations or condition (financial or otherwise), could result in an event of default under the Credit Agreement, which could cause all of the outstanding indebtedness under the facility to become immediately due and payable. The Credit Agreement also contains a minimum liquidity covenant requiring us to maintain at least $10.0 million of unrestricted cash and cash equivalents, subject to certain exceptions. The accompanying condensed financial statements do not include adjustments, if any, that may result from the outcome of this uncertainty. See Part II, Item 8, “Notes to Consolidated Financial Statements, Note 7. Debt Financing Arrangements” of our Annual Report on Form 10-K for the year ended December 31, 2021 for additional information regarding the Credit Agreement with DRI.

Cash, Cash Equivalents and Short-Term Investments

As of June 30, 2022, our cash, cash equivalents and short-term investments consisted of cash, money market funds and corporate debt securities. As of December 31, 2021, our cash and cash equivalents consisted of cash and money market funds. Cash equivalents and short-term investments are recorded at fair value. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Fair value measurements are based on a three-tier hierarchy that prioritizes the inputs used to measure fair value. There are three levels of inputs used to measure fair value, with Level 1 having the highest priority and Level 3 having the lowest:

•Level 1—Valuations based on unadjusted quoted prices for identical assets and liabilities in active markets.

•Level 2—Valuations based on observable inputs other than quoted prices included in Level 1, such as quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable market data.

•Level 3—Valuations based on unobservable inputs that are supported by little or no market activity, reflecting our own assumptions. These valuations require significant judgment or estimation.

We measure the fair value of money market funds based on the closing price reported by the fund sponsor from an actively traded exchange. We value all other securities using broker quotes that utilize observable market inputs. We did not hold cash, cash equivalents and short-term investments categorized as Level 3 assets as of June 30, 2022 and December 31, 2021. The following table summarizes, by major security type, our cash, cash equivalents and short-term investments that are measured at fair value on a recurring basis and are categorized using the fair value hierarchy (in thousands):


	June 30, 2022				December 31, 2021
	Cost or Amortized Cost		Gross Unrealized Losses		Total Estimated Fair Value	Total Estimated Fair Value
Cash	$	444	$	—	$

SEC Form 10-Q filed by CTI BioPharma Corp. (DE)