10-Q
false1--12-31Q30001841387January 1, 20220001841387us-gaap:RetainedEarningsMember2022-09-300001841387srt:MinimumMembercadl:NCOhioTrustWarrantsMember2019-03-202019-03-200001841387cadl:StockOptionsOutstandingMember2021-01-012021-09-300001841387srt:MaximumMember2021-01-012021-09-300001841387cadl:SeriesCConvertiblePreferredStockMember2021-07-012021-09-300001841387cadl:SeriesBConvertiblePreferredStockMember2021-01-012021-09-3000018413872022-07-012022-09-300001841387us-gaap:ShareBasedCompensationAwardTrancheTwoMember2022-01-012022-09-300001841387cadl:VentagenLLCMembercadl:ExclusiveLicensingAgreementMember2022-09-3000018413872022-06-3000018413872021-12-310001841387cadl:LoanAgreementMember2022-02-240001841387us-gaap:ResearchAndDevelopmentExpenseMember2021-01-012021-09-300001841387cadl:SeriesCConvertiblePreferredStockMember2021-01-012021-09-300001841387us-gaap:OverAllotmentOptionMember2021-08-1300018413872021-01-012021-09-300001841387us-gaap:PrimeRateMembersrt:MinimumMembercadl:LoanAgreementMembercadl:TermLoanMember2022-02-242022-02-240001841387cadl:SeriesBWarrantsMember2018-11-130001841387us-gaap:ResearchAndDevelopmentExpenseMember2022-01-012022-09-300001841387cadl:NCOhioTrustWarrantsMember2022-01-012022-09-300001841387us-gaap:GeneralAndAdministrativeExpenseMember2022-01-012022-09-300001841387cadl:StockOptionsOutstandingMember2021-12-310001841387us-gaap:TreasuryStockMember2022-09-300001841387cadl:OutstandingWarrantsForCommonStockMember2022-01-012022-09-300001841387cadl:BrighamAndWomensHospitalIncLicenseAgreementMember2021-01-012021-09-300001841387us-gaap:AccountingStandardsUpdate201602Member2022-01-010001841387us-gaap:AdditionalPaidInCapitalMembercadl:SeriesCConvertiblePreferredStockMember2021-01-012021-09-300001841387cadl:ShareBasedCompensationAwardTrancheFourMember2022-01-012022-09-300001841387cadl:LaboratoryEquipmentMember2021-12-310001841387cadl:ManufacturingEquipmentMember2022-09-300001841387us-gaap:GovernmentMember2021-01-012021-09-300001841387us-gaap:CommonStockMembercadl:SeriesCConvertiblePreferredStockMember2021-01-012021-09-300001841387cadl:ShareBasedCompensationAwardTrancheFourMember2022-09-300001841387cadl:TwoThousandFifteenStockPlanMember2022-01-012022-09-300001841387cadl:SeriesBConvertiblePreferredStockMemberus-gaap:CommonStockMember2021-07-012021-09-300001841387cadl:StockOptionsOutstandingMember2022-09-300001841387us-gaap:AdditionalPaidInCapitalMember2022-09-300001841387us-gaap:RetainedEarningsMember2021-09-300001841387us-gaap:RetainedEarningsMember2022-06-300001841387us-gaap:RetainedEarningsMember2021-12-310001841387cadl:ConditionalSeriesBWarrantsMember2022-09-300001841387us-gaap:FurnitureAndFixturesMember2021-12-310001841387us-gaap:AdditionalPaidInCapitalMember2021-09-3000018413872021-10-012021-12-310001841387cadl:SharesAvailableForFutureGrantUnderStockOptionPlanMember2022-09-300001841387us-gaap:CommonStockMember2022-09-300001841387cadl:SeriesBConvertiblePreferredStockMemberus-gaap:AdditionalPaidInCapitalMember2021-01-012021-09-300001841387us-gaap:WarrantMember2022-09-300001841387us-gaap:LeaseholdImprovementsMember2022-09-300001841387us-gaap:AdditionalPaidInCapitalMember2022-01-012022-09-300001841387us-gaap:RetainedEarningsMember2022-01-012022-09-300001841387us-gaap:IPOMember2021-07-290001841387cadl:SeriesBWarrantsMember2021-06-242021-06-240001841387srt:ScenarioForecastMember2022-12-302022-12-300001841387cadl:NCOhioTrustWarrantsMember2021-01-012021-12-310001841387srt:ScenarioForecastMember2022-12-300001841387cadl:SeriesBWarrantLiabilityMember2022-01-012022-09-300001841387cadl:LoanAgreementMembercadl:TermLoanMember2022-02-242022-02-240001841387cadl:LoanAgreementMember2022-01-012022-09-300001841387cadl:VentagenLLCMembercadl:ExclusiveLicensingAgreementMember2021-09-300001841387us-gaap:FairValueMeasurementsRecurringMember2022-09-300001841387us-gaap:IPOMember2021-07-292021-07-290001841387cadl:TwoThousandTwentyOneEquityIncentivePlanMember2021-07-140001841387us-gaap:FurnitureAndFixturesMember2022-09-300001841387cadl:ManufacturingEquipmentMember2022-01-012022-09-300001841387cadl:NCOhioTrustWarrantsMember2019-03-200001841387cadl:SeriesBConvertiblePreferredStockMemberus-gaap:AdditionalPaidInCapitalMember2021-07-012021-09-300001841387srt:MaximumMembercadl:LoanAgreementMember2022-02-242022-02-240001841387cadl:LoanAgreementMember2022-07-012022-09-300001841387us-gaap:ResearchAndDevelopmentExpenseMember2021-07-012021-09-300001841387cadl:IPOIncludingUnderwritersOverallotmentOptionMember2021-07-290001841387us-gaap:AccountingStandardsUpdate201602Member2022-09-300001841387us-gaap:RetainedEarningsMember2020-12-310001841387us-gaap:CommonStockMember2022-06-300001841387cadl:SeriesCConvertiblePreferredStockMember2020-12-310001841387us-gaap:AccountingStandardsUpdate202006Member2022-09-300001841387us-gaap:EquipmentMember2022-01-012022-09-300001841387srt:MaximumMembercadl:LoanAgreementMembercadl:TermLoanMember2022-02-242022-02-240001841387us-gaap:RetainedEarningsMember2022-07-012022-09-300001841387us-gaap:AdditionalPaidInCapitalMember2022-06-3000018413872022-01-012022-09-300001841387us-gaap:CommonStockMember2021-12-3100018413872021-07-012021-09-300001841387cadl:ConditionalSeriesBWarrantsMember2022-01-012022-09-300001841387us-gaap:AdditionalPaidInCapitalMember2022-07-012022-09-300001841387cadl:NCOhioTrustWarrantsMember2022-09-300001841387srt:MinimumMembercadl:LoanAgreementMember2022-02-242022-02-240001841387cadl:TwoThousandFifteenStockPlanMember2022-09-300001841387cadl:VentagenLLCMembercadl:ExclusiveLicensingAgreementMemberus-gaap:AccountingStandardsUpdate201409Member2014-03-012014-03-310001841387us-gaap:CommonStockMember2021-06-300001841387cadl:NCOhioTrustWarrantsMember2021-12-310001841387cadl:SeriesAWarrantsMemberus-gaap:IPOMember2018-01-012018-12-310001841387us-gaap:ShareBasedCompensationAwardTrancheTwoMember2022-09-300001841387us-gaap:ResearchAndDevelopmentExpenseMember2022-07-012022-09-300001841387cadl:SeriesBConditionalWarrantsMember2022-09-300001841387us-gaap:RetainedEarningsMember2021-06-300001841387us-gaap:AdditionalPaidInCapitalMember2021-01-012021-09-300001841387us-gaap:GovernmentMember2022-07-012022-09-300001841387cadl:OutstandingWarrantsForCommonStockMember2021-07-012021-09-300001841387cadl:BrighamAndWomensHospitalIncLicenseAgreementMember2018-01-200001841387us-gaap:GeneralAndAdministrativeExpenseMember2021-07-012021-09-300001841387cadl:PeriphagenIncAssetAcquisitionMember2022-01-012022-09-3000018413872014-04-01cadl:VentagenLLCMembercadl:ExclusiveLicensingAgreementMember2014-03-310001841387us-gaap:AdditionalPaidInCapitalMember2021-07-012021-09-300001841387us-gaap:CommonStockMember2021-09-300001841387us-gaap:ShareBasedCompensationAwardTrancheThreeMember2022-09-300001841387cadl:LaboratoryEquipmentMember2022-09-300001841387cadl:PeriphagenIncAssetAcquisitionMember2019-12-092019-12-090001841387us-gaap:AdditionalPaidInCapitalMembercadl:SeriesCConvertiblePreferredStockMember2021-07-012021-09-300001841387us-gaap:GovernmentMember2022-01-012022-09-300001841387cadl:VentagenLLCMembercadl:VotingStockMembercadl:ExclusiveLicensingAgreementMember2014-03-310001841387cadl:SeriesBConvertiblePreferredStockMember2021-09-300001841387us-gaap:AccountingStandardsUpdate202110Member2022-09-300001841387cadl:SeriesCConvertiblePreferredStockMember2021-06-300001841387us-gaap:WarrantMember2021-12-310001841387us-gaap:GovernmentMember2021-07-012021-09-300001841387srt:MaximumMember2022-01-012022-09-300001841387cadl:OutstandingWarrantsForCommonStockMember2021-01-012021-09-300001841387cadl:VentagenLLCMembercadl:ExclusiveLicensingAgreementMember2014-03-012014-03-310001841387cadl:SeriesAWarrantsMember2018-12-310001841387us-gaap:TreasuryStockMember2022-01-012022-09-300001841387us-gaap:FairValueMeasurementsRecurringMember2021-12-310001841387us-gaap:ComputerEquipmentMember2022-09-3000018413872021-06-300001841387srt:ExecutiveOfficerMembercadl:VentagenLLCMembercadl:VotingStockMembercadl:ExclusiveLicensingAgreementMember2014-03-310001841387cadl:SharesAvailableForFutureGrantUnderStockOptionPlanMember2021-12-310001841387us-gaap:FairValueInputsLevel3Memberus-gaap:FairValueMeasurementsRecurringMember2021-12-310001841387cadl:SeriesBWarrantsMember2022-01-012022-09-300001841387us-gaap:ComputerEquipmentMember2022-01-012022-09-300001841387cadl:SeriesBConditionalWarrantsMember2021-12-3100018413872021-09-300001841387cadl:OutstandingWarrantsForCommonStockMember2022-07-012022-09-300001841387cadl:ManufacturingEquipmentMember2021-12-310001841387cadl:BrighamAndWomensHospitalIncLicenseAgreementMember2022-01-012022-09-300001841387cadl:SeriesBConvertiblePreferredStockMember2021-06-300001841387us-gaap:TreasuryStockMember2022-06-300001841387cadl:SeriesBWarrantsMember2021-12-310001841387cadl:SeriesCConvertiblePreferredStockMember2021-09-300001841387us-gaap:LeaseholdImprovementsMember2021-12-310001841387us-gaap:GeneralAndAdministrativeExpenseMember2022-07-012022-09-300001841387cadl:PeriphagenIncAssetAcquisitionMember2019-12-090001841387cadl:StockOptionsOutstandingMember2021-07-012021-09-300001841387cadl:StockOptionsOutstandingMember2022-01-012022-09-300001841387srt:MinimumMember2021-01-012021-09-300001841387us-gaap:FairValueInputsLevel3Memberus-gaap:FairValueMeasurementsRecurringMember2022-09-300001841387cadl:LoanAgreementMember2022-02-242022-02-240001841387cadl:SeriesBConvertiblePreferredStockMember2020-12-310001841387us-gaap:CommonStockMember2020-12-310001841387us-gaap:RetainedEarningsMember2021-07-012021-09-300001841387cadl:SeriesBConvertiblePreferredStockMemberus-gaap:CommonStockMember2021-01-012021-09-300001841387cadl:SeriesBWarrantsMember2021-01-012021-12-310001841387us-gaap:CommonStockMember2021-01-012021-09-300001841387cadl:VentagenLLCMembercadl:ExclusiveLicensingAgreementMember2014-03-310001841387cadl:SeriesBWarrantLiabilityMember2021-12-3100018413872020-12-310001841387srt:MinimumMember2022-01-012022-09-300001841387cadl:BrighamAndWomensHospitalIncLicenseAgreementMember2018-01-202018-01-200001841387cadl:StockOptionsOutstandingMember2022-07-012022-09-3000018413872021-07-142021-07-140001841387cadl:ConditionalSeriesBWarrantsMember2021-12-310001841387us-gaap:ShareBasedCompensationAwardTrancheThreeMember2022-01-012022-09-3000018413872022-09-300001841387us-gaap:ShareBasedCompensationAwardTrancheOneMember2022-09-300001841387cadl:AccountingStandardsUpdate202005Member2022-09-300001841387us-gaap:CommonStockMembercadl:SeriesCConvertiblePreferredStockMember2021-07-012021-09-300001841387us-gaap:AdditionalPaidInCapitalMember2021-06-3000018413872022-11-020001841387us-gaap:AdditionalPaidInCapitalMember2021-12-310001841387us-gaap:ComputerEquipmentMember2021-12-310001841387us-gaap:LeaseholdImprovementsMember2022-01-012022-09-300001841387us-gaap:RetainedEarningsMember2021-01-012021-09-300001841387cadl:BrighamAndWomensHospitalIncLicenseAgreementMember2020-09-152020-09-150001841387us-gaap:FurnitureAndFixturesMember2022-01-012022-09-300001841387us-gaap:ShareBasedCompensationAwardTrancheOneMember2022-01-012022-09-300001841387cadl:CorporateClinicalAndManufacturingOperationsMemberstpr:MA2019-02-040001841387cadl:CorporateClinicalAndManufacturingOperationsMemberstpr:MA2019-02-042019-02-040001841387us-gaap:CommonStockMember2022-01-012022-09-300001841387us-gaap:AdditionalPaidInCapitalMember2020-12-310001841387cadl:SeriesBConvertiblePreferredStockMember2021-07-012021-09-300001841387us-gaap:CommonStockMember2021-07-012021-09-300001841387cadl:ConditionalSeriesBWarrantsMember2021-01-012021-12-310001841387us-gaap:GeneralAndAdministrativeExpenseMember2021-01-012021-09-300001841387cadl:SeriesBWarrantLiabilityMember2022-09-300001841387cadl:LoanAgreementMember2022-09-300001841387cadl:SeriesAWarrantsMember2018-01-012018-12-310001841387cadl:SeriesBWarrantsMember2022-09-30cadl:Installmentcadl:Candidatexbrli:purexbrli:sharescadl:TradingDayscadl:Segmentiso4217:USDcadl:Squrefootiso4217:USDxbrli:shares

 

 

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 September 30, 2022

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: 001-40629

 

CANDEL THERAPEUTICS, INC.

(Exact Name of Registrant as Specified in its Charter)

 

 

Delaware

52-2214851

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer
Identification No.)

117 Kendrick St, Suite 450
Needham, MA

02494

(Address of principal executive offices)

(Zip Code)

Registrant’s telephone number, including area code: (617) 916-5445

 

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 $0.01 per share

 

CADL

 

The Nasdaq Global Market

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, 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

As of November 2, 2022, the registrant had 28,894,044 shares of common stock, $0.01 par value per share, outstanding.

 


 

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q, or Form 10-Q, including the section entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” contains express or implied forward-looking statements that are based on our management’s belief and assumptions and on information currently available to our management. Although we believe that the expectations reflected in these forward-looking statements are reasonable, these statements relate to future events or our future operational or financial performance, and involve known and unknown risks, uncertainties, and other factors that may cause our actual results, performance, or achievements to be materially different from any future results, performance, or achievements expressed or implied by these forward-looking statements. Forward-looking statements in this Form 10-Q may include, but are not limited to, statements about:

the timing and the success of preclinical studies and clinical trials of CAN-2409 and CAN-3110 and any other product candidates;
the initiation of any clinical trials of CAN-2409 and CAN-3110 and any other product candidates;
our need to raise additional funding before we can expect to generate any revenues from product sales;
our ability to conduct successful clinical trials or obtain regulatory approval for CAN-2409 and CAN-3110 or any other product candidates that we may identify or develop;
the ability of our research to generate and advance additional product candidates;
the effect of the ongoing COVID-19 pandemic, including mitigation efforts and economic effects, on any of the foregoing or other aspects of our business operations;
our ability to establish an adequate safety or efficacy profile for CAN-2409, CAN-3110 or any other product candidates that we may pursue;
our ability to manufacture CAN-2409, CAN-3110 or any other product candidate in conformity with our specifications and the U.S. Food and Drug Administration’s (FDA) requirements and to scale up manufacturing of our product candidates to commercial scale, if approved;
the implementation of our strategic plans for our business, any product candidates we may develop and any companion diagnostics;
our intellectual property position, including the scope of protection we are able to establish and maintain for intellectual property rights covering our product candidates any companion diagnostics;
the rate and degree of market acceptance and clinical utility for any product candidates we may develop;
estimates of our expenses, future revenues, capital requirements and our needs for additional financing;
the period we estimate to be funded by our existing financial resources;
our ability to establish and maintain collaborations;
the potential benefits with the continued existence of our license agreement with Mass General Brigham (MGB);
our financial performance;
our ability to effectively manage our anticipated growth;
developments relating to our competitors and our industry, including the impact of government regulation;
our ability to retain the continued service of our key professionals and to identify, hire and retain additional qualified professionals; and
other risks and uncertainties, including those discussed in Part II, Item 1A - Risk Factors in this Form 10-Q.

 

In some cases, forward-looking statements can be identified by terminology such as “will,” “may,” “should,” “could,” “expects,” “intends,” “plans,” “aims,” “anticipates,” “believes,” “estimates,” “predicts,” “potential,” “continue,” or the negative of these terms or other comparable terminology, although not all forward-looking statements contain these words. These statements are only predictions. You should not place undue reliance on forward-looking statements because they involve known and unknown risks, uncertainties, and other factors, which are, in some cases, beyond our control and which could materially affect results. Factors that may cause actual results to differ materially from current expectations include, among other things, those listed under the section entitled “Risk Factors” and elsewhere in this Form 10-Q. If one or more of these risks or uncertainties occur, or if our underlying assumptions prove to be incorrect, actual events or results may vary significantly from those expressed or implied by the forward-looking statements. No forward-looking statement is a promise or a guarantee of future performance.

The forward-looking statements in this Form 10-Q represent our views as of the date of this Form 10-Q. We anticipate that subsequent events and developments will cause our views to change. However, while we may elect to update these forward-looking statements at some point in the future, we have no current intention of doing so except to the extent required by applicable law. You should therefore not rely on these forward-looking statements as representing our views as of any date subsequent to the date of this Form 10-Q.

This Form 10-Q may include statistical and other industry and market data that we obtained from industry publications and research, surveys, and studies conducted by third parties. Industry publications and third-party research, surveys, and studies generally indicate that their information has been obtained from sources believed to be reliable, although they do not guarantee the accuracy or completeness of such information. We have not independently verified the information contained in such sources.


 

SUMMARY OF THE MATERIAL AND OTHER RISKS ASSOCIATED WITH OUR BUSINESS

Our ability to implement our business strategy is subject to numerous risks that you should be aware of before making an investment decision. These risks are described more fully in Part II, Item 1A - Risk Factors in this Form 10-Q. These risks include, among others:

We are a biopharmaceutical company with a limited operating history and we have not generated any revenue from product sales. We expect to continue to incur significant expenses and increasing operating losses for at least the next several years and may never achieve or maintain profitability. Our net loss was $13.7 million and $37.7 million for the nine months ended September 30, 2022 and 2021, respectively.
We will need to raise substantial additional funding. If we are unable to raise capital when needed, we would be forced to delay, reduce or eliminate some of our product development programs or commercialization efforts.
Our business is dependent on the success of our lead product candidate, CAN-2409, as well as CAN-3110 and any other product candidates that we advance into the clinic. All of our product candidates will require additional development before we may be able to seek regulatory approval for and launch a product commercially.
Our preclinical studies and clinical trials may fail to demonstrate adequately the safety and efficacy of any of our product candidates, which would prevent or delay development, regulatory approval, and commercialization.
Our product candidates are based on a novel approach to the treatment of cancer, which makes it difficult to predict the time and cost of product candidate development and subsequently obtaining regulatory approval, if at all.
Even if we receive marketing approval for our current or future product candidates, our current or future product candidates may not achieve broad market acceptance, which would limit the revenue that we generate from their sales.
The regulatory approval processes of the FDA and comparable foreign regulatory authorities are lengthy, time consuming and inherently unpredictable. If we are not able to obtain, or experience delays in obtaining, required regulatory approvals, we will not be able to commercialize CAN-2409, CAN-3110 and future product candidates as expected, and our ability to generate revenue may be materially impaired.
The FDA’s agreement to a Special Protocol Assessment with respect to the study design of our Phase 3 clinical trial of CAN-2409 in newly diagnosed localized prostate cancer in intermediate and high-risk patients does not guarantee any particular outcome from regulatory review, including ultimate approval, and may not lead to a successful review or approval process.
Some of our product candidates are being and may continue to be studied in third-party research and clinical trials sponsored by organizations or agencies other than us, or in investigator-initiated clinical trials, which means we will have minimal or no control over the conduct of such trials and which may adversely affect our ability to obtain marketing approval or certain regulatory exclusivities.
Changes in product candidate manufacturing or formulation may result in additional costs or delay.
The ongoing COVID-19 pandemic, which began in late 2019 and has spread worldwide, may affect our ability to complete our ongoing clinical trials and initiate and complete other preclinical studies, planned clinical trials or future clinical trials, disrupt regulatory activities, disrupt our manufacturing and supply chain, or have other adverse effects on our business and operations. In addition, the ongoing COVID-19 pandemic has caused substantial disruption in the financial markets and may adversely impact economies worldwide, both of which could result in adverse effects on our business, operations and ability to raise capital.
If the government or third-party payors fail to provide adequate coverage, reimbursement and payment rates for our product candidates, or if health maintenance organizations or long-term care facilities choose to use therapies that are less expensive or considered a better value, our revenue and prospects for profitability will be limited.
If the manufacturers upon which we may rely fail to produce our product candidates in the volumes that we require on a timely basis, or fail to comply with stringent regulations applicable to biopharmaceutical manufacturers, we may face delays in the development and commercialization of, or be unable to meet demand for, our product candidates and may lose potential revenues.
The transition of our manufacturing operations to a third-party contract manufacturer may result in further delays or expenses, and we may not experience the anticipated operating efficiencies.
Our rights to develop and commercialize certain of our product candidates are subject and may in the future be subject, in part, to the terms and conditions of licenses granted to us by third parties. If we fail to comply with our

 

obligations under our current or future intellectual property license agreements or otherwise experience disruptions to our business relationships with our current or any future licensors, we could lose intellectual property rights that are important to our business.

 

NOTE REGARDING COMPANY REFERENCES

 

Unless the context otherwise requires, the terms “Candel Therapeutics,” “the Company,” “we,” “us,” and “our” in this Form 10-Q refer to Candel Therapeutics, Inc. and its consolidated subsidiary.

 

NOTE REGARDING TRADEMARKS

 

We own or have rights to various trademarks, service marks and trade names that are used in connection with the operation of our business, including our company name, Candel Therapeutics, our logo, and the names of our CAN-2409™ and CAN-3110™ product candidates. This Form 10-Q may also contain trademarks, service marks and trade names of third parties, which are the property of their respective owners. Our use or display of third parties’ trademarks, service marks, trade names or products in this quarterly report on Form 10-Q is not intended to and does not imply a relationship with, or endorsement or sponsorship by, us. Solely for convenience, the trademarks, service marks and trade names referred to in this quarterly report on Form 10-Q may appear without the ®, TM or SM symbols, but the omission of such references is not intended to indicate, in any way, that we will not assert, to the fullest extent under applicable law, our rights or the right of the applicable owner of these trademarks, service marks and trade names.

i


 

Table of Contents

 

 

 

Page

PART I.

FINANCIAL INFORMATION

1

Item 1.

Financial Statements (Unaudited)

1

 

Condensed Consolidated Balance Sheets

1

 

Condensed Consolidated Statements of Operations

2

 

Condensed Consolidated Statements of Stockholders’ Equity

3

 

Condensed Consolidated Statements of Cash Flows

5

 

Notes to Condensed Consolidated Financial Statements (Unaudited)

6

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

21

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

35

Item 4.

Controls and Procedures

35

PART II.

OTHER INFORMATION

37

Item 1.

Legal Proceedings

37

Item 1A.

Risk Factors

37

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

88

Item 3.

Defaults Upon Senior Securities

88

Item 4.

Mine Safety Disclosures

88

Item 5.

Other Information

88

Item 6.

Exhibits

89

Signatures

90

 

ii


 

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements.

Candel Therapeutics, Inc.

Condensed Consolidated Balance Sheets

(In thousands, except share and per share amounts)

(Unaudited)

 

 

 

SEPTEMBER 30,
2022

 

 

DECEMBER 31,
2021

 

Assets

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

77,183

 

 

$

82,642

 

Prepaid expenses and other current assets

 

 

1,887

 

 

 

2,303

 

Total current assets

 

 

79,070

 

 

 

84,945

 

Fixed assets, net

 

 

4,561

 

 

 

3,836

 

Lease right of use assets

 

 

1,110

 

 

 

 

Restricted cash

 

 

266

 

 

 

424

 

Total assets

 

$

85,007

 

 

$

89,205

 

Liabilities and Stockholders’ Equity

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Accounts payable

 

$

970

 

 

$

1,590

 

Accrued expenses

 

 

4,445

 

 

 

3,438

 

Current portion of lease liability

 

 

452

 

 

 

 

Other current liabilities

 

 

31

 

 

 

334

 

Total current liabilities

 

 

5,898

 

 

 

5,362

 

Deferred rent

 

 

 

 

 

894

 

Term loan payable to a bank

 

 

20,122

 

 

 

 

Other long-term debt

 

 

626

 

 

 

560

 

Lease liability, net of current portion

 

 

1,608

 

 

 

 

Warrant liability

 

 

4,626

 

 

 

18,252

 

Total liabilities

 

 

32,880

 

 

 

25,068

 

Commitments and contingencies (Note 15)

 

 

 

 

 

 

Stockholders’ equity:

 

 

 

 

 

 

Preferred stock, $0.01 par value; 10,000,000 shares authorized at
September 30, 2022 and December 31, 2021,
no shares issued or outstanding at September 30, 2022 and December 31, 2021, respectively.

 

 

 

 

 

 

Common stock, $0.01 par value; 150,000,000 shares authorized at September 30, 2022 and December 31, 2021; 29,014,517 and 28,689,842 shares issued at September 30, 2022 and December 31, 2021, respectively; 28,891,909 and 28,689,842 shares outstanding at September 30, 2022 and December 31, 2021, respectively.

 

 

290

 

 

 

286

 

Additional paid-in capital

 

 

146,291

 

 

 

144,146

 

Treasury stock (at cost)

 

 

(448

)

 

 

 

Accumulated deficit

 

 

(94,006

)

 

 

(80,295

)

Total stockholders’ equity

 

 

52,127

 

 

 

64,137

 

Total liabilities and stockholders’ equity

 

$

85,007

 

 

$

89,205

 

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

1


 

Candel Therapeutics, Inc.

Condensed Consolidated Statements of Operations

(In thousands, except share and per share amounts)

(Unaudited)

 

 

 

THREE MONTHS ENDED
SEPTEMBER 30,

 

 

NINE MONTHS ENDED
SEPTEMBER 30,

 

 

 

2022

 

 

2021

 

 

2022

 

 

2021

 

Research and development service revenue,
   related party

 

$

31

 

 

$

31

 

 

$

94

 

 

$

94

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

Research and development

 

 

5,376

 

 

 

5,265

 

 

 

15,815

 

 

 

11,324

 

General and administrative

 

 

3,536

 

 

 

2,795

 

 

 

10,900

 

 

 

6,756

 

Total operating expenses

 

 

8,912

 

 

 

8,060

 

 

 

26,715

 

 

 

18,080

 

Loss from operations

 

 

(8,881

)

 

 

(8,029

)

 

 

(26,621

)

 

 

(17,986

)

Other income (expense):

 

 

 

 

 

 

 

 

 

 

 

 

Grant income

 

 

 

 

 

131

 

 

 

 

 

 

927

 

Interest, dividend and investment income (expense), net

 

 

(176

)

 

 

(14

)

 

 

(716

)

 

 

(42

)

Change in fair value of warrant liability

 

 

369

 

 

 

(8,250

)

 

 

13,626

 

 

 

(20,619

)

Total other income (expense), net

 

 

193

 

 

 

(8,133

)

 

 

12,910

 

 

 

(19,734

)

Net loss

 

$

(8,688

)

 

$

(16,162

)

 

$

(13,711

)

 

$

(37,720

)

Net loss per share, basic and diluted

 

$

(0.30

)

 

$

(0.69

)

 

$

(0.48

)

 

$

(2.42

)

Weighted-average common shares outstanding, basic and diluted

 

 

28,891,909

 

 

 

23,325,716

 

 

 

28,798,284

 

 

 

15,579,267

 

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

2


 

Candel ThErapeutics, Inc.

Condensed Consolidated Statements of Stockholders’ Equity

(In thousands, except share and per share amounts)

(Unaudited)

 

 

 

COMMON STOCK

 

 

TREASURY STOCK

 

 

ADDITIONAL
PAID-IN

 

 

ACCUMULATED

 

 

STOCKHOLDERS’

 

 

 

SHARES

 

 

AMOUNT

 

 

SHARES

 

 

AMOUNT

 

 

CAPITAL

 

 

DEFICIT

 

 

EQUITY

 

Balance, December 31, 2021

 

 

28,689,842

 

 

$

286

 

 

 

 

 

$

-

 

 

$

144,146

 

 

$

(80,295

)

 

$

64,137

 

Options exercised

 

 

324,675

 

 

 

4

 

 

 

 

 

 

 

 

 

472

 

 

 

 

 

 

476

 

Treasury stock acquired

 

 

 

 

 

 

 

 

(122,608

)

 

 

(448

)

 

 

0

 

 

 

 

 

 

(448

)

Stock-based compensation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2,309

 

 

 

 

 

 

2,309

 

Change in fair value of
   NC Ohio Trust Warrants

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(636

)

 

 

 

 

 

(636

)

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(13,711

)

 

 

(13,711

)

Balance, September 30, 2022

 

 

29,014,517

 

 

$

290

 

 

 

(122,608

)

 

$

(448

)

 

$

146,291

 

 

$

(94,006

)

 

$

52,127

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

COMMON STOCK

 

 

TREASURY STOCK

 

 

ADDITIONAL
PAID-IN

 

 

ACCUMULATED

 

 

STOCKHOLDERS’

 

 

 

SHARES

 

 

AMOUNT

 

 

SHARES

 

 

AMOUNT

 

 

CAPITAL

 

 

DEFICIT

 

 

EQUITY

 

Balance, June 30, 2022

 

 

29,014,517

 

 

$

290

 

 

 

(122,608

)

 

$

(448.00

)

 

$

145,548

 

 

$

(85,318

)

 

$

60,072

 

Stock-based compensation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

757

 

 

 

 

 

 

757

 

Change in fair value of
   NC Ohio Trust Warrants

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(14

)

 

 

 

 

 

(14

)

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(8,688

)

 

 

(8,688

)

Balance, September 30, 2022

 

 

29,014,517

 

 

$

290

 

 

 

(122,608

)

 

$

(448

)

 

$

146,291

 

 

$

(94,006

)

 

$

52,127

 

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

3


 

Candel ThErapeutics, Inc.

Condensed Consolidated Statements of Stockholders’ Equity (Deficit)

(In thousands, except share and per share amounts)

(Unaudited)

 

 

 

SERIES B
CONVERTIBLE
PREFERRED STOCK

 

 

SERIES C
CONVERTIBLE
PREFERRED STOCK

 

 

COMMON STOCK

 

 

ADDITIONAL
PAID-IN

 

 

ACCUMULATED

 

 

STOCKHOLDERS’

 

 

 

SHARES

 

 

AMOUNT

 

 

SHARES

 

 

AMOUNT

 

 

SHARES

 

 

AMOUNT

 

 

CAPITAL

 

 

DEFICIT

 

 

EQUITY (DEFICIT)

 

Balance, December 31, 2020

 

 

11,155,506

 

 

$

26,560

 

 

 

6,032,170

 

 

$

22,500

 

 

 

11,635,094

 

 

$

116

 

 

$

20,493

 

 

$

(44,171

)

 

$

(23,562

)

Options exercised

 

 

 

 

 

 

 

 

 

 

 

 

 

 

24,410

 

 

 

 

 

 

35

 

 

 

 

 

 

35

 

Warrants exercised

 

 

 

 

 

 

 

 

 

 

 

 

 

 

75,946

 

 

 

1

 

 

 

429

 

 

 

 

 

 

430

 

Stock-based compensation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2,564

 

 

 

 

 

 

2,564

 

Change in fair value of NC
   Ohio Trust Warrants

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

845

 

 

 

 

 

 

845

 

Conversion of Series B Preferred
   Stock to common stock

 

 

(11,155,506

)

 

 

(26,560

)

 

 

 

 

 

 

 

 

4,538,578

 

 

 

45

 

 

 

26,515

 

 

 

 

 

 

26,560

 

Conversion of Series C Preferred
   Stock to common stock

 

 

 

 

 

 

 

 

(6,032,170

)

 

 

(22,500

)

 

 

2,527,820

 

 

 

25

 

 

 

22,475

 

 

 

 

 

 

22,500

 

Proceeds from IPO, net

 

 

 

 

 

 

 

 

 

 

 

 

 

 

9,887,994

 

 

 

99

 

 

 

71,236

 

 

 

 

 

 

71,335

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(37,720

)

 

 

(37,720

)

Balance, September 30, 2021

 

 

 

 

$

0

 

 

 

 

 

$

0

 

 

 

28,689,842

 

 

$

286

 

 

$

144,592

 

 

$

(81,891

)

 

$

62,987

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

SERIES B
CONVERTIBLE
PREFERRED STOCK

 

 

SERIES C
CONVERTIBLE
PREFERRED STOCK

 

 

COMMON STOCK

 

 

ADDITIONAL
PAID-IN

 

 

ACCUMULATED

 

 

STOCKHOLDERS’

 

 

 

SHARES

 

 

AMOUNT

 

 

SHARES

 

 

AMOUNT

 

 

SHARES

 

 

AMOUNT

 

 

CAPITAL

 

 

DEFICIT

 

 

EQUITY (DEFICIT)

 

Balance, June 30, 2021

 

 

11,155,506

 

 

$

26,560

 

 

 

6,032,170

 

 

$

22,500

 

 

 

11,731,889

 

 

$

117

 

 

$

22,437

 

 

$

(65,729

)

 

$

(43,175

)

Options exercised