LadRx Corp (LADX)·Q2 2018 Earnings Summary

Executive Summary

• Q2 2018 delivered a materially improved P&L with net loss of $3.01M ($0.10 EPS) versus $14.36M ($0.60 EPS) in Q2 2017, driven by sharply lower R&D and G&A and a small gain on warrant liabilities; management highlighted a substantial reduction in monthly cash burn rate and expects continued discipline .
• Cash was $36.43M at quarter-end; post-quarter, the company fully repaid its Hercules term loan on August 1, eliminating all outstanding debt and further strengthening the balance sheet .
• Strategic focus intensified around Centurion BioPharma (wholly owned subsidiary) and the albumin companion diagnostic (ACDx) to enable patient selection for LADR-7/8/9/10; a provisional patent for ACDx was filed in late July .
• No formal financial guidance or revenue outlook was provided; management reiterated the goal to secure a strategic partnership for LADR/ACDx “before the end of 2018,” and stated they prefer to align with a partner prior to filing an IND, which is a key near-term catalyst .
• Consensus estimates from S&P Global for Q2 2018 were unavailable at time of request; comparisons to Street estimates cannot be made (Values were unavailable from S&P Global).

What Went Well and What Went Wrong

What Went Well

• Burn-rate discipline and operating leverage: YoY net loss fell ~79% on reduced R&D (no aldoxorubicin program costs) and lower G&A (professional fees), with a small non-cash gain on warrants; management emphasized sustained reduction in cash burn going forward .
• Balance sheet de-risking: Company repaid the Hercules loan on Aug 1, removing all debt, and expired ~3.2M warrants in July, reducing perceived overhang and potentially stabilizing float .
• Pipeline and diagnostic strategy progressed: Launch of Centurion BioPharma and filing of the ACDx provisional patent underpin a personalized medicine approach to LADR and future albumin-binding assets; management sees higher response rates via better patient selection .

What Went Wrong

• No revenue recognized and continuing operating losses: Licensing revenue remained $0, with reliance on cash reserves and partner milestones longer term; interest expense persisted before loan repayment .
• IND timing contingent on partnering: Management clarified it plans not to proceed with IND submissions until alignment with a strategic partner, potentially gating near-term clinical initiation .
• Limited financial visibility: No formal guidance on revenue, margins, or OpEx beyond qualitative burn-rate commentary, constraining near-term forecasting for investors .

Financial Results

KPIs and Balance Sheet

Note: No segment revenues reported; licensing revenue was $0 in all compared periods .

Guidance Changes

No formal guidance provided for revenue, margins, OpEx ranges, OI&E, tax rate, or dividends .

Earnings Call Themes & Trends

Management Commentary

• “To date, 2018 has been marked by several important achievements, most notably the launch of Centurion BioPharma... and the filing of a provisional patent... for our breakthrough companion diagnostic...” — Eric Curtis, President & COO .
• “CytRx has dramatically reduced its monthly cash burn rate... Cash... totaled $36.4 million. Net loss... was $3 million or $0.10 per share...” — John Caloz, CFO .
• “Our major goal is to secure a strategic partnership for our companion diagnostic and high-potency LADR drug candidates before the end of 2018.” — Eric Curtis .
• “We want to get aligned with our strategic partner before we would move forward towards an IND.” — Eric Curtis (Q&A) .

Q&A Highlights

• IND sequencing: Management intends not to file INDs until aligned with a strategic partner, to avoid misalignment and maximize partnership success .
• IP timing: ACDx provisional patent filed in late July; publication and issuance timelines will follow typical multi-year processes; management expressed confidence in IP protection .
• Burn rate/runway: Excluding the Hercules payoff, average burn is ~$0.85M/month with a projected 13-month runway at the time of the Q2 call .
• Rationale for Centurion subsidiary: Strategy to unlock pipeline value and enhance attractiveness to large pharma partners; early feedback has been positive .
• Aldoxorubicin NDA timing: Controlled by NantCell; CytRx/LadRx deferred to licensee decisions; expressed confidence in NantCell’s resources and approach .

Estimates Context

• Wall Street consensus (S&P Global) for Q2 2018 EPS and revenue was unavailable at time of request; therefore, no comparison to Street estimates can be made (Values were unavailable from S&P Global).
• With no revenue and reduced OpEx, Street models likely need to reflect lower R&D/G&A run-rate and incorporate post-quarter debt repayment; absence of revenue and guidance limits precision .

Key Takeaways for Investors

• Balance sheet de-risked: Post-quarter debt extinguishment and warrant expiration reduce financial overhang and improve flexibility; supports downside protection while awaiting catalysts .
• Operating discipline: Net loss fell ~79% YoY on lower R&D and G&A; burn ~$0.85M/month suggests a more sustainable path pending partnership .
• Near-term catalyst: Management targets securing a strategic partnership before end-2018 and will align prior to IND; watch for partnering announcements and IND-enabling progression .
• Pipeline narrative: Personalized medicine approach via ACDx could enhance LADR response rates; continued external clinical progress for aldoxorubicin at NantCell adds credibility to albumin-binding modalities .
• Trading implications: Potential upside on partnership headlines and debt-free status; limited fundamental revenue drivers near term may temper momentum absent concrete deal terms .
• Medium-term thesis: Execution on partner alignment and IND filings, plus validation of ACDx utility, are critical to value creation; cash runway provides time to transact without dilutive financing pressure .