Cocrystal Pharma, Inc. — Q3 2023 Form 10-Q
Reporting period: Three and nine months ended September 30, 2023. The unaudited statements are presented under U.S. GAAP. Cocrystal is a clinical-stage biotechnology company developing antiviral drug candidates; it has no products approved for sale and reported no revenue.
Financial results and liquidity
| Metric | Q3 2023 | Q3 2022 | Nine months 2023 | Nine months 2022 |
|---|---|---|---|---|
| Revenue | None reported | None reported | None reported | None reported |
| Research and development expense | $4.194 million | $3.872 million | $10.902 million | $9.105 million |
| General and administrative expense | $1.849 million | $1.822 million | $4.591 million | $4.530 million |
| Net loss | $4.165 million | $5.700 million | $13.520 million | $34.336 million |
| Net loss per share, basic and diluted | $0.41 | $0.70 | $1.43 | $4.23 |
| Net cash used in operating activities | Not presented quarterly | $11.340 million | $16.542 million |
At September 30, 2023, cash was $29.738 million, restricted cash $0.075 million, and total current assets $32.205 million. Current liabilities were $1.924 million and total liabilities $1.924 million; the filing reports no outstanding borrowings. Operating lease liabilities were $0.118 million, classified as current. Stockholders’ equity was $30.690 million. Gross or operating margins are not meaningful because the company reported no revenue.
Cash and restricted cash decreased $7.406 million over the first nine months. Investing cash use was $0.059 million; financing provided $3.993 million, including $4.0 million from a private stock placement. Management stated that unrestricted cash should fund planned operations for more than 12 months, while cautioning that additional capital may be required and is not assured.
Changes versus comparable periods
- Q3 net loss narrowed by $1.535 million year over year; nine-month net loss narrowed by $20.816 million. The nine-month comparison is substantially affected by a $19.092 million goodwill impairment recorded in 2022 and a $1.6 million legal-settlement recovery recognized in 2023.
- R&D expense increased $0.322 million in Q3 and $1.797 million for the nine-month period, reflecting clinical-trial activity and preparations for the CC-42344 Phase 2a trial. The nine-month discussion also cites $0.523 million of R&D tax credits.
- G&A expense was broadly stable: up $0.027 million in Q3 and $0.061 million for the nine-month period.
- Operating cash use improved by $5.202 million year over year, primarily reflecting prior-year cash use for a $1.7 million clinical-trial reservation fee and the $1.6 million court deposit.
- Shares outstanding increased from 8.143 million at December 31, 2022 to 10.174 million at September 30, 2023, following issuance of 2.030 million shares to related investors for $4.0 million.
Programs, outlook, and risks
- Influenza: CC-42344 completed Phase 1 with reported favorable safety and tolerability. The company reported UK authorization in October 2023 to begin a Phase 2a human-challenge trial, with treatment expected to start in Q4 2023. Inhaled-formulation preclinical work is also underway. Merck continues development of partnered influenza A/B compounds and is responsible for their development and commercialization under the collaboration; Cocrystal may receive milestones and royalties, but Merck can terminate the agreement before first commercial sale.
- Coronavirus and norovirus: CDI-988 entered Phase 1, with first subjects dosed announced in September 2023. It was selected as the company’s lead oral norovirus candidate; the ongoing Phase 1 study is intended to support both programs.
- Clinical-trial spending: The CC-42344 Phase 2a contract has an estimated total cost of approximately $7.2 million, including a prepaid reservation fee. The company reported $1.384 million of related expense for the first nine months of 2023.
- Funding and development risk: Cocrystal has no revenue source sufficient to cover operating costs and has incurred losses and negative operating cash flows. It expects to seek funding through equity, strategic partners, or other sources; financing may be unavailable or dilutive. Clinical outcomes, regulatory approvals, trial recruitment, competition, supply-chain disruptions, economic conditions, and currency movements are among the disclosed risks. No quantified financial guidance was provided.
- Contingency: Liberty Insurance litigation was remanded for trial after Cocrystal’s successful appeal. The company received the $1.6 million court deposit refund in August 2023 and recognized the recovery in earnings. A new trial was scheduled for December 4, 2023; the final outcome remains uncertain.
Key facts for investors to verify
- Whether CC-42344’s Phase 2a trial began as expected, and its enrollment, safety, and efficacy progress.
- CDI-988 Phase 1 results and development plans for both coronavirus and norovirus indications.
- Cash burn, clinical-trial commitments, and the assumptions underlying management’s greater-than-12-month runway estimate.
- Potential dilution and availability of future financing, given the 2023 share issuance and continuing operating losses.
- The outcome and any financial effects of the Liberty litigation, including the scheduled trial.
- Merck’s continued commitment to its collaboration and any resulting development, milestone, or royalty updates.