Cingulate Inc. — Q1 2022 Form 10-Q
Reporting period: Three months ended March 31, 2022; filed May 12, 2022. Cingulate is a pre-revenue, clinical-stage biopharmaceutical company developing drug-delivery-based therapies, initially for ADHD.
Financial results and liquidity
| Metric | Q1 2022 | Q1 2021 |
|---|---|---|
| Revenue | None | None |
| Research and development expense | $2.76 million | $0.56 million |
| General and administrative expense | $2.25 million | $0.77 million |
| Operating loss | $5.01 million | $1.33 million |
| Net loss | $5.00 million | $1.33 million |
| Net loss per share | $0.44 | Not clearly provided |
| Cash used in operating activities | $3.86 million | $1.67 million |
- Cash and cash equivalents were $12.61 million at March 31, 2022, down from $16.49 million at December 31, 2021. Current assets totaled $14.57 million; current liabilities were $1.63 million.
- Total liabilities were $2.41 million, primarily lease obligations and operating payables/accruals. The company reported no outstanding notes payable; related-party notes had been repaid in December 2021.
- Accumulated deficit was $56.74 million. No operating margin is meaningful because the company had no revenue.
- Management estimates current cash will fund operations through late 2022. It estimates approximately $21.5 million in additional capital is needed to support a planned late-2023 CTx-1301 NDA filing, in addition to funding for other programs.
Changes versus the prior comparable period
- Net loss increased by $3.67 million, or 275%, year over year. R&D rose 391.5%, mainly reflecting CTx-1301 development, clinical-trial preparation, and manufacturing; G&A rose 192.6%, including public-company personnel, insurance, and professional costs.
- Operating cash use increased by $2.19 million. The company attributed this to higher development spending, partly offset by working-capital changes and noncash expenses.
- Cash was substantially higher than Q1 2021’s $0.81 million ending balance, reflecting the December 2021 IPO; the company reported approximately $20.4 million of net IPO proceeds.
Outlook, risks, and notable items
- CTx-1301: Two Phase 3 studies were planned for 2022, with first-patient dosing targeted in the second half. A contract manufacturer’s operational resource issues delayed clinical-supply delivery and pushed the fixed-dose study’s initial second-quarter dosing target. Management expected results in late 2022 or early 2023 and continued to target an NDA filing in late 2023, assuming positive trial results.
- CTx-1302: Management planned a Phase 1/2 bioavailability study in 2023, followed, if successful, by pivotal Phase 3 trials targeted for late 2023.
- CTx-2103: A human formulation study began in May 2022; results were expected in July 2022.
- The company stated that it had incurred ongoing losses and negative operating cash flows and that substantial doubt existed about its ability to continue as a going concern within one year after issuance of the financial statements. Further financing is required; equity issuance could dilute shareholders, while debt or partnerships may impose costs or require surrendering rights.
- Management cited expected inflation and higher clinical-site and manufacturing costs. COVID-19 had not materially affected Q1 results, but future effects on suppliers, trials, financing, and operations remained uncertain.
- A $250,000 licensing milestone for CTx-1301 Phase 3 dosing was accrued because management deemed it probable. Stock-based compensation expense was $181,518. The company reported no material pending legal proceedings and no material changes to previously disclosed risk factors.
Important facts for investors to verify
- Whether CTx-1301 clinical supply is delivered and Phase 3 dosing and study timelines remain achievable.
- Actual cash burn, financing progress, and whether funding can be secured to reach the planned CTx-1301 NDA filing and advance other candidates.
- Clinical-study results and regulatory feedback for CTx-1301, CTx-1302, and CTx-2103.
- The impact of inflation, manufacturing and clinical-site costs, and potential dilution or other financing terms.
- The going-concern warning and the assumptions underlying management’s cash runway and additional-capital estimates.