Cocrystal Pharma, Inc. — Q1 2024 Form 10-Q
Reporting period: Three months ended March 31, 2024. Cocrystal is a clinical-stage biopharmaceutical company developing antiviral candidates; it reported no product revenue and has no products approved for sale.
Financial results and liquidity
| Metric | Q1 2024 | Q1 2023 / prior balance |
|---|---|---|
| Revenue | None reported | None reported |
| Research and development expense | $2.950 million | $3.907 million |
| General and administrative expense | $1.208 million | $1.204 million |
| Total operating expenses | $4.158 million | $5.111 million |
| Net loss | $3.956 million | $5.189 million |
| Basic and diluted loss per share | $0.39 | $0.64 |
| Net cash used in operating activities | $4.503 million | $3.111 million |
| Cash and restricted cash at quarter-end | $21.917 million | $34.056 million |
- Cash and restricted cash declined by $4.511 million during the quarter. Unrestricted cash was $21.842 million at March 31, 2024.
- Current assets were $24.492 million and current liabilities were $2.379 million. Total liabilities were $3.961 million, primarily operating lease liabilities; the filing reports no borrowings.
- No operating margin is meaningful because the company reported no revenue. R&D expense fell 24% year over year; operating cash use increased about 45%.
- Management believes cash is sufficient to fund planned operations for more than 12 months. The company has no ongoing revenue sufficient to cover operating costs and may need additional capital; future financing availability and terms are uncertain.
Material changes and notable items
- Net loss improved by $1.233 million year over year, primarily reflecting lower R&D expense and $220,000 of net interest income, partly offset by continued operating costs. G&A was broadly unchanged.
- Management attributed lower R&D expense to reduced clinical-preparation costs as CC-42344 moved into a Phase 2a trial and CDI-988 into a Phase 1 trial. Higher operating cash use was attributed to Phase 2a influenza trial work, preparation for an inhaled influenza candidate trial, and completion of the COVID-19 Phase 1 trial.
- Merck’s influenza collaboration termination became effective March 14, 2024, after Merck determined there were no conditions to continue the program. The filing says development could not meet a specific program requirement; related pending patent applications remain in place.
- Cocrystal elected to terminate its two Kansas State University Research Foundation license agreements, effective March 29, 2024, because it concluded further development would be futile.
- All 11,000 remaining liability-classified warrants expired in January 2024; no warrants remained outstanding at March 31.
- The company accrued approximately $194,000 of Australian R&D tax credits in Q1; the receivable balance was approximately $980,000 at quarter-end. It recorded no income tax expense or benefit and maintains a full valuation allowance against deferred tax assets.
Programs, outlook, and risks
- Oral CC-42344: The Phase 2a influenza human-challenge trial was ongoing at quarter-end. Topline results were expected in 2024. The filing, signed May 13, 2024, also reports that enrollment of 78 subjects was completed in May.
- Inhaled CC-42344: The company was evaluating plans to initiate a Phase 1 study in 2024.
- CDI-988: Phase 1 testing for the oral pan-coronavirus and pan-norovirus candidate was underway; topline results were expected in 2024.
- CC-31244, the HCV candidate, had completed Phase 2a testing; the company said it was seeking a partner for further development.
- There is no formal financial guidance in the filing. Clinical timelines and results are forward-looking and subject to trial, regulatory, funding, vendor/CRO, supply-chain, competitive, and viral-mutation risks. The company also cited potential inflationary pressure on future operating costs.
- The company disclosed no material changes to previously reported legal proceedings and no new risk factors in this 10-Q. Management said disclosure controls were effective and reported no material change in internal control over financial reporting.
Important facts for investors to verify
- Whether cash burn remains consistent with management’s stated runway of more than 12 months, and whether additional or dilutive financing is needed.
- Timing and results of the CC-42344 Phase 2a and CDI-988 Phase 1 trials, and whether the planned inhaled CC-42344 Phase 1 study proceeds.
- Effects of the Merck collaboration termination on the influenza program, intellectual property, and potential future milestone or royalty opportunities.
- Development plans and partnering prospects for CC-31244 and other pipeline candidates, including after termination of the Kansas State agreements.
- Recognition and collection of Australian R&D tax credits, and the company’s ongoing lease commitments.