Coya Therapeutics, Inc. — Q2 2023 Form 10-Q
Reporting period: Quarter and six months ended June 30, 2023; filed August 8, 2023. Coya is a clinical-stage biotechnology company developing therapies intended to enhance regulatory T-cell function. It has no product revenue and is focused on research and development.
Financial results and liquidity
| Metric | Q2 2023 | Q2 2022 | Six months 2023 | Six months 2022 |
|---|---|---|---|---|
| Revenue | $0 | $0 | $0 | $0 |
| Research and development | $1.07 million | $1.45 million | $2.30 million | $2.43 million |
| General and administrative | $1.83 million | $1.99 million | $3.49 million | $2.71 million |
| Operating expenses | $3.25 million | $3.45 million | $6.15 million | $5.15 million |
| Net loss | $3.10 million | $3.41 million | $5.83 million | $5.12 million |
| Net loss per share, basic and diluted | $0.31 | $1.32 | $0.59 | $1.98 |
As of June 30, 2023, cash and cash equivalents were $13.10 million, versus $5.93 million at year-end 2022. Current liabilities were $1.22 million and total liabilities were $1.22 million; the $12.97 million convertible-note balance at year-end converted to common stock in the January IPO. Stockholders’ equity was $13.25 million, compared with a deficit of $8.39 million at year-end. No revenue or gross margin was reported; profitability and operating margins are not meaningful for this pre-revenue company.
Cash used in operating activities was $6.73 million in the first half, compared with $3.42 million in 2022; investing used $0.35 million for the Dr. Reddy’s license, while financing provided $14.25 million, primarily from the IPO and overallotment. Management expects available cash to fund operations and capital needs into Q2 2024, but states that substantial doubt exists about the company’s ability to continue as a going concern within one year after issuance without additional financing.
Changes versus prior periods
- Q2 net loss narrowed by about $0.32 million year over year, while first-half net loss increased by about $0.72 million.
- Q2 R&D declined by about $0.38 million, mainly reflecting lower Houston Methodist sponsored-research costs, partly offset by higher preclinical spending. First-half R&D was slightly lower overall, as reduced sponsored-research and clinical costs offset increased preclinical spending.
- First-half G&A rose by about $0.78 million, primarily from public-company costs, partly offset by the absence of prior-year convertible-note financing costs.
- IPO proceeds improved liquidity and eliminated convertible debt through conversion, but operating cash use increased year over year.
Outlook, developments, and risks
- Management expects significant expenses and operating losses to continue, with 2023 spending expected to exceed 2022 levels and focus primarily on COYA 301 and COYA 302. The company will need additional funding; it has no credit facility or committed capital source and warns that failure to raise funds could delay, scale back, or end development programs.
- Management reported positive proof-of-concept observations from small, open-label investigator-initiated studies using commercially available products: COYA 302 in four ALS patients and COYA 301 in eight Alzheimer’s patients. These preliminary results are not controlled evidence of efficacy. Coya planned an FDA pre-IND meeting for COYA 302 in fall 2023 and a Phase 2 trial following FDA acceptance of an IND. An academic Phase 2 Alzheimer’s study of low-dose IL-2 was ongoing, with topline results anticipated in Q2 2024.
- The Dr. Reddy’s agreement licenses a proposed abatacept biosimilar for COYA 302. It includes a $0.35 million upfront payment, approximately $2.9 million in potential pre-approval milestones for the first indication, up to approximately $20 million in additional development, regulatory, and sales milestones, and single-digit royalties. Other license agreements also include contingent milestone and royalty obligations.
- The company reported a $23.70 million accumulated deficit and continuing negative operating cash flows. Key risks include clinical and regulatory uncertainty, reliance on third-party licensed technology, financing needs, and the possibility that early study findings will not be confirmed. No material changes to the previously disclosed risk factors were reported.
- After quarter-end, the President and Chief Medical Officer resigned from those positions, and Dr. Fred Grossman was appointed President and CMO effective July 17, 2023.
Investor facts to verify
- Cash burn, actual runway, and timing and terms of any required financing, considering the stated going-concern uncertainty.
- Whether the COYA 302 pre-IND meeting, IND acceptance, and planned clinical-trial milestones occurred as anticipated.
- Whether preliminary ALS and Alzheimer’s observations are reproduced in adequately controlled studies.
- Potential dilution: 9,947,915 common shares were outstanding as of August 3, 2023, and 2,174,737 warrants were outstanding at June 30, 2023, in addition to stock options.
- Future milestone, royalty, and research-funding obligations under the Dr. Reddy’s, ARScience, Methodist, and Houston Methodist agreements.