Quince Therapeutics, Inc. quarterly report, Q2 FY2020

Business context and reporting period

Filing identity: The supplied filing is Cortexyme, Inc.’s Form 10-Q, not Quince Therapeutics, Inc.’s. It covers the quarter and six months ended June 30, 2020; filed August 14, 2020. Cortexyme was a clinical-stage biopharmaceutical company developing atuzaginstat (COR388) for Alzheimer’s disease.

The company reported no product revenue. Its principal program was the global Phase 2/3 GAIN trial, with an open-label extension that began dosing in April 2020.

Financial performance and position

At June 30, 2020, cash and cash equivalents were $66.2 million, short-term investments $78.3 million, and long-term investments $66.1 million. Cash, cash equivalents, and short-term investments totaled $144.5 million; total cash, cash equivalents, and investments were about $210.6 million. Current assets were $151.6 million versus current liabilities of $13.7 million. Total liabilities were $13.7 million, including $0.3 million of operating lease liabilities; the filing reports no borrowings or other debt.

Gross margin and operating margin are not meaningful for this pre-revenue company. Operating cash use was $25.2 million in the first half of 2020. The six-month cash increase was $14.9 million, reflecting $118.7 million of financing inflows, principally the PIPE, offset by operating and investment activity. Accumulated deficit was $104.6 million.

Material changes versus prior comparable period

• Q2 operating expenses increased 90.8% and net loss increased 94.4% year over year. For the first half, operating expenses rose 130.9% and net loss rose 136.0%.
• R&D growth reflected GAIN trial enrollment and related clinical and drug-manufacturing costs, as well as increased personnel and stock-based compensation. G&A rose with headcount, stock-based compensation, and public-company insurance costs.
• In February 2020, Cortexyme issued 2.5 million shares at $50 per share in a private placement, generating $117.6 million net proceeds after $7.4 million of issuance costs. Shares outstanding rose to 29.49 million at June 30 from 26.87 million at year-end 2019.
• Cash and investments expanded following the financing: cash and short-term investments were $144.5 million at June 30, versus $99.9 million at December 31, 2019.

Outlook, commentary, and risks

• Management expected an interim GAIN analysis by the end of 2020, after about 100 patients in each of three arms completed 24 weeks of treatment, and top-line results by the end of 2021.
• Management said existing resources were expected to fund planned operations through 2022, including completion and announcement of GAIN top-line results. The liquidity note separately states cash, cash equivalents, and short-term investments were expected to cover at least 12 months from issuance of the financial statements. These are different runway statements and merit reconciliation.
• COVID-19 had not, as of the filing, changed stated GAIN analysis timelines; enrollment, screening, and the open-label extension were continuing, and the company reported no significant supply disruptions and said it had drug supply for the full GAIN trial. It cautioned that the pandemic could disrupt enrollment, trials, suppliers, staffing, and regulatory timelines.
• Management expected R&D expenses to increase substantially as clinical development, manufacturing, and pipeline work advanced. The company anticipated continuing operating losses and may need additional capital; unavailable or unfavorable financing could force delays or reductions in development programs.
• Other key risks include uncertain clinical efficacy and safety, trial enrollment or completion delays, manufacturing and vendor dependence, regulatory uncertainty, and volatile share price. No material legal proceedings were reported. Disclosure controls were assessed as effective; no material changes in internal control over financial reporting were reported.

Investor verification points

1. Confirm the filing is for Cortexyme, Inc., ticker CRTX, rather than Quince Therapeutics, Inc.
2. Check subsequent GAIN trial enrollment, interim-analysis timing, and top-line results against the timelines stated here.
3. Reconcile the stated liquidity runway through 2022 with the separate “at least 12 months” statement and monitor operating cash burn.
4. Assess whether the PIPE proceeds and higher spending adequately support the trial and whether further financing or dilution may be needed.
5. Track COVID-19 effects on clinical-trial execution, drug supply, and regulatory review, alongside clinical safety and efficacy developments.