Coya Therapeutics, Inc. — Q1 2023 Form 10-Q
Reporting period: Three months ended March 31, 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 position
| Metric | Q1 2023 | Q1 2022 / comparison |
|---|---|---|
| Revenue | None | None |
| Research and development expense | $1.23 million | $0.98 million; up $0.25 million |
| General and administrative expense | $1.66 million | $0.72 million; up $0.94 million |
| Total operating expenses | $2.90 million | $1.70 million |
| Net loss | $2.74 million | $1.70 million |
| Basic and diluted loss per share | $0.28 | $0.66 |
| Net cash used in operating activities | $3.86 million | $1.98 million |
| Cash and cash equivalents, March 31 | $16.32 million | $5.93 million at December 31, 2022 |
| Total liabilities, March 31 | $1.27 million | $16.79 million at December 31, 2022 |
| Accumulated deficit, March 31 | $20.61 million | $17.87 million at December 31, 2022 |
No operating margin is meaningful because the company reported no revenue. Q1 financing activities provided $14.25 million, principally from the IPO and over-allotment. Cash increased by $10.39 million during the quarter. Convertible promissory notes of $12.97 million and Series A preferred stock converted into common stock in connection with the IPO; no convertible notes remained outstanding at quarter-end.
Material changes and business developments
- Operating expenses rose $1.20 million year over year, driven primarily by higher personnel, professional and consulting costs, increased clinical-trial activity, and greater spending on the COYA 300 Series. R&D expense increased by $0.25 million; G&A increased by $0.94 million.
- Net loss increased by $1.03 million. The reported loss per share declined from $0.66 to $0.28, while weighted-average common shares increased substantially following the IPO and conversions.
- The January 2023 IPO and partial over-allotment raised approximately $14.14 million net, per the equity statement. The cash flow statement reports $14.25 million of financing cash inflow.
- On March 16, 2023, Coya entered into an exclusive license and supply agreement with Dr. Reddy’s Laboratories for an abatacept biosimilar for COYA 302; it became effective April 1. Coya paid a $350,000 non-refundable upfront fee. Potential payments include approximately $2.9 million in pre-approval regulatory milestones for the first indication, up to approximately $20 million for other development, approval and sales milestones, additional indication milestones, and single-digit royalties.
Outlook, liquidity, and risks
- Management estimated that March 31 cash would fund operating expenses and capital expenditure requirements into the second quarter of 2024. The estimate depends on assumptions that may prove imprecise; additional funding will be needed.
- The filing states there is substantial doubt about Coya’s ability to continue as a going concern within one year after issuance of the financial statements. Management was evaluating financing strategies, but there is no assurance funding will be available. Coya had no credit facility or committed capital source.
- Management expects significant expenses and operating losses to continue as programs advance, with R&D and public-company costs expected to increase. No product-sales revenue is expected in the foreseeable future; the filing provides no specific revenue or earnings guidance.
- Key risks include clinical and regulatory uncertainty, financing availability, development and manufacturing costs, reliance on third-party licenses and research arrangements, intellectual-property protection, and the ability to recruit and retain personnel. The company reported no material changes to the risk factors in its 2022 Form 10-K.
- License and research arrangements may create substantial future contingent payments. The ARScience agreement includes development milestones and royalties; the Houston Methodist license includes milestone and royalty obligations. On May 4, 2023, Coya executed a revised sponsored research agreement committing $0.5 million through May 2024.
- The company reported no legal proceedings, defaults on senior securities, or off-balance-sheet arrangements. Management concluded disclosure controls were effective as of March 31, 2023.
Important facts for investors to verify
- Whether Coya can secure additional financing before its stated cash runway ends, and the resulting dilution or financing terms.
- Actual cash burn and spending versus management’s runway assumptions, including the impact of trial and manufacturing plans.
- Clinical and regulatory progress for COYA 101, COYA 301, COYA 302, and other pipeline programs.
- The terms, effective status, milestones, royalty rates, and potential aggregate costs of the Dr. Reddy’s, ARScience, and Houston Methodist agreements.
- The difference between IPO net proceeds presented in the equity statement and financing cash inflow in the cash flow statement, and the precise share counts following the IPO and conversions.