Quince Therapeutics, Inc. — Q1 2024 Form 10-Q
Reporting period: Three months ended March 31, 2024. The unaudited results include EryDel from its October 2023 acquisition. Quince is a clinical-stage biotechnology company developing EryDex, a drug/device treatment for ataxia-telangiectasia (A-T); it has not generated product revenue.
Financial results and liquidity
| Metric | Q1 2024 | Q1 2023 / comparison |
|---|---|---|
| Revenue | None | None |
| Research and development expense | $3.7 million | $3.2 million; up 14.6% |
| General and administrative expense | $5.0 million | $3.8 million; up 29.9% |
| Operating expenses | $11.2 million | $13.0 million |
| Net loss | $11.1 million; $0.26 per share | $12.3 million; $0.34 per share |
| Operating cash used | $8.4 million | $3.6 million |
| Cash, cash equivalents and short-term investments | $67.8 million at March 31 | $75.1 million at December 31, 2023 |
| Long-term debt | $13.5 million | $13.4 million at December 31, 2023 |
There are no meaningful operating margins to report because the company has no product revenue. Cash and short-term investments totaled $67.8 million; current liabilities were $9.8 million. The company reported an accumulated deficit of $330.8 million and total stockholders’ equity of $74.2 million. Investing activities provided $8.9 million, primarily reflecting investment maturities exceeding purchases; financing activities provided $0.2 million, mainly from option exercises.
Material changes and unusual items
- R&D expense rose mainly from EryDex Phase 3 NEAT trial start-up costs, including higher clinical-trial and manufacturing spending. EryDex accounted for $2.8 million of direct R&D expense.
- G&A expense increased by $1.1 million, primarily from personnel, audit and tax, and consulting costs.
- Q1 2024 included a $2.5 million non-cash charge from remeasuring EryDel acquisition contingent consideration and a $0.4 million charge from remeasuring EIB debt. Q1 2023 included a $5.9 million non-cash impairment of the Novosteo in-process R&D asset; there was no comparable impairment in Q1 2024.
- The EryDel acquisition earnout has a maximum potential cash amount of $485 million, payable only if specified development, regulatory, commercial and sales milestones are achieved. Its recorded fair value was $60.3 million long-term plus $4.7 million short-term at quarter-end.
- The EIB loan had €10 million principal outstanding, reported at a fair value of $13.5 million, with principal due in August 2026 for the drawn tranches. The agreement also includes potential revenue-based payments and restrictive covenants.
Outlook, milestones and risks
Management expects to start enrollment in the global Phase 3 NEAT trial in Q2 2024, report top-line results in the second half of 2025, and prepare a U.S. NDA submission in 2026 if results are positive. The planned trial will evaluate EryDex against placebo, with approximately 86 participants ages 6–9 and approximately 20 participants ages 10 or older; the primary endpoint is change in RmICARS. The trial is being conducted under an FDA Special Protocol Assessment, which does not guarantee success or approval.
Management says existing resources are expected to fund planned operations, including NEAT through completion, into at least 2026. The filing also says resources are sufficient for at least 12 months and cautions that estimates depend on assumptions; the stated runway excludes costs associated with in-licensing activities. Quince expects continued losses and may need substantial additional funding. Financing may dilute shareholders, impose debt restrictions, or require delay, reduction or termination of development programs.
- The prior Phase 3 ATTeST trial missed its primary endpoint; statistical significance was reported in a per-protocol analysis and in a subgroup of patients ages 6–9. NEAT’s outcomes may differ.
- Quince depends substantially on EryDex, has no approved products or product sales, and faces clinical, regulatory, manufacturing, supplier, intellectual-property, reimbursement and acquisition-integration risks.
- Management reported effective disclosure controls and no material change in internal control over financial reporting during the quarter. The company reported no material pending legal proceeding.
- The Series A preferred share purchase rights expired April 5, 2024.
Key facts investors should verify
- Whether NEAT enrollment began on schedule and whether trial execution, recruitment and supply plans remain on track.
- Whether the NEAT design and endpoints remain acceptable to regulators, and how the results compare with the prior ATTeST findings, particularly for ages 6–9.
- Cash burn and updated runway assumptions, including the effect of trial costs, in-licensing, and potential financing needs.
- The EryDel earnout terms and fair-value assumptions, and the EIB loan’s covenants, repayment obligations and potential revenue-based payments.
- Progress on EryDex manufacturing, medical-device compliance and required European certifications, alongside continued integration of EryDel.