Cogent Biosciences, Inc. — Q1 2022 Form 10-Q
Reporting period: Three months ended March 31, 2022. Financial statements are unaudited. Cogent is a clinical-stage biotechnology company developing precision therapies; its lead candidate is bezuclastinib (CGT9486). The company reported no product revenue.
Key financial results
| Metric | Q1 2022 | Q1 2021 |
|---|---|---|
| Revenue | None reported | None reported |
| Research and development expense | $25.5 million | $8.2 million |
| General and administrative expense | $5.9 million | $4.6 million |
| Total operating expenses / operating loss | $31.4 million | $12.8 million |
| Net loss | $30.6 million | $11.7 million |
| Net loss per share, basic and diluted | $0.68 | $0.34 |
| Cash used in operating activities | $28.3 million | $11.4 million |
As a pre-revenue company, profit margins are not meaningful. R&D expense rose $17.3 million, largely from bezuclastinib manufacturing and development, the PEAK, APEX and SUMMIT studies, and expanded research and personnel costs. G&A increased primarily with headcount. Stock-based compensation was $4.2 million, compared with $1.8 million.
Financial position and liquidity
- At March 31, 2022, cash and cash equivalents were $191.0 million, down from $219.7 million at year-end 2021; cash, cash equivalents and restricted cash totaled $192.3 million.
- Total assets were $206.9 million and stockholders’ equity was $187.9 million. The accumulated deficit was $301.6 million.
- No conventional borrowings were reported. Balance-sheet obligations included operating lease liabilities of $3.5 million and a $3.1 million contingent value rights (CVR) liability.
- Management stated that cash was expected to fund operations and capital expenditures into 2024; the notes also state it should cover at least 12 months from issuance. The runway estimate depends on assumptions and may prove shorter.
- Operating cash use increased substantially year over year, while investing activities used $0.4 million, mainly for equipment. Financing activities provided $0.1 million.
Material changes and notable items
- Net loss increased $18.9 million year over year, reflecting sharply higher operating expenses.
- Common shares outstanding were 45.8 million at March 31, 2022. A further 95,334 Series A preferred shares were outstanding, convertible into 23.8 million common shares, subject to conversion limitations. Preferred-stock conversions during the quarter added approximately 2.0 million common shares.
- In April 2022, a clinical milestone under the Plexxikon license was deemed achieved, triggering a $2.5 million payment in Q2.
- The Boulder research facility lease was expanded in March. The company estimated net construction costs of $8–10 million for the initial premises, with landlord contributions and a possible tenant-improvement loan. Rent on the initial premises was expected to begin in June 2023.
- Subsequent to quarter-end, Cogent filed a new shelf registration statement for up to $300 million in securities and entered an at-the-market sales agreement permitting up to $75 million of common-stock sales. It terminated its prior sales agreement in May 2022.
Outlook, programs and risks
- PEAK, a Phase 3 study, evaluates bezuclastinib plus sunitinib versus sunitinib in previously treated GIST. APEX is a Phase 2 study in advanced systemic mastocytosis; SUMMIT is a Phase 2 study in indolent or smoldering systemic mastocytosis. Management expected initial APEX data in the first half of 2022.
- Management planned FGFR2 candidate selection later in 2022 and expected to file its first internally developed IND in the second half of 2023. The company is also pursuing an ErbB2 research program.
- Management expects significant expenses and operating losses for at least several years and will need additional funding. Equity or convertible financing could dilute holders; debt or partnering could impose restrictions or require relinquishing rights.
- Key uncertainties include clinical efficacy and safety, trial timing and costs, regulatory outcomes, manufacturing and supply, intellectual-property protection, competition, and potential COVID-19 disruption. The company reported no material change to the risk factors in its 2021 Form 10-K and no material legal proceedings.
- Historical bezuclastinib data cited by the company included a 20% confirmed objective response rate in a subgroup of 15 heavily pre-treated GIST patients receiving the combination with sunitinib; this small prior-trial subgroup is not a result from the ongoing Phase 3 study.
Investor facts to verify
- Progress, enrollment, safety and efficacy updates for PEAK, APEX and SUMMIT, including whether expected clinical milestones were achieved.
- Cash burn against the stated runway into 2024, and the assumptions underlying that estimate.
- Potential dilution from the preferred shares convertible into 23.8 million common shares, equity compensation, and the new $75 million ATM facility.
- Timing and total cost of the Boulder build-out, lease commitments and the $2.5 million Plexxikon milestone payment.
- Whether the proposed FGFR2 development timeline and other pipeline plans remain on track.