Quince Therapeutics, Inc. — FY2023 Form 10-K
Reporting period: Fiscal year ended December 31, 2023. Quince is a clinical-stage biotechnology company with no approved products and no product revenue. Following its October 2023 acquisition of EryDel, its focus is EryDex, a drug/device combination using autologous red blood cells to deliver dexamethasone sodium phosphate for ataxia-telangiectasia (A-T).
Financial performance and liquidity
| Metric | FY2023 / Dec. 31, 2023 | FY2022 / Dec. 31, 2022 |
|---|---|---|
| Revenue | $0 | $0 |
| Research and development expense | $9.4 million | $25.2 million |
| General and administrative expense | $17.7 million | $26.0 million |
| Operating loss | $34.6 million | $52.0 million |
| Net loss | $31.4 million | $51.7 million |
| Net loss per share, basic and diluted | $0.84 | $1.54 |
| Net cash used in operating activities | $18.3 million | $44.0 million |
| Cash, cash equivalents and short-term investments | $75.1 million | $90.2 million |
There are no meaningful revenue-based margins to report. Management attributes lower expenses and net loss principally to the 2023 workforce reduction, lower stock-based compensation and the winding down or sale of legacy programs; higher interest income also contributed to the reduced net loss. FY2023 included a $5.9 million non-cash impairment of the NOV004 in-process R&D asset and a $1.6 million charge from remeasurement of EryDel contingent consideration. Cash flow from investing activities was an outflow of $5.8 million, while financing activities provided $0.1 million. Cash and investments declined by $15.1 million year over year.
At year-end, total assets were $167.9 million, total liabilities $82.8 million and stockholders’ equity $85.1 million. The balance sheet included $13.4 million of EIB debt at fair value (approximately $11.0 million principal outstanding; principal due August 2026) and $57.7 million of EryDel contingent consideration ($4.1 million short-term and $53.6 million long-term). EryDel shareholders may receive up to $485 million in additional cash milestone payments if specified development, approval and sales milestones are achieved; no royalties are payable. Quince reported an accumulated deficit of $319.6 million.
Management says existing resources are expected to fund planned operations into 2026, including the Phase 3 NEAT trial and its open-label extension, and states resources are sufficient for at least 12 months from issuance of the financial statements. Estimated direct costs are approximately $20 million for NEAT and $15 million for the extension. The company nevertheless expects continuing losses and says additional capital may be required to execute its broader strategy.
Material changes and unusual items
- Quince acquired EryDel on October 20, 2023, issuing 6.5 million shares at closing, with 725,037 additional shares subject to release after one year, subject to indemnification claims. The acquisition added EryDex, the AIDE platform, an Italian manufacturing operation, $17.6 million of goodwill and approximately $60.6 million of acquired IPR&D fair value.
- In January 2023, Quince sold its legacy protease-inhibitor portfolio to Lighthouse and shifted strategy toward acquiring or licensing clinical-stage rare-disease assets. It also discontinued internal development of NOV004, terminated the related Purdue license, and recorded the $5.9 million impairment.
- A cost-reduction program cut the workforce by approximately 47% and was completed in April 2023; the company reported approximately $0.4 million of program expenses. Headcount subsequently increased with the EryDel acquisition.
- The EryDel acquisition was accounted for as a business combination. Its purchase-price allocation remains preliminary and may be revised within the measurement period. Fair-value estimates for acquired IPR&D and contingent consideration rely on significant unobservable assumptions; the auditor identified these valuations as a critical audit matter.
Outlook, risks and contingencies
Quince expects to begin enrollment in the global Phase 3 NEAT trial in the second quarter of 2024. The planned study includes approximately 86 patients aged six to nine and approximately 20 patients aged 10 or older; the primary endpoint is change in RmICARS. Management targets top-line results in the second half of 2025 and a potential U.S. NDA submission in 2026, contingent on positive results. The trial is being conducted under an FDA Special Protocol Assessment (SPA), which does not guarantee success or approval. The company also plans to seek ex-U.S. partners.
The prior Phase 3 ATTeST trial did not meet its prespecified primary endpoint (high-dose p=0.077); the company reports statistically significant findings in the per-protocol population and in an age six-to-nine subgroup. These findings are not assurance that NEAT will succeed. The FDA placed a partial clinical hold on EryDex in March 2023 related to extractables and leachables from new EryKit components; it was lifted in September 2023.
Key risks include dependence on EryDex as the lead late-stage asset; clinical, regulatory, manufacturing and enrollment uncertainty; the small A-T patient population; reliance on third-party suppliers and trial operators; potential financing needs and dilution; and EIB covenants, repayment and revenue-based payment obligations. EryDex must demonstrate a favorable safety or efficacy profile versus existing corticosteroids to support uptake and reimbursement. The company also faces integration, intellectual-property, competition, pricing and reimbursement risks. Management reported effective disclosure controls and effective internal control over financial reporting; EryDel was excluded from management’s 2023 internal-control assessment, and the auditor did not attest to internal-control effectiveness.
Investor facts to verify
- NEAT enrollment timing, recruitment progress, protocol implementation under the SPA, and whether the endpoint and planned patient population remain unchanged.
- Final NEAT results versus the prior ATTeST failure on its primary endpoint, including the evidence supporting the age-specific subgroup rationale and the treatment’s safety profile.
- Cash burn against management’s “into 2026” runway estimate, including actual trial and open-label extension costs and any financing or partnership plans.
- EIB loan terms, covenant compliance and future repayment or revenue-based obligations; the likelihood and timing of the up-to-$485 million EryDel milestone payments.
- Completion of the EryDel purchase-price allocation and changes in the fair value of contingent consideration, goodwill or acquired IPR&D.
- Manufacturing readiness and supplier redundancy, regulatory status of the drug/device components, and the commercial assumptions underlying the company’s estimated market opportunity.