Coya Therapeutics, Inc. — Q3 2023 Form 10-Q
Reporting period: Three and nine months ended September 30, 2023. Coya is a clinical-stage biotechnology company developing therapies intended to enhance regulatory T-cell function. It reported no revenue and remains dependent on external financing.
Financial results and liquidity
| Metric | Q3 2023 | Q3 2022 | Nine months 2023 | Nine months 2022 |
|---|---|---|---|---|
| Revenue | None | None | None | None |
| Research and development expense | $1.59 million | $1.28 million | $3.89 million | $3.70 million |
| General and administrative expense | $1.96 million | $1.24 million | $5.46 million | $3.95 million |
| Total operating expenses | $3.56 million | $2.66 million | $9.72 million | $7.81 million |
| Net loss | $3.42 million | $4.02 million | $9.25 million | $9.14 million |
| Basic and diluted loss per share | $0.34 | $1.55 | $0.94 | $3.53 |
- Gross profit and operating margins are not meaningful because the company had no revenue.
- Cash and cash equivalents were $10.89 million at September 30, 2023, versus $5.93 million at December 31, 2022. Current liabilities were $1.81 million; accumulated deficit was $27.12 million.
- Operating cash use was $8.95 million for the first nine months, compared with $5.02 million in 2022. Investing used $0.35 million; financing provided $14.25 million, primarily from the January IPO and over-allotment.
- Convertible promissory notes totaling $12.97 million converted to common stock in the IPO; no note balance remained at quarter-end. The filing reports no credit facility or committed capital source.
Changes versus comparable periods
- Q3 net loss narrowed by $0.60 million, despite higher operating expenses, principally because the 2022 quarter included a $1.40 million loss from changes in fair value of convertible notes. Q3 2023 also had higher interest and other income.
- Nine-month net loss increased by $0.12 million. Operating expenses rose $1.91 million, mainly from higher public-company and administrative costs and increased preclinical spending; higher other income and the absence of the prior-year note fair-value loss partly offset the increase.
- Research and development spending shifted toward the COYA 300 Series: nine-month external costs were $2.37 million versus $0.30 million in 2022. Sponsored-research costs declined to $0.21 million from $1.24 million.
- The January 2023 IPO converted preferred shares and notes into common stock and increased shares outstanding. At November 2, 2023, 10,030,436 common shares were outstanding.
Outlook, developments and risks
- Management estimated that September 30 cash would fund operating and capital expenditure requirements into the second quarter of 2024. The filing states that substantial additional financing is needed and that substantial doubt exists about the company’s ability to continue as a going concern within one year after the financial statements were issued. Funding plans include equity, debt, strategic investors or collaborations; success is not assured.
- Management expects continued losses and higher expenses as it advances development, trials, manufacturing and public-company operations. No specific revenue or earnings guidance was provided.
- Management reported positive preliminary observations from small, open-label proof-of-concept studies: COYA 302 in four ALS patients and low-dose IL-2/COYA 301 in eight Alzheimer’s disease patients. These studies used commercially available products, were not controlled efficacy trials, and reported no serious adverse events. Management planned to prepare an FDA IND submission for COYA 302 in the first half of 2024 and, subject to FDA acceptance, initiate a Phase 2 trial. A separate academic Phase 2 Alzheimer’s study was fully enrolled with 38 patients; top-line data were anticipated in summer 2024.
- License arrangements entail potential milestone payments, royalties and sublicense payments. The Dr. Reddy’s agreement includes up to approximately $2.9 million in pre-approval milestones for the first indication and approximately $20 million in additional development, regulatory and sales milestones if achieved. ARScience and Houston Methodist agreements also include contingent payments and royalties.
- Key risks include clinical and regulatory uncertainty, reliance on licensed intellectual property and third parties, ability to recruit and retain personnel, and the need to raise capital. The company said there were no material changes to the risk factors in its 2022 Form 10-K. It reported no legal proceedings and concluded disclosure controls were effective.
Important facts for investors to verify
- Whether Coya can secure financing before its stated cash runway ends, and the resulting dilution or other financing terms.
- Progress and timing of the COYA 302 IND submission and Phase 2 plans, and the summer 2024 data timing for the Alzheimer’s study.
- Whether early open-label findings are reproducible in adequately controlled, larger clinical trials.
- Expected cash burn and the timing and amount of contingent license milestones, royalties and other development costs.
- Share-count and potential dilution effects from outstanding warrants and options; the filing lists 2,174,737 warrants and 1,238,612 options outstanding at September 30, 2023.