Cognition Therapeutics, Inc. — Q1 2023 Form 10-Q
Reporting period: Three months ended March 31, 2023; filed May 4, 2023. Cognition Therapeutics is a clinical-stage CNS and retinal therapeutics developer focused on small-molecule candidates including CT1812. It had no product-sales revenue; grant income is reported as other income.
Financial performance and liquidity
| Metric | Q1 2023 | Q1 2022 |
|---|---|---|
| Research and development expense | $5.43 million | $6.52 million |
| General and administrative expense | $3.54 million | $2.90 million |
| Total operating expenses | $8.97 million | $9.41 million |
| Grant income | $3.43 million | $5.90 million |
| Net loss | $6.17 million | $3.84 million |
| Net loss per share, basic and diluted | $0.21 | $0.17 |
| Net cash used in operating activities | $2.71 million | $2.99 million |
At March 31, cash and cash equivalents were $38.81 million, down from $41.56 million at year-end 2022. Current assets were $42.80 million and current liabilities $7.47 million; total liabilities were $9.88 million and stockholders’ equity $35.78 million. The company reported $427,000 of outstanding insurance-premium financing, classified as a current liability, and $808,000 of operating lease liabilities. Accumulated deficit was $121.57 million. Operating margins are not meaningful given the absence of product revenue.
Changes versus prior-year quarter
- Net loss widened by $2.33 million even as operating expenses declined by $440,000, primarily because grant income decreased $2.48 million and other expense increased $420,000.
- R&D expense fell $1.09 million, reflecting lower clinical-trial and manufacturing costs, partly offset by higher personnel and preclinical spending. G&A rose $648,000, primarily from professional fees and stock-based compensation.
- Operating cash use decreased by $283,000. The company’s cash balance fell $2.75 million during the quarter.
- Weighted-average shares increased to 29.09 million from 22.43 million. Shares outstanding at March 31 were 29.28 million.
Outlook, funding and risks
- Management estimated existing cash and expected grant income could fund operations into the second half of 2024, assuming no use of the remaining ATM or Lincoln Park facility. The filing also states cash should cover at least one year after filing. Additional funding will be needed thereafter; actual runway depends on assumptions and may be shorter.
- The ATM permits up to $40 million in common-stock sales; $39.8 million remained available at quarter-end, subject to Form S-3 limitations. The company sold 95,823 shares for approximately $197,000 gross proceeds during the quarter.
- A March 2023 agreement gives the company the option to sell up to $35 million of stock to Lincoln Park over 36 months. No shares had been sold under the facility by quarter-end; 189,856 commitment shares were issued and $318,000 recorded as expense.
- The company expects continued losses and rising expenses, and has no assurance of profitability. Key uncertainties include clinical and regulatory progress, reliance on CT1812, future grant awards and access to capital, third-party manufacturing and trial vendors, competition, and macroeconomic or geopolitical disruption.
- NIH grant reimbursements are subject to eligibility requirements and audit; disallowed costs could go unreimbursed or require repayment. No material litigation or contingency was reported as of March 31. Management reported disclosure controls and internal control over financial reporting were effective, with no material changes in internal control during the quarter.
Investor verification points
- Confirm clinical-trial progress, timing, spending and results for CT1812, and the effect of reduced Phase II trial activity on future costs.
- Assess the assumptions behind the second-half-2024 cash runway, including grant receipts, trial spending and whether the ATM or Lincoln Park facility is used.
- Review potential dilution and financing terms from the ATM, Lincoln Park facility, equity awards and future capital raises.
- Track grant eligibility, reimbursement timing and award availability; cumulative grant awards are not equivalent to cash on hand.
- Reconcile the increase in net loss with lower operating expenses, particularly the decline in grant income and higher other expense.