Cocrystal Pharma, Inc. — FY2022 Form 10-K
Reporting period: Fiscal year ended December 31, 2022. This is an annual report, not a standalone fourth-quarter report. Cocrystal is a clinical-stage antiviral biotechnology company and reported one operating segment.
Financial performance and liquidity
| Metric | FY2022 | FY2021 |
|---|---|---|
| Product revenue | None reported | None reported |
| Research and development expense | $12.392 million | $8.794 million |
| General and administrative expense | $5.745 million | $5.427 million |
| Goodwill impairment | $19.092 million | None |
| Net loss | $38.837 million | $14.185 million |
| Net loss per share, basic and diluted | $4.77 | $0.16 |
| Cash used in operating activities | $21.435 million | $12.719 million |
Amounts are in U.S. dollars; financial statement figures are reported in thousands, except per-share data. The company had $37.144 million of cash and $75,000 of restricted cash at year-end, versus $58.705 million and $50,000, respectively, a year earlier. Management reported approximately $35 million of cash on March 21, 2023 and expected available resources to fund operations for at least 12 months following the filing. It also cautioned that continued development will require substantial funding and that future financing may not be available on acceptable terms.
Total assets were $40.840 million, total liabilities $1.273 million, and stockholders’ equity $39.567 million at December 31, 2022. Liabilities were primarily accounts payable and lease obligations; no material borrowing debt is reported. Operating lease liabilities totaled $290,000. Gross margin is not meaningful because the company had no product revenue. The company has an accumulated deficit of $297.930 million.
Material changes and notable items
- Net loss increased by $24.652 million year over year, principally due to the $19.092 million non-cash goodwill impairment and higher R&D spending.
- R&D expense increased $3.598 million as CC-42344 advanced through Phase 1 and CDI-988 progressed toward clinical testing. Operating cash use also increased by $8.716 million.
- Cash and restricted cash decreased by $21.536 million during 2022. Unlike 2021, when equity offerings provided $38.505 million net, the company raised no proceeds from common-stock sales in 2022.
- Goodwill was written off in full following a decline in market capitalization; no goodwill remained at year-end.
- The company recorded a $1.6 million legal-settlement expense and deposited $1.6 million with the court while appealing an insurance-coverage judgment. A $1.359 million judgment had been entered for Liberty Insurance; the appeal was pending as of the report date.
Pipeline, outlook, and risks
- Influenza A: CC-42344 completed a Phase 1 study with favorable reported safety and tolerability results. Management planned a human-challenge Phase 2a study, subject to UK regulatory clearance, and expected to begin it in the second half of 2023. An inhaled formulation was in preclinical development.
- Coronavirus: CDI-988 was selected as the lead oral candidate; GLP toxicology work and preparations for a Phase 1 study were underway. The company expected to seek to start Phase 1 in the first half of 2023, subject to regulatory clearance. CDI-45205 remained in IND-enabling work.
- Norovirus: The company was developing polymerase and protease inhibitors and expected to select a preclinical lead in the first half of 2023.
- HCV: CC-31244 had advanced through clinical studies, and the company was seeking a development partner. The filing describes its Phase 2 status inconsistently; investors should confirm the latest study status directly from subsequent filings.
- Merck collaboration: Merck is responsible for further development and commercialization of partnered influenza A/B compounds. Cocrystal may receive up to $156 million in development, regulatory, and sales milestones plus royalties, but no milestones had been achieved and no collaboration revenue was recognized in 2022. Merck may terminate the agreement before first commercial sale.
- No formal financial guidance is provided. Management expects substantial operating losses and negative operating cash flows for the next several years. Key risks include clinical and regulatory failure or delay, competition, viral mutations, reliance on CROs and manufacturers, supply disruptions, intellectual-property protection, and the need for additional capital.
- The company reported effective disclosure controls and internal control over financial reporting at year-end. The auditor issued an unqualified opinion and identified goodwill impairment assessment as a critical audit matter; the audit did not include an opinion on internal-control effectiveness.
Important facts for investors to verify
- Current cash, quarterly cash burn, and updated runway assumptions, including whether additional financing or partnerships are needed.
- Current CC-42344 Phase 2a and CDI-988 Phase 1 timing, regulatory status, and clinical results.
- Updated clinical and partnering status for CC-31244, given the differing Phase 2 descriptions in the filing.
- Merck’s development progress and any milestone or royalty eligibility; the stated potential payments are contingent, not assured.
- Outcome of the Liberty Insurance appeal and any resulting cash, expense, or contingency impact.