COGENT BIOSCIENCES, INC. The following discussion and analysis of our financial condition and results of
operations should be read in conjunction with our condensed consolidated
financial statements and related notes appearing elsewhere in this Quarterly
Report on Form 10-Q and our Annual Report on Form 10-K. Some of the information
contained in this discussion and analysis or set forth elsewhere in this
Quarterly Report on Form 10-Q, including information with respect to our plans
and strategy for our business, includes forward-looking statements that involve
risks and uncertainties. Our actual results may differ materially from those
anticipated in these forward-looking statements as a result of certain factors,
including but not limited to those set forth under the caption "Risk Factors" in
this Quarterly Report on Form 10-Q and in our Annual Report on Form 10-K for the
year ended
Overview
We are a biotechnology company focused on developing precision therapies for
genetically defined diseases. Our approach is to design rational precision
therapies that treat the underlying cause of disease and improve the lives of
patients. Our lead drug candidate, bezuclastinib, is designed to target exon 17
mutations found within the KIT receptor tyrosine kinase, including KIT D816V.
When
Pipeline
Our current pipeline is below:
[[Image Removed: img156520917_0.jpg]]
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Bezuclastinib
We are pursuing the development of bezuclastinib in patients living with
Advanced Systemic Mastocytosis ("AdvSM") and Non-Advanced Systemic Mastocytosis
("Non-AdvSM"). The vast majority of AdvSM and Non-AdvSM patients have a KIT
D816V mutation. Patients with AdvSM have a significantly diminished lifespan
with a median survival of less than 3.5 years. For patients with Non-AdvSM,
there are no available approved therapies, and while their lifespan is not
impacted by the disease, these patients suffer from a poor quality of life and
new treatment options are badly needed. Emerging clinical data for other kinase
inhibitors with activity against KIT D816V have shown that the disease is highly
sensitive to inhibition of the target. Bezuclastinib was specifically designed
to selectively inhibit KIT mutations on exon 17, including KIT D816V. In
APEX is our global, open-label, multi-center, two-part Phase 2 clinical trial in
patients with AdvSM evaluating the safety, efficacy, pharmacokinetic, and
pharmacodynamic profiles of bezuclastinib. In
SUMMIT is our randomized, double-blind, placebo-controlled, global Phase 2 clinical trial for patients with Non-AdvSM. The study is designed to evaluate the safety and efficacy of bezuclastinib in patients with moderate to severe Indolent Systemic Mastocytosis or Smoldering Systemic Mastocytosis. We expect to report initial data from the SUMMIT trial in the first half of 2023.
We are also evaluating bezuclastinib for the treatment of GIST. Bezuclastinib
has been studied in more than 50 advanced solid tumor and GIST patients in a
Phase 1/2 clinical trial, with the vast majority of those patients living with
advanced GIST. GIST is a disease frequently driven by KIT mutations, and
resistance to currently available therapeutics is frequently associated with the
emergence of other KIT mutations. Anti-tumor activity for bezuclastinib was
observed in both single agent and combination settings, including in combination
with sunitinib, an approved treatment option for GIST patients. Clinical data
from this trial have been published in the
PEAK is our randomized open-label, global Phase 3 clinical trial designed to
evaluate the safety, tolerability, and efficacy of bezuclastinib in combination
with sunitinib compared to sunitinib alone in patients with locally advanced,
unresectable or metastatic GIST
In
Worldwide rights to develop and commercialize bezuclastinib are exclusively
licensed from
Patents protecting bezuclastinib include composition of matter claims which have issued in the US and other key territories and provide exclusivity through 2033 and potentially beyond through patent term extensions.
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Research programs
During the second quarter of 2021, we announced the formation of the Cogent
Research Team, a highly experienced discovery and research group. Based in
Since our inception in 2014, we have focused significant efforts and financial
resources on establishing and protecting our intellectual property portfolio,
conducting research and development of our product candidates, manufacturing
drug product material for use in preclinical studies and clinical trials,
staffing our company, and raising capital. We do not have any products approved
for sale and have not generated any revenue from product sales. Our ability to
generate product revenue sufficient to achieve profitability will depend heavily
on the successful development and eventual commercialization of one or more of
our product candidates. Our net losses were
•
initiate and increase enrollment for our existing and planned clinical trials for our product candidates;
•
continue to discover and develop additional product candidates, including
through the creation of our research team in
•
acquire or in-license other product candidates and technologies;
•
maintain, expand, and protect our intellectual property portfolio;
•
hire additional research, clinical, scientific, and commercial personnel;
•
establish a commercial manufacturing source and secure supply chain capacity sufficient to provide commercial quantities of any product candidates for which we may obtain regulatory approval;
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seek regulatory approvals for any product candidates that successfully complete clinical trials;
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establish a sales, marketing, and distribution infrastructure to commercialize any products for which we may obtain regulatory approval; and
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add operational, financial, and management information systems and personnel, including personnel to support our product development and planned future commercialization efforts.
We will not generate revenue from product sales unless and until we successfully complete clinical development and obtain regulatory approval for our product candidates. If we obtain regulatory approval for any of our product candidates and do not enter into a commercialization partnership, we expect to incur significant expenses related to developing our internal commercialization capability to support product sales, marketing, and distribution.
As a result, we will need substantial additional funding to support our continuing operations and pursue our growth strategy. Until such time as we can generate significant revenue from product sales, if ever, we expect to finance our operations through a combination of equity offerings, debt financings, collaborations, strategic alliances, and marketing, distribution, or licensing arrangements. We may be unable to raise additional funds or enter into such other agreements or arrangements when needed on favorable terms, or at all. If we fail to raise capital or enter into such agreements as, and when, needed, we may have to significantly delay, scale back, or discontinue the development and commercialization of one or more of our product candidates.
Because of the numerous risks and uncertainties associated with pharmaceutical product development, we are unable to accurately predict the timing or amount of increased expenses or when, or if, we will be able to achieve or maintain profitability. Even if we are able to generate product sales, we may not become profitable. If we fail to become profitable or are unable to sustain profitability on a continuing basis, then we may be unable to continue our operations at planned levels and be forced to reduce or terminate our operations.
As of
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The COVID-19 Pandemic
In
Components of Our Results of Operations
Operating Expenses
Research and Development Expenses
Research and development expenses consist primarily of costs incurred for our research activities, including our drug discovery efforts, and the development of our product candidates, which include:
•
expenses incurred in connection with the discovery, preclinical and clinical development of our product candidates, including under agreements with third parties, such as consultants, contractors and contract research organizations ("CROs");
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the cost of manufacturing drug products for use in our preclinical studies and clinical trials, including under agreements with third parties, such as consultants, contractors and contract manufacturing organizations ("CMOs");
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employee-related expenses, including salaries, related benefits and stock-based compensation expense for employees engaged in research and development functions;
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laboratory supplies and animal care;
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facilities, depreciation and other expenses, which include direct and allocated expenses for rent and maintenance of facilities and insurance; and
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payments made under third-party licensing agreements.
We expense research and development costs as incurred. Advance payments that we make for goods or services to be received in the future for use in research and development activities are recorded as prepaid expenses. The prepaid amounts are expensed as the related goods are delivered or the services are performed.
Certain of our direct research and development expenses are tracked on a program-by-program basis and consist of costs, such as fees paid to consultants, contractors, CMOs, and CROs in connection with our discovery, preclinical and clinical development activities. We do not allocate employee costs, costs associated with the manufacture of bezuclastinib, costs associated with our discovery efforts, laboratory supplies, and facilities, including depreciation or other indirect costs, to specific product development programs because these costs are deployed across multiple product development programs and, as such, are not separately classified.
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Product candidates in later stages of clinical development generally have higher development costs than those in earlier stages of clinical development, primarily due to the increased size and duration of later-stage clinical trials. We expect that our research and development expenses will increase substantially in connection with our planned clinical and preclinical development activities in the near term and in the future. At this time, we cannot reasonably estimate or know the nature, timing, and costs of the efforts that will be necessary to complete the preclinical and clinical development of any of our product candidates. The successful development and commercialization of our product candidates is highly uncertain. This is due to the numerous risks and uncertainties associated with product development and commercialization, including the following:
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the timing and progress of our preclinical and clinical development activities;
•
the number and scope of preclinical and clinical programs we decide to pursue;
•
the progress of the development efforts of parties with whom we have entered, or may enter, into collaboration arrangements;
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our ability to maintain our current research and development programs and to establish new ones;
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our ability to establish new licensing or collaboration arrangements;
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the future productivity of our research team in
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the successful completion of clinical trials with safety, tolerability, and efficacy profiles that are satisfactory to the FDA or any comparable foreign regulatory authority;
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the receipt of regulatory approvals from applicable regulatory authorities;
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the success in establishing and operating a manufacturing facility, or securing manufacturing supply through relationships with third parties;
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our ability to obtain and maintain patents, trade secret protection, and
regulatory exclusivity, both in
•
our ability to protect our rights in our intellectual property portfolio;
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the commercialization of our product candidates, if and when approved;
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the acceptance of our product candidates, if approved, by patients, the medical community, and third-party payors;
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competition with other products; and
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a continued acceptable safety profile of our therapies following approval.
A change in the outcome of any of these variables with respect to the development of any of our product candidates could significantly change the costs and timing associated with the development of that product candidate. We may never succeed in obtaining regulatory approval for any of our product candidates.
General and Administrative Expenses
General and administrative expenses consist primarily of salaries and related costs, including stock-based compensation, for personnel in executive, finance, and administrative functions. General and administrative expenses also include direct and allocated facility-related costs as well as professional fees for legal, patent, consulting, investor and public relations, accounting, and audit services. We anticipate that our general and administrative expenses will increase in the future as a result of the costs associated with the expansion of operations to support our on-going discovery, preclinical and clinical activities.
Other Income Interest Income
Interest income consists of interest earned on our cash equivalents balances.
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Other Income
Other income consists of miscellaneous income and expense unrelated to our core operations, primarily income from subleasing a portion of our headquarters facilities.
Change in Fair Value of the CVR liability
This consists of changes in the fair value of the CVR liability.
Income Taxes
Since our inception, we have not recorded any current or deferred tax benefit
for the net losses we have incurred in each year or for our research and
development tax credits generated, as we believe, based upon the weight of
available evidence, that it is more likely than not that our net operating loss
carryforwards and tax credits will not be realized. Accordingly, a full
valuation allowance has been established against the deferred tax assets as of
Utilization of the
We have recorded a full valuation allowance against our net deferred tax assets at each balance sheet date.
Results of Operations
Comparison of the Three Months Ended
The following table summarizes our results of operations for the three months
ended
Three Months Ended June 30,
2022 2021 Change
(in thousands)
Operating expenses:
Research and development 29,479 12,388 17,091
General and administrative 6,376 4,904 1,472
Total operating expenses 35,855 17,292 18,563
Loss from operations (35,855 ) (17,292 ) (18,563 )
Other income:
Interest income 272 120 152
Other income 656 623 33
Total other income 928 743 185
Net loss $ (34,927 ) $ (16,549 ) $ (18,378 )
Research and Development Expenses
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The following table summarizes our research and development expenses for the
three months ended
Three Months Ended June 30,
2022 2021 Change
(in thousands)
Direct external research and development
expenses:
Bezuclastinib $ 16,072 $ 6,938 9,134
Preclinical research and discovery 2,601 431 2,170
Unallocated expenses:
Personnel related (including stock-based
compensation) 8,095 3,706 4,389
Laboratory supplies, facility related and
other 2,711 1,313 1,398
Total research and development expenses
Total research and development expense increased by
General and Administrative Expenses
General and administrative expenses for the three months ended
Interest Income
Interest income for the three months ended
Other Income
Other income, net was
Change in Fair Value of CVR Liability
There was no change in fair value of the CVR liability for the three months
ended
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Comparison of the Six Months Ended
The following table summarizes our results of operations for the six months
ended
Six Months Ended June 30,
2022 2021 Change
(in thousands)
Operating expenses:
Research and development $ 54,949 20,601 34,348
General and administrative 12,324 9,491 2,833
Total operating expenses 67,273 30,092 37,181
Loss from operations (67,273 ) (30,092 ) (37,181 )
Other income:
Interest income 379 245 134
Other income 1,333 1,227 106
Change in fair value of CVR liability - 343 (343 )
Total other income (expense), net 1,712 1,815 (103 )
Net loss $ (65,561 ) $ (28,277 ) $ (37,284 ) Research and Development Expenses
The following table summarizes our research and development expenses for the six
months ended
Six Months Ended June 30,
2022 2021 Change
(in thousands)
Direct external research and development
expenses:
Bezuclastinib $ 29,533 $ 12,785 16,748
Preclinical research and discovery 4,969 431 4,538
Unallocated expenses:
Personnel related (including stock-based
compensation) 15,747 5,174 10,573
Laboratory supplies, facility related and
other 4,700 2,211 2,489
Total research and development expenses
Total research and development expense increased by
General and Administrative Expenses
General and administrative expenses for the six months ended
Interest Income
Interest income for the six months ended
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Other Income
Other income, net was
Change in Fair Value of CVR Liability
There was no change in fair value of the CVR liability for the three months
ended
Liquidity and Capital Resources
We have incurred certain costs related to the COVID-19 outbreak as a result of taking necessary precautions for essential personnel to operate safely both in person as well as remotely. Costs incurred include items like incremental payroll costs, consulting support, IT infrastructure and facilities related costs. The estimated impact of COVID-19 is currently unknown. The final impact may vary based on the duration of the current social and economic conditions. To the extent the COVID-19 pandemic continues, it may materially impact our financial condition, liquidity or results of operations in the future. We do not currently believe the accumulated costs will present a material impact to our financial liquidity or position.
Since our inception, we have incurred significant operating losses. We have generated limited revenue to date from funding arrangements with our former collaboration partner. We have not yet commercialized any of our product candidates and we do not expect to generate revenue from sales of any product candidates for several years, if at all. We have historically funded our operations primarily through the public offering and private placement of our securities and consideration received from our collaborative agreements.
On
Additionally, on
On
After completion of the financing and as of
As of
Cash Flows
The following table summarizes our sources and uses of cash for each of the
periods presented:
Six Months Ended June 30,
2022 2021
(in thousands)
Cash used in operating activities $ (54,790 ) $ (23,877 )
Cash used in investing activities (1,585 ) (123 )
Net cash (used in) provided by financing activities 162,253 (85 )
Net (decrease) increase in cash, cash equivalents and
restricted cash$ 105,878 $ (24,085 ) 23
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Operating Activities
During the six months ended
During the six months ended
Investing Activities
During the six months ended
Financing Activities
During the six months ended
During the six months ended
Funding Requirements
We expect our expenses to increase in connection with our ongoing activities, particularly as we advance the clinical development of our current and any future product candidates and conduct additional research, development and preclinical activities. The timing and amount of our operating expenditures will depend largely on:
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the initiation, progress, timing, and completion of preclinical studies and clinical trials for our current and future potential product candidates, including the impact of COVID-19 on our ongoing and planned research and development efforts;
•
any delay in our regulatory filings for our product candidates and any adverse
development or perceived adverse development with respect to the applicable
regulatory authority's review of such filings, including without limitation the
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adverse results or delays in clinical trials;
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our decision to initiate a clinical trial, not to initiate a clinical trial, or to terminate an existing clinical trial;
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adverse regulatory decisions, including failure to receive regulatory approval of our product candidates;
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changes in laws or regulations applicable to our products, including but not limited to clinical trial requirements for approvals;
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adverse developments concerning our manufacturers;
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our inability to obtain adequate product supply for any approved product or our inability to do so at acceptable prices;
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our inability to establish collaborations, if desired or needed;
•
our failure to commercialize our product candidates;
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•
the cost and timing of completion of the build out of our new office and
laboratory facility in
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additions or departures of key scientific or management personnel;
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unanticipated serious safety concerns related to the use of our product candidates; and
•
the impact of COVID-19 on the operations of key governmental agencies, such as the FDA, which may delay the development of our current product candidates or any future product candidates.
Based on our current plans, we believe that our existing cash and cash
equivalents of
Until such time, if ever, as we can generate substantial product revenue, we expect to finance our operations through a combination of equity offerings, debt financings, collaborations, strategic alliances, and marketing, distribution, or licensing arrangements. To the extent that we raise additional capital through the sale of equity or convertible debt securities, existing ownership interests will be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect the rights of common stockholders. Debt financing and preferred equity financing, if available, may involve agreements that include covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making acquisitions or capital expenditures, or declaring dividends. If we raise additional funds through collaborations, strategic alliances, or marketing, distribution, or licensing arrangements with third parties, we may have to relinquish valuable rights to our technologies, future revenue streams, research programs or drug candidates, or grant licenses on terms that may not be favorable to us. If we are unable to raise additional funds through equity or debt financings or other arrangements when needed, we may be required to delay, limit, reduce, or terminate our research, product development, or future commercialization efforts, or grant rights to develop and market drug candidates that we would otherwise prefer to develop and market ourselves.
Critical Accounting Estimates
There have been no material changes in our critical accounting policies during
the three months ended
Off-Balance Sheet Arrangements
We did not have during the periods presented, and we do not currently have, any
off-balance sheet arrangements, as defined in the rules and regulations of the
Contractual Obligations and Commitments
A description of our commitments and contingencies is disclosed in Note 7 to our condensed consolidated financial statements
appearing elsewhere in this Quarterly Report.
Recently Issued Accounting Pronouncements
A description of recently issued accounting pronouncements that may potentially impact our financial position and results of operations is disclosed in Note 2 to our condensed consolidated financial statements appearing elsewhere in this Quarterly Report.
Emerging Growth Company Status
The Jumpstart Our Business Startups Act of 2012 ("JOBS Act") permits an "emerging growth company" such as us to take advantage of an extended transition period to comply with new or revised accounting standards applicable to public companies until those standards would otherwise apply to private companies. We have irrevocably elected to "opt out" of this provision and, as a result, we will comply with new or revised accounting standards when they are required to be adopted by public companies that are not emerging growth companies.
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