QUINCE THERAPEUTICS, INC. The following discussion and analysis of our financial condition and results of operations should be read in conjunction with (i) our unaudited condensed consolidated financial statements and related notes appearing elsewhere in this Quarterly Report on Form 10-Q and (ii) our audited financial statements and related notes and management's discussion and analysis of financial condition and results of operations included in our Annual Report on Form 10-K for the year endedDecember 31, 2020 filed with theSecurities and Exchange Commission (the "SEC"), onMarch 1, 2021 . Unless the context requires otherwise, references in this Quarterly Report on Form 10-Q to the "Company," "Cortexyme ," "we," "us" and "our" refer toCortexyme, Inc. In preparing the Management's Discussion and Analysis below, we presume the readers have access to and have read the Management's Discussion and Analysis in our Prospectus, pursuant to Instruction 2 to paragraph (b) of Item 303 of Regulation S-K.
Forward-Looking Statements
This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). All statements other than statements of historical facts contained in this quarterly report, including statements regarding our future results of operations and financial position, business strategy, prospective products, product approvals, research and development costs, timing and likelihood of success, plans and objectives of management for future operations, adequacy of our cash resources and working capital, impact of COVID-19 pandemic on our research and development activities and business operations, and future results of anticipated products, are forward-looking statements. These statements involve known and unknown risks, uncertainties and other important factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. In some cases, you can identify forward-looking statements by terms such as "may," "will," "should," "expect," "plan," "anticipate," "could," "intend," "target," "project," "contemplates," "believes," "estimates," "predicts," "potential" or "continue" or the negative of these terms or other similar expressions. The forward-looking statements in this quarterly report are only predictions. We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our business, financial condition and results of operations. These forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from those anticipated in the forward-looking statements. Factors that might cause such a difference include, but are not limited to, those discussed in this report in Part II, Item 1A -"Risk Factors," and in our Annual Report on Form 10-K for the year endedDecember 31, 2020 and elsewhere in this Quarterly Report on Form 10-Q and in other filings we make with theSEC from time to time. The events and circumstances reflected in our forward-looking statements may not be achieved or occur and actual results could differ materially from those projected in the forward-looking statements. Moreover, we operate in an evolving environment. New risk factors and uncertainties may emerge from time to time, and it is not possible for management to predict all risk factors and uncertainties. These forward-looking statements speak only as of the date hereof. Except as required by applicable law, we do not plan to publicly update or revise any forward-looking statements contained herein, whether as a result of any new information, future events, changed circumstances or otherwise.
Overview
We are a clinical stage biopharmaceutical company with a growing pipeline of
therapeutics in Alzheimer's disease and other degenerative diseases. Our
approach is based on the seminal discovery of the presence of Porphyromonas
gingivalis ("P. gingivalis"), and its secreted toxic virulence factor proteases,
called gingipains, in the brains of greater than 90% of Alzheimer's patients.
Additionally, we and other researchers have observed that P. gingivalis
infection causes Alzheimer's and Parkinson's pathology in animal models, and
these effects have been successfully treated with a gingipain inhibitor in
preclinical studies. Our proprietary lead drug candidate, atuzaginstat (COR388),
is an orally administered, brain-penetrating small molecule gingipain protease
inhibitor.
Alzheimer's Disease
On October 26, 2021 , we announced top-line results from our global Phase 2/3
clinical trial of atuzaginstat, called the GAIN (GingipAIN Inhibitor for
Treatment of Alzheimer's Disease) trial, in mild to moderate Alzheimer's
patients. The 643-participant study did not meet statistical significance in its
co-primary cognitive and functional endpoints as measured by ADAS-Cog11 and
ADCS-ADL at end of the treatment period in the overall cohort. The study did
show a dose response for a pre-specified subgroup of participants with P.
gingivalis DNA detectable in saliva at baseline (n=242), with a 57% slowing of
cognitive decline as measured by ADAS-Cog11 in the 80 mg BID arm (p=0.02) and a
42% slowing in the 40 mg BID arm (p=0.07) vs. placebo. Significant benefits in
this subgroup were not seen on the other co-primary, ADCS-ADL. The study also
indicated that most adverse events were mild to moderate in severity. The most
common were gastrointestinal, such as diarrhea in up to 16% and nausea in 6% of
participants treated with atuzaginstat vs. 3% and 2% of placebo participants,
respectively. Atuzaginstat was associated with dose-related liver enzyme
elevations >3X the upper limit of normal: 2% on placebo, 7% on 40 mg BID, and
15% on 80 mg BID. These
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-------------------------------------------------------------------------------- elevations alone were not clinically significant, and virtually all participants were asymptomatic. Two participants in the 80 mg BID arm had concomitant bilirubin elevations without alternative explanation. Lab changes resolved while participants remained on drug or after withdrawal without any known long-term adverse effects. We are actively engaging with regulators, the medical community, patient advocacy groups, and other key stakeholders to advance development of atuzaginstat and the second-generation lysine-gingipain inhibitor COR588, which is differentiated by novel compound properties and once daily administration. We are reviewing plans for the further development of atuzaginstat and expect to have additional information in the coming quarters. Alzheimer's disease represents one of the most significant unmet medical needs of our time and prior to the approval of Aduhelm onJune 7, 2021 , there were no marketed treatments that address the underlying cause of the disease. The disease afflicts an estimated 5.7 million people inthe United States and more than 30 million people worldwide and is expected to grow to 14.0 million people inthe United States by 2050. The direct costs of caring for individuals with Alzheimer's disease and other dementias inthe United States were estimated to total$300 billion in 2020 and are projected to increase to$1.1 trillion by 2050, according to theAlzheimer's Association . Historical challenges in developing effective therapeutics for this disease include a poor understanding of disease causation and animal models that do not translate to efficacy in humans. We believe our novel approach can overcome these challenges by targeting an upstream cause of neuroinflammation and neurodegeneration. Our drug candidate has demonstrated proof of concept in a new physiological animal model that we believe is representative of human Alzheimer's disease pathology. Atuzaginstat is the first and only selective small molecule inhibitor of gingipain activity being investigated in clinical trials for the treatment of neurodegenerative disease. Atuzaginstat is designed to target an upstream driver of multiple pathological pathways, including amyloid beta production, inflammation and neurodegeneration, in contrast to mechanisms of action targeting downstream effects, such as amyloid plaques and tau tangles, which have been largely unsuccessful in clinical trials to date. Accordingly, we believe atuzaginstat could represent a disease-modifying therapy for the chronic treatment of neurodegenerative disease.
Periodontal Disease
The GAIN Trial sub-study in periodontal disease demonstrated a trend to benefit on the primary clinical endpoint of pocket depth in the same pre-specified sub-group with P. gingivalis DNA detectable in saliva. Further results will inform the next stage of development in periodontitis and will be presented at a future scientific conference. P. gingivalis has been identified as a key pathogen in the development of periodontal disease. Periodontal disease is a common age-related disease affecting nearly 50% of the population over 50 years of age, or 65 million people, inthe United States . The disease presents with symptoms including chronic inflammation, degeneration of gum tissue and tooth loss. Periodontal disease is associated with increased risk of cardiovascular disease, diabetes and certain cancers. The disease is often chronic and recurring due to persistent bacterial infection and antibiotic resistance. Current standard of care for the treatment of periodontal disease commonly involves scaling and root planning to remove bacterial plaque and tartar, in addition to local delivery of antibiotics in some cases. Atuzaginstat (COR388) reduced periodontal disease and associated bone loss in multiple animal models of periodontal disease. Target engagement and efficacy data for atuzaginstat (COR388) in aged dogs was published inJanuary 2020 in the journalPharmacology Research and Perspectives. COR588 is a second generation brain penetrant lysine gingipain inhibitor which has completed IND enabling studies. We began Phase 1 studies utilizing COR588 inSeptember 2021 . We presently expect to study COR588 in periodontal disease with potential utilization in additional indications.
Parkinson's Disease
Parkinson's disease affects more than 1 million people inthe United States and 10 million worldwide. Currently approved treatments are limited to primarily managing symptoms. Based upon published literature and our research to date, our start-up activities continue for a placebo controlled multicenter Phase 2 study in Parkinson's disease called the PEAK (Gingipain inhibitor for treatment of PArKinson's' disease) Trial. In light of the GAIN Trial results, we are incorporating our experience in the GAIN Trial into the potential study design for PEAK. Coronavirus
A 3CLpro inhibitor, COR803, has been selected as lead compound for treatment of coronavirus infections, including COVID-19 disease, caused by SARS-CoV-2 infection. COR803 is a novel patent-pending small molecule 3CLpro inhibitor discovered and developed by us based on our expertise in cysteine protease inhibition. 3CLpro, or Mpro, is a validated antiviral drug
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target shown to be essential in viral replication of SARS-CoV-2. COR803 has
beneficial properties over other COVID-19 therapeutics and 3CLpro inhibitors in
development including; covalent irreversible binding of the viral 3CLpro enzyme;
high potency of antiviral EC90 of 30 nM in human lung cell viral replication
assays; highly selective for 3CLpro versus other cellular proteases including
Cathepsin L; and excellent systemic exposure utilizing intranasal or
subcutaneous administration, allowing for clinical use in multiple settings such
as outpatient and inpatient.
Pipeline
Two arginine gingipain inhibitors, COR788 and COR822, have been selected as lead
compounds to progress toward IND-enabling studies, including manufacturing
scale-up and dose range-finding toxicology studies based on their properties of
potency, selectivity, pharmacologic efficacy, and pharmacokinetics. Arginine
gingipain is a distinct target associated with P. gingivalis that contributes to
bacterial survival, replication and toxicity. An arginine gingipain inhibitor
may be used as monotherapy in new indications or potentially additively with
lysine gingipain inhibitors, like atuzaginstat. Both molecules have novel
composition of matter (patent pending), are brain penetrant and orally
available.
Partial Clinical Hold
OnFebruary 12, 2021 , we received a letter from the FDA stating that a partial clinical hold has been placed on atuzaginstat (COR388) impacting the open-label extension (OLE) phase of the GAIN Trial. Under the hold, no new participants were enrolled in the OLE and currently enrolled OLE participants were discontinued. Participants in the fully enrolled (N=643) double-blind, placebo-controlled randomized phase of the GAIN Trial continued to receive study drug at their assigned dose. The partial clinical hold was initiated following the review of hepatic adverse events in the GAIN trial by the FDA. These events have been reversible and without any known long-term adverse effects for the participants. We plan to review the GAIN Trial results with the FDA and other regulators as part of a discussion of the overall development program for atuzaginstat.
Business Update Regarding COVID-19
The current COVID-19 pandemic has presented a substantial public health and economic challenge around the world and is affecting our employees, patients, communities and business operations, as well as theU.S. economy and financial markets. The full extent to which the COVID-19 pandemic will directly or indirectly impact our business, results of operations and financial condition will depend on future developments that are highly uncertain and cannot be accurately predicted, including new information that may emerge concerning COVID-19, the actions taken to contain it or treat its impact and the economic impact on local, regional, national and international markets. To date, our employees, vendors and clinical trial sites have been able to advance our GAIN clinical trial and complete enrollment. At this time the impact of the COVID-19 pandemic has not resulted in changes to our previously stated analysis timelines for the GAIN trial. We are continuing to assess the potential impact of the COVID-19 pandemic on our business and operations, including our expenses, preclinical operations and clinical trials. Our office-based employees have been working primarily from home sincemid-March 2020 , while ensuring essential staffing levels in our operations remain in place, including maintaining key personnel in our lab facility. We have implemented plans to enable all employees to voluntarily return to work in our offices and lab facility which include safety protocols, such as face coverings, social distancing, frequent cleaning, and COVID-19 testing. Employee have been gradually returning to the office on a voluntary basis sinceJune 2021 . We continue to assess the risks which take into account applicable public health authority and local government guidelines and are designed to ensure community and employee safety. However, the effects of the COVID-19 pandemic continue to rapidly evolve and even if our employees more broadly return to work in our offices and lab facility, we may have to resume a more restrictive remote work model, whether as a result of spikes or surges in COVID-19 infection or hospitalization rates or public authority mandates. We are not currently experiencing any significant supply chain disruptions due to COVID-19. We have diversified our vendor relationships geographically for both starting materials and manufacturing. However, in the future, the ongoing COVID-19 pandemic, may result in the inability of some of our suppliers to deliver drug supplies on a timely basis. We have taken and continues to take proactive measures to maintain the integrity of its ongoing clinical trial. To potentially mitigate some of the risks of COVID-19 and based on interest and the ability to maintain milestone timelines, we enrolled an additional 73 subjects in the GAIN trial. Despite these efforts, the COVID-19 pandemic could impact timelines, subject follow up visits and study completion. We will continue to monitor the COVID-19 situation and its impact on the ability to continue the development of, and seek regulatory approvals for, our product candidates.
Financial Overview
Since commencing material operations in 2014, we have devoted substantially all
of our efforts and financial resources to building our research and development
capabilities, establishing our corporate infrastructure and most recently,
executing our Phase
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--------------------------------------------------------------------------------1a, Phase 1b and Phase 2/3 clinical trials of atuzaginstat and increasing investment in new indications for atuzaginstat and clinical trials for COR588.
To date, we have not generated any revenue and we have never been profitable. We have incurred net losses since the commencement of our operations. As ofSeptember 30, 2021 , we had an accumulated deficit of$213.2 million . We incurred a net loss of$21.7 million and$66.5 million in the three and nine months endedSeptember 30, 2021 . We do not expect to generate product revenue unless and until we obtain marketing approval for and commercialize a drug candidate, and we cannot assure you that we will ever generate significant revenue or profits. To date, we have financed our operations primarily through the issuance and sale of convertible promissory notes and redeemable convertible preferred stock and common stock. From inception throughSeptember 30, 2021 , we received net proceeds of approximately$294.9 million from the issuance of redeemable convertible preferred stock, convertible promissory notes and common stock. This includes net proceeds of approximately$117.6 million from the issuance and sale of common stock in a private placement to certain accredited investors received inFebruary 2020 . As ofSeptember 30, 2021 andDecember 31, 2020 , we had cash, cash equivalents and short-term investments of$114.4 million and$133.8 million , respectively. The balances exclude long-term investments of$26.1 million and$50.5 million as of those same periods. Our cash equivalents, short-term and long-term investments are held in money market funds, certificate of deposits, repurchase agreements, investments in corporate debt securities, municipal debt obligations and government agency obligations.
We believe that our existing cash, cash equivalents and investments will be sufficient to fund our planned operations through 2023. We have based this estimate on assumptions that may prove to be wrong, and we could utilize our available capital resources sooner than we expect.
We expect to incur substantial expenditures in the foreseeable future as we expand our pipeline and advance our drug candidates through clinical development, the regulatory approval process and, if approved, commercial launch activities. Specifically, in the near term we expect to incur substantial expenses relating to our ongoing and planned clinical trials, the development and validation of our manufacturing processes, and other development activities. We will need substantial additional funding to support our continuing operations and pursue our development strategy. Until such time as we can generate significant revenue from sales of an approved drug, if ever, we expect to finance our operations through the sale of equity, debt financings or other capital sources. Adequate funding may not be available to us on acceptable 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 our drug candidates or delay our efforts to expand our product pipeline.
Critical Accounting Policies and Significant Judgments and Estimates
Our management's discussion and analysis of our financial condition and results of operations is based on our consolidated financial statements, which have been prepared in accordance withU.S. generally accepted accounting principles ("GAAP"). The preparation of these consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements, as well as the reported expenses incurred during the reporting periods. Our estimates are based on our historical experience and on various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.
We believe that the assumptions and estimates associated with accrued research and development expenditures and stock-based compensation have the most significant impact on our condensed consolidated financial statements. Therefore, we consider these to be our critical accounting policies and estimates.
The following critical accounting policies are described under the heading
"Management's Discussion and Analysis of Financial Condition and Results of
Operations-Critical Accounting Policies, Significant Judgements and Use
Estimates" in our 2020 Annual Report on Form 10-K and the notes to the unaudited
condensed consolidated financial statements included in Item 1, "Unaudited
Financial Statements," of this Quarterly Report on Form 10-Q. We believe that of
our critical accounting policies, the
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--------------------------------------------------------------------------------following accounting policies are the most critical to fully understanding and evaluating our financial condition and results of operations:
? Research and Development Expenses; ? Stock-Based Compensation Expense; and ? Income Taxes
There have been no material changes in our critical accounting policies during
the nine months ended
Components of Results of Operations
Operating Expenses
Research and Development Expenses
Our research and development expenses consist of expenses incurred in connection with the research and development of our research programs. These expenses include payroll and personnel expenses, including stock-based compensation, for our research and product development employees, laboratory supplies, product licenses, consulting costs, contract research, regulatory, quality assurance, preclinical and clinical expenses, allocated rent, facilities costs and depreciation. We expense both internal and external research and development costs as they are incurred. Non-refundable advance payments and deposits for services that will be used or rendered for future research and development activities are recorded as prepaid expenses and recognized as an expense as the related services are performed. To date, our research and development expenses have supported the advancement of atuzaginstat and our other drug candidates in preclinical development. We expect that at least for the foreseeable future, a substantial majority of our research and development expense will support the clinical and regulatory development of our lead candidate atuzaginstat. We expect our research and development expenses to increase substantially during the next few years as we seek to complete existing and initiate additional clinical trials, pursue regulatory approval of atuzaginstat and advance other drug candidates into clinical development. Over the next few years, we expect our preclinical, clinical and contract manufacturing expenses to increase significantly relative to what we have incurred to date. Predicting the timing or the final cost to complete our clinical program or validation of our manufacturing and supply processes is difficult and delays may occur because of many factors.
The duration, costs and timing of our clinical trial and development of our product candidates will depend on a variety of factors that include, but are not limited to, the following:
?
per patient trial costs;
?
biomarker analysis costs;
?
the cost and timing of drug manufacturing for the trials;
?
the number of patients that participate in the trials;
?
the number of sites included in the trials;
?
the countries in which the trials are conducted;
?
the length of time required to enroll eligible patients;
?
the screening, randomization, drop-out or discontinuation rates of patients;
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?
potential additional safety monitoring or other studies requested by regulatory
agencies; and
?
the efficacy and safety profile of the product candidates.
In addition, the probability of success for each product candidate will depend
on numerous factors, including safety, efficacy, competition, manufacturing
capability and commercial viability. We will determine which programs to pursue
and how much to fund each program in response to the scientific and clinical
success of each product candidate, as well as an assessment of each product
candidate's commercial potential.
Because our product candidates are still in clinical development and the outcome
of these efforts is uncertain, we cannot estimate the actual amounts necessary
to successfully complete the development and commercialization of our product
candidates or whether, or when, we may achieve profitability.
The COVID-19 pandemic may have an adverse impact on our operations, supply chains, our current or future clinical trials, and increase our expenses, including as a result of impacts associated with preventive and precautionary measures that we, other businesses and governments are taking.
General and Administrative
General and administrative expenses consist principally of personnel-related costs, including payroll and stock-based compensation, for personnel in executive, finance, human resources, business and corporate development, and other administrative functions, professional fees for legal, consulting, insurance and accounting services, allocated rent and other facilities costs, depreciation, and other general operating expenses not otherwise classified as research and development expenses.
We anticipate that our general and administrative expenses will increase as the size of our business operations grows to support additional research and development activities.
Interest Income
Interest and other income, net consists primarily of interest earned on our short-term and long-term investments portfolio.
Results of Operations
Comparison of the three months ended
The following sets forth our results of operations for the three months ended
Three Months Ended
September 30, Change
2021 2020 $ %
Operating expenses:
Research and development $ 14,038 $ 16,983 $ (2,945 ) (17.3 ) %
General and administrative 7,639 4,929 2,710 55.0 %
Loss from operations (21,677 ) (21,912 ) 235 (1.1 ) %
Interest income 128 406 (278 ) (68.5 ) %
Other expense, net (157 ) - (157 ) 100.0 %
Net loss $ (21,706 ) $ (21,506 ) (200 ) 0.9 %
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Research and Development Expenses (in thousands):
Three Months Ended September 30, Change
2021 2020 $ %
Direct research and development
expenses:
Atuzaginstat $ 4,502 $ 11,985 $ (7,483 ) (62.4 ) %
COR588 1,662 526 1,136 216.0 %
Other direct research costs 557 520 37 7.1 %
Indirect research and development
expenses:
Personnel related (including 3,009 86.3 %
stock-based compensation) 6,497 3,488
Facilities and other research and 356 76.7 % development expenses 820
464
Total research and development expenses
Research and development expenses were
The costs for atuzaginstat, currently in our GAIN Phase 2/3 clinical trial, decreased$7.5 million from the prior year due to decreases of$1.7 million in drug manufacturing costs and$5.8 million in clinical trial costs as patients continue to conclude participation in the GAIN trial. The GAIN trial is expected to substantially conclude in the fourth quarter 2021 and we anticipate continued overall expenses to decrease as patients complete the trial protocols and the final top-line data read out occurs. In the three months endedSeptember 30, 2021 , we initiated our clinical trial for our new compound COR588. COR588 is a unique small molecule lysine gingipain inhibitor with likely once daily oral dosing that we intend to position in periodontal disease and other new indications. We incurred$1.7 million in costs for the three months endedSeptember 30, 2021 for Phase 1 clinical study costs compared to$0.5 million for the three months endedSeptember 30, 2020 . The variance of$1.1 million was caused by increases of$0.4 million in drug manufacturing costs,$0.6 million in clinical trial costs and$0.1 million for preclinical and IND enabling studies. Other direct research costs remained flat against the same period a year ago and is related primarily to pipeline development and preclinical work in the three months endedSeptember 30, 2021 . We incurred$6.5 million in personnel related expenses in the three months endedSeptember 30, 2021 compared to$3.5 million in the same period for 2020. The increase of$3.0 million is due to a$1.1 million increase in personnel related expenses for increased headcount and a$1.9 million increase in allocated stock-based compensation costs. Facilities and other research and development expenses increased$0.4 million from the three months endedSeptember 30, 2020 to$0.8 million due to regulatory and quality assurance consulting.
General and Administrative Expenses
General and administrative expenses were$7.6 million for the three months endedSeptember 30, 2021 compared to$4.9 million for the three months endedSeptember 30, 2020 . The increase of$2.7 million was due to increases in our employee headcount, which was comprised of compensation and benefits costs of$0.3 million and$1.5 million in allocated stock-based compensation expense,$0.2 million in consulting expense,$0.4 million in investor relations expense,$0.2 million insurance expense and$0.1 million in other general and administrative expenses. Interest Income
Interest income was
We anticipate continued historic low overall yields from our investment portfolio in future quarters, specifically the credit securities markets.
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--------------------------------------------------------------------------------Other Expense
Other expense increased by$0.2 million for the three months endedSeptember 30, 2021 compared to$0 for the three months endedSeptember 30, 2020 . The increase was primarily due to unrealized losses resulting from changes in foreign exchange rates.
Comparison of the nine months ended
The following sets forth our results of operations for the nine months ended
Nine Months Ended September
30, Change
2021 2020 $ %
Operating expenses:
Research and development $ 45,582 $ 45,450 $ 132 0.3 %
General and administrative 21,192 12,591 8,601 68.3 %
Loss from operations (66,774 ) (58,041 ) (8,733 ) 15.0 %
Interest income 515 1,747 (1,232 ) (70.5 ) %
Other expense, net (287 ) - (287 ) 100.0 %
Net loss $ (66,546 ) $ (56,294 ) $ (10,252 ) 18.2 %
Research and Development Expenses (in thousands):
Nine Months Ended September 30, Change
2021 2020 $ %
Direct research and development
expenses:
Atuzaginstat $ 19,607 $ 32,943 $ (13,336 ) (40.5 ) %
COR588 4,295 842 3,453 410.1 %
Other direct research costs 2,404 1,772 632 35.7 %
Indirect research and development
expenses:
Personnel related (including 17,481 8,801 8,680 98.6 %
stock-based compensation)
Facilities and other research and 1,795 1,092 703 64.4 %
development expenses
Total research and development expenses
0.3 %
Research and development expenses were
The costs for atuzaginstat development, currently in our GAIN Phase 2/3 clinical trial, decreased$13.3 million from the same period in the prior year due to decreases of$4.3 million in drug manufacturing costs and$9.0 million in clinical trial costs. The GAIN trial is expected to substantially conclude in the fourth quarter 2021 and we anticipate continued overall expenses to decrease as patients complete the trial protocols and the final top-line data read out occurs. For the nine months endedSeptember 30, 2021 , we initiated our clinical trial for our new compound COR588. COR588 is a unique small molecule lysine gingipain inhibitor with likely once daily oral dosing that we intend to position in periodontal disease and other new indications. We incurred$4.3 million in costs for the nine months endedSeptember 30, 2021 , an increase of$3.5 million from the same period in the prior year. This increase was primarily due to$1.4 million in drug manufacturing costs,$0.8 million in clinical trial costs and$1.3 million for preclinical and IND enabling studies. We expect increased costs for this compound as it moves through the Phase 1 clinical study which began in September, 2021. Additionally, other direct research costs increased$0.6 million primarily due to pipeline development and preclinical research. For the nine months endedSeptember 30, 2021 , we experienced a net increase of$8.7 million in personnel related expenses due to an increase in our employee headcount which was comprised of an increase in compensation and benefit costs of$2.8 million and$5.9 million in allocated stock-based compensation costs. Facilities and other research and development expenses increased$0.7 million from the nine months endedSeptember 30, 2020 to$1.8 million due to increased regulatory and quality assurance consulting.
General and Administrative Expenses
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General and administrative expenses increased $8.6 million to $21.2 million for
the nine months ended September 30, 2021 from $12.6 million for the nine months
ended September 30, 2020 . The increase in general and administrative expenses
was primarily due to an increase of $7.1 million in personnel costs due to an
increase in our employee headcount which was comprised of an increase in
compensation and benefits costs of $1.1 million and $6.0 million in allocated
stock-based compensation expense, $0.7 million in consulting expense, $0.4
million in investor relations expense and $0.4 million in insurance expense.
Interest Income
Interest income was
We anticipate continued historic low overall yields from our investment portfolio in future quarters, specifically the credit securities markets.
Other Expense
Other expense increased by$0.3 million for the nine months endedSeptember 30, 2021 compared to$0 for the nine months endedSeptember 30, 2020 . The increase was primarily due to unrealized losses resulting from changes in foreign exchange rates.
Liquidity, Capital Resources and Plan of Operations
We have incurred cumulative net losses and negative cash flows from operations since our inception and anticipate we will continue to incur net losses for the foreseeable future. As ofSeptember 30, 2021 , we had an accumulated deficit of$213.2 million . and we had cash, cash equivalents and investments of$140.6 million . Based on our existing business plan, we believe that our existing cash, cash equivalents and investments will be sufficient to fund our anticipated level of operations through at least 2023. However, our operating plans may change and in any event we may need to raise substantial additional financing in the future to fund our operations. Capital Resources Our primary use of cash is to fund operating expenses, which consist primarily of research and development expenditures related to our lead program, atuzaginstat, and other research efforts, and to a lesser extent, general and administrative expenditures. Cash used to fund operating expenses is impacted by the timing of when we pay these expenses, as reflected in the change in our outstanding accounts payable and accrued expenses. Our product candidates are still in clinical development and the outcome of these efforts is uncertain. Accordingly, we cannot estimate the actual amounts necessary to successfully complete the development and commercialization of our product candidates or whether, or when, we may achieve profitability. We will continue to require additional capital to develop our drug candidates and fund operations for the foreseeable future. We may seek to raise capital through private or public equity or debt financings, collaborative or other arrangements with other companies, or through other sources of financing. Adequate additional funding may not be available to us on acceptable terms or at all. Our failure to raise capital as and when needed could have a negative impact on our financial condition and our ability to pursue our business strategies. We anticipate that we will need to raise substantial additional capital, the requirements of which will depend on many factors, including: ? the progress, costs, trial design, results of and timing of our Phase 2/3 GAIN trial and other clinical trials of atuzaginstat, including our Phase 2 PEAK trial for Parkinson's disease, our COR588 Phase 1 trial and for potential additional indications that we may pursue beyond Alzheimer's and Parkinson's disease; ? the willingness of the FDA or EMA to accept our Phase 2/3 GAIN trial, as well as data from our completed and planned clinical and preclinical studies and other work, as the basis for review and approval of atuzaginstat for Alzheimer's disease; ? the outcome, costs and timing of seeking and obtaining FDA, EMA and any other regulatory approvals; ? the number and characteristics of drug candidates that we pursue; 25
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? our ability to manufacture sufficient quantities of our drug candidates; ? our need to expand our research and development activities; ? the costs associated with securing and establishing commercialization and manufacturing capabilities; ? the costs of acquiring, licensing or investing in businesses, drug candidates and technologies; ? our ability to maintain, expand and defend the scope of our intellectual property portfolio, including the amount and timing of any payments we may be required to make, or that we may receive, in connection with the licensing, filing, prosecution, defense and enforcement of any patents or other intellectual property rights; ? our need and ability to retain management and hire scientific and clinical personnel; ? the effect of competing drugs and drug candidates and other market developments; ? our need to implement additional internal systems and infrastructure, including financial and reporting systems; and ? the economic and other terms, timing of and success of any collaboration, licensing or other arrangements into which we may enter in the future. If we raise additional funds by issuing equity securities, our stockholders will experience dilution. Any future debt financing into which we enter may impose upon us additional covenants that restrict our operations, including limitations on our ability to incur liens or additional debt, pay dividends, repurchase our common stock, make certain investments and engage in certain merger, consolidation or asset sale transactions. Any debt financing or additional equity that we raise may contain terms that are not favorable to us or our stockholders. If we are unable to raise additional funds when needed, we may be required to delay, reduce, or terminate some or all of our development programs and clinical trials. We may also be required to sell or license to others rights to our drug candidates in certain territories or indications that we would prefer to develop and commercialize ourselves. Our ability to raise additional capital may be adversely impacted by potential worsening global economic conditions and the recent disruptions to, and volatility in, the credit and financial markets inthe United States and worldwide resulting from the ongoing COVID-19 pandemic. However, based on our current business plans, we believe that our existing cash, cash equivalents and investments will be sufficient to fund our planned operations through 2023.
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