Part I [Business](index=5&type=section&id=Item%201.%20Business) Cidara Therapeutics is a biotechnology company developing anti-infectives, led by rezafungin and the Cloudbreak® platform - The company's lead product candidate is rezafungin acetate, a novel **once-weekly echinocandin** for treating and preventing serious invasive fungal infections[11](index=11&type=chunk)[12](index=12&type=chunk) - Cidara is developing its proprietary Cloudbreak® platform to create antibody-drug conjugates (ADCs) that directly kill pathogens and engage the patient's immune system, with initial programs targeting **influenza and bacterial infections**[11](index=11&type=chunk)[14](index=14&type=chunk) - The company's strategy includes rapidly advancing rezafungin, developing the Cloudbreak antiviral program for influenza, and commercializing products in the U.S. with a **targeted sales force**[17](index=17&type=chunk) [Rezafungin](index=6&type=section&id=Rezafungin) Rezafungin is a once-weekly antifungal in Phase 3 trials with potential for extended market exclusivity - Rezafungin has received FDA designations as an Orphan Drug and a Qualified Infectious Disease Product (QIDP), which together provide a potential for **12 years of marketing exclusivity** upon approval[27](index=27&type=chunk) STRIVE Phase 2 Trial (Part A) Key Efficacy Outcomes | Outcome (mITT Population) | Rezafungin 400mg/200mg (Group 2) | Caspofungin (Group 3) | | :--- | :--- | :--- | | **Clinical Cure (Day 14) by PI Assessment** | 86% (24/28) | 71% (20/28) | | **All Cause Mortality (Day 30)** | 3% (1/31) | 11% (3/28) | - The company has initiated the ReSTORE Phase 3 trial for treatment of candidemia/invasive candidiasis, with topline results expected in **mid-2020**[38](index=38&type=chunk) [Cloudbreak Platform](index=10&type=section&id=Cloudbreak%20Platform) The Cloudbreak platform develops antibody-drug conjugates for infectious diseases, with a lead program targeting influenza - The Cloudbreak platform designs bispecific molecules that have **intrinsic antimicrobial activity** and also direct the immune system to the targeted pathogen[39](index=39&type=chunk)[42](index=42&type=chunk) - Preclinical studies of the influenza candidate CB-012 demonstrated **100% protection** in lethal mouse models of H1N1 and H3N2 at a cumulative dose approximately 1/500th to 1/1000th that of oseltamivir phosphate[50](index=50&type=chunk) - A study showed CB-012 provided **100% protection from mortality** when administered to mice 28 days before a lethal flu challenge, demonstrating its potential as a long-acting prophylactic agent[51](index=51&type=chunk) - The Cloudbreak antibacterial program is supported by a five-year, **$5.5 million partnership grant** from the NIAID to develop immunotherapies for multi-drug resistant Gram-negative bacterial infections[57](index=57&type=chunk) [Intellectual Property](index=13&type=section&id=Intellectual%20Property) The company protects its rezafungin and Cloudbreak technologies through patents and regulatory exclusivities - As of February 28, 2019, the company's patent portfolio included **13 families of patents/applications for rezafungin** and nine families for the Cloudbreak platform[59](index=59&type=chunk) - Issued patents related to rezafungin are expected to expire in **2033**, excluding any potential extensions[59](index=59&type=chunk) - Rezafungin has received orphan drug designation (**7 years exclusivity**) and QIDP designation (**5 additional years exclusivity**) from the FDA for the treatment of candidemia and invasive candidiasis[62](index=62&type=chunk) [Competition](index=14&type=section&id=Competition) The company faces intense competition from large, well-resourced pharmaceutical and biotechnology companies - Rezafungin will compete with approved branded echinocandins (**Cancidas, Eraxis, Mycamine**), their future generic versions, and other antifungals in development[63](index=63&type=chunk) - The Cloudbreak influenza program will compete with approved antiviral agents like neuraminidase inhibitors (**Tamiflu**) and endonuclease inhibitors (**Xofluza**)[63](index=63&type=chunk) - Many competitors have **substantially greater financial, technical, and human resources** and more experience in drug development, regulatory approval, and commercialization[63](index=63&type=chunk) [Government Regulation](index=15&type=section&id=Government%20Regulation) The company's products are subject to extensive FDA and international regulations for development and marketing - The U.S. drug approval process requires extensive preclinical and clinical trials (**Phase 1, 2, and 3**) to establish safety and efficacy before an NDA can be submitted to the FDA for marketing approval[68](index=68&type=chunk)[72](index=72&type=chunk)[73](index=73&type=chunk) - The FDA's **Fast Track designation** facilitates development and expedites review for drugs treating serious conditions with unmet medical needs[77](index=77&type=chunk) - The GAIN Act provides incentives for developing Qualified Infectious Disease Products (QIDPs), including an **additional five years of market exclusivity** and eligibility for priority review and fast track designation[84](index=84&type=chunk) - The company is subject to various healthcare laws, including **anti-kickback statutes and false claims laws**, which restrict marketing and business practices[90](index=90&type=chunk) [Risk Factors](index=23&type=section&id=Item%201A.%20Risk%20Factors) The company faces significant risks including clinical trial failures, financial instability, and reliance on third parties [Risks Related to Drug Discovery, Development and Commercialization](index=23&type=section&id=Risks%20Related%20to%20Drug%20Discovery%2C%20Development%20and%20Commercialization) Success hinges on the rezafungin clinical trials, which face uncertainty, delays, and intense competition - The company depends heavily on the success of **rezafungin**, which is currently in Phase 3 development, and its Cloudbreak programs are in very early stages[114](index=114&type=chunk) - Clinical trials may be **delayed, terminated, or fail to demonstrate safety and efficacy**, which could lead to additional costs or prevent commercialization[118](index=118&type=chunk) - Difficulties in **enrolling a sufficient number of eligible patients** in clinical trials could significantly delay or prevent regulatory approvals[122](index=122&type=chunk) - The company faces substantial competition from major pharmaceutical and biotechnology companies with **greater financial resources and experience**[133](index=133&type=chunk)[136](index=136&type=chunk) [Risks Related to Our Financial Position and Need for Additional Capital](index=31&type=section&id=Risks%20Related%20to%20Our%20Financial%20Position%20and%20Need%20for%20Additional%20Capital) A history of losses and limited cash raises substantial doubt about the company's ability to continue as a going concern - The company needs substantial additional funding; existing cash and cash equivalents are only sufficient to fund obligations **through the third quarter of 2019**, raising going concern doubts[150](index=150&type=chunk) - As of December 31, 2018, the company had an **accumulated deficit of $218.7 million** and incurred a net loss of **$59.0 million** for the fiscal year[161](index=161&type=chunk) - The term loan facility with Pacific Western Bank contains **restrictive covenants** and a material adverse effect clause that could be triggered by circumstances related to the going concern uncertainty, potentially leading to debt acceleration[157](index=157&type=chunk) [Risks Related to Our Dependence on Third Parties](index=35&type=section&id=Risks%20Related%20to%20Our%20Dependence%20on%20Third%20Parties) The company relies on third-party manufacturers and CROs, creating risks in supply chain and clinical trial execution - The company may need to establish collaborations for development and commercialization but faces **significant competition** in seeking partners[168](index=168&type=chunk) - Cidara relies on third parties to conduct clinical trials and preclinical testing; **unsatisfactory performance** by these parties could delay or prevent marketing approvals[172](index=172&type=chunk) - With no manufacturing facilities, the company is dependent on third-party manufacturers, posing risks related to **regulatory compliance (cGMP), supply chain reliability, and quality control**[176](index=176&type=chunk) [Risks Related to Our Intellectual Property](index=43&type=section&id=Risks%20Related%20to%20Our%20Intellectual%20Property) The company's success depends on securing and defending patents, which face risks of invalidation and infringement claims - Efforts to protect proprietary intellectual property **may not be adequate**, which could allow competitors to duplicate technological achievements and erode the company's market position[202](index=202&type=chunk) - The company may face **third-party claims of intellectual property infringement**, which could prevent or delay drug development and lead to substantial litigation expenses[210](index=210&type=chunk) - Issued patents could be **found invalid or unenforceable** if challenged in court or at the USPTO, potentially leading to a loss of patent protection[215](index=215&type=chunk) - The company has **limited foreign intellectual property rights** and may not be able to protect its rights throughout the world, as laws and enforcement vary by country[217](index=217&type=chunk) [Properties](index=55&type=section&id=Item%202.%20Properties) The company leases a single facility in San Diego, California for all its operations - Cidara leases a **29,638 square foot facility** in San Diego, CA for administrative and R&D activities, with the lease expiring in December 2021[269](index=269&type=chunk) Part II [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=56&type=section&id=Item%207.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) The company's net loss increased in 2018 due to higher R&D expenses, with cash reserves sufficient only through Q3 2019 [Results of Operations](index=60&type=section&id=Results%20of%20Operations) Higher R&D expenses for Phase 3 trials drove an increased net loss in 2018 compared to 2017 Results of Operations Comparison (in thousands) | Expense Category | 2018 | 2017 | Change | | :--- | :--- | :--- | :--- | | Research and development | $49,142 | $42,823 | $6,319 | | General and administrative | $14,143 | $12,898 | $1,245 | | Other income (expense), net | $4,269 | $(7) | $4,276 | - The increase in R&D expenses in 2018 was mainly due to higher clinical expenses for the **start-up of the rezafungin ReSTORE and ReSPECT studies**[311](index=311&type=chunk) [Liquidity and Capital Resources](index=61&type=section&id=Liquidity%20and%20Capital%20Resources) Existing cash of $74.6 million is insufficient beyond Q3 2019, necessitating additional financing - The company's existing cash and cash equivalents of **$74.6 million** (as of Dec 31, 2018) are only sufficient to fund operations **through Q3 2019**, raising substantial doubt about its ability to continue as a going concern[325](index=325&type=chunk) Summary of Cash Flows (in thousands) | Activity | 2018 | 2017 | 2016 | | :--- | :--- | :--- | :--- | | Net cash used in Operating activities | $(56,705) | $(49,909) | $(39,771) | | Net cash provided by Investing activities | $14,301 | $4,471 | $25,482 | | Net cash provided by Financing activities | $56,153 | $20,884 | $37,094 | - Net cash from financing activities in 2018 was **$56.2 million**, primarily from the sale of common stock, Series X Convertible Preferred Stock, and warrants in a May 2018 registered direct offering[324](index=324&type=chunk) [Financial Statements and Supplementary Data](index=63&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) This section presents audited financial statements accompanied by an auditor's report expressing a going concern doubt [Report of Independent Registered Public Accounting Firm](index=63&type=section&id=Report%20of%20Independent%20Registered%20Public%20Accounting%20Firm) The auditor's report includes an explanatory paragraph raising substantial doubt about the company's going concern status - The auditor's report includes a **"Going Concern" paragraph**, stating that substantial doubt exists about the Company's ability to continue as a going concern due to its history of net losses and negative cash flows[332](index=332&type=chunk) [Consolidated Financial Statements](index=64&type=section&id=Consolidated%20Financial%20Statements) The company reported a net loss of $59.0 million for 2018 and an accumulated deficit of $218.7 million Consolidated Balance Sheet Data (in thousands) | | Dec 31, 2018 | Dec 31, 2017 | | :--- | :--- | :--- | | Cash and cash equivalents | $74,562 | $60,813 | | Total assets | $79,112 | $79,035 | | Total liabilities | $19,973 | $19,291 | | Accumulated deficit | $(218,735) | $(149,390) | | Total stockholders' equity | $59,139 | $59,744 | Consolidated Statement of Operations Data (in thousands) | | 2018 | 2017 | 2016 | | :--- | :--- | :--- | :--- | | Research and development | $49,142 | $42,823 | $35,699 | | General and administrative | $14,143 | $12,898 | $12,737 | | Total operating expenses | $63,285 | $55,721 | $48,436 | | Net loss | $(59,016) | $(55,728) | $(48,165) | [Notes to Consolidated Financial Statements](index=68&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) Notes detail the company's going concern issue, debt covenants, and financing activities - The company's term loan with Pacific Western Bank has an outstanding principal of **$10.0 million**, matures in January 2022, and is secured by substantially all company assets[368](index=368&type=chunk)[371](index=371&type=chunk) - In May 2018, the company completed the first closing of a registered direct offering, raising **$49.5 million**[372](index=372&type=chunk)[375](index=375&type=chunk) - As of December 31, 2018, the company had federal and state net operating loss carryforwards of approximately **$179.1 million** and **$132 million**, respectively, which are subject to a full valuation allowance[397](index=397&type=chunk) [Controls and Procedures](index=83&type=section&id=Item%209A.%20Controls%20and%20Procedures) Management concluded that the company's disclosure controls and internal financial reporting controls were effective - Based on an evaluation as of December 31, 2018, the principal executive officer and principal financial officer concluded that the company's **disclosure controls and procedures were effective**[408](index=408&type=chunk) - Management concluded that the company's **internal control over financial reporting was effective** as of December 31, 2018, based on the COSO 2013 framework[409](index=409&type=chunk) Part III This part incorporates information on governance and compensation by reference from the company's Proxy Statement [Directors, Executive Officers and Corporate Governance](index=84&type=section&id=Item%2010.%20Directors%2C%20Executive%20Officers%20and%20Corporate%20Governance) Information on directors and governance is incorporated by reference from the 2019 Proxy Statement - The required information for this item is **incorporated by reference** from the company's definitive Proxy Statement for its 2019 Annual Meeting of Stockholders[414](index=414&type=chunk) [Executive Compensation](index=84&type=section&id=Item%2011.%20Executive%20Compensation) Details regarding executive compensation are incorporated by reference from the 2019 Proxy Statement - The required information for this item is **incorporated by reference** from the company's definitive Proxy Statement[415](index=415&type=chunk) Part IV This part lists the financial statements and exhibits filed with the Annual Report [Exhibits, Financial Statement Schedules](index=85&type=section&id=Item%2015.%20Exhibits%2C%20Financial%20Statement%20Schedules) This section lists the financial statements and provides an index of all exhibits filed with the report - This item lists the financial statements filed in Item 8 and provides an **index of all exhibits** filed with the Annual Report[422](index=422&type=chunk)