PART I. FINANCIAL INFORMATION [Item 1. Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) Presents unaudited condensed consolidated financial statements and notes, detailing financial performance for Q2 2023 and FY2022 [Condensed Consolidated Balance Sheets](index=3&type=section&id=Condensed%20Consolidated%20Balance%20Sheets%20as%20of%20June%2030%2C%202023%20%28unaudited%29%20and%20December%2031%2C%202022) Total assets decreased from **$28.4 million** to **$12.4 million**, primarily due to reduced cash and CVR reclassification | Metric | June 30, 2023 (in thousands) | December 31, 2022 (in thousands) | Change | | :-------------------------- | :----------------------------- | :------------------------------- | :----- | | Cash and cash equivalents | $6,923 | $21,666 | -$14,743 | | Total current assets | $7,620 | $28,206 | -$20,586 | | Long-term receivable from GCBP | $4,606 | $0 | +$4,606 | | Total assets | $12,394 | $28,444 | -$16,050 | | Total current liabilities | $2,793 | $16,824 | -$14,031 | | CVR derivative liability, noncurrent | $4,606 | $0 | +$4,606 | | Total liabilities | $7,399 | $16,824 | -$9,425 | | Total stockholders' deficit | $(28,314) | $(21,689) | -$6,625 | [Condensed Consolidated Statements of Operations and Comprehensive Income (Loss)](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Income%20%28Loss%29%20for%20the%20three%20and%20six%20months%20ended%20June%2030%2C%202023%20and%202022%20%28unaudited%29) Q2 2023 reported a **$2.5 million net loss**, a sharp decline from **$51.6 million net income** in Q2 2022, due to lower asset disposal gains | Metric | Q2 2023 (in thousands) | Q2 2022 (in thousands) | Change ($) | Change (%) | | :------------------------------------------ | :--------------------- | :--------------------- | :--------- | :--------- | | Revenue: Collaboration | $0 | $0 | $0 | 0% | | Research and development expenses | $318 | $1,871 | -$1,553 | -83% | | General and administrative expenses | $2,225 | $3,844 | -$1,619 | -42% | | Gain on disposal of assets, net | $0 | $(57,245) | +$57,245 | -100% | | Net income (loss) | $(2,472) | $51,632 | -$54,104 | * | | Net income (loss) per share, basic | $(0.07) | $1.64 | -$1.71 | * | | Cash dividends paid per common share | $0 | $0 | $0 | 0% | | CVR cash dividends paid per common share | $0.11 | $0 | +$0.11 | * | | Metric | YTD June 30, 2023 (in thousands) | YTD June 30, 2022 (in thousands) | Change ($) | Change (%) | | :------------------------------------------ | :------------------------------- | :------------------------------- | :--------- | :--------- | | Revenue: Collaboration | $0 | $794 | -$794 | -100% | | Research and development expenses | $906 | $11,574 | -$10,668 | -92% | | General and administrative expenses | $6,195 | $8,838 | -$2,643 | -30% | | Gain on disposal of assets, net | $(4,736) | $(57,245) | +$52,509 | -92% | | Net income (loss) | $(2,212) | $37,096 | -$39,308 | * | | Net income (loss) per share, basic | $(0.06) | $1.18 | -$1.24 | * | | Cash dividends paid per common share | $0.24 | $0 | +$0.24 | * | | CVR cash dividends paid per common share | $0.12 | $0 | +$0.12 | * | [Condensed Consolidated Statements of Redeemable Convertible and Redeemable Preferred Stock and Stockholders' Equity (Deficit)](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Redeemable%20Convertible%20and%20Redeemable%20Preferred%20Stock%20and%20Stockholders%27%20Equity%20%28Deficit%29%20for%20the%20three%20and%20six%20months%20ended%20June%2030%2C%202023%20and%202022%20%28unaudited%29) Stockholders' deficit increased from **$21.7 million** to **$28.3 million**, due to net loss, CVR adjustments, and Series Y preferred stock issuance | Metric | December 31, 2022 (in thousands) | June 30, 2023 (in thousands) | Change | | :------------------------------------ | :----------------------------- | :--------------------------- | :------- | | Redeemable Convertible Preferred Stock | $33,309 | $33,309 | $0 | | Redeemable Preferred Stock | $0 | $0 | $0 | | Common Stock (shares) | 37,756,574 | 37,974,892 | +218,318 | | Additional Paid-In Capital | $389,210 | $384,797 | -$4,413 | | Accumulated Deficit | $(410,936) | $(413,148) | -$2,212 | | Total Stockholders' Deficit | $(21,689) | $(28,314) | -$6,625 | - Issuance of **37,975 shares** of Series Y redeemable preferred stock for stock dividends in June 2023[14](index=14&type=chunk) - CVR cash dividends paid related to GCBP Agreement: **$(206) thousand**[14](index=14&type=chunk) - CVR derivative liability adjustment: **$(4,530) thousand**[14](index=14&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows%20for%20the%20six%20months%20ended%20June%2030%2C%202023%20and%202022%20%28unaudited%29) Net cash decreased by **$14.7 million** for YTD June 30, 2023, from operating, investing, and financing activities | Cash Flow Activity | Six Months Ended June 30, 2023 (in thousands) | Six Months Ended June 30, 2022 (in thousands) | Change | | :------------------------------------ | :------------------------------------------ | :------------------------------------------ | :------- | | Net cash flows used in operating activities | $(8,687) | $(24,344) | +$15,657 | | Net cash flows provided by investing activities | $5,206 | $55,375 | -$50,169 | | Net cash flows (used in) provided by financing activities | $(11,262) | $16 | -$11,278 | | Net (decrease) increase in cash and cash equivalents | $(14,743) | $31,047 | -$45,790 | | Cash and cash equivalents at end of period | $6,923 | $75,394 | -$68,471 | - Investing activities in 2023 included **$5.0 million** from Vertex hold-back and **$1.0 million** from GCBP asset sale, offset by **$0.8 million** in transaction costs[118](index=118&type=chunk) - Financing activities in 2023 included **$11.3 million** in dividend payments and CVR distributions[120](index=120&type=chunk) [Notes to the Unaudited Interim Condensed Consolidated Financial Statements](index=7&type=section&id=Notes%20to%20the%20Unaudited%20Interim%20Condensed%20Consolidated%20Financial%20Statements) Notes detail strategic shift, liquidity, accounting policies, asset acquisitions, fair value, stock compensation, and going concern risk [Note 1. Nature of Operations and Liquidity](index=7&type=section&id=1.%20Nature%20of%20Operations%20and%20Liquidity) Catalyst transitioned to F351 asset acquisition and BC business combination, facing substantial going concern doubt due to a potential **$43.2 million** preferred stock redemption - Company ceased R&D activities in March 2022, sold complement portfolio to Vertex in May 2022, and rare bleeding disorder program to GCBP in February 2023[19](index=19&type=chunk) - Acquired F351 Assets (Hydronidone compound for NASH) from GNI Group Ltd. in December 2022 for **$35.0 million** in common and preferred stock[20](index=20&type=chunk) - Signed Business Combination Agreement to acquire indirect controlling interest in Beijing Continent Pharmaceutical Co Ltd. (BC), subject to stockholder approval on August 29, 2023[21](index=21&type=chunk) - Issued Contingent Value Rights (CVRs) to common stockholders (excluding GNI) for future cash payments from asset dispositions[22](index=22&type=chunk) - Paid a one-time cash dividend of **$0.24 per share** (**$7.6 million** total) on January 12, 2023[23](index=23&type=chunk) - Distributed **$0.01 per share** from GCBP asset sale (March 2023) and **$0.11 per share** from Vertex hold-back (June 2023) to CVR Holders[24](index=24&type=chunk)[25](index=25&type=chunk) - Net loss of **$2.2 million** for six months ended June 30, 2023, with an accumulated deficit of **$413.1 million** and cash of **$6.9 million**[26](index=26&type=chunk) - Substantial doubt about going concern due to potential **$43.2 million** cash payment for Catalyst Convertible Preferred Stock if stockholder approval for conversion is not received by September 30, 2023[26](index=26&type=chunk)[38](index=38&type=chunk) [Note 2. Summary of Significant Accounting Policies](index=8&type=section&id=2.%20Summary%20of%20Significant%20Accounting%20Policies) Financial statements adhere to GAAP, reflecting management estimates; ASU 2016-13 adoption had no material impact, and fair value option elected for GCBP receivable - Financial statements prepared under GAAP for interim reporting, with normal recurring adjustments[27](index=27&type=chunk) - Management makes estimates for revenue recognition, CVR derivative liabilities, accrued expenses, etc[29](index=29&type=chunk) - Adopted ASU 2016-13 (Credit Losses) on January 1, 2023, with no material impact[30](index=30&type=chunk) - Long-term receivable from GCBP accounted for under the fair value option, with changes in fair value recorded in interest and other income[31](index=31&type=chunk) [Note 3. F351 Asset Acquisition](index=9&type=section&id=3.%20F351%20Asset%20Acquisition) Catalyst acquired F351 Assets from GNI for **$35.0 million** in equity, facing a **$43.2 million** cash redemption risk if preferred stock conversion lacks stockholder approval - Acquired F351 Assets from GNI on December 26, 2022, for **$35.0 million** in equity (**6,266,521** common shares and **12,340** Catalyst Convertible Preferred Stock shares)[35](index=35&type=chunk) - Acquisition classified as an asset acquisition, not a business[36](index=36&type=chunk) - Each Catalyst Convertible Preferred Stock share is convertible into **10,000** common shares, subject to stockholder approval by September 30, 2023[37](index=37&type=chunk)[38](index=38&type=chunk) - Failure to obtain approval by September 30, 2023, could trigger a **$43.2 million** cash redemption obligation for the preferred stock, exceeding current liquidity[38](index=38&type=chunk) [Note 4. Fair Value Measurements](index=9&type=section&id=4.%20Fair%20Value%20Measurements) Assets and liabilities are measured at fair value, including money market funds (Level 1) and GCBP receivable/CVR derivative liability (Level 3), with Vertex CVR settled | Financial Instrument | June 30, 2023 (in thousands) | December 31, 2022 (in thousands) | Fair Value Level | | :-------------------------- | :----------------------------- | :------------------------------- | :--------------- | | Money market funds | $6,923 | $21,666 | Level 1 | | Long-term receivable from GCBP | $4,606 | $0 | Level 3 | | CVR derivative liability, noncurrent | $4,606 | $0 | Level 3 | | CVR derivative liability (current) | $0 | $5,000 | Level 3 | - CVR derivative liability for Vertex was initially **$5.0 million** and settled in May 2023 with a **$5.0 million** hold-back payment distribution[42](index=42&type=chunk) - Long-term receivable and CVR derivative liability from GCBP are **$4.6 million**, based on a **$5.0 million** hold-back payment expected in Q1 2025, discounted at **5.05%**[43](index=43&type=chunk) [Note 5. Lease](index=12&type=section&id=5.%20Lease) Corporate headquarters lease expired, now month-to-month, with sublease income and significantly decreased operating lease expenses - Corporate headquarters lease expired April 30, 2023; now month-to-month[45](index=45&type=chunk) - Sublease income: **$13,000** (Q2 2023), **$0.1 million** (YTD 2023), **$38,000** (Q2 2022)[46](index=46&type=chunk) - Operating lease expense: **$17,000** (Q2 2023), **$0.1 million** (YTD 2023), compared to **$0.6 million** (Q2 2022) and **$1.1 million** (YTD 2022)[47](index=47&type=chunk) [Note 6. Stock Based Compensation](index=12&type=section&id=6.%20Stock%20Based%20Compensation) 2018 Omnibus Incentive Plan shares increased; January 2023 cash dividend modified stock options without incremental cost, decreasing stock-based compensation - 2018 Omnibus Incentive Plan shares increased to **31,456,403**, with **25,521,867** shares available for future grant as of June 30, 2023[48](index=48&type=chunk) - Special cash dividend in January 2023 resulted in stock option modification (decreased exercise price, increased shares) to preserve value, with no incremental compensation cost[50](index=50&type=chunk) - Outstanding options at June 30, 2023: **8,246,945** shares with a weighted-average exercise price of **$1.32**[51](index=51&type=chunk) | Stock-Based Compensation Expense (in thousands) | Q2 2023 | Q2 2022 | YTD 2023 | YTD 2022 | | :------------------------------------ | :------ | :------ | :------- | :------- | | Research and development | $1 | $83 | $67 | $211 | | General and administrative | $88 | $263 | $232 | $650 | | Total | $89 | $346 | $299 | $861 | [Note 7. Net Income (Loss) per Share Attributable to Common Stockholders](index=14&type=section&id=7.%20Net%20Income%20%28Loss%29%20per%20Share%20Attributable%20to%20Common%20Stockholders) EPS is calculated using the two-class method; potentially dilutive securities excluded from diluted EPS for YTD June 30, 2023, due to anti-dilutive effects or unmet conversion - Uses two-class method for EPS calculation[32](index=32&type=chunk) - Catalyst Convertible Preferred Stock excluded from basic EPS (not participating until merger closes) and diluted EPS (conversion contingent)[32](index=32&type=chunk)[34](index=34&type=chunk)[55](index=55&type=chunk) - Potentially dilutive securities excluded from diluted EPS due to anti-dilutive effect: **8,246,945** options (YTD 2023) vs. **2,512,078** options (YTD 2022)[55](index=55&type=chunk) | EPS Metric | Q2 2023 | Q2 2022 | YTD 2023 | YTD 2022 | | :------------------------------------ | :------ | :------ | :------- | :------- | | Net income (loss) (in thousands) | $(2,472) | $51,632 | $(2,212) | $37,096 | | Basic EPS | $(0.07) | $1.64 | $(0.06) | $1.18 | | Diluted EPS | $(0.07) | $1.64 | $(0.06) | $1.18 | [Note 8. Commitments and Contingencies](index=14&type=section&id=8.%20Commitments%20and%20Contingencies) The company faces financial market risks and significant commitments from the GNI Business Combination Agreement, including potential **$2.0 million** termination fees, CVR cash payments, and **$0.5 million** in F351 manufacturing agreements - Exposure to financial market uncertainties, particularly regarding bank liquidity[57](index=57&type=chunk) - Business Combination Agreement with GNI to acquire BC is subject to stockholder approval on August 29, 2023; up to **1,110,776,224** common shares to be issued[58](index=58&type=chunk) - Termination of Business Combination Agreement could incur a **$2.0 million** fee and up to **$2.0 million** in expense reimbursements[59](index=59&type=chunk) - CVR Agreement entitles holders to cash payments from legacy asset dispositions (GCBP, Vertex) and excess cash[60](index=60&type=chunk) - Distributed **$3.5 million** (net of expenses) from Vertex hold-back (June 2023) and **$0.2 million** from GCBP asset sale (March 2023) to CVR Holders[61](index=61&type=chunk)[62](index=62&type=chunk) - Entered into manufacturing agreements for F351 Assets totaling up to **$0.5 million**, terminable with 90 days' notice[63](index=63&type=chunk) [Note 9. Income Taxes](index=15&type=section&id=9.%20Income%20Taxes) Minimal income tax expense in 2023, no NOL benefits recognized due to uncertainty, despite significant federal (**$193.8 million**) and state (**$3.6 million**) NOL carryforwards subject to Section 382 limitations - Income tax expense: **$2,000** (Q2 2023), **$16,000** (YTD 2023) No expense in 2022[64](index=64&type=chunk) - No income tax benefits recognized for NOLs or R&D tax credits due to uncertainty[64](index=64&type=chunk) - Federal NOL carryforwards: **$193.8 million** (indefinite carryforward)[65](index=65&type=chunk) - State NOL carryforwards: **$3.6 million** (expire starting 2034)[65](index=65&type=chunk) - NOL utilization subject to Section 382 limitations due to ownership changes (latest on December 26, 2022)[67](index=67&type=chunk) [Note 10. Stockholders' Equity (Deficit)](index=16&type=section&id=10.%20Stockholders%27%20Equity%20%28Deficit%29) Authorized preferred stock, designating shares for Catalyst Convertible and Series Y redeemable preferred stock, with Series Y issued as a dividend for a reverse stock split proposal and classified as temporary equity - Authorized **5,000,000** shares of preferred stock; **123,418** designated as Catalyst Convertible Preferred Stock and **161,160** as Series Y redeemable preferred stock[68](index=68&type=chunk) - Series Y Preferred Stock issued as a dividend on June 20, 2023, granting **250,000** votes per share for a reverse stock split proposal[69](index=69&type=chunk) - Series Y Preferred Stock is redeemable at **$0.001 per share** and classified as temporary equity due to redemption features not solely within company control[69](index=69&type=chunk)[70](index=70&type=chunk) [Note 11. Restructuring](index=16&type=section&id=11.%20Restructuring) Catalyst underwent significant restructuring, including workforce reductions and the sale of its complement portfolio to Vertex for **$60.0 million** and rare bleeding disorder program to GCBP for **$6.0 million**, generating substantial gains and CVR distributions - Workforce reductions in November 2021 (**35%** of employees) and March 2022 (**22** full-time employees)[71](index=71&type=chunk)[72](index=72&type=chunk) - Sold lab equipment, consumables, and furniture for **$0.4 million** in Q2 2022, resulting in a **$0.2 million** loss on disposal[73](index=73&type=chunk) - Sold complement portfolio to Vertex in May 2022 for **$60.0 million** cash (**$55.0 million** upfront, **$5.0 million** hold-back received May 2023) Recorded a **$57.4 million** gain[74](index=74&type=chunk)[75](index=75&type=chunk) - Distributed **$3.5 million** (net of expenses) from Vertex hold-back to CVR Holders in June 2023[75](index=75&type=chunk) - Sold rare bleeding disorder program to GCBP in February 2023 for **$6.0 million** cash (**$1.0 million** upfront, **$5.0 million** hold-back due in 2 years) Recorded a **$4.7 million** gain[76](index=76&type=chunk) - Distributed **$0.2 million** (net of expenses) from GCBP upfront payment to CVR Holders in March 2023[76](index=76&type=chunk) [Note 12. Related Parties](index=17&type=section&id=12.%20Related%20Parties) GNI Group Ltd. is a related party, owning 100% of Catalyst Convertible Preferred Stock and 80.4% of common stock (as-converted), with **$0.3 million** in F351 development costs receivable from GNI USA, Inc - GNI Group Ltd. is a related party, owning **100%** of Catalyst Convertible Preferred Stock and **80.4%** of outstanding capital stock (as-converted) as of June 30, 2023[77](index=77&type=chunk) - Entered into a Cost Sharing and Agency Agreement with GNI USA, Inc. for F351 Asset development costs[78](index=78&type=chunk) - **$0.3 million** in F351 development costs incurred and receivable from GNI as of June 30, 2023[78](index=78&type=chunk) [Note 13. Condensed Consolidated Financial Statements Detail](index=17&type=section&id=13.%20Condensed%20Consolidated%20Financial%20Statements%20Detail) Details other accrued liabilities, primarily consisting of **$1.5 million** in tax liability and **$0.2 million** in professional and consulting services as of June 30, 2023 | Other Accrued Liabilities (in thousands) | June 30, 2023 | December 31, 2022 | | :------------------------------------ | :------------ | :---------------- | | Tax liability | $1,500 | $0 | | Professional and consulting services | $210 | $1,417 | | Manufacturing | $87 | $22 | | Other | $271 | $13 | | Total other accrued liabilities | $2,068 | $1,452 | [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=18&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses strategic shift to asset acquisition and business combination, financial impacts, and critical liquidity challenges, including going concern risk [Overview](index=18&type=section&id=Overview) Catalyst underwent a strategic transformation, acquiring F351 Assets and entering a business combination with BC, following prior R&D cessation and legacy portfolio divestiture - Acquired F351 Assets (**15** patents/applications outside China, expiring by August 2037) from GNI for **$35.0 million** in common and Catalyst Convertible Preferred Stock[82](index=82&type=chunk) - Catalyst Convertible Preferred Stock is convertible into **10,000** common shares per preferred share, subject to stockholder approval (expected August 29, 2023)[83](index=83&type=chunk) - Entered Business Combination Agreement with GNI to acquire indirect controlling interest in BC, a China-based pharmaceutical company, subject to stockholder approval (expected August 29, 2023) Up to **1,110,776,224** common shares to be issued[84](index=84&type=chunk)[58](index=58&type=chunk) - CVR Agreement grants holders rights to cash payments from legacy asset dispositions (Vertex, GCBP) and excess cash, with distributions already made[87](index=87&type=chunk)[88](index=88&type=chunk) - Company ceased all previous R&D activities by June 2022 and began supporting F351 Assets development in April 2023[94](index=94&type=chunk) [Financial Operations Overview](index=20&type=section&id=Financial%20Operations%20Overview) Catalyst incurred significant operating losses, with a **net loss of $2.5 million** in Q2 2023, as collaboration revenue ceased, R&D and G&A expenses decreased, and asset disposal gains were a major income source - No drug product sales revenue; collaboration revenue ceased after Biogen Agreement termination in May 2022[89](index=89&type=chunk)[91](index=91&type=chunk) - Net loss of **$2.5 million** (Q2 2023) and **$2.2 million** (YTD 2023), compared to net income of **$51.6 million** (Q2 2022) and **$37.1 million** (YTD 2022)[90](index=90&type=chunk) - Accumulated deficit of **$413.1 million** and cash of **$6.9 million** as of June 30, 2023[90](index=90&type=chunk) - R&D expenses decreased significantly due to cessation of prior activities, with new F351 development costs covered by GNI until business combination closes[94](index=94&type=chunk)[97](index=97&type=chunk) - Gains on disposal of assets: **$4.7 million** (YTD 2023) from GCBP sale; **$57.2 million** (YTD 2022) from Vertex sale[99](index=99&type=chunk) [Results of Operations](index=22&type=section&id=Results%20of%20Operations) Financial performance shifted from significant net income in 2022 (due to asset disposals) to net losses in 2023, driven by the absence of large disposal gains and reduced R&D and G&A expenses | Metric | Q2 2023 (in thousands) | Q2 2022 (in thousands) | Change ($) | Change (%) | | :-------------------------- | :--------------------- | :--------------------- | :--------- | :--------- | | R&D Expenses | $318 | $1,871 | $(1,553) | (83)% | | G&A Expenses | $2,225 | $3,844 | $(1,619) | (42)% | | Gain on Disposal of Assets, Net | $0 | $(57,245) | $57,245 | (100)% | | Net Income (Loss) | $(2,472) | $51,632 | $(54,104) | * | | Metric | YTD June 30, 2023 (in thousands) | YTD June 30, 2022 (in thousands) | Change ($) | Change (%) | | :-------------------------- | :------------------------------- | :------------------------------- | :--------- | :--------- | | Collaboration Revenue | $0 | $794 | $(794) | (100)% | | Cost of Collaboration | $0 | $798 | $(798) | (100)% | | R&D Expenses | $906 | $11,574 | $(10,668) | (92)% | | G&A Expenses | $6,195 | $8,838 | $(2,643) | (30)% | | Gain on Disposal of Assets, Net | $(4,736) | $(57,245) | $52,509 | (92)% | | Net Income (Loss) | $(2,212) | $37,096 | $(39,308) | * | - R&D decrease primarily due to **$4.4 million** in personnel-related costs, **$4.1 million** in complement-related costs, and **$2.1 million** in hemophilia-related costs (YTD 2023 vs 2022)[104](index=104&type=chunk) - G&A decrease primarily due to **$1.7 million** in professional services and **$0.9 million** in personnel-related costs (YTD 2023 vs 2022)[106](index=106&type=chunk) [Liquidity and Capital Resources](index=23&type=section&id=Liquidity%20and%20Capital%20Resources) As of June 30, 2023, Catalyst had **$6.9 million** cash and **$413.1 million** accumulated deficit, facing going concern doubt if preferred stock conversion is not approved, necessitating future financing - Cash and cash equivalents: **$6.9 million** as of June 30, 2023[112](index=112&type=chunk) - Accumulated deficit: **$413.1 million** as of June 30, 2023[112](index=112&type=chunk) - Net cash used in operating activities: **$8.7 million** for YTD June 30, 2023[115](index=115&type=chunk) - Substantial doubt about going concern if stockholder approval for Catalyst Convertible Preferred Stock conversion is not obtained by August 29, 2023, potentially requiring a cash redemption payment exceeding current liquidity[113](index=113&type=chunk) - Future cash needs to be financed through divestitures, equity/debt offerings, collaborations, strategic alliances, and licensing arrangements[114](index=114&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=26&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section is not applicable to the company - Not applicable[122](index=122&type=chunk) [Item 4. Controls and Procedures](index=26&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded disclosure controls and procedures were effective as of June 30, 2023, with no material changes in internal control over financial reporting - Disclosure controls and procedures evaluated as effective at a reasonable assurance level as of June 30, 2023[123](index=123&type=chunk)[124](index=124&type=chunk) - No material changes in internal control over financial reporting identified during Q2 2023[125](index=125&type=chunk) PART II. OTHER INFORMATION [Item 1. Legal Proceedings](index=27&type=section&id=Item%201.%20Legal%20Proceedings) The company is not a party to any material legal proceedings - Not a party to any material legal proceedings[127](index=127&type=chunk) [Item 1A. Risk Factors](index=27&type=section&id=Item%201A.%20Risk%20Factors) Significant Nasdaq delisting risk due to non-compliance with minimum bid price and stockholders' equity, potentially impacting stock liquidity, value, and business operations - Received Nasdaq delisting notice for failing Minimum Bid Price Requirement (**$1.00** for 30 consecutive trading days) and **$2.5 million** minimum stockholders' equity requirement[129](index=129&type=chunk)[130](index=130&type=chunk) - Granted until October 30, 2023, to regain compliance with initial listing requirements[130](index=130&type=chunk) - Delisting could adversely impact stock liquidity, value, ability to sell equity, and closing of Business Combination Agreement[131](index=131&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=27&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section is not applicable to the company - Not applicable[132](index=132&type=chunk) [Item 3. Defaults Upon Senior Securities](index=27&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) There are no defaults upon senior securities - None[133](index=133&type=chunk) [Item 4. Mine Safety Disclosures](index=27&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This section is not applicable to the company - Not applicable[134](index=134&type=chunk) [Item 5. Other Information](index=28&type=section&id=Item%205.%20Other%20Information) No directors or officers adopted or terminated Rule 10b5-1 or non-Rule 10b5-1 trading arrangements during Q2 2023 - No Rule 10b5-1 or non-Rule 10b5-1 trading arrangements adopted or terminated by directors or officers in Q2 2023[135](index=135&type=chunk) [Item 6. Exhibits](index=28&type=section&id=Item%206.%20Exhibits) Lists filed exhibits, including agreement amendments, waiver agreements, certifications, and XBRL data - Includes amendments to Business Combination Agreement and Asset Purchase Agreement[139](index=139&type=chunk) - Includes Contingent Value Rights Agreement and its amendment[139](index=139&type=chunk) - Includes certifications of CEO and Interim CFO (Sections 302 and 906 of Sarbanes-Oxley Act)[139](index=139&type=chunk)[141](index=141&type=chunk) - Includes Inline XBRL data for financial statements[141](index=141&type=chunk)

[PART I. FINANCIAL INFORMATION](index=3&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) This section details the company's financial statements, management's analysis, market risk disclosures, and internal controls [Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) Q1 2023 financial statements reflect a net income of $0.3 million, cash decreased to $8.1 million, and going concern doubts are noted [Condensed Consolidated Balance Sheets](index=3&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) This section presents the company's financial position, highlighting changes in assets, liabilities, and stockholders' deficit Condensed Consolidated Balance Sheet Highlights (in thousands USD) | Account | March 31, 2023 (Unaudited) | December 31, 2022 | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | $8,099 | $21,666 | | Total current assets | $14,014 | $28,206 | | Total assets | $18,750 | $28,444 | | **Liabilities & Stockholders' Deficit** | | | | Total current liabilities | $6,844 | $16,824 | | Total liabilities | $11,394 | $16,824 | | Redeemable convertible preferred stock | $33,309 | $33,309 | | Total stockholders' deficit | $(25,953) | $(21,689) | - Cash and cash equivalents decreased significantly from **$21.7 million** to **$8.1 million**, primarily due to dividend payments. Total liabilities also decreased from **$16.8 million** to **$11.4 million**, mainly from the settlement of dividends payable[9](index=9&type=chunk) [Condensed Consolidated Statements of Operations](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) This section details the company's revenues, expenses, and net income or loss for the reporting periods Condensed Consolidated Statements of Operations Highlights (in thousands USD, except per share data) | Metric | Three Months Ended Mar 31, 2023 | Three Months Ended Mar 31, 2022 | | :--- | :--- | :--- | | Collaboration Revenue | $0 | $794 | | Research and development | $588 | $9,703 | | General and administrative | $3,970 | $4,994 | | Gain on disposal of assets, net | $(4,736) | $0 | | **Net income (loss)** | **$260** | **$(14,536)** | | Net income (loss) per share, basic | $0.01 | $(0.46) | - The company shifted from a **net loss of $14.5 million** in Q1 2022 to a **net income of $0.3 million** in Q1 2023, primarily due to a **$4.7 million gain** on asset disposal and a significant reduction in **R&D expenses from $9.7 million to $0.6 million** after ceasing R&D activities[11](index=11&type=chunk) - The company paid a cash dividend of **$0.24 per common share** and a CVR cash dividend of **$0.01 per common share** during the first quarter of 2023[11](index=11&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) This section outlines the cash inflows and outflows from operating, investing, and financing activities Condensed Consolidated Statements of Cash Flows Highlights (in thousands USD) | Cash Flow Category | Three Months Ended Mar 31, 2023 | Three Months Ended Mar 31, 2022 | | :--- | :--- | :--- | | Net cash used in operating activities | $(6,216) | $(12,050) | | Net cash provided by investing activities | $411 | $2,504 | | Net cash (used in) provided by financing activities | $(7,762) | $16 | | **Net decrease in cash and cash equivalents** | **$(13,567)** | **$(9,530)** | - Cash used in operating activities decreased to **$6.2 million** from **$12.1 million** year-over-year due to the cessation of R&D activities[17](index=17&type=chunk)[113](index=113&type=chunk)[114](index=114&type=chunk) - Financing activities used **$7.8 million** in cash, primarily for dividend payments, while investing activities provided **$0.4 million** from the sale of the legacy rare bleeding disorder program to GCBP[17](index=17&type=chunk) [Notes to Financial Statements](index=7&type=section&id=Notes%20to%20the%20Unaudited%20Interim%20Condensed%20Consolidated%20Financial%20Statements) These notes provide additional details and context for the figures presented in the financial statements - The company has transitioned from a biopharmaceutical R&D company to a vehicle for a business combination, having ceased its own R&D in March 2022 and sold its legacy assets[19](index=19&type=chunk) - On February 27, 2023, Catalyst sold its legacy rare bleeding disorder program to GC Biopharma Corp (GCBP)[21](index=21&type=chunk) - The company acquired F351 assets from GNI Group in December 2022 and concurrently signed a definitive agreement to acquire a controlling interest in Beijing Continent Pharmaceutical Co Ltd (BC), subject to stockholder approval[22](index=22&type=chunk)[23](index=23&type=chunk) - There is substantial doubt about the company's ability to continue as a going concern due to a potential cash redemption requirement for its Series X redeemable convertible preferred stock if stockholder approval for its conversion is not obtained by September 30, 2023[27](index=27&type=chunk)[40](index=40&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=17&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the strategic shift, Q1 2023 results, and critical liquidity risks, including going concern uncertainty [Overview](index=18&type=section&id=Overview) This section provides a high-level summary of the company's recent strategic transactions and business developments - On December 26, 2022, Catalyst acquired F351 assets from GNI Group Ltd in exchange for common stock and Series X convertible preferred stock[82](index=82&type=chunk) - The company has entered into a Business Combination Agreement to acquire an indirect controlling interest in Beijing Continent Pharmaceutical Co Ltd (BC), which is subject to stockholder approval expected in Q3 2023[84](index=84&type=chunk)[85](index=85&type=chunk) - A Contingent Value Rights (CVR) Agreement was established to distribute net proceeds from the disposition of legacy assets to stockholders of record as of January 5, 2023 (excluding GNI)[87](index=87&type=chunk) - The company sold its legacy rare bleeding disorders programs to GCBP for **$6.0 million** in February 2023, with net proceeds to be distributed to CVR Holders[88](index=88&type=chunk) [Results of Operations](index=21&type=section&id=Results%20of%20Operations) This section analyzes the company's financial performance, detailing changes in revenues and expenses Comparison of Results of Operations (in thousands USD) | Line Item | Three Months Ended Mar 31, 2023 | Three Months Ended Mar 31, 2022 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Collaboration Revenue | $0 | $794 | $(794) | (100)% | | Research and development | $588 | $9,703 | $(9,115) | (94)% | | General and administrative | $3,970 | $4,994 | $(1,024) | (21)% | | Gain on disposal of assets, net | $(4,736) | $0 | $(4,736) | 100% | | **Net income (loss)** | **$260** | **$(14,536)** | **$14,796** | * | - Research and development expenses decreased by **94%** to **$0.6 million** from **$9.7 million** in the prior year, following the cessation of R&D activities in March 2022[103](index=103&type=chunk) - General and administrative expenses decreased by **21%** to **$4.0 million**, primarily due to lower professional services and personnel-related costs[104](index=104&type=chunk) - A gain of **$4.7 million** was recognized from the sale of the legacy rare bleeding disorder program to GCBP in February 2023[105](index=105&type=chunk) [Liquidity and Capital Resources](index=22&type=section&id=Liquidity%20and%20Capital%20Resources) This section assesses the company's cash position, cash flow, and ability to meet its financial obligations - As of March 31, 2023, the company had **$8.1 million** in cash and cash equivalents[109](index=109&type=chunk) - The company paid a one-time cash dividend of approximately **$7.6 million** in January 2023 and distributed **$0.2 million** in net proceeds from the GCBP asset sale in March 2023[108](index=108&type=chunk) - A substantial doubt exists about the company's ability to continue as a going concern, as failure to obtain stockholder approval for the conversion of Catalyst Convertible Preferred Stock could require a cash redemption the company may not have sufficient liquidity to make[110](index=110&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=22&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section is not applicable as the company qualifies as a smaller reporting company - The company has indicated that quantitative and qualitative disclosures about market risk are not applicable[120](index=120&type=chunk) [Controls and Procedures](index=23&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded disclosure controls were effective as of March 31, 2023, with no material changes to internal control - Management concluded that as of March 31, 2023, the company's disclosure controls and procedures were effective at the reasonable assurance level[122](index=122&type=chunk) - There were no changes in internal control over financial reporting during the quarter ended March 31, 2023, that materially affected, or are reasonably likely to materially affect, internal controls[123](index=123&type=chunk) [PART II. OTHER INFORMATION](index=24&type=section&id=PART%20II.%20OTHER%20INFORMATION) This section provides additional information including legal proceedings, risk factors, and other required disclosures [Legal Proceedings](index=24&type=section&id=Item%201.%20Legal%20Proceedings) The company is not currently involved in any material legal proceedings - Catalyst is not currently involved in any material legal proceedings[125](index=125&type=chunk) [Risk Factors](index=24&type=section&id=Item%201A.%20Risk%20Factors) The company faces significant Nasdaq delisting risk due to non-compliance with minimum bid price and stockholders' equity requirements - The company is not in compliance with Nasdaq's minimum bid price requirement (Rule 5550(a)(2)) and minimum stockholders' equity requirement (Rule 5550(b)(1))[127](index=127&type=chunk)[128](index=128&type=chunk) - Nasdaq has notified the company of its intent to delist the stock, and the company has requested a hearing, which stays the suspension pending a decision[128](index=128&type=chunk) - Delisting from Nasdaq could adversely impact the stock's liquidity, value, and the ability to close the pending Business Combination Agreement[129](index=129&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=24&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section is not applicable for the current reporting period - The company reports no unregistered sales of equity securities for the period[130](index=130&type=chunk) [Defaults Upon Senior Securities](index=24&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) The company reports no defaults upon senior securities during the period - There were no defaults upon senior securities during the period[131](index=131&type=chunk) [Mine Safety Disclosures](index=25&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) Mine safety disclosures are not applicable to the company's operations - Mine safety disclosures are not applicable to the company's operations[132](index=132&type=chunk) [Other Information](index=25&type=section&id=Item%205.%20Other%20Information) The company reports no other material information for this period - There is no other information to report for the quarter[133](index=133&type=chunk) [Exhibits](index=25&type=section&id=Item%206.%20Exhibits) This section incorporates the Exhibit Index, listing all documents filed with the quarterly report - This section incorporates the Exhibit Index by reference, which lists all exhibits filed with the Form 10-Q[134](index=134&type=chunk)

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 10-K (Mark One) ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the year ended December 31, 2022 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number: 000-51173 Catalyst Biosciences, Inc. (Exact Name of Registrant as Specified in its Charter) Delaware 56-2020050 (State or Other Jurisdiction of ...

Financial Performance - The company reported net losses of $14.5 million and $22.4 million for the three months ended March 31, 2022 and 2021, respectively, with an accumulated deficit of $417.2 million as of March 31, 2022[81]. - The net loss for Q1 2022 was $14.5 million, improving by 35% from a net loss of $22.4 million in Q1 2021[95]. - Cash used in operating activities was $12.1 million in Q1 2022, significantly lower than $24.4 million in Q1 2021[106]. - Total operating expenses fell to $15.5 million in Q1 2022, a decrease of 35% compared to $23.9 million in Q1 2021[95]. - Collaboration revenue was $0.8 million in Q1 2022, down 46% from $1.5 million in Q1 2021[96]. - Research and development expenses decreased to $9.7 million in Q1 2022 from $17.0 million in Q1 2021, a reduction of 43%[99]. - Cash provided by investing activities was $2.5 million in Q1 2022, down from $27.6 million in Q1 2021[108]. Financing Activities - The company raised net proceeds of approximately $510.1 million from various financing activities, including $84.3 million from license and collaboration agreements[80]. - The company plans to fund future losses through equity and/or debt financings, as well as potential asset sales and collaborations[104]. Product Development - The company has not generated any revenue from drug product sales and does not expect to do so until regulatory approval is obtained[83]. - The license agreement with Biogen, which included a $15.0 million upfront payment, is set to terminate in May 2022[82]. - CB 4332, an engineered albumin-fused Complement Factor I molecule, is designed for subcutaneous or intravitreal administration to address complement imbalance disorders[72]. - CB 2782-PEG, a potential best-in-class C3 degrader, aims to treat dry age-related macular degeneration and has shown potential in preclinical models[70]. - The company has discontinued the development of its protease programs and is focusing on monetizing its assets[62]. - MarzAA, a next-generation Factor VIIa variant, has been discontinued in its Phase 3 trial due to enrollment challenges and competition[77]. - DalcA, a next-generation Factor IX product candidate, has completed a Phase 2b study showing raised FIX plasma activity levels and is exploring licensing opportunities[79]. - The company has several early-stage complement discovery programs targeting various proteins of the complement system[76]. Strategic Outlook - The company expects minimal research and development expenses in the next year as it explores strategic opportunities[88]. - The company incurred $3.8 million in charges to write off prepaid manufacturing costs related to the MarzAA program[91].

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 10-K (Mark One) ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the year ended December 31, 2021 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number: 000-51173 Catalyst Biosciences, Inc. (Exact Name of Registrant as Specified in its Charter) Delaware 56-2020050 (State or Other Jurisdiction of ...

Pipeline and Product Development - Catalyst Biosciences is focused on developing protease therapeutics targeting disorders of the complement system, with a pipeline including a preclinical C3 degrader program licensed to Biogen for geographic atrophy in dry AMD[77]. - The complement portfolio includes CB 4332, a first-in-class CFI molecule for subcutaneous administration in CFI deficiency, and CB 2782-PEG, a C3 degrader in preclinical development for dry AMD[79]. - Patient enrollment for the CFI-001 and CFI-002 studies commenced in July 2021 to assess CFI blood levels and identify candidates for CB 4332 treatment[80]. - The prevalence of rare CFI variants in the overall AMD population is estimated at approximately 6%, with around 40% expected to have low serum CFI levels that could benefit from targeted therapy[91]. - The ProTUNE™ C3b/C4b degrader platform is prioritizing IgA nephropathy, which affects over 100,000 individuals in the US and leads to significant economic burden due to chronic treatment costs[95]. - The ImmunoTUNE™ C3a/C5a degrader platform targets ANCA vasculitis, with an estimated addressable patient population of around 50,000 in the US[96]. - MarzAA, a next-generation Factor VIIa variant, has seen enrollment in a Phase 3 trial for hemophilia treatment but has been discontinued due to enrollment challenges and competition[97]. - The company is exploring opportunities to license or sell MarzAA for further development following the discontinuation of its trials[97]. - The protease candidates are designed to have improved properties such as longer half-life and higher potency, potentially allowing for better safety and efficacy in treatment[78]. - DalcA, a next-generation SQ Factor IX product candidate, completed a Phase 2b study in 2020, raising FIX plasma activity levels from severe to mild phenotype[98]. - The company is actively seeking a partner for the DalcA program and exploring opportunities for licensing or selling it for further development[98]. Financial Performance - In Q1 2021, the company issued 9,185,000 shares at $5.75 per share, netting approximately $49.3 million after underwriting discounts[101]. - The company reported net losses of $25.2 million for Q3 2021, compared to $16.0 million for Q3 2020, marking a 57% increase in losses[103]. - Total research and development expenses for the nine months ended September 30, 2021, were $52.8 million, with significant investments in hemophilia and complement programs[113]. - License and collaboration revenue for Q3 2021 was $2.3 million, a 157% increase from $893,000 in Q3 2020[123]. - The accumulated deficit as of September 30, 2021, was $382.4 million, with cash and cash equivalents totaling $64.5 million[103]. - The company expects to incur significant expenses and increasing operating losses for the next several years as it continues development and seeks regulatory approval[104]. - Research and development expenses for hemophilia were $6.0 million for Q3 2021, and $17.8 million for the nine months ended September 30, 2021[113]. - The company has not generated any revenue from drug product sales and does not expect to until regulatory approval is obtained[109]. - License and collaboration revenue decreased to $4.9 million for the nine months ended September 30, 2021, down 74% from $18.9 million in the same period of 2020[125]. - Research and development expenses increased to $52.8 million for the nine months ended September 30, 2021, a rise of 37% compared to $38.4 million in 2020[128]. - General and administrative expenses rose to $14.8 million for the nine months ended September 30, 2021, reflecting a 24% increase from $11.9 million in 2020[130]. - The net loss for the nine months ended September 30, 2021, was $67.6 million, an increase of 81% from a net loss of $37.3 million in 2020[134]. - Cash used in operating activities for the nine months ended September 30, 2021, was $66.1 million, compared to $32.9 million in the same period of 2020[139]. - Cash provided by investing activities was $45.3 million for the nine months ended September 30, 2021, primarily due to $46.2 million in proceeds from maturities of investments[141]. - Cash provided by financing activities was $49.6 million for the nine months ended September 30, 2021, mainly from $49.3 million in net proceeds from the issuance of common stock[142]. - As of September 30, 2021, the company had $64.5 million in cash, cash equivalents, and short-term investments[134]. - The accumulated deficit as of September 30, 2021, was $382.4 million[134]. - The company plans to fund future losses through equity and/or debt financings, as well as potential asset sales and collaborations[135]. Operational Challenges - Catalyst continues to face operational challenges due to the COVID-19 pandemic, which may impact development timelines[82].

Part I [Business](index=5&type=section&id=Item%201.%20Business) Catalyst Biosciences develops engineered proteases for complement and coagulation disorders, with lead candidate MarzAA entering a Phase 3 trial - The company focuses on engineering proteases for complement and coagulation disorders, with its lead candidate **MarzAA** (a next-gen FVIIa) entering a **registrational Phase 3 trial** for hemophilia with inhibitors[15](index=15&type=chunk)[17](index=17&type=chunk) - The complement pipeline includes **CB 4332** for CFI deficiency and **CB 2782-PEG** for dry AMD, the latter being developed in collaboration with **Biogen**[18](index=18&type=chunk) - The company's next most advanced hemophilia candidate is **DalcA**, a next-generation SQ FIX for Hemophilia B, which has completed a **Phase 2b trial**[19](index=19&type=chunk) [Product Pipeline and Development Programs](index=5&type=section&id=Item%201.%20Business%23Product%20Pipeline) The company's pipeline focuses on hemostasis and complement disorders, with lead candidate MarzAA advancing to Phase 3 and DalcA completing Phase 2b - **MarzAA** is entering a **registrational Phase 3 trial (MAA-304)** for on-demand treatment of bleeding in hemophilia patients with inhibitors, with a Phase 1/2 trial (MAA-202) also planned for other rare bleeding disorders[17](index=17&type=chunk)[39](index=39&type=chunk)[41](index=41&type=chunk) - The FDA granted **Fast Track designation** for MarzAA for treating episodic bleeding in patients with Hemophilia A or B with inhibitors, validating its potential to address an unmet medical need[38](index=38&type=chunk) - The complement program **CB 2782-PEG** for dry AMD is licensed to **Biogen**, with Catalyst receiving a **$15.0 million upfront payment** and eligible for up to **$340.0 million in milestones** plus royalties[24](index=24&type=chunk)[25](index=25&type=chunk)[56](index=56&type=chunk) - The Factor IX gene therapy candidate, **CB 2679d-GT**, has shown **superior activity** in preclinical models compared to the Padua variant, potentially allowing for lower vector doses[65](index=65&type=chunk)[66](index=66&type=chunk) [Collaborations](index=15&type=section&id=Item%201.%20Business%23Collaborations) Catalyst has key collaborations including a legacy agreement with Pfizer for MarzAA, a partnership with ISU Abxis for DalcA, and a major deal with Biogen for CB 2782-PEG - Collaboration with **Biogen** for **CB 2782-PEG**: Catalyst received a **$15.0 million upfront payment** and is eligible for up to **$340.0 million in milestones** and tiered royalties[72](index=72&type=chunk) - Agreement with **Pfizer** for **MarzAA**: Catalyst owes up to **$17.5 million in milestone payments** and single-digit royalties on net sales, with a **$1.0 million milestone** paid in February 2018[69](index=69&type=chunk) - Partnership with **ISU Abxis** for **DalcA**: ISU holds commercial rights in South Korea, and Catalyst owes up to **$19.5 million in milestones** and low single-digit royalties on sales in other regions[71](index=71&type=chunk) [Competition](index=16&type=section&id=Item%201.%20Business%23Competition) The company faces significant competition from larger pharmaceutical companies across its Factor VIIa, Factor IX, and dry AMD programs - Factor VIIa competition for **MarzAA** includes approved products like **Novo Nordisk's NovoSeven RT**, **Takeda's FEIBA**, **Roche's Hemlibra**, and HEMA Biologics' SEVENFACT[77](index=77&type=chunk)[78](index=78&type=chunk) - Factor IX competition for **DalcA** includes **Pfizer's BeneFIX**, Sanofi/SOBI's Alprolix, and **CSL Behring's Idelvion**, with several companies also developing Factor IX gene therapies[78](index=78&type=chunk) - While no treatments are approved for dry AMD, several companies are in clinical studies, including **Apellis (APL-2)**, **Iveric Bio (Zimura®)**, and **Gemini Therapeutics (GEM103)**[78](index=78&type=chunk) [Intellectual Property](index=18&type=section&id=Item%201.%20Business%23Intellectual%20Property) As of year-end 2020, the company's patent portfolio included 72 issued patents and 12 pending applications, covering its lead candidates and novel proteases - As of year-end 2020, the patent portfolio included approximately **72 issued patents** and **12 pending applications**[82](index=82&type=chunk) - Patents covering **MarzAA** (modified Factor VII) expire in **2029-2031** in the U.S. and patents covering **DalcA** (modified Factor IX) expire between **2030-2038**[91](index=91&type=chunk) - A recently issued patent covering the portfolio of engineered C3-degrading proteases, including lead candidate **CB 2782-PEG**, provides protection until at least **2038**[60](index=60&type=chunk) [Manufacturing and Commercialization](index=20&type=section&id=Item%201.%20Business%23Manufacturing%20and%20Commercialization) Catalyst relies on third-party contract manufacturers for drug substance and product, and plans to retain U.S. commercial rights for hemophilia candidates - The company relies on **third parties for manufacturing** and does not own any facilities, with key partners including **AGC Biologics** for drug substance and **Catalent** and **Symbiosis** for drug product[95](index=95&type=chunk)[96](index=96&type=chunk)[99](index=99&type=chunk) - **Two large-scale GMP batches of MarzAA** have been successfully completed at AGC, sufficient to support the Phase 3 clinical trial (MAA-304)[96](index=96&type=chunk) - The company plans to retain U.S. commercial rights for its hemophilia products and may build a specialized sales force, but has not yet developed a commercial strategy outside the U.S[101](index=101&type=chunk) [Government Regulation](index=21&type=section&id=Item%201.%20Business%23Government%20Regulation) The company's biologic products are subject to extensive FDA regulation, including IND/BLA processes, and ongoing compliance with healthcare laws - The company's products are regulated as **biologics**, requiring an extensive process of preclinical and clinical testing before a **Biologics License Application (BLA)** can be submitted to the FDA for approval[102](index=102&type=chunk)[105](index=105&type=chunk) - **MarzAA** has received **Orphan Drug designation** in the U.S. and E.U. and **Fast Track designation** from the FDA, while **DalcA** has received Orphan Drug designation in both the U.S. and E.U[123](index=123&type=chunk)[128](index=128&type=chunk) - The company is subject to numerous other laws, including the federal **Anti-Kickback Statute**, **HIPAA**, and the **Physician Payments Sunshine Act**, which regulate marketing, data privacy, and financial relationships with healthcare providers[139](index=139&type=chunk)[140](index=140&type=chunk)[147](index=147&type=chunk) [Risk Factors](index=32&type=section&id=Item%201A.%20Risk%20Factors) The company faces significant risks including COVID-19 impacts, substantial accumulated losses requiring additional capital, reliance on third parties, and intellectual property challenges - The **COVID-19 pandemic** has caused operational challenges, including delays in clinical trial enrollment for MAA-304 and MAA-202, and poses a risk to manufacturing and supply chains[173](index=173&type=chunk)[175](index=175&type=chunk) - The company has incurred **significant losses since inception ($314.8 million accumulated deficit** as of Dec 31, 2020) and expects to continue incurring losses, requiring substantial additional capital to fund development programs[174](index=174&type=chunk)[191](index=191&type=chunk)[201](index=201&type=chunk) - **Reliance on third parties** is a key risk, including the success of the Biogen collaboration, the performance of contract manufacturers, and the potential for government requisition of manufacturing capacity for COVID-19 vaccines[174](index=174&type=chunk)[188](index=188&type=chunk)[222](index=222&type=chunk) - There is a risk of **intellectual property infringement claims**, with a patent family that may read on MarzAA pending, though the company believes the claims are not patentable[257](index=257&type=chunk) [Properties](index=63&type=section&id=Item%202.%20Properties) The company leases approximately 16,208 square feet for its corporate headquarters in South San Francisco, with the current lease expiring in April 2023 - The company leases approximately **16,208 square feet** for its corporate headquarters in South San Francisco, California[325](index=325&type=chunk) - The current lease term expires on **April 30, 2023**[325](index=325&type=chunk) [Legal Proceedings](index=63&type=section&id=Item%203.%20Legal%20Proceedings) The company is not currently a party to any legal proceedings expected to have a material adverse effect on its business or financial condition - The company is not presently a party to any **material legal proceedings**[327](index=327&type=chunk) Part II [Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=64&type=section&id=Item%205.%20Market%20for%20Registrant%27s%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) Catalyst Biosciences' common stock trades on Nasdaq under 'CBIO', with no cash dividends ever paid or anticipated, as earnings are retained for development - The company's common stock trades on the **Nasdaq Capital Market** under the ticker symbol **'CBIO'**[331](index=331&type=chunk) - The company has never paid cash dividends and does not plan to in the foreseeable future, retaining funds for development[333](index=333&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=65&type=section&id=Item%207.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) For 2020, Catalyst reported $20.9 million in revenue, a net loss of $56.2 million, and ended the year with $81.9 million in cash, sufficient for the next 12 months - In 2020, the company raised approximately **$60.0 million in net proceeds** from two underwritten public offerings of common stock in February and June[373](index=373&type=chunk)[374](index=374&type=chunk)[411](index=411&type=chunk) - The company believes its existing capital of **$81.9 million** (as of Dec 31, 2020) is sufficient to fund operations for at least the **next 12 months**[402](index=402&type=chunk)[403](index=403&type=chunk) [Results of Operations](index=72&type=section&id=Item%207.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations%23Results%20of%20Operations) In 2020, the company generated $20.9 million in revenue, with R&D and G&A expenses increasing 21%, resulting in a net loss of $56.2 million Results of Operations (in thousands) | | 2020 | 2019 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | **License and collaboration revenue** | **$20,948** | **$—** | **$20,948** | **N/A** | | *License* | $15,100 | $— | $15,100 | N/A | | *Collaboration* | $5,848 | $— | $5,848 | N/A | | **Total operating expenses** | **$78,318** | **$57,277** | **$21,041** | **37%** | | *Cost of license and collaboration* | $9,163 | $— | $9,163 | N/A | | *Research and development* | $52,975 | $43,859 | $9,116 | 21% | | *General and administrative* | $16,180 | $13,418 | $2,762 | 21% | | **Loss from operations** | **($57,370)** | **($57,277)** | **($93)** | **0%** | | **Net loss** | **($56,241)** | **($55,178)** | **($1,063)** | **2%** | - R&D expenses increased by **$9.1 million (21%)** in 2020, primarily due to a **$7.0 million increase** in preclinical research and a **$2.3 million increase** in personnel costs[398](index=398&type=chunk) - G&A expenses increased by **$2.8 million (21%)** in 2020, mainly driven by a **$2.8 million increase** in professional services[399](index=399&type=chunk) [Liquidity and Capital Resources](index=73&type=section&id=Item%207.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations%23Liquidity%20and%20Capital%20Resources) As of December 31, 2020, Catalyst had $81.9 million in cash, bolstered by $60.4 million from public offerings, deemed sufficient for at least 12 months Cash Flow Summary (in thousands) | | Year Ended Dec 31, 2020 | Year Ended Dec 31, 2019 | | :--- | :--- | :--- | | Cash used in operating activities | $(55,048) | $(43,613) | | Cash provided by investing activities | $9,663 | $27,392 | | Cash provided by financing activities | $60,376 | $327 | | **Net increase (decrease) in cash** | **$14,991** | **$(15,894)** | - As of December 31, 2020, the company had cash, cash equivalents, and investments of **$81.9 million** and an accumulated deficit of **$314.8 million**[402](index=402&type=chunk) - In Q1 2021, the company raised approximately **$49.3 million in net proceeds** from the sale of common stock[405](index=405&type=chunk)[560](index=560&type=chunk) [Financial Statements and Supplementary Data](index=78&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) The audited financial statements for 2020 show total assets of $94.8 million and a net loss of $56.2 million, with R&D expense estimation noted as a critical audit matter Consolidated Balance Sheet Data (in thousands) | | Dec 31, 2020 | Dec 31, 2019 | | :--- | :--- | :--- | | Cash and cash equivalents | $30,360 | $15,369 | | Total current assets | $89,510 | $96,066 | | **Total assets** | **$94,846** | **$98,554** | | Total current liabilities | $17,796 | $28,899 | | **Total liabilities** | **$18,777** | **$30,218** | | **Total stockholders' equity** | **$76,069** | **$68,336** | Consolidated Statement of Operations Data (in thousands) | | Year Ended Dec 31, 2020 | Year Ended Dec 31, 2019 | | :--- | :--- | :--- | | License and collaboration revenue | $20,948 | $— | | Total operating expenses | $78,318 | $57,277 | | Loss from operations | $(57,370) | $(57,277) | | **Net loss** | **$(56,241)** | **$(55,178)** | | **Net loss per share** | **$(2.93)** | **$(4.60)** | - The independent auditor, EisnerAmper LLP, identified the estimation of research and development expenses as a **critical audit matter** due to the significant judgment required by management[437](index=437&type=chunk)[439](index=439&type=chunk)[441](index=441&type=chunk) [Controls and Procedures](index=103&type=section&id=Item%209A.%20Controls%20and%20Procedures) Management concluded that the company's disclosure controls and internal control over financial reporting were effective as of December 31, 2020 - Management concluded that the company's **disclosure controls and procedures** were effective as of December 31, 2020[563](index=563&type=chunk) - Based on the **COSO 2013 framework**, management assessed internal control over financial reporting to be effective as of December 31, 2020[565](index=565&type=chunk) Part III [Directors, Executive Officers, Corporate Governance, Compensation, and Security Ownership](index=105&type=section&id=Item%2010%2C%2011%2C%2012%2C%2013%2C%2014) Information for directors, executive officers, corporate governance, compensation, and security ownership is incorporated by reference from the forthcoming Proxy Statement - Information regarding Directors, Executive Officers, Corporate Governance (Item 10), Executive Compensation (Item 11), Security Ownership (Item 12), Certain Relationships and Related Transactions (Item 13), and Principal Accountant Fees (Item 14) is **incorporated by reference** from the company's forthcoming Proxy Statement[569](index=569&type=chunk)[570](index=570&type=chunk)[571](index=571&type=chunk) Part IV [Exhibits and Financial Statement Schedules](index=106&type=section&id=Item%2015.%20Exhibits%20and%20Financial%20Statement%20Schedules) This section lists all exhibits filed with the 10-K, including material contracts and certifications from the CEO and CFO - This section contains the list of all exhibits filed with the 10-K, including material contracts like the **License and Collaboration Agreement with Biogen** and the **Amended and Restated License Agreement with ISU Abxis**[578](index=578&type=chunk)[581](index=581&type=chunk) - Certifications from the Principal Executive Officer and Principal Financial Officer pursuant to **Sarbanes-Oxley Sections 302 and 906** are included as exhibits[583](index=583&type=chunk)

Form 10-Q UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 (Exact Name of Registrant as Specified in its Charter) Delaware 56-2020050 (State or Other Jurisdiction of Incorporation or Organization) (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2020 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission fi ...

Clinical Trials and Drug Development - Catalyst Biosciences is initiating a Phase 3 clinical trial for MarzAA, targeting approximately 230 bleeding episodes in about 75 patients with Hemophilia A or B with inhibitors[73]. - The Phase 2b study for DalcA showed effective prophylaxis with FIX activity levels ranging from 14% to 28% and zero bleeds, with a half-life of 70 to 112 hours[79]. - MarzAA has demonstrated the potential for a safety profile comparable to NovoSeven when used in combination with Hemlibra, providing a subcutaneous rescue therapy option[77]. - The company completed two large-scale GMP batches of MarzAA sufficient to support the Phase 3 clinical trial[86]. - Catalyst is optimizing its Factor IX gene therapy construct CB 2679d-GT, which has shown 2-fold to 3-fold higher activity compared to the Padua variant in preclinical studies[80]. - The company is experiencing operational challenges due to the COVID-19 pandemic, which may impact clinical trial timelines and patient enrollment[90]. Financial Performance - The company reported a net loss of $4.1 million for the three months ended March 31, 2020, compared to a net loss of $15.1 million for the same period in 2019, representing a 73% decrease in net loss[93][111]. - As of March 31, 2020, the company had an accumulated deficit of $262.6 million and cash, cash equivalents, and short-term investments totaling $104.5 million[93][118]. - License and collaboration revenue for the three months ended March 31, 2020, was $16.4 million, all derived from the Biogen Agreement[95][112]. - Total operating expenses increased by 36% to $21.4 million for the three months ended March 31, 2020, compared to $15.7 million in the same period of 2019[111]. - Research and development expenses rose to $13.3 million for the three months ended March 31, 2020, up from $12.0 million in 2019, marking a 10% increase[100][114]. - The company expects to incur significant expenses and increasing operating losses for at least the next several years as it continues development and seeks regulatory approval for its drug candidates[94]. Cash Flow and Financing - Cash used in operating activities was $4.8 million for the three months ended March 31, 2020, compared to $14.96 million in the same period of 2019[120]. - The company has committed to a total of $10.7 million in payments to AGC for manufacturing development activities, with $3.4 million outstanding as of March 31, 2020[104]. - Interest and other income increased to $1.0 million for the three months ended March 31, 2020, compared to $0.6 million in 2019, primarily due to a $0.7 million payment from a prior asset sale[116]. - The company plans to fund future losses through equity and/or debt financings, with effective registration statements allowing for the sale of up to $200.0 million in securities[119]. - Cash provided by investing activities for Q1 2020 was $27.4 million, mainly from $33.5 million in proceeds from maturities of investments[123]. - Cash provided by financing activities for Q1 2020 was $32.4 million, due to $32.0 million in net proceeds from the issuance of common stock[125]. - Cash provided by financing activities for Q1 2019 was $0.1 million, entirely from the issuance of common stock related to the Employee Stock Purchase Plan[126]. - As of March 31, 2020, the company had cash and cash equivalents and short-term investments totaling $104.5 million[130]. Market Risks and Accounting Policies - The company does not have any off-balance sheet arrangements[127]. - The company is exposed to market risks, particularly interest income sensitivity in its investment portfolio[129]. - Future investment income may fall short of expectations due to changes in interest rates[129]. - The short-term nature of the instruments in the portfolio minimizes the impact of sudden changes in market interest rates[130]. - There have been no significant changes to critical accounting policies since December 31, 2019[128].

Financial Performance - The company reported a net loss of $55.2 million for the year ended December 31, 2019, compared to a net loss of $30.1 million for the year ended December 31, 2018, resulting in an accumulated deficit of $258.5 million as of December 31, 2019[297]. - Net loss for 2019 was $55.2 million, compared to a net loss of $30.1 million in 2018, representing an increase of 84%[318]. - Cash used in operating activities was $43.6 million in 2019, up from $28.6 million in 2018, reflecting a significant increase in net loss[321]. - Interest and other income decreased by 44% to $2.1 million in 2019 from $3.8 million in 2018, primarily due to the absence of significant milestone payments[315]. Research and Development - Research and development expenses for the year ended December 31, 2019, totaled $43.9 million, significantly increasing from $21.5 million in 2018, with clinical manufacturing costs rising from $12.2 million to $26.1 million[301]. - Research and development expenses increased by 104% to $43.9 million in 2019 from $21.5 million in 2018, primarily due to increased manufacturing activities and personnel-related expenses[312]. - The company expects research and development expenses to increase materially in 2020 due to costs associated with clinical trials and manufacturing[313]. - The company completed a Phase 1/2 SQ dosing trial for DalcA, achieving protective Factor IX activity levels of 12-30% with no reported serious adverse events[288]. - MarzAA, the company's most advanced product candidate, is currently in a SQ Phase 1 study to evaluate its pharmacokinetics and pharmacodynamics, with interim data indicating target levels consistent with treating a bleed[286]. Collaborations and Funding - The company entered into a collaboration agreement with Biogen, receiving a $15 million upfront payment and being eligible for up to $340 million in milestone payments for the development of anti-C3 proteases[290]. - The company raised approximately $32 million from the sale of 5,307,692 shares of common stock at $6.50 per share in February 2020[295]. - The company plans to fund future losses and capital needs through equity and/or debt financings, with effective registration statements allowing for the sale of up to $200.0 million in securities[319]. Cash and Investments - As of December 31, 2019, the company had cash, cash equivalents, and short-term investments totaling $76.9 million[297]. - Cash provided by investing activities was $27.4 million in 2019, primarily due to $157.4 million in proceeds from maturities of investments[324]. - As of December 31, 2019, the company had $76.9 million in cash, cash equivalents, and short-term investments, with an accumulated deficit of $258.5 million[318]. Operating Expenses - General and administrative expenses rose by 9% to $13.4 million in 2019 from $12.4 million in 2018, driven by higher personnel-related costs[314]. - The company expects to incur significant expenses and increasing operating losses for at least the next several years as it continues clinical development and seeks regulatory approval for its drug candidates[298]. Manufacturing and Agreements - The company has a long-term development and manufacturing services agreement with AGC Biologics for drug substance manufacturing, successfully completing a GMP batch of MarzAA to support future studies[292]. - The company has firm work orders totaling $12.4 million with AGC for the manufacture of MarzAA and DalcA to support clinical trials, with $4.6 million still outstanding[304]. - Contract revenue decreased to $0.0 million in 2019 from $0.01 million in 2018, a decline of 100% due to the end of a collaboration agreement[311]. Lease Accounting - The company adopted the new lease accounting standard ASC 842 on January 1, 2019, using the optional transition method, which does not restate comparative financial information[344]. - Operating lease liabilities and corresponding right-of-use assets are recorded based on the present value of lease payments over the expected lease term[345]. - The company utilizes its incremental borrowing rate for lease contracts, as the interest rate implicit in lease contracts is typically not readily determinable[345]. - Lease and non-lease components are combined as a single component, with lease expense recognized over the expected term on a straight-line basis[346]. - Operating leases are recognized on the balance sheet as right-of-use assets and operating lease liabilities, eliminating the recognition of deferred rent[346].