UNITED STATES SECURITIES AND EXCHANGE COMMISSION For the quarterly period ended March 31, 2023 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: 001-38890 Quince Therapeutics, Inc. (Exact Name of Registrant as Specified in its Charter) WASHINGTON, D.C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Delaware ...

PART I [Business](index=7&type=section&id=Item%201.%20Business) Quince Therapeutics transformed its strategy, shifting from Alzheimer's to rare skeletal diseases, selling its legacy portfolio, and focusing on in-licensing clinical-stage assets while seeking to out-license its bone-targeting platform - In January 2023, the company sold its legacy small molecule protease inhibitor portfolio, including atuzaginstat (COR388) and COR588, to Lighthouse Pharmaceuticals, Inc[22](index=22&type=chunk)[34](index=34&type=chunk) - The company's current strategy is to in-license or acquire clinical-stage assets for rare diseases and to out-license its bone-targeting drug platform and lead compound NOV004[23](index=23&type=chunk) - A corporate restructuring plan was approved in January 2023, involving a **47% reduction in workforce** to align with the new strategy, expected to save approximately **$10 million in annualized operating expenses**[38](index=38&type=chunk)[99](index=99&type=chunk) Key Events in 2022-2023 | Event | Date/Period | Details | | :--- | :--- | :--- | | **FDA Clinical Hold** | January 2022 | FDA placed a full clinical hold on atuzaginstat (COR388) | | **Management Change** | January 2022 | CEO and CSO resigned | | **Novosteo Acquisition** | May 2022 | Acquired Novosteo, Inc., focusing on rare skeletal diseases | | **New Management** | May 2022 | Appointed Dirk Thye, M.D. as CEO and other key executives | | **Legacy Portfolio Sale** | January 2023 | Sold protease inhibitor portfolio to Lighthouse Pharmaceuticals, Inc. | [Drug Candidate Portfolio](index=7&type=section&id=Item%201.%20Business-Drug%20Candidate%20Portfolio) The company's main asset is NOV004, a bone anabolic peptide for fracture repair, which it seeks to partner or out-license, having sold its legacy Alzheimer's portfolio - NOV004 is a systemically administered bone anabolic peptide engineered to target and concentrate at bone fracture sites, showing **positive results in preclinical studies**[25](index=25&type=chunk)[26](index=26&type=chunk) - The legacy portfolio, including atuzaginstat (COR388) which was placed on a **full clinical hold by the FDA in January 2022**, has been sold[28](index=28&type=chunk)[29](index=29&type=chunk)[34](index=34&type=chunk) [Strategic Transactions and Restructuring](index=8&type=section&id=Item%201.%20Business-Strategic%20Transactions%20and%20Restructuring) The company acquired Novosteo in May 2022, sold its legacy portfolio in January 2023 for potential milestones and royalties, and initiated a 47% workforce reduction for capital conservation - The acquisition of Novosteo was completed on **May 19, 2022**, resulting in Novosteo becoming a wholly owned subsidiary[32](index=32&type=chunk) - The sale of the legacy portfolio to Lighthouse Pharmaceuticals includes potential milestone payments up to **$150 million** and tiered royalties on future net sales[36](index=36&type=chunk) - The 2023 restructuring plan is expected to incur charges of **$0.6 million to $0.8 million**, primarily for severance, and result in annualized savings of approximately **$10 million**[38](index=38&type=chunk)[39](index=39&type=chunk) [Commercialization, Competition, and Intellectual Property](index=10&type=section&id=Item%201.%20Business-Commercialization%2C%20Competition%2C%20and%20IP) Lacking commercialization capabilities, the company faces competition in bone disease and relies on licensed patents for NOV004, expiring between 2037 and 2041 - The company has **no commercialization infrastructure** and will need to build or partner to market any future approved drugs[46](index=46&type=chunk)[47](index=47&type=chunk) - Key competitors in the bone disease and osteogenesis imperfecta space include **Amgen, Lilly, Radius Health, Ultragenyx, and Sanofi**[49](index=49&type=chunk)[50](index=50&type=chunk) - The company has exclusively licensed patents covering NOV004 as a composition of matter and its therapeutic use, with estimated expiration dates between **2037 and 2041**, not including potential extensions[55](index=55&type=chunk) [Regulatory Environment](index=13&type=section&id=Item%201.%20Business-Regulatory%20Environment) The company's drug development is subject to extensive FDA regulation, requiring multi-phase clinical trials and ongoing compliance with manufacturing, labeling, and healthcare laws - The U.S. drug development process requires completion of preclinical studies, submission of an Investigational New Drug (IND) application, and performance of adequate and well-controlled human clinical trials before submitting a New Drug Application (NDA) to the FDA[59](index=59&type=chunk)[60](index=60&type=chunk) - Human clinical trials are typically conducted in **three sequential phases (Phase 1, 2, and 3)** to test for safety, efficacy, and dosage, with potential for post-approval Phase 4 studies[69](index=69&type=chunk)[72](index=72&type=chunk) - The business is subject to healthcare reform measures, such as the **Affordable Care Act (ACA)** and the **Inflation Reduction Act of 2022 (IRA)**, which can impact drug pricing, coverage, and reimbursement[94](index=94&type=chunk)[95](index=95&type=chunk)[98](index=98&type=chunk) [Risk Factors](index=20&type=section&id=Item%201A.%20Risk%20Factors) The company faces significant strategic, financial, operational, and intellectual property risks, including uncertainty in asset acquisition, ongoing losses, potential Nasdaq delisting, and challenges in drug development and patent protection [Strategic and Financial Risks](index=20&type=section&id=Item%201A.%20Risk%20Factors-Strategic%20and%20Financial%20Risks) The company's new in-licensing strategy is uncertain, it has a history of significant losses and no revenue, requires substantial additional capital, and its stock faces Nasdaq delisting risk - The success of the company's new strategic direction to in-license or acquire clinical-stage assets is uncertain and may not enhance shareholder value[103](index=103&type=chunk)[104](index=104&type=chunk)[105](index=105&type=chunk) - The company has a history of net losses and has never been profitable, with an accumulated deficit of **$288.3 million** as of December 31, 2022[106](index=106&type=chunk) - The company will require substantial additional funding to finance its operations and future acquisitions, and failure to raise capital could force it to delay or eliminate programs[112](index=112&type=chunk)[141](index=141&type=chunk) - The company's common stock is at risk of delisting from Nasdaq due to its failure to meet the **minimum $1.00 bid price requirement**, which could adversely affect liquidity and the ability to raise capital[297](index=297&type=chunk)[298](index=298&type=chunk) [Development, Regulatory, and Commercial Risks](index=24&type=section&id=Item%201A.%20Risk%20Factors-Development%2C%20Regulatory%2C%20and%20Commercial%20Risks) Drug development is risky, relying on third parties, with no guarantee of regulatory approval or effective commercialization due to lack of internal infrastructure - Clinical drug development is inherently risky, and positive results from preclinical or early clinical trials are not predictive of success in later-stage trials[130](index=130&type=chunk)[131](index=131&type=chunk) - The company relies on third-party CROs and contract manufacturers, and their failure to perform satisfactorily could delay or halt development and commercialization efforts[157](index=157&type=chunk)[160](index=160&type=chunk) - Obtaining regulatory approval is a lengthy and uncertain process, and the FDA or other authorities may not approve any future drug candidates[146](index=146&type=chunk)[148](index=148&type=chunk)[149](index=149&type=chunk) - The company has no sales, marketing, or distribution infrastructure and would need to build these capabilities or partner with third parties to commercialize any approved drugs[167](index=167&type=chunk) [Intellectual Property Risks](index=43&type=section&id=Item%201A.%20Risk%20Factors-Intellectual%20Property%20Risks) The company faces significant IP risks, including challenges in obtaining and defending patents, reliance on a key license for NOV004, and potential costly litigation - The company's ability to commercialize its technology could be adversely affected if it fails to obtain and maintain sufficient patent protection or if its patents are deemed invalid or unenforceable[225](index=225&type=chunk)[226](index=226&type=chunk)[227](index=227&type=chunk) - The company depends on an exclusive license agreement with Purdue Research Foundation for NOV004; termination of this license could result in the loss of significant rights[238](index=238&type=chunk)[241](index=241&type=chunk) - The company may be involved in costly and time-consuming lawsuits to protect its patents or may face infringement claims from third parties, which could prevent or delay drug development[244](index=244&type=chunk)[252](index=252&type=chunk) - Protecting trade secrets is difficult, and unauthorized disclosure by employees, consultants, or partners could harm the company's competitive position[267](index=267&type=chunk) [Unresolved Staff Comments](index=60&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) The company reports no unresolved staff comments from the SEC - None[315](index=315&type=chunk) [Properties](index=60&type=section&id=Item%202.%20Properties) The company leases corporate headquarters in South San Francisco and other office/lab spaces in San Diego and West Lafayette, with the latter recently subleased - The company leases office and lab space in **South San Francisco, CA; San Diego, CA; and West Lafayette, IN**[315](index=315&type=chunk) - In response to strategic changes, the company entered into a sublease agreement for its West Lafayette property on **February 27, 2023**[315](index=315&type=chunk) [Legal Proceedings](index=60&type=section&id=Item%203.%20Legal%20Proceedings) The company is not currently involved in any material legal proceedings - The company is not currently a party to any material legal proceedings[316](index=316&type=chunk) [Mine Safety Disclosures](index=60&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company - Not applicable[317](index=317&type=chunk) PART II [Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=61&type=section&id=Item%205.%20Market%20for%20Registrant%27s%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) The company's common stock trades on Nasdaq under "QNCX," with no sales of unregistered securities or issuer purchases reported - The company's common stock trades on the Nasdaq Global Select Market under the symbol **"QNCX"**[319](index=319&type=chunk)[320](index=320&type=chunk) - There were no sales of unregistered securities or issuer purchases of equity securities reported for the period[321](index=321&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=62&type=section&id=Item%207.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) The company's 2022 net loss decreased to $51.7 million due to reduced R&D, with $93.8 million in cash expected to fund operations through 2026, excluding new acquisitions [Results of Operations](index=69&type=section&id=Item%207.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations-Results%20of%20Operations) The company's 2022 net loss significantly improved to $51.7 million, driven by a 58.6% reduction in R&D expenses and an 11.9% decrease in G&A, alongside a $0.8 million goodwill impairment Comparison of Operations (Years Ended Dec 31) | (in thousands) | 2022 | 2021 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Research and development | $25,178 | $60,795 | $(35,617) | (58.6)% | | General and administrative | $26,012 | $29,523 | $(3,511) | (11.9)% | | Goodwill impairment charge | $825 | $0 | $825 | 100.0% | | **Loss from operations** | **$(52,015)** | **$(90,318)** | **$(38,303)** | **(42.4)%** | | **Net loss** | **$(51,660)** | **$(89,945)** | **$(38,285)** | **(42.6)%** | - The **$35.6 million decrease in R&D expenses** was primarily due to a **$24.2 million reduction** in costs for the atuzaginstat (COR388) program as its Phase 2/3 GAIN trial concluded in late 2021[380](index=380&type=chunk)[381](index=381&type=chunk) - A non-cash goodwill impairment charge of **$0.8 million** was recorded in 2022 related to the Novosteo acquisition, driven by deteriorating macroeconomic conditions and a decline in the company's market capitalization[391](index=391&type=chunk) [Liquidity and Capital Resources](index=71&type=section&id=Item%207.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations-Liquidity%20and%20Capital%20Resources) As of December 31, 2022, the company held $93.8 million in cash, sufficient for operations through 2026, but will require additional capital for new asset acquisitions - The company had cash, cash equivalents, and investments totaling **$93.8 million** as of December 31, 2022[396](index=396&type=chunk) - Existing capital is expected to fund planned operations through at least **2026**, but this forecast excludes any costs related to future in-licensing or acquisition of new assets[345](index=345&type=chunk)[403](index=403&type=chunk) Summary Statement of Cash Flows (in thousands) | | Year Ended Dec 31, 2022 | Year Ended Dec 31, 2021 | | :--- | :--- | :--- | | Net cash used in operating activities | $(44,038) | $(62,932) | | Net cash provided by investing activities | $18,002 | $58,952 | | Net cash provided by financing activities | $707 | $6,808 | [Quantitative and Qualitative Disclosures About Market Risk](index=73&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) As a smaller reporting company, Quince Therapeutics, Inc. is not required to provide this information - The company is a smaller reporting company and is not required to provide this information[415](index=415&type=chunk) [Financial Statements and Supplementary Data](index=74&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) This section presents audited financial statements for 2022 and 2021, showing decreased assets and net loss, with notes detailing the Novosteo acquisition and subsequent strategic changes Consolidated Balance Sheet Data (in thousands) | | Dec 31, 2022 | Dec 31, 2021 | | :--- | :--- | :--- | | Cash and cash equivalents | $44,579 | $69,724 | | Total current assets | $93,748 | $111,673 | | Total assets | $103,910 | $133,228 | | Total current liabilities | $3,069 | $14,222 | | Total liabilities | $3,317 | $14,642 | | Total stockholders' equity | $100,593 | $118,586 | Consolidated Statement of Operations Data (in thousands) | | Year Ended Dec 31, 2022 | Year Ended Dec 31, 2021 | | :--- | :--- | :--- | | Total operating expenses | $52,015 | $90,318 | | Loss from operations | $(52,015) | $(90,318) | | Net loss | $(51,660) | $(89,945) | | Net loss per share | $(1.54) | $(3.03) | - The May 2022 acquisition of Novosteo was accounted for as a business combination with a total consideration of **$16.5 million**, resulting in the recognition of a **$5.9 million** in-process research and development (IPR&D) intangible asset and **$0.8 million** in goodwill[553](index=553&type=chunk)[554](index=554&type=chunk)[555](index=555&type=chunk) - Subsequent events in January 2023 include the sale of the legacy protease inhibitor portfolio and a cost reduction program that will reduce headcount by approximately **47%**[564](index=564&type=chunk)[567](index=567&type=chunk) [Changes in and Disagreements With Accountants on Accounting and Financial Disclosure](index=106&type=section&id=Item%209.%20Changes%20in%20and%20Disagreements%20With%20Accountants%20on%20Accounting%20and%20Financial%20Disclosure) The company reported no changes in or disagreements with its accountants regarding accounting and financial disclosure - None[572](index=572&type=chunk) [Controls and Procedures](index=106&type=section&id=Item%209A.%20Controls%20and%20Procedures) Management concluded that disclosure controls and internal control over financial reporting were effective as of December 31, 2022, with no material changes in Q4 2022 - Management concluded that the company's disclosure controls and procedures were **effective** as of December 31, 2022[572](index=572&type=chunk) - Management assessed internal control over financial reporting and concluded it was **effective** as of December 31, 2022[575](index=575&type=chunk) PART III This section incorporates information by reference from the company's 2023 Proxy Statement, covering directors, executive compensation, security ownership, related transactions, and accountant fees [Directors, Executive Officers and Corporate Governance](index=108&type=section&id=Item%2010.%20Directors%2C%20Executive%20Officers%20and%20Corporate%20Governance) Information required by this item, including details about directors, executive officers, and the code of business conduct, is incorporated by reference from the company's 2023 Proxy Statement - Information is incorporated by reference from the 2023 Proxy Statement[582](index=582&type=chunk)[583](index=583&type=chunk) [Executive Compensation](index=108&type=section&id=Item%2011.%20Executive%20Compensation) Information regarding director and executive compensation is incorporated by reference from the company's 2023 Proxy Statement - Information is incorporated by reference from the 2023 Proxy Statement[584](index=584&type=chunk) [Security Ownership of Certain Beneficial Owners and Management And Related Stockholder Matters](index=108&type=section&id=Item%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20And%20Related%20Stockholder%20Matters) Information regarding security ownership and equity compensation plans is incorporated by reference from the company's 2023 Proxy Statement - Information is incorporated by reference from the 2023 Proxy Statement[585](index=585&type=chunk) [Certain Relationships and Related Transactions, and Director Independence](index=108&type=section&id=Item%2013.%20Certain%20Relationships%20and%20Related%20Transactions%2C%20and%20Director%20Independence) Information regarding related party transactions and director independence is incorporated by reference from the company's 2023 Proxy Statement - Information is incorporated by reference from the 2023 Proxy Statement[586](index=586&type=chunk) [Principal Accountant Fees and Services](index=108&type=section&id=Item%2014.%20Principal%20Accountant%20Fees%20and%20Services) Information regarding fees and services of the principal accountant, BDO USA, LLP, is incorporated by reference from the company's 2023 Proxy Statement - Information is incorporated by reference from the 2023 Proxy Statement[587](index=587&type=chunk) PART IV This section lists exhibits filed with the Form 10-K and notes the omission of financial statement schedules where not applicable or redundant [Exhibits and Financial Statement Schedules](index=109&type=section&id=Item%2015.%20Exhibits%20and%20Financial%20Statement%20Schedules) This item lists the exhibits filed with the annual report and notes the omission of financial statement schedules - This section lists the exhibits filed with the report, including various agreements, certificates, and certifications[590](index=590&type=chunk)[592](index=592&type=chunk) [Form 10-K Summary](index=109&type=section&id=Item%2016.%20Form%2010-K%20Summary) The company did not provide a summary for this item - None[593](index=593&type=chunk)

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q (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, 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: 001-38890 Quince Therapeutics, Inc. (Exact Name of Registrant as Specified in its Charter) Dela ...

Advancing innovative precision therapeutics for debilitating and rare diseases CANACCORD GENUITY 42ND ANNUAL GROWTH CONFERENCE A u g u s t 1 1 , 2 0 2 2 Forward-looking statements 2 Statements in this presentation contain "forward-looking statements" that are subject to substantial risks and uncertainties. Forward-looking statements contained in this presentation may be identified by the use of words such as "expect," "will," "estimate," "project," "potential," "positioned," "advancing," "planned," "progres ...

```markdown [PART I. FINANCIAL INFORMATION](index=3&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) [Item 1. Financial Statements (Unaudited)](index=3&type=section&id=Item%201.%20Financial%20Statements%20(Unaudited)) The unaudited financial statements for Q2 2022 report a net loss of $16.6 million, total assets of $117.9 million, reflecting the Novosteo acquisition and reduced R&D expenses [Condensed Consolidated Balance Sheets](index=3&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) As of June 30, 2022, total assets decreased to $117.9 million due to reduced cash, while liabilities significantly decreased, and new assets from the Novosteo acquisition were recognized Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | June 30, 2022 | December 31, 2021 | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | $46,928 | $69,724 | | Total current assets | $99,370 | $111,673 | | Goodwill | $825 | $— | | Intangible asset | $5,900 | $— | | **Total assets** | **$117,863** | **$133,228** | | **Liabilities & Equity** | | | | Total current liabilities | $5,950 | $14,222 | | **Total liabilities** | **$6,331** | **$14,642** | | Accumulated deficit | $(274,804) | $(236,599) | | **Total stockholders' equity** | **$111,532** | **$118,586** | [Condensed Consolidated Statements of Operations and Comprehensive Loss](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Loss) The company reported a reduced net loss of $16.6 million for Q2 2022 and $38.2 million for the six-month period, driven by decreased R&D expenses despite higher G&A costs Condensed Consolidated Statements of Operations Highlights (in thousands) | Metric | Three Months Ended June 30, 2022 | Three Months Ended June 30, 2021 | Six Months Ended June 30, 2022 | Six Months Ended June 30, 2021 | | :--- | :--- | :--- | :--- | :--- | | Research and development | $7,199 | $14,719 | $19,960 | $31,543 | | General and administrative | $9,059 | $7,064 | $18,116 | $13,553 | | Loss from operations | $(16,258) | $(21,783) | $(38,076) | $(45,096) | | **Net loss** | **$(16,564)** | **$(21,754)** | **$(38,205)** | **$(44,840)** | | Net loss per share | $(0.51) | $(0.74) | $(1.22) | $(1.52) | [Condensed Consolidated Statements of Cash Flows](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Net cash used in operating activities for the six months ended June 30, 2022, was $31.5 million, with cash and cash equivalents decreasing by $22.8 million to $46.9 million, influenced by the Novosteo acquisition Condensed Consolidated Statements of Cash Flows Highlights (in thousands) | Cash Flow Activity | Six Months Ended June 30, 2022 | Six Months Ended June 30, 2021 | | :--- | :--- | :--- | | Net cash used in operating activities | $(31,506) | $(31,172) | | Net cash provided by investing activities | $8,162 | $37,267 | | Net cash provided by financing activities | $730 | $1,113 | | **Net (decrease) increase in cash** | **$(22,796)** | **$7,208** | | **Cash and cash equivalents at end of period** | **$46,928** | **$74,049** | - Non-cash activities included the acquisition of Novosteo's net assets for **$16.2 million** in exchange for common stock[20](index=20&type=chunk) [Notes to Unaudited Condensed Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20Unaudited%20Condensed%20Consolidated%20Financial%20Statements) The notes detail the company's name change to Quince Therapeutics, the Novosteo acquisition and strategic shift to rare skeletal diseases, and confirm sufficient liquidity for at least 12 months - Effective August 1, 2022, Cortexyme Inc. changed its name to Quince Therapeutics, Inc., shifting its focus to precision therapeutics for debilitating and rare diseases[23](index=23&type=chunk) - On May 19, 2022, the company acquired Novosteo, Inc., a biotech focused on rare skeletal diseases, issuing **5,520,000 shares** as part of the transaction[24](index=24&type=chunk) - As of June 30, 2022, the company held **$94.7 million** in cash, cash equivalents, and short-term investments, deemed sufficient for at least the next 12 months of operations[33](index=33&type=chunk) - The Novosteo acquisition, valued at approximately **$16.5 million**, resulted in the recognition of a **$5.9 million** IPRD intangible asset and **$825,000** in goodwill[118](index=118&type=chunk)[119](index=119&type=chunk)[122](index=122&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=26&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the strategic shift to rare skeletal diseases following the Novosteo acquisition, highlighting decreased R&D expenses and confirming sufficient capital into the second half of 2025 [Overview and Business Acquisition](index=26&type=section&id=Overview%20and%20Business%20Acquisition) The company transitioned to a preclinical stage biopharmaceutical company focused on rare diseases following the May 2022 Novosteo acquisition, prioritizing its bone-targeting drug platform and changing its name to Quince Therapeutics - On May 19, 2022, the company acquired Novosteo, Inc., issuing **5,520,000 shares** of common stock, representing approximately **15.5%** of outstanding stock post-acquisition[130](index=130&type=chunk)[132](index=132&type=chunk) - The acquisition initiated a strategic shift to prioritize Novosteo's bone-targeting drug platform and lead compound NOV004 for rare skeletal diseases[134](index=134&type=chunk) - Legacy programs, including atuzaginstat and 3CLpro inhibitor programs, will be advanced through proactive out-licensing efforts[134](index=134&type=chunk) [Drug Candidate Portfolio](index=28&type=section&id=Drug%20Candidate%20Portfolio) The company's pipeline is now led by NOV004, with an IND submission planned for H1 2023, while legacy assets like atuzaginstat (COR388) and COR588 will be pursued through out-licensing or partnerships - **NOV004:** The lead asset for accelerating bone fracture repair, with an IND submission planned for the first half of 2023[142](index=142&type=chunk) - **Atuzaginstat (COR388):** Under a full FDA clinical hold since January 25, 2022, with further development for any indication contingent on external out-licensing or partnership[145](index=145&type=chunk) - **COR588:** A second-generation brain penetrant lysine gingipain inhibitor, which completed Phase 1 trials and will be advanced via out-licensing or partnership[152](index=152&type=chunk) [Results of Operations](index=34&type=section&id=Results%20of%20Operations) R&D expenses decreased significantly in Q2 2022 due to the conclusion of the COR388 trial, while G&A expenses increased from acquisition and severance costs, leading to a reduced net loss for both the quarter and six-month period Comparison of Operating Expenses (in thousands) | Expense Category | Three Months Ended June 30, 2022 | Three Months Ended June 30, 2021 | Change (%) | | :--- | :--- | :--- | :--- | | Research and development | $7,199 | $14,719 | (51.1)% | | General and administrative | $9,059 | $7,064 | 28.2% | | **Net Loss** | **$16,564** | **$21,754** | **(23.9)%** | Comparison of Operating Expenses (in thousands) | Expense Category | Six Months Ended June 30, 2022 | Six Months Ended June 30, 2021 | Change (%) | | :--- | :--- | :--- | :--- | | Research and development | $19,960 | $31,543 | (36.7)% | | General and administrative | $18,116 | $13,553 | 33.7% | | **Net Loss** | **$38,205** | **$44,840** | **(14.8)%** | - The decrease in R&D costs was primarily due to the conclusion of the GAIN Phase 2/3 clinical trial for atuzaginstat (COR388) in late 2021[186](index=186&type=chunk)[198](index=198&type=chunk) - The increase in G&A expenses was mainly due to severance costs and legal expenses related to the Novosteo acquisition and regulatory compliance[192](index=192&type=chunk)[203](index=203&type=chunk) [Liquidity, Capital Resources and Plan of Operations](index=37&type=section&id=Liquidity%2C%20Capital%20Resources%20and%20Plan%20of%20Operations) As of June 30, 2022, the company held $105.7 million in cash and investments, projected to fund operations into H2 2025, prioritizing NOV004 development while seeking partnerships for legacy assets - As of June 30, 2022, the company had cash, cash equivalents, and investments totaling **$105.7 million**[207](index=207&type=chunk) - The company believes existing cash and investments are sufficient to fund planned operations into the second half of 2025[208](index=208&type=chunk)[214](index=214&type=chunk) - Future plans prioritize internal development of the bone-targeting drug platform and NOV004, while seeking strategic partnerships for legacy assets like atuzaginstat (COR388) and COR588[210](index=210&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=40&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company faces market risks from interest rate sensitivity on its investment portfolio and foreign currency exchange rates, but believes a 100 basis point interest rate change would not materially affect its holdings - The company's primary market risks include interest rate sensitivity on its **$105.7 million** cash and marketable securities portfolio, and foreign currency exchange rate risk from Australian operations[225](index=225&type=chunk)[226](index=226&type=chunk)[227](index=227&type=chunk) - Due to the short-term nature of investments, a 100 basis point change in interest rates is not expected to materially affect the fair market value of holdings[226](index=226&type=chunk) [Item 4. Controls and Procedures](index=41&type=section&id=Item%204.%20Controls%20and%20Procedures) As of June 30, 2022, management concluded that disclosure controls and procedures were effective, with no material changes to internal control over financial reporting during the quarter - Management concluded that as of June 30, 2022, the company's disclosure controls and procedures were effective[231](index=231&type=chunk) - No material changes in internal control over financial reporting occurred during the quarter[232](index=232&type=chunk) [PART II. OTHER INFORMATION](index=42&type=section&id=PART%20II.%20OTHER%20INFORMATION) [Item 1. Legal Proceedings](index=42&type=section&id=Item%201.%20Legal%20Proceedings) The company is not currently a party to any material legal proceedings - As of the filing date, the company is not involved in any material legal proceedings[235](index=235&type=chunk) [Item 1A. Risk Factors](index=42&type=section&id=Item%201A.%20Risk%20Factors) The company faces significant risks including dependence on NOV004, challenges in out-licensing legacy assets like atuzaginstat (COR388) under FDA clinical hold, the need for additional funding, and integration complexities from the Novosteo acquisition - The business is substantially dependent on the success of NOV004 and the uncertain successful out-licensing of legacy assets[237](index=237&type=chunk) - The FDA has placed a full clinical hold on atuzaginstat (COR388), potentially delaying or precluding its approval and impacting other pipeline candidates[237](index=237&type=chunk)[256](index=256&type=chunk) - As a preclinical stage entity with limited operating history and no sales revenue, the company will require substantial additional funding to continue operations[237](index=237&type=chunk) - Significant risks exist related to integrating the Novosteo acquisition, including cultural blending, key personnel retention, and managing expanded operations[237](index=237&type=chunk)[238](index=238&type=chunk)[239](index=239&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=88&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company reported no unregistered sales of equity securities during the period - None[457](index=457&type=chunk) [Item 3. Defaults Upon Senior Securities](index=88&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) This item is not applicable - Not Applicable[458](index=458&type=chunk) [Item 4. Mine Safety Disclosures](index=88&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable - Not Applicable[459](index=459&type=chunk) [Item 5. Other Information](index=88&type=section&id=Item%205.%20Other%20Information) The company reported no other information - None[460](index=460&type=chunk) [Item 6. Exhibits](index=89&type=section&id=Item%206.%20Exhibits) This section lists exhibits filed with the Quarterly Report on Form 10-Q, including the Merger Agreement, employment agreements, equity plans, and officer certifications ```

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 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: 001-38890 Cortexyme, Inc. (Exact Name of Registrant as Specified in its Charter) ( State or other j ...

PART I [Business](index=6&type=section&id=Item%201.%20Business) Cortexyme pivoted to prioritize COR588 for Alzheimer's after atuzaginstat failed its GAIN trial and received a full FDA clinical hold, initiating a 53% workforce reduction - The company's core strategy is based on the discovery of P. gingivalis and its toxic proteases (gingipains) in the brains of Alzheimer's and Parkinson's disease patients, suggesting a causal link to neurodegeneration[20](index=20&type=chunk) - The Phase 2/3 GAIN trial for atuzaginstat (COR388) in mild to moderate Alzheimer's patients did not meet its co-primary cognitive and functional endpoints in the overall cohort of 643 participants[21](index=21&type=chunk) - On January 25, 2022, the FDA placed a full clinical hold on the Investigational New Drug (IND) application for atuzaginstat (COR388) for Alzheimer's disease[22](index=22&type=chunk)[36](index=36&type=chunk) - Following the clinical hold on atuzaginstat, the company is prioritizing the development of its next-generation gingipain inhibitor, COR588, for Alzheimer's disease. A Phase 1 trial for COR588 began in August 2021[22](index=22&type=chunk)[23](index=23&type=chunk) - The company is exploring new indications for atuzaginstat (COR388), including oncology (oral/head and neck squamous cell carcinoma) and periodontal disease[22](index=22&type=chunk)[25](index=25&type=chunk)[29](index=29&type=chunk) - In response to the pipeline reprioritization, the company initiated a cost reduction program in February 2022, planning to reduce headcount by approximately **53%** and incurring estimated severance costs of up to **$2.1 million**[37](index=37&type=chunk)[116](index=116&type=chunk) [Pipeline and Clinical Development](index=6&type=section&id=Item%201.%20Business-Pipeline%20and%20Clinical%20Development) Cortexyme's pipeline details atuzaginstat's GAIN trial failure and clinical hold, prioritizing COR588 and other inhibitors - The GAIN trial showed a dose-dependent slowing of cognitive decline in a pre-specified subgroup of patients with detectable P. gingivalis DNA in saliva, with the 80 mg dose showing a **57% slowing of decline** on ADAS-Cog11 (p=0.02)[21](index=21&type=chunk) - Atuzaginstat (COR388) was associated with dose-related, asymptomatic liver enzyme elevations in the GAIN trial, which led to a partial clinical hold in February 2021 and ultimately a full clinical hold in January 2022 for the Alzheimer's indication[21](index=21&type=chunk)[35](index=35&type=chunk)[36](index=36&type=chunk) - The company is advancing COR588, a second-generation brain-penetrant lysine gingipain inhibitor, which has completed IND-enabling studies and entered a Phase 1 trial in August 2021[23](index=23&type=chunk) - The pipeline also includes a 3CLpro inhibitor (COR803) for coronavirus infections and two arginine gingipain inhibitors progressing toward IND-enabling studies[32](index=32&type=chunk)[33](index=33&type=chunk) [Operations and Strategy](index=8&type=section&id=Item%201.%20Business-Operations%20and%20Strategy) Cortexyme's operations rely on third-party manufacturing, lack commercial capabilities, face competition, and detail intellectual property - The company does not own manufacturing facilities and relies on third-party contract manufacturing organizations (CMOs) for the supply of its drug candidates[43](index=43&type=chunk) - Cortexyme currently has no sales, marketing, or commercial distribution capabilities and plans to build this infrastructure or partner with third parties if any of its drug candidates approach commercialization[48](index=48&type=chunk)[49](index=49&type=chunk) - The company faces competition from large pharmaceutical and biotechnology companies developing therapies for Alzheimer's disease, including AbbVie, Biogen, Eli Lilly, Eisai, and Roche[51](index=51&type=chunk)[52](index=52&type=chunk) - The company holds issued U.S. patents for atuzaginstat (COR388) providing composition of matter and method of treatment coverage through **2037**, with foreign patents extending through **2035**[53](index=53&type=chunk) [Regulatory and Human Capital](index=11&type=section&id=Item%201.%20Business-Regulatory%20and%20Human%20Capital) Cortexyme's drug development is subject to extensive regulation, with a significant planned workforce reduction impacting human capital - The company's operations are subject to extensive regulation by government authorities in the U.S. (FDA) and other countries, covering all stages from research and development to post-approval marketing[56](index=56&type=chunk) - The FDA drug development process involves preclinical studies, an Investigational New Drug (IND) application, and multiple phases of human clinical trials (Phase 1, 2, 3) to establish safety and efficacy before a New Drug Application (NDA) can be submitted[58](index=58&type=chunk)[67](index=67&type=chunk)[70](index=70&type=chunk) - As of December 31, 2021, the company had **55 employees**, with **39** in research and development. A planned cost reduction program will reduce headcount by approximately **53%** by July 2022[115](index=115&type=chunk)[116](index=116&type=chunk) [Risk Factors](index=21&type=section&id=Item%201A.%20Risk%20Factors) The company faces substantial risks, including drug candidate success, novel therapeutic approach, funding needs, regulatory hurdles, and stock price volatility - The company is substantially dependent on the success of COR588 and atuzaginstat (COR388). The full clinical hold on atuzaginstat for Alzheimer's disease significantly harms the business[123](index=123&type=chunk)[124](index=124&type=chunk) - The company's novel therapeutic approach, targeting P. gingivalis, is unproven and exposes it to unforeseen risks. The GAIN trial's failure to meet primary endpoints underscores this risk[126](index=126&type=chunk)[127](index=127&type=chunk) - The company has a limited operating history, has never generated revenue, and has incurred significant net losses, with an accumulated deficit of **$236.6 million** as of December 31, 2021[144](index=144&type=chunk)[146](index=146&type=chunk) - Substantial additional funding is required to finance operations. Without it, the company may be forced to delay, reduce, or eliminate drug development programs[152](index=152&type=chunk) - The company relies on third parties for manufacturing and conducting clinical trials, which reduces control and introduces risks related to performance, compliance, and potential delays[174](index=174&type=chunk) - The market price of the company's common stock is highly volatile and has been negatively impacted by clinical trial results and regulatory actions, such as the FDA clinical hold[298](index=298&type=chunk) [Unresolved Staff Comments](index=62&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) The company reports that it has no unresolved staff comments from the SEC - None[321](index=321&type=chunk) [Properties](index=62&type=section&id=Item%202.%20Properties) The company's corporate headquarters are in a subleased facility in South San Francisco, with additional office space in San Diego for clinical operations - The main corporate headquarters are subleased in South San Francisco, CA, with a lease expiring in July 2022 and an option to extend to July 2023[321](index=321&type=chunk) - An additional office for clinical trial operations is leased in San Diego, CA, with that lease expiring in August 2023[321](index=321&type=chunk) [Legal Proceedings](index=62&type=section&id=Item%203.%20Legal%20Proceedings) The company is not a party to any material litigation or legal proceedings expected to adversely affect its business - The company is not currently a party to any material legal proceedings[322](index=322&type=chunk) [Mine Safety Disclosures](index=62&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company's business - Not applicable[323](index=323&type=chunk) PART II [Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=65&type=section&id=Item%205.%20Market%20for%20Registrant%27s%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) The company's common stock trades on Nasdaq under "CRTX", has never paid dividends, and has significantly underperformed market indexes since its IPO - The company's common stock is listed on the Nasdaq Global Select Market under the ticker symbol "**CRTX**"[326](index=326&type=chunk)[327](index=327&type=chunk) - The company has never declared or paid cash dividends and does not anticipate doing so in the foreseeable future[330](index=330&type=chunk) Stock Performance | Company/Index | 5/9/2019 | 12/31/2019 | 12/31/2020 | 12/31/2021 | |---|---|---|---|---| | Cortexyme, Inc (CRTX) | $100.00 | $170.69 | $84.46 | $38.37 | | Nasdaq Composite Index | $100.00 | $113.43 | $162.92 | $197.77 | | Nasdaq Biotechnology Index | $100.00 | $114.28 | $143.64 | $142.73 | [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=67&type=section&id=Item%207.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) The company reported an increased net loss of **$89.9 million** in 2021, driven by strategic pivot to COR588, a **53%** workforce reduction, and increased G&A expenses, while maintaining **$126.7 million** in cash to fund operations through 2024 - On January 25, 2022, the FDA placed a full clinical hold on the atuzaginstat (COR388) IND for Alzheimer's Disease, prompting a prioritization of the next-generation inhibitor, COR588[335](index=335&type=chunk) - In February 2022, the Board approved a cost reduction program to reduce headcount by approximately **53%**, with expected annualized savings of **$8.0 million to $8.5 million** in 2022[348](index=348&type=chunk)[390](index=390&type=chunk) Selected Financial Data (in millions) | | Year Ended December 31, 2021 | Year Ended December 31, 2020 | |---|---|---| | Research and development | $60.8 million | $61.3 million | | General and administrative | $29.5 million | $17.6 million | | **Loss from operations** | **($90.3 million)** | **($78.9 million)** | | **Net loss** | **($89.9 million)** | **($76.8 million)** | - As of December 31, 2021, the company had cash, cash equivalents, and investments of **$126.7 million** and believes these resources are sufficient to fund planned operations through **2024**[346](index=346&type=chunk)[347](index=347&type=chunk)[386](index=386&type=chunk) - In December 2021, the company entered into an Open Market Sales Agreement (ATM) to sell up to **$150.0 million** of common stock. Between January 1 and February 24, 2022, it sold **51,769 shares** for net proceeds of approximately **$608,000**[387](index=387&type=chunk)[388](index=388&type=chunk) [Results of Operations](index=72&type=section&id=Item%207.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations-Results%20of%20Operations) Cortexyme's results detail changes in R&D, G&A expenses, and interest income for the fiscal year - Research and development expenses decreased slightly by **$0.5 million** to **$60.8 million** in 2021. A **$16.5 million** decrease in atuzaginstat (COR388) costs was largely offset by an **$11.4 million** increase in personnel-related expenses (including stock-based compensation) and a **$3.0 million** increase in costs for the COR588 program[377](index=377&type=chunk)[378](index=378&type=chunk)[380](index=380&type=chunk) - General and administrative expenses increased by **$11.9 million (67.9%)** to **$29.5 million** in 2021, primarily due to a **$9.2 million** increase in personnel-related costs from higher headcount and stock-based compensation, and a **$1.2 million** increase in consulting and marketing expenses[382](index=382&type=chunk) - Interest income decreased by **$1.4 million (69.7%)** in 2021 due to lower average cash and investment balances and lower yields[384](index=384&type=chunk) [Liquidity and Capital Resources](index=74&type=section&id=Item%207.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations-Liquidity%20and%20Capital%20Resources) Cortexyme's liquidity section analyzes cash flow activities from operations, investing, and financing, and its overall financial position Cash Flow Summary (in thousands) | Cash Flow Activity (in thousands) | Year Ended Dec 31, 2021 | Year Ended Dec 31, 2020 | |---|---|---| | Net cash used in operating activities | $(62,932) | $(50,818) | | Net cash provided by (used in) investing activities | $58,952 | $(52,431) | | Net cash provided by financing activities | $6,808 | $118,876 | - Net cash used in operating activities increased to **$62.9 million** in 2021 from **$50.8 million** in 2020, primarily due to the higher net loss, partially offset by an increase in non-cash stock-based compensation[394](index=394&type=chunk) - Net cash provided by investing activities was **$59.0 million** in 2021, driven by **$98.0 million** in maturities of investments exceeding the **$38.8 million** in purchases[397](index=397&type=chunk) - Net cash provided by financing activities was **$6.8 million** in 2021, consisting of proceeds from stock option exercises. This is a significant decrease from 2020, which included **$117.6 million** from a private placement[399](index=399&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=76&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company's primary market risk is interest rate fluctuations on its investment portfolio, with foreign currency risk deemed immaterial - The primary market risk is interest rate risk on the company's investment portfolio of cash equivalents and marketable debt securities, which totaled **$126.7 million** at year-end 2021[405](index=405&type=chunk) - The company faces foreign exchange risk from transactions denominated in currencies other than the U.S. dollar but does not use forward exchange contracts to hedge this exposure[406](index=406&type=chunk) [Financial Statements and Supplementary Data](index=78&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) This section presents the audited consolidated financial statements for fiscal year 2021, including the auditor's report and detailed notes Consolidated Balance Sheet (in thousands) | Consolidated Balance Sheet (in thousands) | Dec 31, 2021 | Dec 31, 2020 | |---|---|---| | Cash, cash equivalents, and investments | $126,735 | $184,284 | | Total Assets | $133,228 | $189,466 | | Total Liabilities | $14,642 | $17,204 | | Total Stockholders' Equity | $118,586 | $172,262 | Consolidated Statement of Operations (in thousands) | Consolidated Statement of Operations (in thousands) | 2021 | 2020 | 2019 | |---|---|---|---| | Research and development | $60,795 | $61,307 | $30,214 | | General and administrative | $29,523 | $17,586 | $8,954 | | **Net Loss** | **$(89,945)** | **$(76,849)** | **$(36,980)** | | **Net Loss Per Share** | **$(3.03)** | **$(2.63)** | **$(1.94)** | - The independent auditor's report identified the accounting for prepaid and accrued clinical trial expenses as a critical audit matter due to the significant judgments and estimates involved in determining the progress and cost of clinical trials[415](index=415&type=chunk)[416](index=416&type=chunk) - As of December 31, 2021, the company had federal net operating loss carryforwards of approximately **$207.9 million** to offset future taxable income, though their use may be limited by ownership change provisions[527](index=527&type=chunk) [Changes in and Disagreements With Accountants on Accounting and Financial Disclosure](index=105&type=section&id=Item%209.%20Changes%20in%20and%20Disagreements%20With%20Accountants%20on%20Accounting%20and%20Financial%20Disclosure) The company reported no changes in or disagreements with its accountants on any matter of accounting principles or practices, or financial statement disclosure - None[537](index=537&type=chunk) [Controls and Procedures](index=105&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, 2021, with no material changes during Q4 - Management concluded that the company's disclosure controls and procedures were effective as of December 31, 2021[537](index=537&type=chunk) - Management's assessment concluded that the company's internal control over financial reporting was effective as of December 31, 2021[540](index=540&type=chunk) PART III [Directors, Executive Officers, Corporate Governance, Compensation, and Other Matters](index=106&type=section&id=Items%2010-14) Information for Items 10-14, covering directors, executive officers, corporate governance, compensation, and related matters, is incorporated by reference from the 2022 Proxy Statement - Information regarding Directors, Executive Officers, and Corporate Governance is incorporated by reference from the 2022 Proxy Statement[545](index=545&type=chunk) - Information regarding Executive Compensation is incorporated by reference from the 2022 Proxy Statement[547](index=547&type=chunk) - Information regarding Security Ownership and Principal Accountant Fees is incorporated by reference from the 2022 Proxy Statement[548](index=548&type=chunk)[550](index=550&type=chunk) PART IV [Exhibits and Financial Statement Schedules](index=107&type=section&id=Item%2015.%20Exhibits%20and%20Financial%20Statement%20Schedules) This section provides an index of consolidated financial statements and all exhibits filed or incorporated by reference, including corporate documents and material contracts - This section contains the index to the Consolidated Financial Statements and a list of all exhibits filed with the Form 10-K[553](index=553&type=chunk)[554](index=554&type=chunk) [Form 10-K Summary](index=107&type=section&id=Item%2016.%20Form%2010-K%20Summary) The company has not provided a summary for its Form 10-K - None[555](index=555&type=chunk)

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q (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, 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: 001-38890 Cortexyme, Inc. (Exact Name of Registrant as Specified in its Charter) Delaware 90-10 ...

[PART I. FINANCIAL INFORMATION](index=3&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) This section presents Cortexyme, Inc.'s unaudited condensed consolidated financial statements and management's discussion and analysis of financial condition and results of operations [Item 1. Financial Statements (Unaudited)](index=3&type=section&id=Item%201.%20Financial%20Statements%20(Unaudited)) This section presents Cortexyme, Inc.'s unaudited condensed consolidated financial statements, including balance sheets, statements of operations and comprehensive loss, statements of stockholders' equity, and statements of cash flows, along with detailed notes. The financial data reflects the company's ongoing net losses, increased operating expenses, and a decrease in total stockholders' equity, while also detailing its liquidity position and significant accounting policies [Condensed Consolidated Balance Sheets](index=3&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) This section provides a snapshot of the company's financial position, detailing assets, liabilities, and stockholders' equity at specific points in time Condensed Consolidated Balance Sheets (In thousands) | Metric | June 30, 2021 (In thousands) | December 31, 2020 (In thousands) | | :-------------------------------- | :------------ | :---------------- | | Total Assets | $161,390 | $189,466 | | Total Liabilities | $19,310 | $17,204 | | Total Stockholders' Equity | $142,080 | $172,262 | | Accumulated Deficit | $(191,494) | $(146,654) | - Total assets decreased by **$28,076k (14.8%)** from December 31, 2020, to June 30, 2021[10](index=10&type=chunk) - Total liabilities increased by **$2,106k (12.2%)** from December 31, 2020, to June 30, 2021[10](index=10&type=chunk) - Total stockholders' equity decreased by **$30,182k (17.5%)** from December 31, 2020, to June 30, 2021, primarily due to the accumulated deficit[10](index=10&type=chunk) [Condensed Consolidated Statements of Operations and Comprehensive Loss](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Loss) This section outlines the company's financial performance over specific periods, highlighting revenue, operating expenses, and net loss Condensed Consolidated Statements of Operations and Comprehensive Loss (In thousands, except per share amounts) | Metric | Three Months Ended June 30, 2021 (In thousands) | Three Months Ended June 30, 2020 (In thousands) | Six Months Ended June 30, 2021 (In thousands) | Six Months Ended June 30, 2020 (In thousands) | | :----------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Research and development | $14,719 | $14,086 | $31,543 | $28,467 | | General and administrative | $7,064 | $4,185 | $13,553 | $7,662 | | Total operating expenses | $21,783 | $18,271 | $45,096 | $36,129 | | Net loss | $(21,754) | $(17,612) | $(44,840) | $(34,788) | | Net loss per share - basic and diluted | $(0.74) | $(0.60) | $(1.52) | $(1.21) | - Net loss increased by **23.5%** for the three months ended June 30, 2021, and by **28.9%** for the six months ended June 30, 2021, compared to the respective prior year periods[13](index=13&type=chunk) - Total operating expenses increased by **19.2%** for the three months and **24.8%** for the six months ended June 30, 2021, primarily driven by higher general and administrative costs[13](index=13&type=chunk) [Condensed Consolidated Statements of Stockholders' Equity](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Stockholders'%20Equity) This section details changes in the company's equity accounts, including common stock, additional paid-in capital, and accumulated deficit Condensed Consolidated Statements of Stockholders' Equity (In thousands, except share amounts) | Metric | Balance Dec 31, 2020 (In thousands) | Balance June 30, 2021 (In thousands) | Change (6 months) (In thousands) | | :-------------------------------- | :------------------- | :-------------------- | :------------------ | | Common Stock (Shares) | 29,543,222 | 29,655,786 | +112,564 | | Common Stock (Amount) | $29 | $30 | +$1 | | Additional Paid in Capital | $318,574 | $333,427 | +$14,853 | | Accumulated Other Comprehensive Income | $313 | $117 | -$(196) | | Accumulated Deficit | $(146,654) | $(191,494) | -$(44,840) | | Total Stockholders' Equity | $172,262 | $142,080 | -$(30,182) | - Stock-based compensation contributed **$13,741k** to additional paid-in capital for the six months ended June 30, 2021[19](index=19&type=chunk) - The accumulated deficit increased by **$44,840k** for the six months ended June 30, 2021, reflecting the net loss for the period[19](index=19&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) This section presents the company's cash inflows and outflows from operating, investing, and financing activities over specific periods Condensed Consolidated Statements of Cash Flows (In thousands) | Cash Flow Activity | Six Months Ended June 30, 2021 (In thousands) | Six Months Ended June 30, 2020 (In thousands) | | :-------------------------------- | :------------------------------- | :------------------------------- | | Net cash used in operating activities | $(31,172) | $(25,171) | | Net cash provided by / (used in) investing activities | $37,267 | $(78,628) | | Net cash provided by financing activities | $1,113 | $118,741 | | Net increase in cash and cash equivalents | $7,208 | $14,942 | | Cash and cash equivalents at end of period | $74,049 | $66,156 | - Net cash used in operating activities increased by **$6,001k (23.8%)** for the six months ended June 30, 2021, compared to the prior year[21](index=21&type=chunk) - Investing activities shifted from using **$78,628k** in 2020 to providing **$37,267k** in 2021, primarily due to proceeds from maturities of investments[21](index=21&type=chunk) - Financing activities provided significantly less cash in 2021 (**$1,113k**) compared to 2020 (**$118,741k**), as the prior year included proceeds from a private placement offering[21](index=21&type=chunk) [Notes to Unaudited Condensed Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20Unaudited%20Condensed%20Consolidated%20Financial%20Statements) This section provides detailed explanations and additional information supporting the unaudited condensed consolidated financial statements [Note 1. Organization](index=8&type=section&id=Note%201.%20Organization) This note describes Cortexyme, Inc.'s business, its focus on Alzheimer's therapeutics, and its financial position and funding needs - Cortexyme, Inc. is a clinical stage biopharmaceutical company focused on developing therapeutics for Alzheimer's disease and other degenerative disorders, targeting an infectious pathogen (P. gingivalis) and its proteases (gingipains)[24](index=24&type=chunk) - The company completed a Private Investment in Public Equity (PIPE) financing in February 2020, selling **2,500,000 common shares** for aggregate gross proceeds of **$125.0 million** (net **$117.6 million**)[25](index=25&type=chunk)[101](index=101&type=chunk) - As of June 30, 2021, the company had an accumulated deficit of **$191.5 million** and cash, cash equivalents, and short-term investments of **$130.0 million**, which it believes will fund operations for at least 12 months[26](index=26&type=chunk)[99](index=99&type=chunk)[102](index=102&type=chunk) [Note 2. Summary of Significant Accounting Policies](index=8&type=section&id=Note%202.%20Summary%20of%20Significant%20Accounting%20Policies) This note outlines the key accounting principles and methods used in preparing the unaudited condensed consolidated financial statements - The unaudited condensed consolidated financial statements are prepared in accordance with GAAP for interim financial information and SEC instructions on Form 10-Q, including normal recurring adjustments[29](index=29&type=chunk) - The company's future operating results are subject to risks and uncertainties, including clinical trial outcomes, regulatory approval, market acceptance, competition, proprietary technology, and the impact of the COVID-19 pandemic[32](index=32&type=chunk) - No significant changes to accounting policies occurred during the six months ended June 30, 2021, compared to the Annual Report on Form 10-K[35](index=35&type=chunk) - The company is evaluating ASU 2016-13, 'Financial Instruments—Credit Losses', which is effective for fiscal years beginning after December 15, 2022, for smaller reporting companies[39](index=39&type=chunk) [Note 3. Fair Value Measurements](index=10&type=section&id=Note%203.%20Fair%20Value%20Measurements) This note details the fair value hierarchy and measurements applied to the company's financial assets and liabilities - The company measures and reports cash equivalents and investments at fair value, classifying money market funds as **Level 1** and other investments (Certificates of Deposit, Repurchase Agreements, Corporate notes, Government and agency notes, Municipal notes) as **Level 2**[41](index=41&type=chunk)[42](index=42&type=chunk) Fair Value Measurements of Financial Assets (In thousands) | Asset Type | June 30, 2021 (Total, In thousands) | December 31, 2020 (Total, In thousands) | | :------------------------ | :-------------------- | :------------------------ | | Money market funds | $47,049 | $15,661 | | Certificates of Deposit | $12,613 | $30,765 | | Repurchase Agreements | $21,000 | $15,000 | | Corporate notes | $57,749 | $75,426 | | Government and agency notes | $4,734 | $8,296 | | Municipal notes | $4,577 | $3,446 | | **Total** | **$147,722** | **$148,594** | - As of June 30, 2021, the company had total unrealized gains of **$141k** and unrealized losses of **$(24)k** on available-for-sale securities[44](index=44&type=chunk) [Note 4. Cash, Cash Equivalents and Investments](index=14&type=section&id=Note%204.%20Cash,%20Cash%20Equivalents%20and%20Investments) This note provides a breakdown of the company's cash, cash equivalents, and investment portfolio Cash, Cash Equivalents and Investments (In thousands) | Category | June 30, 2021 (In thousands) | December 31, 2020 (In thousands) | | :-------------------------- | :------------ | :---------------- | | Total cash and cash equivalents | $74,049 | $66,841 | | Total short-term investments | $55,901 | $66,979 | | Total long-term investments | $23,516 | $50,464 | | **Grand Total** | **$153,466** | **$184,284** | - Cash and cash equivalents increased by **$7,208k (10.8%)** from December 31, 2020, to June 30, 2021[48](index=48&type=chunk) - Long-term investments decreased significantly by **$26,948k (53.4%)** from December 31, 2020, to June 30, 2021[48](index=48&type=chunk) [Note 5. Balance Sheet Components](index=14&type=section&id=Note%205.%20Balance%20Sheet%20Components) This note offers detailed breakdowns of specific balance sheet accounts, including prepaid expenses and accrued liabilities Prepaid Expenses and Other Current Assets (In thousands) | Category | June 30, 2021 (In thousands) | December 31, 2020 (In thousands) | | :-------------------------------- | :------------ | :---------------- | | Prepaid expenses | $459 | $274 | | Prepaid insurance | $2,775 | $964 | | Prepaid research and development expenses | $2,221 | $2,110 | | Other current assets | $438 | $694 | | **Total** | **$5,893** | **$4,042** | Accrued Expenses and Other Current Liabilities (In thousands) | Category | June 30, 2021 (In thousands) | December 31, 2020 (In thousands) | | :-------------------------------- | :------------ | :---------------- | | Personnel expenses | $2,082 | $2,415 | | Professional fees | $172 | $141 | | Research and development expenses | $8,368 | $10,603 | | Other | $722 | $282 | | **Total** | **$11,344** | **$13,441** | - Prepaid expenses and other current assets increased by **$1,851k (45.8%)** from December 31, 2020, to June 30, 2021, primarily due to prepaid insurance[49](index=49&type=chunk) - Accrued expenses and other current liabilities decreased by **$2,097k (15.6%)** from December 31, 2020, to June 30, 2021, mainly due to a reduction in accrued research and development expenses[51](index=51&type=chunk) [Note 6. Leases](index=15&type=section&id=Note%206.%20Leases) This note describes the company's lease arrangements, including right-of-use assets and lease liabilities - In May 2021, the company extended its existing facility lease to July 15, 2022, and recognized an additional right-of-use asset and corresponding lease liability of **$1.2 million**[56](index=56&type=chunk) Lease Information (In thousands, except lease terms and discount rates) | Metric | June 30, 2021 (In thousands) | December 31, 2020 (In thousands) | | :-------------------------------- | :------------ | :---------------- | | Operating lease right of use asset, net | $1,496 | $674 | | Short-term operating lease liability | $699 | $238 | | Long-term operating lease liability | $773 | $208 | | Weighted average remaining lease term (Operating) | 2.1 years | 1.6 years | | Weighted average discount rate (Operating) | 1.88% | 2.10% | - Total future rent expense from all real estate operating leases is **$1,435k**, to be recognized over the remaining terms of **25 months** as of June 30, 2021[58](index=58&type=chunk) [Note 7. Stock-Based Compensation](index=17&type=section&id=Note%207.%20Stock-Based%20Compensation) This note details the company's stock-based compensation plans and the associated expenses recognized - The 2019 Equity Incentive Plan has **1,149,925 shares** available for future issuance as of June 30, 2021[67](index=67&type=chunk) Stock-Based Compensation Expense (In thousands) | Expense Category | Three Months Ended June 30, 2021 (In thousands) | Three Months Ended June 30, 2020 (In thousands) | Six Months Ended June 30, 2021 (In thousands) | Six Months Ended June 30, 2020 (In thousands) | | :-------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | General and administrative expense | $3,629 | $1,616 | $7,108 | $2,654 | | Research and development expense | $3,121 | $1,782 | $6,633 | $2,699 | | **Total stock-based compensation** | **$6,750** | **$3,398** | **$13,741** | **$5,353** | - Total stock-based compensation expense increased by **98.6%** for the three months and **156.7%** for the six months ended June 30, 2021, compared to the prior year periods[70](index=70&type=chunk) - As of June 30, 2021, total unamortized employee stock-based compensation was **$71.5 million**, expected to be recognized over **3.02 years**[68](index=68&type=chunk) [Note 8. Related Party Transactions](index=20&type=section&id=Note%208.%20Related%20Party%20Transactions) This note discloses transactions between the company and its related parties, including directors and affiliated entities - In February 2020, the company sold **30,000 shares** of common stock for **$1.5 million** to an entity affiliated with a member of its Board of Directors as part of a private placement[73](index=73&type=chunk) - For the six months ended June 30, 2021, the company incurred **$306,000** in expenses related to consulting agreements with LifeSci Advisors, LLC, where its COO and CFO has an investment in a sister entity[74](index=74&type=chunk) [Note 9. Income Taxes](index=21&type=section&id=Note%209.%20Income%20Taxes) This note explains the company's income tax position, including its history of losses and deferred tax assets - The company has a history of losses and expects to record a loss in 2021, resulting in no provision for income taxes due to available net operating loss carryforwards[76](index=76&type=chunk)[78](index=78&type=chunk) - A valuation allowance is provided for significant deferred tax assets as their realization is determined not likely to occur[78](index=78&type=chunk) - The CARES Act and CAA Act are concluded to have no material impact on the company's 2021 provision for income taxes[79](index=79&type=chunk) [Note 10. Net Loss Per Share](index=21&type=section&id=Note%2010.%20Net%20Loss%20Per%20Share) This note presents the calculation of basic and diluted net loss per share, including potentially dilutive securities Net Loss Per Share - Basic and Diluted | Period | 2021 | 2020 | | :-------------------------------- | :----- | :----- | | Three Months Ended June 30 | $(0.74) | $(0.60) | | Six Months Ended June 30 | $(1.52) | $(1.21) | - Potentially dilutive shares, including **4,978,919 stock options** and **675,000 performance stock options** as of June 30, 2021, were excluded from diluted net loss per share calculation due to their anti-dilutive effect[80](index=80&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=22&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on Cortexyme's financial condition and operational results. It highlights the company's focus as a clinical-stage biopharmaceutical entity, its lead drug candidate atuzaginstat for Alzheimer's disease with topline data expected in Q4 2021, and its pipeline for other degenerative and infectious diseases. The discussion covers the company's history of net losses, its current liquidity, and the need for future funding, alongside a detailed analysis of operating expenses and cash flows for the reported periods. It also addresses critical accounting policies and the impact of the COVID-19 pandemic [Overview](index=22&type=section&id=Overview) This section provides an executive summary of Cortexyme's business, drug development pipeline, and key operational updates - Cortexyme is a clinical stage biopharmaceutical company advancing **atuzaginstat (COR388)** in a pivotal Phase 2/3 GAIN trial for mild to moderate Alzheimer's patients, with topline data expected in **Q4 2021**[84](index=84&type=chunk)[85](index=85&type=chunk) - The company's therapeutic approach targets *Porphyromonas gingivalis* and its gingipain proteases, which are tied to neurodegeneration and chronic inflammation in Alzheimer's disease[84](index=84&type=chunk)[88](index=88&type=chunk) - Pipeline includes **COR588** (second-generation gingipain inhibitor, Phase 1 in Q3 2021 for periodontal disease), **COR803** (3CLpro inhibitor for coronavirus), and arginine gingipain inhibitors **COR788** and **COR822** (preclinical)[90](index=90&type=chunk)[92](index=92&type=chunk)[93](index=93&type=chunk) - The FDA placed a **partial clinical hold** on the open-label extension (OLE) phase of the GAIN trial due to hepatic adverse events, but the fully enrolled double-blind phase continues[95](index=95&type=chunk) - The COVID-19 pandemic has not resulted in significant hinderances to operations or material negative financial impacts, nor changes to GAIN trial analysis timelines to date[33](index=33&type=chunk)[97](index=97&type=chunk) [Financial Overview](index=24&type=section&id=Financial%20Overview) This section summarizes the company's financial performance, including net losses, liquidity, and future funding requirements - The company has incurred net losses since inception, with an accumulated deficit of **$191.5 million** as of June 30, 2021, and does not expect to be profitable in the foreseeable future[99](index=99&type=chunk) - Net loss for the three months ended June 30, 2021, was **$21.8 million**, and for the six months ended June 30, 2021, was **$44.8 million**[99](index=99&type=chunk) - As of June 30, 2021, cash, cash equivalents, and short-term investments totaled **$130.0 million**, which is believed to be sufficient to fund planned operations through **2023**[102](index=102&type=chunk)[103](index=103&type=chunk) - Substantial additional funding will be required to support continuing operations, expand the pipeline, and advance drug candidates through clinical development and commercialization[104](index=104&type=chunk)[105](index=105&type=chunk) [Critical Accounting Policies and Significant Judgments and Estimates](index=25&type=section&id=Critical%20Accounting%20Policies%20and%20Significant%20Judgments%20and%20Estimates) This section discusses the key accounting policies and estimates that significantly impact the company's financial statements - The most significant estimates in the financial statements relate to stock-based awards, accruals for research and development costs, useful lives of long-lived assets, incremental borrowing rate for leases, and income tax uncertainties[34](index=34&type=chunk)[107](index=107&type=chunk) - Accrued research and development expenditures and stock-based compensation are considered critical accounting policies[107](index=107&type=chunk)[108](index=108&type=chunk) - There have been no material changes in critical accounting policies during the six months ended June 30, 2021[108](index=108&type=chunk) [Components of Results of Operations](index=26&type=section&id=Components%20of%20Results%20of%20Operations) This section defines the primary components of the company's operating expenses, including research and development and general and administrative costs - Research and development (R&D) expenses include payroll, lab supplies, licenses, consulting, contract research, regulatory, preclinical/clinical expenses, and allocated facilities costs, expensed as incurred[109](index=109&type=chunk) - R&D expenses are expected to increase substantially in the coming years due to existing and additional clinical trials, regulatory approval efforts for atuzaginstat, and advancement of other drug candidates[111](index=111&type=chunk) - General and administrative (G&A) expenses consist primarily of personnel-related costs (including stock-based compensation), professional fees, and allocated facilities costs, and are anticipated to increase with business growth[117](index=117&type=chunk)[118](index=118&type=chunk) [Results of Operations](index=27&type=section&id=Results%20of%20Operations) This section provides a comparative analysis of the company's financial results for the reported periods [Comparison of the three months ended June 30, 2021 to the three months ended June 30, 2020](index=27&type=section&id=Comparison%20of%20the%20three%20months%20ended%20June%2030,%202021%20to%20the%20three%20months%20ended%20June%2030,%202020) This section analyzes the financial performance changes between the two three-month periods, focusing on key expense categories Results of Operations (Three Months Ended June 30, In thousands) | Metric | 2021 (In thousands) | 2020 (In thousands) | Change ($ In thousands) | Change (%) | | :-------------------------- | :----- | :----- | :--------- | :--------- | | Research and development | $14,719 | $14,086 | $633 | 4.5% | | General and administrative | $7,064 | $4,185 | $2,879 | 68.8% | | Loss from operations | $(21,783) | $(18,271) | $(3,512) | 19.2% | | Interest income | $160 | $659 | $(499) | (75.7)% | | Net loss | $(21,754) | $(17,612) | $(4,011) | 22.8% | - Research and development expenses increased by **$0.6 million (4.5%)**, driven by a **$2.1 million** increase in personnel-related expenses (including stock-based compensation) and **$0.3 million** in other R&D expenses, partially offset by a **$3.1 million** decrease in atuzaginstat costs[121](index=121&type=chunk)[122](index=122&type=chunk)[123](index=123&type=chunk)[124](index=124&type=chunk) - General and administrative expenses increased by **$2.9 million (68.8%)**, primarily due to a **$2.3 million** increase in employee headcount-related costs (including stock-based compensation), **$0.3 million** in consulting, and **$0.2 million** in insurance[126](index=126&type=chunk) [Comparison of the six months ended June 30, 2021 to the six months ended June 30, 2020](index=29&type=section&id=Comparison%20of%20the%20six%20months%20ended%20June%2030,%202021%20to%20the%20six%20months%20ended%20June%2030,%202020) This section analyzes the financial performance changes between the two six-month periods, focusing on key expense categories Results of Operations (Six Months Ended June 30, In thousands) | Metric | 2021 (In thousands) | 2020 (In thousands) | Change ($ In thousands) | Change (%) | | :-------------------------- | :----- | :----- | :--------- | :--------- | | Research and development | $31,543 | $28,467 | $3,076 | 10.8% | | General and administrative | $13,553 | $7,662 | $5,891 | 76.9% | | Loss from operations | $(45,096) | $(36,129) | $(8,967) | 24.8% | | Interest income | $387 | $1,341 | $(954) | (71.1)% | | Net loss | $(44,840) | $(34,788) | $(9,921) | 28.5% | - Research and development expenses increased by **$3.1 million (10.8%)**, driven by a **$5.7 million** increase in personnel-related expenses (including stock-based compensation) and **$2.3 million** in COR588 and other direct research costs, partially offset by a **$5.8 million** decrease in atuzaginstat development costs[130](index=130&type=chunk)[131](index=131&type=chunk)[132](index=132&type=chunk)[133](index=133&type=chunk) - General and administrative expenses increased by **$5.9 million (76.9%)**, primarily due to a **$5.3 million** increase in personnel costs (including stock-based compensation), **$0.4 million** in consulting, and **$0.2 million** in insurance[134](index=134&type=chunk) [Liquidity, Capital Resources and Plan of Operations](index=31&type=section&id=Liquidity,%20Capital%20Resources%20and%20Plan%20of%20Operations) This section assesses the company's ability to meet its short-term and long-term financial obligations and its future funding strategy - As of June 30, 2021, the company had an accumulated deficit of **$191.5 million** and **$153.5 million** in cash, cash equivalents, and investments[137](index=137&type=chunk) - Existing capital resources are believed to be sufficient to fund anticipated operations through at least **2023**[138](index=138&type=chunk)[143](index=143&type=chunk) - The company will require substantial additional capital to develop drug candidates and fund operations, potentially through equity, debt financings, or collaborative arrangements[140](index=140&type=chunk) Summary Statement of Cash Flows (Six Months Ended June 30, In thousands) | Activity | 2021 (In thousands) | 2020 (In thousands) | | :-------------------------- | :----- | :----- | | Operating activities | $(31,172) | $(25,171) | | Investing activities | $37,267 | $(78,628) | | Financing activities | $1,113 | $118,741 | | Net increase in cash and cash equivalents | $7,208 | $14,942 | [Contractual Obligations and Commitments](index=33&type=section&id=Contractual%20Obligations%20and%20Commitments) This section outlines the company's significant contractual obligations and future financial commitments - No material changes to contractual obligations and other commitments as of June 30, 2021, compared to the Annual Report on Form 10-K[150](index=150&type=chunk) - Primary contractual obligations consist of non-cancellable operating leases and other purchase obligations[150](index=150&type=chunk) - Accrued expenses for vendor services were approximately **$8.4 million**, with **$10.5 million** in cancellable future commitments as of June 30, 2021[151](index=151&type=chunk) [Off-Balance Sheet Arrangements](index=33&type=section&id=Off-Balance%20Sheet%20Arrangements) This section confirms the absence of any material off-balance sheet arrangements for the reporting periods - The company did not have any off-balance sheet arrangements during the periods presented[152](index=152&type=chunk) [Recent Accounting Pronouncements](index=33&type=section&id=Recent%20Accounting%20Pronouncements) This section refers to the notes for updates on new accounting standards relevant to the company - Refer to Note 2 of the unaudited condensed consolidated financial statements for a discussion of new accounting standards updates[153](index=153&type=chunk) [Available information](index=33&type=section&id=Available%20information) This section details where the company's public information and SEC filings can be accessed - The company's corporate website (www.cortexyme.com) serves as a routine channel for investor relations information, including news releases, presentations, and financial information[154](index=154&type=chunk) - SEC filings are posted on the company's website and are also available free of charge on the SEC's website (www.sec.gov)[154](index=154&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=33&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section discusses Cortexyme's exposure to market risks, primarily interest rate sensitivities and foreign currency exchange rate risk. The company's investment strategy focuses on capital preservation and income maximization through high-credit quality, short-term duration securities. While an immediate 100 basis point change in interest rates is not expected to materially impact its investment portfolio, the company acknowledges foreign currency risk from international clinical trials but has not utilized hedging instruments. Historically, inflation, interest rate changes, or exchange rate fluctuations have not significantly affected its operations - The company is exposed to interest rate risk from its **$153.5 million** portfolio of cash, cash equivalents, and marketable securities as of June 30, 2021[157](index=157&type=chunk) - An immediate **100 basis point change** in interest rates is not expected to have a material effect on the fair market value of the company's cash equivalents and marketable securities due to their short-term maturities and low-risk profile[157](index=157&type=chunk) - Foreign currency exchange rate risk exists due to international clinical trials (e.g., Australia), but the company has not used hedging instruments in the past or for the reported periods[158](index=158&type=chunk) - Inflation, interest rate changes, or exchange rate fluctuations did not have a significant impact on the company's results of operations for the three and six months ended June 30, 2021[159](index=159&type=chunk) [Item 4. Controls and Procedures](index=34&type=section&id=Item%204.%20Controls%20and%20Procedures) Cortexyme's management, including the Chief Executive Officer and Chief Operating Officer/Chief Financial Officer, evaluated the effectiveness of the company's disclosure controls and procedures as of June 30, 2021, and concluded they were effective. No material changes in internal control over financial reporting occurred during the quarter - Disclosure controls and procedures were evaluated by management (CEO and COO/CFO) and concluded to be **effective** as of June 30, 2021[161](index=161&type=chunk) - There have been no changes in internal control over financial reporting during the quarter ended June 30, 2021, that have materially affected, or are reasonably likely to materially affect, internal control over financial reporting[162](index=162&type=chunk) [PART II. OTHER INFORMATION](index=35&type=section&id=PART%20II.%20OTHER%20INFORMATION) This section provides additional information not covered in the financial statements, including legal proceedings, risk factors, and exhibits [Item 1. Legal Proceedings](index=35&type=section&id=Item%201.%20Legal%20Proceedings) Cortexyme, Inc. is not currently involved in any material legal proceedings - The company is not currently a party to any material legal proceedings[165](index=165&type=chunk) [Item 1A. Risk Factors](index=35&type=section&id=Item%201A.%20Risk%20Factors) This section details various risks and uncertainties that could materially and adversely affect Cortexyme's business, financial condition, and results of operations. Key risks include the company's early stage of development and lack of profitability, heavy reliance on the success of its lead drug candidate atuzaginstat, the novel and unproven nature of its therapeutic approach, the inherent challenges and uncertainties of clinical drug development (including potential adverse side effects and regulatory holds), the need for substantial additional funding, intense competition, manufacturing complexities, and regulatory compliance. Furthermore, risks related to intellectual property protection, product liability, international operations, and the ongoing impact of the COVID-19 pandemic are highlighted - Cortexyme is a clinical-stage biopharmaceutical company with a limited operating history, no approved drug candidates, no revenue from sales, and an accumulated deficit of **$191.5 million** as of June 30, 2021, with no expectation of profitability in the foreseeable future[169](index=169&type=chunk)[170](index=170&type=chunk) - The company is substantially dependent on the success of **atuzaginstat**, its only clinical-stage drug candidate, which requires significant additional clinical testing and regulatory approval, with no guarantee of success[178](index=178&type=chunk) - The company's novel therapeutic approach targeting *P. gingivalis* and gingipains for Alzheimer's disease is based on limited data and exposes it to unforeseen risks, as there is no current consensus on Alzheimer's causation or effective treatments[182](index=182&type=chunk) - Clinical drug development is lengthy, expensive, and uncertain; results from preclinical and early clinical trials are not always predictive of future outcomes, and adverse side effects (e.g., hepatic events leading to a **partial clinical hold** on the GAIN trial's OLE phase) could delay or preclude approval[183](index=183&type=chunk)[186](index=186&type=chunk)[187](index=187&type=chunk)[192](index=192&type=chunk) - Substantial additional funding will be required beyond existing capital (sufficient through **2023**) to finance operations, complete development, and commercialize drug candidates, with potential for dilution or operational delays if funding is not secured[173](index=173&type=chunk)[175](index=175&type=chunk)[177](index=177&type=chunk) - The company faces significant competition from major pharmaceutical and biotechnology companies with greater resources and expertise in the highly competitive degenerative disease field[216](index=216&type=chunk)[219](index=219&type=chunk) - Commercial success depends on obtaining and maintaining sufficient intellectual property protection (patents and trade secrets), which is uncertain due to complex legal and factual questions, potential challenges, and the high cost of prosecution and enforcement[285](index=285&type=chunk)[286](index=286&type=chunk)[297](index=297&type=chunk) - The COVID-19 pandemic presents ongoing risks, including potential delays in clinical trials, supply chain disruptions, and adverse impacts on financial markets and operations, despite current mitigation efforts[96](index=96&type=chunk)[97](index=97&type=chunk)[196](index=196&type=chunk)[236](index=236&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=87&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) Cortexyme, Inc. reported no unregistered sales of equity securities or issuer repurchases of equity securities during the period. The planned use of proceeds from its initial public offering (IPO) remains materially unchanged from what was previously disclosed - No unregistered sales of equity securities occurred[361](index=361&type=chunk) - No issuer repurchases of equity securities occurred[362](index=362&type=chunk) - There has been no material change in the planned use of proceeds from the IPO from that described in the final prospectus filed on May 9, 2019[363](index=363&type=chunk) [Item 3. Defaults Upon Senior Securities](index=87&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) This item is not applicable to Cortexyme, Inc. for the reporting period - Not Applicable[364](index=364&type=chunk) [Item 4. Mine Safety Disclosures](index=87&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to Cortexyme, Inc. for the reporting period - Not Applicable[365](index=365&type=chunk) [Item 5. Other Information](index=87&type=section&id=Item%205.%20Other%20Information) No other information is reported under this item for the reporting period - None[366](index=366&type=chunk) [Item 6. Exhibits](index=88&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed or furnished as part of the Quarterly Report on Form 10-Q. These include various change in control and severance agreements for key executives, a third amendment to a sub-sublease agreement, and certifications from the Chief Executive Officer and Chief Financial Officer - Exhibits include Change in Control and Severance Agreements for Casey C. Lynch, Caryn McDowell, Christopher Lowe, Leslie Holsinger, Michael Detke, and Stephen S. Dominy, M.D[369](index=369&type=chunk) - A Third Amendment to Sub-Sublease by and between Cortexyme, Inc. and Verily Life Sciences LLC, dated July 15, 2021, is filed[369](index=369&type=chunk) - Certifications of the Chief Executive Officer and Chief Financial Officer pursuant to Rules 13a-14(a), 15d-14(a), and 13a-14(b) of the Exchange Act and 18 U.S.C. Section 1350 are included[369](index=369&type=chunk) [Signatures](index=89&type=section&id=Signatures) This section provides the official signatures of the company's authorized officers, certifying the report's contents - The report was signed on August 6, 2021, by Casey C. Lynch, President, Chief Executive Officer and Chairman, and Christopher Lowe, Chief Operating Officer and Chief Financial Officer[372](index=372&type=chunk)

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 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: 001-38890 Cortexyme, Inc. (Exact Name of Registrant as Specified in its Charter) Delaware 90-102403 ...