Company Overview - Quince Therapeutics (NASDAQ:QNCX) is a biotech company focused on developing treatments for rare diseases, with a primary asset being EryDex, a drug delivery platform for Ataxia-Telangiectasia [2][3] - The company aims to expand its development pipeline through in-licensing and acquisition of clinical-stage assets, following a strategic shift after previous setbacks in Alzheimer's disease [3] EryDex and AIDE Technology - EryDex utilizes the AIDE technology platform, which allows for the encapsulation of drugs into a patient's red blood cells, enabling continuous delivery of dexamethasone sodium phosphate over a month without toxicity [2][4] - The treatment involves harvesting about 50 ml of the patient's blood, loading it with dexamethasone, and reinfusing it back into the patient [4] Ataxia-Telangiectasia - Ataxia-Telangiectasia is a genetic disorder with approximately 10,000 diagnosed patients in the U.S., U.K., and Big 4 EU countries, and no approved treatment currently exists [2][6] - The disease is characterized by poor coordination and dilated blood vessels, leading to severe disability and a median lifespan of 25-30 years [6] Clinical Trials and Results - Quince is conducting a pivotal Phase 3 trial (NEAT) for EryDex, targeting patients aged 6-9, with topline data expected in Q4 2025 [2][15] - Previous Phase 3 trials (ATTeST) showed statistically significant efficacy in the 6-9 year old subgroup, with a notable 4.8-point improvement on the mICARS rating scale compared to placebo [10][11] Market Potential - The peak commercial potential for EryDex in treating Ataxia-Telangiectasia is estimated to exceed $1 billion, assuming a treatment price similar to other orphan drugs [21][22] - The company anticipates a market entry as early as 2027, with potential for high market penetration due to the lack of competing treatments [22][28] Financials - As of June 2024, Quince had $59 million in cash, expected to fund operations into 2026, with a net loss of $27.7 million reported for the last quarter [24] - The company is currently trading below its cash value, indicating a potentially undervalued position in the market [23][27] Leadership - Quince's leadership team has extensive experience, with CEO Dirk Thye having a successful track record in founding and selling companies, as well as obtaining FDA approvals [20] - Insider buying activity has been noted, with significant purchases by leadership, indicating confidence in the company's future [20]

Product Development - Quince Therapeutics is focused on developing EryDex, a treatment for A-T, with the first patient enrolled in the Phase 3 NEAT clinical trial in Q2 2024, expecting topline results in Q4 2025 and potential NDA submission in 2026[129][142]. - EryDex has received Fast Track designation from the FDA, highlighting its potential to address a high unmet medical need for A-T patients[130][144]. - The Phase 3 NEAT trial aims to enroll about 86 patients aged 6-9 and 20 patients aged 10 and older, with a primary efficacy endpoint based on changes in RmICARS scores[143][144]. - The NEAT trial is conducted under an SPA agreement with the FDA, facilitating NDA submission upon positive results[144]. - EryDex's development is supported by insights gained from the prior ATTeST Phase 3 trial, which involved 176 patients and highlighted the importance of early treatment in A-T[146]. - EryDex is classified as a drug/device combination product by the FDA, with plans to submit a 505(b)(2) NDA in 2026, leveraging prior findings of safety and effectiveness for the active ingredient, DSP[145]. - Quince Therapeutics plans to initiate a proof-of-concept study for EryDex in Duchenne muscular dystrophy (DMD) in 2025, targeting corticosteroid intolerance in this population[138]. - The company intends to explore additional indications for EryDex in various rare diseases where chronic corticosteroid treatment is standard but limited by safety concerns[139]. Market Opportunity - The updated patient sizing project indicates approximately 4,600 diagnosed A-T patients in the U.S. as of July 2024, up from previous estimates of 3,400, with a global market opportunity exceeding $1 billion[131]. - The AIDE technology platform, which encapsulates drugs in patients' red blood cells, has been developed over 20 years with an investment of approximately $100 million, creating high barriers to entry for competitors[140]. Financial Performance - Research and development expenses increased by 207% to $4.2 million for the three months ended June 30, 2024, compared to $1.4 million for the same period in 2023[160]. - Total operating expenses rose by 405% to $28.2 million for the three months ended June 30, 2024, compared to $5.6 million for the same period in 2023[160]. - The net loss for the three months ended June 30, 2024, was $27.7 million, a 468% increase compared to a net loss of $4.9 million for the same period in 2023[160]. - Research and development expenses increased by $3.3 million, reaching $7.8 million for the six months ended June 30, 2024, compared to $4.6 million for the same period in 2023, representing a 71% increase[173]. - The net loss for the six months ended June 30, 2024, was $38.9 million, compared to a net loss of $17.1 million for the same period in 2023, marking a 127% increase in losses[185]. - The company recorded a non-cash goodwill impairment charge of $17.1 million for the six months ended June 30, 2024, due to deteriorating macro-economic conditions and a decline in market capitalization[179]. - General and administrative expenses rose by $1.6 million to $9.7 million for the six months ended June 30, 2024, primarily driven by increased personnel-related expenses[176]. - Cash used in operating activities was $17.1 million for the six months ended June 30, 2024, compared to $7.4 million for the same period in 2023, reflecting a significant increase in operational losses[195][196]. - The company had an accumulated deficit of $358.5 million as of June 30, 2024, reflecting ongoing financial challenges since inception[185]. Cash Flow and Capital Resources - Cash, cash equivalents, and short-term investments totaled $59.4 million as of June 30, 2024, down from $75.1 million at the end of 2023[188]. - The company expects existing capital resources to be sufficient to fund projected operating requirements for at least the next twelve months[188]. - The company anticipates needing to raise substantial additional capital following the acquisition of EryDel, influenced by various factors including clinical trial progress and regulatory approvals[191]. - The company’s existing cash, cash equivalents, and investments are expected to fund planned operations, including clinical activities related to EryDex, through 2026[193]. - The EIB Loan, assumed during the acquisition of EryDel, has a maximum borrowing capacity of €30 million, with only tranches A and B drawn as of June 30, 2024[186]. - Cash provided by investing activities was $3.9 million for the six months ended June 30, 2024, primarily from the maturities of short-term investments[197]. - Cash provided by financing activities was $0.2 million for the six months ended June 30, 2024, from the exercise of stock options[197]. - The net increase in cash and cash equivalents for the six months ended June 30, 2024, was $(12.9) million, compared to $(21.9) million for the same period in 2023[194]. - The company has approximately $29.6 million in cancellable future operating expense commitments based on existing contracts as of June 30, 2024[200]. Clinical Trial Results - EryDex high dose missed the primary efficacy endpoint with a p-value of 0.077, but showed statistical significance in the per protocol analysis with a p-value of 0.019[148]. - Patients with any treatment-emergent adverse events (TEAE) in the EryDex high dose group were 82%, compared to 73% in the placebo group[152].

Financial Performance - Quince reported a net loss of $27.7 million for Q2 2024, including a non-cash goodwill impairment charge of $17.1 million[6]. - The company reported a net loss of $27,729,000 for Q2 2024, compared to a net loss of $4,886,000 in Q2 2023, reflecting a 466% increase in losses[11]. - The net loss per share for Q2 2024 was $(0.64), compared to $(0.14) in Q2 2023[11]. - Total operating expenses for Q2 2024 were $28,192,000, a significant increase from $5,584,000 in Q2 2023, representing a 404% rise[11]. - Research and development expenses for Q2 2024 were $4,147,000, up from $1,353,000 in Q2 2023, indicating a 206% increase[11]. - General and administrative expenses for Q2 2024 totaled $4.7 million, including personnel-related costs and commercial planning[6]. - Total stock-based compensation for Q2 2024 was $1,223,000, slightly down from $1,321,000 in Q2 2023[11]. - Interest income for Q2 2024 was $823,000, compared to $805,000 in Q2 2023, a modest increase of 2%[11]. - Fair value adjustment for contingent consideration in Q2 2024 was $2,220,000, with no such adjustment in Q2 2023[11]. - The company incurred a fair value adjustment for long-term debt of $(415,000) in Q2 2024, with no such expense in Q2 2023[11]. Clinical Trials and Research - The company achieved a major milestone by enrolling the first patient in the Phase 3 NEAT clinical trial for Ataxia-Telangiectasia (A-T), with a target of approximately 86 patients aged 6 to 9 years[2]. - The NEAT trial is a randomized, double-blind, placebo-controlled study evaluating EryDex's neurological effects, with topline results expected in Q4 2025[3]. - The company plans to initiate a proof-of-concept study for Duchenne muscular dystrophy (DMD) in 2025, focusing on capital-efficient study approaches[5]. - Research and development expenses for Q2 2024 were $4.2 million, primarily related to the NEAT clinical trial[6]. Market Opportunity - The estimated number of diagnosed A-T patients in the U.S. has increased to approximately 4,600, representing a global market opportunity exceeding $1 billion[4]. Financial Position - Quince Therapeutics reported cash, cash equivalents, and short-term investments of $59.4 million for Q2 2024, expected to fund operations through 2026[6]. - Quince's total assets decreased to $134.8 million as of June 30, 2024, down from $167.9 million at the end of 2023[9]. Strategic Initiatives - The company is evaluating potential strategic partnerships to extend operational runway and support NDA approval for EryDex in the U.S.[5].

Product Development - Quince Therapeutics is focused on developing EryDex, a treatment for A-T, with a global market opportunity exceeding $1 billion [145]. - The Phase 3 NEAT clinical trial for EryDex is expected to begin enrollment in Q2 2024, targeting approximately 86 patients aged 6 to 9 and 20 patients aged 10 and older [161]. - EryDex has received orphan drug designation from the U.S. FDA and EU EC for the treatment of A-T [163]. - The previous ATTeST Phase 3 trial involved 176 patients and evaluated two doses of EryDex, with a primary efficacy endpoint based on neurological symptoms measured by mICARS [166]. - The company plans to submit a New Drug Application (NDA) to the FDA in 2026, contingent on positive NEAT trial results [162]. - EryDex is designed to improve the pharmacokinetics and biodistribution of DSP, a corticosteroid, to enhance safety and efficacy [156]. - The company aims to explore additional indications for EryDex in rare diseases where corticosteroid treatment is standard but limited by safety concerns [154]. - The NEAT trial will be conducted under a Special Protocol Assessment (SPA) agreement with the FDA, facilitating NDA submission post-trial [162]. Financial Performance - Research and development expenses increased by 14.6% to $3.7 million for the three months ended March 31, 2024, compared to $3.2 million for the same period in 2023 [185]. - EryDex development costs rose by $2.7 million due to Phase 3 NEAT clinical trial start-up costs, primarily from a $2.4 million increase in clinical trial costs [186]. - General and administrative expenses increased by 29.9% to $5.0 million for the three months ended March 31, 2024, from $3.8 million for the same period in 2023 [190]. - A fair value adjustment for contingent consideration resulted in a $2.5 million charge for the three months ended March 31, 2024, related to the EryDel acquisition [191]. - Interest income increased by 26.7% to $0.887 million for the three months ended March 31, 2024, compared to $0.700 million for the same period in 2023 [185]. - The net loss for the three months ended March 31, 2024, was $11.149 million, a decrease of 9.0% from a net loss of $12.254 million for the same period in 2023 [185]. - No intangible asset impairment charges were recognized during the three months ended March 31, 2024, compared to a $5.9 million charge in the same period of 2023 [193]. - The company anticipates a significant increase in research and development expenses as it prepares to begin enrollment for the Phase 3 NEAT clinical trial [177]. - Personnel-related costs decreased by $0.4 million during the three months ended March 31, 2024, compared to the same period in 2023 [188]. - As of March 31, 2024, the company had an accumulated deficit of $330.8 million and incurred a net loss of $11.1 million for the three months ended March 31, 2024 [198]. Funding and Cash Flow - The company has financed operations through the issuance of convertible promissory notes and redeemable convertible preferred stock, receiving net proceeds of approximately $303.9 million since inception [199]. - Cash, cash equivalents, and short-term investments were $67.8 million as of March 31, 2024, down from $75.1 million as of December 31, 2023 [200]. - The company believes existing capital resources will fund operations into at least 2026, excluding costs associated with in-licensing activities [201]. - Substantial additional funding will be needed to support ongoing operations and development strategies, with potential reliance on equity or debt financing [202]. - Net cash used in operating activities was $8.4 million for the three months ended March 31, 2024, primarily due to the net loss [209]. - Cash provided by investing activities was $8.9 million for the three months ended March 31, 2024, mainly from maturities of short-term investments [211]. - Cash provided by financing activities was $0.2 million for the three months ended March 31, 2024, from the exercise of stock options [212]. - The fair value of long-term contingent consideration related to the EryDel acquisition is $60.3 million, with a short-term portion of $4.7 million as of March 31, 2024 [214]. - The company has approximately $14.3 million in cancellable future operating expense commitments based on existing contracts as of March 31, 2024 [214].

[PART I](index=15&type=section&id=PART%20I) This section provides an overview of the company's business, strategic direction, associated risks, corporate governance, and operational details [Item 1. Business.](index=15&type=section&id=Item%201.%20Business.) Quince Therapeutics pivoted to rare diseases via EryDel acquisition, advancing AIDE platform and lead Phase 3 asset EryDex for A-T - Quince Therapeutics, Inc. (formerly Cortexyme, Inc.) completed the acquisition of **EryDel** on **October 20, 2023**, shifting its strategic focus to late-stage biotechnology for rare diseases, utilizing EryDel's proprietary **AIDE technology platform** and lead Phase 3 asset, **EryDex**[29](index=29&type=chunk)[32](index=32&type=chunk)[33](index=33&type=chunk) - The **AIDE technology platform** is an innovative drug/device combination designed to encapsulate drugs into a patient's own red blood cells, offering potential benefits such as better tolerability, enhanced tissue distribution, reduced immunogenicity, and prolonged circulating half-life[34](index=34&type=chunk)[40](index=40&type=chunk)[45](index=45&type=chunk) - **EryDex**, the lead asset, encapsulates **Dexamethasone Sodium Phosphate (DSP)** in red blood cells to treat **Ataxia-Telangiectasia (A-T)**, a rare neurodegenerative disease with no approved treatments, representing a potential **$1+ billion** peak commercial opportunity[37](index=37&type=chunk)[49](index=49&type=chunk)[52](index=52&type=chunk) - The company plans to initiate enrollment for the **Phase 3 NEAT clinical trial** of EryDex in A-T in **Q2 2024**, with top-line results anticipated in **H2 2025**, and aims for a U.S. **NDA submission in 2026**, contingent on positive study results[42](index=42&type=chunk)[66](index=66&type=chunk)[67](index=67&type=chunk) - As of **December 31, 2023**, Quince had **$75.1 million** in cash, cash equivalents, and investments, providing capital into **2026** to fund the Phase 3 NEAT clinical trial and prepare for potential NDA submission[36](index=36&type=chunk)[485](index=485&type=chunk) - Key events in **Fiscal Year 2023** included the sale of the legacy small molecule protease inhibitor portfolio, a workforce reduction of approximately **47%** to align with the new corporate strategy, and the acquisition of **EryDel**[43](index=43&type=chunk) [Overview](index=15&type=section&id=Overview) [Strategy](index=15&type=section&id=Strategy) [Fiscal Year 2023 Key Events](index=17&type=section&id=Fiscal%20Year%202023%20Key%20Events) [Proprietary AIDE Technology Platform](index=17&type=section&id=Proprietary%20AIDE%20Technology%20Platform) [Phase 3 Lead Asset – EryDex for the Potential Treatment of A-T](index=21&type=section&id=Phase%203%20Lead%20Asset%20%E2%80%93%20EryDex%20for%20the%20Potential%20Treatment%20of%20A-T) [Prior ATTeST Phase 3 Clinical Trial Results in Patients with A-T](index=23&type=section&id=Prior%20ATTeST%20Phase%203%20Clinical%20Trial%20Results%20in%20Patients%20with%20A-T) [Pivotal Phase 3 NEAT Clinical Trial of EryDex in Patients with A-T](index=25&type=section&id=Pivotal%20Phase%203%20NEAT%20Clinical%20Trial%20of%20EryDex%20in%20Patients%20with%20A-T) [Regulatory Interactions](index=25&type=section&id=Regulatory%20Interactions) [Manufacturing](index=27&type=section&id=Manufacturing) [Commercialization Plan](index=27&type=section&id=Commercialization%20Plan) [Competition](index=27&type=section&id=Competition) [Intellectual Property](index=28&type=section&id=Intellectual%20Property) [Regulatory Matters](index=32&type=section&id=Regulatory%20Matters) [U.S. Drug Development](index=32&type=section&id=U.S.%20Drug%20Development) [EU Drug Development](index=43&type=section&id=EU%20Drug%20Development) [Combination Products](index=51&type=section&id=Combination%20Products) [Pharmaceutical Coverage, Pricing and Reimbursement](index=53&type=section&id=Pharmaceutical%20Coverage%2C%20Pricing%20and%20Reimbursement) [Healthcare Law and Regulation](index=55&type=section&id=Healthcare%20Law%20and%20Regulation) [Healthcare Reform](index=57&type=section&id=Healthcare%20Reform) [Employees and Human Capital](index=59&type=section&id=Employees%20and%20Human%20Capital) [Corporate Information](index=59&type=section&id=Corporate%20Information) [Item 1A. Risk Factors.](index=61&type=section&id=Item%201A.%20Risk%20Factors.) The company faces significant risks in EryDex development, integration, funding, regulatory compliance, and intellectual property protection - The success of the **EryDel Acquisition** and the realization of expected operational efficiencies and benefits are uncertain, with potential challenges in integration, retaining key employees, and managing increased costs[194](index=194&type=chunk)[195](index=195&type=chunk) - The company is substantially dependent on the success of its lead drug candidate, **EryDex**, for **A-T**. The previous **Phase 3 ATTeST trial** failed its primary endpoint, and there is no guarantee the upcoming **NEAT study** will be successful or lead to NDA approval[196](index=196&type=chunk)[197](index=197&type=chunk)[201](index=201&type=chunk) - The company has never generated revenue from sales, has incurred net losses since inception (**$31.4 million in 2023**, **$51.7 million in 2022**), and expects to continue incurring losses, requiring substantial additional funding[198](index=198&type=chunk)[200](index=200&type=chunk)[230](index=230&type=chunk) - Milestone payments of up to **$485.0 million** to EryDel shareholders and obligations under the EIB Facility could impose substantial additional costs and adversely affect EryDex's profitability if approved[204](index=204&type=chunk)[205](index=205&type=chunk) - Clinical drug development is lengthy, expensive, and uncertain; preclinical and early clinical trial results are not always predictive of future outcomes, and drug candidates may not achieve favorable results or receive marketing approval[213](index=213&type=chunk)[214](index=214&type=chunk) - The company's ability to obtain and maintain sufficient **intellectual property protection** for its drug candidates and technology is critical, as competitors could develop similar products, and patent challenges are costly and uncertain[354](index=354&type=chunk)[355](index=355&type=chunk)[356](index=356&type=chunk) - The company is subject to extensive government regulations (**FDA**, **EMA**) for drug development, manufacturing, and marketing. Non-compliance or changes in regulations could lead to delays, penalties, or inability to commercialize products[88](index=88&type=chunk)[90](index=90&type=chunk)[342](index=342&type=chunk) - Healthcare reforms, including the **PPACA** and **IRA**, aim to contain costs and may negatively impact drug pricing, coverage, and reimbursement, potentially limiting revenue and profitability for approved products[178](index=178&type=chunk)[180](index=180&type=chunk)[182](index=182&type=chunk) [Risks Relating to Our Business](index=61&type=section&id=Risks%20Relating%20to%20Our%20Business) [Risks Related to the Development of Our Drug Candidates](index=65&type=section&id=Risks%20Related%20to%20the%20Development%20of%20Our%20Drug%20Candidates) [Risks Relating to Our Financial Position](index=71&type=section&id=Risks%20Relating%20to%20Our%20Financial%20Position) [Risks Relating to Regulatory Review and Approval of Our Drug Candidates and Other Legal Compliance Matters](index=77&type=section&id=Risks%20Relating%20to%20Regulatory%20Review%20and%20Approval%20of%20Our%20Drug%20Candidates%20and%20Other%20Legal%20Compliance%20Matters) [Risks Relating to Our Intellectual Property](index=117&type=section&id=Risks%20Relating%20to%20Our%20Intellectual%20Property) [General Risk Factors](index=141&type=section&id=General%20Risk%20Factors) [Item 1B. Unresolved Staff Comments.](index=149&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments.) The company has no unresolved staff comments from the SEC - There are no unresolved staff comments[458](index=458&type=chunk) [Item 1C. Cybersecurity.](index=151&type=section&id=Item%201C.%20Cybersecurity.) Quince Therapeutics maintains a structured cybersecurity risk management program, overseen by the Audit Committee, integrating threat identification and mitigation - The board of directors' **Audit Committee** oversees the company's cybersecurity risk management processes, including oversight and mitigation of risks from cybersecurity threats[459](index=459&type=chunk)[466](index=466&type=chunk) - The company implements various information security processes, including manual and automated tools, threat reports, systems monitoring, personnel training, cybersecurity insurance, data encryption, and access controls, to identify, assess, and manage material cybersecurity risks[460](index=460&type=chunk)[461](index=461&type=chunk)[462](index=462&type=chunk) - Cybersecurity risk management is **integrated** into the company's overall risk management processes, with the IT Department and senior management prioritizing and mitigating threats[463](index=463&type=chunk)[467](index=467&type=chunk) - The company utilizes **third-party service providers** for cybersecurity assistance and employs a vendor management strategy to address risks associated with these providers[464](index=464&type=chunk) [Cybersecurity Risk Management and Strategy](index=151&type=section&id=Cybersecurity%20Risk%20Management%20and%20Strategy) [Governance](index=151&type=section&id=Governance) [Item 2. Properties.](index=153&type=section&id=Item%202.%20Properties.) Quince Therapeutics operates headquarters in South San Francisco, a manufacturing facility in Medolla, Italy, and an office in Bresso, Italy - The company's corporate headquarters are in **South San Francisco, California**, with a lease expiring in **November 2024**[469](index=469&type=chunk) - Manufacturing operations are located in **Medolla, Italy**, under a lease agreement expiring in **August 2028**[469](index=469&type=chunk) - An additional office space is leased in **Bresso, Italy**, with a lease agreement extending until **January 2036**[469](index=469&type=chunk) [Item 3. Legal Proceedings.](index=153&type=section&id=Item%203.%20Legal%20Proceedings.) The company is not currently involved in material legal proceedings, but future litigation could adversely impact its business and reputation - The company is **not currently a party** to any litigation or legal proceedings that are likely to have a material adverse effect on its business[470](index=470&type=chunk) - Litigation, regardless of outcome, can adversely impact the company due to defense and settlement costs, diversion of management resources, negative publicity, and reputational harm[470](index=470&type=chunk) [Item 4. Mine Safety Disclosures.](index=153&type=section&id=Item%204.%20Mine%20Safety%20Disclosures.) This item is not applicable to the company [PART II](index=154&type=section&id=PART%20II) This section details the company's common equity market, dividend policy, financial condition, results of operations, and market risk disclosures [Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.](index=154&type=section&id=Item%205.%20Market%20for%20Registrant%27s%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities.) Quince Therapeutics' common stock trades on Nasdaq under 'QNCX', with 50 holders of record, and no cash dividends are declared or planned - The company's common stock is listed on the **Nasdaq Stock Market LLC** under the trading symbol "**QNCX**" since **August 1, 2022**, previously "**CRTX**" since **May 9, 2019**[3](index=3&type=chunk)[474](index=474&type=chunk) - As of **March 25, 2024**, there were **50 holders** of record of the company's common stock[5](index=5&type=chunk)[475](index=475&type=chunk) - The company has **never declared or paid any cash dividends** on its common stock and does not intend to in the foreseeable future, planning to retain all future earnings for business operations and general corporate purposes. The EIB Facility also prohibits dividend payments[442](index=442&type=chunk)[476](index=476&type=chunk) [Market Information](index=154&type=section&id=Market%20Information) [Stockholders](index=154&type=section&id=Stockholders) [Dividend Policy](index=154&type=section&id=Dividend%20Policy) [Sales of Unregistered Securities](index=154&type=section&id=Sales%20of%20Unregistered%20Securities) [Issuer Purchases of Equity Securities](index=154&type=section&id=Issuer%20Purchases%20of%20Equity%20Securities) [Item 6. Reserved.](index=154&type=section&id=Item%206.%20Reserved.) This item is reserved and contains no information [Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations.](index=155&type=section&id=Item%207.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations.) Quince Therapeutics, now a rare disease biotech, reported a **$31.4 million net loss in 2023**, with **$75.1 million cash** to fund operations into **2026** - Quince Therapeutics is now a late-stage biotechnology company focused on rare diseases, leveraging its **AIDE technology platform** and lead asset **EryDex** for **Ataxia-Telangiectasia (A-T)**[479](index=479&type=chunk)[480](index=480&type=chunk)[481](index=481&type=chunk) - The company completed the acquisition of **EryDel** in **October 2023**, issuing **6,525,315 shares** of common stock and potentially up to **$485.0 million** in contingent cash payments based on development, NDA acceptance, approval, and sales milestones[484](index=484&type=chunk) Net Loss and Cash Position | Metric | 2023 (in millions) | 2022 (in millions) | Change (YoY) | | :-------------------------------- | :------------------ | :------------------ | :------------- | | Net Loss | $(31.4) | $(51.7) | $(20.3) decrease | | Accumulated Deficit (as of Dec 31) | $(319.6) | $(288.3) | $(31.3) increase | | Cash, Cash Equivalents & Investments (as of Dec 31) | $75.1 | $90.2 | $(15.1) decrease | - The company expects its existing capital resources of **$75.1 million** to fund planned operations, including the Phase 3 NEAT clinical trial for EryDex, into **2026**[485](index=485&type=chunk)[491](index=491&type=chunk)[552](index=552&type=chunk) Operating Expenses (in thousands) | Expense Category | 2023 | 2022 | Change ($) | Change (%) | | :----------------------------------- | :----- | :----- | :--------- | :--------- | | Research and development | $9,447 | $25,178 | $(15,731) | (62.5)% | | General and administrative | $17,695 | $26,012 | $(8,317) | (32.0)% | | Goodwill impairment charge | $0 | $825 | $(825) | (100.0)% | | Intangible asset impairment charge | $5,900 | $0 | $5,900 | 100.0% | | Fair value adjustment for contingent consideration | $1,578 | $0 | $1,578 | 100.0% | | **Total operating expenses** | **$34,620** | **$52,015** | **$(17,395)** | **(33.4)%** | - Research and development expenses decreased by **$15.7 million (62.5%)** in **2023**, primarily due to the completion of COR588 trials, out-licensing of legacy assets (COR388, COR588, NOV004), and reduced personnel costs, despite increased EryDex development costs[529](index=529&type=chunk)[530](index=530&type=chunk)[532](index=532&type=chunk)[533](index=533&type=chunk)[535](index=535&type=chunk) - General and administrative expenses decreased by **$8.3 million (32.0%)** in **2023**, mainly due to reduced personnel expenses (including stock-based compensation and headcount reduction) and lower corporate insurance, partially offset by increased business development consulting for the EryDel acquisition[537](index=537&type=chunk) Cash Flows Summary (in thousands) | Activity | 2023 | 2022 | | :-------------------------- | :------- | :------- | | Operating activities | $(18,292) | $(44,038) | | Investing activities | $(5,758) | $18,002 | | Financing activities | $143 | $707 | | Effect of exchange rate changes | $80 | $184 | | **Net decrease in cash** | **$(23,827)** | **$(25,145)** | [Overview](index=155&type=section&id=Overview) [2023 Events](index=155&type=section&id=2023%20Events) [Financial Overview](index=157&type=section&id=Financial%20Overview) [Critical Accounting Policies, Significant Judgments and Use of Estimates](index=159&type=section&id=Critical%20Accounting%20Policies%2C%20Significant%20Judgments%20and%20Use%20of%20Estimates) [Research and Development Expenses](index=159&type=section&id=Research%20and%20Development%20Expenses) [Stock-Based Compensation Expense](index=161&type=section&id=Stock-Based%20Compensation%20Expense) [Income Taxes](index=161&type=section&id=Income%20Taxes) [Business Combination](index=163&type=section&id=Business%20Combination) [Goodwill](index=163&type=section&id=Goodwill) [Identifiable Intangible Assets](index=163&type=section&id=Identifiable%20Intangible%20Assets) [Impairment of Intangible Assets](index=165&type=section&id=Impairment%20of%20Intangible%20Assets) [Contingent Consideration](index=165&type=section&id=Contingent%20Consideration) [Long-term Debt](index=165&type=section&id=Long-term%20Debt) [Components of Operating Results](index=165&type=section&id=Components%20of%20Operating%20Results) [Research and Development Expenses](index=165&type=section&id=Research%20and%20Development%20Expenses) [General and Administrative Expenses](index=167&type=section&id=General%20and%20Administrative%20Expenses) [Interest Income](index=167&type=section&id=Interest%20Income) [Other Expense, net](index=167&type=section&id=Other%20Expense%2C%20net) [Results of Operations](index=167&type=section&id=Results%20of%20Operations) [Research and Development Expenses](index=169&type=section&id=Research%20and%20Development%20Expenses) [General and Administrative Expenses](index=170&type=section&id=General%20and%20Administrative%20Expenses) [Goodwill Impairment Charge](index=170&type=section&id=Goodwill%20Impairment%20Charge) [Intangible Asset Impairment Charge](index=170&type=section&id=Intangible%20Asset%20Impairment%20Charge) [Fair Value Adjustment for Contingent Consideration](index=170&type=section&id=Fair%20Value%20Adjustment%20for%20Contingent%20Consideration) [Fair Value Adjustment for Long-term Debt](index=170&type=section&id=Fair%20Value%20Adjustment%20for%20Long-term%20Debt) [Interest Income](index=170&type=section&id=Interest%20Income) [Other Expense](index=170&type=section&id=Other%20Expense) [Income Tax](index=170&type=section&id=Income%20Tax) [Liquidity, Capital Resources and Plan of Operations](index=172&type=section&id=Liquidity%2C%20Capital%20Resources%20and%20Plan%20of%20Operations) [Capital Resources](index=172&type=section&id=Capital%20Resources) [Summary Statement of Cash Flows](index=174&type=section&id=Summary%20Statement%20of%20Cash%20Flows) [Operating Activities](index=174&type=section&id=Operating%20Activities) [Investing Activities](index=174&type=section&id=Investing%20Activities) [Financing Activities](index=174&type=section&id=Financing%20Activities) [Contractual Obligations and Commitments](index=176&type=section&id=Contractual%20Obligations%20and%20Commitments) [Recent Accounting Pronouncements](index=176&type=section&id=Recent%20Accounting%20Pronouncements) [Item 7A. Quantitative and Qualitative Disclosures About Market Risk.](index=176&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk.) As a smaller reporting company, Quince Therapeutics is not required to provide quantitative and qualitative disclosures about market risk - The company is a smaller reporting company and is not required to provide quantitative and qualitative disclosures about market risk[564](index=564&type=chunk) [Item 8. Financial Statements and Supplementary Data.](index=177&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data.) This section presents audited consolidated financial statements for 2023 and 2022, including balance sheets, income statements, cash flows, and notes, with auditor's opinion - The independent auditor, BDO USA, P.C., issued an **unqualified opinion** on the consolidated financial statements for the years ended **December 31, 2023 and 2022**, stating they present fairly the financial position and results of operations in conformity with **GAAP**[569](index=569&type=chunk) - A critical audit matter identified was the valuation of **contingent consideration** and **intangible assets** related to **In-process Research and Development (IPR&D)** from the **EryDel acquisition**, due to significant management judgment and subjectivity in determining fair values, probability rates, discount rates, and revenue projections[574](index=574&type=chunk)[575](index=575&type=chunk) Consolidated Balance Sheet Highlights (in thousands) | Metric | December 31, 2023 | December 31, 2022 | | :-------------------------------- | :------------------ | :------------------ | | Total Assets | $167,900 | $103,910 | | Total Liabilities | $82,816 | $3,317 | | Total Stockholders' Equity | $85,084 | $100,593 | | Cash and cash equivalents | $20,752 | $44,579 | | Short-term investments | $54,307 | $45,602 | | Goodwill | $17,625 | $0 | | Intangible asset | $63,672 | $5,900 | | Long-term debt | $13,429 | $0 | | Long-term contingent consideration | $53,603 | $0 | Consolidated Statements of Operations and Comprehensive Loss Highlights (in thousands) | Metric | Year Ended Dec 31, 2023 | Year Ended Dec 31, 2022 | | :--------------------------------------- | :---------------------- | :---------------------- | | Research and development expenses | $9,447 | $25,178 | | General and administrative expenses | $17,695 | $26,012 | | Intangible asset impairment charge | $5,900 | $0 | | Fair value adjustment for contingent consideration | $1,578 | $0 | | Loss from operations | $(34,620) | $(52,015) | | Interest income | $3,478 | $1,068 | | Net loss | $(31,385) | $(51,660) | | Net loss per share - basic and diluted | $(0.84) | $(1.54) | Consolidated Statements of Cash Flows Highlights (in thousands) | Activity | Year Ended Dec 31, 2023 | Year Ended Dec 31, 2022 | | :-------------------------------- | :---------------------- | :---------------------- | | Net cash used in operating activities | $(18,292) | $(44,038) | | Net cash used in investing activities | $(5,758) | $18,002 | | Net cash provided by financing activities | $143 | $707 | | Net decrease in cash and cash equivalents | $(23,827) | $(25,145) | - The EryDel acquisition on **October 20, 2023**, involved a total consideration of approximately **$66.9 million**, including **$7.16 million** in common stock and **$56.1 million** in contingent consideration, leading to the recognition of **$61.1 million** in intangible assets (IPR&D) and **$16.9 million** in goodwill[744](index=744&type=chunk)[745](index=745&type=chunk)[746](index=746&type=chunk)[749](index=749&type=chunk)[750](index=750&type=chunk)[752](index=752&type=chunk) [Report of Independent Registered Public Accounting Firm](index=178&type=section&id=Report%20of%20Independent%20Registered%20Public%20Accounting%20Firm) [Consolidated Balance Sheets](index=181&type=section&id=Consolidated%20Balance%20Sheets) [Consolidated Statements of Operations and Comprehensive Loss](index=182&type=section&id=Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Loss) [Consolidated Statements of Stockholders' Equity](index=183&type=section&id=Consolidated%20Statements%20of%20Stockholders%27%20Equity) [Consolidated Statements of Cash Flows](index=184&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) [Notes to Consolidated Financial Statements](index=186&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) [Note 1. Organization](index=186&type=section&id=Note%201.%20Organization) [Note 2. Summary of Significant Accounting Policies](index=188&type=section&id=Note%202.%20Summary%20of%20Significant%20Accounting%20Policies) [Note 3. Fair Value Measurements](index=200&type=section&id=Note%203.%20Fair%20Value%20Measurements) [Note 4: Cash, Cash Equivalents and Investments](index=203&type=section&id=Note%204%3A%20Cash%2C%20Cash%20Equivalents%20and%20Investments) [Note 5: Balance Sheet Components](index=207&type=section&id=Note%205%3A%20Balance%20Sheet%20Components) [Note 6. Leases](index=211&type=section&id=Note%206.%20Leases) [Note 7. Long-term Debt](index=215&type=section&id=Note%207.%20Long-term%20Debt) [Note 8. Commitments and Contingencies](index=217&type=section&id=Note%208.%20Commitments%20and%20Contingencies) [Note 9. Equity Incentive Plans](index=217&type=section&id=Note%209.%20Equity%20Incentive%20Plans) [Note 10. Common Stock](index=226&type=section&id=Note%2010.%20Common%20Stock) [Note 11. Related Party Transactions](index=227&type=section&id=Note%2011.%20Related%20Party%20Transactions) [Note 12. Income taxes](index=227&type=section&id=Note%2012.%20Income%20taxes) [Note 13. Net Loss per Share](index=231&type=section&id=Note%2013.%20Net%20Loss%20per%20Share) [Note 14. Employee Benefit Plan](index=231&type=section&id=Note%2014.%20Employee%20Benefit%20Plan) [Note 15. Business Combination](index=231&type=section&id=Note%2015.%20Business%20Combination) [Note 16. Intangible Assets](index=237&type=section&id=Note%2016.%20Intangible%20Assets) [Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure](index=240&type=section&id=Item%209.%20Changes%20in%20and%20Disagreements%20With%20Accountants%20on%20Accounting%20and%20Financial%20Disclosure) There have been no changes in or disagreements with accountants on accounting and financial disclosure for the company - There are no changes in or disagreements with accountants on accounting and financial disclosure[771](index=771&type=chunk) [Item 9A. Controls and Procedures](index=240&type=section&id=Item%209A.%20Controls%20and%20Procedures) Quince Therapeutics' management evaluated disclosure controls and internal control over financial reporting as effective, excluding the EryDel business from the 2023 assessment - As of **December 31, 2023**, the company's disclosure controls and procedures were evaluated as **effective**, designed to provide reasonable assurance for timely and accurate information disclosure[771](index=771&type=chunk) - Management assessed the effectiveness of internal control over financial reporting as of **December 31, 2023**, and concluded it was **effective**, using the **COSO framework**[773](index=773&type=chunk)[774](index=774&type=chunk) - The acquired **EryDel business** (representing approximately **$91.9 million** of total assets and **$4.0 million** of total operating loss) was excluded from the **2023 assessment** of internal control over financial reporting due to ongoing integration, as permitted by SEC Staff guidance[774](index=774&type=chunk) - There have been **no material changes** in internal control over financial reporting during the fourth quarter ended **December 31, 2023**[776](index=776&type=chunk) [Evaluation of Disclosure Controls and Procedures](index=240&type=section&id=Evaluation%20of%20Disclosure%20Controls%20and%20Procedures) [Management's Report on Internal Control over Financial Reporting](index=240&type=section&id=Management%27s%20Report%20on%20Internal%20Control%20over%20Financial%20Reporting) [Changes in Internal Control over Financial Reporting](index=240&type=section&id=Changes%20in%20Internal%20Control%20over%20Financial%20Reporting) [Item 9B. Other Information](index=242&type=section&id=Item%209B.%20Other%20Information) This item reports that there is no other information required to be disclosed - No other information is required to be disclosed under this item[777](index=777&type=chunk) [Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections](index=242&type=section&id=Item%209C.%20Disclosure%20Regarding%20Foreign%20Jurisdictions%20that%20Prevent%20Inspections) This item is not applicable to the company, indicating no foreign jurisdictions prevent inspections of its operations - This item is not applicable[777](index=777&type=chunk) [PART III](index=243&type=section&id=PART%20III) This section provides information on the company's directors, executive officers, corporate governance, executive compensation, security ownership, related transactions, and principal accountant fees [Item 10. Directors, Executive Officers and Corporate Governance](index=243&type=section&id=Item%2010.%20Directors%2C%20Executive%20Officers%20and%20Corporate%20Governance) Information on directors, executive officers, and corporate governance, including the Code of Business Conduct and Ethics, will be incorporated by reference from the 2024 Proxy Statement - Information on directors, executive officers, and corporate governance will be incorporated by reference from the **2024 Proxy Statement**[779](index=779&type=chunk) - The company has adopted a **Code of Business Conduct and Ethics** applicable to all directors, officers, and employees, available on its investor relations website[780](index=780&type=chunk) [Code of Business Conduct and Ethics](index=243&type=section&id=Code%20of%20Business%20Conduct%20and%20Ethics) [Item 11. Executive Compensation](index=243&type=section&id=Item%2011.%20Executive%20Compensation) Executive compensation details will be incorporated by reference from the company's 2024 Proxy Statement - Information on executive compensation will be included in the **2024 Proxy Statement**, incorporated by reference[781](index=781&type=chunk) [Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=243&type=section&id=Item%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Stockholder%20Matters) Security ownership information for beneficial owners and management, and related stockholder matters, will be incorporated by reference from the 2024 Proxy Statement - Information on security ownership of beneficial owners, management, and related stockholder matters will be incorporated by reference from the **2024 Proxy Statement**[782](index=782&type=chunk) [Item 13. Certain Relationships and Related Transactions, and Director Independence](index=243&type=section&id=Item%2013.%20Certain%20Relationships%20and%20Related%20Transactions%2C%20and%20Director%20Independence) Information on certain relationships, related transactions, and director independence will be incorporated by reference from the 2024 Proxy Statement - Information on certain relationships, related transactions, and director independence will be incorporated by reference from the **2024 Proxy Statement**[783](index=783&type=chunk) [Item 14. Principal Accountant Fees and Services](index=243&type=section&id=Item%2014.%20Principal%20Accountant%20Fees%20and%20Services) Information on principal accountant fees and services will be incorporated by reference from the 2024 Proxy Statement; BDO USA, P.C. is the independent auditor - Information on principal accountant fees and services will be incorporated by reference from the **2024 Proxy Statement**[784](index=784&type=chunk) - **BDO USA, P.C.** (**PCAOB Auditor ID 243**) is the independent registered public accounting firm[570](index=570&type=chunk)[784](index=784&type=chunk) [PART IV](index=244&type=section&id=PART%20IV) This section outlines the exhibits and financial statement schedules included in the report, and confirms the absence of a Form 10-K Summary [Item 15. Exhibits and Financial Statement Schedules](index=244&type=section&id=Item%2015.%20Exhibits%20and%20Financial%20Statement%20Schedules) This section lists consolidated financial statements, confirms omission of schedules, and provides an index of exhibits incorporated by reference or filed - The section includes the **consolidated financial statements** as part of the report[787](index=787&type=chunk) - All financial statement schedules are **omitted** as they are not applicable or the required information is presented in the consolidated financial statements or notes[788](index=788&type=chunk) - An **Exhibit Index** lists documents incorporated by reference or filed with the report, numbered according to **Item 601 of Regulation S-K**[789](index=789&type=chunk)[792](index=792&type=chunk) [Item 16. Form 10-K Summary](index=244&type=section&id=Item%2016.%20Form%2010-K%20Summary) This item indicates that no Form 10-K Summary is provided - No Form 10-K Summary is provided[790](index=790&type=chunk)

Acquisition and Strategic Focus - The company completed the acquisition of EryDel on October 20, 2023, issuing 6,525,315 shares, resulting in EryDel shareholders owning approximately 15.2% of the company[146]. - The company has shifted its strategic focus to rare diseases following the acquisition of EryDel, aiming to develop innovative therapeutics[143]. Financial Performance - The company incurred a net loss of $5.4 million and $22.5 million for the three and nine months ended September 30, 2023, respectively, with an accumulated deficit of $310.8 million[155]. - The net loss for the three months ended September 30, 2023, was $5.4 million, a reduction of 32.4% from a net loss of $7.9 million in the same period of 2022[173]. - The loss from operations for the nine months ended September 30, 2023, was $24.7 million, a decrease of 45.9% from a loss of $45.7 million in the same period of 2022[186]. - The company does not expect any additional expenses related to legacy assets COR388 and COR588 following their sale to Lighthouse in January 2023[189]. Cash and Investments - As of September 30, 2023, the company had cash, cash equivalents, and short-term investments totaling $83.2 million, which is expected to fund operations into at least 2026[153]. - The company anticipates that existing cash will be sufficient to fund operations through at least 2026, assuming positive results from the Phase 3 NEAT trial[199]. - Net cash used in operating activities was $12.2 million for the nine months ended September 30, 2023, primarily due to a net loss of $22.5 million[208]. - Net cash used by investing activities was $11.1 million, primarily related to the purchase of investments of $95.1 million[210]. Research and Development - The company plans to initiate a pivotal Phase 3 NEAT trial for EryDex in the second quarter of 2024, targeting approximately 86 A-T patients aged six to nine years and 20 additional patients aged 10 years or older[143]. - Research and development expenses decreased to $1.4 million for the three months ended September 30, 2023, down from $2.4 million in the same period of 2022, representing a decrease of 41.6%[175]. - Total research and development expenses for the nine months ended September 30, 2023, were $6.0 million, a decrease of 73.2% from $22.4 million in the same period of 2022[186]. - The costs for atuzaginstat (COR388) development decreased by $1.2 million for the nine months ended September 30, 2023, primarily due to reduced drug manufacturing and consulting costs[187]. - For the nine months ended September 30, 2023, costs for NOV004 increased by $0.9 million due to drug manufacturing costs in preparation for Phase 1 clinical trials, but will be minimal for the remainder of 2023[190]. - Other direct research costs decreased by $1.5 million primarily due to the winddown of pipeline development of legacy assets sold to Lighthouse in January 2023[191]. Cost Management - A cost reduction program was implemented in January 2023, resulting in a 47% reduction in workforce, with associated expenses of approximately $0.4 million[151]. - Personnel-related expenses decreased by $9.5 million, including a $4.9 million decrease in stock-based compensation and a $3.0 million reduction in headcount year over year[192]. - General and administrative expenses decreased approximately $9.7 million to $12.8 million, primarily due to a decrease in personnel-related expenses and legal fees[193]. - General and administrative expenses increased by $0.3 million to $4.7 million for the three months ended September 30, 2023, compared to $4.3 million for the same period in 2022, an increase of 7.3%[182]. Impairment and Charges - The company recorded a non-cash impairment charge of $5.9 million for intangible assets during the nine months ended September 30, 2023[186]. - An impairment charge of $5.9 million was recorded for the IPR&D intangible asset due to a significant decrease in fair value[194]. Interest Income - Interest income increased significantly by 204.4% to $959,000 for the three months ended September 30, 2023, compared to $315,000 in the same period of 2022[173]. - Interest income increased to $2.5 million for the nine months ended September 30, 2023, compared to $0.5 million for the same period in 2022, due to increased yields on the investment portfolio[195].

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 June 30, 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) ( State o ...

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 ...