
Part I Business Cidara Therapeutics is a biotechnology company developing anti-infectives, led by rezafungin and the Cloudbreak® platform - The company's lead product candidate is rezafungin acetate, a novel once-weekly echinocandin for treating and preventing serious invasive fungal infections1112 - Cidara is developing its proprietary Cloudbreak® platform to create antibody-drug conjugates (ADCs) that directly kill pathogens and engage the patient's immune system, with initial programs targeting influenza and bacterial infections1114 - The company's strategy includes rapidly advancing rezafungin, developing the Cloudbreak antiviral program for influenza, and commercializing products in the U.S. with a targeted sales force17 Rezafungin Rezafungin is a once-weekly antifungal in Phase 3 trials with potential for extended market exclusivity - Rezafungin has received FDA designations as an Orphan Drug and a Qualified Infectious Disease Product (QIDP), which together provide a potential for 12 years of marketing exclusivity upon approval27 STRIVE Phase 2 Trial (Part A) Key Efficacy Outcomes | Outcome (mITT Population) | Rezafungin 400mg/200mg (Group 2) | Caspofungin (Group 3) | | :--- | :--- | :--- | | Clinical Cure (Day 14) by PI Assessment | 86% (24/28) | 71% (20/28) | | All Cause Mortality (Day 30) | 3% (1/31) | 11% (3/28) | - The company has initiated the ReSTORE Phase 3 trial for treatment of candidemia/invasive candidiasis, with topline results expected in mid-202038 Cloudbreak Platform The Cloudbreak platform develops antibody-drug conjugates for infectious diseases, with a lead program targeting influenza - The Cloudbreak platform designs bispecific molecules that have intrinsic antimicrobial activity and also direct the immune system to the targeted pathogen3942 - Preclinical studies of the influenza candidate CB-012 demonstrated 100% protection in lethal mouse models of H1N1 and H3N2 at a cumulative dose approximately 1/500th to 1/1000th that of oseltamivir phosphate50 - A study showed CB-012 provided 100% protection from mortality when administered to mice 28 days before a lethal flu challenge, demonstrating its potential as a long-acting prophylactic agent51 - The Cloudbreak antibacterial program is supported by a five-year, $5.5 million partnership grant from the NIAID to develop immunotherapies for multi-drug resistant Gram-negative bacterial infections57 Intellectual Property The company protects its rezafungin and Cloudbreak technologies through patents and regulatory exclusivities - As of February 28, 2019, the company's patent portfolio included 13 families of patents/applications for rezafungin and nine families for the Cloudbreak platform59 - Issued patents related to rezafungin are expected to expire in 2033, excluding any potential extensions59 - Rezafungin has received orphan drug designation (7 years exclusivity) and QIDP designation (5 additional years exclusivity) from the FDA for the treatment of candidemia and invasive candidiasis62 Competition The company faces intense competition from large, well-resourced pharmaceutical and biotechnology companies - Rezafungin will compete with approved branded echinocandins (Cancidas, Eraxis, Mycamine), their future generic versions, and other antifungals in development63 - The Cloudbreak influenza program will compete with approved antiviral agents like neuraminidase inhibitors (Tamiflu) and endonuclease inhibitors (Xofluza)63 - Many competitors have substantially greater financial, technical, and human resources and more experience in drug development, regulatory approval, and commercialization63 Government Regulation The company's products are subject to extensive FDA and international regulations for development and marketing - The U.S. drug approval process requires extensive preclinical and clinical trials (Phase 1, 2, and 3) to establish safety and efficacy before an NDA can be submitted to the FDA for marketing approval687273 - The FDA's Fast Track designation facilitates development and expedites review for drugs treating serious conditions with unmet medical needs77 - The GAIN Act provides incentives for developing Qualified Infectious Disease Products (QIDPs), including an additional five years of market exclusivity and eligibility for priority review and fast track designation84 - The company is subject to various healthcare laws, including anti-kickback statutes and false claims laws, which restrict marketing and business practices90 Risk Factors The company faces significant risks including clinical trial failures, financial instability, and reliance on third parties Risks Related to Drug Discovery, Development and Commercialization Success hinges on the rezafungin clinical trials, which face uncertainty, delays, and intense competition - The company depends heavily on the success of rezafungin, which is currently in Phase 3 development, and its Cloudbreak programs are in very early stages114 - Clinical trials may be delayed, terminated, or fail to demonstrate safety and efficacy, which could lead to additional costs or prevent commercialization118 - Difficulties in enrolling a sufficient number of eligible patients in clinical trials could significantly delay or prevent regulatory approvals122 - The company faces substantial competition from major pharmaceutical and biotechnology companies with greater financial resources and experience133136 Risks Related to Our Financial Position and Need for Additional Capital A history of losses and limited cash raises substantial doubt about the company's ability to continue as a going concern - The company needs substantial additional funding; existing cash and cash equivalents are only sufficient to fund obligations through the third quarter of 2019, raising going concern doubts150 - As of December 31, 2018, the company had an accumulated deficit of $218.7 million and incurred a net loss of $59.0 million for the fiscal year161 - The term loan facility with Pacific Western Bank contains restrictive covenants and a material adverse effect clause that could be triggered by circumstances related to the going concern uncertainty, potentially leading to debt acceleration157 Risks Related to Our Dependence on Third Parties The company relies on third-party manufacturers and CROs, creating risks in supply chain and clinical trial execution - The company may need to establish collaborations for development and commercialization but faces significant competition in seeking partners168 - Cidara relies on third parties to conduct clinical trials and preclinical testing; unsatisfactory performance by these parties could delay or prevent marketing approvals172 - With no manufacturing facilities, the company is dependent on third-party manufacturers, posing risks related to regulatory compliance (cGMP), supply chain reliability, and quality control176 Risks Related to Our Intellectual Property The company's success depends on securing and defending patents, which face risks of invalidation and infringement claims - Efforts to protect proprietary intellectual property may not be adequate, which could allow competitors to duplicate technological achievements and erode the company's market position202 - The company may face third-party claims of intellectual property infringement, which could prevent or delay drug development and lead to substantial litigation expenses210 - Issued patents could be found invalid or unenforceable if challenged in court or at the USPTO, potentially leading to a loss of patent protection215 - The company has limited foreign intellectual property rights and may not be able to protect its rights throughout the world, as laws and enforcement vary by country217 Properties The company leases a single facility in San Diego, California for all its operations - Cidara leases a 29,638 square foot facility in San Diego, CA for administrative and R&D activities, with the lease expiring in December 2021269 Part II Management's Discussion and Analysis of Financial Condition and Results of Operations The company's net loss increased in 2018 due to higher R&D expenses, with cash reserves sufficient only through Q3 2019 Results of Operations Higher R&D expenses for Phase 3 trials drove an increased net loss in 2018 compared to 2017 Results of Operations Comparison (in thousands) | Expense Category | 2018 | 2017 | Change | | :--- | :--- | :--- | :--- | | Research and development | $49,142 | $42,823 | $6,319 | | General and administrative | $14,143 | $12,898 | $1,245 | | Other income (expense), net | $4,269 | $(7) | $4,276 | - The increase in R&D expenses in 2018 was mainly due to higher clinical expenses for the start-up of the rezafungin ReSTORE and ReSPECT studies311 Liquidity and Capital Resources Existing cash of $74.6 million is insufficient beyond Q3 2019, necessitating additional financing - The company's existing cash and cash equivalents of $74.6 million (as of Dec 31, 2018) are only sufficient to fund operations through Q3 2019, raising substantial doubt about its ability to continue as a going concern325 Summary of Cash Flows (in thousands) | Activity | 2018 | 2017 | 2016 | | :--- | :--- | :--- | :--- | | Net cash used in Operating activities | $(56,705) | $(49,909) | $(39,771) | | Net cash provided by Investing activities | $14,301 | $4,471 | $25,482 | | Net cash provided by Financing activities | $56,153 | $20,884 | $37,094 | - Net cash from financing activities in 2018 was $56.2 million, primarily from the sale of common stock, Series X Convertible Preferred Stock, and warrants in a May 2018 registered direct offering324 Financial Statements and Supplementary Data This section presents audited financial statements accompanied by an auditor's report expressing a going concern doubt Report of Independent Registered Public Accounting Firm The auditor's report includes an explanatory paragraph raising substantial doubt about the company's going concern status - The auditor's report includes a "Going Concern" paragraph, stating that substantial doubt exists about the Company's ability to continue as a going concern due to its history of net losses and negative cash flows332 Consolidated Financial Statements The company reported a net loss of $59.0 million for 2018 and an accumulated deficit of $218.7 million Consolidated Balance Sheet Data (in thousands) | | Dec 31, 2018 | Dec 31, 2017 | | :--- | :--- | :--- | | Cash and cash equivalents | $74,562 | $60,813 | | Total assets | $79,112 | $79,035 | | Total liabilities | $19,973 | $19,291 | | Accumulated deficit | $(218,735) | $(149,390) | | Total stockholders' equity | $59,139 | $59,744 | Consolidated Statement of Operations Data (in thousands) | | 2018 | 2017 | 2016 | | :--- | :--- | :--- | :--- | | Research and development | $49,142 | $42,823 | $35,699 | | General and administrative | $14,143 | $12,898 | $12,737 | | Total operating expenses | $63,285 | $55,721 | $48,436 | | Net loss | $(59,016) | $(55,728) | $(48,165) | Notes to Consolidated Financial Statements Notes detail the company's going concern issue, debt covenants, and financing activities - The company's term loan with Pacific Western Bank has an outstanding principal of $10.0 million, matures in January 2022, and is secured by substantially all company assets368371 - In May 2018, the company completed the first closing of a registered direct offering, raising $49.5 million372375 - As of December 31, 2018, the company had federal and state net operating loss carryforwards of approximately $179.1 million and $132 million, respectively, which are subject to a full valuation allowance397 Controls and Procedures Management concluded that the company's disclosure controls and internal financial reporting controls were effective - Based on an evaluation as of December 31, 2018, the principal executive officer and principal financial officer concluded that the company's disclosure controls and procedures were effective408 - Management concluded that the company's internal control over financial reporting was effective as of December 31, 2018, based on the COSO 2013 framework409 Part III This part incorporates information on governance and compensation by reference from the company's Proxy Statement Directors, Executive Officers and Corporate Governance Information on directors and governance is incorporated by reference from the 2019 Proxy Statement - The required information for this item is incorporated by reference from the company's definitive Proxy Statement for its 2019 Annual Meeting of Stockholders414 Executive Compensation Details regarding executive compensation are incorporated by reference from the 2019 Proxy Statement - The required information for this item is incorporated by reference from the company's definitive Proxy Statement415 Part IV This part lists the financial statements and exhibits filed with the Annual Report Exhibits, Financial Statement Schedules This section lists the financial statements and provides an index of all exhibits filed with the report - This item lists the financial statements filed in Item 8 and provides an index of all exhibits filed with the Annual Report422