Cognition Therapeutics(CGTX) - 2025 Q2 - Quarterly Report

Cautionary Note on Forward-Looking Statements Forward-Looking Statements Overview This section cautions readers about forward-looking statements and the inherent risks that may cause actual results to differ - The report contains forward-looking statements identifiable by terms like 'anticipate,' 'expect,' 'will,' and 'may,' which are subject to risks and uncertainties that could cause actual results to differ materially[8] - Key risks include the ability to raise additional capital, maintain Nasdaq listing, successful clinical trial advancement, regulatory approvals, profitability, and dependence on zervimesine (CT1812)[8][11] - Readers are directed to the 'Risk Factors' section of the Annual Report for a comprehensive discussion of material factors[9] PART I – FINANCIAL INFORMATION Item 1. Financial Statements This section presents the unaudited consolidated financial statements, detailing the company's financial position, performance, and cash flows Consolidated Balance Sheets Consolidated Balance Sheets (in thousands) | Metric (in thousands) | June 30, 2025 | December 31, 2024 | Change | % Change | | :-------------------- | :------------ | :---------------- | :----- | :------- | | Cash and cash equivalents | $10,743 | $25,009 | $(14,266) | -57.0% | | Total current assets | $19,049 | $29,555 | $(10,506) | -35.5% | | Total assets | $19,622 | $30,234 | $(10,612) | -35.1% | | Total current liabilities | $12,364 | $11,142 | $1,222 | 11.0% | | Total liabilities | $12,593 | $11,484 | $1,109 | 9.7% | | Total stockholders' equity | $7,029 | $18,750 | $(11,721) | -62.5% | Consolidated Statements of Operations and Comprehensive Loss Consolidated Statements of Operations and Comprehensive Loss (in thousands) | Metric (in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Change | % Change | | :-------------------- | :------------------------------- | :------------------------------- | :----- | :------- | | Research and development | $11,481 | $11,577 | $(96) | -0.8% | | General and administrative | $2,497 | $3,101 | $(604) | -19.5% | | Total operating expenses | $13,978 | $14,678 | $(700) | -4.8% | | Grant income | $7,106 | $7,311 | $(205) | -2.8% | | Net loss | $(6,734) | $(7,041) | $307 | -4.4% | | Basic Net loss per share | $(0.11) | $(0.18) | $0.07 | -38.9% | Consolidated Statements of Operations and Comprehensive Loss (in thousands) | Metric (in thousands) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | Change | % Change | | :-------------------- | :----------------------------- | :----------------------------- | :----- | :------- | | Research and development | $22,267 | $22,130 | $137 | 0.6% | | General and administrative | $5,486 | $6,650 | $(1,164) | -17.5% | | Total operating expenses | $27,753 | $28,780 | $(1,027) | -3.6% | | Grant income | $12,192 | $12,223 | $(31) | -0.3% | | Net loss | $(15,214) | $(16,192) | $978 | -6.0% | | Basic Net loss per share | $(0.24) | $(0.44) | $0.20 | -45.5% | Consolidated Statements of Stockholders' Equity Consolidated Statements of Stockholders' Equity (in thousands, except shares) | Metric (in thousands, except shares) | December 31, 2024 | June 30, 2025 | | :----------------------------------- | :---------------- | :------------ | | Common Stock Shares Outstanding | 59,854,877 | 64,962,957 | | Common Stock Amount | $60 | $65 | | Additional Paid-in Capital | $193,850 | $197,338 | | Accumulated Deficit | $(175,160) | $(190,374) | | Total Stockholders' Equity | $18,750 | $7,029 | - Issuance of common stock under the ATM sales agreement contributed $1,460 thousand (March 31, 2025) and $877 thousand (June 30, 2025) to additional paid-in capital[23] - Equity-based compensation recognized was $586 thousand (March 31, 2025) and $621 thousand (June 30, 2025)[23] Consolidated Statements of Cash Flows Consolidated Statements of Cash Flows (in thousands) | Metric (in thousands) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | Change | | :-------------------- | :----------------------------- | :----------------------------- | :----- | | Net cash used in operating activities | $(15,500) | $(13,241) | $(2,259) | | Net cash used in investing activities | $0 | $(3) | $3 | | Net cash provided by financing activities | $2,048 | $11,855 | $(9,807) | | Net decrease in cash, cash equivalents and restricted cash equivalents | $(13,452) | $(1,389) | $(12,063) | | Cash, cash equivalents, and restricted cash equivalents – end of period | $11,557 | $28,533 | $(16,976) | Notes to Consolidated Financial Statements - The Company is a biopharmaceutical company developing disease-modifying therapies for age-related degenerative diseases of the CNS and retina, incorporated in Delaware on August 21, 2007[29] - The Company has incurred recurring losses since inception, with a net loss of $15,214 thousand for the six months ended June 30, 2025, and an accumulated deficit of $190,374 thousand[32] - As of August 7, 2025, the Company believes its cash and cash equivalents are insufficient to fund operations for the next year, indicating substantial doubt about its ability to continue as a going concern[33] Grant Income (in thousands) | Period | 2025 | 2024 | | :----- | :--- | :--- | | Three Months Ended June 30 | $7,106 | $7,311 | | Six Months Ended June 30 | $12,192 | $12,223 | - Grant income is primarily from NIA reimbursements for aging research, with deferred grant income increasing from $1,066 thousand (Dec 31, 2024) to $1,982 thousand (June 30, 2025)[41] - Research and development costs are expensed as incurred, focusing on Alzheimer's disease, dementia with Lewy bodies (DLB), and geographic atrophy (GA)[43] Equity-based Compensation Expense (in thousands) | Category | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Research and development | $331 | $282 | $641 | $513 | | General and administrative | $290 | $865 | $566 | $1,805 | | Total | $621 | $1,147 | $1,207 | $2,318 | - The Company operates as one operating segment focused on neurodegenerative disorders, with the CEO as the chief operating decision maker[54][95] - The Company is an emerging growth company and has elected to use the extended transition period for complying with new or revised accounting standards[55] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section analyzes the company's financial condition, operational results, liquidity, and capital resources for the reported periods Overview - Cognition Therapeutics is a clinical-stage biopharmaceutical company developing small molecule therapeutics for age-related degenerative diseases of the CNS and retina, focusing on Alzheimer's disease, DLB, and GA secondary to dAMD[101] - The lead candidate, zervimesine (CT1812), targets the σ-2 (sigma-2) receptor (S2R) complex to antagonize amyloid beta oligomer binding and toxicity, showing improved synapse function in clinical trials[102] - Phase 2 SHINE study (Alzheimer's disease) met primary endpoints of safety and tolerability. A prespecified analysis showed a 95% reduction in cognitive decline at week 26 in participants with baseline plasma p-tau217 below the median, relative to placebo[103][104][105] - Phase 2 SHIMMER study (DLB) met primary endpoints of safety and tolerability, with zervimesine-treated patients showing significant benefits across behavioral, functional, cognitive, and motor scales compared to placebo[110][111] - Phase 2 MAGNIFY study (GA secondary to dry AMD) was voluntarily concluded. Top-line results showed zervimesine-treated participants had 29% slower GA lesion growth on average and 28% smaller lesions at 18 months compared to placebo, with effects widening over time[113][114] - Zervimesine was generally well tolerated across all three Phase 2 studies, with transient liver enzyme test increases observed in 9.6% of zervimesine-treated participants, which subsided after drug cessation[115][116] - The company has received approximately $140.4 million in net proceeds from equity sales and convertible notes since inception, and $171.0 million in cumulative grants primarily from the NIA[117] Components of Our Results of Operations - Research and development expenses include direct costs (lab materials, contracted research, clinical trials) and indirect costs (personnel, facilities). These costs are expensed as incurred[127][128] - General and administrative expenses primarily cover personnel costs (salaries, benefits, stock-based compensation) for executive, finance, and administrative functions, as well as third-party costs like legal, insurance, and accounting fees[130] - Grant income is recognized from government and non-government parties as allowable costs are incurred, primarily from NIA for clinical trials[131][133] Results of Operations Three Months Ended June 30, 2025 vs. 2024 (in thousands) | Metric | 2025 | 2024 | Change | | :------------------------- | :--- | :--- | :----- | | Research and development | $11,481 | $11,577 | $(96) | | General and administrative | $2,497 | $3,101 | $(604) | | Grant income | $7,106 | $7,311 | $(205) | | Net loss | $(6,734) | $(7,041) | $307 | - The decrease in R&D expenses for the three months ended June 30, 2025, was primarily due to a decrease in personnel costs, partially offset by an increase in clinical programs and manufacturing costs[137][143] - General and administrative expenses decreased by $0.6 million for the three months ended June 30, 2025, mainly due to a decrease in equity-based compensation, partially offset by increased employee compensation[138] Six Months Ended June 30, 2025 vs. 2024 (in thousands) | Metric | 2025 | 2024 | Change | | :-------------------- | :----------------------------- | :----------------------------- | :----- | | Research and development | $22,267 | $22,130 | $137 | | General and administrative | $5,486 | $6,650 | $(1,164) | | Grant income | $12,192 | $12,223 | $(31) | | Net loss | $(15,214) | $(16,192) | $978 | - The increase in R&D expenses for the six months ended June 30, 2025, was primarily due to increased Phase 2 trial activities, partially offset by decreases in personnel, manufacturing, and preclinical program costs[144][148] - General and administrative expenses decreased by $1.2 million for the six months ended June 30, 2025, primarily due to a decrease in equity-based compensation, partially offset by increased professional fees[145] Liquidity and Capital Resources - As of June 30, 2025, the company had $11.6 million in cash, cash equivalents, and restricted cash equivalents[151] - The company believes its existing cash, grant income, and proceeds from the March 2024 follow-on public offering will fund operations into the second quarter of 2026, assuming no usage from the remaining ATM or Lincoln Park Purchase Agreement[151] - The company expects to incur significant and increasing expenses and net losses, requiring substantial additional funding through equity offerings, debt financings, or collaborations[152][153] Cash Flows (in thousands) | Category | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :----------------------------- | :----------------------------- | :----------------------------- | | Cash flows used in operating activities | $(15,500) | $(13,241) | | Cash flows provided by financing activities | $2,048 | $11,855 | - Net cash used in operating activities increased by $2.3 million, primarily due to a decrease in non-cash adjustments (equity-based compensation) and an increase in grant receivables, partially offset by a decrease in net loss[159] - Net cash provided by financing activities decreased by $9.8 million, mainly due to lower proceeds from common stock issuance in the follow-on offering and ATM program compared to the prior year[161] Contractual Obligations as of June 30, 2025 (in thousands) | Category | Less than 1 Year | 1 to 3 Years | 3 to 5 Years | More than 5 Years | Total | | :-------------------- | :--------------- | :----------- | :----------- | :---------------- | :---- | | Operating lease obligations | $223 | $174 | $82 | $0 | $479 | | Other obligations | $41 | $0 | $0 | $0 | $41 | | Total | $264 | $174 | $82 | $0 | $520 | Item 3. Quantitative and Qualitative Disclosures about Market Risk The company is exempt from providing quantitative and qualitative disclosures about market risk due to its status as a 'smaller reporting company' - The company is exempt from providing quantitative and qualitative disclosures about market risk due to its status as a 'smaller reporting company'[173] Item 4. Controls and Procedures This section confirms the effectiveness of disclosure and internal controls over financial reporting as of June 30, 2025 - The President, CEO, and CFO concluded that disclosure controls and procedures were effective as of June 30, 2025[174] - Management concluded that internal control over financial reporting was effective as of June 30, 2025, based on the COSO framework[175] - There were no material changes in internal control over financial reporting during the most recent fiscal quarter[176] - Management acknowledges the inherent limitations of control systems, which can only provide reasonable, not absolute, assurance[177] PART II – OTHER INFORMATION Item 1. Legal Proceedings The company reports no material pending legal actions as of June 30, 2025, while acknowledging potential future disputes - As of June 30, 2025, the company is not aware of any pending legal actions that would materially adversely affect its business[179] - The company may become involved in disputes or regulatory inquiries in the ordinary course of business, and as a public company, is susceptible to litigation, including securities law claims[180] Item 1A. Risk Factors This section references Annual Report risk factors and details new risks, including FDA operational impacts and potential Nasdaq delisting - Readers should consider risk factors from the Annual Report, with no material changes other than those specified[181] - Changes in funding or disruptions to staffing and operations of the FDA and other government agencies could hinder product development and approval, negatively impacting the business[182][185] - The company received a deficiency letter from Nasdaq on September 12, 2024, for failing to maintain a minimum $1.00 bid price. It was granted an extension until September 8, 2025, to regain compliance, with potential delisting if unsuccessful[189][190][191] - Failure to regain Nasdaq compliance could reduce liquidity, impact stock price, hinder access to capital markets, and impair the company's ability to continue as a going concern[192] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds This section reports no unregistered sales or repurchases of equity securities during the fiscal quarter ended June 30, 2025 - No unregistered sales of equity securities occurred during the fiscal quarter ended June 30, 2025[193] - There were no repurchases of company equity securities during the period[194] Item 3. Defaults Upon Senior Securities The company reported no defaults upon senior securities during the period - There were no defaults upon senior securities[195] Item 4. Mine Safety Disclosures This item is not applicable to the company - This item is not applicable[196] Item 5. Other Information No other information is reported under this item - No other information is reported under this item[197] Item 6. Exhibits This section lists all exhibits filed with the Quarterly Report, including governance documents, officer certifications, and XBRL files - Exhibits include the Third Amended and Restated Certificate of Incorporation, Second Amended and Restated Bylaws, and an Amendment to the Bylaws[199] - Certifications from the Principal Executive Officer and Principal Financial and Accounting Officer are included pursuant to Section 302 and Section 906 of the Sarbanes-Oxley Act of 2002[199] - Inline XBRL Instance Document and Taxonomy Extension Documents are also filed[199]