Centessa Pharmaceuticals(US:CNTA)2025-08-12 11:13markdown [Filing Information](index=1&type=section&id=Filing%20Information) [Registrant Details](index=1&type=section&id=Registrant%20Details) Centessa Pharmaceuticals PLC is an English public limited company, registered with the SEC under commission file number 001-40445. Its securities, including Ordinary shares and American Depositary Shares (CNTA), are registered on the Nasdaq Stock Market, LLC - Registrant: Centessa Pharmaceuticals PLC, incorporated in England and Wales[1](index=1&type=chunk) Title of each class Table | Title of each class | Trading Symbol(s) | Name of each exchange on which registered | | :------------------ | :---------------- | :---------------------------------------- | | Ordinary shares, nominal value £0.002 per share | CNTA | Nasdaq Stock Market, LLC* | | American Depositary Shares, each representing one ordinary share, nominal value £0.002 per share | CNTA | Nasdaq Stock Market, LLC | [Filer Status and Shares Outstanding](index=1&type=section&id=Filer%20Status%20and%20Shares%20Outstanding) The registrant has filed all required reports, submitted all Interactive Data Files, and is classified as a non-accelerated filer, smaller reporting company, and emerging growth company. As of August 1, 2025, **134,073,436** ordinary shares were outstanding - The registrant has filed all required reports and submitted all Interactive Data Files during the preceding **12** months[3](index=3&type=chunk) Filer Status Table | Filer Status | | | :-------------------- | :--- | | Non-accelerated filer | x | | Smaller reporting company | x | | Emerging growth company | x | - Outstanding ordinary shares as of August **1**, **2025**: **134,073,436**[4](index=4&type=chunk) [Summary of the Material Risks Associated with Our Business](index=2&type=section&id=Summary%20of%20the%20Material%20Risks%20Associated%20with%20Our%20Business) [Overview of Key Business Risks](index=2&type=section&id=Overview%20of%20Key%20Business%20Risks) The company faces numerous risks, including potential failure in drug discovery and development, reliance on a limited number of programs, operational growth challenges, expected continued net losses, and the need for substantial additional funding. Product candidates are in early development stages and may fail or suffer delays, and the company may struggle to differentiate its molecules. Other risks include intellectual property protection, lack of commercialization experience, international operational complexities, and regulatory compliance challenges - The company may not succeed in its asset-centric approach to drug discovery and development, potentially failing to build a pipeline of commercially valuable product candidates[6](index=6&type=chunk) - The company has incurred net losses since inception and expects to continue incurring losses, requiring substantial additional funds for product candidate development[6](index=6&type=chunk) - Product candidates are in various stages of development (discovery, preclinical, clinical) and face risks of failure or delays, impacting commercial viability and differentiation from competitors[6](index=6&type=chunk) [TABLE OF CONTENTS](index=5&type=section&id=TABLE%20OF%20CONTENTS) [SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS](index=6&type=section&id=SPECIAL%20NOTE%20REGARDING%20FORWARD-LOOKING%20STATEMENTS) [Nature and Scope of Forward-Looking Statements](index=6&type=section&id=Nature%20and%20Scope%20of%20Forward-Looking%20Statements) This section highlights that the **10**-Q contains forward-looking statements, which involve substantial risks and uncertainties that could cause actual results to differ materially. These statements cover various aspects of the business, including preclinical and clinical trials, regulatory approvals, financial estimates, and strategic plans, and are based on management's current information, which may be limited - Forward-looking statements involve known and unknown risks, uncertainties, and other important factors that may cause actual results to differ materially[12](index=12&type=chunk) - Initiation, timing, progress, and results of preclinical studies and clinical trials (e.g., ORX750, ORX142, ORX489, LockBody platform) - Ability to execute research and clinical development plans and advance product candidates - Timing or likelihood of regulatory filings and approvals - Estimates of expenses, future revenues, capital requirements, and needs for additional financing, including anticipated cash runway[12](index=12&type=chunk)[15](index=15&type=chunk) - Readers are advised to refer to 'Item **1A**. Risk Factors' for a detailed discussion of factors that may cause actual results to differ[13](index=13&type=chunk) [PART I. FINANCIAL INFORMATION](index=8&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) [Item 1. Financial Statements (unaudited)](index=8&type=section&id=Item%201.%20Financial%20Statements%20(unaudited)) This section presents the unaudited consolidated financial statements, including the balance sheets, statements of operations and comprehensive loss, statements of shareholders' equity, and statements of cash flows, along with detailed notes explaining the company's organization, accounting policies, license agreements, fair value measurements, balance sheet components, debt, commitments, program terminations, share-based compensation, and segment information [Consolidated Balance Sheets](index=8&type=section&id=Consolidated%20Balance%20Sheets) Consolidated Balance Sheet Highlights (amounts in thousands) | Metric | June 30, 2025 | December 31, 2024 | | :-------------------------------- | :------------ | :---------------- | | Cash and cash equivalents | $44,242 | $383,221 | | Short-term investments | $206,482 | $98,956 | | Total current assets | $300,363 | $536,409 | | Total assets | $492,127 | $576,798 | | Total current liabilities | $29,694 | $57,998 | | Long term debt | $109,545 | $108,940 | | Total liabilities | $147,208 | $175,253 | | Total shareholders' equity | $344,919 | $401,545 | - Cash and cash equivalents decreased significantly from **$383.2 million** at December **31**, **2024**, to **$44.2 million** at June **30**, **2025**, while short-term investments increased[18](index=18&type=chunk) [Consolidated Statements of Operations and Comprehensive Loss](index=9&type=section&id=Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Loss) Consolidated Statements of Operations and Comprehensive Loss (amounts in thousands) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :---------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | License and other revenue | $— | $— | $15,000 | $— | | Research and development | $42,741 | $32,815 | $76,184 | $55,467 | | General and administrative | $11,912 | $11,165 | $24,246 | $24,603 | | Loss from operations | $(54,653) | $(43,980) | $(85,430) | $(80,070) | | Net loss | $(50,343) | $(43,816) | $(76,478) | $(81,862) | | Net loss per ordinary share - basic and diluted | $(0.38) | $(0.40) | $(0.57) | $(0.78) | - Net loss for the three months ended June **30**, **2025**, increased to **$50.3 million** from **$43.8 million** in the prior year, primarily due to higher R&D expenses[20](index=20&type=chunk) - For the six months ended June **30**, **2025**, the net loss decreased to **$76.5 million** from **$81.9 million** in the prior year, driven by **$15.0 million** in license revenue[20](index=20&type=chunk) [Consolidated Statements of Shareholders' Equity](index=10&type=section&id=Consolidated%20Statements%20of%20Shareholders'%20Equity) Shareholders' Equity Changes (amounts in thousands) | Metric | June 30, 2025 | December 31, 2024 | | :-------------------------- | :------------ | :---------------- | | Total shareholders' equity | $344,919 | $401,545 | | Accumulated deficit | $(1,065,180) | $(988,702) | | Additional paid-in capital | $1,408,145 | $1,385,675 | | Ordinary shares outstanding | 133,913,556 | 132,631,587 | - Total shareholders' equity decreased from **$401.5 million** at December **31**, **2024**, to **$344.9 million** at June **30**, **2025**, primarily due to the accumulated deficit[18](index=18&type=chunk) - Additional paid-in capital increased by **$22.5 million** for the six months ended June **30**, **2025**, reflecting stock option exercises and share-based compensation[27](index=27&type=chunk) [Consolidated Statements of Cash Flows](index=12&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Consolidated Statements of Cash Flows (amounts in thousands) | Activity | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------------- | :----------------------------- | :----------------------------- | | Net cash used in operating activities | $(79,698) | $(77,866) | | Net cash used in investing activities | $(262,342) | $(38,697) | | Net cash provided by financing activities | $4,691 | $115,806 | | Net decrease in cash and cash equivalents | $(338,979) | $(658) | | Cash and cash equivalents at end of period | $44,242 | $127,372 | - Net cash used in investing activities significantly increased to **$262.3 million** for the six months ended June **30**, **2025**, from **$38.7 million** in the prior year, primarily due to net investment in marketable securities[30](index=30&type=chunk) - Net cash provided by financing activities decreased substantially to **$4.7 million** for the six months ended June **30**, **2025**, from **$115.8 million** in the prior year, as the prior period included proceeds from a share offering[30](index=30&type=chunk) [Notes to Unaudited Consolidated Financial Statements](index=13&type=section&id=Notes%20to%20Unaudited%20Consolidated%20Financial%20Statements) [1. Organization and Description of Business](index=13&type=section&id=1.%20Organization%20and%20Description%20of%20Business) Centessa Pharmaceuticals plc is a clinical-stage pharmaceutical company focused on discovering and developing transformational medicines. The company has incurred significant losses and negative cash flows since inception, with an accumulated deficit of **$1.07 billion** as of June **30**, **2025**. It expects existing cash and investments of **$404.1 million** to fund operations for at least the next twelve months. The company is an emerging growth company and smaller reporting company but will become a 'large accelerated filer' as of December **31**, **2025**, losing certain reduced reporting requirements - Centessa Pharmaceuticals plc is a clinical-stage pharmaceutical company aiming to discover, develop, and deliver transformational medicines[32](index=32&type=chunk) - The company has an accumulated deficit of **$1.07 billion** as of June **30**, **2025**, and expects to incur additional losses[34](index=34&type=chunk) - Existing cash, cash equivalents, and investments of **$404.1 million** as of June **30**, **2025**, are expected to fund operations for at least the next twelve months[36](index=36&type=chunk) - The company will transition from an 'emerging growth company' and 'smaller reporting company' to a 'large accelerated filer' as of December **31**, **2025**, due to its market value exceeding **$700 million**, which will increase reporting requirements[42](index=42&type=chunk) [2. Summary of Significant Accounting Policies](index=14&type=section&id=2.%20Summary%20of%20Significant%20Accounting%20Policies) The financial statements are prepared in conformity with GAAP, with interim statements omitting disclosures that would duplicate the **2024** Annual Report. The company consolidates its wholly-owned subsidiaries and makes estimates and assumptions, particularly for R&D expenses and share-based compensation. Excess cash is invested in marketable securities classified as available-for-sale, and revenue from collaboration/license agreements is recognized when performance obligations are satisfied, with milestone payments constrained until probable of achievement - Unaudited interim consolidated financial statements are prepared in conformity with GAAP and include all normal and recurring adjustments[44](index=44&type=chunk)[45](index=45&type=chunk) - Investments in marketable securities (money market funds, U.S. Treasury, corporate notes, commercial paper) are classified as available-for-sale and recorded at fair value[49](index=49&type=chunk)[50](index=50&type=chunk) - Revenue from collaboration, license, or other arrangements is recognized as performance obligations are satisfied, with milestone payments assessed for probability of achievement to avoid significant revenue reversal[54](index=54&type=chunk)[56](index=56&type=chunk) [3. Genmab License Agreement](index=16&type=section&id=3.%20Genmab%20License%20Agreement) On February **14**, **2025**, Centessa entered into an exclusive worldwide license agreement with Genmab A/S for its LockBody technology platform. Centessa received an upfront payment of **$15.0 million** and is eligible for up to **$15.0 million** in option exercise fees, up to **$234.0 million** in development, regulatory, and sales milestones per product, and tiered royalties. The upfront payment was recognized as revenue in Q**1** **2025**, while milestone payments are constrained due to uncertainty - Centessa granted Genmab an exclusive worldwide license to its LockBody technology platform for research on up to three undisclosed targets[58](index=58&type=chunk) Genmab License Agreement Financials (amounts in millions) | Payment Type | Amount | | :-------------------------------- | :----- | | Non-refundable upfront payment | $15.0 | | Potential option exercise fees | Up to $15.0 | | Potential development, regulatory, and sales milestones (per product) | Up to $234.0 | | Tiered royalties on net sales | Mid single-digits | - The **$15.0 million** upfront payment was recognized as revenue in the first quarter of **2025** upon delivery of the exclusive license[65](index=65&type=chunk) [4. Fair Value Measurement](index=17&type=section&id=4.%20Fair%20Value%20Measurement) The company measures financial assets at fair value, classifying them into Level **1** (quoted prices in active markets) and Level **2** (observable inputs). As of June **30**, **2025**, total financial assets measured at fair value were **$378.3 million**, primarily comprising U.S. Treasury and government agency securities, corporate debt securities, and commercial paper. A significant portion of these investments were in an unrealized loss position, but the company does not anticipate credit losses or early sales Fair Value Measurement of Financial Assets (amounts in thousands) | Asset Type | June 30, 2025 (Total) | December 31, 2024 (Total) | | :-------------------------------- | :-------------------- | :-------------------- | | Money Market fund | $18,364 | $217,515 | | U.S. Treasury and government agency securities | $210,536 | $171,885 | | Corporate debt securities | $109,974 | $— | | Commercial Paper | $39,378 | $— | | **Total** | **$378,252** | **$389,400** | - As of June **30**, **2025**, **$270.2 million** of debt securities were in an unrealized loss position, but the company does not expect to sell them before recovery of amortized cost[72](index=72&type=chunk) - Investments are classified into Level **1** (quoted prices) and Level **2** (observable inputs) based on FASB ASC Topic **820**[68](index=68&type=chunk)[70](index=70&type=chunk) [5. Balance Sheet Components](index=19&type=section&id=5.%20Balance%20Sheet%20Components) This section details the composition of prepaid expenses and other current assets, as well as accrued expenses and other current liabilities. Prepaid R&D expenses decreased, while interest receivable increased. Accrued R&D expenses significantly decreased, largely due to payments for contract termination costs Prepaid Expenses and Other Current Assets (amounts in thousands) | Component | June 30, 2025 | December 31, 2024 | | :-------------------------------- | :------------ | :---------------- | | Research and development expenses | $3,691 | $6,314 | | Interest receivable | $2,249 | $287 | | Total | $8,935 | $10,464 | Accrued Expenses and Other Current Liabilities (amounts in thousands) | Component | June 30, 2025 | December 31, 2024 | | :-------------------------------- | :------------ | :---------------- | | Research and development expenses* | $16,085 | $38,063 | | Personnel related expenses | $4,045 | $9,465 | | Total | $24,002 | $50,855 | *Includes accrued contract termination costs of $1.7 million as of June 30, 2025 and $30.3 million as of December 31, 2024. - Accrued R&D expenses decreased significantly from **$38.1 million** to **$16.1 million**, primarily due to payments of contract termination costs[75](index=75&type=chunk) [6. Debt](index=21&type=section&id=6.%20Debt) The company's long-term debt primarily consists of the Loan and Security Agreement (LSA) with Oxford Finance, with a principal amount of **$110.0 million** and an end-of-term charge of **$5.5 million**. The LSA is carried at amortized cost of **$109.5 million** as of June **30**, **2025**, with future principal payments, including the end-of-term charge, totaling **$115.5 million** due in **2029** Loan and Security Agreement (LSA) Details (amounts in thousands) | Component | June 30, 2025 | December 31, 2024 | | :------------------------------------------------ | :------------ | :---------------- | | Principal amount | $110,000 | $110,000 | | End of term charge | $5,500 | $5,500 | | Unamortized debt issuance costs and end of term charge | $(5,955) | $(6,560) | | **LSA (amortized cost)** | **$109,545** | **$108,940** | | Fair value of LSA (Level 2) | $107,965 | $109,450 | Future Principal Payments (including End of Term Charge, amounts in thousands) | Year ending | Payments | | :---------- | :------- | | 2029 | $115,500 | | **Total** | **$115,500** | [7. Commitments and Contingencies](index=21&type=section&id=7.%20Commitments%20and%20Contingencies) As of June **30**, **2025**, Centessa had non-cancellable commitments of **$10.4 million** for clinical materials, contract manufacturing, and maintenance, with **$8.6 million** expected within one year. The company also reported operating lease right-of-use assets of **$10.5 million** and total operating lease liabilities of **$8.6 million**, with a weighted-average remaining lease term of **7.5** years and a discount rate of **11.97%** - Non-cancellable commitments totaled **$10.4 million** as of June **30**, **2025**, with **$8.6 million** payable within one year[79](index=79&type=chunk) Operating Lease Information (amounts in thousands) | Metric | June 30, 2025 | | :-------------------------------- | :------------ | | Operating lease, right-of-use asset | $10,539 | | Total operating lease liabilities | $8,596 | | Weighted-average remaining lease term | 7.5 years | | Weighted-average discount rate | 11.97 % | Total Operating Lease Cost (amounts in thousands) | Period | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------- | :----------------------------- | :----------------------------- | | Total operating lease cost | $891 | $830 | [8. Program Termination](index=22&type=section&id=8.%20Program%20Termination) In November **2024**, Centessa discontinued the global clinical development program for SerpinPC for hemophilia B, incurring a one-time charge of **$31.5 million** in Q**4** **2024**, primarily for contract termination costs. As of June **30**, **2025**, the remaining liability was **$1.8 million**, expected to be fully extinguished by December **2025** - Discontinuation of SerpinPC program for hemophilia B announced in November **2024**[84](index=84&type=chunk) - One-time charge of **$31.5 million** incurred in Q**4** **2024**, consisting of **$30.3 million** in contract termination costs and **$1.2 million** in employee severance[87](index=87&type=chunk) Program Termination Liability Roll-Forward (amounts in thousands) | Metric | Balance as of January 1, 2025 | Cash payments | Reversal of charge | Foreign currency translation changes | Balance as of June 30, 2025 | | :-------------------- | :---------------------------- | :------------ | :----------------- | :------------------------------- | :-------------------------- | | Contract Termination | $30,283 | $(26,406) | $(2,555) | $329 | $1,651 | | Severance-Related | $1,199 | $(1,014) | $— | $— | $185 | | **Total** | **$31,482** | **$(27,420)** | **$(2,555)** | **$329** | **$1,836** | [9. Share-based Compensation](index=23&type=section&id=9.%20Share-based%20Compensation) Centessa recorded **$15.8 million** in share-based compensation expense for the six months ended June **30**, **2025**, primarily from stock options. The **2021** Stock Option and Incentive Plan had **11.7 million** shares available for future grants. As of June **30**, **2025**, total unrecognized compensation expense for unvested stock options was **$69.2 million**, to be recognized over **3.2** years Share-based Compensation Expense (amounts in thousands) | Expense Category | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------- | :----------------------------- | :----------------------------- | | Research and development | $8,272 | $7,731 | | General and administrative | $7,560 | $9,034 | | **Total** | **$15,832** | **$16,765** | Share-based Compensation by Award Type (amounts in thousands) | Award Type | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------- | :----------------------------- | :----------------------------- | | Stock options | $13,022 | $11,207 | | Restricted share awards and units | $2,810 | $5,558 | | **Total** | **$15,832** | **$16,765** | - As of June **30**, **2025**, total unrecognized compensation expense for unvested stock option awards was **$69.2 million**, with a weighted-average recognition period of **3.2** years[92](index=92&type=chunk) [10. Segment Information](index=25&type=section&id=10.%20Segment%20Information) Centessa manages its business as a single operating segment, with performance evaluated by the CEO based on R&D efforts, clinical trial results, and consolidated net loss. Resource allocation is guided by strategic objectives and available liquidity. Program-specific expenses are tracked for OX2R agonist, LockBody, and discontinued R&D programs - The company operates as a single segment, with performance evaluated based on R&D efforts and clinical trial results[98](index=98&type=chunk) Reportable Segment Loss and Expenses (amounts in thousands) | Metric | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------------- | :----------------------------- | :----------------------------- | | License and other revenue | $15,000 | $— | | OX2R agonist program expenses | $(52,774) | $(14,952) | | LockBody program expenses | $(5,183) | $(6,266) | | Discontinued R&D program expenses | $(4,109) | $(28,619) | | Consolidated net loss | $(76,478) | $(81,862) | - OX2R agonist program expenses significantly increased to **$52.8 million** for the six months ended June **30**, **2025**, from **$15.0 million** in the prior year, reflecting higher clinical study costs for ORX750 and developmental milestones for ORX142[100](index=100&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=27&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides an overview of Centessa's business, including its pipeline programs and financial performance for the three and six months ended June **30**, **2025**, compared to the prior year. It details changes in revenues, operating expenses, and liquidity, highlighting the company's reliance on external funding and its transition to a large accelerated filer status [Overview and Format of Presentation](index=27&type=section&id=Overview%20and%20Format%20of%20Presentation) Centessa Pharmaceuticals plc is a clinical-stage pharmaceutical company focused on orally administered OX2R agonists for neurological disorders and an early-stage immuno-oncology LockBody® technology platform. Key candidates include ORX750 (Phase **2a**), ORX142 (Phase **1**), and ORX489 (IND-enabling). The company discontinued LB101 clinical development in Q**1** **2025** and licensed its LockBody platform to Genmab. As of June **30**, **2025**, cash, cash equivalents, and investments totaled **$404.1 million**, expected to fund operations into mid-**2027** - Centessa is developing novel, oral, highly potent and selective OX2R agonists for excessive daytime sleepiness and other neurological disorders[103](index=103&type=chunk) - ORX750: In ongoing Phase **2a** study for narcolepsy type **1** (NT**1**), narcolepsy type **2** (NT**2**), and idiopathic hypersomnia (IH). Phase **1** data enabled dose selection - ORX142: Initiated Phase **1** FIH clinical trial after FDA IND clearance in June **2025**, targeting neurological and neurodegenerative disorders - ORX489: Most potent OX2R agonist in preclinical studies, in IND-enabling activities for neuropsychiatric disorders[104](index=104&type=chunk)[105](index=105&type=chunk)[106](index=106&type=chunk)[107](index=107&type=chunk)[108](index=108&type=chunk) - Discontinued clinical development of LB101 (LockBody candidate) in Q**1** **2025** and licensed LockBody technology platform to Genmab in February **2025**[110](index=110&type=chunk)[111](index=111&type=chunk) - Cash, cash equivalents, and investments totaled **$404.1 million** as of June **30**, **2025**, expected to fund operations into mid-**2027**[113](index=113&type=chunk) [Components of Results of Operations](index=28&type=section&id=Components%20of%20Results%20of%20Operations) This section outlines the key components of Centessa's financial results. Revenue is currently non-recurring, primarily from out-licensing. Research and development expenses, which are expensed as incurred, are expected to increase significantly due to advancing product candidates and clinical trials. General and administrative expenses cover personnel, legal, and professional fees. Interest and investment income is derived from cash and investments, while interest expense relates to debt. Other income/expense primarily reflects foreign currency fluctuations - Revenue is currently non-recurring, with future profitability dependent on successful development and commercialization of product candidates[114](index=114&type=chunk) - Research and development expenses are expensed as incurred and are expected to increase significantly due to advancing clinical trials and pipeline development[115](index=115&type=chunk)[116](index=116&type=chunk) - R&D expenses include preclinical/clinical study costs, milestone payments, personnel, third-party research funding (CROs), manufacturing, regulatory fees, and facility costs - General and administrative expenses cover personnel, facility costs, legal, accounting, and professional services - Interest and investment income primarily from cash and investments; interest expense from the Loan and Security Agreement - Other income (expense), net, mainly reflects foreign currency transaction gains and losses[120](index=120&type=chunk)[123](index=123&type=chunk)[124](index=124&type=chunk)[125](index=125&type=chunk) [Results of Operations](index=31&type=section&id=Results%20of%20Operations) Centessa's results of operations show an increased net loss for the three months ended June **30**, **2025**, driven by higher R&D expenses, but a reduced net loss for the six-month period due to **$15.0 million** in license revenue. R&D expenses surged due to the OX2R agonist program, while G&A expenses saw minor fluctuations. Interest income increased due to higher cash balances, and other non-operating income benefited from foreign currency gains [Comparison of the Three Months Ended June 30, 2025 and June 30, 2024](index=31&type=section&id=Comparison%20of%20the%20Three%20Months%20Ended%20June%2030,%202025%20and%20June%2030,%202024) For the three months ended June **30**, **2025**, Centessa reported a net loss of **$50.3 million**, an increase from **$43.8 million** in the prior year. This was primarily due to a **$9.9 million** increase in R&D expenses, driven by the OX2R agonist program, partially offset by higher interest income and foreign currency gains Results of Operations (Three Months Ended June 30, amounts in thousands) | Metric | 2025 | 2024 | Change | | :-------------------------- | :----- | :----- | :----- | | Research and development | $42,741 | $32,815 | +$9,926 | | General and administrative | $11,912 | $11,165 | +$747 | | Loss from operations | $(54,653) | $(43,980) | $(10,673) | | Interest and investment income | $4,380 | $3,240 | +$1,140 | | Net loss | $(50,343) | $(43,816) | $(6,527) | - R&D expenses increased by **$9.9 million**, mainly due to higher development costs for the OX2R agonist program (**$22.4 million** increase), partially offset by lower spending on discontinued programs[128](index=128&type=chunk) - Other non-operating income, net, was a gain of **$3.6 million** in **2025**, primarily from foreign currency transaction gains, compared to **$0.2 million** in **2024**[133](index=133&type=chunk) [Comparison of the Six Months Ended June 30, 2025 and June 30, 2024](index=32&type=section&id=Comparison%20of%20the%20Six%20Months%20Ended%20June%2030,%202025%20and%20June%2030,%202024) For the six months ended June **30**, **2025**, Centessa's net loss decreased to **$76.5 million** from **$81.9 million** in the prior year, primarily driven by **$15.0 million** in license revenue from Genmab. R&D expenses increased by **$20.7 million**, largely due to the OX2R agonist program, while G&A expenses slightly decreased. Interest and investment income significantly increased due to realized gains and higher average cash balances Results of Operations (Six Months Ended June 30, amounts in thousands) | Metric | 2025 | 2024 | Change | | :-------------------------- | :----- | :----- | :----- | | License and other revenue | $15,000 | $— | +$15,000 | | Research and development | $76,184 | $55,467 | +$20,717 | | General and administrative | $24,246 | $24,603 | $(357) | | Loss from operations | $(85,430) | $(80,070) | $(5,360) | | Net loss | $(76,478) | $(81,862) | +$5,384 | - License and other revenue of **$15.0 million** was recognized in **2025** from the Genmab License Agreement[135](index=135&type=chunk) - R&D expenses increased by **$20.7 million**, primarily due to a **$37.8 million** increase in the OX2R agonist program, partially offset by lower costs from discontinued programs and a decline in research tax incentives[136](index=136&type=chunk) - Interest and investment income increased by **$6.4 million**, reflecting realized gains on marketable securities and higher average cash balances[138](index=138&type=chunk)[139](index=139&type=chunk) [Liquidity and Capital Resources](index=34&type=section&id=Liquidity%20and%20Capital%20Resources) As of June **30**, **2025**, Centessa had **$404.1 million** in cash, cash equivalents, and investments, expected to fund operations into mid-**2027**. The company secured a **$200.0 million** loan facility with Oxford Finance in December **2024**, with an initial **$110.0 million** tranche. An 'at-the-market' (ATM) program generated **$6.1 million** in net proceeds in H**1** **2025**. Operating activities used **$79.7 million**, investing activities used **$262.3 million** (primarily for marketable securities), and financing activities provided **$4.7 million** - Cash, cash equivalents, and investments totaled **$404.1 million** as of June **30**, **2025**, expected to fund operations into mid-**2027**[113](index=113&type=chunk)[141](index=141&type=chunk) - Secured a **$200.0 million** loan facility with Oxford Finance in December **2024**, with an initial **$110.0 million** received[142](index=142&type=chunk)[143](index=143&type=chunk) - The ATM program generated **$6.1 million** in net proceeds from the sale of **372,538** ordinary shares in the first six months of **2025**[146](index=146&type=chunk) Summary of Cash Flows (amounts in thousands) | Activity | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------------- | :----------------------------- | :----------------------------- | | Net cash used in operating activities | $(79,698) | $(77,866) | | Net cash used in investing activities | $(262,342) | $(38,697) | | Net cash provided by financing activities | $4,691 | $115,806 | [Funding Requirements](index=35&type=section&id=Funding%20Requirements) Centessa anticipates substantial increases in expenses for continued product development, clinical trials, regulatory approvals, and potential commercialization activities. The company will require significant additional funding, which it plans to secure through equity offerings, debt financings, or collaborations. Failure to raise capital on acceptable terms could force delays or termination of R&D programs - Expenses are expected to increase substantially for product development, clinical trials, regulatory approvals, and pre-commercialization activities[153](index=153&type=chunk) - Need to obtain substantial additional funding for operations - Future funding requirements are uncertain and depend on the scope, progress, and costs of R&D programs, regulatory review, and commercialization efforts - Plans to seek additional funding through public/private equity offerings, debt financings, or collaborations[153](index=153&type=chunk)[154](index=154&type=chunk)[203](index=203&type=chunk) - Inability to raise capital on attractive terms could lead to delays, reductions, or elimination of R&D programs or commercialization efforts[154](index=154&type=chunk) [Critical Accounting Policies and Estimates](index=36&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) As of June **30**, **2025**, Centessa's critical accounting policies and estimates remained consistent with those disclosed in its Annual Report on Form **10**-K for the year ended December **31**, **2024**. The preparation of financial statements involves significant management judgments and estimates - No significant changes to critical accounting policies and estimates as of June **30**, **2025**, compared to December **31**, **2024**[157](index=157&type=chunk) - Financial statements are prepared in accordance with U.S. GAAP, requiring management to make estimates and assumptions affecting reported amounts[156](index=156&type=chunk) [Contractual Obligations and Other Commitments](index=37&type=section&id=Contractual%20Obligations%20and%20Other%20Commitments) There were no material changes to Centessa's contractual obligations and other commitments as of June **30**, **2025**, beyond what was disclosed in the Debt and Commitments and Contingencies notes of this report and the **2024** Annual Report - No material changes to contractual obligations and other commitments as of June **30**, **2025**, compared to the **2024** Annual Report, other than those disclosed in Note **6** (Debt) and Note **7** (Commitments and Contingencies)[159](index=159&type=chunk) [Emerging Growth Company and Smaller Reporting Company Status](index=37&type=section&id=Emerging%20Growth%20Company%20and%20Smaller%20Reporting%20Company%20Status) Centessa is currently an emerging growth company and a smaller reporting company, benefiting from reduced reporting requirements. However, as of December **31**, **2025**, its market value exceeded **$700 million**, it will become a 'large accelerated filer,' losing these exemptions and incurring increased compliance costs, including auditor attestation requirements - Currently an emerging growth company and smaller reporting company, utilizing reduced reporting requirements under the JOBS Act[160](index=160&type=chunk)[162](index=162&type=chunk) - As of December **31**, **2025**, the company will be considered a 'large accelerated filer' and will cease to be an 'emerging growth company' and 'smaller reporting company'[163](index=163&type=chunk) - This change will remove exemptions from auditor attestation requirements (Section **404**(b) of Sarbanes-Oxley Act) and reduced reporting, leading to increased compliance costs[163](index=163&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=37&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) As a smaller reporting company, Centessa Pharmaceuticals plc is not required to provide 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[164](index=164&type=chunk) [Item 4. Controls and Procedures](index=37&type=section&id=Item%204.%20Controls%20and%20Procedures) Management, including the CEO and CFO, evaluated the effectiveness of Centessa's disclosure controls and procedures as of June **30**, **2025**, concluding they were effective at a reasonable assurance level. No changes in internal control over financial reporting occurred during the quarter that materially affected or are reasonably likely to materially affect these controls - Disclosure controls and procedures were evaluated as effective at the reasonable assurance level as of June **30**, **2025**[167](index=167&type=chunk) - No material changes in internal control over financial reporting occurred during the three months ended June **30**, **2025**[168](index=168&type=chunk) [PART II. OTHER INFORMATION](index=39&type=section&id=PART%20II.%20OTHER%20INFORMATION) [Item 1. Legal Proceedings](index=39&type=section&id=Item%201.%20Legal%20Proceedings) Centessa Pharmaceuticals plc reported no legal proceedings as of the filing date - No legal proceedings were reported[171](index=171&type=chunk) [Item 1A. Risk Factors](index=39&type=section&id=Item%201A.%20Risk%20Factors) This comprehensive section details the significant risks Centessa faces, categorized into business model, financial position, clinical development, reliance on third parties, intellectual property, commercialization, industry-specific, and securities ownership risks. These risks highlight the challenges in drug development, funding, regulatory approval, market acceptance, and operational complexities inherent in a clinical-stage pharmaceutical company - The company's business is subject to numerous risks and uncertainties that could materially adversely affect its business, financial condition, results of operations, growth prospects, and stock price[171](index=171&type=chunk) [Risks Related to our Business Model and Structure](index=39&type=section&id=Risks%20Related%20to%20our%20Business%20Model%20and%20Structure) Centessa's asset-centric drug discovery approach may not successfully build a pipeline of commercially valuable product candidates. The company faces challenges in integrating acquired subsidiaries, managing growth, and retaining a small, geographically dispersed team. Conflicts of interest may arise from officers serving multiple roles within the company and its subsidiaries, and reliance on licensed intellectual property may restrict strategic flexibility - The asset-centric approach to drug discovery and development may not succeed in building a pipeline of product candidates with commercial value[172](index=172&type=chunk) - Challenges include integrating operations of acquired Centessa Subsidiaries, managing growth, and potential operational, legal, and financial risks from disparate systems[176](index=176&type=chunk)[177](index=177&type=chunk) - Reliance on a small, geographically dispersed team of **98** employees and consultants presents operational challenges and limits resource allocation[182](index=182&type=chunk) - Programs are dependent on licensed intellectual property, and loss of rights or failure to comply with agreements could prevent development or commercialization[186](index=186&type=chunk) [Risks Related to our Financial Position, Need for Additional Capital and Growth Strategy](index=43&type=section&id=Risks%20Related%20to%20our%20Financial%20Position,%20Need%20for%20Additional%20Capital%20and%20Growth%20Strategy) Centessa has incurred significant net losses since inception and expects this to continue, with no product sales revenue to date. The company will need substantial additional funds to advance its product candidates, and there's no guarantee of sufficient future funding. Its loan facility with Oxford Finance contains restrictive covenants and is subject to acceleration, which could adversely affect its financial position. Acquisitions and strategic partnerships, while part of the growth strategy, also carry significant risks including increased capital requirements and dilution - The company has incurred significant net losses since inception and expects to continue incurring losses for the foreseeable future, with no revenue from product sales to date[189](index=189&type=chunk)[193](index=193&type=chunk) - Substantial additional funds are required to advance product candidates through development, and there is no guarantee of sufficient future funding[197](index=197&type=chunk) - The loan facility with Oxford Finance contains operating and financial covenants that restrict business activities and are subject to acceleration, potentially impacting financial position and ability to raise capital[205](index=205&type=chunk)[206](index=206&type=chunk) - Engaging in acquisitions or strategic partnerships may increase capital requirements, dilute shareholders, incur debt, or assume contingent liabilities[211](index=211&type=chunk) [Risks Related to Our Business and the Clinical Development, Regulatory Review and Approval](index=49&type=section&id=Risks%20Related%20to%20Our%20Business%20and%20the%20Clinical%20Development,%20Regulatory%20Review%20and%20Approval) Centessa's product candidates are mostly in early development stages, facing high risks of failure or delays in preclinical and clinical trials. Success in early trials is not indicative of later results, and patient enrollment can be challenging, especially for orphan indications. The marketing approval process is expensive, time-consuming, and uncertain, with no guarantee of U.S. or foreign regulatory approval. Undesirable side effects, competition, and the complexities of combination products or orphan drug designations further complicate development and commercialization - Most product candidates are in early development stages (preclinical or Phase **1**/**2a**), with high risk of failure or delays in development[216](index=216&type=chunk) - Success in preclinical studies or early clinical trials is not predictive of results in later trials, and product candidates may fail at any stage[223](index=223&type=chunk)[224](index=224&type=chunk) - Difficulty enrolling patients in clinical trials, particularly for orphan indications, could delay or prevent trial completion[234](index=234&type=chunk)[235](index=235&type=chunk) - The marketing approval process is expensive, time-consuming, and uncertain, with no guarantee of obtaining U.S. or foreign regulatory approval[231](index=231&type=chunk)[241](index=241&type=chunk) - Product candidates may cause undesirable side effects, leading to delays, more restrictive labeling, or denial of regulatory approval[254](index=254&type=chunk)[256](index=256&type=chunk) [Risks Related to our Reliance on Third Parties](index=64&type=section&id=Risks%20Related%20to%20our%20Reliance%20on%20Third%20Parties) Centessa heavily relies on third parties, such as Contract Research Organizations (CROs) and Contract Manufacturing Organizations (CMOs), to conduct preclinical studies, clinical trials, and manufacturing. Unsatisfactory performance, manufacturing problems, supply chain shortages, or non-compliance by these third parties could cause significant delays, increased costs, and harm to the business. The company's dependence on single-source suppliers for active pharmaceutical ingredients (APIs) and the need to license third-party technology further expose it to risks - Heavy reliance on third parties (CMOs, CROs) for manufacturing and conducting preclinical/clinical trials, with limited control over their performance[283](index=283&type=chunk)[284](index=284&type=chunk) - Manufacturing problems, including production interruptions, equipment malfunctions, or raw material shortages, could cause delays or disruptions[289](index=289&type=chunk) - Dependence on single-source suppliers for active pharmaceutical ingredients (APIs) creates vulnerability to supply chain disruptions[299](index=299&type=chunk) - Inability to obtain licenses from third parties on commercially reasonable terms or failure to comply with existing license obligations could harm the business[302](index=302&type=chunk)[303](index=303&type=chunk) [Risks Related to Intellectual Property](index=69&type=section&id=Risks%20Related%20to%20Intellectual%20Property) Centessa's success depends on obtaining, maintaining, and enforcing sufficient patent and other intellectual property (IP) protection for its product candidates and technology. The patent prosecution process is expensive and uncertain, and issued patents may be challenged or found invalid. The company also relies on trade secrets, which are difficult to protect. Third-party claims of IP infringement or misappropriation are costly and time-consuming, potentially delaying development or leading to substantial damages. Changes in patent law and the limited lifespan of patents further threaten competitive position - Ability to obtain, maintain, enforce, and defend patents and other intellectual property rights is critical for success[304](index=304&type=chunk)[305](index=305&type=chunk) - The patent prosecution process is expensive, time-consuming, and uncertain, with no guarantee that pending applications will result in broad or enforceable patents[307](index=307&type=chunk)[308](index=308&type=chunk) - Reliance on trade secrets and confidentiality agreements to protect unpatented know-how, but enforcement is difficult and disclosure could harm competitive position[310](index=310&type=chunk) - Risk of third-party claims of intellectual property infringement, misappropriation, or other violations, leading to costly litigation, potential damages, or injunctions[311](index=311&type=chunk)[314](index=314&type=chunk) - Patent terms may be inadequate, and changes in patent law could diminish the value of patents, impairing the ability to protect product candidates[341](index=341&type=chunk)[346](index=346&type=chunk) [Risks Related to Commercialization](index=80&type=section&id=Risks%20Related%20to%20Commercialization) Centessa has no prior experience commercializing a product candidate and lacks the necessary sales, marketing, and distribution capabilities. Commercial success depends on market acceptance by physicians, patients, and third-party payors, which is uncertain. Market opportunities for oncology product candidates may be smaller than estimated. Healthcare legislative reforms, particularly those aimed at cost containment and drug pricing, could adversely affect the business and profitability. Product liability lawsuits pose a significant financial risk, potentially leading to substantial liabilities - Lack of prior experience in commercializing product candidates and absence of a sales, marketing, or distribution infrastructure[354](index=354&type=chunk)[355](index=355&type=chunk) - Commercial success is highly dependent on market acceptance by physicians, patients, and third-party payors, which is uncertain and influenced by efficacy, safety, cost, and competition[356](index=356&type=chunk) - Market opportunities for product candidates, especially in oncology, may be smaller than anticipated, impacting financial viability[358](index=358&type=chunk) - Healthcare legislative reforms and increasing efforts by payors to contain costs could limit coverage, reduce reimbursement, and adversely affect product pricing and revenues[362](index=362&type=chunk)[367](index=367&type=chunk)[368](index=368&type=chunk) - Inherent risk of product liability exposure from clinical trials and commercial sales, potentially leading to substantial liabilities and harm to reputation[375](index=375&type=chunk) [Risks Related to our Business and Industry](index=84&type=section&id=Risks%20Related%20to%20our%20Business%20and%20Industry) Centessa faces risks from inadequate funding for government agencies, adverse developments in the financial services industry, and the critical need to retain key employees and attract qualified personnel. Employee misconduct, non-compliance with environmental and healthcare fraud laws, and cybersecurity incidents pose significant operational and reputational threats. International operations expose the company to diverse regulatory, legal, political, and financial risks, while stringent and evolving data privacy laws (like GDPR and CCPA) impose complex compliance burdens and potential penalties - Inadequate funding for government agencies (FDA, SEC) or disruptions could hinder regulatory review and business functions[377](index=377&type=chunk)[379](index=379&type=chunk) - Adverse developments in the financial services industry could impair access to funding sources and impact business operations[380](index=380&type=chunk)[382](index=382&type=chunk) - Future success depends on retaining key employees, consultants, and advisors, and attracting qualified personnel in a competitive market[386](index=386&type=chunk)[387](index=387&type=chunk) - Exposure to risks of employee fraud or misconduct, noncompliance with healthcare fraud and abuse laws, and environmental regulations[391](index=391&type=chunk)[392](index=392&type=chunk) - Vulnerability to cybersecurity incidents and data breaches, which could disrupt development programs, lead to loss of sensitive information, and incur significant costs and liabilities[394](index=394&type=chunk)[396](index=396&type=chunk)[397](index=397&type=chunk) - International operations expose the company to multiple, conflicting, and changing laws, regulations, and compliance requirements, including privacy regulations and anti-corruption laws[399](index=399&type=chunk)[403](index=403&type=chunk) - Subject to stringent and changing data privacy laws (e.g., GDPR, UK GDPR, CCPA), imposing complex compliance burdens, potential fines, and operational disruptions[407](index=407&type=chunk)[409](index=409&type=chunk)[415](index=415&type=chunk)[421](index=421&type=chunk)[422](index=422&type=chunk) [Risks Related to Ownership of Our Securities](index=93&type=section&id=Risks%20Related%20to%20Ownership%20of%20Our%20Securities) Centessa's status as an emerging growth company and smaller reporting company will change to a 'large accelerated filer' by December **31**, **2025**, increasing compliance costs. The price of its ADSs is highly volatile, and future sales by shareholders could cause price declines. Forum selection clauses in articles of association may limit shareholder litigation options. Future equity issuances could dilute ownership. The company does not intend to pay dividends. As a public company, it faces increased risk of securities class action litigation and significant compliance costs. There is uncertainty regarding its status as a Controlled Foreign Corporation (CFC) or Passive Foreign Investment Company (PFIC), which could have adverse U.S. federal income tax consequences for U.S. holders. Changes in tax laws and potential disagreements with tax authorities also pose risks - Transitioning from an emerging growth company to a large accelerated filer by December **31**, **2025**, will increase reporting requirements and compliance costs[433](index=433&type=chunk)[435](index=435&type=chunk)[436](index=436&type=chunk) - The trading price of ADSs is highly volatile, influenced by clinical trial results, regulatory decisions, financial performance, and broader market factors[440](index=440&type=chunk)[441](index=441&type=chunk) - Future sales of a substantial number of securities by shareholders could cause the ADS price to fall due to dilution[443](index=443&type=chunk)[450](index=450&type=chunk) - The company does not intend to pay dividends on ordinary shares, limiting shareholder returns to share value appreciation[453](index=453&type=chunk) - Uncertainty exists regarding the company's classification as a Controlled Foreign Corporation (CFC) or Passive Foreign Investment Company (PFIC), which could lead to material adverse U.S. federal income tax consequences for U.S. holders[486](index=486&type=chunk)[487](index=487&type=chunk) - Changes to tax laws, regulations, or interpretations, and potential disagreements with tax authorities, could materially adversely affect the company's financial position and reduce net returns to shareholders[491](index=491&type=chunk)[493](index=493&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=110&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) Centessa Pharmaceuticals plc reported no unregistered sales of equity securities and stated that the use of proceeds from its initial public offering is not applicable - No unregistered sales of equity securities were reported[515](index=515&type=chunk) - Use of proceeds from initial public offering is not applicable[516](index=516&type=chunk) [Item 3. Defaults Upon Senior Securities](index=110&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) Centessa Pharmaceuticals plc reported no defaults upon senior securities - No defaults upon senior securities were reported[518](index=518&type=chunk) [Item 4. Mine Safety Disclosures](index=110&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) Centessa Pharmaceuticals plc reported that mine safety disclosures are not applicable to its operations - Mine safety disclosures are not applicable[519](index=519&type=chunk) [Item 5. Other Information](index=110&type=section&id=Item%205.%20Other%20Information) This section details the company's policy on Rule **10b5**-**1** trading plans, which allows directors, officers, and employees to enter into trading plans when not in possession of material non-public information. No directors or officers adopted, terminated, or modified such plans during the three months ended June **30**, **2025** - The company's policy permits officers, directors, and employees to enter into Rule **10b5**-**1** trading plans when not in possession of material non-public information[520](index=520&type=chunk) - No directors or officers adopted, terminated, or modified a Rule **10b5**-**1** trading arrangement during the three months ended June **30**, **2025**[521](index=521&type=chunk) [Item 6. Exhibits](index=111&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed as part of the Form **10**-Q, including the Articles of Association, Deposit Agreement, certifications from principal executive and financial officers, and Inline XBRL documents - Exhibit **3.1**: Articles of Association of the registrant - Exhibit **4.1**: Form of Deposit Agreement - Exhibit **31.1** & **31.2**: Certifications of Principal Executive Officer and Principal Financial Officer - Exhibit **32.1** & **32.2**: Certifications of Principal Executive Officer and Principal Financial Officer pursuant to **18** U.S.C. Section **1350** - Exhibits **101** INS, SCH, CAL, DEF, LAB, PRE: Inline XBRL Instance Document and Taxonomy Extension Documents[522](index=522&type=chunk) [SIGNATURES](index=112&type=section&id=SIGNATURES) [Signatures of Authorized Officers](index=112&type=section&id=Signatures%20of%20Authorized%20Officers) The report is duly signed on behalf of Centessa Pharmaceuticals PLC by its Chief Executive Officer, Saurabh Saha, M.D., Ph.D., and Chief Financial Officer, John Crowley, on August **12**, **2025** - Report signed by Saurabh Saha, M.D., Ph.D., Chief Executive Officer, and John Crowley, Chief Financial Officer, on August **12**, **2025**[526](index=526&type=chunk)