Cocrystal(COCP) - 2025 Q2 - Quarterly Report

Part I - FINANCIAL INFORMATION Item 1. Financial Statements This section presents the unaudited condensed consolidated financial statements for Cocrystal Pharma, Inc., including balance sheets, statements of operations, stockholders' equity, and cash flows, along with detailed notes explaining the company's organization, accounting policies, and specific financial line items for the periods ended June 30, 2025, and December 31, 2024 Condensed Consolidated Balance Sheets | Metric | June 30, 2025 (in thousands) | December 31, 2024 (in thousands) | | :-------------------------------- | :----------------------------- | :------------------------------- | | Assets | | | | Cash | $4,766 | $9,860 | | Total current assets | $6,765 | $11,580 | | Total assets | $8,505 | $13,456 | | Liabilities & Equity | | | | Total current liabilities | $1,831 | $2,428 | | Total liabilities | $3,172 | $3,933 | | Total stockholders' equity | $5,333 | $9,523 | | Total liabilities and stockholders' equity | $8,505 | $13,456 | - The company's cash balance decreased by approximately 51.7% from $9,860,000 at December 31, 2024, to $4,766,000 at June 30, 2025[7] - Total assets declined by approximately 36.8% from $13,456,000 at December 31, 2024, to $8,505,000 at June 30, 2025[7] Condensed Consolidated Statements of Operations | Operating Expenses (in thousands) | 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 | $1,122 | $4,308 | $2,482 | $7,258 | | General and administrative | $986 | $1,140 | $1,967 | $2,348 | | Total operating expenses | $2,108 | $5,448 | $4,449 | $9,606 | | Net loss | $(2,055) | $(5,343) | $(4,356) | $(9,299) | | Net loss per common share, basic and diluted | $(0.20) | $(0.53) | $(0.43) | $(0.91) | - Net loss significantly decreased for both the three-month period (from $5,343,000 in 2024 to $2,055,000 in 2025) and the six-month period (from $9,299,000 in 2024 to $4,356,000 in 2025), primarily due to reduced research and development expenses[10] - Research and development expenses decreased by approximately 73.9% for the three months ended June 30, 2025, and by approximately 65.8% for the six months ended June 30, 2025, compared to the same periods in 2024[10] Condensed Consolidated Statements of Stockholders' Equity | (in thousands) | Balance as of Dec 31, 2024 | Stock-based compensation | Net loss | Balance as of June 30, 2025 | | :----------------------- | :------------------------- | :----------------------- | :------- | :-------------------------- | | Common Stock Amount | $10 | - | - | $10 | | Additional Paid-in Capital | $342,931 | $166 | - | $343,097 | | Accumulated Deficit | $(333,418) | - | $(4,356) | $(337,774) | | Total Stockholders' Equity | $9,523 | $166 | $(4,356) | $5,333 | - Total stockholders' equity decreased from $9,523,000 at December 31, 2024, to $5,333,000 at June 30, 2025, primarily due to the net loss incurred during the period[14] - Stock-based compensation added $166,000 to additional paid-in capital for the six months ended June 30, 2025[14] Condensed Consolidated Statements of Cash Flows | (in thousands) | Six months ended June 30, 2025 | Six months ended June 30, 2024 | | :------------------------------------ | :----------------------------- | :----------------------------- | | Net cash used in operating activities | $(5,094) | $(8,202) | | Net cash used in investing activities | $0 | $(8) | | Net decrease in cash and restricted cash | $(5,094) | $(8,210) | | Cash and restricted cash at beginning of period | $9,935 | $26,428 | | Cash and restricted cash at end of period | $4,841 | $18,218 | - Net cash used in operating activities decreased by approximately 37.8% to $5,094,000 for the six months ended June 30, 2025, compared to $8,202,000 for the same period in 2024[17] - Cash and restricted cash at the end of the period significantly decreased from $18,218,000 in 2024 to $4,841,000 in 2025[17] Notes to the Condensed Consolidated Financial Statements 1. Organization and Business - Cocrystal Pharma, Inc. is a clinical-stage biopharmaceutical company focused on developing novel antiviral drug candidates for human viral diseases[19] - The company has incurred net losses and negative operating cash flows since inception, raising substantial doubt about its ability to continue as a going concern[21] - As of June 30, 2025, the company had $4,841,000 in cash and restricted cash, which is not believed to be sufficient to fund operations beyond the next 12 months[22] 2. Basis of Presentation and Significant Accounting Policies - The financial statements are prepared in accordance with U.S. GAAP for interim financial information and SEC regulations, and include normal recurring accruals[25] - The company operates as a single reportable segment, with its Co-Chief Executive Officer and President serving as the chief operating decision maker[28] - Research and development costs are expensed as incurred and presented net of refundable tax credits, primarily from the Australian subsidiary[43][44] 3. Property and Equipment | (in thousands) | June 30, 2025 | December 31, 2024 | | :------------------------------------ | :------------ | :---------------- | | Total property and equipment | $2,082 | $2,082 | | Less: accumulated depreciation and amortization | $(1,975) | $(1,929) | | Property and equipment, net | $107 | $153 | - Net property and equipment decreased from $153,000 at December 31, 2024, to $107,000 at June 30, 2025[54] - Total depreciation and amortization expense for the six months ended June 30, 2025, was approximately $46,000, a decrease from $68,000 in the prior year[54] 4. Accounts Payable and Accrued Expenses | (in thousands) | June 30, 2025 | December 31, 2024 | | :-------------------------------- | :------------ | :---------------- | | Accounts payable | $856 | $1,542 | | Accrued compensation | $106 | $117 | | Accrued other expenses | $552 | $468 | | Total accounts payable and accrued expenses | $1,514 | $2,127 | - Total accounts payable and accrued expenses decreased by approximately 28.9% from $2,127,000 at December 31, 2024, to $1,514,000 at June 30, 2025[55] 5. Common Stock - As of June 30, 2025, the Company had 100,000,000 authorized shares of common stock and 1,000,000 authorized shares of preferred stock[56] - There were 10,174,000 shares of common stock issued and outstanding, and no shares of preferred stock issued and outstanding, as of both June 30, 2025, and December 31, 2024[56] 6. Stock Based Awards - The 2015 Equity Incentive Plan expired on June 29, 2025, with no further equity awards to be issued under it[57] - Stockholders approved the 2025 Equity Incentive Plan on June 25, 2025, reserving an initial 1,500,000 shares, with automatic annual increases of 5% of outstanding common stock, up to a total of 4,000,000 shares[58][59] | (in thousands) | June 30, 2025 | December 31, 2024 | | :------------------------------------ | :------------ | :---------------- | | Outstanding options to purchase common stock | 537 | 550 | | Unvested restricted stock units | 155 | 164 | | Total potential common shares excluded from diluted EPS | 692 | 555 | 7. Commitments and Contingencies - The company has operating leases for office and lab space expiring in 2027 and 2031, with total operating lease liabilities of $1,658,000 as of June 30, 2025[68][69] - A Phase 2a clinical trial for an antiviral influenza candidate is ongoing, with a total cost of approximately $6.9 million, including a $1.7 million reservation fee fully expensed by December 31, 2024[75][76] - Operating lease expense for the six months ended June 30, 2025, was approximately $205,000, including $32,000 paid to a related party[74] 8. Transactions with Related Parties - The company renewed a three-year lease extension on August 14, 2024, with a limited liability company controlled by Dr. Phillip Frost, a director and principal stockholder[78] - Annualized straight-line rent expense for this related-party lease is approximately $64,000[78] - Total rent and other expenses paid to the related party were $32,000 for the six months ended June 30, 2025, compared to $31,000 for the same period in 2024[79] 9. Segment Information - The company operates and manages its business as a single reportable and operating segment, focused on research and development of antiviral candidates[80] | Segment Expenses (in thousands) | Six months ended June 30, 2025 | Six months ended June 30, 2024 | | :------------------------------ | :----------------------------- | :----------------------------- | | Research and development | $2,015 | $6,394 | | Salaries and personnel costs | $783 | $1,308 | | Stock-based compensation | $166 | $306 | | Operating expenses | $1,359 | $1,440 | | Net loss | $4,356 | $9,299 | Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides an overview of Cocrystal Pharma's business, recent research and development updates across its influenza, norovirus, coronavirus, and hepatitis C programs, and a detailed analysis of its financial performance, liquidity, and capital resources for the three and six months ended June 30, 2025, compared to the prior year Overview - Cocrystal Pharma, Inc. is a clinical-stage biotechnology company focused on discovering and developing novel antiviral therapeutics for serious and chronic viral diseases[83] - The company utilizes unique structure-based technologies and expertise to create safe, effective, and convenient small molecule antiviral drugs[83] - Promising preclinical and clinical-stage antiviral compounds are being developed for influenza, coronavirus, norovirus, and hepatitis C virus (HCV)[83] Impact of Inflation - The Company believes inflation has not materially affected its operations to date, beyond its general economic impact[84] - There is a risk that future inflationary pressures, particularly from United States tariff policy, could increase operating costs and strain working capital resources[84] Research and Development Update - The company continues to focus R&D efforts on norovirus, coronavirus, and influenza programs[85] Influenza Program - CC-42344, a novel PB2 inhibitor, is a preclinical lead for oral or inhaled treatment of pandemic and seasonal influenza A, showing excellent in vitro antiviral activity against resistant strains[87] - A Phase 2a human challenge study for oral CC-42344 received UK MHRA authorization, but enrollment was extended due to unexpectedly low influenza infection rates among participants[89][90] - CC-42344 demonstrated high potency (EC50, 0.003 µM) against the highly pathogenic H5N1 avian influenza A strain (A/Texas/37/2024) in May 2025[91] Norovirus and Coronavirus Programs - CDI-988, a novel protease inhibitor, is being developed as an oral pan-viral treatment for noroviruses and coronaviruses, including SARS-CoV-2 variants[93] - Phase 1 study results for CDI-988 showed favorable safety and tolerability across all doses (100 mg to 1200 mg), with headache as the most common adverse event[95][96][98] - CDI-988 demonstrated broad-spectrum activity against newly circulating GII.17 norovirus strains in April 2025[97] Therapeutic Targets - Influenza causes 1 billion cases and up to 650,000 deaths annually worldwide, with existing treatments facing significant viral resistance[99][100] - Norovirus is the leading cause of acute gastroenteritis in the U.S., responsible for 21 million cases and an estimated 900 deaths annually, with no effective treatment or vaccine currently available[102][104] - COVID-19 remains a global pandemic with over 778 million reported cases and 7 million deaths as of June 2025, driven by mutating SARS-CoV-2 variants[105][106] - The company is targeting the HCV NS5B polymerase with CC-31244 to develop ultra-short (4-6 weeks) pan-genotypic combination treatment regimens, aiming for high sustained virologic response rates[111] Results of Operations for the Three and Six Months Ended June 30, 2025 compared to the Three and Six Months Ended June 30, 2024 Research and Development Expense | (in thousands) | Three months ended June 30, 2025 | Three months ended June 30, 2024 | Six months ended June 30, 2025 | Six months ended June 30, 2024 | | :------------------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Total research and development expenses | $1,122 | $4,308 | $2,482 | $7,258 | - Research and development expenses decreased by $3,186,000 (73.9%) for the three months and $4,776,000 (65.8%) for the six months ended June 30, 2025, primarily due to reduced costs associated with the Influenza CC-42344 Phase 2a and Norovirus/Coronavirus CDI-988 Phase 1 clinical trials[115][116] | (in thousands) | Six months ended June 30, 2025 | Six months ended June 30, 2024 | | :------------------------------------ | :----------------------------- | :----------------------------- | | Influenza Program | $662 | $4,708 | | Norovirus and Coronavirus Programs | $1,093 | $1,372 | | Other discoveries | $203 | $220 | | Total external cost | $1,958 | $6,300 | | Salaries, Stock based compensation and other employee expenses | $467 | $864 | | Depreciation and other cost | $57 | $94 | | Total research and development expenses | $2,482 | $7,258 | General and Administrative Expense | (in thousands) | Three months ended June 30, 2025 | Three months ended June 30, 2024 | Six months ended June 30, 2025 | Six months ended June 30, 2024 | | :------------------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | General and administrative expenses | $986 | $1,140 | $1,967 | $2,348 | - General and administrative expenses decreased by $154,000 (13.5%) for the three months and $381,000 (16.2%) for the six months ended June 30, 2025, primarily due to reductions in salaries and wages, legal, and other general and administrative costs[118][119] | (in thousands) | Six months ended June 30, 2025 | Six months ended June 30, 2024 | | :------------------------------------ | :----------------------------- | :----------------------------- | | Salaries and Wages | $482 | $751 | | Professional/outside services | $216 | $154 | | Legal Consultants | $318 | $357 | | Rental Expense | $347 | $335 | | Investor and Public relations | $189 | $222 | | Business Insurance | $126 | $158 | | Public Company expenses | $99 | $155 | | Travel and other Expense | $190 | $216 | | Total G&A expense | $1,967 | $2,348 | Interest Income, Net | (in thousands) | Three months ended June 30, 2025 | Three months ended June 30, 2024 | Six months ended June 30, 2025 | Six months ended June 30, 2024 | | :------------------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Interest income, net | $28 | $151 | $65 | $371 | - Interest income decreased significantly, from $151,000 to $28,000 for the three-month period and from $371,000 to $65,000 for the six-month period, primarily due to lower cash balances held in interest-bearing accounts[121] Foreign Exchange Loss - The company recorded a foreign exchange gain of $28,000 for the six months ended June 30, 2025, a reversal from a $64,000 loss in the same period of 2024[122] - Foreign exchange fluctuations are primarily due to the operations of its wholly-owned Australian subsidiary[122] Income Taxes - No income tax benefit or expense was recognized for the three and six months ended June 30, 2025 and 2024, with an effective income tax rate of 0.00%[123] - A full valuation allowance is maintained against the company's net deferred tax assets due to cumulative losses and management's assessment of future taxable income[123] Net Loss | (in thousands) | Three months ended June 30, 2025 | Three months ended June 30, 2024 | Six months ended June 30, 2025 | Six months ended June 30, 2024 | | :------------------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net loss | $2,055 | $5,343 | $4,356 | $9,299 | - Net loss decreased significantly to $2,055,000 for the three months and $4,356,000 for the six months ended June 30, 2025, compared to $5,343,000 and $9,299,000, respectively, in the prior year, primarily due to reduced operating expenses[124] Liquidity and Capital Resources - Net cash used in operating activities decreased to $5,094,000 for the six months ended June 30, 2025, from $8,202,000 in the prior year, mainly due to reduced clinical trial expenses[125] - The company had $4,766,000 in unrestricted cash as of June 30, 2025, which is not expected to be sufficient to fund operations for the next 12 months[128] - Future operations will require additional capital, which management intends to secure through equity offerings or strategic partnerships, with no assurance of availability or acceptable terms[133] Cautionary Note Regarding Forward-Looking Statements - The report contains forward-looking statements about product candidates, development plans, timelines, operating results, and liquidity, identified by words like 'believe,' 'may,' 'expect,' and 'will'[134] - Actual results may differ due to risks including the need for additional capital, inflation, economic downturns, manufacturing delays, regulatory approvals, competition, and viral mutations[135] Critical Accounting Policies and Estimates - The preparation of financial statements requires management to make estimates and assumptions that affect reported asset, liability, revenue, and expense amounts[137] - Readers are encouraged to review these disclosures in the Company's Annual Report on Form 10-K for the year ended December 31, 2024[138] Item 3. Quantitative and Qualitative Disclosures About Market Risk This section states that the company has no applicable quantitative and qualitative disclosures about market risk for this reporting period - The company has no applicable quantitative and qualitative disclosures about market risk[140] Item 4. Controls and Procedures This section details the evaluation of the company's disclosure controls and procedures, concluding their effectiveness as of June 30, 2025, and reports no material changes in internal control over financial reporting during the quarter - Management, including Co-CEOs and CFO, concluded that disclosure controls and procedures were effective as of June 30, 2025[141] - No material changes in internal controls over financial reporting occurred during the quarter ended June 30, 2025[142] Part II - OTHER INFORMATION Item 1. Legal Proceedings This section states that there have been no material changes to the description of legal proceedings as set forth in the company's Annual Report - No material changes to legal proceedings have occurred during the reporting period, as compared to the Annual Report on Form 10-Q for the year ended June 30, 2025[144] Item 1.A. Risk Factors This section indicates that Item 1.A. Risk Factors is not applicable for smaller reporting companies - Item 1.A. Risk Factors is not applicable for smaller reporting companies[145] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds This section states that all recent sales of unregistered securities have been previously reported - All recent sales of unregistered securities have been previously reported[146] Item 3. Defaults Upon Senior Securities This section reports that there have been no defaults upon senior securities - There have been no defaults upon senior securities[147] Item 4. Mine Safety Disclosures This section indicates that Mine Safety Disclosures are not applicable to the company - Mine Safety Disclosures are not applicable[148] Item 5. Other Information This section confirms that no directors or officers adopted or terminated any Rule 10b5-1 trading plans or non-Rule 10b5-1 arrangements during the six months ended June 30, 2025 - No directors or officers adopted or terminated any Rule 10b5-1 trading plans or non-Rule 10b5-1 arrangements during the six months ended June 30, 2025[149] Item 6. Exhibits This section lists all exhibits filed or incorporated by reference as part of the Form 10-Q, including certificates of incorporation, bylaws, equity incentive plans, and certifications - The exhibit index lists documents such as Certificate of Incorporation, Amended and Restated Bylaws, 2025 Equity Incentive Plan, and various certifications (302, 906)[152] - Copies of the report and exhibits are available to stockholders upon written request[153] SIGNATURES This section contains the required signatures of the registrant's authorized officers, including the President and Co-Chief Executive Officer, and the Chief Financial Officer and Co-Chief Executive Officer, certifying the filing of the report - The report is signed by Sam Lee, President and Co-Chief Executive Officer, and James Martin, Chief Financial Officer and Co-Chief Executive Officer, on August 14, 2025[156]