text Therapeutics (CNTX) - 2022 Q4 - Annual Report

Part I Business Context Therapeutics, a biopharmaceutical company, strategically shifted focus to its preclinical CTIM-76 program, extending its cash runway - On March 22, 2023, the company announced a strategic portfolio prioritization, discontinuing the development of ONA-XR to focus resources on its preclinical program, CTIM-76[42][344] - The decision to cease ONA-XR development was influenced by a competitive breast cancer treatment landscape, challenging market conditions, and the identification of elevated liver function tests (LFTs) in three patients in a Phase 2 trial[42][43][345] - The company's lead program is now CTIM-76, an anti-Claudin 6 (CLDN6) x anti-CD3 bispecific antibody designed to target solid tumors An Investigational New Drug (IND) application is expected to be filed in Q1 2024[41][47][343] - Preclinical data indicates CTIM-76 has high selectivity for CLDN6 over the highly similar CLDN9 (>1000x), which is a key development challenge and a potential competitive advantage[59][67] - The company relies on third parties for manufacturing and has agreements with Lonza for the development and manufacture of CTIM-76[78][80] - As of March 1, 2023, the company had nine full-time employees and one consultant serving as an executive officer[127][185] Risk Factors The company faces significant risks including a history of losses, capital dependence, reliance on its lead candidate, and operational and market challenges - The company has a history of losses, has never been profitable, and will require substantial additional capital to fund its research, development, and commercialization efforts[136][139] - The business is highly dependent on the successful development and commercialization of CTIM-76, which is in the early stages of development and has not yet entered clinical trials[153] - The decision to discontinue ONA-XR development carries risks, including the inability to consummate a strategic transaction for the asset, which could be time-consuming and distracting to management[177][178] - The company relies heavily on third parties, such as CROs and contract manufacturers (e.g., Lonza), for clinical trials and manufacturing Failure by these parties to perform could significantly harm the business[210][219] - On January 24, 2023, the company received a notice from Nasdaq for non-compliance with the minimum $1.00 bid price requirement, which could lead to delisting if not resolved[301] - The company is exposed to risks from the financial services industry, highlighted by the recent failure of Silicon Valley Bank, which could impair access to funding and affect counterparties[198][200] Unresolved Staff Comments None Properties The company's corporate headquarters are located in Philadelphia, Pennsylvania, where it leases approximately 3,500 square feet of office space A sublease for this space expires in July 2023, and a new direct lease for the same space will commence on August 1, 2023, and expire on August 31, 2024 - The company leases approximately 3,500 square feet of office space in Philadelphia, PA A new direct lease for this space begins August 1, 2023, and expires August 31, 2024, with a one-year renewal option[330] Legal Proceedings The company is not currently a party to any material legal proceedings Mine Safety Disclosures Not applicable Part II Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities The company's common stock trades on The Nasdaq Stock Market under the symbol "CNTX" As of March 17, 2023, there were 15,966,053 shares outstanding held by 56 holders of record The company has never paid cash dividends and does not anticipate paying any in the near future - The company's common stock has traded on The Nasdaq Stock Market under the symbol "CNTX" since its IPO on October 20, 2021[335] - As of March 17, 2023, there were 15,966,053 shares of common stock outstanding held by 56 holders of record[336] - The company has not paid and does not anticipate paying cash dividends in the foreseeable future, intending to retain earnings for business development[337] [Reserved]](index=62&type=section&id=Item%206.%20%5BReserved%5D) This item is reserved Management's Discussion and Analysis of Financial Condition and Results of Operations The company reported a net loss of $14.8 million in 2022 due to increased operating expenses, with $35.5 million cash expected to fund operations into late 2024 Comparison of Results of Operations (2022 vs. 2021) | | Year ended December 31, | | | | |---|---:|---:|---:|---:| | | 2022 | 2021 | $ Change | % Change | | Operating Expenses: | | | | | | Acquired in-process R&D | $500,000 | $3,087,832 | $(2,587,832) | (84)% | | Research and development | $7,091,163 | $3,805,067 | $3,286,096 | 86% | | General and administrative | $7,790,040 | $3,632,920 | $4,157,120 | 114% | | Loss from operations | $(15,381,203) | $(10,525,819) | $(4,855,384) | 46% | | Net loss | $(14,835,939) | $(10,456,870) | $(4,379,069) | 42% | - Research and development expenses increased by $3.3 million (86%) in 2022, primarily due to a $2.4 million increase in ONA-XR costs (contract manufacturing and clinical trials) and a $0.3 million increase in CTIM-76 IND-enabling study costs[366] - General and administrative expenses increased by $4.2 million (114%) in 2022, driven by higher compensation ($2.0 million), insurance costs ($1.2 million), and other public company operating costs ($1.0 million)[367] - As of December 31, 2022, the company had $35.5 million in cash and cash equivalents and an accumulated deficit of $44.1 million[350][371] - The company expects its current cash and cash equivalents to be sufficient to fund operations into late 2024, following its strategic decision to discontinue the ONA-XR program[345][350][372] - Net cash used in operating activities was $13.5 million in 2022, compared to $8.8 million in 2021, reflecting increased operational spending on product development[377][378][379] Quantitative and Qualitative Disclosures About Market Risk This item is not required as the company qualifies as a smaller reporting company Financial Statements and Supplementary Data This section provides audited financial statements for 2022 and 2021, including key financial data and notes on accounting policies and subsequent events Consolidated Balance Sheet Data (as of December 31) | | 2022 | 2021 | |---|---:|---:| | Cash and cash equivalents | $35,497,445 | $49,635,197 | | Total assets | $37,965,943 | $51,305,750 | | Total liabilities | $3,207,577 | $3,033,415 | | Accumulated deficit | $(44,090,379) | $(29,254,440) | | Total stockholders' equity | $34,758,366 | $48,272,335 | Consolidated Statement of Operations Data (for the year ended December 31) | | 2022 | 2021 | |---|---:|---:| | Research and development | $7,091,163 | $3,805,067 | | General and administrative | $7,790,040 | $3,632,920 | | Loss from operations | $(15,381,203) | $(10,525,819) | | Net loss | $(14,835,939) | $(10,456,870) | | Net loss per share, basic and diluted | $(0.93) | $(3.69) | - A subsequent event note discloses that on March 22, 2023, the company announced a portfolio prioritization to discontinue development of ONA-XR and focus on CTIM-76[513] - The company has a full valuation allowance against its net deferred tax assets of $9.2 million as of December 31, 2022, as it is not more likely than not that they will be realized[506] - In March 2023, the company amended its license agreement with Integral Molecular for CTIM-76, modifying certain milestone payment terms[495] Changes in and Disagreements With Accountants on Accounting and Financial Disclosures None Controls and Procedures Management, including the CEO and CFO, evaluated the company's disclosure controls and procedures and concluded they were effective as of December 31, 2022 Management also assessed internal control over financial reporting and concluded it was effective As an emerging growth company, an attestation report from the independent registered public accounting firm on internal controls is not required - Management concluded that as of December 31, 2022, the company's disclosure controls and procedures were effective[517] - Management concluded that as of December 31, 2022, the company's internal control over financial reporting was effective based on the COSO 2013 framework[519] - The annual report does not include an auditor's attestation report on internal control over financial reporting, as permitted for emerging growth companies under the JOBS Act[520] Other Information This section discloses two material events from March 2023 On March 20, the company amended its license agreement with Integral Molecular, modifying milestone payment terms On March 21, in connection with discontinuing the ONA-XR program, the company mutually terminated its Clinical Trial Collaboration and Supply Agreement with Menarini Group - On March 20, 2023, the company amended its license agreement with Integral Molecular, removing a second milestone payment and reallocating its value to a third milestone payment[522] - On March 21, 2023, the company mutually terminated its Clinical Trial Collaboration and Supply Agreement with Menarini Group related to the ONA-XR program[523] Disclosure Regarding Foreign Jurisdictions that Prevent Inspections Not applicable Part III Directors, Executive Officers and Corporate Governance Information required for this item will be incorporated by reference from the company's definitive Proxy Statement for its 2023 Annual Meeting of Stockholders Executive Compensation Information required for this item will be incorporated by reference from the company's definitive Proxy Statement for its 2023 Annual Meeting of Stockholders Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters Information required for this item will be incorporated by reference from the company's definitive Proxy Statement for its 2023 Annual Meeting of Stockholders Certain Relationships and Related Transactions, and Director Independence Information required for this item will be incorporated by reference from the company's definitive Proxy Statement for its 2023 Annual Meeting of Stockholders Principal Accountant Fees and Services Information required for this item will be incorporated by reference from the company's definitive Proxy Statement for its 2023 Annual Meeting of Stockholders Part IV Exhibits and Financial Statement Schedules This section lists the exhibits filed with or furnished as part of the Annual Report Key exhibits include the company's charter and bylaws, various material contracts such as license and collaboration agreements with Integral Molecular, Tyligand Bioscience, and Lonza, employment agreements, and certifications from the CEO and CFO Form 10-K Summary Not applicable