Cogent Biosciences(COGT) - 2023 Q1 - Quarterly Report

PART I—FINANCIAL INFORMATION Item 1. Financial Statements (Unaudited) Cogent Biosciences reported an increased net loss for Q1 2023 driven by higher R&D expenses, with a decrease in cash and total assets from year-end 2022 Condensed Consolidated Balance Sheets As of March 31, 2023, total assets and liabilities decreased, primarily due to reduced marketable securities and CVR liability settlement | Balance Sheet Items (in thousands) | March 31, 2023 | December 31, 2022 | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $160,698 | $139,886 | | Marketable securities | $59,566 | $119,390 | | Total current assets | $226,270 | $264,966 | | Total assets | $263,198 | $300,810 | | Liabilities & Equity | | | | Total current liabilities | $21,120 | $26,849 | | Total liabilities | $39,635 | $45,075 | | Total stockholders' equity | $223,563 | $255,735 | Condensed Consolidated Statements of Operations and Comprehensive Loss For Q1 2023, net loss increased to $38.6 million, primarily driven by a significant rise in research and development expenses | Statement of Operations (in thousands) | Three Months Ended March 31, 2023 | Three Months Ended March 31, 2022 | | :--- | :--- | :--- | | Research and development | $36,038 | $25,470 | | General and administrative | $7,199 | $5,948 | | Total operating expenses | $43,237 | $31,418 | | Loss from operations | ($43,237) | ($31,418) | | Total other income, net | $4,650 | $784 | | Net loss | ($38,587) | ($30,634) | | Net loss per share | ($0.55) | ($0.68) | Condensed Consolidated Statements of Cash Flows Net cash used in operating activities increased in Q1 2023, offset by significant cash provided by investing activities, resulting in a net increase in cash | Cash Flow Items (in thousands) | Three Months Ended March 31, 2023 | Three Months Ended March 31, 2022 | | :--- | :--- | :--- | | Net cash used in operating activities | ($39,517) | ($28,334) | | Net cash (used in) provided by investing activities | $59,884 | ($441) | | Net cash provided by financing activities | $445 | $138 | | Net (decrease) increase in cash | $20,812 | ($28,637) | Notes to Unaudited Condensed Consolidated Financial Statements Notes detail the company's lead program bezuclastinib, expected cash runway, CVR liability reduction, and stock-based compensation expenses - The company's most advanced program is bezuclastinib, a selective tyrosine kinase inhibitor for genetically defined diseases like Systemic Mastocytosis (SM) and gastrointestinal stromal tumors (GIST)[26] - The fair value of the CVR liability was reduced by $1.7 million to zero during the first quarter of 2023, as the probability of milestone payments occurring before the CVR's expiration is now considered remote[41][42] Stock-Based Compensation (in thousands) | Stock-Based Compensation (in thousands) | Q1 2023 | Q1 2022 | | :--- | :--- | :--- | | Research and development | $2,956 | $1,924 | | General and administrative | $2,894 | $2,251 | | Total | $5,850 | $4,175 | Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses progress of lead candidate bezuclastinib, pipeline development, increased net loss due to R&D, and the company's liquidity position Overview and Pipeline Cogent focuses on bezuclastinib for SM and GIST across three trials, while advancing FGFR2 and ErbB2 inhibitor programs towards 2024 clinical trials - The company's lead program, bezuclastinib, is being evaluated in three clinical trials: APEX (Advanced Systemic Mastocytosis), SUMMIT (Non-Advanced Systemic Mastocytosis), and PEAK (Gastrointestinal Stromal Tumors)[71][75][76][78] - Initial clinical data for the SUMMIT trial in patients with Non-AdvSM is expected in the second half of 2023[76] - The research team is developing novel inhibitors for FGFR2 and ErbB2 mutations, with plans to initiate clinical trials for both programs in 2024[83][85][86] Results of Operations Total operating expenses increased in Q1 2023, driven by a significant rise in research and development costs for clinical trials and pipeline development Operating Results (in thousands) | Operating Results (in thousands) | Q1 2023 | Q1 2022 | Change | | :--- | :--- | :--- | :--- | | Research and development | $36,038 | $25,470 | $10,568 | | General and administrative | $7,199 | $5,948 | $1,251 | | Total operating expenses | $43,237 | $31,418 | $11,819 | | Net loss | ($38,587) | ($30,634) | ($7,953) | - The $10.6 million increase in R&D expense was driven by manufacturing and development costs for bezuclastinib, costs for the APEX, SUMMIT, and PEAK trials, and development of the research pipeline[106] - The increase in G&A expenses was primarily due to higher personnel costs from increased headcount, including a $0.6 million increase in stock-based compensation[107] Liquidity and Capital Resources As of March 31, 2023, the company held $220.3 million in cash and equivalents, expected to fund operations into 2025, supplemented by prior public offerings - As of March 31, 2023, the company had cash, cash equivalents and marketable securities of $220.3 million[92][117] - The current cash position is expected to fund operating expenses and capital expenditure requirements into 2025[92][117][125] - In June 2022, the company completed an underwritten public offering, raising net proceeds of approximately $161.9 million[114] Item 3. Quantitative and Qualitative Disclosures About Market Risk As a smaller reporting company, Cogent Biosciences is exempt from providing market risk disclosures - As a smaller reporting company, Cogent Biosciences is not required to provide quantitative and qualitative disclosures about market risk[133] Item 4. Controls and Procedures Management concluded that disclosure controls and procedures were effective as of March 31, 2023, with no material changes to internal control over financial reporting - Based on an evaluation as of March 31, 2023, the CEO and CFO concluded that the company's disclosure controls and procedures were effective at a reasonable assurance level[135] - No changes in internal control over financial reporting occurred during the quarter that materially affected, or are reasonably likely to materially affect, these controls[136] PART II—OTHER INFORMATION Item 1. Legal Proceedings The company is not currently a party to any material legal proceedings - The company reports that it is not currently a party to any material legal proceedings[139] Item 1A. Risk Factors No material changes have occurred to the risk factors previously disclosed in the company's 2022 Annual Report on Form 10-K - No material changes have occurred to the risk factors described in the company's 2022 Annual Report on Form 10-K[140] Other Part II Items The company reported no recent sales of unregistered securities, no defaults, no mine safety disclosures, and no other material information for Items 2-5 - Item 2: No recent sales of unregistered securities were reported[141] - Items 3, 4, and 5 were noted as 'Not applicable' or 'None'[142][143][144]