Finch Therapeutics (FNCH) - 2023 Q1 - Quarterly Report

Financial Performance - Total revenue for the three months ended March 31, 2023, was $0.1 million, a decrease of 71% compared to $0.4 million for the same period in 2022, primarily due to the termination of the collaboration agreement with Takeda[140] - The net loss for the three months ended March 31, 2023, was $63.9 million, compared to a net loss of $24.6 million for the same period in 2022[139] - Cash and cash equivalents decreased by $29.6 million for the three months ended March 31, 2023, compared to a decrease of $26.6 million in the same period in 2022[149] - Net cash used in operating activities was $13.4 million for the three months ended March 31, 2023, a decrease from $25.6 million in the same period in 2022[149] Cash Position - As of March 31, 2023, the company has cash and cash equivalents of $41.7 million, which is expected to fund operations into 2025[118] - As of March 31, 2023, the company had cash and cash equivalents of $41.7 million, down from $71.0 million as of December 31, 2022[162] - The company believes its existing cash will fund operating expenses and capital expenditures into 2025, although this estimate is based on assumptions that may prove incorrect[154] Expenses and Cost Management - The company has significantly scaled back expenses by winding down development efforts, including liquidating certain assets and reducing headcount[107] - Research and development expenses are expected to decrease in the foreseeable future due to reduced headcount and discontinued clinical trials[128] - General and administrative expenses are also expected to decrease due to reduced headcount, while continuing to incur costs associated with being a public company[130] - Restructuring expenses amounted to $3.2 million for the three months ended March 31, 2023, compared to zero in the same period in 2022, due to expense reduction measures implemented in January 2023[145] Impairment Charges - The company recognized an impairment charge of $32.9 million for IPR&D assets in the first fiscal quarter of 2023, compared to no impairment charge in the same period in 2022[143] - An impairment charge of $13.1 million was recorded for long-lived assets in the three months ended March 31, 2023, as certain assets were deemed no longer usable following the discontinuation of the Phase 3 clinical trial in CP101[144] Strategic Partnerships and Intellectual Property - The company has a robust intellectual property estate with over 70 issued U.S. and foreign patents relevant to microbiome therapeutics[107] - The company will continue to explore opportunities for strategic partnerships and academic collaborations to realize the value of its intellectual property[112] - The company does not expect to generate revenue from product sales in the near future and plans to derive revenue from enforcement and out-licensing of its intellectual property estate[148] Clinical Trials and Development - The decision to discontinue the Phase 3 clinical trial of CP101 was made due to slower than anticipated enrollment and the ongoing unauthorized use of intellectual property[114] Financing and Revenue Generation - The company received a one-time upfront payment of $10.0 million from Takeda under the Takeda Agreement, along with $4.0 million in milestone payments[122] - The company has made payments of $5.0 million to OpenBiome related to the OpenBiome Agreement, with potential future milestone payments up to $26.0 million[125] - The company has raised approximately $177.0 million from the sale of convertible preferred stock and $14.0 million in collaboration revenue since inception[148] Market Risks and Accounting Policies - The company is exposed to market risks primarily due to interest rate sensitivities affecting its financial position[161] - The company has not experienced significant changes to its critical accounting policies from those described in its 2022 10-K filing[157] - The company has not entered into investments for trading or speculative purposes, focusing instead on capital preservation[162] Future Outlook - The company expects to continue incurring significant losses as it seeks to realize the value of its intellectual property and other assets[154] - The company will remain an emerging growth company until December 31, 2026, unless it meets certain revenue or market value thresholds[160] - There were no material changes to the company's cash requirements during the three months ended March 31, 2023[155]