Finch Therapeutics (US:FNCH)2024-03-25 20:31Financial Performance - The company reported net losses of $74.8 million and $114.6 million for the years ended December 31, 2023 and 2022, respectively, with an accumulated deficit of $350.4 million as of December 31, 2023[247]. - Total revenue for the year ended December 31, 2023, was $0.1 million, a decrease of 88.6% from $0.9 million in 2022, primarily due to the termination of the Takeda Agreement[273]. - The net loss for 2023 was $74.8 million, an improvement from a net loss of $114.6 million in 2022[284]. - Cash used in operating activities decreased to $31.5 million in 2023 from $74.9 million in 2022, reflecting reduced operational expenses[285]. - The company anticipates continuing to incur significant losses as it seeks to realize the value of its intellectual property estate[289]. Revenue Generation - Revenue has not been generated from product sales, with future revenue expected to come primarily from collaboration and license agreements[253]. - The company does not expect to progress any product candidates through clinical trials or generate revenue from product sales in the foreseeable future[246]. - The company has no products approved for commercial sale and does not expect to generate revenue from licensed products for the foreseeable future[253]. Expenses and Cost Management - The company has significantly scaled back expenses, including reducing headcount and winding down clinical development efforts, as part of its 2023 Business Initiatives[245]. - Research and development expenses decreased by 85.6% to $7.2 million in 2023 from $52.9 million in 2022, driven by a significant scaling back of development efforts[274]. - General and administrative expenses were $26.9 million in 2023, down 25.7% from $36.2 million in 2022, mainly due to a reduction in personnel expenses[275]. - The company anticipates a decrease in general and administrative expenses due to a reduction in headcount to one full-time employee[258]. Impairment Charges - The company recognized an impairment charge of $32.9 million for in-process research and development (IPR&D) in 2023, compared to no impairment in 2022[277]. - An interim impairment test of IPR&D as of March 31, 2023, resulted in a full impairment charge of $32.9 million, as the fair value of the IPR&D asset was less than its carrying value[301]. - A full impairment charge of $13.1 million was recognized in the first quarter of 2023 for long-lived assets, including equipment and software, due to discontinuation of a clinical trial and workforce reduction[304]. - The company recorded a full goodwill impairment charge of $18.1 million due to a decline in stock price and market capitalization below net book value as of September 30, 2022[300]. Funding and Capital Requirements - The company may require additional funding to support operations and may pursue equity offerings, debt financings, or other capital sources[249]. - As of December 31, 2023, the company had unrestricted cash and cash equivalents of $25.1 million, expected to fund operations into 2025[289]. - Total lease commitments amounted to $42.4 million, with $4.8 million due within one year[290]. - The company had borrowings under its Loan Agreement totaling $15.0 million with an average interest rate of 8.71% as of December 31, 2022, but prepaid all outstanding amounts by January 25, 2023[313]. Intellectual Property and Assets - The company holds more than 113 issued U.S. and foreign patents relevant to microbiome therapeutics, including investigational candidate CP101 for preventing recurrent C. difficile infection[244]. - The company has developed a significant biorepository of strains and samples that may support future collaborations[252]. - The company evaluates long-lived assets for impairment whenever events indicate that the carrying amount may not be recoverable, measuring recoverability against future undiscounted net cash flows[302]. - The fair value of the company's IPR&D asset exceeded its carrying value as of December 31, 2022, resulting in no impairment at that time[301]. Company Classification and Reporting - The company is classified as an "emerging growth company" and a "smaller reporting company," allowing it to take advantage of certain exemptions and reduced reporting requirements until December 31, 2026[306][308]. - The company may present only the two most recent fiscal years of audited financial statements in its Annual Report due to its status as a smaller reporting company[309]. - The company has not entered into investments for trading or speculative purposes, maintaining a conservative investment portfolio[312].