10-Q
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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

 

FORM 10-Q

 

(Mark One)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2022

OR

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number: 001-38443

 

Cogent Biosciences, Inc.

(Exact name of registrant as specified in its charter)

 

 

Delaware

 

46-5308248

(State or other jurisdiction of

incorporation or organization)

 

(I.R.S. Employer

Identification Number)

 

275 Wyman Street, 3rd Floor

Waltham, Massachusetts

 

02451

(Address of principal executive offices)

 

(Zip code)

(617) 945-5576

(Registrant’s telephone number, including area code)

 

200 Cambridge Park Drive, Suite 2500

Cambridge, Massachusetts 02140

(Former name or former address, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

 

Trading

Symbol(s)

 

Name of each exchange

on which registered

Common Stock, $0.001 Par Value

 

COGT

 

The Nasdaq Global Select Market

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer

 

Accelerated filer

Non-accelerated filer

 

Smaller reporting company

 

 

 

Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No

 

As of November 11, 2022, there were 69,893,434 shares of the registrant’s Common Stock, $0.001 par value per share, outstanding.

 

 

 


Summary of the Material Risks Associated with Our Business

Our business is subject to numerous risks and uncertainties that you should be aware of in evaluating our business. These risks include, but are not limited to, the following:

Our business is highly dependent on the success of our bezuclastinib program and our ability to discover and develop additional product candidates. We may not be successful in our efforts to develop bezuclastinib or expand our pipeline of drug candidates.
Since the number of patients that we have dosed to date in our clinical trials is small, the results from such clinical trials may be less reliable than results achieved in larger clinical trials.
Clinical trials are expensive, time-consuming, and difficult to design and implement.
The current pandemic of the novel coronavirus, or COVID-19, and the future outbreak of other highly infectious or contagious diseases, could seriously harm our development efforts, increase our costs and expenses and have a material adverse effect on our business, financial condition and results of operations.
We face significant competition from other biotechnology and pharmaceutical companies, and our operating results will suffer if we fail to compete effectively.
We may choose not to develop a potential product candidate, or we may suspend, deprioritize or terminate one or more discovery programs or preclinical or clinical product candidates or programs.
Regulatory authorities, including the U.S. Food and Drug Administration (“FDA”), may disagree with our regulatory plan and we may fail to obtain regulatory approval of our product candidates.
The impact on our business of healthcare legislation and other changes in the healthcare industry and in healthcare spending is currently unknown and may adversely affect our business model.
We contract with third parties for the manufacture of our product candidates for preclinical development and clinical trials. This reliance on third parties increases the risk that we will not have sufficient quantities of our drug candidates or such quantities at an acceptable cost, which could delay, prevent or impair our development or commercialization efforts.
The third parties upon whom we rely for the supply of the API and drug product used in bezuclastinib are our sole source of supply, and the loss of any of these suppliers could significantly harm our business.
We may form or seek collaborations or strategic alliances or enter into additional licensing arrangements in the future, and we may not realize the benefits of such collaborations, alliances or licensing arrangements.
If our efforts to protect the proprietary nature of the intellectual property related to our technologies are not adequate, we may not be able to compete effectively in our market.
We are highly dependent on our key personnel, and if we are not successful in attracting and retaining highly qualified personnel, we may not be able to successfully implement our business strategy.
We have incurred net losses in every year since our inception and anticipate that we will continue to incur net losses in the future.
We will require substantial additional funding. If we fail to obtain additional financing when needed, or on attractive terms, we may be unable to complete the development and commercialization of our product candidates
The price of our stock may be volatile, and you could lose all or part of your investment.

The summary risk factors described above should be read together with the text of the full risk factors in Item 1A. “Risk Factors” and the other information set forth in this Quarterly Report on Form 10-Q, including our consolidated financial statements and the related notes, as well as in other documents that we file with the SEC. The risks summarized above or described in full below are not the only risks that we face. Additional risks and uncertainties not precisely known to us, or that we currently deem to be immaterial may also materially adversely affect our business, financial condition, results of operations and future growth prospects.

This Quarterly Report on Form 10-Q contains forward-looking statements, which reflect our current views with respect to, among other things, our operations and financial performance. All statements other than statements of historical facts contained in this Quarterly Report on Form 10-Q, including statements regarding our strategy, future operations, future financial position, future revenue, projected costs, prospects, plans, objectives of management and expected market growth are forward-looking statements. These statements involve known and unknown risks, uncertainties, and other important factors that may cause our actual results, performance or achievements to be materially different from any future results, performance, or achievements expressed or implied by the forward-looking statements.

i


In some cases, you can identify forward-looking statements by terms such as “may,” “should,” “expects,” “might,” “plans,” “anticipates,” “could,” “intends,” “target,” “projects,” “contemplates,” “believes,” “estimates,” “predicts,” “potential,” “seek,” “would” or “continue,” or the negative of these terms or other similar expressions. The forward looking statements in this Quarterly Report on Form 10-Q are only predictions. We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our business, financial condition and results of operations. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee that the future results, levels of activity, performance or events and circumstances reflected in the forward-looking statements will be achieved or occur. These forward-looking statements speak only as of the date of this Quarterly Report on Form 10-Q and are subject to a number of risks, uncertainties and assumptions described in Item 1A. “Risk Factors.” Because forward-looking statements are inherently subject to risks and uncertainties, some of which cannot be predicted or quantified, you should not rely on these forward-looking statements as predictions of future events. The events and circumstances reflected in our forward-looking statements may not be achieved or occur and actual results could differ materially from those projected in the forward-looking statements. Some of the key factors that could cause actual results to differ from our expectations include:

the potential impacts of raising additional capital, including dilution to our existing stockholders, restrictions on our operations or requirements that we relinquish rights to our technologies or product candidates;
business interruptions resulting from the coronavirus disease (“COVID-19”) outbreak or similar public health crises, which could cause a disruption to the development of our product candidates and adversely impact our business;
the success, cost, and duration of our product development activities and clinical trials;
the timing of our planned regulatory submissions to the FDA for our bezuclastinib product candidate, also known as CGT9486;
our ability to obtain and maintain regulatory approval for our bezuclastinib product candidate and any other product candidates we may develop, and any related restrictions, limitations, and/or warnings in the label of an approved product candidate;
the potential for our identified research priorities to advance our bezuclastinib product candidate or for our teams to discover and develop additional product candidates;
the ability to license additional intellectual property rights relating to our bezuclastinib product candidate or future product candidates from third-parties and to comply with our existing or future license agreements and/or collaboration agreements;
our ability to commercialize our bezuclastinib product candidate and future product candidates in light of the intellectual property rights of others;
our ability to obtain funding for our operations, including funding necessary to complete further discovery, development and commercialization of our existing and future product candidates;
the scalability and commercial viability of our manufacturing methods and processes;
the commercialization of our product candidates, if approved;
our ability to attract collaborators with development, regulatory, and commercialization expertise;
future agreements with third parties in connection with the commercialization of our product candidates and any other approved product;
the size and growth potential of the markets for our product candidates, and our ability to serve those markets;
the rate and degree of market acceptance of our product candidates;
the pricing and reimbursement of our product candidates, if approved;
regulatory developments in the United States and foreign countries;
our ability to contract with third-party suppliers and manufacturers and their ability to perform adequately;
the development and success of competing therapies that are or may be under development in clinical trials or become available commercially;
our ability to attract and retain key scientific and management personnel;
the accuracy of our estimates regarding expenses, future revenue, capital requirements, and needs for additional financing;
our use of the proceeds from the private placements, sales of our preferred stock and public offerings of our common stock from time to time; and

ii


our expectations regarding our ability to obtain and maintain intellectual property protection for our bezuclastinib product candidate and future product candidates.

While we may elect to update these forward-looking statements at some point in the future, whether as a result of any new information, future events, or otherwise, we have no current intention of doing so except to the extent required by applicable law.

iii


Cogent Biosciences, Inc.

Table of Contents

 

 

 

Page

 

PART I—FINANCIAL INFORMATION

 

Item 1.

Financial Statements (Unaudited)

1

 

Condensed Consolidated Balance Sheets

1

 

Condensed Consolidated Statements of Operations and Comprehensive Loss

2

 

Condensed Consolidated Statements of Stockholders’ Equity

3

 

Condensed Consolidated Statements of Cash Flows

5

 

Notes to Unaudited Condensed Consolidated Financial Statements

6

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

16

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

28

Item 4.

Controls and Procedures

28

 

PART II—OTHER INFORMATION

 

Item 1.

Legal Proceedings

29

Item 1A.

Risk Factors

29

Item 2.

Recent Sales of Unregistered Securities and Use of Proceeds

42

Item 3.

Defaults Upon Senior Securities

42

Item 4.

Mine Safety Disclosures

42

Item 5.

Other Information

42

Item 6.

Exhibits

43

Signatures

44

 

iv


 

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements (Unaudited)

COGENT BIOSCIENCES, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except share and per share amounts)

(unaudited)

 

 

 

September 30,

 

 

December 31,

 

 

 

2022

 

 

2021

 

Assets

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

140,568

 

 

$

219,684

 

Marketable securities

 

 

148,526

 

 

$

 

Prepaid expenses and other current assets

 

 

6,068

 

 

 

2,949

 

Restricted cash

 

 

1,255

 

 

 

 

Total current assets

 

 

296,417

 

 

 

222,633

 

Operating lease, right-of-use asset

 

 

23,832

 

 

 

2,771

 

Property and equipment, net

 

 

6,543

 

 

 

1,706

 

Restricted cash

 

 

 

 

 

1,255

 

Other assets

 

 

4,768

 

 

 

3,727

 

Total assets

 

$

331,560

 

 

$

232,092

 

Liabilities and Stockholders’ Equity

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Accounts payable

 

$

4,093

 

 

$

3,483

 

Accrued expenses and other current liabilities

 

 

14,384

 

 

 

8,210

 

CVR liability (Note 3)

 

 

3,060

 

 

 

3,060

 

Operating lease liability

 

 

2,014

 

 

 

2,324

 

Total current liabilities

 

 

23,551

 

 

 

17,077

 

Operating lease liability, net of current portion

 

 

18,067

 

 

 

831

 

Total liabilities

 

 

41,618

 

 

 

17,908

 

Commitments and contingencies (Note 7)

 

 

 

 

 

 

Stockholders’ equity:

 

 

 

 

 

 

Preferred stock, $0.001 par value; 9,000,000 shares authorized; no shares issued
   or outstanding

 

 

 

 

 

 

Series A non-voting convertible preferred stock, $0.001 par value; 1,000,000 
   shares authorized;
81,050 and 103,289 shares issued and outstanding at
   September 30, 2022 and December 31, 2021, respectively

 

 

65,830

 

 

 

85,400

 

Common stock, $0.001 par value; 150,000,000 shares authorized; 69,857,972
   shares and
43,805,922 shares issued and outstanding at September 30, 2022 and
   December 31, 2021, respectively

 

 

70

 

 

 

44

 

Additional paid-in capital

 

 

595,801

 

 

 

399,713

 

Accumulated other comprehensive loss

 

 

(163

)

 

 

 

Accumulated deficit

 

 

(371,596

)

 

 

(270,973

)

Total stockholders’ equity

 

 

289,942

 

 

 

214,184

 

Total liabilities and stockholders’ equity

 

$

331,560

 

 

$

232,092

 

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

1


 

COGENT BIOSCIENCES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

(in thousands, except share and per share amounts)

(unaudited)

 

 

Three Months Ended September 30,

 

 

Nine Months Ended September 30,

 

 

2022

 

 

2021

 

 

2022

 

 

2021

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

Research and development

 

29,936

 

 

 

14,798

 

 

 

84,885

 

 

 

35,399

 

General and administrative

 

6,885

 

 

 

5,021

 

 

 

19,209

 

 

 

14,512

 

Total operating expenses

 

36,821

 

 

 

19,819

 

 

 

104,094

 

 

 

49,911

 

Loss from operations

 

(36,821

)

 

 

(19,819

)

 

 

(104,094

)

 

 

(49,911

)

Other income:

 

 

 

 

 

 

 

 

 

 

 

Interest income

 

1,500

 

 

 

115

 

 

 

1,879

 

 

 

360

 

Other income, net

 

259

 

 

 

620

 

 

 

1,592

 

 

 

1,847

 

Change in fair value of CVR liability

 

 

 

 

 

 

 

 

 

 

343

 

Total other income, net

 

1,759

 

 

 

735

 

 

 

3,471

 

 

 

2,550

 

Net loss

$

(35,062

)

 

$

(19,084

)

 

$

(100,623

)

 

$

(47,361

)

Net loss per share attributable to common stockholders, basic and diluted

$

(0.50

)

 

$

(0.48

)

 

$

(1.84

)

 

$

(1.25

)

Weighted average common shares outstanding, basic and diluted

 

69,576,359

 

 

 

39,848,943

 

 

 

54,780,041

 

 

 

37,741,526

 

Comprehensive loss:

 

 

 

 

 

 

 

 

 

 

 

Net loss

$

(35,062

)

 

$

(19,084

)

 

$

(100,623

)

 

$

(47,361

)

Other comprehensive loss

 

 

 

 

 

 

 

 

 

 

 

Net unrealized losses on marketable securities

 

(163

)

 

 

 

 

 

(163

)

 

 

 

Total other comprehensive loss

 

(163

)

 

 

 

 

 

(163

)

 

 

 

Comprehensive loss

$

(35,225

)

 

$

(19,084

)

 

$

(100,786

)

 

$

(47,361

)

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

2


 

COGENT BIOSCIENCES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(in thousands, except share amounts)

(unaudited)

 

 

 

Series A Non-Voting

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Convertible Preferred
Stock

 

 

Common Stock

 

 

Additional
Paid-in

 

 

Accumulated
Other Comprehensive

 

 

Accumulated

 

 

Total
Stockholders’

 

 

 

Shares

 

 

Amount

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Loss

 

 

Deficit

 

 

Equity

 

Balances at December 31, 2021

 

 

103,289

 

 

$

85,400

 

 

 

43,805,922

 

 

$

44

 

 

$

399,713

 

 

$

 

 

$

(270,973

)

 

$

214,184

 

Conversion of Series A non-voting preferred
   stock into common stock

 

 

(7,955

)

 

 

(7,000

)

 

 

1,988,750

 

 

 

2

 

 

 

6,998

 

 

 

 

 

 

 

 

 

 

Issuance of common stock under Employee
   Stock Purchase Plan

 

 

 

 

 

 

 

 

18,995

 

 

 

 

 

 

129

 

 

 

 

 

 

 

 

 

129

 

Issuance of common stock upon exercise of
   stock options

 

 

 

 

 

 

 

 

5,599

 

 

 

 

 

 

9

 

 

 

 

 

 

 

 

 

9

 

Stock-based compensation expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

4,175

 

 

 

 

 

 

 

 

 

4,175

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(30,634

)

 

 

(30,634

)

Balances at March 31, 2022

 

 

95,334

 

 

 

78,400

 

 

 

45,819,266

 

 

 

46

 

 

 

411,024

 

 

 

 

 

 

(301,607

)

 

 

187,863

 

Issuance of common stock and pre-funded
   warrants in underwritten public offering,
   net of offering costs of $
10.8 million

 

 

 

 

 

 

 

 

17,899,698

 

 

 

18

 

 

 

161,897

 

 

 

 

 

 

 

 

 

161,915

 

Conversion of Series A non-voting preferred
   stock into common stock

 

 

(7,955

)

 

 

(7,000

)

 

 

1,988,750

 

 

 

2

 

 

 

6,998

 

 

 

 

 

 

 

 

 

 

Stock-based compensation expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

4,534

 

 

 

 

 

 

 

 

 

4,534

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(34,927

)

 

 

(34,927

)

Balances at June 30, 2022

 

 

87,379

 

 

 

71,400

 

 

 

65,707,714

 

 

 

66

 

 

 

584,453

 

 

 

 

 

 

(336,534

)

 

 

319,385

 

Conversion of Series A non-voting preferred
   stock into common stock

 

 

(6,329

)

 

 

(5,570

)

 

 

1,582,250

 

 

 

2

 

 

 

5,568

 

 

 

 

 

 

 

 

$

 

Pre-funded warrant exercise

 

 

 

 

 

 

 

 

2,424,242

 

 

 

2

 

 

 

22

 

 

 

 

 

 

 

 

$

24

 

Issuance of common stock under Employee
   Stock Purchase Plan

 

 

 

 

 

 

 

 

30,005

 

 

 

 

 

 

222

 

 

 

 

 

 

 

 

 

222

 

Issuance of common stock upon exercise of
   stock options

 

 

 

 

 

 

 

 

113,761

 

 

 

 

 

 

914

 

 

 

 

 

 

 

 

 

914

 

Net unrealized losses on marketable securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(163

)

 

 

 

 

 

(163

)

Stock-based compensation expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

4,622

 

 

 

 

 

 

 

 

 

4,622

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(35,062

)

 

 

(35,062

)

Balances at September 30, 2022

 

 

81,050

 

 

 

65,830

 

 

 

69,857,972

 

 

 

70

 

 

 

595,801

 

 

 

(163

)

 

 

(371,596

)

 

 

289,942

 

 

3


 

 

 

 

 

Series A Non-Voting

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Convertible Preferred
Stock

 

 

Common Stock

 

 

Additional
Paid-in

 

 

Accumulated

 

 

Total
Stockholders’

 

 

 

Shares

 

 

Amount

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Deficit

 

 

Equity

 

Balances at December 31, 2020

 

 

132,244

 

 

$

110,881

 

 

 

32,347,905

 

 

$

32

 

 

$

322,454

 

 

$

(198,700

)

 

$

234,667

 

Conversion of Series A non-voting preferred
   stock into common stock

 

 

(18,409

)

 

 

(16,200

)

 

 

4,602,250

 

 

 

5

 

 

 

16,195

 

 

 

 

 

 

 

Issuance of common stock to settle CVR
   liability

 

 

 

 

 

 

 

 

212,429

 

 

 

 

 

 

2,043

 

 

 

 

 

 

2,043

 

Issuance of common stock for services

 

 

 

 

 

 

 

 

31,683

 

 

 

 

 

 

260

 

 

 

 

 

 

260

 

Stock-based compensation expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,521

 

 

 

 

 

 

1,521

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(11,728

)

 

 

(11,728

)

Balances at March 31, 2021