Cognition Therapeutics Inc Q4 FY2021 Earnings Call

Good morning, ladies and gentlemen, and welcome to Cognition Therapeutics Incorporated Fourth Quarter and Fiscal Year 2021 Earnings Conference Call. My name is Olivia and I will be your conference operator today. This call is being recorded. I would now like to turn the presentation over to your speaker host for today's call, Mr. Daniel Kontoh-Boateng, Investor Relations for Cognition Therapeutics. Please proceed.

Good morning and thank you for participating in Cognition Therapeutics conference call today. With me today are Lisa Ricciardi, President and Chief Executive Officer of Cognition; and Jim O'Brien, Chief Financial Officer of Cognition. By now you should have the press release we issued earlier. If not, it is available on the Investor Relations page of our website at cogrx.com. We encourage everyone to read this morning's press release as well as Cognition's Annual Report on Form 10-K, which is now filed with the SEC. The company's 10-K report and press release are also available on Cognition's website. In addition, this conference call is being webcast through the company's website and will be archived for 30 days. Please note that certain information discussed in the call today is covered under the safe harbor provisions of the Private Securities Litigation Reform Act. We caution listeners that during this call, management will be making forward-looking statements. Actual results could differ materially from those stated or implied by these forward-looking statements due to risks and uncertainties associated with the company's business. These forward-looking statements are qualified by cautionary statements contained in Cognition's press releases and SEC filings, including its annual report on Form 10-K and previous filings. This conference call contains time-sensitive information that is accurate only as of this date of this live broadcast. Cognition undertakes no obligation to revise or update any forward-looking statements to reflect events or circumstances after the date of this conference call. With that, I would now like to turn the call to Lisa Ricciardi. Lisa?

Thank you, Daniel. Good morning, everyone, and welcome to Cognition Therapeutics' first earnings conference call. On today's call our Chief Financial Officer, Jim O'Brien, and I will share prepared remarks on the company's progress and financial performance in 2021, after which we'll be joined by Dr. Tony Caggiano, our CMO and Head of R&D in order to take your questions. It has been an exciting time at Cognition Therapeutics. We completed our initial public offering, which added to our significant base of grant funding. As our team moves forward with intent and velocity to advance our pipeline of drug candidates for serious neurodegenerative conditions, we are well positioned in terms of our access to capital and grants, and our scientific underpinnings are strong. As many of you know, our primary focus is on the development of innovative orally available drug candidates targeting age-related degenerative diseases of the CNS and retina. Our current clinical programs leverage the company's expertise in the sigma-2 receptor which regulates the number of cellular functions that are disrupted in neurodegenerative diseases. Our lead candidate, CT1812, is currently being tested in multiple diseases such as Alzheimer's and Parkinson's disease, dementia with Lewy bodies or DLB, and dry age-related macular degeneration or dry AMD. We believe that modulating the sigma-2 receptor complex with the brain penetrant small molecule drug candidate is an approach that is distinct from other approaches in clinical development. Now let me turn to some recent data and then provide a short update on our trials. Our initial indication for CT1812 is Alzheimer's disease. And we recently presented data from two studies at the ADPD meeting in Barcelona several weeks ago. First, we presented data from the SNAP study that showed the rapid and robust displacement of Aβ oligomers into the cerebral spinal fluid of patients with mild to moderate Alzheimer's disease following a single dose of CT1812. No such change was observed following the administration of placebo, and we expect to publish complete results later this year. Second at the ADPD meeting, we presented an analysis of biomarkers from the first part of our Phase II SHINE study. Patients in this first cohort of the study who were treated with CT1812 showed marked changes in the levels of certain proteins implicated in Alzheimer's and Parkinson's disease. Among these 22 proteins that are dysregulated in Alzheimer's disease were normalized after CT1812 towards levels seen in healthy controls. Six proteins were specifically implicated in cognition. With our NIA additional funding of $13 million, we believe we will complete the SHINE study with the goal of enrolling over 120 patients. Now, with regard to our trial, CT1812 is being tested in the ongoing SEQUEL study of patients with mild to moderate AD. SEQUEL is exploring the utility of quantitative EEG as a non-invasive biomarker of disease severity and treatment effect in patients given drug or placebo. We anticipate the data readout by year-end. You may be aware that Cognition Therapeutics was given an $80 million grant to study patients with early AD. We anticipate initiating patient enrollment in a 540 patient Phase II trial in the second half of '22. This trial is being conducted in collaboration with the Alzheimer's clinical trials consortium. One program I am particularly excited to tell you about is our trial in patients with DLB. We have evidence that the sigma-2 receptor may be a promising target for DLB based on studies we've conducted, which show an ability to block the toxic effect of α-synuclein oligomers. We recently initiated a Phase II trial of dementia with Lewy bodies to evaluate CT1812's potential as a disease-modifying therapy for these patients, and clinical sites are being onboarded now. This study is being conducted with our primary investigator, Dr. Jim Galvin at the University of Miami School of Medicine and this study is funded by a $30 million grant award from the NIA. You may be aware that there are a very large number of people with DLB, 1.4 million people, and further that there are no treatments for this condition. This further compels us to move forward expeditiously in our clinical trial. Finally, we plan to initiate a clinical program in the second half of 2022 to study the potential of CT1812 in patients with dry AMD. We have evidence from genome-wide studies as well as the analysis of results from our Alzheimer's trial that demonstrate treatment with CT1812 may have a beneficial impact on the proteins implicated in dry AMD. We look forward to presenting some of these findings during the Association for Research in Vision and Ophthalmology, better known as ARVO, at that meeting in May in Denver. Beyond CT1812, we are working to advance additional pipeline candidates for Parkinson's disease. For this work, we have been recently awarded another grant from the Michael J. Fox Foundation. This is the second award from the Michael J. Fox Foundation for our research team. We look forward to sharing progress on both our preclinical and clinical programs throughout the year. Now, as I said at the beginning of the call, this is an exciting year at Cognition Therapeutics. I believe that we have the right expertise, scientific underpinnings, partnerships, non-dilutive grants, and capital to accelerate our mission of creating therapies for age-related neurodegenerative diseases. With that, I turn the call to Jim.

Thanks, Lisa. To begin, we completed our upsized IPO in November 2021 with 4.4 million shares, raising gross proceeds of $52 million, with gratitude to the NIA, Michael J. Fox Foundation, and other key associations. A majority of our programs are well funded by grants totaling $168.9 million since the company was founded. These grants are distributed based on when preclinical and clinical trial expenses are incurred. For the year 2021, $17.4 million was reimbursed to Cognition and recognized as grant income. With that context, let's now proceed to the financial results for 2021. Research and development expenses for the year 2021 totaled $18.6 million compared to $12.9 million in the year 2020. The increase of $5.7 million was primarily attributable to an increase in manufacturing expenses related to costs incurred with contract manufacturing organizations for production of preclinical and future clinical trial materials. General and administrative expenses for the year ended December 31, 2021 were $10 million compared to $4.5 million for the same period in 2020. The increase in G&A expenses is primarily attributable to non-cash equity-based compensation for option grants made subsequent to the IPO and the costs for D&O liability insurance expense as a result of being a new public company. For the year ended December 31, 2021, we reported a net loss of $11.7 million or $3.13 per share compared to a net loss of $7.8 million or $23.76 per share for the year ended December 31, 2020. As outlined in our Form 10-K, the weighted average number of common shares outstanding are different in each reported period, again, due to the IPO. Finally, we had cash and cash equivalents of $54.7 million at December 31, 2021 and available grant funding of $110 million. Combined, proceeds from the IPO and grants awarded from sponsor partners, the company estimates that it has sufficient cash to fund operations and capital expenditures into the second half of 2023. I'll now turn the call back over to the operator who can open the call for questions.

Thank you, sir. And our first question coming from the line of Jay Olson with Oppenheimer. Your line is open.

Hi, this is Matt on for Jay. Thank you very much for taking our questions and congrats on all the progress. So we were wondering for CT1812, first of all, what feedback might you have received from physicians and KOLs based on the recent ADPD presentations? We were wondering how they view the biomarker readout for potential cognitive benefit and that could potentially translate? And then as a corollary, what do you think about the potential to apply for an accelerated approval pathway with the FDA based on a potential biomarker approach as we've seen with Biogen? I really appreciate that. Thank you.

Terrific, Matt. Good morning. Thanks for joining the call. I'll begin the question and then turn it over to Tony to respond. With regard to ADPD, we've had a number of investor calls over the last couple of weeks, and generally we have very positive feedback. Their observation is that we're really digging into biomarkers in a positive way, perhaps doing some things other companies haven't been. Looking at the point, it is generally supportive and observant of the work we're doing on biomarkers. So with regard to its read on Cognition and an accelerated approval, I’ll turn it over to Tony.

Sure. So we're very aware of all the FDA expedited programs ranging from fast track breakthrough, accelerated approval, and priority review. And we will, of course, discuss with the FDA all the potential to accelerate the approval of our programs, including the use of biomarkers.

Okay. Understood. Really appreciate it. Thank you.

And our next question coming from the line of Mayank Mamtani from B. Riley Securities. Your line is open.

Good morning team. Congratulations on the progress and thank you for taking our question. To start, can you provide more detail on the new study you've announced for DLB regarding execution, including study design, timelines, and the types of patients you are looking to involve? Also, I would like to hear your thoughts on your broader plans related to the various α-synucleinopathies you mentioned. I have a follow-up as well.

Mayank, Good morning, Thanks for joining the call. I'll turn it over to Tony to talk about DLB. We are very excited about this study. Tony?

Great. So the study design is on. It's very similar to our other trials. It's a three-arm trial with two different doses of CT1812 versus placebo. Patients are treated for six months and we follow their cognitive function throughout the course of the study, as well as looking at biomarker changes by pulling CSF before and after completion of the study. And then the second part of your question regarding interest and other α-synuclein related diseases. As Lisa mentioned, we have another grant from the Michael J. Fox Foundation supporting development of some of our pipeline molecules in those cellular and animal models of Parkinson's disease. Based on our research, we understand that not only can sigma-2 modulation interrupt the toxicity of Aβ oligomers, but also now we understand that it can interrupt the toxicity of α-synuclein oligomers and this is what led us into DLB and also will continue to lead us to continue research in Parkinson's disease.

Great. And then my follow-up was around, coming away from ADPD, the SNAP data and the SHINE biomarker data that you presented, are you able to talk about what element you're also looking for in the ongoing SHINE study, the broader cohort and which data elements that we saw at ADPD should be of high relevance as you work through the next analysis that you look to put out? And can you remind me the timeline for your SHINE data readout?

Right now, Mayank, we are recruiting patients, doing site investigations, and recruiting patients. So that's ongoing. We are not going to put out a point of view on when the trial will complete. It's a function of how quickly it enrolls and moves ahead. So that study is underway. We're very pleased with that. Regarding your other questions, I'll let Tony talk about the parameters we're looking forward to in the second half of the trial.

Great. So the remainder of the study is designed exactly as the first 24 patients that were reported at ADPD. Our primary exploratory outcome measure of interest is that ADAS Cog-11, which is a cognitive scale used in Alzheimer's disease. The biomarker work that we reported at ADPD was exploratory work which we're using to understand what protein changes might indicate target engagement, disease modification, and change in disease status. So we'll be looking to repeat some of those findings in the larger cohort when the study finishes.

Okay. And just my final question on dry AMD. Can you provide a quick update on the initiation of that study? Also, if you could share any insights on the busy landscape, particularly regarding any learnings you hope to gain from the various readouts expected in the latter half of this year?

Mayank, I’ll start, and I'll let Tony jump in. So you're right; it is a busy space. One thing we've observed is the greater the activity in the category, the greater the interest among investors in our program, because, as you know, we have an oral and not an intravitreal program. So as for learnings, it's a new group of physicians in the ophthalmology community and so we're looking to apply expeditious ways of recruiting patients from our many AD trials to our work in dry AMD. The second half of the year is when we will be recruiting sites and enrolling patients.

Fantastic. Thanks for taking our questions team.

Terrific. Thank you, Mayank.

And I'm showing no further questions at this time. I would now like to turn the call back over to Lisa Ricciardi for any closing remarks.

Terrific. Thank you. To conclude, I'd like to say that we have reached an exciting juncture in our evolution as a company. We're working diligently to advance our novel clinical pipeline of candidates that have the potential to treat neurodegenerative diseases in what we believe will be important market opportunities. We believe we are well positioned to achieve and deliver on multiple clinical milestones focused on creating new therapeutic options for patients and long-term value for our shareholders. Thank you to our supporters and thank you for joining us today.

Ladies and gentlemen, that does end our conference for today. Thank you for your participation. You may now disconnect.