Cognition Therapeutics Inc (CGTX) 2022 Q4 法說會逐字稿

Good morning, ladies and gentlemen, and welcome to Cognition Therapeutics, Inc. Fourth Quarter and Fiscal Year 2022 Earnings Conference Call. My name is Julianne, and I will be your conference operator today. This call is being recorded. I would like to turn the presentation over now to your host for today's call, Daniel Kontoh-Boateng, Investor Relations for Cognition Therapeutics. Please go ahead, Mr. Kontoh-Boateng.

Thank you, Julianne. 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 Andrew Einhorn, Interim Chief Financial Officer of Cognition. A press release detailing Cognition Therapeutics 2022 results is available on the Investors section 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 and available on our 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 on 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 the 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 the 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 hand the call over to Lisa Ricciardi. Lisa?

Thank you, Daniel. Good morning, everyone, and welcome to Cognition Therapeutics Earnings Conference Call covering 2022's results. On today's call, our Interim Chief Financial Officer, Andy Einhorn and I will share prepared remarks on the company's progress and financial performance in 2022. After which, we'll be joined by Dr. Tony Caggiano, our Chief Medical Officer and Head of R&D, in order to take your questions.

It is an exciting time at Cognition Therapeutics, and I am proud of the momentum the company has built. We anticipate this momentum will continue into 2023. Looking back, what a year in the field of neurodegeneration. I believe all of us working in this clinical and scientific arena have a well-deserved sense of optimism for the first time in many years. With the approval of Leqembi, the Alzheimer's community saw true progress that many of us will build on.

This serves as a testament that the biopharmaceutical industry, together with patients, medical professionals, regulatory agencies, can bring to market a product to slow Alzheimer's disease progression. At Cognition, we believe that CT1812, our lead candidate, has the potential to be an important part of the evolving treatment paradigm for dementia and we are unwavering in our commitment to advance our work to develop therapies for these conditions.

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 the retina. Our current clinical programs build upon the company's expertise with Sigma-2 receptor biology, which regulates a number of cellular functions that are disrupted as a result of neurodegenerative disease. Our drug candidate is currently in the clinic being tested for Alzheimer's disease and dementia with Lewy bodies, or DLB, as we refer to it.

Within Alzheimer's disease, we are studying both early-stage patients as well as patients with mild-to-moderate disease. In addition, we're now studying CT1812 in a new indication, geographic atrophy secondary to dry age-related macular degeneration, commonly referred to as dry AMD. Modulating the signature receptor complex with a brain penetrant small molecule drug candidate is a unique approach and well differentiated from approaches both in neurodegenerative disease as well as in the ophthalmology and retinal disease space.

Now let me provide a brief update on our clinical trials and anticipated time lines for each study. In February, we completed enrollment of our Phase II SEQUEL study for mild-to-moderate Alzheimer's disease, where we are measuring brain waves tied to memory and processing information. We hope the trial demonstrates that a once-daily dose of CT1812 can normalize EEG patterns by decreasing state of power relative to placebo. This will further support the role of CT1812 in protecting synapsis from the toxicity of A beta oligomers. We anticipate reporting topline data from SEQUEL later in 2023.

Supported by multiple grants totaling approximately $30 million from the National Institute on Aging, our 144 patients Phase II SHINE trial for mild-to-moderate disease has been expanded internationally to Spain, the Netherlands and the Czech Republic where patients are currently being dosed. We are grateful to our partners for their diligence in getting sites up and running. Our SHIMMER study of CT1812, which is also supported by a nondilutive grant from the NIA for $30 million, is enrolling patients with mild-to-moderate dementia with Lewy bodies in a Phase II US-based trial.

The study, which is being led by Dr. Jim Galvin from the University of Miami is expected to be conducted at more than 30 sites across the United States. An estimated 1.4 million people are affected by DLB, all of whom have no treatment options. We expect data from SHIMMER next year. Moving on, our 540 patient Phase II START trial is for patients with early Alzheimer's disease. We received FDA clearance on the protocol and are preparing to enroll patients.

In collaboration with the Alzheimer's Clinical Trials Consortium that is our partner, the START trial will measure the efficacy and tolerability of CT1812 in subjects with mild cognitive impairment or early Alzheimer's disease, who have elevated A beta levels. We received an immense grant totaling $81 million for our work in this trial, and we are pleased to join forces with the ACTC. With regulatory clearance on our proposed protocol, we expect site activations to begin in 2023.

Shifting to the opportunity for CT1812 in ophthalmic indications, dry AMD and geographic atrophy, we presented data in connection with the ARVO Conference that supports the proof of concept for geographic atrophy secondary to dry AMD. Somewhat paralleling the challenges to developing treatments for dementia, dry AMD is an area that has frustrated the ophthalmology community for decades with many failed attempts to develop effective treatments.

Dry AMD is estimated to account for up to 90% of the population with age-related macular degeneration. The advanced form, known as geographic atrophy, can lead to progressive and permanent vision loss. An estimated 1 million people in the U.S. have geographic atrophy, making for a vital area of unmet need and a substantial market. With the recent groundbreaking approval of Syfovre from Apellis Pharmaceutical, it is an exciting time to be adding dry AMD to our pipeline as we are seeing a surge in patient and physician education around this major cause of blindness.

Looking at our opportunities, we have evidence from genome-wide studies as well as analyses of results from our Alzheimer's studies that demonstrate the treatment with CT1812 may have a beneficial impact on proteins implicated in dry AMD. As we recently announced, we received FDA clearance to initiate a Phase II dry AMD geographic atrophy trial, which we plan to commence this year. The magnify trial, as we call it, is a randomized, placebo-controlled Phase II trial expected to enroll approximately 240 people who have been diagnosed with dry AMD and measurable geographic atrophy.

Over the treatment period, change in geographic atrophy lesion size and best corrected visual acuity as well as other measures of safety and efficacy will be determined to assess if CT1812 can low vision loss. In closing, I am proud of the progress that our scientific and clinical teams have made. Our trials are expanding into new regions of the world, and we are expanding indications. We're optimistic that the work we're doing is moving us closer to benefiting patients.

With this mindset, we decided that it was vital that we extend and expand our ability to communicate our messages and our patient-centric mission. In order to reach various audiences, including scientific and the medical community, the investment community, patients and caregivers, we have launched the Cognition Conversations podcast. The podcast serves to provide information about the latest developments in the neuroscience arena and functions as an important clearinghouse with thought leaders to continue to educate the public about research.

To summarize, the diligent work of our team in 2022 set the stage for what we believe will be a milestone-rich 2023. Looking back on our first full year of operating as a publicly listed company on the NASDAQ, I believe we have the tools and resources to continue our mission of creating therapies for age-related neurodegenerative diseases of the CNS and the retina. With that, I turn the call to Andy.

Thanks, Lisa. We entered 2023 on a sound financial footing. The combination of the IPO towards the end of '21, a follow-on offering at the end of 2022, our ATM program, our recent agreement with Lincoln Park Capital, together with our substantial grant funding, have helped us establish a very solid financial infrastructure. Grants from the NIA, the Michael J. Fox Foundation and other key associations have helped us raise approximately $171 million in nondilutive funding since the company was founded.

Our new 3-year, up to $35 million equity financing agreement with Lincoln Park Capital serves as a potential additional source of liquidity for us to tap into in an efficient manner. Additionally, we have and continue to be vigilant in controlling our expenses, which, together with the aforementioned capital strategies, enable us to extend our cash runway into the second half of 2024.

With that context, let's now proceed to the financials for fiscal year 2022. Research and development expenses for the year ended December 31, 2022, totaled $30.3 million compared to $18.6 million for the 2021 prior year period. The increase was primarily attributable to greater spending on clinical programs as we proceed into Phase II trials and increased personnel costs.

General and administrative expenses for the year ended December 31, 2022, were $13.2 million compared to $10 million for the same period in 2021. The increase in general and administrative expenses reflects higher employee costs, greater director and officer liability insurance costs and professional fees incurred during the first full year as a public company.

For the year ended December 31, 2022, we reported a net loss of $21.4 million or $0.91 per basic and diluted share compared to a net loss of $11.7 million or $3.13 per basic and diluted share for the year ended December 31, 2021. At December 31, 2022, we had cash and cash equivalents of $41.6 million and $89 million in grant funding remaining to support certain of our clinical trials and no long-term debt.

A few comments about our recent transaction with Lincoln Park Capital. On March 10, we entered into an agreement giving Cognition the right but not the obligation to sell up to 35 million of our common shares to Lincoln Park over a 36-month period, as more fully described in the 8-K filing made on March 10, 2023.

Lincoln Park's commitment provides Cognition with potential access to liquidity, which, as recent events have shown, is critically important in turbulent markets. We believe the Lincoln Park facility, our ATM program and the availability under our recently filed S3 gives the company considerable optionality to access capital, enabling us to continue managing our cash runway.

I'll turn the call back over to the operator, who could open the call to questions.

(Operator Instructions) Our first question comes from Charles Duncan from Cantor Fitzgerald.

Congratulations on a good year of progress. I had a couple of questions on the Alzheimer's programs. And then I'm actually quite intrigued with the geographic atrophy program. So I wanted to ask about that. First of all, with regard to SEQUEL, in terms of the EEG data that's coming up, could you give us a sense of what you're looking for? I think you mentioned top line data. Do you believe that has predictive value? Or are you really looking for activity that could then translate into efficacy with some of the other studies?

Chaz, thanks for joining. Tony is here with me, and he'll take your question on SEQUEL.

Sure. So as Lisa announced, we've completed enrollment in that study, and we're looking for topline data to be reported sometime later this year. As you asked, what we're looking for is the shift in the relative data power, meaning the portion of slow wave activity relative between the treated patients and the placebo-treated patients. And this is really a measure of more acute activity that we're looking for following 4 weeks of treatment with CT1812.

And do you believe it has predictive value for symptomatic treatment or for disease-modifying potential for the candidate?

Yes. So I think this is really a measure of whether the acute removal of A beta oligomers from the synapsis has a positive effect on synapse activity as measured by EEG. Certainly, we believe that would be a positive indication overall for the potential of the drug.

Okay. And then moving on to geographic atrophy. I'm intrigued with that. Can you provide a little more color in terms of the connection for Sigma-2 receptor modulation in neurodegenerative diseases and what you think that says about potential in geographic atrophy? And then vice versa, what does geographic atrophy activity tell you about the potential in neurodegenerative diseases? And then when would you anticipate early data out of the magnify study?

Yes. So we ended up in geographic atrophy based on -- as Lisa mentioned just a few minutes ago, based on proteomic data coming out of our Alzheimer's disease study, based on our look at genome-wide association studies in the literature, some basic science in the literature and then a series of studies that we performed ourselves and with collaborators demonstrating that Sigma-2 modulation could normalize the dysfunction that occurs within a certain cell type in the retina that we and others believe is really integral to the basic pathophysiology of geographic atrophy. And that gave us the confidence and the interest in pursuing GA.

Now there are certain common features that Sigma-2 was able to regulate these processes within cells, within the retina and the central nervous system. After how they predict each other's success in the end, we'll see as they come out. So I hope that answers your question.

Perhaps, we'll come back to it off-line. But last question, because I don't want to consume the entire call, is actually for Andy, that is relative to the grants. You've notably been able to raise a lot of money, in fact, more so than most companies I cover. And so -- that is nondilutive. So my question is, is this a strategy going forward, could you anticipate filing for additional grants?

And what percentage roughly of your R&D spend do you anticipate being able to cover with the existing grants? And is that money included in your balance sheet? Or is it on the come as you achieve milestones?

So Chaz, it's Lisa. I'll take the first part of it, which is to say as we look at the grant opportunities and the 2 general areas we're looking in, the larger trials are presently not funded by much grant support. The expectation is you have access to private investors or the capital markets. And so I will say going forward, while it would be wonderful to have another $170 million in grant funding, we're looking at much smaller kinds of grants. So I would guide towards different kind of expectations going forward based on where we are in the clinic. I'll turn it back to Andy for your questions about the expense coverage.

Yes. Thanks, Chaz. The grant revenue in 2022 covered approximately half the operating expenses that we have. And mind you, the trials that we're conducting right now with the exception of the MAGNIFY trial in dry AMD, all have grant funding supporting them in one shape -- way, shape or form. And in terms of where this money gets put on the balance sheet and so forth, when we incur eligible expenses, we draw on our grants and we get reimbursed by the NIA or whomever, fairly -- almost immediately.

When we pay a milestone or upfront payment to a CRO, for example, we'll draw that money and that gets -- and the grant revenue then gets hung up on the balance sheet as deferred revenue and then will be taken into -- recognized as income as the trial progresses and this work is done. Does that answer your questions?

Yes, it does. Good Luck for the near-term milestones.

Our next question comes from Jay Olson from Oppenheimer.

Congrats on all the progress. Can you talk about the proteomic data that you have coming up at ADPD and what investors should be looking for in terms of how it supports CT1812's mechanism in Alzheimer's? And then anything else you think investors should look out at ADPD that may have read across to Cognition? And then I'm going to follow up on Dry AMD?

Terrific, Jay. Great to hear from you. It's another exciting year. Last year at AAIC we presented data. This year, Mary has some more data. I'll let Tony take you through what it is. We can discuss the data will be released in 1.5 weeks, and then the posters will be available. But at a high level, Tony?

Sure. So we presented data last year from the first 24 patients of our Phase 2 SHINE study and from the SPARC study, which was an imaging study we conducted at Yale. What's being presented this year at ADPD is a meta-analysis of the 2 studies. So these are 2 nearly identical studies with same doses, same patients. There's a powerful way to cross the 2 data sets and see which signals of drug exposure and effect come through both studies.

So this is giving us a good candidate biomarkers to follow in the future for treatment effect. As Lisa mentioned, we haven't released details at this point on which proteins those are and so forth. You can see that on the poster and we'll be able to distribute that when it comes out.

Okay. Great. We'll look forward to that. And then just on dry AMD. Are there any human genetic data showing the involvement of the Sigma-2 receptor in dry AMD? And have you had any patients in your Alzheimer's study who also had dry AMD and showed efficacy signals that you could detect there? And then finally, where do you think CT1812 as an oral drug could fit into the treatment landscape of dry AMD, especially in particular combination regimens?

Sure. So as we mentioned before, some of the impetus for us to move into GA was based on the genome-wide association studies that are in the literature demonstrating that certain changes in the proteins that make up the Sigma-2 receptor confer either risk or protection against developing GA. So indeed, there is some of that data out there. And then your next question was...

Do you have any patients in your Alzheimer's study that have dry AMD?

Yes, it's an interesting question. We don't screen those subjects for geographic atrophy. Obviously, these are complex studies in individuals with dementia. So that's not really part of our operations.

And last, Jay, with regard to the market, the great thing for us is that you have drugs ahead of us that are building this market, right? Apellis, Iveric on their heels, other companies coming behind them. And as we're going through development, we will see as the retinal community takes forward these products, we'll look at what the reimbursement is. We'll see how this landscape evolves.

We believe for patients that an oral drug is a far simpler regimen to take for the long term than having intravitreal injections. And we'll see what the practices of the retinal specialists support. So we're watching and waiting carefully. We think an oral drug has an enormous advantage.

Could it be disruptive? Possibly. Could it work in combination? Possibly. Those are things we'll be looking to study as we progress.

Our next question comes from Mayank Mamtani from B. Riley Securities.

I appreciate the level of detail. So maybe I'll go in reverse order. Staying on the GA Phase 2 trial design -- sorry if I missed this. Could you touch on the treatment period for your primary efficacy endpoint, assuming it's GA lesion reduction? And are you also, by any chance, looking at visual acuity maybe as a safety measure? And at what time point could we have an update for that? And then I have a follow-up Alzheimer's question.

Mayank, thank you. Tony will take your questions.

Sure. Yes. So indeed, we are following the precedents of others who have recently filed for approval in this field. They've taught us a lot, particularly about the approvability of measuring change in GA. So we're following very much what others have done. Our study is a 2-year trial. And this is largely because while the effects of changing GA are devastating, they are relatively slow progressing. So you need a significant period of time to measure change.

Finally to answer your next question, we are measuring visual acuity in various different ways. And indeed, like others, these will support our primary outcome, but they are not the primary.

If I may just ask a follow-up, that 2-year treatment period, was that your proposal to the agency? Or was that coming from Dr. Chambers?

So we did have discussions with FDA and we landed on this number based on what we and they thought was the most likely chance of success.

Got it. And then on the Alzheimer's program, I appreciate the level of detail on expectations for SEQUEL. I was just curious, as you know, there's a big focus on CSF biomarkers, right? Also, I believe, in your -- both your SEQUEL and SHINE study. So could you just maybe elaborate on which markers are more relevant with oligomer displacement? And you could expect to move acutely in a study like SEQUEL versus other markers where you may need a sort of a 6-month to a 12-month time period longer chronic dosing? That would be helpful, Tony.

Sure. Yes. Indeed, we've been very fortunate to have very significant support from NIA to run biomarker analysis from CSF in all of our studies. So we agree with the importance. Our process right now is really identifying those candidate biomarkers which will be predictive of change. To answer the question of which ones will take longer and which ones might be more acute, we'll need to look at the data from the more acute studies in order to really tell you which ones will require a longer time.

So certainly, that is kind of information we hope to have over the next many months.

Got it. And sorry, again, if I missed this, did you say what forum you're looking to present the SEQUEL data? Is there like a conference you're targeting? And also...

We haven't announced yet where that will be.

And a similar question on SHINE. Is there a particular time next year, you're looking to present that data?

With SHINE, Mayank, our goal is to complete enrollment this year. The last patient comes in at the end of the year. It's a 6-month trial. Several months to clean up the data and get top line results. It will really be a function of the enrollment being completed. So we're saying fall of '24.

We have no further questions. I'll turn the call back over to Cognition's CEO for closing remarks. Ms. Ricciardi, please go ahead.

Thank you. To conclude, I'd like to say that we are optimistic for Cognition's future and its evolution as we aim to improve the lives of those afflicted with neurodegenerative diseases. The science is sound, and we continue to build evidence about what CT1812 can do for patients. We believe we're now well positioned to achieve and deliver on multiple clinical milestones, and we are focused on creating long-term value for our shareholders by doing so.

Thank you for joining us this morning, and everyone, have a great day.

This concludes today's conference call. Thank you for your participation. You may now disconnect.