Cognition Therapeutics, Inc. (CGTX) Earnings Call Transcript & Summary

Hello, everyone, and welcome to Cognition Therapeutics Fourth Quarter 2023 Earnings Call. Please note that this call is being recorded. I'd now like to hand over to our first speaker for today, Mike Moyer. Please go ahead.

Thank you, operator, and good morning, everyone. Welcome to the Cognition Therapeutics Fourth Quarter and Year-End 2023 Results Conference Call. With me today are Lisa Ricciardi, President and Chief Executive Officer; John Doyle, Chief Financial Officer; and Dr. Tony Caggiano, Chief Medical Officer. This morning, the company issued a press release detailing its 2023 fourth quarter and year-end results. 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 the 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 the risks and uncertainties associated with the company's business. These forward-looking statements are qualified by the cautionary statements contained in Cognition's press release 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. Commission 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 over to Lisa Ricciardi.

Mike, thank you. Good morning, everyone. Welcome to Cognition Therapeutics Earnings Conference Call covering our 2023 results and highlights from recent weeks. On today's call, John Doyle and I will share prepared remarks on the company's progress and then we'll be joined by Dr. Tony Caggiano, our Chief Medical Officer and Head of R&D, to take your questions. Cognition focus is the development of innovative, orally available drug candidates targeting age-related degenerative diseases of the central nervous system and retina. Our current clinical programs built on our expertise in the Sigma-2 Receptor, which regulate cellular functions disrupted by neurodegenerative diseases. Our drug candidate -- our leading drug candidate is currently in the clinic being tested for Alzheimer's disease and dementia with Lewy bodies, also referred to as DLB. In Alzheimer's disease, we're setting both early-stage patients and patients with mild to moderate disease. We're also studying CT1812 in geographic atrophy second to dry age-related AMD or dry AMD as it is known. Modulating the Sigma-2 Receptor complex with a brain penetrant, small molecule drug candidate is a unique approach differentiated from other companies developing treatments in both neurodegenerative and ophthalmology diseases. Now an update on our trials. Our SHINE study is a Phase II clinical trial of CT1812 that completed enrollment of 153 patients with mild to moderate Alzheimer's disease. Patients were randomized 1:1:1 to receive placebo oral doses 100 or 300 milligrams of drug. We expect top line data mid '24 after the last patient has completed 6 months treatment, and we anticipate presenting our more detailed findings at the Alzheimer's Association International Conference or AAIC meeting later in the summer. Now the question at the forefront of everyone's mind, of course, is what would we consider to be a success in SHINE? As an objective measure, we consider the results from the most recently approved disease-modifying antibody intravenous infusion therapy, lecanemab in which treated participants had a 1.4 point difference in ADAS-Cog 14 over 18 months. We exceeded this in our preliminary analysis of the first 24 patients in SHINE, where we saw a 3-point difference in the slowing of cognitive decline compared to placebo on the ADAS-Cog 11 just after 6 months. Results similar to our preliminary analysis of the initial 24 patients would represent a clinically meaningful outcome. End points in SHINE include safety, changes in cognitive and functional scores, including the ADAS-Cog 11, the neuropsych test battery, the ADCS activities of daily living. In addition, we would look to corroborate CT1812 biological activity and its brain penetrant target engagement through the analysis of biomarkers. Before moving on, I would like to acknowledge the support of our study participants and their caregivers, our clinical trial investigators, CRO partners and collaborators at the NIA, National Institute of Aging. We look forward to seeing the full study results later this year. Now let me turn to our SHIMMER study, a Phase II U.S.-based trial of CT1812 in mild to moderate dementia with Lewy bodies, or DLB. An estimated 1.4 million people are affected by DLB, making the disease the second most common form of dementia. There are no currently approved treatment options and few drugs are being studied for this condition. Now we know from the literature that more than half of DLB patients are estimated to have both amyloid-beta and alpha-synuclein oligomers in their brain. CT1812 has been shown to protect neurons from the toxicity of both amyloid-beta and alpha-synuclein pathogenic proteins, and thus, it has the potential to treat the sizable population of DLB patients with co-pathology. The SHIMMER trial was also supported by nondilutive funding from the NIA and it's being led by Dr. Jim Galvin, our primary investigator at the University of Miami School of Medicine as well as the Lewy Body Dementia Association or LBDA, whose centers of excellence are among the sites enrolling patients. We aim to complete enrollment and present top line data in the second half of the year. Again, we extend our thanks to patients, caregivers, our clinical trial investigators, our CRO partners and the NIH -- NIA. The prior trials I've discussed are being run in a mild to moderate patient population. Our START trial is a 540-patient Phase II study of CT1812 in adults with early Alzheimer's disease. In collaboration with the Alzheimer's Clinical Trials Consortium, or the ACTC, the START trial is measuring the efficacy and tolerability of CT1812 in subjects with mild cognitive impairment or early disease who have elevated amyloid-beta. We received brand support totaling $81 million for this trial from the NIA, and we are very pleased to join forces and collaborate with the ACTC. In 2023, we initiated site activations and the START trial is now actively recruiting from centers of excellence within the ACTC network. We and our collaborators on this study made the decision to allow participants on stable background therapy with lecanemab to enroll in START. We believe this decision will provide real-world evidence of CT1812 in combination therapy. I will now turn to our opportunity for CT1812 in ophthalmic conditions, specifically dry AMD and geographic atrophy. Dry AMD is estimated to account for up to 90% of the population with age-related macular degeneration. The advanced form of the disease known as geographic atrophy can lead to progressive and permanent vision loss and an estimated 1 million people in the U.S. of geographic atrophy. Now looking at this opportunity, we have evidence from genome-wide studies, from preclinical studies, from clinical biomarker data, as well as from results of our Alzheimer's studies that demonstrate treatment with CT1812 may have a beneficial impact on the proteins implicated in dry AMD. The MAGNIFY study is a randomized, placebo-controlled Phase II trial expected to enroll approximately 240 people who have been diagnosed with dry AMD with measurable geographic atrophy. Over the treatment period, change in GA lesion size as well as other measures of safety and efficacy will be assessed to determine if CT1812 can slow macular degeneration. In addition, we have added measures of visual change to assess the impact of our drug on vision. We believe the level of interest investigators and participants have shown in the MAGNIFY trial indicate that an effective oral treatment option will be well received. And as more treatment options become available, we believe ophthalmologists will move towards combination therapies. Might our drug be synergistic with complement approaches, this is to be determined. Beyond our clinical trial work, our scientific and medical teams have been active in 2023. Cognition scientists published 2 manuscripts and made 11 presentations at medical and scientific congresses this past year. The scientific evidence generated by our team has continued to support our clinical development efforts, providing insights into proteins and biological processes impacted by CT1812 in Alzheimer's, Parkinson's disease and dry AMD. In closing, I'm proud of the progress we have made in advancing CT1812 trials toward important value-driving milestones for 2024. We believe that CT1812 can be an important part of the developing paradigm for dementia treatment, and we are unwavering in our commitment developing new therapies for neurodegenerative diseases. With that, I turn the call to John Doyle to review our financial results.

Thank you, Lisa. During 2023, we continued to execute with financial stewardship. We officially managed our resources and leveraged our grant funding and our at-the-market offering facility with Cantor Fitzgerald and B. Riley Securities to support our clinical programs. Recently, we concluded a new $11.5 million underwritten public offering that is expected to provide funding for our existing clinical trials and bolster our balance sheet by extending cash runway through May 2025. With that context, let us now proceed to the financials for the fiscal year 2023. Research and development expenses were $37.2 million for the year ended December 31, 2023, compared to $30.3 million for 2022. The increase was primarily related to higher costs associated with Phase II trial activities with contract research organizations, personnel and preclinical research partially offset by decreased manufacturing costs. General and administrative expenses were $13.5 million for the year ended December 31, 2023, compared to $13.2 million for 2022. The increase was primarily related to higher employee compensation and benefits, driven by increased headcount and equity-based compensation, partially offset by decreased Director & Officer Liability insurance and other expenses. The company reported a net loss of $25.8 million or $0.86 per basic and diluted share for the year ended December 31, 2023, compared to a net loss of $21.4 million or $0.91 per basic and diluted share for 2022. Cash and cash equivalents as of December 31, 2023, were approximately $29.9 million and total grant funds remaining from the NIA were $67.5 million. I will now turn the call back over to the operator, who can open the call to questions. Operator?

[Operator Instructions] Our first question comes from Charles Duncan from Cantor Fitzgerald.

Lisa and team, congratulations on the progress, could be a transformational year. I had a couple of questions regarding SHINE. And then yes, on the program for 1812. I guess you mentioned a point change that would be clinically meaningful. And I agree with you. However, I would argue that actually a lower point change may also be clinically meaningful given that you have an oral compound and given that you are seeing that in a very short time, relative to the antibodies. And so I guess I would ask you about smaller change being impactful and possibly even if it's seen in a more mild patient population, and then can you update us on the completer rate for SHINE?

Charles, good to talk to you. I'm going to turn your question over to Tony. Spoiler alert, I will not update you on the completer rate for SHINE. When the study is fully completed, we'll provide more information.

Yes. So it's a good question, and we agree with you, Chaz. There is a lot of meaning and changes that are less than the 3 points that folks talk about a lot. Indeed, if you look at the lecanemab data, as Lisa mentioned, there was a 1.44-point change over 18 months. And at 6 months, they had about a 0.5-point change. And this is really the current benchmark for what could be seen in the disease-modifying therapy. Now we're optimistic that we'll have very good results based on our preliminary results, which we've reported previously. But indeed, there is success and great success short of that benchmark. We have several secondary measures, which -- how those follow if the preponderance of those secondary measures follow directionally with the primary. Obviously, that would strengthen changes that are more modest.

That's very helpful, Tony. And then thinking about the mechanism is a Sigma-2 ligand. It would seem to me that the drug may have even greater activity or signal to noise in more mild patient population. And so excited to see the START trial progress. I guess I'm wondering when you could anticipate an update out of that trial? I know that you're not fully engaged in conducting it, but wouldn't it be great to see activity in an even earlier stage patients with Alzheimer's?

Chaz, this is Lisa. Your point is well taken. At this time, I believe there is no interim plan for START. I leave that all to Tony and his ACTC colleagues. And consistent with our previous trials, we're not reporting any interim updates on enrollment or things of that nature. So as for now, we'll continue to provide communication that says it's enrolling. And if there are anything -- there's anything else to communicate, we'll let you know. But we found this more effective for us to say when the trial is done, it's done and not to provide partial progress.

Okay. Last question, and sorry to hop back to SHINE, and that is, following the 6-month treatment period, could you remind us what happens with those patients? Are they given an opportunity to continue on to treatment? And if so, have any done that?

We do not have an open-label extension at this time. So after 6 months of treatment, folks are followed for another month for safety and then the study is completed.

Chaz, to be honest, we have wanted to do an open-label extension, but the economics were prohibitive for a company of our size. And so that's something we're considering as we look forward. It's a great question, something the team would like to be in a position to do.

Yes. Understood. Hopefully, good data will change that.

Our next question comes from Jay Olson from Oppenheimer.

Congrats on the progress. Can you talk about the patient's baseline characteristics in the SHINE study? And also, can you describe how you plan to share the top line results of the SHINE study, will that be in a press release or a medical meeting? And then I had a follow-on.

Jay, good to hear from you. Tony, I'll let you take these questions.

Sure. Yes. We do not have baseline characteristics for the study as yet. It's still [indiscernible] and the data is, obviously, not yet been locked [indiscernible] and analyzed. The plan to read out the data, we'll have a top line read obviously, soon after we get it. And then the plan is to roll out the full data set at the AAIC Meeting at the end of July this year. Obviously, the timing is dependent upon when we get the data, but that's the current plan.

Great. And then just as a follow-up, can you just talk about the level of interest you've seen from investigators and the progress you're making in site activation for the START study?

Yes. The sites are top sites around the country, that's the ACTC network, absolutely top sites. I always say to Investors Day, if your family member were sick, these are the places you'd want to go. And so there is a lot of enthusiasm. I don't have at the top of my head, the number of active sites, but we are making progress and they are keen to have the opportunity to study an oral drug for their early patient population. So from our perspective, it's positive. We're looking to get that study fully enrolled and completed. It's a big study, and it's a long study, but we're making positive progress and met with enthusiasm by the PIs.

Congrats on the progress.

Thanks, Jay.

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

I appreciate the comprehensive update. Maybe just quickly on the Phase II SHINE study. Could you comment on your expectation for rate of ARIA? And if you do have any understanding on how the split of mild and moderate patients are going to be in the SHINE study? Obviously, with your earlier 24-patient cohort breaking out mild and moderate was not possible. But in this larger cohort, that could be a possibility. And then I have a couple of follow-ups.

I'm going to let Tony take your question.

Yes. So the -- taking the second part first, we will be doing analysis of how folks, their scores entering, breaking down between mild and moderate or more severe and less severe and how that impacts their change on our outcome measures. And then can you remind me of the first question? Rate of margin. Yes. So we don't expect based on our mechanism of action that ARIA will be an issue. With antibody therapies pulling amyloid from brain and blood vessels and the rest of the vasculature, you would expect to see those findings. We do not. However, obviously, the full safety picture of our drug will come out as we do complete studies.

Understood. And then, in regards to your recent EEG, proteomics and even brain volume data that has been helpful to understand Sigma-2 Receptor biology. Any specific biomarker data you'd have in the top line for both readouts that is worth paying attention to? If you could point to that, that will be great.

Yes, sure. So we'll be reporting out basically the same biomarkers that we did from the preliminary read, and those are the canonical biomarkers that you would expect to see changes in monomer, synaptic proteins, GFAP, NfL, et cetera. And then as we did previously, we'll be doing complete proteomic analysis from the cerebrospinal fluid and plasma of these individuals to look at more refined measures of target engagement and disease modification. So we'll be doing pretty much the same thing we did in the preliminary read as well as expand it based on what we've learned in the interviewing time.

Great. And then on the Phase II MAGNIFY study, how has the initial investigator feedback then -- I know you're doing well with site activation, but just if you are able to comment on study enrollment? And then lastly, the -- on financials, how much of expected grant funding is baked into your runway guidance so we could have [indiscernible] the next 4 to 5 quarters of cash flow?

With regard to MAGNIFY, there is tremendous enthusiasm in the clinical research community for the trial as well as from patients. So there is positive momentum in that study. And like our other studies, we don't provide guidance on enrollment. They are a very enthusiastic group of PIs and patients. So we can tell you that much. And on the grants, John?

With respect to the grant funding, Mayank. So we expect to complete the SHIMMER grant fund this year as we ramp up that trial. And then the remaining balance of that will be dedicated to START trial as we progress through '24 and '25.

So Mayank, your question was about the $67 million in the press release we identified. Is that right? And how much of that is baked into the runway? Yes. As you know, Mayank, the grants are drawn down as the studies are completed. So it's really a function of the progress we make in those studies, how quickly that grant funding is absorbed.

Got it. That's helpful. I'm looking forward to an exciting next few months for you guys.

Yes, thank you. We are as well. Thank you.

As of right now, we don't have any raised hands. So I'd now like to hand back over to the management for your final remarks.

Terrific. To conclude, we're looking forward to our continued progress in important Phase II data readouts in 2024. We believe our science is sound, and we continue to build evidence supporting CT1812's potential for patients. We're positioned to achieve and deliver on multiple clinical milestones, and we're focused on creating long-term value for our shareholders. Thank you for joining us today.

[This concludes] today's conference call. You may now all disconnect. Have a good day.

Thank you.

Goodbye.