Cognition Therapeutics, Inc. (CGTX) is a clinical-stage biopharmaceutical company focused on developing innovative, small molecule therapeutics targeting age-related degenerative diseases and disorders of the central nervous system (CNS) and retina. The company's lead product candidate, CT1812, represents a novel approach to addressing the underlying causes of conditions like Alzheimer's disease (AD), dementia with Lewy bodies (DLB), and dry age-related macular degeneration (dAMD).
Company History and Evolution
Cognition Therapeutics was incorporated as a Delaware corporation on August 21, 2007. The company was founded on the unique combination of biological expertise around the sigma-2 (σ-2) receptor target and proprietary medicinal chemistry intended to produce novel, high-quality small-molecule drug candidates. Since its inception, Cognition Therapeutics has incurred significant operating losses and devoted substantially all of its time and resources to developing its lead product candidate, CT1812, building its intellectual property portfolio, raising capital, and recruiting management and technical staff to support these operations.
The company has funded its operations primarily through grants awarded by the National Institute on Aging (NIA), a division of the National Institutes of Health (NIH), as well as proceeds from its initial public offering (IPO) completed in October 2021, follow-on public offerings, sales of its common stock through an at-the-market (ATM) offering, sales of convertible promissory notes, convertible preferred stock, simple agreements for future equity (SAFE), and stock option exercises.
In December 2022, Cognition filed a shelf registration statement on Form S-3 with the SEC and simultaneously entered into a sales agreement with Cantor Fitzgerald & Co. and B. Riley Securities, Inc., providing for the offering, issuance, and sale of up to $40 million of its common stock from time to time in at-the-market offerings. Additionally, in March 2023, the company entered into a purchase agreement with Lincoln Park Capital Fund, LLC for an equity line financing, allowing Cognition to direct Lincoln Park to purchase up to $35 million of shares of common stock over a 36-month period commencing on March 10, 2023.
In January 2024, Cognition Therapeutics ceased operations at its wholly-owned subsidiary, Cognition Therapeutics PTY LTD, and completed its liquidation.
Financial Overview and Liquidity
As of September 30, 2024, Cognition Therapeutics reported $22.0 million in cash and cash equivalents. The company has not generated any revenue from product sales to date, with its operations primarily funded through grants awarded by the National Institute on Aging (NIA), a division of the National Institutes of Health (NIH), as well as the sale of equity securities, including its IPO and follow-on offerings.
For the nine months ended September 30, 2024, Cognition reported a net loss of $26.1 million, compared to a net loss of $17.6 million for the same period in 2023. The company's research and development expenses for the nine-month period were $33.5 million, up from $25.6 million in the prior year, reflecting the ongoing clinical development of CT1812 and other programs.
In the third quarter of 2024, Cognition Therapeutics reported total operating expenses of $14.46 million, compared to $14.74 million in the same period of 2023. Research and development expenses were $11.39 million, slightly lower than the $11.67 million in the prior year quarter, primarily due to a decrease in manufacturing costs. General and administrative expenses remained relatively flat at $3.07 million.
The company's clinical programs accounted for the majority of its research and development expenses, increasing to $7.98 million in Q3 2024 from $5.37 million in the prior year period. This increase was largely driven by the ongoing Phase 2 trials of CT1812, including the SHINE study in mild-to-moderate Alzheimer's disease and the SHIMMER study in dementia with Lewy bodies. Personnel costs related to the company's expanded research and development activities also rose to $2.59 million from $2.21 million.
Cognition Therapeutics reported grant income of $4.29 million in the third quarter of 2024, down from $7.68 million in the same quarter of 2023, as the company experienced a decrease in eligible reimbursable costs related to its clinical trials. Other income, net, was $0.24 million, compared to $0.31 million in the prior year period, mainly due to lower interest earned on money market funds.
For the full year 2023, Cognition reported no revenue and a net loss of $25.79 million. The company's operating cash flow (OCF) for 2023 was -$16.02 million, with free cash flow (FCF) of -$16.17 million. In the most recent quarter (Q3 2024), the company reported no revenue, a net loss of $9.94 million, OCF of -$6.85 million, and FCF of -$6.85 million.
Despite the lack of revenue, Cognition's liquidity position remains relatively strong, with $53.6 million in remaining grant funds as of September 30, 2024. However, the company has stated that its existing cash and cash equivalents, along with income from non-dilutive grants, are not sufficient to fund operations for the period through one year after the filing of its latest quarterly report, indicating substantial doubt about its ability to continue as a going concern.
The company's financial position as of September 30, 2024, shows a debt-to-equity ratio of 0.013, a current ratio of 2.11, and a quick ratio of 2.11. Cognition Therapeutics believes its current cash and cash equivalents, combined with expected grant funding, will be sufficient to fund its operations into the second quarter of 2025, assuming no further utilization of its ATM program or equity line financing.
Cognition Therapeutics has been actively pursuing additional funding sources, including public or private equity offerings, debt financings, and potential collaborations or strategic partnerships, to support its ongoing research and development efforts.
Clinical Pipeline and Key Developments
Cognition's lead product candidate, CT1812, is a first-in-class, orally administered, small molecule drug that selectively binds to the σ-2 receptor complex. The company's research has shown that CT1812 can displace toxic amyloid-beta (Aβ) oligomers from neuronal synapses, which is believed to be a key driver of neurodegeneration in Alzheimer's disease and other CNS disorders.
In the company's Phase 2 "SHINE" study, which enrolled 153 adults with mild-to-moderate Alzheimer's disease, CT1812 demonstrated a consistent trend of cognitive improvement compared to placebo. Participants treated with CT1812 showed approximately a 40% mean improvement in the Alzheimer's Disease Assessment Scale-cognitive subscale (ADAS-Cog 11) versus placebo, as well as positive changes across multiple other cognitive and functional measures.
Additionally, a pre-specified analysis of the SHINE study data presented at the 2024 Clinical Trials on Alzheimer's Disease (CTAD) conference showed that CT1812-treated participants with lower levels of plasma p-tau217, a biomarker of Alzheimer's disease pathology, experienced a dramatic 95% slowing of cognitive decline on the ADAS-Cog 11 scale and a 108% slowing on the Mini-Mental State Examination (MMSE) compared to placebo.
Cognition is also advancing CT1812 in the Phase 2 "SHIMMER" study, which is evaluating the drug in patients with mild-to-moderate dementia with Lewy bodies (DLB). The company expects to report topline results from this study by the end of 2024.
Risks and Challenges
Cognition Therapeutics faces several risks and challenges common to clinical-stage biopharmaceutical companies, including the inherent uncertainties of drug development, the potential for delays or failures in its clinical trials, and the need to secure additional funding to support its operations.
The company's reliance on grant funding from the NIA, as well as its ability to raise capital through public or private offerings, represents a significant risk. Cognition has stated that its existing cash and cash equivalents, along with income from non-dilutive grants, may not be sufficient to fund operations for the next 12 months, raising substantial doubt about its ability to continue as a going concern.
Additionally, the company operates in a highly competitive and regulated industry, with numerous other companies pursuing treatments for neurodegenerative disorders. The success of CT1812 and Cognition's other product candidates will depend on their ability to demonstrate superior efficacy, safety, and commercial viability compared to existing and emerging therapies.
Conclusion
Cognition Therapeutics is leveraging its unique expertise in the σ-2 receptor complex to develop innovative treatments for devastating neurodegenerative disorders, such as Alzheimer's disease and dementia with Lewy bodies. The company's lead candidate, CT1812, has shown promising results in early-stage clinical trials, particularly in slowing cognitive decline in Alzheimer's patients with lower levels of a key biomarker.
However, Cognition faces significant challenges, including the need to secure additional funding to support its ongoing research and development efforts. The company's ability to navigate the regulatory landscape and successfully bring its product candidates to market will be crucial in determining its long-term success. Investors should closely monitor Cognition's progress as it continues to advance its pipeline and explore strategic partnerships to enhance its financial position and maximize the potential of its innovative approach to treating neurodegenerative diseases.