Cognition Therapeutics, Inc. (NASDAQ: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 drug candidate, CT1812, is currently being evaluated in several Phase 2 clinical trials for the treatment of Alzheimer's disease, dementia with Lewy bodies, and geographic atrophy secondary to dry age-related macular degeneration.
Business Overview
Cognition Therapeutics was founded in 2007 with the goal of developing disease-modifying treatments for patients with neurodegenerative disorders. The company's approach is centered around targeting the sigma-2 (σ-2) receptor complex, which plays a key role in regulating cellular functions disrupted by these diseases. By modulating the σ-2 receptor with small molecule drugs like CT1812, the company aims to address the underlying pathologies associated with Alzheimer's, Lewy body dementia, and dry age-related macular degeneration.
The company's lead product candidate, CT1812, is an orally available, brain-penetrant small molecule that has demonstrated the ability to displace toxic protein oligomers from neuronal synapses in preclinical studies and early clinical trials. This unique mechanism of action sets CT1812 apart from other therapies in development, which typically focus on reducing the production or clearing the aggregation of these pathogenic proteins.
Cognition Therapeutics is currently evaluating CT1812 in three Phase 2 clinical trials:
1. SHINE study: Evaluating CT1812 in patients with mild-to-moderate Alzheimer's disease. Topline data is expected mid-2024.
2. SHIMMER study: Assessing CT1812 in patients with dementia with Lewy bodies. Topline data is anticipated in the second half of 2024.
3. MAGNIFY study: Investigating CT1812 in patients with dry age-related macular degeneration and geographic atrophy. This study is expected to complete enrollment in 2024.
In addition to these ongoing trials, Cognition Therapeutics is also collaborating with the Alzheimer's Clinical Trials Consortium (ACTC) on the START study, a Phase 2 trial evaluating CT1812 in adults with early Alzheimer's disease. This 540-patient study is being supported by an $81 million grant from the National Institute on Aging (NIA).
Financials and Liquidity
For the fiscal year ended December 31, 2023, Cognition Therapeutics reported a net loss of $25.8 million, with no revenue generated during the period. The company's annual operating cash flow was -$16.0 million, and its annual free cash flow was -$16.2 million.
As of March 31, 2024, Cognition Therapeutics had cash and cash equivalents of $34.7 million. The company also has access to $67.5 million in remaining grant funding from the NIA to support its ongoing clinical trials. In March 2024, the company completed a follow-on public offering, raising approximately $11.9 million in net proceeds to further bolster its balance sheet.
Based on its current cash position and expected grant funding, Cognition Therapeutics believes it has sufficient resources to fund its operations through the second quarter of 2025. The company continues to explore additional financing options, including its at-the-market (ATM) facility and an equity line financing agreement, to support the advancement of its pipeline and extend its cash runway.
Quarterly Performance
In the first quarter of 2024, Cognition Therapeutics reported a net loss of $9.2 million, compared to a net loss of $6.2 million in the same period of the prior year. The increase in net loss was primarily driven by higher research and development expenses, which rose from $5.4 million in Q1 2023 to $10.6 million in Q1 2024. This was due to increased costs associated with the company's Phase 2 clinical trial activities, personnel, and manufacturing.
Grant income, which is recognized as the company incurs eligible reimbursable costs, increased from $3.4 million in Q1 2023 to $4.9 million in Q1 2024, reflecting the progress made in the company's clinical programs. Other income, net, also improved from an expense of $0.6 million in Q1 2023 to income of $0.2 million in Q1 2024, primarily due to higher interest earned on the company's cash and cash equivalents.
As of March 31, 2024, Cognition Therapeutics had cash and cash equivalents of $34.7 million, compared to $29.9 million as of December 31, 2023. The increase in cash was primarily attributable to the net proceeds from the company's follow-on public offering completed in March 2024.
Upcoming Milestones and Outlook
Cognition Therapeutics is poised to achieve several important clinical milestones in 2024. The company expects to report topline data from its SHINE study of CT1812 in patients with mild-to-moderate Alzheimer's disease in mid-2024, followed by a more detailed presentation of the results at the Alzheimer's Association International Conference later in the year.
Additionally, the company anticipates reporting topline data from its SHIMMER study of CT1812 in patients with dementia with Lewy bodies in the second half of 2024. The MAGNIFY study evaluating CT1812 in patients with dry age-related macular degeneration and geographic atrophy is also expected to complete enrollment in 2024.
The company's collaboration with the ACTC on the START study in early Alzheimer's disease continues to progress, with site activations and patient enrollment underway. While Cognition Therapeutics does not plan to provide interim updates on this trial, the company remains optimistic about the potential for CT1812 to demonstrate efficacy in this earlier stage patient population.
Risks and Challenges
As a clinical-stage biopharmaceutical company, Cognition Therapeutics faces several risks and challenges that investors should be aware of. These include the inherent uncertainties associated with drug development, the potential for clinical trial failures or delays, the ability to obtain regulatory approvals, and the company's ability to secure additional funding to support its operations and pipeline advancement.
Additionally, the company's reliance on grant funding from the NIA and its ability to continue to receive such non-dilutive financing represents a potential risk. Any disruption or reduction in this grant funding could have a significant impact on the company's financial position and its ability to execute on its clinical development plans.
Conclusion
Cognition Therapeutics is pioneering a unique approach to treating neurodegenerative diseases by targeting the sigma-2 receptor complex. With several promising Phase 2 clinical trials underway, the company is poised to deliver important data readouts in 2024 that could validate its innovative mechanism of action and demonstrate the potential of CT1812 to become a disease-modifying therapy for Alzheimer's disease, dementia with Lewy bodies, and dry age-related macular degeneration.
The company's strong cash position, access to non-dilutive grant funding, and recent successful financing activities provide it with the resources to advance its pipeline and continue to build on the scientific evidence supporting its approach. As Cognition Therapeutics navigates the challenges inherent in drug development, investors will be closely watching the progress and outcomes of its ongoing clinical trials, which could have significant implications for the company's future growth and value creation.