What changed in this filing

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Item 1. Financial Statements

2023-11-02 compared with 2023-08-08 · 85 added, 66 removed, 348 unchanged (30% of the section changed)

4 unchanged sentences

(in thousands, except share and per share amounts)

June 30, 2023

September 30, 2023

December 31, 2022

20 unchanged sentences

Preferred stock, $ 0.001 par value, 10,000,000 shares authorized;

no shares issued and outstanding at June 30, 2023 and December 31, 2022

no shares issued and outstanding at September 30, 2023 and December 31, 2022

Common stock, $ 0.001 par value, 250,000,000 shares authorized;

30,286,582 and 28,991,548 shares issued and outstanding at June 30, 2023 and December 31, 2022, respectively

30,417,082 and 28,991,548 shares issued and outstanding at September 30, 2023 and December 31, 2022, respectively

Additional paid-in capital

8 unchanged sentences

(in thousands, except share and per share amounts)

Three Months Ended June 30,

Six Months Ended June 30,

Three Months Ended September 30,

Nine Months Ended September 30,

Operating Expenses:

7 unchanged sentences

Total other income, net

Loss before income tax

Income tax benefit

Unrealized (loss) gain on foreign currency translation

Unrealized gain (loss) on foreign currency translation

Total comprehensive loss

10 unchanged sentences

Issuance of common stock under the at-the-market (ATM) sales agreement, net of commissions and allocated fees

Issuance of common stock as commitment shares for equity line financing (see Note 7)

Issuance of common stock as commitment shares for equity line financing (Note 7)

Equity-based compensation

5 unchanged sentences

Balances as of June 30, 2023

Issuance of common stock under the at-the-market (ATM) sales agreement, net of commissions and allocated fees

Issuance of common stock related to the equity line financing

Equity-based compensation

Balances as of September 30, 2023

COGNITION THERAPEUTICS, INC.

AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (continued)

(in thousands, except share amounts)

Comprehensive

9 unchanged sentences

Balances as of June 30, 2022

Exercise of stock options

Equity-based compensation

Other comprehensive loss

Balances as of September 30, 2022

The accompanying notes are an integral part of these consolidated financial statements.

3 unchanged sentences

(in thousands)

Six Months Ended June 30,

Nine Months Ended September 30,

Cash flows from operating activities:

4 unchanged sentences

Issuance of common stock as commitment shares for equity line financing

Loss on sale of common stock related to the equity line financing

Changes in operating assets and liabilities:

1 unchanged sentence

Prepaid expenses and other assets

Other receivables

Accounts payable and accrued expenses

7 unchanged sentences

Proceeds from issuance of common stock under the ATM sales agreement, net of commissions and allocated fees

Proceeds from sale of common stock related to the equity line financing

Proceeds from the exercise of common stock options

Payments on loan payable

Net cash provided by (used in) financing activities

Net cash provided by financing activities

Effect of exchange rate changes on cash and cash equivalents

3 unchanged sentences

Cash and cash equivalents – end of period

Supplemental disclosures of non-cash financing activities:

Remeasurement of right-of-use asset and operating lease liability

The accompanying notes are an integral part of these consolidated financial statements.

16 unchanged sentences

The gross proceeds from the November 2022 Offering were $ 6,000 and the net proceeds were approximately $ 5,184 , after deducting underwriting discounts and commissions and other offering related expenses payable by the Company.

Additionally, the Company granted the underwriters in the November 2022 Offering an option to purchase up to 750,000 additional shares of its common stock at the public offering price, less underwriting discounts and commissions.

On December 23, 2022, the Company filed a Registration Statement on Form S-3 (File No.

4 unchanged sentences

(the “Sales Agents”) providing for the offering, issuance and sale by the Company of up to $ 40,000 of its common stock from time to time in “at-the-market” offerings under the Shelf (the “ATM”).

During the six months ended June 30, 2023, the Company sold 1,105,178 shares of our common stock pursuant to the ATM for gross proceeds of approximately $ 2,502 .

During the nine months ended September 30, 2023, the Company sold 1,110,678 shares of its common stock pursuant to the ATM for gross proceeds of approximately $ 2,509 .

Please refer to Note 7 for further details.

3 unchanged sentences

333-268992) covering the resale of shares of common stock that may be issued under the Purchase Agreement.

As of June 30, 2023, the Company had not sold any shares of its common stock to Lincoln Park.

During the nine months ended September 30, 2023, the Company sold 125,000 shares of common stock to Lincoln Park for proceeds of $ 205 , as part of the equity line financing arrangement.

As of September 30, 2023, $ 34,795 was available to draw pursuant to the Purchase Agreement.

Please refer to Note 7 for further details.

The Company held cash and cash equivalents of $ 37,190 at June 30, 2023.

The Company held cash and cash equivalents of $ 32,969 at September 30, 2023.

The Company expects that its cash and cash equivalents will enable it to fund its operating expenses and capital expenditure requirements through at least the one year period subsequent to the filing date of this Quarterly Report on Form 10-Q.

However, additional funding will

be necessary beyond this point to fund the Company’s future preclinical and clinical activities.

The Company expects to finance its future cash needs through a combination of grant awards, equity or debt financings, collaboration agreements, strategic alliances and licensing arrangements.

However, additional funding will be necessary beyond this point to fund the Company’s future preclinical and clinical activities.

The Company expects to

finance its future cash needs through a combination of grant awards, equity or debt financings, collaboration agreements, strategic alliances and licensing arrangements.

Summary of Significant Accounting Policies

Basis of Presentation

The accompanying consolidated financial statements as of June 30, 2023, and for the three and six months ended June 30, 2023 and 2022, have been prepared in accordance with the rules and regulations of the SEC and generally accepted accounting principles in the United States of America (“U.S.

The accompanying consolidated financial statements as of September 30, 2023, and for the three and nine months ended September 30, 2023 and 2022, have been prepared in accordance with the rules and regulations of the SEC and generally accepted accounting principles in the United States of America (“U.S.

GAAP”) for interim financial information, the instructions to Form 10-Q and Article 10 of Regulation S-X.

1 unchanged sentence

GAAP for complete financial statements.

In the opinion of the Company’s management, the accompanying unaudited interim consolidated financial statements contain all adjustments that are necessary to present fairly the Company’s financial position as of June 30, 2023, the statements of operations and comprehensive loss and stockholders’ equity for the three and six months ended June 30, 2023 and 2022, and cash flows for the six months ended June 30, 2023 and 2022.

In the opinion of the Company’s management, the accompanying unaudited interim consolidated financial statements contain all adjustments that are necessary to present fairly the Company’s financial position as of September 30, 2023, the statements of operations and comprehensive loss and stockholders’ equity for the three and nine months ended September 30, 2023 and 2022, and cash flows for the nine months ended September 30, 2023 and 2022.

Such adjustments are of a normal and recurring nature.

The results for the three and six months ended June 30, 2023 are not necessarily indicative of the results for the year ending December 31, 2023, or for any future period.

The results for the three and nine months ended September 30, 2023 are not necessarily indicative of the results for the year ending December 31, 2023, or for any future period.

These interim financial statements should be read in conjunction with the audited financial statements as of and for the year ended December 31, 2022, and the notes thereto, which are included in the Company’s Annual Report on Form 10-K, filed with the SEC on March 23, 2023.

12 unchanged sentences

Deferred grant income represents grant proceeds received by the Company prior to the period in which the reimbursable research and development services are incurred.

For the three and six months ended June 30, 2023, the Company generated grant income of $ 6,925 and $ 10,351 , respectively, primarily from reimbursements from the National Institute of Aging (the “NIA”), a division of the NIH for aging research.

For the three and six months ended June 30, 2022, the Company generated grant income of $ 6,385 and $ 12,289 , respectively, primarily from reimbursements from the NIA, a division of the NIH for aging research.The

current and noncurrent portion of deferred grant income as of June 30, 2023 was $ 1,056 and $ 1,052 , respectively, as compared to the current and noncurrent portion of deferred grant income as of December 31, 2022 of $ 1,702 and $ 1,686 , respectively.

For the three and nine months ended September 30, 2023, the Company generated grant income of $ 7,684 and $ 18,035 , respectively, primarily from reimbursements from the National Institute of Aging (the “NIA”), a division of the NIH for aging research.

For the three and nine months ended September 30, 2022, the Company generated grant income of $ 5,947 and $ 18,236 , respectively, primarily from reimbursements from the NIA, a division of the NIH for aging research.

The current and

noncurrent portion of deferred grant income as of September 30, 2023 was $ 910 and $ 1,052 , respectively, as compared to the current and noncurrent portion of deferred grant income as of December 31, 2022 of $ 1,702 and $ 1,686 , respectively.

The grants awarded relate to agreed-upon direct and indirect costs for specific studies or clinical trials, which may include personnel and consulting costs, costs paid to contract research organizations (“CROs”), research institutions and/or consortiums involved in the grants, as well as facilities and administrative costs.

4 unchanged sentences

To date, the Company has not been found to have breached the terms of any NIH grant.

As of June 30, 2023, the Company has been awarded grants with project periods that extend through May 31, 2026, subject to extension.

As of September 30, 2023, the Company has been awarded grants with project periods that extend through May 31, 2026, subject to extension.

Research and Development Costs

The Company is involved in research and development of treatments for a variety of diseases related to the central nervous system, with a primary focus on Alzheimer’s disease.

The Company is involved in research and development of treatments for a variety of diseases related to the central nervous system, with a focus on Alzheimer’s disease, dementia with Lewy bodies, and geographic atrophy (GA) secondary to dry age-related macular degeneration.

Research and development costs are expensed as incurred.

52 unchanged sentences

Recent Accounting Pronouncements

There have been no new pronouncements issued during the six months ended June 30, 2023, which could be expected to materially impact the Company’s consolidated financial statements.

There have been no new pronouncements issued during the nine months ended September 30, 2023, which could be expected to materially impact the Company’s consolidated financial statements.

In accordance with ASC 270, Interim Reporting , and ASC 740, Income Taxes , the Company is required at the end of each interim period to determine the best estimate of its annual effective tax rate, apply that rate in providing for income taxes on a current year-to-date (interim period) basis, and include the tax impact for discrete items within the interim period.

The Company maintains a full valuation allowance against all deferred tax assets as of June 30, 2023 and December 31, 2022, as management has determined that it is not more likely than not that the Company will realize these future tax benefits.

As of June 30, 2023 and December 31, 2022, the Company had no uncertain tax positions.

The Company maintains a full valuation allowance against all deferred tax assets as of September 30, 2023 and December 31, 2022, as management has determined that it is not more likely than not that the Company will realize these future tax benefits.

As of September 30, 2023 and December 31, 2022, the Company had no uncertain tax positions.

Financial Instruments and Fair Value Measurements

Financial assets and liabilities measured at fair value are summarized below:

As of June 30, 2023

As of September 30, 2023

Quoted Priced in

11 unchanged sentences

Accrued expense consists of the following:

June 30, 2023

September 30, 2023

December 31, 2022

6 unchanged sentences

Total payments of approximately $ 72 , including interest and principal, are due monthly from November 2022 through October 2023.

As of June 30, 2023 and December 31, 2022, the outstanding principal of the loan was $ 217 and $ 634 , respectively, and is included in other current liabilities on the consolidated balance sheet.

As of September 30, 2023 and December 31, 2022, the outstanding principal of the loan was $ 0 and $ 634 , respectively, and is included in other current liabilities on the consolidated balance sheet.

Commitments and Contingencies

Operating Leases

Amounts reported in the consolidated balance sheets for leases where the Company is the lessee as of June 30, 2023 were as follows, in thousands:

June 30, 2023

Amounts reported in the consolidated balance sheets for leases where the Company is the lessee as of September 30, 2023 were as follows, in thousands:

September 30, 2023

Operating lease assets

3 unchanged sentences

Total operating lease liabilities

Operating lease costs for the three and six months ended June 30, 2023 was $ 54 and $ 108 , respectively, as compared to operating lease costs for the three and six months ended June 30, 2022 of $ 49 and $ 99 , respectively.

The maturities of the operating lease liabilities and minimum lease payments as of June 30, 2023 were as follows:

Operating lease costs for the three and nine months ended September 30, 2023 was $ 53 and $ 161 , respectively, as compared to operating lease costs for the three and nine months ended September 30, 2022 of $ 50 and $ 149 , respectively.

The maturities of the operating lease liabilities and minimum lease payments as of September 30, 2023 were as follows:

For the Years Ended December 31,

4 unchanged sentences

Present value of operating lease liabilities

The following table summarizes the lease term and discount rate as of June 30, 2023:

June 30, 2023

The following table summarizes the lease term and discount rate as of September 30, 2023:

September 30, 2023

Weighted-average remaining lease term (years)

3 unchanged sentences

The following table summarizes the supplemental cash flow information related to the Company’s operating leases:

Six Months Ended June 30,

Nine Months Ended September 30,

(In Thousands)

4 unchanged sentences

When a material loss contingency is only reasonably possible, the Company does not record a liability but instead discloses the nature and the amount of the claim and an estimate of the loss or range of loss, if such an estimate can reasonably be made.

As of June 30, 2023 and December 31, 2022, there was no litigation or contingency with at least a reasonable possibility of a material loss.

As of September 30, 2023 and December 31, 2022, there was no litigation or contingency with at least a reasonable possibility of a material loss.

Stockholders’ Equity

2 unchanged sentences

Common stockholders are entitled to dividends if and when declared by the Company’s board of directors subject to the rights of the preferred stockholders.

As of June 30, 2023, no dividends on common stock had been declared by the Company.

As of September 30, 2023, no dividends on common stock had been declared by the Company.

On December 23, 2022, the Company filed a shelf registration statement on Form S-3 with the SEC in relation to the registration of common stock, preferred stock, debt securities, warrants, subscription rights, and/or units of any combination thereof of up to $ 200,000 in aggregate (the “Shelf”).

1 unchanged sentence

The Company also simultaneously entered into a sales agreement with the Sales Agents providing for the offering, issuance and sale by the Company of up to $ 40,000 of its common stock from time to time in ATM offerings under the Shelf.

The Company sold 1,105,178 shares of common stock pursuant to the ATM during the six months ended June 30, 2023 for gross proceeds of approximately $ 2,502 .

As of June 30, 2023, there was $ 37,498 remaining of common stock available for sale under the ATM.

The Company sold 1,110,678 shares of common stock pursuant to the ATM during the nine months ended September 30, 2023 for gross proceeds of approximately $ 2,509 .

As of September 30, 2023, there was $ 37,491 remaining of common stock available for sale under the ATM.

Lincoln Park Purchase Agreement

3 unchanged sentences

The Company recorded $ 318 to other expense, net in connection with the issuance of the Commitment Shares.

As of June 30, 2023, the Company had not sold any shares of its common stock to Lincoln Park under the Purchase Agreement.

During the nine months ended September 30, 2023, the Company sold 125,000 shares of common stock to Lincoln Park for proceeds of $ 205 , as part of the equity line financing arrangement.

As of September 30, 2023, $ 34,795 was available to draw pursuant to the Purchase Agreement.

Equity-based Compensation

3 unchanged sentences

The 2021 Plan authorizes the award of both equity-based and cash-based incentive awards, including:

(i) stock options (both incentive stock options and nonqualified stock options), (ii) stock appreciation rights, (iii) restricted stock awards, (iv) restricted

stock units (“RSUs”), and (v) cash or other stock-based awards.

(i) stock options (both incentive stock options and nonqualified stock options), (ii) stock appreciation rights, (iii) restricted stock awards, (iv) restricted stock units (“RSUs”), and (v) cash or other stock-based awards.

Incentive stock options may be granted only to employees.

All other types of awards may be issued to employees, directors, consultants, and other service providers.

As of June 30, 2023, the aggregate number of shares of common stock of the Company that may be issued under the 2021 Plan is 3,001,359 .

As of September 30, 2023, the aggregate number of shares of common stock of the Company that may be issued under the 2021 Plan is 2,982,942 .

The number of shares reserved for issuance under the 2021 Plan increased automatically on January 1, 2023 pursuant to an evergreen provision therein by 1,449,577 shares, representing 5 % of total common shares outstanding at December 31, 2022.

5 unchanged sentences

On September 15, 2017, the Company’s board of directors approved the 2017 Plan, which provides for the granting of incentive stock options, non-qualified stock options and stock awards to employees, certain consultants and directors.

The board of directors, or its designated committee, has the sole authority to select the individuals to whom awards are granted and determine the terms of each award, including the number of shares and the schedule upon which the award becomes exercisable.

The board of directors, or its designated committee, has the sole authority to select the individuals to whom awards are

granted and determine the terms of each award, including the number of shares and the schedule upon which the award becomes exercisable.

Upon the effectiveness of the 2021 Plan, no further awards will be granted under the 2017 Plan.

The aggregate number of shares of common stock of the Company that may be issued under the 2017 Plan is 4,334,131 (taking into account shares of common stock that may become issuable pursuant to Section 3(b) of the 2017 Plan in respect of shares of common stock reserved under the Company’s Amended and Restated 2007 Equity Incentive Plan).

The 2021 Plan allows for a provision for shares granted under the Prior Plans which are cancelled, forfeited, exchanged or surrendered without having been exercised to subsequently be available for reissuance under the 2021 Plan.

The 2021 Plan provides for shares granted under the Prior Plans which are cancelled, forfeited, exchanged or surrendered without having been exercised shall subsequently be available for reissuance under the 2021 Plan.

Employee Stock Purchase Plan

1 unchanged sentence

Under the ESPP, the Company may provide employees and employees of the Subsidiary with an opportunity to purchase shares of the Company’s common stock at a discounted purchase price.

As of June 30, 2023, subject to adjustment as provided in the ESPP, a total of 209,532 shares of common stock are authorized and reserved for issuance under the ESPP.

As of September 30, 2023, subject to adjustment as provided in the ESPP, a total of 209,532 shares of common stock are authorized and reserved for issuance under the ESPP.

Subject to prior approval by the board of directors in each instance, on or about January 1, 2022 and each anniversary of such date thereafter prior to the termination of the ESPP, the number of shares of common stock authorized and reserved for issuance under the ESPP will be increased by a number of shares of common stock equal to the least of (i) 1,000,000 shares of common stock, (ii) 1 % of the shares of common stock outstanding on the final day of the immediately preceding calendar year, and (iii) such smaller number of shares of common stock as determined by the board of directors.

3 unchanged sentences

The fair value of options granted was estimated on the date of grant using the Black-Scholes option pricing model with the following assumptions:

Six Months Ended June 30,

Nine Months Ended September 30,

Fair value of common stock

15 unchanged sentences

Expected Volatility — Up until October 13, 2021, the Company was privately held and did not have a trading history of common stock.

As such, the expected volatility was derived from the average historical stock volatilities of the common stock of several public companies within the industry that the Company considers to be comparable to our business over a period equivalent to the expected term of the stock-based awards.

As such, the expected volatility was derived from the average historical stock volatilities of the common

stock of several public companies within the industry that the Company considers to be comparable to our business over a period equivalent to the expected term of the stock-based awards.

The Company will continue to derive expected volatility from average historical stock volatilities of industry peers until the Company has compiled a trading history of its own for a sufficient period of time.

11 unchanged sentences

Options expired

Balance, June 30, 2023

Exercisable as of June 30, 2023

The weighted-average grant date fair value of stock options granted was $ 1.57 and $ 1.61 during the three and six months ended June 30, 2023, respectively.

The weighted-average grant date fair value of stock options granted was $ 2.00 and $ 2.52 during the three and six months ended June 30, 2022, respectively.

There were 163,549 and 576,269 stock options granted at an aggregate fair value of $ 257 and $ 925 for the three and six months ended June 30, 2023, respectively.

There were 214,125 and 426,575 stock options granted at an aggregate fair value of $ 429 and $ 1,077 for the three and six months ended June 30, 2022, respectively.

During the three and six months ended June 30, 2023, there were no stock options exercised.

During the three and six months ended June 30, 2022 there were 19,321 and 367,875 stock options exercised, respectively, with an aggregate grant date fair value of $ 22 and $ 327 , respectively.

The intrinsic value of stock options exercised during the three and six months ended June 30, 2022 was $ 36 and $ 1,121 , respectively.

Balance, September 30, 2023

Exercisable as of September 30, 2023

The weighted-average grant date fair value of stock options granted was $ 1.25 and $ 1.59 during the three and nine months ended September 30, 2023, respectively.

The weighted-average grant date fair value of stock options granted was $ 1.47 and $ 1.90 during the three and nine months ended September 30, 2022, respectively.

There were 19,500 and 595,769 stock options granted at an aggregate fair value of $ 24 and $ 950 for the three and nine months ended September 30, 2023, respectively.

There were 14,000 and 449,270 stock options granted at an aggregate fair value of $ 21 and $ 838 for the three and nine months ended September 30, 2022, respectively.

During the three and nine months ended September 30, 2023, there were no stock options exercised.

During the three and nine months ended September 30, 2022 there were 1,371,589 and 1,739,465 stock options exercised, respectively, with an aggregate grant date fair value of $ 1,018 and $ 1,308 , respectively.

The intrinsic value of stock options exercised during the three and nine months ended September 30, 2022 was $ 1,596 and $ 2,717 , respectively.

Restricted Stock Units

2 unchanged sentences

RSUs for employees vest annually over three years on each anniversary of the Grant Date and RSUs for non-employee directors vest on the one-year anniversary of the Grant Date.

The following table summarizes the Company’s RSU activity for the six months ended June 30, 2023:

The following table summarizes the Company’s RSU activity for the nine months ended September 30, 2023:

Weighted-Average

Outstanding at December 31, 2022

Outstanding at June 30, 2023

Outstanding at September 30, 2023

Equity-based Compensation Expense

The Company recorded total equity-based compensation expense in the statement of operations and comprehensive loss related to stock options and restricted stock units as follows:

Three Months Ended June 30,

Six Months Ended June 30,

Three Months Ended September 30,

Nine Months Ended September 30,

Research and development

1 unchanged sentence

Total equity-based compensation

As of June 30, 2023, total future compensation expense related to unvested awards yet to be recognized by the Company was $ 6,347 , which is expected to be recognized over a weighted-average remaining vesting period of approximately 1.9 years.

As of September 30, 2023, total future compensation expense related to unvested awards yet to be recognized by the Company was $ 5,306 , which is expected to be recognized over a weighted-average remaining vesting period of approximately 1.69 years.

Net Loss per Share

The following outstanding potentially dilutive common stock equivalents have been excluded from the calculation of diluted net loss per share for the periods presented due to their antidilutive effect:

September 30,

Options issued and outstanding

1 unchanged sentence

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements