COGNITION THERAPEUTICS INC 10-Q

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations The following discussion and analysis of our financial conditions and results of operations should be read together with our consolidated financial statements and related notes appearing elsewhere in this Quarterly Report and our audited financial statements and notes thereto as of and for the years ended December 31, 2023 and 2022 and the related Management’s Discussion and Analysis of Financial Condition and Results of Operations, included in our Annual Report filed with the Securities and Exchange Commission (“SEC”), on March 26, 2024. In addition to historical information, this discussion and analysis contains forward-looking statements that involve risks, uncertainties and assumptions and other factors that could cause actual results to differ materially from those made, projected or implied in the forward-looking statements. Our actual results may differ materially from those discussed below. Please see “Special Note Regarding Forward-Looking Statements” and “Risk Factors” included in Part I, Item 1A of our Annual Report for factors that could cause or contribute to such differences. Overview We are a clinical-stage biopharmaceutical company engaged in the discovery and development of innovative, small molecule therapeutics targeting age-related degenerative diseases and disorders of the central nervous system (“CNS”) and retina. Currently available therapies for these diseases are limited, with few Alzheimer’s disease (“AD”) treatments, two approved treatments for geographic atrophy (“GA”) secondary to dry age-related macular degeneration (“dAMD”) and no approved treatments for dementia with Lewy bodies. Our goal is to develop disease-modifying treatments for participants with these degenerative disorders by initially leveraging our expertise in the σ-2 (sigma-2) receptor (“S2R”), which is expressed by multiple cell types, including neuronal synapses, and acts as a key regulator of cellular damage commonly associated with certain age-related degenerative diseases of the CNS and retina. Data indicates that CT1812 antagonizes the binding and toxicity of amyloid beta oligomers via targeting the S2R complex and represents a mechanism that is functionally distinct from other current approaches in clinical development for the treatment of degenerative diseases. Clinical results support this hypothesis, and our clinical trial findings provide evidence that the displacement of oligomers from synapses via CT1812 engagement with the S2R results in improved synapse function. In the SNAP study, results of which were published in May 2023 in the journal, Translational Neurodegeneration and showed that a single oral dose of CT1812 rapidly displaces Aβ oligomers from synapses of individuals with AD. In the SEQUEL study, top-line results showed that four weeks of treatment with CT1812 improved synapse activity and connectivity of brain regions as measured via quantitative electroencephalogram (“qEEG”). In blinded and unblinded clinical trials, several participants experienced asymptomatic, reversible elevations in serum liver chemistries prompting harmonization of monitoring, increasing frequency where appropriate, across our clinical trials. The SPARC trial, results of which were published in January 2024 in the Journal of Alzheimer’s Research & Therapy, showed the ability of CT1812 to mitigate brain volume atrophy consistent with neurodegenerative disease. In July 2024, we reported results from our Phase 2 SHINE trial, which showed a consistent trend in cognitive improvement in participants treated with CT1812 (pooled 100mg and 300mg) compared to placebo across all cognitive measures including ADAS-Cog 11, ADAS-Cog 13, cognitive composite and Mini-Mental State Examination (MMSE) scores. In addition, there were signals of improvement in functional measures (ADCS-ADL and ADCS-CGIC). SHINE enrolled 153 adults with mild-to-moderate (MMSE 18-26) Alzheimer's disease who were randomized evenly (1:1:1) to one of two oral daily doses of CT1812 (100mg or 300mg) or placebo. P-values less than 0.05 were observed on ADAS-Cog 11 and MMSE at Day 98, the midpoint of the study. Through the course of the study, participants in the placebo arm worsened approximately 2.70 points as measured by ADAS-Cog 11 on Day 182. In contrast, CT1812-treated participants declined by an average of 1.66 points, a 39% slowing of decline favoring CT1812. Similar results were seen in the MMSE score on Day 98 for the pooled CT1812 arms. On the exploratory measures of function (ADCS-ADL and CGIC), there was a signal of benefit favoring CT1812 at the six-month timepoint. In the SHINE trial, CT1812 did not achieve statistical significance on the first of the ordered secondary efficacy endpoints in the pooled 100mg and 300mg dose group compared to placebo. The SHINE trial achieved its primary objective and demonstrated a favorable safety and tolerability profile, consistent with previous clinical experience. The percentage of participants experiencing any adverse event was similar between the pooled CT1812 treatment arms (76.5%) and the placebo group (78%). The majority of 22 Table of Contents adverse events were mild or moderate in severity. In the placebo arm, 10% of participants experienced a serious adverse event (“SAE”) compared to approximately 5% in the combined CT1812 treated arms. Among CT1812-treated participants, two experienced treatment-emergent SAEs in the 100mg group, including stomatitis, chronic constipation, and hip fracture (all deemed not related to treatment) and three experienced treatment-emergent SAEs in the 300mg group, including hematuria, abdominal pain, and infection (all deemed not related to treatment) and recurrent presyncope (deemed related to treatment). At the 300mg dose, ten participants (nine at scheduled visits and one at an unscheduled visit) experienced treatment-emergent liver enzyme test (“LFT”) increases (greater than 3xULN) that subsided after cessation of drug without evidence of serious liver injury. There were no LFT elevations observed in the 100mg dose. The SHINE study was designed with several pre-planned analyses to further our understanding of CT1812’s mechanism of action and its impact on certain biomarker-defined subgroups. Results of a pre-specified analysis based on participants’ blood levels of p-tau217 at baseline were reported at the Clinical Trials in Alzheimer’s Disease (CTAD) conference in October 2024. Individuals with lower Alzheimer’s disease pathology at baseline as reflected by lower levels of plasma p-tau217 have been shown to have a greater response to amyloid-based therapies. This analysis demonstrated that CT1812-treated participants with plasma p-tau217 below the median of 1.0 pg/mL experienced a 95% slowing in rate of cognitive decline on the ADAS-Cog 11 scale and 108% decline on the MMSE. The placebo-treated participants with below-median p-tau217 declined almost 3 points on the ADAS-Cog 11 scale by the end of the study. Placebo patients in both analyses experienced cognitive decline. We have enrolled 130 patients in the Phase 2 COG1201 (SHIMMER) study of CT1812 in mild-to-moderate dementia with Lewy bodies, or DLB. The design of this trial is a double-blind, randomized, six-month trial involving three dose groups, two active treatment cohorts and a placebo group. Clinical endpoints of the trial include safety and physical activity measurements, cognitive assessments, and PK and pharmacodynamic biomarker analyses compared to baseline measurements recorded at the beginning of the trial. In addition, as an exploratory analysis, cerebrospinal fluid will be collected and analyzed for α-synuclein content and established patterns of differential protein expression. This study is not powered to show significance in the efficacy endpoints. We expect to report topline results from our SHIMMER trial by year-end 2024. Since our inception in 2007, we have incurred significant operating losses and devoted substantially all of our time and resources to developing our lead product candidate, CT1812, building our intellectual property portfolio, raising capital and recruiting management and technical staff to support these operations. As of September 30, 2024, we had an accumulated deficit of $167.3 million. We incurred a net loss of $9.9 million and $26.1 million for the three and nine months ended September 30, 2024, respectively, and net loss of $6.7 million and $17.6 million for the three and nine months ended September 30, 2023, respectively. To date, we have funded our operations primarily with proceeds from grants awarded by the National Institute of Aging (the “NIA”), a division of the National Institutes of Health (the “NIH”), and proceeds from our initial public offering (the “IPO”), completed in October 2021, proceeds from our follow-on public offerings, sales of our common stock through our ATM (as defined below), sales of our convertible promissory notes, convertible preferred stock, simple agreements for future equity (“SAFE”) and stock option exercises. Since our inception, we have received approximately $171.0 million in cumulative grant awards to fund our clinical trials, primarily from the NIA, and we have raised approximately $126.4 million in net proceeds from sales of our equity securities, convertible notes, SAFE, stock option exercises, IPO and follow-on public offerings, ATM, and equity line financing with Lincoln Park. As of September 30, 2024, we had cash and cash equivalents of $22.0 million. To date, $53.6 million of the cumulative grant funds remain available. On December 23, 2022, we entered into a sales agreement with Cantor Fitzgerald & Co. and B. Riley Securities, Inc. (the “Sales Agents”), providing for the offering, issuance and sale by us of up to $40.0 million of our common stock from time to time in “at-the-market” offerings (the “ATM”). We sold 864,404 shares of common stock under the ATM during the nine months ended September 30, 2024 for gross proceeds of approximately $0.9 million. As of September 30, 2024, there was approximately $33.8 million of common stock remaining available for sale under the ATM. On March 10, 2023, we entered into a purchase agreement with Lincoln Park Capital Fund, LLC (“Lincoln Park”) for an equity line financing (the “Lincoln Park Purchase Agreement”). The Lincoln Park Purchase Agreement provides that, subject to the terms and conditions set forth therein, we have the right, but not the obligation, to direct Lincoln Park 23 Table of Contents to purchase up to $35.0 million of shares of common stock at our sole discretion, over a 36-month period commencing on March 10, 2023. We filed a prospectus supplement to our registration statement on Form S-3 (File No. 333-268992) covering the resale of shares of common stock that are issued under the Lincoln Park Purchase Agreement. During the nine months ended September 30, 2024, we did not sell any shares of common stock to Lincoln Park. As of September 30, 2024, $34.8 million was available to draw pursuant to the Lincoln Park Purchase Agreement. On March 14, 2024, we completed our follow-on public offering, pursuant to which we issued and sold 6,571,428 shares of our common stock at a public offering price of $1.75 per share. On March 28, 2024, the underwriters exercised their option to purchase 985,714 shares of our common stock at a public offering price of $1.75 per share. In connection with the follow-on public offering, we received net proceeds of approximately $11.9 million, after deducting underwriting discounts and commissions and other offering related expenses. We expect to continue to incur significant and increasing expenses and net losses for the foreseeable future, as we advance our current and future product candidates through preclinical and clinical development, manufacture drug product and drug supply, seek regulatory approval for our current and future product candidates, maintain and expand our intellectual property portfolio, hire additional research and development and business personnel and operate as a public company. We will not generate revenue from product sales unless and until we successfully complete clinical development and obtain regulatory approval for our product candidates. In addition, if we obtain regulatory approval for our product candidates and do not enter into a third-party commercialization partnership, we expect to incur significant expenses related to developing our commercialization capability to support product sales, marketing, manufacturing and distribution activities. As a result, we will need substantial additional funding to support our continuing operations and pursue our growth strategy. Until we can generate significant revenue from product sales, if ever, we expect to finance our operations through a combination of public or private equity offerings, debt financings or other sources, such as potential collaboration agreements and strategic alliances, licensing or similar arrangements with third parties. To the extent available, we expect to continue our pursuit of non-dilutive research contributions, or grants, including additional NIA grant funding. However, we may fail to receive additional NIA grants, or we may be unable to raise additional funds or enter into such other agreements or arrangements when needed on acceptable terms, or at all. Our failure to obtain additional NIA grants or raise capital or enter into such agreements as and when needed could have a material adverse effect on our business, results of operations and financial condition. Because of the numerous risks and uncertainties associated with product development, we are unable to accurately predict the timing or amount of increased expenses or when, or if, we will be able to achieve profitability. Even if we do achieve profitability, we may not be able to sustain or increase profitability on a quarterly or annual basis. If we fail to become profitable or are unable to sustain profitability on a continuing basis, then we may be unable to raise capital, maintain our research and development efforts, expand our business or continue our operations at planned levels, and as a result we may be forced to substantially reduce or terminate our operations. We do not own or operate manufacturing facilities. We rely, and expect to continue to rely, on third parties for the manufacture of CT1812 for preclinical studies and clinical trials, as well as for commercial manufacture if CT1812 obtains marketing approval. We also rely, and expect to continue to rely, on third parties to manufacture, package, label, store, and distribute CT1812, if marketing approval is obtained. We believe that this strategy allows us to maintain a more efficient infrastructure by eliminating the need for us to invest in our own manufacturing facilities, equipment, and personnel while also enabling us to focus our expertise and resources on the development of CT1812. Impact of COVID-19 on Our Business Our business has been and could be adversely affected by the effects of the COVID-19 pandemic or other national health issues. For example, our ongoing and/or planned clinical trials may be impacted by interruptions or delays at clinical trial sites or operations of the FDA and comparable foreign regulatory authorities. Additionally, we have made certain adjustments to the operation of our trials in an effort to ensure the monitoring and safety of participants and minimize risks to trial integrity during the pandemic in accordance with the guidance issued by the FDA and may need to make further adjustments in the future. 24 Table of Contents While the potential further economic impact brought by the COVID-19 pandemic may be difficult to assess or predict, there could be a significant disruption of global financial markets, reducing our ability to access capital, which could in the future negatively affect our liquidity and financial position. As a result, we may face difficulties raising capital through future sales of our common stock or such sales may be on unfavorable terms. Components of Our Results of Operations Operating Expenses Research and Development Expenses Research and development expenses consist primarily of direct and indirect costs incurred for our research activities, including development of our drug discovery efforts and the development of our product candidates. Direct costs include laboratory materials and supplies, contracted research and manufacturing, clinical trial costs, consulting fees, and other expenses incurred to sustain our research and development program. Indirect costs include personnel-related expenses, consisting of employee salaries, related benefits, and stock-based compensation expense for employees engaged in research and development activities, facilities, and other expenses consisting of direct and allocated expenses for rent and depreciation, and lab consumables. We expense research and development costs as incurred. Non-refundable advance payments for goods and services that will be used over time for research and development are capitalized and recognized as goods are delivered or as the related services are performed. In-licensing fees and other costs to acquire technologies used in research and development that have not yet received regulatory approval and that are not expected to have an alternative future use are expensed when incurred. We track direct costs by stage of program, clinical or preclinical. However, we do not track indirect costs on a program specific basis because these costs are deployed across multiple programs and, as such, are not separately classified. We cannot reasonably determine the nature, timing, and estimated costs of the efforts that will be necessary to complete the development of, and obtain regulatory approval for, any of our product candidates. Product candidates in later stages of development generally have higher development costs than those in earlier stages. We expect that our research and development expenses will increase substantially for the foreseeable future as we continue to invest in research and development activities related to developing our product candidates, as our product candidates advance into later stages of development, as we begin to conduct larger clinical trials, as we seek regulatory approvals for any product candidates that successfully complete clinical trials, as we expand our product pipeline, as we maintain, expand, protect and enforce our intellectual property portfolio, and as we incur expenses associated with hiring additional personnel to support our research and development efforts. General and Administrative Expenses General and administrative expenses consist primarily of personnel-related costs, including employee salaries, related benefits, and stock-based compensation expense for our employees in the executive, finance and accounting, and other administrative functions. General and administrative expenses also include third-party costs such as legal costs, insurance costs, accounting, auditing and tax related fees, consulting fees and facilities and other expenses not otherwise included as research and development expenses. We expense general and administrative costs as incurred. Other Income (Expense) Grant Income Grant income relates to the grants awarded from governmental bodies that are conditional cost reimbursement grants and are recognized as grant income as allowable costs are incurred and the right to payment is realized. 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 grant, as well as facilities and administrative costs. These grants are cost plus fixed fee arrangements in which we 25 Table of Contents are reimbursed for eligible direct and indirect costs over time, up to the maximum amount of each specific grant award. Only costs that are allowable under the grant award, certain government regulations and the NIH’s supplemental policy and procedure manual may be claimed for reimbursement, and the reimbursements are subject to routine audits from governmental agencies from time to time. As of September 30, 2024, the Company has been awarded grants with project periods that extend through May 31, 2027, subject to extension. Our clinical trials have been funded by approximately $171.0 million in cumulative grants awarded primarily by the NIA, which includes an approximately $81.0 million grant from the NIA to fund our Phase 2 (COG0203-START) study of CT1812 in participants with early-stage AD, an approximately $30.5 million grant from the NIA to fund our Phase 2 (COG0201-SHINE) study of CT1812 in participants with mild-to-moderate AD, and an approximately $29.5 million grant from the NIA to fund our Phase 2 (COG1201-SHIMMER) study of CT1812 in participants with dementia with Lewy bodies. Other Income (Expense), Net Other income (expense), net consists primarily of interest income from money market funds, other fees such as offering costs incurred to establish our equity line financing, as well as foreign currency transaction gains or losses. Interest Expense Interest expense consisted of interest expense related to the insurance premium financing arrangement with a lender. Results of Operations Comparison of the Three Months Ended September 30, 2024 and 2023 The following table summarizes our results of operations (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended September 30, ​ ​ ​ ​ 2024 2023 Change Operating Expenses: ​ ​ ​ Research and development ​ $ 11,392 ​ $ 11,669 ​ $ (277) General and administrative ​ 3,071 ​ 3,076 ​ (5) Total operating expenses ​ 14,463 ​ 14,745 ​ (282) Loss from operations ​ (14,463) ​ (14,745) ​ 282 Other income (expense): ​ ​ ​ ​ Grant income ​ 4,293 ​ 7,684 ​ (3,391) Other income, net ​ 236 ​ 314 ​ (78) Interest expense ​ (3) ​ (2) ​ (1) Total other income, net ​ 4,526 ​ 7,996 ​ (3,470) Net loss ​ $ (9,937) ​ $ (6,749) ​ $ (3,188) ​ Research and Development Expenses The following table summarizes our research and development expenses (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended September 30, ​ ​ ​ ​ 2024 2023 Change Clinical programs ​ $ 7,977 ​ $ 5,367 ​ $ 2,610 Personnel ​ 2,591 ​ 2,213 ​ 378 Manufacturing ​ 515 ​ 2,699 ​ (2,184) Preclinical programs ​ 259 ​ 1,292 ​ (1,033) Other expense ​ 50 ​ 98 ​ (48) ​ ​ $ 11,392 ​ $ 11,669 ​ $ (277) ​ 26 Table of Contents Research and development expenses were $11.4 million for the three months ended September 30, 2024, compared to $11.7 million for the three months ended September 30, 2023. The decrease of $0.3 million was primarily due to the following: ● an increase of $2.6 million in clinical programs primarily related to increased Phase 2 trial activities with contract research organizations; ● an increase of $0.4 million in personnel costs associated with expanded research and development activities, and equity-based compensation expense; ● a decrease of $2.2 million in manufacturing related to lower costs with contract manufacturing organizations for the production of pre-clinical and future clinical trial supply ; and ● a decrease of $1.1 million in preclinical programs and other expense primarily due to decreased research activities . General and Administrative Expenses General and administrative expenses were $3.1 million for the three months ended September 30, 2024, compared to $3.1 million for the three months ended September 30, 2023. The change in general and administrative expenses was not significant period over period. Other Income (Expense) Grant Income Grant income was $4.3 million for the three months ended September 30, 2024, compared to $7.7 million for the three months ended September 30, 2023. The change in grant income is correlated with the decrease in eligible reimbursable costs related to clinical trials incurred during 2024 as compared to 2023. Other Income, Net Other income, net was $0.2 million for the three months ended September 30, 2024, compared to other income, net of $0.3 million for the three months ended September 30, 2023. The decrease in other income, net was driven primarily by lower interest earned on money market funds. Interest Expense Interest expense was less than $0.1 million for the three months ended September 30, 2024, compared to interest expense of less than $0.1 million for the three months ended September 30, 2023. Interest expense was not significant in either period. 27 Table of Contents Comparison of the Nine Months Ended September 30, 2024 and 2023 The following table summarizes our results of operations (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Nine Months Ended September 30, ​ ​ ​ ​ 2024 2023 Change Operating Expenses: ​ ​ ​ Research and development ​ $ 33,522 ​ $ 25,596 ​ $ 7,926 General and administrative ​ 9,721 ​ 9,939 ​ (218) Total operating expenses ​ 43,243 ​ 35,535 ​ 7,708 Loss from operations ​ (43,243) ​ (35,535) ​ (7,708) Other income (expense): ​ ​ ​ ​ Grant income ​ 16,516 ​ 18,035 ​ (1,519) Other income (expense), net ​ 813 ​ (129) ​ 942 Interest expense ​ (20) ​ (18) ​ (2) Loss on currency translation from liquidation of subsidiary ​ ​ (195) ​ ​ — ​ ​ (195) Total other income, net ​ 17,114 ​ 17,888 ​ (774) Net loss ​ $ (26,129) ​ $ (17,647) ​ $ (8,482) ​ Research and Development Expenses The following table summarizes our research and development expenses (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Nine Months Ended September 30, ​ ​ ​ ​ 2024 2023 Change Clinical programs ​ $ 22,312 $ 11,961 ​ $ 10,351 Personnel ​ 8,324 ​ ​ 6,875 ​ 1,449 Manufacturing ​ 1,926 ​ ​ 3,527 ​ (1,601) Preclinical programs ​ 784 ​ ​ 2,910 ​ (2,126) Other expense ​ 176 ​ ​ 323 ​ (147) Total research & development expenses ​ $ 33,522 ​ $ 25,596 ​ $ 7,926 ​ Research and development expenses were $ 33.5 million for the nine months ended September 30, 2024, compared to $25.6 million for the nine months ended September 30, 2023. The increase of $ 7.9 million was primarily due to the following: ● an increase of $10.4 million in clinical programs primarily related to increased Phase 2 trial activities with contract research organizations; ● an increase of $1.4 million in personnel costs associated with expanded research and development activities, and equity-based compensation expense; ● a decrease of $1.6 million in manufacturing related to lower costs with contract manufacturing organizations for the production of pre-clinical and future clinical trial supply; and ● a decrease of $2.3 million in preclinical programs and other expense, primarily due to decreased research activities. 28 Table of Contents General and Administrative Expenses General and administrative expenses were $9.7 million for the nine months ended September 30, 2024, compared to $9.9 million for the nine months ended September 30, 2023. The decrease of $0.2 million in general and administrative expenses was driven by lower professional services. Other Income (Expense) Grant Income Grant income was $16.5 million for the nine months ended September 30, 2024, compared to $18.0 million for the nine months ended September 30, 2023. The change in grant income is correlated with the decrease in eligible reimbursable costs incurred during 2024 as compared to 2023. O ther Income (Expense), Ne t Other income, net was $0.8 million for the nine months ended September 30, 2024, compared to other expense, net of $0.1 million for the nine months ended September 30, 2023. The increase in other income (expense), net was driven primarily by interest earned on money market funds, as well as prior year expenses related to the Lincoln Park Purchase Agreement not repeated in 2024. Interest Expense Interest expense was less than $0.1 million for the nine months ended September 30, 2024, compared to interest expense of less than $0.1 million for the nine months ended September 30, 2023. Interest expense was not significant in either period. Liquidity and Capital Resources Sources of Liquidity To date, we have funded our operations primarily with proceeds from grants awarded by the NIA, and proceeds from the sales of our convertible promissory notes, convertible preferred stock, SAFE, stock option exercises, follow-on equity offerings, sales under our ATM and equity line financing, and our IPO. Since our inception, we have received grant awards primarily from the NIA in the aggregate amount of approximately $171.0 million and have raised approximately $126.4 million in net proceeds from sales of our equity securities, convertible notes and SAFE, stock option exercises, our ATM, our equity line financing with Lincoln Park, our IPO and our follow-on public offering. The net proceeds from our IPO, which closed on October 13, 2021, were approximately $44.2 million, after deducting underwriting discounts and commissions and other offering related expenses payable by us. On November 15, 2022, we closed our follow-on public offering, selling 5,000,000 shares of our common stock at a public offering price of $1.20 per share. The net proceeds were approximately $5.2 million, after deducting underwriting discounts and commissions and other offering related expenses payable by us. On December 23, 2022, we entered into a sales agreement with the Sales Agents, providing for the offering, issuance and sale by us of up to $40.0 million of our common stock from time to time in ATM offerings. As of September 30, 2024, we sold 3,723,478 shares of common stock under the ATM for gross proceeds of approximately $6.2 million. As of September 30, 2024, there was $33.8 million of common stock remaining available for sale under the ATM. In addition, in March 2023, we entered into the Lincoln Park Purchase Agreement with Lincoln Park Capital Fund, LLC, or Lincoln Park, giving the Company the right, but not the obligation to sell to Lincoln Park up to $35.0 million worth of shares of our common stock. As of September 30, 2024, we have sold 125,000 shares of common stock to Lincoln Park for proceeds of $0.2 million, as part of the equity line financing arrangement. As of September 30, 2024, $34.8 million was available to draw pursuant to the Lincoln Park Purchase Agreement. On March 14, 2024, we closed a follow-on public offering of 6,571,428 shares of our common stock at a public offering price of $1.75 per share. As part of the follow-on offering, the underwriters exercised their option to purchase 985,714 shares of our common stock on March 28, 2024, at a public offering price of $1.75 per share. The net proceeds were approximately $11.9 million, after deducting underwriting discounts and commissions and other offering related expenses payable by us. 29 Table of Contents As of September 30, 2024, we had $22.0 million in cash and cash equivalents and have not generated positive cash flows from operations. Based on our current business plans, we believe that our existing cash and cash equivalents, and income from non-dilutive grants, will be sufficient for us to fund our operating expenses and capital expenditures into the second quarter of 2025, which assumes no usage from the remaining ATM nor the Lincoln Park Purchase Agreement. We have based these estimates on assumptions that may prove to be incorrect or require adjustment as a result of business decisions, and we could utilize our available capital resources sooner than we currently expect. As of November 13, 2024, the date of issuance of this Quarterly Report, we believe that our cash and cash equivalents as of September 30, 2024 is not sufficient to fund operations for the period through one year after the date of this filing and therefore we have concluded that substantial doubt exists about our ability to continue as a going concern. To execute our business plans, we will need substantial funding to support our continuing operations and pursue our growth strategy. Until such time that we can generate significant revenue from product sales, if ever, we expect to finance our operations through the sale of common stock in public offerings and/or private placements, debt financings or other capital sources, including collaborations with other companies or other strategic transactions. There can be no assurance that additional financing will be available to us or that such financing, if available, will be available on terms acceptable to us. The terms of any financing may adversely affect the holdings or the rights of our stockholders. If we are unable to obtain funding, we could be forced to delay, reduce or abandon our product development programs, which could have a material adverse effect on our business prospects. Future Funding Requirements We expect to continue to incur significant and increasing expenses and net losses for the foreseeable future, as we advance our current and future product candidates through preclinical and clinical development, manufacture drug product and drug supply, seek regulatory approval for our current and future product candidates, maintain and expand our intellectual property portfolio, hire additional research and development and business personnel, and operate as a public company. We anticipate that we will need to raise additional funding in the future to fund our operations, including continuing and completing our clinical trials. We are subject to the risks typically related to the development of new products, and we may encounter unforeseen expenses, difficulties, complications, delays, and other unknown factors that may adversely affect our business. Our future funding requirements will depend on many factors, including, but not limited to: ● the scope, progress, costs and results of our ongoing and planned clinical trials of CT1812, as well as the associated costs, including any unforeseen costs we may incur as a result of preclinical study or clinical trial delays due to a pandemic, such as the COVID-19 pandemic or other diseases, macroeconomic conditions, global or political instability, such as the ongoing global and regional conflicts, inflation, or other delays ; ● the scope, progress, costs and results of preclinical development, laboratory testing and clinical trials for any future product candidates we may decide to pursue ; ● the extent to which we develop, in-license or acquire other product candidates and technologies; ● the costs and timing of process development and manufacturing scale-up activities associated with our product candidates and other programs as we advance them through preclinical and clinical development; ● the availability, timing, and receipt of any future NIA grants; ● the number and development requirements of other product candidates that we may pursue; ● the costs, timing and outcome of regulatory review of our product candidates; 30 Table of Contents ● the costs and timing of future commercialization activities, including product manufacturing, marketing, sales and distribution, for any of our product candidates for which we receive marketing approval; ● the revenue, if any, received from commercial sales of our product candidates for which we receive marketing approval; ● our ability to establish collaborations to commercialize CT1812 or any of our other product candidates outside the United States; ● the costs and timing of preparing, filing and prosecuting patent applications, maintaining and enforcing our intellectual property rights and defending any intellectual property-related claims; ● our ability to maintain the listing of our common stock on the Nasdaq Global Market; and ● the additional costs we may incur as a result of operating as a public company, including our efforts to enhance operational systems and hire additional personnel, including enhanced internal controls over financial reporting. Until such time as we can generate significant revenue from product sales, we expect to finance our operations through a combination of public or private equity offerings, debt financings or other sources, such as potential collaboration agreements and strategic alliances, licensing or similar arrangements with third parties. To the extent available, we expect to continue our pursuit of non-dilutive research contributions, or grants, including additional NIA grant funding. However, we may fail to receive additional NIA grants, or we may be unable to raise additional funds or enter into such other agreements or arrangements when needed on acceptable terms, or at all. Our failure to obtain additional NIA grants or raise capital or enter into such agreements as and when needed could have a material adverse effect on our business, results of operations and financial condition. To the extent that we raise additional capital through the sale of equity or convertible debt securities, the ownership interest of our stockholders will be or could be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect the rights of our common stockholders. Debt financing and preferred equity financing, if available, may involve agreements that include covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures or declaring dividends. If we raise funds through collaborations, licenses and other similar arrangements with third parties, we may have to relinquish valuable rights to our technologies, future revenue streams, research programs or product candidates or grant licenses on terms that may not be favorable to us and/or may reduce the value of our common stock. Adequate funding may not be available when needed or on terms acceptable to us, or at all. Our ability to raise additional funds may be adversely impacted by potential worsening global economic conditions and the recent disruptions to, and volatility in, the credit and financial markets in the United States and worldwide resulting from the COVID-19 pandemic or other diseases, the ongoing global and regional conflicts, inflation, liquidity constraints, failures and instability in U.S. and international financial banking systems, and otherwise. If we fail to obtain necessary capital when needed on acceptable terms, or at all, it could force us to delay, limit, reduce or terminate our product development programs, commercialization efforts or other operations. Insufficient liquidity may also require us to relinquish rights to product candidates at an earlier stage of development or on less favorable terms than we would otherwise choose. We cannot assure you that we will ever be profitable or generate positive cash flows from operating activities. 31 Table of Contents Cash Flows The following table summarizes our cash flows for the periods indicated (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Nine Months Ended September 30, ​ 2024 2023 Cash flows used in operating activities ​ $ (20,092) $ (10,562) Cash flows used in investing activities ​ (3) ​ (117) Cash flows provided by financing activities ​ 12,184 ​ 2,082 Effect of exchange rate changes on cash and cash equivalents ​ — ​ 4 Net decrease in cash and cash equivalents ​ $ (7,911) ​ $ (8,593) ​ Operating Activities Net cash used in operating activities for the nine months ended September 30, 2024 was $20.1 million, which consisted primarily of a net loss of $26.1 million, offset primarily by the impact of equity-based compensation of $3.2 million and a net change of $2.4 million in operating assets and liabilities. The net change in operating assets and liabilities was primarily due to an increase in grant receivables of $2.1 million, an increase in accounts payable and accrued expenses of $3.6 million, a decrease in prepaid expenses and other assets of $1.6 million, and a decrease in deferred grant income and other liabilities of $0.7 million. Net cash used in operating activities for the nine months ended September 30, 2023 was $10.6 million, which consisted primarily of a net loss of $17.6 million, offset primarily by the impact of equity-based compensation of $3.3 million and a net change of $3.3 million in operating assets and liabilities. The net change in operating assets and liabilities was primarily due to a decrease in grant receivables of $2.0 million, a decrease in prepaid expenses and other assets of $1.0 million, an increase in accounts payable and accrued expenses of $1.8 million, and a decrease in deferred grant income and other liabilities of $1.4 million. Investing Activities Net cash used in investing activities for the nine months ended September 30, 2024 and 2023 was less than $0.1 million and $0.1 million, respectively. Overall, the change in net cash used in investing activities was insignificant. Financing Activities Net cash provided by financing activities for the nine months ended September 30, 2024 and 2023 was $12.2 million and $2.1 million, respectively. The change in net cash provided by financing activities is primarily related to net proceeds from the issuance of common stock in our follow-on offering in March 2024 and under the ATM program. Contractual Obligations The following table summarizes our contractual obligations as of September 30, 2024 (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Less than ​ 1 to 3 ​ 3 to 5 ​ More than 5 ​ ​ ​ ​ 1 Year Years Years years Total Operating lease obligations: ​ $ 226 ​ $ 283 ​ $ 153 ​ $ — ​ $ 662 Total: ​ $ 226 ​ $ 283 ​ $ 153 ​ $ — ​ $ 662 ​ In October 2023, we entered into an insurance premium financing arrangement with a lender whereby we financed $0.7 million of certain premiums at a 8.65% annual interest rate. Payments of less than $0.1 million are due monthly from October 2023 through September 2024. As of September 30, 2024, there was no remaining outstanding principal on the loan. In October 2024, we entered into an insurance premium financing arrangement with the same lender whereby we financed $0.4 million of certain premiums at a 8.65% annual interest rate. Payments of less than $0.1 million are due monthly from November 2024 through August 2025. 32 Table of Contents We have entered into an operating leases for office and laboratory facilities under agreements that run through May 31, 2029. The amounts reflected in the table above consist of the future minimum lease payments under the non-cancelable lease arrangements. On August 31, 2022, we entered into an agreement to lease 2,980 square feet of office space in Pittsburgh, Pennsylvania. The lease has a term of 45 months and commenced on October 1, 2022. The annual base rent under the lease is less than $0.1 million throughout the term of the lease. Total payments due over the term of the lease are $0.2 million. Additionally, on August 31, 2022, we modified one of our existing lease agreements with the landlord for approximately 3,706 square feet of lab space at the same location to extend the lease term termination date from June 30, 2023 until June 30, 2026. On July 1, 2021, we entered into an agreement to lease 2,864 square feet of office space in Purchase, New York. The lease has a term of 89 months and commenced on December 9, 2021. The annual base rent under the lease is less than $0.1 million for the first lease year and is subject to annual increases of between 1.82% and 2.04%. We provided a security deposit in the form of a Letter of Credit in the amount of less than $0.1 million pursuant to the terms of the lease. We enter into contracts in the normal course of business with CROs and other vendors to assist in the performance of our research and development and other services and products for operating purposes. These contracts typically do not contain minimum purchase commitments and generally provide for termination on notice, and therefore are cancelable contracts and not included in the table of contractual obligations. Critical Accounting Policies and Use of Estimates The Critical Accounting Policies and Significant Judgements and Estimates included in our Annual Report on Form 10-K have not materially changed. See “Critical Accounting Policies and Use of Estimates” included in Part II, Item 7 of our Annual Report on Form 10-K filed with the SEC on March 26, 2024. Recent Accounting Pronouncements For a description of recent accounting pronouncements, see Note 2 of the notes to our consolidated financial statements included in this Quarterly Report. Emerging Growth Company Status We are an emerging growth company, as defined in the Jumpstart Our Business Startups Act of 2012, or the JOBS Act. Under the JOBS Act, emerging growth companies can delay adopting new or revised accounting standards issued subsequent to the enactment of the JOBS Act until such time as those standards apply to private companies. We elected to use this extended transition period for complying with new or revised accounting standards that have different effective dates for public and private companies until the earlier of the date that we (1) are no longer an emerging growth company or (2) affirmatively and irrevocably opt out of the extended transition period provided in the JOBS Act. As a result, our financial statements may not be comparable to companies that comply with the new or revised accounting pronouncements as of public company effective dates. We will remain an emerging growth company until the earliest to occur of: (1) the last day of the fiscal year in which we have at least $1.235 billion in annual revenue; (2) the last day of the fiscal year in which we are deemed to be a “large accelerated filer,” as defined in Rule 12b-2 under the Exchange Act, which would occur if the market value of our common stock held by non-affiliates exceeded $700.0 million as of the last business day of the second fiscal quarter of such year; (3) the date on which we have issued more than $1.0 billion in non-convertible debt securities during the prior three-year period; and (4) the last day of the fiscal year ending after the fifth anniversary of our IPO. ​ 33 Table of Contents Item 3. Quantitative and Qualitative Disclosures About Market Risk As a “smaller reporting company,” as that term is defined in Rule 229.10(f)(1), we are not required to provide the information required by this Item.