What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2020-11-09 compared with 2020-08-11 · 140 added, 115 removed, 222 unchanged (53% of the section changed)

4 unchanged sentences

On July 6, 2020, we completed our acquisition of Kiq Bio LLC (formerly Kiq LLC), a Delaware limited liability company (“Kiq”), in accordance with the terms of the Agreement and Plan of Merger, dated July 6, 2020 (the “Merger Agreement”).

Through this acquisition of Kiq, we are now a biopharmaceutical company focused on developing a pipeline of novel therapies to treat cancer patients.

Kiq’s most advanced program, PLX9486, is a clinical-stage, highly potent and selective KIT D816V inhibitor that is being developed to treat systemic mastocytosis and Gastrointestinal Solid Tumor (GIST) patients.

On October 2, 2020, we filed an amendment to our certificate of incorporation to change our name from Unum Therapeutics Inc.

to Cogent Biosciences, Inc.

The name change became effective on October 6, 2020.

In connection with the name change, our common stock began trading under the ticker symbol “COGT.”

We are a biotechnology company focused on developing precision therapies for genetically defined diseases.

Our most advanced program, PLX9486, is a clinical-stage, selective KIT D816V inhibitor that is being developed to treat systemic mastocytosis (“SM”) and gastrointestinal stromal tumor (“GIST”) patients.

PLX9486 has been administered to more than 50 advanced solid tumor and GIST patients in a Phase 1 / 2 clinical trial, with the vast majority of those patients living with advanced GIST.

5 unchanged sentences

The overall response rate was 16.6 percent, including two partial responses and one complete response.

Based on these results, we plan to meet with the FDA to explore further clinical development of PLX9486 in combination with sunitinib in GIST patients, and plan to initiate an additional clinical study in GIST in the second half of 2021.

Based on these results, we are planning an FDA interaction to explore further clinical development of PLX9486 in combination with sunitinib in GIST patients, and plan to initiate an additional clinical study in GIST in the second half of 2021.

In addition to continuing the development of PLX9486 in GIST patients, we are pursuing development of the compound in patients living with advanced systemic mastocytosis (“ASM”) and indolent systemic mastocytosis (“ISM”).

Systemic mastocytosis is a disease almost entirely defined by KIT D816V, and patients with ASM have a significantly diminished quality of life and median survival of less than approximately 3.5 years.

For patients with ISM, there are no available approved therapies, and while their lifespan is not shortened by the disease, these patients suffer from a poor quality of life and new treatment options are badly needed.

The vast majority of ASM patients have a KIT D816V mutation, and have a significantly diminished quality of life with median survival less than 3.5 years.

For patients with ISM, there are no available approved therapies, and while their lifespan is not impacted by the disease, these patients suffer from a poor quality of life and new treatment options are badly needed.

Emerging clinical data for other kinase inhibitors with activity against KIT D816V have shown that the disease is highly sensitive to inhibition of the target.

4 unchanged sentences

Under the terms of the May 2020 agreement, Plexxikon received an upfront payment and is eligible for additional development milestones and mid- to high- single-digit royalty payments.

Plexxikon has also committed to a transition plan to enable the seamless transfer of the program.

Patents protecting PLX9486 include composition of matter claims which have issued in the US and other key territories and provide exclusivity through 2033 and potentially beyond.

In addition to our small molecule efforts, we have developed proprietary technologies which enable cell therapy programs targeting cancers utilizing a patient's engineered T cells.

Our BOXR (Bolt-On Chimeric Receptor) product candidates are designed to improve the functionality of T cells by incorporating a "bolt-on" transgene to counter the adverse effects of the solid tumor microenvironment on T cell function.

Our ACTR (“Antibody-Coupled T cell Receptor”) product candidates incorporate a novel chimeric receptor that are designed to enable a co-administered, tumor-specific antibody to direct T cell targeting toward tumor cells.

In March 2020, we announced that we would be suspending further clinical testing of all ACTR product candidates and focusing efforts on advancing our BOXR platform with the aim of bringing the lead BOXR product candidate, BOXR1030, into clinical testing.

With the acquisition of Kiq and the focus on development of novel precision kinase inhibitors, we are directing our cell therapy efforts towards the identification of an external partner who will have responsibility for future development of the technology and development of product candidates.

All ACTR clinical trials are closed to further enrollment.

We anticipate completing all closeout activities of 3 of 4 ACTR clinical trials by th e end of t he quarter ending September 30, 2020 .

We are initiating a study closeout plan for the fourth clinical trial and anticipate closing out the last ACTR clinical trial in the first half of 2021.

Since our inception in 2014, we have focused significant efforts and financial resources on building our ACTR and BOXR platforms, establishing and protecting our intellectual property portfolio, conducting research and development of our product candidates, manufacturing drug product material for use in preclinical studies and clinical trials, staffing our company, and raising capital.

We anticipate completing all closeout activities of 3 of 4 ACTR clinical trials by December 31, 2020.

We anticipate closing out the last ACTR clinical trial in the first half of 2021.

With the acqu isition of Kiq and the focus on development of novel prec ision kinase inhibitors, we are directing our cell therapy efforts towards the identification of an external partner who will have responsibility for future development of the technology and developm ent of product candidates.

On August 28, 2020, we completed the sale of our BOXR technology and Autologous Cell Therapy Industrial Automation (“ACTIA”) technology (collectively, the “BOXR Platform”), to Sotio LLC (“Sotio”) (the “BOXR Platform Transaction”), pursuant to an asset purchase agreement by and among Cogent, Sotio and Sotio NV as Guarantor (the “BOXR Platform Purchase Agreement”).

Pursuant to the BOXR Platform Purchase Agreement, Sotio has agreed to pay us total cash consideration of up to $11.5 million, consisting of an upfront payment of $8.1 million ($1.73 million of which was placed in escrow for 90 days for general representations and warranties) and potential milestone payments of up to $3.4 million in the aggregate upon the achievement of certain milestones related to the issuance of Specified Claims (as described in the BOXR Platform Purchase Agreement) by the U.S.

Patent and Trademark Office and the European Patent Office.

Since our inception in 2014, we have focused significant efforts and financial resources on establishing and protecting our intellectual property portfolio, conducting research and development of our product candidates, manufacturing drug product material for use in preclinical studies and clinical trials, staffing our company, and raising capital.

We do not have any products approved for sale and have not generated any revenue from product sales.

To date, we have funded our operations primarily with proceeds from the sales of preferred stock, our initial public offering of common stock and Concurrent Private Placement (as further discussed below), and payments received under our Collaboration Agreement with Seattle Genetics.

On April 3, 2018, we completed our initial public offering (IPO) of our common stock and issued and sold 5,770,000 shares of our common stock at a public offering price of $12.00 per share, resulting in net proceeds of approximately $61.5 million, after deducting underwriting discounts and commissions and other offering costs.

In addition, we completed a Concurrent Private Placement of $5.0 million of shares of common stock at the public offering price of $12.00 per share, or 416,666 shares, with Seattle Genetics (“Concurrent Private Placement”).

In connection with our IPO, we issued and sold an additional 215,000 shares of our common stock on April 25, 2018, pursuant to the underwriters’ partial exercise of their option to purchase additional shares of common stock at the public offering price of $12.00 and received additional net proceeds of $2.4 million, after deducting underwriting discounts and commissions.

To date, we have funded our operations primarily with proceeds from the sales of preferred stock, our initial public offering of common stock and Concurrent Private Placement, and payments received under our Collaboration Agreement with Seattle Genetics.

On April 1, 2019, we filed a shelf registration statement on Form S-3 with the SEC.

2 unchanged sentences

Additionally, on April 1, 2019 and pursuant to the Form S-3, we entered into a Sales Agreement (the “Sales Agreement”) with Cowen and Company, LLC (“Cowen”), pursuant to which we may issue and sell, from time to time, shares of our common stock having an aggregate offering price of up to $50.0 million through Cowen as the sales agent.

As of June 30, 2020, no shares have been issued or sold under this Sales Agreement.

On March 19, 2020, we entered into a Purchase Agreement with Lincoln Park Capital Fund, LLC (“LPC”), pursuant to which we may elect to sell to LPC up to $25.0 million in shares of our common stock, subject to certain limitations and conditions set forth in the Purchase Agreement.

Pursuant to the Purchase Agreement, we issued 726,382 shares of common stock to LPC as a commitment fee.

As of June 30, 2020, no other shares have been sold under this Purchase Agreement.

On March 26, 2020, we announced that it would be exploring strategic alternatives in order to maximize stockholder value and that we had engaged Ladenburg Thalmann & Co.

As of September 30, 2020, no shares have been issued or sold under this Sales Agreement.

On March 19, 2020, we entered into a Purchase Agreement (the “LPC Purchase Agreement”) with Lincoln Park Capital Fund, LLC (“LPC”), pursuant to which we may elect to sell to LPC up to $25.0 million in shares of our common stock, subject to certain limitations and conditions set forth in the LPC Purchase Agreement.

Pursuant to the LPC Purchase Agreement, we issued 181,595 shares of common stock to LPC as a commitment fee.

As of September 30, 2020, 1,061,583 registered common shares have been sold to LPC under the LPC Purchase Agreement for proceeds of $10.7 million.

On March 26, 2020, we announced that we would be exploring strategic alternatives in order to maximize stockholder value and that we had engaged Ladenburg Thalmann & Co.

to act as our strategic financial advisor to assist in the strategic review process.

On June 9, 2020, our stockholders approved an amendment to our certificate of incorporation, which allows the board to effect a reverse stock split of all issued and outstanding shares of our common stock, as a ratio ranging from 1-for-5 to 1-for-10.

We have yet to effect the reverse stock split as of June 30, 2020.

On July 9, 2020, we completed Private Investment in Public Equity (“PIPE”) with existing and new investors to raise gross proceeds of $104.4 million in which the investors were issued shares of Series A Preferred Stock at a price of $880 per share or, $0.88 per share on an as-converted-to-common basis.

As of July 6, 2020, we successfully signed and closed the acquisition of Kiq.

On July 9, 2020, we completed Private Investment in Public Equity (“PIPE”) with existing and new investors to raise gross proceeds of $104.4 million in which the investors were issued shares of Series A Non-Voting Convertible Preferred Stock (“Series A Preferred Stock”) at a price of $880 per share or, $3.52 per share on an as-converted-to-common basis.

In August 2020, our board of directors unanimously approved an amendment to our certificate of incorporation, which would allow the board to effect a reverse stock split of all issued and outstanding shares of our common stock, at a ratio ranging from 1-for-4 to 1-for-8, inclusive, subject to stockholder approval.

On October 9, 2020, the Company filed a Definitive Proxy Statement which included the proposal that our stockholders approve the amendment to our certificate of incorporation to effect the reverse stock split and a proposal that the stockholders approve the conversion of the shares of Series A Preferred Stock issued in the Kiq acquisition and the private placement .

The proposals were approved by the stockholders at a special meeting held on November 6, 2020 and our board of directors approved a ratio of 1-for-4 for the reverse stock split.

The amendment to our certificate of incorporation to effect the reverse stock split at a ratio of 1-for-4 was filed with the Delaware Secretary of State on November 6, 2020.

Since our inception, we have incurred significant operating losses.

Our ability to generate product revenue sufficient to achieve profitability will depend heavily on the successful development and eventual commercialization of one or more of our product candidates.

Our net losses were $13.5 million for the six months ended June 30, 2020.

As of June 30, 2020, we had an accumulated deficit of $137.4 million.

Our net losses were $63.5 million for the nine months ended September 30, 2020.

As of September 30, 2020, we had an accumulated deficit of $187.4 million.

We expect to continue to incur significant expenses and operating losses for at least the next several years.

19 unchanged sentences

If we fail to become profitable or are unable to sustain profitability on a continuing basis, then we may be unable to continue our operations at planned levels and be forced to reduce or terminate our operations.

As of June 30, 2020, we had cash and cash equivalents of $21.3 million.

We expect that our current cash and cash equivalents, including the $104.4 million we received on July 9, 2020 from the Series A Preferred Stock private placement, will be sufficient to fund our operating expenses and capital expenditure requirements beyond 2022.

As of September 30, 2020, we had cash and cash equivalents of $129.4 million.

We expect that our current cash and cash equivalents will be sufficient to fund our operating expenses and capital expenditure requirements into 2023.

The COVID-19 Pandemic

13 unchanged sentences

In June 2015, we entered into a Collaboration Agreement with Seattle Genetics (the “Collaboration Agreement”).

Pursuant to the terms of the Collaboration Agreement, Unum and Seattle Genetics agreed to jointly develop two product candidates incorporating our ACTR platform and Seattle Genetics’ antibodies.

Pursuant to the terms of the Collaboration Agreement, we and Seattle Genetics agreed to jointly develop two product candidates incorporating our ACTR platform and Seattle Genetics’ antibodies.

Under the Collaboration Agreement, we conduct preclinical research and clinical development activities related to the two specified product candidates through Phase 1 clinical development, and Seattle Genetics provides the funding for those activities.

As a result of the Collaboration Agreement with Seattle Genetics, we recognized revenue of $0.5 million and $3.1 million for the three months ended June 30, 2020 and 2019, respectively, and $7.6 million and $6.2 million for the six months ended June 30, 2020 and 2019, respectively, related to the upfront payment received from Seattle Genetics under our Collaboration Agreement as well as reimbursements of research and development costs.

In November 2019, Unum and Seattle Genetics suspended further dose-escalation of the ATTCK-17-01 trial and associated research activities and are evaluating next steps for the programs.

See Note 5 to the condensed consolidated financial statements herein for further discussion related to this suspension.

On January 16, 2020, Unum and Seattle Genetics announced an agreement to terminate the ATTCK-17-01 Phase 1 clinical trial and other research activities under the collaboration.

Pursuant to terms of the Termination Agreement, among other things, (i) Seattle Genetics paid Unum $5.75 million, (ii) Seattle Genetics surrendered, assigned and transferred to Unum all of its right, title and interest in the 831,847 shares of our common stock owned by Seattle Genetics, (iii) we will continue to be responsible for and pay all expenses for the wind-down of the ACTR-BCMA trial and (iv) Seattle Genetics paid all research and development costs incurred through the Termination Effective Date.

As a result of the Collaboration Agreement with Seattle Genetics, we recognized revenue of $0.3 million and $1.0 million for the three months ended September 30, 2020 and 2019, respectively, and $7.9 million and $7.2 million for the nine months ended September 30, 2020 and 2019, respectively, related to the upfront payment received from Seattle Genetics under our Collaboration Agreement as well as reimbursements of research and development costs.

On January 16, 2020, we and Seattle Genetics announced an agreement to terminate the ATTCK-17-01 Phase 1 clinical trial and other research activities under the collaboration.

Pursuant to terms of the Termination Agreement, among other things, (i) Seattle Genetics paid us $5.75 million, (ii) Seattle Genetics surrendered, assigned and transferred to us all of its right, title and interest in the 207,961 shares of our common stock owned by Seattle Genetics, (iii) we will continue to be responsible for and pay all expenses for the wind-down of the ACTR-BCMA trial and (iv) Seattle Genetics paid all research and development costs incurred through the Termination Effective Date.

In addition, the exclusivity provisions in the Collaboration Agreement terminate and each party will be free to research, develop and commercialize their individual intellectual property (either by themselves or with third parties, subject to the intellectual property rights of the other party.

In considering all facts known, including the suspension of the ATTCK-17-01 clinical trial as announced in November 2019 and the expected termination of the Collaboration Agreement in January 2020, as of December 31, 2019, we adjusted the estimated transaction price to be the $25.0 million upfront payment from 2015 and the total payments to be earned for preclinical research and clinical development activities through the Termination Date.

During the six months ended June 30, 2020, we adjusted the transaction price to include the Termination Payment of $5.75 million as well as the aggregate fair value of $0.8 million as of January 16, 2020 of the 831,847 shares of common stock received.

We also adjusted the estimated costs to complete the remaining performance obligation to represent our best estimate as of June 30, 2020.

During the nine months ended September 30, 2020, we adjusted the transaction price to include the Termination Payment of $5.75 million as well as the aggregate fair value of $0.8 million as of January 16, 2020 of the 207,961 shares of common stock received.

All performance obligations have been completed as of September 30, 2020 and all revenue has been recognized under this collaboration agreement.

There is no remaining deferred revenue balance as of September 30, 2020.

Operating Expenses

1 unchanged sentence

Research and development expenses consist primarily of costs incurred for our research activities, including our drug discovery efforts, and the development of our product candidates, which include:

employee-related expenses, including salaries, related benefits, and stock-based compensation expense for employees engaged in research and development functions;

expenses incurred in connection with the preclinical and clinical development of our product candidates, including under agreements with third parties, such as consultants and contractors and contract research organizations (“CROs”);

the cost of manufacturing drug products for use in our preclinical studies and clinical trials, including under agreements with third parties, such as consultants and contractors and contract manufacturing organizations (“CMOs”);

employee-related expenses, including salaries, related benefits, and stock-based compensation expense for employees engaged in research and development functions;

laboratory supplies and animal care;

5 unchanged sentences

The prepaid amounts are expensed as the related goods are delivered or the services are performed.

Our direct research and development expen ses are tracked on a program-by-program basis and consist of costs, such as fees paid to consultants, contractors, CMOs, and CROs in connection with our preclinical and clinical development activities.

We do not allocate employee costs, costs associated wi th our discovery efforts, laboratory supplies, and facilities, including depreciation or other indirect costs, to specific product development programs because these costs are deployed across multiple product development programs and, as such, are not sepa rately classified.

Our direct research and development expenses are tracked on a program-by-program basis and consist of costs, such as fees paid to consultants, contractors, CMOs, and CROs in connection with our preclinical and clinical development activities.

We do not allocate employee costs, costs associated with our discovery efforts, laboratory supplies, and facilities, including depreciation or other indirect costs, to specific product development programs because these costs are deployed across multiple product development programs and, as such, are not separately classified.

Product candidates in later stages of clinical development generally have higher development costs than those in earlier stages of clinical development, primarily due to the increased size and duration of later-stage clinical trials.

23 unchanged sentences

General and administrative expenses also include direct and allocated facility-related costs as well as professional fees for legal, patent, consulting, investor and public relations, accounting, and audit services.

We anticipate that our general and administrative expenses will increase in the future as of a result of the costs associated with the acquisition of Kiq as well as the expansion of operations subsequent to the acquisition.

We anticipate that our general and administrative expenses will increase in the future as of a result of the costs associated with the asset acquisition of PLX9486 as well as the expansion of operations subsequent to the acquisition.

Acquired In-process Research and Development (“IPR&D”)

We expense acquired IPR&D in connection with an asset acquisition when there is no alternative future use, as determined by Management in accordance with GAAP .

Other Income (Expense)

2 unchanged sentences

Our interest income has not been significant due to low interest earned on invested balances.

Other Income, Net

Other income, net consists of miscellaneous income and expense unrelated to our core operations.

Other income consists of sublease and miscellaneous income and expense unrelated to our core operations.

Change in fair value of the CVR liability

This consists of changes in the fair value of the CVR liability.

Since our inception, we have not recorded any current or deferred tax benefit for the net losses we have incurred in each year or for our earned research and development tax credits, as we believe, based upon the weight of available evidence, that it is more likely than not that all of our net operating loss carryforwards and tax credits will not be realized.

Accordingly, a full valuation allowance has been established against the deferred tax assets as of December 31, 2019.

We reevaluate the utilization of net operating loss carryforwards and tax credits at each reporting period.

As of December 31, 2019, we had U.S.

federal and state net operating loss carryforwards of $109.8 million and $110.8 million, respectively, which may be available to offset future income tax liabilities and begin to expire in 2035.

Of the 2019 federal net operating loss, $79.6 million is available to be carried forward indefinitely but can only offset 80% of taxable income per year.

federal and state net operating loss carryforwards of $109.8 million and $110.8 million.

Utilization of the U.S.

federal and state net operating loss carryforwards and research and development tax credit carryforwards may be subject to annual limitation under Section 382 of the Internal Revenue Code of 1986, and corresponding provisions of state law, due to ownership changes that have occurred previously or that could occur in the future.

These ownership changes may limit the amount of carryforwards that can be utilized annually to offset future taxable income.

In general, an ownership change, as defined by Section 382, results from transactions increasing the ownership of certain stockholders or public groups in the stock of a corporation by more than 50% over a three-year period.

As a result of the shares issued in July 2020 related to the acquisition of Kiq and the sale of Series A convertible preferred stock, the Company has likely experienced a change of control, as defined by Section 382.

If the Company has experienced a change of control, as defined by Section 382, at any time since inception, utilization of the federal and state net operating loss carryforwards or research and development tax credit carryforwards would be subject to annual limitation under Section 382.

Under Section 382, the annual limitation is determined by first multiplying the value of the Company’s stock at the time of the ownership change by the applicable long-term tax-exempt rate, and then could be subject to additional adjustments, as required.

Any limitation may result in expiration of a portion of the net operating loss carryforwards or research and development tax credit carryforwards before utilization.

The Company is completing a study to assess whether a change of control has occurred or whether there have been multiple changes of control since inception, as well as the resulting amount of the limitation on the Company's net operating loss carryforwards and research and development tax credit carryforwards.

As of December 31, 2019, we also had U.S.

1 unchanged sentence

As of December 31, 2019, we have Massachusetts investment tax credits of $0.1 million which generally have a 3 year carryover period.

We have recorded a full valuation allowance against our net deferred tax assets at each balance sheet date.

Results of Operations

Comparison of the three months ended June 30, 2020 and 2019

The following table summarizes our results of operations for the three months ended June 30, 2020 and 2019:

Three Months Ended June 30,

Comparison of the three months ended September 30, 2020 and 2019

The following table summarizes our results of operations for the three months ended September 30, 2020 and 2019:

Three Months Ended September 30,

(in thousands)

3 unchanged sentences

General and administrative

Acquired in-process research and development

Total operating expenses

2 unchanged sentences

Interest income

Other income, net

Gain on disposal of long-lived assets

Change in fair value of CVR liability

Total other income (expense), net

Collaboration Revenue

Collaboration revenue recognized during the three months ended June 30, 2020 and 2019 was $0.5 million and $3.1 million, respectively, this decrease is due to the termination of the Collaboration Agreement with Seattle Genetics.

Collaboration revenue recognized during the three months ended September 30, 2020 and 2019 was $0.3 million and $1.0 million, respectively, this decrease is due to the termination of the Collaboration Agreement with Seattle Genetics.

We recognize revenue from the upfront payment we received as well as ongoing reimbursements of research and development costs from Seattle Genetics by applying the costs-to-cost method over the performance period.

Collaboration revenue fluctuates based upon our pattern of performance for each performance obligation and changes in estimated transaction price and costs to complete our performance obligations.

All performance obligations under the Collaboration Agreement are complete as of September 30, 2020 and all revenue has been recognized under this collaboration agreement.

There is no remaining deferred revenue balance as of September 30, 2020.

Research and Development Expenses

Three Months Ended June 30,

Three Months Ended September 30,

(in thousands)

Direct research and development expenses:

Hematologic Programs

Solid Tumor Programs

Legacy programs

Unallocated expenses:

2 unchanged sentences

Total research and development expenses

Research and development expenses decreased to $5.1 million for the three months ended June 30, 2020 from $10.6 million for the three months ended June 30, 2019.

The overall decrease in R&D expense during the three months ended June 30, 2020 compared to the three months ended June 30, 2019 primarily relates to a decrease in clinical activity related to our Phase 1 clinical trials.

Direct research and development costs related to our hematologic programs and solid tumor programs have decreased $1.7 million and $0.3 million, respectively, in the current year, primarily related to deprioritizing these programs.

On March 2, 2020, as part of our effort to conserve resources for BOXR1030, Unum announced that we are concluding our clinical trials.

The decrease in personnel-related costs of $1.9 million included in unallocated expenses was primarily a result of a decrease in overall compensation resulting from decreased headcount in the three months ended June 30, 2020 due to the restructuring.

The decrease in laboratory supplies, facility-related, and other costs of $1.6 million was primarily due primarily due to the conclusion of our clinical trials.

Research and development expenses decreased by $5.3 million for the three months ended September 30, 2020 compared to the three months ended September 30, 2019 primarily due to the conclusion of our legacy clinical trials and preclinical efforts and a reduced headcount, related to the restructuring, offset by stock compensation expense charges of $1.4 million based on the acceleration of all outstanding options related to the Kiq acquisition.

The three months ended September 30, 2020 includes a change in estimate of $0.8 million which resulted in a cost reversal for amounts associated with our legacy clinical trials.

General and Administrative Expenses

General and administrative expenses for the three months ended June 30, 2020 were $2.8 million, compared to $3.1 million for the three months ended June 30, 2019.

The decrease in general and administrative expenses was primarily due to decrease in professional and consultant fees and facility and other costs of $0.6 million partially offset by increased personnel costs of $0.1 million.

The increase in personnel-related costs was primarily due to restructuring expenses consisting of one-time severance payments and other employee related costs that were incurred during the three months ended June 30, 2020.

General and administrative expenses for the three months ended September 30, 2020 were $5.6 million, compared to $2.7 million for the three months ended September 30, 2019.

The increase in general and administrative expenses was primarily due to an increase personnel costs of $1.5 million based on the acceleration of all outstanding options related to the Kiq acquisition.

Professional and consultant fees and facility and other costs increased $1.4 million as a result of the transactions occurring during the three-months ended September 30, 2020, including increased legal, audit and consulting costs.

Acquired In-process Research and Development (“IPR&D”)

We expensed acquired IPR&D, with an estimated fair value of $46.9 million, including $2.1 million of associated transaction costs, in connection with the Kiq asset acquisition as there was no alternative future use, as determined by Management in accordance with GAAP .

Interest Income

Interest income for the three months ended June 30, 2020 and 2019 remained consistent at $0.1 million as a result of lower invested balances in the current year due to the use of cash proceeds received from our IPO to fund current operations.

Comparison of the six months ended June 30, 2020 and 2019

The following table summarizes our results of operations for the six months ended June 30, 2020 and 2019:

Six Months Ended June 30,

Interest income for the three months ended September 30, 2020 and 2019 remained consistent at $0.1 million as a result of lower interest rates on the invested balances in the current year.

Gain on disposal of long-lived assets

Gain on disposal of long-lived assets, net increased to $7.5 million for the three months ended September 30, 2020 compared to $0.1 million for the three months ended September 30, 2019.

The 2020 gain represents the net proceeds of the sale of BOXR Platform assets as well as the proceeds from the sale of other long-lived assets in the three months ended September 30, 2020.

The prior year gain is the result of the sale of certain long-live assets.

Other income for the three months ended September 30, 2020 represents sublease income recognized resulting from the sublease of a portion of our leased office space to Sotio.

No sublease income was recorded for the three months ended September 30, 2019.

Change in fair value of CVR liability

Change in fair value of CVR liability for the three months ended September 30, 2020 represents the change in the fair value of the CVR liability.

Comparison of the nine months ended September 30, 2020 and 2019

The following table summarizes our results of operations for the nine months ended September 30, 2020 and 2019:

Nine Months Ended September 30,

(in thousands)

3 unchanged sentences

General and administrative

Acquired in-process research and development

Total operating expenses

2 unchanged sentences

Interest income

Other income, net

Total other income, net

Gain on disposal of long-lived assets

Change in fair value of CVR liability

Total other income (expense), net

Collaboration Revenue

Collaboration revenue recognized during the six months ended June 30, 2020 and 2019 was $7.6 million and $6.2 million, respectively, this increase due to the recognition of revenue from payments received from Seattle Genetics under our recently terminated Collaboration Agreement.

Collaboration revenue recognized during the nine months ended September 30, 2020 and 2019 was $7.9 million and $7.2 million, respectively, this increase due to the recognition of revenue from payments received from Seattle Genetics under our recently terminated Collaboration Agreement.

Collaboration revenue fluctuates based upon our pattern of performance for each performance obligation and changes in estimated transaction price and costs to complete our performance obligations.

On January 16, 2020, Unum and Seattle Genetics entered into an agreement to terminate the Collaboration Agreement (the “Termination Agreement”) effective as of January 16, 2020 (the “Termination Effective Date”), pursuant to which the parties will cease all research, development, manufacturing and other exploitations of any and all research candidates and development candidates under the Collaboration Agreement, including, without limitation, the development candidate ACTR-BCMA and a research candidate.

Pursuant to terms of the Termination Agreement, among other things, (i) Seattle Genetics paid Unum $5.75 million and (ii) Seattle Genetics surrendered, assigned and transferred to Unum all of its right, title and interest in the 831,847 shares of Unum’s common stock owned by Seattle Genetics.

On January 16, 2020, Cogent and Seattle Genetics entered into an agreement to terminate the Collaboration Agreement (the “Termination Agreement”) effective as of January 16, 2020 (the “Termination Effective Date”), pursuant to which the parties will cease all research, development, manufacturing and other exploitations of any and all research candidates and development candidates under the Collaboration Agreement, including, without limitation, the development candidate ACTR-BCMA and a research candidate.

Pursuant to terms of the Termination Agreement, among other things, (i) Seattle Genetics paid Cogent $5.75 million and (ii) Seattle Genetics surrendered, assigned and transferred to Cogent all of its right, title and interest in the 207,961 shares of Cogent’s common stock owned by Seattle Genetics.

We adjusted the estimated transaction price to be the $25.0 million upfront payment from 2015 and the total payments to be earned for preclinical research and clinical development activities through the Termination Date.

We also adjusted the costs to complete the remaining performance obligations to represent our best estimate as of June 30, 2020.

Revenue during the six months ended June 30, 2020 includes the termination payments previously discussed.

We also adjusted the costs to complete the remaining performance obligations to represent our best estimate as of September 30, 2020.

Revenue during the nine months ended September 30, 2020 includes the termination payments previously discussed.

All performance obligations have been completed as of September 30, 2020 and all revenue has been recognized under this collaboration agreement.

There is no remaining deferred revenue balance as of September 30, 2020.

Research and Development Expenses

Six Months Ended June 30,

Nine Months Ended September 30,

(in thousands)

Direct research and development expenses:

Hematologic Programs

Solid Tumor Programs

Legacy programs

Unallocated expenses:

2 unchanged sentences

Total research and development expenses

Research and development expenses decreased to $14.6 million for the six months ended June 30, 2020 from $23.0 million for the six months ended June 30, 2019.

The overall decrease in research and development expense during the six months ended June 30, 2020 compared to the six months ended June 30, 2019 primarily relates to the decrease in clinical activity related to our Phase 1 clinical trials.

Direct research and development costs related to our hematologic programs and solid tumor programs have decreased $4.7 million and less than $0.1 million, respectively, in the current year, primarily related to deprioritizing these programs.

On March 2, 2020, as part of our effort to conserve resources for BOXR1030, Unum announced that we are concluding our clinical trials.

The decrease in personnel-related costs of $1.1 million included in unallocated expenses was primarily a result of a decrease in overall compensation resulting from decreased headcount during the six months ended June 30, 2020 due to the restructuring.

The decrease in laboratory supplies, facility-related, and other costs of $2.6 million is primarily due to the conclusion of our clinical trials.

Research and development expenses decreased by $13.7 million for the nine months ended September 30, 2020 compared to nine months ended September 30, 2019 primarily due to the conclusion of our legacy clinical trials and preclinical efforts and a reduced headcount, related to the restructuring, offset by stock compensation expense charges of $1.4 million based on the acceleration of all outstanding options related to the Kiq acquisition.

The nine months ended September 30, 2020 includes a change in estimate of $0.8 million which resulted in a cost reversal for amounts associated with our legacy clinical trials.

General and Administrative Expenses

General and administrative expenses for the six months ended June 30, 2020 were $6.5 million, compared to $5.6 million for the six months ended June 30, 2019.

The increase in general and administrative expenses was primarily due to increased personnel costs of $1.1 million partially offset by a decrease in professional and consultant fees and facility and other costs of $0.4 million.

The increase in personnel-related costs was primarily due to severance paid to employees during the six months ended June 30, 2020.

General and administrative expenses for the nine months ended September 30, 2020 were $12.1 million, compared to $8.3 million for the nine months ended September 30, 2019.

The increase in general and administrative expenses was primarily due to increased personnel costs of $2.8 million, which includes stock compensation expense charges of $1.4 million based on the acceleration of all outstanding options related to the Kiq acquisition.

Professional and consultant fees and facility and other costs of have increased $1.0 million as a result of the significant transactions occurring during the nine-months ended September 30, 2020, including increased legal, audit and consulting costs .

Acquired In-process Research and Development (“IPR&D”)

Interest Income

Interest income for the six months ended June 30, 2020 and 2019 was less than $0.1 million and $0.2 million, respectively.

Interest income for the nine months ended September 30, 2020 and 2019 was $0.1 million and $0.2 million, respectively.

Interest income decreased due to lower invested balances in the current year compared to the prior period.

Gain on disposal of long-lived assets

Gain on disposal of long-lived assets, net increased to $7.5 million for the nine months ended September 30, 2020 compared to $0.1 million for the nine months ended September 30, 2019.

The 2020 gain represents the net proceeds of the sale of BOXR Platform assets as well as the proceeds from the sale of other long-lived assets in the nine months ended September 30, 2020.

The prior year gain is the result of the sale of certain long-live assets.

Other income for the nine months ended September 30, 2020 represents sublease income recognized resulting from the sublease of a portion of our leased office space to Sotio.

No sublease income was recorded for the nine months ended September 30, 2019.

Change in fair value of CVR liability

Change in fair value of CVR liability for the nine months ended September 30, 2020 represents the change in the fair value of the CVR liability.

Liquidity and Capital Resources

8 unchanged sentences

We have not yet commercialized any of our product candidates and we do not expect to generate revenue from sales of any product candidates for several years, if at all.

Prior to our IPO, we had funded our operations with proceeds from the sales of preferred stock and payments received under the Collaboration Agreement.

We have historically funded our operations primarily through the public offering and private placement of our securities and consideration received from our collaborative agreements.

On March 19, 2020, we entered into a Purchase Agreement with LPC, pursuant to which we may elect to sell to LPC up to $25,000,000 in shares of our Common Stock, subject to certain limitations and conditions set forth in the Purchase Agreement.

Pursuant to the Purchase Agreement, we issued 181,595 shares of Common Stock to LPC as a commitment fee.

As of June 30, 2020, no other shares have been issued or sold under this Purchase Agreement.

On July 9, 2020, the Company completed a private placement of 118,638 Series A Preferred Stock to new and existing investors in exchange gross proceeds of $104.4 million.

As of June 30, 2020, we had cash and cash equivalents of $21.3 million.

As of September 30, 2020, 1,061,583 shares have been sold under this Purchase Agreement for proceeds of $10.7 million.

On July 9, 2020, we completed a PIPE and issued 118,638 Series A Preferred Stock to new and existing investors in exchange gross proceeds of $1 04.4 million , or net proceeds of $98.9 million , after deducting commissions and estimated offering costs .

As of September 30, 2020, we had cash and cash equivalents of $129.4 million, which will be sufficient to fund out operating expenses and capital expenditure requirements into 2023.

The following table summarizes our sources and uses of cash for each of the periods presented:

Six Months Ended June 30,

Nine Months Ended September 30,

(in thousands)

5 unchanged sentences

Operating Activities

During the six months ended June 30, 2020, operating activities used $16.2 million of cash, primarily resulting from our net loss of $13.5 million and from net cash used by changes in our operating assets and liabilities of $4.1 million, partially offset by net non-cash charges of $1.4 million.

Net cash used by changes in our operating assets and liabilities for the six months ended June 30, 2020 consisted primarily of a $4.1 million decrease in accounts payable and accrued expenses and other current liabilities, a $1.0 million decrease in deferred revenue and a $1.4 million increase in prepaid expenses and other current assets, partially offset by $2.0 million decrease in accounts receivable and a $0.4 million decrease in other assets.

During the six months ended June 30, 2019, operating activities used $22.9 million of cash, primarily resulting from our net loss of $22.2 million and from net cash used by changes in our operating assets and liabilities of $2.9 million, partially offset by net non-cash charges of $1.9 million.

Net cash used by changes in our operating assets and liabilities for the six months ended June 30, 2019 consisted primarily of a $2.8 million decrease in deferred revenue, a $0.2 million increase in accounts receivable and a $0.7 million decrease in accounts payable and accrued expenses and other current liabilities, all partially offset by a $0.9 million increase in prepaid expenses and other current assets and other assets.

During the nine months ended September 30, 2020, operating activities used $26.5 million of cash, primarily resulting from our net loss of $63.5 million and net cash used by changes in our operating assets and liabilities of $5.9 million, partially offset by net non-cash charges of $42.9 million.

Net cash used by changes in our operating assets and liabilities for the nine months ended September 30, 2020 consisted primarily of a $4.1 million decrease in accounts payable and accrued expenses and other current liabilities, a $1.3 million decrease in deferred revenue, a $0.4 million decrease in operating lease liabilities, and a $2.8 million increase in prepaid expenses and other current assets, partially offset by $2.0 million decrease in accounts receivable, a $0.2 million decrease in the right-of-use asset and a $0.4 million decrease in other assets.

During the nine months ended September 30, 2019, operating activities used $33.1 million of cash, primarily resulting from our net loss of $34.1 million and from net cash used by changes in our operating assets and liabilities of $2.2 million, partially offset by net non-cash charges of $3.2 million.

Net cash used by changes in our operating assets and liabilities for the nine months ended September 30, 2019 consisted primarily of a $3.2 million decrease in deferred revenue and a $0.9 million decrease in prepaid expenses and other current assets and other assets, partially offset by a $0.8 million increase in accounts receivable and a $1.2 million increase in accounts payable and accrued expenses and other current liabilities.

Investing Activities

During the six months ended June 30, 2020, net cash from investing activities was nil.

During the six months ended June 30, 2019, net cash provided by investing activities of $22.9 million consisted of maturities and sales of marketable securities of $23.0 million offset by purchases of property and equipment of $0.1 million.

During the nine months ended September 30, 2020, net cash provided by investing activities of $8.4 million consisted of $8.1 million in proceeds from the disposal of BOXR assets as well as $0.3 million in proceeds from the sale of other property and equipment.

During the nine months ended September 30, 2019, net cash provided by investing activities of $23.2 million consisted of maturities and sales of marketable securities of $23.0 million and $0.2 million in proceeds from the sale of property and equipment offset by purchases of property and equipment of less than $0.1 million.

Financing Activities

During the six months ended June 30, 2020, net used in financing activities was $0.1 million which consisted of the proceeds from the issuance of common stock upon stock option exercises and from the issuance of common stock under the Employee Stock Purchase Plan.

During the six months ended June 30, 2019, net cash provided by financing activities was $0.1 million from the proceeds from the issuance of common stock upon stock option exercises.

Loan and Security Agreement

In January 2017, we entered into a loan and security agreement (the Loan Agreement) with Pacific West Bank (PWB), which provides for term loan borrowings of up to $15.0 million through January 19, 2019.

Borrowings under the Loan Agreement bear interest at a variable annual rate equal to the greater of (i) the prime rate plus 0.25% or (ii) 3.75%, and are payable over an interest-only period until January 19, 2019, followed by a 24-month period of equal monthly payments of principal and interest.

All amounts outstanding as of the maturity date of January 19, 2021 become immediately due and payable.

In January 2019, we amended the Loan Agreement to extend the available date for borrowings from January 19, 2019 to June 30, 2019 and extend the interest only period from January 19, 2019 to June 30, 2020, with the possibility of further extension to March 31, 2021 if certain equity financing considerations are met.

Additionally, the loan repayment period will be over a 24-month period following the end of the interest-only period.

We further amended the Loan Agreement in June 2019 to extend the available date for borrowings to June 30, 2020.

On July 31, 2019, we amended the Loan Agreement t to provide for changes to the primary depository requirements with PWB.

No amounts had been borrowed as term loans under the Loan Agreement as of June 30, 2020 and Loan Agreement expired on June 30, 2020.

During the nine months ended September 30, 2020, net used in financing activities was $110.1 million which consisted of the proceeds from the issuance of Series A non-voting preferred stock and common stock, from the issuance common stock upon stock option exercises and from the issuance of common stock under the Employee Stock Purchase Plan.

During the nine months ended September 30, 2019, net cash provided by financing activities was $0.1 million from the proceeds from the issuance of common stock upon stock option exercises.

Funding Requirements

We expect our expenses to increase in connection with our ongoing activities, particularly as we advance the preclinical activities, wind-down our current clinical trials and potential clinical development of our product candidates.

We expect our expenses to increase in connection with our ongoing activities, particularly as we advance clinical development of our product candidates, preclinical activities, and wind-down our legacy clinical trials.

The timing and amount of our operating expenditures will depend largely on:

the commencement, enrollment, or results of the planned clinical trials of our product candidates or any future clinical trials we may conduct, or changes in the development status of our product candidates;

the initiation, progress, timing, and completion of preclinical studies and clinical trials for our current and future potential product candidates, including the impact of COVID-19 on our ongoing and planned research and development efforts;

any delay in our regulatory filings for our product candidates and any adverse development or perceived adverse development with respect to the applicable regulatory authority’s review of such filings, including without limitation the FDA’s issuance of a “refusal to file” letter or a request for additional information;

9 unchanged sentences

unanticipated serious safety concerns related to the use of our product candidates.

As of June 30, 2020, we had cash and cash equivalents of $21.3 million .

We expect that our current cash and cash equivalents, including the $104.4 million we received on J uly 9, 2020 from the Series A Preferred Stock private placement, will enable us to fund our operating expenses and capital expenditure requirements beyond 2022 .

the impact of COVID-19 on the operations of key governmental agencies, such as the FDA, which may delay the development of our current product candidates or any future product candidates;

As of September 30, 2020, we had cash and cash equivalents of $129.4 million.

We expect that our current cash and cash equivalents will enable us to fund our operating expenses and capital expenditure requirements into 2023.

We have based this estimate on assumptions that may prove to be wrong, and we could exhaust our available capital resources sooner than we expect.

The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

There is no assurance that we will be successful in obtaining benefits from cost saving meas ures implemented or planned or in obtaining additional financing on terms acceptable to us, if at all, nor is it considered probable under the accounting standards.

As such, under the requirements of ASC 205-40, management may not consider the potential fo r future capital raises or management plans to reduce costs that are not considered probable in their assessment of our ability to meet our obligations.

There is no assurance that we will be successful in obtaining benefits from cost saving measures implemented or planned or in obtaining additional financing on terms acceptable to us, if at all, nor is it considered probable under the accounting standards.

As such, under the requirements of ASC 205-40, management may not consider the potential for future capital raises or management plans to reduce costs that are not considered probable in their assessment of our ability to meet our obligations.

Until such time, if ever, as we can generate substantial product revenue, we expect to finance our operations through a combination of equity offerings, debt financings, collaborations, strategic alliances, and marketing, distribution, or licensing arrangements.

22 unchanged sentences

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 2. Management’s Discussion and Analysis