What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2020-08-14 compared with 2020-05-12 · 124 added, 63 removed, 380 unchanged (33% of the section changed)

3 unchanged sentences

(In thousands, except share and per share amounts)

March 31, 2020

June 30, 2020

December 31, 2019 (1)

7 unchanged sentences

Long term investments

LIABILITIES, REDEEMABLE CONVERTIBLE PREFERRED STOCK AND

STOCKHOLDERS’ EQUITY / (DEFICIT)

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current liabilities:

7 unchanged sentences

Preferred stock, $0.001 par value, 10,000,000 authorized, no shares issued and

outstanding as of March 31, 2020 and December 31, 2019

outstanding as of June 30, 2020 and December 31, 2019

Common stock, $0.001 par value, 100,000,000 shares authorized,

29,404,540 and 26,869,413 issued and outstanding as of March 31, 2020 and

29,486,269 and 26,869,413 issued and outstanding as of June 30, 2020 and

December 31, 2019, respectively

Additional paid in capital

Accumulated other comprehensive income (loss)

Accumulated other comprehensive income

Accumulated deficit

Total stockholders’ equity

Total liabilities, redeemable convertible preferred stock and stockholders’ equity

Total liabilities and stockholders’ equity

The balance sheet as of December 31, 2019 is derived from the audited financial statements as of that date

3 unchanged sentences

(In thousands, except share and per share amounts)

Three Months Ended March 31,

Three Months Ended June 30,

For the Six Months Ended June 30,

Operating expenses:

4 unchanged sentences

Interest income

Other comprehensive income/ (loss):

Unrealized gain / (loss) on available for sales securities

Other comprehensive income:

Unrealized gain on available for sales securities

Total comprehensive loss

4 unchanged sentences

Cortexyme, Inc.

Condensed Statements of Redeemable Convertible Preferred Stock and Stockholders’ Equity / (Deficit)

Condensed Statements of Redeemable Convertible Preferred Stock and Stockholders’ Equity

(In thousands, except share and per share amounts)

For the three months ended March 31, 2020 and 2019

For the three months ended June 30, 2020 and 2019

Series A Redeemable

2 unchanged sentences

Convertible Preferred

Accumulated Other

Comprehensive

Stockholders'

Shareholders'

Income / (Loss)

Balance March 31, 2020

Issuance cost related to private placement

Exercise of stock options

Stock based compensation

Other comprehensive income

Balance June 30, 2020

Balance March 31, 2019

Exercise of stock options

Stock based compensation

Vesting of Series B

redeemable convertible

preferred stock in lieu

Conversion of redeemable

convertible preferred stock

to common stock

Initial public offering of

common stock, net of

issuance costs of $8,427

Exercise of stock warrant

Other comprehensive income

Balance June 30, 2019

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

Cortexyme, Inc.

Condensed Statements of Redeemable Convertible Preferred Stock and Stockholders’ Equity

(In thousands, except share and per share amounts)

For the six months ended June 30, 2020 and 2019

Series A Redeemable

Convertible Preferred

Series B Redeemable

Convertible Preferred

Comprehensive

Shareholders'

Income / (Loss)

Balance January 1, 2020

Issuance of common stock in connection

with private placement, net of issuance

Issuance of common stock in

connection with private

placement, net of issuance

costs of $7,372

1 unchanged sentence

Stock based compensation

Other comprehensive loss

Balance March 31, 2020

Other comprehensive income

Balance June 30, 2020

Balance January 1, 2019

1 unchanged sentence

Stock based compensation

Vesting of Series B redeemable

convertible preferred stock in lieu of rent

Vesting of Series B

redeemable convertible

preferred stock in lieu

Conversion of redeemable

convertible preferred stock

to common stock

Initial public offering of

common stock, net of

issuance costs of $8,427

Exercise of stock warrant

Other comprehensive income

Balance March 31, 2019

Balance June 30, 2019

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

1 unchanged sentence

Condensed Statements of Cash Flows

For the Three Months Ended March 31,

For the Six Months Ended June 30,

Cash flows from operating activities:

13 unchanged sentences

Purchase of property and equipment

Net cash (used in) provided by investing activities

Net cash used in investing activities

Cash flows from financing activities:

1 unchanged sentence

Proceeds from issuance of common stock upon exercise of stock options

Proceeds from initial public offering, net of stock offering costs

Proceeds from private placement offering, net of issuance costs

5 unchanged sentences

Right-of-use assets obtained in exchange for new operating lease liabilities

Right-of-use assets obtained in exchange for new finance lease liabilities

Conversion of Series A redeemable convertible preferred stock to common stock on

initial public offering

Conversion of Series B redeemable convertible preferred stock to common stock on

initial public offering

Acceleration of vesting of Series B redeemable convertible preferred stock on initial

public offering

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

25 unchanged sentences

The Company has incurred losses and negative cash flows from operations since inception and expects to continue to generate operating losses for the foreseeable future.

As of March 31, 2020, the Company had an accumulated deficit of $87.0 million.

Since inception through March 31, 2020, the Company has funded operations primarily with the net proceeds from the issuance of convertible promissory notes, from the issuance of redeemable convertible preferred stock, from the net proceeds from the IPO and from the net proceeds from the PIPE Financing.

As of March 31,2020, the Company had cash, cash equivalents, and short-term investments of $162.4 million, which it believes will be sufficient to fund its planned operations for a period of at least 12 months from the date of the issuance of the accompanying unaudited financial statements.

As of June 30, 2020, the Company had an accumulated deficit of $104.6 million.

Since inception through June 30, 2020, the Company has funded operations primarily with the net proceeds from the issuance of convertible promissory notes, from the issuance of redeemable convertible preferred stock, from the net proceeds from the IPO and from the net proceeds from the PIPE Financing.

As of June 30,2020, the Company had cash, cash equivalents, and short-term investments of $144.5 million, which it believes will be sufficient to fund its planned operations for a period of at least 12 months from the date of the issuance of the accompanying unaudited financial statements.

The Company also has long-term investments of $66.1 million.

6 unchanged sentences

Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements.

In the management’s opinion, all adjustments (consisting only of normal recurri ng adjustments) considered necessary for a fair presentation of the results of operations and cash flows for the periods presented have been included.

The condensed balance sheet as of March 31, 2020, the condensed statements of operations and comprehensive loss for the three months ended March 31, 2020 and 2019, the condensed statements of stockholders’ equity/(deficit) as of March 31, 2020 and 2019, the condensed statements of cash flows for the three months ended March 31, 2020 and 2019, and the financial data and other financial information disclosed in the notes to the condensed financial statements are unaudited.

In management’s opinion, all adjustments (consisting only of normal recurring adjustments) considered necessary for a fair presentation of the results of operations and cash flows for the periods presented have been included.

The condensed balance sheet as of June 30, 2020, the condensed statements of operations and comprehensive loss for the three and six months ended June 30, 2020 and 2019, the condensed statements of redeemable convertible preferred stock and stockholders’ equity for the three and six months ended June 30, 2020 and 2019, the condensed statements of cash flows for the six months ended June 30, 2020 and 2019, and the financial data and other financial information disclosed in the notes to the condensed financial statements are unaudited.

These financial statements should be read in conjunction with the audited financial statements and notes thereto for the year ended December 31, 2019 included in the Company’s Form 10-K filed with the SEC on March 16, 2020.

The results of operations for the three months ended March 31, 2020 are not necessarily indicative of the results to be expected for the year ending December 31, 2020, or for any other future annual or interim period.

The results of operations for the three and six months ended June 30, 2020 are not necessarily indicative of the results to be expected for the year ending December 31, 2020, or for any other future annual or interim period.

Risks and Uncertainties

10 unchanged sentences

Significant Accounting Policies

There have been no significant changes to the accounting policies during the three months ended March 31, 2020, as compared to the significant accounting policies described in our Annual Report on Form 10-K.

There have been no significant changes to the accounting policies during the six months ended June 30, 2020, as compared to the significant accounting policies described in our Annual Report on Form 10-K.

Cash, Cash Equivalents, and Restricted Cash

42 unchanged sentences

2018-15, Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40)”:

Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract (“ASU 2018-15”), which clarifies the accounting for implementation costs in cloud computing arrangements.

The Company adopt ed the standard prospectively on January 1, 2020.

Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract (“ASU 2018-15”), w hich clarifies the accounting for implementation costs in cloud computing arrangements.

The Company adopted the standard prospectively on January 1, 2020.

The adoption of this pronouncement did not have a material impact on its financial statements .

12 unchanged sentences

Investments are measured at fair value based on inputs other than quoted prices that are derived from observable market data and are classified as Level 2 inputs.

Financial assets and liabilities subject to fair value measurements on a recurring basis and the level of inputs used in such measurements by major security type as of March 31, 2020 and December 31, 2019 are presented in the following tables (in thousands):

Fair Value Measurements at March 31, 2020

Financial assets and liabilities subject to fair value measurements on a recurring basis and the level of inputs used in such measurements by major security type as of June 30, 2020 and December 31, 2019 are presented in the following tables (in thousands):

Fair Value Measurements at June 30, 2020

Money market funds

Certificates of deposit

Repurchase agreements

Municipal notes

Corporate notes

8 unchanged sentences

The following table summarizes the available-for-sale securities (in thousands):

Fair Value Measurements at March 31, 2020

Fair Value Measurements at June 30, 2020

Money market funds

Certificates of deposit

Repurchase agreements

Municipal notes

Corporate notes

19 unchanged sentences

Total cash equivalents and investments

As of March 31, 2020, the remaining contractual maturities of available-for-sale securities was approximately six months.

As of June 30, 2020, the weighted average remaining contractual maturities of available-for-sale securities was approximately 11 months.

There have been no significant realized losses on available-for-sale securities for the period presented.

Based on the Company’s review of its available-for-sale securities, the Company has a limited number of available-for-sale securities in insignificant loss positions as of March 31, 2020, none of which have been in a loss position for more than 120 days.

T he Company believes it had no other-than-temporary impairments on these securities as of March 31, 2020, because the Company does not intend to sell these securities nor does the Company believe that it will be required to sell these securities before the recovery of their amortized cost basis.

Based on the Company’s review of its available-for-sale securities, the Company has a limited number of available-for-sale securities in insignificant loss positions as of June 30, 2020, none of which have been in a loss position for more than one year.

T he Company believes it had no other-than-temporary impairments on these securities as of June 30, 2020, because the Company does not intend to sell these securities nor does the Company believe that it will be required to sell these securities before the recovery of their amortized cost basis.

The investments are classified as available-for-sale securities.

At March 31, 2020 and December 31, 2019, the balance in the Company’s accumulated other comprehensive income (loss) was comprised solely of activity related to the Company’s available-for-sale securities.

There were no realized gains or losses recognized on the sale or maturity of available-for-sale securities for the three months ended March 31, 2020 and as a result, the Company did not reclassify any amounts out of accumulated other comprehensive income for the quarter.

At June 30, 2020 and December 31, 2019, the balance in the Company’s accumulated other comprehensive income was comprised solely of activity related to the Company’s available-for-sale securities.

There were no realized gains or losses recognized on the sale or maturity of available-for-sale securities for the three or six months ended June 30, 2020 and as a result, the Company did not reclassify any amounts out of accumulated other comprehensive income for the quarter.

There were no transfers between Levels 1, 2 or 3 for the period presented.

1 unchanged sentence

The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported within the condensed balance sheets that sum to the total of the same amounts shown in the condensed statements of cash flows (in thousands):

Three Months Ended March 31,

Six Months Ended June 30,

Cash and cash equivalents

1 unchanged sentence

Total cash, cash equivalents and restricted cash

Restricted cash as of March 31, 2019 relates to a compensating balance to secure a credit card facility.

There was no restricted cash as of March 31, 2020.

Restricted cash as of June 30, 2019 relates to a compensating balance to secure a credit card facility.

There was no restricted cash as of June 30, 2020.

The following tables categorize the fair values of cash, cash equivalents, and short-term investments measured at fair value on a recurring basis on our balance sheet (in thousands):

March 31, 2020

June 30, 2020

December 31, 2019

3 unchanged sentences

Certificates of deposit

Government and agency notes

Corporate notes

3 unchanged sentences

Certificates of deposit

Municipal notes

Corporate notes

19 unchanged sentences

Finance lease right of use assets

Leasehold improvement

accumulated amortization and depreciation

20 unchanged sentences

As the entire lease is prepaid, there is no associated lease liability.

In May 2020 the Company entered into a second amendment to the lease agreement to rent additional space in the same facility under the same terms as its existing facility lease except the terms of payment.

Under the terms of the amendment, the Company will pay rent monthly for the additional space and the lease agreement will terminate in July 2021.

The Company recorded an operating lease asset and liability of $172,000.

In May 2020 the Company entered into a lease agreement to rent space in San Diego, California for our clinical operations team.

The lease agreement is for three years commencing July 1, 2020.

Total payments under the lease will be $346,000.

The Company paid a security deposit of $29,400 and is included in Other Assets on our June 30, 2020 balance sheets.

The lease did not create any other significant rights or obligations.

The Company recognizes lease expense on a straight-line basis over the term of its operating lease.

As of March 31 , 20 20 , future rent expense of $ 526 ,000 will be recognized over the remaining term of 16 months on a straight-line basis over the respective lease period.

As of June 3 0 , 2020, future rent expense of $5 88 ,000 will be recognized over t he remaining term of 1 3 months on a straight-line basis over the respective lease period.

Clinical Equipment Operating Lease

10 unchanged sentences

The Company recognizes the depreciation expense in research and development expenses in the statement of operations and recognizes expense on a straight-line basis starting when the equipment is placed into service until the end of the contract term ranging from 25 to 31 months.

Amortization expense of the financing lease right of use asset for the three months ended March 31, 2020 and 2019 was $60,000 and $ 0 , respectively.

Amortization expense of the financing lease right of use asset for the six months ended June 30, 2020 and 2019 was $117,000 and $0 , respectively.

Supplemental balance sheet information related to leases as follows (in thousands except lease terms and discount rates):

March 31, 2020

June 30, 2020

December 31, 2019

13 unchanged sentences

Operating Lease

2020 (excluding the three months ended March 31, 2020)

2020 (excluding the six months ended June 30, 2020)

Total lease payments

5 unchanged sentences

The remaining shares available for issuance under the 2014 Plan were added to the shares reserved for issuance under the 2019 Plan.

The 2019 Plan provides for the grant of stock options (including incentive stock options and non-qualified stock options), stock appreciation rights, restricted stock, RSUs, performance units, and performance shares to the Company’s employees, directors, and consultants.

Th e 2019 Plan provides for the grant of stock options (including incentive stock options and non-qualified stock options), stock appreciation rights, restricted stock, RSUs, performance units, and performance shares to the Company’s employees, directors, and consultants.

The maximum aggregate number of shares that may be issued under the 2019 Plan is 5,131,549 shares of the Company’s common stock.

In addition, the number of shares available for issuance under the 2019 Plan will be increased annually on the first day of each of its fiscal years beginning with fiscal 2020, by an amount equal to the least of (i) 2,146,354 shares of common stock;

In addition, the number of shares available for issuance under the 2019 Plan will be increased annually on the f irst day of each of its fiscal years beginning with fiscal 2020, by an amount equal to the least of (i) 2,146,354 shares of common stock;

(ii) 4% of the outstanding shares of its common stock as of the last day of its immediately preceding fiscal year;

2 unchanged sentences

Unless sooner terminated by the Company’s Board of Directors, the 2019 Plan will automatically terminate on April 23, 2029.

As of March 31, 2020, the Company had 2,602,312 shares available for future issuance under the 2019 Plan.

For the three months ended March 31, 2020 and 2019, the Company recognized $1,955,000 and $190,000 of stock-based compensation expense, respectively related to options granted to employees and non-employees.

As of June 30, 2020, the Company had 2,146,861 shares available for future issuance under the 2019 Plan.

For the three and six months ended June 30, 2020, the Company recognized $3,398,000 and $5,353,000 of stock-based compensation expense, respectively related to options granted to employees and non-employees.

The compensation expense is allocated on a departmental basis, based on the classification of the option holder.

5 unchanged sentences

Options cancelled

Balance at March 31, 2020

Balance at June 30, 2020

Options vested and expected to vest as of

March 31, 2020

Options exercisable as of March 31, 2020

Future stock-based compensation for unvested employee and non-employee options granted and outstanding as of March 31, 2020 is $40.7 million with a weighted average remaining expense life of 1.9 years.

The following table summarizes employee and non-employee stock-based compensation expense for the three months ended March 31, 2020 and 2019 and the allocation within the statements of operations and comprehensive loss (in thousands):

June 30, 2020

Options exercisable as of June 30, 2020

Future stock-based compensation for unvested employee and non-employee options granted and outstanding as of June 30, 2020 is $52.5 million with a weighted average remaining expense life of 2.2 years.

The following table summarizes employee and non-employee stock-based compensation expense for the three and six months ended June 30, 2020 and 2019 and the allocation within the statements of operations and comprehensive loss (in thousands):

Three Months Ended June 30,

Six Months Ended June 30,

General and administrative expense

24 unchanged sentences

As a result of the IPO, in addition to the 229,453 shares of Series B redeemable convertible preferred stock held by the investor, an additional 82,649 shares of the Company’s Series B redeemable convertible preferred stock under issued pursuant the lease agreement fully vested and were converted into common stock of the Company on a one-to-one basis.

On February 10, 2020, the Company issued and sold shares of common stock at a purchase price of $50.00 per share in a private placement.

As described in Note 1, o n February 10, 2020, the Company issued and sold shares of common stock at a purchase price of $50.00 per share in a private placement.

In the private placement, the Company issued and sold 30,000 shares of common stock for an aggregate purchase price of $1,500,000 to an entity affiliated with David A.

Lamond, a member of the Company’s Board of Directors.

As described in Note 6, the Company entered into a second amendment to the lease agreement to rent additional space in the same facility under the same terms as its existing facility lease except the terms of payment.

Under the terms of the amendment, the Company will pay rent monthly for the additional space and the lease agreement will terminate in July 2021.

The Company recorded an operating lease asset and liability of $172,000.

The Company has a history of losses and expects to record a loss in 2020.

10 unchanged sentences

The following outstanding potentially dilutive shares have been excluded from the calculation of diluted net loss per share for the period presented due to their anti-dilutive effect:

Series A redeemable convertible preferred stock

Series B redeemable convertible preferred stock

Options issued and outstanding

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

What changed 10-Q

Item 1. Financial Statements