What changed in this filing

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Item 1. Financial Statements

2020-11-12 compared with 2020-08-14 · 78 added, 95 removed, 409 unchanged (30% of the section changed)

3 unchanged sentences

(In thousands, except share and per share amounts)

June 30, 2020

September 30, 2020

December 31, 2019 (1)

17 unchanged sentences

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

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

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

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

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

29,494,249 and 26,869,413 issued and outstanding as of September 30, 2020 and

December 31, 2019, respectively

9 unchanged sentences

(In thousands, except share and per share amounts)

Three Months Ended June 30,

For the Six Months Ended June 30,

Three Months Ended September 30,

Nine Months Ended September 30,

Operating expenses:

4 unchanged sentences

Interest income

Other comprehensive income:

Unrealized gain on available for sales securities

Other comprehensive income / (loss):

Unrealized gain / (loss) on available for sales securities

Total comprehensive loss

4 unchanged sentences

Cortexyme, Inc.

Condensed Statements of Redeemable Convertible Preferred Stock and Stockholders’ Equity

Condensed Statements of Stockholders’ Equity

(In thousands, except share and per share amounts)

For the three months ended June 30, 2020 and 2019

Series A Redeemable

Convertible Preferred

Series B Redeemable

Convertible Preferred

For the three months ended September 30, 2020 and 2019

Comprehensive

1 unchanged sentence

Income / (Loss)

Balance March 31, 2020

Issuance cost related to private placement

Balance June 30, 2020

Exercise of stock options

Stock based compensation

Other comprehensive income

Other comprehensive loss

Balance September 30, 2020

Balance June 30, 2019

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

Balance September 30, 2019

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

2 unchanged sentences

(In thousands, except share and per share amounts)

For the six months ended June 30, 2020 and 2019

For the nine months ended September 30, 2020 and 2019

Series A Redeemable

6 unchanged sentences

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

2 unchanged sentences

Other comprehensive income

Balance June 30, 2020

Balance September 30, 2020

Balance January 1, 2019

1 unchanged sentence

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

Vesting of Series B redeemable convertible

preferred stock in lieu of rent

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

Balance September 30, 2019

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

1 unchanged sentence

Condensed Statements of Cash Flows

For the Six Months Ended June 30,

For the Nine Months Ended September 30,

Cash flows from operating activities:

3 unchanged sentences

Depreciation and amortization

Amortization of (discount) premium on available for sale investments

Amortization of premium (discount) on available for sale investments

Changes in operating assets and liabilities:

34 unchanged sentences

Cortexyme is targeting a specific, infectious pathogen tied to neurodegeneration and chronic inflammation in humans and animal models.

Reverse Stock Split

On April 25, 2019, the Company’s Board of Directors approved a one-for-0.367647 reverse split of the Company’s issued and outstanding common stock, redeemable convertible preferred stock, and stock options.

The par value of the common stock was not adjusted as a result of the reverse stock split.

All share and per share amounts in the accompanying unaudited condensed financial statements and notes to the unaudited condensed financial statements have been retroactively adjusted for all periods presented to reflect the reverse stock split.

Initial Public Offering

13 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 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.

As of September 30, 2020, the Company had an accumulated deficit of $126.1 million.

Since inception through September 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 September 30, 2020, the Company had cash, cash equivalents, and short-term investments of $137.8 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 $60.1 million.

6 unchanged sentences

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

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.

In management’s opinion, all adjustments (consisting only of normal recur ring 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 September 30, 2020, the condensed statements of operations and comprehensive loss for the three and nine months ended September 30, 2020 and 2019, the condensed statements of redeemable convertible preferred stock and stockholders’ equity for the three and nine months ended September 30, 2020 and 2019, the condensed statements of cash flows for the nine months ended September 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 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.

The results of operations for the three and nine months ended September 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

2 unchanged sentences

However, the full extent, consequences, and duration of the COVID-19 pandemic and the resulting impact on the Company cannot currently be predicted.

The Company will continue to evaluate the impact that these events could have on the Company’s operations, financial position, and the results of operations and cash flows during fiscal year 2020.

The Company will continue to evaluate the impact that these events could have on the Company’s operations, financial position, and the results of operations and cash flows during fiscal year 2020 and beyond.

Use of Estimates

5 unchanged sentences

Significant Accounting Policies

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.

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

Cash, Cash Equivalents, and Restricted Cash

37 unchanged sentences

The new guidance changes disclosure requirements related to fair value measurements as part of the disclosure framework project.

The disclosure framework project aims to improve the effectiveness of disclosures in the notes to the financial statements by focusing on requirements that clearly communicate the most important information to users of the financial statements.

The disclosure framework project aims to improve the effectiveness of disclosures in the notes to the financial statements by focusing on requirements that clearly communicate the most important

information to users of the financial statements.

The Company adopted this effective January 1, 2020.

2 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”), w hich clarifies the accounting for implementation costs in cloud computing arrangements.

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 adopted the standard prospectively on January 1, 2020.

13 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 June 30, 2020 and December 31, 2019 are presented in the following tables (in thousands):

Fair Value Measurements at June 30, 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 September 30, 2020 and December 31, 2019 are presented in the following tables (in thousands):

Fair Value Measurements at September 30, 2020

Money market funds

11 unchanged sentences

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

Fair Value Measurements at June 30, 2020

Fair Value Measurements at September 30, 2020

Money market funds

22 unchanged sentences

Total cash equivalents and investments

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

As of September 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 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.

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 September 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 September 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 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.

At September 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 nine months ended September 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.

Cash, cash equivalents and investments

Cash, C ash E quivalents and I nvestments

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):

Six Months Ended June 30,

Nine Months Ended September 30,

Cash and cash equivalents

1 unchanged sentence

Total cash, cash equivalents and restricted cash

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.

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

There was no restricted cash as of September 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):

June 30, 2020

September 30, 2020

December 31, 2019

15 unchanged sentences

Certificates of deposit

Municipal notes

Government and agency notes

3 unchanged sentences

Prepaid expenses and other current assets consist of the following (in thousands):

September 30,

Prepaid expenses

9 unchanged sentences

Leasehold improvement

Office furniture

accumulated amortization and depreciation

2 unchanged sentences

Accrued expenses and other current liabilities consist of the following (in thousands):

September 30,

Personnel expenses

20 unchanged sentences

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.

The lease agreement is for three years which commenced August 1, 2020.

Total payments under the lease will be $337,000.

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 paid a security deposit of $29,000 and is included in Other Assets on our September 30, 2020 balance sheets.

At the commencement of the lease, the Company recorded an operating lease asset of $326,000, which consists of an operating lease liability of $317,000 and cash rent prepayment of $9,000.

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

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.

As of September 3 0 , 2020, future rent expense of $ 760 ,000 will be recognized over the remaining term s of 10 to 34 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 20 to 34 months.

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.

Amortization expense of the financing lease right of use asset for the nine months ended September 30, 2020 and 2019 was $173,000 and $53,000, respectively.

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

June 30, 2020

September 30, 2020

December 31, 2019

13 unchanged sentences

Operating Lease

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

2020 (excluding the nine months ended September 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.

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 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 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;

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;

(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 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.

As of September 30, 2020, the Company had 2,014,728 shares available for future issuance under the 2019 Plan.

For the three and nine months ended September 30, 2020, the Company recognized $4,158,000 and $9,511,000 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 June 30, 2020

Balance at September 30, 2020

Options vested and expected to vest as of

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,

September 30, 2020

Options exercisable as of September 30, 2020

Future stock-based compensation for unvested employee and non-employee options granted and outstanding as of September 30, 2020 is $54.0 million with a weighted average remaining expense life of 1.7 years.

The weighted average grant date fair value of options granted during the nine months ended September 30, 2020 was $37.03 per share.

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

Three Months Ended September 30,

Nine Months Ended September 30,

General and administrative expense

2 unchanged sentences

Employee Stock Purchase Plan

On April 24, 2019, the Company’s Board of Directors adopted its 2019 Employee Stock Purchase Plan (“2019 ESPP”), which was subsequently approved by the Company’s stockholders and became effective on May 7, 2019, the day immediately prior to the effectiveness of the registration statement filed in connection with the IPO.

effectivene ss of the registration statement filed in connection with the IPO.

The 2019 ESPP is intended to qualify as an “employee stock purchase plan” within the meaning of Section 423 of the Internal Revenue Code (the “Code”) for U.S.

2 unchanged sentences

service providers.

The Company has reserved 536,989 shares of common stock for issuance under the 2019 ESPP.

The Company has reserved 536,989 shares of common stock for issua nce under the 2019 ESPP.

In addition, the number of shares reserved for issuance under the 2019 ESPP will be increased automatically on the first day of each fiscal year for a period of up to ten years, starting with the 2020 fiscal year, by a number equal to the least of:

2 unchanged sentences

or (iii) such lesser number of shares determined by the Company’s Board of Directors.

The 2019 ESPP is expected to be implemented through a series of offerings under which participants are granted purchase rights to purchase shares of the Company’s common stock on specified dates during such offerings.

The 2019 ESPP is expected to be implemen ted through a series of offerings under which participants are granted purchase rights to purchase shares of the Company’s common stock on specified dates during such offerings.

The Company has not yet approved an offering under the 2019 ESPP.

24 unchanged sentences

The Company has reviewed the aspects of this law as it relates to income taxes and have concluded that at this time, the CARES Act will have no material impact to the Company’s 2020 provision for income taxes.

The Company will continue to evaluate the impact of the CARES Act on its financial position, results of operations and cash flows.

Net Loss Per Share

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:

September 30,

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