ý
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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¨
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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Delaware
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20-4839882
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(State or other jurisdiction of
incorporation or organization)
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(I.R.S. Employer
Identification No.)
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|
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65 Hayden Avenue, Suite 3000N
Lexington, Massachusetts
(Address of principal executive offices)
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02421
(Zip Code)
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Title of each class
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Trading Symbol(s)
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Name of each exchange on which registered
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Common Stock, par value $0.001 per share
|
CNCE
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Nasdaq Global Market
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Large accelerated filer
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¨
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Accelerated filer
|
x
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|
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Non-accelerated filer
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¨
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Smaller reporting company
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x
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|
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Emerging growth company
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¨
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Page No.
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Item 1.
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Item 2.
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Item 3.
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Item 4.
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Item 1A.
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Item 6.
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||
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•
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ongoing and planned clinical trials for our product candidates, whether conducted by us or by our collaborators, including the timing of initiation and completion of these trials and of the anticipated results;
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•
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our plans to identify, develop and commercialize novel small molecule drugs based on our knowledge of deuterium chemistry;
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•
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our plans to enter into collaborations for the development and commercialization of product candidates;
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•
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our expected benefits from our current and any future collaboration, development or license arrangements;
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•
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our ability to receive research and development funding and achieve anticipated milestones under our collaborations;
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•
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our expectations regarding any future milestone payments we may receive as part of our asset purchase agreement with Vertex Pharmaceuticals, Inc. with respect to VX-561 and payments from our other collaboration and license arrangements;
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•
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the timing of and our ability to obtain and maintain marketing approvals for our product candidates;
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•
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the rate and degree of market acceptance and clinical utilization of our products;
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•
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our commercialization, marketing and manufacturing capabilities and strategy;
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•
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our intellectual property position and strategy;
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•
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the outcome of our inter partes review proceeding regarding U.S. Patent No. 9,249,149 covering CTP-543;
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•
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our freedom to operate with respect to third-party patents;
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•
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our expectations regarding our DCE Platform® and the potential advantages of our product candidates;
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•
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our estimates regarding expenses, future revenue, capital requirements and needs for additional financing;
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•
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risks associated with the COVID-19 pandemic, which may adversely impact our business, clinical trials and supply chain;
|
•
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developments relating to our competitors and our industry; and
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•
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the impact of government laws and regulations.
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Item 1.
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Financial Statements.
|
|
March 31,
|
|
December 31,
|
||||
|
2020
|
|
2019
|
||||
Assets
|
|
|
|
||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
46,079
|
|
|
$
|
53,043
|
|
Investments, available for sale
|
113,515
|
|
|
53,395
|
|
||
Marketable equity securities
|
2,986
|
|
|
5,375
|
|
||
Interest receivable
|
428
|
|
|
260
|
|
||
Deferred offering costs
|
—
|
|
|
143
|
|
||
Accounts receivable
|
1
|
|
|
72
|
|
||
Income taxes receivable, current
|
2,358
|
|
|
—
|
|
||
Prepaid expenses and other current assets
|
4,028
|
|
|
4,567
|
|
||
Total current assets
|
169,395
|
|
|
116,855
|
|
||
Property and equipment, net
|
7,457
|
|
|
7,753
|
|
||
Restricted cash
|
1,157
|
|
|
1,157
|
|
||
Other assets
|
82
|
|
|
96
|
|
||
Income taxes receivable
|
—
|
|
|
2,358
|
|
||
Operating lease right-of-use assets, long-term
|
9,184
|
|
|
9,252
|
|
||
Total assets
|
$
|
187,275
|
|
|
$
|
137,471
|
|
Liabilities and stockholders’ equity
|
|
|
|
||||
Current liabilities:
|
|
|
|
||||
Accounts payable
|
$
|
1,444
|
|
|
$
|
881
|
|
Accrued expenses and other liabilities
|
4,261
|
|
|
8,336
|
|
||
Income taxes payable
|
—
|
|
|
—
|
|
||
Deferred revenue, current portion
|
7,783
|
|
|
7,783
|
|
||
Lease liability, current portion
|
783
|
|
|
268
|
|
||
Total current liabilities
|
14,271
|
|
|
17,268
|
|
||
Deferred revenue, net of current portion
|
2,750
|
|
|
2,750
|
|
||
Lease liability, net of current portion
|
15,775
|
|
|
15,996
|
|
||
Total liabilities
|
32,796
|
|
|
36,014
|
|
||
Commitments (Note 11)
|
|
|
|
||||
Stockholders’ equity:
|
|
|
|
||||
Preferred stock, $0.001 par value per share; 5,000,000 shares authorized; no shares issued and outstanding as of March 31, 2020 and December 31, 2019
|
—
|
|
|
—
|
|
||
Common stock, $0.001 par value per share; 100,000,000 shares authorized; 29,852,196 and 24,065,676 shares issued and 29,651,595 and 23,865,075 shares outstanding as of March 31, 2020 and December 31, 2019, respectively
|
29
|
|
|
24
|
|
||
Additional paid-in capital
|
369,116
|
|
|
296,145
|
|
||
Accumulated other comprehensive gain (loss)
|
492
|
|
|
(31
|
)
|
||
Accumulated deficit
|
(215,158
|
)
|
|
(194,681
|
)
|
||
Total stockholders’ equity
|
154,479
|
|
|
101,457
|
|
||
Total liabilities and stockholders’ equity
|
$
|
187,275
|
|
|
$
|
137,471
|
|
|
Three Months Ended March 31,
|
||||||
|
2020
|
|
2019
|
||||
Revenue:
|
|
|
|
||||
License and research and development revenue
|
$
|
7
|
|
|
$
|
1,005
|
|
Operating expenses:
|
|
|
|
||||
Research and development
|
13,986
|
|
|
15,790
|
|
||
General and administrative
|
4,672
|
|
|
5,609
|
|
||
Total operating expenses
|
18,658
|
|
|
21,399
|
|
||
Loss from operations
|
(18,651
|
)
|
|
(20,394
|
)
|
||
Investment income
|
563
|
|
|
867
|
|
||
Unrealized loss on marketable equity securities
|
(2,389
|
)
|
|
(2,299
|
)
|
||
Net loss
|
$
|
(20,477
|
)
|
|
$
|
(21,826
|
)
|
Other comprehensive income:
|
|
|
|
||||
Unrealized gain on investments, available for sale
|
523
|
|
|
97
|
|
||
Comprehensive loss
|
$
|
(19,954
|
)
|
|
$
|
(21,729
|
)
|
|
|
|
|
||||
Net loss per share applicable to common stockholders - basic and diluted
|
$
|
(0.70
|
)
|
|
$
|
(0.93
|
)
|
|
|
|
|
||||
Weighted-average number of common shares used in net loss per share applicable to common stockholders - basic and diluted
|
29,110
|
|
|
23,508
|
|
CONCERT PHARMACEUTICALS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (UNAUDITED)
|
||||||||||||||||||||||||||
|
|
Three Months Ended March 31, 2020
|
||||||||||||||||||||||||
|
|
Common Stock
|
|
Additional paid-in capital
|
|
Accumulated other comprehensive income
|
|
Accumulated deficit
|
|
Total stockholders’ equity
|
||||||||||||||||
|
|
Issued
|
|
In Treasury
|
|
Amount
|
|
|||||||||||||||||||
|
|
(in thousands)
|
||||||||||||||||||||||||
Balance at December 31, 2019
|
|
24,066
|
|
|
200
|
|
|
$
|
24
|
|
|
$
|
296,145
|
|
|
$
|
(31
|
)
|
|
$
|
(194,681
|
)
|
|
$
|
101,457
|
|
Exercise of stock options
|
|
51
|
|
|
—
|
|
|
—
|
|
|
435
|
|
|
—
|
|
|
—
|
|
|
435
|
|
|||||
Unrealized gain on short-term investments
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
523
|
|
|
—
|
|
|
523
|
|
|||||
Stock-based compensation expense
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,477
|
|
|
—
|
|
|
—
|
|
|
2,477
|
|
|||||
Sale of common stock and pre-funded warrants, net of underwriters' discount and costs
|
|
5,735
|
|
|
—
|
|
|
5
|
|
|
70,059
|
|
|
—
|
|
|
—
|
|
|
70,064
|
|
|||||
Net loss
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(20,477
|
)
|
|
(20,477
|
)
|
|||||
Balance at March 31, 2020
|
|
29,852
|
|
|
200
|
|
|
$
|
29
|
|
|
$
|
369,116
|
|
|
$
|
492
|
|
|
$
|
(215,158
|
)
|
|
$
|
154,479
|
|
|
|
Three Months Ended March 31, 2019
|
||||||||||||||||||||||||
|
|
Common Stock
|
|
Additional paid-in capital
|
|
Accumulated other comprehensive income
|
|
Accumulated deficit
|
|
Total stockholders’ equity
|
||||||||||||||||
|
|
Issued
|
|
In Treasury
|
|
Amount
|
|
|||||||||||||||||||
|
|
(in thousands)
|
||||||||||||||||||||||||
Balance at December 31, 2018
|
|
23,519
|
|
|
81
|
|
|
$
|
23
|
|
|
$
|
284,369
|
|
|
$
|
(137
|
)
|
|
$
|
(116,515
|
)
|
|
$
|
167,740
|
|
Exercise of stock options
|
|
154
|
|
|
47
|
|
|
—
|
|
|
805
|
|
|
—
|
|
|
—
|
|
|
805
|
|
|||||
Release of restricted stock units
|
|
202
|
|
|
61
|
|
|
—
|
|
|
(741
|
)
|
|
—
|
|
|
—
|
|
|
(741
|
)
|
|||||
Unrealized gain on short-term investments
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
97
|
|
|
—
|
|
|
97
|
|
|||||
Stock-based compensation expense
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,929
|
|
|
—
|
|
|
—
|
|
|
2,929
|
|
|||||
Exercise of stock warrants
|
|
71
|
|
|
—
|
|
|
—
|
|
|
1,000
|
|
|
—
|
|
|
—
|
|
|
1,000
|
|
|||||
Offering expenses incurred
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(206
|
)
|
|
—
|
|
|
—
|
|
|
(206
|
)
|
|||||
Net loss
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(21,826
|
)
|
|
(21,826
|
)
|
|||||
Balance at March 31, 2019
|
|
23,946
|
|
|
189
|
|
|
$
|
23
|
|
|
$
|
288,156
|
|
|
$
|
(40
|
)
|
|
$
|
(138,341
|
)
|
|
$
|
149,798
|
|
|
Three Months Ended
March 31, |
||||||
|
2020
|
|
2019
|
||||
Operating activities
|
|
|
|
||||
Net loss
|
$
|
(20,477
|
)
|
|
$
|
(21,826
|
)
|
Adjustments to reconcile net loss to net cash used in operating activities:
|
|
|
|
||||
Depreciation and amortization
|
408
|
|
|
444
|
|
||
Stock-based compensation expense
|
2,477
|
|
|
2,929
|
|
||
Accretion of premiums and discounts on investments
|
(80
|
)
|
|
(294
|
)
|
||
Unrealized loss on marketable equity securities
|
2,389
|
|
|
2,299
|
|
||
Loss on disposal of asset
|
—
|
|
|
4
|
|
||
Non-cash lease expense
|
68
|
|
|
49
|
|
||
Changes in operating assets and liabilities:
|
|
|
|
||||
Accounts receivable
|
71
|
|
|
4
|
|
||
Interest receivable
|
(168
|
)
|
|
174
|
|
||
Prepaid expenses and other current assets
|
539
|
|
|
381
|
|
||
Contract asset
|
—
|
|
|
16,000
|
|
||
Other assets
|
14
|
|
|
(23
|
)
|
||
Accounts payable
|
563
|
|
|
479
|
|
||
Accrued expenses and other liabilities
|
(3,932
|
)
|
|
(1,388
|
)
|
||
Income taxes receivable
|
—
|
|
|
(36
|
)
|
||
Income taxes payable
|
—
|
|
|
(390
|
)
|
||
Operating lease liability
|
294
|
|
|
(144
|
)
|
||
Net cash used in operating activities
|
(17,834
|
)
|
|
(1,338
|
)
|
||
Investing activities
|
|
|
|
||||
Purchases of property and equipment
|
(112
|
)
|
|
(315
|
)
|
||
Purchases of investments
|
(93,417
|
)
|
|
(13,331
|
)
|
||
Maturities of investments
|
33,900
|
|
|
55,721
|
|
||
Net cash (used in) provided by investing activities
|
(59,629
|
)
|
|
42,075
|
|
||
Financing activities
|
|
|
|
||||
Proceeds from exercises of stock options
|
435
|
|
|
805
|
|
||
Proceeds from exercise of warrants
|
—
|
|
|
1,000
|
|
||
Proceeds from common stock and pre-funded warrants sold, net of underwriters' discount and costs
|
70,064
|
|
|
(50
|
)
|
||
Net cash provided by financing activities
|
70,499
|
|
|
1,755
|
|
||
Net (decrease) increase in cash and cash equivalents and restricted cash
|
(6,964
|
)
|
|
42,492
|
|
||
Cash, cash equivalents and restricted cash at beginning of period
|
54,200
|
|
|
18,927
|
|
||
Cash, cash equivalents and restricted cash at end of period
|
$
|
47,236
|
|
|
$
|
61,419
|
|
Supplemental cash flow information:
|
|
|
|
||||
Cash paid for income taxes
|
$
|
—
|
|
|
$
|
425
|
|
Purchases of property and equipment unpaid at period end
|
$
|
—
|
|
|
$
|
16
|
|
Public offering costs unpaid at period end
|
$
|
—
|
|
|
$
|
156
|
|
Cash paid included in measurement of lease liabilities
|
$
|
244
|
|
|
$
|
694
|
|
Pre-funded stock warrants issued
|
$
|
16,736
|
|
|
$
|
—
|
|
•
|
Level 1—quoted prices for identical instruments in active markets;
|
•
|
Level 2—quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active and model-derived valuations in which all significant inputs and significant value drivers are observable in active markets; and
|
•
|
Level 3—valuations derived from valuation techniques in which one or more significant value drivers are unobservable.
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||
March 31, 2020
|
|
|
|
||||||||||||
Cash equivalents:
|
|
|
|
||||||||||||
Money market funds
|
$
|
31,821
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
31,821
|
|
U.S. Treasury obligations
|
7,998
|
|
|
—
|
|
|
—
|
|
|
7,998
|
|
||||
Investments, available for sale:
|
|
|
|
||||||||||||
U.S. Treasury obligations
|
36,868
|
|
|
—
|
|
|
—
|
|
|
36,868
|
|
||||
Government agency securities
|
22,530
|
|
|
54,117
|
|
|
—
|
|
|
76,647
|
|
||||
Marketable equity securities:
|
|
|
|
||||||||||||
Corporate equity securities (Note 8)
|
2,986
|
|
|
—
|
|
|
—
|
|
|
2,986
|
|
||||
Total
|
$
|
102,203
|
|
|
$
|
54,117
|
|
|
$
|
—
|
|
|
$
|
156,320
|
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||
December 31, 2019
|
|
|
|
||||||||||||
Cash equivalents:
|
|
|
|
||||||||||||
Money market funds
|
$
|
40,782
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
40,782
|
|
Government agency securities
|
—
|
|
|
2,000
|
|
|
—
|
|
|
2,000
|
|
||||
Investments, available for sale:
|
|
|
|
||||||||||||
U.S. Treasury obligations
|
34,499
|
|
|
—
|
|
|
—
|
|
|
34,499
|
|
||||
Government agency securities
|
10,997
|
|
|
7,899
|
|
|
—
|
|
|
18,896
|
|
||||
Marketable equity securities:
|
|
|
|
||||||||||||
Corporate equity securities (Note 8)
|
5,375
|
|
|
—
|
|
|
—
|
|
|
5,375
|
|
||||
Total
|
$
|
91,653
|
|
|
$
|
9,899
|
|
|
$
|
—
|
|
|
$
|
101,552
|
|
|
|
Average Maturity
|
|
Amortized Cost
|
|
Unrealized Gains
|
|
Unrealized Losses
|
|
Fair Value
|
||||||||
March 31, 2020
|
|
|
|
|
|
|
|
|
|
|
||||||||
Cash
|
|
|
|
$
|
6,260
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
6,260
|
|
Money market funds
|
|
|
|
31,821
|
|
|
—
|
|
|
—
|
|
|
31,821
|
|
||||
U.S. Treasury obligations
|
|
30 days
|
|
7,998
|
|
|
—
|
|
|
—
|
|
|
7,998
|
|
||||
Cash and cash equivalents
|
|
|
|
$
|
46,079
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
46,079
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
U.S. Treasury obligations
|
|
173 days
|
|
36,586
|
|
|
282
|
|
|
—
|
|
|
36,868
|
|
||||
Government agency securities
|
|
130 days
|
|
76,360
|
|
|
287
|
|
|
—
|
|
|
76,647
|
|
||||
Investments, available for sale
|
|
|
|
$
|
112,946
|
|
|
$
|
569
|
|
|
$
|
—
|
|
|
$
|
113,515
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
March 31, 2020
|
|
|
|
Acquisition Value
|
|
Unrealized Gains
|
|
Unrealized Losses
|
|
Fair Value
|
||||||||
Marketable equity securities (Note 8)
|
|
|
|
$
|
10,451
|
|
|
$
|
—
|
|
|
$
|
(7,465
|
)
|
|
$
|
2,986
|
|
|
|
Average Maturity
|
|
Amortized Cost
|
|
Unrealized Gains
|
|
Unrealized Losses
|
|
Fair Value
|
||||||||
December 31, 2019
|
|
|
|
|
|
|
|
|
|
|
||||||||
Cash
|
|
|
|
$
|
10,261
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
10,261
|
|
Money market funds
|
|
|
|
40,782
|
|
|
—
|
|
|
—
|
|
|
40,782
|
|
||||
Government agency securities
|
|
8 days
|
|
2,000
|
|
|
—
|
|
|
—
|
|
|
2,000
|
|
||||
Cash and cash equivalents
|
|
|
|
$
|
53,043
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
53,043
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
U.S. Treasury obligations
|
|
108 days
|
|
$
|
34,475
|
|
|
$
|
24
|
|
|
$
|
—
|
|
|
$
|
34,499
|
|
Government agency securities
|
|
74 days
|
|
18,874
|
|
|
22
|
|
|
—
|
|
|
18,896
|
|
||||
Investments, available for sale
|
|
|
|
$
|
53,349
|
|
|
$
|
46
|
|
|
$
|
—
|
|
|
$
|
53,395
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
December 31, 2019
|
|
|
|
Acquisition Value
|
|
Unrealized Gains
|
|
Unrealized Losses
|
|
Fair Value
|
||||||||
Marketable equity securities (Note 8)
|
|
|
|
$
|
10,451
|
|
|
$
|
—
|
|
|
$
|
(5,076
|
)
|
|
$
|
5,375
|
|
|
March 31,
2020 |
|
March 31,
2019 |
||||
Cash and cash equivalents
|
$
|
46,079
|
|
|
$
|
60,262
|
|
Restricted cash
|
1,157
|
|
|
1,157
|
|
||
Total cash, cash equivalents and restricted cash shown in the statements of cash flows
|
$
|
47,236
|
|
|
$
|
61,419
|
|
|
March 31,
2020 |
|
December 31,
2019 |
||||
Accrued professional fees and other
|
$
|
342
|
|
|
$
|
862
|
|
Employee compensation and benefits
|
812
|
|
|
3,222
|
|
||
Research and development expenses
|
3,107
|
|
|
4,252
|
|
||
|
$
|
4,261
|
|
|
$
|
8,336
|
|
•
|
$7.8 million related to the Company's collaboration with Celgene Corporation, $1.4 million of which is attributable to the CTP-730 program and is currently expected to be recognized as revenue in the next twelve months as the Company satisfies its remaining research and development activities pursuant to mutually agreed upon development plans, and $6.4 million of which is attributable to two additional license programs that the Company will not recognize as revenue unless the rights to those programs are exercised, or in the second quarter of 2020 at such time that the rights lapse; and
|
•
|
$2.8 million related to a payment received from GlaxoSmithKline that the Company will not recognize as revenue until all repayment obligations lapse.
|
|
Three Months Ended March 31,
|
||||||
|
2020
|
|
2019
|
||||
Research and development
|
$
|
1,255
|
|
|
$
|
1,475
|
|
General and administrative
|
1,222
|
|
|
1,454
|
|
||
Total stock-based compensation expense
|
$
|
2,477
|
|
|
$
|
2,929
|
|
|
Three Months Ended March 31,
|
||||
|
2020
|
|
2019
|
||
Expected volatility
|
68.19
|
%
|
|
77.16
|
%
|
Expected term
|
6.0 years
|
|
|
6.0 years
|
|
Risk-free interest rate
|
1.47
|
%
|
|
2.27
|
%
|
Expected dividend yield
|
—
|
%
|
|
—
|
%
|
|
Three Months Ended March 31,
|
||||||
|
2020
|
|
2019
|
||||
|
(in thousands, except per share data)
|
||||||
Weighted-average fair value of options granted, per option
|
$
|
6.67
|
|
|
$
|
9.45
|
|
Aggregate grant date fair value of options vested during the period
|
$
|
2,184
|
|
|
$
|
2,442
|
|
Total cash received from exercises of stock options
|
$
|
435
|
|
|
$
|
805
|
|
Total intrinsic value of stock options exercised
|
$
|
93
|
|
|
$
|
879
|
|
|
Number of
Option Shares
|
|
Weighted
Average
Exercise
Price per
Share
|
|
Weighted
Average
Remaining
Contractual
Term
|
|
Aggregate
Intrinsic
Value
|
|||||
|
|
|
|
|
(in years)
|
|
(in thousands)
|
|||||
Outstanding at December 31, 2019
|
4,112,609
|
|
|
$
|
15.01
|
|
|
|
|
|
||
Granted
|
615,050
|
|
|
$
|
10.87
|
|
|
|
|
|
||
Exercised
|
(51,237
|
)
|
|
$
|
8.48
|
|
|
|
|
|
||
Forfeited or expired
|
(42,937
|
)
|
|
$
|
19.57
|
|
|
|
|
|
||
Outstanding at March 31, 2020
|
4,633,485
|
|
|
$
|
14.49
|
|
|
7.14
|
|
$
|
886
|
|
Exercisable at March 31, 2020
|
2,718,386
|
|
|
$
|
14.26
|
|
|
5.98
|
|
$
|
886
|
|
Vested and expected to vest at March 31, 2020(1)
|
4,452,847
|
|
|
$
|
14.52
|
|
|
7.06
|
|
$
|
886
|
|
(1)
|
Represents the number of vested stock option shares as of March 31, 2020, plus the number of unvested stock option shares that the Company estimated as of March 31, 2020 would vest, based on the unvested stock option shares as of March 31, 2020 and an estimated forfeiture rate of 7%.
|
|
Number of
RSUs
|
|
Weighted-
Average
Grant Date Fair Value
|
|||
|
|
|
|
|||
Outstanding at December 31, 2019
|
393,629
|
|
|
$
|
10.27
|
|
Granted
|
409,295
|
|
|
$
|
10.87
|
|
Released
|
—
|
|
|
$
|
—
|
|
Forfeited
|
(4,168
|
)
|
|
$
|
10.27
|
|
Outstanding at March 31, 2020
|
798,756
|
|
|
$
|
10.58
|
|
|
Three Months Ended March 31,
|
||||||
|
2020
|
|
2019
|
||||
|
(in thousands, except per share amounts)
|
||||||
Numerator:
|
|
|
|
||||
Net loss applicable to common stockholders - basic and diluted
|
$
|
(20,477
|
)
|
|
$
|
(21,826
|
)
|
|
|
|
|
||||
Denominator:
|
|
|
|
||||
Weighted-average shares outstanding - basic and diluted
|
29,110
|
|
|
23,508
|
|
||
|
|
|
|
||||
Net loss per share applicable to common stockholders - basic and diluted
|
$
|
(0.70
|
)
|
|
$
|
(0.93
|
)
|
|
|
|
|
||||
Anti-dilutive potential common stock equivalents excluded from the calculation of net loss per share:
|
|
|
|
||||
Stock options
|
156
|
|
|
448
|
|
||
Restricted stock units
|
55
|
|
|
187
|
|
||
Warrants
|
61
|
|
|
95
|
|
Item 2.
|
Management’s Discussion and Analysis of Financial Condition and Results of Operations.
|
•
|
employee-related expenses, including salary, benefits, travel and stock-based compensation expense;
|
•
|
expenses incurred under agreements with contract research organizations and investigative sites that conduct our clinical trials;
|
•
|
the cost of acquiring, developing and manufacturing clinical trial materials;
|
•
|
facilities, depreciation and other expenses, which include direct and allocated expenses for rent and maintenance of facilities, insurance and other supplies;
|
•
|
platform-related lab expenses, which includes costs related to synthesis, analysis and in vitro and in vivo characterization of deuterated compounds to support the selection and progression of potential product candidates;
|
•
|
expenses related to consultants and advisors; and
|
•
|
costs associated with nonclinical activities and regulatory operations.
|
•
|
the scope and rate of progress of our ongoing as well as any additional clinical trials and other research and development activities;
|
•
|
successful enrollment in and completion of clinical trials, including on account of the COVID-19 pandemic and its impact on clinical trial sites;
|
•
|
conduct of and results from ongoing as well as any additional clinical trials and research and development activities;
|
•
|
significant and changing government regulation;
|
•
|
the terms and timing and receipt of any marketing approvals;
|
•
|
the performance of our collaborators;
|
•
|
our ability to manufacture any of our product candidates that we are developing or may develop in the future; and
|
•
|
the expense and success of filing, prosecuting, defending and enforcing any patent claims and other intellectual property rights, including potential claims that we infringe other parties' intellectual property.
|
|
Three Months Ended March 31,
|
||
(in thousands)
|
2020
|
||
Revenue:
|
|
||
License and research and development revenue
|
$
|
7
|
|
Operating expenses:
|
|
||
Research and development
|
13,986
|
|
|
General and administrative
|
4,672
|
|
|
Total operating expenses
|
18,658
|
|
|
Loss from operations
|
(18,651
|
)
|
|
Investment income
|
563
|
|
|
Unrealized loss on marketable equity securities
|
(2,389
|
)
|
|
Net loss
|
$
|
(20,477
|
)
|
|
|
Three Months Ended March 31,
|
||
(in thousands)
|
|
2020
|
||
CTP-543 external costs
|
|
$
|
2,930
|
|
CTP-692 external costs
|
|
4,308
|
|
|
External expenses for other programs
|
|
344
|
|
|
Employee and contractor-related expenses
|
|
5,056
|
|
|
Facility and other expenses
|
|
1,348
|
|
|
Total research and development expenses
|
|
$
|
13,986
|
|
|
|
Three Months Ended March 31,
|
||
(in thousands)
|
|
2020
|
||
Employee salaries and benefits
|
|
$
|
2,709
|
|
External professional service and legal expenses
|
|
888
|
|
|
Facility, technology and other expenses
|
|
1,000
|
|
|
Depreciation and amortization
|
|
75
|
|
|
Total general and administrative expenses
|
|
$
|
4,672
|
|
|
Three Months Ended March 31,
|
||
(in thousands)
|
2019
|
||
Revenue:
|
|
||
License and research and development revenue
|
$
|
1,005
|
|
Operating expenses:
|
|
||
Research and development
|
15,790
|
|
|
General and administrative
|
5,609
|
|
|
Total operating expenses
|
21,399
|
|
|
Loss from operations
|
(20,394
|
)
|
|
Investment income
|
867
|
|
|
Unrealized loss on marketable equity securities
|
(2,299
|
)
|
|
Net loss
|
$
|
(21,826
|
)
|
|
|
Three Months Ended March 31,
|
||
(in thousands)
|
|
2019
|
||
CTP-543 external costs
|
|
$
|
3,934
|
|
CTP-692 external costs
|
|
4,031
|
|
|
External expenses for other programs
|
|
1,358
|
|
|
Employee and contractor-related expenses
|
|
5,069
|
|
|
Facility and other expenses
|
|
1,398
|
|
|
Total research and development expenses
|
|
$
|
15,790
|
|
|
|
Three Months Ended March 31,
|
||
(in thousands)
|
|
2019
|
||
Employee salaries and benefits
|
|
$
|
3,001
|
|
External professional service and legal expenses
|
|
1,611
|
|
|
Facility, technology and other expenses
|
|
916
|
|
|
Depreciation and amortization
|
|
81
|
|
|
Total general and administrative expenses
|
|
$
|
5,609
|
|
|
Three Months Ended March 31,
|
||||||
(in thousands)
|
2020
|
|
2019
|
||||
Net cash (used in) provided by:
|
|
|
|
||||
Operating activities
|
$
|
(17,834
|
)
|
|
$
|
(1,338
|
)
|
Investing activities
|
(59,629
|
)
|
|
42,075
|
|
||
Financing activities
|
70,499
|
|
|
1,755
|
|
||
Net (decrease) increase in cash and cash equivalents and restricted cash
|
$
|
(6,964
|
)
|
|
$
|
42,492
|
|
Item 3.
|
Quantitative and Qualitative Disclosures About Market Risk.
|
Item 4.
|
Controls and Procedures.
|
Item 1A.
|
Risk Factors.
|
•
|
We believe that the COVID-19 pandemic has had, and will continue to have, an impact on our clinical trials, including our Phase 2 clinical trial of CTP-692 for schizophrenia and our open label long-term extension study of CTP-543 for alopecia areata. Due to changes to study site operations, in some cases, these impacts include the potential need for remote assessments and delivery of study medication directly to patients. In addition, enrollment of new patients in our clinical trials has slowed as a result of state and local restrictions. Some patients may choose to withdraw from our studies or we may choose to, or be required to, pause enrollment or patient dosing in order to preserve health resources and protect trial participants. As a result, the timelines to complete our clinical trials may be delayed. For example, due to delays in enrollment in our Phase 2 clinical trial of CTP-692 for schizophrenia as a result of the COVID-19 pandemic, we now expect to complete enrollment of this clinical trial by year-end 2020.
|
•
|
We believe that the COVID-19 pandemic may also have an impact on the clinical trials of our collaborators. For instance, AVP-786 is being developed under a collaboration with Avanir. Screening and enrollment in ongoing AVP-786 clinical trials has been paused until restrictions associated with the COVID-19 pandemic have been lifted. As a result, our collaborators' timelines to complete clinical trials may be delayed.
|
•
|
We currently rely on third parties to, among other things, manufacture raw materials, manufacture our product candidates for our clinical trials, ship our product candidates to study sites, perform quality testing and supply other goods and services to run our business. If any such third party in our supply chain is adversely impacted by restrictions resulting from the COVID-19 pandemic, including staffing shortages, production slowdowns or disruptions in delivery systems, our supply chain may be disrupted, limiting our ability to manufacture our product candidates for our clinical trials and conduct our research and development operations.
|
•
|
We have closed our offices and requested that most of our personnel work remotely, and restricted on-site staff to only those personnel and contractors who must perform essential activities on-site. Our increased reliance on personnel working from home may negatively impact productivity or disrupt, delay or otherwise adversely impact our business. In addition, this could increase our cyber security risk, create data accessibility concerns and make us more susceptible to communication disruptions, any of which could adversely impact our business operations or delay necessary interactions with local and federal regulators, ethics committees, manufacturing sites, research or clinical trial sites and other important agencies and contractors. General protective measures put into place at various governmental levels, including quarantines, travel restrictions and business shutdowns, may also negatively affect our operations.
|
•
|
Our employees and contractors conducting research activities may not be able to access our laboratory for an extended period of time due to the closure of our offices. As a result, this could delay our timelines for various research activities.
|
•
|
Health regulatory agencies globally may experience disruptions in their operations as a result of the COVID-19 pandemic. The FDA and comparable foreign regulatory agencies may have slower response times or be under-resourced. It is unknown how long these disruptions could continue, were they to occur. Any elongation or de-prioritization of our clinical trials or delay in regulatory review resulting from such disruptions could materially affect the development and study of our product candidates.
|
•
|
The trading prices for our common stock and the stock of other biopharmaceutical companies have been highly volatile as a result of the COVID-19 pandemic. As a result, we may face difficulties raising capital through sales of our common stock or such sales may be on unfavorable terms. In addition, a recession, depression or other sustained adverse market event resulting from the COVID-19 pandemic could materially and adversely affect our business and the value of our common stock.
|
•
|
continue to develop and conduct nonclinical studies and clinical trials with respect to our product candidates;
|
•
|
seek to identify additional product candidates;
|
•
|
in-license or acquire additional product candidates;
|
•
|
seek marketing approvals for our product candidates that successfully complete clinical trials;
|
•
|
establish sales, marketing, distribution and other commercial infrastructure in the future to commercialize various products for which we may obtain marketing approval;
|
•
|
require the manufacture of larger quantities of product candidates for clinical development and potentially commercialization;
|
•
|
maintain, expand and protect our intellectual property portfolio;
|
•
|
incur delays to the initiation or completion of our clinical trials due to the COVID-19 pandemic;
|
•
|
incur any disruptions or delays to the supply of our product candidates due to the COVID-19 pandemic;
|
•
|
hire additional personnel;
|
•
|
add equipment and physical infrastructure to support our research and development; and
|
•
|
continue to implement the infrastructure necessary to support our product development and help us comply with our obligations as a public company.
|
•
|
the progress, timing, costs and results of clinical trials of, and research and nonclinical development efforts for, our product candidates and potential product candidates, including current and future clinical trials, including on account of the COVID-19 pandemic and its impact on our clinical trial sites;
|
•
|
our current collaboration agreements and achievement of milestones under these agreements;
|
•
|
our ability to enter into and the terms and timing of any additional collaborations, licensing, product acquisition or other arrangements that we may establish;
|
•
|
the number of product candidates that we pursue and their development requirements;
|
•
|
the outcome, timing and costs of seeking marketing approvals;
|
•
|
our headcount growth and associated costs as we expand our research and development and establish a commercial infrastructure;
|
•
|
the costs of preparing, filing and prosecuting patent applications, maintaining and protecting our intellectual property rights and defending against intellectual property related claims;
|
•
|
potential litigation costs; and
|
•
|
the costs of operating as a public company.
|
•
|
requiring us to dedicate a portion of our cash resources to the payment of interest and principal, reducing money available to fund working capital, capital expenditures, product development and other general corporate purposes;
|
•
|
increasing our vulnerability to adverse changes in general economic, industry and market conditions;
|
•
|
subjecting us to restrictive covenants that may reduce our ability to take certain corporate actions or obtain further debt or equity financing;
|
•
|
limiting our flexibility in planning for, or reacting to, changes in our business and the industry in which we compete; and
|
•
|
placing us at a competitive disadvantage compared to our competitors that have less debt or better debt servicing options.
|
•
|
in the case of CTP-543, our ability to treat moderate-to-severe alopecia areata with acceptable safety and efficacy;
|
•
|
in the case of CTP-692, our ability to treat schizophrenia, in patients concurrently receiving antipsychotic medication, with acceptable safety and efficacy;
|
•
|
successful and timely completion of clinical trials, including the impact of the COVID-19 pandemic on the initiation or completion of our clinical trials and the supply of our product candidates;
|
•
|
receipt of marketing approvals from applicable regulatory authorities;
|
•
|
the performance of our future collaborators, if any, for our programs;
|
•
|
the extent of any required post-marketing approval commitments to applicable regulatory authorities;
|
•
|
establishment of supply arrangements with third-party raw materials suppliers and manufacturers;
|
•
|
our ability to manufacture or arrange for the manufacture of our active pharmaceutical ingredients and drug products
|
•
|
establishment of arrangements with third-party manufacturers to obtain finished drug products that are appropriately packaged for sale;
|
•
|
obtaining and maintaining patent, trade secret protection, regulatory exclusivity and freedom to operate, both in the United States and internationally;
|
•
|
amount of commercial sales, if and when approved;
|
•
|
a continued acceptable safety profile of our programs following any marketing approval; and
|
•
|
agreement by third-party payors to reimburse patients for the costs of treatment with our products, and the terms of such reimbursement.
|
•
|
be delayed in obtaining marketing approval for our product candidates;
|
•
|
not obtain marketing approval at all;
|
•
|
obtain approval for indications or patient populations that are not as broad as intended or desired;
|
•
|
obtain approval with labeling that includes significant use or distribution restrictions or significant safety warnings, including boxed warnings;
|
•
|
be subject to additional post-marketing testing or other requirements; or
|
•
|
be required to remove the product from the market after obtaining marketing approval.
|
•
|
toxicity or serious adverse effects may be observed in our nonclinical studies causing us to delay or abandon clinical trials;
|
•
|
clinical trials of our product candidates may produce unfavorable or inconclusive results;
|
•
|
unexpectedly high placebo response rates;
|
•
|
rater variability in the assessment of clinical endpoints;
|
•
|
we, or our collaborators, may decide, or regulators may require us or them, to conduct additional clinical trials and or develop and or validate new clinical endpoints for our clinical trials, or abandon product development programs;
|
•
|
the number of patients required for clinical trials of our product candidates may be larger than we, or our collaborators, anticipate, patient enrollment in these clinical trials may be slower than we, or our collaborators, anticipate or participants may drop out of these clinical trials at a higher rate than we, or our collaborators, anticipate;
|
•
|
our third-party contractors, or those of our collaborators, including those manufacturing our product candidates or components or ingredients thereof or conducting clinical trials on our behalf or on behalf of our collaborators, may fail to comply with regulatory requirements or meet their contractual obligations to us or our collaborators in a timely manner or at all;
|
•
|
criminal or unauthorized misuse of computer systems may result in disruption to our, or our partners' or vendors', clinical trials, nonclinical activities or manufacturing, or may compromise data from our, or our partners' or vendors', clinical or nonclinical studies;
|
•
|
regulators or institutional review boards may not authorize us, our collaborators or our or their investigators to commence a clinical trial or conduct a clinical trial at a prospective trial site;
|
•
|
we, or our collaborators, may have delays in reaching or fail to reach agreement on acceptable clinical trial contracts or clinical trial protocols with prospective trial sites;
|
•
|
patients that enroll in a clinical trial may misrepresent their eligibility to do so or may otherwise not comply with the clinical trial protocol, resulting in the need to drop the patients or the sites from the clinical trial, increase the needed enrollment size for the clinical trial, extend the clinical trial’s duration or cause spurious results;
|
•
|
investigators may provide inaccurate or false data, resulting in spurious clinical results, an inadequate data set or regulators’ unwillingness to approve a product;
|
•
|
regulators, institutional review boards or data monitoring committees may require that we, or our collaborators, or our or their investigators suspend or terminate clinical research for various reasons, including noncompliance with regulatory requirements or their standards of conduct, a finding that the participants are being exposed to unacceptable health risks, undesirable side effects or other unexpected characteristics of the product candidate or findings of undesirable effects caused by a chemically or mechanistically similar drug or drug candidate;
|
•
|
the FDA or comparable foreign regulatory authorities may disagree with our, or our collaborators’, clinical trial design or our or their interpretation of data from nonclinical studies and clinical trials;
|
•
|
the FDA or comparable foreign regulatory authorities may change their requirements for approvability for a given product or for an indication after we have initiated work based on their previous guidance;
|
•
|
the COVID-19 pandemic may impact the FDA's ability to continue its normal operations;
|
•
|
the supply or quality of raw materials or manufactured product candidates or other materials necessary to conduct clinical trials of our product candidates may be insufficient, inadequate or not available at an acceptable cost, or we may experience interruptions in supply;
|
•
|
we, or our manufacturing vendors, may not produce, or may not consistently produce material, that meets necessary specifications for commercialization;
|
•
|
the FDA or comparable foreign regulatory authorities may determine that our, or our manufacturing vendors, manufacturing or quality control processes fail to meet their specifications or guidelines; and
|
•
|
the approval policies or regulations of the FDA or comparable foreign regulatory authorities may significantly change in a manner rendering our clinical data insufficient to obtain marketing approval.
|
•
|
the size and nature of the patient population;
|
•
|
the severity of the disease under investigation;
|
•
|
the availability or interest of clinical sites to enroll patients into our trials;
|
•
|
the willingness or availability of patients to participate in our clinical trials, including due to the COVID-19 pandemic;
|
•
|
the proximity of patients to clinical sites;
|
•
|
the eligibility criteria for the trial;
|
•
|
the design of the clinical trial, including any requirement to halt current therapy in connection with the trial;
|
•
|
the potential need to discontinue investigational treatment at the completion of the study;
|
•
|
the availability of other effective treatments for the indication we are assessing;
|
•
|
access to relevant clinical trial sites;
|
•
|
efforts to facilitate timely enrollment;
|
•
|
competing clinical trials;
|
•
|
support by relevant industry or patient organizations with influence over clinical trial sites; and
|
•
|
clinicians’ and patients’ perceptions as to the potential advantages and risks of the drug being studied in relation to other available therapies, including any new drugs that may be approved or used for the indications we are investigating.
|
•
|
the efficacy and safety of the product;
|
•
|
the potential advantages of the product compared to alternative treatments;
|
•
|
the prevalence and severity of any side effects;
|
•
|
the clinical indications for which the product is approved;
|
•
|
whether the product is designated under physician treatment guidelines as a first-line therapy or as a second- or third-line therapy;
|
•
|
limitations or warnings, including distribution or use restrictions or burdensome prescription requirements contained in the product’s approved labeling;
|
•
|
our ability, or the ability of our collaborators, to offer the product for sale at commercially acceptable prices;
|
•
|
the product’s convenience and ease of administration compared to alternative treatments;
|
•
|
the willingness of the target patient population to try, and of physicians to prescribe, the product;
|
•
|
the strength of sales, marketing and distribution support;
|
•
|
the approval of other new products for the same indications;
|
•
|
the extent and success of counter-detailing efforts by our competitors;
|
•
|
the pricing, extent of discounts or bundled products offered by our competitors;
|
•
|
the organization stability of our collaborators, if any;
|
•
|
changes in the standard of care for the targeted indications for the product;
|
•
|
the timing of market introduction of our approved products as well as competitive products; and
|
•
|
the availability and amount of reimbursement from government payors, managed care plans and other third-party payors.
|
•
|
regulatory authorities may withdraw their approval of the drug and/or seize the drug;
|
•
|
we, or our collaborators, may need to recall the drug or change the way the drug is administered;
|
•
|
additional restrictions may be imposed on the marketing of, or the manufacturing processes for, the particular drug, including the addition of labeling statements, such as a “black box” warning or a contraindication;
|
•
|
we may be subject to fines, injunctions or the imposition of civil or criminal penalties;
|
•
|
we, or our collaborators, may be required to operate under a Risk Evaluation and Mitigation Strategy, or REMS;
|
•
|
we, or our collaborators, could be sued and held liable for harm caused to patients; and
|
•
|
the drug may become less competitive.
|
•
|
deuterated analogs of existing non-deuterated compounds or newly designed deuterated compounds may not demonstrate satisfactory efficacy or other benefits, such as convenience of dosing, increased tolerability, enhanced formation of desirable active metabolites or reduced formation of toxic metabolites;
|
•
|
potential product candidates may, on further study, be shown to have harmful side effects or other characteristics that indicate that they are unlikely to be products that will receive marketing approval and achieve market acceptance; and
|
•
|
pharmaceutical and biotechnology companies have begun to claim deuterated analogs of their compounds in patent filings, resulting in otherwise promising deuterated product candidates already being covered by patents or patent applications.
|
•
|
decreased demand for our product candidates or products that we may develop;
|
•
|
injury to our reputation and significant negative media attention;
|
•
|
withdrawal of clinical trial participants;
|
•
|
significant costs to defend litigation;
|
•
|
distraction to our management diverting focus from business operations and strategy;
|
•
|
initiation of investigations by regulators;
|
•
|
product recalls, withdrawals or labeling, marketing or promotional restrictions;
|
•
|
substantial monetary awards to trial participants or patients;
|
•
|
loss of revenue; and
|
•
|
the inability to commercialize any products that we may develop.
|
•
|
collaborators have significant discretion in determining the efforts and resources that they will apply to these collaborations;
|
•
|
collaborators may not perform their obligations as expected;
|
•
|
collaborators may not pursue development and commercialization of our product candidates or may elect not to continue or renew development or commercialization programs, based on clinical trial results, changes in the collaborators’ strategic focus or available funding or external factors, such as an acquisition, that divert resources or create competing priorities;
|
•
|
collaborators may delay clinical trials, provide insufficient funding for a clinical trial program, stop a clinical trial or abandon a product candidate, repeat or conduct new clinical trials or require a new formulation of a product candidate for clinical testing;
|
•
|
collaborators may conduct their clinical trials poorly or inadequately, harming our products, including our products’ development in other territories;
|
•
|
product candidates developed in collaboration with us, including in particular product candidates based on deuteration of a collaborator’s marketed drugs or advanced clinical candidates, may be viewed by our collaborators as competitive with their own product candidates or products, which may cause collaborators to cease to devote resources to the commercialization of our product candidates;
|
•
|
a collaborator with marketing and distribution rights to one or more products may not commit sufficient resources to the marketing and distribution of such product or products;
|
•
|
disagreements with collaborators, including disagreements over proprietary rights, contract interpretation or the preferred course of development, might cause delays or termination of the research, development or commercialization of product candidates, might lead to additional responsibilities for us with respect to product candidates or might result in litigation or arbitration, any of which would be time-consuming and expensive;
|
•
|
collaborators may steal our trade secrets or may hire valuable employees from us;
|
•
|
collaborators may fail to protect our trade secrets;
|
•
|
collaborators may not properly maintain or defend our intellectual property rights or may use our proprietary information in such a way as to invite litigation that could jeopardize or invalidate our intellectual property or proprietary information or expose us to potential litigation;
|
•
|
collaborators may infringe the intellectual property rights of third parties, which may expose us to litigation and potential liability; and
|
•
|
collaborations may be terminated and, if terminated, may result in a need for additional capital to pursue further development or commercialization of the applicable product candidates.
|
•
|
manufacturing delays, including if our third-party contractors give greater priority to the supply of other products over our product candidates or if they otherwise do not satisfactorily perform according to the terms of the agreements between us and them;
|
•
|
potentially incorrect data analysis, resulting in falsely-positive, falsely-negative or misleading or uninterpretable results;
|
•
|
potential industrial accidents such as fires or explosions that compromise our product candidates or the ability of the contractors to timely deliver them;
|
•
|
natural disasters, public health crises, pandemics and epidemics, including the COVID-19 pandemic;
|
•
|
the possible termination or non-renewal of agreements by our third-party contractors at a time that is costly or inconvenient for us;
|
•
|
potentially limited numbers of available contractors due to the need for uncommon equipment or expertise, or pre-existing conflicts of interest;
|
•
|
the possible breach by the third-party contractors of our agreements with them;
|
•
|
possible theft of intellectual property or trade secrets;
|
•
|
possible theft of our materials, including starting materials, intermediates, active pharmaceutical ingredients or drug products;
|
•
|
the failure of third-party contractors to comply with applicable regulatory requirements;
|
•
|
the possible mislabeling of clinical supplies, potentially resulting in the wrong dose amounts being supplied or active drug or placebo not being properly identified;
|
•
|
possible contamination, or non-conformance with product or packaging specifications, of our product during or after its manufacture;
|
•
|
possible interruptions in our contractors’ operations, including departure of key personnel, disruption due to merger and acquisitions activities or supply chain disruptions;
|
•
|
the possibility of clinical supplies not being delivered to clinical sites on time, leading to clinical trial interruptions, or of drug supplies not being distributed to commercial vendors in a timely manner, resulting in lost sales; and
|
•
|
the possible misappropriation of our proprietary information, including our trade secrets and know-how.
|
•
|
restrictions on such products, manufacturers or manufacturing processes;
|
•
|
restrictions on the indication, patient population or other parameters for which the drug is approved;
|
•
|
restrictions on the labeling or marketing of a product;
|
•
|
restrictions on product distribution or use;
|
•
|
requirements to conduct post-marketing studies or clinical trials;
|
•
|
warning letters or untitled letters;
|
•
|
withdrawal of the products from the market;
|
•
|
refusal to approve pending applications or supplements to approved applications that we submit;
|
•
|
recall of products;
|
•
|
fines, restitution or disgorgement of profits or revenues;
|
•
|
reputational damage;
|
•
|
suspension or withdrawal of marketing approvals;
|
•
|
refusal to permit the import or export of products;
|
•
|
product seizure; or
|
•
|
injunctions or the imposition of civil or criminal penalties.
|
•
|
an annual, non-deductible fee on any entity that manufactures or imports specified branded prescription drugs and biologic agents;
|
•
|
an increase in the statutory minimum rebates a manufacturer must pay under the Medicaid Drug Rebate Program;
|
•
|
expansion of healthcare fraud and abuse laws, including the False Claims Act and the Anti-Kickback Statute, new government investigative powers and enhanced penalties for noncompliance;
|
•
|
a new Medicare Part D coverage gap discount program, in which manufacturers must agree to offer 50% point-of-sale discounts off negotiated prices;
|
•
|
extension of manufacturers’ Medicaid rebate liability;
|
•
|
expansion of eligibility criteria for Medicaid programs;
|
•
|
expansion of the entities eligible for discounts under the Public Health Service pharmaceutical pricing program new requirements to report financial arrangements with physicians and teaching hospitals;
|
•
|
a new requirement to annually report drug samples that manufacturers and distributors provide to physicians; and
|
•
|
a new Patient-Centered Outcomes Research Institute to oversee, identify priorities in and conduct comparative clinical effectiveness research, along with funding for such research.
|
•
|
Anti-Kickback Statute. The federal Healthcare Anti-Kickback statute prohibits, among other things, persons and entities from knowingly and willfully soliciting, offering, receiving or providing remuneration, directly or indirectly, in cash or in kind, to induce or reward, or in return for, either the referral of an individual for, or the purchase, order or recommendation or arranging of, any good or service, for which payment may be made, in whole or in part, under a federal healthcare program such as Medicare and Medicaid;
|
•
|
False Claims Act. The federal False Claims Act imposes criminal and civil penalties, including through civil whistleblower or qui tam actions, against individuals or entities for, among other things, knowingly presenting, or causing to be presented false or fraudulent claims for payment by a federal healthcare program or making a false statement or record material to payment of a false claim or avoiding, decreasing or concealing an obligation to pay money to the federal government, with potential liability including mandatory treble damages and significant per-claim penalties;
|
•
|
HIPAA. The federal Health Insurance Portability and Accountability Act of 1996, or HIPAA, imposes criminal and civil liability for executing a scheme to defraud any healthcare benefit program or knowingly and willfully falsifying, concealing or covering up a material fact or making any materially false statement in connection with the delivery of or payment for healthcare benefits, items or services and, as amended by the Health Information Technology for Economic and Clinical Health Act and its implementing regulations, also imposes obligations, including mandatory contractual terms and technical safeguards, with respect to maintaining the privacy, security and transmission of individually identifiable health information;
|
•
|
Transparency Requirements. Federal transparency laws require certain manufacturers of covered drugs to report payments and other transfers of value to physicians, other healthcare providers and teaching hospitals, as well as ownership and investment interests held by physicians and other healthcare providers and their immediate family members; and
|
•
|
Analogous State and Foreign Laws. Analogous state and foreign laws and regulations, such as state anti-kickback and false claims laws, can apply to sales or marketing arrangements and claims involving healthcare items or services. In addition, some state laws require pharmaceutical companies to comply with the pharmaceutical industry's voluntary compliance guidelines and the relevant compliance guidance promulgated by the federal government in addition to requiring drug manufacturers to report information related to payments to physicians and other health care providers or marketing expenditures and govern the privacy and security of health information in certain circumstances, many of which differ from each other in significant ways and often are not preempted by HIPAA, thus complicating compliance efforts.
|
•
|
the success or failure of existing or new competitive products or technologies;
|
•
|
the timing, advancement of and results of nonclinical studies and clinical trials of any of our product candidates;
|
•
|
commencement or termination of collaborations for our development programs;
|
•
|
failure, delays, changes to or discontinuation of any of our development programs;
|
•
|
regulatory or legal developments in the United States and other countries;
|
•
|
regulatory actions relating to our product candidates;
|
•
|
developments or disputes concerning patent applications, issued patents or other proprietary rights;
|
•
|
the recruitment or departure of key personnel;
|
•
|
disclosures by our collaborators relating to our product candidates or competitive programs;
|
•
|
merger or acquisition activity of our collaborators;
|
•
|
the level of expenses related to any of our product candidates or clinical development programs;
|
•
|
the results of our efforts to develop additional product candidates or products;
|
•
|
actual or anticipated changes in estimates as to financial results, development timelines or recommendations by securities analysts;
|
•
|
announcement or expectation of additional financing efforts;
|
•
|
receipt or expectation of receipt of revenues such as milestones, royalties, grants and license fees;
|
•
|
sales of our common stock by us, our insiders or other stockholders;
|
•
|
programmed trading based on technical stock chart or other inputs;
|
•
|
portfolio restructuring by large stockholders or decisions by stockholders to rapidly acquire or sell our shares;
|
•
|
addition or removal of our stock from stock indices;
|
•
|
variations in our financial results or those of companies that are perceived to be similar to us;
|
•
|
changes in estimates or recommendations by securities analysts that cover our stock;
|
•
|
actions by short-sellers or supporters of our stock, including social media postings or reports;
|
•
|
changes in the structure of healthcare payment systems;
|
•
|
market conditions in the pharmaceutical and biotechnology sectors;
|
•
|
legalization or the anticipation of possible legalization of drug reimportation from other countries;
|
•
|
actual or anticipated changes in FDA practices;
|
•
|
general economic, industry and market conditions; and
|
•
|
the other factors described in this “Risk Factors” section.
|
•
|
delay, defer or prevent a change in control;
|
•
|
entrench our management or the board of directors; or
|
•
|
impede a merger, consolidation, takeover or other business combination involving us that other stockholders may desire.
|
•
|
establish a classified board of directors such that all members of the board of directors are not elected at one time;
|
•
|
allow the authorized number of our directors to be changed only by resolution of our board of directors;
|
•
|
limit the manner in which stockholders can remove directors from the board;
|
•
|
establish advance notice requirements for nominations for election to the board of directors or for proposing matters that can be acted on at stockholder meetings;
|
•
|
require that stockholder actions must be effected at a duly called stockholder meeting and prohibit actions by our stockholders by written consent;
|
•
|
limit who may call a special meeting of stockholders;
|
•
|
authorize our board of directors to issue preferred stock without stockholder approval, which could be used to institute a “poison pill” that would work to dilute the stock ownership of a potential hostile acquirer, effectively preventing acquisitions that have not been approved by our board of directors; and
|
•
|
require the approval of the holders of at least 75% of the votes that all our stockholders would be entitled to cast to amend or repeal certain provisions of our charter or by-laws.
|
Item 6.
|
Exhibits.
|
Exhibit
number
|
|
Description
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
101.INS*
|
|
XBRL Instance Document
|
|
|
|
101.SCH*
|
|
XBRL Taxonomy Extension Schema Document
|
|
|
|
101.CAL*
|
|
XBRL Taxonomy Extension Calculation Linkbase Document
|
|
|
|
101.DEF*
|
|
XBRL Taxonomy Extension Definition Linkbase Document
|
|
|
|
101.LAB*
|
|
XBRL Taxonomy Extension Label Linkbase Document
|
|
|
|
101.PRE*
|
|
XBRL Taxonomy Extension Presentation Linkbase Document
|
|
|
CONCERT PHARMACEUTICALS, INC.
|
||
|
|
|
|
|
Date:
|
April 30, 2020
|
By:
|
|
/s/ Marc A. Becker
|
|
|
|
|
|
|
|
|
|
Marc A. Becker
Chief Financial Officer
(Principal Financial Officer)
|
1.
|
I have reviewed this Quarterly Report on Form 10-Q of Concert Pharmaceuticals, Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
(d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
Date:
|
April 30, 2020
|
|
|
/s/ Roger D. Tung
|
|
Roger D. Tung
|
|
President and Chief Executive Officer
|
|
(Principal Executive Officer)
|
1.
|
I have reviewed this Quarterly Report on Form 10-Q of Concert Pharmaceuticals, Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
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(d)
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Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
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5.
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The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
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(a)
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All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
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(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
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Date:
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April 30, 2020
|
|
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/s/ Marc A. Becker
|
|
Marc A. Becker
|
|
Chief Financial Officer
|
|
(Principal Financial Officer)
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(1)
|
the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
(2)
|
the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
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Dated:
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April 30, 2020
|
/s/ Roger D. Tung
|
|
|
Roger D. Tung
|
|
|
President and Chief Executive Officer
|
|
|
(Principal Executive Officer)
|
(1)
|
the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
(2)
|
the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
Dated:
|
April 30, 2020
|
/s/ Marc A. Becker
|
|
|
Marc A. Becker
|
|
|
Chief Financial Officer
|
|
|
(Principal Financial Officer)
|