cnce-20220331

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

_________________________________

FORM 10-Q

_________________________________


(Mark One)


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2022


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number 001-36310

_________________________________

CONCERT PHARMACEUTICALS, INC.

(Exact name of registrant as specified in its charter)


Delaware			20-4839882
(State or other jurisdiction of incorporation or organization)			(I.R.S. Employer Identification No.)


65 Hayden Avenue, Suite 3000N Lexington, Massachusetts			02421
(Address of principal executive offices)			(Zip Code)

(781) 860-0045

(Registrant’s telephone number, including area code)

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $0.001 per share	CNCE	Nasdaq Global Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer	☐	Accelerated filer	☐

Non-accelerated filer	☒	Smaller reporting company	☒

		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

The number of shares outstanding of the registrant’s common stock as of May 2, 2022: 36,329,342

TABLE OF CONTENTS


		Page No.

PART I. FINANCIAL INFORMATION

Item 1.	Financial Statements (Unaudited)	8

	Condensed Consolidated Balance Sheets as of March 31, 2022 and December 31, 2021	8

	Condensed Consolidated Statements of Operations and Comprehensive Loss for the Three Months Ended March 31, 2022 and 2021	9

	Condensed Consolidated Statements of Stockholders’ Equity for the Three Months Ended March 31, 2022 and 2021	10

	Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2022 and 2021	11

	Notes to Condensed Consolidated Financial Statements	12

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	25

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	39

Item 4.	Controls and Procedures	40

PART II. OTHER INFORMATION

Item 1A.	Risk Factors	41

Item 6.	Exhibits	71

	Signatures	72

REFERENCES TO CONCERT

Throughout this Quarterly Report on Form 10-Q, “Concert,” “the Company,” “we,” “us” and “our,” except where the context requires otherwise, refer to Concert Pharmaceuticals, Inc. and its consolidated subsidiaries, and “our board of directors” refers to the board of directors of Concert Pharmaceuticals, Inc.

FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains forward-looking statements that involve substantial risks and uncertainties. All statements, other than statements of historical facts, contained in this Quarterly Report on Form 10-Q, including statements regarding our strategy, future operations, future financial position, projected costs, prospects, plans and objectives of management, are forward-looking statements. The words “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “potential,” “predict,” “project,” “should,” “target,” “will,” “would” and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words.

The forward-looking statements in this Quarterly Report on Form 10-Q include, among other things, statements about:

•ongoing and planned clinical trials for our product candidates, whether conducted by us or by our collaborators, including the timing of initiation, enrollment and completion of these trials and of the anticipated results;

•our plans to identify, develop and commercialize novel small molecule drugs based on our knowledge of deuterium chemistry;

•our plans to enter into collaborations for the development and commercialization of product candidates;

•our expected benefits from our current and any future collaboration, development or license arrangements;

•our ability to receive research and development funding and achieve anticipated milestones under our collaborations;

•our expectations regarding any future milestone payments or royalties we may receive as part of our agreement with Avanir Pharmaceuticals, Inc. with respect to AVP-786 and payments from our other collaboration and license arrangements;

•the timing of and our ability to obtain and maintain marketing approvals for our product candidates;

•the rate and degree of market acceptance and clinical utilization of our products;

•our commercialization, marketing and manufacturing capabilities and strategy;

•our intellectual property position and strategy;

•the outcome of our inter partes review proceeding regarding U.S. Patent No. 9,249,149 covering CTP-543 and the post grant review petition challenging U.S. Patent No. 10,561,659 covering CTP-543;

•our freedom to operate with respect to third-party patents;

•the potential advantages of our product candidates;

•our estimates regarding expenses, future revenue, capital requirements and needs for additional financing;

•conditions and events that raise doubt about our ability to continue as a going concern;

•risks associated with the COVID-19 pandemic, which may adversely impact our business, clinical trials and supply chain;

•developments relating to our competitors and our industry; and

•the impact of government laws and regulations.

We may not actually achieve the plans, intentions or expectations disclosed in our forward-looking statements, and you should not place undue reliance on our forward-looking statements. Actual results or events could differ materially from the plans, intentions and expectations disclosed in the forward-looking statements we make. We have included important factors in the cautionary statements included in this Quarterly Report on Form 10-Q, particularly in Part II, Item 1A. Risk Factors, that could cause actual results or events to differ materially from the forward-looking statements that we make. Our forward-looking statements do not reflect the potential impact of any future acquisitions, mergers, dispositions, joint ventures, collaborations or investments that we may make.

You should read this Quarterly Report on Form 10-Q and the documents that we have filed as exhibits to this Quarterly Report on Form 10-Q completely and with the understanding that our actual future results may be materially different from

what we expect. We do not assume any obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.

SUMMARY OF THE MATERIAL RISKS ASSOCIATED WITH OUR BUSINESS

Our business is subject to numerous risks and uncertainties, including those described in the “Risk Factors” section in Part II, Item 1A. of this Quarterly Report on Form 10-Q. The principal risks and uncertainties affecting our business include the following:

•Our business may be adversely affected by the ongoing COVID-19 pandemic.

•We have incurred significant losses since inception, expect to incur losses for at least the next several years and may never sustain profitability.

•Based on our current operating plan, there is substantial doubt regarding our ability to continue as a going concern.

•We will need substantial additional funding. If we are unable to raise capital when needed or on favorable terms, we could be forced to delay, reduce or eliminate our development programs or commercialization efforts.

•Raising additional capital may cause dilution to our stockholders or require us to relinquish rights to our technologies or product candidates.

•Clinical drug development involves a lengthy and expensive process with an uncertain outcome.

•We may not be able to continue further clinical development of our wholly-owned development programs, including CTP-543. If we are unable to develop, obtain marketing approval for or commercialize our wholly-owned development programs, ourselves or through a collaboration, or experience significant delays in doing so, our business could be materially harmed.

•If clinical trials of our product candidates fail to satisfactorily demonstrate safety and efficacy to the FDA and other regulators, we, or our collaborators, may incur additional costs or experience delays in completing, or ultimately be unable to complete, the development and commercialization of these product candidates.

•If we, or our collaborators, experience any of a number of possible unforeseen events in connection with clinical trials of our product candidates, potential marketing approval or commercialization of our product candidates could be delayed or prevented.

•If we, or our collaborators, experience delays or difficulties in the enrollment of patients in clinical trials, our, or their, receipt of necessary marketing approvals could be delayed or prevented.

•Serious adverse events, undesirable side effects or other unexpected properties of our product candidates, including those that we have licensed to collaborators, may be identified during development that could delay or prevent the product candidate’s marketing approval.

•We rely on third parties to conduct our clinical trials and some aspects of our research and nonclinical testing. If they terminate their relationships with us or do not perform satisfactorily, our business may be materially harmed.

•We depend on collaborations with third parties for the development and commercialization of some of our product candidates and expect to continue to do so in the future. Our prospects with respect to those product candidates will depend in significant part on the success of those collaborations.

•We expect to seek to establish additional collaborations, and if we are not able to establish them on commercially reasonable terms, we may have to alter our development and commercialization plans.

•If we are unable to obtain and maintain sufficient patent protection for our product candidates, or if the scope of the patent protection is not sufficiently broad, our competitors could develop and commercialize products similar or identical to ours, and our ability to successfully commercialize our product candidates may be adversely affected.

•Third parties may sue us alleging that we are infringing their intellectual property rights, and such litigation could be costly and time consuming and could prevent or delay us from developing or commercializing our product candidates.

•We contract with third parties for the manufacture and distribution of our product candidates for nonclinical and clinical testing and expect to continue to do so in connection with our future development and commercialization

efforts. This reliance on third parties increases the risk that we will not have sufficient quantities of our product candidates or such quantities at an acceptable cost, or that the product candidates will not be of sufficient quality or reproducibility or produced on our desired schedule, which could delay, prevent or impair our development or commercialization efforts.

•Even if we complete the necessary nonclinical studies and clinical trials, the marketing approval process is expensive, time consuming and uncertain and we may not obtain approvals for the commercialization of some or all of our product candidates. As a result, we cannot predict when or if, and in which territories, we, or our collaborators, will obtain marketing approval to commercialize a product candidate.

•Even if we, or our collaborators, obtain marketing approvals for our product candidates, the approved labeling may include significant safety warnings or use limitations, which could adversely affect the degree of market acceptance.

•We face substantial competition from other pharmaceutical and biotechnology companies and our operating results may suffer if we fail to compete effectively.

The summary risk factors described above should be read together with the text of the full risk factors below, in the section entitled “Risk Factors” and the other information set forth in this Quarterly Report on Form 10-Q, including our consolidated financial statements and the related notes, as well as in other documents that we file with the Securities and Exchange Commission. The risks summarized above or described in full below are not the only risks that we face. Additional risks and uncertainties not precisely known to us, or that we currently deem to be immaterial may also materially adversely affect our business, financial condition, results of operations and future growth prospects.

PART I. FINANCIAL INFORMATION

Item 1.Financial Statements.

CONCERT PHARMACEUTICALS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)

(Amounts in thousands, except share and per share data)


	March 31,		December 31,
	2022		2021
Assets
Current assets:
Cash and cash equivalents	$	59,363	$	141,636
Investments, available for sale	49,643		—
Marketable equity securities	899		1,463
Interest receivable	251		—
Deferred offering costs	—		15
Accounts receivable	744		218

Prepaid expenses and other current assets	3,868		6,997
Total current assets	114,768		150,329
Property and equipment, net	5,015		5,242
Restricted cash	1,157		1,157
Other assets	2		3

Operating lease right-of-use asset, long-term	8,469		8,585
Total assets	$	129,411	$	165,316
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable	$	2,755	$	2,606
Accrued expenses and other liabilities	11,111		12,359


Lease liability, current portion	1,216		1,155
Total current liabilities	15,082		16,120
Accrued expenses, net of current portion	—		28
Deferred revenue, long-term	7,595		7,595
Lease liability, net of current portion	13,574		13,910
Warrant liabilities, long-term (Note 13)	16,594		15,438
Total liabilities	52,845		53,091
Commitments (Note 11)
Stockholders’ equity:
Preferred stock, $0.001 par value per share; 5,000,000 shares authorized; 32,500 shares designated as Series X1; 13,997 shares of Series X1 issued and outstanding as of March 31, 2022 and December 31, 2021, respectively	—		—
Common stock, $0.001 par value per share; 100,000,000 shares authorized; 35,153,943 and 34,939,628 shares issued and 34,953,342 and 34,739,027 shares outstanding as of March 31, 2022 and December 31, 2021, respectively	34		34
Additional paid-in capital	463,876		461,765
Accumulated other comprehensive loss	(118)		(76)
Accumulated deficit	(387,226)		(349,498)
Total stockholders’ equity	76,566		112,225
Total liabilities and stockholders’ equity	$	129,411	$	165,316

See accompanying notes.

CONCERT PHARMACEUTICALS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

(UNAUDITED)

(Amounts in thousands, except per share data)


	Three Months Ended March 31,
	2022		2021
Revenue:
License and research and development revenue	$	—	$	5
Operating expenses:
Research and development	30,489		18,500
General and administrative	5,539		5,485
Total operating expenses	36,028		23,985
Loss from operations	(36,028)		(23,980)

SEC Form 10-Q filed by Concert Pharmaceuticals Inc.