Cerevel Therapeutics Holdings, Inc. [CERE] Filings

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

Emerging growth company

10-Q 1 cere-20220930.htm 10-Q 10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 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 September 30, 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: 001-39311

CEREVEL THERAPEUTICS HOLDINGS, INC.

(Exact Name of Registrant as Specified in its Charter)


Delaware	85-3911080
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

222 Jacobs Street, Suite 200 Cambridge, MA	02141
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: (844) 304-2048

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 $0.0001 per share

CERE

The NASDAQ Stock Market LLC

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, 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.

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 ☒

As of October 28, 2022, the registrant had 156,322,552 shares of common stock, par value $0.0001 per share, outstanding.

Table of Contents


		Page
PART I.	FINANCIAL INFORMATION	5
Item 1.	Financial Statements (Unaudited)	5
	Condensed Consolidated Balance Sheets	5
	Condensed Consolidated Statements of Operations and Comprehensive Loss	6
	Condensed Consolidated Statements of Stockholders' Equity	7
	Condensed Consolidated Statements of Cash Flows	9
	Notes to Condensed Consolidated Financial Statements	10
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	24
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	39
Item 4.	Controls and Procedures	39
PART II.	OTHER INFORMATION	41
Item 1.	Legal Proceedings	41
Item 1A.	Risk Factors	41
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	92
Item 3.	Defaults Upon Senior Securities	92
Item 4.	Mine Safety Disclosures	92
Item 5.	Other Information	92
Item 6.	Exhibits	92
Signatures		94

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

Certain statements in this Quarterly Report on Form 10-Q, or this Quarterly Report, may constitute “forward-looking statements” for purposes of the federal securities laws. Our forward-looking statements include, but are not limited to, statements regarding our or our management team’s expectations, hopes, beliefs, intentions or strategies regarding the future. In addition, any statements that refer to projections, forecasts or other characterizations of future events or circumstances, including any underlying assumptions, are forward-looking statements. The words “anticipate,” “believe,” “contemplate,” “continue,” “could,” “estimate,” “expect,” “intends,” “may,” “might,” “plan,” “possible,” “potential,” “predict,” “project,” “should,” “will,” “would,” “can,” “target,” “future” or the negative of these terms or other similar expressions may identify forward-looking statements, but the absence of these words does not mean that a statement is not forward-looking. Forward-looking statements in this Quarterly Report may include, for example, statements about:

•

the format, likelihood of success, cost and timing of our clinical trials and other product development activities, including the design of clinical trials and preclinical studies, the timing of initiation and completion of clinical trials and related preparatory work, our ability to collect and interpret clinical trial data and the timing and outcome of regulatory interactions;

•

our ability to recruit and enroll suitable patients in our clinical trials;

•

the potential attributes and benefits of our product candidates;

•

our ability to obtain and maintain regulatory approval for our product candidates, and any related restrictions, limitations or warnings on the label of an approved product candidate;

•

our ability to obtain funding for our operations, including funding necessary to complete further development, approval and, if approved, commercialization of our product candidates;

•

the period over which we anticipate our available financial resources will enable us to fund our operating expense and capital expenditure requirements;

•

the potential for our business development efforts to maximize the potential value of our portfolio;

•

our ability to identify, in-license or acquire additional product candidates;

•

our ability to maintain our license agreement with Pfizer;

•

our ability to compete with other companies currently marketing or engaged in the development of treatments for the indications that we are pursuing for our product candidates;

•

our ability to obtain and maintain intellectual property protection for our product candidates and the duration of such protection;

•

our ability to contract with and rely on third parties to assist in conducting our clinical trials and manufacturing our product candidates;

•

the size and growth potential of the markets for our product candidates, and our ability to serve those markets, either alone or in partnership with others;

•

the rate and degree of market acceptance of our product candidates, if approved;

•

the pricing and reimbursement of our product candidates, if approved;

•

regulatory developments in the United States and foreign countries;

•

the impact of laws, regulations, accounting standards, regulatory requirements, judicial decisions and guidance issued by authoritative bodies;

•

our ability to attract and retain key scientific, medical, commercial or management personnel;

•

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

•

our future financial performance;

•

our ability to recognize the anticipated benefits of the tavapadon financing transaction (including our ability to receive future payments thereunder) and other financing and business development transactions;

•

our ability to satisfy our payment obligations, remain in compliance with covenants under the 2027 Notes (as defined below), to service the interest on or to refinance the 2027 Notes or to make cash payments in connection with any conversion of the 2027 Notes, to the extent required; and

•

the effect of the ongoing COVID-19 pandemic, or any other health epidemic, including as a result of the emergence of new variants or subvariants, mitigation efforts and economic effects, on any of the foregoing or other aspects of our business operations, including but not limited to our clinical trials and other product development activities, healthcare systems and the global economy as a whole.

The forward-looking statements contained in this Quarterly Report are based on current expectations and beliefs concerning future developments and their potential effects on us. There can be no assurance that future developments affecting us will be those that we have anticipated. These forward-looking statements involve a number of risks, uncertainties (some of which are beyond our control) or other assumptions that may cause actual results or performance to be materially different from those expressed or implied by these forward-looking statements. These risks and uncertainties include, but are not limited to, those factors described in the section titled “Risk Factors” of this Quarterly Report. Should one or more of these risks or uncertainties materialize, or should any of our assumptions prove incorrect, actual results may vary in material respects from those projected in these forward-looking statements. Some of these risks and uncertainties may in the future be amplified by the ongoing COVID-19 pandemic, including as a result of the emergence of new variants or subvariants, and there may be additional risks that we consider immaterial, or which are unknown. It is not possible to predict or identify all such risks. We do not undertake any obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws.

You should read this Quarterly Report completely and with the understanding that our actual future results may be materially different from what we expect. We qualify all of our forward-looking statements by these cautionary statements.

This Quarterly Report contains summaries of certain provisions contained in some of the documents described herein, but reference is made to the actual documents for complete information. All of the summaries are qualified in their entirety by the actual documents. Copies of some of the documents referred to herein have been filed as exhibits to this Quarterly Report. Unless the context otherwise requires, reference in this Quarterly Report to the terms “Cerevel,” “the Company,” “we,” “us,” “our,” and similar designations refer to Cerevel Therapeutics Holdings, Inc. and, where appropriate, our consolidated subsidiaries.

We may from time to time provide estimates, projections and other information concerning our industry, the general business environment, and the markets for certain diseases, including estimates regarding the potential size of those markets and the estimated incidence and prevalence of certain medical conditions. Information that is based on estimates, forecasts, projections, market research or similar methodologies is inherently subject to uncertainties, and actual events, circumstances or numbers, including actual disease prevalence rates and market size, may differ materially from the information reflected in this Quarterly Report. Unless otherwise expressly stated, we obtained the industry, market and competitive position data from our internal estimates and research, as well as from independent market research, industry and general publications and surveys, governmental agencies and publicly available information in addition to research, surveys and studies conducted by third parties that have not been independently verified which may, in the future, prove not to have been accurate.

SUMMARY OF MATERIAL RISKS ASSOCIATED WITH OUR BUSINESS

Our business is subject to numerous risks and uncertainties that you should be aware of before making an investment decision, including those highlighted in the section entitled “Risk Factors.” These risks include, but are not limited to, the following:

•

The successful development of pharmaceutical products is highly uncertain.

•

We are a clinical-stage biopharmaceutical company with a limited operating history. We have incurred significant financial losses since our inception and anticipate that we will continue to incur significant financial losses for the foreseeable future.

•

We will need substantial additional funding, and if we are unable to raise capital when needed, we could be forced to delay, reduce or terminate our product discovery and development programs or commercialization efforts.

•

Due to the significant resources required for the development of our pipeline, and depending on our ability to access capital, we must prioritize the development of certain product candidates over others. Moreover, we may fail to expend our limited resources on product candidates or indications that may have been more profitable or for which there is a greater likelihood of success.

•

Our business is highly dependent on the success of our product candidates. If we are unable to successfully complete clinical development, obtain regulatory approval for or commercialize one or more of our product candidates, or if we experience delays in doing so, our business will be materially harmed.

•

The regulatory approval processes of the U.S. Food and Drug Administration, or the FDA, and comparable foreign authorities are lengthy, time-consuming and inherently unpredictable, and if we are ultimately unable to obtain regulatory approval for our product candidates, our business will be substantially harmed.

•

Business interruptions resulting from the ongoing COVID-19 pandemic or similar public health crises could cause a disruption of the development of our product candidates and adversely impact our business.

•

If our clinical trials fail to replicate positive results from earlier preclinical studies or clinical trials conducted by us or third parties, we may be unable to successfully develop, obtain regulatory approval for or commercialize our product candidates.

iii

•

We may incur unexpected costs or experience delays in completing, or ultimately be unable to complete, the development and commercialization of our product candidates.

•

If we encounter difficulties enrolling patients in our clinical trials, our clinical development activities could be delayed or otherwise adversely affected.

•

Even if any of our product candidates receives regulatory approval, it may fail to achieve the degree of market acceptance by physicians, patients, third-party payors and others in the medical community necessary for commercial success, in which case we may not generate significant revenues or become profitable.

•

Competitive products may reduce or eliminate the commercial opportunity for our product candidates, if approved. If our competitors develop technologies or product candidates more rapidly than we do, or their technologies or product candidates are more effective or safer than ours, our ability to develop and successfully commercialize our product candidates may be adversely affected.

•

We depend heavily on our executive officers, third-party consultants and others and our ability to compete in the biotechnology and pharmaceutical industries depends upon our ability to attract and retain highly qualified managerial, scientific and medical personnel. The loss of their services or our inability to hire and retain such personnel would materially harm our business.

•

BC Perception Holdings, LP, or Bain Investor, and Pfizer Inc., or Pfizer, have significant influence over us.

•

We rely on third parties to assist in conducting our clinical trials. If they do not perform satisfactorily, we may not be able to obtain regulatory approval or commercialize our product candidates, or such approval or commercialization may be delayed, and our business could be substantially harmed.

•

We depend and expect in the future to continue to depend on in-licensed intellectual property. Such licenses impose obligations on our business, and if we fail to comply with those obligations, we could lose license rights, which would substantially harm our business.

The risks described above should be read together with the text of the full risk factors discussed in the section entitled “Risk Factors” and the other information set forth in this Quarterly Report, including our condensed consolidated financial statements and the related notes, as well as in other documents that we file with the Securities and Exchange Commission, or the SEC. The risks summarized above or described in full elsewhere in this Quarterly Report are not the only risks that we face. Additional risks and uncertainties not presently 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.

CEREVEL THERAPEUTICS HOLDINGS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except share amounts and per share data)

(Unaudited)


	As of
	September 30, 2022			December 31, 2021
ASSETS
Current assets:
Cash and cash equivalents	$	248,600		$	193,018
Marketable securities		741,318			372,670
Prepaid expenses and other current assets		8,740			12,329
Total current assets		998,658			578,017
Marketable securities		39,863			52,269
Property and equipment, net		28,323			28,449
Operating lease assets		22,204			23,251
Restricted cash		1,867			4,200
Other long-term assets		2,797			2,733
Total assets	$	1,093,712		$	688,919
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	14,971		$	11,298
Accrued expenses and other current liabilities		42,264			28,803
Operating lease liabilities, current portion		2,785			2,437
Total current liabilities		60,020			42,538
Operating lease liabilities, net of current portion		31,948			34,110
Financing liability, related party (Notes 5 and 7)		31,687			16,770
Financing liability (Notes 5 and 7)		31,687			16,770
2027 convertible senior notes, net (Note 6)		335,006			—
Other long-term liabilities		2			2
Total liabilities		490,350			110,190
Commitments and contingencies (Notes 13 and 14)
Stockholders’ equity:
Preferred stock, $0.0001 par value: 10,000,000 shares authorized; no shares issued and outstanding as of September 30, 2022 and December 31, 2021		—			—
Common stock, $0.0001 par value: 500,000,000 shares authorized; 156,243,808 and 147,719,523 shares issued and outstanding as of September 30, 2022 and December 31, 2021, respectively		16			15
Additional paid-in capital		1,473,099			1,195,944
Accumulated other comprehensive income (loss)		5,194			(986	)
Accumulated deficit		(874,947	)		(616,244	)
Total stockholders’ equity		603,362			578,729
Total liabilities and stockholders’ equity	$	1,093,712		$	688,919

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

CEREVEL THERAPEUTICS HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

(In thousands, except share amounts and per share data)

(Unaudited)


	For the Three Months Ended September 30,						For the Nine Months Ended September 30,
	2022			2021			2022			2021
Operating expenses:
Research and development	$	71,385		$	40,159		$	198,947		$	114,014
General and administrative		23,680			14,368			61,654			41,594
Total operating expenses		95,065			54,527			260,601			155,608
Loss from operations		(95,065	)		(54,527	)		(260,601	)		(155,608	)
Interest income (expense), net		2,706			13			3,668			38
Other income (expense), net		(7,579	)		(7,545	)		(1,770	)		(10,709	)
Loss before income taxes		(99,938	)		(62,059	)		(258,703	)		(166,279	)
Income tax benefit (provision), net		—			—			—			—
Net loss	$	(99,938	)	$	(62,059	)	$	(258,703	)	$	(166,279	)
Net loss per share, basic and diluted	$	(0.66	)	$	(0.43	)	$	(1.73	)	$	(1.25	)
Weighted-average shares used in calculating net loss per share, basic and diluted		152,304,645			144,022,109			149,544,252			132,971,450

Comprehensive loss:
Net loss	$	(99,938	)	$	(62,059	)	$	(258,703	)	$	(166,279	)
Other comprehensive income (loss)
Changes in fair value attributable to instrument-specific credit risk		(1,364	)		(533	)		9,466			(533	)
Unrealized gains (losses) on securities available-for-sale		(1,430	)		—			(3,286	)		—
Total other comprehensive income (loss)		(2,794	)		(533	)		6,180			(533	)
Comprehensive loss	$	(102,732	)	$	(62,592	)	$	(252,523	)	$	(166,812	)

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

CEREVEL THERAPEUTICS HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(In thousands, except share amounts)

(Unaudited)


	Common stock				Additional paid-in		Accumulated other comprehensive			Accumulated			Total stockholders’
	Shares		Amount		capital		income (loss)			deficit			equity
Balance at December 31, 2021		147,719,523	$	15	$	1,195,944	$	(986	)	$	(616,244	)	$	578,729
Issuance of common stock under equity incentive plans related to vesting of RSUs		14,270		—		—		—			—			—
Issuance of common stock under equity incentive plans related to exercise of options		449,005		—		2,854		—			—			2,854
Equity-based compensation expense		—		—		8,558		—			—			8,558
Other comprehensive loss		—		—		—		(348	)		—			(348	)
Net loss		—		—		—		—			(68,294	)		(68,294	)
Balance at March 31, 2022		148,182,798	$	15	$	1,207,356	$	(1,334	)	$	(684,538	)	$	521,499
Issuance of common stock under equity incentive plans related to vesting of RSUs		14,270		—		—		—			—			—
Issuance of common stock under equity incentive plans related to exercise of options		160,623		—		1,471		—			—			1,471
Issuance of common stock under equity incentive plans related to ESPP		37,591		—		845		—			—			845
Equity-based compensation expense		—		—		10,148		—			—			10,148
Other comprehensive income		—		—		—		9,322			—			9,322
Net loss		—		—		—		—			(90,471	)		(90,471	)
Balance at June 30, 2022		148,395,282	$	15	$	1,219,820	$	7,988		$	(775,009	)	$	452,814
Issuance of common stock related to follow-on offering, net of offering costs (Note 9)		7,250,000		1		238,099		—			—			238,100
Issuance of common stock under equity incentive plans related to exercise of options		598,526		—		5,484		—			—			5,484
Equity-based compensation expense		—		—		9,696		—			—			9,696
Other comprehensive loss		—		—		—		(2,794	)		—			(2,794	)
Net loss		—		—		—		—			(99,938	)		(99,938	)
Balance at September 30, 2022		156,243,808	$	16	$	1,473,099	$	5,194		$	(874,947	)	$	603,362

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

CEREVEL THERAPEUTICS HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(In thousands, except share amounts)

(Unaudited)


	Common stock				Additional paid-in			Accumulated other comprehensive		Accumulated			Total stockholders’
	Shares		Amount		capital			loss		deficit			equity
Balance at December 31, 2020		127,123,954	$	13	$	775,417		$	—	$	(390,910	)	$	384,520
Issuance of common stock under equity incentive plans related to vesting of RSUs		14,270		—		—			—		—			—
Issuance of common stock under equity incentive plans related to exercise of options		186,892		—		742			—		—			742
Reclassification of private placement warrants from equity to other long-term liabilities		—		—		(305	)		—		—			(305	)
Equity-based compensation expense		—		—		6,060			—		—			6,060
Net loss		—		—		—			—		(50,981	)		(50,981	)
Balance at March 31, 2021		127,325,116	$	13	$	781,914		$	—	$	(441,891	)	$	340,036
Issuance of common stock under equity incentive plans related to vesting of RSUs		14,270		—		—			—		—			—
Issuance of common stock under equity incentive plans related to exercise of options		204,684		—		1,394			—		—			1,394
Issuance of common stock under equity incentive plans related to ESPP		40,589		—		435			—		—			435
Equity-based compensation expense		—		—		5,261			—		—			5,261
Net loss		—		—		—			—		(53,239	)		(53,239	)
Balance at June 30, 2021		127,584,659	$	13	$

Cerevel Therapeutics Holdings, Inc. [CERE] Filings
10-Q	[2022-11-08]
10-Q	[2022-08-01]
10-Q	[2022-05-10]
10-K	[2022-03-01]
10-Q	[2021-11-10]
10-Q	[2021-08-11]
S-1	[2021-06-29]
10-Q	[2021-05-17]
10-K	[2021-03-24]
S-1	[2020-11-25]
10-Q	[2020-11-16]
10-Q	[2020-08-14]
S-1	[2020-05-19]