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Cerevel Therapeutics Holdings, Inc. (CERE)·Q1 2023 Earnings Summary

Executive Summary

  • Cerevel reported no revenue and a GAAP net loss of $104.3M (-$0.67 per share) in Q1 2023; R&D rose 42% YoY to $78.2M as emraclidine Phase 2 and other programs advanced .
  • Cash, cash equivalents, and marketable securities were $863.0M at March 31, 2023; management expects the runway to fund seven data readouts in 2024 and operations into 2025 .
  • Program timelines: emraclidine Phase 2 schizophrenia data on track for 1H 2024; REALIZE epilepsy data mid-2024; TEMPO Parkinson’s Phase 3 data in 2024 (adjunct mid-year; monotherapy 2H) .
  • CEO transition announced: Ron Renaud to succeed Tony Coles on June 12, 2023, framed as a leadership catalyst ahead of 2024 readouts .

What Went Well and What Went Wrong

What Went Well

  • Emraclidine execution sustained: two adequately powered Phase 2 schizophrenia trials continuing; open-label EMPOWER-3 enrolling; BP monitoring showed no chronic BP increase, de-risking tolerability. “Emraclidine does not induce an increase in blood pressure with chronic dosing in people living with schizophrenia” .
  • Balance sheet strength supports development: $863.0M cash/marketable securities with additional $31.3M tavapadon funding received in April 2023 (post-quarter), runway into 2025 .
  • Pipeline breadth maintained: multiple lead programs (emraclidine, darigabat, tavapadon, CVL-871) and discovery efforts (CVL-354, M4 agonist, PDE4) progressed per plan .

What Went Wrong

  • Net loss widened to $104.3M (from $68.3M YoY), driven by higher R&D and financing-liability fair value losses; “Other income (expense), net” swung to a loss of $11.1M on fair value remeasurement .
  • Enrollment headwinds in epilepsy and Parkinson’s persisted; company reiterated post-COVID environment impacts and updated timelines (REALIZE mid-2024; TEMPO-3 mid-2024) .
  • Operating expenses rose significantly YoY: R&D +42% to $78.2M and G&A +22% to $21.4M, reflecting program expansion and personnel costs .

Financial Results

MetricQ1 2022Q3 2022Q4 2022Q1 2023
Revenue ($USD Millions)$0.0 $0.0 $0.0 $0.0
Net Loss ($USD Millions)$(68.3) $(99.9) $(92.8) $(104.3)
Diluted EPS ($USD)$(0.46) $(0.66) $(0.59) $(0.67)
R&D Expense ($USD Millions)$55.0 $71.4 $81.3 $78.2
G&A Expense ($USD Millions)$17.5 $23.7 $25.9 $21.4
Cash + Marketable Securities ($USD Millions)n/a$1,030.0 (as of 9/30/22) $950.2 (as of 12/31/22) $863.0 (as of 3/31/23)

Estimate vs. Actual (Q1 2023):

MetricConsensusActualSurprise
Diluted EPS ($USD)$(0.67) $(0.67) In line

Notes:

  • No revenue segments exist; Cerevel is a clinical-stage company .
  • EPS consensus from S&P Global was unavailable via our tool. We cite external source; S&P Global consensus unavailable.

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Cash RunwayMulti-year“Support operations into 2025” (as of 12/31/22) “Support seven data readouts in 2024 and fund operations into 2025” Maintained (narrowed with data milestones)
R&D ExpenseFY 2023“R&D to increase vs 2022” No Q1 update beyond higher spend trend Maintained
G&A ExpenseFY 2023“G&A to remain relatively consistent” Q1 spend lower than Q4 level; no change to FY posture Maintained
Tavapadon Phase 3 Timing2024Under review; delay flagged in Nov-2022 TEMPO-3 mid-2024; TEMPO-1/-2 2H 2024 Clarified timing (updated)
Darigabat Epilepsy Timing2023/2024Mid-2023 target (Aug-2022) Mid-2024 Lowered (pushed out)
Emraclidine Schizophrenia Timing20241H 2024 (Aug-2022/Nov-2022) 1H 2024 affirmed Maintained

Earnings Call Themes & Trends

TopicPrevious Mentions (Q3 2022, Q4 2022)Current Period (Q1 2023)Trend
Emraclidine Phase 2 (schizophrenia)Initiated two Phase 2 trials; 1H 2024 readout; added EMPOWER-3; fast track for AD psychosis; Phase 1 elderly study planned 1H 2024 timing reaffirmed; OLE enrolling; BP monitoring de-risked; elderly Phase 1 underway Stable execution, de-risked tolerability
Darigabat (epilepsy & panic)REALIZE data target mid-2023; panic Phase 2 planned REALIZE data mid-2024; panic Phase 2 to initiate Q2 2023 Slower enrollment; timeline pushed
Tavapadon (Parkinson’s Phase 3)Delays expected due to residual post-COVID; timeline under review Adjunct TEMPO-3 mid-2024; monotherapy TEMPO-1/-2 2H 2024 Timelines clarified, extended
Cash runway/financing$1.03B (Q3); $950M (Q4) runway into 2025 $863M (Q1) with additional $31.3M in Apr; runway into 2025 Strong but trending lower with spend
Macro/enrollment headwindsPost-COVID impacts noted Enrollment mitigations continue (discussed on call) Persistent headwind
Leadership—CEO transition to Ron Renaud effective June 12, 2023 Potential strategic/operational catalyst

Management Commentary

  • “Cerevel has the pipeline, the people, and the capital needed to make a meaningful difference… starting with the seven expected data readouts coming in 2024.” — Ron Renaud (press release) .
  • “Emraclidine does not induce an increase in blood pressure with chronic dosing…” — De-risking nonclinical/clinical pharmacology steps ahead of registrational path .
  • On REALIZE and enrollment mitigations: management acknowledged headwinds and committed to execution while preserving data quality (earnings call) .

Q&A Highlights

  • Enrollment and timeline clarifications: reiterated REALIZE mid-2024 and TEMPO timing; discussed mitigations to address enrollment headwinds (operator-led Q&A; multiple analysts) .
  • Perceptive SEC filing reference: management stated there were “no strategic transaction conversations underway,” addressing investor questions (transcript) .
  • Placebo response and EMPOWER-3: clinical considerations were discussed to manage trial design risks (transcript) .

Estimates Context

  • S&P Global Wall Street consensus was unavailable via our S&P tool for CERE in Q1 2023; we attempted retrieval but mapping was missing.
  • External reporting indicated GAAP EPS at $(0.67) was in line with Street estimates of $(0.67) .
  • Given runway and program timing updates, Street models may shift expense phasing into 2024 with limited near-term P&L relief (no revenue).

Key Takeaways for Investors

  • Execution focus: Emraclidine remains on-track for 1H 2024 with key tolerability de-risking; readouts in 2024 form the core value-creation window .
  • Timelines normalized: Darigabat and tavapadon program timelines pushed to 2024; headwinds are acknowledged and managed; reduces near-term catalysts while concentrating 2024/2025 events .
  • Balance sheet supports strategy: $863M quarter-end cash/marketable securities plus April funding, runway into 2025; dilution risk moderated near-term .
  • Leadership catalyst: CEO transition to Renaud with operator/scientist/financier experience may sharpen execution ahead of dense 2024 readouts .
  • Model implications: Higher R&D run-rate and pushed timelines suggest near-term losses persist; valuation will hinge on 2024 clinical outcomes rather than quarterly financials .
  • Watch list: Enrollment cadence, EMPOWER schizophrenia data quality (placebo response and safety), REALIZE efficacy signals, and TEMPO Phase 3 execution.
  • Strategic optionality: Advancing programs with strong balance sheet could support partnering or strategic paths post-readouts; management denies current strategic talks (as of Q1 call) .

Citations: Q1 2023 press release and 8-K ; Q1 2023 10-Q ; Q4 2022 press release and 8-K ; Q3 2022 press release and 8-K . Transcript sources: Seeking Alpha and Insider Monkey . EPS consensus (non-S&P): .