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Cerevel Therapeutics Holdings, Inc. (CERE)·Q4 2022 Earnings Summary

Executive Summary

  • Cerevel reported Q4 2022 net loss per share of $0.59 and total operating expenses of $107.2M; cash, cash equivalents and marketable securities ended the year at $950.2M, extending runway into 2025 .
  • Pipeline execution advanced: emraclidine Phase 1 in healthy elderly volunteers initiated in Q4 2022 (AD psychosis); positive ambulatory blood pressure monitoring results in December 2022 de-risked cardiovascular profile; emraclidine Phase 2 schizophrenia readouts remain on track for 1H 2024 .
  • Timelines were revised: darigabat REALIZE readout pushed beyond 2023 due to slower-than-expected enrollment; tavapadon TEMPO-3 now mid-2024 and TEMPO-1/2 in 2H 2024 .
  • S&P Global consensus EPS and revenue estimates for Q4 2022 were unavailable (CIQ mapping), so beat/miss assessment versus Street could not be performed. Estimates comparisons are not included.

What Went Well and What Went Wrong

What Went Well

  • “2022 was another important year… strengthening of our balance sheet with a nearly $600 million capital raise mid-year” enabling operations into 2025 .
  • Emraclidine cardiovascular risk de-risked: 24-hour ambulatory SBP mean change at week 8 was −2.7 mmHg (10 mg QD) and −0.4 mmHg (30 mg QD); upper bound of 95% CI ruled out ≥3 mmHg increase per FDA guidance .
  • Emraclidine Phase 2 schizophrenia (EMPOWER-1/2) enrollment on track with data in 1H 2024; EMPOWER-3 safety extension continues, supporting a potential registrational package .

What Went Wrong

  • REALIZE (darigabat focal epilepsy) enrollment slowed due to residual post-COVID environment; readout delayed beyond 2023 with updated timing to be provided mid-year 2023 .
  • Tavapadon Phase 3 timelines extended: TEMPO-3 pushed to mid-2024; TEMPO-1/2 to 2H 2024 following environmental review, indicating longer path to Parkinson’s data .
  • Operating expenses rose materially: Q4 R&D $81.3M (+70% YoY) and G&A $25.9M (+56% YoY), increasing quarterly burn ahead of pivotal readouts .

Financial Results

Income Statement and EPS

MetricQ4 2021Q3 2022Q4 2022
Research & Development ($USD Millions)$47.8 $71.4 $81.3
General & Administrative ($USD Millions)$16.6 $23.7 $25.9
Total Operating Expenses ($USD Millions)$64.5 $95.1 $107.2
Net Loss ($USD Millions)$(59.1) $(99.9) $(92.8)
Net Loss per Share (basic & diluted, $USD)$(0.40) $(0.66) $(0.59)
Interest Income (Expense), Net ($USD Millions)$0.1 $2.7 $6.0
Other Income (Expense), Net ($USD Millions)$5.3 $(7.6) $8.6

Notes:

  • No product revenue was reported; loss from operations equaled total operating expenses in each period .

Liquidity

MetricQ2 2022Q3 2022Q4 2022
Cash, Cash Equivalents & Marketable Securities ($USD Millions)$531.2 $1,030.0 $950.2

Balance Sheet Highlights (Year-End)

MetricFY 2021FY 2022
Total Assets ($USD Millions)$688.9 $1,017.8
2027 Convertible Senior Notes, Net ($USD Millions)$0.0 $335.5
Total Stockholders’ Equity ($USD Millions)$578.7 $521.2

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Emraclidine Phase 2 (Schizophrenia) Readouts1H 20241H 2024 (initiated June 2022) 1H 2024 (on track) Maintained
Emraclidine ABPM Trial Results2022Results expected by YE 2022 Positive results announced Dec 19, 2022 Achieved
Emraclidine Phase 1 (Healthy Elderly, AD Psychosis)Q4 2022Initiation planned by YE 2022 Trial initiated in Q4 2022; enrollment underway Achieved
Darigabat REALIZE (Focal Epilepsy) Readout2023Mid-2023 Delayed beyond 2023; timing by mid-2023 Lowered/Delayed
Darigabat Phase 2 (Panic Disorder)2023Initiation in 2023 Initiation planned for Q2 2023 Clarified timing
Tavapadon TEMPO-3 (Adjunctive PD)Timing1H 2023 (earlier) Mid-2024 Lowered/Delayed
Tavapadon TEMPO-1/2 (Monotherapy PD)TimingUnder review 2H 2024 Lowered/Delayed
R&D ExpenseFY 2023N/AIncrease vs 2022 Raised
G&A ExpenseFY 2023N/ARelatively consistent vs Q4 2022 Maintained
Cash RunwayCorporateInto 2024 Into 2025 Raised

Earnings Call Themes & Trends

TopicPrevious Mentions (Q2 2022)Previous Mentions (Q3 2022)Current Period (Q4 2022)Trend
Emraclidine CV risk (ABPM)Ambulatory BP trial results expected YE 2022 BP trial results expected by end of year Positive ABPM results announced; no BP increase; supports schizophrenia program Improving
Schizophrenia Phase 2 timelineEMPOWER-1/2 initiated; 1H 2024 data 1H 2024 maintained; EMPOWER-3 initiated 1H 2024 on track; EMPOWER-3 ongoing Stable
Tavapadon Phase 3 timingReadouts beginning 1H 2023 Delays due to post-COVID challenges; updates forthcoming TEMPO-3 mid-2024; TEMPO-1/2 2H 2024 Delaying
Darigabat REALIZE timingMid-2023 data Mid-2023 maintained Delayed beyond 2023; timing update mid-2023 Delaying
Cash runway and financing$531M; runway into 2024 $1,030M post financing; runway into 2025 $950.2M; runway into 2025 Strengthened
Enrollment headwindsNot highlightedPost-COVID impacts cited Continued enrollment challenges (REALIZE) Persisting

Management Commentary

  • “Cerevel is progressing in its quest to become the premier neuroscience company… nearly $600 million capital raise mid-year… achieve critical milestones… supported by strong fiscal discipline” — Tony Coles, M.D., Chairman & CEO .
  • “Cerevel anticipates R&D expenses for 2023 to increase… advancement of Phase 2 emraclidine… Phase 1 elderly volunteers… Phase 2 panic disorder… incremental personnel costs…” — Company outlook statement .
  • CFO commentary reinforced fiscal discipline and pipeline investment priorities amid timeline shifts (Q4 call) .

Q&A Highlights

  • Timeline clarifications: Analysts probed the causes and extent of delays for REALIZE and TEMPO trials; management cited post-COVID enrollment challenges and environmental factors, with updated timings provided (mid-2023 for REALIZE update; 2024 for TEMPO) .
  • Emraclidine risk mitigation: Questions focused on ABPM results and their implications for the Phase 2 schizophrenia program and potential AD psychosis path; management emphasized the clean BP profile supporting chronic dosing .
  • Capital allocation and runway: Discussion on spending cadence and runway into 2025; management reiterated disciplined OpEx management and prioritization of programs with long-term value .

Estimates Context

  • S&P Global consensus EPS and revenue estimates for Q4 2022 were unavailable for CERE due to CIQ mapping constraints; as a result, we cannot assess beats/misses versus Street for this quarter. Estimates comparisons are not included.

Key Takeaways for Investors

  • Strong liquidity and extended runway: $950.2M cash, cash equivalents and marketable securities at year-end supports operations into 2025, enabling multiple late-stage readouts without near-term financing risk .
  • Emraclidine de-risking: Positive ABPM results materially reduce CV risk concerns, supporting chronic dosing and enhancing probability of technical success ahead of 1H 2024 Phase 2 readouts .
  • Timeline push-outs for tavapadon and darigabat: Parkinson’s and epilepsy programs face extended timelines (2024 for TEMPO; REALIZE beyond 2023), which may temper near-term catalysts but concentrate focus on 2024 data cycle .
  • OpEx trending upward: R&D and G&A growth supports pipeline execution; management guides higher R&D in 2023 with G&A stable vs Q4 2022, implying continued burn but within runway .
  • Management transition: President Abraham Ceesay’s departure effective March 9, 2023; responsibilities redistributed among existing team—monitor for any execution impact .
  • Near-term trading implications: Expect stock sensitivity to any updates on REALIZE enrollment and TEMPO timelines; emraclidine Phase 2 status and any interim operational milestones likely to be key narrative drivers .
  • Medium-term thesis: Emraclidine remains the central value driver with de-risked safety and clear regulatory momentum (Fast Track in AD psychosis); breadth across tavapadon and darigabat provides multiple shots on goal despite timing shifts .