Finch Therapeutics Group, Inc. (FNCH)·Q4 2022 Earnings Summary

Executive Summary

• Reported Q4 2022 collaboration revenue of $0.008M, net loss of $27.0M, and diluted EPS of $(0.56); cash and cash equivalents were $71.0M at quarter-end .
• Management extended cash runway guidance to 2025 following significant cost reductions, facility subleases, and debt repayment .
• Strategic pivot underway: PRISM4 (CP101, recurrent CDI) was discontinued on Jan 24, 2023; focus shifted to realizing value from IP estate and assets via partnerships and litigation progress (claim construction order largely in Finch’s favor) .
• Key near-term catalysts: litigation against Ferring/Rebiotix (trial scheduled May 2024) and monetization of biorepository and licensing opportunities; debt facility ($16.2M) repaid and Hood Park fully subleased into H2 2025 .

What Went Well and What Went Wrong

What Went Well

• Cash runway extended into 2025 with aggressive cost actions and subleases; “significantly decreased costs by reducing vendor and employee expenses, extending our expected cash runway into 2025” .
• Balance sheet de-risked: $16.2M Hercules debt facility repaid in January 2023; Hood Park fully subleased into H2 2025 .
• Litigation momentum: Court adopted Finch’s proposed definitions for 7 of 8 claim terms; indefiniteness arguments denied without prejudice—seen internally as a “significant inflection point” .

Selected quote: “We believe that Finch has made significant progress towards restructuring the business to maximize value for shareholders… extending our expected cash runway into 2025” — CEO Mark Smith .

What Went Wrong

• Revenue collapse across 2H22 after Takeda collaboration changes/termination; Q3 revenue fell to $0.138M and Q4 to $0.008M .
• Larger losses and higher G&A/R&D driven by impairments and facility costs; Q4 included a $6.9M non-cash partial impairment of the Hood Park lease ROU asset (allocated $5.0M to R&D, $1.9M to G&A) .
• PRISM4 discontinuation and ~95% workforce reduction in January 2023 due to funding/partnership outlook and slower-than-anticipated enrollment—effectively removing the near-term CP101 Phase 3 catalyst .

Financial Results

P&L and Cash: Q2 2022 → Q3 2022 → Q4 2022

Notes:

• Q3 net loss included $18.1M goodwill impairment and sharp revenue decline tied to Takeda termination; restructuring expense rose .
• Q4 included $6.9M partial impairment of a right-of-use lease asset (Hood Park) and higher R&D/G&A, with negligible revenue .

Segment breakdown and traditional margins not meaningful given minimal revenue base; company does not report segment detail or gross margin in releases .

Guidance Changes

Earnings Call Themes & Trends

(No Q4 2022 call transcript was found despite targeted searches; narrative compiled from primary press releases.)

Management Commentary

• “We believe that Finch has made significant progress towards restructuring the business to maximize value for shareholders… extending our expected cash runway into 2025.” — Mark Smith, CEO .
• “Patient dosing now underway in our PRISM4 Phase 3 trial… evaluating possible modifications… such as a reduction in the size of the randomized portion.” — Mark Smith (Q3) .
• “Discontinue the PRISM4 Phase 3 trial of CP101… focus on realizing the value of its intellectual property estate and other assets.” — Jan 24, 2023 press release .

Q&A Highlights

No Q4 2022 earnings call transcript was available; management provided updates via press releases. Clarifications included: no treatment-related SAEs reported in PRISM4 prior to discontinuation; database lock and site close-outs completed .

Estimates Context

We attempted to retrieve Wall Street consensus (EPS and revenue) for Q2–Q4 2022 via S&P Global; estimates were unavailable due to data access limits, so an estimates comparison could not be provided at this time. Values retrieved from S&P Global.*

Where relevant, qualitative beats/misses cannot be assessed without consensus benchmarks.

Key Takeaways for Investors

• Liquidity runway improved into 2025 through restructuring, subleases, and debt repayment, reducing near-term financing risk .
• The discontinuation of PRISM4 removes a key late-stage clinical catalyst; the strategic focus shifts to monetizing IP (including >70 issued patents) and assets via partnerships/licensing and litigation outcomes .
• Revenue visibility is minimal post-Takeda termination; 2H22 revenue declines underscore the pivot away from collaboration-driven top line .
• Operating expenses remain sensitive to facility and impairment decisions; the Hood Park ROU asset impairment materially impacted Q4 R&D/G&A .
• Legal developments (claim construction largely favorable) and subleased facilities into H2 2025 could serve as catalysts and support cash preservation .
• Short-term trading: headlines around litigation milestones, licensing deals, and further cost actions likely drive sentiment; absence of late-stage clinical readouts changes the stock’s risk-reward profile to event-driven IP/asset monetization .
• Medium-term thesis: execution on partnerships (e.g., UMN/Brigham collaborations), biorepository licensing, and legal resolution will determine value realization given the strategic pivot .

Appendices

Additional Q4-Relevant Corporate Updates

• Strain bank launched; biorepository available for collaborators and potential licensing .
• UMN investigator-sponsored trials (MCT-101) across IBD, oncology, ASD—covered under Finch’s exclusive license; numerous readouts anticipated (executed independently of Finch) .
• Cash estimate as of Feb 28, 2023 was ~$43.3M (preliminary, unaudited) .

Prior Quarter Highlights (for trend)

• Q3 2022: Dosing underway in PRISM4; goodwill impairment ($18.1M); runway to Q2 2024 .
• Q2 2022: Preparing PRISM4 enrollment; planned FIN-211 IND submission; runway to Q1 2024 .

Source Index

• Q4 2022 8-K and press release: .
• Q3 2022 8-K and press release: .
• Q2 2022 8-K and press release: .
• Jan 24, 2023 8-K discontinuation: .
• Sep 1, 2022 8-K business update: .
• SEC exhibit link confirming Q4 press release: .