Cogent Biosciences Inc

Item 1A. Risk Factors.

Except as provided below, there have been no material changes from our risk factors described in our Annual Report on Form 10-K for the year ended December 31, 2024, as filed with the SEC on February 25, 2025. The risks described below and in our Annual Report on Form 10-K are not the only risks we face. Additional risk and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition and/or operating results.

The terms of our Loan and Security Agreement require us to meet certain operating and financial covenants and place restrictions on our operating and financial flexibility. If we raise additional capital through debt financing, the terms of any new debt could further restrict our ability to operate our business.

On June 11, 2025, we entered into the Loan and Security Agreement with SLR and the lenders and guarantors party thereto. The Loan and Security Agreement provides for a Credit Facility of up to an aggregate principal amount of $400.0 million, of which a first tranche of $50.0 million was fully funded on June 11, 2025, with future tranches at our election, subject to achievement of milestones consisting of (i) a second tranche of $25.0 million subject to our announcing positive data from our pPhase 2 SUMMIT clinical trial, (ii) a third tranche of $75.0 million subject to our announcing positive data from its pPhase 3 PEAK clinical trial, (iii) a fourth tranche of $50.0 million subject to our achieving at least $85.0 million in net product revenue on a trailing six month basis on or prior to June 30, 2027, and (iv) a fifth tranche of $200.0 million subject to mutual agreement of us and SLR. In July 2025, the second tranche of $25.0 million became available following our announcement of positive top-line results from the SUMMIT clinical trial. As security for the obligations under the Loan and Security Agreement, we granted SLR, for the benefit of the lenders, a continuing security interest in substantially all of our assets and those of our guarantors, including intellectual property, subject to certain exceptions.

The Loan and Security Agreement contains a number of representations and warranties, and affirmative and restrictive covenants, including compliance with certain financial covenants, requirements as to financial reporting and insurance, and restrictions (subject to certain exceptions) on our ability to dispose of our business or property, to change our line of business, to liquidate or dissolve, to enter into any change in control transaction, to merge or consolidate with any other entity or to acquire all or substantially all the capital stock or property of another entity, to incur additional indebtedness, to incur liens on our property, to pay any dividends or other distributions on capital stock other than dividends payable solely in capital stock, to redeem capital stock, to enter into licensing agreements, to engage in transactions with affiliates, and to encumber our intellectual property. Such terms may restrict our current and future operations, particularly our ability to respond to certain changes in our business or industry, or take future actions.

The amount we may borrow under the Loan and Security Agreement is subject to the achievement of certain clinical, regulatory, and financial milestones. We may not achieve the applicable milestones and therefore may be unable to use the full amount of the Credit Facility. If we do not achieve the milestones, we may need to refinance or secure separate debt or equity financing in order to operate our business, and no assurance can be given that we will be able to renegotiate the terms of the agreement with the lender or that we will be able to secure separate debt or equity financing on favorable terms, if at all.

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We are permitted to make interest-only payments on the Credit Facility through May 2028, with principal repayments commencing on June 1, 2028, unless certain conditions are satisfied, which would allow us to defer principal payments until June 1, 2029. However, we may be required to repay the outstanding indebtedness under the Credit Facility if an event of default occurs under the Loan and Security Agreement. An event of default will occur if, among other things, we fail to make payments under the Loan and Security Agreement; we breach any of our covenants under the Loan and Security Agreement, subject to specified cure periods with respect to certain breaches; a material adverse change has occurred; we or our assets become subject to certain legal proceedings, such as bankruptcy proceedings; we are unable to pay our debts as they become due; or we default on contracts with third parties which would permit such third parties to accelerate the maturity of any indebtedness or that could have a material adverse change on us. If the debt under the Loan and Security Agreement were accelerated due to an event of default or otherwise, we may not have sufficient cash or be able to sell sufficient assets to repay this debt, which would harm our business and financial condition. If we do not have or are unable to generate sufficient cash to repay our debt obligations when they become due and payable, either upon maturity or in the event of a default, our assets could be foreclosed upon and we may not be able to obtain additional debt or equity financing on favorable terms, if at all, which may negatively impact our ability to operate and continue our business as a going concern. Moreover, regardless of a potential event of default, the debt under the Loan and Security Agreement matures and is due on June 1, 2030. As a result, we may need to refinance or secure separate financing in order to repay amounts outstanding when due, however, no assurance can be given that an extension will be granted, that we will be able to renegotiate the terms of the agreement with the lenders or that we will be able to secure separate debt or equity financing on favorable terms, if at all.

In order to service our indebtedness, we need to generate cash from our operating activities or additional equity or debt financing. Our ability to generate cash is subject, in part, to our ability to successfully execute our business strategy, as well as general economic, financial, competitive, regulatory and other factors beyond our control. We cannot assure you that our business will be able to generate sufficient cash flow from operations or that future borrowings or other financings will be available to us in an amount sufficient to enable us to service our indebtedness and fund our other liquidity needs. To the extent we are required to use cash from operations or the proceeds of any future financing to service our indebtedness instead of funding working capital, capital expenditures or other general corporate purposes, we will be less able to plan for, or react to, changes in our business, industry and in the economy generally. This may place us at a competitive disadvantage compared to our competitors that have less indebtedness.

Item 2. Recent Sales of Unregistered Securities and Use of Proceeds

None.