SEC Filing - Acrivon Therapeutics, Inc.

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10-Q

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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: 001-41551

Acrivon Therapeutics, Inc.

(Exact Name of Registrant as Specified in its Charter)


Delaware	82-5125532
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
480 Arsenal Way, Suite 100 Watertown, Massachusetts	02472
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: (617) 207-8979

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 $0.001 per share

ACRV

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.


Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller reporting company	☒
		Emerging growth company	☒

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 December 9, 2022, the registrant had 20,884,862 shares of common stock, $0.001 par value per share, outstanding.

Table of Contents


		Page
	Special Note Regarding Forward-Looking Statements	1
	Summary Risk Factors	3

PART I.	FINANCIAL INFORMATION	4

Item 1.	Financial Statements (Unaudited)	4
	Condensed Consolidated Balance Sheets	4
	Condensed Consolidated Statements of Operations and Comprehensive Loss	5
	Condensed Consolidated Statements of Convertible Preferred Stock and Stockholders’ Deficit	6
	Condensed Consolidated Statements of Cash Flows	7
	Notes to Condensed Consolidated Financial Statements	8
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	21
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	33
Item 4.	Controls and Procedures	33

PART II.	OTHER INFORMATION	35

Item 1.	Legal Proceedings	35
Item 1A.	Risk Factors	35
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	82
Item 3.	Defaults Upon Senior Securities	83
Item 4.	Mine Safety Disclosures	83
Item 5.	Other Information	83
Item 6.	Exhibits	84

Signatures		85

Special Note Regarding Forward-Looking Statements

This Quarterly Report on Form 10-Q, or the Quarterly Report, contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 about us and our industry that involve substantial risks and uncertainties. All statements other than statements of historical facts contained in this Quarterly Report, including statements regarding our future results of operations or financial condition, business strategy and plans and objectives of management for future operations, are forward-looking statements. In some cases, you can identify forward-looking statements because they contain words such as “anticipate,” “believe,” “contemplate,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “potential,” “predict,” “project,” “should,” “target,” “will,” or “would” or the negative of these words or other similar terms or expressions. These forward-looking statements include, but are not limited to, statements about the following:

•

the timing, progress and results of our preclinical studies and clinical trials of our drug candidates, including statements regarding the timing of initiation and completion of studies or trials and related preparatory work, the period during which the results of the trials will become available and our research and development programs;

•

the timing of any Investigational New Drug, or IND, submissions, initiation of clinical trials and timing of expected clinical results for our lead drug candidate, ACR-368, and our other future drug candidates;

•

the timing of any submission of filings for regulatory approval of, and our ability to obtain and maintain regulatory approvals for, ACR-368 and any other drug candidates for any indication;

•

the ongoing COVID-19 pandemic, including new variants of the virus, which could adversely impact our business, including our preclinical studies and clinical trials;

•

our ability to identify patients with the cancers treated by our drug candidates, and to enroll patients in trials;

•

our expectations regarding the size of the patient populations, market acceptance and opportunity for and clinical utility of our drug candidates, if approved for commercial use;

•

our manufacturing capabilities and strategy, including the scalability and commercial viability of our manufacturing methods and processes;

•

our expectations regarding the scope of any approved indication for ACR-368 or any other drug candidate;

•

our ability to successfully commercialize our drug candidates;

•

our ability to leverage our proprietary precision medicine platform, Acrivon Predictive Precision Proteomics, or AP3, to identify and develop future drug candidates;

•

our estimates of our expenses, ongoing losses, future revenue, capital requirements and our need for or ability to obtain additional funding before we can expect to generate any revenue from drug sales and the expected closing of our sale of common stock pursuant to the exercise of the underwriters’ option to purchase additional shares granted in connection with our initial public offering;

•

our ability to establish or maintain collaborations or strategic relationships;

•

our ability to identify, recruit and retain key personnel;

•

our reliance upon intellectual property licensed from third parties and our ability to obtain such licenses on commercially reasonable terms or at all;

•

our ability to protect and enforce our intellectual property position for our drug candidates, and the scope of such protection;

•

our financial performance;

•

our expected use of proceeds from our initial public offering and the concurrent private placement;

•

our competitive position and the development of and projections relating to our competitors or our industry;

•

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

•

the impact of laws and regulations; and

•

our expectations regarding the time during which we will be an emerging growth company under the JOBS Act.

You should not rely on forward-looking statements as predictions of future events. We have based the forward-looking statements contained in this Quarterly Report primarily on our current expectations and projections about future events and trends that we believe may affect our business, financial condition, and results of operations. The outcome of the events described in these forward-looking

statements is subject to risks and uncertainties, including the factors described in “Part II, Item 1A. Risk Factors” and elsewhere in this Quarterly Report. Moreover, we operate in a very competitive and rapidly changing environment. New risks and uncertainties emerge from time to time, and it is not possible for us to predict all risks and uncertainties that could have an impact on the forward-looking statements contained in this Quarterly Report. The results, events, and circumstances reflected in the forward-looking statements may not be achieved or occur, and actual results, events, or circumstances could differ materially from those described in the forward-looking statements.

In addition, statements that “we believe” and similar statements reflect our beliefs and opinions on the relevant subject. These statements are based on information available to us as of the date of this Quarterly Report. While we believe that such information provides a reasonable basis for these statements, that information may be limited or incomplete. Our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all relevant information. These statements are inherently uncertain, and investors are cautioned not to unduly rely on these statements.

The forward-looking statements contained in this Quarterly Report relate only to events as of the date on which the statements are made. We undertake no obligation to update any forward-looking statements made in this Quarterly Report or to reflect new information or the occurrence of unanticipated events, except as required by law. We may not actually achieve the plans, intentions or expectations disclosed in or expressed by, and you should not place undue reliance on, our forward-looking statements. Our forward-looking statements do not reflect the potential impact of any future acquisitions, mergers, dispositions, joint ventures, or investments.

Unless the context otherwise requires, all references in this Quarterly Report to “we,” “us,” “our,” “our company,” and “Acrivon” refer to Acrivon Therapeutics, Inc. and its subsidiaries.

Summary Risk Factors

Investing in our common stock involves a high degree of risk because our business is subject to numerous risks and uncertainties, as more fully described in “Part II, Item 1A. Risk Factors” of this Quarterly Report on Form 10-Q. Below are some of these risks, any one of which could materially adversely affect our business, financial condition, results of operations, and prospects:

•

We have incurred significant losses since our inception. We expect to incur losses over the next several years and may never achieve or maintain profitability.

•

We have a limited operating history and no history of commercializing products, which may make it difficult for an investor to evaluate the success of our business to date and to assess our future viability.

•

We will need additional funding to meet our financial obligations and to pursue our business objectives. If we are unable to raise capital when needed, we could be forced to curtail our planned longer-term operations and the pursuit of our growth strategy.

•

We are highly dependent on the success of ACR-368 as this is our first drug candidate being developed for clinical development and regulatory approval. We may never obtain approval for ACR-368 or any other drug candidate.

•

Our business substantially depends upon the successful clinical development of drug candidates using our AP3 platform and OncoSignature companion diagnostics. If we are unable to obtain regulatory approval for, and successfully commercialize, drugs developed through the application of our AP3 platform and OncoSignature tests, our business may be materially harmed.

•

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

•

The successful clinical development of our drug candidates depends on the co-approval of the OncoSignature test as a companion diagnostic test. If we or our companion diagnostic collaborator are unable to obtain regulatory approval for our OncoSignature companion diagnostic tests for our drug candidates, we may not obtain regulatory approval and realize the commercial potential of our drug candidates.

•

Our relationships with customers, healthcare providers, including physicians, and third-party payors are subject, directly or indirectly, to federal and state healthcare fraud and abuse laws, false claims laws, health information privacy and security laws and other healthcare laws and regulations. If we are unable to comply, or have not fully complied, with such laws, we could face substantial penalties.

•

We rely, and expect to continue to rely, on third parties, including independent clinical investigators, contracted laboratories and contract research organizations, or CROs, to conduct our preclinical studies and clinical trials. If these third parties do not successfully carry out their contractual duties or meet expected deadlines, we may not be able to obtain regulatory approval for or commercialize our drug candidates and our business could be substantially harmed.

•

The targeted oncology space is competitive, which may result in others discovering, developing or commercializing products before or more successfully than we do.

•

Our future success depends on our ability to retain key executives and to attract, retain and motivate qualified personnel.

•

Our success depends in part on our ability to obtain intellectual property rights for our proprietary technologies and drug candidates, as well as our ability to protect our intellectual property. It is difficult and costly to protect our proprietary rights and technology, and we may not be able to ensure their protection.

•

We depend on intellectual property licensed from a third party and termination of this license could result in the loss of significant rights, which would harm our business.

•

We have identified material weaknesses in our internal control over financial reporting. If we are unable to remediate these material weaknesses, or if we identify additional material weaknesses in the future or otherwise fail to maintain effective internal control over financial reporting, we may not be able to accurately or timely report our financial condition or results of operations, which may adversely affect our business.

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements.

ACRIVON THERAPEUTICS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(UNAUDITED)

(in thousands, except share and per share data)


	September 30, 2022			December 31, 2021
Assets
Current assets:
Cash and cash equivalents	$	32,080		$	99,603
Investments		44,743			—
Prepaid expenses and other current assets		1,849			805
Total current assets		78,672			100,408
Property and equipment, net		2,151			290
Operating lease right-of-use assets		4,958			5,501
Restricted cash		388			388
Deferred offering costs		1,544			—
Total assets	$	87,713		$	106,587
Liabilities, convertible preferred stock and stockholders’ deficit
Current liabilities:
Accounts payable	$	1,976		$	964
Accrued expenses and other current liabilities		3,698			1,286
Operating lease liabilities, current		717			664
Total current liabilities		6,391			2,914
Operating lease liabilities, long-term		4,420			4,964
Total liabilities		10,811			7,878
Commitments and contingencies (Note 13)
Series A-1 convertible preferred stock, par value $0.001; 9,904,806 shares authorized, issued and outstanding as of September 30, 2022 and December 31, 2021; liquidation preference of $22.6 million as of September 30, 2022.		22,502			22,502
Series B convertible preferred stock, par value $0.001; 17,567,105 shares authorized, issued and outstanding as of September 30, 2022 and December 31, 2021; liquidation preference of $100.3 million as of September 30, 2022.		100,016			100,016
Stockholders’ deficit:
Common stock, par value $0.001; 40,013,683 shares authorized as of September 30, 2022 and December 31, 2021; 1,794,600 and 1,769,561 shares issued and outstanding as of September 30, 2022 and December 31, 2021, respectively.		2			2
Additional paid-in capital		1,618			1,054
Accumulated other comprehensive loss		(133	)		—
Accumulated deficit		(47,103	)		(24,865	)
Total stockholders’ deficit		(45,616	)		(23,809	)
Total liabilities, convertible preferred stock and stockholders’ deficit	$	87,713		$	106,587

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

ACRIVON THERAPEUTICS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

(UNAUDITED)

(in thousands, except share and per share data)


	Three Months Ended September 30,						Nine Months Ended September 30,
	2022			2021			2022			2021
Operating expenses:
Research and development	$	7,942		$	2,216		$	18,087		$	10,665
General and administrative		1,633			455			4,625			1,249
Total operating expenses		9,575			2,671			22,712			11,914
Loss from operations		(9,575	)		(2,671	)		(22,712	)		(11,914	)
Other income (expense):
Other income (expense), net		377			(3	)		474			38
Change in fair value of preferred stock tranche rights		—			—			—			(50	)
Change in fair value of anti-dilution right		—			234			—			26
Total other income, net		377			231			474			14
Net loss	$	(9,198	)	$	(2,440	)	$	(22,238	)	$	(11,900	)
Net loss per share—basic and diluted	$	(5.17	)	$	(1.38	)	$	(12.55	)	$	(6.86	)
Weighted-average common stock outstanding—basic and diluted		1,778,255			1,769,132			1,772,491			1,734,560
Comprehensive loss:
Net loss	$	(9,198	)	$	(2,440	)	$	(22,238	)	$	(11,900	)
Other comprehensive loss:
Unrealized loss on available-for-sale investments, net of tax		(133	)		—			(133	)		—
Comprehensive loss	$	(9,331	)	$	(2,440	)	$	(22,371	)	$	(11,900	)

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

ACRIVON THERAPEUTICS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ DEFICIT

(UNAUDITED)

(in thousands, except share and per share data)


	Convertible Preferred Stock				Common Stock
	Shares		Amount		Shares		Amount		Additional Paid-In Capital		Accumulated Other Comprehensive Loss			Accumulated Deficit			Total Stockholders’ Deficit
Balance at December 31, 2021		27,471,911	$	122,518		1,769,561	$	2	$	1,054	$	—		$	(24,865	)	$	(23,809	)
Stock-based compensation expense		—		—		—		—		40		—			—			40
Net loss		—		—		—		—		—		—			(7,220	)		(7,220	)
Balance at March 31, 2022		27,471,911	$	122,518		1,769,561	$	2	$	1,094	$	—		$	(32,085	)	$	(30,989	)
Stock-based compensation expense		—		—		—		—		233		—			—			233
Net loss		—		—		—		—		—		—			(5,820	)		(5,820	)
Balance at June 30, 2022		27,471,911	$	122,518		1,769,561	$	2	$	1,327	$	—		$	(37,905	)	$	(36,576	)
Exercise of common stock options		—		—		25,039		—		24		—			—			24
Stock-based compensation expense		—		—		—		—		267		—			—			267
Unrealized loss on available-for-sale investments, net of tax		—		—		—		—		—		(133	)		—			(133	)
Net loss		—		—		—		—		—		—			(9,198	)		(9,198	)
Balance at September 30, 2022		27,471,911	$	122,518		1,794,600	$	2	$	1,618	$	(133	)	$	(47,103	)	$	(45,616	)


	Convertible Preferred Stock				Common Stock
	Shares		Amount		Shares		Amount		Additional Paid-In Capital		Accumulated Deficit			Total Stockholders’ Deficit
Balance at December 31, 2020		4,422,350	$	9,667		1,432,480	$	1	$	208	$	(8,622	)	$	(8,413	)
Issuance of common stock related to license agreement with Eli Lilly		—		—		336,575		1		348		—			349
Issuance of Series A-1 convertible preferred stock, net of issuance costs of $33		5,321,132		12,467		—		—		—		—			—
Issuance of Series A-1 convertible preferred stock related to settlement of preferred stock tranche rights		161,324		368		—		—		—		—			—
Stock-based compensation expense		—		—		—		—		139		—			139
Net loss		—		—		—		—		—		(6,912	)		(6,912	)
Balance at March 31, 2021		9,904,806	$	22,502		1,769,055	$	2	$	695	$	(15,534	)	$	(14,837	)
Stock-based compensation expense		—		—		—		—		27		—			27
Net loss		—		—		—		—		—		(2,548	)		(2,548	)
Balance at June 30, 2021		9,904,806	$	22,502		1,769,055	$	2	$	722	$	(18,082	)	$	(17,358	)
Exercise of common stock options		—		—		506		—		1		—			1
Stock-based compensation expense		—		—		—		—		27		—			27
Net loss		—		—		—		—		—		(2,440	)		(2,440	)
Balance at September 30, 2021		9,904,806	$	22,502		1,769,561	$	2	$	750	$	(20,522	)	$	(19,770	)

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

ACRIVON THERAPEUTICS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

(in thousands)


	Nine Months Ended September 30,
	2022			2021
Cash flows from operating activities:
Net loss	$	(22,238	)	$	(11,900	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation		239			24
Stock-based compensation expense		540			193
Non-cash lease expense		543			593
Net amortization of premiums and accretion of discounts on investments		(182	)		—
License agreement paid for with common stock