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, 2023

OR

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

 

Nasdaq Global Market

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 November 3, 2023, the registrant had 22,194,307 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’ Equity (Deficit)

6

 

Condensed Consolidated Statements of Cash Flows

7

 

Notes to the Condensed Consolidated Financial Statements

8

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

20

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

31

Item 4.

Controls and Procedures

31

 

 

 

PART II.

OTHER INFORMATION

34

 

 

 

Item 1.

Legal Proceedings

34

Item 1A.

Risk Factors

35

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

82

Item 3.

Defaults Upon Senior Securities

82

Item 4.

Mine Safety Disclosures

82

Item 5.

Other Information

82

Item 6.

Exhibits

83

 

 

 

Signatures

84

 

 

 

i


 

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, ACR-2316, 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, ACR-2316, and any other drug candidates for any indication;
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, ACR-2316, 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 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

1


 

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.

2


 

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 are a clinical stage biopharmaceutical company and 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.
Our business substantially depends upon the successful clinical development of drug candidates using our AP3 platform and OncoSignature, or 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.
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, ACR-2316, or any other drug candidate.
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 operations and 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.
Current and future legislation may increase the difficulty and cost for us, and any collaborators, to obtain marketing approval or licensure of and commercialize our drug candidates and affect the prices we, or they, may obtain.
Even if we are able to commercialize any drug candidates, the products may become subject to unfavorable pricing regulations, third-party reimbursement practices or healthcare reform initiatives, which would harm our business.
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 precision 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.

3


 

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,
2023

 

 

December 31,
2022

 

Assets

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

29,859

 

 

$

29,519

 

Short-term investments

 

 

112,231

 

 

 

98,232

 

Prepaid expenses and other current assets

 

 

2,402

 

 

 

4,344

 

Total current assets

 

 

144,492

 

 

 

132,095

 

Property and equipment, net

 

 

2,003

 

 

 

2,092

 

Operating lease right-of-use assets

 

 

4,186

 

 

 

4,770

 

Long-term investments

 

 

 

 

 

41,881

 

Restricted cash

 

 

411

 

 

 

388

 

Total assets

 

$

151,092

 

 

$

181,226

 

Liabilities and stockholders’ equity

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Accounts payable

 

$

1,504

 

 

$

904

 

Accrued expenses and other current liabilities

 

 

7,019

 

 

 

4,886

 

Operating lease liabilities, current

 

 

776

 

 

 

726

 

Total current liabilities

 

 

9,299

 

 

 

6,516

 

Operating lease liabilities, long-term

 

 

3,644

 

 

 

4,235

 

Total liabilities

 

 

12,943

 

 

 

10,751

 

Commitments and contingencies (Note 12)

 

 

 

 

 

 

Stockholders’ equity:

 

 

 

 

 

 

Preferred stock, $0.001 par value; 10,000,000 shares authorized as of September 30,
   2023 and December 31, 2022;
0 shares issued and outstanding as of September 30,
   2023 and December 31, 2022.

 

 

 

 

 

 

Common stock, par value $0.001; 500,000,000 shares authorized as of September 30,
   2023 and December 31, 2022;
22,104,469 and 21,920,402 shares issued and
   outstanding as of September 30, 2023 and December 31, 2022, respectively.

 

 

22

 

 

 

22

 

Additional paid-in capital

 

 

235,597

 

 

 

226,580

 

Accumulated other comprehensive loss

 

 

(302

)

 

 

(95

)

Accumulated deficit

 

 

(97,168

)

 

 

(56,032

)

Total stockholders’ equity

 

 

138,149

 

 

 

170,475

 

Total liabilities and stockholders’ equity

 

$

151,092

 

 

$

181,226

 

 

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

4


 

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,

 

 

2023

 

 

2022

 

 

2023

 

 

2022

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

Research and development

 

$

10,267

 

 

$

7,942

 

 

$

30,546

 

 

$

18,087

 

General and administrative

 

 

5,870

 

 

 

1,633

 

 

 

15,504

 

 

 

4,625

 

Total operating expenses

 

 

16,137

 

 

 

9,575

 

 

 

46,050

 

 

 

22,712

 

Loss from operations

 

 

(16,137

)

 

 

(9,575

)

 

 

(46,050

)

 

 

(22,712

)

Other income (expense):

 

 

 

 

 

 

 

 

 

 

 

 

Other income, net

 

 

1,671

 

 

 

377

 

 

 

4,914

 

 

 

474

 

Total other income, net

 

 

1,671

 

 

 

377

 

 

 

4,914

 

 

 

474

 

Net loss

 

$

(14,466

)

 

$

(9,198

)

 

$

(41,136

)

 

$

(22,238

)

Net loss per share—basic and diluted

 

$

(0.66

)

 

$

(5.17

)

 

$

(1.87

)

 

$

(12.55

)

Weighted-average common stock outstanding—basic and diluted

 

 

22,081,162

 

 

 

1,778,255

 

 

 

21,991,509

 

 

 

1,772,491

 

Comprehensive loss:

 

 

 

 

 

 

 

 

 

 

 

 

Net loss

 

$

(14,466

)

 

$

(9,198

)

 

$

(41,136

)

 

$

(22,238

)

Other comprehensive loss:

 

 

 

 

 

 

 

 

 

 

 

 

Unrealized gain (loss) on available-for-sale investments, net of tax

 

 

125

 

 

 

(133

)

 

 

(207

)

 

 

(133

)

Comprehensive loss

 

$

(14,341

)

 

$

(9,331

)

 

$

(41,343

)

 

$

(22,371

)

 

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

5


 

ACRIVON THERAPEUTICS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ EQUITY (DEFICIT)

(UNAUDITED)

(in thousands, except share data)

 

 

Common Stock

 

 

 

 

 

 

 

 

 

 

 

 

Shares

 

 

Amount

 

 

 

Additional
Paid-In
Capital

 

 

Accumulated Other Comprehensive Gain (Loss)

 

 

Accumulated
Deficit

 

 

Total
Stockholders’
Equity

 

Balance at December 31, 2022

 

 

21,920,402

 

 

$

22

 

 

 

$

226,580

 

 

$

(95

)

 

$

(56,032

)

 

$

170,475

 

Exercise of common stock options

 

 

232

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock-based compensation expense

 

 

 

 

 

 

 

 

 

2,646

 

 

 

 

 

 

 

 

 

2,646

 

Unrealized gain on available-for-sale investments, net of tax

 

 

 

 

 

 

 

 

 

 

 

 

104

 

 

 

 

 

 

104

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(12,756

)

 

 

(12,756

)

Balance at March 31, 2023

 

 

21,920,634

 

 

$

22

 

 

 

$

229,226

 

 

$

9

 

 

$

(68,788

)

 

$

160,469

 

Exercise of common stock options

 

 

148,026

 

 

 

 

 

 

 

379

 

 

 

 

 

 

 

 

 

379

 

Stock-based compensation expense

 

 

 

 

 

 

 

 

 

2,686

 

 

 

 

 

 

 

 

 

2,686

 

Unrealized loss on available-for-sale investments, net of tax

 

 

 

 

 

 

 

 

 

 

 

 

(436

)

 

 

 

 

 

(436

)

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(13,914

)

 

 

(13,914

)

Balance at June 30, 2023

 

 

22,068,660

 

 

$

22

 

 

 

$

232,291

 

 

$

(427

)

 

$

(82,702

)

 

$

149,184

 

Exercise of common stock options

 

 

35,669

 

 

 

 

 

 

 

78

 

 

 

 

 

 

 

 

 

78

 

Issuance of common stock upon vesting of restricted stock units

 

 

140

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock-based compensation expense

 

 

 

 

 

 

 

 

 

3,228

 

 

 

 

 

 

 

 

 

3,228

 

Unrealized gain on available-for-sale investments, net of tax

 

 

 

 

 

 

 

 

 

 

 

 

125

 

 

 

 

 

 

125

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(14,466

)

 

 

(14,466

)

Balance at September 30, 2023

 

 

22,104,469

 

 

$

22

 

 

 

$

235,597

 

 

$

(302

)

 

$

(97,168

)

 

$

138,149

 

 

 

 

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

)

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

6


 

ACRIVON THERAPEUTICS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

(in thousands)

 

Nine Months Ended September 30,

 

 

2023

 

 

2022

 

Cash flows from operating activities:

 

 

 

 

 

 

Net loss

 

$

(41,136

)

 

$

(22,238

)

Adjustments to reconcile net loss to net cash used in operating activities:

 

 

 

 

 

 

Depreciation

 

 

387

 

 

 

239

 

Stock-based compensation expense

 

 

8,560

 

 

 

540

 

Non-cash lease expense

 

 

584

 

 

 

543

 

Net amortization of premiums and accretion of discounts on investments

 

 

(2,643

)

 

 

(182

)

Changes in operating assets and liabilities:

 

 

 

 

 

 

Prepaid expenses and other current assets

 

 

1,942

 

 

 

(1,044

)

Accounts payable

 

 

439

 

 

 

482

 

Accrued expenses and other liabilities

 

 

2,133

 

 

 

1,388

 

Operating lease liabilities

 

 

(541

)

 

 

(491

)

Net cash used in operating activities

 

 

(30,275

)

 

 

(20,763

)

Cash flows from investing activities:

 

 

 

 

 

 

Purchases of short-term and long-term investments

 

 

(39,947

)

 

 

(49,367

)

Proceeds from maturities of short-term investments

 

 

70,265

 

 

 

4,673

 

Purchases of property and equipment

 

 

(137

)

 

 

(1,915

)

Net cash provided by (used in) investing activities

 

 

30,181

 

 

 

(46,609

)

Cash flows from financing activities:

 

 

 

 

 

 

Proceeds from exercise of stock options

 

 

457

 

 

 

24

 

Payments of deferred offering costs

 

 

 

 

 

(175

)

Net cash provided by (used in) financing activities

 

 

457

 

 

 

(151

)

Net increase (decrease) in cash, cash equivalents, and restricted cash

 

 

363

 

 

 

(67,523

)

Cash, cash equivalents and restricted cash at beginning of period

 

 

29,907

 

 

 

99,991

 

Cash, cash equivalents and restricted cash at end of period

 

$

30,270

 

 

$

32,468

 

Supplemental disclosure of non-cash investing and financing activities:

 

 

 

 

 

 

Purchases of property and equipment included in accounts payable and accrued expenses

 

$

161

 

 

$

185

 

Deferred offering costs in accounts payable and accrued expenses

 

$

 

 

$

1,369

 

Reconciliation of cash, cash equivalents, and restricted cash:

 

 

 

 

 

 

Cash and cash equivalents

 

$

29,859

 

 

$

32,080

 

Restricted cash

 

411

 

 

388

 

Total cash, cash equivalents, and restricted cash

 

$

30,270

 

 

$

32,468

 

 

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

7


 

ACRIVON THERAPEUTICS, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

1. Nature of the Business

Acrivon Therapeutics, Inc., (the “Company”) is a clinical stage biopharmaceutical company developing oncology medicines that the Company matches to patients whose tumors are predicted to be sensitive to each specific medicine by utilizing its proteomics-based patient responder identification platform. The Company’s pipeline includes the Phase 2 lead program, ACR-368, referred to as prexasertib, a precision oncology asset, as well as ACR-2316, a selective, dual WEE1/PKMYT1 inhibitor, and additional programs targeting these two critical nodes in the DNA Damage Response, or DDR, pathways.

The Company was incorporated in March 2018 under the laws of the state of Delaware, and its principal offices are in Watertown, Massachusetts. Also in March 2018, the Company formed Acrivon AB, a wholly-owned subsidiary of the Company, established in Lund, Sweden. In December 2021, the Company formed Acrivon Securities Corporation, a wholly-owned subsidiary, established in Massachusetts.

Liquidity

As an emerging growth entity, the Company has devoted substantially all of its resources since inception to organizing and staffing the Company, business planning, raising capital, establishing its intellectual property portfolio, acquiring or internally discovering drug candidates, research and development activities for the Company's lead candidate ACR-368, for the Company's internally discovered development candidate ACR-2316, and other compounds, establishing arrangements with third parties for the manufacture of its drug candidates and component materials, and providing general and administrative support for these operations. As a result, the Company has incurred significant operating losses and negative cash flows from operations since its inception and anticipates such losses and negative cash flows will continue for the foreseeable future.

The Company has incurred recurring losses since its inception, including net losses of $41.1 million and $22.2 million for the nine months ended September 30, 2023, and 2022, respectively. As of September 30, 2023 and December 31, 2022 the Company had an accumulated deficit of $97.2 million and $56.0 million, respectively. To date, the Company has not generated any revenues and expects to continue generating operating losses for the foreseeable future as it continues to expand its research and development efforts.

Since its inception, the Company has funded its operations primarily with proceeds from the sales of shares of its convertible preferred stock and the issuance of convertible notes, and most recently, through an initial public offering (“IPO”) and concurrent private placement. Upon the closing of the Company’s IPO on November 17, 2022, only common stock remains issued and outstanding.

The Company expects that its existing cash, cash equivalents and investments of $142.1 million as of September 30, 2023, will be sufficient to fund its operating expenses and capital expenditure requirements for at least 12 months from the date these condensed consolidated financial statements were issued.

The Company will need additional funding to support its planned operating activities. There can be no assurances, however, that the current operating plan will be achieved or that additional funding will be available on terms acceptable to the Company, or at all, considering the current interest rate environment. If the Company is unable to obtain sufficient funding, it could be required to delay its development efforts, limit activities and reduce research and development costs, which could adversely affect its business prospects.

Initial Public Offering, Reverse Stock Split and Concurrent Private Placement

On November 17, 2022, the Company closed its IPO, pursuant to which it issued and sold 7,550,000 shares of its common stock at a public offering price of $12.50 per share for gross proceeds of $94.4 million. In connection with the IPO, the Company granted the underwriters a 30-day option to purchase 1,132,500 additional shares of common stock. On December 14, 2022, the underwriters partially exercised the option to purchase 1,035,540 additional shares. The sale pursuant to the exercise of the underwriters’ option to purchase additional shares closed on December 16, 2022, upon which the Company issued 1,035,540 shares of common stock for gross proceeds of $12.9 million. The Company received aggregate net proceeds from the IPO, including the exercise by the underwriters of their option to purchase additional shares, of $99.8 million, after deducting underwriting discounts and commissions of $7.5 million, but before deducting offering expenses payable by the Company of $3.6 million.

In connection with the IPO, the Company effected a 1-for-2.466 reverse stock split of the Company’s common stock and adjusted the ratio at which the Company’s preferred stock is convertible into common stock, the number of shares available for issuance under the 2019 Stock Incentive Plan (“2019 Plan”) and the number of options and exercise prices of options granted under the 2019 Plan as a result of the 1-for-2.466 reverse stock split. Accordingly, all common shares, stock options, and per share information presented in the

8


 

accompanying condensed consolidated financial statements and notes thereto have been adjusted, where applicable, to reflect the reverse stock split on a retroactive basis for all periods presented. The per share par value and authorized number of shares of the Company’s common stock were not adjusted as a result of the reverse stock split.

Upon the closing of the IPO, all of the Company's then-outstanding shares of convertible preferred stock converted into 11,140,262 shares of common stock at the applicable conversion ratio then in effect. Subsequent to the closing of the IPO, there were no shares of convertible preferred stock outstanding.

The Company also completed a private placement which closed concurrently with the IPO, in which the Company issued and sold 400,000 shares of its common stock at $12.50 per share to Chione Limited, an existing investor of the Company (the “Concurrent Private Placement”). The Company received aggregate net proceeds of $4.7 million from the Concurrent Private Placement, after deducting the placement agent fee.

2. Summary of Significant Accounting Policies

The significant accounting policies and estimates used in the preparation of the accompanying condensed consolidated financial statements are described in the Company’s audited consolidated financial statements for the year ended December 31, 2022 included in the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission (the “SEC”), on March 28, 2023. There have been no material changes in the Company’s significant accounting policies during the nine months ended September 30, 2023, except as noted below.

Basis of Presentation and Consolidation

The accompanying unaudited condensed consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and include the operations of Acrivon Therapeutics, Inc. and its wholly-owned subsidiaries. All intercompany accounts, transactions and balances have been eliminated in consolidation.

The condensed consolidated interim financial statements have been prepared on the same basis as the audited annual financial statements and, in the opinion of management, reflect all adjustments, which include only normal recurring adjustments necessary for the fair statement of the Company’s financial position as of September 30, 2023 and the results of its operations for the three and nine months ended September 30, 2023 and 2022 and its cash flows for the nine months ended September 30, 2023 and 2022. The condensed balance sheet as of December 31, 2022 was derived from audited annual financial statements but does not include all disclosures required by U.S. GAAP.

The results for the three and nine months ended September 30, 2023 are not necessarily indicative of results to be expected for the full year or for any other subsequent interim period.

Investments

The Company classifies all investments with an original maturity of greater than three months and less than one year upon purchase as available-for-sale. Available-for-sale securities are recorded at fair value based upon market prices at period end, with the unrealized gains and losses reported in other comprehensive loss. The amortized cost of debt securities in this category is adjusted for amortization of premiums and accretion of discounts to maturity. Such amortization is included in interest income in the consolidated statements of operations and comprehensive loss. Realized gains and losses and declines in value due to credit-related factors on available-for-sale securities are included in other income, net in the consolidated statements of operations and comprehensive loss. The cost of securities sold is based on the specific identification method. Interest and dividends on securities classified as available-for-sale are included in interest income in the consolidated statements of operation.

At each balance sheet date, the Company assesses available-for-sale debt securities in an unrealized loss position to determine whether the unrealized loss or any potential credit losses should be recognized in the consolidated statements of operations. For available-for-sale debt securities in an unrealized loss position, the Company first assesses whether it intends to sell, or it is more likely than not that it will be required to sell, the security before recovery of its amortized cost basis. If either of the criteria regarding intent or requirement to sell is met, the security’s amortized cost basis is written down to fair value through net income (loss). For available-for-sale securities that do not meet the aforementioned criteria, the Company evaluates whether the decline in fair value has resulted from credit losses or other factors. In making this assessment, the Company considers the severity of the impairment, any changes in interest rates, changes to the underlying credit ratings and forecasted recovery, among other factors. The credit-related portion of unrealized losses, and any subsequent improvements, are recorded in other income, net through an allowance account. There have been no impairment or credit losses recognized during any of the periods presented.

9


 

Recently Adopted Accounting Pronouncements

ASU 2016-13, Financial Instruments–Credit Losses

In June 2016, the FASB issued ASU 2016-13, Financial Instruments–Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments ("ASU 2016-13"), and also issued subsequent amendments to the initial guidance: ASU 2018-19, ASU 2019-04, ASU 2019-05, ASU 2020-02 and ASU 2020-03 (collectively, "Topic 326"). Topic 326 significantly changes the impairment model for most financial assets and certain other instruments. Topic 326 requires immediate recognition of estimated credit losses expected to occur over the remaining life of many financial assets, which will generally result in earlier recognition of allowances for credit losses on loans and other financial instruments. The measurement is based on relevant information, including historical experience, current conditions and reasonable and supportable forecasts that affect the collectability of the reported amount and requires disclosure requirements related to credit risks. The Company adopted this accounting standard as of January 1, 2023, with no material impact on its condensed consolidated financial statements and related disclosures.

3. Investments

The following table summarizes the amortized cost and estimated fair value of the Company's U.S. Treasury securities and U.S. government-sponsored enterprise securities, which are considered to be available-for-sale investments and were included in short-term investments as of September 30, 2023 and in short-term investments and long-term investments as of December 31, 2022 (in thousands):

 

 

 

September 30, 2023

 

 

Amortized Cost

 

 

Gross Unrealized Gains

 

 

Gross Unrealized Losses

 

 

Fair Value

 

U.S. Treasury securities

 

$

32,957

 

 

$

3

 

 

$

(47

)

 

$

32,913

 

U.S. government-sponsored enterprise securities

 

 

79,576

 

 

 

 

 

 

(258

)