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 June 30, 2024

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 August 8, 2024, the registrant had 30,972,163 shares of common stock, $0.001 par value per share, outstanding.

 

 

 

 


 

Table of Contents

 

 

 

Page

 

Special Note Regarding Forward-Looking Statements

1

 

 

 

PART I.

FINANCIAL INFORMATION

3

 

 

 

Item 1.

Financial Statements (Unaudited)

3

 

Condensed Consolidated Balance Sheets

3

 

Condensed Consolidated Statements of Operations and Comprehensive Loss

4

 

Condensed Consolidated Statements of Stockholders’ Equity

5

 

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

18

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

29

Item 4.

Controls and Procedures

29

 

 

 

PART II.

OTHER INFORMATION

30

 

 

 

Item 1.

Legal Proceedings

30

Item 1A.

Risk Factors

31

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

33

Item 3.

Defaults Upon Senior Securities

33

Item 4.

Mine Safety Disclosures

34

Item 5.

Other Information

34

Item 6.

Exhibits

35

 

 

 

Signatures

36

 

 

 

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;
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 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 I, Item 1A. Risk Factors” of our Annual Report on Form 10-K filed with the Securities and Exchange Commission, or the SEC, on March 28, 2024, “Part II, Item 1A. Risk Factors” of this Quarterly Report 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

1


 

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


 

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements.

ACRIVON THERAPEUTICS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(UNAUDITED)

(in thousands, except share and per share data)

 

 

June 30,
2024

 

 

December 31,
2023

 

Assets

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

46,006

 

 

$

36,015

 

Short-term investments

 

 

134,531

 

 

 

91,443

 

Prepaid expenses and other current assets

 

 

1,821

 

 

 

2,234

 

Total current assets

 

 

182,358

 

 

 

129,692

 

Property and equipment, net

 

 

3,467

 

 

 

3,479

 

Operating lease right-of-use assets

 

 

3,976

 

 

 

4,429

 

Long-term investments

 

 

39,895

 

 

 

 

Restricted cash

 

 

421

 

 

 

414

 

Deferred offering costs

 

 

468

 

 

 

251

 

Total assets

 

$

230,585

 

 

$

138,265

 

Liabilities and stockholders’ equity

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Accounts payable

 

$

1,261

 

 

$

5,048

 

Accrued expenses and other current liabilities

 

 

9,045

 

 

 

7,378

 

Operating lease liabilities, current

 

 

978

 

 

 

877

 

Total current liabilities

 

 

11,284

 

 

 

13,303

 

Operating lease liabilities, long-term

 

 

3,243

 

 

 

3,767

 

Total liabilities

 

 

14,527

 

 

 

17,070

 

Commitments and contingencies (Note 11)

 

 

 

 

 

 

Stockholders’ equity:

 

 

 

 

 

 

Preferred stock, $0.001 par value; 10,000,000 shares authorized as of
   June 30, 2024 and December 31, 2023;
no shares issued and outstanding
   as of June 30, 2024 and December 31, 2023.

 

 

 

 

 

 

Common stock, $0.001 par value; 500,000,000 shares authorized as of
   June 30, 2024 and December 31, 2023;
30,966,255 and 22,522,644 shares
   issued and outstanding as of June 30, 2024 and December 31, 2023,
   respectively.

 

 

31

 

 

 

23

 

Additional paid-in capital

 

 

367,750

 

 

 

237,675

 

Accumulated other comprehensive loss

 

 

(19

)

 

 

(83

)

Accumulated deficit

 

 

(151,704

)

 

 

(116,420

)

Total stockholders’ equity

 

 

216,058

 

 

 

121,195

 

Total liabilities and stockholders’ equity

 

$

230,585

 

 

$

138,265

 

 

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

3


 

ACRIVON THERAPEUTICS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

(UNAUDITED)

(in thousands, except share and per share data)

 

 

Three Months Ended June 30,

 

 

Six Months Ended June 30,

 

 

2024

 

 

2023

 

 

2024

 

 

2023

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

Research and development

 

$

15,025

 

 

$

10,521

 

 

$

26,498

 

 

$

20,279

 

General and administrative

 

 

6,412

 

 

 

4,999

 

 

 

12,607

 

 

 

9,634

 

Total operating expenses

 

 

21,437

 

 

 

15,520

 

 

 

39,105

 

 

 

29,913

 

Loss from operations

 

 

(21,437

)

 

 

(15,520

)

 

 

(39,105

)

 

 

(29,913

)

Other income (expense), net:

 

 

 

 

 

 

 

 

 

 

 

 

Interest income

 

 

2,694

 

 

 

1,770

 

 

 

4,140

 

 

 

3,577

 

Other expense, net

 

 

(55

)

 

 

(164

)

 

 

(319

)

 

 

(334

)

Total other income, net

 

 

2,639

 

 

 

1,606

 

 

 

3,821

 

 

 

3,243

 

Net loss

 

$

(18,798

)

 

$

(13,914

)

 

$

(35,284

)

 

$

(26,670

)

Net loss per share—basic and diluted

 

$

(0.52

)

 

$

(0.63

)

 

$

(1.20

)

 

$

(1.22

)

Weighted-average common stock outstanding—basic and diluted

 

 

36,132,616

 

 

 

21,971,032

 

 

 

29,361,710

 

 

 

21,945,940

 

Comprehensive loss:

 

 

 

 

 

 

 

 

 

 

 

 

Net loss

 

$

(18,798

)

 

$

(13,914

)

 

$

(35,284

)

 

$

(26,670

)

Other comprehensive income (loss):

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

51

 

 

 

(436

)

 

 

64

 

 

 

(332

)

Comprehensive loss

 

$

(18,747

)

 

$

(14,350

)

 

$

(35,220

)

 

$

(27,002

)

 

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

4


 

ACRIVON THERAPEUTICS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(UNAUDITED)

(in thousands, except share data)

 

 

Common Stock

 

 

 

 

 

 

 

 

 

 

 

Shares

 

 

Amount

 

 

Additional
Paid-In
Capital

 

 

Accumulated Other Comprehensive Income (Loss)

 

 

Accumulated
Deficit

 

 

Total
Stockholders’
Equity

 

Balance at December 31, 2023

 

 

22,522,644

 

 

$

23

 

 

$

237,675

 

 

$

(83

)

 

$

(116,420

)

 

$

121,195

 

Exercise of common stock options

 

 

20,277

 

 

 

 

 

 

79

 

 

 

 

 

 

 

 

 

79

 

Issuance of common stock upon vesting of restricted
   stock units, net of shares withheld for tax

 

 

94,618

 

 

 

 

 

 

(166

)

 

 

 

 

 

 

 

 

(166

)

Stock-based compensation expense

 

 

 

 

 

 

 

 

3,344

 

 

 

 

 

 

 

 

 

3,344

 

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

 

 

 

 

 

 

 

 

 

 

 

13

 

 

 

 

 

 

13

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(16,486

)

 

 

(16,486

)

Balance at March 31, 2024

 

 

22,637,539

 

 

$

23

 

 

$

240,932

 

 

$

(70

)

 

$

(132,906

)

 

$

107,979

 

Issuance of common stock in private placement, net of
   issuance costs of $
3,360

 

 

8,235,000

 

 

 

8

 

 

 

66,629

 

 

 

 

 

 

 

 

 

66,637

 

Issuance of pre-funded warrants in private placement, net of
   issuance costs of $
2,881

 

 

 

 

 

 

 

 

57,122

 

 

 

 

 

 

 

 

 

57,122

 

Exercise of common stock options

 

 

10,598

 

 

 

 

 

 

11

 

 

 

 

 

 

 

 

 

11

 

Issuance of common stock upon vesting of restricted stock
   units, net of shares withheld for tax

 

 

83,118

 

 

 

 

 

 

(510

)

 

 

 

 

 

 

 

 

(510

)

Stock-based compensation expense

 

 

 

 

 

 

 

 

3,566

 

 

 

 

 

 

 

 

 

3,566

 

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

 

 

 

 

 

 

 

 

 

 

 

51

 

 

 

 

 

 

51

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(18,798

)

 

 

(18,798

)

Balance at June 30, 2024

 

 

30,966,255

 

 

$

31

 

 

$

367,750

 

 

$

(19

)

 

$

(151,704

)

 

$

216,058

 

 

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

5


 

ACRIVON THERAPEUTICS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(UNAUDITED)

(in thousands, except share data)

 

 

Common Stock

 

 

 

 

 

 

 

 

 

 

 

Shares

 

 

Amount

 

 

Additional
Paid-In
Capital

 

 

Accumulated Other Comprehensive Income (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

 

 

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)

 

Six Months Ended June 30,

 

 

2024

 

 

2023

 

Cash flows from operating activities:

 

 

 

 

 

 

Net loss

 

$

(35,284

)

 

$

(26,670

)

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

 

 

 

 

 

 

Depreciation expense

 

 

452

 

 

 

254

 

Stock-based compensation expense

 

 

6,910

 

 

 

5,332

 

Non-cash lease expense

 

 

453

 

 

 

386

 

Net amortization of premiums and accretion of discounts on investments

 

 

(1,676

)

 

 

(1,901

)

Changes in operating assets and liabilities:

 

 

 

 

 

 

Prepaid expenses and other current assets

 

 

413

 

 

 

2,016

 

Accounts payable

 

 

(3,215

)

 

 

363

 

Accrued expenses and other liabilities

 

 

1,384

 

 

 

111

 

Operating lease liabilities

 

 

(423

)

 

 

(360

)

Net cash used in operating activities

 

 

(30,986

)

 

 

(20,469

)

Cash flows from investing activities:

 

 

 

 

 

 

Purchases of short-term and long-term investments

 

 

(163,167

)

 

 

(16,963

)

Proceeds from maturities of short-term investments

 

 

81,925

 

 

 

45,765

 

Purchases of property and equipment

 

 

(952

)

 

 

(137

)

Net cash (used in) provided by investing activities

 

 

(82,194

)

 

 

28,665

 

Cash flows from financing activities:

 

 

 

 

 

 

Proceeds from issuance of common stock in private placement

 

 

69,997

 

 

 

 

Proceeds from issuance of pre-funded warrants in private placement

 

 

60,003

 

 

 

 

Proceeds from exercise of stock options

 

 

90

 

 

 

379

 

Payments of offering costs

 

 

(6,236

)

 

 

 

Payments of tax withholdings related to vesting of restricted stock units

 

 

(676

)

 

 

 

Net cash provided by financing activities

 

 

123,178

 

 

 

379

 

Net increase in cash, cash equivalents, and restricted cash

 

 

9,998

 

 

 

8,575

 

Cash, cash equivalents and restricted cash at beginning of period

 

 

36,429

 

 

 

29,907

 

Cash, cash equivalents and restricted cash at end of period

 

$

46,427

 

 

$

38,482

 

Supplemental disclosure of non-cash investing and financing activities:

 

 

 

 

 

 

Purchases of property and equipment included in accounts payable

 

$

123

 

 

$

 

Offering costs in accounts payable and accrued expenses and other current
   liabilities

 

$

308

 

 

$

 

Reconciliation of cash, cash equivalents, and restricted cash:

 

 

 

 

 

 

Cash and cash equivalents

 

$

46,006

 

 

$

38,074

 

Restricted cash

 

421

 

 

408

 

Total cash, cash equivalents, and restricted cash

 

$

46,427

 

 

$

38,482

 

 

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 precision 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. Acrivon is currently advancing its lead candidate, ACR-368, (also known as prexasertib), a selective small molecule inhibitor targeting CHK1 and CHK2 in a potentially registrational Phase 2 trial across multiple tumor types. The Company has received Fast Track designation from the Food and Drug Administration (“FDA”) for the investigation of ACR-368 as monotherapy based on OncoSignature-predicted sensitivity in patients with platinum-resistant ovarian or endometrial cancer. Acrivon’s ACR-368 OncoSignature test, which has not yet obtained regulatory approval, has been extensively evaluated in preclinical studies, including in two separate, blinded, prospectively-designed studies on pretreatment tumor biopsies collected from past third-party Phase 2 trials in patients with ovarian cancer treated with ACR-368. The FDA has granted Breakthrough Device designation for the ACR-368 OncoSignature assay for the identification of ovarian cancer patients who may benefit from ACR-368 treatment. In April 2024, the Company reported initial positive clinical data from its ongoing registrational-intent Phase 2b trial of ACR-368 for patients with locally advanced or metastatic, recurrent platinum-resistant ovarian cancer or endometrial adenocarcinoma (data cut as of April 1, 2024), including a confirmed objective response rate (per RECIST 1.1) of 50% in the prospective cohort of OncoSignature-positive patients who were efficacy-evaluable. In addition to ACR-368, Acrivon is also leveraging its proprietary AP3 precision medicine platform for developing its co-crystallography-driven, internally-discovered preclinical stage pipeline programs. These include ACR-2316, a potent, selective WEE1/PKMYT1 inhibitor designed for superior single-agent activity as demonstrated in preclinical studies against benchmark inhibitors, and a cell cycle program with an undisclosed target. The Company reported in April 2024 that it is on track for Investigational New Drug filing in the third quarter of 2024, one quarter ahead of previously disclosed timelines.

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 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 $35.3 million and $26.7 million for the six months ended June 30, 2024 and 2023, respectively. As of June 30, 2024 and December 31, 2023 the Company had an accumulated deficit of $151.7 million and $116.4 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, the issuance of convertible notes, and 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. On April 8, 2024, the Company entered into a Private Investment in Public Equity (“PIPE”) securities purchase agreement (the “PIPE Purchase Agreement”) for a private placement with certain institutional and accredited investors (the “April 2024 Private Placement”). Pursuant to the PIPE Purchase Agreement, the Company agreed to issue and sell to the PIPE investors an aggregate of (i) 8,235,000 shares of the Company’s common stock at a purchase price of $8.50 per share, and (ii) pre-funded warrants (“Pre-Funded Warrants”) to purchase up to an aggregate of 7,060,000 shares of the Company’s common stock at a purchase price of $8.499 per Pre-Funded Warrant, which represents the per share purchase price of the Company’s common stock less the $0.001 per share exercise price for each Pre-Funded Warrant. The Pre-Funded Warrants are exercisable at any time after the date of issuance and do not expire. The April 2024 Private Placement closed on April 11, 2024, for aggregate net proceeds of $123.8 million, after deducting fees and expenses of $6.2 million. The April 2024 Private Placement is further described in Note 8.

8


 

The Company expects that its existing cash, cash equivalents and investments of $220.4 million as of June 30, 2024, will be sufficient to fund its operating expenses and capital expenditure requirements into the second half of 2026, which is 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.

 

ATM Program

On December 1, 2023, the Company filed a registration statement on Form S-3 (the “Registration Statement”) with the U.S. Securities and Exchange Commission (the “SEC”), which was declared effective on December 15, 2023, which registered the offering, issuance, and sale of up to a maximum aggregate offering price of $300.0 million of common stock, preferred stock, debt securities, warrants and/or units of any combination thereof. The Company simultaneously entered into a sales agreement with Cowen and Company, LLC, as sales agent, to provide for the issuance and sale by the Company of up to $100.0 million of common stock from time to time in “at-the-market” offerings under the Registration Statement and related prospectus (“ATM Program”). As of June 30, 2024, no sales had been made pursuant to the ATM Program.

2. Summary of Significant Accounting Policies

The significant accounting policies and estimates used in the preparation of the accompanying unaudited condensed consolidated financial statements are described in the Company’s audited consolidated financial statements for the year ended December 31, 2023 included in the Company’s Annual Report on Form 10-K filed with the SEC on March 28, 2024. There have been no material changes in the Company’s significant accounting policies during the six months ended June 30, 2024, except as noted below.

Pre-Funded Warrants

Warrants are accounted for based on the specific terms of the warrant agreements. The Company's pre-funded warrants are indexed to the Company's common stock and meet the criteria to be classified as equity. Proceeds from the issuance of pre-funded warrants are recorded within additional paid-in capital and are not subject to remeasurement. Refer to Note 8 and Note 10 for further information regarding pre-funded warrants issued by the Company.

Unaudited Interim Financial Information

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 accompanying condensed consolidated interim financial statements are unaudited but 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 June 30, 2024 and the results of its operations for the three and six months ended June 30, 2024 and 2023 and its cash flows for the six months ended June 30, 2024 and 2023. The consolidated balance sheet as of December 31, 2023 was derived from audited annual financial statements but does not include all disclosures required by U.S. GAAP.

The results for the three and six months ended June 30, 2024 are not necessarily indicative of results to be expected for the full year or for any other subsequent interim period.

Recently Adopted Accounting Pronouncements

ASU 2023-07, Segment Reporting (Topic 280)

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, which requires public entities to disclose information about their reportable segments’ significant expenses on an interim and annual basis. All disclosure requirements under ASU 2023-07 are also required for public entities with a single reportable segment. The ASU is effective for annual periods beginning after December 15, 2023 and for interim periods within fiscal years beginning after December 15, 2024. The Company adopted this accounting standard as of January 1, 2024, with no material impact on its condensed consolidated financial statements and related disclosures.

9


 

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 and long-term investments as of June 30, 2024 and in short-term investments as of December 31, 2023 (in thousands):

 

 

 

June 30, 2024

 

Short-term investments:

 

Amortized Cost

 

 

Gross Unrealized Gains

 

 

Gross Unrealized Losses

 

 

Fair Value

 

U.S. Treasury securities

 

$

134,588

 

 

$

3

 

 

$

(60

)

 

$

134,531

 

Long-term investments:

 

 

 

 

 

 

 

 

 

 

 

 

U.S. Treasury securities

 

 

39,857

 

 

 

38

 

 

 

 

 

 

39,895

 

 

$

174,445

 

 

$

41

 

 

$

(60

)

 

$

174,426

 

 

 

 

December 31, 2023

 

 

Amortized Cost

 

 

Gross Unrealized Gains

 

 

Gross Unrealized Losses

 

 

Fair Value

 

Short-term investments:

 

 

 

 

 

 

 

 

 

 

 

 

U.S. Treasury securities

 

$

41,470

 

 

$

22

 

 

$

(19

)

 

$

41,473

 

U.S. government-sponsored enterprise securities

 

 

50,056

 

 

 

 

 

 

(86

)

 

 

49,970

 

 

$

91,526

 

 

$

22

 

 

$

(105

)

 

$

91,443

 

 

Certain short-term debt securities with original maturities of less than 90 days are included in cash and cash equivalents on the condensed consolidated balance sheets and are not included in the tables above. As of June 30, 2024 and December 31, 2023, all short-term investments had contractual maturities within one year. As of June 30, 2024, all long-term investments had contractual maturities between one to two years.

The aggregate fair value of available-for-sale securities held by the Company in an unrealized loss position for less than 12 months as of June 30, 2024 was $119.9 million. There were no available-for-sale securities in a continuous unrealized loss position for greater than 12 months. The Company evaluated its securities for potential impairment and considered the decline in market value to be primarily attributable to current economic and market conditions. Additionally, the Company does not intend to sell the investments in an unrealized loss position and does not expect it will be required to sell the investments before recovery of their amortized cost bases, which may be maturity. Given the Company's intent and ability to hold such investments until recovery, and the lack of a significant change in credit risk for these investments, the Company does not consider these investments to be impaired and there are no allowances for credit losses as of June 30, 2024.

4. Fair Value Measurement

The following tables present information about the Company’s financial assets measured at fair value on a recurring basis and indicate the level of the fair value hierarchy to determine such fair value (in thousands):

 

 

 

 

Fair Value Measurements at June 30, 2024 Using:

 

Assets:

 

Total

 

 

Level 1

 

 

Level 2

 

 

Level 3

 

Cash equivalents:

 

 

 

 

 

 

 

 

 

 

 

 

Money market funds

 

$

36,885

 

 

$

36,885

 

 

$

 

 

$

 

Short-term investments:

 

 

 

 

 

 

 

 

 

 

 

 

U.S. Treasury securities

 

 

134,531

 

 

 

134,531

 

 

 

 

 

 

 

Long-term investments:

 

 

 

 

 

 

 

 

 

 

 

 

U.S. Treasury securities

 

 

39,895

 

 

 

39,895

 

 

 

 

 

 

 

Total assets

 

$

211,311

 

 

$

211,311

 

 

$

 

 

$

 

 

10


 

 

 

 

 

 

Fair Value Measurements at December 31, 2023 Using:

 

Assets:

 

Total

 

 

Level 1

 

 

Level 2

 

 

Level 3

 

Cash equivalents:

 

 

 

 

 

 

 

 

 

 

 

 

Money market funds

 

$

31,191

 

 

$

31,191

 

 

$

 

 

$

 

Short-term investments:

 

 

 

 

 

 

 

 

 

 

 

 

U.S. Treasury securities

 

 

41,473

 

 

 

41,473

 

 

 

 

 

 

 

U.S. government-sponsored enterprise securities

 

 

49,970

 

 

 

 

 

 

49,970

 

 

 

 

Total assets

 

$

122,634

 

 

$

72,664

 

 

$

49,970

 

 

$

 

 

The Company classifies its money market funds and U.S. Treasury securities as Level 1 assets under the fair value hierarchy as these assets have been valued using quoted market prices in active markets without any valuation adjustment. The Company classifies its U.S. government-sponsored enterprise securities as Level 2 assets under the fair value hierarchy as these assets have been valued using information obtained through a third-party pricing service as of the balance sheet date, using observable market inputs that may include trade information, broker or dealer quotes, bids, offers, or a combination of these data sources.

During the six months ended June 30, 2024 and the year ended December 31, 2023, there were no transfers between levels. The Company uses the carrying amounts of its restricted cash, prepaid expenses and other current assets, accounts payable, and accrued expenses and other current liabilities to approximate their fair values due to the short-term nature of these amounts.

5. Property and Equipment, net

Property and equipment, net consisted of the following (in thousands):

 

 

 

June 30,
2024

 

 

December 31,
2023

 

Laboratory and computer equipment

 

$

4,584

 

 

$

2,955

 

Furniture and fixtures

 

 

172

 

 

 

172

 

Construction in progress

 

 

119

 

 

 

1,308

 

Total property and equipment

 

 

4,875

 

 

 

4,435

 

Less: accumulated depreciation

 

 

(1,408

)

 

 

(956

)

Total property and equipment, net

 

$

3,467

 

 

$

3,479

 

 

Depreciation expense related to property and equipment for the three months ended June 30, 2024 and 2023 was $0.2 million and $0.1 million, respectively. Depreciation expense related to property and equipment for the six months ended June 30, 2024 and 2023 was $0.5 million and $0.3 million, respectively.

6. Accrued Expenses and Other Current Liabilities

Accrued expenses and other current liabilities consisted of the following (in thousands):

 

 

June 30,
2024

 

 

December 31,
2023

 

Accrued research and development expenses

 

$

5,069

 

 

$

2,661

 

Accrued compensation and benefits

 

 

2,947

 

 

 

3,860

 

Accrued legal, accounting and other professional fees

 

 

600

 

 

 

667

 

Accrued offering costs

 

 

283

 

 

 

 

Accrued other

 

 

146

 

 

 

190

 

Total accrued expenses and other current liabilities

 

$

9,045

 

 

$

7,378

 

 

7. Leases

In December 2020, the Company entered into a lease agreement for laboratory and office space located at 480 Arsenal Way, Watertown, Massachusetts (the “Arsenal Way Lease”). The lease commenced in April 2021, with a term of seven years and an option to extend the term for an additional five years. The Company delivered a letter of credit of $0.3 million to the landlord, which is included in restricted cash in the accompanying condensed consolidated balance sheets. Under the terms of the lease, the base rent is $1.0 million, subject to a 3% annual rent increase, plus an allocation of operating expenses and taxes. In May 2021, the Company subleased a portion of its Arsenal Way Lease to a subtenant. The sublease term expired in March 2023.

11


 

In August 2023, the Company entered into an operating lease agreement, denominated in Swedish Krona, for office and laboratory space located in Lund, Sweden. The term of the lease commenced in December 2023. The lease has an initial term of three years, with an option to extend the term for an additional three years.

The following table summarizes the presentation of the Company’s operating leases on its condensed consolidated balance sheets (in thousands):

Leases

 

Balance sheet classification

 

June 30,
2024

 

 

December 31,
2023

 

Assets:

 

 

 

 

 

 

 

 

Operating lease assets

 

Operating lease right-of-use assets

 

$

3,976

 

 

$

4,429

 

Total lease assets

 

 

 

$

3,976

 

 

$

4,429

 

Liabilities:

 

 

 

 

 

 

 

 

Current:

 

 

 

 

 

 

 

 

Operating lease liabilities

 

Operating lease liability, current

 

$

978

 

 

$

877

 

Noncurrent:

 

 

 

 

 

 

 

 

Operating lease liabilities

 

Operating lease liability, long-term

 

 

3,243

 

 

 

3,767

 

Total lease liabilities

 

 

 

$

4,221

 

 

$

4,644

 

 

The components of lease cost under ASC 842 included within research and development expenses and general and administrative expenses in the Company’s condensed consolidated statements of operations and comprehensive loss were as follows (in thousands):

 

 

 

Three Months Ended June 30,

 

 

Six Months Ended June 30,

 

Lease cost

 

2024

 

 

2023

 

 

2024

 

 

2023

 

Operating lease cost

 

$

317

 

 

$

286

 

 

$

634

 

 

$

572

 

Variable lease cost

 

 

170

 

 

 

152

 

 

 

299

 

 

 

248

 

Sublease income

 

 

 

 

 

 

 

 

 

 

 

(134

)

Total lease cost

 

$

487

 

 

$

438

 

 

$

933

 

 

$

686

 

 

As of June 30, 2024 and December 31, 2023, the weighted-average remaining lease term for operating leases was 3.7 years and 4.2 years, respectively, and the weighted-average discount rate was 8.29% and 8.30%, respectively. Cash paid for amounts included in the measurement of lease liabilities was $0.6 million and $0.5 million for the six months ended June 30, 2024 and 2023, respectively.

Future minimum annual lease commitments under the Company’s non-cancelable operating leases as of June 30, 2024 were as follows (in thousands):

Fiscal Year

 

Amount

 

2024 (remaining 6 months)

 

$

633

 

2025

 

 

1,306

 

2026

 

 

1,340

 

2027

 

 

1,200

 

2028

 

 

404

 

Thereafter

 

 

 

Total lease payments

 

 

4,883

 

Less: interest

 

 

(662

)

Present value of operating lease liabilities

 

$

4,221

 

 

8. Stockholders' Equity

Prior to the IPO, the voting, dividend and liquidation rights of the holders of the Company’s common stock were subject to and qualified by the rights, powers and preferences of the holders of the Preferred Stock as set forth above and described in the Company’s final prospectus for the IPO filed with the SEC pursuant to Rule 424(b)(4) under the Securities Act on November 16, 2022.

In October 2022, the Board approved the amended and restated certificate of incorporation, which was filed upon the closing of the IPO and which authorized the Company to issue up to 10,000,000 shares of preferred stock, with a par value of $0.001. There are no shares of preferred stock issued or outstanding as of June 30, 2024.

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As of June 30, 2024 and December 31, 2023, the Company’s Amended and Restated Certificate of Incorporation authorized the Company to issue 500,000,000 shares of common stock with a par value of $0.001.

The holders of the common stock are entitled to one vote for each share of common stock held at all meetings of stockholders (and written actions in lieu of meetings), and there are not any cumulative voting rights. The number of authorized shares of common stock may be increased or decreased by the affirmative vote of the holders of shares of capital stock of the Company; however, the issuance of common stock may be subject to the vote of the holders of one or more series of preferred stock that may be required by terms of the Amended and Restated Certificate of Incorporation.

PIPE Securities Purchase Agreement

On April 8, 2024, the Company entered into the PIPE Purchase Agreement for a private placement with certain institutional and accredited investors. Pursuant to the PIPE Purchase Agreement, the Company agreed to issue and sell to the PIPE investors an aggregate of (i) 8,235,000 shares of the Company’s common stock at a purchase price of $8.50 per share, and (ii) Pre-Funded Warrants to purchase up to an aggregate of 7,060,000 shares of the Company’s common stock at a purchase price of $8.499 per Pre-Funded Warrant, which represents the per share purchase price of the Company’s common stock less the $0.001 per share exercise price for each Pre-Funded Warrant. The Pre-Funded Warrants are exercisable at any time after the date of issuance and do not expire.

The holders of Pre-Funded Warrants may not exercise a Pre-Funded Warrant if the holder, together with its affiliates, would beneficially own more than 4.99% of the number of shares of common stock outstanding immediately after giving effect to such exercise. The holders of Pre-Funded Warrants may increase or decrease such percentage by providing at least 61 days’ prior notice to the Company, but not in excess of 19.99% in the case of an increase. The Pre-Funded Warrants are indexed to the Company's common stock and were classified as a component of permanent equity in the Company's condensed consolidated balance sheet as they are freestanding financial instruments that are immediately exercisable, do not embody an obligation for the Company to repurchase its own shares and permit the holders to receive a fixed number of shares of common stock upon exercise. The April 2024 Private Placement closed on April 11, 2024, for aggregate net proceeds of $123.8 million, after deducting fees and expenses of $6.2 million. As of June 30, 2024, no Pre-Funded Warrants were exercised.

Common Stock

As of June 30, 2024 and December 31, 2023, the Company had reserved the following shares of common stock for the potential exercise of stock options, potential exercise of pre-funded warrants, vesting of restricted stock units, as well as the remaining shares available for issuance under the 2022 Stock Option Incentive Plan (the “2022 Plan”), the 2022 Employee Stock Purchase Plan (the “2022 ESPP”), and the 2023 Inducement Plan (the “Inducement Plan”):

 

June 30,
2024

 

 

December 31,
2023

 

Options to purchase common stock

 

 

4,356,771

 

 

 

3,117,042

 

Pre-funded warrants to purchase common stock

 

 

7,060,000

 

 

 

 

Unvested restricted stock units

 

 

1,472,741

 

 

 

1,759,918

 

Remaining shares reserved for future issuance

 

 

2,297,940

 

 

 

2,107,745

 

Total

 

 

15,187,452

 

 

 

6,984,705

 

 

9. Stock-Based Compensation

Equity Incentive Plans

In October 2022, the Board adopted, and in November 2022 its stockholders approved, the 2022 Plan, which replaced the 2019 Plan and became effective immediately prior to and contingent upon the execution of the underwriting agreement related to the Company’s IPO. The 2022 Plan allows the Company to make equity-based and cash-based incentive awards to its officers, employees, directors, and consultants and provides for the grant of incentive stock options, non-qualified stock options, stock appreciation rights, restricted stock awards, restricted stock units (“RSUs”) and other stock-based awards. In addition, the number of shares reserved and available for issuance under the 2022 Plan shall automatically increase beginning on January 1, 2023 and each January 1 thereafter, by five percent of the aggregate number of shares of common stock of all classes issued and outstanding on the immediately preceding December 31 or such lesser number of shares of common stock as determined by the compensation committee.

In October 2022, the Board adopted, and in November 2022 its stockholders approved, the 2022 ESPP, which became effective immediately prior to and contingent upon the execution of the underwriting agreement related to the Company’s IPO. The number of

13


 

shares of common stock that may be issued under the 2022 ESPP shall cumulatively increase beginning on January 1, 2023 and each January 1 thereafter through January 1, 2032, by one percent of the outstanding number of shares of common stock on the immediately preceding December 31 or such lesser number of shares as determined by the compensation committee. No shares of the Company's common stock have been issued and no stock-based compensation expense has been recognized related to the 2022 ESPP.

In June 2023, the Board adopted the Inducement Plan to facilitate the granting of equity awards as an inducement material to new employees joining the Company. The only persons eligible to receive awards under the Inducement Plan are individuals who are new employees and satisfy the standards for inducement grants under Nasdaq Listing Rule 5635(c)(4) or 5635(c)(3), as applicable. The terms of the Inducement Plan are identical to the terms of the 2022 Plan, except that no incentive stock options shall be awarded under the Inducement Plan.

Stock Options

The Company has granted stock options with service-based vesting conditions. Stock options typically vest over four years and have a maximum term of ten years. The Company typically grants stock options to employees and non-employees at exercise prices deemed by the Board to be equal to the fair value of the common stock at the time of grant.

The assumptions that the Company used in the Black-Scholes option-pricing model to determine the grant date fair value of stock options granted were as follows:

 

 

Six Months Ended June 30,

 

2024

 

2023

Risk-free interest rate range

 

3.93% - 4.57%

 

3.40% - 4.28%

Dividend yield

 

0.00%

 

0.00%

Expected life of options (years)

 

5.5 - 6.1

 

5.8 - 6.1

Volatility rate range

 

81.06% - 82.31%

 

82.62% - 83.55%

Fair value of common stock range

 

$3.54 - $8.65

 

$11.95 - $20.50

 

The following table summarizes the Company’s stock option activity:

 

Number of
Shares

 

 

Weighted-Average
Exercise Price

 

 

Weighted-Average
Remaining
Contractual Term
(in years)

 

 

Aggregate
Intrinsic Value
(in thousands)

 

Outstanding as of December 31, 2023

 

 

3,117,042

 

 

$

7.04

 

 

 

8.34

 

 

$

3,409

 

Granted

 

 

1,360,308

 

 

 

5.67

 

 

 

 

 

 

 

Exercised

 

 

(30,875

)

 

 

2.91

 

 

 

 

 

 

 

Forfeited or canceled

 

 

(89,704

)