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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 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, 2021

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 001-39402

 

ANNEXON, INC.

(Exact name of Registrant as specified in its Charter)

 

 

Delaware

 

27-5414423

(State or other jurisdiction

of incorporation or organization)

 

(I.R.S. Employer

Identification No.)

 

180 Kimball Way, Suite 200

South San Francisco, California 94080

(Address of principal executive offices including zip code)

Registrant’s telephone number, including area code: (650822-5500

 

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

ANNX

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  

The number of shares of Registrant’s Common Stock outstanding as of August 10, 2021 was 38,332,276.

 


 

Table of Contents

 

 

 

 

Page

 

 

PART I—FINANCIAL INFORMATION

 

Item 1.

 

Financial Statements

 

 

 

Condensed Consolidated Balance Sheets as of June 30, 2021 (unaudited) and December 31, 2020

3

 

 

Condensed Consolidated Statements of Operations for the three and six months ended June 30, 2021 and 2020 (unaudited)

4

 

 

Condensed Consolidated Statements of Comprehensive Loss for the three and six months ended June 30, 2021 and 2020 (unaudited)

5

 

 

Condensed Consolidated Statements of Redeemable Convertible Preferred Stock and Stockholders’ Equity (Deficit) for the three and six months ended June 30, 2021 and 2020 (unaudited)

6

 

 

Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2021 and 2020 (unaudited)

8

 

 

Notes to the Condensed Consolidated Financial Statements (unaudited)

10

Item 2.

 

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

22

Item 3.

 

Quantitative and Qualitative Disclosures About Market Risk

31

Item 4.

 

Controls and Procedures

31

 

 

 

 

 

 

PART II—OTHER INFORMATION

 

Item 1.

 

Legal Proceedings

32

Item 1A.

 

Risk Factors

32

Item 2.

 

Unregistered Sales of Equity Securities and Use of Proceeds

75

Item 3.

 

Defaults Upon Senior Securities

75

Item 4.

 

Mine Safety Disclosures

75

Item 5.

 

Other Information

75

Item 6.

 

Exhibits

76

EXHIBIT INDEX

76

SIGNATURES

77

 

 

In this Quarterly Report on Form 10-Q, “we,” “our,” “us,” “Annexon” and the “Company” refer to Annexon, Inc. and its consolidated subsidiary. Annexon, Annexon, Inc., the Annexon logo and other trade names, trademarks or service marks of Annexon are the property of Annexon, Inc. This report contains references to our trademarks and to trademarks belonging to other entities. Trade names, trademarks and service marks of other companies appearing in this report are the property of their respective holders. We do not intend our use or display of other companies’ trade names or trademarks to imply a relationship with, or endorsement or sponsorship of us by, any other companies.

 

 

2


 

ANNEXON, INC.

Condensed Consolidated Balance Sheets

(in thousands)

 

 

 

June 30,

2021

 

 

December 31,

2020

 

 

 

(Unaudited)

 

 

 

 

 

Assets

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

99,588

 

 

$

268,565

 

Short-term investments

 

 

202,798

 

 

 

82,641

 

Prepaid expenses and other current assets

 

 

2,007

 

 

 

2,805

 

Total current assets

 

 

304,393

 

 

 

354,011

 

Restricted cash

 

 

1,166

 

 

 

 

Property and equipment, less accumulated depreciation of $3,047 and $1,971

   as of June 30, 2021 and December 31, 2020, respectively

 

 

5,129

 

 

 

1,935

 

Operating lease right-of-use assets

 

 

21,096

 

 

 

 

Total assets

 

$

331,784

 

 

$

355,946

 

Liabilities and Stockholders’ Equity

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

Accounts payable

 

$

4,184

 

 

$

3,734

 

Accrued liabilities

 

 

5,850

 

 

 

6,497

 

Deferred rent, current

 

 

 

 

 

391

 

Operating lease liabilities, current

 

 

250

 

 

 

 

Total current liabilities

 

 

10,284

 

 

 

10,622

 

Deferred rent

 

 

 

 

 

1,046

 

Operating lease liabilities, non-current

 

 

26,165

 

 

 

 

Total liabilities

 

 

36,449

 

 

 

11,668

 

Commitments and contingencies (Note 5)

 

 

 

 

 

 

 

 

Stockholders’ equity:

 

 

 

 

 

 

 

 

Common stock

 

 

38

 

 

 

38

 

Additional paid-in capital

 

 

518,708

 

 

 

510,309

 

Accumulated other comprehensive loss

 

 

(65

)

 

 

(77

)

Accumulated deficit

 

 

(223,346

)

 

 

(165,992

)

Total stockholders’ equity

 

 

295,335

 

 

 

344,278

 

Total liabilities and stockholders’ equity

 

$

331,784

 

 

$

355,946

 

 

See accompanying notes to unaudited condensed consolidated financial statements.

 

3


 

ANNEXON, INC.

Condensed Consolidated Statements of Operations

(in thousands, except share and per share amounts)

(Unaudited)

 

 

 

Three Months Ended

June 30,

 

 

Six Months Ended

June 30,

 

 

 

2021

 

 

2020

 

 

2021

 

 

2020

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Research and development

 

$

24,572

 

 

$

9,287

 

 

$

45,268

 

 

$

19,504

 

General and administrative

 

 

6,801

 

 

 

2,950

 

 

 

12,307

 

 

 

5,189

 

Total operating expenses

 

 

31,373

 

 

 

12,237

 

 

 

57,575

 

 

 

24,693

 

Loss from operations

 

 

(31,373

)

 

 

(12,237

)

 

 

(57,575

)

 

 

(24,693

)

Other income, net

 

 

79

 

 

 

1

 

 

 

221

 

 

 

116

 

Net loss before taxes

 

 

(31,294

)

 

 

(12,236

)

 

 

(57,354

)

 

 

(24,577

)

Provision for income taxes

 

 

 

 

 

4

 

 

 

 

 

 

4

 

Net loss

 

 

(31,294

)

 

 

(12,240

)

 

 

(57,354

)

 

 

(24,581

)

Accretion on redeemable convertible preferred stock

 

 

 

 

 

281

 

 

 

 

 

 

560

 

Net loss attributable to common stockholders

 

$

(31,294

)

 

$

(12,521

)

 

$

(57,354

)

 

$

(25,141

)

Net loss per share attributable to common stockholders, basic

   and diluted

 

$

(0.82

)

 

$

(28.87

)

 

$

(1.50

)

 

$

(57.96

)

Weighted-average shares used in computing net loss per share

   attributable to common stockholders, basic and diluted

 

 

38,277,950

 

 

 

433,749

 

 

 

38,219,143

 

 

 

433,749

 

 

See accompanying notes to unaudited condensed consolidated financial statements.

4


ANNEXON, INC.

Condensed Consolidated Statements of Comprehensive Loss

(in thousands)

(Unaudited)

 

 

 

Three Months Ended

June 30,

 

 

Six Months Ended

June 30,

 

 

 

2021

 

 

2020

 

 

2021

 

 

2020

 

Net loss

 

$

(31,294

)

 

$

(12,240

)

 

$

(57,354

)

 

$

(24,581

)

Other comprehensive gain (loss):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign currency translation adjustment

 

 

(20

)

 

 

9

 

 

 

(2

)

 

 

(2

)

Unrealized gain on available for sale securities

 

 

38

 

 

 

 

 

 

14

 

 

 

 

Comprehensive loss

 

$

(31,276

)

 

$

(12,231

)

 

$

(57,342

)

 

$

(24,583

)

 

See accompanying notes to unaudited condensed consolidated financial statements.

 

5


 

 

ANNEXON, INC.

Condensed Consolidated Statements of Redeemable Convertible Preferred Stock and Stockholders’ Equity (Deficit)

(in thousands, except share amounts)

(Unaudited)

 

 

 

 

Redeemable Convertible

Preferred Stock

 

 

 

Common Stock

 

 

Additional

Paid-In

 

 

Accumulated Other

Comprehensive

 

 

Accumulated

 

 

Total

Stockholders’

 

 

 

Shares

 

 

Cost

 

 

 

Shares

 

 

Cost

 

 

Capital

 

 

Loss

 

 

Deficit

 

 

Equity

 

Balances as of December 31, 2020

 

 

 

 

$

 

 

 

 

38,157,618

 

 

$

38

 

 

$

510,309

 

 

$

(77

)

 

$

(165,992

)

 

$

344,278

 

Stock-based compensation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2,962

 

 

 

 

 

 

 

 

 

2,962

 

Stock option exercises

 

 

 

 

 

 

 

 

 

74,930

 

 

 

 

 

 

268

 

 

 

 

 

 

 

 

 

268

 

Foreign currency translation adjustment

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

18

 

 

 

 

 

 

18

 

Unrealized loss on available-for-sale securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(24

)

 

 

 

 

 

(24

)

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(26,060

)

 

 

(26,060

)

Balances as of March 31, 2021

 

 

 

 

 

 

 

 

 

38,232,548

 

 

 

38

 

 

 

513,539

 

 

 

(83

)

 

 

(192,052

)

 

 

321,442

 

Stock-based compensation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

4,517

 

 

 

 

 

 

 

 

 

4,517

 

Stock option exercises

 

 

 

 

 

 

 

 

 

82,805

 

 

 

 

 

 

534

 

 

 

 

 

 

 

 

 

534

 

Issuance of common stock per ESPP purchase

 

 

 

 

 

 

 

 

 

6,759

 

 

 

 

 

 

118

 

 

 

 

 

 

 

 

 

118

 

Foreign currency translation adjustment

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(20

)

 

 

 

 

 

(20

)

Unrealized gain on available-for-sale securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

38

 

 

 

 

 

 

38

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(31,294

)

 

 

(31,294

)

Balances as of June 30, 2021

 

 

 

 

$

 

 

 

 

38,322,112

 

 

$

38

 

 

$

518,708

 

 

$

(65

)

 

$

(223,346

)

 

$

295,335

 

 

 

See accompanying notes to unaudited condensed consolidated financial statements.

 

6


 

 

ANNEXON, INC.

Condensed Consolidated Statements of Redeemable Convertible Preferred Stock and Stockholders’ Equity (Deficit)

(in thousands, except share amounts)

(Unaudited)

 

 

 

Redeemable Convertible

Preferred Stock

 

 

 

Common Stock

 

 

Additional

Paid-In

 

 

Accumulated Other

Comprehensive

 

 

Accumulated

 

 

 

Total

Stockholders’

 

 

 

Shares

 

 

Cost

 

 

 

Shares

 

 

Cost

 

 

Capital

 

 

Loss

 

 

Deficit

 

 

Deficit

 

Balances as of December 31, 2019

 

 

111,748,065

 

 

$

143,984

 

 

 

 

433,749

 

 

$

4

 

 

$

2,202

 

 

$

(80

)

 

$

(102,580

)

 

$

(100,454

)

Accretion on redeemable convertible preferred stock

 

 

 

 

 

279

 

 

 

 

 

 

 

 

 

 

(279

)

 

 

 

 

 

 

 

 

(279

)

Stock-based compensation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

663

 

 

 

 

 

 

 

 

 

663

 

Foreign currency translation adjustment

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(11

)

 

 

 

 

 

(11

)

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(12,341

)

 

 

(12,341

)

Balances as of March 31, 2020

 

 

111,748,065

 

 

 

144,263

 

 

 

 

433,749

 

 

 

4

 

 

 

2,586

 

 

 

(91

)

 

 

(114,921

)

 

 

(112,422

)

Issuance of Series D redeemable

   convertible preferred stock, net

   of issuance costs of $5,193

 

 

71,719,859

 

 

 

96,807

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Beneficial conversion feature on

   Series D redeemable convertible

   preferred stock

 

 

 

 

 

(6,297

)

 

 

 

 

 

 

 

 

 

6,297

 

 

 

 

 

 

 

 

 

6,297

 

Accretion on redeemable convertible

   preferred stock

 

 

 

 

 

281

 

 

 

 

 

 

 

 

 

 

(281

)

 

 

 

 

 

 

 

 

(281

)

Stock-based compensation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

763

 

 

 

 

 

 

 

 

 

763

 

Foreign currency translation adjustment

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

9

 

 

 

 

 

 

9

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(12,240

)

 

 

(12,240

)

Balances as of June 30, 2020

 

 

183,467,924

 

 

$

235,054

 

 

 

 

433,749

 

 

$

4

 

 

$

9,365

 

 

$

(82

)

 

$

(127,161

)

 

$

(117,874

)

 

 

See accompanying notes to unaudited condensed consolidated financial statements.

 

 

7


 

 

ANNEXON, INC.

Condensed Consolidated Statements of Cash Flows

(in thousands)

(Unaudited)

 

 

 

Six Months Ended

June 30,

 

 

 

2021

 

 

2020

 

Operating activities:

 

 

 

 

 

 

 

 

Net loss

 

$

(57,354

)

 

$

(24,581

)

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

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

1,076

 

 

 

262

 

Accretion of discount on available-for-sale securities

 

 

480

 

 

 

 

Stock-based compensation

 

 

7,479

 

 

 

1,426

 

Reduction in the carrying amount of right-of-use assets

 

 

510

 

 

 

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

 

Prepaid expenses and other current assets

 

 

359

 

 

 

568

 

Other long-term assets

 

 

 

 

 

44

 

Accounts payable

 

 

42

 

 

 

787

 

Accrued liabilities

 

 

(647

)

 

 

1,425

 

Deferred rent

 

 

 

 

 

(178

)

Operating lease liabilities

 

 

(19

)

 

 

 

Net cash used in operating activities

 

 

(48,074

)

 

 

(20,247

)

Investing activities:

 

 

 

 

 

 

 

 

Purchases of property and equipment

 

 

(32

)

 

 

(16

)

Purchases of available-for-sale securities

 

 

(159,616

)

 

 

 

Proceeds from sale of available-for-sale securities

 

 

5,993

 

 

 

 

Proceeds from maturities of available-for-sale securities

 

 

33,000

 

 

 

 

Net cash used in investing activities

 

 

(120,655

)

 

 

(16

)

Financing activities:

 

 

 

 

 

 

 

 

Deferred offering cost payments

 

 

 

 

 

(890

)

Proceeds from the exercise common stock options

 

 

802

 

 

 

 

Proceeds from employee stock plan purchases

 

 

118

 

 

 

 

Proceeds from Paycheck Protection Program loan

 

 

 

 

 

500

 

Repayments of Paycheck Protection Program loan

 

 

 

 

 

(500

)

Proceeds from issuance of redeemable convertible preferred stock, net of issuance costs

 

 

 

 

 

101,985

 

Net cash provided by financing activities

 

 

920

 

 

 

101,095

 

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

 

 

(167,809

)

 

 

80,832

 

Effect of exchange rate changes on cash, cash equivalents and restricted cash

 

 

(2

)

 

 

(2

)

Cash, cash equivalents and restricted cash

 

 

 

 

 

 

 

 

Beginning of period

 

 

268,565

 

 

 

43,931

 

End of period

 

$

100,754

 

 

$

124,761

 

Supplemental disclosure of cash flow information:

 

 

 

 

 

 

 

 

Cash paid for amounts included in the measurement of lease liability

 

$

744

 

 

$

 

Non-cash investing and financing activities:

 

 

 

 

 

 

 

 

Accretion on redeemable convertible preferred stock

 

$

 

 

$

560

 

Purchase of property and equipment included in accounts payable

 

$

408

 

 

$

156

 

Right-of-use assets obtained in exchange for lease liability

 

$

21,084

 

 

$

 

Construction-in-progress obtained in exchange for tenant improvement allowance from lessors

 

$

3,830

 

 

$

 

Beneficial conversion feature recognized upon issuance of redeemable convertible preferred stock

 

$

 

 

$

6,297

 

Deferred offering costs included in accounts payable and accrued liabilities

 

$