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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 September 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 October 29, 2021 was 38,374,846.

 


 

Table of Contents

 

 

 

 

Page

 

 

PART I—FINANCIAL INFORMATION

 

Item 1.

 

Financial Statements

 

 

 

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

3

 

 

Condensed Consolidated Statements of Operations for the Three and Nine Months Ended September 30, 2021 and 2020 (unaudited)

4

 

 

Condensed Consolidated Statements of Comprehensive Loss for the Three and Nine Months Ended September 30, 2021 and 2020 (unaudited)

5

 

 

Condensed Consolidated Statements of Redeemable Convertible Preferred Stock and Stockholders’ Equity (Deficit) for the Three and Nine Months Ended September 30, 2021 and 2020 (unaudited)

6

 

 

Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2021 and 2020 (unaudited)

8

 

 

Notes to Condensed Consolidated Financial Statements (unaudited)

9

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)

 

 

 

September 30,

2021

 

 

December 31,

2020

 

 

 

(Unaudited)

 

 

 

 

 

Assets

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

68,519

 

 

$

268,565

 

Short-term investments

 

 

202,848

 

 

 

82,641

 

Prepaid expenses and other current assets

 

 

4,131

 

 

 

2,805

 

Total current assets

 

 

275,498

 

 

 

354,011

 

Restricted cash

 

 

1,166

 

 

 

 

Property and equipment, net

 

 

12,219

 

 

 

1,935

 

Operating lease right-of-use assets

 

 

20,680

 

 

 

 

Other assets

 

 

593

 

 

 

 

Total assets

 

$

310,156

 

 

$

355,946

 

Liabilities and Stockholders’ Equity

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

Accounts payable

 

$

4,797

 

 

$

3,734

 

Accrued liabilities

 

 

7,059

 

 

 

6,497

 

Deferred rent, current

 

 

 

 

 

391

 

Operating lease liabilities, current

 

 

63

 

 

 

 

Total current liabilities

 

 

11,919

 

 

 

10,622

 

Deferred rent

 

 

 

 

 

1,046

 

Operating lease liabilities, non-current

 

 

33,760

 

 

 

 

Total liabilities

 

 

45,679

 

 

 

11,668

 

Commitments and contingencies (Note 5)

 

 

 

 

 

 

 

 

Stockholders’ equity:

 

 

 

 

 

 

 

 

Common stock

 

 

38

 

 

 

38

 

Additional paid-in capital

 

 

523,458

 

 

 

510,309

 

Accumulated other comprehensive loss

 

 

(75

)

 

 

(77

)

Accumulated deficit

 

 

(258,944

)

 

 

(165,992

)

Total stockholders’ equity

 

 

264,477

 

 

 

344,278

 

Total liabilities and stockholders’ equity

 

$

310,156

 

 

$

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

September 30,

 

 

Nine Months Ended

September 30,

 

 

 

2021

 

 

2020

 

 

2021

 

 

2020

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Research and development

 

$

27,581

 

 

$

11,775

 

 

$

72,849

 

 

$

31,279

 

General and administrative

 

 

8,099

 

 

 

3,810

 

 

 

20,406

 

 

 

8,999

 

Total operating expenses

 

 

35,680

 

 

 

15,585

 

 

 

93,255

 

 

 

40,278

 

Loss from operations

 

 

(35,680

)

 

 

(15,585

)

 

 

(93,255

)

 

 

(40,278

)

Other income (expense), net

 

 

82

 

 

 

(52

)

 

 

303

 

 

 

64

 

Net loss before taxes

 

 

(35,598

)

 

 

(15,637

)

 

 

(92,952

)

 

 

(40,214

)

Provision for income taxes

 

 

 

 

 

1

 

 

 

 

 

 

5

 

Net loss

 

 

(35,598

)

 

 

(15,638

)

 

 

(92,952

)

 

 

(40,219

)

Accretion on redeemable convertible preferred stock

 

 

 

 

 

(145

)

 

 

 

 

 

(705

)

Deemed dividend - beneficial conversion feature on redeemable

   convertible preferred stock

 

 

 

 

 

(6,219

)

 

 

 

 

 

(6,219

)

Net loss attributable to common stockholders

 

$

(35,598

)

 

$

(22,002

)

 

$

(92,952

)

 

$

(47,143

)

Net loss per share attributable to common stockholders, basic

   and diluted

 

$

(0.93

)

 

$

(0.77

)

 

$

(2.43

)

 

$

(4.79

)

Weighted-average shares used in computing net loss per share

   attributable to common stockholders, basic and diluted

 

 

38,341,110

 

 

 

28,465,156

 

 

 

38,261,359

 

 

 

9,845,754

 

 

See accompanying notes to unaudited condensed consolidated financial statements.

4


ANNEXON, INC.

Condensed Consolidated Statements of Comprehensive Loss

(in thousands)

(Unaudited)

 

 

 

Three Months Ended

September 30,

 

 

Nine Months Ended

September 30,

 

 

 

2021

 

 

2020

 

 

2021

 

 

2020

 

Net loss

 

$

(35,598

)

 

$

(15,638

)

 

$

(92,952

)

 

$

(40,219

)

Other comprehensive gain (loss):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign currency translation adjustment

 

 

(3

)

 

 

4

 

 

 

(5

)

 

 

2

 

Unrealized gain (loss) on available for sale securities

 

 

(7

)

 

 

 

 

 

7

 

 

 

 

Comprehensive loss

 

$

(35,608

)

 

$

(15,634

)

 

$

(92,950

)

 

$

(40,217

)

 

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

 

Stock-based compensation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

4,428

 

 

 

 

 

 

 

 

 

4,428

 

Stock option exercises

 

 

 

 

 

 

 

 

 

47,986

 

 

 

 

 

 

322

 

 

 

 

 

 

 

 

 

322

 

Foreign currency translation adjustment

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(3

)

 

 

 

 

 

(3

)

Unrealized loss on available-for-sale securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(7

)

 

 

 

 

 

(7

)

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(35,598

)

 

 

(35,598

)

Balances as of September 30, 2021

 

 

 

 

$

 

 

 

 

38,370,098

 

 

$

38

 

 

$

523,458

 

 

$

(75

)

 

$

(258,944

)

 

$

264,477

 

 

 

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

 

 

Equity (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

)

Conversion of redeemable convertible

   preferred stock to common stock upon

   initial public offering

 

 

(183,467,924

)

 

 

(241,418

)

 

 

 

20,824,938

 

 

 

21

 

 

 

241,397

 

 

 

 

 

 

 

 

 

241,418

 

Deemed dividend of beneficial

   conversion feature on conversion of

   redeemable convertible preferred stock

 

 

 

 

 

6,219

 

 

 

 

 

 

 

 

 

 

(6,219

)

 

 

 

 

 

 

 

 

(6,219

)

Accretion on redeemable convertible

   preferred stock

 

 

 

 

 

145

 

 

 

 

 

 

 

 

 

 

(145

)

 

 

 

 

 

 

 

 

(145

)

Issuance of common stock in connection

   with initial public offering, net of

   issuance costs of $24.7 million

 

 

 

 

 

 

 

 

 

16,889,403

 

 

 

13

 

 

 

262,427