SEC Filing | Annexon Inc.

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10-Q

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, 2022

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number 001-39402

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.)

1400 Sierra Point Parkway, Bldg C, Suite 200

Brisbane, California 94005

(Address of principal executive offices including zip code)

Registrant’s telephone number, including area code: (650) 822-5500

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 the Registrant’s Common Stock outstanding as of October 28, 2022 was 47,630,393. This number does not include 24,696,206 shares of Common Stock issuable upon the exercise of pre-funded warrants (which are immediately exercisable at an exercise price of $0.001 per share of Common Stock, subject to beneficial ownership limitations) sold in the Registrant’s private placement on July 11, 2022. See Note 6—Stockholders’ Equity to the Registrant’s unaudited condensed consolidated financial statements.

Table of Contents


		Page
	PART I—FINANCIAL INFORMATION
Item 1.	Financial Statements
	Condensed Consolidated Balance Sheets	3
	Condensed Consolidated Statements of Operations	4
	Condensed Consolidated Statements of Comprehensive Loss	5
	Condensed Consolidated Statements of Stockholders’ Equity	6
	Condensed Consolidated Statements of Cash Flows	8
	Notes to Condensed Consolidated Financial Statements	9
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	20
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	28
Item 4.	Controls and Procedures	28

	PART II—OTHER INFORMATION
Item 1.	Legal Proceedings	30
Item 1A.	Risk Factors	30
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	73
Item 3.	Defaults Upon Senior Securities	73
Item 4.	Mine Safety Disclosures	73
Item 5.	Other Information	73
Item 6.	Exhibits	74
SIGNATURES		76

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.

ANNEXON, INC.

Condensed Consolidated Balance Sheets

(in thousands)


	September 30, 2022			December 31, 2021
	(Unaudited)
Assets
Current assets:
Cash and cash equivalents	$	210,658		$	74,843
Short-term investments		58,861			167,872
Prepaid expenses and other current assets		5,258			4,978
Total current assets		274,777			247,693
Restricted cash		1,032			1,166
Property and equipment, net		17,093			17,848
Operating lease right-of-use assets		19,616			20,333
Other non-current assets		204			—
Total assets	$	312,722		$	287,040
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	6,921		$	11,153
Accrued liabilities		11,323			9,250
Operating lease liabilities, current		1,806			1,202
Other current liabilities		170			139
Total current liabilities		20,220			21,744
Operating lease liabilities, non-current		31,900			33,387
Total liabilities		52,120			55,131
Commitments and contingencies (Note 5)
Stockholders’ equity:
Common stock		48			39
Additional paid-in capital		664,839			528,365
Accumulated other comprehensive loss		(406	)		(180	)
Accumulated deficit		(403,879	)		(296,315	)
Total stockholders’ equity		260,602			231,909
Total liabilities and stockholders’ equity	$	312,722		$	287,040

See accompanying notes to unaudited condensed consolidated financial statements.

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,
	2022			2021			2022			2021
Operating expenses:
Research and development	$	27,862		$	27,581		$	83,966		$	72,849
General and administrative		8,207			8,099			24,938			20,406
Total operating expenses		36,069			35,680			108,904			93,255
Loss from operations		(36,069	)		(35,680	)		(108,904	)		(93,255	)
Interest and other income, net		1,015			82			1,340			303
Net loss		(35,054	)		(35,598	)		(107,564	)		(92,952	)
Net loss attributable to common stockholders	$	(35,054	)	$	(35,598	)	$	(107,564	)	$	(92,952	)
Net loss per share attributable to common stockholders, basic and diluted	$	(0.51	)	$	(0.93	)	$	(2.21	)	$	(2.43	)
Weighted-average shares used in computing net loss per share attributable to common stockholders, basic and diluted		68,652,859			38,341,110			48,710,433			38,261,359

See accompanying notes to unaudited condensed consolidated financial statements.

ANNEXON, INC.

Condensed Consolidated Statements of Comprehensive Loss

(in thousands)

(Unaudited)


	Three Months Ended September 30,						Nine Months Ended September 30,
	2022			2021			2022			2021
Net loss	$	(35,054	)	$	(35,598	)	$	(107,564	)	$	(92,952	)
Other comprehensive gain (loss):
Foreign currency translation adjustment		(4	)		(3	)		(7	)		(5	)
Unrealized gain (loss) on available-for-sale securities		37			(7	)		(219	)		7
Comprehensive loss	$	(35,021	)	$	(35,608	)	$	(107,790	)	$	(92,950	)

See accompanying notes to unaudited condensed consolidated financial statements.

ANNEXON, INC.

Condensed Consolidated Statements of Stockholders’ Equity

(in thousands, except share amounts)

(Unaudited)


	Common Stock				Additional Paid-In		Accumulated Other Comprehensive			Accumulated			Total Stockholders’
	Shares		Cost		Capital		Loss			Deficit			Equity
Balances as of December 31, 2021		38,560,854	$	39	$	528,365	$	(180	)	$	(296,315	)	$	231,909
Stock-based compensation		—		—		4,252		—			—			4,252
Stock option exercises		2,711		—		19		—			—			19
Foreign currency translation adjustment		—		—		—		3			—			3
Unrealized loss on available-for-sale securities		—		—		—		(196	)		—			(196	)
Net loss		—		—		—		—			(35,373	)		(35,373	)
Balances as of March 31, 2022		38,563,565		39		532,636		(373	)		(331,688	)		200,614
Stock-based compensation		—		—		4,520		—			—			4,520
Issuance of common stock per Employee Stock Purchase Plan purchase		40,341		—		113		—			—			113
Foreign currency translation adjustment		—		—		—		(6	)		—			(6	)
Unrealized loss on available-for-sale securities		—		—		—		(60	)		—			(60	)
Net loss		—		—		—		—			(37,137	)		(37,137	)
Balances as of June 30, 2022		38,603,906		39		537,269		(439	)		(368,825	)		168,044
Stock-based compensation		—		—		4,911		—			—			4,911
Stock option exercises		8,763		—		45		—			—			45
Issuance of common stock, pre-funded warrants and common warrants, net of issuance costs (related party amount of $9,500)		9,013,834		9		122,614		—			—			122,623
Foreign currency translation adjustment		—		—		—		(4	)		—			(4	)
Unrealized gain on available-for-sale securities		—		—		—		37			—			37
Net loss		—		—		—		—			(35,054	)		(35,054	)
Balances as of September 30, 2022		47,626,503	$	48	$	664,839	$	(406	)	$	(403,879	)	$	260,602

See accompanying notes to unaudited condensed consolidated financial statements.

ANNEXON, INC.

Condensed Consolidated Statements of Stockholders’ Equity

(in thousands, except share amounts)

(Unaudited)


	Common Stock				Additional Paid-In		Accumulated Other Comprehensive			Accumulated			Total Stockholders’
	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		—		—		—		(1	)		—			(1	)
Unrealized loss on available-for-sale securities		—		—		—		(25	)		—			(25	)
Net loss		—		—		—		—			(26,060	)		(26,060	)
Balances as of March 31, 2021		38,232,548		38		513,539		(103	)		(192,052	)		321,422
Stock-based compensation		—		—		4,517		—			—			4,517
Stock option exercises		82,805		—		534		—			—			534
Issuance of common stock per Employee Stock Purchase Plan purchase		6,759		—		118		—			—			118
Foreign currency translation adjustment		—		—		—		(1	)		—			(1	)
Unrealized gain on available-for-sale securities		—		—		—		39			—			39
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.

ANNEXON, INC.

Condensed Consolidated Statements of Cash Flows

(in thousands)

(Unaudited)


	Nine Months Ended September 30,
	2022	2021
Operating activities: