UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Mark One)
For the quarterly period ended
OR
For the transition period from to
Commission File Number
(Exact name of Registrant as specified in its Charter)
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(State or other jurisdiction of incorporation or organization) |
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(I.R.S. Employer Identification No.) |
(Address of principal executive offices including zip code)
Registrant’s telephone number, including area code: (
Former name, former address and former fiscal year, if changed since last report: Not applicable
Securities registered pursuant to Section 12(b) of the Act:
Title of each class |
Trading Symbol(s) |
Name of each exchange on which registered |
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.
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).
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 |
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Accelerated filer |
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Smaller reporting company |
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Emerging growth company |
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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 August 2, 2023 was
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
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Page |
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PART I—FINANCIAL INFORMATION |
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Item 1. |
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Financial Statements |
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1 |
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2 |
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3 |
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4 |
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6 |
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7 |
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Item 2. |
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Management’s Discussion and Analysis of Financial Condition and Results of Operations |
15 |
Item 3. |
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23 |
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Item 4. |
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23 |
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PART II—OTHER INFORMATION |
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Item 1. |
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24 |
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Item 1A. |
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24 |
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Item 2. |
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66 |
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Item 3. |
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66 |
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Item 4. |
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66 |
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Item 5. |
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66 |
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Item 6. |
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67 |
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68 |
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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)
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June 30, |
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December 31, |
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(Unaudited) |
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Assets |
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Current assets: |
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Cash and cash equivalents |
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$ |
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$ |
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Short-term investments |
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Prepaid expenses and other current assets |
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Total current assets |
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Restricted cash |
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Property and equipment, net |
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Operating lease right-of-use assets |
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Total assets |
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$ |
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$ |
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Liabilities and Stockholders’ Equity |
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Current liabilities: |
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Accounts payable |
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$ |
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$ |
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Accrued liabilities |
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Operating lease liabilities, current |
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Other current liabilities |
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Total current liabilities |
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Operating lease liabilities, non-current |
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Total liabilities |
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Stockholders’ equity: |
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Common stock |
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Additional paid-in capital |
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Accumulated other comprehensive loss |
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( |
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( |
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Accumulated deficit |
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( |
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( |
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Total stockholders’ equity |
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Total liabilities and stockholders’ equity |
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$ |
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$ |
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See accompanying notes to unaudited condensed consolidated financial statements.
1
ANNEXON, INC.
Condensed Consolidated Statements of Operations
(in thousands, except share and per share amounts)
(Unaudited)
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Three Months Ended |
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Six Months Ended |
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2023 |
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2022 |
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2023 |
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2022 |
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Operating expenses: |
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Research and development |
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$ |
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$ |
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$ |
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$ |
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General and administrative |
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Total operating expenses |
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Loss from operations |
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( |
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( |
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( |
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Interest and other income, net |
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Net loss |
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$ |
( |
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$ |
( |
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$ |
( |
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$ |
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Net loss per share, basic and diluted |
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$ |
( |
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$ |
( |
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$ |
( |
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$ |
( |
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Weighted-average shares used in computing net loss per share, |
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See accompanying notes to unaudited condensed consolidated financial statements.
2
ANNEXON, INC.
Condensed Consolidated Statements of Comprehensive Loss
(in thousands)
(Unaudited)
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Three Months Ended |
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Six Months Ended |
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2023 |
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2022 |
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2023 |
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2022 |
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Net loss |
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$ |
( |
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$ |
( |
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$ |
( |
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$ |
( |
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Other comprehensive gain (loss): |
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Foreign currency translation adjustment |
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( |
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( |
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( |
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( |
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Unrealized gain (loss) on available-for-sale securities |
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( |
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( |
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Comprehensive loss |
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$ |
( |
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$ |
( |
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$ |
( |
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$ |
( |
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See accompanying notes to unaudited condensed consolidated financial statements.
3
ANNEXON, INC.
Condensed Consolidated Statements of Stockholders’ Equity
(in thousands, except share amounts)
(Unaudited)
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Common Stock |
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Additional |
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Accumulated Other |
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Accumulated |
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Total |
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Shares |
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Cost |
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Capital |
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Loss |
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Deficit |
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Equity |
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Balances as of December 31, 2022 |
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$ |
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$ |
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$ |
( |
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$ |
( |
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$ |
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Stock-based compensation |
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— |
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— |
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— |
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— |
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Exercise of stock options |
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— |
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— |
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— |
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Exercise of pre-funded warrants |
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( |
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— |
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— |
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— |
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Issuance of common stock to a related |
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— |
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— |
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Restricted stock units vested in the period |
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— |
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— |
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— |
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— |
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— |
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Foreign currency translation |
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— |
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— |
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— |
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( |
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— |
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( |
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Unrealized gain on available-for-sale |
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— |
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— |
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— |
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— |
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Net loss |
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— |
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— |
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— |
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— |
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( |
) |
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( |
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Balances as of March 31, 2023 |
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( |
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( |
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Stock-based compensation |
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— |
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— |
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— |
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— |
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Exercise of stock options |
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— |
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— |
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— |
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— |
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— |
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Issuance of common stock per |
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— |
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— |
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— |
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Foreign currency translation |
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— |
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— |
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— |
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( |
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— |
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( |
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Unrealized gain on available-for-sale |
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— |
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— |
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— |
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— |
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Net loss |
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— |
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— |
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— |
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— |
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( |
) |
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( |
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Balances as of June 30, 2023 |
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$ |
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$ |
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$ |
( |
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$ |
( |
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$ |
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See accompanying notes to unaudited condensed consolidated financial statements.
4
ANNEXON, INC.
Condensed Consolidated Statements of Stockholders’ Equity
(in thousands, except share amounts)
(Unaudited)
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Common Stock |
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Additional |
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Accumulated Other |
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Accumulated |
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Total |
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Shares |
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Cost |
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Capital |
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Loss |
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Deficit |
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Equity |
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Balances as of December 31, 2021 |
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$ |
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$ |
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$ |
( |
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$ |
( |
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$ |
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Stock-based compensation |
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— |
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— |
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— |
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— |
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Stock option exercises |
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— |
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— |
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— |
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Foreign currency translation |
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— |
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— |
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— |
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— |
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Unrealized loss on available-for-sale |
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— |
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— |
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— |
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( |
) |
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— |
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( |
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Net loss |
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— |
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— |
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— |
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— |
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( |
) |
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( |
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Balances as of March 31, 2022 |
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( |
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( |
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Stock-based compensation |
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— |
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— |
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— |
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— |
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Issuance of common stock per |
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— |
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— |
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— |
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Foreign currency translation |
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— |
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— |
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— |
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( |
) |
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— |
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( |
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Unrealized loss on available-for-sale |
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— |
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— |
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— |
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( |
) |
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— |
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( |
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Net loss |
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— |
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— |
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— |
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— |
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( |
) |
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( |
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Balances as of June 30, 2022 |
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$ |
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$ |
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$ |
( |
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$ |
( |
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$ |
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See accompanying notes to unaudited condensed consolidated financial statements.
5
ANNEXON, INC.
Condensed Consolidated Statements of Cash Flows
(in thousands)
(Unaudited)
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Six Months Ended |
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2023 |
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2022 |
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Operating activities: |
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Net loss |
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$ |
( |
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$ |
( |
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Adjustments to reconcile net loss to net cash used in operating activities: |
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Depreciation and amortization |
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Accretion of (discount) premium on available-for-sale securities |
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Stock-based compensation |
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Reduction in the carrying amount of right-of-use assets |
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Changes in operating assets and liabilities: |
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Prepaid expenses and other current assets |
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Other assets |
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— |
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( |
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Accounts payable |
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( |
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Accrued liabilities |
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( |
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Operating lease liabilities |
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( |
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( |
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Other current liabilities |
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( |
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Net cash used in operating activities |
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( |
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( |
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Investing activities: |
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Purchases of property and equipment |
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( |
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( |
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Purchases of available-for-sale securities |
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( |
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( |
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Proceeds from maturities of available-for-sale securities |
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Net cash provided by investing activities |
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Financing activities: |
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Proceeds from the exercise of common stock options |
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Proceeds from Employee Stock Purchase Plan purchases |
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Proceeds from the issuance of common stock to a related party, net of commissions |
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— |
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Payment of common stock issuance costs |
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( |
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— |
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Net cash provided by financing activities |
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(Decrease) increase in cash, cash equivalents and restricted cash |
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( |
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Effect of exchange rate changes on cash, cash equivalents and restricted cash |
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( |
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( |
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Cash, cash equivalents and restricted cash |
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Beginning of period |
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End of period |
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$ |
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$ |
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Supplemental disclosure of cash flow information: |
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Cash paid for amounts included in the measurement of lease liability |
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$ |
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$ |
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Non-cash investing and financing activities: |
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Deferred offering costs included in accrued liabilities |
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$ |
— |
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$ |
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Purchases of property and equipment included in accounts payable and accrued liabilities |
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$ |
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$ |
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See accompanying notes to unaudited condensed consolidated financial statements.
6
ANNEXON, INC.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
1. Organization
Annexon, Inc., or the Company, is a clinical-stage biopharmaceutical company pioneering a new class of complement medicines for patients with classical complement-mediated autoimmune, neurodegenerative and ophthalmic disorders. The Company is located in Brisbane, California and was incorporated in Delaware in March 2011.
The Company’s wholly-owned subsidiary, Annexon Biosciences Australia Pty Ltd, or the Subsidiary, is a proprietary limited company incorporated in 2016 and domiciled in Australia.
Liquidity
Since inception, the Company has been involved primarily in performing research and development activities, conducting clinical trials, hiring personnel, and raising capital to support and expand these activities. The Company has experienced losses and negative cash flows from operations since its inception and, as of June 30, 2023, had an accumulated deficit of $
The Company has historically funded its operations through the issuance of shares of its redeemable convertible preferred stock, common stock and warrants. Based on projected activities, management projects that cash on hand is sufficient to support operations for at least the next 12 months following issuance of these condensed consolidated financial statements. Management expects to continue to incur losses and negative cash flows from operations for at least the next several years.
2. Basis of Presentation and Significant Accounting Policies
Basis of Presentation
The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States, or GAAP, and applicable rules and regulations of the SEC regarding interim financial reporting.
The condensed consolidated balance sheet as of June 30, 2023, the condensed consolidated statements of operations, comprehensive loss, stockholders’ equity for the three and six months ended June 30, 2023 and 2022 and the condensed consolidated statements of cash flows for the six months ended June 30, 2023 and 2022 are unaudited. These unaudited condensed consolidated financial statements have been prepared on the same basis as the annual consolidated financial statements and, in the opinion of management, reflect all adjustments, which include only normal recurring adjustments, necessary to present fairly the Company’s consolidated financial position, results of operations and cash flows for the interim period presented. The financial data and the other financial information contained in these notes to the condensed consolidated financial statements related to the three and six month periods are also unaudited. The results of operations for the three and six months ended June 30, 2023 are not necessarily indicative of the results to be expected for the year ending December 31, 2023 or for any other future annual or interim period. The condensed consolidated balance sheet as of December 31, 2022 included herein was derived from the audited financial statements as of that date. These unaudited condensed consolidated financial statements should be read in conjunction with the Company's audited consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022, filed with the SEC on March 6, 2023.
Use of Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America, or GAAP, requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported expenses during the reporting period. Management evaluates its estimates, including but not limited to the fair value of investments, stock options, income taxes, clinical trial accruals and stock-based compensation. The Company evaluates its estimates and assumptions on an ongoing basis using historical experience and other factors and adjusts those estimates and assumptions when facts and circumstances dictate. Actual results could differ from those estimates.
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ANNEXON, INC.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Principles of Consolidation
The condensed consolidated financial statements include the operations of Annexon, Inc. and its wholly-owned subsidiary and include the results of operations and cash flows of these entities. All intercompany balances and transactions have been eliminated in consolidation.
Summary of Significant Accounting Policies
Reference is made to Note 2 Summary of Significant Accounting Policies in our 2022 Form 10-K filed on March 6, 2023 for a detailed description of significant accounting policies. There have been no significant changes to our accounting policies as disclosed in our 2022 Form 10-K.
Recently Adopted Accounting Pronouncements
The Company has implemented all new accounting pronouncements, which are expected to have a material impact on its condensed consolidated financial statements and does not believe that there are any other new pronouncements that have been issued that might have a material impact on its financial position or results of operations.
Recently Issued Accounting Pronouncements
The Company does not believe that any recently issued effective pronouncements, or pronouncements issued but not yet effective, if adopted, would have a material impact on its financial position or results of operations.