10-Q
falseQ2--12-3100015281150001528115us-gaap:AdditionalPaidInCapitalMember2022-12-310001528115us-gaap:EmployeeStockOptionMember2023-06-300001528115us-gaap:RetainedEarningsMember2022-01-012022-03-310001528115srt:MaximumMember2022-04-012022-06-300001528115srt:MinimumMember2023-01-012023-06-3000015281152023-03-310001528115annx:BrisbaneCaliforniaMember2023-06-300001528115us-gaap:RetainedEarningsMember2023-06-300001528115us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-12-310001528115us-gaap:IndemnificationGuaranteeMember2023-06-300001528115annx:PrefundedWarrantMember2023-08-020001528115annx:UnvestedRestrictedStockUnitsOutstandingMember2023-06-3000015281152023-01-012023-06-300001528115us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-06-3000015281152021-11-012021-11-0100015281152023-06-300001528115annx:LaboratoryEquipmentMember2022-12-310001528115annx:PreFundedWarrantsMember2023-06-3000015281152022-07-112022-07-110001528115annx:StockOptionsReservedForTwoThousandTwentyIncentiveAwardPlanMember2023-06-3000015281152022-01-012022-12-310001528115us-gaap:AdditionalPaidInCapitalMember2022-03-310001528115us-gaap:EmployeeStockOptionMember2022-12-3100015281152022-01-012022-03-310001528115annx:LaboratoryEquipmentMember2023-06-300001528115us-gaap:AdditionalPaidInCapitalMember2023-04-012023-06-300001528115us-gaap:EmployeeStockOptionMember2022-01-012022-06-300001528115us-gaap:FairValueInputsLevel2Memberus-gaap:CommercialPaperMember2023-06-300001528115us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-01-012022-03-3100015281152022-01-012022-06-300001528115us-gaap:AccumulatedOtherComprehensiveIncomeMember2023-04-012023-06-300001528115us-gaap:LeaseholdImprovementsMember2022-12-310001528115us-gaap:PrivatePlacementMember2022-07-112022-07-110001528115us-gaap:LeaseholdImprovementsMember2023-06-300001528115us-gaap:RetainedEarningsMember2023-01-012023-03-310001528115us-gaap:ResearchAndDevelopmentExpenseMember2022-04-012022-06-300001528115srt:MinimumMember2022-04-012022-06-300001528115annx:ComputerEquipmentAndSoftwareMember2023-06-300001528115annx:StockOptionsReservedForTwoThousandTwentyIncentiveAwardPlanMember2022-12-310001528115annx:BrisbaneCaliforniaMember2023-01-012023-06-300001528115us-gaap:EmployeeStockOptionMember2023-06-300001528115annx:EmployeeStockPurchasePlanMember2023-04-012023-06-300001528115annx:CommonWarrantsMember2023-06-300001528115us-gaap:RetainedEarningsMember2023-04-012023-06-300001528115annx:CommonStockReservedForTwoThousandTwentyTwoEmploymentInducementAwardPlanMember2023-06-300001528115annx:UnvestedRestrictedStockUnitsOutstandingMember2022-12-310001528115us-gaap:FairValueInputsLevel1Memberus-gaap:MoneyMarketFundsMember2023-06-300001528115us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-03-310001528115us-gaap:GeneralAndAdministrativeExpenseMember2022-01-012022-06-300001528115srt:MinimumMember2023-04-012023-06-300001528115us-gaap:AdditionalPaidInCapitalMember2022-06-300001528115us-gaap:RetainedEarningsMember2021-12-310001528115us-gaap:GeneralAndAdministrativeExpenseMember2023-01-012023-06-300001528115us-gaap:CommonStockMember2023-04-012023-06-300001528115annx:EmployeeStockPurchasePlanMember2023-01-012023-06-300001528115us-gaap:WarrantMembersrt:MaximumMember2023-06-300001528115us-gaap:AdditionalPaidInCapitalMember2022-01-012022-03-310001528115us-gaap:FairValueInputsLevel2Memberus-gaap:USTreasuryBondSecuritiesMember2023-06-3000015281152022-06-300001528115us-gaap:RestrictedStockUnitsRSUMember2023-01-012023-06-300001528115annx:PrefundedWarrantMember2023-03-310001528115us-gaap:AdditionalPaidInCapitalMember2023-03-3100015281152022-04-012022-06-300001528115srt:MaximumMember2022-01-012022-06-300001528115us-gaap:AdditionalPaidInCapitalMember2022-04-012022-06-300001528115annx:EmployeeStockPurchasePlanMember2022-04-012022-06-300001528115annx:EmployeeStockPurchasePlanMember2022-01-012022-06-3000015281152022-03-310001528115annx:CommonWarrantsMember2022-12-310001528115us-gaap:CommonStockMember2022-06-300001528115us-gaap:AdditionalPaidInCapitalMember2021-12-310001528115us-gaap:CommonStockMember2023-08-020001528115annx:CommonStockReservedForTwoThousandTwentyTwoEmploymentInducementAwardPlanMember2022-12-310001528115us-gaap:EmployeeStockOptionMember2023-01-012023-06-300001528115annx:EmploymentInducementIncentivePlanMember2023-06-300001528115annx:TwoZeroTwoOneAtTheMarketProgramMemberannx:SalesAgreementWithCowenAndCompanyLLCMember2021-08-012021-08-310001528115annx:TwoZeroTwoOneAtTheMarketProgramMemberannx:SalesAgreementWithCowenAndCompanyLLCMember2023-01-012023-03-310001528115annx:TwoZeroTwoOneAtTheMarketProgramMember2022-12-310001528115us-gaap:AdditionalPaidInCapitalMember2023-06-300001528115us-gaap:EmployeeStockMember2022-01-012022-06-300001528115us-gaap:GeneralAndAdministrativeExpenseMember2023-04-012023-06-300001528115us-gaap:CommonStockMember2022-03-310001528115us-gaap:ResearchAndDevelopmentExpenseMember2023-04-012023-06-300001528115us-gaap:WarrantMember2022-07-110001528115us-gaap:AdditionalPaidInCapitalMember2023-01-012023-03-310001528115us-gaap:ResearchAndDevelopmentExpenseMember2022-01-012022-06-300001528115us-gaap:CommonStockMember2022-12-310001528115annx:EmployeeStockPurchasePlanMember2023-06-300001528115us-gaap:CommonStockMember2022-01-012022-03-3100015281152022-12-310001528115us-gaap:PrivatePlacementMember2023-01-012023-06-300001528115us-gaap:WarrantMember2023-01-012023-06-300001528115annx:EmploymentInducementIncentivePlanMember2022-07-310001528115us-gaap:CommonStockMember2023-06-300001528115srt:MaximumMemberannx:PrefundedWarrantMember2023-06-3000015281152023-01-012023-03-310001528115us-gaap:AccumulatedOtherComprehensiveIncomeMember2023-01-012023-03-310001528115us-gaap:RetainedEarningsMember2023-03-310001528115us-gaap:RetainedEarningsMember2022-12-310001528115us-gaap:RestrictedStockUnitsRSUMember2023-01-012023-06-300001528115us-gaap:CommonStockMember2023-03-310001528115us-gaap:AccumulatedOtherComprehensiveIncomeMember2023-03-310001528115us-gaap:RetainedEarningsMember2022-06-300001528115us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-12-310001528115srt:MaximumMember2023-04-012023-06-300001528115annx:TwoZeroTwoOneAtTheMarketProgramMember2023-06-300001528115us-gaap:EmployeeStockMember2023-01-012023-06-300001528115annx:PreFundedWarrantsMember2022-12-3100015281152023-04-012023-06-300001528115us-gaap:FurnitureAndFixturesMember2022-12-310001528115us-gaap:CommonStockMember2023-01-012023-03-310001528115us-gaap:FurnitureAndFixturesMember2023-06-300001528115us-gaap:CommonStockMember2022-04-012022-06-3000015281152021-12-310001528115us-gaap:CommonStockMember2021-12-310001528115srt:MaximumMember2023-01-012023-06-300001528115srt:MaximumMemberannx:PrefundedWarrantMember2022-07-110001528115us-gaap:FairValueInputsLevel2Memberus-gaap:USTreasuryBondSecuritiesMember2022-12-310001528115us-gaap:FairValueInputsLevel1Memberus-gaap:MoneyMarketFundsMember2022-12-310001528115annx:TwoZeroTwoOneAtTheMarketProgramMemberannx:SalesAgreementWithCowenAndCompanyLLCMember2021-08-310001528115us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-04-012022-06-300001528115srt:MinimumMemberannx:IncentiveStockOptionsAndNonstatutoryStockOptionsMember2023-01-012023-06-300001528115annx:EmployeeStockPurchasePlanMember2022-12-310001528115us-gaap:RestrictedStockUnitsRSUMember2022-01-012022-06-300001528115us-gaap:RestrictedStockUnitsRSUMember2023-06-300001528115us-gaap:GeneralAndAdministrativeExpenseMember2022-04-012022-06-300001528115annx:ComputerEquipmentAndSoftwareMember2022-12-310001528115us-gaap:RetainedEarningsMember2022-03-310001528115us-gaap:WarrantMember2022-07-112022-07-110001528115srt:MinimumMember2022-01-012022-06-300001528115us-gaap:FairValueInputsLevel2Memberus-gaap:CommercialPaperMember2022-12-310001528115us-gaap:RetainedEarningsMember2022-04-012022-06-300001528115us-gaap:ResearchAndDevelopmentExpenseMember2023-01-012023-06-300001528115us-gaap:WarrantMembersrt:MaximumMember2022-07-110001528115annx:TwoZeroTwoOneAtTheMarketProgramMemberannx:SalesAgreementWithCowenAndCompanyLLCMember2023-03-310001528115us-gaap:AccumulatedOtherComprehensiveIncomeMember2023-06-300001528115annx:PrefundedWarrantMember2022-07-112022-07-110001528115us-gaap:FairValueInputsLevel2Memberus-gaap:CorporateBondSecuritiesMember2022-12-31xbrli:pureannx:Claimiso4217:USDxbrli:sharesxbrli:sharesiso4217:USD

 

 

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, 2023

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.)

 

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

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

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 August 2, 2023 was 53,238,985. This number does not include 22,113,062 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

1

 

 

Condensed Consolidated Statements of Operations

2

 

 

Condensed Consolidated Statements of Comprehensive Loss

3

 

 

Condensed Consolidated Statements of Stockholders’ Equity

4

 

 

Condensed Consolidated Statements of Cash Flows

6

 

 

Notes to Condensed Consolidated Financial Statements

7

Item 2.

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

15

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

23

Item 4.

Controls and Procedures

23

 

 

PART II—OTHER INFORMATION

 

Item 1.

Legal Proceedings

24

Item 1A.

Risk Factors

24

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

66

Item 3.

Defaults Upon Senior Securities

66

Item 4.

Mine Safety Disclosures

66

Item 5.

Other Information

66

Item 6.

Exhibits

67

SIGNATURES

68

 

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)

 

 

 

June 30,
2023

 

 

December 31,
2022

 

 

 

(Unaudited)

 

 

 

 

Assets

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

113,614

 

 

$

140,020

 

Short-term investments

 

 

79,324

 

 

 

102,637

 

Prepaid expenses and other current assets

 

 

4,623

 

 

 

5,441

 

Total current assets

 

 

197,561

 

 

 

248,098

 

Restricted cash

 

 

1,032

 

 

 

1,032

 

Property and equipment, net

 

 

15,830

 

 

 

16,838

 

Operating lease right-of-use assets

 

 

18,590

 

 

 

19,128

 

Total assets

 

$

233,013

 

 

$

285,096

 

Liabilities and Stockholders’ Equity

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Accounts payable

 

$

7,161

 

 

$

7,416

 

Accrued liabilities

 

 

8,953

 

 

 

13,448

 

Operating lease liabilities, current

 

 

1,616

 

 

 

1,316

 

Other current liabilities

 

 

161

 

 

 

180

 

Total current liabilities

 

 

17,891

 

 

 

22,360

 

Operating lease liabilities, non-current

 

 

30,398

 

 

 

31,542

 

Total liabilities

 

 

48,289

 

 

 

53,902

 

Commitments and contingencies (Note 5)

 

 

 

 

 

 

Stockholders’ equity:

 

 

 

 

 

 

Common stock

 

 

53

 

 

 

48

 

Additional paid-in capital

 

 

696,968

 

 

 

669,780

 

Accumulated other comprehensive loss

 

 

(171

)

 

 

(372

)

Accumulated deficit

 

 

(512,126

)

 

 

(438,262

)

Total stockholders’ equity

 

 

184,724

 

 

 

231,194

 

Total liabilities and stockholders’ equity

 

$

233,013

 

 

$

285,096

 

 

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)

 

 

 

Three Months Ended
June 30,

 

 

Six Months Ended
June 30,

 

 

 

2023

 

 

2022

 

 

2023

 

 

2022

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

Research and development

 

$

30,251

 

 

$

29,106

 

 

$

62,596

 

 

$

56,104

 

General and administrative

 

 

7,440

 

 

 

8,303

 

 

 

16,337

 

 

 

16,731

 

Total operating expenses

 

 

37,691

 

 

 

37,409

 

 

 

78,933

 

 

 

72,835

 

Loss from operations

 

 

(37,691

)

 

 

(37,409

)

 

 

(78,933

)

 

 

(72,835

)

Interest and other income, net

 

 

2,503

 

 

 

272

 

 

 

5,069

 

 

 

325

 

Net loss

 

$

(35,188

)

 

$

(37,137

)

 

$

(73,864

)

 

$

(72,510

)

Net loss per share, basic and diluted

 

$

(0.47

)

 

$

(0.96

)

 

$

(0.99

)

 

$

(1.88

)

Weighted-average shares used in computing net loss per share,
   basic and diluted

 

 

75,230,003

 

 

 

38,584,400

 

 

 

74,546,995

 

 

 

38,573,950

 

 

See accompanying notes to unaudited condensed consolidated financial statements.

2


 

ANNEXON, INC.

Condensed Consolidated Statements of Comprehensive Loss

(in thousands)

(Unaudited)

 

 

 

Three Months Ended
June 30,

 

 

Six Months Ended
June 30,

 

 

 

2023

 

 

2022

 

 

2023

 

 

2022

 

Net loss

 

$

(35,188

)

 

$

(37,137

)

 

$

(73,864

)

 

$

(72,510

)

Other comprehensive gain (loss):

 

 

 

 

 

 

 

 

 

 

 

 

Foreign currency translation adjustment

 

 

(1

)

 

 

(6

)

 

 

(6

)

 

 

(3

)

Unrealized gain (loss) on available-for-sale securities

 

 

47

 

 

 

(60

)

 

 

207

 

 

 

(256

)

Comprehensive loss

 

$

(35,142

)

 

$

(37,203

)

 

$

(73,663

)

 

$

(72,769

)

 

See accompanying notes to unaudited condensed consolidated financial statements.

3


 

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, 2022

 

 

47,722,995

 

 

$

48

 

 

$

669,780

 

 

$

(372

)

 

$

(438,262

)

 

$

231,194

 

Stock-based compensation

 

 

 

 

 

 

 

 

4,607

 

 

 

 

 

 

 

 

 

4,607

 

Exercise of stock options

 

 

55,605

 

 

 

 

 

 

111

 

 

 

 

 

 

 

 

 

111

 

Exercise of pre-funded warrants

 

 

2,582,557

 

 

 

3

 

 

 

(3

)

 

 

 

 

 

 

 

 

 

Issuance of common stock to a related
  party, net of issuance costs of $
525

 

 

2,646,458

 

 

 

2

 

 

 

17,468

 

 

 

 

 

 

 

 

 

17,470

 

Restricted stock units vested in the period

 

 

73,058

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign currency translation
  adjustment

 

 

 

 

 

 

 

 

 

 

 

(5

)

 

 

 

 

 

(5

)

Unrealized gain on available-for-sale
  securities

 

 

 

 

 

 

 

 

 

 

 

160

 

 

 

 

 

 

160

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(38,676

)

 

 

(38,676

)

Balances as of March 31, 2023

 

 

53,080,673

 

 

 

53

 

 

 

691,963

 

 

 

(217

)

 

 

(476,938

)

 

 

214,861

 

Stock-based compensation

 

 

 

 

 

 

 

 

4,660

 

 

 

 

 

 

 

 

 

4,660

 

Exercise of stock options

 

 

283

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Issuance of common stock per
  Employee Stock Purchase Plan
  purchase

 

 

70,155

 

 

 

 

 

 

345

 

 

 

 

 

 

 

 

 

345

 

Foreign currency translation
  adjustment

 

 

 

 

 

 

 

 

 

 

 

(1

)

 

 

 

 

 

(1

)

Unrealized gain on available-for-sale
  securities

 

 

 

 

 

 

 

 

 

 

 

47

 

 

 

 

 

 

47

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(35,188

)

 

 

(35,188

)

Balances as of June 30, 2023

 

 

53,151,111

 

 

$

53

 

 

$

696,968

 

 

$

(171

)

 

$

(512,126

)

 

$

184,724

 

 

 

See accompanying notes to unaudited condensed consolidated financial statements.

 

4


 

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

 

 

 

See accompanying notes to unaudited condensed consolidated financial statements.

5


 

ANNEXON, INC.

Condensed Consolidated Statements of Cash Flows

(in thousands)

(Unaudited)

 

 

 

Six Months Ended
June 30,

 

 

 

2023

 

 

2022

 

Operating activities:

 

 

 

 

 

 

Net loss

 

$

(73,864

)

 

$

(72,510

)

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

 

 

 

 

 

 

Depreciation and amortization

 

 

1,072

 

 

 

1,058

 

Accretion of (discount) premium on available-for-sale securities

 

 

(1,695

)

 

 

601

 

Stock-based compensation

 

 

9,267

 

 

 

8,772

 

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

 

 

538

 

 

 

469

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

Prepaid expenses and other current assets

 

 

818

 

 

 

1,200

 

Other assets

 

 

 

 

 

(1,018

)

Accounts payable

 

 

(152

)

 

 

2,669

 

Accrued liabilities

 

 

(4,495

)

 

 

736

 

Operating lease liabilities

 

 

(844

)

 

 

(454

)

Other current liabilities

 

 

(19

)

 

 

25

 

Net cash used in operating activities

 

 

(69,374

)

 

 

(58,452

)

Investing activities:

 

 

 

 

 

 

Purchases of property and equipment

 

 

(167

)

 

 

(6,075

)

Purchases of available-for-sale securities

 

 

(69,875

)

 

 

(27,632

)

Proceeds from maturities of available-for-sale securities

 

 

95,090

 

 

 

121,667

 

Net cash provided by investing activities

 

 

25,048

 

 

 

87,960

 

Financing activities:

 

 

 

 

 

 

Proceeds from the exercise of common stock options

 

 

111

 

 

 

19

 

Proceeds from Employee Stock Purchase Plan purchases

 

 

345

 

 

 

113

 

Proceeds from the issuance of common stock to a related party, net of commissions

 

 

17,545

 

 

 

 

Payment of common stock issuance costs

 

 

(75

)

 

 

 

Net cash provided by financing activities

 

 

17,926

 

 

 

132

 

(Decrease) increase in cash, cash equivalents and restricted cash

 

 

(26,400

)

 

 

29,640

 

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

 

 

(6

)

 

 

(3

)

Cash, cash equivalents and restricted cash

 

 

 

 

 

 

Beginning of period

 

 

141,052

 

 

 

76,009

 

End of period

 

$

114,646

 

 

$

105,646

 

Supplemental disclosure of cash flow information:

 

 

 

 

 

 

Cash paid for amounts included in the measurement of lease liability

 

$

2,350

 

 

$

1,892

 

Non-cash investing and financing activities:

 

 

 

 

 

 

Deferred offering costs included in accrued liabilities

 

$

 

 

$

704

 

Purchases of property and equipment included in accounts payable and accrued liabilities

 

$

7

 

 

$

93

 

 

 

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 $512.1 million and cash and cash equivalents and short-term investments of $192.9 million.

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.

7


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