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 June 30, 2024

☐ 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 8, 2024 was 105,653,962. This number does not include 41,283,052 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). 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	17
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	25
Item 4.	Controls and Procedures	25

	PART II—OTHER INFORMATION
Item 1.	Legal Proceedings	26
Item 1A.	Risk Factors	26
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	69
Item 3.	Defaults Upon Senior Securities	69
Item 4.	Mine Safety Disclosures	69
Item 5.	Other Information	69
Item 6.	Exhibits	70
SIGNATURES		71

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, 2024			December 31, 2023
	(Unaudited)
Assets
Current assets:
Cash and cash equivalents	$	157,304		$	225,110
Short-term investments		211,395			34,606
Prepaid expenses and other current assets		5,270			4,144
Total current assets		373,969			263,860
Restricted cash		1,032			1,032
Property and equipment, net		13,702			14,773
Operating lease right-of-use assets		17,382			18,009
Total assets	$	406,085		$	297,674
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	4,126		$	5,487
Accrued liabilities		10,657			10,235
Operating lease liabilities, current		2,345			2,165
Other current liabilities		20			41
Total current liabilities		17,148			17,928
Operating lease liabilities, non-current		27,858			29,190
Total liabilities		45,006			47,118
Commitments and contingencies (Note 5)
Stockholders’ equity:
Common stock		106			78
Additional paid-in capital		988,347			823,029
Accumulated other comprehensive loss		(89	)		(52	)
Accumulated deficit		(627,285	)		(572,499	)
Total stockholders’ equity		361,079			250,556
Total liabilities and stockholders’ equity	$	406,085		$	297,674

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 June 30,						Six Months Ended June 30,
	2024			2023			2024			2023
Operating expenses:
Research and development	$	25,026		$	30,251		$	45,989		$	62,596
General and administrative		8,554			7,440			16,163			16,337
Total operating expenses		33,580			37,691			62,152			78,933
Loss from operations		(33,580	)		(37,691	)		(62,152	)		(78,933	)
Interest and other income, net		3,970			2,503			7,366			5,069
Net loss	$	(29,610	)	$	(35,188	)	$	(54,786	)	$	(73,864	)
Net loss per share, basic and diluted	$	(0.23	)	$	(0.47	)	$	(0.43	)	$	(0.99	)
Weighted-average shares used in computing net loss per share, basic and diluted		130,132,960			75,230,003			126,403,081			74,546,995

See accompanying notes to unaudited condensed consolidated financial statements.

ANNEXON, INC.

Condensed Consolidated Statements of Comprehensive Loss

(in thousands)

(Unaudited)


	Three Months Ended June 30,						Six Months Ended June 30,
	2024			2023			2024			2023
Net loss	$	(29,610	)	$	(35,188	)	$	(54,786	)	$	(73,864	)
Other comprehensive income (loss):
Foreign currency translation adjustment		1			(1	)		(11	)		(6	)
Unrealized gain (loss) on available-for-sale securities		12			47			(26	)		207
Comprehensive loss	$	(29,597	)	$	(35,142	)	$	(54,823	)	$	(73,663	)

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, 2023		78,369,099	$	78	$	823,029		$	(52	)	$	(572,499	)	$	250,556
Exercise of stock options		105,526		—		217			—			—			217
Issuance of common stock, net of issuance costs of $933		6,639,348		7		32,191			—			—			32,198
Exercise of pre-funded warrants		5,243,400		5		(5	)		—			—			—
Restricted stock vested in the period		124,695		—		—			—			—			—
Stock-based compensation		—		—		4,660			—			—			4,660
Other comprehensive loss		—		—		—			(50	)		—			(50	)
Net loss		—		—		—			—			(25,176	)		(25,176	)
Balances as of March 31, 2024		90,482,068		90		860,092			(102	)		(597,675	)		262,405
Exercise of stock options		35,914		—		171			—			—			171
Issuance of common stock per Employee Stock Purchase Plan purchase		98,534		1		214			—			—			215
Issuance of common stock, net of issuance costs of $480		936,719		1		6,125			—			—			6,126
Issuance of common stock and pre-funded warrants, net of issuance costs of $8,183		13,001,120		13		116,804			—			—			116,817
Exercise of pre-funded warrants		965,427		1		(1	)		—			—			—
Exercise of common warrants		19,901		—		—			—			—			—
Stock-based compensation		—		—		4,942			—			—			4,942
Other comprehensive income		—		—		—			13			—			13
Net loss		—		—		—			—			(29,610	)		(29,610	)
Balances as of June 30, 2024		105,539,683	$	106	$	988,347		$	(89	)	$	(627,285	)	$	361,079

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, 2022		47,722,995	$	48	$	669,780		$	(372	)	$	(438,262	)	$	231,194
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 vested in the period		73,058		—		—			—			—			—
Stock-based compensation		—		—		4,607			—			—			4,607
Other comprehensive income		—		—		—			155			—			155
Net loss		—		—		—			—			(38,676	)		(38,676	)
Balances as of March 31, 2023		53,080,673		53		691,963			(217	)		(476,938	)		214,861
Exercise of stock options		283		—		—			—			—			—
Issuance of common stock per Employee Stock Purchase Plan purchase		70,155		—		345			—			—			345
Stock-based compensation		—		—		4,660			—			—			4,660
Other comprehensive income		—		—		—			46			—			46
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.

ANNEXON, INC.

Condensed Consolidated Statements of Cash Flows

(in thousands)

(Unaudited)


	Six Months Ended June 30,
	2024			2023
Operating activities:
Net loss	$	(54,786	)	$	(73,864	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		1,075			1,072
Accretion of discount on available-for-sale securities		(2,932	)		(1,695	)
Stock-based compensation		9,602			9,267
Reduction in the carrying amount of right-of-use assets		627			538
Changes in operating assets and liabilities:
Prepaid expenses and other current assets		(1,126	)		818
Accounts payable		(1,457	)		(152	)
Accrued liabilities		194			(4,495	)
Operating lease liabilities		(1,152	)		(844	)
Other current liabilities		(21	)		(19	)
Net cash used in operating activities		(49,976	)		(69,374	)
Investing activities:
Purchases of property and equipment		—			(167	)
Purchases of available-for-sale securities		(266,183	)		(69,875	)
Proceeds from maturities of available-for-sale securities		92,300			95,090
Net cash (used in) provided by investing activities		(173,883	)		25,048
Financing activities:
Proceeds from the exercise of common stock options		388			111
Proceeds from Employee Stock Purchase Plan purchases		215			345
Proceeds from the issuance of common stock, including related party of zero and $17,995 for the six months ended June 30, 2024 and 2023, respectively		39,737			17,995
Proceeds from the issuance of common stock and pre-funded warrants, net of commissions		117,500			—
Payment of financing costs		(1,776	)		(525	)
Net cash provided by financing activities		156,064			17,926
Decrease in cash, cash equivalents and restricted cash		(67,795	)		(26,400	)
Effect of exchange rate changes on cash, cash equivalents and restricted cash		(11	)		(6	)
Cash, cash equivalents and restricted cash
Beginning of period		226,142			141,052
End of period	$	158,336		$	114,646
Supplemental disclosure of cash flow information:
Cash paid for amounts included in the measurement of lease liability	$	2,432		$	2,350
Non-cash investing and financing activities:
Deferred offering costs included in accounts payable and accrued liabilities	$	320		$	—

See accompanying notes to unaudited condensed consolidated financial statements.

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 people living with devasting inflammatory-related diseases. 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, 2024, had an accumulated deficit of $627.3 million and cash and cash equivalents and short-term investments of $368.7 million.

The Company has historically funded its operations through the issuance of shares of its common stock and warrants. Based on projected activities, management projects that existing cash and cash equivalents and short-term investments will enable the Company to fund its operating expenses and capital expenditure requirements for at least twelve months from the date of issuance of these financial statements. The Company’s future viability beyond that point is dependent on its ability to achieve development milestones and obtain additional funding. Management expects to continue to incur losses and negative cash flows from operations for at least the next several years. There are uncertainties associated with the Company’s ability to (1) obtain additional equity or debt financing on terms that are favorable to the Company, (2) enter into collaborative agreements with strategic partners, and (3) succeed in its future operations. If the Company is not able to obtain the required funding for its operations or is not able to obtain funding on terms that are favorable to the Company, it could be forced to delay, reduce or eliminate its research and development programs and its business could be materially harmed.

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, 2024, the condensed consolidated statements of operations, comprehensive loss, stockholders’ equity for the three and six months ended June 30, 2024 and 2023 and the condensed consolidated statements of cash flows for the six months ended June 30, 2024 and 2023 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-month periods are also unaudited. The results of operations for the three and six months ended June 30, 2024 are not necessarily indicative of the results to be expected for the year ending December 31, 2024 or for any other future annual or interim period. The condensed consolidated balance sheet as of December 31, 2023 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, 2023, filed with the SEC on March 26, 2024.

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, operating lease right-of-use assets and liabilities, valuation of deferred tax assets and uncertain tax positions (including valuation allowance), clinical trial accruals and stock-based compensation. The Company evaluates its estimates and assumptions on an ongoing basis using historical experience and

ANNEXON, INC.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

other factors and adjusts those estimates and assumptions when facts and circumstances dictate. Actual results could differ from those estimates.

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 the Company’s 2023 Form 10-K filed on March 26, 2024 for a detailed description of significant accounting policies. There have been no significant changes to the Company’s accounting policies as disclosed in its 2023 Form 10-K.

Recently Issued Accounting Pronouncements

In November 2023, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2023-07, Segment Reporting: Improvements to Reportable Segment Disclosures, which requires disclosure of incremental segment information on an interim and annual basis. This ASU is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal periods beginning after December 15, 2024, and requires retrospective application to all prior periods presented in the financial statements. The Company adopted annual requirements under ASU 2023-07 on January 1, 2024 and plans to adopt interim requirements under ASU 2023-07 on January 1, 2025. The Company will begin including financial statement disclosures in accordance with ASU 2023-07 in its Annual Report on Form 10-K for the year ended December 31, 2024. The Company is evaluating the impact of this guidance on its financial statements and related disclosures.

In December 2023, the FASB issued ASU 2023-09, Income Taxes: Improvements to Income Tax Disclosures, which requires enhanced annual disclosures regarding the rate reconciliation and income taxes paid information. ASU 2023-09 is effective for fiscal years beginning after December 15, 2024 and may be adopted on a prospective or retrospective basis. Early adoption is permitted. The Company is evaluating the impact of this guidance on its financial statements and related disclosures.

3. Fair Value Measurements

The Company utilizes valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs to the extent possible. The Company determines fair value based on assumptions that market participants would use in pricing an asset or liability in the principal or most advantageous market. When considering market participant assumptions in fair value measurements, the following fair value hierarchy distinguishes between observable and unobservable inputs, which are categorized in one of the following levels:

•

Level 1 Inputs: Unadjusted quoted prices in active markets for identical assets or liabilities accessible to the reporting entity at the measurement date.

•

Level 2 Inputs: Other than quoted prices included in Level 1 inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the asset or liability.

•

Level 3 Inputs: Unobservable inputs for the asset or liability used to measure fair value to the extent that observable inputs are not available, thereby allowing for situations in which there is little, if any, market activity for the asset or liability at measurement date.

ANNEXON, INC.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

On a recurring basis, the Company measures certain financial assets and liabilities at fair value. The following tables summarize the fair value of the Company’s financial assets measured at fair value on a recurring basis by level within the fair value hierarchy (in thousands):


		June 30, 2024
	Valuation Hierarchy	Amortized Cost		Gross Unrealized Holding Gains		Gross Unrealized Holding Losses			Aggregate Fair Value
Assets:
Cash equivalents:
Money market funds	Level 1	$	36,226	$	—	$	—		$	36,226
Government bonds	Level 2		118,139		1		(1	)		118,139
Total cash equivalents			154,365		1		(1	)		154,365
Short-term investments:
Government bonds	Level 2		211,402		4		(11	)		211,395
Total short-term investments			211,402		4		(11	)		211,395
		$	365,767	$	5	$	(12	)	$	365,760


		December 31, 2023
	Valuation Hierarchy	Amortized Cost		Gross Unrealized Holding Gains		Gross Unrealized Holding Losses		Aggregate Fair Value
Assets:
Cash equivalents:
Money market funds	Level 1	$	143,933	$	—	$	—	$	143,933
Government bonds	Level 2		72,689		—		—		72,689
Total cash equivalents			216,622		—		—		216,622
Short-term investments:
Government bonds	Level 2		34,596		10		—		34,606
Total short-term investments			34,596		10		—		34,606
		$	251,218	$	10	$	—	$	251,228

For the three and six months ended June 30, 2024 and 2023, the Company recognized no material realized gains or losses on financial instruments.

4. Balance Sheet Components

Cash, Cash Equivalents and Restricted Cash

The Company considers all highly liquid instruments with an original maturity of three months or less at time of purchase to be cash equivalents. Cash equivalents, which include amounts invested in money market funds, are stated at fair value.

Restricted cash as of June 30, 2024 relates to the letters of credit established for the Company’s office leases.

The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the condensed consolidated balance sheets that sum to the total of the same amounts shown in the condensed consolidated statements of cash flows (in thousands):


	June 30, 2024		December 31, 2023
Cash	$	2,939	$	8,488
Cash equivalents		154,365		216,622
Cash and cash equivalents		157,304		225,110
Restricted cash		1,032		1,032
Cash, cash equivalents and restricted cash	$	158,336	$	226,142

ANNEXON, INC.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

Prepaid Expenses and Other Current Assets

Prepaid expenses and other current assets consisted of the following (in thousands):


	June 30, 2024		December 31, 2023
Prepaid research and development costs	$	4,130	$	2,617
Prepaid insurance		309		704
Other prepaid expenses		831		760
Other current assets		—		63
Total prepaid expenses and other current assets	$	5,270	$	4,144

Property and Equipment, Net

Property and equipment, net, consisted of the following (in thousands):


	June 30, 2024			December 31, 2023
Leasehold improvements	$	17,245		$	17,245
Laboratory equipment		1,832			1,832
Furniture and fixtures		692			692
Computer equipment and software		33			33
Construction in progress		4			—
Total property and equipment, gross		19,806			19,802
Less: accumulated depreciation		(6,104	)		(5,029	)
Total property and equipment, net	$	13,702		$	14,773

The Company recognized depreciation for property and equipment of $0.5 million for each of the three months ended June 30, 2024 and 2023, and $1.1 million for each of the six months ended June 30, 2024 and 2023.

Accrued Liabilities

Accrued liabilities consisted of the following (in thousands):


	June 30, 2024		December 31, 2023
Accrued research and development expenses	$	6,538	$	4,027
Accrued compensation		2,766		5,607
Accrued professional services		1,240		501
Other accrued expenses		113		100
Total accrued liabilities	$	10,657	$	10,235

5. Commitments and Contingencies

Leases

The Company leases its offices and laboratory in Brisbane, California, or the Brisbane Lease, under a ten-year noncancelable lease agreement that ends in October 2031 with a ten-year renewable option. In November 2021, the Company subleased unoccupied space from December 2021 through November 2023, for aggregate sublease payments of $3.4 million. The sublease income, while it reduces the rent expense, is not considered in the value of the right-of-use assets or lease liabilities. The Company’s sublease income was zero and $0.6 million for the three months ended June 30, 2024 and 2023, respectively, and zero and $1.1 million for the six months ended June 30, 2024 and 2023, respectively.

As of June 30, 2024, the operating lease right-of-use assets were $17.4 million and lease liabilities were $30.2 million on the condensed consolidated balance sheet. The weighted-average remaining lease term is 7.3 years.

ANNEXON, INC.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

The weighted-average incremental borrowing rate used to measure the operating lease liability is 8.4%.

Operating lease costs were $1.0 million and $0.5 million for the three months ended June 30, 2024 and 2023, respectively, and $1.9 million and $1.1 million for the six months ended June 30, 2024 and 2023, respectively. Variable lease payments were $0.6 million and $0.4 million for the three months ended June 30, 2024 and 2023, respectively, and $1.2 million and $0.7 million for the six months ended June 30, 2024 and 2023, respectively.

Future minimum lease payments and related lease liabilities as of June 30, 2024, were as follows:


	(in thousands)
2024 (remaining six months)	$	2,461
2025		5,065
2026		5,242
2027		5,425
2028 and thereafter		22,600
Total undiscounted lease payments		40,793
Less: Imputed interest		(10,590	)
Total	$	30,203

Guarantees and Indemnifications

In the normal course of business, the Company enters into agreements that contain a variety of representations and provide for general indemnification. The Company’s exposure under these agreements is unknown because it involves claims that may be made against the Company in the future. To date, the Company has not paid any claims or been required to defend any action related to its indemnification obligations. As of June 30, 2024, the Company did not have any material indemnification claims that were probable or reasonably possible and consequently has not recorded related liabilities.

6. Stockholders’ Equity

2024 Financing

In June 2024, the Company raised net proceeds of approximately $116.8 million after deducting underwriting discounts and offering expenses through the sale of 13,001,120 shares of the Company’s common stock, par value $0.001 per share at a price of $6.25 per share and pre-funded warrants to purchase an aggregate of 7,000,000 shares of common stock at a price of $6.249 per share, which equals the per share offering price for the shares of common stock less the $0.001 exercise price for each pre-funded warrant. The pre-funded warrants are immediately exercisable, subject to certain beneficial ownership limitations. The warrants meet the criteria for equity classification and were therefore recorded at fair value as of the grant date as a component of stockholders’ equity within additional paid-in capital in the amount of $43.7 million.

2023 Financing

In December 2023, the Company raised net proceeds of approximately $117.0 million after deducting underwriting discounts and offering expenses through the sale of 25,035,000 shares of the Company’s common stock, par value $0.001 per share at a price of $2.880 per share and pre-funded warrants to purchase an aggregate of 18,379,861 shares of common stock at a price of $2.879 per share, which equals the per share offering price for the shares of common stock less the $0.001 exercise price for each pre-funded warrant. An entity related to one of the Company’s directors participated in the public offering and purchased 350,000 shares of common stock for an aggregate price of approximately $1.0 million. The pre-funded warrants are immediately exercisable, subject to certain beneficial ownership limitations. The warrants meet the criteria for equity classification and were therefore recorded at fair value as of the grant date as a component of stockholders’ equity within additional paid-in capital in the amount of $52.9 million. The Company issued an aggregate of 5,243,400 shares and 965,427 shares of common stock upon the cashless and cash exercise of these pre-funded warrants in February 2024 and April 2024, respectively.

2022 Financing

In July 2022, the Company raised net proceeds of approximately $122.5 million after deducting fees and expenses through the sale of an aggregate of 9,013,834 shares of common stock, pre-funded warrants to purchase up to 24,696,206 shares of its common

ANNEXON, INC.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

stock and accompanying common warrants to purchase up to 8,427,508 shares of its common stock. The offering price per share and accompanying common warrant was $3.87125 per share and the offering price per pre-funded warrant and accompanying common warrant was $3.87025 per share, which equals the per share offering price for the shares of common stock less the $0.001 exercise price for each such pre-funded warrant. The pre-funded warrants remain exercisable until exercised in full. The common warrants have an exercise price of $5.806875 per share and expire on June 30, 2025. Both the pre-funded and common warrants are immediately exercisable, subject to beneficial ownership limitations. The warrants meet the criteria for equity classification and were therefore recorded at fair value as of the grant date as a component of stockholders’ equity within additional paid-in capital. The Company issued an aggregate of 2,582,557 shares of common stock upon the cashless exercise of the pre-funded warrants in March 2023. The Company issued an aggregate of 19,901 shares of common stock upon the cashless exercise of the common warrants in June 2024.

Pre-Funded and Common Warrants

The following summarizes warrant activity during the six months ended June 30, 2024 and 2023:


	Number of Common Warrants			Number of Pre-funded Warrants			Weighted-Average Exercise Price
Balances as of December 31, 2023		8,427,508			40,492,923
Issued		—			7,000,000		$	0.001
Exercised		(322,893	)		(6,209,871	)	$	0.307
Balances as of June 30, 2024		8,104,615			41,283,052


	Number of Common Warrants		Number of Pre-funded Warrants			Weighted-Average Exercise Price
Balances as of December 31, 2022		8,427,508		24,696,206
Exercised		—		(2,583,144	)	$	0.001
Balances as of June 30, 2023		8,427,508		22,113,062

2024 ATM Program

In March 2024, the Company entered into a sales agreement with TD Cowen, as sales agent, or 2024 ATM program, pursuant to which the Company may issue and sell shares of its common stock for an aggregate maximum offering of $100.0 million. TD Cowen is entitled to compensation up to 3% of the aggregate gross proceeds for the common stock sold through the 2024 ATM program. As of June 30, 2024, the Company has not made any sales under the 2024 ATM program.

2021 At-the-Market (ATM) Program

In August 2021, the Company entered into a sales agreement with Cowen and Company LLC, or TD Cowen, as sales agent, pursuant to which the Company may issue and sell shares of its common stock for an aggregate maximum offering of $100.0 million under an at-the-market offering program, or 2021 ATM program. TD Cowen is entitled to compensation up to 3% of the aggregate gross proceeds for the common stock sold through the 2021 ATM program. During the six months ended June 30, 2024 and 2023, the Company sold 7,576,067 shares and 2,646,458 shares of common stock, respectively, under the 2021 ATM program for net proceeds of approximately $38.4 million and $17.5 million, respectively, after deducting commissions paid to TD Cowen. As of June 30, 2024 and December 31, 2023, approximately $42.3 million and $82.0 million, respectively, remained available for the offer and sale of shares of common stock under the 2021 ATM program. The Form S-3 registration statement pursuant to which the 2021 ATM Program is registered will expire on August 15, 2024, and no shares of common stock may be sold under the 2021 ATM Program after that date.

ANNEXON, INC.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

Common Stock

The Company reserved the following shares of common stock for issuance as follows:


	June 30, 2024		December 31, 2023
Stock options issued and outstanding		11,937,414		9,208,970
Stock options reserved for 2020 Incentive Award Plan		1,861,959		1,988,340
Unvested restricted stock units outstanding		867,298		495,579
Common stock reserved for 2021 ATM program		25,043,404