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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(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:
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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 8, 2024 was
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 |
17 |
Item 3. |
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25 |
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Item 4. |
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25 |
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PART II—OTHER INFORMATION |
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Item 1. |
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26 |
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Item 1A. |
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26 |
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Item 2. |
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69 |
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Item 3. |
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69 |
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Item 4. |
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69 |
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Item 5. |
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69 |
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Item 6. |
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70 |
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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)
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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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2024 |
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2023 |
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2024 |
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2023 |
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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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2024 |
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2023 |
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2024 |
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2023 |
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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 income (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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Unrealized gain (loss) on available-for-sale securities |
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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, 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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Exercise of stock options |
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— |
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— |
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— |
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Issuance of common stock, net of |
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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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Restricted stock 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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Stock-based compensation |
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— |
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— |
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— |
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— |
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Other comprehensive 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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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, 2024 |
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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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Issuance of common stock per Employee |
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— |
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— |
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Issuance of common stock, net of issuance |
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— |
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— |
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Issuance of common stock and pre-funded |
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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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Exercise of common warrants |
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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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Other comprehensive income |
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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, 2024 |
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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, 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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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 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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Stock-based compensation |
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— |
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— |
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— |
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— |
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Other comprehensive income |
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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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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 Employee |
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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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Other comprehensive income |
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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.
5
ANNEXON, INC.
Condensed Consolidated Statements of Cash Flows
(in thousands)
(Unaudited)
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Six Months Ended |
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2024 |
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2023 |
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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 on available-for-sale securities |
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( |
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( |
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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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( |
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Accounts payable |
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( |
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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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( |
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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 (used in) provided by investing activities |
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( |
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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, including related party of |
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Proceeds from the issuance of common stock and pre-funded warrants, net of commissions |
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— |
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Payment of financing costs |
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( |
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( |
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Net cash provided by financing activities |
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Decrease in cash, cash equivalents and restricted cash |
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( |
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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 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 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 $
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
7
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:
8
ANNEXON, INC.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
On a recurring basis, the Company measures certain financial assets and liabilities at fair value.
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June 30, 2024 |
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Valuation |
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Amortized |
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Gross |
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Gross |
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Aggregate |
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Assets: |
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Cash equivalents: |
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Money market funds |
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Level 1 |
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$ |
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$ |
— |
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$ |
— |
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$ |
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Government bonds |
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Level 2 |
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( |
) |
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Total cash equivalents |
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( |
) |
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Short-term investments: |
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Government bonds |
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Level 2 |
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( |
) |
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Total short-term investments |
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( |
) |
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$ |
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$ |
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$ |
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$ |
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December 31, 2023 |
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Valuation |
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Amortized |
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Gross |
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Gross |
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Aggregate |
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Assets: |
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Cash equivalents: |
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Money market funds |
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Level 1 |
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$ |
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$ |
— |
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$ |
— |
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$ |
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Government bonds |
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Level 2 |
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— |
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— |
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Total cash equivalents |
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— |
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— |
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Short-term investments: |
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Government bonds |
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Level 2 |
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— |
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Total short-term investments |
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— |
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$ |
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$ |
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$ |
— |
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$ |
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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):
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June 30, |
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December 31, |
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Cash |
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$ |
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$ |
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Cash equivalents |
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Cash and cash equivalents |
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Restricted cash |
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Cash, cash equivalents and restricted cash |
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$ |
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$ |
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9
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):
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June 30, |
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December 31, |
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Prepaid research and development costs |
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$ |
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$ |
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Prepaid insurance |
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Other prepaid expenses |
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Other current assets |
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— |
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Total prepaid expenses and other current assets |
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$ |
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$ |
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Property and Equipment, Net
Property and equipment, net, consisted of the following (in thousands):
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June 30, |
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December 31, |
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Leasehold improvements |
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$ |
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$ |
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Laboratory equipment |
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Furniture and fixtures |
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Computer equipment and software |
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Construction in progress |
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— |
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Total property and equipment, gross |
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Less: accumulated depreciation |
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( |
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( |
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Total property and equipment, net |
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$ |
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$ |
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The Company recognized depreciation for property and equipment of $
Accrued Liabilities
Accrued liabilities consisted of the following (in thousands):
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June 30, |
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December 31, |
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Accrued research and development expenses |
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$ |
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$ |
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Accrued compensation |
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Accrued professional services |
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Other accrued expenses |
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Total accrued liabilities |
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$ |
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$ |
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5. Commitments and Contingencies
Leases
The Company leases its offices and laboratory in Brisbane, California, or the Brisbane Lease, under a
As of June 30, 2024, the operating lease right-of-use assets were $
10
ANNEXON, INC.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
The weighted-average incremental borrowing rate used to measure the operating lease liability is
Operating lease costs were $
Future minimum lease payments and related lease liabilities as of June 30, 2024, were as follows:
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(in thousands) |
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2024 (remaining six months) |
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$ |
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2025 |
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2026 |
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2027 |
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2028 and thereafter |
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Total undiscounted lease payments |
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Less: Imputed interest |
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( |
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Total |
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$ |
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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
6. Stockholders’ Equity
2024 Financing
In June 2024, the Company raised net proceeds of approximately $
2023 Financing
In December 2023, the Company raised net proceeds of approximately $
2022 Financing
In July 2022, the Company raised net proceeds of approximately $
11
ANNEXON, INC.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
stock and accompanying common warrants to purchase up to
Pre-Funded and Common Warrants
The following summarizes warrant activity during the six months ended June 30, 2024 and 2023:
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Number of Common Warrants |
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Number of Pre-funded Warrants |
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Weighted-Average Exercise Price |
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Balances as of December 31, 2023 |
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Issued |
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— |
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$ |
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Exercised |
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( |
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( |
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$ |
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Balances as of June 30, 2024 |
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Number of Common Warrants |
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Number of Pre-funded Warrants |
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Weighted-Average Exercise Price |
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Balances as of December 31, 2022 |
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Exercised |
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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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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 $
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 $
12
ANNEXON, INC.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Common Stock
The Company reserved the following shares of common stock for issuance as follows:
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June 30, |
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December 31, |
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Stock options issued and outstanding |
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Stock options reserved for 2020 Incentive Award Plan |
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Unvested restricted stock units outstanding |
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Common stock reserved for 2021 ATM program |
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