UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 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, 2020
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: 001-39409
ALLOVIR, INC.
(Exact Name of Registrant as Specified in its Charter)
|
Delaware |
|
83-1971007 |
|
(State or other jurisdiction of incorporation or organization) |
|
(I.R.S. Employer Identification No.) |
|
139 Main Street, Suite 500 Cambridge, MA |
|
02142 |
|
(Address of principal executive offices) |
|
(Zip Code) |
Registrant’s telephone number, including area code: (617) 433-2605
Securities registered pursuant to Section 12(b) of the Act:
|
Title of each class |
|
Trading Symbol(s) |
|
Name of each exchange on which registered |
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Common Stock, par value $0.0001 per share |
|
ALVR |
|
The Nasdaq Global Market |
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 |
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☐ |
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Accelerated filer |
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☐ |
|
|
|
|
|
|
|
|
|
Non-accelerated filer |
|
☒ |
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Smaller reporting company |
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☒ |
|
|
|
|
|
|
|
|
|
|
|
|
|
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 ☒
As of August 31, 2020, the registrant had 21,574,585 shares of common stock, $0.0001 par value per share, outstanding.
Table of Contents
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Page |
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PART I. |
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Item 1. |
3 |
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3 |
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Condensed Consolidated Statements of Operations and Comprehensive Loss |
4 |
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Condensed Consolidated Statements of Convertible Preferred Stock and Changes in Stockholders’ Equity |
5 |
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6 |
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7 |
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Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
20 |
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Item 3. |
29 |
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Item 4. |
30 |
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PART II. |
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Item 1. |
31 |
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Item 1A. |
31 |
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Item 2. |
76 |
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Item 3. |
76 |
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Item 4. |
76 |
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Item 5. |
76 |
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Item 6. |
77 |
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78 |
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i
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical facts contained in this Quarterly Report on Form 10-Q are forward-looking statements, including but not limited to, statements about:
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• |
the success, cost, timing and potential indications of our product development activities and clinical trials, including the ongoing clinical trials of Viralym-M, ALVR106 and ALVR109; |
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• |
the timing of our planned IND submissions to the FDA for our product candidates, including ALVR106, ALVR109, ALVR107 and ALVR108; |
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• |
the timing of the initiation, enrollment and completion of planned clinical trials; |
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• |
our plans to research, develop and commercialize our product candidates, including Viralym-M, ALVR106, ALVR109, ALVR107 and ALVR108; |
|
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• |
the outcomes of our preclinical studies; |
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• |
the costs of development of any of our product candidates or clinical development programs and our ability to obtain funding for our operations, including funding necessary to complete the clinical trials of any of our product candidates; |
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• |
our ability to successfully manufacture and distribute Viralym-M and ALVR106 or any other future product or product candidate, including under the Development and Manufacturing Services Agreement with ElevateBio BaseCamp, Inc.; |
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• |
the potential benefits of and our ability to maintain our collaboration with our existing collaborators, including BCM, and establish or maintain future collaborations or strategic relationships or obtain additional funding; |
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• |
the ability to maintain our existing license agreements, including BCM, and to license additional intellectual property relating to any future product candidates and to comply with our existing license agreements; |
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• |
our ability to attract and retain collaborators with development, regulatory and commercialization expertise; |
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• |
risks associated with the COVID-19 pandemic, which may adversely impact our business and clinical trials; |
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• |
the size of the markets for our VST product candidates, and our ability to serve those markets; |
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|
• |
whether the results of our clinical trials will be sufficient to support domestic or foreign regulatory approvals for any of our product candidates; |
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|
• |
our ability to successfully commercialize our product candidates, including Viralym-M and ALVR106; |
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• |
the rate and degree of market acceptance of our product candidates, including Viralym-M and ALVR106; |
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• |
our ability to obtain and maintain regulatory approval of our product candidates in any of the indications for which we plan to develop them, and any related restrictions, limitations or warnings in the label of any approved product we develop; |
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• |
our ability to develop and maintain sales and marketing capabilities, whether alone or with potential future collaborators; |
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• |
regulatory developments in the United States and foreign countries with respect to our product candidates or our competitors’ products and product candidates; |
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• |
our reliance on third-party contract manufacturers and the performance of our third-party suppliers and manufacturers to manufacture and supply our product candidates for us; |
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• |
the success of competing therapies that are or become available; |
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|
• |
our ability to attract and retain key scientific or management personnel; |
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• |
our expectation about the period of time over which our existing capital resources will be sufficient to fund our operating expenses and capital expenditures; |
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• |
our expectations regarding the time during which we will be an emerging growth company under the JOBS Act; |
|
|
• |
our financial performance; |
1
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|
• |
developments and projections relating to our competitors or our industry; |
|
|
• |
the accuracy of our estimates regarding expenses, future revenues, capital requirements and needs for additional financing; and |
|
|
• |
our expectations regarding our ability to obtain and maintain intellectual property protection for our product candidates and our ability to operate our business without infringing on the intellectual property rights of others. |
In some cases, you can identify forward-looking statements by the words “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “might,” “objective,” “ongoing,” “plan,” “predict,” “project,” “potential,” “should,” “will,” or “would,” or the negative of these terms, or other comparable terminology intended to identify statements about the future. These statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, levels of activity, performance or achievements to be materially different from the information expressed or implied by these forward-looking statements.
In addition, statements that “we believe” and similar statements reflect our beliefs and opinions on the relevant subject. These statements are based upon information available to us as of the date of this report, and while we believe such information forms a reasonable basis for such statements, such information may be limited or incomplete, and our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all potentially available relevant information. These statements are inherently uncertain and investors are cautioned not to unduly rely upon these statements.
You should read the section titled “Risk Factors” set forth in Part II, Item 1A of this Quarterly Report on Form 10-Q for a discussion of important factors that may cause our actual results to differ materially from those expressed or implied by our forward-looking statements. Moreover, we operate in an evolving environment. New risk factors and uncertainties may emerge from time to time, and it is not possible for management to predict all risk factors and uncertainties. As a result of these factors, we cannot assure you that the forward-looking statements in this Quarterly Report on Form 10-Q will prove to be accurate. Except as required by applicable law, we do not plan to publicly update or revise any forward-looking statements contained herein, whether as a result of any new information, future events, changed circumstances or otherwise.
You should read this Quarterly Report on Form 10-Q, completely and with the understanding that our actual future results may be materially different from what we expect. We qualify all of our forward-looking statements by these cautionary statements.
2
Item 1. Financial Statements (unaudited)
ALLOVIR, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
UNAUDITED
|
(in thousands, except share and per share amounts) |
|
June 30, 2020 |
|
|
December 31, 2019 |
|
||
|
Assets |
|
|
|
|
|
|
|
|
|
Current assets: |
|
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
78,267 |
|
|
$ |
61,084 |
|
|
Short-term investments |
|
|
26,184 |
|
|
|
64,993 |
|
|
Accrued interest |
|
|
58 |
|
|
|
262 |
|
|
Unbilled grant receivables |
|
|
354 |
|
|
|
298 |
|
|
Prepaid expenses and other current assets |
|
|
2,425 |
|
|
|
676 |
|
|
Total current assets |
|
|
107,288 |
|
|
|
127,313 |
|
|
Property and equipment |
|
|
313 |
|
|
|
350 |
|
|
Operating lease right-of-use assets |
|
|
10,245 |
|
|
|
11,759 |
|
|
Total assets |
|
$ |
117,846 |
|
|
$ |
139,422 |
|
|
Liabilities, convertible preferred stock and stockholders’ deficit |
|
|
|
|
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
|
|
|
|
Accounts payable |
|
$ |
680 |
|
|
$ |
630 |
|
|
Accrued expenses |
|
|
4,546 |
|
|
|
5,163 |
|
|
Operating lease liability, current |
|
|
3,147 |
|
|
|
3,067 |
|
|
Amount due to related party |
|
|
542 |
|
|
|
246 |
|
|
Total current liabilities |
|
|
8,915 |
|
|
|
9,106 |
|
|
Operating lease liability, long term |
|
|
7,098 |
|
|
|
8,692 |
|
|
Total liabilities |
|
|
16,013 |
|
|
|
17,798 |
|
|
Series B preferred stock, $0.0001 par value: 14,877,697 shares authorized, issued and outstanding at June 30, 2020 and December 31, 2019; net of issuance costs (liquidation value of $121.3 million) |
|
|
120,923 |
|
|
|
120,923 |
|
|
Series A preferred stock, $0.0001 par value: 64,520,653 shares authorized at June 30, 2020 and December 31, 2019; 44,520,653 shares issued and outstanding at June 30, 2020 and December 31, 2019; net of issuance costs (liquidation value of $66.8 million) |
|
|
52,204 |
|
|
|
52,204 |
|
|
Stockholders’ deficit: |
|
|
|
|
|
|
|
|
|
Common stock, $0.0001 par value: 90,000,000 shares authorized at June 30, 2020 and December 31, 2019; 6,559,348 and 6,502,929 issued at June 30, 2020 and December 31, 2019, respectively; 2,801,859 and 2,099,740 outstanding at June 30, 2020 and December 31, 2019, respectively |
|
|
— |
|
|
|
— |
|
|
Additional paid-in capital |
|
|
4,886 |
|
|
|
3,748 |
|
|
Accumulated other comprehensive income |
|
|
110 |
|
|
|
68 |
|
|
Accumulated deficit |
|
|
(76,290 |
) |
|
|
(55,319 |
) |
|
Total stockholders’ deficit |
|
|
(71,294 |
) |
|
|
(51,503 |
) |
|
Total liabilities, convertible preferred stock and stockholders’ deficit |
|
$ |
117,846 |
|
|
$ |
139,422 |
|
The accompanying notes are an integral part of these condensed consolidated financial statements.
3
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
UNAUDITED
|
|
|
Three Months Ended June 30, |
|
|
Six Months Ended June 30, |
|
||||||||||
|
(in thousands, except share and per share amounts) |
|
2020 |
|
|
2019 |
|
|
2020 |
|
|
2019 |
|
||||
|
Revenue |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
165 |
|
|
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Research and development |
|
|
8,885 |
|
|
|
2,755 |
|
|
|
15,724 |
|
|
|
3,906 |
|
|
General and administrative |
|
|
3,268 |
|
|
|
3,190 |
|
|
|
6,269 |
|
|
|
4,977 |
|
|
Total operating expenses |
|
|
12,153 |
|
|
|
5,945 |
|
|
|
21,993 |
|
|
|
8,883 |
|
|
Loss from operations |
|
|
(12,153 |
) |
|
|
(5,945 |
) |
|
|
(21,993 |
) |
|
|
(8,718 |
) |
|
Total other income, net: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest income |
|
|
166 |
|
|
|
503 |
|
|
|
623 |
|
|
|
619 |
|
|
Other income, net |
|
|
355 |
|
|
|
140 |
|
|
|
399 |
|
|
|
273 |
|
|
Net loss |
|
$ |
(11,632 |
) |
|
$ |
(5,302 |
) |
|
$ |
(20,971 |
) |
|
$ |
(7,826 |
) |
|
Net loss per share — basic and diluted |
|
$ |
(4.43 |
) |
|
$ |
(5.05 |
) |
|
$ |
(8.66 |
) |
|
$ |
(8.49 |
) |
|
Weighted-average common shares outstanding — basic and diluted |
|
|
2,625,648 |
|
|
|
1,050,190 |
|
|
|
2,420,797 |
|
|
|
921,995 |
|
|
Comprehensive loss: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss |
|
$ |
(11,632 |
) |
|
$ |
(5,302 |
) |
|
$ |
(20,971 |
) |
|
$ |
(7,826 |
) |
|
Other comprehensive (loss) income, net of tax: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unrealized (loss) gain on available-for-sale securities |
|
|
(134 |
) |
|
|
129 |
|
|
|
42 |
|
|
|
129 |
|
|
Total other comprehensive (loss) income |
|
|
(134 |
) |
|
|
129 |
|
|
|
42 |
|
|
|
129 |
|
|
Comprehensive loss |
|
$ |
(11,766 |
) |
|
$ |
(5,173 |
) |
|
$ |
(20,929 |
) |
|
$ |
(7,697 |
) |
The accompanying notes are an integral part of these condensed consolidated financial statements.
4
CONDENSED CONSOLIDATED STATEMENTS OF CONVERTIBLE PREFERRED STOCK AND CHANGES IN STOCKHOLDERS’ DEFICIT
UNAUDITED
|
|
|
Series B Preferred Stock |
|
|
Series A Preferred Stock |
|
|
|
Common Stock |
|
|
Additional Paid-In |
|
|
Accumulated Other Comprehensive |
|
|
Accumulated |
|
|
Total Stockholders’ |
|
|||||||||||||||||||
|
(in thousands, except share amounts) |
|
Shares |
|
|
Amount |
|
|
Shares |
|
|
Amount |
|
|
|
Shares |
|
|
Amount |
|
|
Capital |
|
|
Income |
|
|
Deficit |
|
|
Deficit |
|
||||||||||
|
Balance at December 31, 2018 |
|
|
— |
|
|
$ |
— |
|
|
|
42,066,666 |
|
|
$ |
52,204 |
|
|
|
|
747,231 |
|
|
$ |
— |
|
|
$ |
858 |
|
|
|
— |
|
|
$ |
(31,480 |
) |
|
$ |
(30,622 |
) |
|
Issuance of common stock, upon vesting of restricted stock |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
140,106 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
Stock-based compensation |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
— |
|
|
|
— |
|
|
|
231 |
|
|
|
— |
|
|
|
— |
|
|
|
231 |
|
|
Net loss |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(2,524 |
) |
|
|
(2,524 |
) |
|
Balance at March 31, 2019 |
|
|
— |
|
|
$ |
— |
|
|
|
42,066,666 |
|
|
$ |
52,204 |
|
|
|
|
887,337 |
|
|
$ |
— |
|
|
$ |
1,089 |
|
|
$ |
— |
|
|
$ |
(34,004 |
) |
|
$ |
(32,915 |
) |
|
Issuance of Series B Preferred Stock, net of $330 issuance costs |
|
|
14,877,697 |
|
|
$ |
120,923 |
|
|
|
— |
|
|
|
— |
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
Issuance of common stock, upon vesting of restricted stock |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
510,876 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
Unrealized gain on available-for-sale securities |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
129 |
|
|
|
— |
|
|
|
129 |
|
|
Stock-based compensation |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
— |
|
|
|
— |
|
|
|
1,441 |
|
|
|
— |
|
|
|
— |
|
|
|
1,441 |
|
|
Net loss |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(5,302 |
) |
|
|
(5,302 |
) |
|
Balance at June 30, 2019 |
|
|
14,877,697 |
|
|
$ |
120,923 |
|
|
|
42,066,666 |
|
|
$ |
52,204 |
|
|
|
|
1,398,213 |
|
|
$ |
— |
|
|
$ |
2,530 |
|
|
$ |
129 |
|
|
$ |
(39,306 |
) |
|
$ |
(36,647 |
) |
|
|
|
Series B Preferred Stock |
|
|
Series A Preferred Stock |
|
|
|
Common Stock |
|
|
Additional Paid-In |
|
|
Accumulated Other Comprehensive |
|
|
Accumulated |
|
|
Total Stockholders’ |
|
|||||||||||||||||||
|
(in thousands, except share amounts) |
|
Shares |
|
|
Amount |
|
|
Shares |
|
|
Amount |
|
|
|
Shares |
|
|
Amount |
|
|
Capital |
|
|
Income |
|
|
Deficit |
|
|
Deficit |
|
||||||||||
|
Balance at December 31, 2019 |
|
|
14,877,697 |
|
|
$ |
120,923 |
|
|
|
44,520,653 |
|
|
$ |
52,204 |
|
|
|
|
2,099,740 |
|
|
$ |
— |
|
|
$ |
3,748 |
|
|
$ |
68 |
|
|
$ |
(55,319 |
) |
|
$ |
(51,503 |
) |
|
Issuance of common stock, upon vesting of restricted stock |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
292,644 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
Unrealized gain available-for-sale securities |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
176 |
|
|
|
— |
|
|
|
176 |
|
|
Stock-based compensation |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
— |
|
|
|
— |
|
|
|
646 |
|
|
|
— |
|
|
|
— |
|
|
|
646 |
|
|
Net loss |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(9,339 |
) |
|
|
(9,339 |
) |
|
Balance at March 31, 2020 |
|
|
14,877,697 |
|
|
$ |
120,923 |
|
|
|
44,520,653 |
|
|
$ |
52,204 |
|
|
|
|
2,392,384 |
|
|
$ |
— |
|
|
$ |
4,394 |
|
|
$ |
244 |
|
|
$ |
(64,658 |
) |
|
$ |
(60,020 |
) |
|
Issuance of common stock, upon vesting of restricted stock |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
409,475 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
Unrealized loss available-for-sale securities |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(134 |
) |
|
|
— |
|
|
|
(134 |
) |
|
Stock-based compensation |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
— |
|
|
|
— |
|
|
|
492 |
|
|
|
— |
|
|
|
— |
|
|
|
492 |
|
|
Net loss |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(11,632 |
) |
|
|
(11,632 |
) |
|
Balance at June 30, 2020 |
|
|
14,877,697 |
|
|
$ |
120,923 |
|
|
|
44,520,653 |
|
|
$ |
52,204 |
|
|
|
|
2,801,859 |
|
|
$ |
— |
|
|
$ |
4,886 |
|
|
$ |
110 |
|
|
$ |
(76,290 |
) |
|
$ |
(71,294 |
) |
The accompanying notes are an integral part of these condensed consolidated financial statements.
5
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
UNAUDITED
|
|
|
Six Months Ended June 30, |
|
|||||
|
(in thousands) |
|
2020 |
|
|
2019 |
|
||
|
Cash flows from operating activities |
|
|
|
|
|
|
|
|
|
Net loss |
|
$ |
(20,971 |
) |
|
$ |
(7,826 |
) |
|
Adjustments to reconcile net loss to net cash used in operating activities: |
|
|
|
|
|
|
|
|
|
Depreciation and amortization |
|
|
37 |
|
|
|
— |
|
|
Accretion of discounts on short-term investments |
|
|
7 |
|
|
|
(148 |
) |
|
Stock compensation expense |
|
|
1,138 |
|
|
|
1,672 |
|
|
Changes in operating assets and liabilities: |
|
|
|
|
|
|
|
|
|
Subscription receivable and unbilled grants receivable |
|
|
(56 |
) |
|
|
159 |
|
|
Accrued interest |
|
|
204 |
|
|
|
(254 |
) |
|
Prepaid expenses and other current assets |
|
|
(1,749 |
) |
|
|
(378 |
) |
|
Accounts payable, accrued expenses and amount due to related party |
|
|
(271 |
) |
|
|
2,049 |
|
|
Deferred grant revenue |
|
|
— |
|
|
|
(158 |
) |
|
Net cash used in operating activities |
|
|
(21,661 |
) |
|
|
(4,884 |
) |
|
Cash flows from investing activities |
|
|
|
|
|
|
|
|
|
Purchase of property and equipment |
|
|
— |
|
|
|
(225 |
) |
|
Purchase of short-term investments |
|
|
(26,156 |
) |
|
|
(99,344 |
) |
|
Maturities of short-term investments |
|
|
65,000 |
|
|
|
— |
|
|
Net cash provided by (used in) investing activities |
|
|
38,844 |
|
|
|
(99,569 |
) |
|
Cash flows from financing activities |
|
|
|
|
|
|
|
|
|
Proceeds from issuance of Series B Preferred Stock |
|
|
— |
|
|
|
121,253 |
|
|
Issuance costs related to the issuance of preferred stock |
|
|
— |
|
|
|
(330 |
) |
|
Net cash provided by financing activities |
|
|
— |
|
|
|
120,923 |
|
|
Net increase in cash, cash equivalents and restricted cash |
|
|
17,183 |
|
|
|
16,470 |
|
|
Cash, cash equivalents and restricted cash at beginning of period |
|
|
61,084 |
|
|
|
24,960 |
|
|
Cash, cash equivalents and restricted cash at end of period |
|
$ |
78,267 |
|
|
$ |
41,430 |
|
|
Non-cash investing and financing activities |
|
|
|
|
|
|
|
|
|
Unrealized gain on short-term investments |
|
|
42 |
|
|
|
129 |
|
|
Right-of-use assets obtained in exchange for operating lease liability |
|
|
— |
|
|
|
6,890 |
|
The accompanying notes are an integral part of these condensed consolidated financial statements.
6
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
UNAUDITED
1. Nature of the Business
AlloVir, Inc., (“AlloVir” or “the Company”, formerly known as ViraCyte, Inc.) is a leading late, clinical-stage cell therapy company developing highly innovative allogeneic T cell therapies to treat and prevent devastating viral diseases. The Company’s innovative and proprietary virus-specific T cell, or VST, therapy platform allows AlloVir to generate off-the-shelf VSTs designed to restore immunity in patients with T cell deficiencies who are at risk from the life-threatening consequences of viral diseases. There is an urgent medical need for therapies to treat a large number of patients suffering from viral diseases who currently have limited or no treatment options. To date, the Company has generated five innovative, allogeneic, off-the-shelf VST therapy candidates targeting 12 different devastating viruses, the most advanced of which has successfully completed a proof-of-concept trial across five viruses and is entering initial pivotal trials for the treatment of virus-associated hemorrhagic cystitis in the fourth quarter of 2020.
The Company’s lead product candidate, Viralym-M, is a multi-VST cell therapy that targets five viruses: BK virus, cytomegalovirus, adenovirus, Epstein-Barr virus and human herpesvirus 6. To fully explore the clinical benefit of Viralym-M, the Company plans to initiate a total of three Phase 3 pivotal and three Phase 2 proof-of-concept trials in 2020 and 2021 for the treatment and prevention of life-threatening viral diseases in pediatric and/or adult patients, each representing a potential meaningful commercial opportunity. In addition, the Company anticipates filing an Investigational New Drug, or IND, application with the FDA in the second half of 2020 for its second cell therapy, ALVR106, an allogeneic, off-the-shelf, VST therapy designed to target severe respiratory diseases caused by four respiratory viruses: respiratory syncytial virus, influenza, parainfluenza virus and human metapneumovirus. The Company plans to initiate a Phase 1/2 clinical study in autologous and allogeneic hematopoietic stem cell transplant patients with respiratory viral diseases in the fourth quarter of 2020. We own worldwide development and commercialization rights to our cell therapies. Pursuant to the Company’s sponsored research agreement with Baylor College of Medicine (“BCM”), the Company anticipates BCM will initiate a proof-of-concept trial for ALVR109, an allogeneic, off-the-shelf VST therapy designed to target SARS-CoV-2, the virus that causes the severe and life-threatening viral disease, COVID-19. ALVR109 is being developed to arrest the progression of COVID-19 by eradicating SARS-CoV-2 virus-infected cells.
The Company was formed on August 16, 2013 as a Delaware limited liability company (“LLC”) under the name AdCyte LLC and on July 29, 2014 the Company changed its name to ViraCyte LLC. On September 17, 2018, the Company converted from a Delaware LLC to a Delaware corporation (the “LLC Conversion”) and changed its name to ViraCyte, Inc. On May 22, 2019, the Company changed its name to AlloVir, Inc. The Company has principal offices in Houston, Texas and Cambridge, Massachusetts.
On August 8, 2019, AlloVir formed AlloVir International Designated Activity Company (“AlloVir International”), a wholly-owned subsidiary established in Ireland.
On October 9, 2019, AlloVir Securities Corporation was incorporated as a Massachusetts Security Corporation, a wholly-owned subsidiary of AlloVir.
On November 10, 2019, AlloVir International formed AlloVir Italia S.R.L. (“AlloVir Italia”), a wholly-owned subsidiary in Italy.
On August 3, 2020, the Company completed an initial public offering (“IPO”) in which the Company issued and sold 18,687,500 shares of its common stock, at a public offering price of $17.00 per share, resulting in gross proceeds of $317.7 million. The Company received approximately $292.4 million in net proceeds after deducting underwriting discounts and commissions and offering costs.
In connection with the IPO, the Company effected a 1-for-1.49020520953831 reverse stock split of the Company’s common stock and adjusted the ratio at which the Company’s preferred stock is convertible into common stock, as well as the number of shares under the 2018 Equity Incentive Plan (“2018 Plan”), as well as the share amounts of restricted stock grants under the 2018 Plan and the number of options and exercise prices of options under the 2018 Plan as a result of the 1-for-1.49020520953831 reverse stock split. Accordingly, all common shares, stock options, and per share information presented in the accompanying condensed consolidated financial statements and notes thereto have been adjusted, where applicable, to reflect the reverse stock split on a retroactive basis for all periods presented. The per share par value and authorized number of shares of the Company’s common stock were not adjusted as a result of the split.
Upon the closing of the IPO, all of the then-outstanding shares of convertible preferred stock automatically converted into 39,859,139 shares of common stock at the applicable conversion ratio then in effect. Subsequent to the closing of the IPO, there were no shares of convertible preferred stock outstanding. The condensed consolidated financial statements as of June 30, 2020, including share and per share amounts, do not give effect to the IPO, as it closed subsequent to June 30, 2020.
7
On September 17, 2018, the Company executed a Series A2 Preferred Stock Purchase Agreement (“Series A2 Agreement”) with ElevateBio, LLC, a Delaware LLC (“ElevateBio”) concurrent with the LLC Conversion. ElevateBio was formed on November 29, 2017 and is headquartered in Cambridge, Massachusetts with a focus on the development of a portfolio of novel cell therapy programs acquired through business development activities with biotechnology companies. ElevateBio is structured as a holding company, comprised of asset-specific subsidiaries focused on the development of pipeline assets, as well as a manufacturing subsidiary with the expertise to provide drug development and manufacturing services. As a result of the purchase of the Company’s Series A2 Preferred Stock, ElevateBio acquired an ownership interest in the Company. The Chief Executive Officer, Chief Financial Officer, and other executives of ElevateBio also serve in similar management roles with AlloVir.
Going Concern
In accordance with Accounting Standards Update (“ASU”) 2014-15, Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern (Subtopic 205-40), the Company has evaluated whether there are conditions and events, considered in the aggregate, that raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date the condensed consolidated financial statements are issued.
The Company is subject to risks and uncertainties common to early-stage companies in the biotechnology industry, including, but not limited to, development by competitors of new technological innovations, dependence on key personnel, protection of proprietary technology, compliance with government regulations and the ability to secure additional capital to fund operations. Product candidates currently under development will require significant additional research and development efforts, including preclinical and clinical testing and regulatory approval, prior to commercialization. These efforts require significant amounts of additional capital, adequate personnel and infrastructure and extensive compliance and reporting capabilities. Even if the Company’s product development efforts are successful, it is uncertain when, if ever, the Company will realize significant revenue from product sales.
The Company believes that its $104.5 million of cash, cash equivalents and short-term investments held at June 30, 2020 in addition to the proceeds from the IPO, are sufficient to fund planned operations for at least twelve months from the date that these condensed consolidated financial statements are available to be issued.
The accompanying condensed consolidated financial statements have been prepared on the basis of continuity of operations, realization of assets and the satisfaction of liabilities and commitments in the ordinary course of business. Through June 30, 2020, the Company has funded its operations primarily with proceeds received from capital contributions, research grants and from the sale of preferred stock. The Company has incurred recurring losses since its inception, including net losses attributable to AlloVir common stockholders of $11.6 million and $5.3 million for the three months ended June 30, 2020 and 2019, respectively and $21.0 million and $7.8 million for the six months ended June 30, 2020 and 2019, respectively. In addition, at June 30, 2020, the Company had an accumulated deficit of $76.3 million. The Company expects to continue to generate operating losses for the foreseeable future.
The accompanying condensed consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty. Accordingly, the condensed consolidated financial statements have been prepared on a basis that assumes the Company will continue as a going concern and which contemplates the realization of assets and satisfaction of liabilities and commitments in the ordinary course of business.
COVID-19 Considerations
The development of product candidates could be disrupted and materially adversely affected in the future by a pandemic, epidemic or outbreak of an infectious disease, such as the recent COVID-19 pandemic. The spread of COVID-19 has impacted the global economy and has impacted the Company’s operations, including the interruption of preclinical and clinical trial activities and potential interruption to the Company’s supply chain. For example, the COVID-19 pandemic has delayed clinical trials. If the disruption due to the COVID-19 pandemic continues, planned pivotal clinical trials also could be delayed due to government orders and site policies on account of the pandemic, and some patients may be unwilling or unable to travel to study sites, enroll in trials or be unable to comply with clinical trial protocols if quarantines impede patient movement or interrupt healthcare services, which would delay the Company’s ability to conduct preclinical studies and clinical trials or release clinical trial results and could delay the Company’s ability to obtain regulatory approval and commercialize product candidates. Furthermore, COVID-19 could affect the Company’s employees or the employees of research sites and service providers on whom the Company relies on as well as those of companies with which the Company does business, including suppliers and contract manufacturing organizations or CMOs, thereby disrupting business operations. Quarantines and travel restrictions imposed by governments in the jurisdictions in which the Company and the companies with which it does business operate could materially impact the ability of employees to access preclinical and clinical sites, laboratories, manufacturing sites and offices. The Company has implemented work-at-home policies and only employees essential to the development and research of product candidates remain on-site at the Company’s research and manufacturing facilities; accordingly, the Company may experience limitations in employee resources. The outbreak and any other preventative or protective actions that the Company, its suppliers or other third parties with which it has business relationships, or governments may take in respect of the COVID-19 pandemic, could disrupt, delay or otherwise adversely impact the business.
8
The Company is still assessing business plans and the impact the COVID-19 pandemic may have on its ability to advance the testing, development and manufacturing of drug candidates, including as a result of adverse impacts on the research sites, service providers, vendors, or suppliers on whom the Company relies on, or to raise financing to support the development of our drug candidates. No assurances can be given that this analysis will enable the Company to avoid part or all of any impact from the spread of COVID-19 or its consequences, including downturns in business sentiment generally or this sector in particular. The Company cannot presently predict the scope and severity of any potential business shutdowns or disruptions, but if the Company or any of the third parties on whom it relies on or with whom it conducts business, were to experience shutdowns or other business disruptions, the Company’s ability to conduct business in the manner and on the timelines presently planned could be materially and adversely impacted.
2. Summary of Significant Accounting Policies
The Company’s significant accounting policies are disclosed in the audited consolidated financial statements for the years ended December 31, 2019 and 2018 (“annual financial statements”), included in the Company’s final prospectus that forms part of the Company’s Registration Statement on Form S-1 (Reg. No. 333-239698), dated July 29, 2020 and filed with the SEC pursuant to Rule 424(b)(4) on July 30, 2020 (the “Prospectus”). Since the date of those financial statements, there have been no changes to the Company’s significant accounting policies, except as noted below.
Interim Financial Information
The accompanying condensed consolidated balance sheet at June 30, 2020, and the condensed consolidated statements of operations and comprehensive loss, statements of convertible preferred stock and changes in stockholders’ deficit for the three and six months ended June 30, 2020 and 2019 and condensed consolidated statements of cash flows for the six months ended June 30, 2020 and 2019 are unaudited. The condensed consolidated interim financial statements have been prepared on the same basis as the audited annual financial statements and, in the opinion of management, reflect all adjustments, which include only normal recurring adjustments necessary for the fair presentation of the Company’s financial position at June 30, 2020 and the results of its operations for the three and six months ended June 30, 2020 and 2019 and its cash flows for the six months ended June 30, 2020 and 2019. The financial data and other information disclosed in these notes related to the three and six months ended June 30, 2020 and 2019 are also unaudited. The results for the three and six months ended June 30, 2020 are not necessarily indicative of results to be expected for the year ending December 31, 2020 or for any other subsequent interim period.
Deferred Offering Costs
The Company capitalizes certain legal, professional accounting and other third-party fees that are directly associated with in-process equity financings as deferred offering costs until such financings are consummated. After consummation of the equity financing, these costs are presented in the consolidated balance sheets as a direct reduction from the carrying amount of the respective equity instrument issued. Should an in-process equity financing be abandoned, the deferred offering costs will be expensed immediately as a charge to operating expenses in the consolidated statements of operations and comprehensive loss. At June 30, 2020, the Company recorded deferred offering costs of approximately $1.3 million. Upon closing the IPO in August 2020, deferred offering costs were derecognized and recorded against the IPO proceeds as a debit to additional paid-in capital.
Recent Accounting Pronouncements
From time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board (“FASB”), or other standard setting bodies and adopted by the Company as of the specified effective date. Unless otherwise discussed, the impact of recently issued standards that are not yet effective will not have a material impact on the Company’s consolidated financial statements upon adoption. Under the Jumpstart Our Business Startups Act of 2012, as amended (the “JOBS Act”), the Company meets the definition of an emerging growth company and has elected the extended transition period for complying with certain new or revised accounting standards pursuant to Section 107(b) of the JOBS Act. As noted below, certain new or revised accounting standards were early adopted.
The new accounting pronouncements recently adopted by the Company and issued by the Financial Accounting Standards Board ("FASB") that are applicable to the Company are described in the Company’s audited financial statements as of and for the year ended December 31, 2019, and the notes thereto, which are included in the Company’s Prospectus filed with the SEC on July 30, 2020. There have been no new accounting pronouncements issued in the six months ended June 30, 2020 that are applicable to the Company, except as noted below.
9
Recently Issued Accounting Pronouncements Not Yet Adopted
In December 2019, the FASB issued ASU 2019-12 – Income Taxes (Topic 740) (“ASU 2019-12”), which removes certain exceptions from the guidance and simplifies the accounting for income taxes in certain areas. The new standard will be effective beginning January 1, 2021. The Company does not expect that the new standard will have a material impact to the Company’s consolidated financial statements.
In June 2016, the FASB issued ASU 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”). ASU 2016-13 significantly changes the impairment model for most financial assets and certain other instruments. ASU 2016-13 will require immediate recognition of estimated credit losses expected to occur over the remaining life of many financial assets, which will generally result in earlier recognition of allowances for credit losses on loans and other financial instruments. ASU 2016-13 is effective for the Company’s fiscal year beginning December 15, 2023 and subsequent interim periods. The adoption of this standard is not expected to have a material impact on the Company’s consolidated financial statements and related disclosures.
3. Short-Term Investments
The following table summarizes the amortized cost and estimated fair value of the Company’s marketable securities, which are considered to be available-for-sale investments and were included in short-term investments on the condensed consolidated balance sheets:
|
|
|
June 30, 2020 |
|
|||||||||||||
|
(in thousands) |
|
Amortized Cost |
|
|
Unrealized Gains |
|
|
Unrealized Losses |
|
|
Fair Value |
|
||||
|
U.S. treasury securities |
|
$ |
4,995 |
|
|
- |
|
|
$ |
(1 |
) |
|
$ |
4,994 |
|
|
|
U.S. government treasury securities |
|
|
21,072 |
|
|
|
118 |
|
|
|
- |
|
|
|
21,190 |
|
|
Totals |
|
$ |
26,067 |
|
|
$ |
118 |
|
|
$ |
(1 |
) |
|
$ |
26,184 |
|
|
|
|
December 31, 2019 |
|
|||||||||||||
|
(in thousands) |
|
Amortized Cost |
|
|
Unrealized Gains |
|
|
Unrealized Losses |
|
|
Fair Value |
|
||||
|
U.S. government treasury securities |
|
$ |
64,925 |
|
|
$ |
68 |
|
|
$ |
— |
|
|
$ |
64,993 |
|
|
Totals |
|
$ |
64,925 |
|
|
$ |
68 |
|
|
$ |
— |
|
|
$ |
64,993 |
|
Certain short-term debt securities with original maturities of less than 90 days are included in cash and cash equivalents on the condensed consolidated balance sheets and are not included in the tables above. At June 30, 2020 and December 31, 2019, all investments had contractual maturities within one year.
4. Fair Value Measurements
The following tables present information about the Company’s financial assets and liabilities measured at fair value on a recurring basis:
|
|
|
June 30, 2020 |
|
|||||||||||||
|
(in thousands) |
|
Level 1 |
|
|
Level 2 |
|
|
Level 3 |
|
|
Total |
|
||||
|
Cash equivalents: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Money market fund |
|
$ |
53,139 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
53,139 |
|
|
U.S. treasury securities |
|
|
19,995 |
|
|
|
- |
|
|
|
- |
|
|
|
19,995 |
|
|
Totals |
|
$ |
73,134 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
73,134 |
|
|
Short-term investments: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. treasury securities and government treasury securities |
|
$ |
26,184 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
26,184 |
|
|
Totals |
|
$ |
26,184 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
26,184 |
|
10
|
|
|
December 31, 2019 |
|
|||||||||||||
|
(in thousands) |
|
Level 1 |
|
|
Level 2 |
|
|
Level 3 |
|
|
Total |
|
||||
|
Cash equivalents: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Money market fund |
|
$ |
46,407 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
46,407 |
|
|
Demand deposit |
|
|
10,027 |
|
|
|
— |
|
|
|
— |
|
|
|
10,027 |
|
|
Totals |
|
$ |
56,434 |
|
|
|||||||||||