10-Q
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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

(Mark One)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2024

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.)

1100 Winter Street, Waltham, MA

 

02451

(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

Common Stock, par value $0.0001 per share

 

ALVR

 

The Nasdaq Global Select 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

Accelerated filer

 

 

 

 

 

 

 

Non-accelerated filer

Smaller reporting company

 

 

 

 

 

 

 

 

 

 

 

Emerging growth company

 

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No

As of May 6, 2024, the registrant had 115,003,325 shares of common stock, $0.0001 par value per share, outstanding.

 

 

 

 

 


 

Table of Contents

 

Page

PART I.

FINANCIAL INFORMATION

5

Item 1.

Financial Statements (unaudited)

5

Condensed Consolidated Balance Sheets

5

Condensed Consolidated Statements of Operations and Comprehensive Loss

6

Condensed Consolidated Statements of Changes in Stockholders’ Equity

7

Condensed Consolidated Statements of Cash Flows

9

Notes to Condensed Consolidated Financial Statements

10

Item 2.

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

20

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

28

Item 4.

Controls and Procedures

29

 

 

 

PART II.

OTHER INFORMATION

30

Item 1.

Legal Proceedings

30

Item 1A.

Risk Factors

30

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

77

Item 3.

Defaults Upon Senior Securities

77

Item 4.

Mine Safety Disclosures

77

Item 5.

Other Information

77

Item 6.

Exhibits

78

 

 

 

Signatures

79

 

i


 

Summary of Material Risks Associated with Our Business

Our business is subject to numerous risks and uncertainties that you should be aware of before making an investment decision, including those highlighted in the section entitled “Risk Factors.” These risks include, but are not limited to, the following:

 

We may not be successful in identifying and implementing any strategic transaction and any strategic transactions that we may consummate in the future could have negative consequences.
Even if we successfully consummate any transaction from our strategic assessment, including, but not limited to, in-licensing and/or out-licensing, a merger, sale, and/or divestiture of assets, we may fail to realize all of the anticipated benefits of the transaction, those benefits may take longer to realize than expected, or we may encounter integration difficulties.
If we are successful in completing a strategic transaction, we may be exposed to other operational and financial risks.
If a strategic transaction is not consummated, our board of directors may decide to pursue a dissolution and liquidation. In such an event, the amount of cash available for distribution to our stockholders will depend heavily on the timing of such liquidation as well as the amount of cash that will need to be reserved for commitments and contingent liabilities.
We are a clinical-stage cell therapy company and we have incurred net losses since our inception. We anticipate that we will continue to incur significant losses for the foreseeable future and may never achieve or maintain profitability.
We depend substantially on intellectual property licensed from third parties, including Baylor College of Medicine, or BCM, and termination of any of these licenses could result in the loss of significant rights, which would harm our business.
If we are unable to obtain and maintain sufficient intellectual property protection for our product candidates and manufacturing process, or if the scope of the intellectual property protection is not sufficiently broad, our ability to commercialize our product candidates successfully and to compete effectively may be adversely affected.
We will need substantial additional funding, and if we are unable to raise capital when needed, we could be forced to delay, reduce or eliminate our product discovery and development programs or commercialization efforts.
We have a limited operating history, which may make it difficult to evaluate the success of our business to date and to assess our future viability.
We are early in our development efforts and have only a small number of product candidates in clinical development. All of our other product candidates are still in preclinical development. If we or our collaborators are unable to successfully develop and commercialize product candidates or experience significant delays in doing so, our business may be materially harmed.
Clinical drug development involves a lengthy and expensive process with an uncertain outcome, and the inability to successfully and timely conduct clinical trials and obtain regulatory approval for our product candidates would substantially harm our business.
The results of preclinical studies or earlier clinical trials are not necessarily predictive of future results. Our existing product candidates in clinical trials, and any other product candidate we advance into clinical trials, may not have favorable results in later clinical trials or receive regulatory approval.
Our product candidates, the methods used to deliver them or their dosage levels may cause undesirable side effects or have other properties that could delay or prevent their regulatory approval, limit the commercial profile of an approved label or result in significant negative consequences following any regulatory approval.
We face substantial competition, which may result in others discovering, developing or commercializing products before or more successfully than we do.
We and our third-party partners are subject to a multitude of manufacturing risks, any of which could substantially increase our costs and limit supply of our product candidates.
We intend to develop an efficient and highly productive manufacturing supply chain for our allogeneic, off-the-shelf single- and multi-virus specific T, or VST, cell therapies. Delays in process performance qualification to validate the drug product manufacturing process could delay regulatory approvals, our development plans and thereby limit our ability to generate revenues.
We are highly dependent on our key personnel and anticipate hiring new key personnel. If we are not successful in attracting and retaining highly qualified personnel, we may not be able to successfully implement our business strategy.
The trading price of our common stock may be volatile.

1


 

Our business could be adversely affected by the effects of health epidemics, like the COVID-19 pandemic, in regions where our contracted third parties, including contract research organizations, or CROs, and contract development and manufacturing organizations, or CMOs or CDMOs, have significant research, development or manufacturing facilities, concentrations of clinical trial sites or other business operations, causing disruption in supplies and services.

The summary risk factors described above should be read together with the text of the full risk factors below, in the section entitled “Risk Factors” and the other information set forth in this Quarterly Report on Form 10-Q, including our condensed consolidated financial statements and the related notes, as well as in other documents that we file with the SEC. The risks summarized above or described in full below are not the only risks that we face. Additional risks and uncertainties not precisely known to us, or that we currently deem to be immaterial may also materially adversely affect our business, financial condition, results of operations and future growth prospects.

2


 

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:

our plans and expectations regarding our strategic alternative review process and the timing and success of such process regarding a potential transaction;
timing of and costs or charges associated with our restructurings, and the savings benefits we expect to receive from those restructurings;
success in retaining, or changes required in, our officers, key employees or directors;
should we resume development of our product candidates, the success, cost, timing and potential indications of our product development activities and clinical trials, including the future clinical trials of posoleucel and ALVR106;
the timing of our planned Investigational New Drug, or IND, submissions to the U.S. Food and Drug Administration, or FDA, for our product candidates, including ALVR107;
the timing of the initiation, enrollment and completion of planned clinical trials;
should we resume development of our product candidates, our plans to research, develop and commercialize our product candidates, including posoleucel, ALVR106, and ALVR107;
the timing of the initiation, completion and outcomes of our preclinical studies;
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;
our ability to successfully manufacture and distribute posoleucel, ALVR106 or any other future product or product candidate, should we resume development of our product candidates;
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;
the ability to maintain our existing license agreements, including Baylor College of Medicine, or BCM, and to license additional intellectual property relating to any future product candidates and to comply with our existing license agreements;
our ability to attract and retain collaborators with development, regulatory and commercialization expertise;
risks associated with a health epidemic like the COVID-19 pandemic, including the emergence of new COVID-19 variants, which may adversely impact our business and clinical trials;
the size of the markets for our VST product candidates, and our ability to serve those markets;
whether the results of our clinical trials will be sufficient to support domestic or foreign regulatory approvals for any of our product candidates;
should we resume development of our product candidates, our ability to successfully commercialize our product candidates, including posoleucel and ALVR106;
should we resume development of our product candidates, the rate and degree of market acceptance of our product candidates, including posoleucel and ALVR106;
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;
our ability to develop and maintain sales and marketing capabilities, whether alone or with potential future collaborators;
regulatory developments in the United States and foreign countries with respect to our product candidates or our competitors’ products and product candidates;
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;
the success of competing therapies that are or become available;
our ability to attract and retain key scientific or management personnel;

3


 

our expectation about the period of time over which our existing capital resources will be sufficient to fund our operating expenses and capital expenditures;
our expectations regarding the time during which we will be an emerging growth company under the Jumpstart Our Business Startups Act of 2012, or the JOBS Act;
our financial performance;
the impact of laws and regulations;
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.

4


 

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements (unaudited)

ALLOVIR, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

UNAUDITED

 

(in thousands, except share and per share amounts)

 

March 31,
2024

 

 

December 31,
2023

 

Assets

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

86,039

 

 

$

90,121

 

Short-term investments

 

 

54,491

 

 

 

93,822

 

Interest receivable

 

 

181

 

 

 

206

 

Prepaid expenses and other current assets

 

 

771

 

 

 

3,486

 

Total current assets

 

 

141,482

 

 

 

187,635

 

Restricted cash

 

 

554

 

 

 

852

 

Other assets

 

 

 

 

 

122

 

Operating lease right-of-use assets

 

 

2,107

 

 

 

2,187

 

Total assets

 

$

144,143

 

 

$

190,796

 

Liabilities and stockholders’ equity

 

 

 

 

 

Current liabilities:

 

 

 

 

 

Accounts payable

 

 

765

 

 

$

6,761

 

Accrued expenses

 

 

4,596

 

 

 

10,086

 

Operating lease liability, current

 

 

2,295

 

 

 

10,781

 

Amount due to related party

 

 

-

 

 

 

739

 

Total current liabilities

 

 

7,656

 

 

 

28,367

 

Operating lease liability, long-term

 

 

16,047

 

 

 

16,648

 

Total liabilities

 

$

23,703

 

 

$

45,015

 

Stockholders’ equity:

 

 

 

 

 

 

Preferred stock, $0.0001 par value: 10,000,000 shares authorized at March 31, 2024 and December 31, 2023, respectively; 0 shares issued and outstanding at March 31, 2024 and December 31, 2023, respectively

 

 

 

 

 

 

Common stock, $0.0001 par value: 300,000,000 shares authorized at March 31, 2024 and December 31, 2023, respectively; 114,881,765 and 114,153,538 shares issued at March 31, 2024 and December 31, 2023, respectively; and 114,881,765 and 114,148,991 shares outstanding at March 31, 2024 and December 31, 2023, respectively

 

 

11

 

 

 

11

 

Additional paid-in capital

 

 

807,059

 

 

 

802,025

 

Accumulated other comprehensive loss

 

 

(138

)

 

 

(62

)

Accumulated deficit

 

 

(686,492

)

 

 

(656,193

)

Total stockholders’ equity

 

 

120,440

 

 

 

145,781

 

Total liabilities and stockholders’ equity

 

$

144,143

 

 

$

190,796

 

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

5


 

ALLOVIR, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

UNAUDITED

 

 

 

Three Months Ended
March 31,

 

(in thousands, except share and per share amounts)

 

2024

 

 

2023

 

Operating expenses:

 

 

 

 

 

Research and development

 

$

12,173

 

 

$

30,718

 

General and administrative

 

 

10,662

 

 

 

12,513

 

Restructuring costs

 

 

9,464

 

 

 

 

Total operating expenses

 

 

32,299

 

 

 

43,231

 

Loss from operations

 

 

(32,299

)

 

 

(43,231

)

Total other income (loss), net:

 

 

 

 

 

 

Interest income

 

 

1,246

 

 

 

1,325

 

Other income (loss), net

 

 

754

 

 

 

723

 

Net loss

 

$

(30,299

)

 

$

(41,183

)

Net loss per share — basic and diluted

 

$

(0.26

)

 

$

(0.44

)

Weighted-average common shares outstanding — basic and diluted

 

 

114,690,726

 

 

 

93,303,672

 

Comprehensive loss:

 

 

 

 

 

 

Net loss

 

$

(30,299

)

 

$

(41,183

)

Other comprehensive income (loss), net of tax:

 

 

 

 

 

 

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

 

 

(76

)

 

 

167

 

Total other comprehensive income (loss)

 

 

(76

)

 

 

167

 

Comprehensive loss

 

$

(30,375

)

 

$

(41,016

)

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

6


 

ALLOVIR, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

UNAUDITED

 

 

 

Common Stock

 

 

Additional
Paid-In

 

 

Accumulated
Other
Comprehensive

 

 

Accumulated

 

 

Total
Stockholders’

 

(in thousands, except share amounts)

 

Shares

 

 

Amount

 

 

Capital

 

 

Loss

 

 

Deficit

 

 

Equity

 

Balance at December 31, 2022

 

 

93,093,243

 

 

$

9

 

 

$

690,753

 

 

$

(468

)

 

$

(465,775

)

 

$

224,519

 

Stock-based compensation

 

 

 

 

 

 

 

 

10,029

 

 

 

 

 

 

 

 

 

10,029

 

Issuance of common stock, upon vesting of restricted stock

 

 

334,747

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Unrealized gain on available-for-sale securities

 

 

 

 

 

 

 

 

 

 

 

167

 

 

 

 

 

 

167

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(41,183

)

 

 

(41,183

)

Balance at March 31, 2023

 

 

93,427,990

 

 

$

9

 

 

$

700,782

 

 

$

(301

)

 

$

(506,958

)

 

$

193,532

 

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

 

7


 

ALLOVIR, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

UNAUDITED

 

 

 

Common Stock

 

 

Additional
Paid-In

 

 

Accumulated
Other
Comprehensive

 

 

Accumulated

 

 

Total
Stockholders’

 

(in thousands, except share amounts)

 

Shares

 

 

Amount

 

 

Capital

 

 

Loss

 

 

Deficit

 

 

Equity

 

Balance at December 31, 2023

 

 

114,148,991

 

 

$

11

 

 

$

802,025

 

 

$

(62

)

 

$

(656,193

)

 

 

145,781

 

Stock-based compensation

 

 

 

 

 

 

 

 

5,034

 

 

 

 

 

 

 

 

 

5,034

 

Issuance of common stock, upon vesting of restricted stock

 

 

732,774

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Unrealized loss on available-for-sale securities

 

 

 

 

 

 

 

 

 

 

 

(76

)

 

 

 

 

 

(76

)

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(30,299

)

 

 

(30,299

)

Balance at March 31, 2024

 

 

114,881,765

 

 

$

11

 

 

$

807,059

 

 

$

(138

)

 

$

(686,492

)

 

$

120,440

 

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

8


 

ALLOVIR, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

UNAUDITED

 

 

 

Three Months Ended
March 31,

 

(in thousands)

 

2024

 

 

2023

 

Cash flows from operating activities

 

 

 

 

 

 

Net loss

 

$

(30,299

)

 

$

(41,183

)

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

 

 

 

 

 

 

Depreciation and amortization

 

 

 

 

 

86

 

Non-cash lease expense

 

 

80

 

 

 

461

 

Non-cash gain on lease termination

 

 

(5,583

)

 

 

 

Accretion of short-term investment discounts

 

 

(745

)

 

 

(729

)

Stock-based compensation expense

 

 

5,034

 

 

 

10,029

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

Interest receivable

 

 

26

 

 

 

(87

)

Prepaid expenses and other current assets and prepaid expenses to related party

 

 

2,715

 

 

 

(333

)

Other assets

 

 

122

 

 

 

122

 

Income tax payable

 

 

 

 

 

2

 

Accounts payable, accrued expenses, other liabilities and amount due to related party

 

 

(15,730

)

 

 

(486

)

Net cash used in operating activities

 

 

(44,380

)

 

 

(32,118

)

Cash flows from investing activities

 

 

 

 

 

 

Purchase of short-term investments

 

 

 

 

 

(11,756

)

Maturities of short-term investments

 

 

40,000

 

 

 

53,480

 

Net cash provided by investing activities

 

 

40,000

 

 

 

41,724

 

Net (decrease) increase in cash, cash equivalents, and restricted cash

 

 

(4,380

)

 

 

9,606

 

Cash, cash equivalents, and restricted cash at beginning of period

 

 

90,973

 

 

 

106,944

 

Cash, cash equivalents, and restricted cash at end of period

 

$

86,593

 

 

$

116,550

 

Non-cash investing and financing activities

 

 

 

 

 

 

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

 

$

(76

)

 

$

167

 

 

 

 

 

 

 

 

Three Months Ended
March 31,

 

 

2024

 

 

2023

 

Cash and cash equivalents

 

$

86,039

 

 

$

115,698

 

Restricted cash

 

 

554

 

 

 

852

 

Total cash, cash equivalents, and restricted cash

 

$

86,593

 

 

$

116,550

 

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

9


 

ALLOVIR, INC.

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 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. The Company’s platform includes three innovative, allogeneic, off-the-shelf VST therapy candidates targeting 11 different devastating viruses. The Company’s lead product candidate, posoleucel (previously referred to as Viralym-M or ALVR105), is a multi-VST therapy that targets six viruses: adenovirus (“AdV”), BK virus (“BKV”), cytomegalovirus (“CMV”), Epstein-Barr virus (“EBV”), human herpesvirus 6 (“HHV-6”) and JC virus (“JCV”).

In December 2023, the Company announced the discontinuation of three Phase 3 registrational trials of posoleucel following separate, pre-planned Data Safety Monitoring Board (“DSMB”), futility analyses that concluded the studies were unlikely to meet their primary endpoints. Specifically, the Company discontinued a multicenter, randomized, double-blind, placebo-controlled Phase 3 trial comparing posoleucel to placebo for the prevention of infection or disease due to AdV, BKV, CMV, EBV, HHV-6, or JCV in high-risk adult and pediatric patients after undergoing an allogeneic hematopoietic stem cell transplant. The Company also discontinued two multicenter, randomized, double-blind, placebo-controlled Phase 3 trials of posoleucel – one for the treatment of virus-associated hemorrhagic cystitis and the second for the treatment of adenovirus infection – both after allogeneic hematopoietic cell transplant.

In December 2023, the Company also announced that it would review the detailed datasets from those Phase 3 trials and launch a comprehensive review of strategic alternatives focused on maximizing stockholder value, including, but not limited to, a merger, sale, divestiture of assets, licensing, or other strategic transaction. The Company expects to devote substantial time and resources to exploring strategic alternatives that the board of directors believes will maximize stockholder value. Despite devoting significant efforts to identify and evaluate potential strategic alternatives, there can be no assurance that this strategic review process will result in us pursuing any transaction or that any transaction, if pursued, will be completed on attractive terms or at all. The Company has not set a timetable for completion of this strategic review process, and the board of directors has not approved a definitive course of action. Additionally, there can be no assurances that any particular course of action, business arrangement or transaction, or series of transactions, will be pursued, successfully consummated or lead to increased stockholder value, or that the Company will make any cash distributions to our stockholders. In connection with the evaluation of strategic alternatives and in order maximize capital preservation, the Company has implemented a plan to reduce our workforce by approximately 95%. This workforce reduction plan was approved in January 2024, and took place primarily during the first quarter of 2024 and was substantially completed by April 15, 2024.

The Company’s pipeline includes additional investigational VST therapies that may benefit high-risk individuals. ALVR106 is the Company’s second off-the-shelf, multi-VST product candidate targeting devastating respiratory diseases caused by human metapneumovirus (“hMPV”), influenza, parainfluenza virus (“PIV”) and respiratory syncytial virus (“RSV”). A Phase 1b/2 proof of concept (“POC”) clinical study of ALVR106 has completed enrollment of patients in Part A of the trial. The Company has paused development of ALVR106, including discontinuing the trial pending the outcome of the Company’s review of strategic alternatives. Preclinical and IND-enabling studies of ALVR107 to treat and cure hepatitis B were completed in 2022 to support advancement into a POC study. Clinical development of ALVR107 has been paused pending the outcome of the Company’s review of strategic alternatives.

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.

Since its inception and until recently, the Company devoted substantially all of its resources to recruiting personnel, developing its technology platform and advancing its pipeline of product candidates through discovery, preclinical and clinical trials, acquiring and manufacturing clinical trial materials and maintaining and building its intellectual property portfolio. The Company is subject to risks and uncertainties common to early-stage companies in the biotechnology industry, including, but not limited to, success of clinical trials, 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. Should the Company resume development of its product candidates, the product candidates will require significant additional research and development efforts, including preclinical and clinical testing and regulatory approval, prior to commercialization.

10


 

Through March 31, 2024, the Company has funded its operations primarily with proceeds received from the sale of common stock, research grants, and from the sale of preferred stock. The Company has incurred recurring losses since its inception, including net losses attributable to common stockholders of $30.3 million and $41.2 million for the three months ended March 31, 2024 and 2023, respectively. In addition, at March 31, 2024, the Company had an accumulated deficit of $686.5 million. The Company expects to continue to generate operating losses for the foreseeable future.

 

The Company has incurred and expects to continue to incur costs and expenditures in connection with the process of evaluating strategic alternatives. There can be no assurance, however, that the Company will be able to successfully consummate any particular strategic transaction. The process of evaluating strategic options has been and may continue to be costly, time-consuming and complex and the Company may incur significant costs related to this continued evaluation, such as legal, accounting and advisory fees and expenses and other related charges.

Based on current projections, the Company believes that its $140.5 million of cash, cash equivalents and short-term investments held at March 31, 2024 will be sufficient to fund planned operations for at least twelve months from the date that these condensed consolidated financial statements are available to be issued. However, due to the consideration of certain qualitative factors, including the discontinuation of all clinical trials and research activities, as well as the Company’s workforce reduction plan, management has concluded there is substantial doubt regarding the Company’s ability to continue as a going concern for more than twelve months from the date that the condensed consolidated financial statements are available to be issued. These financial statements do not include any adjustments that might result from the outcome of this uncertainty. Should the Company resume the development of product candidates, it would need to obtain substantial additional funding in connection with continuing operations, particularly as the Company resumes its preclinical activities and clinical trials for its product candidates. There can be no assurance that the Company will be able to obtain sufficient capital to cover its costs on acceptable terms, if at all.

ElevateBio, LLC – Related Party

On September 17, 2018, the Company executed a Series A2 Preferred Stock Purchase Agreement ("Series A2 Agreement") with ElevateBio, LLC ("ElevateBio") and ElevateBio was a purchaser in our registered direct offering in July 2022. ElevateBio, through its diverse platform of technologies to support cell and gene therapy products and expertise, provides drug development and manufacturing services. As a result of ElevateBio’s purchase of our Series A2 Preferred Stock, which converted to common stock upon completion of our IPO, and as a result of ElevateBio’s participation in the July 2022 registered direct offering, ElevateBio acquired an ownership interest in the Company. The Chief Financial Officer of ElevateBio currently serves in a similar management role with AlloVir. In May 2021, Diana M. Brainard, M.D. succeeded David Hallal, ElevateBio’s Chief Executive Officer, as the Company’s Chief Executive Officer. Mr. Hallal currently serves as Executive Chairman of the Company’s board of directors. Vikas Sinha, our President and Chief Financial Officer, also serves as the Chief Financial Officer of ElevateBio. In addition to Mr. Hallal and Mr. Sinha, Morana Jovan-Embiricos, a director of the Company’s board of directors, also serves as a director of the board of directors of ElevateBio.

2. Summary of Significant Accounting Policies

The Company’s significant accounting policies are disclosed in the audited consolidated financial statements for the year ended December 31, 2023, and notes thereto, which are included in the Company’s Annual Report on Form 10-K that was filed with the Securities and Exchange Commission (the “SEC”) on March 15, 2024. Since the date of those financial statements, there have been no material changes to the Company’s significant accounting policies except as described below.

Restructuring Costs

The Company records costs and liabilities associated with exit and disposal activities in accordance with ASC 420, Exit or Disposal Cost Obligations (ASC 420). Such costs are based on estimates of fair value in the period liabilities are incurred. Given the short duration of when the liability is incurred to when it is paid, there is no significant difference between fair value and the amount paid. Costs are expensed at the date the entity notifies the employee, unless the employee must provide future service, in which case the benefits are expensed ratably over the future service period. The Company evaluates and adjusts these costs as appropriate for changes in circumstances as additional information becomes available. Please refer to Note 13 for further information regarding restructuring costs.

Interim Financial Information

The accompanying condensed consolidated balance sheet at March 31, 2024, and the condensed consolidated statements of operations and comprehensive loss, statements of changes in stockholders’ equity for the three months ended March 31, 2024 and 2023 and the condensed consolidated statements of cash flows for the three months ended March 31, 2024 and 2023 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

11


 

presentation of the Company’s financial position at March 31, 2024 and the results of its operations for the three months ended March 31, 2024 and 2023 and its cash flows for the three months ended March 31, 2024 and 2023. The financial data and other information disclosed in these notes related to the three months ended March 31, 2024 and 2023 are also unaudited. The results for the three months ended March 31, 2024 are not necessarily indicative of results to be expected for the year ending December 31, 2024 or for any other subsequent interim period.

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 condensed 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.

Since December 31, 2023, there have been no new accounting pronouncements adopted by the Company or issued by FASB that are applicable to the Company, except as noted below.

Recently Issued Accounting Pronouncements Not Yet Adopted

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): 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 adoption of this standard is not expected to have a material impact on the Company’s condensed consolidated financial statements and related disclosures.

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which requires public companies, on an annual basis, to provide disclosure of specific categories in the rate reconciliation, as well as disclosure of income taxes paid disaggregated by jurisdiction. This ASU is effective for fiscal years beginning after December 15, 2024, with early adoption permitted. The adoption of this standard is not expected to have a material impact on the Company’s condensed consolidated financial statements and related disclosures.

3. Short-Term Investments

The following tables summarize the amortized cost and estimated fair value of the Company’s U.S. government treasury securities and marketable securities, which are considered to be available-for-sale investments and are included in short-term investments on the consolidated balance sheets:

 

 

 

March 31, 2024

 

(in thousands)

 

Amortized
Cost

 

 

Unrealized
Gains

 

 

Unrealized
Losses

 

 

Fair
Value

 

U.S. government treasury securities

 

$

54,495

 

 

$

4

 

 

$

(8

)

 

$

54,491

 

Totals

 

$

54,495

 

 

$

4

 

 

$

(8

)

 

$

54,491

 

 

 

 

December 31, 2023

 

(in thousands)

 

Amortized
Cost

 

 

Unrealized
Gains

 

 

Unrealized
Losses

 

 

Fair
Value

 

U.S. government treasury securities

 

 

93,749

 

 

 

73

 

 

 

 

 

$

93,822

 

Totals

 

$

93,749

 

 

$

73

 

 

$

 

 

$

93,822

 

 

Certain short-term debt securities with original maturities of less than three months are included in cash and cash equivalents on the consolidated balance sheets and are not included in the tables above. The Company holds debt securities of companies with high credit quality and has determined that there was no material change in the credit risk of any of its debt securities. At March 31, 2024 and December 31, 2023, all investments had contractual maturities within one year.

12


 

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:

 

 

 

March 31, 2024

 

(in thousands)

 

Level 1

 

 

Level 2

 

 

Level 3

 

 

Total

 

Cash equivalents:

 

 

 

 

 

 

 

 

 

 

 

 

Money market fund

 

$

66,161

 

 

 

 

 

 

 

 

$

66,161

 

Totals

 

$

66,161

 

 

$

 

 

$

 

 

$

66,161

 

Short-term investments:

 

 

 

 

 

 

 

 

 

 

 

 

U.S. government treasury securities

 

$

54,491

 

 

 

 

 

 

 

 

$

54,491

 

Totals

 

$

54,491

 

 

$

 

 

$

 

 

$

54,491

 

 

 

 

December 31, 2023

 

(in thousands)

 

Level 1

 

 

Level 2

 

 

Level 3

 

 

Total

 

Cash equivalents:

 

 

 

 

 

 

 

 

 

 

 

 

Money market fund

 

$

23,854

 

 

$

 

 

$

 

 

$

23,854

 

Totals

 

$

23,854

 

 

$

 

 

$

 

 

$

23,854

 

Short-term investments:

 

 

 

 

 

 

 

 

 

 

 

 

U.S. government treasury securities

 

 

93,822

 

 

 

 

 

 

 

 

$

93,822

 

Totals

 

$

93,822

 

 

$

 

 

$

 

 

$

93,822

 

 

During the three months ended March 31, 2024 and the year ended December 31, 2023, there were no transfers between levels. The Company classifies its money market fund and U.S. government treasury securities as Level 1 assets under the fair value hierarchy, as these assets have been valued using quoted market prices in active markets without any valuation adjustment.

The carrying amounts of prepaid expenses and other current assets, prepaid expenses to related party, accounts payable, amount due to related party and accrued expenses approximate their fair values due to the short-term nature of these assets and liabilities.

5. Leases

Operating leases

Development and Manufacturing Services Agreement (“DMS Agreement”) with Third-Party Supplier

In October 2022, the Company entered into a Statement of Work (“SOW”) under the DMS Agreement (“2022 SOW under the DMS Agreement”) with a third-party supplier. The 2022 SOW under the DMS Agreement contained an embedded lease for a dedicated manufacturing suite for the manufacture of AlloVir’s products at the facility because the Company directs how and for what purpose the suite is used and obtains substantially all of the economic benefit of the suite. At inception of the lease, it was determined that, in exchange for this dedicated manufacturing suite, AlloVir will pay the supplier a monthly fixed suite utilization fee, fixed batch payments and other related fixed costs, totaling $16.3 million over the 2.25 year lease term ending in December 2024. As part of the arrangement, there were also variable costs for materials, non-fixed batch payments, testing, storage, knowledge and tech transfer and other common area maintenance fees that were not included in the measurement of the lease liability. The lease of the facility was determined to be classified as an operating lease and commenced in October 2022, the point at which the suite was substantially complete and available for use by the Company. Accordingly, at inception, the Company recorded a right-of-use asset and lease liability of $14.7 million.

In December 2023, the Company issued a notice of termination of the DMS Agreement effective June 2024, or 190 days from the third-party supplier’s receipt of the notice. Management concluded that the notice of termination constituted a lease reassessment under ASC 842 as the Company was granted the option of such termination at the onset of the DMS Agreement and it was previously determined to be reasonably certain of not being exercised. As a result, the remaining lease term was shortened and the Company recorded a $4.9 million reduction to the right-of-use asset and lease liability in December 2023.

13


 

In February 2024, the Company entered into a new SOW (“2024 SOW under the DMS Agreement”) that terminated the 2022 SOW under the DMS Agreement with a third-party supplier, resulting in a lease remeasurement under ASC 842. The right-of-use asset was previously impaired and thus as a result of the liability remeasurement, the Company recorded a $5.6 million gain to reduce the lease liability in February 2024. As of March 31, 2024, the Company has paid all remaining lease obligations under the DMS Agreement.

Waltham Leases

In September 2021, the Company entered into a lease agreement with BP Bay Colony LLC and a sublease with AMAG Pharmaceuticals Inc. for the lease of property in Waltham, Massachusetts (collectively, the “Waltham leases”). The space identified under the Waltham leases is intended for general office space, research and development, laboratory use, and light manufacturing. The Waltham leases are classified as operating leases and commenced in September 2021. At the inception date, the Company recorded a ROU asset and lease liability of $6.0 million for the lease and a ROU asset and lease liability of $17.3 million for the sublease based on a July 30, 2030 end date for the Waltham leases. As part of the arrangement, there were also variable costs for common area maintenance fees that were not included in the measurement of the lease liability. The agreement also provided a $3.1 million tenant improvement allowance. The Company utilized $0.9 million of the tenant improvement allowance. The Company has the option to renew the leased space for an additional one time period of five years with written notice from the Company. As of March 31, 2024, the Company has no reasonable certainty that this option to extend will be exercised.

Impairment of Lease Right-of-Use Assets

As a result of the December 2023 announcement of the discontinuation of the Company’s three Phase 3 registrational trials, a comprehensive review of strategic alternatives, and the December 2023 notice of termination of the DMS Agreement, the Company determined that there was a triggering event for impairment. The Company determined that the operating lease right-of-use assets were not recoverable as the carrying value exceeded the anticipated future cash flows on an undiscounted basis. To measure the impairment, the Company determined the fair value of the operating lease right-of-use assets based on estimated subleasing scenarios, which represent the highest and best use of the right-of-use assets. This fair value assessment utilized market participant assumptions, including the anticipated amount and timing of potential sublease payments using current real estate trends and market conditions. As a result, an impairment charge was calculated by reducing the carrying amount of the operating lease right-of-use assets to their estimated fair value, which was determined by discounting the estimated future cash flows by applying a rate that a market participant would require in assuming the risks associated with those cash flows. In December 2023, the Company recorded an impairment loss of $16.6 million to the operating lease right-of-use assets. No impairment losses were recorded during the three months ended March 31, 2024 and 2023, respectively. As of March 31, 2024, the remaining right-of-use asset balance is $2.1 million, which relates to the Waltham leases.

Maturities of operating lease liabilities at March 31, 2024 are as follows (in thousands):

 

2024 (remaining 9 months)

 

 

2,358

 

2025

 

 

3,219

 

2026

 

 

3,298

 

2027

 

 

3,376

 

2028

 

 

3,455

 

Thereafter

 

 

5,824

 

Total lease payments

 

 

21,530

 

Less: interest

 

 

3,188

 

Total lease liability

 

$

18,342

 

Lease liability – current

 

$

2,295

 

Lease liability – long-term

 

$

16,047

 

 

 

Total lease costs were $0.4 million and $2.6 million for the three months ended March 31, 2024 and 2023, respectively. Cash paid for operating leases was $3.8 million and $2.1 million for the three months ended March 31, 2024 and 2023, respectively. The Company’s total variable lease costs, such as materials, non-fixed batch payments, testing, storage, knowledge and tech transfer, and other common area maintenance fees, related to the operating leases was $0.1 million and $0.1 million for the three months ended March 31, 2024 and 2023, respectively. The weighted average remaining lease term was 6.33 years and 4.70 years at March 31, 2024 and December 31, 2023, respectively. The weighted average discount rate was 5.00% and 5.95% at March 31, 2024 and December 31, 2023, respectively.

14


 

6. Accrued Expenses

Accrued expenses consisted of the following:

 

(in thousands)

 

March 31,
2024

 

 

December 31,
2023

 

Employee compensation and benefits

 

$

2,200

 

 

$

3,809

 

Professional fees

 

 

464

 

 

 

435

 

Research and development

 

 

1,665

 

 

 

2,442

 

Process development and manufacturing costs

 

 

 

 

 

2,367

 

Other

 

 

267

 

 

 

1,033

 

Total accrued expenses

 

$

4,596

 

 

$

10,086

 

Employee compensation and benefits includes $1.7 million of restructuring liability (see Note 13).

7. Stockholder’s Equity

On May 15, 2023, the Company filed a certificate of amendment to its amended and restated certificate of incorporation authorizing the Company to issue up to 300,000,000 shares of common stock at a par value of $0.0001 per share and 10,000,000 shares of preferred stock at a par value of $0.0001 per share. There were no shares of preferred stock issued or outstanding at March 31, 2024 and December 31, 2023.

On June 21, 2023, the Company entered into an underwriting agreement with J.P. Morgan Securities LLC, Morgan Stanley & Co. LLC and BoFA Securities, Inc., as the representatives of the several underwriters (the “Underwriters”) relating to an underwritten public offering of 20,000,000 shares of its common stock at a public offering price of $3.75 per share, resulting in net proceeds of $70.2 million after deducting underwriting discounts and commissions of $4.5 million and offering costs of $0.3 million. Under the terms of the underwriting agreement, the Company granted the Underwriters an option, exercisable for 30 days, to purchase up to an additional 3,000,000 shares of its common stock at the same price per share as the shares, less underwriting discounts and commissions. On July 21, 2023, the Underwriters option expired.

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

 

 

 

March 31,
2024

 

 

December 31,
2023

 

Options to purchase common stock

 

 

8,594,001

 

 

 

10,439,751

 

Unvested restricted stock

 

 

1,564,941

 

 

 

3,254,863

 

Stock available for grant under the 2020 Stock Option and Grant Plan

 

 

12,692,809

 

 

 

4,182,461

 

Stock available for issuance under the 2020 Employee Stock Purchase Plan

 

1,621,594

 

 

 

480,059

 

Total

 

 

22,851,751

 

 

 

18,357,134

 

 

8. Stock-Based Compensation

Stock-Based Compensation Expense

Stock-based compensation expense was as follows:

 

 

 

Three Months Ended
March 31,

 

(in thousands)

 

2024

 

 

2023

 

Research and development

 

$

(274

)

 

$

3,423

 

General and administrative

 

 

5,308

 

 

 

6,606

 

Total stock-based compensation expense

 

$

5,034

 

 

$

10,029

 

Stock Modification

In connection with the reduction in the Company’s workforce (“RIF”) (see Note 13), the Company accelerated certain unvested stock options and restricted common stock scheduled to vest in the three month period following the employees’ separation date. The Company determined that the acceleration of the unvested units constituted a Type III modification in accordance with ASC 718, resulting in a new measurement of compensation cost. As of March 31, 2024, 601,115 units were accelerated resulting in the recognition of $0.1 million of stock-based compensation expense using the reassessed fair value on the modification date and a reversal of $3.5 million in stock-based compensation expense for previously recognized expense using the original grant date fair value, of which $1.9

15


 

million was related to research and development expense and $1.6 million was related to general and administrative expense for the three months ended March 31, 2024.

 

2018 Equity Incentive Plan

At March 31, 2024, there was an aggregate of 64,042 shares of common stock issuable upon the exercise of outstanding options under the Company’s 2018 Equity Incentive Plan (the “2018 Plan”) and 6,616,772 shares of restricted common stock granted under the 2018 plan. No shares remain available for future issuance under the 2018 Plan. Any options or awards outstanding under the 2018 Plan remain outstanding and effective.

2020 Stock Option and Grant Plan

At March 31, 2024, there was an aggregate of 8,529,959 shares of common stock issuable upon the exercise of outstanding options under the Company’s 2020 Stock Option and Grant Plan (the “2020 Plan”) and 5,356,510 shares of restricted common stock granted under the 2020 Plan. There is an aggregate of 12,692,809 shares reserved for future issuance under the 2020 Plan.

Restricted Common Stock

The following table summarizes restricted common stock activity for the three months ended March 31, 2024:

 

 

 

Shares

 

 

Weighted
Average
Grant Date
Fair Value

 

Unvested at January 1, 2024

 

 

3,254,863

 

 

$

8.73

 

Granted

 

 

 

 

 

 

Forfeited

 

 

(957,148

)

 

 

8.13

 

Vested

 

 

(732,774

)

 

 

8.12

 

Unvested at March 31, 2024

 

 

1,564,941

 

 

$

9.37

 

 

At March 31, 2024, there was $12.3 million of unrecognized stock-based compensation expense related to restricted stock, which is expected to be recognized over a weighted average period of 1.90 years. The total fair value of restricted stock vested was $0.5 million and $1.6 million for the three months ended March 31, 2024 and 2023, respectively.

Stock Options

The following table summarizes stock option activity (in thousands, except share and per share data):

 

 

 

Shares

 

 

Weighted
Average
Exercise
Price

 

 

Weighted
Average
Contractual
Life (in years)

 

 

Aggregate
Intrinsic
Value

 

Options outstanding at January 1, 2024

 

 

10,439,751

 

 

$

13.81

 

 

 

7.95

 

 

$

 

Granted

 

 

 

 

 

 

 

 

 

 

 

 

Exercised

 

 

 

 

 

 

 

 

 

 

 

 

Forfeited

 

 

(1,845,750

)

 

 

8.61

 

 

 

 

 

 

 

Options outstanding at March 31, 2024

 

 

8,594,001

 

 

$

14.93

 

 

 

7.54

 

 

$

 

Options vested and exercisable at March 31, 2024

 

 

5,972,960

 

 

$

16.44

 

 

 

7.29

 

 

$

 

 

The aggregate intrinsic value of options is calculated as the difference between the exercise price of the stock options and the fair value of the Company’s common stock for those stock options that had exercise prices lower than the fair value of the common stock as of the end of the period.

There were no options granted during the three months ended March 31, 2024. The weighted-average grant date fair value of stock options granted during the three months ended March 31, 2023 was $5.18 per share. At March 31, 2024, there was $19.4 million of unrecognized stock-based compensation expense related to unvested stock options, which is being recognized over a period of 1.63 years.

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There were no options granted during the three months ended March 31, 2024. For the three months ended March 31, 2023, the fair value was estimated on the date of grant using the Black-Scholes option-pricing model, with the following weighted-average assumptions:

 

 

 

Three Months Ended
March 31, 2023

 

Expected term (in years)

 

 

6.11

 

Expected volatility

 

 

94.50

%

Risk-free interest rate

 

 

3.46

%

Expected dividend yield

 

 

Fair value of common stock

 

$

6.63

 

 

2020 Employee Stock Purchase Plan

The Company did not issue common shares under the Employee Stock Purchase Plan (the “ESPP”) during the three months ended March 31, 2024. The Company recognized $0.0 and $0.1 million of compensation expense for the ESPP during the three months ended March 31, 2024 and 2023, respectively.

At March 31, 2024, there was an aggregate of 1,621,594 shares reserved for future issuance under the ESPP.

9. Income Taxes

The Company’s income tax provision is computed based on the federal statutory rate, the average state statutory rates, net of the related federal benefit, and foreign statutory rates. For the three months ended March 31, 2024 and 2023, the Company did not record income tax expense due to the generation of net operating losses, the benefits of which have been fully reserved.

The Company’s estimate of the realizability of the deferred tax asset is dependent on estimates of projected future levels of taxable income. In consideration of historical losses and in analyzing future taxable income levels, the Company considered all evidence currently available, both positive and negative, and has not recognized deferred tax assets.

10. Net Loss per Share

The following table summarizes the computation of basic and diluted net loss per share attributable to common stockholders of the Company:

 

 

 

Three Months Ended
March 31,

 

(in thousands, except share and per share data)

 

2024

 

 

2023

 

Numerator:

 

 

 

 

 

 

Net loss – basic and diluted

 

$

(30,299

)

 

$

(41,183

)

Denominator:

 

 

 

 

 

 

Weighted-average common shares outstanding – basic and diluted

 

 

114,690,726

 

 

 

93,303,672

 

Net loss per share – basic and diluted

 

$

(0.26

)

 

$

(0.44

)

 

Based on the amounts outstanding at March 31, 2024 and 2023, the Company excluded the following potential shares of common stock from the computation of diluted net loss per share attributable to common stockholders for the three months ended March 31, 2024 and 2023, because including them would have had an anti-dilutive effect. Therefore, the weighted-average number of common shares outstanding used to calculate both basic and diluted net loss per share attributable to common stockholders is the same.

 

 

 

March 31,

 

 

 

2024

 

 

2023

 

Options to purchase common stock

 

 

8,594,001

 

 

 

10,753,342

 

Unvested restricted stock

 

 

1,564,941

 

 

 

3,675,716

 

 

 

11. Commitments and Contingencies

 

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Leases

The Company entered into a lease agreement and a sublease agreement for the lease of property in Waltham, Massachusetts (see Note 5).

Legal Proceedings

From time to time, in the ordinary course of business, the Company is subject to litigation and regulatory examinations as well as information gathering requests, inquiries and investigations. On January 19, 2024, a purported stockholder of the Company filed a lawsuit, captioned Zerbato v. AlloVir, Inc. et al., No. 1:24-cv-10152 (D. Mass.), in Massachusetts federal court against the Company and two of its officers purportedly on behalf of a putative class of stockholders consisting of persons who purchased or otherwise acquired Company securities between March 22, 2022 and December 21, 2023, inclusive. The complaint purports to assert claims under Section 10(b) and 20(a) of the Securities Act of 1934, as amended, and the related regulations, alleging that the defendants made false and misleading statements and omissions to investors relating to the Company’s three Phase 3 studies of posoleucel. The complaint seeks, among other things, damages, prejudgment and post-judgment interest, and attorneys’ fees, expert fees and other costs. On April 16, 2024, the Court appointed stockholders Harry Levin and Julio Maurice Bueno as lead plaintiffs and their counsel as lead counsel in the action. On April 22, 2024, the parties filed a stipulation and proposed order setting forth an agreed-upon schedule for the filing of an amended complaint and motion to dismiss briefing. The Court has not yet ruled on that stipulation. The Company intends to vigorously defend against the lawsuit. As the outcome is not presently determinable, any loss is neither probable nor reasonably estimable.

Purchase and Other Obligations

We enter into contracts in the normal course of business with CROs and other third-party vendors for clinical trials and testing and manufacturing services, which can contain purchase commitments or other noncancelable obligations. Most contracts do not contain minimum purchase commitments and are cancellable by us upon written notice. Payments due upon cancellation consist of payments for services provided or expenses incurred, including non-cancelable obligations of services provided up to one year after the date of cancellation. The amount and timing of such payments are not known.

We may incur potential contingent payments upon our achievement of clinical, regulatory and commercial milestones, as applicable, or we may be required to make royalty payments under license and grant agreements we have entered into with various entities pursuant to which we have in-licensed certain intellectual property. Due to the uncertainty of the achievement and timing of the events requiring payment under these agreements, the amounts to be paid by us are not fixed or determinable at this time (see Note 8 in the Company’s Annual Report on Form 10-K that was filed with the SEC on March 15, 2024).

 

12. Related Party Transactions

In March 2020, the Company entered into a Management and Administrative Services Agreement with ElevateBio Technologies, Inc. that provides for ongoing services to the Company in areas such as information technology, human resources and administration management, and facilities. The Company is billed monthly for such services at cost, with mark-up for profit on specific services, but including reasonable allocations of employee benefits, facilities and other direct or fairly allocated indirect costs that relate to the associates providing the services. The agreement has an initial term of five years and will automatically renew for successive one year terms, unless earlier terminated under the terms of the agreement. In April 2024, the agreement was terminated effective May 1, 2024.

In May 2020, the Company entered into a Development and Manufacturing Services Agreement with ElevateBio BaseCamp, Inc. (“BaseCamp”) pursuant to which BaseCamp provides products and services that are used in the Company’s laboratory operations, including consulting services, project management services, quality control services and cGMP drug product manufacturing. The agreement will expire upon the later of (a) five years from the effective date of January 1, 2019 or (b) the completion of services under all work orders executed prior to the fifth anniversary of the effective date, unless earlier terminated under the terms of the agreement. All services under all work orders have been completed and the agreement expired on January 1, 2024.

The Company incurred $0.1 million and $0.2 million during the three months ended March 31, 2024 and 2023, respectively, related to services provided to the Company by ElevateBio and affiliates and sold $0.1 million of equipment to ElevateBio and affiliates during the three months ended March 31, 2024. At March 31, 2024 and December 31, 2023, the Company owed ElevateBio and affiliates $0 and $0.3 million, respectively, and had no prepaid expenses with ElevateBio and affiliates.

In March 2023, the Company entered into a services agreement with Marker Therapeutics, Inc. (“Marker”) pursuant to which Marker provides development services to the Company. Juan Vera, a current director and former executive officer of the Company, is co-founder, director and chief executive officer of Marker. In June 2023, CellReady LLC (“CellReady”) acquired certain manufacturing assets previously owned by Marker, and inherited the service agreement that Allovir previously maintained with Marker. The Company

18


 

incurred $0 during the three months ended March 31, 2024 and 2023, respectively, under the agreement. At March 31, 2024 and December 31, 2023, the Company owed CellReady $0 and $0.5 million, respectively.

Members of the Company’s management and board of directors received consulting fees totaling $0.1 million and $0.1 million during the three months ended March 31, 2024 and 2023, respectively.

13. Restructuring Costs

In January 2024, the Company’s board of directors approved a RIF of approximately 95% of the Company’s employee base in order to reduce costs and preserve capital in light of the announcement on December 22, 2023 that the Company is discontinuing its three global Phase 3 posoleucel studies. The Company communicated the RIF to affected employees in January 2024.

The RIF was primarily completed during the first quarter of 2024 and was substantially completed by April 15, 2024. As a result of these actions, the Company recorded restructuring costs of $9.5 million, consisting primarily of employee severance, continuing healthcare benefits and other employee-related costs. Restructuring costs associated with one-time termination benefits were recorded pursuant to ASC 420. The Company expects cash payments related to the restructuring costs to be substantially complete by the second quarter of 2024.

The following table presents the details of the Company’s restructuring liability, which is included in accrued expenses on the consolidated balance sheet at March 31, 2024 as follows:

 

(in thousands)

 

Restructuring Liability

 

Balance at December 31, 2023

 

$

 

Restructuring charges

 

 

9,464

 

Cash payments

 

 

(7,756

)

Balance at March 31, 2024

 

$

1,708

 

 

19


 

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

You should read the following discussion and analysis of our financial condition and results of operations together with our unaudited condensed consolidated financial statements and related notes appearing in Part I, Item I of this Quarterly Report on Form 10-Q and with our audited consolidated financial statements and notes thereto for the year ended December 31, 2023, included in our Annual Report on Form 10-K that was filed on March 15, 2024 with the U.S. Securities and Exchange Commission, or the SEC.

Some of the information contained in this discussion and analysis or set forth elsewhere in this report, including information with respect to our plans and strategy for our business and related financing, includes forward-looking statements that involve risks and uncertainties. As a result of many factors, including those factors set forth in the “Risk Factors” section of this Quarterly Report on Form 10-Q, our actual results could differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis. You should carefully read the section titled “Risk Factors” set forth in Part II, Item 1A of this Quarterly Report on Form 10-Q to gain an understanding of the important factors that could cause actual results to differ materially from our forward-looking statements. Please also see the section entitled “Special Note Regarding Forward-Looking Statements.” You should, therefore, not rely on these forward-looking statements as representing our views as of any date subsequent to the date of this Quarterly Report on Form 10-Q.

Overview

We are a clinical-stage cell therapy company developing highly innovative allogeneic T cell therapies to treat and prevent devastating viral diseases. Our innovative and proprietary virus-specific T cell, or VST, therapy platform allows us 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. Our platform includes three innovative, allogeneic, off-the-shelf VST therapy candidates targeting 11 different devastating viruses. Our lead product candidate, posoleucel (previously referred to as Viralym-M or ALVR105), is a multi-VST therapy that targets six viruses: adenovirus, or AdV, BK virus, or BKV, cytomegalovirus, or CMV, Epstein-Barr virus, or EBV, human herpesvirus 6, or HHV-6, and JC virus, or JCV.

In December 2023, we announced the discontinuation of three Phase 3 registrational trials of posoleucel following separate, pre-planned DSMB futility analyses that concluded the studies were unlikely to meet their primary endpoints. Specifically, we discontinued a multicenter, randomized, double-blind, placebo-controlled Phase 3 trial comparing posoleucel to placebo for the prevention of infection or disease due to AdV, BKV, CMV, EBV, HHV-6, or JCV in high-risk adult and pediatric patients after undergoing an allogeneic hematopoietic stem cell transplant. We also discontinued two multicenter, randomized, double-blind, placebo-controlled Phase 3 trials of posoleucel – one for the treatment of virus-associated hemorrhagic cystitis and the second for the treatment of adenovirus infection – both after allogeneic hematopoietic cell transplant.

In December 2023, we also announced that we would review the detailed datasets from those Phase 3 trials and launch a comprehensive review of strategic alternatives focused on maximizing stockholder value, including, but not limited to, a merger, sale, divestiture of assets, licensing, or other strategic transaction. We expect to devote substantial time and resources to exploring strategic alternatives that our board of directors believes will maximize stockholder value. Despite devoting significant efforts to identify and evaluate potential strategic alternatives, there can be no assurance that this strategic review process will result in us pursuing any transaction or that any transaction, if pursued, will be completed on attractive terms or at all. We have not set a timetable for completion of this strategic review process, and our board of directors has not approved a definitive course of action. Additionally, there can be no assurances that any particular course of action, business arrangement or transaction, or series of transactions, will be pursued, successfully consummated or lead to increased stockholder value, or that we will make any cash distributions to our stockholders. In connection with the evaluation of strategic alternatives and in order maximize capital preservation, we have implemented a plan to reduce our workforce by approximately 95%. This workforce reduction plan was approved in January 2024, and took place primarily during the first quarter of 2024 and was substantially completed by April 15, 2024.

Our pipeline includes additional investigational VST therapies that may benefit high-risk individuals. ALVR106 is our second off-the-shelf, multi-VST product candidate targeting devastating respiratory diseases caused by human metapneumovirus, or hMPV, influenza, parainfluenza virus, or PIV and respiratory syncytial virus, or RSV. A Phase 1b/2 proof of concept, or POC, clinical study of ALVR106 has completed enrollment of patients in Part A of the trial. We have paused development of ALVR106, including discontinuing the trial pending the outcome of our review of strategic alternatives. Preclinical and IND-enabling studies of ALVR107 to treat and cure hepatitis B were completed in 2022 to support advancement into a POC study. Clinical development of ALVR107 is currently paused pending the outcome of our review of strategic alternatives.

20


 

Since inception, we have devoted substantially all of our resources on raising capital, organizing and staffing our company, business planning, conducting discovery and research activities, acquiring or discovering product candidates, establishing and protecting our intellectual property portfolio, developing and progressing posoleucel, ALVR106, ALVR107, and other product candidates and preparing for clinical trials and establishing arrangements with third parties for the manufacture of our product candidates and component materials. We do not have any product candidates approved for sale and have not generated any revenue from product sales.

On August 3, 2020, we completed an initial public offering, or IPO, of our common stock and issued and sold 18,687,500 shares of our common stock at a public offering price of $17.00 per share, resulting in net proceeds of $292.0 million after deducting underwriting discounts and commissions and offering costs. Prior to our IPO, we funded our operations through equity financings and received proceeds of $156.3 million, net of offering costs of $0.6 million, from the sale of our preferred stock.

On July 26, 2022, we entered into a Securities Purchase Agreement, or the Securities Purchase Agreement, with certain investors for the issuance and sale of 27,458,095 shares of our common stock for aggregate net proceeds of $126.4 million.

On June 21, 2023, we entered into an underwriting agreement with J.P. Morgan Securities LLC, Morgan Stanley & Co. LLC and BoFA Securities, Inc., as the representatives of the several underwriters, or Underwriters, relating to an underwritten public offering of 20,000,000 shares of our common stock at a public offering price of $3.75 per share, resulting in net proceeds of $70.2 million after deducting underwriting discounts, commissions and offering costs.

On August 6, 2021, we filed an automatically effective registration statement on Form S-3, or Registration Statement, with the SEC which registered the offering, issuance and sale of an unspecified amount of common stock, preferred stock, debt securities, warrants and/or units of any combination thereof. We simultaneously entered into a sales agreement with SVB Leerink LLC, as sales agent, to provide for the issuance and sale by the Company of up to $100.0 million of common stock from time to time in “at-the-market” offerings under the Registration Statement and related prospectus filed with the Registration Statement, or the ATM Program. On February 10, 2022 we filed a Post-Effective Amendment No. 2 to the Registration Statement and on February 18, 2022 we filed Post-Effective Amendment No. 3 to the Registration Statement. On June 21, 2023, we suspended our use of and terminated the prospectus supplement under the ATM Program. We will not make any sales under the ATM Program unless and until a new prospectus supplement or a new registration statement is filed. Other than the termination of the prospectus supplement, the sales agreement remains in full force and effect. As of March 31, 2024, no sales had been made pursuant to the ATM Program.

We have incurred significant operating losses since inception, including net losses of $30.3 million for the three months ended March 31, 2024. As of March 31, 2024, we had an accumulated deficit of $686.5 million.

These losses have resulted primarily from costs incurred in connection with research and development activities and general and administrative costs associated with our operations. We expect losses to decrease in the foreseeable future due to our workforce reduction plan and discontinuation of our clinical trials. We expect to continue to incur costs and expenditures in connection with our ongoing evaluation of strategic alternatives and we will continue to incur costs associated with operating as a public company. There can be no assurance, however, that we will be able to successfully consummate any particular strategic transaction. The process of evaluating strategic transactions has been and may continue to be costly, time-consuming and complex, and we may incur significant costs related to these processes, such as legal, accounting and advisory fees and expenses and other related charges. A considerable portion of these costs will be incurred regardless of whether any particular course of action is implemented or transaction is completed. Any such expenses will decrease the remaining cash available for use in our business. In addition, any strategic business combination or other transactions that we may consummate in the future, could have a variety of negative consequences and we may implement a course of action or consummate a transaction that yields unexpected results that adversely affects our business and decreases the remaining cash available for use in our business or the execution of our strategic plan. There can be no assurances that any particular course of action, business arrangement, transaction, or series of transactions, will be pursued, successfully consummated, lead to increased stockholder value or achieve the anticipated results. Any failure of such potential transaction to achieve the anticipated results could significantly impair our ability to enter into any future strategic transactions and may significantly diminish or delay any future distributions to our stockholders.

Should we resume the development of product candidates, we expect to continue to incur significant and increasing expenses and operating losses for the foreseeable future, particularly if and as we:

initiate and conduct additional preclinical studies and clinical trials for our product candidates;
continue to discover and develop additional product candidates;
acquire or in-license other product candidates and technologies;
maintain, expand, and protect our intellectual property portfolio;
hire additional clinical and scientific personnel;

21


 

expand our manufacturing capabilities with third parties and establish manufacturing capabilities in-house;
seek regulatory approvals and pursue commercialization for any product candidates that successfully complete clinical trials; and
add operational, financial, and management information systems and personnel, including personnel to support our product development and planned future commercialization efforts.

Should we resume the development of product candidates, we will need substantial additional funding to support our continuing operations and pursue our growth strategy. Until such time as we can generate significant revenue from product sales, if ever, we expect to finance our operations through the sale of equity, debt financings or other capital sources, including potential collaborations with other companies or other strategic transactions. Our inability to raise capital as and when needed could have a negative impact on our financial condition and ability to pursue our business strategies. There can be no assurances, however, that the current operating plan will be achieved or that additional funding will be available on terms acceptable to us, or at all.

At March 31, 2024, we had cash, cash equivalents and short-term investments of $140.5 million. Based on current projections, we believe that our existing cash, cash equivalents and short-term investments, will enable us to fund our operating expenses and capital expenditure requirements through at least twelve months following the issuance of these financial statements. We have based this estimate on assumptions that may prove to be wrong, and we could exhaust our available capital resources sooner than we expect. However, due to the discontinuation of our clinical trials and research activities, as well as our workforce reduction plan, management has concluded that there is a substantial doubt regarding our ability to continue as a going concern for more than twelve months after the date the condensed consolidated financial statements are available to be issued. See “—Liquidity and Capital Resources.”

Should we resume the development of product candidates, the development of our 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 COVID-19 pandemic. The spread of COVID-19 impacted the global economy and our operations, including the interruption of our preclinical and clinical trial activities and potential interruption to our supply chain. For example, the COVID-19 pandemic delayed clinical trials. Although the immediate impacts of COVID-19 have receded, if the disruption due to COVID-19 resurges, our planned pivotal clinical trials also could be delayed due to government orders and site policies on account of a pandemic like the COVID-19 pandemic, and some patients may be unwilling or unable to travel to study sites, enroll in our trials or be unable to comply with clinical trial protocols if quarantines impede patient movement or interrupt healthcare services, which would delay our ability to conduct preclinical studies and clinical trials or release clinical trial results and could delay our ability to obtain regulatory approval and commercialize our product candidates. Furthermore, a pandemic like COVID-19 could affect our employees or the employees of research sites and service providers on whom we rely, including CROs, as well as those of companies with which we do business, including our suppliers and CMOs, thereby disrupting our business operations.

We cannot presently predict the scope of any potential business shutdowns or disruptions, but if we or any of the third parties on whom we rely or with whom we conduct business, were to experience shutdowns or other business disruptions, our ability to conduct our business in the manner and on the timelines presently planned could be materially and adversely impacted.

Relationship with ElevateBio – Related Party

On September 17, 2018, we entered into a Series A2 Preferred Stock Purchase Agreement, or the Series A2 Agreement, with ElevateBio, LLC, or ElevateBio, and ElevateBio was a purchaser in our registered direct offering in July 2022. ElevateBio, through its diverse platform of technologies to support cell and gene therapy products and expertise, provides drug development and manufacturing services. As a result of ElevateBio’s purchase of our Series A2 Preferred Stock, which converted to common stock upon completion of our IPO, and as a result of ElevateBio’s participation in the July 2022 registered direct offering, ElevateBio acquired an ownership interest in the Company. The Chief Financial Officer of ElevateBio currently serves in a similar management role with us. In May 2021, Diana M. Brainard, M.D., succeeded David Hallal, ElevateBio’s Chief Executive Officer, as the Company’s Chief Executive Officer. Mr. Hallal currently serves as Executive Chairman of the Company’s board of directors. Vikas Sinha, our President and Chief Financial Officer, also serves as the Chief Financial Officer of ElevateBio. In addition to Mr. Hallal and Mr. Sinha, Morana Jovan-Embiricos, a director of the Company’s board of directors, also serves as a director of the board of directors of ElevateBio.

22


 

Components of Results of Operations

Operating Expenses

Research and Development Expenses

Research and development expenses consist primarily of costs incurred in connection with our research and development activities, including our drug discovery efforts and the development of our product candidates. We expense research and development costs as incurred, which include:

external research and development expenses incurred under agreements with CROs, as well as investigative sites and consultants that conduct our clinical trials and other scientific development services;
costs related to manufacturing material for our clinical trials, including fees paid to CMOs;
manufacturing scale-up expenses and the cost of acquiring and manufacturing clinical trial materials;
employee-related expenses, including salaries, bonuses, benefits, stock-based compensation and other related costs for those employees involved in research and development efforts;
costs of outside consultants, including their fees, stock-based compensation and related travel expenses;
the costs of acquiring and developing clinical trial materials;
expenses to acquire technologies, such as intellectual property, to be used in research and development;
upfront and maintenance fees incurred under license, acquisition and other third-party agreements;
costs related to compliance with regulatory requirements; and
facilities, depreciation, and other expenses, which include direct and allocated expenses for rent, maintenance of facilities and equipment and software.

Costs for certain activities are recognized based on an evaluation of the progress to completion of specific tasks using data such as information provided to us by our vendors and analyzing the progress of our discovery studies or other services performed. Significant judgment and estimates are made in determining the accrued expense balances at the end of any reporting period.

We characterize research and development costs incurred prior to the identification of a product candidate as discovery costs. Once a product candidate has been identified, research and development costs incurred are allocated as product candidate costs.

Our direct, external research and development expenses consist primarily of fees paid to outside consultants, CROs, CMOs and research laboratories in connection with our process development, manufacturing and clinical development activities. Our direct external research and development expenses also include fees incurred under license and intellectual property purchase agreements. We track these external research and development costs on a program-by-program basis once we have identified a mature product candidate.

We do not allocate employee costs, costs associated with our discovery efforts, and facilities, including depreciation or other indirect costs, to specific programs because these costs are deployed across multiple programs and, as such, are not separately classified. We use internal resources and third-party consultants primarily to conduct our research and discovery activities as well as for managing our process development, manufacturing and clinical development activities.

Research and development activities have historically been central to our business model. We expect our research and development expenses to continue to decrease significantly given the discontinuation of our clinical trials and research activities and workforce reduction plan. Should we resume development of product candidates, we would expect research and development costs to increase significantly for the foreseeable future as the product candidate development programs progress.

Should we resume development of our product candidates, the duration, costs and timing of development activities including clinical trials would depend on a variety of factors, including:

the scope, rate of progress and expenses of our ongoing research activities and clinical trials and other research and development activities;
establishing an appropriate safety profile;
successful enrollment in and completion of clinical trials;
whether our product candidates show safety and efficacy in our clinical trials;

23


 

receipt of marketing approvals from applicable regulatory authorities;
establishing commercial manufacturing capabilities or making arrangements with third-party manufacturers;
obtaining and maintaining patent and trade secret protection and regulatory exclusivity for our product candidates;
commercializing product candidates, if and when approved, whether alone or in collaboration with others; and
continued acceptable safety profile of the products following any regulatory approval.

Should we resume development of our product candidates, any changes in the outcome of any of these variables with respect to the development of our product candidates in clinical development could mean a significant change in the costs and timing associated with the development of these product candidates. We may never succeed in achieving regulatory approval for any of our product candidates. We may obtain unexpected results from our clinical trials. We may elect to discontinue, delay or modify clinical trials of some product candidates or focus on others. For example, if the FDA, the European Medicines Agency, or the EMA, or another regulatory authority were to delay our planned start of clinical trials or require us to conduct clinical trials or other testing beyond those that we currently expect or if we experience significant delays in enrollment in any of our planned clinical trials, we could be required to expend significant additional financial resources and time on the completion of clinical development of that product candidate.

General and Administrative Expenses

General and administrative expenses consist primarily of employee-related costs, including salaries, bonuses, benefits, stock-based compensation and other related costs, as well as expenses for outside professional services, including legal, accounting and audit services and other consulting fees, rent expense and other general administrative expenses.

Restructuring Costs

Restructuring costs consist primarily of severance and employee termination costs in connection with our workforce reduction plan. We anticipate that our restructuring costs may increase in the future as we continue our comprehensive review of strategic alternatives.

Total Other Income (Loss), Net

Interest income

Interest income consists of interest income on cash, cash equivalents and short-term investments held in financial institutions.

Other income (loss), net

Other income (loss), net consists primarily of investment amortization and accretion of discounts and premiums on short-term investments and foreign exchange gains and losses.

24


 

Results of Operations

Comparison of the three months ended March 31, 2024 and 2023

The following table summarizes our results of operations (in thousands):

 

 

 

Three Months Ended March 31,

 

 

 

 

 

 

2024

 

 

2023

 

 

Change

 

Operating expenses:

 

 

 

 

 

 

 

 

 

Research and development

 

$

12,173

 

 

$

30,718

 

 

$

(18,545

)

General and administrative

 

 

10,662

 

 

 

12,513

 

 

 

(1,851

)

Restructuring costs

 

 

9,464

 

 

 

 

 

 

9,464

 

Total operating expenses

 

 

32,299

 

 

 

43,231

 

 

 

(10,932

)

Loss from operations

 

 

(32,299

)

 

 

(43,231

)

 

 

10,932

 

Total other income (loss), net:

 

 

 

 

 

 

 

 

Interest income

 

 

1,246

 

 

 

1,325

 

 

 

(79

)

Other income (loss), net

 

 

754

 

 

 

723

 

 

 

31

 

Net loss

 

$

(30,299

)

 

$

(41,183

)

 

$

10,884

 

Research and Development Expenses

 

Research and development expenses were $12.2 million for the three months ended March 31, 2024, compared to $30.7 million for the three months ended March 31, 2023. The decrease of $18.5 million was primarily due to the discontinuation of clinical trials and research activities and workforce reduction plan in connection with the Company’s December 2023 announcement of the discontinuation of our three Phase 3 registrational trials and a comprehensive review of strategic alternatives, as well as a $5.6 million gain on lease termination during the three months ended March 31, 2024.

General and Administrative Expenses

General and administrative expenses were $10.7 million for the three months ended March 31, 2024, compared to $12.5 million for the three months ended March 31, 2023. The decrease of $1.9 million was primarily due to the decrease in personnel costs resulting from the workforce reduction plan in connection with the Company’s December 2023 announcement of the discontinuation of our three Phase 3 registrational trials and a comprehensive review of strategic alternatives.

 

Restructuring Costs

Restructuring costs were $9.5 million for the three months ended March 31, 2024, which consist primarily of severance and employee termination costs in connection with our workforce reduction plan.

Total Other Income (Loss), Net

Total other income (loss), net was generally consistent at $2.0 million for the three months ended March 31, 2024, compared to $2.0 million for the three months ended March 31, 2023.

Liquidity and Capital Resources

Sources of Liquidity

At March 31, 2024, we have funded our operations primarily through equity financings and have received net cash proceeds of approximately $156.3 million from the sale of our preferred stock, $292.0 million of net proceeds from the sale of common stock in our IPO, $126.4 million of net proceeds from the Securities Purchase Agreement entered into on July 26, 2022 and $70.2 million of net proceeds from the public offering pursuant to the Underwriting Agreement entered into on June 21, 2023.

We currently have no ongoing material financing commitments, such as lines of credit or guarantees, that are expected to affect our liquidity over the next five years, other than our manufacturing, licensing and lease obligations described further below.

Funding Requirements

At March 31, 2024, our cash, cash equivalents and short-term investments were $140.5 million. We believe that our existing cash, cash equivalents and short-term investments will enable us to fund our operating expenses and capital expenditure requirements through

25


 

at least twelve months following the issuance of these financial statements. However, in light of the discontinuation of all of our clinical trials and research activities, as well as our workforce reduction plan, we have concluded that there is a substantial doubt regarding our ability to continue as a going concern for at least twelve months following the issuance of these financial statements. We have based this estimate on assumptions that may prove to be wrong, and we could expend our capital resources sooner than we expect.

We expect our research and development expenses to continue to decrease significantly given the discontinuation of our clinical trials and research activities and workforce reduction plan. We will continue to incur costs associated with operating as a public company, and will also incur costs associated with our review of strategic alternatives.

Should we resume development of product our candidates, however, we expect our expenses to increase in order to advance our product candidates through clinical development, seek regulatory approval and pursue commercialization of any approved product candidates. We expect that our research and development and general and administrative costs will increase in connection with our planned research and development activities. If we receive regulatory approval for our product candidates, we expect to incur significant commercialization expenses related to product manufacturing, sales, marketing and distribution, depending on where we choose to commercialize. We may also require additional capital to pursue in-l