Aura Biosciences(US:AURA)2024-08-08 11:10PART I. FINANCIAL INFORMATION Financial Statements (Unaudited) Unaudited H1 2024 financial statements report a $40.0 million net loss, decreased assets, and strong liquidity from equity financing Condensed Consolidated Balance Sheets Balance Sheet Highlights (in thousands) | Account | June 30, 2024 | December 31, 2023 | | :--- | :--- | :--- | | Cash and cash equivalents | $30,075 | $41,063 | | Marketable securities | $157,341 | $185,087 | | Total Assets | $218,282 | $255,075 | | Total current liabilities | $10,548 | $12,357 | | Total Liabilities | $26,828 | $29,227 | | Total Stockholders' Equity | $191,454 | $225,848 | Condensed Consolidated Statements of Operations and Comprehensive Loss Operating Results (in thousands, except per share data) | Metric | Three Months Ended June 30, 2024 | Three Months Ended June 30, 2023 | Six Months Ended June 30, 2024 | Six Months Ended June 30, 2023 | | :--- | :--- | :--- | :--- | :--- | | Research and development | $16,879 | $15,120 | $33,932 | $29,524 | | General and administrative | $5,883 | $5,156 | $11,145 | $10,196 | | Total operating loss | ($22,762) | ($20,276) | ($45,077) | ($39,720) | | Net loss | ($20,337) | ($18,299) | ($40,043) | ($35,765) | | Net loss per share | ($0.41) | ($0.48) | ($0.81) | ($0.95) | Condensed Consolidated Statements of Cash Flows Cash Flow Summary for Six Months Ended June 30 (in thousands) | Activity | 2024 | 2023 | | :--- | :--- | :--- | | Net cash used in operating activities | ($40,580) | ($31,057) | | Net cash provided by (used in) investing activities | $29,237 | ($45,472) | | Net cash provided by financing activities | $336 | $2,679 | | Net decrease in cash, cash equivalents and restricted cash | ($11,007) | ($73,850) | Notes to Unaudited Condensed Consolidated Financial Statements - The company is a clinical-stage biotechnology firm focused on developing its lead candidate, bel-sar, for solid tumors, initially in ocular and urologic oncology, utilizing its proprietary Virus-Like Drug Conjugates (VDCs) platform24 - As of the report date, the company expects its cash, cash equivalents, and marketable securities to be sufficient to fund operations and capital expenditures through at least the next 12 months27 - In March 2024, the company filed a new $350.0 million shelf registration statement (Form S-3), which includes an ATM facility, though no shares were issued under the ATM in the first six months of 20242642 - As of June 30, 2024, there was $17.7 million of unrecognized compensation expense related to stock options and $13.5 million related to restricted stock units, expected to be recognized over weighted-average periods of 2.66 and 3.11 years, respectively5253 Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses bel-sar's clinical progress, reporting a $40.0 million net loss for H1 2024 due to increased expenses, while maintaining strong liquidity - The company is advancing its lead candidate, bel-sar, in a global Phase 3 CoMpass trial for early-stage choroidal melanoma, with an FDA Special Protocol Assessment (SPA) agreement in place8284 - A Phase 2 trial for metastases to the choroid is planned to start in 2024, with initial data expected by year-end, while the ongoing Phase 1 trial in bladder cancer is enrolling patients in light-activated cohorts, with early data expected in October 20248792 Comparison of Operating Expenses for Six Months Ended June 30 (in thousands) | Expense Category | 2024 | 2023 | Change | Reason for Change | | :--- | :--- | :--- | :--- | :--- | | Research & Development | $33,932 | $29,524 | $4,408 | Higher personnel expenses due to company growth | | General & Administrative | $11,145 | $10,196 | $949 | Higher personnel and general corporate expenses | - As of June 30, 2024, the company had $187.4 million in cash, cash equivalents, and marketable securities, which management believes is sufficient to fund operations into the second half of 202699126 Quantitative and Qualitative Disclosures About Market Risk As a smaller reporting company, the company is exempt from providing quantitative and qualitative market risk disclosures - The company is a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and is not required to provide quantitative and qualitative disclosures about market risk135 Controls and Procedures Management concluded disclosure controls were effective as of June 30, 2024, with no material changes to internal financial reporting controls - The CEO and CFO concluded that as of June 30, 2024, the company's disclosure controls and procedures were effective137 - No changes in internal control over financial reporting occurred during the quarter that have materially affected, or are reasonably likely to materially affect, these controls138 PART II. OTHER INFORMATION Legal Proceedings As of June 30, 2024, the company is not involved in any material legal proceedings - The company is not currently involved in any material legal proceedings139 Risk Factors The company outlines significant risks related to its financial position, product development, third-party reliance, commercialization, and intellectual property Risks Related to Financial Position and Capital Needs - The company has a history of significant net losses, with a $40.0 million loss for the six months ended June 30, 2024, and an accumulated deficit of $327.4 million, anticipating continued losses for the foreseeable future141 - Substantial additional capital will be required to finance operations, and while existing cash is expected to fund operations into the second half of 2026, this estimate is based on assumptions that may prove wrong145146 Risks Related to Product Discovery and Development - The company is heavily dependent on the success of its only product candidate, bel-sar, and failure to gain regulatory approval or achieve commercial viability would severely harm the business157 - Bel-sar is a biologic-device combination product, requiring use of a microinjector and a laser, which adds complexity and risk to the regulatory approval process172 - The company has an FDA Special Protocol Assessment (SPA) for its Phase 3 trial, but this does not guarantee a successful review or ultimate approval208210 Risks Related to Reliance on Third Parties - The company relies on third-party CROs to conduct clinical trials and CDMOs for the manufacturing of bel-sar, which reduces control over these activities and introduces risks related to performance, compliance, and supply212216 Risks Related to Commercialization - The company has no experience in marketing or sales and must build these capabilities or rely on partners, which is critical for generating revenue if bel-sar is approved229 - The market opportunity for bel-sar may be smaller than estimated, and its success depends on acceptance by physicians, patients, and payors, as well as favorable pricing and reimbursement226235 Risks Related to Intellectual Property - Commercial success depends on obtaining and maintaining proprietary rights for its technology, where patents may be challenged, and the company may need to license IP from third parties on potentially unfavorable terms245250 Risks Related to Business and Industry - The business is exposed to risks from cybersecurity incidents, which could compromise confidential information and disrupt development programs, while compliance with evolving data privacy laws (e.g., GDPR, CCPA) is complex and costly283288 Risks Related to Common Stock - Principal stockholders and management own approximately 51% of the common stock, allowing them to exert significant influence over corporate actions315 - The company's ability to use its net operating loss (NOL) carryforwards of approximately $174.4 million (federal) may be limited by ownership changes under Section 382 of the Code316 Unregistered Sales of Equity Securities and Use of Proceeds The company reported no unregistered sales of equity securities or issuer purchases during the period - There were no unregistered sales of equity securities or issuer purchases of equity securities in the quarter354 Defaults Upon Senior Securities This item is not applicable to the company - Not applicable354 Mine Safety Disclosures This item is not applicable to the company - Not applicable355 Other Information No directors or officers adopted or terminated Rule 10b5-1 trading arrangements during the quarter ended June 30, 2024 - No directors or officers adopted or terminated a Rule 10b5-1 trading plan during the quarter355 Exhibits This section lists exhibits filed with the quarterly report, including corporate governance documents and CEO/CFO certifications - Key exhibits filed include the Tenth Amended and Restated Certificate of Incorporation and an Amended and Restated Non-Employee Director Compensation Policy358