Aptevo Therapeutics(APVO) - 2024 Q3 - Quarterly Report

PART I. FINANCIAL INFORMATION Item 1. Financial Statements (Unaudited) The unaudited financial statements show a significant decrease in assets and a rising net loss, which, combined with an accumulated deficit and increased cash burn, raise substantial doubt about the company's ability to continue as a going concern Condensed Consolidated Balance Sheets Total assets decreased significantly to $15.1 million due to a reduction in cash, while stockholders' equity fell sharply from $12.2 million to $4.4 million Condensed Consolidated Balance Sheet Data (in thousands) | Balance Sheet Items | September 30, 2024 | December 31, 2023 | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $7,753 | $16,904 | | Total current assets | $10,012 | $19,066 | | Total assets | $15,146 | $24,842 | | Liabilities & Equity | | | | Total current liabilities | $5,882 | $7,224 | | Total liabilities | $10,726 | $12,621 | | Total stockholders' equity | $4,420 | $12,221 | | Total liabilities and stockholders' equity | $15,146 | $24,842 | Condensed Consolidated Statements of Operations The company's net loss widened to $17.8 million for the nine-month period, despite an improved quarterly loss, influenced by the absence of a significant prior-year gain on an asset sale Condensed Consolidated Statements of Operations (in thousands) | Metric | Q3 2024 | Q3 2023 | 9 Months 2024 | 9 Months 2023 | | :--- | :--- | :--- | :--- | :--- | | Research and development | $(3,103) | $(3,887) | $(10,498) | $(13,516) | | General and administrative | $(2,110) | $(2,674) | $(7,722) | $(8,978) | | Loss from operations | $(5,213) | $(6,561) | $(18,220) | $(22,494) | | Gain related to sale of non-financial asset | — | — | — | $9,650 | | Net loss from continuing operations | $(5,101) | $(6,334) | $(17,818) | $(12,454) | | Net loss | $(5,101) | $(6,334) | $(17,818) | $(11,508) | Net Loss Per Share (Basic and Diluted) | Period | 2024 | 2023 | | :--- | :--- | :--- | | Three Months Ended Sep 30 | $(0.48) | $(22.16) | | Nine Months Ended Sep 30 | $(5.01) | $(56.22) | Condensed Consolidated Statements of Cash Flows Net cash used in operating activities increased substantially to $18.0 million, while financing activities provided $8.9 million, resulting in a net cash decrease of $9.2 million Cash Flow Summary (in thousands) | Activity | Nine Months Ended Sep 30, 2024 | Nine Months Ended Sep 30, 2023 | | :--- | :--- | :--- | | Net cash used in operating activities | $(18,026) | $(6,477) | | Net cash provided by financing activities | $8,875 | $2,952 | | Decrease in cash and cash equivalents | $(9,151) | $(3,525) | | Cash and cash equivalents at end of period | $7,753 | $19,110 | Notes to Condensed Consolidated Financial Statements The notes detail the company's clinical-stage focus, significant financing activities including a reverse stock split, and the substantial doubt about its ability to continue as a going concern - The company is a clinical-stage biotechnology firm focused on novel immuno-oncology candidates, using its proprietary ADAPTIR™ and ADAPTIR-FLEX™ platforms[16] - Due to recurring losses, a net loss of $17.8 million and negative operating cash flow of $18.0 million for the nine months ended September 30, 2024, there is substantial doubt about the company's ability to continue as a going concern[16] - On March 5, 2024, the company effected a 1-for-44 reverse stock split of its common stock, and all share and per-share amounts have been retroactively adjusted[30] - Subsequent to the reporting period, remaining pre-funded warrants were exercised, bringing the total shares of common stock outstanding to 18,512,084 as of November 7, 2024[59] Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses decreased operating expenses, a critical liquidity position with $7.8 million in cash, and the urgent need for substantial additional funding to continue operations and advance clinical programs Overview Aptevo is a clinical-stage biotechnology company developing novel cancer immunotherapies using its versatile ADAPTIR and ADAPTIR-FLEX protein technology platforms - The company is focused on developing novel immunotherapy candidates for cancer treatment[63] - Key assets include two proprietary technology platforms, ADAPTIR and ADAPTIR-FLEX, used to design multi-specific antibody candidates[65] - The clinical pipeline includes mipletamig (APVO436) for acute myelogenous leukemia (AML) and ALG.APV-527 for multiple solid tumor types[63] Results of Operations Operating expenses decreased in 2024 due to lower spending on the mipletamig clinical trial and reduced G&A costs, while the prior year's results included a significant one-time gain Research and Development Expenses by Program (in thousands) | Program | 9 Months 2024 | 9 Months 2023 | | :--- | :--- | :--- | | Mipletamig | $2,544 | $4,300 | | ALG.APV-527 | $2,004 | $2,264 | | Preclinical, research & discovery | $5,950 | $6,952 | | Total | $10,498 | $13,516 | - The decrease in R&D expenses was primarily due to lower spending on the mipletamig clinical trial as the Phase 1b dose expansion study concluded[70] - General and administrative expenses decreased by $1.3 million for the nine months ended September 30, 2024, compared to the prior year, mainly due to lower employee and consulting costs[71] - In 2023, the company recorded a $9.7 million gain from the sale of nonfinancial assets to XOMA, which was not present in 2024[72] Liquidity and Capital Resources The company's liquidity is a significant concern, with cash of $7.8 million and an accumulated deficit of $241.3 million, necessitating substantial additional funds to continue development - As of September 30, 2024, the company had cash and cash equivalents of $7.8 million and an accumulated deficit of $241.3 million[83] - The company does not have sufficient cash to complete the clinical development of any of its product candidates and will require substantial additional funds to continue its development programs[83] - If unable to raise additional capital, the company may be required to delay, limit, reduce, or terminate its clinical trials and other development activities[84] Financing Activities (Gross Proceeds) | Offering | Date | Gross Proceeds | | :--- | :--- | :--- | | Public Offering | August 2023 | $4.3M (net) | | Warrant Inducement | November 2023 | $3.3M | | Public Offering | April 2024 | $4.6M | | Registered Direct Offering | July 2024 | $2.7M | | Registered Direct Offering | September 2024 | $3.0M | Quantitative and Qualitative Disclosures About Market Risk The company states there have been no material changes to the information regarding market risk since its 2023 Annual Report on Form 10-K - There were no material changes to the disclosures about market risk as of September 30, 2024, compared to those in the 2023 Annual Report on Form 10-K[86] Controls and Procedures Management evaluated the company's disclosure controls and procedures and concluded they were effective, with no material changes in internal control over financial reporting during the quarter - The CEO and CFO concluded that as of September 30, 2024, the company's disclosure controls and procedures were effective[87] - No changes in internal control over financial reporting occurred during the quarter ended September 30, 2024, that have materially affected or are likely to materially affect internal controls[88] PART II. OTHER INFORMATION Legal Proceedings The company is not currently a party to any legal claims or actions that management believes would have a material adverse effect on its financial condition or operations - Management believes there are currently no pending legal claims or actions that could have a material adverse effect on the company's results, financial condition, or cash flows[90] Risk Factors The company faces significant financial, operational, and regulatory risks, including a history of losses, going concern uncertainty, reliance on clinical trial success, and potential delisting from Nasdaq - The company's common stock is at risk of delisting from Nasdaq for failing to maintain the minimum $1.00 bid price requirement[92][169] - The company has a history of losses, an accumulated deficit of $241.3 million, and its ability to continue as a going concern is in substantial doubt[92][94] - Success is highly dependent on the ability to develop, receive regulatory approval for, and commercialize product candidates, a process which is long, costly, and uncertain[92][134] - The business is affected by macroeconomic conditions, including inflation, interest rates, and market volatility, which could impact operations and the ability to raise capital[92][97] Other Information No directors or executive officers adopted, terminated, or materially modified a Rule 10b5-1 trading plan or other non-Rule 10b5-1 trading arrangement during the third quarter of 2024 - In Q3 2024, no directors or executive officers adopted, terminated, or modified a Rule 10b5-1 trading plan or other non-Rule 10b5-1 trading arrangement[179] Exhibits This section lists exhibits filed with the Form 10-Q, including financing agreements, an amendment to the stockholder Rights Agreement, and officer certifications - Exhibits filed include agreements from the September 2024 registered direct offering, such as the Securities Purchase Agreement and forms of Common and Pre-Funded Warrants[181] - An amendment to the Rights Agreement with Broadridge Corporate Issuer Solutions, Inc., dated November 1, 2024, was filed[181] - Certifications by the Principal Executive Officer and Principal Financial Officer pursuant to Sarbanes-Oxley Sections 302 and 906 are included as exhibits[181]