Rallybio(RLYB) - 2024 Q4 - Annual Report

Part I Business Rallybio is a clinical-stage biotechnology company focused on developing therapies for severe and rare diseases, leveraging strategic collaborations and intellectual property while navigating extensive government regulation - The company's mission is to develop and commercialize life-transforming therapies for patients with severe and rare diseases, focusing on maternal fetal health, complement dysregulation, hematology, and metabolic disorders[21] Product Pipeline as of December 31, 2024 | Molecule | Approach | Indication | Discovery | Preclinical | Phase 1 | Phase 2 | Phase 3 | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | RLYB212 | Anti-HPA-1a Monoclonal Antibody | Prevention of FNAIT | | | ✅ | ✅ | | | RLYB116 | C5 Inhibitor Affibody®-ABD Fusion | Diseases of complement dysregulation | | | ✅ | | | | REV102 | ENPP1 Inhibitor Small Molecule | Hypophosphatasia (HPP) | | ✅ | | | Partnership with Recursion | | RLYB332 | Matriptase-2 Inhibitor Monoclonal Antibody | Diseases of iron overload and severe anemias | | ✅ | | | | | RLYB114 | C5 Inhibitor Pegylated Affibody® | Ophthalmological diseases of complement dysregulation | | ✅ | | | | | Undisclosed | - | Undisclosed metabolic disease | Partnership with AbCellera | | | | | Our Product Candidates Rallybio's pipeline is led by RLYB212 for FNAIT and RLYB116 for complement-mediated diseases, with preclinical assets including RLYB332 for iron overload and REV102 for HPP - RLYB212 is in a Phase 2 clinical trial in pregnant women at higher risk for HPA-1a alloimmunization and FNAIT, with enrollment in three stages[27][28] - Following biomarker analyses and manufacturing enhancements for RLYB116, the company plans to initiate a confirmatory clinical PK/PD trial in Q2 2025[36] - RLYB332, a long-acting MTP-2 inhibitor, has shown favorable preclinical PD data, supporting its potential as a best-in-class therapy for diseases of iron overload like beta thalassemia and MDS[37] - In collaboration with Recursion, the company advanced REV102, an ENPP1 inhibitor for HPP, and plans for additional preclinical development activities in 2025[39] Competition Rallybio faces competition across its pipeline, with no approved preventative therapies for FNAIT, and established competitors in PNH, gMG, and HPP markets - FNAIT: No approved therapies exist, with Johnson & Johnson evaluating nipocalimab for treatment[110] - PNH: Competes with approved drugs Soliris and Ultomiris (AstraZeneca), Empaveli (Apellis), and Fabhalta (Novartis)[111] - gMG: Competes with approved drugs from AstraZeneca, Argenx (Vyvgart), and UCB (Zilbrysq, Rystiggo)[112] - HPP: Competes with the only approved therapy, Strensiq (AstraZeneca)[113] Intellectual Property The company's intellectual property strategy relies on owned and in-licensed patents and trade secrets, with key patent expirations for FNAIT in 2035 and complement programs between 2033 and 2034 - The patent family covering RLYB212 and its use in preventing FNAIT includes issued patents in the U.S., Europe, and other regions, which will expire in 2035, excluding any potential extensions[122] - The complement program, including RLYB114 and RLYB116, is protected by two patent families acquired from Sobi, with patents granted in the U.S., Europe, and Japan that are scheduled to expire between 2033 and 2034[124] - The company has exclusively in-licensed patent rights for RLYB332 from Kymab Limited, with patent applications pending in the U.S. and over 20 other countries[125] License and Collaboration Agreements Rallybio has key agreements including asset purchases for RLYB212 and RLYB116/114, license agreements for RLYB332, a joint venture for ENPP1 inhibitors, and collaborations with AbCellera and Johnson & Johnson - Entered a collaboration with Johnson & Johnson in April 2024 to advance FNAIT research, involving data sharing, an upfront payment of $0.5 million, and potential milestone payments up to $3.7 million[155][156] - Acquired RLYB212 assets from Prophylix for an upfront payment, with up to $19.0 million in development milestones and $20.0 million in sales milestones[142][143] - Acquired RLYB116/RLYB114 assets from Sobi for a $5.0 million upfront payment, with up to $51.0 million in development milestones and $65.0 million in sales milestones[137][138] - Licensed RLYB331 (now RLYB332) from Sanofi for a $3.0 million upfront payment, with up to $43.0 million in development/regulatory milestones and $150.0 million in commercial milestones[133][134] Government Regulation The company's operations are subject to extensive regulation by the FDA and comparable authorities, covering preclinical studies, clinical trials, manufacturing, and post-approval requirements, including pricing, reimbursement, and data privacy - The company must navigate a multi-step approval process with the FDA, including preclinical studies, an effective IND application, and adequate and well-controlled clinical trials (Phase 1, 2, 3) under GCPs[165][166] - RLYB212 has received Orphan Drug Designation from both the FDA and EMA, which provides incentives like market exclusivity (7 years in the U.S., 10 years in the EU) upon approval[214][245] - RLYB212 has also received Rare Pediatric Disease Designation from the FDA, making it potentially eligible for a Priority Review Voucher upon approval, subject to certain conditions and statutory deadlines[218] - The company is subject to various U.S. healthcare laws, including anti-kickback statutes, false claims acts, and the Sunshine Act, as well as global data privacy laws like GDPR, which impose significant compliance obligations[259][268] Risk Factors The company faces substantial risks including significant losses, capital needs, dependence on early-stage clinical candidates, regulatory uncertainties, reliance on third parties, intense competition, intellectual property disputes, patient recruitment challenges, and stock volatility - Financial Risk: The company has a history of significant losses ($57.8 million in 2024) and will require substantial additional capital, with failure to obtain financing risking program delays or discontinuation[276][281] - Clinical Development Risk: The company is heavily dependent on the success of RLYB212 and RLYB116, which are in early-stage clinical development, and preclinical and early clinical results may not be indicative of later-stage trial outcomes[295][308] - Regulatory Risk: The marketing approval process is lengthy, unpredictable, and may require companion diagnostics, and even if approved, products will face extensive ongoing regulation and potential competition from generics or biosimilars[319][366][368] - Third-Party Reliance: The company relies on third-party CMOs for all manufacturing and CROs for clinical trials, increasing risks related to supply, quality control, and trial execution[383][393] - Stock Risk: The company received a notice from Nasdaq on February 24, 2025, for failing to maintain a minimum bid price of $1.00 per share, posing a risk of delisting[476] Cybersecurity Rallybio has implemented a cybersecurity risk management program based on the NIST Cybersecurity Framework, overseen by the audit committee, and has not experienced any material incidents to date - The company's cybersecurity program is guided by the NIST Cybersecurity Framework and includes risk assessments, security controls, and an incident response plan[512][513] - Oversight is provided by the audit committee of the board of directors, with management handled by a third-party IT service provider and internal staff[516] - As of the report date, the company has not experienced any cybersecurity incidents that have had a material effect on its operations or financial condition[515] Properties The company's corporate headquarters is located in New Haven, CT, where it leases approximately 9,000 square feet of office space under a lease expiring on September 30, 2025 - Leases 9,000 sq. ft. of office space for its headquarters at 234 Church Street, Suite 1020, New Haven, CT 06510[517] - The current lease expires on September 30, 2025[517] Part II Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Rallybio's common stock trades on Nasdaq under 'RLYB' since July 2021, with no dividends paid or anticipated, and proceeds from IPO and offerings supporting pipeline development - Common stock trades on Nasdaq under the symbol 'RLYB' since its IPO in July 2021[521] - The company has never paid dividends and intends to retain future earnings to finance business operations and expansion[523] - Net proceeds from the IPO were $83.0 million, which are intended to support pipeline development, working capital, and general corporate purposes[528][529] Management's Discussion and Analysis of Financial Condition and Results of Operations For 2024, Rallybio's net loss decreased to $57.8 million due to lower R&D and G&A expenses, with $0.6 million in new collaboration revenue, and $65.5 million in cash expected to fund operations into H2 2026 Results of Operations For fiscal year 2024, Rallybio's net loss decreased to $57.8 million from $74.6 million in 2023, driven by a $17.8 million reduction in total operating expenses, primarily in R&D and G&A, and initial collaboration revenue Comparison of Operations for Years Ended Dec 31, 2024 and 2023 (in thousands) | (in thousands) | 2024 | 2023 | CHANGE | | :--- | :--- | :--- | :--- | | Collaboration and license revenue | $ 636 | $ — | $ 636 | | Research and development | 41,507 | 53,544 | (12,037) | | General and administrative | 19,625 | 25,388 | (5,763) | | Total operating expenses | 61,132 | 78,932 | (17,800) | | Loss from operations | (60,496) | (78,932) | 18,436 | | Net loss | $ (57,775) | $ (74,564) | $ 16,789 | Research and Development Expenses by Program (in thousands) | (in thousands) | 2024 | 2023 | CHANGE | | :--- | :--- | :--- | :--- | | RLYB212 | $ 21,287 | $ 25,685 | $ (4,398) | | RLYB116 | 4,841 | 8,791 | (3,950) | | Other program candidates | 1,901 | 3,411 | (1,510) | | Personnel expenses | 12,488 | 14,160 | (1,672) | | Total R&D expenses | $ 41,507 | $ 53,544 | $ (12,037) | - The decrease in R&D expenses was primarily due to lower development costs for RLYB212 and RLYB116, and reduced payroll expenses following a workforce reduction effective March 6, 2024[570] - The decrease in G&A expenses was mainly due to lower consulting fees, D&O insurance premiums, and reduced payroll costs from the 2024 workforce reduction[570] Liquidity and Capital Resources As of December 31, 2024, Rallybio had $65.5 million in cash, cash equivalents, and marketable securities, projected to fund operations into the second half of 2026, with primary liquidity from equity financings - The company projects its existing cash of $65.5 million (as of Dec 31, 2024) will fund operations into the second half of 2026[552][580] - In April 2024, the company raised approximately $6.6 million in gross proceeds through a private placement of common stock to Johnson & Johnson Innovation – JJDC, Inc[551][577] Cash Flow Summary (in thousands) | (in thousands) | 2024 | 2023 | | :--- | :--- | :--- | | Net cash used in operating activities | $ (49,282) | $ (60,265) | | Net cash provided by investing activities | 33,492 | 27,658 | | Net cash provided by financing activities | 5,199 | 143 | | Net decrease in cash and cash equivalents | $ (10,591) | $ (32,464) | Financial Statements and Supplementary Data The audited consolidated financial statements for 2024 show a net loss of $57.8 million and total assets of $68.1 million, with notes detailing the J&J collaboration, asset acquisitions, and a 2024 restructuring Consolidated Financial Statements The consolidated financial statements show a net loss of $57.8 million for 2024, a decrease from $74.6 million in 2023, with total assets decreasing to $68.1 million primarily due to lower cash and marketable securities Consolidated Balance Sheet Data (in thousands) | | Dec 31, 2024 | Dec 31, 2023 | | :--- | :--- | :--- | | Cash and cash equivalents | $13,903 | $24,494 | | Marketable securities | $51,608 | $85,435 | | Total Assets | $68,108 | $115,620 | | Total current liabilities | $6,242 | $9,263 | | Total Liabilities | $6,454 | $9,436 | | Total Stockholders' Equity | $61,654 | $106,184 | Consolidated Statement of Operations Data (in thousands) | | Year Ended Dec 31, 2024 | Year Ended Dec 31, 2023 | | :--- | :--- | :--- | | Collaboration and license revenue | $636 | $— | | Research and development | $41,507 | $53,544 | | General and administrative | $19,625 | $25,388 | | Loss from operations | $(60,496) | $(78,932) | | Net Loss | $(57,775) | $(74,564) | | Net Loss Per Share | $(1.33) | $(1.84) | Notes to Consolidated Financial Statements Key notes to the financial statements detail the J&J collaboration revenue, equity transactions including a $6.6 million stock sale to JJDC, deferred tax assets offset by a valuation allowance, and a February 2024 restructuring with a $3.3 million charge - In February 2024, the company initiated a restructuring, eliminating approximately 45% of its positions and incurring charges of approximately $3.3 million for severance and benefits[749][750] - The company has federal net operating loss carryforwards of $167.4 million that do not expire and federal R&D tax credit carryforwards of $23.4 million that begin expiring in 2039, with a full valuation allowance recorded against deferred tax assets[734][735][736] - The company recognized $0.6 million in revenue in 2024 related to its collaboration with Johnson & Johnson, with total consideration of $1.2 million from the associated equity sale premium and discount allocated to revenue to be recognized over the two-year performance period[703][706] Controls and Procedures Management concluded that the company's disclosure controls and procedures and internal control over financial reporting were effective as of December 31, 2024, with no material changes during the quarter - Management concluded that as of December 31, 2024, the company's disclosure controls and procedures were effective[607] - Management concluded that the company's internal control over financial reporting was effective as of December 31, 2024[608] Part III Directors, Executive Officers, Corporate Governance, Executive Compensation, Security Ownership, and Certain Relationships Information for Items 10 through 14, covering directors, executive officers, corporate governance, executive compensation, security ownership, and certain relationships, is incorporated by reference from the 2025 Proxy Statement - The information for Items 10, 11, 12, 13, and 14 is incorporated by reference from the registrant's Definitive Proxy Statement for its 2025 Annual Meeting of Stockholders[614][615][616][617][618] Part IV Exhibits, Financial Statement Schedules This section lists all exhibits filed with the Form 10-K, including corporate governance documents, material contracts such as asset purchase and license agreements, collaboration agreements, employment agreements, and officer certifications - Lists all exhibits filed with the Form 10-K, including corporate governance documents, material contracts, and officer certifications[622]