ACELYRIN(SLRN) - 2024 Q4 - Annual Report

Part I Business ACELYRIN, a clinical biopharmaceutical company, focuses on lonigutamab for Thyroid Eye Disease after a 2024 restructuring and pending merger with Alumis - On February 6, 2025, ACELYRIN entered into an Agreement and Plan of Merger with Alumis Inc., under which ACELYRIN will become a wholly owned subsidiary of Alumis[33] - The company's lead product candidate is lonigutamab, a subcutaneously delivered monoclonal antibody targeting IGF-1R for the treatment of Thyroid Eye Disease (TED)[34] - In August 2024, the company implemented a restructuring plan to suspend new internal investment in the izokibep program and focus primarily on the lonigutamab clinical program, subsequently terminating the license agreement with Affibody[40] - The SLRN-517 program was suspended in August 2024, and the corresponding license agreement with Novelty Nobility was terminated effective January 16, 2025[41] - The company acquired ValenzaBio, Inc. in an all-stock transaction on January 4, 2023, which added lonigutamab to its pipeline[44][66] - ACELYRIN relies on third-party CMOs for the manufacturing of its product candidates and does not own or operate any manufacturing facilities[63] Risk Factors The company faces significant risks from its pending merger, limited operating history, substantial losses, and reliance on its lead product candidate - The merger with Alumis is subject to various closing conditions, including stockholder and governmental approvals, and there is no assurance it will be completed, potentially delaying the Phase 3 LONGITUDE program for lonigutamab[121][126] - ACELYRIN is a clinical-stage company with no approved products and a history of substantial losses, with an accumulated deficit of $736.9 million as of December 31, 2024, anticipating increasing losses for the foreseeable future[19][128] - The company's business depends entirely on the success of its product candidates, with a primary focus on lonigutamab for TED, having previously suspended development of izokibep and SLRN-517 after expending significant resources[24][153][170] - The company faces significant competition for lonigutamab from the sole approved product for TED, Tepezza, as well as from other product candidates in late-stage clinical development by third parties[156] - ACELYRIN relies on third parties for critical functions, including in-licensing intellectual property (e.g., from Pierre Fabre for lonigutamab), conducting clinical trials (CROs), and manufacturing its product candidates (CMOs), exposing it to risks of non-performance and supply chain disruptions[234][325][334] - A purported federal securities class action lawsuit was filed against the company in November 2023 related to disclosures about the Phase 2b trial of izokibep in HS, which could result in substantial damages and divert management's attention[384] Unresolved Staff Comments The company reports no unresolved staff comments - None[386] Cybersecurity The company integrates cybersecurity risk management into its overall processes, overseen by an IT Steering Committee and audit committee - Cybersecurity risk management is integrated into the company's overall risk management processes, with an IT Steering Committee (ITSC) composed of senior management meeting at least quarterly to oversee the framework[387] - The board of directors' audit committee is responsible for overseeing cybersecurity and information technology risk management, receiving periodic reports from the ITSC and the Head of IT[394] - The company employs various measures to mitigate cybersecurity risks, including a Cybersecurity Incident Response Policy, access controls, encryption, systems monitoring, and the use of third-party experts for penetration testing and threat intelligence[389][392] Properties The company leases its principal executive office in Agoura Hills, California, and subleased its South San Francisco office in February 2025 - The principal executive office is located at 4149 Liberty Canyon Road, Agoura Hills, California, comprising 10,012 square feet of leased space[397] - In February 2025, the company subleased its former office space in South San Francisco to a third party through October 2027[397] Legal Proceedings The company is a defendant in a federal securities class action lawsuit filed in November 2023, alleging misleading disclosures about the izokibep trial - A purported federal securities class action lawsuit was filed against the company and its current and former officers and directors on November 15, 2023[398] - The complaint alleges misleading statements regarding the Phase 2b trial of izokibep in Hidradenitis Suppurativa (HS), with a motion to dismiss the amended complaint currently pending[398] - The company cannot reasonably estimate the potential loss from this lawsuit and has not accrued any liability[638] Mine Safety Disclosures This item is not applicable to the company - Not applicable[401] Part II Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities ACELYRIN's common stock began trading on Nasdaq in May 2023, raising $573.6 million from its IPO, with no plans for future cash dividends - The company's common stock began trading on the Nasdaq Global Market under the symbol "SLRN" on May 5, 2023[404] - The company has never declared or paid cash dividends and does not plan to in the foreseeable future[406] - The IPO, which closed on May 9, 2023, generated net proceeds of approximately $573.6 million after deducting underwriting discounts and offering costs[408] RESERVED This item is not applicable - Not applicable[411] Management's Discussion and Analysis of Financial Condition and Results of Operations The company's net loss decreased to $248.2 million in 2024, driven by lower R&D expenses, with $448.4 million in cash deemed sufficient for the next 12 months Results of Operations ACELYRIN's net loss decreased to $248.2 million in 2024, primarily due to a $117.8 million R&D expense reduction, offset by $11.4 million in restructuring charges Comparison of Results of Operations (in thousands) | | Year Ended December 31, | Change | | | :--- | :--- | :--- | :--- | :--- | | | 2024 | 2023 | $ | % | | Research and development | $238,055 | $355,886 | $(117,831) | (33)% | | General and administrative | $66,809 | $66,178 | $631 | 1% | | Restructuring charges | $11,394 | $— | $11,394 | * | | Total operating expenses | $316,258 | $422,064 | $(105,806) | (25)% | | Loss from operations | $(316,258) | $(422,064) | $105,806 | (25)% | | Net loss | $(248,226) | $(381,641) | $133,415 | (35)% | - The decrease in R&D expenses was primarily due to lower license fees and acquired in-process R&D, which in 2023 included $123.1 million for assets from the ValenzaBio acquisition and a $15.0 million milestone payment to Affibody, while 2024's main cost was a one-time $31.0 million payment to Pierre Fabre for an option buyout[450][451] - Restructuring charges of $11.4 million were recognized in 2024, consisting of $4.2 million for employee severance and a net $7.2 million for contract cancellation costs related to the discontinuation of the izokibep program[458] Liquidity, Capital Resources and Capital Requirements The company held $448.4 million in cash and marketable securities as of December 31, 2024, deemed sufficient for the next 12 months, despite increased net cash used in operations - As of December 31, 2024, the company had $448.4 million in cash, cash equivalents, restricted cash, and short-term marketable securities[461] - Management estimates that existing cash resources are sufficient to fund the operating plan and capital expenditure requirements for at least the next 12 months from the filing date of this report[461] Cash Flow Summary (in thousands) | | Year Ended December 31, | | | :--- | :--- | :--- | | | 2024 | 2023 | | Net cash used in operating activities | $(303,921) | $(169,705) | | Net cash provided by (used in) investing activities | $154,865 | $(447,744) | | Net cash provided by financing activities | $5,393 | $568,436 | - Non-cancellable purchase obligations under various contracts totaled $21.5 million as of December 31, 2024, a significant decrease from $142.3 million at the end of 2023[476][477] Financial Statements and Supplementary Data This section presents the company's audited consolidated financial statements for 2023 and 2024, including balance sheets, statements of operations, and cash flows, with notes Consolidated Balance Sheet Data (in thousands) | | Dec 31, 2024 | Dec 31, 2023 | | :--- | :--- | :--- | | Total Assets | $491,141 | $742,690 | | Total Liabilities | $32,848 | $86,353 | | Total Stockholders' Equity | $458,293 | $656,337 | Consolidated Statement of Operations Data (in thousands) | | Year Ended Dec 31, 2024 | Year Ended Dec 31, 2023 | | :--- | :--- | :--- | | Total operating expenses | $316,258 | $422,064 | | Loss from operations | $(316,258) | $(422,064) | | Net loss | $(248,226) | $(381,641) | | Net loss per share | $(2.50) | $(5.43) | - The financial statements were audited by PricewaterhouseCoopers LLP, which issued an unqualified opinion[509] Changes in and Disagreements With Accountants on Accounting and Financial Disclosures The company reports no changes in or disagreements with its accountants on accounting and financial disclosures - None[689] Controls and Procedures Management concluded that disclosure controls and internal control over financial reporting were effective as of December 31, 2024, with no material changes - Management concluded that the company's disclosure controls and procedures were effective at a reasonable assurance level as of December 31, 2024[690] - Management concluded that the company's internal control over financial reporting was effective as of December 31, 2024[693] - As an emerging growth company, the annual report does not include an attestation report from the registered public accounting firm regarding internal control over financial reporting[694] Other Information Effective March 19, 2025, CEO Mina Kim assumed the principal accounting officer role, and several executives terminated Rule 10b5-1 trading plans - Effective March 19, 2025, CEO Mina Kim also assumed the role of principal accounting officer[697] - Several executives, including the former CEO and the current Chief Medical Officer, terminated their prearranged Rule 10b5-1 trading plans between August 2024 and March 2025, with no shares sold under these plans prior to their termination[698][699][700][701] Part III Directors, Executive Officers and Corporate Governance The company's nine-member Board of Directors, with an independent Chair, oversees governance through three committees and adheres to a Code of Business Conduct - The Board of Directors consists of nine members, with a majority being independent, and Bruce C. Cozadd serves as the independent Chair of the Board[704][716][717] - The Board has three standing committees: Audit, Compensation, and Nominating and Corporate Governance, each composed of independent directors[724] - The company's executive officers as of March 19, 2025, are Mina Kim (CEO), Shephard Mpofu (Chief Medical Officer), and K. Amar Murugan (Chief Legal Officer)[748] - The company has adopted a Code of Business Conduct and Ethics and an Insider Trading Policy that includes prohibitions on hedging and pledging company stock[743][745] Executive Compensation This section details executive compensation for 2023 and 2024, including base salary, bonuses, and equity awards, alongside severance and director compensation 2024 Summary Compensation for Named Executive Officers | Name | Position | Total Compensation ($) | | :--- | :--- | :--- | | Mina Kim | Chief Executive Officer | 5,659,331 | | Shao-Lee Lin, M.D., Ph.D. | Former Chief Executive Officer | 9,427,551 | | Gil Labrucherie | Chief Financial Officer & Chief Business Officer | 6,538,637 | | Melanie Gloria | Chief Operating Officer | 4,760,349 | | Shephard Mpofu | Chief Medical Officer | 2,529,666 | - The company has a Severance Plan providing cash payments, pro-rata target bonuses, continued health insurance premiums, and accelerated equity vesting for eligible executives upon qualifying termination events[773] - Non-employee directors receive an annual cash retainer of $40,000, additional retainers for chair and committee service, an initial option grant valued at $600,000, and an annual option grant valued at $300,000[789] Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters This section details beneficial ownership of common stock as of February 28, 2025, with key holders including Westlake BioPartners (9.7%) and all directors/executive officers owning 10.8% Security Ownership of 5% Beneficial Owners (as of Feb 28, 2025) | Name of Beneficial Owner | % of Common Stock | | :--- | :--- | | Westlake BioPartners Fund II, L.P | 9.7% | | AyurMaya Capital Management Company, LP | 9.3% | | Tang Capital Management, LLC | 7.3% | | BlackRock, Inc. | 6.0% | | Access Industries Management, LLC | 5.1% | - All current directors and executive officers as a group beneficially own 10.8% of the company's common stock as of February 28, 2025[803] - As of December 31, 2024, a total of 8,043,529 securities remained available for future issuance under equity compensation plans approved by stockholders[797] Certain Relationships and Related Transactions, and Director Independence The company has a policy for reviewing related person transactions exceeding $120,000 and indemnifies its directors and executive officers - The company has a formal written policy for identifying, reviewing, and approving related person transactions exceeding $120,000[810] - The company indemnifies its directors and executive officers and has entered into indemnification agreements with them[811][812] Principal Accounting Fees and Services PricewaterhouseCoopers LLP served as the principal accountant, with total fees of $1.762 million in 2024 and $3.532 million in 2023, all pre-approved by the Audit Committee Accountant Fees (in thousands) | Fee Type | 2024 | 2023 | | :--- | :--- | :--- | | Audit Fees | $1,760 | $3,530 | | All Other Fees | $2 | $2 | | Total Fees | $1,762 | $3,532 | - All services provided by PricewaterhouseCoopers LLP were pre-approved by the Audit Committee, which has determined that the non-audit services are compatible with maintaining the accountant's independence[815][816] Part IV Exhibits, Financial Statement Schedules This section lists exhibits for the Annual Report on Form 10-K, including the Alumis merger agreement and key license contracts, with financial statement schedules omitted - The Agreement and Plan of Merger with Alumis Inc. is filed as Exhibit 2.1[819] - Material contracts, including the license and collaboration agreement with Affibody AB and the license and commercialization agreement with Pierre Fabre, are included as exhibits[820] - All financial statement schedules have been omitted because the required information is either not applicable or is included within the consolidated financial statements and notes[819][822] Form 10-K Summary The company has not provided a summary for Form 10-K - None[823]