PART I Business Tectonic Therapeutic, Inc. is a clinical-stage biotechnology company developing GPCR-targeted biologics using its GEODe™ platform, with lead asset TX45 in Phase 2 for PH-HFpEF and a pipeline including TX2100 for HHT - On June 20, 2024, the company completed a merger with AVROBIO, Inc., changing its name to Tectonic Therapeutic, Inc. and focusing on the business of Legacy Tectonic, a clinical-stage biotech developing GPCR-targeted biologics14 - The company's proprietary GEODe™ technology platform is designed to overcome historical challenges in discovering and developing biologic therapeutics for GPCR targets1618 Development Pipeline Summary | Program | Target/Mechanism | Indication | Development Stage | | :--- | :--- | :--- | :--- | | TX45 | Fc-relaxin fusion (RXFP1 agonist) | Group 2 PH in HFpEF (PH-HFpEF) | Phase 2 Initiated | | TX2100 | GPCR3 Antagonist | Hereditary Hemorrhagic Telangiectasia (HHT) | Preclinical (IND-enabling studies planned) | | Fibrosis Program | GPCR Modulator Bispecific | Fibrotic Diseases | Discovery | Pipeline and Clinical Development The company's pipeline features lead asset TX45 in Phase 2 for PH-HFpEF, TX2100 advancing to Phase 1 for HHT, and a discovery-stage fibrosis program, all supported by the GEODe™ platform - The lead asset, TX45, is an Fc-relaxin fusion molecule being developed for Group 2 PH in HFpEF. A Phase 2 trial (APEX) was initiated in Q4 2024, with data expected in 20262126 TX45 Phase 1b Interim Hemodynamic Data (16 of 19 patients) | Endpoint | Result | p-value | | :--- | :--- | :--- | | Mean Δ PCWP (all participants) | -2.9 mm Hg | <0.05 | | Mean Δ PVR (CpcPH, PVR ≥ 3 WU) | -1.35 Woods Units | <0.05 | | Mean Δ Cardiac Output (all) | +0.65 L/min | <0.05 | - The second program, TX2100, is a VHH-Fc fusion antagonist for HHT. The company plans to start IND-enabling toxicology studies in Q2 2025 and initiate a Phase 1 trial in Q4 2025 or Q1 20262729 - The GEODe™ platform has been significantly modified and improved over the last few years, enhancing its success rate in generating high-affinity, potent GPCR-targeted antibodies1979 Collaboration and Manufacturing Tectonic relies on third-party CDMOs like WuXi Biologics for manufacturing and CROs for clinical services, underpinned by a core technology license from Harvard - The company in-licensed core technology from Harvard, paying a one-time fee and stock, with future obligations for annual maintenance fees, low single-digit royalties on net sales, and a percentage of sublicensing income8586 - Tectonic does not own manufacturing facilities and relies on third-party CDMOs. A key relationship is with WuXi Biologics for the development and manufacturing of its product candidates in compliance with CGMPs107108109 Intellectual Property and Competition The company protects its proprietary technology and product candidates, including TX45, through patents expiring no earlier than 2041, while facing competition from major biotech and pharmaceutical firms - The patent portfolio for Fc-relaxin fusion compositions (including TX45) consists of in-licensed and owned applications with expected 20-year expiry dates not earlier than May 2041, November 2042, and May 2044 for different families102 - The company faces competition from AstraZeneca, which is also developing a relaxin agonist, and from companies like Vaderis and Diagonal Therapeutics in the HHT space111112 Government Regulation The company's products are subject to extensive FDA and international regulation, requiring multi-phase clinical trials and BLA submission for approval, with ongoing compliance and potential impacts from biosimilar pathways and drug pricing laws - To gain marketing approval in the U.S., the company must complete preclinical testing, submit an IND, conduct adequate and well-controlled clinical trials (Phases 1-3) under GCP, and submit a BLA to the FDA117121 - The BPCIA creates an abbreviated approval pathway for biosimilars, but a reference product like Tectonic's, if approved, could be eligible for a 12-year period of marketing exclusivity in the U.S150152 - The Inflation Reduction Act of 2022 (IRA) includes provisions for Medicare to negotiate drug prices for certain biologics after 11 years on the market and imposes rebates for price increases faster than inflation, which may impact future revenue160 Risk Factors The company faces significant risks including limited operating history, ongoing net losses, funding needs, uncertain clinical development, reliance on third parties, intense competition, and regulatory challenges - Financial Risk: The company has a history of net losses ($58.0 million in 2024) and will require substantial additional funding to continue operations, which may not be available on favorable terms187190 - Development Risk: All product candidates are in early development. Clinical trials are expensive and uncertain, and may fail to demonstrate safety or efficacy, preventing regulatory approval198202207 - Reliance on Third Parties: The company depends on third parties for manufacturing (sole-source for TX45 with WuXi Biologics), conducting clinical trials (CROs), and for licensed intellectual property (Harvard), the loss of which could harm the business300341344 - Regulatory and Commercial Risk: The company faces a lengthy and unpredictable regulatory approval process and, if approved, must build a commercial organization and achieve market acceptance and reimbursement, which is not guaranteed227253259 - Political and Supply Chain Risk: Reliance on a Chinese manufacturer (WuXi Biologics) exposes the company to geopolitical risks, such as the proposed BIOSECURE Act, which could disrupt the supply chain for its lead product candidate284285343 Cybersecurity The company manages cybersecurity risks through its IT Department and audit committee oversight, employing threat assessment, mitigation strategies, and vendor management processes - Cybersecurity risk management is handled by the IT Department, led by the VP of IT, and is integrated into the company's overall enterprise risk management program437440 - Governance is provided by the board of directors' audit committee, which oversees the cybersecurity risk management processes and receives periodic reports from the VP of IT445449 - The company uses vendor management processes to manage cybersecurity risks associated with third-party providers, such as CROs and CDMOs, which may include risk assessments and contractual obligations442443 PART II Management's Discussion and Analysis of Financial Condition and Results of Operations For 2024, Tectonic reported a $58.0 million net loss, driven by increased R&D and G&A expenses, with $141.2 million cash on hand, deemed sufficient for the next 12 months Results of Operations Summary (in millions) | | Year Ended Dec 31, 2024 | Year Ended Dec 31, 2023 | $ Change | % Change | | :--- | :--- | :--- | :--- | :--- | | Research and development | $41.4 | $37.0 | $4.4 | 12% | | General and administrative | $16.7 | $7.7 | $9.0 | 117% | | Loss from operations | ($58.0) | ($44.6) | ($13.4) | 30% | | Net loss | ($58.0) | ($42.8) | ($15.2) | 35% | - R&D expenses increased by $4.4 million, primarily due to a $4.0 million increase in costs for the TX2100 program, while TX45 program costs remained stable486 - G&A expenses increased by $9.0 million, driven by a $4.8 million rise in professional and consulting fees for merger activities and public company support, and a $3.9 million increase in employee-related costs487488 - As of December 31, 2024, the company had $141.2 million in cash and cash equivalents and an accumulated deficit of $148.6 million. Management believes current cash is sufficient to fund operations for at least the next 12 months492 Quantitative and Qualitative Disclosures About Market Risk The company's primary market risk is interest rate sensitivity on its $141.2 million cash and equivalents, though a 10% rate change is not expected to be material, and inflation impact is immaterial - The primary market risk is interest rate sensitivity related to the company's $141.2 million in cash and cash equivalents. A 10% change in interest rates is not expected to have a material effect517518 - The effects of inflation on the company's results of operations and financial condition are believed to have been immaterial519 Financial Statements and Supplementary Data The consolidated financial statements for 2024 and 2023, reflecting the AVROBIO merger, show a $58.0 million net loss in 2024, with Deloitte & Touche LLP providing an unqualified opinion and noting critical audit matters Consolidated Balance Sheet Data (in millions) | | Dec 31, 2024 | Dec 31, 2023 | | :--- | :--- | :--- | | Cash and cash equivalents | $141.2 | $28.8 | | Total assets | $152.9 | $39.4 | | Total liabilities | $12.1 | $43.4 | | Total stockholders' equity (deficit) | $140.8 | ($84.6) | Consolidated Statement of Operations Data (in millions) | | Year Ended Dec 31, 2024 | Year Ended Dec 31, 2023 | | :--- | :--- | :--- | | Research and development | $41.4 | $37.0 | | General and administrative | $16.7 | $7.7 | | Loss from operations | ($58.0) | ($44.6) | | Net loss | ($58.0) | ($42.8) | | Net loss per share | ($6.83) | ($33.76) | - The independent auditor, Deloitte & Touche LLP, identified two critical audit matters: (1) the estimation of accrued and prepaid contract research and development expenses, and (2) the evaluation of the accounting for the merger with AVROBIO as a reverse recapitalization562565 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 reported - Management concluded that as of December 31, 2024, the company's disclosure controls and procedures were effective523 - Management concluded that the company's internal control over financial reporting was effective as of December 31, 2024, based on the COSO 2013 framework524 PART III Directors, Executive Compensation, Security Ownership, and Related Transactions Information for Items 10-14, covering directors, executive compensation, security ownership, and related transactions, is incorporated by reference from the upcoming 2025 proxy statement - Information regarding Directors, Executive Officers, Corporate Governance, Executive Compensation, Security Ownership, Certain Relationships and Related Transactions, and Principal Accounting Fees and Services is incorporated by reference from the definitive proxy statement to be filed within 120 days of December 31, 2024531533534535536 PART IV Exhibits, Financial Statement Schedules This section lists exhibits filed with the Form 10-K, including the Merger Agreement, Subscription Agreement, equity plans, and material contracts like the Harvard license and WuXi Biologics manufacturing agreement - The exhibits include key corporate and transactional documents, such as the Merger Agreement, Subscription Agreement, and various equity and compensation plans541 - Material contracts filed as exhibits include the license agreement with Harvard College and the manufacturing services agreement with WuXi Biologics542
Tectonic Therapeutic, Inc.(TECX) - 2024 Q4 - Annual Report