LAVA Therapeutics(LVTX) - 2024 Q4 - Annual Report

PART I Business LAVA Therapeutics is a clinical-stage immuno-oncology company developing its Gammabody® platform for cancer treatment, with lead candidate LAVA-1266 in Phase 1, strategic partnerships, and a recent restructuring to extend capital resources - The company is a clinical-stage immuno-oncology firm focused on its proprietary Gammabody® platform, developing bispecific gamma delta (γδ) T cell engagers to treat cancer[11] - In February 2025, a restructuring plan was adopted to extend capital resources, involving a 30% reduction in the global workforce to focus on the LAVA-1266 program, expected to incur approximately $1.0 million in expenses[12] Development Pipeline Overview | Category | Candidate | Target | Indication(s) | Preclinical | Phase 1 | Phase 2 | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Proprietary Pipeline | LAVA-1266 | CD123 | Hematologic Malignancies | ✔ | ✔ | | | | LAVA-1427 | Undisclosed | Undisclosed | ✔ | | | | | LAVA-1433 | Undisclosed | Undisclosed | ✔ | | | | Strategic Partnerships | PF-08046052 | EGFR | Solid Tumors | ✔ | ✔ (Pfizer) | | | | JNJ-89853413 | CD33 | Hematologic Malignancies | ✔ | ✔ (J&J) | | | Discontinued Programs | LAVA-1207 | PSMA | Solid Tumors | - | Discontinued | - | - The lead candidate, LAVA-1266, targets CD123 for hematological malignancies like AML and MDS, with a Phase 1 trial initiated in Q4 2024 and initial data expected by year-end 2025[18][22][23] - The LAVA-1207 program for prostate cancer was discontinued in December 2024 due to not meeting internal benchmarks, resulting in a $3.9 million expense for related costs[19][37][43] - The LAVA-051 clinical trial for hematological tumors was discontinued in June 2023 due to the evolving competitive landscape, resulting in a $1.4 million expense write-off and a 36% workforce reduction[44][45][47] Partnered Programs The company maintains strategic partnerships with Pfizer and Johnson & Johnson, involving upfront payments and significant milestone potential for their respective partnered programs, PF-8046052 and JNJ-89853413 - Entered an exclusive license agreement with Pfizer in 2022 for PF-8046052, targeting EGFR-expressing solid tumors, receiving a $50 million upfront payment and eligible for up to $650 million in milestones plus royalties[28] - Pfizer initiated a Phase 1 trial for PF-8046052 in 2023 and paid LAVA a $7 million clinical milestone in March 2024[29][30] - The collaboration with Johnson & Johnson (J&J) for JNJ-89853413, targeting CD33, has resulted in $17.5 million in upfront, research, and clinical milestone payments as of December 31, 2024, with an IND filed in October 2024[33][34] Intellectual Property LAVA Therapeutics protects its Gammabody® platform and product candidates through a combination of patents, trade secrets, and know-how, with a portfolio including 2 issued U.S. patents and 21 pending U.S. applications as of December 31, 2024, covering core technology and specific candidates like LAVA-1266, with patents expected to expire starting in 2042 - As of December 31, 2024, the company's patent portfolio includes 2 issued U.S. patents, 21 pending U.S. patent applications, and over 100 patents and applications in other territories[110][111] - For its lead candidate LAVA-1266, the patent portfolio includes multiple pending U.S. and foreign applications, with any patents issuing expected to expire in 2042, excluding potential extensions[114] - The Gammabody® platform technology is protected by six patent families covering antibodies that activate γδ T cells, dosing regimens, and combination therapies[116] Government Regulation The company's operations are subject to extensive regulation by the FDA, EMA, and other global authorities, covering all stages from R&D to post-approval marketing, requiring comprehensive testing, BLA/MAA submissions, cGMP compliance, and adherence to healthcare laws regarding fraud, abuse, data privacy, and pricing - The company's biologic products are extensively regulated by the FDA in the U.S. and the EMA in Europe, covering research, development, manufacturing (cGMP), and marketing[123] - The approval process requires successful completion of preclinical studies and three phases of human clinical trials to establish safety and efficacy before submitting a BLA (U.S.) or MAA (E.U.)[124][129] - The company may seek expedited review programs such as Fast Track, Breakthrough Therapy, or Accelerated Approval to potentially speed up development and review timelines[143][145][147] - Post-approval, the company is subject to ongoing regulations, including REMS, post-marketing studies, and strict rules on advertising and promotion to prevent off-label use[140][156][158] - Operations are also governed by healthcare laws like the Anti-Kickback Statute, False Claims Act, and data privacy regulations such as HIPAA and GDPR, with non-compliance carrying substantial penalties[171][172][179] Human Capital As of December 31, 2024, LAVA Therapeutics had 34 full-time employees, primarily in R&D, with a reduction in force initiated in February 2025 to decrease European employees to 6, and a human capital strategy focused on attracting and retaining talent through equity incentive plans - As of December 31, 2024, the company had 34 full-time employees, with 23 in research and development and 11 in general and administrative roles[199] - A reduction in force was initiated in February 2025, which will reduce the number of full-time employees in Europe to 6, effective April 30, 2025[199] Risk Factors The company faces significant risks including a history of operating losses, the need for substantial additional funding, uncertain clinical development pathways for its novel Gammabody® platform, dependence on LAVA-1266 and third-party collaborations, reliance on single-source suppliers, intense competition, potential Nasdaq delisting, and the successful execution of its strategic review and restructuring - The company is a clinical-stage entity with a history of significant operating losses ($25.1 million in 2024, $41.9 million in 2023) and anticipates continued losses, with no guarantee of ever achieving profitability[204][206][208] - Substantial additional funding is required to complete development and commercialization, and failure to raise capital could force delays, reductions, or termination of programs[204][220] - The Gammabody® platform is a novel approach, making it difficult to predict development time, cost, and regulatory approval, as no bispecific γδ T cell engagers are currently approved by the FDA or EMA[204][233] - The company relies on a single-source supplier for bulk drug substance for its programs, and the loss of this supplier could significantly impair and delay development[207][298] - The ongoing strategic review and workforce reduction may not achieve intended outcomes and could lead to loss of institutional knowledge and decreased morale[207][371][372] - The company received a notice of non-compliance from Nasdaq on February 27, 2025, for its stock price falling below $1.00, though compliance was regained on March 11, 2025, but future non-compliance could lead to delisting[461] Cybersecurity The company manages cybersecurity risks through internal processes and third-party providers, with oversight from the Audit Committee and implementation by senior management, including the CFO, through risk assessments, monitoring, incident response, and technical controls - The Audit Committee of the Board of Directors is responsible for overseeing the company's cybersecurity risk management processes[503] - Cybersecurity risk management is implemented by senior management, including the Chief Financial Officer (CFO), with assistance from third-party service providers and consultants[499][504] - The company maintains an information security policy, an incident response policy, and various technical controls like data encryption, network security, and access controls to mitigate threats[500] Properties The company leases approximately 8,471 square feet of office and laboratory space for its headquarters in Utrecht, Netherlands, until March 2026, and 5,621 square feet of office space in Philadelphia, Pennsylvania, until December 2025 - The company's headquarters is located in Utrecht, the Netherlands, occupying approximately 8,471 sq. ft. of leased office and lab space with a lease expiring March 31, 2026[509] - A U.S. office of approximately 5,621 sq. ft. is leased in Philadelphia, PA, with the lease term ending in December 2025[509] PART II Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities LAVA Therapeutics' common shares trade on the Nasdaq Global Select Market under the symbol "LVTX" since March 26, 2021, with 2,313 holders of record as of March 21, 2025, and the company has never paid cash dividends, intending to retain earnings for business development, with IPO net proceeds of approximately $94.2 million - Common shares are traded on the Nasdaq Global Select Market under the symbol "LVTX" since March 26, 2021[513] - The company has never paid cash dividends and does not intend to in the foreseeable future, retaining funds for business expansion[515] - The IPO generated net proceeds of approximately $94.2 million, which have been invested in money market funds and short-term investments[518] Management's Discussion and Analysis of Financial Condition and Results of Operations For the year ended December 31, 2024, LAVA Therapeutics reported a net loss of $25.1 million, a decrease from $41.9 million in 2023, with revenue increasing to $12.0 million driven by milestone payments, and R&D expenses decreasing to $28.5 million, while existing cash of $76.6 million is deemed sufficient for at least 12 months Results of Operations (FY 2024 vs. FY 2023) | (in thousands) | 2024 | 2023 | Change | | :--- | :--- | :--- | :--- | | Total Revenue | $11,982 | $6,769 | $5,213 | | Research and development | ($28,450) | ($32,559) | $4,109 | | General and administrative | ($13,225) | ($14,122) | $897 | | Operating Loss | ($29,693) | ($43,394) | $13,701 | | Net Loss | ($25,114) | ($41,871) | $16,757 | - Revenue in 2024 was primarily driven by a $7.0 million clinical milestone payment from Pfizer and a $5.0 million development milestone payment from Johnson & Johnson[549][550] - Research and development expenses decreased by $4.1 million year-over-year, mainly due to reduced manufacturing costs for LAVA-1266 and lower personnel-related expenses following headcount reductions in late 2023[552] - The company believes its existing cash, cash equivalents, and investments are sufficient to fund operations for at least 12 months from the report date[561] Cash Flow Summary (FY 2024 vs. FY 2023) | (in thousands) | 2024 | 2023 | | :--- | :--- | :--- | | Net cash used in operating activities | $(19,544) | $(40,283) | | Net cash generated from (used in) investing activities | $12,475 | $(17,636) | | Net cash used in financing activities | $(569) | $— | | Net decrease in cash and cash equivalents | $(7,638) | $(57,919) | Controls and Procedures Management concluded that the company's disclosure controls and procedures were effective as of December 31, 2024, with previously identified material weaknesses in IT general controls and segregation of duties fully remediated through additional accounting resources, enhanced policies, and improved IT controls - Management concluded that as of December 31, 2024, the company's disclosure controls and procedures were effective at a reasonable assurance level[578] - Material weaknesses previously identified in the 2023 Annual Report, related to IT general controls and segregation of duties, were fully remediated as of December 31, 2024[492][581][584] - Remediation actions included hiring additional accounting personnel, enhancing formal policies and procedures, redesigning internal controls, and improving IT general controls such as change management and user access[583] Other Information On March 27, 2025, the company amended CEO Stephen Hurly's employment agreement, primarily modifying Change in Control severance benefits to a full 1.5 times his target bonus, removing the pro-rated calculation - On March 27, 2025, the company amended the employment agreement with CEO Stephen Hurly[587] - The amendment modified the Change in Control severance benefit, entitling Mr. Hurly to a lump-sum payment equal to 1.5 times his target bonus, removing the previous pro-rated calculation[588] PART III Directors, Executive Officers, Corporate Governance, Compensation, and Principal Accountant Fees Information for Items 10 through 14, covering directors, executive officers, corporate governance, compensation, security ownership, related transactions, and principal accountant fees, is incorporated by reference from the company's forthcoming 2025 Proxy Statement - Information regarding Directors, Executive Officers, Corporate Governance (Item 10), Executive Compensation (Item 11), Security Ownership (Item 12), Certain Relationships and Related Transactions (Item 13), and Principal Accountant Fees and Services (Item 14) is incorporated by reference from the forthcoming 2025 Proxy Statement[597][598][600] PART IV Exhibits and Financial Statement Schedules This section lists all exhibits filed with the Form 10-K, including corporate governance documents, material contracts, and certifications, such as Amended and Restated Articles of Association, license agreements, stock plans, employment agreements, and CEO/CFO certifications - This item lists all exhibits filed as part of the annual report, including material contracts and required certifications[605][607] Financial Statements Consolidated Financial Statements The audited consolidated financial statements for the years ended December 31, 2024 and 2023, show a decreased net loss to $25.1 million in 2024, with total assets of $80.8 million, total liabilities of $53.1 million, and total shareholders' equity of $27.7 million as of December 31, 2024 Consolidated Balance Sheet Data (as of Dec 31) | (in thousands) | 2024 | 2023 | | :--- | :--- | :--- | | Cash and cash equivalents | $35,015 | $44,231 | | Short-term investments | $41,561 | $51,340 | | Total Assets | $80,831 | $101,673 | | Total current liabilities | $18,006 | $14,894 | | Non-current portion of deferred revenue | $35,000 | $35,000 | | Total Liabilities | $53,086 | $50,309 | | Total Shareholders' Equity | $27,745 | $51,364 | Consolidated Statement of Operations Data (Year Ended Dec 31) | (in thousands) | 2024 | 2023 | | :--- | :--- | :--- | | Total Revenue | $11,982 | $6,769 | | Research and development | $(28,450) | $(32,559) | | General and administrative | $(13,225) | $(14,122) | | Operating Loss | $(29,693) | $(43,394) | | Net Loss | $(25,114) | $(41,871) | | Net loss per share | $(0.94) | $(1.57) | - The company transitioned from IFRS to U.S. GAAP for all periods presented, as it no longer qualified as a Foreign Private Issuer (FPI) as of June 30, 2024[640] - As of December 31, 2024, the company had Dutch tax loss carryforwards of $106.5 million, which are fully offset by a valuation allowance[543][762]