Nuvalent(NUVL) - 2025 Q1 - Quarterly Report

PART I—FINANCIAL INFORMATION Item 1. Financial Statements (Unaudited) Nuvalent, Inc.'s unaudited Q1 2025 consolidated financial statements report an $84.6 million net loss and $1.1 billion in cash and marketable securities Condensed Consolidated Balance Sheets Total assets decreased to $1.11 billion as of March 31, 2025, while total liabilities increased to $94.7 million, driven by changes in cash and accounts payable Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Cash and cash equivalents | $120,835 | $145,691 | | Marketable securities | $952,390 | $972,611 | | Total Assets | $1,105,806 | $1,141,752 | | Total current liabilities | $75,034 | $54,020 | | Total Liabilities | $94,749 | $71,960 | | Total Stockholders' Equity | $1,011,057 | $1,069,792 | Condensed Consolidated Statements of Operations and Comprehensive Loss Net loss increased to $84.6 million in Q1 2025 from $44.5 million in Q1 2024, driven by a significant rise in operating expenses, particularly Research and Development Statement of Operations Highlights (in thousands, except per share data) | Metric | Three Months Ended Mar 31, 2025 | Three Months Ended Mar 31, 2024 | | :--- | :--- | :--- | | Research and development | $74,418 | $38,634 | | General and administrative | $20,394 | $13,954 | | Total operating expenses | $94,812 | $52,588 | | Loss from operations | ($94,812) | ($52,588) | | Net loss | ($84,582) | ($44,482) | | Net loss per share | ($1.18) | ($0.69) | Condensed Consolidated Statements of Cash Flows Net cash used in operating activities increased to $54.8 million in Q1 2025, while investing activities provided $25.4 million, a shift from prior year's cash usage Cash Flow Highlights (in thousands) | Activity | Three Months Ended Mar 31, 2025 | Three Months Ended Mar 31, 2024 | | :--- | :--- | :--- | | Net cash used in operating activities | ($54,821) | ($36,087) | | Net cash provided by (used in) investing activities | $25,417 | ($206,771) | | Net cash provided by financing activities | $4,548 | $5,986 | | Net decrease in cash and cash equivalents | ($24,856) | ($236,872) | Notes to Condensed Consolidated Financial Statements Notes detail accounting policies, confirm the company's clinical-stage status with recurring losses, and outline stock-based compensation and segment reporting - The company is a clinical-stage biopharmaceutical company that has incurred recurring losses since inception, with a net loss of $84.6 million for Q1 2025. Management believes existing cash, cash equivalents, and marketable securities are sufficient to fund operations for at least 12 months[29][31] - The company operates as a single reportable segment focused on the discovery, development, and commercialization of cancer therapies. The Chief Executive Officer, as the CODM, assesses performance based on consolidated net loss[57] Direct External Expenses by Program (in thousands) | Program | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Zidesamtinib | ($15,551) | ($10,366) | | Neladalkib | ($28,007) | ($9,731) | | NVL-330 | ($3,961) | ($1,972) | | Discovery programs | ($2,133) | ($2,100) | - Stock-based compensation expense was $20.4 million in Q1 2025, up from $13.9 million in Q1 2024. As of March 31, 2025, total unrecognized compensation cost was $190.3 million, expected to be recognized over a weighted average period of 2.6 years[44][46] Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses clinical program progress for lead candidates, reporting an $84.6 million net loss for Q1 2025 due to increased R&D, with $1.1 billion in cash expected to fund operations into 2028 - Zidesamtinib (NVL-520): The company expects to report pivotal data for TKI pre-treated patients in H1 2025 and anticipates an NDA submission by mid-2025[67] - Neladalkib (NVL-655): Pivotal data for TKI pre-treated patients is expected by year-end 2025. A global Phase 3 trial (ALKAZAR) for TKI-naïve patients is planned to start in H1 2025[72][73] - NVL-330: The Phase 1a/1b HEROEX-1 clinical trial is currently enrolling pre-treated patients with advanced HER2-altered NSCLC[75] Comparison of Operating Expenses (in thousands) | Expense Category | Q1 2025 | Q1 2024 | Change | | :--- | :--- | :--- | :--- | | Research and development | $74,418 | $38,634 | $35,784 | | General and administrative | $20,394 | $13,954 | $6,440 | | Total operating expenses | $94,812 | $52,588 | $42,224 | - The $18.3 million increase in neladalkib program expenses was primarily due to costs for the ongoing Phase 2 trial, preparation for the Phase 3 ALKAZAR trial, and increased manufacturing costs[94] - As of March 31, 2025, the company had $1.1 billion in cash, cash equivalents, and marketable securities, which is expected to fund operations and capital expenditures into 2028[83][97] Quantitative and Qualitative Disclosures About Market Risk The company's primary market risk is interest rate sensitivity on its $1.1 billion cash and marketable securities, with a 10% rate change not expected to materially impact financial results - The company is exposed to interest rate risk on its cash, cash equivalents ($120.8 million), and marketable securities ($952.4 million)[114] - Due to the short-term maturities and low-risk profile of its investments, a 10% change in market interest rates is not expected to materially impact financial condition or results of operations[115] Controls and Procedures Management concluded that disclosure controls and procedures were effective as of March 31, 2025, with no material changes in internal control over financial reporting during the quarter - Management, including the CEO and CFO, concluded that disclosure controls and procedures were effective as of the end of the reporting period[117] - No changes in internal control over financial reporting occurred during the most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, internal controls[118] PART II—OTHER INFORMATION Legal Proceedings As of March 31, 2025, the company was not involved in any material legal proceedings - As of March 31, 2025, the company was not a party to any material legal proceedings[120] Risk Factors This section outlines significant risks including financial position, product development, regulatory hurdles, reliance on third parties, intellectual property, and stock ownership Risks related to financial position and need for additional capital The company faces risks from its limited operating history, lack of approved products, recurring net losses, and the need for additional capital to fund future operations - The company has a limited operating history, no products approved for sale, and has not generated any revenue, making it difficult for investors to evaluate its prospects[122] - Significant net losses have been incurred each period since inception, including $84.6 million for Q1 2025, and are expected to continue for the foreseeable future[125] Risks related to the discovery, development and commercialization of our product candidates The company's prospects depend on its lead candidates, facing risks of clinical trial failure, non-predictive early data, and substantial competition from larger pharmaceutical companies - The company's future is substantially dependent on the success of its three lead product candidates: zidesamtinib, neladalkib, and NVL-330[135] - The outcome of preclinical testing and early clinical trials may not predict the success of later trials, and positive results may not satisfy regulatory requirements[149] - The company faces substantial competition from major multinational pharmaceutical companies with greater financial resources and established market presence, including approved products for ROS1-positive and ALK-positive NSCLC[180][183][185] Risks related to regulatory approval and other legal compliance matters The company faces lengthy, complex, and unpredictable regulatory approval processes, including risks with accelerated pathways, and is subject to stringent laws regarding healthcare fraud and data privacy - The company may be unable to obtain U.S. or foreign regulatory approval for its product candidates, which is a costly, time-consuming, and uncertain process[207] - Even if accelerated approval is granted, the FDA may withdraw it if confirmatory trials fail to verify clinical benefit or if post-marketing requirements are not met[241][242] - The company is subject to stringent and evolving data privacy laws like GDPR in the EU and various state laws in the U.S., which could impose significant fines and penalties for non-compliance[275][277] Risks related to our dependence on third parties Nuvalent heavily relies on third parties for clinical trials and manufacturing, increasing risks of poor performance, delays, and supply chain disruptions that could impair development and commercialization - The company depends on third parties like CROs to conduct preclinical studies and clinical trials, and their failure to perform satisfactorily could delay or derail development programs[390] - Reliance on third-party manufacturers for product supply increases the risk of not having sufficient quality or quantities at an acceptable cost, which could impair development and commercialization[395] Risks related to employee matters, managing our growth and other risks related to our business Success depends on attracting and retaining skilled personnel, managing organizational growth, and mitigating vulnerabilities to IT failures, security breaches, and external events - Success is highly dependent on the ability to attract and retain highly skilled personnel, including key members of management, in a competitive environment[307][308] - The company will need to manage its growth effectively, as it expects to add significant personnel and expand its operational, financial, and management systems[312] - Internal computer systems and those of third-party partners are vulnerable to security breaches and cyber-attacks, which could result in significant liabilities and disruption of operations[317][318] Risks related to our intellectual property Success hinges on obtaining and enforcing patent protection, which is uncertain and vulnerable to challenges, alongside risks of infringing third-party intellectual property leading to costly litigation - The company's ability to successfully commercialize its products depends on obtaining and maintaining patent protection, which is an expensive, complex, and uncertain process[340][341] - The company may become involved in lawsuits to protect its patents or be subject to claims that it is infringing on the intellectual property rights of third parties, which could be expensive and have an adverse effect on the business[355][360] - The company relies on trade secrets and confidentiality agreements to protect proprietary information, but these measures may be breached, and legal remedies may be inadequate[385] Risks related to ownership of our common stock Ownership of Class A common stock involves high price volatility, significant control by principal stockholders, and potential impacts from anti-takeover provisions and dual-class stock structure - The market price of the Class A common stock is likely to be highly volatile and subject to wide fluctuations[412] - Principal stockholders own over 50% of the capital stock and can exert significant control over matters subject to stockholder approval, including the election of directors[423] - Anti-takeover provisions in the company's charter and bylaws, along with Delaware law, could discourage or prevent a change in control, potentially depressing the stock price[438] Other Information No directors or officers adopted or terminated Rule 10b5-1 or non-Rule 10b5-1 trading arrangements during Q1 2025 - No directors or officers adopted or terminated a Rule 10b5-1 trading arrangement or a non-Rule 10b5-1 trading arrangement during the quarterly period ended March 31, 2025[444] Exhibits This section lists exhibits filed with the Form 10-Q, including CEO and CFO certifications required by the Sarbanes-Oxley Act and XBRL data files - The report includes a list of filed exhibits, such as the company's certificate of incorporation, bylaws, and certifications from the Principal Executive Officer and Principal Financial Officer as required by the Sarbanes-Oxley Act[445]