Aptevo Therapeutics(APVO) - 2025 Q1 - Quarterly Report

PART I. FINANCIAL INFORMATION Financial Statements (Unaudited) The unaudited financial statements reveal a significant decrease in cash, a net loss for the quarter, and a shift to a stockholders' deficit, raising substantial doubt about the company's ability to continue as a going concern Condensed Consolidated Balance Sheets As of March 31, 2025, total assets decreased to $8.3 million from $15.6 million, driven by a drop in cash, shifting the company from stockholders' equity to a deficit of $1.5 million Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $2,139 | $8,714 | | Total current assets | $3,607 | $10,659 | | Total assets | $8,342 | $15,591 | | Liabilities & Equity | | | | Total current liabilities | $5,393 | $6,207 | | Total liabilities | $9,815 | $10,836 | | Total stockholders' (deficit) equity | $(1,473) | $4,755 | | Total liabilities and stockholders' (deficit) equity | $8,342 | $15,591 | Condensed Consolidated Statements of Operations For Q1 2025, the company reported a net loss of $6.4 million, a slight improvement from the $6.8 million loss in Q1 2024 due to lower operating expenses and a significant change in per-share loss after reverse stock splits Condensed Consolidated Statements of Operations (in thousands, except per share data) | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Research and development | $(3,633) | $(3,752) | | General and administrative | $(2,847) | $(3,231) | | Loss from operations | $(6,480) | $(6,983) | | Net loss | $(6,408) | $(6,834) | | Basic and diluted net loss per share | $(4.39) | $(368.21) | | Weighted average shares outstanding | 1,458,458 | 18,560 | Condensed Consolidated Statements of Cash Flows Net cash used in operating activities was $6.6 million for Q1 2025, leading to a decrease in cash and cash equivalents to $2.1 million by the end of the period Condensed Consolidated Statements of Cash Flows (in thousands) | Activity | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net cash used in operating activities | $(6,575) | $(6,651) | | Net cash from investing activities | — | — | | Net cash used in financing activities | — | $(3) | | Decrease in cash and cash equivalents | $(6,575) | $(6,654) | | Cash and cash equivalents at end of period | $2,139 | $10,250 | Condensed Consolidated Statements of Changes in Stockholders' (Deficit) Equity Stockholders' equity decreased from $4.8 million to a deficit of $1.5 million in Q1 2025, primarily driven by the period's net loss of $6.4 million - The company's equity position deteriorated from a positive $4.76 million at the end of 2024 to a deficit of $1.47 million by March 31, 2025, mainly due to the $6.41 million net loss incurred during the quarter[20] Notes to Condensed Consolidated Financial Statements The notes detail the company's clinical-stage status and highlight substantial doubt about its going concern status due to recurring losses, also covering reverse stock splits and financing activities - The company has suffered recurring losses, with a net loss of $6.4 million for Q1 2025 and an accumulated deficit of $254.0 million, raising substantial doubt about its ability to continue as a going concern[24] - The company will need to raise additional funds to support operations, as existing cash and potential milestone payments are insufficient; without new funding, it may be forced to delay or scale back R&D[24][25] - In 2024, the company executed two reverse stock splits: a 1-for-44 split and a 1-for-37 split, with all share and per-share amounts retroactively adjusted[44] - In April 2025, the company completed two offerings and a private placement, raising $3.7 million after expenses, and entered an ATM offering agreement for up to $50 million[74][75][76] Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses its focus on cancer immunotherapies, recent financing, positive clinical updates for mipletamig, and the critical liquidity situation reinforcing the going concern risk Recent Developments The company secured $4.1 million in financing in April 2025 and reports promising clinical data for its mipletamig RAINIER trial, with no observed cytokine release syndrome - In April 2025, Aptevo secured $4.1 million in gross proceeds from two registered direct offerings and entered an 'At The Market' agreement to sell up to $50 million in common stock[86] - The RAINIER Phase 1b/2 trial for mipletamig in frontline AML is advancing, with 9 out of 10 (90%) frontline patients treated in combination with standard of care achieving remission[86] - Mipletamig has demonstrated a favorable safety profile, with no cytokine release syndrome (CRS) observed in the ongoing RAINIER trial, a key differentiator[86] Results of Operations Total operating expenses for Q1 2025 decreased to $6.48 million from $6.98 million in Q1 2024, driven by lower research and development and general and administrative spending Research and Development Expenses by Program (in thousands) | Program | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Mipletamig | $1,622 | $684 | | ALG.APV-527 | $178 | $827 | | Total clinical programs | $1,800 | $1,511 | | Preclinical & general research | $1,833 | $2,241 | | Total R&D | $3,633 | $3,752 | - The decrease in R&D spending was primarily due to the ALG.APV-527 escalation phase ramping down and lower preclinical costs, offset by increased patient enrollment costs for the mipletamig trial[91] - General and administrative expenses decreased by $0.4 million year-over-year, from $3.2 million to $2.8 million, mainly due to reduced stock-based compensation costs[94] Liquidity and Capital Resources The company's liquidity is critical with only $2.1 million in cash, an accumulated deficit of $254.0 million, and a dependency on raising additional capital to continue operations - As of March 31, 2025, the company had cash and cash equivalents of $2.1 million and an accumulated deficit of $254.0 million[104] - The company has an 'At The Market' (ATM) sales agreement to sell up to $50 million in common stock, though sales are currently limited by SEC rules; as of May 14, 2025, it had sold approximately $1.2 million[100][102] - The company has 5.2 million common warrants outstanding, which, if exercised, could provide up to an additional $6.8 million in gross proceeds[103] - A significant contractual obligation is a potential $2.0 million milestone payment to OMT upon dosing the first patient in a Phase 2 clinical trial of mipletamig[113] Quantitative and Qualitative Disclosures About Market Risk The company states that there have been no material changes to its market risk disclosures since its Annual Report on Form 10-K for the year ended December 31, 2024 - There were no material changes to the information regarding market risk as of March 31, 2025, compared to what was disclosed in the 2024 Annual Report on Form 10-K[116] Controls and Procedures Management concluded that disclosure controls and procedures were effective as of March 31, 2025, with no material changes to internal control over financial reporting during the quarter - Based on an evaluation as of March 31, 2025, the CEO and CFO concluded that the company's disclosure controls and procedures were effective[117] - No changes in internal control over financial reporting occurred during the quarter ended March 31, 2025, that have materially affected or are likely to materially affect internal controls[118] PART II. OTHER INFORMATION Legal Proceedings The company reports that it is not currently a party to any legal claims or actions that its management believes would have a material adverse effect on its financial condition or operations - Management believes there are currently no pending legal claims or actions against the company that would have a material adverse effect on its business[121] Risk Factors This section outlines significant risks including precarious financial condition, dependence on clinical success, reliance on third parties, intense competition, and common stock volatility Financial Risks The company faces severe financial risks, including a history of significant operating losses, a $254.0 million accumulated deficit, and substantial doubt about its ability to continue as a going concern - The company has a history of significant losses, with a net loss of $6.4 million for Q1 2025 and an accumulated deficit of $254.0 million as of March 31, 2025[124] - Management has concluded that substantial doubt exists about the company's ability to continue as a going concern, which may adversely affect its stock price and ability to raise capital[125] - The company requires additional funding to continue operations; failure to secure funding may force reductions in spending, suspension of programs, or unfavorable licensing deals[126] Product Development and Commercialization Risks The company's success hinges on its ability to develop and commercialize its product candidates, a process fraught with risk, reliance on its ADAPTIR platforms, and substantial competition - Success in early preclinical and clinical trials does not guarantee success in later-stage trials, as product candidates may fail to demonstrate sufficient safety and efficacy[182] - The company's open-label clinical trial for mipletamig is subject to potential patient and investigator bias, and results may not be predictive of future trial outcomes[184] - The company faces substantial competition from numerous well-established pharmaceutical and biotechnology companies with greater resources, including AbbVie, Amgen, and Johnson & Johnson[236] - The company's long-term success depends on its ability to successfully use and develop its ADAPTIR and ADAPTIR-FLEX platforms, which is not guaranteed[234] Regulatory, Compliance, and Manufacturing Risks The company is subject to extensive regulations, depends entirely on third-party manufacturers, and must comply with stringent healthcare laws, with violations carrying substantial penalties - The company depends on third parties (CROs, investigators) to conduct its clinical trials and does not have day-to-day control over their activities[198][199] - The company has no manufacturing capabilities and relies on a limited number of third-party suppliers, where production problems could halt development[205] - The company is subject to numerous healthcare laws, including the Anti-Kickback Statute and False Claims Act; violations can lead to significant penalties and exclusion from federal programs[265][266][270] - The company's information technology systems are vulnerable to cybersecurity breaches, which could lead to the loss of trade secrets and significant legal and financial liability[276][280][281] Risks Related to Our Common Stock and General Risks Ownership of the company's common stock involves significant risk due to extreme price volatility and a substantial risk of delisting from Nasdaq for failing to meet the minimum bid price - The company's common stock is at risk for delisting from Nasdaq if it fails to maintain a minimum closing bid price of $1.00 per share[166] - The stock price is highly volatile, having fluctuated between $1.12 and $182,290.42 per share (split-adjusted) since 2016[157] - Future equity issuances for capital raising or other purposes will result in the dilution of existing stockholders' ownership percentage[170] Unregistered Sales of Equity Securities and Use of Proceeds This item is not applicable for the reporting period - Not applicable[309] Defaults Upon Senior Securities This item is not applicable for the reporting period - Not applicable[310] Mine Safety Disclosures This item is not applicable for the reporting period - Not applicable[311] Other Information Stockholders approved proposals for a stock issuance, a potential reverse stock split, and meeting adjournment at the Special Meeting of Stockholders held on May 14, 2025 Proposal 1: Approval of Stock Issuance and Warrant Proposal | FOR | AGAINST | ABSTAIN | BROKER NON-VOTES | | :--- | :--- | :--- | :--- | | 174,107 | 120,876 | 20,950 | 826,918 | Proposal 2: Approval of Reverse Stock Split | FOR | AGAINST | ABSTAIN | BROKER NON-VOTES | | :--- | :--- | :--- | :--- | | 804,924 | 311,563 | 26,364 | 0 | Proposal 3: Authorization to Adjourn the Special Meeting | FOR | AGAINST | ABSTAIN | BROKER NON-VOTES | | :--- | :--- | :--- | :--- | | 791,430 | 299,950 | 51,471 | 0 | Exhibits This section lists the exhibits filed with the Form 10-Q, including CEO and CFO certifications pursuant to the Sarbanes-Oxley Act and Inline XBRL data files - The exhibits include certifications from the Principal Executive Officer and Principal Financial Officer as required by the Sarbanes-Oxley Act, as well as XBRL data files[320]