Vera Therapeutics(VERA) - 2025 Q2 - Quarterly Report

Summary of Risks Associated with Our Business The company's primary risks include substantial dependence on clinical-stage product candidates, significant capital requirements, a history of net losses, and operational and intellectual property challenges - The company's primary risks include its substantial dependence on the success of its clinical-stage product candidates (atacicept, MAU868, and VT-109), the need for significant additional capital to fund operations, and a history of incurring net losses since inception[10] - Key operational risks involve potential difficulties in clinical trial enrollment and retention, significant competition from other companies, reliance on third parties for manufacturing and clinical trials, and the potential for manufacturing or formulation changes to cause delays[10][11] - Intellectual property and strategic risks include the need to protect proprietary technologies, potential loss of rights if license agreements are breached, and the volatility of the company's common stock price[10][11] PART I. FINANCIAL INFORMATION This section presents the company's unaudited condensed financial statements and management's discussion and analysis of financial condition Item 1. Condensed Financial Statements (Unaudited) The company reported increased net losses for Q2 and H1 2025, driven by higher expenses, while maintaining a strong cash position of $556.8 million Condensed Balance Sheets Total assets decreased to $578.5 million, liabilities increased to $110.3 million due to new debt, and stockholders' equity declined to $468.3 million Condensed Balance Sheet Highlights (in thousands) | Balance Sheet Item | June 30, 2025 (unaudited) | December 31, 2024 | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $49,121 | $92,646 | | Marketable securities | $507,706 | $548,206 | | Total Assets | $578,528 | $655,681 | | Liabilities | | | | Total current liabilities | $33,554 | $25,371 | | Long-term debt | $74,464 | $50,687 | | Total Liabilities | $110,251 | $78,526 | | Total Stockholders' Equity | $468,277 | $577,155 | Condensed Statements of Operations and Comprehensive Loss Net loss significantly increased to $76.5 million for Q2 2025 and $128.2 million for H1 2025, primarily due to substantial rises in R&D and G&A expenses Statement of Operations Summary (in thousands, except per share data) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Research and development | $58,195 | $29,311 | $99,473 | $52,511 | | General and administrative | $21,946 | $8,032 | $37,862 | $15,944 | | Loss from operations | $(80,141) | $(37,343) | $(137,335) | $(68,455) | | Net loss | $(76,531) | $(33,708) | $(128,225) | $(62,091) | | Net loss per share | $(1.20) | $(0.62) | $(2.01) | $(1.17) | Condensed Statements of Stockholders' Equity Total stockholders' equity decreased by $108.9 million to $468.3 million as of June 30, 2025, primarily due to the period's net loss - Stockholders' equity decreased by $108.9 million in the first six months of 2025, falling from $577.2 million to $468.3 million, mainly due to the period's net loss[20] Condensed Statements of Cash Flows Net cash used in operations increased to $109.2 million for H1 2025, while investing and financing activities provided cash, resulting in a $43.5 million decrease in cash and equivalents Cash Flow Summary (in thousands) | Cash Flow Activity | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Net cash used in operating activities | $(109,204) | $(58,612) | | Net cash provided by (used in) investing activities | $43,861 | $(241,963) | | Net cash provided by financing activities | $21,818 | $279,979 | | Net decrease in cash and cash equivalents | $(43,525) | $(20,596) | | Cash and cash equivalents, end of period | $49,121 | $25,085 | Notes to Condensed Financial Statements The notes detail the company's $556.8 million liquidity, a new $500 million loan agreement, and the acquisition of preclinical compound VT-109 - As of June 30, 2025, the company had cash, cash equivalents, and marketable securities of $556.8 million, which management believes are sufficient to support planned operations for at least the next 12 months[27][28] - In June 2025, the company entered into a new loan agreement with a total borrowing capacity of up to $500.0 million, of which $75.0 million was funded at closing, with proceeds partly used to repay the previous 2021 Loan Agreement[49] - In January 2025, the company acquired worldwide development and commercial rights to VT-109, a preclinical fusion protein, from Stanford University for license issue fees of $0.8 million plus potential future milestones and royalties[65] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses progress on atacicept's Phase 3 trial and Q4 2025 submission plans, alongside increased Q2 2025 net losses driven by higher R&D and G&A expenses Overview Vera Therapeutics, a late clinical-stage biotech, completed enrollment for its pivotal atacicept Phase 3 trial, with a regulatory submission planned for Q4 2025, while expecting continued operating losses - The company's lead product candidate, atacicept, is being evaluated for IgAN, with the pivotal Phase 3 trial (ORIGIN 3) completing full enrollment in April 2025, and primary endpoint results announced in Q2 2025 supporting a planned regulatory submission[81] - A regulatory submission for atacicept is planned for the fourth quarter of 2025[81] - The company's pipeline also includes MAU868 for reactivated BK virus (BKV) infections and VT-109, a next-generation dual BAFF/APRIL inhibitor in preclinical development[81] Results of Operations Total operating expenses increased to $80.1 million in Q2 2025, driven by significant rises in R&D (99%) and G&A (173%) expenses due to clinical and commercial activities Comparison of Operating Expenses (in thousands) | Expense Category | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Change | | :--- | :--- | :--- | :--- | | Research and development | $58,195 | $29,311 | $28,884 | | General and administrative | $21,946 | $8,032 | $13,914 | | Total operating expenses | $80,141 | $37,343 | $42,798 | - The 99% year-over-year increase in Q2 R&D expenses was primarily due to a $10.7 million increase in contract drug manufacturing, a $5.8 million increase in clinical trial expenses, and an $8.2 million increase in employee compensation due to headcount growth[96] - The 173% year-over-year increase in Q2 G&A expenses was mainly driven by a $6.5 million increase in employee compensation and a $3.8 million increase in commercial planning and medical affairs expenses in preparation for potential regulatory approval[101] Liquidity and Capital Resources The company held $556.8 million in liquidity, refinanced debt with a new $500 million loan, and used $109.2 million in cash for operations in H1 2025 - The company held $556.8 million in cash, cash equivalents, and marketable securities as of June 30, 2025, which is believed to be sufficient to fund operations for at least the next 12 months[111] - In June 2025, the company entered into a new loan agreement for up to $500.0 million, drawing an initial $75.0 million, with net proceeds of approximately $23.3 million after repaying existing debt[107][124] Cash Flow Summary (in thousands) | Cash Flow Activity | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Net cash used in operating activities | $(109,204) | $(58,612) | | Net cash provided by (used in) investing activities | $43,861 | $(241,963) | | Net cash provided by financing activities | $21,818 | $279,979 | Item 3. Quantitative and Qualitative Disclosures About Market Risk The company's market risks primarily involve interest rate sensitivity and concentration of cash at a single financial institution, with foreign currency and inflation risks deemed minimal - The company is exposed to interest rate risk through its investment portfolio and its variable-rate 2025 Loan Agreement, however, management does not believe a 1.0% change in interest rates would have a material impact on its financial condition[134][135] - Substantially all of the company's cash is held with a single financial institution, which may exceed FDIC insured limits, representing a concentration of credit risk[136] - Foreign currency exchange risk and the effects of inflation are not considered to have had a material effect on the company's business or financial results during the periods presented[138][139] Item 4. Controls and Procedures Management concluded that disclosure controls and procedures were effective as of June 30, 2025, with no material changes to internal control over financial reporting - Management, including the CEO and CFO, concluded that as of June 30, 2025, the company's disclosure controls and procedures were effective[141] - No changes in internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, such controls were identified during the quarter ended June 30, 2025[142] PART II. OTHER INFORMATION This section provides additional information including legal proceedings, detailed risk factors, and other required disclosures Item 1. Legal Proceedings The company is not currently a party to any material legal proceedings - As of the filing date, the company is not a party to any material legal proceedings[144] Item 1A. Risk Factors This section outlines significant risks including reliance on product candidates, need for funding, regulatory uncertainty, intense competition, third-party dependence, and intellectual property protection Risks related to financial position and need for additional capital The company faces risks from its limited operating history, ongoing net losses, accumulated deficit of $589.5 million, and the need for substantial additional capital - The company will require substantial additional capital to finance its operations and may be forced to delay or eliminate research and development programs if unable to raise funds on acceptable terms[148] - The company has incurred net losses since inception, with an accumulated deficit of $589.5 million as of June 30, 2025, and expects to continue incurring losses for the foreseeable future[152] Risks related to discovery, development and commercialization Future success depends heavily on clinical-stage candidates, facing risks from lengthy, uncertain, and costly development, potential trial delays, and significant competition - The company is substantially dependent on the success of its product candidates, atacicept, MAU868, and VT-109, which are in clinical or pre-clinical development[161] - Clinical development is a lengthy, expensive process with an uncertain outcome, and results of earlier studies may not predict future trial results, with failure possible at any stage[163] - The company faces significant competition in the IgAN space from approved products such as TARPEYO, FILSPARI, FABHALTA, and VANRAFIA, as well as numerous programs in late-stage development[176][190] Risks related to regulatory approval and legal compliance The company faces risks from lengthy and unpredictable regulatory approval, market acceptance, pricing and reimbursement challenges, healthcare reform, and complex data privacy compliance - The regulatory approval process is lengthy, time-consuming, and inherently unpredictable, and failure to obtain approval would significantly harm the business[195] - Successful commercialization depends on obtaining adequate coverage and reimbursement from governmental and private payors, which is uncertain and subject to cost-containment pressures[231][232] - The company is subject to stringent and evolving U.S. and foreign data privacy and security laws (e.g., GDPR, CCPA), and non-compliance could lead to significant fines, litigation, and reputational harm[262][263] Risks related to intellectual property Success depends on intellectual property protection, facing risks of patent invalidation or insufficient coverage, and potential loss of rights from license agreement breaches - Commercial success depends on the ability to obtain and maintain proprietary protection for product candidates, with no assurance that patents will be issued or that they will provide sufficient protection[307][308] - A breach of the license agreements with Ares (atacicept), Novartis (MAU868), or Stanford (VT-109) could result in the loss of the ability to continue development and commercialization of these respective product candidates[317] - Patent terms may be inadequate to protect the company's competitive position for a sufficient amount of time, as patents may expire before or shortly after product commercialization[364] Risks related to dependence on third parties The company heavily relies on third parties for clinical trials and manufacturing, introducing risks of non-performance, regulatory non-compliance, and supply delays - The company relies on third-party CROs to conduct clinical trials and is responsible for ensuring their compliance with GCP and other regulations, where failure by CROs to perform could delay or terminate trials[392][393] - The company lacks internal manufacturing capabilities and relies on third-party manufacturers for its product candidates, increasing the risk of supply delays, quality issues, and lack of control over the manufacturing process[399] - Future collaborations for development and commercialization are not guaranteed and, if unsuccessful, could prevent the company from capitalizing on the market potential of its product candidates[409] Risks related to ownership of Class A common stock The company's stock price is highly volatile, with significant control held by principal stockholders, and corporate provisions could deter acquisitions - The trading price of the company's common stock has been and is likely to be highly volatile[417] - Executive officers, directors, and stockholders owning over 5% of the company's stock beneficially own a significant percentage, enabling them to exert substantial control over matters requiring stockholder approval[426] - Provisions in the company's amended and restated certificate of incorporation and bylaws, as well as Delaware law, could make an acquisition of the company more difficult[435] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds The 2025 Loan Agreement restricts the company's ability to pay dividends without prior lender consent - The terms of the 2025 Loan Agreement restrict the company's ability to pay dividends without prior written consent from Oxford[467] Item 3. Defaults Upon Senior Securities The company reports no defaults upon senior securities - None[468] Item 4. Mine Safety Disclosures This item is not applicable to the company - Not applicable[469] Item 5. Other Information The company reports no other information - None[470] Item 6. Exhibits This section lists exhibits filed with the Quarterly Report, including the Loan and Security Agreement and officer certifications - Key exhibits filed include the Loan and Security Agreement dated June 2, 2025, and certifications from the Principal Executive Officer and Principal Financial Officer[472]