Avidity Biosciences(RNA) - 2025 Q2 - Quarterly Report

PART I – FINANCIAL INFORMATION Item 1. Condensed Consolidated Financial Statements (unaudited) This section presents unaudited condensed consolidated financial statements, including balance sheets, statements of operations, equity, cash flows, and detailed notes Condensed Consolidated Balance Sheets This section provides a summary of the company's financial position at specific dates Condensed Consolidated Balance Sheet Highlights (in thousands) | Metric | June 30, 2025 | December 31, 2024 | | :-------------------------- | :------------ | :---------------- | | Cash and cash equivalents | $243,907 | $219,868 | | Marketable securities | $939,237 | $1,281,629 | | Total current assets | $1,250,560 | $1,542,290 | | Total assets | $1,368,926 | $1,563,895 | | Total current liabilities | $135,061 | $98,018 | | Total liabilities | $176,262 | $138,936 | | Total stockholders' equity | $1,192,664 | $1,424,959 | - Total assets decreased by $195.0 million from December 31, 2024, to June 30, 2025, primarily due to a reduction in marketable securities[11] - Total liabilities increased by $37.3 million, while total stockholders' equity decreased by $232.3 million during the six-month period[11] Condensed Consolidated Statements of Operations and Comprehensive Loss This section details the company's revenues, expenses, and net loss over specific periods Condensed Consolidated Statements of Operations and Comprehensive Loss (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 | | :-------------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Collaboration revenue | $3,847 | $2,045 | $5,420 | $5,588 | | Research and development expenses | $138,125 | $63,940 | $237,615 | $130,772 | | General and administrative expenses | $36,864 | $20,731 | $70,464 | $34,629 | | Loss from operations | $(171,142) | $(82,626) | $(302,659) | $(159,813) | | Interest income | $14,478 | $11,949 | $30,657 | $20,382 | | Net loss | $(157,315) | $(70,793) | $(273,088) | $(139,648) | | Net loss per share, basic and diluted | $(1.21) | $(0.65) | $(2.11) | $(1.44) | | Weighted-average shares outstanding | 129,622 | 106,928 | 129,428 | 97,070 | - Net loss significantly increased for both the three-month period (from $(70.8 million) to $(157.3 million)) and the six-month period (from $(139.6 million) to $(273.1 million)) year-over-year[12] - Research and development expenses more than doubled for both periods, driving the increased net loss[12] Condensed Consolidated Statements of Stockholders' Equity This section outlines changes in the company's equity, including common stock and accumulated deficit Changes in Stockholders' Equity (in thousands) | Metric | December 31, 2024 | March 31, 2025 | June 30, 2025 | | :-------------------------------- | :---------------- | :------------- | :------------ | | Common Stock Shares | 119,893 | 120,512 | 120,778 | | Additional Paid-in Capital | $2,315,111 | $2,334,784 | $2,357,029 | | Accumulated Other Comprehensive Income | $2,902 | $2,766 | $1,777 | | Accumulated Deficit | $(893,066) | $(1,008,839) | $(1,166,154) | | Total Stockholders' Equity | $1,424,959 | $1,328,723 | $1,192,664 | - Total stockholders' equity decreased by $232.3 million from December 31, 2024, to June 30, 2025, primarily due to the accumulated net loss[15] - Additional paid-in capital increased due to stock option exercises, ESPP, and stock-based compensation[15] Condensed Consolidated Statements of Cash Flows This section presents the company's cash inflows and outflows from operating, investing, and financing activities Condensed Consolidated Statements of Cash Flows (in thousands, Six Months Ended June 30) | Activity | 2025 | 2024 | | :------------------------------------------ | :--------- | :--------- | | Net cash used in operating activities | $(324,495) | $(135,384) | | Net cash provided by (used in) investing activities | $342,673 | $(307,616) | | Net cash provided by financing activities | $5,710 | $836,169 | | Net increase in cash, cash equivalents and restricted cash | $24,042 | $393,169 | | Cash, cash equivalents and restricted cash at end of period | $246,705 | $578,546 | - Net cash used in operating activities increased significantly from $135.4 million in 2024 to $324.5 million in 2025[20] - Investing activities shifted from using $307.6 million in 2024 to providing $342.7 million in 2025, primarily due to proceeds from maturities of marketable securities[20] Notes to Unaudited Condensed Consolidated Financial Statements This section provides detailed explanations and disclosures for the unaudited condensed consolidated financial statements 1. Description of Business and Basis of Presentation This note describes the company's biopharmaceutical business and the basis for financial statement presentation - Avidity Biosciences is a biopharmaceutical company developing Antibody Oligonucleotide Conjugates (AOCs) to target the root cause of previously untreatable diseases[22] - As of June 30, 2025, the company had an accumulated deficit of $1.2 billion and cash, cash equivalents, and marketable securities of $1.2 billion[23] - Existing cash, cash equivalents, and marketable securities are believed to be sufficient to fund operations for at least 12 months from the Form 10-Q filing date[24] 2. Summary of Significant Accounting Policies This note outlines the key accounting policies used in preparing the condensed consolidated financial statements - No significant changes to accounting policies occurred during the six months ended June 30, 2025[29] - The company is evaluating the impact of new FASB ASUs 2023-09 (Income Tax Disclosures) and 2024-03 (Expense Disaggregation Disclosures) on its financial statements[33][34] Common Stock Equivalent Securities Not Included in Diluted Net Loss Per Share (in thousands) | Security Type | June 30, 2025 | June 30, 2024 | | :-------------------------------- | :------------ | :------------ | | Common stock options | 14,394 | 12,728 | | Restricted stock units | 2,812 | 1,526 | | Performance stock units | 810 | 562 | | ESPP shares pending issuance | 3 | 4 | | Total | 18,019 | 14,820 | 3. Fair Value Measurements This note details the fair value measurements of financial instruments, primarily marketable securities Fair Value Measurements of Marketable Securities (in thousands, as of June 30, 2025) | Asset Type | Total | Level 1 (Quoted Prices) | Level 2 (Other Observable Inputs) | Level 3 (Unobservable Inputs) | | :----------------------- | :------ | :---------------------- | :-------------------------- | :------------------------ | | U.S. Treasury securities | $939,237 | $939,237 | $0 | $0 | - All marketable securities are measured at fair value using Level 1 inputs, indicating readily available quoted prices in active markets[35] 4. Marketable Securities This note provides information on the company's marketable securities, including their fair value and maturity Marketable Securities (in thousands, as of June 30, 2025) | Maturity | Amortized Cost | Unrealized Gains | Unrealized Losses | Estimated Fair Value | | :--------------- | :------------- | :--------------- | :---------------- | :------------------- | | U.S. Treasury securities (1 year or less) | $753,666 | $1,350 | $(94) | $754,922 | | U.S. Treasury securities (1-2 years) | $183,924 | $435 | $(44) | $184,315 | | Total | $937,590 | $1,785 | $(138) | $939,237 | - Unrealized losses on marketable securities are primarily due to interest rate increases, not credit quality, and no allowance for credit losses was recorded[37] - The company does not intend to sell these investments before maturity and expects to recover their amortized cost bases[37] 5. Collaboration, License and Research Agreements This note details revenue and deferred revenue from collaboration, license, and research agreements Collaboration Revenue (in thousands) | Agreement | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Bristol Myers Squibb Company (BMS) | $3,847 | $2,045 | $5,420 | $4,500 | | Eli Lilly and Company (Lilly) | $0 | $0 | $0 | $1,100 | | Total Collaboration Revenue | $3,847 | $2,045 | $5,420 | $5,600 | - Revenue from the BMS Collaboration Agreement increased for both the three and six months ended June 30, 2025[39] - Deferred revenue related to collaboration agreements decreased from $58.9 million at December 31, 2024, to $53.5 million at June 30, 2025[41] 6. Composition of Certain Consolidated Financial Statement Items This note provides a breakdown of specific balance sheet items, including prepaid assets and other current assets Prepaid and Other Current Assets (in thousands) | Item | June 30, 2025 | December 31, 2024 | | :-------------------------- | :------------ | :---------------- | | Prepaid assets | $15,976 | $12,571 | | Interest receivable | $8,540 | $9,447 | | Other current assets | $42,900 | $18,775 | | Total | $67,416 | $40,793 | - Other current assets increased significantly, including reimbursable tenant improvements rising from $7.1 million to $31.1 million[42] - The company recorded approximately $87.0 million in nonrefundable reservation fees with a Contract Manufacturing Organization (CMO) for future production batches (2026-2028)[44] 7. Commitments and Contingencies This note discloses the company's future lease commitments and any material litigation matters - The company has future lease commitments of approximately $80.0 million for its corporate headquarters sublease (payments starting Q3 2025) and $53.7 million for an amended sublease for an adjacent building (payments starting April 2026)[46][47] - A $2.5 million letter of credit is maintained for the benefit of the sublandlord[48] - No material litigation matters are currently outstanding for which liabilities have been accrued[49] 8. Stockholders' Equity This note details changes in stockholders' equity and stock-based compensation expenses Stock-Based Compensation Expense (in thousands) | Expense Type | 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 | $9,490 | $6,529 | $18,609 | $12,266 | | General and administrative | $8,169 | $6,283 | $16,786 | $10,852 | | Total | $17,659 | $12,812 | $35,395 | $23,118 | - Unrecognized compensation cost as of June 30, 2025, includes $121.0 million for time-based options, $68.0 million for restricted stock units, and $34.2 million for performance stock units[51] - The company issued 92,348 shares under the Employee Stock Purchase Plan (ESPP) during the six months ended June 30, 2025[52] 9. Segment Information This note confirms the company operates as a single segment and provides related financial information - The company operates as a single operating and reportable segment[54] - The Chief Executive Officer (CODM) uses consolidated net loss to assess performance and allocate resources[54] Cash, Cash Equivalents and Marketable Securities (in thousands) | Date | Amount | | :----------- | :--------- | | June 30, 2025 | $1,183,144 | | December 31, 2024 | $1,501,497 | 10. Subsequent Events This note discloses significant events that occurred after the reporting period, including stock sales and new agreements - From July 1, 2025, through August 7, 2025, the company sold 5,646,583 shares of common stock, generating $185.5 million in net proceeds[56] - On August 1, 2025, the company entered into a commercial manufacturing agreement with a CMO, incurring approximately $620.0 million in future unconditional purchase obligations from 2026 through 2028[57] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the company's financial condition, operational results, biopharmaceutical pipeline progress, and liquidity Overview This overview highlights the company's biopharmaceutical focus, clinical trial progress, and strategic advancements - Avidity Biosciences is a biopharmaceutical company developing Antibody Oligonucleotide Conjugates (AOCs) for rare diseases, with three programs in potentially registrational trials[60] - The company is expanding into precision cardiology with two wholly-owned development candidates: AOC 1072 (PRKAG2 Syndrome) and AOC 1086 (PLN cardiomyopathy)[76] - Avidity is building global commercial infrastructure for potential product launches for DMD, DM1, and FSHD starting in 2026[77] Delpacibart zotadirsen (del-zota) for the treatment of DMD44 This section details del-zota's development for DMD44, including clinical trials and FDA Breakthrough Therapy designation - Del-zota, for Duchenne muscular dystrophy (DMD44), is in Phase 2 development (EXPLORE44-OLE™ study) and received FDA Breakthrough Therapy designation in July 2025[60][61][62] - Positive top-line data from the Phase 1/2 EXPLORE44 trial showed statistically significant improvements across key biomarkers and favorable safety[63] - The company plans to submit its first Biologics License Application (BLA) for del-zota at year-end 2025, using data from EXPLORE44 and EXPLORE44-OLE studies[63][67] Delpacibart etedesiran (del-desiran) for the treatment of myotonic dystrophy type 1 (DM1) This section details del-desiran's development for DM1, including the HARBOR trial and anticipated data - Del-desiran, for myotonic dystrophy type 1 (DM1), is in the global Phase 3 HARBOR™ trial, with enrollment completed in July 2025[60][64][66] - Data from the MARINA-OLE™ trial showed reversal of disease progression across multiple endpoints, including hand function and muscle strength[64] - Topline data from the HARBOR study is anticipated in the second quarter of 2026, with marketing application submissions expected to start in the second half of 2026[72] Delpacibart braxlosiran (del-brax) for the treatment of facioscapulohumeral muscular dystrophy (FSHD) This section details del-brax's development for FSHD, including registrational trials and regulatory pathways - Del-brax, for facioscapulohumeral muscular dystrophy (FSHD), is in the registrational FORTITUDE biomarker cohort, Phase 2 FORTITUDE-OLE™, and Phase 3 FORTITUDE-3™ trials[60][68] - FDA has aligned on accelerated and full approval pathways for del-brax, with positive topline Phase 1/2 FORTITUDE data showing consistent improvement in functional mobility, muscle strength, and rapid reduction in biomarkers[69][73] - The company plans to submit a BLA for accelerated approval in the second half of 2026, supported by data from FORTITUDE trials[69] Company Advancements This section highlights pipeline expansion into precision cardiology and commercial infrastructure development - Avidity is expanding its AOC pipeline beyond rare neuromuscular disorders into precision cardiology, with candidates AOC 1072 and AOC 1086[76] - The company is developing a global commercial infrastructure in preparation for potential product launches for DMD, DM1, and FSHD starting in 2026[77] - Since inception, the company has incurred operating losses, with a net loss of $273.1 million for the six months ended June 30, 2025, and an accumulated deficit of $1.2 billion[79] Components of Results of Operations This section explains the key components of the company's revenue and expenses, and their expected trends - Revenue is derived from license and research collaboration agreements; no product sales revenue is expected until regulatory approval[83][84] - Research and development expenses are expected to increase significantly due to ongoing preclinical studies and clinical trials, including external and internal costs[87][89] - General and administrative expenses are also projected to increase to support expanded R&D activities, commercial readiness, and corporate functions[92] Results of Operations (Comparison of the Three and Six Months Ended June 30, 2025 and 2024) This section analyzes the company's financial performance for the three and six months ended June 30, 2025 and 2024 Key Financial Results (in thousands) | 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 | | :-------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Revenue | $3,847 | $2,045 | $5,420 | $5,588 | | Research and development expenses | $138,125 | $63,940 | $237,615 | $130,772 | | General and administrative expenses | $36,864 | $20,731 | $70,464 | $34,629 | | Other income | $13,827 | $11,833 | $29,571 | $20,165 | - Research and development expenses increased by $74.2 million (three months) and $106.8 million (six months) year-over-year, driven by clinical trial progression, manufacturing costs, and personnel[97] - General and administrative expenses increased by $16.1 million (three months) and $35.8 million (six months) due to higher personnel costs and professional fees[98] Liquidity and Capital Resources This section discusses the company's cash position, capital requirements, and future funding strategies - As of June 30, 2025, the company had $1.2 billion in cash, cash equivalents, and marketable securities, expected to fund operations for at least 12 months[103] - Future capital requirements are substantial and will depend on the progress of product candidates, manufacturing, regulatory outcomes, and commercialization efforts[104][105] - The company plans to finance future cash needs through equity offerings, debt financings, or collaborations, as product sales revenue is not anticipated in the immediate term[104] Critical Accounting Estimates This section addresses the company's critical accounting estimates and any material changes - No material changes to critical accounting estimates were reported as of June 30, 2025, compared to the annual report on Form 10-K for the year ended December 31, 2024[111] Contractual Obligations and Commitments This section outlines the company's significant contractual obligations and commitments - The company has aggregate future lease commitments of approximately $80.0 million for its corporate headquarters sublease and $53.7 million for an amended sublease for an adjacent building[112] - No other material changes to contractual obligations were reported as of June 30, 2025, outside the ordinary course of business[112] Item 3. Quantitative and Qualitative Disclosures About Market Risk This section states no material changes in market risk as of June 30, 2025, compared to prior annual report disclosures - No material changes in market risk were reported as of June 30, 2025, compared to the disclosures in the annual report on Form 10-K for the year ended December 31, 2024[114] Item 4. Controls and Procedures Management concluded disclosure controls were effective as of June 30, 2025, with no material changes in internal control - Management concluded that the company's disclosure controls and procedures were effective at the reasonable assurance level as of June 30, 2025[116] - There have been no material changes in internal control over financial reporting during the quarter ended June 30, 2025[117] PART II – OTHER INFORMATION Item 1. Legal Proceedings The company is not currently involved in any material legal proceedings - The company is not currently subject to any material legal proceedings[119] Item 1A. Risk Factors This section states no material changes to risk factors previously disclosed in the annual report on Form 10-K - No material changes to the risk factors set forth in the annual report on Form 10-K for the year ended December 31, 2024, were reported[120] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds The company reported no unregistered sales or issuer repurchases of equity securities during the period - No unregistered sales of equity securities occurred during the period[121] - No issuer repurchases of equity securities occurred during the period[122] Item 3. Defaults Upon Senior Securities This item is not applicable to the company - This item is not applicable[123] Item 4. Mine Safety Disclosures This item is not applicable to the company - This item is not applicable[124] Item 5. Other Information The Chief Human Resources Officer adopted a Rule 10b5-1 trading arrangement during the quarter - Teresa McCarthy, Chief Human Resources Officer, adopted a Rule 10b5-1 trading arrangement on April 11, 2025, to sell 120,000 shares by July 31, 2026[126] Item 6. Exhibits This section lists all exhibits filed with the Form 10-Q, including corporate governance documents and certifications - Exhibits include Amended and Restated Certificate of Incorporation, Bylaws, Form of Common Stock Certificate, Form of Pre-Funded Warrant, CEO/CFO Certifications (31.1, 31.2, 32.1, 32.2), and Inline XBRL documents[127] SIGNATURES This section contains the official signatures of the company's executive officers, certifying the report - The report was signed on August 7, 2025, by Sarah Boyce, President, Chief Executive Officer and Director, and Michael F. MacLean, Chief Financial Officer[131]