Adverum Biotechnologies(US:ADVM)2025-08-12 11:05PART I Financial Statements Adverum Biotechnologies reported a widened net loss and significant decline in cash and equity for H1 2025, raising substantial doubt about its going concern ability Condensed Consolidated Balance Sheets As of June 30, 2025, total assets decreased significantly, liabilities increased, and stockholders' equity shifted to a $20.2 million deficit Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $42,418 | $60,652 | | Short-term investments | $1,979 | $65,039 | | Total current assets | $48,391 | $131,300 | | Total assets | $96,179 | $179,841 | | Liabilities & Equity | | | | Total current liabilities | $31,356 | $22,898 | | Total liabilities | $116,398 | $109,127 | | Total stockholders' (deficit) equity | $(20,219) | $70,714 | Condensed Consolidated Statements of Operations and Comprehensive Loss Net loss widened significantly for both the three and six months ended June 30, 2025, primarily due to increased research and development 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 | $37,125 | $17,097 | $65,872 | $32,507 | | General and administrative | $12,730 | $15,807 | $32,204 | $29,596 | | Operating loss | $(49,855) | $(32,904) | $(98,076) | $(62,103) | | Net loss | $(49,191) | $(30,498) | $(96,210) | $(57,645) | | Net loss per share | $(2.34) | $(1.46) | $(4.59) | $(3.08) | Condensed Consolidated Statements of Stockholders' (Deficit) Equity Stockholders' equity transitioned from a positive balance to a $20.2 million deficit by June 30, 2025, primarily due to the net loss incurred - Stockholders' equity decreased from $70.7 million at December 31, 2024, to a deficit of $20.2 million at June 30, 202518 - The primary driver for the decrease in equity was the net loss of $96.2 million for the six months ended June 30, 20251518 Condensed Consolidated Statements of Cash Flows Net cash used in operating activities nearly doubled for H1 2025, leading to an overall decrease in cash despite investing inflows, with no significant financing activities 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 | $(81,538) | $(43,089) | | Net cash provided by (used in) investing activities | $63,184 | $(24,354) | | Net cash provided by financing activities | $120 | $119,764 | | Net (decrease) increase in cash | $(18,234) | $52,321 | Notes to Condensed Consolidated Financial Statements Notes highlight substantial doubt about going concern, limited cash runway into Q4 2025, a significant subtenant lease default, and a recent $10.0 million private placement - There is substantial doubt regarding the Company's ability to continue as a going concern, as its cash, cash equivalents, and proceeds from an August 2025 financing are insufficient to fund operations for at least twelve months28 - The company's cash runway, including proceeds from the August 2025 private placement, is expected to fund operations only into the fourth quarter of 202529 - A subtenant for the company's North Carolina premises defaulted on rent payments in March 2025, and Adverum remains obligated under the head lease with a total future rent obligation of $118.3 million and has initiated a lawsuit to recover damages4547 - On August 11, 2025, the company entered into an agreement for a private placement to raise gross proceeds of $10.0 million6869 Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses Ixo-vec's clinical progress, increased R&D expenses, and reiterates substantial doubt about the company's going concern ability due to limited cash runway Overview Adverum is a clinical-stage company developing Ixo-vec gene therapy for wet AMD, with the ARTEMIS Phase 3 trial initiated and AQUARIUS planned, holding key regulatory designations - The lead product candidate is ixoberogene soroparvovec (Ixo-vec), a single, in-office intravitreal injection gene therapy for wet AMD71 - The first Phase 3 trial, ARTEMIS, was initiated in February 2025, with enrollment expected to complete in Q1 2026 and top-line data in H1 20277177 - The second Phase 3 trial, AQUARIUS, is planned for Q4 2025, but is subject to the availability of additional funding7177 - Ixo-vec has received several key regulatory designations: FDA Fast Track, FDA RMAT, EMA PRIME, and UK MHRA Innovation Passport78 Results of Operations Operating expenses significantly increased for H1 2025, driven by higher R&D for Ixo-vec's Phase 3 development and G&A expenses related to a defaulted sublease Comparison of Operating Expenses (in thousands) | Expense Category | 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 | $37,125 | $17,097 | $65,872 | $32,507 | | General and administrative | $12,730 | $15,807 | $32,204 | $29,596 | | Total operating expenses | $49,855 | $32,904 | $98,076 | $62,103 | - The increase in R&D expense was primarily driven by a $27.3 million increase in spending on Ixo-vec for the six-month period, mainly due to Phase 3 clinical development activities96 Liquidity, Capital Resources and Plan of Operations Liquidity is severely constrained, with cash expected to fund operations only into Q4 2025, leading to substantial doubt about going concern and necessitating significant additional capital - As of June 30, 2025, the company had $44.4 million in cash, cash equivalents, and short-term investments101 - Management has determined there is substantial doubt about the company's ability to continue as a going concern for the next twelve months101105 - Existing cash, combined with the $10.0 million gross proceeds from the August 2025 Private Placement, is expected to fund operations only into the fourth quarter of 2025105 - The company will need to raise substantial additional funding to finance its operations and continue clinical development, with partnering discussions active and ongoing106 Quantitative and Qualitative Disclosures About Market Risk As a smaller reporting company, Adverum Biotechnologies, Inc. is not required to provide the information for this item - The company is not required to provide information on market risk as it qualifies as a smaller reporting company119 Controls and Procedures Management concluded disclosure controls and procedures were ineffective as of June 30, 2025, due to a material weakness in lease accounting controls, with remediation ongoing - A material weakness in internal control over financial reporting was identified as of December 31, 2024, related to controls over lease accounting121 - As a result of this material weakness, the Chief Executive Officer and Chief Financial Officer concluded that disclosure controls and procedures were not effective as of June 30, 2025124 - A remediation plan is underway, involving increased rigor, engagement of outside experts, and enhanced monitoring of lease agreements and subtenant creditworthiness122 PART II—OTHER INFORMATION Legal Proceedings The company initiated a lawsuit against its subtenant and guarantor for defaulting on a North Carolina sublease, leaving Adverum responsible for a $118.3 million head lease obligation - On April 10, 2025, the company initiated a lawsuit against its subtenant (AMP) and the guarantor (Jaguar) for defaulting on a sublease for its North Carolina (NC) Premises127 - The default occurred after the subtenant failed to remit rent payments from March 2025 onwards, and Adverum assumed responsibility for the payments, with a total future rent obligation of $118.3 million for the property127 Risk Factors The company faces significant risks including substantial doubt about its going concern ability, dependence on a single product candidate, high development costs, and a material weakness in internal controls Risks Related to Financial Position and Need for Capital Substantial doubt exists about the company's going concern ability, with cash funding operations only into Q4 2025, necessitating significant additional capital that may cause dilution - There is substantial doubt regarding the company's ability to continue as a going concern, with cash expected to fund operations only into the fourth quarter of 2025129130 - The company has incurred significant operating losses since inception and expects them to continue for the foreseeable future, having accumulated a deficit of $1.2 billion as of June 30, 202510138 - The company is exposed to risks from subtenant defaults, as evidenced by the default on its NC Premises lease, leaving Adverum with a future rent obligation of $118.3 million140 Risks Related to Discovery and Development Business success depends on Ixo-vec, a single clinical candidate, facing long, expensive, and uncertain development with high failure risk, potential side effects, and unpredictable timelines for novel gene therapy - The business depends substantially on the success of its one clinical product candidate, Ixo-vec141 - A dose-limiting toxicity was observed at the 6E11 dose in the prior INFINITY trial in DME subjects, leading to the discontinuation of that indication and highlighting safety risks147 - The company's gene therapy platform is a novel technology, making it difficult to predict the time, cost, and probability of obtaining regulatory approval, especially for a broad patient population like wet AMD157158 Risks Related to Manufacturing Significant manufacturing risks for gene therapy include developing scalable processes, reliance on limited third-party contractors, potential production delays, and costly comparability studies for method changes - Developing a commercially viable, robust, and reliable manufacturing process for gene therapy is difficult, expensive, and time-consuming179 - The company relies on a limited number of vendors, including single-source vendors, for manufacturing and testing, who are subject to significant regulation and may not meet requirements or have sufficient capacity187 - Manufacturing is susceptible to product loss from contamination, equipment failure, or operator error, and any deviations could lead to supply disruptions, recalls, or termination of development programs200202 Risks Related to Reliance on Third Parties Heavy reliance on third parties for R&D and manufacturing reduces control, and their poor performance or delays could significantly impact clinical trials and regulatory submissions - The company relies on third parties for vector production, manufacturing, testing, clinical trials, and other R&D activities, reducing its control over these functions203204 - If third-party CROs or investigators fail to meet deadlines, adhere to protocols, or meet regulatory requirements, clinical development could be delayed or unsuccessful206208 Risks Relating to Intellectual Property Success depends on uncertain patent and trade secret protection in a litigious landscape, reliance on potentially terminable third-party licenses, and U.S. government rights over some intellectual property - Commercial success depends on obtaining and maintaining patent and trade secret protection, which is uncertain and may not provide a competitive advantage210 - The company relies on licenses from third parties for key technology, and the loss of these licenses could materially harm the business227 - Some in-licensed intellectual property was developed with U.S. government funding and is subject to federal regulations, including "march-in" rights246 Risks Related to Commercialization Commercial success of Ixo-vec is not guaranteed due to approval uncertainties, market acceptance challenges, intense competition, uncertain reimbursement, and the company's lack of sales and marketing capabilities - The company faces intense competition from established therapies like Eylea and Vabysmo, as well as other gene therapies in development from companies like 4D Molecular Therapeutics and REGENXBIO263267 - Market acceptance and sales will depend significantly on obtaining adequate coverage and reimbursement from third-party payers, which is a costly and uncertain process272 - The company has no internal sales, marketing, or distribution capabilities and would need to build them or partner with a third party, which involves significant cost and risk295 Risks Related to Business Operations Operational risks include negative public perception of gene therapy, dependence on key personnel, intense competition for talent, significant cybersecurity risks, and complex data privacy and healthcare law compliance - Negative public opinion and increased regulatory scrutiny of gene therapy could damage perception of the company's products and delay approvals296 - The company is dependent on retaining key executives and scientific staff and faces intense competition for qualified personnel300 - The company and its partners are subject to significant risks from cyber-attacks and must comply with stringent, evolving data privacy and security laws globally, with non-compliance carrying heavy penalties304331 Risks Related to Common Stock Common stock faces high volatility, potential negative impact from a material weakness in internal controls, anti-takeover provisions, and exclusive forum provisions limiting stockholder litigation options - The trading price of the company's common stock has been and is expected to continue to be highly volatile353 - The identified material weakness in internal control over financial reporting could erode investor confidence and negatively impact the stock price356360 - Anti-takeover provisions in the company's charter documents and under Delaware law may delay or prevent an acquisition355 Unregistered Sales of Equity Securities and Use of Proceeds There were no unregistered sales of equity securities during the reporting period that were not previously disclosed in a Form 8-K - No unregistered sales of equity securities were made during the period that had not been previously reported367 Defaults Upon Senior Securities None - The company reported no defaults upon senior securities368 Mine Safety Disclosures Not applicable - This item is not applicable to the company369 Other Information On August 11, 2025, the company entered a private placement agreement for $10.0 million gross proceeds from common stock and pre-funded warrants, intended for R&D and general corporate purposes - On August 11, 2025, the company entered into a securities purchase agreement for a private placement with Frazier Life Sciences371 August 2025 Private Placement Details | Security | Quantity | | :--- | :--- | | Common Stock Shares | 1.0 million | | Pre-Funded Warrants (to purchase common stock) | 3.5 million | | Total Gross Proceeds | $10.0 million | Exhibits This section provides an index of the exhibits filed with the Quarterly Report on Form 10-Q, including corporate governance documents, compensatory plans, forms of agreements related to the recent private placement, and officer certifications - The report includes an index of all exhibits filed, such as the Restated Certificate of Incorporation, Bylaws, equity incentive plans, and forms of the Securities Purchase Agreement and Registration Rights Agreement379