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Vor(VOR) - 2025 Q2 - Quarterly Report
VorVor(US:VOR)2025-08-12 20:02

PART I. FINANCIAL INFORMATION This section presents the unaudited condensed consolidated financial statements, management's discussion and analysis, and disclosures on market risk and internal controls Item 1. Financial Statements (Unaudited) This section presents the unaudited condensed consolidated financial statements, including the balance sheets, statements of operations and comprehensive loss, statements of stockholders' equity (deficit), and statements of cash flows, along with their accompanying notes, providing a detailed financial overview for the periods ended June 30, 2025, and December 31, 2024 Condensed Consolidated Balance Sheets Condensed Consolidated Balance Sheets (in thousands) | Item | June 30, 2025 | December 31, 2024 | | :-------------------------------- | :------------ | :---------------- | | Assets | | | | Cash and cash equivalents | $190,574 | $81,949 | | Restricted cash equivalents | $2,413 | — | | Marketable securities | $9,991 | $9,977 | | Total current assets | $204,927 | $96,507 | | Total assets | $205,371 | $142,891 | | Liabilities | | | | Accounts payable | $669 | $1,505 | | Accrued liabilities | $58,104 | $12,892 | | Warrant liabilities | $1,652,298 | — | | Total liabilities | $1,711,071 | $46,227 | | Stockholders' Equity (Deficit) | | | | Total stockholders' equity (deficit) | $(1,505,700) | $96,664 | | Accumulated deficit | $(2,063,149) | $(456,994) | Condensed Consolidated Statements of Operations and Comprehensive Loss Condensed Consolidated Statements of Operations and Comprehensive Loss (in thousands, except per share amounts) | Item | 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 expenses | $261,499 | $21,823 | $288,200 | $46,145 | | General and administrative expenses | $12,785 | $7,212 | $19,375 | $15,216 | | Total operating expenses | $274,284 | $29,035 | $307,575 | $61,361 | | Loss from operations | $(274,284) | $(29,035) | $(307,575) | $(61,361) | | Interest income | $537 | $1,196 | $1,342 | $2,718 | | Change in fair value of warrant liabilities | $(1,299,922) | — | $(1,299,922) | — | | Net loss | $(1,573,669) | $(27,839) | $(1,606,155) | $(58,643) | | Net loss per share, basic and diluted | $(12.56) | $(0.41) | $(12.84) | $(0.86) | | Weighted-average common shares outstanding | 125,271,447 | 68,299,170 | 125,049,032 | 68,165,068 | Condensed Consolidated Statements of Stockholders' Equity (Deficit) Changes in Stockholders' Equity (Deficit) (in thousands, except share amounts) | Item | Balance at Dec 31, 2024 | Balance at June 30, 2025 | | :------------------------------------------ | :---------------------- | :--------------------- | | Common Stock Shares | 124,776,152 | 125,645,952 | | Common Stock Amount | $13 | $13 | | Additional Paid-In Capital | $553,623 | $557,422 | | Accumulated Other Comprehensive Income | $22 | $14 | | Accumulated Deficit | $(456,994) | $(2,063,149) | | Total Stockholders' Equity (Deficit) | $96,664 | $(1,505,700) | Key Changes for Six Months Ended June 30, 2025: * Net loss: $(1,606,155) thousand (includes $(32,486) thousand for Q1 2025 and $(1,573,669) thousand for Q2 2025) * Issuance of common stock upon vesting of RSUs, net of shares withheld for taxes, exercise of stock options, and issuance of common stock under ESPP: 869,790 shares, resulting in $10 thousand increase in Additional Paid-In Capital * Stock-based compensation expense: $3,777 thousand * Other comprehensive loss: $(8) thousand Condensed Consolidated Statements of Cash Flows Condensed Consolidated Statements of Cash Flows (in thousands) | Activity | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------------ | :----------------------------- | :----------------------------- | | Net cash used in operating activities | $(66,250) | $(52,312) | | Net cash provided by investing activities | $416 | $96,963 | | Net cash provided by financing activities | $174,459 | $65 | | Net increase in cash, cash equivalents and restricted cash equivalents | $108,625 | $44,716 | | Cash, cash equivalents and restricted cash equivalents, beginning of period | $84,362 | $33,773 | | Cash, cash equivalents and restricted cash equivalents, end of period | $192,987 | $78,489 | Notes to Condensed Consolidated Financial Statements (Unaudited) 1. Nature of the Business - Vor Biopharma Inc. is a clinical-stage biotechnology company focused on advancing telitacicept, a novel dual-target recombinant fusion protein that inhibits BLyS and APRIL for autoimmune diseases. The company was incorporated on December 30, 2015, and is headquartered in Massachusetts29 - The Company has incurred significant operating losses and anticipates continued losses, making its operations dependent on raising additional funding. As of June 30, 2025, the Company had $200.6 million in cash, cash equivalents, and marketable securities, and an accumulated deficit of $2,063.1 million3132 - The issuance of $174.4 million in net cash proceeds from the 2025 PIPE Warrants in June 2025 has alleviated substantial doubt about the Company's ability to continue as a going concern for the next twelve months3233 2. Summary of Significant Accounting Policies - The condensed consolidated financial statements are prepared in conformity with GAAP, requiring management to make estimates and assumptions, particularly for accrued expenses, stock-based compensation, fair value of financial instruments (including warrants), and R&D expenses343536 - Warrants are classified as either equity or liability based on specific terms and accounting guidance. Liability-classified warrants are revalued at each balance sheet date, with changes in fair value recorded in the statement of operations4041 - Restructuring costs, including employee severance, are recognized based on whether benefits are ongoing or one-time, in accordance with ASC 712 or ASC 42043 3. Marketable Securities Marketable Securities (in thousands) | Item | June 30, 2025 (Fair Value) | December 31, 2024 (Fair Value) | | :---------------- | :------------------------- | :----------------------------- | | U.S. Treasuries | $9,991 | $9,977 | | Maturing in one year or less | $9,991 | $4,993 | | Maturing after one year through five years | — | $4,984 | * No individual securities were in an unrealized loss position as of June 30, 2025, or December 31, 2024 * No impairments or credit loss reserves were recorded for marketable securities during the periods presented 4. Fair Value Measurements Fair Value Measurements (in thousands) as of June 30, 2025 | Item | Level 1 | Level 2 | Level 3 | Total | | :------------------------ | :------ | :------ | :------ | :------ | | Cash equivalents (Money market funds) | $190,508 | — | — | $190,508 | | Marketable securities (U.S. Treasuries) | — | $9,991 | — | $9,991 | | Restricted cash equivalents (Money market funds) | $2,413 | — | — | $2,413 | | Warrant liabilities | — | $1,652,298 | — | $1,652,298 | * Fair value of cash equivalents and restricted cash equivalents is based on quoted market prices (Level 1) * Fair value of marketable securities and warrant liabilities is based on observable market inputs (Level 2) * No transfers between fair value levels occurred during the six months ended June 30, 2025 5. Property and Equipment, Net Property and Equipment, Net (in thousands) | Item | June 30, 2025 | December 31, 2024 | | :-------------------------- | :------------ | :---------------- | | Laboratory equipment | — | $9,625 | | Manufacturing equipment | — | $7,082 | | Computer equipment | — | $446 | | Furniture, fixtures and other | — | $606 | | Construction in progress | — | $36 | | Total | — | $17,795 | | Less: Accumulated depreciation | — | $(11,214) | | Property and equipment, net | $— | $6,581 | * Depreciation expense for the six months ended June 30, 2025, was $2.9 million, compared to $1.8 million for the same period in 2024 * In connection with the Restructuring Plan, the Company recognized a $3.3 million loss on disposal of long-lived assets and accelerated depreciation of approximately $1.5 million during the three and six months ended June 30, 20254849 6. Accrued Liabilities Accrued Liabilities (in thousands) | Item | June 30, 2025 | December 31, 2024 | | :------------------------------------------ | :------------ | :---------------- | | Employee-related expenses (including Restructuring Liability) | $11,136 | $5,852 | | Professional fees | $1,615 | $1,461 | | Clinical expenses | $79 | $3,835 | | Manufacturing expenses | $50 | $516 | | Research and development expenses | $83 | $872 | | Accrued up-front license payment (Note 10) | $45,000 | — | | Other | $141 | $356 | | Total accrued liabilities | $58,104 | $12,892 | 7. Stockholders' Equity and Warrants - In December 2024, the Company completed a private placement, issuing 55,871,260 common shares and warrants (2024 Warrants) to purchase up to 69,839,075 shares, generating $52.7 million in net proceeds. These warrants are equity-classified515253 - In June 2025, the Company issued 2025 PIPE Warrants (700,000,000 shares) and RemeGen Warrants (320,000,000 shares) in a private placement, raising $174.4 million in net proceeds. These 2025 Warrants are liability-classified and had a fair value of $1,652.3 million as of June 30, 2025, resulting in a $1,299.9 million change in fair value recognized as an expense545556 - Neither the 2024 nor 2025 Warrants were included in diluted net loss per share for the period ended June 30, 2025, as their effect would be antidilutive57 8. Stock-Based Compensation - As of June 30, 2025, the Company had 69,668,889 shares available under the 2023 Inducement Plan and 6,027,849 shares under the Amended and Restated 2021 Equity Incentive Plan5859 - During the six months ended June 30, 2025, the Company granted 87,549,888 stock options (weighted-average fair value $0.73/share) and 1,224,000 restricted stock units (weighted-average fair value $1.33/share). Total unrecognized compensation expense for stock options was $66.3 million (2.1 years weighted-average period) and for RSUs was $2.9 million (2.3 years weighted-average period)606165 - An Option Repricing in February 2025 reduced the exercise price of approximately 6.76 million options to $1.34/share, but the associated incremental compensation cost of $1.9 million was reversed as conditions for modified terms were not met6364 Stock-Based Compensation Expense (in thousands) | Allocation | 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 | $599 | $1,272 | $1,641 | $2,677 | | General and administrative | $1,245 | $1,521 | $2,136 | $3,197 | | Total stock-based compensation expense | $1,844 | $2,793 | $3,777 | $5,874 | 9. Leases - In June 2025, the Company entered into an early termination agreement for its Cambridgepark Lease, effective August 4, 2025, incurring an $8.5 million non-refundable termination fee. This resulted in accelerated amortization of the right-of-use asset and de-recognition of remaining balances70 Lease Costs (in thousands) | Item | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :---------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Operating lease cost | $13,085 | $1,951 | $15,036 | $3,902 | | Variable lease cost | $774 | $679 | $1,485 | $1,209 | | Total lease cost | $13,859 | $2,630 | $16,521 | $5,111 | Lease Liabilities (in thousands): | Item | June 30, 2025 | December 31, 2024 | | :-------------------------------- | :------------ | :---------------- | | Operating lease right-of-use assets | $24 | $35,007 | | Total lease liabilities | $— | $31,830 | * Weighted-average remaining lease term decreased from 5.7 years (Dec 31, 2024) to 0.1 years (June 30, 2025) 10. Significant Agreements - On June 25, 2025, the Company entered into a license agreement with RemeGen Co., Ltd. for exclusive rights to develop and commercialize telitacicept outside Greater China. The Company is responsible for all development, regulatory, and commercialization activities in the licensed territory7273 - Consideration for the license included an upfront cash payment of $45.0 million (accrued as of June 30, 2025) and the issuance of RemeGen Warrants initially valued at $177.4 million. The agreement was accounted for as an asset acquisition, resulting in a $222.6 million charge to R&D expense7475 - RemeGen is eligible for up to $330 million in regulatory milestone payments, up to $3.775 billion in sales milestone payments, and tiered royalties on net sales. No milestone or royalty payments have been accrued as of June 30, 202576 11. Net Loss Per Share Net Loss Per Share Attributable to Common Stockholders (in thousands, except per share amounts) | Item | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net loss attributable to common stockholders | $(1,573,669) | $(27,839) | $(1,606,155) | $(58,643) | | Weighted-average common shares outstanding | 125,271,447 | 68,299,170 | 125,049,032 | 68,165,068 | | Net loss per share, basic and diluted | $(12.56) | $(0.41) | $(12.84) | $(0.86) | * Potentially dilutive securities (stock options, RSUs, warrants) were excluded from diluted EPS calculation as their effect would be anti-dilutive7980 12. Restructuring Plan - On May 5, 2025, the Board approved a Restructuring Plan to wind down existing clinical and manufacturing operations and explore strategic alternatives, publicly announced on May 8, 202581 - The plan included a workforce reduction of 154 full-time employees (approximately 99% of the employee base), incurring $14.1 million in severance and benefit costs as of June 30, 202582 Total Restructuring Costs (in thousands) for Three and Six Months Ended June 30, 2025 | Item | Research and Development Expense | General and Administrative Expense | Total Restructuring Costs | | :------------------------------------------ | :------------------------------- | :------------------------------- | :------------------------ | | Severance and Benefits Costs | $8,957 | $5,188 | $14,145 | | Stock-based Compensation | — | $549 | $549 | | Accelerated Depreciation on Long-lived Assets | $1,230 | $284 | $1,514 | | Accelerated Amortization on Right-of-use Assets | $10,159 | $1,064 | $11,223 | | Loss on Disposal of Long-lived Assets | $3,303 | — | $3,303 | | Total | $23,649 | $7,085 | $30,734 | * The restructuring resulted in a total of $30.7 million in costs for the three and six months ended June 30, 202584 - The remaining restructuring liability included in accrued liabilities as of June 30, 2025, was $11.5 million85 13. Segments - The Company operates as a single reportable and operating segment, with the CEO serving as the Chief Operating Decision Maker (CODM). The CODM reviews consolidated operating results and net loss to make resource allocation decisions8687 Segment Expenses (in thousands) | Item | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Trem-cel (external R&D) | $3,095 | $3,619 | $9,477 | $8,480 | | VCAR33 (external R&D) | $2,419 | $1,762 | $6,055 | $4,362 | | Other research and development | $225,144 | $3,177 | $228,139 | $6,294 | | Salaries and benefits | $17,863 | $10,404 | $29,476 | $22,517 | | General corporate activities | $16,694 | $4,947 | $21,863 | $10,246 | | Other segment items | $1,308,454 | $3,930 | $1,311,145 | $6,744 | | Total Segment Expenses | $1,573,669 | $27,839 | $1,606,155 | $58,643 | | Segment Net Loss | $(1,573,669) | $(27,839) | $(1,606,155) | $(58,643) | * Other segment items primarily include changes in fair value of warrant liabilities, stock-based compensation, depreciation, and non-cash lease expense8889 14. Related Party Transactions - In June 2025, RA Capital Healthcare Fund, L.P., an affiliate of a board member, purchased warrants to acquire up to 200,000,000 shares of the Company's common stock for $50.0 million in gross proceeds as part of the 2025 Private Placement91 15. Subsequent Events - On August 12, 2025, the Company entered into a new lease agreement for approximately 8,391 square feet of office space in Boston, Massachusetts, with a term expiring 72 months after the September 1, 2025 commencement date. Aggregate base rental payments are expected to be $3.8 million during the initial term9293 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides a comprehensive discussion and analysis of the Company's financial condition and results of operations, highlighting key events such as the in-licensing of telitacicept, the restructuring plan, and the financial performance for the three and six months ended June 30, 2025, compared to the same periods in 2024 Overview - Vor Bio is a clinical-stage biopharmaceutical company focused on autoimmune diseases, having in-licensed telitacicept from RemeGen Co., Ltd. in June 202595 - Telitacicept is a novel fusion protein approved in China for systemic lupus erythematosus (SLE), rheumatoid arthritis (RA), and generalized myasthenia gravis (gMG), and is currently in a global Phase 3 clinical trial for gMG9596 - The Company holds exclusive development and commercialization rights for telitacicept outside of Greater China97 Our Clinical Development Programs & Pipeline - The Company's broader development plan includes exploring telitacicept in additional autoantibody-driven diseases where BAFF/APRIL signaling is a validated target, leveraging prior clinical experience and mechanistic rationale98 Our Team - Jean-Paul Kress, M.D., was appointed CEO and Chairman in June 2025, bringing extensive experience in autoimmune disease drug development and corporate leadership99 - Sandy Mahatme, J.D., LL.M., joined as Chief Financial Officer and Chief Business Officer in July 2025, with a background in biomanufacturing and biopharmaceutical finance99100 - Qing Zuraw, M.D., M.P.H., M.B.A., joined as Chief Development Officer in July 2025, having led global clinical development programs for telitacicept at RemeGen104 - Dallan Murray, M.B.A., joined as Chief Commercial Officer in August 2025, bringing over 20 years of commercial leadership experience in the biopharmaceutical industry104 Our Strategy - The Company's strategic priorities include rapid global development of telitacicept, pipeline expansion into additional B cell-driven autoimmune diseases, and building global commercial capabilities for potential launches104 Our Product Candidate (Telitacicept) This section details telitacicept, its mechanism of action, current approvals in China, ongoing global clinical trials for gMG, regulatory designations, commercialization strategy, manufacturing approach, competitive landscape, and intellectual property protection Telitacicept Overview and gMG - Telitacicept is approved in China for SLE, RA, and gMG, and is a novel recombinant fusion protein that dual-targets BLyS (BAFF) and APRIL to inhibit B cell survival and plasma cell function101108 - Generalized Myasthenia Gravis (gMG) is a rare, chronic autoimmune neuromuscular disorder with a prevalence of approximately 150-250 individuals per million worldwide, and an estimated 100,000 individuals in the United States102103 - Current gMG treatments include acetylcholinesterase inhibitors, traditional immunosuppressives, FcRn antagonists, and complement inhibitors, but none directly modulate the cytokine environment sustained by BAFF and APRIL105106107 Phase 3 Clinical Trial in patients with gMG in China - RemeGen's Phase 3 trial in China for gMG enrolled 114 patients, demonstrating significant improvements in MG-ADL and QMG scores for the telitacicept group compared to placebo at week 24109111 Key Results from China Phase 3 gMG Trial (Week 24) | Endpoint | Telitacicept Group | Placebo Group | | :------------------------------------------ | :----------------- | :------------ | | MG-ADL score decrease from baseline | 5.74 points | 0.91 points | | QMG score decrease from baseline | 8.66 points | 2.27 points | | Patients with ≥3-point MG-ADL improvement | 98.1% | 12.0% | | Patients with ≥5-point QMG improvement | 87.0% | 16.0% | * Telitacicept was well-tolerated, with an overall adverse event rate comparable to placebo Global Phase 3 Clinical Trial in patients with gMG - Telitacicept is currently being evaluated in a global Phase 3 clinical trial for gMG, with the Company assuming responsibility from RemeGen. The trial is recruiting in the United States, Canada, Europe, Australia, and South America112 - The primary endpoint is change from baseline in MG-ADL at week 24, with key secondary endpoints including QMG score reduction and MG Quality of Life (MG-QoL15r) scale changes112 - The first patient in the United States was enrolled in July 2024113 Regulatory Overview (Product Candidate) - Telitacicept has received Orphan Drug Designation (ODD) from both the U.S. FDA and European Medicines Agency (EMA) for the treatment of gMG114 - In January 2024, the FDA cleared the Investigational New Drug (IND) application for a global multi-center Phase 3 clinical trial of telitacicept for adult patients with primary Sjögren's syndrome (pSS), and granted Fast-Track Designation (FTD) in March 2024115 Sales and Marketing - The Company plans to build focused commercial capabilities and infrastructure in regions like the United States, South America, Europe, Japan, the Middle East, and North Africa to commercialize telitacicept, if approved116 Manufacturing - The Company plans to rely on third-party contract manufacturers for clinical manufacturing of raw materials, devices, active pharmaceutical ingredients, and finished products, and expects to enter into long-term agreements for future clinical trials and commercialization117 Competition (Product Candidate) - The autoimmune field is highly competitive, with numerous monoclonal antibodies, biologics, CAR T cells, and small molecules from companies like Alexion, Amgen, Argenx, Dianthus, Johnson & Johnson, and UCB already marketed or in development118 Intellectual Property (Product Candidate) - The licensed patent portfolio from RemeGen includes a first patent family for telitacicept's composition of matter, with granted patents in key regions (US, China, Europe, Japan, Korea, Russia, Brazil, India) expected to expire in 2028119 - Additional licensed families cover telitacicept formulations (expiring 2040-2044) and methods/uses for specific conditions like SLE, IgA nephropathy, Sjögren's syndrome, myasthenia gravis, and other autoimmune diseases (expiring 2039-2045)120121123124125126 Government Regulation This section outlines the extensive regulatory framework governing drug and biological product development, approval, and commercialization in the United States and the European Union, including preclinical and clinical trial requirements, review processes, special designations, and post-approval obligations Regulatory Approval in the United States - Pharmaceutical and biological products in the U.S. are extensively regulated by the FDA under the FDCA and PHSA, requiring considerable data for quality, safety, and efficacy before marketing127128 - The approval process for biologics involves extensive preclinical studies, submission of an Investigational New Drug (IND) application, well-controlled human clinical trials, and submission of a Biologics License Application (BLA) for marketing approval129 Preclinical Studies (US) - Preclinical studies involve laboratory and animal testing to assess product chemistry, formulation, potential adverse events, and therapeutic rationale, conducted in accordance with GLP regulations131 - An IND must be submitted to the FDA and become effective before human clinical trials can begin, allowing interstate shipment of unapproved product candidates for investigational use132 Clinical Trials (US) - Clinical trials involve administering investigational products to volunteers or patients under qualified investigators, adhering to federal regulations, GCPs, and IRB-approved protocols133134 - Trials are generally conducted in three sequential phases (Phase 1, 2, 3) to assess safety, pharmacokinetics, efficacy, and establish the overall benefit/risk relationship for product labeling139145 - Regulatory agencies require extensive monitoring, auditing, and reporting of clinical activities, data, and adverse events, with trials potentially suspended or terminated for non-compliance or health risks142143 FDA Review Processes - After clinical trials, a BLA is submitted to the FDA, including preclinical and clinical results, proposed labeling, and manufacturing information, requiring a substantial user fee146147 - The FDA reviews the BLA for safety, purity, potency, and cGMP compliance, with standard review goals of 10 months (6 months for priority review), which can be extended148149150 - Approval may be limited to specific indications or conditions, and the FDA may issue a Complete Response Letter for deficiencies or require a REMS program to manage risks152153 Orphan Drug Designation (US) - Orphan drug designation is granted for products treating rare diseases (fewer than 200,000 U.S. individuals) or conditions where development costs are unlikely to be recovered from sales155 - Designation, requested before BLA submission, does not shorten the review process but grants seven years of market exclusivity upon first FDA approval for the designated indication, with limited exceptions156157 Expedited Development and Review Programs (US) - The FDA offers expedited review programs for products addressing unmet medical needs in serious or life-threatening conditions, including Fast Track, Breakthrough Therapy, Priority Review, and Accelerated Approval158159160161162 - Fast Track allows for greater FDA interaction and rolling review; Breakthrough Therapy provides intensive guidance; Priority Review aims for a six-month review; and Accelerated Approval uses surrogate endpoints for earlier approval, contingent on confirmatory studies159160161162 - These programs may expedite development but do not change approval standards, and qualification can be revoked or review times may not be shortened164 Additional Controls for Biologics (US) - The PHSA emphasizes manufacturing controls for biologics to reduce the risk of adventitious agents and grants the FDA authority to suspend licenses for public health dangers165 - Approved biologics may be subject to official lot release, requiring manufacturers to submit samples and test results to the FDA, which may also perform confirmatory tests166 Post-Approval Requirements (US) - After BLA approval, products are subject to ongoing FDA regulation, including marketing and promotion standards, adverse event reporting, and cGMP compliance167168 - The FDA may require post-marketing testing (Phase 4), REMS, or surveillance, and can withdraw approvals or request recalls for non-compliance or newly discovered problems, leading to various sanctions168169173 U.S. Marketing Exclusivity - The BPCIA established an abbreviated approval pathway for biosimilar or interchangeable biological products170 - Reference biological products receive 12 years of data exclusivity from first licensure, preventing FDA from accepting biosimilar/interchangeable applications for four years, and market entry for 10 years171 Regulatory Approval in the European Union - The EMA coordinates the evaluation and monitoring of centrally authorized medicinal products in the EU, responsible for scientific evaluation of marketing authorization applications172 - The EU approval process involves preclinical tests, submission of a Clinical Trial Application (CTA), well-controlled clinical trials, and submission of a Marketing Authorization Application (MAA)174183 Preclinical Studies (EU) - Preclinical tests in the EU involve laboratory evaluations of product chemistry, formulation, stability, and animal toxicity studies, complying with international, EU, and national regulations176 Clinical Trials (EU) - Clinical trials in the EU are governed by the Clinical Trials Regulation (CTR), which harmonizes authorizations, simplifies adverse-event reporting, and increases transparency through a single-entry EU portal (CTIS)177178 - The CTR introduced a streamlined application procedure and a harmonized assessment process, with a three-year transition period ending January 31, 2025, after which all trials are subject to its provisions178179 Review and Approval (EU) - Medicinal products in the EU require a Marketing Authorization (MA), obtainable through a centralized procedure administered by the EMA or national procedures180 - The centralized procedure, compulsory for specific products like biotechnological or orphan medicinal products, grants a single MA valid across the European Economic Area (EEA) based on the CHMP's opinion and European Commission's decision181182184 Validity of Marketing Authorizations (EU) - An MA typically has an initial validity of five years, renewable based on a re-evaluation of the risk-benefit balance. After definitive renewal, it can be valid for an unlimited period186 - A 'sunset clause' dictates that an authorization not followed by actual placing of the product on the EU market within three years will cease to be valid186 Manufacturing Regulation in the EU - Manufacturing and importing medicinal products in the EU require specific authorizations and compliance with EU cGMP standards and distribution regulations187 - Non-compliance can lead to civil, criminal, or administrative sanctions, including suspension of manufacturing authorization187 Data and Market Exclusivity (EU) - Innovative medicinal products in the EU generally receive eight years of data exclusivity and 10 years of market exclusivity, preventing generic/biosimilar referencing and commercialization188 - A special regime exists for biosimilars, requiring appropriate preclinical or clinical trial results to support marketing authorization applications189 Orphan Drug Designation (EU) - Orphan medicinal product designation in the EU is for products treating life-threatening or chronically debilitating conditions affecting not more than five in 10,000 persons, or where development costs are not justified by sales190191 - Designation provides incentives like fee reductions, protocol assistance, and 10 years of market exclusivity, which can be reduced to six years under certain conditions or if a similar, clinically superior product is approved193 Post-Authorization Requirements (EU) - MA holders in the EU must comply with regulatory requirements for manufacturing, marketing, promotion, and sale, including establishing a pharmacovigilance system and submitting periodic safety update reports (PSURs)194 - New MAAs require a risk management plan (RMP), and advertising/promotion must comply with EU and Member State laws, adhering to the product's Summary of Product Characteristics (SmPC)195196 European Data Collection and Processing - Processing of health-related and personal data in Europe is governed by the EU GDPR, imposing strict requirements on disclosures, consents, data security, breach notifications, and individual rights197 - Non-compliance with EU GDPR can lead to private litigation, processing prohibitions, and heavy fines, potentially increasing compliance costs and limiting activities in Europe198 Marketing (EU) - The EU prohibits benefits or advantages to healthcare professionals to induce product prescription, with interactions governed by national anti-bribery laws, sunshine rules, and industry codes199 - Payments to physicians in certain EU Member States must be publicly disclosed, and non-compliance can result in reputational risk, administrative penalties, fines, or imprisonment200 International Regulation - Foreign regulations govern clinical trials, commercial sales, and distribution of product candidates, with approval processes varying by country and potentially differing from FDA or European Commission timelines201 Other Healthcare Laws and Regulations and Legislative Reform - The Company's operations are subject to various U.S. federal and state healthcare fraud and abuse laws, including the Anti-Kickback Statute, False Claims Act, HIPAA, and Physician Payments Sunshine Act, which broadly regulate interactions with healthcare providers and third-party payors202205 - Violations of these laws can lead to significant civil, criminal, and administrative penalties, including fines, imprisonment, exclusion from government healthcare programs, and reputational harm204206 - Recent legislative reforms, such as the Affordable Care Act (ACA) and the Inflation Reduction Act of 2022 (IRA), have significantly impacted healthcare financing and drug pricing, including Medicare drug price negotiation and rebates for price increases208209211 - The U.S. Supreme Court's decision in Loper Bright Enterprises v. Raimondo, overturning the Chevron doctrine, could lead to increased regulatory uncertainty and legal challenges to federal agency regulations, including those from the FDA213 Pharmaceutical Coverage, Pricing and Reimbursement - Sales of product candidates depend on coverage and adequate reimbursement by governmental and private third-party payors, which is a time-consuming and costly process requiring scientific, clinical, and cost-effectiveness data215216 - Coverage and reimbursement decisions in the U.S. are often influenced by CMS, while in Europe, pricing and reimbursement schemes vary widely by country, potentially involving pricing negotiations and Health Technology Assessments (HTA)219220 - Downward pressure on healthcare costs globally, including increased discounts and reference pricing, creates higher barriers to entry for new products and could negatively impact the Company's revenues and profitability221222 Restructuring Plan (MD&A) - On May 5, 2025, the Company approved a Restructuring Plan to wind down existing clinical and manufacturing operations and reduce its workforce by approximately 99% (154 full-time employees)223 - Restructuring costs incurred during the three and six months ended June 30, 2025, totaled $30.7 million, including severance, stock-based compensation modifications, and asset disposals/accelerated depreciation224 - The Company incurred net losses of $1,573.7 million and $1,606.2 million for the three and six months ended June 30, 2025, respectively, with an accumulated deficit of $2,063.1 million as of June 30, 2025225 - Existing cash, cash equivalents, and marketable securities of $200.6 million as of June 30, 2025, are expected to fund operating expenses and capital expenditure requirements into the first quarter of 2027226 Critical Accounting Estimates - The preparation of financial statements requires management to make judgments and estimates affecting reported amounts, particularly for accrued R&D expenses, stock-based compensation, and fair value of financial instruments227 - In connection with the restructuring, certain estimates related to accrued research and development have been revised, but no other material changes to critical accounting estimates were reported from the 2024 Annual Report227 Financial Operations Overview - The Company has not generated any revenue since inception and does not expect to generate product sales revenue in the near future, if at all, relying on potential future product sales or collaboration/license agreements228 - Research and development expenses, expensed as incurred, consist of external costs (CROs, consultants, supplies, manufacturing, licensing payments) and internal costs (personnel, facilities, depreciation). These expenses are expected to increase significantly as product candidates advance229230231233 - General and administrative expenses primarily include personnel costs, professional services (legal, audit), facility-related expenses, and are expected to increase with business expansion237238 - Other income (expense) includes interest income on cash and marketable securities, and changes in the fair value of liability-classified warrant liabilities239240 Results of Operations Summary of Results of Operations (in thousands) | Item | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Change (2025 vs 2024) | | :------------------------------------------ | :------------------------------- | :------------------------------- | :-------------------- | | Research and development | $261,499 | $21,823 | $239,676 | | General and administrative | $12,785 | $7,212 | $5,573 | | Total operating expenses | $274,284 | $29,035 | $245,249 | | Loss from operations | $(274,284) | $(29,035) | $(245,249) | | Interest income | $537 | $1,196 | $(659) | | Change in fair value of warrant liabilities | $(1,299,922) | — | $(1,299,922) | | Net loss | $(1,573,669) | $(27,839) | $(1,545,830) | | Item | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | Change (2025 vs 2024) | | :------------------------------------------ | :----------------------------- | :----------------------------- | :-------------------- | | Research and development | $288,200 | $46,145 | $242,055 | | General and administrative | $19,375 | $15,216 | $4,159 | | Total operating expenses | $307,575 | $61,361 | $246,214 | | Loss from operations | $(307,575) | $(61,361) | $(246,214) | | Interest income | $1,342 | $2,718 | $(1,376) | | Change in fair value of warrant liabilities | $(1,299,922) | — | $(1,299,922) | | Net loss | $(1,606,155) | $(58,643) | $(1,547,512) | - Research and development expenses increased by $239.7 million for the three months and $242.1 million for the six months ended June 30, 2025, primarily due to the $222.6 million upfront consideration for the Telitacicept License Agreement, $3.3 million loss on asset disposal, and $11.2 million in accelerated depreciation/amortization242243 - General and administrative expenses increased by $5.6 million for the three months and $4.2 million for the six months ended June 30, 2025, mainly due to increased personnel costs from termination payments and higher facilities/other expenses from accelerated depreciation and asset disposals244245 - Other income (expense) decreased by $1,300.6 million for the three months and $1,301.3 million for the six months ended June 30, 2025, primarily due to the change in fair value of liability-classified warrant liabilities246 Liquidity and Capital Resources - Since inception, the Company has funded operations primarily through equity sales, raising approximately $691.5 million in net proceeds as of June 30, 2025247 - As of June 30, 2025, the Company had $200.6 million in cash, cash equivalents, and marketable securities, expected to fund operations into the first quarter of 2027250251 - Future expenses are expected to increase substantially with continued R&D, clinical trials, manufacturing, regulatory approvals, and commercialization efforts, necessitating additional funding through equity, debt, or collaborations252254 Cash Flows (in thousands) | Activity | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------------ | :----------------------------- | :----------------------------- | | Net cash used in operating activities | $(66,250) | $(52,312) | | Net cash provided by investing activities | $416 | $96,963 | | Net cash provided by financing activities | $174,459 | $65 | | Net increase in cash, cash equivalents and restricted cash equivalents | $108,625 | $44,716 | * Net cash used in operating activities increased by $14.0 million in 2025, driven by higher net loss partially offset by non-cash charges (warrant liabilities, in-process R&D acquisition)256257259 - Financing activities provided $174.5 million in 2025, primarily from $175.0 million in proceeds from pre-funded warrants, compared to $0.1 million in 2024261 - Contractual obligations include ongoing payments under license and collaboration agreements, such as the Telitacicept License Agreement, which require payments upon achievement of milestones and royalties on sales263 Item 3. Quantitative and Qualitative Disclosures About Market Risk As a smaller reporting company, the registrant is not required to provide quantitative and qualitative disclosures about market risk - The Company is a smaller reporting company and is not required to provide quantitative and qualitative disclosures about market risk267 Item 4. Controls and Procedures This section details the management's evaluation of the effectiveness of the Company's disclosure controls and procedures and reports on any changes in internal control over financial reporting - Management, with CEO and CFO participation, concluded that the Company's disclosure controls and procedures were effective at the reasonable assurance level as of June 30, 2025268269 - There were no changes in internal control over financial reporting during the quarter ended June 30, 2025, that materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting270 PART II. OTHER INFORMATION This section includes information on legal proceedings, risk factors, other disclosures, exhibits, and required signatures Item 1. Legal Proceedings This section states that the Company is not currently involved in any material legal proceedings - The Company is not currently a party to any material legal proceedings273 Item 1A. Risk Factors This section outlines various risks that could materially affect the Company's business, financial condition, results of operations, cash flows, and access to liquidity, categorized by financial position, development, regulatory, third-party relationships, intellectual property, legal compliance, employee matters, and common stock ownership Risks Related to Our Financial Position and Need for Additional Capital - The Company has incurred significant net losses since inception ($1,606.2 million for the six months ended June 30, 2025) and expects to continue incurring losses, potentially never achieving or maintaining profitability275276 - Substantial additional funding will be needed to support ongoing operations and growth strategy, and inability to raise capital on acceptable terms could force delays or elimination of R&D programs or commercialization efforts277278282 - Raising additional capital through equity or convertible debt securities, including warrants (e.g., 2024 and 2025 Warrants), will cause significant dilution to existing stockholders283284 - The Company has a limited operating history and no history of commercializing products, making it difficult to evaluate future viability and success286287 - The ability to utilize net operating loss carryforwards (federal $243.9 million, state $234.7 million as of Dec 31, 2024) may be limited by ownership changes under Section 382 of the Internal Revenue Code, potentially increasing future tax obligations292 Risks Related to Discovery, Development, Manufacturing and Commercialization - The Company is substantially dependent on the success of its lead product candidate, telitacicept, and failure to complete its development, obtain approval, or commercialize it in a timely manner would harm the business293295 - Reliance on clinical trial data from RemeGen in China for telitacicept carries risks, as access to data may be limited, and there's no assurance the FDA or other regulatory authorities will accept or consider such data296298 - Clinical trials may fail to demonstrate safety and efficacy, or serious adverse effects may be identified, leading to increased costs, abandonment of development, or limitations on use300301303 - Interim, topline, or preliminary clinical trial data may change upon full analysis, and discrepancies could harm reputation and business prospects302304306 - The Company's limited resources may be expended on less profitable or successful product candidates or indications, leading to missed opportunities307 - Even if approved, product candidates may fail to achieve sufficient market acceptance by physicians, patients, and payors due to factors like efficacy, safety, pricing, or competition308309 - Failure to establish internal sales and marketing capabilities or secure third-party agreements could hinder commercialization efforts310312 - The Company faces significant competition from major pharmaceutical and biotechnology companies, with competitors potentially achieving regulatory approval faster or developing superior therapies313317318320 - Negative developments in protein-based therapies, especially fusion proteins like telitacicept, could damage public perception and adversely affect the business322323 - Product liability lawsuits could result in substantial liabilities, requiring commercialization limits or significant monetary awards, and insurance coverage may be inadequate324325 - Manufacturing fusion proteins is complex and difficult; problems could lead to delays in development or commercialization, and reliance on third-party CMOs increases risks of insufficient quantities, quality, or regulatory non-compliance326327328330 - Failure to comply with environmental, health, and safety laws by the Company or its contractors could result in fines, penalties, or costs, materially affecting business success331332333334 - Success in preclinical studies or early clinical trials, including those by RemeGen, may not be indicative of results in future clinical trials, especially with small patient numbers, potentially leading to abandonment of product candidates335 Risks Related to Regulatory Review - Clinical trials may fail to demonstrate safety and efficacy to regulatory authorities' satisfaction, leading to additional costs, delays, or inability to complete development and commercialization336337338 - Numerous unforeseen events during clinical trials, such as regulatory delays, enrollment difficulties, negative results, or third-party contractor failures, could delay or prevent marketing approval339340 - Even with successful clinical trials, obtaining timely regulatory approval for telitacicept or other product candidates in the U.S. or other jurisdictions is uncertain, and approvals may be for narrower indications or subject to significant limitations342343 - Marketing approval in one country does not guarantee approval in others, and seeking foreign regulatory approval involves additional costs, testing, and risks, potentially reducing the target market344 - Significant delays or difficulties in patient enrollment or retention in clinical trials could increase development costs and delay or prevent necessary regulatory approvals346347 Risks Related to Our Relationships with Third Parties - Reliance on third parties (CROs, data management, investigators) for research, preclinical testing, and clinical trials reduces control over these activities and may lead to unsatisfactory performance, delays, or non-compliance with regulatory requirements348349352353 - Dependence on third-party manufacturers for materials and product candidates increases the risk of insufficient quantities, quality, or acceptable cost, potentially delaying or impairing development and commercialization efforts356357360361362363 - Collaborations with third parties for R&D and commercialization of product candidates may not be successful, as collaborators may not dedicate sufficient resources, delay trials, or abandon programs, impacting revenue generation364365366 - Inability to establish collaborations on commercially reasonable terms could force alterations to development and commercialization plans, requiring increased expenditures or delays368369371373 Risks Related to Our Intellectual Property - High dependence on intellectual property licensed from third parties, particularly the Telitacicept License Agreement with RemeGen, means termination or invalidation of these licenses could result in loss of significant rights and harm commercialization ability374375376381 - Commercial success relies on obtaining, maintaining, and protecting intellectual property through patents, trademarks, and trade secrets; inadequate protection could allow competitors to erode competitive advantage382383 - Patent protection may be insufficient or challenged, as patents may not provide meaningful protection, be circumvented, or be invalidated due to procedural defects, prior art, or legal challenges387388392394 - Failure to protect the confidentiality of trade secrets could harm business and competitive position, as unauthorized disclosure or independent discovery by competitors could occur despite protective measures396397398 - Inability to acquire or in-license necessary rights to key technologies from third parties on acceptable terms could force abandonment of relevant programs or product candidates399401402 - Third-party claims of intellectual property infringement, misappropriation, or other violations could prevent or delay product development, leading to substantial damages, injunctions, or costly litigation403405406407 - Compliance with procedural, document submission, and fee payment requirements for patents is critical; non-compliance can lead to abandonment or lapse of patent rights408 - Intellectual property licensed from government-funded programs may be subject to federal regulations like 'march-in' rights and U.S.-based manufacturing preferences, limiting exclusive rights and manufacturing options409410411 - Lawsuits to protect or enforce patents or other intellectual property can be expensive, time-consuming, and unsuccessful, potentially resulting in invalidation of patents or limited enforcement ability412413 - Changes to patent law in the U.S. and other jurisdictions, including recent Supreme Court rulings, could diminish the value of patents and weaken the ability to protect product candidates414 - Inability to protect intellectual property rights globally, due to varying laws and enforcement challenges, could allow competitors to use technologies in other jurisdictions and export infringing products415416417418 - Patent terms may be inadequate to protect competitive position for a sufficient time, as patents might expire before or shortly after commercialization, leading to competition from generics419 - Failure to obtain patent term extension and data exclusivity for product candidates could shorten the period of exclusive rights, allowing competitors to market sooner and reducing revenue420 - Claims that employees or consultants have wrongfully used or disclosed confidential information or misappropriated trade secrets could lead to litigation, loss of intellectual property, or personnel[421](index=4