Annexon(ANNX) - 2025 Q2 - Quarterly Report

PART I—FINANCIAL INFORMATION Item 1. Financial Statements (Unaudited) Presents Annexon, Inc.'s unaudited condensed consolidated financial statements, covering balance sheets, operations, equity, cash flows, and notes Condensed Consolidated Balance Sheets | (in thousands) | June 30, 2025 (Unaudited) | December 31, 2024 | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $132,288 | $49,498 | | Short-term investments | 94,729 | 262,519 | | Total current assets | 230,620 | 316,461 | | Total assets | $264,573 | $350,071 | | Liabilities and Stockholders' Equity | | | | Accounts payable | $11,515 | $10,426 | | Accrued and other current liabilities | 26,411 | 17,568 | | Total current liabilities | 40,642 | 30,512 | | Total liabilities | 65,556 | 56,966 | | Total stockholders' equity | 199,017 | 293,105 | | Total liabilities and stockholders' equity | $264,573 | $350,071 | Condensed Consolidated Statements of Operations | (in thousands, except share and per share amounts) | 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 | $44,160 | $25,026 | $92,339 | $45,989 | | General and administrative | 7,566 | 8,554 | 16,792 | 16,163 | | Total operating expenses | 51,726 | 33,580 | 109,131 | 62,152 | | Loss from operations | (51,726) | (33,580) | (109,131) | (62,152) | | Interest and other income, net | 2,570 | 3,970 | 5,619 | 7,366 | | Net loss | (49,156) | (29,610) | (103,512) | (54,786) | | Net loss attributable to common stockholders | $(51,013) | $(29,610) | $(105,369) | $(54,786) | | Net loss per share, basic and diluted | $(0.34) | $(0.23) | $(0.71) | $(0.43) | | Weighted-average shares used in computing net loss per share, basic and diluted | 148,320,803 | 130,132,960 | 148,215,392 | 126,403,081 | Condensed Consolidated Statements of Comprehensive Loss | (in thousands) | 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 | $(49,156) | $(29,610) | $(103,512) | $(54,786) | | Other comprehensive income (loss): | | | | | | Foreign currency translation adjustment | 2 | 1 | 2 | (11) | | Unrealized (loss) income on available-for-sale securities | (4) | 12 | (105) | (26) | | Comprehensive loss | $(49,158) | $(29,597) | $(103,615) | $(54,823) | Condensed Consolidated Statements of Stockholders' Equity | (in thousands, except share amounts) | Common Stock Shares | Common Stock Cost | Additional Paid-In Capital | Accumulated Other Comprehensive Income (Loss) | Accumulated Deficit | Total Stockholders' Equity | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Balances as of December 31, 2024 | 109,381,556 | $109 | $1,003,685 | $10 | $(710,699) | $293,105 | | Exercise of stock options | 43,113 | — | 62 | — | — | 62 | | Restricted stock vested in the period | 289,735 | — | — | — | — | — | | Stock-based compensation | — | — | 5,078 | — | — | 5,078 | | Other comprehensive loss | — | — | — | (101) | — | (101) | | Net loss | — | — | — | — | (54,356) | (54,356) | | Balances as of March 31, 2025 | 109,714,404 | 109 | 1,008,825 | (91) | (765,055) | 243,788 | | Issuance of common stock per Employee Stock Purchase Plan purchase | 117,743 | 1 | 181 | — | — | 182 | | Stock-based compensation | — | — | 4,205 | — | — | 4,205 | | Other comprehensive loss | — | — | — | (2) | — | (2) | | Net loss | — | — | — | — | (49,156) | (49,156) | | Balances as of June 30, 2025 | 109,832,147 | $110 | $1,013,211 | $(93) | $(814,211) | $199,017 | | (in thousands, except share amounts) | Common Stock Shares | Common Stock Cost | Additional Paid-In Capital | Accumulated Other Comprehensive Loss | Accumulated Deficit | Total Stockholders' Equity | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Balances as of December 31, 2023 | 78,369,099 | $78 | $823,029 | $(52) | $(572,499) | $250,556 | | Exercise of stock options | 105,526 | — | 217 | — | — | 217 | | Issuance of common stock, net of issuance costs of $933 | 6,639,348 | 7 | 32,191 | — | — | 32,198 | | Exercise of pre-funded warrants | 5,243,400 | 5 | (5) | — | — | — | | Restricted stock vested in the period | 124,695 | — | — | — | — | — | | Stock-based compensation | — | — | 4,660 | — | — | 4,660 | | Other comprehensive loss | — | — | — | (50) | — | (50) | | Net loss | — | — | — | — | (25,176) | (25,176) | | Balances as of March 31, 2024 | 90,482,068 | 90 | 860,092 | (102) | (597,675) | 262,405 | | Exercise of stock options | 35,914 | — | 171 | — | — | 171 | | Issuance of common stock per Employee Stock Purchase Plan purchase | 98,534 | 1 | 214 | — | — | 215 | | Issuance of common stock, net of issuance costs of $480 | 936,719 | 1 | 6,125 | — | — | 6,126 | | Issuance of common stock and pre-funded warrants, net of issuance costs of $8,183 | 13,001,120 | 13 | 116,804 | — | — | 116,817 | | Exercise of pre-funded warrants | 965,427 | 1 | (1) | — | — | — | | Exercise of common warrants | 19,901 | — | — | — | — | — | | Stock-based compensation | — | — | 4,942 | — | — | 4,942 | | Other comprehensive income | — | — | — | 13 | — | 13 | | Net loss | — | — | — | — | (29,610) | (29,610) | | Balances as of June 30, 2024 | 105,539,683 | $106 | $988,347 | $(89) | $(627,285) | $361,079 | Condensed Consolidated Statements of Cash Flows | (in thousands) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Net cash used in operating activities | $(88,126) | $(49,976) | | Net cash provided by (used in) investing activities | 170,702 | (173,883) | | Net cash provided by financing activities | 212 | 156,064 | | Increase (decrease) in cash, cash equivalents and restricted cash | 82,788 | (67,795) | | Cash, cash equivalents and restricted cash, Beginning of period | 50,530 | 226,142 | | Cash, cash equivalents and restricted cash, End of period | $133,320 | $158,336 | Notes to Condensed Consolidated Financial Statements Provides detailed explanations for Annexon, Inc.'s financial statements, covering organization, policies, fair value, and equity 1. Organization Details Annexon, Inc.'s biopharmaceutical focus, incorporation, and significant accumulated deficit with projected funding - Annexon, Inc. is a biopharmaceutical company focused on developing novel therapies for classical complement-mediated neuroinflammatory diseases, incorporated in Delaware in March 2011, with a wholly-owned subsidiary in Australia[28] - The company has incurred significant losses and negative cash flows from operations since inception, with an accumulated deficit of $814.2 million as of June 30, 2025. Existing cash and investments are projected to fund operations for at least twelve months from the financial statements' issuance date[29][30] 2. Basis of Presentation and Significant Accounting Policies Outlines financial statement preparation, management estimates, and recent accounting pronouncement adoptions and evaluations - The unaudited condensed consolidated financial statements are prepared in accordance with GAAP and SEC rules for interim reporting, reflecting normal recurring adjustments. Results for interim periods are not indicative of full-year results[31][32] - Management makes estimates and assumptions affecting reported amounts, including fair value of investments, borrowing rates, deferred tax assets, clinical trial accruals, and stock-based compensation. No significant changes to accounting policies were made from the 2024 Form 10-K[33][35][37] - The company adopted ASU 2023-07 (Segment Reporting) on January 1, 2024 (annual) and 2025 (interim), which did not materially impact financial statements. It is evaluating ASU 2023-09 (Income Tax Disclosures) and ASU 2024-03 (Expense Disaggregation Disclosures) for future impact[38][39][40] 3. Fair Value Measurements Describes the fair value hierarchy for financial assets and liabilities, primarily cash equivalents and short-term investments - The company uses a fair value hierarchy (Level 1, 2, 3) to categorize inputs for financial asset and liability measurements, prioritizing observable inputs[41] - Fair Value Measurements (in thousands) | (in thousands) | Valuation Hierarchy | Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Aggregate Fair Value | | :--- | :--- | :--- | :--- | :--- | :--- | | June 30, 2025 | | | | | | | Cash equivalents: | | | | | | | Money market funds | Level 1 | $27,102 | $— | $— | $27,102 | | Government bonds | Level 2 | 96,620 | — | — | 96,620 | | Total cash equivalents | | 123,722 | — | — | 123,722 | | Short-term investments: | | | | | | | Government bonds | Level 2 | 94,738 | 2 | (11) | 94,729 | | Total short-term investments | | 94,738 | 2 | (11) | 94,729 | | December 31, 2024 | | | | | | | Cash equivalents: | | | | | | | Money market funds | Level 1 | $31,680 | $— | $— | $31,680 | | Government bonds | Level 2 | 15,167 | — | — | 15,167 | | Total cash equivalents | | 46,847 | — | — | 46,847 | | Short-term investments: | | | | | | | Government bonds | Level 2 | 262,424 | 98 | (3) | 262,519 | | Total short-term investments | | 262,424 | 98 | (3) | 262,519 | - All investments as of June 30, 2025, had original maturities of less than two years and are scheduled to mature within 12 months. No material realized gains or losses on financial instruments were recognized for the three and six months ended June 30, 2025 and 2024[43][44] 4. Balance Sheet Components Details components of cash, prepaid expenses, property and equipment, and accrued liabilities on the balance sheet - Cash equivalents include highly liquid instruments with original maturities of three months or less, stated at fair value. Restricted cash relates to letters of credit for office leases[45][46] - Cash, Cash Equivalents and Restricted Cash (in thousands) | (in thousands) | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Cash | $8,566 | $2,651 | | Cash equivalents | 123,722 | 46,847 | | Cash and cash equivalents | 132,288 | 49,498 | | Restricted cash | 1,032 | 1,032 | | Cash, cash equivalents and restricted cash | $133,320 | $50,530 | - Prepaid Expenses and Other Current Assets (in thousands) | (in thousands) | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Prepaid research and development costs | $2,233 | $2,640 | | Prepaid insurance | 187 | 700 | | Prepaid and other current assets | 1,183 | 1,104 | | Total prepaid expenses and other current assets | $3,603 | $4,444 | - Property and Equipment, Net (in thousands) | (in thousands) | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Leasehold improvements | $17,254 | $17,254 | | Laboratory equipment | 1,871 | 1,838 | | Furniture and fixtures | 730 | 692 | | Computer equipment and software | 39 | 33 | | Construction in progress | 12 | — | | Total property and equipment, gross | 19,906 | 19,817 | | Less: accumulated depreciation | (8,256) | (7,179) | | Total property and equipment, net | $11,650 | $12,638 | - Accrued and Other Current Liabilities (in thousands) | (in thousands) | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Accrued research and development expenses | $21,683 | $10,992 | | Accrued compensation | 4,201 | 5,833 | | Accrued professional services | 395 | 602 | | Other accrued and current liabilities | 132 | 141 | | Total accrued and other current liabilities | $26,411 | $17,568 | 5. Commitments and Contingencies Covers operating lease obligations and general indemnification provisions, with no material claims recorded - The company leases its offices and laboratory in Brisbane, California, under a noncancelable lease agreement ending in October 2031. As of June 30, 2025, operating lease right-of-use assets were $16.0 million and lease liabilities were $27.6 million, with a weighted-average remaining lease term of 6.3 years and an incremental borrowing rate of 8.4%[53][54] - Future Minimum Lease Payments (in thousands) | (in thousands) | Amount | | :--- | :--- | | 2025 (remaining six months) | $2,547 | | 2026 | 5,242 | | 2027 | 5,425 | | 2028 | 5,615 | | 2029 and thereafter | 16,985 | | Total undiscounted lease payments | 35,814 | | Less: Imputed interest | (8,184) | | Total lease liabilities | $27,630 | - The company enters into agreements with general indemnification provisions but has not recorded related liabilities as of June 30, 2025, as no material claims were probable or reasonably possible[56] 6. Stockholders' Equity Details equity financing activities, including common stock, pre-funded warrants, and common warrant modifications - In June 2024, the company raised $116.8 million net proceeds from selling common stock and pre-funded warrants. In December 2023, it raised $117.0 million net proceeds from common stock and pre-funded warrants, with some warrants exercised in early 2024[57][58][60] - In July 2022, the company raised $122.5 million net proceeds from common stock, pre-funded warrants, and common warrants. In June 2025, common warrants for 6,877,622 shares were amended to extend their term by one year and remove the cashless exercise option, potentially yielding $39.9 million if fully exercised for cash. A deemed dividend of $1.9 million was recognized due to this modification[61][62][63] - Warrant Activity | | Number of Common Warrants | Number of Pre-funded Warrants | Weighted-Average Exercise Price | | :--- | :--- | :--- | :--- | | Balances as of December 31, 2024 | 8,104,615 | 38,543,577 | | | Issued | — | — | $— | | Exercised | — | — | $— | | Balances as of June 30, 2025 | 8,104,615 | 38,543,577 | | | Balances as of December 31, 2023 | 8,427,508 | 40,492,923 | | | Issued | — | 7,000,000 | $0.001 | | Exercised | (322,893) | (6,209,871) | $0.307 | | Balances as of June 30, 2024 | 8,104,615 | 41,283,052 | | 7. Equity Incentive Plans Describes the 2020 Incentive Award Plan, ESPP, and Inducement Plan, along with stock option and RSU activity - The company operates under the 2020 Incentive Award Plan (2020 Plan) and the Employee Stock Purchase Plan (ESPP), both adopted in July 2020. The 2020 Plan automatically increases reserved shares annually by 4% of outstanding capital stock, with 656,488 shares available as of June 30, 2025[69][70][71] - The 2022 Employment Inducement Award Plan (Inducement Plan) was adopted without stockholder approval to grant awards to newly hired employees, with 2,746,483 shares available as of June 30, 2025[72][74] - Stock Option Activity | Stock Option Activity | Number of Shares | Weighted-Average Exercise Price Per Share | Weighted Average Remaining Contractual Term (in years) | Aggregate Intrinsic Value (in thousands) | | :--- | :--- | :--- | :--- | :--- | | Balances as of December 31, 2024 | 14,594,720 | $8.29 | 7.94 | $4 | | Stock options granted | 6,159,513 | $2.55 | | | | Stock options exercised | (43,113) | $1.44 | | | | Stock options forfeited | (690,940) | $6.52 | | | | Balances as of June 30, 2025 | 20,020,180 | $6.60 | 8.08 | $286 | | Vested and Exercisable as of June 30, 2025 | 8,373,556 | $9.99 | 6.50 | $42 | - Total unrecognized stock-based compensation cost for unvested stock options was $34.6 million as of June 30, 2025, to be recognized over an estimated weighted-average period of 3.0 years. The weighted-average grant date fair value of options granted was $1.97 per share for Q2 2025 and $4.17 for Q2 2024[76] - RSU Activity | RSU Activity | Number of Shares | Weighted-Average Grant Date Fair Value Per Share | | :--- | :--- | :--- | | Unvested as of December 31, 2024 | 770,028 | $5.28 | | Granted | 1,072,921 | $2.50 | | Vested | (289,735) | $5.62 | | Cancelled | (100,215) | $3.11 | | Unvested as of June 30, 2025 | 1,452,999 | $3.31 | - Unrecognized stock-based compensation expense for unvested RSUs was $3.9 million as of June 30, 2025, to be recognized over a weighted-average period of 2.2 years[78] - The ESPP allows eligible employees to purchase common stock at a discount, with 2,959,996 shares available for future purchase as of June 30, 2025. Stock-based compensation expense related to the ESPP was $40,000 for Q2 2025 and $41,000 for Q2 2024[81][82] - Stock-Based Compensation Expense (in thousands) | (in thousands) | 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 | $2,688 | $2,311 | $5,517 | $4,593 | | General and administrative | 1,517 | 2,631 | 3,766 | 5,009 | | Total stock-based compensation expense | $4,205 | $4,942 | $9,283 | $9,602 | - Black-Scholes Assumptions | Black-Scholes Assumptions | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Expected term (in years) | 5.50 - 6.08 | 6.08 | 5.50 - 6.08 | 6.02 - 6.08 | | Expected volatility | 93.70% - 93.80% | 96.20% - 97.80% | 92.30% - 93.80% | 95.90% - 97.80% | | Risk-free interest rate | 4.03% - 4.15% | 4.22% - 4.65% | 4.03% - 4.49% | 4.22% - 4.65% | | Dividend yield | — | — | — | — | 8. Net Loss Per Share Explains basic and diluted net loss per share calculation, noting anti-dilutive securities due to net losses - Basic net loss per share is calculated by dividing net loss by the weighted-average common stock outstanding, including pre-funded warrants. Diluted net loss per share is the same as basic due to net losses, making potentially dilutive securities anti-dilutive[90] - Potentially Dilutive Shares Excluded from Diluted Net Loss Per Share Calculation | Potentially Dilutive Shares Excluded | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Stock options to purchase common stock | 20,020,180 | 11,937,414 | 20,020,180 | 11,937,414 | | Shares subject to Employee Stock Purchase Plan | 58,184 | 7,850 | 58,184 | 7,850 | | Unvested restricted stock units | 1,452,999 | 867,298 | 1,452,999 | 867,298 | | Common warrants | 8,104,615 | 8,104,615 | 8,104,615 | 8,104,615 | | Total | 29,635,978 | 20,917,177 | 29,635,978 | 20,917,177 | 9. Segment Reporting Identifies the company's single reportable segment focused on R&D for complement-mediated diseases - The company operates as a single reportable segment focused on research and development of product candidates for complement-mediated diseases. The chief operating decision maker (CODM) assesses financial performance and allocates resources based on total operating expenses and consolidated net loss[92][93] - Consolidated Segment Net Loss (in thousands) | (in thousands) | 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 - external expenses | $31,278 | $15,678 | $65,776 | $27,369 | | Research and development - personnel | 8,376 | 5,479 | 17,422 | 11,103 | | General and administrative - personnel | 2,153 | 1,561 | 4,493 | 3,057 | | Other general and administrative expenses | 5,174 | 5,383 | 11,080 | 9,946 | | Depreciation expense | 540 | 537 | 1,077 | 1,075 | | Stock-based compensation | 4,205 | 4,942 | 9,283 | 9,602 | | Total operating expense | 51,726 | 33,580 | 109,131 | 62,152 | | Loss from operations | (51,726) | (33,580) | (109,131) | (62,152) | | Interest and other income, net | 2,570 | 3,970 | 5,619 | 7,366 | | Consolidated segment net loss | $(49,156) | $(29,610) | $(103,512) | $(54,786) | Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management's discussion of financial condition, operational results, liquidity, capital resources, and critical accounting policies Overview Summarizes Annexon's biopharmaceutical focus, pipeline progress, and financial position with accumulated losses - Annexon is a biopharmaceutical company developing novel therapies for classical complement-mediated neuroinflammatory diseases by targeting C1q. The company aims to suppress excessive complement activity to halt disease progression while preserving beneficial immune functions[100][101] - Key pipeline programs include tanruprubart for Guillain-Barré Syndrome (GBS), vonaprument for Geographic Atrophy (GA), and ANX1502 for autoimmune indications. Tanruprubart has shown rapid functional improvements in Phase 3 GBS trials, with an MAA submission in Europe expected in Q1 2026. Vonaprument, a neuroprotective inhibitor for dry AMD with GA, completed enrollment for its global Phase 3 ARCHER II trial in July 2025, with topline data expected in H2 2026. ANX1502, an oral small molecule for autoimmune indications, is in a POC study for cold agglutinin disease (CAD), with an update planned by end of 2025[101][106] - The company has incurred net losses since inception, totaling $49.2 million for Q2 2025 and $103.5 million for H1 2025. As of June 30, 2025, the accumulated deficit was $814.2 million, with cash and short-term investments of $227.0 million[102] Components of Operating Results Details the components of research and development and general and administrative expenses, and their expected trends Revenue States the company has not generated product sales revenue and does not expect to in the foreseeable future - The company has not generated any revenue from product sales as its product candidates are not yet approved for commercial sale and does not expect to do so in the foreseeable future[103] Operating Expenses Details the components of research and development and general and administrative expenses, and their expected trends Research and Development Describes R&D expenses, including direct and indirect costs, with expectations for future increases due to pipeline advancement - Research and development (R&D) expenses are a significant portion of operating expenses, comprising direct costs (preclinical/clinical services, contract manufacturing, laboratory supplies) and indirect costs (compensation, facilities, other indirect costs)[104][105][113] - Future R&D expenses are expected to increase due to regulatory pursuits, late-stage clinical trials, commercialization preparations (including manufacturing), and increased personnel[108] General and Administrative Outlines G&A expenses, including compensation and professional fees, with expected increases to support growth - General and administrative (G&A) expenses primarily include compensation, professional fees (accounting, legal, tax), allocated facilities costs, and other administrative expenses[109] - G&A expenses are expected to increase to support R&D, business growth, late-stage clinical trials, regulatory approval, commercialization, and public company operations[110] Interest and Other Income, Net Primarily consists of interest earned on cash equivalents and short-term investments - Interest and other income, net, primarily consists of interest earned on cash equivalents and short-term investments[111] Results of Operations Compares financial performance for the three and six months ended June 30, 2025 and 2024, across key operating metrics Comparison of the Three Months Ended June 30, 2025 and 2024 Compares financial results for Q2 2025 and Q2 2024, highlighting changes in operating expenses and net loss - Operating Results (in thousands) | (in thousands) | June 30, 2025 | June 30, 2024 | Dollar Change | % Change | | :--- | :--- | :--- | :--- | :--- | | Research and development | $44,160 | $25,026 | $19,134 | 76% | | General and administrative | 7,566 | 8,554 | (988) | (12%) | | Total operating expenses | 51,726 | 33,580 | 18,146 | 54% | | Loss from operations | (51,726) | (33,580) | (18,146) | 54% | | Interest and other income, net | 2,570 | 3,970 | (1,400) | (35%) | | Net loss | $(49,156) | $(29,610) | $(19,546) | 66% | - Research and Development Expenses (in thousands) | (in thousands) | June 30, 2025 | June 30, 2024 | Dollar Change | % Change | | :--- | :--- | :--- | :--- | :--- | | Clinical and nonclinical outside services | $16,519 | $7,905 | $8,614 | 109% | | Contract manufacturing | 6,896 | 2,970 | 3,926 | 132% | | Consulting and professional services | 6,925 | 3,835 | 3,090 | 81% | | Compensation and personnel-related | 11,669 | 8,158 | 3,511 | 43% | | Total research and development expenses | $44,160 | $25,026 | $19,134 | 76% | - General and Administrative Expenses (in thousands) | (in thousands) | June 30, 2025 | June 30, 2024 | Dollar Change | % Change | | :--- | :--- | :--- | :--- | :--- | | Compensation and personnel-related | $3,791 | $4,324 | $(533) | (12%) | | Consulting and professional services | 2,382 | 3,089 | (707) | (23%) | | Other | 778 | 504 | 274 | 54% | | Total general and administrative expenses | $7,566 | $8,554 | $(988) | (12%) | - Interest and other income, net, decreased by $1.4 million (35%) due to lower average cash and investment balances[116] Comparison of the Six Months Ended June 30, 2025 and 2024 Compares financial results for H1 2025 and H1 2024, detailing changes in operating expenses and net loss - Operating Results (in thousands) | (in thousands) | June 30, 2025 | June 30, 2024 | Dollar Change | % Change | | :--- | :--- | :--- | :--- | :--- | | Research and development | $92,339 | $45,989 | $46,350 | 101% | | General and administrative | 16,792 | 16,163 | 629 | 4% | | Total operating expenses | 109,131 | 62,152 | 46,979 | 76% | | Loss from operations | (109,131) | (62,152) | (46,979) | 76% | | Interest and other income, net | 5,619 | 7,366 | (1,747) | (24%) | | Net loss | $(103,512) | $(54,786) | $(48,726) | 89% | - Research and Development Expenses (in thousands) | (in thousands) | June 30, 2025 | June 30, 2024 | Dollar Change | % Change | | :--- | :--- | :--- | :--- | :--- | | Clinical and nonclinical outside services | $27,081 | $14,611 | $12,470 | 85% | | Contract manufacturing | 22,761 | 4,728 | 18,033 | >200% | | Consulting and professional services | 13,389 | 6,061 | 7,328 | 121% | | Compensation and personnel-related | 24,416 | 16,331 | 8,085 | 50% | | Total research and development expenses | $92,339 | $45,989 | $46,350 | 101% | - General and Administrative Expenses (in thousands) | (in thousands) | June 30, 2025 | June 30, 2024 | Dollar Change | % Change | | :--- | :--- | :--- | :--- | :--- | | Compensation and personnel-related | $8,536 | $8,285 | $251 | 3% | | Other | 1,347 | 924 | 423 | 46% | | Total general and administrative expenses | $16,792 | $16,163 | $629 | 4% | - Interest and other income, net, decreased by $1.7 million (24%) for the six months ended June 30, 2025, compared to the same period in 2024, primarily due to lower average cash and investment balances[122] Liquidity and Capital Resources Discusses historical funding, cash flows, future funding requirements, and various financing activities Sources of Liquidity Details historical funding through equity sales and current cash/investment balances against accumulated deficit - The company has historically funded operations through equity security sales, with $227.0 million in cash, cash equivalents, and short-term investments as of June 30, 2025, and an accumulated deficit of $814.2 million[123] Historical Cash Flows Analyzes cash flows from operating, investing, and financing activities for the six months ended June 30, 2025 and 2024 - Cash Flow Summary (in thousands) | (in thousands) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Net cash used in operating activities | $(88,126) | $(49,976) | | Net cash provided by (used in) investing activities | 170,702 | (173,883) | | Net cash provided by financing activities | 212 | 156,064 | | Increase (decrease) in cash, cash equivalents and restricted cash | $82,788 | $(67,795) | - Cash used in operating activities increased to $88.1 million in H1 2025 from $50.0 million in H1 2024, driven by higher net loss partially offset by non-cash charges and changes in operating assets/liabilities[125][126] - Cash provided by investing activities was $170.7 million in H1 2025, a significant shift from $173.9 million used in H1 2024, primarily due to proceeds from maturities of available-for-sale securities[127][128] - Cash provided by financing activities decreased substantially to $0.2 million in H1 2025 from $156.1 million in H1 2024, as 2024 included significant proceeds from common stock and warrant issuances[129][130] Funding Requirements Outlines the need for substantial additional financing to fund operations beyond Q4 2026 and potential risks of failure - The company expects existing cash and investments to fund operations into Q4 2026 but will require substantial additional financing for regulatory approval, late-stage clinical trials, commercialization, and increased personnel[131][132][134] - Future funding needs are dependent on factors such as the scope and cost of R&D, clinical trials, regulatory approvals, manufacturing, commercialization, and intellectual property costs. Failure to obtain funding could lead to delays or termination of programs[132][134][161][163] 2024 Financing Details the June 2024 financing, raising $116.8 million net proceeds from common stock and pre-funded warrants - In June 2024, the company raised approximately $116.8 million in net proceeds from the sale of 13,001,120 shares of common stock and pre-funded warrants for 7,000,000 shares[135] 2023 Financing Describes the December 2023 financing, raising $117.0 million net proceeds from common stock and pre-funded warrants - In December 2023, the company raised approximately $117.0 million in net proceeds from the sale of 25,035,000 shares of common stock and pre-funded warrants for 18,379,861 shares. Some pre-funded warrants were exercised in February and April 2024[136] 2022 Financing Details the July 2022 financing, raising $122.5 million net proceeds, and the June 2025 common warrant amendment - In July 2022, the company raised approximately $122.5 million in net proceeds from the sale of common stock, pre-funded warrants, and common warrants. Common warrants to purchase 6,877,622 shares were amended in June 2025 to extend their term and remove cashless exercise, potentially generating $39.9 million upon cash exercise[137][138] - A deemed dividend of $1.9 million was recognized in additional paid-in capital due to the modification of common warrants, with no net impact on stockholders' equity[139] Pre-Funded and Common Warrants Summarizes the activity and balances of common and pre-funded warrants as of June 30, 2025, and December 31, 2024 - Warrant Activity | | Number of Common Warrants | Number of Pre-funded Warrants | Weighted-Average Exercise Price | | :--- | :--- | :--- | :--- | | Balances as of December 31, 2024 | 8,104,615 | 38,543,577 | | | Issued | — | — | $— | | Exercised | — | — | $— | | Balances as of June 30, 2025 | 8,104,615 | 38,543,577 | | | Balances as of December 31, 2023 | 8,427,508 | 40,492,923 | | | Issued | — | 7,000,000 | $0.001 | | Exercised | (322,893) | (6,209,871) | $0.307 | | Balances as of June 30, 2024 | 8,104,615 | 41,283,052 | | 2024 At-the-Market (ATM) Program Describes the $100.0 million ATM program established in March 2024, with no sales made to date - In March 2024, the company established a $100.0 million ATM program with TD Cowen. No sales were made under this program during the six months ended June 30, 2024 and 2025, with approximately $95.4 million remaining available[142] 2021 At-the-Market (ATM) Program Details the expired 2021 ATM program, which generated $38.4 million in net proceeds during H1 2024 - The 2021 ATM program, which allowed for up to $100.0 million in common stock sales, expired on August 15, 2024. During the six months ended June 30, 2024, the company sold 7,576,067 shares for net proceeds of approximately $38.4 million[143] Critical Accounting Policies and Estimates Confirms reliance on U.S. GAAP, management estimates, and no material changes to policies in Q2 2025 - Management's discussion relies on condensed consolidated financial statements prepared in accordance with U.S. GAAP, requiring estimates and assumptions. No material changes to critical accounting policies or estimation methodologies occurred during Q2 2025[144][145] Recent Accounting Pronouncements Not Yet Adopted Refers to Note 2 for information on recent accounting pronouncements and their potential impact - Information on recent accounting pronouncements and their potential impact is detailed in Note 2 to the unaudited condensed consolidated financial statements[146] Item 3. Quantitative and Qualitative Disclosures About Market Risk States that there are no quantitative and qualitative disclosures about market risk applicable to the company - The company has no applicable quantitative and qualitative disclosures about market risk[147] Item 4. Controls and Procedures Details the evaluation of disclosure controls and procedures and confirms no material changes in internal control Evaluation of Disclosure Controls and Procedures Concludes that disclosure controls and procedures were effective as of June 30, 2025, ensuring timely reporting - Management, with CEO and CFO participation, concluded that disclosure controls and procedures were effective as of June 30, 2025, providing reasonable assurance that required information is recorded, processed, summarized, and reported timely[148] Changes in Internal Control over Financial Reporting Confirms no material changes in internal control over financial reporting during the quarter ended June 30, 2025 - No changes in internal control over financial reporting occurred during the quarter ended June 30, 2025, that materially affected, or are reasonably likely to materially affect, the company's internal control over financial reporting[149] PART II—OTHER INFORMATION Item 1. Legal Proceedings States the company is not currently involved in any material legal proceedings, but may encounter them ordinarily - The company is not currently party to any material legal proceedings but may become involved in various legal proceedings in the ordinary course of business[151] Item 1A. Risk Factors Outlines significant risks affecting the company's business, financial condition, and results of operations Risk Factor Summary Summarizes key risks related to limited operating history, financial needs, product development, and intellectual property - The company is a clinical-stage biopharmaceutical company with a limited operating history and no approved products, incurring significant losses and facing difficulty in assessing future viability - Substantial additional financing is required to achieve goals; failure to obtain it could delay, limit, reduce, or terminate product development and commercialization efforts - Business heavily depends on successful development, regulatory approval, and commercialization of product candidates, some in early clinical stages - Research and development of biopharmaceutical products is inherently risky; no assurance of regulatory approval for any product candidates - Potential for substantial delays in clinical trials or inability to complete them on expected timelines - Clinical trials for product candidates are conducted outside the U.S., and foreign regulatory data may not be accepted by the FDA or comparable authorities - Adverse events or undesirable side effects from product candidates could halt development, delay/prevent approval, limit commercial potential, or result in negative consequences - Reliance on third-party suppliers for manufacturing product candidates; loss or non-compliance of these suppliers would materially and adversely affect the business - Commercialization depends on adequate coverage, reimbursement, and pricing policies from governmental authorities and health insurers; failure to obtain these could limit marketability and revenue - Future collaboration arrangements may not be successful, impacting ability to develop and commercialize product candidates - Inability to obtain, maintain, and enforce intellectual property protection could allow competitors to make, use, or sell similar products - Stock price has been and could remain volatile, risking inability to resell shares at or above purchase price - Failure to comply with data protection laws could lead to enforcement actions, penalties, litigation, or adverse publicity - Actual or perceived failure to comply with applicable data protection laws, regulations, standards, contractual obligations and other requirements related to data privacy and security could lead to government enforcement actions and civil or criminal penalties, private litigation (including class actions) or adverse publicity and otherwise could negatively affect our results of operations and business[154][159] Risks Related to Our Limited Operating History, Financial Condition and Capital Requirements Details risks from limited operating history, significant losses, substantial financing needs, and resource prioritization - As a clinical-stage biopharmaceutical company with no approved products, Annexon has a limited operating history and has incurred significant net losses since inception ($49.2 million for Q2 2025, $103.5 million for H1 2025, and an accumulated deficit of $814.2 million as of June 30, 2025). The company expects to continue incurring losses, making future viability assessment difficult[155][156] - The company requires substantial additional financing beyond its $227.0 million in capital resources (as of June 30, 2025, expected to fund operations into Q4 2026) to complete product development and commercialization. Failure to secure funding on acceptable terms could force delays, reductions, or termination of programs, leading to dilution for stockholders or restrictive debt covenants[157][158][161][162][163] - Due to limited resources, the company must prioritize development of certain product candidates (e.g., tanruprubart in GBS, vonaprument in GA). Incorrect prioritization or inability to secure sufficient funding could lead to missed opportunities or program termination[165][166] - Conducting the global Phase 3 ARCHER II trial for vonaprument in dry AMD with GA is expensive and time-consuming. There is no assurance that the FDA and foreign regulatory authorities will accept the data as sufficient for approval, potentially requiring additional capital or delaying commercialization[167][168] - Quarterly and annual results of operations may fluctuate significantly due to factors like R&D costs, clinical trial timing, manufacturing costs, and competitive landscape, making future results difficult to predict and potentially causing stock price declines[169][170][171][174] Risks Related to Our Business Covers risks associated with product development, clinical trials, regulatory approvals, manufacturing, and competition - The company's success hinges on the successful development, regulatory approval, and commercialization of its product candidates, which is a highly uncertain and lengthy process. C1q inhibition is a novel therapeutic approach, carrying risks that product candidates may not be effective or that biomarker-driven approaches may not translate to therapeutic effectiveness[172][173][176] - Public health crises, like pandemics, can materially disrupt clinical trials, business, and financial results through delays in patient enrollment, site initiation, supply chains, and regulatory interactions[177][179][180][183] - Biopharmaceutical R&D is inherently risky; product candidates may fail preclinical/clinical trials, show harmful side effects, become obsolete due to competitors, or be unproducible at acceptable costs. Regulatory agencies may require additional trials or impose restrictions, delaying or preventing approval[181][182][186][187][190] - Delays in clinical trials can occur due to issues like patient enrollment, regulatory disagreements, investigator recruitment, IRB approvals, safety concerns, or product supply. For tanruprubart in GBS, ongoing dialogue with the FDA for a generalizability package may lead to delays or additional data requirements, impacting U.S. approval[191][192][195][199] - Difficulties in patient enrollment, driven by disease severity, eligibility criteria, competition from other trials, or availability of approved therapies, could delay clinical development and adversely affect the company's ability to advance product candidates[202][203] - Adverse events or unforeseen side effects from product candidates could halt clinical development, delay regulatory approval, limit commercial potential, or lead to significant negative consequences, including regulatory actions, product recalls, or liability claims[204][206][207][208] - Interim, 'top-line,' and preliminary data from studies are subject to change as more data become available and undergo audit, potentially differing materially from final results. Regulatory agencies or others may also interpret data differently, impacting program value or approvability[209][210][212] - Even with regulatory approval, product candidates may fail to achieve broad physician and patient adoption due to competitive factors, pricing, reimbursement issues, or physician/patient preferences, adversely affecting commercial success[213][214][216] - Orphan Drug designation for tanruprubart (GBS, HD) and vonaprument (GBS) provides financial incentives and market exclusivity, but does not guarantee faster development or approval, nor does it prevent competition from different drugs for the same condition or from clinically superior products[215][217][218][219][220] - Breakthrough Therapy, Fast Track, and PRIME designations, while offering enhanced regulatory interaction, do not guarantee faster development, review, or approval, nor do they increase the likelihood of marketing approval[221][222][223][224][225] - Disruptions at the FDA and other government agencies (e.g., funding shortages, global health concerns) could hinder their ability to review, approve, or commercialize products in a timely manner, negatively impacting the business[226][227] - Clinical trials conducted outside the U.S. may not have their data accepted by the FDA or comparable foreign regulatory authorities if conditions (e.g., applicability to U.S. population, GCP compliance, on-site inspection validation) are not met, potentially requiring additional costly and time-consuming trials[228][229][231][232][233] - Regulatory approval in one jurisdiction does not guarantee approval in others, limiting market opportunities and adversely affecting the business if international approvals are not obtained[234] - Product candidates approved as biologics may face competition sooner than anticipated due to abbreviated approval pathways for biosimilar products, potentially shortening exclusivity periods[235][236] - The company relies entirely on third-party suppliers for manufacturing product candidates and lacks internal manufacturing capabilities. Loss of these suppliers or their failure to comply with cGMPs, quality standards, or provide sufficient quantities could materially and adversely affect the business, requiring costly and time-consuming alternative arrangements[237][238][239][240][242][243] - Reliance on third parties (CROs, investigators) for preclinical and clinical trials carries risks of non-compliance, missed deadlines, or compromised data quality, which could delay or prevent regulatory approval and harm business prospects[244][245] - Failure to identify, develop, and commercialize additional product candidates would impair business expansion and strategic objectives, as development efforts may not yield viable commercial products or may divert resources from better opportunities[246][247] - The pharmaceutical industry is highly competitive, with many competitors having greater resources, marketing capabilities, and R&D expertise. This intense competition may prevent the company from achieving significant market penetration, especially if competitors develop superior or cheaper alternatives, or gain regulatory approval faster[248][249] - Commercial success depends on adequate coverage, reimbursement, and pricing policies from governmental and private payors. Failure to obtain these, or if reimbursement levels are inadequate, could limit marketability and revenue, especially for high-priced, physician-administered drugs[250][252][253][254][255][256][257] - The company currently lacks a sales organization and must build or partner for marketing, sales, and distribution capabilities. Failure to establish these effectively could prevent commercialization and lead to significant losses[258][259] - The company needs to expand its organization and may face difficulties managing growth, requiring effective management of clinical trials, commercialization, employee recruitment, and operational controls[260][261] - Failure to attract and retain senior management and key scientific personnel could materially and adversely affect the business, delaying product development and commercialization[262][263][264] - Product liability lawsuits, arising from clinical testing or commercialization, pose an inherent risk. Unsuccessful defense could lead to substantial liabilities, limit commercialization, and incur significant financial and management resources, even if successfully defended[265][267][268] - Future collaboration arrangements may not be successful, potentially delaying or terminating product development, diverting resources, or leading to disputes over intellectual property, adversely affecting the ability to develop and commercialize product candidates[269][270][271] - Unfavorable global and macroeconomic or political conditions (e.g., financial crises, inflation, geopolitical conflicts) could adversely affect business, financial condition, and results of operations by weakening demand, impacting capital raising, or disrupting supply chains[272] - International trade policies, including tariffs and trade barriers, could increase R&D expenses, disrupt supply chains (especially with foreign suppliers), and delay development timelines, materially affecting business and growth prospects[273][274][275][276] - The company's operations are vulnerable to natural disasters (e.g., earthquakes, wildfires) or other unforeseen events, particularly in the San Francisco Bay Area. Limited business continuity and disaster recovery plans, coupled with lack of specific insurance, could severely disrupt operations and incur substantial expenses[278][279][280] - Misconduct by employees or third-party contractors, including noncompliance with regulatory standards or fraud, could lead to significant penalties, governmental investigations, reputational harm, and adverse financial impacts[281] - Business operations involve hazardous materials, requiring compliance with environmental laws and regulations. Risks of contamination, accidental injury, and non-compliance could lead to costly clean-up, liabilities, fines, and operational restrictions[282][283][285][286] Risks Related to Intellectual Property Addresses risks concerning patent protection, infringement, trade secrets, licensing, and global IP enforcement - The company's commercial success depends on its ability to develop and market products without infringing third-party patents. It faces risks of costly litigation, substantial damages, and limitations on commercialization if found to infringe, or if its own patents are challenged or invalidated[287][288][289] - The company has not conducted a comprehensive freedom-to-operate search, and may be unaware of patents that could block commercialization. Patent law is uncertain, and changes in interpretation or legislation could affect patent protection[290][291][292][293][302][303] - Failure to obtain, maintain, and enforce intellectual property (IP) protection (patents, trademarks, trade secrets) could allow competitors to use similar technologies, harming competitive position and business. Patent applications may not issue, or issued patents may be challenged, narrowed, or circumvented[294][295][296][297][300][301] - Maintaining patent applications and issued patents requires compliance with procedural and payment provisions; noncompliance can lead to loss of patent rights. International IP protection is expensive and laws vary, making enforcement difficult in some countries[304][305][306][307][308][309] - Inability to prevent disclosure of trade secrets or confidential information to third parties could impair competitive position. Confidentiality agreements or security measures may be breached, and enforcement is difficult and costly[310] - Licenses for third-party intellectual property are subject to early termination if the company fails to comply with obligations, potentially leading to loss of material rights or technology. Licensing is competitive, and larger companies may have an advantage[311][313][314][315] - Disagreements over contract interpretation in IP agreements could narrow rights or increase financial obligations. Jointly owned patent rights may limit out-licensing ability or allow co-owners to license without consent[316][317][318][319] - Claims challenging inventorship or ownership of patents could lead to litigation, loss of IP rights, or infringement liability. Reliance on third-party consultants or collaborators could result in shared ownership or rights to patents[320][321][322] - Inadequate protection of trademarks and trade names could hinder brand recognition. Trademark applications may be rejected or challenged, and foreign registrations may be difficult to obtain or enforce. Regulatory authorities may also object to proposed product names[323][324] - Protecting IP rights globally is expensive, and foreign laws may not offer the same extent of protection as in the U.S. This could allow competitors to use technologies in unprotected jurisdictions or export infringing products, diminishing the commercial advantage of the company's IP[325][326] Risks Related to Government Regulation Highlights risks from ongoing regulatory requirements, healthcare legislation, generic competition, and compliance laws - Approved products remain subject to extensive ongoing regulatory requirements for manufacturing, labeling, promotion, and post-marketing studies. Non-compliance with cGMPs or other regulations can lead to restrictions, withdrawal of approval, or enforcement actions, adversely affecting commercialization and revenue[327][328][329][330][331][332] - Healthcare legislation, such as the ACA and IRA, has increased costs and scrutiny on drug pricing, potentially limiting reimbursement and affecting profitability. Future legislative or administrative actions could further impact drug approval, pricing, and market access[333][335][336][337][338][339][341][342][343] - If the company develops a small molecule product, it could face generic competition via ANDAs or 505(b)(2) NDAs, potentially leading to rapid sales decline if patents are challenged or exclusivity periods expire[344][345][346] - Business operations are subject to various healthcare regulatory laws (e.g., Anti-Kickback Statute, False Claims Act, HIPAA, Sunshine Act, FCPA). Non-compliance could result in significant civil/criminal penalties, exclusion from healthcare programs, reputational harm, and costly defense[347][348][350] Risks Related to Our Common Stock Discusses stock price volatility, public company costs, internal control weaknesses, dilution, and anti-takeover provisions - The company's stock price has been and could remain highly volatile due to factors like clinical trial results, regulatory approvals, financing announcements, competition, and general economic conditions. This volatility makes future stock performance unpredictable[351][352] - As a 'smaller reporting company,' the company benefits from reduced disclosure and governance requirements, which may make its common stock less attractive to some investors due to less available information[353] - Operating as a public company incurs significant legal, accounting, and compliance costs, requiring substantial management time. Failure to comply with public company rules could result in sanctions or penalties[354] - The company is subject to Section 404 of the Sarbanes-Oxley Act. Future material weaknesses in internal controls could lead to inaccurate financial reporting, adversely affecting investor confidence and stock value. Establishing and maintaining effective controls is resource-intensive and subject to human error or fraud[355][356][357][358] - Principal stockholders and management own a significant percentage of stock, allowing them to exert substantial control over matters requiring stockholder approval, potentially discouraging acquisition proposals[359] - Future issuance of common stock or convertible securities, including through ATM programs or warrant exercises, will cause immediate dilution for existing stockholders, and the dilutive impact of future financings may be difficult to compute[360] - Sales of a substantial number of shares by existing stockholders in the public market could cause the stock price to fall[361] - The company's ability to use net operating loss (NOL) carryforwards and other tax attributes may be limited due to past and potential future 'ownership changes' under Sections 382 and 383 of the Internal Revenue Code, potentially reducing future tax benefits[362][363][364][365] - Provisions in charter documents and Delaware law (e.g., classified board, no cumulative voting, board's right to fill vacancies) could discourage takeovers and entrench management[366][368] - Claims for indemnification by directors and officers may reduce available funds to satisfy third-party claims and impact cash position, as insurance may not cover all liabilities[367][369][372] - Exclusive forum provisions in charter documents designate Delaware courts for certain disputes and federal courts for Securities Act claims, potentially limiting stockholders' ability to choose a favorable judicial forum and discouraging lawsuits[370](