Acrivon Therapeutics(ACRV) - 2023 Q2 - Quarterly Report

Financial Performance - Acrivon Therapeutics has incurred net losses of $26.7 million and $13.0 million for the six months ended June 30, 2023, and 2022, respectively, with an accumulated deficit of $82.7 million as of June 30, 2023[92]. - Acrivon has not generated any revenue from drug sales and does not expect to do so in the foreseeable future[99]. - Net loss for the three months ended June 30, 2023, was $13.9 million, compared to a net loss of $5.8 million in the same period of 2022, representing an increase of $8.1 million[109]. - Net cash used in operating activities for the six months ended June 30, 2023, was $20.5 million, an increase of $6.3 million from $14.2 million in 2022[122]. - Total other income, net for the three months ended June 30, 2023, was $1.6 million, compared to $0.1 million in 2022, reflecting a $1.5 million increase primarily from interest income[114]. - Total other income, net for the six months ended June 30, 2023, was $3.2 million, compared to $0.1 million in 2022, indicating a $3.1 million increase due to higher interest income[118]. Expenses - The majority of expenses are attributed to research and development, with significant costs incurred for the development of ACR-368 and the ACR-368 OncoSignature[100]. - Total operating expenses for the three months ended June 30, 2023, were $15.5 million, an increase of $9.6 million compared to $5.9 million in the same period of 2022[109]. - Research and development expenses for the three months ended June 30, 2023, were $10.5 million, up from $4.1 million in 2022, reflecting a $6.4 million increase primarily due to clinical trial progression and personnel costs[110]. - General and administrative expenses for the three months ended June 30, 2023, were $5.0 million, an increase of $3.2 million compared to $1.8 million in 2022, driven by higher payroll and professional fees[111]. - Total operating expenses for the six months ended June 30, 2023, were $29.9 million, an increase of $16.8 million compared to $13.1 million in 2022[115]. - General and administrative expenses for the six months ended June 30, 2023, were $9.6 million, up from $3.0 million in 2022, reflecting a $6.6 million increase[117]. Funding and Capital - The company completed its IPO in November 2022, raising net proceeds of $104.5 million from the sale of 7,550,000 shares, including a partial exercise of underwriters' option[89]. - Acrivon has funded operations primarily through equity and convertible debt financings, with total net proceeds of $119.8 million from these activities since inception[90]. - As of June 30, 2023, the company had cash, cash equivalents, and investments totaling $151.0 million, expected to fund operations into 2025[95]. Agreements and Milestones - Acrivon entered into a companion diagnostic agreement with Akoya Biosciences, with a total potential payment of up to $10.3 million upon achieving specified milestones[96][97]. - Under the companion diagnostic agreement with Akoya, the company has incurred payments of $3.8 million for achieved development milestones out of a total potential of $10.3 million[133]. - The company is obligated to pay up to $168.0 million in aggregate development and commercial milestone payments under its license agreement with Lilly, with $5.0 million due prior to NDA[132]. - The company is required to pay a tiered percentage royalty on annual net sales ranging from a low single-digit percentage up to a maximum of 10% under its license agreement with Lilly[132]. Regulatory and Compliance - Acrivon has received Fast Track designations from the FDA for ACR-368 targeting platinum-resistant ovarian cancer and endometrial cancer[87]. - The company has identified material weaknesses in its internal control over financial reporting for the years ended December 31, 2022, and 2021, which may affect the accuracy and timeliness of financial reporting[137]. - As an emerging growth company, the company has elected to take advantage of an extended transition period for complying with new or revised accounting standards, which may affect comparability with other public companies[138]. - The company qualifies as a smaller reporting company, with a market value of stock held by non-affiliates less than $700 million and annual revenue below $100 million[140]. - The company may continue to rely on exemptions from certain disclosure requirements as a smaller reporting company, including presenting only the two most recent fiscal years of audited financial statements[141]. - The company has not provided quantitative and qualitative disclosures about market risk as it is considered a smaller reporting company[142]. Operational Plans - The company anticipates significant increases in general and administrative expenses as it expands its workforce and operational capabilities[107]. - Acrivon plans to continue incurring substantial research and development expenses as it advances ACR-368 and other drug candidates[103]. - The company has entered into contracts with CROs and third-party vendors for clinical trials and testing, which are cancelable without minimum purchase commitments[134]. - There have been no significant changes to the company's critical accounting policies from those described in its Annual Report on Form 10-K[135].