Adverum Biotechnologies(ADVM) - 2021 Q4 - Annual Report

Company Overview - Adverum is a clinical-stage gene therapy company focused on unmet medical needs in ocular and rare diseases, with a lead product candidate, ADVM-022, designed for long-term treatment of wet age-related macular degeneration (wet AMD) through a single intravitreal injection[9]. - The company has incurred significant operating losses since inception and expects to continue incurring losses for the foreseeable future[6]. - Adverum anticipates that its cash, cash equivalents, and short-term investments will be sufficient to fund lead gene therapy programs for at least twelve months from the date of the filing[6]. - The company is continuously evaluating the impact of COVID-19 on its operations, with limited disruptions reported to date[12]. - The company has not experienced significant disruptions to its supply chain and manufacturing due to the COVID-19 pandemic, but is actively monitoring potential risks[15]. - The company was incorporated in Delaware in 2006 and completed its IPO in August 2014, changing its name to Adverum Biotechnologies, Inc. after acquiring Annapurna Therapeutics SAS[87]. - The common stock is listed on The Nasdaq Global Market under the symbol "ADVM"[87]. Product Candidates - ADVM-022 utilizes a proprietary vector capsid, AAV.7m8, to deliver aflibercept, aiming to reduce the treatment burden associated with frequent anti-VEGF injections[9]. - The FDA granted Fast Track designation for ADVM-022 for the treatment of wet AMD, with strong signals of therapeutic efficacy observed in the OPTIC trial at doses of 6 x 10^11 vg/eye and 2 x 10^11 vg/eye[10]. - ADVM-062, a novel gene therapy for blue cone monochromacy, received Orphan Drug Designation from the FDA in January 2022, highlighting the company's commitment to rare diseases[10]. - The company is planning a future Phase 2 clinical trial for ADVM-022, evaluating a lower dose of 6 x 10^10 vg/eye with enhanced prophylactic steroid regimens[10]. - The INFINITY trial for ADVM-022 in diabetic macular edema was halted due to dose-limiting toxicity at the 6E11 dose, but no similar safety concerns were noted at the 2E11 dose in ongoing trials[10]. - The Phase 1 OPTIC trial for ADVM-022 began in November 2018, with Fast Track designation from the FDA received in September 2018[28]. - A Phase 2 trial for ADVM-022 is being prepared, with plans to enroll approximately 72 subjects and evaluate similar endpoints as the Phase 1 trial[33]. - The company is advancing its AAV-based directed evolution platform for additional product candidates in nonclinical development[34]. Market Opportunity - Approximately 20 million individuals worldwide are living with wet AMD, with the incidence expected to grow significantly as populations age, impacting an estimated 288 million people by 2040[10]. - The standard-of-care anti-VEGF therapies for wet AMD generated over $13 billion in sales worldwide in 2021, indicating a substantial market opportunity[18]. - The global market for anti-VEGF therapies for wet AMD and other chronic retinal conditions generated over $13 billion in sales in 2021[18]. - The market for wet AMD treatments generated over $13 billion in sales worldwide in 2021, with the incidence of AMD expected to impact 288 million people by 2040[27]. Regulatory Environment - Regulatory approvals and the ability to successfully commercialize product candidates are critical for the company's future revenue generation[7]. - The FDA requires the completion of nonclinical laboratory tests and submission of an IND before human clinical trials can begin[50]. - The BLA submission must demonstrate adequate efficacy and acceptable safety profile based on nonclinical testing and clinical trials[51]. - The FDA aims to review priority BLA applications within 6 months and standard applications within 10 months from successful filing[57]. - The FDA may require additional clinical data or Phase 3 trials if the BLA does not meet statutory and regulatory criteria[57]. - The FDA has the authority to withdraw licensure if ongoing regulatory requirements are not met or if safety issues arise post-marketing[59]. - The new EU Clinical Trials Regulation aims to simplify and streamline the approval process for clinical trials across member states[56]. - The FDA recommends observing subjects for potential delayed adverse events for up to 5 years for certain gene therapy products[56]. - The FDA requires that any modifications to biologics, including changes in indications or manufacturing processes, may necessitate a new BLA or BLA supplement, which could involve additional data or clinical trials[60]. - A biological product approved under section 351(a) of the PHSA can receive 12 years of marketing exclusivity, with 4 years constituting data exclusivity, preventing biosimilar applications during this period[60]. - In the EU, biological products authorized through the centralized procedure are entitled to 8 years of data exclusivity and 10 years of market exclusivity[60]. - The FDA's expedited development programs, such as Fast Track and Breakthrough Therapy designations, allow for rolling reviews and priority reviews, potentially reducing the review time to 6 months[63]. - Orphan Drug Designation grants a 7-year exclusive marketing period in the U.S. for products treating rare diseases affecting fewer than 200,000 individuals[64]. - The FDA may approve biologics based on surrogate endpoints, but post-marketing trials are required to confirm clinical benefits, with potential withdrawal of approval if requirements are not met[63]. - The decentralized authorization procedure allows simultaneous applications for authorization in multiple EU Member States, streamlining the approval process[60]. Competition and Intellectual Property - The company faces significant competition in the gene therapy market, which could impact its commercial opportunities if competitors develop superior treatments[7]. - Adverum's intellectual property position is crucial for its business, with potential risks related to patent rights and third-party claims that could affect its development efforts[6]. - The company owns or licenses over 140 issued patents and has more than 190 pending patent applications, with a focus on AAV-based biological products and methods for treating diseases[45]. - The company has four patent families directed to AAV-based compositions for treating neovascular diseases, with patents expected to expire between 2033 and 2040[46]. - The company has licensed rights to various technologies, including improved rAAV virions, with patents projected to expire between 2024 and 2031[47]. - The company relies on trade secrets and confidentiality agreements to protect its proprietary technology and product candidates[49]. - The company is eligible to receive low to mid-single digit royalties on sales of GenSight's licensed products, indicating potential revenue streams from collaborations[41]. - The company has exclusive worldwide sublicensable license agreements with the University of California, with milestone payments totaling up to $1.5 million for product development[40]. - The company has licensed its AAV.7m8 vector to GenSight for the development of GS030, currently in phase 1/2 trials for retinitis pigmentosa[41]. Financial and Operational Risks - The success of the company heavily relies on the successful development and commercialization of its product candidates, with potential delays or failures in drug development posing significant risks[6]. - The company faces significant competition in the gene therapy market, which could impact its commercial opportunities if competitors develop superior treatments[7]. - The company may face significant penalties for violations of healthcare laws, including civil, criminal, and administrative penalties, which could adversely affect its financial condition and operations[73]. - The company must navigate complex coverage and reimbursement landscapes for gene therapy products, with third-party payers increasingly challenging pricing and cost-effectiveness[74]. - The Affordable Care Act includes provisions that may reduce the profitability of drug products, such as increased minimum rebates owed by manufacturers under the Medicaid Drug Rebate Program[74]. - The company may need to conduct expensive pharmacoeconomic studies to demonstrate the medical necessity and cost-effectiveness of its products to obtain coverage and reimbursement[74]. - Regulatory scrutiny regarding drug pricing practices has increased, with federal prosecutors issuing subpoenas to pharmaceutical companies[73]. - The company could be subject to substantial penalties if found in violation of the federal Anti-Kickback Statute or the civil False Claims Act[72]. - Compliance with evolving privacy and data security laws may prove costly and complex, impacting operational efficiency[73]. - The company may face reputational risks and administrative penalties if it fails to comply with strict laws governing interactions with healthcare providers[72]. - The company’s revenue and future profitability could be negatively affected by legislative or regulatory proposals limiting price increases for its products[73]. - The company is subject to numerous privacy and data protection obligations, including the EU GDPR and CCPA, which may increase compliance costs and exposure to penalties[70]. - The company is subject to numerous environmental, health, and safety regulations, with compliance necessary to avoid substantial fines or operational limitations[80]. Workforce and Culture - As of December 31, 2021, the company had approximately 188 full-time employees, with 131 engaged in research and development[81]. - Racial and ethnic minorities represented 68% of the employee base, and women comprised 52.7% of the workforce[82]. - The company offers a competitive compensation package, including market-competitive pay, stock grants, bonuses, and healthcare benefits[83]. - Employee engagement is highly favorable, contributing to the company being named a Top Workplace in 2021[81]. - The company has implemented employee-led resource groups to support diverse communities within the workforce[82]. - Employee safety and well-being are prioritized, with measures taken in response to COVID-19, including protective equipment and weekly testing[86]. - The company has a governance structure in place for timely communication and decision-making regarding employee safety[86]. - The company is committed to diversity, equity, and inclusion, with employee-led resource groups supporting various communities[82].