Aravive(ARAV) - 2021 Q1 - Quarterly Report

PART I. FINANCIAL INFORMATION This section presents Aravive, Inc.'s unaudited condensed consolidated financial information, including statements, MD&A, market risk, and controls Financial Statements Aravive, Inc.'s unaudited condensed consolidated financial statements for Q1 2021 are presented, detailing balance sheets, operations, equity, cash flows, and notes Condensed Consolidated Balance Sheets Aravive's total assets increased to $87.3 million by March 31, 2021, driven by higher cash from financing, while stockholders' equity grew to $68.7 million Condensed Consolidated Balance Sheets (in thousands of US dollars) | | March 31, 2021 (unaudited) | December 31, 2020 | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $78,682 | $60,541 | | Total current assets | $81,486 | $61,689 | | Total assets | $87,267 | $67,710 | | Liabilities and Stockholders' Equity | | | | Total current liabilities | $9,102 | $9,461 | | Total liabilities | $18,551 | $19,655 | | Total stockholders' equity | $68,716 | $48,055 | | Total liabilities and stockholders' equity | $87,267 | $67,710 | Condensed Consolidated Statements of Operations Aravive's Q1 2021 net loss decreased to $8.0 million from $10.8 million in Q1 2020, driven by lower G&A and no impairment charge Condensed Consolidated Statements of Operations (in thousands of US dollars, except per share data) | | Three Months Ended March 31, 2021 | Three Months Ended March 31, 2020 | | :--- | :--- | :--- | | Collaboration revenue | $256 | $— | | Research and development | $5,884 | $3,491 | | General and administrative | $2,380 | $3,951 | | Loss on impairment of long-lived assets | $— | $2,870 | | Loss from operations | $(8,008) | $(10,312) | | Net loss | $(8,004) | $(10,796) | | Net loss per share - basic and diluted | $(0.44) | $(0.72) | Condensed Consolidated Statements of Stockholders' Equity Stockholders' equity increased by $20.7 million to $68.7 million in Q1 2021, primarily due to $20.9 million from a direct offering and $7.0 million from an ATM offering - Stockholders' equity increased from $48.1 million on January 1, 2021, to $68.7 million on March 31, 2021[14] - The increase was driven by $20.9 million from a direct offering, $7.0 million from an at-the-market offering, and $0.3 million from stock option exercises, partially offset by a $8.0 million net loss[14] Condensed Consolidated Statements of Cash Flows Aravive used $10.0 million in operating cash in Q1 2021 but generated $28.2 million from financing, increasing cash to $81.1 million Summary of Cash Flows (in thousands of US dollars) | Cash Flow Activity | Three Months Ended March 31, 2021 | Three Months Ended March 31, 2020 | | :--- | :--- | :--- | | Net cash used in operating activities | $(10,019) | $(4,462) | | Net cash provided by financing activities | $28,160 | $33 | | Net change in cash, cash equivalents, and restricted cash | $18,141 | $(4,429) | | Cash, cash equivalents, and restricted cash at end of period | $81,112 | $63,128 | Notes to Condensed Consolidated Financial Statements Notes detail Aravive's clinical-stage biopharmaceutical business, AVB-500 development, 3D Medicines collaboration, accounting policies, and a $6 million Phase 3 milestone - The company's lead product candidate, AVB-500, is a decoy protein targeting the GAS6-AXL signaling pathway for cancer and fibrosis treatment[20] - A collaboration and license agreement with 3D Medicines for AVB-500 in Greater China includes a $12 million upfront payment and up to $207 million in potential milestones[24][89] - The company believes its $78.7 million in cash and cash equivalents as of March 31, 2021, are sufficient to fund operations for at least the next 12 months[35] - Subsequent Event: Dosing of the first patient in the Phase 3 trial of AVB-500 in April 2021 triggered a $6 million milestone payment from 3D Medicines[124] Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A) Management discusses financial results and operational progress, including AVB-500 clinical trial advancements, a 69% R&D increase, 40% G&A decrease, and liquidity Overview Aravive, a clinical-stage oncology company, initiated AVB-500 Phase 3 trials in PROC and Phase 1b/2 in ccRCC, with plans for pancreatic cancer trials - A registrational Phase 3 trial of AVB-500 in PROC was initiated in Q1 2021, with the first patient dosed in April 2021[131] - A Phase 1b/2 trial of AVB-500 in ccRCC was initiated, with the first patient dosed in March 2021[131] - Plans for a Phase 1b/P2 trial investigating AVB-500 for pancreatic cancer are expected to begin in the second half of 2021[131][132] Results of Operations Aravive's Q1 2021 net loss decreased to $8.0 million from $10.8 million in Q1 2020, driven by lower G&A and no impairment charge Comparison of Operations (in thousands of US dollars) | | Three Months Ended March 31, 2021 | Three Months Ended March 31, 2020 | Change (%) | | :--- | :--- | :--- | :--- | | Collaboration revenue | $256 | $— | N/A | | Research and development | $5,884 | $3,491 | +69% | | General and administrative | $2,380 | $3,951 | -40% | | Loss on impairment | $— | $2,870 | N/A | | Net loss | $(8,004) | $(10,796) | -26% | - The increase in R&D expense was primarily due to increased clinical trial expenses for the Phase 3 trial of AVB-500 in PROC[147] - The decrease in G&A expense was driven by lower stock-based compensation, rent, legal, and consulting fees[148] Liquidity and Capital Resources Aravive held $78.7 million in cash as of March 31, 2021, bolstered by $21 million from a private placement and $7.0 million from an ATM offering, sufficient for 12 months but requiring additional funding - The company held $78.7 million in cash and cash equivalents as of March 31, 2021[152] - In Q1 2021, the company raised $20.9 million (net) from a private placement and $7.0 million (net) from its ATM offering[152][153] - Management believes current cash is sufficient for at least the next 12 months but will need to raise substantial additional capital for future activities[154][155] Quantitative and Qualitative Disclosures about Market Risk The company's primary market risk is interest rate exposure on its $78.7 million in short-term cash and cash equivalents, which management deems insignificant - The company's main market risk is interest rate risk on its $78.7 million in cash and cash equivalents held in money market funds[165] - Management considers the interest rate risk to be insignificant due to the short-term duration of its investments[165] Controls and Procedures Management, including the CEO and CFO, concluded that disclosure controls and procedures were effective as of March 31, 2021, with no material changes to internal control over financial reporting - Management, including the CEO and CFO, concluded that the company's disclosure controls and procedures were effective as of March 31, 2021[167] - No material changes to internal control over financial reporting were identified during the first quarter of 2021[168] PART II. OTHER INFORMATION This section provides additional information, including legal proceedings, key risk factors, and a list of exhibits filed with the report Legal Proceedings The company is not currently involved in any material legal proceedings - Aravive is not currently subject to any material legal proceedings[171] Risk Factors This section highlights key risks, including a history of significant losses (accumulated deficit of $508.7 million), the need for additional funding, CPRIT grant obligations, and concentrated stock ownership - The company has a history of significant losses, with an accumulated deficit of approximately $508.7 million as of March 31, 2021, and expects to incur substantial losses for the foreseeable future[173] - Additional funding is required to support operations and complete the development and commercialization of AVB-500[178] - The terminated CPRIT grant still carries obligations, including potential repayment of the $20.0 million grant if the company relocates its principal place of business outside of Texas within a specified timeframe[181] - As of March 31, 2021, executive officers, directors, and their controlled entities owned approximately 28.6% of common stock, giving them significant influence over stockholder matters[189] Exhibits This section lists all exhibits filed with the Form 10-Q, including CEO and CFO certifications and interactive data files (XBRL) - The filing includes CEO and CFO certifications pursuant to Sections 302 and 906 of the Sarbanes-Oxley Act[191][192][193][194] - Interactive data files (XBRL documents) are also included as exhibits[195][196][197]