Aura Biosciences(AURA) - 2023 Q3 - Quarterly Report

PART I. FINANCIAL INFORMATION Item 1. Financial Statements (Unaudited) Aura Biosciences reported a net loss of $54.3 million for the nine months ended September 30, 2023, driven by increased R&D expenses, with total assets of $179.8 million Condensed Consolidated Balance Sheets Condensed Consolidated Balance Sheet Highlights (in thousands) | Balance Sheet Item | Sep 30, 2023 | Dec 31, 2022 | | :--- | :--- | :--- | | Cash and cash equivalents | $55,584 | $121,582 | | Marketable securities | $93,472 | $67,229 | | Total Assets | $179,766 | $223,935 | | Total Liabilities | $28,048 | $28,352 | | Total Stockholders' Equity | $151,718 | $195,583 | - The company's cash and cash equivalents decreased significantly from $121.6 million at the end of 2022 to $55.6 million as of September 30, 2023, while marketable securities increased. Total assets and stockholders' equity also decreased during the period[12] Condensed Consolidated Statements of Operations and Comprehensive Loss Statement of Operations Summary (in thousands, except per share data) | Metric | Three Months Ended Sep 30, 2023 | Three Months Ended Sep 30, 2022 | Nine Months Ended Sep 30, 2023 | Nine Months Ended Sep 30, 2022 | | :--- | :--- | :--- | :--- | :--- | | Research and development | $15,428 | $11,293 | $44,952 | $29,079 | | General and administrative | $5,060 | $4,762 | $15,256 | $13,603 | | Total operating loss | ($20,488) | ($16,055) | ($60,208) | ($42,682) | | Net loss | ($18,512) | ($15,901) | ($54,277) | ($42,204) | | Net loss per share | ($0.48) | ($0.54) | ($1.43) | ($1.44) | - The net loss for the nine months ended September 30, 2023, increased to $54.3 million from $42.2 million in the prior-year period, primarily due to a significant rise in research and development expenses[16] Condensed Consolidated Statements of Stockholders' Equity - Total stockholders' equity decreased from $195.6 million at December 31, 2022, to $151.7 million at September 30, 2023, primarily due to the $54.3 million net loss, partially offset by stock-based compensation and stock issuances[19][20] Condensed Consolidated Statements of Cash Flows Cash Flow Summary (in thousands) | Cash Flow Activity | Nine Months Ended Sep 30, 2023 | Nine Months Ended Sep 30, 2022 | | :--- | :--- | :--- | | Net cash used in operating activities | ($46,460) | ($36,588) | | Net cash used in investing activities | ($23,843) | ($50,993) | | Net cash provided by financing activities | $4,305 | $430 | | Net decrease in cash, cash equivalents and restricted cash | ($65,998) | ($87,151) | Notes to Unaudited Condensed Consolidated Financial Statements Notes detail Aura Biosciences' clinical-stage biotechnology focus on cancer treatment with bel-sar, sufficient cash for 12 months, key license agreements, and a $92.6 million November 2023 follow-on offering - Aura Biosciences is a clinical-stage biotechnology company developing its Virus-Like Drug Conjugates (VDCs) platform for cancer, with bel-sar as its lead candidate for choroidal melanoma and other cancers[26] - The company expects its cash, cash equivalents, and marketable securities to fund operating expenses and capital requirements for at least the next 12 months from the report's issuance date[31] - On November 9, 2023, the company completed a follow-on offering, raising approximately $92.6 million in net proceeds from selling 11,000,000 shares at $9.00 per share[93] - Key license agreements for core technology are in place with LI-COR, Life Technologies, the National Institute of Health (NIH), and Clearside Biomedical, involving potential milestone and royalty payments[71][72][80][84] Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses bel-sar's clinical development, including Phase 2 completion and Phase 3 initiation, noting a $54.3 million net loss for the first nine months of 2023, with sufficient funds to operate into H2 2026 Overview - Aura is a clinical-stage biotechnology company developing bel-sar, a Virus-like Drug Conjugate (VDC), for first-line treatment of early-stage choroidal melanoma and other ocular and urologic cancers[97][98] - Enrollment is complete in the Phase 2 trial for choroidal melanoma, showing an 80% tumor control rate and 90% visual acuity preservation, with a global Phase 3 trial expected to begin dosing in Q4 2023 following FDA agreement on a Special Protocol Assessment[98][99][100] - Bel-sar is also being developed for non-muscle invasive bladder cancer (NMIBC), with preliminary Phase 1 data from the first light-activated patient showing a clinical complete response[102] - The company has not generated revenue and incurred significant operating losses, with a net loss of $54.3 million for the nine months ended September 30, 2023, and an accumulated deficit of $265.2 million[103] Results of Operations Comparison of Operating Results (in thousands) | Period | Research & Development | General & Administrative | Net Loss | | :--- | :--- | :--- | :--- | | Three Months Ended Sep 30, 2023 | $15,428 | $5,060 | ($18,512) | | Three Months Ended Sep 30, 2022 | $11,293 | $4,762 | ($15,901) | | Nine Months Ended Sep 30, 2023 | $44,952 | $15,256 | ($54,277) | | Nine Months Ended Sep 30, 2022 | $29,079 | $13,603 | ($42,204) | - R&D expenses increased by $15.9 million for the nine months ended Sep 30, 2023, primarily due to higher clinical trial costs for Phase 2 and Phase 3 studies, and increased manufacturing and development costs for bel-sar[130] - General and administrative expenses increased by $1.7 million for the nine months ended Sep 30, 2023, mainly driven by higher personnel expenses and general corporate costs related to company growth[131] Liquidity and Capital Resources - As of September 30, 2023, the company held $149.1 million in cash, cash equivalents, and marketable securities[109][141] - Subsequent to quarter-end, on November 9, 2023, the company raised approximately $92.6 million in net proceeds from a follow-on public offering[133] - Management believes existing cash combined with the November 2023 offering proceeds will fund operations and capital expenditures into the second half of 2026[109][141] Cash Flow Summary (Nine Months Ended Sep 30, in thousands) | Cash Flow Activity | 2023 | 2022 | | :--- | :--- | :--- | | Net cash used in operating activities | ($46,460) | ($36,588) | | Net cash used in investing activities | ($23,843) | ($50,993) | | Net cash provided by financing activities | $4,305 | $430 | Quantitative and Qualitative Disclosures About Market Risk As a smaller reporting company, Aura Biosciences is exempt from providing quantitative and qualitative disclosures about market risk - The company is a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and is not required to provide the information under this item[151] Controls and Procedures Management concluded the company's disclosure controls and procedures were effective as of September 30, 2023, with no material changes to internal control over financial reporting during the quarter - Management, including the CEO and CFO, concluded that the company's disclosure controls and procedures were effective as of September 30, 2023[153] - No changes in internal control over financial reporting occurred during the quarter that materially affected, or are reasonably likely to materially affect, the company's internal control over financial reporting[154] PART II. OTHER INFORMATION Legal Proceedings As of September 30, 2023, the company is not party to any material legal proceedings expected to adversely affect its business - The company reports that it is not currently a party to any claim or litigation that would be reasonably expected to have a material adverse effect on its business[156] Risk Factors The company outlines significant risks including financial losses, reliance on bel-sar's success, dependence on third parties for development and manufacturing, and challenges in market acceptance and intellectual property protection - The company has a history of significant net losses ($54.3 million for the nine months ended Sep 30, 2023) and anticipates continued losses for the foreseeable future[159] - The business is heavily dependent on the success of its only product candidate, bel-sar; failure to gain regulatory approval or achieve commercial viability would severely harm the company[178] - The company relies on third-party contract manufacturing organizations (CMOs) for the production of bel-sar, increasing risks related to supply sufficiency, cost, and regulatory compliance[244] - The company's ability to compete depends on adequately protecting its proprietary rights, which may not address all potential threats, relying on both owned and in-licensed intellectual property[276] Unregistered Sales of Equity Securities and Use of Proceeds The company reported no unregistered sales of equity securities, no use of IPO proceeds, and no issuer purchases during the period - There were no unregistered sales of equity securities during the reporting period[398] Other Information The company entered a Transition and Release Agreement with its former Chief Medical Officer, Dr. Cadmus Rich, effective November 7, 2023, detailing separation terms - On November 6, 2023, the company entered into a Transition and Release Agreement with its former Chief Medical Officer, Dr. Cadmus Rich, detailing his separation terms, including severance and continued benefits for nine months[399] Exhibits This section lists exhibits filed with the Form 10-Q, including corporate governance documents, employment agreements, and SEC certifications - Exhibits filed include the employment offer letter for Jill Hopkins, transition and release agreements with Cadmus Rich, and certifications by the Principal Executive Officer and Principal Financial Officer[401]