AnaptysBio(ANAB) - 2023 Q4 - Annual Report

Part I Business AnaptysBio is a clinical-stage biotechnology company developing immune cell modulating antibodies for autoimmune and inflammatory diseases - The company's core focus is on developing immune cell modulating antibodies for autoimmune and inflammatory diseases, with two key clinical-stage assets: rosnilimab (PD-1 agonist) and ANB032 (BTLA agonist)[10] - AnaptysBio has a financial collaboration with GSK for immuno-oncology, which provides revenue from milestones and royalties on Jemperli (dostarlimab-gxly) and cobolimab[10][19] Wholly-Owned Product Candidate Pipeline Status | Program | Target | Indication | Stage | Key Milestone/Data Timing | | :--- | :--- | :--- | :--- | :--- | | Rosnilimab | PD-1 agonist | Rheumatoid Arthritis | Phase 2b | Top-line data mid-2025 | | | | Ulcerative Colitis | Phase 2 | Top-line data H1 2026 | | ANB032 | BTLA agonist | Atopic Dermatitis | Phase 2b | Top-line data YE 2024 | | ANB033 | CD122 antagonist | Inflammatory Diseases | Preclinical | IND submission Q2 2024 | | ANB101 | BDCA2 modulator | Inflammatory Diseases | Preclinical | IND submission H2 2024 | | Imsidolimab | IL-36R antagonist | Generalized Pustular Psoriasis | Phase 3 | Available for out-licensing; BLA submission planned Q3 2024 | | Etokimab | IL-33 antagonist | Epithelial Driven Diseases | Phase 2/3 ready | Available for out-licensing; no further internal investment | - The company relies on third-party manufacturers for cGMP-compliant production of its clinical trial materials and does not plan to acquire its own manufacturing facilities[41][42] Risk Factors The company faces significant risks from its early-stage pipeline, clinical trial uncertainties, financial losses, and reliance on third parties - Product candidates are in early development stages and may fail or be delayed, and initial clinical trial results may not be indicative of later-stage trial outcomes[74][76] - The company has a history of operational losses, has no products approved for sale, and will require additional capital to finance operations[75][97][99] - Dependence on the GSK collaboration is critical; the company also relies on third-party manufacturers, and any production difficulties could delay or halt clinical trials[75][95][102] - The company faces significant competition from larger, more established pharmaceutical and biotechnology companies with greater financial and technical resources[74][89] - Inability to obtain and protect intellectual property rights could prevent the company from competing effectively[75][123] Unresolved Staff Comments The company reports no unresolved staff comments from the SEC - None[162] Cybersecurity Cybersecurity risk management is overseen by the Audit Committee and focuses on threat mitigation, with no material incidents reported - The Board's Audit Committee oversees cybersecurity risk management, supported by the Head of IT[162][163] - The cybersecurity strategy includes technical safeguards, incident response plans, third-party risk management, and employee training[162] - The company is not aware of any cybersecurity incidents that have materially affected or are reasonably likely to materially affect its business, operations, or financial condition[163] Properties The company leases approximately 45,000 square feet of office and laboratory space in San Diego, California - The company leases approximately 45,000 square feet of office and lab space in San Diego, CA, under a lease agreement that commenced in April 2021 for a term of 124 months[164] Legal Proceedings The company is not involved in any specific material legal proceedings - The company states it may be involved in legal proceedings from time to time in the ordinary course of business but does not disclose any specific ongoing material litigation[165] Mine Safety Disclosures This section is not applicable to the company's operations - Not applicable[166] Part II Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities The company's common stock trades on Nasdaq (ANAB), it does not pay dividends, and no shares were repurchased in Q4 2023 - Common stock trades on Nasdaq under the symbol "ANAB"[168] - The company has never paid dividends and does not intend to in the foreseeable future[169] - No shares were repurchased in the fourth quarter of 2023[170] Management's Discussion and Analysis of Financial Condition and Results of Operations Revenue increased due to the GSK collaboration, while higher R&D spending drove a larger net loss, though cash remains sufficient Results of Operations Comparison (2023 vs. 2022) | (in thousands) | 2023 | 2022 | Change | | :--- | :--- | :--- | :--- | | Collaboration Revenue | $17,157 | $10,287 | $6,870 | | Research and Development | $132,283 | $88,798 | $43,485 | | General and Administrative | $41,946 | $36,643 | $5,303 | | Acquired in-process R&D | $7,339 | $0 | $7,339 | | Total Operating Expenses | $181,568 | $125,441 | $56,127 | | Loss from Operations | ($164,411) | ($115,154) | ($49,257) | | Net Loss | ($163,619) | ($128,724) | ($34,895) | External R&D Expenses by Program (2023 vs. 2022) | (in thousands) | 2023 | 2022 | Change | | :--- | :--- | :--- | :--- | | Rosnilimab | $25,010 | $7,794 | $17,216 | | ANB032 | $17,197 | $3,866 | $13,331 | | ANB033 | $11,520 | $1,706 | $9,814 | | Imsidolimab | $31,769 | $38,812 | ($7,043) | - The company believes its existing cash, cash equivalents, and investments of $417.9 million as of December 31, 2023, are sufficient to fund its current operating plan for at least the next twelve months[212] - The company monetized future royalty streams for Jemperli and Zejula, receiving upfront payments of $250.0 million and $35.0 million, respectively[211] Quantitative and Qualitative Disclosures About Market Risk The company's primary market risks from interest rates, foreign currency, and inflation are not considered material - The company's primary market risk is interest rate fluctuations affecting its $417.9 million portfolio of cash and investments, with a hypothetical 100 basis point change not expected to have a material impact[221] - Foreign currency exchange risk exists due to business with international CROs but is not considered material and is not hedged[222] - Inflation has not had a material effect on the company's business, financial condition, or results of operations[223] Consolidated Financial Statements and Supplementary Data This section presents the audited financial statements, showing total assets of $452.4 million and a net loss of $163.6 million for 2023 Consolidated Balance Sheet Data (as of Dec 31, 2023) | (in thousands) | Amount | | :--- | :--- | | Assets | | | Cash, cash equivalents, and investments | $417,930 | | Total current assets | $406,835 | | Total assets | $452,389 | | Liabilities & Stockholders' Equity | | | Total current liabilities | $37,442 | | Liability related to sale of future royalties | $310,807 | | Total liabilities | $364,286 | | Total stockholders' equity | $88,103 | Consolidated Statement of Operations Data (Year ended Dec 31, 2023) | (in thousands) | Amount | | :--- | :--- | | Collaboration revenue | $17,157 | | Total operating expenses | $181,568 | | Loss from operations | ($164,411) | | Net loss | ($163,619) | | Net loss per share | ($6.08) | - In January 2023, the company completed a $50.0 million stock repurchase program, buying back 2,124,214 shares at an average price of $24.48 per share[301][302] - As of December 31, 2023, the company had federal and state Net Operating Loss (NOL) carryforwards of $313.8 million and $73.3 million, respectively[326] Changes in and Disagreements With Accountants on Accounting and Financial Disclosure The company reports no changes in or disagreements with its accountants - None[331] Controls and Procedures Management concluded that both disclosure controls and internal controls over financial reporting were effective as of year-end 2023 - Management concluded that disclosure controls and procedures were effective as of December 31, 2023[332] - Management concluded that internal control over financial reporting was effective as of December 31, 2023, based on the COSO framework[333] - No attestation report on internal control is included as the company qualifies as a smaller reporting company[333] Other Information No directors or officers adopted or terminated Rule 10b5-1 trading plans during the fourth quarter of 2023 - No directors or officers adopted or terminated Rule 10b5-1 trading plans during the fourth quarter of 2023[336] Part III Directors, Executive Officers and Corporate Governance Required information is incorporated by reference from the company's 2024 Definitive Proxy Statement - Information is incorporated by reference from the forthcoming 2024 Definitive Proxy Statement[339] Executive Compensation Required information is incorporated by reference from the company's 2024 Definitive Proxy Statement - Information is incorporated by reference from the forthcoming 2024 Definitive Proxy Statement[340] Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters Required information is incorporated by reference from the company's 2024 Definitive Proxy Statement - Information is incorporated by reference from the forthcoming 2024 Definitive Proxy Statement[341] Certain Relationships and Related Transactions, and Director Independence Required information is incorporated by reference from the company's 2024 Definitive Proxy Statement - Information is incorporated by reference from the forthcoming 2024 Definitive Proxy Statement[342] Principal Accounting Fees and Services Required information is incorporated by reference from the company's 2024 Definitive Proxy Statement - Information is incorporated by reference from the forthcoming 2024 Definitive Proxy Statement. The independent auditor is KPMG LLP[343] Part IV Exhibits, Consolidated Financial Statement Schedules This section lists all documents filed as part of the report, including financial statements and material contracts - This section contains the index of all exhibits filed with the Form 10-K[345][346] Form 10-K Summary The company indicates that no Form 10-K summary is provided - None[352]