Acrivon Therapeutics(ACRV) - 2024 Q1 - Quarterly Report

PART I. FINANCIAL INFORMATION Item 1. Financial Statements (Unaudited) Unaudited Q1 2024 financials show decreased assets, a wider net loss, and a significant post-quarter financing event Condensed Consolidated Balance Sheets Total assets decreased to $120.5 million as of March 31, 2024, from $138.3 million at the end of 2023 Condensed Consolidated Balance Sheets (in thousands) | Account | March 31, 2024 | December 31, 2023 | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $24,607 | $36,015 | | Short-term investments | $85,368 | $91,443 | | Total current assets | $112,143 | $129,692 | | Total assets | $120,521 | $138,265 | | Liabilities and Stockholders' Equity | | | | Total current liabilities | $9,041 | $13,303 | | Total liabilities | $12,542 | $17,070 | | Total stockholders' equity | $107,979 | $121,195 | | Total liabilities and stockholders' equity | $120,521 | $138,265 | Condensed Consolidated Statements of Operations and Comprehensive Loss The net loss for Q1 2024 increased to $16.5 million, compared to $12.8 million in the prior-year period Statement of Operations Highlights (in thousands, except per share data) | Metric | Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 | | :--- | :--- | :--- | | Research and development | $11,473 | $9,758 | | General and administrative | $6,195 | $4,635 | | Total operating expenses | $17,668 | $14,393 | | Loss from operations | ($17,668) | ($14,393) | | Net loss | ($16,486) | ($12,756) | | Net loss per share—basic and diluted | ($0.73) | ($0.58) | Condensed Consolidated Statements of Stockholders' Equity Stockholders' equity declined to $108.0 million, primarily driven by the quarterly net loss of $16.5 million - The primary driver for the decrease in stockholders' equity during Q1 2024 was the net loss of $16.5 million[15] Condensed Consolidated Statements of Cash Flows Net cash used in operating activities increased to $17.1 million, contributing to an overall $11.4 million decrease in cash Cash Flow Summary (in thousands) | Activity | Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 | | :--- | :--- | :--- | | Net cash used in operating activities | ($17,083) | ($11,357) | | Net cash provided by investing activities | $5,850 | $9,327 | | Net cash used in financing activities | ($172) | $0 | | Net decrease in cash, cash equivalents, and restricted cash | ($11,405) | ($2,030) | Notes to the Condensed Consolidated Financial Statements Notes provide context on clinical operations, liquidity, and a key $130 million post-quarter financing - The company is a clinical-stage biopharmaceutical company advancing its lead candidate, ACR-368, a selective small molecule inhibitor targeting CHK1 and CHK2, in a Phase 2 trial[20] - As of March 31, 2024, the company had an accumulated deficit of $132.9 million and expects existing cash combined with $130.0 million in gross proceeds from a recent private placement to fund operations for at least 12 months[23][25] - The company has a license agreement with Eli Lilly for ACR-368, which includes potential future milestone payments of up to $168.0 million[60][61] - In April 2024, the company closed a Private Investment in Public Equity (PIPE) financing, receiving aggregate gross proceeds of $130.0 million[70][71] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management analyzes its precision oncology strategy, Q1 2024 results, and liquidity following a $130 million financing Overview The company is advancing its lead candidate ACR-368 in a Phase 2 trial and preparing its preclinical candidate ACR-2316 for IND filing - The company's lead candidate, ACR-368, is being evaluated in a potentially registrational Phase 2 trial for platinum-resistant ovarian cancer, endometrial adenocarcinoma, and urothelial cancer[76] - Initial clinical data from the Phase 2 trial showed a 50% confirmed Objective Response Rate (ORR) in OncoSignature-positive patients, providing prospective validation for the OncoSignature test[79] - The preclinical candidate ACR-2316, a WEE1/PKMYT1 inhibitor, is advancing rapidly, with an IND filing expected in Q3 2024 and clinical trial initiation in Q4 2024[81] Results of Operations The net loss widened to $16.5 million in Q1 2024, driven by increased R&D and G&A expenses Comparison of Results of Operations (in thousands) | Item | Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 | Change | | :--- | :--- | :--- | :--- | | Research and development | $11,473 | $9,758 | $1,715 | | General and administrative | $6,195 | $4,635 | $1,560 | | Loss from operations | ($17,668) | ($14,393) | ($3,275) | | Net loss | ($16,486) | ($12,756) | ($3,730) | - The $1.7 million increase in R&D expenses was primarily due to a $0.8 million increase in costs for the ACR-368 clinical trial and a $0.9 million increase in personnel-related costs[103] - The $1.6 million increase in G&A expenses was mainly driven by a $1.1 million increase in payroll and employee-related expenses, including $0.6 million in stock-based compensation[106] Liquidity and Capital Resources A $130 million private placement in April 2024 extends the company's projected cash runway into the second half of 2026 - The company had $110.0 million in cash, cash equivalents, and investments as of March 31, 2024[108] - In April 2024, the company raised $130.0 million in gross proceeds from a PIPE financing, significantly strengthening its balance sheet[108] - With the recent financing, the company projects its cash runway will extend into the second half of 2026[113] - Net cash used in operating activities increased to $17.1 million for Q1 2024, compared to $11.4 million for Q1 2023, primarily due to an increased net loss[109] Item 3. Quantitative and Qualitative Disclosures About Market Risk The company is exempt from this disclosure requirement as a "smaller reporting company" - As a "smaller reporting company," Acrivon is exempt from providing quantitative and qualitative disclosures about market risk[128] Item 4. Controls and Procedures Management concluded that disclosure controls and procedures were effective with no material changes to internal controls - The company's management, including the CEO and CFO, concluded that disclosure controls and procedures were effective as of the end of the period covered by the report[129] - There were no changes in internal control over financial reporting during the quarter ended March 31, 2024, that have materially affected, or are reasonably likely to materially affect, internal controls[131] PART II. OTHER INFORMATION Item 1. Legal Proceedings The company is not currently a party to any material legal proceedings - The company is not currently subject to any material legal proceedings[133] Item 1A. Risk Factors Key risks include a history of operating losses, the need for additional funding, and potential stock price dilution - The company has a history of significant losses, with an accumulated deficit of $132.9 million as of March 31, 2024, and expects to incur losses for the foreseeable future[135] - Substantial additional funding will be required to meet financial obligations; the current cash runway is projected to last into the second half of 2026[140][141] - A significant number of shares may be sold in the near future, which could cause the market price of the common stock to drop[144][146] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds No unregistered securities were sold during the quarter, and $59.7 million of IPO net proceeds have been utilized to date - There were no sales of unregistered securities during the reported period[146] - As of March 31, 2024, the company had used $59.7 million of the net proceeds from its IPO, and the planned use of these proceeds has not materially changed[147] Item 3. Defaults Upon Senior Securities This item is not applicable to the company - Not applicable[148] Item 4. Mine Safety Disclosures This item is not applicable to the company - Not applicable[148] Item 5. Other Information The company appointed Katharine Peterson as Vice President of Finance and Chief Accounting Officer - Effective May 13, 2024, Katharine Peterson was appointed as Vice President of Finance and Chief Accounting Officer, and will serve as the company's Principal Accounting Officer[149] Item 6. Exhibits This section lists required officer certifications and Inline XBRL documents filed with the report - The report includes certifications from the CEO and CFO pursuant to Sarbanes-Oxley Act Sections 302 and 906, along with Inline XBRL data files[152]