Avidity Biosciences(RNA) - 2022 Q1 - Quarterly Report

PART I – FINANCIAL INFORMATION Condensed Financial Statements (unaudited) For Q1 2022, Avidity Biosciences reported decreased collaboration revenue, a widened net loss driven by increased expenses, and maintained a strong liquidity position with $421.1 million in total assets Condensed Balance Sheets As of March 31, 2022, total assets were $421.1 million, with cash reallocated to marketable securities, while total liabilities remained stable and stockholders' equity slightly decreased Condensed Balance Sheet Data (in thousands) | Account | March 31, 2022 | December 31, 2021 | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $139,262 | $320,448 | | Marketable securities | $257,809 | $85,095 | | Total current assets | $404,800 | $411,141 | | Total assets | $421,135 | $427,580 | | Liabilities & Equity | | | | Total current liabilities | $30,920 | $29,658 | | Total liabilities | $45,427 | $46,150 | | Total stockholders' equity | $375,708 | $381,430 | | Total liabilities and stockholders' equity | $421,135 | $427,580 | Condensed Statements of Operations and Comprehensive Loss Collaboration revenue decreased to $1.8 million, while operating expenses rose to $36.3 million, leading to a net loss of $34.2 million for the three months ended March 31, 2022 Condensed Statements of Operations (in thousands, except per share data) | Metric | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | | :--- | :--- | :--- | | Collaboration revenue | $1,795 | $2,704 | | Research and development | $27,688 | $20,677 | | General and administrative | $8,567 | $5,884 | | Total operating expenses | $36,255 | $26,561 | | Loss from operations | ($34,460) | ($23,857) | | Net loss | ($34,235) | ($23,844) | | Net loss per share, basic and diluted | ($0.71) | ($0.64) | Condensed Statements of Stockholders' Equity Stockholders' equity decreased to $375.7 million due to the net loss, partially offset by proceeds from common stock issuance and stock-based compensation - During Q1 2022, the company issued 1.52 million shares of common stock in public offerings, generating net proceeds of $24.1 million[14] - The total stockholders' equity decreased by $5.7 million during the quarter, from $381.4 million to $375.7 million[14] Condensed Statements of Cash Flows Net cash used in operating activities increased to $29.6 million, while investing activities used $175.5 million, resulting in a net decrease of $180.9 million in cash for Q1 2022 Summary of Cash Flows (in thousands) | Activity | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | | :--- | :--- | :--- | | Net cash used in operating activities | ($29,574) | ($19,681) | | Net cash used in investing activities | ($175,475) | ($525) | | Net cash provided by financing activities | $24,113 | $17 | | Net decrease in cash, cash equivalents and restricted cash | ($180,936) | ($20,189) | Notes to Condensed Financial Statements (unaudited) Notes detail the company's AOC development, liquidity position, collaboration with Eli Lilly, equity financing, and the immaterial impact of COVID-19 - The company is a biopharmaceutical firm developing a new class of RNA therapeutics called Antibody Oligonucleotide Conjugates (AOCs)[19] - As of March 31, 2022, the company had an accumulated deficit of $218.8 million and cash, cash equivalents, and marketable securities of $397.1 million[21] - Management believes existing cash, cash equivalents, and marketable securities are sufficient to fund operations for at least 12 months from the filing date[22] - From April 1, 2022, through May 10, 2022, the company sold 482,220 shares of common stock, receiving net proceeds of $9.2 million under its Sales Agreement[83] Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the AOC platform, clinical pipeline advancement, decreased revenue, increased operating expenses, and confirms sufficient liquidity for at least 12 months - The company's lead product candidate, AOC 1001 for myotonic dystrophy type 1 (DM1), is in a Phase 1/2 MARINA trial. The single-dose cohort is complete, and the multi-dose cohort is enrolling[86] - The pipeline includes AOC 1044 for Duchenne Muscular Dystrophy (DMD) and AOC 1020 for facioscapulohumeral muscular dystrophy (FSHD), both anticipated to enter the clinic by the end of 2022[87] - The company believes its existing cash, cash equivalents, and marketable securities of $397.1 million as of March 31, 2022, will be sufficient to fund operations for at least 12 months[91][109] Results of Operations Q1 2022 revenue decreased to $1.8 million due to collaboration timing, while R&D and G&A expenses increased due to pipeline advancement and personnel costs Results of Operations Comparison (in thousands) | Item | Q1 2022 | Q1 2021 | Increase (Decrease) | | :--- | :--- | :--- | :--- | | Revenue | $1,795 | $2,704 | ($909) | | Research and development expenses | $27,688 | $20,677 | $7,011 | | General and administrative expenses | $8,567 | $5,884 | $2,683 | - The decrease in revenue was primarily due to the timing of reimbursable collaboration-related research and development expenses under the Lilly Agreement[104] - The increase in R&D expenses was driven by the advancement of AOC 1001, AOC 1044, and AOC 1020, and the expansion of research capabilities[105] Liquidity and Capital Resources As of March 31, 2022, the company held $397.1 million in cash and securities, primarily from IPOs and a Sales Agreement, which management deems sufficient for at least 12 months of operations - Through March 31, 2022, the company has sold 2,300,490 shares under its Sales Agreement, receiving net proceeds of $43.7 million[108][89] - Subsequent to the quarter end, from April 1 to May 10, 2022, an additional $9.2 million in net proceeds was raised from selling 482,220 shares under the Sales Agreement[108] Cash Flow Summary (in thousands) | Activity | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | | :--- | :--- | :--- | | Net cash used in Operating activities | $(29,574) | $(19,681) | | Net cash used in Investing activities | $(175,475) | $(525) | | Net cash provided by Financing activities | $24,113 | $17 | Quantitative and Qualitative Disclosures About Market Risk The company states that as of March 31, 2022, there have been no material changes in its market risk from the disclosures provided in its Annual Report on Form 10-K for the year ended December 31, 2021 - There have been no material changes in the company's market risk since its 2021 year-end report[118] Controls and Procedures Management concluded disclosure controls were effective as of March 31, 2022, following the implementation of a new ERP system in January 2022 that modified internal controls - The principal executive officer and principal financial officer concluded that as of March 31, 2022, the company's disclosure controls and procedures were effective at the reasonable assurance level[120] - In January 2022, the company completed the implementation of a new ERP system, modifying certain internal control processes and procedures[121] PART II – OTHER INFORMATION Legal Proceedings The company is not currently subject to any material legal proceedings, though it may face ordinary course claims - The company is not currently subject to any material legal proceedings[124] Risk Factors There have been no material changes to the risk factors previously disclosed in the company's Annual Report on Form 10-K for the year ended December 31, 2021 - There have been no material changes to the risk factors set forth in the company's annual report on Form 10-K for the year ended December 31, 2021[125] Unregistered Sales of Equity Securities and Use of Proceeds The company reports no unregistered equity sales and has used $77.9 million of its $298.1 million June 2020 IPO proceeds for general corporate and development purposes - The company's IPO in June 2020 generated gross proceeds of $298.1 million[127] - As of March 31, 2022, approximately $77.9 million of the IPO proceeds have been used for general corporate purposes and advancing development programs[128] Defaults Upon Senior Securities Not applicable - Not applicable[130] Mine Safety Disclosures Not applicable - Not applicable[131] Other Information None - None[132] Exhibits This section lists the exhibits filed with the Form 10-Q, including the Amended and Restated Certificate of Incorporation and Bylaws, an employment letter agreement, and various certifications required by the Sarbanes-Oxley Act