Vera Therapeutics(VERA) - 2023 Q1 - Quarterly Report

Summary of Risks Associated with Our Business Summary of Risks Associated with Our Business The company identifies material risks centered on its clinical-stage nature, including no approved products, dependence on two candidates, and the need for substantial capital - The company has not completed any clinical trials for its lead product candidate, atacicept, and has no products approved for commercial sale[8] - Vera will require substantial additional capital for its operations, and failure to raise capital may force the company to delay, reduce, or eliminate its programs[8] - The business is substantially dependent on the success of its clinical-stage product candidates, atacicept and MAU868[9] - The company has incurred net losses since inception and expects this trend to continue for the foreseeable future[9] - Losing development rights to atacicept or MAU868 by breaching license agreements with Ares Trading S.A. or Novartis is a key risk[9] PART I. FINANCIAL INFORMATION Condensed Financial Statements (Unaudited) The company's financial statements show increased cash from a public offering, rising R&D costs, and continued net losses Condensed Balance Sheets Total assets and stockholders' equity grew significantly due to a follow-on offering, while total liabilities decreased slightly Condensed Balance Sheet Highlights (in thousands) | | March 31, 2023 | December 31, 2022 | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $137,385 | $43,459 | | Total current assets | $204,449 | $125,698 | | Total assets | $209,604 | $131,435 | | Liabilities & Stockholders' Equity | | | | Total current liabilities | $23,529 | $25,600 | | Total liabilities | $51,895 | $54,527 | | Total stockholders' equity | $157,709 | $76,908 | | Total liabilities and stockholders' equity | $209,604 | $131,435 | Condensed Statements of Operations and Comprehensive Loss The company's net loss widened in Q1 2023 compared to Q1 2022, driven by a significant increase in operating expenses Condensed Statement of Operations (in thousands) | | Three Months Ended March 31, 2023 | Three Months Ended March 31, 2022 | | :--- | :--- | :--- | | Research and development | $25,108 | $12,549 | | General and administrative | $6,150 | $4,472 | | Total operating expenses | $31,258 | $17,021 | | Loss from operations | $(31,258) | $(17,021) | | Net loss | $(30,069) | $(17,085) | | Net loss per share, basic and diluted | $(0.80) | $(0.71) | Condensed Statements of Stockholders' Equity Stockholders' equity increased substantially, primarily due to net proceeds from a follow-on common stock offering - The company raised approximately $107.7 million in net proceeds from an underwritten follow-on offering during the three months ended March 31, 2023[17] Condensed Statements of Cash Flows Cash flows show significant cash provided by financing activities from a stock offering, offsetting cash used in operations Condensed Statement of Cash Flows (in thousands) | | Three Months Ended March 31, 2023 | Three Months Ended March 31, 2022 | | :--- | :--- | :--- | | Net cash used in operating activities | $(26,292) | $(8,981) | | Net cash provided by (used in) investing activities | $12,234 | $(39,455) | | Net cash provided by financing activities | $107,984 | $80,268 | | Net increase in cash, cash equivalents and restricted cash | $93,926 | $31,832 | Notes to Condensed Financial Statements Notes detail the company's liquidity, confirming sufficient cash for the next 12 months, and significant future milestone obligations - In February 2023, the company completed a follow-on public offering, receiving net proceeds of approximately $107.7 million[24] - As of March 31, 2023, the company had an accumulated deficit of $243.2 million but believes its cash is sufficient to fund operations for at least the next 12 months[25][26] - As of March 31, 2023, the company had $25.0 million in outstanding borrowings under its Loan Facility with Oxford[89][90] - Under the Ares Agreement for atacicept, the company is obligated to pay up to $176.5 million in regulatory milestones and up to $515.0 million in commercial milestones[114] - For MAU868, the company is obligated to make future milestone payments of up to $7.0 million to Amplyx and $62.0 million to Novartis[122] Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses its strategic focus on the atacicept IgAN trial, rising operating expenses, and sufficient liquidity until early 2026 - The company is prioritizing the advancement of atacicept in IgAN into a pivotal Phase 3 trial while delaying enrollment and resource commitment to other programs[132] Comparison of Operating Expenses (in thousands) | Expense Category | Q1 2023 | Q1 2022 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Research and development | $25,108 | $12,549 | $12,559 | 100% | | General and administrative | $6,150 | $4,472 | $1,678 | 38% | - The increase in R&D expenses was primarily due to contract drug manufacturing for atacicept and higher compensation costs from increased headcount[152] - The company believes its $197.2 million in cash, equivalents, and marketable securities will be sufficient to fund operations until early 2026[168] Quantitative and Qualitative Disclosures About Market Risk The company's primary market risk is interest rate sensitivity on its short-term investments, which is not considered material - The company's primary market risk is interest rate sensitivity on its cash, cash equivalents, and short-term marketable securities, which is not expected to have a material impact[189] - Inflation is acknowledged as a factor that increases costs but is not believed to have had a significant impact on the results for the periods presented[190] Controls and Procedures Management concluded that the company's disclosure controls and procedures were effective as of the end of the quarter - The CEO and CFO concluded that as of March 31, 2023, the company's disclosure controls and procedures were effective[192] - No changes in internal control over financial reporting occurred during the quarter ended March 31, 2023, that have materially affected, or are reasonably likely to materially affect, these controls[193] PART II. OTHER INFORMATION Legal Proceedings The company reports it is not currently a party to any material legal proceedings - As of the report date, the company is not a party to any material legal proceedings[195] Risk Factors The company details significant risks related to its finances, clinical development, regulation, intellectual property, and third-party reliance - The company has no products approved for sale, has incurred net losses since inception, and will require substantial additional capital to finance operations[197][199][204] - The business is heavily dependent on the success of its two clinical-stage product candidates, atacicept and MAU868[212] - The company faces significant competition from multinational pharmaceutical companies and specialized biotech firms with greater resources[240][241][242] - The company's success depends on protecting its intellectual property and not breaching its license agreements with Ares or Novartis[338][347] - The company relies on third parties for manufacturing and to conduct clinical trials, increasing risks related to supply, cost, and compliance[414][421] Unregistered Sales of Equity Securities and Use of Proceeds The company's loan agreement with Oxford restricts its ability to declare and pay dividends without prior written consent - The company's Loan Agreement with Oxford restricts its ability to pay dividends without prior written consent[489] Defaults Upon Senior Securities The company reports that this item is not applicable - Not applicable[490] Mine Safety Disclosures The company reports that this item is not applicable - Not applicable[491] Other Information The company reports that there is no other information to disclose for this item - None[492] Exhibits This section lists the exhibits filed with the Form 10-Q, including corporate documents and required officer certifications - Lists exhibits filed with the report, including corporate governance documents and officer certifications (302 and 906)[494]