AC Immune SA — FY2020 Form 20-F
Reporting period: Fiscal year ended December 31, 2020. This is an annual report, not a standalone Q4 report. Financial statements are prepared under IFRS in Swiss francs (CHF).
Business context
AC Immune is a clinical-stage biopharmaceutical company developing therapies and diagnostics for neurodegenerative diseases, especially Alzheimer’s disease. Its SupraAntigen and Morphomer platforms support a pipeline of therapeutic and diagnostic candidates. It had no approved products and generated no product-sales revenue; income primarily came from licensing, collaboration and grant arrangements.
Financial results and liquidity
| Metric (CHF millions unless stated) | FY2020 | FY2019 |
|---|---|---|
| Contract and total revenue | 15.4 | 110.5 |
| Research and development expense | 59.5 | 50.4 |
| General and administrative expense | 18.6 | 16.1 |
| Operating loss / income | (61.3) | 44.5 |
| Net loss / income | (61.9) | 45.4 |
| Basic and diluted EPS (CHF) | (0.86) | 0.64 |
| Net cash from / (used in) operating activities | (59.5) | 55.2 |
At year-end, cash and cash equivalents were CHF 160.9 million and short-term financial assets CHF 65.0 million, for reported liquidity of CHF 225.9 million, down from CHF 288.6 million a year earlier. Total assets were CHF 238.7 million; shareholders’ equity was CHF 215.5 million. Total liabilities were CHF 23.3 million, including CHF 2.2 million in lease liabilities and CHF 7.5 million in defined-benefit pension liabilities. The Lilly convertible note had converted to equity in 2019; the LuMind financing obligation was fully repaid in 2020.
The filing reports no product-sales margins; a conventional product gross margin is therefore not provided. The company reported a net loss and negative operating cash flow in 2020.
Material changes versus FY2019
- Revenue fell CHF 95.0 million, principally because 2019 included Lilly’s CHF 73.1 million license payment and CHF 30 million milestone installment; 2020 included CHF 10 million of Lilly milestone revenue and CHF 4.3 million for Lilly research and development activities.
- R&D expense increased CHF 9.1 million as the company expanded internal programs and clinical work; G&A expense increased CHF 2.5 million.
- Net income of CHF 45.4 million in 2019 turned to a CHF 61.9 million net loss in 2020. The 2019 result included a CHF 4.5 million gain on the Lilly convertible note’s conversion feature.
- Operating cash flow shifted from CHF 55.2 million provided to CHF 59.5 million used. Investing cash flow was CHF 28.3 million provided, mainly as short-term financial assets matured; financing cash flow was CHF 0.8 million used.
Outlook, commentary and risks
- Management estimated existing capital resources would fund projected operating requirements through at least Q1 2024, excluding potential milestone payments. This estimate depends on assumptions and could change with spending, development results or other circumstances.
- Management expected R&D spending to continue increasing. The company remained dependent on collaboration income, grants and capital markets and could need additional funding; equity financing could dilute shareholders.
- Clinical developments were mixed. Genentech’s Phase 2 Tauriel study of semorinemab in early Alzheimer’s did not meet its primary efficacy endpoint or two secondary endpoints, although the primary safety endpoint was met. A separate Phase 2 study in moderate Alzheimer’s remained ongoing. Roche had discontinued crenezumab’s CREAD and CREAD 2 Phase 3 trials in 2019; a prevention trial continued.
- ACI-24 Alzheimer’s Phase 2 interim results were described as safe and well tolerated; further interim data were expected in Q2 2021. The ACI-24 Down syndrome Phase 1b study reported encouraging safety and immunogenicity, but further trial initiation depended on COVID-19 conditions. ACI-35.030 interim results showed an antibody response in all patients assessed; development remained early-stage.
- COVID-19 disrupted some studies, including temporary interruption of crenezumab dosing and suspension or delays to certain PI-2620 studies. Management said operations had mostly resumed at full capacity and did not expect material long-term effects on development timelines or going concern, while acknowledging uncertainty.
- Key risks include clinical and regulatory failure, reliance on partners that control development of several candidates, competition, intellectual-property challenges, reimbursement and pricing uncertainty, foreign-exchange exposure, and dependence on third-party manufacturers and research organizations.
Other notable items
- The September 2020 ATM facility authorized sales of up to USD 80 million of shares. At December 31, 5 million newly issued shares were held as treasury shares; the filing says no shares had been sold under the sales agreement by year-end. The company subsequently reported net proceeds of CHF 8.0 million from sales of 764,977 shares in February 2021.
- Management concluded disclosure controls and internal control over financial reporting were effective as of December 31, 2020. The auditor did not provide an internal-control attestation because of the company’s emerging-growth-company exemption. PwC issued an unqualified opinion on the IFRS financial statements.
- The company believed it was likely a passive foreign investment company (PFIC) for US tax purposes in 2020 and said it may be a PFIC in later years; the determination was not definitive.
Important facts for investors to verify
- Whether the Q1 2024 runway estimate remains supported by current cash, projected spending and updated trial plans, excluding unearned milestones.
- Updated clinical results and timelines for semorinemab, ACI-24, ACI-35.030, the crenezumab prevention trial and diagnostic candidates.
- Milestone terms, partner decisions and termination rights under the Lilly, Janssen, Genentech and Life Molecular Imaging agreements.
- ATM share issuance and treasury-share treatment, including subsequent sales and any resulting dilution.
- Current PFIC status and any US tax reporting consequences, as well as material currency exposures and commitments to external research projects.