Arvinas, Inc. — FY2023 Form 10-K
Business context and reporting period. This annual report covers the fiscal year ended December 31, 2023; it is not a separate fourth-quarter report. Arvinas is a clinical-stage biotechnology company developing PROTAC protein degraders. It had no approved products and no product-sales revenue. Its lead programs target ER-positive/HER2-negative breast cancer (vepdegestrant, co-developed with Pfizer) and metastatic castration-resistant prostate cancer (ARV-766 and bavdegalutamide); ARV-393 and ARV-102 were preclinical at year-end.
Financial performance and liquidity
| Metric (USD millions, except per-share data) | 2023 | 2022 |
|---|---|---|
| Collaboration revenue | $78.5 | $131.4 |
| Research and development expense | $379.7 | $315.0 |
| General and administrative expense | $100.3 | $79.6 |
| Operating loss | $(401.5) | $(263.2) |
| Net loss | $(367.3) | $(282.5) |
| Net loss per share, basic and diluted | $(6.62) | $(5.31) |
| Net cash used in operating activities | $(347.8) | $(273.5) |
Revenue came from collaboration agreements, not product sales; the filing reports no sales-based milestone or royalty revenue to date. Other income was $37.6 million, including $38.8 million of net interest income. No product gross margin is reported because Arvinas had no product sales.
At December 31, 2023, cash, cash equivalents, restricted cash and marketable securities totaled approximately $1.3 billion, compared with approximately $1.2 billion a year earlier. Management said this was expected to fund planned operating expenses and capital requirements into 2027, subject to assumptions that could prove incorrect. Debt was $1.0 million, at a fixed 3.25% rate. Current assets were $1,280.2 million and current liabilities $257.1 million; deferred revenue totaled $549.2 million, including current and long-term portions.
Material changes versus 2022
- Revenue declined $52.9 million, primarily reflecting changes in estimated collaboration performance periods and recognition, lower Genentech revenue, and lower Oerth Bio-related deferred revenue recognition. The notes report 2023 revenue reductions of $35.0 million for the Pfizer vepdegestrant collaboration and $10.6 million for the Bayer and Pfizer research collaborations; the reversed revenue is expected to be recognized in future periods as performance continues.
- R&D expense rose $64.7 million, driven by expanded clinical-trial and drug-manufacturing costs, increased investment in ER and AR programs, and platform and exploratory research. G&A expense rose $20.7 million, including personnel, professional fees and commercial-readiness spending.
- Net loss widened by $84.8 million. Higher interest income and lower income-tax expense partly offset increased operating costs and lower revenue.
- Operating cash use increased by $74.3 million. Financing cash flow was $374.7 million, principally reflecting a November private placement and an at-the-market offering. The November placement raised $350.0 million gross through common shares and pre-funded warrants; year-end common shares issued and outstanding increased to 68.0 million from 53.2 million.
Outlook, programs and key risks
- Vepdegestrant: Phase 3 VERITAC-2 (monotherapy) and the VERITAC-3 first-line combination study were underway. Interim Phase 1b combination data reported a 63% clinical benefit rate, 42% objective response rate among evaluable patients, and median PFS of 11.1 months. These are interim results from a small, heavily pretreated study, not confirmatory Phase 3 findings. Combination treatment had substantial neutropenia, although management reported it was manageable with dose modifications. The company and Pfizer expected VERITAC-2 top-line data in the second half of 2024, and anticipated regulatory feedback on additional Phase 3 plans in that period. The FDA granted Fast Track designation in early 2024.
- ARV-766 and bavdegalutamide: In late 2023, Arvinas prioritized a planned Phase 3 ARV-766 trial over the previously planned bavdegalutamide Phase 3, citing early comparative efficacy and tolerability signals. It expected to discuss Phase 3 alignment with regulators by the second quarter of 2024 and anticipated ARV-766 Phase 2 PFS data in mid-2024. ARV-766 interim data included PSA50 responses in mutation-bearing patient subsets; bavdegalutamide results showed materially lower activity in patients with AR L702H mutations. Ongoing bavdegalutamide trials were expected to continue.
- Pipeline expansion: FDA clearance for ARV-393 and EMA clearance for ARV-102 were reported in the fourth quarter of 2023. Arvinas initiated ARV-102’s first-in-human Phase 1 trial in early 2024 and planned to start ARV-393 Phase 1 in the first half of 2024.
- Funding and execution: Arvinas expects continued losses and substantial R&D spending and may need additional capital. Clinical outcomes, regulatory decisions, trial enrollment, manufacturing and reliance on collaborators and contract organizations could delay or limit development. The company’s PROTAC approach remains unproven, and interim clinical findings may change as data mature.
- Contingency: The company accrued $15.2 million at year-end, primarily for a contract dispute; it said the possible loss range could not be estimated. It reported no material litigation proceedings. Other risks include competition, patent challenges, reimbursement and pricing pressures, cybersecurity and privacy exposure, and dependence on third-party manufacturing.
- Audit and controls: Deloitte issued an unqualified opinion on the financial statements and internal control over financial reporting. The audit identified CRO research-and-development accrual estimates as a critical audit matter; no material weakness was reported.
Important facts for investors to verify
- Whether management’s cash-runway estimate into 2027 remains valid as trial scope, spending and collaboration cost-sharing evolve.
- Phase 3 design, regulatory alignment, enrollment and readouts for vepdegestrant and ARV-766, and whether interim efficacy and safety signals are confirmed in larger studies.
- The cause, resolution and ultimate financial exposure of the contract dispute underlying the $15.2 million accrual.
- The size and timing of future collaboration payments, and the assumptions behind the 2023 deferred-revenue estimate changes.
- The effects of the November 2023 financing, pre-funded warrants, equity awards and any future share issuance on dilution.