Evaxion Biotech A/S — 2020 Form 20-F Summary
Business context and reporting period
This is Evaxion’s audited annual report for the fiscal year ended December 31, 2020—not a standalone fourth-quarter report. The Danish clinical-stage biotechnology company develops AI-based immunotherapies and vaccines through its PIONEER, EDEN and RAVEN platforms. It had no approved products and reported no revenue for 2020, 2019 or 2018. Financial statements are prepared under IFRS and presented in U.S. dollars; the company’s functional currency is Danish kroner.
Financial results and liquidity
| USD millions, except per-share data | 2020 | 2019 | Change |
|---|---|---|---|
| Revenue | None reported | None reported | — |
| Research and development expense | 10.9 | 8.2 | +32.7% |
| General and administrative expense | 5.7 | 2.6 | +114.1% |
| Operating loss | (16.6) | (10.9) | Loss widened |
| Net loss | (15.0) | (11.2) | Loss widened |
| Basic and diluted loss per share | (0.97) | (0.81) | Loss per share increased |
| Cash and cash equivalents at year-end | 5.8 | 9.6 | Down 3.7 |
| Net cash used in operating activities | (12.4) | (7.0) | Use increased |
Operating margins are not meaningful because the company had no revenue. R&D expense increased by $2.7 million, reflecting higher platform, preclinical and clinical development spending and employee costs, partly offset by grant income. G&A increased by $3.0 million, primarily from higher employee costs and professional and overhead expenses associated with expanding corporate functions and preparing for the IPO. The 2020 net loss included a $1.6 million income-tax benefit; the company did not recognize deferred tax assets for its tax-loss carryforwards.
At December 31, 2020, total assets were $12.0 million, total liabilities $4.9 million and total equity $7.0 million. Cash declined by $4.0 million during the year. Financing activities provided $8.8 million, mainly from share issuances; investing activities used $0.4 million. The company reported no drawn borrowings at year-end. Its €20 million European Investment Bank facility was undrawn, although a tranche-related warrant arrangement could create future cash obligations. Year-end lease liabilities were $20,000.
Material changes, outlook and risks
- Evaxion completed its U.S. IPO in February 2021, after the reporting period, issuing 3.0 million ADSs at $10 each. The filing reports net proceeds of approximately $25.4 million after underwriting discounts, commissions and estimated offering expenses. Management expected the IPO proceeds and existing cash to fund operations and capital needs for at least 12 months from the IPO; it also cautioned that plans and cash needs could change.
- Management expects continued operating losses and says further financing will be needed to advance development. Its strategy is to progress candidates through Phase 2b proof-of-concept trials and then seek licensing partners; it had not yet entered the planned late-stage partnerships.
- EVX-01 and EVX-02 were in Phase 1/2a trials. Preliminary EVX-01 results reported reactive T cells in all five patients treated at the low dose, with 80.5% of administered neoepitopes inducing reactive T cells; 84.8% of those responses were reported as new responses. The filing also reports clinical benefit in three of five low-dose patients. These early findings are not definitive and may change as data mature. The company anticipated readouts for both lead candidates in the first half of 2021.
- EVX-03 was in preclinical development, with a regulatory filing targeted for the second half of 2021. EVX-B1, a vaccine candidate for Staphylococcus aureus infections, was preclinical, with an IND filing targeted for the second half of 2022. These are stated plans, not assurances.
- COVID-19 could disrupt trials, supply chains, operations and access to capital. The company said it had not experienced a material negative impact as of the report date, while noting uncertainty about future effects.
- A material weakness in internal control over financial reporting remained unremediated at December 31, 2020, involving insufficient technical accounting and supervisory resources and oversight of service providers. Management also concluded disclosure controls were ineffective at year-end. Remediation plans included outside accounting support and hiring additional finance personnel; success was not assured.
- The company reported no material litigation and no material off-balance-sheet arrangements. It did report a $2.7 million early-termination fee under its new 10-year Hørsholm facility lease, which commenced in February 2021. It does not anticipate paying dividends in the foreseeable future.
Key facts for investors to verify
- Confirm the IPO’s final net proceeds and reconcile them with the cash-flow runway assumptions and projected spending.
- Review the full clinical datasets and subsequent updates for EVX-01 and EVX-02, including response definitions, patient counts, safety and durability.
- Track whether the company meets trial, regulatory-filing and partnership milestones, and how development costs affect cash burn.
- Check the status and terms of the EIB facility and warrants, including potential cash-settlement obligations.
- Monitor remediation of the material weakness and whether subsequent filings report effective financial controls.
- Consider manufacturing, regulatory, intellectual-property, financing and COVID-related risks; the company’s AI-platform claims and preclinical results do not establish clinical or commercial success.