Evaxion Biotech A/S — FY2021 Form 20-F
Reporting period: Fiscal year ended December 31, 2021; filed March 31, 2022. This is an annual report, not a standalone fourth-quarter report. Financial statements are audited and prepared under IFRS, with U.S. dollars as the presentation currency. The auditor issued an unqualified opinion on the financial statements.
Business context
Evaxion is a clinical-stage biotechnology company developing AI-designed immunotherapies and vaccines. It had no approved products and reported no revenue for 2021. Its lead clinical programs were patient-specific cancer candidates EVX-01 and EVX-02; EVX-03 and bacterial vaccine EVX-B1 remained preclinical. The company’s strategy is to develop candidates through Phase 2b proof-of-concept studies and seek pharmaceutical partners for later-stage development and commercialization.
Financial performance and position
| Metric (USD millions, except per-share data) | FY2021 | FY2020 |
|---|---|---|
| Revenue | None | None |
| Research and development expense | 19.6 | 10.9 |
| General and administrative expense | 6.3 | 5.7 |
| Operating loss | (25.8) | (16.6) |
| Net loss | (24.5) | (15.0) |
| Basic and diluted loss per share | (1.26) | (0.97) |
| Net cash used in operating activities | (21.9) | (12.4) |
| Cash and cash equivalents at year-end | 32.2 | 5.8 |
| Total liabilities at year-end | 7.7 | 4.9 |
Operating expenses increased 56% to $25.8 million, principally reflecting higher R&D spending on platforms, preclinical work and clinical trials, and increased headcount. Net loss widened by $9.5 million. Finance income was $2.0 million, primarily foreign-exchange gains; finance expenses were $0.9 million. No operating or gross margin is meaningful because the company had no revenue.
Cash used in investing activities was $1.3 million, mainly for property and equipment. Financing activities provided $49.8 million, largely from equity offerings. The February 2021 IPO generated $25.3 million net proceeds and the November follow-on offering generated $24.9 million net proceeds. Year-end equity was $32.4 million and accumulated deficit was $50.4 million.
Year-end liabilities included $2.5 million of lease liabilities and a $1.2 million loan from the lessor for laboratory fit-out. The company also had a €20 million EIB loan facility in three tranches; it received the first €7 million tranche on February 17, 2022, after year-end. The filing says existing cash, offering proceeds and available EIB funding were expected to fund operations and capital needs for at least 12 months from the filing date.
Material developments and outlook
- EVX-01: In an initial Phase 1/2a readout, nine melanoma patients showed a reported 67% overall response rate and 22% complete response rate. These results were compared with historical anti-PD-1 outcomes, not a concurrent control group. The filing also reports reactive T cells in all nine patients and treatment-related Grade 1–2 adverse events. Thirteen patients had been treated by year-end. Evaxion signed a clinical trial collaboration and supply agreement with MSD for a planned Phase 2b study combining EVX-01 with KEYTRUDA; Evaxion sponsors the study and MSD supplies KEYTRUDA. Australian regulatory clearance followed in January 2022.
- EVX-02/EVX-03: EVX-02 preliminary Phase 1/2a data indicated neoepitope-specific T-cell activation and apparent tolerability; 16 patients had been recruited by year-end. EVX-03 remained in late preclinical development. The company planned a 225-patient, three-arm Phase 2b study of EVX-02/EVX-03 plus anti-PD-1 versus anti-PD-1 alone. The filing gives inconsistent first-patient timing: first half of 2022 in one passage and second half in another.
- Other pipeline: EVX-B1, an S. aureus vaccine, remained preclinical, with a clinical regulatory filing targeted for the second half of 2022. The company also described RAVEN/AICoV coronavirus vaccine work and planned to select further bacterial and viral candidates in 2022.
- Financial outlook: Management expects significant losses and expenses to continue and requires additional capital to achieve its plans. It gave no specific revenue, earnings or cash-burn guidance. Future spending and funding needs depend on trial progress, manufacturing, regulatory requirements and potential partnerships.
Risks, contingencies and unusual items
- The company is pre-revenue, has a limited operating history and expects ongoing losses; clinical development, regulatory approval and successful partnering are uncertain. Its AI-based discovery approach is novel and unproven.
- Clinical and manufacturing risks include small early-stage datasets, potential safety or efficacy failures, patient-specific production complexity, reliance on external manufacturers and suppliers, and possible trial delays. COVID-19 had affected some timelines and could continue to disrupt trials, supply chains and financing. Russia’s invasion of Ukraine was identified as a potential source of research, clinical-trial and market disruption.
- Management concluded internal control over financial reporting was ineffective at December 31, 2021 and identified material weaknesses in control design and implementation, as well as technical accounting staffing and oversight. Disclosure controls were also deemed ineffective. Remediation plans include additional finance resources, external advisers, redesigned controls and training; remediation was not assured. As an emerging growth company, Evaxion was exempt from auditor attestation of internal controls.
- Income tax benefit declined to $0.2 million from $1.6 million. Following an Australian tax ruling, the company reversed approximately $1.0 million of tax benefit previously reported. It did not recognize deferred tax assets for accumulated tax losses.
- The EIB warrants are expected to be cash-settled or put back to the company rather than settled in shares; the eventual cash obligation is uncertain and could use operating funds. The company also reported no material off-balance-sheet arrangements and no material pending litigation.
Important facts for investors to verify
- Review the complete EVX-01 dataset, patient count, follow-up, response definitions, safety findings and limitations of historical comparisons; verify results in controlled, larger trials.
- Confirm timing, design, enrollment and funding for the planned EVX-01 and EVX-02/EVX-03 Phase 2b trials, including the inconsistent EVX-02/EVX-03 start-date disclosures.
- Track actual cash burn, remaining liquidity and financing runway, including EIB tranche availability, repayment terms and any cash settlement of EIB warrants.
- Monitor remediation of the disclosed material weaknesses and the reliability and timeliness of future financial reporting.
- Assess whether Evaxion secures economically favorable development or licensing partners and whether its manufacturing and clinical supply arrangements can support larger trials.