AC Immune SA — 2017 Form 20-F Summary
Reporting period: Fiscal year ended December 31, 2017. This is an annual report, not a standalone fourth-quarter filing; the supplied filing does not provide clear standalone Q4 financial results. Figures are in CHF unless stated otherwise. Financial statements are prepared under IFRS.
Business context
AC Immune is a clinical-stage biopharmaceutical company developing therapeutics and diagnostics for neurodegenerative diseases linked to misfolded proteins. It reported five product candidates in clinical trials and no approved products or product-sales revenue. Collaboration revenue, including milestone payments and research services, is its principal revenue source.
Financial performance and liquidity
| Metric | 2017 | 2016 | Change |
|---|---|---|---|
| Contract revenue | CHF 20.255 million | CHF 23.214 million | Down CHF 2.959 million |
| Research and development expense | CHF 32.663 million | CHF 25.774 million | Up CHF 6.889 million |
| General and administrative expense | CHF 10.131 million | CHF 7.896 million | Up CHF 2.235 million |
| Operating loss | CHF 22.539 million | CHF 10.456 million | Loss increased |
| Net loss | CHF 26.411 million | CHF 7.096 million | Loss increased |
| Net cash used in operating activities | CHF 22.094 million | CHF 5.646 million | Cash use increased |
| Cash and cash equivalents at year-end | CHF 124.377 million | CHF 152.210 million | Down CHF 27.833 million |
Operating and net loss margins were approximately negative 111% and negative 130% of revenue, respectively, based on reported figures. These are loss-making clinical-stage operations, not product-sales margins. Total assets were CHF 132.013 million and shareholders’ equity CHF 116.839 million at year-end. Current assets were CHF 129.534 million against current liabilities of CHF 9.754 million.
Reported financing obligations were CHF 395,000, plus CHF 99,000 accrued interest; the filing does not indicate substantial conventional borrowing. Cash flow from investing activities was negative CHF 1.842 million, primarily reflecting capital spending. Financing activities provided CHF 271,000, versus CHF 78.790 million in 2016, when the IPO and private placement generated proceeds.
Material changes versus 2016
- Revenue declined, mainly due to the timing and size of collaboration milestones. 2017 included a CHF 14 million Genentech milestone for first patient dosing in a Phase 2 anti-Tau trial and a CHF 1.1 million Piramal milestone.
- R&D spending rose 27%, reflecting investment in discovery programs, employee growth and development of the clinical and diagnostic pipeline. G&A increased 28%, including higher personnel, public-company, legal and audit costs.
- Net finance result swung from a CHF 3.360 million gain to a CHF 3.872 million loss, chiefly due to foreign-exchange losses on cash balances; the filing identifies approximately CHF 4.2 million of FX losses in 2017.
- Operating cash use increased, while year-end cash fell from the elevated 2016 level that included IPO and placement proceeds.
Outlook, management commentary and key risks
- Management expected existing resources, excluding potential milestone payments, to fund projected operations through at least the second quarter of 2019. This estimate depends on assumptions and development spending; the company expected continuing losses and anticipated needing additional capital.
- R&D spending was expected to rise. AC Immune planned to advance its wholly owned ACI-24 Alzheimer’s program toward a Phase 2 study, expected to start in the second half of 2018, and to co-fund ACI-35 development with Janssen through the first Phase 2 study.
- Two Phase 3 crenezumab studies were ongoing under Genentech’s control; one was fully recruited in Q4 2017. The filing describes earlier Phase 2 findings as exploratory or underpowered, including a reported cognitive signal in a non-pre-specified subgroup. These findings are not confirmatory Phase 3 results.
- Genentech began a Phase 2 study of anti-Tau antibody RO7105705 in Q4 2017; the first patient dosing triggered a CHF 14 million milestone. Partners control important development activities, and Genentech may terminate its agreements on notice. Janssen and Piramal also have termination rights under specified terms.
- Material risks include clinical failure or delay, safety issues, competition, dependence on partners and third-party manufacturers, intellectual-property challenges, and the possibility of needing further financing. No candidate was approved for sale, and milestone and royalty receipts are uncertain.
- Currency exposure is unhedged. More than 83% of year-end cash was held in CHF, with the remainder mainly in USD and EUR; management estimated that a 10% CHF exchange-rate movement against the USD and EUR would change net loss by about CHF 2.1 million, all else equal.
- Contractual commitments totaled CHF 12.372 million, including CHF 11.635 million of R&D obligations. The independent auditor issued an unqualified opinion on the IFRS financial statements. Management reported effective disclosure controls and internal control over financial reporting at year-end; the auditor did not attest to internal-control effectiveness.
Important facts for investors to verify
- Progress, enrollment, timing and eventual results of the crenezumab Phase 3 trials, and whether exploratory earlier signals are confirmed.
- Actual cash burn versus the forecast runway through Q2 2019, planned R&D commitments, and the timing or availability of future financing and milestone payments.
- Partner decisions and obligations, particularly Genentech’s control of crenezumab and anti-Tau development and termination rights across collaborations.
- Safety updates for ACI-35 and other candidates, including events the company says were not considered treatment-related but whose relationship could not be ruled out.
- Foreign-exchange effects, the concentration of cash at one bank, and the amount and timing of committed R&D spending.