Acrivon Therapeutics, Inc. — Q1 2023 Form 10-Q
Business context and reporting period. Clinical-stage oncology biotechnology company; quarter ended March 31, 2023. Its lead candidate, ACR-368 (prexasertib), was in Phase 2 development, alongside preclinical WEE1 and PKMYT1 programs. The company had no approved products and generated no revenue.
Financial performance and position
| Metric | Q1 2023 | Q1 2022 / prior date |
|---|---|---|
| Revenue | None | None |
| Research and development expense | $9.8 million | $6.1 million |
| General and administrative expense | $4.6 million | $1.1 million |
| Total operating expenses | $14.4 million | $7.2 million |
| Other income (expense), net | $1.6 million income | $8,000 expense |
| Net loss | $12.8 million | $7.2 million |
| Net loss per share, basic and diluted | $0.58 | $4.08 |
| Net cash used in operating activities | $11.4 million | $8.4 million |
Margins are not meaningful because the company had no revenue. Higher R&D costs reflected continued ACR-368 development, companion-diagnostic milestones, increased staffing and discovery activity. Higher G&A primarily reflected increased personnel costs and public-company legal and professional fees. Increased investment interest income partially offset operating expenses.
At March 31, 2023, cash and cash equivalents were $27.5 million and investments were $132.0 million, totaling approximately $159.5 million. Current assets were $124.0 million; total assets were $170.2 million. Total liabilities were $9.7 million, including $4.8 million of operating lease liabilities; the balance sheet shows no borrowings. Accumulated deficit was $68.8 million. Cash, cash equivalents and restricted cash declined $2.0 million during the quarter. Investing activities provided $9.3 million, primarily from investment maturities, partially offset by purchases.
Material changes and outlook
- Net loss increased $5.5 million year over year; operating expenses increased $7.2 million.
- Cash used in operations increased about $2.9 million. Noncash stock-based compensation was $2.6 million, compared with $40,000 in Q1 2022.
- Management estimated that March 31 cash, cash equivalents and investments would fund operations and capital requirements into at least Q4 2024. The notes separately state sufficiency for at least 12 months from issuance of the financial statements. Both estimates depend on assumptions; management expects additional funding will be needed.
- On May 8, 2023, after quarter-end, FDA granted ACR-368 two Fast Track designations for monotherapy investigation in OncoSignature-positive platinum-resistant ovarian cancer and endometrial cancer. This designation does not assure approval or a faster review.
- The company reported access to its funds following the March 2023 Silicon Valley Bank closure, no resulting losses, and a process to diversify holdings.
Risks, commitments and unusual items
- The company expects continuing losses and increasing development costs, and may need additional capital. Funding may be unavailable or require dilution, reduced development activity or licensing rights to third parties.
- ACR-368’s success depends on clinical results and development of its OncoSignature companion diagnostic with Akoya. The diagnostic is not yet approved. Akoya milestone payments may total up to $10.3 million; $2.8 million had been paid through the filing’s stated update, and Q1 included $1.5 million of related expense.
- The Lilly license for ACR-368 carries up to $168.0 million in development and commercial milestones, including $5.0 million due before an NDA, plus tiered royalties up to 10%. No milestones or royalties had been incurred as of March 31, 2023.
- Operating lease liabilities were $4.8 million; undiscounted future lease payments totaled $5.8 million. Clinical, regulatory, manufacturing, patient-enrollment, competition, intellectual-property and reimbursement risks remain significant.
- Disclosure controls were deemed ineffective at March 31, 2023 because previously identified material weaknesses in internal control over financial reporting had not been fully remediated. Management reported no resulting financial-statement misstatements and described ongoing remediation.
- No material legal proceedings were reported. No material effect of COVID-19 on the financial statements was identified for the periods presented.
Important facts for investors to verify
- Progress, enrollment and results of the ACR-368 Phase 2 trials, and the evidence supporting use of the OncoSignature test.
- Timing and requirements for companion-diagnostic validation and regulatory review, including Akoya milestones and costs.
- Cash burn, investment liquidity and whether the stated Q4 2024 runway remains achievable; the filing cautions that estimates rely on assumptions.
- Plans and terms for additional financing, and potential dilution or licensing of assets.
- Progress in remediating material weaknesses and the effectiveness of newly implemented financial controls.
- Future obligations under the Lilly license, Akoya agreement and operating leases.