Acrivon Therapeutics, Inc. — FY 2022 Form 10-K
Reporting period: Fiscal year ended December 31, 2022; filed March 28, 2023. This is an annual report, not a standalone Q4 filing. Acrivon is a clinical-stage oncology company and has not generated revenue from product sales.
Business context
Acrivon uses its proteomics-based AP3 platform to develop targeted cancer medicines and OncoSignature tests intended to identify patients most likely to respond. Its lead candidate, ACR-368 (prexasertib), is a CHK1/2 inhibitor in an FDA-cleared Phase 2 master-protocol trial. The trial includes OncoSignature-positive patients receiving ACR-368 alone and OncoSignature-negative patients receiving ACR-368 with low-dose gemcitabine (LDG). The OncoSignature test is investigational and not approved. WEE1 and PKMYT1 are preclinical programs.
Financial performance and liquidity
| Metric | FY 2022 | FY 2021 |
|---|---|---|
| Revenue | None | None |
| Research and development expense | $23.9 million | $13.7 million |
| General and administrative expense | $8.7 million | $2.5 million |
| Total operating expenses / operating loss | $32.7 million | $16.2 million |
| Other income (expense), net | $1.5 million | $(0.1) million |
| Net loss | $(31.2) million | $(16.2) million |
| Basic and diluted net loss per share | $(7.56) | $(9.32) |
| Cash used in operating activities | $30.1 million | $14.0 million |
At year-end, cash and cash equivalents were $29.5 million, short-term investments $98.2 million, and long-term investments $41.9 million, totaling $169.6 million in cash, cash equivalents and investments. Total assets were $181.2 million and total liabilities $10.8 million. The filing reports no outstanding borrowings; lease liabilities were $5.0 million, with $6.1 million of undiscounted future lease payments. Gross margin is not applicable because there were no product sales.
FY 2022 financing cash inflow was $101.7 million, primarily from the IPO and concurrent private placement; investing cash outflow was $141.7 million, primarily reflecting purchases of investments. Acrivon reported an accumulated deficit of $56.0 million. Management estimates year-end resources will fund operating expenses and capital requirements at least into Q4 2024, subject to assumptions and execution.
Material changes versus FY 2021
- Net loss increased by $14.9 million as operating expenses rose by $16.5 million. R&D expense increased $10.2 million, reflecting trial startup and manufacturing costs, personnel growth, discovery work and companion-diagnostic milestones; prior-year R&D included the $5.0 million Lilly upfront license payment.
- G&A expense increased $6.2 million, mainly from higher personnel costs and public-company legal, accounting and professional fees.
- Other income improved by $1.5 million, principally from interest on cash and investments and the absence of prior-year fair-value losses on settled financing rights.
- The November 2022 IPO and concurrent private placement generated approximately $104.5 million net proceeds before IPO expenses. The underwriters’ partial option exercise closed in December. The company said it had not used IPO proceeds as of year-end and held proceeds in cash equivalents and investments.
- All preferred stock converted to common stock at the IPO. Common shares outstanding were 21,920,402 at December 31, 2022; the cover reports 21,920,634 outstanding as of March 24, 2023.
Outlook, risks and notable matters
- Management expected initial ACR-368 trial data in the second half of 2023 and intended, subject to results and FDA discussions, to enter a registrational phase during 2024. It also expected to advance one or both WEE1 and PKMYT1 programs into IND-enabling studies in 2023. These are forward-looking plans, not guarantees; the filing provides no financial guidance.
- Prior ACR-368 trials reported activity without prospective patient selection, while the claimed response enrichment from OncoSignature is based on preclinical analyses of prior-trial samples and models. The ongoing trial must establish clinical benefit and the test’s utility; FDA approval of both drug and companion diagnostic is uncertain.
- Key risks include clinical failure or delay, patient enrollment and safety, reliance on Akoya for the companion diagnostic, third-party manufacturing and research providers, competition, intellectual-property and licensing exposure, and the need for additional capital. Acrivon expects continued losses and no product revenue for the foreseeable future.
- ACR-368 carries potential hematologic toxicity, particularly neutropenia and thrombocytopenia. The filing also notes three deaths in one prior trial cohort that investigators deemed possibly related to treatment; a death in the current combination arm was reported as not drug-related and attributed to disease progression.
- The company disclosed material weaknesses in internal control over financial reporting and concluded disclosure controls were not effective as of December 31, 2022. Remediation was underway but the weaknesses were not considered remediated; management said they had not caused a financial-statement misstatement. PwC issued an unqualified opinion on the financial statements.
- After year-end, Acrivon reported full access to its SVB deposits following the bank’s March 2023 resolution and said it did not anticipate losses; it had begun diversifying holdings.
- No material legal proceedings were reported. Contingent obligations include up to $168.0 million in Lilly development and commercial milestones, plus tiered royalties up to 10%, and up to $10.3 million in Akoya development milestones. The filing reports $2.3 million paid to Akoya through December 2022 and $0.5 million paid in March 2023 for subsequent milestones.
Important facts for investors to verify
- Current cash, investment balances, quarterly burn rate and whether the stated runway to Q4 2024 remains achievable.
- Enrollment, safety, response data and timing for each ACR-368 monotherapy and ACR-368-plus-LDG trial cohort; distinguish clinical results from preclinical response predictions.
- FDA requirements and timeline for the ACR-368 companion diagnostic, and Akoya’s ability to supply and validate the test.
- Progress toward remediation of material weaknesses and the effectiveness of the company’s financial-reporting controls.
- Potential dilution from equity compensation and future financing, as well as milestone, royalty and lease commitments.