UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
(Mark One)
|
☒ |
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended September 30, 2018
OR
|
☐ |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from ____________________ to ____________________
Commission File Number: 001-38672
ARVINAS, INC.
(Exact Name of Registrant as Specified in its Charter)
|
Delaware |
47-2566120 |
|
(State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer |
|
5 Science Park 395 Winchester Ave. New Haven, Connecticut |
06511 |
|
(Address of principal executive offices) |
(Zip Code) |
Registrant’s telephone number, including area code: (203) 535-1456
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☐ No ☒
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
|
Large accelerated filer |
|
☐ |
|
Accelerated filer |
|
☐ |
|
Non-accelerated filer |
|
☒ |
|
Small reporting company |
|
☒ |
|
|
|
|
|
Emerging growth Company |
|
☒ |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☒
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
As of November 01, 2018, the registrant had 32,350,972 shares of common stock, $0.001 par value per share, outstanding.
|
|
|
Page |
|
PART I. |
2 |
|
|
Item 1. |
2 |
|
|
|
2 |
|
|
|
3 |
|
|
|
Condensed Consolidated Statements of Comprehensive Income (Loss) |
3 |
|
|
4 |
|
|
|
5 |
|
|
|
Notes to Unaudited Condensed Consolidated Financial Statements |
6 |
|
Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
15 |
|
Item 3. |
24 |
|
|
Item 4. |
24 |
|
|
PART II. |
25 |
|
|
Item 1. |
25 |
|
|
Item 1A. |
25 |
|
|
Item 2. |
60 |
|
|
Item 6. |
61 |
|
|
62 |
||
|
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|
|
i
Arvinas, INC. (SUCCESSOR TO aRVINAS hOLDING cOMPANY, llc) and Subsidiaries
Condensed Consolidated Balance Sheets (unaudited)
|
|
|
September 30, 2018 |
|
|
December 31, 2017 |
|
||
|
Assets |
|
|
|
|
|
|
|
|
|
Current assets: |
|
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
6,191,004 |
|
|
$ |
30,912,391 |
|
|
Marketable securities |
|
|
83,602,865 |
|
|
|
8,258,982 |
|
|
Account receivable |
|
|
— |
|
|
|
25,000,000 |
|
|
Other receivable |
|
|
2,178,878 |
|
|
|
1,040,452 |
|
|
Prepaid expenses and other current assets |
|
|
3,545,309 |
|
|
|
316,903 |
|
|
Total current assets |
|
|
95,518,056 |
|
|
|
65,528,728 |
|
|
Property, equipment and leasehold improvements, net |
|
|
3,347,242 |
|
|
|
1,298,881 |
|
|
Other assets |
|
|
20,760 |
|
|
|
20,760 |
|
|
Total assets |
|
$ |
98,886,058 |
|
|
$ |
66,848,369 |
|
|
Liabilities and stockholders'/members’ equity |
|
|
|
|
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
|
|
|
|
Accounts payable |
|
$ |
1,300,760 |
|
|
$ |
596,527 |
|
|
Accrued expenses |
|
|
4,851,146 |
|
|
|
3,545,936 |
|
|
Deferred revenue |
|
|
13,501,056 |
|
|
|
13,553,136 |
|
|
Current portion of long-term debt |
|
|
194,669 |
|
|
|
159,265 |
|
|
Total current liabilities |
|
|
19,847,631 |
|
|
|
17,854,864 |
|
|
Deferred revenue |
|
|
40,713,950 |
|
|
|
48,545,625 |
|
|
Long term debt, net of current portion |
|
|
2,000,000 |
|
|
|
151,122 |
|
|
Preferred unit warrant liability |
|
|
— |
|
|
|
50,888 |
|
|
Total liabilities |
|
|
62,561,581 |
|
|
|
66,602,499 |
|
|
Commitments and Contingencies |
|
|
|
|
|
|
|
|
|
Series A redeemable convertible preferred units, no par value, at redemption value, 22,463,665 units issued and outstanding at December 31, 2017 |
|
|
— |
|
|
|
19,768,025 |
|
|
Series B redeemable convertible preferred units, no par value, at redemption value, 24,977,489 units issued and outstanding at December 31, 2017 |
|
|
— |
|
|
|
41,712,407 |
|
|
Series A redeemable convertible preferred stock, $0.001 par value, at redemption value, 22,573,781 shares issued and outstanding at September 30, 2018 |
|
|
111,132,408 |
|
|
|
— |
|
|
Series B redeemable convertible preferred stock, $0.001 par value, at redemption value, 24,977,489 shares issued and outstanding at September 30, 2018 |
|
|
122,965,984 |
|
|
|
— |
|
|
Series C redeemable convertible preferred stock, $0.001 par value, at redemption value, 16,467,066 shares issued and outstanding at September 30, 2018 |
|
|
81,068,464 |
|
|
|
— |
|
|
Stockholders’/Members’ equity: |
|
|
|
|
|
|
|
|
|
Common units, no par value, 1,897,544 units issued and outstanding |
|
|
— |
|
|
|
6,167 |
|
|
Incentive units, no par value, 3,066,734 units issued as of December 31, 2017 |
|
|
— |
|
|
|
1,186,419 |
|
|
Common stock, $0.001 par value; 3,683,639 shares issued and outstanding as of September 30, 2018 |
|
|
3,684 |
|
|
|
— |
|
|
Accumulated deficit |
|
|
(286,176,753 |
) |
|
|
(62,417,397 |
) |
|
Additional paid-in capital |
|
|
7,377,913 |
|
|
|
— |
|
|
Accumulated other comprehensive loss |
|
|
(47,223 |
) |
|
|
(9,751 |
) |
|
Total members’/stockholders’ equity |
|
|
(278,842,379 |
) |
|
|
(61,234,562 |
) |
|
Total liabilities and members’/stockholders’ equity |
|
$ |
98,886,058 |
|
|
$ |
66,848,369 |
|
See accompanying notes
2
Arvinas, INC. (SUCCESSOR TO aRVINAS hOLDING cOMPANY, llc) and Subsidiaries
Condensed Consolidated Statements of Operations and Comprehensive Loss (unaudited)
|
Consolidated Statements of Operations |
|
Three Months Ended September 30, |
|
|
Nine Months Ended September 30, |
|
||||||||||
|
|
|
2018 |
|
|
2017 |
|
|
2018 |
|
|
2017 |
|
||||
|
Revenue |
|
$ |
3,375,264 |
|
|
$ |
1,668,861 |
|
|
$ |
10,883,755 |
|
|
$ |
5,006,583 |
|
|
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Research and development |
|
|
13,149,879 |
|
|
|
7,222,897 |
|
|
|
30,631,531 |
|
|
|
22,102,713 |
|
|
General and administrative |
|
|
4,284,231 |
|
|
|
857,310 |
|
|
|
7,110,723 |
|
|
|
2,357,119 |
|
|
Total operating expenses |
|
|
17,434,110 |
|
|
|
8,080,207 |
|
|
|
37,742,254 |
|
|
|
24,459,832 |
|
|
Loss from operations |
|
|
(14,058,846 |
) |
|
|
(6,411,346 |
) |
|
|
(26,858,499 |
) |
|
|
(19,453,249 |
) |
|
Other income (expenses) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income, net |
|
|
160,100 |
|
|
|
607 |
|
|
|
418,494 |
|
|
|
1,030 |
|
|
Change in fair value of preferred unit warrant |
|
|
— |
|
|
|
1,546 |
|
|
|
(193,779 |
) |
|
|
4,338 |
|
|
Interest income |
|
|
523,338 |
|
|
|
24,140 |
|
|
|
1,273,988 |
|
|
|
165,606 |
|
|
Interest expense |
|
|
(12,264 |
) |
|
|
(12,219 |
) |
|
|
(32,804 |
) |
|
|
(38,905 |
) |
|
Total other income |
|
|
671,174 |
|
|
|
14,074 |
|
|
|
1,465,899 |
|
|
|
132,069 |
|
|
Loss before income taxes |
|
|
(13,387,672 |
) |
|
|
(6,397,272 |
) |
|
|
(25,392,600 |
) |
|
|
(19,321,180 |
) |
|
Benefit from income taxes |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
Net loss |
|
|
(13,387,672 |
) |
|
|
(6,397,272 |
) |
|
|
(25,392,600 |
) |
|
|
(19,321,180 |
) |
|
Change in fair value of redeemable convertible preferred stock/units |
|
|
(112,050,609 |
) |
|
|
— |
|
|
|
(198,366,756 |
) |
|
|
— |
|
|
Net loss attributable to common shares/units |
|
$ |
(125,438,281 |
) |
|
$ |
(6,397,272 |
) |
|
$ |
(223,759,356 |
) |
|
$ |
(19,321,180 |
) |
|
Net loss per common share/unit, basic and diluted |
|
$ |
(62.38 |
) |
|
$ |
(3.37 |
) |
|
$ |
(115.62 |
) |
|
$ |
(10.18 |
) |
|
Weighted average common shares/units outstanding, basic and diluted |
|
|
2,010,807 |
|
|
|
1,897,544 |
|
|
|
1,935,299 |
|
|
|
1,897,544 |
|
|
Consolidated Statements of Comprehensive Loss |
|
Three Months Ended September 30, |
|
|
Nine Months Ended September 30, |
|
||||||||||
|
|
|
2018 |
|
|
2017 |
|
|
2018 |
|
|
2017 |
|
||||
|
Net loss |
|
$ |
(13,387,672 |
) |
|
$ |
(6,397,272 |
) |
|
$ |
(25,392,600 |
) |
|
$ |
(19,321,180 |
) |
|
Other comprehensive loss: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unrealized gain (loss) on available-for-sale securities |
|
|
49,391 |
|
|
|
9,339 |
|
|
|
(37,472 |
) |
|
|
18,043 |
|
|
Comprehensive loss |
|
$ |
(13,338,281 |
) |
|
$ |
(6,387,933 |
) |
|
$ |
(25,430,072 |
) |
|
$ |
(19,303,137 |
) |
See accompanying notes
3
Arvinas, INC. (SUCCESSOR TO aRVINAS hOLDING cOMPANY, llc) and Subsidiaries
Condensed Consolidated Statements of Redeemable Convertible Preferred Units/Shares and Changes in Members’/Stockholders’ Equity (unaudited)
|
|
|
Series A |
|
|
Series B |
|
|
Series C |
|
|
Series |
|
||||||||||||||||||||
|
|
Redeemable |
|
|
Redeemable |
|
|
Redeemable |
|
|
A, B and C |
|
|||||||||||||||||||||
|
|
|
Convertible |
|
|
Convertible |
|
|
Convertible |
|
|
Convertible |
|
||||||||||||||||||||
|
|
|
Preferred |
|
|
Preferred |
|
|
Preferred |
|
|
Preferred |
|
||||||||||||||||||||
|
|
|
Units |
|
|
Amount |
|
|
Units |
|
|
Amount |
|
|
Units |
|
|
Amount |
|
|
Shares |
|
|
Amount |
|
||||||||
|
|
|
22,463,665 |
|
|
$ |
15,300,002 |
|
|
|
24,977,489 |
|
|
$ |
41,609,999 |
|
|
|
— |
|
|
$ |
— |
|
|
|
— |
|
|
$ |
— |
|
|
|
Incentive unit-based compensation |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
Net loss |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
Unrealized gain on available-for-sale securities |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
Balance at September 30, 2017 |
|
|
22,463,665 |
|
|
$ |
15,300,002 |
|
|
|
24,977,489 |
|
|
$ |
41,609,999 |
|
|
|
— |
|
|
$ |
— |
|
|
|
— |
|
|
$ |
— |
|
|
Balance at December 31, 2017 |
|
|
22,463,665 |
|
|
$ |
19,768,025 |
|
|
|
24,977,489 |
|
|
$ |
41,712,407 |
|
|
|
— |
|
|
$ |
— |
|
|
|
— |
|
|
$ |
— |
|
|
Incentive unit-based compensation |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
Exercise of Series A redeemable convertible preferred warrant |
|
|
110,116 |
|
|
|
319,667 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
Issuance of Series C redeemable convertible preferred units |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
16,467,066 |
|
|
|
55,000,001 |
|
|
|
— |
|
|
|
— |
|
|
Change in redemption value of redeemable convertible preferred units |
|
|
— |
|
|
|
91,044,716 |
|
|
|
— |
|
|
|
81,253,577 |
|
|
|
— |
|
|
|
26,068,463 |
|
|
|
— |
|
|
|
— |
|
|
Net loss |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
Conversion of redeemable convertible preferred units to redeemable convertible preferred shares |
|
|
(22,573,781 |
) |
|
|
(111,132,408 |
) |
|
|
(24,977,489 |
) |
|
|
(122,965,984 |
) |
|
|
(16,467,066 |
) |
|
|
(81,068,464 |
) |
|
|
64,018,336 |
|
|
|
315,166,856 |
|
|
Conversion of common and incentive units to common and restricted stock |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
Unrealized loss on available-for-sale securities |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
Balance at September 30, 2018 |
|
|
— |
|
|
$ |
— |
|
|
|
— |
|
|
$ |
— |
|
|
|
— |
|
|
$ |
— |
|
|
|
64,018,336 |
|
|
$ |
315,166,856 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated |
|
|
Total |
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Additional |
|
|
Other |
|
|
Members’ |
|
|||
|
|
|
Common |
|
|
Common |
|
|
Incentive |
|
|
Accumulated |
|
|
Paid-in |
|
|
Comprehensive |
|
|
/Stockholders' |
|
|||||||||||||||||||
|
|
|
Units |
|
|
Amount |
|
|
Shares |
|
|
Amount |
|
|
Units |
|
|
Amount |
|
|
Deficit |
|
|
Capital |
|
|
Loss |
|
|
Equity |
|
||||||||||
|
Balance at December 31, 2016 |
|
|
1,897,544 |
|
|
$ |
6,167 |
|
|
|
— |
|
|
$ |
— |
|
|
|
9,966,886 |
|
|
$ |
941,371 |
|
|
$ |
(33,797,760 |
) |
|
$ |
— |
|
|
$ |
(28,679 |
) |
|
$ |
(32,878,901 |
) |
|
Incentive unit-based compensation |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
232,329 |
|
|
|
162,901 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
162,901 |
|
|
Net loss |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(19,321,180 |
) |
|
|
— |
|
|
|
— |
|
|
|
(19,321,180 |
) |
|
Unrealized gain on available-for-sale securities |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
18,043 |
|
|
|
18,043 |
|
|
Balance at September 30, 2017 |
|
|
1,897,544 |
|
|
$ |
6,167 |
|
|
|
— |
|
|
$ |
— |
|
|
|
10,199,215 |
|
|
$ |
1,104,272 |
|
|
$ |
(53,118,940 |
) |
|
$ |
— |
|
|
$ |
(10,636 |
) |
|
$ |
(52,019,137 |
) |
|
Balance at December 31, 2017 |
|
|
1,897,544 |
|
|
$ |
6,167 |
|
|
|
— |
|
|
$ |
— |
|
|
|
11,927,381 |
|
|
$ |
1,186,419 |
|
|
$ |
(62,417,397 |
) |
|
$ |
— |
|
|
$ |
(9,751 |
) |
|
$ |
(61,234,562 |
) |
|
Incentive unit/share-based compensation |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
5,424,605 |
|
|
|
6,189,011 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
6,189,011 |
|
|
Exercise of Series A redeemable convertible preferred warrant |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
Issuance of Series C redeemable convertible preferred units |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
Change in redemption value of redeemable convertible preferred units |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(198,366,756 |
) |
|
|
— |
|
|
|
— |
|
|
|
(198,366,756 |
) |
|
Net loss |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(25,392,600 |
) |
|
|
— |
|
|
|
— |
|
|
|
(25,392,600 |
) |
|
Conversion of redeemable convertible preferred units to redeemable convertible preferred shares |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
— |
|
|
|
— |
|
|
Conversion of common and incentive units to common and restricted stock |
|
|
(1,897,544 |
) |
|
|
(6,167 |
) |
|
|
3,683,639 |
|
|
|
3,684 |
|
|
|
(17,351,986 |
) |
|
|
(7,375,430 |
) |
|
|
— |
|
|
|
7,377,913 |
|
|
|
— |
|
|
|
— |
|
|
Unrealized loss on available-for-sale securities |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(37,472 |
) |
|
|
(37,472 |
) |
|
Balance at September 30, 2018 |
|
|
— |
|
|
$ |
— |
|
|
|
3,683,639 |
|
|
$ |
3,684 |
|
|
|
— |
|
|
$ |
— |
|
|
$ |
(286,176,753 |
) |
|
$ |
7,377,913 |
|
|
$ |
(47,223 |
) |
|
$ |
(278,842,379 |
) |
See accompanying notes
4
Arvinas, INC. (SUCCESSOR TO aRVINAS hOLDING cOMPANY, llc) and Subsidiaries
Condensed Consolidated Statements of Cash Flows (unaudited)
|
|
|
Nine Months Ended September 30, |
|
|||||
|
|
|
2018 |
|
|
2017 |
|
||
|
Cash flows from operating activities: |
|
|
|
|
|
|
|
|
|
Net loss |
|
$ |
(25,392,600 |
) |
|
$ |
(19,321,180 |
) |
|
Adjustments to reconcile net loss to net cash used in operating activities: |
|
|
|
|
|
|
|
|
|
Amortization of debt discount |
|
|
13,473 |
|
|
|
13,473 |
|
|
Change in fair value of preferred unit warrant liability |
|
|
193,779 |
|
|
|
(4,338 |
) |
|
Depreciation and amortization |
|
|
483,052 |
|
|
|
246,367 |
|
|
Net accretion of bond discounts/premiums |
|
|
213,190 |
|
|
|
312,561 |
|
|
Non-cash compensation |
|
|
6,189,011 |
|
|
|
162,901 |
|
|
Changes in operating assets and liabilities: |
|
|
|
|
|
|
|
|
|
Account receivable |
|
|
25,000,000 |
|
|
|
— |
|
|
Other receivable |
|
|
(1,138,426 |
) |
|
|
887,835 |
|
|
Prepaid expenses and other current assets |
|
|
(2,565,154 |
) |
|
|
22,940 |
|
|
Accounts payable |
|
|
704,233 |
|
|
|
(648,028 |
) |
|
Accrued expenses |
|
|
319,657 |
|
|
|
289,802 |
|
|
Deferred revenue |
|
|
(7,883,755 |
) |
|
|
(5,006,582 |
) |
|
Net cash used in operating activities |
|
|
(3,863,540 |
) |
|
|
(23,044,249 |
) |
|
Cash flows from investing activities: |
|
|
|
|
|
|
|
|
|
Purchase of marketable securities |
|
|
(114,393,545 |
) |
|
|
— |
|
|
Maturities of marketable securities |
|
|
38,799,000 |
|
|
|
12,033,000 |
|
|
Sales of marketable securities |
|
|
— |
|
|
|
9,077,435 |
|
|
Purchase of property, equipment and leasehold improvements |
|
|
(2,209,112 |
) |
|
|
(577,859 |
) |
|
Net cash provided by (used in) investing activities |
|
|
(77,803,657 |
) |
|
|
20,532,576 |
|
|
Cash flows from financing activities: |
|
|
|
|
|
|
|
|
|
Repayments of long term debt |
|
|
(129,191 |
) |
|
|
(119,885 |
) |
|
Proceeds from long term debt |
|
|
2,000,000 |
|
|
|
— |
|
|
Proceeds from sale of redeemable convertible preferred units |
|
|
55,000,001 |
|
|
|
— |
|
|
Proceeds from exercise of redeemable convertible preferred warrant |
|
|
75,000 |
|
|
|
— |
|
|
Net cash provided by (used in) financing activities |
|
|
56,945,810 |
|
|
|
(119,885 |
) |
|
Net decrease in cash and cash equivalents |
|
|
(24,721,387 |
) |
|
|
(2,631,558 |
) |
|
Cash and cash equivalents, beginning of the period |
|
|
30,912,391 |
|
|
|
5,088,548 |
|
|
Cash and cash equivalents, end of the period |
|
$ |
6,191,004 |
|
|
$ |
2,456,990 |
|
|
Supplemental disclosure of cash flow information: |
|
|
|
|
|
|
|
|
|
Purchases of property, equipment and leasehold improvements unpaid at period end |
|
$ |
322,301 |
|
|
$ |
- |
|
|
Deferred offering costs included in accrued expenses |
|
$ |
663,252 |
|
|
$ |
- |
|
|
Cash paid for interest |
|
$ |
19,331 |
|
|
$ |
25,433 |
|
|
Change in redemption value of preferred units |
|
$ |
(198,366,756 |
) |
|
$ |
- |
|
See accompanying notes
5
Arvinas, INC. (SUCCESSOR TO aRVINAS hOLDING cOMPANY, llc) and Subsidiaries
Notes to Condensed Consolidated Financial Statements (unaudited)
1. Nature of Business
Arvinas, Inc. (Arvinas) has five wholly owned subsidiaries, Arvinas Operations, Inc., Arvinas Androgen Receptor, Inc., Arvinas Estrogen Receptor, Inc., Arvinas BRD4, Inc. and Arvinas Winchester, Inc. (collectively, the Company). The Company is a biopharmaceutical company dedicated to improving the lives of patients suffering from debilitating and life-threatening diseases throughout the discovery, development and commercialization of therapies to degrade disease-causing proteins. The Company expects to incur additional operating losses and negative operating cash flows for the foreseeable future.
On October 1, 2018, the Company completed an initial public offering (IPO) in which the Company issued and sold 7,500,000 shares of common stock at a public offering price of $16.00 per share. In October 2018, the underwriters of the IPO exercised in part their option to purchase 200,482 additional shares of the Company’s common stock at an offering price of $16.00 per share. The Company’s aggregate gross proceeds from the sale of shares in the IPO, including the option, was $123.2 million before fees and expenses of $12.0 million, of which $2.8 million were recorded within Other current assets as of September 30, 2018.
The Company’s Board of Managers approved a one-for-3.25 reverse stock split of its issued and outstanding shares of common units and a proportional adjustment to the existing conversion ratios for the Company’s Series A, Series B, and Series C preferred units effective as of September 14, 2018. Accordingly, all share/unit and per share/unit amounts for all periods presented in the accompanying financial statements and notes thereto have been retroactively adjusted, where applicable, to reflect this reverse unit split and adjustment of the preferred unit conversion ratios. Immediately prior to the effectiveness of the registration statement on September 26, 2018, the Company converted from a Delaware limited liability company to a Delaware corporation. Pursuant to the plan of conversion, each outstanding Series A, Series B, and Series C preferred units converted into an equal number of shares of Series A, Series B, and Series C preferred stock, each outstanding common unit converted into a share of common stock and each outstanding incentive unit converted into a number of shares of common stock and restricted stock based on a conversion price determined by the board of directors. The Company issued 1,786,095 shares of common stock and 1,268,923 shares of restricted stock.
On October 1, 2018, all of the outstanding shares of convertible preferred stock automatically converted into 19,697,928 shares of common stock at the applicable conversion ratio then in effect. Subsequent to the closing of the IPO, there were no shares of preferred stock outstanding. The financial statements as of September 30, 2018, including share and per share amounts, do not give effect to the IPO, as it closed on October 1, 2018.
2. Summary of Significant Accounting Policies
Unaudited Interim Financial Statements
The accompanying condensed consolidated financial statements are unaudited and have been prepared by the Company in accordance with accounting principles generally accepted in the United States (U.S. GAAP) and pursuant to the rules and regulations of the Securities and Exchange Commission. The year-end condensed consolidated balance sheet data was derived from the Company’s audited financial statements but does not include all disclosures required by U.S. GAAP. These condensed consolidated financial statements should be read in conjunction with the Company’s audited financial statements for the year ended December 31, 2017 included in the Company’s final prospectus for its IPO, filed pursuant to Rule 424(b) under the Securities Exchange Act of 1933, as amended, with the Securities Exchange Commission on September 27, 2018 (the Prospectus). The condensed consolidated financial statements, in the opinion of management, reflect all normal and recurring adjustments necessary for a fair statement of the Company’s financial position and results of operations.
Recently Issued Accounting Pronouncements
In February 2016, the FASB issued ASU No. 2016-02, Leases. ASU 2016-02 requires lessees to present right-of-use assets and lease liabilities on the balance sheet for all leases with terms longer than 12 months. The guidance is to be applied using a modified retrospective approach at the beginning of the earliest comparative period in the financial statements and is effective for years beginning after December 15, 2018. Early adoption is permitted. The Company is still in the process of determining the effect that the adoption of ASU 2016-02 will have on the accompanying consolidated financial statements.
6
During the nine months ended September 30, 2018, there were no changes to the Company’s significant accounting policies as described in Note 2 to the financial statements included in the Company’s consolidated financial statements as of December 31, 2017 and 2016 and for the years then ended included in the Prospectus.
3. Research Collaboration and License Agreements
In December 2017, the Company entered into a Research Collaboration and License Agreement with Pfizer, Inc. (the Pfizer Agreement) Under the terms of the Pfizer Agreement, the Company received an upfront non-refundable payment and certain additional payments totaling $28.0 million in the nine months ended September 30, 2018 in exchange for use of the Company’s technology license and to fund Pfizer-related research as defined within the agreement. These payments are being recognized as revenue over the total estimated period of performance. The Company is also eligible to receive up to an additional $37.5 million in non-refundable option payments if Pfizer exercises its options for all targets under the agreement. The Company is also entitled to receive up to $225 million in development milestone payments and up to $550 million in sales-based milestone payments for all designated targets under the Pfizer Agreement, as well as tiered royalties based on sales.
In September 2015, the Company entered into an Option and License Agreement with Genentech, Inc. and F. Hoffman-La Roche Ltd. (the Genentech Agreement). During 2015, the Company received an upfront non-refundable payment of $11.0 million in exchange for use of the Company’s technology license and to fund Genentech-related research as defined within the Genentech agreement. In November 2017, the Company entered into an Amended and Restated Option, License, and Collaboration Agreement with Genentech, Inc. and F. Hoffman-La Roche Ltd. (the Genentech Modification), amending the Genentech Agreement. Under the Genentech Modification, the Company received additional upfront non-refundable payments of $34.5 million to fund Genentech-related research and Genentech has the right to designate up to ten targets. The Company is eligible to receive up to $27.5 million in additional expansion target payments if Genentech exercises its options on all remaining targets. Upfront non-refundable payments are recognized as revenue over the total estimated period of performance. The Company is eligible to receive up to $44.0 million per target in development milestone payments, $52.5 million in regulatory milestone payments and $60.0 million in commercial milestones based on sales thresholds as well as tiered royalties based on sales.
In April 2015, the Company entered into a Research Collaboration and License Agreement with Merck Sharp & Dohme Corp. (the Merck Agreement). During 2015, the Company received an upfront non-refundable payment of $7 million, which is being recognized as revenue over the total estimated period of performance, in exchange for use of the Company’s technology license. The Merck Agreement also provided for research program funding to support Merck-related research. The Merck Agreement expired in April 2018.
Information about contract liabilities is as follows:
|
|
|
September 30, |
|
|
December 31, |
|
||
|
|
|
2018 |
|
|
2017 |
|
||
|
Contract liabilities |
|
$ |
54,215,006 |
|
|
$ |
62,098,761 |
|
|
Revenues recognized in the period from: |
|
|
|
|
|
|
|
|
|
Amounts included in deferred revenue in previous periods |
|
$ |
10,354,342 |
|
|
$ |
6,600,000 |
|
Changes in deferred revenue from December 31, 2017 to September 30, 2018 were due to billings of $3.0 million under the Pfizer Agreement and $10.9 million of revenue recognized on the research collaboration and license agreements.
The aggregate amount of the transaction price allocated to performance obligations that are unsatisfied as of September 30, 2018 was $54.2 million, which is expected to be recognized as revenue in years ending:
|
|
|
December 31 |
|
|
|
Remainder of 2018 |
|
$ |
3.4 |
|
|
2019 |
|
|
13.5 |
|
|
2020 |
|
|
||