SEC Filing | Arvinas

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arvn-10q_20190630.htm

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 June 30, 2019

☐	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 Identification No.)
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

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading

Symbol(s)

Name of each exchange on which registered

Common stock, par value $0.001 per share

ARVN

The Nasdaq Stock Market LLC

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, a 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	☒	Smaller 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 July 30, 2019, the registrant had 33,717,343 shares of common stock, $0.001 par value per share, outstanding.

Table of Contents

		Page
PART I.	FINANCIAL INFORMATION	2
Item 1.	Financial Statements (Unaudited)	2
	Condensed Consolidated Balance Sheets	2
	Condensed Consolidated Statements of Operations	3
	Condensed Consolidated Statements of Comprehensive Loss	3
	Condensed Consolidated Statements of Redeemable Convertible Preferred Units/Shares and Changes in Members’/Stockholders’ Equity	4
	Condensed Consolidated Statements of Cash Flows	6
	Notes to Unaudited Condensed Consolidated Financial Statements	7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	16
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	26
Item 4.	Controls and Procedures	26
PART II.	OTHER INFORMATION	28
Item 1.	Legal Proceedings	28
Item 1A.	Risk Factors	28
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	66
Item 6.	Exhibits	67
Signatures		68

FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains forward-looking statements that involve substantial risks and uncertainties. All statements, other than statements of historical facts, contained in this Quarterly Report on Form 10-Q, including statements regarding our strategy, future operations, future financial position, future revenues, projected costs, prospects, plans and objectives of management, are forward-looking statements. The words “anticipate,” “believe,” “estimate,” “expect,” “intend,” “may,” “might,” “plan,” “predict,” “project,” “target,” “potential,” “goals,” “will,” “would,” “could,” “should,” “continue” and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words.

The forward-looking statements in this Quarterly Report on Form 10-Q include, among other things, statements about:

•

the timing and conduct of our clinical trial programs of ARV-110 and ARV-471, including statements regarding the timing of initiation and completion of the clinical trials and the period during which the results of the clinical trials will become available;

•

the timing of, and our ability to obtain, marketing approval of ARV-110 and ARV-471, and the ability of ARV-110 and ARV-471 and our other product candidates to meet existing or future regulatory standards;

•

our plans to pursue research and development of other product candidates;

•

the potential advantages of our platform technology and our product candidates;

•

the extent to which our scientific approach and platform technology may potentially address a broad range of diseases;

•

the potential benefits of our arrangements with Yale University and Professor Crews;

•

the timing of and our ability to obtain and maintain regulatory approvals for our product candidates;

•

the potential receipt of revenue from future sales of our product candidates;

•

the rate and degree of market acceptance and clinical utility of our product candidates;

•

our estimates regarding the potential market opportunity for our product candidates;

•

our sales, marketing and distribution capabilities and strategy;

•

our ability to establish and maintain arrangements for manufacture of our product candidates;

•

the potential achievement of milestones and receipt of payments under our collaborations;

•

our ability to enter into additional collaborations with third parties;

•

our intellectual property position;

•

our estimates regarding expenses, future revenues, capital requirements and needs for additional financing;

•

the impact of government laws and regulations; and

•

our competitive position.

We may not actually achieve the plans, intentions or expectations disclosed in our forward-looking statements, and you should not place undue reliance on our forward-looking statements. Actual results or events could differ materially from the plans, intentions and expectations disclosed in the forward-looking statements we make. We have included important factors in the cautionary statements included in this Quarterly Report on Form 10-Q, particularly in the “Risk Factors” section, that we believe could cause actual results or events to differ materially from the forward-looking statements that we make. Our forward-looking statements do not reflect the potential impact of any future acquisitions, mergers, dispositions, joint ventures or investments we may make.

You should read this Quarterly Report on Form 10-Q and the documents that we have filed as exhibits to this Quarterly Report on Form 10-Q completely and with the understanding that our actual future results may be materially different from what we expect. We do not assume any obligation to update any forward-looking statements except as required by applicable law.

In this Quarterly Report on Form 10-Q, unless otherwise stated or the context otherwise requires, references to the “Company,” “Arvinas,” “we,” “us,” and “our,” except where the context requires otherwise, refer to Arvinas, Inc. and its consolidated subsidiaries, or any one or more of them as the context may require, and “our board of directors” refers to the board of directors of Arvinas, Inc.

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements.

Arvinas, INC. and Subsidiaries

Condensed Consolidated Balance Sheets (unaudited)

	June 30, 2019			December 31, 2018
Assets
Current assets:
Cash and cash equivalents	$	11,342,178		$	3,190,056
Marketable securities		147,831,005			184,637,640
Account receivable		—			2,775,831
Other receivables		1,402,085			2,255,966
Prepaid expenses and other current assets		2,685,820			2,818,286
Total current assets		163,261,088			195,677,779
Property, equipment and leasehold improvements, net		6,366,491			3,583,036
Operating lease right of use assets		2,397,789			—
Other assets		20,760			20,760
Total assets	$	172,046,128		$	199,281,575
Liabilities and stockholders' equity
Current liabilities:
Accounts payable	$	1,411,471		$	2,758,184
Accrued expenses		3,998,974			4,001,276
Deferred revenue		14,815,957			16,065,957
Current portion of long-term debt		71,499			154,461
Current portion of operating lease liability		647,872			—
Total current liabilities		20,945,773			22,979,878
Deferred revenue		30,701,736			37,484,714
Long term debt, net of current portion		2,000,000			2,000,000
Operating lease liability		1,893,359			—
Other noncurrent liability		—			150,000
Total liabilities		55,540,868			62,614,592
Commitments and Contingencies
Stockholders’ equity:
Common stock, $0.001 par value; 31,523,474 and 31,235,458 shares issued and outstanding as of June 30, 2019 and December 31, 2018, respectively		31,524			31,236
Accumulated deficit		(333,833,758	)		(302,264,619	)
Additional paid-in capital		450,007,344			439,118,089
Accumulated other comprehensive income (loss)		300,150			(217,723	)
Total stockholders’ equity		116,505,260			136,666,983
Total liabilities and stockholders’ equity	$	172,046,128		$	199,281,575

See accompanying notes

Arvinas, INC. and Subsidiaries

Condensed Consolidated Statements of Operations and Comprehensive Loss (unaudited)

Condensed Consolidated Statements of Operations	For the Three Months Ended June 30,						For the Six Months Ended June 30,
	2019			2018			2019			2018
Revenue	$	4,016,489		$	3,399,895		$	8,032,979		$	7,508,491
Operating expenses:
Research and development		16,000,638			10,337,835			30,190,996			17,481,652
General and administrative		6,440,779			1,579,605			12,081,409			2,826,492
Total operating expenses		22,441,417			11,917,440			42,272,405			20,308,144
Loss from operations		(18,424,928	)		(8,517,545	)		(34,239,426	)		(12,799,653	)
Other income (expenses)
Other income, net		191,729			130,945			434,850			258,394
Change in fair value of preferred unit warrant		—			2,516			—			(193,779	)
Interest income		1,091,331			539,413			2,281,853			750,650
Interest expense		(22,778	)		(9,871	)		(46,416	)		(20,540	)
Total other income		1,260,282			663,003			2,670,287			794,725
Net loss		(17,164,646	)		(7,854,542	)		(31,569,139	)		(12,004,928	)
Change in fair value of redeemable convertible preferred units		—			(14,834,049	)		—			(86,316,147	)
Net loss attributable to common shares/units	$	(17,164,646	)	$	(22,688,591	)	$	(31,569,139	)	$	(98,321,075	)
Net loss per common share/unit, basic and diluted	$	(0.55	)	$	(11.96	)	$	(1.01	)	$	(51.81	)
Weighted average common shares/units outstanding, basic and diluted		31,440,051			1,897,544			31,408,658			1,897,544

Condensed Consolidated Statements of Comprehensive Loss	For the Three Months Ended June 30,						For the Six Months Ended June 30,
	2019			2018			2019			2018
Net loss	$	(17,164,646	)	$	(7,854,542	)	$	(31,569,139	)	$	(12,004,928	)
Other comprehensive gain (loss):
Unrealized gain (loss) on available-for-sale securities		220,119			(28,831	)		517,873			(86,863	)
Comprehensive loss	$	(16,944,527	)	$	(7,883,373	)	$	(31,051,266	)	$	(12,091,791	)

See accompanying notes

Arvinas, INC. and Subsidiaries

Condensed Consolidated Statements of Redeemable Convertible Preferred Units/Shares and Changes in Members’/Stockholders’ Equity (unaudited)

	Series A				Series B				Series C
	Redeemable				Redeemable				Redeemable
	Convertible				Convertible				Convertible
	Preferred				Preferred				Preferred
	Units		Amount		Units		Amount		Units		Amount
Balance at April 1, 2018		22,463,665	$	59,528,712		24,977,489	$	73,433,818		—	$	—
Incentive unit-based compensation		—		—		—		—		—		—
Net loss		—		—		—		—		—		—
Change in redemption value of redeemable convertible preferred units		—		6,289,826		—		5,744,822		—		2,799,401
Issuance of Series C redeemable convertible preferred units		—		—		—		—		16,467,066		55,000,001
Unrealized loss on available-for-sale securities		—		—		—		—		—		—
Balance at June 30, 2018		22,463,665	$	65,818,538		24,977,489	$	79,178,640		16,467,066	$	57,799,402
Balance at April 1, 2019		—	$	—		—	$	—		—	$	—
Stock-based compensation		—		—		—		—		—		—
Net loss		—		—		—		—		—		—
Restricted stock vesting		—		—		—		—		—		—
Proceeds from exercise of stock options		—		—		—		—		—		—
Unrealized gain on available-for-sale securities		—		—		—		—		—		—
Balance at June 30, 2019		—	$	—		—	$	—		—	$	—


																			Accumulated			Total
																Additional			Other			Stockholders'/
	Common				Common				Incentive				Accumulated			Paid-in			Comprehensive			Members’
	Units		Amount		Shares		Amount		Units		Amount		Deficit			Capital			Income (Loss)			Equity
Balance at April 1, 2018		1,897,544	$	6,167		—	$	—		3,829,223	$	1,333,149	$	(138,049,881	)	$	—		$	(67,783	)	$	(136,778,348	)
Incentive unit-based compensation		—		—		—		—		1,509,850		979,873		—			—			—			979,873
Net loss		—		—		—		—		—		—		(7,854,542	)		—			—			(7,854,542	)
Change in redemption value of redeemable convertible preferred units		—		—		—		—		—		—		(14,834,049	)		—			—			(14,834,049	)
Issuance of Series C redeemable convertible preferred units		—		—		—		—		—		—		—			—			—			—
Unrealized loss on available-for-sale securities		—		—		—		—		—		—		—			—			(28,831	)		(28,831	)
Balance at June 30, 2018		1,897,544	$	6,167		—	$	—		5,339,073	$	2,313,022	$	(160,738,472	)	$	—		$	(96,614	)	$	(158,515,897	)
Balance at April 1, 2019		—	$	—		31,368,864	$	31,369		—	$	—	$	(316,669,112	)	$	444,295,404		$	80,031		$	127,737,692
Stock-based compensation		—		—		—		—		—		—		—			5,312,607			—			5,312,607
Net loss		—		—		—		—		—		—		(17,164,646	)		—			—			(17,164,646	)
Restricted stock vesting		—		—		129,642		130		—		—		—			(130	)		—			—
Proceeds from exercise of stock options		—		—		24,968		25		—		—		—			399,463			—			399,488
Unrealized gain on available-for-sale securities		—		—		—		—		—		—		—			—			220,119			220,119
Balance at June 30, 2019		—	$	—		31,523,474	$	31,524		—	$	—	$	(333,833,758	)	$	450,007,344		$	300,150		$	116,505,260

See accompanying notes

Arvinas, INC. and Subsidiaries

Condensed Consolidated Statements of Redeemable Convertible Preferred Units/Shares and Changes in Members’/Stockholders’ Equity (unaudited)

	Series A				Series B				Series C
	Redeemable				Redeemable				Redeemable
	Convertible				Convertible				Convertible
	Preferred				Preferred				Preferred
	Units		Amount		Units		Amount		Units		Amount
Balance at December 31, 2017		22,463,665	$	19,768,025		24,977,489	$	41,712,407		—	$	—
Incentive unit-based compensation		—		—		—		—		—		—
Net loss		—		—		—		—		—		—
Change in redemption value of redeemable convertible preferred units		—		46,050,513		—		37,466,233		—		2,799,401
Issuance of Series C redeemable convertible preferred units		—		—		—		—		16,467,066		55,000,001
Unrealized loss on available-for-sale securities		—		—		—		—		—		—
Balance at June 30, 2018		22,463,665	$	65,818,538		24,977,489	$	79,178,640		16,467,066	$	57,799,402
Balance at December 31, 2018		—	$	—		—	$	—		—	$	—
Stock-based compensation		—		—		—		—		—		—
Net loss		—		—		—		—		—		—
Restricted stock vesting		—		—		—		—		—		—
Proceeds from exercise of stock options		—		—		—		—		—		—
Unrealized gain on available-for-sale securities		—		—		—		—		—		—
Balance at June 30, 2019		—	$	—		—	$	—		—	$	—

Accumulated

Total

Additional

Other

Stockholders'/

Common

Incentive

Accumulated