arvn-10q_20190930.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 September 30, 2019

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
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 October 31, 2019, the registrant had 33,748,982 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 and 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

17

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

27

Item 4.

Controls and Procedures

27

PART II.

OTHER INFORMATION

29

Item 1.

Legal Proceedings

29

Item 1A.

Risk Factors

29

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

68

Item 5.

Other Information

68

Item 6.

Exhibits

69

Signatures

70

 

 

 

i


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 completion of our ongoing Phase 1 clinical trials of ARV-110 and ARV-471 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.

 

 

ii


PART I—FINANCIAL INFORMATION

Item 1. Financial Statements.

Arvinas, INC. and Subsidiaries

Condensed Consolidated Balance Sheets (unaudited)

 

 

 

September 30,

2019

 

 

December 31,

2018

 

Assets

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

12,135,475

 

 

$

3,190,056

 

Marketable securities

 

 

178,375,159

 

 

 

184,637,640

 

Account receivable

 

 

59,330

 

 

 

2,775,831

 

Other receivables

 

 

5,142,227

 

 

 

2,255,966

 

Prepaid expenses and other current assets

 

 

3,951,152

 

 

 

2,818,286

 

Total current assets

 

 

199,663,343

 

 

 

195,677,779

 

Property, equipment and leasehold improvements, net

 

 

7,152,151

 

 

 

3,583,036

 

Operating lease right of use assets

 

 

2,257,544

 

 

 

 

Other assets

 

 

20,760

 

 

 

20,760

 

Total assets

 

$

209,093,798

 

 

$

199,281,575

 

Liabilities and stockholders' equity

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

Accounts payable

 

$

2,277,824

 

 

$

2,758,184

 

Accrued expenses

 

 

6,226,971

 

 

 

4,001,276

 

Deferred revenue

 

 

20,294,456

 

 

 

16,065,957

 

Current portion of long-term debt

 

 

 

 

 

154,461

 

Current portion of operating lease liability

 

 

597,014

 

 

 

 

Total current liabilities

 

 

29,396,265

 

 

 

22,979,878

 

Deferred revenue

 

 

41,770,160

 

 

 

37,484,714

 

Long term debt, net of current portion

 

 

2,000,000

 

 

 

2,000,000

 

Operating lease liability

 

 

1,767,775

 

 

 

 

Other noncurrent liability

 

 

 

 

 

150,000

 

Total liabilities

 

 

74,934,200

 

 

 

62,614,592

 

Commitments and Contingencies

 

 

 

 

 

 

 

 

Stockholders’ equity:

 

 

 

 

 

 

 

 

Common stock, $0.001 par value; 33,076,557 and 31,235,458 shares

   issued and outstanding as of September 30, 2019 and December 31, 2018,

   respectively

 

 

33,076

 

 

 

31,236

 

Accumulated deficit

 

 

(351,509,130

)

 

 

(302,264,619

)

Additional paid-in capital

 

 

485,439,007

 

 

 

439,118,089

 

Accumulated other comprehensive income (loss)

 

 

196,645

 

 

 

(217,723

)

Total stockholders’ equity

 

 

134,159,598

 

 

 

136,666,983

 

Total liabilities and stockholders’ equity

 

$

209,093,798

 

 

$

199,281,575

 

 

See accompanying notes

2


Arvinas, INC. and Subsidiaries

Condensed Consolidated Statements of Operations and Comprehensive Loss (unaudited)

 

Condensed Consolidated Statements of Operations

 

For the Three Months

Ended September 30,

 

 

For the Nine Months

Ended September 30,

 

 

 

2019

 

 

2018

 

 

2019

 

 

2018

 

Revenue

 

$

30,050,227

 

 

$

3,375,264

 

 

$

38,083,205

 

 

$

10,883,755

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Research and development

 

 

16,588,050

 

 

 

13,149,879

 

 

 

46,779,047

 

 

 

30,631,531

 

General and administrative

 

 

7,957,364

 

 

 

4,284,231

 

 

 

20,038,772

 

 

 

7,110,723

 

Total operating expenses

 

 

24,545,414

 

 

 

17,434,110

 

 

 

66,817,819

 

 

 

37,742,254

 

Income (loss) from operations

 

 

5,504,813

 

 

 

(14,058,846

)

 

 

(28,734,614

)

 

 

(26,858,499

)

Other income (expenses)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other income, net

 

 

405,302

 

 

 

160,100

 

 

 

840,153

 

 

 

418,494

 

Change in fair value of preferred unit warrant

 

 

 

 

 

 

 

 

 

 

 

(193,779

)

Interest income

 

 

1,112,415

 

 

 

523,338

 

 

 

3,394,269

 

 

 

1,273,988

 

Interest expense

 

 

(22,903

)

 

 

(12,264

)

 

 

(69,319

)

 

 

(32,804

)

Total other income

 

 

1,494,814

 

 

 

671,174

 

 

 

4,165,103

 

 

 

1,465,899

 

Loss from equity method investment

 

 

(24,675,000

)

 

 

 

 

 

(24,675,000

)

 

 

 

Net loss

 

 

(17,675,373

)

 

 

(13,387,672

)

 

 

(49,244,511

)

 

 

(25,392,600

)

Change in fair value of redeemable convertible

   preferred units

 

 

 

 

 

(112,050,609

)

 

 

 

 

 

(198,366,756

)

Net loss attributable to common shares

 

$

(17,675,373

)

 

$

(125,438,281

)

 

$

(49,244,511

)

 

$

(223,759,356

)

Net loss per common share, basic and diluted

 

$

(0.54

)

 

$

(62.38

)

 

$

(1.54

)

 

$

(115.62

)

Weighted average common shares outstanding, basic

   and diluted

 

 

32,740,486

 

 

 

2,010,807

 

 

 

31,876,074

 

 

 

1,935,299

 

 

Condensed Consolidated Statements of Comprehensive Loss

 

For the Three Months

Ended September 30,

 

 

For the Nine Months

Ended September 30,

 

 

 

2019

 

 

2018

 

 

2019

 

 

2018

 

Net loss

 

$

(17,675,373

)

 

$

(13,387,672

)

 

$

(49,244,511

)

 

$

(25,392,600

)

Other comprehensive gain (loss):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Unrealized gain (loss) on available-for-sale securities

 

 

(103,505

)

 

 

49,391

 

 

 

414,368

 

 

 

(37,472

)

Comprehensive loss

 

$

(17,778,878

)

 

$

(13,338,281

)

 

$

(48,830,143

)

 

$

(25,430,072

)

 

See accompanying notes

 

 

3


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

 

 

Series A, B and C

 

 

 

Convertible

 

 

Convertible

 

 

Convertible

 

 

Convertible

 

 

 

Preferred

 

 

Preferred

 

 

Preferred

 

 

Preferred

 

 

 

Units

 

 

Amount

 

 

Units

 

 

Amount

 

 

Units

 

 

Amount

 

 

Shares

 

 

Amount

 

Balance at July 1, 2018

 

 

22,463,665

 

 

$

65,818,538

 

 

 

24,977,489

 

 

$

79,178,640

 

 

 

16,467,066

 

 

$

57,799,402

 

 

 

 

 

$

 

Incentive unit-based compensation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Exercise of Series A redeemable

   convertible preferred warrant

 

 

110,116

 

 

 

319,667

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Change in redemption value of

   redeemable convertible preferred

   units

 

 

 

 

 

44,994,203

 

 

 

 

 

 

43,787,344

 

 

 

 

 

 

23,269,062

 

 

 

 

 

 

 

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

 

Balance at July 1, 2019

 

 

 

 

$

 

 

 

 

 

$

 

 

 

 

 

$

 

 

 

 

 

$

 

Stock-based compensation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Issuance of common stock

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Restricted stock vesting

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Proceeds from exercise of stock

   options

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Unrealized gain on available-for

   -sale securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at September 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 July 1, 2018

 

 

1,897,544

 

 

$

6,167

 

 

 

 

 

$

 

 

 

17,315,339

 

 

$

2,313,022

 

 

$

(160,738,472

)

 

$

 

 

$

(96,614

)

 

$

(158,515,897

)

Incentive unit-based

   compensation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

36,647

 

 

 

5,062,408

 

 

 

 

 

 

 

 

 

 

 

 

5,062,408

 

Exercise of Series A redeemable

   convertible preferred warrant

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Change in redemption value

   of redeemable convertible

   preferred units

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(112,050,609

)

 

 

 

 

 

 

 

 

(112,050,609

)

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(13,387,672

)

 

 

 

 

 

 

 

 

(13,387,672

)

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

49,391

 

 

 

49,391

 

Balance at September 30, 2018

 

 

 

 

$

 

 

 

3,683,639

 

 

$

3,684

 

 

 

 

 

$

 

 

$

(286,176,753

)

 

$

7,377,913

 

 

$

(47,223

)

 

$

(278,842,379

)

Balance at July 1, 2019

 

 

 

 

$

 

 

 

31,523,474

 

 

$

31,524

 

 

 

 

 

$

 

 

$

(333,833,757

)

 

$

450,007,344

 

 

$

300,150

 

 

$

116,505,261

 

Stock-based compensation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

4,601,214

 

 

 

 

 

 

4,601,214

 

Issuance of common stock

 

 

 

 

 

 

 

 

1,346,313

 

 

 

1,346

 

 

 

 

 

 

 

 

 

 

 

 

29,452,687

 

 

 

 

 

 

29,454,033

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(17,675,373

)

 

 

 

 

 

 

 

 

(17,675,373

)

Restricted stock vesting

 

 

 

 

 

 

 

 

120,647

 

 

 

120

 

 

 

 

 

 

 

 

 

 

 

 

(120

)

 

 

 

 

 

 

Proceeds from exercise of stock

   options

 

 

 

 

 

 

 

 

86,123

 

 

 

86

 

 

 

 

 

 

 

 

 

 

 

 

1,377,882

 

 

 

 

 

 

1,377,968

 

Unrealized gain on available-for

   -sale securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(103,505

)

 

 

(103,505

)

Balance at September 30, 2019

 

 

 

 

$

 

 

 

33,076,557

 

 

$

33,076

 

 

 

 

 

$

 

 

$

(351,509,130

)

 

$

485,439,007

 

 

$

196,645

 

 

$

134,159,598

 

 

See accompanying notes

4


 

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

 

 

Series

 

 

 

Redeemable

 

 

Redeemable

 

 

Redeemable

 

 

A, B and C

 

 

 

Convertible

 

 

Convertible

 

 

Convertible

 

 

Convertible

 

 

 

Preferred

 

 

Preferred

 

 

Preferred

 

 

Preferred

 

 

 

Units

 

 

Amount

 

 

Units

 

 

Amount

 

 

Units

 

 

Amount

 

 

Shares

 

 

Amount

 

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