SEC Filing | Arvinas

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arvn-10q_20200930.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 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, 2020

☐	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 30, 2020, the registrant had 40,548,985 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 Changes in Stockholders’ Equity	4
	Condensed Consolidated Statements of Cash Flows	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.	Quantitative and Qualitative Disclosures About Market Risk	25
Item 4.	Controls and Procedures	25
PART II.	OTHER INFORMATION	26
Item 1.	Legal Proceedings	26
Item 1A.	Risk Factors	26
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	64
Item 6.	Exhibits	65
Signatures		66

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, ARV-471 and ARV-766, including statements regarding the conduct of our ongoing Phase 1/2 clinical trials of ARV-110 and ARV-471, including one or more Phase 1b cohort expansions of ARV-110 in combination with standard of care agents and the Phase 1b cohort expansion evaluating ARV-471 in combination with palbociclib, 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 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 COVID-19 on our business and operations;

•

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)

	September 30, 2020			December 31, 2019
Assets
Current assets:
Cash and cash equivalents	$	88,988,921		$	9,211,057
Marketable securities		159,574,963			271,661,456
Account receivable		2,444,450			—
Other receivables		3,511,633			6,280,828
Prepaid expenses and other current assets		3,459,862			3,727,294
Total current assets		257,979,829			290,880,635
Property, equipment and leasehold improvements, net		11,712,403			8,455,411
Operating lease right of use assets		2,226,422			2,278,623
Other assets		28,777			26,757
Total assets	$	271,947,431		$	301,641,426
Liabilities and stockholders' equity
Current liabilities:
Accounts payable	$	5,088,034		$	4,556,827
Accrued expenses		12,143,734			7,602,904
Deferred revenue		21,358,989			19,979,525
Current portion of operating lease liability		939,761			673,896
Total current liabilities		39,530,518			32,813,152
Deferred revenue		23,945,470			38,427,882
Long term debt		2,000,000			2,000,000
Operating lease liability		1,351,476			1,714,111
Total liabilities		66,827,464			74,955,145
Commitments and Contingencies
Stockholders’ equity:
Common stock, $0.001 par value; 40,096,001 and 38,461,353 shares issued and outstanding as of September 30, 2020 and December 31, 2019, respectively		40,096			38,461
Accumulated deficit		(450,342,422	)		(372,556,846	)
Additional paid-in capital		654,342,486			599,097,090
Accumulated other comprehensive income		1,079,807			107,576
Total stockholders’ equity		205,119,967			226,686,281
Total liabilities and stockholders’ equity	$	271,947,431		$	301,641,426

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 September 30,						For the Nine Months Ended September 30,
	2020			2019			2020			2019
Revenue	$	7,596,776		$	30,050,227		$	19,584,085		$	38,083,205
Operating expenses:
Research and development		30,012,918			16,588,050			75,155,694			46,779,047
General and administrative		9,331,925			7,957,364			26,072,404			20,038,772
Total operating expenses		39,344,843			24,545,414			101,228,098			66,817,819
Income (loss) from operations		(31,748,067	)		5,504,813			(81,644,013	)		(28,734,614	)
Other income (expenses)
Other income, net		144,215			405,302			841,967			840,153
Interest income		800,236			1,112,415			3,065,220			3,394,269
Interest expense		(16,250	)		(22,903	)		(48,750	)		(69,319	)
Total other income		928,201			1,494,814			3,858,437			4,165,103
Loss from equity method investment		—			(24,675,000	)		—			(24,675,000	)
Net loss		(30,819,866	)		(17,675,373	)		(77,785,576	)		(49,244,511	)
Net loss per common share, basic and diluted	$	(0.79	)	$	(0.54	)	$	(2.01	)	$	(1.54	)
Weighted average common shares outstanding, basic and diluted		39,058,294			32,740,486			38,784,569			31,876,074

Condensed Consolidated Statements of Comprehensive Loss	For the Three Months Ended September 30,						For the Nine Months Ended September 30,
	2020			2019			2020			2019
Net loss	$	(30,819,866	)	$	(17,675,373	)	$	(77,785,576	)	$	(49,244,511	)
Other comprehensive income (loss):
Unrealized gain (loss) on available-for-sale securities		(584,317	)		(103,505	)		972,231			414,368
Comprehensive loss	$	(31,404,183	)	$	(17,778,878	)	$	(76,813,345	)	$	(48,830,143	)

See accompanying notes

Arvinas, INC. and Subsidiaries

Condensed Consolidated Statements of Changes in Stockholders’ Equity (unaudited)


											Accumulated
								Additional			Other			Total
	Common				Accumulated			Paid-in			Comprehensive			Stockholders'
	Shares		Amount		Deficit			Capital			Income (Loss)			Equity
Balance at June 30, 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	)		—			—
Exercise of stock options		86,123		86		—			1,377,882			—			1,377,968
Unrealized loss 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
Balance at June 30, 2020		38,825,190	$	38,825	$	(419,522,556	)	$	615,601,031		$	1,664,124		$	197,781,424
Stock-based compensation		—		—		—			8,246,921			—			8,246,921
Net loss		—		—		(30,819,866	)		—			—			(30,819,866	)
Restricted stock vesting		82,156		82		—			(82	)		—			—
Exercise of stock options		25,581		26		—			577,277			—			577,303
Common stock issued in at-the-market offering, net of offering costs of $0.9 million		1,163,074		1,163		—			29,917,339			—			29,918,502
Unrealized loss on available-for -sale securities		—		—		—			—			(584,317	)		(584,317	)
Balance at September 30, 2020		40,096,001	$	40,096	$	(450,342,422	)	$	654,342,486		$	1,079,807		$	205,119,967


											Accumulated
								Additional			Other			Total
	Common				Accumulated			Paid-in			Comprehensive			Stockholders'
	Shares		Amount		Deficit			Capital			Income (Loss)			Equity
Balance at December 31, 2018		31,235,458	$	31,236	$	(302,264,619	)	$	439,118,089		$	(217,723	)	$	136,666,983
Stock-based compensation		—		—		—			15,091,269			—			15,091,269
Issuance of common stock		1,346,313		1,346		—			29,452,687			—			29,454,033
Net loss		—		—		(49,244,511	)		—			—			(49,244,511	)
Restricted stock vesting		383,695		383		—			(383	)		—			—
Exercise of stock options		111,091		111		—			1,777,345			—			1,777,456
Unrealized gain on available-for -sale securities		—		—		—			—			414,368			414,368
Balance at September 30, 2019		33,076,557	$	33,076	$	(351,509,130	)	$	485,439,007		$	196,645		$	134,159,598
Balance at December 31, 2019		38,461,353	$	38,461	$	(372,556,846	)	$	599,097,090		$	107,576		$	226,686,281
Stock-based compensation		—		—		—			22,121,591			—			22,121,591
Net loss		—		—		(77,785,576	)		—			—			(77,785,576	)
Restricted stock vesting		295,065		295		—			(295	)		—			—
Exercise of stock options		176,509		177		—			3,206,761			—			3,206,938
Common stock issued in at-the-market offering, net of offering costs of $0.9 million		1,163,074		1,163		—			29,917,339			—			29,918,502
Unrealized gain on available-for -sale securities		—		—		—			—			972,231			972,231
Balance at September 30, 2020		40,096,001	$	40,096	$	(450,342,422	)	$	654,342,486		$	1,079,807		$	205,119,967

See accompanying notes

Arvinas, INC. and Subsidiaries

Condensed Consolidated Statements of Cash Flows (unaudited)

	For the Nine Months Ended September 30,
	2020			2019
Cash flows from operating activities:
Net loss	$	(77,785,576	)	$	(49,244,511	)
Adjustments to reconcile net loss to net cash used in operating activities:
Amortization of debt discount		—			15,149
Depreciation and amortization		2,113,865			1,024,845
Net accretion of bond discounts/premiums		1,404,626			(109,870	)
Gain on sale of marketable securities		(327,025	)		—
Amortization of right to use assets		624,614			506,855
Stock-based compensation		22,121,591			15,091,269
Changes in operating assets and liabilities:
Account receivable		(2,444,450	)		2,716,501
Other receivables		2,769,195			(2,886,261	)
Prepaid expenses and other current assets		265,412			(1,282,866	)
Accounts payable		(246,733	)		(618,960	)
Accrued expenses		4,540,830			2,225,695
Deferred revenue		(13,102,948	)		8,513,945
Operating lease liabilities		(669,183	)		(399,610	)
Net cash used in operating activities		(60,735,782	)		(24,447,819	)
Cash flows from investing activities:
Purchase of marketable securities		(41,196,165	)		(113,056,097	)
Maturities of marketable securities		115,402,053			119,842,816
Sales of marketable securities		37,775,235			—
Purchase of property, equipment and leasehold improvements		(4,592,917	)		(4,455,360	)
Net cash provided by investing activities		107,388,206			2,331,359
Cash flows from financing activities: