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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, 2021

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 November 1, 2021, the registrant had 52,871,645 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 Condensed Consolidated Financial Statements

6

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

16

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

27

Item 4.

Controls and Procedures

28

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

31

Item 6.

Exhibits

32

Signatures

33

 

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 initiation, timing, progress and results of our current and future clinical trials of ARV-110, ARV-471 and ARV-766, including statements regarding 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, ARV-471 and ARV-766 and the ability of ARV-110, ARV-471, and ARV-476 and our other product candidates to meet existing or future regulatory standards;

 

the potential achievement of milestones and receipt of payments under our collaborations, including our collaboration with Pfizer Inc., or Pfizer, entered into in July 2021, or the ARV-471 Collaboration;

 

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 and disease targets;

 

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;

 

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 our Annual Report on Form 10-K for the year ended December 31, 2020, filed on March 1, 2021, and this Quarterly Report on Form 10-Q, particularly in the “Risk Factors” sections, 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


We use Arvinas, the Arvinas logo, and other marks as trademarks in the United States and other countries. This Quarterly Report on Form 10-Q contains references to our trademarks and service marks and to those belonging to other entities. Solely for convenience, trademarks and trade names referred to in this Quarterly Report on Form 10-Q, including logos, artwork and other visual displays, may appear without the ® or ™ symbols, but such references are not intended to indicate in any way that we will not assert, to the fullest extent under applicable law, our rights or the rights of the applicable licensor to these trademarks and trade names. We do not intend our use or display of other entities’ trade names, trademarks or service marks to imply a relationship with, or endorsement or sponsorship of us by, any other entity.

 

 

iii


 

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements.

Arvinas, INC. and Subsidiaries

Condensed Consolidated Balance Sheets (unaudited)

 

 

 

September 30,

2021

 

 

December 31,

2020

 

Assets

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

255,662,835

 

 

$

588,373,232

 

Restricted cash

 

 

4,500,000

 

 

 

 

Marketable securities

 

 

1,288,814,399

 

 

 

100,157,618

 

Accounts receivable

 

 

1,880,180

 

 

 

1,000,000

 

Other receivables

 

 

6,755,720

 

 

 

7,443,654

 

Prepaid expenses and other current assets

 

 

18,537,587

 

 

 

6,113,122

 

Total current assets

 

 

1,576,150,721

 

 

 

703,087,626

 

Property, equipment and leasehold improvements, net

 

 

11,628,051

 

 

 

12,259,515

 

Operating lease right of use assets

 

 

4,250,463

 

 

 

1,992,669

 

Collaboration contract asset and other assets

 

 

12,835,975

 

 

 

28,777

 

Total assets

 

$

1,604,865,210

 

 

$

717,368,587

 

Liabilities and stockholders' equity

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

Accounts payable

 

$

4,671,605

 

 

$

7,121,879

 

Accrued expenses

 

 

13,769,220

 

 

 

18,859,840

 

Deferred revenue

 

 

162,943,830

 

 

 

22,150,861

 

Current portion of operating lease liability

 

 

1,123,101

 

 

 

952,840

 

Total current liabilities

 

 

182,507,756

 

 

 

49,085,420

 

Deferred revenue

 

 

600,429,165

 

 

 

22,938,233

 

Long term debt

 

 

1,000,000

 

 

 

2,000,000

 

Operating lease liability

 

 

3,191,132

 

 

 

1,087,422

 

Total liabilities

 

 

787,128,053

 

 

 

75,111,075

 

Commitments and Contingencies

 

 

 

 

 

 

 

 

Stockholders’ equity:

 

 

 

 

 

 

 

 

Common stock, $0.001 par value; 52,766,020 and 48,455,741 shares

   issued and outstanding as of September 30, 2021 and December 31,

   2020, respectively

 

 

52,766

 

 

 

48,455

 

Accumulated deficit

 

 

(629,893,515

)

 

 

(491,888,910

)

Additional paid-in capital

 

 

1,448,254,555

 

 

 

1,133,537,171

 

Accumulated other comprehensive (loss) income

 

 

(676,649

)

 

 

560,796

 

Total stockholders’ equity

 

 

817,737,157

 

 

 

642,257,512

 

Total liabilities and stockholders’ equity

 

$

1,604,865,210

 

 

$

717,368,587

 

 

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,

 

 

 

2021

 

 

2020

 

 

2021

 

 

2020

 

Revenue

 

$

9,284,785

 

 

$

7,596,776

 

 

$

20,368,568

 

 

$

19,584,085

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Research and development

 

 

40,603,631

 

 

 

30,012,918

 

 

 

118,481,320

 

 

 

75,155,694

 

General and administrative

 

 

16,012,384

 

 

 

9,331,925

 

 

 

42,741,962

 

 

 

26,072,404

 

Total operating expenses

 

 

56,616,015

 

 

 

39,344,843

 

 

 

161,223,282

 

 

 

101,228,098

 

Loss from operations

 

 

(47,331,230

)

 

 

(31,748,067

)

 

 

(140,854,714

)

 

 

(81,644,013

)

Other income (expenses)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other income, net

 

 

219,058

 

 

 

144,215

 

 

 

1,703,521

 

 

 

841,967

 

Interest income

 

 

368,545

 

 

 

800,236

 

 

 

1,179,088

 

 

 

3,065,220

 

Interest expense

 

 

(8,125

)

 

 

(16,250

)

 

 

(32,500

)

 

 

(48,750

)

Total other income

 

 

579,478

 

 

 

928,201

 

 

 

2,850,109

 

 

 

3,858,437

 

Net loss

 

$

(46,751,752

)

 

$

(30,819,866

)

 

$

(138,004,605

)

 

$

(77,785,576

)

Net loss per common share, basic and diluted

 

$

(0.94

)

 

$

(0.79

)

 

$

(2.81

)

 

$

(2.01

)

Weighted average common shares outstanding, basic

   and diluted

 

 

49,807,508

 

 

 

39,058,294

 

 

 

49,101,927

 

 

 

38,784,569

 

 

Condensed Consolidated Statements of Comprehensive Loss

 

For the Three Months

Ended September 30,

 

 

For the Nine Months

Ended September 30,

 

 

 

2021

 

 

2020

 

 

2021

 

 

2020

 

Net loss

 

$

(46,751,752

)

 

$

(30,819,866

)

 

$

(138,004,605

)

 

$

(77,785,576

)

Other comprehensive loss:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

(190,105

)

 

 

(584,317

)

 

 

(1,237,445

)

 

 

972,231

 

Comprehensive loss

 

$

(46,941,857

)

 

$

(31,404,183

)

 

$

(139,242,050

)

 

$

(76,813,345

)

 

See accompanying notes

 

 

 

3


 

Arvinas, INC. and Subsidiaries

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Additional

 

 

Other

 

 

Total

 

 

 

Common

 

 

Accumulated

 

 

Paid-in

 

 

Comprehensive

 

 

Stockholders'

 

For the Three Months Ended September 30, 2020

   and 2021

 

Shares

 

 

Amount

 

 

Deficit

 

 

Capital

 

 

Income (Loss)

 

 

Equity

 

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 issuance 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

 

Balance at June 30, 2021

 

 

48,994,869

 

 

$

48,995

 

 

$

(583,141,763

)

 

$

1,166,526,486

 

 

$

(486,544

)

 

$

582,947,174

 

Stock-based compensation

 

 

 

 

 

 

 

 

 

 

 

15,224,632

 

 

 

 

 

 

15,224,632

 

Net loss

 

 

 

 

 

 

 

 

(46,751,752

)

 

 

 

 

 

 

 

 

(46,751,752

)

Restricted stock vesting

 

 

54,804

 

 

 

55

 

 

 

 

 

 

(55

)

 

 

 

 

 

 

Exercise of stock options

 

 

258,532

 

 

 

258

 

 

 

 

 

 

6,570,446

 

 

 

 

 

 

6,570,704

 

Common stock issued, net of issuance costs of

   $4.6 million

 

 

3,457,815

 

 

 

3,458

 

 

 

 

 

 

259,933,046

 

 

 

 

 

 

259,936,504

 

Unrealized loss on available-for

   -sale securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(190,105

)

 

 

(190,105

)

Balance at September 30, 2021

 

 

52,766,020

 

 

$

52,766

 

 

$

(629,893,515

)

 

$

1,448,254,555

 

 

$

(676,649

)

 

$

817,737,157

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Additional

 

 

Other

 

 

Total

 

 

 

Common

 

 

Accumulated

 

 

Paid-in

 

 

Comprehensive

 

 

Stockholders'

 

For the Nine Months Ended September 30, 2020

   and 2021

 

Shares

 

 

Amount

 

 

Deficit

 

 

Capital

 

 

Income (Loss)

 

 

Equity

 

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 issuance 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

 

Balance at December 31, 2020

 

 

48,455,741

 

 

$

48,455

 

 

$

(491,888,910

)

 

$

1,133,537,171

 

 

$

560,796

 

 

$

642,257,512

 

Stock-based compensation

 

 

 

 

 

 

 

 

 

 

 

40,120,506

 

 

 

 

 

 

40,120,506

 

Net loss

 

 

 

 

 

 

 

 

(138,004,605

)

 

 

 

 

 

 

 

 

(138,004,605

)

Restricted stock vesting

 

 

179,832

 

 

 

180

 

 

 

 

 

 

(180

)

 

 

 

 

 

 

Exercise of stock options

 

 

672,632

 

 

 

673

 

 

 

 

 

 

14,664,012

 

 

 

 

 

 

14,664,685

 

Common stock issued, net of issuance costs of

   $4.6 million

 

 

3,457,815

 

 

 

3,458

 

 

 

 

 

 

259,933,046

 

 

 

 

 

 

259,936,504

 

Unrealized loss on available-for

   -sale securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1,237,445

)

 

 

(1,237,445

)

Balance at September 30, 2021

 

 

52,766,020

 

 

$

52,766

 

 

$

(629,893,515

)

 

$

1,448,254,555

 

 

$

(676,649

)

 

$

817,737,157

 

 

See accompanying notes

4


 

Arvinas, INC. and Subsidiaries

Condensed Consolidated Statements of Cash Flows (unaudited)

 

 

 

For the Nine Months Ended September 30,

 

 

 

2021

 

 

2020

 

Cash flows from operating activities:

 

 

 

 

 

 

 

 

Net loss

 

$

(138,004,605

)

 

$

(77,785,576

)

Adjustments to reconcile net loss to net cash

   provided by (used in) operating activities:

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

3,511,998

 

 

 

2,113,865

 

Net accretion of bond discounts/premiums

 

 

5,241,206

 

 

 

1,404,626

 

Forgiveness of debt income

 

 

(1,000,000

)

 

 

 

Loss (gain) on sale of marketable securities

 

 

26,055

 

 

 

(327,025

)

Amortization of right-of-use assets

 

 

931,261

 

 

 

624,614

 

Amortization of collaboration contract asset

 

 

62,890

 

 

 

 

Stock-based compensation

 

 

40,120,506

 

 

 

22,121,591

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

 

Accounts receivable

 

 

(880,180

)

 

 

(2,444,450

)

Other receivables

 

 

687,934

 

 

 

2,769,195

 

Prepaid expenses and other current assets

 

 

(12,424,465

)

 

 

265,412

 

Collaboration contract asset

 

 

(12,870,088

)

 

 

 

Accounts payable

 

 

(2,525,807

)

 

 

(246,733

)

Accrued expenses

 

 

(5,090,620

)

 

 

4,540,830

 

Deferred revenue

 

 

718,283,901

 

 

 

(13,102,948

)

Operating lease liability

 

 

(915,084

)

 

 

(669,183

)

Net cash provided by (used in) operating activities

 

 

595,154,902

 

 

 

(60,735,782

)

Cash flows from investing activities:

 

 

 

 

 

 

 

 

Purchase of marketable securities

 

 

(1,402,866,256

)

 

 

(41,196,165

)

Maturities of marketable securities

 

 

200,482,309

 

 

 

115,402,053

 

Sales of marketable securities

 

 

7,222,460

 

 

 

37,775,235

 

Purchase of property, equipment and leasehold

   improvements

 

 

(2,805,001

)