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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

FORM 10-Q

 

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2022

or

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number 001-39321

 

Avidity Biosciences, Inc.

(Exact name of registrant as specified in its charter)

 

 

Delaware

 

46-1336960

(State or other jurisdiction of

incorporation or organization)

 

(IRS Employer

Identification No.)

 

 

 

10578 Science Center Drive, Suite 125

San Diego, California

 

92121

(Address of principal executive offices)

 

(Zip Code)

 

(858401-7900

(Registrant’s telephone number, including area code)

 

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, $0.0001 par value

RNA

The Nasdaq Global Market

 

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 25, 2022, the registrant had 54,462,518 shares of common stock outstanding.

 

 

 

 


 

 

Avidity Biosciences, Inc.

FORM 10-Q

TABLE OF CONTENTS

 

PART I – FINANCIAL INFORMATION

 

 

 

 

Item 1.

Condensed Financial Statements (unaudited)

3

 

Condensed Balance Sheets (unaudited)

3

 

Condensed Statements of Operations and Comprehensive Loss (unaudited)

4

 

Condensed Statements of Stockholders' Equity (unaudited)

5

 

Condensed Statements of Cash Flows (unaudited)

7

 

Notes to Condensed Financial Statements (unaudited)

8

Item 2.

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

19

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

27

Item 4.

Controls and Procedures

27

 

 

 

PART II – OTHER INFORMATION

 

 

 

 

Item 1.

Legal Proceedings

28

Item 1A.

Risk Factors

28

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

31

Item 3.

Defaults Upon Senior Securities

32

Item 4.

Mine Safety Disclosures

32

Item 5.

Other Information

32

Item 6.

Exhibits

33

 

 

 

SIGNATURES

34

 

2


 

 

PART I - FINANCIAL INFORMATION

Item 1.  Condensed Financial Statements (unaudited)

Avidity Biosciences, Inc.

Condensed Balance Sheets

(in thousands, except par value)

 

 

 

September 30,

2022

 

 

December 31,

2021

 

 

 

(unaudited)

 

 

 

 

 

Assets

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

143,699

 

 

$

320,448

 

Marketable securities

 

 

261,849

 

 

 

85,095

 

Prepaid and other assets

 

 

8,916

 

 

 

5,598

 

Total current assets

 

 

414,464

 

 

 

411,141

 

Property and equipment, net

 

 

6,037

 

 

 

4,805

 

Restricted cash

 

 

251

 

 

 

251

 

Right-of-use assets

 

 

9,264

 

 

 

10,784

 

Other assets

 

 

523

 

 

 

599

 

Total assets

 

$

430,539

 

 

$

427,580

 

Liabilities and Stockholders’ Equity

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

Accounts payable and accrued liabilities

 

$

26,375

 

 

$

14,085

 

Accrued compensation

 

 

7,747

 

 

 

8,940

 

Lease liabilities, current portion

 

 

3,090

 

 

 

1,769

 

Deferred revenue, current portion

 

 

5,454

 

 

 

4,864

 

Total current liabilities

 

 

42,666

 

 

 

29,658

 

Lease liabilities, net of current portion

 

 

8,185

 

 

 

9,960

 

Deferred revenue, net of current portion

 

 

2,706

 

 

 

6,532

 

Total liabilities

 

 

53,557

 

 

 

46,150

 

Commitments and contingencies (Note 7)

 

 

 

 

 

 

 

 

Stockholders’ equity:

 

 

 

 

 

 

 

 

Common stock, $0.0001 par value; authorized shares – 400,000; issued and

   outstanding shares – 54,446 and 47,754 at September 30, 2022 and

   December 31, 2021, respectively

 

 

5

 

 

 

5

 

Additional paid-in capital

 

 

688,513

 

 

 

566,161

 

Accumulated other comprehensive loss

 

 

(3,463

)

 

 

(187

)

Accumulated deficit

 

 

(308,073

)

 

 

(184,549

)

Total stockholders’ equity

 

 

376,982

 

 

 

381,430

 

Total liabilities and stockholders’ equity

 

$

430,539

 

 

$

427,580

 

 

See accompanying notes.

3


 

Avidity Biosciences, Inc.

Condensed Statements of Operations and Comprehensive Loss

(in thousands, except per share data)

(unaudited)

 

 

 

Three Months Ended September 30,

 

 

Nine Months Ended September 30,

 

 

 

2022

 

 

2021

 

 

2022

 

 

2021

 

Collaboration revenue

 

$

2,482

 

 

$

2,163

 

 

$

6,455

 

 

$

7,474

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Research and development

 

 

37,317

 

 

 

24,831

 

 

 

104,794

 

 

 

68,214

 

General and administrative

 

 

10,094

 

 

 

6,612

 

 

 

27,349

 

 

 

18,764

 

Total operating expenses

 

 

47,411

 

 

 

31,443

 

 

 

132,143

 

 

 

86,978

 

Loss from operations

 

 

(44,929

)

 

 

(29,280

)

 

 

(125,688

)

 

 

(79,504

)

Other income (expense):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest income

 

 

1,342

 

 

 

17

 

 

 

2,203

 

 

 

49

 

Other expense

 

 

(12

)

 

 

(11

)

 

 

(39

)

 

 

(16

)

Total other income

 

 

1,330

 

 

 

6

 

 

 

2,164

 

 

 

33

 

Net loss

 

 

(43,599

)

 

 

(29,274

)

 

 

(123,524

)

 

 

(79,471

)

Other comprehensive income (loss):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net unrealized (losses) gains on marketable

   securities

 

 

(477

)

 

 

(1

)

 

 

(3,276

)

 

 

4

 

Comprehensive loss

 

$

(44,076

)

 

$

(29,275

)

 

$

(126,800

)

 

$

(79,467

)

Net loss per share, basic and diluted

 

$

(0.82

)

 

$

(0.68

)

 

$

(2.45

)

 

$

(2.01

)

Weighted-average shares outstanding, basic and

   diluted

 

 

53,069

 

 

 

43,265

 

 

 

50,432

 

 

 

39,477

 

 

See accompanying notes.

 

 

4


 

 

Avidity Biosciences, Inc.

Condensed Statements of Stockholders' Equity

(in thousands)

(unaudited)

 

 

 

Common Stock

 

 

Additional

Paid-in

 

 

Accumulated

Other

Comprehensive

 

 

Accumulated

 

 

Total

Stockholders’

 

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Loss

 

 

Deficit

 

 

Equity

 

Balance at December 31, 2021

 

 

47,754

 

 

$

5

 

 

$

566,161

 

 

$

(187

)

 

$

(184,549

)

 

$

381,430

 

Issuance of common stock upon exercise

   of stock options

 

 

7

 

 

 

 

 

 

10

 

 

 

 

 

 

 

 

 

10

 

Vesting of early exercise options

 

 

 

 

 

 

 

 

1

 

 

 

 

 

 

 

 

 

1

 

Issuance of common stock in public offerings,

   net of issuance costs of $745

 

 

1,520

 

 

 

 

 

 

24,103

 

 

 

 

 

 

 

 

 

24,103

 

Stock-based compensation

 

 

 

 

 

 

 

 

6,238

 

 

 

 

 

 

 

 

 

6,238

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(34,235

)

 

 

(34,235

)

Other comprehensive loss

 

 

 

 

 

 

 

 

 

 

 

(1,839

)

 

 

 

 

 

(1,839

)

Balance at March 31, 2022

 

 

49,281

 

 

$

5

 

 

$

596,513

 

 

$

(2,026

)

 

$

(218,784

)

 

$

375,708

 

Issuance of common stock upon exercise

   of stock options

 

 

5

 

 

 

 

 

 

4

 

 

 

 

 

 

 

 

 

4

 

Issuance of common stock in public offerings,

   net of issuance costs of $1,184

 

 

2,746

 

 

 

 

 

 

38,281

 

 

 

 

 

 

 

 

 

38,281

 

Issuance of common stock under employee

   stock purchase plan

 

 

49

 

 

 

 

 

 

499

 

 

 

 

 

 

 

 

 

499

 

Vesting of early exercise options

 

 

 

 

 

 

 

 

1

 

 

 

 

 

 

 

 

 

1

 

Stock-based compensation

 

 

 

 

 

 

 

 

6,508

 

 

 

 

 

 

 

 

 

6,508

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(45,690

)

 

 

(45,690

)

Other comprehensive loss

 

 

 

 

 

 

 

 

 

 

 

(960

)

 

 

 

 

 

(960

)

Balance at June 30, 2022

 

 

52,081

 

 

$

5

 

 

$

641,806

 

 

$

(2,986

)

 

$

(264,474

)

 

$

374,351

 

Issuance of common stock upon exercise

   of stock options

 

 

270

 

 

 

 

 

 

303

 

 

 

 

 

 

 

 

 

303

 

Issuance of common stock in public offering,

   net of issuance costs of $1,216

 

 

2,095

 

 

 

 

 

 

39,317

 

 

 

 

 

 

 

 

 

 

 

39,317

 

Vesting of early exercise options

 

 

 

 

 

 

 

 

1

 

 

 

 

 

 

 

 

 

1

 

Stock-based compensation

 

 

 

 

 

 

 

 

7,086

 

 

 

 

 

 

 

 

 

7,086

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(43,599

)

 

 

(43,599

)

Other comprehensive loss

 

 

 

 

 

 

 

 

 

 

 

(477

)

 

 

 

 

 

(477

)

Balance at September 30, 2022

 

 

54,446

 

 

$

5

 

 

$

688,513

 

 

$

(3,463

)

 

$

(308,073

)

 

$

376,982

 

 

See accompanying notes.

 

5


 

 

Avidity Biosciences, Inc.

Condensed Statements of Stockholders' Equity

(in thousands)

(unaudited)

 

 

 

Common Stock

 

 

Additional

Paid-in

 

 

Accumulated

Other

Comprehensive

 

 

Accumulated

 

 

Total

Stockholders’

 

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Loss

 

 

Deficit

 

 

Equity

 

Balance at December 31, 2020

 

 

37,569

 

 

$

4

 

 

$

372,764

 

 

$

(5

)

 

$

(66,540

)

 

$

306,223

 

Issuance of common stock upon exercise

   of stock options

 

 

31

 

 

 

 

 

 

24

 

 

 

 

 

 

 

 

 

24

 

Vesting of early exercise options

 

 

 

 

 

 

 

 

10

 

 

 

 

 

 

 

 

 

10

 

Stock-based compensation

 

 

 

 

 

 

 

 

3,701

 

 

 

 

 

 

 

 

 

3,701

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(23,844

)

 

 

(23,844

)

Other comprehensive gain

 

 

 

 

 

 

 

 

 

 

 

2

 

 

 

 

 

 

2

 

Balance at March 31, 2021

 

 

37,600

 

 

$

4

 

 

$

376,499

 

 

$

(3

)

 

$

(90,384

)

 

$

286,116

 

Issuance of common stock upon exercise

   of stock options

 

 

51

 

 

 

 

 

 

98

 

 

 

 

 

 

 

 

 

98

 

Issuance of common stock under employee

   stock purchase plan

 

 

14

 

 

 

 

 

 

318

 

 

 

 

 

 

 

 

 

318

 

Vesting of early exercise options

 

 

 

 

 

 

 

 

9

 

 

 

 

 

 

 

 

 

9

 

Stock-based compensation

 

 

 

 

 

 

 

 

4,289

 

 

 

 

 

 

 

 

 

4,289

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(26,353

)

 

 

(26,353

)

Other comprehensive gain

 

 

 

 

 

 

 

 

 

 

 

3

 

 

 

 

 

 

3

 

Balance at June 30, 2021

 

 

37,665

 

 

$

4

 

 

$

381,213

 

 

$

 

 

$

(116,737

)

 

$

264,480

 

Issuance of common stock upon exercise

   of stock options

 

 

32

 

 

 

 

 

 

34

 

 

 

 

 

 

 

 

 

34

 

Vesting of early exercise options

 

 

 

 

 

 

 

 

6

 

 

 

 

 

 

 

 

 

6

 

Issuance of common stock in public offering,

   net of issuance costs of $10,518

 

 

9,200

 

 

 

1

 

 

 

155,081

 

 

 

 

 

 

 

 

 

155,082

 

Stock-based compensation

 

 

 

 

 

 

 

 

4,550

 

 

 

 

 

 

 

 

 

4,550

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(29,274

)

 

 

(29,274

)

Other comprehensive loss

 

 

 

 

 

 

 

 

 

 

 

(1

)

 

 

 

 

 

(1

)

Balance at September 30, 2021

 

 

46,897

 

 

$

5

 

 

$

540,884

 

 

$

(1

)

 

$

(146,011

)

 

$

394,877

 

 

See accompanying notes.

 

 

 

6


 

 

Avidity Biosciences, Inc.

Condensed Statements of Cash Flows

(in thousands)

(unaudited)

 

 

 

Nine Months Ended September 30,

 

 

 

2022

 

 

2021

 

Cash flows from operating activities

 

 

 

 

 

 

 

 

Net loss

 

$

(123,524

)

 

$

(79,471

)

Adjustments to reconcile net loss to net cash used in operating activities:

 

 

 

 

 

 

 

 

Depreciation

 

 

1,006

 

 

 

431

 

Stock-based compensation expense

 

 

19,832

 

 

 

12,540

 

Amortization of premiums and discounts on marketable securities, net

 

 

184

 

 

 

87

 

Gain on disposal of property and equipment

 

 

 

 

 

(16

)

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

 

Prepaid and other assets

 

 

(3,242

)

 

 

(5,654

)

Accounts payable and accrued liabilities

 

 

12,028

 

 

 

3,869

 

Accrued compensation

 

 

(1,193

)

 

 

3,001

 

Operating lease right-of-use assets and liabilities, net

 

 

1,066

 

 

 

449

 

Deferred revenue

 

 

(3,236

)

 

 

(3,834

)

Net cash used in operating activities

 

 

(97,079

)

 

 

(68,598

)

Cash flows from investing activities

 

 

 

 

 

 

 

 

Maturities of marketable securities

 

 

85,975

 

 

 

3,580

 

Purchases of marketable securities

 

 

(266,189

)

 

 

 

Purchases of property and equipment

 

 

(1,973

)

 

 

(2,033

)

Net cash (used in) provided by investing activities

 

 

(182,187

)

 

 

1,547

 

Cash flows from financing activities

 

 

 

 

 

 

 

 

Proceeds from issuance of common stock in public offerings, gross

 

 

104,846

 

 

 

165,600

 

Payment of issuance costs related to public offerings

 

 

(3,145

)

 

 

(10,399

)

Proceeds from issuance of common stock under employee stock

  purchase plan

 

 

499

 

 

 

318

 

Proceeds from exercise of stock options