What changed in this filing

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Item 2. Management’s Discussion and Analysis

2024-11-14 compared with 2024-08-12 · 61 added, 53 removed, 197 unchanged (37% of the section changed)

17 unchanged sentences

We are advancing our lead candidate, ANX005, an investigational, full-length monoclonal antibody, or mAb, formulated for intravenous administration for the potential treatment of patients with GBS, a rare antibody-mediated autoimmune disease that is the most common cause of acute neuromuscular paralysis with no approved therapies in the U.S.

In the second quarter of 2024, we announced positive results from the completed pivotal Phase 3 trial in GBS at the 2024 Peripheral Nerve Society (PNS) Annual Meeting.

In the second quarter of 2024, we announced positive results from the completed pivotal Phase 3 trial in GBS at the 2024 Peripheral Nerve Society Annual Meeting.

Data showed that ANX005-treated patients demonstrated faster and more complete recovery from week 1 through week 26 on primary and multiple pre-specified endpoints.

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ANX007 was generally well-tolerated through month 12, with no increase in choroidal

neovascularization (CNV) rates between the treated and sham arms and no events of retinal vasculitis reported.

neovascularization rates between the treated and sham arms and no events of retinal vasculitis reported.

In August 2024, we announced that patient dosing was initiated in the global pivotal Phase 3 ARCHER II trial, the only GA pivotal program utilizing visual protection as the global regulatory-aligned primary end point.

Topline data from the ARCHER II trial are expected in the second half of 2026.

Plans for a Phase 3 injection-controlled study, ARROW, to assess the prevention of ≥15-letter loss of BCVA, are also ongoing.

Plans for a Phase 3 injection-controlled study, ARROW, are being assessed.

ANX007 has been granted Fast Track designation from the FDA and is the first therapeutic candidate for the treatment of GA to receive Priority Medicine, or PRIME, designation by the EMA, which provides early and proactive support to developers of promising medicines that may offer a major therapeutic advantage over existing treatments or benefit to patients without treatment options.

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We are advancing ANX1502, a novel oral small molecule inhibitor of classical complement which we believe is first-in-kind.

In a Phase 1 single-ascending dose, or SAD, and multiple-ascending dose, or MAD, clinical trial in healthy volunteers, ANX1502 was generally well tolerated with no serious adverse events, achieved target levels of active drug and showed supportive impact on a pharmacodynamic (PD) biomarker of complement activity.

We have completed a bridging study from liquid to a tablet formulation of ANX1502 and are on track to advance a proof-of-concept study designed to assess PD in patients with cold agglutinin disease, or CAD, with data expected in the fourth quarter of 2024.

We have completed a bridging study from liquid to a tablet formulation of ANX1502 and have initiated an open-label single arm proof-of-concept, or POC, study in patients with cold agglutinin disease, or CAD.

The POC study in CAD patients will evaluate ANX1502 administered twice daily for up to four weeks and will characterize the pharmacodynamics of ANX1502 on objective and established markers of complement activation and disease hemolysis.

Initial data are expected in the first quarter of 2025.

We were incorporated in March 2011 and commenced operations later that year.

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We have incurred net losses each year since our inception.

Our net losses were $29.6 million and $35.2 million for the three months ended June 30, 2024 and 2023, respectively, and $54.8 million and $73.9 million for the six months ended June 30, 2024 and 2023, respectively.

As of June 30, 2024, we had an accumulated deficit of $627.3 million and cash and cash equivalents and short-term investments of $368.7 million.

Our net losses were $34.8 million and $32.5 million for the three months ended September 30, 2024 and 2023, respectively, and $89.6 million and $106.3 million for the nine months ended September 30, 2024 and 2023, respectively.

As of September 30, 2024, we had an accumulated deficit of $662.1 million and cash and cash equivalents and short-term investments of $340.1 million.

Components of Operating Results

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• contract manufacturing costs to produce clinical trial materials and commercial materials to support any

biologics license applications (BLA) to the FDA;

BLA to the FDA;

• laboratory supplies and materials.

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The prepaid amounts are then expensed as the related services are performed.

At this time, we cannot

reasonably estimate or know the nature, timing and estimated costs of the efforts that will be necessary to complete the development of, and obtain regulatory approval for, any of our product candidates.

We expect our future research and development expenses to vary substantially for the foreseeable future as we continue to prioritize our pipeline opportunities, advance our product candidates through clinical trials, invest in next generation development, pursue regulatory approval of our product candidates, and hire additional personnel to support our research and development efforts.

The process of conducting the necessary clinical research to obtain regulatory approval is costly and time-consuming, and the successful development of our product candidates is highly uncertain.

At this time, we cannot reasonably estimate or know the nature, timing and estimated costs of the efforts that will be necessary to complete the development of, and obtain regulatory approval for, any of our product candidates.

We expect our future research and development expenses to increase as we pursue regulatory approval of our product candidates, continue to advance our product candidates through late-stage clinical trials, invest in capabilities to prepare for commercialization including manufacturing, and hire additional personnel to support our organization.

The process of conducting the necessary clinical research, development and manufacturing to obtain regulatory approval is costly and time-consuming, and the successful development and approval of our product candidates is highly uncertain.

General and Administrative

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General and administrative expenses also include professional fees paid for accounting, legal and tax services, allocated expenses for facilities and depreciation and other general and administrative costs.

We expect our general and administrative expenses for the foreseeable future to remain relatively flat as we continue to support our research and development activities, grow our business, advance our product candidates toward regulatory approval and commercialization activities, and operate as a public company.

We expect our general and administrative expenses to increase as we continue to support our research and development activities, grow our business, advance our product candidates in late-stage clinical trials and toward regulatory approval and commercialization activities, and operate as a public company.

Interest and Other Income, Net

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Results of Operations

Comparison of the Three Months Ended June 30, 2024 and 2023

Comparison of the Three Months Ended September 30, 2024 and 2023

The following tables summarize our results of operations for the periods presented:

Three Months Ended

September 30,

(in thousands)

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Three Months Ended

September 30,

(in thousands)

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Total research and development expenses

Research and development expenses decreased by $5.2 million, or 17%, for the three months ended June 30, 2024 compared to the same period in 2023.

The decrease was primarily due to a decrease of $4.0 million in direct clinical and nonclinical outside services costs due to completion of the Phase 2 ARCHER trial in GA in 2023, a decrease of $2.3 million in contract manufacturing expenses for ANX005, a decrease of $0.4 million in laboratory supplies and materials, and a decrease of $0.2 million in compensation and personnel-related expenses due to a decrease in headcount, partially offset by an increase of $1.3 million in consulting and professional services, and an increase of $0.5 million in facilities related costs due to completion of sublease agreement.

Research and development expenses increased by $2.2 million, or 8%, for the three months ended September 30, 2024 compared to the same period in 2023.

The increase was primarily due to an increase of $2.9 million in consulting and professional services supporting the advancement of our flagship programs, an increase of $0.8 million in contract manufacturing expenses for ANX005, an increase of $0.5 million in facilities related costs due to the expiration of a sublease agreement, and an increase of $0.5 million in compensation and personnel-related expenses due to an increase in headcount, partially offset by a decrease of $2.3 million in direct clinical and nonclinical outside services costs due to completion of the Phase 2 ARCHER trial in GA in 2023, and a decrease of $0.2 million in laboratory supplies and materials.

General and Administrative Expenses

Three Months Ended

September 30,

(in thousands)

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Total general and administrative expenses

General and administrative expenses increased by $1.1 million, or 15%, for the three months ended June 30, 2024 compared to the same period in 2023.

The increase was primarily due to an increase of $0.7 million in consulting and professional services costs for business development and market research, and an increase of $0.2 million in facilities related costs.

General and administrative expenses increased by $2.4 million, or 36%, for the three months ended September 30, 2024 compared to the same period in 2023.

The increase was primarily due to an increase of $2.5 million in consulting and professional services costs for business development, market research, and recruitment costs.

Interest and other income, net

Interest and other income, net, increased by $1.5 million, or 59%, for the three months ended June 30, 2024 compared to the same period in 2023.

The increase was primarily due to higher average cash balance and favorable interest rates.

Comparison of the Six Months Ended June 30, 2024 and 2023

Interest and other income, net, increased by $2.3 million, or 101%, for the three months ended September 30, 2024 compared to the same period in 2023.

The increase was primarily due to higher average cash and investment balances and favorable interest rates.

Comparison of the Nine Months Ended September 30, 2024 and 2023

The following tables summarize our results of operations for the periods presented:

Six Months Ended

Nine Months Ended

September 30,

(in thousands)

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Research and Development Expenses

Six Months Ended

Nine Months Ended

September 30,

(in thousands)

9 unchanged sentences

Total research and development expenses

Research and development expenses decreased by $16.6 million, or 27%, for the six months ended June 30, 2024 compared to the same period in 2023.

The decrease was primarily due to a decrease of $8.8 million in contract manufacturing expenses for ANX005, a decrease of $8.5 million in direct clinical and nonclinical outside services costs due to completion of the Phase 2 ARCHER trial in GA in 2023, a decrease of $1.0 million in compensation and personnel-related expenses due to a decrease in headcount, and a decrease in $0.7 million of laboratory supplies and materials, partially offset by an increase of $1.4 million in consulting and professional services, and an increase of $1.0 million in facilities related costs due to completion of sublease agreement.

Research and development expenses decreased by $14.4 million, or 16%, for the nine months ended September 30, 2024 compared to the same period in 2023.

The decrease was primarily due to a decrease of $10.8 million in direct clinical and nonclinical outside services costs due to completion of the Phase 2 ARCHER trial in GA in 2023, a decrease of $8.0 million due to timing of contract manufacturing expenses for ANX005, a decrease of $0.9 million of laboratory supplies and materials, and a decrease in $0.6 million in compensation and personnel-related expenses, partially offset by an increase of $4.4 million in consulting and professional services supporting the advancement of our flagship programs, and an increase of $1.5 million in facilities related costs due to the expiration of a sublease agreement.

General and Administrative Expenses

Six Months Ended

Nine Months Ended

September 30,

(in thousands)

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Total general and administrative expenses

General and administrative expenses decreased by $0.2 million, or 1%, for the six months ended June 30, 2024 compared to the same period in 2023.

The decrease was primarily due to a decrease of compensation and personnel-related expenses of $0.4 million due

to a decrease in headcount, and a decrease of $0.3 million in consulting and professional services costs, partially offset by an increase in $0.4 million in facilities related costs due to completion of sublease agreement.

General and administrative expenses increased by $2.3 million, or 10%, for the nine months ended September 30, 2024 compared to the same period in 2023.

The increase was primarily due to an increase of $2.2 million in consulting and professional services costs

for business development, market research, and recruitment costs, and an increase of $0.4 million in facilities related costs due to the expiration of a sublease agreement, partially offset by a decrease in compensation and personnel-related expenses of $0.3 million.

Interest and other income, net

Interest and other income, net, increased by $2.3 million, or 45%, for the six months ended June 30, 2024 compared to the same period in 2023.

Interest and other income, net, increased by $4.6 million, or 63%, for the nine months ended September 30, 2024 compared to the same period in 2023.

The increase was primarily due to higher average cash balance and favorable interest rates.

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We have funded our operations primarily through the sale of equity securities.

As of June 30, 2024, we had available cash and cash equivalents and short-term investments of $368.7 million and an accumulated deficit of $627.3 million.

As of September 30, 2024, we had available cash and cash equivalents and short-term investments of $340.1 million and an accumulated deficit of $662.1 million.

Historical Cash Flows

Six Months Ended

Nine Months Ended

September 30,

(in thousands)

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Cash Flows from Operating Activities

Cash used in operating activities for the six months ended June 30, 2024 was $50.0 million, which consisted of a net loss of $54.8 million and a net change of $3.6 million in our operating assets and liabilities, partially offset by $8.4 million in non-cash charges.

Cash used in operating activities for the nine months ended September 30, 2024 was $82.0 million, which consisted of a net loss of $89.6 million and a net change of $3.2 million in our operating assets and liabilities, partially offset by $10.8 million in non-cash charges.

The non-cash charges consisted of stock-based compensation of $14.2 million, depreciation and amortization of $1.6 million, reduction in the carrying amount of right-of-use assets of $1.0 million, partially offset by accretion of discount on available-for-sale securities of $6.0 million.

Cash used in operating activities for the six months ended June 30, 2023 was $69.4 million, which consisted of a net loss of $73.9 million and a net change of $4.7 million in our operating assets and liabilities, partially offset by $9.2 million in non-cash charges.

Cash used in operating activities for the nine months ended September 30, 2023 was $97.7 million, which consisted of a net loss of $106.3 million and a net change of $5.3 million in our operating assets and liabilities, partially offset by $14.0 million in non-cash charges.

The non-cash charges consisted of stock-based compensation of $13.8 million, depreciation and amortization of $1.6 million, reduction in the carrying amount of right-of-use assets of $0.8 million, partially offset by accretion of discount on available-for-sale securities of $2.3 million.

Cash Flows from Investing Activities

Cash used in investing activities for the six months ended June 30, 2024 was $173.9 million, which consisted of $266.2 million of purchases of available-for-sale securities, partially offset by $92.3 million of proceeds from maturities of available-for-sale securities.

Cash provided by investing activities for the six months ended June 30, 2023 was $25.0 million, which consisted of $95.1 million of proceeds from maturities of available-for-sale securities, partially offset by $69.9 million of purchases of available-for-sale securities and $0.2 million of equipment purchases.

Cash used in investing activities for the nine months ended September 30, 2024 was $219.8 million, which consisted of $411.9 million of purchases of available-for-sale securities, partially offset by $192.1 million of proceeds from maturities of available-for-sale securities.

Cash provided by investing activities for the nine months ended September 30, 2023 was $72.9 million, which consisted of $156.7 million of proceeds from maturities of available-for-sale securities, partially offset by $83.6 million of purchases of available-for-sale securities and $0.2 million of equipment purchases.

Cash Flows from Financing Activities

Cash provided by financing activities for the six months ended June 30, 2024 was $156.1 million, which consisted of $116.8 million of net proceeds from the issuance of common stock and pre-funded warrants under our 2024 financing, $38.4 million of net proceeds from the issuance of common stock under our 2021 ATM program and $0.6 million of proceeds from the exercise of common stock options and employee stock purchase plan purchases.

Cash provided by financing activities for the six months ended June 30, 2023 was $17.9 million, which consisted of $17.5 million of net proceeds from the issuance of common stock to a related party under our at-the-market offering program and $0.4 million of proceeds from the exercise of common stock options and employee stock purchase plan purchases.

Cash provided by financing activities for the nine months ended September 30, 2024 was $156.2 million, which consisted of $116.8 million of net proceeds from the issuance of common stock and pre-funded warrants under our 2024 financing, $38.3 million of net proceeds from the issuance of common stock under our 2021 ATM program and $1.1 million of proceeds from the exercise of common stock options and employee stock purchase plan purchases.

Cash provided by financing activities for the nine months ended September 30, 2023 was $17.9 million, which consisted of $17.5 million of net proceeds from the issuance of common stock to a related party under our at-the-market offering program and $0.4 million of proceeds from the exercise of common stock options and employee stock purchase plan purchases.

Funding Requirements

We use our cash to fund operations, primarily to fund our clinical trials, research and development expenditures and related personnel costs.

In addition, we expect our general and administrative expenses for the foreseeable future to remain relatively flat as we continue to advance our research and development activities, grow our business, advance our product candidates toward regulatory approval and commercialization activities, and operate as a public company.

In addition, we expect our general and administrative expenses to increase as we continue to support our research and development activities, grow our business, advance our product candidates in late-stage clinical trials and toward regulatory approval and commercialization activities, and operate as a public company.

The timing and amount of our operating expenditures will depend on many factors, including:

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We issued an aggregate of 19,901 shares of common stock upon the cashless exercise of the common warrants in June 2024.

Subsequent to September 30, 2024 and through the date of issuance of these interim unaudited condensed financial statements, the Company issued an aggregate of 2,739,096 shares of common stock upon the cashless exercise of the pre-funded warrants.

Pre-Funded and Common Warrants

The following summarizes warrant activity during the six months ended June 30, 2024 and 2023:

The following summarizes warrant activity during the nine months ended September 30, 2024 and 2023:

Number of Common Warrants

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Balances as of December 31, 2023

Balances as of June 30, 2024

Balances as of September 30, 2024

Number of Common Warrants

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Balances as of December 31, 2022

Balances as of June 30, 2023

Balances as of September 30, 2023

2024 At-the-Market (ATM) Program

In March 2024, we entered into a sales agreement with Cowen and Company LLC, or TD Cowen, as sales agent, or 2024 ATM program, pursuant to which we may issue and sell shares of our common stock for an aggregate maximum offering of $100.0 million.

TD Cowen is entitled to compensation up to 3% of the aggregate gross proceeds for the common stock sold through the 2024 ATM program.

As of September 30, 2024, we have not made any sales under the 2024 ATM program.

Subsequent to September 30, 2024 and through the date of issuance of our interim unaudited condensed financial statements, we sold 750,000 shares of common stock under the 2024 ATM for net proceeds of approximately $4.5 million, after deducting commissions paid to TD Cowen.

2021 ATM Program

In March 2024, we entered into a sales agreement with TD Cowen, as sales agent, or 2024 ATM program, pursuant to which we may issue and sell shares of our common stock for an aggregate maximum offering of $100.0 million.

In August 2021, we entered into a sales agreement with TD Cowen, as sales agent, pursuant to which we may issue and sell shares of our common stock for an aggregate maximum offering of $100.0 million under an at-the-market offering program, or 2021 ATM program.

TD Cowen is entitled to compensation up to 3% of the aggregate gross proceeds for the common stock sold through the 2021 ATM program.

As of June 30, 2024, we have not made any sales under the 2024 ATM program.

2021 At-the-Market (ATM) Program

In August 2021, we entered into a sales agreement with Cowen and Company LLC, or TD Cowen, as sales agent, pursuant to which we may issue and sell shares of our common stock for an aggregate maximum offering of $100.0 million under an at-the-market offering program, or 2021 ATM program.

TD Cowen is entitled to compensation up to 3% of the aggregate gross proceeds for the

common stock sold through the 2021 ATM program.

During the six months ended June 30, 2024 and 2023, we sold 7,576,067 shares and 2,646,458 shares of common stock, respectively, under the 2021 ATM program for net proceeds of approximately $38.4 million and $17.5 million, respectively, after deducting commissions paid to TD Cowen.

As of June 30, 2024 and December 31, 2023, approximately $42.3 million and $82.0 million, respectively, remained available for the offer and sale of shares of common stock under the 2021 ATM program.

The Form S-3 registration statement pursuant to which the 2021 ATM Program is registered will expire on August 15, 2024, and no shares of common stock may be sold under the 2021 ATM Program after that date.

During the nine months ended September 30, 2024 and 2023, we sold 7,576,067 shares and 2,646,458 shares of common stock, respectively, under the 2021 ATM program for net proceeds of approximately $38.4 million and $17.5 million, respectively, after deducting commissions paid to TD Cowen.

The Form S-3 registration statement pursuant to which the 2021 ATM Program is registered expired on August 15, 2024, and no shares of common stock may be sold under the 2021 ATM Program after that date.

Critical Accounting Policies and Estimates

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Actual results may differ from these estimates under different assumptions or conditions and any such differences may be material.

During the quarter ended June 30, 2024, there were no material changes to our critical accounting policies or in the methodology used for estimates from those described in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in our Annual Report on Form 10-K for the year ended December 31, 2023.

During the quarter ended September 30, 2024, there were no material changes to our critical accounting policies or in the methodology used for estimates from those described in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in our Annual Report on Form 10-K for the year ended December 31, 2023.

Recent Accounting Pronouncements Not Yet Adopted

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis