What changed in this filing

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Item 1. Financial Statements

2024-08-14 compared with 2024-05-08 · 99 added, 53 removed, 219 unchanged (41% of the section changed)

15 unchanged sentences

Total current liabilities

Operating lease liabilities

Operating lease liabilities, net of current amount

Total liabilities

8 unchanged sentences

Common stock $ 0.0001 par value, 200,000,000 shares authorized;

33,493,750 and 2,745,480 shares issued and outstanding at March 31, 2024 and December 31, 2023, respectively

33,509,090 and 2,745,480 shares issued and outstanding at June 30, 2024 and December 31, 2023, respectively

Additional paid-in capital

7 unchanged sentences

Three Months Ended

Six Months Ended

Operating expenses:

5 unchanged sentences

Share information:

Net loss per share of common stock, basic and diluted

Net loss per share attributable to common stockholders, basic and diluted

Weighted-average shares of common stock outstanding, basic and diluted

10 unchanged sentences

Balance, March 31, 2023

Issuance costs of Series B convertible preferred stock

Repurchase of common stock

Exercise of stock options

Stock-based compensation expense

Balance, June 30, 2023

See accompanying notes to unaudited interim financial statements.

ARRIVENT BIOPHARMA, INC.

STATEMENTS OF CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ EQUITY (DEFICIT)

(in thousands, except share and per share data)

convertible preferred stock

Balance January 1, 2024

6 unchanged sentences

Balance, March 31, 2024

Exercise of stock options

Stock-based compensation expense

Balance, June 30, 2024

See accompanying notes to unaudited interim financial statements.

2 unchanged sentences

(in thousands)

Three Months Ended

Six Months Ended

Cash flows from operating activities:

7 unchanged sentences

Net cash used in operating activities

Cash flows from investing activities:

Purchase of short-term investments

Net cash used in investing activities

Cash flows from financing activities:

Proceeds from issuance of common stock in an initial public offering, net

Proceeds from issuance of common stock in an initial public offering, net of issuance costs

Proceeds from the exercise of stock options

5 unchanged sentences

Supplemental disclosures of non-cash financing and investing activities

Deferred offering costs in accounts payable

Deferred offering costs transferred to additional paid in capital

9 unchanged sentences

The shares of common stock began trading on the Nasdaq Global Market on January 26, 2024, under the symbol “AVBP”.

The Company received net proceeds of $ 183.2 million, after deducting underwriting discounts and commissions and other estimated offering expenses.

The Company received net proceeds of $ 183.2 million, after deducting underwriting discounts and commissions and other offering expenses.

In addition, as a result of the closing of the Company’s initial public offering, the Company’s Series A and Series B convertible preferred stock converted into 19,567,306 shares of common stock in January 2024.

Development-Stage Risks and Liquidity

The Company has incurred losses since inception and has an accumulated deficit of $ 175.3 million as of March 31, 2024.

The Company has incurred losses since inception and has an accumulated deficit of $ 197.1 million as of June 30, 2024.

The Company anticipates incurring additional losses until such time, if ever, that it can generate significant sales from its product candidates currently in development.

Management believes that cash and cash equivalents of $ 317.4 million as of March 31, 2024 are sufficient to sustain planned operations through at least twelve months from the issuance date of these financial statements.

Management believes that cash and cash equivalents of $ 298.7 million as of June 30, 2024 are sufficient to sustain planned operations through at least twelve months from the issuance date of these financial statements.

The Company is subject to those risks associated with any specialty biotechnology company that has substantial expenditures for research and development.

9 unchanged sentences

NOTES TO THE UNAUDITED FINANCIAL STATEMENTS

In the opinion of management, the accompanying interim financial statements include all the normal and recurring adjustments (which consist primarily of accruals, estimates, and assumptions that impact financial statements) considered necessary to present fairly the Company’s financial position as of March 31, 2024 and its results of operations for the three months ended March 31, 2024 and 2023.

In the opinion of management, the accompanying interim financial statements include all the normal and recurring adjustments (which consist primarily of accruals, estimates, and assumptions that impact financial statements) considered necessary to present fairly the Company’s financial position as of June 30, 2024 and its results of operations for the three and six months ended June 30, 2024 and 2023.

Certain information and disclosures normally included in the annual financial statements prepared in accordance with GAAP, but that is not required for interim reporting purposes, have been condensed or omitted.

These interim financial statements should be read in conjunction with the audited financial statements and related notes as of and for the year ended December 31, 2023, and the notes thereto, which are included in the Annual Report.

These interim financial statements should be read in conjunction with the audited financial statements and related notes as of and for the year ended December 31, 2023, which are included in the Annual Report.

The December 31, 2023 balance sheet has been derived from the audited financial statements.

27 unchanged sentences

Three Months Ended

Six Months Ended

Weighted-average shares of common stock outstanding

Weighted-average shares of common stock subject to repurchase

( 1,314,914 )

Weighted-average shares of common stock outstanding, basic and diluted

1 unchanged sentence

The following potentially dilutive securities have been excluded from the computation of diluted weighted-average shares of common stock outstanding, as they would be anti-dilutive:

Three Months Ended

Six Months Ended

Series A convertible preferred stock (as converted to common stock)

3 unchanged sentences

Accounting Pronouncements Not Yet Adopted

In November 2023, the FASB issued ASU 2023-07 Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures .

This standard includes the requirements that a public entity disclose, on an annual and interim basis, significant segment expenses that are regularly provided to the chief operating decision maker and included within each reported measure of segment profit or loss, the title and position of the chief operating decision maker, and an explanation of how the chief operating decision maker uses the reported measure(s) of segment profit or loss in assessing segment performance and deciding how to allocate resources.

It also requires that a public entity that has a single reportable segment provide all the disclosures required by the guidance and all existing segment disclosures in ASC 280, Segment Reporting .

This standard is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024.

Early adoption is permitted.

A public entity should apply

ARRIVENT BIOPHARMA, INC.

NOTES TO THE UNAUDITED FINANCIAL STATEMENTS

the amendments in the guidance retrospectively to all prior periods presented in the financial statements.

Upon transition, the segment expense categories and amounts disclosed in the prior periods should be based on the significant segment expense categories identified and disclosed in the period of adoption.

The Company is currently evaluating the impact that this standard may have on its financial statements.

In December 2023, the FASB issued ASU 2023-09 Income Taxes (Topic 740):

5 unchanged sentences

Early adoption is permitted.

This standard should be applied on a

ARRIVENT BIOPHARMA, INC.

NOTES TO THE UNAUDITED FINANCIAL STATEMENTS

prospective basis.

This standard should be applied on a prospective basis.

Retrospective application is permitted.

5 unchanged sentences

The following table presents information about the Company’s financial assets measured at fair value on a recurring basis and indicates the level of the fair value hierarchy utilized to determine such fair values (in thousands):

March 31, 2024

June 30, 2024

Current assets:

8 unchanged sentences

This approach results in a classification of these securities as Level 1 of the fair value hierarchy.

ARRIVENT BIOPHARMA, INC.

NOTES TO THE UNAUDITED FINANCIAL STATEMENTS

Prepaid Expenses and Other Current Assets

3 unchanged sentences

Tax credit receivable

ARRIVENT BIOPHARMA, INC.

NOTES TO THE UNAUDITED FINANCIAL STATEMENTS

Accrued Expenses

5 unchanged sentences

Commitments and Contingencies

The Company has one operating lease that it subleases for its office space in California, which commenced in November 2023 with an original lease term through January 2026.

This lease replaced a lease at the same address which commenced in January 2022 with an original lease term through January 2024 (which ended in January 2024).

The Company also leases other space with an initial lease term of less than twelve months;

therefore, it does not recognize this lease as an operating lease on the balance sheet.

The Company’s operating lease right-of-use (“ROU”) asset and the related lease liabilities are initially measured at the present value of future lease payments over the lease term.

The Company is responsible for payment of certain real estate taxes, insurance and other expenses on certain of its leases.

These amounts are generally considered to be variable and are not included in the measurement of the ROU assets and lease liability.

The Company accounts for non-lease components, such as maintenance, separately from lease components.

Operating lease expense was less than $ 0.1 million for each of the three months ended March 31, 2024 and 2023.

The Company’s remaining lease term and discount rate for its operating lease as of March 31, 2024 were 1.83 years and 10.0 %, respectively.

Future maturities of operating lease liabilities were as follows as of March 31, 2024 (in thousands):

Operating lease expense was less than $ 0.1 million for each of the three and six months ended June 30, 2024 and 2023.

The Company’s remaining lease term and discount rate for its operating lease as of June 30, 2024 were 1.58 years and 10.0 %, respectively.

Future maturities of operating lease liabilities were as follows as of June 30, 2024 (in thousands):

Fiscal year ending:

3 unchanged sentences

Present value of lease liabilities

Cash paid for rent expense recorded during each of the three months ended March 31, 2024 and 2023 was less than $ 0.1 million.

Aarvik Research Agreement

In December 2021, the Company entered into a Research Collaboration Agreement, as amended, effective June 2023, with Aarvik Pharmaceuticals, Inc.

(“Aarvik”), under which the Company is required to pay Aarvik up to $ 3.1 million on statements of work (“SOWs”) and an initiation fee of $ 0.3 million predefined in the agreement.

Cash paid for rent expense recorded during the three months ended June 30, 2024 and 2023 was less than $ 0.1 million.

Cash paid for rent expense recorded during the six months ended June 30, 2024 and 2023 was less than $ 0.1 million.

Stock-based Compensation

In June 2021, the Company adopted the 2021 Employee, Director and Consultant Equity Incentive Plan, as amended (the “2021 Plan”), that authorized the Company to grant up to 803,564 shares of common stock.

In 2022, the Company

ARRIVENT BIOPHARMA, INC.

NOTES TO THE UNAUDITED FINANCIAL STATEMENTS

completion of the SOWs, the Company has an exclusive option to license the Aarvik intellectual property, and the option to acquire certain of Aarvik’s intellectual property, after which it is the Company’s sole responsibility to research, develop, manufacture and commercialize any applicable compound and product in the field and territory.

If the Company exercises that option, it would be obligated to pay up to $ 18.0 million per product upon the achievement of certain clinical and regulatory milestone events and up to $ 80.0 million per product in commercial milestones.

Additionally, the Company would be obligated to pay Aarvik royalties in the mid-single digits based on net sales of licensed products.

During each of the three months ended March 31, 2024 and 2023, the Company incurred $ 0.1 million in research and development expenses related to the Aarvik SOWs.

Stock-based Compensation

In June 2021, the Company adopted the 2021 Employee, Director and Consultant Equity Incentive Plan (the “2021 Plan”), as amended, that authorized the Company to grant up to 803,564 shares of common stock.

In 2022, the Company amended the 2021 Plan and increased the total number of shares authorized under the Plan to 2,748,818 .

amended the 2021 Plan and increased the total number of shares authorized under the Plan to 2,748,818 .

In January 2024, the Company adopted the 2024 Employee, Director and Consultant Equity Incentive Plan (the “2024 Plan”) that authorized the Company to grant up to 3,900,000 shares of common stock plus any remaining ungranted or forfeited shares from the 2021 Plan.

As of March 31, 2024, there were 3,939,333 shares available to be granted.

As of June 30, 2024, there were 3,802,245 shares available to be granted.

The Company’s stock options vest based on the terms in the awards agreements and generally vest over four years .

1 unchanged sentence

Three Months Ended

Six Months Ended

Research and development

5 unchanged sentences

Forfeited/Expired

Outstanding as of March 31, 2024

Exercisable as of March 31, 2024

Vested and expected to vest at March 31, 2024

ARRIVENT BIOPHARMA, INC.

NOTES TO THE UNAUDITED FINANCIAL STATEMENTS

The weighted-average grant-date fair value of options granted in 2024 and 2023 were $ 6.03 and $ 2.79 per share, respectively.

Outstanding as of June 30, 2024

Exercisable as of June 30, 2024

Vested and expected to vest at June 30, 2024

The weighted-average grant-date fair value of options granted in the first six months of 2024 and 2023 were $ 7.49 and $ 2.74 per share, respectively.

The fair value was estimated using the Black-Scholes option-pricing model based on the following assumptions:

Three Months Ended

Six Months Ended

Risk-free interest rate

4.34 % - 4.66 %

3.50 % - 3.68 %

3.85 % - 4.66 %

3.45 % - 3.68 %

Expected term

6.0 - 6.1 years

5.5 - 6.1 years

Expected volatility

89.3 % - 89.8 %

93.1 % - 98.6 %

87.0 % - 88.0 %

Expected dividend yield

Estimated fair value of the Company's common stock per share

Unrecognized compensation cost for awards not vested as of March 31, 2024 was $ 7.8 million and will be expensed over a weighted-average period of 3.1 years.

Allist License Agreement

15.90 - 20.15

Unrecognized compensation cost for awards not vested as of June 30, 2024 was $ 9.2 million and will be expensed over a weighted-average period of 2.81 years.

ARRIVENT BIOPHARMA, INC.

NOTES TO THE UNAUDITED FINANCIAL STATEMENTS

License and Collaborative Agreements

In June 2021, the Company entered into a Global Technology Transfer and License Agreement with Allist (the “Allist Agreement”).

2 unchanged sentences

Upon the achievement of certain clinical, regulatory and commercial milestones using the licensed technology, the Company is obligated to make future milestone payments to Allist.

During the three months ended March 31, 2024 and 2023, no clinical milestones were met or achieved.

During the six months ended June 30, 2024 and 2023, no clinical milestones were met or achieved.

The Company is obligated to make future milestone payments of up to $ 105.0 million in clinical and regulatory milestones and up to $ 655.0 million in sales milestones.

1 unchanged sentence

In connection with the Allist Agreement, in December 2021, the parties also entered into a Joint Clinical Collaboration Agreement (“Clinical Collaboration”) to define the framework under which the parties will cooperate and share costs related to global clinical studies to be conducted jointly by the Company and Allist.

During the three months ended March 31, 2024 and 2023, the Company incurred $ 0.2 million and $ 0.6 million, respectively, in cost reimbursements to Allist which have been recorded as research and development expense under the Clinical Collaboration Agreement.

The Company also was entitled to cost reimbursement from Allist of $ 0.1 million for each of the three months ended March 31, 2024 and 2023, which has been recorded as a reduction of research and development expenses.

The Company assessed the Clinical Collaboration in accordance with ASC 808, Collaborative Arrangements , and determined that the arrangement did not meet the definition of a collaborative arrangement under ASC 808 since, while the Company and Allist are active participants in the activities under the Clinical Collaboration, both parties are not exposed to significant risks and rewards dependent on the commercial success of the activities.

During the six months ended June 30, 2024 and 2023, the Company incurred $ 0.3 million and $ 1.3 million, respectively, in cost reimbursements to Allist which have been recorded as research and development expense under the Clinical Collaboration.

The Company also was entitled to cost reimbursement from Allist of $ 0.3 million for each of the six months ended June 30, 2024 and 2023, which has been recorded as a reduction of research and development expenses.

In June 2024, the Company entered into a collaboration agreement with Jiangsu Alphamab Biopharmaceuticals Co., Ltd.

(“Alphamab”) to discover, develop and commercialize novel antibody drug conjugates (“ADCs”) for the treatment of cancers.

Under the agreement, both companies will leverage Alphamab’s proprietary linker-payload platform and glycan-conjugation technology to identify novel ADCs for oncology indications.

The agreement gives the Company exclusive rights to develop and commercialize ADCs globally, except greater China, which includes outside of mainland China, Hong Kong, Macau and Taiwan where Alphamab retains the right to develop and commercialize the ADCs.

The terms of the agreement include combined upfront and potential milestone payments to Alphamab of up to $ 615.5 million in aggregate for the potential programs, based on the achievement of certain regulatory, development, and sales milestones.

In addition, Alphamab is entitled to receive tiered sales royalties from the Company for each ADC product.

In December 2021, the Company entered into a Research Collaboration Agreement, as amended, effective June 30, 2023 (the “Aarvik Collaboration Agreement”), with Aarvik Pharmaceuticals, Inc.

(“Aarvik”), under which the Company is required to pay Aarvik up to $ 3.1 million on statements of work (“SOWs”) and an initiation fee of $ 0.3 million predefined in the agreement.

After the completion of the SOWs, the Company has an exclusive option to license the Aarvik intellectual property, and the option to acquire certain of Aarvik’s intellectual property, after which it is the Company’s sole responsibility to research, develop, manufacture and commercialize any applicable compound and product in the field and territory.

ARRIVENT BIOPHARMA, INC.

NOTES TO THE UNAUDITED FINANCIAL STATEMENTS

in commercial milestones.

Additionally, the Company would be obligated to pay Aarvik royalties in the mid-single digits based on net sales of licensed products.

The Company incurred $ 0.8 million and $ 0.6 million in research and development expenses related to the Aarvik SOWs during the three months ended June 30, 2024 and 2023, respectively.

The Company incurred $ 1.0 million and $ 0.7 million in research and development expenses related to the Aarvik SOWs during the six months ended June 30, 2024 and 2023, respectively.

On August 9, 2024, the Company entered into an amendment and restatement of the Aarvik Collaboration Agreement (the “Amended and Restated Aarvik Collaboration Agreement”).

Under the Amended and Restated Aarvik Collaboration Agreement, Aarvik has granted the Company an exclusive option to obtain exclusive rights to certain of Aarvik’s intellectual property for the research, development, manufacture, use, commercialization, or other exploitation of the ADCs related to (i) the two agreed targets to which the compounds being developed under the collaboration bind, which is referred to as the Target Pair, and (ii) to acquire exclusive rights to certain intellectual property generated during the collaboration.

The Company has not yet selected the indication or indications that it would pursue in the collaboration and anticipates doing so in connection with the identification of a lead candidate for IND-enabling studies.

Under the Amended and Restated Aarvik Collaboration Agreement, the Company is now required to pay Aarvik a collaboration initiation fee and research fees as provided in the SOWs in an aggregate of up to $ 4.7 million (based on estimated research fees).

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 1. Financial Statements