What changed in this filing

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Item 2. Management’s Discussion and Analysis

2024-08-14 compared with 2024-05-08 · 72 added, 38 removed, 179 unchanged (38% of the section changed)

20 unchanged sentences

We selected firmonertinib for global development against nonclassical, or uncommon, mutations based on preliminary reductions in tumor size observed in seven out of ten patients in first-line treatment with EGFR exon 20 insertion mutations in the ongoing Phase 1b clinical trial, the FAVOUR trial, conducted by Allist in China, and preclinical activity in EGFR P-loop and-alpha-c-helix compressing (PACC) mutations, each a subtype of uncommon mutation.

In a subsequent interim data readout from the FAVOUR trial of firmonertinib in first-line patients with locally advanced or metastatic EGFRm NSCLC with exon 20 insertion mutations, 79% of patients

(n=22 out of 28 patients) were observed to experience a reduction in tumor size of at least 30%.

If the future clinical trial results of the FAVOUR trial are unfavorable, our clinical development plans for firmonertinib, which include conducting our global, pivotal Phase 3 FURVENT clinical trial in first-line non-squamous locally advanced or metastatic EGFRm NSCLC patients with exon 20 insertion mutations, may be adversely affected.

In a subsequent interim data readout from the FAVOUR trial of firmonertinib in first-line patients with locally advanced or metastatic EGFRm NSCLC with exon 20 insertion mutations, 79% of patients (n=22 out of 28 patients) were observed to experience a reduction in tumor size of at least 30%.

If the future clinical trial results of the FAVOUR trial are unfavorable, our clinical development plans for firmonertinib, which include

conducting our global, pivotal Phase 3 FURVENT clinical trial in first-line non-squamous locally advanced or metastatic EGFRm NSCLC patients with exon 20 insertion mutations, may be adversely affected.

In 2021, we licensed from Allist the right to develop and commercialize firmonertinib worldwide, with the exception of greater China, which includes mainland China, Hong Kong, Macau and Taiwan.

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Under the Allist License Agreement, we are obligated to pay Allist milestone payments up to an aggregate of $765.0 million upon the achievement of certain development, regulatory and sales milestone events as set forth in the Allist License Agreement.

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.

We are also obligated under the Allist License Agreement to pay Allist tiered royalties based on net sales of Licensed Products (as defined in the Allist License Agreement).

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

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

We 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 our initial public offering, our convertible preferred stock converted into 19,567,306 shares of common stock in January 2024.

We have incurred significant operating losses since our inception and have not yet generated any revenue.

Our net losses were $17.4 million and $12.2 million for the three months ended March 31, 2024 and 2023, respectively.

As of March 31, 2024, we had an accumulated deficit of $175.3 million.

Our net losses were $39.3 million and $33.7 million for the six months ended June 30, 2024 and 2023, respectively.

As of June 30, 2024, we had an accumulated deficit of $197.1 million.

Our net losses may fluctuate significantly from quarter-to-quarter and year-to-year, depending on the timing of our preclinical studies, clinical trials and our expenditures on other research and development activities.

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● other allocated expenses, which include direct and allocated expenses, insurance, equipment and other supplies.

Our direct research and development expenses consist principally of external costs, such as fees paid to CROs and consultants in connection with our clinical trials for firmonertinib, preclinical and toxicology studies and costs related to manufacturing materials for clinical and preclinical studies.

manufacturing materials for clinical and preclinical studies.

Prior to our identification of potential product candidates in 2022, we did not track external costs by program.

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We anticipate that our general and administrative expenses will increase in the future to support our continued research and development activities and, if any product candidates receive marketing approval, commercialization activities.

We also anticipate increased expenses related to audit, legal, regulatory and tax-

related services associated with maintaining compliance with exchange listing and SEC requirements, director and officer insurance premiums and investor relations costs associated with operating as a public company.

We also anticipate increased expenses related to audit, legal, regulatory and tax-related services associated with maintaining compliance with exchange listing and SEC requirements, director and officer insurance premiums and investor relations costs associated with operating as a public company.

Interest Income

1 unchanged sentence

Results of Operations

Comparison of the Three Months Ended March 31, 2024 and 2023

The following table summarizes our results of operations for the three months ended March 31, 2024 and 2023:

Three Months Ended March 31,

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

The following table summarizes our results of operations for the three months ended June 30, 2024 and 2023:

Three Months Ended June 30,

(in thousands)

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We do not track internal research and development costs by product candidate.

The following table summarizes our research and development expenses for the three months ended March 31, 2024 and 2023:

Three Months Ended March 31,

The following table summarizes our research and development expenses for the three months ended June 30, 2024 and 2023:

Three Months Ended June 30,

(in thousands)

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Total research and development expenses

Research and development expenses were $17.0 million and $10.2 million for the three months ended March 31, 2024 and 2023, respectively.

The increase of $6.7 million was primarily due to an increase of $5.9 million related to our lead product candidate, firmonertinib, an increase of $0.7 million in personnel-related costs due to increased headcount and $0.2 million in preclinical discovery work.

Costs related to firmonertinib increased as a result of increased costs related to our FURVENT Phase 3 clinical trial of $5.2 million, a $0.7 million increase in other general firmonertinib costs, and a $0.3 million increase in costs related to our FURTHER Phase 1 clinical trial due to additional patients added to the studies in the second half of 2023, partially offset by a decrease in costs related to our FAVOUR trial.

Research and development expenses were $21.8 million and $20.4 million for the three months ended June 30, 2024 and 2023, respectively.

The increase of $1.4 million was primarily due to a decrease of $5.1 million related to our lead product candidate, firmonertinib, offset by increases of $5.7 million in preclinical discovery work and $0.8 million in personnel-related costs due to increased headcount.

Costs related to firmonertinib decreased as a result of decreased costs related to our FURVENT Phase 3 clinical trial of $3.6 million, a $0.6 million decrease in costs related to our FAVOUR trial, and a $1.2 million decrease in costs related to our FURTHER Phase 1 clinical trial, partially offset by an increase in general firmonertinib costs.

Discovery-stage program costs increased due to an up-front payment related to the collaboration with Jiangsu Alphamab Biopharmaceuticals Co., Ltd.

General and Administrative

General and administrative expenses were $3.7 million and $1.9 million for the three months ended March 31, 2024 and 2023, respectively.

The increase of $1.8 million was due primarily to increases of $0.7 million in professional services and $0.7 million in personnel-related expenses.

General and administrative expenses were $3.9 million and $2.2 million for the three months ended June 30, 2024 and 2023, respectively.

The increase of $1.7 million was due primarily to increases of $1.0 million in personnel-related costs, and $0.7 million in insurance, taxes, and outside services.

Interest Income

Interest income was $3.3 million for the three months ended March 31, 2024 and consisted of interest earned on our cash equivalents.

For the three months ended March 31, 2023, we did not earn any interest income.

Interest income was $3.8 million and $1.0 million for the three months ended June 30, 2024 and 2023, respectively.

The increase in interest income is due to increased invested balances and increased average market yields.

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

The following table summarizes our results of operations for the six months ended June 30, 2024 and 2023:

Six Months Ended June 30,

(in thousands)

Operating expenses:

Research and development

General and administrative

Total operating expenses

Operating loss

Interest income

Research and Development

We track outsourced clinical and preclinical costs and other external research and development costs associated with our lead product candidate, firmonertinib, and other discovery-stage programs.

We do not track internal research and development costs by product candidate.

The following table summarizes our research and development expenses for the six months ended June 30, 2024 and 2023:

Six Months Ended June 30,

(in thousands)

Firmonertinib:

Other Firmonertinib costs

Total Firmonertinib

Discovery-stage programs

Personnel-related and other internal costs

Total research and development expenses

Research and development expenses were $38.8 million and $30.6 million for the six months ended June 30, 2024 and 2023, respectively.

The increase of $8.2 million was primarily due to an increase of $0.8 million related to our lead product candidate, firmonertinib, an increase of $1.5 million in personnel-related costs due to increased headcount, and an increase of $5.9 million in preclinical discovery work.

Costs related to firmonertinib increased as a result of increased costs related to our FURVENT Phase 3 clinical trial of $1.7 million, a $1.0 million increase in other general firmonertinib costs, offset by a $0.9 million decrease in costs related to our FURTHER Phase 1 clinical trial, and a decrease of $1.0 million related to our FAVOUR trial.

General and Administrative

General and administrative expenses were $7.6 million and $4.2 million for the six months ended June 30, 2024 and 2023, respectively.

The increase of $3.5 million was due primarily to increases of $1.6 million in personnel-related costs, $0.9 million in outside services, and $1.0 million in software, insurance, and taxes.

Interest Income

Interest income was $7.1 million and $1.0 million for the six months ended June 30, 2024 and 2023, respectively.

The increase in interest income is due to increased invested balances and increased average market yields.

Liquidity and Capital Resources

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To date, we have raised gross proceeds of $305.0 million from the issuance of convertible preferred stock.

Additionally, in the first quarter of 2024, we completed our initial public offering of 11,180,555 shares of our common stock at a price to the public of $18.00 per share, including the exercise in full by the underwriters of their option to purchase 1,458,333 additional shares of our common stock for aggregate proceeds of $183.2 million, net of underwriting discounts, commissions and other estimated offering expenses.

As of March 31, 2024, we had cash and cash equivalents of $317.4 million.

As of June 30, 2024, we had cash and cash equivalents of $298.7 million.

Future Funding Requirements

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We cannot be assured that we will ever be profitable or generate positive cash flows from operating activities.

We believe that our existing cash and cash equivalents as of March 31, 2024 will be sufficient to meet our anticipated cash requirements into 2026.

We believe that our existing cash and cash equivalents as of June 30, 2024 will be sufficient to meet our anticipated cash requirements into 2026.

However, our forecast of the period of time through which our financial resources will be adequate to support our operations is a forward-looking statement that involves risks and uncertainties, and actual results could vary materially.

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The following table summarizes our cash flows for the periods indicated:

Three Months Ended March 31,

Six Months Ended June 30,

(in thousands)

1 unchanged sentence

Operating activities

Investing activities

Financing activities

1 unchanged sentence

Operating Activities

Net cash used in operating activities was $18.6 million for the three months ended March 31, 2024 reflecting our net loss of $17.4 million and a $1.8 million net change in our operating assets and liabilities attributable to the timing in which we pay our vendors for research and development activities offset, in part, by $0.6 million in stock-based compensation.

Net cash used in operating activities was $16.9 million for the three months ended March 31, 2023 reflecting our net loss of $12.2 million and a $4.9 million net change in our operating assets and liabilities attributable to the timing in which we pay our vendors for research and development activities offset, in part, by $0.2 million in stock-based compensation.

Net cash used in operating activities was $37.7 million for the six months ended June 30, 2024 reflecting our net loss of $39.3 million, offset by $1.4 million in stock-based compensation and a $0.2 million net decrease in our operating assets and liabilities attributable to the timing in which we pay our vendors for research and development activities.

Net cash used in operating activities was $25.5 million for the six months ended June 30, 2023 reflecting our net loss of $33.7 million, offset by $0.4 million in stock-based compensation, and a $7.8 million net decrease in our operating assets and liabilities attributable to the timing in which we pay our vendors for research and development activities.

Investing Activities

No net cash was provided by investing activities for each of the three months ended March 31, 2024 and 2023.

No net cash was provided by investing activities for the six months ended June 30, 2024.

Net cash used by investing activities was $25.0 million for the six months ended June 30, 2023.

This was attributable to the purchase of short-term investments.

Financing Activities

Net cash provided by financing activities was $185.6 million for the three months ended March 31, 2024, due to the net proceeds from our initial public offering.

Net cash provided by financing activities was $45.0 million for the three months ended March 31, 2023, primarily due to the $44.9 million of net proceeds from the issuance of Series B convertible preferred stock.

Net cash provided by financing activities was $186.0 million for the six months ended June 30, 2024, due to the net proceeds from our initial public offering.

Net cash provided by financing activities was $45.0 million for the six months ended June 30, 2023, primarily due to the issuance of Series B convertible preferred stock.

Contractual Obligations and Commitments

The following table summarizes our contractual obligations as of March 31, 2024 and the effects that such obligations are expected to have on our liquidity and cash flows in future periods:

Payments Due by Period

(in thousands)

Operating lease obligations

As of March 31, 2024, except for the operating lease, we did not have any long-term obligations, capital lease obligations, purchase obligation or long-term liabilities.

We enter into contracts in the normal course of business with third-party CROs and clinical trial sites for our clinical trials, and with supply vendors for other services and products for operating purposes.

These contracts generally provide for termination after a notice period, and, therefore, are cancelable contracts.

We have leases for office space in Gaithersburg, Virginia and Burlingame, California that extend through January 2025 and January 2026, respectively.

Amounts related to future lease payments as of June 30, 2024 totaled $0.2 million, to be paid within the next 12 months.

As of June 30, 2024, except for the operating leases, we did not have any long-term obligations, capital lease obligations, purchase obligations or long-term liabilities.

Critical Accounting Policies, Significant Judgments and Use of Estimates

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Actual results may differ from these estimates under different assumptions or conditions.

There have been no changes to our critical accounting policies from those described under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Critical Accounting Policies and Significant Judgments and Use of Estimates” included in the Annual Report, other than as disclosed in Note 3 to our accompanying financial statements appearing elsewhere in this Quarterly Report on Form 10-Q.

JOBS Act and Emerging Growth Company Status

6 unchanged sentences

We may continue to be a smaller reporting company even after we are no longer an emerging growth company.

We may take advantage of certain of the scaled disclosures available to smaller reporting companies and will be able to take advantage of these scaled disclosures for so long as our voting and non-voting common stock held by non-affiliates is less than $250.0 million measured on the last business day of our second fiscal quarter, or our annual revenue is less than $100.0 million during the most recently completed fiscal year and our voting and non-voting common stock held by non-affiliates is less than $700.0 million measured on the last business day of our second fiscal quarter.

recently completed fiscal year and our voting and non-voting common stock held by non-affiliates is less than $700.0 million measured on the last business day of our second fiscal quarter.

Recent Accounting Pronouncements

1 unchanged sentence

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