advm-10q_20190930.htm

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 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, 2019

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: 001-36579

 

Adverum Biotechnologies, Inc.

(Exact name of registrant as specified in its charter)

 

 

 

 

 

Delaware

 

20-5258327

(State or other jurisdiction of

incorporation or organization)

 

(I.R.S. Employer

Identification No.)

1035 O’Brien Drive,

Menlo Park, CA

(Address of principal executive offices)

94025

(Zip Code)

(650) 272-6269

(Registrant’s telephone number, including area code)

 

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading symbol

Name of each exchange on which registered

Common Stock, $0.0001 par value

ADVM

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 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 31, 2019, there were 64,588,046 shares of the registrant’s common stock, par value $0.0001 per share, outstanding.

 


 

 

 

 


Table of Contents

 

Adverum Biotechnologies, Inc.

 

TABLE OF CONTENTS

 

 

 

Page

 

 

 

PART I—FINANCIAL INFORMATION

 

3

 

 

 

Item 1. Financial Statements

 

3

Condensed Consolidated Balance Sheets as of September 30, 2019 and December 31, 2018 (unaudited)

 

3

Condensed Consolidated Statements of Operations and Comprehensive Loss for the three and nine months ended September 30, 2019 and 2018  (unaudited)

 

4

Condensed Consolidated Statements of Stockholders’ Equity for the three and nine months ended September 30, 2019 and 2018 (unaudited)

 

5

Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2019 and 2018 (unaudited)

 

7

Notes to Condensed Consolidated Financial Statements (unaudited)

 

8

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

15

Item 3. Quantitative and Qualitative Disclosures About Market Risk

 

20

Item 4. Controls and Procedures

 

21

 

 

 

PART II—OTHER INFORMATION

 

22

 

 

 

Item 1. Legal Proceedings

 

22

Item 1A. Risk Factors

 

22

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

 

51

Item 3. Defaults Upon Senior Securities

 

51

Item 4. Mine Safety Disclosures

 

51

Item 5. Other Information

 

51

Item 6. Exhibits

 

52

 

 

 

SIGNATURES

 

54

 

 

 

 

 

 

2


Table of Contents

 

PART I—FINANCIAL INFORMATION

Item 1.Financial Statements

Adverum Biotechnologies, Inc.

Condensed Consolidated Balance Sheets

(In thousands)

(Unaudited)

 

 

September 30

 

 

December 31,

 

 

2019

 

 

2018

 

 

 

 

Assets

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

Cash and cash equivalents

$

73,171

 

 

$

154,949

 

Short-term investments

 

88,814

 

 

 

50,130

 

Prepaid expenses and other current assets

 

5,617

 

 

 

3,675

 

Total current assets

 

167,602

 

 

 

208,754

 

Operating lease right-of-use asset

 

21,511

 

 

 

 

Property and equipment, net

 

15,249

 

 

 

3,586

 

Restricted cash

 

999

 

 

 

999

 

Deposit and other long-term assets

 

164

 

 

 

156

 

Total assets

$

205,525

 

 

$

213,495

 

Liabilities and stockholders’ equity

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

Accounts payable

$

3,382

 

 

$

1,707

 

Accrued expenses and other current liabilities

 

10,320

 

 

 

8,784

 

Lease liability, current portion

 

4,044

 

 

 

 

Deferred rent, current portion

 

 

 

 

228

 

Total current liabilities

 

17,746

 

 

 

10,719

 

Deferred rent, net of current portion

 

 

 

 

1,366

 

Lease liability, net of current portion

 

23,380

 

 

 

 

Other noncurrent liabilities

 

185

 

 

 

243

 

Total liabilities

 

41,311

 

 

 

12,328

 

Commitments and contingencies (Note 7)

 

 

 

 

 

 

 

Stockholders’ equity:

 

 

 

 

 

 

 

Preferred stock

 

 

 

 

 

Common stock

 

7

 

 

 

6

 

Additional paid-in capital

 

531,056

 

 

 

522,503

 

Accumulated other comprehensive loss

 

(745

)

 

 

(799

)

Accumulated deficit

 

(366,104

)

 

 

(320,543

)

Total stockholders’ equity

 

164,214

 

 

 

201,167

 

Total liabilities and stockholders' equity

$

205,525

 

 

$

213,495

 

 

 

See accompanying notes to condensed consolidated financial statements

 

 

 

3


Table of Contents

 

Adverum Biotechnologies, Inc.

Condensed Consolidated Statements of Operations and Comprehensive Loss

(In thousands except per share amounts)

(Unaudited)

 

 

 

 

Three Months Ended September 30,

 

 

Nine Months Ended September 30,

 

 

 

2019

 

 

2018

 

 

2019

 

 

2018

 

 

 

 

 

Collaboration and license revenue

 

$

250

 

 

$

833

 

 

$

250

 

 

$

1,542

 

Total revenue

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Research and development

 

 

9,944

 

 

 

14,480

 

 

 

29,045

 

 

 

38,491

 

General and administrative

 

 

7,389

 

 

 

4,826

 

 

 

20,097

 

 

 

19,373

 

Impairment of intangible asset

 

 

 

 

 

5,000

 

 

 

 

 

 

5,000

 

Total operating expenses

 

 

17,333

 

 

 

24,306

 

 

 

49,142

 

 

 

62,864

 

Operating loss

 

 

(17,083

)

 

 

(23,473

)

 

 

(48,892

)

 

 

(61,322

)

Other income, net

 

 

965

 

 

 

1,265

 

 

 

3,331

 

 

 

3,104

 

Net loss before income tax benefit

 

 

(16,118

)

 

 

(22,208

)

 

 

(45,561

)

 

 

(58,218

)

Income tax benefit

 

 

 

 

 

1,250

 

 

 

 

 

 

1,250

 

Net loss

 

 

(16,118

)

 

 

(20,958

)

 

 

(45,561

)

 

 

(56,968

)

Other comprehensive loss:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net unrealized gain on marketable securities

 

 

4

 

 

 

53

 

 

 

27

 

 

 

129

 

Foreign currency translation adjustment

 

 

(11

)

 

 

 

 

 

27

 

 

 

(21

)

Comprehensive loss

 

$

(16,125

)

 

$

(20,905

)

 

$

(45,507

)

 

$

(56,860

)

Net loss per share basic and diluted

 

$

(0.25

)

 

$

(0.34

)

 

$

(0.71

)

 

$

(0.94

)

Weighted-average common shares used to compute net loss per share - basic and diluted

 

 

64,484

 

 

 

62,454

 

 

 

63,764

 

 

 

60,856

 

 

 

See accompanying notes to condensed consolidated financial statements

 

 

 

 

 

4


Table of Contents

 

Adverum Biotechnologies, Inc.

Condensed Consolidated Statements of Stockholders’ Equity

(In thousands except share data)

(Unaudited)

 

 

Common Stock

 

 

Additional Paid-In

 

 

Accumulated Other Comprehensive

 

 

Accumulated

 

 

Total Stockholders'

 

 

Shares

 

 

Amount

 

 

Capital

 

 

(Loss)/Income

 

 

Deficit

 

 

Equity

 

Balance at December 31, 2018

 

62,965,468

 

 

$

6

 

 

$

522,503

 

 

$

(799

)

 

$

(320,543

)

 

$

201,167

 

Stock-based compensation expense

 

 

 

 

 

 

 

1,762

 

 

 

 

 

 

 

 

 

1,762

 

Issuance of common stock upon exercise of stock options

 

118,482

 

 

 

 

 

 

162

 

 

 

 

 

 

 

 

 

162

 

Issuance of common stock upon release of restricted stock units

 

397,302

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Restricted stock surrendered for taxes

 

(145,603

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Taxes paid for RSUs

 

 

 

 

 

 

 

(504

)

 

 

 

 

 

 

 

 

(504

)

Foreign currency translation adjustments

 

 

 

 

 

 

 

 

 

 

42

 

 

 

 

 

 

42

 

Unrealized gain on marketable securities, net

 

 

 

 

 

 

 

 

 

 

3

 

 

 

 

 

 

3

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

(14,489

)

 

 

(14,489

)

Balance at March 31, 2019

 

63,335,649

 

 

 

6

 

 

 

523,923

 

 

 

(754

)

 

 

(335,032

)

 

 

188,143

 

Stock-based compensation expense

 

 

 

 

 

 

 

2,626

 

 

 

 

 

 

 

 

 

2,626

 

Issuance of common stock

 

20,000

 

 

 

 

 

 

134

 

 

 

 

 

 

 

 

 

134

 

Issuance of common stock upon exercise of stock options

 

823,028

 

 

 

 

 

 

2,312

 

 

 

 

 

 

 

 

 

2,312

 

Common stock issued under employee stock purchase plan

 

51,112

 

 

 

 

 

 

163

 

 

 

 

 

 

 

 

 

163

 

Issuance of common stock upon release of restricted stock units

 

219,704

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Restricted stock surrendered for taxes

 

(72,516

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Taxes paid for RSUs

 

 

 

 

 

 

 

(700

)

 

 

 

 

 

 

 

 

(700

)

Foreign currency translation adjustments

 

 

 

 

 

 

 

 

 

 

(4

)

 

 

 

 

 

(4

)

Unrealized gain on marketable securities, net

 

 

 

 

 

 

 

 

 

 

20

 

 

 

 

 

 

20

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

(14,954

)

 

 

(14,954

)

Balance at June 30, 2019

 

64,376,977

 

 

 

6

 

 

 

528,458

 

 

 

(738

)

 

 

(349,986

)

 

 

177,740

 

Stock-based compensation expense

 

 

 

 

 

 

 

2,661

 

 

 

 

 

 

 

 

 

2,661

 

Issuance of common stock upon exercise of stock options

 

191,371

 

 

 

1

 

 

 

144

 

 

 

 

 

 

 

 

 

145

 

Issuance of common stock upon release of restricted stock units

 

27,350

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Restricted stock surrendered for taxes

 

(14,160

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Taxes paid for RSUs

 

 

 

 

 

 

 

(207

)

 

 

 

 

 

 

 

 

(207

)

Foreign currency translation adjustments

 

 

 

 

 

 

 

 

 

 

(11

)

 

 

 

 

 

(11

)

Unrealized gain on marketable securities, net

 

 

 

 

 

 

 

 

 

 

4

 

 

 

 

 

 

4

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

(16,118

)

 

 

(16,118

)

Balance at September 30, 2019

 

64,581,538

 

 

$

7

 

 

$

531,056

 

 

$

(745

)

 

$

(366,104

)

 

$

164,214

 

 

 

See accompanying notes to condensed consolidated financial statements.

 

 

5


Table of Contents

 

Adverum Biotechnologies, Inc.

Condensed Consolidated Statements of Stockholders’ Equity - continued

(In thousands except share data)

Unaudited

 

 

Common Stock

 

 

Additional Paid-In

 

 

Accumulated Other Comprehensive

 

 

Accumulated

 

 

Total Stockholders'

 

 

Shares

 

 

Amount

 

 

Capital

 

 

(Loss)/Income

 

 

Deficit

 

 

Equity

 

Balance at December 31, 2017

 

49,015,339

 

 

$

5

 

 

$

439,048

 

 

$

(963

)

 

$

(254,062

)

 

$

184,028

 

Stock-based compensation expense

 

 

 

 

 

 

 

3,429

 

 

 

 

 

 

 

 

 

3,429

 

Adoption of Topic 606

 

 

 

 

 

 

 

 

 

 

 

 

 

6,146

 

 

 

6,146

 

Issuance of common stock upon follow-on offerings, net of issuance costs

 

11,642,128

 

 

 

2

 

 

 

70,189

 

 

 

 

 

 

 

 

 

70,191

 

Issuance of common stock upon exercise of stock options

 

1,361,546

 

 

 

 

 

 

308

 

 

 

 

 

 

 

 

 

308

 

Issuance of common stock upon release of restricted stock units

 

328,952

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Restricted stock surrendered for taxes

 

(115,593

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Taxes paid for RSUs

 

 

 

 

 

 

 

(801

)

 

 

 

 

 

 

 

 

(801

)

Foreign currency translation adjustments

 

 

 

 

 

 

 

 

 

 

(75

)

 

 

 

 

 

(75

)

Unrealized gain on marketable securities, net

 

 

 

 

 

 

 

 

 

 

17

 

 

 

 

 

 

17

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

(17,200

)

 

 

(17,200

)

Balance at March 31, 2018

 

62,232,372

 

 

 

7

 

 

 

512,173

 

 

 

(1,021

)

 

 

(265,116

)

 

 

246,043

 

Stock-based compensation expense

 

 

 

 

 

 

 

5,826

 

 

 

 

 

 

 

 

 

5,826

 

Issuance of common stock upon follow-on offerings, net of issuance costs

 

 

 

 

 

 

 

(2

)

 

 

 

 

 

 

 

 

(2

)

Issuance of common stock upon exercise of stock options

 

127,554

 

 

 

 

 

 

264

 

 

 

 

 

 

 

 

 

264

 

Issuance of common stock upon release of restricted stock units

 

241,764

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Restricted stock surrendered for taxes

 

(22,873

)

 

 

(1

)

 

 

 

 

 

 

 

 

 

 

 

(1

)

Taxes paid for RSUs

 

-

 

 

 

 

 

 

(135

)

 

 

 

 

 

 

 

 

(135

)

Common stock issued under employee stock purchase plan

 

58,294

 

 

 

 

 

 

149

 

 

 

 

 

 

 

 

 

149

 

Foreign currency translation adjustments

 

 

 

 

 

 

 

 

 

 

54

 

 

 

 

 

 

54

 

Unrealized gain on marketable securities, net

 

 

 

 

 

 

 

 

 

 

59

 

 

 

 

 

 

59

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

(18,810

)

 

 

(18,810

)

Balance at June 30, 2018

 

62,637,111

 

 

 

6

 

 

 

518,275

 

 

 

(908

)

 

 

(283,926

)

 

 

233,447

 

Stock-based compensation expense

 

 

 

 

 

 

 

2,995

 

 

 

 

 

 

 

 

 

2,995

 

Issuance of common stock upon follow-on offerings, net of issuance costs

 

 

 

 

 

 

 

2

 

 

 

 

 

 

 

 

 

2

 

Issuance of common stock upon exercise of stock options

 

107,037

 

 

 

 

 

 

115

 

 

 

 

 

 

 

 

 

115

 

Issuance of common stock upon release of restricted stock units

 

101,250

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Restricted stock unit withholdings

 

(18,982

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Taxes paid for RSUs

 

 

 

 

 

 

 

(101

)

 

 

 

 

 

 

 

 

(101

)

Foreign currency translation adjustments

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Unrealized gain on marketable securities, net

 

 

 

 

 

 

 

 

 

 

53

 

 

 

 

 

 

53

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

(20,958

)

 

 

(20,958

)

Balance at September 30, 2018

 

62,826,416

 

 

$

6

 

 

$

521,286

 

 

$

(855

)

 

$

(304,884

)

 

$

215,553

 

 

 

See accompanying notes to condensed consolidated financial statements.

 

 

 

 

6


Table of Contents

 

Adverum Biotechnologies, Inc.

Condensed Consolidated Statements of Cash Flows

(In thousands)

Unaudited

 

 

Nine Months Ended September 30,

 

 

2019

 

 

2018

 

 

 

 

Cash flows from operating activities:

 

 

 

 

 

 

 

Net loss

$

(45,561

)

 

$

(56,968

)

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

 

 

 

 

 

 

 

Depreciation and amortization

 

1,219

 

 

 

1,361

 

Stock-based compensation expense

 

7,049

 

 

 

12,250

 

Amortization of premium and accrued interest on marketable securities

 

(813

)

 

 

199

 

Impairment of intangible asset

 

 

 

 

5,000

 

Amortization of operating lease right-of-use asset

 

1,620

 

 

 

 

Other

 

46

 

 

 

(15

)

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

Prepaid expenses and other current assets

 

(1,868

)

 

 

(1,518

)

Accounts payable

 

(680

)

 

 

5

 

Accrued expenses and other current liabilities

 

1,891

 

 

 

353

 

Deferred revenue

 

 

 

 

(884

)

Deferred rent

 

 

 

 

233

 

Lease liability

 

2,762

 

 

 

 

Deferred tax liability

 

 

 

 

(1,250

)

Net cash used in operating activities

 

(34,335

)

 

 

(41,234

)

Cash flows from investing activities:

 

 

 

 

 

 

 

Purchases of marketable securities

 

(133,144

)

 

 

(55,924

)

Maturities of marketable securities

 

95,155

 

 

 

117,993

 

Purchases of property and equipment

 

(10,874

)

 

 

(652

)

Net cash (used in) provided by investing activities

 

(48,863

)

 

 

61,417

 

 

 

 

 

 

 

 

 

Cash flows from financing activities:

 

 

 

 

 

 

 

Proceeds from offerings of common stock, net of issuance costs

 

 

 

 

70,189

 

Proceeds from issuance of common stock

 

134

 

 

 

 

Proceeds from issuance of common stock pursuant to option exercises

 

2,618

 

 

 

687

 

Taxes paid related to net share settlement of restricted stock units

 

(1,411

)

 

 

(1,037

)

Proceeds from employee stock purchase plan

 

163

 

 

 

149

 

Proceeds from a financing arrangement

 

 

 

 

100

 

Repayment of loan

 

(84

)

 

 

(118

)

Net cash provided by financing activities

 

1,420

 

 

 

69,970

 

Net increase (decrease) in cash and cash equivalents and restricted cash

 

(81,778

)

 

 

90,153

 

Cash and cash equivalents and restricted cash at beginning of period

 

155,948

 

 

 

70,519

 

Cash and cash equivalents and restricted cash at end of period

$

74,170

 

 

$

160,672

 

Supplemental schedule of noncash investing and financing information