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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended June 30, 2024
OR
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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: 001-39409
ALLOVIR, INC.
(Exact Name of Registrant as Specified in its Charter)
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Delaware |
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83-1971007 |
(State or other jurisdiction of incorporation or organization) |
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(I.R.S. Employer Identification No.) |
PO Box 44, 1661 Massachusetts Avenue, Lexington, MA |
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02420 |
(Address of principal executive offices) |
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(Zip Code) |
Registrant’s telephone number, including area code: (617) 433-2605
Securities registered pursuant to Section 12(b) of the Act:
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Title of each class |
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Trading Symbol(s) |
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Name of each exchange on which registered |
Common Stock, par value $0.0001 per share |
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ALVR |
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The Nasdaq Global Select 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, 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.
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Large accelerated filer |
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Accelerated filer |
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Non-accelerated filer |
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Smaller reporting company |
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Emerging growth company |
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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 August 2, 2024, the registrant had 115,365,282 shares of common stock, $0.0001 par value per share, outstanding.
Table of Contents
Summary of Material Risks Associated with Our Business
Our business is subject to numerous risks and uncertainties that you should be aware of before making an investment decision, including those highlighted in the section entitled “Risk Factors.” These risks include, but are not limited to, the following:
•We may not be successful in identifying and implementing any strategic transaction and any strategic transactions that we may consummate in the future could have negative consequences.
•Even if we successfully consummate any transaction from our strategic assessment, including, but not limited to, in-licensing and/or out-licensing, a merger, sale, and/or divestiture of assets, we may fail to realize all of the anticipated benefits of the transaction, those benefits may take longer to realize than expected, or we may encounter integration difficulties.
•If we are successful in completing a strategic transaction, we may be exposed to other operational and financial risks.
•If a strategic transaction is not consummated, our board of directors may decide to pursue a dissolution and liquidation. In such an event, the amount of cash available for distribution to our stockholders will depend heavily on the timing of such liquidation as well as the amount of cash that will need to be reserved for commitments and contingent liabilities.
•We are a clinical-stage cell therapy company and we have incurred net losses since our inception. We anticipate that we will continue to incur significant losses for the foreseeable future and may never achieve or maintain profitability.
•We depend substantially on intellectual property licensed from third parties, including Baylor College of Medicine, or BCM, and termination of any of these licenses could result in the loss of significant rights, which would harm our business.
•If we are unable to obtain and maintain sufficient intellectual property protection for our product candidates and manufacturing process, or if the scope of the intellectual property protection is not sufficiently broad, our ability to commercialize our product candidates successfully and to compete effectively may be adversely affected.
•We will need substantial additional funding, and if we are unable to raise capital when needed, we could be forced to delay, reduce or eliminate our product discovery and development programs or commercialization efforts.
•We have a limited operating history, which may make it difficult to evaluate the success of our business to date and to assess our future viability.
•We are early in our development efforts and have only a small number of product candidates in clinical development. All of our other product candidates are still in preclinical development. If we or our collaborators are unable to successfully develop and commercialize product candidates or experience significant delays in doing so, our business may be materially harmed.
•Clinical drug development involves a lengthy and expensive process with an uncertain outcome, and the inability to successfully and timely conduct clinical trials and obtain regulatory approval for our product candidates would substantially harm our business.
•The results of preclinical studies or earlier clinical trials are not necessarily predictive of future results. Our existing product candidates in clinical trials, and any other product candidate we advance into clinical trials, may not have favorable results in later clinical trials or receive regulatory approval.
•Our product candidates, the methods used to deliver them or their dosage levels may cause undesirable side effects or have other properties that could delay or prevent their regulatory approval, limit the commercial profile of an approved label or result in significant negative consequences following any regulatory approval.
•We face substantial competition, which may result in others discovering, developing or commercializing products before or more successfully than we do.
•We and our third-party partners are subject to a multitude of manufacturing risks, any of which could substantially increase our costs and limit supply of our product candidates.
•We intend to develop an efficient and highly productive manufacturing supply chain for our allogeneic, off-the-shelf single- and multi-virus specific T, or VST, cell therapies. Delays in process performance qualification to validate the drug product manufacturing process could delay regulatory approvals, our development plans and thereby limit our ability to generate revenues.
•We are highly dependent on our key personnel and anticipate hiring new key personnel. If we are not successful in attracting and retaining highly qualified personnel, we may not be able to successfully implement our business strategy.
•The trading price of our common stock may be volatile.
•Our business could be adversely affected by the effects of health epidemics, like the COVID-19 pandemic, in regions where our contracted third parties, including contract research organizations, or CROs, and contract development and manufacturing organizations, or CMOs or CDMOs, have significant research, development or manufacturing facilities, concentrations of clinical trial sites or other business operations, causing disruption in supplies and services.
The summary risk factors described above should be read together with the text of the full risk factors below, in the section entitled “Risk Factors” and the other information set forth in this Quarterly Report on Form 10-Q, including our condensed consolidated financial statements and the related notes, as well as in other documents that we file with the SEC. The risks summarized above or described in full below are not the only risks that we face. Additional risks and uncertainties not precisely known to us, or that we currently deem to be immaterial may also materially adversely affect our business, financial condition, results of operations and future growth prospects.
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical facts contained in this Quarterly Report on Form 10-Q are forward-looking statements, including but not limited to, statements about:
•our plans and expectations regarding our strategic alternative review process and the timing and success of such process regarding a potential transaction;
•timing of and costs or charges associated with our restructurings, and the savings benefits we expect to receive from those restructurings;
•success in retaining, or changes required in, our officers, key employees or directors;
•should we resume development of our product candidates, the success, cost, timing and potential indications of our product development activities and clinical trials, including the future clinical trials of posoleucel and ALVR106;
•the timing of our planned Investigational New Drug, or IND, submissions to the U.S. Food and Drug Administration, or FDA, for our product candidates, including ALVR107;
•the timing of the initiation, enrollment and completion of planned clinical trials;
•should we resume development of our product candidates, our plans to research, develop and commercialize our product candidates, including posoleucel, ALVR106, and ALVR107;
•the timing of the initiation, completion and outcomes of our preclinical studies;
•the costs of development of any of our product candidates or clinical development programs and our ability to obtain funding for our operations, including funding necessary to complete the clinical trials of any of our product candidates;
•our ability to successfully manufacture and distribute posoleucel, ALVR106 or any other future product or product candidate, should we resume development of our product candidates;
•the potential benefits of and our ability to maintain our collaboration with our existing collaborators, including BCM, and establish or maintain future collaborations or strategic relationships or obtain additional funding;
•the ability to maintain our existing license agreements, including Baylor College of Medicine, or BCM, and to license additional intellectual property relating to any future product candidates and to comply with our existing license agreements;
•our ability to attract and retain collaborators with development, regulatory and commercialization expertise;
•risks associated with a health epidemic like the COVID-19 pandemic, including the emergence of new COVID-19 variants, which may adversely impact our business and clinical trials;
•the size of the markets for our VST product candidates, and our ability to serve those markets;
•whether the results of our clinical trials will be sufficient to support domestic or foreign regulatory approvals for any of our product candidates;
•should we resume development of our product candidates, our ability to successfully commercialize our product candidates, including posoleucel and ALVR106;
•should we resume development of our product candidates, the rate and degree of market acceptance of our product candidates, including posoleucel and ALVR106;
•our ability to obtain and maintain regulatory approval of our product candidates in any of the indications for which we plan to develop them, and any related restrictions, limitations or warnings in the label of any approved product we develop;
•our ability to develop and maintain sales and marketing capabilities, whether alone or with potential future collaborators;
•regulatory developments in the United States and foreign countries with respect to our product candidates or our competitors’ products and product candidates;
•our reliance on third-party contract manufacturers and the performance of our third-party suppliers and manufacturers to manufacture and supply our product candidates for us;
•the success of competing therapies that are or become available;
•our ability to attract and retain key scientific or management personnel;
•our expectation about the period of time over which our existing capital resources will be sufficient to fund our operating expenses and capital expenditures;
•our expectations regarding the time during which we will be an emerging growth company under the Jumpstart Our Business Startups Act of 2012, or the JOBS Act;
•our financial performance;
•the impact of laws and regulations;
•developments and projections relating to our competitors or our industry;
•the accuracy of our estimates regarding expenses, future revenues, capital requirements and needs for additional financing; and
•our expectations regarding our ability to obtain and maintain intellectual property protection for our product candidates and our ability to operate our business without infringing on the intellectual property rights of others.
In some cases, you can identify forward-looking statements by the words “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “might,” “objective,” “ongoing,” “plan,” “predict,” “project,” “potential,” “should,” “will,” or “would,” or the negative of these terms, or other comparable terminology intended to identify statements about the future. These statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, levels of activity, performance or achievements to be materially different from the information expressed or implied by these forward-looking statements.
In addition, statements that “we believe” and similar statements reflect our beliefs and opinions on the relevant subject. These statements are based upon information available to us as of the date of this report, and while we believe such information forms a reasonable basis for such statements, such information may be limited or incomplete, and our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all potentially available relevant information. These statements are inherently uncertain, and investors are cautioned not to unduly rely upon these statements.
You should read the section titled “Risk Factors” set forth in Part II, Item 1A of this Quarterly Report on Form 10-Q for a discussion of important factors that may cause our actual results to differ materially from those expressed or implied by our forward-looking statements. Moreover, we operate in an evolving environment. New risk factors and uncertainties may emerge from time to time, and it is not possible for management to predict all risk factors and uncertainties. As a result of these factors, we cannot assure you that the forward-looking statements in this Quarterly Report on Form 10-Q will prove to be accurate. Except as required by applicable law, we do not plan to publicly update or revise any forward-looking statements contained herein, whether as a result of any new information, future events, changed circumstances or otherwise.
You should read this Quarterly Report on Form 10-Q, completely and with the understanding that our actual future results may be materially different from what we expect. We qualify all of our forward-looking statements by these cautionary statements.
PART I—FINANCIAL INFORMATION
Item 1. Financial Statements (unaudited)
ALLOVIR, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
UNAUDITED
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(in thousands, except share and per share amounts) |
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June 30,
2024 |
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December 31,
2023 |
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Assets |
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Current assets: |
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Cash and cash equivalents |
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$ |
104,741 |
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$ |
90,121 |
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Short-term investments |
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24,871 |
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93,822 |
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Interest receivable |
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96 |
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206 |
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Prepaid expenses and other current assets |
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230 |
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3,486 |
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Total current assets |
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129,938 |
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187,635 |
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Restricted cash |
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554 |
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852 |
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Other assets |
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— |
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122 |
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Operating lease right-of-use assets |
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495 |
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2,187 |
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Total assets |
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$ |
130,987 |
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$ |
190,796 |
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Liabilities and stockholders’ equity |
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Current liabilities: |
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Accounts payable |
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110 |
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$ |
6,761 |
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Accrued expenses |
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1,582 |
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10,086 |
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Operating lease liability, current |
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667 |
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10,781 |
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Amount due to related party |
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— |
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739 |
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Total current liabilities |
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2,359 |
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28,367 |
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Operating lease liability, long-term |
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8,336 |
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16,648 |
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Total liabilities |
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$ |
10,695 |
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$ |
45,015 |
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Stockholders’ equity: |
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Preferred stock, $0.0001 par value: 10,000,000 shares authorized at June 30, 2024 and December 31, 2023, respectively; 0 shares issued and outstanding at June 30, 2024 and December 31, 2023, respectively |
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— |
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— |
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Common stock, $0.0001 par value: 300,000,000 shares authorized at June 30, 2024 and December 31, 2023, respectively; 115,312,411 and 114,153,538 shares issued at June 30, 2024 and December 31, 2023, respectively; and 115,312,411 and 114,148,991 shares outstanding at June 30, 2024 and December 31, 2023, respectively |
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11 |
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11 |
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Additional paid-in capital |
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812,988 |
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802,025 |
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Accumulated other comprehensive loss |
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(139 |
) |
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(62 |
) |
Accumulated deficit |
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(692,568 |
) |
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(656,193 |
) |
Total stockholders’ equity |
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120,292 |
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145,781 |
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Total liabilities and stockholders’ equity |
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$ |
130,987 |
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$ |
190,796 |
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The accompanying notes are an integral part of these condensed consolidated financial statements.
ALLOVIR, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
UNAUDITED
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Three Months Ended
June 30, |
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Six Months Ended
June 30, |
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(in thousands, except share and per share amounts) |
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2024 |
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2023 |
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2024 |
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2023 |
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Operating expenses: |
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Research and development |
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$ |
93 |
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|
$ |
34,824 |
|
|
$ |
12,266 |
|
|
$ |
65,543 |
|
General and administrative |
|
|
7,169 |
|
|
|
12,480 |
|
|
|
17,829 |
|
|
|
24,992 |
|
Restructuring costs |
|
|
512 |
|
|
|
— |
|
|
|
9,976 |
|
|
|
— |
|
Total operating expenses |
|
|
7,774 |
|
|
|
47,304 |
|
|
|
40,071 |
|
|
|
90,535 |
|
Loss from operations |
|
|
(7,774 |
) |
|
|
(47,304 |
) |
|
|
(40,071 |
) |
|
|
(90,535 |
) |
Total other income (loss), net: |
|
|
|
|
|
|
|
|
|
|
|
|
Interest income |
|
|
1,360 |
|
|
|
1,516 |
|
|
|
2,606 |
|
|
|
2,841 |
|
Other income (loss), net |
|
|
338 |
|
|
|
521 |
|
|
|
1,090 |
|
|
|
1,244 |
|
Net loss |
|
$ |
(6,076 |
) |
|
$ |
(45,267 |
) |
|
$ |
(36,375 |
) |
|
$ |
(86,450 |
) |
Net loss per share — basic and diluted |
|
$ |
(0.05 |
) |
|
$ |
(0.48 |
) |
|
$ |
(0.32 |
) |
|
$ |
(0.92 |
) |
Weighted-average common shares outstanding — basic and diluted |
|
|
115,127,044 |
|
|
|
94,625,837 |
|
|
|
114,908,885 |
|
|
|
93,968,407 |
|
Comprehensive loss: |
|
|
|
|
|
|
|
|
|
|
|
|
Net loss |
|
$ |
(6,076 |
) |
|
$ |
(45,267 |
) |
|
$ |
(36,375 |
) |
|
$ |
(86,450 |
) |
Other comprehensive income (loss), net of tax: |
|
|
|
|
|
|
|
|
|
|
|
|
Unrealized (loss) gain on available-for-sale securities |
|
|
(1 |
) |
|
|
76 |
|
|
|
(77 |
) |
|
|
243 |
|
Total other comprehensive income (loss) |
|
|
(1 |
) |
|
|
76 |
|
|
|
(77 |
) |
|
|
243 |
|
Comprehensive loss |
|
$ |
(6,077 |
) |
|
$ |
(45,191 |
) |
|
$ |
(36,452 |
) |
|
$ |
(86,207 |
) |
The accompanying notes are an integral part of these condensed consolidated financial statements.
ALLOVIR, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
UNAUDITED
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common Stock |
|
|
Additional
Paid-In |
|
|
Accumulated
Other
Comprehensive |
|
|
Accumulated |
|
|
Total
Stockholders’ |
|
(in thousands, except share amounts) |
|
Shares |
|
|
Amount |
|
|
Capital |
|
|
Loss |
|
|
Deficit |
|
|
Equity |
|
Balance at December 31, 2022 |
|
|
93,093,243 |
|
|
$ |
9 |
|
|
$ |
690,753 |
|
|
$ |
(468 |
) |
|
$ |
(465,775 |
) |
|
$ |
224,519 |
|
Stock-based compensation |
|
|
— |
|
|
|
— |
|
|
|
10,029 |
|
|
|
— |
|
|
|
— |
|
|
|
10,029 |
|
Issuance of common stock, upon vesting of restricted stock |
|
|
334,747 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Unrealized gain on available-for-sale securities |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
167 |
|
|
|
— |
|
|
|
167 |
|
Net loss |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(41,183 |
) |
|
|
(41,183 |
) |
Balance at March 31, 2023 |
|
|
93,427,990 |
|
|
$ |
9 |
|
|
$ |
700,782 |
|
|
$ |
(301 |
) |
|
$ |
(506,958 |
) |
|
$ |
193,532 |
|
Stock-based compensation |
|
|
— |
|
|
|
— |
|
|
|
10,288 |
|
|
|
— |
|
|
|
— |
|
|
|
10,288 |
|
Issuance of common stock, upon vesting of restricted stock |
|
|
179,092 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
- |
|
Purchase of common stock under the 2020 Employee Stock Purchase Plan |
|
|
108,936 |
|
|
|
— |
|
|
|
315 |
|
|
|
— |
|
|
|
— |
|
|
|
315 |
|
Issuance of common stock in public offering, net of underwriting discounts, commissions and offering costs |
|
|
20,000,000 |
|
|
|
2 |
|
|
|
70,167 |
|
|
|
— |
|
|
|
— |
|
|
|
70,169 |
|
Unrealized gain on available-for-sale securities |
|
|
|
|
|
|
|
|
|
|
|
76 |
|
|
|
|
|
|
76 |
|
Net loss |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(45,267 |
) |
|
|
(45,267 |
) |
Balance at June 30, 2023 |
|
|
113,716,018 |
|
|
$ |
11 |
|
|
$ |
781,552 |
|
|
$ |
(225 |
) |
|
$ |
(552,225 |
) |
|
$ |
229,113 |
|
The accompanying notes are an integral part of these condensed consolidated financial statements.
ALLOVIR, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
UNAUDITED
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common Stock |
|
|
Additional
Paid-In |
|
|
Accumulated
Other
Comprehensive |
|
|
Accumulated |
|
|
Total
Stockholders’ |
|
(in thousands, except share amounts) |
|
Shares |
|
|
Amount |
|
|
Capital |
|
|
Loss |
|
|
Deficit |
|
|
Equity |
|
Balance at December 31, 2023 |
|
|
114,148,991 |
|
|
$ |
11 |
|
|
$ |
802,025 |
|
|
$ |
(62 |
) |
|
$ |
(656,193 |
) |
|
|
145,781 |
|
Stock-based compensation |
|
|
— |
|
|
|
— |
|
|
|
5,034 |
|
|
|
— |
|
|
|
— |
|
|
|
5,034 |
|
Issuance of common stock, upon vesting of restricted stock |
|
|
732,774 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Unrealized loss on available-for-sale securities |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(76 |
) |
|
|
— |
|
|
|
(76 |
) |
Net loss |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(30,299 |
) |
|
|
(30,299 |
) |
Balance at March 31, 2024 |
|
|
114,881,765 |
|
|
$ |
11 |
|
|
$ |
807,059 |
|
|
$ |
(138 |
) |
|
$ |
(686,492 |
) |
|
$ |
120,440 |
|
Stock-based compensation |
|
|
— |
|
|
|
— |
|
|
|
5,908 |
|
|
|
— |
|
|
|
— |
|
|
|
5,908 |
|
Issuance of common stock, upon vesting of restricted stock |
|
|
394,309 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Purchase of common stock under the 2020 Employee Stock Purchase Plan |
|
|
36,337 |
|
|
|
— |
|
|
|
21 |
|
|
|
— |
|
|
|
— |
|
|
|
21 |
|
Unrealized loss on available-for-sale securities |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(1 |
) |
|
|
— |
|
|
|
(1 |
) |
Net loss |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(6,076 |
) |
|
|
(6,076 |
) |
Balance at June 30, 2024 |
|
|
115,312,411 |
|
|
$ |
11 |
|
|
$ |
812,988 |
|
|
$ |
(139 |
) |
|
$ |
(692,568 |
) |
|
$ |
120,292 |
|
The accompanying notes are an integral part of these condensed consolidated financial statements.
ALLOVIR, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
UNAUDITED
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended
June 30, |
|
(in thousands) |
|
2024 |
|
|
2023 |
|
Cash flows from operating activities |
|
|
|
|
|
|
Net loss |
|
$ |
(36,375 |
) |
|
$ |
(86,450 |
) |
Adjustments to reconcile net loss to net cash used in operating activities: |
|
|
|
|
|
|
Depreciation and amortization |
|
|
— |
|
|
|
171 |
|
Non-cash lease expense |
|
|
145 |
|
|
|
233 |
|
Non-cash gain on lease termination and remeasurement |
|
|
(7,364 |
) |
|
|
— |
|
Accretion of short-term investment discounts |
|
|
(1,127 |
) |
|
|
(1,253 |
) |
Stock-based compensation expense |
|
|
10,942 |
|
|
|
20,317 |
|
Changes in operating assets and liabilities: |
|
|
|
|
|
|
Interest receivable |
|
|
110 |
|
|
|
51 |
|
Prepaid expenses and other current assets and prepaid expenses to related party |
|
|
3,256 |
|
|
|
2,856 |
|
Other assets |
|
|
122 |
|
|
|
(72 |
) |
Income tax payable |
|
|
— |
|
|
|
(1 |
) |
Accounts payable, accrued expenses, other liabilities and amount due to related party |
|
|
(25,408 |
) |
|
|
4,908 |
|
Net cash used in operating activities |
|
|
(55,699 |
) |
|
|
(59,240 |
) |
Cash flows from investing activities |
|
|
|
|
|
|
Purchase of short-term investments |
|
|
— |
|
|
|
(14,196 |
) |
Maturities of short-term investments |
|
|
70,000 |
|
|
|
93,814 |
|
Net cash provided by investing activities |
|
|
70,000 |
|
|
|
79,618 |
|
Cash flows from financing activities |
|
|
|
|
|
|
Proceeds from issuance of common stock in public offering, net of underwriting discounts, commissions and offering costs |
|
|
— |
|
|
|
70,169 |
|
Proceeds from issuance of stock under the 2020 Employee Stock Purchase Plan |
|
|
21 |
|
|
|
315 |
|
Net cash provided by financing activities |
|
|
21 |
|
|
|
70,484 |
|
Net increase in cash, cash equivalents, and restricted cash |
|
|
14,322 |
|
|
|
90,862 |
|
Cash, cash equivalents, and restricted cash at beginning of period |
|
|
90,973 |
|
|
|
106,944 |
|
Cash, cash equivalents, and restricted cash at end of period |
|
$ |
105,295 |
|
|
$ |
197,806 |
|
Non-cash investing and financing activities |
|
|
|
|
|
|
Unrealized (loss) gain on available-for-sale securities |
|
$ |
(77 |
) |
|
$ |
243 |
|
Deferred offering costs included in accounts payable and accrued expenses |
|
$ |
— |
|
|
$ |
331 |
|
Reduction of right-of-use asset due to modification and remeasurement |
|
$ |
1,549 |
|
|
$ |
— |
|
Supplemental disclosure of cash flows |
|
|
|
|
|
|
Income taxes paid, net of refunds |
|
$ |
— |
|
|
$ |
350 |
|
|
|
|
|
|
|
|
|
|
Six Months Ended
June 30, |
|
|
|
2024 |
|
|
2023 |
|
Cash and cash equivalents |
|
$ |
104,741 |
|
|
$ |
196,954 |
|
Restricted cash |
|
|
554 |
|
|
|
852 |
|
Total cash, cash equivalents, and restricted cash |
|
$ |
105,295 |
|
|
$ |
197,806 |
|
The accompanying notes are an integral part of these condensed consolidated financial statements.
ALLOVIR, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
UNAUDITED
1. Nature of the Business
AlloVir, Inc. (“AlloVir” or “the Company”, formerly known as ViraCyte, Inc.) is a cell therapy company developing highly innovative allogeneic T cell therapies to treat and prevent devastating viral diseases. The Company’s innovative and proprietary virus-specific T cell, or VST, therapy platform allows AlloVir to generate off-the-shelf VSTs designed to restore immunity in patients with T cell deficiencies who are at risk from the life-threatening consequences of viral diseases. There is an urgent medical need for therapies to treat a large number of patients suffering from viral diseases who currently have limited or no treatment options. The Company’s platform includes three innovative, allogeneic, off-the-shelf VST therapy candidates targeting 11 different devastating viruses. The Company’s lead product candidate, posoleucel (previously referred to as Viralym-M or ALVR105), is a multi-VST therapy that targets six viruses: adenovirus (“AdV”), BK virus (“BKV”), cytomegalovirus (“CMV”), Epstein-Barr virus (“EBV”), human herpesvirus 6 (“HHV-6”) and JC virus (“JCV”).
In December 2023, the Company announced the discontinuation of three Phase 3 registrational trials of posoleucel following separate, pre-planned Data Safety Monitoring Board (“DSMB”), futility analyses that concluded the studies were unlikely to meet their primary endpoints. Specifically, the Company discontinued a multicenter, randomized, double-blind, placebo-controlled Phase 3 trial comparing posoleucel to placebo for the prevention of infection or disease due to AdV, BKV, CMV, EBV, HHV-6, or JCV in high-risk adult and pediatric patients after undergoing an allogeneic hematopoietic stem cell transplant. The Company also discontinued two multicenter, randomized, double-blind, placebo-controlled Phase 3 trials of posoleucel – one for the treatment of virus-associated hemorrhagic cystitis and the second for the treatment of adenovirus infection – both after allogeneic hematopoietic cell transplant.
In December 2023, the Company also announced that it would review the detailed datasets from those Phase 3 trials and launch a comprehensive review of strategic alternatives focused on maximizing stockholder value, including, but not limited to, a merger, sale, divestiture of assets, licensing, or other strategic transaction. The Company expects to devote substantial time and resources to exploring strategic alternatives that the board of directors believes will maximize stockholder value. Despite devoting significant efforts to identify and evaluate potential strategic alternatives, there can be no assurance that this strategic review process will result in us pursuing any transaction or that any transaction, if pursued, will be completed on attractive terms or at all. The Company has not set a timetable for completion of this strategic review process, and the board of directors has not approved a definitive course of action. Additionally, there can be no assurances that any particular course of action, business arrangement or transaction, or series of transactions, will be pursued, successfully consummated or lead to increased stockholder value, or that the Company will make any cash distributions to our stockholders. In connection with the evaluation of strategic alternatives and in order maximize capital preservation, the Company has implemented a plan to reduce our workforce by approximately 95%. This workforce reduction plan was approved in January 2024, and took place primarily during the first quarter of 2024 and was substantially completed by April 15, 2024.
The Company’s pipeline includes additional investigational VST therapies that may benefit high-risk individuals. ALVR106 is the Company’s second off-the-shelf, multi-VST product candidate targeting devastating respiratory diseases caused by human metapneumovirus (“hMPV”), influenza, parainfluenza virus (“PIV”) and respiratory syncytial virus (“RSV”). A Phase 1b/2 proof of concept (“POC”) clinical study of ALVR106 has completed enrollment of patients in Part A of the trial. The Company has paused development of ALVR106, including discontinuing the trial pending the outcome of the Company’s review of strategic alternatives. Preclinical and IND-enabling studies of ALVR107 to treat and cure hepatitis B were completed in 2022 to support advancement into a POC study. Clinical development of ALVR107 has been paused pending the outcome of the Company’s review of strategic alternatives.
Going Concern
In accordance with Accounting Standards Update (“ASU”) 2014-15, Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern (Subtopic 205-40), the Company has evaluated whether there are conditions and events, considered in the aggregate, that raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date the condensed consolidated financial statements are issued.
Since its inception and until recently, the Company devoted substantially all of its resources to recruiting personnel, developing its technology platform and advancing its pipeline of product candidates through discovery, preclinical and clinical trials, acquiring and manufacturing clinical trial materials and maintaining and building its intellectual property portfolio. The Company is subject to risks and uncertainties common to early-stage companies in the biotechnology industry, including, but not limited to, success of clinical trials, development by competitors of new technological innovations, dependence on key personnel, protection of proprietary technology, compliance with government regulations and the ability to secure additional capital to fund operations. Should the Company resume development of its product candidates, the product candidates will require significant additional research and development efforts, including preclinical and clinical testing and regulatory approval, prior to commercialization.
Through June 30, 2024, the Company has funded its operations primarily with proceeds received from the sale of common stock, research grants, and from the sale of preferred stock. The Company has incurred recurring losses since its inception, including net losses attributable to common stockholders of $6.1 million and $45.3 million for the three months ended June 30, 2024 and 2023, respectively. In addition, at June 30, 2024, the Company had an accumulated deficit of $692.6 million. The Company expects to continue to generate operating losses for the foreseeable future.
The Company has incurred and expects to continue to incur costs and expenditures in connection with the process of evaluating strategic alternatives. There can be no assurance, however, that the Company will be able to successfully consummate any particular strategic transaction. The process of evaluating strategic options has been and may continue to be costly, time-consuming and complex and the Company may incur significant costs related to this continued evaluation, such as legal, accounting and advisory fees and expenses and other related charges.
Based on current projections, the Company believes that its $129.6 million of cash, cash equivalents and short-term investments held at June 30, 2024 will be sufficient to fund planned operations for at least twelve months from the date that these condensed consolidated financial statements are available to be issued. However, due to the consideration of certain qualitative factors, including the discontinuation of all clinical trials and research activities, as well as the Company’s workforce reduction plan, management has concluded there is substantial doubt regarding the Company’s ability to continue as a going concern for more than twelve months from the date that the condensed consolidated financial statements are available to be issued. These financial statements do not include any adjustments that might result from the outcome of this uncertainty. Should the Company resume the development of product candidates, it would need to obtain substantial additional funding in connection with continuing operations, particularly as the Company resumes its preclinical activities and clinical trials for its product candidates. There can be no assurance that the Company will be able to obtain sufficient capital to cover its costs on acceptable terms, if at all.
ElevateBio, LLC – Related Party
On September 17, 2018, the Company executed a Series A2 Preferred Stock Purchase Agreement ("Series A2 Agreement") with ElevateBio, LLC ("ElevateBio") and ElevateBio was a purchaser in our registered direct offering in July 2022. ElevateBio, through its diverse platform of technologies to support cell and gene therapy products and expertise, provides drug development and manufacturing services. As a result of ElevateBio’s purchase of our Series A2 Preferred Stock, which converted to common stock upon completion of our IPO, and as a result of ElevateBio’s participation in the July 2022 registered direct offering, ElevateBio acquired an ownership interest in the Company. The Chief Financial Officer of ElevateBio currently serves in a similar management role with AlloVir. In May 2021, Diana M. Brainard, M.D. succeeded David Hallal, ElevateBio’s Chief Executive Officer, as the Company’s Chief Executive Officer. Mr. Hallal currently serves as Executive Chairman of the Company’s board of directors. Vikas Sinha, our President and Chief Financial Officer, also serves as the Chief Financial Officer of ElevateBio. In addition to Mr. Hallal and Mr. Sinha, Morana Jovan-Embiricos, a director of the Company’s board of directors, also serves as a director of the board of directors of ElevateBio.
2. Summary of Significant Accounting Policies
The Company’s significant accounting policies are disclosed in the audited consolidated financial statements for the year ended December 31, 2023, and notes thereto, which are included in the Company’s Annual Report on Form 10-K that was filed with the Securities and Exchange Commission (the “SEC”) on March 15, 2024. Since the date of those financial statements, there have been no material changes to the Company’s significant accounting policies except as described below.
Restructuring Costs
The Company records costs and liabilities associated with exit and disposal activities in accordance with ASC 420, Exit or Disposal Cost Obligations (ASC 420). Such costs are based on estimates of fair value in the period liabilities are incurred. Given the short duration of when the liability is incurred to when it is paid, there is no significant difference between fair value and the amount paid. Costs are expensed at the date the entity notifies the employee, unless the employee must provide future service, in which case the benefits are expensed ratably over the future service period. The Company evaluates and adjusts these costs as appropriate for changes in circumstances as additional information becomes available. Please refer to Note 13 for further information regarding restructuring costs.
Interim Financial Information
The accompanying condensed consolidated balance sheet at June 30, 2024, and the condensed consolidated statements of operations and comprehensive loss, statements of changes in stockholders’ equity for the three and six months ended June 30, 2024 and 2023 and the condensed consolidated statements of cash flows for the six months ended June 30, 2024 and 2023 are unaudited. The condensed consolidated interim financial statements have been prepared on the same basis as the audited annual financial statements and, in the opinion of management, reflect all adjustments, which include only normal recurring adjustments necessary for the fair
presentation of the Company’s financial position at June 30, 2024 and the results of its operations for the three and six months ended June 30, 2024 and 2023 and its cash flows for the six months ended June 30, 2024 and 2023. The financial data and other information disclosed in these notes related to the three and six months ended June 30, 2024 and 2023 are also unaudited. The results for the three and six months ended June 30, 2024 are not necessarily indicative of results to be expected for the year ending December 31, 2024 or for any other subsequent interim period.
Recent Accounting Pronouncements
From time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board (“FASB”), or other standard setting bodies and adopted by the Company as of the specified effective date. Unless otherwise discussed, the impact of recently issued standards that are not yet effective will not have a material impact on the Company’s condensed consolidated financial statements upon adoption. Under the Jumpstart Our Business Startups Act of 2012, as amended (the “JOBS Act”), the Company meets the definition of an emerging growth company and has elected the extended transition period for complying with certain new or revised accounting standards pursuant to Section 107(b) of the JOBS Act.
Since December 31, 2023, there have been no new accounting pronouncements adopted by the Company or issued by FASB that are applicable to the Company, except as noted below.
Recently Issued Accounting Pronouncements Not Yet Adopted
In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, which requires disclosure of incremental segment information on an interim and annual basis. This ASU is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal periods beginning after December 15, 2024, and requires retrospective application to all prior periods presented in the financial statements. The Company expects to enhance annual segment reporting disclosures based on the new requirements.
In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which requires public companies, on an annual basis, to provide disclosure of specific categories in the rate reconciliation, as well as disclosure of income taxes paid disaggregated by jurisdiction. This ASU is effective for fiscal years beginning after December 15, 2024, with early adoption permitted. The adoption of this standard is not expected to have a material impact on the Company’s condensed consolidated financial statements and related disclosures.
3. Short-Term Investments
The following tables summarize the amortized cost and estimated fair value of the Company’s U.S. government treasury securities and marketable securities, which are considered to be available-for-sale investments and are included in short-term investments on the consolidated balance sheets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30, 2024 |
|
(in thousands) |
|
Amortized
Cost |
|
|
Unrealized
Gains |
|
|
Unrealized
Losses |
|
|
Fair
Value |
|
U.S. government treasury securities |
|
$ |
24,876 |
|
|
$ |
— |
|
|
$ |
(5 |
) |
|
$ |
24,871 |
|
Totals |
|
$ |
24,876 |
|
|
$ |
— |
|
|
$ |
(5 |
) |
|
$ |
24,871 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2023 |
|
(in thousands) |
|
Amortized
Cost |
|
|
Unrealized
Gains |
|
|
Unrealized
Losses |
|
|
Fair
Value |
|
U.S. government treasury securities |
|
|
93,749 |
|
|
|
73 |
|
|
|
— |
|
|
$ |
93,822 |
|
Totals |
|
$ |
93,749 |
|
|
$ |
73 |
|
|
$ |
— |
|
|
$ |
93,822 |
|
Certain short-term debt securities with original maturities of less than three months are included in cash and cash equivalents on the consolidated balance sheets and are not included in the tables above. The Company holds debt securities of companies with high credit quality and has determined that there was no material change in the credit risk of any of its debt securities. At June 30, 2024 and December 31, 2023, all investments had contractual maturities within one year.
4. Fair Value Measurements
The following tables present information about the Company’s financial assets and liabilities measured at fair value on a recurring basis:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30, 2024 |
|
(in thousands) |
|
Level 1 |
|
|
Level 2 |
|
|
Level 3 |
|
|
Total |
|
Cash equivalents: |
|
|
|
|
|
|
|
|
|
|
|
|
Money market fund |
|
$ |
92,406 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
92,406 |
|
Totals |
|
$ |
92,406 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
92,406 |
|
Short-term investments: |
|
|
|
|
|
|
|
|
|
|
|
|
U.S. government treasury securities |
|
$ |
24,871 |
|
|
|
|
|
|
|
|
$ |
24,871 |
|
Totals |
|
$ |
24,871 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
24,871 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2023 |
|
(in thousands) |
|
Level 1 |
|
|
Level 2 |
|
|
Level 3 |
|
|
Total |
|
Cash equivalents: |
|
|
|
|
|
|
|
|
|
|
|
|
Money market fund |
|
$ |
23,854 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
23,854 |
|
Totals |
|
$ |
23,854 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
23,854 |
|
Short-term investments: |
|
|
|
|
|
|
|
|
|
|
|
|
U.S. government treasury securities |
|
|
93,822 |
|
|
|
— |
|
|
|
— |
|
|
$ |
93,822 |
|
Totals |
|
$ |
93,822 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
93,822 |
|
During the six months ended June 30, 2024 and the year ended December 31, 2023, there were no transfers between levels. The Company classifies its money market fund and U.S. government treasury securities as Level 1 assets under the fair value hierarchy, as these assets have been valued using quoted market prices in active markets without any valuation adjustment.
The carrying amounts of prepaid expenses and other current assets, prepaid expenses to related party, accounts payable, amount due to related party and accrued expenses approximate their fair values due to the short-term nature of these assets and liabilities.
5. Leases
Operating leases
Development and Manufacturing Services Agreement (“DMS Agreement”) with Third-Party Supplier
In October 2022, the Company entered into a Statement of Work (“SOW”) under the DMS Agreement (“2022 SOW under the DMS Agreement”) with a third-party supplier. The 2022 SOW under the DMS Agreement contained an embedded lease for a dedicated manufacturing suite for the manufacture of AlloVir’s products at the facility because the Company directs how and for what purpose the suite is used and obtains substantially all of the economic benefit of the suite. At inception of the lease, it was determined that, in exchange for this dedicated manufacturing suite, AlloVir will pay the supplier a monthly fixed suite utilization fee, fixed batch payments and other related fixed costs, totaling $16.3 million over the 2.25 year lease term ending in December 2024. As part of the arrangement, there were also variable costs for materials, non-fixed batch payments, testing, storage, knowledge and tech transfer and other common area maintenance fees that were not included in the measurement of the lease liability. The lease of the facility was determined to be classified as an operating lease and commenced in October 2022, the point at which the suite was substantially complete and available for use by the Company. Accordingly, at inception, the Company recorded a right-of-use asset and lease liability of $14.7 million.
In December 2023, the Company issued a notice of termination of the DMS Agreement effective June 2024, or 190 days from the third-party supplier’s receipt of the notice. Management concluded that the notice of termination constituted a lease reassessment under ASC 842 as the Company was granted the option of such termination at the onset of the DMS Agreement and it was previously determined to be reasonably certain of not being exercised. As a result, the remaining lease term was shortened and the Company recorded a $4.9 million reduction to the right-of-use asset and lease liability in December 2023.
In February 2024, the Company entered into a new SOW (“2024 SOW under the DMS Agreement”) that terminated the 2022 SOW under the DMS Agreement with a third-party supplier, resulting in a lease remeasurement under ASC 842. The right-of-use asset was previously impaired and thus as a result of the liability remeasurement, the Company recorded a $5.6 million gain to reduce the lease liability in February 2024. As of June 30, 2024, the Company has paid all remaining lease obligations under the DMS Agreement.
Waltham Leases
In September 2021, the Company entered into a lease agreement with BP Bay Colony LLC and a sublease agreement with AMAG Pharmaceuticals Inc. for the lease of property in Waltham, Massachusetts (collectively, the “Waltham leases”). The space identified under the Waltham leases was intended for general office space, research and development, laboratory use, and light manufacturing. The Waltham leases are classified as operating leases and commenced in September 2021. At the inception date, the Company recorded a ROU asset and lease liability of $6.0 million for the lease and a ROU asset and lease liability of $17.3 million for the sublease based on a July 30, 2030 end date for the Waltham leases. As part of the arrangement, there were also variable costs for common area maintenance fees that were not included in the measurement of the lease liability. The agreement also provided a $3.1 million tenant improvement allowance. The Company utilized $0.9 million of the tenant improvement allowance. The Company has the option to renew the leased space for an additional one time period of five years with written notice from the Company. As of June 30, 2024, the Company has no reasonable certainty that this option to extend will be exercised.
In June 2024, the Company entered into a Termination of Sublease Agreement with AMAG Pharmaceuticals Inc. which terminated the sublease agreement effective June 30, 2024. In consideration of the early termination, the Company paid a $5.7 million termination fee. The Company concluded that this early termination constituted a lease modification under ASC 842 as the Company still had access to the premises for a period of time after the execution date of the agreement. As a result of this modification, the Company included the termination fee in the remeasurement of the lease liability and ROU asset, resulting in a $1.8 million gain on lease remeasurement. As of June 30, 2024, the sublease agreement with AMAG Pharmaceuticals Inc. has terminated.
In July 2024, the Company entered into a Termination Agreement with BP Bay Colony LLC which terminates with immediate effect, the existing lease. In consideration of the termination, the Company has agreed to pay a $7.0 million termination fee. As a result, the Company expects to record a $1.5 million gain on lease termination in Q3 2024. As of June 30, 2024, the Company has recorded a lease liability of $9.0 million associated with the remaining $11.0 million of payments that were contractually due under the lease as of June 30, 2024 and a right-of-use asset of $0.5 million.
Impairment of Lease Right-of-Use Assets
As a result of the December 2023 announcement of the discontinuation of the Company’s three Phase 3 registrational trials, a comprehensive review of strategic alternatives, and the December 2023 notice of termination of the DMS Agreement, the Company determined that there was a triggering event for impairment. The Company determined that the operating lease right-of-use assets were not recoverable as the carrying value exceeded the anticipated future cash flows on an undiscounted basis. To measure the impairment, the Company determined the fair value of the operating lease right-of-use assets based on estimated subleasing scenarios, which represent the highest and best use of the right-of-use assets. This fair value assessment utilized market participant assumptions, including the anticipated amount and timing of potential sublease payments using current real estate trends and market conditions. As a result, an impairment charge was calculated by reducing the carrying amount of the operating lease right-of-use assets to their estimated fair value, which was determined by discounting the estimated future cash flows by applying a rate that a market participant would require in assuming the risks associated with those cash flows. In December 2023, the Company recorded an impairment loss of $16.6 million to the operating lease right-of-use assets. No impairment losses were recorded during the three and six months ended June 30, 2024 and 2023, respectively.
Total lease costs were $0.3 million and $2.6 million for the three months ended June 30, 2024 and 2023, respectively, and $0.6 million and $5.1 million for the six months ended June 30, 2024 and 2023, respectively. Cash paid for operating leases was $6.2 million and $2.8 million for the three months ended June 30, 2024 and 2023, respectively and $10.0 million and $4.9 million for the six months ended June 30, 2024 and 2023, respectively. The Company’s total variable lease costs, such as materials, non-fixed batch payments, testing, storage, knowledge and tech transfer, and other common area maintenance fees, related to the operating leases was $0.0 million and $0.5 million for the three months ended June 30, 2024 and 2023, respectively, and $0.1 million and $0.6 million for the six months ended June 30, 2024 and 2023, respectively.
6. Accrued Expenses
Accrued expenses consisted of the following:
|
|
|
|
|
|
|
|
|
(in thousands) |
|
June 30,
2024 |
|
|
December 31,
2023 |
|
Employee compensation and benefits |
|
$ |
1,251 |
|
|
$ |
3,809 |
|
Professional fees |
|
|
296 |
|
|
|
435 |
|
Research and development |
|
|
— |
|
|
|
2,442 |
|
Process development and manufacturing costs |
|
|
— |
|
|
|
2,367 |
|
Other |
|
|
35 |
|
|
|
1,033 |
|
Total accrued expenses |
|
$ |
1,582 |
|
|
$ |
10,086 |
|
Employee compensation and benefits includes $0.8 million of restructuring liability (see Note 13).
7. Stockholder’s Equity
On May 15, 2023, the Company filed a certificate of amendment to its amended and restated certificate of incorporation authorizing the Company to issue up to 300,000,000 shares of common stock at a par value of $0.0001 per share and 10,000,000 shares of preferred stock at a par value of $0.0001 per share. There were no shares of preferred stock issued or outstanding at June 30, 2024 and December 31, 2023.
On June 21, 2023, the Company entered into an underwriting agreement with J.P. Morgan Securities LLC, Morgan Stanley & Co. LLC and BoFA Securities, Inc., as the representatives of the several underwriters (the “Underwriters”) relating to an underwritten public offering of 20,000,000 shares of its common stock at a public offering price of $3.75 per share, resulting in net proceeds of $70.2 million after deducting underwriting discounts and commissions of $4.5 million and offering costs of $0.3 million. Under the terms of the underwriting agreement, the Company granted the Underwriters an option, exercisable for 30 days, to purchase up to an additional 3,000,000 shares of its common stock at the same price per share as the shares, less underwriting discounts and commissions. On July 21, 2023, the Underwriters option expired.
The Company has reserved shares of common stock for issuance as follows:
|
|
|
|
|
|
|
|
|
|
|
June 30,
2024 |
|
|
December 31,
2023 |
|
Options to purchase common stock |
|
|
6,518,729 |
|
|
|
10,439,751 |
|
Unvested restricted stock |
|
|
1,246,012 |
|
|
|
3,254,863 |
|
Stock available for grant under the 2020 Stock Option and Grant Plan |
|
|
14,644,386 |
|
|
|
4,182,461 |
|
Stock available for issuance under the 2020 Employee Stock Purchase Plan |
|
|
1,585,257 |
|
|
|
480,059 |
|
Total |
|
|
23,994,384 |
|
|
|
18,357,134 |
|
8. Stock-Based Compensation
Stock-Based Compensation Expense
Stock-based compensation expense was as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
June 30, |
|
|
Six Months Ended
June 30, |
|
(in thousands) |
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
Research and development |
|
$ |
194 |
|
|
$ |
3,514 |
|
|
$ |
(80 |
) |
|
$ |
6,937 |
|
General and administrative |
|
|
5,714 |
|
|
|
6,774 |
|
|
|
11,022 |
|
|
|
13,380 |
|
Total stock-based compensation expense |
|
$ |
5,908 |
|
|
$ |
10,288 |
|
|
$ |
10,942 |
|
|
$ |
20,317 |
|
Stock Modification
In connection with the reduction in the Company’s workforce (“RIF”) (see Note 13), the Company accelerated certain unvested stock options and restricted common stock scheduled to vest in the three month period following the employees’ separation date. The Company determined that the acceleration of the unvested units constituted a Type III modification in accordance with ASC 718, resulting in a new measurement of compensation cost. As of June 30, 2024, 664,248 units were accelerated. For the six months ended June 30, 2024, the acceleration resulted in the recognition of $0.1 million of stock-based compensation expense using the reassessed fair value on the modification date and a reversal of $4.0 million in stock-based compensation expense for previously recognized expense using the original grant date fair value, of which $2.4 million was related to research and development expense and $1.6 million was related to general and administrative expense. For the three months ended June 30, 2024, the acceleration resulted in the recognition of $0.0 million of stock-based compensation expense using the reassessed fair value on the modification date and a reversal of $0.5 million in stock-based compensation expense for previously recognized expense using the original grant date fair value, of which $0.5 million was related to research and development expense and $0.0 million was related to general and administrative expense.
2020 Stock Option and Grant Plan
At June 30, 2024, there is an aggregate of 14,644,386 shares reserved for future issuance under the 2020 Plan.
Restricted Common Stock
The following table summarizes restricted common stock activity for the six months ended June 30, 2024:
|
|
|
|
|
|
|
|
|
|
|
Shares |
|
|
Weighted
Average
Grant Date
Fair Value |
|
Unvested at January 1, 2024 |
|
|
3,254,863 |
|
|
$ |
8.73 |
|
Granted |
|
|
245,000 |
|
|
|
0.77 |
|
Forfeited |
|
|
(1,126,768 |
) |
|
|
8.34 |
|
Vested |
|
|
(1,127,083 |
) |
|
|
8.04 |
|
Unvested at June 30, 2024 |
|
|
1,246,012 |
|
|
$ |
8.13 |
|
At June 30, 2024, there was $8.9 million of unrecognized stock-based compensation expense related to restricted stock, which is expected to be recognized over a weighted average period of 1.72 years. The total fair value of restricted stock vested was $0.8 million and $2.3 million for the six months ended June 30, 2024 and 2023, respectively.
Stock Options
The following table summarizes stock option activity (in thousands, except share and per share data):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares |
|
|
Weighted
Average
Exercise
Price |
|
|
Weighted
Average
Contractual
Life (in years) |
|
|
Aggregate
Intrinsic
Value |
|
Options outstanding at January 1, 2024 |
|
|
10,439,751 |
|
|
$ |
13.81 |
|
|
|
7.95 |
|
|
$ |
— |
|
Granted |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Exercised |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Forfeited |
|
|
(3,921,022 |
) |
|
|
10.38 |
|
|
|
— |
|
|
|
— |
|
Options outstanding at June 30, 2024 |
|
|
6,518,729 |
|
|
$ |
15.87 |
|
|
|
7.14 |
|
|
$ |
— |
|
Options vested and exercisable at June 30, 2024 |
|