Cover
Cover - shares | 9 Months Ended | |
Sep. 30, 2022 | Nov. 03, 2022 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Sep. 30, 2022 | |
Document Transition Report | false | |
Entity File Number | 001-37590 | |
Entity Registrant Name | AVALO THERAPEUTICS, INC. | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 45-0705648 | |
Entity Address, Address Line One | 540 Gaither Road, Suite 400 | |
Entity Address, City or Town | Rockville | |
Entity Address, State or Province | MD | |
Entity Address, Postal Zip Code | 20850 | |
City Area Code | 410 | |
Local Phone Number | 522-8707 | |
Title of 12(b) Security | Common Stock, $0.001 par value | |
Trading Symbol | AVTX | |
Security Exchange Name | NASDAQ | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | true | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 9,414,104 | |
Entity Central Index Key | 0001534120 | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2022 | |
Document Fiscal Period Focus | Q3 | |
Amendment Flag | false |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets (Unaudited) - USD ($) $ in Thousands | Sep. 30, 2022 | Dec. 31, 2021 | |
Current assets: | |||
Cash and cash equivalents | $ 16,943 | $ 54,585 | |
Accounts receivable, net | 0 | 1,060 | |
Other receivables | 1,314 | 3,739 | |
Inventory, net | 22 | 38 | |
Prepaid expenses and other current assets | 1,118 | 2,372 | |
Restricted cash, current portion | 53 | 51 | |
Total current assets | 19,450 | 61,845 | |
Property and equipment, net | 2,507 | 2,695 | |
Other long-term asset | 0 | 1,000 | |
Intangible assets, net | 0 | 38 | |
Goodwill | 14,409 | 14,409 | |
Restricted cash, net of current portion | 181 | 227 | |
Total assets | 36,547 | 80,214 | |
Current liabilities: | |||
Accounts payable | 1,447 | 3,369 | |
Deferred revenue | 442 | 0 | |
Accrued expenses and other current liabilities | 13,696 | 16,519 | |
Notes payable, current | 2,564 | 0 | |
Total current liabilities | 18,149 | 19,888 | |
Notes payable, non-current | 16,502 | 32,833 | |
Royalty obligation | 2,000 | 2,000 | |
Deferred tax liability, net | 133 | 113 | |
Other long-term liabilities | 1,791 | 2,298 | |
Total liabilities | 38,575 | 57,132 | |
Stockholders’ (deficit) equity: | |||
Common stock—$0.001 par value; 200,000,000 shares authorized at September 30, 2022 and December 31, 2021; 9,414,104 and 9,399,517 shares issued and outstanding at September 30, 2022 and December 31, 2021, respectively | [1] | 9 | 9 |
Additional paid-in capital | [1] | 291,975 | 285,239 |
Accumulated deficit | (294,012) | (262,166) | |
Total stockholders’ (deficit) equity | (2,028) | 23,082 | |
Total liabilities and stockholders’ (deficit) equity | $ 36,547 | $ 80,214 | |
[1]Amounts for prior periods presented have been retroactively adjusted to reflect the 1-for-12 reverse stock split effected on July 7, 2022 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical) | Sep. 30, 2022 $ / shares shares | Dec. 31, 2021 $ / shares shares |
Statement of Financial Position [Abstract] | ||
Common stock, par value (in dollars per share) | $ / shares | $ 0.001 | $ 0.001 |
Common stock, shares authorized (in shares) | 200,000,000 | 200,000,000 |
Common stock, shares issued (in shares) | 9,414,104 | 9,399,517 |
Common stock, shares outstanding (in shares) | 9,414,104 | 9,399,517 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations and Comprehensive Loss (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | ||||
Revenues: | |||||||
Total revenues, net | $ 14,949 | $ 1,350 | $ 17,155 | $ 5,179 | |||
Operating expenses: | |||||||
Cost of product sales | 528 | 908 | 2,814 | 1,067 | |||
Research and development | 7,042 | 10,551 | 25,136 | 48,325 | |||
Selling, general and administrative | 3,284 | 5,926 | 17,752 | 18,677 | |||
Amortization expense | 0 | 428 | 38 | 1,281 | |||
Total operating expenses | 10,854 | 17,813 | 45,740 | 69,350 | |||
Total operating income (loss) | 4,095 | (16,463) | (28,585) | (64,171) | |||
Other expense: | |||||||
Interest expense, net | (898) | (985) | (3,221) | (1,207) | |||
Other expense, net | 0 | (15) | (20) | (20) | |||
Total other expense, net from continuing operations | (898) | (1,000) | (3,241) | (1,227) | |||
Income (loss) from continuing operations before taxes | 3,197 | (17,463) | (31,826) | (65,398) | |||
Income tax expense (benefit) | 5 | 8 | 20 | (180) | |||
Income (loss) from continuing operations | 3,192 | (17,471) | (31,846) | (65,218) | |||
Income from discontinued operations | 0 | 76 | 0 | 38 | |||
Net income (loss) | 3,192 | $ (17,395) | $ (31,846) | $ (65,180) | |||
Common stock | |||||||
Other expense: | |||||||
Net income (loss) | $ 3,192 | ||||||
Net income (loss) per share of common stock, basic | |||||||
Net income (loss) per share of common stock, continuing operations, basic (in dollars per share) | [1] | $ 0.34 | $ (2.09) | $ (3.39) | $ (8.02) | ||
Net income (loss) per share of common stock, discontinued operations, basic (in dollars per share) | 0 | 0.01 | 0 | 0 | [1] | ||
Net income (loss) per share of common stock, basic (in dollars per share) | [1] | 0.34 | (2.08) | (3.39) | (8.02) | ||
Net income (loss) per share of common stock, diluted | |||||||
Net income (loss) per share of common stock, continuing operations, diluted in dollars per share) | 0.34 | [1] | (2.09) | (3.39) | (8.02) | ||
Net income (loss) per share, of common stock, discontinued operations, diluted (in dollars per share) | 0 | 0.01 | 0 | 0 | |||
Net income (loss) per share of common stock, diluted (in dollars per share) | $ 0.34 | [1] | $ (2.08) | $ (3.39) | (8.02) | ||
Preferred Stock | |||||||
Net income (loss) per share of common stock, basic | |||||||
Net income (loss) per share of common stock, continuing operations, basic (in dollars per share) | [1] | (3.34) | |||||
Net income (loss) per share of common stock, discontinued operations, basic (in dollars per share) | [1] | 0 | |||||
Net income (loss) per share of common stock, basic (in dollars per share) | [1] | (3.34) | |||||
Net income (loss) per share of common stock, diluted | |||||||
Net income (loss) per share of common stock, continuing operations, diluted in dollars per share) | [1] | (3.34) | |||||
Net income (loss) per share, of common stock, discontinued operations, diluted (in dollars per share) | [1] | 0 | |||||
Net income (loss) per share of common stock, diluted (in dollars per share) | [1] | $ (3.34) | |||||
Product revenue, net | |||||||
Revenues: | |||||||
Total revenues, net | $ 432 | $ 1,350 | $ 2,638 | $ 4,554 | |||
License revenue | |||||||
Revenues: | |||||||
Total revenues, net | $ 14,517 | $ 0 | $ 14,517 | $ 625 | |||
[1]for prior periods presented have been retroactively adjusted to reflect the 1-for-12 reverse stock split effected on July 7, 2022. |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Operations and Comprehensive Loss (Unaudited) (Parenthetical) | Jul. 07, 2022 |
Income Statement [Abstract] | |
Stock split, conversion ratio | 0.0833 |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Changes in Stockholders’ (Deficit) Equity (Unaudited) - USD ($) $ in Thousands | Total | Underwritten Public Offering | ATM Agreement | Common stock | Common stock Underwritten Public Offering | Common stock ATM Agreement | Preferred Stock | Additional paid-in capital | Additional paid-in capital Underwritten Public Offering | Additional paid-in capital ATM Agreement | Accumulated deficit | |||||
Balance at the beginning (in shares) at Dec. 31, 2020 | 6,250,344 | [1] | 1,257,143 | |||||||||||||
Balance at the beginning at Dec. 31, 2020 | $ 24,562 | $ 6 | [1] | $ 1 | $ 202,345 | [1] | $ (177,790) | |||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||||||||||
Issuance of shares of common stock and pre-funded warrants in underwritten public offering, net (in shares) | [1] | 1,192,407 | 1,164,323 | 166,667 | ||||||||||||
Issuance of shares of common stock and pre-funded warrants in underwritten public offering, net | 29,046 | $ 37,653 | $ 5,312 | $ 1 | [1] | $ 1 | [1] | 29,045 | $ 37,652 | [1] | $ 5,312 | |||||
Issuance of equity classified warrants related to venture loan and security agreement | 861 | 861 | ||||||||||||||
Exercise of stock options (in shares) | [1] | 48,385 | ||||||||||||||
Exercise of stock options | 1,568 | 1,568 | [1] | |||||||||||||
Conversion of preferred stock to common stock (in shares) | 523,810 | [1] | (1,257,143) | |||||||||||||
Conversion of preferred stock to common stock | 0 | $ 1 | [1] | $ (1) | ||||||||||||
Shares purchased through employee stock purchase plan (in shares) | [1] | 7,391 | ||||||||||||||
Shares purchased through employee stock purchase plan | 207 | 207 | [1] | |||||||||||||
Restricted stock units vested during period (in shares) | [1] | 6,493 | ||||||||||||||
Stock-based compensation | 6,280 | 6,280 | [1] | |||||||||||||
Net income (loss) | (65,180) | (65,180) | ||||||||||||||
Balance at the end (in shares) at Sep. 30, 2021 | 9,359,820 | [1] | 0 | |||||||||||||
Balance at the end at Sep. 30, 2021 | 40,309 | $ 9 | [1] | $ 0 | 283,270 | [1] | (242,970) | |||||||||
Balance at the beginning (in shares) at Jun. 30, 2021 | [1] | 8,000,746 | ||||||||||||||
Balance at the beginning at Jun. 30, 2021 | 21,588 | $ 8 | [1] | 247,155 | [1] | (225,575) | ||||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||||||||||
Issuance of shares of common stock and pre-funded warrants in underwritten public offering, net (in shares) | [1] | 1,192,407 | 166,667 | |||||||||||||
Issuance of shares of common stock and pre-funded warrants in underwritten public offering, net | $ 29,046 | $ 5,312 | $ 1 | [1] | $ 29,045 | $ 5,312 | ||||||||||
Stock-based compensation | 1,758 | 1,758 | [1] | |||||||||||||
Net income (loss) | (17,395) | (17,395) | ||||||||||||||
Balance at the end (in shares) at Sep. 30, 2021 | 9,359,820 | [1] | 0 | |||||||||||||
Balance at the end at Sep. 30, 2021 | 40,309 | $ 9 | [1] | $ 0 | 283,270 | [1] | (242,970) | |||||||||
Balance at the beginning (in shares) at Dec. 31, 2021 | [1] | 9,399,517 | ||||||||||||||
Balance at the beginning at Dec. 31, 2021 | 23,082 | $ 9 | [1] | 285,239 | [1] | (262,166) | ||||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||||||||||
Impact of reverse stock split (in shares) | 8,380 | |||||||||||||||
Shares purchased through employee stock purchase plan (in shares) | [1] | 5,269 | ||||||||||||||
Shares purchased through employee stock purchase plan | 25 | 25 | [1] | |||||||||||||
Restricted stock units vested during period (in shares) | [1] | 938 | ||||||||||||||
Stock-based compensation | 6,711 | 6,711 | [1] | |||||||||||||
Net income (loss) | (31,846) | (31,846) | ||||||||||||||
Balance at the end (in shares) at Sep. 30, 2022 | [1] | 9,414,104 | ||||||||||||||
Balance at the end at Sep. 30, 2022 | (2,028) | $ 9 | [1] | 291,975 | [1] | (294,012) | ||||||||||
Balance at the beginning (in shares) at Jun. 30, 2022 | [1] | 9,405,724 | ||||||||||||||
Balance at the beginning at Jun. 30, 2022 | (5,951) | $ 9 | [1] | 291,244 | [1] | (297,204) | ||||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||||||||||
Impact of reverse stock split (in shares) | [1] | 8,380 | ||||||||||||||
Stock-based compensation | 731 | 731 | [1] | |||||||||||||
Net income (loss) | 3,192 | 3,192 | ||||||||||||||
Balance at the end (in shares) at Sep. 30, 2022 | [1] | 9,414,104 | ||||||||||||||
Balance at the end at Sep. 30, 2022 | $ (2,028) | $ 9 | [1] | $ 291,975 | [1] | $ (294,012) | ||||||||||
[1]Amounts for prior periods presented have been retroactively adjusted to reflect the 1-for-12 reverse stock split effected on July 7, 2022. |
Condensed Consolidated Statem_4
Condensed Consolidated Statements of Changes in Stockholders’ (Deficit) Equity (Unaudited) (Parenthetical) | Jul. 07, 2022 |
Statement of Stockholders' Equity [Abstract] | |
Stock split, conversion ratio | 0.0833 |
Condensed Consolidated Statem_5
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2022 | Sep. 30, 2021 | |
Operating activities | ||
Net income (loss) | $ (31,846) | $ (65,180) |
Adjustments to reconcile net loss used in operating activities: | ||
Depreciation and amortization | 131 | 1,362 |
Stock-based compensation | 6,711 | 6,280 |
Accretion of debt discount | 1,040 | 445 |
Allowance for other long-term asset | 1,000 | 0 |
Deferred taxes | 20 | 40 |
Changes in assets and liabilities: | ||
Accounts receivable, net | 1,060 | 742 |
Other receivables | 2,425 | (269) |
Other long-term asset | 0 | (2,000) |
Inventory, net | 16 | (13) |
Prepaid expenses and other assets | 1,254 | 1,252 |
Accounts payable | (1,922) | 994 |
Deferred revenue | 442 | |
Accrued expenses and other liabilities | (3,144) | 2,604 |
Lease liability, net | 2 | (50) |
Net cash used in operating activities | (22,811) | (53,793) |
Investing activities | ||
Purchase of property and equipment | (95) | (102) |
Net cash used in investing activities | (95) | (102) |
Financing activities | ||
Proceeds from issuance of common stock and pre-funded warrants in underwritten public offering, net | 0 | 37,653 |
Proceeds from Notes and warrants, net of debt issuance costs paid | 0 | 32,900 |
Prepayment on Notes | (14,806) | 0 |
Proceeds from issuance of common stock in underwritten public offering, net | 0 | 29,046 |
Proceeds from common stock pursuant to ATM Program, net | 0 | 5,312 |
Proceeds from exercise of stock options | 0 | 1,568 |
Proceeds from issuance of common stock under employee stock purchase plan | 25 | 207 |
Net cash (used in) provided by financing activities | (14,781) | 106,686 |
(Decrease) increase in cash, cash equivalents and restricted cash | (37,687) | 52,791 |
Cash, cash equivalents, and restricted cash at beginning of period | 54,864 | 19,106 |
Cash, cash equivalents, and restricted cash at end of period | 17,177 | 71,897 |
Supplemental disclosures of cash flow information | ||
Cash paid for interest | 2,256 | 796 |
Cash and cash equivalents | 16,943 | 71,506 |
Restricted cash, current | 53 | 164 |
Restricted cash, non-current | 181 | 227 |
Total cash, cash equivalents and restricted cash | $ 17,177 | $ 71,897 |
Business
Business | 9 Months Ended |
Sep. 30, 2022 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Business | Business Avalo Therapeutics, Inc. (the “Company” or “Avalo” or “we”) is a clinical stage biotechnology company focused on the treatment of immune dysregulation by developing therapies that target the LIGHT network. LIGHT ( L ymphotoxin-like, exhibits I nducible expression, and competes with HSV G lycoprotein D for H erpesvirus Entry Mediator (“HVEM”), a receptor expressed by T lymphocytes; also referred to as TNFSF14) is an immunoregulatory cytokine. LIGHT and its signaling receptors, HVEM (TNFRSF14), and lymphotoxin β receptor (TNFRSF3), form an immune regulatory network with two co-receptors of herpesvirus entry mediator, checkpoint inhibitor B and T Lymphocyte Attenuator (“BTLA”), and CD160 (collectively, the “LIGHT-signaling network” or the “LIGHT network”). Accumulating evidence points to the dysregulation of the LIGHT network as a disease-driving mechanism in autoimmune and inflammatory reactions in barrier organs. Therefore, we believe reducing LIGHT levels can moderate immune dysregulation in many acute and chronic inflammatory disorders. Avalo was incorporated in Delaware and commenced operation in 2011, and completed its initial public offering in October 2015. On July 7, 2022, Avalo effected a 1-for-12 reverse stock split. The Company retroactively applied the reverse stock split to share and per share amounts for periods prior to July 7, 2022, including the unaudited condensed consolidated financial statements for the nine months ended September 30, 2022, three and nine months ended September 30, 2021, and the year ended December 31, 2021. Additionally, pursuant to their terms, a proportionate adjustment was made to the per share exercise price and number of shares issuable under all of the Company’s outstanding options and warrants, and the number of shares authorized for issuance pursuant to the Company’s equity incentive plans have been reduced proportionately. Avalo retroactively applied such adjustments in the notes to the unaudited condensed consolidated financial statements for periods presented prior to July 7, 2022, including the nine months ended September 30, 2022, three and nine months ended September 30, 2021, and the year ended December 31, 2021. The reverse stock split did not reduce the number of authorized shares of common and preferred stock and did not alter the par value. Liquidity In order to meet its cash flow needs, the Company applies a disciplined decision-making methodology as it evaluates the optimal allocation of the Company’s resources between investing in the Company’s existing pipeline assets and acquisitions or in-licensing of new assets. As of September 30, 2022, Avalo had $16.9 million in cash and cash equivalents. For the nine months ended September 30, 2022, Avalo generated a net loss of $31.8 million and negative cash flows from operations of $22.8 million. As of September 30, 2022, Avalo had an accumulated deficit of $294.0 million. In the second quarter of 2022, as collectively agreed upon with the Lenders (as defined below), the Company made a partial prepayment of $15.0 million ($14.8 million of which was applied to principal) on the notes (the “Notes) issued under its venture loan and security agreement (the “Loan Agreement”) with Horizon Technology Finance Corporation (“Horizon”) and Powerscourt Investments XXV, LP (“Powerscourt”, and together with Horizon, the “Lenders”). Avalo intends to consider additional prepayments prior to principal loan amounts coming due, if collectively agreed upon with the Lenders. As of September 30, 2022, the carrying value of the Notes (as defined in Note 9) was $19.1 million. The accompanying unaudited condensed consolidated financial statements have been prepared assuming the Company will continue as a going concern; however, losses are expected to continue as the Company continues to invest in its research and development pipeline assets. The Company will require additional financing to fund its operations and to continue to execute its business strategy within one year after the date the unaudited condensed consolidated financial statements included herein were issued. We anticipate that the cash and cash equivalents as of September 30, 2022 will not be sufficient for us to fund our product candidates through their next anticipated milestones, which include topline data from the AVTX-002 Phase 2 PEAK trial and pivotal data from the AVTX-803 LADDER trial, both expected in the first half of 2023. We will need to raise additional capital to reach these milestones. These conditions raise substantial doubt about the Company’s ability to continue as a going concern. To mitigate these conditions and to meet the Company’s capital requirements, management plans to use its current cash on hand along with some combination of the following: (i) dilutive and/or non-dilutive financings, (ii) out-licensing or strategic alliances/collaborations of its current pipeline assets, (iii) out-licensing or sale of its non-core assets, and (iv) federal and/or private grants. If the Company raises additional funds through collaborations, strategic alliances or licensing arrangements with third parties, the Company might have to relinquish valuable rights to its technologies, future revenue streams, research programs or product candidates. Subject to limited exceptions, the Loan Agreement prohibits the Company from incurring certain additional indebtedness, making certain asset dispositions, and entering into certain mergers, acquisitions or other business combination transactions without the prior consent of the Lenders. Additionally, the Loan Agreement contains certain covenants and certain other specified events that could result in an event of default, which if not cured or waived, could result in the immediate acceleration of all or a substantial portion of the outstanding Notes. As of the filing date of this Quarterly Report on Form 10-Q, the Company was not aware of any breach of covenants or occurrence of material adverse change, nor had it received any notice of event of default from the Lenders (refer to Note 9 of the condensed unaudited consolidated financial statements for more information). If the Company requires but is unable to obtain additional funding, the Company may be forced to make reductions in spending, delay, suspend, reduce or eliminate some or all of its planned research and development programs, or liquidate assets where possible. Due to the uncertainty regarding future financing and other potential options to raise additional funds, management has concluded that substantial doubt exists with respect to the Company’s ability to continue as a going concern within one year after the date that the financial statements in this Quarterly Report on Form 10-Q were issued. |
Basis of Presentation and Signi
Basis of Presentation and Significant Accounting Policies | 9 Months Ended |
Sep. 30, 2022 | |
Accounting Policies [Abstract] | |
Basis of Presentation and Significant Accounting Policies | Basis of Presentation and Significant Accounting Policies Basis of Presentation The Company’s unaudited condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”). Any reference in these notes to applicable guidance is meant to refer to the authoritative GAAP as found in the Accounting Standards Codification (“ASC”) and Accounting Standards Updates (“ASU”) of the Financial Accounting Standards Board (“FASB”). In the opinion of management, the accompanying unaudited condensed consolidated financial statements include all adjustments, consisting of normal recurring adjustments, which are necessary to present fairly the Company’s financial position, results of operations, and cash flows. The condensed consolidated balance sheet at December 31, 2021 has been derived from audited financial statements at that date. The interim results of operations are not necessarily indicative of the results that may occur for the full fiscal year. Certain information and footnote disclosure normally included in the financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to instructions, rules, and regulations prescribed by the United States Securities and Exchange Commission (“SEC”). The Company believes that the disclosures provided herein are adequate to make the information presented not misleading when these unaudited condensed consolidated financial statements are read in conjunction with the December 31, 2021 audited consolidated financial statements. In the second quarter of 2022, the Company concluded that it would include sales and marketing expenses within the selling, general and administrative line in the Company’s condensed consolidated statement of operations. The Company reclassified $0.7 million and $2.0 million from sales and marketing expense to selling, general and administrative expense for the three and nine months ended September 30, 2021, respectively, to conform with the current period presentation. Unless otherwise indicated, all amounts in the following tables are in thousands except share and per share amounts. Significant Accounting Policies |
Revenue
Revenue | 9 Months Ended |
Sep. 30, 2022 | |
Revenue from Contract with Customer [Abstract] | |
Revenue | Revenue In July 2022, Avalo entered into a license agreement with Apollo AP43 Limited, a wholly owned subsidiary of Apollo Therapeutics Group Limited (collectively, “Apollo”) pursuant to which the Company granted Apollo a worldwide, exclusive license to research, develop, manufacture and commercialize AVTX-007, an anti-IL-18 monoclonal antibody (the “Apollo License Agreement”). Pursuant to the Apollo License Agreement, the Company received an upfront payment of $14.5 million, which was recognized as license revenue for the three and nine months ended September 30, 2022 . The Company generates substantially all of its product revenue from sales of Millipred ® , an oral prednisolone indicated across a wide variety of inflammatory conditions, which is considered a prescription drug. The Company sells its prescription drug in the United States primarily through wholesale distributors. Wholesale distributors account for substantially all of the Company’s net product revenues and trade receivables. For the three months ended September 30, 2022, the Company’s two largest customers accounted for approximately 65% and 35%, respectively, of the Company’s total net product revenues. For the nine months ended September 30, 2022, the Company’s two largest customers accounted for approximately 72% and 28%, respectively, of the Company’s total net product revenues. Net revenue from sales of prescription drugs was $0.4 million and $1.4 million for the three months ended September 30, 2022 and 2021, respectively, and $2.6 million and $4.6 million for the nine months ended September 30, 2022 and 2021, respectively. As of September 30, 2022, deferred revenue was $0.4 million due to the receipt of payment from wholesale distributors related to product that had not yet been sold to the customer. The Company has a license and supply agreement for the Millipred ® product with a wholly owned subsidiary of Teva Pharmaceutical Industries Ltd. (“Teva”), which expires on September 30, 2023. Beginning July 1, 2021, Avalo was required to pay Teva fifty percent of the net profit of the Millipred ® product following each calendar quarter, subject to a $0.5 million quarterly minimum payment unless total net profit is below a specified threshold. For the three and nine months ended September 30, 2022, the Company recognized $0.4 million and $1.4 million, respectively, in cost of product sales related to the royalty. Dr. Sol Barer served as the Chairman of the Company’s board of directors until June 2021 and currently serves as the Chairman of Teva’s board of directors. Aytu BioScience, Inc. (“Aytu”), to which the Company sold its rights, title, and interests in assets relating to certain commercialized products in 2019 (the “Aytu Transaction”), managed Millipred ® commercial operations until August 31, 2021 pursuant to transition service agreements, which included managing the third-party logistics provider and providing accounting reporting services. Aytu collected cash on behalf of Avalo for revenue generated by sales of Millipred ® from the second quarter of 2020 through the third quarter of 2021 and is obligated to transfer cash generated by such sales to Avalo. In the third quarter of 2021, Avalo finalized its trade and distribution channel to allow it to control the third-party distribution and began managing Millipred ® commercial operations at that time. The current transition services agreement allows Aytu to withhold cash of $2.0 million until September 30, 2022 and $1.0 million until December 2024. The Company received $2.2 million from Aytu in first quarter of 2022. As of September 30, 2022, the total receivable balance was approximately $1.8 million. As disclosed in its Annual Report on Form 10-K for the year ended June 30, 2022 (filed September 27, 2022), Aytu concluded that substantial doubt exists with respect to their ability to continue as a going concern within one year after the date that the financial statements were issued, or until September 2023. As such, the Company fully reserved for the $1.0 million due in December 2024 and recognized the related expense in cost of product sales for the nine months ended September 30, 2022. The remaining $0.8 million is included within other receivables and is contractually owed in the fourth quarter of 2022. |
Net (Loss) Income Per Share
Net (Loss) Income Per Share | 9 Months Ended |
Sep. 30, 2022 | |
Earnings Per Share [Abstract] | |
Net (Loss) Income Per Share | Net (Loss) Income Per Share The Company computes earnings per share (“EPS”) using the two-class method. The two-class method of computing EPS is an earnings allocation formula that determines EPS for common stock and any participating securities according to dividends declared and participation rights in undistributed earnings. The Company had only common stock outstanding during the three and nine months ended September 30, 2022 and three months ended September 30, 2021. The Company had two classes of stock outstanding during the nine months ended September 30, 2021; common stock and preferred stock. The preferred stock outstanding during the prior period converted to shares of common stock on an approximately 1-for-0.42 ratio (ratio adjusted for the reverse stock split) and had the same rights, preferences and privileges as the Company’s common stock other than it held no voting rights. In April 2021, Armistice Capital, LLC (“Armistice”), which is a significant stockholder of the Company and whose chief investment officer, Steven Boyd, and managing director, Keith Maher, served on Avalo’s Board until August 8, 2022, converted the then outstanding 1,257,143 shares of convertible preferred stock into 523,810 shares of Avalo’s common stock. Under the two-class method, the convertible preferred stock was considered a separate class of stock until the time it was converted to common shares for EPS purposes. Therefore, basic and diluted EPS is provided below for common stock for the three and nine months ended September 30, 2022 and three months ended September 30, 2021, and both common stock and preferred stock for the nine months ended September 30, 2021. EPS for common stock and EPS for preferred stock is computed by dividing the sum of distributed earnings and undistributed earnings for each class of stock by the weighted average number of shares outstanding for each class of stock for the period. In applying the two-class method, undistributed earnings are allocated to common stock and preferred stock based on the weighted average shares outstanding during the period, which assumed the convertible preferred stock had been converted to common stock. The weighted average number of common shares outstanding as of September 30, 2022 and 2021 include the weighted average effect of the pre-funded warrants issued in connection with the underwritten public offering that closed in January 2021, the exercise of which requires nominal consideration for the delivery of the shares of common stock (refer to Note 10 for more information). Diluted net (loss) income per share includes the potential dilutive effect of common stock equivalents as if such securities were converted or exercised during the period, when the effect is dilutive. Common stock equivalents include: (i) outstanding stock options and restricted stock units, which are included under the “treasury stock method” when dilutive; and (ii) common stock to be issued upon the exercise of outstanding warrants, which are included under the “treasury stock method” when dilutive. Because the impact of these items is generally anti-dilutive during periods of net loss, there is no difference between basic and diluted loss per common share for periods with net losses. In periods of net loss, losses are allocated to the participating security only if the security has not only the right to participate in earnings, but also a contractual obligation to share in the Company’s losses. The following tables set forth the computation of basic and diluted net (loss) income per share of common stock for the three and nine months ended September 30, 2022 and three months ended September 30, 2021, and common stock and preferred stock for the nine months ended September 30, 2021 (in thousands, except share and per share amounts): Three Months Ended September 30, 2022 Common stock Basic income per share: Net income $ 3,192 Weighted average shares 9,413,466 Basic net income per share $ 0.34 Diluted income per share: Net income $ 3,192 Weighted average shares - basic 9,413,466 Effect of dilutive securities: Potentially dilutive shares 166 Weighted average shares - diluted 9,413,632 Diluted net income per share $ 0.34 Nine Months Ended September 30, 2022 Common stock Net loss $ (31,846) Weighted average shares 9,404,679 Basic and diluted net loss per share $ (3.39) Three Months Ended September 30, 2021 Common stock Continuing Operations Discontinued Operations Allocation of undistributed net (loss) income $ (17,471) $ 76 Weighted average shares 8,374,200 8,374,200 Basic and diluted net (loss) income per share $ (2.09) $ 0.01 Nine Months Ended September 30, 2021 Common stock Preferred stock Continuing Operations Discontinued Operations Continuing Operations Discontinued Operations Allocation of undistributed net (loss) income $ (63,602) $ 37 $ (1,616) $ 1 Weighted average shares 7,927,152 7,927,152 483,517 483,517 Basic and diluted net (loss) income per share $ (8.02) $ 0.00 $ (3.34) $ 0.00 The following outstanding securities have been excluded from the computation of diluted weighted shares outstanding for the three and nine months ended September 30, 2022 and 2021, as they could have been anti-dilutive: Three and Nine Months Ended September 30, 2022 2021 Stock options 1,260,906 1,122,785 Warrants on common stock 1 366,990 367,186 Restricted Stock Units — 6,493 1 The weighted average number of common shares outstanding as of September 30, 2021 included the weighted average effect of the 139,747 pre-funded warrants issued in connection with the underwritten public offering that closed in January 2021 because the exercise of such warrants requires only nominal consideration ($0.012 per share exercise price for each pre-funded warrant). During 2021, the holder exercised 25,740 of the pre-funded warrants. As of September 30, 2022, the weighted average number of common shares outstanding included the weighted average effect of the remaining 114,007 pre-funded warrants outstanding. These pre-funded warrants are not included in the table above. |
Fair Value Measurements
Fair Value Measurements | 9 Months Ended |
Sep. 30, 2022 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | Fair Value Measurements ASC No. 820, Fair Value Measurements and Disclosures (“ASC 820”), defines fair value as the price that would be received to sell an asset, or paid to transfer a liability, in the principal or most advantageous market in an orderly transaction between market participants on the measurement date. The fair value standard also establishes a three‑level hierarchy, which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The valuation hierarchy is based upon the transparency of inputs to the valuation of an asset or liability on the measurement date. The three levels are defined as follows: • Level 1—inputs to the valuation methodology are quoted prices (unadjusted) for an identical asset or liability in an active market. • Level 2—inputs to the valuation methodology include quoted prices for a similar asset or liability in an active market or model‑derived valuations in which all significant inputs are observable for substantially the full term of the asset or liability. • Level 3—inputs to the valuation methodology are unobservable and significant to the fair value measurement of the asset or liability. The following table presents, for each of the fair value hierarchy levels required under ASC 820, the Company’s assets and liabilities that are measured at fair value on a recurring basis (in thousands): September 30, 2022 Fair Value Measurements Using Quoted prices in Significant other Significant active markets for observable unobservable identical assets inputs inputs (Level 1) (Level 2) (Level 3) Assets Investments in money market funds* $ 16,079 $ — $ — December 31, 2021 Fair Value Measurements Using Quoted prices in Significant other Significant active markets for observable unobservable identical assets inputs inputs (Level 1) (Level 2) (Level 3) Assets Investments in money market funds* $ 54,010 $ — $ — *Investments in money market funds are reflected in cash and cash equivalents on the accompanying condensed consolidated balance sheets. As of September 30, 2022 and December 31, 2021, the Company’s financial instruments included cash and cash equivalents, restricted cash, accounts receivable, other receivables, prepaid and other current assets, accounts payable, accrued expenses and other current liabilities, and long-term debt. The carrying amounts reported in the accompanying condensed consolidated financial statements for cash and cash equivalents, restricted cash, accounts receivable, other receivables, prepaid and other current assets, accounts payable, and accrued expenses and other current liabilities approximate their respective fair values because of the short-term nature of these accounts. The estimated fair value of the Company’s debt approximates its carrying value as of September 30, 2022 and is in Level Two of the fair value hierarchy (refer to Note 9 for more information). |
Leases
Leases | 9 Months Ended |
Sep. 30, 2022 | |
Leases [Abstract] | |
Leases | Leases The Company currently occupies two leased properties, both of which serve as administrative office space. The Company determined that both of these leases are operating leases based on the lease classification test performed at lease commencement. The annual base rent for the Company’s office located in Rockville, Maryland is $0.2 million, subject to annual 2.5% increases over the term of the lease. The applicable lease provided for a rent abatement for a period of 12 months following the Company’s date of occupancy. The lease has an initial term of 10 years from the date the Company made its first annual fixed rent payment, which occurred in January 2020. The Company has the option to extend the lease two times, each for a period of five years, and may terminate the lease as of the sixth anniversary of the first annual fixed rent payment, upon the payment of a termination fee. The initial annual base rent for the Company’s office located in Chesterbrook, Pennsylvania is $0.2 million and the annual operating expenses are approximately $0.1 million. The annual base rent is subject to periodic increases of approximately 2.4% over the term of the lease. The lease provided for a rent abatement period of three months following lease commencement. The lease has an initial term of 5.25 years from the lease commencement on December 1, 2021. The weighted average remaining term of the operating leases at September 30, 2022 was 5.8 years. Supplemental balance sheet information related to the leased properties include (in thousands): As of September 30, 2022 December 31, 2021 Property and equipment, net $ 1,813 $ 2,001 Accrued expenses and other current liabilities $ 526 $ 485 Other long-term liabilities 1,791 2,018 Total operating lease liabilities $ 2,317 $ 2,503 The operating lease right-of-use (ROU) assets are included in property and equipment, net and the lease liabilities are included in accrued expenses and other current liabilities and other long-term liabilities in our condensed consolidated balance sheets. The Company utilized a weighted average discount rate of 9.2% to determine the present value of the lease payments. The components of lease expense for the three and nine months ended September 30, 2022 and 2021 were as follows (in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2022 2021 2022 2021 Operating lease cost* $ 134 $ 97 $ 373 $ 287 *Includes short-term leases, which are immaterial. The following table shows a maturity analysis of the operating lease liabilities as of September 30, 2022 (in thousands): Undiscounted Cash Flows October 1, 2022 through December 31, 2022 $ 130 2023 528 2024 537 2025 547 2026 557 2027 258 Thereafter 426 Total lease payments $ 2,983 Less implied interest (666) Total $ 2,317 |
Accrued Expenses and Other Curr
Accrued Expenses and Other Current Liabilities | 9 Months Ended |
Sep. 30, 2022 | |
Accrued Liabilities and Other Liabilities [Abstract] | |
Accrued Expenses and Other Current Liabilities | Accrued Expenses and Other Current Liabilities Accrued expenses and other current liabilities as of September 30, 2022 and December 31, 2021 consisted of the following (in thousands): As of September 30, 2022 December 31, 2021 Research and development $ 7,094 $ 8,221 Compensation and benefits 2,972 4,310 Selling, general and administrative 903 1,386 Commercial operations 1,798 1,733 Royalty payment 399 375 Lease liability, current 526 485 Other 4 9 Total accrued expenses and other current liabilities $ 13,696 $ 16,519 |
Cost Reduction Plan
Cost Reduction Plan | 9 Months Ended |
Sep. 30, 2022 | |
Restructuring and Related Activities [Abstract] | |
Cost Reduction Plan | Cost Reduction Plan In the first quarter of 2022, the Board approved a cost reduction plan to enable the Company to execute its strategy of prioritizing the development of its most promising programs (the “Plan”). As part of the Plan, the Company announced plans to wind down internal development efforts of AVTX-006 and pause development efforts of AVTX-802. Accordingly, a reduction in workforce plan was approved to reduce headcount and related expenses. The reduction in workforce plan, which was considered a one-time termination benefit, was completed in the second quarter of 2022. The one-time termination benefits mainly relate to severance payments to separated employees. As a result, the Company recognized $1.5 million of expense during the first quarter of 2022, of which $0.7 million was recognized in research and development expense, and $0.8 million was recognized in selling, general and administrative expense. Of the $1.5 million initial liability recognized in the first quarter of 2022, $1.2 million was paid in the nine months ended September 30, 2022. The remaining severance liability will be paid over the next two twelve |
Notes Payable
Notes Payable | 9 Months Ended |
Sep. 30, 2022 | |
Debt Disclosure [Abstract] | |
Notes Payable | Notes Payable On June 4, 2021, the Company entered into the $35.0 million Loan Agreement with the Lenders. In accordance with the Loan Agreement, $20.0 million was funded on the closing date (the “Initial Note”), with the remaining $15.0 million fundable upon the Company achieving certain predetermined milestones, which the Company met in the third quarter of 2021. On July 30, 2021, after achieving a predetermined milestone, the Company borrowed an additional $10.0 million, which was evidenced by a second note payable (the “Second Note”). On September 29, 2021, after achieving a second predetermined milestone, the Company borrowed the remaining $5.0 million, which was evidenced by a third note payable (the “Third Note”, and collectively with the Initial and Second Notes, the “Notes”). In June 2022, the Company, as collectively agreed upon with the Lenders, prepaid $15.0 million to the Lenders, of which $14.8 million was applied to principal and the remainder applied to accrued interest. As of September 30, 2022, the outstanding notes payable balance was $21.2 million, inclusive of the final payment fee. Avalo intends to consider additional prepayments prior to principal loan amounts coming due, if collectively agreed upon with the Lenders. Each advance under the Loan Agreement will mature 42 months from the first day of the month following the funding of the advance. Each advance accrues interest at a per annum rate of interest equal to 6.25% plus the prime rate, as reported in the Wall Street Journal (subject to a floor of 3.25%). The Loan Agreement provides for interest-only payments for each advance for the first 18 months, however the interest-only period was extended to 24 months as a result of the Company satisfying the Interest Only Extension Milestone (as defined in the Loan Agreement) in the third quarter of 2021. Thereafter, amortization payments will be payable in monthly installments of principal and interest through each advance’s maturity date. Upon ten business days’ prior written notice, the Company may prepay all of the outstanding advances by paying the entire principal balance and all accrued and unpaid interest, subject to prepayment charges of up to 3% of the then outstanding principal balance. Upon the earlier of (i) payment in full of the principal balance, (ii) an event of default, or (iii) the maturity date, the Company will pay an additional final payment of 3% of the principal loan amount to the Lenders. Each advance of the loan is secured by a lien on substantially all of the assets of the Company, other than Intellectual Property and Excluded Collateral (in each case as defined in the Loan Agreement), and contains customary covenants and representations, including a financial reporting covenant and limitations on dividends, indebtedness, collateral, investments, distributions, transfers, mergers or acquisitions, taxes, corporate changes, deposit accounts, and subsidiaries. The events of default under the Loan Agreement include, but are not limited to, failing to make a payment, breach of covenant, or occurrence of a material adverse change. If an event of default occurs, the Lenders are entitled to accelerate the loan amounts due or take other enforcement actions. The accelerated payment obligations would include the outstanding principal balance (inclusive of the 3% final payment fee), a prepayment charge on the outstanding principal balance of up to 3%, and any accrued and unpaid interest. As of the filing date of this Quarterly Report on Form 10-Q, the Company was not aware of any breach of covenants, occurrence of a material adverse change, nor had it received any notice of event of default from the Lenders. On June 4, 2021, pursuant to the Loan Agreement, the Company issued warrants to the Lenders to purchase 33,656 shares of the Company’s common stock with an exercise price of $31.20 per share (the “Warrants”). The Warrants are exercisable for ten years from the date of issuance. The Lenders may exercise the Warrants either by (a) cash or check or (b) through a net issuance conversion. The Warrants, which met equity classification, were recognized as a component of permanent stockholders’ equity within additional paid-in-capital and were recorded at the issuance date using a relative fair value allocation method. The Company valued the Warrants at issuance, which resulted in a discount on the debt, and allocated the proceeds from the loan proportionately to the Notes and to the Warrants, of which $0.9 million was allocated to the Warrants. In the second quarter of 2021, the Company incurred $2.1 million in debt issuance costs, including legal fees in connection with the Loan Agreement, fees paid directly to the Lenders, and other direct costs. All fees, warrants, and costs paid to the Lenders and all direct costs incurred by the Company are recognized as a debt discount and are amortized to interest expense using the effective interest method over the term of the loan. The $1.1 million final payment fee is included in the contractual cash flows and is accreted to interest expense using the effective interest method over the term of the loan. The effective interest rate of the Notes, including the accretion of the final payment, was 18.7% as of September 30, 2022. Balance sheet information related to the note payable for the Notes is as follows (in thousands): As of September 30, 2022 December 31, 2021 Maturity Initial Note 12,139 20,600 January 2025 Second Note 6,070 10,300 February 2025 Third Note 3,035 5,150 April 2025 Notes payable, gross 1 21,244 36,050 Less: Unamortized debt discount and issuance costs 2,178 3,217 Carrying value of notes payable 19,066 32,833 Less: Current portion 2,564 — Carrying value of notes payable, non-current 16,502 32,833 1 Balance includes $1.1 million final payment fee for the Notes, which represents 3% of the original principal loan amount. As of September 30, 2022, the estimated future principal payments due on the Notes were as follows (in thousands): As of September 30, 2022 2022 $ — 2023 5,930 2024 13,463 2025 1,851 Total principal payments 1 $ 21,244 1 Balance includes $1.1 million final payment fee, which represents 3% of the original principal loan amount. |
Capital Structure
Capital Structure | 9 Months Ended |
Sep. 30, 2022 | |
Equity [Abstract] | |
Capital Structure | Capital Structure Pursuant to the Company’s amended and restated certificate of incorporation, the Company is authorized to issue two classes of stock, common stock and preferred stock. At September 30, 2022, the total number of shares of capital stock the Company was authorized to issue was 205,000,000 of which 200,000,000 was common stock and 5,000,000 was preferred stock. All shares of common and preferred stock have a par value of $0.001 per share. Common Stock 2021 Financings Q3 2021 Equity Financing On September 17, 2021, the Company closed an underwritten public offering of approximately 1.2 million shares of its common stock for net proceeds of $29.0 million. Armistice participated in the offering by purchasing approximately 0.5 million shares of common stock, on the same terms as all other investors. Certain affiliates of Nantahala Capital Management LLC (collectively, “Nantahala”), which beneficially owned greater than 5% of the Company’s outstanding common stock at the time of the offering, participated in the offering on the same terms as all other investors. At-the-Market Offering Program In July 2021, the Company entered into an “at-the-market” sales agreement with Cantor Fitzgerald & Co. and RBC Capital Markets, LLC (together, the “Agents”), pursuant to which the Company may sell from time to time, shares of its common stock having an aggregate offering price of up to $50.0 million through the Agents. In August 2021, the Company sold approximately 0.2 million shares of common stock under the ATM Program for net proceeds of approximately $5.2 million. Q2 2021 Debt Financing Agreement As part of the Loan Agreement entered into in the second quarter of 2021, on June 4, 2021, the Company issued Warrants to Horizon and Powerscourt to purchase 33,656 shares of the Company’s common stock with an exercise price of $31.20 per share. The Warrants are exercisable for ten years from the date of issuance. Refer to Note 9 for additional information. Q1 2021 Financing In January 2021, the Company closed an underwritten public offering of approximately 1.2 million shares of its common stock and 139,747 pre-funded warrants for net proceeds of $37.7 million. Armistice participated in the offering by purchasing approximately 0.2 million shares of common stock, on the same terms as all other investors. Nantahala participated in the offering by purchasing approximately 0.1 million shares of common stock, on the same terms as all other investors. Nantahala also purchased the pre-funded warrants to purchase up to an aggregate of 139,747 shares of common stock at a purchase price of $31.188, which represents the per share public offering price for the common stock less the $0.012 per share exercise price for each pre-funded warrant. During 2021, the holder exercised 25,740 of the pre-funded warrants. As of September 30, 2022, 114,007 pre-funded warrants were outstanding. Common Stock Warrants At September 30, 2022, the following common stock warrants were outstanding: Number of common shares Exercise price Expiration underlying warrants per share date 333,334 $ 150.00 June 2024 114,007 $ 0.012 — 33,656 $ 31.20 June 2031 480,997 |
Stock Based Compensation
Stock Based Compensation | 9 Months Ended |
Sep. 30, 2022 | |
Share-Based Payment Arrangement [Abstract] | |
Stock-Based Compensation | Stock-Based Compensation 2016 Equity Incentive Plan In April 2016, our board of directors adopted the 2016 Equity Incentive Plan, which was approved by our stockholders in May 2016 and which was subsequently amended and restated in May 2018 and August 2019 with the approval of our board of directors and our stockholders (the “2016 Third Amended Plan”). During the term of the 2016 Third Amended Plan, the share reserve will automatically increase on the first trading day in January of each calendar year ending on (and including) January 1, 2026, by an amount equal to 4% of the total number of outstanding shares of common stock of the Company on the last trading day in December of the prior calendar year. On January 1, 2022, pursuant to the terms of the 2016 Third Amended and Restated Plan, an additional 375,981 shares were made available for issuance. As of September 30, 2022, there were 361,892 shares available for future issuance under the 2016 Third Amended Plan. In October 2022, the Company granted 225,000 options to its employees that vest on the first anniversary of the grant date. Option grants expire after ten years. Employee options typically vest over four years. Employees typically receive a new hire option grant, as well as an annual grant in the first or second quarter of each year. In addition, in the first quarter of 2022, employees were also granted options that vest on the first anniversary of the grant date. Options granted to directors typically vest either immediately or over a period of one Three Months Ended September 30, Nine Months Ended September 30, 2022 2021 2022 2021 Research and development $ 279 $ 480 $ 931 $ 1,244 Selling, general and administrative 452 1,278 5,780 5,036 Total stock-based compensation $ 731 $ 1,758 $ 6,711 $ 6,280 As a result of separation agreements that the Company entered into in the first quarter of 2022 and in accordance with the terms of the pre-existing employment agreements, the Company accelerated the vesting of certain separated employees’ stock options and modified certain awards to extend the exercisability periods. As a result, the Company recognized $4.3 million of compensation cost in the first quarter of 2022, all of which was recognized in selling, general and administrative expense. There was no additional expense related to the modifications in the three months ended September 30, 2022. Stock options with service-based vesting conditions The Company has granted options that contain service-based vesting conditions. The compensation cost for these options is recognized on a straight-line basis over the vesting periods. A summary of option activity for the nine months ended September 30, 2022 is as follows: Options Outstanding Number of shares Weighted average exercise price per share Weighted average grant date fair value per share Weighted average remaining contractual term (in years) Balance at December 31, 2021 1,054,277 $ 44.26 $ 27.45 8.1 Granted 447,022 $ 9.19 $ 6.59 Forfeited (262,852) $ 30.14 $ 20.14 Expired (60,876) $ 53.48 $ 35.76 Balance at September 30, 2022 1,177,571 $ 33.62 $ 20.72 6.4 Exercisable at September 30, 2022 713,994 $ 44.28 $ 26.55 4.7 In March 2022, the Company granted 0.3 million options with service-based vesting conditions to its employees as part of its annual stock option award that vest over four years. In March 2022, the Company granted 0.1 million options to its employees that vest on the first anniversary of the grant date. As a result of the reduction of workforce plan, 0.1 million options were forfeited in the first quarter of 2022, and 0.2 million options were forfeited as a result of other terminations during the nine months ended September 30, 2022. In October 2022, the Company granted 0.2 million options to its employees that vest on the first anniversary of the grant date. The aggregate intrinsic value of stock options is calculated as the difference between the exercise price of the stock options and the fair value of the Company’s common stock for those stock options that had exercise prices lower than the fair value of the Company’s common stock. As of September 30, 2022, the aggregate intrinsic value of options outstanding was zero. There were 349,405 options that vested during the nine months ended September 30, 2022 with a weighted average exercise price of $39.76 per share, which included the acceleration of vesting of certain options in accordance with the separation agreements entered into in the first quarter of 2022. The total grant date fair value of shares which vested during the nine months ended September 30, 2022 was $9.0 million. The Company recognized stock-based compensation expense of $0.7 million and $6.6 million related to stock options with service-based vesting conditions for the three and nine months ended September 30, 2022, respectively. At September 30, 2022, there was $4.8 million of total unrecognized compensation cost related to unvested service-based vesting condition awards. The unrecognized compensation cost is expected to be recognized over a weighted-average period of 2.2 years. Stock-based compensation assumptions The following table shows the assumptions used to compute stock-based compensation expense for stock options with service-based vesting conditions granted under the Black-Scholes valuation model for the nine months ended September 30, 2022: Service-based options Expected term of option (in years) 5 - 6.25 Expected stock price volatility 84.0% - 93.5% Risk-free interest rate 1.50% - 4.06% Expected annual dividend yield 0% Stock options with market-based vesting conditions As of September 30, 2022, there were 0.1 million exercisable stock options that contained market-based vesting conditions (that had been previously satisfied). The options have a weighted average share price per share of $39.53 and a weighted average remaining contractual term of 1.7 years. There were no stock options with market-based vesting conditions granted, exercised, or forfeited for the nine months ended September 30, 2022. Restricted Stock Units The Company measures the fair value of the restricted stock units using the stock price on the date of the grant. The restricted shares typically vest annually over a four-year period beginning on the first anniversary of the award. As of September 30, 2022, there were no unvested restricted stock units outstanding. During the nine months ended September 30, 2022, 937 restricted stock units vested and had a weighted average grant date fair value of $54.00 per unit. Employee Stock Purchase Plan On April 5, 2016, the Company’s board of directors approved the 2016 Employee Stock Purchase Plan (the “ESPP”). The ESPP was approved by the Company’s stockholders and became effective on May 18, 2016 (the “ESPP Effective Date”). Under the ESPP, eligible employees can purchase common stock through accumulated payroll deductions at such times as are established by the administrator. The ESPP is administered by the compensation committee of the Company’s board of directors. Under the ESPP, eligible employees may purchase stock at 85% of the lower of the fair market value of a share of the Company’s common stock (i) on the first day of an offering period or (ii) on the purchase date. Eligible employees may contribute up to 15% of their earnings during the offering period. The Company’s board of directors may establish a maximum number of shares of the Company’s common stock that may be purchased by any participant, or all participants in the aggregate, during each offering or offering period. Under the ESPP, a participant may not accrue rights to purchase more than $25,000 of the fair market value of the Company’s common stock for each calendar year in which such right is outstanding. The Company initially reserved and authorized up to 41,667 shares of common stock for issuance under the ESPP. On January 1 of each calendar year, the aggregate number of shares that may be issued under the ESPP automatically increases by a number equal to the lesser of (i) 1% of the total number of shares of the Company’s capital stock outstanding on December 31 of the preceding calendar year, and (ii) 41,667 shares of the Company’s common stock, or (iii) a number of shares of the Company’s common stock as determined by the Company’s board of directors or compensation committee. The number of shares were increased by 41,667 on January 1, 2022. As of September 30, 2022, 181,028 shares remained available for issuance. In accordance with the guidance in ASC 718-50, Employee Share Purchase Plans , the ability to purchase shares of the Company’s common stock at the lower of the offering date price or the purchase date price represents an option and, therefore, the ESPP is a compensatory plan under this guidance. Accordingly, stock-based compensation expense is determined based on the option’s grant-date fair value and is recognized over the requisite service period of the option. The Company used the Black-Scholes valuation model and recognized stock-based compensation expense of $33,000 and $117,000 for the three and nine months ended September 30, 2022, respectively. |
Income Taxes
Income Taxes | 9 Months Ended |
Sep. 30, 2022 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income TaxesThe Company recognized minimal income tax expense for the three and nine months ended September 30, 2022 and the three months ended September 30, 2021 due to the significant valuation allowance against the Company’s deferred tax assets and the current and prior period losses. The Company recognized an income tax benefit of $0.2 million for the nine months ended September 30, 2021 due to the receipt of its refund claim related to the tax year 2017. The tax benefit recognized for the nine months ended September 30, 2020 was a result of a tax law change signed into law as part of the Coronavirus Aid, Relief and Economic Security Act (“CARES Act”), which allowed the Company to carry back certain losses for taxes paid in fiscal year 2017 and thus resulted in a refund claim. The 2021 income tax benefit was a result of the updated estimate of interest receivable and abatement of penalties on the refund claim, as the final refund payment was received from the Internal Revenue Service in the second quarter of 2021. |
Commitments and Contingencies
Commitments and Contingencies | 9 Months Ended |
Sep. 30, 2022 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies Litigation Litigation - General The Company may become party to various contractual disputes, litigation, and potential claims arising in the ordinary course of business. The Company currently does not believe that the resolution of such matters will have a material adverse effect on its financial position or results of operations except as otherwise disclosed in this report. Deerfield Guarantee As consideration of the sale of the rights to the Company’s rights, title and interest in assets relating to c ertain commercialized products to Aytu in 2019 , Aytu assumed our financial obligations to Deerfield CSF, LLC (“Deerfield”), which currently includes the remaining contingent consideration of future royalties on the divested products. In conjunction with the closing of the transaction in 2019, the Company entered into an agreement, which guarantees the payment of the assumed liabilities to Deerfield (the “Guarantee”). Aytu publicly reported that it had entered into a Waiver, Release and Consent in June 2021, pursuant to which it paid a portion of the contingent consideration early and agreed to pay the remaining fixed obligations of $3.0 million in six equal quarterly payments of $0.5 million commencing September 30, 2021. As reported in Aytu’s Annual Report on Form 10-K for the year ended June 30, 2022, the fixed payment arrangement was $1.0 million. Avalo is required to make a payment under the Guarantee upon demand by Deerfield if all or any part of the fixed payments are not paid by Aytu when due or upon breach of a covenant. In accordance with the Waiver, Release and Consent, as of September 30, 2022, the Company estimates Aytu has one quarterly payment of $0.5 million remaining, which represents Avalo’s estimated maximum potential future payments under the Guarantee. The Company concluded that the expected credit loss of the Guarantee was de minimis as of September 30, 2022, based on considerations of Aytu’s ability to meet its current financial commitments including recent financings, cash position, operating cash flows and trends. Karbinal Royalty Make-Whole Provision In 2018, in connection with the acquisition of certain commercialized products, the Company entered into a supply and distribution agreement (the “Karbinal Agreement”) with TRIS Pharma Inc. (“TRIS”). As part of the Karbinal Agreement, the Company had an annual minimum sales commitment, which is based on a commercial year that spans from August 1 through July 31, of 70,000 units through 2025. The Company was required to pay TRIS a royalty make whole payment (“Make-Whole Payments”) of $30 for each unit under the 70,000 units annual minimum sales commitment through 2025. As a part of the Aytu transaction, the Company assigned all payment obligations, including the Make-Whole Payments, under the Karbinal Agreement (collectively, the “TRIS Obligations”) to Aytu. However, under the original license agreement, the Company could ultimately be liable for the TRIS Obligations to the extent Aytu fails to make the required payments. The future Make-Whole Payments to be made by Aytu are unknown as the amount owed to TRIS is dependent on the number of units sold. Possible Future Milestone Payments for In-Licensed Compounds General The Company is a party to license and development agreements with various third parties, which contain future payment obligations such as royalties and milestone payments (discussed further below). The Company recognizes a liability (and related expense) for each milestone if and when such milestone is probable and can be reasonably estimated. As typical in the biotechnology industry, each milestone has its own unique risks that the Company evaluates when determining the probability of achieving each milestone and the probability of success evolves over time as the programs progress and additional information is obtained. The Company considers numerous factors when evaluating whether a given milestone is probable including (but not limited to) the regulatory pathway, development plan, ability to dedicate sufficient funding to reach a given milestone and the probability of success. AVTX-002 KKC License Agreement On March 25, 2021, the Company entered into a license agreement with Kyowa Kirin Co., Ltd. (“KKC”) for exclusive worldwide rights to develop, manufacture and commercialize AVTX-002, KKC’s first-in-class fully human anti-LIGHT (TNFSF14) monoclonal antibody for all indications (the “KKC License Agreement”). The KKC License Agreement replaced the Amended and Restated Clinical Development and Option Agreement between the Company and KKC dated May 28, 2020. Under the KKC License Agreement, the Company paid KKC an upfront license fee equal to $10.0 million. The Company is also required to pay KKC up to $112.5 million based on the achievement of specified development and regulatory milestones. Upon commercialization, the Company is required to pay KKC sales-based milestones aggregating up to $75.0 million tied to the achievement of annual net sales targets. Additionally, the Company is required to pay KKC royalties during a country-by-country royalty term equal to a mid-teen percentage of annual net sales. The Company is required to pay KKC a double-digit percentage (less than 30%) of the payments that the Company receives from sublicensing of its rights under the KKC License Agreement, subject to certain exclusions. Avalo is responsible for the development and commercialization of AVTX-002 in all indications worldwide (other than the option in the KKC License Agreement that, upon exercise by KKC, allows KKC to develop, manufacture and commercialize AVTX-002 in Japan). No expense related to the KKC License Agreement was recognized in the nine months ended September 30, 2022. The Company recognized the upfront license fee of $10.0 million within research and development expenses in the nine months ended September 30, 2021. There has been no cumulative expense recognized as of September 30, 2022 related to the milestones under this license agreement. The Company will continue to monitor the milestones at each reporting period. AVTX-006 Astellas License Agreement The Company has an exclusive license agreement with OSI Pharmaceuticals, LLC, an indirect wholly owned subsidiary of Astellas Pharma, Inc. (“Astellas”), for the worldwide development and commercialization of the novel, second generation mTORC1/2 inhibitor (AVTX-006). Under the terms of the license agreement, there was an upfront license fee of $0.5 million. The Company is required to pay Astellas up to $5.5 million based on the achievement of specified development and regulatory milestones. The Company is also required to pay Astellas a tiered mid-to-high single digit percentage of the payments that Avalo receives from sublicensing of its rights under the Astellas license agreement, subject to certain exclusions. Upon commercialization, the Company is required to pay Astellas royalties during a country-by-country royalty term equal to a tiered mid-to-high single digit percentage of annual net sales. Avalo is fully responsible for the development and commercialization of the program. No expense related to this license agreement was recognized in the nine months ended September 30, 2022. There has been $0.5 million of cumulative expense recognized as of September 30, 2022 related to the milestones under this license agreement, which was recognized in the nine months ended September 30, 2021. The Company will continue to monitor the remaining milestones at each reporting period. AVTX-008 Sanford Burnham Prebys License Agreement On June 22, 2021, the Company entered into an Exclusive Patent License Agreement with Sanford Burnham Prebys Medical Discovery Institute (the “Sanford Burnham Prebys License Agreement”) under which the Company obtained an exclusive license to a portfolio of issued patents and patent applications covering an immune checkpoint program (AVTX-008). Under the terms of the agreement, the Company incurred an upfront license fee of $0.4 million, as well as patent costs of $0.5 million. The Company is required to pay Sanford Burnham Prebys up to $24.2 million based on achievement of specified development and regulatory milestones. Upon commercialization, the Company is required to pay Sanford Burnham Prebys sales-based milestone payments aggregating up to $50.0 million tied to annual net sales targets. Additionally, the Company is required to pay Sanford Burnham Prebys royalties during a country-by-country royalty term equal to a low-to-mid single digit percentage of annual net sales. The Company is also required to pay Sanford Burnham Prebys a tiered low-double digit percentage of the payments that Avalo receives from sublicensing of its rights under the Sanford Burnham Prebys License Agreement, subject to certain exclusions. Avalo is fully responsible for the development and commercialization of the program. No expense related to the Sanford Burnham Prebys License Agreement was recognized in the nine months ended September 30, 2022. The Company recognized the upfront license fee of $0.4 million within research and development expenses and the upfront patent expense of $0.5 million within selling, general and administrative expenses in the nine months ended September 30, 2021. There has been no cumulative expense recognized as of September 30, 2022 related to the milestones under the Sanford Burnham Prebys License Agreement. The Company will continue to monitor the milestones at each reporting period. Possible Future Milestone Proceeds for Out-Licensed Compounds AVTX-301 Out-License On May 28, 2021, the Company out-licensed its rights in respect of its non-core asset, AVTX-301, to Alto Neuroscience, Inc. (“Alto”). The Company initially in-licensed the compound from an affiliate of Merck & Co., Inc. (“Merck”) in 2013. Under the out-license agreement, the Company received a mid-six digit upfront payment from Alto. The Company is also eligible to receive up to $18.6 million based on the achievement of specified development, regulatory and commercial sale milestones (net of the payments due to Merck pursuant to the original license agreement, which Alto is responsible for). Additionally, the Company is entitled to a less than single digit percentage royalty based on annual net sales. Alto is fully responsible for the development and commercialization of the program. Avalo recognized the upfront fee as license revenue in the nine months ended September 30, 2021. The Company has not recognized any milestones as of September 30, 2022. AVTX-406 License Assignment On June 9, 2021, the Company assigned its rights, title, interest, and obligations under an in-license covering its non-core asset, AVTX-406, to ES Therapeutics, LLC (“ES”), an affiliate of Armistice. The transaction with ES was approved in accordance with Avalo’s related party transaction policy. The Company initially in-licensed the compound from Merck in 2013. Under the assignment agreement, the Company received a low-six digit upfront payment from ES. The Company is also eligible to receive up to $6.0 million based on the achievement of specified development and regulatory milestones. Upon commercialization, the Company is eligible to receive sales-based milestone payments aggregating up to $20.0 million tied to annual net sales targets. ES is fully responsible for the development and commercialization of the program. Avalo is no longer responsible for future milestones or royalties under the original license with Merck. Avalo recognized the upfront fee as license revenue in the nine months ended September 30, 2021. The Company has not recognized any milestones as of September 30, 2022. Acquisition Related and Related Party Contingent Liabilities Aevi Merger Possible Future Milestone Payments In the first quarter of 2020, the Company consummated its merger with Aevi Genomic Medicine Inc. (“Aevi”), in which Avalo acquired the rights to AVTX-002, AVTX-006 and AVTX-007 (the “Merger” or the “Aevi Merger”). A portion of the consideration for the Aevi Merger included two future contingent development milestones worth up to an additional $6.5 million, payable in either shares of Avalo’s common stock or cash, at the election of Avalo. The first milestone was the enrollment of a patient in a Phase 2 study related to AVTX-002 (for treatment of pediatric onset Crohn’s disease), AVTX-006 (for treatment of any indication) or AVTX-007 (for treatment of any indication) prior to February 3, 2022, which would have resulted in a milestone payment of $2.0 million. The Company did not meet the first milestone prior to February 3, 2022. Therefore, no contingent consideration related to this milestone was recognized as of September 30, 2022 and no future contingent consideration will be recognized. The second milestone is the receipt of NDA approval for either AVTX-006 or AVTX-007 from the FDA on or prior to February 3, 2025. If this milestone is met, the Company is required to make a milestone payment of $4.5 million. The contingent consideration related to the second development milestone will be recognized if and when such milestone is probable and can be reasonably estimated. No contingent consideration related to the development milestone has been recognized as of September 30, 2022. The Company will continue to monitor the second development milestone at each reporting period. AVTX-006 Royalty Agreement with Certain Related Parties In July 2019, Aevi entered into a royalty agreement, and liabilities thereunder were assumed by the Company upon closing the Aevi Merger in February 2020. The royalty agreement provided certain Aevi investors, including LeoGroup Private Investment Access, LLC on behalf of Garry Neil, the Company’s Chief Executive Officer, and Mike Cola, the Company’s former Chief Executive Officer (collectively, the “Investors”), a royalty stream, in exchange for a one-time aggregate payment of $2.0 million (the “Royalty Agreement”). Pursuant to the Royalty Agreement, the Investors will be entitled collectively to an aggregate amount equal to a low-single digit percentage of the aggregate net sales of the Company’s second generation mTORC1/2 inhibitor, AVTX-006. At any time beginning three years after the date of the first public launch of AVTX-006, Avalo may exercise, at its sole discretion, a buyout option that terminates any further obligations under the Royalty Agreement in exchange for a payment to the Investors of an aggregate of 75% of the net present value of the royalty payments. A majority of the independent members of the board of directors and the audit committee of Aevi approved the Royalty Agreement. Avalo assumed this Royalty Agreement upon closing of the Aevi Merger and it is recorded as a royalty obligation within the Company's accompanying condensed consolidated balance sheet as of September 30, 2022. Because there is a significant related party relationship between the Company and the Investors, the Company has treated its obligation to make royalty payments under the Royalty Agreement as an implicit obligation to repay the funds advanced by the Investors. As the Company makes royalty payments in accordance with the Royalty Agreement, it will reduce the liability balance. At the time that such royalty payments become probable and estimable, and if such amounts exceed the liability balance, the Company will impute interest accordingly on a prospective basis based on such estimates, which will result in a corresponding increase in the liability balance. Ichorion Asset Acquisition Possible Future Milestone Payments In September 2018, the Company acquired Ichorion Therapeutics, Inc. including acquiring three compounds for inherited metabolic disorders known as CDGs (AVTX-801, AVTX-802 and AVTX-803) and one other preclinical compound. Consideration for the transaction included shares of Avalo common stock and three future contingent development milestones for the acquired compounds worth up to an additional $15.0 million, payable in either shares of Avalo’s common stock or cash, at the election of Avalo. The first and second milestones were marketing approval of the first and second product, respectively, by the FDA on or prior to December 31, 2021, which would have resulted in milestone payments of $6.0 million and $5.0 million, respectively. The Company did not meet the first or second milestone as of December 31, 2021. As a result, no contingent consideration related to these milestones was recognized as of September 30, 2022 and no future contingent consideration will be recognized. |
Subsequent Events
Subsequent Events | 9 Months Ended |
Sep. 30, 2022 | |
Subsequent Events [Abstract] | |
Subsequent Events | Subsequent Events On November 4, 2022, Avalo entered into an agreement to sell its economic rights to future payments for previously out-licensed assets including AVTX-007, AVTX-501, and AVTX-611 to ES Therapeutics, LLC (“ES”), an affiliate of Armistice, in exchange for $5.0 million, payable upon closing (the “ES Transaction”). The ES Transaction is expected to close in November 2022. The ES Transaction was approved in accordance with Avalo’s related party transaction policy. The Company will evaluate the accounting impact of the transaction in the fourth quarter of 2022. Upon closing of the ES Transaction, the Company will no longer be entitled to receive the possible future milestones and royalties related to AVTX-007, AVTX-501 and AVTX-611, as discussed further below: AVTX-007 On July 29, 2022, Avalo entered into a license agreement with Apollo pursuant to which the Company granted Apollo a worldwide, exclusive license to research, develop, manufacture and commercialize AVTX-007. Upon closing of the ES Transaction, the future economic rights to milestones and royalties for AVTX-007 under the Apollo License Agreement will be transferred to ES. The program was originally licensed to Avalo from MedImmune Limited, a subsidiary of AstraZeneca plc (“MedImmune”), and such license was transferred to Apollo. Avalo is not responsible for future milestone or royalties under the original license with MedImmune. AVTX-501 In 2017, Avalo sold its worldwide rights to AVTX-501 to Janssen Pharmaceuticals, Inc. Upon closing of the ES Transaction, the future economic rights to milestones for AVTX-501 will be transferred to ES. The Company had initially in-licensed the compound from Eli Lilly Company (“Lilly”). Avalo is not responsible for future milestones or royalties under the original license with Lilly. AVTX-611 In 2019, Avalo assigned its rights, title, interest and obligations under an in-license covering its non-core asset, AVTX-611, to ES. Upon closing of the ES Transaction, Avalo will waive all rights, including payments due to the Company from ES, under the original license agreement. |
Basis of Presentation and Sig_2
Basis of Presentation and Significant Accounting Policies (Policies) | 9 Months Ended |
Sep. 30, 2022 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation The Company’s unaudited condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”). Any reference in these notes to applicable guidance is meant to refer to the authoritative GAAP as found in the Accounting Standards Codification (“ASC”) and Accounting Standards Updates (“ASU”) of the Financial Accounting Standards Board (“FASB”). In the opinion of management, the accompanying unaudited condensed consolidated financial statements include all adjustments, consisting of normal recurring adjustments, which are necessary to present fairly the Company’s financial position, results of operations, and cash flows. The condensed consolidated balance sheet at December 31, 2021 has been derived from audited financial statements at that date. The interim results of operations are not necessarily indicative of the results that may occur for the full fiscal year. Certain information and footnote disclosure normally included in the financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to instructions, rules, and regulations prescribed by the United States Securities and Exchange Commission (“SEC”). The Company believes that the disclosures provided herein are adequate to make the information presented not misleading when these unaudited condensed consolidated financial statements are read in conjunction with the December 31, 2021 audited consolidated financial statements. In the second quarter of 2022, the Company concluded that it would include sales and marketing expenses within the selling, general and administrative line in the Company’s condensed consolidated statement of operations. The Company reclassified $0.7 million and $2.0 million from sales and marketing expense to selling, general and administrative expense for the three and nine months ended September 30, 2021, respectively, to conform with the current period presentation. Unless otherwise indicated, all amounts in the following tables are in thousands except share and per share amounts. |
Net (Loss) Income Per Share (Ta
Net (Loss) Income Per Share (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Earnings Per Share [Abstract] | |
Schedule of the Computation of Basic and Diluted Net Loss Per Share of Common Stock | The following tables set forth the computation of basic and diluted net (loss) income per share of common stock for the three and nine months ended September 30, 2022 and three months ended September 30, 2021, and common stock and preferred stock for the nine months ended September 30, 2021 (in thousands, except share and per share amounts): Three Months Ended September 30, 2022 Common stock Basic income per share: Net income $ 3,192 Weighted average shares 9,413,466 Basic net income per share $ 0.34 Diluted income per share: Net income $ 3,192 Weighted average shares - basic 9,413,466 Effect of dilutive securities: Potentially dilutive shares 166 Weighted average shares - diluted 9,413,632 Diluted net income per share $ 0.34 Nine Months Ended September 30, 2022 Common stock Net loss $ (31,846) Weighted average shares 9,404,679 Basic and diluted net loss per share $ (3.39) Three Months Ended September 30, 2021 Common stock Continuing Operations Discontinued Operations Allocation of undistributed net (loss) income $ (17,471) $ 76 Weighted average shares 8,374,200 8,374,200 Basic and diluted net (loss) income per share $ (2.09) $ 0.01 Nine Months Ended September 30, 2021 Common stock Preferred stock Continuing Operations Discontinued Operations Continuing Operations Discontinued Operations Allocation of undistributed net (loss) income $ (63,602) $ 37 $ (1,616) $ 1 Weighted average shares 7,927,152 7,927,152 483,517 483,517 Basic and diluted net (loss) income per share $ (8.02) $ 0.00 $ (3.34) $ 0.00 |
Schedule of Anti-dilutive Securities Excluded From Computation of Diluted Weighted Shares Outstanding | The following outstanding securities have been excluded from the computation of diluted weighted shares outstanding for the three and nine months ended September 30, 2022 and 2021, as they could have been anti-dilutive: Three and Nine Months Ended September 30, 2022 2021 Stock options 1,260,906 1,122,785 Warrants on common stock 1 366,990 367,186 Restricted Stock Units — 6,493 1 The weighted average number of common shares outstanding as of September 30, 2021 included the weighted average effect of the 139,747 pre-funded warrants issued in connection with the underwritten public offering that closed in January 2021 because the exercise of such warrants requires only nominal consideration ($0.012 per share exercise price for each pre-funded warrant). During 2021, the holder exercised 25,740 of the pre-funded warrants. As of September 30, 2022, the weighted average number of common shares outstanding included the weighted average effect of the remaining 114,007 pre-funded warrants outstanding. These pre-funded warrants are not included in the table above. |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Fair Value Disclosures [Abstract] | |
Schedule of Assets and Liabilities That Are Measured at Fair Value on a Recurring Basis | The following table presents, for each of the fair value hierarchy levels required under ASC 820, the Company’s assets and liabilities that are measured at fair value on a recurring basis (in thousands): September 30, 2022 Fair Value Measurements Using Quoted prices in Significant other Significant active markets for observable unobservable identical assets inputs inputs (Level 1) (Level 2) (Level 3) Assets Investments in money market funds* $ 16,079 $ — $ — December 31, 2021 Fair Value Measurements Using Quoted prices in Significant other Significant active markets for observable unobservable identical assets inputs inputs (Level 1) (Level 2) (Level 3) Assets Investments in money market funds* $ 54,010 $ — $ — *Investments in money market funds are reflected in cash and cash equivalents on the accompanying condensed consolidated balance sheets. |
Leases (Tables)
Leases (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Leases [Abstract] | |
Assets and Liabilities Lessee | Supplemental balance sheet information related to the leased properties include (in thousands): As of September 30, 2022 December 31, 2021 Property and equipment, net $ 1,813 $ 2,001 Accrued expenses and other current liabilities $ 526 $ 485 Other long-term liabilities 1,791 2,018 Total operating lease liabilities $ 2,317 $ 2,503 |
Lease, Cost | The components of lease expense for the three and nine months ended September 30, 2022 and 2021 were as follows (in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2022 2021 2022 2021 Operating lease cost* $ 134 $ 97 $ 373 $ 287 |
Lessee, Operating Lease, Liability, Maturity | The following table shows a maturity analysis of the operating lease liabilities as of September 30, 2022 (in thousands): Undiscounted Cash Flows October 1, 2022 through December 31, 2022 $ 130 2023 528 2024 537 2025 547 2026 557 2027 258 Thereafter 426 Total lease payments $ 2,983 Less implied interest (666) Total $ 2,317 |
Accrued Expenses and Other Cu_2
Accrued Expenses and Other Current Liabilities (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Accrued Liabilities and Other Liabilities [Abstract] | |
Schedule of Accrued Expenses and Other Current Liabilities | Accrued expenses and other current liabilities as of September 30, 2022 and December 31, 2021 consisted of the following (in thousands): As of September 30, 2022 December 31, 2021 Research and development $ 7,094 $ 8,221 Compensation and benefits 2,972 4,310 Selling, general and administrative 903 1,386 Commercial operations 1,798 1,733 Royalty payment 399 375 Lease liability, current 526 485 Other 4 9 Total accrued expenses and other current liabilities $ 13,696 $ 16,519 |
Notes Payable (Tables)
Notes Payable (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Debt Disclosure [Abstract] | |
Schedule of Debt | Balance sheet information related to the note payable for the Notes is as follows (in thousands): As of September 30, 2022 December 31, 2021 Maturity Initial Note 12,139 20,600 January 2025 Second Note 6,070 10,300 February 2025 Third Note 3,035 5,150 April 2025 Notes payable, gross 1 21,244 36,050 Less: Unamortized debt discount and issuance costs 2,178 3,217 Carrying value of notes payable 19,066 32,833 Less: Current portion 2,564 — Carrying value of notes payable, non-current 16,502 32,833 1 Balance includes $1.1 million final payment fee for the Notes, which represents 3% of the original principal loan amount. |
Schedule of Estimated Future Principal Payments | As of September 30, 2022, the estimated future principal payments due on the Notes were as follows (in thousands): As of September 30, 2022 2022 $ — 2023 5,930 2024 13,463 2025 1,851 Total principal payments 1 $ 21,244 1 Balance includes $1.1 million final payment fee, which represents 3% of the original principal loan amount. |
Capital Structure (Tables)
Capital Structure (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Equity [Abstract] | |
Schedule of Outstanding Common Stock Warrants | At September 30, 2022, the following common stock warrants were outstanding: Number of common shares Exercise price Expiration underlying warrants per share date 333,334 $ 150.00 June 2024 114,007 $ 0.012 — 33,656 $ 31.20 June 2031 480,997 |
Stock Based Compensation (Table
Stock Based Compensation (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Share-Based Payment Arrangement [Abstract] | |
Schedule of Stock-based Compensation Expense | The amount of stock-based compensation expense recognized for the three and nine months ended September 30, 2022 and 2021 was as follows (in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2022 2021 2022 2021 Research and development $ 279 $ 480 $ 931 $ 1,244 Selling, general and administrative 452 1,278 5,780 5,036 Total stock-based compensation $ 731 $ 1,758 $ 6,711 $ 6,280 |
Summary of Option Activity | A summary of option activity for the nine months ended September 30, 2022 is as follows: Options Outstanding Number of shares Weighted average exercise price per share Weighted average grant date fair value per share Weighted average remaining contractual term (in years) Balance at December 31, 2021 1,054,277 $ 44.26 $ 27.45 8.1 Granted 447,022 $ 9.19 $ 6.59 Forfeited (262,852) $ 30.14 $ 20.14 Expired (60,876) $ 53.48 $ 35.76 Balance at September 30, 2022 1,177,571 $ 33.62 $ 20.72 6.4 Exercisable at September 30, 2022 713,994 $ 44.28 $ 26.55 4.7 |
Schedule of Fair Value Assumptions for Options | The following table shows the assumptions used to compute stock-based compensation expense for stock options with service-based vesting conditions granted under the Black-Scholes valuation model for the nine months ended September 30, 2022: Service-based options Expected term of option (in years) 5 - 6.25 Expected stock price volatility 84.0% - 93.5% Risk-free interest rate 1.50% - 4.06% Expected annual dividend yield 0% |
Business (Details)
Business (Details) $ in Thousands | 1 Months Ended | 3 Months Ended | 9 Months Ended | ||||||
Jul. 07, 2022 | Jul. 31, 2022 USD ($) | Jun. 30, 2022 USD ($) | Sep. 30, 2022 USD ($) | Jun. 30, 2022 USD ($) | Sep. 30, 2021 USD ($) | Sep. 30, 2022 USD ($) | Sep. 30, 2021 USD ($) | Dec. 31, 2021 USD ($) | |
Debt Instrument [Line Items] | |||||||||
Stock split, conversion ratio | 0.0833 | ||||||||
Cash and cash equivalents | $ 16,943 | $ 71,506 | $ 16,943 | $ 71,506 | $ 54,585 | ||||
Net loss | (3,192) | $ 17,395 | 31,846 | 65,180 | |||||
Net cash used in operating activities | 22,811 | 53,793 | |||||||
Accumulated deficit | 294,012 | 294,012 | 262,166 | ||||||
Proceeds received from license and assignment agreement | $ 14,500 | ||||||||
Prepayment on Notes | 14,806 | $ 0 | |||||||
Horizon & Powerscourt Notes | Notes Payable | |||||||||
Debt Instrument [Line Items] | |||||||||
Prepayment on Notes | $ 15,000 | $ 15,000 | |||||||
Repayment of debt, principal | $ 14,800 | $ 14,800 | |||||||
Outstanding balance | $ 19,066 | $ 19,066 | $ 32,833 |
Basis of Presentation and Sig_3
Basis of Presentation and Significant Accounting Policies (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended |
Sep. 30, 2021 | Sep. 30, 2021 | |
Accounting Policies [Abstract] | ||
Selling, general and administrative | $ 0.7 | $ 2 |
Revenue (Details)
Revenue (Details) - USD ($) $ in Thousands | 1 Months Ended | 3 Months Ended | 9 Months Ended | 15 Months Ended | 27 Months Ended | |||||
Jul. 01, 2021 | Jul. 31, 2022 | Sep. 30, 2022 | Jun. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Dec. 31, 2024 | Dec. 31, 2021 | |
Disaggregation of Revenue [Line Items] | ||||||||||
Proceeds received from license and assignment agreement | $ 14,500 | |||||||||
Total revenue | $ 14,949 | $ 1,350 | $ 17,155 | $ 5,179 | ||||||
Deferred revenue | 442 | 442 | $ 442 | $ 0 | ||||||
Amount fully reserved | 1,000 | 0 | ||||||||
Discontinued Operations, Disposed of by Sale | Pediatric Portfolio | ||||||||||
Disaggregation of Revenue [Line Items] | ||||||||||
Proceeds from divestiture of businesses | $ 2,200 | 2,000 | ||||||||
Total receivable balance | 1,800 | 1,800 | 1,800 | |||||||
Amount fully reserved | 1,000 | 1,000 | ||||||||
Remaining receivable balance | 800 | 800 | $ 800 | |||||||
Forecast | Discontinued Operations, Disposed of by Sale | Pediatric Portfolio | ||||||||||
Disaggregation of Revenue [Line Items] | ||||||||||
Proceeds from divestiture of businesses | $ 1,000 | |||||||||
Product Revenue | ||||||||||
Disaggregation of Revenue [Line Items] | ||||||||||
Total revenue | 432 | $ 1,350 | 2,638 | $ 4,554 | ||||||
Millipred | Teva | ||||||||||
Disaggregation of Revenue [Line Items] | ||||||||||
Percent of net profit for installment payments | 50% | |||||||||
Installment payment | $ 500 | |||||||||
Royalty expense | $ 400 | $ 1,400 | ||||||||
Sales Revenue | Customer Concentration Risk | Major Customer Number One | ||||||||||
Disaggregation of Revenue [Line Items] | ||||||||||
Concentration risk percentage | 65% | 72% | ||||||||
Sales Revenue | Customer Concentration Risk | Major Customer Number Two | ||||||||||
Disaggregation of Revenue [Line Items] | ||||||||||
Concentration risk percentage | 35% | 28% |
Net (Loss) Income Per Share - N
Net (Loss) Income Per Share - Narrative (Details) | 9 Months Ended | |||
Aug. 08, 2022 shares | Sep. 30, 2022 class_of_stock | Sep. 30, 2021 shares | ||
Subsidiary, Sale of Stock [Line Items] | ||||
Number of classes of stock outstanding | class_of_stock | 2 | |||
Preferred stock conversion ratio | 2.38 | |||
Preferred Stock | ||||
Subsidiary, Sale of Stock [Line Items] | ||||
Conversion to common stock (in shares) | (1,257,143) | |||
Common stock | ||||
Subsidiary, Sale of Stock [Line Items] | ||||
Conversion to common stock (in shares) | 523,810 | 523,810 | [1] | |
Series B Preferred Stock | Preferred Stock | ||||
Subsidiary, Sale of Stock [Line Items] | ||||
Shares converted (in shares) | 1,257,143 | |||
[1]Amounts for prior periods presented have been retroactively adjusted to reflect the 1-for-12 reverse stock split effected on July 7, 2022. |
Net (Loss) Income Per Share - S
Net (Loss) Income Per Share - Schedule of Net Loss Per Share (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 9 Months Ended | |||||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | ||||
Basic income per share: | |||||||
Net income (loss) | $ 3,192 | $ (17,395) | $ (31,846) | $ (65,180) | |||
Diluted income per share: | |||||||
Net income (loss) | $ 3,192 | (17,395) | $ (31,846) | (65,180) | |||
Potentially dilutive shares (in shares) | 166 | ||||||
Common Stock | |||||||
Basic income per share: | |||||||
Net income (loss) | $ 3,192 | ||||||
Allocation of undistributed net loss, continuing operations, basic | (17,471) | (63,602) | |||||
Allocation of undistributed net loss, continuing operations, diluted | (17,471) | (63,602) | |||||
Allocation of undistributed net loss, discontinued operations, basic | (17,395) | 76 | 37 | ||||
Allocation of undistributed net loss, discontinued operations, diluted | (17,395) | $ 76 | $ 37 | ||||
Diluted income per share: | |||||||
Net income (loss) | $ 3,192 | ||||||
Weighted average shares, basic (in shares) | 9,413,466 | 8,374,200 | 9,404,679 | 7,927,152 | |||
Weighted average shares, diluted (in shares) | 9,413,632 | 8,374,200 | 9,404,679 | 7,927,152 | |||
Basic net loss per share, continuing operations (in dollars per share) | [1] | $ 0.34 | $ (2.09) | $ (3.39) | $ (8.02) | ||
Diluted net loss per share, continuing operations (in dollars per share) | 0.34 | [1] | (2.09) | (3.39) | (8.02) | ||
Basic net loss per share, discontinued operations (in dollars per share) | 0 | 0.01 | 0 | 0 | [1] | ||
Diluted net loss per share, discontinued operations (in dollars per share) | $ 0 | $ 0.01 | $ 0 | $ 0 | |||
Preferred Stock | |||||||
Basic income per share: | |||||||
Allocation of undistributed net loss, continuing operations, basic | $ (1,616) | ||||||
Allocation of undistributed net loss, continuing operations, diluted | (1,616) | ||||||
Allocation of undistributed net loss, discontinued operations, basic | 1 | ||||||
Allocation of undistributed net loss, discontinued operations, diluted | $ 1 | ||||||
Diluted income per share: | |||||||
Weighted average shares, basic (in shares) | 483,517 | ||||||
Weighted average shares, diluted (in shares) | 483,517 | ||||||
Basic net loss per share, continuing operations (in dollars per share) | [1] | $ (3.34) | |||||
Diluted net loss per share, continuing operations (in dollars per share) | [1] | (3.34) | |||||
Basic net loss per share, discontinued operations (in dollars per share) | [1] | 0 | |||||
Diluted net loss per share, discontinued operations (in dollars per share) | [1] | $ 0 | |||||
[1]for prior periods presented have been retroactively adjusted to reflect the 1-for-12 reverse stock split effected on July 7, 2022. |
Net (Loss) Income Per Share - A
Net (Loss) Income Per Share - Anti-dilutive Securities (Details) - $ / shares | 3 Months Ended | 9 Months Ended | ||||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | Dec. 31, 2021 | Jan. 31, 2021 | |
Anti-dilutive securities | ||||||
Weighted average number of shares issuable (in shares) | 139,747 | |||||
Exercise price per share (in dollars per share) | $ 0.012 | $ 0.012 | $ 0.012 | |||
Pre-funded warrants exercised (in shares) | 25,740 | |||||
Nantahala | ||||||
Anti-dilutive securities | ||||||
Warrants outstanding (in shares) | 114,007 | 114,007 | ||||
Stock options | ||||||
Anti-dilutive securities | ||||||
Anti-dilutive securities excluded from the computation of diluted weighted shares outstanding (in shares) | 1,260,906 | 1,122,785 | 1,260,906 | 1,122,785 | ||
Warrants on common stock | ||||||
Anti-dilutive securities | ||||||
Anti-dilutive securities excluded from the computation of diluted weighted shares outstanding (in shares) | 366,990 | 367,186 | 366,990 | 367,186 | ||
Restricted Stock Units | ||||||
Anti-dilutive securities | ||||||
Anti-dilutive securities excluded from the computation of diluted weighted shares outstanding (in shares) | 0 | 6,493 | 0 | 6,493 |
Fair Value Measurements - Sched
Fair Value Measurements - Schedule of Assets and Liabilities that are Measured at Fair Value on a Recurring Basis (Details) - Recurring Basis - USD ($) $ in Thousands | Sep. 30, 2022 | Dec. 31, 2021 |
Quoted prices in active markets for identical assets (Level 1) | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investments in money market funds | $ 16,079 | $ 54,010 |
Significant other observable inputs (Level 2) | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investments in money market funds | 0 | 0 |
Significant unobservable inputs (Level 3) | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investments in money market funds | $ 0 | $ 0 |
Leases - Narrative (Details)
Leases - Narrative (Details) $ in Millions | 9 Months Ended |
Sep. 30, 2022 USD ($) property renewal_option | |
Lessee, Lease, Description [Line Items] | |
Number of leased properties | property | 2 |
Remaining lease team | 5 years 9 months 18 days |
Discount rate | 9.20% |
Building | Maryland | |
Lessee, Lease, Description [Line Items] | |
Annual base rent | $ 0.2 |
Annual rent increase | 2.50% |
Rent abatement period | 12 months |
Lease term of contract | 10 years |
Number of renewal options | renewal_option | 2 |
Renewal term | 5 years |
Building | Pennsylvania | |
Lessee, Lease, Description [Line Items] | |
Annual rent increase | 2.40% |
Rent abatement period | 3 months |
Lease term of contract | 5 years 3 months |
Lessee, operating lease, annual base rent | $ 0.2 |
Operating lease, expense | $ 0.1 |
Leases - Assets and Liabilities
Leases - Assets and Liabilities (Details) - USD ($) $ in Thousands | Sep. 30, 2022 | Dec. 31, 2021 |
Leases [Abstract] | ||
Operating Lease, Right-of-Use Asset, Statement of Financial Position [Extensible Enumeration] | Property and equipment, net | Property and equipment, net |
Property and equipment, net | $ 1,813 | $ 2,001 |
Operating Lease, Liability, Current, Statement of Financial Position [Extensible Enumeration] | Accrued expenses and other current liabilities | Accrued expenses and other current liabilities |
Accrued expenses and other current liabilities | $ 526 | $ 485 |
Operating Lease, Liability, Noncurrent, Statement of Financial Position [Extensible Enumeration] | Other long-term liabilities | Other long-term liabilities |
Other long-term liabilities | $ 1,791 | $ 2,018 |
Total operating lease liabilities | $ 2,317 | $ 2,503 |
Leases - Lease Cost (Details)
Leases - Lease Cost (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Leases [Abstract] | ||||
Operating lease cost | $ 134 | $ 97 | $ 373 | $ 287 |
Leases - Lease Maturity (Detail
Leases - Lease Maturity (Details) - USD ($) $ in Thousands | Sep. 30, 2022 | Dec. 31, 2021 |
Leases [Abstract] | ||
October 1, 2022 through December 31, 2022 | $ 130 | |
2023 | 528 | |
2024 | 537 | |
2025 | 547 | |
2026 | 557 | |
2027 | 258 | |
Thereafter | 426 | |
Total lease payments | 2,983 | |
Less implied interest | (666) | |
Total operating lease liabilities | $ 2,317 | $ 2,503 |
Accrued Expenses and Other Cu_3
Accrued Expenses and Other Current Liabilities - Schedule of Accrued Expenses and Other Current Liabilities (Details) - USD ($) $ in Thousands | Sep. 30, 2022 | Dec. 31, 2021 |
Accrued Liabilities and Other Liabilities [Abstract] | ||
Research and development | $ 7,094 | $ 8,221 |
Compensation and benefits | 2,972 | 4,310 |
Selling, general and administrative | 903 | 1,386 |
Commercial operations | 1,798 | 1,733 |
Royalty payment | 399 | 375 |
Lease liability, current | 526 | 485 |
Other | 4 | 9 |
Total accrued expenses and other current liabilities | $ 13,696 | $ 16,519 |
Cost Reduction Plan (Details)
Cost Reduction Plan (Details) - Employee Severance - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended |
Mar. 31, 2022 | Sep. 30, 2022 | |
Restructuring Plan, One-Time Termination Benefits | ||
Restructuring Cost and Reserve [Line Items] | ||
Restructuring charges | $ 1.5 | |
Payments for restructuring | $ 1.2 | |
Share-based payment arrangement, accelerated cost | 0.4 | |
Restructuring Plan, One-Time Termination Benefits | Minimum | ||
Restructuring Cost and Reserve [Line Items] | ||
Payment term | 2 months | |
Restructuring Plan, One-Time Termination Benefits | Maximum | ||
Restructuring Cost and Reserve [Line Items] | ||
Payment term | 6 months | |
Separation From Certain Section 16 Officers | ||
Restructuring Cost and Reserve [Line Items] | ||
Restructuring charges | $ 1.7 | |
Share-based payment arrangement, accelerated cost | $ 3.9 | |
Separation From Certain Section 16 Officers | Minimum | ||
Restructuring Cost and Reserve [Line Items] | ||
Payment term | 12 months | |
Separation From Certain Section 16 Officers | Maximum | ||
Restructuring Cost and Reserve [Line Items] | ||
Payment term | 18 months | |
Research and development | Restructuring Plan, One-Time Termination Benefits | ||
Restructuring Cost and Reserve [Line Items] | ||
Restructuring charges | $ 0.7 | |
Selling, general and administrative | Restructuring Plan, One-Time Termination Benefits | ||
Restructuring Cost and Reserve [Line Items] | ||
Restructuring charges | $ 0.8 |
Notes Payable - Narrative (Deta
Notes Payable - Narrative (Details) $ / shares in Units, $ in Thousands | 1 Months Ended | 3 Months Ended | 9 Months Ended | ||||||||
Sep. 29, 2021 USD ($) | Jul. 30, 2021 USD ($) | Jun. 04, 2021 USD ($) business_day $ / shares shares | Jun. 30, 2022 USD ($) | Jan. 31, 2021 $ / shares shares | Jun. 30, 2022 USD ($) | Sep. 30, 2021 USD ($) $ / shares | Jun. 30, 2021 USD ($) | Sep. 30, 2022 USD ($) | Sep. 30, 2021 USD ($) $ / shares | Dec. 31, 2021 USD ($) | |
Line of Credit Facility [Line Items] | |||||||||||
Prepayment on Notes | $ 14,806 | $ 0 | |||||||||
Exercise price per share (in dollars per share) | $ / shares | $ 0.012 | $ 0.012 | $ 0.012 | ||||||||
Warrant | |||||||||||
Line of Credit Facility [Line Items] | |||||||||||
Sale of stock (in shares) | shares | 139,747 | ||||||||||
Horizon & Powerscourt Notes | Notes Payable | |||||||||||
Line of Credit Facility [Line Items] | |||||||||||
Principal amount | $ 35,000 | ||||||||||
Proceeds from debt | $ 5,000 | $ 10,000 | $ 20,000 | $ 15,000 | |||||||
Prepayment on Notes | $ 15,000 | $ 15,000 | |||||||||
Repayment of debt, principal | $ 14,800 | $ 14,800 | |||||||||
Notes payable, outstanding | $ 21,244 | $ 36,050 | |||||||||
Debt instrument, term | 42 months | ||||||||||
Interest rate | 6.25% | ||||||||||
Interest-only payment period | 18 months | ||||||||||
Interest-only payment extension period | 24 months | ||||||||||
Number of business days required for prepayment | business_day | 10 | ||||||||||
Prepayment charges percentage | 3% | ||||||||||
Additional final payment percentage | 3% | 3% | |||||||||
Proceeds from issuance of warrants | $ 900 | ||||||||||
Debt issuance costs incurred | $ 2,100 | ||||||||||
Final payment fee | $ 1,100 | $ 1,100 | |||||||||
Effective rate | 18.70% | ||||||||||
Horizon & Powerscourt Notes | Notes Payable | Warrant | |||||||||||
Line of Credit Facility [Line Items] | |||||||||||
Sale of stock (in shares) | shares | 33,656 | ||||||||||
Exercise price per share (in dollars per share) | $ / shares | $ 31.20 | ||||||||||
Warrants or rights exercisable term | 10 years | ||||||||||
Horizon & Powerscourt Notes | Notes Payable | Prime Rate | |||||||||||
Line of Credit Facility [Line Items] | |||||||||||
Floor interest rate | 3.25% |
Notes Payable - Balance Sheet I
Notes Payable - Balance Sheet Information (Details) - Horizon & Powerscourt Notes - USD ($) $ in Thousands | Sep. 30, 2022 | Dec. 31, 2021 | Jun. 30, 2021 | Jun. 04, 2021 |
Notes Payable | ||||
Debt Instrument [Line Items] | ||||
Notes payable, gross | $ 21,244 | $ 36,050 | ||
Less: Unamortized debt discount and issuance costs | 2,178 | 3,217 | ||
Carrying value of notes payable | 19,066 | 32,833 | ||
Less: Current portion | 2,564 | 0 | ||
Carrying value of notes payable, non-current | 16,502 | 32,833 | ||
Final payment fee | $ 1,100 | $ 1,100 | ||
Additional final payment percentage | 3% | 3% | ||
Initial Note | ||||
Debt Instrument [Line Items] | ||||
Notes payable, gross | $ 12,139 | 20,600 | ||
Second Note | ||||
Debt Instrument [Line Items] | ||||
Notes payable, gross | 6,070 | 10,300 | ||
Third Note | ||||
Debt Instrument [Line Items] | ||||
Notes payable, gross | $ 3,035 | $ 5,150 |
Notes Payable - Estimated Futur
Notes Payable - Estimated Future Principal Payments (Details) - Horizon & Powerscourt Notes - Notes Payable - USD ($) $ in Thousands | Sep. 30, 2022 | Dec. 31, 2021 | Jun. 30, 2021 | Jun. 04, 2021 |
Debt Instrument [Line Items] | ||||
2022 | $ 0 | |||
2023 | 5,930 | |||
2024 | 13,463 | |||
2025 | 1,851 | |||
Total principal payments | 21,244 | $ 36,050 | ||
Final payment fee | $ 1,100 | $ 1,100 | ||
Additional final payment percentage | 3% | 3% |
Capital Structure - Narrative (
Capital Structure - Narrative (Details) $ / shares in Units, $ in Millions | 1 Months Ended | |||||||
Sep. 17, 2021 USD ($) shares | Jun. 04, 2021 $ / shares shares | Aug. 31, 2021 USD ($) shares | Jul. 31, 2021 USD ($) | Jan. 31, 2021 USD ($) $ / shares shares | Sep. 30, 2022 class_of_stock $ / shares shares | Dec. 31, 2021 $ / shares shares | Sep. 30, 2021 $ / shares | |
Class of Stock [Line Items] | ||||||||
Number of classes of stock authorized to issue | class_of_stock | 2 | |||||||
Number of shares of capital stock authorized to issue (in shares) | 205,000,000 | |||||||
Common stock, shares authorized (in shares) | 200,000,000 | 200,000,000 | ||||||
Preferred stock, shares authorized (in shares) | 5,000,000 | |||||||
Common stock, par value (in dollars per share) | $ / shares | $ 0.001 | $ 0.001 | ||||||
Preferred stock, par value per share (in dollars per share) | $ / shares | $ 0.001 | |||||||
Exercise price per share (in dollars per share) | $ / shares | $ 0.012 | $ 0.012 | ||||||
Pre-funded warrants exercised (in shares) | 25,740 | |||||||
Warrant | ||||||||
Class of Stock [Line Items] | ||||||||
Sale of stock (in shares) | 139,747 | |||||||
Horizon & Powerscourt Notes | Notes Payable | Warrant | ||||||||
Class of Stock [Line Items] | ||||||||
Sale of stock (in shares) | 33,656 | |||||||
Exercise price per share (in dollars per share) | $ / shares | $ 31.20 | |||||||
Warrants or rights exercisable term | 10 years | |||||||
Nantahala Capital Management LLC | ||||||||
Class of Stock [Line Items] | ||||||||
Percentage of ownership | 5% | |||||||
Nantahala | ||||||||
Class of Stock [Line Items] | ||||||||
Warrants outstanding (in shares) | 114,007 | |||||||
Underwritten Public Offering | ||||||||
Class of Stock [Line Items] | ||||||||
Sale of stock (in shares) | 1,200,000 | 1,200,000 | ||||||
Net proceeds | $ | $ 29 | $ 37.7 | ||||||
Underwritten Public Offering | Armistice | ||||||||
Class of Stock [Line Items] | ||||||||
Sale of stock (in shares) | 500,000 | 200,000 | ||||||
Underwritten Public Offering | Nantahala | ||||||||
Class of Stock [Line Items] | ||||||||
Sale of stock (in shares) | 100,000 | |||||||
Purchase price (in dollars per share) | $ / shares | $ 31.188 | |||||||
ATM Agreement | ||||||||
Class of Stock [Line Items] | ||||||||
Sale of stock (in shares) | 200,000 | |||||||
Net proceeds | $ | $ 5.2 | $ 50 |
Capital Structure - Warrants (D
Capital Structure - Warrants (Details) - $ / shares | Sep. 30, 2022 | Sep. 30, 2021 | Jan. 31, 2021 |
Common Stock Warrants | |||
Exercise price per share (in dollars per share) | $ 0.012 | $ 0.012 | |
Common Stock | |||
Common Stock Warrants | |||
Number of shares available under warrant (in shares) | 480,997 | ||
Common Stock Warrants Expiration Date Of June 2024 | Common Stock | |||
Common Stock Warrants | |||
Number of shares available under warrant (in shares) | 333,334 | ||
Exercise price per share (in dollars per share) | $ 150 | ||
Common Stock Warrants No Expiration | Common Stock | |||
Common Stock Warrants | |||
Number of shares available under warrant (in shares) | 114,007 | ||
Exercise price per share (in dollars per share) | $ 0.012 | ||
Common Stock Warrants Expiration June 2031 | Common Stock | |||
Common Stock Warrants | |||
Number of shares available under warrant (in shares) | 33,656 | ||
Exercise price per share (in dollars per share) | $ 31.20 |
Stock Based Compensation - Narr
Stock Based Compensation - Narrative (Details) - USD ($) $ / shares in Units, $ in Thousands | 1 Months Ended | 3 Months Ended | 9 Months Ended | ||||||||
Jan. 01, 2022 | Apr. 05, 2016 | Oct. 31, 2022 | Mar. 31, 2022 | Sep. 30, 2022 | Jun. 30, 2022 | Mar. 31, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | Dec. 31, 2021 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||
Total stock-based compensation | $ 731 | $ 1,758 | $ 6,711 | $ 6,280 | |||||||
Employee Stock Purchase Plan (ESPP) | |||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||
Common stock remaining for future issuance (in shares) | 181,028 | 181,028 | |||||||||
Purchase price of common stock, percentage | 85% | ||||||||||
Maximum portion of earning an employee may contribute to the ESPP Plan | 15% | ||||||||||
Maximum annual amount of fair market value of the company's common stock that a participant may accrue the rights to purchase | $ 25 | ||||||||||
Shares of common stock for future issuance (in shares) | 41,667 | ||||||||||
Automatic increase to shares authorized as percentage of outstanding stock at end of preceding year | 1% | ||||||||||
Increase in shares available (in shares) | 41,667 | ||||||||||
Service Based Options | |||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||
Granted (in shares) | 447,022 | ||||||||||
Total stock-based compensation | $ 700 | $ 6,600 | |||||||||
Forfeited (in shares) | 262,852 | ||||||||||
Outstanding intrinsic value | $ 0 | $ 0 | |||||||||
Options vested (in shares) | 349,405 | ||||||||||
Weighted average exercise price (in dollars per share) | $ 39.76 | $ 39.76 | |||||||||
Fair value of options vested in period | $ 9,000 | ||||||||||
Compensation not yet recognized | $ 4,800 | $ 4,800 | |||||||||
Period for recognition | 2 years 2 months 12 days | ||||||||||
Exercisable stock options (in shares) | 1,177,571 | 1,177,571 | 1,054,277 | ||||||||
Weighted average share price (in dollars per share) | $ 33.62 | $ 33.62 | $ 44.26 | ||||||||
Weighted average remaining contractual term | 8 years 1 month 6 days | 6 years 4 months 24 days | |||||||||
Service Based Options | Special Advisor To The Board | |||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||
Total stock-based compensation | $ 0 | $ 4,300 | |||||||||
Service Based Options | Employee | |||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||
Granted (in shares) | 300,000 | ||||||||||
Award vesting period | 4 years | ||||||||||
Retention Grant | Employee | |||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||
Granted (in shares) | 100,000 | ||||||||||
Reduction of Workforce Plan | |||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||
Forfeited (in shares) | 100,000 | ||||||||||
Other Terminations | |||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||
Forfeited (in shares) | 200,000 | ||||||||||
Market Based Options | |||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||
Exercisable stock options (in shares) | 100,000 | 100,000 | |||||||||
Weighted average share price (in dollars per share) | $ 39.53 | $ 39.53 | |||||||||
Weighted average remaining contractual term | 1 year 8 months 12 days | ||||||||||
Granted (in shares) | 0 | ||||||||||
Exercise of stock options (in shares) | 0 | ||||||||||
Forfeited (in shares) | 0 | ||||||||||
Restricted Stock Units | |||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||
Award vesting period | 4 years | ||||||||||
Unvested restricted stock units (in shares) | 0 | 0 | |||||||||
Vested (in shares) | 937,000 | 937,000 | |||||||||
Vested (in dollars per share) | $ 54 | $ 54 | |||||||||
Employee Stock Purchase Plan (ESPP) | |||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||
Total stock-based compensation | $ 33 | $ 117 | |||||||||
Subsequent Event | |||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||
Granted (in shares) | 200,000 | ||||||||||
2016 Plan | |||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||
Annual share reserve increase | 4% | ||||||||||
Increase in number of shares reserved for issuance (in shares) | 375,981 | ||||||||||
Common stock remaining for future issuance (in shares) | 361,892 | 361,892 | |||||||||
2016 Plan | Equity Option | |||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||
Award expiration period | 10 years | ||||||||||
2016 Plan | Equity Option | Minimum | Director | |||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||
Award vesting period | 1 year | ||||||||||
2016 Plan | Equity Option | Maximum | Director | |||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||
Award vesting period | 3 years | ||||||||||
2016 Plan | Equity Option | Maximum | Employee | |||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||
Award vesting period | 4 years | ||||||||||
2016 Plan | Subsequent Event | |||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||
Granted (in shares) | 225,000 |
Stock Based Compensation - Stoc
Stock Based Compensation - Stock-based Compensation Expense (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Total stock-based compensation | $ 731 | $ 1,758 | $ 6,711 | $ 6,280 |
Research and development | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Total stock-based compensation | 279 | 480 | 931 | 1,244 |
Selling, general and administrative | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Total stock-based compensation | $ 452 | $ 1,278 | $ 5,780 | $ 5,036 |
Stock Based Compensation - St_2
Stock Based Compensation - Stock Options With Service-based Vesting Conditions (Details) - Service Based Options - $ / shares | 3 Months Ended | 9 Months Ended |
Mar. 31, 2022 | Sep. 30, 2022 | |
Number of shares | ||
Balance, beginning of period (in shares) | 1,054,277 | 1,054,277 |
Granted (in shares) | 447,022 | |
Forfeited (in shares) | (262,852) | |
Expired (in shares) | (60,876) | |
Balance, ending of period (in shares) | 1,177,571 | |
Exercisable (in shares) | 713,994 | |
Weighted average exercise price per share | ||
Balance, beginning of period (in dollars per share) | $ 44.26 | $ 44.26 |
Granted (in dollars per share) | 9.19 | |
Forfeited (in dollars per share) | 30.14 | |
Expired (in dollars per share) | 53.48 | |
Balance, ending of period (in dollars per share) | 33.62 | |
Exercisable (in dollars per share) | 44.28 | |
Weighted average grant date fair value per share | ||
Balance, beginning of period (in dollars per share) | $ 27.45 | 27.45 |
Granted (in dollars per share) | 6.59 | |
Forfeited (in dollars per share) | 20.14 | |
Expired (in dollars per share) | 35.76 | |
Balance, ending of period (in dollars per share) | 20.72 | |
Exercisable (in dollars per share) | $ 26.55 | |
Weighted average remaining contractual term (in years) | ||
Weighted average remaining contractual term | 8 years 1 month 6 days | 6 years 4 months 24 days |
Exercisable | 4 years 8 months 12 days |
Stock Based Compensation - St_3
Stock Based Compensation - Stock-based Compensation Assumptions (Details) - Service Based Options | 9 Months Ended |
Sep. 30, 2022 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Expected annual dividend yield | 0% |
Minimum | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Expected term of option (in years) | 5 years |
Expected stock price volatility | 84% |
Risk-free interest rate | 1.50% |
Maximum | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Expected term of option (in years) | 6 years 3 months |
Expected stock price volatility | 93.50% |
Risk-free interest rate | 4.06% |
Income Taxes (Details)
Income Taxes (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Income Tax Disclosure [Abstract] | ||||
Income tax expense (benefit) | $ 5 | $ 8 | $ 20 | $ (180) |
Commitments and Contingencies (
Commitments and Contingencies (Details) $ / shares in Units, $ in Thousands | 1 Months Ended | 3 Months Ended | 6 Months Ended | 9 Months Ended | 12 Months Ended | 40 Months Ended | 64 Months Ended | |||||||||
Sep. 30, 2021 USD ($) payment | Feb. 03, 2020 USD ($) milestone | Jul. 31, 2019 USD ($) | Sep. 30, 2018 USD ($) milestone therapy | Sep. 30, 2022 USD ($) payment | Sep. 30, 2021 USD ($) payment | Jun. 30, 2022 USD ($) | Sep. 30, 2022 USD ($) payment | Sep. 30, 2021 USD ($) payment | Dec. 31, 2018 unit $ / shares | Dec. 31, 2021 USD ($) | Dec. 31, 2023 USD ($) | Jun. 22, 2021 USD ($) | Jun. 09, 2021 USD ($) | May 28, 2021 USD ($) | Mar. 25, 2021 USD ($) | |
Operating Leased Assets [Line Items] | ||||||||||||||||
Selling, general and administrative | $ 3,284 | $ 5,926 | $ 17,752 | $ 18,677 | ||||||||||||
Payment received | $ 2,000 | |||||||||||||||
Period after public launch to terminate agreement | 3 years | |||||||||||||||
Percentage of net present value of royalty payments | 75% | |||||||||||||||
Aevi | ||||||||||||||||
Operating Leased Assets [Line Items] | ||||||||||||||||
Milestone payment | 0 | |||||||||||||||
Aevi | ||||||||||||||||
Operating Leased Assets [Line Items] | ||||||||||||||||
Number of milestones | milestone | 2 | |||||||||||||||
Contingent consideration | $ 6,500 | |||||||||||||||
Ichorion | ||||||||||||||||
Operating Leased Assets [Line Items] | ||||||||||||||||
Number of milestones | milestone | 3 | |||||||||||||||
Contingent consideration | $ 15,000 | |||||||||||||||
Milestone payment | 0 | |||||||||||||||
AVTX-801, AVTX-802, And AVTX-803 | Ichorion | ||||||||||||||||
Operating Leased Assets [Line Items] | ||||||||||||||||
Number of preclinical therapies | therapy | 3 | |||||||||||||||
AVTX-913 | Ichorion | ||||||||||||||||
Operating Leased Assets [Line Items] | ||||||||||||||||
Number of preclinical therapies | therapy | 1 | |||||||||||||||
Milestone One | Aevi | ||||||||||||||||
Operating Leased Assets [Line Items] | ||||||||||||||||
Contingent consideration | 2,000 | |||||||||||||||
Milestone One | Ichorion | ||||||||||||||||
Operating Leased Assets [Line Items] | ||||||||||||||||
Milestone payment | $ 6,000 | |||||||||||||||
Milestone Two | Aevi | ||||||||||||||||
Operating Leased Assets [Line Items] | ||||||||||||||||
Contingent consideration | $ 4,500 | |||||||||||||||
Milestone Two | Ichorion | Forecast | ||||||||||||||||
Operating Leased Assets [Line Items] | ||||||||||||||||
Milestone payment | $ 5,000 | |||||||||||||||
Milestone Three | Ichorion | ||||||||||||||||
Operating Leased Assets [Line Items] | ||||||||||||||||
Milestone payment | 0 | |||||||||||||||
Milestone Three | Ichorion | Forecast | ||||||||||||||||
Operating Leased Assets [Line Items] | ||||||||||||||||
Milestone payment | $ 4,000 | |||||||||||||||
Alto | AVTX-301 Out-License | ||||||||||||||||
Operating Leased Assets [Line Items] | ||||||||||||||||
Maximum proceeds from milestones | $ 18,600 | |||||||||||||||
Revenue recognized from milestones to date | 0 | 0 | ||||||||||||||
ES | AVTX-406 License Assignment | ||||||||||||||||
Operating Leased Assets [Line Items] | ||||||||||||||||
Revenue recognized from milestones to date | 0 | 0 | ||||||||||||||
ES | Milestone One | AVTX-406 License Assignment | ||||||||||||||||
Operating Leased Assets [Line Items] | ||||||||||||||||
Maximum proceeds from milestones | $ 6,000 | |||||||||||||||
ES | Milestone Two | AVTX-406 License Assignment | ||||||||||||||||
Operating Leased Assets [Line Items] | ||||||||||||||||
Maximum proceeds from milestones | $ 20,000 | |||||||||||||||
Karbinal Agreement | TRIS Pharma | ||||||||||||||||
Operating Leased Assets [Line Items] | ||||||||||||||||
Minimum quantity required | unit | 70,000 | |||||||||||||||
Make whole payment per unit (in dollars per share) | $ / shares | $ 30 | |||||||||||||||
AVTX-002 KKC License Agreement | Kyowa Kirin Co., Ltd. (KKC) | ||||||||||||||||
Operating Leased Assets [Line Items] | ||||||||||||||||
Upfront license fee | $ 10,000 | |||||||||||||||
Percent of payments received from sublicensing | 30% | |||||||||||||||
Research and development expense | 0 | 10,000 | ||||||||||||||
Cumulative expense recognized to date | 0 | 0 | ||||||||||||||
AVTX-002 KKC License Agreement | Kyowa Kirin Co., Ltd. (KKC) | Milestone One | ||||||||||||||||
Operating Leased Assets [Line Items] | ||||||||||||||||
Maximum aggregate milestone payment | $ 112,500 | |||||||||||||||
AVTX-002 KKC License Agreement | Kyowa Kirin Co., Ltd. (KKC) | Milestone Two | ||||||||||||||||
Operating Leased Assets [Line Items] | ||||||||||||||||
Maximum aggregate milestone payment | $ 75,000 | |||||||||||||||
AVTX-006 Astellas License Agreement | Astellas Pharma, Inc. (Astellas) | ||||||||||||||||
Operating Leased Assets [Line Items] | ||||||||||||||||
Upfront license fee | 500 | 500 | ||||||||||||||
Maximum aggregate milestone payment | 5,500 | 5,500 | ||||||||||||||
Research and development expense | 0 | |||||||||||||||
Cumulative expense recognized to date | 500 | 500 | ||||||||||||||
AVTX-008 Sanford Burnham Prebys License Agreement | Sanford Burnham Prebys Medical Discovery Institute | ||||||||||||||||
Operating Leased Assets [Line Items] | ||||||||||||||||
Upfront license fee | $ 400 | |||||||||||||||
Research and development expense | 400 | 0 | 400 | |||||||||||||
Cumulative expense recognized to date | $ 0 | $ 0 | ||||||||||||||
Patent costs | 500 | |||||||||||||||
Selling, general and administrative | 500 | 500 | ||||||||||||||
AVTX-008 Sanford Burnham Prebys License Agreement | Sanford Burnham Prebys Medical Discovery Institute | Milestone One | ||||||||||||||||
Operating Leased Assets [Line Items] | ||||||||||||||||
Maximum aggregate milestone payment | 24,200 | |||||||||||||||
AVTX-008 Sanford Burnham Prebys License Agreement | Sanford Burnham Prebys Medical Discovery Institute | Milestone Two | ||||||||||||||||
Operating Leased Assets [Line Items] | ||||||||||||||||
Maximum aggregate milestone payment | $ 50,000 | |||||||||||||||
Deerfield Obligation | AYTU | ||||||||||||||||
Operating Leased Assets [Line Items] | ||||||||||||||||
Maximum potential future payments | $ 3,000 | $ 3,000 | $ 3,000 | |||||||||||||
Number of quarterly payments | payment | 6 | 1 | 6 | 1 | 6 | |||||||||||
Periodic payment | $ 500 | $ 1,000 |
Subsequent Events (Details)
Subsequent Events (Details) $ in Millions | Nov. 07, 2022 USD ($) |
Subsequent Event | Apollo | AVTX-007 Apollo License Agreement | |
Subsequent Event [Line Items] | |
Upfront license fee | $ 5 |