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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

 

FORM 10-Q

 

(Mark One)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2021

OR

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ___________________ to ___________________

Commission File Number: 001-40971

 

AURA BIOSCIENCES, INC.

(Exact Name of Registrant as Specified in its Charter)

 

 

Delaware

32-0271970

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer
Identification No.)

85 Bolton Street

Cambridge, MA

02140

(Address of principal executive offices)

(Zip Code)

Registrant’s telephone number, including area code: (617) 500-8864

 

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

 

Title of each class

 

Trading

Symbol(s)

 

Name of each exchange on which registered

Common Stock, par value $0.00001 per share

 

AURA

 

Nasdaq Global Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer

 

 

Accelerated filer

 

Non-accelerated filer

 

 

Smaller reporting company

 

 

 

 

 

Emerging growth company

 

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes No

As of November 19, 2021, the registrant had 29,210,549 shares of common stock, $0.00001 par value per share, outstanding.

 

 

 

 


 

Summary of the material risks associated with our business

 

Our business is subject to numerous material and other risks and uncertainties that you should be aware of in evaluating our business. These risks are described more fully in Part II, “Item 1A—Risk Factors,” and include, but are not limited to, the following:

We have incurred significant net losses since our inception and anticipate that we will continue to incur losses for the foreseeable future.
Raising additional capital may cause dilution to our existing stockholders, restrict our operations or require us to relinquish proprietary rights to our technologies or product candidates.
Our ability to generate revenue and achieve profitability depends significantly on our ability to achieve our objectives relating to the discovery, development and commercialization of our product candidates.
We are heavily dependent on the success of AU-011, our only product candidate to date.
If we are not able to obtain, or if there are delays in obtaining, required regulatory approvals for AU-011, we will not be able to commercialize, or will be delayed in commercializing, our product candidates, and our ability to generate revenue will be materially impaired.
We have not yet successfully initiated or completed any pivotal clinical trials nor commercialized any pharmaceutical products, which may make it difficult to evaluate our future prospects.
If we fail to develop additional product candidates, or obtain additional indications of our first product candidate our commercial opportunity could be limited.
We expect to rely on third parties to conduct our clinical trials and some aspects of our research and preclinical testing, and those third parties may not perform satisfactorily, including failing to meet deadlines for the completion of such trials, research or testing.
We currently rely on third-party contract manufacturing organizations, or CMOs, for the production of clinical supply of AU-011 and may continue to rely on CMOs for the production of commercial supply of AU-011, if approved. This reliance on CMOs increases the risk that we will not have sufficient quantities of such materials, product candidates, or any therapies that we may develop and commercialize, or that such supply will not be available to us at an acceptable cost, which could delay, prevent, or impair our development or commercialization efforts.
If AU-011 or any future product candidates do not achieve broad market acceptance, the revenue that we generate from their sales may be limited, and we may never become profitable.
If the market opportunity for AU-011 is smaller than we estimate or if any regulatory approval that we obtain is based on a narrower definition of the patient population, our revenue and ability to achieve profitability will be adversely affected, possibly materially.
Our ability to compete may decline if we do not adequately protect our proprietary rights, and our proprietary rights do not necessarily address all potential threats to our competitive advantage.
If we lose key management personnel, or if we fail to recruit additional highly skilled personnel, our ability to pursue our business strategy will be impaired, could result in loss of markets or market share and could make us less competitive.
Business disruptions could seriously harm our future revenue and financial condition and increase our costs and expenses.
Our principal stockholders and management own a significant percentage of our stock and will be able to exert significant influence over matters subject to stockholder approval.

 

i


 

Special Note Regarding Forward-Looking Statements

 

This Quarterly Report on Form 10-Q, or the Quarterly Report, contains forward-looking statements which are made pursuant to the safe harbor provisions of Section 27A of the Securities Act of 1933, as amended, or the or the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act. All statements other than statements of historical facts contained in this Quarterly Report are forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as “may”, “will”, “should”, “expects”, “intends”, “plans”, “anticipates”, “believes”, “estimates”, “predicts”, “potential”, “continue” or the negative of these terms or other comparable terminology. These statements are not guarantees of future results or performance and involve substantial risks and uncertainties. Forward-looking statements in this Quarterly Report include, but are not limited to, statements about:

the initiation, timing, progress, results, and cost of our research and development programs and our current and future preclinical studies and clinical trials, including statements regarding the timing of initiation and completion of studies or trials and related preparatory work, the period during which the results of the trials will become available, and our research and development programs;
our ability to efficiently develop our existing product candidates and discover new product candidates;
our ability to successfully manufacture our drug substances and product candidates for preclinical use, for clinical trials and on a larger scale for commercial use, if approved;
the ability and willingness of our third-party strategic collaborators to continue research and development activities relating to our development candidates and product candidates;
our ability to obtain funding for our operations necessary to complete further development and commercialization of our product candidates;
our ability to obtain and maintain regulatory approval of our product candidates;
our ability to commercialize our products, if approved;
the pricing and reimbursement of our product candidates, if approved;
the implementation of our business model, and strategic plans for our business and product candidates;
the scope of protection we are able to establish and maintain for intellectual property rights covering our product candidates;
estimates of our future expenses, revenues, capital requirements, and our needs for additional financing;
the potential benefits of strategic collaboration agreements, our ability to enter into strategic collaborations or arrangements, and our ability to attract collaborators with development, regulatory and commercialization expertise;
future agreements with third parties in connection with the commercialization of product candidates and any other approved product;
the size and growth potential of the markets for our product candidates, and our ability to serve those markets;
our financial performance;
the rate and degree of market acceptance of our product candidates;
regulatory developments in the United States and foreign countries;
our ability to produce our products or product candidates with advantages in turnaround times or manufacturing cost;
the success of competing therapies that are or may become available;
our ability to attract and retain key scientific or management personnel;
the impact of laws and regulations;
developments relating to our competitors and our industry;
the effect of the COVID-19 pandemic, including mitigation efforts and economic effects, on any of the foregoing or other aspects of our business operations, including but not limited to our preclinical studies and clinical trials and any future studies or trials; and
other risks and uncertainties, including those listed under the caption “Risk Factors.”

ii


 

Table of Contents

 

 

 

Page

 

 

 

 

SUMMARY OF RISKS

i

 

 

 

PART I.

FINANCIAL INFORMATION

1

 

 

 

Item 1.

Financial Statements (Unaudited)

1

 

Condensed Balance Sheets

1

 

Condensed Statements of Operations and Comprehensive Loss

2

 

Condensed Statements of Convertible Preferred Stock and Stockholders’ Deficit

3

 

Condensed Statements of Cash Flows

4

 

Notes to Unaudited Condensed Financial Statements

5

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

20

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

29

Item 4.

Controls and Procedures

30

 

 

 

PART II.

OTHER INFORMATION

31

 

 

 

Item 1.

Legal Proceedings

31

Item 1A.

Risk Factors

31

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

77

Item 3.

Defaults Upon Senior Securities

78

Item 4.

Mine Safety Disclosures

78

Item 5.

Other Information

78

Item 6.

Exhibits

79

 

Signatures

80

 

iii


 

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements.

Aura Biosciences, Inc.

Condensed Balance Sheets (Unaudited)

(in thousands, except share and per share amounts)

 

 

 

As of

 

 

 

September 30, 2021

 

 

December 31, 2020

 

Assets

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

81,829

 

 

$

17,393

 

Restricted cash and deposits

 

 

20

 

 

 

19

 

Prepaid expenses and other current assets

 

 

1,609

 

 

 

1,043

 

Total current assets

 

 

83,458

 

 

 

18,455

 

Restricted cash and deposits, net of current portion

 

 

125

 

 

 

75

 

Right of use assets - operating lease

 

 

1,096

 

 

 

-

 

Property and equipment, net

 

 

4,442

 

 

 

3,574

 

Deferred offering costs

 

 

1,583

 

 

 

-

 

Total Assets

 

$

90,704

 

 

$

22,104

 

Liabilities, Convertible Preferred Stock, and Stockholders’ Deficit

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Accounts payable

 

 

1,736

 

 

 

611

 

Current portion of operating lease liabilities

 

 

607

 

 

 

-

 

Accrued expenses and other current liabilities

 

 

3,488

 

 

 

2,050

 

Total current liabilities

 

 

5,831

 

 

 

2,661

 

Deferred rent

 

 

-

 

 

 

8

 

Operating lease liabilities, net of current portion

 

 

513

 

 

 

-

 

Warrant liability

 

 

71

 

 

 

72

 

Total Liabilities

 

 

6,415

 

 

 

2,741

 

Commitments and Contingencies (Note 12)

 

 

 

 

 

 

Series A convertible preferred stock, $0.00001 par value, 1,701,141 shares authorized, issued and outstanding at September 30, 2021 and December 31, 2020, respectively, and a liquidation preference of $3,403 at September 30, 2021 and December 31, 2020, respectively

 

 

3,368

 

 

 

3,368

 

Series A-1 convertible preferred stock, $0.00001 par value, 3,298,732 shares authorized, issued, and outstanding at September 30, 2021 and December 31, 2020, respectively, and a liquidation preference of $8,196 at September 30, 2021 and December 31, 2020, respectively

 

 

7,837

 

 

 

7,837

 

Series A-2 convertible preferred stock, $0.00001 par value, 4,325,021 shares authorized, and 4,324,998 shares issued and outstanding at September 30, 2021 and December 31, 2020, respectively, and a liquidation preference of $5,373 at September 30, 2021 and December 31, 2020, respectively

 

 

5,373

 

 

 

5,373

 

Series B convertible preferred stock, $0.00001 par value, 22,705,646 shares authorized, and 22,531,819 shares issued and outstanding at September 30, 2021 and December 31, 2020, respectively, and a liquidation preference of $38,894 and $37,429 at September 30, 2021 and December 31, 2020, respectively

 

 

20,806

 

 

 

20,806

 

Series C-1 convertible preferred stock, $0.00001 par value, 58,109,711 shares authorized, issued and outstanding at September 30, 2021 and December 31, 2020, respectively, and a liquidation preference of $37,736 and $36,150 at September 30, 2021 and December 31, 2020, respectively

 

 

29,353

 

 

 

29,353

 

Series C-2 convertible preferred stock, $0.00001 par value, 33,218,192 shares authorized, issued and outstanding at September 30, 2021 and December 31, 2020, respectively, and a liquidation preference of $15,332 and $14,697 at September 30, 2021 and December 31, 2020, respectively

 

 

11,746

 

 

 

11,746

 

Series D-1 convertible preferred stock, $0.00001 par value, 57,878,742 shares authorized, issued and outstanding at September 30, 2021 and December 31, 2020, respectively, and a liquidation preference of $46,003 and $43,908 at September 30, 2021 and December 31, 2020, respectively

 

 

39,686

 

 

 

39,686

 

Series D-2 convertible preferred stock, $0.00001 par value, 24,598,481 shares authorized, and 24,598,481 and 14,469,710 issued and outstanding at September 30, 2021 and December 31, 2020, respectively, and a liquidation preference of $17,982 and $10,176 at September 30, 2021 and December 31, 2020, respectively

 

 

16,889

 

 

 

9,907

 

Series E convertible preferred stock, $0.00001 par value, 102,671,041 shares authorized, issued and outstanding at September 30, 2021, and a liquidation preference of $83,525 at September 30, 2021; no shares authorized, issued or outstanding at December 31, 2020, respectively

 

 

80,246

 

 

 

-

 

Stockholders’ Deficit:

 

 

 

 

 

 

Common stock, $0.00001 par value, 470,183,383 and 232,697,999 authorized at September 30, 2021 and December 31, 2020, and 442,717 and 381,123 shares issued and outstanding at September 30, 2021 and December 31, 2020, respectively

 

 

-

 

 

 

-

 

Additional paid-in capital

 

 

9,488

 

 

 

8,173

 

Accumulated deficit

 

 

(140,503

)

 

 

(116,886

)

Total Stockholders’ Deficit

 

 

(131,015

)

 

 

(108,713

)

Total Liabilities, Convertible Preferred Stock, and Stockholders’ Deficit

 

$

90,704

 

 

$

22,104

 

 

The accompanying notes are an integral part of these unaudited condensed financial statements.

1


 

Condensed Statements of Operations and Comprehensive Loss (Unaudited)

(in thousands except for share and per share data)

 

 

 

Three Months Ended
September 30,

 

 

Nine Months Ended
September 30,

 

 

 

2021

 

 

2020

 

 

2021

 

 

2020

 

Operating Expenses:

 

 

 

 

 

 

 

 

 

 

 

 

Research and development

 

$

6,365

 

 

$

2,850

 

 

$

17,182

 

 

$

14,499

 

General and administrative

 

 

2,530

 

 

 

781

 

 

 

6,441

 

 

 

2,798

 

Total operating expenses

 

 

8,895

 

 

 

3,631

 

 

 

23,623

 

 

 

17,297

 

Total operating loss

 

 

8,895

 

 

 

3,631

 

 

 

23,623

 

 

 

17,297

 

Other income (expense):

 

 

 

 

 

 

 

 

 

 

 

 

Change in fair value of warrant liability

 

 

-

 

 

 

-

 

 

 

1

 

 

 

-

 

Change in fair value of derivative liability

 

 

52

 

 

 

-

 

 

 

-

 

 

 

-

 

Interest income (expense), including amortization
   of discount

 

 

5

 

 

 

-

 

 

 

8

 

 

 

(2

)

Loss from disposal of assets

 

 

-

 

 

 

-

 

 

 

(3

)

 

 

-

 

Total other income (expense)

 

 

57

 

 

 

-

 

 

 

6

 

 

 

(2

)

Net loss and comprehensive loss

 

$

(8,838

)

 

$

(3,631

)

 

$

(23,617

)

 

$

(17,299

)

Net loss attributable to common stockholders—
   basic and diluted

 

$

(12,506

)

 

$

(5,579

)

 

$

(33,244

)

 

$

(23,101

)

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

 

 

(28.33

)

 

 

(14.81

)

 

 

(77.93

)

 

 

(63.69

)

Weighted average common stock outstanding—
   basic and diluted

 

 

441,448

 

 

 

376,738

 

 

 

426,604

 

 

 

362,735

 

 

The accompanying notes are an integral part of these unaudited condensed financial statements.

2


 

Aura Biosciences, Inc.

Condensed Statements of Convertible Preferred Stock and Stockholders’ Deficit (Unaudited)

(in thousands, except share data)

 

 

Convertible Preferred Stock

 

 

 

 

 

Additional

 

 

 

Total

 

 

Series A

 

Series A-1

 

Series A-2

 

Series B

 

Series C-1 and C-2

 

Series D-1 and D-2

 

Series E

 

Common Stock

 

Paid-In

 

Accumulated

 

Stockholders'

 

 

Shares

 

Amount

 

Shares

 

Amount

 

Shares

 

Amount

 

Shares

 

Amount

 

Shares

 

Amount

 

Shares

 

Amount

 

Shares

 

Amount

 

Shares

 

Amount

 

Capital

 

Deficit

 

Deficit

 

Balance, December 31,
   2019

 

1,701,141

 

$

3,368

 

 

3,298,732

 

$

7,837

 

 

4,324,998

 

$

5,373

 

 

22,531,819

 

$

20,806

 

 

91,327,903

 

$

41,099

 

 

57,878,742

 

$

39,686

 

 

 

 

 

 

340,591

 

 

 

$

7,274

 

$

(94,680

)

$

(87,406

)

Stock-based compensation
   expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

177

 

 

 

 

177

 

Stock option exercises

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

7,880

 

 

 

 

33

 

 

 

 

33

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(7,512

)

 

(7,512

)

Balance, March 31,
   2020

 

1,701,141

 

$

3,368

 

 

3,298,732

 

$

7,837

 

 

4,324,998

 

$

5,373

 

 

22,531,819

 

$

20,806

 

 

91,327,903

 

$

41,099

 

 

57,878,742

 

$

39,686

 

 

 

$

 

 

348,471

 

$

 

$

7,484

 

$

(102,192

)

$

(94,708

)

Stock-based compensation
   expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

189

 

 

 

 

189

 

Stock option exercises

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

24,648

 

 

 

 

97

 

 

 

 

97

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(6,156

)

 

(6,156

)

Balance, June 30,
   2020

 

1,701,141

 

$

3,368

 

 

3,298,732

 

$

7,837

 

 

4,324,998

 

$

5,373

 

 

22,531,819

 

$

20,806

 

 

91,327,903

 

$

41,099

 

 

57,878,742

 

$

39,686

 

 

 

$

 

 

373,119

 

$

 

$

7,770

 

$

(108,348

)

$

(100,578

)

Stock-based compensation
   expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

191

 

 

 

 

191

 

Stock option exercises

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

6,783

 

 

 

 

18

 

 

 

 

18

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(3,631

)

 

(3,631

)

Balance, September 30,
   2020

 

1,701,141

 

$

3,368

 

 

3,298,732

 

$

7,837

 

 

4,324,998

 

$

5,373

 

 

22,531,819

 

$

20,806

 

 

91,327,903

 

$

41,099

 

 

57,878,742

 

$

39,686

 

 

 

$

 

 

379,902

 

$

 

$

7,979

 

$

(111,979

)

$

(104,000

)

Balance, December 31,
   2020

 

1,701,141

 

$

3,368

 

 

3,298,732

 

$

7,837

 

 

4,324,998

 

$

5,373

 

 

22,531,819

 

$

20,806

 

 

91,327,903

 

$

41,099

 

 

72,348,452

 

$

49,593

 

 

 

$

 

 

381,123

 

$

 

$

8,173

 

$

(116,886

)

$

(108,713

)

Issuance of Series D
   Tranche 2, convertible
   preferred stock, net of
   issuance costs of $
18

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

10,128,771

 

 

6,982

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Issuance of Series E
   convertible preferred
   stock, net of issuance
   costs of $
237

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

102,671,041

 

 

80,246

 

 

 

 

 

 

 

 

 

 

 

Stock-based compensation
   expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

185

 

 

 

 

185

 

Stock option exercises

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

54,296

 

 

 

 

265

 

 

 

 

265

 

Net loss