10-Q
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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 March 31, 2022

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 May 9, 2022, the registrant had 29,259,976 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 Consolidated Balance Sheets

1

 

Condensed Consolidated Statements of Operations and Comprehensive Loss

2

 

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

3

 

Condensed Consolidated Statements of Cash Flows

4

 

Notes to Unaudited Condensed Consolidated Financial Statements

5

Item 2.

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

17

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

24

Item 4.

Controls and Procedures

24

 

 

 

PART II.

OTHER INFORMATION

25

 

 

 

Item 1.

Legal Proceedings

25

Item 1A.

Risk Factors

25

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

71

Item 3.

Defaults Upon Senior Securities

71

Item 4.

Mine Safety Disclosures

71

Item 5.

Other Information

71

Item 6.

Exhibits

72

 

Signatures

73

 

iii


 

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements.

Aura Biosciences, Inc.

Condensed Consolidated Balance Sheets

(Unaudited)

(in thousands, except share and per share amounts)

 

 

 

March 31, 2022

 

 

December 31, 2021

 

Assets

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

108,382

 

 

$

149,063

 

Marketable securities

 

 

24,899

 

 

 

 

Restricted cash and deposits

 

 

23

 

 

 

23

 

Prepaid expenses and other current assets

 

 

6,278

 

 

 

4,618

 

Total current assets

 

 

139,582

 

 

 

153,704

 

Restricted cash and deposits, net of current portion

 

 

125

 

 

 

125

 

Right of use assets - operating lease

 

 

804

 

 

 

950

 

Property and equipment, net

 

 

5,911

 

 

 

5,251

 

Total Assets

 

$

146,422

 

 

$

160,030

 

Liabilities and Stockholders’ Equity

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Accounts payable

 

 

1,956

 

 

 

2,401

 

Short-term operating lease liability

 

 

624

 

 

 

615

 

Accrued expenses and other current liabilities

 

 

2,423

 

 

 

4,256

 

Total current liabilities

 

 

5,003

 

 

 

7,272

 

Long-term operating lease liability

 

 

206

 

 

 

360

 

Warrant liability

 

 

127

 

 

 

83

 

Total Liabilities

 

 

5,336

 

 

 

7,715

 

Commitments and Contingencies (Note 12)

 

 

 

 

 

 

Stockholders’ Equity:

 

 

 

 

 

 

Common stock, $0.00001 par value, 150,000,000 authorized at March 31, 2022 and December 31, 2021, and 29,217,236 and 29,211,643 shares issued and outstanding at March 31, 2022 and December 31, 2021, respectively

 

 

 

 

 

 

Additional paid-in capital

 

 

306,063

 

 

 

304,452

 

Accumulated deficit

 

 

(164,972

)

 

 

(152,137

)

Accumulated other comprehensive loss

 

 

(5

)

 

 

 

Total Stockholders’ Equity

 

 

141,086

 

 

 

152,315

 

Total Liabilities and Stockholders’ Equity

 

$

146,422

 

 

$

160,030

 

 

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

1


 

Aura Biosciences, Inc.

Condensed Consolidated Statements of Operations and Comprehensive Loss

(Unaudited)

(in thousands except for share and per share data)

 

 

 

Three Months Ended
March 31,

 

 

 

2022

 

 

2021

 

Operating Expenses:

 

 

 

 

 

 

Research and development

 

$

8,276

 

 

$

4,185

 

General and administrative

 

 

4,535

 

 

 

1,742

 

Total operating expenses

 

 

12,811

 

 

 

5,927

 

Total operating loss

 

 

(12,811

)

 

 

(5,927

)

Other income (expense):

 

 

 

 

 

 

Change in fair value of warrant liability

 

 

(44

)

 

 

4

 

Interest income (expense), including amortization and accretion income

 

 

25

 

 

 

(1

)

Loss on disposal of assets

 

 

(5

)

 

 

(3

)

Total other expense

 

 

(24

)

 

 

 

Net loss

 

 

(12,835

)

 

 

(5,927

)

Net loss attributable to common stockholders—basic and diluted (Note 13)

 

 

(12,835

)

 

 

(8,258

)

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

 

 

(0.44

)

 

 

(20.62

)

Weighted average common stock outstanding—basic and diluted

 

 

29,213,632

 

 

 

400,450

 

Comprehensive loss:

 

 

 

 

 

 

Net loss attributable to common stockholders

 

$

(12,835

)

 

$

(8,258

)

Other comprehensive items:

 

 

 

 

 

 

Unrealized loss on marketable securities

 

 

(5

)

 

 

 

Total other comprehensive loss

 

 

(5

)

 

 

 

Total comprehensive loss

 

$

(12,840

)

 

$

(8,258

)

 

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

2


 

Aura Biosciences, Inc.

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

(Unaudited)

(in thousands, except share data)

 

 

Convertible Preferred Stock

 

 

 

 

 

 

 

 

 

Additional

 

 

 

Accumulated

 

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

 

Other Comprehensive

 

Stockholders’

 

 

Shares

 

Amount

 

Shares

 

Amount

 

Shares

 

Amount

 

Shares

 

Amount

 

Shares

 

Amount

 

Shares

 

Amount

 

Shares

 

Amount

 

Shares

 

Amount

 

Capital

 

Deficit

 

Income (Loss) Amount

 

Equity (Deficit)

 

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 $232

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

102,671,041

 

 

80,251

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock-based compensation expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

185

 

 

 

 

 

 

185

 

Stock option exercises

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

54,296

 

 

 

 

265

 

 

 

 

 

 

265

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(5,927

)

 

 

 

(5,927

)

Balance, March 31, 2021

 

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

 

 

82,477,223

 

$

56,575

 

 

102,671,041

 

$

80,251

 

 

435,419

 

$

 

$

8,623

 

$

(122,813

)

$

 

$

(114,190

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Convertible Preferred Stock

 

 

 

 

 

 

 

 

 

Additional

 

 

 

Accumulated

 

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

 

Other Comprehensive

 

Stockholders’

 

 

Shares

 

Amount

 

Shares

 

Amount

 

Shares

 

Amount

 

Shares

 

Amount

 

Shares

 

Amount

 

Shares

 

Amount

 

Shares

 

Amount

 

Shares

 

Amount

 

Capital

 

Deficit

 

Income (Loss) Amount

 

Equity (Deficit)

 

Balance, December 31, 2021

 

 

$

 

 

 

$

 

 

 

$

 

 

 

$

 

 

 

$

 

 

 

$

 

 

 

$

 

 

29,211,643

 

$

 

$

304,452

 

$

(152,137

)

$

 

$

152,315

 

Stock-based compensation expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,594

 

 

 

 

 

 

1,594

 

Stock option exercises

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

5,593

 

 

 

 

17

 

 

 

 

 

 

17

 

Unrealized loss on marketable securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(5

)

 

(5

)

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(12,835

)

 

 

 

(12,835

)

Balance, March 31, 2022

 

 

$

 

 

 

$

 

 

 

$

 

 

 

$

 

 

 

$

 

 

 

$

 

 

 

$

 

 

29,217,236

 

$

 

$

306,063

 

$

(164,972

)

$

(5

)

$

141,086

 

 

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

3


 

Aura Biosciences, Inc.

Condensed Consolidated Statements of Cash Flows

(Unaudited)

(in thousands)

 

 

Three Months Ended
March 31,

 

 

 

2022

 

 

2021

 

Cash flows from operating activities:

 

 

 

 

 

 

Net loss

 

$

(12,835

)

 

$

(5,927

)

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

 

 

 

 

 

 

Depreciation expense

 

 

256

 

 

 

185

 

Change in fair value of warrant liability

 

 

44

 

 

 

(4

)

Stock-based compensation expense

 

 

1,594

 

 

 

185

 

Other

 

 

(9

)

 

 

(4

)

Changes in operating assets and liabilities:

 

 

 

 

 

 

Prepaid expenses and other assets

 

 

(1,660

)

 

 

15

 

Accounts payable

 

 

(756

)

 

 

700

 

Accrued expenses and other liabilities

 

 

(1,834

)

 

 

(287

)

Net cash used in operating activities

 

 

(15,200

)

 

 

(5,137

)

Cash flows from investing activities:

 

 

 

 

 

 

Purchases of property and equipment

 

 

(599

)

 

 

(71

)

Purchase of marketable securities

 

 

(24,899

)

 

 

 

Net cash used in investing activities

 

 

(25,498

)

 

 

(71

)

Cash flows from financing activities:

 

 

 

 

 

 

Proceeds from issuance of Series E convertible preferred stock, net of issuance costs

 

 

 

 

 

80,251

 

Proceeds from exercise of stock options

 

 

17

 

 

 

265

 

Proceeds from issuance of Series D convertible preferred stock, net of
 issuance costs

 

 

 

 

 

6,982

 

Other

 

 

 

 

 

(9

)

Net cash provided by financing activities

 

 

17

 

 

 

87,489

 

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

 

 

(40,681

)

 

 

82,281

 

Cash, cash equivalents and restricted cash at beginning of period

 

 

149,211

 

 

 

17,487

 

Cash, cash equivalents and restricted cash at end of period

 

$

108,530

 

 

$

99,768

 

Supplemental disclosure of cash flow information:

 

 

 

 

 

 

Purchases of property and equipment in accounts payable and accrued expenses and other liabilities

 

$

311

 

 

$

 

Remeasurement of operating lease right-of-use assets and liabilities for lease modification

 

$

 

 

$

390

 

 

 

 

 

 

 

 

The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported within the balance sheets that sum to the total of the same such amounts shown in the unaudited condensed consolidated statements of cash flows (in thousands):

 

 

 

Three Months Ended
March 31,

 

 

 

2022

 

 

2021

 

Cash and cash equivalents, end of period

 

$

108,382

 

 

$

99,674

 

Short-term restricted cash, end of period

 

 

23

 

 

 

19

 

Long-term restricted cash, end of period

 

 

125

 

 

 

75

 

Cash, cash equivalents and restricted cash at end of period

 

$

108,530

 

 

$

99,768

 

 

 

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

4


 

Aura Biosciences, Inc.

Notes to Unaudited Condensed Consolidated Financial Statements

1. Description of Business

Aura Biosciences, Inc. (the “Company” or “Aura”) is a clinical-stage biotechnology company leveraging its novel targeted oncology platform to develop a potential new standard of care across multiple cancer indications, with an initial focus on ocular and urologic oncology. Within these unaudited condensed consolidated financial statements, unless the context otherwise requires, references to the Company or Aura refer to Aura Biosciences, Inc. The Company’s proprietary platform enables the targeting of a broad range of solid tumors using Virus-Like Particles, or VLPs, that can be conjugated with drugs or loaded with nucleic acids to create Virus-Like Drug Conjugates, or VDCs. The Company’s VDCs are largely agnostic to tumor type and can recognize a surface marker, known as HSPGs, that are specifically modified and more broadly expressed on many tumors. The Company is developing AU-011, its first VDC product candidate for the first line treatment of primary choroidal melanoma, a rare disease with no drugs approved. The Company is also developing AU-011 for additional ocular oncology indications and in non-muscle invasive bladder cancer. Aura’s team combines expertise in cancer cell biology, ophthalmology, and targeted therapies together with experience in the development and commercialization of orphan products for significant unmet medical needs. Aura’s headquarters are located in Cambridge, Massachusetts.

The Company’s operations to date have consisted primarily of conducting research and development and raising capital.

The Company is subject to risks common to companies in the biotechnology industry, including, but not limited to, the successful development and commercialization of products, fluctuations in operating results and financial risks, need for additional financing or alternative means of financial support or both to fund its current operating plan, protection of proprietary technology and patent risks, compliance with government regulations, dependence on key personnel and collaborative partners, competition, customer demand, management of growth, and the effectiveness of marketing by the Company.

Reverse Stock Split

On October 22, 2021, the Company effected a reverse stock split of the Company’s common stock on a 1-for-13.7 basis, or the Reverse Stock Split. In connection with the Reverse Stock Split, the conversion ratio for the Company’s convertible preferred stock was proportionately adjusted such that the common stock issuable upon conversion of such preferred stock was decreased in proportion to the Re