SEC Filing - Aura Biosciences

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10-Q

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, 2022


☐	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.)
80 Guest Street Boston, MA	02135
(Address of principal executive offices)	(Zip Code)

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

(Former Name or Former Address, if Changed Since Last Report)

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 7, 2022, the registrant had 29,334,729 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 belzupacap sarotalocan (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 belzupacap sarotalocan, 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 belzupacap sarotalocan and may continue to rely on CMOs for the production of commercial supply of belzupacap sarotalocan, 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 belzupacap sarotalocan 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 belzupacap sarotalocan 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.

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 macroeconomic conditions, including rising interest rates and inflation, on our business operations;

•

the effect of the ongoing 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.”

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	25
Item 4.	Controls and Procedures	26

PART II.	OTHER INFORMATION	27

Item 1.	Legal Proceedings	27
Item 1A.	Risk Factors	27
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	75
Item 3.	Defaults Upon Senior Securities	75
Item 4.	Mine Safety Disclosures	75
Item 5.	Other Information	75
Item 6.	Exhibits	76
	Signatures	77

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)


	September 30, 2022			December 31, 2021
Assets
Current assets:
Cash and cash equivalents	$	61,110		$	149,063
Marketable securities		50,409			—
Restricted cash and deposits		182			23
Prepaid expenses and other current assets		4,207			4,618
Total current assets		115,908			153,704
Restricted cash and deposits, net of current portion		768			125
Right of use assets - operating lease		20,996			950
Property and equipment, net		5,475			5,251
Total Assets	$	143,147		$	160,030
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable		1,724			2,401
Short-term operating lease liability		2,942			615
Accrued expenses and other current liabilities		5,298			4,339
Total current liabilities		9,964			7,355
Long-term operating lease liability		18,129			360
Total Liabilities		28,093			7,715
Commitments and Contingencies (Note 12)
Stockholders’ Equity:
Common stock, $0.00001 par value, 150,000,000 authorized at September 30, 2022 and December 31, 2021, and 29,283,285 and 29,211,643 shares issued and outstanding at September 30, 2022 and December 31, 2021, respectively		—			—
Additional paid-in capital		309,542			304,452
Accumulated deficit		(194,341	)		(152,137	)
Accumulated other comprehensive loss		(147	)		—
Total Stockholders’ Equity		115,054			152,315
Total Liabilities and Stockholders’ Equity	$	143,147		$	160,030

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

Aura Biosciences, Inc.

Condensed Consolidated Statements of Operations and Comprehensive Loss

(Unaudited)

(in thousands, except share and per share data)


	Three Months Ended September 30,						Nine Months Ended September 30,
	2022			2021			2022			2021
Operating Expenses:
Research and development	$	11,293		$	6,365		$	29,079		$	17,182
General and administrative		4,762		$	2,530			13,603			6,441
Total operating expenses		16,055			8,895			42,682			23,623
Total operating loss		(16,055	)		(8,895	)		(42,682	)		(23,623	)
Other income (expense):
Interest income, including amortization and accretion income		483			5			802			8
Realized loss on marketable securities		(9	)		—			(9	)		—
Loss on disposal of assets		(313	)		—			(318	)		(3	)
Other income (expense)		(7	)		52			3			1
Total other income (expense)		154			57			478			6
Net loss		(15,901	)		(8,838	)		(42,204	)		(23,617	)
Net loss attributable to common stockholders—basic and diluted (Note 13)		(15,901	)		(12,506	)		(42,204	)		(33,244	)
Net loss per share attributable to common stockholders—basic and diluted		(0.54	)		(28.33	)		(1.44	)		(77.93	)
Weighted average common stock outstanding—basic and diluted		29,273,577			441,448			29,246,449			426,604
Comprehensive loss:
Net loss	$	(15,901	)	$	(8,838	)	$	(42,204	)	$	(23,617	)
Other comprehensive items:
Unrealized loss on marketable securities		(19	)		—			(147	)		—
Total other comprehensive loss		(19	)		—			(147	)		—
Total comprehensive loss	$	(15,920	)	$	(8,838	)	$	(42,351	)	$	(23,617	)

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

Aura Biosciences, Inc.

Condensed Consolidated Statements of Convertible Preferred Stock and Stockholders’ Equity (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, 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	)
Stock-based compensation expense		—		—		—		—		—		—		—		—		—		—		—		—		—		—			—		—		271		—			271
Stock option exercises		—		—		—		—		—		—		—		—		—		—		—		—		—		—			3,649		—		20		—			20
Net loss		—		—		—		—		—		—		—		—		—		—		—		—		—		—			—		—		—		(8,852	)		(8,852	)
Balance, June 30, 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			439,068	$	—	$	8,914	$	(131,665	)	$	(122,751	)
Stock-based compensation expense		—		—		—		—		—		—		—		—		—		—		—		—		—		—			—		—		554		—			554
Stock option exercises		—		—		—		—		—		—		—		—		—		—		—		—		—		—			3,649		—		20		—			20
Other		—		—		—		—		—		—		—		—		—		—		—		—		—		(5	)		—		—		—		—			—
Net loss		—		—		—		—		—		—		—		—		—		—		—		—		—		—			—