10-Q
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,k

 

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, 2024

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.)

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

As of May 3, 2024, the Registrant had 49,543,309 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, regulatory approval and commercialization of our product candidates.
We are heavily dependent on the success of bel-sar, our only product candidate to date.
If we are not able to obtain, or if there are delays in obtaining, required regulatory approvals for bel-sar, 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 initiated but not yet completed a pivotal clinical trial nor have we 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.
The U.S Food and Drug Administration’s agreement to a Special Protocol Assessment with respect to the study design of our global Phase 3 trial of bel-sar for the treatment of early-stage choroidal melanoma does not guarantee any particular outcome from regulatory review, including ultimate approval, and may not lead to a successful review or approval process.
We rely on third parties to conduct our clinical trials and some aspects of our research and preclinical testing, and expect to continue to do so, 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 development and manufacturing organizations, or CDMOs, for the production of clinical supply of bel-sar and may continue to rely on CDMOs for the production of commercial supply of bel-sar, if approved. This reliance on CDMOs 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 bel-sar 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 bel-sar 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 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 nonclinical, 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 effects of macroeconomic conditions, including rising interest rates and inflation, on our business operations; 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 Stockholders’ Equity

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

16

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

25

Item 4.

Controls and Procedures

25

 

 

 

PART II.

OTHER INFORMATION

26

 

 

 

Item 1.

Legal Proceedings

26

Item 1A.

Risk Factors

26

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

70

Item 3.

Defaults Upon Senior Securities

70

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, 2024

 

 

December 31, 2023

 

Assets

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

26,279

 

 

$

41,063

 

Marketable securities

 

 

176,595

 

 

 

185,087

 

Restricted cash and deposits

 

 

 

 

 

19

 

Prepaid expenses and other current assets

 

 

9,375

 

 

 

5,625

 

Total current assets

 

 

212,249

 

 

 

231,794

 

Restricted cash and deposits, net of current portion

 

 

768

 

 

 

768

 

Right of use assets - operating lease

 

 

18,501

 

 

 

18,854

 

Other long-term assets

 

 

453

 

 

 

509

 

Property and equipment, net

 

 

3,054

 

 

 

3,150

 

Total Assets

 

$

235,025

 

 

$

255,075

 

Liabilities and Stockholders’ Equity

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Accounts payable

 

 

1,933

 

 

 

1,787

 

Short-term operating lease liability

 

 

2,741

 

 

 

2,687

 

Accrued expenses and other current liabilities

 

 

4,989

 

 

 

7,883

 

Total current liabilities

 

 

9,663

 

 

 

12,357

 

Long-term operating lease liability

 

 

16,579

 

 

 

16,870

 

Total Liabilities

 

 

26,242

 

 

 

29,227

 

Commitments and Contingencies (Note 12)

 

 

 

 

 

 

Stockholders’ Equity:

 

 

 

 

 

 

Common stock, $0.00001 par value, 150,000,000 authorized at March 31, 2024 and December 31, 2023, and 49,504,405 and 49,350,788 shares issued and outstanding at March 31, 2024 and December 31, 2023, respectively

 

 

 

 

 

 

Additional paid-in capital

 

 

515,779

 

 

 

512,617

 

Accumulated deficit

 

 

(307,014

)

 

 

(287,308

)

Accumulated other comprehensive loss

 

 

18

 

 

 

539

 

Total Stockholders’ Equity

 

 

208,783

 

 

 

225,848

 

Total Liabilities and Stockholders’ Equity

 

$

235,025

 

 

$

255,075

 

 

 

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 share and per share data)

 

Three Months Ended
March 31,

 

 

2024

 

 

2023

 

Operating Expenses:

 

 

 

 

 

 

Research and development

 

$

17,052

 

 

$

14,405

 

General and administrative

 

 

5,261

 

 

$

5,039

 

Total operating expenses

 

 

22,313

 

 

 

19,444

 

Total operating loss

 

 

(22,313

)

 

 

(19,444

)

Other income (expense):

 

 

 

 

 

 

Interest income, including amortization and accretion income

 

 

2,685

 

 

 

1,991

 

Other income (expense)

 

 

(32

)

 

 

(13

)

Total other income

 

 

2,653

 

 

 

1,978

 

Loss before income taxes

 

 

(19,660

)

 

 

(17,466

)

Income tax benefit (provision), net

 

 

(46

)

 

 

 

Net loss

 

 

(19,706

)

 

 

(17,466

)

Net loss per common share—basic and diluted

 

 

(0.40

)

 

 

(0.46

)

Weighted average common stock outstanding—basic and diluted

 

 

49,451,943

 

 

 

37,784,282

 

Comprehensive loss:

 

 

 

 

 

 

Net loss

 

$

(19,706

)

 

$

(17,466

)

Other comprehensive items:

 

 

 

 

 

 

Unrealized gain (loss) on marketable securities

 

$

(521

)

 

 

27

 

Total other comprehensive income (loss)

 

 

(521

)

 

 

27

 

Total comprehensive loss

 

$

(20,227

)

 

$

(17,439

)

 

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

2


 

Aura Biosciences, Inc.

Condensed Consolidated Statements of Stockholders’ Equity

(Unaudited)

(in thousands, except share data)

 

 

 

 

 

Additional

 

 

Accumulated

 

Total

 

Common Stock

 

Paid-In

 

Accumulated

 

Other Comprehensive

 

Stockholders’

 

 

Shares

 

Amount

 

Capital

 

Deficit

 

Loss Amount

 

Equity

 

Balance, December 31, 2023

 

49,350,788

 

 

 

 

512,617

 

 

(287,308

)

 

539

 

 

225,848

 

Stock-based compensation expense

 

 

 

 

 

2,909

 

 

 

 

 

 

2,909

 

Employee stock purchase plan

 

12,314

 

 

 

 

95

 

 

 

 

 

 

95

 

Stock option exercises

 

51,180

 

 

 

 

158

 

 

 

 

 

 

158

 

Vesting of restricted stock

 

90,123

 

 

 

 

 

 

 

 

 

 

 

Unrealized gain on marketable securities

 

 

 

 

 

 

 

 

 

(521

)

 

(521

)

Net loss

 

 

 

 

 

 

 

(19,706

)

 

 

 

(19,706

)

Balance, March 31, 2024

 

49,504,405

 

 

 

 

515,779

 

 

(307,014

)

 

18

 

 

208,783

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Additional

 

 

Accumulated

 

Total

 

Common Stock

 

Paid-In

 

Accumulated

 

Other Comprehensive

 

Stockholders’

 

 

Shares

 

Amount

 

Capital

 

Deficit

 

Loss Amount

 

Equity

 

Balance, December 31, 2022

 

37,771,918

 

 

 

 

406,555

 

 

(210,900

)

 

(72

)

 

195,583

 

Stock-based compensation expense

 

 

 

 

 

1,913

 

 

 

 

 

 

1,913

 

Stock option exercises

 

21,549

 

 

 

 

145

 

 

 

 

 

 

145

 

Employee stock purchase plan

 

6,635

 

 

 

 

56

 

 

 

 

 

 

56

 

Unrealized loss on marketable securities

 

 

 

 

 

 

 

 

 

27

 

 

27

 

Net loss

 

 

 

 

 

 

 

(17,466

)

 

 

 

(17,466

)

Balance, March 31, 2023

 

37,800,102

 

 

 

 

408,669

 

 

(228,366

)

 

(45

)

 

180,258

 

 

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,

 

 

2024

 

 

2023

 

Cash flows from operating activities:

 

 

 

 

 

 

Net loss

 

$

(19,706

)

 

$

(17,466

)

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

 

 

 

 

 

 

Depreciation expense

 

 

306

 

 

 

328

 

Accretion on marketable securities

 

 

(1,506

)

 

 

(1,004

)

Stock-based compensation expense

 

 

2,909

 

 

 

1,913

 

Other

 

 

(5

)

 

 

 

Non-cash lease expense

 

 

353

 

 

 

331

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

Prepaid expenses and other assets

 

 

(3,750

)

 

 

2,292

 

Other long-term assets

 

 

56

 

 

 

(200

)

Accounts payable

 

 

23

 

 

 

(1,881

)

Accrued expenses and other liabilities

 

 

(2,895

)

 

 

(506

)

Operating lease liabilities

 

 

(237

)

 

 

(219

)

Net cash used in operating activities

 

 

(24,452

)

 

 

(16,412

)

Cash flows from investing activities:

 

 

 

 

 

 

Purchases of property and equipment

 

 

(88

)

 

 

(109

)

Purchase of marketable securities

 

 

(29,201

)

 

 

(88,847

)

Proceeds from sale of marketable securities

 

 

38,685

 

 

 

22,077

 

Net cash provided by (used in) investing activities

 

 

9,396

 

 

 

(66,879

)

Cash flows from financing activities:

 

 

 

 

 

 

Proceeds from exercise of stock options

 

 

158

 

 

 

145

 

Proceeds from ESPP purchase

 

 

95

 

 

 

56

 

Net cash provided by (used in) financing activities

 

 

253

 

 

 

201

 

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

 

 

(14,803

)

 

 

(83,090

)

Cash, cash equivalents and restricted cash at beginning of period

 

 

41,850

 

 

 

122,370

 

Cash, cash equivalents and restricted cash at end of period

 

$

27,047

 

 

$

39,280

 

Supplemental disclosure of cash flow information:

 

 

 

 

 

 

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

 

 

122

 

 

 

15

 

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):

 

 

 

March 31,

 

 

 

2024

 

 

2023

 

Cash and cash equivalents, end of period

 

$

26,279

 

 

$

38,492

 

Short-term restricted cash, end of period

 

 

 

 

 

20

 

Long-term restricted cash, end of period

 

 

768

 

 

 

768

 

Cash, cash equivalents and restricted cash at end of period

 

$

27,047

 

 

$

39,280

 

 

 

 

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., or the Company or Aura, is a clinical-stage biotechnology company developing precision immunotherapies to treat solid tumors designed to preserve the function of the organ with cancer. Within these unaudited condensed consolidated financial statements, unless the context otherwise requires, references to the Company or Aura refer to Aura Biosciences, Inc. and its subsidiaries on a consolidated basis. The Company’s proprietary platform is designed to enable 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. VDCs are a novel class of drugs with a dual mechanism of action that promote cancer cell death by both the delivery of the cytotoxic payload to generate acute necrosis and activation of a secondary immune mediated response. The Company’s initial focus is in ocular and urologic oncology, both areas of high unmet medical need where local targeted therapies may enable early intervention. The Company is evaluating the safety and efficacy of its lead candidate, bel-sar, as a potential vision-sparing therapy in an ongoing global Phase 3 CoMpass trial for the first-line treatment of adult patients with small choroidal melanoma and indeterminate lesions, or early-stage choroidal melanoma. Bel-sar is also being explored for choroidal metastases and cancers of the ocular surface and is in Phase 1 clinical development in bladder cancer. The Company envisions the potential for development of bel-sar in additional therapeutic areas. Aura’s headquarters are located in Boston, 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, collaborative partners, contract development and manufacturing organizations and other third-parties, competition, customer demand, management of growth, and the effectiveness of marketing by the Company.

Liquidity

Through March 31, 2024, the Company has funded its operations primarily with proceeds from the initial and additional closings of its convertible preferred stock financings, and through its IPO, follow-on offerings and at-the-market offering, or ATM. On November 9, 2023, the Company issued and sold 11,000,000 shares of common stock at a price to the public of $9.00 per share for aggregate gross proceeds of $99.0 million, or the 2023 Follow-On Offering. The Company received approximately $92.6 million in net proceeds from the 2023 Follow-On Offering after deducting underwriting discounts and commissions and offering expenses. On December 5, 2022, the Company issued and sold 7,705,000 shares of common stock, including the full exercise of the underwriters’ option to purchase additional shares at a price to the public of $12.00 per share for aggregate gross proceeds of $92.5 million, or the 2022 Follow-On Offering. The Company received approximately $86.7 million in net proceeds from the 2022 Follow-On Offering after deducting underwriting discounts, commissions and offering expenses. On November 1, 2022, the Company filed a shelf registration statement on Form S-3, or the 2022 Shelf, with the SEC in relation to the registration of up to an aggregate offering price of $250.0 million of common stock, preferred stock, debt securities, warrants and units or any combination thereof. The Company also simultaneously entered into the Open Market Sale AgreementSM, or Sales Agreement, with Jefferies LLC, or the Sales Agent, to provide for the offering, issuance and sale by the Company of up to an aggregate of $75.0 million of common stock from time to time in the ATM under the 2022 Shelf and subject to the limitations thereof. In connection with the 2023 Follow-On Offering, on November 6, 2023, the Company delivered written notice to Jefferies that the Company was suspending and terminating the prospectus related to the shares issuable in the ATM pursuant to the terms of the Sales Agreement. As of November 6, 2023, the Company had issued 993,996 shares of common stock at an average price of $12.50 under the ATM. On March 27, 2024, the Company filed a new shelf registration statement on Form S-3, or the 2024 Shelf, with the SEC in relation to the registration of up to an aggregate offering price of $350.0 million of common stock, preferred stock, debt securities, warrants and units or any combination thereof, which superseded the 2022 Shelf. The 2024 Shelf included a prospectus supplement to provide for offerings in the ATM under the Sales Agreement. The Company issued no shares of common stock during the three months ended March 31, 2024 under the ATM.

5


 

As of the issuance date of these unaudited condensed consolidated financial statements for the three months ended March 31, 2024, the Company expects that its cash and cash equivalents and marketable securities will be sufficient to fund its operating expenses and capital expenditure requirements through at least 12 months from the issuance of these consolidated financial statements. The future viability of the Company beyond that point is dependent on its ability to raise additional capital to finance its operations.

2. Summary of Significant Accounting Policies

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America, or U.S. GAAP. In management’s opinion, 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 financial data and other information disclosed in these notes related to the three months ended March 31, 2024 and 2023 are also unaudited. The unaudited condensed results of operations are not necessarily indicative of the operating results that may occur for the full fiscal year ending December 31, 2024. Certain information and footnote disclosures normally included in annual consolidated financial statements prepared in accordance with U.S. GAAP have been omitted pursuant to instructions, rules, and regulations prescribed by the United States Securities and Exchange Commission, or the SEC. Management believes that the disclosures provided here are adequate to make the information presented not misleading when these unaudited condensed consolidated financial statements are read in conjunction with the audited consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K.

Significant Accounting Policies

The Company’s significant accounting policies are disclosed in the audited consolidated financial statements for the year ended December 31, 2023, in the Company’s Annual Report on Form 10-K filed with the SEC on March 27, 2024. There have been no changes to the Company’s significant accounting policies except as noted below.

Recently Adopted Accounting Pronouncements

In June 2016, the FASB issued ASU No. 2016-13, “Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments,” which was subsequently amended in November 2018 through ASU No. 2018-19, “Codification Improvements to Topic 326, Financial Instruments—Credit Losses.” ASU No. 2016-13 will require entities to estimate lifetime expected credit losses for trade and other receivables, net investments in leases, financing receivables, debt securities and other instruments, which will result in earlier recognition of credit losses. Further, the new credit loss model will affect how entities in all industries estimate their allowance for losses for receivables that are current with respect to their payment terms. ASU No. 2018-19 further clarifies that receivables arising from operating leases are not within the scope of Topic 326. Instead, impairment from receivables of operating leases should be accounted for in accordance with Topic 842, Leases. As per the latest ASU 2020-02, FASB deferred the timelines for certain small public and private entities, thus the new guidance was adopted by the Company for the annual reporting period beginning January 1, 2023, including interim periods within that annual reporting period. The standard will apply as a cumulative-effect adjustment to retained earnings as of the beginning of the first reporting period in which the guidance is adopted. The Company adopted this standard on January 1, 2023 and the standard did not have a material impact on its results of operations, financial condition, and financial statement disclosures.

6


 

3. Fair Value of Assets and Liabilities

The following table presents information about the Company’s financial assets and liabilities measured at fair value on a recurring basis and indicates the level of the fair value hierarchy utilized to determine such fair values as of March 31, 2024 and December 31, 2023 (in thousands):

Description

 

March 31,
2024

 

 

Quoted prices
active
markets
for identical
assets
(Level 1)

 

 

Significant
other
observable
inputs
(Level 2)

 

 

Significant
other
observable
inputs
(Level 3)

 

Financial assets

 

 

 

 

 

 

 

 

 

 

 

 

Cash equivalents:

 

 

 

 

 

 

 

 

 

 

 

 

Money market funds

 

$

25,808

 

 

$

25,808

 

 

$

 

 

$

 

Marketable securities:

 

 

 

 

 

 

 

 

 

 

 

 

  U.S. Government agencies

 

 

176,098

 

 

 

 

 

 

176,098

 

 

 

 

  Asset-backed securities

 

 

497

 

 

 

 

 

 

497

 

 

 

 

Total financial assets

 

$

202,403

 

 

$

25,808

 

 

$

176,595

 

 

$

 

 

Description

 

December 31,
2023

 

 

Quoted prices
active
markets
for identical
assets
(Level 1)

 

 

Significant
other
observable
inputs
(Level 2)

 

 

Significant
other
observable
inputs
(Level 3)

 

Financial assets

 

 

 

 

 

 

 

 

 

 

 

 

Cash equivalents:

 

 

 

 

 

 

 

 

 

 

 

 

Money market funds

 

$

40,551

 

 

$

40,551

 

 

$

 

 

$

 

Marketable securities:

 

 

 

 

 

 

 

 

 

 

 

 

  Commercial paper

 

 

9,137

 

 

 

 

 

 

9,137

 

 

 

 

  Corporate bonds

 

 

6,187

 

 

 

 

 

 

6,187

 

 

 

 

  U.S. Government agencies

 

 

166,002

 

 

 

 

 

 

166,002

 

 

 

 

Yankee bonds

 

 

2,982

 

 

 

 

 

 

2,982

 

 

 

 

Asset-backed securities

 

 

779

 

 

 

 

 

 

779

 

 

 

 

Total financial assets

 

$

225,638

 

 

$

40,551

 

 

$

185,087

 

 

$

 

 

 

4. Property and Equipment, Net

Property and equipment, net, consisted of the following (in thousands):

 

March 31,
2024

 

 

December 31,
2023

 

Assets under construction

 

$

555

 

 

$

391

 

IT equipment

 

 

289

 

 

 

289

 

Lab equipment

 

 

7,552

 

 

 

7,506

 

 

$

8,396

 

 

$

8,186

 

Less—accumulated depreciation

 

 

(5,342

)

 

 

(5,036

)

Property and equipment, net

 

$

3,054

 

 

$

3,150

 

 

Depreciation expense was $0.3 million and $0.3 million for the three months ended March 31, 2024 and 2023, respectively.

5. Prepaid Expenses and Other Current Assets

Prepaid expenses and other current assets consisted of the following (in thousands):

 

March 31,
2024

 

 

December 31,
2023

 

Prepaid insurance

 

$

1,258

 

 

$

1,817

 

Prepaid research and development expenses

 

 

5,829

 

 

 

1,399

 

Other

 

 

2,288

 

 

 

2,409

 

Prepaid expenses and other current assets

 

$

9,375

 

 

$

5,625

 

 

7


 

 

6. Marketable Securities

Marketable securities consist of the following (in thousands):

 

 

March 31, 2024

 

 

 

Amortized Cost

 

 

Unrealized Gains

 

 

Unrealized Losses

 

 

Fair Value

 

U.S. Government agencies

 

 

176,079

 

 

 

67

 

 

 

(48

)

 

$

176,098

 

Asset-backed securities

 

 

498

 

 

 

 

 

 

(1

)

 

$

497

 

Total

 

$

176,577

 

 

$

67

 

 

$

(49

)

 

$

176,595

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

December 31, 2023

 

 

 

Amortized Cost

 

 

Unrealized Gains

 

 

Unrealized Losses

 

 

Fair Value

 

Commercial paper

 

$

9,144

 

 

$

 

 

$

(7

)

 

$

9,137

 

Corporate bonds

 

 

6,186

 

 

 

3

 

 

 

(2

)

 

$

6,187

 

U.S. Government agencies

 

 

165,453

 

 

 

563

 

 

 

(14

)

 

$

166,002

 

Yankee bonds

 

 

2,985

 

 

 

 

 

 

(3

)

 

$

2,982

 

Asset-backed securities

 

 

780

 

 

 

 

 

 

(1

)

 

$

779

 

Total

 

$

184,548

 

 

$

566

 

 

$

(27

)

 

$

185,087

 

 

As of March 31, 2024, the unrealized losses on the Company’s investments in U.S. government agencies securities and asset-backed securities were caused by interest rate increases. The current credit ratings are all within the guidelines of the investment policy of the Company and the Company does not expect the issuers to settle any security at a price less than the amortized cost basis of the investment. The Company does not intend to sell the investments and it is not probable that the Company will be required to sell the investments before recovery of their amortized cost basis.

As of March 31, 2024, four marketable securities with contractual maturities of one year or less were in an unrealized loss position totaling $0.01 million.

As of March 31, 2024, the Company had marketable securities with a fair value of $58.7 million that had maturities of one to two years.

There were no impairments of the Company’s assets measured and carried at fair value during the three months ended March 31, 2024.

 

 

7. Accrued Expenses and Other Current Liabilities

Accrued expenses and other current liabilities consisted of the following (in thousands):

 

March 31,
2024

 

 

December 31,
2023

 

Accrued research and development expenses

 

$

2,509

 

 

$

3,445

 

Accrued compensation

 

 

1,798

 

 

 

3,503

 

Other

 

 

682

 

 

 

935

 

Accrued expenses and other current liabilities

 

$

4,989

 

 

$

7,883

 

 

 

8. Equity

The Company had 150,000,000 authorized shares of common stock, par value $0.00001 per share, of which 49,504,405 and 49,350,788 shares were issued and outstanding at March 31, 2024 and December 31, 2023, respectively.

8


 

In addition, the Company had 10,000,000 authorized shares of preferred stock, par value $0.00001 per share, all of which shares of preferred stock are undesignated. No authorized shares of preferred stock were issued and outstanding at March 31, 2024 and December 31, 2023.

 

Financings

On November 9, 2023, the Company issued and sold 11,000,000 shares of common stock at a price to the public of $9.00 per share for aggregate gross proceeds of $99.0 million in the 2023 Follow-On Offering. The Company received approximately $92.6 million in net proceeds from the 2023 Follow-On Offering after deducting underwriting discounts and commissions and offering expenses.

On December 5, 2022, the Company issued and sold 7,705,000 shares of common stock, including the full exercise of the underwriters’ option to purchase additional shares at a price to the public of $12.00 per share for aggregate gross proceeds of $92.5 million in the 2022 Follow-On Offering. The Company received approximately $86.7 million in net proceeds from the 2022 Follow-On Offering after deducting underwriting discounts, commissions and offering expenses.

On November 1, 2022, the Company filed the 2022 Shelf with the SEC in relation to the registration of up to an aggregate offering price of $250.0 million of common stock, preferred stock, debt securities, warrants and units or any combination thereof. The Company also simultaneously entered into the Sales Agreement with the Sales Agent to provide for the offering, issuance and sale by the Company of up to an aggregate of $75.0 million of common stock from time to time in the ATM under the 2022 Shelf and subject to the limitations thereof. As of November 6, 2023, the Company had issued 993,996 shares of common stock at an average price of $12.50 under the ATM. On March 27, 2024, the Company filed the 2024 Shelf with the SEC in relation to the registration of up to an aggregate offering price of $350.0 million of common stock, preferred stock, debt securities, warrants and units or any combination thereof, which superseded the 2022 Shelf. The 2024 Shelf included a prospectus supplement to provide for offerings in the ATM under the Sales Agreement. The Company issued no shares of common stock during the three months ended March 31, 2024 under the ATM.

 

9. Stock-Based Compensation

 

2018 Stock Option and Incentive Plan

On December 12, 2018, the Company adopted the Aura Biosciences, Inc. 2018 Equity Incentive Plan, or the 2018 Plan. The 2018 Plan will expire in 2028. Under the 2018 Plan, Aura may grant incentive stock options, non-qualified stock options, restricted and unrestricted stock awards and stock rights. The Board of Directors, or the Board, has determined not to make any further awards under the 2018 Plan as of November 2, 2021. However, the 2018 Plan will continue to govern outstanding equity awards granted thereunder.

 

2021 Stock Option and Incentive Plan

The 2021 Stock Option and Incentive Plan, or the 2021 Plan, was adopted by the Board on October 7, 2021, approved by the Company’s stockholders on October 22, 2021 and became effective on November 1, 2021. The 2021 Plan permits the granting of both options to purchase common stock intended to qualify as incentive stock options under Section 422 of the Code and options that do not so qualify. The number of shares initially reserved for issuance under the 2021 Plan was 3,352,166, which increased on January 1, 2022 and will continue to increase each January 1 thereafter, by 5% of the outstanding number of shares of common stock on the immediately preceding December 31 or such lesser number of shares as determined by the Company’s compensation committee. The maximum number of shares of common stock that may be issued in the form of incentive stock options shall not exceed the initial limit, cumulatively increased on January 1, 2022 and on each January 1 thereafter by the lesser of the annual increase for such year or 3,352,166 shares of common stock. On January 1, 2024, the shares reserved for issuance was increased to 9,414,162 shares. With the transfer of the available options from the 2018 Plan to the 2021 Plan, there were 4,110,430 options and restricted stock units available for grant under the 2021 Plan at March 31, 2024.

 

9


 

2021 Employee Stock Purchase Plan

 

The 2021 Employee Stock Purchase Plan, or the ESPP, was adopted by the Board on October 7, 2021, approved by the Company’s stockholders on October 22, 2021 and became effective on November 1, 2021. A total of 335,217 shares of common stock were initially reserved for issuance under this plan, which increased on January 1, 2022 and will continue to increase each January 1 thereafter through January 1, 2031, by the least of (i) 335,217 shares of common stock, (ii) 1% of the outstanding number of shares of common stock on the immediately preceding December 31 or (iii) such lesser number of shares of common stock as determined by the administrator of the ESPP. On January 1, 2024, the shares reserved for issuance was increased to 1,282,856 shares. The purchase price of the shares under the ESPP are at 85% of the lower of the fair market value of the Company’s common stock on the first trading day of the offering period or on the purchase date. As of March 31, 2024, 1,270,542 shares were available to be issued under the ESPP. The Company recognized $0.03 million share-based compensation expense related to the ESPP for the three months ended March 31, 2024.

 

Stock Options

The Board is authorized to administer the 2021 Plan. In accordance with the provisions of the 2021 Plan, the Board determines the terms of Aura options and other awards issued pursuant thereto, including the following:

which employees, directors and consultants shall be granted awards;
the number of shares of common stock subject to options and other awards;
the exercise price of each option, which generally shall not be less than fair market value of the common stock on the date of grant;
the termination or cancellation provisions applicable to options;
the terms and conditions of other awards, including conditions for repurchase, termination or cancellation, issue price and repurchase price; and
all other terms and conditions upon which each award may be granted in accordance with the 2021 Plan.

In addition, the Board may award restricted shares of common stock and restricted stock units to participants subject to such conditions and restrictions as it may determine. The Board or any committee to which the Board delegates authority may, with the consent of the affected plan participants, re-price or otherwise amend outstanding awards consistent with the terms of the 2021 Plan.

The following table summarizes stock option activity under the 2018 Plan and 2021 Plan for the three months ended March 31, 2024:

 

Options

 

 

Weighted-
Average
Exercise
Price

 

 

Weighted-
Average
Remaining
Contractual
Term
(years)

 

 

Aggregate Intrinsic
Value
(in thousands)

 

Outstanding at December 31, 2023

 

 

5,030,351

 

 

$

8.46

 

 

 

7.54

 

 

$

10,353

 

Granted

 

 

1,085,500

 

 

 

7.83

 

 

 

 

 

 

 

Exercised

 

 

(51,180

)

 

 

3.10

 

 

 

 

 

 

 

Cancelled/Forfeited

 

 

(107,783

)

 

 

11.12

 

 

 

 

 

 

 

Outstanding at March 31, 2024

 

 

5,956,888

 

 

$

8.34

 

 

 

7.69

 

 

$

7,681

 

Exercisable at March 31, 2024

 

 

2,902,169

 

 

$

7.37

 

 

 

6.34

 

 

$

6,627

 

 

 

The weighted-average grant date fair value of stock options granted during the three months ended March 31, 2024 and 2023 was $5.90 and $7.52 per share, respectively. The fair value of options vested during the three months ended March 31, 2024 and 2023 was $2.2 million and $1.2 million, respectively. The total intrinsic value of options exercised was $0.3 million and $0.1 million for the three months ended March 31, 2024 and 2023, respectively.

10


 

The fair value of the stock options issued for the three months ended March 31, 2024 and 2023 was measured with the following weighted-average assumptions:

 

Three Months Ended
March 31,

 

 

 

2024

 

 

2023

 

Risk-free interest rate

 

 

3.84

%

 

 

3.53

%

Expected term (years)

 

 

6.06

 

 

 

6.04

 

Expected volatility of the underlying stock

 

 

88.50

%

 

 

84.83

%

Expected dividend rate

 

 

%

 

 

%

 

 

Restricted Stock Units

The Company has granted restricted stock units with service-based vesting conditions. Unvested restricted stock units may not be sold or transferred by the holder.

A summary of the restricted stock units activity during the three months ended March 31, 2024 is as follows:

 

Restricted Stock Units

 

 

Weighted-
Average
Grant Date Fair Value

 

Unvested at December 31, 2023

 

 

1,093,402

 

 

$

10.27

 

Granted

 

 

731,925

 

 

 

7.83

 

Vested/Released

 

 

(90,123

)

 

 

10.08

 

Forfeited

 

 

(44,662

)

 

 

10.05

 

Unvested at March 31, 2024

 

 

1,690,542

 

 

$

9.23

 

 

As a result of the 2021 Plan, the Company granted restricted stock units which vest in increments of 25% annually over a period of four years. For the three months ended March 31, 2024, 90,123 restricted stock units vested with a fair value of $1.0 million.

 

Stock-based Compensation Expense

 

The Company recorded stock-based compensation expense as follows (in thousands):

 

Three Months Ended
March 31,

 

 

 

2024

 

 

2023

 

Research and development

 

$

1,478

 

 

$

767

 

General and administrative

 

 

1,431

 

 

 

1,146

 

Total

 

$

2,909

 

 

$

1,913

 

 

As of March 31, 2024, there was $18.8 million of unrecognized compensation expense related to stock options, which is expected to be recognized over a weighted-average period of 2.74 years.

As of March 31, 2024, there was $13.8 million of unrecognized compensation expense related to restricted stock units, which is expected to be recognized over a weighted-average period of 3.31 years.

10. Common Stock Warrants

In February 2015 and May 2015, the Company issued warrants to purchase 1,650,098 and 887,536 shares of Series B convertible preferred stock, respectively, at an exercise price of $1.24235 per share (the “Series B Warrants”). Each Series B Warrant was immediately exercisable and expires ten years from the original date of issuance. Pursuant to FASB ASC Topic 480, Distinguishing Liabilities from Equity, the Series B Warrants were classified as a liability and were re-measured to fair value at each balance sheet date. A total of 173,827 of the Series B Warrants were outstanding and were converted into warrants to purchase 12,686 shares of common stock with an exercise price of $17.03 upon the completion of the IPO in November 2021. As a result, the 12,686 common stock warrants were converted into equity instruments and remain outstanding as of March 31, 2024.

11


 

11. Compensation

In January 2012, the Company adopted the Aura Biosciences 401(k) Profit Sharing Plan and Trust (the “401(k) Plan”) for its employees, which is designed to be qualified under Section 401(k) of the Internal Revenue Code. Eligible employees are permitted to contribute to the 401(k) Plan within statutory and 401(k) Plan limits. The Company makes matching contributions of 100% of the first 6% of employee contributions. The Company made matching contributions in the amount of $0.2 million for the three months ended March 31, 2024 and 2023, respectively.

12. Commitments and Contingencies

Lease Commitments

The Company has historically entered into lease arrangements for its facilities. The Company has one operating lease for its office and laboratory facility with required future minimum payments as of March 31, 2024 and one operating lease that was terminated in August 2022.

On May 16, 2022, the Company entered into an office and laboratory lease in Boston, MA with an initial 10-year term and one renewal option to extend the lease for an additional seven years. The lease commenced on August 1, 2022, and estimated payments due under the initial term total $35.2 million. The lease requires a letter of credit totaling $0.8 million which is classified as long-term restricted cash and deposits on the consolidated balance sheet. The landlord will reimburse the Company up to $0.5 million for certain costs related to expansion of the laboratory space. As of March 31, 2024, the Company has incurred $0.1 million of expenses related to the expansion, and has been reimbursed for $0.1 million of these expenses.

The following table contains a summary of the lease costs recognized under ASC 842 and other information pertaining to the Company’s leases for the three months ended March 31, 2024 and 2023 (in thousands):

 

 

Three Months Ended
March 31,

 

 

 

2024

 

 

2023

 

Lease Cost

 

 

 

 

 

 

Operating lease costs

 

 

868

 

 

 

881

 

Variable lease costs

 

 

361

 

 

 

309

 

Short-term lease costs

 

 

 

 

 

2

 

Total lease costs

 

$

1,229

 

 

$

1,192

 

 

 

Cash paid for amounts included in the measurement of lease liabilities—operating leases

 

 

 

 

$

751

 

 

$

768

 

Weighted-average remaining lease term—operating leases (years)

 

 

 

 

 

8.34

 

 

 

9.34

 

Weighted-average discount rate—operating leases

 

 

 

 

 

10.71

%

 

 

10.71

%

 

The following table reconciles the future minimum commitments to the Company’s operating lease liabilities at March 31, 2024 (in thousands):

Operating lease payments as of March 31, 2024

 

2024

$

2,070

 

2025

 

3,306

 

2026

 

3,405

 

2027

 

3,507

 

2028

 

3,612

 

Thereafter

 

13,823

 

Total lease payments

 

29,723

 

Less: interest

 

(10,403

)

Total lease liabilities at March 31, 2024

 

19,320

 

Less: current portion of lease liabilities

 

2,741

 

Lease liabilities, net of current portion

$

16,579

 

 

12


 

License Agreements

The Company has entered into the following key agreements that relate to the core technology under development:

Rakuten License and Supply Agreement

In May 2024, the Company received notice from LI-COR, Inc., or LI-COR, that as of April 16, 2024, LI-COR assigned, and Rakuten Medical, Inc., or Rakuten, assumed, the 2014 Exclusive Agreement and the 2014 Non-Exclusive Agreement (each described below), each originally entered into by and between the Company and LI-COR. The 2014 Exclusive Agreement and 2014 Non-Exclusive Agreement were not otherwise modified by this assignment and assumption and remain in effect.

 

2014 Exclusive Agreement

In January 2014, the Company entered into an Exclusive License and Supply Agreement, or the 2014 Exclusive Agreement, with LI-COR for the license of IRDye 700DC and related licensed patent (now expired) for the treatment and diagnosis of ocular cancers in humans, as amended in January 2016, July 2017, April 2018 and April 2019. The 2014 Exclusive Agreement required a one-time upfront license issue fee of $0.1 million and aggregate milestone payments of up to $0.2 million upon certain regulatory and development milestones. The Company is also required to pay Rakuten low-single digit royalties on net sales. The term of the 2014 Exclusive Agreement expires on a country-by-country basis, until the longer of (i) ten years from the first commercial sale of a licensed product in such country and (ii) the last to expire valid claim in such country.

The Company recognized no expenses related to this agreement and related amendments for the three months ended March 31, 2024 and 2023, respectively.

2014 Non-Exclusive Agreement

In December 2014, the Company entered into a Non-Exclusive License Agreement, or the 2014 Non-Exclusive Agreement, with LI-COR for the supply of IRDye 700DX to the Company for the treatment and diagnosis of non-ocular solid tumor cancers in humans. Under the 2014 Non-Exclusive Agreement, the Company paid a license issue fee of $0.03 million on the effective date. The Company must also pay Rakuten a non-refundable, non-creditable fee of $0.03 million per each licensed product upon pre-IND designation, as defined of such licensed product, aggregate milestone payments of up to $0.3 million upon certain regulatory and development milestones; and during the term, the Company must pay Rakuten a low-single digit percentage royalty on net sales. Rakuten receives 10% of all sublicensee income within 30 days of the Company’s receipt from the sublicensee. The 2014 Non-Exclusive Agreement also required the Company to make certain payments upon the achievement of specified development and commercial milestones of up to $0.4 million in aggregate. During the three months ended March 31, 2024 and 2023, the Company recognized no milestones related to this agreement.

Life Technologies Corporation License Agreements

In December 2014, the Company entered into a non-exclusive, perpetual license agreement with Life Technologies Corporation, or the Life Technologies, which allows for five licensed products. Under this agreement the Company is required to pay an initial license fee of $0.1 million for each product. An annual development fee of $0.1 million is due within a year from payment of the initial license fee and due annually or earlier of (i) payment of a commercialization fee or (ii) all development work is terminated. The commercialization fee is a one-time, non-refundable, non-creditable fee of $0.3 million due upon receipt of approval of a licensed product. In the event of a change of control, there will be a change of control fee of $0.2 million.