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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_____________________________________________
FORM 10-Q
_____________________________________________
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 |
For the quarterly period ended June 30, 2022
OR
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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 001-39990
ANGION BIOMEDICA CORP
(Exact name of registrant as specified in its charter)
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Delaware |
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11-3430072 |
(State or other jurisdiction of
incorporation or organization) |
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(I.R.S. Employer Identification No.) |
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51 Charles Lindbergh Boulevard Uniondale, New York
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11553 |
(Address of Principal Executive Offices) |
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(Zip Code) |
(415) 655-4899
Registrant's telephone number, including area code
Securities registered pursuant to Section 12(b) of the
Act:
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Title of each class |
Trading Symbol(s) |
Name of each exchange on which registered |
Common Stock, par value $0.01 |
ANGN |
The Nasdaq Global Select Market |
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 and posted on its corporate web site, if any, every
Interactive Data File required to be submitted and posted pursuant
to Rule 405 of Regulation S-(§232.405 of this chapter) during the
preceding 12 months (or for such shorter period that the registrant
was required to submit and post such files). Yes ☒ No
☐
Indicate by check mark whether the registrant is a large
accelerated filer, an accelerated filer, a non-accelerated filer,
or a smaller reporting 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.
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Large accelerated filer |
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Accelerated filer |
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Non-accelerated filer |
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Smaller reporting company |
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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 Act). Yes
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No
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The number of shares of the issuer’s common stock outstanding as of
August 8, 2022 was 30,113,339.
Forward-Looking Statements
This Quarterly Report on Form 10-Q contains forward-looking
statements. We intend such forward-looking statements to be covered
by the safe harbor provisions for forward-looking statements
contained in Section 27A of the Securities Act of 1933 and Section
21E of the Securities Exchange Act of 1934. Any statements
contained in this Quarterly Report on Form 10-Q that are not
statements of historical facts may be deemed to be forward-looking
statements. In some cases, you can identify forward-looking
statements by terminology such as “aim,” “anticipate,” “assume,”
“believe,” “contemplate,” “continue,” “could,” “due,” “estimate,”
“expect,” “goal,” “intend,” “may,” “objective,” “plan,” “predict,”
“potential,” “positioned,” “seek,” “should,” “target,” “will,”
“would,” and other similar expressions that are predictions of or
indicate future events and future trends, or the negative of these
terms or other comparable terminology. These forward-looking
statements include, but are not limited to, statements
about:
•our
intention to explore strategic options, including but not limited
to merger, reverse merger, other business combinations, sale of
assets, licensing, or other strategic alternatives to enhance value
for shareholders;
•the
potential benefits, activity, effectiveness and safety of our
product candidates;
•the
success and timing of our preclinical studies and clinical trials,
including the timing and availability of data from such clinical
trials;
•the
primary endpoints to be utilized in our clinical
trials;
•the
scope, progress, expansion, and costs of developing and
commercializing our product candidates;
•our
dependence on existing and future collaborators for commercializing
product candidates in the collaboration;
•our
receipt and timing of any milestone payments or royalties under any
existing or future research collaboration and license agreements or
arrangements;
•the
potential effects of the COVID-19 pandemic on our business and
operations, results of operations and financial
performance;
•the
potential adverse effects of any regional armed conflicts on our
business and operations, results of operations and financial
performance;
•the
size and growth of the potential markets for our product candidates
and the ability to serve those markets;
•our
expectations regarding our expenses and revenue, the sufficiency of
our cash resources, and needs for additional
financing;
•regulatory
developments in the United States and other countries;
•the
rate and degree of market acceptance of any future
products;
•the
implementation of our business model and strategic plans for our
business and product candidates, including additional indications
which we may pursue;
•our
expectations regarding competition;
•our
anticipated growth strategies;
•the
performance of third-party manufacturers;
•our
ability to establish and maintain development
partnerships;
•our
expectations regarding federal, state, and foreign regulatory
requirements;
•our
ability to obtain and maintain intellectual property protection for
our product candidates;
•the
successful development for our sales and marketing
capabilities;
•the
hiring, retention, or separation of key scientific or management
personnel; and
•the
anticipated trends and challenges in our business and the market in
which we operate.
We caution you that the foregoing list may not contain all of the
forward-looking statements made in this Quarterly Report on Form
10-Q.
Forward-looking statements involve known and unknown risks,
uncertainties and other factors that may cause our actual results,
performance or achievements to be materially different from any
future results, performance or achievements expressed or implied by
the forward-looking statements. We discuss these risks in greater
detail in “Risk Factors” and elsewhere in this Quarterly Report on
Form 10-Q. Given these uncertainties, you should not place undue
reliance on these forward-looking statements. Also, forward-looking
statements represent our management’s beliefs and assumptions only
as of the date of this Quarterly Report on Form 10-Q. Except as
required by law, we assume no obligation to update these
forward-looking statements publicly, or to update the reasons
actual results could differ materially from those anticipated in
these forward-looking statements, even if new information becomes
available in the future. In addition, statements that “we believe”
and similar statements reflect our beliefs and opinions on the
relevant subject. These statements are based on information
available to us as of the date of this Quarterly Report on Form
10-Q. While we believe that information provides a reasonable basis
for
these statements, that information may be limited or incomplete.
Our statements should not be read to indicate that we have
conducted an exhaustive inquiry into or review of, all relevant
information. These statements are inherently uncertain and
investors are cautioned not to unduly rely on these
statements.
This Quarterly Report on Form 10-Q also contains estimates,
projections and other information concerning our industry, our
business and the markets for certain drugs, including data
regarding the estimated size of those markets, their projected
growth rates and the incidence of certain medical conditions.
Information that is based on estimates, forecasts, projections or
similar methodologies is inherently subject to uncertainties, and
actual events or circumstances may differ materially from events
and circumstances reflected in this information. Unless otherwise
expressly stated, we obtained this industry, business, market and
other data from reports, research surveys, studies and similar data
prepared by third parties, industry, medical and general
publications, government data and similar sources. In some cases,
we do not expressly refer to the sources from which this data is
derived. In that regard, when we refer to one or more sources of
this type of data in any paragraph, you should assume that other
data of this type appearing in the same paragraph is derived from
the same sources, unless otherwise expressly stated or the context
otherwise requires.
Trademarks
This Quarterly Report on Form 10-Q includes trademarks, service
marks and trade names owned by us or other companies. All
trademarks, service marks and trade names included in this
Quarterly Report on Form 10-Q are the property of their respective
owners.
Part I FINANCIAL INFORMATION
Item 1. Financial Statements
ANGION BIOMEDICA CORP.
Condensed Consolidated Balance Sheets
(in thousands, except share and per share amounts)
(unaudited)
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June 30,
2022 |
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December 31,
2021 |
Assets |
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Current assets |
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Cash and cash equivalents |
$ |
63,372 |
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$ |
88,756 |
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Grants receivable |
— |
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806 |
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Prepaid expenses and other current assets |
2,513 |
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1,685 |
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Total current assets |
65,885 |
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91,247 |
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Property and equipment, net |
388 |
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451 |
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Operating lease right-of-use assets |
3,589 |
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3,986 |
|
Investments in related parties |
865 |
|
|
723 |
|
Other assets |
86 |
|
|
106 |
|
Total assets |
$ |
70,813 |
|
|
$ |
96,513 |
|
Liabilities and stockholders’ equity |
|
|
|
Current liabilities |
|
|
|
Accounts payable |
$ |
2,656 |
|
|
$ |
4,710 |
|
Accrued expenses |
4,086 |
|
|
3,219 |
|
Operating lease liabilities, current |
943 |
|
|
894 |
|
Financing obligation, current |
62 |
|
|
58 |
|
Deferred revenue, current |
— |
|
|
2,301 |
|
Warrant liability |
33 |
|
|
114 |
|
Total current liabilities |
7,780 |
|
|
11,296 |
|
Operating lease liabilities, noncurrent |
2,990 |
|
|
3,475 |
|
Financing obligation, noncurrent |
202 |
|
|
235 |
|
Other liabilities, noncurrent |
81 |
|
|
— |
|
|
|
|
|
|
|
|
|
Total liabilities |
11,053 |
|
|
15,006 |
|
Commitments and contingencies (Note 9) |
|
|
|
Stockholders' equity |
|
|
|
|
|
|
|
|
|
|
|
Common stock, $0.01 par value per share; 300,000,000 and
300,000,000 shares authorized, 30,052,544 and 29,959,060 shares
issued and outstanding as of June 30, 2022 and
December 31, 2021, respectively
|
301 |
|
|
300 |
|
|
|
|
|
Additional paid-in capital |
297,875 |
|
|
296,445 |
|
Accumulated other comprehensive income (loss) |
98 |
|
|
(103) |
|
Accumulated deficit |
(238,514) |
|
|
(215,135) |
|
Total stockholders' equity |
59,760 |
|
|
81,507 |
|
Total liabilities and stockholders' equity |
$ |
70,813 |
|
|
$ |
96,513 |
|
The accompanying notes are an integral part of these unaudited
condensed consolidated financial statements.
ANGION BIOMEDICA CORP.
Condensed Consolidated Statements of Operations and Comprehensive
Loss
(in thousands, except share and per share amounts)
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
|
2022 |
|
2021 |
|
2022 |
|
2021 |
Revenue:
|
|
|
|
|
|
|
|
Contract revenue
|
$ |
653 |
|
|
$ |
540 |
|
|
$ |
2,301 |
|
|
$ |
911 |
|
|
|
|
|
|
|
|
|
Total revenue
|
653 |
|
|
540 |
|
|
2,301 |
|
|
911 |
|
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Research and development
|
6,073 |
|
|
14,444 |
|
|
17,740 |
|
|
28,742 |
|
General and administrative
|
3,615 |
|
|
4,340 |
|
|
8,081 |
|
|
10,352 |
|
Total operating expenses
|
9,688 |
|
|
18,784 |
|
|
25,821 |
|
|
39,094 |
|
Loss from operations
|
(9,035) |
|
|
(18,244) |
|
|
(23,520) |
|
|
(38,183) |
|
Other income (expense)
|
|
|
|
|
|
|
|
Change in fair value of warrant liability
|
42 |
|
|
200 |
|
|
81 |
|
|
(3,319) |
|
Change in fair value of convertible notes
|
— |
|
|
— |
|
|
— |
|
|
(7,469) |
|
Change in fair value of Series C convertible preferred
stock |
— |
|
|
— |
|
|
— |
|
|
(3,592) |
|
Gain upon debt extinguishment |
— |
|
|
905 |
|
|
— |
|
|
905 |
|
Foreign exchange transaction loss |
(337) |
|
|
(22) |
|
|
(226) |
|
|
(75) |
|
Earnings from equity method investment
|
133 |
|
|
(35) |
|
|
142 |
|
|
20 |
|
Interest income (expense), net
|
58 |
|
|
124 |
|
|
144 |
|
|
(2,046) |
|
Total other income (expense)
|
(104) |
|
|
1,172 |
|
|
141 |
|
|
(15,576) |
|
Net loss
|
(9,139) |
|
|
(17,072) |
|
|
(23,379) |
|
|
(53,759) |
|
Other comprehensive income: |
|
|
|
|
|
|
|
Foreign currency translation adjustment
|
297 |
|
|
68 |
|
|
201 |
|
|
114 |
|
Comprehensive loss
|
$ |
(8,842) |
|
|
$ |
(17,004) |
|
|
$ |
(23,178) |
|
|
$ |
(53,645) |
|
Net loss per common share, basic and diluted
|
$ |
(0.30) |
|
|
$ |
(0.58) |
|
|
$ |
(0.78) |
|
|
$ |
(2.02) |
|
Weighted average common shares outstanding, basic and
diluted
|
29,973,886 |
|
|
29,670,329 |
|
|
29,966,609 |
|
|
26,574,290 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The accompanying notes are an integral part of these unaudited
condensed consolidated financial statements.
ANGION BIOMEDICA CORP.
Condensed Consolidated Statements of Stockholders' Equity
(Deficit)
(in thousands, except share amounts)
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common Stock
|
|
Treasury Stock
|
|
Additional
Paid-in
Capital
|
|
Accumulated Other
Comprehensive Loss |
|
Accumulated
Deficit
|
|
Total
Stockholders'
Equity
|
|
|
|
|
|
|
|
|
Shares
|
|
Amount
|
|
Shares
|
|
Amount
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance as of December 31, 2021
|
29,959,060 |
|
$ |
300 |
|
|
— |
|
$ |
— |
|
|
$ |
296,445 |
|
|
$ |
(103) |
|
|
$ |
(215,135) |
|
|
$ |
81,507 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of common stock upon net settlement of restricted stock
units and performance stock units |
365 |
|
— |
|
|
— |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
|
|
|
|
|
|
|
Stock-based compensation |
— |
|
— |
|
|
— |
|
— |
|
|
31 |
|
|
|
|
— |
|
|
31 |
|
|
|
|
|
|
|
|
|
Foreign currency translation adjustment |
— |
|
— |
|
|
— |
|
— |
|
|
— |
|
|
(96) |
|
|
— |
|
|
(96) |
|
|
|
|
|
|
|
|
|
Net loss |
— |
|
— |
|
|
— |
|
— |
|
|
— |
|
|
— |
|
|
(14,240) |
|
|
(14,240) |
|
|
|
|
|
|
|
|
|
Balance as of March 31, 2022 |
29,959,425 |
|
|
$ |
300 |
|
|
— |
|
|
— |
|
|
$ |
296,476 |
|
|
$ |
(199) |
|
|
$ |
(229,375) |
|
|
$ |
67,202 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of common stock upon net settlement of restricted stock
units and performance stock units |
93,119 |
|
|
1 |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
1 |
|
|
|
|
|
|
|
|
|
Stock-based compensation |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
1,399 |
|
|
— |
|
|
— |
|
|
1,399 |
|
|
|
|
|
|
|
|
|
Foreign currency translation adjustment |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
297 |
|
|
— |
|
|
297 |
|
|
|
|
|
|
|
|
|
Net loss |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(9,139) |
|
|
(9,139) |
|
|
|
|
|
|
|
|
|
Balance as of June 30, 2022 |
30,052,544 |
|
|
$ |
301 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
297,875 |
|
|
$ |
98 |
|
|
$ |
(238,514) |
|
|
$ |
59,760 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common Stock
|
|
Treasury Stock
|
|
Additional
Paid-in
Capital
|
|
Accumulated Other
Comprehensive Loss |
|
Accumulated
Deficit
|
|
Total
Stockholders'
Equity (Deficit)
|
|
|
|
|
|
|
|
|
Shares
|
|
Amount
|
|
Shares
|
|
Amount
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance as of December 31, 2020
|
15,632,809 |
|
$ |
156 |
|
|
(316,088) |
|
$ |
(1,846) |
|
|
$ |
72,136 |
|
|
$ |
(333) |
|
|
$ |
(160,562) |
|
|
$ |
(90,449) |
|
|
|
|
|
|
|
|
|
Issuance of common stock upon initial public offering, net of
issuance costs, discount, and commissions of
$9.3 million
|
5,750,000 |
|
58 |
|
|
— |
|
— |
|
|
82,657 |
|
|
— |
|
|
— |
|
|
82,715 |
|
|
|
|
|
|
|
|
|
Issuance of common stock upon Concurrent Private Placement, net of
issuance costs of $0.7 million
|
1,562,500 |
|
16 |
|
|
— |
|
— |
|
|
24,234 |
|
|
— |
|
|
— |
|
|
24,250 |
|
|
|
|
|
|
|
|
|
Conversion of convertible preferred stock into common stock upon
initial public offering |
2,234,640 |
|
22 |
|
|
— |
|
— |
|
|
35,732 |
|
|
— |
|
|
— |
|
|
35,754 |
|
|
|
|
|
|
|
|
|
Conversion of convertible notes into common stock upon initial
public offering |
3,636,189 |
|
36 |
|
|
— |
|
— |
|
|
58,143 |
|
|
— |
|
|
— |
|
|
58,179 |
|
|
|
|
|
|
|
|
|
Conversion of convertible notes prior to initial public
offering |
33,978 |
|
— |
|
|
— |
|
— |
|
|
460 |
|
|
— |
|
|
— |
|
|
460 |
|
|
|
|
|
|
|
|
|
Net exercise of warrants upon initial public offering |
844,335 |
|
9 |
|
|
— |
|
— |
|
|
13,500 |
|
|
— |
|
|
— |
|
|
13,509 |
|
|
|
|
|
|
|
|
|
Exercise of broker warrants |
47,188 |
|
— |
|
|
— |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
|
|
|
|
|
|
|
Exercise of warrants |
107,038 |
|
1 |
|
|
— |
|
— |
|
|
679 |
|
|
— |
|
|
— |
|
|
680 |
|
|
|
|
|
|
|
|
|
Exercise of stock options |
155 |
|
— |
|
|
— |
|
— |
|
|
1 |
|
|
— |
|
|
— |
|
|
1 |
|
|
|
|
|
|
|
|
|
Issuance of common stock upon vesting of restricted stock units and
performance stock units |
204,774 |
|
2 |
|
|
— |
|
— |
|
|
11 |
|
|
— |
|
|
— |
|
|
13 |
|
|
|
|
|
|
|
|
|
Return of common stock to pay withholding taxes on restricted
stock |
— |
|
— |
|
|
(77,060) |
|
(1,145) |
|
|
— |
|
|
— |
|
|
— |
|
|
(1,145) |
|
|
|
|
|
|
|
|
|
Stock-based compensation |
— |
|
— |
|
|
— |
|
— |
|
|
5,117 |
|
|
— |
|
|
— |
|
|
5,117 |
|
|
|
|
|
|
|
|
|
Foreign currency translation adjustment |
— |
|
— |
|
|
— |
|
— |
|
|
— |
|
|
46 |
|
|
— |
|
|
46 |
|
|
|
|
|
|
|
|
|
Net loss |
— |
|
— |
|
|
— |
|
— |
|
|
— |
|
|
— |
|
|
(36,687) |
|
|
(36,687) |
|
|
|
|
|
|
|
|
|
Balance as of March 31, 2021 |
30,053,606 |
|
$ |
300 |
|
|
(393,148) |
|
$ |
(2,991) |
|
|
$ |
292,670 |
|
|
$ |
(287) |
|
|
$ |
(197,249) |
|
|
$ |
92,443 |
|
|
|
|
|
|
|
|
|
Fractional shares paid out related to the forward stock
split |
|
|
|
|
|
|
|
|
(10) |
|
|
|
|
|
|
(10) |
|
|
|
|
|
|
|
|
|
Issuance of broker warrants |
— |
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
|
|
|
|
|
|
Exercise of broker warrants |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
|
|
|
|
|
|
|
Exercise of warrants |
22,714 |
|
|
1 |
|
|
— |
|
|
— |
|
|
175 |
|
|
— |
|
|
— |
|
|
176 |
|
|
|
|
|
|
|
|
|
Exercise of stock options |
8,495 |
|
|
— |
|
|
— |
|
|
— |
|
|
79 |
|
|
— |
|
|
— |
|
|
79 |
|
|
|
|
|
|
|
|
|
Issuance of common stock upon net settlement of restricted stock
units and performance stock units |
193,715 |
|
|
2 |
|
|
— |
|
|
|
|
4 |
|
|
— |
|
|
— |
|
|
6 |
|
|
|
|
|
|
|
|
|
Repurchase of common stock |
— |
|
|
— |
|
|
(87,795) |
|
|
(1,219) |
|
|
— |
|
|
— |
|
|
— |
|
|
(1,219) |
|
|
|
|
|
|
|
|
|
Stock-based compensation |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
2,718 |
|
|
— |
|
|
— |
|
|
2,718 |
|
|
|
|
|
|
|
|
|
Foreign currency translation adjustment |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
68 |
|
|
— |
|
|
68 |
|
|
|
|
|
|
|
|
|
Net loss |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(17,072) |
|
|
(17,072) |
|
|
|
|
|
|
|
|
|
Balance as of June 30, 2021 |
30,278,530 |
|
|
$ |
303 |
|
|
(480,943) |
|
|
$ |
(4,210) |
|
|
$ |
295,636 |
|
|
$ |
(219) |
|
|
$ |
(214,321) |
|
|
$ |
77,189 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The accompanying notes are an integral part of these unaudited
condensed consolidated financial statements.
ANGION BIOMEDICA CORP.
Condensed Consolidated Statements of Cash Flows
(in thousands)
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended June 30, |
|
2022 |
|
2021 |
Cash flows from operating activities:
|
|
|
|
Net loss
|
$ |
(23,379) |
|
|
$ |
(53,759) |
|
Adjustments to reconcile net loss to net cash used in operating
activities:
|
|
|
|
Depreciation |
63 |
|
|
29 |
|
Amortization of right-of-use assets |
397 |
|
|
332 |
|
Amortization of debt issuance costs |
— |
|
|
1,884 |
|
Stock-based compensation |
1,430 |
|
|
7,835 |
|
PPP Loan forgiveness |
— |
|
|
(905) |
|
Change in fair value of convertible notes |
— |
|
|
7,469 |
|
Change in fair value of Series C convertible preferred
stock |
— |
|
|
3,592 |
|
Change in fair value of warrant liability |
(81) |
|
|
3,319 |
|
Earnings from equity method investment |
(142) |
|
|
(45) |
|
Distribution from equity investment |
— |
|
|
24 |
|
Changes in operating assets and liabilities:
|
|
|
|
Grants receivable
|
806 |
|
|
— |
|
Prepaid expenses and other current assets
|
(796) |
|
|
3,315 |
|
Other assets |
19 |
|
|
(38) |
|
Accounts payable
|
(2,086) |
|
|
3,736 |
|
Accrued expenses
|
867 |
|
|
1,345 |
|
Lease liabilities
|
(436) |
|
|
(303) |
|
|
|
|
|
Deferred revenue |
(2,301) |
|
|
(912) |
|
Other liabilities, noncurrent |
81 |
|
|
— |
|
Net cash used in operating activities
|
(25,558) |
|
|
(23,082) |
|
Cash flows from investing activities:
|
|
|
|
Purchases of fixed assets
|
— |
|
|
(285) |
|
Net cash used in investing activities
|
— |
|
|
(285) |
|
Cash flows from financing activities:
|
|
|
|
Net proceeds from issuance of common stock upon initial public
offering and Concurrent Private Placement, net of discount and
commissions |
— |
|
|
110,560 |
|
Payment of deferred offering costs |
— |
|
|
(3,073) |
|
Fractional share payments related to the forward stock
split |
— |
|
|
(10) |
|
Taxes paid related to net share settlement upon vesting of
restricted stock awards
|
— |
|
|
(2,364) |
|
Proceeds from RSU settlement |
1 |
|
|
19 |
|
Payment of financing obligation
|
(29) |
|
|
— |
|
Exercise of warrants |
— |
|
|
856 |
|
Exercise of stock options |
— |
|
|
80 |
|
Net cash (used in) provided by financing activities
|
(28) |
|
|
106,068 |
|
Effect of foreign currency on cash |
202 |
|
|
5 |
|
Net (decrease) increase in cash and cash equivalents
|
(25,384) |
|
|
82,706 |
|
Cash and cash equivalents at the beginning of the
period
|
88,756 |
|
|
34,607 |
|
Cash and cash equivalents at the end of the period
|
$ |
63,372 |
|
|
$ |
117,313 |
|
Supplemental disclosure of noncash investing and financing
activities:
|
|
|
|
Conversion of convertible notes into common stock upon initial
public offering |
$ |
— |
|
|
$ |
58,179 |
|
Conversion of Series C preferred stock into common stock upon
initial public offering |
$ |
— |
|
|
$ |
35,754 |
|
Net exercise of warrants upon initial public offering |
$ |
— |
|
|
$ |
13,509 |
|
Right-of-use assets obtained in exchange for operating lease
liabilities |
$ |
— |
|
|
$ |
624 |
|
Conversion of convertible notes into common stock prior to initial
public offering |
$ |
— |
|
|
$ |
460 |
|
|
|
|
|
|
|
|
|
The accompanying notes are an integral part of these unaudited
condensed consolidated financial statements.
Table of Contents
ANGION BIOMEDICA CORP.
Notes to Unaudited Interim Condensed Consolidated Financial
Statements
Note 1—Description of the Business and Financial
Condition
Angion Biomedica Corp. (“Angion” or, the “Company”) is a
biopharmaceutical company that has focused on the discovery,
development and commercialization of novel small molecule
therapeutics to address acute organ injuries and fibrotic diseases.
The Company was incorporated in Delaware in 1998.
Initial Public Offering and the Concurrent Private
Placement
On February 9, 2021, the Company’s registration statement on Form
S-1 (File No. 333-252177) relating to its initial public offering
(“IPO”) of common stock became effective. The IPO closed on
February 9, 2021 at which time the Company issued 5,750,000 shares
of its common stock at a price to the public of $16.00 per share,
which included the full exercise by the underwriters of their
option to purchase an additional 750,000 shares of common stock. In
addition to the shares being sold in the IPO, the Company sold an
additional 1,562,500 shares of its common stock at the public
offering price of $16.00 per share to entities affiliated with
Vifor International, Ltd., an existing stockholder (the “Concurrent
Private Placement”) for gross proceeds of
$25.0 million.
The IPO and Concurrent Private Placement generated aggregate net
proceeds of approximately $107.0 million, after deducting the
underwriting discounts and commissions, private placement fee and
offering expenses payable by the Company.
In connection with the closing of the IPO, all outstanding shares
of convertible preferred stock and outstanding convertible notes
automatically converted into shares of common stock. Subsequent to
the closing of the IPO, there were no shares of convertible
preferred stock outstanding and there were no convertible notes
outstanding. In connection with the closing of the IPO, the Company
restated its Restated Certificate of Incorporation to change the
authorized capital stock to 300,000,000 shares designated as common
stock, and 10,000,000 shares designated as preferred stock, with a
par value of $0.01 per share and $0.01 per share,
respectively.
Reduction in Force
On January 4, 2022, the Company announced a reduction in force
impacting somewhat less than half of its employees. The Company’s
decision to engage in this reduction resulted from an assessment of
its internal resources needs, given the results of the Phase 3
study of ANG-3777 in patients at risk for delayed graft function
(DGF) would likely not support a regulatory approval in that
population and the Phase 2 study in CSA-AKI would not support a
Phase 3 trial in that indication. This reduction was a cost-cutting
measure across the organization to support the Company’s 2022
primary focus on the clinical development of its investigational
asset ANG-3070, a highly selective, oral tyrosine kinase receptor
inhibitor in development as a treatment for fibrotic diseases, as
well as advancing preclinical assets to IND-enabling studies. In
connection with the reduction in force, the Company incurred
termination costs, which include severance, benefits, and related
costs of approximately $3.2 million, of which
$2.7 million was research and development expense and
$0.5 million was general and administrative expense. The
Company paid $1.8 million during the six months ended June 30, 2022
and expects to pay the remaining $1.4 million, of which
$1.3 million is included in accrued expenses, and $0.1 million
is included in other liabilities, noncurrent, on or before
September 2023.
On July 25, 2022, the Company announced a process to explore
strategic options for enhancing and preserving shareholder value
(the “2022 Strategic Realignment”). Potential strategic options to
be explored or evaluated as part of the process may include, but
are not limited to merger, reverse merger, other business
combination, sale of assets, licensing, or other strategic
transactions. The Company also announced the discontinuation of
development of ANG-3070 for all indications and the discontinuation
of other development activities pending conclusion of the strategic
process, except certain pre-clinical studies of ANG-3777,
consistent with ongoing discussions with its license partner Vifor
Pharma. In connection with the foregoing, the Company also
announced an additional reduction in force of the majority of its
current 37 employees. This
reduction in force, expected to be completed in October 2022, is a
cash preservation measure and impacts employees across
the
Table of Contents
ANGION BIOMEDICA CORP.
Notes to Consolidated Financial Statements (Continued)
organization. The Company expects to record a charge of
approximately $3.3 million in the third quarter of 2022 to
implement the reduction in force. These charges are primarily
one-time termination benefits payable in cash.
Liquidity and Capital Resources
Since inception, the Company has devoted substantially all of its
efforts and financial resources to conducting research and
development activities, including drug discovery and pre-clinical
studies and clinical trials, establishing and maintaining its
intellectual property portfolio, organizing and staffing the
Company, business planning, raising capital and providing general
and administrative support for these operations. The Company has
incurred losses from operations and negative cash flows from
operating activities since inception. As of June 30, 2022, the
Company had $63.4 million in cash and cash equivalents and an
accumulated deficit of $238.5 million.
The Company has evaluated and concluded there are no conditions or
events, considered in the aggregate, that raise substantial doubt
about its ability to continue as a going concern for a period of
one year following the date these condensed consolidated financial
statements are issued and believes its existing cash and cash
equivalents will be sufficient to meet the projected operating
requirements for at least 12 months following the issuance date of
its condensed consolidated financial statements.
Note 2—Summary of Significant Accounting Policies
Basis of Presentation
The Company's condensed consolidated financial statements have been
prepared in conformity with accounting principles generally
accepted in the United States of America (“GAAP”) and include the
accounts of the Company, its wholly owned subsidiary, Angion
Biomedica Europe Limited, which was dissolved on March 16, 2021,
and its wholly owned subsidiary, Angion Pty Ltd., which was
established on August 22, 2019. The Company established Angion Pty
Ltd., an Australian subsidiary, for the purpose of qualifying for
research credits for studies conducted in Australia. All
significant intercompany balances and transactions have been
eliminated in consolidation. Certain prior period amounts reported
in the Company’s condensed consolidated financial statements and
accompanying notes have been reclassified to conform to the current
period presentation.
The Company’s remaining significant accounting policies are
described in Note 2 to its consolidated financial statements for
the year ended December 31, 2021, included in its Annual Report on
Form 10-K filed with the Securities and Exchange Commission (the
“SEC”) on March 30, 2022 (the “Annual Report on Form 10-K”). There
have been no material changes to the Company’s significant
accounting policies during the six months ended June 30,
2022.
Unaudited Interim Financial Information
The condensed consolidated financial statements of the Company
included herein have been prepared, without audit, pursuant to the
rules and regulations of the SEC. The interim unaudited condensed
consolidated financial statements have been prepared on the same
basis as the audited consolidated financial statements as of and
for the year ended December 31, 2021 and, in the opinion of
management, reflect all adjustments, which include only normal
recurring adjustments, necessary to present fairly the Company’s
consolidated financial position, results of operations and
comprehensive loss, and cash flows. The condensed consolidated
balance sheet as of December 31, 2021 was derived from the audited
financial statements as of that date. Certain information and
footnote disclosures normally included in financial statements
prepared in accordance with GAAP have been condensed or omitted
from this Quarterly Report, as is permitted by such rules and
regulations. Accordingly, these condensed consolidated financial
statements should be read in conjunction with the financial
statements and notes thereto included in the Company’s Annual
Report on Form 10-K. The results for any interim period are not
necessarily indicative of results for any future
period.
Segments
Operating segments are identified as components of an enterprise
about which separate discrete financial information is available
for evaluation by the chief operating decision-maker (“CODM”) in
making decisions regarding resource allocation and assessing
performance. The Company views its operations and manages its
business as one operating segment.
Table of Contents
ANGION BIOMEDICA CORP.
Notes to Consolidated Financial Statements (Continued)
Use of Estimates
The preparation of condensed consolidated financial statements in
conformity with GAAP requires management to make estimates and
assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at
the date of the condensed consolidated financial statements and the
reported amounts of revenue and expenses during the reporting
period. On an ongoing basis, management evaluates its estimates,
including those related to the useful lives of long-lived assets,
the measurement of stock-based compensation, accruals for research
and development activities, income taxes and revenue recognition.
The Company bases its estimates on historical experience and on
other relevant assumptions that are reasonable under the
circumstances. Actual results could materially differ from those
estimates.
Concentrations of Credit Risk and Off-Balance Sheet
Risk
Cash and cash equivalents are financial instruments potentially
subject to concentrations of credit risk. The Company's cash and
cash equivalents are deposited in accounts at large financial
institutions, and amounts may exceed federally insured limits. The
Company has not experienced any losses in such accounts and
believes it is not exposed to significant risk on its cash balances
due to the financial position of the depository institution in
which those deposits are held.
Additionally, the Company established guidelines regarding approved
investments and maturities of investments, which are designed to
maintain safety and liquidity.
The Company maintains its cash equivalents in securities and money
market funds with original maturities less than three
months.
The Company has no financial instruments with off-balance sheet
risk of loss.
Cash and Cash Equivalents
The Company considers all highly liquid investments with original
maturities of three months or less to be cash equivalents. As of
June 30, 2022 and December 31, 2021, the Company’s cash
equivalents were held in institutions in the United States and
include deposits in a money market fund which were unrestricted as
to withdrawal or use.
Fair Value Measurement
Certain assets and liabilities are carried at fair value under
GAAP. Fair value is determined using the principles of ASC
820,
Fair Value Measurement.
Fair value is described as the price that would be received to sell
an asset or paid to transfer a liability in an orderly transaction
between market participants at the measurement date. The fair value
hierarchy prioritizes and defines the inputs to valuation
techniques as follows:
Level 1: Observable inputs such as quoted
prices in active markets.
Level 2: Inputs are observable for the asset
or liability either directly or through corroboration with
observable market data.
Level 3: Unobservable inputs.
The inputs used to measure the fair value of an asset or a
liability are categorized within levels of the fair value
hierarchy. The fair value measurement is categorized in its
entirety in the same level of the fair value hierarchy as the
lowest level input that is significant to the
measurement.
The Company's cash and cash equivalents, accounts payable and
accrued expenses are carried at cost, which approximates fair value
due to the short-term nature of these instruments.
Table of Contents
ANGION BIOMEDICA CORP.
Notes to Consolidated Financial Statements (Continued)
Revenue
The Company does not have any products approved for sale and has
not generated any revenue from product sales. The Company’s revenue
to date has been primarily derived from government funding
consisting of U.S. government grants and contracts and revenue
under its license agreements.
Contract Revenue
The Company accounts for revenue earned from contracts with
customers under Accounting Standards Update (“ASU”) No.
2014-09,
Revenue from Contracts with Customers (Topic 606)
(“ASC 606”). Under ASC 606, the Company recognizes revenue when a
customer obtains control of promised goods or services, in an
amount that reflects the consideration which the Company expects to
receive in exchange for those goods or services. To determine
revenue recognition for arrangements within the scope of ASC 606,
the Company performs the following five steps:
(1) Identify the contract(s) with a
customer;
(2) Identify the performance obligations in
the contract;
(3) Determine the transaction
price;
(4) Allocate the transaction price to the
performance obligations in the contract; and
(5) Recognize revenue when (or as) the
Company satisfies a performance obligation.
At contract inception, the Company assesses the goods or services
promised within each contract, whether each promised good or
service is distinct, and determines those that are performance
obligations. The Company then recognizes as revenue the amount of
the transaction price allocated to the respective performance
obligation when or as the performance obligation is
satisfied.
The Company enters into agreements under which it may obtain
upfront payments, milestone payments, royalty payments and other
fees. Promises under these arrangements may include research
licenses, research services, including selection campaign research
services for certain replacement targets, the obligation to share
information during the research and the participation of alliance
managers and in joint research committees, joint patent committees
and joint steering committees. The Company assesses these promises
within the context of the agreements to determine the performance
obligations.
Licenses of Intellectual Property:
If a license to its intellectual property is determined to be
distinct from the other promises or performance obligations
identified in the arrangement, the Company recognizes revenue from
non-refundable, upfront fees allocated to the license when the
license is transferred to the customer and the customer is able to
use and benefit from the license. For licenses bundled with other
promises, the Company utilizes judgment to assess the nature of the
combined performance obligation to determine whether the combined
performance obligation is satisfied over time or at a point in time
and, if over time, the appropriate method of measuring proportional
performance for purposes of recognizing revenue from
non-refundable, upfront payments. The Company evaluates the measure
of proportional performance each reporting period and, if
necessary, adjusts the measure of performance and related revenue
recognition.
Milestone payments:
The Company evaluates the probability of whether regulatory and
development milestones will be reached and estimates the amounts to
be included in the transaction price using the most likely amount
method. The Company evaluates factors such as the scientific,
clinical, regulatory, commercial and other risks that must be
overcome to achieve the particular milestone in making this
assessment. If it is probable a significant revenue reversal would
not occur, the associated milestone value is included in the
transaction price. At the end of each reporting period, the Company
re-evaluates the probability of achievement of milestones and any
related constraint, and if necessary, adjust the estimate of the
overall transaction price.
Sales-based milestones and royalties:
For sales-based royalties, including milestone payments based on
the level of sales, the Company determines whether the sole or
predominant item to which the royalties relate is a license. When
the license is the sole or predominant item to which the
sales-based royalty relates, the Company recognize revenue at the
later of: (i) when the related sales occur, or (ii) when the
performance obligation to which some or all of the royalty has been
allocated has been satisfied (or partially satisfied). To date, the
Company has not recognized any sales-based royalty revenue
resulting from any license agreement.
Table of Contents
ANGION BIOMEDICA CORP.
Notes to Consolidated Financial Statements (Continued)
Deferred revenue,
which is a contract liability, represents amounts received by the
Company for which the related revenues have not been recognized
because one or more of the revenue recognition criteria have not
been met. The current portion of deferred revenue represents the
amount expected to be recognized within one year from the
consolidated balance sheet date based on the estimated performance
period of the underlying performance obligation. The noncurrent
portion of deferred revenue represents amounts expected to be
recognized after one year from the condensed consolidated balance
sheet date through the end of the performance period of the
performance obligation.
Grant Revenue
The Company concluded that the Company's government grants are not
within the scope of ASC 606 as they do not meet the definition of a
contract with a customer. The Company has concluded the grants meet
the definition of a contribution and are non-reciprocal
transactions, and has also concluded Subtopic 958-605,
Not-for-Profit-Entities-Revenue Recognition,
does not apply, as the Company is a business entity and the grants
are with governmental agencies.
In the absence of applicable guidance under GAAP, the Company
developed a policy recognizing grant revenue when the allowable
costs are incurred and the right to payment is
realized.
The Company believes this policy is consistent with the overarching
premise in ASC 606, to ensure revenue recognition reflects the
transfer of promised goods or services to customers in an amount
reflecting the consideration the Company expects to be entitled to
in exchange for those goods or services, even though there is no
exchange as defined in ASC 606. The Company believes the
recognition of revenue as costs are incurred and amounts become
realizable is analogous to the concept of transfer of control of a
service over time under ASC 606.
Research and Development
Research and development costs include, but are not limited to,
payroll and personnel expenses, laboratory supplies, preclinical
studies, compound manufacturing costs, consulting costs and
allocated overhead, including rent, equipment, depreciation and
utilities. Research and development costs may be offset by research
and development refundable tax rebates received by the Company’s
wholly-owned Australian subsidiary.
The Company has agreements with various Contract Research
Organizations (“CROs") and third-party vendors. Research and
development accruals of amounts due to the CRO are estimated based
on the level of services performed, progress of the studies,
including the phase or completion of events, and contracted costs.
The estimated costs of research and development provided, but not
yet invoiced, are included in accrued expenses on the condensed
consolidated balance sheet. Payments made to CROs under such
arrangements in advance of the performance of the related services
are recorded as prepaid expenses and other current assets until the
services are rendered. The Company makes judgments and estimates in
determining the accrued expenses balance in each reporting period.
As actual costs become known, the Company adjusts its accrued
expenses. For the three and six months ended June 30, 2022 and
2021, the Company has not experienced any material differences
between accrued costs and actual costs incurred.
Advertising Costs
Advertising costs are expensed as incurred. For the three and six
months ended June 30, 2022 and 2021, advertising costs were not
material.
Net Loss Per Share
Basic net loss per share of common stock is computed by dividing
net loss attributable to common stockholders by the weighted
average number of shares of common stock outstanding for the
period. Diluted net loss per share excludes the potential impact of
common stock options, warrants and unvested shares of restricted
stock and restricted stock units because their effect would be
anti-dilutive due to the Company's net loss. Since the Company had
net losses for the three and six months ended June 30, 2022 and
2021, basic and diluted net loss per common share are the
same.
Recently Issued Accounting Pronouncements Not Yet
Adopted
In June 2016, the FASB issued ASU No. 2016-13,
Financial Instruments—Credit Losses (Topic 326) Measurement of
Credit Losses on Financial Instruments
(ASU No. 2016-13), which requires an entity to utilize
a
Table of Contents
ANGION BIOMEDICA CORP.
Notes to Consolidated Financial Statements (Continued)
new impairment model known as the current expected credit loss
(“CECL”) model to estimate its lifetime “expected credit loss” and
record an allowance that, when deducted from the amortized cost
basis of the financial assets and certain other instruments,
including but not limited to, available-for-sale debt securities.
Credit losses relating to available-for-sale debt securities will
be recorded through an allowance for credit losses rather than as a
direct write-down to the security. As an emerging growth company,
ASU No. 2016-13 is effective for the Company for fiscal years
beginning after December 15, 2022, with early adoption permitted.
The Company is currently evaluating the impact of the adoption of
ASU No. 2016-13 on its condensed consolidated financial
statements.
Table of Contents
ANGION BIOMEDICA CORP.
Notes to Consolidated Financial Statements (Continued)
Note 3—Revenue and Deferred Revenue
Contract Revenue
The Company’s contract revenue has been generated from payments
received pursuant to a license agreement (the “Vifor License”) with
Vifor International, Ltd. (“Vifor Pharma”), with headquarters
located in Switzerland. The Company recognized revenue from upfront
payments over the term of its estimated period of performance using
a cost-based input method under Topic 606.
Vifor License Agreement
In November 2020, the Company entered into a license agreement with
Vifor Pharma, granting Vifor Pharma global rights (excluding China,
Taiwan, Hong Kong and Macau) to develop, manufacture and
commercialize ANG-3777 in all therapeutic, prophylactic and
diagnostic uses for renal indications, including forms of acute
kidney injury (AKI), and congestive heart failure (collectively,
the Renal Indications). Pursuant to the Vifor License, the Company
received $60.0 million in upfront and equity payments,
including $30.0 million in up-front cash received in November
2020, and a $30.0 million equity investment, $5.0 million
of which was a convertible note that subsequently converted into
common stock with the IPO and $25.0 million of which was
received in the Concurrent Private Placement with the Company’s
IPO. The Company is also eligible to receive post-approval
milestones of up to approximately $260.0 million and
sales-related milestones of up to $1.585 billion, providing a
total potential deal value of up to $1.905 billion (subject to
certain specified reductions and offsets), plus tiered royalties on
net sales of ANG-3777 at royalty rates of up to 40%. Under the
Vifor License, the Company is responsible for executing a
pre-specified clinical development plan designed to obtain
regulatory approvals of ANG-3777 for delayed graft function (DGF)
and AKI associated with cardiac surgery involving cardiopulmonary
bypass (CSA-AKI). Based on the ANG-3777 clinical trial data
disclosed in the fourth quarter of 2021, the Company does not
expect to receive any additional clinical, post-approval, or sales
milestones, or royalties, as it does not intend to continue to
pursue the clinical development plan for ANG-3777 set forth in the
Vifor License.
On October 26, 2021, the Company announced that its Phase 3 trial
of ANG-3777 in DGF did not achieve its primary endpoint and the
data from the Phase 3 trial was not expected to provide sufficient
evidence to support an indication in the studied DGF population. On
December 9, 2021, the Company announced its Phase 2 trial of
ANG-3777 in CSA-AKI did not achieve its primary endpoint and the
data from the Phase 2 trial was not expected to provide sufficient
evidence to support a Phase 3 trial in the studied CSA-AKI
population. Angion and Vifor continue to analyze data from the
CSA-AKI trial. In 2022, the Company and Vifor Pharma continue to
work to complete the planned analyses of the results of the
clinical trials announced in the fourth quarter of 2021 and to
discuss the future of the collaboration based upon such
analyses.
Vifor Pharma may terminate the Vifor License at its sole discretion
upon the earlier of (i) the acceptance for filing of an NDA
covering products incorporating ANG-3777 filed with the FDA (after
completion of the relevant Phase 3 clinical trial for such
products), or (ii) the third anniversary of the effective date of
the Vifor License. Both the Company and Vifor Pharma may terminate
the Vifor License in its entirety if the other is in material
breach of the Vifor License and has not cured the breach (if
curable) within 60 days, or 90 days for incurable breach. In
certain circumstances, in the event of the Company’s material
breach of the Vifor License, Vifor Pharma may terminate the Vifor
License with respect to certain major markets. In addition, both
parties have the right to terminate the Vifor License upon
insolvency of the other party.
The Company identified the following performance obligations in the
Vifor License based upon the clinical development plan for
ANG-3777: (1) the global license (excluding greater China), (2) the
development services, including the clinical development services
including a post-approval confirmatory study, the technical
development services and regulatory services and (3) the required
participation on Joint Committees for coordination and oversight.
The Company determined that the license is not capable of being
distinct due to the specialized nature of the development services
to be provided by the Company, and, accordingly, this promise was
combined with the development services and participation in the
joint committees as one single performance obligation.
In order to determine the transaction price, the Company evaluated
all the payments to be received during the duration of the
contract. Certain milestones and additional fees were considered
variable consideration, which were not included in the transaction
price at contract inception. The Company determined the transaction
price at the inception of the Vifor License was $15.0 million,
which represents 50% of the $30.0 million upfront payment due
to the potential setoff defined in the contract.
Table of Contents
ANGION BIOMEDICA CORP.
Notes to Consolidated Financial Statements (Continued)
Based on the ANG-3777 clinical trial data disclosed in the fourth
quarter of 2021 and the Company’s decision to discontinue the
current clinical development plan for ANG-3777 DGF as described
above, the Company adjusted the transaction price to include an
additional $15.0 million in previously constrained variable
consideration. The Company also reassessed the performance period
as the Company is currently closing out the planned analyses from
both trials. As of June 30, 2022, the Company has completed
substantially all performance obligation under the Vifor License
and recognized all remaining deferred revenue under the agreement
during the three months ended June 30, 2022.
Using the cost-based input method, the Company recognizes revenue
based on actual costs incurred as a percentage of total estimated
costs as the Company completes its performance obligation. The
cumulative effect of revisions to estimated costs to complete the
Company’s performance obligation will be recorded in the period in
which changes are identified and amounts can be reasonably
estimated. These actual costs consist primarily of internal full
time equivalent (FTE) efforts and third-party contract costs
related to the Vifor License.
For the three months ended June 30, 2022 and 2021, the Company
recognized contract revenue related to the Vifor License of
$0.7 million and $0.5 million, respectively. For the six
months ended June 30, 2022 and 2021, the Company recognized
contract revenue related to the Vifor License of $2.3 million and
$0.9 million, respectively. As of June 30, 2022 and
December 31, 2021, zero and $2.3 million, respectively,
was recorded as deferred revenue, current, on the condensed
consolidated balance sheets related to the Vifor
License.
Note 4—Fair Value Measurements
The following tables present the Company's financial assets and
liabilities measured at fair value on a recurring basis and their
assigned levels within the fair value hierarchy (in
thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30, 2022 |
|
Level 1 |
|
Level 2 |
|
Level 3 |
|
Total |
Money market funds(1)
|
$ |
12,366 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
12,366 |
|
Total assets
|
$ |
12,366 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
12,366 |
|
Warrant liabilities |
$ |
— |
|
|
$ |
— |
|
|
$ |
34 |
|
|
$ |
34 |
|
Total liabilities
|
$ |
— |
|
|
$ |
— |
|
|
$ |
34 |
|
|
$ |
34 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2021 |
|
Level 1 |
|
Level 2 |
|
Level 3 |
|
Total |
Money market funds(1)
|
$ |
87,252 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
87,252 |
|
Total assets
|
$ |
87,252 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
87,252 |
|
Warrant liabilities |
— |
|
|
— |
|
|
114 |
|
|
114 |
|
Total liabilities
|
$ |
— |
|
|
$ |
— |
|
|
$ |
114 |
|
|
$ |
114 |
|
_________________
(1) Included in cash and cash equivalents on the condensed
consolidated balance sheets. This balance includes cash
requirements settled on a nightly basis.
There were no transfers made among the three levels in the fair
value hierarchy during periods presented.
The following table presents a summary of changes in the fair value
of the Company’s common stock warrant liability (in
thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30,
2022 |
|
December 31,
2021 |
Balance, beginning of the period |
$ |
114 |
|
|
$ |
10,704 |
|
Net exercise of warrants |
— |
|
|
(13,509) |
|
Change in fair value |
(81) |
|
|
2,919 |
|
Balance, end of the period |
$ |
33 |
|
|
$ |
114 |
|
Table of Contents
ANGION BIOMEDICA CORP.
Notes to Consolidated Financial Statements (Continued)
The fair value of the warrants issued by the Company has been
estimated using a variant of the Black Scholes option pricing
model. The underlying equity included in the Black Scholes option
pricing model was valued based on the equity value implied from
sales of preferred and common stock at each measurement date. The
fair value of the warrants was impacted by the model selected as
well as assumptions surrounding unobservable inputs including the
underlying equity value, expected volatility of the underlying
equity, risk free interest rate and the expected term.
The Company records the change in the fair value of common stock
warrants in change in fair value of warrant liability in the
condensed consolidated statements of operations.
The fair value of the common stock warrant liability was estimated
using the following assumptions:
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30,
2022 |
|
December 31,
2021 |
Weighted average strike price
|
$7.60 |
|
$7.60 |
Contractual term (years)
|
6.2 |
|
6.7 |
Volatility (annual)
|
125.7% |
|
124.0% |
Risk-free rate
|
3.0% |
|
1.4% |
Dividend yield (per share)
|
0.0% |
|
0.0% |
Note 5—Balance Sheet Components
Property and Equipment, Net
Property and equipment, net consisted of the following (in
thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30,
2022 |
|
December 31,
2021 |
Equipment
|
$ |
866 |
|
|
$ |
866 |
|
Furniture and fixtures
|
34 |
|
|
34 |
|
Leasehold improvements
|
68 |
|
|
68 |
|
Total property and equipment
|
968 |
|
|
968 |
|
Less: accumulated depreciation
|
(580) |
|
|
(517) |
|
Property and equipment, net
|
$ |
388 |
|
|
$ |
451 |
|
Depreciation expense for each of the three and six months ended
June 30, 2022 and 2021 was immaterial.
Prepaid and Other Current Assets
Prepaid and other current assets consisted of the following (in
thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30,
2022 |
|
December 31,
2021 |
Angion Pty tax receivable |
$ |
3 |
|
|
$ |
781 |
|
|
|
|
|
Prepaid insurance |
1,942 |
|
|
275 |
|
Security deposit |
105 |
|
|
131 |
|
Other |
463 |
|
|
498 |
|
Total prepaid and other current assets |
$ |
2,513 |
|
|
$ |
1,685 |
|
Accrued Expenses
Accrued expenses consisted of the following (in
thousands):
Table of Contents
ANGION BIOMEDICA CORP.
Notes to Consolidated Financial Statements (Continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30,
2022 |
|
December 31,
2021 |
Accrued compensation
|
$ |
722 |
|
|
$ |
2,023 |
|
Accrued restructuring (Note 1) |
1,321 |
|
|
— |
|
Accrued direct research costs
|
1,886 |
|
|
764 |
|
Accrued operating expenses
|
157 |
|
|
432 |
|
Total accrued expenses
|
$ |
4,086 |
|
|
$ |
3,219 |
|
Note 6—Stockholders' Equity
Common Stock
Each share of common stock entitles the holder to one vote on all
matters submitted to a vote of the Company’s stockholders. Common
stockholders are not entitled to receive dividends, unless declared
by the board of directors.
Note 7—Stock-Based Compensation
2015 Plan
In June 2019, the Company approved an Amended and Restated 2015
Equity Incentive Plan (the “2015 Plan”) permitting the granting of
incentive stock options, non-statutory stock options, restricted
stock and other stock-based awards. Following the effectiveness of
the 2021 Equity Incentive Plan (“2021 Plan”), the Company ceased
making grants under the 2015 Plan. However, the 2015 Plan continues
to govern the terms and conditions of the outstanding awards
granted under it. Shares of common stock subject to awards granted
under the 2015 Plan that cease to be subject to such awards by
forfeiture or otherwise after the termination of the 2015 Plan will
be available for issuance under the 2021 Plan.
2021 Plan
On January 25, 2021, the Company's board of directors approved the
2021 Plan which permits the granting of incentive stock options,
non-statutory stock options, stock appreciation rights, restricted
stock, restricted stock units and other stock-based awards to
employees, directors, officers and consultants. On January 25,
2021, shares of common stock equal to 11% of the post-IPO
capitalization were authorized for issuance under the 2021 Plan.
The 2021 Plan provides that the number of shares reserved and
available for issuance will automatically increase each January 1,
beginning on January 1, 2022, by the lesser of 5% of the Company’s
common stock outstanding on the immediately preceding December 31,
or such lesser number of shares as determined by the Company’s
board of directors.
Stock Options
The fair value of each employee and non-employee stock option grant
was estimated on the date of grant using the Black-Scholes
option-pricing model based on the following
assumptions:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
|
2022 |
|
2021 |
|
2022 |
|
2021 |
Risk-free interest rate |
3.1% |
|
1.1% |
|
1.7% |
|
0.7% |
Expected dividend yield |
0.0% |
|
0.0% |
|
0.0% |
|
0.0% |
Expected term in years |
5.48 |
|
6.05 |
|
5.90 |
|
5.99 |
Expected volatility |
70.8% |
|
74.3%-74.8%
|
|
70.8%-72.5%
|
|
73.8%-86.8%
|
Each of these inputs is subjective and generally requires
significant judgment.
Table of Contents
ANGION BIOMEDICA CORP.
Notes to Consolidated Financial Statements (Continued)
Expected Term—The
expected term represents the period the Company’s stock-based
awards are expected to be outstanding and is determined using the
simplified method, which is based on the mid-point between the
contractual term and vesting period.
Volatility—The
Company determines volatility based on the historical volatilities
of comparable publicly traded life science companies over a period
equal to the expected term because it does not have sufficient
trading history for its common stock price. The comparable
companies were chosen based on the similar size, stage in the life
cycle, or area of specialty. The Company will continue to apply
this process until a sufficient amount of historical information
regarding volatility on its own stock becomes
available.
Risk-Free Interest Rate—The
risk-free interest rate is determined by reference to the U.S.
Treasury yield curve in effect at the time of grant of the award
for time periods approximately equal to the expected term of the
award.
Dividend Yield—The
Company has never paid and has no plans to pay any dividends on its
common stock. Therefore, the Company has used an expected dividend
yield of zero.
Fair Value of Common Stock—For
periods prior to the IPO, the Company determined the estimated fair
value of its common stock using the Subject Company Transaction
Method which includes the back-solve and scenario-based methods
(Probability Weighted Expected Return Method) to arrive at
estimated fair values. Subsequent to the IPO, the fair value was
based on the closing price of the Company’s common stock on the
grant date.
The following table summarizes information and activity related to
the Company’s stock options:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of
Stock Options |
|
Weighted Average
Exercise Price |
|
Weighted Average
Remaining Contractual Life
(in years) |
|
Total
Intrinsic Value
(in thousands) |
Outstanding as of December 31, 2021 |
4,230,162 |
|
|
$ |
8.92 |
|
|
8.4 |
|
$ |
— |
|
Options granted |
2,248,700 |
|
|
1.93 |
|
|
|
|
|
Options forfeited |
(626,950) |
|
|
10.35 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding as of June 30, 2022 |
5,851,912 |
|
|
$ |
6.08 |
|
|
7.7 |
|
$ |
— |
|
Options vested and exercisable |
2,799,721 |
|
|
$ |
7.34 |
|
|
6.1 |
|
$ |
— |
|
The aggregate intrinsic value in the above table is calculated as
the difference between the estimated fair value of the Company's
common stock price and the exercise price of the stock options. The
weighted average grant date fair value per share for the stock
option grants during the three months ended June 30, 2022 and 2021
was $1.08 and $9.29, and $1.18 and $8.89 during the six months
ended June 30, 2022 and 2021 respectively. As of June 30,
2022, the total unrecognized compensation related to unvested stock
option awards granted was $4.6 million. The Company expects to
reverse $1.7 million in the next six months of 2022 due to the
implementation of the reduction in force announced in July 2022.
The remaining $2.9 million is expected to be recognized over a
weighted-average period of approximately 1.9 years.
Restricted Stock Units (RSUs)
The following table summarizes information and activity related to
the Company’s RSUs:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of
Restricted Stock Units |
|
Weighted
Average Grant
Date Fair Value
Per Share |
Outstanding at December 31, 2021 |
|
|
|
|
17,504 |
|
|
$ |
9.51 |
|
|
|
|
|
|
|
|
|
Vested |
|
|
|
|
(729) |
|
|
$ |
9.51 |
|
Outstanding as of June 30, 2022 |
|
|
|
|
16,775 |
|
|
$ |
9.51 |
|
Vested as of June 30, 2022 |
|
|
|
|
729 |
|
|
$ |
9.51 |
|
Performance-based Restricted Stock Units (PSUs)
The Company had 556,530 PSUs outstanding that were granted in June
2019. Vesting of the PSUs is dependent upon the satisfaction of
both a service condition and a performance condition, an initial
public offering or
Table of Contents
ANGION BIOMEDICA CORP.
Notes to Consolidated Financial Statements (Continued)
a change of control, as defined in the 2015 Plan. As the IPO
occurred in February 2021, the performance condition was met and
185,510 PSUs vested and were released upon the closing of the IPO.
Another 185,510 PSUs vested and were released in June 2021 upon the
second anniversary of the grants. In June 2022, 92,755 PSUs were
released upon the third anniversary of the grants, therefore,
as
of
June 30, 2022,
the Company had 92,755 PSUs outstanding.
Stock-based Compensation Expense
The following table summarizes total stock-based compensation
expense recorded in the condensed consolidated statements of
operations (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
|
2022 |
|
2021 |
|
2022 |
|
2021 |
Research and development |
$ |
535 |
|
|
$ |
1,409 |
|
|
$ |
87 |
|
|
$ |
3,952 |
|
General and administrative |
866 |
|
|
1,309 |
|
|
1,345 |
|
|
3,883 |
|
Total |
$ |
1,401 |
|
|
$ |
2,718 |
|
|
$ |
1,432 |
|
|
$ |
7,835 |
|
The decrease in total stock-based compensation expense for three
and six months ended June 30, 2022 is primarily due to the reversal
of expense upon the forfeiture of awards in connection with the
reduction in force event that occurred on January 4, 2022. See Note
1 for additional information.
Employee Stock Purchase Plan
In January 2021, the board of directors of the Company approved the
Employee Stock Purchase Plan (the “ESPP”). The ESPP was effective
on the date immediately prior to the effectiveness of the Company's
registration statement relating to the IPO. A total of 390,000
shares of common stock were initially reserved for issuance under
the ESPP. The ESPP provides that the number of shares reserved and
available for issuance will automatically increase each January 1,
beginning on January 1, 2022, by the lesser of 1% of the Company’s
common stock outstanding on the immediately preceding December 31,
or such lesser number of shares as determined by the Company’s
board of directors. The offering period and purchase period will be
determined by the board of directors. As of June 30, 2022,
689,583 shares under the ESPP remain available for purchase and no
offerings have been authorized.
Note 8—Warrants
As of June 30, 2022 and December 31, 2021, outstanding
warrants to purchase the Company's common stock consisted of the
following:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Classification |
|
Exercise Price |
|
Expiration Date |
|
June 30,
2022 |
|
December 31,
2021 |
Warrants issued with Conversion of Notes to Common
Stock |
Equity |
|
$ |
8.03 |
|
|
8/31/23 |
|
232,287 |
|
|
232,287 |
|
Warrants issued with Units in the Equity Offering |
Equity |
|
$ |
8.03 |
|
|
8/31/23 |
|
875,034 |
|
|
875,034 |
|
Broker Warrants issued with Equity Offering |
Equity |
|
$ |
0.01 |
|
|
8/31/25 |
|
1,297 |
|
|
1,297 |
|
Consultant Warrants |
Liability |
|
$ |
7.60 |
|
|
8/31/28 |
|
39,505 |
|
|
39,505 |
|
Total Warrants |
|
|
|
|
|
|
1,148,123 |
|
|
1,148,123 |
|
In accordance with ASC 815, the warrants classified as liabilities
are recorded at fair value at the issuance date, with changes in
the fair value recognized in the condensed consolidated statements
of operations at the end of each reporting period. Refer to Note 4
for changes in the fair value recognized during the periods
reported.
In accordance with ASC 815, the warrants classified as equity do
not meet the definition of a derivative and are classified in
stockholders' equity in the condensed consolidated balance
sheets.
There was no warrant activity during the six months ended June 30,
2022.
Table of Contents
ANGION BIOMEDICA CORP.
Notes to Consolidated Financial Statements (Continued)
Note 9—Commitments and Contingencies
Operating Leases
The Company leases office and laboratory space in Uniondale, New
York from NovaPark, a related party, under an agreement classified
as an operating lease expiring on June 20, 2026. The Company's
lease does not require any contingent rental payments, impose any
financial restrictions, or contain any residual value guarantees.
Variable expenses generally represent the Company's share of the
landlord's operating expenses, including management fees. The
Company does not act as a lessor or have any leases classified as
financing leases.
The Company leased office space in Fort Lee, New Jersey, comprising
approximately 2,105 square feet for approximately $0.1 million
per year, under a non-cancelable operating lease through March 31,
2022. However, this arrangement was excluded from the calculation
of lease liabilities and right of use assets as its term was less
than one year. The lease was subject to charges for common area
maintenance and other costs. The Company did not renew the New
Jersey lease and it expired on March 31, 2022.
In July 2020, the Company entered into a lease for office furniture
in San Francisco, California set to expire in July 2025, with an
immaterial annual lease payment.
In February 2021, the Company entered into a lease for clinical and
regulatory space in Newton, Massachusetts (the “Newton lease”),
comprising approximately 6,157 square feet for approximately
$0.2 million per year, under a non-cancelable operating lease
through June 30, 2024. Pursuant to the Newton lease, the Company
had four months of free rent starting from February 15, 2021 to
June 14, 2021. The Company has one option to extend the term of the
lease for three years with nine months’ notice.
The following table summarizes the components of the Company's
operating lease costs (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
|
2022 |
|
2021 |
|
2022 |
|
2021 |
Operating lease cost
|
$ |
302 |
|
|
$ |
317 |
|
|
$ |
714 |
|
|
$ |
590 |
|
Variable lease cost
|
91 |
|
|
85 |
|
|
144 |
|
|
215 |
|
Short-term lease cost |
6 |
|
|
3 |
|
|
12 |
|
|
42 |
|
Total operating lease cost
|
$ |
399 |
|
|
$ |
405 |
|
|
$ |
870 |
|
|
$ |
847 |
|
The following table summarizes quantitative information about the
Company's operating leases (dollars in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended June 30, |
|
2022 |
|
2021 |
Operating cash flows from operating leases
|
$ |
644 |
|
|
$ |
543 |
|
Right-of-use assets exchanged for operating lease
liabilities
|
$ |
— |
|
|
$ |
624 |
|
Weighted-average remaining lease term—operating leases (in
years)
|
3.7 |
|
3.5 |
Weighted-average discount rate—operating leases
|
9.5 |
% |
|
9.1 |
% |
As of June 30, 2022, maturities of lease liabilities were as
follows (in thousands):
|
|
|
|
|
|
|
|
|
Year Ended December 31, |
|
Amounts |
2022 (remaining six months) |
|
$ |
646 |
|
2023 |
|
1,305 |
|
2024 |
|
1,209 |
|
2025 |
|
1,104 |
|
2026 |
|
516 |
|
|
|
|
Total
|
|
4,780 |
|
Less present value discount
|
|
(847) |
|
Operating lease liabilities
|
|
$ |
3,933 |
|
Table of Contents
ANGION BIOMEDICA CORP.
Notes to Consolidated Financial Statements (Continued)
Financing obligation
In 2021, the Company entered into an immaterial sale and leaseback
arrangement with a third-party financing institution as a financing
mechanism to fund certain of its capital expenditures primarily
related to operating equipment, whereby the physical asset is sold
concurrent with an agreement to lease the asset back. The initial
leaseback term is 42 months starting from November 2021. The
arrangement includes a renewal option as well as a repurchase
option at fair value with a cap at the end of the term. The
arrangement does not qualify as an asset sale as control of the
equipment did not transfer to the third party and is accounted for
as a failed sale-leaseback. Therefore, the Company accounts for the
arrangement as a financing transaction and records the proceeds
received as a financing obligation. The leased assets are included
in property and equipment, net on the condensed consolidated
balance sheets and are subject to depreciation.
The following table summarizes quantitative information about the
Company's financing obligation for the six months ended June 30,
2022 (dollars in thousands):
|
|
|
|
|
|
Cash flow information: |
|
Payments of financing obligation
|
|
Operating cash flows from financing obligation |
$ |
19 |
|
Financing cash flows from financing obligation |
$ |
29 |
|
Other information: |
|
Weighted-average remaining lease term (in years)
|
2.8 |
Weighted-average discount rate (in percent)
|
1.1 |
% |
Carrying value of leased asset included in Property and Equipment,
net |
$ |
239 |
|
Depreciation associated with the leased asset |
$ |
15 |
|
As of June 30, 2022, maturities of the financing obligation
were as follows (in thousands):
|
|
|
|
|
|
|
|
|
Year Ended December 31, |
|
Amounts |
2022 (remaining six months) |
|
$ |
47 |
|
2023 |
|
94 |
|
2024 |
|
94 |
|
2025 |
|
31 |
|
|
|
|
|
|
|
Total
|
|
266 |
|
Less present value discount
|
|
(1) |
|
Financing obligation
|
|
$ |
265 |
|
Litigation
The Company is not a party to any material legal proceedings and is
not aware of any pending or threatened claims. From time to time,
the Company may be subject to various legal proceedings and claims
that arise in the ordinary course of its business
activities.
Indemnification
The Company enters into standard indemnification arrangements in
the ordinary course of business. Pursuant to these arrangements,
the Company indemnifies, holds harmless and agrees to reimburse the
indemnified parties for losses suffered or incurred by the
indemnified party, in connection with any trade secret, copyright,
patent or other intellectual property infringement claim by any
third party with respect to its technology. The term of these
indemnification agreements is generally perpetual any time after
the execution of the agreement. The maximum potential amount of
future payments the Company could be required to make under these
arrangements is not determinable. The Company has never incurred
costs to defend lawsuits or settle claims related to these
indemnification agreements. As a result, the Company believes the
fair value of these agreements is minimal.
Table of Contents
ANGION BIOMEDICA CORP.
Notes to Consolidated Financial Statements (Continued)
Note 10—Income Taxes
The Company’s income tax provision was immaterial and the effective
tax rate was 0% in each of the three and six months ended
June 30, 2022 and 2021. The difference between the Company's
effective tax rate of 0% and the U.S. federal statutory tax rate of
21% is primarily due to net operating losses in this period which
are offset by the corresponding valuation allowance. The Company
has provided a full valuation allowance against its net deferred
tax assets as it is more likely than not such assets would not be
realized.
In assessing the realization of deferred tax assets, management
considers whether it is more likely than not some portion or all of
the deferred tax assets will not be realized. The ultimate
realization of the deferred tax assets is dependent upon the
generation of future taxable income in which those temporary
differences become deductible. Based on the available objective
evidence, management believes it is more likely than not the net
deferred tax assets at June 30, 2022 will not be realizable.
Accordingly, management has maintained a full valuation allowance
against its net deferred tax assets at June 30, 2022. Each
reporting period, management evaluates the need for a valuation
allowance on the Company’s deferred tax assets by jurisdiction and
adjust the Company’s estimates as more information becomes
available.
The Company is required to recognize the financial statement
effects of a tax position when it is more likely than not, based on
the technical merits, the position will be sustained upon
examination. Tax years starting from 2015 and forward are subject
to examination by the U.S. federal and state tax authorities. These
years are open due to net operating losses and tax credits remain
unutilized from such years. The Company's policy is to recognize
interest expense and penalties related to income tax matters as a
component of income tax expense. As of June 30, 2022, there
were no accruals for interest and penalties related to uncertain
tax positions.
Table of Contents
ANGION BIOMEDICA CORP.
Notes to Consolidated Financial Statements (Continued)
Note 11—Employee Benefit Plan
Employee Benefit Plan
The Company sponsors a retirement savings plan intended to qualify
for favorable tax treatment under Section 401(a) of the Code, and
contains a cash or deferred feature intended to meet the
requirements of Section 401(k) of the Code. Participants may make
pre-tax and certain after-tax (Roth) salary deferral contributions
to the plan from their eligible earnings up to the statutorily
prescribed annual limit under the Code. Participants who are 50
years of age or older may contribute additional amounts based on
the statutory limits for catch-up contributions. Participant
contributions are held in trust as required by law. No minimum
benefit is provided under the plan. An employee’s interest in his
or her salary deferral contributions is 100% vested when
contributed. Contributions, subject to established limits, are
matched at a dollar for dollar rate up to 3% of an individual’s
earnings and fifty cents on the dollar on the next 4-5% of
earnings.
Note 12—Net Loss Per Share
The following table sets forth the computation of the Company’s
basic and diluted net loss per share attributable to common
stockholders, which excludes shares which are legally outstanding
but subject to repurchase by the Company (in thousands, except
share and per share data):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
|
2022 |
|
2021 |
|
2022 |
|
2021 |
Numerator |
|
|
|
|
|
|
|
Net loss attributable to common stockholders |
$ |
(9,139) |
|
|
$ |
(17,072) |
|
|
$ |
(23,379) |
|
|
$ |
(53,759) |
|
Denominator: |
|
|
|
|
|
|
|
Weighted-average shares used in computing net loss per share
attributable to common stockholders, basic and diluted |
29,973,886 |
|
29,670,329 |
|
29,966,609 |
|
26,574,290 |
Net loss per share attributable to common stockholders, basic and
diluted |
$ |
(0.30) |
|
|
$ |
(0.58) |
|
|
$ |
(0.78) |
|
|
$ |
(2.02) |
|
The table below provides potentially dilutive securities not
included in the calculation of the diluted net loss per share
because to do so would be anti-dilutive:
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended June 30, |
|
2022 |
|
2021 |
Shares issuable upon exercise of stock options |
5,851,912 |
|
4,488,202 |
Shares issuable upon the exercise of warrants |
1,148,123 |
|
1,148,900 |
Unvested shares under restricted stock unit grants |
109,530 |
|
46,675 |
Unvested shares under restricted stock grants |
— |
|
7,292 |
Total |
7,109,565 |
|
5,691,069 |
Note 13—Related Party Transactions
On February 25, 2022, the Company entered into a Separation
Agreement with Itzhak D. Goldberg, M.D., who formerly served as
Executive Chairman and Chief Scientific Officer and currently
serves as a director and Chairman Emeritus on the Company’s board
of directors. Pursuant to the terms of the Separation Agreement,
Dr. Goldberg will receive severance benefits of approximately
$1.1 million. Under the 2015 Plan and 2021 Plan, Dr. Goldberg
will continue to vest his PSUs and stock options and exercisability
of his options, so long as he remains in continuous service with
the Company as a director on the board of directors or
otherwise.
On March 1, 2022, the Company entered into a Separation Agreement
with Elisha Goldberg, former employee and son of Itzhak D.
Goldberg, M.D. Pursuant to the terms of the Separation Agreement,
Mr. Goldberg will receive severance benefits of approximately
$0.5 million. Mr. Goldberg will also have the right to
exercise any vested stock options he may have received under the
2015 Plan or 2021 Plan until December 31, 2022, which extended the
exercise period by 11 months.
Table of Contents
ANGION BIOMEDICA CORP.
Notes to Consolidated Financial Statements (Continued)
Ohr Investment
In a series of investments in November 2013 and July 2017, the
Company invested a total of $150,000 to acquire a membership
interest in Ohr Cosmetics, LLC (“Ohr”), an affiliated
company.
The Company owns, and the family of the Company's Chairman Emeritus
owns, approximately 2.4% and 81.3%, respectively, of the membership
interests in Ohr. The Chairman Emeritus' son is the manager of
Ohr.
In November 2013, the Company granted Ohr an exclusive worldwide
license, with the right to sublicense, under the Company's patent
rights covering one of the Company's CYP26 inhibitors, ANG-3522,
for the use in treating conditions of the skin or hair.
Sublicensees may not grant further sublicenses under the Company's
patent rights other than to affiliates of such sublicensees and
entities with which sublicensees are collaborating for the
research, development, manufacture and commercialization of the
products. Ohr will pay the Company a royalty at a rate in the low
single digits on gross revenue of products incorporating ANG-3522,
and milestone payments potentially totaling up to $9.0 million
based on achievement of sales milestones. Royalties and milestone
payments will be paid until the later of 15 years from the first
commercial sale of a licensed product or the last to expire
licensed patent rights. The royalty rate is subject to adjustments
under certain circumstances. The Company believes the Ohr License
was made on terms no less favorable to the Company than those the
Company could obtain from unaffiliated third parties.
No revenue from this license agreement was recognized for the
periods presented.
NovaPark Investment and Lease
As of June 30, 2022, the Company had a 10% interest in
NovaPark. Members of the Company's Chairman Emeritus’ immediate
family own a majority of the membership interests of NovaPark. The
Company accounts for its aggregate 10% investment in NovaPark under
the equity method.
The following table provides the activity for the NovaPark
investment for the three and six months ended June 30, 2022
and 2021 (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
|
2022 |
|
2021 |
|
2022 |
|
2021 |
Beginning balance |
$ |
732 |
|
|
$ |
782 |
|
|
$ |
723 |
|
|
$ |
727 |
|
Earnings from equity method investment |
133 |
|
|
(22) |
|
|
142 |
|
|
45 |
|
Distribution from NovaPark |
— |
|
|
(12) |
|
|
— |
|
|
(24) |
|
Ending balance |
$ |
865 |
|
|
$ |
748 |
|
|
$ |
865 |
|
|
$ |
748 |
|
The Company rents office and laboratory space in Uniondale, New
York from NovaPark under a lease expiring June 20, 2026. The
Company recorded rent expense for fixed lease payments of $0.3
million in each of the three months ended June 30, 2022 and 2021
and $0.5 million in each of the six months ended June 30, 2022 and
2021. The Company recorded rent expense for variable expenses
related to the lease of $0.1 million for the three months ended
June 30, 2022 and 2021 and $0.1 million and $0.2 million in each of
the six months ended June 30, 2022 and 2021. See Note
9.
Convertible Notes
In connection with the IPO in February 2021, Victor Ganzi, Gilbert
Omenn and Karen Wilson, directors of the Company, and Raj
Venkatesan, brother of the Chief Executive Officer and director of
the Company, converted all their outstanding convertible notes into
an aggregate of 149,500 shares of common stock with a conversion
price of $11.57. As of June 30, 2022, there were no
convertible notes outstanding.
Series C Convertible Preferred Stock
In connection with the IPO in February 2021, Jay Venkatesan, M.D.,
the Chief Executive Officer and director of the Company converted
all his outstanding preferred stock into an aggregate of 165,094
shares of common stock with a conversion price of $11.57 per share.
As of June 30, 2022, there were no shares of convertible
preferred stock outstanding.
Table of Contents
ANGION BIOMEDICA CORP.
Notes to Consolidated Financial Statements (Continued)
Consultant Fees
Angion paid consulting fees under an agreement with the wife of the
Company’s Chairman Emeritus for Company management services.
Consultant fees paid to the wife were immaterial in each of the
three and six months ended June 30, 2022 and 2021. This
consultant agreement was terminated in February 2022.
Other
Dr. Michael Yamin, a former member of the board of directors of the
Company, is a Scientific Advisor for Pearl Cohen Zedek Latzer
Baratz LLP (Pearl Cohen). During the each of the three and six
months ended June 30, 2022 and 2021, the Company paid Pearl
Cohen an immaterial amount in legal fees,
respectively.
In January 2018, the Company also entered into a consulting
agreement with Dr. Yamin pursuant to which he agreed to provide
consulting services to the Company in the areas of biomedical
research and development. Consultant fees paid to Dr. Yamin were
immaterial in in each of the three and six months ended
June 30, 2022 and 2021. Dr. Yamin resigned from the Company's
board of directors in March 2020. Dr. Yamin's resignation was not
due to any disagreement with the Company, the board or management
of the Company.
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
You should read the following discussion and analysis of our
financial condition and results of operations together with our
condensed
consolidated financial statements and the related notes appearing
elsewhere in this Quarterly Report on Form 10-Q and in our Annual
Report on Form 10-K for the year ended December 31, 2021. In
addition to the historical financial information, this discussion
contains forward-looking statements involving risks, assumptions
and uncertainties, such as statements of our plans, objectives,
expectations, intentions, forecasts and projections. Our actual
results and the timing of selected events could differ materially
from those discussed in these forward-looking statements as a
result of several factors, including those set forth under the
section of this Quarterly Report on Form 10-Q titled
“Risk
Factors,”
which you should carefully to gain an understanding of the
important factors that could cause actual results to differ
materially from our forward-looking statements. Please also see the
section titled
“Forward-Looking
Statements”
at the beginning of this report.
Overview
We are a biopharmaceutical company that has focused on the
discovery, development, and commercialization of novel small
molecule therapeutics to address chronic and progressive fibrotic
diseases. Our goal has been to transform the treatment paradigm for
patients suffering from these potentially life-threatening
conditions for which there are no approved medicines or where
existing approved medicines have limitations. Our product
candidates and programs include ANG-3070, a highly selective oral
tyrosine kinase receptor inhibitor (TKI) in development as a
treatment for fibrotic diseases, a ROCK2 preclinical program
targeted towards the treatment of fibrotic diseases, and a CYP11B2
preclinical program targeted towards diseases related to
aldosterone synthase dysregulation.
Prior to January 2022, our lead product was ANG-3777, a hepatocyte
growth factor (HGF) mimetic we were evaluating in multiple
indications of acute organ injury, including delayed graft function
(DGF) and for the treatment of AKI associated with cardiac surgery
involving cardiopulmonary bypass (CSA-AKI). In 2021, we also
studied ANG-3777 in patients with severe COVID-19 related pneumonia
at high risk for acute respiratory distress syndrome (ARDS). On
October 26, 2021, we announced the Phase 3 trial of ANG-3777 in DGF
did not achieve its primary endpoint and the data were not expected
to be sufficient evidence to support an indication in the studied
DGF population. On December 9, 2021, we announced the Phase 2 trial
of ANG-3777 in CSA-AKI did not achieve its primary endpoint. We do
not intend to continue the clinical development plan for ANG-3777
set forth in the Vifor License, which had included a Phase 3 study
in CSA-AKI and a Phase 4 confirmatory study in donor kidney
transplant patients who were at risk for developing DGF, given we
do not believe the earlier Phase 2 and Phase 3 clinical trial
results in the respective indications support a regulatory
approval. We have no funds budgeted for additional clinical trials
for ANG-3777.
On May 12, 2022, we were notified by the U.S. Food and Drug
Administration (FDA) of the acceptance of an Investigational New
Drug (IND) application supporting the clinical development of
ANG-3070 in idiopathic pulmonary fibrosis (IPF) and clearance to
begin a Phase 1b study of ANG-3070 in patients with
IPF.
On June 29, 2022, we announced the termination of our Phase 2
“JUNIPER” dose-finding trial for ANG-3070 in patients with primary
proteinuric kidney diseases, specifically focal segmental
glomerulorsclerosis (FSGS) and immunoglobulin A nephropathy (IgAN)
in the interests of patient safety based upon a reassessment of the
risk/benefit profile of ANG-3070 in patients with established
serious kidney disease.
On July 25, 2022, we announced a process to explore strategic
options for enhancing and preserving shareholder value (the “2022
Strategic Realignment”). Potential strategic options to be explored
or evaluated as part of the process may include, but are not
limited to merger, reverse merger, other business combination, sale
of assets, licensing, or other strategic transactions. In addition,
we announced the discontinuation of development of ANG-3070 for all
indications and the discontinuation of other development activities
pending conclusion of the strategic process, except certain
pre-clinical studies of ANG-3777, consistent with ongoing
discussions with our license partner Vifor Pharma. Finally, we also
announced a reduction in force across the organization as described
below.
We do not have any products approved for sale and have not
generated any revenue from product sales since our inception and do
not expect to generate revenue from product sales unless we
successfully develop, and we or our collaborators commercialize our
product candidates, which we do not expect to occur for at least
several years, if ever. Our net losses were $9.1 million and $17.1
million for the three months ended June 30, 2022 and 2021, and
$23.4 million and $53.8 million for the six months ended June 30,
2022 and 2021 respectively. As of June 30, 2022, we had an
accumulated deficit of $238.5 million. We expect to continue to
incur net losses for the foreseeable future.
In addition, if we seek regulatory approval for any of our
wholly-owned product candidates or those for which we retain the
right to commercialize in the future, we would need to incur
additional expenses as we expand our clinical, regulatory, quality,
manufacturing and commercialization capabilities, incur significant
commercialization expenses for marketing, sales, manufacturing and
distribution if we obtain marketing approval for such product
candidates.
We rely on third parties in the conduct of our preclinical studies
and clinical trials and for manufacturing and supply of our product
candidates. We have no internal manufacturing capabilities, and if
we continue to develop product candidates, we expect to continue to
rely on third parties, many of whom are single-source suppliers,
for our preclinical study and clinical trial materials. In
addition, we do not yet have a marketing or sales organization or
commercial infrastructure. Accordingly, if we are able to develop
and obtain approval for one or more product candidates, we will
incur significant expenses to develop a marketing and sales
organization and commercial infrastructure in advance of generating
any product sales of wholly-owned product candidates or those for
which we retain the right to commercialize.
Furthermore, we will need to make continued investment in
development studies, registration activities and the development of
commercial support functions including quality assurance and safety
pharmacovigilance before we will be in a position to sell any of
our product candidates, if approved.
The Initial Public Offering and Concurrent Private
Placement
The Initial Public Offering (“IPO”) and Concurrent Private
Placement, which both closed on February 9, 2021, generated
aggregate net proceeds of approximately $107.0 million, after
deducting the underwriting discounts and commissions, private
placement fee and offering expenses payable by us.
Reduction in Force
On January 4, 2022, we previously announced and completed a
reduction in force impacting somewhat less than half of our
employees at that time. Our decision to engage in this reduction
resulted from an assessment of our internal resources needs, given
the results of the Phase 3 study of ANG-3777 in patients at risk
for DGF would likely not support a regulatory approval in that
population and the Phase 2 study in CSA-AKI would not support a
Phase 3 trial in that indication. This reduction was a cost-cutting
measure across the organization to support our 2022 primary focus
on the clinical development of our investigational asset ANG-3070,
a highly selective, oral tyrosine kinase receptor inhibitor in
development as a treatment for fibrotic diseases, as well as
advancing preclinical assets to IND-enabling studies. In connection
with the reduction in force, we incurred termination costs, which
include severance, benefits and related costs, of approximately
$3.2 million, of which $1.8 million were paid during the six
months ended June 30, 2022. We expect to pay the remaining $1.4
million on or before September 2023.
On July 25, 2022, we announced an additional reduction in force of
the majority of our current 37 employees. This reduction in force,
expected to be completed in October 2022, is a cash preservation
measure and impacts employees across the organization. In
connection with the reduction in force, we expect to record a
charge of approximately
$3.3 million in
the third quarter of 2022 to implement the reduction in force.
These charges are primarily one-time termination benefits payable
in cash.
License, Collaboration and Grant Agreements
License Agreement with Vifor Pharma
In November 2020, we granted Vifor Pharma, an exclusive, global
(excluding Greater China), royalty-bearing license, for the
commercialization of ANG-3777 in all Renal Indications, beginning
with DGF and CSA-AKI. The Vifor License also grants Vifor Pharma
exclusive rights, with a right to sublicense subject to our consent
for certain specified conditions, to develop and manufacture
ANG-3777 for commercialization in Renal Indications worldwide
(excluding Greater China) in cooperation with us or independently.
We retain the right to develop and commercialize combination
therapy products combining ANG-3777 with our other proprietary
molecules, subject to Vifor Pharma's right of first negotiation
with respect to global (excluding Greater China) rights to such
combination therapy products in the Renal Indications.
Pursuant to the Vifor License and specifically based upon the
clinical development plan for ANG-3777 set forth in the Vifor
License, we are entitled to receive $80 million in upfront and
near-term clinical milestone payments, including $30 million
in up-front cash received in November 2020, and a $30 million
equity investment comprising a $5 million convertible note
subsequently converting into common stock with the IPO and
$25 million of which was received in the Concurrent Private
Placement with our IPO.
We are also eligible to receive post-approval milestones of up to
approximately $260 million and sales-related milestones of up
to $1.585 billion, providing a total potential deal value of
up to $1.925 billion (subject to certain specified reductions
and offsets), plus tiered royalties on net sales of ANG-3777 at
royalty rates of up to 40%. Under the Vifor License, we are
responsible for executing a pre-specified clinical development plan
designed to obtain regulatory approvals of ANG-3777 for DGF and
CSA-AKI. For the three months ended June 30, 2022 and 2021, we
recognized license revenue related to the Vifor License of $0.7
million and $0.5 million, respectively. For the six months ended
June 30, 2022 and 2021, we recognized license revenue related to
the Vifor License of $2.3 million and $0.9 million, respectively.
The Company has completed substantially all performance under the
Vifor License and recognized all remaining deferred revenue under
the agreement during the three months ended June 30, 2022. As of
June 30, 2022 and December 31, 2021, we recorded zero and
$2.3 million, respectively, as deferred revenue, current on the
condensed consolidated balance sheet related to the Vifor
License.
On October 26, 2021, we announced the Phase 3 trial of ANG-3777 in
DGF did not achieve its primary endpoint and the data were not
expected to be sufficient evidence to support an indication in the
studied DGF population. On December 14, 2021, we announced the
Phase 2 trial of ANG-3777 in CSA-AKI did not achieve its primary
endpoint. The Vifor License includes additional milestone and
royalty objectives related to the clinical development plan for
ANG-3777, which had included a Phase 3 study for CSA-AKI and a
Phase 4 confirmatory study in DGF. We do not expect to receive any
clinical, post-approval, or sales milestones, or royalties, as we
do not intend to continue to pursue the current clinical
development plan for ANG-3777. In 2022, we and Vifor Pharma
continue to work to complete the planned analyses of the results of
the clinical trials announced in the fourth quarter of 2021 and to
discuss the future of the collaboration based upon such analyses
and certain additional pre-clinical studies of
ANG-3777.
Components of Results of Operations
The following discussion summarizes the key factors our management
believes are necessary for an understanding of our financial
statements.
Revenue
We do not have any products approved for sale and have not
generated any revenue from product sales. Our revenue to date
primarily has been derived from government funding consisting of
U.S. government grants and contracts, and revenue under our license
agreements, specifically the Vifor License.
Grant Revenue
Our grants and contracts reimburse us for direct and indirect costs
relating to the grant projects and also provide us with a
pre-negotiated profit margin on total direct and indirect costs of
the grant award, excluding subcontractor costs, after giving effect
to directly attributable costs and allowable overhead costs. Funds
received from grants and contracts are generally deemed to be
earned and recognized as revenue as allowable costs are incurred
during the grant or contract period and the right to payment is
realized.
Contract Revenue
Our license agreements comprise elements of upfront license fees,
milestone payments based on development and royalties based on net
product sales. The timing of our operating cash flows may vary
significantly from the recognition of the related revenue. Income
from upfront payments is recognized when we satisfy the performance
obligations in the contract, which can result in recognition at
either a point in time or over the period of continued involvement.
Other revenue, such as milestone payments, are recognized when
achieved.
Our revenue to date has been generated from payments received
pursuant to the Vifor License Agreement. We recognize revenue from
upfront payments over the term of our estimated period of
performance using a cost-based input method under Topic 606,
Revenue from Contracts with Customers.
In addition to receiving an upfront payment, we may also be
entitled to milestones and other contingent payments upon achieving
predefined objectives. If a milestone is considered probable of
being reached, and if it is probable that a significant revenue
reversal would not occur, the associated milestone amount would
also be included in the transaction price. We expect any license
revenue we generate from any future collaboration partners, will
fluctuate in the future as a result of the timing and amount of
upfront, milestones and other collaboration agreement payments and
other factors.
Operating Expenses
Cost of Grant Revenue
Our cost of grant revenue primarily relates to personnel-related
costs and expenses for grant projects.
Research and Development Expenses
To date, our research and development expenses have primarily
related to discovery efforts and preclinical and clinical
development of our product candidates. We recognize research and
development expenses as they are incurred and payments made prior
to the receipt of goods or services to be used in research and
development are capitalized until the goods or services are
received.
Our research and development expenses have consisted primarily
of:
▪personnel
costs, including salaries, payroll taxes, employee benefits and
stock-based compensation, for personnel in research and development
functions;
▪costs
associated with medical affairs activities;
▪fees
paid to consultants, clinical testing sites and contract research
organizations (CROs), including in connection with our preclinical
studies and clinical trials, and other related clinical trial fees,
such as for investigator grants, patient screening, laboratory
work, clinical trial database management, clinical trial material
management and statistical compilation, analysis and
reporting;
▪contracted
research and license agreement fees with no alternative future
use;
▪costs
related to acquiring, manufacturing and maintaining clinical trial
materials and laboratory supplies;
▪depreciation
of equipment and facilities;
▪legal
expenses related to clinical trial agreements and material transfer
agreements; and
▪costs
related to preparation of regulatory submissions and compliance
with regulatory requirements.
Other than with respect to reimbursable expenses required to be
recorded under our government grants and contracts, we do not
allocate our expenses by product candidates. A significant amount
of our direct research and development expenses include payroll and
other personnel expenses for our departments supporting multiple
product candidate research and development programs and, other than
as specified above, we do not record research and development
expenses by product. However, research and development expenses
were primarily driven by expenses relating to the development of
ANG-3777 and ANG-3070 during the three and six months ended June
30, 2021 and 2022. Of our total research and development expenses
for both the three months ended June 30, 2022 and 2021, 68% of such
expenses were from external third-party sources and the remaining
32% were from internal sources. For the six months ended June 30,
2022 and 2021, 62% and 61%, respectively, of such expenses were
from external third-party sources and the remaining 38% and 39%,
respectively, were from internal sources.
General and Administrative Expenses
General and administrative expenses consist primarily of
personnel-related expenses, such as salaries, payroll taxes,
employee benefits and stock-based compensation, for personnel in
executive, operational, finance and human resources functions.
Other significant general and administrative expenses include
facilities costs, insurance costs, and accounting and legal
services and expenses associated with obtaining and maintaining
patents. A portion of the general and administrative expenses are
reimbursed through the overhead rates contained in our grants with
the U.S. Government.
Other Income (Expense)
Convertible Notes Recorded at Fair Value
We elected the fair value option for recognition of our convertible
notes. Our convertible notes were subject to re-measurement each
reporting period with gains and losses reported through our
condensed consolidated statements of operations. All of our
convertible notes were converted into shares of our common stock
upon the closing of our IPO.
Liability Classified Series C Convertible Preferred Stock Recorded
at Fair Value
Our Series C convertible preferred stock included settlement
features resulting in classification as a liability. The initial
carrying value of the Series C convertible preferred stock was
accreted to the settlement value, the fair value of the securities
to be issued upon the conversion of the Series C Preferred Stock.
The discount to the settlement value was accreted to interest
expense using the effective interest method. During 2020, certain
of the convertible notes were exchanged for Series C convertible
preferred stock. As the exchange was accounted for as a
modification, the Series C convertible preferred stock exchanged
for the convertible notes (the Exchanged Series C Shares) was
recorded at fair value. The Exchanged Series C Shares were subject
to re-measurement each reporting period with gains and losses
reported through our condensed consolidated statements of
operations. All shares of our Series C convertible preferred stock
converted into common stock upon the closing of our
IPO.
Warrant Liability
We have accounted for certain of our freestanding warrants to
purchase shares of our common stock as liabilities measured at fair
value, in accordance with ASC 815,
Derivatives and Hedging.
The warrants are subject to re-measurement at each reporting period
with gains and losses reported through our condensed consolidated
statements of operations.
Foreign Exchange Transaction Gain
Foreign currency transaction gains, primarily related to
intercompany loans, are recorded as a component of other income
(expense) in our condensed consolidated statements of
operations.
Earnings in Equity Method Investment
Earnings in equity method investment represents our 10% interest in
NovaPark accounted for under the equity method.
Interest Income
Interest income consists of interest earned on our cash and cash
equivalents.
Results of Operations
Comparison of the Three Months Ended June 30, 2022 and
2021
The following table summarizes our results of operations for the
periods indicated:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30, |
|
|
|
|
|
2022 |
|
2021 |
|
$ Change
|
|
% Change
|
|
|
|
|
|
|
|
|
|
(In thousands, except percentages)
|
Revenue:
|
|
|
|
|
|
|
|
Contract revenue
|
$ |
653 |
|
|
$ |
540 |
|
|
$ |
113 |
|
|
21% |
|
|
|
|
|
|
|
|
Total revenue
|
653 |
|
|
540 |
|
|
113 |
|
|
21% |
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Research and development |
6,073 |
|
|
14,444 |
|
|
(8,371) |
|
|
(58)% |
General and administrative |
3,615 |
|
|
4,340 |
|
|
(725) |
|
|
(17)% |
Total operating expenses
|
9,688 |
|
|
18,784 |
|
|
(9,096) |
|
|
(48)% |
Loss from operations
|
(9,035) |
|
|
(18,244) |
|
|
9,209 |
|
|
(50)% |
Other income (expense), net
|
(104) |
|
|
1,172 |
|
|
(1,276) |
|
|
(109)% |
Net loss
|
$ |
(9,139) |
|
|
$ |
(17,072) |
|
|
$ |
7,933 |
|
|
|
Contract Revenue
Contract revenue increased by $0.1 million for the three
months ended June 30, 2022 compared to the same period in 2021.
Since we do not intend to continue the clinical development plan
for ANG-3777 currently set forth in Vifor License agreement, which
had included a Phase 3 study in cardiac surgery associated with
cardiopulmonary bypass (CSA-AKI) and a Phase 4 confirmatory study
in delayed graft function (DGF), we performed a reassessment of the
performance period and estimated costs for the completion of the
performance obligations. This accelerated
the revenue recognition related to the upfront payment we received
from Vifor Pharma when the license agreement with Vifor Pharma was
entered into in 2020.
As of June 30, 2022 we have completed substantially all our
performance obligation under the Vifor License and recognized all
remaining deferred revenue under the agreement during the three
months ended June 30, 2022.
Research and Development Expenses
Research and development expenses decreased by $8.4 million,
or 58%, for the three months ended June 30, 2022 compared to the
same period in 2021. The decrease in research and development
expenses was primarily due to a net decrease of $2.9 million
in personnel-related expenses as a result of the reduction in force
announced in January 2022, a decrease of $3.5 million in CRO
expenses from decreased clinical trial activities, and a decrease
of $2.0 million in R&D consulting and subcontractor expenses
from reduced clinical and non-clinical trial activities primarily
related to the completion of ANG-3777 trials.
We expect our research and development expenses to be significantly
lower in the near term due to the discontinuation of development of
ANG-3070 for all indications and the discontinuation of other
development activities pending conclusion of the strategic process,
except for approximately $2.8 million in termination costs related
to the reduction in force announced in July 2022 and certain
pre-clinical studies of ANG-3777, consistent with ongoing
discussions with our license partner Vifor Pharma.
General and Administrative Expenses
General and administrative expenses decreased by $0.7 million,
or 17%, for the three months ended June 30, 2022 compared to the
same period in 2021. The decrease in general and administrative
expenses was primarily due to a net decrease of $1.0 million
in personnel-related expenses as a result of the reduction in force
announced in January 2022, offset in part by an increase of $0.3
million in operating expenses, including legal, office and
insurance charges.
We expect our general and administrative expenses to be slightly
lower in the future due to the effect of our restructuring and 2022
Strategic Alignment process, except for approximately $0.5 million
in termination costs related to our reduction in force announced in
July 2022. We also expect to generally maintain our current level
of expenses associated with operating as a public company,
including expenses related to audit, legal, regulatory, and
tax-related services associated with maintaining compliance with
the rules and regulations of the SEC and standards applicable to
companies listed on a national securities exchange, insurance
expenses, investor relations activities and other administrative
and professional services.
Other Income (Expense)
Other income (expense) decreased by $1.3 million for the three
months ended June 30, 2022 compared to the same period in 2021. The
decrease is primarily due to a decrease of $0.9 million gain from
the forgiveness of our PPP loan in the second quarter of 2021.
There is also an increase of $0.3 million foreign exchange losses
resulting from unfavorable effect of exchange rates.
Comparison of the Six Months Ended June 30, 2022 and
2021
The following table summarizes our results of operations for the
periods indicated:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended June 30, |
|
|
|
|
|
2022 |
|
2021 |
|
$ Change
|
|
% Change
|
|
|
|
|
|
|
|
|
|
(In thousands, except percentages)
|
Revenue:
|
|
|
|
|
|
|
|
Contract revenue
|
$ |
2,301 |
|
|
$ |
911 |
|
|
$ |
1,390 |
|
|
153 |
% |
|
|
|
|
|
|
|
|
Total revenue
|
2,301 |
|
|
911 |
|
|
1,390 |
|
|
153 |
% |
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Research and development |
17,740 |
|
|
28,742 |
|
|
(11,002) |
|
|
(38) |
% |
General and administrative |
8,081 |
|
|
10,352 |
|
|
(2,271) |
|
|
(22) |
% |
Total operating expenses
|
25,821 |
|
|
39,094 |
|
|
(13,273) |
|
|
(34) |
% |
Loss from operations
|
(23,520) |
|
|
(38,183) |
|
|
14,663 |
|
|
(38) |
% |
Other income (expense), net
|
141 |
|
|
(15,576) |
|
|
15,717 |
|
|
(101) |
% |
Net loss
|
$ |
(23,379) |
|
|
$ |
(53,759) |
|
|
$ |
30,380 |
|
|
|
Contract Revenue
Contract revenue increased by $1.4 million for the six months ended
June 30, 2022 compared to the same period in 2021. Since we do not
intend to continue the clinical development plan for ANG-3777
currently set forth under our Vifor License agreement, which had
included a Phase 3 study in cardiac surgery associated with
cardiopulmonary bypass (CSA-AKI) and a Phase 4 confirmatory study
in delayed graft function (DGF), we performed a reassessment of the
performance period and estimated costs for the completion of the
performance obligations. This accelerated the revenue recognition
related to the upfront payment we received from Vifor Pharma when
the license agreement with Vifor Pharma was entered into in
2020.
As of June 30, 2022, we have completed all our performance
obligation under the Vifor License and recognized all remaining
deferred revenue under the agreement during the three months ended
June 30, 2022.
Research and Development Expenses
Research and development expenses decreased by $11.0 million,
or 38%, for the six months ended June 30, 2022 compared to the same
period in 2021. The net decrease in research and development
expenses was primarily due to a $6.3 million reduction in clinical
trial related expenses as a result of the completion of ANG-3777
trials, and a $7.3 million decrease in salary, bonus and stock
based compensation primarily due to the reduction in headcount
following the reduction in force announced in January 4, 2022.
These decreases are offset in part by the one-time termination
benefit charges of $2.7 million incurred in connection with our
reduction in force announced January 4, 2022 (see Note 1 to the
condensed consolidated financial statements for additional
information).
General and Administrative Expenses
General and administrative expenses decreased by $2.3 million,
or 22%, for the six months ended June 30, 2022 compared to the same
period in 2021. The decrease in general and administrative expenses
was primarily due to a net decrease of $3.3 million in
personnel-related expenses primarily in salary, bonus and stock
based compensation related to the reduction in force announced
January 4, 2022 and the vesting of performance-based stock units
upon IPO in the
six months ended June 30, 2021. These decreases were offset in part
by the one-time termination benefit charges of $0.6 million (see
Note 1 to the condensed consolidated financial statements for
additional information) and a net increase of $0.4 million in
professional services expense, including audit, tax, legal and
insurance.
Other Income (Expense)
Other income (expense) increased by $15.7 million for the six
months ended June 30, 2022 compared to the same period in 2021. The
increase is primarily due to a decrease of $14.5 million of loss
from the first quarter of 2021 as a result of the increase in fair
value related to our warrant liability, convertible notes, and
Series C convertible preferred stock for which we elected the fair
value option as most of these instruments were no longer
outstanding after our IPO in February 2021. There was also a
reduction of $2.2 million in interest expense, primarily related to
interest associated with convertible notes and Series C convertible
preferred stock in 2020 that were converted into equity upon our
IPO in February 2021. The convertible notes and warrants both
require re-measurement at each balance sheet date with gains and
losses reported through our consolidated statement of operations.
These increases were offset in part by a $0.9 million gain from the
forgiveness of our PPP loan in the second quarter of
2021.
Liquidity and Capital Resources
Sources and Uses of Liquidity
We have incurred losses and negative cash flows from operations
since inception, and we anticipate we will incur losses for at
least the next several years. To date, we have not generated any
revenue from product sales. We have funded our operations primarily
through the receipt of grants, the sale of debt and equity
securities, and proceeds from license agreements. As of
June 30, 2022, we had $63.4 million of cash and cash
equivalents and an accumulated deficit of $238.5 million,
compared to $88.8 million of cash and cash equivalents and an
accumulated deficit of $215.1 million as of December 31,
2021.
Future Cash Needs and Funding Requirements
Based on our current operating plan, we believe our cash and cash
equivalents will be sufficient to fund our planned operations for
at least 12 months following the issuance date of our condensed
consolidated financial statements. However, we have based our
projections of operating capital requirements on assumptions that
may prove to be incorrect and we may use all our available capital
resources sooner than we expect. Because of the numerous risks and
uncertainties associated with
the status of our company and the initiation of our 2022 Strategic
Realignment process, we are unable to estimate the exact amount of
our operating capital requirements. The amount and timing of our
future funding requirements will depend on many factors, including,
but not limited to:
▪the
amount of time it takes to complete our 2022 Strategic Realignment
process, including completing any potential merger or reverse
merger transaction;
▪the
amount and cost of legal and professional services required to
conduct our 2022 Strategic Realignment process, including fees
related to the engagement of a strategic advisor; and
▪our
need to continue to operate as a public company
Summary Statement of Cash Flows
The following table sets forth a summary of our net cash flow
activity for the six months ended June 30, 2022 and 2021 (in
thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended June 30, |
|
2022 |
|
2021 |
Net cash provided by (used in)
|
|
|
|
Operating activities
|
$ |
(25,558) |
|
|
$ |
(23,082) |
|
Investing activities
|
— |
|
|
(285) |
|
Financing activities
|
(28) |
|
|
106,068 |
|
Effect of foreign currency on cash
|
202 |
|
|
5 |
|
Net increase (decrease) in cash
|
$ |
(25,384) |
|
|
$ |
82,706 |
|
Operating activities
For the six months ended June 30, 2022, net cash used in operating
activities was $25.6 million, which primarily consisted of a
net loss of $23.4 million, partially offset by net non-cash
charges of $1.7 million and a use of cash from the change in
net operating assets and liabilities of $3.8 million. The net
non-cash charges were primarily related to stock-based compensation
of $1.4 million and amortization of operating lease right-of-use
assets of $0.4 million. The use of cash due to the change in
net operating assets and liabilities was due to a decrease in
deferred revenue of $2.3 million due to revenue recognized in
the period, an increase of $0.8 million in prepaid expenses
and other current assets primarily due to the prepayment of
business insurance, and a decrease of $2.1 million in accounts
payable due to the payment of CRO invoices, partially offset by an
increase of $0.9 million in accrued expenses due to timing of
invoices, and an increase of $0.1 million in other
liabilities, noncurrent, for accrued severance, and a decrease of
$0.8 million in grants receivable due to the fulfillment of
the grant contract with the U.S. Department of
Defense.
For the six months ended June 30, 2021, net cash used in operating
activities was $23.1 million, which primarily consisted of a net
loss of $53.8 million, partially offset by net non-cash charges of
$23.5 million and a change in net operating assets and liabilities
of $7.1 million. The net non-cash charges were primarily related to
a change in fair value of $14.4 million in convertible notes,
Series C preferred stock and warrant liabilities, stock-based
compensation expense of $7.8 million and amortization of debt
issuance costs of $1.9 million, partially offset by a gain of $0.9
million from the forgiveness of our PPP loan. The change in net
operating assets and liabilities was due to a decrease of $3.3
million in prepaid expenses and other current assets, an increase
of $3.7 million in accounts payable due to our overall growth and
an increase of $1.3 million in accrued expenses due to timing of
invoices, partially offset by a decrease in deferred revenue of
$0.9 million due to revenue recognized in the period.
Investing activities
For the six months ended June 30, 2022, no cash was provided by or
used in investing activities, and for the six months ended June 30,
2021, net cash used in investing activities was $0.3 million,
primarily related to purchases of fixed assets for research
activities.
Financing activities
For the six months ended June 30, 2022, net cash used in financing
activities was immaterial.
For the six months ended June 30, 2021, net cash provided by
financing activities was $106.1 million, primarily due to net
proceeds of $110.6 million from the IPO and Concurrent Private
Placement and $0.9 million from the exercise of warrants, partially
offset by the payment of the deferred offering costs of $3.1
million and taxes paid related to net share settlement upon vesting
of restricted stock awards of $2.4 million.
Critical Accounting Policies and Significant Judgements and
Estimates
Our condensed consolidated financial statements are prepared in
accordance with generally accepted accounting principles in the
United States (“U.S. GAAP”). The preparation of our condensed
consolidated financial statements and related disclosures requires
us to make estimates and judgments affecting the reported amounts
of assets, liabilities, costs and expenses. We base our estimates
on historical experience, known trends and events and various other
factors we believe are reasonable under the circumstances, the
results of which form the basis for making judgments about the
carrying values of assets and liabilities not readily apparent from
other sources. We evaluate our estimates and assumptions on an
ongoing basis. Our actual results may differ from these estimates
under different assumptions or conditions.
Our critical accounting policies are described under the heading
“Management’s Discussion and Analysis of Financial Condition and
Results of Operations—Critical Accounting Policies and Use of
Estimates” in our Annual Report on Form 10-K for the year ended
December 31, 2021, which was filed with the SEC on March 30,
2022. During the six months ended June 30, 2022, except as
described in Note 1 to the unaudited interim condensed consolidated
financial statements appearing elsewhere in this Quarterly Report
on Form 10-Q, there were no material changes to our critical
accounting policies from those previously disclosed.
Emerging Growth Company and Smaller Reporting Company
Status
We are a smaller reporting company and an emerging growth company,
as defined in the JOBS Act. Under the JOBS Act, emerging growth
companies can delay the adoption of new or revised accounting
standards issued subsequent to the enactment of the JOBS Act until
such time as those standards apply to private companies. Other
exemptions and reduced reporting requirements under the JOBS Act
for emerging growth companies include
presentation of only two years of audited financial statements in a
registration statement for an initial public offering, an exemption
from the requirement to provide an auditor's report on internal
controls over financial reporting pursuant to Sarbanes-Oxley Act of
2002, as amended (Sarbanes-Oxley) an exemption from any requirement
that may be adopted by the Public Company Accounting Oversight
Board regarding mandatory audit firm rotation, and less extensive
disclosure about our executive compensation
arrangements.
We have elected to use the extended transition period for complying
with new or revised accounting standards that have different
effective dates for public and private companies until the earlier
of the date that (i) we are no longer an emerging growth company or
(ii) we affirmatively and irrevocably opt out of the extended
transition period provided in the JOBS Act. As a result, our
condensed consolidated financial statements may not be comparable
to companies that comply with new or revised accounting standards
as of public company effective dates.
We will remain an emerging growth company until the earliest of (i)
December 31, 2026, (ii) the last day of our first fiscal year in
which we have total annual gross revenue of $1.07 billion or more,
(iii) the date on which we are deemed to be a “large accelerated
filer,” as defined in Rule 12b-2 under the Securities Exchange Act
of 1934, as amended (Exchange Act), which means the market value of
equity securities held by non-affiliates exceeds $700 million as of
the last business day of our most recently completed second fiscal
quarter and (iv) the date on which we have issued more than $1.0
billion in non-convertible debt securities during the prior
three-year period.
Even after we no longer qualify as an emerging growth company, we
may still qualify as a “smaller reporting company” and/or
“non-accelerated filer” which may allow us to take advantage of
many of the same exemptions from disclosure requirements including
not being required to comply for a period of time with the auditor
attestation requirements of Section 404 of Sarbanes-Oxley, and
reduced disclosure obligations regarding executive compensation in
our periodic reports and proxy statements.
Item 3. Quantitative and Qualitative Disclosures About Market
Risk
We are a smaller reporting company as defined by Rule 12b-2 of the
Exchange Act and are not required to provide the information
required under this item.
Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
Our management, with the participation of our President and Chief
Executive Officer and our Chief Financial Officer, our principal
executive officer and principal accounting and financial officer,
respectively, have evaluated the effectiveness of our disclosure
controls and procedures (as defined in Rules 13a-15(e) and
15d-15(e) under the Exchange Act) as of June 30,
2022.
Disclosure controls and procedures are controls and other
procedures designed to ensure information required to be disclosed
in our reports filed or submitted under the Exchange Act is
recorded, processed, summarized and reported, within the time
periods specified in the SEC’s rules and forms. Disclosure controls
and procedures include controls and procedures designed to ensure
information required to be disclosed in our reports filed under the
Exchange Act is accumulated and communicated to management,
including our President and Chief Executive Officer and our Chief
Financial Officer, to allow timely decisions regarding required
disclosure. Based on the evaluation of our disclosure controls and
procedures, our President and Chief Executive Officer and our Chief
Financial Officer concluded our disclosure controls and procedures
were not effective as of June 30, 2022 due to the material
weaknesses in our internal control over financial reporting
described below. In light of this fact, our management has
performed additional analyses, reconciliations, and other
post-closing procedures and has concluded that, notwithstanding the
material weaknesses in our internal control over financial
reporting, the condensed consolidated financial statements for the
periods covered by and included in this Quarterly Report on Form
10-Q fairly present, in all material respects, our financial
position, results of operations and cash flows for the periods
presented in conformity with U.S. GAAP.
Changes in Internal Control Over Financial Reporting
Except for the changes in connection with the ongoing remediation
of the previously identified material weakness discussed below,
there has been no change in our internal control over financial
reporting during the quarter ended June 30, 2022, that has
materially affected, or is reasonably likely to materially affect,
our internal control over financial reporting.
In connection with the preparation of our consolidated financial
statements, we identified control deficiencies in the design and
operation of our internal control over financial reporting that
constituted material weaknesses. A
material weakness is a deficiency, or a combination of
deficiencies, in internal control over financial reporting such
that there is a reasonable possibility that a material misstatement
of our financial statements will not be prevented or detected on a
timely basis.
The material weaknesses identified in our internal control over
financial reporting related to (i) insufficient resources with
knowledge and expertise in U.S. GAAP to properly evaluate certain
complex transactions, including debt instruments and equity
instruments; and (ii) insufficient financial reporting and close
controls to ensure that incurred expenses are accrued at period end
and deliverables from third party contractors are reviewed for
accuracy.
During 2021, we took a number of actions to remediate these
material weaknesses, including:
•engaging
SEC compliance and technical accounting consultants to assist in
evaluating transactions for conformity with U.S. GAAP;
•hiring
additional finance and accounting personnel to augment accounting
staff and to provide more resources for complex accounting matters
and financial reporting; and
•strengthening
our financial reporting and close relating to incurred expenses by
ensuring our data capture procedures are clearly defined and that
responsible personnel, including supervisory personnel, have
adequate training regarding the process and
expectation.
We are still in the process of implementing these controls. We
intend to continue to take steps to remediate the material
weaknesses through formalizing documentation of policies and
procedures and further evolving our accounting processes. While we
believe these efforts will improve our internal control over
financial reporting, the design and implementation of our
remediation is ongoing and will require validation and testing of
the design and operating effectiveness of our internal controls
over a sustained period of financial reporting cycles. The actions
we are taking are subject to ongoing senior management review, as
well as audit committee oversight. We will not be able to conclude
whether the steps we are taking will fully remediate the material
weaknesses in our internal control over financial reporting until
we have completed our remediation efforts and subsequent evaluation
of their effectiveness.
Inherent Limitation on the Effectiveness Over Financial
Reporting
The effectiveness of any system of internal control over financial
reporting, including ours, is subject to inherent limitations,
including the exercise of judgment in designing, implementing,
operating, and evaluating the controls and procedures, and the
inability to eliminate misconduct completely. Accordingly, any
system of internal control over financial reporting, including
ours, no matter how well designed and operated, can only provide
reasonable and not absolute assurances. In addition, projections of
any evaluation of effectiveness to future periods are subject to
the risk that controls may become inadequate because of changes in
conditions, or that the degree of compliance with the policies or
procedures may deteriorate. We intend to continue to monitor and
upgrade our internal controls as necessary or appropriate for our
business, but there can be no assurance such improvements will be
sufficient to provide us with effective internal control over
financial reporting.
Part II OTHER INFORMATION
Item 1. Legal Proceedings
We are not currently a party to any material legal proceedings.
From time to time, we may be involved in legal proceedings or
subject to claims incident to the ordinary course of business.
Regardless of the outcome, such proceedings or claims can have an
adverse impact on us because of defense and settlement costs,
diversion of resources and other factors, and there can be no
assurances that favorable outcomes will be obtained.
Item 1A. Risk Factors
Investing in our common stock involves a high degree of risk. You
should carefully consider the following risk factors, as well as
the other information in this Quarterly Report on Form 10-Q,
including our
condensed
consolidated financial statements and related notes, before
deciding whether to invest in shares of our common stock. Many of
the following risks and uncertainties are, and will be, exacerbated
by the COVID-19 pandemic and any worsening of the global business
and economic environment as a result. The occurrence of any of the
adverse developments described in the following risk factors could
materially and adversely harm our business, financial condition,
results of operations or prospects. In that case, the trading price
of our common stock could decline, and you may lose all or part of
your investment.
Risk factors that may affect our business and financial results are
discussed within Item 1A “Risk Factors” of our Annual Report on
Form 10-K and below. Except as set forth below, there have been no
material changes to the disclosures relating to this item from
those set forth in our Annual Report on Form 10-K.
As disclosed under “Management's Discussion and Analysis of
Financial Condition and Results of Operations—Overview,” on July
25, 2022, we announced that we intend to engage in a 2022 Strategic
Realignment process, pursuant to which we will explore strategic
options for enhancing and preserving shareholder value, which may
include exploration and evaluation of strategic options like a
merger, reverse merger, other business combination, sale of assets,
licensing, or other strategic transactions. We also announced the
discontinuation of development of ANG-3070 for all indications and
the discontinuation of other development activities pending
conclusion of the strategic process, except certain pre-clinical
studies of ANG-3777. As a result, many of the risk factors
previously disclosed in our Annual Report on Form 10-K may only
apply to the extent we continue the pre-clinical studies of
ANG-3777 or resume further development of our product candidates
and programs Any related risk factors surrounding the costs of our
operations and need for additional funding are also tied to our
remaining operations discussed throughout this Report. This section
discusses risk factors that may affect our business and financial
results that were not previously disclosed in Item 1A “Risk
Factors” of our Annual Report on Form 10-K.
We may be unable to realize all of the potential benefits, and may
be subject to potential liabilities, in connection with our planned
2022 Strategic Realignment.
In July 2022, we announced that we will discontinue development of
ANG-3070 for all indications and discontinue other development
activities pending conclusion of our 2022 Strategic Realignment
process, pursuant to which we will explore and evaluate strategic
options like a merger, reverse merger, other business combination,
sale of assets, licensing, or other strategic transactions. We may
not be able to successfully enter into and complete a strategic
transaction in a timely manner, if at all. In addition, the costs
of implementing the 2022 Strategic Realignment process may be
greater than we expect and we may be unable to offset such costs.
As a result, we may not achieve the benefits we are seeking, even
if we implement our 2022 Strategic Realignment
process.
Our recent organizational changes and cost cutting measures may not
be successful.
In July 2022, following the announcement that we will terminate our
Phase 2 “JUNIPER” dose-finding trial for ANG-3070 in patients with
primary proteinuric kidney diseases and discontinue all development
activities, and we decided to implement a reduction-in-force
affecting a majority of our workforce. The objective of this
workforce reduction was to realign our workforce to meet our needs
in light of the termination of our clinical development activities.
In connection with these actions, we have incurred or will incur
the termination costs, which include severance, benefits, and
related costs, of approximately $3.3 million.
We believe these changes are needed to streamline our organization
and reallocate our resources to better align with our current
strategic goals, including our current focus on the 2022 Strategic
Realignment. However, these restructuring and cost cutting
activities may yield unintended consequences and costs, such as
attrition beyond our intended reduction-in-force, a reduction in
morale among our remaining employees, and the risk that we may not
achieve the anticipated benefits of the 2022 Strategic Realignment,
all of which may have an adverse effect
on our results of operations or financial condition. In addition,
while positions have been eliminated, certain functions necessary
to our reduced operations remain, and we may be unsuccessful in
distributing the duties and obligations of departed employees among
our remaining employees. We may also discover that the reductions
in workforce and cost cutting measures will make it difficult for
us to pursue new initiatives, requiring us to hire qualified
replacement personnel, which may require us to incur additional and
unanticipated costs and expenses. As a result of the loss of
services of substantially all of our personnel, including several
of our executive officers, we may be unable to continue our
operations and meet our ongoing obligations. Moreover, there is no
assurance that we will be successful in our pursuit of any new
strategic opportunities. Our failure to successfully accomplish any
of the above activities and goals may have a material adverse
impact on our business, financial condition, and results of
operations.
We may not be able to comply with Nasdaq’s continued listing
standards.
Our common stock trades on The Nasdaq Capital Market (“Nasdaq”)
under the symbol “ANGN.” There is also no guarantee that we will be
able to perpetually satisfy Nasdaq’s continued listing requirements
to maintain our listing on Nasdaq for any periods of time. Our
failure to continue to meet these requirements may result in our
securities being delisted from Nasdaq.
Among the conditions required for continued listing on Nasdaq, we
are required to maintain a stock price over $1.00 per share
pursuant to Rule 5550(a)(2) of the Nasdaq Listing Rules. On July
25, 2022, our common stock has traded as low as $0.98 per share.
Accordingly, we may not be able to maintain a stock price over
$1.00 per share and could face the risk of our common stock being
delisted if the closing bid price for our common stock falls below
$1.00 per share for 30 consecutive business days and we are unable
to regain compliance.
If we fail to comply with Nasdaq rules and requirements, our stock
may be delisted. In addition, even if we demonstrate compliance
with the requirement above, we will have to continue to meet other
objective and subjective listing requirements to continue to be
listed on Nasdaq. Delisting from Nasdaq could make trading our
common stock more difficult for investors, potentially leading to
declines in our share price and liquidity. Without a Nasdaq
listing, stockholders may have a difficult time getting a quote for
the sale or purchase of our common stock, the sale or purchase of
our common stock would likely be made more difficult, and the
trading volume and liquidity of our common stock could decline.
Delisting from Nasdaq could also result in negative publicity and
could also make it more difficult for us to raise additional
capital. The absence of such a listing may adversely affect the
acceptance of our common stock as currency or the value accorded by
other parties. Further, if we are delisted, we would also incur
additional costs under state blue sky laws in connection with any
sales of our securities. These requirements could severely limit
the market liquidity of our common stock and the ability of our
stockholders to sell our common stock in the secondary market. If
our common stock is delisted by Nasdaq, our common stock may be
eligible to trade on an over-the-counter quotation system, such as
the OTCQB Market, where an investor may find it more difficult to
sell our stock or obtain accurate quotations as to the market value
of our common stock. In the event our common stock is delisted from
Nasdaq, we may not be able to list our common stock on another
national securities exchange or obtain quotation on an over-the
counter quotation system.
Item 2. Unregistered Sales of Equity Securities and Use of
Proceeds
Use of Proceeds from the Initial Public Offering
On February 9, 2021, we closed our Initial Public Offering of
5,750,000 shares of our common stock at a public offering price of
$16.00 per share, which includes the full exercise by the
underwriters of their option to purchase an additional 750,000
shares of common stock. All of the shares of common stock issued
and sold in our IPO were registered under the Securities Act
pursuant to registration statements on Form S-1, as amended
(Registration No. 333-252177), which was declared effective by the
SEC on February 4, 2021. Aggregate net proceeds to Angion were
$85.6 million, after deducting underwriting discounts and
commissions of $6.4 million. None of the underwriting
discounts and commissions or offering expenses were incurred or
paid, directly or indirectly, to any of our directors or officers
or their associates or to persons owning 10% or more of our common
stock or to any of our affiliates.
The Initial Public Offering and Concurrent Private Placement, which
both closed on February 9, 2021, generated aggregate net proceeds
of approximately $107.0 million, after deducting the underwriting
discounts and commissions, private placement fee and estimated
offering expenses of $10.0 million. As of June 30, 2022, we have
used approximately $75.0 million of the aggregate net proceeds
from our IPO.
There has been no material change in the use of proceeds from our
IPO as described in our final prospectus filed with the SEC on
February 5, 2021 pursuant to Rule 424(b)(4), except that given
the clinical trial data on ANG-3777 reported in the fourth quarter
of 2021 and the termination of our Phase 2 “JUNIPER” dose-finding
trial for ANG-3070, we no longer use the proceeds for the clinical
development of ANG-3777 or ANG-3070, but we do expect to use the
proceeds for the 2022 Strategic Realignment. There are no funds
budgeted for additional clinical trials.
Recent Sales of Unregistered Securities
There were no unregistered securities sold in three months ended
June 30, 2022.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Mine Safety Disclosures
None.
Item 5. Other Information
None.
Item 6. Exhibits
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Exhibit
Number |
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Exhibit
Description |
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Incorporated by Reference |
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Filed Herewith |
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Form |
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Date |
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Number |
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3.1 |
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8-K |
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2/09/2021 |
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3.1 |
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3.2 |
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8-K |
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2/09/2021 |
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3.2 |
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4.1 |
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Reference is made to exhibits 3.1 through 3.2. |
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4.2 |
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S-1/A |
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2/01/2021 |
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4.2 |
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4.3 |
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S-1 |
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1/15/2021 |
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4.3 |
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4.4 |
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S-1 |
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1/15/2021 |
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4.6 |
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10.1 |
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X |
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31.1 |
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X |
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31.2 |
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X |
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32.1^ |
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X |
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32.2^ |
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X |
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101.INS |
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XBRL Instance Document. |
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X |
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101.SCH |
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XBRL Taxonomy Extension Schema Document. |
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X |
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101.CAL |
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XBRL Taxonomy Extension Calculation Linkbase Document. |
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X |
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101.DEF |
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XBRL Taxonomy Extension Definition Linkbase Document. |
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X |
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101.LAB |
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XBRL Taxonomy Extension Label Linkbase Document. |
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X |
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101.PRE |
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XBRL Taxonomy Extension Presentation Linkbase Document. |
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X |
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104 |
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Cover Page Interactive Data File (formatted as inline XBRL and
contained in Exhibit 101). |
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X |
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__________________________________
†Portions
of this exhibit have been omitted in accordance with Item
601(b)(10) of Regulation S-K.
^ The
certification that accompanies this Quarterly Report on Form 10-Q
pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section
906 of the Sarbanes-Oxley Act of 2002, is not deemed “filed” by the
Registrant for purposes of Section 18 of the Securities Exchange
Act of 1934, as amended.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly
authorized.
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ANGION BIOMEDICA CORP. |
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By: |
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/s/ JAY R. VENKATESAN, M.D. |
Date: |
August 15, 2022
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Jay R. Venkatesan, M.D.
President and Chief Executive Officer and Director (Principal
Executive Officer)
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ANGION BIOMEDICA CORP. |
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By: |
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/s/ GREGORY S. CURHAN |
Date: |
August 15, 2022
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Gregory S. Curhan
Chief Financial Officer
(Principal Financial and Accounting Officer)
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