10-K: Aptevo Therapeutics Reports 2023 Financial Results and Provides Business Update

Sentiment:

Annual Report 5 March 2024 8:30 AM

📋All filings for Aptevo Therapeutics INC

Aptevo Therapeutics, a clinical-stage biotech company, reported a net loss of $17.4 million for 2023, shifting from a net income of $8.0 million in 2022, while advancing its immunotherapy pipeline.

Capital raiseThe company will require additional funding to continue its business including to support the ongoing clinical development of APVO436 and ALG.APV-527, develop additional products, support commercial marketing activities or otherwise provide additional financial flexibility.The company may need to seek additional funds sooner than planned due to changing circumstances, some of which may be beyond its control.The company's ability to raise future capital on acceptable terms or at all will be impacted by the macroeconomic environment, including rising and fluctuating interest rates, economic uncertainty and volatility in the capital market, geopolitical tensions, including the ongoing war between Ukraine and Russia and the rising conflict in the Middle East, reoccurrences of COVID-19 or other pandemics, or other future widespread public health epidemics, or other factors could also adversely impact our ability to access capital as and when needed or increase our costs in order to raise capital.Future issuances of common stock may include, but not be limited to, (i) the issuance of 581,826 remaining shares of common stock pursuant to our Purchase Agreement with Lincoln Park, (ii) the issuance of up to 350,589 remaining outstanding shares of common stock upon the exercise of warrants issued in connection with our March 2019 public offering of common stock and warrants, (iii) the issuance of the remaining outstanding shares of common stock upon the exercise of warrants issued in connection with our August 2023 public offering of common stock and warrants that would result in gross proceeds of $1.2 million, (iv) the issuance of the remaining shares of common stock upon the exercise of warrants issued in connection with our November 2023 Warrant Inducement Agreement with certain Holders of our Series A and Series B common warrants issued in connection with our August 2023 public offering that would result in gross proceeds of $6.6 million, or (v) the issuance of common stock in a firm commitment offering or private placement.

Worse than expectedThe company reported a net loss of $17.4 million in 2023, a significant decrease from the net income of $8.0 million in 2022.The company's management has expressed substantial doubt about its ability to continue as a going concern through March 2025.

Summary

Aptevo Therapeutics, a clinical-stage biotechnology company, reported a net loss of $17.4 million for the year ended December 31, 2023, compared to a net income of $8.0 million for the same period in 2022.
The company's net income in 2022 was primarily due to a one-time $37.2 million gain from an amendment to a royalty purchase agreement.
As of December 31, 2023, Aptevo had cash and cash equivalents of $16.9 million.
The company is focused on developing novel immunotherapies for cancer, utilizing its ADAPTIR and ADAPTIR-FLEX platform technologies.
Aptevo's pipeline includes clinical-stage candidates APVO436 for acute myelogenous leukemia (AML) and ALG.APV-527 for solid tumors, as well as preclinical candidates APVO603, APVO442, and APVO711.
The company plans to initiate a Phase 1b/2 trial for APVO436 in combination with Venetoclax and Azacitidine in the first half of 2024.
A Phase 1 clinical trial for ALG.APV-527, which began in the first quarter of 2023, is ongoing with patient enrollment continuing.
Research and development expenses decreased to $17.1 million in 2023 from $17.9 million in 2022, primarily due to lower APVO436 trial costs.
General and administrative expenses decreased to $11.8 million in 2023 from $13.9 million in 2022, mainly due to lower employee and consulting costs.
The company sold its right to future deferred payments and a portion of potential milestones from Medexus to XOMA for $9.65 million, which was recorded as other income.
Aptevo's management has concluded that substantial doubt exists about the company's ability to continue as a going concern through March 2025.

Sentiment

Score: 4

Explanation: The document presents a mixed picture with positive advancements in clinical trials and platform technology, but significant concerns about financial losses, going concern status, and the need for additional capital. The overall sentiment is cautiously negative due to the financial challenges.

Positives

Aptevo is advancing its clinical-stage candidates, APVO436 and ALG.APV-527, through clinical trials.
The company is continuing to develop its preclinical candidates, APVO603, APVO442, and APVO711.
Aptevo has a versatile ADAPTIR and ADAPTIR-FLEX platform for developing novel immunotherapies.
The company has secured funding through a purchase agreement with XOMA, selling its right to future deferred payments and a portion of potential milestones from Medexus.

Negatives

Aptevo reported a net loss of $17.4 million in 2023, a significant decrease from the net income of $8.0 million in 2022.
The company's management has expressed substantial doubt about its ability to continue as a going concern through March 2025.
The company's royalty revenue decreased to $0 in 2023 from $3.1 million in 2022 due to an amendment to a royalty purchase agreement.
The company is dependent on third parties for manufacturing its product candidates.

Risks

Aptevo has a history of losses and may not be profitable in the future.
The company's ability to continue as a going concern is uncertain.
Aptevo will require additional capital and may be unable to raise it when needed or on acceptable terms.
The company's success depends on attracting and retaining key personnel.
Delays or difficulties in clinical trials could delay regulatory approvals.
The company faces substantial competition in the biotechnology market.
Macroeconomic conditions, including inflation and interest rates, could negatively affect the business.
The company may not be successful in developing its ADAPTIR or ADAPTIR-FLEX platforms.
Failure to protect intellectual property rights could harm the business.
The company's stock price is volatile and may be at risk for delisting from the Nasdaq Capital Market.
The company may be subject to periodic litigation.

Future Outlook

Aptevo plans to initiate a Phase 1b/2 trial for APVO436 in combination with Venetoclax and Azacitidine in the first half of 2024 and continue to advance ALG.APV-527 in its ongoing Phase 1 clinical trial.

Management Comments

The company believes it is skilled at candidate generation, validation, and subsequent preclinical and clinical development using the ADAPTIR platform and the ADAPTIR-FLEX platform.
Aptevo believes its candidates in development and future molecules derived from its ADAPTIR and ADAPTIR-FLEX platforms will be highly competitive in the market as they are rationally designed for safety and tolerability as well as efficacy.

Industry Context

The document highlights Aptevo's position in the competitive immuno-oncology market, noting the increasing recognition of bispecific therapeutics as potent anti-cancer agents and the presence of numerous competitors developing similar therapies.

Comparison to Industry Standards

The document mentions several competitors developing antibody therapies targeting CD123, including Affirmed, Arcellx, AvenCell, Cellectis, Macrogenics, Inc. / Gilead, ImmunoGen, Menarini Group and Sanofi.
It also notes competitors developing non-CD123 antibody therapies such as Novartis, Bio-Path, Shattuck Labs, Syros Pharma, Faron Pharma and ALX Oncology.
For ALG.APV-527, the document identifies Crescendo Biologics as a competitor in preclinical development and GenMab and Abbvie as competitors with bispecifics in the clinic targeting 5T4.
The document also mentions competitors developing bispecifics targeting 4-1BB in combination with other targets, such as Molecular Partners and Amgen and Hoffmann-La Roche (RO7122290) targeting 4-1BB x FAP, and BioNTech / Genmab and Pieris / Servier targeting PD-L1 x 4-1BB.
The document states that nine new bispecific agents have been approved for use by the FDA in the last three years and there is a total of 125 bispecific drug candidates currently in development.

Corporate Governance

Change Type	Description	Effective Date	Impact Assessment
ESG Oversight	The Board amended its Corporate Governance Guidelines to specify that the Nominating and Corporate Governance Committee shall coordinate with the Audit Committee, in the Audit Committees primary oversight over the Companys ESG activities.	2022-10	This change formalizes the oversight of ESG activities and ensures coordination between relevant committees.

Stakeholder Impact

Shareholders face the risk of dilution from future equity issuances and potential loss of investment value due to the company's financial challenges.
Employees may be affected by potential cost reductions and restructuring if the company fails to secure additional funding.
Customers and patients may experience delays in the development and availability of new therapies if the company's financial situation worsens.
Suppliers and creditors may face increased risk of non-payment or delayed payments due to the company's financial instability.

Next Steps

Initiate a Phase 1b/2 trial for APVO436 in combination with Venetoclax and Azacitidine in the first half of 2024.
Continue patient enrollment in the Phase 1 clinical trial for ALG.APV-527.
Advance preclinical candidates APVO603 and APVO442 through preclinical and IND-enabling studies.
Continue preclinical studies to evaluate the mechanism of action and efficacy of APVO711.
Pursue collaborations with other biotechnology and pharmaceutical companies, academia, and non-governmental organizations to advance the product portfolio.

Key Dates

Date	Description
2016-02	Aptevo was incorporated in Delaware.
2016-08-01	Emergent effectuated a spin-off of Aptevo into an independent publicly traded company.
2017-07-20	Aptevo R&D entered into a collaboration agreement with Alligator Bioscience AB.
2019-11-26	FDA granted Orphan Drug Designation for APVO436 for the treatment of acute myelogenous leukemia.
2020-02-28	Aptevo entered into a Purchase Agreement with Medexus.
2023-02	Phase 1 trial for ALG.APV-527 initiated.
2023-03-29	Aptevo entered into a Purchase Agreement with XOMA.
2024-03-05	Number of shares of Registrants common stock outstanding was 23,472,436.

Keywords

immunotherapy, cancer, biotechnology, clinical trials, APVO436, ALG.APV-527, ADAPTIR, ADAPTIR-FLEX, AML, solid tumors

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