Form 4: Avidity Biosciences CFO MacLean Reports Stock Transactions Following PSU Vesting

Chief Financial Officer Michael F. MacLean of Avidity Biosciences reports acquisition and disposal of common stock related to performance-based restricted stock units (PSUs) vesting upon achievement of a Phase 3 trial milestone.

Summary

• On June 17, 2024, Michael F. MacLean, CFO of Avidity Biosciences, acquired 25,000 shares of common stock through the vesting of performance-based restricted stock units (PSUs) at a price of $0.
• These PSUs vested due to the achievement of the first performance objective: the initiation of the Phase 3 HARBOR trial for del-desiran.
• On June 18, 2024, MacLean sold 11,228 shares at a weighted-average price of $39.1294, ranging from $39.04 to $39.13, to cover tax withholding obligations related to the PSU vesting.
• Following these transactions, MacLean beneficially owns 57,865 shares of common stock directly.
• Additionally, on June 17, 2024, MacLean earned an additional 25,000 PSUs that converted to time-based restricted stock units, vesting on December 17, 2024, contingent upon continued employment.

Sentiment

Score: 7

Explanation: The sentiment is neutral to slightly positive. The vesting of PSUs indicates the achievement of a key milestone (Phase 3 trial initiation), which is a positive signal. The stock sale is a routine transaction to cover tax obligations and doesn't necessarily reflect a negative outlook.

Positives

• The vesting of PSUs indicates the achievement of a key company performance objective: the initiation of the Phase 3 HARBOR trial for del-desiran.

Future Outlook

25,000 time-based restricted stock units will vest on December 17, 2024, subject to the Reporting Person's continued employment or service.

Industry Context

This filing reflects routine executive compensation practices within the biotechnology industry, where stock-based compensation is common to incentivize performance and align executive interests with shareholder value. The vesting of PSUs tied to clinical trial milestones is a typical mechanism to reward progress in drug development.

Comparison to Industry Standards

• Stock sales to cover tax obligations upon vesting of equity awards are a standard practice among executives in publicly traded companies, particularly in the biotech sector.
• Companies like Alnylam Pharmaceuticals and Ionis Pharmaceuticals, which are also focused on RNA therapeutics, utilize similar equity compensation structures to incentivize their executives.
• The size of the stock sale (11,228 shares) is proportional to the tax obligations arising from the vesting of 25,000 PSUs, aligning with typical tax withholding rates for equity compensation.

Stakeholder Impact

• Shareholders may view the vesting of PSUs as a positive sign, indicating progress in the company's clinical development programs.
• The stock sale to cover tax obligations is unlikely to have a significant impact on the stock price, as it is a routine transaction.

Next Steps

• The remaining 25,000 time-based restricted stock units will vest on December 17, 2024, contingent upon continued employment.

Key Dates