Executive Summary / Key Takeaways

• Arvinas is at a pivotal juncture, transitioning from a clinical-stage biotech to a potential commercial entity, underpinned by its pioneering PROTAC protein degradation technology and recent positive Phase 3 data for vepdegestrant in ESR1-mutant breast cancer.
• The company has strategically restructured, including a workforce reduction and portfolio reprioritization, to streamline operations and extend its cash runway into the second half of 2028, focusing resources on its most promising clinical and preclinical programs.
• Vepdegestrant, co-developed with Pfizer, demonstrated statistically significant and clinically meaningful improvement in progression-free survival in the ESR1-mutant population in the pivotal VERITAC-2 trial, supporting a planned NDA submission in the second half of 2025.
• Beyond vepdegestrant, Arvinas is advancing a differentiated pipeline, including ARV-102 (brain-penetrant LRRK2 degrader with promising initial human data), ARV-393 (BCL6 degrader showing strong preclinical combination synergy), and ARV-806 (highly potent KRAS G12D degrader entering Phase 1).
• While facing typical biotech risks like clinical trial outcomes, regulatory hurdles, and the need for future funding, Arvinas's validated PROTAC platform and focused pipeline offer a compelling investment thesis centered on technological differentiation and potential value creation across multiple therapeutic areas.

The Dawn of Degradation: Arvinas's Pioneering PROTAC Journey

Arvinas, Inc. stands at the forefront of a transformative wave in drug discovery, leveraging its proprietary PROTAC (PROteolysis TArgeting Chimera) platform to develop a new class of medicines designed to eliminate, rather than merely inhibit, disease-causing proteins. Founded in 2013, the company embarked on a journey to harness the body's natural protein disposal system, the ubiquitin-proteasome system, offering a potentially differentiated approach to tackling targets previously considered "undruggable" by traditional small molecules or antibodies.

The company's early years were dedicated to building this foundational technology, securing initial funding through equity sales, grants, and debt, and establishing key collaborations. Partnerships with pharmaceutical giants like Genentech (initiated 2015, expanded 2017) and Pfizer (research collaboration started 2017) provided crucial capital and validation for the PROTAC approach. A significant turning point arrived in July 2021 with the global 50/50 collaboration with Pfizer for vepdegestrant (ARV-471), Arvinas's lead estrogen receptor (ER) degrader, injecting substantial funding and setting the stage for pivotal clinical trials. Further strategic portfolio management included the out-licensing of luxdegalutamide (ARV-766) to Novartis (NVS) in April 2024 for $150 million upfront, focusing internal resources while potentially benefiting from future milestones and royalties.

This historical trajectory underscores Arvinas's evolution from a platform-centric research entity to a clinical-stage company with assets nearing potential commercialization. Its business model is currently centered on advancing its pipeline through clinical development, primarily funded by collaborations and capital raises, with the future prospect of generating revenue from product sales and milestone/royalty payments.

At the heart of Arvinas's strategy is its PROTAC technology. Unlike inhibitors that block protein function, PROTACs are bifunctional molecules designed to recruit target proteins to E3 ubiquitin ligases, tagging them for degradation and removal by the proteasome. This catalytic mechanism means a single PROTAC molecule can potentially facilitate the degradation of multiple target protein molecules, offering the possibility of potent and sustained activity even at lower doses. The tangible benefits articulated by the company include the ability to target proteins previously considered inaccessible, potentially overcome resistance mechanisms associated with inhibition, and achieve deeper or more complete target knockdown.

Specific quantifiable advantages include the demonstration of brain penetration and dose-dependent LRRK2 degradation in the cerebrospinal fluid (CSF) with ARV-102, achieving greater than 50% reduction at single doses of 60mg or more and repeated doses of 20mg or more in healthy volunteers. For the KRAS G12D degrader, ARV-806, preclinical data showed it was 30-fold more potent than an inhibitor in vitro and 40-fold more potent than a competing degrader, binding both active and inactive states of the target protein. These metrics underscore the potential for enhanced efficacy and differentiation compared to existing or competing modalities. Arvinas's ongoing R&D focuses on expanding the capabilities of its PROTAC Discovery Engine and advancing additional candidates, aiming to translate these technological advantages into clinical success and a robust pipeline.

Navigating the Competitive Currents: Positioning Arvinas's Pipeline

Arvinas operates within highly competitive therapeutic landscapes, facing both large pharmaceutical companies with established market presence and smaller biotechs developing novel approaches. Its competitive positioning is defined by its pioneering PROTAC technology and strategic partnerships.

In the ER-positive breast cancer space, vepdegestrant competes with existing standard-of-care endocrine therapies like fulvestrant and emerging oral selective ER degraders (SERDs) from companies like Eli Lilly (LLY) (Orserdu/elacestrant), Roche (RHHBY), and AstraZeneca (AZN). While larger players like Pfizer (PFE) and Bristol-Myers Squibb (BMY) have broad oncology portfolios and significant financial resources (Pfizer's Q1 2024 revenue ~$14.9B, BMY's ~$11.5B, both with strong margins), Arvinas's PROTAC technology offers a differentiated mechanism. Orserdu, the approved oral SERD in the second-line ESR1-mutant setting, showed a median PFS of 3.8 months. Arvinas believes vepdegestrant's degradation mechanism offers the potential for superior efficacy and tolerability compared to SERDs, aiming to be a best-in-class ER-targeting backbone therapy. The partnership with Pfizer provides crucial scale, manufacturing expertise, and commercial infrastructure, mitigating some of the disadvantages Arvinas faces against large pharmaceutical competitors in terms of global reach and financial muscle.

In the neurodegenerative space, ARV-102 targeting LRRK2 competes with LRRK2 inhibitors being developed by others, such as the Biogen (BIIB)-Denali (DNLI) partnership. Arvinas highlights its PROTAC's ability to achieve significant brain penetration and degrade LRRK2, eliminating all functions, not just kinase activity, which it believes differentiates it from inhibitors that may lack sufficient brain exposure or only block one function. This technological advantage is central to its competitive strategy in this area.

For its hematology program, ARV-393 targeting BCL6, Arvinas competes with standard-of-care chemotherapy (like R-CHOP) and biologics, as well as other investigational agents including potentially other BCL6 degraders (e.g., from Bristol Myers Squibb). Preclinical data showing ARV-393's strong synergistic activity in combination with existing and emerging therapies, coupled with its ability to upregulate CD20 expression, positions it as a potential combination partner, seeking to carve out a niche in relapsed/refractory non-Hodgkin Lymphoma.

The KRAS G12D degrader, ARV-806, enters a crowded field with existing inhibitors and other degradation approaches. Arvinas's preclinical data emphasizing ARV-806's high potency (30x vs. inhibitors, 40x vs. a competing degrader) and ability to bind both active and inactive KRAS states are key differentiators it hopes will translate clinically.

Compared to smaller biotech competitors focused on protein degradation like Kymera Therapeutics (KYMR) and Nurix Therapeutics (NRIX), Arvinas appears to have a lead in clinical validation with its Phase 3 vepdegestrant program. While these smaller companies also pursue innovative degradation approaches, Arvinas's strategic collaborations provide a stronger financial footing and a clearer path towards potential commercialization, offering a buffer against the high cash burn typical of early-stage biotech. However, all companies in this space face the inherent risks of drug development failure.

Financial Performance and Strategic Realignment

Arvinas's financial performance reflects its stage of development as a clinical-stage biotechnology company heavily invested in R&D. Historically, the company has incurred significant operating losses, accumulating a deficit of $1.53 billion as of December 31, 2024. For the year ended December 31, 2024, the net loss was $198.9 million, following losses of $367.3 million in 2023 and $282.5 million in 2022.

The first quarter of 2025 presented a notable shift, reporting net income of $82.9 million, a significant improvement from a net loss of $69.4 million in Q1 2024. This was primarily driven by a substantial increase in revenue to $188.8 million in Q1 2025 from $25.3 million in Q1 2024. Management clarified that this revenue increase was largely an accounting impact resulting from changes in the estimated total program budget for the Vepdegestrant collaboration with Pfizer, specifically the removal of two planned Phase 3 combination trials. This change in estimate accelerated the recognition of previously deferred revenue related to the upfront payment from Pfizer.

Operating expenses remained substantial, with R&D expenses at $90.8 million in Q1 2025 (up from $84.3 million in Q1 2024) and G&A expenses at $26.6 million (up from $24.3 million in Q1 2024). The increase in R&D reflects continued investment in the pipeline, including a $10 million one-time inventory charge for vepdegestrant.

Recognizing the challenging capital market environment and the need to ensure sufficient resources to reach key data milestones, Arvinas implemented a significant strategic restructuring in April 2025. This involved a workforce reduction of approximately 33% across all areas of the company and a reprioritization of the research portfolio. Management estimates this will result in approximately $80 million in annual infrastructure cost reductions, expected to be fully realized by the fourth quarter of 2025. Furthermore, the decision, aligned with Pfizer, to remove two planned Phase 3 combination trials for vepdegestrant is expected to result in significant cost avoidance of approximately $350 million to $400 million over the next three to five years. The total cost savings and avoidance from these actions are projected to be approximately $500 million over the next three years. The company expects to incur approximately $10 million in costs related to the workforce reduction, primarily in Q2 2025.

As of March 31, 2025, Arvinas held approximately $1.0 billion in cash, cash equivalents, and marketable securities. Management explicitly guided that these resources, combined with the anticipated cost savings and avoidance from the restructuring and portfolio changes, are expected to fund planned operating expenses and capital expenditure requirements into the second half of 2028. This significantly extends the cash runway from previous guidance, providing a longer period to execute on strategic priorities without immediate reliance on external financing.

Outlook and Remaining Hurdles

The outlook for Arvinas is heavily weighted towards execution on its refined pipeline and navigating the regulatory path for vepdegestrant. The positive topline data from VERITAC-2 in the ESR1-mutant population is a critical validation point for the PROTAC platform and the vepdegestrant program. Detailed results presented at ASCO and published in NEJM are expected to support a regulatory filing in the coming months, with an NDA submission to the FDA planned for the second half of 2025. Success here could mark the company's transition to a commercial entity, initially targeting the second-line ESR1-mutant ER+/HER2- breast cancer market.

Beyond vepdegestrant, the company has several key data readouts anticipated in the second half of 2025. Preliminary clinical data from the Phase 1 trial of ARV-393 in NHL patients will provide the first human evidence for this BCL6 degrader. Initial data from the single ascending dose cohort of the ARV-102 Phase 1 trial in Parkinson's disease patients, building on the promising healthy volunteer data showing brain penetration and LRRK2 degradation, will be crucial for assessing its potential in neurodegenerative disorders. The planned initiation of the Phase 1 trial for the KRAS G12D degrader, ARV-806, also in the second half of 2025, expands the pipeline into another high-value oncology target.

The strategic decision to remove the two planned vepdegestrant combination Phase 3 trials, while reducing the potential breadth of the initial vepdegestrant label and market opportunity, reflects a pragmatic approach to capital allocation and market dynamics. It allows Arvinas to focus resources on the most probable near-term commercial opportunity (VEPDEG monotherapy in ESR1m) and advance other promising pipeline assets. The addition of a vepdegestrant cohort to Pfizer's KAT6 inhibitor trial, funded by Pfizer, provides a cost-effective way to explore a potential combination without committing significant Arvinas capital.

Despite the positive momentum and extended cash runway, significant risks remain. The regulatory review process for vepdegestrant is not guaranteed to result in approval, and even if approved, commercial success is uncertain in a competitive market. The remaining pipeline programs are still in early clinical or preclinical stages, with high attrition risk inherent in drug development. The recent workforce reduction, while necessary for financial sustainability, carries risks of disrupting operations and impacting talent retention, which is critical for a biotech company. Furthermore, potential disruptions at regulatory agencies, as highlighted in the company's risk factors, could delay timelines. The company will eventually require additional funding beyond the second half of 2028 to support ongoing R&D and potential commercial expansion.

Conclusion

Arvinas is navigating a critical phase, marked by the validation of its pioneering PROTAC platform through positive pivotal data for vepdegestrant and a strategic restructuring to sharpen focus and extend its financial horizon. The investment thesis centers on the potential of its targeted protein degradation technology to deliver differentiated therapies, starting with vepdegestrant's potential launch in the ESR1-mutant breast cancer setting. The recent cost reduction efforts and portfolio reprioritization, while involving difficult decisions, appear prudent in ensuring the company is well-capitalized to advance its most promising assets, including the exciting neuroscience and earlier-stage oncology programs. While the path forward involves inherent biotech risks related to clinical success, regulatory approval, and market adoption, Arvinas's technological leadership and strategic partnerships position it to potentially create significant value if its pipeline continues to deliver on the promise of targeted protein degradation. Investors will be closely watching the vepdegestrant regulatory outcome and the upcoming data readouts from the broader pipeline as key indicators of the company's long-term potential.