Avidity Biosciences, Inc. is a biopharmaceutical company at the forefront of developing a novel class of RNA therapeutics called Antibody Oligonucleotide Conjugates (AOCs). The company's pioneering platform combines the specificity of monoclonal antibodies with the precision of RNA therapeutics to address diseases that were previously untreatable with such therapies.
Business Overview and History:
Avidity Biosciences was founded in 2012 with the goal of developing a new class of RNA therapeutics called Antibody Oligonucleotide Conjugates (AOCs). In its early years, the company focused on organizing and staffing, business planning, raising capital, developing its AOC platform, identifying potential product candidates, and establishing its intellectual property portfolio. Like many early-stage biopharmaceutical companies, Avidity faced challenges including operating losses as it invested heavily in research and development activities.
A significant milestone was reached in June 2020 when Avidity completed its initial public offering, raising $274.1 million to fund its operations. The company has since secured additional capital through various means, including follow-on public offerings, private placements, and sales agreements, to advance its pipeline of AOC product candidates.
Avidity has also entered into strategic partnerships to further validate and develop its AOC platform. In 2019, the company established a research collaboration and license agreement with Eli Lilly and Company to discover, develop, and commercialize AOC products in immunology and other select indications. This collaboration provided Avidity with an upfront payment and the potential for future milestone and royalty payments. Further expanding its partnerships, Avidity entered into a research collaboration and license agreement with Bristol Myers Squibb in 2023, providing additional validation for its AOC platform technology.
Over the past decade, Avidity has steadily advanced its pipeline of AOC product candidates, focused primarily on addressing rare genetic diseases with high unmet medical needs. The company's lead programs target debilitating muscle disorders such as myotonic dystrophy type 1 (DM1), facioscapulohumeral muscular dystrophy (FSHD), and Duchenne muscular dystrophy (DMD).
Financials:
In June 2020, Avidity completed its initial public offering, raising $274.1 million in gross proceeds to fuel the development of its growing pipeline. Since then, the company has continued to bolster its financial position, securing an additional $378.9 million through follow-on public offerings and $140.6 million under a previous at-the-market (ATM) sales agreement.
For the fiscal year 2023, Avidity reported revenue of $9.56 million, a net loss of $212.22 million, operating cash flow (OCF) of -$119.06 million, and free cash flow (FCF) of -$123.29 million. In the most recent quarter (Q2 2024), the company reported revenue of $2.04 million, a net loss of $70.79 million, OCF of -$65.00 million, and FCF of -$65.54 million.
Year-over-year revenue growth was -12.07%. The decrease in revenue was primarily due to the recognition of revenues under the Lilly agreement in the prior year for which there were no revenues recognized in the current year comparative period, offset by an increase in revenues recognized under the BMS Agreement in the current year.
Liquidity:
As of June 30, 2024, Avidity had a strong cash position of $1.30 billion, providing the necessary resources to advance its clinical programs and further expand its research efforts. The company's financial flexibility is evidenced by its robust liquidity ratios, including a current ratio of 15.77 and a quick ratio of 15.97 as of the same date.
The company's cash and cash equivalents stood at $575.75 million, with marketable securities of $723.29 million. Avidity's debt-to-equity ratio is 0.0069, indicating a low level of debt relative to equity. The company has not disclosed any information about available credit lines.
Clinical Pipeline and Milestones:
Avidity's lead product candidate, delpacibart etedesiran (del-desiran), is designed to treat myotonic dystrophy type 1 (DM1). In June 2024, the company initiated the global Phase 3 HARBOR trial to evaluate del-desiran in individuals living with DM1. This milestone followed the FDA's decision to lift the partial clinical hold on the program, which had been in place since 2022 following a reported serious adverse event.
The company's FSHD program, featuring delpacibart braxlosiran (del-brax), has also made significant strides. In June 2024, Avidity shared initial data from the randomized, double-blind, placebo-controlled FORTITUDE trial, which demonstrated consistent reductions of greater than 50% in DUX4-regulated genes, trends of functional improvement, and favorable safety and tolerability in people living with FSHD. Avidity plans to accelerate the initiation of registrational cohorts for del-brax, with a biomarker cohort expected in the second half of 2024 and a functional cohort in the first half of 2025.
For Avidity's Duchenne muscular dystrophy (DMD) program, delpacibart zotadirsen (del-zota), the company reported initial data from the EXPLORE44 trial in August 2024. The data showed consistent delivery of the phosphorodiamidate morpholino oligomer (PMO) in skeletal muscle, an increase of dystrophin production to 25% of normal, and an increase of 37% in exon 44 skipping. Additionally, del-zota demonstrated a greater than 80% reduction in creatine kinase compared to baseline in people living with DMD44.
Avidity's pipeline also includes earlier-stage programs targeting precision cardiology, which the company plans to highlight in an upcoming investor and analyst event on November 12, 2024. The company has stated that it will present new development candidates from this portfolio and provide a first look at its next-generation technology innovations.
It's worth noting that del-desiran, del-brax, and del-zota have all been granted Orphan Designation by the FDA and the European Medicines Agency, and Fast Track Designation by the FDA. Additionally, del-desiran has been granted Breakthrough Therapy designation by the FDA, and del-zota has been granted Rare Pediatric Disease designation by the FDA.
Risks and Challenges:
While Avidity's AOC platform has demonstrated promising results, the company faces several risks and challenges common to the biopharmaceutical industry. These include the inherent uncertainties of clinical development, the potential for regulatory setbacks, and the competition from other therapies targeting the same indications.
The partial clinical hold on del-desiran, which was lifted in 2024, highlights the regulatory hurdles the company may encounter. Additionally, the complex nature of Avidity's AOC technology and the specialized expertise required for its development and manufacturing could pose challenges as the company scales its operations.
Furthermore, the success of Avidity's programs is dependent on the continued effectiveness and safety profiles of its product candidates, as well as the company's ability to secure necessary regulatory approvals and successfully commercialize any approved therapies.
Outlook and Guidance:
Avidity has not provided specific financial guidance for the upcoming fiscal year. However, the company's strong cash position and the progress of its clinical pipeline suggest that it is well-positioned to continue advancing its development efforts.
The FDA's decision to lift the partial clinical hold on del-desiran, the ongoing HARBOR, FORTITUDE, and EXPLORE44 trials, and the upcoming investor and analyst event focused on precision cardiology candidates all indicate that Avidity is making significant strides in its mission to deliver transformative RNA-based therapeutics.
Conclusion:
Avidity Biosciences is at the forefront of a new era in genetic medicine, leveraging its innovative AOC platform to address diseases that were previously considered untreatable with RNA-based therapies. The company's robust pipeline, strong financial position, and experienced management team position it well to navigate the challenges of the biopharmaceutical industry and potentially deliver life-changing treatments to patients in need.
The company's focus on rare genetic diseases, particularly muscular dystrophies, provides a clear direction for its research and development efforts. With three programs in clinical development and additional candidates in the pipeline, Avidity is building a diverse portfolio of potential treatments for high-unmet-need conditions.
Despite the recent decrease in year-over-year revenue, primarily due to changes in collaboration revenue recognition, Avidity maintains a strong cash position that should support its ongoing research and clinical programs. The company's low debt-to-equity ratio and robust liquidity ratios further underscore its financial stability.
As Avidity continues to execute on its strategic priorities, investors will closely follow the progress of its clinical programs, particularly the Phase 3 HARBOR trial for del-desiran, and the company's ability to unlock the full potential of its pioneering technology. The upcoming investor and analyst event in November 2024 may provide further insights into Avidity's pipeline expansion and technological advancements, potentially offering new catalysts for growth and development.
In the competitive landscape of RNA therapeutics, Avidity's unique AOC platform and its focus on previously untreatable diseases position the company as a potential leader in this emerging field. However, as with all biopharmaceutical companies, success will ultimately depend on clinical outcomes, regulatory approvals, and the ability to successfully commercialize its therapies.