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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

(Mark One)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2020

OR

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 001-37345

 

ADURO BIOTECH, INC.

(Exact name of Registrant as specified in its Charter)

 

 

Delaware

 

94-3348934

(State or other jurisdiction

of incorporation or organization)

 

(I.R.S. Employer

Identification No.)

740 Heinz Avenue

Berkeley, California 94710

(Address of principal executive offices including zip code)

Registrant’s telephone number, including area code: (510) 848-4400

 

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock, par value $0.0001 per share

ADRO

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 every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the Registrant was required to submit such files).    YES      NO  

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth 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.

 

Large accelerated filer

 

 

 

Accelerated filer

 

 

 

 

 

 

 

 

 

Non-accelerated filer

 

 

 

Smaller reporting company

 

 

 

 

 

 

 

 

 

 

 

 

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 Exchange Act).    YES      NO  

The number of shares of Registrant’s Common Stock outstanding as of July 29, 2020 was 81,059,005.

 

 

 

 


 

Table of Contents

 

 

 

 

Page

 

 

PART I—FINANCIAL INFORMATION

 

Item 1.

 

Condensed Consolidated Financial Statements (unaudited)

3

 

 

Condensed Consolidated Balance Sheets as of June 30, 2020 and December 31, 2019

3

 

 

Condensed Consolidated Statements of Operations for the three and six months ended June 30, 2020 and 2019

4

 

 

Condensed Consolidated Statements of Comprehensive Loss for the three and six months ended June 30, 2020 and 2019

5

 

 

Condensed Consolidated Statements of Stockholders’ Equity for the three and six months ended June 30, 2020 and 2019

6

 

 

Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2020 and 2019

7

 

 

Notes to the Condensed Consolidated Financial Statements

8

Item 2.

 

Management’s Discussion and Analysis of Financial Condition and Results of Operations

23

Item 3.

 

Quantitative and Qualitative Disclosures About Market Risk

33

Item 4.

 

Controls and Procedures

34

 

 

 

 

 

 

PART II—OTHER INFORMATION

 

Item 1.

 

Legal Proceedings

35

Item 1A.

 

Risk Factors

35

Item 2.

 

Unregistered Sales of Equity Securities and Use of Proceeds

75

Item 3.

 

Defaults Upon Senior Securities

75

Item 4.

 

Mine Safety Disclosures

75

Item 5.

 

Other Information

75

Item 6.

 

Exhibits

75

EXHIBIT INDEX

76

SIGNATURES

78

 

In this Quarterly Report on Form 10-Q, “we,” “our,” “us,” “Aduro” and the “Company” refer to Aduro Biotech, Inc. and its consolidated subsidiaries. Aduro, Aduro Biotech, the Aduro logo and other trade names, trademarks or service marks of Aduro are the property of Aduro Biotech, Inc. This report contains references to our trademarks and to trademarks belonging to other entities. Trade names, trademarks and service marks of other companies appearing in this report are the property of their respective holders. We do not intend our use or display of other companies’ trade names or trademarks to imply a relationship with, or endorsement or sponsorship of us by, any other companies.

 

2


 

PART I—FINANCIAL INFORMATION

Item 1. Condensed Consolidated Financial Statements (unaudited)

 

ADURO BIOTECH, INC.

Condensed Consolidated Balance Sheets

(In thousands, except share and per share amounts)

(Unaudited) 

 

 

 

June 30,

 

 

December 31,

 

 

 

2020

 

 

2019

 

Assets

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

71,103

 

 

$

59,624

 

Marketable securities

 

 

100,028

 

 

 

153,978

 

Accounts receivable

 

 

1,169

 

 

 

342

 

Income tax receivable

 

 

5,665

 

 

 

 

Prepaid expenses and other current assets

 

 

3,015

 

 

 

3,958

 

Total current assets

 

 

180,980

 

 

 

217,902

 

Marketable securities

 

 

14,995

 

 

 

 

Property and equipment, net

 

 

21,706

 

 

 

24,688

 

Operating lease right-of-use assets

 

 

20,334

 

 

 

21,110

 

Goodwill

 

 

8,177

 

 

 

8,167

 

Intangible assets, net

 

 

18,723

 

 

 

18,978

 

Restricted cash

 

 

468

 

 

 

468

 

Total assets

 

$

265,383

 

 

$

291,313

 

Liabilities and Stockholders’ Equity

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

Accounts payable

 

$

1,339

 

 

$

414

 

Accrued clinical trial and manufacturing expenses

 

 

2,615

 

 

 

4,253

 

Accrued expenses and other liabilities

 

 

9,673

 

 

 

8,181

 

Operating lease liabilities

 

 

1,741

 

 

 

1,803

 

Deferred revenue

 

 

4,935

 

 

 

6,950

 

Total current liabilities

 

 

20,303

 

 

 

21,601

 

Contingent consideration

 

 

2,013

 

 

 

1,051

 

Deferred revenue

 

 

161,312

 

 

 

166,963

 

Deferred tax liabilities

 

 

3,531

 

 

 

3,527

 

Operating lease liabilities

 

 

30,855

 

 

 

31,636

 

Other long-term liabilities

 

 

753

 

 

 

940

 

Total liabilities

 

 

218,767

 

 

 

225,718

 

Commitments and contingencies (Note 7)

 

 

 

 

 

 

 

 

Stockholders’ equity:

 

 

 

 

 

 

 

 

Preferred stock, $0.0001 par value; 10,000,000 shares authorized; no shares

   issued and outstanding at June 30, 2020 and December 31, 2019

 

 

 

 

 

 

Common stock, $0.0001 par value; 300,000,000 shares authorized; 81,059,005

   and 80,735,688 shares issued and outstanding at June 30, 2020 and

   December 31, 2019

 

 

8

 

 

 

8

 

Additional paid-in capital

 

 

557,263

 

 

 

552,077

 

Accumulated other comprehensive income

 

 

439

 

 

 

414

 

Accumulated deficit

 

 

(511,094

)

 

 

(486,904

)

Total stockholders’ equity

 

 

46,616

 

 

 

65,595

 

Total liabilities and stockholders’ equity

 

$

265,383

 

 

$

291,313

 

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

3


 

ADURO BIOTECH, INC.

Condensed Consolidated Statements of Operations

(In thousands, except share and per share amounts)

(Unaudited)

 

 

 

Three Months Ended June 30,

 

 

Six Months Ended June 30,

 

 

 

2020

 

 

2019

 

 

2020

 

 

2019

 

Revenue:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Collaboration and license revenue

 

$

5,574

 

 

$

4,888

 

 

$

19,524

 

 

$

8,826

 

Total revenue

 

 

5,574

 

 

 

4,888

 

 

 

19,524

 

 

 

8,826

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Research and development

 

 

11,108

 

 

 

16,657

 

 

 

26,936

 

 

 

34,151

 

General and administrative

 

 

9,284

 

 

 

7,832

 

 

 

17,103

 

 

 

16,056

 

Restructuring and related expense

 

 

2,046

 

 

 

367

 

 

 

6,354

 

 

 

3,361

 

Amortization of intangible assets

 

 

136

 

 

 

139

 

 

 

272

 

 

 

279

 

Total operating expenses

 

 

22,574

 

 

 

24,995

 

 

 

50,665

 

 

 

53,847

 

Loss from operations

 

 

(17,000

)

 

 

(20,107

)

 

 

(31,141

)

 

 

(45,021

)

Interest income

 

 

413

 

 

 

1,497

 

 

 

1,333

 

 

 

2,968

 

Other expense, net

 

 

(28

)

 

 

(3

)

 

 

(47

)

 

 

(22

)

Total other income

 

 

385

 

 

 

1,494

 

 

 

1,286

 

 

 

2,946

 

Loss before income tax

 

 

(16,615

)

 

 

(18,613

)

 

 

(29,855

)

 

 

(42,075

)

Income tax benefit

 

 

 

 

 

35

 

 

 

5,665

 

 

 

70

 

Net loss

 

$

(16,615

)

 

$

(18,578

)

 

$

(24,190

)

 

$

(42,005

)

Net loss per common share, basic and diluted

 

$

(0.21

)

 

$

(0.23

)

 

$

(0.30

)

 

$

(0.53

)

Shares used in computing net loss per common

   share, basic and diluted

 

 

80,862,621

 

 

 

80,032,022

 

 

 

80,810,211

 

 

 

79,847,960

 

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

 

4


 

ADURO BIOTECH, INC.

Condensed Consolidated Statements of Comprehensive Loss

(In thousands)

(Unaudited)

 

 

 

Three Months Ended June 30,

 

 

Six Months Ended June 30,

 

 

 

2020

 

 

2019

 

 

2020

 

 

2019

 

Net loss

 

$

(16,615

)

 

$

(18,578

)

 

$

(24,190

)

 

$

(42,005

)

Other comprehensive loss:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Unrealized gain on marketable securities, net of tax of $0

 

 

109

 

 

 

147

 

 

 

28

 

 

 

331

 

Foreign currency translation adjustments, net of tax of $0

 

 

470

 

 

 

404

 

 

 

(3

)

 

 

(229

)

Other comprehensive gain

 

 

579

 

 

 

551

 

 

 

25

 

 

 

102

 

Comprehensive loss

 

$

(16,036

)

 

$

(18,027

)

 

$

(24,165

)

 

$

(41,903

)

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

 

5


 

ADURO BIOTECH, INC.

Condensed Consolidated Statements of Stockholders’ Equity

(In thousands, except share amounts)

(Unaudited)

 

 

 

Common Stock

 

 

Additional

Paid-In

 

 

Accumulated

Other

Comprehensive

 

 

Accumulated

 

 

Total

Stockholders

 

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Income (Loss)

 

 

Deficit

 

 

Equity

 

Balance at December 31, 2019

 

 

80,735,688

 

 

$

8

 

 

$

552,077

 

 

$

414

 

 

$

(486,904

)

 

$

65,595

 

Issuance of common stock upon exercise of stock

   options

 

 

88,480

 

 

 

 

 

 

80

 

 

 

 

 

 

 

 

 

80

 

Release of restricted stock units

 

 

12,925

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock-based compensation

 

 

 

 

 

 

 

 

2,035

 

 

 

 

 

 

 

 

 

2,035

 

Other comprehensive loss

 

 

 

 

 

 

 

 

 

 

 

(554

)

 

 

 

 

 

(554

)

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(7,575

)

 

 

(7,575

)

Balance at March 31, 2020

 

 

80,837,093

 

 

 

8

 

 

 

554,192

 

 

 

(140

)

 

 

(494,479

)

 

 

59,581

 

Issuance of common stock upon exercise of stock

   options

 

 

2,980

 

 

 

 

 

 

3

 

 

 

 

 

 

 

 

 

3

 

Issuance of common stock under

   Employee Stock Purchase Plan

 

 

42,916

 

 

 

 

 

 

40

 

 

 

 

 

 

 

 

 

40

 

Release of restricted stock units

 

 

176,016

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock-based compensation

 

 

 

 

 

 

 

 

3,028

 

 

 

 

 

 

 

 

 

3,028

 

Other comprehensive income

 

 

 

 

 

 

 

 

 

 

 

579

 

 

 

 

 

 

579

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(16,615

)

 

 

(16,615

)

Balance at June 30, 2020

 

 

81,059,005

 

 

$

8

 

 

$

557,263

 

 

$

439

 

 

$

(511,094

)

 

$

46,616

 

 

 

 

Common Stock

 

 

Additional

Paid-In

 

 

Accumulated

Other

Comprehensive

 

 

Accumulated

 

 

Total

Stockholders’

 

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Income (Loss)

 

 

Deficit

 

 

Equity

 

Balance at December 31, 2018

 

 

79,571,714

 

 

$

8

 

 

$

538,895

 

 

$

940

 

 

$

(404,532

)

 

$

135,311

 

Issuance of common stock upon exercise of stock

   options

 

 

254,481

 

 

 

 

 

 

251

 

 

 

 

 

 

 

 

 

251

 

Release of restricted stock units

 

 

25,850

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock-based compensation

 

 

 

 

 

 

 

 

3,703

 

 

 

 

 

 

 

 

 

3,703

 

Other comprehensive loss

 

 

 

 

 

 

 

 

 

 

 

(449

)

 

 

 

 

 

(449

)

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(23,427

)

 

 

(23,427

)

Balance at March 31, 2019

 

 

79,852,045

 

 

 

8

 

 

 

542,849

 

 

 

491

 

 

 

(427,959

)

 

 

115,389

 

Issuance of common stock upon exercise of stock

   options

 

 

173,925

 

 

 

 

 

 

188

 

 

 

 

 

 

 

 

 

188

 

Issuance of common stock under Employee

   Stock Purchase Plan

 

 

58,748

 

 

 

 

 

 

164

 

 

 

 

 

 

 

 

 

164

 

Release of restricted stock units

 

 

45,556

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

-

 

Stock-based compensation

 

 

 

 

 

 

 

 

3,336

 

 

 

 

 

 

 

 

 

3,336

 

Other comprehensive income

 

 

 

 

 

 

 

 

 

 

 

551

 

 

 

 

 

 

551

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(18,578

)

 

 

(18,578

)

Balance at June 30, 2019

 

 

80,130,274

 

 

$

8

 

 

$

546,537

 

 

$

1,042

 

 

$

(446,537

)

 

$

101,050

 

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

 

 

6


 

ADURO BIOTECH, INC.

Condensed Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)

 

 

Six Months Ended June 30,

 

 

 

2020

 

 

2019

 

Cash Flows from Operating Activities

 

 

 

 

 

 

 

 

Net loss

 

$

(24,190

)

 

$

(42,005

)

Adjustments to reconcile net loss to net cash used in operating activities:

 

 

 

 

 

 

 

 

Depreciation

 

 

1,837

 

 

 

2,175

 

Amortization of intangible assets

 

 

272

 

 

 

279

 

Impairment of property and equipment

 

 

1,202

 

 

 

1,177

 

Non-cash lease expense

 

 

768

 

 

 

436

 

Accretion of discounts and amortization of premiums on marketable securities

 

 

(418

)

 

 

(856

)

Stock-based compensation

 

 

5,063

 

 

 

7,039

 

Loss from remeasurement of fair value of contingent consideration

 

 

943

 

 

 

24

 

Gain on disposal of property and equipment

 

 

(544

)

 

 

(2

)

Deferred income tax

 

 

 

 

 

(70

)

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

 

Accounts receivable

 

 

(820

)

 

 

10,674

 

Income tax receivable

 

 

(5,665

)

 

 

 

Prepaid expenses and other assets

 

 

938

 

 

 

612

 

Accounts payable

 

 

1,245

 

 

 

(349

)

Deferred revenue

 

 

(7,666

)

 

 

(6,763

)

Accrued clinical trial and manufacturing expenses

 

 

(2,007

)

 

 

1,359

 

Accrued expenses and other liabilities

 

 

1,056

 

 

 

(1,784

)

Operating lease liabilities

 

 

(838

)

 

 

468

 

Net cash used in operating activities

 

 

(28,824

)

 

 

(27,586

)

Cash Flows from Investing Activities

 

 

 

 

 

 

 

 

Purchase of marketable securities

 

 

(113,683

)

 

 

(133,478

)

Proceeds from maturities of marketable securities

 

 

153,082

 

 

 

114,159

 

Purchase of property and equipment

 

 

(9

)

 

 

(382

)

Proceeds from sale of property and equipment

 

 

544

 

 

 

 

Net cash provided by (used in) investing activities

 

 

39,934

 

 

 

(19,701

)

Cash Flows from Financing Activities

 

 

 

 

 

 

 

 

Proceeds from employee stock purchase plan

 

 

40