10-Q
false0001888012--12-31Q3http://fasb.org/us-gaap/2023#UsefulLifeTermOfLeaseMember0001888012us-gaap:ResearchAndDevelopmentExpenseMember2023-07-012023-09-300001888012hlvx:PlansMember2023-01-012023-09-300001888012hlvx:UnderwrittenPublicOfferingMember2023-09-220001888012us-gaap:RelatedPartyMember2022-12-310001888012us-gaap:RelatedPartyMember2022-07-012022-09-300001888012srt:MinimumMember2022-01-012022-09-300001888012hlvx:FrazierMember2023-09-300001888012hlvx:TermLoanMemberhlvx:LoanAndSecurityAgreementMember2023-01-012023-09-300001888012us-gaap:GeneralAndAdministrativeExpenseMember2022-01-012022-09-300001888012hlvx:EmployeeStockPurchasePlanMember2023-01-012023-09-300001888012hlvx:AugustTwentyTwentyOneNotesMemberhlvx:NotePurchaseAgreementMember2021-08-3100018880122023-06-300001888012us-gaap:FairValueMeasurementsRecurringMember2023-09-300001888012srt:MaximumMember2022-07-012022-09-300001888012hlvx:TakedaWarrantMember2023-01-012023-09-300001888012hlvx:TwoThousandAndTwentyTwoIncentiveAwardPlanMember2022-04-012022-04-300001888012hlvx:TakedaMemberhlvx:TransitionalServicesAgreementMember2022-12-310001888012hlvx:AugustTwentyTwentyOneNotesMemberus-gaap:CommonStockMember2022-01-012022-03-310001888012us-gaap:USTreasurySecuritiesMember2023-09-3000018880122021-12-310001888012us-gaap:AccumulatedOtherComprehensiveIncomeMember2023-06-300001888012us-gaap:ConstructionInProgressMember2023-09-3000018880122022-12-310001888012us-gaap:CommonStockMember2022-01-012022-09-300001888012us-gaap:RelatedPartyMember2023-01-012023-09-300001888012us-gaap:ResearchAndDevelopmentExpenseMember2022-01-012022-09-300001888012us-gaap:CommonStockMemberhlvx:UnderwrittenPublicOfferingMember2023-07-012023-09-300001888012hlvx:FurnitureAndEquipmentMember2022-12-310001888012us-gaap:USGovernmentCorporationsAndAgenciesSecuritiesMemberus-gaap:FairValueMeasurementsRecurringMember2023-09-300001888012us-gaap:AccumulatedOtherComprehensiveIncomeMember2023-07-012023-09-300001888012hlvx:TakedaMemberhlvx:TransitionalServicesAgreementMember2023-07-012023-09-300001888012us-gaap:GeneralAndAdministrativeExpenseMember2023-01-012023-09-300001888012srt:MinimumMemberus-gaap:LeaseholdImprovementsMember2023-09-300001888012stpr:MA2023-09-300001888012us-gaap:AdditionalPaidInCapitalMember2021-12-310001888012hlvx:FrazierMember2023-01-012023-09-300001888012us-gaap:AdditionalPaidInCapitalMember2022-01-012022-09-300001888012hlvx:AugustTwentyTwentyOneNotesMemberus-gaap:CommonStockMember2021-01-012021-12-3100018880122022-06-300001888012hlvx:TwoThousandTwentyTwoEmployeeStockPurchasePlanMember2022-04-012022-04-300001888012us-gaap:CommonStockMember2022-06-300001888012us-gaap:PrimeRateMemberhlvx:TermLoanMemberhlvx:LoanAndSecurityAgreementMember2022-04-182022-04-180001888012us-gaap:AdditionalPaidInCapitalMember2023-09-300001888012hlvx:FrazierMember2022-07-012022-09-300001888012us-gaap:AdditionalPaidInCapitalMember2022-06-300001888012hlvx:FrazierMember2022-12-310001888012srt:MinimumMember2022-07-012022-09-300001888012us-gaap:AdditionalPaidInCapitalMember2023-01-012023-09-300001888012us-gaap:FairValueMeasurementsRecurringMember2022-12-310001888012srt:MaximumMemberhlvx:LoanAndSecurityAgreementMemberhlvx:TermLoanTwoMemberhlvx:TermLoanTwoBorrowingPeriod1Member2023-06-150001888012us-gaap:AccumulatedOtherComprehensiveIncomeMember2023-01-012023-09-300001888012us-gaap:EquipmentMember2023-09-300001888012hlvx:UnderwrittenPublicOfferingMember2023-09-222023-09-220001888012us-gaap:IPOMember2022-05-032022-05-030001888012us-gaap:FairValueInputsLevel2Memberus-gaap:USGovernmentCorporationsAndAgenciesSecuritiesMemberus-gaap:FairValueMeasurementsRecurringMember2023-09-3000018880122022-11-012022-11-300001888012srt:MaximumMember2022-01-012022-09-300001888012us-gaap:RetainedEarningsMember2023-07-012023-09-300001888012us-gaap:GeneralAndAdministrativeExpenseMember2023-07-012023-09-300001888012us-gaap:RelatedPartyMember2023-07-012023-09-300001888012hlvx:AugustTwentyTwentyOneNotesMemberhlvx:NotePurchaseAgreementMember2023-01-012023-09-300001888012us-gaap:CommonStockMember2023-01-012023-09-300001888012hlvx:LoanAndSecurityAgreementMember2023-09-300001888012srt:MaximumMemberhlvx:TermLoanThreeMemberhlvx:LoanAndSecurityAgreementMemberhlvx:TermLoan3BorrowingPeriod1Member2023-06-150001888012hlvx:AugustTwentyTwentyOneNotesMemberhlvx:NotePurchaseAgreementMember2022-01-012022-09-300001888012us-gaap:CommonStockMember2023-07-012023-09-300001888012us-gaap:AccountingStandardsUpdate201613Member2023-09-3000018880122023-11-060001888012hlvx:TermLoanOneBorrowingPeriod1Memberhlvx:TermLoanOneMembersrt:MaximumMemberhlvx:LoanAndSecurityAgreementMember2023-06-150001888012us-gaap:EmployeeStockOptionMember2022-01-012022-09-300001888012srt:MaximumMemberhlvx:SalesAgreementMember2023-05-122023-05-120001888012us-gaap:AdditionalPaidInCapitalMember2023-07-012023-09-300001888012us-gaap:ResearchAndDevelopmentExpenseMember2022-07-012022-09-300001888012us-gaap:RelatedPartyMember2022-01-012022-09-300001888012us-gaap:ResearchAndDevelopmentExpenseMember2023-01-012023-09-300001888012hlvx:PlansMember2022-01-012022-12-310001888012hlvx:UnderwrittenPublicOfferingMember2023-01-012023-09-300001888012us-gaap:CommonStockMember2022-12-3100018880122022-01-012022-09-300001888012us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-12-310001888012hlvx:PlansMember2023-09-300001888012hlvx:FrazierLifeSciencesXLPMemberhlvx:AugustTwentyTwentyOneNotesMemberus-gaap:CommonStockMember2022-01-012022-03-310001888012us-gaap:AdditionalPaidInCapitalMemberhlvx:UnderwrittenPublicOfferingMember2023-07-012023-09-300001888012srt:MaximumMember2023-01-012023-09-300001888012us-gaap:FairValueInputsLevel1Memberus-gaap:FairValueMeasurementsRecurringMember2022-12-310001888012hlvx:TwoThousandTwentyTwoEmployeeStockPurchasePlanMember2023-09-300001888012us-gaap:MoneyMarketFundsMemberus-gaap:FairValueMeasurementsRecurringMember2022-12-310001888012us-gaap:CommonStockMember2023-06-300001888012hlvx:FrazierMembersrt:MaximumMember2023-09-300001888012us-gaap:RetainedEarningsMember2022-12-310001888012us-gaap:AdditionalPaidInCapitalMember2022-07-012022-09-300001888012us-gaap:RetainedEarningsMember2022-09-300001888012us-gaap:MoneyMarketFundsMemberus-gaap:FairValueMeasurementsRecurringMember2023-09-300001888012us-gaap:ComputerEquipmentMember2023-09-3000018880122022-09-300001888012hlvx:TakedaMember2023-07-012023-09-300001888012hlvx:TakedaMemberhlvx:TransitionalServicesAgreementMember2022-01-012022-09-300001888012hlvx:TermLoanMember2023-07-012023-09-300001888012us-gaap:EmployeeStockOptionMember2023-01-012023-09-300001888012hlvx:FrazierMember2023-09-300001888012hlvx:TakedaMemberhlvx:TransitionalServicesAgreementMember2023-09-300001888012hlvx:TermLoanMember2023-01-012023-09-300001888012hlvx:UnvestedCommonStockMember2023-01-012023-09-300001888012us-gaap:CommonStockMember2021-12-310001888012hlvx:TakedaMember2022-03-012022-03-310001888012us-gaap:RetainedEarningsMember2021-12-310001888012srt:MinimumMember2023-01-012023-09-300001888012us-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsRecurringMember2023-09-300001888012us-gaap:RetainedEarningsMember2023-01-012023-09-300001888012hlvx:EmployeeStockPurchasePlanMember2022-01-012022-09-300001888012us-gaap:AdditionalPaidInCapitalMemberhlvx:UnderwrittenPublicOfferingMember2023-01-012023-09-300001888012hlvx:TwoThousandTwentyFrazierNotesMember2023-09-300001888012country:CH2021-08-310001888012us-gaap:USTreasurySecuritiesMemberus-gaap:FairValueMeasurementsRecurringMember2023-09-3000018880122019-01-082022-05-310001888012hlvx:TwoThousandTwentyOneEquityIncentivePlanMember2023-01-012023-09-300001888012hlvx:AugustTwentyTwentyOneNotesMemberhlvx:FrazierLifeSciencesXLPMemberhlvx:NotePurchaseAgreementMember2021-08-312021-08-310001888012hlvx:SalesAgreementMember2023-05-122023-05-120001888012hlvx:TakedaMember2021-07-020001888012country:CH2023-01-012023-09-300001888012us-gaap:CommonStockMember2022-09-300001888012us-gaap:FurnitureAndFixturesMember2023-09-300001888012us-gaap:CommonStockMemberhlvx:UnderwrittenPublicOfferingMember2023-09-222023-09-220001888012hlvx:TermLoanMemberhlvx:LoanAndSecurityAgreementMember2022-04-1800018880122022-04-220001888012us-gaap:EmployeeStockOptionMember2023-09-3000018880122022-04-222022-04-220001888012hlvx:TermLoanOneBorrowingPeriod1Memberhlvx:TermLoanOneMemberhlvx:LoanAndSecurityAgreementMember2023-06-162023-06-160001888012us-gaap:LeaseholdImprovementsMember2022-12-310001888012us-gaap:RetainedEarningsMember2023-06-300001888012us-gaap:FairValueMeasurementsNonrecurringMember2023-09-3000018880122023-01-012023-09-300001888012us-gaap:ConstructionInProgressMember2022-12-310001888012us-gaap:RetainedEarningsMember2023-09-300001888012hlvx:TakedaMember2021-07-022021-07-020001888012hlvx:TwoThousandTwentyTwoEmployeeStockPurchasePlanMember2022-04-300001888012hlvx:FrazierMember2022-01-012022-09-3000018880122023-07-012023-09-300001888012us-gaap:RestrictedStockMember2023-01-012023-09-300001888012hlvx:TermLoanOneBorrowingPeriod1Memberhlvx:TermLoanOneMembersrt:MaximumMemberhlvx:LoanAndSecurityAgreementMemberus-gaap:SubsequentEventMember2023-11-090001888012hlvx:TakedaMember2023-01-012023-09-300001888012us-gaap:USTreasurySecuritiesMemberus-gaap:FairValueInputsLevel1Memberus-gaap:FairValueMeasurementsRecurringMember2023-09-300001888012hlvx:TakedaMemberhlvx:TransitionalServicesAgreementMember2022-07-012022-09-300001888012hlvx:TwoThousandAndTwentyTwoIncentiveAwardPlanMember2022-04-300001888012hlvx:TermLoanMemberhlvx:LoanAndSecurityAgreementMember2022-04-182022-04-180001888012hlvx:TwoThousandAndTwentyTwoIncentiveAwardPlanMember2023-09-300001888012us-gaap:IPOMember2022-05-0300018880122022-07-012022-09-300001888012us-gaap:MoneyMarketFundsMemberus-gaap:FairValueInputsLevel1Memberus-gaap:FairValueMeasurementsRecurringMember2022-12-310001888012us-gaap:RetainedEarningsMember2022-01-012022-09-300001888012stpr:MA2022-03-012022-03-310001888012country:CH2021-08-012021-08-310001888012us-gaap:CommonStockMember2022-07-012022-09-300001888012us-gaap:FairValueMeasurementsNonrecurringMember2023-01-012023-09-300001888012us-gaap:CommonStockMember2023-09-300001888012hlvx:UnvestedCommonStockMember2022-01-012022-09-300001888012hlvx:TermLoanOneMembersrt:MaximumMemberhlvx:LoanAndSecurityAgreementMemberhlvx:TermLoanOneBorrowingPeriod2Member2023-06-160001888012hlvx:LabEquipmentsMember2023-09-300001888012us-gaap:LeaseholdImprovementsMember2023-09-300001888012stpr:MA2023-01-012023-09-300001888012stpr:MA2022-03-310001888012hlvx:TwoThousandTwentyOneEquityIncentivePlanMember2022-04-300001888012us-gaap:RelatedPartyMember2023-09-300001888012hlvx:TakedaMemberhlvx:TransitionalServicesAgreementMember2023-01-012023-09-300001888012hlvx:PlansMember2022-12-310001888012us-gaap:USGovernmentAgenciesDebtSecuritiesMember2023-09-300001888012hlvx:TwoThousandAndTwentyTwoIncentiveAwardPlanMember2023-01-012023-09-300001888012hlvx:FrazierMember2023-07-012023-09-300001888012us-gaap:AdditionalPaidInCapitalMember2023-06-300001888012us-gaap:RetainedEarningsMember2022-06-300001888012hlvx:TermLoanMemberhlvx:LoanAndSecurityAgreementMember2022-04-182023-06-150001888012us-gaap:GeneralAndAdministrativeExpenseMember2022-07-012022-09-300001888012hlvx:TermLoanMemberhlvx:LoanAndSecurityAgreementMember2023-09-300001888012hlvx:AugustTwentyTwentyOneNotesMemberhlvx:NewInvestorsMemberhlvx:NotePurchaseAgreementMember2021-08-310001888012hlvx:FurnitureAndEquipmentMember2023-09-300001888012us-gaap:AdditionalPaidInCapitalMember2022-09-3000018880122023-09-300001888012hlvx:FrazierLifeSciencesXLPMemberhlvx:AugustTwentyTwentyOneNotesMemberhlvx:NotePurchaseAgreementMember2021-08-310001888012us-gaap:AccumulatedOtherComprehensiveIncomeMember2023-09-300001888012us-gaap:FairValueInputsLevel1Memberus-gaap:FairValueMeasurementsRecurringMember2023-09-300001888012us-gaap:CommonStockMemberhlvx:UnderwrittenPublicOfferingMember2023-01-012023-09-300001888012hlvx:TwoThousandTwentyOneFrazierNotesMember2023-09-300001888012us-gaap:OverAllotmentOptionMember2019-01-082023-09-300001888012us-gaap:AdditionalPaidInCapitalMember2022-12-310001888012us-gaap:MoneyMarketFundsMemberus-gaap:FairValueInputsLevel1Memberus-gaap:FairValueMeasurementsRecurringMember2023-09-300001888012hlvx:TermLoanMembersrt:MaximumMemberhlvx:LoanAndSecurityAgreementMember2022-04-180001888012us-gaap:RetainedEarningsMember2022-07-012022-09-300001888012hlvx:TwoThousandTwentyOneEquityIncentivePlanMember2023-09-300001888012srt:MaximumMemberus-gaap:LeaseholdImprovementsMember2023-09-300001888012hlvx:UnderwrittenPublicOfferingMember2023-07-012023-09-300001888012hlvx:FrazierMembersrt:MinimumMember2023-09-300001888012us-gaap:IPOMember2019-01-082022-05-310001888012us-gaap:EmployeeStockOptionMember2023-01-012023-09-300001888012hlvx:TwoThousandNineteenFrazierNotesMember2023-09-30xbrli:purexbrli:sharesiso4217:USDiso4217:USDxbrli:shareshlvx:Segment

 

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 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 September 30, 2023

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: 001-41365

 

HILLEVAX, INC.

(Exact Name of Registrant as Specified in its Charter)

 

 

Delaware

85-0545060

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer
Identification No.)

321 Harrison Avenue, Boston, Massachusetts

02118

(Address of principal executive offices)

(Zip Code)

Registrant’s telephone number, including area code: (617) 213-5054

 

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, $0.0001 par value per share

 

HLVX

 

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

As of November 6, 2023, the registrant had 48,437,001 shares of common stock, $0.0001 par value per share, outstanding.

 

 


 

Table of Contents

 

 

 

Page

PART I

FINANCIAL INFORMATION

1

 

 

 

Item 1.

Financial Statements (Unaudited)

1

 

Condensed Consolidated Balance Sheets

1

 

Condensed Consolidated Statements of Operations and Comprehensive Loss

2

 

Condensed Consolidated Statements of Stockholders' Equity (Deficit)

3

 

Condensed Consolidated Statements of Cash Flows

5

 

Notes to Condensed Consolidated Financial Statements

6

Item 2.

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

22

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

32

Item 4.

Controls and Procedures

32

 

 

 

PART II

OTHER INFORMATION

32

 

 

 

Item 1.

Legal Proceedings

32

Item 1A.

Risk Factors

33

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

34

Item 3.

Defaults Upon Senior Securities

34

Item 4.

Mine Safety Disclosures

34

Item 5.

Other Information

34

Item 6.

Exhibits

35

Signatures

36

 

 

 


 

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements.

HilleVax, Inc.

Condensed Consolidated Balance Sheets

(in thousands, except share and par value data)

(unaudited)

 

September 30,

 

 

December 31,

 

 

 

2023

 

 

2022

 

Assets

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

208,502

 

 

$

279,401

 

Marketable securities

 

 

115,908

 

 

 

 

Prepaid expenses and other current assets (includes related party amounts of $77 and $0, respectively)

 

 

8,785

 

 

 

11,212

 

Total current assets

 

 

333,195

 

 

 

290,613

 

Property and equipment, net

 

 

13,744

 

 

 

5,586

 

Operating lease right-of-use assets

 

 

18,377

 

 

 

19,359

 

Restricted cash

 

 

1,631

 

 

 

1,631

 

Other assets

 

 

22

 

 

 

22

 

Total assets

 

$

366,969

 

 

$

317,211

 

Liabilities and Stockholders’ Equity

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Accounts payable (includes related party amounts of $0 and $141,
   respectively)

 

$

3,287

 

 

$

4,744

 

Accrued expenses (includes related party amounts of $0 and $140,
   respectively)

 

 

12,889

 

 

 

8,210

 

Accrued interest

 

 

128

 

 

 

55

 

Current portion of operating lease liability

 

 

2,654

 

 

 

37

 

Total current liabilities

 

 

18,958

 

 

 

13,046

 

Operating lease liability, net of current portion

 

 

23,247

 

 

 

21,569

 

Long-term debt, net of debt discount

 

 

25,038

 

 

 

14,792

 

Other long-term liabilities

 

 

1,096

 

 

 

575

 

Total liabilities

 

 

68,339

 

 

 

49,982

 

Commitments and contingencies (Note 8)

 

 

 

 

 

 

Stockholders’ equity:

 

 

 

 

 

 

Preferred stock, $0.0001 par value; authorized shares— 50,000,000 at September 30, 2023 and December 31, 2022; no shares issued and outstanding at September 30, 2023 and December 31, 2022

 

 

 

 

 

 

Common stock, $0.0001 par value; authorized shares— 500,000,000 at September 30, 2023 and December 31, 2022; issued shares—48,417,931 and 39,240,746 at
September 30, 2023 and December 31, 2022, respectively; outstanding shares—
47,418,350 and 37,656,037 at September 30, 2023 and December 31, 2022, respectively

 

 

5

 

 

 

4

 

Additional paid-in capital

 

 

650,567

 

 

 

532,499

 

Accumulated other comprehensive loss

 

 

(343

)

 

 

(281

)

Accumulated deficit

 

 

(351,599

)

 

 

(264,993

)

Total stockholders’ equity

 

 

298,630

 

 

 

267,229

 

Total liabilities and stockholders’ equity

 

$

366,969

 

 

$

317,211

 

 

See accompanying notes.

1


 

HilleVax, Inc.

Condensed Consolidated Statements of Operations and Comprehensive Loss

(in thousands, except share and per share data)

(unaudited)

 

 

Three Months Ended
September 30,

 

 

Nine Months Ended
September 30,

 

 

2023

 

 

2022

 

 

2023

 

 

2022

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

Research and development (includes related party
   amounts of $
55, $719, $252, and $2,313, respectively)

 

$

27,308

 

 

$

13,315

 

 

$

73,425

 

 

$

28,352

 

In-process research and development - related party

 

 

 

 

 

 

 

 

 

 

 

2,500

 

General and administrative (includes related party
   amounts of $
0, $3, $0, and $37, respectively)

 

 

6,603

 

 

 

4,577

 

 

 

19,629

 

 

 

11,162

 

Total operating expenses

 

 

33,911

 

 

 

17,892

 

 

 

93,054

 

 

 

42,014

 

Loss from operations

 

 

(33,911

)

 

 

(17,892

)

 

 

(93,054

)

 

 

(42,014

)

Other income (expense):

 

 

 

 

 

 

 

 

 

 

 

 

Interest income

 

 

1,690

 

 

 

1,317

 

 

 

6,717

 

 

 

1,657

 

Interest expense (includes related party amounts
   of $
0, $0, $0, and $717, respectively)

 

 

(717

)

 

 

(205

)

 

 

(1,666

)

 

 

(3,157

)

Change in fair value of convertible promissory notes (includes related party amounts of $0, $0, $0 and $13,196, respectively)

 

 

 

 

 

 

 

 

 

 

 

(51,469

)

Change in fair value of warrant liabilities - related party

 

 

 

 

 

 

 

 

 

 

 

(43,575

)

Other income (expense)

 

 

1,123

 

 

 

(25

)

 

 

1,397

 

 

 

(63

)

Total other income (expense)

 

 

2,096

 

 

 

1,087

 

 

 

6,448

 

 

 

(96,607

)

Net loss

 

$

(31,815

)

 

$

(16,805

)

 

$

(86,606

)

 

$

(138,621

)

Other comprehensive loss:

 

 

 

 

 

 

 

 

 

 

 

 

Unrealized loss on marketable securities

 

 

(28

)

 

 

 

 

 

(65

)

 

 

 

Pension and other postemployment benefits

 

 

7

 

 

 

 

 

 

3

 

 

 

 

Total comprehensive loss

 

$

(31,836

)

 

$

(16,805

)

 

$

(86,668

)

 

$

(138,621

)

Net loss per share, basic and diluted

 

$

(0.81

)

 

$

(0.45

)

 

$

(2.26

)

 

$

(5.86

)

Weighted-average shares of common stock outstanding, basic and diluted

 

 

39,039,553

 

 

 

37,323,626

 

 

 

38,252,981

 

 

 

23,640,388

 

 

See accompanying notes.

 

2


 

HilleVax, Inc.

Condensed Consolidated Statements of Stockholders’ Equity (Deficit)

(in thousands, except share data)

(unaudited)

 

 

Common Stock

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shares

 

 

Amount

 

 

Additional
Paid-in
Capital

 

 

Accumulated Other Comprehensive Loss

 

 

Accumulated
Deficit

 

 

Total
Stockholders’
Equity (Deficit)

 

Balance at June 30, 2023

 

 

38,049,186

 

 

$

4

 

 

$

538,865

 

 

$

(322

)

 

$

(319,784

)

 

$

218,763

 

Vesting of restricted shares

 

 

168,164

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock—based compensation

 

 

 

 

 

 

 

 

3,946

 

 

 

 

 

 

 

 

 

3,946

 

Exercise of common stock options

 

 

1,000

 

 

 

 

 

 

7

 

 

 

 

 

 

 

 

 

7

 

Issuance of common stock in connection with underwritten public offering, net

 

 

9,200,000

 

 

 

1

 

 

 

107,749

 

 

 

 

 

 

 

 

 

107,750

 

Unrealized loss on marketable securities

 

 

 

 

 

 

 

 

 

 

 

(28

)

 

 

 

 

 

(28

)

Pension and other postemployment benefits

 

 

 

 

 

 

 

 

 

 

 

7

 

 

 

 

 

 

7

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(31,815

)

 

 

(31,815

)

Balance at September 30, 2023

 

 

47,418,350

 

 

$

5

 

 

$

650,567

 

 

$

(343

)

 

$

(351,599

)

 

$

298,630

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at June 30, 2022

 

 

31,311,387

 

 

$

3

 

 

$

530,151

 

 

$

 

 

$

(227,000

)

 

$

303,154

 

Vesting of restricted shares

 

 

251,999

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock—based compensation

 

 

 

 

 

 

 

 

844

 

 

 

 

 

 

 

 

 

844

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(16,805

)

 

 

(16,805

)

Balance at September 30, 2022

 

 

31,563,386

 

 

$

3

 

 

$

530,995

 

 

$

 

 

$

(243,805

)

 

$

287,193

 

 

See accompanying notes.

3


 

HilleVax, Inc.

Condensed Consolidated Statements of Stockholders’ Equity (Deficit) - (Continued)

(in thousands, except share data)

(unaudited)

 

Common Stock

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shares

 

 

Amount

 

 

Additional
Paid-in
Capital

 

 

Accumulated Other Comprehensive Loss

 

 

Accumulated
Deficit

 

 

Total
Stockholders’
Equity (Deficit)

 

Balance at December 31, 2022

 

 

37,656,037

 

 

$

4

 

 

$

532,499

 

 

$

(281

)

 

$

(264,993

)

 

$

267,229

 

Vesting of restricted shares

 

 

513,036

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock—based compensation

 

 

 

 

 

 

 

 

9,834

 

 

 

 

 

 

 

 

 

9,834

 

Exercise of common stock options

 

 

22,382

 

 

 

 

 

 

167

 

 

 

 

 

 

 

 

 

167

 

Issuance of common stock under stock purchase plan

 

 

26,895

 

 

 

 

 

 

318

 

 

 

 

 

 

 

 

 

318

 

Issuance of common stock in connection with underwritten public offering, net

 

 

9,200,000

 

 

 

1

 

 

 

107,749

 

 

 

 

 

 

 

 

 

107,750

 

Unrealized loss on marketable securities

 

 

 

 

 

 

 

 

 

 

 

(65

)

 

 

 

 

 

(65

)

Pension and other postemployment benefits

 

 

 

 

 

 

 

 

 

 

 

3

 

 

 

 

 

 

3

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(86,606

)

 

 

(86,606

)

Balance at September 30, 2023

 

 

47,418,350

 

 

$

5

 

 

$

650,567

 

 

$

(343

)

 

$

(351,599

)

 

$

298,630

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at December 31, 2021

 

 

6,599,886

 

 

$

1

 

 

$

4,426

 

 

$

 

 

$

(105,184

)

 

$

(100,757

)

Issuance of common stock in connection with initial public offering, net of issuance costs of $20,491

 

 

13,529,750

 

 

 

1

 

 

 

209,514

 

 

 

 

 

 

 

 

 

209,515

 

Conversion of August 2021 Notes and accrued interest into common shares

 

 

10,672,138

 

 

 

1

 

 

 

215,363

 

 

 

 

 

 

 

 

 

215,364

 

Conversion of Takeda Warrant liability into equity

 

 

 

 

 

 

 

 

100,020

 

 

 

 

 

 

 

 

 

100,020

 

Vesting of restricted shares

 

 

761,612

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock—based compensation

 

 

 

 

 

 

 

 

1,672

 

 

 

 

 

 

 

 

 

1,672

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(138,621

)

 

 

(138,621

)

Balance at September 30, 2022

 

 

31,563,386

 

 

$

3

 

 

$

530,995

 

 

$

 

 

$

(243,805

)

 

$

287,193

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

See accompanying notes.

4


 

HilleVax, Inc.

Condensed Consolidated Statements of Cash Flows

(in thousands)

(unaudited)

 

 

Nine Months Ended
September 30,

 

 

2023

 

 

2022

 

Cash flows from operating activities

 

 

 

 

 

 

Net loss

 

$

(86,606

)

 

$

(138,621

)

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

 

 

 

 

 

 

Depreciation

 

 

450

 

 

 

 

Stock-based compensation

 

 

9,834

 

 

 

1,672

 

Change in fair value of convertible promissory notes (includes related party
   amounts of $
0 and $13,196, respectively)

 

 

 

 

 

51,469

 

Change in fair value of warrant liabilities - related party

 

 

 

 

 

43,575

 

Amortization of operating lease right-of-use assets

 

 

982

 

 

 

836

 

Amortization of debt discount

 

 

410

 

 

 

182

 

Issuance of PIK interest debt

 

 

375

 

 

 

48

 

Acquired in-process research and development - related party

 

 

 

 

 

2,500

 

Net amortization of premiums and discounts on marketable securities

 

 

(1,876

)

 

 

 

Loss on disposal of property and equipment

 

 

 

 

 

42

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

Prepaid expenses and other current assets (includes related party amounts of $77 and $0, respectively)

 

 

2,427

 

 

 

(7,951

)

Accounts payable, accrued expenses and other long-term liabilities
   (includes related party amounts of $(
281) and $(4,137), respectively)

 

 

4,459

 

 

 

(713

)

Accrued interest (includes related party amounts of $0 and $717,
   respectively)

 

 

73

 

 

 

2,823

 

Operating lease right-of-use assets and liabilities

 

 

4,295

 

 

 

666

 

Net cash used in operating activities

 

 

(65,177

)

 

 

(43,472

)

Cash flows from investing activities

 

 

 

 

 

 

Cash paid for purchased in-process research and development

 

 

 

 

 

(2,500

)

Purchases of property and equipment

 

 

(10,010

)

 

 

(185

)

Purchases of marketable securities

 

 

(129,097

)

 

 

 

Proceeds from sales or maturities of marketable securities

 

 

15,000

 

 

 

 

Net cash used in investing activities

 

 

(124,107

)

 

 

(2,685

)

Cash flows from financing activities

 

 

 

 

 

 

Proceeds from issuances of stock under ESPP

 

 

318

 

 

 

 

Proceeds from issuance of common stock in initial public offering

 

 

 

 

 

230,006

 

Payment of initial public offering costs

 

 

 

 

 

(19,389

)

Proceeds from issuance of common stock in underwritten public offering, net of issuance costs

 

 

108,100

 

 

 

 

Proceeds from issuance of long-term debt, net of issuance costs

 

 

9,800

 

 

 

4,665

 

Proceeds from exercise of stock options

 

 

167

 

 

 

 

Net cash provided by financing activities

 

 

118,385

 

 

 

215,282

 

Net increase (decrease) in cash, cash equivalents and restricted cash

 

 

(70,899

)

 

 

169,125

 

Cash, cash equivalents and restricted cash—beginning of period

 

 

281,032

 

 

 

124,566

 

Cash, cash equivalents and restricted cash—end of period

 

$

210,133

 

 

$

293,691

 

Supplemental disclosure of cash flow information

 

 

 

 

 

 

Cash paid for interest

 

$

1,121

 

 

$

104

 

Supplemental disclosure of noncash investing and financing activities

 

 

 

 

 

 

Operating lease

 

$

 

 

$

20,317

 

Unpaid initial public offering costs

 

$

 

 

$

313

 

Unpaid underwritten public offering costs

 

$

350

 

 

$

 

Unpaid property and equipment purchases

 

$

171

 

 

$

415

 

Conversion of convertible promissory notes and interest into common stock

 

$

 

 

$

215,364

 

Conversion of warrant liability into equity

 

$

 

 

$

100,020

 

Accreted final interest payment fees

 

$

339

 

 

$

158

 

 

See accompanying notes.

5


 

HilleVax, Inc.

Notes to Condensed Consolidated Financial Statements (Unaudited)

1. Organization

Organization

HilleVax, Inc. (the “Company” or “HilleVax”) was incorporated in the state of Delaware in March 2020 under the name MokshaCo, Inc. (“MokshaCo”). On February 8, 2021, MokshaCo changed its name to HilleVax and merged with North Bridge V, Inc. (“North Bridge V”) and YamadaCo III, Inc. (“YamadaCo III”), each a Delaware corporation formed in 2019, with HilleVax being the surviving entity (the “Merger”). The Company is a biopharmaceutical company focused on developing and commercializing novel vaccines.

Forward Stock Split

On April 22, 2022, the Company effected a 1.681-for-1 forward split of shares of the Company’s common stock (the “Forward Stock Split”). The par value of the common stock was not adjusted as a result of the Forward Stock Split and the authorized shares were increased to 50,000,000 shares of common stock in connection with the Forward Stock Split. The accompanying financial statements and notes to the financial statements give retroactive effect to the Forward Stock Split for all periods presented, unless otherwise indicated.

Liquidity and Capital Resources

From inception to September 30, 2023, the Company has devoted substantially all of its efforts to organizing and staffing the Company, business planning, raising capital, in-licensing its initial vaccine candidate, HIL-214, preparing for and managing its clinical trials of HIL-214, and providing other general and administrative support for these operations. The Company has a limited operating history, has never generated any revenue, and the sales and income potential of its business is unproven. The Company has incurred net losses and negative cash flows from operating activities since its inception and expects to continue to incur net losses into the foreseeable future as it continues the development and potential commercialization of HIL-214. From inception to September 30, 2023, the Company has funded its operations through the issuance of convertible promissory notes, commercial bank debt, the sale of 13,529,750 shares of common stock for net proceeds of approximately $209.5 million in its initial public offering ("IPO") which closed in May 2022, and the sale of 9,200,000 shares of common stock for net proceeds of approximately $107.8 million in its underwritten public offering which closed in September 2023 (see Note 10).

The accompanying condensed consolidated financial statements have been prepared assuming the Company will continue as a going concern. Management is required to perform a two-step analysis over the Company’s ability to continue as a going concern. Management must first evaluate whether there are conditions and events that raise substantial doubt about the Company’s ability to continue as a going concern (Step 1). If management concludes that substantial doubt is raised, management is also required to consider whether its plans alleviate that doubt (Step 2). Management believes that it has sufficient working capital on hand to fund operations through at least the next twelve months from the date these financial statements were issued. There can be no assurance that the Company will be successful in acquiring additional funding, if needed, that the Company’s projections of its future working capital needs will prove accurate, or that any additional funding would be sufficient to continue operations in future years.

2. Summary of Significant Accounting Policies

Basis of Presentation

The Company's financial statements include the accounts of HilleVax Security Corporation, a wholly-owned subsidiary formed in Massachusetts, and HilleVax GmbH, a wholly-owned subsidiary formed in Zurich, Switzerland. The functional currency of the Company, HilleVax Security Corporation and HilleVax GmbH is the U.S. dollar. The Company’s assets and liabilities that are not denominated in the functional currency are remeasured into U.S. dollars at foreign currency exchange rates in effect at the balance sheet date except for nonmonetary assets, which are remeasured at historical foreign currency exchange rates in effect at the date of transaction. Net realized and unrealized gains and losses from foreign currency transactions and remeasurement are reported in other income (expense), in the condensed consolidated statements of operations and were not material for the periods presented. All intercompany transactions have been eliminated in consolidation.

6


 

Unaudited Interim Financial Information

The unaudited condensed consolidated financial statements as of September 30, 2023, and for the three and nine months ended September 30, 2023 and 2022, have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission (“SEC”), and with U.S. generally accepted accounting principles (“GAAP”) applicable to interim financial statements. These unaudited condensed consolidated financial statements have been prepared on the same basis as the Company’s audited financial statements and include all adjustments, consisting of only normal recurring accruals, which in the opinion of management are necessary to present fairly the Company’s financial position as of the interim date and results of operations for the interim periods presented. Interim results are not necessarily indicative of results for a full year or future periods. The condensed consolidated balance sheet data as of December 31, 2022 was derived from the Company’s audited financial statements but does not include all disclosures required by GAAP. These unaudited condensed financial statements should be read in conjunction with the Company’s audited financial statements for the year ended December 31, 2022, included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022 filed with the SEC on March 17, 2023.

Use of Estimates

The preparation of the Company’s unaudited condensed consolidated financial statements requires it to make estimates and assumptions that impact the reported amounts of assets, liabilities and expenses and the disclosure of contingent assets and liabilities in the Company’s condensed consolidated financial statements and accompanying notes. The most significant estimates in the Company’s unaudited condensed consolidated financial statements relate to accruals for research and development expenses, and prior to the Company's IPO, the valuation of convertible promissory notes, warrant liabilities and various other equity instruments. Although these estimates are based on the Company’s knowledge of current events and actions it may undertake in the future, actual results could differ materially from those estimates and assumptions.

Fair Value Option

As permitted under Accounting Standards Codification (“ASC”) 825, Financial Instruments, (“ASC 825”), the Company has elected the fair value option to account for its convertible promissory notes issued through May 2022, when the convertible promissory notes converted into equity in connection with the Company's IPO. In accordance with ASC 825, the Company recorded these convertible promissory notes at fair value with changes in fair value recorded in the condensed consolidated statements of operations. As a result of applying the fair value option, direct costs and fees related to the convertible promissory notes were recognized in earnings as incurred and not deferred.

Fair Value Measurements

The accounting guidance defines fair value, establishes a consistent framework for measuring fair value and expands disclosure for each major asset and liability category measured at fair value on either a recurring or non-recurring basis. Fair value is defined as an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability. As a basis for considering such assumptions, the accounting guidance establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value as follows:

Level 1: Observable inputs such as quoted prices in active markets.

Level 2: Inputs, other than the quoted prices in active markets that are observable either directly or indirectly.

Level 3: Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions.

Cash and Cash Equivalents

The Company considers all highly liquid investments with original maturities of three months or less when purchased to be cash equivalents. Cash and cash equivalents include cash in readily available checking accounts and money market funds.

Restricted Cash

Restricted cash consists of a money market account securing a standby letter of credit issued in connection with the Company’s Boston Lease (as defined and described in Note 6).

7


 

Marketable Securities

Marketable securities represent holdings of available-for-sale marketable debt securities in accordance with the Company’s investment policy. The Company has classified its investments with maturities beyond one year as current, based on their highly liquid nature and because such marketable securities represent the investment of cash that is available for current operations.

Investments in marketable securities are recorded at fair value, with any unrealized gains and losses reported within accumulated other comprehensive income (loss) as a separate component of stockholders’ equity (deficit) until realized or until a determination is made that an other-than-temporary decline in market value has occurred. The amortized cost of debt securities is adjusted for amortization of premiums and accretion of discounts to maturity. Such amortization and accretion, together with interest on securities sold, is determined based on the specific identification method and any realized gains or losses on the sale of investments are reflected as a component of other income (expense).

Concentrations of Credit Risk

Financial instruments that potentially subject the Company to significant concentrations of credit risk consist primarily of cash, cash equivalents, marketable securities, and restricted cash. The Company maintains deposits in federally insured financial institutions in excess of federally insured limits. The Company has not experienced any losses in such accounts and management believes that the Company is not exposed to significant credit risk due to the financial position of the depository institutions in which those deposits are held.

Property and Equipment, Net

Property and equipment are stated at cost and depreciated on a straight-line basis over the estimated useful life of the related assets as follows:

 

Estimated Useful Life

Computer equipment

 

3 years

Lab equipment

 

5 years

Furniture and fixtures

 

5 years

Leasehold improvements

 

3 – 10 years or term of lease

Repairs and maintenance costs are charged to expense as incurred.

Leases

At the inception of a contractual arrangement, the Company determines whether the contract contains a lease by assessing whether there is an identified asset and whether the contract conveys the right to control the use of the identified asset in exchange for consideration over a period of time. Lease terms are determined at the commencement date by considering whether renewal options and termination options are reasonably assured of exercise. For its long-term operating leases, the Company recognizes a lease liability and a right-of-use (“ROU”) asset on its balance sheet and recognizes lease expense on a straight-line basis over the lease term. The lease liability is determined as the present value of future lease payments, reduced by any reimbursements for tenant improvements, using the discount rate implicit in the lease or, if the implicit rate is not readily determinable, an estimate of the Company’s incremental borrowing rate. The ROU asset is based on the lease liability, adjusted for any prepaid or deferred rent, and reduced by any reimbursements for tenant improvements. The Company aggregates all lease and non-lease components for each class of underlying assets into a single lease component and variable charges for common area maintenance and other variable costs are recognized as expense as incurred. The Company has elected to not recognize a lease liability or ROU asset in connection with short-term operating leases and recognizes lease expense for short-term operating leases on a straight-line basis over the lease term. The Company does not have any financing leases.

Impairment of Long-Lived Assets

The Company reviews long-lived assets, such as property and equipment, for impairment whenever events or changes in circumstances indicate the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to the future undiscounted net cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured as the amount by which the carrying amount of the assets exceeds the fair value of the assets. Fair value would be assessed using discounted cash flows or other appropriate measures of fair value. The Company has not recognized any impairment losses through September 30, 2023.

8


 

Research and Development Expenses and Accruals

All research and development costs are expensed in the period incurred and consist primarily of salaries, payroll taxes, employee benefits, stock-based compensation charges for those individuals involved in research and development efforts, external research and development costs incurred under agreements with contract research organizations and consultants to conduct and support the Company’s clinical trials of HIL-214.

The Company has entered into various research and development contracts with clinical research organizations, clinical manufacturing organizations and other companies. Payments for these activities are based on the terms of the individual agreements, which may differ from the pattern of costs incurred, and payments made in advance of performance are reflected in the accompanying balance sheets as prepaid expenses. The Company records accruals for estimated costs incurred for ongoing research and development activities. When evaluating the adequacy of the accrued liabilities, the Company analyzes progress of the services, including the phase or completion of events, invoices received and contracted costs. Significant judgments and estimates may be made in determining the prepaid or accrued balances at the end of any reporting period. Actual results could differ from the Company’s estimates.

In-Process Research and Development

The Company evaluates whether acquired intangible assets are a business under applicable accou