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Avidity Biosciences
RNA
#1873
Rank
$11.26 B
Marketcap
๐Ÿ‡บ๐Ÿ‡ธ United States
Country
$72.92
Share price
0.04%
Change (1 day)
115.80%
Change (1 year)
๐Ÿ’Š Pharmaceuticals๐Ÿงฌ Biotech
Categories
  1. Avidity Biosciences
  2. Quarterly Reports (10-Q)
  3. Financial Year FY2025 Q1

Avidity Biosciences - 10-Q quarterly report FY2025 Q1


Text size:
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
_____________________________________________________
FORM 10-Q
_____________________________________________________
xQUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2025
or
oTRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Commission File Number 001-39321
_____________________________________________________
Avidity Biosciences, Inc.
(Exact name of registrant as specified in its charter)
_____________________________________________________
Delaware46-1336960
(State or other jurisdiction of
incorporation or organization)		(IRS Employer
Identification No.)
10578 Science Center Drive, Suite 125
San Diego, California
92121
(Address of principal executive offices)(Zip Code)
(858) 401-7900
(Registrant’s telephone number, including area code)
_____________________________________________________
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock, $0.0001 par valueRNAThe Nasdaq Global 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 x No o
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 x No o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a 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 filerxAccelerated filero
Non-accelerated fileroSmaller reporting companyo
Emerging growth companyo
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. o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No x
As of April 24, 2025, the registrant had 120,538,359 shares of common stock outstanding.

Avidity Biosciences, Inc.
FORM 10-Q
TABLE OF CONTENTS
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28
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29
30
31
2
PART I - FINANCIAL INFORMATION
Item 1. Condensed Consolidated Financial Statements (unaudited)
Avidity Biosciences, Inc.
Condensed Consolidated Balance Sheets
(in thousands, except par value)
March 31,
2025		December 31,
2024
(unaudited)
Assets
Current assets:
Cash and cash equivalents$254,203 $219,868 
Marketable securities1,125,674 1,281,629 
Prepaid and other assets55,098 40,793 
Total current assets1,434,975 1,542,290 
Property and equipment, net15,637 12,670 
Restricted cash2,795 2,795 
Right-of-use assets4,929 5,619 
Other assets739 521 
Total assets$1,459,075 $1,563,895 
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable and accrued liabilities$54,189 $69,524 
Accrued compensation12,814 3,663 
Lease liabilities, current portion3,884 3,844 
Deferred revenue, current portion13,978 20,987 
Total current liabilities84,865 98,018 
Lease liabilities, net of current portion2,090 2,957 
Deferred revenue, net of current portion43,397 37,961 
Total liabilities130,352 138,936 
Commitments and contingencies (Note 7)
Stockholders’ equity:
Common stock, $0.0001 par value; authorized shares – 400,000; issued and outstanding shares – 120,512 and 119,893 at March 31, 2025 and December 31, 2024, respectively
12 12 
Additional paid-in capital2,334,784 2,315,111 
Accumulated other comprehensive income2,766 2,902 
Accumulated deficit(1,008,839)(893,066)
Total stockholders’ equity1,328,723 1,424,959 
Total liabilities and stockholders’ equity$1,459,075 $1,563,895 
See accompanying notes.
3
Avidity Biosciences, Inc.
Condensed Consolidated Statements of Operations and Comprehensive Loss
(in thousands, except per share data)
(unaudited)
Three Months Ended March 31,
20252024
Collaboration revenue$1,573 $3,543 
Operating expenses:
Research and development99,490 66,832 
General and administrative33,600 13,898 
Total operating expenses133,090 80,730 
Loss from operations(131,517)(77,187)
Other income (expense):
Interest income16,179 8,433 
Other expense(435)(101)
Total other income15,744 8,332 
Net loss$(115,773)$(68,855)
Net loss per share, basic and diluted$(0.90)$(0.79)
Weighted-average shares outstanding, basic and diluted129,23287,212
Other comprehensive income (loss):
Net unrealized losses on marketable securities(170)(589)
Foreign currency translation adjustment34 — 
Comprehensive loss$(115,909)$(69,444)
See accompanying notes.
4
Avidity Biosciences, Inc.
Condensed Consolidated Statements of Stockholders' Equity
(in thousands)
(unaudited)
Common StockAdditional
Paid-in
Capital		Accumulated
Other
Comprehensive
Income (Loss)		Accumulated
Deficit		Total
Stockholders’
Equity
SharesAmount
Balance at December 31, 2024119,893$12 $2,315,111 $2,902 $(893,066)$1,424,959 
Issuance of common stock upon exercise of stock options114— 1,937 — — 1,937 
Issuance of common stock in connection with vesting of restricted stock units and performance stock units505— — — — — 
Stock-based compensation—— 17,736 — — 17,736 
Net loss—— — — (115,773)(115,773)
Other comprehensive loss—— — (136)— (136)
Balance at March 31, 2025120,512$12 $2,334,784 $2,766 $(1,008,839)$1,328,723 
Balance at December 31, 202379,275$8 $1,071,395 $125 $(570,764)$500,764 
Issuance of common stock upon exercise of stock options541— 3,896 — — 3,896 
Issuance of common stock in public offering, net of issuance costs of $143
418— 5,594 — — 5,594 
Issuance of common stock in a private placement, net of issuance costs of $12,821
15,2252 238,386 — — 238,388 
Issuance of pre-funded warrants in a private placement, net of issuance costs of $7,605
—— 141,395 — — 141,395 
Issuance of common stock in connection with vesting of restricted stock units135— — — — — 
Stock-based compensation—— 10,306 — — 10,306 
Net loss—— — — (68,855)(68,855)
Other comprehensive loss—— — (589)— (589)
Balance at March 31, 202495,594$10 $1,470,972 $(464)$(639,619)$830,899 
See accompanying notes.
5
Avidity Biosciences, Inc.
Condensed Consolidated Statements of Cash Flows
(in thousands)
(unaudited)
Three Months Ended March 31,
20252024
Cash flows from operating activities
Net loss$(115,773)$(68,855)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation785 641 
Stock-based compensation expense17,736 10,306 
Amortization of premiums and discounts on marketable securities, net(5,157)(2,960)
Non-cash operating lease costs824 828 
Changes in operating assets and liabilities:
Prepaid and other assets(14,522)(2,528)
Accounts payable and accrued liabilities(15,342)2,575 
Accrued compensation9,151 (6,539)
Operating lease liabilities(958)(887)
Deferred revenue(1,573)(2,961)
Net cash used in operating activities(124,829)(70,380)
Cash flows from investing activities
Proceeds from maturities of marketable securities330,211 109,725 
Purchases of marketable securities(169,270)(141,557)
Purchases of property and equipment(3,753)(915)
Net cash provided by (used) in investing activities157,188 (32,747)
Cash flows from financing activities
Proceeds from issuance of common stock in public offerings, net of issuance costs— 5,594 
Proceeds from issuance of common stock under employee incentive equity plans1,937 3,655 
Proceeds from the issuance of common stock in a private placement, net of issuance costs— 238,647 
Proceeds from issuance of pre-funded warrants in a private placement, net of issuance costs— 141,549 
Net cash provided by financing activities1,937 389,445 
Effect of exchange rate on cash, cash equivalents and restricted cash39 — 
Net increase in cash, cash equivalents and restricted cash34,335 286,318 
Cash, cash equivalents and restricted cash at beginning of period222,663 185,377 
Cash, cash equivalents and restricted cash at end of period$256,998 $471,695 
Supplemental schedule of noncash investing and financing activities:
Costs incurred, but not paid, in connection with deferred financing costs included in accounts payable and accrued liabilities$— $413 
Costs incurred, but not paid, in connection with purchases of property and equipment included in accounts payable and accrued liabilities$904 $228 
See accompanying notes.
6
Avidity Biosciences, Inc.
Notes to Unaudited Condensed Consolidated Financial Statements
1.    Description of Business and Basis of Presentation
Description of Business
Avidity Biosciences, Inc. (the Company or Avidity) is a biopharmaceutical company committed to delivering a new class of RNA therapeutics called Antibody Oligonucleotide Conjugates (AOCs). The Company’s proprietary AOC platform is designed to combine the specificity of monoclonal antibodies with the precision of RNA therapeutics to target the root cause of diseases previously untreatable with such therapeutics.
Liquidity
Since inception, the Company has relied on various means of raising capital, including public offerings, ATM sales agreements, the sale and issuance of convertible preferred stock, funding under collaboration agreements, and private placements of common stock. The Company has devoted substantially all of its resources to organizing and staffing the Company, business planning, raising capital, developing its proprietary AOC platform, identifying potential product candidates, establishing its intellectual property portfolio, conducting research and preclinical studies, advancing its clinical programs, and providing other general and administrative support for these operations. In addition, the Company has a limited operating history, has incurred operating losses since inception and expects that it will continue to incur net losses into the foreseeable future as it continues the development of its product candidates and development programs. As of March 31, 2025, the Company had an accumulated deficit of $1.0 billion and cash, cash equivalents and marketable securities of $1.4 billion.
The Company believes that existing cash, cash equivalents and marketable securities will be sufficient to fund the Company’s operations for at least 12 months from the date of the filing of this Form 10-Q. The Company plans to finance its future cash needs through equity offerings, debt financings or other capital sources, including potential collaborations, licenses and other similar arrangements. If the Company is not able to secure adequate additional funding, it may be forced to make reductions in spending, extend payment terms with suppliers, liquidate assets where possible, and/or delay or reduce the scope of its planned development programs. Any of these actions could materially harm the Company’s business, results of operations and future prospects.
Basis of Presentation
The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (GAAP) and the rules and regulations of the Securities and Exchange Commission (SEC) related to a quarterly report on Form 10-Q. Certain information and note disclosures normally included in annual financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to those rules and regulations. The unaudited condensed consolidated financial statements reflect all adjustments which, in the opinion of management, are necessary for a fair presentation of the results for the periods presented. All such adjustments are of a normal and recurring nature. The operating results presented in these unaudited condensed consolidated financial statements are not necessarily indicative of the results that may be expected for any future periods. These unaudited condensed consolidated financial statements should be read in conjunction with the audited financial statements and the notes thereto for the year ended December 31, 2024 included in the Company’s annual report on Form 10-K filed with the SEC on February 27, 2025.
In December 2023, the Company formed Avidity Biosciences Ireland Limited, a wholly-owned subsidiary (the Subsidiary). The accompanying condensed consolidated financial statements reflect the operations of Avidity Biosciences, Inc. and the Subsidiary. Intercompany balances and transactions have been eliminated in consolidation.
7
2.    Summary of Significant Accounting Policies
Use of Estimates
The preparation of condensed consolidated financial statements in accordance with GAAP requires the Company to make estimates and assumptions that impact the reported amounts of assets, liabilities, revenues and expenses and the disclosure of contingent assets and liabilities in the condensed consolidated financial statements and accompanying notes. Although estimates are based on the Company’s knowledge of current events and actions it may undertake in the future, actual results may ultimately materially differ from these estimates and assumptions.
Summary of Significant Accounting Policies
The Company’s significant accounting policies are discussed in “Note 2 – Summary of Significant Accounting Policies” of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2024 filed with the SEC on February 27, 2025. There have been no significant changes to these policies during the three months ended March 31, 2025.
Foreign Currency Translation
The foreign subsidiary uses its local currency as the functional currency. The financial statements of the foreign subsidiary are translated into U.S. dollars using the exchange rate in effect at the balance sheet date for assets and liabilities, stockholders’ equity is translated at the historical rates, and revenues and expenses are translated at the average exchange rates for the period. Translation adjustments are recorded as a component of accumulated other comprehensive income (loss) within stockholders’ equity.
Net Loss Per Share
Basic net loss per share is computed by dividing the net loss by the weighted-average number of common shares outstanding for the period, adjusted for the weighted-average number of common shares outstanding that are subject to repurchase or forfeiture. Diluted net loss per share is computed by dividing the net loss by the weighted-average number of common shares and dilutive common stock equivalents outstanding for the period determined using the treasury-stock and if-converted methods. For all periods presented, there is no difference in the number of shares used to calculate basic and diluted shares outstanding as inclusion of the common stock equivalent securities would be anti-dilutive. The pre-funded common stock warrants are included in the calculation of basic and diluted net loss per share as the exercise price of $0.001 per share is not substantive and the shares are issuable for little or no consideration.
Common stock equivalent securities not included in the calculation of diluted net loss per share, because to do so would be anti-dilutive, are as follows (in common stock equivalent shares; in thousands):
March 31,
20252024
Common stock options issued and outstanding14,08113,485
Restricted stock units2,6301,415
Performance stock units810750
ESPP shares pending issuance6185
Total17,58215,735
Recently Issued Accounting Pronouncements
In December 2023, the Financial Accounting Standards Board (FASB) issued Accounting Standard Update (ASU) 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which enhances income tax disclosures, primarily through standardization and disaggregation of the income tax rate reconciliation and disaggregation of income taxes paid. ASU 2023-09 is effective for annual periods beginning after December 15, 2024. ASU 2023-09 can be applied either prospectively or retrospectively and early adoption is permitted. The Company is currently evaluating the impact that this guidance will have on the presentation of its consolidated financial statements and accompanying notes.
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In November 2024, the FASB issued ASU 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40), which requires that public business entities disclose additional information about specific expense captions in the notes to financial statements at interim and annual reporting periods. The amendment in the update does not change or remove current expense disclosures, rather, it requires enhanced disaggregated disclosures of specific expense captions and affects where that information is presented within the notes to the financial statements. ASU 2024-03 is effective for annual periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027. ASU 2024-03 can be applied either prospectively or retrospectively and early adoption is permitted. The Company is currently evaluating the impact that this guidance will have on the presentation of its consolidated financial statements and accompanying notes.
3.    Fair Value Measurements
The following tables summarize the Company’s cash equivalents and marketable securities measured at fair value (in thousands):
Fair Value Measurements Using
As of March 31, 2025TotalQuoted Prices in
Active Markets
for Identical
Assets (Level 1)		Significant
Other
Observable
Inputs (Level 2)		Significant
Unobservable
Inputs
(Level 3)
Marketable securities:
U.S. Treasury securities$1,125,674 $1,125,674 $— $— 
Total$1,125,674 $1,125,674 $— $— 
Fair Value Measurements Using
As of December 31, 2024TotalQuoted Prices in
Active Markets
for Identical
Assets (Level 1)		Significant
Other
Observable
Inputs (Level 2)		Significant
Unobservable
Inputs
(Level 3)
Cash equivalents:
U.S. Treasury securities$7,439 $7,439 $— $— 
Marketable securities:
U.S. Treasury securities1,281,139 1,281,139 — — 
Negotiable certificates of deposit490 — 490 — 
Total$1,289,068 $1,288,578 $490 $— 
4.    Marketable Securities
The Company’s marketable securities, which consist of highly liquid marketable debt securities, are classified as available-for-sale and are stated at fair value. The following tables summarize the Company’s marketable securities (in thousands):
As of March 31, 2025Maturity
(in years)		Amortized
Cost		Unrealized
Gains		Unrealized
Losses		Estimated
Fair Value
U.S. Treasury securities
1 or less
$834,073 $1,700 $(59)$835,714 
U.S. Treasury securities
1 - 2
288,870 1,156 (66)289,960 
Total$1,122,943 $2,856 $(125)$1,125,674 
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As of December 31, 2024Maturity
(in years)		Amortized
Cost		Unrealized
Gains		Unrealized
Losses		Estimated
Fair Value
U.S. Treasury securities
1 or less
$947,916 $2,154 $(80)$949,990 
Negotiable certificates of deposit
1 or less
490 — — 490 
U.S. Treasury securities
1 - 2
330,321 1,218 (390)331,149 
Total$1,278,727 $3,372 $(470)$1,281,629 
The unrealized losses on the Company’s marketable securities were caused by interest rate increases and resulted in the decrease in market value of these securities. There were no allowances for credit losses at March 31, 2025 and December 31, 2024 because (i) the decline in fair value is attributable to changes in interest rates and not credit quality, (ii) the Company does not intend to sell the investments before maturity, and (iii) it is not more likely than not that the Company will be required to sell the investments before recovery of their amortized cost bases.
The following table summarizes marketable securities in a continuous unrealized loss position for which an allowance for credit losses was not recorded (in thousands):
Less Than 12 Months
12 Months or Greater
Total
As of March 31, 2025
Fair Value
Unrealized Losses
Fair Value
Unrealized Losses
Fair Value
Unrealized Losses
U.S. Treasury securities$262,348 $(125)$— $— $262,348 $(125)
Total$262,348 $(125)$— $— $262,348 $(125)
Less Than 12 Months
12 Months or Greater
Total
As of December 31, 2024
Fair Value
Unrealized Losses
Fair Value
Unrealized Losses
Fair Value
Unrealized Losses
U.S. Treasury securities$247,404 $(470)$— $— $247,404 $(470)
Total$247,404 $(470)$— $— $247,404 $(470)
Accrued interest receivable on available-for-sale securities was $8.8 million and $8.7 million at March 31, 2025 and December 31, 2024, respectively. The Company has not written off any accrued interest receivable for the three months ended March 31, 2025 and 2024.
5.    Collaboration, License and Research Agreements
Research Collaboration and License Agreement with Bristol Myers Squibb Company
In November 2023, the Company entered into a Research Collaboration and License Agreement (the BMS Collaboration Agreement) with Bristol Myers Squibb Company (BMS) to expand on its research with MyoKardia Inc. In connection with the BMS Collaboration Agreement, the Company recognized revenue of $1.6 million and $2.4 million for the three months ended March 31, 2025 and 2024, respectively. There were no collaboration receivables related to the BMS Collaboration Agreement in any of the periods presented.
Research Collaboration and License Agreement with Eli Lilly and Company
In April 2019, the Company entered into a Research Collaboration and License Agreement (the Lilly Agreement) with Eli Lilly and Company (Lilly) for the discovery, development and commercialization of AOC products directed against certain targets in immunology and other select indications on a worldwide basis. In connection with the Lilly Agreement, the Company recognized no revenue for the three months ended March 31, 2025 and $1.1 million for the three months ended March 31, 2024. There were no collaboration receivables related to the Lilly Agreement as of March 31, 2025 and December 31, 2024. There was no deferred revenue related to the Lilly Agreement at March 31, 2025.
The amounts received that have not yet been recognized as revenue are deferred on the Company’s condensed consolidated balance sheet and will be recognized over the remaining research and development period until the performance obligation is satisfied. A reconciliation of the closing balance of deferred revenue
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related to all collaboration agreements for the three months ended March 31, 2025 and 2024 is as follows (in thousands):
Balance at December 31, 2024$58,948 
Revenue recognized that was included in the balance at the beginning of the period(1,573)
Balance at March 31, 2025$57,375 
Balance at December 31, 2023$69,263 
Revenue recognized that was included in the balance at the beginning of the period(2,961)
Balance at March 31, 2024$66,302 
6.    Composition of Certain Consolidated Financial Statement Items
Prepaid and other assets (in thousands)
March 31,
2025		December 31,
2024
Prepaid assets$18,516 $12,571 
Interest receivable and other assets
36,582 28,222
Total prepaid and other assets$55,098 $40,793 
Property and equipment, net (in thousands)
March 31,
2025		December 31,
2024
Laboratory equipment$14,702 $14,180 
Computers and software262 261 
Office furniture and equipment1,979 1,979 
Leasehold improvements288 288 
Construction in process7,188 3,959 
Property and equipment, gross24,419 20,667 
Less accumulated depreciation(8,782)(7,997)
Total property and equipment, net$15,637 $12,670 
Depreciation expense related to property and equipment was $0.8 million and $0.6 million for the three months ended March 31, 2025 and 2024, respectively.
Accounts payable and accrued liabilities (in thousands)
March 31,
2025		December 31,
2024
Accounts payable$6,633 $8,461 
Accrued non-clinical liabilities13,107 17,226
Accrued manufacturing and technical development29,316 35,680
Accrued clinical liabilities5,133 8,157
Total accounts payable and accrued liabilities$54,189 $69,524 
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7.    Commitments and Contingencies
Operating Lease
In April 2024, the Company entered into a sublease agreement with Turning Point Therapeutics, Inc. (the Sublease) to rent 105,000 square feet for office and laboratory space for the Company’s future corporate headquarters. The term of the Sublease is approximately 9 years, 9 months with payments expected to begin in August 2025. Pursuant to the terms of the Sublease, the sublandlord will provide the Company with a tenant improvement allowance of up to $33.6 million. An additional tenant improvement allowance of up to $5.0 million is also available to be repaid in equal installments through monthly rent payments, subject to 8% interest per annum and annual increases of 3% per annum. Total aggregate future lease commitments under the Sublease are approximately $72.6 million, excluding the option for the adjacent available building, and inclusive of 3% annual rent increases and various agreed upon rent abatement amounts. The Sublease will be measured and recognized upon commencement of the Sublease. As of March 31, 2025, the sublease had not commenced because construction of improvements to the facility for its intended use was not substantially complete.
In March 2025, the Company exercised the option to rent an additional 80,000 square feet in an adjacent available building under the amended sublease agreement with Turning Point Therapeutics, Inc. (the Amended Sublease). The term of the Amended Sublease is approximately 9 years, 1 month with payments expected to begin in April 2026. Pursuant to the terms of the Amended Sublease, the sublandlord will provide the Company with a tenant improvement allowance of up to $19.9 million. An additional tenant improvement allowance of $5.1 million is also available under the master lease but it requires the Company to spend $3.4 million of its own funds to receive the full $5.1 million additional allowance. If the full amount is not utilized, the Company is obligated to repay any unutilized tenant improvement amount in cash or forfeiture of rent abatement up to a maximum of $1.8 million. Total aggregate future lease commitments under the Amended Sublease are approximately $53.7 million and inclusive of 3% annual rent increases and various agreed upon rent abatement amounts. The Amended Sublease will be measured and recognized upon commencement of the Amended Sublease. As of March 31, 2025, the Amended Sublease had not commenced because construction of improvements to the facility for its intended use was not substantially complete.
In connection with the Sublease, the Company is required to maintain a letter of credit for the benefit of the sublandlord in the amount of $2.5 million, which was delivered in April 2024 and is included in restricted cash in the Company’s condensed consolidated balance sheets.
Litigation
Liabilities for loss contingencies arising from claims, assessments, litigation, fines, penalties and other sources are recorded when it is probable that a liability has been incurred and the amount can be reasonably estimated. There are no such matters currently outstanding for which any liabilities have been accrued.
8.    Stockholders’ Equity
Common Stock
On November 8, 2022, the Company entered into a sales agreement (the 2022 Sales Agreement) with the Cowen and Company, LLC (the 2022 Sales Agent), under which the Company could, from time to time, sell shares of its common stock having an aggregate offering price of up to $200.0 million through the 2022 Sales Agent. Sales of the shares of common stock were made at prevailing market prices at the time of sale, or as otherwise agreed with the 2022 Sales Agent. During the three months ended March 31, 2024, the Company sold 418,408 shares of its common stock pursuant to the 2022 Sales Agreement and received net proceeds of $5.6 million, after deducting offering-related transaction costs and commissions of $0.1 million. The Company terminated the 2022 Sales Agreement, effective August 9, 2024.
On August 9, 2024, the Company entered into a sales agreement (the 2024 Sales Agreement) with TD Securities (USA) LLC (the 2024 Sales Agent) which contained substantially similar terms as the 2022 Sales Agreement. Under the 2024 Sales Agreement, the Company may, from time to time, sell shares of its common stock having an aggregate offering price of up to $400.0 million through the 2024 Sales Agent. Sales of the shares of common stock, if any, will be made at prevailing market prices at the time of sale, or as otherwise agreed with the 2024 Sales Agent. The Company is not obligated to sell, and the 2024 Sales Agent is not obligated to buy or sell, any shares of common stock under the 2024 Sales Agreement. During the three months
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ended March 31, 2025, the Company did not sell shares of its common stock pursuant to the 2024 Sales Agreement.
Stock Options
Stock option activity for employee and non-employee awards and related information is as follows (in thousands, except per share data):
Number of
Options		Weighted-
Average
Exercise
Price Per
Share
Outstanding balance at December 31, 202412,635$19.19 
Granted1,70731.44 
Exercised(114)16.90 
Forfeited/expired(147)21.71 
Outstanding balance at March 31, 202514,081$20.67 
Restricted Stock Units and Performance Stock Units
During the three months ended March 31, 2025, under the 2020 Incentive Award Plan and the 2022 Employment Inducement Incentive Award Plan, the Company granted Restricted Stock Units (RSUs) and Performance Stock Units (PSUs) to employees of the Company. PSUs were granted to the Company's officers.
RSUs and PSUs are valued at the market price of a share of the Company’s stock on the date of grant. RSUs vest ratably on an annual basis over a service period and are payable in shares of common stock on the vesting date. Compensation expense for RSUs is recognized on a straight-line basis over the four-year service period. Compensation expense for PSUs is recognized on a straight-line basis over the requisite service periods when the achievement of the performance condition is determined to be probable, using management's best estimate. If a performance condition is not determined to be probable or is not met, no stock-based compensation expense is recognized, and any previously recognized expense is reversed. Forfeitures are recorded in the period in which they occur.
The following table summarizes the RSU activity for the three months ended March 31, 2025 (in thousands, except per share data):
Number of SharesWeighted-Average Grant Date Fair Value
Issued and unvested balance at December 31, 20242,111 $24.54 
Granted875 31.44 
Vested(318)15.27 
Forfeited(38)27.02 
Issued and unvested balance at March 31, 2025
2,630 $27.92 
During the three months ended March 31, 2025, 317,661 RSUs vested with a total fair value of $9.3 million.
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The following table summarizes the PSU activity for the three months ended March 31, 2025 (in thousands, except per share data):
Number of SharesWeighted-Average Grant Date Fair Value
Issued and unvested balance at December 31, 2024925 $35.80 
Granted73 31.42 
Vested(188)6.57 
Forfeited— — 
Issued and unvested balance at March 31, 2025
810 $42.17 
During the three months ended March 31, 2025, 187,500 PSUs vested with a total fair value of $5.9 million.
Employee Stock Purchase Plan
The Company did not issue shares of common stock under the Employee Stock Purchase Plan (ESPP) during the three months ended March 31, 2025 and 2024, respectively. The Company had an outstanding liability of $1.5 million at March 31, 2025, which is included in accounts payable and accrued liabilities on the condensed consolidated balance sheet, for employee contributions to the ESPP for shares pending issuance at the end of the current offering period. As of March 31, 2025, 1,392,267 shares of common stock were available for issuance under the ESPP.
Stock-Based Compensation Expense
The assumptions used in the Black-Scholes model to determine the fair value of stock option grants and shares purchasable under the ESPP were as follows:
Options
Three Months Ended March 31,
20252024
Risk-free interest rate
4.1% - 4.5%
3.9% - 4.3%
Expected volatility
75% - 76%
79% - 80%
Expected term (in years)
6.0 - 6.1
6.0 - 6.1
Expected dividend yield
—%
—%
Risk-Free Interest Rate. The Company bases the risk-free interest rate assumption for equity awards on the rates for U.S. Treasury zero-coupon bonds with maturities similar to those of the expected term of the award being valued.
Expected Volatility. The expected volatility of stock options is based on the average historical volatility of the Company's common stock. Prior to 2025, the Company estimated volatility based on the average historical volatilities of common stock of comparable publicly traded companies and the Company's own volatility. The expected volatility for employee stock purchases under the ESPP is based on the Company's own historical volatility for the prior six months to conform with the six-month ESPP offering period.
Expected Term. The Company's limited option exercise history does not provide a reasonable basis for estimating expected term, therefore the Company has estimated the expected life of its stock options using the simplified method, whereby the expected life equals the average of the vesting term and the original contractual term of the option. The expected life assumption for employee stock purchases under the ESPP is six months to conform with the six-month ESPP offering period.
Expected Dividend Yield. The Company’s expected dividend yield assumption is zero as it has never paid dividends and has no present intention to do so in the future.
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The allocation of stock-based compensation expense was as follows (in thousands):
Three Months Ended March 31,
20252024
Research and development expense$9,119 $5,737 
General and administrative expense8,617 4,569 
Total stock-based compensation expense$17,736 $10,306 
Stock-based compensation expense by type of share-based award was as follows (in thousands):
Three Months Ended March 31,
20252024
Stock options$12,316 $8,920 
RSUs4,746 1,176 
PSUs173 — 
ESPP501 210 
Total stock-based compensation expense$17,736 $10,306 
As of March 31, 2025, the unrecognized compensation cost related to outstanding time-based options and RSUs was $125.2 million and $66.9 million, respectively, which is expected to be recognized over a weighted-average period of 2.8 and 3.3 years, respectively. As of March 31, 2025 the unrecognized compensation cost related to PSUs was $34.2 million, none of which was deemed probable. As of March 31, 2025, the unrecognized compensation cost related to stock purchase rights under the ESPP was $0.4 million, which is expected to be recognized over a weighted-average period of 0.2 years.
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9. Segment Information
The Company's operations constitute a single operating and reportable segment. The material accounting policies of the segments are described in the notes to the consolidated financial statements included in the Company's Annual Report filed on Form 10-K for the fiscal year ended December 31, 2024. The Company's Chief Operating Decision Maker (CODM) is the Chief Executive Officer, who utilizes consolidated net loss in assessing performance and allocating resources by comparing net loss against prior periods and the Company’s forecast. The measure of segment assets is reported on the consolidated balance sheets as total consolidated assets.
The following table presents financial information, including significant segment expenses, which are regularly provided to the CODM and included within consolidated net loss (in thousands):
Three Months Ended March 31,
20252024
Collaboration revenue
$1,573 $3,543 
Operating expenses, excluding stock-based compensation and depreciation
Research and development
(89,706)(60,572)
General and administrative
(24,863)(9,211)
Total operating expenses, excluding stock-based compensation and depreciation(114,569)(69,783)
Stock-based compensation(17,736)(10,306)
Depreciation(785)(641)
Total operating expenses(133,090)(80,730)
Other income15,744 8,332 
Net loss$(115,773)$(68,855)
The following table presents the measure of segment assets regularly provided to the CODM (in thousands):
March 31,
2025		December 31,
2024
Cash, cash equivalents and marketable securities
$1,379,877 $1,501,497 
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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our unaudited condensed consolidated financial statements and related notes thereto included elsewhere in this quarterly report on Form 10-Q and with our audited financial statements and notes thereto and management’s discussion and analysis of financial condition and results of operations, both of which are contained in our annual report on Form 10-K for the year ended December 31, 2024 filed with the Securities and Exchange Commission, or SEC, on February 27, 2025.
Cautionary Note Regarding Forward-Looking Statements
This quarterly report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, or the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act. All statements other than statements of historical facts contained in this quarterly report, including statements regarding our future results of operations and financial position, business strategies and plans, research and development plans, the anticipated timing, costs, design and conduct of our ongoing and planned preclinical studies and clinical trials for our product candidates, the timing and likelihood of regulatory filings and approvals for our product candidates, the timing and likelihood of success, plans and objectives of management for future operations and future results of anticipated product development efforts, inflationary pressures, and the ongoing hostilities outside the United States on our business, are forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as “may,” “will,” “should,” “could,” “expect,” “intend,” “plan,” “anticipate,” “believe,” “estimate,” “predict,” “potential,” “continue,” or the negative of these terms or other comparable terminology. These forward-looking statements are only predictions. We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our business, financial condition and results of operations. These forward-looking statements speak only as of the date of this quarterly report and are subject to a number of risks, uncertainties and assumptions, including those described in Part II, Item 1A, “Risk Factors.” The events and circumstances reflected in our forward-looking statements may not be achieved or occur, and actual results could differ materially from those projected in the forward-looking statements. Except as required by applicable law, we do not plan to publicly update or revise any forward-looking statements contained herein, whether as a result of any new information, future events, changed circumstances or otherwise. All forward-looking statements are qualified in their entirety by this cautionary statement, which is made under the safe harbor provisions of the Private Securities Litigation Reform Act of 1995.
Overview
We are a biopharmaceutical company committed to delivering a new class of RNA therapeutics called Antibody Oligonucleotide Conjugates, or AOCs. Our proprietary AOC platform is designed to combine the specificity of monoclonal antibodies, or mAbs, with the precision of RNA therapeutics to target the root cause of diseases previously untreatable with such therapeutics. Our pipeline currently has three programs in potentially registrational trials. Delpacibart etedesiran, abbreviated as del-desiran (formerly AOC 1001), is designed to treat people with myotonic dystrophy type 1, or DM1, and is currently in Phase 3 development with the global HARBOR™ trial. Del-desiran is also being studied in the ongoing MARINA-OLE™ trial with all of the participants who completed the Phase 1/2 MARINA® trial. Delpacibart braxlosiran, or del-brax (formerly AOC 1020), is the first investigational therapy designed to directly target DUX4 in people living with facioscapulohumeral muscular dystrophy, or FSHD, and is currently in Phase 1/2 development with the FORTITUDE™ trial. Delpacibart zotadirsen, or del-zota (formerly AOC 1044), is designed for people living with Duchenne muscular dystrophy, or DMD, and is currently in development with the Phase 2 EXPLORE44 Open-Label Extension (OLE) study. Del-zota is specifically designed for people with mutations amenable to exon 44 skipping, or DMD44, and is the first of multiple AOCs we are developing for DMD. Del-desiran, del-brax and del-zota have all been granted Orphan Designation by the FDA and the European Medicines Agency, or EMA, and Fast Track Designation by the FDA. In addition, the FDA has granted del-desiran Breakthrough Therapy designation for the treatment of DM1 and granted del-zota Rare Pediatric Disease designation. Del-desiran has also been granted Orphan Drug Designation by the Japan Ministry of Health, Labour and Welfare (MHLW).
Phase 3 HARBORTM Trial for DM1 (del-desiran)
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Del-desiran is currently being studied in the global Phase 3 HARBOR trial and in the ongoing MARINA-OLE trial in people with DM1. Del-desiran is designed to address the root cause of DM1 by reducing levels of a disease-related mRNA called DMPK. Del-desiran consists of a proprietary mAb that binds to the transferrin receptor 1 (TfR1) conjugated with an siRNA targeting DMPK mRNA. Long-term data from the MARINA-OLE trial showed reversal of disease progression in people living with DM1 across multiple endpoints including video hand opening time (vHOT) as a measure of hand function and myotonia, muscle strength and activities of daily living when compared to END-DM1 natural history data.
In June 2024, we announced the initiation of our global Phase 3 HARBOR trial and began administration of del-desiran. The HARBOR trial is a randomized, placebo-controlled, double-blind pivotal study designed to evaluate del-desiran in approximately 150 people (age 16 and older) living with DM1. The trial will be conducted at approximately 40 sites globally. Patients will be administered either del-desiran or placebo (1:1) every eight weeks. The trial is designed to assess multiple key functional aspects of DM1. The primary endpoint is video hand opening time (vHOT), a measurement of myotonia, which is the hallmark symptom of DM1. Key secondary endpoints include muscle strength as measured by hand grip strength and quantitative muscle testing (QMT) total score, and activities of daily living as measured by DM1-Activ. All study participants, regardless of whether they receive active treatment or placebo, will have the option to enroll into an open-label extension trial where all patients will receive active drug.
We remain on track to deliver multiple updates from the del-desiran program including:
▪Expected completion of enrollment for the ongoing Phase 3 HARBOR™ trial in mid-2025.
▪Plan to provide an update from the ongoing MARINA-OLE™ trial including long-term 4mg/kg and safety data in the fourth quarter 2025.
▪Expected publication of data analyses from the completed Phase 1/2 MARINA® trial during 2025.
▪Planned marketing application submissions starting 2026, including in the U.S., European Union and Japan.
Phase 1/2 EXPLORE44® Trial for DMD44 (del-zota)
Del-zota is currently being studied for the treatment of people living with DMD44 and is the first of multiple AOCs we are developing for DMD. Del-zota is designed to deliver PMO to skeletal muscle and heart tissue to specifically skip exon 44 of dystrophin mRNA to enable production of near full-length functional dystrophin. Del-zota is currently in Phase 2 development as part of the EXPLORE44-OLE™ study in people living with DMD44.
In February 2025, we announced completion of enrollment in the EXPLORE44-OLE™ study. In March 2025, we reported positive top-line del-zota data from our completed Phase 1/2 EXPLORE44® trial for people living with DMD44. The topline data from the randomized, double-blind, placebo-controlled Phase 1/2 EXPLORE44 trial demonstrated consistent, statistically significant improvements across key biomarkers as well as favorable safety and tolerability of del-zota across two dose levels, 5 mg/kg and 10 mg/kg. Participants received three doses of either 5 mg/kg del-zota or placebo every six weeks, or 10 mg/kg del-zota or placebo every eight weeks. Data on muscle delivery, exon skipping, dystrophin production and creatine kinase levels were assessed from seven (7) participants in the 5 mg/kg cohort, 10 participants in the 10 mg/kg cohort, and six (6) placebo participants, 28 days after the third dose. Safety and tolerability data were assessed from 26 participants in the completed Phase 1/2 EXPLORE44 trial and 38 participants in the ongoing EXPLORE44-OLE study, as of January 22, 2025.
Based on the consistent data between the 5 mg/kg every six weeks and the 10mg/kg every eight weeks groups across all parameters, we selected the dose of 5 mg/kg every six weeks of del-zota for the planned Biologics License Application (BLA) submission and future clinical studies. Participants currently receiving the 10 mg/kg dose in the EXPLORE44-OLE trial are in the process of being transitioned to 5 mg/kg every six weeks. We intend to use the data from the Phase 1/2 EXPLORE44 and EXPLORE44-OLE studies to support our first BLA submission, planned for year-end 2025.
We remain on track to deliver multiple updates from the del-zota program including:
▪Expected first BLA submission for del-zota at year end 2025
▪Plan to present topline and functional data from the ongoing EXPLORE44-OLE trial in the fourth quarter of 2025
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Phase 1/2 FORTITUDETM Trial for FSHD (del-brax)
Del-brax is currently being studied in the Phase 1/2 FORTITUDE™ trial in adult and adolescent participants with facioscapulohumeral muscular dystrophy (FSHD). We are developing del-brax to treat the underlying cause of FSHD, which is the abnormal expression of the DUX4 gene. The FORTITUDE trial is a randomized, placebo-controlled, double-blind, Phase 1/2 clinical trial designed to evaluate single and multiple doses of del-brax in 90 participants with FSHD. FORTITUDE is evaluating the safety, tolerability, pharmacokinetics, and pharmacodynamics of del-brax administered intravenously. Activity of del-brax is being assessed using key biomarkers, including DUX4-regulated muscle and circulating biomarkers and magnetic resonance imaging (MRI) measures of muscle volume and composition. Though the Phase 1/2 trial is not statistically powered to assess functional benefit, it explores the clinical activity of del-brax including measures of mobility and muscle strength as well as patient reported outcomes and quality of life measures.
In March 2025 we announced that enrollment has been completed for the del-brax biomarker cohort with a total of 51 participants enrolled. This is an important milestone for Avidity as we pursue a potential accelerated approval path in the United States for del-brax. We remain on track to deliver multiple updates from the del-brax program in Q2 including:
•Regulatory alignment on a potential accelerated approval path in the United States
•Regulatory alignment on the design of the global Phase 3 trial as well as initiation of the trial; and
•Topline data from the dose escalation cohorts in the FORTITUDE trial.
The FORTITUDE trial has a total of three dose cohorts. The first two dose escalation cohorts evaluated 2 mg/kg or 4 mg/kg of del-brax versus placebo and were designed to assess safety as well as inform the dose and dose regimen of del-brax for additional studies. We have completed enrollment in the dose escalation cohorts and identified 2 mg/kg every six weeks of del-brax as the dose for future clinical trials.
The third, ongoing biomarker cohort in the FORTITUDE trial is designed for a potential accelerated approval path in the U.S. It is assessing the impact of del-brax 2 mg/kg every six weeks versus placebo for 12 months in people living with FSHD, ages 16-70. The primary endpoints of the study cohort are changes in DUX4-regulated gene expression and DUX4-regulated circulating biomarker. Enrollment in the biomarker cohort is complete.
Company Advancements
We are advancing and expanding our innovative AOC pipeline to develop potential treatment options for people living with rare diseases across a wide range of therapeutic areas. Our first AOC programs are from our rare neuromuscular disease franchise where we have leveraged our deep experience with oligonucleotide therapeutics, modulation of RNA processes, antibody engineering and conjugation and drug delivery techniques. We have now expanded beyond rare neuromuscular disorders and into precision cardiology, advancing two wholly-owned precision cardiology development candidates targeting rare genetic cardiomyopathies - AOC 1072 targeting PRKAG2 (Protein Kinase AMP-activated non-catalytic subunit Gamma 2) Syndrome and AOC 1086 targeting PLN (phospholamban) cardiomyopathy.
We continue to execute on our global commercial infrastructure development as we plan for three potential successive product launches for DMD, DM1 and FSHD starting in 2026 and transition to the next stage as we advance our AOC technology in rare neuromuscular and precision cardiology, and next-generation innovations. In addition to our own internal research programs, we continue to explore the full potential of our AOC platform through collaborations and partnerships, including programs in immunology, cardiology and other select indications outside of muscle.
Since our inception in 2012, we have devoted substantially all of our resources to organizing and staffing our company, business planning, raising capital, developing our proprietary AOC platform, identifying potential product candidates, establishing our intellectual property portfolio, conducting research, preclinical and clinical studies, preparing for potential commercial activities, and providing other general and administrative support for these operations. We have not generated any revenue from product sales. We are currently building our capabilities to support potential launches of product candidates currently in clinical development and to potentially operate as a commercial organization. In June 2020, we completed our initial public offering, or IPO, and have since raised capital through additional public offerings and private placements, and under collaboration and research license agreements.
We have incurred operating losses in each year since inception. Our net losses were $322.3 million and $212.2 million for the years ended December 31, 2024 and 2023, respectively, and $115.8 million for the three
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months ended March 31, 2025. As of March 31, 2025, we had an accumulated deficit of $1.0 billion. We expect our expenses and operating losses will increase substantially as we conduct our ongoing and planned preclinical studies and clinical trials, continue our research and development activities, utilize third parties to manufacture our product candidates and related raw materials, hire additional personnel and protect our intellectual property. Our net losses may fluctuate significantly from quarter-to-quarter and year-to-year, depending on the timing of our preclinical studies and clinical trials and our expenditures on other research and development activities, as well as the generation of any collaboration and services revenue.
Based upon our current operating plans, we believe that our existing cash, cash equivalents and marketable securities of approximately $1.4 billion (as of March 31, 2025) will be sufficient to fund our operations for at least 12 months from the date of the filing of this Form 10-Q. While we may generate revenue under our current and/or future collaboration agreements, we do not expect to generate any revenues from product sales until we successfully complete development and obtain regulatory approval for one or more of our product candidates. If we obtain regulatory approval for any of our product candidates, we expect to incur significant commercialization expenses related to product sales, marketing, manufacturing and distribution. Accordingly, until such time as we can generate significant revenue from sales of our product candidates, if ever, we expect to finance our cash needs through equity offerings, debt financings or other capital sources, including potential collaborations, licenses, and other similar arrangements. However, we may be unable to raise additional funds or enter into such other arrangements when needed, on favorable terms or at all. Our failure to raise capital or enter into such other arrangements when needed would have a negative impact on our financial condition and could force us to delay, limit, reduce or terminate our product development or future commercialization efforts or grant rights to develop and market product candidates that we would otherwise prefer to develop and market ourselves.
Research Collaboration with Bristol Myers Squibb Company
In November 2023, we entered into (i) a Research Collaboration and License Agreement, or the BMS Collaboration Agreement, to expand on the research with MyoKardia for up to five targets utilizing our proprietary AOC platform technology and (ii) a Securities Purchase Agreement with BMS, or the BMS Purchase Agreement, for the purchase by BMS in a private placement of 5,075,304 shares of our common stock at a purchase price of $7.8813 per share, for an aggregate purchase price of approximately $40 million. We refer to the BMS Collaboration Agreement and the BMS Purchase Agreement together as the "BMS Agreements." Under the terms of the BMS Agreements, we received approximately $100 million upfront, which includes a $60 million cash payment under the terms of the BMS Collaboration Agreement, and approximately $40 million for the purchase of our common stock under the terms of the BMS Purchase Agreement. We are also eligible to receive up to approximately $1.35 billion in research and development milestone payments, up to approximately $825 million in commercial milestone payments, and tiered royalties from high single digits to low double-digits on net sales. We are responsible for our own research collaboration costs incurred under the agreement, subject to a cumulative spending limit of $40 million. BMS will fund all future clinical development, regulatory and commercialization activities coming from this collaboration.
Research Collaboration with Eli Lilly and Company
In April 2019, we entered into a Research Collaboration and License Agreement, or the Lilly Agreement, with Eli Lilly and Company, or Lilly, for the discovery, development and commercialization of AOC products in immunology and other select indications on a worldwide basis. Under the Lilly Agreement, we and Lilly will collaborate on preclinical research and discovery activities for such products, with Lilly being responsible for funding the cost of such activities by both parties. Lilly will also lead the clinical development, regulatory approval and commercialization of all such products, at its sole cost. We granted Lilly an exclusive, worldwide, royalty-bearing license, with the right to sublicense, under our technology to research, develop, manufacture, and sell products containing AOCs that are directed to up to six mRNA targets. We retain the right to use our technology to perform our obligations under the agreement and for all purposes not granted to Lilly. Lilly paid us an upfront license fee of $20.0 million in 2019, and we are eligible to receive up to $60.0 million in development milestone payments per target, up to $140.0 million in regulatory milestone payments per target and up to $205.0 million in commercialization milestone payments per target. We are eligible to receive a tiered royalty ranging from the mid-single to low-double digits from Lilly on worldwide annual net sales of licensed products, subject to specified and capped reductions for the market entry of biosimilar products, loss of patent coverage of licensed products and for payments owed to third parties for additional rights necessary to commercialize licensed products in the territory.
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Components of Results of Operations
Revenue
Our revenue to date has been derived from payments received under our license and research collaboration agreements, including revenue from reimbursements of services, as well as a combination of upfront payments and, milestone payments under our current and/or future collaboration agreements. We do not expect to generate any revenue from the sale of products unless and until such time that our product candidates have advanced through clinical development and regulatory approval, if ever. We expect that any revenue we generate, if at all, will fluctuate from quarter-to-quarter as a result of the timing and amount of payments relating to such services and milestones and the extent to which any of our products are approved and successfully commercialized. If we fail to complete preclinical and clinical development of product candidates or obtain regulatory approval for our product candidates, our ability to generate future revenues and our results of operations and financial position would be adversely affected.
Operating Expenses
Research and Development
Research and development expenses consist of costs associated with our research and development activities, including our discovery and research efforts, and the preclinical and clinical development of our product candidates. Our research and development expenses include:
•external costs, including expenses incurred under arrangements with third parties, such as contract research organizations, contract manufacturers, consultants and our scientific advisors; and
•internal costs, including;
◦employee-related expenses, including salaries, benefits, and stock-based compensation;
◦the costs of laboratory supplies and acquiring, developing, and manufacturing preclinical study materials; and
◦facilities, information technology and depreciation, which include direct and allocated expenses for rent and maintenance of facilities and depreciation of leasehold improvements and equipment.
Research and development costs, including costs reimbursed under collaboration agreements, are expensed as incurred, with reimbursements of such amounts being recognized as revenue. We account for nonrefundable advance payments for goods and services that will be used in future research and development activities as expenses when the service has been performed or when the goods have been received.
At any one time, we are working on multiple programs. Our internal resources, employees and infrastructure are not directly tied to any one research or drug discovery program and are typically deployed across multiple programs.
We expect our research and development expenses to increase for the foreseeable future as we continue to conduct ongoing research and development activities, advance preclinical research programs toward clinical development, including IND-enabling studies, and conduct clinical trials. The process of conducting preclinical studies and clinical trials necessary to obtain regulatory approval is costly and time consuming, and can vary significantly for each product candidate and development program. We may never succeed in achieving marketing approval for any of our product candidates.
We anticipate we will make determinations as to which programs to pursue and how much funding to direct to each program on an ongoing basis in response to preclinical and clinical results, regulatory developments, ongoing assessments as to each program’s commercial potential, and our ability to maintain or enter into new collaborations, to the extent we determine the resources or expertise of a collaborator would be beneficial for a given program. We will need to raise substantial additional capital in the future. In addition, we cannot forecast which development programs may be subject to future collaborations, when such arrangements will be secured, if at all, and to what degree such arrangements would affect our development plans and capital requirements.
Our development costs may vary significantly based on factors such as:
•the number and scope of clinical, preclinical and IND-enabling studies;
•per patient trial costs;
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•the number of trials required for approval;
•the number of sites included in the trials;
•the countries in which the trials are conducted;
•the length of time required to enroll eligible patients;
•the number of patients that participate in the trials;
•the number of doses that patients receive;
•the drop-out or discontinuation rates of patients;
•potential additional safety monitoring requested by regulatory agencies;
•the duration of patient participation in the trials and follow-up;
•the cost and timing of manufacturing our product candidates;
•the various phases of development of our product candidates; and
•the efficacy and safety profiles of our product candidates.
General and Administrative
General and administrative expenses consist primarily of employee-related expenses, including salaries, benefits, and stock-based compensation, for employees in our executive, finance, accounting, legal, business development, and other support functions. Other general and administrative expenses include allocated facility, information technology, and depreciation related costs not otherwise included in research and development expenses, and professional fees for auditing, tax, intellectual property, and legal services. Costs related to filing and pursuing patent applications are recognized as general and administrative expenses as incurred since recoverability of such expenditures is uncertain.
We expect our general and administrative expenses will increase for the foreseeable future to support our increased research and development activities, commercial readiness initiatives, and other corporate activities.
Other Income (Expense)
Other income (expense) consists primarily of interest earned on our cash, cash equivalents, and marketable securities.
Results of Operations
Comparison of the Three Months Ended March 31, 2025 and 2024
The following table summarizes our results of operations for the periods presented (in thousands):
Three Months Ended March 31,Change
20252024
Revenue$1,573 $3,543 $(1,970)
Research and development expenses99,490 66,832 32,658 
General and administrative expenses33,600 13,898 19,702 
Other income15,744 8,332 7,412 
Revenue
Revenue decreased by $2.0 million for the three months ended March 31, 2025 as compared to the same period in 2024, primarily due to the recognition of revenues under the Lilly agreement in the prior year period for which there were no revenues recognized in the current year, and a decrease in revenues recognized under the BMS Agreement in the current year.
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Research and Development Expenses
The following tables illustrate the components of our research and development expenses for the periods presented (in thousands):
Three Months Ended March 31,Change
20252024
External costs:
Del-desiran$15,401 $9,095 $6,306 
Del-brax12,288 6,163 6,125 
Del-zota11,583 5,839 5,744 
Other programs3,312 1,438 1,874 
Unallocated19,333 19,707 (374)
Total external costs61,917 42,242 19,675 
Internal costs:
Employee-related expenses31,103 19,336 11,767 
Facilities, lab supplies and other6,470 5,254 1,216 
Total internal costs
37,573 24,590 12,983 
Total research and development expenses$99,490 $66,832 $32,658 
Research and development expenses increased by $32.7 million for the three months ended March 31, 2025 as compared to the same period in 2024, primarily due to increased external costs associated with the progression of clinical trials and preclinical studies, as well as higher internal costs including $11.8 million in higher personnel costs.
General and Administrative Expenses
General and administrative expenses increased by $19.7 million for the three months ended March 31, 2025 as compared to the same period in 2024, primarily due to $9.7 million in higher personnel costs and $6.9 million in higher professional fees to support our expanded operations.
Other Income
Other income increased by $7.4 million for the three months ended March 31, 2025 and 2024, due to higher interest income earned on marketable securities investments and cash and cash equivalent balances.
Liquidity and Capital Resources
Sources of Liquidity
On November 8, 2022, we entered into a sales agreement (2022 Sales Agreement) with Cowen and Company, LLC (the 2022 Sales Agent), under which we could sell shares of our common stock having an aggregate offering price of up to $200.0 million through the 2022 Sales Agent. Sales of the shares of common stock were made at prevailing market prices at the time of sale, or as otherwise agreed with the 2022 Sales Agent. During the three months ended March 31, 2025 the Company did not sell shares of its common stock pursuant to the 2022 Sales Agreement. During the three months ended March 31, 2024, the Company sold 418,408 shares of its common stock pursuant to the 2022 Sales Agreement and received net proceeds of $5.6 million, after deducting offering-related transaction costs and commissions of $0.1 million. We terminated the 2022 Sales Agreement, effective August 9, 2024.
On August 9, 2024, we entered into a sales agreement (the 2024 Sales Agreement) with TD Securities (USA) LLC (the 2024 Sales Agent). Under the 2024 Sales Agreement, we may, from time to time, sell shares of our common stock having an aggregate offering price of up to $400.0 million through the 2024 Sales Agent. Sales of the shares of common stock, if any, will be made at prevailing market prices at the time of sale, or as otherwise agreed with the 2024 Sales Agent. We are not obligated to sell, and the 2024 Sales Agent is not
23
obligated to buy or sell, any shares of common stock under the 2024 Sales Agreement. As of March 31, 2025, we had sold no shares of our common stock under the 2024 Sales Agreement.
Other sources of capital to fund our operations include potential revenue pursuant to the BMS Collaboration Agreement and the Lilly Agreement.
Future Capital Requirements
As of March 31, 2025, we had cash, cash equivalents and marketable securities of $1.4 billion. Based upon our current operating plans, we believe that our existing cash, cash equivalents, and marketable securities will be sufficient to fund our operations for at least 12 months from the date of the filing of this Form 10-Q. However, our forecast of the period of time through which our financial resources will be adequate to support our operations is a forward-looking statement that involves risks and uncertainties, and actual results could vary materially. We have based this estimate on assumptions that may prove to be wrong, and we could deplete our capital resources sooner than we expect. Additionally, the process of conducting preclinical studies and testing product candidates in clinical trials is costly, and the timing of progress and expenses in these studies and trials is uncertain.
Our future capital requirements are difficult to forecast and will depend on many factors, including but not limited to:
•the type, number, scope, progress, expansions, results, costs, and timing of discovery, preclinical studies, and clinical trials of our product candidates that we are pursuing or may choose to pursue in the future;
•the costs and timing of manufacturing for our product candidates and commercial manufacturing if any product candidate is approved;
•the costs, timing, and outcome of regulatory review of our product candidates;
•the terms and timing of establishing and maintaining collaborations, licenses, and other similar arrangements;
•the costs of obtaining, maintaining, and enforcing our patents and other intellectual property rights;
•the costs associated with hiring additional personnel and consultants as we continue to grow our company;
•the timing and amount of the milestone or other payments made to us under current or future research and collaboration agreements;
•the costs and timing of establishing or securing sales and marketing capabilities if any product candidate is approved;
•our ability to achieve sufficient market acceptance, coverage and adequate reimbursement from third-party payors and adequate market share and revenue for any approved products; and
•costs associated with any products or technologies that we may in-license or acquire.
While we may generate revenue under our current and/or future collaboration agreements, we do not expect to generate any revenues from product sales until we successfully complete development and obtain regulatory approval for one or more of our product candidates, which we do not expect will occur in the immediate term, and may never occur. If we obtain regulatory approval for any of our product candidates, we expect to incur significant commercialization expenses related to product sales, marketing, manufacturing, and distribution. Accordingly, until such time as we can generate significant revenue from sales of our product candidates, if ever, we expect to finance our cash needs through equity offerings, debt financings, or other capital sources, including current and potential future collaborations, licenses and other similar arrangements. However, we may be unable to raise additional funds or enter into such other arrangements when needed, on favorable terms or at all. In addition, we may seek additional capital due to favorable market conditions or strategic considerations even if we believe we have sufficient funds for our current or future operating plans. Our failure to raise capital or enter into such other arrangements when needed would have a negative impact on our financial condition and could force us to delay, limit, reduce, or terminate our product development or future commercialization efforts or grant rights to develop and market product candidates that we would otherwise prefer to develop and market ourselves.
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Cash Flows
The following table summarizes our cash flows for the periods presented (in thousands):
Three Months Ended March 31,Change
20252024
Net cash provided by (used in):
Operating activities$(124,829)$(70,380)$(54,449)
Investing activities157,188 (32,747)189,935 
Financing activities1,937 389,445 (387,508)
Effect of exchange rate on cash, cash equivalents and restricted cash39 — 39 
Net increase in cash, cash equivalents and restricted cash
$34,335 $286,318 $(251,983)
Operating Activities
Net cash used in operating activities of $124.8 million and $70.4 million for the three months ended March 31, 2025 and 2024, respectively, consisted primarily of cash used to fund our operations related to the development of del-desiran, del-brax, del-zota, and other potential programs. The increase in cash used in our operations is primarily due to increased research and development costs as well as general and administrative expenses as described under “Results of Operations” above.
Investing Activities
Net cash provided by investing activities of $157.2 million for the three months ended March 31, 2025 consisted primarily of $330.2 million of proceeds from maturities of marketable securities, offset by $169.3 million for purchases of marketable securities due to investing the proceeds from the issuance of common stock and pre-funded warrants, as well as the reinvestment of proceeds from matured marketable securities, and $3.8 million in purchases of property and equipment. Net cash used in investing activities of $32.7 million for the three months ended March 31, 2024 consisted of $141.6 million for purchases of marketable securities and $0.9 million in purchases of property and equipment, offset by $109.7 million of proceeds from maturities of marketable securities.
Financing Activities
Net cash provided by financing activities of $1.9 million for the three months ended March 31, 2025 consisted of $1.9 million in proceeds from the issuance of common stock under employee incentive equity plans. Net cash provided by financing activities of $389.4 million for the three months ended March 31, 2024 consisted primarily of $244.2 million in net proceeds from sales of our common stock and $141.5 million in net proceeds from the sale of pre-funded warrants in a private placement.
Critical Accounting Estimates
Our management’s discussion and analysis of our financial condition and results of operations is based on our condensed consolidated financial statements, which have been prepared in accordance with U.S. generally accepted accounting principles, or GAAP. The preparation of these condensed consolidated financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenue and expenses. On an ongoing basis, we evaluate these estimates and judgments. We base our estimates on historical experience and on various assumptions that we believe to be reasonable under the circumstances. These estimates and assumptions form the basis for making judgments about the carrying values of assets and liabilities and the recording of revenue and expenses that are not readily apparent from other sources. Actual results may differ materially from these estimates. As of March 31, 2025, there have been no material changes to our critical accounting estimates from those disclosed in “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Critical Accounting Policies and Estimates,” included in our annual report on Form 10-K for the year ended December 31, 2024 filed with the SEC on February 27, 2025.
25
Contractual Obligations and Commitments
In April 2024, we entered into a sublease agreement to rent office and laboratory space for our future corporate headquarters. Total aggregate future lease commitments under the sublease agreement are approximately $72.6 million. In March 2025, we exercised the option to rent an additional 80,000 square feet in an adjacent available building under the amended sublease agreement with Turning Point Therapeutics, Inc. Total aggregate future lease commitments attributable to the option under the amended sublease agreement are approximately $53.7 million. Refer to Note 7, "Commitments and Contingencies" to our condensed consolidated financial statements included elsewhere in this quarterly report on Form 10-Q for further details. Except for the sublease agreement, as of March 31, 2025, there have been no material changes outside the ordinary course of our business to the contractual obligations we reported in “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Contractual Obligations and Commitments,” included in our annual report on Form 10-K for the year ended December 31, 2024 filed with the SEC on February 27, 2025.
26
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
As of March 31, 2025, there have been no material changes in our market risk from that described in “Quantitative and Qualitative Disclosures About Market Risk,” included in our annual report on Form 10-K for the year ended December 31, 2024 filed with the SEC on February 27, 2025.
ITEM 4. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our periodic and current reports that we file with the SEC is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, management recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable and not absolute assurance of achieving the desired control objectives. In reaching a reasonable level of assurance, management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures. In addition, the design of any system of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions; over time, controls may become inadequate because of changes in conditions, or the degree of compliance with policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.
Our management, with the participation of our principal executive officer and principal financial officer, has evaluated, as of the end of the period covered by this quarterly report on Form 10-Q, the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act). Based on such evaluation, our principal executive officer and principal financial officer have concluded that, as of March 31, 2025, our disclosure controls and procedures were effective at the reasonable assurance level.
Changes in Internal Control Over Financial Reporting
There have been no changes in our internal control over financial reporting during the quarter ended March 31, 2025 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
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PART II — OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
We are not currently subject to any material legal proceedings. From time to time, we may be involved in legal proceedings or subject to claims incident to the ordinary course of business. Regardless of the outcome, such proceedings or claims can have an adverse impact on us because of defense and settlement costs, diversion of resources and other factors, and there can be no assurances that favorable outcomes will be obtained.
ITEM 1A. RISK FACTORS
We do not believe that there have been any material changes to the risk factors set forth in Part I, Item 1A of our annual report on Form 10-K for the year ended December 31, 2024 filed with the SEC on February 27, 2025. The risk factors described in such reports are not the only risks we face. Factors that are not currently known to us, factors that we currently consider immaterial or factors that are not specific to us, such as general economic conditions, may also materially adversely affect our business or financial condition.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
Unregistered Sales of Equity Securities
None.
Issuer Repurchases of Equity Securities
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
Not applicable.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
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ITEM 5. OTHER INFORMATION
Rule 10b5-1 Trading Arrangements
From time to time, our officers (as defined in Rule 16a–1(f)) and directors may enter into Rule 10b5-1 or non-Rule 10b5-1 trading arrangements (as each such term is defined in Item 408 of Regulation S-K). During the three months ended March 31, 2025, our officers and directors took the following actions with respect to such trading arrangements:
ActionDateTrading ArrangementTotal Shares to be SoldExpiration Date
Rule 10b5-1*Non-Rule 10b5-1**
Teresa McCarthy (Chief Human Resources Officer)
Terminate1/7/2025X
Charles Calderaro III (Chief Technical Officer)
Adopt1/6/2025X(1)(2)
Steven Hughes (Chief Medical Officer)
Adopt1/9/2025X(1)(2)
Eric Mosbrooker (Chief Commercial Officer)
Adopt1/9/2025X(1)(2)
Kathleen Gallagher (Chief Program Officer)
Adopt1/10/2025X(1)(2)
____________________
* Intended to satisfy the affirmative defense of Rule 10b5-1(c)
** Not intended to satisfy the affirmative defense of Rule 10b5-1(c)
(1)Under our 2020 Incentive Award Plan, recipients of RSUs and PSUs are required to sell a number of shares that satisfies applicable tax withholding obligations upon a taxable event such as a vesting date. The participant listed in this table has executed an instruction letter to our broker for the sale of such minimum number of shares, at the then-applicable market price, sufficient to cover applicable tax withholding obligations, at the statutory minimum applicable statutory rate, for such person. This instruction letter qualifies as a Rule 10b5-1 trading arrangement but may exist concurrent with another 10b5-1 trading arrangement for the same individual, as permitted by Rule 10b5-1(c)(1)(ii)(D)(3) under the Exchange Act.
(2)This instruction letter shall remain in effect for so long as the individual owns RSUs or PSUs.

29
Table of Contents
Item 6. Exhibits
Exhibit
Number		Exhibit DescriptionIncorporated by ReferenceFiled
Herewith
FormDateNumber
3.18-K6/16/20203.1
3.28-K12/13/20233.1
4.1S-15/22/20204.1
4.2
8-K
2/29/20244.1
10.1#
X
10.2
X
31.1X
31.2X
32.1*X
32.2*X
101.INSInline XBRL Instance Document – the instance document does not appear in the Interactive Data File because XBRL tags are embedded within the Inline XBRL document.X
101.SCHInline XBRL Taxonomy Extension Schema DocumentX
101.CALInline XBRL Taxonomy Extension Calculation Linkbase DocumentX
101.DEFInline XBRL Taxonomy Extension Definition Linkbase DocumentX
101.LABInline XBRL Taxonomy Extension Label Linkbase DocumentX
101.PREInline XBRL Taxonomy Extension Presentation Linkbase DocumentX
104Cover Page Interactive Data File (embedded within the Inline XBRL document)X
#Indicates management contract or compensatory plan.
*This certification is deemed not filed for purpose of section 18 of the Exchange Act or otherwise subject to the liability of that section, nor shall it be deemed incorporated by reference into any filing under the Securities Act or the Exchange Act.
30
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Avidity Biosciences, Inc.
Date: May 8, 2025
By:/s/ Sarah Boyce
Sarah Boyce
President, Chief Executive Officer and Director
(Principal Executive Officer)

Date: May 8, 2025
By:/s/ Michael F. MacLean
Michael F. MacLean
Chief Financial Officer
(Principal Financial and Accounting Officer)
31

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