arav20230331

arav20230331_10q.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

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

For the quarterly period ended March 31, 2023

☐	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: 001-36361

Aravive, Inc.

(Exact name of registrant as specified in its charter)

Delaware

26-4106690

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer

Identification Number)

River Oaks Tower

3730 Kirby Drive, Suite 1200

Houston, Texas 77098

(Address of principal executive offices)

(936) 355-1910

(Registrant’s telephone number, including area code)

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

Title of each class		Trading Symbol(s)		Name of each exchange on which registered
Common stock, par value $0.0001 per share		ARAV		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, 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 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 May 5, 2023, there were 59,844,850 outstanding shares of common stock, par value $0.0001 per share, of Aravive, Inc.

Item		Page
1.	Financial Statements (unaudited):
	a. Condensed Consolidated Balance Sheets at March 31, 2023 and December 31, 2022	3
	b. Condensed Consolidated Statements of Operations for the three months ended March 31, 2023 and 2022	4
	c. Condensed Consolidated Statements of Stockholders’ Equity for the three ended March 31, 2023 and 2022	5
	d. Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2023 and 2022	6
	e. Notes to Condensed Consolidated Financial Statements	7
2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	22
3.	Quantitative and Qualitative Disclosures About Market Risk	28
4.	Controls and Procedures	29

PART II. OTHER INFORMATION
1.	Legal Proceedings	30
1A.	Risk Factors	30
2	Unregistered Sales of Equity Securities and Use of Proceeds	28
6.	Exhibits	33
	Signatures	34

	*March 31,*			*December 31,*
	*2023*			*2022*
		(unaudited)
Assets
Current Assets
Cash and cash equivalents	$	35,924		$	53,689
Prepaid expenses and other current assets		3,139			4,281
Total current assets		39,063			57,970
Restricted cash		2,458			2,445
Property and equipment, net		240			270
Operating lease right-of-use assets		1,277			1,462
Other assets		6			6
Total assets	$	43,044		$	62,153
Liabilities and stockholders' (deficit) equity
Current liabilities
Accounts payable	$	9,794		$	8,765
Accrued liabilities		4,646			6,738
Operating lease obligation, current portion		2,170			2,195
Current portion of deferred revenue		3,582			4,414
Total current liabilities		20,192			22,112
Deferred revenue, net of current portion		28			621
Operating lease obligation, net of current portion		1,347			1,882
Warrant liability		60,088			26,881
Total liabilities		81,655			51,496
Commitments and contingencies (Note 6)
Stockholders' (deficit) equity
Common stock, $0.0001 par value, 250,000,000 shares authorized at March 31, 2023 and 100,000,000 shares authorized at December 31, 2022; 59,844,850 shares issued and outstanding at March 31, 2023 and December 31, 2022		6			6
Additional paid-in capital		627,466			626,778
Accumulated deficit		(666,083	)		(616,127	)
Total stockholders' (deficit) equity		(38,611	)		10,657
Total liabilities and stockholders’ (deficit) equity	$	43,044		$	62,153

	*Three Months Ended*
	*March 31,*
	*2023*			*2022*
Revenue
Collaboration revenue	$	1,491		$	1,092
Total revenue		1,491			1,092
Operating expenses
Research and development		15,915			13,002
General and administrative		3,489			3,088
Total operating expenses		19,404			16,090
Loss from operations		(17,913	)		(14,998	)
Other income (expense), net:
Interest income		467			10
Change in fair value of warrant liability		(33,207	)		1,228
Other income, net		697			703
Total other income (expense), net		(32,043	)		1,941
Net loss	$	(49,956	)	$	(13,057	)
Net loss per share - basic and diluted	$	(0.66	)	$	(0.62	)
Weighted-average common shares used to compute basic and diluted net loss per share		75,715			21,130

	*Three Months Ended*
	*March 31, 2023*
					*Additional*					*Total*
	*Common Stock*				*Paid-In*		*Accumulated*			*Stockholders'*
	*Shares*		*Amount*		*Capital*		*Deficit*			*(Deficit) Equity*
Balances at January 1, 2023		59,844,850	$	6	$	626,778	$	(616,127	)	$	10,657
Stock-based compensation		—		—		688		—			688
Net loss		—		—		—		(49,956	)		(49,956	)
Balances at March 31, 2023		59,844,850	$	6	$	627,466	$	(666,083	)	$	(38,611	)

	*Three Months Ended*
	*March 31, 2022*
					*Additional*					*Total*
	*Common Stock*				*Paid-In*		*Accumulated*			*Stockholders'*
	*Shares*		*Amount*		*Capital*		*Deficit*			*Equity*
Balances at January 1, 2022		21,039,594	$	2	$	582,025	$	(539,805	)	$	42,222
Issuance of common stock and common stock warrants in registered direct offering, net of issuance costs of $706		3,185,216		—		9,291		—			9,291
Issuance of common stock in at the market offering, net of issuance costs of $3		54,763		—		123		—			123
Stock-based compensation		—		—		620		—			620
Net loss		—		—		—		(13,057	)		(13,057	)
Balances at March 31, 2022		24,279,573	$	2	$	592,059	$	(552,862	)	$	39,199

	*Fair Value Measurements at*
	*March 31, 2023*
	(unaudited)
	*Total*		*Level 1*		*Level 2*		*Level 3*
Assets
Money market funds	$	32,759	$	32,759	$	—	$	—
Liabilities
Warrant liability	$	60,088	$	—	$	—	$	60,088

	*Fair Value Measurements at*
	*December 31, 2022*
	*Total*		*Level 1*		*Level 2*		*Level 3*
Assets
Money market funds	$	52,905	$	52,905	$	—	$	—
Liabilities
Warrant liability	$	26,881	$	—	$	—	$	26,881

	*October 2022 Warrants*
	*March 31, 2023*			*December 31, 2022*
Expected term (in years)		1.7			1.9
Expected volatility		70.9	%		49.9	%
Risk-free interest rate		4.30	%		4.48	%
Expected dividend yield		0.00	%		0.00	%
Fair value of common share	$	2.00		$	1.25
Exercise price	$	0.7949		$	0.7949

	*October 2022 Warrants*
Balance at December 31, 2022	$	26,881
Change in fair value		33,207
Balance at March 31, 2023	$	60,088

Year Ending December 31,
2023 (9 months remaining)		2,285
2024		2,619
2025		116
2026		30
Total future minimum lease payments		5,050
Less: discount	$	(1,533	)
Total lease liabilities	$	3,517

Number of Shares		Exercise Price	Expiration Date
3,990,025	$	1.88	March 30, 2027
860,216	$	2.20	March 30, 2027

Security	Number of Shares		Exercise Price	Expiration Date
Pre-Funded	15,870,199	$	0.0001	No expiration
Series A	22,589,410	$	0.7949	April 16, 2024 (1)
Series B	22,589,401	$	0.7949	July 16, 2025

						*Weighted*
						*Average*
				*Weighted*		*Remaining*		*Aggregate*
				*Average*		*Contractual*		*Intrinsic*
	*Number of*			*Exercise*		*Life*		*Value*
	*Shares*			*Price*		*(in years)*		*(in thousands)*
Balances, January 1, 2023		4,570,432		$	2.50
Options granted		2,707,654			1.67
Options expired		(43,838	)		6.18
Balances, March 31, 2023		7,234,248		$	2.17		8.1	$	3,677
Outstanding and expected to vest as of March 31, 2023		6,286,788		$	2.22		7.9	$	3,328
Exercisable as of March 31, 2023		2,619,503		$	2.74		5.6	$	1,814

		March 31,
		2023		2022
Payroll and related	$	1,030	$	801
Clinical		3,383		7,769
Sublease prepayment		233		228
Other		—		42
Total	$	4,646	$	8,840

Year Ending December 31,
2023 (9 months remaining)		1,786
2024		2,029
Total	$	3,815

	Three Months Ended
	March 31,						Increase/
	2023			2022			(Decrease)
Revenue:
Collaboration revenue	$	1,491		$	1,092		$	399	37	%
Operating expenses:
Research and development		15,915			13,002			2,913	22	%
General and administrative		3,489			3,088			401	13	%
Total operating expenses		19,404			16,090			3,314	21	%
Loss from operations		(17,913	)		(14,998	)		2,915	19	%
Total other income (expense), net		(32,043	)		1,941			33,984	(A)
Net loss	$	(49,956	)	$	(13,057	)	$	36,899	283	%

	•	establish a sales, marketing and distribution infrastructure and scale-up manufacturing capabilities to commercialize batiraxcept or other future product candidates if they obtain regulatory approval, including process improvements in order to manufacture batiraxcept at commercial scale; and
	•	enhance operational, financial and information management systems and hire more personnel, including personnel to support development of batiraxcept and any future product candidates and, if a product candidate is approved, our commercialization efforts.

		Incorporation by Reference
Exhibit Number	Exhibit Description	Form	SEC File No.	Exhibit	Filing Date
3.1	Amended and Restated Bylaws	S-1/A	333-193997	3.4	03/06/2014
3.2	Amended and Restated Certificate of Incorporation	8-K	001-36361	3.1	03/26/2014
3.3	Certificate of Amendment to the Amended and Restated Certificate of Incorporation	8-K	001-36361	3.1	06/01/2017
3.4	Certificate of Amendment of Amended to the Amended and Restated Certificate of Incorporation, as amended	8-K	001-36361	3.1	09/12/2017
3.5	Certificate of Amendment to the Amended and Restated Certificate of Incorporation, as amended	8-K	001-36361	3.1	10/16/2018
3.6	Certificate of Amendment to the Amended and Restated Certificate of Incorporation, as amended	8-K	001-36361	3.2	10/16/2018
3.7	Certificate of Correction to Certificate of Amendment to the Amended and Restated Certificate of Incorporation, as amended	10-K	001-36361	3.6	03/15/2019
3.8	Certificate of Amendment of amended and restated certificate of incorporation of Aravive, Inc.	8-K	001-36361	3.1	01/18/2023
10.1	Amendment No. 3 to Offer Letter dated as of February 1, 2023 by and between Aravive, Inc. and Gail McIntyre, Ph.D.	8-K	001-36361	10.1	02/06/2023
10.2	Amendment No. 1 to Offer Letter dated as of February 1, 2023 by and between Aravive, Inc. and Rudy Howard	8-K

SEC Form 10-Q filed by Aravive Inc.