XML 17 R8.htm IDEA: XBRL DOCUMENT v3.22.2
Nature of the Business
 6 Months Ended
Jun. 30, 2022
Nature of the Business [Abstract]  
Nature of the Business
1. Nature of the Business
Vaxxinity,
 
Inc.,
 
a
 
Delaware
 
corporation
 
(“Vaxxinity
 
,”
 
and
 
together
 
with
 
its
 
subsidiaries,
 
the
 
“Company”),
 
was
 
formed
 
through
 
the
combination of
 
two separate businesses
 
that originated
 
from United Biomedical,
 
Inc. (“UBI”)
 
in two separate
 
transactions: a
 
spin-out
from UBI in
 
2014 of
 
operations focused on
 
developing chronic disease
 
product candidates that
 
resulted in United
 
Neuroscience (“UNS”),
and a second spin-out
 
from UBI in 2020 of
 
operations focused on the
 
development of a COVID-19
 
vaccine that resulted in
 
C19 Corp.
(“COVAXX”).
 
On February 2, 2021,
 
Vaxxinity
 
was incorporated for the
 
purpose of reorganizing
 
and combining UNS and
 
COVAXX
and on March 2, 2021, did so by
 
acquiring all of the outstanding equity interests
 
of UNS and COVAXX
 
pursuant to a contribution and
exchange
 
agreement
 
(the
 
“Contribution
 
and
 
Exchange
 
Agreement”)
 
whereby
 
the
 
existing
 
equity
 
holders
 
of
 
UNS
 
and
 
COVAXX
contributed their equity interests in each of UNS and COVAXX
 
in exchange for equity in Vaxxinity
 
(the “Reorganization”).
The Company is a
 
biotechnology company currently focused on
 
developing product candidates for human
 
use in the fields
 
of neurology,
pain, cardiovascular diseases and coronaviruses utilizing its “Vaxxine
 
Platform”—a peptide vaccine technology first developed by UBI
and subsequently refined
 
over the last
 
two decades. The
 
Company is engaged
 
in the development
 
and commercialization
 
of rationally
designed prophylactic
 
and therapeutic
 
vaccines to
 
combat chronic
 
disorders and
 
infectious diseases
 
with large
 
global unmet
 
medical
need. UBI is a significant shareholder of the Company and, therefore, considered
 
a related party.
The Company
 
is subject
 
to risks and
 
uncertainties common
 
to early-stage
 
companies in
 
the biotechnology
 
industry including,
 
but not
limited
 
to,
 
uncertainty
 
of
 
product
 
development
 
and
 
commercialization,
 
lack
 
of
 
marketing
 
and
 
sales
 
history,
 
development
 
by
 
its
competitors of new
 
technological innovations, dependence on
 
key personnel, market
 
acceptance of products, product
 
liability, protection
of proprietary technology,
 
ability to raise additional
 
financing, and compliance
 
with government regulations. If
 
the Company does not
successfully commercialize any of its
 
product candidates, it will
 
be unable to generate
 
recurring product revenue or
 
achieve profitability.
The
 
Company’s
 
product
 
candidates
 
are
 
in
 
development
 
and
 
will
 
require
 
significant
 
additional
 
research
 
and
 
development
 
efforts,
including extensive pre-clinical and clinical testing and
 
regulatory approval prior to commercialization. These efforts require significant
amounts of
 
additional capital, adequate
 
personnel and infrastructure
 
and extensive compliance
 
-reporting capabilities.
 
There can be
 
no
assurance that
 
the Company’s
 
research and
 
development will
 
be successfully
 
completed, that
 
adequate protection
 
for the
 
Company’s
intellectual property
 
will be
 
obtained, that
 
any products
 
developed will
 
obtain necessary
 
government regulatory
 
approval or
 
that any
approved products will be commercially viable.
 
Even if the Company’s product development efforts are
 
successful, it is uncertain when,
if ever, the Company will generate significant revenue from product sales. The Company operates in an environment of rapid change in
technology and is dependent upon the services of its employees and consultants.
Contribution and Exchange Agreement
On March
 
2, 2021,
 
in accordance
 
with the
 
Contribution and
 
Exchange Agreement,
 
(i) all
 
outstanding shares
 
of UNS
 
and COVAXX
preferred stock and
 
common stock were
 
contributed to Vaxxinity and exchanged for
 
like shares
 
of stock in
 
Vaxxinity,
 
(ii) the outstanding
options to
 
purchase shares
 
of UNS and
 
COVAXX
 
common stock
 
were terminated
 
and substituted
 
with options
 
to purchase
 
shares of
common stock in Vaxxinity,
 
(iii) the outstanding warrant to purchase shares of COVAXX
 
common stock was cancelled and exchanged
for a warrant to acquire common stock in Vaxxinity
 
and (iv) each outstanding Reorganization Convertible Note (as defined below) was
contributed to Vaxxinity
 
and the holders of such notes received Series A preferred stock in Vaxxinity.
 
In particular:
•
Each UNS common share and convertible preferred share was exchanged
 
for
0.2191
 
shares of Vaxxinity
 
common stock or
Series A preferred stock, as applicable;
•
Each share of COVAXX
 
common and convertible preferred stock was exchanged for
3.4233
 
shares of Vaxxinity
 
common
stock or Series A preferred stock, as applicable (and prior to the closing of the Reorganization,
 
all the holders of outstanding
COVAXX
 
SAFEs agreed to convert such SAFEs into shares of Series A-3 preferred
 
stock of COVAXX,
 
which shares were
then exchanged for shares of Vaxxinity’s
 
Series A preferred stock);
•
The Reorganization Convertible Notes were exchanged
 
for an aggregate of
4,047,344
 
shares of Vaxxinity’s
 
Series A
preferred stock; and
•
Each outstanding option of both UNS and COVAXX
 
to purchase common shares of UNS or COVAXX
 
was terminated and
substituted with an option to purchase shares of Class A common stock of
 
Vaxxinity.
 
Each outstanding UNS option was
exchanged based on a conversion ratio of
0.2191
. Each outstanding COVAXX
 
option was exchanged based on a conversion
ratio of
3.4233
.
All parties to
 
the Contribution
 
and Exchange
 
Agreement intended
 
that the contribution
 
of outstanding equity
 
interests to Vaxxinity
 
in
exchange for Vaxxinity’s
 
common stock and preferred stock be treated as
 
an integrated transaction for U.S. federal
 
income tax purposes
that is governed by Section 351(a) of the Internal Revenue Code of 1986, as amended.
The Reorganization
 
was determined
 
to be a
 
common control
 
transaction, so
 
the carrying
 
values of all
 
contributed assets
 
and assumed
liabilities
 
remained
 
unchanged
 
and
 
the
 
financial
 
information
 
for
 
all
 
periods
 
in
 
the
 
financial
 
statements
 
presented
 
prior
 
to
 
the
Reorganization are presented on a consolidated basis.
Reverse Stock Split
 
On October 29,
 
2021, the
 
Company effectuated
 
a reverse stock
 
split of 1-for-
1.556
 
(the “Stock Split”)
 
of the Company’s
 
Class A and
Class B common
 
stock pursuant to
 
an amendment to
 
the Company’s
 
Amended and Restated
 
Certificate of Incorporation
 
approved by
the Company’s
 
board of directors
 
and stockholders.
 
As a result
 
of the
 
Stock Split, the
 
Company also
 
adjusted the
 
share and per
 
share
amounts
 
associated
 
with
 
its options
 
and
 
warrants
 
to
 
purchase shares
 
of
 
its common
 
stock.
 
These
 
unaudited
 
condensed
 
consolidated
financial
 
statements
 
including
 
the
 
notes
 
have
 
been
 
retroactively
 
adjusted
 
to
 
reflect
 
the
 
Stock
 
Split
 
for
 
all
 
periods
 
presented.
 
Any
fractional shares that would have resulted from the Stock Split have been rounded down
 
to the nearest whole share.
 
Initial Public Offering
On November 15, 2021, the Company closed its IPO of
6,000,000
 
shares of Class A common stock at a public offering price of $
13.00
per share. On
 
November 18, 2021
 
the Company held
 
a subsequent closing for
 
the issuance of an
 
additional
537,711
 
shares of Class A
common stock pursuant
 
to a
 
30-day option granted
 
to the
 
underwriters to purchase
 
up to an
 
additional
900,000
 
shares of Class
 
A common
stock at
 
the IPO
 
price, less
 
underwriting
 
discounts and
 
commissions. The
 
aggregate net
 
proceeds to
 
the Company
 
from the
 
offering,
after deducting underwriting discounts
 
and commissions and
 
other offering expenses payable
 
by the Company, was approximately
 
$
71.1
million. Upon the closing
 
of the IPO, all previously
 
outstanding shares of the Company’s
 
redeemable convertible preferred
 
stock were
automatically converted at the same ratio used for the Stock Split (1-for-
1.556
) into shares of its Class A common stock.
Liquidity
As of
 
June 30,
 
2022,
 
the Company
 
had
 
$
109.1
 
million
 
of cash
 
and
 
cash equivalents.
 
As of
 
June 30,
 
2022,
 
the Company
 
also had
 
a
Restricted Cash balance
 
of $
4.7
 
million of which
 
$
4.6
 
million is restricted
 
for the reimbursement
 
of certain research
 
and development
expenses related to
 
our UB-612
 
COVID-19 vaccine program.
 
To
 
date, the Company
 
has primarily financed
 
its operations through
 
the
sale of convertible
 
preferred stock and
 
common stock, borrowings
 
under promissory notes
 
(including Convertible
 
Notes), a portion of
which
 
has
 
been
 
raised
 
from
 
related
 
party
 
entities,
 
and
 
grants
 
from
 
foundations
 
such
 
as
 
the
 
Coalition
 
for
 
Epidemic
 
Preparedness
Innovations (CEPI)
 
and the
 
Michael J.
 
Fox Foundation
 
(MJFF). The
 
Company has
 
experienced significant
 
negative cash
 
flows from
operations since inception, and incurred
 
a net loss of $
35.5
 
million for the six months
 
ended June 30, 2022. Net cash
 
used in operating
activities for the six months ended June 30, 2022 was $
30.1
 
million. In addition, as of June 30, 2022, the Company has an accumulated
deficit of
 
$
265.0
 
million. The
 
Company expects
 
to incur
 
substantial operating
 
losses and
 
negative cash
 
flows from
 
operations for
 
the
foreseeable future. As of the date these financial statements were available to be issued, the Company expects its existing cash and cash
equivalents to be sufficient to fund its operating expenses and
 
capital expenditure requirements for at least the next 12 months.
In order
 
to continue
 
to fund
 
future research
 
and development
 
activities, the
 
Company
 
will need
 
to seek
 
additional capital.
 
This may
occur through
 
strategic alliances,
 
licensing arrangements,
 
grants and/or
 
future public
 
or private
 
debt or
 
equity financings.
 
Additional
funding may not
 
be available on
 
terms the Company
 
finds acceptable or
 
at all. If the
 
Company is unable
 
to obtain sufficient
 
capital to
continue to advance
 
its programs, the Company
 
would be forced
 
to delay,
 
limit, reduce or terminate
 
its product development
 
or future
commercialization efforts
 
or grant rights
 
to third parties
 
to develop and
 
market product candidates
 
that the Company
 
would otherwise
prefer to develop and market itself.
The
 
accompanying
 
unaudited
 
condensed
 
consolidated
 
financial
 
statements
 
have
 
been
 
prepared
 
on
 
a
 
going
 
concern
 
basis,
 
which
contemplates
 
the
 
realization
 
of
 
assets
 
and
 
satisfaction
 
of
 
liabilities
 
in
 
the
 
ordinary
 
course
 
of
 
business.
 
The
 
unaudited
 
condensed
consolidated
 
financial
 
statements
 
do
 
not
 
include
 
any
 
adjustments
 
relating
 
to
 
the
 
recoverability
 
and
 
classification
 
of
 
recorded
 
asset
amounts or the amounts and classification of liabilities that might result from the outcome
 
of the uncertainties described above.