10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q

(Mark One)

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

For the quarterly period ended June 30, 2024

OR

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

For the transition period from __________________ to __________________

Commission File Number: 001-41551

Acrivon Therapeutics, Inc.

(Exact Name of Registrant as Specified in its Charter)

Delaware	82-5125532
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
480 Arsenal Way, Suite 100 Watertown, Massachusetts	02472
(Address of principal executive offices)	(Zip Code)

Registrant's telephone number, including area code: (617) 207-8979

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 $0.001 per share		ACRV		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 ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer		☐		Accelerated filer		☐
Non-accelerated filer		☒		Smaller reporting company		☒
				Emerging growth company		☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of August 8, 2024, the registrant had 30,972,163shares of common stock, $0.001 par value per share, outstanding.

Table of Contents

		Page
	Special Note Regarding Forward-Looking Statements	1
PART I.	FINANCIAL INFORMATION	3
Item 1.	Financial Statements (Unaudited)	3
	Condensed Consolidated Balance Sheets	3
	Condensed Consolidated Statements of Operations and Comprehensive Loss	4
	Condensed Consolidated Statements of Stockholders' Equity	5
	Condensed Consolidated Statements of Cash Flows	7
	Notes to the Condensed Consolidated Financial Statements	8
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	18
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	29
Item 4.	Controls and Procedures	29
PART II.	OTHER INFORMATION	30
Item 1.	Legal Proceedings	30
Item 1A.	Risk Factors	31
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	33
Item 3.	Defaults Upon Senior Securities	33
Item 4.	Mine Safety Disclosures	34
Item 5.	Other Information	34
Item 6.	Exhibits	35
Signatures	36

Special Note Regarding Forward-Looking Statements

This Quarterly Report on Form 10-Q,or the Quarterly Report, contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 about us and our industry that involve substantial risks and uncertainties. All statements other than statements of historical facts contained in this Quarterly Report, including statements regarding our future results of operations or financial condition, business strategy and plans and objectives of management for future operations, are forward-looking statements. In some cases, you can identify forward-looking statements because they contain words such as "anticipate," "believe," "contemplate," "continue," "could," "estimate," "expect," "intend," "may," "plan," "potential," "predict," "project," "should," "target," "will," or "would" or the negative of these words or other similar terms or expressions. These forward-looking statements include, but are not limited to, statements about the following:

You should not rely on forward-looking statements as predictions of future events. We have based the forward-looking statements contained in this Quarterly Report primarily on our current expectations and projections about future events and trends that we believe may affect our business, financial condition, and results of operations. The outcome of the events described in these forward-looking statements is subject to risks and uncertainties, including the factors described in "Part I, Item 1A. Risk Factors" of our Annual Report on Form 10-K filed with the Securities and Exchange Commission, or the SEC, on March 28, 2024, "Part II, Item 1A. Risk Factors" of this Quarterly Report and elsewhere in this Quarterly Report. Moreover, we operate in a very competitive and rapidly changing environment. New risks and uncertainties emerge from time to time, and it is not possible for us to predict all risks and uncertainties that could have an impact on the forward-looking statements contained in this Quarterly Report. The results, events, and circumstances

reflected in the forward-looking statements may not be achieved or occur, and actual results, events, or circumstances could differ materially from those described in the forward-looking statements.

In addition, statements that "we believe" and similar statements reflect our beliefs and opinions on the relevant subject. These statements are based on information available to us as of the date of this Quarterly Report. While we believe that such information provides a reasonable basis for these statements, that information may be limited or incomplete. Our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all relevant information. These statements are inherently uncertain, and investors are cautioned not to unduly rely on these statements.

The forward-looking statements contained in this Quarterly Report relate only to events as of the date on which the statements are made. We undertake no obligation to update any forward-looking statements made in this Quarterly Report or to reflect new information or the occurrence of unanticipated events, except as required by law. We may not actually achieve the plans, intentions or expectations disclosed in or expressed by, and you should not place undue reliance on, our forward-looking statements. Our forward-looking statements do not reflect the potential impact of any future acquisitions, mergers, dispositions, joint ventures, or investments.

Unless the context otherwise requires, all references in this Quarterly Report to "we," "us," "our," "our company," and "Acrivon" refer to Acrivon Therapeutics, Inc. and its subsidiaries.

PART I-FINANCIAL INFORMATION

Item 1. Financial Statements.

ACRIVON THERAPEUTICS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(UNAUDITED)

(in thousands, except share and per share data)

		June 30, 2024			December 31, 2023
Assets
Current assets:
Cash and cash equivalents		$	46,006			$	36,015
Short-term investments			134,531				91,443
Prepaid expenses and other current assets			1,821				2,234
Total current assets			182,358				129,692
Property and equipment, net			3,467				3,479
Operating lease right-of-use assets			3,976				4,429
Long-term investments			39,895				-
Restricted cash			421				414
Deferred offering costs			468				251
Total assets		$	230,585			$	138,265
Liabilities and stockholders' equity
Current liabilities:
Accounts payable		$	1,261			$	5,048
Accrued expenses and other current liabilities			9,045				7,378
Operating lease liabilities, current			978				877
Total current liabilities			11,284				13,303
Operating lease liabilities, long-term			3,243				3,767
Total liabilities			14,527				17,070
Commitments and contingencies (Note 11)
Stockholders' equity:
Preferred stock, $0.001par value; 10,000,000shares authorized as of June 30, 2024 and December 31, 2023; noshares issued and outstanding as of June 30, 2024 and December 31, 2023.			-				-
Common stock, $0.001par value; 500,000,000shares authorized as of June 30, 2024 and December 31, 2023; 30,966,255and 22,522,644shares issued and outstanding as of June 30, 2024 and December 31, 2023, respectively.			31				23
Additional paid-in capital			367,750				237,675
Accumulated other comprehensive loss			(19	)			(83	)
Accumulated deficit			(151,704	)			(116,420	)
Total stockholders' equity			216,058				121,195
Total liabilities and stockholders' equity		$	230,585			$	138,265

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

ACRIVON THERAPEUTICS, INC.

CONDENSED CONSOLIDATED STATEMENTSOF OPERATIONS AND COMPREHENSIVE LOSS

(UNAUDITED)

(in thousands, except share and per share data)

		Three Months Ended June 30,			Six Months Ended June 30,
		2024			2023			2024			2023
Operating expenses:
Research and development		$	15,025			$	10,521			$	26,498			$	20,279
General and administrative			6,412				4,999				12,607				9,634
Total operating expenses			21,437				15,520				39,105				29,913
Loss from operations			(21,437	)			(15,520	)			(39,105	)			(29,913	)
Other income (expense), net:
Interest income			2,694				1,770				4,140				3,577
Other expense, net			(55	)			(164	)			(319	)			(334	)
Total other income, net			2,639				1,606				3,821				3,243
Net loss		$	(18,798	)		$	(13,914	)		$	(35,284	)		$	(26,670	)
Net loss per share-basic and diluted		$	(0.52	)		$	(0.63	)		$	(1.20	)		$	(1.22	)
Weighted-average common stock outstanding-basic and diluted			36,132,616				21,971,032				29,361,710				21,945,940
Comprehensive loss:
Net loss		$	(18,798	)		$	(13,914	)		$	(35,284	)		$	(26,670	)
Other comprehensive income (loss):
Unrealized gain (loss) on available-for-sale investments, net of tax			51				(436	)			64				(332	)
Comprehensive loss		$	(18,747	)		$	(14,350	)		$	(35,220	)		$	(27,002	)

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

ACRIVON THERAPEUTICS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

(UNAUDITED)

(in thousands, except share data)

		Common Stock
		Shares			Amount			Additional Paid-In Capital			Accumulated Other Comprehensive Income (Loss)			Accumulated Deficit			Total Stockholders' Equity
Balance at December 31, 2023			22,522,644			$	23			$	237,675			$	(83	)		$	(116,420	)		$	121,195
Exercise of common stock options			20,277				-				79				-				-				79
Issuance of common stock upon vesting of restricted stock units, net of shares withheld for tax			94,618				-				(166	)			-				-				(166	)
Stock-based compensation expense			-				-				3,344				-				-				3,344
Unrealized gain on available-for-sale investments, net of tax			-				-				-				13				-				13
Net loss			-				-				-				-				(16,486	)			(16,486	)
Balance at March 31, 2024			22,637,539			$	23			$	240,932			$	(70	)		$	(132,906	)		$	107,979
Issuance of common stock in private placement, net of issuance costs of $3,360			8,235,000				8				66,629				-				-				66,637
Issuance of pre-funded warrants in private placement, net of issuance costs of $2,881			-				-				57,122				-				-				57,122
Exercise of common stock options			10,598				-				11				-				-				11
Issuance of common stock upon vesting of restricted stock units, net of shares withheld for tax			83,118				-				(510	)			-				-				(510	)
Stock-based compensation expense			-				-				3,566				-				-				3,566
Unrealized gain on available-for-sale investments, net of tax			-				-				-				51				-				51
Net loss			-				-				-				-				(18,798	)			(18,798	)
Balance at June 30, 2024			30,966,255			$	31			$	367,750			$	(19	)		$	(151,704	)		$	216,058

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

ACRIVON THERAPEUTICS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

(UNAUDITED)

(in thousands, except share data)

		Common Stock
		Shares			Amount			Additional Paid-In Capital			Accumulated Other Comprehensive Income (Loss)			Accumulated Deficit			Total Stockholders' Equity
Balance at December 31, 2022			21,920,402			$	22			$	226,580			$	(95	)		$	(56,032	)		$	170,475
Exercise of common stock options			232				-				-				-				-				-
Stock-based compensation expense			-				-				2,646				-				-				2,646
Unrealized gain on available-for-sale investments, net of tax			-				-				-				104				-				104
Net loss			-				-				-				-				(12,756	)			(12,756	)
Balance at March 31, 2023			21,920,634			$	22			$	229,226			$	9			$	(68,788	)		$	160,469
Exercise of common stock options			148,026				-				379				-				-				379
Stock-based compensation expense			-				-				2,686				-				-				2,686
Unrealized loss on available-for-sale investments, net of tax			-				-				-				(436	)			-				(436	)
Net loss			-				-				-				-				(13,914	)			(13,914	)
Balance at June 30, 2023			22,068,660			$	22			$	232,291			$	(427	)		$	(82,702	)		$	149,184

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

ACRIVON THERAPEUTICS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

(in thousands)

		Six Months Ended June 30,
		2024			2023
Cash flows from operating activities:
Net loss		$	(35,284	)		$	(26,670	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation expense			452				254
Stock-based compensation expense			6,910				5,332
Non-cash lease expense			453				386
Net amortization of premiums and accretion of discounts on investments			(1,676	)			(1,901	)
Changes in operating assets and liabilities:
Prepaid expenses and other current assets			413				2,016
Accounts payable			(3,215	)			363
Accrued expenses and other liabilities			1,384				111
Operating lease liabilities			(423	)			(360	)
Net cash used in operating activities			(30,986	)			(20,469	)
Cash flows from investing activities:
Purchases of short-term and long-term investments			(163,167	)			(16,963	)
Proceeds from maturities of short-term investments			81,925				45,765
Purchases of property and equipment			(952	)			(137	)
Net cash (used in) provided by investing activities			(82,194	)			28,665
Cash flows from financing activities:
Proceeds from issuance of common stock in private placement			69,997				-
Proceeds from issuance of pre-funded warrants in private placement			60,003				-
Proceeds from exercise of stock options			90				379
Payments of offering costs			(6,236	)			-
Payments of tax withholdings related to vesting of restricted stock units			(676	)			-
Net cash provided by financing activities			123,178				379
Net increase in cash, cash equivalents, and restricted cash			9,998				8,575
Cash, cash equivalents and restricted cash at beginning of period			36,429				29,907
Cash, cash equivalents and restricted cash at end of period		$	46,427			$	38,482
Supplemental disclosure of non-cash investing and financing activities:
Purchases of property and equipment included in accounts payable		$	123			$	-
Offering costs in accounts payable and accrued expenses and other current liabilities		$	308			$	-
Reconciliation of cash, cash equivalents, and restricted cash:
Cash and cash equivalents		$	46,006			$	38,074
Restricted cash		421			408
Total cash, cash equivalents, and restricted cash		$	46,427			$	38,482

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

ACRIVON THERAPEUTICS, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

Item 2. Management's Discussion and Analysis ofFinancial Condition and Results of Operations.

You should read the following discussion and analysis of our financial condition and results of operations together with our unaudited condensed consolidated financial statements and related notes and other financial information included elsewhere in this Quarterly Report on Form 10-Q, and the audited consolidated financial statements and notes thereto as of and for the year ended December 31, 2023 and the related Management's Discussion and Analysis of Financial Condition and Results of Operations included in our Annual Report on Form 10-K filed with the Securities and Exchange Commission, or the SEC, on March 28, 2024. Some of the information contained in this discussion and analysis or set forth elsewhere in this Quarterly Report, including information with respect to our plans and strategy for our business and related financing, includes forward-looking statements that involve risks and uncertainties. As a result of many factors, including those factors set forth in the "Special Note Regarding Forward-Looking Statements" and "Risk Factors" sections of this Quarterly Report on Form 10-Q, our actual results could differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis. Unless the context requires otherwise, references in this Quarterly Report on Form 10-Q to "Acrivon," the "Company," "we," "us," and "our" refer to Acrivon Therapeutics, Inc. and its subsidiaries.

Overview

We are a clinical stage precision medicine company utilizing our Acrivon Precision Predictive Proteomics (AP3) platform for the discovery, design, and development of drug candidates through a mechanistic match to patients whose disease is predicted sensitive to the specific treatment. Previously approved precision oncology treatments, such as kinase inhibitors, have transformed the cancer treatment landscape, and while the therapeutic benefit of these agents has provided significant benefit to patients, these precision oncology treatments unfortunately only address the less than 10% of patients with cancers that harbor certain easily-identifiable genetic mutations. In diseases outside oncology, e.g. autoimmune, inflammatory, fibrotic, and metabolic disorders, recurrent mutations in individual patients that can be linked to disease pathogenesis are exceedingly rare. Accordingly, genetics-based precision medicine approaches to treat only the patients that benefit from a particular therapeutic have been even more challenging in such diseases.

Our approach is designed to overcome the limitations of genomics-based patient selection methods. We do this by using AP3 to discover and develop our pipeline of innovative oncology drug candidates. The AP3 platform is engineered to measure compound-specific effects on the entire tumor cell protein signaling network and drug-induced resistance mechanisms in an unbiased manner and is modality and disease agnostic. These distinctive capabilities enable AP3's direct application for drug design optimization for monotherapy activity, the identification of rational drug combinations, and the creation of drug-specific proprietary OncoSignature companion diagnostics that are used to identify the patients most likely to benefit from our drug candidates.

We are currently advancing our lead candidate, ACR-368 (also called prexasertib), a selective small molecule inhibitor targeting CHK1 and CHK2 with sub single-digit nM and single-digit nM potency, respectively, in a potentially registrational Phase 2 trial across multiple solid tumor types. We are continuing enrollment and dosing of patients in this multi-center trial based on OncoSignature-predicted sensitivity to ACR-368 in patients with locally advanced or metastatic, recurrent platinum-resistant ovarian cancer, as well as endometrial adenocarcinoma or urothelial cancer, two tumor types predicted to be sensitive to ACR-368 through OncoSignature screening and not previously evaluated in past clinical trials.

Our ACR-368 OncoSignature test, which has not yet obtained regulatory approval, has been extensively evaluated in preclinical studies, including in two separate, blinded, prospectively-designed studies on pretreatment tumor biopsies collected from patients with ovarian cancer treated with ACR-368 in past Phase 2 clinical trials conducted by Eli Lilly and Company, or Lilly, and at the National Cancer Institute providing evidence of robust enrichment of responders through our method.

In November 2023, we announced initial clinical observations from the ongoing Phase 2 trial. Consistent with the overall favorable tolerability profile previously observed in multiple past single-arm trials conducted at recommended Phase 2 dose (RP2D), drug-related adverse events were primarily reversible, manageable hematological toxicities, including neutropenia and thrombocytopenia. In the limited number of patients evaluated by imaging to date, preliminary evidence of clinical activity was observed in OncoSignature-positive patients across all three tumor types treated with single agent ACR-368 at RP2D. Consistent with AP3-predicted tumor sensitivity to the combination of ACR-368 and low dose gemcitabine (LDG) in OncoSignature-negative patients, early imaging-based evidence of clinical activity across all three tumor types was also observed in patients treated with ACR-368 at RP2D and LDG during the dose escalation phase.

In April 2024, we presented initial positive clinical data from the ongoing registrational-intent Phase 2 ACR-368 clinical trials, which provided initial, prospective validation of the OncoSignature test's ability to identify ovarian and endometrial patients sensitive to ACR-368 monotherapy, with clear segregation of RECIST responders in the OncoSignature-positive (50% confirmed objective response rate, or ORR, in 10 patients) versus OncoSignature-negative (0% ORR in 16 patients) arms (p-value=0.0038).

On May 8, 2023, ACR-368 was granted two Fast Track designations from the U.S. Food and Drug Administration for the investigation of ACR-368 monotherapy for patients with OncoSignature-positive platinum-resistant ovarian cancer and endometrial cancer. On November 16, 2023, the ACR-368 OncoSignature test was granted Breakthrough Device Designation for the identification of ovarian cancer patients who may benefit from treatment with ACR-368. This designation reflects the FDA's determination that the device is reasonably expected to provide for more effective treatment or diagnosis of life-threatening or irreversibly debilitating human disease or conditions.

In addition to ACR-368, we are also leveraging our proprietary AP3 precision medicine platform to rationally design and develop internally-discovered co-crystallography-driven, preclinical stage pipeline programs. These include ACR-2316, a potent, selective WEE1/PKMYT1 inhibitor designed using AP3 for superior single-agent activity as demonstrated in preclinical studies against clinically relevant comparators, and a potential first-in-class cell cycle program for an undisclosed target initiated following the same AP3 approach. In April 2024, we announced new preclinical data for ACR-2316, including accelerated timelines, and we remain on track to start a Phase I clinical study in the fourth quarter of 2024.

Since our inception in 2018, we have devoted substantially all of our resources toward conducting discovery and research activities, organizing and staffing our company, business planning, acquiring and internally discovering drug candidates, establishing and protecting our intellectual property portfolio, developing and progressing ACR-368 and the ACR-368 OncoSignature, preparing for and conducting preclinical studies and clinical trials, establishing arrangements with third parties for the manufacture of ACR-368, the ACR-368 OncoSignature and component materials, advancing our internal co-crystallography-driven, AP3-enabled preclinical programs, conducting preclinical and IND-enabling studies for ACR-2316, as well as raising capital. We do not have any drug candidates approved for sale and have not generated any revenue from drug sales.

Since inception, we have funded our operations primarily with proceeds from the sales of shares of our convertible preferred stock, the issuance of convertible notes, and our initial public offering, or IPO, and concurrent private placement. Upon the closing of our IPO on November 17, 2022, only common stock remains issued and outstanding. In addition, on April 8, 2024, we entered into a Private Investment in Public Equity, or PIPE, securities purchase agreement, or the PIPE Purchase Agreement, for a private placement with certain institutional and accredited investors, or the April 2024 Private Placement. Pursuant to the PIPE Purchase Agreement, we agreed to issue and sell to the PIPE investors an aggregate of (i) 8,235,000 shares of our common stock at a purchase price of $8.50 per share, and (ii) pre-funded warrants, or Pre-Funded Warrants, to purchase up to an aggregate of 7,060,000 shares of our common stock at a purchase price of $8.499 per Pre-Funded Warrant, which represents the per share purchase price of our common stock less the $0.001 per share exercise price for each Pre-Funded Warrant. The Pre-Funded Warrants are exercisable at any time after the date of issuance and do not expire. The April 2024 Private Placement closed on April 11, 2024, for aggregate net proceeds of $123.8 million, after deducting fees and expenses of $6.2 million.

We have incurred operating losses since inception. Our net losses for the six months ended June 30, 2024 and 2023 were $35.3 million and $26.7 million, respectively. As of June 30, 2024, we had an accumulated deficit of $151.7 million. These losses have resulted primarily from costs incurred in connection with research and development activities and general and administrative costs associated with our operations. We expect to continue to incur significant and increasing expenses and operating losses for the foreseeable future, particularly if and as we:

We are incurring and expect to continue to incur additional costs associated with operating as a public company, including significant legal, accounting, insurance, investor relations and other expenses that we did not incur as a private company. Furthermore, we will not generate revenue from drug sales until we successfully complete clinical development and obtain regulatory approval for a drug candidate. In addition, if we obtain regulatory approval for a drug candidate and do not enter into a third-party commercialization partnership, we expect to incur significant expenses related to developing our commercialization capability to support drug sales, marketing, manufacturing and distribution activities. Our net losses may fluctuate significantly from quarter-to-quarter and year-to-year, depending on the timing of our planned clinical studies and our expenditures on other research and development activities.

As a result, we will need substantial additional funding to support our continuing operations and pursue our growth strategy. Until such time that we can generate significant revenue from drug sales, if ever, we expect to finance our operations through the sale of equity, debt financings or other capital sources, including potential collaborations with other companies or other strategic transactions. If we are unable to raise capital as needed, this could have a negative impact on our financial condition and ability to pursue our business strategies including requiring us to delay, reduce or eliminate drug development or future commercialization efforts. The amount and timing of our future funding requirements will depend on many factors including the successful advancement of ACR-368, the ACR-368 OncoSignature, ACR-2316, or any future drug candidates. Our ability to raise additional funds may also be adversely impacted by potential worsening global economic conditions, and disruptions to, and volatility in the credit and financial markets in the United States and worldwide, such as those resulting from conflicts in the Middle East and the war in Ukraine. There can be no assurances that the current operating plan will be achieved or that additional funding will be available on terms acceptable to us, or at all.

As of June 30, 2024, we had cash, cash equivalents and investments of $220.4 million. We believe that our existing cash, cash equivalents and investments as of June 30, 2024, will enable us to fund our operating expenses and capital expenditure requirements into the second half of 2026. We have based this estimate on assumptions that may prove to be wrong, and we could exhaust our available capital resources sooner than we expect. See the section titled "-Liquidity and Capital Resources."

Companion Diagnostic Agreement

In June 2022, we entered into a companion diagnostic agreement with Akoya Biosciences, Inc., or Akoya, pursuant to which we agreed to co-develop, validate, and commercialize our proprietary ACR-368 OncoSignature test, the companion diagnostic that will be used to identify patients with cancer most likely to respond to ACR-368.

Pursuant to the agreement, we paid Akoya a one-time, non-refundable, non-creditable upfront payment in the amount of $0.6 million. We are obligated to pay Akoya up to an aggregate of $17.3 million upon the achievement of specified development milestones. As of August 13, 2024, development milestones totaling $10.1 million have been achieved by Akoya under the agreement. Other than certain specified pass-through costs, each party is responsible for its own costs associated with the development of the companion diagnostic. Akoya will procure and manufacture necessary supplies to perform the ACR-368 OncoSignature test to support our clinical development and commercial requirements, in accordance with a supply agreement to be mutually agreed upon by the parties. We may terminate the agreement at our convenience, subject to the payment of a termination fee in the amount of $1.0 million.

Components of Results of Operations

Revenue

To date, we have not generated any revenue, and we do not expect to generate any revenue in the foreseeable future from drug sales. We may in the future generate revenue from payments received under collaboration agreements, which could potentially include (but not be limited to) payments of upfront fees, license fees, milestone-based payments and reimbursements for research and development efforts.

Operating Expenses

Research and Development

The majority of our expenses have been research and development expenses, which consist primarily of costs incurred in connection with our research and development activities, including our drug discovery efforts and the development of ACR-368 and the ACR-368 OncoSignature. We expense research and development costs as incurred, which include:

Research and development costs are expensed as incurred. We recognize external development costs as related goods are delivered or services are performed. Significant judgments and estimates are made in determining the accrued expense balances at the end of any reporting period.

We record direct costs for our early stage, discovery, and development drug candidates at the program level. Other costs inclusive of personnel, facilities, and supplies are not allocated at the program level.

Our external research and development expenses consist primarily of fees paid to outside consultants, CROs, CMOs and research laboratories in connection with our process development, manufacturing, and clinical development activities. Our direct external research and development expenses also include fees incurred under license and intellectual property purchase agreements. We track these external research and development costs on a program-by-program basis once we have identified a drug candidate.

Our indirect research and development costs are primarily personnel-related costs, facilities, which is offset by a portion of our allocable sublease rent income, and other costs. Employees and infrastructure are not directly tied to any one program and are deployed across our programs. As such, we do not track these costs on a specific program basis.

The successful development of our ACR-368 and ACR-368 OncoSignature test or any other future drug candidates, including ACR-2316, is highly uncertain. We plan to substantially increase our research and development expenses for the foreseeable future as we continue the development of ACR-368 and manufacturing processes and conduct discovery and research activities for our clinical and preclinical programs, including ACR-2316 and any new programs.

We cannot determine with certainty the timing of initiation, the duration, or the completion costs of current or future clinical trials of our drug candidates due to the inherently unpredictable nature of preclinical and clinical development. Clinical development timelines, the probability of success and development costs can differ materially from expectations. We anticipate that we will make determinations as to which drug candidates to pursue and how much funding to direct to each drug candidate on an ongoing basis in response to the results of ongoing and future clinical trials, regulatory developments and our ongoing assessments as to each drug candidate's commercial potential. We will need to raise substantial additional capital in the future. Our clinical development costs are expected to increase significantly with our ongoing clinical trials. We anticipate that our expenses will increase substantially, particularly due to the numerous risks and uncertainties associated with developing drug candidates, including the uncertainty of:

Any changes in the outcome of any of these variables with respect to the development of our drug candidates in clinical development could mean a significant change in the costs and timing associated with the development of these drug candidates. We may never succeed in achieving regulatory approval for any of our drug candidates. We may obtain unexpected results from our clinical trials. We may elect to discontinue, delay or modify clinical trials of some drug candidates or focus on others. For example, if the U.S. Food and Drug Administration, European Medicines Agency or another regulatory authority were to delay our planned start of clinical trials or require us to conduct clinical trials or other testing beyond those that we currently expect or if we experience significant delays in enrollment in any of our planned clinical trials, we could be required to expend significant additional financial resources and time on the completion of clinical development of that drug candidate.

General and Administrative

General and administrative expenses consist primarily of employee-related costs, including salaries, bonuses, benefits, and stock-based compensation expenses for personnel in executive, finance, accounting, human resources and other administrative functions. Other significant general and administrative expenses include legal fees relating to patent, intellectual property and corporate matters, fees paid for accounting, audit, consulting and other professional services, and expenses for rent, insurance and other operating costs. An allocated portion of sublease rent income is recorded as an offset to general and administrative expenses.

We anticipate that our general and administrative expenses will continue to increase in the future as we increase our headcount to support our continued research activities and development of our drug candidates. We also anticipate that we will continue to incur increased accounting, audit, legal, regulatory, compliance and director and officer insurance costs, as well as investor and public relations expenses associated with operating as a public company.

Other Income (Expense), Net

Interest Income

Interest income consists of interest income earned on cash equivalents and investments and amortization of premiums and accretion of discounts to maturity for available-for-sale debt securities.

Other Expense, Net

Other expense, net primarily consists of unrealized gains and losses on foreign currency transactions, state taxes, and investment management fees.

Results of Operations

Comparison of the Three Months Ended June 30, 2024 and 2023

The following table summarizes our results of operations (in thousands):

		Three Months Ended June 30,
		2024			2023			Change
Operating expenses:
Research and development		$	15,025			$	10,521			$	4,504
General and administrative			6,412				4,999				1,413
Total operating expenses			21,437				15,520				5,917
Loss from operations			(21,437	)			(15,520	)			(5,917	)
Other income (expense), net:
Interest income			2,694				1,770				924
Other expense, net			(55	)			(164	)			109
Total other income, net			2,639				1,606				1,033
Net loss		$	(18,798	)		$	(13,914	)		$	(4,884	)

Research and Development Expenses

The following table summarizes our research and development expenses (in thousands):

		Three Months Ended June 30,
		2024			2023			Change
Direct research and development expenses by program:
ACR-368		$	7,883			$	4,659			$	3,224
Other drug discovery programs			1,803				1,568				235
Unallocated research and development expenses:
Personnel related (including stock-based compensation)			4,329				3,373				956
Facilities, supplies and other			1,010				921				89
Total research and development expenses		$	15,025			$	10,521			$	4,504

Research and development expenses were $15.0 million for the three months ended June 30, 2024, compared to $10.5 million for the three months ended June 30, 2023. The increase of $4.5 million was primarily driven by:

General and Administrative Expenses

The following table summarizes our general and administrative expenses (in thousands):

		Three Months Ended June 30,
		2024			2023			Change
Personnel related (including stock-based compensation)		$	4,519			$	3,219			$	1,300
Legal and professional fees			1,326				1,355				(29	)
Facilities, supplies and other			567				425				142
Total general and administrative expenses		$	6,412			$	4,999			$	1,413

General and administrative expenses were $6.4 million for the three months ended June 30, 2024, compared to $5.0 million for the three months ended June 30, 2023. The increase of $1.4 million was primarily driven by a $1.3 million increase in payroll and employee-related expenses, including $0.7 million of stock-based compensation expense.

Total Other Income, Net

Total other income, net was $2.6 million for the three months ended June 30, 2024, compared to total other income, net of $1.6 million for the three months ended June 30, 2023. The change of $1.0 million is primarily attributable to an increase in interest income and accretion earned on our investments.

Comparison of the Six Months Ended June 30, 2024 and 2023

The following table summarizes our results of operations (in thousands):

		Six Months Ended June 30,
		2024			2023			Change
Operating expenses:
Research and development		$	26,498			$	20,279			$	6,219
General and administrative			12,607				9,634				2,973
Total operating expenses			39,105				29,913				9,192
Loss from operations			(39,105	)			(29,913	)			(9,192	)
Other income (expense), net:
Interest income			4,140				3,577				563
Other expense, net			(319	)			(334	)			15
Total other income, net			3,821				3,243				578
Net loss		$	(35,284	)		$	(26,670	)		$	(8,614	)

Research and Development Expenses

The following table summarizes our research and development expenses (in thousands):

		Six Months Ended June 30,
		2024			2023			Change
Direct research and development expenses by program:
ACR-368		$	13,000			$	8,932			$	4,068
Other drug discovery programs			3,122				3,096				26
Unallocated research and development expenses:
Personnel related (including stock-based compensation)			8,520				6,660				1,860
Facilities, supplies and other			1,856				1,591				265
Total research and development expenses		$	26,498			$	20,279			$	6,219

Research and development expenses were $26.5 million for the six months ended June 30, 2024, compared to $20.3 million for the six months ended June 30, 2023. The increase of $6.2 million was primarily due to:

General and Administrative Expenses

The following table summarizes our general and administrative expenses (in thousands):

		Six Months Ended June 30,
		2024			2023			Change
Personnel related (including stock-based compensation)		$	8,951			$	6,522			$	2,429
Legal and professional fees			2,502				2,347				155
Facilities, supplies and other			1,154				765				389
Total general and administrative expenses		$	12,607			$	9,634			$	2,973

General and administrative expenses were $12.6 million for the six months ended June 30, 2024, compared to $9.6 million for the six months ended June 30, 2023. The increase of $3.0 million was primarily due to:

Total Other Income, Net

Total other income, net was $3.8 million for the six months ended June 30, 2024, compared to total other income, net of $3.2 million for the six months ended June 30, 2023. The change of $0.6 million is primarily attributable to an increase in interest income and accretion earned on our investments.

Liquidity and Capital Resources

Sources of Liquidity

Since our inception, we have not recognized any revenue and have incurred significant losses in each period and on an aggregate basis. We have not yet commercialized any drug candidates, and we do not expect to generate revenue from sales of any drug candidates or from other sources for several years, if at all. As of June 30, 2024, we had $220.4 million in cash, cash equivalents and investments, and we had an accumulated deficit of $151.7 million. We have funded our operations primarily with proceeds from the sales of shares of our convertible preferred stock, the issuance of convertible notes, and our IPO and concurrent private placement. Upon the closing of our IPO on November 17, 2022, only common stock remains issued and outstanding. On December 1, 2023, we filed the Registration Statement with the SEC and simultaneously entered into a sales agreement with TD Cowen, as sales agent, for the ATM Program. On April 8, 2024, we entered into the PIPE Purchase Agreement for a private placement with certain institutional and accredited investors. Pursuant to the PIPE Purchase Agreement, we agreed to issue and sell to the PIPE investors an aggregate of (i) 8,235,000 shares of our common stock at a purchase price of $8.50 per share, and (ii) Pre-Funded Warrants to purchase up to an aggregate of 7,060,000 shares of our common stock at a purchase price of $8.499 per Pre-Funded Warrant, which represents the per share purchase price of our common stock less the $0.001 per share exercise price for each Pre-Funded Warrant. The Pre-Funded Warrants are exercisable at any time after the date of issuance and do not expire. The April 2024 Private Placement closed on April 11, 2024, for aggregate net proceeds of $123.8 million, after deducting fees and expenses of $6.2 million. We believe that our existing cash, cash equivalents and investments of $220.4 million as of June 30, 2024, will enable us to fund our operating expenses and capital expenditure requirements into the second half of 2026.

Cash Flows

The following table summarizes our cash flows for each of the six month periods presented (in thousands):

		Six Months Ended June 30,
		2024			2023
Net cash used in operating activities		$	(30,986	)		$	(20,469	)
Net cash (used in) provided by investing activities			(82,194	)			28,665
Net cash provided by financing activities			123,178				379
Net increase in cash, cash equivalents, and restricted cash		$	9,998			$	8,575

Net Cash Used in Operating Activities

Net cash used in operating activities was $31.0 million for the six months ended June 30, 2024, compared to net cash used in operating activities of $20.5 million for the six months ended June 30, 2023. The increase in net cash used in operating activities of $10.5 million was primarily driven by an increase in net loss of $8.6 million, partially offset by a $1.6 million increase in non-cash stock-based compensation expense.

Net Cash (Used in) Provided by Investing Activities

Net cash used in investing activities was $82.2 million for the six months ended June 30, 2024, resulting from purchases of short-term and long-term investments of $163.2 million and purchases of property and equipment of $1.0 million, offset by $81.9 million in proceeds from maturities of short-term investments.

Net cash provided by investing activities was $28.7 million for the six months ended June 30, 2023, resulting primarily from $45.8 million in proceeds from maturities of short-term investments, offset by purchases of short-term and long-term investments of $17.0 million and purchases of property and equipment of $0.1 million.

Net Cash Provided by Financing Activities

Net cash provided by financing activities was $123.2 million for the six months ended June 30, 2024, resulting from $130.0 million in proceeds from the April 2024 Private Placement and $0.1 million in proceeds from the exercise of stock options, offset by $0.7 million of payments for tax withholdings related to the vesting of restricted stock units and $6.2 million of payments of offering costs.

Net cash provided by financing activities was $0.4 million for the six months ended June 30, 2023, resulting from the exercise of stock options.

Funding Requirements

As of June 30, 2024, our cash, cash equivalents and investments were $220.4 million. We believe that our existing cash, cash equivalents and investments as of June 30, 2024, will enable us to fund our operating expenses and capital expenditure requirements into the second half of 2026. We have based this estimate on assumptions that may prove to be wrong, and we could expend our capital resources sooner than we expect.

We expect to incur significant expenses and operating losses for the foreseeable future as we advance our drug candidates through clinical development, seek regulatory approval and pursue commercialization of any approved drug candidates. We expect that our research and development and general and administrative costs will increase in connection with our planned research and clinical activities. In addition, we expect to continue to incur additional costs associated with operating as a public company. If we receive regulatory approval for any of our drug candidates, we expect to incur significant commercialization expenses related to drug manufacturing, sales, marketing and distribution, depending on where we choose to commercialize. We may also require additional capital to pursue in-licenses or acquisitions of other drug candidates.

Because of the numerous risks and uncertainties associated with research, development and commercialization of pharmaceutical drug candidates, we are unable to accurately predict the amount of our operating expenditures. Our future capital requirements will depend on many factors, including but not limited to:

A change in the outcome of any of these or other variables with respect to the development of ACR-368, the ACR-368 OncoSignature, ACR-2316, or any drug or development candidate we may develop in the future could significantly change the costs and timing associated with our development plans. Further, our operating plans may change in the future, and we may need additional funds to meet operational needs and capital requirements associated with such operating plans.

Until such time, if ever, as we can generate substantial drug revenues to support our expenses, we expect to finance our cash needs through a combination of equity offerings, debt financings, collaborations and other similar arrangements. To the extent that we raise additional capital through the sale of equity or convertible debt securities, the ownership interest of our stockholders will be or could be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect the rights of our common stockholders. Debt financing and equity financing, if available, may involve agreements that include covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures or declaring dividends. If we raise funds through collaborations, or other similar arrangements with third parties, we may have to relinquish valuable rights to our technologies, future revenue streams, research programs, drug candidates or grant licenses on terms that may not be favorable to us and/or may reduce the value of our common stock. If we are unable to raise additional funds through equity or debt financings when needed, we may be required to delay, limit, reduce or terminate our drug development or future commercialization efforts or grant rights to develop and market our drug candidates even if we would otherwise prefer to develop and market such drug candidates ourselves.

Contractual Obligations

During the six months ended June 30, 2024, there were no material changes to our contractual obligations and commitments from those described in our Annual Report on Form 10-K for the year ended December 31, 2023, which was filed with the SEC on March 28, 2024.

Critical Accounting Policies and Significant Judgments and Estimates

Our financial statements are prepared in accordance with generally accepted accounting principles in the United States. The preparation of our financial statements and related disclosures requires us to make estimates, assumptions and judgments that affect the reported amount of assets, liabilities, revenue, costs and expenses, and related disclosures. Our critical accounting policies are described under the heading "Management's Discussion and Analysis of Financial Condition and Results of Operations-Critical Accounting Policies and Significant Judgments and Estimates" in our Annual Report on Form 10-K. If actual results or events differ materially from the estimates, judgments and assumptions used by us in applying these policies, our reported financial condition and results of operations could be materially affected. There have been no significant changes to our critical accounting policies from those described in our Annual Report on Form 10-K.

Recent Accounting Pronouncements

A description of recently adopted accounting pronouncements that may potentially impact our financial position, results of operations and cash flows is disclosed in Note 2 to our unaudited condensed consolidated financial statements appearing elsewhere in this Quarterly Report.

Emerging Growth Company and Smaller Reporting Company Status

The JOBS Act provides that, among other things, an "emerging growth company" can take advantage of an extended transition period for complying with new or revised accounting standards. This provision allows an emerging growth company to delay the adoption of some accounting standards until those standards would otherwise apply to private companies. As an emerging growth company, we have elected not to "opt out" of the extended transition period afforded by the JOBS Act for the implementation of new or revised accounting standards and, as a result, we will comply with new or revised accounting standards on the relevant dates on which adoption of such standards is required for private companies on a case-by-case basis until such time that we either (i) irrevocably elect to "opt out" of such extended transition period or (ii) no longer qualify as an emerging growth company. As a result, our consolidated financial statements may not be comparable to companies that comply with new or revised accounting pronouncements as of public company effective dates. We may choose to early adopt any new or revised accounting standards whenever such early adoption is permitted for private companies. We intend to rely on certain of the other exemptions and reduced reporting requirements provided by the JOBS Act. As an emerging growth company, we are not required to, among other things, (i) provide an auditor's attestation report on our system of internal controls over financial reporting pursuant to Section 404(b), and (ii) comply with any requirement that may be adopted by the Public Company Accounting Oversight Board regarding a supplement to the auditor's report providing additional information about the audit and the financial statements (auditor discussion and analysis).

We will remain an emerging growth company until the earlier to occur of (1) the last day of our fiscal year (a) following the fifth anniversary of the closing of our IPO, (b) in which we have total annual gross revenues of at least $1.235 billion or (c) in which we are deemed to be a "large accelerated filer" under the rules of the SEC, which means the market value of our common shares that is held by non-affiliates exceeds $700 million as of the last day of our second quarter, and (2) the date on which we have issued more than $1.0 billion in non-convertible debt during the prior three-year period.

We are also a "smaller reporting company," meaning that the market value of our stock held by non-affiliates is less than $700 million and our annual revenue was less than $100 million during the most recently completed fiscal year. We may continue to be a smaller reporting company if either (i) the market value of our stock held by non-affiliates is less than $250 million or (ii) our annual revenue is less than $100 million during the most recently completed fiscal year and the market value of our stock held by non-affiliates is less than $700 million.

If we are a smaller reporting company at the time we cease to be an emerging growth company, we may continue to rely on exemptions from certain disclosure requirements that are available to smaller reporting companies. Specifically, as a smaller reporting company we may choose to present only the two most recent fiscal years of audited financial statements in our Annual Report on Form 10-K and, similar to emerging growth companies, smaller reporting companies have reduced disclosure obligations regarding executive compensation.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

Under SEC rules and regulations, because we are considered to be a "smaller reporting company," we are not required to provide the information required by this item in this report.

Item 4. Controls and Procedures.

Evaluation of Disclosure Controls and Procedures

Our management, with the participation of our Chief Executive Officer and our Chief Financial Officer, have evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of the period covered by this Quarterly Report on Form 10-Q. Based on that evaluation, our Chief Executive Officer and our Chief Financial Officer have concluded that, as of June 30, 2024, our disclosure controls and procedures were effective at the reasonable assurance level.

Limitations on Effectiveness of Disclosure Controls and Procedures

Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

Changes in Internal Control Over Financial Reporting

There were no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the quarter ended June 30, 2024 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II-OTHER INFORMATION

Item 1. Legal Proceedings.

From time to time, we may become involved in legal proceedings arising in the ordinary course of our business. We are not currently subject to any material legal proceedings.

Item 1A. Risk Factors.

Investing in our common stock involves a high degree of risk. Information regarding risk factors appears in "Part I, Item 1A. Risk Factors" of our 2023 Form 10-K. Except as otherwise described herein, there have been no material changes in our risk factors from those previously disclosed in our 2023 Form 10-K.

We have incurred significant losses since our inception. We expect to incur losses over the next several years and may never achieve or maintain profitability.

Since our inception, we have incurred significant losses, and we expect to continue to incur significant expenses and operating losses for the foreseeable future. Our net loss was $60.4 million for the year ended December 31, 2023, and $35.3 million and $26.7 million for the six months ended June 30, 2024 and 2023, respectively. As of June 30, 2024, we had an accumulated deficit of $151.7 million. Since our inception, we have financed our operations primarily with proceeds from the sales of shares of our convertible preferred stock and the issuance of convertible notes, proceeds raised in our IPO and concurrent private placement, and most recently, proceeds from our April 2024 Private Placement. We have no products approved for commercialization and have never generated any revenue from product sales.

All of our drug candidates are still in clinical and preclinical testing. We expect to continue to incur significant expenses and operating losses over the next several years. Our net losses may fluctuate significantly from quarter to quarter and year to year. We anticipate that our expenses will increase substantially as we:

To date, we have not generated any revenue from the commercialization of any drug candidate. To become and remain profitable, we must succeed in developing and eventually commercializing drug candidates that generate significant revenue. This will require us to be successful in a range of challenging activities, including completing preclinical testing and clinical trials of our drug candidates, validating manufacturing processes, obtaining regulatory approval, and manufacturing, marketing and selling any drug candidates for which we may obtain regulatory approval, as well as discovering and developing additional drug candidates. All of our drug candidates are in clinical or preclinical development. We may never succeed in these activities and, even if we do, may never generate any revenue or revenue that is significant enough to achieve profitability.

Because of the numerous risks and uncertainties associated with drug candidate development, we are unable to accurately predict the timing or amount of expenses or when, or if, we will be able to achieve profitability. If we are required by regulatory authorities to perform clinical trials or preclinical studies in addition to those currently expected, or if there are any delays in the initiation and completion of our clinical trials or the development of any of our drug candidates, our expenses could increase.

Even if we achieve profitability, we may not be able to sustain or increase profitability on a quarterly or annual basis. Our failure to become and remain profitable would depress the value of our company and could impair our ability to raise capital, expand our business, maintain our development efforts, obtain product approvals, diversify our offerings or continue our operations. A decline in the value of our company could also cause you to lose all or part of your investment.

We will need additional funding to meet our financial obligations and to pursue our business objectives. If we are unable to raise capital when needed, we could be forced to curtail our planned longer-term operations and the pursuit of our growth strategy.

Our operations have consumed substantial amounts of cash since inception, and we expect to continue to incur significant expenses and operating losses over the next several years as we continue to develop our drug candidate pipeline and, to a lesser extent, build out our manufacturing capabilities for our drug candidates, which, if approved, may not achieve commercial success. Our revenue, if any, will be derived from sales of products that may not be commercially available for a number of years, if at all. If we obtain marketing approval for any drug candidates that we develop or otherwise acquire, we expect to incur significant commercialization expenses related to product sales, marketing, distribution and manufacturing. We also expect an increase in our expenses associated with creating additional infrastructure to support operations as a public company. Accordingly, we will need to obtain substantial additional funding in order to continue our operations.

As of June 30, 2024, we had cash, cash equivalents and investments of $220.4 million. We believe that our existing cash, cash equivalents and investments as of June 30, 2024, will be sufficient to fund our operating expenses and capital expenditure requirements into the second half of 2026. This estimate is based on assumptions that may prove to be wrong, and we could exhaust our available capital resources sooner than we expect. Changes may occur beyond our control that would cause us to consume our available capital before that time, including changes in and progress of our development activities, acquisitions of additional drug candidates and changes in regulation. The timing and amount of our funding requirements will depend on many factors, including but not limited to:

We will require additional capital to achieve our business objectives. Additional funds may not be available on a timely basis, on favorable terms or at all, and such funds, if raised, may not be sufficient to enable us to continue to implement our long-term business strategy. Any additional fundraising efforts may divert our management from their day-to-day activities, which may adversely affect our ability to develop and commercialize our drug candidates. Further, our ability to raise additional capital may be adversely impacted by potential worsening global economic conditions and the recent disruptions to and volatility in the credit and financial markets in the United States and worldwide resulting from the ongoing Russian invasion of Ukraine and related sanctions against Russia and the Israel-Hamas conflicts. If we are unable to raise sufficient additional capital, we could be forced to curtail our planned operations and the pursuit of our growth strategy.

A significant portion of our total outstanding shares are restricted from immediate resale but may be sold into the market in the near future. This could cause the market price of our common stock to drop significantly, even if our business is doing well.

Sales of a substantial number of shares of our common stock in the public market could occur at any time. These sales, or the perception in the market that the holders of a large number of shares intend to sell shares, could reduce the market price of our common stock. As of August 8, 2024, we had 30,972,163shares of common stock outstanding. This includes 7,550,000 shares sold in our IPO, which may be resold in the public market. As of August 8, 2024, approximately 13.9 million shares were held by our affiliates, who are generally restricted from selling pursuant to securities laws. Our shares may be resold and the market price of our stock could decline if the holders of currently-restricted shares sell them or are perceived by the market as intending to sell them.

We have filed a registration statement on Form S-8 under the Securities Act registering shares subject to outstanding stock options issued under the 2019 Stock Incentive Plan, or the 2019 Plan, and shares of common stock reserved for issuance under the 2022 Stock Option and Incentive Plan, or the 2022 Plan, and the 2022 Employee Stock Purchase Plan, or the 2022 ESPP. Both the 2022 Plan and the 2022 ESPP provide for annual automatic increases in the shares reserved for issuance under the plans which could result in additional dilution to our stockholders. Shares registered under these registration statements on Form S-8 can be freely sold in the public market upon issuance, subject to the vesting of the equity awards, other restrictions provided under the terms of the applicable plan or equity award, and the restrictions of Rule 144 in the case of our affiliates.

We also filed a registration statement on Form S-3, which was declared effective by the SEC on April 29, 2024, covering the resale of 8,235,000 shares of our common stock and 7,060,000 shares of our common stock issuable upon the exercise of pre-funded warrants held by selling stockholders who participated in the April 2024 Private Placement. Pursuant to the registration statement on Form S-3, these selling stockholders may resell all or a portion of the 8,235,000 shares of common stock, and all or a portion of the 7,060,000 shares of common stock underlying the pre-funded warrants after the pre-funded warrants are exercised by the holders.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

(a) Sales of Unregistered Securities

None.

(b) Use of Proceeds from Public Offering of Common Stock

The offer and sale of shares in our IPO was registered under the Securities Act pursuant to a Registration Statement on Form S-1 (File No. 333-267911), which was declared effective by the SEC on November 9, 2022. There has been no material change in the planned use of proceeds from our IPO as described in our final prospectus filed with the SEC pursuant to Rule 424(b)(4) under the Securities Act on November 16, 2022.

(c) Issuer Purchases of Equity Securities

None.

Item 3. Defaults Upon Senior Securities.

Not applicable.

Item 4. Mine Safety Disclosures.

Not applicable.

Item 5. Other Information.

Item 6. Exhibits.

Exhibit Number		Description
31.1		Certification of Principal Executive Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2		Certification of Principal Financial Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1+		Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2+		Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS		Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because XBRL tags are embedded within the Inline XBRL document.
101.SCH		Inline XBRL Taxonomy Extension Schema With Embedded Linkbase Documents
104		Cover Page Interactive Data File (embedded within the Inline XBRL document)

+

This certification is being furnished solely to accompany this Quarterly Report pursuant to 18 U.S.C. Section 1350, and is not being filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and is not to be incorporated by reference into any filing of the Registrant, whether made before or after the date hereof, regardless of any general incorporation language in such filing.

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.

		Acrivon Therapeutics, Inc.
Date: August 13, 2024		By:	/s/ Peter Blume-Jensen
			Peter Blume-Jensen, M.D., Ph.D.
			Chief Executive Officer and President
			(Principal Executive Officer)

Date: August 13, 2024		By:	/s/ Rasmus Holm-Jorgensen
			Rasmus Holm-Jorgensen
			Chief Financial Officer
			(Principal Financial Officer)