anab-20210331
000137005312/312021Q1FALSEP1YP1YP1YP1YP1YP1Yus-gaap:OtherLiabilitiesCurrentus-gaap:OtherLiabilitiesCurrent00013700532021-01-012021-03-310001370053dei:FormerAddressMember2021-01-012021-03-31xbrli:shares00013700532021-04-30iso4217:USD00013700532021-03-3100013700532020-12-31iso4217:USDxbrli:shares00013700532020-01-012020-03-310001370053us-gaap:CommonStockMember2020-12-310001370053us-gaap:AdditionalPaidInCapitalMember2020-12-310001370053us-gaap:AccumulatedOtherComprehensiveIncomeMember2020-12-310001370053us-gaap:RetainedEarningsMember2020-12-310001370053us-gaap:CommonStockMember2021-01-012021-03-310001370053us-gaap:AdditionalPaidInCapitalMember2021-01-012021-03-310001370053us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-01-012021-03-310001370053us-gaap:RetainedEarningsMember2021-01-012021-03-310001370053us-gaap:CommonStockMember2021-03-310001370053us-gaap:AdditionalPaidInCapitalMember2021-03-310001370053us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-03-310001370053us-gaap:RetainedEarningsMember2021-03-310001370053us-gaap:CommonStockMember2019-12-310001370053us-gaap:AdditionalPaidInCapitalMember2019-12-310001370053us-gaap:AccumulatedOtherComprehensiveIncomeMember2019-12-310001370053us-gaap:RetainedEarningsMember2019-12-3100013700532019-12-310001370053us-gaap:CommonStockMember2020-01-012020-03-310001370053us-gaap:AdditionalPaidInCapitalMember2020-01-012020-03-310001370053us-gaap:AccumulatedOtherComprehensiveIncomeMember2020-01-012020-03-310001370053us-gaap:RetainedEarningsMember2020-01-012020-03-310001370053us-gaap:CommonStockMember2020-03-310001370053us-gaap:AdditionalPaidInCapitalMember2020-03-310001370053us-gaap:AccumulatedOtherComprehensiveIncomeMember2020-03-310001370053us-gaap:RetainedEarningsMember2020-03-3100013700532020-03-31anab:segment0001370053us-gaap:EmployeeStockOptionMember2021-01-012021-03-310001370053us-gaap:EmployeeStockOptionMember2020-01-012020-03-310001370053anab:LaboratoryEquipmentMember2021-03-310001370053anab:LaboratoryEquipmentMember2020-12-310001370053us-gaap:OfficeEquipmentMember2021-03-310001370053us-gaap:OfficeEquipmentMember2020-12-310001370053us-gaap:LeaseholdImprovementsMember2021-03-310001370053us-gaap:LeaseholdImprovementsMember2020-12-310001370053us-gaap:CollaborativeArrangementMemberanab:GlaxoSmithKlineMember2014-03-012014-03-31anab:target0001370053us-gaap:CollaborativeArrangementMemberanab:GlaxoSmithKlineMember2014-03-310001370053us-gaap:CollaborativeArrangementMemberanab:GlaxoSmithKlineMember2014-11-300001370053us-gaap:CollaborativeArrangementMemberanab:GlaxoSmithKlineMember2014-11-012014-11-300001370053anab:AnaptysBioGeneratedAntiPD1JEMPERLIDostarlimabMemberanab:CollaborationAndExclusiveLicenseAgreementMemberanab:GlaxoSmithKlineMember2020-10-012020-12-31xbrli:pure0001370053anab:CollaborationAndExclusiveLicenseAgreementMemberanab:AnaptysBioGeneratedZejulaMemberanab:GlaxoSmithKlineMember2021-01-012021-01-010001370053anab:AnaptysBioGeneratedAntiPD1JEMPERLIDostarlimabMemberanab:CollaborationAndExclusiveLicenseAgreementMemberanab:GlaxoSmithKlineMember2021-01-012021-03-310001370053anab:CollaborationAndExclusiveLicenseAgreementMemberanab:AnaptysBioGeneratedZejulaMemberanab:GlaxoSmithKlineMember2021-01-012021-03-31anab:milestone0001370053us-gaap:CollaborativeArrangementMemberanab:GlaxoSmithKlineMember2021-01-012021-03-310001370053anab:Phase3ClinicalTrialInitiationFirstIndicationMemberanab:AnaptysBioGeneratedAntiPD1JEMPERLIDostarlimabMemberanab:GlaxoSmithKlineMember2021-01-012021-03-310001370053anab:AnaptysBioGeneratedAntiPD1JEMPERLIDostarlimabMemberanab:GlaxoSmithKlineMemberanab:InVivoToxicologyStudiesMember2015-04-012015-06-300001370053anab:AnaptysBioGeneratedAntiTIM3GSK4069889ACobolimabMemberanab:GlaxoSmithKlineMemberanab:InVivoToxicologyStudiesMember2015-10-012015-12-310001370053anab:GlaxoSmithKlineMemberanab:InVivoToxicologyStudiesMemberanab:AnaptysBioGeneratedAntiLAG3GSK40974386Member2016-07-012016-09-300001370053anab:AnaptysBioGeneratedAntiPD1JEMPERLIDostarlimabMemberanab:ClearanceOfInvestigationalNewDrugFromFDAMemberanab:GlaxoSmithKlineMember2016-01-012016-03-310001370053anab:AnaptysBioGeneratedAntiTIM3GSK4069889ACobolimabMemberanab:ClearanceOfInvestigationalNewDrugFromFDAMemberanab:GlaxoSmithKlineMember2016-04-012016-06-300001370053anab:ClearanceOfInvestigationalNewDrugFromFDAMemberanab:GlaxoSmithKlineMemberanab:AnaptysBioGeneratedAntiLAG3GSK40974386Member2017-04-012017-06-300001370053anab:AnaptysBioGeneratedAntiPD1JEMPERLIDostarlimabMemberanab:GlaxoSmithKlineMemberanab:Phase2ClinicalTrialInitiationMember2017-04-012017-06-300001370053anab:AnaptysBioGeneratedAntiTIM3GSK4069889ACobolimabMemberanab:GlaxoSmithKlineMemberanab:Phase2ClinicalTrialInitiationMember2017-10-012017-12-310001370053anab:GlaxoSmithKlineMemberanab:Phase2ClinicalTrialInitiationMemberanab:AnaptysBioGeneratedAntiLAG3GSK40974386Member2019-10-012019-12-310001370053anab:Phase3ClinicalTrialInitiationFirstIndicationMemberanab:AnaptysBioGeneratedAntiPD1JEMPERLIDostarlimabMemberanab:GlaxoSmithKlineMember2018-07-012018-09-300001370053anab:AnaptysBioGeneratedAntiPD1JEMPERLIDostarlimabMemberanab:Phase3ClinicalTrialInitiationSecondIndicationMemberanab:GlaxoSmithKlineMember2019-04-012019-06-300001370053anab:AnaptysBioGeneratedAntiPD1JEMPERLIDostarlimabMemberanab:FilingOfBLAFirstIndicationMemberanab:GlaxoSmithKlineMember2020-01-012020-03-310001370053anab:AnaptysBioGeneratedAntiPD1JEMPERLIDostarlimabMemberanab:GlaxoSmithKlineMemberanab:FilingOfMMAFirstIndicationMember2020-01-012020-03-310001370053anab:AnaptysBioGeneratedAntiPD1JEMPERLIDostarlimabMemberanab:GlaxoSmithKlineMemberanab:FilingOfBLASecondIndicationMember2021-01-012021-03-310001370053us-gaap:CollaborativeArrangementMemberanab:GlaxoSmithKlineMember2020-01-012020-03-310001370053us-gaap:CollaborativeArrangementMemberanab:BristolMyersSquibbMember2011-01-012011-12-310001370053us-gaap:CollaborativeArrangementMemberanab:BristolMyersSquibbMember2011-12-310001370053anab:InVivoToxicologyStudiesMemberanab:BristolMyersSquibbMemberanab:AnaptysBioGeneratedAntiPD1AntagonistAntibodyCC90006Member2016-04-012016-06-300001370053anab:BristolMyersSquibbMemberanab:AnaptysBioGeneratedAntiPD1AntagonistAntibodyCC90006Memberanab:Phase1ClinicalTrialInitiationMember2016-10-012016-12-310001370053us-gaap:CollaborativeArrangementMemberanab:BristolMyersSquibbMember2020-01-012020-03-310001370053us-gaap:CollaborativeArrangementMemberanab:BristolMyersSquibbMember2021-01-012021-03-310001370053us-gaap:MoneyMarketFundsMemberus-gaap:FairValueMeasurementsRecurringMember2021-03-310001370053us-gaap:FairValueInputsLevel1Memberus-gaap:MoneyMarketFundsMemberus-gaap:FairValueMeasurementsRecurringMember2021-03-310001370053us-gaap:FairValueInputsLevel2Memberus-gaap:MoneyMarketFundsMemberus-gaap:FairValueMeasurementsRecurringMember2021-03-310001370053us-gaap:MoneyMarketFundsMemberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel3Member2021-03-310001370053us-gaap:MutualFundMemberus-gaap:FairValueMeasurementsRecurringMember2021-03-310001370053us-gaap:FairValueInputsLevel1Memberus-gaap:MutualFundMemberus-gaap:FairValueMeasurementsRecurringMember2021-03-310001370053us-gaap:MutualFundMemberus-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsRecurringMember2021-03-310001370053us-gaap:MutualFundMemberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel3Member2021-03-310001370053us-gaap:FairValueMeasurementsRecurringMemberus-gaap:USTreasurySecuritiesMember2021-03-310001370053us-gaap:FairValueInputsLevel1Memberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:USTreasurySecuritiesMember2021-03-310001370053us-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:USTreasurySecuritiesMember2021-03-310001370053us-gaap:FairValueMeasurementsRecurringMemberus-gaap:USTreasurySecuritiesMemberus-gaap:FairValueInputsLevel3Member2021-03-310001370053us-gaap:CertificatesOfDepositMemberus-gaap:FairValueMeasurementsRecurringMember2021-03-310001370053us-gaap:FairValueInputsLevel1Memberus-gaap:CertificatesOfDepositMemberus-gaap:FairValueMeasurementsRecurringMember2021-03-310001370053us-gaap:CertificatesOfDepositMemberus-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsRecurringMember2021-03-310001370053us-gaap:CertificatesOfDepositMemberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel3Member2021-03-310001370053us-gaap:USGovernmentAgenciesDebtSecuritiesMemberus-gaap:FairValueMeasurementsRecurringMember2021-03-310001370053us-gaap:FairValueInputsLevel1Memberus-gaap:USGovernmentAgenciesDebtSecuritiesMemberus-gaap:FairValueMeasurementsRecurringMember2021-03-310001370053us-gaap:USGovernmentAgenciesDebtSecuritiesMemberus-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsRecurringMember2021-03-310001370053us-gaap:USGovernmentAgenciesDebtSecuritiesMemberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel3Member2021-03-310001370053us-gaap:FairValueMeasurementsRecurringMemberanab:CommercialAndCorporateObligationsMember2021-03-310001370053us-gaap:FairValueInputsLevel1Memberus-gaap:FairValueMeasurementsRecurringMemberanab:CommercialAndCorporateObligationsMember2021-03-310001370053us-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsRecurringMemberanab:CommercialAndCorporateObligationsMember2021-03-310001370053us-gaap:FairValueMeasurementsRecurringMemberanab:CommercialAndCorporateObligationsMemberus-gaap:FairValueInputsLevel3Member2021-03-310001370053us-gaap:MoneyMarketFundsMemberus-gaap:FairValueMeasurementsRecurringMember2020-12-310001370053us-gaap:FairValueInputsLevel1Memberus-gaap:MoneyMarketFundsMemberus-gaap:FairValueMeasurementsRecurringMember2020-12-310001370053us-gaap:FairValueInputsLevel2Memberus-gaap:MoneyMarketFundsMemberus-gaap:FairValueMeasurementsRecurringMember2020-12-310001370053us-gaap:MoneyMarketFundsMemberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel3Member2020-12-310001370053us-gaap:MutualFundMemberus-gaap:FairValueMeasurementsRecurringMember2020-12-310001370053us-gaap:FairValueInputsLevel1Memberus-gaap:MutualFundMemberus-gaap:FairValueMeasurementsRecurringMember2020-12-310001370053us-gaap:MutualFundMemberus-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsRecurringMember2020-12-310001370053us-gaap:MutualFundMemberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel3Member2020-12-310001370053us-gaap:FairValueMeasurementsRecurringMemberus-gaap:USTreasurySecuritiesMember2020-12-310001370053us-gaap:FairValueInputsLevel1Memberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:USTreasurySecuritiesMember2020-12-310001370053us-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:USTreasurySecuritiesMember2020-12-310001370053us-gaap:FairValueMeasurementsRecurringMemberus-gaap:USTreasurySecuritiesMemberus-gaap:FairValueInputsLevel3Member2020-12-310001370053us-gaap:CertificatesOfDepositMemberus-gaap:FairValueMeasurementsRecurringMember2020-12-310001370053us-gaap:FairValueInputsLevel1Memberus-gaap:CertificatesOfDepositMemberus-gaap:FairValueMeasurementsRecurringMember2020-12-310001370053us-gaap:CertificatesOfDepositMemberus-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsRecurringMember2020-12-310001370053us-gaap:CertificatesOfDepositMemberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel3Member2020-12-310001370053us-gaap:USGovernmentAgenciesDebtSecuritiesMemberus-gaap:FairValueMeasurementsRecurringMember2020-12-310001370053us-gaap:FairValueInputsLevel1Memberus-gaap:USGovernmentAgenciesDebtSecuritiesMemberus-gaap:FairValueMeasurementsRecurringMember2020-12-310001370053us-gaap:USGovernmentAgenciesDebtSecuritiesMemberus-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsRecurringMember2020-12-310001370053us-gaap:USGovernmentAgenciesDebtSecuritiesMemberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel3Member2020-12-310001370053us-gaap:FairValueMeasurementsRecurringMemberanab:CommercialAndCorporateObligationsMember2020-12-310001370053us-gaap:FairValueInputsLevel1Memberus-gaap:FairValueMeasurementsRecurringMemberanab:CommercialAndCorporateObligationsMember2020-12-310001370053us-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsRecurringMemberanab:CommercialAndCorporateObligationsMember2020-12-310001370053us-gaap:FairValueMeasurementsRecurringMemberanab:CommercialAndCorporateObligationsMemberus-gaap:FairValueInputsLevel3Member2020-12-310001370053us-gaap:USGovernmentAgenciesDebtSecuritiesMember2021-03-310001370053us-gaap:CertificatesOfDepositMember2021-03-310001370053anab:CommercialAndCorporateObligationsMember2021-03-310001370053us-gaap:USTreasurySecuritiesMember2021-03-310001370053us-gaap:USGovernmentAgenciesDebtSecuritiesMember2021-01-012021-03-310001370053us-gaap:USGovernmentAgenciesDebtSecuritiesMembersrt:MinimumMember2021-01-012021-03-310001370053srt:MaximumMemberus-gaap:USGovernmentAgenciesDebtSecuritiesMember2021-01-012021-03-310001370053us-gaap:CertificatesOfDepositMember2021-01-012021-03-310001370053us-gaap:CertificatesOfDepositMembersrt:MinimumMember2021-01-012021-03-310001370053srt:MaximumMemberus-gaap:CertificatesOfDepositMember2021-01-012021-03-310001370053srt:MaximumMemberanab:CommercialAndCorporateObligationsMember2021-01-012021-03-310001370053us-gaap:USGovernmentAgenciesDebtSecuritiesMember2020-12-310001370053us-gaap:CertificatesOfDepositMember2020-12-310001370053anab:CommercialAndCorporateObligationsMember2020-12-310001370053us-gaap:USTreasurySecuritiesMember2020-12-310001370053us-gaap:USGovernmentAgenciesDebtSecuritiesMembersrt:MinimumMember2020-01-012020-12-310001370053srt:MaximumMemberus-gaap:USGovernmentAgenciesDebtSecuritiesMember2020-01-012020-12-310001370053us-gaap:CertificatesOfDepositMembersrt:MinimumMember2020-01-012020-12-310001370053srt:MaximumMemberus-gaap:CertificatesOfDepositMember2020-01-012020-12-310001370053srt:MinimumMemberanab:CommercialAndCorporateObligationsMember2020-01-012020-12-310001370053srt:MaximumMemberanab:CommercialAndCorporateObligationsMember2020-01-012020-12-310001370053srt:MinimumMemberus-gaap:USTreasurySecuritiesMember2020-01-012020-12-310001370053srt:MaximumMemberus-gaap:USTreasurySecuritiesMember2020-01-012020-12-310001370053anab:EquityIncentivePlan2017Member2021-03-310001370053anab:EmployeeStockPurchasePlan2017Member2021-03-310001370053anab:EquityIncentivePlan2017Member2018-01-012018-01-010001370053anab:EquityIncentivePlan2017Member2021-01-012021-01-010001370053us-gaap:EmployeeStockMemberanab:EmployeeStockPurchasePlan2017Member2018-01-012018-01-010001370053us-gaap:EmployeeStockMemberanab:EmployeeStockPurchasePlan2017Member2021-01-012021-01-010001370053us-gaap:EmployeeStockOptionMember2021-01-012021-03-310001370053srt:DirectorMemberus-gaap:EmployeeStockOptionMember2021-01-012021-03-310001370053us-gaap:EmployeeStockOptionMember2020-01-012020-03-310001370053us-gaap:ResearchAndDevelopmentExpenseMember2021-01-012021-03-310001370053us-gaap:ResearchAndDevelopmentExpenseMember2020-01-012020-03-310001370053us-gaap:GeneralAndAdministrativeExpenseMember2021-01-012021-03-310001370053us-gaap:GeneralAndAdministrativeExpenseMember2020-01-012020-03-3100013700532020-12-152020-12-15utr:sqft0001370053anab:A10770WateridgeCircleSanDiegoCalifornia92121Member2020-05-040001370053anab:A10770WateridgeCircleSanDiegoCalifornia92121Member2020-05-042020-05-04iso4217:USDutr:sqft0001370053anab:A10770WateridgeCircleSanDiegoCalifornia92121Member2021-03-310001370053anab:FoodAndDrugAdministrationApprovalMemberanab:AnaptysBioGeneratedAntiPD1JEMPERLIDostarlimabMemberus-gaap:SubsequentEventMemberanab:GlaxoSmithKlineMember2021-04-012021-04-300001370053anab:AnaptysBioGeneratedAntiPD1JEMPERLIDostarlimabMemberus-gaap:SubsequentEventMemberanab:GlaxoSmithKlineMemberanab:EuropeanMedicinesAgencyConditionalMarketingAuthorizationMember2021-04-012021-04-30

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, 2021
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: 001-37985
ANAPTYSBIO, INC.
(Exact name of registrant as specified in its charter)
Delaware20-3828755
(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer
Identification Number)
10770 Wateridge Circle, Suite 210
San Diego, CA 92121
(Address of principal executive offices and zip code)
(858) 362-6295
(Registrant’s telephone number, including area code)

10421 Pacific Center Court, Suite 200
San Diego, CA 92121
(Former name, former address and former fiscal year, if changed since last report)

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, $0.001 par value ANABThe Nasdaq Stock Market LLC
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 FilerAccelerated Filer
Non-accelerated FilerSmaller 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 Act).    Yes      No  
As of April 30, 2021, there were 27,369,199 shares of the Registrant’s Common Stock outstanding.



AnaptysBio, Inc.
Table of Contents
 
Page Number
PART I. FINANCIAL INFORMATION
PART II. OTHER INFORMATION



PART I. FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements (unaudited)
AnaptysBio, Inc.
Consolidated Balance Sheets
(in thousands, except par value data)
(unaudited)
March 31, 2021December 31, 2020
ASSETS
Current assets:
Cash and cash equivalents$284,148 $250,456 
Receivable from collaborative partners1,247  
Short-term investments96,212 143,197 
Prepaid expenses and other current assets5,464 2,908 
Restricted cash60  
Total current assets387,131 396,561 
Property and equipment, net1,754 1,783 
Long-term investments7,056 17,546 
Other long-term assets477 602 
Restricted cash 60 
Total assets$396,418 $416,552 
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable$2,452 $4,217 
Accrued expenses11,826 15,262 
Other current liabilities197 342 
Total current liabilities14,475 19,821 
Stockholders’ equity:
Preferred stock, $0.001 par value, 10,000 shares authorized and no shares, issued or outstanding at March 31, 2021 and December 31, 2020, respectively
  
Common stock, $0.001 par value, 500,000 shares authorized, 27,367 shares and 27,356 shares issued and outstanding at March 31, 2021 and December 31, 2020, respectively
27 27 
Additional paid in capital664,147 660,665 
Accumulated other comprehensive loss(111)(4)
Accumulated deficit(282,120)(263,957)
Total stockholders’ equity381,943 396,731 
Total liabilities and stockholders’ equity $396,418 $416,552 
 See accompanying notes to unaudited consolidated financial statements.
1


AnaptysBio, Inc.
Consolidated Statements of Operations and Comprehensive Loss
(in thousands, except per share data)
(unaudited)
Three Months Ended
March 31,
20212020
Collaboration revenue$11,247 $15,000 
Operating expenses:
Research and development24,185 20,968 
General and administrative5,423 4,285 
Total operating expenses29,608 25,253 
Loss from operations(18,361)(10,253)
Other income, net:
Interest income195 1,897 
Other income, net3 94 
Total other income, net198 1,991 
Net loss(18,163)(8,262)
Unrealized (loss) income on available for sale securities(107)807 
Comprehensive loss$(18,270)$(7,455)
Net loss per common share:
      Basic and diluted$(0.66)$(0.30)
Weighted-average number of shares outstanding:
      Basic and diluted27,361 27,264 
 See accompanying notes to unaudited consolidated financial statements.

2


AnaptysBio, Inc.
Consolidated Statement of Stockholders’ Equity
(in thousands)
(unaudited)
Common StockAdditional
Paid-in
Capital
Accumulated Other Comprehensive LossAccumulated
Deficit
Total
Stockholders’
Equity
SharesAmount
Balance, December 31, 202027,356 $27 $660,665 $(4)$(263,957)$396,731 
Shares issued under employee stock plans
11 — 167 — — 167 
Stock-based compensation
— — 3,315 — — 3,315 
Comprehensive loss, net— — — (107)— (107)
Net loss
— — — — (18,163)(18,163)
Balance, March 31, 202127,367 $27 $664,147 $(111)$(282,120)$381,943 
See accompanying notes to unaudited consolidated financial statements.
3


AnaptysBio, Inc.
Consolidated Statement of Stockholders’ Equity
(in thousands)
(unaudited)
Common StockAdditional
Paid-in
Capital
Accumulated Other Comprehensive IncomeAccumulated
Deficit
Total
Stockholders’
Equity
SharesAmount
Balance, December 31, 201927,255 $27 $648,669 $338 $(244,026)$405,008 
Shares issued under employee stock plans
22 — 36 — — 36 
Stock-based compensation
— — 2,975 — — 2,975 
Comprehensive income, net
— — — 807 — 807 
Net loss
— — — — (8,262)(8,262)
Balance, March 31, 202027,277 $27 $651,680 $1,145 $(252,288)$400,564 
See accompanying notes to unaudited consolidated financial statements.
4


AnaptysBio, Inc.
Consolidated Statements of Cash Flows
(in thousands)
(unaudited)
Three Months Ended
March 31,
20212020
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss$(18,163)$(8,262)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization125 140 
Stock-based compensation3,315 2,975 
Accretion/amortization of investments, net167 (8)
Changes in operating assets and liabilities:
Receivable from collaborative partners(1,247)(5,000)
Prepaid expenses and other assets(2,276)233 
Accounts payable and other liabilities(5,125)(5,190)
Net cash used in operating activities(23,204)(15,112)
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of investments(6,238)(74,013)
Sales and maturities of investments63,284 84,851 
Purchases of property and equipment(317)(87)
Net cash provided by investing activities56,729 10,751 
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of common stock, upon the exercise of stock options167 36 
Payments on notes payable (1,375)
Net cash provided by (used in) financing activities167 (1,339)
Net increase (decrease) in cash, cash equivalents, and restricted cash33,692 (5,700)
Cash, cash equivalents and restricted cash, beginning of period250,516 171,077 
Cash, cash equivalents and restricted cash, end of period$284,208 $165,377 
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Interest paid$ $4 
Non-cash investing and financing activities:
Amounts accrued for property and equipment$58 $86 
See accompanying notes to unaudited consolidated financial statements.
5


AnaptysBio, Inc.
Notes to Unaudited Consolidated Financial Statements
1. Description of the Business
AnaptysBio, Inc. (“we,” “us,” “our,” or the “Company”) was incorporated in the state of Delaware in November 2005. We are a clinical-stage biotechnology company developing first-in-class immunology therapeutic product candidates focused on emerging immune control mechanisms applicable to inflammation and immuno-oncology indications. We develop our product candidates using our proprietary antibody discovery technology platform, which is based upon a breakthrough understanding of the natural process of antibody generation, known as somatic hypermutation, and replicates this natural process of antibody generation in vitro. We currently generate revenue from milestones achieved under our collaborative research and development arrangements.
    Since our inception, we have devoted our primary effort to research and development activities. Our financial support has been provided primarily from the sale of our common and preferred stock, as well as through funds received under our collaborative research and development agreements. Going forward, as we continue our expansion, we may seek additional financing and/or strategic investments. However, there can be no assurance that any additional financing or strategic investments will be available to us on acceptable terms, if at all. If events or circumstances occur such that we do not obtain additional funding, we will most likely be required to reduce our plans and/or certain discretionary spending, which could have a material adverse effect on our ability to achieve our intended business objectives. Our management believes our currently available resources will provide sufficient funds to enable us to meet our operating plans for at least the next twelve months. The accompanying consolidated financial statements do not include any adjustments that might be necessary if we are unable to continue as a going concern.
2. Summary of Significant Accounting Policies
Basis of Presentation
The accompanying unaudited consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). Certain information and note disclosures normally included in annual financial statements prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) have been omitted. The accompanying unaudited consolidated financial statements include all known adjustments necessary for a fair presentation of the results of interim periods as required by U.S. GAAP. These adjustments consist primarily of normal recurring accruals and estimates that impact the carrying value of assets and liabilities. Operating results for the three months ended March 31, 2021 are not necessarily indicative of the results that may be expected for the year ending December 31, 2021. Interim results are not necessarily indicative of results for a full year, particularly in light of the novel coronavirus (“COVID-19”) pandemic, and its impact on domestic and global economies. To limit the spread of COVID-19, governments have taken various actions, including the issuance of stay-at-home orders and social distancing guidelines, which have resulted in some businesses suspending operations or experiencing a reduction in demand for many products from direct or ultimate customers. Accordingly, businesses have adjusted, reduced or suspended operating activities. The effects of the stay-at-home orders and our work-from-home policies may negatively impact productivity, disrupt our business, and delay our development programs and regulatory and commercialization timelines, the magnitude of which will depend, in part, on the length and severity of the restrictions and other limitations on our ability to conduct our business in the ordinary course. Our future research and development expenses and general and administrative expenses may vary significantly if we experience an increased impact from the COVID-19 pandemic on the costs and timing associated with the conduct of our clinical trials and other related business activities, to date there has not been any material delays in clinical operations. The financial statements should be read in conjunction with our audited financial statements for the year ended December 31, 2020 included in our Annual Form 10-K.
Basis of Consolidation
The accompanying consolidated financial statements include us and our wholly-owned Australian subsidiary. All intercompany accounts and transactions have been eliminated in consolidation. We operate in one reportable segment, and our functional and reporting currency is the U.S. dollar.
6


Use of Estimates
The preparation of the accompanying consolidated financial statements in conformity with U.S. GAAP requires our management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates. We base our estimates and assumptions on historical experience when available and on various factors that we believe to be reasonable under the circumstances. We evaluate our estimates and assumptions on an ongoing basis. The full extent to which the COVID-19 pandemic will directly or indirectly impact our business, results of operations, and financial condition, including expenses, reserves and allowances, manufacturing, clinical trials, research and development costs, and employee-related amounts, will depend on future developments that are highly uncertain, including as a result of new information that may emerge concerning COVID-19 and the actions taken to contain or treat it, as well as the economic impact on local, regional, national and international markets. Our actual results could differ from these estimates under different assumptions or conditions.
Revenue Recognition
Revenue is recognized in accordance with revenue recognition accounting guidance, which utilizes five basic steps to determine whether revenue can be recognized and to what extent: (i) identify the contract with a customer; (ii) identify the performance obligation; (iii) determine the transaction price; (iv) allocate the transaction price; and (v) determine the recognition period.
Performance Obligations. We evaluate deliverables on a contract-by-contract basis to determine whether each deliverable represents a good or service that is distinct or has the same pattern of transfer as other deliverables. A deliverable is considered distinct if the customer can benefit from the good or service independently of other goods/services either in the contract or that can be obtained elsewhere, without regard to contract exclusivity, and the entity’s promise to transfer the good or service to the customer is separately identifiable from other promises in the contact. If the deliverable is not considered distinct, we combine such deliverables and account for them as a single performance obligation. We allocate the consideration to each deliverable at the inception of the arrangement based on the transaction price.
Our performance obligations may include the following:
License Arrangements. The performance obligations under our collaboration and license agreements generally include exclusive or nonexclusive licenses to one or more products generated using our technologies. Licenses for multiple antibodies within a single contract are generally combined as they have substantially the same pattern of transfer to the customer. Historically, our licenses have held no value to the customer, as the antibodies were in the discovery phase and required our expertise for further development. Accordingly, licenses are not considered distinct.
Research and Development Services. The performance obligations under our collaboration and license agreements generally include research and development services we perform on behalf of or with our collaborators. As discussed within license arrangements above, our licenses have historically held no value without the research and development services we provide. As we generally only provide research and development services for internally generated antibodies that require a license to be utilized by a third party, our research and development services are not considered distinct.
Steering Committee Meetings. The performance obligations under our collaboration and license agreements may also include our participation on steering committees, which allows us to direct the progression of our discovery programs. As these steering committees would not occur or benefit the customer without the use of our licenses, these are not considered distinct.
We recognize consideration allocated to a performance obligation as the performance obligation is satisfied, and the determination as to whether consideration is recognized over time or at a point in time is made upon contract inception. For our collaboration agreements, this is generally over the period in which research and development services have been performed.
Transaction Price. Our collaboration and license agreements generally include both fixed and variable consideration. Fixed payments, such as those for upfront fees are included in the transaction price at contract value, while variable consideration such as reimbursement for research and development services, milestone and royalty payments are estimated and then evaluated for constraints upon inception of the contract and evaluated on a quarterly basis thereafter. Research and
7


development services are updated for actual invoices. Given the nature of our agreements, milestones are estimated using the most likely amount and are evaluated on a quarterly basis. Upon commercialization, royalty payments will be recognized in the period incurred.
Royalty Revenue
We receive royalty revenue on sales by our partners of products covered by patents or contract rights that we own and net sales of their approved drugs, where we have concluded the license is the predominant item to which the royalties relate. We do not have future performance obligations under these license arrangements. We generally satisfy our obligation to grant intellectual property rights on the effective date of the contract. However, we apply the royalty recognition constraint required under the guidance for sales-based royalties which requires a sales-based royalty to be recorded when the underlying sale occurs. Therefore, royalties on sales of products commercialized by our partners are recognized in the quarter the product is sold. Our partners generally report sales information to us on a one quarter lag. Thus, we estimate the expected royalty proceeds based on an analysis of our partners’ historical experience including their publicly announced sales. Differences between actual and estimated royalty revenues are adjusted for in the period in which they become known, typically the following quarter.
Net Loss Per Common Share
Basic net loss per common share is computed by dividing net loss by the weighted-average number of common shares outstanding during the period. Diluted net loss per share is computed by dividing net loss by the weighted-average number of common equivalent shares outstanding for the period, as well as any dilutive effect from outstanding stock options and warrants using the treasury stock method. For each period presented, there is no difference in the number of shares used to calculate basic and diluted net loss per share.
The following table sets forth the weighted-average outstanding potentially dilutive securities that have been excluded in the calculation of diluted net loss per share because to do so would be anti-dilutive (in common stock equivalent shares):
Three Months Ended
March 31,
(in thousands)20212020
Options to purchase common stock3,445 3,021 
3. Balance Sheet Accounts and Supplemental Disclosures
Property and Equipment, net
Property and equipment, net consist of the following:
(in thousands)March 31, 2021December 31, 2020
Laboratory equipment$5,226 $5,225 
Office furniture and equipment976 976 
Leasehold improvements620 527 
Property and equipment, gross6,822 6,728 
Less: accumulated depreciation and amortization(5,068)(4,945)
Total property and equipment, net$1,754 $1,783 
 
8


Accrued Expenses
Accrued expenses consist of the following:
(in thousands)March 31, 2021December 31, 2020
Accrued compensation and related expenses$2,019 $3,688 
Accrued professional fees638 408 
Accrued research, development and manufacturing expenses8,976 10,936 
Other193 230 
Total accrued expenses$11,826 $15,262 
4. Collaborative Research and Development Agreements
GlaxoSmithKline Collaboration
In March 2014, we entered into a Collaboration and Exclusive License Agreement (the “GSK Agreement”) with TESARO, Inc. (“Tesaro”), an oncology-focused biopharmaceutical company now a part of GlaxoSmithKline (Tesaro and GlaxoSmithKline are hereinafter referred to, collectively, as “GSK”). Under the terms of the GSK Agreement, we agreed to perform certain discovery and early preclinical development of therapeutic antibodies with the goal of generating immunotherapy antibodies for subsequent preclinical, clinical, regulatory, and commercial development to be performed by GSK. Under the terms of the GSK Agreement, GSK paid an upfront license fee of $17.0 million in March 2014 and agreed to provide funding to us for research and development services related to antibody discovery programs for three specific targets. In November 2014, Amendment No. 1 to the GSK Agreement was agreed by both parties to add an antibody discovery program against an undisclosed fourth target for an upfront license fee of $2.0 million.
For each development program, we are eligible to receive milestone payments of up to $18.0 million if certain preclinical and clinical trial events are achieved by GSK, up to an additional $90.0 million if certain U.S. and European regulatory submissions and approvals in multiple indications are achieved, and up to an additional $165.0 million upon the achievement of specified levels of annual worldwide net sales. We will also be eligible to receive tiered single-digit royalties related to worldwide net sales of products developed under the collaboration. Unless earlier terminated by either party upon specified circumstances, the GSK Agreement will terminate, with respect to each specific developed product, upon the later of the 12th anniversary of the first commercial sale of the product or the expiration of the last to expire of any patent. Prior to the adoption of ASC 606, Revenue from Contracts with Customers, we determined that the upfront license fees and research funding under the GSK Agreement, as amended, should be accounted for as a single unit of accounting and that the upfront license fees should be deferred and recognized as revenue over the same period that the research and development services are performed. In February 2016, Amendment No. 2 to the GSK Agreement was agreed by both parties to define the effective dates of the development programs of the GSK Agreement. We determined that the research and development services would be extended through December 31, 2016. As a result, the period over which the unrecognized license fees and discovery milestones were recognized was extended through December 31, 2016 and have since been recognized in full.
We assessed these arrangements in accordance with ASC 606 and concluded that the contract counterparty, GSK, is a customer. We identified the following material promises under the GSK Agreement: (1) the licenses under certain patent rights relating to six discovery programs (four targets) and transfer of certain development and regulatory information, (2) research and development (“R&D”) services, and (3) joint steering committee meetings. We considered the research and discovery capabilities of GSK for these specific programs, GSK’s inability to sub-license, and the fact that the discovery and optimization of these antibodies is proprietary and could not, at the time of contract inception, be provided by other vendors, to conclude that the license does not have stand-alone functionality and is therefore not distinct. Additionally, we determined that the joint steering committee participation would not have been provided without the R&D services and license agreement. Based on these assessments, we identified all services to be interrelated and therefore concluded that the promises should be combined into a single performance obligation at the inception of the arrangement.
9


On October 23, 2020, Amendment No. 3 to the GSK Agreement (the “Amendment”) was agreed to by both parties to permit GSK to conduct development and commercialization of Zejula, an oral, once-daily poly (ADP-ribose) polymerase (PARP) inhibitor, which has received U.S. approval for the maintenance treatment of adult patients with advanced epithelial ovarian, fallopian tube, or primary peritoneal cancer who are in a complete or partial response to first-line platinum-based chemotherapy, and is under development for additional cancer indications. In addition, under the Amendment, we were granted increased royalties upon sales of JEMPERLI (dostarlimab), an anti-PD-1 antagonist antibody under development by GSK for multiple oncological disorders. The Amendment also provided for a one-time, non-refundable cash payment of $60.0 million that we received and recognized as revenue in the fourth quarter of 2020. GSK also agreed, starting January 1, 2021, to pay us a 1% royalty on all GSK net sales of Zejula. The $1.1 billion in cash milestone payments due under the GSK Agreement remain unchanged. Additionally, under the terms of the Amendment, GSK has agreed to certain diligence commitments with respect to the future development of JEMPERLI, and the parties have agreed to review such commitments under regular joint review committee meetings going forward.
We assessed this Amendment in accordance with ASC 606 and concluded the Amendment was a contract modification to the GSK Agreement. Based on our assessment, we identified the terms of the Amendment to be interrelated to the GSK Agreement’s single performance obligation, noting completion and delivery of terms under the Amendment were satisfied by both parties with the execution of the Amendment.
As of March 31, 2021, the transaction price for the GSK Agreement and Amendment includes the upfront payment, research reimbursement revenue, one-time payment associated with the Amendment, and milestones earned to date, which are allocated in their entirety to the single performance obligation.
We earned and recognized $1.2 million in royalty revenue during the three months ended March 31, 2021 related to GSK net sales of Zejula during the period based on estimates of GSK’s sales historical experience. GSK reports sales information to us on a one quarter lag and differences between actual and estimated royalty revenues will be adjusted in the following quarter.
We earned and recognized one clinical milestone for $10.0 million during the three months ended March 31, 2021. No other future clinical or regulatory milestones have been included in the transaction price, as all milestone amounts were subject to the revenue constraint. As part of the constraint evaluation, we considered numerous factors including the fact that the receipt of milestones is outside of our control and contingent upon success in future clinical trials, an outcome that is difficult to predict, and GSK’s efforts. Any consideration related to sales-based milestones, including royalties, will be recognized when the related sales occur as they were determined to relate predominantly to the intellectual property license granted to GSK and therefore have also been excluded from the transaction price. We will re-evaluate the variable transaction price in each reporting period and as uncertain events are resolved or other changes in circumstances occur.
Milestones recognized through March 31, 2021 under the GSK Agreement are as follows:
Anti-PD-1
(JEMPERLI/Dostarlimab)
Anti-TIM-3
(GSK4069889A/Cobolimab)
Anti-LAG-3
(GSK40974386)
Milestone EventAmountQuarter RecognizedAmountQuarter RecognizedAmountQuarter Recognized
Initiated in vivo toxicology studies using good laboratory practices (GLPs)
$1.0MQ2'15$1.0MQ4'15$1.0MQ3'16
IND clearance from the FDA$4.0MQ1'16$4.0MQ2'16$4.0MQ2'17
Phase 2 clinical trial initiation$3.0MQ2'17$3.0MQ4'17$3.0MQ4'19
Phase 3 clinical trial initiation - first indication$5.0MQ3'18
Phase 3 clinical trial initiation - second indication$5.0MQ2'19
Filing of the first BLA - first indication$10.0MQ1'20
Filing of the first MAA - first indication$5.0MQ1'20
Filing of the first BLA - second indication
$10.0MQ1'21
Milestones achieved during the discovery period were recognized as revenue pro-rata through December 31, 2016. Milestones achieved during fiscal 2017 were recognized as revenue in the period earned, while milestones after December 31,
10


2017 are recognized upon determination that a significant reversal of revenue would not be probable. Cash is generally received within 30 days of milestone achievement.
We recognized $11.2 million and $15.0 million in revenue under the GSK Agreement during the three months ended March 31, 2021 and 2020, respectively.
Antibody Generation Agreement with Bristol-Myers Squibb
In December 2011, we entered into a license and collaboration agreement (the “BMS Agreement”) with Celgene, now a part of Bristol-Myers Squibb (Celgene and Bristol-Myers Squibb are hereinafter referred to, collectively, as “BMS”), to develop therapeutic antibodies against multiple targets. We granted BMS the option to obtain worldwide commercial rights to antibodies generated against each of the targets under the agreement, which option was triggered on a target-by-target basis by our delivery of antibodies meeting certain pre-specified parameters pertaining to each target under the agreement.
The BMS Agreement provided for an upfront payment of $6.0 million from BMS, which we received in 2011 and recognized through 2014, milestone payments of up to $53.0 million per target, low single-digit royalties on net sales of antibodies against each target, and reimbursement of specified research and development costs.
We assessed this arrangement in accordance with ASC Topic 606 and concluded that the contract counterparty, BMS, is a customer. We identified the following material promises under the BMS Agreement: (1) the licenses under certain patent rights relating to four targets and transfer of certain development and regulatory information, (2) R&D services, (3) a written report documenting findings, and (4) steering committee meetings. We considered the research and discovery capabilities of BMS, BMS’s inability to sub-license the four targets, and the fact that the discovery and optimization of these antibodies is proprietary and could not, at the time of contract inception, be provided by other vendors, to conclude that the license does not have stand-alone functionality and is therefore not distinct. Additionally, we determined that the report of findings and steering committee participation would not have been provided without the R&D services and license agreement. Based on these assessments, we identified all services to be interrelated, and therefore concluded that the promises should be combined into a single performance obligation at the inception the arrangement.
As of March 31, 2021, the transaction price of the BMS Agreement includes the upfront payment, success fees, expense reimbursement, and milestones earned to date, which are allocated in their entirety to the single performance obligation. None of the future clinical or regulatory milestones have been included in the transaction price, as all milestone amounts were subject to the revenue constraint. As part of the constraint evaluation, we considered numerous factors, including the fact that the receipt of milestones is outside of our control and contingent upon success in future clinical trials and BMS’s efforts. Any consideration related to sales-based milestones, including royalties, will be recognized when the related sales occur as they were determined to relate predominantly to the intellectual property license granted to BMS and therefore have also been excluded from the transaction price. We will re-evaluate the transaction price in each reporting period and as uncertain events are resolved or other changes in circumstances occur.
Milestones achieved through March 31, 2021 under the BMS Agreement are as follows:
Anti-PD-1
(CC-90006)
Milestone EventAmountQuarter Recognized
Completion of first in vivo toxicology studies using GLPs
$0.5MQ2'16
Phase 1 clinical trial initiation$1.0MQ4'16
Revenue from future contingent milestone payments will be recognized when it is more likely than not that the revenue will not be reversed in future periods. Cash is generally received within 30 days of milestone achievement.
There was no revenue recognized under this agreement during the three months ended March 31, 2021 and 2020.
5. Fair Value Measurements and Available for Sale Investments
Fair Value Measurements
11


Our financial instruments consist principally of cash, cash equivalents, restricted cash, short-term and long-term investments, receivables, accounts payable, and notes payable. Certain of our financial assets and liabilities have been recorded at fair value in the consolidated balance sheet in accordance with the accounting standards for fair value measurements.
Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants on the measurement date. Accounting guidance also establishes a fair value hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The standard describes three levels of inputs that may be used to measure fair value:
Level 1 - Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets.
Level 2 - Inputs are observable, unadjusted quoted prices in active markets for similar assets or liabilities, unadjusted quoted prices for identical or similar assets or liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the related assets or liabilities; and
Level 3 - Unobservable inputs that are supported by little or no market activities, therefore requiring an entity to develop its own assumptions.
Assets and Liabilities Measured at Fair Value on a Recurring Basis
The following table summarizes our assets and liabilities that require fair value measurements on a recurring basis and their respective input levels based on the fair value hierarchy:
Fair Value Measurements at End of Period Using:
(in thousands)
Fair
Value
Quoted Market
Prices for
Identical Assets
(Level 1)
Significant
Other Observable
Inputs
(Level 2)
Significant
Unobservable
Inputs
(Level 3)
At March 31, 2021
Money market funds(1)
$267,463 $267,463 $ $ 
Mutual funds(1)
18,928 18,928   
U.S. Treasury securities(2)
74,027 74,027   
Certificates of deposit(2)
2,067  2,067  
Agency securities(2)
11,164  11,164  
Commercial and corporate obligations(2)
16,010  16,010  
At December 31, 2020
Money market funds(1)
$188,297 $188,297 $ $ 
Mutual funds(1)
57,153 57,153   
U.S. Treasury securities(2)
107,697 107,697   
Certificates of deposit(2)
2,436  2,436  
 Agency securities(2)
21,169  21,169  
Commercial and corporate obligations(2)
29,441  29,441  
(1)    Included in cash and cash equivalents or restricted cash in the accompanying consolidated balance sheets.
(2)    Included in short-term or long-term investments in the accompanying consolidated balance sheets depending on the respective maturity date.
The following methods and assumptions were used to estimate the fair value of our financial instruments for which it is practicable to estimate that value:
Marketable Securities. For fair values determined by Level 1 inputs, which utilize quoted prices in active markets for identical assets, the level of judgment required to estimate fair value is relatively low. For fair values determined by Level 2 inputs, which utilize quoted prices in less active markets for similar assets, the level of judgment required to estimate fair value is also considered relatively low.
12


Fair Value of Other Financial Instruments
 The carrying amounts of certain of our financial instruments, including cash and cash equivalents, accounts payable, and accrued expenses approximate fair value due to their short-term nature.
Available for Sale Investments
We invest our excess cash in agency securities, debt instruments of financial institutions and corporations, commercial obligations, and U.S. Treasury securities, which we classify as available-for-sale investments. These investments are carried at fair value and are included in the tables above. The aggregate market value, cost basis, and gross unrealized gains and losses of available-for-sale investments by security type, classified in cash equivalents, short-term and long-term investments as of March 31, 2021 are as follows:
(in thousands)Amortized
Cost
 Gross
Unrealized Gains
 Gross
Unrealized Losses
 Total
Fair Value
Agency securities(1)
$11,167 $ $(3)$11,164 
Certificates of deposit(2)
2,063 4  2,067 
Commercial and corporate obligations(3)
16,008 4 (2)16,010 
U.S. Treasury securities(4)
73,935 92  74,027 
     Total available-for-sale investments$103,173 $100 $(5)$103,268 
(1)    Of our outstanding agency securities, $5.0 million have maturity dates of less than one year and $6.2 million have a maturity date of between one to two years as of March 31, 2021.
(2)    Of our outstanding certificates of deposit, $1.2 million have maturity dates of less than one year and $0.9 million have a maturity date of between one to two years as of March 31, 2021.
(3)    All of our outstanding commercial and corporate obligations have maturity dates of less than one year as of March 31, 2021.
(4)    All of our outstanding U.S. Treasury securities have maturity dates of less than one year as of March 31, 2021.
The aggregate market value, cost basis, and gross unrealized gains and losses of available-for-sale investments by security type, classified in cash equivalents, short-term and long-term investments as of December 31, 2020 are as follows:
(in thousands)Amortized
Cost
 Gross
Unrealized Gains
 Gross
Unrealized Losses
 Total
Fair Value
Agency securities(1)
$21,169 $1 $(1)$21,169 
Certificates of deposit(2)
2,427 9  2,436 
Commercial and corporate obligations(3)
29,414 28 (1)29,441 
US Treasury securities(4)
107,530 170 (3)107,697 
     Total available-for-sale investments$160,540 $208 $(5)$160,743 
(1)    Of our outstanding agency securities, $10.0 million have maturity dates of less than one year and $11.2 million have a maturity date of between one to two years as of December 31, 2020.
(2)     Of our outstanding certificates of deposit, $1.1 million have a maturity date of less than one year and $1.3 million have a maturity date of between one to two years as of December 31, 2020.
(3)     Of our outstanding commercial and corporate obligations, $29.4 million have maturity dates of less than one year and $0.0 million have a maturity date of between one to two years as of December 31, 2020.
(4)     Of our outstanding U.S. Treasury securities, $102.7 million have maturity dates of less than one year and $5.0 million have a maturity date of between one to two years as of December 31, 2020.
The following tables present gross unrealized losses and fair values for those investments that were in an unrealized loss position as of March 31, 2021 and December 31, 2020, aggregated by investment category and the length of time that individual securities have been in a continuous loss position:
13


March 31, 2021
Less than 12 Months12 Months or GreaterTotal
(in thousands)
Fair Value
Gross
Unrealized Losses
Fair Value
Gross
Unrealized Losses
Fair Value
Gross
Unrealized Losses
Agency securities$6,163 $(3)$ $ $6,163 $(3)
Commercial and corporate obligations4,777 (2)  4,777 (2)
Total
$10,940 $(5)$ $ $10,940 $(5)
December 31, 2020
Less than 12 Months12 Months or GreaterTotal
(in thousands)
Fair Value
Gross
Unrealized Losses
Fair Value
Gross
Unrealized Losses
Fair Value
Gross
Unrealized Losses
Agency securities$4,999 $(1)$ $ $4,999 $(1)
Commercial and corporate obligations6,503 (1)2,399  8,902 (1)
US Treasury Securities35,211 (3)  35,211 (3)
Total
$46,713 $(5)$2,399 $ $49,112 $(5)
As of March 31, 2021 and 2020, unrealized losses on available-for-sale investments were not material, and accordingly, no allowance for credit losses were recorded.
6. Stockholders’ Equity
Common Stock
Of the 500,000,000 shares of common stock authorized, 27,367,355 shares were issued and outstanding as of March 31, 2021. Common stock reserved for future issuance upon the exercise, issuance or conversion of the respective equity instruments at March 31, 2021 are as follows:
 
Issued and Outstanding:
Stock options3,824,494 
Shares Reserved For:
2017 Equity Incentive Plan
3,164,750 
2017 Employee Stock Purchase Plan1,271,237 
Total8,260,481 
7. Equity Incentive Plans
2017 Equity Incentive Plan
On January 12, 2017, our board of directors and stockholders approved and adopted the 2017 Equity Incentive Plan (the “2017 Plan”). The 2017 Plan became effective upon the execution and delivery of the underwriting agreement for our initial public offering on January 26, 2017 and replaced our existing 2006 Equity Incentive Plan. Under the 2017 Plan, we may grant stock options, stock appreciation rights, restricted stock, restricted stock units and other awards to individuals who are then our employees, officers, directors or consultants. In addition, the number of shares of stock available for issuance under the 2017 Plan will be automatically increased each January 1, beginning on January 1, 2018, by 4% of the aggregate number of outstanding shares of our common stock as of the immediately preceding December 31 or such lesser number as determined by our board of directors. The 2017 Plan automatically increased by 1,094,223 shares as of January 1, 2021.
14


Employee Stock Purchase Plan
On January 12, 2017, our board of directors and stockholders approved and adopted the 2017 Employee Stock Purchase Plan or the ESPP. The ESPP became effective upon the execution and delivery of the underwriting agreement for our initial public offering on January 26, 2017. In addition, the number shares of stock available for issuance under the ESPP will be automatically increased each January 1, beginning on January 1, 2018, by 1% of the aggregate number of outstanding shares of our common stock as of the immediately preceding December 31 or such lesser number as determined by our board of directors. The ESPP automatically increased by 273,555 shares as of January 1, 2021.
Stock Options
Stock options granted to employees and non-employees generally vest over a four-year period while stock options granted to directors vest over a one year period. Each stock option award has a maximum term of 10 years from the date of grant, subject to earlier cancellation prior to vesting upon cessation of service to us. A summary of the activity related to stock option awards during the three months ended March 31, 2021 is as follows:
 
Shares
Subject to
Options
Weighted-Average
Exercise
Price per
Share
Weighted-Average
Remaining
Contractual
Term
(in years)
Aggregate
Intrinsic
Value (in
thousands)
Outstanding at January 1, 20212,920,700 $26.67 
Granted1,011,724 $29.63 
Exercises(11,780)$14.20 
Forfeitures and cancellations(96,150)$27.24 
Outstanding at March 31, 20213,824,494 $27.48 7.67$17,205 
Exercisable at March 31, 20211,715,491 $26.91 5.70$12,760 
Stock-Based Compensation Expense
We recognize stock-based compensation expense for awards issued to employees and non-employees over the requisite service period based on the estimated grant-date fair value of such awards. We record the expense for stock-based compensation awards subject to performance-based milestone vesting over the requisite service period when management determines that achievement of the milestone is probable. Management evaluates when the achievement of a performance-based milestone is probable based on the expected satisfaction of the performance conditions at each reporting date. The estimated fair values of stock option awards granted to employees were determined on the date of grant using the Black-Scholes option valuation model with the following weighted-average assumptions:
Three Months Ended
March 31,
20212020
Risk-free interest rate0.7%1.7%
Expected volatility93.0%92.0%
Expected dividend yield % %
Expected term (in years)6.186.25
Weighted-average grant date fair value per share$22.47$11.25
We determine the appropriate risk-free interest rate, expected term for employee stock-based awards, contractual term for non-employee stock-based awards, and volatility assumptions. The weighted-average expected option term for employee and non-employee stock-based awards reflects the application of the simplified method, which defines the life as the average of the contractual term of the options and the weighted-average vesting period for all option tranches. Estimated volatility for 2021 incorporates the historical volatility of our stock price, and volatility for 2020 incorporates our stock price as well as similar entities whose share prices are publicly available. The risk-free interest rate is based upon U.S. Treasury securities with
15


remaining terms similar to the expected or contractual term of the stock-based payment awards. The assumed dividend yield is based on our expectation of not paying dividends in the foreseeable future.
Total non-cash stock-based compensation expense for all stock awards that was recognized in the consolidated statements of operations and comprehensive loss is as follows:
Three Months Ended
March 31,
(in thousands)20212020
Research and development$1,194 $1,146 
General and administrative2,121 1,829 
Total$3,315 $2,975 
 
At March 31, 2021, there was $40.6 million of unrecognized compensation cost related to unvested stock option awards, which is expected to be recognized over a remaining weighted-average vesting period of 2.91 years.
8. Commitments and Contingencies
Operating Leases
On November 11, 2020, we entered into an agreement to terminate our sublease (the “Sublease Termination”) with Trex Enterprises Corporation, with respect to facilities in the building at 10455 Pacific Center Court in San Diego, California (the “10455 Building”). The terms of the original sublease with Trex provided for a November 12, 2021 lease expiration. Under the Sublease Termination, we agreed to terminate the sublease agreement on December 15, 2020 with no associated penalty. We recorded a non-cash gain of approximately $0.1 million as other income, in connection with the write-off of the lease liability and corresponding ROU asset. As of March 31, 2021, there was no lease liability and corresponding ROU asset related to the 10455 Building Lease.
As of March 31, 2021, we maintain the non-cancellable office lease for our facilities at 10421 Pacific Center Court in San Diego, California, which expires on August 31, 2021. Our lease payments are fixed, and we recognize lease expense for leases on a straight-line basis over the lease term. Operating lease ROU assets and lease liabilities are recorded based on the present value of the future minimum lease payments over the lease term at commencement date. As our leases do not provide an implicit rate, we used our incremental borrowing rate based on the information available at effective date of adoption in determining the present value of future payments. The weighted-average discount rate used was 8.59%.
Our balance sheet includes our ROU assets and lease liabilities for the non-cancellable office lease as follows (in thousands):
LeasesClassification on the Balance SheetMarch 31, 2021December 31, 2020
Operating ROU assetsOther long-term assets$218 $344 
Operating lease liabilitiesOther current liabilities197 342 
The following non-cancellable office lease costs are included in our consolidated statements of cash flow (in thousands):
Three Months Ended
March 31,
LeasesClassification on the Cash Flow20212020
Operating lease costOperating$133 $220 
Cash paid for amounts included in the measurement of lease liabilitiesOperating151 239 
16


At March 31, 2021, the future minimum annual obligations for the non-cancellable office lease are as follows (in thousands):
Years Ending December 31,
2021$201 
2022 
2023 
2024 
2025 
Thereafter 
Total minimum payments required201 
Less imputed interest(4)
Total$197 
On May 4, 2020, we entered into a lease agreement with Wateridge Property Owner, LP, with respect to facilities in the building at 10770 Wateridge Circle, San Diego, California 92121 (the “Lease Agreement”). Under the Lease Agreement, we agreed to lease approximately 45,000 square feet of space for a term of 124 months, beginning on April 5, 2021. The terms of the Lease Agreement provide us with an option to extend the term of the lease for an additional five years, as well as a one-time option to terminate the lease after seven years with the payment of a termination fee. The monthly base rent will be $4.20 per rentable square foot and will be increased by 3% annually. Under the Lease Agreement, we are also responsible for our pro rata share of real estate taxes, building insurance, maintenance, direct expenses, and utilities. As of March 31, 2021, we have recorded $0.3 million in prepaid rent and $0.3 million as a security deposit in accordance with the terms of the Lease Agreement.
At March 31, 2021, the future minimum annual obligations for the Lease Agreement in excess of one year are as follows (in thousands):
Years Ending December 31,
2021$568 
20222,328 
20232,397 
20242,469 
20252,543 
Thereafter15,420 
Total minimum payments required$25,725 
17


Shareholder Lawsuit
On March 25, 2020, a putative securities class action was filed in the United States District Court for the Southern District of California naming the Company and certain of its current or former officers as defendants. The complaint purports to assert claims under Section 10(b) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), Exchange Act Rule 10b-5, and Section 20(a) of the Exchange Act, on behalf of persons and entities who acquired our common stock between October 10, 2017 and November 7, 2019 (the “Class Period”). An amended complaint was filed on September 30, 2020 alleging that, during the Class Period, the defendants made material misrepresentations or omissions regarding our etokimab product candidate that artificially inflated our stock price. The plaintiff seeks, among other things, damages in an unspecified amount, as well as costs and expenses. We believe that the plaintiff’s allegations are without merit and intend to vigorously defend against the claims. Because the Company is in the early stages of this litigation matter, we are unable to estimate a reasonably possible loss or range of loss, if any, that may result from these matters. On September 1, 2020, a related shareholder derivative complaint was filed in the same Court based on allegations substantially similar to those in the class action, and asserting claims against current or former officers and directors for contribution under Sections 10(b) and 21D of the Exchange Act, breach of fiduciary duty, unjust enrichment and corporate waste. On January 28, 2021, this derivative action was voluntarily dismissed without prejudice. On May 3, 2021, another shareholder derivative complaint was filed in the same Court based on allegations substantially similar to those in the class action, and purporting to assert claims on the Company’s behalf against current or former officers and directors for alleged violation of Sections 14(a) and 20(a) of the Exchange Act, breach of fiduciary duties, unjust enrichment, waste of corporate assets and insider selling.
9. Subsequent Events
Milestone Revenue
A Biologics License Application (“BLA”) for our most advanced partnered program, which is an anti-PD-1 antagonist antibody called JEMPERLI, was approved by the FDA in April 2021 for the treatment of advanced or recurrent deficient mismatch repair endometrial cancer (“dMMREC”). This is the first AnaptysBio-generated antibody, of eight currently under clinical development, to obtain FDA approval. We earned a $20.0 million milestone payment as a result of this FDA approval. In addition, in April 2021 the European Medicines Agency (“EMA”) granted conditional marketing authorization in the European Union (“EU”) for JEMPERLI for use in women with mismatch repair deficient (dMMR)/microsatellite instability-high (MSI-H) recurrent or advanced endometrial cancer who have progressed on or following prior treatment with a platinum containing regimen, which approval makes JEMPERLI the first anti-PD-1 therapy available for endometrial cancer in Europe. We earned a $10.0 million milestone payment as a result of this approval.
Leases
On April 5, 2021, the leasehold improvements were completed for the Lease Agreement and we took possession of the premises, see Note 8.




18


SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q (“Quarterly Report”) contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and section 27A of the Securities Act of 1933, as amended (the “Securities Act”). The words “believe,” “may,” “will,” “potentially,” “estimate,” “continue,” “anticipate,” “intend,” “could,” “would,” “project,” “plan,” and “expect,” and similar expressions that convey uncertainty of future events or outcomes, are intended to identify forward-looking statements.
The forward-looking statements in this report include, among other things, statements about:
the success, cost, and timing of our product candidate development activities and ongoing and planned clinical trials;
our plans to develop and commercialize antibodies, including our lead product candidate: imsidolimab for patients with generalized pustular psoriasis (“GPP”), skin toxicities associated with treatments with inhibitors of epidermal growth factor, ichthyosis, hidradenitis suppurativa, and acne;
the impact of the coronavirus (“COVID-19”) pandemic on our business and the United States (“U.S.”) and global economies;
the likelihood that the clinical data generated in any study we performed, are performing, or plan to perform in a non-U.S. jurisdiction will be subsequently accepted by the U.S. Food and Drug Administration (“FDA”) and/or by foreign regulatory authorities outside of the jurisdiction where the study was being performed;
the timing and ability of our collaborators to develop and commercialize our partnered product candidates;
the potential benefits and advantages of our product candidates and approaches versus those of our competitors;
our ability to execute on our strategy, including advancing our lead product candidates, identifying emerging opportunities in key therapeutic areas, continuing to expand our wholly-owned pipeline, and retaining rights to strategic products in key commercial markets;
our ability to obtain funding for our operations, including funding necessary to complete further development and commercialization of our product candidates;
the timing of and our ability to obtain and maintain regulatory approvals for imsidolimab and our other product candidates;
our ability to develop our product candidates;
the rate and degree of market acceptance and clinical utility of any approved product candidates;
the size and growth potential of the markets for any approved product candidates, and our ability to serve those markets;
our commercialization, marketing, and manufacturing capabilities and strategy;
our expectations regarding our ability to obtain and maintain intellectual property protection for our product candidates;
regulatory developments in the U.S., the United Kingdom, Australia, and other foreign countries;
the success of competing therapies that are or may become available;
our ability to attract and retain key scientific or management personnel;
our use of the net proceeds from our public offerings;
our ability to identify additional products or product candidates with significant commercial potential that are consistent with our commercial objectives; and
our estimates regarding expenses, future revenue, capital requirements, and needs for additional financing.
These forward-looking statements are subject to a number of risks, uncertainties, and assumptions, including those described in Part II, Item 1A, “Risk Factors,” and elsewhere in this Quarterly Report. Moreover, we operate in a competitive
19


and rapidly changing environment, and new risks emerge from time to time. It is not possible for our management to predict all risks, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements we may make. In light of these risks, uncertainties, and assumptions, the forward-looking events and circumstances discussed in this Quarterly Report may not occur, and actual results could differ materially and adversely from those anticipated or implied in the forward-looking statements.
You should not rely upon forward-looking statements as predictions of future events. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee that the future results, levels of activity, performance, or events and circumstances reflected in the forward-looking statements will be achieved or occur. We undertake no obligation to update publicly any forward-looking statements to conform these statements to actual results or to changes in our expectations, except as required by law.
You should read this Quarterly Report with the understanding that our actual future results, levels of activity, performance, and events and circumstances may be materially different from what we expect.
Unless the context indicates otherwise, as used in this Quarterly Report, the terms “AnaptysBio,” “company,” “we,” “us” and “our” refer to AnaptysBio, Inc., a Delaware corporation, and its subsidiaries taken as a whole, unless otherwise noted. AnaptysBio is our common law trademark. This Quarterly Report contains additional trade names, trademarks, and service marks of other companies, which are the property of their respective owners. We do not intend our use or display of other companies’ trade names, trademarks, or service marks to imply a relationship with, or endorsement or sponsorship of us by, these other companies.
20


Item 2. Management’s Discussion and Analysis of Financial 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 consolidated financial statements and related notes for the three months ended March 31, 2021, included in Part I, Item 1 of this report and with our audited consolidated financial statements and related notes thereto for the year ended December 31, 2020 included in our Annual Report on Form 10-K. This discussion and other sections of this Quarterly Report contain forward-looking statements that involve risks and uncertainties, such as our plans, objectives, expectations, intentions, and beliefs. Our actual results could differ materially from those discussed in these forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those identified below and those discussed in the section entitled “Risk Factors” included in Part II, Item 1A of this Quarterly Report. You should also carefully read “Special Note Regarding Forward-Looking Statements.”
Overview
We are a clinical stage biotechnology company developing first-in-class immunology therapeutic product candidates focused on emerging immune control mechanisms applicable to inflammation and immuno-oncology indications. We develop our product candidates using our proprietary antibody discovery technology platform, which is based upon a breakthrough understanding of the natural process of antibody generation, known as somatic hypermutation (“SHM”), and replicates this natural process of antibody generation in vitro. Our strategy is to advance the development of our proprietary product candidates, and where applicable, establish partnerships with leading biopharmaceutical companies where we retain certain development and commercialization rights. Our most advanced wholly-owned antibody programs, imsidolimab, ANB030 and ANB032, are designed to modulate therapeutic targets that are genetically associated with human inflammatory disorders.
Imsidolimab, our IL-36R antibody previously referred to as ANB019, inhibits the interleukin-36 receptor (“IL-36R”), and is being developed for the treatment of multiple dermatological inflammatory diseases. We completed a Phase 1 clinical trial in healthy volunteers, which was presented at the European Academy of Allergy and Clinical Immunology in 2018, where imsidolimab was well-tolerated by all subjects, no dose-limiting toxicities were observed, and no serious adverse events were reported among any subjects in the clinical trial. In July 2020, the U.S. Food and Drug Administration (the “FDA”) granted Orphan Drug Designation for imsidolimab for the treatment of patients with GPP. We are conducting an open-label, multi-dose, single-arm Phase 2 clinical trial of imsidolimab in 8 GPP patients, also referred to as the GALLOP clinical trial, where we announced positive topline data in October 2020. Six of 8 (75%) patients treated with imsidolimab monotherapy achieved the primary endpoint of improvement in the clinical global impression scale (“CGI”) on Day 29. Two of 8 (25%) patients were considered to have not met the primary endpoint because they dropped out of the clinical trial prior to Day 29. The modified Japanese Dermatology Association Severity Index (“mJDA-SI”) score, which incorporates both dermatological and systemic aspects of GPP, decreased on average by 29% on Day 8 and 54% on Day 29. Erythema with skin pustules, which clinically defines GPP, decreased by 60% on Day 8 and 94% on Day 29. Serum c-reactive protein (“CRP”), which is an indicator of systemic inflammation, was normal (less than 5 mg/L) for 5 of the 6 patients achieving the primary endpoint on Day 29. Genotypic testing indicated homozygous wild-type IL-36RN, CARD14 and AP1S3 alleles for all tested patients. We believe this suggests that imsidolimab may be broadly applicable to pustular diseases irrespective of genetic drivers. Anti-drug antibodies were not detected as of Day 29 in any patient. Imsidolimab was generally well-tolerated, and most treatment-emergent adverse events were mild to moderate in severity and resolved without sequelae. No infusion or injection site reactions were observed. One patient dropped out of the clinical trial due to a diagnosis of Staphylococcal aureus bacteremia in the first week, which was a serious adverse event deemed to be possibly drug-related. Because the patient was symptomatic prior to dosing and had a prior medical history of bacteremia, a common comorbidity of GPP, we do not believe this event is likely attributable to imsidolimab. Another patient dropped out of the study on Day 22 due to investigator reported inadequate efficacy. One patient contracted COVID-19 during the course of the clinical trial, which was mild, unrelated to imsidolimab, and did not lead to study discontinuation. Data from the first two patients to have completed the Day 113 treatment period under this clinical trial, which we announced in September 2019, indicated sustained efficacy in these two patients through Day 113. We plan to report full data from the GALLOP clinical trial at a medical conference in 2021. While initial GPP epidemiology studies suggested at least 3,000 GPP patients in the United States, medical claims analyses conducted by IQVIA indicate approximately 37,000 unique patients were diagnosed with GPP at least once, and approximately 15,000 unique patients were diagnosed with GPP at least twice, by a physician between 2017 and 2019 using the International Classification of Diseases 10th Revision (ICD-10) billing code pertaining to GPP (L40.1). We have most recently met with the FDA during the second quarter of 2021 for an end-of-Phase 2 meeting to review an orphan disease registration plan for imsidolimab for the treatment of GPP and anticipate announcing key aspects of our Phase 3 trial design upon its initiation in mid-2021. We have
21


initiated a global registry of GPP patients, also referred to as the RADIANCE study, which we anticipate will improve understanding of the patient journey and assist in enrollment of future GPP clinical trials.
We have also conducted a randomized, double-blind, placebo-controlled 59-patient multi-dose clinical trial of imsidolimab in PPP, also referred to as the POPLAR clinical trial, where top-line data was announced in March 2021. This trial failed to meet the primary endpoint, as least-squares mean difference (LSMD) PPPASI improvement at week 16 (Day 113) was 6.1 for imsidolimab-treated patients and 6.3 for placebo-treated patients relative to their respective baselines, a p-value of 0.93 for the difference between the groups. Twenty-four patients completed the week 16 primary endpoint analysis in each arm of the trial. Imsidolimab-treated patients had a mean PPPASI change from baseline of 5.78 or 38% improvement, while placebo-treated patients improved by 6.78 or 33% improvement, each relative to baseline. Percent PPPASI improvement versus baseline was numerically greater for imsidolimab-treated patients relative to placebo-treated patients at each study time point (Days 3, 8, 15, 22, 29, 43, 57, 71, 85 and 113), ranging from approximately 3% to 19%. Nine (38%) patients achieved fifty percent PPPASI improvement (PPPASI50) and 4 (17%) patients achieved seventy five percent PPPASI improvement (PPPASI75) in the imsidolimab arm at week 16, while 12 (50%) and 3 (13%) achieved these responder thresholds in the placebo arm, respectively. Five (21%) imsidolimab-treated patients achieved a PPPIGA score of zero (clear) or 1 (almost clear) at week 16 relative to 3 (13%) placebo-dosed patients. While we continue to review secondary endpoints to further understand the activity of imsidolimab in various PPP patient subsets, we do not currently plan to pursue further clinical development of imsidolimab in PPP.
We have initiated clinical development of imsidolimab for the treatment of skin toxicities associated with treatments with inhibitors of epidermal growth factor (“EGFRi”) and MAPK/ERK kinase (“MEKi”). Treatment of solid tumors with EGFRi and/or MEKi is frequently limited by the occurrence of skin toxicities, including acneiform or papulopustular rash. Recent translational data has suggested that these skin toxicities are mediated by excess IL-36 signaling, leading to IL-8-mediated cutaneous neutrophilia and acneiform rash. Based on existing claims data, approximately 60,000 patients are prescribed EGFRi and/or MEKi treatments annually, and the vast majority of these patients experience skin toxicity, which in some cases leads to dose reduction and/or discontinuation of treatment. Current standard-of-care treatments are generally ineffective in patients with the most severe grades of EGFRi and/or MEKi mediated skin toxicity. During the fourth quarter of 2020, we initiated a Phase 2 clinical trial, called EMERGE, of imsidolimab in combination with EGFRi inhibitors, for the treatment of patients diagnosed with a certain baseline severity of skin toxicity, where 45 patients are randomized 2:1 between imsidolimab and placebo arms, to assess the efficacy of imsidolimab in the treatment of this indication. We anticipate interim top-line data from this clinical trial at the end of 2021.
We have also initiated clinical development of imsidolimab in ichthyosis, which is a family of rare, inherited, dermatological disorders characterized by dry, scaling and thickened skin. Recent human translational studies have suggested that the underlying skin inflammation responsible for ichthyosis is mediated by dysregulated IL-36 signaling, and we believe that imsidolimab treatment may be efficacious in treatment of this condition. Approximately 6,000 patients in the United States are affected with moderate-to-severe levels of ichthyosis, and no approved therapies are available for this disease. We have initiated a Phase 2 clinical trial, called INSPIRE, of imsidolimab in patients with certain baseline severity of ichthyosis, where 24 patients are randomized 2:1 between imsidolimab and placebo arms, and we anticipate interim top-line data in 2022.
We have also initiated clinical development of imsidolimab in hidradenitis suppurativa, also known as acne inversa, which is a chronic inflammatory skin disease characterized by painful nodules in intertriginous areas that can progress to abscesses, sinus tracks and scarring. Current treatment options for hidradenitis suppurativa, including antibiotics, corticosteroids and anti-TNF therapy, have variable efficacy in moderate-to-severe patients, which often leads to surgery for removal of hidradenitis suppurativa nodules. Human translational studies have demonstrated elevated IL-36 cytokine expression in hidradenitis suppurativa skin biopsies, and we believe treatment of moderate-to-severe hidradenitis suppurativa with imsidolimab may lead to therapeutic benefit for this patient population. Moderate-to-severe hidradenitis suppurativa affects approximately 150,000 adults in the United States. We have initiated a Phase 2 clinical trial of imsidolimab in hidradenitis suppurativa, called HARP, where 120 patients will be randomized equally between two dose levels of imsidolimab and placebo, and we anticipate top-line data during the second half of 2022.
We have also initiated clinical development of imsidolimab in acne, which is the most common skin disorder in the United States, with approximately 7 million patients diagnosed with moderate-to-severe disease. Moderate-to-severe acne typically presents with painful papules, pustules, nodules, cysts and scarring. A key contributing factor to the pathogenesis of acne is the immune response to p. acnes, which is associated with upregulated IL-36 cytokine activity, localized inflammation and neutrophil infiltration of the skin. Existing therapies, including isotretinoin and systemic antibiotics, provide variable
22


efficacy for moderate-to-severe acne patients and have practical limitations to their use given potential for clinically meaningful side effects. We have initiated a Phase 2 clinical trial of imsidolimab, called ACORN, where 120 patients will be randomized equally between two dose levels of imsidolimab and placebo, for the treatment of moderate-to-severe acne, and we anticipate top-line data during the first half of 2022.
Our second wholly-owned program, ANB030, is an anti-PD-1 agonist antibody program designed to augment PD-1 signaling through ANB030 treatment to suppress T-cell driven human inflammatory diseases. Genetic mutations in the PD-1 pathway are known to be associated with increased susceptibility to human inflammatory diseases, and hence we believe that ANB030 is applicable to diseases where PD-1 checkpoint receptor function may be under-represented. We presented preclinical data for ANB030 at the Festival of Biologics Annual Meeting in March 2020, including translational data demonstrating in vitro activity of ANB030 in alopecia areata patient samples. We initiated a Phase 1 healthy volunteer clinical trial in the first half of 2020, which is designed to assess the safety, pharmacokinetics and pharmacodynamics of ANB030 in single and multiple ascending dose cohorts. We anticipate top-line safety, pharmacokinetic and receptor occupancy data from this Phase 1 clinical trial during the second half of 2021. We plan to initiate Phase 2 clinical trials of ANB030 in alopecia areata and vitiligo in the fourth quarter of 2021.
Our third wholly-owned program is an anti-BTLA modulator antibody, known as ANB032, which is broadly applicable to human inflammatory diseases associated with lymphoid and myeloid immune cell dysregulation. Mutations in the BTLA signaling pathway are associated with human inflammatory disease, and we believe ANB032 silences pro-inflammatory signaling by modulating BTLA binding to HVEM. We have initiated a healthy volunteer Phase 1 trial of ANB032 in the first quarter of 2021, under an Australian Clinical Trial Notification (“CTN”) and anticipate top-line data from this trial during the first half of 2022. We presented preclinical data regarding ANB032 at the 2020 Federation of Clinical Immunology Societies (FOCIS) Virtual Annual Meeting in October 2020.
In addition to our wholly-owned antibody programs, multiple Company-developed antibody programs have been advanced to preclinical and clinical milestones under our collaborations. We have received to date approximately $174.6 million in cash receipts from collaborations. Our collaborations include an immuno-oncology-focused collaboration with GlaxoSmithKline, Inc. (“GSK”) and an inflammation-focused collaboration with Bristol-Myers Squibb (“BMS”). A Biologics License Application (“BLA”) for our most advanced partnered program, which is an anti-PD-1 antagonist antibody called JEMPERLI (dostarlimab), was approved by the FDA in April 2021 for the treatment of advanced or recurrent deficient mismatch repair endometrial cancer (“dMMREC”). This is the first AnaptysBio-generated antibody, of eight currently under clinical development, to obtain FDA approval. We earned a $20.0 million milestone payment as a result of this FDA approval. In addition, in April 2021 the European Medicines Agency (“EMA”) granted conditional marketing authorization in the European Union (“EU”) for JEMPERLI for use in women with mismatch repair deficient (dMMR)/microsatellite instability-high (MSI-H) recurrent or advanced endometrial cancer who have progressed on or following prior treatment with a platinum containing regimen, which approval makes JEMPERLI the first anti-PD-1 therapy available for endometrial cancer in Europe. We earned a $10.0 million milestone payment as a result of this approval. A second BLA submitted by GSK was accepted by the FDA during the first quarter of 2021 for JEMPERLI in pan-deficient mismatch repair tumors (“PdMMRT”). We received a $10.0 million cash milestone payment upon the FDA acceptance of GSK’s second FDA BLA for JEMPERLI and anticipate an additional $20.0 million cash milestone payment upon FDA approval of this second FDA BLA of JEMPERLI during the second half of 2021. We anticipate an additional $15.0 million and $165.0 million in milestone payments upon achievement of certain JEMPERLI regulatory and commercial milestones, respectively. JEMPERLI is currently in clinical development for various solid tumor indications, including dMMREC, PdMMRT, colorectal cancer, ovarian cancer, non-small cell lung cancer, cervical cancer, rectal cancer, clear cell sarcoma and head-and-neck squamous cell carcinoma. In October 2020, we amended our GSK collaboration to increase royalties on global net sales of JEMPERLI to 8-25%, add a 1% royalty rate on GSK’s global net sales of Zejula and received a one-time cash payment of $60.0 million. For more information about these collaborations, see Note 4 — Collaborative Research and Development Agreements in the accompanying notes to the consolidated financial statements.
23


The following table summarizes certain key information about our wholly-owned and partnered product candidates:
https://cdn.kscope.io/508b11fc33e6229c4e34836cba4e8704-anab-20210331_g1.jpg
COVID-19
In March 2020, the World Health Organization declared the coronavirus (“COVID-19”) to be a global pandemic. The full impact of the COVID-19 pandemic is inherently uncertain at the time of this Quarterly Report. The COVID-19 pandemic has resulted in travel restrictions and, in some cases, prohibitions of non-essential activities, disruption and shutdown of businesses, and greater uncertainty in global financial markets. As COVID-19 has spread, it has significantly impacted the health and economic environment around the world, and many governments have closed most public establishments, including restaurants, workplaces, and schools. Our ongoing clinical trials have been, and may continue to be, affected by the closure of offices, or country borders, among other measures being put in place around the world. The inability to travel and conduct face-to-face meetings can also make it more difficult to enroll new patients in ongoing or planned clinical trials, and for the FDA and other regulatory agencies to complete in-person inspections required prior to granting approval of product candidates. Any of these circumstances will potentially have a negative impact on our financial results, the timing of our clinical trials and the timing of any regulatory approvals.
24


The COVID-19 pandemic has caused us to modify our business practices (including but not limited to curtailing or modifying employee travel, moving to full remote work, and cancelling physical participation in meetings, events, and conferences), and we may take further actions as may be required by government authorities or that we determine are in the best interests of our employees, patients, and business partners.
The extent of the impact of the COVID-19 pandemic on our future liquidity and operational performance will depend on certain developments, including the duration and spread of the outbreak, the availability and effectiveness of vaccines, the impact on our clinical trials, patients, and collaboration partners, and the effect on our suppliers.
Components of Operating Results
Collaboration Revenue
We have not generated any revenue from product sales. Our revenue has been derived from amortization of upfront license payments, research and development funding, milestone and royalty payments under collaboration and license agreements with our collaborators. From inception through March 31, 2021, we have received $174.6 million in cash in non-dilutive funding from our collaborators.
Research and Development Expense
Research and development expenses consist of costs associated with our research and development activities, including drug discovery efforts, preclinical and clinical development of our programs, and manufacturing. Our research and development expenses include:
External research and development expenses incurred under arrangements with third parties, such as contract research organizations (“CROs”), consultants, members of our scientific and therapeutic advisory boards, and contract manufacturing organizations (“CMOs”);
Employee-related expenses, including salaries, benefits, travel, and stock-based compensation;
Facilities, depreciation and other allocated expenses, which include direct and allocated expenses for rent and maintenance of facilities, depreciation of leasehold improvements and equipment, and laboratory supplies; and
License and sub-license fees.
We expense research and development costs as incurred. We account for nonrefundable advance payments for goods and services that will be used in future research and development activities as expense when the service has been performed or when the goods have been received.
We are conducting research and development activities primarily on inflammation programs. We have a research and development team that conducts antibody discovery, characterization, translational studies, IND-enabling preclinical studies, and clinical development. We conduct some of our early research and preclinical activities internally and plan to rely on third parties, such as CROs and CMOs, for the execution of certain of our research and development activities, such as in vivo toxicology and pharmacology studies, drug product manufacturing, and clinical trials.
We have completed Phase 1 clinical trials and have ongoing Phase 2 clinical trials for imsidolimab and an ongoing Phase 1 clinical trial for ANB030. We expect our research and development expenses to be higher for the foreseeable future as we continue to advance our product candidates into larger clinical trials.
General and Administrative Expense
General and administrative expenses consist primarily of salaries and related benefits, including stock-based compensation for our executive, finance, legal, business development, human resource, and support functions. Other general and administrative expenses include allocated facility-related costs not otherwise included in research and development expenses, travel expenses, and professional fees for auditing, tax, and legal services.
25


Interest Income
Interest income consists primarily of interest earned on our short-term and long-term investments and is recognized when earned.
Critical Accounting Policies and Use of Estimates
Our management’s discussion and analysis of our financial condition and results of operations are based on our financial statements, which have been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”). The preparation of these financial statements requires us to make judgments and estimates that affect the reported amounts of assets, liabilities, revenues, and expenses and the disclosure of contingent assets and liabilities in our financial statements. We base our estimates on historical experience, known trends and events, and various other factors that are believed to be reasonable under the circumstances. Actual results may differ from these estimates under different assumptions or conditions. On an ongoing basis, we evaluate our judgments and estimates in light of changes in circumstances, facts, and experience. We believe there have been no significant changes in our critical accounting policies as discussed in our Annual Report on Form 10-K filed with the SEC on February 25, 2021.
Results of Operations - Comparison of the Three Months Ended March 31, 2021 and 2020
Collaboration Revenue
Collaboration revenue consists of both milestone payments under the collaborations, and royalty payments. We recognized $10.0 million and $15.0 million in milestone revenue for the three months ended March 31, 2021 and 2020, respectively, related to milestone payments associated with JEMPERLI, the anti-PD-1 antagonist antibody partnered with GSK. For the first quarter of 2021, milestone revenue reflects $10.0 million for successful filing of the first BLA in a second indication for JEMPERLI. For the first quarter of 2020, milestone revenue reflects $10.0 million for successful filing of the first BLA in a first indication and $5.0 million for successful filing of the first MAA in a first indication. We expect that any collaboration revenue we generate will continue to fluctuate from period to period as a result of the timing and amount of milestones from our existing collaborations.
Royalty revenue is a function of our partners' product sales and the applicable royalty rate. During the first quarter of 2021, we recognized $1.2 million related to the sale of GSK’s Zejula, which we estimated based on GSK’s historical sales.
Research and Development Expenses
Research and development expenses were $24.2 million during the three months ended March 31, 2021 compared to $21.0 million during the three months ended March 31, 2020 for an increase of $3.2 million, primarily due to a $2.4 million increase in clinical expenses, $1.2 million increase in salaries and related expenses, including stock compensation expense, and a $0.2 million increase in other research and development expenses, offset by a $0.6 million decrease in outside services for manufacturing expenses.
We do not track fully burdened research and development costs separately for each of our product candidates. We review our research and development expenses by focusing on external development and internal development costs. External development expenses consist of costs associated with our external preclinical and clinical trials, including pharmaceutical development and manufacturing. Included in preclinical and other unallocated costs are external corporate overhead costs that are not specific to any one program. Internal costs consist of salaries and wages, share-based compensation and benefits, which are not tracked by product candidate as several of our departments support multiple product candidate research and development programs. The following table summarizes the external costs attributable to each program and internal costs:
26


Three Months Ended
March 31,
(in thousands)20212020Increase/(Decrease)
External Costs
Imsidolimab$12,266 $5,191 $7,075 
ANB0301,779 667 1,112 
ANB032755 1,841 (1,086)
Etokimab565 7,921 (7,356)
Preclinical and other unallocated costs2,952 764 2,188 
Total External Costs18,317 16,384 1,933 
Internal Costs5,868 4,584 1,284 
Total Costs$24,185 $20,968 $3,217 
General and Administrative Expenses
General and administrative expenses were $5.4 million during the three months ended March 31, 2021 compared to $4.3 million during the three months ended March 31, 2020 for an increase of $1.1 million, primarily due to a $0.7 million increase in personnel costs including stock compensation expense, $0.2 million increase in legal expenses and $0.2 million increase in insurance expense.
We expect that our general and administrative expenses will increase for the foreseeable future as we incur additional costs associated with being a publicly traded company, including legal, auditing and filing fees, additional insurance premiums, investor relations expenses and general compliance and consulting expenses. We also expect our intellectual property related legal expenses, including those related to preparing, filing, prosecuting and maintaining patent applications, to increase as our intellectual property portfolio expands.
Interest Income
Interest income was $0.2 million and $1.9 million during the three months ended March 31, 2021 and 2020, respectively, which primarily related to our short-term and long-term investments, the balance of which decreased during the periods as a result of funding our clinical trial programs. The decrease in interest income is also attributable to lower interest rates during the three months ended March 31, 2021 and a decrease in investment balances as of March 31, 2021.
Other Income, Net
Other income, net was income of less than $0.1 million and income of $0.1 million for the three months ended March 31, 2021 and 2020, respectively, primarily related to foreign exchange transactions through our Australian subsidiary and with our foreign CROs and CMOs.
Liquidity and Capital Resources
From our inception through March 31, 2021, we have received an aggregate of $814.2 million to fund our operations, which included $620.5 million from the sale of equity securities, $174.6 million from our collaboration agreements and $19.1 million from venture debt. As of March 31, 2021, we had $387.4 million in cash, cash equivalents and investments.
In addition to our existing cash, cash equivalents and investments, we are eligible to earn milestone and other contingent payments for the achievement of defined collaboration objectives and certain nonclinical, clinical, regulatory and sales-based events, and royalty payments under our collaboration agreements. Our ability to earn these milestone and contingent payments and the timing of achieving these milestones is primarily dependent upon the outcome of our collaborators’ research and development activities. Our rights to payments under our collaboration agreements are our only committed external source of funds.
27


Specific to our collaboration agreement with GSK, JEMPERLI is currently in clinical development for various solid tumor indications. In April 2021, we became eligible to receive additional milestones from GSK, as outlined above, following the acceptance and approval of BLA and EMA filings of JEMPERLI for the PdMMRT indication. We anticipate an additional $15.0 million and $165.0 million in milestone payments upon achievement of certain JEMPERLI regulatory and commercial milestones, respectively. Our amended GSK Agreement also includes a 1% royalty on GSK’s global net sales of Zejula that began in 2021.
Funding Requirements
We may seek to obtain additional financing in the future through equity or debt financings or through collaborations or partnerships with other companies. If we are unable to obtain additional financing on commercially reasonable terms, our business, financial condition and results of operations will be materially adversely affected.
Our primary uses of capital are, and we expect will continue to be, third-party clinical and preclinical research and development services, including manufacturing, laboratory and related supplies, compensation and related expenses, legal, patent and other regulatory expenses, and general overhead costs. We have entered into agreements with certain vendors for the provision of services, including services related to commercial manufacturing, that we are unable to terminate for convenience. Under such agreements, we are contractually obligated to make certain minimum payments to the vendors with the amounts to be based on the timing of the termination and the specific terms of the agreement.
Cash, cash equivalents and investments totaled $387.4 million as of March 31, 2021, compared to $411.2 million as of December 31, 2020. We believe that our existing cash, cash equivalents and investments will fund our current operating plan at least into 2024. We have based this estimate on assumptions that may prove to be wrong, and we could use our capital resources sooner than we expect. Additionally, the process of testing product candidates in clinical trials and seeking regulatory approval is costly, and the timing of progress and expenses in these trials is uncertain.
Cash Flows
The following table summarizes our cash flows for the three months ended March 31, 2021 and 2020:
Three Months Ended
March 31,
(in thousands)20212020
Net cash (used in) provided by:
Operating activities$(23,204)$(15,112)
Investing activities56,729 10,751 
Financing activities167 (1,339)
Net increase (decrease) in cash, cash equivalents, and restricted cash$33,692 $(5,700)
Operating Activities
Net cash used in operating activities during the three months ended March 31, 2021 of $23.2 million was primarily due to our net loss of $18.2 million, adjusted for addbacks for non-cash expenses of $3.6 million, which includes stock-based compensation, and net decreases in working capital of $8.6 million. Net cash used in operating activities during the three months ended March 31, 2020 of $15.1 million was primarily due to our net loss of $8.3 million, adjusted for non-cash expenses of $3.1 million, which includes stock-based compensation, and net decreases in working capital of $10.0 million.
Investing Activities
Net cash provided by investing activities during the three months ended March 31, 2021 and 2020 of $56.7 million and $10.8 million, respectively, primarily relates to the timing of our investment maturity, which was used to fund our operating expenses.
28


Financing Activities
The net cash provided by financing activities during the three months ended March 31, 2021 of $0.2 million primarily related to the issuance of common stock upon the exercise of stock options. The net cash used in financing activities during the three months ended March 31, 2020 of $1.3 million primarily related to principal and final payments of $1.4 million made on our Term Loans, offset by $0.04 million in proceeds from the issuance of common stock upon the exercise of stock options.
Contractual Obligations
We have entered into agreements with certain vendors for the provision of goods and services, which includes manufacturing services with contract manufacturing organizations and development services with contract research organizations. These agreements may include certain provisions for purchase obligations and termination obligations that could require payments for the cancellation of committed purchase obligations or for early termination of the agreements. The amount of the cancellation or termination payments vary and are based on the timing of the cancellation or termination and the specific terms of the agreement and therefore are cancellable contracts.
For further information related to our operating leases and future minimum annual obligations, see Note 8 — Commitments and Contingencies in the accompanying notes to the consolidated financial statements.
Off-Balance Sheet Arrangements
We did not have during the periods presented, and we do not currently have, any off-balance sheet arrangements, as defined in the rules and regulations of the SEC.
29


Item 3. Quantitative and Qualitative Disclosures About Market Risk
As of March 31, 2021, there have been no material changes surrounding our market risk, including interest rate risk, inflation risk, and foreign currency exchange risk from the discussion provided in Item 7A. Quantitative and Qualitative Disclosures About Market Risk of our Annual Report on Form 10-K filed with the SEC on February 25, 2021.
Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
Our disclosure controls and procedures are designed to ensure that information required to be disclosed in the reports we file or submit under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) is recorded, processed, summarized, and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms and that such information is accumulated and communicated to our management, including the Chief Executive Officer and the Chief Financial Officer, to allow timely decisions regarding required disclosures. As of March 31, 2021, our management, with the participation of our Chief Executive Officer and Chief Financial Officer, performed an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act. Based on this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that the design and operation of our disclosure controls and procedures were effective at a reasonable assurance level.
Any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objective, and our 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 identified in connection with the evaluation required by Rules 13a-15(f) and 15d-15(f) of the Exchange Act that occurred during the quarter ended March 31, 2021 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.


30


PART II. OTHER INFORMATION
Item 1. Legal Proceedings
From time to time, we may be involved in legal proceedings arising in the ordinary course of our business. We investigate these claims as they arise and accrue estimates for resolution of legal and other contingencies when losses are probable and estimable. Regardless of outcome, litigation can have an adverse impact on us due to defense and settlement costs, diversion of management resources, negative publicity and reputational harm, and other factors.
For further information related to our legal proceedings, see Note 8 — Commitments and Contingencies in the accompanying notes to the consolidated financial statements.
Item 1A. Risk Factors
Investing in our common stock involves a high degree of risk. You should carefully consider the risks described below, as well as the other information in this report, including our consolidated financial statements and the related notes and “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” before deciding whether to invest in our common stock. The occurrence of any of the events or developments described below could harm our business, financial condition, results of operations, and growth prospects. In such an event, the market price of our common stock could decline, and you may lose all or part of your investment.
Summary of Risk Factors
An investment in our common stock involves various risks, and prospective investors are urged to carefully consider the matters discussed in the section titled “Risk Factors” prior to making an investment in our common stock. These risks include, but are not limited to, the following:

Our product candidates are in early stages of development and may fail in development or suffer delays that adversely affect their commercial viability. Results from our initial clinical trials may not be representative of the results we will experience in later clinical trials. If we or our collaborators are unable to complete development of or commercialize our product candidates or experience significant delays in doing so, our business will be materially harmed.
The COVID-19 pandemic has had a material impact on the U.S. and global economies and could have a material adverse impact on our employees, contractors, and patients, which could adversely and materially impact our business, financial condition, and results of operations.
We have only limited data regarding the safety profile of our wholly-owned product candidates when dosed in humans. Our ongoing and planned clinical trials or those of our collaborators may reveal significant adverse events, toxicities or other side effects and may result in a safety profile that could inhibit regulatory approval or market acceptance of any of our product candidates.
We and/or our collaborators may be unable to obtain, or may be delayed in obtaining, required regulatory approvals in the United States or in foreign jurisdictions, which would materially impair our ability to commercialize and generate revenue from our product candidates.
We may not be successful in our efforts to use our technology platform to expand our pipeline of product candidates and develop marketable products.
We have recently commenced clinical development of imsidolimab, ANB030 and ANB032 and have a limited history of conducting clinical trials and no history of commercializing biotechnology products, which may make it difficult to evaluate the prospects for our future viability.
We face significant competition, and if our competitors develop and market products that are more effective, safer or less expensive than our product candidates, our commercial opportunities will be negatively impacted.
31


Our product candidates may not achieve adequate market acceptance among physicians, patients, health care payors and others in the medical community necessary for commercial success.
If companion diagnostics for our product candidates, for which such diagnostics are required, are not successfully, and in a timely manner, validated, developed or approved, we may not achieve marketing approval or realize the full commercial potential of our product candidates.
The manufacture of biologics is complex, and our third-party manufacturers may encounter difficulties in production. If any of our third-party manufacturers encounter such difficulties, our ability to provide supply of our product candidates for clinical trials, our ability to obtain marketing approval, or our ability to provide supply of our products for patients, if approved, could be delayed or stopped.
We have limited operating revenue and a history of operational losses and may not achieve or sustain profitability.
We have no products approved for commercial sale, and to date we have not generated any revenue or profit from sales of our product candidates.
We will require additional capital to finance our operations, which may not be available to us on acceptable terms, or at all. As a result, we may not complete the development and commercialization of our product candidates or develop new product candidates.
We must attract and retain highly skilled employees in order to succeed.
The manufacture of biotechnology products is complex, and manufacturers often encounter difficulties in production. If we or any of our third-party manufacturers encounter any loss of our master cell banks or if any of our third-party manufacturers encounter other difficulties, or otherwise fail to comply with their contractual obligations, our ability to provide product candidates for clinical trials or our products to patients, once approved, could be delayed or stopped.
We currently have no marketing and sales force. If we are unable to establish effective sales or marketing capabilities or enter into agreements with third parties to sell or market our product candidates, we may not be able to effectively sell or market our product candidates, if approved, or generate product revenue.
Our existing collaborations, including those with GSK and BMS, are important to our business, and future collaborations may also be important to us. If we are unable to maintain any of these collaborations, or if these collaborations are not successful, our business could be adversely affected.
We may not succeed in establishing and maintaining additional development and commercialization collaborations, which could adversely affect our ability to develop and commercialize product candidates.
Even if our product candidates receive regulatory approval, they will be subject to significant post-marketing regulatory requirements.
If we are unable to obtain or protect intellectual property rights, we may not be able to compete effectively in our market.
We may not be able to protect our intellectual property rights throughout the world.
The market price of our stock has been and may continue to be volatile, and you could lose all or part of your investment.
Risks Related to Discovery and Development of Our Product Candidates
Our product candidates are in early stages of development and may fail in development or suffer delays that adversely affect their commercial viability. Results from our initial clinical trials may not be representative of the results we will experience in later clinical trials. If we or our collaborators are unable to complete development of or commercialize our product candidates or experience significant delays in doing so, our business will be materially harmed.
We are using our proprietary technology platform to develop therapeutic antibodies, including our wholly-owned product candidates, as well as other programs that are being developed by our collaborators. However, all of our wholly-owned
32


and most of partnered product candidates are in the early stages of development, and, for a wide variety of reasons discussed below, may fail in development or suffer delays that adversely affect their commercial viability.
A product candidate can unexpectedly fail at any stage of preclinical and clinical development. The historical failure rate for product candidates is high due to scientific feasibility, safety, efficacy, changing standards of medical care, and other variables. The results from preclinical testing or early clinical trials of a product candidate may not predict the results that will be obtained in later phase clinical trials of the product candidate. For example, results from our initial Phase 2a clinical trial of etokimab in moderate-to-severe atopic dermatitis patients were not representative of the results we experienced in our later etokimab moderate-to-severe atopic dermatitis Phase 2b clinical trial called “ATLAS” and we ultimately discontinued development of etokimab.
Furthermore, our rationale for conducting clinical trials of imsidolimab in multiple indications is that we believe imsidolimab’s mechanism of action, the inhibition of IL-36R, has the potential be effective for treatment of a range of dermatological inflammatory diseases. However, it is possible that our assumptions regarding the effectiveness of imsidolimab’s mechanism of action may be incorrect and that imsidolimab may be ineffective in certain dermatological inflammatory diseases or in treating inflammatory disorders generally. If this were the case, then the results from any clinical trials of imsidolimab that we conduct are less likely to be positive. For example, top-line data from our POPLAR clinical trial of imsidolimab in PPP failed to meet the primary endpoint of the clinical trial of least-squares mean difference PPPASI improvement at week 16 (Day 113) and we do not currently plan to conduct further development of imsidolimab in PPP.
If our other ongoing or future clinical trials of imsidolimab are unsuccessful, whether for one of the reasons mentioned above or otherwise, imsidolimab may be delayed in development or fail entirely, which would have a material adverse impact on our business.
The success of our current product candidates, and any other product candidates we may develop in the future, will depend on many factors, including the following:
obtaining regulatory permission to initiate clinical trials;
successful enrollment of patients in, and the completion of, our planned clinical trials;
receiving marketing approvals from applicable regulatory authorities;
establishing commercial manufacturing capabilities and/or making arrangements with third-party manufacturers;
obtaining and maintaining patent and trade secret protection and non-patent exclusivity for our product candidates and their components;
enforcing and defending intellectual property rights and claims;
achieving desirable therapeutic properties for our product candidates’ intended indications;
launching commercial sales of our product candidates, if and when approved, whether alone or in collaboration with third parties;
acceptance of our product candidates, if and when approved, by patients, the medical community and third-party payors;
effectively competing with other therapies; and
maintaining an acceptable safety profile of our product candidates through clinical trials and following regulatory approval.
If we do not achieve one or more of these factors in a timely manner or at all, we could experience significant delays or an inability to successfully commercialize our product candidates, which would harm our business.
Furthermore, delays or difficulties in patient enrollment or difficulties in retaining trial participants can result in increased costs, longer development times, or termination of a clinical trial. Clinical trials of a new product candidate require the enrollment of a sufficient number of patients, including patients who are suffering from the disease the product candidate is intended to treat and who meet other eligibility criteria. Rates of patient enrollment are affected by many factors, including the
33


size of the patient population, the eligibility criteria for the clinical trial, the age and condition of the patients, the stage and severity of disease, the nature of the protocol, the proximity of patients to clinical sites, and the availability of effective treatments for the relevant disease. We may not be able to initiate our planned clinical trials if we are unable to locate and enroll a sufficient number of eligible patients to participate in these trials as required by the FDA or foreign regulatory authorities. More specifically, some of our product candidates, including imsidolimab, initially target indications that are very rare, which can prolong the clinical trial timeline for the regulatory process if sufficient patients cannot be enrolled in a timely manner.
The COVID-19 pandemic has had a material impact on the U.S. and global economies and could have a material adverse impact on our employees, contractors and patients, which could adversely and materially impact our business, financial condition and results of operations.
The COVID-19 pandemic and mitigation measures have had, and may continue to have, an adverse impact on global economic conditions, which could have an adverse effect on our business and financial condition, including impairing our ability to raise capital when needed. The extent to which the COVID-19 pandemic impacts our business and operations will depend on future developments that are highly uncertain and cannot be predicted, including new information that may emerge concerning the severity of the virus and the actions to contain its impact.
The COVID-19 pandemic has caused us to modify our business practices (including but not limited to curtailing or modifying employee travel, moving to full remote work, and cancelling physical participation in meetings, events and conferences), and we may take further actions as may be required by government authorities or that we determine are in the best interests of our employees and patients. In response to the COVID-19 pandemic, we limited our office to only those employees completing laboratory-based tasks essential to our development efforts, and are starting to allow other employees to work in our office with certain precautions in place that we believe will ensure our employees’ safety and wellbeing. “Essential” employees that are unable to telework continue to work at our facilities, and we have implemented appropriate safety measures, including social distancing, face covering and increased sanitation standards. We are following guidance from the Center for Disease Control and the Occupational Safety and Health Administration regarding suspension of nonessential travel, self-isolation recommendations for employees returning from certain geographic areas, confirmed reports of any COVID-19 diagnosis among our employees and the return of such employees to our workplace. Pursuant to updated guidance from the Equal Employment Opportunity Commission, we are engaging in limited and appropriate inquiries of employees regarding potential COVID-19 exposure based on the direct threat that such exposure may present to our workforce. We continue to address other unique situations that arise among our workforce due to the COVID-19 pandemic on a case-by-case basis. While we believe that we have taken appropriate measures to ensure the health and well-being of our “essential” employees, there can be no assurances that our measures will be sufficient to protect our employees in our workplace, and they may be exposed to COVID-19 outside of our workplace. If a number of our essential employees become ill, incapacitated or are otherwise unable to continue working during the current or any future epidemic, our operations may be adversely impacted.
A prolonged disruption or any further unforeseen delay in our operations or within any of our business activities could continue to result in reduced participation in ongoing clinical trials or delays in enrolling our planned clinical trials because we rely on contract research organizations (for non-clinical and clinical activities) (“CROs”) and contract manufacturing organizations (“CMOs”) to conduct our clinical trials and to manufacture our product candidates. If our CROs are unable to continue ongoing clinical trials or to enroll new patients for new clinical trials, or if our CMOs are unable to obtain sufficient quantities of reagents or manufacture adequate drug quantities, our clinical trials could be materially delayed or disrupted. We may also encounter delays from the FDA, EMA or other health authorities in our clinical development efforts. Any elongation or de-prioritization of our preclinical or clinical studies or delay in regulatory review resulting from such disruptions could materially affect the development and study of our product candidates. Further, in reaction to the spread of COVID-19 in the United States and internationally, many patients and medical facilities are delaying or canceling elective procedures, adding further strain to health care budgets globally.
The COVID-19 pandemic may result in the inability of our suppliers to deliver supplies to us on a timely basis. We currently utilize third parties to, among other things, manufacture components of our product candidates and, in the future, intend to utilize third parties to conduct our preclinical and clinical studies. If either we or any third-party parties in the supply chain for materials used in the production of our product candidates are adversely impacted by restrictions resulting from the COVID-19 pandemic, our supply chain may be disrupted, limiting our ability to manufacture our product candidates for our preclinical or clinical studies.
34


Both the health and economic aspects of the COVID-19 virus are highly fluid, and the future course of each is uncertain. For these reasons and other reasons that may come to light if the COVID-19 pandemic and associated protective or preventative measures expand, we may experience a material adverse effect, either directly or indirectly through our CROs, CMOs, collaboration partners or patients, on our business operations, revenues and financial condition; however, its ultimate impact is highly uncertain and subject to change.
We have only limited data regarding the safety profile of our wholly-owned product candidates when dosed in humans. Our ongoing and planned clinical trials or those of our collaborators may reveal significant adverse events, toxicities or other side effects and may result in a safety profile that could inhibit regulatory approval or market acceptance of any of our product candidates.
In order to obtain marketing approval for any of our product candidates, we must demonstrate the safety and efficacy of the product candidate for the relevant clinical indication or indications through preclinical studies and clinical trials as well as additional supporting data. If our product candidates are associated with undesirable side effects in preclinical studies or clinical trials or have characteristics that are unexpected, we may need to interrupt, delay or abandon their development or limit development to more narrow uses or subpopulations in which the undesirable side effects or other characteristics are less prevalent, less severe or more acceptable from a risk-benefit perspective.
We have conducted various preclinical studies of our product candidates, but we do not know the predictive value of these studies for humans, and we cannot guarantee that any positive results in preclinical studies will successfully translate to human patients. We have only completed Phase 1 and Phase 2 clinical trials with imsidolimab, and subsequent clinical trials with imsidolimab are currently ongoing. It is not uncommon to observe results in human clinical trials that are unexpected based on preclinical testing, or to observe results in later stage clinical trials that are unexpected based on early clinical trials. Many product candidates fail in clinical trials despite promising preclinical and early clinical results. In addition, top-line results of a clinical trial, which generally reflect preliminary reviews of primary efficacy and/or safety results, do not necessarily predict final results, and any top-line findings or assessments are subject to change pending the completion of final data review procedures. Moreover, preclinical and clinical data are often susceptible to varying interpretations and analyses, and many companies that believed their product candidates performed satisfactorily in preclinical studies and clinical trials have nonetheless failed to obtain marketing approval for their products.
Some patients in our clinical trials have experienced adverse events, including serious adverse events. We reported that one patient dropped out of the GALLOP Phase 2 clinical trial for imsidolimab due to diagnosis with Staphylococcal aureus bacteremia on Day 3 post-imsidolimab administration, which was a serious adverse event deemed to be possibly drug-related. Subjects in our ongoing and planned clinical trials may in the future suffer significant adverse events or other side effects not observed in our preclinical studies or in our Phase 1 or Phase 2 clinical trials. The observed potency and kinetics of our product candidates in preclinical studies may not be observed in human clinical trials. We have tested the dosing frequency and route of administration of our product candidates in preclinical studies, which will inform our dosing strategy for future clinical trials, however such dose and route of administration may not result in sufficient exposure or pharmacological effect in humans and may lead to unforeseen toxicity not previously observed in preclinical testing. If preclinical studies of our product candidates fail to provide preliminary evidence of safety to the satisfaction of regulatory authorities or do not otherwise produce satisfactory results, we may incur additional costs or experience delays in initiating and/or advancing the development and commercialization of our product candidates. Further, if clinical trials of our product candidates fail to demonstrate safety and efficacy to the satisfaction of regulatory authorities or do not otherwise produce positive results, we may incur additional costs or experience delays in completing, or ultimately be unable to complete, the development and commercialization of our product candidates.
If further significant adverse events or other side effects are observed in any of our current or future clinical trials, we may have difficulty recruiting patients to the clinical trial, patients may drop out of our trial, or we may be required to abandon the trial or our development efforts of that product candidate altogether. We, the FDA, or other applicable regulatory authorities, or an institutional review board or ethics committee, may suspend clinical trials of a product candidate at any time for various reasons, including a belief that subjects in such clinical trials are being exposed to unacceptable health risks or adverse side effects. Some potential therapeutics developed in the biotechnology industry that initially showed therapeutic promise in early-stage studies have later been found to cause side effects that prevented their further development. Even if the side effects do not preclude a product candidate from obtaining or maintaining marketing approval, undesirable side effects may inhibit market acceptance of the approved product due to its tolerability versus other therapies. Any of these developments could materially harm our business, financial condition and prospects.
35


Further, if any of our product candidates obtain marketing approval, toxicities associated with our product candidates may also develop after such approval and lead to a requirement to conduct additional clinical safety trials, additional warnings being added to the labeling, significant restrictions on the use of the product or the withdrawal of the product from the market. We cannot predict whether our product candidates will cause toxicities in humans that would preclude or lead to the revocation of regulatory approval based on preclinical studies or early stage clinical testing.
We and/or our collaborators may be unable to obtain, or may be delayed in obtaining, required regulatory approvals in the United States or in foreign jurisdictions, which would materially impair our ability to commercialize and generate revenue from our product candidates.
Our ability to continue to develop our product candidates, and to have the potential to achieve and sustain profitability, depends on the FDA and foreign regulatory authorities permitting us to conduct human clinical trials and, if our product candidates are safe and effective, obtaining approval from the FDA and foreign regulatory authorities to market them and subsequently successfully commercializing them, either alone or with our collaborators. The research, testing, manufacturing, labeling, approval, selling, marketing and distribution of drug and biologic products are subject to extensive regulation by the FDA and foreign regulatory authorities. Though we have cleared an IND and clinical trial application (“CTA”) to conduct clinical trials for imsidolimab in the United States and certain foreign jurisdictions and we have cleared an IND to conduct a clinical trial for ANB030 in the United States, before commencing clinical trials in the United States for any other product candidate, we must submit an IND to the FDA; foreign regulatory authorities enforce similar requirements for initiation of clinical trials in other countries. An IND or foreign equivalent requires extensive preclinical studies, and there is no guarantee that the FDA or foreign regulatory authorities will allow clinical trials to proceed based on the IND or equivalent submission. For example, although we have initiated toxicology studies for our product candidates, the FDA in the United States, or other foreign regulatory authorities, as applicable, may not allow our clinical trials to proceed in the regulatory authority’s jurisdiction if we are unable to show safety margins acceptable to the particular regulatory authority in appropriate animal species in our preclinical toxicology studies.
Even if we or our collaborators initiate and complete clinical trials for our product candidates, these product candidates will not be permitted to be marketed in the United States until approval of a BLA from the FDA is received, and will not be permitted to be marketed in other countries without marketing approval from foreign regulatory authorities. Obtaining approval of a BLA or other marketing approvals is often a lengthy, expensive and uncertain process over which the FDA and foreign regulatory authorities have substantial discretion. Other than submitting and receiving acceptance for initiation of our previous and current clinical trials in the United States and certain foreign jurisdictions, we have had only limited discussions with the FDA and no discussions with foreign regulatory authorities regarding the development plans for any of our product candidates or the designs of any of our later-stage clinical studies. We thus may not have the full benefit of the FDA’s or foreign regulatory authorities’ current thinking on clinical trial designs or product development for our target indications. For example, we believe a small pivotal clinical trial, potentially with less than 100 patients, may be sufficient to demonstrate substantial evidence of efficacy and safety of imsidolimab in GPP patients and obtain BLA approval, and we have discussed these plans with the FDA. However, the FDA may determine, based on future clinical efficacy and safety data from our GPP studies, that we will need to conduct additional clinical trials in order to obtain approval of a BLA. We held an end-of-Phase 2 meeting with the FDA during the second quarter of 2021 to review an orphan disease registration plan for imsidolimab for the treatment of GPP and anticipate announcing key aspects of our Phase 3 trial design upon its initiation in mid-2021.
Preclinical studies and clinical trials are expensive, difficult to design and implement, can take many years to complete, and are uncertain as to outcome. Product candidates, on average, take 10 to 15 years to be developed from the time they are discovered to the time they are approved and available for treating patients. The start or end of a clinical trial is often delayed or halted for many reasons, including:
imposition of a clinical hold for safety reasons or following an inspection of clinical trial operations or site by the FDA or other regulatory authorities;
manufacturing challenges;