Alder Biopharmaceuticals, Inc. (Exact Name of Registrant As Specified in Its Charter)

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Alder Biopharmaceuticals, Inc. (Exact Name of Registrant As Specified in Its Charter) UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 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, 2019 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: 001-36431 Alder BioPharmaceuticals, Inc. (Exact name of registrant as specified in its charter) Delaware 90-0134860 (State or other jurisdiction (I.R.S. Employer of incorporation or organization) Identification No.) 11804 North Creek Parkway South Bothell, WA 98011 (Address of principal executive offices including zip code) Registrant’s telephone number, including area code: (425) 205-2900 Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐ Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐ Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. Large accelerated filer ☒ Accelerated filer ☐ Non-accelerated filer ☐ Smaller reporting company ☐ Emerging growth company ☐ If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐ Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒ As of April 25, 2019, the registrant had 83,503,820 shares of common stock, $0.0001 par value per share, outstanding. Securities registered pursuant to Section 12(b) of the Act: Title of Each Class Trading Symbol(s) Name of Exchange on Which Registered Common Stock, $0.0001 par value per share ALDR The Nasdaq Stock Market LLC (The Nasdaq Global Market) Alder BioPharmaceuticals, Inc. Quarterly Report on Form 10-Q For the Quarter Ended March 31, 2019 INDEX Page PART I. FINANCIAL INFORMATION (Unaudited) Item 1. Condensed Consolidated Financial Statements 3 Condensed Consolidated Balance Sheets 3 Condensed Consolidated Statements of Operations 4 Condensed Consolidated Statements of Comprehensive Loss 5 Condensed Consolidated Statements of Convertible Preferred Stock and Stockholders’ Equity 6 Condensed Consolidated Statements of Cash Flows 7 Notes to Condensed Consolidated Financial Statements 8 Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations 24 Item 3. Quantitative and Qualitative Disclosures About Market Risk 35 Item 4. Controls and Procedures 36 PART II. OTHER INFORMATION Item 1. Legal Proceedings 37 Item 1A. Risk Factors 37 Item 6. Exhibits 66 SIGNATURES 68 In this Quarterly Report on Form 10-Q, “we,” “our,” “us,” “Alder,” and “the Company” refer to Alder BioPharmaceuticals, Inc. and, where appropriate, its consolidated subsidiaries. “Alder,” “Alder BioPharmaceuticals” and the Alder logo are the property of Alder BioPharmaceuticals, Inc. This report contains references to our trademarks and trade names and to trademarks belonging to other entities. Solely for convenience, trademarks and trade names referred to in this report may appear without the ® or ™ symbols, but such references are not intended to indicate, in any way, that their respective owners will not assert, to the fullest extent under applicable law, their rights thereto. We do not intend our use or display of other companies’ trade names or trademarks to imply a relationship with, or endorsement or sponsorship of us by, any other companies. 2 PART I. – FINANCIAL INFORMATION Item 1. Condensed Consolidated Financial Statements Alder BioPharmaceuticals, Inc. Condensed Consolidated Balance Sheets (unaudited) March 31, December 31, 2019 2018 (in thousands, except share and per share data) Assets Current assets Cash and cash equivalents $ 126,105 $ 87,865 Short-term investments 348,517 319,504 Restricted cash 23,886 5,000 Prepaid expenses and other assets 3,806 7,440 Total current assets 502,314 419,809 Property and equipment, net 6,149 6,400 Right of use assets 4,693 — Other assets 12 30 Total assets $ 513,168 $ 426,239 Liabilities, convertible preferred stock and stockholders’ equity Current liabilities Accounts payable $ 15,316 $ 8,945 Accrued liabilities 42,687 19,217 Accrued dividends on convertible preferred stock 1,311 — Operating lease liability 946 — Deferred rent — 74 Total current liabilities 60,260 28,236 Long-term operating lease liability 4,321 — Long-term deferred rent — 510 2025 convertible senior notes, net 185,146 182,104 Derivative liability 2,633 1,658 Total liabilities 252,360 212,508 Commitments and contingencies Class A-1 convertible preferred stock; $0.0001 par value; 10,000,000 shares authorized; 760,753 shares and no shares issued and outstanding, respectively; liquidation preference of $100,000 and zero, respectively 103,755 103,755 Stockholders’ equity Common stock; $0.0001 par value; 200,000,000 shares authorized; 83,246,074 and 68,410,576 shares issued and outstanding, respectively 8 7 Additional paid-in capital 1,239,411 1,074,963 Accumulated deficit (1,081,872) (963,938) Accumulated other comprehensive loss (494) (1,056) Total stockholders’ equity 157,053 109,976 Total liabilities, convertible preferred stock and stockholders’ equity $ 513,168 $ 426,239 The accompanying notes are an integral part of these condensed consolidated financial statements. 3 Alder BioPharmaceuticals, Inc. Condensed Consolidated Statements of Operations (unaudited) Three Months Ended March 31, 2019 2018 (in thousands, except share and per share data) Revenues Collaboration and license agreements $ — $ — Operating expenses Research and development 69,589 74,048 General and administrative 44,498 11,553 Total operating expenses 114,087 85,601 Loss from operations (114,087) (85,601) Other income (expense) Interest income 1,966 1,643 Interest expense (4,838) (2,851) Change in fair value of derivative liability (975) — Total other income (expense), net (3,847) (1,208) Net loss before equity in net loss of unconsolidated entity (117,934) (86,809) Equity in net loss of unconsolidated entity — (222) Net loss $ (117,934) $ (87,031) Deemed dividends on convertible preferred stock attributable to accretion of beneficial conversion feature — (29,460) Dividends on convertible preferred stock (1,311) (1,083) Net loss applicable to common stockholders $ (119,245) $ (117,574) Net loss per share applicable to common stockholders - basic and diluted $ (1.63) $ (1.73) Weighted average number of common shares used in net loss per share - basic and diluted 73,056,907 67,844,872 The accompanying notes are an integral part of these condensed consolidated financial statements. 4 Alder BioPharmaceuticals, Inc. Condensed Consolidated Statements of Comprehensive Loss (unaudited) Three Months Ended March 31, 2019 2018 (in thousands) Net loss $ (117,934) $ (87,031) Other comprehensive income (loss): Unrealized gain (loss) on securities available-for-sale, net of tax 562 (877) Total other comprehensive income (loss), net 562 (877) Comprehensive loss $ (117,372) $ (87,908) The accompanying notes are an integral part of these condensed consolidated financial statements. 5 Alder BioPharmaceuticals, Inc. Condensed Consolidated Statements of Convertible Preferred Stock and Stockholders’ Equity (unaudited) Class A-1 Convertible Preferred Stock Common Stock Accumulated Additional Other Total Paid-in Accumulated Comprehensive Stockholders' Shares Amount Shares Amount Capital Deficit Income (Loss) Equity (in thousands, except for share data) Balances at December 31, 2017 — — 67,842,942 7 946,869 (667,509) (92) 279,275 Net loss — — — — — (87,031) — (87,031) Accrued dividends on convertible preferred stock — — — — (1,083) — — (1,083) Other comprehensive loss — — — — — — (877) (877) Issuance of Class A-1 convertible preferred stock, net of issuance costs of $2.3 million 725,268 97,710 — — — — — — Beneficial conversion feature on Class A-1 convertible preferred stock — (29,460) — — 29,460 — — 29,460 Deemed dividend on convertible preferred stock attributable to accretion of beneficial conversion feature — 29,460 — — (29,460) — — (29,460) Equity component of 2025 convertible senior notes — — — — 109,911 — — 109,911 Equity component of deferred financing costs for 2025 convertible senior notes — — — — (3,763) — — (3,763) Exercise of stock options — — 5,759 — 20 — — 20 Stock-based compensation — — — — 5,946 — — 5,946 Balances at March 31, 2018 725,268 $ 97,710 67,848,701 $ 7 $ 1,057,900 $ (754,540) $ (969) $ 302,398 Balances at December 31, 2018 760,753 $ 103,755 68,410,576 $ 7 $ 1,074,963 $ (963,938) $ (1,056) $ 109,976 Net loss — — — — — (117,934) — (117,934) Accrued dividends on convertible preferred stock — —
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