GENERATION BIO CO. The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our condensed consolidated financial statements and related notes appearing elsewhere in this Quarterly Report on Form 10-Q, or Quarterly Report, and our consolidated financial statements and related notes appearing in our most recently filed Annual Report on Form 10-K, or Annual Report, with theSecurities and Exchange Commission , orSEC . Some of the information contained in this discussion and analysis or set forth elsewhere in this Quarterly Report, including information with respect to our plans and strategy for our business, includes forward-looking statements that involve risks and uncertainties. As a result of many factors, including those factors set forth in the "Risk Factors" section of this Quarterly Report, in our Annual Report and in the other documents filed with theSEC , our actual results could differ materially from the results described in, or implied by, the forward-looking statements contained in the following discussion and analysis.
Overview and Recent Developments
We are innovating genetic medicines to provide durable, redosable treatments for
potentially hundreds of millions of patients living with rare and prevalent
diseases. Our non-viral genetic medicine platform incorporates our high-capacity
DNA construct called closed-ended DNA, or ceDNA; our cell-targeted lipid
nanoparticle delivery system, or ctLNP; and our highly scalable capsid-free
manufacturing process that uses our proprietary cell-free rapid enzymatic
synthesis, or RES, to produce ceDNA. Using our approach, we are developing novel
genetic medicines to provide targeted delivery of genetic payloads that include
large and multiple genes to a range of tissues across a broad array of diseases.
We are also engineering our genetic medicines to be redosable, which may enable
individualized patient titration to reach the desired level of therapeutic
expression and to maintain efficacy throughout a patient's life. The combination
of the expected multi-year durability of a single dose of ceDNA, tissue-specific
delivery and manufacturing capacity may enable dosing for hundreds of millions
of patients living with prevalent diseases.
We are advancing a broad and expansive portfolio of programs, including rare and
prevalent diseases of the liver and retina. We are focused on diseases with
significant unmet need for which our non-viral genetic medicine platform may
substantially improve clinical efficacy relative to current gene therapy
approaches. We are initially prioritizing rare monogenic diseases of the liver
and retina, which are diseases that result from mutations in a single gene, that
have well-established biomarkers and clear clinical and regulatory pathways. We
plan to expand our portfolio to include rare and prevalent diseases of the
skeletal muscle, the central nervous system, or CNS, and oncology by developing
discrete ctLNPs, each engineered to reach a different tissue.
We believe our ctLNP will allow us to address a variety of inherited retinal
diseases. Data from our study of the sub-retinal delivery of ceDNA using ctLNP
demonstrated broad distribution and durable expression in rodents. In our study,
expression was comparable to that achieved with adeno-associated virus Type 5,
or AAV5, delivery, which is the current standard for retinal gene therapy, and
ceDNA delivered using ctLNP was well-tolerated without evidence of photoreceptor
degeneration, supporting the potential for full gene replacement to address
diseases of the retina. In addition, our study in rodents and non-human primates
on the sub-retinal delivery of messenger RNA, or mRNA, demonstrated the
first-ever species-translation from rodent to non-human primates using ctLNP
with comparable tolerability and uniform photoreceptor expression across
species. Distribution with ctLNP in this study was broader and more uniform than
that achieved with AAV5 in mice, and total expression was comparable to AAV5.
These findings suggest ctLNP as a best-in-class non-viral delivery system for
mRNA, potentially enabling gene editing in the retina.
Additionally, we believe our non-viral genetic medicine platform may allow
patients to produce antibody therapies from their own cells for years at a time
from a single dose, and plan to advance endogenous therapeutic antibody
production, or ETAP, programs across multiple therapeutic areas. Data from an in
vivo study conducted as part of our research collaboration with Vir
Biotechnology, Inc. showed that ceDNA delivered via LNP enabled mice to generate
persistent anti-spike protein human antibody concentrations with a peak level of
8µg/ml, which corresponds to a level that may be therapeutically relevant in
humans. Furthermore, endogenously produced antibodies in the serum of
ceDNA-treated mice retained binding and functional activity, neutralizing
SARS-CoV-2 ex vivo at the same level as recombinantly produced monoclonal
antibodies.
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Our most advanced liver disease programs are in hemophilia A and
phenylketonuria, or PKU, which are in the preclinical stage of development, and
our most advanced retina disease programs are in Leber's Congenital Amaurosis
10, or LCA10, and Stargardt disease, which are in the lead optimization stage of
development. In the preclinical stage of development, we are conducting
additional in vivo studies to identify development candidates and are assessing
these candidates in investigational new drug, or IND, -enabling studies. We plan
to submit an IND application for our hemophilia A program in 2023, and expect to
report Factor VIII expression data in non-human primates by year-end. In the
lead optimization stage, we are seeking to identify ceDNA constructs that
provide disease relevant expression in an animal model.
In parallel with our platform development, we are developing the constructs and
manufacturing capacity to rapidly advance new disease programs in a tissue or
therapeutic area once human proof of concept is established. We have developed
novel, next-generation rapid enzymatic approach to manufacture ceDNA that does
not rely on Sf9 cells. Instead, the process uses enzymes to convert plasmid DNA
into ceDNA, similar to the current high-capacity methods used to manufacture
mRNA vaccines. In comparison to Sf9 manufacturing, RES has consistently yielded
highly pure ceDNA, reduced ceDNA variability, and shortened the ceDNA production
cycle time from 28 days to one day. We expect that scaling RES may enable us to
manufacture our potential drug candidates in a cost-effective manner and to
expand access to patients with prevalent diseases, requiring hundreds of
millions of doses, on a sustainable basis. We plan to transition all of our
portfolio programs to RES.
Additionally, to realize the full potential of RES, in July 2021 , we entered
into a lease agreement with Zinc II PropCo 2020, LLC to build out an
approximately 104,000 square foot current Good Manufacturing Practice-, or
cGMP-, compliant manufacturing facility in Waltham, Massachusetts . The facility,
expected to be operational in 2023, will be designed to scale ceDNA
manufacturing utilizing RES for cGMP-compliant clinical and initial commercial
supply. In addition, the new facility will house expanded capacity for research
production and process development activities. We plan to invest up to $45
million in the new manufacturing facility over the next two years, and we
believe this investment will allow us to realize the potential of RES,
maximizing the value of our platform and accelerating the development of
subsequent programs. We plan to continue to rely on contract manufacturing
organizations during and after construction to provide redundancy and secure
additional ceDNA supply.
Since our inception in October 2016 , we have focused substantially all of our
resources on building our non-viral genetic medicine platform, establishing and
protecting our intellectual property portfolio, conducting research and
development activities, developing our manufacturing process, organizing and
staffing our company, business planning, raising capital and providing general
and administrative support for these operations. We do not have any products
approved for sale and have not generated any revenue from product sales. To
date, we have funded our operations with proceeds from instruments convertible
into convertible preferred stock (which converted into convertible preferred
stock in 2017) and the sales of convertible preferred stock (which converted
into common stock in 2020) and, most recently, with proceeds from the sale of
common stock in our public offerings. In June 2020 , we completed our initial
public offering, or IPO, pursuant to which we issued and sold 12,105,263 shares
of our common stock, including 1,578,947 shares sold by us pursuant to the full
exercise of the underwriters' option to purchase additional shares. We received
net proceeds of $210.7 million , after deducting underwriting discounts and
commissions and other offering expenses. In January 2021 , we issued and sold
9,200,000 shares of our common stock, including 1,200,000 shares sold by us
pursuant to the full exercise of the underwriters' option to purchase additional
shares, in a follow-on public offering, resulting in net proceeds of
$211.3 million after deducting underwriting discounts and commissions and other
offering expenses.
Historically, we have incurred significant operating losses. Our ability to
generate any product revenue or product revenue sufficient to achieve
profitability will depend on the successful development and eventual
commercialization of one or more product candidates we may develop. For the
nine months ended September 30, 2021 , we reported net losses of $88.2 million ,
and for the nine months ended September 30, 2020 , we reported net losses of
$56.3 million . As of September 30, 2021 , we had an accumulated deficit of
$277.2 million . We expect to continue to incur significant expenses and
increasing operating losses for at least the next several years. We expect that
our expenses and capital requirements will increase substantially in connection
with our ongoing activities, particularly if and as we:
? continue our current research programs and conduct additional research
programs;
? advance any product candidates we identify into preclinical and clinical
development;
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? expand the capabilities of our proprietary non-viral genetic medicine platform;
? seek marketing approvals for any product candidates that successfully complete
clinical trials;
? obtain, expand, maintain, defend and enforce our intellectual property
portfolio;
? hire additional clinical, regulatory and scientific personnel;
? ultimately establish a sales, marketing and distribution infrastructure to
commercialize any products for which we may obtain marketing approval;
? build out our manufacturing facility and scale RES to produce clinical and
initial commercial supply;
establish a commercial manufacturing source and secure supply chain capacity
? sufficient to provide commercial quantities of any product candidates for which
we may obtain regulatory approval; and
add operational, legal, compliance, financial and management information
? systems and personnel to support our research, product development, future
commercialization efforts and operations as a public company.
We will not generate revenue from product sales unless and until we successfully complete clinical development and obtain regulatory approval for any product candidates we may develop. If we obtain regulatory approval for any product candidates we may develop, we expect to incur significant expenses related to developing our commercial capability to support product sales, marketing and distribution. Further, we expect to continue to incur additional costs associated with operating as a public company. As a result, we will need substantial additional funding to support our continuing operations and pursue our growth strategy. Until such time as we can generate significant revenue from product sales, if ever, we expect to finance our operations through a combination of equity offerings, debt financings, collaborations, strategic alliances and/or licensing arrangements. We may be unable to raise additional funds or enter into such other agreements or arrangements when needed on favorable terms, or at all. If we fail to raise capital or enter into such agreements when needed or on terms acceptable to us, we would be required to delay, limit, reduce or terminate our product development or future commercialization of one or more of our product candidates. Because of the numerous risks and uncertainties associated with pharmaceutical product development, we are unable to accurately predict the timing or amount of increased expenses or when, or if, we will be able to achieve or maintain profitability. Even if we are able to generate product sales, we may not become profitable. If we fail to become profitable or are unable to sustain profitability on a continuing basis, then we may be unable to continue our operations at planned levels and be forced to reduce or terminate our operations. We believe that our existing cash, cash equivalents and marketable securities, will enable us to fund our operating expenses and capital expenditures into 2024. We have based our estimates as to how long we expect we will be able to fund our operations on assumptions that may prove to be wrong. We could use our available capital resources sooner than we currently expect, in which case we would be required to obtain additional financing, which may not be available to us on acceptable terms, or at all. Our failure to raise capital as and when needed would have a negative impact on our financial condition and our ability to pursue our business strategy. See "-Liquidity and Capital Resources."
COVID-19
InMarch 2020 , COVID-19 was declared a global pandemic by theWorld Health Organization and to date, the COVID-19 pandemic continues to present a substantial public health and economic challenge around the world. The length of time and full extent to which the COVID-19 pandemic may directly or indirectly impact our business, results of operations and financial condition will depend on future developments that are highly uncertain, subject to change and difficult to predict. We, our contract development and manufacturing organizations, or CDMOs, and our contract research 22
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organizations, or CROs, experienced temporary reductions in the capacity to undertake research-scale production and to execute some preclinical studies. While these operations have since normalized, we, together with our CDMOs and CROs, are closely monitoring the impact of the COVID-19 pandemic on these operations. In addition, shortages, delays and governmental restrictions arising from the COVID-19 pandemic have disrupted and may continue to disrupt global supply chains and our and our vendors' ability to procure items, such as raw materials, that are essential for the manufacturing of our product candidates or needed to build out our manufacturing facility. We plan to continue to closely monitor the ongoing impact of the COVID-19 pandemic on our employees and our other business operations. In an effort to provide a safe work environment for our employees, we had, among other things, limited employees in our office and lab facilities to those where on-site presence is needed for their job activities, increased the cadence of sanitization of our office and lab facilities, implemented various social distancing measures in our offices and labs including replacing all in-person meetings with virtual interactions, and provided personal protective equipment for our employees present in our office and lab facilities. Currently, we continue to monitor the impact and effects of the COVID-19 pandemic and our response to it, and, in accordance with updated federal and state guidelines, we have relaxed some of our COVID-19 related restrictions and are permitting on-site presence for a limited number of additional employees. In addition, inSeptember 2021 , theBiden Administration proposed a new rule requiring all employers with 100 or more employees to ensure either the full vaccination or weekly testing of employees; and inNovember 2021 , theOccupational Safety and Health Administration issued an emergency temporary standard, or ETS, implementing this rule. Complying with the ETS could be difficult and costly, and it is possible that some employees may choose to leave employment over a vaccination or testing requirement. The ETS is already subject to a number of legal challenges, the outcomes of which remain uncertain. It is currently not possible to predict with certainty the exact impact the ETS would have on us. We expect to continue to take actions as may be required or recommended by government authorities or as we determine are in the best interests of our employees and other business partners in light of the pandemic.
Components of Our Results of Operations
Operating expenses
Research and development expenses
Research and development expenses consist primarily of costs incurred for our research activities, including our discovery efforts, and the development of our programs, which include:
personnel-related costs, including salaries, benefits and stock-based
? compensation expense, for employees engaged in research and development
functions;
expenses incurred in connection with our research programs, including under
? agreements with third parties, such as consultants, contractors, CROs, and
regulatory agency fees;
the cost of developing and scaling our manufacturing process and manufacturing
? drug substance and drug product for use in our research and preclinical
studies, including under agreements with third parties, such as consultants and
contractors and CDMOs;
? laboratory supplies and research materials;
facilities, depreciation and amortization and other expenses, which include
? direct and allocated expenses for rent and maintenance of facilities and
insurance; and
? payments made under third-party licensing agreements.
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We expense research and development costs as incurred. Advance payments that we
make for goods or services to be received in the future for use in research and
development activities are recorded as prepaid expenses. The prepaid amounts are
expensed as the related goods are delivered or the services are performed.
Our external research and development expenses consist of costs that include
fees and other costs paid to consultants, contractors, CDMOs and CROs in
connection with our preclinical and manufacturing activities. We do not allocate
our research and development costs to specific programs because costs are
deployed across multiple programs and our platform and, as such, are not
separately classified. We expect that our research and development expenses will
increase substantially as we advance our programs into clinical development and
expand our discovery, research and preclinical activities in the near term and
in the future. At this time, we cannot accurately estimate or know the nature,
timing and costs of the efforts that will be necessary to complete the
preclinical and clinical development of any product candidates we may develop.
The successful development of any of our product candidates is highly uncertain.
This is due to the numerous risks and uncertainties associated with product
development, including the following:
? the timing and progress of preclinical studies, including IND-enabling studies;
? the number and scope of preclinical and clinical programs we decide to pursue;
? raising additional funds necessary to complete preclinical and clinical
development of our product candidates;
the timing of the submission and acceptance of IND applications or comparable
? foreign applications that allow commencement of future clinical trials for our
product candidates;
? the successful initiation, enrollment and completion of clinical trials,
including under current good clinical practices;
our ability to achieve positive results from our future clinical programs that
? support a finding of safety and effectiveness and an acceptable risk-benefit
profile in the intended patient populations of any product candidates we may
develop;
? the availability of specialty raw materials for use in production of our
product candidates;
? our ability to build out our manufacturing facility and scale RES to produce
clinical and initial commercial supply;
? our ability to establish arrangements with third-party manufacturers for
preclinical and clinical supply;
? our ability to establish new licensing or collaboration arrangements;
? the receipt and related terms of regulatory approvals from the
our ability to establish, obtain, maintain, enforce and defend patent,
? trademark, trade secret protection and other intellectual property rights or
regulatory exclusivity for any product candidates we may develop and our
technology; and
? our ability to maintain a continued acceptable safety, tolerability and
efficacy profile of our product candidates following approval.
A change in the outcome of any of these variables with respect to any product
candidates we may develop could significantly change the costs and timing
associated with the development of that product candidate. We may never succeed
in obtaining regulatory approval for any product candidates we may develop.
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General and administrative expenses
General and administrative expenses consist primarily of personnel-related costs, including salaries, benefits and stock-based compensation, for employees engaged in executive, legal, finance and accounting and other administrative functions. General and administrative expenses also include professional fees for legal, patent, consulting, investor and public relations and accounting and audit services as well as direct and allocated facility-related costs. We anticipate that our general and administrative expenses will increase in the future as we increase our headcount to support our continued research activities and development of our programs and platform. We also anticipate that we will continue to incur increased accounting, audit, legal, regulatory, compliance, director and officer insurance costs and investor and public relations expenses associated with operating as a public company.
Other (expense) income
Other (expense) and interest income, net
Other (expense) and interest income, net consists of interest income earned on our invested cash balances and other (expense) income from miscellaneous expenses and income unrelated to our core operations.
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Results of Operations
Comparison of the three months ended
The following table summarizes our results of operations for the three months
ended
Three Months Ended September 30,
(in thousands) 2021 2020 Change
Operating expenses:
Research and development $ 21,991 $ 15,308 $ 6,683
General and administrative 9,667 5,661 4,006
Total operating expenses 31,658 20,969 10,689
Loss from operations (31,658) (20,969) (10,689)
Other (expense) income:
Other (expense) and interest income, net (197)
120 (317)
Net loss $ (31,855) $ (20,849) $ (11,006) Research and development expenses
The following table summarizes our research and development expenses for the
three months ended
Three Months Ended September 30,
(in thousands) 2021 2020 Change
Personnel-related $ 6,375 $ 4,434 $ 1,941 Preclinical and manufacturing 5,946
4,955 991
Facilities 2,610 2,355 255
Stock-based compensation 2,498 1,204 1,294
Lab supplies 1,953 1,086 867Consulting and professional services 734 356 378 Other 1,875 918 957 Total research and development expenses $ 21,991
$ 15,308$ 6,683 Research and development expenses were$22.0 million for the three months endedSeptember 30, 2021 , compared to$15.3 million for the three months endedSeptember 30, 2020 . The increases of$1.9 million in personnel-related costs and$1.3 million in stock-based compensation costs were primarily due to increased headcount in our research and development function. The increase in preclinical and manufacturing costs and lab supplies of$1.0 million and$0.9 million , respectively, was primarily due to increased preclinical activity as we continue our efforts to advance our two lead programs into IND-enabling studies.
General and administrative expenses
The following table summarizes our general and administrative expenses for the
three months ended
Three Months Ended September 30,
(in thousands) 2021 2020 Change
Personnel-related $ 3,354 $ 2,160 $ 1,194
Stock-based compensation 2,472 957 1,515Professional and consultant fees 2,178
1,905 273
Facilities 206 379 (173)
Other 1,457 260 1,197Total general and administrative expenses $ 9,667
$ 5,661$ 4,006 26 Table of Contents
General and administrative expenses were$9.7 million for the three months endedSeptember 30, 2021 , compared to$5.7 million for the three months endedSeptember 30, 2020 . The increase in stock-based compensation costs and personnel-related costs of$1.5 million and$1.2 million , respectively, were primarily a result of an increase in headcount in our general and administrative function. The increase of$1.2 million in other costs was primarily a result of expense recognized related to the termination of a software license agreement during the three months endedSeptember 30, 2021 .
Other (expense) and interest income, net
Other expense, net for the three months endedSeptember 30, 2021 was$0.2 million as compared to other income, net of$0.1 million for the three months endedSeptember 30, 2020 . The increase in other expense, net from the three months endedSeptember 30, 2020 was due to the loss recognized on the sale of equipment and a decrease in interest earned on invested cash balances.
Comparison of the nine months ended
The following table summarizes our results of operations for the nine months
ended
Nine Months Ended September 30,
(in thousands) 2021 2020 Change
Operating expenses:
Research and development $ 63,400 $ 42,158 $ 21,242
General and administrative 24,755 14,611 10,144
Total operating expenses 88,155 56,769 31,386
Loss from operations (88,155) (56,769) (31,386)
Other (expense) income:Other (expense) and interest income, net (53)
472 (525)
Net loss $ (88,208) $ (56,297) $ (31,911) Research and development expenses
The following table summarizes our research and development expenses for the
nine months ended
Nine Months Ended September 30,
(in thousands) 2021 2020 Change
Preclinical and manufacturing $ 19,584 $ 11,718 $ 7,866
Personnel-related 17,530 12,546 4,984
Facilities 7,350 7,099 251
Stock-based compensation 6,772 2,967 3,805
Lab supplies 5,388 2,936 2,452Consulting and professional services 1,837 2,494 (657) Other 4,939 2,398 2,541 Total research and development expenses$ 63,400 $
42,158 $ 21,242
Research and development expenses were $63.4 million for the nine months ended
September 30, 2021 , compared to $42.2 million for the nine months ended
September 30, 2020 . The increase in preclinical and manufacturing costs and lab
supplies of $7.9 million and $2.5 million , respectively, was primarily due to
increased preclinical activity as we continue our efforts to advance our two
lead programs into IND-enabling studies. The increases of $5.0 million in
personnel-related costs and $3.8 million in stock-based compensation costs were
primarily due to increased headcount in our research and development function.
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General and administrative expenses
The following table summarizes our general and administrative expenses for the
nine months ended
Nine Months Ended September 30,
(in thousands) 2021 2020 Change
Personnel-related $ 9,646 $ 5,555 $ 4,091
Stock-based compensation 6,054 2,066 3,988Professional and consultant fees 5,777
5,293 484
Facilities 888 1,120 (232)
Other 2,390 577 1,813Total general and administrative expenses$ 24,755 $
14,611 $ 10,144 General and administrative expenses were$24.8 million for the nine months endedSeptember 30, 2021 , compared to$14.6 million for the nine months endedSeptember 30, 2020 . The increase in personnel-related costs and stock-based compensation costs of$4.1 million and$4.0 million , respectively, were primarily a result of an increase in headcount in our general and administrative function.
Other (expense) and interest income, net
Other expense, net for the nine months endedSeptember 30, 2021 was$0.1 million compared to other income, net of$0.5 million for the nine months endedSeptember 30, 2020 . The increase in other expense, net from the nine months endedSeptember 30, 2020 was due to the loss recognized on the sale of equipment and a decrease in interest earned on invested cash balances.
Liquidity and Capital Resources
Since our inception, we have incurred significant operating losses. We expect to incur significant expenses and operating losses for the foreseeable future as we support our continued research activities and development of our programs and platform. We have not yet commercialized any product candidates and we do not expect to generate revenue from sales of any product candidates for several years, if at all. To date, we have funded our operations with proceeds from instruments convertible into convertible preferred stock (which converted into convertible preferred stock in 2017), the sale of convertible preferred stock (which converted into common stock in 2020) and with proceeds from the sale of common stock in our public offerings. InJune 2020 , we completed our IPO, pursuant to which we issued and sold 12,105,263 shares of our common stock, including 1,578,947 shares sold by us pursuant to the full exercise of the underwriters' option to purchase additional shares. We received net proceeds of$210.7 million , after deducting underwriting discounts and commissions and other offering expenses. InJanuary 2021 , we issued and sold 9,200,000 shares of our common stock, including 1,200,000 shares sold by us pursuant to the full exercise of the underwriters' option to purchase additional shares, in a follow-on public offering, resulting in net proceeds of$211.3 million , after deducting underwriting discounts and commissions and other offering expenses. InAugust 2021 , we entered into an "at-the-market" sales agreement pursuant to which we may, from time to time, sell shares of our common stock having an aggregate offering price of up to$250.0 million . As ofNovember 10, 2021 , the issuance date of the condensed consolidated financial statements, we have not issued and sold any shares of our common stock pursuant to this sales agreement. As ofSeptember 30, 2021 , we had cash, cash equivalents and marketable securities of$398.4 million . 28 Table of Contents Cash flows The following table summarizes our sources and uses of cash for each of the periods presented: Nine Months Ended September 30, (in thousands) 2021 2020 Cash used in operating activities$ (71,019) $ (51,777) Cash provided by (used in) investing activities 185,882 (225,547) Cash provided by financing activities 214,236 320,798
Net increase in cash, cash equivalents and restricted cash
Operating activities
During the nine months endedSeptember 30, 2021 , operating activities used$71.0 million of cash, primarily resulting from our net loss of$88.2 million , offset by non-cash charges of$16.9 million and changes in our operating assets and liabilities of$0.3 million . Net cash used by changes in our operating assets and liabilities for the nine months endedSeptember 30, 2021 consisted primarily of a$1.0 million increase in other noncurrent assets, offset by a$0.8 million decrease in accrued expense and other current liabilities and accounts payable and a$0.5 million decrease in prepaid expenses and other current assets. During the nine months endedSeptember 30, 2020 , operating activities used$51.8 million of cash, primarily resulting from our net loss of$56.3 million and changes in our operating assets and liabilities of$3.0 million , both partially offset by non-cash charges of$7.6 million . Net cash used by changes in our operating assets and liabilities for the nine months endedSeptember 30, 2020 consisted primarily of a$2.9 million increase in prepaid expenses and other current assets and a$0.8 million decrease in deferred rent, partially offset by a decrease of$0.4 million in tenant receivable. Changes in accounts payable, accrued expenses and other current liabilities and prepaid expenses in the periods were generally due to growth in our business and the timing of vendor invoicing and payments. Changes in operating lease right-of-use-assets, operating lease liability, and deferred rent were primarily related to our adoption of the new lease accounting standard onJanuary 1, 2021 .
Investing activities
During the nine months endedSeptember 30, 2021 , net cash provided by investing activities was$185.9 million , due to the maturities of marketable securities of$188.9 million , partially offset by a$3.1 million increase in purchases of property and equipment during the period. During the nine months endedSeptember 30, 2020 , net cash used in investing activities was$225.5 million , due to the purchases of marketable securities and property and equipment during the period. Property and equipment purchases during the nine months endedSeptember 30, 2021 and 2020 were primarily related to leasehold improvements and lab equipment for our facility inCambridge, Massachusetts .
Financing activities
During the nine months endedSeptember 30, 2021 , net cash provided by financing activities was$214.2 million , consisting primarily of proceeds from our follow-on public offering of common stock of$211.9 million , net of underwriting discounts and commissions, and proceeds of$3.3 million from the exercise of common stock options, partially offset by the payment of$0.9 million of public offering costs. During the nine months endedSeptember 30, 2020 , net cash provided by financing activities was$320.8 million , consisting primarily of proceeds from our IPO of common stock of$213.9 million , net of underwriting discounts and commissions, and proceeds from the sale of our Series C preferred stock of$108.9 million , partially offset by the payment of$3.2 million of
public offering costs.
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Funding requirements
We expect our expenses to increase substantially in connection with our ongoing
activities, particularly as we advance the preclinical activities and initiate
clinical trials for our product candidates in development. The timing and amount
of our operating expenditures will depend largely on:
? the identification of additional research programs and product candidates;
? the scope, progress, costs and results of preclinical and clinical development
for any product candidates we may develop;
? the costs, timing and outcome of regulatory review of any product candidates we
may develop;
? the cost and timing of clinical and commercial-scale manufacturing activities,
including the build-out of our manufacturing facility;
the costs and timing of future commercialization activities, including product
? manufacturing, marketing, sales and distribution, for any product candidates we
may develop for which we receive marketing approval;
? the costs and scope of the continued development of our non-viral genetic
medicine platform;
? the costs of satisfying any post-marketing requirements;
? the revenue, if any, received from commercial sales of product candidates we
may develop for which we receive marketing approval;
the costs and timing of preparing, filing and prosecuting applications for
patents, obtaining, maintaining, defending and enforcing our intellectual
? property rights and defending against any intellectual property-related claims,
including claims of infringement, misappropriation or other violation of
third-party intellectual property;
? the costs of operational, financial and management information systems and
associated personnel;
? the associated costs in connection with any acquisition of in-licensed
products, intellectual property and technologies; and
? the costs of operating as a public company.
We believe that our existing cash, cash equivalents, and marketable securities
will enable us to fund our operating expenses and capital expenditures into
2024. We have based our estimates as to how long we expect we will be able to
fund our operations on assumptions that may prove to be wrong. We could use our
available capital resources sooner than we currently expect, in which case we
would be required to obtain additional financing, which may not be available to
us on acceptable terms, or at all. Our failure to raise capital as and when
needed would have a negative impact on our financial condition and our ability
to pursue our business strategy. We do not have any committed external source of
funds. Accordingly, we will be required to obtain further funding through public
or private equity offerings, debt financings, collaborations and licensing
arrangements or other sources. If we raise additional funds by issuing equity
securities, our stockholders may experience dilution. Any future debt financing
into which we enter would result in fixed payment obligations and may involve
agreements that include grants of security interests on our assets and
restrictive covenants that limit our ability to take specific actions, such as
incurring additional debt, making capital expenditures, granting liens over our
assets, redeeming stock or declaring dividends, that could adversely impact our
ability to conduct our business. Any debt financing or additional equity that we
raise may contain terms that could adversely affect the holdings or the rights
of our common stockholders.
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If we are unable to raise sufficient capital as and when needed, we may be required to significantly curtail, delay or discontinue one or more of our research or development programs or the commercialization of any product candidate we may develop, or be unable to expand our operations or otherwise capitalize on our business opportunities. If we raise additional funds through collaborations or licensing arrangements with third parties, we may have to relinquish valuable rights to future revenue streams or product candidates or grant licenses on terms that may not be favorable to us.
See the "Risk Factors" section of this Quarterly Report and in our Annual Report for additional risks associated with our substantial capital requirements.
Critical Accounting Policies and Significant Judgments and Estimates
Our condensed consolidated financial statements are prepared in accordance with generally accepted accounting principles inthe United States of America , or GAAP. The preparation of our condensed consolidated financial statements and related disclosures requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, costs and expenses and related disclosures and the disclosure of contingent assets and liabilities in our condensed consolidated financial statements. We base our estimates on historical experience, known trends and events and on various other factors that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. We evaluate our estimates and assumptions on an ongoing basis. Our actual results may differ significantly from these estimates under different assumptions or conditions. While our significant accounting policies are described in more detail in Note 2 to our condensed consolidated financial statements appearing elsewhere in this Quarterly Report, we believe that the accounting policies related to accrued research and development expenses and stock-based compensation are those most critical to the judgments and estimates used in the preparation of our consolidated financial statements. There have been no material changes to our critical accounting policies and estimates from those disclosed in our financial statements and the related notes included in our Annual Report.
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 theSEC .
Recently Issued and Adopted Accounting Pronouncements
A description of recently adopted and recently issued accounting pronouncements that may potentially impact our financial position and results of operations is disclosed in Note 2 to our condensed consolidated financial statements included in this Quarterly Report.
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