The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our unaudited condensed consolidated financial statements and related notes appearing elsewhere in this Quarterly Report on Form 10-Q. Some of the information contained in this discussion and analysis or set forth elsewhere in this Quarterly Report on Form 10-Q, 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 on Form 10-Q, our actual results could differ materially from the results described in, or implied by, these forward-looking statements. Please also refer to the section under the heading "Special Note Regarding Forward-Looking Statements and Industry Data."
Overview
We are a clinical-stage genetic medicine company pioneering gene editing and gene delivery platforms to address rare and serious diseases from infancy through adulthood. Our genome editing platform, GeneRide™, is a new approach to precise gene insertion harnessing a cell's natural deoxyribonucleic acid, or DNA, repair process potentially leading to durable therapeutic protein expression levels. Our gene delivery platform, sAAVy™, is an AAV capsid engineering platform designed to optimize gene delivery for treatments in a broad range of indications and tissues. Our lead product candidate, LB-001, is a single-administration, genome editing therapy developed using our GeneRide technology, currently in Phase 1/2 development for the treatment of MMA in pediatric patients. MMA is a rare and life-threatening genetic disorder affecting approximately 1 in 50,000 newborns inthe United States that often results in developmental delays and other long-term complications and a high rate of hospitalizations. InApril 2021 , we grantedCANbridge Care Pharma Hong Kong Limited , or CANbridge, an exclusive option to obtain an exclusive license to develop and commercialize LB-001 for the treatment of MMA inGreater China . InDecember 2021 , we announced the nomination of a new product candidate, LB-401, based on our GeneRide technology. LB-401 is a genome editing therapy being developed for the treatment of hereditary tyrosinemia type 1, or HT1. HT1 is a rare, genetic disorder characterized by elevated blood levels of the amino acid tyrosine, a building block of most proteins, and affects more than 1,200 patients inNorth America andEurope alone. Also based on our GeneRide technology, we completed the first phase of preclinical development of our product candidate, LB-301, for the treatment of Crigler-Najjar syndrome, or CN, a rare pediatric disease affecting approximately 1 in 1,000,000 newborns globally, in collaboration with Takeda Pharmaceutical Company Limited, or Takeda. In addition, we are developing treatments based on our GeneRide technology for two indications in collaboration with Daiichi Sankyo Company, Limited, or Daiichi. We have also demonstrated proof of concept of our GeneRide platform in hemophilia B and alpha-1-antitrypsin deficiency, or A1ATD, animal disease models, and more recently, in Wilson disease. Based on our sAAVy technology, we are developing gene therapy candidates utilizing, among other things, sL65, the first capsid produced from sAAVy, for the treatment of Fabry and Pompe diseases in collaboration with CANbridge. We also granted CANbridge an option to obtain an exclusive worldwide license to certain of our intellectual property rights, including those relating to sL65, to develop and commercialize gene therapy candidates for the treatment of two additional indications.
LB-001 for the Treatment of Methylmalonic Acidemia (MMA) in Pediatric Patients
We are evaluating the safety, tolerability and preliminary efficacy of LB-001 in our Phase 1/2 SUNRISE clinical trial in pediatric patients with MMA. The SUNRISE trial is designed to enroll patients with ages ranging from six months to twelve years and evaluate a single administration of LB-001 at two dose levels (5 x 1013 vg/kg and 1 x 1014 vg/kg), with dose escalation subject to certain conditions. The primary endpoint of the SUNRISE trial is to assess the safety and tolerability of LB-001 at 52 weeks after a single infusion. Additional endpoints include changes in disease-related biomarkers, including serum methylmalonic acid, clinical outcomes such as growth and healthcare utilization, and the pharmacodynamic marker albumin-2A. InJune 2021 , we announced that the first patient was dosed in the SUNRISE trial. In accordance with the FDA-reviewed protocol, we initially enrolled patients in the three- to twelve-year-old age group at the lower dose.Mid-October 2021 , we announced early results from the SUNRISE trial. The early results showed measurable levels of albumin-2A, a technology-related biomarker indicating site-specific gene insertion and protein expression. Detection of albumin-2A is an indication that we have achieved the first ever in vivo genome editing in children. We also announced inmid-October 2021 that, following an evaluation of the safety data from the first two patients enrolled in the SUNRISE trial, the independent Data Safety Monitoring Board, or the DSMB, overseeing the SUNRISE trial recommended continuation of the trial without modification. Albumin-2A detection together with the DSMB 22 --------------------------------------------------------------------------------
continuation recommendation enabled us to begin enrolling two patients in the higher dose cohort (with ages ranging three to twelve years old), and two patients with ages ranging from six months to two years old at the lower dose.
As previously disclosed, the third and fourth patients dosed in the SUNRISE trial, each of whom received 5 x 1013 vg/kg of LB-001, experienced a drug-related serious adverse event, or SAE, which was categorized as a case of thrombotic microangiopathy, or TMA. Each TMA resolved within a few weeks, and these patients continue to be followed in accordance with the SUNRISE protocol. Following the occurrence of the TMA experienced by the third patient, we implemented a DSMB-endorsed response plan that included increased patient monitoring. Following the occurrence of the TMA experienced by the fourth patient, we announced onFebruary 2, 2022 that the FDA placed our Investigational New Drug Application, or IND, for LB-001 on clinical hold. We announced onMay 9, 2022 that the hold was lifted. In its communication lifting the hold, the FDA indicated that all clinical hold issues had been addressed. In connection with the lifting of the clinical hold, we amended the SUNRISE protocol. The amended protocol includes enhanced monitoring measures such as frequent testing for complement activation, a characteristic of TMA, as well as use of a complement inhibitor in the event there are laboratory findings indicating a potential TMA. We have initiated activities to resume dosing in the SUNRISE trial and expect to dose the next patient in the third quarter of 2022. We expect to report interim data from the SUNRISE trial by the end of the second quarter of 2022. In addition to the Phase 1/2 SUNRISE trial, we have also completed a retrospective natural history study designed to evaluate disease progression in pediatric patients with MMA. These data helped to provide us with a better understanding of the natural progression of the disease, the impact of a liver transplant on the outcomes of MMA patients and potential endpoints such as the relevance of methylmalonic acid levels on clinical outcomes, with the goal of informing our future clinical development in MMA and our discussions with regulatory agencies as we look toward advancing our MMA program. We presented preliminary findings from our retrospective natural history study at theAmerican College of Medical Genetics inApril 2021 . InJuly 2019 , the FDA granted rare pediatric disease designation for LB-001 for the treatment of MMA, and inApril 2019 , the FDA granted orphan drug designation for LB-001 for the treatment of MMA. InNovember 2020 , the FDA granted fast track designation for LB-001 for the treatment of MMA, and inJune 2021 , theEuropean Commission granted orphan drug designation to LB-001 for the treatment of MMA.
LB-401 for the Treatment of Hereditary Tyrosinemia Type 1
InDecember 2021 , we announced the nomination of a new development candidate, LB-401, for the treatment of HT1. This development candidate is based on our GeneRide platform. HT1 is a rare, genetic disorder characterized by elevated blood levels of the amino acid tyrosine that affects more than 1,200 patients inNorth America andEurope alone. This condition is caused by a shortage of the enzyme fumarylacetoacetate hydrolase, or FAH, one of the enzymes required for the multi-step process that breaks down tyrosine. In preclinical studies presented at theEuropean Society of Gene andCell Therapy , or ESGCT, Annual Meeting inOctober 2021 , the data in HT1 models with acute liver damage showed that GeneRide-edited hepatocytes repopulated the entire liver within four weeks post-administration, replacing the diseased hepatocytes with corrected hepatocytes. HT1 mice that received the GeneRide-FAH vector were no longer reliant on the current standard of care for the disease, and demonstrated restored normal body growth, liver function, and undetectable succinyl acetone levels. In preclinical studies to be presented at the ASGCT Annual Meeting inMay 2022 , additional data in HT1 models with acute liver damage highlighted the potential durability of LB-401 for at least 10 months. Additionally, compared to the standard of care, these data demonstrated that HT1 mice treated with LB-401 showed succinylacetone reduction, better tyrosine management, and a rapid decrease of alfa-fetoprotein, suggesting a lower risk of hepatocellular carcinoma.
Other GeneRide Development Programs
Also based on our GeneRide technology, we completed the first phase of preclinical development of our product candidate, LB-301, for the treatment of CN, a rare pediatric disease affecting approximately 1 in 1,000,000 newborns globally, in collaboration with Takeda. In initial proof-of-concept studies, a murine GeneRide construct of LB-301was used to correct the gene deficiency in an animal model of CN. The introduction of UGT1A1 into the albumin locus in mouse liver cells resulted in normalization of bilirubin levels and long-term survival of mice deficient in UGT1A1 from less than twenty days to at least one year. Our Takeda collaboration to further develop LB-301 in CN, resulted in the extension of our proof-of-concept data and was reported atAmerican Society of Gene & Cell Therapy , or ASGCT, inMay 2020 . In these reported studies, neonatal mice treated with a murine GeneRide construct of LB-301 resulted in a survival benefit and a dose-dependent reduction in total circulating bilirubin. The bilirubin levels achieved were within the range of that observed in patients with Gilbert's syndrome (1-6mg/dL), a mild liver disorder usually requiring no medical treatment. Moreover, through a collaboration with Dr.Andrés Muro at theInternational Centre for Genetic Engineering and Biotechnology inTrieste, Italy , we demonstrated that GeneRide treatment could improve motor discoordination in preclinical mouse models of CN. 23 -------------------------------------------------------------------------------- In addition, we are developing treatments based on our GeneRide technology for two indications in collaboration with Daiichi. We have also demonstrated proof of concept of our GeneRide platform in mouse models of hemophilia B and alpha-1-antitrypsin deficiency, or A1ATD, and Wilson disease.
Our sAAVy Platform
We are also developing sAAVy, a next generation AAV capsid platform, for use in gene editing and gene therapy. At the ASGCT Annual Meeting inMay 2020 , we presented data showing that the capsids delivered highly efficient functional transduction of human hepatocytes in a humanized mouse model. Based on these data, we believe the top-tier capsid candidates from this effort demonstrated the potential to achieve significant improvements over benchmark AAVs that are currently in clinical development. We are developing these highly potent vectors for use in our internal development candidates and collaborations. We announced data generated from translational animal models using these capsids at the ASGCT 2021 Annual Meeting inMay 2021 . In addition, inJanuary 2021 , we announced the extension of our collaboration withChildren's Medical Research Institute , or CMRI, to continue to develop next-generation capsids for gene therapy and gene editing applications in the liver as well as additional tissues.
Manufacturing
Our genome editing and gene therapy product candidates are manufactured as viral vectors. Viral vector manufacturing is a complex process due to several factors, including the following:
• the use of complex biological raw materials, including plasmid DNA, and cell
banks, that need to comply with stringent regulatory requirements;
• the use of complex manufacturing methods, such as transfection of suspension
mammalian cell culture in large bioreactors (transfection is the process by
which plasmid DNA enters the cells), and purification of intact viral particles; • the need to produce high-concentration, high purity drug product; and
• the challenges associated with scale-up, batch-to-batch consistency and
product characterization, including measurement of potency and quality.
We have built extensive internal non-GMP process development, analytical development and vector development capabilities that are designed to optimize certain components of viral vector manufacturing, including the following:
• Improved production yields. One challenge facing gene editing and gene
therapy product candidates manufactured as viral vectors is production
yield. Improvements in production yields have the potential to make drug
product available to more patients in need by decreasing the drug product
cost of goods. Initial results from our proprietary manufacturing process,
mAAVRxTM, have demonstrated significantly improved production yields in comparison to published results.
• Increased drug product purity. Another challenge facing gene editing and
gene therapy product candidates manufactured as viral vectors is that, over
the last several years, the occurrence of undesirable side effects in
clinical trials have led the industry stakeholders and regulatory
authorities to look for higher levels of purity of drug product for use in
humans. The proprietary methods developed by our internal team are designed
to increase the purity of drug product.
• Decreasing "empty" capsids. A challenge facing AAV vector manufacturing in
particular is the formation of an excess of what are known as "empty"
capsids, which are unable to provide a therapeutic benefit and may
contribute to exacerbating adverse effects. Our internal team has developed
proprietary and scalable methods designed to decrease the proportion of empty capsids in our drug product.
• Reliable characterization methods. We have invested resources in developing
a large panel of methods to enable accurate and consistent characterization
of our clinical supply of our lead product, LB-001, that we can leverage for
use in our other development programs if and as we optimize the drug product
from those programs for use in humans.
Operating Overview
Since our inception in 2014, we have devoted the majority of our efforts to research and development, including our preclinical and clinical development activities and our manufacturing and process development activities, raising capital, and providing general and 24 -------------------------------------------------------------------------------- administrative support for these operations. We do not have any products approved for sale and our only revenue recognized to date has been revenue related to upfront payments and research cost reimbursement under our strategic agreements with CANbridge, Daiichi and Takeda. ThroughMarch 31, 2022 , we have raised approximately$126.0 million through underwritten public offerings and at-the-market sales of our common stock and$33.1 million in net proceeds from the sale of preferred stock prior to our initial public offering. InJuly 2019 , we entered into the Loan Agreement, under which term loans in an aggregate principal amount of$20.0 million were made available to us in two tranches, subject to certain terms and conditions. As ofMarch 31, 2022 , we had drawn down the$10.0 million first tranche. In 2021, we met the conditions to initiate drawdown of the$10.0 million second tranche but did not exercise our right to do so and the option to draw down the second tranche of the Term Loans expired. We have incurred significant operating losses since our inception. Our ability to generate product revenue sufficient to achieve profitability will depend on the successful development and commercialization of our current product candidates and any future product candidates. Our net loss was$6.7 million for the three months endedMarch 31, 2022 . As ofMarch 31, 2022 , we had an accumulated deficit of$146.7 million . We expect to continue to incur significant expenses and increasing operating losses for the foreseeable future in connection with our ongoing activities. While we intend to continue to evaluate ways to enhance our liquidity and capital position, our efforts will largely depend on future developments that are highly uncertain and cannot be predicted with confidence at this time.
Impact of COVID-19
The COVID-19 pandemic continues to present a substantial public health and economic challenge around the world. We continue to closely monitoring the COVID-19 pandemic in order to promote the safety of our personnel and to continue advancing our research and development activities. We are following federal, state and local requirements and guidelines with respect to the COVID-19 pandemic and have allowed our employees to work on-premises in accordance with those requirements and guidelines.
The COVID-19 pandemic did not have a material impact on our results of operations, cash flow and financial position as of and for the quarter endedMarch 31, 2022 . However, we are aware that certain of our third-party vendors are being affected by import/export and other restrictions due to the COVID-19 pandemic, which may have an impact on certain of our research, development and manufacturing activities. Further, the pandemic could also potentially affect the business of the FDA, the EMA or other governmental authorities, which could result in delays in meetings, reviews, inspections and approvals, including those relating to LB-001. Any decision by the FDA, EMA or other governmental authorities to delay meeting with us or scheduling inspections in light of COVID-19 could have a material adverse effect on our clinical trials, which could increase our operating expenses and have a material adverse effect on our financial results, including the timing and amount of future regulatory milestones we could receive from our partners. We cannot predict the impact of the progression of the COVID-19 pandemic on future results due to a variety of factors, including the health of our and our third-party vendors, suppliers and collaborators' employees, our ability to maintain operations, the ability of our third-party vendors, suppliers and collaborators to continue operations, any further government and/or public actions taken in response to the pandemic and ultimately the length of the pandemic. We plan to continue to closely monitor the COVID-19 pandemic in order to ensure the safety of our personnel and to continue advancing our research and development activities.
Components of Results of Operations
Revenue
Our only revenue recognized to date has been collaboration and service revenue related to upfront payments and research cost reimbursement under our agreements with CANbridge, Daiichi and Takeda. We have not generated any revenue from product sales and do not expect to generate any revenue from product sales for the foreseeable future. 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 product candidates, and include:
• salaries, benefits and other related costs, including stock-based
compensation expense, for personnel engaged in research and development
functions;
• license maintenance fees and milestone fees incurred in connection with
various license agreements;
• the cost of laboratory supplies and acquiring, developing and manufacturing
preclinical study and clinical trial materials;
25 --------------------------------------------------------------------------------
• expenses incurred under agreements with contract research organizations, or
CROs, contract manufacturing organizations, or CMOs, as well as academic
institutions and consultants that conduct our preclinical studies and other
scientific development services;
• facility-related expenses, which include direct depreciation costs and allocated expenses for rent and maintenance of facilities and other operating costs; • costs of outside consultants, including their fees, stock-based compensation and related travel expenses; and • costs related to compliance with regulatory requirements. We expense research and development costs as incurred. Costs for external development activities are recognized based on an evaluation of the progress to completion of specific tasks. Payments for these activities are based on the terms of the individual agreements, which may differ from the pattern of costs incurred, and are reflected in our financial statements as prepaid or accrued research and development expenses. Research and development activities are central to our business model. We will continue to incur significant expenses to conduct the clinical program for our product candidate, LB-001, and as we continue to discover and develop additional product candidates. If any of our product candidates enters into later stages of clinical development, we expect that they will generally have higher development costs than those in earlier stages of clinical development, primarily due to the increased size and duration of later-stage clinical trials.
General and Administrative Expenses
General and administrative expenses consist primarily of salaries, benefits and other related costs, including stock-based compensation, for personnel in our executive, finance, legal, human resources, corporate and business development and administrative functions. General and administrative expenses also include professional fees for legal, patent, accounting, auditing, tax and consulting services, travel expenses, and facility-related expenses, which include direct depreciation costs and allocated expenses for rent and maintenance of facilities and other operating costs. Other Income (Expense), Net Interest income consists primarily of interest on our cash and cash equivalents and investments. Interest expense consists of interest expense related to the aggregate$10.0 million principal amount of the term loan under the Loan Agreement inJuly 2019 . A portion of the interest expense on the term loan is non-cash expense relating to the accretion of the debt discount, amortization of issuance costs and accretion of the final payment fee. During the quarter endedMarch 31, 2022 , we recorded$0.2 million in interest expense, of which$0.2 million related to cash interest paid and the remainder to the accretion of the debt discount and amortization of issuance costs. During the quarter endedMarch 31, 2021 , we recorded$0.3 million in interest expense, of which$0.2 million related to cash interest paid and the remainder to the accretion of the debt discount and amortization of issuance costs.
Results of Operations
Comparison of the Three Months Ended
The following table summarizes our results of operations for the three months
ended
Three Months Ended March 31, 2022 2021 (in thousands) REVENUE Collaboration and service revenue$ 2,816 $ 461 Total revenue 2,816 461 OPERATING EXPENSES Research and development 5,641 6,419 General and administrative 3,624 4,059 Total operating expenses 9,265 10,478 LOSS FROM OPERATIONS (6,449 ) (10,017 ) OTHER INCOME (EXPENSE): Other expense, net (213 ) (265 ) Net loss$ (6,662 ) $ (10,282 ) 26
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Revenue
Revenue for the quarter ended
Research and Development Expenses
The following table summarizes our research and development expenses for the
three months ended
Three Months Ended March 31, 2022 2021 (Decrease)/Increase (in thousands) LB-001 external development and manufacturing costs$ 988 $ 1,863 $ (875 ) Personnel-related costs 2,357 2,146 211 Lab supplies 732 916 (184 ) Other research and development costs 1,564 1,494 70
Total research and development expenses
$ (778 ) Research and development expenses for the three months endedMarch 31, 2022 were$5.6 million , compared to$6.4 million for the three months endedMarch 31, 2021 . The decrease of approximately$0.8 million was primarily due to a decrease of$0.9 million related to the LB-001 external development and manufacturing costs incurred during the three months endedMarch 31, 2021 to start up the Phase 1/2 SUNRISE clinical trial and ensure appropriate clinical supply that did not reoccur during the three months endedMarch 31, 2022 . Although there may be fluctuations on a quarterly basis, we expect that our research and development expenses will increase during the remaining quarters of 2022 as we continue to advance the LB-001 clinical program as well as advance the remainder of our pipeline both internally and with collaborators.
General and Administrative Expenses
General and administrative expenses were$3.6 million for the three months endedMarch 31, 2022 , compared to$4.1 million for the three months endedMarch 31, 2021 . The decrease of approximately$0.4 million was primarily driven by a decrease of approximately$0.6 million in professional service fees as we brought more professional work in-house through key hires made during 2021. As such, personnel expenses increased approximately$0.3 million as we filled key open positions within the human resources, legal and business development functions. Although there may be fluctuations on a quarterly basis, we expect that our general and administrative expenses will remain relatively consistent during the remaining quarters of 2022.
Other Expense, Net
Other expense, net was$0.2 million for the three months endedMarch 31, 2022 , compared to$0.3 million for the three months endedMarch 31, 2021 . Other expense, net decreased due to a lower principal amount due on the term loan balance during the three-month period endedMarch 31, 2022 . We expect our other expense, net to decrease during the remaining quarters of 2022 as the principal balance on our term loan decreases.
Liquidity and Capital Resources
Overview
Since our inception and throughMarch 31, 2022 , we have not generated any sales revenue and have incurred significant losses and negative cash flows from our operations. As ofMarch 31, 2022 , we had cash and cash equivalents of$42.7 million , which we believe will be sufficient to fund our operating expenses and capital expenditure requirements through the first quarter of 2023; however, due to the uncertainties described below there is substantial doubt about the Company's ability to continue as a going concern. On a quarterly basis, we are required to conduct an accounting analysis under ASC 205-40, Disclosure of Uncertainties about an Entity's Ability to Continue as a Going Concern, or ASC 205-40. The result of our ASC 205-40 analysis is that there is substantial doubt about our ability to continue as a going concern through the next twelve months from the date of issuance of these unaudited condensed consolidated financial statements. We will require substantial additional capital to fund our research and development, including our preclinical and clinical development 27 -------------------------------------------------------------------------------- activities and our manufacturing and process development activities, and ongoing operating expenses. Management's plans to mitigate the conditions that raise substantial doubt include raising additional capital through equity or debt financings, payments from our collaborators, strategic transactions, or a combination of those approaches. These plans may also include the possible elimination or deferral of certain operating expenses unless and until additional capital is received. There can be no assurance that we will be successful in raising additional capital or that such capital, if available, will be on terms that are acceptable to us, or that we will be successful in deferring certain operating expenses.
Cash Flows
The following table summarizes our cash flows for the three months endedMarch 31, 2022 and 2021: Three Months Ended March 31, 2022 2021 (in thousands) Net cash used in operating activities$ (9,901 ) $ (8,073 ) Net cash used in investing activities (7 ) (151 ) Net cash (used in) provided by financing activities (833 ) 2,091 Net decrease in cash, cash equivalents and restricted cash$ (10,741 ) $ (6,133 ) Operating Activities During the three months endedMarch 31, 2022 , net cash used in operating activities was$9.9 million , primarily related to our net loss adjusted for non-cash charges and changes in the components of working capital. The$1.8 million increase in net cash used in operating activities during the three months endedMarch 31, 2022 , as compared to the three months endedMarch 31, 2021 , was primarily driven by a$2.8 million decrease in deferred revenue, as revenue recognized during the quarter endedMarch 31, 2022 was previously paid by our collaboration partners as well as a$2.5 million decrease in working capital based on the timing of payments. These decreases in cash were partially offset by a$3.6 million decrease in net loss during the three-month period endedMarch 31, 2022 as compared to the three month period endedMarch 31, 2021 .
Investing Activities
During the three months ended
Financing Activities
During the three months endedMarch 31, 2022 , net cash used in financing activities was$0.8 million related to the repayment of principal on our term loans. During the three months endedMarch 31, 2021 net cash provided by financing activities was$2.1 million related to net proceeds from sales of our common stock under an Open Market Sale Agreement withJefferies LLC as the sales agent, or the Open Market Sale Agreement. Funding Requirements We expect to continue to incur a significant amount of expenses in connection with our ongoing activities for the foreseeable future. In particular, we will incur significant expenses related to the preclinical activities and clinical trials of our product candidates and any future product candidates.
We expect that we will continue to incur significant expenses if and as we:
28 --------------------------------------------------------------------------------
• continue our current research programs and our preclinical development of
any product candidates from our current research programs;
• continue to conduct our clinical program for LB-001, including our Phase 1/2
SUNRISE clinical trial. In connection with the lifting of the LB-001
clinical hold described above, we amended the SUNRISE protocol.
Implementation of the protocol amendments is expected to increase clinical
trial costs primarily due to increased screening time, an intensified monitoring regimen, prolonged hospitalization and potential acute use of a complement inhibitor;
• seek to identify, assess, acquire and/or develop additional research
programs and additional product candidates, and initiate and conduct clinical trials for such product candidates; • engage in transactions, including strategic, merger, collaboration, acquisition and licensing transactions;
• seek regulatory approvals for any product candidates that successfully
complete clinical trials; develop, optimize, scale and validate a
manufacturing process and analytical methods for any product candidates we
may develop;
• obtain market acceptance of any product candidates we may develop as viable
treatment options; • address competing technological and market developments;
• maintain, expand and protect our intellectual property portfolio and provide
reimbursement of third-party expenses related to our patent portfolio;
• further develop our GeneRide and sAAVy technology platforms;
• hire additional scientific, clinical, technical, quality, regulatory,
general and administrative, and commercial personnel and add operational,
financial and management information systems and personnel, including
personnel to support our process and analytical development, manufacturing
and planned future commercialization efforts;
• make royalty, milestone or other payments under current or future in-license
agreements;
• establish and maintain supply chain and manufacturing relationships with third parties that can provide adequate products and services, in both amount, timing and quality, to support our development programs and the
market demand for any product candidate for which we obtain regulatory and
marketing approval;
• lease and build new facilities, including offices and labs, as necessary to
support any organizational growth;
• comply with good practice quality guidelines and regulations, or GXP, including good laboratory practice, good clinical practice, or GCP, or current good manufacturing practice, and cGMP;
• build out and validate clinical and commercial-scale cGMP manufacturing
capabilities; • establish a sales, marketing and distribution infrastructure to
commercialize any product candidates for which we may obtain marketing
approval; and • experience any delays or encounter issues with any of the above. We are unable to estimate the timing and amounts of increased capital outlays and operating expenses associated with completing the research and development of our product candidates because of the numerous risks and uncertainties associated with the development of our lead product candidate, LB-001, and any other product candidates and programs we may develop and because the extent to which we may enter into collaborations with third parties for the development of LB-001 and any other product candidates we may develop is unknown. AtMarch 31, 2022 , we had$42.7 million of cash and cash equivalents on hand, which we currently expect will be sufficient to fund our operating expenses and capital expenditure requirements through the first quarter of 2023. We have based these estimates on assumptions that may prove to be wrong, and we could use our available capital resources sooner than we currently expect. Our future funding requirements, both near and long-term, will depend on many factors, including: 29
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• the scope, progress, timing, costs and results of drug discovery,
preclinical development, laboratory testing, and clinical trials for our
product candidates, including the ongoing development program for LB-001
(including the Phase 1/2 SUNRISE clinical trial), and process development
and manufacturing activities for LB-001;
• the implementation of amendments to the Phase 1/2 SUNRISE clinical trial
protocol made in connection with the lifting of the clinical hold, which
include increased screening time, an intensified monitoring regimen,
prolonged hospitalization and potential acute use of a complement inhibitor;
• the outcome, timing and cost of following the advice of and complying with
regulatory requirements and decisions made by the FDA, EMA and other
regulatory authorities, including relating to any potential clinical holds
that may be imposed on us in the future;
• the impact of the COVID-19 pandemic on our ability to progress with our
research, development, manufacturing and regulatory efforts, including our
ability to advance and complete our Phase 1/2 SUNRISE clinical trial of LB-001;
• the cost of filing, prosecuting, defending and enforcing our patent claims
and other intellectual property rights;
• the cost of defending potential intellectual property disputes, including
patent infringement actions;
• the achievement of milestones or occurrence of other developments that
trigger payments under any of our current agreements or other agreements we
may enter into; • the extent to which we are obligated to reimburse, or entitled to
reimbursement of, clinical trial and other research and development costs
under future collaboration agreements, if any; • the effect of competing technological and market developments;
• the cost and timing of completion of process and analytical development and
manufacturing activities;
• the extent to which we engage in transactions, including collaboration,
merger, acquisition and licensing transactions;
• our ability to establish and maintain collaborations on favorable terms, if
at all;
• the cost of establishing sales, marketing and distribution capabilities for
LB-001 and any other product candidates in regions where we choose to commercialize our product candidates, if approved;
• the initiation, progress, timing and results of our commercialization of
LB-001 and any other product candidates, if approved, for commercial sale;
• our ability to repay outstanding debt; and
• our ability to attract, hire and retain qualified personnel.
A change in the outcome of any of the above variables that are applicable to the development of a product candidate could mean a significant change in the costs and timing associated with the research and development of that product candidate. For example, if the FDA or another regulatory authority were to require us to conduct clinical trials beyond those that we anticipate will be required for the completion of clinical development of a product candidate, or if we experience significant trial delays due to actions taken by regulatory authorities, IRBs, patient enrollment or other reasons, we would be required to expend significant additional financial resources and/or time on the completion of clinical development. Any significant delays in our programs may also require us to reevaluate our corporate strategy, resulting in the expenditure of significant resources and time. We may never succeed in obtaining regulatory approval for our product candidates or any future product candidates. Until such time, if ever, that we can generate product revenue sufficient to achieve profitability, we expect to finance our future cash needs through equity or debt financings, payments from our collaborators, strategic transactions, or a combination of those approaches. There is no assurance that we will be successful in obtaining any additional financing on terms acceptable to the Company, if at all. Additionally, the terms of any financing may adversely affect the holdings or the rights of our stockholders. If we are unable to obtain funding, we may be required to delay, reduce or eliminate some or all of our research and development programs, preclinical and clinical development programs or future commercialization efforts, or we may be unable to continue operations. 30 --------------------------------------------------------------------------------
At-the-Market Sales of Common Stock
InNovember 2019 , we entered into the Open Market Sale Agreement. Under the terms of the Open Market Sale Agreement and the related prospectus supplement we filed with theSecurities and Exchange Commission , or theSEC , inNovember 2019 , we may sell shares of our common stock at the then current market prices, from time to time, having an aggregate value of up to$50.0 million throughJefferies LLC . We pay up to a 3% cash commission toJefferies LLC on the proceeds from sales under the program. During the three months endedMarch 31, 2022 , we did not sell any shares under the Open Market Sale Agreement and the related prospectus supplement. During the three months endedMarch 31, 2021 , we sold 251,086 shares of our common stock at a weighted-average price of$8.59 per share, resulting in net proceeds to us of$2.1 million . AtMarch 31, 2022 , we had$41.3 million in aggregate gross offering amount of shares available under the Open Market Sale Agreement and the related prospectus supplement. For information relating to the rules known as the "baby shelf" rules, please see "-Raising additional capital may cause dilution to our stockholders, restrict our operations or require us to relinquish rights to our technologies or product candidates."
Policies and Significant Judgments and Estimates
Our unaudited condensed consolidated financial statements are prepared in accordance with generally accepted accounting principles inthe United States , orU.S. GAAP. The preparation of our unaudited 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 the disclosure of contingent assets and liabilities in our unaudited condensed consolidated financial statements. We base our estimates on historical experience, known trends and events and various other factors that we believe are 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 from these estimates under different assumptions or conditions. There have been no significant changes to our critical accounting policies from those described in "Management's Discussion and Analysis of Financial Condition and Results of Operations," included in our Annual Report on Form 10-K for the year endedDecember 31, 2021 , filed with theSEC onMarch 4, 2022 , or our Form 10-K.
Emerging Growth Company Status
The Jumpstart Our Business Startups Act of 2012 permits an "emerging growth company" such as our company to take advantage of an extended transition period to comply with new or revised accounting standards applicable to public companies until those standards would otherwise apply to private companies. We have irrevocably elected to "opt out" of this provision and, as a result, we will comply with new or revised accounting standards when they are required to be adopted by public companies that are not emerging growth companies.
Recently Issued Accounting Pronouncements
Refer to Note 2 in the accompanying notes to our unaudited condensed consolidated financial statements appearing elsewhere in this Quarterly Report on Form 10-Q for a discussion of recent accounting pronouncements.
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