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ROCKET PHARMACEUTICALS, INC.

(RCKT)
  Report
Delayed Nasdaq  -  04:00 2022-09-30 pm EDT
15.96 USD   +13.68%
09/30Chardan Lifts Price Target on Rocket Pharmaceuticals to $65 From $62, Maintains Buy Rating
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09/30Evercore ISI Adjusts Rocket Pharmaceuticals Price Target to $75 From $65, Maintains Outperform Rating
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09/30Transcript : Rocket Pharmaceuticals, Inc. - Special Call
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ROCKET PHARMACEUTICALS, INC. Management's Discussion and Analysis of Financial Condition and Results of Operations (form 10-Q)

08/09/2022 | 04:31pm EDT
You should read the following discussion and analysis of our financial condition
and results of operations together with the consolidated financial statements
and related notes that are included elsewhere in this Quarterly Report on Form
10-Q and our 2021 Form 10-K. This discussion contains forward-looking statements
based upon current plans, expectations and beliefs that involve risks and
uncertainties. Our actual results may differ materially from those anticipated
in these forward-looking statements as a result of various factors, including,
but not limited to, those discussed in the section entitled "Risk Factors" and
elsewhere in this Quarterly Report on Form 10-Q. In preparing this MD&A, we
presume that readers have access to and have read the MD&A in our 2021 Form
10-K, pursuant to Instruction 2 to paragraph of Item 303 of Regulation S-K.
Unless stated otherwise, references in this Quarterly Report on Form 10-Q to
"us," "we," "our," or our "Company" and similar terms refer to Rocket
Pharmaceuticals, Inc.

We are a clinical-stage, multi-platform biotechnology company focused on the
development of first, only and best-in-class gene therapies, with direct
on-target mechanism of action and clear clinical endpoints, for rare and
devastating diseases. We have three clinical-stage ex vivo lentiviral vector
("LVV") programs. These include programs for Fanconi Anemia ("FA"), a genetic
defect in the bone marrow that reduces production of blood cells or promotes the
production of faulty blood cells, Leukocyte Adhesion Deficiency-I ("LAD-I"), a
genetic disorder that causes the immune system to malfunction and Pyruvate
Kinase Deficiency ("PKD"), a rare red blood cell autosomal recessive disorder
that results in chronic non-spherocytic hemolytic anemia. Of these, both the
Phase 2 FA program and the Phase 1/2 LAD-I program are in potentially
registration-enabling studies in the United States ("U.S.") and Europe ("EU").
In addition, in the U.S., we have a clinical stage in vivo adeno-associated
virus ("AAV") program for Danon disease, a multi-organ lysosomal-associated
disorder leading to early death due to heart failure. Additional work on a gene
therapy program for the less common FA subtypes C and G is ongoing. We have
global commercialization and development rights to all of these product
candidates under royalty-bearing license agreements.

Effective December 2021, a decision was made to no longer pursue
Rocket-sponsored clinical evaluation of RP-L401; this program was returned to
academic innovators. Although we believe that gene therapy may be beneficial to
patients afflicted with this disorder, we have opted to focus available
resources towards advancement of RP-A501, RP-L102, RP-L201 and RP-L301, based on
the compelling clinical data to date and potential for therapeutic advancement
in these severe disorders of childhood and young adulthood.

Recent Developments

At-the-Market Offering Program


On February 28, 2022, we entered into the Sales Agreement with Cowen with
respect to an at-the-market offering program pursuant to which the Company may
offer and sell, from time to time at its sole discretion, shares through Cowen
as its sales agent. The shares to be offered and sold under the Sales Agreement,
if any, will be offered and sold pursuant to the Company's shelf registration
statement on Form S-3 (File No. 333-253756), which was filed with the SEC on
March 2, 2021 and which became effective on September 10, 2021. We filed a
prospectus supplement with the SEC on February 28, 2022 in connection with the
offer and sale of the shares pursuant to the Sales Agreement.  We will pay Cowen
a cash commission of up to 3.0% of gross proceeds from the sale of the shares
pursuant to the Sales Agreement. We also agreed to provide Cowen with customary
indemnification and contribution rights and will also reimburse Cowen for
certain expenses incurred in connection with the Sales Agreement. As of June 30,
2022, we sold 1.3 million shares of common stock pursuant to the at-the-market
offering program for gross proceeds of $17.8 million, less commissions of $0.5
million for net proceeds of $17.3 million (see Note 7).

Gene Therapy Overview


Genes are composed of sequences of deoxyribonucleic acid ("DNA"), which code for
proteins that perform a broad range of physiologic functions in all living
organisms. Although genes are passed on from generation to generation, genetic
changes, also known as mutations, can occur in this process. These changes can
result in the lack of production of proteins or the production of altered
proteins with reduced or abnormal function, which can in turn result in disease.

Gene therapy is a therapeutic approach in which an isolated gene sequence or
segment of DNA is administered to a patient, most commonly for the purpose of
treating a genetic disease that is caused by genetic mutations. Currently
available therapies for many genetic diseases focus on administration of large
proteins or enzymes and typically address only the symptoms of the disease. Gene
therapy aims to address the disease-causing effects of absent or dysfunctional
genes by delivering functional copies of the gene sequence directly into the
patient's cells, offering the potential for curing the genetic disease, rather
than simply addressing symptoms.

We are using modified non-pathogenic viruses for the development of our gene
therapy treatments. Viruses are particularly well suited as delivery vehicles
because they are adept at penetrating cells and delivering genetic material
inside a cell. In creating our viral delivery vehicles, the viral (pathogenic)
genes are removed and are replaced with a functional form of the missing or
mutant gene that is the cause of the patient's genetic disease. The functional
form of a missing or mutant gene is called a therapeutic gene, or the
"transgene." The process of inserting the transgene is called "transduction."
Once a virus is modified by replacement of the viral genes with a transgene, the
modified virus is called a "viral vector." The viral vector delivers the
transgene into the targeted tissue or organ (such as the cells inside a
patient's bone marrow). We have two types of viral vectors in development, LVV
and AAV. We believe that our LVV and AAV-based programs have the potential to
offer a significant therapeutic benefit to patients that is durable
(long-lasting).

The gene therapies can be delivered either (1) ex vivo (outside the body), in
which case the patient's cells are extracted and the vector is delivered to
these cells in a controlled, safe laboratory setting, with the modified cells
then being reinserted into the patient, or (2) in vivo (inside the body), in
which case the vector is injected directly into the patient, either
intravenously ("IV") or directly into a specific tissue at a targeted site, with
the aim of the vector delivering the transgene to the targeted cells.


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We believe that scientific advances, clinical progress, and the greater
regulatory acceptance of gene therapy have created a promising environment to
advance gene therapy products as these products are being designed to restore
cell function and improve clinical outcomes, which in many cases include
prevention of death at an early age. The FDA approval of several gene therapies
in recent years indicates that there is a regulatory pathway forward for gene
therapy products.

Pipeline Overview

The chart below shows the current phases of development of Rocket's programs and product candidates:

                           [[Image Removed: graphic]]

AAV Program:

Danon Disease:

Danon disease ("DD") is a multi-organ lysosomal-associated disorder leading to
early death due to heart failure. DD is caused by mutations in the gene encoding
lysosome-associated membrane protein 2 ("LAMP-2"), a mediator of autophagy. This
mutation results in the accumulation of autophagic vacuoles, predominantly in
cardiac and skeletal muscle. Male patients often require heart transplantation
and typically die in their teens or twenties from progressive heart failure.
Along with severe cardiomyopathy, other DD-related manifestations can include
skeletal muscle weakness, liver disease, and intellectual impairment. There are
no specific therapies available for the treatment of DD and medications
typically utilized for the treatment of congestive heart failure (CHF) are not
believed to modify progression to end-stage CHF. Patients with end-stage CHF may
undergo heart transplant, which currently is available to a minority of
patients, is associated with short- and long-term complications and is not
curative of the disorder in the long-term. RP-A501 is in clinical trials as an
in vivo therapy for Danon disease, which is estimated to have a prevalence of
15,000 to 30,000 patients in the U.S. and the EU.

Danon disease is an autosomal dominant, rare inherited disorder characterized by
progressive cardiomyopathy which is almost universally fatal in males even in
settings where cardiac transplantation is available. Danon disease predominantly
affects males early in life and is characterized by absence of LAMP2B expression
in the heart and other tissues. Preclinical models of Danon disease have
demonstrated that AAV-mediated transduction of the heart results in
reconstitution of LAMP2B expression and improvement in cardiac function.

We currently have one adeno-associated viral vector program targeting DD,
RP-A501. We have treated seven patients in the RP-A501 Phase 1 clinical trial,
which enrolled for adult and pediatric male DD patients. This includes a first
cohort evaluating a low-dose (6.7e13 genome copies (gc)/kilogram (kg)) in
adult/older adolescent patients aged 15 or greater (n=3), a second cohort
evaluating a higher dose (1.1e14 gc/kg) in adult/older adolescent patients aged
15 or greater (n=2), and we have initiated treatment in a pediatric cohort at a
low dose level (6.7e13 gc/kg; n=2).

Data disclosed from our Phase 1 study of RP-A501 in November 2021 and January
2022 included safety and clinical activity results from the three patients
treated with the low dose of 6.7e13 gc/kg and from two patients treated with the
higher dose of 1.1e14 gc/kg, and initial safety information from the one
pediatric patient (pediatric cohort is age 8-14 years) treated with the low dose
of 6.7e13 gc/kg.

Efficacy assessments include evaluation of New York Heart Association ("NYHA")
Functional Classification, which is the most commonly used heart failure
classification system. NYHA Class II is where a patient exhibits a slight
limitation of physical activity, is comfortable at rest, and ordinary physical
activity results in fatigue, palpitation and/or dyspnea. Class I is where a
patient exhibits no limitation of physical activity and ordinary physical
activity does not cause undue fatigue, palpitation and/or dyspnea. Brain
natriuretic peptide (BNP) is a blood-based evaluation and a key marker of heart
failure with prognostic significance in CHF and cardiomyopathies. Other efficacy
parameters include echocardiographic measurements of heart thickness, most
notably the thickness of the left ventricular posterior wall (LVPW), and
importantly, measurement of LAMP2B gene expression both via immunohistochemistry
and Western blot, as obtained via endomyocardial biopsy. Biopsied heart tissue
is also evaluated on electron microscopy for evidence of DD-associated tissue
derangements, including the presence of autophagic vacuoles and disruption of
myofibrillar architecture, each of which are characteristic of DD-related
myocardial damage.

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In November 2021 and January 2022, data for the ongoing Phase 1 trial of RP-A501
was presented, including efficacy parameters for the low and high dose cohorts
in patients aged 15 and older with at least 12 months follow-up (n=5). An
improvement in NYHA Class (from II to I) was observed in three patients (two
low-dose and one high-dose) who had closely monitored immunosuppression with
follow-up greater than one year and stabilization was observed in one low-dose
patient without a closely monitored immunosuppressive regimen. A substantial
improvement in BNP, a key marker of heart failure, was observed in all three
low-dose patients and one high-dose patient. Among the three low-dose patients,
BNP decreased from a pretreatment baseline by 57% at 24 months, 79% at 18
months, and 75% at 15 months, respectively. In one high-dose patient, BNP
decreased from a pretreatment baseline by 67% at 12 months. In patients with
closely monitored immunosuppression (two low-dose and one high-dose) left
ventricular (LV) posterior wall thickness improved (average 23% decrease
compared to pretreatment baseline) and ejection fraction improved or stabilized
(average 20% increase compared to pretreatment baseline) at 12 to 18 months on
echocardiography. Severe and progressive wall thickening is a hallmark of the
hypertrophic cardiomyopathy of Danon disease and is a major contributor to early
mortality in male patients. Cardiac output remained normal for all patients with
improved or stable left heart filling pressures as measured by cardiac
catheterization. Three low-dose patients and one high-dose patient demonstrated
improvements in the 6-minute walk test (6MWT). One low-dose patient improved
from a pretreatment baseline of 443 meters (m) to 467 m at 24 months. The second
low-dose patient improved from a pretreatment baseline of 405 m to 410 m at 18
months. The third low-dose patient improved from a pretreatment baseline of 427
m to 435 m at 15 months. One high-dose patient improved from a pretreatment
baseline of 436 m to 492 m at 12 months. Evidence of sustained cardiac LAMP2B
gene expression by immunohistochemistry and Western blot with qualitative
improvement of vacuoles and cardiac tissue architecture on electron microscopy
was observed at both dose levels. Sustained cardiac LAMP2B gene expression by
immunohistochemistry was observed in all three patients with a closely monitored
immunosuppressive regimen. Specifically, LAMP2B gene expression by
immunohistochemistry in the low-dose (6.7e13 vg/kg) was 68% in one patient at
Month 12 and 92% in another patient at Month 9. In one patient who received the
high-dose (1.1e14 vg/kg), LAMP2B gene expression by immunohistochemistry was
100% at Month 12.

One of the patients receiving therapy on the high dose cohort had progressive
heart failure and underwent a heart transplant at Month 5 following therapy.
This patient had more advanced disease than the 4 other adult/older adolescent
patients who received treatment in the low and high dose cohorts, as evidenced
by diminished LV ejection fraction (35%) on echocardiogram and markedly elevated
LV filling pressure prior to treatment. His clinical course was characteristic
of DD progression. Assessments regarding gene transduction from the explanted
heart are summarized below:

Explanted Heart

• Analysis of the explanted heart revealed significant fibrosis consistent with

advanced DD.

• Myocardial tissue from the explanted heart at 5 months post-treatment displayed

100% LAMP2B protein expression by immunohistochemistry throughout non-fibrotic

cardiac regions including the ventricles and other essential targeted areas




RP-A501 was generally well tolerated at the 6.7e13 gc/kg dose level, or lower
dose. All observed adverse effects were reversible with no lasting sequelae.
Early transaminase and creatinine kinase elevations returned to baseline or
decreased. No unexpected and serious drug product-related adverse events or
severe adverse events were observed in this low dose cohort. The most common
adverse events were predominantly mild, not associated with clinical symptoms
and were related to elevated transaminases post-treatment. Elevation in
transaminases and creatinine kinases was observed in all three low-dose patients
and returned to baseline levels within the first one to two months
post-treatment. There was also a transient and reversible decline in platelets
observed in these three patients. These changes were largely responsive to
corticosteroids and other immunosuppressive therapies. All patients were given
oral steroids to prevent or minimize potential immune-related events.
Corticosteroids were associated with transient exacerbation of DD-associated
skeletal myopathy, which resolved upon discontinuation of steroid therapy. At
the higher dose administered (1.1e14 gc/kg), additional immunosuppressive
therapies were stipulated and administered to mitigate the immune response
associated with RP-A501. As disclosed in December 2020, one of the two patients
receiving the 1.1e14 gc/kg dose had more advanced heart failure than the others,
and was the heaviest patient treated to-date (receiving the highest absolute
AAV9 dose). This patient experienced a non-persistent, immune-related event that
was classified as a drug product-related serious adverse event. This thrombotic
microangiopathy ("TMA") event (which was later reclassified as a Sudden
Unexpected Serious Adverse Reaction ("SUSAR") was believed to be likely due to
immune-mediated complement activation, resulting in reversible thrombocytopenia
and acute kidney injury requiring eculizumab and transient hemodialysis. This
patient regained normal kidney function within three weeks. (This event occurred
in the same patient in whom RP-A501 was not associated with clinical
stabilization or improvement, and who required a heart transplant 5 months
post-therapy).

Following transplant, this patient has been clinically stable and reports
resolution of a baseline skeletal myopathy that was present prior to treatment.
Analysis of the explanted heart is described above. Of note, this patient had
more advanced heart failure at time of treatment; the clinical protocol has been
modified to exclude enrollment of DD with end-stage CHF/cardiomyopathy. In May
2021, 5 months after details of this event were disclosed and after recognition
of complement-mediated TMA in other systemic AAV programs, the FDA placed the
study on clinical hold. In response to the FDA's clinical hold, we amended the
trial protocol in order to enable more defined mechanisms for prevention, early
recognition and management of complement-mediated adverse events. The FDA lifted
the clinical hold on August 16, 2021 and dosing of the pediatric cohort was
initiated in the fourth quarter of 2021.

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Based on the activity observed in the low dose cohort and to mitigate
complement-mediated TMA (safety concerns observed in the high dose cohort) and
in agreement with the FDA, we are focusing on the low dose (6.7e13 gc/kg) and we
will no longer administer doses of 1.1e14 gc/kg or higher in this trial.
Additional safety measures have been implemented and are reflected in the
updated trial protocol. These measures include exclusion of patients with
end-stage heart failure, and a refined immunosuppressive regimen involving
transient B- and T-cell mediated inhibition, with emphasis on preventing
complement activation, while also enabling lower steroid doses and earlier
steroid taper, with all immunosuppressive therapy discontinued 2-3 months
following therapy. As announced in January 2022, the initial pediatric patient
received RP-A501 therapy (6.7e13 gc/kg dose level) without evidence of
significant complement activation and with stable platelet levels; there was no
worsening of the patient's baseline DD-related skeletal myopathy during the
weeks following RP-A501. A second pediatric patient has also been treated under
the program.

In May 2022, we presented new initial safety data for RP-A501 at the 25th Annual
Meeting of the American Society of Gene and Cell Therapy ("ASGCT"). In the
pediatric cohort, RP-A501 (6.7e13 gc/kg dose level) was well-tolerated in both
patients as of the April 30, 2022 cut-off date. The patients were observed to
have normal-range platelets, diminished complement activation relative to the
adult cohorts, and no complement-related adverse events. The two patients
received preventative treatment with an enhanced immunomodulatory regimen. No
significant immediate or delayed toxicities have been observed as of the April
30, 2022 cut-off date.  In the adult (age ?15 years) low-dose cohort, RP-A501
was generally well-tolerated. All 4 adult (age ?15 years) patients with observed
immunomodulatory regimen compliance and preserved (>40%) left ventricular
ejection fraction at baseline demonstrated disease modification across
molecular, echocardiographic, and functional parameters. These patients
demonstrated evidence of cardiac LAMP2B expression by immunohistochemistry.
Echocardiograms showed stabilized or decreased cardiac wall thickness with
improved or stabilized ejection fraction in these patients. Patients in the
adult cohorts demonstrated sustained improvement or stabilization in Brain
Natriuretic Peptide (BNP) and New York Heart Association (NYHA) class, 6-minute
walk test and reported increases in physical activity. Adverse events were
manageable with transient immunomodulation. All treatment-related adverse events
in pediatric and adult cohorts were reversible with no lasting renal, hepatic,
or other sequelae.

Anticipated Milestones
We look forward to presenting early efficacy data from the pediatric cohort with
three to six months of follow-up in the third quarter of 2022. If early signals
of efficacy and ongoing tolerability are demonstrated along with evidence of
longer-term safety and efficacy in the adults, we expect these results to
support FDA discussions on study design and endpoints in the fourth quarter of
2022 for our planned Phase 2 trial.  Phase 2 trial planning activities are
expected to begin in the fourth quarter of 2022.

Fanconi Anemia Complementation Group A (FANCA):


FA, a rare and life-threatening DNA-repair disorder, generally arises from a
mutation in a single FA gene. An estimated 60 to 70% of cases arise from
mutations in the Fanconi-A ("FANCA") gene, which is the focus of our program. FA
results in bone marrow failure, developmental abnormalities, myeloid leukemia,
and other malignancies, often during the early years and decades of life. Bone
marrow aplasia, which is bone marrow that no longer produces any or very few red
and white blood cells and platelets leading to infections and bleeding, is the
most frequent cause of early morbidity and mortality in FA, with a median onset
before 10 years of age. Leukemia is the next most common cause of mortality,
ultimately occurring in about 20% of patients later in life. Solid organ
malignancies, such as head and neck cancers, can also occur, although at lower
rates during the first two to three decades of life.

Although improvements in allogeneic (donor-mediated) hematopoietic stem cell
transplant ("HSCT"), currently the most frequently utilized therapy for FA, have
resulted in more frequent hematologic correction of the disorder, HSCT is
associated with both acute and long-term risks, including transplant-related
mortality, graft versus host disease ("GVHD"), a sometimes fatal side effect of
allogeneic transplant characterized by painful ulcers in the GI tract, liver
toxicity and skin rashes, as well as increased risk of subsequent cancers. Our
gene therapy program in FA is designed to enable a minimally toxic hematologic
correction using a patient's own stem cells during the early years of life. We
believe that the development of a broadly applicable autologous gene therapy can
be transformative for these patients.

Each of our LVV-based programs utilize third-generation, self-inactivating
lentiviral vectors to correct defects in patients' HSCs, which are the cells
found in bone marrow that are capable of generating blood cells over a patient's
lifetime. Defects in the genetic coding of HSCs can result in severe, and
potentially life-threatening anemia, which is when a patient's blood lacks
enough properly functioning red blood cells to carry oxygen throughout the body.
Stem cell defects can also result in severe and potentially life-threatening
decreases in white blood cells resulting in susceptibility to infections, and in
platelets responsible for blood clotting, which may result in severe and
potentially life-threatening bleeding episodes. Patients with FA have a genetic
defect that prevents the normal repair of genes and chromosomes within blood
cells in the bone marrow, which frequently results in the development of acute
myeloid leukemia ("AML"), a type of blood cancer, as well as bone marrow failure
and congenital defects. The average lifespan of an FA patient is estimated to be
30 to 40 years. The prevalence of FA in the U.S. and EU is estimated to be
approximately 4,000 patients in total. In light of the efficacy seen in
non-conditioned patients, the addressable annual market opportunity is now
believed to be 400 to 500 patients collectively in the U.S. and EU.

We currently have one ex-vivo LVV-based program targeting FA, RP-L102. RP-L102
is our lead lentiviral vector-based program that we in-licensed from Centro de
Investigaciones Energéticas, Medioambientales y Tecnológicas ("CIEMAT"), which
is a leading research institute in Madrid, Spain. RP-L102 is currently being
studied in our Phase 2 registrational enabling clinical trials treating FA
patients at the Center for Definitive and Curative Medicine at Stanford
University School of Medicine ("Stanford"), the University of Minnesota, Great
Ormond Street Hospital ("GOSH") in London and Hospital Infantil de Nino Jesus
("HNJ") in Spain. The trial is expected to enroll a total of ten patients from
the U.S. and EU with the first patient in this Phase 2 trial treated in December
2019. Patients will receive a single intravenous infusion of RP-L102 that
utilizes fresh cells and "Process B" which incorporates a modified stem cell
enrichment process, transduction enhancers, as well as commercial-grade vector
and final drug product.

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Resistance to mitomycin-C, a DNA damaging agent, in bone marrow stem cells at a
minimum time point of one year post treatment is the primary endpoint for our
ongoing Phase 2 study. Per agreement with the FDA and EMA, engraftment leading
to bone marrow restoration exceeding a 10% mitomycin-C resistance threshold
could support a marketing application for approval.

In December 2020, we presented updated interim data from our FA program at the
62nd American Society of Hematology ("ASH") Annual Meeting. The FA data
presented at the ASH Annual Meeting were from seven of the nine patients treated
(out of twelve patients enrolled) as of October 2020 in both the U.S. Phase 1
and global Phase 2 studies of RP-L102 for FA. Patients in these studies received
a single intravenous infusion of "Process B" RP-L102 which incorporates a
modified stem cell enrichment process, transduction enhancers, as well as
commercial-grade vector. Preliminary data from these studies support "Process B"
as a consistent and reproducible improvement over "Process A" which was used in
earlier academic FA studies.

Seven patients had follow-up data of at least two-months and three of the seven
patients had been followed for twelve-months or longer. As patients are treated
with gene therapy product without the use of a conditioning regimen, the data
indicated that RP-L102 was generally well-tolerated with no significant safety
issues reported with infusion or post-treatment. One drug related serious
adverse event of Grade 2 transient infusion-related reaction was observed. In
five out of the seven patients for whom there was follow-up data, evidence of
preliminary engraftment was observed, with bone marrow ("BM") vector copy
numbers ("VCNs") from 0.16 to 0.22 (long-term follow-up only) and peripheral
VCNs ranging from 0.01 (2-month follow-up) to 0.11 (long-term follow-up).
Further, two of the three patients with greater than 12-months follow-up showed
evidence of increasing engraftment, mitomycin-C ("MMC") resistance and stable
blood counts, which suggests a halt in the progression of bone marrow failure.
The third patient with greater than 12-month follow-up contracted Influenza B
nine months post-treatment resulting in progressive BM failure, for which, such
patient received a successful bone marrow transplant at 18 months
post-treatment.

In May 2021, we presented positive clinical data at the 24th Annual Meeting of
the ASGCT. The preliminary data from the Phase 1/2 trials presented in a poster
at ASGCT were from nine pediatric patients and showed increasing evidence of
engraftment in at least six of the nine patients, including two patients with at
least 15-months of follow-up and four patients with at least 6-months of
follow-up. RP-L102 demonstrated a highly favorable tolerability profile with all
subjects being treated without conditioning and with no sign of dysplasia. One
patient experienced a Grade 2 transient infusion-related reaction.

In December 2021, we presented encouraging clinical data at the 63rd Annual
Meeting of the American Society of Hematology (ASH). The preliminary results
from the Phase 1/2 trials were presented in a poster at ASH were from eleven
pediatric patients and showed increasing evidence of engraftment in at least six
of eight patients for whom there are at least 12 months of follow-up, including
bone marrow progenitor cell resistance to mitomycin-C (MMC) ranging from 16-63%
in six patients (bone marrow cells in FA patients are highly sensitive to
DNA-damaging agents including MMC; this susceptibility to DNA damage is believed
to mediate the FA-associated bone marrow failure and predisposition to
malignancy. In addition to the development of MMC-resistance in BM hematopoietic
cells, sustained peripheral VCN levels were seen in six of seven patients with
at least 12-months of follow-up. One patient experienced an Influenza B
infection approximately 9 months following treatment with concomitant
progressive hematologic failure requiring allogeneic hematopoietic stem cell
transplant, which was administered successfully; the remaining patients have not
required transfusions. RP-L102 demonstrated a highly favorable tolerability
profile with all subjects being treated without cytotoxic conditioning and no
signs of dysplasia. The only RP-L102 related serious adverse event to-date has
been a Grade 2 transient infusion-related reaction in one patient.

In May 2022, we presented updated data for RP-L102 at ASGCT's 25th Annual
Meeting.  Five of nine evaluable patients as of the April 4, 2022 cut-off date
had increased resistance to MMC in bone marrow-derived colony forming cells,
ranging from 21% to 42% at 12 to 18 months, increasing to 51% to 94% at 18 - 21
months. The primary endpoint has been achieved, based on a trial protocol in
which statistical and clinical significance requires a minimum of five patients
to attain increased MMC resistance at least 10% above baseline at two or more
timepoints, and concomitant evidence of genetic correction and clinical
stabilization. A sixth patient has displayed evidence of progressively
increasing genetic correction as evidenced by peripheral VCN. Three additional
patients were less than 12 months post-treatment at the time of presentation.
One patient had progressive bone marrow failure following therapy and underwent
successful allogeneic transplant as previously disclosed. The tolerability
profile of RP-L102 appears favorable with no signs of dysplasia, clonal
dominance or oncogenic integrations; as previously reported, one patient
experienced a RP-L102 Grade 2 transient infusion-related reaction, which
resolved without any additional clinical sequelae.

Anticipated Milestones
Based on achievement of the primary endpoint in our potentially pivotal Phase 2
study for Fanconi Anemia, we have begun dialogue around biologics license
application ("BLA") preparations for initiating BLA planning activities.
Additional data readouts for the Fanconi Anemia program are expected in the
fourth quarter of 2022.

Leukocyte Adhesion Deficiency-I (LAD-I):


LAD-I is a rare autosomal recessive disorder of white blood cell adhesion and
migration, resulting from mutations in the ITGB2 gene encoding for the Beta-2
Integrin component, CD18. Deficiencies in CD18 result in an impaired ability for
neutrophils (a subset of infection-fighting white blood cells) to leave blood
vessels and enter tissues where these cells are needed to combat infections. As
is the case with many rare diseases, accurate estimates of incidence are
difficult to confirm; however, several hundred cases have been reported to
date.  Most LAD-I patients are believed to have the severe form of the disease.
Severe LAD-I is notable for recurrent, life-threatening infections and
substantial infant mortality in patients who do not receive an allogeneic HSCT.
Mortality for severe LAD-I has been reported as 60 to 75% by age two in the
absence of allogeneic HCST.

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We currently have one ex-vivo program targeting LAD-I, RP-L201. RP-L201 is a
clinical program that we in-licensed from CIEMAT. We have partnered with UCLA to
lead U.S. clinical development efforts for the LAD-I program. UCLA and its Eli
and Edythe Broad Center of Regenerative Medicine and Stem Cell Research is
serving as the lead U.S. clinical research center for the registrational
clinical trial for LAD-I, and HNJ and GOSH serving as the lead clinical sites in
Spain and London, respectively. This study has received a $7.5 million CLIN2
grant award from the California Institute for Regenerative Medicine ("CIRM") to
support the clinical development of gene therapy for LAD-I.

The ongoing open-label, single-arm, Phase 1/2 registration-enabling clinical
trial of RP-L201 has treated four severe LAD-I patients to assess the safety and
tolerability of RP-L201 to date. The first patient was treated at UCLA with
RP-L201 in the third quarter 2019. Enrollment is now complete in both the Phase
1 and 2 portions of the study; 9 patients have received RP-L102 at 3
investigative centers in the U.S. and Europe.

In December 2021, we presented positive clinical data at the 63rd Annual Meeting
of ASH. The ASH oral presentation included preliminary data from eight of nine
severe LAD-I patients, as defined by CD18 expression of less than 2%, who
received RP-L201 treatment as of the November 8, 2021, data cut-off date. Eight
patients had follow-up data of at least three months, and four of the eight
patients had been followed for 12 months or longer. All infusions of RP-L201
were well tolerated and no drug product-related serious adverse events were
reported. Evidence of preliminary efficacy was observed in all eight evaluable
patients. All eight patients demonstrated neutrophil CD18 expression that
exceeded the 4-10% threshold associated with survival into adulthood and
consistent with reversal of the severe LAD-I phenotype including six patients
with at least 6 months of follow-up. Peripheral blood VCN levels have been
stable and in the 0.54 - 2.94 copies per genome range. No patients had LAD-I
related infections requiring hospitalization after hematopoietic reconstitution
post-RP-L201. Additional updates presented in January 2022 included a ninth
patient achieving CD18 expression of 61% at 3 months, with the preliminary
observation that all nine of nine patients have demonstrated 26% to 87% CD18
expression at timepoints ranging from 3 to 24 months following RP-L102, with
stable CD18 expression levels for each patient subsequent to month 3.

In May 2022, we presented updated data at ASGCT's 25th Annual Meeting. The
presentation included interim efficacy and safety data at three to 24 months of
follow-up after infusion for all nine treated patients and overall survival
data, including survival data for the seven patients with at least 12 months of
follow-up after infusion as of the March 9, 2022 cut-off date. All patients,
aged three months to nine years, demonstrated sustained CD18 restoration and
expression on more than 10% of neutrophils (range: 20%-87%, median: 56%). At one
year, the overall survival without allogeneic hematopoietic stem cell
transplantation across the cohort is 100% based on the Kaplan-Meier estimate. As
of the data cut-off, all nine patients are alive and clinically stable. All
patients demonstrated a statistically significant reduction in the rate of
all-cause hospitalizations and severe infections, relative to pre-treatment.
Evidence of resolution of LAD-I-related skin rash and restoration of wound
repair capabilities has been shown along with sustained phenotypic correction.
The tolerability profile of RP-L201 has been highly favorable in all patients
with no RP-L201-related adverse events. Adverse events related to other study
procedures, including busulfan conditioning, have been previously disclosed and
consistent with the tolerability profiles of those agents and procedures.

Anticipated Milestones
We have initiated discussions with the FDA on BLA filing plans for RP-L201 for
the treatment of severe LAD-I and we anticipate a BLA filing in the first half
of 2023.

Pyruvate Kinase Deficiency (PKD):


Red blood cell PKD is a rare autosomal recessive disorder resulting from
mutations in the pyruvate kinase L/R ("PKLR") gene encoding for a component of
the red blood cell ("RBC") glycolytic pathway. PKD is characterized by chronic
non-spherocytic hemolytic anemia, a disorder in which RBCs do not assume a
normal spherical shape and are broken down, leading to decreased ability to
carry oxygen to cells, with anemia severity that can range from mild
(asymptomatic) to severe forms that may result in childhood mortality or a
requirement for frequent, lifelong RBC transfusions. The pediatric population is
the most commonly and severely affected subgroup of patients with PKD, and PKD
often results in splenomegaly (abnormal enlargement of the spleen), jaundice and
chronic iron overload which is likely the result of both chronic hemolysis and
the RBC transfusions used to treat the disease. The variability in anemia
severity is believed to arise in part from the large number of diverse mutations
that may affect the PKLR gene. Estimates of disease incidence have ranged
between 3.2 and 51 cases per million in the white U.S. and EU population.
Industry estimates suggest at least 2,500 cases in the U.S. and EU have already
been diagnosed despite the lack of FDA-approved molecularly targeted therapies.
Market research indicates the application of gene therapy to broader populations
could increase the market opportunity from approximately 250 to 500 patients per
year.

We currently have one ex-vivo LVV-based program targeting PKD, RP-L301. RP-L301
is a clinical stage program that we in-licensed from CIEMAT. The IND for RP-L301
to initiate the global Phase 1 study cleared in October 2019. This program has
been granted US and EMA orphan drug disease designation.

This global Phase 1 open-label, single-arm, clinical trial is expected to enroll
six adult and pediatric PKD patients in the U.S. and Europe. The trial will be
comprised of three cohorts to assess RP-L301 in young pediatric (age 8-11),
older pediatric (age 12-17) and adult populations. The trial is designed to
assess the safety, tolerability, and preliminary activity of RP-L301, and
initial safety evaluation will occur in the adult cohort before evaluation in
pediatric patients. Stanford will serve as the lead site in the U.S. for adult
and pediatric patients, HNJ will serve as the lead site in Europe for
pediatrics, and Hospital Universitario Fundación Jiménez Díaz will serve as the
lead site in Europe for adult patients. In July 2020, we treated the first
patient in our clinical trial of RP-L301.

                                       24

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In December 2021, we presented positive clinical data at the 63rd Annual Meeting
of ASH. The ASH poster presentation included preliminary data from two adult
patients with severe anemia and substantial transfusion requirements who were
treated as of the November 3, 2021 cut-off date. Each of these patients had
experience extensive PKD-related disease complications including hepatic iron
overload. Both patients have had marked improvement in hemoglobin levels, from
baselines of 7.4 and 7.0 g/dL to 12-month values of 13.3 and 14.8 g/dL
respectively; this represents an improvement from severe (Hb <8g/dL) to normal
levels. Both patients have been transfusion independent subsequent to
post-treatment hematopoietic reconstitution. Anemia resolution has been
accompanied by marked improvement in additional markers of hemolysis, including
bilirubin, erythropoietin, and reticulocyte counts. RP-L301 has been well
tolerated in these adult patients, with no drug product related serious adverse
events or infusion-related complications observed through 12-months
post-treatment. Both patients have reported improved quality of life (QOL)
following treatment with increases on FACT-An and additional designated QOL
evaluations sustained through 12 months following therapy.

In May 2022, we presented updated data at the 25th Annual Meeting of the ASGCT.
The presentation included data from two adult patients with severe or
transfusion-dependent anemia as of the April 13, 2022 cut-off date. At 18 months
post-infusion, both patients had sustained transgene expression, normalized
hemoglobin, improved hemolysis, no red blood cell transfusion requirements
post-engraftment and improved quality of life both reported anecdotally and as
documented via formal quality of life assessments. The tolerability profile of
RP-L301 appears favorable , with no RP-L-301-related serious adverse events
through 18 months post-infusion. Transient transaminase elevation was seen in
both patients post-therapy/conditioning, with no clinical stigmata of liver
injury and subsequent resolution without clinical sequelae. The pediatric cohort
is currently enrolling.

Anticipated Milestones
Enrollment in the PKD pediatric cohort is ongoing, and additional Phase 1 data
are expected in the fourth quarter 2022.

Infantile Malignant Osteopetrosis (IMO):


IMO is a genetic disorder characterized by increased bone density and bone mass
secondary to impaired bone resorption. During normal growth and development
small areas of bone are constantly being broken down by special cells called
osteoclasts, then made again by cells called osteoblasts. In IMO, the cells that
break down bone (osteoclasts) do not work properly, which leads to the bones
becoming thicker and not as healthy. Untreated IMO patients may suffer from a
compression of the bone-marrow space, which results in bone marrow failure,
anemia, and increased infection risk due to the lack of production of white
blood cells. Untreated IMO patients may also suffer from a compression of
cranial nerves, which transmit signals between vital organs and the brain,
resulting in blindness, hearing loss and other neurologic deficits.

IMO represents the autosomal recessive, severe variants of a group of disorders
characterized by increased bone density and bone mass secondary to impaired bone
resorption. IMO typically presents in the first year of life and is associated
with severe manifestations leading to death within the first decade of life in
the absence of allogeneic HSCT, although HSCT results have been limited to-date
and notable for frequent graft failure, GVHD and other severe complications.

Approximately 50% of IMO results from mutations in the TCIRG1 gene, resulting in
cellular defects that prevent osteoclast bone resorption. As a result of this
defect, bone growth is markedly abnormal. It is estimated that IMO occurs in 1
out of 250,000-300,000 within the general global population, although incidence
is higher in specific geographic regions including Costa Rica, parts of the
Middle East, the Chuvash Republic of Russia, and the Vasterbotten Province of
Northern Sweden.

Effective December 2021, the Company made a decision to no longer pursue
Rocket-sponsored clinical evaluation of RP-L401; this program was returned to
academic innovators. The Company has opted to focus available resources towards
advancement of RP-A501, RP-L102, RP-L201 and RP-L301, based on the compelling
clinical data to date and potential for therapeutic advancement in these severe
disorders of childhood and young adulthood.

cGMP Manufacturing


Our state-of-the-art, 103,720 square foot manufacturing facility in Cranbury,
New Jersey. has been scaled up to manufacture AAV drug product for a planned
Phase 2 pivotal trial in Danon disease. The facility also houses lab space for R
& D and quality. We recently consulted with the FDA on CMC (chemistry,
manufacturing, and controls) ("CMC") requirements to start AAV cGMP
manufacturing at our in-house facility as well as potency assay plans for a
Phase 2 pivotal trial in Danon disease. To further strengthen our manufacturing
and commercial capabilities we appointed Mayo Pujols, one of the most seasoned
cell and gene therapy technical operations and manufacturing leaders in the
industry, as our Chief Technical Officer.

Strategy


We seek to bring hope and relief to patients with devastating, undertreated,
rare pediatric diseases through the development and commercialization of
potentially curative first-in-class gene therapies. To achieve these objectives,
we intend to develop into a fully-integrated biotechnology company. In the near
and medium-term, we intend to develop our first-in-class product candidates,
which are targeting devastating diseases with substantial unmet need, develop
proprietary in-house analytics and manufacturing capabilities and continue to
commence registration trials for our currently planned programs. We expect to
submit our first biologics license application ("BLA") for the LAD program in
the first half of 2023. In the medium and long-term, pending favorable data, we
expect to submit BLAs for the rest of our suite of clinical programs, and
establish our gene therapy platform and expand our pipeline to target additional
indications that we believe to be potentially compatible with our gene therapy
technologies. In addition, during that time, we believe that our currently
planned programs will become eligible for priority review vouchers from the FDA
that provide for expedited review. We have assembled a leadership and research
team with expertise in cell and gene therapy, rare disease drug development and
product approval.

                                       25

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Index



We believe that our competitive advantage lies in our disease-based selection
approach, a rigorous process with defined criteria to identify target diseases.
We believe that this approach to asset development differentiates us as a gene
therapy company and potentially provides us with a first-mover advantage.

Financial Overview


Since our inception, we have devoted substantially all of our resources to
organizing and staffing the company, business planning, raising capital,
acquiring or discovering product candidates and securing related intellectual
property rights, conducting discovery, R&D activities for our product candidates
and planning for potential commercialization. We do not have any products
approved for sale and have not generated any revenue from product sales. From
inception through June 30, 2022, we raised net cash proceeds of approximately
$697.8 million from investors through both equity and convertible debt financing
to fund operating activities.

Revenue


To date, we have not generated any revenue from any sources, including from
product sales, and we do not expect to generate any revenue from the sale of
products in the near future. If our development efforts for product candidates
are successful and result in regulatory approval or license agreements with
third parties, we may generate revenue in the future from product sales.

Operating Expenses

Research and Development Expenses

Our R&D program expenses consist primarily of external costs incurred for the development of our product candidates. These expenses include:

• expenses incurred under agreements with research institutions and consultants

that conduct R&D activities including process development, preclinical, and

clinical activities on our behalf;

• costs related to process development, production of preclinical and clinical

materials, including fees paid to contract manufacturers and manufacturing

input costs for use in internal manufacturing processes;

• consultants supporting process development and regulatory activities;

• patent fees; and

• costs related to in-licensing of rights to develop and commercialize our

product candidate portfolio.




We recognize external development costs based on contractual payment schedules
aligned with program activities, invoices for work incurred, and milestones
which correspond with costs incurred by the third parties. Nonrefundable advance
payments for goods or services to be received in the future for use in R&D
activities are recorded as prepaid expenses.

Our direct R&D expenses are tracked on a program-by-program basis for product
candidates and consist primarily of external costs, such as research
collaborations and third-party manufacturing agreements associated with our
preclinical research, process development, manufacturing, and clinical
development activities. Our direct R&D expenses by program also include fees
incurred under license agreements. Our personnel, non-program and unallocated
program expenses include costs associated with activities performed by our
internal R&D organization and generally benefit multiple programs. These costs
are not separately allocated by product candidate and consist primarily of:

• salaries and personnel-related costs, including benefits, travel, and

stock-based compensation, for our scientific personnel performing R&D

activities;

• facilities and other expenses, which include expenses for rent and maintenance

of facilities, and depreciation expense; and

• laboratory supplies and equipment used for internal R&D activities.




Our direct R&D expenses consist principally of external costs, such as fees paid
to investigators, consultants, laboratories and CROs in connection with our
clinical studies, and costs related to acquiring and manufacturing clinical
study materials. We allocate salary and benefit costs directly related to
specific programs. We do not allocate personnel-related discretionary bonus or
stock-based compensation costs, costs associated with our general discovery
platform improvements, depreciation or other indirect costs that are deployed
across multiple projects under development and, as such, the costs are
separately classified as other R&D expenses.

The following table presents R&D expenses tracked on a program-by-program basis
as well as by type and nature of expense for the three and six months ended June
30, 2022 and 2021.

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  Index


                                                          Three Months Ended June 30,             Six Months Ended June 30,
                                                           2022                 2021              2022                2021
Direct Expenses:
Danon Disease (AAV) RP-A501                           $        9,568       

$ 4,507 $ 15,942 $ 8,307 Leukocyte Adhesion Deficiency (LVV) RP-L201

                    7,044                3,864            10,095              10,270
Fanconi Anemia (LVV) RP-L102                                   4,557                2,013             9,087               5,608
Pyruvate Kinase Deficiency (LVV) RP-L301                         632                  562             1,486               2,421
Infantile Malignant Osteopetrosis (LVV) RP-L401 (1)                -                  449               190               1,245
Other product candidates                                       3,776                1,179             7,030               1,871
Total direct expenses                                         25,577               12,574            43,830              29,722
Unallocated Expenses
Employee compensation                                 $        6,964      

$ 5,078 $ 12,511 $ 9,741 Stock based compensation expense

                               2,889                3,148             5,207               6,064
Depreciation and amortization expense                          1,060                1,194             1,887               2,370
Laboratory and related expenses                                1,291                  835             2,518               1,482
Legal and patent fees                                              -                  (16 )               -                  41
Professional Fees                                                629                  358             1,190                 827
Other expenses                                                 2,946                1,359             5,007               2,592
Total other research and development expenses                 15,779               11,956            28,320              23,117
Total research and development expense                $       41,356       

$ 24,530 $ 72,150 $ 52,839

(1) Effective December 2021, a decision was made to no longer pursue

Rocket-sponsored clinical evaluation of RP-L401; this program was returned to

    academic innovators.



We cannot determine with certainty the duration and costs to complete current or
future clinical studies of product candidates or if, when, or to what extent we
will generate revenues from the commercialization and sale of any of our product
candidates that obtain regulatory approval. We may never succeed in achieving
regulatory approval for any of our product candidates. The duration, costs, and
timing of clinical studies and development of product candidates will depend on
a variety of factors, including:

• the scope, rate of progress, and expense of ongoing as well as any clinical

studies and other R&D activities that we undertake;

• future clinical study results;

• uncertainties in clinical study enrollment rates;

• changing standards for regulatory approval; and

• the timing and receipt of any regulatory approvals.




We expect R&D expenses to increase for the foreseeable future as we continue to
invest in R&D activities related to developing product candidates, including
investments in manufacturing, as our programs advance into later stages of
development and as we conduct additional clinical trials. The process of
conducting the necessary clinical research to obtain regulatory approval is
costly and time-consuming, and the successful development of product candidates
is highly uncertain. As a result, we are unable to determine the duration and
completion costs of R&D projects or when and to what extent we will generate
revenue from the commercialization and sale of any of our product candidates.

Our future R&D expenses will depend on the clinical success of our product
candidates, as well as ongoing assessments of the commercial potential of such
product candidates. In addition, we cannot forecast with any degree of certainty
which product candidates may be subject to future collaborations, when such
arrangements will be secured, if at all, and to what degree such arrangements
would affect our development plans and capital requirements. We expect our R&D
expenses to increase in future periods for the foreseeable future as we seek to
further development of our product candidates.

The successful development and commercialization of our product candidates is
highly uncertain. This is due to the numerous risks and uncertainties associated
with product development and commercialization, including the uncertainty of:

• the scope, progress, outcome and costs of our clinical trials and other R&D

activities;

• the efficacy and potential advantages of our product candidates compared to

alternative treatments, including any standard of care;

• the market acceptance of our product candidates;

• obtaining, maintaining, defending, and enforcing patent claims and other

intellectual property rights;

• significant and changing government regulation; and

• the timing, receipt, and terms of any marketing approvals.




A change in the outcome of any of these variables with respect to the
development of our product candidates that we may develop could mean a
significant change in the costs and timing associated with the development of
our product candidates. For example, if the FDA or another regulatory authority
were to require us to conduct clinical trials or other testing beyond those that
we currently contemplate for the completion of clinical development of any of
our product candidates that we may develop or if we experience significant
delays in enrollment in any of our clinical trials, we could be required to
expend significant additional financial resources and time on the completion of
clinical development of that product candidate.

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Index

General and Administrative Expenses


General and administrative expenses consist primarily of salaries and related
benefit costs for personnel, including stock-based compensation and travel
expenses for our employees in executive, operational, finance, legal, business
development, and human resource functions. In addition, other significant
general and administrative expenses include professional fees for legal,
consulting, investor and public relations, auditing, and tax services as well as
other expenses for rent and maintenance of facilities, insurance and other
supplies used in general and administrative activities. We expect general and
administrative expenses to increase for the foreseeable future due to
anticipated increases in headcount to support the continued advancement of our
product candidates. We also anticipate that as we continue to operate as a
public company with increasing complexity, we will continue to incur increased
accounting, audit, legal, regulatory, compliance and director and officer
insurance costs as well as investor and public relations expenses.

Interest Expense


Interest expense for the three and six months ended June 30, 2022, is related to
our financing lease obligation for the Cranbury, NJ facility. Interest expense
for the three and six months ended June 30, 2021, related to the 2021
Convertible Notes which converted into common stock on August 2, 2021, the 2022
Convertible Notes, which were redeemed and converted into common stock in April
2021, and the financing lease obligation for the Cranbury, NJ facility.

Interest Income

Interest income is related to interest earned from investments and cash equivalents.

Critical Accounting Policies and Significant Judgments and Estimates


There have been no material changes in our critical accounting policies and
estimates in the preparation of our condensed consolidated financial statements
during the three months ended June 30, 2022 compared to those disclosed in our
2021 Form 10-K.

Results of Operations

Comparison of the Three Months Ended June 30, 2022 and 2021

                                                    Three Months Ended June 30,
                                                 2022          2021         Change

Operating expenses:
Research and development                       $  41,356     $  24,530     $  16,826
General and administrative                        12,854         9,518         3,336
Total operating expenses                          54,210        34,048        20,162
Loss from operations                             (54,210 )     (34,048 )     (20,162 )
Research and development incentives                    -             -      

-

Interest expense                                    (465 )        (251 )        (214 )
Interest and other income, net                       669           501      

168

Amortization of premium on investments - net (396 ) (727 )

     331
Total other expense, net                            (192 )        (477 )         285
Net loss                                       $ (54,402 )   $ (34,525 )   $ (19,877 )


Research and Development Expenses


R&D expenses increased $16.8 million to $41.3 million for the three months ended
June 30, 2022 compared to the three months ended June 30, 2021. The increase in
R&D expenses was primarily driven by an increase in manufacturing and
development costs of $11.3 million, an increase in compensation and benefits of
$1.9 million due to increased R&D headcount and an increase in laboratory
supplies of $1.4 million.

General and Administrative Expenses


G&A expenses increased $3.3 million to $12.9 million for the three months ended
June 30, 2022, compared to the three months ended June 30, 2021. The increase in
G&A expenses was primarily driven by an increase in commercial preparation
expenses which consists of commercial strategy, medical affairs, market
development and pricing analysis of $1.4 million, an increase in compensation
and benefits of $0.9 million due to increased G&A headcount, an increase in
legal expense of $0.5 million, and an increase in stock compensation expense of
$0.3 million.

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Other Expense, Net

Other expense, net decreased by $0.3 million to $0.2 million for the three
months ended June 30, 2022, compared to the three months ended June 30, 2021.
The decrease in other expense, net was primarily driven by reduced interest
expense of $0.2 million associated with the 2022 Convertible Notes that were
redeemed in April 2021 and the 2021 Convertible Notes that were converted in
August 2021.

Comparison of the Six Months Ended June 30, 2022 and 2021

                                                     Six Months Ended June 30,
                                                 2022          2021         Change

Operating expenses:
Research and development                       $  72,150     $  52,839     $  19,311
General and administrative                        24,624     $  20,431         4,193
Total operating expenses                          96,774        73,270        23,504
Loss from operations                             (96,774 )     (73,270 )     (23,504 )
Research and development incentives                    -           500          (500 )
Interest expense                                    (928 )      (1,980 )    

1,052

Interest and other income, net                     1,291         1,412          (121 )
Amortization of premium on investments - net        (973 )      (1,366 )         393
Total other expense, net                            (610 )      (1,434 )         824
Net loss                                       $ (97,384 )   $ (74,704 )   $ (22,680 )


Research and Development Expenses


R&D expenses increased $19.3 million to $72.2 million for the six months ended
June 30, 2022 compared to the six months ended June 30, 2021. The increase in
R&D expenses was primarily driven by an increase in manufacturing and
development costs of $11.8 million, an increase in laboratory supplies of $2.8
million, an increase in compensation and benefits of $2.8 million due to
increased R&D headcount, offset by a decrease in R&D non-cash stock-based
compensation expense of $0.9 million.

General and Administrative Expenses


G&A expenses increased $4.2 million to $24.6 million for the six months ended
June 30, 2022, compared to the six months ended June 30, 2021. The increase in
G&A expenses was primarily driven by an increase in commercial preparation
expenses which consists of commercial strategy, medical affairs, market
development and pricing analysis of $2.2 million, an increase in compensation
and benefits of $1.5 million due to increased G&A headcount, an increase in
legal expense of $1.0 million, offset by a decrease of $0.7 million in G&A
stock-based compensation expense.

Other Expense, Net


Other expense, net decreased by $0.8 million to $0.6 million for the six months
ended June 30, 2022, compared to the six months ended June 30, 2021. The
decrease in other expense, net was primarily driven by reduced interest expense
of $1.0 million associated with the 2022 Convertible Notes that were redeemed in
April 2021 and the 2021 Convertible Notes that were converted in August 2021, as
well as a decrease of $0.5 million in research and development incentives due to
the receipt of the New York State R&D tax credit in 2021.

Liquidity, Capital Resources and Plan of Operations


We have not generated any revenue and have incurred losses since inception.
Operations of the Company are subject to certain risks and uncertainties,
including, among others, uncertainty of drug candidate development,
technological uncertainty, uncertainty regarding patents and proprietary rights,
having no commercial manufacturing experience, marketing or sales capability or
experience, dependency on key personnel, compliance with government regulations
and the need to obtain additional financing. Drug candidates currently under
development will require significant additional R&D efforts, including extensive
preclinical and clinical testing and regulatory approval, prior to
commercialization. These efforts require significant amounts of additional
capital, adequate personnel infrastructure, and extensive compliance-reporting
capabilities.

Our drug candidates are in the development and clinical stage. There can be no
assurance that our R&D will be successfully completed, that adequate protection
for our intellectual property will be obtained, that any products developed will
obtain necessary government approval or that any approved products will be
commercially viable. Even if our product development efforts are successful, it
is uncertain when, if ever, we will generate significant revenue from product
sales. We operate in an environment of rapid change in technology and
substantial competition from pharmaceutical and biotechnology companies.

Our consolidated financial statements have been prepared on the basis of
continuity of operations, realization of assets and the satisfaction of
liabilities in the ordinary course of business. Rocket has incurred net losses
and negative cash flows from its operations each year since inception. We had
net losses of $97.4 million for the six months ended June 30, 2022, and $169.1
million for the year ended December 31, 2021. As of June 30, 2022 and December
31, 2021, we had an accumulated deficit of $589.3 million and $491.9 million,
respectively. As of June 30, 2022, we had $321.4 million of cash, cash
equivalents and investments. We expect such resources would be sufficient to
fund our operating expenses and capital expenditure requirements into the first
half of 2024. We have funded our operations primarily through the sale of our
equity and debt securities.


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In the longer term, our future viability is dependent on our ability to generate
cash from operating activities or to raise additional capital to finance our
operations. If we raise additional funds by issuing equity securities, our
stockholders will experience dilution. Any future debt financing into which we
enter may impose upon us additional covenants that restrict our operations,
including limitations on our ability to incur liens or additional debt, pay
dividends, repurchase our common stock, make certain investments and engage in
certain merger, consolidation, or asset sale transactions. Any debt financing or
additional equity that we raise may contain terms that are not favorable to us
or our stockholders. Our failure to raise capital as and when needed could have
a negative impact on our financial condition and ability to pursue our business
strategies.

Cash Flows

                                                             Six Months Ended June 30,
                                                               2022               2021
Cash used in operating activities                          $     (78,262 )     $  (62,809 )
Cash provided by investing activities                             15,794    

20,178

Cash provided by financing activities                             17,322    

9,907

Net change in cash, cash equivalents and restricted cash $ (45,146 )

   $  (32,724 )



Operating Activities

During the six months ended June 30, 2022, operating activities used $78.2
million of cash and cash equivalents, primarily resulting from our net loss of
$97.4 million offset by net non-cash charges of $17.7 million, including
non-cash stock-based compensation expense of $13.6 million, accretion of
discount on investments of $1.0 million, and depreciation and amortization
expense of $1.8 million. Changes in our operating assets and liabilities for the
six months ended June 30, 2022, consisted of an increase in accounts payable and
accrued expenses of $2.5 million and an increase in our prepaid expenses of $1.1
million.

During the six months ended June 30, 2021, operating activities used $62.8
million of cash and cash equivalents, primarily resulting from our net loss of
$74.7 million offset by net non-cash charges of $18.6 million, including
non-cash stock-based compensation expense of $15.2 million and depreciation of
$1.4 million. Changes in our operating assets and liabilities for the six months
ended June 30, 2021 consisted of a  decrease in accounts payable and accrued
expenses for $9.0 million and an increase in our prepaid expenses of $1.0
million.

Investing Activities

During the six months ended June 30, 2022, net cash provided by investing activities was $15.8 million, primarily resulting from proceeds of $163.7 million from the maturities of investments, offset by purchases of investments of $143.0 million, and purchases of property and equipment of $4.8 million.


During the six months ended June 30, 2021, net cash provided by investing
activities was $20.2 million, consisting of proceeds of $180.6 million from the
maturities of investments, offset by purchases of investments of $158.6 million,
and purchases of property and equipment of $1.8 million.

Financing Activities


During the six months ended June 30, 2022, financing activities provided $17.3
million of cash, primarily resulting from net proceeds of $17.2 million from the
sale of shares through our at-the-market facility.

During the six months ended June 30, 2021, net cash provided by financing activities was $9.9 million, consisting of issuance of common stock, pursuant to exercises of stock options.

Contractual Obligations and Commitments


There were no material changes outside the ordinary course of our business to
the contractual obligations specified in the table of contractual obligations
included in "Management's Discussion and Analysis of Financial Condition and
Results of Operations" in our 2021 Form 10-K. Information regarding contractual
obligations and commitments may be found in Note 10 of our unaudited
consolidated financial statements in this Quarterly Report on Form 10-Q. We do
not have any off-balance sheet arrangements that are material or reasonably
likely to become material to our financial condition or results of operations.

Recently Issued Accounting Pronouncements

There were no recent accounting pronouncements that impacted the Company, or which had a significant effect on the consolidated financial statements.

                                       30

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