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 and the audited financial information and the
notes thereto included in our Annual Report on Form 10-K for the year ended
December 31, 2021, which was filed with the Securities and Exchange Commission,
or the SEC, on March 8, 2022.
Our actual results and timing of certain events may differ materially from the
results discussed, projected, anticipated, or indicated in any forward-looking
statements. We caution you that forward-looking statements are not guarantees of
future performance and that our actual results of operations, financial
condition and liquidity, and the development of the industry in which we operate
may differ materially from the forward-looking statements contained in this
Quarterly Report on Form 10-Q. In addition, even if our results of operations,
financial condition and liquidity, and the development of the industry in which
we operate are consistent with the forward-looking statements contained in this
Quarterly Report on Form 10-Q, they may not be predictive of results or
developments in future periods.
The following information and any forward-looking statements should be
considered in light of factors discussed elsewhere in this Quarterly Report on
Form 10-Q, including those risks identified under "Part II, Item 1A-Risk
Factors."
These forward-looking statements are made under the safe harbor provisions of
Section 27A of the Securities Act of 1933, as amended, or the Securities Act,
and Section 21E of the Securities Exchange Act of 1934, as amended, or the
Exchange Act. These statements are neither promises nor guarantees. We caution
readers not to place undue reliance on any forward-looking statements made by
us, which speak only as of the date they are made. We disclaim any obligation,
except as specifically required by law and the rules of the SEC, to publicly
update or revise any such statements to reflect any change in our expectations
or in events, conditions or circumstances on which any such statements may be
based, or that may affect the likelihood that actual results will differ from
those set forth in the forward-looking statements.
Overview
We are a gene therapy and neuroscience company developing life-changing
treatments and next-generation adeno-associated virus, or AAV, capsids. We focus
on diseases where we believe a single dose AAV gene therapy or an antibody can
either halt or slow disease progression or reduce symptom severity, therefore
providing clinically meaningful impact to patients. Our gene therapy platforms
enable us to engineer, optimize, manufacture and deliver AAV-based gene
therapies that we believe have the potential to safely provide durable efficacy.
Our team of experts in the field of AAV gene therapy and neuroscience first
identifies and selects diseases in which we believe an AAV gene therapy or an
antibody will answer a high unmet medical need, be supported by target
validation, offer an efficient path to human proof of biology, present robust
preclinical pharmacology, and offer strong commercial potential. We then
engineer and optimize either an AAV vector for delivery of the virus payload to
the targeted tissue or cells or a passive antibody for systemic delivery.
We are identifying proprietary AAV capsids, the outer viral protein shells that
enclose genetic material of a virus payload. Our team has developed a
proprietary AAV capsid discovery platform called TRACERTM (Tropism Redirection
of AAV by Cell Type-Specific Expression of RNA) to facilitate the selection of
AAV capsids with blood brain barrier, or BBB, crossing and cell-specific
transduction properties for particular therapeutic applications. The TRACER
discovery platform is a broadly applicable, functional RNA-based AAV capsid
discovery platform that allows for rapid in vivo evolution of AAV capsids with
cell-specific transduction properties in multiple species, including non-human
primates. We believe our single dose gene therapies have the potential to be
delivered with targeted or systemic surgical delivery or infusions, in
conjunction with capsids we discover through our TRACER discovery platform,
which we refer to as TRACER capsids.
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We are also applying the TRACER discovery platform to identify capsid variant
libraries and facilitate the selection of capsids with tropism and transduction
in additional cell and tissue types. We are actively engaged in discussions with
multiple parties to make TRACER capsids available to third parties for use in
their drug development programs through potential licensing and other
arrangements.
In addition to our TRACER discovery platform, we have developed a vectorized
antibody platform which we believe will overcome many of the challenges of
passive immunization. However, we have also seen promising preclinical results
from the passive immunization approach and we are investigating both passive
immunization and vectorized approaches to administer proprietary antibodies that
selectively target pathological tau to address tauopathies.
Our business strategy focuses on discovering, developing, manufacturing and
commercializing our gene therapy and antibody programs. As part of this
strategy, we have developed core competencies specific to AAV gene therapy
development and manufacturing. This business strategy also includes business
development activities that may include in-licensing activities or partnering
certain programs in specific geographies with collaborators, as we have
demonstrated through our ongoing collaboration with Neurocrine Biosciences,
Inc., which we refer to as Neurocrine, or out-licensing activities including
license agreements related to our TRACER capsids with Pfizer Inc., which we
refer to as Pfizer, and with Novartis Pharma, AG, which we refer to as Novartis.
We believe there is an ongoing opportunity for out-licensing transactions
related to the TRACER capsids. To maximize the potential of TRACER capsids for
both our own programs and out-licensing transactions, we have retained to date,
and expect to retain in the future, all rights associated with such TRACER
capsids other than the rights specific to their use in combination with a
particular licensee's transgenes. Since our inception, our operations have
focused on organizing and staffing our company, business planning, raising
capital, establishing our intellectual property portfolio, determining which
neurological and other diseases to pursue, advancing our product candidates
including delivery and manufacturing, and conducting preclinical studies and
early-phase clinical trials. We do not have any product candidates approved for
sale and have not generated any revenue from product sales, and all of our
current product candidates are in the discovery and preclinical development
stages.
We have funded our operations primarily through private placements of redeemable
convertible preferred stock, public offerings of our common stock, and fees,
milestone payments, and cost reimbursements associated with our strategic
collaborations, including our prior collaboration with Sanofi Genzyme
Corporation, or the Sanofi Genzyme Collaboration, which commenced in February
2015 and was terminated in June 2019, our prior collaboration with AbbVie
Biotechnology Ltd. focusing on tau-related disease, or the AbbVie Tau
Collaboration, which commenced in February 2018 and was terminated in August
2020, our prior collaboration with AbbVie Ireland Unlimited Company focusing on
pathological species of alpha-synuclein, or the AbbVie Alpha-Synuclein
Collaboration, which commenced in February 2019 and was terminated in August
2020, our ongoing collaboration with Neurocrine, which commenced in March 2019,
our licensing agreement with Pfizer, which commenced in October 2021, and our
licensing agreement with Novartis, which commenced in March 2022. We refer to
our collaboration agreement with Neurocrine as the Neurocrine Collaboration
Agreement. We refer to our licensing agreement with Pfizer as the Pfizer License
Agreement, and to our licensing agreement with Novartis as the Novartis License
Agreement.
In August 2021, we initiated a strategic reevaluation of our existing product
candidate portfolio. As a result of this reevaluation, we have invested
additional resources in our TRACER discovery platform to expand our efforts to
discover TRACER capsids with broad tissue tropism in central nervous system, or
CNS and other tissues. We also announced our plan to advance innovative gene
therapy programs that leverage these TRACER capsids as well as our vectorized
antibody technology.
We determined in 2021 that we would not advance our VY-AADC program, a gene
therapy program for the treatment of Parkinson's disease which we had previously
licensed to Neurocrine, on our own. Additionally, to take advantage of our
TRACER capsid development efforts, we decided in 2021 to discontinue our
VY-HTT01 program for the treatment of Huntington's disease and to initiate a
second-generation program for the treatment of Huntington's disease leveraging a
proprietary AAV capsid that may enable intravenous administration and achieve
broad distribution to affected tissue. We also initiated gene therapy programs
using our TRACER capsids in treatment programs for monogenic amyotrophic lateral
sclerosis, or ALS, with superoxide dismutase 1, or SOD1, mutations; spinal
muscular atrophy, or SMA; and various diseases linked to glucocerebrosidase 1,
or GBA1, mutations, including Parkinson's
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disease. We also determined that we would continue to advance our vectorized
antibody platform capability with programs for tauopathies and indications in
neuro-oncology.
In August 2022, we announced an updated portfolio strategy prioritizing programs
targeting Alzheimer's disease, Parkinson's disease with GBA1 mutations, and ALS
with SOD1 mutations. This updated portfolio strategy was the result of an
in-depth portfolio review. The prioritized programs were selected because each
presents a compelling opportunity based on certain criteria identified by the
Company, including high unmet medical need, target validation, an efficient path
to human proof of biology, robust preclinical pharmacology, and strong
commercial potential.
We remain interested in advancing our other programs and are pursuing additional
product candidates in the discovery and preclinical stages of development,
including our second-generation program for the treatment of Huntington's
disease, our program for the treatment of SMA, and our program for the treatment
of human epidermal growth factor receptor positive, or HER2+, brain metastases.
We are evaluating opportunities to do so via collaborative partnership, and will
continue to conduct preclinical research for our second-generation program for
the treatment of Huntington's disease and our program for the treatment of HER2+
brain metastases. We expect to continue to conduct early preclinical research
for our second-generation program for the treatment of SMA as we seek a
collaborative partner for the program.
We continue to partner with Neurocrine on programs for diseases including
Friedreich's ataxia. All of our current product candidates are in the early
stages of development. We also continue to evaluate additional diseases that
could be treated using AAV gene therapy or our proprietary antibodies and are
also actively exploring additional potential treatment methods that can utilize
our proprietary TRACER capsids.
Our pipeline of prioritized gene therapy and antibody programs is summarized in
the table below:
[[Image Removed: Graphic]]
Overview of Our Pipeline
We have leveraged our gene therapy platform, our vectorized antibody platform,
and our expertise with proprietary antibodies to assemble a pipeline of
proprietary AAV gene therapies and passive and vectorized antibodies for the
treatment of neurological and other diseases with high unmet medical need.
Depending on the disease, our current
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AAV gene therapies will use a gene replacement or gene silencing approach, and
our current antibodies will use a passive administration or vectorized delivery
approach. Our goal is to address the underlying cause or the predominant
manifestations of a specific disease by significantly increasing or decreasing
expression of the relevant proteins in targeted tissues
TRACER Capsid Discovery
Our scientists have developed TRACER, a proprietary AAV capsid discovery
platform to facilitate the selection of TRACER capsids for particular
therapeutic applications based on BBB-crossing and cell-specific transduction
properties in multiple species, including non-human primates, or NHPs. In May
2021, we presented data demonstrating that we have developed a series of TRACER
capsids which, following intravenous administration, could achieve up to
1000-fold higher RNA expression in the brain and 100-fold higher expression in
the spinal cord of NHPs than AAV9, the current natural AAV serotype with the
best ability to cross the BBB. We also identified a TRACER capsid which
displayed strong cardiac transduction and significant dorsal root ganglia
de-targeting in NHPs, which may avoid toxicities associated with AAV9 delivery.
We believe these TRACER capsids may allow for significantly enhanced gene
delivery to specific types of cells in the brain at lower doses and,
potentially, with fewer safety and tolerability issues than first-generation
therapies. These TRACER capsids are now in advanced stages of characterization
for deployment in our gene therapy development programs. We are also applying
the TRACER discovery platform towards further capsid variant libraries and the
selection for tropism and transduction in additional cell and tissue types.
At the American Society of Gene & Cell Therapy 25th Annual Meeting in May 2022,
we presented new preclinical data on several families of TRACER capsids. We
presented preclinical results for an AAV9-derived TRACER capsid, VCAP-102, which
demonstrated 50-fold better transduction in mice and 60-fold better transduction
in NHPs, compared to conventional AAV9 capsids, following intravenous
administration. We believe demonstrating equivalent cross-species functionality
is important to increasing a capsid's potential for translation into humans. The
study also demonstrated that VCAP-102 and other TRACER capsids showed
preferential tropism for glial cells in mice, which may facilitate addressing
CNS indications that would benefit from non-neuronal cell transduction. We also
presented preclinical data for an AAV5-derived TRACER capsid with enhanced CNS
transduction across species. AAV5 capsids have a reduced prevalence of
preexisting neutralizing antibodies, but conventional AAV5 capsids do not have
sufficient CNS transduction to be used effectively for gene therapies targeting
the CNS. Our AAV5-derived TRACER capsid showed 20-fold higher brain transduction
and five-fold higher spinal cord transduction compared to conventional AAV9 in
NHPs and improved transduction in multiple CNS regions and cell types in NHPs
with partial de-targeting of the dorsal root ganglia.
We continue to perform screening campaigns with our TRACER discovery platform to
identify additional proprietary AAV9- and AAV5-derived TRACER capsids and to
refine previously-identified TRACER capsids to target or de-target multiple
tissue and cell types. These TRACER capsids offer the potential to broaden the
therapeutic window substantially and enable gene therapies in a wide range of
diseases based on enhanced tissue and cell tropisms that allow for lower doses
and with lower off-target effects or toxicities. We are currently conducting
studies to assess gene expression and therapeutic indices at order-of-magnitude
lower doses, and we intend to submit the results of these studies for
presentation at an upcoming scientific conference.
We have identified the cell surface attachment receptor used by one of our more
promising BBB-penetrant TRACER capsids. In addition to demonstrating direct
binding to the human isoform of this receptor, our experiments have demonstrated
that overexpression of human, murine, or cyno-derived orthologs of this receptor
mediate improved transduction with AAV, supporting a conserved cross-species
mechanism of action of transduction of this BBB-penetrant TRACER capsid.
Further, the specificity of this AAV:receptor interaction is supported by
experiments demonstrating that pharmacological manipulation of the receptor
functionally impacts cellular transduction by the capsid, and that inhibition of
the receptor's natural processing pathway blocks transduction. Expression of
this receptor has been confirmed in rodent, NHP, and human endothelial cells and
multiple CNS cell types. Accordingly, we believe that the characterization of
this receptor and confirmation that those capsids can bind to the human isoform
of the receptor increases the probability that the TRACER capsid will cross the
BBB in humans. We expect the discovery of this receptor to support the clinical
translatability of this TRACER capsid toward human application, and inform our
approach to the design of future TRACER capsids for intravenous delivery. We
also intend to explore whether this
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receptor has the potential to enable intravenous delivery to the CNS for other
therapeutic modalities such as proteins, antibodies, and oligonucleotides. We
expect to share data on this finding at an upcoming scientific conference.
We are actively engaged in discussions to make TRACER capsids available to third
parties for use in their drug development programs through potential licensing
and other arrangements. We believe there is significant opportunity for
out-licensing transactions related to our TRACER capsids. To maximize the
potential of our TRACER capsids for both our own programs and out-licensing
transactions, we have retained to date, and expect to retain in the future, all
rights associated with such TRACER capsids other than the rights specific to
their use in combination with the licensee's transgenes.
Pfizer Option and License Agreement
In October 2021, we entered into the Pfizer License Agreement, pursuant to which
we have granted Pfizer options to receive an exclusive license, or the Pfizer
License Options, to certain TRACER capsids to develop and commercialize certain
AAV gene therapy candidates comprised of a capsid and specified Pfizer
transgenes, which we refer to as the Pfizer Transgenes. Under the terms of the
Pfizer License Agreement, Pfizer intends to evaluate the potential use of the
capsids in combination with up to two Pfizer Transgenes to help treat respective
central nervous system and cardiovascular diseases.
Under the Pfizer License Agreement, we have agreed to provide Pfizer with
certain quantities of materials encoding specified existing capsids for Pfizer's
evaluation. During the research term, which extends until October 1, 2022, or,
in the event Pfizer exercises a Pfizer License Option, until October 1, 2024, we
may, at our sole discretion and expense, conduct additional research activities
to identify additional proprietary capsids that may be useful for AAV gene
therapies for the treatment of central nervous system or cardiovascular
diseases. We have agreed to disclose to Pfizer, on a rolling basis, the
performance characteristics identified during the research term for all such
capsid candidates. Following such disclosure, Pfizer has the right, in its sole
discretion, to select any capsid candidate for evaluation to determine its
interest in exercising a Pfizer License Option with respect to such capsid
candidate. Pfizer may exercise up to two Pfizer License Options, provided that
it may exercise only one Pfizer License Option for each Pfizer Transgene. We
have granted Pfizer, effective upon Pfizer's exercise of a Pfizer License
Option, with respect to a capsid candidate for the Pfizer Transgene identified
therein, an exclusive, worldwide license, with the right to sublicense, under
certain of our intellectual property, the rights to develop and commercialize
the applicable licensed capsid as incorporated into products containing the
corresponding Pfizer Transgene, or the Pfizer Licensed Products. Additionally,
upon such option exercise, we and Pfizer have agreed that we shall provide
certain additional know-how that has not been previously provided to Pfizer to
enable Pfizer to exploit such licensed capsid and the corresponding Pfizer
Transgene for use in a Pfizer Licensed Product. Pfizer may, during the research
term, conduct additional evaluation of capsid candidates and has the right to
substitute any other capsid candidate for the capsid it previously elected to
license.
Novartis Option and License Agreement
In March 2022, we entered into the Novartis License Agreement, pursuant to which
we have granted Novartis options, which we refer to as the Novartis License
Options, to license novel capsids generated from our TRACER discovery platform,
or Novartis Licensed Capsids, for exclusive use with certain targets to develop
and commercialize adeno-associated virus gene therapy candidates comprised of
Novartis Licensed Capsids and payloads directed to such targets, or the Novartis
Payloads.
During the period, which we refer to as the Novartis Research Term, commencing
on the Novartis Effective Date and ending on the first anniversary thereof or,
in the event Novartis exercises a Novartis License Option, the third anniversary
thereof, we have granted Novartis a non-exclusive research license to evaluate
our TRACER capsids for potential use, in combination with Novartis Payloads, in
programs targeting three specified genes, which we refer to as the Initial
Novartis Targets. Upon the payment of additional fees, Novartis may also assess
our TRACER capsids for use with two other targets, which we refer to as
Additional Novartis Targets, subject to certain conditions including that such
target is not part of, or reasonably competitive with, our current development
programs. We refer to the Initial Novartis Targets and the Additional Novartis
Targets, collectively, as the Novartis Targets. During the Novartis Research
Term, we may, at our sole discretion and expense, conduct further research
activities to identify additional TRACER capsids.
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If we elect to do so, we have agreed to disclose performance characteristics of
such new TRACER capsids to Novartis on a rolling basis.
During the Novartis Research Term, Novartis may exercise up to three Novartis
License Options-or up to five Novartis License Options if Novartis is evaluating
the Additional Novartis Targets-in the aggregate, provided that Novartis may
only exercise one Novartis License Option for each Novartis Target. Upon the
exercise of any Novartis License Option, we have agreed to grant Novartis a
target-exclusive, worldwide license, with the right to sublicense, under certain
of our intellectual property, the rights to develop and commercialize the
applicable Novartis Licensed Capsid as incorporated into products containing the
corresponding Novartis Payload, or the Novartis Licensed Products. Upon the
exercise of a Novartis License Option, we have agreed to provide certain
additional know-how to enable Novartis to exploit the Novartis Licensed Capsid
and the corresponding Novartis Payload for use in a Novartis Licensed Product.
Novartis may, during the Novartis Research Term but following the exercise of a
Novartis License Option, conduct additional evaluation of our capsid candidates
and has the right to substitute any other TRACER capsid for a Novartis Licensed
Capsid.
Neurocrine Collaboration
In January 2019, we entered into the Neurocrine Collaboration Agreement for the
research, development and commercialization of four programs including the
VY-AADC Program, a gene therapy for the treatment of Friedreich's ataxia, or the
FA Program, and other undisclosed programs, or the Discovery Programs. The
Neurocrine Collaboration Agreement became effective in March 2019. Under the
terms of the Neurocrine Collaboration Agreement, we received an upfront payment
of $115.0 million and may receive future development and regulatory milestone
payments and royalties. In connection with the Neurocrine Collaboration
Agreement, Neurocrine also paid us $50.0 million as consideration for an equity
purchase of 4,179,728 shares of our common stock. In June 2019, in conjunction
with the termination of the collaboration agreement that we entered into with
Genzyme Corporation in February 2015, we transferred ex-U.S. rights to the FA
Program to Neurocrine pursuant to an amendment to the Neurocrine Collaboration
Agreement and received a $5.0 million payment from Neurocrine. Neurocrine is
responsible for all costs incurred by us in conducting development activities
for programs under the Neurocrine Collaboration Agreement, in accordance with an
agreed budget.
Anti-Tau Antibody Program for the Treatment of Alzheimer's Disease
We are developing proprietary antibodies that selectively target pathological
tau to treat tauopathies. Our lead indication for these antibodies is
Alzheimer's disease. We have maintained a long-standing focus on developing
proprietary and complimentary approaches to disrupt the progression of tau
pathology believed to be central to Alzheimer's disease and other relevant
neurodegenerative diseases. Reduction of toxic tau aggregates may slow disease
progression and cognitive decline in these diseases. We are exploring both
passive administration and vectorized delivery utilizing our BBB-penetrant
TRACER capsids with our anti-tau antibody. Collectively, our passive and
vectorized anti-tau antibodies have differentiated properties including improved
targeting of specific regions of tau protein that could offer an improved
profile compared to first-generation approaches. We believe that our antibody
targeting the C-terminus is highly differentiated from other approaches.
Further, we believe that following the clearance of an investigational new drug,
or IND, application, clinical assessments utilizing positron emission tomography
(PET) imaging of human tau, together with measuring plasma and cerebrospinal
fluid biomarkers, have the potential to enable an efficient and accelerated
demonstration of human proof-of-biology.
At the Alzheimer's Association International Conference in August 2022, we
presented data for our proprietary anti-tau antibodies, targeting the mid-domain
and C-terminus with high affinity and showing favorable biophysical
characteristics and strong activity in preclinical studies in mouse models. In
the P301S seeding-propagation tauopathy mouse model, our C-terminal targeting
anti-tau antibody blocked the seeding/propagation of filamentous tau and
demonstrated substantial reduction of induced tau pathology.
Humanization of the murine antibody is currently underway. We intend to nominate
a lead antibody development candidate in the first half of 2023, initiate Good
Laboratory Practice, or GLP, toxicology studies in the second half of 2023, and,
if preclinical results are supportive, file an IND application in the first half
of 2024.
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GBA1 Gene Replacement Program for the Treatment of Parkinson's Disease
We are developing a gene therapy leveraging a BBB-penetrant, CNS-tropic TRACER
capsid to treat diseases linked to GBA1 mutations via a gene replacement
approach. Our lead indication for this gene therapy is Parkinson's disease with
GBA1 mutations. Mutations in GBA1, the gene encoding the lysosomal enzyme
glucocerebrosidase, or GCase, are the most common genetic risk factor for
synucleinopathies such as Parkinson's disease. Parkinson's disease is among the
most common neurodegenerative diseases, impacting about one million patients in
the United States and more than 10 million patients worldwide. Up to 10% of
Parkinson's disease patients have a GBA1 mutation, and these mutations increase
the risk of Parkinson's disease by approximately 20-fold. GBA1 mutations
decrease the expression of GCase, leading to the accumulation of GCase
substrates and alpha-synuclein aggregates, which is thought to be toxic to
neurons.
We believe that restoring GCase activity may attenuate disease progression and
potentially slow neurodegeneration. We anticipate delivering GBA1 via
intravenous administration to enable widespread distribution to multiple
affected brain regions and to avoid the need for more invasive approaches. We
believe that the measurement of the GCase substrates such as glucosylsphingosine
as cerebrospinal fluid biomarkers may facilitate efficient clinical
demonstration of proof-of-biology. Such substrates of the GCase enzyme are
elevated in the cerebrospinal fluid of Parkinson's disease patients who harbor
the GBA1 mutation, and we expect that substrate levels would fall to normal if
our gene therapy restores GCase enzyme expression in the brain. This gene
therapy may also have potential utility in idiopathic Parkinson's disease, where
there is evidence of loss of GCase activity in the substantia nigra in
Parkinson's disease patients even in the absence of GBA1 mutations as well as
evidence of lysosomal dysfunction in general.
At the American Society of Gene & Cell Therapy 25th Annual Meeting in May 2022,
we presented preclinical data demonstrating CNS target engagement and delivery
of therapeutically relevant levels of GCase in a GBA loss of function mouse
model, as well as sustained expression for three or more months following
intravenous administration.
An NHP capsid selection study for the program is currently underway. We intend
to select a development candidate in the first half of 2023, initiate a dose
range finding study in NHPs in the second half of 2023, initiate GLP toxicology
studies in 2024, and if preclinical results are supportive, file an IND
application in 2025. We are evaluating options to further accelerate the
development timeline for this program.
SOD1 Gene Silencing Program for the Treatment of ALS
We are developing a gene therapy leveraging a BBB-penetrant, CNS-tropic TRACER
capsid to treat ALS caused by the SOD1 mutation via a gene silencing approach.
SOD1 ALS is typically fatal within approximately three years of diagnosis and
impacts approximately 800 patients in the United States, 1,000 patients in the
European Union, and 500 patients in Japan. SOD1 mutations in ALS patients are
thought to cause a toxic gain-of-function that leads to the degeneration of
motor neurons along the entire length of the spinal cord, the brainstem, and the
upper motor neurons in the cerebral cortex. We believe that a therapeutic
delivering a highly potent small interfering RNA, or siRNA, construct via
intravenous administration may enable broad CNS knockdown of SOD1, potentially
slowing the decline of functional ability in ALS patients with the SOD1
mutation. We believe that a Phase 1 clinical trial to demonstrate reduction in
SOD1 in cerebrospinal fluid and neurofilament light chain in plasma will provide
evidence of target engagement and the attenuation of motor neuron loss,
respectively.
At the American Society of Gene & Cell Therapy 25th Annual Meeting in May 2022,
we presented preclinical data demonstrating robust SOD1 knockdown in all levels
of the spinal cord and significant improvements in motor performance, body
weight, and survival in a SOD1-ALS mouse model following intravenous delivery of
a vectorized siRNA using a mouse BBB-penetrant capsid.
Our NHP capsid selection study for the program is already underway, and we
expect to select a development candidate for the program by the end of 2022. We
intend to complete a dose range-finding NHP study in 2023, initiate GLP
toxicology studies in the first half of 2024, and, if preclinical results are
supportive, file an IND application in 2024.
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Other Discovery and Preclinical Pipeline Programs
We are evaluating additional neurological and other diseases that could be
treated using AAV gene therapy through application of either a gene replacement
or a gene silencing approach and are also actively exploring additional
potential treatment methods that can utilize an AAV vector. We expect to
leverage our proprietary gene therapy platform technologies, including TRACER
capsids and our vectorized antibody platform, for any such programs. We are
pursuing additional product candidates in the discovery and preclinical stages
of development, including a second-generation treatment program for Huntington's
Disease and a treatment program for SMA, which leverage our TRACER capsids, and
a treatment program for HER2+ brain metastases, which leverages a TRACER capsid
and our vectorized antibody platform. We are evaluating opportunities to advance
these programs via collaborative partnership, and will continue to conduct
preclinical research for our second-generation program for the treatment of
Huntington's disease and our program for the treatment of HER2+ brain
metastases. We expect to continue to conduct early preclinical research for our
second-generation program for the treatment of SMA as we seek a collaborative
partner for the program.
Vector Engineering and Optimization
We have advanced or intend to advance our multiple preclinical programs towards
selection of lead clinical candidates using AAV vectors that we believe are best
suited for each of our programs either through use of our existing capsids,
through exercising a non-exclusive worldwide commercial license to capsid
sequences covered by third parties, or by engineering or optimizing TRACER
capsids. The key components of an AAV vector include: (i) the capsid; (ii) the
therapeutic gene, or transgene; and (iii) payload control elements,
including the promoter or other DNA sequences that modulate the expression of
the transgene.
We have a history of incurring significant losses. Our net loss was $40.4
million for the six months ended June 30, 2022. As of June 30, 2022, we had an
accumulated deficit of $387.5 million. We expect to continue to incur
significant expenses and operating losses for the foreseeable future. We
anticipate that our expenses will increase significantly in connection with our
ongoing activities, as we:
? continue investing in our gene therapy platform to optimize capsid engineering
and payload development, manufacturing, dosing, and delivery techniques;
increase our investment in and support for TRACER, our proprietary discovery
? platform to facilitate the selection of AAV capsids and expand our investment
to discover TRACER capsids with broad tropism in CNS and other tissues with
cell-specific transduction properties for particular therapeutic applications;
? continue to develop our vectorized antibody platform and other proprietary
antibodies;
? enter into licensing agreements regarding our TRACER capsids, such as the
Pfizer License Agreement and the Novartis License Agreement;
conduct preclinical development activities and initiate IND-enabling studies
? and clinical trials in connection with our tau antibody program, our GBA1 gene
therapy program, and our SOD1 ALS gene therapy program;
? initiate additional preclinical studies and clinical trials for, and continue
research and development of, our other programs;
conduct joint research and development under our strategic collaborations for
? the research, development, and commercialization of certain of our pipeline
programs;
? continue our process research and development activities, as well as establish
our research-grade and commercial manufacturing capabilities;
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? identify additional diseases for treatment with our AAV gene therapies and
develop additional programs or product candidates;
? seek marketing and regulatory approvals for any of our product candidates or
devices that successfully complete clinical development;
? maintain, expand, protect and enforce our intellectual property portfolio;
? identify, acquire or in-license other product candidates and technologies;
? develop a sales, marketing and distribution infrastructure to commercialize any
product candidates for which we may obtain marketing approval;
expand our operational, financial and management systems and personnel,
? including personnel to support our clinical development, manufacturing and
commercialization efforts and our operations as a public company;
? increase our product liability and clinical trial insurance coverage as we
expand our clinical trials and commercialization efforts;
? continue to operate as a public company; and
? determine the appropriate path forward, if any, for VY-AADC (NBIb-1817) as a
treatment for Parkinson's disease.
Financial Operations Overview
Revenue
To date, we have not generated any revenue from product sales and do not expect
to generate any revenue from product sales for the foreseeable future. For the
six months ended June 30, 2022, we recognized $1.4 million of collaboration
revenue from the Neurocrine Collaboration.
For additional information about our revenue recognition policy related to
collaborations and a description of the key terms of the Neurocrine
Collaboration Agreement, the Pfizer License Agreement, and the Novartis License
Agreement, refer to Note 8, Commitments and Contingencies, of our condensed
consolidated financial statements included in this Quarterly Report on Form
10-Q.
For the foreseeable future, we expect substantially all of our revenue will be
generated from the Neurocrine Collaboration Agreement, the Pfizer License
Agreement, the Novartis License Agreement, and any other strategic
collaborations and out-licensing arrangements we may enter into. If our
development efforts are successful, we may also generate revenue from product
sales in the future.
Expenses
Research and Development Expenses
Research and development expenses consist primarily of costs incurred for our
research activities, including our program discovery efforts, and the
development of our programs and gene therapy platform, vectorized antibody
platform, and proprietary antibodies, which include:
? employee-related expenses including salaries, benefits, and stock-based
compensation expense;
costs of funding research performed by third parties that conduct research and
? development, clinical and preclinical activities, manufacturing and production
design on our behalf;
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? the cost of purchasing lab supplies and non-capital equipment used in
designing, developing and manufacturing preclinical study materials;
? consultant fees;
? facility costs including rent, depreciation and maintenance expenses; and
? fees for maintaining licenses under our third-party licensing agreements.
Research and development costs are expensed as incurred. Costs for certain
activities, such as manufacturing, preclinical studies, and clinical trials, are
generally recognized based on an evaluation of the progress to completion of
specific tasks using information and data provided to us by our vendors and
collaborators.
At this time, we cannot reasonably estimate or know the nature, timing and
estimated costs of the efforts that will be necessary to complete the
development of our product candidates. We are also unable to predict when, if
ever, material net cash inflows will commence from sales of our product
candidates. This is due to the numerous risks and uncertainties associated with
developing such product candidates, including the uncertainty of:
? identifying additional product candidates;
? completing preclinical studies successfully;
? designing, initiating, enrolling and completing clinical trials successfully;
? establishing an appropriate safety profile;
? establishing commercial manufacturing capabilities or making arrangements with
third-party manufacturers;
? receiving marketing approvals from applicable regulatory authorities;
? commercializing the product candidates, if and when approved, whether alone or
in collaboration with others;
? obtaining and maintaining patent and trade secret protection and regulatory
exclusivity for our product candidates;
? continued acceptable safety profiles of the products following approval; and
? recruiting and retaining key research and development personnel.
A change in the outcome of any of these variables with respect to the
development of any of our product candidates would significantly change the
costs, timing and viability associated with the development of that product
candidate.
Research and development activities are central to our business model. We are in
the early stages of development of our product candidates. Our research and
development costs have decreased relative to pre-2021 levels as a result of our
strategic restructuring, the reevaluation of our product candidate pipeline, our
strategic shift to invest in TRACER capsid development efforts, and our
initiation of other cost-saving initiatives. As our development programs
progress and as we identify product candidates and initiate preclinical studies
and clinical trials, we expect research and development costs to increase.
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General and Administrative Expenses
General and administrative expenses consist primarily of salaries and other
related costs, including stock-based compensation, for personnel in executive,
finance, accounting, business development, legal and human resource functions.
Other significant costs include corporate facility costs not otherwise included
in research and development expenses, legal fees related to patent and corporate
matters and fees for accounting and consulting services.
Our general and administrative expenses have decreased relative to pre-2021
levels as a result of our strategic restructuring costs. As a result of the
strategic restructuring, there are decreases including a reduction in personnel
costs and fees paid to outside consultants, as well as other cost-saving
initiatives including a reduction in facility-related expenditures. As our
development programs progress and we identify product candidates and initiate
preclinical studies and clinical trials, we expect general and administrative
expenses to increase to support these additional research and development
activities.
Other Income (Expense), net
Other income (expense) for the three months ended June 30, 2022 consists
primarily of interest income on our marketable securities. In the three months
ended June 30, 2021 we recorded a gain on our investment in equity securities of
ClearPoint Neuro, Inc. (formerly known as MRI Interventions, Inc.), or CLPT. All
equity securities in CLPT held by us were sold or otherwise disposed of during
the three months ended June 30, 2021.
Critical Accounting Policies and Estimates
We believe that several accounting policies are important to understanding our
historical and future performance. We refer to these policies as critical
because these specific areas generally require us to make judgments and
estimates about matters that are uncertain at the time we make the estimate.
There were no changes to our critical accounting policies during the six months
ended June 30, 2022, as compared to those identified in our Annual Report on
Form 10-K for the fiscal year ended December 31, 2021. It is important that the
discussion of our operating results that follow be read in conjunction with the
critical accounting policies disclosed in our Annual Report on Form 10-K, as
filed with the SEC on March 8, 2022.
Results of Operations
Comparison of the three months ended June 30, 2022 and 2021
The following table summarizes our results of operations for the three months
ended June 30, 2022 and 2021, together with the changes in those items in
dollars:
Three Months Ended
June 30,
2022 2021 Change
(in thousands)
Collaboration revenue $ 712 $ 1,357 $ (645)
Operating expenses:
Research and development 12,527 19,505 (6,978)
General and administrative 7,552 10,437 (2,885)
Total operating expenses 20,079 29,942 (9,863)
Other income, net:
Interest income 219 48 171
Other (expense) income 61 (1,583) 1,644
Total other income 280 (1,535) 1,815
Net (loss) income $ (19,087) $ (30,120) $ 11,033
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Collaboration Revenue
Collaboration revenue was $0.7 million and $1.4 million for the three months
ended June 30, 2022 and 2021, respectively. The decrease in collaboration
revenue in the three months ended June 30, 2022 was largely a result of our
reduced research and development services related to the Neurocrine
Collaboration as a result of Neurocrine's termination of the Neurocrine
Collaboration Agreement with respect to the VY-AADC Program. During the three
months ended June 30, 2022 and June 30, 2021, collaboration revenue was entirely
related to research services and cost reimbursement from the Neurocrine
Collaboration. As a result of changes in our estimates of research and
development services in the fourth quarter of 2021, we expect to record less
revenue associated with research and development services for the Neurocrine
Collaboration. We expect a significant portion of revenue recognized in future
periods to be attributable to the Pfizer License Agreement and the Novartis
License Agreement. Our collaboration revenues were not materially impacted by
the coronavirus disease 2019, or COVID-19, pandemic during the three months
ended June 30, 2022. In subsequent periods, the COVID-19 pandemic could affect
our collaboration revenues and our operations.
Research and Development Expense
Research and development expense decreased by $7.0 million from $19.5 million
for the three months ended June 30, 2021, to $12.5 million for the three months
ended June 30, 2022. The following table summarizes our research and development
expenses for the three months ended June 30, 2022 and 2021, together with the
changes in those items in dollars:
Three Months Ended
June 30,
2022 2021 Change
(in thousands)
Employee and consultant $ 6,924 $ 10,265 $ (3,341)
External research and development 2,794 4,283 (1,490)
Facilities and other 1,022 2,458 (1,437)
Professional fees 1,787 2,498 (711)
Total research and development expenses $ 12,527 $ 19,505 $ (6,978)
The decrease in research and development expense for the three months ended
June 30, 2022 was primarily attributable to the following:
approximately $1.5 million for external research and development costs
? primarily related to a reduction in clinical activities to prepare for the
first-in humans trial of the VY-HTT01 for the Huntington's disease program; and
approximately $3.3 million for employee and consultant related costs associated
? with lower headcount in research and development functions as compared to the
prior year; and
approximately $1.4 million for decreased facility and other costs primarily
? related to the gain recorded on the terminated lease at 75 Sidney as disclosed
in this Quarterly Report on Form 10-Q.
? approximately $0.7 million for decreased professional fees and related expenses
to support the pipeline programs.
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General and Administrative Expense
General and administrative expense decreased by $2.8 million from $10.4 million
for the three months ended June 30, 2021 to $7.6 million for the three months
ended June 30, 2022. The increase in general and administrative expense was
primarily attributable to the following:
approximately $1.6 million for decrease compensation costs and stock-based
? compensation associated with recognition of the severance expensed as a result
of the reduction in force;
approximately $0.9 million for decreased facility and other costs primarily
? related to the gain recorded on the terminated lease at 75 Sidney as disclosed
in this Quarterly Report on Form 10-Q; and
? approximately $0.3 million for decreased legal costs and intellectual property
related expenses..
Other (Expense) Income, net
Interest and other income of approximately $280 thousand and interest and other
expense of approximately $1.5 million was recognized during the three months
ended June 30, 2022 and 2021, respectively. Other income during the three months
ended June 30, 2022 primarily related to interest income on marketable
securities balances, while other income during the three months ended June 30,
2021 primarily related to a gain on our investment in equity securities of CLPT.
All equity securities in CLPT held by us were sold or otherwise disposed of
during the three months ended June 30, 2021.
Comparison of the six months ended June 30, 2022 and 2021
The following table summarizes our results of operations for the six months
ended June 30, 2022 and 2021, together with the changes in those items in
dollars:
Six Months Ended
June 30,
2022 2021 Change
(in thousands)
Collaboration revenue $ 1,371 $ 7,858 $ (6,487)
Operating expenses:
Research and development 26,876 41,851 (14,975)
General and administrative 15,211 20,181 (4,970)
Total operating expenses 42,087 62,032 (19,945)
Other income, net:
Interest income 271 132 139
Other income (expense) 39 2,273 (2,234)
Total other income, net 310 2,405 (2,095)
Net (loss) income $ (40,406) $ (51,769) $ 11,363
Collaboration Revenue
Collaboration revenue was $1.4 million and $7.9 million for the six months ended
June 30, 2022 and 2021, respectively. The decrease in collaboration revenue in
the three months ended June 30, 2022 was largely a result of our reduced
research and development services related to the Neurocrine Collaboration as a
result of Neurocrine's termination of the Neurocrine Collaboration Agreement
with respect to the VY-AADC Program. During the three months ended June 30, 2022
and June 30, 2021, collaboration revenue was entirely related to research
services and cost reimbursement from the Neurocrine Collaboration. As a result
of changes in our estimates of research and development services in the fourth
quarter of 2021, we expect to record less revenue associated with research and
development services for the Neurocrine Collaboration. We expect a significant
portion of revenue recognized in future periods to be
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attributable to the Pfizer License Agreement and the Novartis License Agreement.
Our collaboration revenues were not materially impacted by the coronavirus
disease 2019, or COVID-19, pandemic during the three months ended June 30, 2022.
In subsequent periods, the COVID-19 pandemic could affect our collaboration
revenues and our operations.
Research and Development Expense
Research and development expense decreased by $15.0 million from $41.9 million
for the six months ended June 30, 2021, to $26.9 million for the six months
ended June 30, 2022. The following table summarizes our research and development
expense, for the six months ended June 30, 2022 and 2021:
Six Months Ended
June 30,
2022 2021 Change
(in thousands)
Employee and consultant $ 13,567 $ 21,690 $ (8,124)
External research and development 4,595 10,347 (5,752)
Facilities and other 4,627 4,976 (349)
Professional fees 4,088 4,837 (749)
Total research and development expenses $ 26,876 $ 41,851 $ (14,974)
The decrease in research and development expense for the six months ended
June 30, 2022 was primarily attributable to the following:
approximately $5.8 million for external research and development costs
primarily related to a reduction in clinical and manufacturing activities to
? prepare for the first-in humans trial of the VY-HTT01 for the Huntington's
disease and decrease spend on external costs incurred in connection with the
Neurocrine Collaboration Agreement; and
approximately $8.1 million for employee and stock-based compensation associated
? with lower headcount in research and development functions compared to the
prior year; and
approximately $0.3 million of decreased facility and other costs primarily
? related to the gain recorded on the terminated lease at 75 Sidney as disclosed
in this Quarterly Report on Form 10-Q, partially offset by increased facility
and other costs including rent, depreciation, maintenance, and other expenses.
? Approximately $0.8 million for decreased professional fees and related expenses
to support the pipeline programs.
General and Administrative Expense
General and administrative expense decreased by $5.0 million from $20.2 million
for the six months ended June 30, 2021 to $15.2 million for the six months ended
June 30, 2022. The decrease in general and administrative expense was primarily
attributable to the following:
approximately $3.1 million for decreased compensation costs and stock-based
? compensation associated with recognition of the severance expensed as a result
of the reduction in force;
? approximately $0.8 million for decreased facility and other costs primarily
related to the gain recorded on the terminated lease at 75 Sidney Street; and
? approximately $1.1 million for decreased legal costs and intellectual property
related expenses.
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Other Income, net
Interest and other income of approximately $310 thousand and $2.4 million were
recognized during the six months ended June 30, 2022 and 2021, respectively.
Other income during the six months ended June 30, 2022 relates to interest
income on marketable securities balances, while other income the six months
ended June 30, 2021 primarily related to a gain on our investment in equity
securities of CLPT. All equity securities in CLPT held by us were sold or
otherwise disposed of during the six months ended June 30, 2021.
COVID-19
The COVID-19 pandemic continues to evolve. We have and will continue to be
guided by applicable guidelines and safety measures, including any stay-at-home
policies for certain non-essential employees, consultants, contractors, and
staff. Certain of our clinical trial sites, collaboration partners, suppliers
and consultants have experienced facility closures or been subject to
quarantines, travel restrictions and other governmental restrictions or supply
chain disruptions and have appropriately diverted attention and resources to
respond to the impacts of COVID-19 on their own operations and personnel. Some
have even become involved in research and development efforts related to
COVID-19.
We will continue to monitor the issues raised by the global spread of COVID-19
and have put in place and will continue to put in place measures as appropriate
and necessary for, or that we believe to be in the best interest of, our
business, employees, collaborators, stockholders, and the community.
Liquidity and Capital Resources
Sources of Liquidity
We have funded our operations primarily through private placements of redeemable
convertible preferred stock, public offerings of our common stock, our strategic
collaborations, including our prior Sanofi Genzyme Collaboration, AbbVie Tau
Collaboration, and AbbVie Alpha-Synuclein Collaboration, our ongoing Neurocrine
Collaboration, and our out-licensing arrangements, including the Pfizer License
Agreement and the Novartis License Agreement.
As of June 30, 2022, we had cash, cash equivalents, and marketable securities of
$148.1 million. Based upon our current operating plans, we expect that our
existing cash, cash equivalents, and marketable securities at June 30, 2022,
together with amounts expected to be received as reimbursement for development
costs under the Neurocrine Collaboration Agreement, will enable us to meet our
planned operating expenses and capital expenditure requirements into 2024.
Cash Flows
The following table provides information regarding our cash flows for the six
months ended June 30, 2022 and 2021:
Six Months Ended
June 30,
2022 2021
(in thousands)
Net cash (used in) provided by:
Operating activities $ 15,941 $ (44,011)
Investing activities (56,128) 57,030
Financing activities 819 385
Net (decrease) increase in cash, cash equivalents, and
restricted cash $ (39,368) $ 13,404
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Net Cash Provided by (Used in) Operating Activities
Net cash provided by operating activities was $15.9 million during the six
months ended June 30, 2022 compared to $44.0 million of net cash used in
operating activities during the six months ended June 30, 2021. The cash
provided by operating activities for the six months ended June 30, 2022 compared
to the cash used in operating activities for the six months ended June 30, 2021
was primarily due to an upfront payment of $54.0 million received pursuant to
the Novartis License Agreement in March 2022.
Net Cash Used in (Provided by) Investing Activities
Net cash used in investing activities was $56.1 million during the six months
ended June 30, 2022 compared to $57.0 million of net cash provided by investing
activities during the six months ended June 30, 2021. The net cash used in
investing activities for the six months ended June 30, 2022 was primarily due to
$54.8 million for purchases of marketable securities and $1.3 million for
purchases of property and equipment. The net cash provided by investing
activities for the six months ended June 30, 2021 was primarily due to proceeds
of $57.6 million from sales and maturities of marketable securities partially
offset by $0.6 million for purchases of property and equipment.
Net Cash Provided by Financing Activities
Net cash provided by financing activities was $0.8 million and $0.4 million
during the six months ended June 30, 2022 and June 30, 2021, respectively,
primarily due to the proceeds from the exercise of stock options.
Funding Requirements
We expect our expenses to decrease from prior year in the near term as a result
of our strategic restructuring, the reevaluation of our product candidate
pipeline, our strategic shift to invest in TRACER capsid development efforts,
and our initiation of other cost-saving initiatives. We expect our expenses to
increase in the future, however, as we continue the research and development of,
conduct clinical trials of, and seek marketing approval for, our product
candidates and as we continue to enter into or conduct activities in connection
with our collaboration agreements. In addition, if we obtain marketing approval
for any of our product candidates, we expect to incur significant expenses
related to program sales, marketing, manufacturing and distribution to the
extent that such sales, marketing and distribution are not the responsibility of
potential collaborators. Furthermore, we expect to incur increasing costs
associated with operating as a public company, meeting financial controls,
satisfying regulatory and quality standards, fulfilling healthcare compliance
requirements, and maintaining product, clinical trial and directors' and
officers' liability insurance coverage. Accordingly, we will need to obtain
substantial additional funding in connection with our continuing operations. If
we are unable to raise capital or enter into business development transactions
when needed or on acceptable terms, we could be forced to delay, reduce or
eliminate our research and development programs or any future commercialization
efforts.
Based upon our current operating plan, we expect that our existing cash, cash
equivalents, and marketable securities at June 30, 2022, together with amounts
expected to be received as reimbursement for development costs under the
Neurocrine Collaboration Agreement, will be sufficient to meet our planned
operating expenses and capital expenditure requirements into 2024. Our future
capital requirements will depend on many factors, including:
? the scope, progress, results, and costs of product discovery, preclinical
studies and clinical trials for our product candidates;
? the scope, progress, results, costs, prioritization, and number of our research
and development programs;
the progress and status of our strategic collaborations and licensing
agreements, including any research and development costs for which we are
responsible, our collaborators' or licensors' willingness and ability to
? approve desirable budgets for research and development costs for which they are
responsible, the potential exercise by our collaboration partners or licensors
of any options to develop or license certain products and product candidates
that they might have, our potential receipt of future milestone payments and
royalties
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from our collaboration partners or licensors, and any decisions by our
collaborators or licensors to exercise their rights to terminate a collaboration
in whole or in part;
the extent to which we are obligated to reimburse, or entitled to reimbursement
? of, preclinical development and clinical trial costs, or the achievement of
milestones or occurrence of other developments that trigger payments, under any
other collaboration agreement to which we might become a party;
? the costs, timing and outcome of regulatory review of our product candidates;
our ability to establish and maintain collaboration, distribution, or other
? marketing arrangements for our product candidates on favorable terms, if at
all;
the costs and timing of preparing, filing and prosecuting patent applications,
? maintaining and enforcing our intellectual property rights and defending
intellectual property-related claims;
the extent to which we acquire or in-license other product candidates and
? technologies, including any intellectual property associated with such
candidates or technologies, acquire or invest in other businesses, or
out-license our product candidates, capsids or other technologies;
? the costs of advancing our manufacturing capabilities and securing
manufacturing arrangements for pre-commercial and commercial production;
? the level of product sales by us or our collaborators from any product
candidates for which we obtain marketing approval in the future;
the costs of operating as a public company, meeting applicable financial,
? regulatory, and quality control standards, fulfilling healthcare compliance
requirements, and maintaining adequate product, clinical trial, and directors'
and officers' liability insurance coverage; and
the costs of establishing or contracting for sales, manufacturing, marketing,
? distribution, and other commercialization capabilities if we obtain regulatory
approvals to market our product candidates.
Identifying potential product candidates and conducting preclinical studies and
clinical trials is a time-consuming, expensive and uncertain process that takes
years to complete. We may never generate the necessary data or results required
to obtain marketing approval and achieve product sales. In addition, our product
candidates, if approved, may not achieve commercial success. Our product
revenues, if any, and any commercial milestone payments or royalty payments
under our collaboration agreements, will be derived from sales of products that
may not be commercially available for many years, if at all. Accordingly, we
will need to continue to rely on additional financing and business development
transactions to achieve our business objectives. Adequate additional financing
may not be available to us on acceptable terms, or at all.
Until such time, if ever, as we can generate product revenues sufficient to
achieve consistent profitability, we expect to finance our cash needs through a
combination of equity offerings, debt financings, collaborations, strategic
alliances and licensing arrangements. We do not have any committed external
source of funds other than the amounts we are entitled to receive from our
collaboration partners and licensors for reimbursement of certain research and
development expenses, potential option exercises, the achievement of specified
regulatory and commercial milestones, and royalty payments under our
collaboration and licensing agreements, as applicable. To the extent that we
raise additional capital through the sale of equity or equity-linked securities,
including convertible debt, our stockholders' ownership interests will be
diluted, and the terms of these securities may include liquidation or other
preferences that adversely affect our existing stockholders' rights as holders
of our common stock. Debt financing and preferred equity financing, if
available, may involve agreements that include covenants limiting or restricting
our ability to take specific actions, such as incurring additional debt,
obtaining additional capital, acquiring or divesting businesses, making capital
expenditures or declaring dividends.
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If we raise additional funds through collaborations, strategic alliances or
licensing arrangements with third parties, we may have to relinquish valuable
rights to our technologies, future revenue streams, research programs or product
candidates or to grant licenses on terms that may not be favorable to us. If we
are unable to raise additional funds through equity or debt financings when
needed, we may be required to delay, limit, reduce or terminate our product
development or future commercialization efforts or grant rights to develop and
market product candidates that we would otherwise prefer to develop and market
ourselves.
Contractual Obligations
We enter into agreements in the normal course of business with clinical research
organizations, contract manufacturing organizations, and institutions to license
intellectual property. These contracts are generally cancelable at any time by
us, upon 30 to 90 days prior written notice.
Our agreements to license intellectual property include potential milestone
payments that are dependent upon the development of products using the
intellectual property licensed under the agreements and contingent upon the
achievement of clinical trial or regulatory approval milestones. We may also be
required to pay annual maintenance fees or minimum amounts payable ranging from
low-four digits to low five-digits depending upon the terms of the applicable
agreement.
We also have non-cancelable operating lease commitments arising from our leases
of office and laboratory space at our facilities in Cambridge and Lexington,
Massachusetts.
Other than the termination of our lease for 75 Sidney Street, as discussed
elsewhere in this Quarterly Report on Form 10-Q, there were no material changes
to our contractual obligations and commitments described under Management's
Discussion and Analysis of Financial Condition and Results of Operations in our
Annual Report on Form 10-K for the fiscal year ended December 31, 2021, as filed
with the SEC on March 8, 2022.
Off-Balance Sheet Arrangements
We did not have, during the periods presented, and we do not currently have, any
off-balance sheet arrangements, as defined under applicable SEC rules.
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