What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2020-11-09 compared with 2020-08-10 · 294 added, 195 removed, 403 unchanged (55% of the section changed)

15 unchanged sentences

$ 223,382,000

AND STOCKHOLDERS’ EQUITY

LIABILITIES AND STOCKHOLDERS’

Current liabilities:

9 unchanged sentences

Stockholders’ equity:

stock - $ 0.01 par

authorized 200,000,000

issued and outstanding 84,781,241

at June 30, 2020 and 83,622,135

at December 31, 201 9

Common stock - $ 0.01 par value;

200,000,000 shares;

issued and outstanding 84,516,161 at September 30, 2020 and 83,622,135 at December 31, 2019

Additional paid-in

11 unchanged sentences

Consolidated Statements of Operations and Comprehensive Loss

the three months ended June 30,

the six months ended June 30,

the three months ended September 30,

the nine months ended September 30,

and other revenues

Research and development

10 unchanged sentences

Interest and miscellaneous income

Interest expense

other expense

( 1,327,000 )

3 unchanged sentences

$ ( 68,406,000 )

$ ( 59,851,000 )

Basic and diluted

loss per common share

Weighted average

number of common shares outstanding – basic and diluted

Weighted average number of common

shares outstanding – basic and diluted

Other comprehensive income/(loss):

unrealized (losses) gains related to available-for-sale debt securities

Change in unrealized

(losses) gains related to available-for-sale debt securities

Comprehensive

7 unchanged sentences

Consolidated Statements of Stockholders’ Equity

Common Stock Shares

Paid-in Capital

Other Comprehensive Income

Comprehensive

Stockholders’

Balance, December

$ 543,754,000

$ ( 410,188,000 )

$ 134,045,000

option-based compensation expense

stock-based compensation expense

stock issued for cash exercise of options

stock issued for cash under open market sale agreement

stock issued for cash under open market sale agreement, shares

returned in connection with arbitration ruling on licensing agreement

returned in connection with arbitration ruling on licensing agreement, shares

of common stock in connection with restricted share awards

of common stock in connection with restricted share awards, shares

comprehensive income

the three months ended September 30, 2020

Balance, June 30, 2020

$ 667,712,000

$ ( 547,639,000 )

March 31, 2019

$ 121,054,000

Stock option-based compensation expense

Restricted stock-based compensation

Cancellation of restricted share awards

Issuance of common stock in connection with restricted share awards

Common stock issued for cash under open market sale agreement

Common stock issued for cash under open market sale agreement, shares

Common stock issued for cash exercise of options

Common stock issued for cash exercise of options, shares

Issuance of common stock in connection with restricted share awards, net of cancellations

Issuance of common stock in connection with restricted share awards, net of cancellations, shares

Shares returned in connection with arbitration ruling on licensing agreement

Shares returned in connection with arbitration ruling on licensing agreement, shares

( 7,237,000 )

March 31, 2019

Other comprehensive

Balance, September 30, 2020

$ 669,125,000

1 unchanged sentence

$ 115,111,000

option-based compensation expense

stock-based compensation expense

stock issued for cash exercise of options

stock issued for cash under open market sale agreement

returned in connection with arbitration ruling on licensing agreement

the three months ended September 30, 2019

Balance, June 30, 2019

$ 559,335,000

1 unchanged sentence

$ 107,160,000

Stock option-based compensation expense

Restricted stock-based compensation

Issuance of common stock in connection

with restricted share awards

Common stock issued for cash under open

market sale agreement

( 17,372,000 )

June 30, 2019

( 17,372,000 )

Balance, September 30, 2019

$ 565,580,000

$ ( 470,039,000 )

the nine months ended September 30, 2020

Balance, December 31, 2019

2 unchanged sentences

$ 178,430,000

option-based compensation expense

stock-based compensation expense

Stock option-based compensation expense

Restricted stock-based compensation

Common stock issued for cash exercise

Issuance of common stock in connection

with restricted share awards, net of cancellations

( 68,406,000 )

comprehensive income

March 31, 2020

Other comprehensive

Balance, September 30, 2020

$ 669,125,000

1 unchanged sentence

$ 115,111,000

March 31, 2020

the nine months ended September 30, 2019

Balance, December 31, 2018

$ 543,754,000

1 unchanged sentence

$ 134,045,000

option-based compensation expense

stock-based compensation expense

stock issued for cash exercise of options

of common stock in connection with restricted share awards

Stock option-based compensation expense

Restricted stock-based compensation

Common stock issued for cash exercise

Common stock issued for cash under open

market sale agreement

Issuance of common stock in connection

with restricted share awards

Shares returned in connection with arbitration

ruling on licensing agreement

( 1,467,000 )

( 1,472,000 )

comprehensive loss

June 30, 2020

( 59,851,000 )

Balance, September 30, 2019

$ 565,580,000

$ ( 470,039,000 )

accompanying notes are an integral part of these condensed consolidated statements.

2 unchanged sentences

Consolidated Statements of Cash Flows

the six months ended June 30

For the nine months ended

September 30,

Cash flows from operating

13 unchanged sentences

on short-term investments

( 1,090,000 )

Accretion of right-of-use

2 unchanged sentences

Change in operating assets and liabilities:

( 7,000,000 )

Prepaid expenses

and other current assets

payable, accrued expenses and lease liabilities

Accounts payable,

accrued expenses and lease liabilities

( 5,183,000 )

Change in payable to licensor

( 2,539,000 )

in payable to licensor

Net cash used in

11 unchanged sentences

maturities of short-term investments

Net cash (used in)

provided by investing activities

Net cash (used in)/provided

by investing activities

( 89,496,000 )

34 unchanged sentences

We have additional AAV-based gene therapies in various developmental stages designed to treat

the CLN1 and CLN3 forms of Batten Disease, cystic fibrosis and retinal diseases.

In addition, we are developing next-generation

AAV-based gene therapies using the novel AIM™ capsid platform that we have exclusively licensed from the University of North

Carolina at Chapel Hill, and internal AAV vector research programs.

Our efforts have been principally devoted to research and

development, resulting in significant losses.

the CLN3 form of Batten Disease, cystic fibrosis and retinal diseases.

In addition, we are developing next-generation AAV-based

gene therapies using the novel AIM™ capsid platform that we have exclusively licensed from the University of North Carolina

at Chapel Hill, and internal AAV vector research programs.

Our efforts have been principally devoted to research and development,

resulting in significant losses.

of Presentation

condensed consolidated balance sheet as of June 30, 2020 and the condensed consolidated statements of operations and comprehensive

loss, stockholders’ equity and cash flows for the three and six months ended June 30, 2020 and 2019 were prepared by management

without audit.

In the opinion of management, all adjustments, consisting only of normal recurring adjustments, except as otherwise

disclosed, necessary for the fair presentation of the financial position, results of operations, and changes in financial position

for such periods, have been made.

condensed consolidated balance sheet as of September 30, 2020 and the condensed consolidated statements of operations and comprehensive

loss, stockholders’ equity and cash flows for the three and nine months ended September 30, 2020 and 2019 were prepared

by management without audit.

In the opinion of management, all adjustments, consisting only of normal recurring adjustments, except

as otherwise disclosed, necessary for the fair presentation of the financial position, results of operations, and changes in financial

position for such periods, have been made.

information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles

4 unchanged sentences

for the year ended December 31, 2019.

The results of operations for the period ended June 30, 2020 are not necessarily indicative

The results of operations for the period ended September 30, 2020 are not necessarily indicative

of the operating results that may be expected for a full year.

4 unchanged sentences

its operating expenses, as and when they become payable, for a period of at least 12 months from the date the financial report

of June 30, 2020, we had cash, cash equivalents and short-term investments of $ 107.9

million and net assets

of September 30, 2020, we had cash, cash equivalents, receivables and short-term investments of $ 103.9 million and net assets

of $ 115.1 million.

For the six months ended June 30, 2020, we had cash outflows from operations of $ 22.7

For the nine months ended September 30, 2020, we had cash outflows from operations of $ 33.4 million.

not generated any significant product revenues and have not achieved profitable operations.

15 unchanged sentences

product revenue, the lack of liquidity and sufficient capital resources could have a material adverse effect on our future prospects.

In October 2020, the Company announced that it had retained Jefferies LLC as its financial advisor to assist with the review of

strategic options focused on advancing the Company’s mission and maximizing stockholder value.

In an effort to unlock potential

additional value, the Company initiated this formal process to explore a broad range of strategic alternatives, including but

not limited to the partnering of its various clinical and pre-clinical programs, or a sale or merger of the Company.

preparation of consolidated financial statements in conformity with U.S.

9 unchanged sentences

We have not experienced any losses related to amounts in excess of FDIC limits.

are reported at net realizable value.

We continually evaluate the creditworthiness of our customers and their financial condition

and generally do not require collateral.

The need for an allowance for doubtful accounts is based upon reviews of specific customer

balances, historic losses, and general economic conditions.

As of September 30, 2020, no allowance was recorded as the receivables

are considered collectible.

There were no receivables outstanding as of December 31, 2019.

investments consist of investments in U.S.

37 unchanged sentences

information and disclosures required under ASC 842 is included in Note 8.

November 2016, the Financial Accounting Standards Board issued ASU 2016-18, Statement of Cash Flows (Topic 230):

Cash , requiring restricted cash and restricted cash equivalents to be included with cash and cash equivalents on the statement

of cash flows when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows.

adopted this standard during the first quarter of 2018.

Restricted cash is now included as a component of cash, cash equivalents

and restricted cash on our consolidated statements of cash flows.

Restricted cash is recorded within other assets and restricted

cash in the accompanying consolidated balance sheets.

November 2016, the Financial Accounting Standards Board issued Accounting Standards Update (“ASU”) 2016-18, Statement

of Cash Flows (Topic 230):

Restricted Cash , requiring restricted cash and restricted cash equivalents to be included with

cash and cash equivalents on the statement of cash flows when reconciling the beginning-of-period and end-of-period total amounts

shown on the statement of cash flows.

We adopted this standard during the first quarter of 2018.

Restricted cash is now included

as a component of cash, cash equivalents and restricted cash on our consolidated statements of cash flows.

Restricted cash is

recorded within other assets and restricted cash in the accompanying consolidated balance sheets.

account for contracts with customers in accordance with ASC 606, Revenue from Contracts with Customers .

ASC 606 applies

to all contracts with customers, except for contracts that are within the scope of other standards.

Under ASC 606, an entity recognizes

revenue when its customer obtains control of promised goods or services, in an amount that reflects the consideration which the

entity expects to receive in exchange for those goods or services.

To determine revenue recognition for arrangements that an entity

determines are within the scope of ASC 606, the entity performs the following five steps:

(i) identify the contract(s) with a

(ii) identify the performance obligations in the contract;

(iii) determine the transaction price;

(iv) allocate the

transaction price to the performance obligations in the contract;

and (v) recognize revenue when (or as) the entity satisfies

a performance obligation.

Additional information and disclosures required under ASC 606 are included in Note 6.

Per Common Share

3 unchanged sentences

warrants outstanding during the period.

At June 30, 2020, 84,781,241

shares of common

stock were outstanding.

The “pre-funded” warrants are included in the computation of basic net loss per share as the

exercise price is negligible and they are fully vested and exercisable.

At September 30, 2020, 84,516,161 shares of common stock were outstanding.

The “pre-funded”

warrants are included in the computation of basic net loss per share as the exercise price is negligible and they are fully vested

and exercisable.

were 9,017,055 “pre-funded” warrants included in the computation of basic net loss per share for the three and nine

months ended September 30, 2020.

There were no “pre-funded” warrants included in the computation of basic net loss

per share for the three and nine months ended September 30, 2019.

In October 2020, all of the pre-funded warrants were exercised

and converted into shares of common stock.

do not include the potential impact of dilutive securities in diluted net loss per share, as the impact of these items is anti-dilutive.

2 unchanged sentences

the following potentially dilutive securities in the computation of diluted net loss per common share during the periods presented:

SCHEDULE OF ANTIDILUTIVE SECURITIES

EXCLUDED FROM COMPUTATION OF EARNINGS PER SHARE

SCHEDULE OF ANTIDILUTIVE SECURITIES EXCLUDED FROM COMPUTATION OF EARNINGS PER SHARE

the three months ended September 30,

the nine months ended September 30,

“Non-pre-funded”

Stock options

"Non-pre-funded" Warrants [Member]

2 – SHORT-TERM INVESTMENTS

following table summarizes the available-for-sale debt securities held:

OF AVAILABLE-FOR-SALE DEBT SECURITIES HELD

following table summarizes the carrying value of the available-for-sale debt securities held:

SCHEDULE OF AVAILABLE-FOR-SALE DEBT SECURITIES HELD

government and agency

2 unchanged sentences

to maturity, was $ 88,430,000

as of June 30, 2020.

There were no

material realized

gains or losses recognized on the sale or maturity of available-for-sale debt securities during the six months ended June 30,

2020 or 2019.

as of September 30, 2020.

realized gains or losses recognized on the sale or maturity of available-for-sale debt securities during the nine months ended

September 30, 2020 or 2019.

3 – LICENSED TECHNOLOGY

12 unchanged sentences

million of which

was due on the first anniversary of the effective date of the agreement in November 2019, (ii) annual fees totaling up to $ 100

was to be due on the first anniversary of the effective date of the agreement in November 2019, (ii) annual fees totaling up to

million, payable

million annual installments

beginning on the second anniversary of the effective date (the first of which remains payable if the agreement is terminated before

the second anniversary in November 2020), (iii) sales milestone payments totaling $ 60

beginning on the second anniversary of the effective date (the first of which was to remain payable if the agreement were terminated

before the second anniversary in November 2020), (iii) sales milestone payments totaling $ 60

million, and (iv)

6 unchanged sentences

on November 4, 2019 with a $ 3

million payment due on November

4, 2019 and an additional $ 8

million payment due

on November 4, 2019 and an additional $ 8

million payment (which

included $ 1 million

of interest) due no later than April 1, 2020.

The payment was scheduled to be paid by April 1, 2020 and the guaranteed amount

of $ 20 million

was due to be paid on November 4,

2020 and are recorded

as payable to licensor on the consolidated balance sheet.

of interest) that would have been due no later than April 1, 2020.

million payment had

been scheduled to be paid by April 1, 2020 and the $ 20

million that had

been due to be paid on November 4,

2020 , and both were

recorded as payable to licensor on the consolidated balance sheet.

As discussed below, the Company has disputed that it is responsible

million and $ 20

million payments,

and those payments are the subject of a current arbitration between the Company and REGENXBIO, as further discussed below.

to the April 1, 2020 deadline, we engaged REGENXBIO in discussions in an attempt to renegotiate the financial terms of the agreement,

but we were unable to reach a mutual understanding that we believed would have been favorable for the Company or our programs,

and we did not make the $ 8

million payment due by April 1,

and we did not make the $ 8 million payment due by April 1, 2020.

On April 17, 2020, REGENXBIO sent us a written demand for the

million fee, payable

within a 15-day cure period after receipt of the demand letter.

The license terminated on May 2, 2020, when the 15-day

period expired.

$ 8 million fee, payable within a 15-day cure period after receipt of the demand letter.

The license terminated on May 2, 2020 ,

when the 15-day period expired.

There were no penalties for early termination of the license.

1 unchanged sentence

claim with the American Arbitration Association alleging that REGENXBIO materially breached the license agreement prior to termination

and seeking, among other things, a declaration that as a result of REGENXBIO’s material breach, we are not responsible

for payments totaling $ 28

million (which would

otherwise have been due in 2020) plus accrued interest of $ 0.8

million as of June

and seeking, among other things, a declaration that as a result of REGENXBIO’s material breach, we are not responsible for

payments totaling $ 28 million (which would otherwise have been due in 2020) plus accrued interest ($ 2.1 million as of September

REGENXBIO disputes our arbitration claim and has filed a counterclaim seeking payment of the $ 28 million plus interest,

4 unchanged sentences

Since our impairment testing indicated that the carrying value of the license agreement exceeded its fair

value, we recorded a $ 32.9

million non-cash impairment charge

in the three months ended March 31, 2020.

value, we recorded a $ 32.9 million non-cash impairment charge in the three months ended March 31, 2020.

May 15, 2015, we acquired Abeona Therapeutics LLC, which had an exclusive license through Nationwide Children’s Hospital

to the AB-101 and AB-102 patent portfolios for developing treatments for patients with Sanfilippo Syndrome Type A and Type B.

The license is amortized over the life of the license of 20

The license is amortized over the life of the license of 20 years.

technology consists of the following:

OF LICENSED TECHNOLOGY

SCHEDULE OF LICENSED TECHNOLOGY

Licensed technology

1 unchanged sentence

Licensed technology,

aggregate estimated amortization expense for intangible assets remaining as of June 30, 2020 is as follows:

OF AMORTIZATION EXPENSE FOR INTANGIBLE ASSETS

aggregate estimated amortization expense for intangible assets remaining as of September 30, 2020 is as follows:

SCHEDULE OF AMORTIZATION EXPENSE FOR INTANGIBLE ASSETS

2020, remainder

of licensed technology was $ 44,000

and $ 1,338,000

for the three and

six months ended June 30, 2020, respectively, and $ 1,293,000

and $ 2,638,000

for the three and

six months ended June 30, 2019, respectively.

of licensed technology was $ 43,000 and $ 1,381,000 for the three and nine months ended September 30, 2020, respectively, and $ 1,293,000

and $ 3,931,000 for the three and nine months ended September 30, 2019, respectively.

4 – FAIR VALUE MEASUREMENTS

22 unchanged sentences

date in the table below.

assets and liabilities measured at fair value on a recurring and non-recurring basis as of June 30, 2020 and December 31, 2019

assets and liabilities measured at fair value on a recurring and non-recurring basis as of September 30, 2020 and December 31,

2019 are summarized below:

OF FAIR VALUE, ASSETS AND LIABILITIES MEASURED ON RECURRING AND NON-RECURRING BASIS

SCHEDULE OF FAIR VALUE, ASSETS AND LIABILITIES MEASURED ON RECURRING AND NON-RECURRING BASIS

September 30,

Short-term investments

4 unchanged sentences

5 – LOAN PAYABLE

May 2, 2020, we received loan proceeds in the amount of approximately $ 1.8 million

(the “PPP Loan”) under the Paycheck Protection Program (“PPP”).

The PPP was established under the

Coronavirus Aid, Relief and Economic Security Act, as amended (“CARES Act”) and is administered by the U.S.

Business Administration (“SBA”).

Under the terms of the CARES Act, PPP loan recipients can apply for loan

The potential loan forgiveness for all or a portion of PPP loans is determined, subject to limitations, based on

the use of loan proceeds over the 24-weeks after the loan proceeds are disbursed for payment of payroll costs and any

payments of mortgage interest, rent, and utilities.

The amount of loan forgiveness will be reduced if PPP loan recipients

terminate employees or reduce salaries during the covered period.

The unforgiven portion of our PPP Loan, if any, is payable

over two years at an interest rate of 1 %,

with a deferral of payments for the first six months, beginning on May 2, 2020.

We intend to use the proceeds from our PPP

loan for purposes consistent with the PPP.

While we currently believe that our use of the loan proceeds will meet the

conditions for forgiveness of our PPP loan there can be no assurance that forgiveness for any portion of the PPP Loan

will be obtained.

May 2, 2020, we received loan proceeds in the amount of approximately $ 1.8 million (the “PPP Loan”) under the Paycheck

Protection Program (“PPP”).

The PPP was established under the Coronavirus Aid, Relief and Economic Security Act, as

amended (“CARES Act”) and is administered by the U.S.

Small Business Administration (“SBA”).

terms of the CARES Act, PPP loan recipients can apply for loan forgiveness.

The potential loan forgiveness for all or a portion

of PPP loans is determined, subject to limitations, based on the use of loan proceeds over the 24 weeks after the loan proceeds

are disbursed for payment of payroll costs and any payments of mortgage interest, rent, and utilities.

The amount of loan forgiveness

will be reduced if PPP loan recipients terminate employees or reduce salaries during the covered period.

The unforgiven portion

of our PPP Loan, if any, is payable over two years at an interest rate of 1 %, with a deferral of payments for the first six months,

beginning on May 2, 2020.

We believe that we have used the proceeds from our PPP Loan for purposes consistent with the PPP.

we currently believe that our use of the loan proceeds will meet the conditions for forgiveness of our PPP Loan, there can be

no assurance that forgiveness for any portion of the PPP Loan will be obtained.

6 – REVENUE FROM CONTRACTS WITH CUSTOMERS

August 14, 2020, we entered into sublicense and inventory purchase agreements with Taysha Gene Therapies (“Taysha”)

relating to a potential gene therapy for CLN1 disease.

Under the sublicense agreement, Taysha received worldwide exclusive

rights to intellectual property and know-how relating to the research, development and manufacture of the potential gene therapy,

which we had referred to as ABO-202.

Under the inventory purchase agreement, we sold to Taysha certain inventory and other items

related to ABO-202.

assessed these contracts at contract inception and determined that, under ASC 606, the two contracts would be combined and accounted

for a single contract, with a single performance obligation.

We assessed the nature of the promised license to determine whether

the license has significant stand-alone functionality and evaluated whether such functionality can be retained without ongoing

activities of the entity and determined that the license has significant stand-alone functionality.

Furthermore, we have no ongoing

activities associated with the license to support or maintain the license’s utility.

Based on this, we determined that the

pattern of transfer of control of the license to the customer was at a point in time.

transaction price of the contract includes (i) $ 7.0 million of fixed consideration, (ii) up to $ 26.0 million of variable consideration

in the form of event-based milestone payments, (iii) up to $ 30.0 million of variable consideration in the form of sales-based

milestone payments, and (iv) other royalty-based payments based on net sales.

The event-based milestone payments are based on

certain development and regulatory events occurring.

We evaluated whether the milestone conditions have been achieved and if it

is probable that a significant revenue reversal would not occur before recognizing the associated revenue.

We determined that

these milestone payments are not within our control or the licensee’s control, such as regulatory approvals, and are not

considered probable of being achieved until those approvals are received.

Accordingly, we have fully constrained the $26.0 million

of event-based milestone payments until such time that it is probable that significant revenue reversal would not occur.

The sales-based

milestone payments and other royalty-based payments are based on a level of sales for which the license is deemed to be the predominant

item to which the royalties relate.

We will recognize revenue for these payments at the later of (i) when the related sales occur,

or (ii) when the performance obligation to which some or all of the royalty has been allocated has been satisfied or partially

To date, we have not recognized any sales-based or royalty revenue resulting from this licensing arrangement.

this arrangement, we recognized $ 7.0

million of revenue during the three months

ended September 30, 2020, which amount related solely to fixed consideration.

In addition, we have $ 7.0

million of related accounts receivable

at September 30, 2020;

this receivable was paid by Taysha in October 2020.

We do not have any contract assets or contract

liabilities as a result of this transaction.

7 – STOCK-BASED COMPENSATION

following table summarizes stock option-based compensation for the three and six months ended June 30, 2020 and 2019:

OF STOCK BASED COMPENSATION

following table summarizes stock option-based compensation for the three and nine months ended September 30, 2020 and 2019:

SCHEDULE OF STOCK BASED COMPENSATION

the three months ended September 30,

the nine months ended September 30,

Research and development

5 unchanged sentences

compensation expense, net of tax

We estimate the fair value of each option award on the date of grant using the Black-Scholes option valuation model.

We then recognize the grant date fair value of each option as compensation expense ratably using the straight-line attribution

method over the service period (generally the vesting period).

Stock Option [Member]

estimate the fair value of each option award on the date of grant using the Black-Scholes option valuation model.

We then recognize

the grant date fair value of each option as compensation expense ratably using the straight-line attribution method over the service

period (generally the vesting period).

The Black-Scholes model incorporates the following assumptions:

11 unchanged sentences

used the following weighted-average assumptions to estimate the fair value of the options granted for the periods indicated:

OF WEIGHTED-AVERAGE ASSUMPTIONS TO ESTIMATE THE FAIR VALUE OF THE OPTIONS GRANTED

SCHEDULE OF WEIGHTED-AVERAGE ASSUMPTIONS TO ESTIMATE THE FAIR VALUE OF THE OPTIONS GRANTED

the three months ended September 30,

the nine months ended September 30,

Expected volatility

Expected term

Risk-free interest

Risk-free interest rate

Expected dividend yield

following table summarizes the options granted for the periods indicated:

OF OPTIONS ACTIVITY

SCHEDULE OF OPTIONS ACTIVITY

the three months ended September 30,

the nine months ended September 30,

Options granted

1 unchanged sentence

Exercise price

Grant date fair

Grant date fair value

Common Stock :

We granted 1,083,313

shares of restricted common stock during

the three and six months ended June 30, 2020.

We did not grant any shares of restricted common stock to employees during the three

and six months ended June 30, 2019.

The following table summarizes restricted common stock compensation expense for the three

and six months ended June 30, 2020 and 2019:

OF RESTRICTED COMMON STOCK SHARE-BASED COMPENSATION

following table summarizes restricted common stock compensation expense for the three and nine months ended September 30, 2020

SCHEDULE OF STOCK BASED COMPENSATION

the three months ended September 30,

the nine months ended September 30,

Research and development

5 unchanged sentences

compensation expense, net of tax

granted 818,233 shares of restricted common stock, net of cancellations, during the nine months ended September 30, 2020.

were 265,080 shares of restricted common stock canceled during the three months ended September 30, 2020.

We granted 376,625 shares

of restricted common stock during the three and nine months ended September 30, 2019.

8 – COMMITMENTS AND CONTINGENCIES

are currently engaged in an arbitration proceeding with REGENXBIO regarding the former license agreement between the parties relating

to use of the AAV9 capsid in our MPS IIIA, MPS IIIB, CLN1 (which has now been sold to Taysha Gene Therapies, as discussed in Note

6 above), and CLN3 programs.

The license terminated on May 2, 2020, and on May 25, 2020, we filed an arbitration claim with the

American Arbitration Association alleging that REGENXBIO materially breached the license agreement prior to termination and seeking,

among other things, a declaration that as a result of REGENXBIO’s material breach, we are not responsible for payments totaling

million (which would otherwise have been

due in 2020) plus accrued interest ($ 2.1

million as of September 30, 2020).

disputes our arbitration claim and has filed a counterclaim seeking payment of these amounts.

Under the current schedule, the

arbitration is expected to be completed in the first half of 2021.

with Contract Manufacturer

engaged a contract manufacturer to assist us with developing and defining the processes necessary to manufacture our RDEB product

candidate and had a remaining commitment of $ 6.3 million at March 31, 2020.

During the second quarter of 2020, we cancelled the

remaining stages of work with the contract manufacturer.

We have no remaining commitment at September 30, 2020.

lease space under operating leases for manufacturing and laboratory facilities and administrative offices in Cleveland, Ohio,

1 unchanged sentence

We also lease office space in Madrid, Spain as well as certain office

equipment under operating leases, which have a non-cancelable

lease term of less than one year and,

therefore, we have elected the practical expedient to exclude these short-term leases from our right-of-use assets and lease liabilities.

equipment under operating leases, which have a non-cancelable lease term of less than one year and, therefore, we have elected

the practical expedient to exclude these short-term leases from our right-of-use assets and lease liabilities.

of lease cost are as follows:

OF COMPONENTS OF LEASE COST

SCHEDULE OF COMPONENTS OF LEASE COST

the three months ended September 30,

the nine months ended September 30,

Operating lease cost

1 unchanged sentence

Short-term lease cost

following table presents information about the amount and timing of cash flows arising from operating leases as of June 30, 2020:

OF SUPPLEMENTAL CASH FLOW INFORMATION RELATED TO LEASES

of lease liabilities:

following table presents information about the amount and timing of cash flows arising from operating leases as of September 30,

SCHEDULE OF SUPPLEMENTAL CASH FLOW INFORMATION RELATED TO LEASES

Maturity of lease liabilities:

2020, remainder

8 unchanged sentences

Other information:

Weighted-average remaining

lease term for operating leases

Weighted-average discount

rate for operating leases

with contract manufacturer

We engaged a contract manufacturer to assist us with developing and defining the processes

necessary to manufacture our RDEB product candidate and had a remaining commitment of $ 6.3 million

at March 31, 2020.

During the second quarter of 2020, we cancelled the remaining stages of work with the contract

manufacturer.

We have no remaining

commitment at June 30, 2020.

are currently engaged in an arbitration proceeding with REGENXBIO regarding the former license agreement between the parties

relating to use of the AAV9 capsid in our MPS IIIA, MPS IIIB, CLN1, and CLN3 programs.

The license terminated on May 2, 2020,

and on May 25, 2020, we filed an arbitration claim with the American Arbitration Association alleging that REGENXBIO

materially breached the license agreement prior to termination and seeking, among other things, a declaration that as a

result of REGENXBIO’s material breach, we are not responsible for payments totaling $ 28

million (which would otherwise have

been due in 2020) plus accrued interest of $ 0.8 million

as of June 30, 2020.

REGENXBIO disputes our arbitration claim and has filed a counterclaim seeking payment of these amounts.

No arbitration schedule has yet been set by the three-arbitrator panel.

Weighted-average remaining lease term

for operating leases

Weighted-average discount rate for operating

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements