What changed in this filing

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Item 1. Financial Statements

2021-11-15 compared with 2021-07-28 · 212 added, 164 removed, 410 unchanged (48% of the section changed)

3 unchanged sentences

Consolidated Balance Sheets

June 30, 2021

September 30, 2021

December 31, 2020

15 unchanged sentences

Current portion of lease liability

Current portion of loan payable

Payable to licensor

Current portion of PPP loan payable

Current portion of payable to licensor

Contract liability

Total current liabilities

PPP loan payable

Payable to licensor

Long-term lease liabilities

4 unchanged sentences

authorized 200,000,000 shares;

issued and outstanding 101,251,023 at June 30, 2021;

issued and outstanding 101,867,539 at September 30, 2021;

issued and outstanding 96,131,678 at December 31, 2020;

13 unchanged sentences

For the three months ended

For the six months ended

September 30,

For the nine months ended

September 30,

Research and development

8 unchanged sentences

( 66,940,000 )

Gain on settlement with licensor

PPP loan payable forgiveness income

Interest and miscellaneous income

8 unchanged sentences

Basic and diluted loss per common share

Weighted average number of common shares outstanding – basic and diluted

Other comprehensive (loss)/income:

Change in unrealized (losses)/gains related to available-for-sale debt

Weighted average number of common shares outstanding – basic and

Other comprehensive income/(loss):

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

Foreign currency translation adjustments

Comprehensive loss

10 unchanged sentences

Income/(Loss)

For the three months ended June 30,

Balance, March 31, 2021

For the three months ended September 30, 2021

Balance, June 30, 2021

$ 684,987,000

2 unchanged sentences

Restricted stock-based compensation expense

Cancellation of restricted share awards

Cancellation of restricted share awards, shares

Common stock issued for cash exercise of options

4 unchanged sentences

Other comprehensive loss

Balance, June 30, 2021

Balance, September 30, 2021

$ 687,691,000

$ ( 608,957,000 )

For the three months ended June 30,

Balance, March 31, 2020

For the three months ended September 30, 2020

Balance, June 30, 2020

$ 667,712,000

3 unchanged sentences

Restricted stock-based compensation expense

Common stock issued for cash exercise of options

Issuance of common stock in connection with restricted share awards

Cancellation of restricted share awards

( 7,237,000 )

1 unchanged sentence

Other comprehensive loss

Balance, June 30, 2020

Balance, September 30, 2020

$ 669,125,000

1 unchanged sentence

$ 115,111,000

For the six months ended June 30, 2021

For the nine months ended September 30, 2021

Balance, December 31, 2020

10 unchanged sentences

Other comprehensive income

Balance, June 30, 2021

Balance, September 30, 2021

$ 687,691,000

$ ( 608,957,000 )

For the six months ended June 30, 2020

For the nine months ended September 30, 2020

Balance, December 31, 2019

10 unchanged sentences

Other comprehensive income (loss)

Balance, June 30, 2020

Balance, September 30, 2020

$ 669,125,000

5 unchanged sentences

Consolidated Statements of Cash Flows

For the six months ended June 30,

For the nine months ended

September 30,

Cash flows from operating activities:

3 unchanged sentences

Non-cash licensed technology impairment charge

Non-cash gain on settlement with licensor

Non-cash PPP loan payable forgiveness income

Non-cash interest expense

Depreciation and amortization

1 unchanged sentence

Restricted stock-based compensation expense

Non-cash interest expense

Accretion and interest on short-term investments

1 unchanged sentence

Change in operating assets and liabilities:

( 7,000,000 )

Prepaid expenses and other current assets

46 unchanged sentences

of Presentation

condensed consolidated balance sheet as of June 30, 2021, the condensed consolidated statements of operations and comprehensive loss

and stockholders’ equity for the three and six months ended June 30, 2021 and 2020, and the condensed consolidated statement of

cash flows for the six months ended June 30, 2021 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, 2021, the condensed consolidated statements of operations and comprehensive

loss and stockholders’ equity for the three and nine months ended September 30, 2021 and 2020, and the condensed consolidated statement

of cash flows for the nine months ended September 30, 2021 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 generally

4 unchanged sentences

December 31, 2020.

The results of operations for the period ended June 30, 2021 are not necessarily indicative of the operating results

that may be expected for a full year.

The results of operations for the period ended September 30, 2021 are not necessarily indicative of the operating

results that may be expected for a full year.

The condensed consolidated balance sheet as of December 31, 2020 contains financial information

3 unchanged sentences

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

of June 30, 2021, we had cash, cash equivalents and short-term investments of $ 77.6 million and net assets of $ 84.1 million.

six months ended June 30, 2021, we had cash outflows from operations of $ 25.1 million.

We have not generated significant product revenues

and have not achieved profitable operations.

There is no assurance that profitable operations will ever be achieved, and, if achieved,

could be sustained on a continuing basis.

of September 30, 2021, we had cash, cash equivalents and short-term investments of $ 67.0

million and net assets of $ 79.7

For the nine months ended September

30, 2021, we had cash outflows from operations of $ 35.4

We have not generated significant product

revenues and have not achieved profitable operations.

There is no assurance that profitable operations will ever be achieved, and, if

achieved, could be sustained on a continuing basis.

In addition, development activities, clinical and nonclinical testing, and commercialization

6 unchanged sentences

of our future success.

on our existing cash, cash equivalents and short-term investments, our ability to access additional financial resources and/or our

financial flexibility to reduce operating expenses if required, we believe that we have sufficient resources to fund operations

through at least the next 12 months.

We will need to secure additional funding in the future to carry out all of our

planned research and development activities.

If we are unable to obtain additional financing or generate license or product revenue,

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

on our existing cash, cash equivalents and short-term investments, our ability to access additional financial resources and/or our financial

flexibility to reduce operating expenses if required, we believe that we have sufficient resources to fund operations through at least

the next 12 months.

We will need to secure additional funding in the future to carry out all of our planned research and development

If we are unable to obtain additional financing or generate license or product revenue, the lack of liquidity and sufficient

capital resources could have a material adverse effect on our future prospects.

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

61 unchanged sentences

“pre-funded” warrants were exercised and converted into shares of common stock.

SCHEDULE OF ANTIDILUTIVE SECURITIES EXCLUDED FROM COMPUTATION OF EARNINGS PER SHARE

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

1 unchanged sentence

not include the following potentially dilutive securities in the computation of diluted net loss per common share during the periods

SCHEDULE OF ANTIDILUTIVE SECURITIES EXCLUDED FROM COMPUTATION OF EARNINGS PER SHARE

For the three months ended

For the six months ended

September 30,

For the nine months ended

September 30,

Stock options

3 unchanged sentences

SCHEDULE OF AVAILABLE-FOR-SALE INVESTMENTS HELD

June 30, 2021

December 31, 2020

September 30,

government and agency securities and treasuries

amortized cost of the available-for-sale debt securities, which is adjusted for amortization of premiums and accretion of discounts to

maturity, was $ 50,381,000 and $ 82,448,000 as of June 30, 2021 and December 31, 2020, respectively.

maturity, was $ 23,217,000 and $ 82,448,000 as of September 30, 2021 and December 31, 2020, respectively.

There were no significant realized

gains or losses recognized on the sale or maturity of available-for-sale debt securities during the six months ended June 30, 2021 or

gains or losses recognized on the sale or maturity of available-for-sale debt securities during the nine months ended September 30, 2021

3 – LICENSED TECHNOLOGY

1 unchanged sentence

(“REGENXBIO”) to obtain rights to an exclusive

worldwide license (subject to certain non-exclusive rights previously granted for MPS IIIA), with rights to sublicense, to

REGENXBIO’s NAV AAV9 vector for gene therapies for treating MPS IIIA, MPS IIIB, CLN1 Disease and CLN3 Disease.

Consideration

for the rights granted under the original agreement included fees totaling $ 180

million and a running royalty on net sales, including:

worldwide license (subject to certain non-exclusive rights previously granted for MPS IIIA), with rights to sublicense, to REGENXBIO’s

NAV AAV9 vector for gene therapies for treating MPS IIIA, MPS IIIB, CLN1 Disease and CLN3 Disease.

Consideration for the rights granted

under the original agreement included fees totaling $ 180 million and a running royalty on net sales, including:

(i) an initial fee of

million, $ 10

million of which was due to REGENXBIO shortly after the effective date of the agreement, and $ 10

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

totaling up to $ 100

million, payable in $ 20

million annual installments 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

$ 20 million, $ 10 million of which was due to REGENXBIO shortly after the effective date of the agreement, and $ 10 million of which was

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

payable in $ 20 million annual installments 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) royalties payable in the low double digits to low teens on net sales of products covered under the agreement.

license was being amortized over the life of the patent of eight

On November 1, 2019, we entered into an amendment of the original license agreement.

The amended agreement replaced

million payment due on November 4, 2019 with a $ 3

million payment due on November 4, 2019 and an additional $ 8

million payment (which included $ 1

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

million payment that 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 are both recorded as payable to licensor on the consolidated balance sheet.

The Company disputed that it was responsible for the $ 8

million and $ 20

million payments, and those payments were the subject of an arbitration between the Company and REGENXBIO as noted 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, 2020.

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

We considered the status

of our discussions with REGENXBIO in March 2020 as a potential indicator of impairment in accordance with ASC 360-10-35-21.

Our impairment

test indicated that the carrying value of the license agreement exceeded its fair value and we recorded a $ 32.9 million non-cash impairment

charge during the three months ended March 31, 2020.

May 25, 2020, we filed an arbitration claim with the American Arbitration Association (“AAA”) 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 were not responsible for payments totaling $ 28

million (which would otherwise

have been due in 2020) plus accrued interest ($ 6.4

million as of June 30, 2021

based on invoices received from REGENXBIO).

REGENXBIO disputed our arbitration claim and filed a counterclaim seeking payment

million plus interest, which

REGENXBIO argued remained due.

was being amortized over the life of the patent of eight years .

On November 1, 2019, we entered into an amendment of the original license

The amended agreement replaced the $ 10 million payment due on November 4, 2019 with a $ 3 million payment due on November 4,

2019 and an additional $ 8 million payment (which included $ 1 million of interest) that would have been due no later than April 1, 2020.

That $ 8 million payment that 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 are both recorded as payable to licensor on the consolidated balance sheet.

The Company disputed that it was responsible for

the $ 8 million and $ 20 million payments, and those payments were the subject of an arbitration between the Company and REGENXBIO as noted

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 an agreement, 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 $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.

We considered the status of our discussions with REGENXBIO in March 2020 as a potential

indicator of impairment in accordance with ASC 360-10-35-21.

Our impairment test indicated that the carrying value of the license agreement

exceeded its fair value and we recorded a $ 32.9 million non-cash impairment charge during the three months ended March 31, 2020.

On May 25, 2020,

we filed an arbitration claim with the American Arbitration Association (“AAA”) 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 were not responsible for payments totaling $ 28 million (which would otherwise have been due in 2020) plus accrued interest.

REGENXBIO disputed our arbitration claim and filed a counterclaim seeking payment of the $ 28 million plus interest, which REGENXBIO argued

remained due.

An arbitration hearing before a tribunal of three AAA arbitrators was held on March 8 and March 9, 2021.

On July 13, 2021, the tribunal found in favor of REGENXBIO Inc.

in connection with the parties’ arbitration claims and counterclaims.

Although the tribunal awarded REGENXBIO $ 28.0

million plus interest, we

believe that prior to the arbitration decision, the two companies had entered into a binding settlement agreement, including $ 18.0

million payable to REGENXBIO

over a two-year period.

We intend to seek enforcement of the settlement agreement.

On July 13, 2021,

the tribunal found in favor of REGENXBIO in connection with the parties’ arbitration claims and counterclaims.

The tribunal awarded

REGENXBIO $ 28 .0 million plus interest.

2021, we filed a second arbitration claim with the AAA asserting that a settlement had been reached before the tribunal’s award

in the first arbitration was issued.

On September 14, 2021, REGENXBIO filed its answer, a counterclaim seeking attorney fees and costs,

and a request for permission to file a case dispositive motion.

A preliminary hearing was held on November 1, 2021, during which the

AAA Tribunal set timetables for discovery and for REGENXBIO’s filing of its case dispositive motion.

Those timetables were formalized

in a procedural order issued by the Tribunal on November 8, 2021.

Under the schedule set by the Tribunal, REGENXBIO’s opening brief

in support of its case dispositive motion was filed on November 8, 2021, briefing was scheduled to be completed on December 29, 2021,

and oral argument was scheduled for January 14, 2022.

REGENXBIO had also filed suit in the New York State Supreme Court Commercial Division

seeking enforcement of the original arbitration award, and we had requested that the Court stay that proceeding until the second arbitration

Oral argument on our request for a stay was set for March 10, 2022.

12, 2021, we entered into a settlement agreement (“Settlement Agreement”) with REGENXBIO to resolve all current disputes

between the parties including the aforementioned AAA arbitration and New York State Court action.

In accordance with the Settlement Agreement,

we agreed to pay REGENXBIO a total of $ 30 million, payable as follows:

(1) $ 20 million payable within one business day of the execution

of the Settlement Agreement, (2) $ 5 million on the first anniversary of the effective date of the Settlement Agreement, and (3) $ 5 million

upon the earlier of:

(i) the third anniversary of the effective date of the Settlement Agreement or (ii) the closing of a Strategic Transaction,

as defined in the Settlement Agreement.

Under the Settlement Agreement’s terms, the prior license agreement between the parties

was not reinstituted, and any future license agreement would need to be negotiated separately and require consideration in addition to

the consideration set forth in the Settlement Agreement.

As of September 30, 2021, we have recorded the payable to licensor in the balance

sheet based on the present value of the payments due to REGENXBIO under the Settlement Agreement.

The accounting for the Settlement Agreement

resulted in a $ 6.7 million gain on settlement with licensor in the statement of operations and comprehensive loss during the three and

nine months ended September 30, 2021 and a $ 6.7 million non-cash gain on settlement with licensor in the statement of cash flows during

the nine months ended September 30, 2021.

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

4 unchanged sentences

SCHEDULE OF LICENSED TECHNOLOGY

June 30, 2021

September 30, 2021

December 31, 2020

2 unchanged sentences

Licensed technology, net

aggregate estimated amortization expense for intangible assets remaining as of June 30, 2021 is as follows:

aggregate estimated amortization expense for intangible assets remaining as of September 30, 2021 is as follows:

SCHEDULE OF AMORTIZATION EXPENSE FOR INTANGIBLE ASSETS

2021, remainder

on licensed technology was $ 29,000 and $ 58,000 for the three and six months ended June 30, 2021 and $ 44,000 and $ 1.3 million for the

three and six months ended June 30, 2020, respectively.

on licensed technology was $ 29,000 and $ 87,000 for the three and nine months ended September 30, 2021 and $ 43,000 and $ 1.4 million for

the three and nine months ended September 30, 2020, respectively.

4 - LOAN PAYABLE

6 unchanged sentences

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.

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 principal and interest payments to either (i)

the date that the SBA remits the borrower’s loan forgiveness amount to the lender or (ii) if the borrower does not apply for forgiveness,

10 months after the end of the borrower’s loan forgiveness covered period.

Principal and interest payments on our PPP Loan are

deferred until August 15, 2021 and the unforgiven portion of our PPP Loan, if any, matures on October 15, 2023.

July 2021, we received notice from the SBA that our PPP loan has been forgiven.

We will record the extinguishment of the PPP loan payable

and other income in the third quarter of 2021.

The loan forgiveness for all or a portion of PPP loans was determined, subject to limitations,

based on the use of loan proceeds over the 24 weeks after the loan proceeds are disbursed.

In July 2021, we received notice from the

SBA that our PPP loan has been forgiven.

In the third quarter of 2021, the extinguishment of the PPP loan payable was recorded as PPP

loan payable forgiveness income in the statement of operations and comprehensive loss.

The forgiveness of the PPP loan payable was recorded

as non-cash PPP loan payable forgiveness income in the statement of cash flows.

5 – FAIR VALUE MEASUREMENTS

23 unchanged sentences

the table below.

assets and liabilities measured at fair value on a recurring and non-recurring basis as of June 30, 2021 and December 31, 2020 are summarized

assets and liabilities measured at fair value on a recurring and non-recurring basis as of September 30, 2021 and December 31, 2020 are

summarized below:

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

June 30, 2021

Total Gains/(Losses)

2 unchanged sentences

Licensed technology, net

December 31, 2020

Total Gains/(Losses)

4 unchanged sentences

6 – STOCK-BASED COMPENSATION

The following table summarizes stock option-based compensation for the three and six months ended June 30, 2021 and 2020:

The following table summarizes stock option-based compensation for the three and nine months ended September 30, 2021 and

SCHEDULE OF STOCK BASED COMPENSATION

For the three months ended June 30,

For the six months ended June 30,

For the three months ended September 30,

For the nine months ended September 30,

Research and development

18 unchanged sentences

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

For the three months ended June 30,

For the six months ended June 30,

For the three months ended September 30,

For the nine months ended September 30,

Expected volatility

4 unchanged sentences

SCHEDULE OF OPTIONS ACTIVITY

For the three months ended June 30,

For the six months ended June 30,

For the three months ended September 30,

For the nine months ended September 30,

Options granted

3 unchanged sentences

Common Stock :

The following table summarizes restricted common stock compensation expense for the three and six months ended June

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

30, 2021 and 2020:

SCHEDULE OF STOCK BASED COMPENSATION

For the three months ended June 30,

For the six months ended June 30,

For the three months ended September 30,

For the nine months ended September 30,

Research and development

2 unchanged sentences

following table summarizes the restricted common stock granted for the periods indicated:

OF RESTRICTED COMMON STOCK

For the three months ended June 30,

For the six months ended June 30,

SUMMARY OF RESTRICTED COMMON STOCK

For the three months ended September 30,

For the nine months ended September 30,

Restricted common stock granted

4 unchanged sentences

7 – COMMITMENTS AND CONTINGENCIES

were 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), 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 (“AAA”) 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 were not responsible for payments totaling $ 28

million (which would otherwise

have been due in 2020) plus accrued interest ($ 6.4

million as of June 30, 2021

based on invoices received from REGENXBIO).

REGENXBIO disputed our arbitration claim and filed a counterclaim seeking payment

of these amounts.

An arbitration hearing before a tribunal of three AAA arbitrators was held on March 8 and March 9, 2021.

2021, the tribunal found in favor of REGENXBIO Inc.

We were engaged in an arbitration

proceeding with REGENXBIO regarding the former license agreement between us and REGENXBIO relating to use of the AAV9 capsid in our

MPS IIIA, MPS IIIB, CLN1 (which has now been sold to Taysha Gene Therapies), and CLN3 programs.

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

(“AAA”) 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 were not responsible for payments totaling $ 28

million (which would otherwise have been due in 2020) plus accrued interest.

REGENXBIO disputed our arbitration claim and filed a

counterclaim seeking payment of the $ 28 million plus interest, which REGENXBIO argued remained due.

An arbitration hearing before a

tribunal of three AAA arbitrators was held on March 8 and March 9, 2021.

On July 13, 2021, the tribunal found in favor of REGENXBIO

in connection with the parties’ arbitration claims and counterclaims.

the tribunal awarded REGENXBIO $ 28.0

million plus interest, we

believe that prior to the arbitration decision, the two companies had entered into a binding settlement agreement, including $ 18.0

million payable to REGENXBIO

over a two-year period.

We intend to seek enforcement of the settlement agreement.

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

as administrative offices in New York, New York.

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.

The tribunal awarded REGENXBIO $ 28 .0 million plus

2021, we filed a second arbitration claim with the AAA asserting that a settlement had been reached before the tribunal’s award

in the first arbitration was issued.

On September 14, 2021, REGENXBIO filed its answer, a counterclaim seeking attorney fees and costs,

and a request for permission to file a case dispositive motion.

A preliminary hearing was held on November 1, 2021, during which the

AAA Tribunal set timetables for discovery and for REGENXBIO’s filing of its case dispositive motion.

Those timetables were formalized

in a procedural order issued by the Tribunal on November 8, 2021.

Under the schedule set by the Tribunal, REGENXBIO’s opening brief

in support of its case dispositive motion was filed on November 8, 2021, briefing was scheduled to be completed on December 29, 2021,

and oral argument was scheduled for January 14, 2022.

REGENXBIO had also filed suit in the New York State Supreme Court Commercial Division

seeking enforcement of the original arbitration award, and we had requested that the Court stay that proceeding until the second arbitration

Oral argument on our request for a stay was set for March 10, 2022.

12, 2021, we entered into a settlement agreement (“Settlement Agreement”) with REGENXBIO to resolve all current disputes

between the parties including the aforementioned AAA arbitration and New York State Court action.

In accordance with the Settlement Agreement,

we agreed to pay REGENXBIO a total of $ 30 million, payable as follows:

(1) $ 20 million payable within one business day of the execution

of the Settlement Agreement, (2) $ 5 million on the first anniversary of the effective date of the Settlement Agreement, and (3) $ 5 million

upon the earlier of:

(i) the third anniversary of the effective date of the Settlement Agreement or (ii) the closing of a Strategic Transaction,

as defined in the Settlement Agreement.

Under the Settlement Agreement’s terms, the prior license agreement between the parties

was not reinstituted, and any future license agreement would need to be negotiated separately and require consideration in addition to

the consideration set forth in the Settlement Agreement.

As of September 30, 2021, we have recorded the payable to licensor in the balance

sheet based on the present value of the payments due to REGENXBIO under the Settlement Agreement.

The accounting for the Settlement Agreement

resulted in a $ 6.7 million gain on settlement with licensor in the statement of operations and comprehensive loss during the three and

nine months ended September 30, 2021 and a $ 6.7 million non-cash gain on settlement with licensor in the statement of cash flows during

the nine months ended September 30, 2021.

We lease space

under operating leases for manufacturing and laboratory facilities and administrative offices in Cleveland, Ohio, as well as administrative

offices in New York, New York.

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.

of lease cost are as follows:

SCHEDULE OF COMPONENTS OF LEASE COST

For the three months ended June 30,

For the six months ended June 30,

For the three months ended September 30,

For 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, 2021:

following table presents information about the amount and timing of cash flows arising from operating leases as of September 30, 2021:

SCHEDULE OF SUPPLEMENTAL CASH FLOW INFORMATION RELATED TO LEASES

12 unchanged sentences

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