What changed in this filing

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Item 1. Legal Proceedings

2021-11-15 compared with 2021-07-28 · 45 added, 17 removed, 0 unchanged (100% of the section changed)

LEGAL PROCEEDINGS

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).

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

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

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.

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.

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. Legal Proceedings