What changed in this filing

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Item 1. Financial Statements

2022-08-04 compared with 2022-05-05 · 88 added, 59 removed, 438 unchanged (25% of the section changed)

4 unchanged sentences

Dollars, except share and per share amounts)

March 31, 2022 December 31, 2021

June 30, 2022 December 31, 2021

Current assets:

39 unchanged sentences

Dollars, except share and per share amounts)

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

2022 2021 2022 2021

Collaborations and licenses $ 12,556 $ 1,185 $ 23,774 $ 2,339

17 unchanged sentences

Dividend accretion of convertible preferred shares.

— ( 3,266 ) — ( 6,478 )

Net loss attributable to common shares $ ( 14,192 ) $ ( 22,653 ) $ ( 29,957 ) $ ( 42,246 )

23 unchanged sentences

Balance March 31, 2022 148,728,237 $ 1,298,212 $ 67,151 $ ( 1,150,112 ) $ ( 49,406 ) $ 165,845

Stock-based compensation — — 2,064 — — 2,064

Certain fair value adjustments to liability stock option awards — — 3 — — 3

Issuance of common shares pursuant to exercise of options 66,025 197 ( 84 ) — — 113

Unrealized loss on available-for-sale securities — — — — ( 691 ) ( 691 )

Net loss — — — ( 14,192 ) — ( 14,192 )

Balance June 30, 2022 148,794,262 $ 1,298,409 $ 69,134 $ ( 1,164,304 ) $ ( 50,097 ) $ 153,142

See accompanying notes to the condensed consolidated financial statements.

15 unchanged sentences

Balance March 31, 2021 1,164,000 $ 152,620 96,245,371 $ 1,013,118 $ 62,133 $ ( 1,065,554 ) $ ( 48,168 ) $ 114,149

Accretion of accumulated dividends on Preferred Shares — 3,266 — — ( 3,266 ) — —

Stock-based compensation — — — — 1,758 — — 1,758

Certain fair value adjustments to liability stock option awards — — — — 51 — — 51

Issuance of common shares pursuant to the Open Market Sale Agreement — — 1,450,145 4,274 — — — 4,274

Issuance of common shares pursuant to exercise of options — — 4,500 24 ( 9 ) — — 15

Unrealized gain on available-for-sale securities — — — — — — ( 31 ) ( 31 )

Net loss — — — — — ( 19,387 ) — ( 19,387 )

Balance June 30, 2021 1,164,000 $ 155,886 97,700,016 $ 1,017,416 $ 63,933 $ ( 1,088,207 ) $ ( 48,199 ) $ 100,829

See accompanying notes to the condensed consolidated financial statements.

2 unchanged sentences

(In thousands of U.S.

Three Months Ended March 31,

Six Months Ended June 30,

OPERATING ACTIVITIES

2 unchanged sentences

Depreciation 777 879

Gain on sale of property and equipment ( 20 ) —

Stock-based compensation expense 3,800 3,378

14 unchanged sentences

Disposition of investments 11,000 34,350

Proceeds from sale of property and equipment 20 —

Acquisition of property and equipment ( 287 ) ( 731 )

Net cash (used in) provided by investing activities ( 60,056 ) 18,221

Net cash used in investing activities ( 73,886 ) ( 20,526 )

FINANCING ACTIVITIES

5 unchanged sentences

Effect of foreign exchange rate changes on cash and cash equivalents — ( 44 )

(Decrease) Increase in cash and cash equivalents ( 27,952 ) 27,170

Decrease in cash and cash equivalents ( 61,962 ) ( 21,297 )

Cash and cash equivalents, beginning of period 109,282 52,251

10 unchanged sentences

Arbutus Biopharma Corporation (“Arbutus” or the “Company”) is a clinical-stage biopharmaceutical company leveraging its extensive virology expertise to develop novel therapeutics that target specific viral diseases.

The Company’s current focus areas include Hepatitis B virus (“HBV”) and coronaviruses, including SARS-CoV-2.

In HBV, the Company is developing an RNA interference (“RNAi”) therapeutic, oral capsid inhibitor, oral PD-L1 inhibitor, and oral RNA destabilizer that it intends to combine to provide a functional cure for patients with chronic HBV infection (“cHBV”) by suppressing viral replication, reducing surface antigen and reawakening the immune system.

The Company’s current focus areas include Hepatitis B virus (“HBV”), SARS-CoV-2, and coronaviruses.

In HBV, the Company is developing an RNA interference (“RNAi”) therapeutic, an oral capsid inhibitor, an oral PD-L1 inhibitor, and an oral RNA destabilizer to potentially identify a combination regimen with the aim of providing a functional cure for patients with chronic HBV infection (“cHBV”) by suppressing viral replication, reducing surface antigen and reawakening the immune system.

The Company believes its lead compound, AB-729, is the only RNAi therapeutic with evidence of immune re-awakening, and is currently being evaluated in multiple phase 2 clinical trials.

1 unchanged sentence

The Company is also exploring oncology applications for its internal PD-L1 portfolio.

At March 31, 2022, the Company had an aggregate of $ 221.8 million in cash, cash equivalents and investments in marketable securities.

The Company had no outstanding debt as of March 31, 2022.

At June 30, 2022, the Company had an aggregate of $ 200.6 million in cash, cash equivalents and investments in marketable securities.

The Company had no outstanding debt as of June 30, 2022.

The Company believes it has sufficient cash resources to fund its operations for at least the next 12 months.

10 unchanged sentences

These statements should be read in conjunction with the Company’s audited consolidated financial statements and notes thereto for the year ended December 31, 2021 included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021.

These unaudited condensed consolidated financial statements include the accounts of Arbutus Biopharma Corporation and its one wholly-owned subsidiary, Arbutus Biopharma, Inc., and reflect, in the opinion of management, all adjustments and reclassifications necessary to fairly present the Company’s financial position as of March 31, 2022 and December 31, 2021, the Company’s results of operations for the three months ended March 31, 2022 and 2021, and the Company’s cash flows for the three months ended March 31, 2022 and 2021.

These unaudited condensed consolidated financial statements include the accounts of Arbutus Biopharma Corporation and its one wholly-owned subsidiary, Arbutus Biopharma, Inc., and reflect, in the opinion of management, all adjustments and reclassifications necessary to fairly present the Company’s financial position as of June 30, 2022 and December 31, 2021, the Company’s results of operations for the three and six months ended June 30, 2022 and 2021, and the Company’s cash flows for the six months ended June 30, 2022 and 2021.

Such adjustments are of a normal recurring nature.

The results of operations for the three months ended March 31, 2022 are not necessarily indicative of the results for the full year.

The results of operations for the three and six months ended June 30, 2022 are not necessarily indicative of the results for the full year.

These unaudited condensed consolidated financial statements follow the same significant accounting policies as those described in the notes to the audited consolidated financial statements of the Company for the year ended December 31, 2021, except as described below under Recent Accounting Pronouncements.

3 unchanged sentences

Net loss attributable to common shareholders per share is calculated based on the weighted average number of common shares outstanding.

Diluted net loss attributable to common shareholders per share does not differ from basic net loss attributable to common shareholders per share for the three months ended March 31, 2022 and 2021, since the effect of including potential common shares would be anti-dilutive.

For the three months ended March 31, 2022, potential common shares of 15.7 million pertaining to outstanding stock options were excluded from the calculation of net loss attributable to common shareholders per share.

A total of approximately 35.0 million outstanding stock options and if-converted Series A participating convertible preferred shares (“Preferred Shares”) were excluded from the calculation for the three months ended March 31, 2021.

Diluted net loss attributable to common shareholders per share does not differ from basic net loss attributable to common shareholders per share for the three and six months ended June 30, 2022 and 2021, since the effect of including potential common shares would be anti-dilutive.

For the six months ended June 30, 2022, potential common shares of 15.9 million pertaining to outstanding stock options were excluded from the calculation of net loss attributable to common shareholders per share.

A total of approximately 35.4 million outstanding stock options and if-converted Series A participating convertible preferred shares (“Preferred Shares”) were excluded from the calculation for the six months ended June 30, 2021.

On October 18, 2021, the Company’s outstanding Preferred Shares were converted into 22,833,922 common shares.

45 unchanged sentences

To determine the fair value of the contingent consideration (note 8), the Company uses a probability weighted assessment of the likelihood the milestones would be met and the estimated timing of such payments, and then the potential contingent payments were discounted to their present value using a probability adjusted discount rate that reflects the early stage nature of the development program, the time to complete the program development, and overall biotech indices.

The Company determined the fair value of the contingent consideration was $ 5.5 million as of March 31, 2022 and the increase of $ 0.2 million from December 31, 2021 has been recorded as a component of total operating expenses in the statement of operations and comprehensive loss for the three months ended March 31, 2022.

The Company determined the fair value of the contingent consideration was $ 5.7 million as of June 30, 2022 and the increase of $ 0.4 million from December 31, 2021 has been recorded as a component of total operating expenses in the statement of operations and comprehensive loss for the six months ended June 30, 2022.

The assumptions used in the discounted cash flow model are level 3 inputs as defined above.

2 unchanged sentences

Level 1 Level 2 Level 3 Total

As of March 31, 2022 (in thousands)

As of June 30, 2022 (in thousands)

Cash and cash equivalents $ 47,320 $ — $ — $ 47,320

17 unchanged sentences

(in thousands)

Three Months Ended March 31, 2022 $ 26 $ — $ ( 21 ) $ 5

Three Months Ended March 31, 2021 $ 250 $ — $ ( 52 ) $ 198

Six Months Ended June 30, 2022 $ 26 $ — $ ( 24 ) $ 2

Six Months Ended June 30, 2021 $ 250 $ — $ ( 118 ) $ 132

The following table presents the changes in fair value of the Company’s contingent consideration:

1 unchanged sentence

(in thousands)

Three Months Ended March 31, 2022 $ 5,298 $ 201 $ 5,499

Three Months Ended March 31, 2021 $ 3,426 $ 129 $ 3,555

Six Months Ended June 30, 2022 $ 5,298 $ 409 $ 5,707

Six Months Ended June 30, 2021 $ 3,426 $ 823 $ 4,249

Investments in marketable securities

2 unchanged sentences

Gross Unrealized Loss (1)

As of March 31, 2022 (in thousands)

As of June 30, 2022 (in thousands)

Cash equivalents

3 unchanged sentences

US government agency bonds $ 19,116 $ — $ ( 192 ) $ 18,924

US corporate bonds 6,499 5 ( 19 ) 6,485

US treasury bills 8,961 — ( 56 ) 8,905

3 unchanged sentences

US government agency bonds $ 12,332 $ — $ ( 304 ) $ 12,028

US corporate bonds 12,135 — ( 54 ) 12,081

US government bonds 26,850 — ( 509 ) 26,341

Total $ 51,317 $ — $ ( 867 ) $ 50,450

(1) Gross unrealized gain (loss) is pre-tax and is reported in other comprehensive loss.

(1) Gross unrealized gain (loss) is pre-tax and is reported in accumulated other comprehensive loss.

Amortized Cost Gross Unrealized Gain (1)

12 unchanged sentences

Total $ 35,775 $ — $ ( 87 ) $ 35,688

(1) Gross unrealized gain (loss) is pre-tax and is reported in other comprehensive loss.

The contractual term to maturity of the $ 84.1 million of short-term marketable securities held by the Company as of March 31, 2022 is less than one year.

As of March 31, 2022, the Company held $ 56.3 million of long-term marketable securities with contractual maturities of more than one year, but less than five years.

(1) Gross unrealized gain (loss) is pre-tax and is reported in accumulated other comprehensive loss.

The contractual term to maturity of the $ 102.9 million of short-term marketable securities held by the Company as of June 30, 2022 is less than one year.

As of June 30, 2022, the Company held $ 50.5 million of long-term marketable securities with contractual maturities of more than one year, but less than five years.

As of December 31, 2021, the Company’s $ 46.0 million of short-term marketable securities had contractual maturities of less than one year, while the Company’s $ 35.7 million of long-term marketable securities had maturities of more than one year, but less than five years.

There were no realized gains or losses for the three months ended March 31, 2022 or 2021.

There were no realized gains or losses for the three and six months ended June 30, 2022 or 2021.

Investment in Genevant

9 unchanged sentences

Accordingly, an estimate of the fair value of the securities is based on the original cost less previously recognized equity method losses, less impairments, plus or minus changes resulting from observable price changes in orderly transactions for identical or a similar Genevant securities.

As of March 31, 2022, the carrying value of the Company’s investment in Genevant was zero and the Company owned approximately 16 % of the common equity of Genevant.

As of June 30, 2022, the carrying value of the Company’s investment in Genevant was zero and the Company owned approximately 16 % of the common equity of Genevant.

Accounts payable and accrued liabilities

Accounts payable and accrued liabilities are comprised of the following:

March 31, 2022 December 31, 2021

June 30, 2022 December 31, 2021

(in thousands)

14 unchanged sentences

The discount, as well as $ 1.5 million of transaction costs, will be amortized as interest expense based on the projected balance of the liability as of the beginning of each period.

As of March 31, 2022, the Company estimated an effective annual interest rate of approximately 16 %.

As of June 30, 2022, the Company estimated an effective annual interest rate of approximately 12 %.

Over the course of the Agreement, the actual interest rate will be affected by the amount and timing of royalty revenue recognized and changes in the timing of forecasted royalty revenue.

2 unchanged sentences

As royalties are remitted to OMERS from Alnylam, the balance of the recognized liability is effectively repaid over the life of the Agreement.

From the inception of the royalty sale through March 31, 2022, the Company has recorded an aggregate of $ 12.5 million of non-cash royalty revenue for royalties earned by OMERS.

From the inception of the royalty sale through June 30, 2022, the Company has recorded an aggregate of $ 14.2 million of non-cash royalty revenue for royalties earned by OMERS.

There are a number of factors that could materially affect the amount and timing of royalty payments from Alnylam, none of which are within the Company’s control.

During the three months ended March 31, 2022, the Company recognized non-cash royalty revenue of $ 1.4 million and non-cash interest expense of $ 0.5 million.

During the three months ended March 31, 2021, the Company recognized non-cash royalty revenue of $ 1.0 million and related non-cash interest expense of $ 0.8 million.

The table below shows the activity related to the net liability for the three months ended March 31, 2022 and 2021:

Three Months Ended March 31,

During the six months ended June 30, 2022, the Company recognized non-cash royalty revenue of $ 3.0 million and non-cash interest expense of $ 1.0 million.

During the six months ended June 30, 2021, the Company recognized non-cash royalty revenue of $ 2.1 million and related non-cash interest expense of $ 1.5 million.

The table below shows the activity related to the net liability for the six months ended June 30, 2022 and 2021:

Six Months Ended June 30,

(in thousands)

3 unchanged sentences

Net liability related to sale of future royalties - ending balance $ 14,233 $ 18,982

In addition to the royalty from the LNP License Agreement, the Company is also receiving a second, lower royalty interest on global net sales of ONPATTRO originating from a settlement agreement and subsequent license agreement with Acuitas Therapeutics, Inc.

In addition to the royalty from the LNP License Agreement, the Company is also receiving a second royalty interest ranging from 0.75 % to 1.125 % on global net sales of ONPATTRO, with 0.75 % applying to sales greater than $ 500 million, originating from a settlement agreement and subsequent license agreement with Acuitas Therapeutics, Inc.

The royalty from Acuitas has been retained by the Company and was not part of the royalty sale to OMERS.

5 unchanged sentences

On December 18, 2020, UBC delivered to the Company a notice of arbitration alleging that under the cross license between UBC and Arbutus, it is due royalties of $ 2.0 million plus interest arising from the Company’s sale to OMERS of part of its royalty interest on future global net sales of ONPATTRO, currently being sold by Alnylam.

Oral hearings for this matter were held on April 25-26, 2022.

The Company does not believe that any royalties are due to UBC and the Company intends to vigorously contest UBC’s allegation.

Oral hearings for this matter were held in April 2022 and, on July 11, 2022, the arbitrator issued his decision fully dismissing UBC’s claim for royalties.

As a result, no payments are owed to UBC and the Company intends to pursue an award for reimbursement of costs and attorneys’ fees.

Stock Purchase Agreement with Enantigen

4 unchanged sentences

The contingent consideration is a financial liability and is measured at its fair value at each reporting period, with any changes in fair value from the previous reporting period recorded in the statements of operations and comprehensive loss (see note 3).

The fair value of the contingent consideration was $ 5.5 million as of March 31, 2022.

The fair value of the contingent consideration was $ 5.7 million as of June 30, 2022.

Collaborations, contracts and licensing agreements

3 unchanged sentences

(“Qilu”), pursuant to which the Company granted Qilu a sublicensable, royalty-bearing license, under certain intellectual property owned by the Company, which is non-exclusive as to development and manufacturing and exclusive with respect to commercialization of AB-729, including pharmaceutical products that include AB-729, for the treatment or prevention of hepatitis B in China, Hong Kong, Macau and Taiwan (the “Territory”).

In partial consideration for the rights granted by the Company, Qilu paid the Company a one-time upfront cash payment of $ 40.0 million on January 5, 2022, and agreed to pay the Company milestone payments totaling up to $ 245.0 million, net of withholding taxes, upon the achievement of certain technology transfer, development, regulatory and commercialization milestones.

Qilu also paid $ 4.4 million of withholding taxes to the Chinese taxing authority on the Company’s behalf, related to the upfront cash payment.

In partial consideration for the rights granted by the Company, Qilu paid the Company a one-time upfront cash payment of $ 40.0 million, net of withholding taxes, on January 5, 2022, and agreed to pay the Company milestone payments totaling up to $ 245.0 million, net of withholding taxes, upon the achievement of certain technology transfer, development, regulatory and commercialization milestones.

Qilu paid $ 4.4 million of withholding taxes to the Chinese taxing authority on the Company’s behalf, related to the upfront cash payment.

In addition, Qilu agreed to pay the Company double digit royalties into the low twenties percent based upon annual net sales of AB-729 in the Territory.

18 unchanged sentences

Any such adjustments will be recorded on a cumulative catch-up basis, which would affect revenues and earnings in the period of adjustment.

The following table outlines the transaction price and the changes to the related asset and liability balances during the three months ended March 31, 2022:

Three Months Ended March 31, 2022

The following table outlines the transaction price and the changes to the related asset and liability balances during the six months ended June 30, 2022:

Six Months Ended June 30, 2022

Transaction Price Cumulative Collaboration Revenue Recognized Deferred License Revenue

5 unchanged sentences

Non-current deferred license revenue $ 10,842

As of March 31, 2022, the balance of the deferred license revenue was $ 39.5 million, which, in accordance with ASC 210-20, was partially offset by the contract asset associated with the manufacturing cost reimbursement of $ 0.7 million, resulting in a net deferred license revenue liability of $ 38.8 million.

The $ 4.4 million of withholding taxes paid by Qilu on behalf of the Company was recorded as income tax expense during the three months ended March 31, 2022.

The Company incurred $ 0.6 million of incremental costs in obtaining the Qilu License, which the Company capitalized in other current assets and other assets and will amortize as a component of general and administrative expense commensurate with the recognition of the combined performance obligation.

As of June 30, 2022, the balance of the deferred license revenue was $ 28.6 million, which, in accordance with ASC 210-20, was partially offset by the contract asset associated with the manufacturing cost reimbursement of $ 0.8 million, resulting in a net deferred license revenue liability of $ 27.8 million.

The $ 4.4 million of withholding taxes paid by Qilu on behalf of the Company was recorded as income tax expense during the six months ended June 30, 2022.

The Company incurred $ 0.6 million of incremental costs in obtaining the Qilu License, which the Company capitalized in other current assets and other assets and amortizes as a component of general and administrative expense commensurate with the recognition of the combined performance obligation.

The Company reevaluates the transaction price and the total estimated labor hours expected to be incurred to satisfy the performance obligations and adjusts the deferred revenue at the end of each reporting period.

4 unchanged sentences

The Company and Vaccitech retain full rights to their respective product candidates and will split all costs associated with the clinical trial.

The Company incurred $ 0.8 million of costs, net of reimbursements from Vaccitech, related to the collaboration during the six months ended June 30, 2022 and reflected those costs in research and development in the statement of operations and comprehensive loss.

Assembly Biosciences, Inc.

In August 2020, the Company entered into a clinical collaboration agreement with Assembly Biosciences, Inc.

(“Assembly”) to evaluate AB-729 in combination with Assembly’s lead HBV core inhibitor (capsid inhibitor) candidate vebicorvir (“VBR”) and standard-of-care NA therapy for the treatment of patients with HBV infection.

(“Assembly”) to evaluate AB-729 in combination with Assembly’s HBV core inhibitor (capsid inhibitor) candidate vebicorvir (“VBR”) and standard-of-care NA therapy for the treatment of patients with HBV infection.

Assembly has completed enrollment in the clinical trial.

In July 2022, Assembly announced its plan to discontinue development of VBR.

Despite this, in consultation with Assembly, the Company plans to continue dosing patients in the Phase 2a proof-of-concept clinical trial in order to fully and accurately assess the results.

The Company and Assembly are sharing in the costs of the collaboration.

The Company incurred $ 0.6 million and $ 0.8 million of costs related to the collaboration during the three months ended March 31, 2022 and 2021, respectively, and reflected those costs in research and development in the statement of operations and comprehensive loss.

The Company incurred $ 1.4 million and $ 1.2 million of costs related to the collaboration during the six months ended June 30, 2022 and 2021, respectively, and reflected those costs in research and development in the statement of operations and comprehensive loss.

Except to the extent necessary to carry out Assembly’s responsibilities with respect to the collaboration trial, the Company has not provided any license grant to Assembly for use of its AB-729 compound.

5 unchanged sentences

The agreement provides for payments by the Company to X-Chem and Proteros upon satisfaction of certain development, regulatory and commercial milestones, as well as royalties on sales.

The agreement with X-Chem and Proteros was amended effective March 31, 2022 primarily to extend the term of the collaboration and update the funding and fee structure.

Through this collaboration, the Company has identified and obtained a worldwide exclusive license to several molecules that inhibit M pro , a validated target for the treatment of COVID-19 and potential future coronavirus outbreaks.

The Company incurred $ 0.3 million and $ 0.9 million of costs related to the collaboration during the three months ended March 31, 2022 and 2021, respectively, and reflected those costs in research and development in the statements of operations and comprehensive loss.

The Company incurred $ 0.3 million and $ 1.2 million of costs related to the collaboration during the six months ended June 30, 2022 and 2021, respectively, and reflected those costs in research and development in the statements of operations and comprehensive loss.

Royalty Entitlements

9 unchanged sentences

If this royalty entitlement reverts to the Company, it has the potential to provide an active royalty stream or to be otherwise monetized again in full or in part.

From the inception of the royalty sale through March 31, 2022, an aggregate of $ 12.5 million of royalties have been earned by OMERS.

The Company also has rights to a second, lower royalty interest on global net sales of ONPATTRO originating from a settlement agreement and subsequent license agreement with Acuitas Therapeutics, Inc.

From the inception of the royalty sale through June 30, 2022, an aggregate of $ 14.2 million of royalties have been earned by OMERS.

The Company also is receiving a second royalty interest of 0.75 % to 1.125 % on global net sales of ONPATTRO, with 0.75 % applying to sales greater than $ 500 million, originating from a settlement agreement and subsequent license agreement with Acuitas Therapeutics, Inc.

This royalty entitlement from Acuitas has been retained by the Company and was not part of the royalty entitlement sale to OMERS.

Revenues are summarized in the following table:

Three Months Ended March 31,

(in thousands)

Three Months Ended June 30, Six Months Ended June 30,

2022 2021 2022 2021

(in thousands) (in thousands)

Revenue from collaborations and licenses

2 unchanged sentences

Qilu Pharmaceutical Co., Ltd.

11,024 — 20,655 —

Other milestone and royalty payments ( 18 ) 22 35 81

1 unchanged sentence

Alnylam Pharmaceuticals, Inc.

1,685 1,144 3,048 2,103

Total revenue $ 14,241 $ 2,329 $ 26,822 4,442

23 unchanged sentences

333-260782) that was declared effective by the SEC on November 18, 2021.

During the three months ended March 31, 2022 , the Company issued 69,048 common shares pursuant to the Sale Agreement, resulting in net proceeds of approximately $ 0.3 million.

For the three months ended March 31, 2021, the Company issued 6,395,780 common shares pursuant to the Sale Agreement, resulting in net proceeds of approximately $ 26.4 million.

As of March 31, 2022, there was approximately $ 152.0 million remaining available in aggregate under the October 2021 Prospectus Supplement and the March 2022 Prospectus Supplement.

During the six months ended June 30, 2022, the Company issued 69,048 common shares pursuant to the Sale Agreement, resulting in net proceeds of approximately $ 0.3 million.

For the six months ended June 30, 2021, the Company issued 6,395,780 common shares pursuant to the Sale Agreement, resulting in net proceeds of approximately $ 26.4 million.

As of June 30, 2022, there was approximately $ 152.0 million remaining available in aggregate under the October 2021 Prospectus Supplement and the March 2022 Prospectus Supplement.

Stock-based compensation

The table below summarizes information about the Company’s stock based compensation for the three months ended March 31, 2022 and 2021 and the expense recognized in the condensed consolidated statements of operations:

Three Months Ended March 31,

The table below summarizes information about the Company’s stock based compensation for the three and six months ended June 30, 2022 and 2021 and the expense recognized in the condensed consolidated statements of operations:

Three Months Ended June 30, Six Months Ended June 30,

2022 2021 2022 2021

(in thousands, except share and per share data)

9 unchanged sentences

The purchase price for the Preferred Shares plus an amount equal to 8.75 % per annum, compounded annually, was subject to mandatory conversion into common shares on October 18, 2021, at which time the Preferred Shares were converted into 22,833,922 common shares and both the lockup and standstill periods that Roivant had previously agreed to expired.

As of March 31, 2022, Roivant owned approximately 26 % of the Company’s outstanding common shares.

As of June 30, 2022, Roivant owned approximately 26 % of the Company’s outstanding common shares.

The Company recorded the Preferred Shares wholly as equity with no bifurcation of the conversion feature from the host contract, given that the Preferred Shares could not be cash settled and the redemption features were within the Company’s control, which included a fixed conversion ratio with predetermined timing and proceeds.

1 unchanged sentence

Related party transactions

During the three months ended March 31, 2022 and 2021, Genevant purchased certain administrative services from the Company.

During the three and six months ended June 30, 2022 and 2021, Genevant purchased certain administrative services from the Company.

Income from these services was less than $ 0.1 million in both periods and is netted against research and development expenses in the condensed consolidated statements of operations.

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