What changed in this filing

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Item 1. Financial Statements

2022-11-09 compared with 2022-08-04 · 86 added, 62 removed, 464 unchanged (24% of the section changed)

4 unchanged sentences

Dollars, except share and per share amounts)

June 30, 2022 December 31, 2021

September 30, 2022 December 31, 2021

Current assets:

39 unchanged sentences

Dollars, except share and per share amounts)

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

Three Months Ended September 30, Nine Months Ended September 30,

2022 2021 2022 2021

11 unchanged sentences

Interest expense ( 429 ) ( 762 ) ( 1,417 ) ( 2,297 )

Foreign exchange (loss) gain 3 ( 13 ) 3 15

Total other loss ( 83 ) ( 745 ) ( 430 ) ( 1,450 )

Foreign exchange loss ( 21 ) ( 15 ) ( 18 ) —

Total other income (loss) 244 ( 750 ) ( 186 ) ( 2,200 )

Loss before income taxes ( 17,567 ) ( 19,158 ) ( 43,080 ) ( 54,926 )

3 unchanged sentences

Dividend accretion of convertible preferred shares — ( 5,087 ) — ( 11,565 )

— ( 3,266 ) — ( 6,478 )

Net loss attributable to common shares $ ( 17,567 ) $ ( 24,245 ) $ ( 47,524 ) $ ( 66,491 )

3 unchanged sentences

Basic and diluted 150,995,191 101,286,351 149,385,999 97,174,253

Comprehensive (loss) income

Unrealized (loss) gain on available-for-sale securities $ ( 691 ) $ ( 31 ) $ ( 1,762 ) $ ( 28 )

Comprehensive loss

Unrealized loss on available-for-sale securities $ ( 907 ) $ ( 31 ) $ ( 2,669 ) $ ( 16 )

Comprehensive loss $ ( 18,474 ) $ ( 19,189 ) $ ( 50,193 ) $ ( 54,942 )

See accompanying notes to the condensed consolidated financial statements.

21 unchanged sentences

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

Stock-based compensation — — 1,715 — — 1,715

Certain fair value adjustments to liability stock option awards — — 2 — — 2

Issuance of common shares pursuant to the Open Market Sale Agreement 3,832,717 8,973 — — — 8,973

Issuance of common shares pursuant to ESPP 84,723 272 ( 113 ) — — 159

Unrealized loss on available-for-sale securities — — — — ( 907 ) ( 907 )

Net loss — — — ( 17,567 ) — ( 17,567 )

Balance September 30, 2022 152,711,702 $ 1,307,654 $ 70,738 $ ( 1,181,871 ) $ ( 51,004 ) $ 145,517

See accompanying notes to the condensed consolidated financial statements.

23 unchanged sentences

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

Accretion of accumulated dividends on Preferred Shares — 5,087 — — — ( 5,087 ) — —

Stock-based compensation — — — — 1,549 — — 1,549

Certain fair value adjustments to liability stock option awards — — — — ( 44 ) — — ( 44 )

Issuance of common shares pursuant to the Open Market Sale Agreement — — 11,869 44,736 — — — 44,736

Issuance of common shares pursuant to exercise of options — — 604 3,166 ( 1,164 ) — — 2,002

Issuance of common shares pursuant to ESPP — — 91 392 ( 178 ) — — 214

Unrealized gain on available-for-sale securities — — — — — — 12 12

Net loss — — — — — ( 19,158 ) — ( 19,158 )

Balance September 30, 2021 1,164,000 $ 160,973 110,264,915 $ 1,065,710 $ 64,096 $ ( 1,112,452 ) $ ( 48,187 ) $ 130,140

See accompanying notes to the condensed consolidated financial statements.

2 unchanged sentences

(In thousands of U.S.

Six Months Ended June 30,

Nine Months Ended September 30,

OPERATING ACTIVITIES

4 unchanged sentences

Stock-based compensation expense 5,515 4,993

Unrealized foreign exchange losses (gains) — 44

Change in fair value of contingent consideration 624 1,679

8 unchanged sentences

Other liabilities ( 281 ) ( 243 )

Net cash provided by (used in) operating activities 326 ( 31,890 )

Net cash used in operating activities ( 18,366 ) ( 47,926 )

INVESTING ACTIVITIES

11 unchanged sentences

Effect of foreign exchange rate changes on cash and cash equivalents ( 18 ) —

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

(Decrease)/increase in cash and cash equivalents ( 85,278 ) 25,632

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

11 unchanged sentences

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.

In HBV, the Company is developing an RNA interference (“RNAi”) therapeutic, 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 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.

At September 30, 2022, the Company had an aggregate of $ 190.2 million in cash, cash equivalents and investments in marketable securities.

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

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

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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 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.

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 September 30, 2022 and December 31, 2021, the Company’s results of operations for the three and nine months ended September 30, 2022 and 2021, and the Company’s cash flows for the nine months ended September 30, 2022 and 2021.

Such adjustments are of a normal recurring nature.

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.

The results of operations for the three and nine months ended September 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 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.

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 nine months ended September 30, 2022 and 2021, since the effect of including potential common shares would be anti-dilutive.

For the nine months ended September 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 34.3 million outstanding stock options and if-converted Series A participating convertible preferred shares (“Preferred Shares”) were excluded from the calculation for the nine months ended September 30, 2021.

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

14 unchanged sentences

and (v) recognize revenue when or as a performance obligation is satisfied.

In contracts where the Company has more than one performance obligation to provide its customer with goods or services, each performance obligation is evaluated to determine whether it is distinct based on whether (i) the customer can benefit from the good or service either on its own or together with other resources that are readily available and (ii) the good or service is

separately identifiable from other promises in the contract.

good or service either on its own or together with other resources that are readily available and (ii) the good or service is separately identifiable from other promises in the contract.

The consideration under the contract is then allocated between the distinct performance obligations based on their respective relative stand-alone selling prices.

27 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 $ 5.7 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 Company determined the fair value of the contingent consideration was $ 5.9 million as of September 30, 2022 and the increase of $ 0.6 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 nine months ended September 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 June 30, 2022 (in thousands)

As of September 30, 2022 (in thousands)

Cash and cash equivalents $ 24,004 $ — $ — $ 24,004

17 unchanged sentences

(in thousands)

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

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

Nine Months Ended September 30, 2022 $ 26 $ — $ ( 25 ) $ 1

Nine Months Ended September 30, 2021 $ 250 $ ( 96 ) $ ( 117 ) $ 37

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

1 unchanged sentence

(in thousands)

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

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

Nine Months Ended September 30, 2022 $ 5,298 $ 624 $ 5,922

Nine Months Ended September 30, 2021 $ 3,426 $ 1,679 $ 5,105

Investments in marketable securities

2 unchanged sentences

Gross Unrealized Loss (1)

As of June 30, 2022 (in thousands)

As of September 30, 2022 (in thousands)

Cash equivalents

28 unchanged sentences

(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.

The contractual term to maturity of the $ 110.7 million of short-term marketable securities held by the Company as of September 30, 2022 is less than one year.

As of September 30, 2022, the Company held $ 55.4 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 and six months ended June 30, 2022 or 2021.

There were realized gains of less than $ 0.1 million during each of the three and nine months ended September 30, 2022.

There were no realized gains or losses for the three and nine months ended September 30, 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 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.

As of September 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:

June 30, 2022 December 31, 2021

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

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

From the inception of the royalty sale through September 30, 2022, the Company has recorded an aggregate of $ 16.5 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 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,

During the nine months ended September 30, 2022, the Company recognized non-cash royalty revenue of $ 5.4 million and non-cash interest expense of $ 1.4 million.

During the nine months ended September 30, 2021, the Company recognized non-cash royalty revenue of $ 4.0 million and related non-cash interest expense of $ 2.3 million.

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

Nine Months Ended September 30,

(in thousands)

12 unchanged sentences

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.

As a result, no payments are owed to UBC.

In September 2022, the arbitrator awarded the Company $ 0.5 million for reimbursement of costs and attorneys’ fees, which the Company received from UBC in October 2022.

This matter is now fully resolved.

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 $ 5.7 million as of June 30, 2022.

The fair value of the contingent consideration was $ 5.9 million as of September 30, 2022.

Collaborations, contracts and licensing agreements

25 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 six months ended June 30, 2022:

Six Months Ended June 30, 2022

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

Nine Months Ended September 30, 2022

Transaction Price Cumulative Collaboration Revenue Recognized Deferred License Revenue

5 unchanged sentences

Non-current deferred license revenue $ 10,585

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 recognized $ 2.4 million and $ 23.0 million of revenue based on labor hours expended by the Company on its Manufacturing Obligations during the three and nine months ended September 30, 2022.

As of September 30, 2022, the balance of the deferred license revenue was $ 26.3 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 $ 25.5 million.

The $ 4.4 million of withholding taxes paid by Qilu on behalf of the Company was recorded as income tax expense during the nine months ended September 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 recognized less than $ 0.1 million and $ 0.3 million of related amortization expense for the three and nine months ended September 30, 2022, respectively.

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.

2 unchanged sentences

In July 2021, the Company entered into a clinical collaboration agreement with Vaccitech plc (“Vaccitech”) to evaluate AB-729 followed by Vaccitech’s VTP-300, a proprietary T cell stimulating therapeutic vaccine, in nucleos(t)ide reverse transcriptase inhibitor (“NrtI”)-suppressed patients with cHBV.

The Company is responsible for managing this Phase 2a proof-of-concept clinical trial, subject to oversight by a joint development committee comprised of representatives from the Company and Vaccitech.

The Company is responsible for managing this Phase 2a proof-of-concept clinical trial, subject to oversight by a joint

development committee comprised of representatives from the Company and Vaccitech.

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.

The Company incurred $ 0.3 million and $ 0.7 million of expenses, net of reimbursements from Vaccitech, related to the collaboration during the three and nine months ended September 30, 2022, respectively and reflected those costs in research and development in the statement of operations and comprehensive loss.

There were no such costs during the three and nine months ended September 30, 2021.

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 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 first-generation 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.

2 unchanged sentences

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

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.

The Company incurred $ 0.6 million and $ 2.1 million of expenses related to the collaboration during the three and nine months ended September 30, 2022, respectively, and $ 0.9 million and $ 2.1 million during the three and nine months ended September 30, 2021, respectively.

Those costs are reflected 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.

7 unchanged sentences

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 $ 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.

The Company incurred $ 0.6 million and $ 0.9 million of expenses related to the collaboration during the three and nine months ended September 30, 2022, respectively, and $ 0.3 million and $ 1.5 million of expenses related to the collaboration during the three and nine months ended September 30, 2021, respectively.

Those costs are reflected 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 June 30, 2022, an aggregate of $ 14.2 million of royalties have been earned by OMERS.

From the inception of the royalty sale through September 30, 2022, an aggregate of $ 16.5 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.

1 unchanged sentence

Revenues are summarized in the following table:

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

Three Months Ended September 30, Nine Months Ended September 30,

2022 2021 2022 2021

14 unchanged sentences

Open Market Sale Agreement

The Company has an Open Market Sale Agreement with Jefferies LLC (“Jefferies”) dated December 20, 2018, as amended by Amendment No.

The Company has an Open Market Sale Agreement with Jefferies LLC dated December 20, 2018, as amended by Amendment No.

1, dated December 20, 2019, Amendment No.

12 unchanged sentences

On October 8, 2021, the Company filed a prospectus supplement with the SEC (the “October 2021 Prospectus Supplement”) in connection with the offering of up to an additional $ 75.0 million of its common shares pursuant to the Sale Agreement under the October 2020 Registration Statement.

On November 4, 2021, the Company filed a shelf registration statement on Form S-3 with the SEC (File No.

333-260782) and accompanying base prospectus, declared effective by the SEC on November 18, 2021 (the “November 2021 Registration Statement”), for the offer and sale of up to $ 250.0 million of the Company’s securities.

On March 3, 2022, the Company filed a prospectus supplement with the SEC (the “March 2022 Prospectus Supplement”) in connection with the offering of up to an additional $ 100.0 million of its common shares pursuant to the Sale Agreement under:

1 unchanged sentence

(ii) the October 2020 Registration Statement;

and (iii) a shelf registration statement on Form S-3 (File No.

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

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.

and (iii) the November 2021 Registration Statement.

During the nine months ended September 30, 2022, the Company issued 3,901,765 common shares pursuant to the Sale Agreement, resulting in net proceeds of approximately $ 9.2 million.

For the nine months ended September 30, 2021, the Company issued 19,715,142 common shares pursuant to the Sale Agreement, resulting in net proceeds of approximately $ 75.4 million.

As of September 30, 2022, there was approximately $ 142.6 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 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,

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

Three Months Ended September 30, Nine Months Ended September 30,

2022 2021 2022 2021

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

As of September 30, 2022, Roivant owned approximately 25 % 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 and six months ended June 30, 2022 and 2021, Genevant purchased certain administrative services from the Company.

During the three and nine months ended September 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