What changed in this filing

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Item 1. Financial Statements

2023-08-03 compared with 2023-05-04 · 94 added, 69 removed, 416 unchanged (28% of the section changed)

4 unchanged sentences

Dollars, except share and per share amounts)

March 31, 2023 December 31, 2022

June 30, 2023 December 31, 2022

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, 2023

2023 2022 2023 2022

Collaborations and licenses $ 3,885 $ 12,556 9,394 23,774

10 unchanged sentences

Interest expense ( 171 ) ( 482 ) ( 369 ) ( 988 )

Foreign exchange gain 4 —

Foreign exchange (gain) loss 1 3 5 3

Total other income (loss) 1,291 ( 83 ) 2,365 ( 430 )

24 unchanged sentences

Balance March 31, 2023 165,132,193 $ 1,339,453 $ 74,238 $ ( 1,220,142 ) $ ( 49,634 ) $ 143,915

Stock-based compensation expense — — 2,964 — — 2,964

Issuance of common shares pursuant to the Open Market Sale Agreement 1,790,546 4,742 — — — 4,742

Unrealized gain on available-for-sale securities — — — — 166 166

Net loss — — — ( 17,094 ) — ( 17,094 )

Balance June 30, 2023 166,922,739 $ 1,344,195 $ 77,202 $ ( 1,237,236 ) $ ( 49,468 ) $ 134,693

See accompanying notes to the condensed consolidated financial statements.

ARBUTUS BIOPHARMA CORPORATION

Condensed Consolidated Statements of Stockholders’ Equity

(In thousands of U.S.

Dollars, except share and per share amounts)

Common Shares

10 unchanged sentences

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

Stock-based compensation expense — — 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.

2 unchanged sentences

(In thousands of U.S.

Three Months Ended March 31,

Six Months Ended June 30,

OPERATING ACTIVITIES

2 unchanged sentences

Depreciation 676 777

Gain on sale of property and equipment — ( 20 )

Stock-based compensation expense 5,095 3,800

7 unchanged sentences

Accounts payable and accrued liabilities ( 7,224 ) 1,660

Deferred license revenue ( 4,104 ) 38,840

Change in deferred license revenue ( 7,128 ) 27,815

Other liabilities ( 147 ) ( 149 )

3 unchanged sentences

Disposition of investments in marketable securities 68,500 11,000

Proceeds from sale of property and equipment — 20

Acquisition of property and equipment ( 976 ) ( 287 )

7 unchanged sentences

Effect of foreign exchange rate changes on cash and cash equivalents 3 —

Increase (decrease) in cash and cash equivalents 9,798 ( 27,952 )

Decrease in cash and cash equivalents ( 3,579 ) ( 61,962 )

Cash and cash equivalents, beginning of period 30,776 109,282

9 unchanged sentences

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

To address HBV, the Company is developing an RNA interference (“RNAi”) therapeutic, AB-729, an oral PD-L1 inhibitor, AB-101, and an oral RNA destabilizer, AB-161, 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.

AB-729 is currently being evaluated in multiple phase 2 clinical trials.

To address HBV, the Company is developing an RNA interference (“RNAi”) therapeutic, imdusiran (AB-729), an oral PD-L1 inhibitor, AB-101, and an oral RNA destabilizer, AB-161, 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, imdusiran, is the only RNAi therapeutic with evidence of immune re-awakening.

Imdusiran is currently being evaluated in multiple phase 2 clinical trials.

In addition, a Phase 1 clinical trial with AB-161 was recently initiated.

1 unchanged sentence

In addition, the Company is also exploring oncology applications for its internal PD-L1 portfolio.

At March 31, 2023, the Company had an aggregate of $ 178.5 million in cash, cash equivalents and investments in marketable securities.

The Company had no outstanding debt as of March 31, 2023.

At June 30, 2023, the Company had an aggregate of $ 163.5 million in cash, cash equivalents and investments in marketable securities.

The Company had no outstanding debt as of June 30, 2023.

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

6 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, 2022 included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022.

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, 2023 and December 31, 2022, the Company’s results of operations for the three months ended March 31, 2023 and 2022, and the Company’s cash flows for the three months ended March 31, 2023 and 2022.

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, 2023 and December 31, 2022, the Company’s results of operations for the three and six months ended June 30, 2023 and 2022, and the Company’s cash flows for the six months ended June 30, 2023 and 2022.

Such adjustments are of a normal recurring nature.

The results of operations for the three months ended March 31, 2023 are not necessarily indicative of the results for the full year.

The results of operations for the three and six months ended June 30, 2023 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, 2022, except as described below under Recent Accounting Pronouncements.

3 unchanged sentences

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

Diluted net loss per share does not differ from basic net loss per share for the three months ended March 31, 2023 and 2022, since the effect of including potential common shares would be anti-dilutive.

For the three months ended March 31, 2023, potential common shares of 19.7 million pertaining to outstanding stock options and unvested restricted stock units were excluded from the calculation of net loss per share.

A total of approximately 15.7 million outstanding stock options were excluded from the calculation for the three months ended March 31, 2022.

Diluted net loss per share does not differ from basic net loss per share for the three and six months ended June 30, 2023 and 2022, since the effect of including potential common shares would be anti-dilutive.

For the six months ended June 30, 2023, potential common shares of 20.2 million pertaining to outstanding stock options and unvested restricted stock units were excluded from the calculation of net loss per share.

A total of approximately 15.9 million outstanding stock options were excluded from the calculation for the six months ended June 30, 2022.

Revenue from collaborations and licenses

44 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 are 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 $ 7.8 million as of March 31, 2023 and the increase of $ 0.3 million from December 31, 2022 has been recorded as a component of total operating expenses in the statements of operations and comprehensive loss for the three months ended March 31, 2023.

The Company determined the fair value of the contingent consideration was $ 7.2 million as of June 30, 2023 and the decrease of $ 0.4 million from December 31, 2022 has been recorded as a component of total operating expenses in the statements of operations and comprehensive loss for the six months ended June 30, 2023.

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, 2023 (in thousands)

As of June 30, 2023 (in thousands)

Cash and cash equivalents $ 27,197 $ — $ — $ 27,197

13 unchanged sentences

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

Liability at beginning of the period Increase in fair value of liability Liability at end of the period

Liability at beginning of the period Change in fair value of liability Liability at end of the period

(in thousands)

Three Months Ended March 31, 2023 $ 7,531 $ 273 $ 7,804

Three Months Ended March 31, 2022 $ 3,426 $ 201 $ 3,627

Six Months Ended June 30, 2023 $ 7,531 $ ( 363 ) $ 7,168

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

See Note 4 for additional information regarding the fair value of the Company’s investments in marketable securities.

Investments in marketable securities

2 unchanged sentences

Gross Unrealized Loss (1)

As of March 31, 2023 (in thousands)

As of June 30, 2023 (in thousands)

Cash equivalents

US government money market fund $ 31,745 $ — $ — $ 31,745

US treasury bills 3,991 1 — 3,992

Money market $ 21,816 $ — $ — $ 21,816

Total $ 21,816 $ — $ — $ 21,816

2 unchanged sentences

US corporate bonds 56,066 — ( 507 ) 55,559

US treasury bills 7,834 — ( 4 ) 7,830

US government bonds 26,944 — ( 356 ) 26,588

1 unchanged sentence

Investments in marketable long-term securities

US government agency bonds $ 7,193 $ 4 $ — $ 7,197

US corporate bonds 9,161 — ( 66 ) 9,095

Yankee bonds 1,999 — ( 37 ) 1,962

Total $ 11,160 $ — $ ( 103 ) $ 11,057

4 unchanged sentences

Cash equivalents

Money markets $ 23,218 $ — $ — $ 23,218

Money market $ 23,218 $ — $ — $ 23,218

Total $ 23,218 $ — $ — $ 23,218

11 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 $ 106.2 million of short-term marketable securities held by the Company as of March 31, 2023 is less than one year.

As of March 31, 2023, the Company held $ 31.8 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 $ 125.3 million of short-term marketable securities held by the Company as of June 30, 2023 is less than one year.

As of June 30, 2023, the Company held $ 11.1 million of long-term marketable securities with contractual maturities of more than one year, but less than five years.

As of December 31, 2022, the Company’s $ 116.1 million of short-term marketable securities had contractual maturities of less than one year, while the Company’s $ 37.4 million of long-term marketable securities had maturities of more than one year, but less than five years.

At March 31, 2023 and December 31, 2022, respectively, the Company had 47 and 53 available-for-sale investment debt securities in an unrealized loss position without an allowance for credit losses.

At June 30, 2023 and December 31, 2022, respectively, the Company had 45 and 53 available-for-sale investment debt securities in an unrealized loss position without an allowance for credit losses.

Unrealized losses on the Company’s investments in debt securities have not been recognized into income as the issuers’ bonds are of high credit quality and the decline in fair value is largely due to market conditions and/or changes in interest rates.

The Company does not intend to sell and it is likely that the Company will not be required to sell the securities prior to the anticipated recovery of their amortized cost basis.

The Company does not intend to sell and it is more likely than not that the Company will not be required to sell the securities prior to the anticipated recovery of their amortized cost basis.

The issuers continue to make timely interest payments on the bonds.

The fair value is expected to recover as the bonds approach maturity.

Accrued interest receivable on investments in marketable securities totaling $ 0.6 million at each of March 31, 2023 and December 31, 2022 is included in Prepaid expenses and other current assets.

The Company had no realized gains or losses during the three months ended March 31, 2023.

The Company had realized gains of less than $ 0.1 million for the three months ended March 31, 2022.

Accrued interest receivable on investments in marketable securities of $ 0.6 million at both June 30, 2023 and December 31, 2022 is included in Prepaid expenses and other current assets.

The Company had realized gains of less than $ 0.1 million for the three and six months ended June 30, 2023 and no unrealized gains in 2022.

See Note 3 for additional information regarding the fair value of the Company’s investments in marketable securities.

Investment in Genevant

8 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, 2023, 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, 2023, 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, 2023 December 31, 2022

June 30, 2023 December 31, 2022

(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, 2023, the Company estimated an effective annual interest rate of approximately 7.6 %.

As of June 30, 2023, the Company estimated an effective annual interest rate of approximately 7.2 %.

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, 2023, the Company has recorded an aggregate of $ 20.0 million of non-cash royalty revenue for royalties earned by OMERS.

From the inception of the royalty sale through June 30, 2023, the Company has recorded an aggregate of $ 20.8 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, 2023, the Company recognized non-cash royalty revenue of $ 1.2 million and related non-cash interest expense of $ 0.2 million.

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

The table below shows the activity related to the net liability for the three months ended March 31, 2023 and 2022:

Three Months Ended March 31,

During the six months ended June 30, 2023, the Company recognized non-cash royalty revenue of $ 1.9 million and related non-cash interest expense of $ 0.4 million.

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

The table below shows the activity related to the net liability for the six months ended June 30, 2023 and 2022:

Six Months Ended June 30,

(in thousands)

12 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 $ 7.8 million as of March 31, 2023.

The fair value of the contingent consideration was $ 7.2 million as of June 30, 2023.

Collaborations, contracts and licensing agreements

2 unchanged sentences

In December 2021, the Company entered into a technology transfer and licensing agreement (the “License Agreement”) with Qilu Pharmaceutical Co., Ltd.

(“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”).

(“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 imdusiran, including pharmaceutical products that include imdusiran, 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, 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.

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

The royalties are payable on a product-by-product and region-by-region basis, subject to certain limitations.

Qilu is responsible for all costs related to developing, obtaining regulatory approval for, and commercializing AB-729 for the treatment or prevention of hepatitis B in the Territory.

Qilu is required to use commercially reasonable efforts to develop, seek regulatory approval for, and commercialize at least one AB-729 product candidate in the Territory.

Qilu is responsible for all costs related to developing, obtaining regulatory approval for, and commercializing imdusiran for the treatment or prevention of hepatitis B in the Territory.

Qilu is required to use commercially reasonable efforts to develop, seek regulatory approval for, and commercialize at least one imdusiran product candidate in the Territory.

A joint development committee has been established between the Company and Qilu to coordinate and review the development, manufacturing and commercialization plans.

Both parties also have entered into a supply agreement and related quality agreement pursuant to which the Company will manufacture or have manufactured and supply Qilu with all quantities of AB-729 necessary for Qilu to develop and commercialize in the Territory until the Company has completed manufacturing technology transfer to Qilu and Qilu has received all approvals required for it or its designated contract manufacturing organization to manufacture AB-729 in the Territory.

Both parties also have entered into a supply agreement and related quality agreement pursuant to which the Company will manufacture or have manufactured and supply Qilu with all quantities of imdusiran necessary for Qilu to develop and commercialize in the Territory until the Company has completed manufacturing technology transfer to Qilu and Qilu has received all approvals required for it or its designated contract manufacturing organization to manufacture imdusiran in the Territory.

Concurrent with the execution of the License Agreement, the Company entered into a Share Purchase Agreement (the “Share Purchase Agreement”) with Anchor Life Limited, a company established pursuant to the applicable laws and regulations of Hong Kong and an affiliate of Qilu (the “Investor”), pursuant to which the Investor purchased 3,579,952 of the Company’s common shares at a purchase price of USD $ 4.19 per share, which was a 15 % premium on the thirty-day average closing price of the common shares as of the close of trading on December 10, 2021 (the “Share Transaction”).

11 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, 2023:

Three Months Ended March 31, 2023

The following table outlines the transaction price and the changes to the related asset and liability balances during the six months ended June 30, 2023:

Six Months Ended June 30, 2023

Transaction Price Cumulative Collaboration Revenue Recognized Deferred License Revenue

5 unchanged sentences

Non-current deferred license revenue $ —

The Company recognized $ 4.1 million and $ 9.6 million of revenue based on labor hours expended by the Company on its Manufacturing Obligations during the three months ended March 31, 2023 and 2022, respectively.

As of March 31, 2023, the balance of the deferred license revenue was $ 19.2 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 $ 18.4 million.

The Company recognized $ 3.0 million and $ 7.1 million of revenue based on labor hours expended by the Company on its Manufacturing Obligations during the three and six months ended June 30, 2023, respectively, and $ 11.0 million and $ 20.7 million during the three and six months ended June 30, 2022, respectively.

As of June 30, 2023, the balance of the deferred license revenue was $ 16.1 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 $ 15.3 million.

The $ 4.4 million of withholding taxes paid by Qilu on behalf of the Company was recorded as income tax expense during the twelve months ended December 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 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 no expense for related amortization for the three months ended March 31, 2023 and 2022, respectively.

The Company recognized amortization expense of less than $ 0.1 million and $ 0.1 million for the three and six months ended June 30, 2023, respectively, and $ 0.1 million and $ 0.3 million for the three and six months ended June 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.

1 unchanged sentence

Vaccitech plc

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 HBV antigen-specific immunotherapeutic, in nucleos(t)ide reverse transcriptase inhibitor (“NrtI”)-suppressed patients with cHBV.

In July 2021, the Company entered into a clinical collaboration agreement with Vaccitech plc (“Vaccitech”) to evaluate

imdusiran followed by Vaccitech’s VTP-300, a proprietary T-cell stimulating HBV antigen-specific immunotherapeutic, 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 and Vaccitech retain full rights to their respective product candidates and will split all costs associated with the clinical trial.

The Company incurred $ 0.6 million and $ 0.2 million of expenses, net of reimbursements from Vaccitech, related to the collaboration during the three months ended March 31, 2023 and 2022, respectively and reflected those costs in research and development in the statements of operations and comprehensive loss.

The Company incurred $ 0.3 million and $ 0.8 million of expenses, net of reimbursements from Vaccitech, related to the collaboration during the three and six months ended June 30, 2023, respectively, and reflected those costs in research and development in the statements of operations and comprehensive loss.

The Company incurred $ 0.2 million and $ 0.4 million of such costs for the same respective periods in 2022.

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 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.

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

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

(“Assembly”) to evaluate imdusiran 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.

After completing enrollment in the Phase 2a proof-of-concept clinical trial, in July 2022, Assembly announced its plan to discontinue development of VBR.

In consultation with Assembly, the Company continued dosing patients in this clinical trial in order to fully and accurately assess the results.

Based on preliminary data reported in late 2022, both parties have mutually agreed to discontinue the clinical trial following completion of the final, on-treatment visit at week 48.

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

The Company incurred $ 0.7 million and $ 0.6 million of expenses related to the collaboration during the three months ended March 31, 2023 and 2022, respectively.

The Company incurred $ 0.6 million and $ 1.3 million of expenses related to the collaboration during the three and six months ended June 30, 2023, respectively, and $ 0.8 million and $ 1.4 million during the three and six months ended June 30, 2022, respectively.

Those costs are reflected in research and development in the statements 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.

and Proteros biostructures GmbH

8 unchanged sentences

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.

The Company incurred $ 0.5 million and $ 0.3 million of expenses related to the collaboration during the three months ended March 31, 2023 and 2022, respectively.

The Company incurred $ 0.5 million and $ 1.1 million of expenses related to the collaboration during the three and six months ended June 30, 2023, respectively, and less than $ 0.1 million and $ 0.3 million during the three and six months ended June 30, 2022, respectively.

Those costs are reflected in research and development in the statements of operations and comprehensive loss.

10 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, 2023, an aggregate of $ 20.0 million of royalties have been earned by OMERS.

From the inception of the royalty sale through June 30, 2023, an aggregate of $ 20.8 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.

1 unchanged sentence

Revenues are summarized in the following table:

Three Months Ended March 31,

(in thousands)

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

2023 2022 2023 2022

(in thousands) (in thousands)

Revenue from collaborations and licenses

2 unchanged sentences

Qilu Pharmaceutical Co., Ltd.

3,024 11,024 7,128 20,655

Other milestone and royalty payments — ( 18 ) — 35

1 unchanged sentence

Alnylam Pharmaceuticals, Inc.

766 1,685 1,944 3,048

Total revenue $ 4,651 $ 14,241 $ 11,338 $ 26,822

25 unchanged sentences

and (iii) the November 2021 Registration Statement.

During the three months ended March 31, 2023 and 2022, the Company issued 7,423,622 and 69,048 common shares pursuant to the Sale Agreement, respectively, resulting in net proceeds of approximately $ 19.9 million and $ 0.3 million, respectively.

As of March 31, 2023, there was approximately $ 110.7 million remaining available in aggregate under the October 2021 Prospectus Supplement and the March 2022 Prospectus Supplement.

During the three and six months ended June 30, 2023, the Company issued 1,790,546 and 9,214,168 common shares pursuant to the Sale Agreement, respectively, resulting in net proceeds of approximately $ 4.7 million and $ 24.6 million, respectively.

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

As of June 30, 2023, there was approximately $ 105.8 million of common shares 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, 2023 and 2022 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, 2023 and 2022 and the expense recognized in the condensed consolidated statements of operations:

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

2023 2022 2023 2022

(in thousands, except share and per share data)

9 unchanged sentences

Total stock compensation expense $ 2,964 $ 2,065 $ 5,095 $ 3,800

During the three months ended March 31, 2023, the Company granted 1,344,550 restricted stock units (“RSUs”).

The RSUs vest in three equal annual installments beginning one year from the grant date.

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