What changed in this filing

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Item 2. Management’s Discussion and Analysis

2020-11-05 compared with 2020-08-06 · 64 added, 62 removed, 328 unchanged (28% of the section changed)

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developments and projections relating to our competitors or our industry.

Although we believe that the expectations reflected in these forward-looking statements are reasonable, these statements relate to our strategy, future operations, future financial position, future revenue, projected costs, prospects, plans, objectives of management and expected market growth, and involve known and unknown risks, uncertainties and other factors including without limitation, risks, uncertainties and assumptions regarding the continuing impact of the COVID-19 pandemic

on our business, operations, strategy, goals and anticipated timelines, our ongoing and planned preclinical activities, our ability to initiate, enroll, conduct or complete ongoing and planned clinical trials, our timelines for regulatory submissions and our financial position that may cause our actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements.

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Our ability to generate product revenue sufficient to achieve profitability will depend heavily on the successful development and eventual commercialization of one or more of our product candidates.

Our net loss was $39.1 million and $76.8 million, respectively, for the six months ended June 30, 2020 and the year ended December 31, 2019.

As of June 30, 2020, we had an accumulated deficit of $218.6 million.

Our net loss was $56.8 million and $76.8 million for the nine months ended September 30, 2020 and the year ended December 31, 2019, respectively.

As of September 30, 2020, we had an accumulated deficit of $236.3 million.

We expect to continue to incur significant expenses and increasing operating losses for at least the next several years.

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If we fail to become profitable or are unable to sustain profitability on a continuing basis, then we may be unable to continue our operations at planned levels and be forced to reduce or terminate our operations.

As of June 30, 2020, we had cash, cash equivalents and marketable securities of $176.5 million.

As of September 30, 2020, we had cash, cash equivalents and marketable securities of $161.7 million.

Based on our updated operating plan, we believe that our existing cash, cash equivalents and marketable securities will enable us to fund our operating expenses and capital expenditure requirements into the second half of 2022.

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Recent Developments

Conditioning Updates

In May 2020, we announced a research and clinical collaboration agreement with AVROBIO, Inc., or AVROBIO, to evaluate the potential utility of MGTA-117

for conditioning patients before they receive one of AVROBIO’s investigational lentiviral gene therapies.

In June 2020, we announced a non-exclusive

research and clinical collaboration agreement with Beam Therapeutics Inc., or Beam, to evaluate the potential utility of MGTA-117

for conditioning of patients with sickle cell disease and beta-thalassemia receiving Beam’s base editing therapies.

We have identified a lead antibody for this program, and preclinical work on CD45-ADC is progressing in 2020.

Mobilization Updates

We recently completed a Phase 1 trial in healthy donors that showed that MGTA-145,

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There is potential to generate initial Phase 2 data on MGTA-145

On May 18, 2020, the FDA’s Office of Orphan Products and Development granted Orphan Drug Designation to MGTA-145

In May 2020, the FDA’s Office of Orphan Products and Development granted Orphan Drug Designation to MGTA-145

for the mobilization of HSCs to the peripheral blood for collection and subsequent transplant.

On June 11, 2020, we announced a clinical collaboration agreement with the National Marrow Donor Program/Be The Match, or NMDP/Be The Match, to evaluate the potential utility of MGTA-145

In June 2020, we announced a clinical collaboration agreement with the National Marrow Donor Program/Be The Match, or NMDP/Be The Match, to evaluate the potential utility of MGTA-145

for mobilizing and collecting HSCs from donors in a single day and then using them for allogeneic transplants in patients.

MGTA-117 Updates

On May 6, 2020, we announced a research and clinical collaboration agreement with AVROBIO, Inc., or AVROBIO, to evaluate the potential utility of MGTA-117

for conditioning patients before they receive one of AVROBIO’s investigational lentiviral gene therapies.

Further, on June 15, 2020, we announced a non-exclusive

research and clinical collaboration agreement with Beam Therapeutics Inc., or Beam, to evaluate the potential utility of MGTA-117

for conditioning of patients with sickle cell disease and beta-thalassemia receiving Beam’s base editing therapies.

On June 11, 2020, we announced that we would discontinue enrollment in our Phase 2 trial in inherited metabolic diseases.

Cell Therapy Updates

In June 2020, we announced that we would discontinue enrollment in our Phase 2 trial in inherited metabolic diseases.

This decision was the result of several factors, including enrollment challenges common to rare disease populations, which were heightened as a result of the COVID-19

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We plan to use these data, when available, to inform a decision regarding future program development in blood cancers.

We have identified a lead antibody for this program, and IND enabling work on CD45-ADC

is progressing in 2020.

Impact of the COVID-19

On March 11, 2020, the World Health Organization, or WHO, declared COVID-19

On March 11, 2020, the World Health Organization declared COVID-19

a global pandemic, and on March 13, 2020, the U.S.

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We have been carefully monitoring the COVID-19

pandemic and its potential impact on our business and have taken important steps to help ensure the safety of employees and their families and to reduce the spread of COVID-19

pandemic and its potential impact on our business and have taken important steps to help ensure the safety of our employees and their families and to reduce the spread of COVID-19

in the Cambridge community.

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We have also maintained efficient communication with our partners and clinical sites as the COVID-19

situation has progressed.

pandemic has progressed.

We have taken these precautionary steps while maintaining business continuity so that we can continue to progress our programs.

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Results of Operations

Comparison of the Three Months Ended June 30, 2020 and 2019

The following table summarizes our results of operations for the three months ended June 30, 2020 and 2019:

Three Months Ended June 30,

Comparison of the Three Months Ended September 30, 2020 and 2019

The following table summarizes our results of operations for the three months ended September 30, 2020 and 2019:

Three Months Ended September 30,

(in thousands)

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Research and Development Expenses

Three Months Ended June 30,

Three Months Ended September 30,

(in thousands)

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Total research and development expenses

Expenses related to our conditioning program increased primarily due to higher preclinical costs for manufacturing to support our IND enabling studies and future clinical trials.

Expenses related to our conditioning program decreased primarily due to the timing of preclinical costs for manufacturing.

The decrease in expenses related to our mobilization program was primarily due to a decrease in clinical trial costs for our MGTA-145

Phase 1 clinical trials which were completed in the first quarter of 2020.

Expenses related to our cell therapy program decreased primarily due to lower manufacturing and clinical trial costs following the discontinuance of enrollment in our Phase 2 trial in inherited metabolic diseases in June 2020.

The decrease in consultant costs was primarily due to a decrease in stock-based compensation.

Consultant costs for the three months ended June 30, 2020 and 2019 included stock-based compensation expense of $0.1 million and $0.4 million, respectively.

Consultant costs for the three months ended September 30, 2020 and 2019 included stock-based compensation expense of $0.1 million and $0.5 million, respectively.

General and Administrative Expenses

Three Months Ended June 30,

Three Months Ended September 30,

(in thousands)

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Total general and administrative expenses

The increase in personnel related costs was due primarily to an increase in headcount and stock-based compensation expenses.

Personnel related costs for the three months ended June 30, 2020 and 2019 included stock-based compensation expense of $1.7 million and $1.3 million, respectively.

The increase in professional and consultant costs was primarily due to patent costs, partially offset by a decrease in costs incurred in prior year for pre-commercialization

The increase in personnel related costs was due primarily to an increase in headcount to support our business.

Interest and Other Income, Net

The decrease in interest and other income, net was primarily due to a decrease in interest income of $0.7 million resulting from lower invested balances.

Comparison of the Six Months Ended June 30, 2020 and 2019

The following table summarizes our results of operations for the six months ended June 30, 2020 and 2019:

Six Months Ended June 30,

The decrease in interest and other income, net was primarily due to a decrease in interest income of $0.8 million resulting from lower interest rates on invested balances.

Comparison of the Nine Months Ended September 30, 2020 and 2019

The following table summarizes our results of operations for the nine months ended September 30, 2020 and 2019:

Nine Months Ended September 30,

(in thousands)

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Research and Development Expenses

Six Months Ended June 30,

Nine Months Ended September 30,

(in thousands)

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Total research and development expenses

Expenses related to our conditioning program increased primarily due to higher preclinical costs for manufacturing to support our IND enabling studies and future clinical trials.

Expenses related to our cell therapy program increased primarily due to manufacturing process development, partially offset by lower manufacturing costs to support the investigator-initiated Phase 2 clinical trial of MGTA-456 in

patients with blood cancers, which was completed in the second quarter of 2020.

The increase in personnel related costs included in unallocated expenses was due primarily to an increase in headcount in our research and development function.

Expenses related to our conditioning program increased primarily due to higher preclinical costs for manufacturing to support our IND-enabling

studies and future clinical trials.

The decrease in expenses related to our mobilization program was primarily due to a decrease in clinical trial costs for our MGTA-145

Phase 1 clinical trials which were completed in the first quarter of 2020.

Expenses related to our cell therapy program decreased primarily due to lower manufacturing costs to support the investigator-initiated Phase 2 clinical trial of MGTA-456 in

patients with blood cancers, which was completed in the second quarter of 2020, and the Phase 2 trial in inherited metabolic diseases, which was discontinued in June 2020, partially offset by increased costs related to manufacturing process development.

The decrease in consultant costs was primarily due to a decrease in stock-based compensation.

Consultant costs for the six months ended June 30, 2020 and 2019 included stock-based compensation expense of $0.3 million and $0.8 million, respectively.

Consultant costs for the nine months ended September 30, 2020 and 2019 included stock-based compensation expense of $0.4 million and $1.3 million, respectively.

General and Administrative Expenses

Six Months Ended June 30,

Nine Months Ended September 30,

(in thousands)

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Total general and administrative expenses

The increase in personnel related costs was due primarily to an increase in headcount and stock-based compensation expenses.

Personnel related costs for the six months ended June 30, 2020 and 2019 included stock-based compensation expense of $3.4 million and $2.6 million, respectively.

The increase in personnel related costs was due primarily to an increase in headcount to support our business and stock-based compensation expenses.

Personnel related costs for the nine months ended September 30, 2020 and 2019 included stock-based compensation expense of $4.9 million and $4.1 million, respectively.

The increase in professional and consultant costs was primarily due to patent costs.

Interest and Other Income, Net

The decrease in interest and other income, net was primarily due to a decrease in interest income of $1.0 million resulting from lower invested balances.

The decrease in interest and other income, net was primarily due to a decrease in interest income of $1.8 million resulting from lower interest rates on invested balances.

Liquidity and Capital Resources

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The Shelf was declared effective by the SEC on August 19, 2019.

As of June 30, 2020, no sales have been made pursuant to the ATM Program.

As of September 30, 2020, no sales have been made pursuant to the ATM Program.

The following table summarizes our sources and uses of cash for each of the periods presented:

Six Months Ended June 30,

Nine Months Ended September 30,

(in thousands)

Cash used in operating activities

Cash provided by (used in) investing activities

Cash provided by investing activities

Cash provided by financing activities

Net increase (decrease) in cash, cash equivalents and restricted cash

Net increase in cash, cash equivalents and restricted cash

Operating Activities

During the six months ended June 30, 2020, operating activities used $35.9 million of cash, primarily resulting from our net loss of $39.1 million and net cash used by changes in our operating assets and liabilities of $3.1 million, partially offset by non-cash

charges of $6.3 million.

Net cash used by changes in our operating assets and liabilities for the six months ended June 30, 2020 consisted of a decrease of $4.0 million in accounts payable and accrued expenses and other current liabilities, partially offset by a decrease of $0.7 million in prepaid expenses and other current assets and an increase of $0.2 million in long-term deferred rent.

During the six months ended June 30, 2019, operating activities used $30.0 million of cash, primarily resulting from our net loss of $32.5 million and net cash used by changes in our operating assets and liabilities of $2.9 million, partially offset by non-cash

charges of $5.4 million.

Net cash used by changes in our operating assets and liabilities for the six months ended June 30, 2019 consisted primarily of an increase of $8.0 million in prepaid expenses and other current assets, partially offset by a $4.7 million increase in long-term deferred rent and an increase of $0.4 million in accounts payable and accrued expenses and other current liabilities.

During the nine months ended September 30, 2020, operating activities used $50.3 million of cash, primarily resulting from our net loss of $56.8 million and net cash used by changes in our operating assets and liabilities of $2.7 million, partially offset by non-

cash charges of $9.2 million.

Net cash used by changes in our operating assets and liabilities for the nine months ended September 30, 2020 consisted of a decrease of $4.3 million in accounts payable and accrued expenses and other current liabilities, partially offset by a decrease of $1.6 million in prepaid expenses and other current assets.

During the nine months ended September 30, 2019, operating activities used $41.5 million of cash, primarily resulting from our net loss of $53.5 million, partially offset by non-cash

charges of $8.4 million and cash provided by changes in our operating assets and liabilities of $3.7 million.

Net cash provided by changes in our operating assets and liabilities for the nine months ended September 30, 2019 consisted primarily of a $4.8 million increase in deferred rent and a $0.7 million increase in accounts payable and accrued expenses and other current liabilities, partially offset by an increase of $1.9 million in prepaid expenses and other current assets.

Changes in accounts payable, accrued expenses and other current liabilities and prepaid expenses and other current assets in both periods were generally due to growth in our business and the timing of vendor invoicing and payments.

Investing Activities

During the six months ended June 30, 2020, net cash provided by investing activities was primarily attributable to net maturities of marketable securities of $40.5 million.

During the six months ended June 30, 2019, net cash used in investing activities was primarily attributable to net purchases of marketable securities of $54.2 million and purchases of property and equipment of $2.4 million, consisting primarily of lab equipment and leasehold improvements.

During the nine months ended September 30, 2020, net cash provided by investing activities was primarily attributable to net maturities of marketable securities of $60.5 million.

During the nine months ended September 30, 2019, net cash provided by investing activities was primarily attributable to net maturities of marketable securities of $10.2 million, partially offset by purchases of property and equipment of $2.9 million, consisting primarily of lab equipment and leasehold improvements.

Financing Activities

During the six months ended June 30, 2020, net cash provided by financing activities was $66.7 million, consisting of proceeds from our follow-on

public offering, net of underwriting discounts and commissions, of $64.9 million and proceeds from the exercise of stock options of $1.8 million.

During the six months ended June 30, 2019, net cash provided by financing activities was $61.3 million, consisting of proceeds from our follow-on

During the nine months ended September 30, 2020, net cash provided by financing activities was $66.6 million, consisting of proceeds from our follow-on

public offering, net of underwriting discounts and commissions, of $64.9 million and proceeds from the exercise of stock options of $1.9 million, partially offset by $0.2 million of payments of offering costs.

During the nine months ended September 30, 2019, net cash provided by financing activities was $61.4 million, consisting of proceeds from our follow-on

public offering, net of underwriting discounts and commissions, of $60.9 million and proceeds from the exercise of stock options of $1.1 million, partially offset by $0.6 million of payments of offering costs.

Funding Requirements

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the cost of establishing sales, marketing and distribution capabilities for any product candidates for which we may receive regulatory approval in regions where we choose to commercialize our products on our own.

As of June 30, 2020, we had cash, cash equivalents and marketable securities of $176.5 million.

As of September 30, 2020, we had cash, cash equivalents and marketable securities of $161.7 million.

We believe that our existing cash, cash equivalents and marketable securities will enable us to fund our operating expenses and capital expenditure requirements into the second half of 2022.

We have based these estimates on assumptions that may prove to be wrong, and we could utilize our available capital resources sooner than we expect.

Because of the numerous risks and uncertainties associated with research, development and commercialization of pharmaceutical product candidates, we are unable to estimate the exact amount of our working capital requirements.

Because of the numerous risks and uncertainties associated with

research, development and commercialization of pharmaceutical product candidates, we are unable to estimate the exact amount of our working capital requirements.

Our future funding requirements will depend on and could increase significantly as a result of many factors, including those listed above.

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To the extent that we raise additional capital through the sale of equity or convertible debt securities, our stockholders’ ownership interest will be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect our stockholders’ rights as a common stockholder.

Debt financing and preferred equity financing, if available, may involve agreements that include covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making acquisitions or capital expenditures

or declaring dividends.

If we raise additional funds through collaborations, strategic alliances or marketing, distribution or licensing arrangements with third parties, we may have to relinquish valuable rights to our technologies, future revenue streams, research programs or product candidates or grant licenses on terms that may not be favorable to us.

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Contractual Obligations and Commitments

During the three months ended June 30, 2020, there were no material changes to our contractual obligations and commitments described in our Annual Report on Form 10-K

During the nine months ended September 30, 2020, there were no material changes to our contractual obligations and commitments described in our Annual Report on Form 10-K

for the year ended December 31, 2019, as filed with the SEC.

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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 2. Management’s Discussion and Analysis