What changed in this filing

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Item 2. Management’s Discussion and Analysis

2023-08-02 compared with 2023-05-05 · 137 added, 73 removed, 197 unchanged (52% of the section changed)

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could safely increase expression of fetal hemoglobin to clinically meaningful levels and correct anemia in SCD patients.

For additional information regarding these clinical data, please see “Business—Our Gene Editing Medicine Programs—Hemoglobinopathies” in the Annual Report.

After completing sequential dosing of the first two patients, we commenced parallel patient dosing in the first quarter of 2023 and remain on track to dose 20 total patients by the end of 2023, with 19 patients currently enrolled in the trial.

We expect to provide clinical updates from the RUBY trial in June 2023 and again by the end of 2023.

After completing sequential dosing of the first two patients, we commenced parallel patient dosing in the first quarter of 2023 and remain on track to dose 20 total patients by the end of 2023.

We provided an update on the initial clinical data from the RUBY trial in June 2023 and expect to provide an additional clinical update by the end of 2023.

In April 2023, the U.S.

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This trial, referred to as our EDITHAL trial, is designed to assess the safety, tolerability, and preliminary efficacy of EDIT-301 for the treatment of TDT.

We dosed the first patient in this trial in the first quarter of 2023, and this patient had successful neutrophil and platelet engraftment.

We remain on track to present data from the EDITHAL trial by the end of 2023.

We dosed the first patient in this trial in the first quarter of 2023 and commenced parallel patient dosing in the second quarter of 2023.

We provided an initial clinical data update on the first patient in the EDITHAL trial in June 2023 and remain on track to provide an additional update by the end of 2023.

In June 2023, we announced initial safety and efficacy data from the first four patients with SCD treated with EDIT-301 in the RUBY trial and from the first TDT patient treated in the EDITHAL trial.

In the RUBY trial, Patients 1 (male) and 2 (female) reached normal hemoglobin levels five months post-treatment with EDIT-301 and maintained a normal hemoglobin level at the 10- and six-month follow-ups, respectively.

Each of these patients had fetal hemoglobin levels of greater than 40% persist during the same time frame.

Patient 1’s total hemoglobin returned to a normal physiological level of 16.4g/dL (male normal range:

13.6–18.0 g/dL) at five months after infusion of EDIT-301 and has been maintained at this level at the 10-month follow-up.

In addition, Patient 1’s fetal hemoglobin fraction increased from 5% at baseline to 45.4% five months after treatment with EDIT-301 and 43.4% at the 10-month follow-up.

Patient 2’s total hemoglobin reached a normal physiological level of 12.7 g/dL (female normal range:

12.0–16.0 g/dL) at five months after infusion of EDIT-301 and fetal hemoglobin increased from 10.8% at baseline to 51.3% at the six-month follow-up.

Patients 3 (female) and 4 (male) in the RUBY trial saw increases in total hemoglobin and fetal hemoglobin fractions at three and two months of follow up, respectively, that followed similar trajectories as those seen in the first two patients at the same timepoints.

All four treated RUBY patients were free of vaso-occlusive events following infusion with EDIT-301.

In the EDITHAL trial, the first patient (male) had successful neutrophil and platelet engraftment within 30 days of infusion, and, at one and a half months post-infusion, the patient’s response resembled that of the first four RUBY patients, achieving a fetal hemoglobin fraction of 34.9% representing 4 g/dL of total hemoglobin.

EDIT-301 was well-tolerated and demonstrated a safety profile consistent with myeloablative conditioning with busulfan, the regimen that is necessary for current gene editing therapies for SCD and TDT, and autologous hematopoietic stem cell transplant by the four patients in the RUBY trial and the first patient in the EDITHAL trial.

After EDIT-301 infusion, no serious adverse events occurred, and no adverse events reported were related to treatment with EDIT-301.

We are also pursuing the development of next generation in vivo administered gene editing medicines, in which the medicine is injected or infused into the patient to edit the cells inside their body.

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We are also in the discovery stage in developing in vivo gene editing medicines for other organs and tissues.

We previously achieved human proof of concept for our most advanced in vivo gene editing medicine for inherited retinal diseases, EDIT-101 to treat Leber congenital amaurosis.

In November 2022, we announced updated clinical data from our Phase 1/2 BRILLIANCE trial of EDIT-101.

This data demonstrated a favorable safety profile and provided proof of concept.

However, we were not able to identify any baseline characteristics of the treatment responder patients that could pre-select a responder patient population other than zygosity.

The identified responder patient population was determined to be too small to progress the program independently.

We have since paused patient enrollment in this program.

We are pursuing the right combination of gene editing and targeted delivery tools through internal development and the in-licensing of complementary technologies, while also leveraging our intellectual property portfolio to drive potential out-licensing and partnership discussions that can accelerate the achievement of our goal of delivering lifesaving medicines to patients with previously untreatable or under-treated diseases.

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to combine gamma-delta T cell adoptive cell therapies and gene editing to develop medicines for the treatment of cancer.

In January 2023, we announced the sale of our wholly owned oncology assets to Shoreline Biosciences, Inc.

(“Shoreline”).

Under the agreement, Shoreline acquired EDIT-202, our preclinical multiplexed edited induced human pluripotent stem cell (“iPSC”)-derived natural killer (“iNK”) cell medicine for the treatment of solid tumors, as well as an additional iNK program under development and certain related manufacturing technologies.

We also exclusively licensed to Shoreline our rights to a proprietary knock-in gene editing technology referred to as SLEEK (SeLection by Essential-gene Exon Knock-in) for use in Shoreline’s iNK platform and for oncology in Shoreline’s iPSC-derived macrophage platform, as well as non-exclusively licensed our AsCas12a gene editing technology.

We believe that this transaction will enable this oncology program to more rapidly move towards clinical applications.

Since our inception in September 2013, our operations have focused on organizing and staffing our company, business planning, raising capital, establishing our intellectual property portfolio, assembling our core capabilities in gene editing, seeking to identify potential product candidates, and undertaking preclinical studies.

gene editing, seeking to identify potential product candidates, and undertaking preclinical studies.

Except for EDIT-301, all of our ongoing research programs are still in the preclinical or research stage of development and the risk of failure of all of our research programs is high.

We have not generated any revenue from product sales.

We have primarily financed our operations through various equity financings and payments received under our research collaboration with BMS and

our former strategic alliance with Allergan Pharmaceuticals International Limited (together with its affiliates, “Allergan”), which was terminated in August 2020.

We have primarily financed our operations through various equity financings and payments received under our research collaboration with BMS and our former strategic alliance with Allergan Pharmaceuticals International Limited (together with its affiliates, “Allergan”), which was terminated in August 2020.

Since inception, we have incurred significant operating losses.

Our net losses were $49.0 million and $50.5 million for the three months ended March 31, 2023 and 2022, respectively.

As of March 31, 2023, we had an accumulated deficit of $1.1 billion.

Our net losses were $89.3 million and $104.0 million for the six months ended June 30, 2023 and 2022, respectively.

As of June 30, 2023, we had an accumulated deficit of $1.2 billion.

We expect to continue to incur significant expenses and operating losses for the foreseeable future.

Our net losses may fluctuate significantly from quarter to quarter and from year to year.

We anticipate that our expenses will increase substantially as we continue our current research programs and our preclinical development activities;

progress our clinical trials;

seek to identify additional research programs and additional product candidates;

We anticipate that our expenses will increase substantially as we progress the clinical development of EDIT-301;

scale our manufacturing capabilities and expand capacity, including capacity at third-party manufacturers, for EDIT-301;

further advance our current research programs and our preclinical development activities;

seek to identify additional product candidates and additional research programs;

initiate preclinical testing and clinical trials for other product candidates we identify and develop;

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We do not expect to be profitable for the year ending December 31, 2023 or the foreseeable future.

We did not experience any significant impact on our financial condition, results of operations or liquidity due to the COVID-19 pandemic during the quarter ended March 31, 2023.

At its height, the COVID-19 pandemic had a significant negative effect on the global economy, supply chains and labor force participation, and created significant volatility in financial markets.

The extent of the future impact of the COVID-19 pandemic, or any future pandemic, on our operational and financial performance, including our ability to timely advance our clinical trials and preclinical activities, will depend on future developments, including the duration, spread and severity of the pandemic, any evolution of the virus, government restrictions imposed in response, and the availability and effectiveness of vaccines and treatment options, all of which are uncertain and cannot be predicted.

We will continue to monitor and respond to the changing conditions created by the pandemic and related impacts, with focus on prioritizing the health and safety of our employees and maintaining safe and reliable operations of our facilities.

Financial Operations Overview

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We no longer receive research funding support from BMS.

As of March 31, 2023, we recorded $56.7 million of deferred revenue in relation to our collaboration with BMS, all of which is classified as long-term on our condensed consolidated balance sheet.

As of June 30, 2023, we recorded $56.7 million of deferred revenue in relation to our collaboration with BMS, all of which is classified as long-term on our condensed consolidated balance sheet.

Under this collaboration, we will recognize revenue upon delivery of option packages to BMS or upon receipt of development milestone payments.

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Other Income, Net

For the three months ended March 31, 2023 and 2022, other income, net consisted primarily of interest income, partially offset by accretion of discounts associated with other marketable securities.

For the six months ended June 30, 2023 and 2022, other income, net consisted primarily of interest income, partially offset by accretion of discounts associated with other marketable securities.

Critical Accounting Policies and Estimates

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Results of Operations

Comparison of the Three Months ended March 31, 2023 and 2022

The following table summarizes our results of operations for the three months ended March 31, 2023 and 2022, together with the changes in those items in dollars (in thousands) and the respective percentages of change:

Comparison of the Three Months ended June 30, 2023 and 2022

The following table summarizes our results of operations for the three months ended June 30, 2023 and 2022, together with the changes in those items in dollars (in thousands) and the respective percentages of change:

Three Months Ended

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Other income, net:

Other expense, net

Other (expense) income, net

Interest income, net

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Collaboration and other research and development revenues

Collaboration and other research and development revenues increased by $3.1 million, to $9.9 million for the three months ended March 31, 2023, compared to $6.8 million for three months ended March 31, 2022.

This increase is related to the sale of our wholly owned oncology assets and related licenses in January 2023.

Collaboration and other research and development revenues decreased by $3.5 million, to $2.9 million for the three months ended June 30, 2023, compared to $6.4 million for three months ended June 30, 2022.

The decrease is primarily attributable to the exercise of a program opt-in under our collaboration with BMS in the second quarter of 2022 for which there was no similar activity in the second quarter of 2023.

Research and development expenses

Research and development expenses remained flat at $37.8 million for the three months ended March 31, 2023 compared to $38.0 million for the same period in 2022.

The following table summarizes our research and development expenses for the three months ended March 31, 2023 and 2022, together with the changes in those items in dollars (in thousands) and the respective percentages of change:

Research and development expenses decreased by $13.9 million, to $29.8 million for the three months ended June 30, 2023 compared to $43.7 million for the same period in 2022.

The following table summarizes our research and development expenses for the three months ended June 30, 2023 and 2022, together with the changes in those items in dollars (in thousands) and the respective percentages of change:

Three Months Ended

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Total research and development expenses

The slight decrease in research and development expenses for the three months ended March 31, 2023 compared to the three months ended March 31, 2022 was primarily attributable to:

● approximately $2.3 million in decreased external research and development expenses related to our reprioritization and targeted focus on our EDIT-301 program and;

● approximately $1.6 million in decreased stock-based compensation expenses due primarily to a reduction in the market price of our common stock, resulting in a lower valuation of equity awards granted in the three months ended March 31, 2023.

These decreases were offset by:

● approximately $1.5 million in increased employee-related expenses due to payments in connection with our reprioritization and related reduction in workforce;

● approximately $1.2 million in increased facility related expenses primarily related to increased lab and manufacturing space;

The decrease in research and development expenses for the three months ended June 30, 2023 compared to the three months ended June 30, 2022 was primarily attributable to:

● approximately $12.8 million in decreased external research and development expenses related to our reprioritization and targeted focus on our EDIT-301 program;

● approximately $1.5 million in decreased sublicense and license fees due to clinical milestone and sublicense fee payments under certain of our license agreements that occurred in the three months ended June 30, 2022 that did not occur for the same period in 2023;

● approximately $1.4 million in decreased employee-related expenses due to decreased headcount costs resulting from our reprioritization and related reduction in workforce in the first quarter of 2023;

● approximately $0.5 million in decreased stock-based compensation expenses.

These decreases were partially offset by:

● approximately $1.7 million in increased other expenses related to increased consulting expenses;

● approximately $0.7 million in increased facility expenses primarily related to increased rent expense incurred in connection with a lease extension for office, manufacturing and lab space.

General and administrative expenses

General and administrative expenses increased by $3.5 million to $23.0 million for the three months ended March 31, 2023 compared to $19.5 million for the three months ended March 31, 2022.

The following table summarizes our general and administrative expenses for the three months ended March 31, 2023 and 2022, together with the changes in those items in dollars (in thousands) and the respective percentages of change:

General and administrative expenses increased by $0.3 million to $17.2 million for the three months ended June 30, 2023 compared to $16.9 million for the three months ended June 30, 2022.

The following table summarizes our general and administrative expenses for the three months ended June 30, 2023 and 2022, together with the changes in those items in dollars (in thousands) and the respective percentages of change:

Three Months Ended

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Percentage Change

Employee related expenses

Professional service expenses

Intellectual property and patent related fees

Employee related expenses

Stock-based compensation expenses

Facility and other expenses

Total general and administrative expenses

The increase in general and administrative expenses for the three months ended June 30, 2023 compared to the three months ended June 30, 2022 was primarily attributable to:

● approximately $1.9 million in increased professional service expenses to support strategic business development activities;

● approximately $0.4 million in increased employee related expenses for executive recruitment fees.

These increases were partially offset by:

● approximately $0.9 million in decreased stock-based compensation expenses;

● approximately $0.6 million in decreased facility and other expenses;

● approximately $0.6 million in decreased intellectual property and patent related fees.

Other income, net

For the three months ended June 30, 2023, other income, net was $3.8 million, which was primarily attributable to interest income, partially offset by accretion of discounts associated with other marketable securities.

For the three months ended June 30, 2022, other income, net was $0.8 million, which was primarily attributable to interest income, partially offset by accretion of discounts associated with other marketable securities.

Comparison of the Six Months ended June 30, 2023 and 2022

The following table summarizes our results of operations for the six months ended June 30, 2023 and 2022, together with the changes in those items in dollars (in thousands) and the respective percentages of change:

Six Months Ended

Dollar Change

Percentage Change

Collaboration and other research and development revenues

Operating expenses:

Research and development

General and administrative

Total operating expenses

Other income, net

Other (expense) income, net

Interest income, net

Total other income, net

Collaboration and other research and development revenues

Collaboration and other research and development revenues slightly decreased by $0.4 million, to $12.7 million, for the six months ended June 30, 2023 from $13.1 million for six months ended June 30, 2022.

Research and development expenses

Research and development expenses decreased by $14.0 million, to $67.6 million, for the six months ended June 30, 2023 from $81.6 million for the six months ended June 30, 2022.

The following table summarizes our research and development expenses for the six months ended June 30, 2023 and 2022, together with the changes in those items in dollars (in thousands) and the respective percentages of change:

Six Months Ended

Dollar Change

Percentage Change

Employee related expenses

External research and development expenses

Facility expenses

Other expenses

Stock-based compensation expenses

Sublicense and license fees

Total research and development expenses

The decrease in research and development expenses for the six months ended June 30, 2023 compared to the six months ended June 30, 2022 was primarily attributable to:

● approximately $15.1 million in decreased external research and development expenses related to our reprioritization and targeted focus on our EDIT-301 program;

● approximately $2.1 million in decreased stock-based compensation expense due primarily to a reduction in the market price of our common stock, resulting in a lower valuation of equity awards granted in the six months ended June 30, 2023 ;

● approximately $1.2 million in decreased sublicense and license fees due to clinical milestone and sublicense fee payments under certain of our license agreements that occurred in the six months ended June 30, 2022 that did not occur for the same period in 2023.

These decreases were partially offset by:

● approxi mately $ 2.4 million in increased other expenses attributable to consulting and external fees ;

● approximately $ 1.9 million in increased facility expenses primarily related to increased rent expense incurred in connection with a lease extension for office, manufacturing and lab space.

General and administrative expenses

General and administrative expenses increased by $3.7 million, to $40.2 million, for the six months ended June 30, 2023 from $36.5 million for the six months ended June 30, 2022.

The following table summarizes our general and administrative expenses for the six months ended June 30, 2023 and 2022, together with the changes in those items in dollars (in thousands) and the respective percentages of change:

Six Months Ended

Dollar Change

Percentage Change

Professional service expenses

Employee related expenses

Intellectual property and patent related fees

Stock-based compensation expenses

Facility and other expenses

Total general and administrative expenses

The increase in general and administrative expenses for the three months ended March 31, 2023 compared to the three months ended March 31, 2022 was primarily attributable to:

● approximately $7.1 million in increased professional service expenses to support business development activities;

● approximately $1.6 million in increased intellectual property and patent related fees related to the prosecution and maintenance of our patents;

● approximately $0.2 million in increased employee related expenses and facility and other expenses.

These increases were partially offset by approximately $5.3 million in decreased stock-based compensation expense primarily related to performance awards granted in 2021 to our former Chief Executive Officer that were achieved or deemed probable in the first quarter of 2022, for which there was no similar expense in the first quarter of 2023.

The increase in general and administrative expenses for the six months ended June 30, 2023 compared to the six months ended June 30, 2022 was primarily attributable to:

● approxi mately $8.9 million in increased professional service expenses to support strategic business development activities ;

● approximately $ 1.0 million in in creased intellectual property and patent related fees primarily resulting from in creased legal fees related to the prosecution and maintenance of our patents;

● approximately $0.

4 million in in creased employee related expenses for executive recruitment fees .

These increases were partially offset by:

● approximately $ 6.2 million in decreased stock-based compensation expenses due primarily to a reduction in the market price of our common stock, resulting in a lower valuation of equity awards granted in the six months ended June 30, 2023 ;

● approximately $ 0.4 million in decreased facility and other expenses.

Other income, net

For the three months ended March 31, 2023, other income, net was $1.9 million, which was primarily attributable to interest income, partially offset by accretion of discounts associated with other marketable securities.

For the three months ended March 31, 2022, other income, net was $0.2 million, which was primarily attributable to interest income, partially offset by accretion of discounts associated with other marketable securities.

For the six months ended June 30, 2023, other income, net was $5.7 million, which was primarily attributable to interest income, partially offset by accretion of discounts associated with other marketable securities.

For the six months ended June 30, 2022, other income, net was $1.0 million, which was primarily attributable to interest income, partially offset by accretion of discounts associated with other marketable securities.

Liquidity and Capital Resources

Sources of Liquidity

As of March 31, 2023, we have raised an aggregate of $898.0 million in net proceeds through the sale of shares of our common stock in public offerings and at-the-market offerings.

In June 2023, we completed a public offering in which we sold 12,500,000 shares of our common stock and received net proceeds of approximately $117.1 million after deducting underwriting discounts and commissions and other offering costs.

As of June 30, 2023, we have raised an aggregate of $1.0 billion in net proceeds through the sale of shares of our common stock in public offerings and at-the-market offerings.

We also have funded our business from payments received under our research collaboration with BMS and our strategic alliance with Allergan, which was terminated in August 2020.

As of March 31, 2023, we had cash, cash equivalents and marketable securities of $401.8 million.

As of June 30, 2023, we had cash, cash equivalents and marketable securities of $480.0 million.

In May 2021, we entered into a common stock sales agreement with Cowen and Company, LLC (“Cowen”), under which we from time to time can issue and sell shares of our common stock through Cowen in at-the-market offerings for aggregate gross sale proceeds of up to $300.0 million (the “ATM Facility”).

As of March 31, 2023, we have not sold any shares of our common stock under the ATM Facility.

As of June 30, 2023, we have not sold any shares of our common stock under the ATM Facility.

In addition to our existing cash, cash equivalents and marketable securities, we are eligible to earn milestone and other payments under our collaboration agreement with BMS.

Our ability to earn the milestone payments and the timing of earning these amounts are dependent upon the timing and outcome of our development, regulatory and commercial activities and, as such, are uncertain at this time.

As of March 31, 2023, our right to contingent payments under our collaboration agreement with BMS is our only significant committed potential external source of funds.

The following table provides information regarding our cash flows for the three months ended March 31, 2023 and 2022 (in thousands):

Three Months Ended

As of June 30, 2023, our right to contingent payments under our collaboration agreement with BMS is our only significant committed potential external source of funds.

The following table provides information regarding our cash flows for the six months ended June 30, 2023 and 2022 (in thousands):

Six Months Ended

Net cash (used in) provided by:

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Financing activities

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

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

Net Cash Used in Operating Activities

The use of cash in all periods resulted primarily from our net losses adjusted for non-cash charges and changes in components of working capital.

Net cash used in operating activities was approximately $35.8 million for the three months ended March 31, 2023, which primarily consisted of operating expenses that related to increasing our research efforts, progressing our EDIT-301 program, and supporting business operations.

Net cash used in operating activities was approximately $49.2 million for the three months ended March 31, 2022, which primarily consisted of operating expenses that related to preclinical and clinical activities, patent costs and license fees, and increased costs as a result of staffing needs.

Net cash used in operating activities was approximately $74.5 million for the six months ended June 30, 2023, which primarily consisted of operating expenses that related to increasing our research efforts, progressing our EDIT-301 program, and supporting business operations.

Net cash used in operating activities was approximately $87.1 million for the six months ended June 30, 2022, which primarily consisted of operating expenses that related to our preclinical and clinical activities, sublicense and license fees, and increased costs as a result of staffing needs due to our expanding operations.

Net Cash Provided by Investing Activities

Net cash provided by investing activities was approximately $23.3 million for the three months ended March 31, 2023, primarily related to proceeds from maturities of marketable securities of $65.9 million, partially offset by costs used to acquire marketable securities of $40.8 million and purchases of property and equipment of $1.8 million.

Net cash provided by investing activities was approximately $56.4 million for the three months ended March 31, 2022, primarily related to proceeds from maturities of marketable securities of $119.0 million, partially offset by costs used to acquire marketable securities of $60.4 million.

Net cash provided by investing activities was approximately $36.2 million for the six months ended June 30, 2023, primarily related to proceeds from maturities of marketable securities of $107.6 million, partially offset by costs used to acquire marketable securities of $68.2 million and purchases of property and equipment of $3.2 million.

Net cash provided by investing activities was approximately $52.4 million for the six months ended June 30, 2022, primarily related to proceeds from maturities of marketable securities of $238.8 million, partially offset by costs used to acquire marketable securities of $183.5 million.

Net Cash Provided by Financing Activities

No cash was provided by or used in financing activities for the three months ended March 31, 2023.

Net cash provided by financing activities was approximately $0.2 million for the three months ended March 31, 2022 primarily related to proceeds received from exercises of options for our common stock.

Net cash provided by financing activities was approximately $117.5 million for the six months ended June 30, 2023, primarily related to proceeds from offering of common stock of $117.1 million after deducting underwriting discounts and commissions and other offering costs , and proceeds received from issuance of common stock under the employee stock purchase plan of $0.4 million.

Net cash provided by financing activities was approximately $0.6 million for the six months ended June 30, 2022 primarily related to proceeds received from issuance of common stock under our benefit program and exercises of options for our common stock.

Funding Requirements

We expect our expenses to increase in connection with our ongoing activities, particularly as we progress the clinical development of EDIT-301;

scale our manufacturing capabilities and expand capacity, including capacity at third-party manufacturers, for EDIT-301;

further advance our research programs and our preclinical development activities;

seek to identify product candidates and additional research programs;

seek to identify additional research programs and additional product candidates;

initiate preclinical testing and clinical trials for other product candidates we identify and develop;

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If we are unable to raise capital when needed or on attractive terms, we would be forced to delay, reduce, or eliminate our research and development programs or future commercialization efforts.

We expect that our existing cash, cash equivalents and marketable securities at March 31, 2023 will enable us to fund our operating expenses and capital expenditure requirements into 2025.

We expect that our existing cash, cash equivalents and marketable securities at June 30, 2023 will enable us to fund our operating expenses and capital expenditure requirements into the third quarter of 2025.

Our forecast of the period of time through which our existing cash, cash equivalents and investments will be adequate to support our operations is a forward-looking statement and involves significant risks and uncertainties.

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● the costs of progressing the clinical development of EDIT-301 to treat SCD and TDT;

● the costs of preparing, filing, and prosecuting patent applications, maintaining and enforcing our

intellectual property and proprietary rights, and defending intellectual property-related claims;

● the costs of preparing, filing, and prosecuting patent applications, maintaining and enforcing our intellectual property and proprietary rights, and defending intellectual property-related claims;

● the costs, timing, and outcome of regulatory review of the product candidates we develop;

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Contractual Obligations

As of March 31, 2023, we had non-cancelable operating leases with future minimum lease payments for a total of $46.1 million, of which $8.2 million will be payable in 2023.

As of June 30, 2023, we had non-cancelable operating leases with future minimum lease payments for a total of $45.3 million, of which $7.0 million will be payable in 2023.

These minimum lease payments exclude our share of the facility operating expenses, real-estate taxes and other costs that are reimbursable to the landlord under the leases.

In the second quarter of 2023, we entered into a License and Service Agreement pursuant to which we will lease manufacturing space for our continued research and development activities.

As of June 30, 2023, the lease has not

commenced for accounting purposes and it is not expected to commence until the second quarter of 2024.

The lease agreement provides for total remaining lease payments of $87.8 million over a 10-year lease term.

Our agreements with certain institutions to license intellectual property include potential milestone payments and success fees, sublicense fees, royalty fees, licensing maintenance fees, and reimbursement of patent maintenance costs that we may be required to pay.

Our agreements to license intellectual property include potential milestone

payments that are dependent upon the development of products using the intellectual property licensed under the agreements and contingent upon the achievement of development or regulatory approval milestones, as well as commercial milestones.

Our agreements to license intellectual property include potential milestone payments that are dependent upon the development of products using the intellectual property licensed under the agreements and contingent upon the achievement of development or regulatory approval milestones, as well as commercial milestones.

These potential obligations are contingent upon future events and the timing and likelihood of such potential obligations are not known with certainty.

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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