What changed in this filing

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Item 1. Financial Statements

2023-08-10 compared with 2023-05-11 · 70 added, 49 removed, 336 unchanged (26% of the section changed)

23 unchanged sentences

Preferred stock, $ .0001 par value per share;

200,000,000 shares authorized and no shares issued or outstanding as of March 31, 2023 and December 31, 2022

200,000,000 shares authorized and no shares issued or outstanding as of June 30, 2023 and December 31, 2022

Common stock, $ .0001 par value per share;

1,000,000,000 shares authorized as of March 31, 2023 and December 31, 2022 ;

63,274,732 shares and 63,257,376 shares issued and outstanding as of March 31, 2023 and December 31, 2022, respectively

1,000,000,000 shares authorized as of June 30, 2023 and December 31, 2022;

63,458,932 shares and 63,257,376 shares issued and outstanding as of June 30, 2023 and December 31, 2022, respectively

Additional paid-in capital

7 unchanged sentences

(In thousands, except share and per share data)

Three months ended March 31,

Three months ended June 30,

Six months ended June 30,

Operating expenses

21 unchanged sentences

Balance as of March 31, 2022

Exercise of stock options

Purchase of common stock under employee stock purchase plan

Stock-based compensation

Other comprehensive loss

Balance as of June 30, 2022

Other Comprehensive

5 unchanged sentences

Balance as of March 31, 2023

Exercise of stock options and vesting of restricted stock

Purchase of common stock under employee stock purchase plan

Stock-based compensation

Other comprehensive loss

Balance as of June 30, 2023

The accompanying notes are an integral part of these condensed financial statements.

2 unchanged sentences

(In thousands)

Three months ended March 31,

Six months ended June 30,

Cash flows from operating activities

18 unchanged sentences

Exercise of stock options

Payment of deferred offering costs

Proceeds from Employee Stock Purchase Plan

Net cash provided by financing activities

4 unchanged sentences

Right-of-use asset obtained in exchange for new operating lease liability, net of tenant improvement receivable

Deferred offering costs included in accrued expenses

Property and equipment purchases included in accounts payable and accrued other expenses

Deferred offering costs included in accounts payable and accrued other expenses

The accompanying notes are an integral part of these condensed financial statements.

5 unchanged sentences

(the Company) was incorporated as a Delaware corporation in May 2017, and it is headquartered in Boulder, Colorado.

The Company is a clinical stage biopharmaceutical company focused on the discovery, development and commercialization of innovative treatments for severe, rare muscle disorders for which there is significant unmet medical need.

The Company’s lead product candidate, EDG-5506, is an orally administered small molecule designed to address the root cause of dystrophinopathies including Duchenne muscular dystrophy (DMD) and Becker muscular dystrophy (BMD).

The Company is a clinical stage biopharmaceutical company focused on the discovery, development and commercialization of innovative treatments for severe, genetic neuromuscular and cardiac disorders for which there is significant unmet medical need.

The Company is currently studying EDG-5506 in Phase 2 trials, which are being held in the U.S.

6 unchanged sentences

Liquidity and Capital Resources

The Company has an accumulated deficit of $ 167.4 million and cash, cash equivalents and marketable securities of $ 328.0 million as of March 31, 2023.

The Company has an accumulated deficit of $ 188.9 million and cash, cash equivalents and marketable securities of $ 309.9 million as of June 30, 2023.

The Company’s ability to fund ongoing operations is highly dependent upon raising additional capital through the issuance of equity securities and issuing debt or other financing vehicles.

The Company filed:

(i) on April 1, 2022, a shelf registration statement on Form S-3 with the U.S.

The Company filed on April 1, 2022, a shelf registration statement on Form S-3 with the U.S.

Securities and Exchange Commission (SEC) that became effective on May 5, 2022 and allows us to undertake various equity and debt offerings up to $ 400,000,000 .

and (ii) on May 5, 2022 a prospectus supplement to the shelf registration statement that covers the offering, issuance and sale of up to $ 125 million of our common stock from time to time through an “at-the-market” program under the Securities Act of 1933, as amended (Securities Act).

As of March 31, 2023, the Company has not sold any shares under the “at the market” program.

On September 16, 2022, the Company closed an underwritten public offering of 13,372,093 shares of common stock at a public offering price of $ 10.32 per share (collectively with the underwriters’ option, the “September 2022 Offering”).

1 unchanged sentence

The aggregate gross proceeds from the September 2022 Offering were $ 138.0 million, and the net proceeds were $ 129.2 million after deducting underwriting discounts and commissions of $ 8.3 million and offering expenses of $ 0.5 million.

On June 16, 2023, the Company entered into a Sales Agreement (Sales Agreement) with BofA Securities, Inc.

(BofA Securities) under which the Company may offer and sell shares of common stock, having aggregate sales proceeds of up to $ 125,000,000 from time to time, through an “at the market offering” program (ATM Program) under which BofA Securities will act as sales agent.

On April 1, 2022, the Company entered into a Sales Agreement (Prior Sales Agreement) with Cowen and Company, LLC (Cowen), as agent, pursuant to which the Company was permitted to issue and sell shares of its common stock, having an aggregate offering price of up to $ 125,000,000 (Placement Shares), from time to time through Cowen.

Prior to termination, the Company had not sold any Placement Shares under the Prior Sales Agreement.

As of June 30, 2023, the Company has not sold any shares under the ATM Program.

The Company’s ability to secure capital is dependent upon success in developing its technology and product candidates.

1 unchanged sentence

The issuance of additional equity or debt securities will likely result in substantial dilution to the Company’s stockholders.

Should additional capital not be available to the Company in the near term, or not be available on acceptable terms, the Company may be unable to realize value from the Company’s assets or discharge liabilities in the normal course of business, which may, among other alternatives, cause the Company to delay, substantially reduce, or discontinue operational activities to conserve cash balances, which could have a material adverse effect on the Company’s ability to achieve its intended business objectives.

Should additional capital not be available to the Company in the near term, or not be available on

acceptable terms, the Company may be unable to realize value from the Company’s assets or discharge liabilities in the normal course of business, which may, among other alternatives, cause the Company to delay, substantially reduce, or discontinue operational activities to conserve cash balances, which could have a material adverse effect on the Company’s ability to achieve its intended business objectives.

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates the realization of assets and the settlement of liabilities and commitments in the normal course of business.

The financial statements do not reflect any adjustments relating to the recoverability and reclassification of assets and liabilities that might be necessary if the Company is unable to continue as a going concern.

The Company believes that the $ 328.0 million of cash, cash equivalents and marketable securities on hand as of March 31, 2023 will be sufficient to fund its operations in the normal course of business and meet its liquidity needs through at least the next 12 months from the issuance of these financial statements.

The Company believes that the $ 309.9 million of cash, cash equivalents and marketable securities on hand as of June 30, 2023 will be sufficient to fund its operations in the normal course of business and meet its liquidity needs through at least the next 12 months from the issuance of these financial statements.

NOTE 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

6 unchanged sentences

The condensed balance sheet as of December 31, 2022, is derived from the Company’s audited financial statements.

The results of operations for the three months ended March 31, 2023 are not necessarily indicative of the results to be expected for the year ending December 31, 2023, or for any other future annual or interim period.

The results of operations for the three and six months ended June 30, 2023 are not necessarily indicative of the results to be expected for the year ending December 31, 2023, or for any other future annual or interim period.

The accompanying interim unaudited condensed financial statements should be read in conjunction with our audited financial statements included in our Annual Report on Form 10-K that was filed with the SEC on February 23, 2023.

In the opinion of management, all adjustments, consisting only of normal recurring adjustments necessary for a fair presentation of our financial position as of March 31, 2023, the results of operations for the three months ended March 31, 2023 and 2022 and cash flows for the three months ended March 31, 2023 and 2022 have been made.

In the opinion of management, all adjustments, consisting only of normal recurring adjustments necessary for a fair presentation of our financial position as of June 30, 2023, the results of operations for the three and six months ended June 30, 2023 and 2022 and cash flows for the six months ended June 30, 2023 and 2022 have been made.

Segment Information

7 unchanged sentences

The Company considers all liquid investments with a maturity of three months or less when purchased to be cash equivalents.

Cash equivalents as of March 31, 2023 and December 31, 2022 primarily consist of money market funds and cash.

Cash equivalents as of June 30, 2023 and December 31, 2022 primarily consist of money market funds and cash.

Concentrations of Credit Risk

2 unchanged sentences

The Company believes that it is not exposed to significant credit risk as its deposits are held at financial institutions that management believes to be of high credit quality.

The Company has not experienced any losses on deposits since inception.

Company has not experienced any losses on deposits since inception.

The Company regularly invests excess cash with major financial institutions in money market funds, corporate debt securities, and commercial paper, all of which can be readily purchased and sold using established markets.

4 unchanged sentences

Should the equity issuance be abandoned, the deferred offering costs are expensed immediately as a charge to operating expenses in the statement of operations.

Deferred offering costs as of March 31, 2023 and December 31, 2022 were $ 0.3 million.

Deferred offering costs as of June 30, 2023 and December 31, 2022 were $ 0.4 million and $ 0.3 million, respectively.

Such costs are classified in other non-current assets in the accompanying balance sheets.

20 unchanged sentences

If impairment is recognized, the carrying value of the impaired asset is reduced to its fair value.

There were no impairment charges or long-lived assets disposed of during the three months ended March 31, 2023 and 2022.

There were no impairment charges or long-lived assets disposed of during the three and six months ended June 30, 2023 and 2022.

Deferred income taxes are provided on temporary differences between financial statement and income tax reporting.

2 unchanged sentences

Deferred tax assets are reduced by a valuation allowance if such deferred tax assets are deemed more likely than not that some or all of the deferred tax assets will not be realized.

Historically, the Company has not recognized these potential benefits in its financial statements and has fully reserved for such net deferred tax assets, as it believes it is more likely than not that the full benefit of these net deferred tax assets will not be

Deferred tax liabilities are recognized for temporary differences that will be taxable in future years.

The Company evaluated its tax positions and determined it has no uncertain tax positions as of March 31, 2023.

The Company evaluated its tax positions and determined it has no uncertain tax positions as of June 30, 2023.

Fair Value of Financial Instruments

11 unchanged sentences

The Company considers its available-for-sale portfolio as available for use in current operations.

Accordingly, the Company may classify its investments as short-term marketable securities, even though the stated maturity date may be one year or more beyond the current balance sheet date.

Accordingly, the Company classifies its investments as short-term marketable securities, even though the stated maturity date may be one year or more beyond the current balance sheet date.

Unrealized gains and losses, net of any related tax effects, are excluded from earnings and are included in other comprehensive loss and reported as a separate component of stockholders’ equity until realized.

5 unchanged sentences

The following tables summarize the Company’s financial assets measured at fair value on a recurring basis by level within the fair value hierarchy (in thousands):

As of March 31, 2023

As of June 30, 2023

Cash equivalents:

23 unchanged sentences

With regard to commercial paper, all of the securities had high credit ratings and one year or less to maturity; therefore, fair value was derived from accretion of purchase price to face value over the term of maturity or quoted market prices for similar instruments if available.

During the three months ended March 31, 2023, there were no transfers of financial assets between Level 1 and Level 2.

As of March 31, 2023, the remaining contractual maturities of $ 275.8 million of marketable securities were less than one year and $ 4.2 million were one to two years .

During the three and six months ended June 30, 2023, there were no transfers of financial assets between Level 1 and Level 2.

As of June 30, 2023, the remaining contractual maturities of $ 274.5 million of marketable securities were less than one year and $ 4.2 million were one to two years .

The Company periodically reviews its portfolio of debt securities to determine if any investment is impaired due to credit loss or other potential valuation concerns.

For debt securities where the fair value of the investment is less than the amortized cost basis, the Company has assessed at the individual security level for various quantitative factors including, but not limited to, the nature of the investments, changes in credit ratings, interest rate fluctuations, industry analyst reports, and the severity of impairment.

Unrealized losses on marketable securities at March 31, 2023 were primarily due to changes in interest rates, including market credit spreads, and not due to increased credit risks associated with specific securities.

Unrealized losses on marketable securities at June 30, 2023 were primarily due to changes in interest rates, including market credit spreads, and not due to increased credit risks associated with specific securities.

Comprehensive Loss

11 unchanged sentences

Internal costs consist primarily of employee-related costs, facilities, depreciation and costs related to compliance with regulatory requirements.

Non-refundable advance payments for goods and services that will be used in future research and development activities are capitalized and recorded as expense in the period that the Company receives the goods or when services are performed.

Non-refundable advance payments for goods and services that will be used in future research and development activities are capitalized and recorded as an expense in the period that the Company receives the goods or when services are performed.

The Company records expenses related to external research and development services based on its estimates of the services received and efforts expended pursuant to quotes and contracts with multiple CROs and CDMOs that supply, conduct and manage preclinical studies and clinical trials on its behalf.

15 unchanged sentences

The Company is authorized to issue two classes of stock designated as common stock and preferred stock.

As of March 31, 2023 the total number of shares authorized was 1,200,000,000 .

As of June 30, 2023 the total number of shares authorized was 1,200,000,000 .

The total number of shares of common stock authorized was 1,000,000,000 .

5 unchanged sentences

Equity Incentive Plans

In March 2021, the Company’s board of directors adopted, and its stockholders approved, the Company’s 2021 Equity Incentive Plan (2021 Plan), which became effective in March 2021 in connection with the IPO.

In March 2021, the Company’s board of directors adopted, and its stockholders approved, the Company’s 2021 Equity Incentive Plan (the 2021 Plan), which became effective in March 2021 in connection with the IPO.

Upon adoption of the 2021 Plan, the Company restricted the grant of future equity awards under its 2017 Equity Incentive Plan, as amended and restated (the 2017 Plan).

6 unchanged sentences

or (3) such other amount as the Company’s board of directors may determine.

As of March 31, 2023, there were 1,616,146 shares available for future issuance under the 2021 Plan.

As of June 30, 2023, there were 4,412,983 shares available for future issuance under the 2021 Plan.

Founder Stock Options

1 unchanged sentence

This grant is separate from the Company’s equity incentive plans discussed above.

As of March 31, 2023, 1,531,780 options were both outstanding and exercisable .

There were no options exercised during the three months ended March 31, 2023.

As of June 30, 2023, 1,531,780 options were both outstanding and exercisable.

There were no options exercised during the three and six months ended June 30, 2023.

Total stock-based compensation expense related to all equity plans, including Founder Stock Options was allocated as follows (in thousands):

Three months ended March 31,

Three months ended June 30,

Six months ended June 30,

Research and development

7 unchanged sentences

In addition, in the event the Company sublicenses the OSIF licensed patent rights, the Company is obligated to pay OSIF a specified portion of income received from sublicensing.

Total costs incurred for license fees and milestones achieved under the OSIF license agreement were $ 6,000 for the three months ended March 31, 2023 and 2022.

As of March 31, 2023, the Company has paid $ 0.7 million for license fees and milestones achieved in connection with the license agreement.

Total costs incurred for license fees and milestones achieved under the OSIF license agreement were $ 6,250 and $ 12,500 for the three and six months ended June 30, 2023, respectively and $ 6,250 and $ 12,500 for the three and six months ended June 30, 2022, respectively.

As of June 30, 2023, the Company has paid $ 0.7 million for license fees and milestones achieved in connection with the license agreement.

On July 27, 2023, the Company provided notice to OSIF to terminate the license agreement because the licensed technology is no longer relevant to the Company’s business, effective as of 90 days from the date of such notice.

Lease Agreements

3 unchanged sentences

The New Boulder Lease includes two tenant improvement allowances, which includes one for $ 1.0 million in construction costs to be fully reimbursed by the lessor (the First Allowance) and one for $ 2.0 million in construction costs to be repaid to the lessor as additional rent payments over the initial term of the lease (the Second Allowance).

From lease commencement through March 31, 2023, $ 1.0 million and $ 1.9 million was received by the lessor under the First Allowance and Second Allowance, respectively.

Both the First Allowance and Second Allowance have been received in full as of June 30, 2023.

The receipt of $ 2.0 million under the Second Allowance resulted in an increase to operating lease liabilities and an increase to aggregate base rent payments totaling $ 2.5 million.

1 unchanged sentence

The Expansion space includes an improvement allowance in the amount of $ 0.5 million to be fully reimbursed by the lessor.

As of June 30, 2023, $ 0 was received by the lessor under the allowance associated with the expansion space.

Under the New Boulder Lease and the Expansion Space (collectively, the Lease), the Company has the option to extend the Lease for two additional terms of five years each.

1 unchanged sentence

Such amounts are not included in the measurement of the lease liabilities and are recognized as variable lease expense when they are incurred.

Variable lease expense was $ 0.1 million and $ 0 for the three months ended March 31, 2023 and 2022, respectively.

Variable lease expense was $ 0.1 million and $ 0.2 million for the three and six months ended June 30, 2023, respectively and $ 0 for both the three and six months ended June 30, 2022.

The Lease is classified as an operating lease.

1 unchanged sentence

The option to extend the Lease was not recognized as part of the Company’s lease liabilities and ROU lease assets, as such extensions are not reasonably certain to occur.

As of March 31, 2023, the weighted-average remaining lease term and the weighted-average discount rate for the Lease was 7.5 years and 6 %, respectively.

Rent expense under the Lease was $ 0.1 million for the three months ended March 31, 2023 and 2022.

Future minimum lease payments under the Lease as of March 31, 2023 are as follows (in thousands):

As of June 30, 2023, the weighted-average remaining lease term and the weighted-average discount rate for the Lease was 6.8 years and 6.4 %, respectively.

Rent expense under the Lease was $ 0.1 million and $ 0.3 million for the three and six months ended June 30, 2023, respectively and $ 0.1 million and $ 0.2 million for the three and six months ended June 30, 2022, respectively.

Future minimum lease payments under the Lease as of June 30, 2023 are as follows (in thousands):

Year Ending December 31,

4 unchanged sentences

From time to time, the Company may become involved in legal proceedings arising in the ordinary course of business.

The Company was not subject to any material legal proceedings during the three months ended March 31, 2023 and no material legal proceedings are currently pending or threatened.

The Company was not subject to any material legal proceedings during the six months ended June 30, 2023 and no material legal proceedings are currently pending or threatened.

Indemnification Agreements

3 unchanged sentences

To date, the Company has not incurred any material costs as a result of such indemnifications.

The Company is not aware of any claims under indemnification arrangements, and it has not accrued any liabilities related to such obligations in its financial statements as of March 31, 2023.

The Company is not aware of any claims under indemnification arrangements, and it has not accrued any liabilities related to such obligations in its financial statements as of June 30, 2023.

NOTE 6 NET LOSS PER SHARE

7 unchanged sentences

The following table sets forth the computation of the basic and diluted net loss per share (in thousands, except share and per share data):

Three months ended March 31,

Three months ended June 30,

Six Months Ended June 30,

Weighted-average shares outstanding used in computing net loss per share, basic and diluted

1 unchanged sentence

The following weighted average outstanding shares of potentially dilutive securities were excluded from the computation of diluted net loss per share attributable to common stockholders for the periods presented because including them would have been anti-dilutive:

Three months ended March 31,

Three months ended June 30,

Six Months Ended June 30,

Options to purchase common stock

2 unchanged sentences

Property and equipment consisted of the following amounts (in thousands):

As of March 31,

As of June 30,

As of December 31,

7 unchanged sentences

Property and equipment - net

Depreciation expense was $ 0.2 million and $ 0.1 million for the three months ended March 31, 2023 and 2022, respectively.

Depreciation expense was $ 0.4 million and $ 0.6 million for the three and six months ended June 30, 2023, respectively and $ 0.1 million and $ 0.2 million for the three and six months ended June 30, 2022, respectively.

NOTE 8 ACCRUED OTHER EXPENSES

Accrued other expenses consisted of the following amounts (in thousands):

As of March 31,

As of June 30,

As of December 31,

3 unchanged sentences

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