What changed in this filing

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Item 1. Financial Statements

2024-08-08 compared with 2024-05-09 · 117 added, 92 removed, 375 unchanged (36% of the section changed)

Financial Statements (unaudited)

Condensed Consolidated Balance Sheets as of March 31, 2024 and December 31, 2023

Condensed Consolidated Statements of Operations and Comprehensive Loss for the three months ended March 31, 2024 and 2023

Condensed Consolidated Statements of Changes in Stockholders' Equity for the three months ended March 31, 2024 and 2023

Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2024 and 2023

Condensed Consolidated Balance Sheets as of June 30, 2024 and December 31, 2023

Condensed Consolidated Statements of Operations and Comprehensive Loss for the three and six months ended June 30, 2024 and 2023

Condensed Consolidated Statements of Changes in Stockholders' Equity for the three and six months ended June 30, 2024 and 2023

Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2024 and 2023

Notes to Condensed Consolidated Financial Statements

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Total current assets

Long-term marketable securities

Property and equipment, net

14 unchanged sentences

5,000,000 shares authorized

as of March 31, 2024 and December 31, 2023;

as of June 30, 2024 and December 31, 2023;

no shares issued and

outstanding as of March 31, 2024 and December 31, 2023

outstanding as of June 30, 2024 and December 31, 2023

Common stock, $ 0.001 par value per share;

115,000,000 shares

authorized as of March 31, 2024 and December 31, 2023;

authorized as of June 30, 2024 and December 31, 2023;

63,802,517 and 43,909,069 shares issued and outstanding as of

March 31, 2024 and December 31, 2023, respectively

June 30, 2024 and December 31, 2023, respectively

Additional paid-in capital

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(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:

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Balances as of March 31, 2024

Stock-based compensation expense

Exercise of stock options

Unrealized loss on marketable debt securities

Balances as of June 30, 2024

Comprehensive

4 unchanged sentences

Balances as of March 31, 2023

Stock-based compensation expense

Unrealized gain on marketable debt securities

Balances as of June 30, 2023

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

2 unchanged sentences

(In thousands)

Three Months Ended March 31,

Six Months Ended June 30,

Cash flows from operating activities:

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Cash flows from investing activities:

Purchase of marketable securities

Purchases of property and equipment

Purchases of marketable securities

Maturities and sales of marketable securities

2 unchanged sentences

Proceeds from issuance of equity securities, net of issuance costs

Proceeds from exercise of stock options and warrants

Net cash provided by financing activities

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Supplemental disclosure of non-cash investing and financing activities:

Offering costs included in accounts payable and accrued expense

Purchases of property and equipment included in accounts payable and accrued expenses

Offering costs included in accrued expense

Leased assets obtained in exchange for new operating lease liabilities

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

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FA is a rare, progressive and fatal disease in which patients are unable to produce sufficient FXN due to a genetic abnormality.

The Company has completed two phase 1 studies of nomlabofusp, a Phase 2 dose exploration study, and recently initiated an open label extension study (“OLE”) in patients with FA.

The Company has completed two phase 1 studies of nomlabofusp, a Phase 2 dose exploration study, and initiated an open label extension study (“OLE”) in patients with FA in January, 2024.

In May 2021, after reporting positive top-line data from the Company’s Phase 1 FA program, the U.S.

Food and Drug Administration (“FDA”) placed a clinical hold on the Company’s nomlabofusp clinical program after the Company notified the FDA of mortalities at the highest dose levels of a 26-week non-human primate toxicology study that was designed to support extended dosing of patients with nomlabofusp.

In August 2022, the Company submitted a complete response to the clinical hold following a Type C Meeting with the FDA, and proposed as nomlabofusp's next clinical trial a Phase 2, four-week, dose exploration study in FA patients starting at the lower dose levels tested in the Company’s Phase 1 multiple-ascending dose clinical trial.

In September 2022, the FDA lifted its full clinical hold on the nomlabofusp program and imposed a partial clinical hold.

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In February 2024, the Company reported positive top-line data and successful completion of their four-week, placebo-controlled Phase 2 dose exploration study of nomlabofusp in participants with FA.

Nomlabofusp was generally well tolerated throughout the four-week treatment periods, had a predictable pharmacokinetic profile and let to dose dependent increases in FXN levels in all evaluated tissues (skin and buccal cells) after daily dosing of 14 days followed by every other day dosing until day 28 in the 25 mg and 50 mg cohorts.

Nomlabofusp was generally well tolerated throughout the four-week treatment periods, had a predictable pharmacokinetic profile and led to dose dependent increases in FXN levels in all evaluated tissues (skin and buccal cells) after daily dosing of 14 days followed by every other day dosing until day 28 in the 25 mg and 50 mg cohorts.

Participants in the 25 mg (n=13) and 50 mg (n=15) cohorts were randomized 2:1 to receive subcutaneous injections of nomlabofusp or placebo.

The initiation of additional U.S.

clinical trials evaluating nomlabofusp are contingent on FDA review of data under the partial clinical hold.

In January 2024, the Company initiated the OLE trial, discussed above, evaluating daily subcutaneous injections of 25 mg of nomlabofusp self-administered or administered by a caregiver, with the first patient dosed in March 2024.

Additional patients continue to be enrolled and dosed and additional clinical sites added.

In May 2024 the FDA removed the partial clinical hold on the development of nomlabofusp

In March 2024, the Company dosed the first patient in the OLE trial, discussed above, evaluating daily subcutaneous injections of 25 mg of nomlabofusp self-administered or administered by a caregiver,This study is ongoing with all seven sites activated and additional patients continue to be enrolled and dosed.

Participants who completed treatment in the Phase 2 dose exploration study, or who previously completed a prior clinical trial of nomlabofusp, are potentially eligible to screen for the OLE study.

The OLE study will evaluate the safety and tolerability, pharmacokinetics, and frataxin levels in peripheral tissues as well as other exploratory pharmacodynamic markers (lipid profiles and gene expression data) following long-term subcutaneous administration of nomlabofusp.

Dose escalation in the OLE study is contingent on the FDA’s review of data from the 50 mg cohort of the Phase 2 study and available data from the OLE study, due to the continued partial clinical hold.

Interim data is expected in the fourth quarter of 2024.

In addition, clinical assessments collected during the study will be compared to data from a matched control arm derived from participants in the Friedreich’s Ataxia Clinical Outcome Measures Study (FACOMS) database.

The Company is subject to risks and uncertainties common to pre-commercial companies in the biotechnology industry, including, but not limited to, development and commercialization by competitors of new technological innovations, dependence on key personnel, protection of proprietary technology, compliance with governmental regulations, failure to secure regulatory approval for its drug candidates or any other product candidates and the

ability to secure additional capital to fund its operations.

Dose escalation to the 50 mg dose in the OLE study is currently planned following further characterization of the frataxin pharmacodynamics (PD) at the 25 mg dose.

Interim data is expected in the fourth quarter of 2024.

The Company has had separate discussions with the FDA regarding the use of tissue FXN levels as a novel surrogate endpoint.

The FDA acknowledged that frataxin deficiency appears to be critical to the pathogenic mechanism of FA, and that there continues to be an unmet need for treatments for FA patients that address the underlying disease pathophysiology.

The Company intends to pursue an accelerated approval using FXN levels, supportive PD and clinical information, and safety data from the OLE study, along with additional non-clinical pharmacology information needed to support the novel surrogate endpoint approach

The Company plans to expand the nomlabofusp clinical program into adolescent (12-17 years old) and pediatric (2-11 years old) patients with FA.

The Company expects to initiate a pharmacokinetics (PK) run-in study in adolescents by the end of this year and expects to transition these study participants into the ongoing OLE study upon completion of the PK study.

The run-in-study will enroll 12-15 adolescent patients who will be randomized 2:1 to receive either nomlabofusp or placebo daily.

The Company is also planning the initiation of a global confirmatory study by mid-2025 with potential sites in the U.S., Europe, the U.K., Canada and Australia.

The Biologics License Application (BLA) filing is targeted in the second half of 2025 to support accelerated approval.

On May 30, 2024, the Company announced that the FDA's Center for Drug Evaluation and Research (CDER) had selected nomlabofusp as one of a few programs for participation in the Support for Clinical Trials Advancing Rare Disease Therapeutics ("START") Pilot Program.

The objective of the program is to accelerate the development of drugs for rare diseases that lead to significant disability or death by facilitating frequent advise and regular communication with the FDA staff to expedite the review process of biologics and drugs.

Product candidates under development will require extensive non-clinical and clinical testing and regulatory approval prior to commercialization.

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The condensed consolidated balance sheet as of December 31, 2023 was derived from the Company’s audited financial statements but does not include all disclosures required by GAAP.

The accompanying unaudited condensed consolidated financial statements as of March 31, 2024 and for the three months ended March 31, 2024 and 2023, have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) for interim financial statements.

The accompanying unaudited condensed consolidated financial statements as of June 30, 2024 and for the three and six months ended June 30, 2024 and 2023, have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) for interim financial statements.

Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations.

However, the Company believes that the disclosures are adequate to make the information presented not misleading.

These condensed consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements and the notes thereto for the year ended December 31, 2023 included in the Company’s Annual Report on Form 10-K filed with the SEC on March 14, 2024.

In the opinion of management, all adjustments, consisting only of normal recurring adjustments necessary for a fair statement of the Company’s condensed consolidated financial position as of March 31, 2024, condensed consolidated results of operations for the three months ended March 31, 2024 and condensed consolidated statement of cash flows for the three months ended March 31, 2024 have been made.

The results of operations for the three months ended March 31, 2024 are not necessarily indicative of the results of operations that may be expected for the year ending December 31, 2024 .

In the opinion of management, all adjustments, consisting only of normal recurring adjustments necessary for a fair statement of the Company’s condensed consolidated financial position as of June 30, 2024, condensed consolidated results of operations for the three and six months ended June 30, 2024 and condensed consolidated statement of cash flows for the six months ended June 30, 2024 have been made.

The results of operations for the three and six months ended June 30, 2024 are not necessarily indicative of the results of operations that may be expected for the year ending December 31, 2024 .

Liquidity and Capital Resources

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Since its inception, the Company has incurred significant recurring operating losses and negative cash flows from operations.

The Company has incurred net losses of $ 14.7 million and $ 6.5 million for the three months ended March 31, 2024 and 2023, respectively.

In addition, as of March 31, 2024, the Company had an accumulated deficit of $ 203.2 million .

The Company has incurred net losses of $ 36.3 million and $ 14.9 million for the six months ended June 30, 2024 and 2023, respectively.

In addition, as of June 30, 2024, the Company had an accumulated deficit of $ 224.8 million .

The Company expects to continue to generate operating losses for the foreseeable future.

As of March 31, 2024, the Company had approximately $ 239.0 million of cash, cash equivalents and marketable securities available for use to fund its operations and capital requirements.

As of June 30, 2024, the Company had approximately $ 226.1 million of cash, cash equivalents and marketable securities available for use to fund its operations and capital requirements.

The Company has funded its operations to date primarily with proceeds from sales of common stock and proceeds from the sale of prefunded warrants for the purchase of common stock, the acquisition in 2020 of cash, cash equivalents and marketable securities upon the merger with Zafgen, Inc.

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2014-15, "Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern", the Company has evaluated whether there are certain conditions and events, considered in the aggregate, that raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date that these condensed consolidated financial statements are issued.

As of the issuance date of these condensed consolidated financial statements, the Company expects its cash, cash equivalents and marketable securities, including its net proceeds from the February 2024 public offering, will be sufficient to fund its forecasted operating expenses and capital expenditure requirements into 2026.

If the timing

of the Company's clinical assumptions are delayed or if there are other forecasted assumption changes that negatively impact its operating plan, the Company would reduce expenditures in order to further extend cash resources.

As of the issuance date of these condensed consolidated financial statements, the Company expects its cash, cash equivalents and marketable securities will be sufficient to fund its forecasted operating expenses and capital expenditure requirements into 2026.

If the timing of the Company's clinical assumptions are delayed, or if there are other forecasted assumption changes that negatively impact its operating plan, the Company could reduce expenditures in order to further extend cash resources.

The Company has not yet commercialized any products and does not expect to generate revenue from the commercial sale of any products for several years, if at all.

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The Company could also be required to seek funds through arrangements with collaborative partners or otherwise at an earlier stage than otherwise would be desirable and it may be required to relinquish rights to some of its technologies or product candidates or otherwise agree to terms unfavorable to it, any of which may have a material adverse effect on the Company's business, operating results and prospects.

In addition, geopolitical tensions, volatility of capital markets, and other adverse macroeconomic events, including those due to inflationary pressures, rising interest rates, bank instability and the ability of the U.S.

government to manage federal debt limits as well as the potential impact of other health crises on the global financial markets may reduce the Company's ability to access capital, which could negatively affect its liquidity and ability to continue as a going concern.

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Costs associated with internal research and development and external research and development services, including drug development, clinical studies and non-clinical studies, are expensed as incurred.

development expenses include costs for salaries, employee benefits, subcontractors, facility-related expenses, depreciation, stock-based compensation, third-party license fees, laboratory supplies, and external costs of outside vendors engaged to conduct discovery, non-clinical and clinical development activities and clinical trials as well as to manufacture clinical trial materials, and other costs.

Research and development expenses include costs for salaries, employee benefits, subcontractors, facility-related expenses, depreciation, stock-based compensation, third-party license fees, laboratory supplies, and external costs of outside vendors engaged to conduct discovery, non-clinical and clinical development activities and clinical trials as well as to manufacture clinical trial materials, and other costs.

The Company recognizes external research and development costs based on an evaluation of the progress to completion of specific tasks using information provided to the Company by its key service providers.

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Beginning on January 1, 2023, based on the availability of sufficient historical trading data of the Company's own common stock on the Nasdaq Global Market to calculate accurately its volatility, the Company began blending its volatility starting from June 2020 (following its merger with Zafgen in 2020) to the date of each stock-based award, and weighing the volatility of its peer group for the amount of time from May 31, 2020 backwards so that the blended volatility equals the expected term of the related stock-based award.

The expected term of the Company’s stock options has been determined utilizing the “simplified” method for awards that qualify as “plain-vanilla” options.

The expected term of the Company’s stock

options has been determined utilizing the “simplified” method for awards that qualify as “plain-vanilla” options.

The risk-free interest rate is determined by reference to the U.S.

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Diluted net loss per share attributable to common stockholders is computed by dividing the diluted net loss attributable to common stockholders by the weighted average number of common shares, including potentially dilutive common stock equivalents assuming the dilutive effect of outstanding stock options, outstanding restricted stock units, and unvested restricted common shares, as determined using the treasury stock method.

For periods in which the Company has reported net losses (all periods since inception), diluted net loss per common share

attributable to common stockholders is the same as basic net loss per common share attributable to common stockholders, since dilutive common stock equivalents are not assumed to have been issued if their effect is antidilutive.

The Company excluded 6,555,145 and 4,974,521 common stock equivalents outstanding as of March 31, 2024 and 2023, respectively, from the computation of diluted net loss per share for the three months ended March 31, 2024 and 2023 because they had an anti-dilutive impact due to the net loss incurred for the periods presented.

For periods in which the Company has reported net losses (all periods since inception), diluted net loss per common share attributable to common stockholders is the same as basic net loss per common share attributable to common stockholders, since dilutive common stock equivalents are not assumed to have been issued if their effect is antidilutive.

The Company excluded 6,900,232 and 5,129,327 common stock equivalents outstanding as of June 30, 2024 and 2023, respectively, from the computation of diluted net loss per share for the three and six months ended June 30, 2024 and 2023 because they had an anti-dilutive impact due to the net loss incurred for the periods presented.

Recently Issued and Adopted Accounting Pronouncements

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Fair Value Measurements

The Company’s assets and liabilities that are measured at fair value on a recurring basis as of March 31, 2024 and December 31, 2023 are measured in accordance with the standards of ASC 820, " Fair Value Measurements and Disclosures" , which establishes a three-level valuation hierarchy for measuring fair value and expands financial statement disclosures about fair value measurements.

The Company’s assets and liabilities that are measured at fair value on a recurring basis as of June 30, 2024 and December 31, 2023 are measured in accordance with the standards of ASC 820, " Fair Value Measurements and Disclosures" , which establishes a three-level valuation hierarchy for measuring fair value and expands financial statement disclosures about fair value measurements.

The valuation hierarchy is based on the transparency of inputs to the valuation of an asset or liability as of the measurement date.

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The Company’s financial instruments consist primarily of cash, cash equivalents, marketable securities, accounts payable and accrued liabilities.

For accounts payable and accrued liabilities, the carrying amounts of these financial instruments as of March 31, 2024 and December 31, 2023 were considered representative of their fair values due to their short term to maturity.

The following tables summarize the Company’s cash equivalents and marketable securities as of March 31, 2024 and December 31, 2023:

For accounts payable and accrued liabilities, the carrying amounts of these financial instruments as of June 30, 2024 and December 31, 2023 were considered representative of their fair values due to their short term to maturity.

The following tables summarize the Company’s cash equivalents and marketable securities as of June 30, 2024 and December 31, 2023:

(in thousands)

March 31, 2024

June 30, 2024

Cash equivalents:

Money market funds invested in government securities

Treasury Bills

Total cash equivalents

2 unchanged sentences

Government securities

Corporate bonds

Total marketable securities

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Total cash equivalents and marketable securities

The accrued interest receivable related to the Company’s investments was $ 1.1 million and $ 0.3 million as of March 31, 2024 and December 31, 2023, respectively, and is included in prepaid expenses and other current assets on the condensed consolidated balance sheet.

The accrued interest receivable related to the Company’s investments was $ 0.8 million and $ 0.3 million as of June 30, 2024 and December 31, 2023, respectively, and is included in prepaid expenses and other current assets on the condensed consolidated balance sheet.

The Company classifies its money market funds and U.S.

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These inputs include reported trades of and broker/dealer quotes on the same or similar securities, issuer credit spreads, benchmark securities, prepayment/default projections based on historical data and other observable inputs.

As of March 31, 2024 and December 31, 2023, the unrealized losses for available-for-sale investments were non-credit related, and the Company does not intend to sell the investments that were in an unrealized loss position, nor will it be required to sell those investments before recovery of their amortized cost basis, which may be maturity.

As of March 31, 2024 and December 31, 2023 , no allowances for credit losses for the Company’s

investments were recorded.

During the three months ended March 31, 2024 and 2023 , the Company did no t recognize any impairment losses related to investments.

As of June 30, 2024 and December 31, 2023, the unrealized losses for available-for-sale investments were non-credit related, and the Company does not intend to sell the investments that were in an unrealized loss position, nor will it be required to sell those investments before recovery of their amortized cost basis, which may be maturity.

As of June 30, 2024 and December 31, 2023 , no allowances for credit losses for the Company’s investments were recorded.

During the three and six months ended June 30, 2024 and 2023 , the Company did no t recognize any impairment losses related to investments.

Marketable securities

The following table summarizes the Company's marketable securities as of March 31, 2024 and December 31, 2023.

The following table summarizes the Company's marketable securities as of June 30, 2024 and December 31, 2023.

(in thousands)

March 31, 2024

June 30, 2024

Treasury Bills

Government securities

Corporate bonds

Total marketable securities

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Total marketable securities

No marketable securities held as of March 31, 2024 or December 31, 2023, had remaining maturities greater than two years.

As of March 31, 2024 and December 31, 2023 , the Company held no investments that have been in a continuous loss position for 12 months or longer.

No marketable securities held as of June 30, 2024 or December 31, 2023, had remaining maturities greater than two years.

As of June 30, 2024 and December 31, 2023 , the Company held no investments that have been in a continuous loss position for 12 months or longer.

Prepaid Expenses and Other Current Assets

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Accumulated depreciation

Depreciation expense was $ 0.1 million for each of the three months ended March 31, 2024 and 2023.

In addition, for the three months ended March 31, 2024 and 2023 , there was less than $ 0.1 million of depreciation related to sublet assets recorded as other expense.

Depreciation expense was $ 0.1 million for the three and six months ended June 30, 2024 and 2023, respectively.

In addition, for the three and six months ended June 30, 2024 and 2023 , there was less than $ 0.1 million of depreciation related to sublet assets recorded as other expense.

Accrued Expenses

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As partial compensation for these services, the Company issued MTS Health Partners 35,260 shares of common stock.

As of March 31, 2024 ,the Company’s Ninth Amended and Restated Certificate of Incorporation, as amended, authorized the Company to issue up to 115,000,000 shares of common stock, par value $ 0.001 per share, of which 63,800,017 shares were issued and outstanding, and up to 5,000,000 shares of undesignated preferred stock, par value $ 0.001 per share, of which no shares were issued or outstanding.

As of June 30, 2024 ,the Company’s Ninth Amended and Restated Certificate of Incorporation, as amended, authorized the Company to issue up to 115,000,000 shares of common stock, par value $ 0.001 per share, of which 63,802,517 shares were issued and outstanding, and up to 5,000,000 shares of undesignated preferred stock, par value $ 0.001 per share, of which no shares were issued or outstanding.

The voting, dividend and liquidation rights of the holders of the Company’s common stock are subject to and qualified by the rights, powers and preferences of the holders of the preferred stock.

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ATM Agreement

In November 2022, the Company entered into a Sales Agreement (the "2022 ATM Agreement") with a Guggenheim Securities, LLC as a sales agent in connection with the establishment of an “at-the-market” offering program under which the Company could sell up to an aggregate of $ 50.0 million of shares of common stock (the “2022 ATM Shares”) from time to time.

In November 2022, the Company entered into a Sales Agreement (the "2022 ATM Agreement") with Guggenheim Securities, LLC as a sales agent in connection with the establishment of an “at-the-market” offering program under which the Company could sell up to an aggregate of $ 50.0 million of shares of common stock (the “2022 ATM Shares”) from time to time.

In February 2024, in connection with the underwritten public offering described above, the Company terminated the 2022 ATM Agreement.

No ATM Shares were ever sold pursuant to the 2022 ATM Agreement.

In May 2024, the Company entered into a sales agreement (the "ATM Agreement") with a Guggenheim Securities, LLC in connection with the establishment of an “at-the-market” offering program under which the Company could sell up to an aggregate of $ 100.0 million of shares of common stock (the “ATM Shares”) from time to time.

In May 2024, the Company entered into a sales agreement (the "ATM Agreement") with Guggenheim Securities, LLC in connection with the establishment of an “at-the-market” offering program under which the Company could sell up to an aggregate of $ 100.0 million of shares of common stock (the “ATM Shares”) from time to time.To date, no sales of common stock have been made under this ATM Agreement.

2020 Equity Incentive Plan

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Options outstanding under the Prior Plans will remain outstanding, unchanged, and subject to the terms of the Prior Plans and the respective award agreements, and no further awards will be made under the Prior Plans.

However, if any award previously granted under the Prior Plans, expires, terminates, is canceled, or is forfeited for any reason after the approval of the 2020 Plan, the shares subject to that award will be added to the 2020 Plan share pool so that they can be utilized for new grants under the 2020 Plan.

However, if any award previously

granted under the Prior Plans, expires, terminates, is canceled, or is forfeited for any reason after the approval of the 2020 Plan, the shares subject to that award will be added to the 2020 Plan share pool so that they can be utilized for new grants under the 2020 Plan.

The 2020 Plan provides for the grant of incentive stock options (“ISOs”), nonstatutory stock options (“NSOs”), stock appreciation rights, restricted stock awards, restricted stock unit awards, and cash or other stock-based awards.

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As permitted by the 2020 Plan, the Company added 1,756,363 and 1,730,768 shares available for grant to the 2020 Plan on January 1, 2024 and January 1, 2023, respectively.

As of March 31, 2024 , 1,222,219 shares of common stock were available for grant under the 2020 Plan.

As of June 30, 2024 , 874,632 shares of common stock were available for grant under the 2020 Plan.

During the twelve months ended December 31, 2023 , options to purchase 224,437 shares issued under the Prior Plans were cancelled and became available for grant under the 2020 Plan.

No such options were cancelled in the three months ended March 31, 2024.

No such options were cancelled in the six months ended June 30, 2024.

Stock Option Valuation

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Stock Options

The following table summarizes the Company’s stock option activity for the three months ended March 31, 2024 (amounts in millions, except for share, contractual term, and per share data):

The following table summarizes the Company’s stock option activity for the six months ended June 30, 2024 (amounts in millions, except for share, contractual term, and per share data):

Weighted Average

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Options forfeited/expired

Outstanding as of March 31, 2024

Exercisable as of March 31, 2024

Vested and expected to vest as of March 31, 2024

(a) The aggregate intrinsic value is calculated as the difference between the exercise price of the underlying options and the fair value of the common stock for the options that were "in the money" at March 31, 2024 .

Outstanding as of June 30, 2024

Exercisable as of June 30, 2024

Vested and expected to vest as of June 30, 2024

Option Grants

During the three months ended March 31, 2024 , the Company granted options to purchase 1,580,377 shares of common stock to employees under the 2020 Plan.

The options have an exercise price equal to the closing stock price as of the grant date, and vest over four years , with 25 % vesting on the first anniversary of the grant and the remainder vesting in equal monthly installments thereafter.

The weighted-average grant date fair value of options granted under the 2020 Plan during the three months ended March 31, 2024 was $ 3.52 .

As of March 31, 2024 , total unrecognized compensation expense related to unvested stock options granted under the 2020 Plan was $ 12.5 million, which is expected to be recognized over a weighted average period of 2.57 years.

During the six months ended June 30, 2024 , the Company granted options to purchase 1,962,477 shares of common stock to employees and directors under the 2020 Plan.

The options have an exercise price equal to the closing stock price as of the grant date.

Of the 1,962,477 options granted, 1,867,477 were granted to employees and vest over four years , with 25 % vesting on the first anniversary of the grant and the remainder vesting in equal monthly installments thereafter.

The remaining 95,000 options were annual grants to the Company's directors and vest one year from the grant date.

The weighted-average grant date fair value of options granted under the 2020 Plan during the six months ended June 30, 2024 was $ 4.01 .

As of June 30, 2024 , total unrecognized compensation expense related to unvested stock options granted under the 2020 Plan was $ 12.8 million, which is expected to be recognized over a weighted average period of 2.62 years.

Inducement Stock Option Grant

There were no inducement awards granted in the three months ended March 31, 2024.

As of March 31, 2024 , total unrecognized compensation expense related to unvested inducement options granted was $ 1.0 million, which is expected to be recognized over a weighted average period of 3.03 years.

There were no inducement awards granted in the six months ended June 30, 2024.

As of June 30, 2024 , total unrecognized compensation expense related to unvested inducement options granted was $ 0.9 million, which is expected to be recognized over a weighted average period of 2.78 years.

Restricted Stock Units

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The shares underlying the RSUs are not issued until the RSUs vest.

Activity with respect to the Company's RSUs during the three months ended March 31, 2024 was as follows (in millions, except share, contractual term, and per share data):

Activity with respect to the Company's RSUs during the six months ended June 30, 2024 was as follows (in millions, except share, contractual term, and per share data):

Weighted Average

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Restricted stock units vested

Outstanding as of March 31, 2024

Unvested and expected to vest as of March 31, 2024

Restricted stock units forfeited

Outstanding as of June 30, 2024

Unvested and expected to vest as of June 30, 2024

Restricted Stock Unit Grants

During the three months ended March 31, 2024 , the Company granted 245,372 shares of RSUs to employees under the 2020 Plan.

During the six months ended June 30, 2024 , the Company granted 245,372 shares of RSUs to employees under the 2020 Plan.

The RSUs vest annually over four years and have a weighted-average grant date fair value of $ 4.21 per unit.

As of March 31, 2024 , total unrecognized compensation expense for RSUs was $ 3.1 million, which is expected to be recognized over a weighted-average period of 3.14 years.

As of June 30, 2024 , total unrecognized compensation expense for RSUs was $ 2.9 million, which is expected to be recognized over a weighted-average period of 2.9 years.

Stock-Based Compensation

Stock-based compensation expense was classified in the condensed consolidated statements of operations as follows:

Three Months Ended March 31,

Three Months Ended June 30,

Six Months Ended June 30,

Research and development

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The new lease on 3,462 additional square footage commenced on October 1, 2023 and the Company recorded a right of use asset and lease liability of $ 0.3 million as of that date.

The right of use assets and lease liabilities with both these leases are reflected in the financial statements for three months ended March 31, 2024 as are the right of use asset and lease liability of the Company's Boston office space discussed below.

The right of use assets and lease liabilities with both these leases are reflected in the financial statements for six months ended June 30, 2024 as are the right of use asset and lease liability of the Company's Boston office space discussed below.

Boston Office Lease

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On August 9, 2021, the Company executed the remaining option to extend the lease for an additional year, expiring on December 31, 2022 .

In January 2023, the Company executed an extension of this lease for an additional year, expiring on December 31, 2023 .

The Company has determined this lease extension qualifies as a short-term lease and have applied the accounting policy election to not record the related right-of-use asset and lease liabilities.

On October 16, 2023, the Company entered into an operating lease for lab space in King of Prussia, Pennsylvania for a period of four year s.

Due to required tenant improvements to be completed by the landlord, the Company did not take immediate possession of the leased property and the lease term is expected to commence in the second quarter of 2024.

The Company will not record a right of use asset or lease liability until the lease commencement date.

In September 2023, the Company executed extended this lease for an additional year with the option to terminate with four months notice, On March 28, 2024, the Company gave the requisite notice and vacated the property in May 2024.

On October 16, 2023, the Company entered into an operating lease for lab space in King of Prussia, Pennsylvania for a period of four years .

Due to required tenant improvements to be completed by the landlord, the Company did not take immediate possession of the leased property.

The actual lease term commenced on May 10, 2024 .

Upon commencement of the lease term, the Company recorded a right of use asset and lease liability of $ 0.5 million which are reflected in these condensed consolidated financial statements.

Lease Expense

Expense arising from operating leases was $ 0.1 million during each of the three months ended March 31, 2024 and 2023.

For operating leases, the weighted-average remaining lease term for leases at March 31, 2024 and December 31, 2023 was 5.2 and 5.5 years, respectively.

For operating leases, the weighted average discount rate for leases at March 31, 2024 and December 31, 2023 was 11.0 %.

Expense arising from operating leases was $ 0.1 million and $ 0.3 million during the three and six months ended June 30, 2024 , respectively.

Expense arising from operating leases was $ 0.1 million and $ 0.2 million during the three and six months ended June 30, 2023, respectively.

For operating leases, the weighted-average remaining lease term for leases at June 30, 2024 and December 31, 2023 was 4.9 and 5.5 years, respectively.

For operating leases, the weighted average discount rate for leases at June 30, 2024 and December 31, 2023 was 11.0 %.

The Company has not entered into any financing leases.

Maturities of lease liabilities due under these lease agreements as of March 31, 2024 are as follows:

Maturities of lease liabilities due under these lease agreements as of June 30, 2024 are as follows:

(in thousands)

Nine months ending December 31, 2024

Six months ending December 31, 2024

Year ended December 31, 2025

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The Company is not currently a party to any litigation, nor is management aware of any pending or threatened litigation against the Company, that it believes would materially affect the Company's business, operating results, financial condition or cash flows.

Related Party

In May 2024, the Company entered into an agreement with the Friedreich’s Ataxia Research Alliance (FARA) to join the TRACK-FA Neuroimaging Consortium that includes pharmaceutical, biotechnology, academic and clinical partners.

The consortium will conduct a natural history study designed to establish disease-specific neuroimaging biomarkers to track disease progression in the brain and spinal cord and provide a basis for utilizing these biomarkers in clinical trials.

As an industry partner, the Company will help fund the study and contribute to the study design, research activities, and analysis.

The Company will have access to all study data for use in its regulatory filings, as appropriate.

The Com pany incurred $ 0.8 M of c osts related to the Track-FA program in the second quarter of 2024 and will fund future costs going forward.

One of the Company’s Directors is also a director of FARA.

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