What changed in this filing

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Item 2. Management’s Discussion and Analysis

2024-10-30 compared with 2024-08-08 · 58 added, 51 removed, 171 unchanged (39% of the section changed)

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We have completed two Phase 1 clinical trials, a Phase 2 dose exploration trial, and recently initiated an open label extension study (“OLE”) in patients with FA.

This OLE study is ongoing.

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

Food and Drug Administration (“FDA”) placed a clinical hold on the our nomlabofusp clinical program after we 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.

Food and Drug Administration (“FDA”) placed a clinical hold on our nomlabofusp clinical program after we 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 September 2022, the FDA lifted its full clinical hold on the nomlabofusp program and imposed a partial clinical hold.

In May 2023, we announced top-line data from its completed 25 mg cohort of a Phase 2, four-week, dose exploration trial of nomlabofusp in patients with FA and provided a complete response to the FDA in June 2023, which included unblinded safety, pharmacokinetic ("PK"), and pharmacodynamic ("PD") data from the Phase 2 trial’s completed 25 mg cohort.

In May 2023, we announced top-line data from our completed 25 mg cohort of a Phase 2, four-week, dose exploration trial of nomlabofusp in patients with FA and provided a complete response to the FDA in June 2023, which included unblinded safety, pharmacokinetic ("PK"), and pharmacodynamic ("PD") data from the Phase 2 trial’s completed 25 mg cohort.

In June 2023, we met with the FDA.

Following that meeting, we submitted a complete response to the FDA’s partial clinical hold that included unblinded safety, PK and frataxin data from the Phase 2 trial’s completed 25 mg cohort.

In July 2023, following the FDA’s review of our complete response to the partial clinical hold, the FDA cleared initiation of a second cohort at 50 mg of our four-week, placebo-controlled, Phase 2 dose exploration trial and initiation of an OLE study with daily dosing of 25 mg.

In May 2024 the FDA removed the partial clinical hold.

In July 2023, following the FDA’s review of the complete response to the partial clinical hold, the FDA cleared initiation of a second cohort at 50 mg of our four-week, placebo-controlled, Phase 2 dose exploration trial and initiation of an OLE study with daily dosing of 25 mg.

In February 2024, we 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.

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

In March 2024, the first patient was dosed 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 7 sites activated and additional patients continue to be enrolled.

Patients who completed treatment in our Phase 2 dose exploration study or who previously completed a prior clinical trial of nomlabofusp are eligible to screen and possibly participate in the OLE study.

Current patients in the OLE study either participated in the Phase 2 dose exploration study and/or a previous clinical trial.

In March 2024, we dosed the first patient in our 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 seven sites activated and additional patients are continuing 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.

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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.

We also had separate discussions with the FDA regarding the use of tissue FXN levels as a novel surrogate endpoint.

We currently expect to provide a nomlabofusp development program update in mid-December 2024 that will include available safety, pharmacokinetic and frataxin data as well as available clinical outcome observations from patients currently receiving the daily 25 mg dose of nomlabofusp for approximately 30 to 180 days in the ongoing OLE study.

An update on enrollment in the OLE study will also be provided.

Separately, we have had 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.

We intend 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.

We plan 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.

We are on track to expand the nomlabofusp clinical program into adolescent (12-17 years old) and pediatric (2-11 years old) patients with FA.

We expect to initiate a PK run-in study in adolescents by the end of this year and expect to transition these study participants into the ongoing OLE study after assessment of safety and exposure data in the adolescent cohort.

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

We are also planning the initiation of a global confirmatory/registration 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 potential accelerated approval.

On May 30, 2024, we 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 START Pilot 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 for biologics and drugs.

Nomlabofusp has been granted Orphan Drug (U.S.

and Europe), Rare Pediatric Disease (U.S.), Fast Track (U.S.), and PRIME (Europe) designations for FA.

We have also begun to engage with regulators and investigators outside the U.S.

as we prepare to expand our clinical program to additional geographies.

With approximately 75% of individuals with FA living outside the U.S., establishing global clinical trial capabilities is important for addressing the pressing unmet needs of the FA community.

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 advice and regular communication with the FDA staff to expedite the review process of biologics and drugs.

In September 2024, we received the Medicines and Healthcare Regulatory Agency ("MHRA") Innovative Licensing and Access Pathway ("ILAP")for the treatment of adults and children with FA aimed to facilitate patient access to novel treatments by accelerating time to market through opportunities for enhanced engagements with UK regulatory authorities and other stakeholders.

Along with the receipt of the ILAP designation, nomlabofusp has already been granted orphan drug designations in the U.S.

and the European Union (EU), Fast Track and Rare Pediatric Disease designations in the U.S., PRIME designation in the EU, and selected to be in the START pilot program by the FDA.

We are 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 our drug candidates or any other product candidates and the ability to secure additional capital to fund our operations.

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

These efforts require significant amounts of additional capital, adequate personnel, infrastructure and extensive compliance-reporting capabilities.

Even if our drug development efforts are successful, it is uncertain when, if ever, it will realize significant revenue from product sales.

Financing Activities, including Recent Material Financings

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Prior to May 28, 2020, we were a private company and lacked company-specific historical and implied volatility information for our common stock.

Prior to January 1, 2023, the Company estimated its expected common stock price volatility solely based on the historical volatility of publicly traded peer companies with comparable characteristics including enterprise value, risk profiles and position within the industry.

Beginning on January 1, 2023, the Company began blending its historical data starting in June 2020 (following its merger with Zafgen in 2020) with its historical peer group.

Prior to January 1, 2023, we estimated our expected common stock price volatility solely based on the historical volatility of publicly traded peer companies with comparable characteristics including enterprise value, risk profiles and position within the industry.

Beginning on January 1,

2023, we began blending our historical data starting in June 2020 (following our merger with Zafgen in 2020) with our historical peer group.

We regularly evaluate our peer group to assess changes in circumstances where identified companies may no longer be similar to us, in which case, more suitable companies whose share prices are publicly available would be utilized in the calculation.

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Results of Operations

Comparison of three months ended June 30, 2024 and 2023

The following table summarizes our results of operations for the three months ended June 30, 2024 and 2023:

Three Months Ended June 30,

Comparison of three months ended September 30, 2024 and 2023

The following table summarizes our results of operations for the three months ended September 30, 2024 and 2023:

Three Months Ended September 30,

(in thousands)

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Research and development expenses

Research and development expenses for the three months ended June 30, 2024 increased $13.8 million compared to the three months ended June 30, 2023.

The increase in research and development expenses was primarily driven by an increase of $10.6 million in nomlabofusp manufacturing costs, an increase of $2.1 million in clinical costs primarily associated with the OLE study which began dosing patients in the first quarter of 2024 and initial costs related to the Company's participation in the Friedreich's Ataxia Research Alliances (FARA) Track-FA program, an increase of $1.1 million in personnel expense due to increased headcount.

Research and development expenses for the three months ended September 30, 2024 increased $7.3 million compared to the three months ended September 30, 2023.

The increase in research and development expenses was primarily driven by an increase of $3.8 million in nomlabofusp manufacturing costs including lyophilization development, production scaling costs and manufacturing costs related to producing doses to be used in ongoing and planned clinical trials, an increase of $1.1 million in personnel expense due to increased headcount, an increase of

$0.9 million in assay development costs, an increase of $0.6 million in clinical costs primarily associated with the OLE study which began dosing patients in the first quarter of 2024, an increase of $0.3 million of professional fees related to consulting costs, an increase of $0.2 million in stock compensation costs associated with 2024 grants and an increase of $0.2 million in internal lab costs.

General and administrative expenses

General and administrative expenses for the three months ended June 30, 2024 increased $1.2 million compared to the three months ended June 30, 2023.

The increase in general and administrative expenses was primarily driven by an increase of $0.6 million in professional fees primarily related to legal fees, consulting costs and other public company related expenses, an increase of $0.4 million in personnel expense and an increase of $0.1 million in higher stock compensation expense associated with grants made in the first quarter of 2024.

General and administrative expenses for the three months ended September 30, 2024 increased $0.6 million compared to the three months ended September 30, 2023.

The increase in general and administrative expenses was primarily driven by an increase of $0.4 million in personnel expense and an increase of $0.2 million in professional fees primarily related to consulting costs related to commercial activity and other public company related expenses.

Other income (expense), net

Other income (expense), net was $3.0 million income in the three months ended June 30, 2024 compared to $1.3 million income in the three months ended June 30, 2023.

The increase primarily relates to interest income earned on a higher investment base and with higher interest rates on that base.

Comparison of six months ended June 30, 2024 and 2023

The following table summarizes our results of operations for the six months ended June 30, 2024 and 2023:

Six Months Ended June 30,

Other income (expense), net was $2.8 million income in the three months ended September 30, 2024 compared to $1.3 million income in the three months ended September 30, 2023.

The increase primarily relates to interest income earned on a higher investment base.

Comparison of nine months ended September 30, 2024 and 2023

The following table summarizes our results of operations for the nine months ended September 30, 2024 and 2023:

Nine Months Ended September 30,

(in thousands)

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Research and development expenses

Research and development expenses for the six months ended June 30, 2024 increased $22.2 million compared to the six months ended June 30, 2023.

The increase in research and development expenses was primarily driven by an increase of $16.3 million in nomlabofusp manufacturing costs, an increase of $3.1 million in clinical costs primarily associated with the OLE study which began dosing patients in the first quarter of 2024 and the Track FA program discussed above, an increase of $2.0 million in personnel expense due to increased headcount, an increase of $0.3 million of internal laboratory costs and an increase of $0.3 million in stock compensation expense associated with grants made in the first quarter of 2024.

Research and development expenses for the nine months ended September 30, 2024 increased $29.5 million compared to the nine months ended September 30, 2023.

The increase in research and development expenses was primarily driven by an increase of $20.2 million in nomlabofusp manufacturing costs including lyophilization development, production scaling costs and manufacturing costs related to producing doses to be used in ongoing and planned clinical trials, an increase of $3.2 million in personnel expense due to increased headcount, an increase of $2.9 million in clinical costs primarily associated with the OLE study which began dosing patients in the first quarter of 2024, an increase of $0.9 million in assay development costs, an increase of $0.8 million related to the Track-FA program discussed above, an increase of $0.5 million in stock compensation costs associated with 2024 grants, an increase of $0.5 million in internal lab costs and an increase of $0.3 million of professional fees related to consulting costs.

General and administrative expenses

General and administrative expenses for the six months ended June 30, 2024 increased $1.9 million compared to the six months ended June 30, 2023.

The increase in general and administrative expenses was primarily driven by an increase of $0.8 million in professional fees primarily related to legal fees, consulting costs and other public company related expenses, an increase of $0.6 million in personnel expense, an increase of $0.3 million in stock compensation expense associated with grants made in the first quarter of 2024.

General and administrative expenses for the nine months ended September 30, 2024 increased $2.5 million compared to the nine months ended September 30, 2023.

The increase in general and administrative expenses was primarily driven by an increase of $1.0 million in personnel expense, an increase of $1.0 million in professional fees primarily related to consulting costs related to commercial activity and other public company related expenses, an increase of $0.3 million of other expense related to computer software, information technology services and recruiting and an increase of $0.2 million in stock compensation costs associated with 2024 grants.

Other income (expense), net

Other income (expense), net was $5.1 million income in the six months ended June 30, 2024 compared to $2.4 million income in the six months ended June 30, 2023.

The increase primarily relates to interest income earned on a higher investment base and with higher interest rates on that base.

Other income (expense), net was $7.8 million income in the nine months ended September 30, 2024 compared to $3.6 million income in the nine months ended September 30, 2023.

The increase primarily relates to interest income earned on a higher investment base.

Liquidity and Capital Resources

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

Six Months Ended June 30,

Nine Months Ended September 30,

(in thousands)

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Net cash used in operating activities

During the six months ended June 30, 2024, operating activities used $24.4 million of cash, resulting from our net loss of $36.3 million, adjusted for noncash expenses of $2.1 million and changes in our operating assets and liabilities resulting in a source of cash of $9.7 million.

During the nine months ended September 30, 2024, operating activities used $48.9 million of cash, resulting from our net loss of $51.8 million, adjusted for noncash expenses of $2.4 million and changes in our operating assets and liabilities resulting in a source of cash of $0.4 million.

Our net loss was primarily attributed to research and development activities related to our nomlabofusp program and our general and administrative expenses as described above.

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The change in operating assets and liabilities was primarily due to an increase in accrued expenses and accounts payable driven primarily by the increase in R&D activities discussed as well as an increase in prepaid expense.

During the six months ended June 30, 2023, operating activities used $14.9 million of cash, resulting from our net loss of $14.9 million, adjusted for noncash expenses of $3.3 million and changes in our operating assets and liabilities resulting in a source of cash of $3.4 million.

During the nine months ended September 30, 2023, operating activities used $24.1 million of cash, resulting from our net loss of $24.0 million, adjusted for noncash expenses of $4.7 million and changes in our operating assets and liabilities resulting in a source of cash of $4.8 million.

Our net loss was primarily attributed to research and development activities related to our nomlabofusp program and our general and administrative expenses as described above.

Noncash expenses primarily relate to stock-based compensation expenses.

The change in operating assets and liabilities was primarily due to a decrease in accrued expenses and offset by an increase in accounts payable.

Noncash expenses are primarily stock-based compensation expense.

Net cash provided by (used in) investing activities

During the six months ended June 30, 2024, investing activities used $131.9 million of cash to purchase $166.6 million of marketable securities, partially offset by $35 million of cash provided by maturities of marketable securities.

During the six months ended June 30, 2023, investing activities provided $82.4 million of cash, including $92.3 million from maturities of marketable securities and partially offset by $9.8 million in purchases of marketable securities.

During the nine months ended September 30, 2024, investing activities used $104.6 million of cash to purchase $189.2 million of marketable securities, partially offset by $85 million of cash provided by maturities of marketable securities.

During the nine months ended September 30, 2023, investing activities provided $36.0 million of cash, including $102.3 million from maturities of marketable securities partially offset by $66.3 million in purchases of marketable securities.

Net cash provided by financing activities

During the six months ended June 30, 2024, financing activities provided $161.8 million of cash flows primarily from an offering of common stock.

During the six months ended June 30, 2023, there were no financing activities.

During the nine months ended September 30, 2024, financing activities provided $161.8 million of cash flows primarily from an offering of common stock.

During the nine months ended September 30, 2023, financing activities provided less than $0.1 million of cash from the exercise of stock options and warrants.

Operating Capital Requirements

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We have to date incurred net losses.

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

As of June 30, 2024, we had an accumulated deficit of $224.8 million and cash and cash equivalents of $226.1 million, excluding restricted cash of $1.3 million.

We incurred net losses of approximately $51.8 million and $24.0 million for the nine months ended September 30, 2024 and 2023, respectively.

As of September 30, 2024, we had an accumulated deficit of $240.3 million and cash, cash equivalents and marketable securities of $203.7 million, excluding restricted cash of $1.3 million.

Losses have resulted principally from costs incurred in connection with research and development activities, and general and administrative costs associated with the development of nomlabofusp and our operations.

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• maintain, leverage and expand our intellectual property portfolio;

• expand our operational, financial, commercial and management systems and personnel, including personnel to support our clinical development and future commercialization efforts and our operations as a public company.

• expand our operational, financial, commercial and management systems and personnel, including personnel to support our clinical development and commercialization efforts and our operations as a public company.

In February 2024, we completed an underwritten public offering in which we issued and sold 19,736,842 shares of our common stock and received net proceeds of approximately $161.8 million after deducting underwriting discounts, commissions and other offering expenses.

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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