30 unchanged sentences
We believe that our audits provide a reasonable basis for our opinion.
+Added: Critical Audit Matter
+Added: The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that:
+Added: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments.
+Added: The communication of a critical audit matter does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.
+Added: Evaluation of long-lived assets for impairment
+Added: As discussed in Notes 3 and 10 to the financial statements, the Company assesses long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying value of the assets or the asset group may not be recoverable.
+Added: The Company’s property and equipment, net, and right of use assets – operating leases as of December 31, 2025 were $4.1 million and $10.2 million, respectively.
+Added: The Company measures the recoverability of assets by comparing the carrying value of the asset groups to an estimate of the related total future undiscounted net cash flows.
+Added: If an asset group’s carrying value is not recoverable through the related undiscounted net cash flows, the asset group is considered impaired.
+Added: The Company measures the impairment by comparing the difference between the asset group’s carrying value and its fair value which is
+Added: estimated using either an income approach based on the present value of estimated future cash flows or a market approach based on industry and economic conditions including estimates on prevailing prices and rates for similar assets.
+Added: The approaches are asset group specific and may incorporate a number of market participant assumptions in assessing fair value including future growth rates, discount rates, and market activity.
+Added: The Company recognized impairment charges for long-lived assets of $6.1 million during the year ended December 31, 2025.
+Added: We identified the evaluation of the impairment of an asset group related to the Company’s laboratory space as a critical audit matter.
+Added: Challenging auditor judgment, and specialized skills and knowledge, were required to evaluate certain assumptions used in the determination of the fair value of the asset group, including sublease market activity and the discount rate.
+Added: The following are the primary procedures we performed to address this critical audit matter.
+Added: We involved valuation professionals with specialized skills and knowledge, who assisted in 1) evaluating sublease market activity used in determining the fair value of the asset group by comparing it to publicly available market data and 2) evaluating the discount rate used by management by comparing it to a range of independently developed discount rates.
We have served as the Company’s auditor since 2019.
16 unchanged sentences
Accrued expenses and other current liabilities
−Removed: Non-refundable sublicense and transition services payments received
+Added: Non-refundable sublicense and transition services payments
Operating lease liabilities
35 unchanged sentences
Statements of Stockholders’ Equity
−Removed: (in thousands, except share data)
Accumulated other
3 unchanged sentences
Balance at January 1, 2024
+Added: Issuance of common stock under the ATM Facility, net of offering costs
Exercise of stock options and vesting of restricted stock units
8 unchanged sentences
Balance at January 1, 2025
−Removed: Issuance of common stock under the ATM Facility, net of offering costs
Exercise of stock options and vesting of restricted stock units
12 unchanged sentences
Amortization of premium and discount on marketable securities, net
−Removed: Loss on disposal of property and equipment
Impairment of long-lived assets
+Added: Other non-cash items
Changes in operating assets and liabilities:
9 unchanged sentences
Sales or maturities of marketable securities
−Removed: Purchases of property and equipment
+Added: Purchases of property and equipment and other assets
+Added: Sales of property and equipment and other assets
Net cash provided by (used in) investing activities
7 unchanged sentences
Cash and cash equivalents at end of year
−Removed: Supplemental disclosure of non‑cash investing and financing activities:
+Added: Supplemental disclosure of non‑cash activities:
Unrealized gain (loss) on marketable securities
−Removed: Property and equipment in accounts payable and accrued expenses and other current liabilities
Right of use assets recognized upon the commencement of sublease
4 unchanged sentences
Nature of Operations
−Removed: Passage Bio, Inc., or the Company, a Delaware corporation incorporated in July 2017, is a clinical stage genetic medicines company on a mission to improve the lives of patients with neurodegenerative diseases.
+Added: Passage Bio, Inc., or the Company, a Delaware corporation incorporated in July 2017, is a clinical stage genetic medicines company focused on improving the lives of patients with neurodegenerative diseases.
The Company’s primary focus is the development and advancement of cutting-edge, one-time therapies designed to target critical underlying pathology in these conditions.
7 unchanged sentences
Product candidates currently under development will require significant additional research and development efforts and establishing manufacturing capacity and regulatory approval prior to commercialization.
−Removed: These efforts require significant amounts of additional capital for the Company to complete its research and development, achieve its research and development objectives, defend its intellectual property rights, and recruit and retain skilled personnel, and key members of management.
+Added: These efforts require significant amounts of additional capital for the Company to complete its research and development, achieve its regulatory objectives, defend its intellectual property rights, and recruit and retain skilled personnel, and key members of management.
Even if the Company’s product development efforts are successful, it is uncertain when, if ever, the Company will realize revenue from product sales.
On March 5, 2021, the Company entered into a Sales Agreement, or the Sales Agreement, with Cowen and Company, LLC, or Cowen, relating to the applicable terms of at-the-market equity offerings, or the ATM Facility, pursuant to which the Company may, but is not obligated to, offer and sell, from time to time, shares of its common stock with an aggregate offering price up to $ 125.0 million through Cowen, as sales agent in the ATM Facility.
−Removed: The Company issued 6,000,000 shares of common stock under the ATM Facility, resulting in net proceeds of $ 8.7 million, after deducting offering costs of $ 0.3 million in March 2024.
−Removed: As a result of the Company’s public float as of January 6, 2025, the Company is currently limited to $ 15.8 million in its capacity to offer and sell shares of its common stock under the Sales Agreement pursuant to its shelf registration statement on Form S-3, filed on March 4, 2024.
+Added: The Company issued 300,000 shares of its common stock under the ATM Facility, resulting in net proceeds of $ 8.7 million, after deducting offering costs of $ 0.3 million in March 2024.
+Added: The Company is currently limited in its capacity to offer and sell shares of its common stock under the Sales Agreement pursuant to the prospectus supplement to its shelf registration statement on Form S-3, filed on March 5, 2025.
The Company plans to seek additional funding through public or private equity offerings, debt financings, other collaborations, strategic alliances and licensing arrangements.
2 unchanged sentences
If the Company is unable to obtain funding or prospects of funding are unfavorable, the Company could be required to further delay, reduce or eliminate research and development programs, product portfolio expansion or future commercialization efforts, which could adversely affect its business prospects.
−Removed: In accordance with the Financial Accounting Standards Board’s, or FASB, Accounting Standards Update, or ASU, No.
−Removed: 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 the financial statements are issued.
−Removed: As of the issuance date of these financial statements, the Company expects that its cash, cash equivalents and marketable debt securities will be sufficient to fund its forecasted operating expenses and capital expenditure requirements for at least the next 12 months from the issuance date of these financial statements.
+Added: In accordance with the Financial Accounting Standards Board’s, or FASB, Accounting Standards Codification, or ASC, Topic 205-40, Presentation of Financial Statements – 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 the financial statements are issued.
+Added: As of the issuance date of these financial statements, the Company expects that its cash and cash equivalents will be sufficient to fund its forecasted operating expenses and capital expenditure requirements for at least the next 12 months from the issuance date of these financial statements.
Passage Bio, Inc.
3 unchanged sentences
The accompanying financial statements have been prepared in accordance with generally accepted accounting principles in the United States, or GAAP.
−Removed: Any reference in these notes to applicable guidance is meant to refer to GAAP as found in the Accounting Standards Codification, or ASC, and ASU promulgated by the Financial Accounting Standards Board, or FASB.
+Added: Any reference in these notes to applicable guidance is meant to refer to GAAP as found in the ASC and Accounting Standard Updates, or ASUs, promulgated by the FASB.
+Added: On July 14, 2025, the Company effected a 1 -for-20 reverse stock split of its common stock, or the Reverse Stock Split.
+Added: No fractional shares were issued in connection with the Reverse Stock Split.
+Added: Stockholders who were otherwise entitled to receive fractional shares received the number of shares of Common Stock as rounded up to the nearest whole share.
+Added: All share and per share amounts in these financial statements and notes thereto, including the stock options, restricted stock units, and employee stock purchase plan activity, have been adjusted retroactively to reflect the Reverse Stock Split for all periods presented.
Use of Estimates
−Removed: The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and contingent liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period.
+Added: The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and contingent liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
3 unchanged sentences
Concentration of Credit Risk
−Removed: Financial instruments that potentially subject the Company to significant concentrations of credit risk consist primarily of cash, cash equivalents, and marketable securities.
+Added: Financial instruments that potentially subject the Company to significant concentrations of credit risk consist primarily of cash and cash equivalents.
The Company maintains a deposit account in a federally insured financial institution in excess of federally insured limits.
−Removed: The Company also maintains a money market account in a federally insured financial institution in excess of federally insured limits.
−Removed: The Company has not experienced any losses in such accounts and believes it is not exposed to significant risk on its cash and cash equivalents beyond the normal credit risk associated with commercial banking relationships.
−Removed: The Company maintains a portfolio of marketable debt securities, which is diversified to limit exposure related to counterparty risk, industry risk, and security type risk.
−Removed: The Company maintains an investment policy which dictates the allocation of funds within its portfolio of marketable debt securities.
−Removed: The Company has not experienced any material losses in such portfolio.
+Added: The Company also maintains a portfolio of money market funds, which is diversified to limit exposure related to counterparty and industry risks.
+Added: The Company maintains an investment policy which dictates the allocation of funds within its portfolio of money market funds.
+Added: The Company has not experienced any losses in such accounts and believes it is not exposed to significant risk on its cash and cash equivalents beyond the normal credit risk associated with commercial banking relationships and money market funds.
Cash and Cash Equivalents
The Company considers all highly-liquid investments that have maturities of three months or less when acquired to be cash equivalents.
−Removed: Cash equivalents as of December 31, 2024 consisted of various securities described in Note 4.
+Added: Cash equivalents as of December 31, 2025 consisted of money market funds.
Cash consists of cash deposits at banking institutions.
1 unchanged sentence
The Company classifies its marketable securities with original maturities of greater than three months as available-for-sale.
+Added: The Company held no marketable securities as of December 31, 2025.
Marketable securities as of December 31, 2024 consisted of various securities as described in Note 4.
−Removed: These securities are carried at fair market value, with unrealized gains and losses reported in comprehensive loss and accumulated other comprehensive income (loss) within stockholders’ equity.
−Removed: Any premium or discount arising at purchase of debt securities is amortized and/or accreted over the term of the security to other income (expense), net.
+Added: Marketable securities are carried at fair market
Passage Bio, Inc.
Notes to Financial Statements (cont.)
+Added: value, with unrealized gains and losses reported in comprehensive loss and accumulated other comprehensive income (loss) within stockholders’ equity.
+Added: Any premium or discount arising at purchase of debt securities is amortized and/or accreted over the term of the security to other income (expense), net.
Gains or losses on marketable securities sold are recognized as a component of other income (expense), net in the statement of operations and comprehensive loss on the specific identification method.
1 unchanged sentence
Property and Equipment, Net
−Removed: Property and equipment, net consists of laboratory equipment, office equipment, computer hardware and software, furniture and fixtures, and leasehold improvements and is recorded at cost.
+Added: Property and equipment, net consists of laboratory equipment, office equipment, computer hardware and software, furniture and fixtures, and leasehold improvements and is initially recorded at cost.
Maintenance and repairs that do not improve or extend the lives of the respective assets are expensed as incurred.
3 unchanged sentences
When property and equipment are retired or otherwise disposed of, the costs and accumulated depreciation and amortization are removed from the respective accounts, with any resulting gain or loss recognized concurrently.
+Added: The Company recognized de minimis losses on disposals of property and equipment for the year ended December 31, 2025.
The Company did no t recognize any losses on disposals of property and equipment for the year ended December 31, 2024.
−Removed: The Company recognized losses on disposals of property and equipment of $ 0.5 million within research and development expenses in the year ended December 31, 2023.
The Company reviews long-lived assets, such as property and equipment, for impairment when events or changes in circumstances indicate the carrying amount of the assets may not be recoverable.
−Removed: The Company recognized impairment expenses for property and equipment of $ 2.7 million and $ 3.2 million in the years ended December 31, 2024 and 2023, respectively.
−Removed: These impairment expenses primarily relate to the proportional allocation of total impairments recognized for the asset groups subject to impairment testing as further described in Note 9.
+Added: The Company recognized impairment expenses for property and equipment of $ 3.5 million for the year ended December 31, 2025, $ 2.5 million of which was for lab equipment, $ 0.9 of which was for leasehold improvements, and $ 0.1 million of which was for certain other assets.
+Added: As a result of the Company’s January 2025 announcement to reduce its overall workforce and cease its lab operations, the Company reassessed asset groups at its lab in Hopewell, New Jersey, and evaluated such asset groups for impairment under FASB ASC Topic 360, Long-lived assets:
+Added: Impairment or disposal of long-lived assets .
+Added: The Company determined the laboratory equipment was a separate asset group based on management’s implemented plans to sell the laboratory equipment and estimated the fair value of the laboratory equipment based on the estimated future cash flows from the sale of such equipment, resulting in impairment of laboratory equipment and certain other assets of $ 2.6 million.
+Added: Subsequent to recording the impairment, the Company sold substantially all the laboratory equipment and certain other assets for $ 1.2 million.
+Added: In December 2025, the Company determined triggering events were present based on rental market activity.
+Added: The Company determined whether an impairment indicator was present for each of the asset groups.
+Added: Where an impairment indicator was present, the Company compared the estimated undiscounted cash flows to the carrying values, which includes ROU assets and leasehold improvements allocable to the laboratory space for those asset groups.
+Added: The Company concluded the carrying value of one asset group was not recoverable as it exceeded the estimated undiscounted cash flows.
+Added: With support from a valuation specialist, the Company estimated the fair value of that asset group by creating a discounted cash flow model which incorporated the net identifiable estimated cash flows for the remaining term of the Laboratory Lease Agreement and an estimated market participant subtenant borrowing rate and compared that to the carrying value of the asset group, resulting in impairment to leasehold improvements of $ 0.9 million.
+Added: The impairment expense for the leasehold improvements relate to the proportional allocation of total impairment recognized for the asset group subject to impairment testing.
+Added: Passage Bio, Inc.
+Added: Notes to Financial Statements (cont.)
+Added: The Company recognized impairment expenses for property and equipment and certain other assets of $ 2.7 million for the year ended December 31, 2024, which primarily relates to the proportional allocation of total impairments recognized for asset groups subject to impairment testing as further described in Note 10.
The Company evaluates leases at their inception to determine if they are an operating lease or a finance lease.
8 unchanged sentences
Research and development costs are expensed as incurred and consist primarily of expenses incurred with the University of Pennsylvania’s Gene Therapy Program, or GTP, and Gemma Biotherapeutics, Inc., or Gemma, contract research organizations, contract manufacturing organizations, internal analytical and testing activities, and employee-related expenses, including salaries, benefits, and share-based compensation.
−Removed: Management makes estimates of the Company’s
−Removed: Passage Bio, Inc.
−Removed: Notes to Financial Statements (cont.)
−Removed: external accrued research and development expenses, which primarily relates to contract research organizations and contract manufacturing organizations, as of each balance sheet date in the Company’s financial statements based on an estimate of progress to completion of specific tasks using facts and circumstances known to the Company at that time.
+Added: Management makes estimates of the Company’s external accrued research and development expenses, which primarily relates to contract research organizations and contract manufacturing organizations, as of each balance sheet date in the Company’s financial statements based on an estimate of progress to completion of specific tasks using facts and circumstances known to the Company at that time.
The Company determines the estimates by reviewing contracts, vendor agreements, change orders, and through discussions with the Company’s internal clinical personnel and external service providers as to the progress to completion of services and the agreed-upon fee to be paid for such services.
2 unchanged sentences
Other income (expense), net consists of interest earned on cash equivalents and marketable securities, amortization of premium and discount on marketable securities, income from subleases, and the sale of certain tax credits.
+Added: The Company recorded $ 3.8 million to other income (expense), net for the year ended December 31, 2025, which consisted of $ 2.3 million attributable to interest income and the amortization of premium and discount on the Company’s marketable securities and $ 1.5 million from sublease income.
The Company recorded $ 5.6 million to other income (expense), net for the year ended December 31, 2024, which consisted of $ 4.3 million attributable to interest income and the amortization of premium and discount on the Company’s marketable securities, $ 1.0 million from sublease income, and $ 0.3 million related to the sale of certain tax credits.
−Removed: The Company recorded $ 6.3 million to other income (expense), net for the year ended December 31, 2023, which consisted of $ 5.6 million attributable to interest income and the amortization of premium and discount on the Company’s marketable securities, and $ 0.7 million related to the sale of certain tax credits.
+Added: Passage Bio, Inc.
+Added: Notes to Financial Statements (cont.)
Share-Based Compensation
7 unchanged sentences
The simplified method is the midpoint between the vesting period and the contractual term of the option.
−Removed: For stock price volatility, the Company uses a composite of comparable public company data as a basis for its expected volatility to calculate the fair value of option grants.
+Added: For stock price volatility, the Company uses a composite of comparable public company data as a basis for its expected volatility and considers the historic volatility of its common stock from its initial public offering to date to calculate the fair value of option grants.
The selection of comparable public company data requires the application of management’s judgement.
1 unchanged sentence
License and Other Revenue
−Removed: The Company may enter into license agreements and transition services agreements (see Note 8) under which it may license rights to research, develop, manufacture, and commercialize its product candidates to third parties, and provide
−Removed: Passage Bio, Inc.
−Removed: Notes to Financial Statements (cont.)
−Removed: transition services for such licenses.
+Added: The Company may enter into license agreements and transition services agreements (see Note 8) under which it may license rights to research, develop, manufacture, and commercialize its product candidates to third parties, and provide transition services for such licenses.
Payments under these arrangements may include non-refundable, upfront fees, reimbursement of certain costs, payments upon the achievement of certain milestones, and royalties on product sales.
13 unchanged sentences
The Company uses judgment to determine whether milestones or other variable consideration, except for certain sales-based milestone payments and royalties, should be included in the transaction price as described further below.
+Added: Passage Bio, Inc.
+Added: Notes to Financial Statements (cont.)
At the inception of each arrangement that includes milestone payments, the Company evaluates whether the milestones are considered probable of being achieved and estimates the amount to be included in the transaction price using the most likely amount method set forth in ASC 606.
4 unchanged sentences
At the end of each subsequent reporting period, the Company reevaluates the probability of achievement of all milestones subject to constraint and, if necessary, adjusts its estimate of the overall transaction price.
−Removed: Any such adjustments are recorded on a cumulative catch-up basis in the statements of operations in the period of adjustment.
+Added: Any such adjustments are recorded on a cumulative catch-up basis in the statements of operations and comprehensive loss in the period of adjustment.
For customer contracts in the scope of ASC 606, amounts due to the Company are recorded as accounts receivable on the Company’s balance sheet when the Company’s right to consideration is unconditional.
6 unchanged sentences
Under ASC 740, a valuation allowance is required when it is more likely than not all or some portion of the deferred tax assets will not be realized through generating sufficient future taxable income.
−Removed: Passage Bio, Inc.
−Removed: Notes to Financial Statements (cont.)
FASB ASC Subtopic 740-10, Accounting for Uncertainty of Income Taxes , or ASC 740-10, defines the criterion an individual tax position must meet for any part of the benefit of the tax position to be recognized in financial statements prepared in conformity with GAAP.
6 unchanged sentences
For diluted net loss per share, the weighted-average number of shares of common stock is the same for basic net loss per share due to the fact that when a net loss exists, dilutive securities are not included in the calculation as the impact is anti-dilutive.
+Added: Passage Bio, Inc.
+Added: Notes to Financial Statements (cont.)
The following potentially dilutive securities have been excluded from the computation of diluted weighted-average shares of common stock outstanding, as they would be anti-dilutive:
4 unchanged sentences
Recently Issued Accounting Pronouncements Not Yet Adopted
−Removed: In December 2023, the FASB issued ASU No.
−Removed: 2023-09, Income Taxes (Topic 740):
−Removed: Improvements to Income Tax Disclosures , or ASU 2023-09, which requires that an entity, on an annual basis, disclose additional income tax information, primarily related to the rate reconciliation and income taxes paid.
−Removed: The amendments in ASU 2023-09 are intended to enhance the transparency and decision usefulness of income tax disclosures.
−Removed: The amendments in this ASU are effective for annual periods beginning after December 15, 2024 with early adoption permitted.
−Removed: The Company is currently evaluating the impact of this guidance on its disclosures.
In November 2024, the FASB issued ASU No.
−Removed: 2024-03, Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosures (Subtopic 220-40), or ASU 2024-03:
−Removed: Disaggregation of Income Statement Expenses , or ASU 2024-03, which requires entities to provide disclosures to disaggregate operating expenses into specific categories, such as salaries and wages, depreciation, and amortization, to provide enhanced transparency into the nature and function of expenses.
+Added: 2024-03, Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosures (Subtopic 220-40) Disaggregation of Income Statement Expenses , or ASU 2024-03, which requires entities to provide disclosures to disaggregate operating expenses into specific categories, such as salaries and wages, depreciation, and amortization, to provide enhanced transparency into the nature and function of expenses.
ASU 2024-03 is effective for the Company’s first fiscal year beginning after December 15, 2026, and for interim periods within the Company’s first fiscal year beginning after December 15, 2027, with early adoption permitted.
1 unchanged sentence
The Company is currently evaluating the impact of this guidance on its disclosures.
+Added: In September 2025, the FASB issued ASU No.
+Added: 2025-06, Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40):
+Added: Targeted Improvements to the Accounting for Internal-Use Software , or ASU 2025-06.
+Added: ASU 2025-06 is intended to increase the operability of the accounting for internal-use software costs by removing all references to software development project stages.
+Added: ASU 2025-06 requires capitalization of software costs to start when management has authorized and committed to funding the software project, it is probable that the project will be completed, and the software will be used to perform the function intended.
+Added: ASU 2025-06 is effective for the Company’s first fiscal year beginning after December 15, 2027, and for interim periods within that year with early adoption permitted.
+Added: The Company is currently evaluating the impact of this guidance on its financial statements.
+Added: In December 2025, the FASB issued ASU No.
+Added: 2025-11, Interim Reporting (Topic 270):
+Added: Narrow-Scope Improvements , or ASU 2025-11.
+Added: The amendments reorganize and clarify the interim disclosure requirements in U.S.
+Added: GAAP and establish a single, principles based framework for determining the information that should be disclosed in interim periods.
+Added: ASU 2025-11 is effective for the Company for interim periods within annual periods beginning after December 15, 2027, with early adoption permitted.
+Added: The guidance can be applied prospectively or retrospectively.
+Added: The Company is currently evaluating the impact of ASU 2025-11 on its interim financial statement disclosures.
Recently Adopted Accounting Pronouncements
−Removed: In November 2023, the FASB issued ASU No.
−Removed: 2023-07, Segment Reporting (Topic 280):
−Removed: Improvements to Reportable Segment Disclosures , or ASU 2023-07, which expands segment disclosures by requiring disclosure of significant
+Added: In December 2023, the FASB issued ASU No.
+Added: 2023-09, Income Taxes (Topic 740):
+Added: Improvements to Income Tax Disclosures , or ASU 2023-09, which requires that an entity, on an annual basis, disclose additional income tax information, primarily related to the rate reconciliation and income taxes paid.
+Added: The amendments in ASU 2023-09 are intended to enhance the transparency and decision usefulness of income tax disclosures.
+Added: The amendments in this ASU are effective for annual periods beginning after December 15, 2024 with early adoption permitted.
+Added: The Company adopted this new accounting pronouncement retrospectively during the year ended December 31, 2025.
+Added: Refer to Note 14 for additional disclosures.
Passage Bio, Inc.
Notes to Financial Statements (cont.)
−Removed: segment expenses that are regularly provided to the chief operating decision maker and included within each reported measure of segment profit or loss, an amount and description of its composition for other segment items, and interim disclosures of a reportable segment’s profit or loss and assets.
−Removed: The Company adopted the new accounting pronouncement for the year beginning on January 1, 2024.
−Removed: See “Note 14 - Segment Reporting” for additional disclosures.
Cash, Cash Equivalents, and Marketable Securities
7 unchanged sentences
Money market funds
−Removed: Commercial paper
December 31, 2024:
2 unchanged sentences
Commercial paper
−Removed: Corporate debt securities
The following table provides details regarding the Company’s portfolio of marketable securities:
13 unchanged sentences
government securities
−Removed: government agency securities
−Removed: Passage Bio, Inc.
−Removed: Notes to Financial Statements (cont.)
−Removed: The contractual maturities of the Company’s marketable securities as of December 31, 2024, are as follows:
−Removed: (in thousands)
−Removed: Amortized Cost
−Removed: Due within one year
−Removed: Due after one year through five years
+Added: As of December 31, 2025, all of the Company’s marketable securities matured and the proceeds were invested into money market funds, which are included in cash and cash equivalents on the Company’s balance sheet.
Fair Value of Financial Instruments and Non-Financial Instruments
4 unchanged sentences
Depending on the nature of the assets and liabilities, various valuation techniques and assumptions are used when estimating fair value.
−Removed: The carrying amounts of certain of the Company’s financial instruments, including prepaid expense and accounts payable are shown at cost, which approximates fair value due to the short-term nature of these instruments.
+Added: The carrying amounts of certain of the Company’s financial instruments, including prepaid expense and accounts payable are shown at cost, which approximates fair value due to the short-term nature of
+Added: Passage Bio, Inc.
+Added: Notes to Financial Statements (cont.)
+Added: these instruments.
The Company follows the provisions of FASB ASC Topic 820, Fair Value Measurement , for financial assets and liabilities measured on a recurring basis.
3 unchanged sentences
Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (i.e., supported by little or no market activity).
−Removed: Passage Bio, Inc.
−Removed: Notes to Financial Statements (cont.)
The following fair value hierarchy table presents information about the Company’s assets measured at fair value on a recurring basis.
7 unchanged sentences
Money market funds
−Removed: Commercial paper
Total cash equivalents
−Removed: Marketable securities:
−Removed: Certificates of deposit
−Removed: Commercial paper
−Removed: Corporate debt securities
−Removed: government securities
−Removed: Total marketable securities
Total financial assets
3 unchanged sentences
Commercial paper
−Removed: Corporate debt securities
Total cash equivalents
4 unchanged sentences
government securities
−Removed: government agency securities
Total marketable securities
2 unchanged sentences
Long-lived non-financial assets are measured at fair value on a nonrecurring basis for purposes of calculating impairment using Level 3 inputs as defined in the fair value hierarchy.
−Removed: The fair value of long-lived assets using Level 3 inputs is determined by estimating the amount and timing of net future cash flows (which are unobservable inputs) and discounting them using a risk-adjusted rate of interest.
−Removed: Significant increases or decreases in actual cash flows may result in valuation changes.
+Added: The fair value of long-lived assets using Level 3
Passage Bio, Inc.
Notes to Financial Statements (cont.)
+Added: inputs is determined by estimating the amount and timing of net future cash flows (which are unobservable inputs) and discounting them using a risk-adjusted rate of interest.
+Added: Significant increases or decreases in actual cash flows may result in valuation changes.
The following long-lived assets were measured at fair value, on a nonrecurring basis, during the years ended December 31, 2025 and 2024.
−Removed: Assets remeasured in 2023 are not included in the fair values presented as of December 31, 2024.
−Removed: The significant assumptions utilized, which relate to future net cash flows, are further described in Note 9:
+Added: Assets remeasured in 2024 or sold in 2025 are not included in the fair value presented as of December 31, 2025.
+Added: The significant assumptions utilized are further described in Notes 3 and 10:
Fair Value Measurements as of December 31, 2025 of assets remeasured during 2025
11 unchanged sentences
Property and Equipment, Net
−Removed: Property and equipment, net, consist of the following:
+Added: Property and equipment, net, consists of the following:
(in thousands)
6 unchanged sentences
Leasehold improvements
−Removed: Construction in progress
Total property and equipment
Accumulated depreciation and amortization
+Added: In connection with the Company’s January 2025 announcement to reduce its overall workforce by 55 % and cease its lab operations in Hopewell, New Jersey, management implemented plans to sell substantially all the laboratory equipment and certain other assets and estimated the fair value of the assets based on the estimated future cash flows from the sale of such assets.
+Added: Subsequent to recording the impairment of $ 2.6 million, the Company sold substantially all the laboratory equipment and certain other assets for $ 1.2 million.
+Added: As a result, the Company did no t record any depreciation on the impaired and disposed laboratory equipment during the year ended December 31, 2025 as the equipment was considered held-for-sale in January 2025.
+Added: Neither laboratory equipment nor accumulated depreciation related to such equipment are recorded on the balance sheet as of December 31, 2025.
Depreciation and amortization expense was $ 0.7 million and $ 3.1 million for the years ended December 31, 2025 and 2024, respectively.
9 unchanged sentences
Research and development
−Removed: Amount due to Catalent in connection with Amended Catalent Agreements
+Added: Divestiture fee due to Catalent
Gemma License Agreement
−Removed: On July 31, 2024, the Company entered into a series of sublicense agreements with Gemma in connection with the outlicense of PBGM01 for the treatment of GM1 gangliosidosis, or GM1, PBKR03 for the treatment of Krabbe disease, and PBML04 for the treatment of metachromatic leukodystrophy, or MLD, collectively the Outlicensed Programs, and such agreements, the Gemma Sublicenses.
−Removed: Pursuant to the Gemma Sublicenses, the Company is entitled to receive (i) initial payments of $ 10.0 million for licenses and clinical product supply, $ 5.0 million of which was received in the three months ended September 30, 2024, and $ 5.0 million of which is due in December 2024;
−Removed: (ii) up to an additional $ 10.0 million contingent on the completion by Gemma of certain business milestones;
+Added: On July 31, 2024, the Company entered into a series of sublicense agreements with Gemma in connection with the outlicense of PBGM01 for the treatment of GM1 gangliosidosis, or GM1, PBKR03 for the treatment of Krabbe disease, or Krabbe, and PBML04 for the treatment of metachromatic leukodystrophy, or MLD, collectively the Outlicensed Programs, and such agreements, the Gemma Sublicenses.
+Added: On May 7, 2025, the Company agreed to amend each of the Gemma Sublicenses to revise certain financial terms related to the Outlicensed Programs, or the Amended Gemma Sublicenses.
+Added: Pursuant to the Amended Gemma Sublicenses, the Company is entitled to receive (i) an aggregate total of $ 15.0 million in initial payments for licenses and clinical product supply, of which $ 7.5 million was previously received, $ 2.5 million of which was due in May 2025, and $ 5.0 million of which is due in March 2026;
+Added: (ii) an additional $ 5.0 million contingent on Gemma completing certain business milestones;
(iii) up to an additional $ 114.0 million in development and commercial milestone payments;
and (iv) single digit royalties as a percentage of annual worldwide net sales, in exchange for sublicenses to relevant intellectual property, transfer of regulatory dossiers and transfer of clinical trial materials and product supply related to the Outlicensed Programs.
−Removed: Gemma will be responsible for all payments due to the Trustees of the University of Pennsylvania, or Penn, under the Company’s research, collaboration and licensing agreement with Penn, or the Penn License Agreement, related to the Outlicensed Programs.
−Removed: On July 31, 2024 the Company also entered into a transition, services agreement with Gemma, or the Transition Services Agreement, as amended by the First Amendment to the Transition Services Agreement, dated January 31, 2025, pursuant to which, the Company will provide transitional services at cost to Gemma through May 31, 2025, unless terminated earlier, and be entitled to reimbursement for transitional services performed retroactively from March 1, 2024, related to the transfer of the Outlicensed Programs.
−Removed: As of December 31, 2024, the Company has collected $ 5.0 million in initial payments and $ 3.2 million in transition services payments under these agreements.
−Removed: As Gemma is a newly-formed company with a limited history of operations, the Company will not recognize revenue under ASC 606 until the Company either (i) has received payment and there are no remaining obligations to transfer goods and services under the Gemma Sublicenses and Transition Services Agreement (as payments received by Gemma are nonrefundable), or (ii) concludes that substantially all of the transaction price is collectible.
−Removed: As of December 31, 2024, the Company has received an initial payment of $ 5.0 million associated with the aggregate $ 10.0 million of payments to be made under the Gemma Sublicenses for licenses and clinical product supply and $ 3.2 million associated with the Transition Services Agreement.
−Removed: The Company recorded the $ 8.2 million received as non-refundable sublicense and transition services payments received on the balance sheet as of December 31, 2024, as the criteria set forth above has not yet been met.
+Added: Gemma will be responsible for all payments due to the Trustees of the University of Pennsylvania’s, or Penn, under the Company’s research, collaboration and licensing agreement with Penn, or the Penn License Agreement, related to the Outlicensed Programs.
+Added: On July 31, 2024, the Company also entered into a transition services agreement with Gemma, or the Transition Services Agreement, as amended by the First Amendment to the Transition Services Agreement, dated January 31, 2025, pursuant to which, the Company provided transitional services at cost to Gemma through May 31, 2025, and is entitled to reimbursement for transitional services performed retroactively from March 1, 2024, related to the transfer of the Outlicensed Programs.
+Added: As of December 31, 2025, the Company has collected $ 7.5 million in initial payments, $ 4.8 million in transition services payments, and applied $ 1.5 million in amounts owed to Gemma for the Huntington’s disease program against amounts due to the Company for transition services under these agreements.
+Added: As Gemma has a limited history of operations, the Company will not recognize revenue under ASC 606 until the Company either (i) has received payment and there are no remaining obligations to transfer goods and services under the Amended Gemma Sublicenses and Transition Services Agreement (as payments received by Gemma are nonrefundable), or (ii) concludes that substantially all of the transaction price is collectible.
+Added: As of December 31, 2025, the Company has received initial payments of $ 7.5 million associated with the aggregate $ 15.0 million of initial payments to be made under the Amended Gemma Sublicenses for licenses and clinical product supply and $ 4.8 million associated with the Transition Services Agreement and applied $ 1.5 million in amounts owed to Gemma for the Huntington’s disease program against amounts due to the Company for transition services under these agreements.
+Added: The Company recorded these amounts ($ 13.8 million) as non-refundable sublicense and transition services payments on the balance sheet as of December 31, 2025, as the criteria set forth above have not yet been met.
+Added: Passage Bio, Inc.
+Added: Notes to Financial Statements (cont.)
+Added: In January 2025, the Company announced a workforce reduction to reduce operating expenses and to extend its cash runway.
+Added: In connection with the announcement, the Company reduced headcount by approximately 55 % .
+Added: In accordance with ASC 420, Exit and Disposal Activities , the Company recorded severance and termination-related costs of $ 0.4 million in general and administrative expenses and $ 1.3 million in research and development expenses for the year ended December 31, 2025.
+Added: During the year ended December 31, 2024, the Company recorded no severance and termination-related costs.
+Added: As of December 31, 2025, there were no unpaid severance and termination-related costs.
2005 Market Street Lease Agreement
2 unchanged sentences
The 2005 Market Street Lease Agreement commenced in February 2021 and is expected to expire in December 2031.
−Removed: The Company has an option to extend the term of the 2005 Market Street Lease Agreement by two
−Removed: Passage Bio, Inc.
−Removed: Notes to Financial Statements (cont.)
−Removed: additional terms of five years each.
+Added: The Company has an option to extend the term of the 2005 Market Street Lease Agreement by two additional terms of five years each.
The Company has an option to early terminate the 2005 Market Street Lease Agreement as of April 2029, given notice is provided to the landlord no less than fifteen months prior to April 2029.
10 unchanged sentences
The Company accounted for Sublease Agreement A as the lessor, and concluded the lease qualified as an operating lease, as it did not meet the criteria of a sales-type or direct financing lease.
−Removed: As a result of Sublease Agreement A, in 2023 the Company determined an impairment indicator was present.
−Removed: The Company compared the estimated undiscounted cash flows to the carrying value of the asset group, which includes ROU assets, leasehold improvements, and other property and equipment allocable to Sublease Agreement A.
−Removed: The Company concluded the carrying value of the asset group was not recoverable as it exceeded the estimated undiscounted cash flows.
−Removed: The Company calculated the amount of impairment using a discounted cash flow model to calculate the fair value of the asset group which incorporated the net identifiable cash flows for the term of Sublease Agreement A, including an estimate for cash flows in the residual period, and an estimated borrowing rate of a market participant subtenant.
−Removed: The impairment charge was recorded as of the sublease execution date.
Sublease Agreement B
4 unchanged sentences
Additionally, Sublessee B is required to pay applicable use and occupancy taxes but is not obligated to make payments for operating expenses and common area maintenance expenses which the Company is required to pay under the 2005 Market Street Lease Agreement.
+Added: Passage Bio, Inc.
+Added: Notes to Financial Statements (cont.)
Pursuant to ASC 842, the Company concluded the sublease is a separate lease, as the Company was not relieved of the primary obligation under the 2005 Market Street Lease Agreement.
1 unchanged sentence
The Company accounted for Sublease Agreement B as the lessor, and concluded the lease qualified as an operating lease, as it did not meet the criteria of a sales-type or direct financing lease.
−Removed: As a result of Sublease Agreement B, in 2023 the Company determined an impairment indicator was present.
−Removed: The Company compared the estimated undiscounted cash flows to the carrying value of the asset group, which includes ROU assets, leasehold improvements, and other property and equipment allocable to Sublease Agreement B.
−Removed: Passage Bio, Inc.
−Removed: Notes to Financial Statements (cont.)
−Removed: concluded the carrying value of the asset group was not recoverable as it exceeded the estimated undiscounted cash flows.
−Removed: The Company calculated the amount of impairment using a discounted cash flow model to calculate the fair value of the asset group which incorporated the net identifiable cash flows for the term of Sublease Agreement B, including an estimate for cash flows in the residual period, and an estimated borrowing rate of a market participant subtenant.
−Removed: The impairment charge was recorded as of the sublease execution date.
1835 Market Street Sublease Agreement
1 unchanged sentence
Under the 1835 Market Street Sublease Agreement, the Company subleased approximately 16,000 square feet of office space in Philadelphia, Pennsylvania.
−Removed: The sublease term began on March 26, 2024 and expires on September 30, 2025.
−Removed: The Company has the option to extend the term of the sublease agreement through February 28, 2029.
−Removed: The base sublease rent is $ 0.3 million per year for the original 18-month term of the sublease.
−Removed: Additionally, the Company is required to pay utility costs associated with the subleased premises.
−Removed: The optional extension was not recognized as part of the Company’s measurement of the ROU asset and operating lease liability as of December 31, 2024.
+Added: The sublease term began on March 26, 2024 and expired on September 30, 2025.
+Added: The Company had the option but did not elect to extend the term of the sublease agreement through February 28, 2029.
+Added: The base sublease rent was $ 0.3 million per year for the original 18-month term of the sublease.
+Added: Additionally, the Company was required to pay utility costs associated with the subleased premises.
Laboratory Lease Agreement
The Company is also party to a lease agreement for laboratory space, or the Laboratory Lease Agreement, in Hopewell, New Jersey.
−Removed: The laboratory is focused on state-of-the-art analytical capabilities, assay development and validation, and clinical product testing to support both viral vector manufacturing and clinical development.
The Laboratory Lease Agreement commenced in March 2021 and is expected to expire in March 2036.
+Added: The Company has an option to early terminate the Laboratory Lease Agreement as of March 2032 given notice is provided to the landlord no less than twelve months prior to March 2032.
The Company has an option to extend the term of the Laboratory Lease Agreement by up to two five-year terms.
−Removed: This option to extend was not recognized as part of the Company’s measurement of the ROU asset and operating lease liability as of December 31, 2024.
+Added: These options were not recognized as part of the Company’s measurement of the ROU asset and operating lease liability as of December 31, 2025.
+Added: In January 2025, the Company implemented a restructuring plan which included ceasing lab operations.
+Added: As a result, the Company is no longer using any of the space covered by the Laboratory Lease Agreement and is actively pursuing opportunities to sublease all remaining space in the Laboratory Lease Agreement as well as discussing with the landlord potential alternatives.
Hopewell Sublease Agreement
7 unchanged sentences
The Company accounted for the Hopewell Sublease Agreement as the lessor, and concluded the lease qualified as an operating lease, as it did not meet the criteria of a sales-type or direct financing lease.
−Removed: As a result of actions in connection with previous announcements in (i) July of 2023, for an organizational redesign, and (ii) August of 2024, for the outlicense of PBGM01 for the treatment of GM1 gangliosidosis, PBKR03 for the treatment of Krabbe disease, and PBML04 for the treatment of metachromatic leukodystrophy, and the execution of the Hopewell Sublease Agreement, the Company determined triggering events were present, primarily related to changes in how underlying assets were being used in operations.
−Removed: As a result, the Company reassessed the asset groups related to its laboratory space under the Laboratory Lease Agreement, which resulted in changes to the Company’s identified asset groups.
+Added: In 2024, the Company determined triggering events were present and reassessed the asset groups related to its laboratory space under the Laboratory Lease Agreement, which resulted in changes to the Company’s identified asset groups.
The Company determined whether an impairment indicator was present for each of the new asset groups.
−Removed: Where an impairment indicator was present, the Company compared the estimated undiscounted cash flows to the carrying
+Added: Where an impairment indicator was present, the Company compared the estimated undiscounted cash flows to the carrying values, which includes ROU assets, leasehold improvements, and other property and equipment allocable to the laboratory space
Passage Bio, Inc.
Notes to Financial Statements (cont.)
−Removed: value, which includes ROU assets, leasehold improvements, and other property and equipment allocable to the laboratory space for those asset groups.
−Removed: The Company concluded the carrying values of certain asset groups were not recoverable as it exceeded the estimated undiscounted cash flows.
+Added: for those asset groups.
+Added: The Company concluded the carrying values of certain asset groups were not recoverable as they exceeded the estimated undiscounted cash flows.
The Company calculated the amount of impairment on those asset groups using a discounted cash flow model to calculate the fair value of the asset group which incorporated the net identifiable cash flows for the term of the Hopewell Sublease Agreement, including an estimate for cash flows in the residual period, and an estimated borrowing rate of a market participant subtenant.
−Removed: As a result, certain asset groups were impaired and the Company recognized impairment expense of $ 4.8 million, including $ 2.5 million for the ROU assets and $ 2.3 million for the property and equipment during the year ended December 31, 2024.
−Removed: The following table summarizes future minimum lease payments for the Company’s lessee operating leases, which comprises of the 2005 Market Street Lease Agreement, 1835 Market Street Sublease Agreement, and the Laboratory Lease Agreement.
+Added: As a result, certain asset groups were impaired and the Company recognized impairment expense of $ 5.2 million, including $ 2.5 million for the ROU assets, $ 2.3 million for the property and equipment, net, and $ 0.4 million for certain other assets during the year ended December 31, 2024.
+Added: In connection with the January 2025 announcement to reduce its overall workforce by 55 % and cease its lab operations in Hopewell, New Jersey, the Company determined triggering events were present and reassessed its asset groups related to its laboratory space under the Laboratory Lease Agreement.
+Added: Laboratory equipment was separated from the ROU assets and leasehold improvements allocable to the laboratory space as the equipment was no longer being used in operations and the Company had implemented a plan to sell those assets.
+Added: For the ROU assets and allocable leasehold improvements, the Company compared the estimated undiscounted cash flows from subleasing to the carrying value and determined there was no impairment.
+Added: In December 2025, the Company determined triggering events were present based on rental market activity.
+Added: The Company determined whether an impairment indicator was present for each of the asset groups.
+Added: Where an impairment indicator was present, the Company compared the estimated undiscounted cash flows to the carrying values, which includes ROU assets and leasehold improvements allocable to the laboratory space for those asset groups.
+Added: The Company concluded the carrying value of one asset group was not recoverable as it exceeded the estimated undiscounted cash flows.
+Added: With support from a valuation specialist, the Company estimated the fair value of that asset group by creating a discounted cash flow model which incorporated the net identifiable estimated cash flows for the remaining term of the Laboratory Lease Agreement based upon sublease market activity and an estimated market participant subtenant borrowing rate and compared that to the carrying value of the asset group.
+Added: As a result, the Company recognized impairment expense of $ 3.5 million, including $ 2.6 million for the ROU assets and $ 0.9 million for the leasehold improvements during the year ended December 31, 2025.
+Added: The following table summarizes future minimum lease payments for the Company’s lessee operating leases, which comprises of the 2005 Market Street Lease Agreement and the Laboratory Lease Agreement.
The below table does not include expected cash inflows related to Sublease Agreement A, Sublease Agreement B, and the Hopewell Sublease Agreement as the Company was not relieved of its primary obligation under the 2005 Market Street Lease Agreement and Laboratory Lease Agreement:
3 unchanged sentences
Total lease liabilities
+Added: Passage Bio, Inc.
+Added: Notes to Financial Statements (cont.)
The following table summarizes lease expense by lease type that was recognized during the years ended December 31, 2025 and 2024:
5 unchanged sentences
The following table shows the weighted average discount rate and weighted average remaining lease term of the operating leases:
−Removed: ($ in thousands)
December 31, 2025
2 unchanged sentences
Weighted-average remaining lease term (years)
−Removed: The cash paid for amounts included in the measurement of our operating lease liabilities for the years ended December 31, 2024 and 2023 were $ 3.8 million and $ 3.5 million, respectively, in operating cash flows.
−Removed: Passage Bio, Inc.
−Removed: Notes to Financial Statements (cont.)
+Added: The cash paid for amounts included in the measurement of the Company’s operating lease liabilities for the years ended December 31, 2025 and 2024 were $ 3.9 million and $ 3.8 million, respectively, recorded in operating cash flows.
The following table summarizes sublease income that was recognized in other income (expense), net during the years ended December 31, 2025 and 2024:
14 unchanged sentences
In addition, on a product-by-product basis, the Company is obligated to make up to $ 55.0 million in sales milestone payments on each licensed product based on annual worldwide net sales of the licensed product in excess of defined thresholds.
−Removed: Pursuant to the Gemma Sublicenses, Gemma is responsible for the payments to Penn related to the Outlicensed Programs.
−Removed: Upon successful commercialization of a product using the licensed technology, the Company is obligated to pay to Penn, on a licensed product-by-licensed product and country-by-country basis, tiered royalties (subject to customary reductions) in the mid-single digits percentage on annual worldwide net sales of such licensed product.
−Removed: In addition, other than the Gemma Sublicenses, the Company is obligated to pay to Penn a percentage of sublicensing income, ranging from the mid-single digits to low double digits, for sublicenses under the Penn License Agreement.
+Added: Pursuant to the Amended Gemma Sublicenses, Gemma is responsible for the payments to Penn related to the Outlicensed Programs.
+Added: Upon successful commercialization of a product using the licensed technology, the Company is obligated to pay to Penn, on a licensed product-by-licensed product and country-by-country basis, tiered royalties (subject to customary
+Added: Passage Bio, Inc.
+Added: Notes to Financial Statements (cont.)
+Added: reductions) in the mid-single digits percentage on annual worldwide net sales of such licensed product.
+Added: In addition, other than the Amended Gemma Sublicenses, the Company is obligated to pay to Penn a percentage of sublicensing income, ranging from the mid-single digits to low double digits, for sublicenses under the Penn License Agreement.
The agreement will expire on a licensed product-by-licensed product and country-by-country basis upon the later of (i) the expiration of the last valid claim of the licensed patent rights that covers the exploitation of such licensed product in such country, and (ii) the expiration of the royalty period.
−Removed: Pursuant to the Gemma Sublicenses, Gemma is responsible for the payments to Penn related to the Outlicensed Programs.
+Added: Pursuant to the Amended Gemma Sublicenses, Gemma is responsible for the payments to Penn related to the Outlicensed Programs.
Gemma - Research, Collaboration and License Agreement
In connection with the transfer of the Outlicensed Programs, on July 31, 2024, the Company entered into a research, collaboration and license agreement with Gemma, or the Gemma Collaboration Agreement.
−Removed: Pursuant to the Gemma Collaboration Agreement, (i) Gemma will conduct certain preclinical and IND-enabling work for the Company’s active research program in Huntington’s disease and a currently paused research program in Temporal Lobe Epilepsy, or TLE, which were previously being conducted by Penn under the Penn Agreement and (ii) Gemma will grant the Company options to conduct mutually-agreed research programs in four new CNS indications.
+Added: Pursuant to the Gemma Collaboration Agreement, (i) Gemma will conduct certain preclinical and Investigational New Drug-enabling work for the Company’s active research program in Huntington’s disease and a currently paused research program in Temporal Lobe Epilepsy, or TLE, which were previously being conducted by Penn under the Penn Agreement and (ii) Gemma will grant the Company options to conduct mutually-agreed research programs in four new CNS indications.
The Gemma Collaboration Agreement requires the Company to make payments of up to (i) $ 16.5 million per product candidate in the aggregate for Huntington’s disease and any future CNS indications available to the Company under its four options and (ii) $ 39.0 million per product candidate in the aggregate arising from the research program for TLE.
−Removed: Passage Bio, Inc.
−Removed: Notes to Financial Statements (cont.)
Each payment will be due upon the achievement of specific development milestone events by such licensed product for a first indication, reduced development milestone payments for the second and third indications and no development milestone payments for subsequent indications.
4 unchanged sentences
If the Company was to exercise any of the four options under the Gemma Collaboration Agreement, it would owe Gemma a non-refundable aggregate fee of $ 1.0 million per product indication, with $ 0.5 million due upfront and another $ 0.5 million fee owed upon a further developmental milestone.
−Removed: The Company has also entered into the Gemma Sublicenses and Transition Services Agreement as described in Note 8.
−Removed: The Gemma Sublicenses, the Transition Services Agreement, and the Gemma Collaboration Agreement are collectively referred to as the Outlicense Transaction Agreements.
+Added: The Company has also entered into the Amended Gemma Sublicenses and Transition Services Agreement as described in Note 8.
+Added: The Amended Gemma Sublicenses, the Transition Services Agreement, and the Gemma Collaboration Agreement are collectively referred to as the Outlicense Transaction Agreements.
Catalent Agreements
−Removed: In June 2019, the Company entered into a collaboration agreement, or the Collaboration Agreement, with Catalent Maryland, a unit of Catalent, Inc.
−Removed: acquired by Novo Holdings A/S, or Catalent.
−Removed: As part of the Collaboration Agreement, the Company was required to pay an annual fee for five years ending in 2025 for the exclusive use of a dedicated clean room suite, or the Clean Room Suite.
−Removed: In April 2020, the Company entered into a development services and clinical supply agreement, or the Manufacturing and Supply Agreement, with Catalent to secure clinical scale manufacturing capacity for batches of active pharmaceutical ingredients for the Company’s gene therapy product candidates.
−Removed: Under the terms of the Manufacturing and Supply Agreement, Catalent agreed to manufacture batches of drug product for the Company’s gene therapy product candidates at the Clean Room Suite at a Catalent facility provided for in the Collaboration Agreement.
−Removed: The Manufacturing and Supply Agreement provided for a term of five years .
−Removed: The Manufacturing and Supply Agreement also included minimum annual purchase commitments.
−Removed: Under both the Collaboration Agreement and the Manufacturing and Supply Agreement, the Company had an annual minimum commitment of $ 10.6 million per year owed to Catalent for five years from November 2020 subject to certain inflationary adjustments.
−Removed: On March 31, 2023, the Company entered into certain letter agreements, the Letter Agreements, amending each of (i) the Collaboration Agreement and (ii) the Manufacturing and Supply Agreement, together with the Collaboration Agreement, the Original Catalent Agreements.
−Removed: On November 9, 2023, to supersede and implement the terms of the Letter Agreements, the Company entered into an amended and restated collaboration agreement and an amended and restated manufacturing and supply agreement, together the Amended Catalent Agreements.
−Removed: The Amended Catalent Agreements eliminate the minimum annual purchase obligation and the obligation to pay an annual fee for use of the Clean Room Suite, thereby eliminating the annual minimum commitment of $ 10.6 million per
+Added: The Company has entered into a collaboration agreement, and a development services and clinical supply agreement, or the Amended Catalent Agreements, with Catalent Maryland, a unit of Catalent, Inc.
+Added: acquired by Novo Holdings A/S, or Catalent, to secure clinical scale manufacturing capacity for batches of active pharmaceutical ingredients for the
Passage Bio, Inc.
Notes to Financial Statements (cont.)
−Removed: year owed to Catalent through November 2025 under the Original Catalent Agreements.
−Removed: In consideration of this, the Company had an obligation to make aggregate payments to Catalent of $ 6.0 million between June 30, 2023 and May 1, 2024.
−Removed: As of December 31, 2024, the Company has made all payments related to this obligation under the Amended Catalent Agreements.
−Removed: The Amended Catalent Agreements extend the term of the Original Catalent Agreements until November 6, 2030, and establish a limited exclusive relationship between the Company and Catalent for the manufacture of bulk drug substance and drug product for the Company’s adeno-associated virus delivery therapeutic product candidates for the treatment of frontotemporal dementia, or FTD, and GM1.
+Added: Company’s gene therapy product candidates.
+Added: Under the terms of the Amended Catalent Agreements, Catalent agreed to manufacture batches of drug product for the Company’s gene therapy product candidates.
+Added: The Amended Catalent Agreements remain in effect until November 6, 2030, and establish a limited exclusive relationship between the Company and Catalent for the manufacture of bulk drug substance and drug product for the Company’s adeno-associated virus delivery therapeutic product candidates for the treatment of FTD and GM1.
The limited exclusive relationship under the Amended Catalent Agreements converts to a non-exclusive relationship (i) in the event Catalent fails to meet certain performance standards and (ii) following certain conditional events related to the divestiture by the Company of either FTD or GM1, in which case, if such events occur, the Company would pay Catalent certain fees.
−Removed: The outlicense of GM1 to Gemma under the Outlicense Transaction Agreements, and subsequent business decisions implemented by Gemma in their sole discretion, could be considered an event related to the divesture of GM1 under the Amended Catalent Agreements and require us to make payment of certain fees to Catalent, which fees are immaterial.
−Removed: Immediately prior to the execution of the Letter Agreements, the Company had a $ 5.3 million prepaid asset related to upfront payments made to secure the Clean Room Suite.
−Removed: In connection with the Letter Agreements, the Company no longer has exclusive access to the Clean Room Suite at Catalent and, as a result, the Company recognized an expense of $ 5.3 million related to the elimination of the prepaid asset during the year ended December 31, 2023.
−Removed: The Company classified the $ 11.3 million of expenses, which comprises of $ 6.0 million in aggregate payments due to Catalent and the $ 5.3 million elimination of the prepaid asset, as general and administrative expense within the statement of operations for the year ended December 31, 2023, as both amounts do not directly relate to the future advancement of the Company’s research and development programs.
+Added: In the event of certain transactions, the Company may terminate the Amended Catalent Agreements for convenience with respect to such products, in which case, the Company would pay Catalent a certain termination fee.
+Added: The outlicense and completed transition of GM1 to Gemma under the Outlicense Transaction Agreements, is deemed by Catalent to be a divestiture under the Amended Catalent Agreements.
+Added: As such, the Company is required to make payment of $ 0.9 million to Catalent which has been accrued as of and during the year ended December 31, 2025.
In the normal course of business, the Company from time to time is named as a party to legal claims and actions.
1 unchanged sentence
The Company has no t recorded any amounts for loss contingencies as of December 31, 2025.
−Removed: The Company is a defendant in litigation with a former employee, who filed a lawsuit in the Court of Common Pleas of Philadelphia County asserting claims for breach of contract and violation of the Pennsylvania Wage Payment and Collection Law.
−Removed: The plaintiff, who was terminated from his employment in 2019, contended that the Company entered into a binding settlement agreement in February 2020 under which he was to receive shares of company stock and additional compensation.
+Added: The Company is the defendant in litigation with a former employee, who filed a lawsuit in the Court of Common Pleas of Philadelphia County asserting claims for breach of contract and violation of the Pennsylvania Wage Payment and Collection Law.
+Added: The plaintiff, who was terminated from their employment in 2019, contended that the Company entered into a binding settlement agreement in February 2020 under which he was to receive shares of company stock and additional compensation.
Specifically, he contended that before the announcement of the Company’s initial public offering in February 2020, he was promised 150,000 shares of stock as part of the settlement, and that those shares were not subject to the reverse stock split that was implemented for all shareholders.
−Removed: The Company responded that the shares offered in settlement negotiations in 2020 were to be subject to the reverse split, and that had the settlement been finalized, the plaintiff would have been entitled to 33,836 shares.
+Added: The Company responded that the shares offered in settlement negotiations in 2020 were to be subject to the reverse split, and that had the settlement been finalized, the plaintiff would have been entitled to 33,836 shares ( 1,692 shares adjusted for the Reverse Stock Split effected in 2025).
A trial in this case was held in October 2024.
2 unchanged sentences
Both sides then challenged the verdict, and on December 12, 2024, the judge who presided over the trial delivered a judgment in the Company’s favor, finding that no binding agreement was reached and that the plaintiff was not entitled to recover any damages.
−Removed: On December 23, 2024, the plaintiff filed an appeal with the Superior Court of Pennsylvania, which is currently pending.
+Added: On December 23, 2024, the plaintiff filed an appeal with the Superior Court of Pennsylvania.
+Added: On September 25, 2025, the appellate court affirmed the entry of judgment in favor of the Company and on October 7, 2025, the plaintiff filed an Application for Reargument to the Superior Court of Pennsylvania.
+Added: In December 2025, the Superior Court of Pennsylvania denied the Application for Reargument.
+Added: In December 2025, the plaintiff petitioned for review of their appeal to the Pennsylvania Supreme Court which is currently pending.
The Company intends to continue to defend against this claim.
−Removed: Passage Bio, Inc.
−Removed: Notes to Financial Statements (cont.)
−Removed: The Company recorded $ 1.0 million for loss contingencies within general and administrative expenses in the quarter ended September 30, 2024 in connection with this matter, which was reversed in the quarter ended December 31, 2024, as it is no longer deemed probable the Company will pay any such amounts.
Other than the above, we are not presently a party to any legal proceedings that, in the opinion of management, would, if decided against us, have a material adverse effect on our business.
Regardless of outcome, litigation can have an adverse impact on us due to defense and settlement costs, diversion of management resources, negative publicity and reputational harm, and other factors.
+Added: Passage Bio, Inc.
+Added: Notes to Financial Statements (cont.)
Employment Agreements
−Removed: The Company has entered into employment agreements with certain key personnel providing for up to 18 months of salary continuation, up to 150 % of target annual bonus amounts, and acceleration of vesting in stock-based compensation awards in certain circumstances.
+Added: The Company has employment agreements with certain key personnel providing for up to 18 months of salary continuation, up to 150 % of target annual bonus amounts, and acceleration of vesting in stock-based compensation awards in certain circumstances.
On March 5, 2021, the Company entered into a Sales Agreement, or the Sales Agreement, with Cowen and Company, LLC, or Cowen, relating to the applicable terms of at-the-market equity offerings, or the ATM Facility, pursuant to which the Company may, but is not obligated to, offer and sell, from time to time, shares of its common stock with an aggregate offering price up to $ 125.0 million through Cowen, as sales agent in the ATM Facility.
The Company issued 300,000 shares of common stock under the ATM Facility, resulting in net proceeds of $ 8.7 million, after deducting offering costs of $ 0.3 million in March 2024.
−Removed: As a result of the Company’s public float as of January 6, 2025, the Company is currently limited to $ 15.8 million in its capacity to offer and sell shares of its common stock under the Sales Agreement pursuant to its shelf registration statement on Form S-3, filed on March 4, 2024.
+Added: The Company is currently limited in its capacity to offer and sell shares of its common stock under the Sales Agreement pursuant to the prospectus supplement to its shelf registration statement on Form S-3, filed on March 5, 2025.
+Added: On July 14, 2025, the Company effected the Reverse Stock Split.
+Added: The Reverse Stock Split did not reduce the number of authorized shares of the common stock and did not change the par value of the common stock.
+Added: In addition, proportionate adjustments were made to the number of shares of common stock available for issuance under the Company’s equity inducement and incentive plans;
+Added: the number of shares underlying, and the exercise prices of outstanding equity awards under such plans.
+Added: All share information in these financial statements has been adjusted for this Reverse Stock Split.
Share-Based Compensation
12 unchanged sentences
The total number of shares authorized under the Inducement Plan as of December 31, 2025 was 125,000 .
−Removed: Of this amount, 1,528,313 shares were
+Added: Of this amount, 87,166 shares were available for future grants as of December 31, 2025.
+Added: The Inducement Plan provides for the granting of nonqualified stock options and restricted stock awards to employees hired by the Company, as determined by the Company’s board of directors.
+Added: The Company’s stock options awarded to date under the Inducement Plan vest based on requisite service
Passage Bio, Inc.
Notes to Financial Statements (cont.)
−Removed: available for future grants as of December 31, 2024.
−Removed: The Inducement Plan provides for the granting of nonqualified stock options and restricted stock awards to employees hired by the Company, as determined by the Company’s board of directors.
−Removed: The Company’s stock options awarded to date under the Inducement Plan vest based on requisite service period and have a term of ten years .
+Added: period and have a term of ten years .
The Company’s restricted stock units awarded to date under the Inducement Plan vest based on requisite service period and have a term based on each award agreement.
The Company measures share-based awards at their grant-date fair value and records compensation expense on a straight-line basis over the vesting period of the awards.
−Removed: The Company recorded share-based compensation expense in the following expense categories in its accompanying statements of operations for the period presented:
+Added: The Company recorded share-based compensation expense in the following expense categories in its accompanying statements of operations and comprehensive loss for the period presented:
Year Ended December 31,
5 unchanged sentences
Outstanding at January 1, 2025
−Removed: ( 2,571,789 )
Outstanding at December 31, 2025
2 unchanged sentences
The weighted-average grant date fair value of options granted was $ 6.07 and $ 20.20 for the years ended December 31, 2025 and 2024, respectively.
−Removed: The aggregate intrinsic value of options exercised, options outstanding, and options exercisable were each de minimus during the years ended December 31, 2024 and 2023.
+Added: The aggregate intrinsic value of options outstanding was $ 0.9 million at December 31, 2025 and was de minimis at December 31, 2024.
+Added: The aggregate intrinsic value of options exercisable was $ 0.2 million at December 31, 2025 and was de minimis at December 31, 2024.
+Added: There were no options exercised during the year ended December 31, 2025 and the aggregate intrinsic value of options exercised during the year ended December 31, 2024 was de minimis.
As of December 31, 2025, the total unrecognized compensation expense related to unvested stock option awards was $ 3.0 million, which the Company expects to recognize over a weighted-average period of 2.2 years.
24 unchanged sentences
The number of shares of the Company’s common stock that may be issued pursuant to rights granted under the ESPP shall automatically increase on January 1st of each year and continuing for ten years , in an amount equal to one percent of the total number of shares of the Company’s common stock outstanding on December 31st of the preceding calendar year, subject to the discretion of the board of directors to determine a lesser number of shares shall be added for such year.
−Removed: As a result, on January 1, 2025, subject to the discretion of the board of directors, the shares authorized for issuance under the ESPP was not increased.
+Added: As a result, on January 1, 2026 and 2025, subject to the discretion of the board of directors, the shares authorized for issuance under the ESPP was not increased.
Under the ESPP, eligible employees can purchase the Company’s common stock through accumulated payroll deductions at such times as are established by the board of director’s Compensation Committee.
3 unchanged sentences
Under the ESPP, a participant may not accrue rights to purchase more than $ 25,000 worth of the Company’s common stock for each calendar year in which such right is outstanding or purchase more than 200 shares of the Company’s common stock in any single offering period.
+Added: Beginning in May 2026,
Passage Bio, Inc.
Notes to Financial Statements (cont.)
+Added: the limit will increase from 200 shares to 2,000 shares in any single offering period, not to exceed $ 25,000 in any calendar year.
In accordance with the guidance in ASC Topic 718-50, Compensation – Stock Compensation , the ability to purchase shares of the Company’s common stock at 85 % of the lower of the price on the first day of the offering period or the last day of the offering period (i.e.
1 unchanged sentence
Accordingly, share-based compensation expense is determined based on the option’s grant-date fair value as estimated by applying the Black Scholes option-pricing model and is recognized over the withholding period.
+Added: No share-based compensation expense related to the ESPP was recorded during the years ended December 31, 2025 and 2024.
The tax effects of temporary differences that gave rise to significant portions of the deferred tax assets and liabilities were as follows:
14 unchanged sentences
Right of use assets - operating leases
−Removed: Depreciation and amortization
Total deferred tax liabilities
6 unchanged sentences
Notes to Financial Statements (cont.)
+Added: During the year ended December 31, 2025, the Company adopted ASU No.
+Added: 2023-09, Income Taxes (Topic 740):
+Added: Improvements to Income Tax Disclosures retrospectively.
A reconciliation of the federal income tax rate to the Company’s effective tax rate is as follows:
−Removed: Federal tax benefit at statutory rate
−Removed: State tax, net of federal benefit
−Removed: Change in state tax rates
−Removed: Permanent differences
−Removed: Equity compensation
−Removed: Research and development and orphan tax credits
−Removed: Change in valuation allowance
+Added: (in thousands)
+Added: US federal statutory tax rate
+Added: Research and development tax credits
+Added: Orphan drug tax credits
+Added: Changes in valuation allowances
+Added: Nontaxable or nondeductible items:
+Added: Share-based payment awards
+Added: Expiration of share-based payment awards
+Added: State and local income taxes, net of federal income tax effect 1
+Added: Effective tax rate
+Added: 1 In 2025 and 2024, state and local income taxes in Pennsylvania and Philadelphia comprise the majority of the state and local income taxes, net of federal income tax effect category.
+Added: During the years ended December 31, 2025 and 2024, the Company made no income tax payments.
+Added: Additionally, the Company generated no foreign pre-tax income or losses during these periods, as all operations were conducted within the United States.
The following table summarizes carryforwards of federal, state and local net operating losses, or NOL, and research and development and orphan drug tax credits:
5 unchanged sentences
For local income tax purposes related to the city of Philadelphia, NOL carryforwards begin expiring in 2042, and expire through 2045.
−Removed: NOL carryforwards generated prior to 2022 expire after three years, whereas NOL carryforwards generated in 2022 and after expire after 20 years.
As of December 31, 2025, the Company also had $ 11.6 million of federal research and development and $ 43.4 million orphan drug tax credit carryforwards that will begin to expire in 2038 and 2040, respectively, unless previously utilized.
The NOL and tax credit carryforwards are subject to review and possible adjustment by the Internal Revenue Service and state tax authorities.
−Removed: NOL and tax credit carryforwards may become subject to an annual limitation in the event of certain cumulative changes in the ownership interest of significant stockholders over a three-year period in excess of 50 percent, as defined under Sections 382 and 383 of the Internal Revenue Code, respectively, as well as similar state provisions.
+Added: NOL and tax credit carryforwards may become subject to an annual limitation in the event of certain cumulative changes in the ownership interest of significant stockholders over a three-year period in excess of 50 percent, as defined under Sections 382 and 383 of the Internal Revenue Code, respectively, as well as similar state
+Added: Passage Bio, Inc.
+Added: Notes to Financial Statements (cont.)
This could limit the amount of tax attributes that can be utilized annually to offset future taxable income or tax liabilities.
7 unchanged sentences
The NOL and tax credit carryforwards remain subject to review until utilized.
−Removed: Passage Bio, Inc.
−Removed: Notes to Financial Statements (cont.)
Segment Reporting
5 unchanged sentences
All assets are located within the United States.
−Removed: The CODM uses net loss as reported on our statement of operations to assess the Company’s performance.
−Removed: Our CODM also uses cash forecast in deciding where to invest or expand operations within the business.
+Added: The CODM uses net loss as reported on the Company’s statement of operations to assess the Company’s performance.
+Added: The CODM also uses cash forecasts in deciding where to invest or expand operations within the business.
In these cash forecasts, research and development expenses and general and administrative expenses exclude certain non-cash items such as share-based compensation and depreciation and amortization expenses.
+Added: Passage Bio, Inc.
+Added: Notes to Financial Statements (cont.)
The following table summarizes significant segment expenses:
+Added: Year Ended December 31,
(in thousands)
8 unchanged sentences
Third-party costs
−Removed: Amended Catalent agreements expense
Share-based compensation
4 unchanged sentences
Other (income) expense, net
−Removed: The components of Other (income) expense, net are futher described in note 3 to the financial statements.
−Removed: Passage Bio, Inc.
−Removed: Notes to Financial Statements (cont.)
+Added: The components of Other (income) expense, net are further described in note 3 to the financial statements.
Subsequent Events
−Removed: On January 8, 2025, the board of directors of the Company approved, and management began to implement, a restructuring plan, or the Restructuring Plan, to (i) cease its lab operations at its leased laboratory space in Hopewell, New Jersey and (ii) reduce operating costs and better align its workforce with the needs of its strategic research and development strategy.
−Removed: The implementation of the Restructuring Plan should be substantially complete by the end of the first quarter 2025.
−Removed: Under the Restructuring Plan, the Company is reducing its overall workforce by approximately 55 % .
−Removed: Impacted employees are eligible to receive severance benefits which the Company estimates will approximate $ 1.7 million.
−Removed: These severance benefits are contingent upon an impacted employee’s execution (and non-revocation) of a severance agreement, which includes a general release of claims against the Company.
−Removed: Following the Restructuring Plan, as of January 31, 2024, the Company had 27 full-time employees.
−Removed: In connection with the Restructuring Plan, the Company is pursuing opportunities to sublease the remaining space leased under the Laboratory Lease Agreement to offset portions of its financial obligations and is pursuing opportunities to sell the laboratory equipment.
−Removed: As a result, the Company reassessed asset groups and evaluated such asset groups for impairment under FASB ASC Topic 360, Long-lived assets:
−Removed: Impairment or disposal of long-lived assets , for all long-lived assets related to the leased laboratory space, which comprises primarily of ROU assets, leasehold improvements and laboratory equipment.
−Removed: As a result, the Company expects to recognize impairment expenses for its laboratory equipment of approximately $ 1.0 million to $ 3.0 million in the three-month period ending March 31, 2025.
−Removed: This range is preliminary and may change subject to management’s finalization of assumptions used in impairment testing.
−Removed: On January 31, 2025 the Company amended its Transition Services Agreement with Gemma Biotherapeutics, pursuant to the First Amendment to the Transition Services Agreement, dated January 31, 2025, which extended the agreement through May 31, 2025, unless terminated earlier.
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
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.