What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2021-08-05 compared with 2021-05-05 · 100 added, 50 removed, 193 unchanged (44% of the section changed)

4 unchanged sentences

Overview and Pipeline

We are a genetic medicines company focused on developing transformative therapies for rare, monogenic central nervous system, or CNS, disorders with limited or no approved treatment options.

Our vision is to finally fulfill the promise of gene therapy by developing groundbreaking therapies that transform the lives of patients with rare monogenic CNS diseases.

The field of genetic medicine is rapidly expanding and we believe we have a differentiated approach to developing treatments for rare, monogenic CNS disorders that enables us to select and advance product candidates with a higher probability of technical and regulatory success.

We are a clinical stage genetic medicines company focused on developing transformative therapies for central nervous system, or CNS, disorders.

Our vision is to finally fulfill the promise of gene therapy by developing groundbreaking therapies that transform the lives of patients with CNS diseases.

The field of genetic medicine is rapidly expanding and we believe we have a differentiated approach to developing treatments for CNS disorders that enables us to select and advance product candidates with a higher probability of technical and regulatory success.

We have entered into a strategic research collaboration with the Trustees of the University of Pennsylvania’s, or Penn’s, Gene Therapy Program, or GTP, headed by Dr.

2 unchanged sentences

Through these collaborations we have assembled a deep portfolio of genetic medicine product candidates, including our three lead product candidates all of which we retain global rights to, the details of which are outlined in the below table:

1 10 additional new pipeline license options

* 10 additional CNS pipeline license options.

† Program includes ongoing natural history study of infantile and juvenile GM1 gangliosidosis patients.

29 unchanged sentences

In April 2021, we received a CTA for our upliFT-D Trial for PBFT02 from Health Canada.

We expect to initiate our upliFT-D Trial in the second or third quarter of 2021, and expect to report initial safety and 30-day biomarker data from the initial cohort in the first half of 2022.

We expect to initiate our upliFT-D Trial in the third quarter of 2021, and expect to report initial safety and 30-day biomarker data from the initial cohort in the first half of 2022.

The FDA has granted ODD and Fast Track Designation to PBFT02 for the treatment of FTD-GRN.

In July 2021, the European Commission granted Orphan designation for PBFT02.

We have manufactured the PBFT02 clinical supply to support clinical trial initiation in the United States.

12 unchanged sentences

Research Programs

We also have four programs in the research stage under our license agreement with Penn:

We also have four rare, monogenic CNS programs in the research stage under our license agreement with Penn:

PBML04 for MLD, PBAL05 for ALS, PBCM06 for CMT2A and an undisclosed program to treat an adult CNS indication.

PBML04 is targeting patients with MLD who have mutations in the ARSA gene, PBAL05 is targeting patients with ALS who have a gain-of-function mutation in the C9orf72 gene and PBCM06 is targeting patients with CMT2A who have a mutation in the MFN2 gene.

Beyond this portfolio, through our research collaboration with GTP, we also have the option to license programs for ten additional new indications in rare, monogenic CNS along with rights and licenses to new gene therapy technologies developed by Penn, such as novel capsids, toxicity reduction, delivery and formulation technologies.

PBML04 is targeting patients with MLD who have mutations in the ARSA gene, PBAL05 is targeting patients with ALS who have a gain-of-function mutation in the C9orf72 gene, PBCM06 is targeting patients with CMT2A who have a mutation in the MFN2 gene and an undisclosed program to treat an adult CNS indication.

In addition, pursuant to the recent Second Expansion Amendment, we also have established exploratory research programs with Penn in Alzheimer’s Disease and Temporal Lobe Epilepsy.

Beyond this portfolio, through our research collaboration with GTP, we also have the option to license programs for ten additional new indications in CNS along with rights and licenses to new gene therapy technologies developed by Penn, such as novel capsids, toxicity reduction, delivery and formulation technologies.

Business Overview

3 unchanged sentences

Historically, we have funded our operations through the sale of convertible preferred stock and public offerings of common stock.

Our net loss was $38.9 million for the three months ended March 31, 2021.

As of March 31, 2021, we had an accumulated deficit of $209.8 million.

Our net loss was $48.4 and $87.3 million for the three and six months ended June 30, 2021, respectively.

As of June 30, 2021, we had an accumulated deficit of $258.2 million.

Our primary use of cash is to fund operating expenses, which consist primarily of research and development expenditures, and to a lesser extent, general and administrative expenditures.

Our ability to generate product revenue sufficient to achieve profitability will depend heavily on the successful development and eventual commercialization of one or more of our current or future product candidates.

We expect to continue to incur significant expenses and operating losses for the foreseeable future as we advance our product candidates through all stages of development and clinical trials and, ultimately, seek regulatory approval.

In addition, if we obtain marketing approval for any of our product candidates, we expect to incur significant commercialization expenses related to product manufacturing, marketing, sales and distribution.

Furthermore, we expect to incur additional costs associated with operating as a public company, including significant legal, accounting, investor

relations and other expenses that we did not incur as a private company.

Furthermore, we expect to incur additional costs associated with operating as a public company, including significant legal, accounting, investor relations and other expenses that we did not incur as a private company.

Our net losses may fluctuate significantly from quarter-to-quarter and year-to-year, depending on the timing of our clinical trials and our expenditures on other research and development activities.

4 unchanged sentences

If we are unable to secure adequate additional funding, we may have to significantly delay, scale back or discontinue the development and commercialization of one or more product candidates or delay our pursuit of potential in-licenses or acquisitions.

As of March 31, 2021, we had cash, cash equivalents and marketable securities of $437.6 million.

As of June 30, 2021, we had cash, cash equivalents and marketable securities of $407.8 million.

We expect our existing cash, cash equivalents and marketable securities will enable us to fund our operating expenses and capital expenditure requirements for at least the next 24 months from the date of this filing.

4 unchanged sentences

As we diligently work to activate sites for our clinical programs, we are experiencing some impacts to our site initiation activities related to COVID-19, such as, meeting delays with various investigational review bodies or ethics committees that have prioritized COVID-19 -related clinical trials and staffing levels at site hospitals.

Our expected timelines for clinical trials have been delayed primarily by these impacts.

Our expected timelines for clinical trials could be delayed by these impacts.

Financial Operations Overview

1 unchanged sentence

University of Pennsylvania

We have a research, collaboration and licensing agreement, or the Penn Agreement, with Penn, for research and development collaborations and exclusive license rights to patents for certain products and technologies .

Under the Penn Agreement, in addition to the obligation to fund certain research relating to the preclinical development of selected products, we fund discovery research conducted by Penn through May 2025, and will receive exclusive rights, subject to certain limitations, to technologies resulting from the discovery program for products developed with GTP, such as novel capsids, toxicity reduction technologies and delivery and formulation improvements.

Our funding commitment is $5.0 million annually, with quarterly payments of $1.3 million through June 30, 2025.

Under the Penn Agreement we have ten remaining options available to us to commence additional licensed programs for rare, monogenic CNS indications until May 2025.

If we were to exercise any of these remaining options, we would owe Penn a non-refundable upfront fee of $0.5 million per product indication, with another $0.5 million fee owed upon a further developmental milestone .

The Penn Agreement requires that we make payments of up to $16.5 million per product candidate in aggregate 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.

We have a research, collaboration and licensing agreement, as recently amended by the Second Expansion Amendment (see below), or the Penn Agreement, with Penn, for research and development collaborations and exclusive license rights to patents for certain products and technologies .

Under the Penn Agreement, in addition to the obligation to fund certain research relating to the preclinical development of selected products and the new exploratory research program in non-rare and/or non-monogenic (or large) CNS indications, initially Alzheimer’s Disease and Temporal Lobe Epilepsy and such other mutually agreed upon large CNS indications, we fund discovery research conducted by Penn through August 2026, and will receive exclusive rights, subject to certain limitations, to technologies resulting from the discovery program for products developed with GTP, such as novel capsids, toxicity reduction technologies and delivery and formulation improvements.

Our funding commitment is $5.0 million annually, paid in quarterly increments of $1.3 million through June 30, 2026.

Under the Penn Agreement, we have ten remaining options available to us to commence additional licensed programs for CNS indications until May 2026.

If we were to exercise any of these remaining options, we would owe Penn a non-refundable upfront fee of $1.0 million.

The Penn Agreement requires that we make payments of up to (i) $16.5 million per product candidate for rare, monogenic disorders in aggregate and (ii) $39.0 million per product candidate in the aggregate arising from the

exploratory program for large CNS indications, initially Alzheimer’s Disease and Temporal Lobe Epilepsy and such other mutually agreed upon large CNS indications.

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.

In addition, on a product-by-product basis, we are obligated to make up to $55.0 million in sales milestone payments on each licensed product based on annual sales of the licensed product in excess of defined thresholds.

1 unchanged sentence

In addition, we are 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 Agreement.

We and Penn entered into an amendment to the Penn Agreement on August 3, 2021, or the Second Expansion Amendment.

Under the Second Expansion Amendment, we and Penn expanded the scope of the collaboration to include certain non-rare and/or non-monogenic (or large) CNS indications, initially Alzheimer’s Disease and Temporal Lobe Epilepsy and such other mutually agreed upon large CNS indications;

included an exploratory research collaboration to identify targets and early product candidates in such large CNS indications;

and extended the term to August 3, 2026 by which product candidates for CNS indications may be selected for the entire agreement.

The exploratory research program is focused on discovering targets and novel gene therapy candidates for large CNS diseases, initially focused on Alzheimer’s Disease and Temporal Lobe Epilepsy, and that can be expanded to other large CNS diseases upon mutual agreement.

The initial term of the exploratory research program is 3 years, which term can be extended by mutual agreement.

During such term we will have an exclusive right of first negotiation to include additional targets to the exploratory research program in the agreed upon large CNS indications.

Under the exploratory research program, we will have the right to further develop and commercialize any gene therapy product candidates specific for those selected targets within Alzheimer’s Disease and Temporal Lobe Epilepsy (and any future large CNS indications that are mutually agreed upon) that arise from the exploratory research programs on substantially the same terms of the current Penn Agreement.

The election of any option to any such product candidates will count against our remaining 10 options and will trigger the $1.0 million option fee.

In addition, under the Second Expansion Amendment, the research phase of the Penn Agreement was extended to August 3, 2026.

As a result, we now will fund discovery research through August 3, 2026, and will now have until August 3, 2026 to exercise our remaining 10 options.

We will make an upfront payment of $5.0 million within 10 days of signing the Second Expansion Amendment, will reimburse Penn for expenses incurred in the exploratory research program;

will pay an aggregate of $39.0 million in development milestones for each product candidate in which the Company has exercised its option in Alzheimer’s Disease and Temporal Lobe Epilepsy and such other mutually agreed upon large CNS indications (in lieu of the milestones set forth in the existing Penn Agreement) in addition to the royalties and commercial milestones for products set forth under the existing Penn Agreement;

and will pay Penn a tiered transaction fee ranging from 1-2% of the net proceeds upon certain change of control events.

Collaboration and Manufacturing and Supply Agreements

27 unchanged sentences

Product candidates in later stages of clinical development generally have higher development costs than those in earlier stages of clinical development, primarily due to the increased size and duration of later-stage clinical trials.

We expect our research and development expenses to increase significantly over the next several years as we increase personnel costs, including share-based compensation, conduct our clinical trials, including later-stage clinical trials, for current and future product candidates and prepare regulatory filings for our product candidates.

We expect our research and development expenses to increase significantly over the next several years as we increase personnel costs, including share-based compensation,

conduct our clinical trials, including later-stage clinical trials, for current and future product candidates and prepare regulatory filings for our product candidates.

Costs incurred in obtaining technology licenses are charged to research and development expense as acquired in-process research and development if the technology licensed has not reached technological feasibility and has no alternative future use.

10 unchanged sentences

Results of Operations

Comparison of the Three Months Ended March 31, 2021 and 2020

The following table sets forth our results of operations for the three months ended March 31, 2021 and 2020.

Comparison of the Three Months Ended June 30, 2021 and 2020

The following table sets forth our results of operations for the three months ended June 30, 2021 and 2020.

Three months ended

2 unchanged sentences

Research and development

Acquired in‑process research and development

General and administrative

2 unchanged sentences

Research and Development Expenses

Research and development expenses increased by $11.9 million to $25.0 million for the three months ended March 31, 2021 from $13.1 million for the three months ended March 31, 2020.

T he increase was primarily due to an increase of $5.1 million in clinical manufacturing costs, a $0.4 million increase in clinical development and professional services expense and an $0.6 million increase in facility and other costs.

We also had a $8.9 million increase in personnel-related costs, including a one-time share-based compensation charge of $5.2 million associated with the modification of stock options associated with the departure of our Acting Head of Research and Development, who was also a member of our Board of Directors.

Absent this one-time charge, personnel cost would have increased by $3.7 million mainly due to an increase in employee headcount in the research and development function.

These increases were offset by a $3.1 million decrease in pre-clinical research and development costs incurred as we finalized work associated with our lead indications in preparation for IND filings.

Research and development expenses increased by $13.2 million to $33.1 million for the three months ended June 30, 2021 from $19.9 million for the three months ended June 30, 2020.

The increase was primarily due to an increase of $13.9 million in clinical manufacturing costs, a $1.7 million increase in clinical development and professional services expense, a $4.8 million increase in personnel-related expense due to an increase in employee headcount, and a $0.4 million increase in facility and other costs.

The $4.8 million increase in personnel-related costs included a one-time share-based compensation expense of $0.9 million associated with the modification of stock options.

Absent this one-time expense, personnel cost would have increased by $3.9 million.

These increases were partially offset by a $7.6

million decrease in research and development costs associated with the Penn Agreement, which relates to costs incurred in the three months ended June 30, 2020 for preclinical work performed in preparation for IND filings for our lead programs and certain pass-through clinical manufacturing costs.

We track outsourced development, outsourced personnel costs and other external research and development costs of specific programs.

6 unchanged sentences

Acquired In-Process Research and Development Expenses

The Company incurred a license fee with Penn of $1.5 million during the three months ended March 31, 2021 in connection with the achievement of a development milestone.

The Company did not incur any license fees with Penn during the three months ended June 30, 2021.

General and Administrative Expenses

General and administrative expenses increased by $7.7 million to $12.5 million for the three months ended March 31, 2021 from $4.8 million for the three months ended March 31, 2020.

General and administrative expenses increased by $8.0 million to $15.4 million for the three months ended June 30, 2021 from $7.4 million for the three months ended June 30, 2020.

The increase was primarily due to a $6.0 million increase in personnel-related and share-based compensation expense due to an increase in employee headcount.

1 unchanged sentence

Interest Income, net

Interest income, net was $52,000 and $0.3 million for the three months ended March 31, 2021 and 2020, respectively.

Such income is primarily attributable to interest income earned on cash, cash equivalents and marketable securities.

Interest income, net was $0.1 million for both three months ended June 30, 2021 and 2020, which is primarily attributable to interest income earned on cash, cash equivalents and marketable securities.

Comparison of the Six Months Ended June 30, 2021 and 2020

The following table sets forth our results of operations for the six months ended June 30, 2021 and 2020.

Six months ended

(in thousands)

Operating expenses:

Research and development

Acquired in‑process research and development

General and administrative

Loss from operations

Interest income

Research and Development Expenses

Research and development expenses increased by $25.1 million to $58.1 million for the six months ended June 30, 2021 from $33.0 million for the six months ended June 30, 2020.

The increase was primarily due to an increase of $19.0 million in clinical manufacturing costs, a $2.1 million increase in clinical development and professional services expense and an $1.0 million increase in facility and other costs.

We also had a $13.8 million increase in personnel-related costs, including one-time share-based compensation expenses of $6.1 million associated with the modification of stock options.

Absent these one-time expenses, personnel cost would have increased by $7.7 million mainly due to an increase in employee headcount in the research and development function.

These increases were partially offset by a $10.8 million decrease in research and development costs associated with the Penn Agreement, which relates to costs incurred in the six months ended June 30, 2020 for preclinical work performed in preparation for IND filings for our lead programs and certain pass-through clinical manufacturing costs.

We track outsourced development, outsourced personnel costs and other external research and development costs of specific programs.

We do not track our internal research and development costs on a program-by-program basis.

Research and development expenses are summarized by program in the table below:

Six months ended

(in thousands)

Undisclosed program

Internal costs, including personnel related

Acquired In-Process Research and Development Expenses

The Company incurred a license fee with Penn of $1.5 million during the six months ended June 30, 2021 in connection with the achievement of a development milestone.

General and Administrative Expenses

General and administrative expenses increased by $15.7 million to $27.9 million for the six months ended June 30, 2021 from $12.2 million for the six months ended June 30, 2020.

The increase was primarily due to a $10.3 million increase in personnel-related and share-based compensation expense due to an increase in employee headcount.

Our professional fees and facility costs also increased by $5.4 million, as we expanded our operations to support our research and development efforts and incurred more costs associated with operating as a public company.

Interest Income, net

Interest income, net was $0.2 million and $0.5 million for the six months ended June 30, 2021 and 2020, respectively which is primarily attributable to interest income earned on cash, cash equivalents and marketable securities.

Liquidity and Capital Resources

In January 2021, we received $165.8 million in net proceeds from the sale of our common stock.

As of March 31, 2021, we had $437.6 million in cash, cash equivalents and marketable securities and had an accumulated deficit of $209.8 million.

As of June 30, 2021, we had $407.8 million in cash, cash equivalents and marketable securities and had an accumulated deficit of $258.2 million.

We expect that our existing cash, cash equivalents and marketable securities will enable us to fund our operating expenses and capital expenditure requirements for at least 24 months as of the date of this filing.

15 unchanged sentences

We currently have no credit facility or committed sources of capital.

Because of the numerous risks and uncertainties associated with the development and commercialization of our product candidates, we are unable to estimate the amounts of increased capital outlays and operating expenditures associated with our current and anticipated clinical studies.

Because of the numerous risks and uncertainties associated with the development and

commercialization of our product candidates, we are unable to estimate the amounts of increased capital outlays and operating expenditures associated with our current and anticipated clinical studies.

Until such time, if ever, as we can generate substantial product revenue, we expect to finance our operations through a combination of equity offerings, debt financings, collaborations, strategic alliances and marketing, distribution or licensing arrangements.

To the extent that we raise additional capital through the sale of equity or convertible debt securities, your ownership interest will be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect your rights as a common stockholder.

To the extent that we raise additional capital through the sale of equity or convertible debt securities, existing stockholders’ ownership interests will be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect existing stockholders’ rights as common stockholders.

Debt financing and preferred equity financing, if available, may involve agreements that include covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making acquisitions or capital expenditures or declaring dividends.

2 unchanged sentences

The following table shows a summary of our cash flows for the periods indicated:

Three months ended

Six months ended

(in thousands)

4 unchanged sentences

Net Cash Used in Operating Activities

During the three months ended March 31, 2021, we used $30.7 million of net cash in operating activities.

Cash used in operating activities reflected a net loss of $38.9 million and a $3.5 million net increase in our operating assets and liabilities.

which was partially offset by non-cash charges of $11.7 million related to share-based compensation, acquired in-process research and development, depreciation, amortization of premium and discount, net and changes in deferred rent.

During the six months ended June 30, 2021, we used $55.0 million of net cash in operating activities.

Cash used in operating activities reflected a net loss of $87.3 million, which was partially offset by net increase in our operating net liabilities by $9.5 million and non-cash charges of $21.2 million related to share-based compensation, depreciation, amortization of premium and discount, net, and changes in deferred rent.

The primary use of cash was to fund our operations related to the development of our product candidates.

During the three months ended March 31, 2020, we used $21.9 million of net cash in operating activities.

Cash used in operating activities reflected a net loss of $17.6 million and a $6.7 million net increase in our operating assets and liabilities.

Cash used in these activities was partially offset by noncash charges of $2.4 million related to share-based compensation, deprecation and changes in deferred rent.

During the six months ended June 30, 2020, we used $33.6 million of net cash in operating activities.

Cash used in operating activities reflected a net loss of $44.8 million.

The primary use of cash was to fund our operations related to the development of our product candidates.

Cash used in operating activities was partially offset by noncash charges of $6.5 million related to share-based compensation, depreciation, and changes in deferred rent as well as a $4.7 million net

increase in our operating assets and liabilities.

Net Cash Used in Investing Activities

During the three months ended March 31, 2021, we purchased $60.3 million in marketable securities, had sales and maturities of $41.2 million in marketable securities and paid $0.5 million for technology licenses.

During the three months ended March 31, 2021 and 2020, we used $0.8 million and $99,000, respectively, for the purchase of property and equipment.

During the six months ended June 30, 2021, we purchased $132.1 million in marketable securities, had sales and maturities of $108.3 million in marketable securities, had purchases of property and equipment of $4.8 million, and paid $2.0 million for technology licenses.

During the six months ended June 30, 2020, we used $0.2 million, for the purchase of property and equipment.

Net Cash Provided by Financing Activities

During the three months ended March 31, 2021, we received net proceeds of $165.8 million from the sale of our common stock and received $81,000 from the exercise of stock options.

During the six months ended June 30, 2021, we received net proceeds of $165.8 million from the sale of our common stock and received $0.7 million from the exercise of stock options and purchases of stock under the Employee Stock Purchase Plan.

We also paid $0.3 million in deferred offering costs.

During the three months ended March 31, 2020, we received $229.9 million from the sale of our common stock in our initial public offering.

During the six months ended June 30, 2020, financing activities provided $228.3 million from the sale of our common stock and convertible preferred stock.

During the six months ended June 30, 2020, we received $46,000 from the exercise of stock options.

Off-Balance Sheet Arrangements

4 unchanged sentences

Critical Accounting Policies and Estimates

During the three months ended March 31, 2021, there were no material changes to our critical accounting policies and estimates from those described under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Policies and Estimates” in the Prospectus.

During the six months ended June 30, 2021, there were no material changes to our critical accounting policies and estimates from those described under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Policies and Estimates” in the Prospectus.

JOBS Act Accounting Election

5 unchanged sentences

Recent Accounting Pronouncements

See Note 2 to our interim financial statements included elsewhere in this Quarterly Report on Form 10-Q for a description of recent accounting pronouncements applicable to our financial statements.

See Note 3 to our unaudited interim financial statements included elsewhere in this Quarterly Report on Form 10-Q for a description of recent accounting pronouncements applicable to our financial statements.

Quantitative and Qualitative Disclosures About Market Risk.

1 unchanged sentence

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