What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2022-03-03 compared with 2021-03-03 · 246 added, 199 removed, 363 unchanged (55% of the section changed)

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INDEX TO AUDITED FINANCIAL STATEMENTS

Report of Independent Registered Public Accounting Firm

Report of Independent Registered Public Accounting Firm ( KPMG LLP , Philadelphia, PA , Auditor Firm ID:

Balance Sheets

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Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.

The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.

As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting.

Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

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Marketable securities

Prepaid expenses

Prepaid expenses and other current assets

Prepaid research and development

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Property and equipment, net

Liabilities, convertible preferred stock and stockholders’ equity (deficit)

Liabilities and stockholders’ equity

Current liabilities:

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Total liabilities

Convertible preferred stock, $0.0001 par value:

Series A‑1 convertible preferred stock:

63,023,258 shares authorized, issued and outstanding at December 31, 2019

Series A‑2 convertible preferred stock:

22,209,301 shares authorized;

issued and outstanding at December 31, 2019

Series B convertible preferred stock:

33,592,907 shares authorized, issued and outstanding at December 31, 2019

Total convertible preferred stock

Commitments and Contingencies (note 8)

Stockholders’ equity (deficit):

Stockholders’ equity:

Common stock, $ 0.0001 par value:

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Additional paid‑in capital

Accumulated other comprehensive loss

Accumulated other comprehensive income (loss)

Accumulated deficit

Total stockholders’ equity (deficit)

Total liabilities, convertible preferred stock and stockholders’ equity (deficit)

Total stockholders’ equity

Total liabilities and stockholders’ equity

See accompanying notes to financial statements.

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Loss from operations

Change in fair value of future tranche right liability

Interest income, net

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Comprehensive loss:

Unrealized loss on available-for-sale securities

Unrealized gain (loss) on marketable securities

Comprehensive loss

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Accumulated other

comprehensive

(in thousands, except share data)

paid ‑ in capital

comprehensive loss

income (loss)

Balance at January 1, 2020

Vesting of early exercise option awards

Sale of Series A-1 convertible preferred stock, net of issuance costs of $19

Sale of Series A‑2 convertible preferred stock, net of issuance costs of $1,439

Sale of Series B convertible preferred stock, net of issuance costs of $102

Reclassification of future tranche right upon exercise

Share‑based compensation expense

Balance at December 31, 2019

Vesting of early exercise option awards

Exercise of stock options

Shares issued under the employee stock purchase plan

Issuance of shares in connection with employee stock purchase plan

Conversion of convertible preferred stock upon initial public offering

( 63,023,258 )

( 22,209,301 )

( 33,592,907 )

Sale of common stock in initial public offering, net of issuance costs of $ 3,495

Unrealized loss on available-for-sale investments

Unrealized gain (loss) on marketable securities

Share‑based compensation expense

Balance at December 31, 2020

Stockholders’ equity

Accumulated other

(in thousands, except share data)

paid ‑ in capital

comprehensive income (loss)

Balance at January 1, 2021

Vesting of early exercise option awards

Exercise of stock options and vesting of restricted stock units

Issuance of shares in connection with employee stock purchase plan

Sale of common stock, net of issuance costs of $ 669

Unrealized gain (loss) on marketable securities

Share‑based compensation expense

Balance at December 31, 2021

See accompanying notes to financial statements.

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Adjustments to reconcile net loss to net cash used in operating activities:

Change in fair value of future tranche right liability

Acquired in‑process research and development

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Changes in operating assets and liabilities:

Prepaid expenses and other assets

Prepaid expenses and other current assets, and other assets

Prepaid research and development

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Purchases of marketable securities

Sale and maturities of marketable securities

Purchase of technology licenses

Sales or maturities of marketable securities

Purchases of technology licenses

Purchases of property and equipment

1 unchanged sentence

Cash flows provided by financing activities:

Proceeds from issuance of common stock upon initial public offering, net of offering costs

Proceeds from the sale of Series A‑1 convertible preferred stock and future tranche right, net of offering costs

Proceeds from the sale of Series A‑2 convertible preferred stock, net of offering costs

Proceeds from the sale of Series B convertible preferred stock, net of offering costs

Deferred financing costs

Proceeds from issuance of common stock, net of offering costs

Payment of offering costs

Proceeds from the exercise of stock options

Proceeds from the issuance of common stock under employee stock purchase plan

Proceeds from exercise of stock options

Net cash provided by financing activities

Net (decrease) increase in cash and cash equivalents

Net increase (decrease) in cash and cash equivalents

Cash and cash equivalents at beginning of year

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Supplemental disclosure of non‑cash investing and financing activities:

Reclassification of deferred offering costs paid in a prior period

Deferred financing costs in accrued expenses and other current liabilities

Deferred financing costs in accounts payable

Reclassification of the future tranche right liability upon exercise

Unrealized gain (loss) on marketable securities

Property and equipment in deferred rent

Property and equipment in accounts payable and accrued expenses and other current liabilities

Acquired in‑process research and development in accrued expenses and other current liabilities

Unrealized loss on marketable securities

Property and equipment in accounts payable

Deferred financing costs in accrued expenses and other current liabilities

Reclassification of deferred offering costs paid in a prior period

Vesting of early exercise option awards

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Nature of Operations

Passage Bio, Inc.

(the Company), a Delaware corporation incorporated in July 2017, is a genetic medicines company focused on advancing transformative therapies for rare monogenic central nervous system diseases.

The Company has a strategic research collaboration with the Trustees of the University of Pennsylvania’s (Penn) Gene Therapy Program (GTP) that provides the Company with access to one of the premier research institutions in the world for the discovery and preclinical development of genetic medicine product candidates and exclusive rights to certain rare, monogenic central nervous system (CNS) indications.

Under this collaboration, GTP conducts discovery and investigation new drug enabling preclinical activities and the Company conducts all clinical development, regulatory strategy, and commercialization activities under the agreement.

The Company also has a collaboration agreement and a development services and clinical supply agreement with Catalent Maryland, Inc.

(Catalent) (formerly Paragon Bioservices, Inc.) for clinical scale manufacturing requirements.

Passage Bio, Inc., or the Company, a Delaware corporation incorporated in July 2017, is a clinical stage genetic medicines company focused on developing transformative therapies for central nervous system diseases, or CNS disorders, with limited or no approved treatment options.

The Company has a strategic research collaboration with the Trustees of the University of Pennsylvania’s, or Penn, Gene Therapy Program, or GTP, that provides the Company with access to one of the premier research institutions in the world for the discovery and preclinical development of genetic medicine product candidates and exclusive rights to certain CNS indications.

Under this collaboration, GTP conducts discovery and preclinical activities enabling Investigation New Drug, or IND, applications and the Company conducts all clinical development, regulatory strategy, and commercialization activities under the agreement.

The Company also has a collaboration agreement and a development services and clinical supply agreement with Catalent Maryland, Inc., or Catalent, for clinical scale manufacturing requirements.

Risks and Liquidity

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Substantial additional capital will be needed by the Company to fund its operations and to develop its product candidates.

In March 2020, the Company closed its initial public offering (IPO) in which the Company issued and sold 13,798,900 shares of its common stock, which included shares sold pursuant to an option granted to the underwriters to purchase additional shares, at a public offering price of $18.00 per share for net proceeds of $227.5 million after deducting underwriting discounts, commissions and other offering expenses.

In March 2020, the Company closed its initial public offering, or IPO, in which the Company issued and sold 13,798,900 shares of its common stock, which included shares sold pursuant to an option granted to the underwriters to purchase additional shares, at a public offering price of $ 18.00 per share for net proceeds of $ 227.5 million after deducting underwriting discounts, commissions and other offering expenses.

In January 2021, the Company closed a follow-on public offering in which the Company issued and sold 8,050,000 shares of its common stock, which included shares sold pursuant to an option granted to the underwriters to purchase additional shares, at a public offering price of $ 22.00 per share for net proceeds of $ 165.8 million after deducting underwriting discounts, commissions and other offering expenses.

The Company’s operations have consisted primarily of organizing the Company, securing financing, developing licensed technology, performing research, conducting preclinical studies and preparing to commence clinical trials.

The Company faces risks associated with early-stage biotechnology companies whose product candidates are in development.

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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.

Even if the Company’s product development efforts are successful, it is uncertain when, if ever, the Company will realize significant revenue from product sales.

Even if the Company’s product development efforts are successful, it is uncertain when, if ever, the Company will realize revenue from product sales.

The Company plans to seek additional funding through public or private equity offerings, debt financings, other collaborations, strategic alliances and licensing arrangements.

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If the Company is unable to obtain funding, the Company could be required to delay, reduce or eliminate research and development programs, product portfolio expansion or future commercialization efforts, which could adversely affect its business prospects.

In accordance with Accounting Standards Update, or “ASU”, No.

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

Passage Bio, Inc.

Notes to Financial Statements (cont.)

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.

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 twelve months from the issuance date of these financial statements.

Summary of Significant Accounting Policies

Basis of Presentation

The accompanying financial statements have been prepared in accordance with accounting principles generally accepted in the United States (GAAP).

Any reference in these notes to applicable guidance is meant to refer to GAAP as found in the Accounting Standards Codification (ASC) and Accounting Standards Updates (ASU) promulgated by the Financial Accounting Standards Board (FASB).

Reverse stock split

The Company effected a one-for-4.43316 reverse stock split of its common stock on February 14, 2020.

The reverse stock split combined each 4.43316 shares of the Company’s issued and outstanding common stock into one share of common stock.

No fractional shares were issued in connection with the reverse stock split.

Any fractional share resulting from the reverse stock split was rounded down to the nearest whole share, and in lieu of any fractional shares, the Company paid in cash to the holders of such fractional shares an amount equal to the fair value, as determined by the board of directors, of such fractional shares.

All common stock, per share and related information presented in the financial statements and accompanying notes have been retroactively adjusted to reflect the reverse stock split.

The accompanying financial statements have been prepared in accordance with accounting principles generally accepted in the United States, or GAAP.

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.

Use of Estimates

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Estimates and assumptions are periodically reviewed and the effects of the revisions are reflected in the accompanying financial statements in the period they are determined to be necessary.

Prior to the IPO, significant areas that required management’s estimates included the fair value of the Company’s future tranche right liability and its common stock.

Fair Value of Financial Instruments

Management believes that the carrying amounts of the Company’s financial instruments, including cash equivalents, prepaid expenses, and accounts payable, approximate fair value due to the short-term nature of those instruments.

The future tranche right liability was recorded at its estimated fair value.

Concentration of credit risk

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The Company views its operations and manages its business in one segment.

Passage Bio, Inc.

Notes to Financial Statements (cont.)

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.

Passage Bio, Inc.

Notes to Financial Statements (cont.)

Marketable securities

The Company classifies its marketable securities as available-for-sale, which include commercial paper, certificates of deposit, corporate debt securities and U.S.

government and non-U.S.

government debt securities with original maturities of greater than three months.

The Company classifies its marketable securities as available-for-sale, which include certificates of deposit, commercial paper, corporate debt securities, U.S.

government debt securities and non-U.S.

government debt securities with original maturities of greater than three months from date of purchase.

These securities are carried at fair market value, with unrealized gains and losses reported in comprehensive loss and accumulated other comprehensive loss within stockholders’ equity.

Gains or losses on marketable securities sold are based on the specific identification method.

Property and Equipment

Property and equipment consists of computer hardware and software, office equipment, furniture and leasehold improvements and are recorded at cost.

Property and Equipment, net

Property and equipment consists of laboratory equipment, office equipment, computer hardware and software, furniture and leasehold improvements and are recorded at cost.

Maintenance and repairs that do not improve or extend the lives of the respective assets are expensed as incurred.

Property and equipment are depreciated on a straight-line basis over their estimated useful lives.

The Company uses a life of three years for computer hardware and software, five years for office equipment and seven years for furniture and fixtures.

The Company estimates useful life on an asset by asset basis, which generally consists of three years for computer hardware and software, five years for office equipment, five years for laboratory equipment and seven years for furniture and fixtures.

Leasehold improvements are amortized over the shorter of the lease term or the estimated useful life of the asset.

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If circumstances require a long-lived asset to be tested for possible impairment, recoverability is measured by comparison of the carrying amount of the assets to estimated future undiscounted cash flows that the assets are expected to generate.

If the carrying amount of an asset exceeds its estimated future cash flows, then an impairment charge is recognized for the amount by which the carrying amount of the asset exceeds the fair value of the asset.

No impairment charges have been recorded since inception.

Deferred Financing Costs

The Company capitalizes costs that are directly associated with in-process equity financings until such financings are consummated, at which time such costs are recorded against the gross proceeds from the applicable financing.

If a financing is abandoned, the related deferred financing costs are expensed.

Financing costs are expensed immediately if the financial instrument is recorded at its estimated fair value and subject to remeasurement.

The Company had $0.2 million and $1.7 million in deferred financing costs in other assets in the accompanying balance sheets at December 31, 2020 and 2019, respectively.

If the carrying amount of an asset exceeds its estimated future cash flows, then impairment expense is recognized for the amount by which the carrying amount of the asset exceeds the fair value of the asset.

For the years ended December 31, 2021, and 2020, no impairment expenses were recognized.

Share-based compensation

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.

Estimating the fair value of share-based awards requires the input of subjective assumptions, including, prior to the IPO, the estimated fair value of the Company’s common stock, and, for stock options, the expected life of the options and stock price volatility.

The Company accounts for forfeitures for stock option awards as they occur.

The Company’s share-based compensation consists of restricted stock units, or RSUs, and options to purchase common stock, or options.

The Company uses the Black-Scholes option pricing model to value its stock option awards.

The assumptions used in estimating the fair value of share-based awards represent management’s estimate and involve inherent uncertainties and the application of management’s judgment.

Estimating the fair value of share-based awards for stock options requires the input of assumptions, including, the expected term of the options and stock price volatility.

The Company accounts for forfeitures for stock option awards as they occur.

The expected term of the stock options is estimated using the "simplified method,"

as the Company has limited historical information from which to develop reasonable expectations about future exercise patterns and post-vesting behavior for its stock option grants.

The simplified method is the midpoint between the vesting period and the contractual term of the option.

For stock price volatility, which is considered the subjective assumption, 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.

The assumptions used in estimating the fair value of share-based awards for stock options represent management’s estimate and involve inherent uncertainties and the application of management’s judgment.

As a result, if factors change and management uses different assumptions, share-based compensation expense could be materially different for future awards.

Research and Development

Research and development costs are expensed as incurred and consist primarily of expenses incurred with Penn, contract research organization, contract manufacturing organizations, and employee-related expenses, including salaries, benefits, and share-based compensation.

Passage Bio, Inc.

Notes to Financial Statements (cont.)

The expected life of the stock options is estimated using the "simplified method,"

as the Company has limited historical information from which to develop reasonable expectations about future exercise patterns and post-vesting employment termination behavior for its stock option grants.

The simplified method is the midpoint between the vesting period and the contractual term of the option.

For stock price volatility, the Company uses comparable public companies as a basis for its expected volatility to calculate the fair value of option grants.

The risk-free rate is based on the U.S.

Treasury yield curve commensurate with the expected life of the option.

Research and Development

Research and development costs are expensed as incurred and consist primarily of funds paid to the Penn and other contract research organizations for preclinical development, and employee-related expenses, including salaries, benefits, and travel expense reimbursement.

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.

Management makes estimates of the Company’s accrued expenses as of each balance sheet date in the Company’s financial statements based on facts and circumstances known to the Company at that time.

If the actual timing of the performance of services or the level of effort varies from the estimate, the Company will adjust the accrual accordingly.

Nonrefundable advance payments for goods and services, including fees for process development or manufacturing and distribution of clinical supplies that will be used in future research and development activities, are deferred and recognized as expense in the period that the related goods are consumed or services are performed.

Management makes estimates of the Company’s accrued research and development expenses 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.

If the actual timing of the performance of services or the level of effort varies from the estimate, the Company will adjust the accrual and related expenses accordingly.

Nonrefundable advance payments for goods and services, including fees for preclinical services, clinical services, manufacturing services and distribution of clinical supplies that will be used in future research and development activities, are deferred and recognized as expense in the period that the related goods are consumed or services are performed.

Acquired In-Process Research and Development

Fees paid to obtain research and development technology licenses are recognized as acquired in-process research and development expense if the research and development technology licensed has not reached technological feasibility and has no alternative future use.

For the years ended December 31, 2021, and 2020, all fees paid to obtain technology licenses were recognized as acquired in-process research and development expense.

Income taxes are accounted for under the asset-and-liability method as required by FASB ASC Topic 740, Income Taxes (ASC 740).

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Year Ended December 31,

Series A‑1 convertible preferred stock

Series A‑2 convertible preferred stock

Series B convertible preferred stock

Stock options (including shares subject to repurchase)

Stock options vested and exercised, but subject to settlement of nonrecourse promissory notes

Stock options (including shares subject to repurchase at December 31, 2020)

Unvested restricted stock units

Employee stock purchase plan

Amounts in the above table reflect the common stock equivalents.

Recently Issued Accounting Pronouncements

In February 2016, the FASB issued ASU No.

2016-02, Leases , which requires a lessee to record a right-of-use asset and a corresponding lease liability on the balance sheet for all leases with terms longer than 12 months.

2016-02, Leases , which requires a lessee to record a right-of-use asset and a corresponding lease liability on the balance sheet for all leases with terms longer than twelve months.

A modified retrospective transition approach is required for lessees for capital and operating leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements, with certain practical expedients available.

As the Company has elected to use the extended transition period for complying with new or revised accounting standards as available under the Jobs Act, the standard is effective for the Company beginning January 1, 2022, with early adoption permitted.

The Company is currently evaluating the expected impact that the standard could have on its financial statements and related disclosures.

As the Company elected to use the extended transition period for complying with new or revised accounting standards as available under the Jobs Act, the standard is effective for the Company beginning January 1, 2022.

The Company will utilize the practical expedients available under ASU No.

2016-02, including, electing the package of practical expedients to not reassess prior conclusions related to contracts containing leases, lease classification and initial direct costs.

In addition, the Company will apply the accounting policy election to not separate lease and non-lease components and the accounting policy election to not apply the recognition requirement under ASU No.

2016-02 to leases with a term of twelve months or less.

The Company will not have a material cumulative adjustment to the statement of operations and comprehensive loss on January 1, 2022.

The Company expects a material adjustment to the balance sheet in connection with the recognition of right-of-use assets and lease liabilities on January 1, 2022, with right-of-use assets approximating $ 17.0 million to $ 24.0 million and lease liabilities approximating $ 24.0 million to $ 31.0 million, subject to finalization of the Company’s incremental borrowing rate.

The difference between right-of-use assets and lease liabilities relates to adjustments to unamortized balances of deferred rent and lease incentives existing as of December 31, 2021.

In June 2016, the FASB issued ASU No.

2016-13, Financial Instruments-Credit Losses:

Measurement of Credit Losses on Financial Instruments (ASU 2016-13), which replaces the incurred loss impairment methodology under current U.S.

Measurement of Credit Losses on Financial Instruments , or ASU 2016-13, which replaces the incurred loss impairment methodology under current U.S.

GAAP with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates.

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Money market funds

Commercial paper

December 31, 2020:

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Money market funds

Commercial paper

The following table provides details regarding the Company’s portfolio of marketable securities:

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government securities

The Company did not have marketable securities as of December 31, 2019.

December 31, 2020:

Certificates of deposit

Commercial paper

Corporate debt securities

government securities

The contractual maturities of our marketable securities as of December 31, 2021, are as follows:

(in thousands)

Amortized Cost

Due within one year

Due after one year through five years

Fair Value of Financial Instruments

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The following fair value hierarchy table presents information about the Company’s assets measured at fair value on a recurring basis.

Included within cash and cash equivalents on the balance sheet, but excluded from the fair value hierarchy table, are cash deposits held at financial institutions:

Fair value measurement at

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Cash and cash equivalents:

Money market fund

Commercial paper

Money market funds

Total cash and cash equivalents

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Cash and cash equivalents:

Money market fund

The Company evaluated the future tranche right feature within the Series A-1 convertible preferred stock issued in 2018 and determined that the future tranche right was a freestanding financial instrument that was classified as a liability and was re-measured at each reporting period until the redemption feature was exercised in connection with the sale and issuance of the Series A-2 convertible preferred stock in May 2019.

Money market funds

Commercial paper

Total cash and cash equivalents

Marketable securities:

Certificates of deposit

Commercial paper

Corporate debt securities

government securities

Total marketable securities

Total financial assets

Passage Bio, Inc.

Notes to Financial Statements (cont.)

Property and Equipment, net

Property and Equipment, net, consist of the following:

(in thousands)

December 31, 2021

December 31, 2020

Laboratory equipment

Office equipment

Computer hardware and software

Furniture and fixtures

Leasehold improvements

Construction in progress

Total property and equipment

Accumulated depreciation and amortization

Accrued Expenses and Other Current Liabilities

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(in thousands)

December 31, 2021

December 31, 2020

Professional fees

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Research and development

Passage Bio, Inc.

Notes to Financial Statements (cont.)

Property and equipment

Commitments and Contingencies

Amended and Restated Research, Collaboration and License Arrangement with Penn

In May 2020, the Company amended and restated its research, collaboration and licensing agreement with Penn (the Penn Agreement) for research and development collaborations and exclusive license rights to patents for certain products and technologies, which superseded the Company’s existing sponsored research, collaboration and licensing agreement with Penn, dated September 18, 2018, as amended.

Under the Penn Agreement, in addition to the obligation to fund certain research relating to the preclinical development of selected products, the Company will fund discovery research conducted by Penn for five years, beginning in May 2020, and will receive exclusive rights, subject to certain limitations, to technologies resulting from the discovery research for the Company’s products developed with GTP, such as novel capsids, toxicity reduction technologies and delivery and formulation improvements.

This funding commitment is $5.0 million annually, with quarterly payments of $1.3 million that began in the third quarter of 2020.

The Penn Agreement also increased the number of remaining options available to the Company to commence additional licensed programs for rare, monogenic CNS indications from six to eleven, and extended the option exercise window by three years.

Accordingly, the window to exercise all remaining options extends to May 2025.

The Company has a research, collaboration and licensing agreement with Penn, as amended, or the Penn Agreement, 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, the Company will fund discovery research conducted by Penn through August 3, 2026 and will receive exclusive rights, subject to certain limitations, to technologies resulting from the discovery research for the Company’s products developed with GTP, such as novel capsids, toxicity reduction technologies and delivery and formulation improvements.

This funding commitment for the discovery research is $ 5.0 million annually, paid in quarterly increments of $ 1.3 million through August 3, 2026.

As a result of an Amendment in August 2021, the Penn Agreement includes an exploratory research program focused on discovering targets and novel gene therapy candidates for large CNS diseases, initially focused on AD and TLE, and can be expanded to other large CNS diseases upon mutual agreement.

The initial term of the exploratory research program is until August 2024, which term can be extended by mutual agreement.

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

Under the exploratory research program, the Company will have the right to further develop and commercialize any gene therapy product candidates specific for those selected targets within AD and TLE (and any future large CNS diseases that are mutually agreed upon) that may arise from the exploratory research programs on

Passage Bio, Inc.

Notes to Financial Statements (cont.)

substantially the same terms of the current Penn Agreement.

The Company made an upfront payment of $ 5.0 million in connection with the amendment to the Penn Agreement in August 2021;

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 for which the Company has exercised its option in large CNS indications, initially AD and TLE 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.

Under the Penn Agreement, the Company has eight remaining options available to commence additional licensed programs for CNS indications and has until August 3, 2026, to exercise these options.

If the Company were to exercise any of these options, it 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.

In the fourth quarter of 2020, the Company exercised one of these options and paid Penn $0.5 million and has accrued an additional $0.5 million as of December 31, 2020.

The Company expensed the $1.0 million fee as acquired in-process research and development expense on the statement of operations and comprehensive loss for the year ended December 31, 2020.

The Penn Agreement requires the Company to 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.

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 sales of a licensed product in excess of defined thresholds.

Upon successful commercialization of a product using the licensed technology, the Company shall 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 on annual worldwide net sales of such licensed product.

In addition, the Company shall pay Penn a percentage of sublicensing income, ranging from the mid-single digits to low double digits, for sublicenses under the Penn Agreement.

The Penn Agreement requires that the Company make payments of up to (i) $ 16.5 million per product candidate for rare, monogenic disorders in the aggregate and (ii) $ 39.0 million per product candidate in the aggregate arising from the exploratory program for large CNS indications, initially AD and TLE 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, the Company is 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.

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 on annual worldwide net sales of such licensed product.

In addition, 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 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.

Under the Penn Agreement, the Company incurred research and development expenses of $ 17.8 million and $ 32.4 million during the years ended December 2021 and 2020, respectively.

During the year ended December 31, 2021, the Company paid Penn $ 1.5 million related to the achievement of a development milestone, $ 1.5 million related to option exercises under the Penn Agreement, and a $ 5.0 million payment related to the August 2021 amendment, which were recognized as in-process research and development expense.

Catalent Agreements

In June 2019, the Company entered into a collaboration agreement (the Catalent Collaboration Agreement) with Catalent.

As part of the Catalent Collaboration Agreement, the Company paid Catalent an upfront fee for the commissioning, qualification, validation and equipping of a clean room suite (the Clean Room Suite).

In June 2019, the Company entered into a collaboration agreement, or the Collaboration Agreement, with Catalent.

As part of the Collaboration Agreement, the Company paid Catalent an upfront fee for the commissioning, qualification, validation and equipping of a clean room suite, or the Clean Room Suite.

Subject to validation of the Clean Room Suite, which was completed in the fourth quarter of 2020, the Company will pay an annual fee for five years for the use of the Clean Room Suite and is also committed to minimum annual purchase commitments.

In April 2020, the Company entered into a development services and clinical supply agreement (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.

The Manufacturing and Supply Agreement confirms the terms contemplated by the Catalent Collaboration Agreement.

The Catalent Collaboration Agreement continues to be in effect pursuant to its terms.

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.

The Manufacturing and Supply Agreement confirms the terms contemplated by the Collaboration Agreement.

The Collaboration Agreement continues to be in effect pursuant to its terms.

Passage Bio, Inc.

Notes to Financial Statements (cont.)

Under the terms of the Manufacturing and Supply Agreement, Catalent has 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 Catalent Collaboration Agreement.

The Manufacturing and Supply Agreement provides for a term of five years which period may be extended once, at the Company’s option, for an additional five-year period.

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Under both the Collaboration Agreement and the Manufacturing and Supply Agreement, the Company has an annual minimum commitment of $ 10.6 million per year owed to Catalent for five years from the validation of the Clean Room, subject to certain inflationary adjustments.

The Clean Room was validated in the fourth quarter of 2020, thus commencing the annual minimum commitment.

For the years ended December 31, 2021 and 2020, the Company paid amounts in excess of the minimum commitment.

Operating Leases

The Company leases office space in Philadelphia, Pennsylvania under a noncancelable lease (Existing Lease Agreement), as amended.

The lease is classified as an operating lease and the Company recognizes rent expense on a straight-line basis over the lease term.

In April 2020, the Company entered into a new lease agreement (New Lease Agreement) for larger office space in Philadelphia to accommodate the Company’s continued growth and serve as the new corporate headquarters.

The New Lease Agreement is expected to commence in March 2021 and is expected to expire in January 2031.

The Company leased office space in Philadelphia, Pennsylvania under a noncancelable lease, as amended.

The lease was classified as an operating lease and the Company recognized rent expense on a straight-line basis over the lease term.

The lease was terminated in February 2021.

In April 2020, the Company entered into a new lease agreement, or New Lease Agreement, for larger office space in Philadelphia to accommodate the Company’s continued growth and serve as the new corporate headquarters.

The New Lease Agreement commenced in February 2021 and expires in December 2031.

The Company has an option to extend the term of the New Lease Agreement by up to two five-year terms.

Upon signing the New Lease Agreement, the Company amended the Existing Lease Agreement such that the Existing Lease Agreement will terminate five days after the commencement of the New Lease Agreement with no further payments due under the Existing Lease Agreement.

The landlord also will provide the Company with a tenant improvement allowance of up to $2.8 million.

In December 2020, the Company entered into a lease agreement for laboratory space (Laboratory Lease Agreement) in Hopewell, New Jersey.

The laboratory will initially focus on state-of-the-art analytical capabilities, clinical assay development and validation, biomarker assay validation and clinical product testing to support both viral vector manufacturing and clinical development.

The Laboratory Lease Agreement is expected to commence in the second quarter of 2021 and is expected to expire in 2036.

The landlord provided the Company with a tenant improvement allowance of up to $ 2.8 million, for which the related expenditures were paid directly by the landlord.

The expenditures were recorded as leasehold improvements with a corresponding amount recorded as a lease liability incentive within deferred rent in the balance sheet.

In December 2020, the Company entered into a lease agreement for laboratory space, or Laboratory Lease Agreement, in Hopewell, New Jersey.

The laboratory is initially 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 2036.

The Company has an option to extend the term of the Laboratory Lease Agreement by up to two five-year terms.

The landlord provided the Company with a tenant improvement allowance of $ 1.3 million in connection with the Laboratory Lease Agreement, for which the related expenditures were paid by the Company and will be reimbursed by the landlord.

As of December 31, 2021, $ 1.3 million of leasehold improvements related to the tenant improvement allowance was recorded as a lease liability incentive within deferred rent and the remaining receivable from the landlord of $ 0.3 million was recorded within prepaid expenses and other current assets.

As of December 31, 2021, the Company received $ 1.0 million of reimbursement from the landlord related to the tenant improvement allowance, which is reflected as an operating inflow in the statement of cash flows.

Passage Bio, Inc.

Notes to Financial Statements (cont.)

The future minimum lease payments under the Company’s lease arrangements as of December 31, 2021 are as follows:

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The Company recognized rent expense of $ 3.4 million and $ 0.6 million during the years ended December 31, 2021 and 2020, respectively, related to its operating leases.

Passage Bio, Inc.

Notes to Financial Statements (cont.)

Employment Agreements

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Patent Infringement Claim

On February 18, 2020, the Company received a letter from REGENXBIO Inc.

(Regenx), which stated its view that the use of the Company’s AAVhu68 capsid infringes patent claims to which Regenx has an exclusive license and which expire in 2024.

Regenx also stated that it has exclusive licenses to various pending patent applications regarding the use of AAV vectors administered via instar-cisterna magna injection, and that these applications may lead to issued claims that Regenx believes may, if issued, cover the Company’s planned method of administration for the Company’s lead product candidates.

On February 18, 2020, the Company received a letter from REGENXBIO Inc., or Regenx, which stated its view that the use of the Company’s AAVhu68 capsid infringes patent claims to which Regenx has an exclusive license and which expire in 2024.

The Company believes it has valid defenses to the issued claims set forth by Regenx relating to AAVhu68.

Further, the prosecution of pending patent applications is highly uncertain, and it is unclear whether any patents will be issued from these pending Regenx patent applications at all, much less with claims that are relevant to the administration of the Company’s product candidates.

Regenx also asked for information regarding the Company’s relationship with Dr.

Regenx also requested information regarding the Company’s relationship with Dr.

Wilson while he was serving as an advisor to Regenx.

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In addition, immediately prior to the initial closing of the IPO on March 3, 2020, (i) all of the Company’s outstanding shares of convertible preferred stock converted into an aggregate of 26,803,777 shares of common stock and (ii) the Company filed an amended and restated certificate of incorporation to, among other things, increase the number of authorized shares of common stock to 300.0 million.

Passage Bio, Inc.

Notes to Financial Statements (cont.)

On March 5, 2021, the Company entered into a Sales Agreement, or the Sales Agreement, with Cowen and Company, LLC, or Cowen, pursuant to which the Company may, but are not obligated to, offer and sell, from time to time, shares of the Company’s common stock with an aggregate offering price up to $ 125.0 million through Cowen, as sales agent.

No sales of common stock have been made pursuant to this Sales Agreement to date.

Share-Based Compensation

Equity Incentive Plan

The Company has two equity incentive plans:

the 2018 Equity Incentive Plan, as amended (the 2018 Plan), and the 2020 Equity Incentive Plan.

New awards can only be granted under the 2020 Equity Incentive Plan (the Plan).

The total number of shares authorized under the Plan as of December 31, 2020 was 5,362,823.

Equity Incentive Plans

The Company has three equity incentive plans:

the 2018 Equity Incentive Plan, as amended, or the 2018 Plan, the 2020 Equity Incentive Plan, or the Incentive Plan, and the 2021 Equity Inducement Plan, or the Inducement Plan.

New awards can only be granted under the Incentive Plan and Inducement Plan.

The total number of shares authorized under the Incentive Plan as of December 31, 2021 was 7,658,677 .

Of this amount, 3,637,509 shares were available for future grants as of December 31, 2021.

The number of shares of the Company’s common stock that may be issued pursuant to rights granted under the Plan shall automatically increase on January 1st of each year, commencing on January 1, 2021 and continuing for ten years , in an amount equal to five 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 or compensation committee to determine a lesser number of shares shall be added for such year.

As such, 2,295,854 shares were added to the Plan in January 2021.

The Plan provides for the granting of

Passage Bio, Inc.

Notes to Financial Statements (cont.)

common stock, incentive stock options, nonqualified stock options, restricted stock awards, and/or stock appreciation rights to employees, directors, and other persons, as determined by the Company’s board of directors.

The Company’s stock options vest based on the terms in each award agreement, generally over four-year periods, and have a term of ten years.

As a result, the number of shares authorized for issuance under the Incentive Plan increased by 2,712,249 and 2,295,854 shares in January 2022 and 2021, respectively.

The Plan provides for the granting of common stock, incentive stock options, nonqualified stock options, restricted stock awards, and/or stock appreciation rights to employees, directors, and other persons, as determined by the Company’s board of directors.

The Company’s stock options under the Incentive Plan vest based on the terms in each award agreement, generally over four-year periods, and have a term of ten years .

The Inducement Plan was approved by the Company’s board of directors in July 2021.

The total number of shares authorized under the Inducement Plan was 1,000,000 .

Of this amount, 12,900 shares were available for future grants as of December 31, 2021.

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.

The Company’s stock options under the Inducement Plan vest based on the terms in each award agreement and have a term of ten years .

The Company’s restricted stock units vest based on the terms in each award agreement 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.

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General and administrative

During the year ended December 31, 2020, the Company modified certain awards and recognized an additional $0.7 million related to the modifications, $0.6 million of which was recognized in research and development expense and $0.1 million was recognized in general and administrative expense.

The following table summarizes stock option activity for the years ended December 31, 2019 and 2020:

Passage Bio, Inc.

Notes to Financial Statements (cont.)

During the year ended December 31, 2020, the Company modified certain awards and recognized $ 0.7 million related to the modifications, $ 0.6 million of which was recognized in research and development expense and $ 0.1 million was recognized in general and administrative expense.

During the year ended December 31, 2021, the Company modified certain awards and recognized $ 7.4 million related to the modifications, $ 6.1 million of which was recognized in research and development expense and $ 1.3 million was recognized in general and administrative expense.

The terms of such modifications included, on an awards-by-award basis, acceleration of the vesting period and extensions of the post-employment period to exercise.

The following table summarizes stock option activity for the year ended December 31, 2021:

exercise price

Outstanding at January 1, 2021

Early exercised

Outstanding at December 31, 2019

( 1,345,215 )

Outstanding at December 31, 2021

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Vested or expected to vest at December 31, 2021

As of December 31, 2021, 1,308,244 options to purchase common stock are unvested, but exercisable, under early exercise provisions as described below.

The weighted-average grant date fair value of options granted was $ 12.75 and $ 11.54 for the years ended December 31, 2021 and 2020, respectively.

The aggregate intrinsic value of options exercised was $ 1.3 and $ 2.0 million and during the year ended December 31, 2021 and 2020, respectively.

The aggregate intrinsic value of options outstanding as of December 31, 2021 was $ 1.6 million and the aggregate intrinsic value of options exercisable as of December 31, 2021 was $ 1.4 million.

As of December 31, 2021, the total unrecognized compensation expense related to unvested stock option awards was $ 58.8 million, which the Company expects to recognize over a weighted-average period of 2.8 years.

The aggregate intrinsic value of options exercised during the year ended December 31, 2020 was $2.0 million.

Passage Bio, Inc.

Notes to Financial Statements (cont.)

The fair value of each option was estimated on the date of grant using the weighted average assumptions in the table below:

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Expected dividend yield

The 2018 Plan provides certain holders of stock options an election to early exercise prior to vesting.

Passage Bio, Inc.

Notes to Financial Statements (cont.)

The 2018 Plan and 2020 Plan provide certain holders of stock options an election to early exercise prior to vesting.

The Company has the right to repurchase early exercised options without transferring any appreciation in the value of the underlying shares to the employee if the employee terminates employment before the end of the original vesting period.

The repurchase price is the lesser of the original exercise price or the then fair value of the Company’s common stock.

At December 31, 2020, $41,000 of proceeds from unvested early exercised options were recognized as a non-current liability in other liabilities in the accompanying balance sheet.

The 2018 Plan allowed for the exercise of options to be financed with nonrecourse notes.

For accounting purposes, payment of principal and interest are viewed as the exercise price of the option.

Therefore, no interest income was recognized.

The following table summarizes activity relating to early exercises of stock options during the years ended December 31, 2019 and 2020:

There were no early exercises of options during the year ended December 31, 2021.

The following table summarizes activity relating to early exercises of stock options during the year ended December 31, 2021:

Number of shares

Unvested balance at January 1, 2021

Granted and early exercised

Unvested balance at December 31, 2021

Unvested balance at December 31, 2020

Unvested and vested subject to promissory notes

Nonrecourse Promissory Notes with Related Parties

In February 2019, the Company’s interim chief executive officer and chief operating officer elected to early exercise 688,875 and 309,994 stock options, respectively, in exchange for cash proceeds of $0.2 million and nonrecourse promissory notes (the Notes) of $0.8 million.

In February 2019, two of the Company’s then executive officers, elected to early exercise 688,875 and 309,994 stock options, respectively, in exchange for cash proceeds of $ 0.2 million and nonrecourse promissory notes, or the Notes, of $ 0.8 million.

The Notes bore interest at 2.91 % and were secured by the underlying shares of common stock that were issued.

In January 2020, the Company forgave the Notes and associated interest related to the early exercise of stock options by the interim chief executive officer and chief operating officer.

In January 2020, the Company forgave the Notes and associated interest related to the early exercise of stock options.

An aggregate of 406,897 shares that were previously not considered outstanding for accounting purposes due to being secured by the Notes became outstanding upon the forgiveness of the Notes in January 2020.

Employee Stock Purchase Plan

The Company’s 2020 Employee Stock Purchase Plan (the ESPP) became effective on February 28, 2020.

The ESPP authorizes the issuance of up to 434,000 shares of the Company’s common stock.

Of this amount, 413,891 shares were available for future grants as of December 31, 2020.

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, commencing on January 1, 2021 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

During the year-ended December 31, 2021, the Company accelerated the vesting of each executive officer’s early exercise of stock options awards in relation to each of their separations from the Company such that all early exercised stock options were vested for accounting purposes as of December 31, 2021.

Restricted Stock Units

The Company issues RSUs to employees that vest over periods as determined by the board of directors.

Any unvested shares are forfeited upon termination of services.

The fair value of the RSUs is equal to the fair market value of the Company’s common stock on the date of grant.

Compensation expense is recognized straight-line over the vesting period of the RSUs.

The following table summarizes activity related to RSU awards during the year ended December 31, 2021:

Weighted average

Number of shares

grant date fair value

Unvested balance at January 1, 2021

Unvested balance at December 31, 2021

As of December 31, 2021, the total unrecognized expense related to all RSUs was $ 3.5 million, which the Company expects to recognize over a weighted-average period of 3.0 years.

Passage Bio, Inc.

Notes to Financial Statements (cont.)

board of directors or compensation committee to determine a lesser number of shares shall be added for such year.

As such, 459,170 shares were added to the ESPP in January 2021.

Employee Stock Purchase Plan

The Company’s 2020 Employee Stock Purchase Plan, or the ESPP, became effective on February 28, 2020.

The total number of shares authorized under the ESPP as of December 31, 2021, was 893,170 shares of the Company’s common stock.

Of this amount, 781,936 shares were available for future grants as of December 31, 2021.

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, commencing on January 1, 2021 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 or compensation committee to determine a lesser number of shares shall be added for such year.

As a result, the number of shares authorized for issuance under the ESPP increased by 542,449 and 459,170 shares in January 2022 and 2021, respectively.

Under the ESPP, eligible employees can purchase the Company’s common stock through accumulated payroll deductions at such times as are established by the compensation committee.

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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.

During the year ended December 31, 2020, 20,109 shares were purchased under the ESPP.

During the years ended December 31, 2021 and 2020, 91,125 and 20,109 shares, respectively, were purchased under the ESPP.

In accordance with the guidance in ASC 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.

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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.

The Company recognized share-based compensation expense of $0.2 million during the year ended December 31, 2020 related to the ESPP.

The Company recognized share-based compensation expense of $ 0.4 million and $ 0.2 million during the years ended December 31, 2021 and 2020, respectively, related to the ESPP.

The tax effects of temporary differences that gave rise to significant portions of the deferred tax assets and liabilities were as follows:

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Accordingly, a full valuation allowance has been recorded against the Company’s net deferred tax assets as of December 31, 2021 and

The valuation allowance increased by $44.6 million and $13.3 million during the years ended December 31, 2020 and 2019, respectively.

Passage Bio, Inc.

Notes to Financial Statements (cont.)

The valuation allowance increased by $ 72.1 million and $ 44.6 million during the years ended December 31, 2021 and 2020, respectively.

A reconciliation of the federal income tax rate to the Company’s effective tax rate is as follows:

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Permanent differences

Research and development and orphan drug tax credits

Research and development

Change in valuation allowance

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(in thousands)

Research and development and orphan drug tax credits

Research tax credits

The NOL carryforwards begin expiring in 2037 for federal and state income tax purposes, however;

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Tax years from 2018 and after remain subject to examination by the taxing jurisdictions.

The NOL carryforwards remain subject to review until utilized.

Related-Party Transactions

Penn Agreement

As part of the Penn Agreement, Penn was issued shares of the Company’s common stock in 2018.

Research and development expenses, including $1.0 million and $0.5 million in acquired in-process research and development associated with Penn during the years ended December 31, 2020 and 2019, were $33.4 million and $26.3 million,

Passage Bio, Inc.

Notes to Financial Statements (cont.)

respectively.

The Company made $23.1 million and $23.6 million in cash payments to Penn during the years ended December 31, 2020 and 2019, respectively, and had a prepaid research and development asset of $8.4 million and $5.7 million as of December 31, 2020 and 2019, respectively, in the accompanying balance sheets.

Consulting Agreement

Wilson, M.D., Ph.D., an employee of Penn and one of the co-founders of the Company who was issued shares of the Company’s common stock in 2018, serves as the Company’s chief scientific advisor pursuant to a consulting agreement.

The Company recognized $0.1 million and $0.1 million of expense related to these services during the years ended December 31, 2020 and 2019, including $25,000 and $25,000 respectively, of share-based compensation expense.

The NOL and tax carryforwards remain subject to review until utilized.

Subsequent Events

In January 2021, the Company closed a follow-on public offering in which the Company issued and sold 8,050,000 shares of its common stock, which included shares sold pursuant to an option granted to the underwriters to purchase additional shares, at a public offering price of $22.00 per share for net proceeds of $165.9 million after deducting underwriting discounts, commissions and other offering expenses.

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.

What changed 10-K

Item 8. Financial Statements and Supplementary Data