What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2022-05-16 compared with 2021-11-04 · 127 added, 153 removed, 144 unchanged (66% of the section changed)

4 unchanged sentences

Overview and Pipeline

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

We are a clinical stage genetic medicines company focused on developing transformative therapies for 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 CNS diseases.

2 unchanged sentences

James Wilson, a leader in the genetic medicines field.

We leverage our close working relationship with the Orphan Disease Center, or the ODC, at Penn to develop historical and prospective natural history studies for comparison to participants in interventional trials.

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:

We also leverage our close working relationship with Penn’s Orphan Disease Center, or ODC, to develop historical and prospective comparable natural history patient profiles for comparison to participants in interventional trials.

Through this collaboration we have assembled a deep portfolio of genetic medicine product candidates, for which we retain global rights, the details of which are outlined in the below table:

* 8 additional CNS pipeline license options;

3 license options were previously exercised, and rights were subsequently returned to the University of Pennsylvania.

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

1 unchanged sentence

We are currently developing PBGM01, which utilizes a proprietary, next-generation AAVhu68 capsid to deliver to the brain and peripheral tissues a functional GLB1 gene encoding β-gal for infantile GM1.

Infantile GM1 is the most common and severe form of GM1 gangliosidosis, or GM1, in which patients have mutations in the GLB1 gene that produce little or no residual β-gal enzyme activity.

Infantile GM1 is the most common and severe form of GM1, in which patients have mutations in the GLB1 gene that produce little or no residual β-gal enzyme activity.

β-gal is an enzyme that catalyzes the first step in the natural degradation of GM1 ganglioside.

Reduced β-gal activity results in the accumulation of toxic levels of GM1 ganglioside in neurons throughout the brain, causing rapidly progressive neurodegeneration, with a life expectancy of two to four years.

Currently, there are no disease-modifying therapies approved for the treatment of GM1.

Early onset infantile GM1 is characterized by onset in the first 6 months of life, while late onset infantile GM1 is characterized by onset between 6 and 24 months.

We believe PBGM01 may provide patients with significantly improved outcomes.

In NHP studies, we have observed meaningful transduction of both the CNS and peripheral organs critical for GM1 patients.

We believe PBGM01 could provide patients with significantly improved outcomes.

In preclinical studies we observed meaningful transgene expression in both the CNS and in peripheral organs affected in GM1.

We are conducting clinical trials using an intra-cisterna magna, or ICM, method of administration, which involves an injection at the craniocervical junction.

In December 2020, the U.S.

Food and Drug Administration, or FDA, cleared our IND for PBGM01, which allows us to proceed with our Imagine-1 Trial, an international multi-center, open-label, single-arm Phase 1/2 clinical trial of PBGM01 in patients with a diagnosis of early and late infantile GM1.

In December 2020, we received a clinical trial authorization, or CTA, for our Imagine-1 Trial for PBGM01 from the UK Medicines and Healthcare products Regulatory Agency, or MHRA.

In January 2021, we received a CTA for our Imagine-1 Trial for PBGM01 from Health Canada.

We have an active IND, or Investigational New Drug application, from the U.S.

Food and Drug Administration, or FDA, and approved clinical trial authorizations, or CTAs, in multiple countries for PBGM01, and we are actively proceeding with our Imagine-1 Trial, an international, multi-center, open-label, single-arm Phase 1/2 clinical trial of PBGM01 in patients with a diagnosis of early and late infantile GM1.

In March 2021, we dosed the first patient in our Imagine-1 Trial.

In April 2021, we received a CTA for our Imagine-1 Trial for PBGM01 in Brazil from Agência Nacional de Vigilância Sanitária, or ANVISA.

We expect to report initial safety and 30-day biomarker data from the initial cohort in the fourth quarter of 2021.

In the fourth quarter of 2021, we reported initial safety and 30-day biomarker data from the initial cohort of two late onset patients with GM1 treated with the low dose of PBGM01.

We also reported interim safety data for the initial cohort that showed PBGM01 was well tolerated with no serious adverse events and no evidence of dorsal root ganglion toxicity.

In February 2022, we reported meaningful developmental improvement in assessments, utilizing the Bayley III and Vineland II scales, performed by trained healthcare providers and caregivers, respectively, for both patients in the initial cohort.

Additionally we have dosed our first patient in Cohort 2, for late onset infantile with high dose PBGM01, and completed dosing patients in Cohort 3, for early onset infantile GM1 with low dose PBGM01, with initial biomarker and safety data from these cohorts expected to be reported in the second half of 2022.

The FDA has granted Orphan Drug Designation, or ODD, Rare Pediatric Disease Designation, or RPDD, and Fast Track Designation, to PBGM01 for the treatment of GM1.

The European Commission has granted Orphan designation for PBGM01.

We have manufactured the PBGM01 clinical supply and have established a clinical supply chain to support the global clinical trial, including in the United States, the United Kingdom, and Canada.

Through our manufacturing partners, we have manufactured the PBGM01 clinical supply and have established a clinical supply chain to support global clinical trials.

PBFT02 for the Treatment of FTD-GRN

We are currently developing PBFT02, which utilizes an AAV1 capsid to deliver to the brain a functional granulin, or GRN, a gene encoding for progranulin, or PGRN, for the treatment of frontotemporal dementia caused by progranulin deficiency, or FTD-GRN.

We are currently developing PBFT02, which utilizes an AAV1 capsid to deliver a functional copy of the granulin gene, or GRN, encoding for human progranulin, or PGRN, for the treatment of frontotemporal dementia caused by progranulin deficiency, or FTD-GRN.

FTD-GRN is an inheritable form of FTD in which patients have mutations in the GRN gene, causing a deficiency in PGRN.

PGRN is a complex and highly conserved protein thought to have multiple roles in cell biology, development and inflammation.

Emerging evidence suggests that PGRN’s pathogenic contribution to FTD and other neurodegenerative disorders relates to a critical role in lysosomal function.

PGRN is a complex and highly conserved protein thought to have multiple roles in cell homeostasis, neurodevelopment, and inflammation.

Emerging evidence suggests that PGRN deficiency in FTD and other neurodegenerative disorders may contribute to lysosomal dysfunction.

Currently, there are no disease-modifying therapies approved for the treatment of FTD-GRN.

We believe PBFT02 may provide patients with significantly improved outcomes.

In a non-human primate, or NHP, model, we observed superior transduction results of the CNS using our ICM method of administration and an AAV1 capsid compared to other AAV capsids.

In January 2021, we received FDA clearance of our IND for PBFT02, which allows us to proceed with our upliFT-D Trial, an international multi-center, open-label, single-arm Phase 1/2 clinical trial of PBFT02 in patients with a diagnosis of early symptomatic FTD-GRN.

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 fourth 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.

Based on findings in preclinical studies, we believe that PBFT02 may provide FTD-GRN patients with significantly improved outcomes.

We selected the AAV1 capsid and ICM administration for PBFT02 because this approach led to extensive and robust expression of human PGRN throughout the brain and spinal cord of NHPs, and due to the higher PGRN levels in CSF using AAV1 as compared with other serotypes tested.

ICM administration of AAV1 to NHPs resulted in CSF levels of human PGRN in excess of 50-fold higher than those in healthy human subjects’ CSF, and in excess of 5-fold higher than levels achieved in NHPs with AAVhu68 or AAV5.

We have an active IND from the FDA and approved CTAs in multiple countries for PBFT02, which allows us to proceed with our upliFT-D Trial, an international, multi-center, open-label, single-arm Phase 1/2 clinical trial of PBFT02 in patients with a diagnosis of early symptomatic FTD-GRN.

We expect to dose the first patient in our initial cohort of our upliFT-D Trial in mid-2022.

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

Through our manufacturing partners, we have manufactured the PBFT02 clinical supply to support clinical trial initiation.

PBKR03 for the Treatment of Krabbe disease

1 unchanged sentence

Krabbe disease is an autosomal recessive lysosomal storage disease caused by mutations in the GALC gene, which provides instructions for making an enzyme called galactosylceramidase, which breaks down certain fats, including galactosylceramide and psychosine.

This results in the accumulation of galactolipids and psychosine, resulting in widespread death of myelin-producing cells in the CNS and in the peripheral nervous system, or PNS.

This results in the accumulation of galactolipids such as psychosine, resulting in widespread death of myelin-producing cells in the CNS and in the peripheral nervous system, or PNS.

Without myelin, nerves in the brain and other parts of the body cannot transmit signals properly, leading to the signs and symptoms of Krabbe disease.

1 unchanged sentence

In preclinical models, we have observed meaningful transduction of both the CNS and other critical peripheral organs for Krabbe disease patients using our ICM method of administration in combination with our next-generation AAVhu68 capsid.

In February 2021, we received FDA clearance of our IND for PBKR03, which allows us to proceed with our GALax-C Trial, an international multi-center, open-label, single-arm Phase 1/2 clinical trial of PBKR03 in patients with a diagnosis of early infantile Krabbe disease.

In April 2021, we received CTA approvals from both UK MHRA and Health Canada for our GALax-C Trial.

We expect to initiate our GALax-C Trial in the fourth 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, RPDD, and Fast Track Designation to PKBR03, and in April 2021, the European Commission granted Orphan designation for PBKR03.

We have manufactured PBKR03 clinical supply to support trial initiation in the United States and the United Kingdom.

We have an active IND from the FDA and approved CTAs in multiple countries for PBKR03, which allows us to proceed with our GALax-C Trial, an international, multi-center, open-label, single-arm Phase 1/2 clinical trial of PBKR03 in patients with a diagnosis of infantile Krabbe disease.

In March 2022, we dosed the first patient in our GALax-C Trial.

T his patient experienced a grade 4 adverse event of acute communicating hydrocephalus, which is a build-up of the CSF in the brain, twenty-six days after dosing.

Health authorities, including the FDA and ex-U.S.

regulatory agencies, as well as study investigators, were notified.

The patient underwent surgery to have a shunt inserted to reduce CSF build-up in the brain.

The procedure was well-tolerated, and the patient has been stable post-procedure.

Following an investigation, this adverse event was assessed to be possibly related to either study treatment or study procedures due to the temporal proximity of the adverse event to the administration of treatment.

At the time of the adverse event, there was no evidence of inflammation in blood or in cerebrospinal fluid.

However, the role of disease progression may also be a factor due to the following findings:

1) hydrocephalus has been reported in the literature in association with Krabbe disease, and 2) baseline imaging showed evidence of changes in the ventricles of the brain that progressed following dosing in this patient.

In addition, preliminary biomarker data in this patient showed rapid normalization of GALC activity and reduction of psychosine in both serum and CSF within 30 days.

The IDMC recommended continuation of the trial with specified modifications including certain changes to the inclusion/exclusion criteria and additional monitoring post administration.

We are implementing these modifications expeditiously.

In addition, we have increased the number of subjects in Cohort 1 from three to four per study protocol following this adverse event.

We are proceeding with study recruitment, and we expect to report interim safety and 30-day biomarker data from the initial cohort by the end of 2022.

The FDA has granted ODD, RPDD, and Fast Track Designation to PKBR03, and the European Commission granted Orphan designation for PBKR03.

Through our manufacturing partners, we have manufactured PBKR03 clinical supply to support clinical trial initiation.

Research Programs

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, 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 Amendment (as defined below), 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.

We have three programs in preclinical research stages under our license agreement with Penn:

PBML04 for metachromatic leukodystrophy, or MLD, PBAL05 for ALS and an unnamed program for Huntington’s disease.

In March 2022, we announced plans to prioritize research and development programs to reduce operating expenses and extend our cash runway.

We have completed our prioritization and will continue to advance our ongoing three clinical programs as well as our preclinical programs in MLD, ALS and Huntington’s disease, and our exploratory research programs in Alzheimer’s disease and temporal lobe epilepsy.

We returned our rights to programs in Canavan disease, Charcot-Marie-Tooth Type 2A and Parkinson’s disease to Penn’s GTP for future development.

We continue to hold eight additional license options.

An IND has been submitted for PBML04 which is being advanced for MLD, a rare, pediatric, lysosomal storage disorder caused by mutations in the ARSA gene.

PBML04 utilizes the same next-generation proprietary capsid as PBGM01 and PBKR03 to deliver, through ICM administration, a functional ARSA gene into the CSF.

PBAL05 is targeting patients with ALS who have a gain-of-function mutation in the C9orf72 gene.

Our unnamed program is for the treatment of Huntington’s disease, a repeat expansion disorder.

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

We also have exploratory research programs with GTP for large indications, initially focused on AD and TLE, which can be expanded to other large CNS diseases upon mutual agreement with GTP.

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 $46.9 and $134.2 million for the three and nine months ended September 30, 2021, respectively.

As of September 30, 2021, we had an accumulated deficit of $305.1 million.

Our net loss was $42.8 and $38.9 million for the three months ended March 31, 2022 and 2021, respectively.

As of March 31, 2022, we had an accumulated deficit of $399.1 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.

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.

3 unchanged sentences

Until such time as we can generate significant revenue from product sales, if ever, we plan to finance our operations through the sale of equity, debt financings or other capital sources, which may include collaborations with other companies or other strategic transactions.

There are no assurances that we will be successful in obtaining an adequate level of financing as and when needed to finance our operations on terms acceptable to us or at all.

There are no assurances that we will be successful in obtaining an adequate

level of financing as and when needed to finance our operations on terms acceptable to us or at all.

Any failure to raise capital as and when needed could have a negative impact on our financial condition and on our ability to pursue our business plans and strategies.

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 September 30, 2021, we had cash, cash equivalents and marketable securities of $354.4 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.

In March 2022, we announced a 13 percent reduction in workforce and plans to prioritize research and development programs, as described above, to reduce operating expenses and to extend our cash runway.

We have slowed our investment in our pilot plant and therefore, the establishment of a pilot plant will be later than end of 2022.

As of March 31, 2022, we had cash, cash equivalents and marketable securities of $267.1 million.

We expect our existing cash, cash equivalents and marketable securities will enable us to fund our operating expenses and capital expenditure requirements into the second quarter of 2024.

COVID-19 Impact

We are continuing to proactively monitor and assess the current coronavirus disease 2019, or COVID-19, global pandemic.

Since early March 2020, we have activated a management team taskforce to assess the potential impact on our business that may result from this rapidly evolving crisis and to avoid any unnecessary potential delays to our programs.

Since early March 2020, we have activated a management team task force to assess the potential impact on our business that may result from this rapidly evolving crisis and to avoid any unnecessary potential delays to our programs.

The safety and well-being of employees, patients and partners is our highest priority.

5 unchanged sentences

University of Pennsylvania

We have a research, collaboration and licensing agreement, as amended most recently in August 2021 (as described 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 $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 (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.

We have a research, collaboration and licensing agreement, as amended, 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, we have the obligation to fund certain research relating to the preclinical development of selected products in research programs as well as the new exploratory research program in non-rare and/or non-monogenic (or large) CNS indications, initially Alzheimer’s Disease, or AD, and Temporal Lobe Epilepsy, or TLE.

We also 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 discovery research funding commitment is $5.0 million a year for five years, with quarterly payments of $1.3 million through June 2026.

Under the Penn Agreement we have eight 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 aggregate fee of $1.0 million, with $0.5 million per product indication paid immediately and another $0.5 million fee owed upon a further developmental milestone.

We have the obligation to fund certain research relating to the preclinical development of each licensed program

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 AD and TLE and such other mutually agreed upon large CNS indications.

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, or the Amendment, to the Penn Agreement, on August 3, 2021.

Under the 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.

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

The Penn Agreement includes an exploratory research collaboration to identify targets and early product candidates in such large CNS indications.

The exploratory research program is focused on discovering targets and novel gene therapy candidates for large CNS diseases, initially focused on AD and TLE, 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 aggregate $1.0 million option fee.

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 made an upfront payment of $5.0 million;

will reimburse Penn for expenses incurred in the exploratory research program;

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

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 AD and TLE (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.

Collaboration and Manufacturing and Supply Agreements

In June 2019, we entered into a collaboration agreement (the Catalent Collaboration Agreement) with Catalent Maryland, Inc., or Catalent .

As part of the Catalent Collaboration Agreement, we paid Catalent an upfront fee for the commissioning, qualification, validation and equipping of the Clean Room Suite.

We will pay an annual fee for five years for the use of the Clean Room Suite, which commenced in November 2020 upon its validation .

In April 2020, we entered into the Manufacturing and Supply Agreement with Catalent to secure clinical scale manufacturing capacity for batches of active pharmaceutical ingredients for our 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.

Under the terms of the Manufacturing and Supply Agreement, Catalent has agreed to manufacture batches of drug product for our gene therapy product candidates at the Clean Room Suite provided for in the Catalent Collaboration

There is a minimum annual purchase commitment owed to Catalent for five years beginning in November 2020, subject to certain inflationary adjustments.

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

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

We will pay an annual fee for five years for the exclusive use of the Clean Room Suite, which commenced in November 2020 upon its validation.

In April 2020, we 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 our gene therapy product candidates.

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

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

There is a minimum annual purchase commitment owed to Catalent for five years beginning in November 2020, subject to certain inflationary adjustments.

We have the right to terminate the Manufacturing and Supply Agreement for convenience or other reasons specified in the Manufacturing and Supply Agreement upon prior written notice.

5 unchanged sentences

These expenses include:

● expenses incurred to conduct the necessary preclinical studies and clinical trials required to obtain regulatory approval, including payments to Penn for preclinical development;

● expenses incurred to conduct the necessary preclinical studies and clinical trials required to obtain regulatory approval, including payments to Penn for preclinical research and development;

● expenses incurred in obtaining technology licenses related to technology that has not reached technological feasibility and has no alternative future use;

● personnel expenses, including salaries, benefits and share-based compensation expense for employees engaged in research and development functions;

● expenses related to funding research performed by third parties, including pursuant to agreements with CROs, as well as investigative sites and consultants that conduct our preclinical studies and clinical trials;

● expenses related to funding research performed by third parties, including pursuant to agreements with clinical research organizations, or CROs, as well as investigative sites and consultants that conduct our preclinical studies and clinical trials;

● expenses incurred under agreements with contract manufacturing organizations, or CMOs, including manufacturing scale-up expenses and the cost of acquiring and manufacturing preclinical study and clinical trial materials;

6 unchanged sentences

Product candidates in later stages of clinical development generally have higher development expenses 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 expenses, 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.

Expenses 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.

Given our recent reduction in workforce and prioritization of research and development programs, we expect our research and development expenses to remain consistent or decrease in the near future.

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

General and Administrative Expenses

General and administrative expense consists primarily of personnel expenses, including salaries, benefits and share-based compensation expense, for employees and consultants in executive, finance, accounting, legal, commercial, quality and human resource functions.

General and administrative expense also includes corporate facility expenses, including rent, utilities, depreciation and maintenance, not otherwise included in research and development expense, as well as legal expenses related to intellectual property and corporate matters, expenses related to information technology, and expenses for accounting and consulting services.

We expect that our general and administrative expense will increase in the future to support our continued research and development activities, potential commercialization efforts and increased expenses of operating as a public company.

These increases will likely include increased expenses related to the hiring of additional personnel and fees to outside consultants, lawyers and accountants, among other expenses.

Additionally, we anticipate continued expenses associated with being a public company, including expenses related to services associated with maintaining compliance with the requirements of The Nasdaq Stock Market, LLC and the SEC, insurance and investor relations expenses.

If any of our current or future product candidates obtains U.S.

regulatory approval, we expect that we would incur significantly increased expenses associated with building a commercial sales and marketing team.

General and administrative expenses consist primarily of personnel expenses, including salaries, benefits and share-based compensation expense, for employees and consultants in executive, finance, accounting, legal, information technology, commercial, quality, regulatory, operations and human resource functions.

General and administrative expenses also include corporate facility costs, including rent, utilities, depreciation and maintenance, not otherwise included in research and development expenses, legal expenses related to intellectual property and corporate matters, insurance expense, and expenses for accounting and consulting services.

Given our recent reduction in workforce and prioritization of operating expenses, we expect our general and administrative expenses to remain consistent in the near future.

Interest Income, net

Interest income, net consists of interest earned on our cash equivalents and marketable securities, offset by amortization of premium and discount on our marketable securities.

Interest income, net consists of interest earned on our cash equivalents and marketable securities, offset by amortization of premium and discount on our marketable securities and fees paid to our external asset manager.

Results of Operations

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

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

Comparison of the Three Months Ended March 31, 2022 and 2021

The following table sets forth our results of operations for the three months ended March 31, 2022 and 2021.

Three months ended

September 30,

(in thousands)

6 unchanged sentences

Research and Development Expenses

Research and development expenses increased by $5.8 million to $26.6 million for the three months ended September 30, 2021 from $20.8 million for the three months ended September 30, 2020.

The increase was primarily due to an increase of $1.1 million in clinical manufacturing expenses, a $3.1 million increase in clinical development and professional services expense, a $2.7 million increase in personnel-related expense due to an increase in employee headcount, and a $1.2 million increase in facility and other expenses.

These increases were partially offset by a $2.3 million decrease in research and development expenses associated with the Penn Agreement, which relates to expenses incurred in the three months ended September 30, 2020 for preclinical work performed in preparation for IND filings for

our lead programs.

Expenses associated with the Penn Agreement will continue to vary from quarter to quarter based on the status of our preclinical pipeline and the timing of preclinical work performed.

Research and development expenses increased by $1.2 million to $26.2 million for the three months ended March 31, 2022 from $25.0 million for the three months ended March 31, 2021.

The increase was primarily due to an increase of $5.1 million in clinical manufacturing expenses, a $1.6 million increase in clinical development and professional services expense, and a $1.1 million increase in facility and other expenses.

These increases were partially offset by a $5.2 million decrease in research and development expenses associated with the Penn Agreement and a $1.4 million decrease in personnel-related expense due to share-based compensation modification expense incurred in the three months ended March 31, 2021, which was partially offset by an increase in headcount and severance related expenses incurred in the three months ended March 31, 2022.

Expenses associated with the Penn Agreement will continue to vary from quarter to quarter based on our selection and prioritization of preclinical product candidates, the status of our preclinical pipeline and timing of preclinical work performed.

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

2 unchanged sentences

Three months ended

September 30,

(in thousands)

Undisclosed program

Internal costs, including personnel related and discovery

Acquired In-Process Research and Development Expenses

We incurred $0.5 million in license fees and $5.0 million in fees related to the August 2021 amendment with Penn during the three months ended September 30, 2021.

General and Administrative Expenses

General and administrative expenses increased by $7.2 million to $15.0 million for the three months ended September 30, 2021 from $7.8 million for the three months ended September 30, 2020.

The increase was primarily due to a $5.3 million increase in personnel-related and share-based compensation expense due to an increase in employee headcount.

Our professional fees and other expenses also increased by $1.8 million, as we expanded our operations to support our research and development efforts and incurred more expenses associated with operating as a public company.

Interest Income, net

Interest income, net was $0.2 million and $0.1 million for the three months ended September 30, 2021 and 2020, respectively, which is primarily attributable to interest income earned on cash, cash equivalents and marketable securities.

Comparison of the Nine Months Ended September 30, 2021 and 2020

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

Nine months ended

September 30,

(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 $30.8 million to $84.7 million for the nine months ended September 30, 2021 from $53.9 million for the nine months ended September 30, 2020.

The increase was primarily due to an increase of $20.0 million in clinical manufacturing expenses, a $5.2 million increase in clinical development and professional services expense and an $1.6 million increase in facility and other expenses.

We also had a $17.0 million increase in personnel-related expenses, including share-based compensation expenses of $6.1 million associated with the modification of stock options.

Absent these modification expenses, personnel expenses would have increased by $10.9 million primarily due to an increase in employee headcount in the research and development function.

These increases were partially offset by a $13.0 million decrease in research and development expenses associated with the Penn Agreement, which relates to expenses incurred in the nine months ended September 30, 2020 for preclinical work performed in preparation for IND filings for our lead programs.

Expenses associated with the Penn Agreement will continue to vary from period to period based on the status of our preclinical pipeline and the timing of preclinical work performed.

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

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

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

Nine months ended

September 30,

(in thousands)

Undisclosed program

Internal costs, including personnel related and discovery

Program Specific Expenses

Other Programs and Discovery

Unallocated Internal Expenses

Personnel-related (including share-based compensation)

Acquired In-Process Research and Development Expenses

We incurred $0.5 million in license fees, $1.5 million in fees related to the achievement of a development milestone, and $5.0 million in fees related to the August 2021 amendment with Penn during the nine months ended September 30, 2021.

During both of the three months ended March 31, 2022 and 2021, we incurred expenses of $1.5 million related to the achievement of a development milestone.

General and Administrative Expenses

General and administrative expenses increased by $22.9 million to $42.9 million for the nine months ended September 30, 2021 from $20.0 million for the nine months ended September 30, 2020.

The increase was primarily due to a $15.7 million increase in personnel-related and share-based compensation expense due to an increase in employee headcount.

Our professional fees and other expenses also increased by $7.2 million, as we expanded our operations to support our research and development efforts and incurred more expenses associated with operating as a public company.

General and administrative expenses increased by $2.6 million to $15.1 million for the three months ended March 31, 2022 from $12.5 million for the three months ended March 31, 2021.

The increase was primarily due to a $3.1 million increase in personnel-related and share-based compensation expense due to an increase in employee headcount, as well as severance expenses incurred during the three months ended March 31, 2022 related to our workforce reduction.

This was partially offset by a decrease in our professional fees and other expenses of $0.5 million.

Interest Income, net

Interest income, net was $0.3 million and $0.6 million for the nine months ended September 30, 2021 and 2020, respectively, which is primarily attributable to interest income earned on cash, cash equivalents and marketable securities.

Interest income, net was de minimus and $0.1 million for the three months ended March 31, 2022 and 2021, respectively, which is primarily attributable to interest income earned on cash, cash equivalents and marketable securities, partially offset by realized losses on marketable securities in the three months ended March 31, 2022.

Liquidity and Capital Resources

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

As of September 30, 2021, we had $354.4 million in cash, cash equivalents and marketable securities and had an accumulated deficit of $305.1 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.

As of March 31, 2022, we had $267.1 million in cash, cash equivalents and marketable securities and had an accumulated deficit of $399.1 million.

We expect that our existing cash, cash equivalents and marketable securities will enable us to fund our operating expenses and capital expenditure requirements into the second quarter of 2024.

Funding Requirements

14 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.

4 unchanged sentences

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

Nine months ended

September 30,

Three Months Ended

(in thousands)

Cash used in operating activities

Cash used in investing activities

Cash provided by (used in) investing activities

Cash provided by financing activities

Net increase in cash and cash equivalents

Net increase (decrease) in cash and cash equivalents

Net Cash Used in Operating Activities

During the nine months ended September 30, 2021, we used $96.1 million of net cash in operating activities.

Cash used in operating activities reflected a net loss of $134.2 million, which was partially offset by net increase in our operating net liabilities by $1.3 million and non-cash charges of $29.8 million related to share-based compensation, depreciation, amortization of premium and discount, net, and changes in deferred rent.

During the three months ended March 31, 2022, we used $44.7 million of net cash in operating activities.

Cash used in operating activities reflected a net loss of $42.8 million and a net increase in our operating assets of $11.5 million, partially offset by non-cash charges of $9.6 million related to share-based compensation, depreciation, amortization of premium and discount, net, reduction of operating right of use assets and operating lease liabilities and acquired in-process research and development.

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

During the nine months ended September 30, 2020, we used $51.1 million of net cash in operating activities.

Cash used in operating activities reflected a net loss of $73.3 million.

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.

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 $11.0 million related to share-based compensation, depreciation, and changes in deferred rent as well as a $11.2 million net increase in our operating assets and liabilities.

Net Cash Used in Investing Activities

During the nine months ended September 30, 2021, we purchased $169.9 million in marketable securities, had sales and maturities of $146.0 million in marketable securities, had purchases of property and equipment of $10.8 million, and paid $7.5 million for technology licenses.

During the nine months ended September 30, 2020, we purchased $135.2 million in marketable securities and had purchases of property and equipment of $0.3 million.

During the three months ended March 31, 2022, we purchased $37.4 million in marketable securities, had sales and maturities of $56.9 million in marketable securities, had purchases of property and equipment of $0.7 million, and paid $1.5 million for technology licenses.

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, paid $0.5 million for technology licenses and purchased $0.8 million in property and equipment.

Net Cash Provided by Financing Activities

During the nine months ended September 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 expenses in connection with the sale of common stock.

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

We also received $0.1 million from the exercise of stock options.

During the three months ended March 31, 2022, we received $49,000 from the exercise of stock options.

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.

We also paid $0.3 million in deferred offering costs.

Off-Balance Sheet Arrangements

4 unchanged sentences

Critical Accounting Policies and Estimates

During the nine months ended September 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.

During the three months ended March 31, 2022, 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 our 2021 Annual Report filed on Form 10-K.

JOBS Act Accounting Election

9 unchanged sentences

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