What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2022-08-04 compared with 2022-05-16 · 97 added, 54 removed, 217 unchanged (41% of the section changed)

16 unchanged sentences

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, 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 results in production of 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.

10 unchanged sentences

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.

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

Additionally, we have dosed our first patient in Cohort 2, for late onset infantile GM1 with high dose PBGM01, and completed dosing patients in Cohort 3, for early onset infantile GM1 with low dose PBGM01.

Initial biomarker and safety data from Cohort 2 and Cohort 3 are 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.

20 unchanged sentences

We believe PBKR03 may provide patients with significantly improved outcomes.

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

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.

2 unchanged sentences

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

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

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

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

5 unchanged sentences

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 Independent Data Monitoring Committee, or IDMC, recommended continuation of the trial with specified modifications including certain changes to the inclusion/exclusion criteria and additional monitoring post administration.

The protocol has been updated and submitted to relevant health authorities and ethics committees.

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

We are proceeding with study recruitment, and we expect to report interim safety and biomarker data from a subset of Cohort 1 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.

PBML04 for the Treatment of Metachromatic Leukodystrophy

We are developing PBML04, which utilizes a proprietary, next-generation AAVhu68 capsid to deliver to the brain and peripheral tissues a functional arylsulfatase A gene, or ARSA, encoding the ARSA enzyme for Metachromatic Leukodystrophy, or MLD.

MLD is a rare, autosomal recessive lysosomal storage disease caused by mutations in the ARSA gene, resulting in little or no functional activity of the ARSA enzyme, which is essential for the degradation of sphingolipid cerebroside-3-sulfate, or sulfatide.

Sulfatides are the most abundant sphingolipids in myelin and have important structural and functional roles in the maintenance of myelin.

When the ARSA enzyme is lacking, sulfatides accumulate in lysosomal storage deposits in microglia, oligodendrocytes, and Schwann cells, leading to widespread demyelination.

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

Accumulation of sulfatides in neurons also leads to further neuronal dysfunction.

We believe PBML04 may provide patients with significantly improved outcomes.

In preclinical models, treatment with PBML04 led to increases in the expression of ARSA in disease relevant target tissues and in the periphery, reduction in sulfatide accumulation, with corresponding clinical improvements and survival.

In April 2022, we submitted an IND for PBML04 to support clinical development in MLD, a rare, pediatric, lysosomal storage disorder.

On May 20, 2022, the FDA cleared our IND application for PBML04, which allows us to proceed with PBML04-001, an international, multi-center, open-label, single-arm clinical trial of PBML04 in patients with a diagnosis of late onset infantile MLD.

As we continue to evaluate our resources and operating expenses, we have made the decision to hold advancement of clinical development activities for the MLD program at this time.

Through our manufacturing partners, we have manufactured PBML04 clinical supply to support clinical trial initiation.

Research Programs

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.

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

PBAL05 for ALS and an unnamed program for Huntington’s disease.

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.

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.

We also have exploratory research programs with GTP for large indications, initially focused on Alzheimer’s Disease, or AD, and Temporal Lobe Epilepsy, or TLE, which can be expanded to other large CNS diseases upon mutual agreement with GTP.

Business Overview

1 unchanged sentence

Since inception, we have devoted substantially all of our resources to acquiring and developing product and technology rights, conducting research and development, organizing and staffing our company, business planning and raising capital.

We have incurred recurring losses, the majority of which are attributable to research and development activities, and negative cash flows from operations.

We have incurred recurring losses, the majority of which are attributable to research and development activities, and negative cash flows from

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

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 net loss was $39.5 and $48.4 million for the three months ended June 30, 2022 and 2021, respectively, and $82.4 million and $87.3 million for the six months ended June 30, 2022 and 2021, respectively.

As of June 30, 2022, we had an accumulated deficit of $438.6 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.

2 unchanged sentences

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

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

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

1 unchanged sentence

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.

2 unchanged sentences

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.

As of June 30, 2022 , we had cash, cash equivalents and marketable securities of $239.3 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.

10 unchanged sentences

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.

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 AD and 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.

4 unchanged sentences

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.

Each payment will be due upon the achievement of specific development milestone events by such licensed product for a first indication, reduced development milestone payments for the second and third indications and no

development milestone payments for subsequent indications.

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

14 unchanged sentences

The 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 Collaboration Agreement.

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 Collaboration Agreement.

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

21 unchanged sentences

General and Administrative Expenses

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.

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.

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

Interest Income, net

1 unchanged sentence

Results of Operations

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.

Comparison of the Three Months Ended June 30, 2022 and 2021

The following table sets forth our results of operations for the three months ended June 30, 2022 and 2021:

Three months ended

7 unchanged sentences

Research and Development Expenses

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.

Research and development expenses decreased by $6.3 million to $26.8 million for the three months ended June 30, 2022 from $33.1 million for three months ended June 30, 2021.

The decrease was primarily due to a decrease of $10.9 million in clinical manufacturing expenses, which relates to the timing of our manufacturing activities.

This amount was partially offset by a $1.2 million increase in research and development expenses associated with the Penn Agreement, a $1.6 million increase in facility and other expenses, a $1.6 million increase in clinical operations and professional fee expenses, and a $0.2 million increase in personnel-related and share-based compensation expenses.

Personnel-related and share-based compensation expenses for the three months ended June 30, 2021 includes $0.9 million of expenses related to modifications of shared-based compensation awards, compared to no modifications of share-based compensation awards for the three months ended June 30, 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.

9 unchanged sentences

Acquired In-Process Research and Development Expenses

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.

During both of the three months ended June 30, 2022 and 2021, we incurred no expenses related to the achievement of development milestones.

General and Administrative Expenses

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.

General and administrative expenses decreased by $2.4 million to $13.0 million for the three months ended June 30, 2022 from $15.4 million for three months ended June 30, 2021.

The decrease was primarily due to a $2.3 million decrease in personnel-related and share-based compensation expense related to our workforce reduction, which was partially offset by severance expenses incurred in the three months ended June 30, 2022 related to the resignation of our Chief Executive Officer, and a $0.1 million decrease in our professional fees, facilities and other expenses.

Interest Income, net

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.

Interest income, net was $0.3 million and $0.1 million for the three months ended June 30, 2022 and 2021, respectively, and were 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 June 30, 2022.

Comparison of the Six Months Ended June 30, 2022 and 2021

The following table sets forth our results of operations for the six months ended June 30, 2022 and 2021:

Six Months Ended

(in thousands)

Operating expenses:

Research and development

Acquired in‑process research and development

General and administrative

Loss from operations

Interest income, net

Research and Development Expenses

Research and development expenses decreased by $5.0 million to $53.0 million for the six months ended June 30, 2022 from $58.1 million for six months ended June 30, 2021.

The decrease was primarily due to a decrease of $5.7 million in clinical manufacturing expenses, a $4.0 million decrease in research and development expenses associated with the Penn Agreement, and a $1.3 million decrease in personnel-related and share-based compensation.

These decreases were partially offset by a $3.2 million increase in clinical operations and professional fees expense and a $2.8 million increase in facility and other expense.

We track outsourced development, outsourced personnel expenses and other external research and development costs 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:

Six Months Ended

(in thousands)

Program Specific Expenses

Other Programs and Discovery

Unallocated Internal Expenses

Personnel-related (including share-based compensation)

Acquired In-Process Research and Development Expenses

During both of the six months ended June 30, 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 $0.2 million to $28.1 million for the six months ended June 30, 2022 from $27.9 million for six months ended June 30, 2021.

The increase was primarily due to a $0.8 million increase in personnel-related and share-based compensation expense.

Personnel-related and share-based compensation expense includes modifications of share-based compensation and severance related expenses incurred during the six months ended June 30, 2022, which was partially offset by lower personnel-related expenses due to our workforce reduction.

This amount was also partially offset by a $0.6 million decrease in professional fees, facility and other expenses.

Interest Income, net

Interest income, net $0.3 million and $0.2 million for the six months ended June 30, 2022 and 2021, respectively, and were primarily attributable to interest income earned on cash, cash equivalents and marketable securities, partially offset by realized losses on marketable securities in the six months ended June 30, 2022

Liquidity and Capital Resources

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.

As of June 30, 2022, we had $239.3 million in cash, cash equivalents and marketable securities and had an accumulated deficit of $438.6 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.

17 unchanged sentences

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

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

liquidation or other preferences that adversely affect existing stockholders’ rights as common stockholders.

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

2 unchanged sentences

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

Three Months Ended

Six Months Ended

(in thousands)

4 unchanged sentences

Net Cash Used in Operating Activities

During the three months ended March 31, 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.

During the six months ended June 30, 2022, we used $70.8 million of net cash in operating activities.

Cash used in operating activities reflected a net loss of $82.4 million and a net increase in our operating assets of $5.5 million, partially offset by non-cash charges of $17.1 million related to share-based compensation, depreciation, amortization of premium and discount, net, 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 three months ended March 31, 2021, we used $30.7 million of net cash in operating activities.

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

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

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

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

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

Net Cash Used in Investing Activities

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 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.

During the six months ended June 30, 2022, we purchased $58.8 million in marketable securities, had sales and maturities of $95.3 million in marketable securities, had purchases of property and equipment of $1.6 million, and paid $1.5 million for technology licenses.

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

Net Cash Provided by (Used in) Financing Activities

During the six months ended June 30, 2022 , we received $49,000 from the exercise of stock options, received $0.2 million in proceeds from the issuance of common stock under the ESPP and paid $0.6 million for short-term insurance premium financing.

During the six months ended June 30, 2021, we received net proceeds of $165.8 million from the sale of our common stock, received $0.2 million from the exercise of stock options and received $0.5 million in proceeds from the issuance of common stock under the ESPP.

We also paid $0.3 million in deferred offering costs.

5 unchanged sentences

Critical Accounting Policies and Estimates

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.

During the six months ended June 30, 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