What changed in this filing

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Item 2. Management’s Discussion and Analysis

2023-08-07 compared with 2023-05-11 · 103 added, 63 removed, 224 unchanged (43% of the section changed)

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β-gal is an enzyme that catalyzes the first step in the natural degradation of GM1 ganglioside as well as other glycan substrates.

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 ten 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.

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

We believe PBGM01 could provide patients with significantly improved outcomes.

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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.

We have completed dosing of the initial four cohorts in our Imagine-1 Trial.

Part 1 of the Imagine-1 Trial is a dose ranging phase of the study exploring different doses of PBGM01 across early infantile and late infantile GM1.

To date, we have completed dosing of the initial four cohorts.

This includes a total of eight patients, as follows:

Cohort 1 for late infantile GM1 treated with low dose PBGM01, Cohort 2 for late infantile GM1 treated with high dose PBGM01, Cohort 3 for early infantile GM1 treated with low dose PBGM01, and Cohort 4 for early infantile GM1 treated with high dose PBGM01.

In December 2022 and February 2023, we reported interim safety and biomarker data for the first three cohorts of our Imagine-1 trial.

The safety data showed that PBGM01 was well tolerated with no serious adverse events and no evidence of dorsal root ganglion toxicity or complications related to the ICM injection.

We observed a dose-dependent increase in β-gal activity in the cerebral spinal fluid, or CSF, coupled with a dose-dependent decrease in CSF levels of GM1 ganglioside.

We also reported meaningful improvement in a subset of patients across developmental areas in assessments utilizing the Vineland II and Bayley III scales, performed by caregivers and trained healthcare providers, respectively.

The data suggests that stage of disease may be a determinant in treatment outcomes.

We expect to report initial safety and biomarker data from patients in Cohort 4 in the middle of 2023.

Cohort 1 for late infantile GM1 treated with the low dose of PBGM01, or dose 1, Cohort 2 for late infantile GM1 treated with the former high dose of PBGM01, or dose 2, Cohort 3 for early infantile GM1 treated with dose 1, and Cohort 4 for early infantile GM1 treated with dose 2.

To date, we have reported interim safety and biomarker data for the initial four cohorts of our Imagine-1 trial.

The safety data showed that PBGM01 was well tolerated with no serious adverse events related to study treatment and no evidence of dorsal root ganglion toxicity or complications related to the ICM injection.

At dose 2, PBGM01 has shown the ability to achieve healthy control levels of β-gal activity and GM1 gangliosides in the cerebral spinal fluid, or CSF, and maintain these effects up to 12 months.

A key objective of the initial phase of the Imagine-1 trial is to determine the optimal dose for the confirmatory phase of the study.

Based on the favorable safety profile of PBGM01 observed to date, the observed dose-response in key biomarkers, such as CSF β-gal activity and GM1 ganglioside levels, and that our preclinical studies showed no safety signals at doses higher than currently being evaluated in the ongoing clinical trial, we plan to treat additional patients in the Imagine-1 trial at higher doses of PBMG01 than the doses of PBGM01 administered to date in Cohorts 1 to 4.

To this end, we have submitted a protocol amendment for Imagine-1 study to treat patients at a higher dose, or Dose 3, of PBGM01 that will inform registrational dose selection.

The Imagine-1 clinical trial protocol amendment intends to treat early and late infantile GM1 gangliosidosis patients at Dose 3, which is two times higher than the current high dose, or Dose 2.

Following regulatory review, the company looks forward to resuming patient enrollment efforts and expects to the dose the first patient at Dose 3 in the second half of the year.

Based on the favorable safety profile of PBGM01 observed to date, the observed dose-response in key biomarkers, such as CSF β-gal activity and GM1 ganglioside levels, and that our preclinical studies showed no safety signals at doses higher than currently being evaluated in the ongoing clinical trial, we have amended the protocol for Imagine-1 study to treat patients at a new higher dose of PBGM01, or dose 3.

The Imagine-1 clinical trial protocol amendment will treat six patients at dose 3, which is two times higher than dose 2, with three late infantile GM1 gangliosidosis patients in Cohort 5 and three early infantile GM1 gangliosidosis patients in Cohort 6.

In July 2023, we dosed the first patient at dose 3.

Results from all 3 doses will inform dose selection for the confirmatory cohorts of the trial.

We expect to report initial safety and biomarker data from patients at dose 3 by mid-2024.

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.

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ICM administration of AAV1 to NHPs resulted in supraphysiologic CSF levels of human PGRN compared to levels in healthy human subjects’ CSF, and in excess of levels achieved in NHPs with AAVhu68 or AAV5.

In a preclinical mouse model model of FTD, higher levels of CSF PGRN were associated with incremental improvements in some measures of downstream pathology.

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.

In August 2022, we dosed the first patient in our upliFT-D trial.

We expect to report initial safety and biomarker data from patients in Cohort 1 in the second half of 2023.

We expect to report initial safety and biomarker data from patients in Cohort 1 in the fourth quarter of 2023.

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.

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

Our preclinical data in ARSA-/- mice and in NHPs support the ability of PBML04 administration into CSF to result in dose-dependent increases in brain

and CSF levels of functional human ARSA enzyme, leading to improved biochemical, histopathological, behavioral, survival endpoints, and with no safety or toxicity signs up to the highest tested dose in NHPs.

Our preclinical data in ARSA -/-

mice and in NHPs support the ability of PBML04 administration into CSF to result in dose-dependent increases in brain and CSF levels of functional human ARSA enzyme, leading to improved biochemical, histopathological, behavioral, survival endpoints, and with no safety or toxicity signs up to the highest tested dose in NHPs.

Preclinical findings were presented by GTP in 2021.

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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 certain 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 an exploratory research program with GTP for larger non-monogenic indications, currently focused on TLE, which can be expanded to other large CNS diseases upon mutual agreement with GTP.

We also have an exploratory research program with GTP for larger non-monogenic indications, currently focused on temporal lobe epilepsy, or TLE, which can be expanded to other large CNS diseases upon mutual agreement with GTP.

Business Overview

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

Our net losses were $34.3 million and $42.8 million for the three months ended March 31, 2023 and 2022, respectively.

As of March 31, 2023, we had an accumulated deficit of $526.7 million.

Our net losses were $23.9 million and $39.5 million for the three months ended June 30, 2023 and 2022, respectively, and $58.2 million and $82.4 million for the six months ended June 30, 2023 and 2022, respectively.

As of June 30, 2023, we had an accumulated deficit of $550.6 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.

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

As of March 31, 2023, we had cash, cash equivalents and marketable securities of $167.8 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 first half of 2025.

In July 2023, we announced an organizational redesign intended to better align our resources with our previously announced focused research and development strategy and further extend our cash runway.

We will decrease operating

expenses through ongoing cash management initiatives and by reducing our workforce by approximately 26 percent, primarily in our CMC group.

As of June 30, 2023, we had cash, cash equivalents and marketable securities of $151.5 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 fourth quarter of 2025.

Financial Operations Overview

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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 exploratory research programs in non-rare and/or non-monogenic, or large, CNS indications, currently 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.

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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.

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, currently 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.

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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, currently focused on TLE, and that can be expanded to other large CNS diseases upon mutual agreement.

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

The exploratory research program is focused on discovering targets and novel gene therapy candidates for certain large CNS diseases and that can be expanded to other large CNS diseases upon mutual agreement.

The initial term of the exploratory research program is 3 years, or until August 2024, which term can be extended by mutual agreement.

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As part of the Collaboration Agreement, we were required to pay an annual fee for five years ending in 2025 for the exclusive use of a dedicated clean room suite, or the Clean Room Suite.

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 confirms the terms contemplated by the Collaboration Agreement and the Collaboration Agreement continues to be in effect pursuant to its terms.

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If we terminate the Manufacturing and Supply Agreement, we will be obligated to pay an early termination fee to Catalent.

Under both the Collaboration Agreement and the Manufacturing and Supply Agreement, we had 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.

On March 31, 2023, we entered into certain letter agreements amending each of (i) the Collaboration Agreement and (ii) the Manufacturing and Supply Agreement, together with the Collaboration Agreement, the Existing Agreements.

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In consideration of Agreement I, we agreed to make aggregate payments to Catalent of $6.0 million between June 30, 2023 and May 1, 2024.

We accrued the $6.0 million of aggregate payments as of the three-months ended March 31, 2023.

Letter agreement II, or Agreement II, and together with Agreement I, the Letter Agreements, extended the term of the Existing Agreements until November 6, 2030, and established a limited exclusive relationship between us and Catalent for the manufacture of bulk drug substance and drug product for our adeno-associated virus delivery therapeutic product candidates for the treatment of FTD and GM1.

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Immediately prior to the execution of the Letter Agreements, we had a $5.3 million prepaid asset related to upfront payments made to secure the Clean Room Suite.

In connection with the Letter Agreements, we no longer have exclusive access to the Clean Room Suite at Catalent and, as a result, we recognized an expense of $5.3 million related to the elimination of the prepaid asset as of the three months ended March 31, 2023.

We classified the $11.3 million of expenses, which comprises of $6.0 million in aggregate payments due to Catalent and the $5.3 million elimination of the prepaid asset, as general and administrative expense within the statement of operations for the three months ended March 31, 2023, as both amounts do not directly relate to the future advancement of our research and development programs.

We classified the $11.3 million of expenses, which comprises of $6.0 million in aggregate payments due to Catalent and the $5.3 million elimination of the prepaid asset, as general and administrative expense within the statement of operations for the six months ended June 30, 2023, as both amounts do not directly relate to the future advancement of our research and development programs.

As of June 30, 2023, we made payments of $1.0 million under the Letter Agreements.

The remaining $5.0 million of aggregate payments due to Catalent under the Letter Agreements are included in accrued expenses and other current liabilities.

Components of Results of Operations

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These increases will likely include increased expenses related to the hiring of additional personnel in general and administrative functions, and expenses related to pre-commercialization efforts.

If any of our current or future product candidates obtain regulatory approval, we expect that we would incur significantly increased expenses associated with building a commercial sales and marketing team.

If any of our current or future product candidates obtain regulatory approval,

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

Other income (expense), net

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

Additionally, in the three months ended March 31, 2023, we recognized other income related to the sale of certain tax credits.

Additionally, in the six months ended June 30, 2023, we recognized other income related to the sale of certain tax credits.

Results of Operations

Comparison of the Three Months Ended March 31, 2023 and 2022

The following table sets forth our results of operations for the three months ended March 31, 2023 and 2022:

Comparison of the three months ended June 30, 2023 and 2022

The following table sets forth our results of operations for the three months ended June 30, 2023 and 2022:

Three months ended

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Research and Development Expenses

Research and development expenses decreased by $9.4 million to $16.8 million for the three months ended March 31, 2023 from $26.2 million for the three months ended March 31, 2022.

The decrease was primarily due to a decrease of $9.2 million in clinical manufacturing expenses, which relates to the timing and reduction of our manufacturing activities to support our clinical trials, and decreases of $2.3 million and $1.4 million in wages and benefits and share-based compensation expense, respectively.

These amounts were partially offset by a $3.2 million increase in preclinical and clinical activities and a $0.3 million increase in professional services and consulting.

Research and development expenses decreased by $9.5 million to $17.3 million for the three months ended June 30, 2023 from $26.8 million for the three months ended June 30, 2022.

The decrease was primarily due to a decrease of $5.5 million in clinical manufacturing expenses, which were higher in 2022 to support clinical trial start up across the portfolio, and decreases of $0.9 million and $1.3 million in wages and benefits and share-based compensation expense, respectively, related to reductions in headcount.

In addition, we had decreases of $1.0 million for clinical operations, $0.8 million in professional services and consulting, and $0.1 million related to a reduction in Penn expenses.

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.

These amounts were partially offset by an increase of $0.1 million in facilities and other expenses.

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

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General and Administrative Expenses

General and administrative expenses increased by $3.9 million to $19.0 million for the three months ended March 31, 2023 from $15.1 million for three months ended March 31, 2022.

The increase was primarily due to non-recurring expenses of $11.3 million related to the Letter Agreements and an increase in expenses of $0.4 million for facilities and other.

These amounts were partially offset by a decrease of $3.9 million and $2.2 million in wages and benefits and share-based compensation expense, respectively, related to a reduction in headcount, and a $1.7 million

decrease in our professional fees, facilities and other expenses.

General and administrative expenses decreased by $4.9 million to $8.1 million for the three months ended June 30, 2023 from $13.0 million for the three months ended June 30, 2022.

The decrease was primarily due to a decrease of $2.5 million and $1.3 million in wages and benefits and share-based compensation expense, respectively, related to reductions in headcount, and a $1.1 million decrease in our professional and consulting fees.

Other income (expense), net

Other income (expense), net was $1.5 million and $0.3 million for the three months ended June 30, 2023 and 2022, respectively.

Other income (expense), net for the three months ended June 30, 2023 consisted of $1.5 million attributable to interest income earned on cash, cash equivalents and marketable securities.

Acquired In-Process Research and Development Expenses

During the three months ended June 30, 2023 and 2022, we did not make any payments for acquired in-process research and development.

Comparison of the six months ended June 30, 2023

The following table sets forth our results of operations for the six months ended June 30, 2023 and 2022:

Six months ended

(in thousands)

Operating expenses:

Research and development

Acquired in‑process research and development

General and administrative

Loss from operations

Other income (expense), net

Research and Development Expenses

Research and development expenses decreased by $18.8 million to $34.2 million for the six months ended June 30, 2023 from $53.0 million for the six months ended June 30, 2022.

The decrease was primarily due to a decrease of $14.6 million in clinical manufacturing expenses, which were higher in 2022 to support clinical trial start up across the portfolio, a decrease of $1.3 million for clinical operations, a decrease of $0.5 million in professional fees, and decreases of $3.3 million and $2.6 million in wages and benefits and share-based compensation expense, respectively, related to reductions in headcount.

These amounts were partially offset by a $3.5 million increase in Penn expenses.

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

PBFT02 (FTD‑GRN)

PBKR03 (Krabbe)

Other Programs and Discovery

Unallocated Internal Expenses

Personnel-related (including share-based compensation)

General and Administrative Expenses

General and administrative expenses decreased by $1.0 million to $27.1 million for the six months ended June 30, 2023 from $28.1 million for the six months ended June 30, 2022.

The decrease was primarily due to a decrease of $6.4 million and $3.4 million in wages and benefits and share-based compensation expense, respectively, related to reductions in headcount, and a $2.9 million decrease in our professional fees and other expenses.

These amounts were partially offset by an increase of $11.3 million related to the non-recurring expenses related to the Letter Agreements and an increase in expenses of $0.4 million for facilities and other.

Excluding the non-recurring expenses of $11.3 million related to the Letter Agreements, our general and administrative expenses decreased by $12.3 million.

Other income (expense), net

Other income (expense), net was $1.5 million and de minimus for the three months ended March 31, 2023 and 2022, respectively.

Other income (expense), net for the three months ended March 31, 2023 consisted of $1.1 million attributable to interest income earned on cash, cash equivalents and marketable securities and $0.4 million related to the sale of certain tax credits.

Other income (expense), net was $3.1 million and $0.3 million for the six months ended June 30, 2023 and 2022, respectively.

Other income (expense), net for the six months ended June 30, 2023 consisted of $2.6 million attributable to interest income earned on cash, cash equivalents and marketable securities, and $0.5 million related to the sale of certain tax credits.

Acquired In-Process Research and Development Expenses

During the three months ended March 31, 2023, we did not make any payments for acquired in-process research and development.

During the three months ended March 31, 2022, we made payments under the Penn Agreement for acquired in-process research and development of $1.5 million related to the achievement of a development milestone.

During the six months ended June 30, 2023, we did not make any payments for acquired in-process research and development.

During the six months ended June 30, 2022, we made payments under the Penn Agreement for acquired in-process research and development of $1.5 million related to the achievement of a development milestone.

Liquidity and Capital Resources

As of March 31, 2023, we had $167.8 million in cash, cash equivalents and marketable securities and had an accumulated deficit of $526.7 million.

We expect our existing cash, cash equivalents and marketable securities will enable us to fund our operating expense and capital expenditures into the first half of 2025.

As of June 30, 2023, we had $151.5 million in cash, cash equivalents and marketable securities and had an accumulated deficit of $550.6 million.

We expect our existing cash, cash equivalents and marketable securities will enable us to fund our operating expense and capital expenditures into the fourth quarter of 2025.

Funding Requirements

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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 interest will be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect existing stockholders’ rights as common stockholders.

To the extent that we raise additional capital through the sale of equity or convertible debt

securities, existing stockholders’ ownership interest will be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect existing stockholders’ rights as common stockholders.

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

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

Three months ended

Six months ended

(in thousands)

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Net Cash Used in Operating Activities

During the three months ended March 31, 2023, we used $22.4 million of net cash in operating activities.

Cash used in operating activities reflected a net loss of $34.3 million and a net decrease in our operating assets of $8.2 million, partially offset by non-cash charges of $3.7 million related to share-based compensation, depreciation, amortization, and amortization of premium and discount, net.

During the six months ended June 30, 2023, we used $39.6 million of net cash in operating activities.

Cash used in operating activities reflected a net loss of $58.2 million, partially offset by a net decrease in our operating assets of $10.6 million and non-cash charges of $8.0 million related to share-based compensation, depreciation, amortization, and amortization of premium and discount, net.

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, 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, amortization of premium and discount, net, 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.

Net Cash Provided by (Used) in Investing Activities

During the three months ended March 31, 2023, we purchased $51.4 million in marketable securities, and had sales and maturities of $72.6 million in marketable securities.

Purchases of property and equipment were de minimus for the three months ended March 31, 2023.

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 six months ended June 30, 2023 , we purchased $73.5 million in marketable securities, and had sales and maturities of $108.8 million in marketable securities.

Purchases of property and equipment were $0.1 million for the six months ended June 30, 2023.

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.

Net Cash Provided by (Used in) Financing Activities

During the three months ended March 31, 2023 , the company had no gross receipts or outflows of cash related to financing activites.

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

During the six months ended June 30, 2023, we received $0.1 million in proceeds from the issuance of common stock under the ESPP.

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.

Contractual obligations and other commitments

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As a result of the Letter Agreements, under both the Collaboration Agreement and the Manufacturing and Supply Agreement with Catalent, we no longer have an annual minimum commitment of $10.6 million per year owed to Catalent through November 2025.

In addition, the Company will make aggregate payments to Catalent of $6.0 million between June 30, 2023 and May 1, 2024.

As of June 30, 2023, the Company made payments of $1.0 million under the Letter Agreements.

In addition, the Company will make aggregate payments to Catalent of $5.0 million between July 1, 2023 and May 1, 2024.

Under the Penn Agreement, we agreed to fund discovery research conducted by Penn for five years, which began in May 2020.

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Critical Accounting Policies and Estimates

During the three months ended March 31, 2023, 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 2022 Annual Report filed on Form 10-K.

During the six months ended June 30, 2023, 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 2022 Annual Report filed on Form 10-K.

JOBS Act Accounting Election

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We are also a “smaller reporting company,” meaning that the market value of our stock held by non-affiliates is less than $700.0 million and our annual revenue is less than $100.0 million during the most recently completed fiscal year.

may continue to be a smaller reporting company if either (i) the market value of our stock held by non-affiliates is less than $250.0 million or (ii) our annual revenue is less than $100.0 million during the most recently completed fiscal year and the market value of our stock held by non-affiliates is less than $700.0 million.

We may continue to be a smaller reporting company if either (i) the market value of our stock held by non-affiliates is less than $250.0 million or (ii) our annual revenue is less than $100.0 million during the most recently completed fiscal year and the market value of our stock held by non-affiliates is less than $700.0 million.

If we are a smaller reporting company at the time we cease to be an emerging growth company, we may continue to rely on exemptions from certain disclosure requirements that are available to smaller reporting companies.

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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