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Item 7. Management’s Discussion and Analysis

2025-03-04 compared with 2024-03-04 · 140 added, 90 removed, 160 unchanged (59% of the section changed)

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We are a clinical stage genetic medicines company on a mission to improve the lives of patients with neurodegenerative diseases.

Our primary focus is the development and advancement of cutting-edge, one-time therapies designed to target the underlying pathology of these conditions.

Our primary focus is the development and advancement of cutting-edge, one-time therapies designed to target critical underlying pathology in these conditions.

We were incorporated in July 2017 under the laws of the State of Delaware.

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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 $102.1 million and $136.1 million for the year ended December 31, 2023 and 2022, respectively.

Our net losses were $64.8 million and $102.1 million for the years ended December 31, 2024 and 2023, respectively.

As of December 31, 2024, we had an accumulated deficit of $659.2 million.

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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.

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

In connection with the organizational restructuring, we reduced our workforce by approximately 26 percent, primarily in our CMC group.

As of December 31, 2024, we had cash, cash equivalents and marketable securities of $76.8 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 fourth quarter of 2025.

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 quarter of 2027.

Financial Operations Overview

License Agreement

License Agreements

University of Pennsylvania

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

Under the Penn Agreement, we have the option to obtain exclusive licenses to, and to fund, certain research relating to the preclinical development of selected products in research programs in rare monogenic CNS indications.

We have eight remaining options available to commence additional licensed programs for CNS indications until August 3, 2026.

The Penn Agreement includes an exploratory research program to identify targets and early product candidates in certain agreed upon non-monogenic, non-rare, or large, CNS indications.

The initial term of the exploratory research program is three years, or until August 2024, 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 that arise from the exploratory research programs by exercising one of our remaining eight options.

We currently do not have any active exploratory research programs.

If we were to exercise any of the remaining options, we would owe Penn a non-refundable aggregate fee of $1.0 million per product indication, with $0.5 million due upfront and another $0.5 million fee owed upon a further developmental milestone.

We also fund discovery research conducted by Penn through August 3, 2026 and will receive exclusive rights, subject to certain limitations, to platform technologies resulting from the discovery research for our products developed with GTP, such as novel capsids, toxicity reduction technologies and delivery and formulation improvements.

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

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

As a result of the Outlicense Transaction Agreements, as discussed below, we restructured our research, collaboration and licensing agreement with the Trustees of the University of Pennsylvania, or Penn, as amended, previously the Penn Agreement and now referred to as the Penn License Agreement.

Pursuant to the Penn License Agreement, as of July 31, 2024, we (i) terminated the funding of discovery research programs;

(ii) terminated the research and exploratory research programs;

(iii) terminated the remaining eight options we had for future central nervous system, or CNS, indications;

(iv) terminated the transaction fee payable to Penn in the event of certain corporate transactions;

and (v) retained our current exclusive and non-exclusive licenses to our programs in frontotemporal dementia, or FTD, GM1 gangliosidosis, or GM1, Krabbe disease, or Krabbe, and metachromatic leukodystrophy, or MLD and certain platform technologies resulting from the discovery programs that we funded.

For our licensed programs in FTD, GM1, Krabbe and MLD, the Penn License Agreement requires that we make payments of up to $16.5 million per product candidate.

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.

Upon successful commercialization of a product using the licensed technology, we are obligated to pay to Penn, on a licensed product-by-licensed product and country-by-country basis, tiered royalties (subject to customary reductions) in the mid-single digits on annual worldwide net sales of such licensed product.

In addition, 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.

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 worldwide net sales of the licensed product in excess of defined thresholds.

Pursuant to the Gemma Sublicenses, as discussed below, Gemma Biotherapeutics, Inc., or Gemma, is responsible for the payments to Penn related to GM1, Krabbe and MLD, collectively the Outlicensed Programs.

Upon successful commercialization of a product using the licensed technology, we are obligated to pay to Penn, on a licensed product-by-licensed product and country-by-country basis, tiered royalties (subject to customary reductions) in the mid-single digits percentage on annual worldwide net sales of such licensed product.

In addition, other than the Gemma Sublicenses, 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 License Agreement.

The agreement will expire on a licensed product-by-licensed product and country-by-country basis upon the later of (i) the expiration of the last valid claim of the licensed patent rights that covers the exploitation of such licensed product in such country, and (ii) the expiration of the royalty period.

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

Pursuant to the Gemma Sublicenses, Gemma is responsible for the payments to Penn related to the Outlicensed Programs.

Gemma - Research, Collaboration and License Agreement

In connection with the transfer of the Outlicensed Programs, on July 31, 2024, we entered into a research, collaboration and license agreement with Gemma, or the Gemma Collaboration Agreement.

Pursuant to the Gemma Collaboration Agreement, (i) Gemma will conduct certain preclinical and Investigational New Drug application, or IND, enabling work for our active research program in Huntington’s disease and a currently paused research program in Temporal Lobe Epilepsy, or TLE, which were previously being conducted by Penn under the Penn Agreement and (ii) Gemma will grant us options to conduct mutually agreed research programs in four new CNS indications.

The Gemma Collaboration Agreement requires that we make payments of up to (i) $16.5 million per product candidate in the aggregate for Huntington’s disease and any future CNS indications available to us under our four options and (ii) $39.0 million per product candidate in the aggregate arising from the research program for TLE.

Upon successful commercialization of a product using the licensed technology, we are obligated to pay to Gemma, on a licensed product-by-licensed product and country-by-country basis, tiered royalties (subject to customary reductions) in the mid-single digits percentage on annual worldwide net sales of such licensed product.

In addition, we are obligated to pay to Gemma a percentage of sublicensing income, ranging from the mid-single digits to low double digits, for sublicenses under the Gemma Collaboration Agreement.

If we were to exercise any of the four options, we would owe Gemma a non-refundable aggregate fee of $1.0 million per product indication, with $0.5 million due upfront and another $0.5 million fee owed upon a further developmental milestone.

Gemma - Sublicense Agreements and Transition Services Agreement

In connection with the transfer of the Outlicensed Programs to Gemma, we have entered into the Gemma Sublicenses, pursuant to which, we will receive (i) initial payments of an aggregate of $10.0 million for licenses and clinical product supply;

(ii) up to an additional $10.0 million contingent on the completion by Gemma of certain business milestones;

(iii) up to an additional $114.0 million in development and commercial milestone payments;

and (iv) single digit royalties as a percentage of annual worldwide net sales in exchange for sublicenses to relevant intellectual property, transfer of regulatory dossiers and transfer of clinical trial materials and product supply related to the Outlicensed Programs.

In addition, Gemma is responsible for all payments to Penn related to the Outlicensed Programs under the Penn License Agreement.

In addition, we entered into the Transition Services Agreement, as amended by the First Amendment to the Transition Services Agreement, dated January 31, 2025, pursuant to which, we will provide transitional services at cost to Gemma through May 31, 2025, unless terminated earlier, and be entitled to reimbursement for transitional services performed retroactively from March 1, 2024, related to the transfer of the Outlicensed Programs.

As of December 31, 2024, we have collected $5.0 million in initial payments and $3.2 million in transition services payments under these agreements.

Subsequent to December 31, 2024, we have received an additional $0.5 million in transition services payments.

We refer to the Gemma Sublicenses, the Transition Services Agreement, and the Gemma Collaboration Agreement, collectively, as the Outlicense Transaction Agreements.

Collaboration and Manufacturing and Supply Agreements

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

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

acquired by Novo Holdings A/S, or Catalent.

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.

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The Amended Catalent Agreements eliminate the minimum annual purchase obligation and the obligation to pay an annual fee for use of the Clean Room Suite, thereby eliminating the annual minimum commitment of $10.6 million per year owed to Catalent through November 2025 under the Original Catalent Agreements.

In consideration of this, we have an obligation to make aggregate payments to Catalent of $6.0 million between June 30, 2023 and May 1, 2024.

In consideration of this, we had an obligation to make aggregate payments to Catalent of $6.0 million between June 30, 2023 and May 1, 2024.

As of December 31, 2024, we have made all payments related to this obligation under the Amended Catalent Agreements.

The Amended Catalent Agreements extend the term of the Original Catalent Agreements until November 6, 2030, and establish 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.

The limited exclusive relationship under the Amended Catalent Agreements converts to a non-exclusive relationship (i) in the event Catalent fails to meet certain performance standards and (ii) following certain conditional events related to the divestiture by us of either FTD or GM1, in which case, if such events occur, we would pay Catalent certain fees.

In addition, in the event of certain transactions, we may terminate the Amended Catalent Agreements for convenience with respect to such products, in which case, we would pay to Catalent a certain termination fee.

The outlicense of GM1 to Gemma under the Outlicense Transaction Agreements, and subsequent business decisions implemented by Gemma in their sole discretion, could be considered an event related to the divesture of GM1 under the Amended Catalent Agreements and require us to make payment of certain fees to Catalent, which fees are immaterial.

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 during the year ended December 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 year ended December 31, 2023, as both amounts do not directly relate to the future advancement of our research and development programs.

As of December 31, 2023, we made payments of $4.0 million under the Amended Catalent Agreements.

The remaining $2.0 million of aggregate payments due to Catalent under the Amended Catalent Agreements are included in accrued expenses and other current liabilities.

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 year ended December 31, 2023, as both amounts did not directly relate to the future advancement of our research and development programs.

Components of Results of Operations

Research and Development and Acquired In-Process Research and Development

Research and Development

Research and development expenses consist primarily of costs incurred in connection with the development of our product candidates.

These expenses include:

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

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

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

● expenses incurred at and for our lab facilities, including rent, utilities, depreciation, amortization, and maintenance;

● expenses and fees paid to consultants who assist with research and development activities;

● expenses incurred at and for our lab facilities, including rent, utilities, depreciation, and maintenance.

Acquired in-process research and development expenses consist of expenses incurred in obtaining technology licenses related to technology that has not reached technological feasibility and has no alternative future use.

We track outsourced development expenses and other external research and development expenses to specific product candidates on a program-by-program basis, such as expenses incurred under our collaboration with Penn, fees paid to CROs, CMOs and research laboratories in connection with our preclinical development, process development, manufacturing and clinical development activities.

However, we do not track our internal research and development expenses on a program-by-program basis as they primarily relate to compensation and other expenses which are deployed across multiple projects under development.

● expenses incurred under agreements with contract development and manufacturing organizations, or CDMOs, including the cost of acquiring and manufacturing preclinical study and clinical trial materials.

We track outsourced development expenses and other external research and development expenses to specific product candidates on a program-by-program basis, such as fees paid to CROs, CDMOs and research laboratories in connection with our preclinical development, process development, manufacturing and clinical development activities, expenses

incurred under our prior collaboration with Penn, and expenses incurred under the Gemma Collaboration Agreement.

However, we do not track our internal research and development expenses on a program-by-program basis as they primarily relate to compensation, lab operations and lab facility costs, and other expenses which are deployed across multiple projects under development.

Research and development activities are central to our business model.

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 remain consistent or decrease in the near future.

We expect our research and development expenses to decrease in the near future in connection with the Company’s Restructuring Plan, which is described more fully in Note 15 to our financial statements found elsewhere in this Form 10-K.

We expect that the reduction of expenses related to the Outlicensed Programs pursuant to the Outlicense Transaction Agreements will offset the increased expenses of advancing our remaining product candidates in the near future.

If our product candidate portfolio progresses into later-stage clinical trials, we expect that our research and development expenses will increase in the future to support our continued research and development activities and production of clinical supply.

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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, product strategy, quality, regulatory, operations and human resource functions.

General and administrative expenses also include corporate facility costs, including rent, utilities, depreciation and maintenance, legal expenses related to intellectual property, litigation and corporate matters, insurance expense, expenses related to contract modifications or terminations, software expenses, expenses incurred to engage with patient advocacy organizations, recruitment related expenses and expenses for other professional and consulting services.

We expect our general and administrative expenses to remain consistent in the near future, after excluding the impacts of the Amended Catalent Agreements.

General and administrative expenses also include professional and consulting services, headquarters facility costs, including rent, utilities, depreciation, amortization and maintenance, legal expenses related to intellectual property, litigation and corporate matters, insurance expense, expenses related to contract modifications or terminations, software expenses, expenses incurred to engage with patient advocacy organizations, and recruitment related expenses.

We expect our general and administrative expenses to decrease in the near future in connection with the Restructuring Plan.

If our product candidate portfolio progresses into later-stage clinical trials, we expect that our general and administrative expenses will increase in the future to support our continued research and development activities and potential commercialization efforts.

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Impairment of Long-Lived Assets

Impairment of long-lived assets consists of non-cash impairment charges recorded to the Company’s assets.

The Company reviews long-lived assets, such as the right of use assets or property and equipment, for impairments when events or changes in circumstances indicate the carrying amount of the assets may not be recoverable.

During the year ended December 31, 2023, we recognized impairment expense in connection with Sublease Agreement A and Sublease Agreement B.

These impairment expenses represent the proportional allocation of total impairments recognized for the asset groups subject to impairment testing in connection with the Company’s sublease agreements.

Impairment of long-lived assets consists of non-cash impairment charges recorded to our assets.

We review long-lived assets, such as the right of use assets, or ROU assets, or property and equipment, for impairments when events or changes in circumstances indicate the carrying amount of the assets may not be recoverable.

During the year ended December 31, 2024, we recognized impairment expenses related to a construction in progress asset, property and equipment, and ROU assets in connection with our leased laboratory space in Hopewell, New Jersey, or the Hopewell Laboratory Space.

The impairment expenses represent the proportional allocation of total impairments recognized for the asset groups subject to impairment testing in connection with the Hopewell Laboratory Space.

Other Income (Expense), Net

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

Additionally, in the year ended December 31, 2023, we recognized other income related to the sale of certain tax credits.

Other income (expense), net consists of interest earned on our cash equivalents and marketable securities, amortization of premium and discount on our marketable securities, income from subleases, and the sale of certain tax credits.

Results of Operations

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Research and development

Acquired in‑process research and development

General and administrative

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The decrease was primarily due to the following:

● a decrease of $16.2 million in chemistry, manufacturing and control expenses primarily related to less activity in 2023 for external manufacturing expenses and internal lab operations expenses to support production of clinical supply, most significantly within our FTD- GRN program;

● a decrease of $4.5 million in wages and benefits related to reductions in headcount;

● a decrease of $13.6 million in third-party costs including:

o a decrease of $5.4 million in preclinical and discovery expenses through our collaboration arrangements with Penn and Gemma related to the reduction of our preclinical portfolio year over year, as well as eliminating the commitment for discovery expenses to Penn in 2024;

o a decrease of $4.2 million for clinical operations expenses driven by lower activity in supporting the GM1 and Krabbe programs, partially offset by increased activity for FTD;

o a decrease of $1.9 million in chemistry, manufacturing and control expenses primarily related to lower external manufacturing expenses, most significantly related to (i) reduced external manufacturing activities for our GM1 program and (ii) reduced expenses for Clean Room Suite fees related to the Amended Catalent Agreements;

o a decrease of $1.5 million in professional fees and consulting expenses;

o a decrease of $0.6 million in facility and other expenses.

● a decrease of $3.0 million in share-based compensation expense related to reductions in headcount and lower fair value of awards granted during the year ended December 31, 2024;

● a decrease of $0.9 million in professional fees related to our decision to stop further clinical development of our Krabbe and MLD programs;

● a decrease of $0.5 million for clinical operations expenses related to our decision in 2022 to stop further clinical development of our Krabbe and MLD programs, partially offset by additional patient enrollment in our FTD- GRN and GM1 programs;

These decreases were partially offset by:

● an increase of $2.2 million in Penn expenses.

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

● an increase of $0.3 million in facility and other expenses .

Acquired In-Process Research and Development Expenses

We did not incur acquired in-process research and development expenses for the year ended December 31, 2023.

We made payments under the Penn Agreement for acquired in-process research and development of $3.0 million related to the achievement of development milestones during the year ended December 31, 2022.

● a decrease of $0.1 million in depreciation and amortization expenses.

General and Administrative Expenses

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The decrease was primarily due to the following:

● a decrease of $9.0 million in wages and benefits expenses related to reductions in headcount;

● a decrease of $2.4 million in wages and benefits related to reductions in headcount;

● a decrease of $0.3 million in third-party costs including professional fees, facilities, and other expenses;

● a decrease of $11.3 million related to expenses incurred in conjunction with the Amended Catalent Agreements during the year ended December 31, 2023;

● a decrease of $2.1 million in share-based compensation expense related to reductions in headcount and lower fair value of awards granted during the year ended December 31, 2024;

● a decrease of $4.7 million in professional fees, facilities, and other expenses;

These decreases were partially offset by:

● an increase of $11.3 million related to expenses incurred in conjunction with the Amended Catalent Agreements.

● a decrease of $0.5 million in depreciation and amortization expenses as a result of the impairment of fixed assets recorded in connection with the sublease of space under the 2005 Market Street Lease Agreement during the year ended December 31, 2023.

Impairment of Long-Lived Assets

During the year ended December 31, 2023, we recorded $5.4 million of impairment expenses in connection with Sublease Agreement A and Sublease Agreement B.

The impairment charges consisted of $2.2 million and $3.2 million recorded to the right of use assets and property and equipment, net, respectively.

During the year ended December 31, 2022, we did not record any impairment expense.

During the year ended December 31, 2024, we recorded $5.2 million of impairment expenses related to the Hopewell Laboratory Space.

The impairment charges consisted of $2.5 million and $2.7 million recorded to the ROU assets and property and equipment, net, respectively.

During the year ended December 31, 2023, we recorded $5.4 million of impairment expenses in connection with the subleases under our 2005 Market Street Lease Agreement.

The impairment charges consisted of $2.2 million and $3.2 million recorded to the ROU assets and property and equipment, net, respectively.

Other Income (Expense), net

Other income (expense), net increased by $4.0 million to $6.3 million for the year ended December 31, 2023 from $2.3 million for the year ended December 31, 2022.

The increase was primarily due to the following:

● an increase of $0.5 million attributable to interest income earned on cash equivalents and marketable securities;

● an increase of $2.8 million attributable to the amortization of premium and discount on our marketable securities;

● an increase of $0.7 million related to the sale of certain tax credits during the current year

Other income (expense), net decreased by $0.7 million to $5.6 million for the year ended December 31, 2024 from $6.3 million for the year ended December 31, 2023.

The decrease was primarily due to the following:

● a decrease of $1.3 million attributable to interest income and the amortization of premium and discount on our marketable securities;

● a decrease of $0.4 million related to the sale of certain tax credits .

These decreases were partially offset by:

● an increase of $1.0 million attributable to income from subleases.

Liquidity and Capital Resources

As of December 31, 2024, we had $76.8 million in cash, cash equivalents and marketable securities and had an accumulated deficit of $659.2 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.

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 quarter of 2027.

Funding Requirements

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If we are unable to raise additional funds through equity or debt financings or other arrangements when needed, we may be required to delay, limit, further reduce or terminate our research, product development or future commercialization efforts, or grant rights to develop and market product candidates that we would otherwise prefer to develop and market ourselves.

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

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

On March 5, 2021, we entered into a Sales Agreement, or the Sales Agreement, with Cowen and Company, LLC, or Cowen, relating to the applicable terms of at-the-market equity offerings, or the ATM Facility, pursuant to which we may, but are not obligated to, offer and sell, from time to time, shares of our common stock with an aggregate offering price up to $125.0 million through Cowen, as sales agent in the ATM Facility.

We issued 6,000,000 shares of common stock under the ATM Facility, resulting in net proceeds of $8.7 million, after deducting offering costs of $0.3 million in March 2024.

As a result of our public float as of January 6, 2025, we are currently limited to $15.8 million in our capacity to offer and sell shares of our common stock under the Sales Agreement pursuant to our shelf registration statement on Form S-3, filed on March 4, 2024.

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

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During the year ended December 31, 2024, we used $48.0 million of net cash in operating activities, primarily to fund our operations related to the development of our product candidates and related general and administrative support activities.

Cash used in operating activities reflected our net loss of $102.1 million, which was partially offset by a net decrease in our operating assets of $5.3 million and net non-cash charges of $18.5 million primarily related to share-based compensation, depreciation and amortization, impairment of long-lived assets, and amortization of premium and discount, net.

Cash used in operating activities reflected our net loss of $64.8 million, which was partially offset by a net decrease in our operating assets of $4.2 million and net non-cash charges of $12.6 million primarily related to depreciation, amortization, share-based compensation, amortization of premium and discount, net, and impairment of long-lived assets.

During the year ended December 31, 2023, we used $78.3 million of net cash in operating activities, primarily to fund our operations related to the development of our product candidates and related general and administrative support activities.

Cash used in operating activities reflected our net loss of $136.1 million and a net decrease in our operating assets of $8.5 million.

This was partially offset by net non-cash charges of $26.4 million primarily related to share-based compensation, depreciation and amortization, and amortization of premium and discount, net.

Cash used in operating activities reflected our net loss of $102.1 million, which was partially offset by a net decrease in our operating assets of $5.3 million and net non-cash charges of $18.5 million primarily related to share-based compensation, depreciation, amortization, impairment of long-lived assets, and amortization of premium and discount, net.

Net Cash Provided by (Used in) Investing Activities

During the year ended December 31, 2024, we purchased $88.2 million in marketable securities and had sales and maturities of $143.2 million in marketable securities.

Additionally, we used $0.1 million for the purchase of property and equipment.

During the year ended December 31, 2023, we purchased $129.4 million in marketable securities and had sales and maturities of $194.8 million in marketable securities.

Additionally, we used $2.3 million for the purchase of property and equipment and we used $3.0 million to purchase technology rights from Penn.

Additionally, we used $0.1 million for the purchase of property and equipment.

Net Cash Provided by (Used in) Financing Activities

During the year ended December 31, 2024, we received $8.7 million in net proceeds from the issuance of common stock under the ATM Facility.

We received gross proceeds of $9.0 million, net of offering costs of $0.3 million.

We received $0.2 million in proceeds from the issuance of common stock under our Employee Stock Purchase Plan, or the ESPP, and exercises of employee stock options.

During the year ended December 31, 2023, we received $0.1 million in proceeds from the issuance of common stock under the ESPP.

During the year ended December 31, 2022, we received $0.1 million from the exercise of stock options, received $0.3 million in proceeds from the issuance of common stock under the ESPP and paid $1.8 million for insurance premiums and insurance premium financing expenses under our short-term insurance premium financing arrangement.

Contractual Obligations and Other Commitments

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The aggregate estimated rent payments due over the initial term of the lease is $11.8 million, with rent payments that began in 2022.

Sublease Agreement A and Sublease Agreement B do not relieve us from our primary obligations under the 2005 Market Street Lease Agreement, however, we do expect cash inflows from the agreements to partially offset our future obligations for the duration of the sublease agreements.

We lease approximately 62,000 square feet of laboratory space in Hopewell, NJ, or the Laboratory Lease Agreement.

Our sublease agreements do not relieve us from our primary obligations under the 2005 Market Street Lease Agreement, however, we do expect cash inflows from the agreements to partially offset our future obligations for the duration of the sublease agreements.

We sublease approximately 16,000 square feet of office space in Philadelphia, Pennsylvania, or the 1835 Market Street Sublease Agreement.

The sublease will expire in August 2025.

We have an option to extend the term of the sublease by three and a half years through February 2029.

The aggregate estimated rent payments due over the initial term of the sublease is approximately $0.5 million, with rent payments that began in March 2024.

We lease approximately 62,000 square feet of laboratory space in Hopewell, New Jersey, or the Laboratory Lease Agreement.

The lease will expire in March 2036.

The aggregate estimated rent payments due over the initial term of the lease is approximately $40.3 million, with rent payments that began in 2021.

As a result of the Amended Catalent Agreements, we no longer have an annual minimum commitment of $10.6 million per year owed to Catalent through November 2025.

As of December 31, 2023, the Company made payments of $4.0 million under the Amended Catalent Agreements.

In addition, the Company will make aggregate payments to Catalent of $2.0 million between January 1, 2024 and May 1, 2024.

Our sublease agreement does not relieve us from our primary obligations under the Laboratory Lease Agreement, however, we do expect cash inflows from the agreement to partially offset our future obligations for the duration of the sublease agreement.

Under the exclusive relationship under the Amended Catalent Agreements, following certain conditional events related to the divestiture by us of either FTD or GM1, we would pay Catalent certain fees.

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

Our funding commitment is $5.0 million a year through June 2026.

Our funding commitment was $5.0 million annually through June 2026.

As a result of the Outlicense Transaction Agreements, we have amended the Penn Agreement to eliminate this commitment as of July 31, 2024.

No discovery research funding commitments exist under the Gemma Collaboration Agreement.

These contractual obligations and commitments are associated with contracts that are enforceable and legally binding and that specify all significant terms, including fixed or minimum services to be used, fixed, minimum or variable price provisions, and the approximate timing of the actions under the contracts.

Payments due upon cancellation consisting only of payments for services provided or expenses incurred, including noncancelable obligations of our service providers, up to the date of cancellation are not included as the amount and timing of such payments are not known.

The contractual obligations and commitments above do not include any potential milestone or royalty payments that we may be required to make under the Penn Agreement.

The contractual obligations and commitments above do not include any potential milestone or royalty payments that we may be required to make under the Penn License Agreement.

Under the Gemma Sublicenses, Gemma will be responsible for all potential milestone and royalty payments to Penn for the Outlicensed Programs.

The contractual obligations and commitments above do not include any potential milestone or royalty payments that we may be required to make under the Gemma Collaboration Agreement.

Critical Accounting Policies and Estimates

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The approaches are asset group specific and may incorporate a number of market participant assumptions in assessing fair value including future growth rates, discount rates, and market activity.

We measure the impairment by comparing the difference between the asset group’s carrying value and its fair value.

We measure the impairment by comparing the difference between the asset group’s carrying

value and its fair value.

Long-lived assets are considered a non-financial asset and are recorded at fair value only if an impairment charge is recognized.

Impairments are determined for groups of assets related to the lowest level of identifiable independent cash flows.

During the year ended December 31, 2023, we recorded impairments of long-lived assets (property and equipment and right of use assets) of $5.4 million based upon impairment testing in connection with Sublease Agreement A and Sublease Agreement B.

During the year ended December 31, 2024, we recorded impairments of long-lived assets (property and equipment and ROU assets) of $5.2 million primarily due to impairment testing in connection with the Hopewell Laboratory Space.

As of December 31, 2024, we had property and equipment, net of $9.3 million and ROU assets of $13.8 million recorded on our balance sheet.

During the year ended December 31, 2023, we recorded impairments of long-lived assets (property and equipment and ROU assets) of $5.4 million based upon impairment testing in connection with Sublease Agreement A and Sublease Agreement B (as described in more detail in Note 9 to our annual financial statements included elsewhere in this Form 10-K).

Actual future net cash flows are uncertain, subject to risks, and may change depending upon several factors, including industry or economic trends.

If our estimates of future net cash flows differ from actual future net cash flows, our estimates of fair value could materially change.

Additionally, future events or changes in circumstances could indicate that the carrying value of our long-lived assets may not be recoverable and lead to future impairments.

As of December 31, 2023, we had property and equipment, net of $15.3 million and right of use assets of $16.9 million recorded on our balance sheet.

Additionally, future events or changes in circumstances could indicate the carrying value of our long-lived assets may not be recoverable and lead to future impairments (such as those described in Note 15 to our annual financial statements included elsewhere in this Form 10-K).

Research and Development Expenses

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

Research and development costs are expensed as incurred and consist primarily of employee-related expenses, including salaries, benefits, and share-based compensation, as well as expenses incurred with contract research organizations, contract manufacturing organizations, internal analytical and testing activities, and preclinical and discovery expenses through our collaboration arrangements with Penn and Gemma.

We make estimates of our external accrued research and development expenses, which primarily relates to activities performed by our contract research organizations and contract manufacturing organizations, as of each balance sheet date in our financial statements based on an estimate of progress to completion of specific tasks using facts and circumstances known to us at that time.

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

License and Other Revenue

We may enter into license agreements and transition services agreements under which we may license rights to research, develop, manufacture, and commercialize our product candidates to third parties, and provide transition services for such licenses.

Payments under these arrangements may include non-refundable, upfront fees, reimbursement of certain costs, payments upon the achievement of certain milestones, and royalties on product sales.

We apply the Financial Accounting Standards Board’s Accounting Standards Codification Topic 606, Revenue from Contracts with Customers , or ASC 606, when all of the following criteria are met, to determine a valid contract exists:

(i) the parties have approved the contract and are committed to perform their respective obligations;

(ii) we can identify each party’s rights regarding the goods or services to be transferred;

(iii) we can identify the payment terms for the goods or services to be transferred;

(iv) the contract has commercial substance;

and (v) we will collect substantially all of

the consideration to which we will be entitled in exchange for the goods or services that will be transferred to the customer.

Once it is determined that a valid contract exists, we perform the following steps:

(i) identification of the promised goods or services in the contract;

(ii) determination of whether the promised goods or services are performance obligations including whether they are distinct in the context of the contract;

(iii) measurement of the transaction price, including consideration of the constraint on variable consideration;

(iv) allocation of the transaction price to the performance obligations on a relative stand-alone selling price basis;

and (v) recognition of revenue when (or as) we satisfy each performance obligation.

As part of the accounting for these arrangements, we must use our judgment to determine the number of performance obligations, the transaction price, the stand-alone selling price for each performance obligation identified in the contract for the allocation of transaction price, the contract term and pattern of satisfaction of the performance obligations.

We use judgment to determine whether milestones or other variable consideration, except for certain sales-based milestone payments and royalties, should be included in the transaction price as described further below.

At the inception of each arrangement that includes milestone payments, we evaluate whether the milestones are considered probable of being achieved and estimate the amount to be included in the transaction price using the most likely amount method set forth in ASC 606.

If it is probable that a significant revenue reversal would not occur, the associated milestone value is included in the transaction price.

Milestone payments that are not within our control or the licensee, such as those subject to regulatory approvals, are not considered probable of being achieved until those approvals are received.

We evaluate factors such as the scientific, clinical, regulatory, commercial and other risks that must be overcome to achieve the particular milestone in making this assessment.

There is considerable judgment involved in determining whether it is probable that a significant revenue reversal would not occur.

At the end of each subsequent reporting period, we reevaluate the probability of achievement of all milestones subject to constraint and, if necessary, adjust our estimate of the overall transaction price.

Any such adjustments are recorded on a cumulative catch-up basis in the statements of operations in the period of adjustment.

For customer contracts in the scope of ASC 606, amounts due to us are recorded as accounts receivable on our balance sheet when our right to consideration is unconditional.

Amounts received prior to satisfying the related performance obligations are classified on our balance sheet as current deferred revenue if expected to be recognized as revenue within 12 months following the balance sheet date and as deferred revenue, net of current portion, if amounts are not expected to be recognized as revenue within the 12 months following the balance sheet date.

We do not evaluate a contract for a significant financing component if payment is expected within one year or less from the transfer of promised items to the customer.

Recent Accounting Pronouncements

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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-K

Item 7. Management’s Discussion and Analysis