What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-05-13 compared with 2024-11-13 · 109 added, 192 removed, 217 unchanged (58% of the section changed)

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Our lead clinical product candidate, PBFT02, seeks to elevate progranulin levels to enhance lysosomal function and slow disease progression across a variety of neurodegenerative diseases.

PBFT02 utilizes an adeno-associated virus serotype 1, or AAV1, capsid to deliver a functional granulin gene, or GRN , encoding progranulin, or PGRN, to the brain via intra cisterna magna, or ICM, administration.

PBFT02 is a gene replacement therapy that utilizes an adeno-associated virus serotype 1, or AAV1, capsid to deliver a functional granulin gene, or GRN , encoding progranulin, or PGRN, to the brain via intra cisterna magna, or ICM, administration.

The lead indication for PBFT02 is frontotemporal dementia, or FTD, caused by progranulin deficiency, or FTD- GRN .

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TDP-43 pathology is a hallmark of multiple neurodegenerative conditions, including FTD due to mutations in the C9orf72 gene, or FTD- C9orf72 , approximately 95% of sporadic amyotrophic lateral sclerosis, or ALS, and approximately 50% of sporadic FTD.

Additionally, we believe restoration of PGRN has the potential to modulate Alzheimer’s disease, or AD, in patients that are carriers of the PGRN-lowering GRN rs5848 single nucleotide polymorphism, or SNP.

Additionally, we believe restoration of PGRN has the potential to modulate Alzheimer’s disease, or AD, in patients who are carriers of the PGRN-lowering GRN rs5848 single nucleotide polymorphism, or SNP.

Individuals with this polymorphism have reduced PGRN levels and are at an increased risk for AD.

We received positive regulatory feedback on the clinical pathway to treating FTD- C9orf72 patients with PBFT02 and plan to initiate dosing in the first half of 2025.

We expect to obtain regulatory feedback on the clinical pathway to treating ALS patients with PBFT02 in the second half of 2024.

We have received positive regulatory feedback on the clinical pathway to treating FTD- C9orf72 patients and ALS patients with PBFT02.

We are proceeding with clinical development of PBFT02 in FTD- C9orf72 patients and plan to initiate dosing in the first half of 2025.

Research Developments

On July 31, 2024, we entered into a series of sublicense agreements with Gemma Biotherapeutics, Inc., or Gemma, a newly formed genetic medicines company co-founded by Dr.

James Wilson, who also serves as a consultant to the Company as a Scientific Advisor in connection with the outlicense of PBGM01 for the treatment of GM1 gangliosidosis, or GM1, PBKR03 for the treatment of Krabbe disease, and PBML04 for the treatment of metachromatic leukodystrophy, or MLD, collectively the Outlicensed Programs and such agreements, the Gemma Sublicenses.

Pursuant to the Gemma Sublicenses, 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.

Pursuant to the Gemma Sublicenses, Gemma will also be responsible for all payments due to the Trustees of the University of Pennsylvania, or Penn, under the Penn License Agreement, as further described below, related to the

Outlicensed Programs.

We also entered into a transition services agreement with Gemma, or the Transition Services Agreement, pursuant to which, we will provide transitional services at cost to Gemma for a period of up to six months from the effective date, and be entitled to reimbursement for transitional services performed retroactively from March 1, 2024, related to the transfer of the Outlicensed Programs.

We also entered into a research, collaboration and license agreement with Gemma, or the Gemma Collaboration Agreement, pursuant to which (i) Gemma will conduct certain preclinical and 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 new research programs in four new CNS indications.

We have entered into a series of sublicense agreements with Gemma Biotherapeutics, Inc., or Gemma, a newly formed genetic medicines company co-founded by Dr.

James Wilson in connection with the outlicensing of PBGM01 for the treatment of GM1 gangliosidosis, or GM1, PBKR03 for the treatment of Krabbe disease, and PBML04 for the treatment of metachromatic leukodystrophy, or MLD, collectively the Outlicensed Programs, and such agreements, the Gemma Sublicenses.

In addition, we have entered into a Transition Services Agreement, as amended, and a research, collaboration and license agreement, or the Gemma Collaboration Agreement, with Gemma.

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

As a result of the Outlicense Transaction Agreements, we also entered into an Amended and Restated Research, Collaboration and License Arrangement with Penn as of July 31, 2024, or the Penn License Agreement, to (i) terminate our funding of discovery research;

(ii) terminate the research and exploratory research programs being conducted by Penn;

(iii) terminate the remaining options we had to select new research programs in the CNS field;

and (iv) terminate the transaction fee due to Penn as a result of certain corporate transactions.

Prior to the execution of the Outlicense Transaction Agreements, we had a research collaboration with Penn’s, Gene Therapy Program, or GTP, headed by Dr.

Under this collaboration, we progressed four product candidates sourced from our research collaboration with GTP to the clinical stage of development and had one active preclinical program in Huntington’s disease.

Prior to the execution of the Outlicense Transaction Agreements, we progressed four product candidates from preclinical to clinical stage development and had one active preclinical program in Huntington’s disease through our research

collaboration with Penn’s Gene Therapy Program, or GTP.

This collaboration provided access to differentiated scientific expertise for the conduct of rigorous preclinical studies to generate promising product candidates.

Gemma is comprised of a core research team from GTP and is continuing the same approach to preclinical development to support the continued development of our preclinical Huntington’s disease program.

We have a gene therapy pipeline with the potential to address multiple neurodegenerative diseases.

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PBFT02 for the Treatment of FTD-GRN

We are currently developing PBFT02, which utilizes an AAV1 capsid to deliver a functional copy of GRN encoding for PGRN, for the treatment of FTD- GRN .

We are currently developing PBFT02, a gene replacement therapy which utilizes an AAV1 capsid to deliver a functional copy of GRN encoding for PGRN, for the treatment of FTD- GRN .

FTD- GRN is an inheritable form of FTD caused by reductions in PGRN production due to mutations in the GRN gene.

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In FTD- GRN , PGRN deficiency results in lysosomal dysfunction, neuroinflammation, and neurodegeneration.

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

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

Currently, there are no disease-modifying therapies approved for the treatment of FTD- GRN , and we estimate the prevalence of FTD- GRN in the United States and Europe is approximately 18,000, based on available literature.

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

We selected the AAV1 capsid and ICM administration for PBFT02 because this approach led to extensive and robust vector delivery throughout the brain and spinal cord of non-human primates, or NHPs, and due to the higher PGRN levels in cerebrospinal fluid, or CSF, achieved using AAV1 as compared with other serotypes tested.

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

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

Food and Drug Administration, or FDA, and approved clinical trial authorizations, or CTAs, in multiple countries for PBFT02.

We have an active IND application from the U.S.

Food and Drug Administration, or the FDA, and approved clinical trial authorizations, or CTAs, in multiple countries for PBFT02.

We are conducting 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 symptomatic FTD-GRN.

We reported biomarker data from four patients in Cohort 1 of our upliFT-D trial in December of 2023, May 2024, and September 2024.

Dose 1 of PBFT02 resulted in consistent elevated levels of CSF PGRN with concentrations ranging from 10.7 to 17.3 ng/mL at 30 days post-treatment (n=5), and 21.7 to 27.3 ng/mL at 6 months post-treatment (n=2).

CSF PGRN remained elevated at 12 months (n=1), reaching a level of 34.2 ng/mL.

The rate of increase was 58% between one month and six months and slowed to 26% between six months and twelve months.

These ranges are higher than the range found in healthy adult controls of 3.3 to 8.2 ng/mL (mean=4.8 ng/mL;

In contrast, following PBFT02 treatment, plasma PGRN levels were unaltered, remaining similar to baseline concentrations and below levels found in healthy adult controls.

As of August 2024, Dose 1 of PBFT02 treatment was generally well-tolerated in study participants who received an enhanced immunosuppression regimen (n=4).

We have completed dosing of Cohort 1 (n=5) and have enrolled the first four patients in Cohort 2 (n=5).

Based on the robust PGRN expression observed in the initial patients in Cohort 1, we are continuing to study Dose 1 in Cohort 2 of the upliFT-D trial.

In January 2025, we reported biomarker data from patients in our upliFT-D trial who received Dose 1 of PBFT02 (3.3e10 genome copies/g estimated brain weight, or 4.50e13 total genome copies).

Dose 1 of PBFT02 resulted in robust and durable increases in CSF PGRN levels, with concentrations increasing from below 3.0 ng/mL at baseline to 8.0 to 17.3 ng/mL at 30 days post-treatment (n=6), 13.2 to 27.3 ng/mL at six months post-treatment (n=4), and 22.3 to 34.0 ng/mL at 12 months post-treatment (n=2).

CSF PGRN levels generally plateaued by 6 months post-treatment and have remained durable through the longest available follow-up of 18 months post-treatment (n=1).

These levels of CSF PGRN are higher than the range found in healthy adult controls of 3.3 to 8.2 ng/mL (mean=4.8 ng/mL;

In contrast, following PBFT02 administration, plasma PGRN levels were unaltered, remaining similar to baseline concentrations and

below levels found in healthy adult controls.

Dose 1 of PBFT02 also resulted in an average 13% decrease in plasma neurofilament light chain, or NfL, levels, a biomarker associated with disease progression, compared to baseline at 12 months post-treatment (n=2).

This reduction in plasma NfL after PBFT02 administration contrasts with an expected increase in plasma NfL levels of approximately 29% per year among untreated, symptomatic FTD-GRN patients, according to published natural history data (Saracino 2021).

As of April 2025, interim safety highlights from Dose 1 of PBFT02 in FTD-GRN patients (n=7) included:

● In five of seven patients, all treatment emergent adverse events were mild to moderate in severity.

● Two of seven patients experienced a total of three serious adverse events.

Patient 1 experienced the asymptomatic serious adverse events of venous sinus thrombosis, or VST, and hepatotoxicity, leading to a revised immunosuppression regiment in all subsequent patients (1,000 mg IV methylprednisolone on days 1-3 followed by 60 mg oral prednisone through day 60).

Patient 7 also experienced the serious adverse event of VST, which was asymptomatic and completely resolved prior to day 30 following treatment with anticoagulants.

Patient 7 had no evidence of hepatotoxicity, immune response, or other laboratory abnormalities.

● No evidence of clinically significant immune responses in any patient who received the revised immunosuppression regimen.

● No evidence of dorsal root ganglion toxicity, as measured by nerve conduction studies, and no complications during ICM administration were observed across any of the seven treated patients.

● Patients treated with Dose 1 of PBFT02 (n=7) have been followed up to 23 months post-dose.

Given the robust PGRN expression observed among patients who received Dose 1 of PBFT02, and to allow for dose exploration and support the program regulatory strategy, we are evaluating Dose 2, which is 50% lower than Dose 1, in subsequent FTD-GRN patients.

As of May 2025, we have treated one patient with Dose 2 of PBFT02 and enrolled a second patient.

We expect to deliver on the following related to our upliFT-D trial for PBFT02 for the treatment of FTD- GRN :

● report 12-month follow-up data from Cohort 1 patients and interim data from Cohort 2 patients in the first half of 2025;

● seek regulatory feedback on pivotal trial design in the second half of 2025.

The FDA has granted Orphan Drug Designation for PBFT02 for the treatment of FTD and Fast Track Designation for PBFT02 for the treatment of FTD- GRN .

The European Commission has granted Orphan designation for PBFT02 for the treatment of FTD.

● Report 12-month follow-up data from Dose 1 and interim safety and biomarker data from Dose 2 in the second half of 2025;

● Seek regulatory feedback on registrational trial design in the first half of 2026.

PBFT02 for the treatment of FTD-C9orf72 and ALS

We intend to pursue PBFT02 in additional adult neurodegenerative diseases where we believe elevated PGRN levels could provide benefits.

We are also evaluating PBFT02 for the treatment of additional adult neurodegenerative diseases where we believe elevated PGRN levels could provide benefits.

This approach stems from PGRN’s pleiotropic cellular effects including the regulation of microglial activation and lysosomal function, and in particular its potential to ameliorate TDP-43 pathology.

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Cytoplasmic TDP-43 pathology is a hallmark of multiple neurodegenerative conditions including FTD- GRN , FTD- C9orf72 , approximately 95% of sporadic ALS, and approximately 50% of sporadic FTD.

In these disorders, hyperphosphorylated TDP-43 accumulates in the cytoplasm of cell bodies and dendritic processes of neurons and glia, suggesting that loss of TDP-43's normal nuclear function contributes to the neurodegenerative process.

In these disorders, hyperphosphorylated TDP-43 accumulates in the cytoplasm of cell bodies and dendritic processes of neurons and glia.

Experimental evidence suggests that loss of TDP-43's normal nuclear function contributes to neurodegenerative processes.

The potential for benefit of increased PGRN in disorders with TDP-43 pathology has been demonstrated by third-party preclinical studies in mice and zebrafish which showed that increased PGRN levels reduced TDP-43 pathology and associated toxicities.

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We have initiated preclinical studies to extend these initial observations.

We received positive regulatory feedback on the clinical pathway to treating FTD- C9orf72 with PBFT02 in the ongoing upliFT-D trial and expect to initiate dosing in the first half of 2025.

We expect to obtain regulatory feedback on the clinical pathway to treating ALS patients with PBFT02 in the second half of 2024.

We received positive regulatory feedback on the clinical pathway to treating FTD- C9orf72 with PBFT02 in the ongoing upliFT-D trial and amended the upliFT-D clinical trial protocol to include two cohorts of FTD- C9orf72 patients to be

enrolled sequentially.

Each cohort will consist of three to five symptomatic FTD patients with C9orf72 gene mutations and patients will initially receive Dose 2 PBFT02.

We expect to initiate dosing of FTD- C9orf72 patients in the first half of 2025.

There are no disease modifying therapies approved for the treatment of FTD- C9orf72 .

Based on available literature, we estimate the prevalence of FTD- C9orf72 in the United States and Europe is approximately 21,000.

We are currently enrolling FTD- C9orf72 patients in our upliFT-D trial.

Similarly, we received positive regulatory feedback on the clinical pathway to treating ALS with PBFT02.

PBFT02 for the treatment of AD

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Third party preclinical studies in animal models have demonstrated that low levels of PGRN may exacerbate AD pathology and, conversely, high levels of PGRN may reduce AD pathology.

We have initiated preclinical studies in AD to extend these initial observations.

Other Clinical Product Candidates

As of July 31, 2024, we outlicensed our clinical stage pediatric programs in GM1 (PBGM01), Krabbe disease (PBKR03), and MLD (PBML04) as part of the Outlicense Transaction Agreements.

We have initiated preclinical studies in AD to further explore the potential for benefit from elevated levels of PGRN.

Clinical Supply

Through our partners, we have manufactured the PBFT02 clinical supply to support completion of the ongoing Phase 1/2 clinical trial in FTD- GRN and FTD- C9orf72 , and initiation of a registrational study in FTD- GRN .

Active Research Programs

We have one unnamed preclinical research program through the Gemma Collaboration Agreement (which was previously conducted by Penn under the Penn Agreement) and are exploring multiple potential treatment targets for Huntington’s disease.

We have one unnamed preclinical research program through the Gemma Collaboration Agreement and are exploring multiple potential treatment targets for Huntington’s disease.

Beyond this program, as a result of the Gemma Collaboration Agreement, we also have the option to license programs for four additional new indications in CNS diseases from Gemma.

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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 $19.3 million and $27.1 million for the three months ended September 30, 2024 and 2023, respectively, and $52.0 million and $85.3 million for the nine months ended September 30, 2024 and 2023, respectively.

As of September 30, 2024, we had an accumulated deficit of $646.5 million.

Our net losses were $15.4 million and $16.7 million for the three months ended March 31, 2025 and 2024, respectively.

As of March 31, 2025, we had an accumulated deficit of $674.6 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 September 30, 2024, we had cash, cash equivalents and marketable securities of $84.8 million.

We expect our existing cash, cash equivalents and marketable securities, combined with the remaining initial payments for the licenses and clinical product supply in connection with the Gemma Sublicenses, and expected payments in connection with the Gemma Transition Services Agreement, will enable us to fund our operating expenses and capital expenditure requirements to the end of the second quarter of 2026.

As of March 31, 2025, we had cash and cash equivalents of $63.4 million.

We expect our existing cash and cash equivalents will enable us to fund our operating expenses and capital expenditure requirements into the first quarter of 2027.

Financial Operations Overview

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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 IND-enabling work for our active research program in Huntington’s disease and a currently paused research program in 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.

Pursuant to the Gemma Collaboration

Agreement, (i) Gemma will conduct certain preclinical and IND-enabling work for our active research program in Huntington’s disease and a currently paused research program in 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.

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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 a transition services agreement with Gemma pursuant to which (i) we provide transitional services at cost to Gemma for a period of up to six months related to the transfer of the Outlicensed Programs and (ii) Gemma reimburses us for certain costs related to conduct of the Outlicensed Programs incurred since March 1, 2024.

On May 7, 2025, we agreed to amend each of the Gemma Sublicenses to revise certain financial terms related to the Outlicensed Programs, or the Amended Gemma Sublicenses.

Pursuant to the Amended Gemma Sublicenses, we are entitled to receive (i) an aggregate total of $15 million in initial payments for licenses and clinical product supply, of which $5 million was previously received;

and (ii) an additional $5 million contingent on Gemma completing certain business milestones.

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 March 31, 2025, we have collected $5.0 million in initial payments and $3.7 million in transition services payments under these agreements.

Subsequent to March 31, 2025, we have received an additional $0.4 million in transition services payments.

Collaboration and Manufacturing and Supply Agreements

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

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

The Manufacturing and Supply Agreement provided for a term of five years.

The Manufacturing and Supply Agreement also included minimum annual purchase commitments.

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 November 2020 subject to certain inflationary adjustments.

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

On November 9, 2023, to supersede and implement the terms of the Letter Agreements, we entered into an amended and restated collaboration agreement and an amended and restated manufacturing and supply agreement, together the Amended Catalent Agreements.

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

As of September 30, 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.

We have entered into a collaboration agreement, and a development services and clinical supply agreement, or the Amended Catalent Agreements, with Catalent Maryland, a unit of Catalent, Inc.

acquired by Novo Holdings A/S, or Catalent, to secure clinical scale manufacturing capacity for batches of active pharmaceutical ingredients for our gene therapy product candidates.

Under the terms of the Amended Catalent Agreements, Catalent agreed to manufacture batches of drug product for our gene therapy product candidates.

The Amended Catalent Agreements remain in effect 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.

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 nine months ended September 30, 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 nine months ended September 30, 2023, as both amounts did not directly relate to the future advancement of our research and development programs.

Components of Results of Operations

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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 and Gemma 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 development and manufacturing organizations, or CDMOs, 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 and amortization;

● 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.

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 future expenses incurred under the Gemma Collaboration Agreement.

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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 in the near future.

We expect our research and development expenses to decrease in the near future as a result of the reduction of our overall workforce by 55% and cessation of our lab operations in Hopewell, New Jersey in January 2025.

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.

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.

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

General and administrative expenses also include headquarters 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.

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 reduction of our overall workforce by 55% in January 2025.

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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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 nine months ended September 30, 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.

During the three months ended March 31, 2025, we recognized impairment expenses related to property and equipment and certain other assets in connection with the announcement to reduce our workforce by 55% and cease our lab operations in Hopewell, New Jersey.

We reassessed asset groups at the lab in Hopewell, New Jersey, and evaluated such asset groups for impairment.

We determined the laboratory equipment was a separate asset group based on management’s implemented plans to sell the laboratory equipment and estimated the fair value of the laboratory equipment based on the estimated future cash flows from the sale of such equipment.

Other Income (Expense), Net

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

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

Results of Operations

Comparison of the three months ended September 30, 2024 and 2023

The following table sets forth our results of operations for the three months ended September 30, 2024 and 2023:

Comparison of the three months ended March 31, 2025 and 2024

The following table sets forth our results of operations for the three months ended March 31, 2025 and 2024:

Three months ended

September 30,

(in thousands)

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Research and Development Expenses

Research and development expenses decreased by $6.4 million to $8.7 million for the three months ended September 30, 2024 from $15.1 million for the three months ended September 30, 2023.

Research and development expenses decreased by $3.8 million to $7.7 million for the three months ended March 31, 2025 from $11.5 million for the three months ended March 31, 2024.

The decrease was primarily due to the following:

● a decrease of $1.8 million in wages and benefits related to severance costs incurred in the three months ended September 30, 2023;

● a decrease of $1.5 million in clinical operations expenses driven by lower activity in supporting the GM1 and Krabbe programs, partially offset by increased activity for FTD;

● a decrease of $1.3 million in Penn expenses related to the termination of our discovery research obligation under the Penn Agreement;

● a decrease of $1.6 million in preclinical research expenses primarily related to the termination of our discovery research obligation under the Penn Agreement;

● a decrease of $0.6 million in share-based compensation expense related to reductions in headcount;

● a decrease of $0.5 million in chemistry, manufacturing and control expenses primarily related to lower external manufacturing expenses, most significantly related to reduced external manufacturing activities for our GM1 program;

● a decrease of $0.6 million in facility and other expenses related to decreased depreciation expenses in connection with the disposal of our laboratory equipment;

● a decrease of $0.5 million in chemistry, manufacturing and control expenses primarily related to reduced costs in connection with the restructuring and ceased use of the lab in Hopewell, New Jersey;

● a decrease of $0.4 million in professional fees;

● a decrease of $0.2 million in facility and other expenses.

● a decrease of $0.3 million in clinical operations expenses driven by lower activity in supporting the GM1 program, partially offset by increased activity for FTD;

These decreases were partially offset by:

● an increase of $0.1 million for pre-clinical studies to evaluate the efficacy of PBFT02 in models of neurodegenerative disorders.

● an increase of $0.2 in wages and benefits related to severance costs incurred in the three months ended March 31, 2025 partially offset by lower headcount for a portion of the period.

General and Administrative Expenses

General and administrative expenses decreased by $0.9 million to $7.3 million for the three months ended September 30, 2024 from $8.2 million for the three months ended September 30, 2023.

The decrease was primarily due to the following:

● a decrease of $1.2 million in wages and benefits related to severance costs incurred in the three months ended September 30, 2023;

● a decrease of $0.6 million in share-based compensation expense related to reductions in headcount;

● a decrease of $0.1 million in facility and other expenses.

These decreases were partially offset by:

● an increase of $1.0 million in accruals for litigation matters.

Impairment of Long-Lived Assets

During the three months ended September 30, 2024, we recorded $4.8 million of impairment expense related to the Hopewell Laboratory Space.

The impairment charges consisted of $2.5 million and $2.3 million recorded to the ROU assets and property and equipment, net, respectively.

During the three months ended September 30, 2023, we recorded $5.4 million of impairment expense 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 ROU assets and property and equipment, net, respectively.

Other Income (Expense), Net

Other income (expense), net decreased by $0.2 million to $1.4 million for the three months ended September 30, 2024 from $1.6 million for the three months ended September 30, 2023.

The decrease was primarily due to the following:

● a decrease of $0.5 million attributable to interest income and the amortization of premium and discount on our marketable securities.

The decrease was partially offset by:

● an increase of $0.3 million attributable to income from subleases.

Comparison of the nine months ended September 30, 2024 and 2023

The following table sets forth our results of operations for the nine months ended September 30, 2024 and 2023:

Nine months ended

September 30,

(in thousands)

Operating expenses:

Research and development

General and administrative

Impairment of long-lived assets

Loss from operations

Other income (expense), net

Research and Development Expenses

Research and development expenses decreased by $18.7 million to $30.6 million for the nine months ended September 30, 2024 from $49.3 million for the nine months ended September 30, 2023.

General and administrative expenses decreased by $0.4 million to $6.1 million for the three months ended March 31, 2025 from $6.5 million for the three months ended March 31, 2024.

The decrease was primarily due to the following:

● a decrease of $4.4 million in wages and benefits related to reductions in headcount;

● a decrease of $4.1 million in Penn expenses related to the pausing of certain programs in our preclinical portfolio, reduction of post-IND support for our clinical stage programs, and termination of our discovery research obligation under the Penn Agreement;

● a decrease of $4.0 million in clinical operations expenses driven by lower activity in supporting the GM1 and Krabbe programs, partially offset by increased activity for FTD;

● a decrease of $2.7 million in share-based compensation expense related to reductions in headcount;

● a decrease of $2.1 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;

● a decrease of $0.6 million in professional fees;

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

These decreases were partially offset by:

● an increase of $0.3 million for pre-clinical studies to evaluate the efficacy of PBFT02 in models of neurodegenerative disorders.

General and Administrative Expenses

General and administrative expenses decreased by $15.0 million to $20.3 million for the nine months ended September 30, 2024 from $35.3 million for the nine months ended September 30, 2023.

The decrease was primarily due to the following:

● a decrease of $11.3 million related to expenses incurred in conjunction with the Amended Catalent Agreements during the nine months ended September 30, 2023;

● a decrease of $2.8 million in wages and benefits related to reductions in headcount;

● a decrease of $0.2 million in share-based compensation expense related to reductions in headcount;

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These decreases were partially offset by:

● an increase of $1.0 million in accruals for litigation matters, and

● an increase of $0.7 million for professional services and consulting.

● an increase of $0.5 million wages and benefits related to severance costs incurred in the three months ended March 31, 2025 partially offset by lower headcount for a portion of the period.

Impairment of Long-Lived Assets

During the nine months ended September 30, 2024, we recorded $5.2 million of impairment expense primarily consisting of $2.5 million and $2.3 million recorded to the ROU assets and property and equipment, net, respectively, related to the Hopewell Laboratory Space.

In addition, we recorded $0.4 million of impairment expenses related to property and equipment for a construction in progress asset we no longer plan to deploy.

During the nine months ended September 30, 2023, we recorded $5.4 million of impairment expense 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 ROU assets and property and equipment, net, respectively.

During the three months ended March 31, 2025, we recorded $2.6 million of impairment expense related to laboratory equipment and certain other assets which were revalued and subsequently sold from the Hopewell Laboratory Space.

During the three months ended March 31, 2024, we did not record any impairment expense.

Other Income (Expense), Net

Other income (expense), net decreased by $0.5 million to $4.1 million for the nine months ended September 30, 2024 from $4.6 million for the nine months ended September 30, 2023.

Other income (expense), net decreased by $0.2 million to $1.1 million for the three months ended March 31, 2025 from $1.3 million for the three months ended March 31, 2024.

The decrease was primarily due to the following:

● a decrease of $0.6 million attributable to interest income and the amortization of premium and discount on our marketable securities.

● a decrease of $0.5 million attributable to the sale of certain tax credits during the nine months ended September 30, 2023.

These decreases were partially offset by:

The decrease was partially offset by:

● an increase of $0.4 million attributable to income from subleases.

Liquidity and Capital Resources

As of September 30, 2024, we had $84.8 million in cash, cash equivalents and marketable securities and had an accumulated deficit of $646.5 million.

We expect our existing cash, cash equivalents and marketable securities, combined with the remaining initial payments for the licenses and clinical product supply in connection with the Gemma Sublicenses and expected payments in connection with the Transition Services Agreement, will enable us to fund our operating expenses and capital expenditure requirements to the end of the second quarter of 2026.

As of March 31, 2025, we had $63.4 million in cash and cash equivalents and had an accumulated deficit of $674.6 million.

We expect our existing cash and cash equivalents will enable us to fund our operating expenses and capital expenditure requirements into the first quarter of 2027.

Funding Requirements

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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.

We are limited to $50.0 million in our capacity to offer and sell shares of our common stock under this sales agreement pursuant to our shelf registration statement on Form S-3, filed on March 4, 2024.

As of September 30, 2024, $50.0 million of capacity remains available to be sold under the ATM Facility.

We are limited to $15.8 million in our capacity to offer and sell shares of our common stock under this sales agreement pursuant to the prospectus supplement to our shelf registration statement on Form S-3, filed on March 5, 2025.

As of March 31, 2025, $15.8 million of capacity remains available to be sold under the ATM Facility.

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

Nine months ended

September 30,

Three months ended

(in thousands)

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Net Cash Provided by (Used in) Operating Activities

During the nine months ended September 30, 2024, we used $39.5 million of net cash in operating activities.

Cash used in operating activities reflected a net loss of $52.0 million, partially offset by a net decrease in our operating assets of $1.5 million, and net non-cash charges of $11.0 million related to depreciation, amortization, share-based compensation, amortization of premium and discount, net, and impairment of long-lived assets.

During the three months ended March 31, 2025, we used $13.8 million of net cash in operating activities.

Cash used in operating activities reflected a net loss of $15.4 million and a decrease in our operating assets of $2.2 million, partially offset by non-cash charges of $3.8 million related to depreciation, amortization, share-based compensation, amortization of premium and discount, net, and impairment of long-lived assets.

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

During the nine months ended September 30, 2023, we used $58.7 million of net cash in operating activities.

Cash used in operating activities reflected a net loss of $85.3 million, partially offset by a net decrease in our operating assets of $9.6 million and net non-cash charges of $17.0 million primarily related to share-based compensation, depreciation, amortization, impairment of long-lived assets, and amortization of premium and discount, net.

During the three months ended March 31, 2024, we used $18.9 million of net cash in operating activities.

Cash used in operating activities reflected a net loss of $16.7 million and a net increase in our operating assets of $4.2 million, partially offset by net non-cash charges of $2.0 million related to depreciation, amortization, share-based compensation, 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.

Net Cash Provided by (Used in) Investing Activities

During the nine months ended September 30, 2024 , we purchased $72.6 million in marketable securities, and had sales and maturities of $113.9 million in marketable securities.

Purchases of property and equipment were de minimus for the nine months ended September 30, 2024.

During the nine months ended September 30, 2023, we purchased $101.6 million in marketable securities, and had sales and maturities of $159.4 million in marketable securities.

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

During the three months ended March 31, 2025 , we had sales and maturities of $39.0 million in marketable securities and received cash proceeds of $0.6 million related to the sale of property and equipment and certain other assets.

During the three months ended March 31, 2024, we purchased $13.8 million in marketable securities, and had sales and maturities of $39.1 million in marketable securities.

We did not make any purchases of property and equipment for the three months ended March 31, 2025 and 2024.

Net Cash Provided by (Used in) Financing Activities

During the nine months ended September 30, 2024, we received $8.7 million in net proceeds from the issuance of common stock under the ATM Facility.

During the three months ended March 31, 2025, we had no gross receipts or outflows of cash related to financing activities.

During the three months ended March 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 $0.1 million in proceeds from the issuance of common stock under the ESPP and exercises of employee stock options.

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

Contractual Obligations and Other Commitments

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

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.

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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

During the nine months ended September 30, 2024, 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 2023 Annual Report filed on Form 10-K, except for those described below.

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 ASC 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.

During the three months ended March 31, 2025, 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 2024 Annual Report filed on Form 10-K.

JOBS Act Accounting Election

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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