Item 2. Management’s Discussion and Analysis
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) is intended to help the reader understand our results of operations and financial condition. This MD&A is provided as a supplement to, and should be read in conjunction with, our unaudited consolidated financial statements and the accompanying notes thereto and other disclosures included in this Quarterly Report on Form 10-Q, including the disclosures under Part II, Item 1A “Risk Factors”, and our audited financial information and the notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2019, which was filed with the Securities and Exchange Commission ( the “SEC”), on March 2, 2020 . Our unaudited consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the U.S. (“U.S. GAAP”) and unless otherwise indicated are presented in U.S. dollars.
Overview
We are a leader in the field of gene therapy, seeking to develop single treatments with potentially curative results for patients suffering from genetic and other devastating diseases. We are advancing a focused pipeline of innovative gene therapies, including product candidates for the treatment of hemophilia B, which we intend to license to CSL Behring pursuant to the CSL Behring Agreement (as defined below), and Huntington’s disease. We believe our validated technology platform and manufacturing capabilities provide us distinct competitive advantages, including the potential to reduce development risk, cost and time to market. We produce our AAV-based gene therapies in our own facilities with a proprietary, commercial-scale, current good manufacturing practices (“cGMP”)-compliant, manufacturing process. We believe our Lexington, Massachusetts-based facility is one of the world's leading, most versatile, gene therapy manufacturing facilities .
Business Developments
Below is a summary of our recent significant business developments:
CSL Behring commercialization and license agreement
On June 24, 2020, uniQure biopharma B.V., our wholly-owned subsidiary of uniQure N.V., entered into a commercialization and license agreement (the “CSL Behring Agreement”) with CSL Behring LLC (“CSL Behring”) providing CSL Behring exclusive global rights to etranacogene dezaparvovec, our investigational gene therapy for patients with hemophilia B (the “Product”).
Under the terms of the CSL Behring Agreement, we will receive a $450 million upfront cash payment upon the closing of the CSL Behring Agreement and be eligible to receive up to $1.6 billion in payments based on regulatory and commercial milestones. We will also be eligible to receive tiered double-digit royalties in a range of up to a low-twenties percent of net sales of the Product based on sales thresholds.
Pursuant to the CSL Behring Agreement, we will be responsible for the completion of the HOPE-B clinical trial, manufacturing process validation, and the manufacturing supply of Product until such time that these capabilities may be transferred to CSL Behring or its designated contract manufacturing organization. Pursuant to a development and commercial supply agreement, we will supply Product to CSL Behring at an agreed-upon price per the contract. We and CSL Behring executed the development and commercial supply agreement simultaneously with the CSL Behring Agreement. Certain provisions will not become effective until after we receive regulatory approval to close the transaction. Clinical development and regulatory activities performed by us pursuant to the CSL Behring Agreement will be reimbursed by CSL Behring. CSL Behring will be responsible for global regulatory submissions and commercialization requirements for Product.
20
Table of Contents
Other than under the CSL Behring Agreement, neither we nor CSL Behring may perform any clinical trials, with the exception of trials required to extend the label or gain marketing authorization outside the United States or the European Union, for any gene therapy product, gene-editing product, or any other product comprising an AAV vector to conduct nucleotide transfer (including DNA and RNA) for the treatment, prevention, or cure of Hemophilia B for a period commencing on June 24, 2020 and continuing for a period of four years following the first commercial sale of the Product in the United States, and neither we nor CSL Behring may commercialize such a product for a period commencing as of June 24, 2020 and continuing for a period of seven years following the first commercial sale of the Product in the United States. This exclusivity commitment would not bind an acquirer of us that owns or controls such a product so long as certain precautions are followed to ensure that CSL Behring’s confidential information and our proprietary technology related to Product are not used or accessed by personnel of such acquirer who are developing or commercializing such competing product.
Unless earlier terminated as described below, the CSL Behring Agreement will continue on a country-by-country basis until expiration of the royalty term in a country. The royalty term expires in a country on the later of (a) 15 years after the first commercial sale of Product in such country, (b) expiration of regulatory exclusivity for Product in such country and (c) expiration of all valid claims of specific licensed patents covering Product in such country. Either we or CSL Behring may terminate the CSL Behring Agreement for the other party’s material breach, if such breach is not cured within a specified cure period. In addition, if CSL Behring fails to commercialize Product in any of a group of major countries for an extended period of time following the first regulatory approval of Product in any of such group of countries (other than due to certain specified reasons) and such failure has not been cured within a specified cure period, then we may terminate the CSL Behring Agreement. CSL Behring may also terminate the CSL Behring Agreement for convenience.
Closing of the CSL Behring Agreement is contingent on the successful completion of reviews under antitrust laws in the United States, Australia, and the United Kingdom, which has not occurred to date. Closing of the transaction is dependent on the timing, extent, and result of the regulatory review process. We do not believe that the consummation of the transaction will result in a violation of any applicable antitrust laws. However, there can be no assurance that a challenge on antitrust grounds will not be made, or if such a challenge is made, what the result would be. In accordance with our existing license and other agreements we are contractually required to pay in total a low to high single digit percentage of any upfront payment to our licensors and financial advisor (“License Fees”).
As of June 30, 2020, we concluded we have no enforceable right to receive any of the upfront payment, the regulatory and sales milestone payments or the royalties (together “CSL License Revenue”) that we may receive in accordance with the CSL Behring Agreement, as all payments are contingent upon the successful completion of reviews under antitrust laws in the United States, Australia and the United Kingdom. Therefore, we determined we will not recognize any revenue in relation to the CSL License Revenue, in accordance with ASC 606.
We determined that in accordance with Dutch taw law we will recognize the CSL Behring License Revenue as well as the License Fees as taxable results as of the date on which we are contractually entitled to receive (or obligated to make) a payment under the CSL Behring Agreement. We expect to continue to incur taxable losses in the Netherlands except for the period in which we receive the $450 million upfront payment. In the event that we recognize the $450 million upfront payment in 2020, such payment will be subject to Dutch corporate income tax at a rate of 25.0%. Any CSL License Revenue including the upfront payment that we recognize thereafter will be subject to Dutch corporate income tax at a rate of 21.7%. However, we do not expect that we will be required to pay any income taxes in the period in which we recognize the $450 million upfront payment as taxable revenue, as such payment is not expected to exceed the net operating losses that we have carried forward in the Netherlands. We have historically recorded a full valuation allowance against our net deferred tax assets.
Future taxable income or losses and a potential reversal of the valuation allowance will be impacted by a variety of factors, of which some are outside of our control. Such factors include the outcome and timing of the reviews under antitrust laws in the United States, Australia, and the United Kingdom, the change in the Dutch corporate income tax rate in 2021, additional net operating losses we may generate in relation to the CSL Behring Agreement, and the amount of License Fees we are required to pay.
21
Table of Contents
We recognize deferred tax assets to the extent that we determine that these assets are more likely than not to be realized. In making such a determination, we weighed all available positive and negative evidence, including future income projections from the CSL Behring Agreement, and concluded that it is more likely than not that the deferred tax assets will not be realized. Accordingly, we continued to record a full valuation allowance as of June 30, 2020.
Hemophilia B program – Etranacogene dezaparvovec (AMT-061)
In June 2018, we initiated our Phase III HOPE-B pivotal trial of etranacogene dezaparvovec (the “HOPE-B trial”). The HOPE-B trial is a multinational, multi-center, open-label, single-arm study to evaluate the safety and efficacy of etranacogene dezaparvovec. After a six-month lead-in period, patients received a single intravenous administration of etranacogene dezaparvovec. The primary endpoint of the study is based on the FIX activity level achieved following the administration of etranacogene dezaparvovec, and the secondary endpoints are measuring annualized FIX replacement therapy usage, annualized bleed rates and safety. Patients enrolled in the HOPE-B trial were tested for the presence of pre-existing neutralizing antibodies to AAV5 but not excluded from the trial based on their titers.
In March 2020, we completed dosing of 54 patients in the HOPE-B trial. The targeted number of patients to be dosed per the clinical trial protocol was 50. As set forth below, we have implemented and continue to implement various measures to allow us to closely monitor the trial within the guidance provided by the FDA regarding the impact of the COVID-19 coronavirus pandemic (“COVID-19”) in order to minimize any risk or disruption in patient follow-up visits.
In August 2018, we initiated a Phase IIb dose-confirmatory study of etranacogene dezaparvovec. In December 2019, we presented 52-week follow-up data from the study showing that all three patients had stabilized and sustained FIX activity at therapeutic levels after a one-time administration of etranacogene dezaparvovec. Mean FIX activity for the three patients at 52 weeks after administration was 41% of normal, with the first patient achieving FIX activity of 50% of normal, the second patient achieving FIX activity of 31% of normal and the third patient achieving FIX activity of 41% of normal. The second and third patients had previously screen-failed and were excluded from another gene therapy study due to pre-existing neutralizing antibodies to a different AAV vector.
Etranacogene dezaparvovec has been granted Breakthrough Therapy Designation by the United States Food and Drug Administration (“FDA”) and access to the PRIME initiative by the European Medicines Agency (“EMA”).
Huntington’s disease program (AMT-130)
AMT-130 is our novel gene therapy candidate for the treatment of Huntington’s disease. AMT-130 utilizes our miQURE proprietary, gene-silencing platform and incorporates an AAV vector carrying a miRNA specifically designed to silence the huntingtin gene and the potentially highly toxic exon 1 protein fragment. AMT-130 has received orphan drug and fast track designations from the FDA and Orphan Medicinal Product Designation from the EMA.
In June 2020, we announced the completion of the first two patient procedures in the Phase I/II clinical trial of AMT-130 for the treatment of Huntington’s disease. These procedures occurred after a postponement that resulted from the COVID-19 pandemic and the associated states of emergency declarations in the United States. The Phase I/II protocol is a randomized, imitation surgery-controlled, double-blinded study conducted at three surgical sites, and multiple referring, non-surgical sites in the U.S. The primary objective of the study is to evaluate the safety, tolerability, and efficacy of AMT-130 at two doses.
AMT-150 for Spinocerebellar Ataxia type 3 (SCA3)
In May 2020, we presented preclinical data at the American Society of Gene and Cell Therapy (“ASGCT”) Annual Meeting, on our gene therapy candidate SCA3. In an in vivo preclinical study, six non-human primates (NHP) received a one-time injection of AMT-150 via the cisterna magna to assess expression and distribution. Samples taken after eight weeks showed widespread transduction of the brain and spinal cord, with the highest genome copies found in the posterior fossa and cortical regions. In other preclinical studies, researchers evaluated AMT-150 in SCA3 mouse models, as well as human induced pluripotent stem cell (“iPSC”)-derived neurons and astrocytes, to investigate potential off-target effects of AAV5-miATXN3. The iPSC-derived cell cultures, which were derived from two SCA3 patients, represent the most disease-relevant cell type for therapeutic targeting of AMT-150. A clear dose-dependent expression of miATXN3 was observed in the iPSC-derived neurons and astrocytes transduced with AMT-150. Mature miATXN3 molecules were also associated with extracellular vesicles that strongly correlated with the dose and miATXN3 expression, suggesting the potential therapeutic spread of the engineered miATXN3. Additionally, AMT-150 demonstrated ATXN3 knockdown in human neurons and various SCA3 mouse models with subsequent neuropathology improvement.
22
Table of Contents
AMT-190 for Fabry disease
In May 2020, we presented preclinical data at the ASGCT Annual Meeting on our gene therapy candidate AMT-190 for Fabry disease. In vivo studies in wild-type NHPs were conducted to assess expression of a proprietary, exclusively licensed modified NAGA (“ModNAGA”) upon AAV-injection. These studies demonstrated that a single administration of AMT-190 resulted in ModNAGA expression in the liver and significant increases of GLA activity levels in the NHP plasma.
AMT-180 for Hemophilia A
In June 2020, we announced that we plan to de-prioritize our research program of AMT-180 for patients with hemophilia A, as part of our effort to focus on those gene therapy programs that have the greatest potential to improve patients’ lives and generate long-term value for shareholders.
COVID-19 measures
In December 2019, COVID-19, a novel coronavirus disease, was reported and in January 2020, the World Health Organization (“WHO”) declared it a Public Health Emergency of International Concern. On February 28, 2020, the WHO raised its assessment of the COVID-19 threat from high to very high at a global level due to the continued increase in the number of cases and affected countries, and on March 11, 2020, the WHO characterized COVID-19 as a pandemic.
Starting March 2020, we implemented measures to address the impact of COVID-19 on our business. As of March 13, 2020, we mandated a work-from-home policy for all non-essential employees at our Amsterdam and Lexington facilities. We supported our employees in setting up a healthy and efficient remote working environment. In conjunction with implementing this policy, we accelerated the roll-out of a number of information technology security measures such as dual factor authentication, to address the increased risks that we might be exposed to in conjunction with our employees working remotely. In addition, we conducted awareness training around cybersecurity for critical functions involved in making payments to vendors such as finance and supply chain.
As a biopharma research and development company, we are deemed to provide essential services under the “stay at home” advisory that was issued by the Governor of Massachusetts on March 23, 2020 and we are therefore maintaining our manufacturing operations at our Lexington site. We adapted to operate our laboratories at our Amsterdam site to comply with social distancing rules and to ensure the health and wellbeing of our employees under the current circumstances. We had discouraged our employees from using public transport and are accommodating them by arranging for alternative means of transport until June 1, 2020 in line with policies advised by the relevant Dutch authorities.
We conduct frequent status video-meetings of local management at our two sites as well as leadership-team video meetings to implement these measures and to monitor the evolving situation. In addition, we inform our employees through periodic newsletters and have organized virtual local and global townhalls to share information and provide direction and support to our employees.
We have adapted our ongoing clinical research activities based on the directions and flexibility provided by the “FDA Guidance on Conduct of Clinical Trials of Medical Products during COVID-19 Pandemic” issued on March 18, 2020 in an attempt to minimize any risk, disruption or delay in either patient dosing or follow-up visits.
We are starting to reopen the Amsterdam and Lexington facilities in phases, in line with the reopening plans that are prescribed by the local government. Starting June 1, 2020, we encouraged our Amsterdam employees to work a minimum of two days per week from the office and approximately 50% of local staff has been working on site since then. Our employees that cannot perform their duties outside of our Lexington facility continue to work at our Lexington facility. Other employees have returned to our Lexington facility on a limited basis, and all employees are encouraged to work from home to the extent possible. To ensure adequate social distancing in our Lexington facility, our COVID-19 protocols currently limit occupancy to numbers below those allowed by the Massachusetts COVID-19 guidelines. Our occupancy at the Lexington facility has been less than approximately 20% of our permitted occupancy during all phases of the Massachusetts reopening plan.
The broader implications of COVID-19 on our results of operations and overall financial performance remain uncertain. The COVID-19 pandemic and its adverse effects have become more prevalent in the locations where we, and our third-party business partners conduct business. While we have experienced disruptions in our operations as a result of COVID-19, we are adapting to the current environment to minimize the effect to our business. However, we may experience more pronounced disruptions in our operations in the future.
23
Table of Contents
We believe our cash and cash equivalents as of June 30, 2020, will enable us to fund our operating expenses including our debt repayment obligations as they become due and capital expenditure requirements into 2022. Upon the receipt of the $450 million payment due on the closing of the CSL Behring Agreement, we expect that our cash and cash equivalents will be sufficient to fund operations into the second half of 2024. The closing of the transactions contemplated by the CSL Behring agreement is contingent on the successful completion of reviews under antitrust laws in the United States, Australia, and the United Kingdom, which has not occurred to date. The transactions contemplated by the CSL Behring Agreement are expected to materially impact our profitability and cash flows. We expect to generate positive cash flows in the period of closing and to recognize material revenue related to the CSL Behring Agreement. However, we expect to continue to incur losses and to generate negative cash flows outside the fiscal year in which we close the transactions contemplated by the CSL Behring Agreement. We have no firm sources of additional funding. Until such time, if ever, as we can generate substantial cash flows from successfully commercializing our proprietary product candidates, we expect to finance our cash needs through a combination of equity offerings, debt financings, collaborations, strategic alliances and marketing, distribution and licensing arrangements. Similar to the other risk factors pertinent to our business, COVID-19 might unfavorably impact our ability to generate such additional funding.
BMS collaboration
We entered into a collaboration and license agreement with Bristol-Myers Squibb (“BMS”) in May 2015. We have been supporting BMS in the discovery, non-clinical, analytical and process development efforts of our gene therapy technology platform for the research, development and commercialization of therapeutics aimed at multiple targets in cardiovascular and other diseases (“Collaboration Targets”). For any Collaboration Targets that are advanced, we will be responsible for manufacturing of clinical and commercial supplies using our vector technologies and industrial, proprietary insect-cell based manufacturing platform. BMS has reimbursed us for all our research and development costs in support of the collaboration during the initial research term. BMS will lead the development, regulatory and commercial activities for all four currently active Collaboration Targets as well as additional Collaboration Targets that may be advanced.
In February 2019, BMS requested a one-year extension of the research term. In April 2019, following an assessment of the progress of this collaboration and our expanding proprietary programs, we notified BMS that we did not intend to agree to an extension of the research term. Accordingly, the initial four-year research term under the collaboration terminated on May 21, 2019. The Company has agreed to certain restrictions on its ability to work independently of the collaboration, either directly or indirectly through any affiliate or third party, on certain programs that would be competitive with the collaboration programs. We are currently in discussions with BMS potentially to amend the collaboration and license agreement and other related agreements following the expiration of the research term. The final resolution of these discussions may or may not result in material changes to our collaboration with BMS.
Organization
On June 17, 2020, our shareholders voted to approve the appointment of Leonard E. Post, Ph.D. as a non-executive director of the Board of Directors. Dr. Post replaced Dr. David Schaffer, whose term as a non-executive director of the Board of Directors ended on the same date.
Intellectual Property
On January 4, 2020, a petition seeking Inter Partes Review of U.S. Patent No. 9,249,405 (the “’405 Patent”) was filed by Pfizer, Inc. The petition sought to invalidate claims 6 and 9-15 of the ‘405 Patent. On April 17, 2020, we filed our preliminary response to the petition, disclaiming claims 6 and 9-13 of the ‘405 patent and otherwise requesting the denial of the petition. On July 13, 2020, the United States Patent and Trademark Office issued its decision to institute the Inter Partes Review . We are in the process of preparing our response to the petition, which is due October 5, 2020 under the schedule set for the proceeding.
24
Table of Contents
Financial Overview
Key components of our results of operations include the following:
Three months ended June 30,
Six months ended June 30,
2020
2019
2020
2019
(in thousands)
(in thousands)
Total revenues
$
1,535
$
2,474
$
1,639
$
3,610
Research and development expenses
(28,401)
(24,154)
(54,414)
(44,691)
Selling, general and administrative expenses
(11,511)
(7,870)
(20,583)
(15,937)
Net loss
(42,551)
(31,399)
(70,550)
(59,171)
As of June 30, 2020, and December 31, 2019, we had cash and cash equivalents of $314.3 million and $377.8 million, respectively. We had a net loss of $42.6 million and $70.6 million in the three and six months ended June 30, 2020, compared to $31.4 million and $59.2 million for the same period in 2019. As of June 30, 2020, and December 31, 2019, we had accumulated deficits of $730.3 million and $659.7 million, respectively. Our losses will be materially impacted by the amount of license revenue that we will recognize in accordance with ASC 606 following the potential closing of our collaboration and license agreement with CSL Behring.
We anticipate that our expenses will increase substantially as we:
● Advance the clinical development of AMT-130 for our Huntington’s disease gene therapy program;
● Build-out our commercial and medical affairs infrastructure and seek marketing approval for any product candidates (including etranacogene dezaparvovec in case our collaboration and license agreement with CSL Behring would not close) that successfully complete clinical trials;
● Advance multiple research programs related to gene therapy candidates targeting liver-directed and central nervous system (“CNS”) diseases;
● Continue to expand, enhance and optimize our technology platform, including our manufacturing capabilities, next-generation viral vectors and promoters, and other enabling technologies;
● Continue to expand our employee base to support research and development, as well as general and administrative functions;
● Acquire or in-license rights to new therapeutic targets or product candidates; and
● Maintain, expand and protect our intellectual property portfolio, including in-licensing additional intellectual property rights from third parties.
See “Results of Operations” below for a discussion of the detailed components and analysis of the amounts above.
Critical Accounting Policies and Estimates
In preparing our consolidated financial statements in accordance with U.S. GAAP and pursuant to the rules and regulations promulgated by the SEC we make assumptions, judgments and estimates that can have a significant impact on our net income/loss and affect the reported amounts of certain assets, liabilities, revenue and expenses, and related disclosures. On an ongoing basis, we evaluate our estimates and judgments, including those related to the implementation of ASC 842 Leases, recognition of License Revenue in accordance with ASC 606, BMS warrants, share-based payments and corporate income taxes related to valuation allowance. We base our assumptions, judgments and estimates on historical experience and various other factors that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not clear from other sources. Actual results may differ from these estimates under different assumptions or conditions. In making estimates and judgments, management employs critical accounting policies. During the six months ended June 30, 2020, there were no material changes to our critical accounting policies as reported in our Annual Report on Form 10-K for the year ended December 31, 2019, which was filed with the SEC on March 2, 2020 .
We believe that the assumptions, judgments and estimates involved in the recognition of License Revenue in accordance with ASC 606, BMS warrants, share-based payments, corporate income taxes related to valuation allowance and accounting for operating leases under ASC 842 to be our critical accounting policies.
25
Table of Contents
The preparation of our consolidated financial statements for the three- and six-month period ended June 30, 2020, required us to analyze the accounting treatment of the CSL Behring Agreement. This analysis required us to exercise judgement regarding the timing and the likelihood of closing the transaction.
Closing of the CSL Behring Agreement is contingent on the successful completion of reviews under antitrust laws in the United States, Australia, and the United Kingdom, which has not occurred to date. Closing of the transaction is dependent on the timing, extent and result of the regulatory review process. We do not believe that the consummation of the transaction will result in a violation of any applicable antitrust laws. However, there can be no assurance that a challenge on antitrust grounds will not be made, or if such a challenge is made, what the result would be.
As of June 30, 2020, we concluded we have no enforceable right to receive any of CSL License Revenue that we may receive in accordance with the CSL Behring Agreement, as all payments are contingent upon the successful completion of reviews under antitrust laws in the United States, Australia and the United Kingdom. Therefore, we determined we will not recognize any revenue in relation to the CSL License Revenue, in accordance with ASC 606.
We recognize deferred tax assets to the extent that we determine that these assets are more likely than not to be realized. In making such a determination, we weighed all available positive and negative evidence, including future income projections from the CSL Behring Agreement, and concluded that it is more likely than not that the deferred tax assets will not be realized. Accordingly, we continued to record a full valuation allowance as of June 30, 2020.
Revenues
We recognize Collaboration Revenues associated with pre-clinical Collaboration Target specific, non-clinical, analytical and process development activities that are reimbursable by BMS under our collaboration and license agreement during the initial research term, which ended on May 21, 2019. We are currently in discussions with BMS potentially to amend the BMS CLA and other related agreements following the expiration of the research term. During these discussions, which may be terminated by us or BMS at any time, we have agreed, subject to certain conditions, to continue providing limited support of the pre-clinical Collaboration Targets, and any related costs will be reimbursed by BMS.
We recognize License Revenues associated with the amortization of the non-refundable upfront payment, target designation fees and research and development milestone payments we received or might receive from BMS. The timing of these cash payments may differ from the recognition of revenue, as revenue is deferred and recognized over the duration of the performance period. We recognize other revenue, such as sales milestone payments, when earned.
Research and development expenses
We expense research and development (“R&D”) expenses as incurred. Our R&D expenses generally consist of costs incurred for the development of our target candidates, which include:
● Employee-related expenses, including salaries, benefits, travel and share-based compensation expense;
● Costs incurred for laboratory research, preclinical and nonclinical studies, clinical trials, statistical analysis and report writing, and regulatory compliance costs incurred with clinical research organizations and other third-party vendors;
● Costs incurred to conduct consistency and comparability studies;
● Costs incurred for the development and improvement of our manufacturing processes and methods;
● Costs associated with our research activities for our next-generation vector and promoter platform; and
● Facilities, depreciation and other expenses, which include direct and allocated expenses for rent and maintenance of facilities, insurance and other supplies.
26
Table of Contents
Our research and development expenses may vary substantially from period to period based on the timing of our research and development activities, including manufacturing campaigns, regulatory submissions and enrollment of patients in clinical trials. The successful development of our product candidates is highly uncertain. Estimating the nature, timing or cost of the development of any of our product candidates involves considerable judgement due to numerous risks and uncertainties associated with developing gene therapies, including the uncertainty of:
● the scope, rate of progress and expense of our research and development activities;
● our ability to successfully manufacture and scale-up production;
● clinical trial protocols, speed of enrollment and resulting data;
● the effectiveness and safety of our product candidates;
● the timing of regulatory approvals; and
● our ability to agree to ongoing development budgets with collaborators who share the costs of our development programs.
A change in the outcome of any of these variables with respect to our product candidates that we may develop, including as a result of the COVID-19 pandemic, could mean a significant change in the expenses and timing associated with the development of such product candidate.
Selling, general and administrative expenses
Our general and administrative expenses consist principally of employee, office, consulting, legal and other professional and administrative expenses. We incur expenses associated with operating as a public company, including expenses for personnel, legal, accounting and audit fees, board of directors’ costs, directors' and officers' liability insurance premiums, Nasdaq listing fees, expenses related to investor relations and fees related to business development and maintaining our patent and license portfolio. Our selling costs include employee expenses as well as professional fees related to the preparation of a commercial launch of etranacogene dezaparvovec.
Other items, net
Our other income consists of payments to subsidize our research and development efforts as well as income from the subleasing of our Amsterdam facility.
Our other expense consists of expenses we incur in relation to our subleasing income.
27
Table of Contents
Results of Operations
Comparison of the three months ended June 30, 2020 and 2019
The following table presents a comparison of the three months ended June 30, 2020 and 2019.
Three months ended June 30,
2020
2019
2020 vs 2019
(in thousands)
Total revenues
$
1,535
$
2,474
$
(939)
Operating expenses:
Research and development expenses
(28,401)
(24,154)
(4,247)
Selling, general and administrative expenses
(11,511)
(7,870)
(3,641)
Total operating expenses
(39,912)
(32,024)
(7,888)
Other income
669
566
103
Other expense
(500)
(347)
(153)
Loss from operations
(38,208)
(29,331)
(8,877)
Other non-operating items, net
(4,343)
(2,068)
(2,275)
Net loss
$
(42,551)
$
(31,399)
$
(11,152)
Revenue
Our revenue for the three months ended June 30, 2020 and 2019 was as follows:
Three months ended June 30,
2020
2019
2020 vs 2019
(in thousands)
License Revenue
$
1,530
$
2,108
$
(578)
Collaboration Revenue
5
366
(361)
Total revenues
$
1,535
$
2,474
$
(939)
We recognize License Revenue related to upfront payments and target designation fees received from BMS in 2015. We recognized $1.5 million License Revenue in the three months ended June 30, 2020, compared to $2.1 million for the same period in 2019. The reduction in License Revenue is primarily a result of delays in development timelines due to our ongoing discussions surrounding the potential amendment of the BMS CLA. Continuing these discussions to some extent was impacted by the parties’ focus to adjust their operations to COVID-19.
We recognized $0.0 million Collaboration Revenue in the three months ended June 30, 2020, compared to $0.4 million for the same period in 2019. The decrease in Collaboration Revenue was primarily related to the reduction of activities following the termination of the initial Research Term under the BMS CLA in May 2019.
28
Table of Contents
Research and development expenses
Research and development expenses for the three months ended June 30, 2020 were $28.4 million, compared to $24.2 million for the same period in 2019. Other research and development expenses are separately classified in the table below. These are not allocated as they are deployed across multiple projects under development.
Three months ended June 30,
2020
2019
2020 vs 2019
(in thousands)
Etranacogene dezaparvovec (AMT-060/061)
$
4,673
$
4,363
$
310
Huntington's disease (AMT-130)
2,095
1,164
931
Programs in preclinical development and platform related expenses
1,770
1,546
224
Total direct research and development expenses
$
8,538
$
7,073
$
1,465
Employee and contractor-related expenses
9,990
8,239
1,751
Share-based compensation expense
2,894
2,111
783
Facility expenses
4,185
3,625
560
Disposables
2,501
2,662
(161)
Other expenses
293
444
(151)
Total other research and development expenses
$
19,863
$
17,081
$
2,782
Total research and development expenses
$
28,401
$
24,154
$
4,247
Direct research and development expenses
Etranacogene dezaparvovec (AMT-060/061)
In the three months ended June 30, 2020 and 2019, the external costs for our hemophilia B program were primarily related to the execution of our Phase III clinical trial. We enrolled patients into a six-month lead in phase between January 2018 and September 2019 and dosed a total of 54 patients between January 2019 and March 2020. Our expenses related to etranacogene dezaparvovec were largely unaffected by the COVID-19 pandemic as we completed enrollment immediately prior to the lockdowns in those countries in which we enroll patients. We have implemented additional measures to minimize any risk, disruption or delay on follow-up visits.
In addition, we continue to incur costs for the long-term follow-up of patients in our Phase I/II clinical trial of AMT-060 and our Phase IIb clinical trial of etranacogene dezaparvovec.
Huntington disease (AMT-130)
In the three months ended June 30, 2020 and 2019, our external costs for the development of Huntington’s disease were primarily related to the execution of our Phase I/II clinical trial as well as expenses related to the procedures of the first two patients in June 2020. The procedure-related expenses were delayed as a result of the temporary postponement of the procedures due to the COVID-19 related state of emergency declarations in the United States.
Preclinical programs & platform development
In the three months ended June 30, 2020, we incurred $1.8 million of costs primarily related to our preclinical activities primarily associated with product candidates for Hemophilia A (AMT-180), SCA3 (AMT-150) and Fabry disease (AMT-190), as well as various other research programs and technology innovation projects, compared to $1.5 million in the same period in 2019.
29
Table of Contents
Other research & development expenses
● We incurred $10.0 million in personnel and contractor related expenses in the three months ended June 30, 2020, compared to $8.2 million for the same period in 2019. Our costs during the three months ended June 30, 2020 increased by $1.8 million as a result of the recruitment of personnel to support the development of our product candidates;
● We incurred $2.9 million in share-based compensation expenses in the three months ended June 30, 2020, compared to $2.1 million for the same period in 2019; and
● We incurred $4.2 million in operating expenses and depreciation expenses related to our rented facilities in the three months ended June 30, 2020, compared to $3.6 million in the same period in 2019. Our costs during the three months ended June 30, 2020, primarily increased as a result of extending and expanding (as from June 2019) the lease of our Lexington facility.
Selling, general and administrative expenses
Selling, general and administrative expenses for the three months ended June 30, 2020 were $11.5 million, compared to $7.9 million for the same period in 2019.
● We incurred $2.9 million in personnel and contractor related expenses in the three months ended June 30, 2020, compared to $2.4 million in the same period in 2019;
● We incurred $2.8 million in share-based compensation expenses in the three months ended June 30, 2020, compared to $2.4 million in the same period in 2019; and
● We incurred $3.0 million in professional fees in the three months ended June 30, 2020, compared to $1.3 million in the same period in 2019. The increase was primarily driven by corporate initiatives.
Our selling, general and administrative expenses were largely unaffected by the COVID-19 pandemic.
Other items, net
We recognized $0.3 million in income from payments received from European authorities to subsidize our research and development efforts in the Netherlands in the three months ended June 30, 2020, compared to $0.3 million for the same period in 2019.
Other non-operating items, net
We recognize interest income associated with our cash and cash equivalents.
We hold monetary items and enter into transactions in foreign currencies, predominantly in euros and U.S. dollars. We recognize foreign exchange results related to changes in these foreign currencies.
We issued warrants to BMS in 2015. We recognize changes in the fair value of these warrants within other non-operating (expense) / income.
Our other non-operating items, net, for the three months ended June 30, 2020 and 2019 were as follows:
Three months ended June 30,
2020
2019
2020 vs 2019
(in thousands)
Interest income
$
81
$
728
$
(647)
Interest expense - Hercules long-term debt
(970)
(937)
(33)
Foreign currency losses, net
(3,645)
(1,252)
(2,393)
Other non-operating gains / (losses)
191
(607)
798
Total other non-operating loss, net
$
(4,343)
$
(2,068)
$
(2,275)
We recognized a net foreign currency loss related to our borrowings from Hercules and our cash and cash equivalents of $3.6 million during the three months ended June 30, 2020, compared to a net loss of $1.3 million during the same period in 2019.
In the three months ended June 30, 2020, we recognized income of $0.2 million related to changes in the fair value of the BMS warrants compared to a loss of $0.6 million related to changes in the fair value of the BMS warrants for the same period in 2019.
30
Table of Contents
Comparison of the six months ended June 30, 2020 and 2019
The following table presents a comparison of the six months ended June 30, 2020 and 2019.
Six months ended June 30,
2020
2019
2020 vs 2019
(in thousands)
Total revenues
$
1,639
$
3,610
$
(1,971)
Operating expenses:
Research and development expenses
(54,414)
(44,691)
(9,723)
Selling, general and administrative expenses
(20,583)
(15,937)
(4,646)
Total operating expenses
(74,997)
(60,628)
(14,369)
Other income
1,526
879
647
Other expense
(839)
(696)
(143)
Loss from operations
(72,671)
(56,835)
(15,836)
Non-operating items, net
2,121
(2,336)
4,457
Net loss
$
(70,550)
$
(59,171)
$
(11,379)
Revenue
Our revenue for the six months ended June 30, 2020 and 2019 was as follows:
Six months ended June 30,
2020
2019
2020 vs 2019
in thousands
License revenue
$
1,577
$
2,665
$
(1,088)
Collaboration revenue
62
945
(883)
Total revenues
$
1,639
$
3,610
$
(1,971)
We recognize License Revenue related to upfront payments and target designation fees received from BMS in 2015. We recognized $1.6 million License Revenue in the six months ended June 30, 2020, compared to $2.7 million for the same period in 2019. The reduction in License Revenue is primarily a result of delays in development timelines due to our ongoing discussions surrounding the potential amendment of the BMS CLA as well as COVID-19. Continuing these discussions to some extent was impacted by the parties’ focus to adjust their operations to COVID-19.
We recognized $0.1 million Collaboration Revenue in the six months ended June 30, 2020, compared to $0.9 million for the same period in 2019. The decrease in Collaboration Revenue was primarily related to the reduction of activities following the termination of the initial Research Term under the BMS CLA in May 2019.
31
Table of Contents
Research and development expenses
Research and development expenses for the six months ended June 30, 2020 were $54.4 million, compared to $44.7 million for the same period in 2019. Other research and development expenses are separately classified in the table below. These are not allocated as they are deployed across multiple projects under development.
Six months ended June 30,
2020
2019
2020 vs 2019
(in thousands)
Etranacogene dezaparvovec (AMT-060/061)
$
9,213
$
7,670
$
1,543
Huntington's disease (AMT-130)
3,155
1,627
1,528
Programs in preclinical development and platform related expenses
3,225
2,435
790
Total direct research and development expenses
$
15,593
$
11,732
$
3,861
Employee and contractor-related expenses
19,338
16,487
2,851
Share-based compensation expense
5,289
4,099
1,190
Facility expenses
8,201
6,919
1,282
Disposables
4,911
4,570
341
Other expenses
1,082
884
198
Total other research and development expenses
$
38,821
$
32,959
$
5,862
Total research and development expenses
$
54,414
$
44,691
$
9,723
Direct research and development expenses
Hemophilia B (AMT-060/061)
In the six months ended June 30, 2020 and 2019, the external costs for our hemophilia B program were primarily related to the execution of our Phase III clinical trial. We enrolled patients into a six-month lead in phase between January 2018 and September 2019 and dosed a total of 54 patients between January 2019 and March 2020. Our expenses related to etranacogene dezaparvovec were largely unaffected by the COVID-19 pandemic as we completed enrollment immediately prior to the lockdowns in those countries that we enroll patients. We have implemented additional measures to minimize any risk, disruption or delay on follow-up visits.
In addition, we continue to incur costs for the long-term follow-up of patients in our Phase I/II clinical trial of AMT-060 and our Phase IIb clinical trial of etranacogene dezaparvovec.
Huntington disease (AMT-130)
In the six months ended June 30, 2020 and 2019, our external costs for the development of Huntington’s disease were primarily related to the execution of our Phase I/II clinical trial as well as expenses related to the procedures of the first two patients in June 2020. The procedure-related expenses were delayed as a result of the temporary postponement of the procedures due to the COVID-19 related state of emergency declarations in the United States.
Preclinical programs & platform development
In the six months ended June 30, 2020, we incurred $3.2 million of costs primarily related to our preclinical activities associated with product candidates for Hemophilia A (AMT-180), SCA3 (AMT-150) and Fabry disease (AMT-190), as well as various other research programs and technology innovation projects, compared to $2.4 million in the same period in 2019.
32
Table of Contents
Other research & development expenses
● We incurred $19.3 million in personnel and contractor related expenses in the six months ended June 30, 2020, compared to $16.5 million for the same period in 2019. Our costs during the six months ended June 30, 2020 increased by $2.8 million as a result of the recruitment of personnel to support the development of our product candidates;
● We incurred $5.3 million in share-based compensation expenses in the six months ended June 30, 2020, compared to $4.1 million for the same period in 2019; and
● We incurred $8.2 million in operating expenses and depreciation expenses related to our rented facilities in the six months ended June 30, 2020, compared to $6.9 million in the same period in 2019. Our costs during the six months ended June 30, 2020 primarily increased as a result of extending and expanding (as from June 2019) the lease of our Lexington facility.
Selling, general and administrative expenses
Selling, general and administrative expenses for the six months ended June 30, 2020 were $20.6 million, compared to $15.9 million for the same period in 2019.
● We incurred $6.1 million in personnel and contractor related expenses in the six months ended June 30, 2020, compared to $5.1 million in the same period in 2019;
● We incurred $4.8 million in share-based compensation expenses in the six months ended June 30, 2020, compared to $4.8 million in the same period in 2019; and
● We incurred $4.2 million in professional fees in the six months ended June 30, 2020, compared to $2.9 million in the same period in 2019. The decrease was primarily driven by timing of various corporate initiatives.
Our selling, general and administrative expenses were largely unaffected by the COVID-19 pandemic.
Other items, net
We recognized $0.5 million in income from payments received from European authorities to subsidize our research and development efforts in the Netherlands in the six months ended June 30, 2020, compared to $0.3 million for the same period in 2019.
Other non-operating items, net
We recognize interest income associated with our cash and cash equivalents.
We hold monetary items and enter into transactions in foreign currencies, predominantly in euros and U.S. dollars. We recognize foreign exchange results related to changes in these foreign currencies.
We issued warrants to Hercules in 2013 and to BMS in 2015. We recognize changes in the fair value of these warrants within other non-operating (expense) / income. Following the exercise of the warrants by Hercules in February 2019 we no longer recognize changes in the fair value of these warrants within other non-operating (expense) / income.
Our other non-operating items, net, for the six months ended June 30, 2020 and 2019 were as follows:
Six months ended June 30,
2020
2019
2020 vs 2019
(in thousands)
Interest income
$
903
$
1,170
$
(267)
Interest expense
(1,945)
(1,894)
(51)
Foreign currency gains, net
957
1,022
(65)
Other non-operating gains / (losses), net
2,206
(2,634)
4,840
Total non-operating income / (loss), net
$
2,121
$
(2,336)
$
4,457
We recognized a net foreign currency gain related to our borrowings from Hercules and our cash and cash equivalents of $1.0 million during the six months ended June 30, 2020, compared to a net gain of $1.0 million during the same period in 2019.
33
Table of Contents
In the six months ended June 30, 2020, we recognized income of $2.2 million related to changes in the fair value of the Hercules and BMS warrants compared to a loss of $2.6 million for the same period in 2019. Changes in the fair value of the Hercules and BMS warrants are primarily impacted by changes in our share price, whereby a decrease in share price generally results in a decrease of the fair value.
Financial Position, Liquidity and Capital Resources
As of June 30, 2020, we had cash, cash equivalents and restricted cash of $316.9 million. We currently expect that our cash and cash equivalents will be sufficient to fund operations into 2022. Upon the receipt of the $450 million payment due on the closing of the CSL Behring Agreement, we expect that our cash and cash equivalents will be sufficient to fund operations into the second half of 2024. The table below summarizes our consolidated cash flow data for the six months ended June 30, 2020, and 2019.
Six months ended June 30,
2020
2019
(in thousands)
Cash, cash equivalents and restricted cash at the beginning of the period
$
380,726
$
237,342
Net cash used in operating activities
(62,944)
(50,657)
Net cash used in investing activities
(4,606)
(2,428)
Net cash generated from financing activities
3,549
3,221
Foreign exchange impact
223
(443)
Cash, cash equivalents and restricted cash at the end of period
$
316,948
$
187,035
We have incurred losses and cumulative negative cash flows from operations since our business was founded by our predecessor entity AMT Therapeutics (“AMT”) Holding N.V. in 1998. We had a net loss of $42.6 million and $70.6 million during the three and six months ended June 30, 2020, compared to a net loss of $31.4 million and $59.2 million during the same periods in 2019. As of June 30, 2020, we had an accumulated deficit of $730.3 million.
Sources of liquidity
From our first institutional venture capital financing in 2006 through June 30, 2020, we funded our operations primarily through private and public placements of equity securities and convertible and other debt securities as well as payments from our collaboration partners.
On September 10, 2019, we completed a follow-on public offering of 4,891,305 ordinary shares at a public offering price of $46.00 per ordinary share, and on September 13, 2019, we completed the sale of an additional 733,695 ordinary shares at a public offering price of $46.00 per ordinary share pursuant to the exercise by the underwriters of the option to purchase additional ordinary shares, resulting in total gross proceeds to us of $258.8 million. The net proceeds from this offering were $242.7 million, after deducting underwriting discounts and commissions and other offering expenses payable by us. We deducted $0.6 million of expenses incurred related to this offering from additional paid-in capital in the accompanying consolidated balance sheets and reflected this within the proceeds from public offering of shares, net of issuance costs within the cash flows from financing activities.
On December 6, 2018, we signed an amendment to the Second Amended and Restated Loan and Security Agreement (the “2018 Amended Facility”) with Hercules that both refinanced our then-existing $20 million credit facility and provided us with an additional unconditional commitment of $15 million as well as a conditional commitment of $15 million that expired on June 30, 2020. At signing, we drew down an additional $15 million, for a total outstanding amount of $35 million. We have the right to draw another $15 million through June 30, 2020 subject to the terms of the 2018 Amended Facility.
34
Table of Contents
The 2018 Amended Facility extends the loan’s maturity date until June 1, 2023. The interest-only period was initially extended from November 2018 to January 1, 2021. The interest-only period was further extended to January 1, 2022 as a result of raising more than $90.0 million in equity financing in September 2019. As of June 30, 2020, $35 million was outstanding under the 2018 Amended Facility (December 31, 2019: $35 million). We are required to repay the facility in equal monthly installments of principal and interest between the end of the interest-only period and the maturity date. The variable interest rate is equal to the greater of (i) 8.85% or (ii) 8.85% plus the prime rate less 5.50%. Under the 2018 Amended Facility, we paid a facility fee equal to 0.50% of the $35,000,000 loan outstanding and will owe a back-end fee of 4.95% of the outstanding debt.
The $450 million upfront payment we expect to receive on the closing of the CSL Behring Agreement is expected to fund operations into the second half of 2024. Closing of the transaction is expected to materially impact our profitability and cash flows. We expect to generate positive cash flows in the period of closing and to recognize material revenue related to the CSL Behring Agreement. However, we expect to continue to incur losses and to generate negative cash flows outside the fiscal year in which we close the transaction. We have no firm sources of additional funding. Until such time, if ever, as we can generate substantial cash flows from successfully commercializing our proprietary product candidates, we expect to finance our cash needs through a combination of equity offerings, debt financings, collaborations, strategic alliances and marketing, distribution and licensing arrangements.
We are subject to covenants under our 2018 Amended Facility and may become subject to covenants under any future indebtedness that could limit our ability to take specific actions, such as incurring additional debt, making capital expenditures or declaring dividends, which could adversely impact our ability to conduct our business. In addition, our pledge of assets as collateral to secure our obligations under the 2018 Amended Facility may limit our ability to obtain debt financing. To the extent we need to finance our cash needs through equity offerings or debt financings, such financing may be subject to unfavorable terms including without limitation, the negotiation and execution of definitive documentation, as well as credit and debt market conditions, and we may not be able to obtain such financing on terms acceptable to us or at all. If financing is not available when needed, including through debt or equity financings, or is available only on unfavorable terms, we may be unable to meet our cash needs. If we raise additional funds through collaborations, strategic alliances or marketing, distribution or licensing arrangements with third parties, we may have to relinquish valuable rights to our technologies, future revenue streams or product candidates or grant licenses on terms that may not be favorable to us. If we are unable to raise additional funds through equity or debt financings when needed, we may be required to delay, limit, reduce or terminate our 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, which could have a material adverse effect on our business, financial conditions, results of operations and cash flows.
Net Cash used in operating activities
Net cash used in operating activities was $62.9 million for the six months ended June 30, 2020, and consisted of a net loss of $70.6 million adjusted for non-cash items, including depreciation and amortization expense of $3.5 million, share-based compensation expense of $10.1 million, fair value gains on derivative financial instruments of $2.2 million, unrealized foreign exchange gain of $0.9 million, and an decrease in unamortized deferred revenue of $1.6 million. Net cash used in operating activities also included unfavorable changes in operating assets and liabilities of $1.3 million. These changes primarily related to a net decrease in accounts receivable and accrued income, prepaid expenses and other current assets of $1.1 million and a net decrease in accounts payable, accrued expenses and other liabilities of $2.3 million.
Net cash used in operating activities was $50.7 million for the six months ended June 30, 2019, and consisted of a net loss of $59.2 million adjusted for non-cash items, including depreciation and amortization expense of $3.2 million, share-based compensation expense of $8.9 million, fair value losses on derivative financial instruments of $2.6 million, unrealized foreign exchange gain of $0.4 million, and a decrease in unamortized deferred revenue of $2.7 million. Net cash used in operating activities also included unfavorable changes in operating assets and liabilities of $3.1 million. These changes primarily related to a net increase in accounts receivable and accrued income, prepaid expenses and other current assets of $2.8 million primarily driven by an increase in prepaid expenses related to our etranacogene dezaparvovec and AMT-130 trials.
35
Table of Contents
Net cash used in investing activities
In the six months ended June 30, 2020, we used $4.6 million in our investing activities compared to $2.4 million for the same period in 2019.
Six months ended June 30,
2020
2019
(in thousands)
Build out of Lexington site
$
(576)
$
(930)
Build out of Amsterdam site
(1,816)
(502)
Acquisition of licenses, patents and other rights
(2,214)
(996)
Total investments
$
(4,606)
$
(2,428)
Net cash generated from financing activities
During the six months ended June 30, 2020, we received $3.5 million from the exercise of options to purchase ordinary shares in relation to our share incentive plans compared to $2.7 million in the same period 2019.
Funding requirements
We believe our cash and cash equivalents as of June 30, 2020 will enable us to fund our operating expenses including our debt repayment obligations as they become due and capital expenditure requirements into 2022. The $450 million upfront payment we expect to receive on the closing of the CSL Behring Agreement would provide us with additional funding into the second half of 2024. Our future capital requirements will depend on many factors, including but not limited to:
● the closing of our collaboration and license transaction with CSL Behring as well as achieving milestones and royalties as defined in the CSL Behring Agreement;
● the cost and timing of future commercialization activities, including product manufacturing, marketing, sales and distribution of any of our product candidates for which we receive marketing approval in the future;
● the amount and timing of revenue, if any, we receive from commercial sales of any product candidates for which we, or our collaboration partner, receives marketing approval in the future;
● the scope, timing, results and costs of our current and planned clinical trials, including those for etranacogene dezaparvovec in hemophilia B and AMT-130 in Huntington’s disease;
● the scope, timing, results and costs of preclinical development and laboratory testing of our additional product candidates;
● the need for additional resources and related recruitment costs to support the preclinical and clinical development of our product candidates;
● the need for any additional tests, studies, or trials beyond those originally anticipated to confirm the safety or efficacy of our product candidates and technologies;
● the cost, timing and outcome of regulatory reviews associated with our product candidates;
● our ability to enter into collaboration arrangements in the future;
● the costs and timing of preparing, filing, expanding, acquiring, licensing, maintaining, enforcing and prosecuting patents and patent applications, as well as defending any intellectual property-related claims;
● the repayments of the principal amount of our venture debt loan with Hercules, which will contractually start in January 2022 and will run through June 2023;
● the extent to which we acquire or in-license other businesses, products, product candidates or technologies;
● the costs associated with maintaining quality compliance and optimizing our manufacturing processes, including the operating costs associated with our Lexington, Massachusetts manufacturing facility;
● the costs associated with increasing the scale and capacity of our manufacturing capabilities; and
● the costs associated in preparing for the Biologics License Application (“BLA”) submission of etranacogene dezaparvovec, including process validation, inspection readiness and other regulatory expenses in the event that our collaboration and license agreement with CSL Behring would not close.
36
Table of Contents
Contractual obligations and commitments
The table below sets forth our contractual obligations and commercial commitments as of June 30, 2020, that are expected to have an impact on liquidity and cash flows in future periods.
Less than 1
Between 1
Between 2
year
and 2 years
and 5 years
Over 5 years
Total
(in thousands)
Debt obligations (including $9.0 million interest payments)
$
3,141
$
14,076
$
26,770
$
—
$
43,987
Operating lease obligations
5,591
5,485
17,744
31,253
60,073
Total
$
8,732
$
19,561
$
44,514
$
31,253
$
104,060
We also have obligations to make future payments to third parties that become due and payable on the achievement of certain development, regulatory and commercial milestones (such as the start of a clinical trial, filing of a Biologics License Application, approval by the FDA or product launch). We have not included these commitments on our balance sheet or in the table above because the achievement and timing of these milestones is not fixed and determinable. We will also have obligations to make future payments that become due and payable if we collect the upfront payment or milestone payments from CSL Behring. We have not included these commitments on our balance sheet or in the table above because these payments only become due and payable upon the closing of the transaction with CSL Behring.
We enter into contracts in the normal course of business with clinical research organizations (“CROs”) for preclinical research studies and clinical trials, research supplies and other services and products for operating purposes. These contracts generally provide for termination on notice, and therefore are cancelable contracts and not included in the table of contractual obligations and commitments.
Off-Balance Sheet Arrangements
As of June 30, 2020, we did not have any off-balance sheet arrangements as defined in Item 303(a)(4) of Regulation S-K.
37
Table of Contents
Text extracted from the filing as submitted to EDGAR. Formatting, tables and exhibits are simplified for reading; the original document is authoritative for anything you rely on.