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 . 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 with a mission to reimagine the future of medicine by delivering innovative cures that transform human lives. We are advancing a pipeline of innovative gene therapies, including our clinical candidates for the treatment of Huntington’s disease and amyotrophic lateral sclerosis (“ALS”), as well as preclinical product candidates including candidates for the treatment of refractory temporal lobe epilepsy (“rTLE’) and Fabry disease. In November 2022 and February 2023, our internally developed HEMGENIX®, a gene therapy for the treatment of hemophilia B, was approved for commercialization by the United States Food and Drug Administration (“FDA”) and the European Medicines Agency (“EMA”), respectively. In June 2020, we agreed to license HEMGENIX® to CSL Behring LLC (“ CSL Behring”), which is now responsible for commercialization of HEMGENIX®. We are manufacturing HEMGENIX® for CSL Behring and are entitled to specific milestone payments and royalties on net sales. 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 Adeno-associated virus (“ 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 most versatile gene therapy manufacturing facilities.
Business developments
Below is a summary of our recent significant business developments:
Amyotrophic Lateral Sclerosis (AMT-162)
On January 31, 2023, we announced that we have entered into a global licensing agreement with Apic Bio for a one-time, intrathecally administered gene therapy for ALS caused by mutations in superoxide dismutase 1 (“SOD1”), a rapidly progressing, rare motor neuron disease that leads to loss of everyday functions and is uniformly fatal. With this agreement, we have added to our pipeline of gene therapies to treat neurological disorders. The FDA has cleared the investigational new drug application for APB-102 and has granted Orphan Drug and Fast Track designation. Mutations in the SOD1 gene of ALS account for approximately one-fifth of all inherited forms of this fatal disease. APB-102 is comprised of a recombinant AAVrh10 vector that expresses a miRNA designed to knock down the expression of SOD1 with the goal of slowing down or potentially reversing the progression of ALS in patients with SOD1 mutations.
We made an initial cash payment of $10.0 million to Apic Bio that was recognized as research and development expense.
Huntington’s disease program (AMT-130)
AMT-130 is our novel gene therapy candidate for the treatment of Huntington’s disease.
We are currently conducting a randomized, controlled and blinded Phase I/II clinical trial for AMT-130 in the U.S. The lower-dose cohort of this trial includes 10 patients, of which six patients received treatment with AMT-130 and four patients received imitation surgery. The higher-dose cohort includes 16 patients, of which 10 patients received treatment with AMT-130 and six patients received imitation surgery. Patients receiving imitation surgery have the option to cross over after 12 months if they meet the inclusion criteria for the study. We are also conducting an open-label Phase Ib/II study in the EU, which includes six patients in the lower-dose cohort and nine patients in the higher-dose cohort. All 15 patients in the EU study will receive AMT-130.
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On March 21, 2022, we announced that we completed the enrollment of all 26 patients in the first two cohorts of our Phase I/II clinical trial of AMT-130 in the U.S. In July 2022, we began crossing over patients who received the imitation surgical procedure. Three of the six control patients in the higher-dose cohort have now crossed over to treatment. Two of these three patients have received the higher dose of AMT-130.
On June 23, 2022, we announced that 10 patients in our Phase Ib/II study in the EU had been treated with AMT-130. On June 23, 2022, we announced safety and biomarker data from the 10 patients enrolled in the low-dose U.S. cohort. AMT-130 was generally well-tolerated with no serious adverse events related to AMT-130 reported in the treated patients. In the four treated patients with evaluable data, mean levels of mutant Huntingtin protein in the cerebral spinal fluid (“CSF mHTT”) declined at all timepoints compared to baseline, and decreased by 53.8% at 12 months of follow-up. In the six treated patients, measurements of neurofilament lights chain in the cerebral spinal fluid (“CSF NfL”) initially increased as expected following the AMT-130 surgical procedure and declined thereafter, nearing baseline at 12 months of follow-up.
Select research programs
In the third quarter of 2022, we initiated a Good Laboratory Practices (“GLP”) toxicology study in non-human primates for AMT-260, a gene therapy product candidate for the treatment of refractory temporal lobe epilepsy (“rTLE”).
In the third quarter of 2022, we initiated a GLP toxicology study in non-human primates for AMT-191, a gene therapy product candidate for the treatment of Fabry disease.
CSL Behring commercialization and license agreement (“CSL Behring Agreement”)
In November 2022, the FDA approved the marketing application for HEMGENIX ® in the U.S., and in February 2023 the European Medicines Agency (“EMA”) approved the marketing application for the EU.
Financial Overview
Key components of our results of operations include the following:
Three months ended March 31,
2023
2022
(in thousands)
Total revenues
$
5,325
$
1,792
Cost of contract manufacturing revenues
(2,435)
—
Research and development expenses
(60,809)
(45,003)
Selling, general and administrative expenses
(17,848)
(10,987)
Net loss
(77,227)
(46,678)
As of March 31, 2023 and December 31, 2022, we had cash and cash equivalents and investment securities of $315.3 million and $392.8 million, respectively. We had a net loss of $77.2 million in the three months ended March 31, 2023, compared to net loss of $46.7 million for the same period in 2022. As of March 31, 2023 and December 31, 2022, we had accumulated deficits of $659.2 million and $581.9 million, respectively.
We anticipate that our expenses will increase for the foreseeable future and will include costs related to:
● advancing AMT-130 for our Huntington’s disease gene therapy program into phase III clinical study;
● advancing our gene therapy programs for rTLE, SOD1-ALS and Fabry disease into Phase I/II clinical studies;
● potentially acquiring or in-licensing rights to new therapeutic targets, product candidates and technologies;
● advancing preclinical research and development for gene therapy product candidates targeting diseases other than those listed above;
● making potential future milestone payments related to the acquisition of Corlieve Therapeutics SAS (“Corlieve”), if any; and
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● continuing to invest in expanding, developing and optimizing our manufacturing capabilities and other enabling technologies, such as next-generation viral vectors, promoters and re-dosing.
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 Securities and Exchange Commission (the “SEC”) we make assumptions, judgments and estimates that can have a significant impact on our net loss and affect the reported amounts of certain assets, liabilities, revenue and expenses, and related disclosures. 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. A summary of our critical accounting policies as well as a discussion of our critical accounting estimates are presented in our Annual Report . There were no material changes to our critical accounting policies during the three months ended March 31, 2023 or reasonably possible changes of our critical accounting estimates as of March 31, 2023 that could have had a material impact on our results of operations for the three- month period ended March 31, 2023.
Cost of contract manufacturing
We entered into a development and commercial supply agreement with CSL Behring in June 2020. Since April 1, 2022, we recognize cost to manufacture HEMGENIX® under such agreement as cost of contract manufacturing.
Research and development expenses
We expense research and development (“R&D”) expenses as incurred. R&D expenses include costs which relate to our primary activities of biopharmaceutical research and development. 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 research activities for enabling technology platforms, such as next-generation vectors, promoters and re-administration of gene therapies;
● costs associated with the rendering of collaboration services as well as the continued development of etranacogene dezaparvovec (the “Product”);
● payments related to identifiable intangible assets without an alternative future use;
● payments to our licensors for milestones that have been achieved related to our product candidates, including approval of the marketing authorization application (“MAA”);
● facilities, depreciation, and other expenses, which include direct and allocated expenses for rent and maintenance of facilities, insurance, and other supplies; and
● changes in the fair value of liabilities recorded in relation to our acquisition of Corlieve.
Our R&D 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;
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● 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 the product candidates that we may develop 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 incurred 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.
Other items, net
Our other income primarily consists of payments received to subsidize our research and development efforts and income from the subleasing of our Amsterdam facility.
Our other expense primarily consists of expenses we incur in relation to our subleasing income.
Comparison of the three months ended March 31, 2023 and 2022
The following table presents a comparison of our results of operations for the three months ended March 31, 2023 and 2022.
Three months ended March 31,
2023
2022
2023 vs 2022
(in thousands)
Total revenues
$
5,325
$
1,792
$
3,533
Operating expenses:
Cost of contract manufacturing revenues
(2,435)
—
(2,435)
Research and development expenses
(60,809)
(45,003)
(15,806)
Selling, general and administrative expenses
(17,848)
(10,987)
(6,861)
Total operating expenses
(81,092)
(55,990)
(25,102)
Other income
1,811
311
1,500
Other expense
(216)
(193)
(23)
Loss from operations
(74,172)
(54,080)
(20,092)
Non-operating items, net
(4,262)
6,786
(11,048)
Loss before income tax benefit
$
(78,434)
$
(47,294)
(31,140)
Income tax benefit
1,207
616
591
Net loss
$
(77,227)
$
(46,678)
$
(30,549)
Revenue
Our revenue for the three months ended March 31, 2023 and 2022 was as follows:
Three months ended March 31,
2023
2022
2023 vs 2022
(in thousands)
Contract manufacturing revenues
$
4,937
$
—
$
4,937
Collaboration revenues
388
1,792
(1,404)
Total revenues
$
5,325
$
1,792
$
3,533
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Collaboration revenues
We entered into collaboration, research, and license agreements with Bristol-Myers Squibb (“BMS”) in 2015 which were terminated on February 21, 2023.
For the three months ended March 31, 2023, we recognized $0.4 million and nil of collaboration revenue for CSL Behring and BMS, respectively. For the three months ended March 31, 2022, we recognized $1.4 million and $0.4 million of collaboration revenue for CSL Behring and BMS, respectively.
Contract manufacturing revenues
We recognize contract manufacturing revenue related to contract manufacturing HEMGENIX® for CSL Behring. Contract manufacturing revenue is realized when earned upon sales of HEMGENIX® to CSL Behring. We recognized $4.9 million contract manufacturing revenues in the three months ended March 31, 2023, compared to nil for the same period in 2022. We did not recognize such revenues in the three months ended March 31, 2022, as we started contract manufacturing activities to supply CSL Behring with launch supplies of HEMGENIX® following their submission of a BLA and MAA in the spring of 2022 .
Cost of contract manufacturing
We incurred $2.4 million of cost of contract manufacturing related to the manufacture of the Product in the three months ended March 31, 2023, compared to nil cost of contract manufacturing in the three months ended March 31, 2022.
R&D expenses
R&D expenses for the three months ended March 31, 2023 were $60.8 million, compared to $45.0 million for the same period in 2022. Other research and development expenses are separately classified in the table below. These other expenses are not allocated as they are deployed across multiple projects under development.
Three months ended March 31,
2023
2022
2023 vs 2022
(in thousands)
Amyotrophic Lateral Sclerosis (AMT-162)
$
10,041
$
—
$
10,041
Temporal lobe epilepsy (AMT-260)
4,320
2,629
1,691
Huntington's disease (AMT-130)
3,733
5,217
(1,484)
Programs in preclinical development and platform related expenses
1,885
1,293
592
Fabry disease (AMT-191)
1,088
630
458
Etranacogene dezaparvovec (AMT-060/061)
667
418
249
Total direct research and development expenses
$
21,734
$
10,187
$
11,547
Employee and contractor-related expenses
18,703
16,164
2,539
Facility expenses
6,786
5,299
1,487
Disposables
3,906
4,533
(627)
Share-based compensation expense
4,305
4,054
251
Other expenses
4,400
2,562
1,838
Fair value changes related to contingent consideration
975
2,204
(1,229)
Total other research and development expenses
$
39,075
$
34,816
$
4,259
Total research and development expenses
$
60,809
$
45,003
$
15,806
Direct research and development expenses
Amyotrophic Lateral Sclerosis caused by mutations in SOD1 (AMT-162)
On January 31, 2023, we announced that we entered into a global licensing agreement with Apic Bio for AMT-162. We have incurred $10.0 million expenses recorded to research and development expense in relation to the
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acquisition of assets without an alternative future use during the three-month period ended March 31, 2023. If and when we complete research and development activities for AMT-162 and AMT-162 is approved in the U.S. and Europe, we will expense up to $43.0 million in milestone payments contractually owed to Apic Bio.
Temporal lobe epilepsy (AMT-260)
In the three months ended March 31, 2023 and March 31, 2022, we incurred $4.3 million and $2.6 million respectively, for the preclinical development of temporal lobe epilepsy.
Huntington disease (AMT-130)
In the three months ended March 31, 2023 and March 31, 2022, our external costs for the development of AMT-130 were primarily related to the execution of our Phase I/II clinical trial in the United States and in Europe.
Preclinical programs & platform development
In the three months ended March 31, 2023, and March 31, 2022, we incurred $1.9 million and $1.3 million of costs, respectively, primarily related to our preclinical activities associated with product candidates for various other research programs and technology innovation projects.
Fabry disease (AMT-190)
In the three months ended March 31, 2023 and March 31, 2022, we incurred $1.1 million and $0.6 million of costs, respectively, related to our preclinical activities for the treatment of Fabry disease (AMT-190).
Hemophilia B (AMT-060/061)
We have incurred external costs for our hemophilia B program related to the execution of our Phase III clinical trial and 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. CSL Behring is responsible for the clinical and regulatory activities and commercialization of the Product. However, we managed the existing trials on behalf of CSL Behring until such responsibilities were transitioned to CSL Behring in December 2022. Direct research and development expenses related to clinical development and other regulatory activities and commercialization expenses incurred in the three months ended March 31, 2023 and March 31, 2022 are presented net of reimbursements due from CSL Behring and include settlement amounts from the transition.
Other research & development expenses
● We incurred $18.7 million in personnel and contractor-related expenses in the three months ended March 31, 2023, compared to $16.2 million for the same period in 2022. The increase was primarily a result of an increase in personnel and contractor-related expenses to support our growth;
● We incurred $6.8 million in operating expenses and depreciation expenses related to our rented facilities in the three months ended March 31, 2023, compared to $5.3 million in the same period in 2022. The increase primarily related to additional sites in Lexington which commenced in May and November 2022;
● We incurred $4.4 million of other expenses for the three months ended March 31, 2023, compared to $2.6 million for the same period in 2022. The increase primarily related to contractual payments of $3.1 million we owed to a licensor upon the Europeans Medicines Agency approval of HEMGENIX® in February 2023 partially offset by a reduction in consultant-related expenses;
● We incurred $4.3 million in share-based compensation expenses in the three months ended March 31, 2023, compared to $4.1 million for the same period in 2022;
● We incurred $3.9 million in disposable costs in the three months ended March 31, 2023, compared to $4.5 million for the same period in 2022; and
● We incurred $1.0 million of expenses in the three months ended March 31, 2023 related to an increase in the fair value of contingent consideration associated with the acquisition of Corlieve, compared to $2.2 million for the same period in 2022.
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Selling, general and administrative expenses
Selling, general and administrative expenses for the three months ended March 31, 2023 were $17.8 million, compared to $11.0 million for the same period in 2022.
● We incurred $5.9 million in personnel and contractor-related expenses in the three months ended March 31, 2023, compared to $4.4 million in the same period in 2022. The increase was primarily as a result of an increase in personnel and contractor-related expenses to support our growth;
● We incurred $3.7 million in share-based compensation expenses in the three months ended March 31, 2023, compared to $2.8 million in the same period in 2022. The increase was primarily a result of an increase in awards granted, including those to newly recruited personnel as well as an increase in expense related to performance share units; and
● We incurred $3.2 million in professional fees in the three months ended March 31, 2023, compared to $1.1 million in the same period in 2022. We regularly incur accounting, audit and legal fees associated with operating as a public company. The increase from the prior period is primarily related to an increase in professional fees related to our global licensing agreement with Apic Bio.
Other items, net
We recognized $1.3 million in other income from payments received from European authorities to subsidize our research and development efforts in the Netherlands in the three months ended March 31, 2023, compared to $0.0 million for the same period in 2022.
Other items, net for the periods presented primarily related to income from the subleasing of our Amsterdam facility and expenses we incur in relation to the subleasing facility.
Other non-operating items, net
Our other non-operating items, net, for the three months ended March 31, 2023 and 2022 were as follows:
Three months ended March 31,
2023
2022
2023 vs 2022
(in thousands)
Interest income
$
1,669
$
42
$
1,627
Interest expense
(3,562)
(2,515)
(1,047)
Foreign currency (losses) / gains, net
(2,369)
8,567
(10,936)
Other non-operating gains
—
692
(692)
Total non-operating (expense) / income, net
$
(4,262)
$
6,786
$
(11,048)
We recognize interest income associated with our cash and cash equivalents and investment securities. We recognized $1.7 million in interest income in the three months ended March 31, 2023, compared to $0.0 million in the same period in the prior year. Our interest income increased by $1.7 primarily due to the interest income earned on investment securities made during the three months ended December 31, 2022.
We recognized $3.6 million in interest expense for the three months ended March 31, 2023 and $2.5 million for the three months ended March 31, 2022. Our interest expense in 2023 increased due to an increase in market interest rates.
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 recognized a net foreign currency loss, related to our borrowings from Hercules and our cash and cash equivalents and investment securities as well as loans between entities within the uniQure group, of $2.4 million during the three months ended March 31, 2023, compared to a net gain of $8.6 million during the same period in 2022.
We recognized fair value changes related to the derivative financial liability related to a contingent payment due to BMS upon the consummation of a change of control transaction in the period ended March 31, 2022 (nil in the period ended March 31, 2023). As of December 31, 2022, we derecognized the derivative financial liability.
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Income tax benefit
We recognized $1.2 million of deferred tax benefit in the three months ended March 31, 2023, and $0.6 million of deferred tax benefit for the same period in 2022.
Financial Position, Liquidity and Capital Resources
As of March 31, 2023, we had cash and cash equivalents, restricted cash and investment securities of $318.5 million. U ntil such time, if ever, as we can generate substantial cash flows from successfully commercializing our proprietary product candida tes, we expect to finance our cash needs through a combination of equity offerings, debt financings, collaborations, strategic alliances and marketing, royalty monetization financings, distribution, and licensing arrangements. We believe that our cash and cash equivalents will fund our operations into 2025 assuming the achievement of $100.0 million of first commercial sale milestone in the United States and into the first half of 2025 if the $75.0 million of first commercial sale milestone in any of the five contractually defined European countries as of or prior to July 2, 2023 under the CSL Behring Agreement. Our material cash requirements include the following contractual and other obligations:
Debt
As of March 31, 2023, we had an outstanding loan amount owed to Hercules Capital, Inc. (“Hercules”) for an aggregate principal amount of $100.0 million. Future interest payments and financing fees associated with the loan total $42.8 million, with $15.4 million payable within 12 months. We are contractually required to repay the $100.0 million in full in December 2025.
Leases
We entered into lease arrangements for facilities, including corporate, manufacturing and office space. As of March 31, 2023, we had fixed lease payment obligations of $58.8 million, with $8.1 million payable within 12 months.
Commitments related to Corlieve acquisition (nominal amounts)
In relation to the Corlieve acquisition, we entered into commitments to make payments to the former shareholders upon the achievement of certain contractual milestones. The commitments include payments related to post-acquisition services that we agreed to as part of the transaction. As of March 31, 2023, our commitment amounts include up to $43.5 million in potential milestone payments through Phase I/II development and $174.0 million in potential milestone payments associated with Phase III development and the approvals of AMT-260 in the United States and European Union. The timing of achieving these milestones and consequently the timing of payments, as well as whether the milestone will be achieved at all, is generally uncertain. These payments are owed in Euro and have been translated at the foreign exchange rate as of March 31, 2023, of $1.09/€1.00. As of March 31, 2023, we expect these obligations will become payable between 2023 and 2031. If and when due, up to 25% of the milestone payments can be settled with our ordinary shares.
Commitments related to licensors and financial advisors
We 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 BLA, approval by the FDA or product launch) or as a result of collecting payments related to our sale of the exclusive global rights to the Product to CSL Behring. We also owe payments to a financial advisor related to any payments we will collect under the CSL Behring Agreement.
The table below summarizes our consolidated cash flow data for the three months ended:
Three months ended March 31,
2023
2022
(in thousands)
Cash, cash equivalents and restricted cash at the beginning of the period
$
231,173
$
559,353
Net cash used in operating activities
(78,302)
(25,711)
Net cash generated from / (used in) investing activities
2,988
(4,880)
Net cash generated from financing activities
131
485
Foreign exchange impact
1,034
(1,168)
Cash, cash equivalents and restricted cash at the end of period
$
157,024
$
528,079
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We had previously 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, with the exception of generating income in 2021 after receiving the upfront payment upon Closing of the CSL Behring Agreement. We continue to incur losses in the current period. We recorded a net loss of $77.2 million in the three months ended March 31, 2023, compared to a net loss of $46.7 million during the same period in 2022. As of March 31, 2023, we had an accumulated deficit of $659.2 million.
Sources of liquidity
From our first institutional venture capital financing in 2006 through the current period, 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. In May 2021, we received a $462.4 million cash payment due from CSL Behring upon Closing. We have collected $55.0 million related to CSL Behring’s global regulatory submissions for etranacogene dezaparvovec in March and April 2022, and are eligible to receive additional milestone payments, as well as royalties on net sales from CSL Behring.
On March 1, 2021, we entered into a Sales Agreement with SVB Leerink LLC (“SVB Leerink”) with respect to an at the market (“ATM”) offering program, under which we may, from time to time in our sole discretion, offer and sell through SVB Leerink, acting as agent, our ordinary shares, up to an aggregate offering price of $200.0 million. We will pay SVB Leerink a commission equal to 3% of the gross proceeds of the sales price of all ordinary shares sold through it as a sales agent under the Sales Agreement. We did not issue ordinary shares under the Sales Agreement for the three months ended March 31, 2023 and March 31, 2022.
We are subject to certain covenants under our December 2021 amendment with Hercules Capital, Inc (“2021 Restated 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 2021 Restated Facility may limit our ability to obtain debt financing. The 2021 Restated Facility permits us to issue up to $500.0 million of convertible debt as well as to enter into a transaction to sell the royalties under the CSL Behring agreement subject to certain conditions .
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, royalty monetization financings, 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 $78.3 million for the three months ended March 31, 2023 and consisted of net loss of $77.2 million adjusted for non-cash items, including depreciation and amortization expense of $2.5 million, share-based compensation expense of $8.1 million, changes in the fair value of contingent consideration of $1.0 million, unrealized foreign exchange losses of $1.2 million and a change in deferred taxes of $1.2 million. Net cash generated from operating activities also included unfavorable changes in operating assets and liabilities of $12.2 million. There was a net increase in accounts receivable, prepaid expenses, and other current assets and receivables of $0.9 million. These changes also relate to a net decrease in accounts payable, accrued expenses, other liabilities, and operating leases of $10.7 million, primarily related to a decrease of $7.9 million from personnel related accruals.
Net cash used in operating activities was $25.7 million for the three months ended March 31, 2022 and consisted of a net loss of $46.7 million adjusted for non-cash items, including depreciation and amortization expense of $2.1 million, share-based compensation expense of $6.9 million, changes in the fair value of contingent
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consideration and the derivative financial liability of $1.5 million, unrealized foreign exchange gains of $7.4 million and a change in deferred taxes of $0.6 million. Net cash generated from operating activities also included favorable changes in operating assets and liabilities of $18.4 million. There was a net decrease in accounts receivable and contract asset, prepaid expenses, and other current assets and receivables of $17.2 million, primarily related to the collection of $20.0 million of the contract asset related to CSL milestones of $55.0 million in March 2022. These changes also relate to a net increase in accounts payable, accrued expenses, other liabilities, and operating leases of $1.2 million.
Net cash generated from / (used in) investing activities
In the three months ended March 31, 2023, we generated $3.0 million in our investing activities compared to using $4.9 million for the same period in 2022.
Three months ended March 31,
2023
2022
(in thousands)
Proceeds from maturity of investment securities
$
5,330
$
—
Build out of Amsterdam site
(686)
(3,740)
Build out of Lexington site
(1,656)
(318)
Acquisition of Corlieve, net of cash acquired
—
(822)
Total investments
$
2,988
$
(4,880)
During the three months ended March 31, 2023, we received $5.3 million from the repayment of investment securities (nil for three months ended March 31, 2022).
The build out of the Amsterdam site and Lexington site consumed $0.7 million and $1.7 million cash respectively during the three months ended March 31, 2023, compared to $3.7 million and $0.3 million for the same period in 2022.
We paid EUR 0.9 million ($0.9 million) to acquire remaining outstanding shares of Corlieve in February 2022 (nil in current period).
Net cash generated from financing activities
In the three months ended March 31, 2023, we generated $0.1 million from financing activities compared to $0.5 million for the same period in 2022.
Three months ended March 31,
2023
2022
(in thousands)
Cash flows from financing activities
Proceeds from issuance of shares related to employee stock option and purchase plans
$
131
$
485
Net cash generated from financing activities
$
131
$
485
During the three months ended March 31, 2023, we received $0.1 million from the exercise of options to purchase ordinary shares in relation to our share incentive plans compared to $0.5 million for the same period in 2022.
Funding requirements
Our future capital requirements will depend on many factors, including but not limited to:
● contractual milestone payments and royalties we might be owed in accordance with the CSL Behring Agreement;
● earnout payments we might owe the former shareholders of Corlieve, which are subject to the achievement of specific development and regulatory milestones;
● the scope, timing, results, and costs of our current and planned clinical trials, including those for AMT-130 in Huntington’s disease;
● the scope of any equity, debt or royalty monetization financings;
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● the extent to which we acquire or in-license other businesses, products, product candidates or technologies;
● the amount and timing of revenue, if any, we receive from manufacturing products for CSL Behring;
● 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 costs associated with maintaining quality compliance and optimizing our manufacturing processes, including the operating costs associated with our Lexington, Massachusetts manufacturing facility; and
● the costs associated with increasing the scale and capacity of our manufacturing capabilities.
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.