Replimune Group, Inc. 10-Q

Item 1. Financial Statements. REPLIMUNE GROUP, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (Amounts in thousands, except share and per share amounts) (Unaudited) December 31, 2022 March 31, 2022 Assets Current assets: Cash and cash equivalents $ 206,667 $ 105,948 Short-term investments 409,707 289,707 Research and development incentives receivable 1,996 3,055 Prepaid expenses and other current assets 5,591 5,267 Total current assets 623,961 403,977 Property, plant and equipment, net 7,679 7,933 Restricted cash 1,636 1,636 Right-to-use asset - operating leases 5,002 5,552 Right-to-use asset - financing leases 40,272 42,094 Total assets $ 678,550 $ 461,192 Liabilities and Stockholders' Equity Current liabilities: Accounts payable $ 3,648 $ 3,732 Accrued expenses and other current liabilities 19,158 13,392 Operating lease liabilities, current 1,039 1,070 Financing lease liabilities, current 2,619 2,562 Total current liabilities 26,464 20,756 Operating lease liabilities, non-current 4,265 4,801 Financing lease liabilities, non-current 24,086 24,406 Long term debt, net of discount $ 28,390 $ — Total liabilities $ 83,205 $ 49,963 Commitments and contingencies (Note 13) Stockholders' equity Common stock, $ 0.001 par value; 150,000,000 shares authorized as of December 31, 2022 and March 31, 2022; 56,632,999 and 47,338,660 shares issued and outstanding as of December 31, 2022 and March 31, 2022, respectively 57 47 Additional paid-in capital 1,027,798 723,359 Accumulated deficit ( 436,249 ) ( 311,204 ) Accumulated other comprehensive income (loss) 3,739 ( 973 ) Total stockholders' equity 595,345 411,229 Total liabilities and stockholders' equity $ 678,550 $ 461,192 The accompanying notes are an integral part of these condensed consolidated financial statements. 3 Table of Contents REPLIMUNE GROUP, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Amounts in thousands, except share and per share amounts) (Unaudited) Three Months Ended December 31, Nine Months Ended December 31, 2022 2021 2022 2021 Operating expenses: Research and development $ 30,261 $ 19,353 $ 88,573 $ 57,809 Selling, general and administrative 11,369 10,345 35,512 28,517 Total operating expenses 41,630 29,698 124,085 86,326 Loss from operations ( 41,630 ) ( 29,698 ) ( 124,085 ) ( 86,326 ) Other income (expense): Research and development incentives 607 733 2,032 2,246 Investment income 2,675 87 4,130 259 Interest expense on finance lease liability ( 548 ) ( 555 ) ( 1,650 ) ( 1,670 ) Interest expense on debt obligations ( 941 ) — ( 941 ) — Other income (expense) 147 ( 241 ) ( 4,531 ) ( 849 ) Total other income (expense), net 1,940 24 ( 960 ) ( 14 ) Net loss $ ( 39,690 ) $ ( 29,674 ) $ ( 125,045 ) $ ( 86,340 ) Net loss per common share, basic and diluted $ ( 0.69 ) $ ( 0.57 ) $ ( 2.25 ) $ ( 1.66 ) Weighted average common shares outstanding, basic and diluted 57,857,132 52,319,877 55,618,052 52,104,548 The accompanying notes are an integral part of these condensed consolidated financial statements. 4 Table of Contents REPLIMUNE GROUP, INC. CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS (Amounts in thousands) (Unaudited) Three Months Ended December 31, Nine Months Ended December 31, 2022 2021 2022 2021 Net loss $ ( 39,690 ) $ ( 29,674 ) $ ( 125,045 ) $ ( 86,340 ) Other comprehensive loss: Foreign currency translation gain 158 161 4,225 604 Net unrealized gain (loss) on short-term investments, net of tax of $ 0 650 ( 351 ) 487 ( 391 ) Comprehensive loss $ ( 38,882 ) $ ( 29,864 ) $ ( 120,333 ) $ ( 86,127 ) The accompanying notes are an integral part of these condensed consolidated financial statements. 5 Table of Contents REPLIMUNE GROUP, INC. CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (Amounts in thousands, except share amounts) (Unaudited) Common stock Additional paid-in capital Accumulated deficit Accumulated other comprehensive loss Total stockholders’ equity Shares Amount Balances as of March 31, 2022 47,338,660 $ 47 $ 723,359 $ ( 311,204 ) $ ( 973 ) $ 411,229 Issuance of common stock through ATM sales, net of offering costs 1,686,438 2 31,035 — — 31,037 Foreign currency translation adjustment — — — — 1,737 1,737 Unrealized loss on short-term investments — — — — ( 244 ) ( 244 ) Exercise of stock options 124,028 — 1,562 — — 1,562 Vesting of RSUs 149,341 — — — — — Stock-based compensation expense — — 7,194 — — 7,194 Net loss — — — ( 42,253 ) — ( 42,253 ) Balances as of June 30, 2022 49,298,467 49 763,150 ( 353,457 ) 520 410,262 Issuance of common stock through ATM sales, net of offering costs 340,000 1 6,400 — — 6,401 Foreign currency translation adjustment — — — — 2,330 2,330 Unrealized loss on short-term investments — — — — 81 81 Exercise of stock options 88,252 — 1,108 — — 1,108 Vesting of RSUs 12,688 — — — — — Stock-based compensation expense — — 6,992 — — 6,992 Net loss — — — ( 43,102 ) — ( 43,102 ) Balances as of September 30, 2022 49,739,407 50 777,650 ( 396,559 ) 2,931 384,072 Issuance of prefunded warrants to purchase common stock 92,778 92,778 Issuance of common stock, net of issuance costs and underwriter fees 6,810,658 7 149,847 149,854 Foreign currency translation adjustment — — — — 158 158 Unrealized loss on short-term investments — — — — 650 650 Exercise of stock options 60,921 — 500 — — 500 Vesting of RSUs 22,013 — — — — — Stock-based compensation expense — — 7,023 — — 7,023 Net loss — — — ( 39,690 ) — ( 39,690 ) Balances as of December 31, 2022 56,632,999 $ 57 $ 1,027,798 $ ( 436,249 ) $ 3,739 $ 595,345 Balances as of March 31, 2021 46,566,481 $ 47 $ 692,243 $ ( 193,168 ) $ ( 394 ) $ 498,728 Foreign currency translation adjustment — — — — 224 224 Unrealized loss on short-term investments — — — — ( 40 ) ( 40 ) Exercise of stock options 163,970 — 1,173 — — 1,173 Stock-based compensation expense — — 6,250 — — 6,250 Net loss — — — ( 27,311 ) — ( 27,311 ) Balances as of June 30, 2021 46,730,451 47 699,666 ( 220,479 ) ( 210 ) 479,024 Foreign currency translation adjustment — — — — 219 219 Exercise of stock options 124,880 — 1,211 — — 1,211 Stock-based compensation expense — — 6,313 — — 6,313 Net loss — — — ( 29,355 ) — ( 29,355 ) Balances as of September 30, 2021 46,855,331 47 707,190 ( 249,834 ) 9 457,412 Foreign currency translation adjustment — — — — 161 161 Unrealized loss on short-term investments — — — — ( 351 ) ( 351 ) Exercise of stock options 350,985 — 4,043 — — 4,043 Stock-based compensation expense — — 5,918 — — 5,918 Net loss — — — ( 29,674 ) — ( 29,674 ) Balances as of December 31, 2021 47,206,316 $ 47 $ 717,151 $ ( 279,508 ) $ ( 181 ) $ 437,509 The accompanying notes are an integral part of these condensed consolidated financial statements. 6 Table of Contents REPLIMUNE GROUP, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Amounts in thousands) (Unaudited) Nine Months Ended December 31, 2022 2021 Cash flows from operating activities: Net loss $ ( 125,045 ) $ ( 86,340 ) Adjustments to reconcile net loss to net cash used in operating activities: Stock-based compensation expense 21,209 18,481 Depreciation 1,919 1,598 Noncash interest expense 235 — Net amortization of premiums and discounts on short-term investments ( 1,782 ) 1,792 Changes in operating assets and liabilities: Research and development incentives receivable 812 700 Prepaid expenses and other current assets ( 396 ) ( 934 ) Operating lease, right-of-use-asset 382 ( 29 ) Finance lease, right-of-use-asset 1,821 1,821 Accounts payable 357 1,193 Accrued expenses and other current liabilities 5,625 2,047 Operating lease liabilities ( 391 ) 48 Net cash used in operating activities ( 95,254 ) ( 59,623 ) Cash flows from investing activities: Purchases of property, plant and equipment ( 2,019 ) ( 1,184 ) Purchase of short-term investments ( 433,911 ) ( 192,546 ) Proceeds from sales and maturities of short-term investments 316,180 196,250 Net cash used in investing activities ( 119,750 ) 2,520 Cash flows from financing activities: Proceeds from issuance of common stock, net of underwriting fees and discounts 150,102 — Proceeds from issuance of prefunded warrants to purchase common stock, net of underwriting fees and discounts 92,778 — Proceeds from issuance of common stock through ATM sales, net of offering costs 37,438 — Proceeds from long-term debt 30,000 — Payment of debt issuance costs ( 1,846 ) — Principal payment of finance lease obligation ( 262 ) ( 188 ) Proceeds from exercise of stock options 3,170 6,427 Net cash provided by financing activities 311,380 6,239 Effect of exchange rate changes on cash, cash equivalents and restricted cash 4,343 621 Net decrease in cash, cash equivalents and restricted cash 100,719 ( 50,243 ) Cash, cash equivalents and restricted cash at beginning of period 107,584 184,154 Cash, cash equivalents and restricted cash at end of period $ 208,303 $ 133,911 Supplemental disclosure of non-cash investing and financing activities: Common stock issuance costs included in accrued expenses 249 — Purchases of property and equipment included in accounts payable 19 491 Lease assets obtained in exchange for new operating lease liabilities — 365 The accompanying notes are an integral part of these condensed consolidated financial statements. 7 Table of Contents REPLIMUNE GROUP, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Dollars in thousands, except share and per share amounts) (Unaudited) 1. Nature of the business Replimune Group, Inc. (the “Company”) is a clinical-stage biotechnology company committed to applying its leading expertise in the field of oncolytic immunotherapy to transform the lives of cancer patients through its novel tumor-directed oncolytic immunotherapies. The Company's proprietary tumor-directed oncolytic immunotherapy product candidates are designed and intended to maximally activate the immune system against cancer. Replimune Group, Inc., whose predecessor was founded in 2015, is the parent company of its wholly owned, direct and indirect subsidiaries: Replimune Limited (“Replimune UK”); Replimune, Inc. (“Replimune US”); Replimune Securities Corporation; and Replimune (Ireland) Limited. The Company is subject to risks and uncertainties common to early-stage companies in the biotechnology industry, including, but not limited to, development by competitors of new technological innovations, dependence on key personnel, protection of proprietary technology, third-party intellectual property, compliance with government regulations and the ability to secure additional capital to fund operations. Product candidates currently under development will require significant additional research and development efforts, including preclinical and clinical testing and regulatory approval, prior to commercialization. These efforts require significant amounts of additional capital, adequate personnel and infrastructure and extensive compliance and reporting capabilities. Even if the Company’s product development efforts are successful, it is uncertain when, if ever, the Company will realize significant revenue from product sales. Basis of presentation The accompanying consolidated financial statements have been prepared on the basis of continuity of operations, realization of assets and the satisfaction of liabilities and commitments in the ordinary course of business. The Company has incurred recurring losses since its inception, including net losses of $ 39.7 million and $ 29.7 million for the three months ended December 31, 2022 and 2021, respectively and net losses of $ 125.0 million and $ 86.3 million for the nine months ended December 31, 2022 and 2021, respectively. In addition, as of December 31, 2022, the Company had an accumulated deficit of $ 436.2 million. The Company expects to continue to generate operating losses for the foreseeable future. As of the issuance date of these consolidated financial statements, the Company expects that its cash and cash equivalents and short-term investments will be sufficient to fund its operating expenses and capital expenditure requirements through at least 12 months from the issuance of these consolidated financial statements. Impact of the COVID-19 coronavirus In December 2019, a novel strain of coronavirus, which causes the disease known as COVID-19, was reported to have surfaced in Wuhan, China. Since then, COVID-19 coronavirus has spread globally. In March 2020, the World Health Organization declared the COVID-19 outbreak a pandemic and the U.S. government imposed travel restrictions on travel between the United States, Europe and certain other countries. The impact of this pandemic has been, and may continue to be, extensive in many aspects of society, which has resulted, and may continue to result, in significant disruptions to the global economy as well as businesses and capital markets around the world. The Company is continuing to generally monitor the spread of COVID-19 and, throughout the pandemic, has implemented measures designed to comply with applicable federal, state and local guidelines, as well as care for the Company's employee's health and well-being. The Company will continue to examine its protocols as the pandemic and health guidance evolves. The COVID-19 pandemic continues to affect the United States and global economies and has affected and may continue to affect the Company's operations and those of third parties on which it relies, including by causing disruptions in our raw material and supply of other materials, the manufacturing of its product candidates and its developing commercialization processes. However, the extent of these delays is currently unknown and has and will likely continue to vary. In addition, the Company may incur unforeseen costs as a result of disruptions in raw material supplies, clinical product supplies, and preclinical studies or clinical trial delays. The full extent to which the COVID-19 pandemic will directly or indirectly impact the Company's business, results of operations and financial condition will depend on future developments that are highly uncertain and cannot be accurately predicted, including new information that may emerge concerning COVID-19, the actions taken in an effort to contain it or to potentially treat or continue to vaccinate against COVID-19 and the economic impact on local, regional, national and international markets. The Company continues to monitor this situation and the possible effects on its financial condition, liquidity, operations, suppliers, supplies, industry and workforce. 8 Table of Contents 2. Summary of significant accounting policies Principles of consolidation The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP") and include the accounts of the Company and its direct and indirect wholly owned subsidiaries, Replimune UK, Replimune US, Replimune Securities Corporation and Replimune (Ireland) Limited after elimination of all intercompany accounts and transactions. Use of estimates The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of expenses during the reporting periods. Significant estimates and assumptions reflected in these consolidated financial statements include, but are not limited to, the accrual for research and development expenses and the valuation of stock-based awards. The Company bases its estimates on historical experience, known trends and other market-specific or other relevant factors that it believes to be reasonable under the circumstances. The full extent to which the COVID-19 pandemic will directly or indirectly impact the Company's business, results of operations and financial condition, including, expenses, research and development costs and employee-related amounts, will depend on future developments that are highly uncertain, including as a result of new information that may emerge concerning COVID-19 and the actions taken to contain it or treat COVID-19. The Company has made estimates of the impact of COVID-19 within the Company's financial statements and there may be changes to those estimates in future periods. On an ongoing basis, management evaluates its estimates in light of reasonable changes in circumstances, facts and experience. Changes in estimates are recorded in the period in which they become known. Actual results could differ from those estimates or assumptions. Unaudited interim financial information The accompanying consolidated balance sheet as of December 31, 2022, the consolidated statements of operations, of comprehensive loss and of stockholders’ equity for the three and nine months ended December 31, 2022 and 2021 and the consolidated statements of cash flows for the nine months ended December 31, 2022 and 2021 are unaudited. The unaudited interim consolidated financial statements have been prepared on the same basis as the audited annual consolidated financial statements and, in the opinion of management, reflect all adjustments, which include only normal recurring adjustments, necessary for the fair presentation of the Company’s financial position as of December 31, 2022 and the results of its operations for the three and nine months ended December 31, 2022 and 2021 and its cash flows for the nine months ended December 31, 2022 and 2021. The financial data and other information disclosed in these consolidated notes related to the three and nine months ended December 31, 2022 and 2021 are unaudited. The results for the three and nine months ended December 31, 2022 are not necessarily indicative of results to be expected for the year ending March 31, 2023, any other interim periods or any future year or period. The financial information included herein should be read in conjunction with the financial statements and notes in the Company's Annual Report on Form 10-K for the year ended March 31, 2022, which was filed with the Securities and Exchange Commission on May 19, 2022 (the "Annual Report"). During the three and nine months ended December 31, 2022, there have been no changes to the Company’s significant accounting policies as described in the Annual Report, except as described below. Recently adopted accounting pronouncements In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments- Credit Losses (Topic 326). The standard changes how entities will measure credit losses for most financial assets and certain other instruments that are not measured at fair value through net income. Financial assets measured at amortized cost will be presented at the net amount expected to be collected by using an allowance for credit losses. The Company adopted ASU 2016-13 as of April 1, 2022. The adoption of ASU 2016-13 did not have a material impact on the Company's consolidated financial statements. 3. Fair value of financial assets and liabilities 9 Table of Contents The following tables present information about the Company’s financial assets and liabilities measured at fair value on a recurring basis: Fair Value Measurements as of December 31, 2022 Using: Level 1 Level 2 Level 3 Total Assets Money market funds $ — $ 174,237 $ — $ 174,237 US Government Agency bonds — 140,840 — 140,840 US Treasury bonds — 268,867 — 268,867 $ — $ 583,944 $ — $ 583,944 Fair Value Measurements as of March 31, 2022 Using: Level 1 Level 2 Level 3 Total Assets Money market funds $ — $ 75,117 $ — $ 75,117 US Government Agency bonds — 26,688 — 26,688 US Treasury bonds — 263,019 — 263,019 $ — $ 364,824 $ — $ 364,824 The underlying securities in the money market funds held by the Company are all government backed securities. During the three and nine months ended December 31, 2022 and 2021, there were no transfers between levels. Valuation of cash equivalents and short-term investments Money market funds, U.S. Government Agency bonds and U.S. Treasury bonds were valued by the Company using quoted prices in active markets for similar securities, which represent a Level 2 measurement within the fair value hierarchy. Cash equivalents consisted of money market funds at December 31, 2022 and March 31, 2022. 4. Short-term investments As of December 31, 2022 and March 31, 2022, the Company's available-for-sale investments by type consisted of the following: December 31, 2022 Amortized cost Gross unrealized gains Gross unrealized losses Credit Losses Fair value US Government agency bonds $ 141,109 $ 46 $ ( 315 ) $ — $ 140,840 US Treasury bonds 269,393 18 ( 544 ) — 268,867 Total $ 410,502 $ 64 $ ( 859 ) $ — $ 409,707 March 31, 2022 Amortized cost Gross unrealized gains Gross unrealized losses Credit Losses Fair value US Government agency bonds 26,827 — ( 139 ) $ — 26,688 US Treasury bonds 264,162 — ( 1,143 ) — 263,019 Total $ 290,989 $ — $ ( 1,282 ) $ — $ 289,707 As of December 31, 2022, available-for-sale securities consisted of investments that mature within one year, with the exception of certain U.S. Government agency bonds which have maturities between one and two years and an aggregate fair value of $ 24.0 million. As of March 31, 2022, available-for-sale securities consisted of investments that mature within one year, 10 Table of Contents with the exception of certain U.S. Government agency bonds and U.S. Treasury bonds which had maturities between one and two years and an aggregate fair value of $ 7.6 million. 5. Property, plant and equipment, net Property, plant and equipment, net consisted of the following: December 31, 2022 March 31, 2022 Office equipment $ 1,113 $ 937 Computer equipment 1,899 1,667 Plant and laboratory equipment 9,042 7,720 Leasehold improvements 1,706 785 Construction in progress 633 1,619 Total property, plant and equipment 14,393 12,728 Less: Accumulated depreciation ( 6,714 ) ( 4,795 ) Property, plant and equipment, net $ 7,679 $ 7,933 Depreciation expense was $ 682 and $ 1,919 for the three and nine months ended December 31, 2022 and $ 548 and $ 1,598 for the three and nine months ended December 31, 2021, respectively. Depreciation expense is recorded within research and development and selling, general and administrative expenses in the consolidated statement of operations. 6. Accrued expenses and other current liabilities Accrued expenses and other current liabilities consisted of the following: December 31, 2022 March 31, 2022 Accrued research and development costs $ 9,999 $ 5,882 Accrued compensation and benefits costs 7,339 5,569 Accrued professional fees 674 621 Other 1,146 1,320 Total accrued expenses and other current liabilities $ 19,158 $ 13,392 7 Debt On October 6, 2022, the Company entered into a Loan and Security Agreement (the “Loan Agreement”), with Hercules Capital, Inc., as administrative agent, collateral agent and as a lender (“Hercules”). Pursuant to the Loan Agreement, the Company can borrow term loans in an aggregate maximum principal amount of up to $ 200.0 million under multiple tranches (the “Term Loan Facility”). Under the Loan Agreement, the Company borrowed an initial amount of $ 30.0 million on the Closing Date, and at the Company's sole option, can draw down an additional $ 30.0 million on or prior to September 30, 2023, as well as additional term loan advances in an aggregate principal amount of up to $ 115.0 million during the term of the Term Loan Facility subject to achievement of specified performance milestones, and two additional term loan advances up to an aggregate principal amount of $ 25.0 million subject to certain terms and conditions, on or prior to the end of the interest-only period. The Company intends to use the proceeds of the Term Loan Facility for working capital and general corporate purposes. The Term Loan Facility will mature on October 1, 2027 (the “Maturity Date”). The outstanding principal balance of the Term Loan Facility bears interest payable in cash at a floating rate per annum equal to the greater of (i) 7.25 % and (ii) the sum of the Prime Rate (which is capped at 7.25 %) and 1.75 %. Accrued interest is payable monthly following the funding of each term loan advance. In addition, the principal balance of the Term Loan Facility will bear “payment-in-kind” interest at the rate of 1.50 % (“PIK Interest”), which PIK Interest will be added to the outstanding principal balance of the Term Loan Facility on each interest payment date. Borrowings under the Loan Agreement are repayable in monthly interest-only payments through September 2026. After the interest-only payment period, borrowings under the Loan Agreement are repayable in equal monthly payments of principal and accrued interest until October 2027. At the Company's option, the Company may prepay all or a portion of the outstanding borrowings, subject to a prepayment fee of 3.0 % of the principal amount if prepayment occurs during the 12 11 Table of Contents months following the Closing Date, 2.0 % after 12 months following the Closing Date but prior to 36 months following the Closing Date, and 1.0 % thereafter. The Loan Agreement contains customary facility fees, events of default and representations, warranties and affirmative and negative covenants, including a financial covenant requiring us to maintain certain levels of cash in accounts subject to a control agreement in favor of the Agent (the “Unrestricted Cash”) at all times commencing on January 1, 2024. In addition, the Loan Agreement also contains a financial covenant that beginning on the later of (i) July 1, 2024 and (ii) the date on which the aggregate outstanding principal amount of the Term Loan Facility is equal to or greater than $ 100.0 million, the Company is required to satisfy one of the following requirements: (1) achieve a minimum amount of trailing three-month net product revenue tested on a monthly basis, (2) maintain a market capitalization in excess of $ 1.2 billion and Unrestricted Cash in an amount no less than 50 % of the outstanding amount under the Term Loan Facility, or (3) maintain Unrestricted Cash in an amount no less than 85 % of the outstanding amount under the Term Loan Facility. The Company paid a $ 0.5 million facility charge and incurred debt issuance costs of $ 1.5 million upon closing of the Loan Agreement. The Loan Agreement also provides for a final payment, payable upon maturity or the repayment of the obligations in full or in part (on a pro rata basis), equal to 4.95 % of the aggregate principal amount of Term Loans advanced to the Borrower and repaid on such date, which is being accrued on the Company's consolidated balance sheet. As of December 31, 2022, the amount accrued for the final payment is $ 0.1 million. Unamortized debt issuance costs are recorded as a reduction of the carrying amount on the term loan and amortized as interest expense using the effective-interest method. In addition, unamortized deferred financing costs of $ 0.3 million were recorded in other assets as of December 31, 2022 related to the Company's right to borrow additional amounts from Hercules in the future and amortized to interest expense over the relevant draw period on a straight-line basis. Interest expense for the three and nine months ended December 31, 2022 was $ 0.9 million. The summary of obligations under the term loan as of December 31, 2022 consisted of the following (in thousands): December 31, 2022 Principal loan balance $ 30,109 Facility charge and diligence fee ( 328 ) Unamortized issuance costs ( 1,465 ) Accumulated end of term fee 74 Long term debt, net $ 28,390 The annual principal payments due under the Loan Agreement as of December 31, 2022 were as follows: December 31, 2022 2023 (remaining 3 months) — 2024 — 2025 — 2026 — 2027 13,438 Thereafter 18,701 Total $ 32,139 The table of future payments of long-term debt excludes the end of term charge of $ 1.5 million, which is due upon the maturity of the loan 8 Stockholders’ equity Common stock 12 Table of Contents As of December 31, 2022 and March 31, 2022, the Company’s certificate of incorporation, as amended and restated, authorized the Company to issue up to 150,000,000 shares of common stock, par value $ 0.001 per share. The Company had reserved for common stock for the exercise of outstanding stock options and the vesting of restricted share units, the number of shares remaining available for grant under the Company’s 2018 Omnibus Incentive Compensation Plan and the Company’s Employee Stock Purchase Plan (see Note 8) and the exercise of the outstanding warrants to purchase shares of common stock as follows: December 31, 2022 March 31, 2022 Stock options, issued and outstanding 7,510,458 6,514,334 Restricted stock units 1,353,745 826,213 Stock options and restricted stock units, future issuance 2,194,816 1,933,300 Employee stock purchase plan, available for future grants 2,076,603 1,550,375 Pre-IPO warrants to purchase common stock 497,344 497,344 Pre-funded warrants 9,484,238 5,284,238 Total shares of common stock reserved for future issuance 23,117,204 16,605,804 Undesignated preferred stock As of December 31, 2022, the Company’s certificate of incorporation, as amended and restated, authorized the Company to issue up to 10,000,000 shares of undesignated preferred stock, par value $ 0.001 per share. There were no undesignated preferred shares issued or outstanding as of December 31, 2022. ATM program On August 11, 2020, the Company and the SVB Leerink LLC (the "Agent") entered into a sales agreement, which was subsequently amended on October 21, 2020 (as amended, the “2020 Sales Agreement”), pursuant to which the Company could sell, from time to time, at its option, up to an aggregate of $ 62.5 million of shares of the Company’s common stock, $ 0.001 par value per share, through the Agent, as the Company’s sales agent. During the nine months ended December 31, 2022, the Company settled transactions that occurred pursuant to the 2020 Sales Agreement, whereby the Company issued and sold an aggregate of 1,686,438 shares of its common stock, resulting in gross proceeds of $ 32.0 million, before deducting fees of $ 1.0 million. The Company did no t issue or sell any shares under the 2020 Sales Agreement during the nine months ended December 31, 2021. On June 23, 2022, the 2020 Sales Agreement was terminated by the execution by the Company and the Agent of a new sales agreement (the “2022 Sales Agreement”). Under the 2022 Sales Agreement, the Company may sell, from time to time, at its option, up to an aggregate of $ 100.0 million of shares of the Company’s common stock, $ 0.001 par value per share (the “Shares”), through the Agent, as the Company’s sales agent. Any Shares to be offered and sold under the 2022 Sales Agreement will be issued and sold (i) by methods deemed to be an “at the market offering” (“ATM”) as defined in Rule 415(a)(4) promulgated under the Securities Act of 1933, as amended, or if authorized by the Company, in negotiated transactions or block trades, and (ii) pursuant to a registration statement on Form S-3 filed by the Company with the Securities and Exchange Commission on June 23, 2022 for an offering of up to $ 400.0 million of various securities, including shares of the Company’s common stock, preferred stock, debt securities, warrants and/or units for sale to the public in one or more public offerings. Subject to the terms of the 2022 Sales Agreement, the Agent will use reasonable efforts to sell the Shares from time to time, based upon the Company’s instructions (including any price, time or size limits or other customary parameters or conditions the Company may impose). The Company will pay the Agent a commission of up to 3.0 % of the gross proceeds from the sale of the Shares. The Company has also agreed to provide the Agent with customary indemnification rights. During the nine months ended December 31, 2022, pursuant to the 2022 Sales Agreement, the Company issued and sold an aggregate of 340,000 shares of its common stock, resulting in gross proceeds of $ 6.7 million, before deducting fees of $ 0.3 million. The Company cannot provide any assurances that it will issue any additional Shares pursuant to the 2022 Sales Agreement. 13 Table of Contents The Company did no t issue or sell any shares under the 2020 Sales Agreement or the 2022 Sales Agreement during the three and nine months ended December 31, 2022. Equity offerings In November 2019, the Company completed a public offering of (a) 4,516,561 shares of the Company's common stock at a public offering price of $ 13.61 per share, and (b) pre-funded warrants to purchase 2,200,000 shares of the Company's common stock at a public offering price of $ 13.6099 per warrant. The Company received aggregate net proceeds of approximately $ 85,598 after deducting underwriting discounts, commissions and other offering expenses payable by the Company of approximately $ 5,814 . In June 2020, the Company completed a public offering of (a) 3,478,261 shares of the Company’s common stock (the “June 2020 Shares”), inclusive of the June 2020 Underwriters fully exercised 30-day option to purchase 652,173 shares of the Company's common stock at a public offering price of $ 23.00 per share, and (b) pre-funded warrants to purchase 1,521,738 shares of the Company’s common stock at a public offering price of $ 22.9999 per warrant. The Company received aggregate net proceeds of approximately $ 107,782 after deducting underwriting discounts, commissions and other offering expenses payable by the Company of approximately $ 7,217 . In October 2020, the Company completed a public offering of (a) 5,625,000 shares of the Company’s common stock, inclusive of the underwriters 30-day option to purchase up to an additional 937,500 shares of the Company’s common stock, at a public offering price of $ 40.00 per share and (b) pre-funded warrants to purchase 1,562,500 shares of the Company’s common stock at a public offering price of $ 39.9999 per warrant. The Company received aggregate net proceeds of approximately $ 269,975 after deducting underwriting discounts, commissions and other offering expenses payable by the Company of approximately $ 17,525 . In December 2022, the Company completed a public offering of (a) 6,810,658 shares of the Company’s common stock, inclusive of the underwriters 30-day option to purchase up to an additional 1,436,172 shares of the Company’s common stock, at a public offering price of $ 23.50 per share and (b) pre-funded warrants to purchase 4,200,000 shares of the Company’s common stock at a public offering price of $ 23.4999 per warrant. The Company received aggregate net proceeds of approximately $ 242,631 after deducting underwriting discounts, commissions and other offering expenses payable by the Company of approximately $ 16,119 . 9 Pre-funded Warrants The pre-funded warrants described above are exercisable at any time after the date of issuance. Unless otherwise modified by a holder of a pre-funded warrant, no holder may exercise a pre-funded warrant if such holder, together with its affiliates, would beneficially own more than 9.99 % of the number of shares of the Company’s common stock outstanding immediately after giving effect to such exercise. A holder of a pre-funded warrant may increase or decrease this percentage up to 19.99 % by providing at least 61 days’ prior notice to the Company. The 9,484,238 shares of the Company's common stock underlying the above described pre-funded warrants, are not included in the number of issued and outstanding shares of the Company’s common stock outstanding as reported on the consolidated balance sheet, though they are included in the Company's annual pool increase calculation as well as the weighted average outstanding common stock in the calculation of basic and diluted net loss per share, as noted below in Note 10. As of December 31, 2022, no pre-funded warrants had been exercised. 10 Stock-based compensation Stock-based compensation expense Stock-based compensation expense was classified in the consolidated statements of operations as follows: Three Months Ended December 31, Nine Months Ended December 31, 2022 2021 2022 2021 Research and development $ 2,600 $ 1,829 $ 7,743 $ 6,514 Selling, general and administrative 4,423 4,089 13,466 11,967 $ 7,023 $ 5,918 $ 21,209 $ 18,481 14 Table of Contents The following table summarizes stock-based compensation expense by award type for the three and nine months ended December 31, 2022 and 2021: Three Months Ended December 31, Nine Months Ended December 31, 2022 2021 2022 2021 Stock options $ 4,811 $ 4,517 $ 14,815 $ 14,785 Restricted stock units 2,212 1,401 6,394 3,696 $ 7,023 $ 5,918 $ 21,209 $ 18,481 2015 Enterprise Mana gement Incentive Share Option Plan The 2015 Enterprise Management Incentive Share Option Plan of Replimune UK (the “2015 Plan”) provided for Replimune UK to grant incentive stock options, non-statutory stock options, stock awards, stock units, stock appreciation rights and other stock-based awards. Incentive stock options were granted under the 2015 Plan only to the Company’s employees, including officers and directors who were also employees. Non-statutory stock options were granted under the 2015 Plan to employees, members of the board of directors, outside advisors and consultants of the Company. 2017 Equity Compensation Plan In July 2017, in conjunction with reorganization by Replimune Limited, pursuant to which each shareholder thereof exchanged their outstanding shares in Replimune Limited for shares in Replimune Group, Inc., on a one -for-one basis (the "Reorganization"), the 2015 Plan was terminated, and all awards were cancelled with replacement awards issued under the 2017 Equity Compensation Plan (the “2017 Plan”). Subsequent to the Reorganization, no additional grants have been or will be made under the 2015 Plan and any outstanding awards under the 2015 Plan have continued, and will continue with their original terms. The Company concluded that the cancellation of the 2015 Plan and issuance of replacement awards under the 2017 Plan was a modification with no change in the material rights and preferences and therefore no recorded change in the fair value of each respective award. The Company’s 2017 Plan provides for the Company to grant incentive stock options or non-statutory stock options, stock awards, stock units, stock appreciation rights and other stock-based awards. Incentive stock options were granted under the 2017 Plan only to the Company’s employees, including officers and directors who were also employees. Restricted stock awards and non-statutory stock options were granted under the 2017 Plan to employees, officers, members of the board of directors, advisors and consultants of the Company. The maximum number of common shares that may be issued under the 2017 Plan was 2,659,885 , of which no ne remained available for future grants as of December 31, 2022. Shares with respect to which awards have expired, terminated, surrendered or cancelled under the 2017 Plan without having been fully exercised will be available for future awards under the 2018 Plan referenced below. In addition, shares of common stock that are tendered to the Company by a participant to exercise an award are added to the number of shares of common stock available for the grant of awards. 2018 Omnibus Incentive Compensation Plan On July 9, 2018, the Company’s board of directors adopted, and the Company’s stockholders approved the 2018 Omnibus Incentive Compensation Plan (the “2018 Plan”), which became effective immediately prior to the effectiveness of the registration statement filed in connection with the Company’s initial public offering. The 2018 Plan provides for the issuance of incentive stock options, non-qualified stock options, stock awards, stock units, stock appreciation rights and other stock-based awards. The number of shares of common stock initially reserved for issuance under the 2018 Plan is 3,617,968 shares. If any options or stock appreciation rights, including outstanding options and stock appreciation rights granted under the 2017 Plan (up to 2,520,247 shares), terminate, expire, or are canceled, forfeited, exchanged, or surrendered without having been exercised, or if any stock awards, stock units or other stock-based awards, including outstanding awards granted under the 2017 Plan, are forfeited, terminated, or otherwise not paid in full in shares of common stock, the shares of the Company’s common stock subject to such grants will be available for purposes of the 2018 Plan. The number of shares reserved for issuance under the 2018 Plan will increase automatically on the first day of each April equal to 4.0 % of the total number of shares of common stock outstanding on the last trading day in the immediately preceding fiscal year, which includes for these purposes, the 5,284,238 shares issuable upon exercise of those pre-funded warrants described in Note 9 to these consolidated financial statements, or such lesser amount as determined by the Board. On April 1, 2022, the number of shares reserved for issuance under the 2018 Plan automatically increased by 2,104,915 shares pursuant to the terms of the 2018 Plan and based on total 15 Table of Contents number of shares of common stock outstanding on March 31, 2022. On April 1, 2021, the number of shares reserved for issuance under the 2018 Plan automatically increased by 2,074,028 shares pursuant to the terms of the 2018 Plan. As of December 31, 2022, 2,194,816 shares remained available for future grants under the 2018 Plan. The 2015 Plan, the 2017 Plan and the 2018 Plan are administered by the board of directors or, at the discretion of the board of directors, by a committee of the board of directors. However, the board of directors shall administer and approve all grants made to non-employee directors. The exercise prices, vesting and other restrictions are determined at the discretion of the board of directors, except that the exercise price per share of incentive stock options may not be less than 100 % of the fair market value of the common stock on the date of grant (or 110 % of fair value in the case of an award granted to employees who hold more than 10% of the total combined voting power of all classes of stock at the time of grant) and the term of stock options may not be greater than five years for an incentive stock option granted to a 10% stockholder and greater than ten years for all other options granted. Stock options awarded under both plans expire ten years after the grant date, unless the board of directors sets a shorter term. Vesting periods for the plans are determined at the discretion of the board of directors. Incentive stock options granted to employees and non-statutory options granted to employees, officers, members of the board of directors, advisors, and consultants of the Company typically vest over four years . In 2021 the board of directors initiated the award of restricted stock units ("RSUs"), under the 2018 Plan in addition to stock option awards available as part of the Company's equity incentive for employees, officers, advisors and consultants of the Company. The RSUs typically vest over four approximately equal annual installments with the first such installment occurring on a designated vesting date that is approximately on the one year anniversary of the date of grant and the subsequent installments occurring on the subsequent three annual anniversaries of the designated vesting date. Employee Stock Purchase Plan On July 9, 2018, the Company’s board of directors adopted and the Company’s stockholders approved the Employee Stock Purchase Plan (the “ESPP”), which became effective immediately prior to the effectiveness of the registration statement that was filed in connection with the Company’s IPO. The total shares of common stock initially reserved for issuance under the ESPP is 348,612 shares. In addition, as of the first trading day of each fiscal year during the term of the ESPP (excluding any extensions), an additional number of shares of the Company’s common stock equal to 1 % of the total number of shares outstanding on the last trading day in the immediately preceding fiscal year, which includes for these purposes, the 9,484,238 shares issuable upon exercise of those pre-funded warrants described in Note 9 to these consolidated financial statements, or 697,224 shares, whichever is less (or such lesser amount as determined by the Company’s board of directors) will be added to the number of shares authorized under the ESPP. In accordance with the terms of the ESPP, on April 1, 2022 and 2021, the number of shares reserved for issuance under the ESPP automatically increased by 526,228 and 518,507 shares respectively, for a total of 2,076,603 shares reserved for the ESPP. If the total number of shares of common stock to be purchased pursuant to outstanding purchase rights on any particular date exceed the number of shares then available for issuance under the ESPP, then the plan administrator will allocate the available shares pro-rata and refund any excess payroll deductions or other contributions to participants. The Company’s ESPP is not currently active. Out-of-Plan Inducement Grants In May 2021, the Company granted an equity award to a newly hired executive as a material inducement to enter into employment with the Company. The grant constitutes an "employment inducement grant" in accordance with Rule 5635(c)(4) of the Nasdaq Listing Rules and was issued outside of the 2018 Plan and each of the other stock incentive plans described above. The inducement grant included a nonqualified stock option to purchase up to 125,000 shares of the Company's common stock, as well as a restricted stock unit grant representing 88,333 shares of the Company's common stock. These stock option and restricted stock unit inducement grants have terms and conditions consistent with those set forth under the 2018 Plan and vest under the same respective vesting schedules as stock option and restricted stock unit awards granted under the 2018 Plan. The inducement grant is included in the stock option and RSU award tables below. In December 2022, the Company granted an equity award to a newly hired executive as a material inducement to enter into employment with the Company. The grant constitutes an "employment inducement grant" in accordance with Rule 5635(c)(4) of the Nasdaq Listing Rules and was issued outside of the 2018 Plan and each of the other stock incentive plans described above. The inducement grant included a nonqualified stock option to purchase up to 82,500 shares of the Company's common stock, as well as a restricted stock unit grant representing 55,000 shares of the Company's common stock. These stock option and restricted stock unit inducement grants have terms and conditions consistent with those set forth under the 2018 Plan and vest under the same respective vesting schedules as stock option and restricted stock unit awards granted under the 2018 Plan. The inducement grant is included in the stock option and RSU award tables below. Stock option valuation 16 Table of Contents The fair value of stock option grants is estimated using the Black-Scholes option-pricing model. As the Company has limited company-specific historical and implied volatility information, the expected stock volatility is based on a combination of Replimune volatility and the historical volatility of a publicly traded set of peer companies. For options with service-based vesting conditions, the expected term of the Company’s stock options has been determined utilizing the “simplified” method for awards that qualify as “plain-vanilla” options. The expected term of stock options granted to non-employees is equal to the contractual term of the option award. The risk-free interest rate is determined by reference to the U.S. Treasury yield curve in effect at the time of grant of the award for time periods approximately equal to the expected term of the award. Expected dividend yield is based on the fact that the Company has never paid cash dividends and does not expect to pay any cash dividends in the foreseeable future. The following table presents, on a weighted-average basis, the assumptions that the Company used to determine the grant-date fair value of stock options granted to employees and directors: Three Months Ended December 31, Nine Months Ended December 31, 2022 2021 2022 2021 Risk-free interest rate 3.93 % 1.27 % 2.78 % 1.12 % Expected term (in years) 6.1 6.0 6.0 6.0 Expected volatility 73.7 % 78.3 % 75.3 % 80.0 % Expected dividend yield 0 % 0 % 0 % 0 % Stock options The following table summarizes the Company’s stock option activity: Number of Shares Weighted Average Exercise Price Weighted Average Contractual Term (Years) Aggregate Intrinsic Value Outstanding as of March 31, 2022 6,514,334 $ 16.78 7.26 $ 30,358 Granted 1,514,524 $ 18.78 Exercised ( 273,201 ) $ 11.61 Cancelled ( 245,199 ) $ 22.75 Outstanding as of December 31, 2022 7,510,458 $ 17.17 7.12 $ 85,400 Options exercisable as of March 31, 2022 3,645,749 $ 10.85 6.31 $ 24,875 Options exercisable as of December 31, 2022 4,504,534 $ 14.07 6.14 $ 63,812 As of December 31, 2022, there was $ 39.4 million of unrecognized compensation cost related to unvested common stock options, which is expected to be recognized over a weighted average period of 2.4 years. The weighted average grant-date fair value of stock options granted during the nine months ended December 31, 2022 and 2021 was $ 12.64 and $ 22.25 , respectively. The aggregate intrinsic value of stock options exercised during the nine months ended December 31, 2022 was $ 2.3 million. Restricted stock units 17 Table of Contents A summary of the changes in the Company's RSUs during the nine months ended December 31, 2022 is as follows: Number of Restricted Shares Weighted Average Grant Date Fair Value Outstanding as of March 31, 2022 826,213 31.38 Granted 782,862 18.93 Vested ( 184,042 ) 32.38 Cancelled ( 71,288 ) 26.38 Outstanding as of December 31, 2022 1,353,745 24.30 As of December 31, 2022, there was $ 27.5 million of unrecognized compensation cost related to unvested restricted stock units, which is expected to be recognized over a weighted average period of 3.0 years. As of December 31, 2021, there was $ 21.6 million unrecognized compensation cost related to unvested restricted stock units . 11 Net loss per share Basic and diluted net loss per share attributable to common stockholders was calculated as follows: Three Months Ended December 31, Nine Months Ended December 31, 2022 2021 2022 2021 Numerator: Net loss $ ( 39,690 ) $ ( 29,674 ) $ ( 125,045 ) $ ( 86,340 ) Denominator: Weighted average common shares outstanding, basic and diluted 57,857,132 52,319,877 55,618,052 52,104,548 Net loss per share, basic and diluted $ ( 0.69 ) $ ( 0.57 ) $ ( 2.25 ) $ ( 1.66 ) The 9,484,238 shares of the Company's common stock issuable upon exercise of Pre-Funded Warrants described in Note 9 to these consolidated financial statements are included as outstanding common stock in the calculation of basic and diluted net loss per share. The Company’s potentially dilutive securities, which include stock options and warrants to purchase shares of common stock that resulted from the conversion of warrants to purchase shares of series seed preferred stock existing before the Company's IPO, have been excluded from the computation of diluted net loss per share as the effect would be to reduce the net loss per share. Therefore, the weighted average number of common shares outstanding used to calculate both basic and diluted net loss per share is the same. The Company excluded the following potential common shares, presented based on amounts outstanding at each period end, from the computation of diluted net loss per share for the periods indicated because including them would have had an anti-dilutive effect: Three and Nine Months Ended December 31, 2022 2021 Options to purchase common stock 7,510,458 6,695,387 Warrants to purchase common stock 497,344 497,344 8,007,802 7,192,731 12 Significant agreements Agreement with Bristol-Myers Squibb Company 18 Table of Contents In February 2018, the Company entered into an agreement with Bristol-Myers Squibb Company (“BMS”). Pursuant to the agreement, BMS will provide to the Company, at no cost, a compound for use in the Company’s ongoing clinical trial of RP1. Under the agreement, the Company will sponsor, fund and conduct the clinical trial in accordance with an agreed-upon protocol. BMS granted the Company a non-exclusive, non-transferrable, royalty-free license (with a right to sublicense) under its intellectual property to its compound in the clinical trial and agreed to supply its compound, at no cost to the Company, for use in the clinical trial. In January 2020, this agreement was expanded to cover an additional cohort of 125 patients with anti-PD-1 failed melanoma. Unless earlier terminated, the agreement will remain in effect until (i) the completion of the clinical trial, (ii) all related clinical trial data have been delivered to both parties and (iii) the completion of any statistical analyses and bioanalyses contemplated by the clinical trial protocol or any analysis otherwise agreed upon by the parties. The agreement may be terminated by either party (x) in the event of an uncured material breach by the other party, (y) in the event the other party is insolvent or in bankruptcy proceedings or (z) for safety reasons. Upon termination, the licenses granted to the Company to use BMS’s compound in the clinical trial will terminate. In April 2019, the Company entered into a separate agreement with BMS on terms similar to the terms set forth in the agreement described above, pursuant to which BMS will provide to the Company, at no cost, nivolumab for use in the Company’s Phase 1 clinical trial of RP2 in combination with nivolumab. Agreement with Regeneron Pharmaceuticals, Inc . In May 2018, the Company entered into an agreement with Regeneron Pharmaceuticals, Inc. (“Regeneron”). The Company and Regeneron are each independently developing compounds for the treatment of certain tumor types. Pursuant to the agreement, the Company and Regeneron will undertake one or more clinical trials using a combination of the compounds being developed by each entity. Under the agreement, each clinical trial will be conducted under terms set out in a separately agreed upon study plan that will identify the name of the sponsor and which party will manage the particular clinical trial, and include the protocol, the budget and a schedule of clinical obligations. In June 2018, under the terms of the agreement between the Company and Regeneron, the parties agreed to the first study plan. The Company and Regeneron have agreed to the protocol, budget, sample testing and clinical obligations schedule under the study plan. Development and supply costs associated with the first study plan will be split equally between the Company and Regeneron. Pursuant to the terms of the agreement, each party granted the other party a non-exclusive license under its respective intellectual property and agreed to contribute the necessary resources needed to fulfill its respective obligations, in each case, under the terms of the agreed-upon or to-be agreed upon study plans. Development costs of a particular clinical trial will be split equally between the Company and Regeneron in accordance with the agreed upon study plan. The agreement may be terminated by either party if (i) there is no active study plan for which a final study report has not been completed and the parties have not entered into a study plan for an additional clinical trial within a period of time after the delivery of the most recent final study report or (ii) in the event of a material breach. The agreement with Regeneron is accounted for under ASC 808, Collaborative Arrangements (“ASC 808”), as both parties are active participants and each party pays its own compound costs and shares equally in development costs in accordance with and up to the amount in the agreed upon first study plan. The Company will account for costs incurred as part of the study, including costs to supply compounds for use in the study, as research and development expenses within the consolidated statement of operations. The Company will recognize any amounts received from Regeneron in connection with this agreement as an offset to research and development expense within the consolidated statement of operations. Under the terms of the agreement, on a quarterly basis the Company and Regeneron true-up costs of the study and make corresponding payments to the party that incurred the majority of the costs up to the amount in the study plan or modified version thereof agreed by the Joint Development Committee established to govern the collaboration. In July 2022, Regeneron informed the Company that the costs of the study have reached the initial budget for the initial study plan of June 2018 and that Regeneron's reimbursement of CERPASS study costs to the Company have completed in the period ending June 30, 2022 in relation to the initial study budget. As a result of this notice from, and the ongoing communications with, Regeneron, the Company has not recorded any cost-sharing reimbursements from Regeneron in prepaid expenses and other current assets in the consolidated balance sheet or as an offset to research and development expense within the consolidated statement of operations since Regeneron informed the Company that Regeneron’s reimbursement of CERPASS study costs to the Company have completed. The Company does not expect any further reimbursements from Regeneron related to the initial study plan of June 2018. 19 Table of Contents During the three months ended December 31, 2022 and 2021, the Company recorded $ 0.0 million and $ 1.9 million, respectively as an offset to research and development expenses. During the nine months ended December 31, 2022 and 2021, the Company recorded $ 1.1 million and $ 4.8 million, respectively as an offset to research and development expenses. During the three and nine months ended December 31, 2022 and 2021, the Company did not make any payments to Regeneron under the terms of the agreement. During the nine months ended December 31, 2022 and 2021, the Company received payments under the terms of the agreement from Regeneron of $ 3.1 million and $ 4.3 million, respectively. As of December 31, 2022 and March 31, 2022, the Company had a balance of $ 0.0 million and $ 2.0 million of receivables from Regeneron in connection with this agreement in prepaid expenses and other current assets in the consolidated balance sheet, respectively. 13 Commitments and contingencies Leases The table below presents the lease-related assets and liabilities recorded on the consolidated balance sheet as of December 31, 2022 and 2021: Three Months Ended December 31, Nine Months Ended December 31, 2022 2021 2022 2021 Lease cost Finance lease costs: Amortization of right-to-use asset $ 607 $ 607 $ 1,821 $ 1,821 Interest on lease liabilities 548 555 1,650 1,670 Operating lease costs 252 249 763 736 Total lease cost $ 1,407 $ 1,411 $ 4,234 $ 4,227 The following table summarizes the classification of lease costs in the consolidated statement of operations for the three months ended December 31, 2022 and 2021 as follows: Three Months Ended December 31, Nine Months Ended December 31, 2022 2021 2022 2021 Finance Lease Costs Research and development $ 518 $ 518 $ 1,553 $ 1,553 Selling, general and administrative 89 89 268 268 Other income (expense) 548 555 1,650 1,670 Operating Lease Costs Research and development 103 105 316 294 Selling, general and administrative 149 144 447 442 Total lease cost $ 1,407 $ 1,411 $ 4,234 $ 4,227 The following table summarizes the maturity of the Company's lease liabilities on an undiscounted cash flow basis and a reconciliation to the operating and financing lease liabilities recognized on its balance sheet as of December 31, 2022: 20 Table of Contents December 31, 2022 Operating leases Financing lease Total 2023 (remaining three months) $ 260 $ 647 $ 907 2024 1,041 2,639 3,680 2025 1,051 2,718 3,769 2026 1,060 2,799 3,859 2027 1,028 2,883 3,911 Thereafter 2,862 38,022 40,884 Total lease payments 7,302 49,708 57,010 Less: interest 1,998 23,003 25,001 Total lease liabilities $ 5,304 $ 26,705 $ 32,009 The following table provides lease disclosure as of December 31, 2022 and March 31, 2022: December 31, 2022 March 31, 2022 Leases Right-to-use operating lease asset $ 5,002 $ 5,552 Right-to-use finance lease asset 40,272 42,094 Total lease assets $ 45,274 $ 47,646 Operating lease liabilities, current $ 1,039 $ 1,070 Finance lease liabilities, current 2,619 2,562 Operating lease liabilities, non-current 4,265 4,801 Finance lease liabilities, non-current 24,086 24,406 Total lease liabilities $ 32,009 $ 32,839 The following table provides lease disclosure for the nine months ended December 31, 2022 and 2021: Nine Months Ended December 31, 2022 2021 Other information Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from operating leases $ 717 $ 648 Operating cash flows from finance leases $ 1,651 $ 1,670 Financing cash flows from finance leases $ 262 $ 188 Right-to-use asset obtained in exchange for new operating lease liabilities $ — $ 365 Weighted-average remaining lease term - operating leases 6.9 years 7.9 years Weighted-average remaining lease term - financing leases 16.6 years 17.6 years Weighted-average discount rate - operating leases 10.0 % 10.2 % Weighted-average discount rate - financing leases 8.3 % 8.3 % The variable lease costs and short-term lease costs were insignificant for three and nine months ended December 31, 2022 and 2021. Manufacturing commitments 21 Table of Contents The Company has entered into an agreement with a contract manufacturing organization to provide clinical trial products. As of December 31, 2022 and March 31, 2022, the Company had committed to minimum payments under these arrangements totaling $ 1,144 and $ 1,951 , respectively. Indemnification agreements In the ordinary course of business, the Company may provide indemnification of varying scope and terms to vendors, lessors, business partners and other parties with respect to certain matters including, but not limited to, losses arising out of breach of such agreements or from intellectual property infringement claims made by third parties. In addition, the Company has entered into indemnification agreements with members of its executive management team and its board of directors that will require the Company, among other things, to indemnify them against certain liabilities that may arise by reason of their status or service as directors or officers. The maximum potential amount of future payments the Company could be required to make under these indemnification agreements is, in many cases, unlimited. To date, the Company has not incurred any material costs as a result of such indemnifications. The Company is not aware of any claims under indemnification arrangements, and therefore it has not accrued any liabilities related to such obligations in its consolidated financial statements as of December 31, 2022 or March 31, 2022. Legal proceedings The Company is not a party to any litigation and does not have contingency reserves established for any litigation liabilities. 14 Geographic information The Company operates in two geographic regions: the United States (Massachusetts) and the United Kingdom (Oxfordshire). Information about the Company’s long-lived assets held in different geographic regions is presented in the tables below: December 31, 2022 March 31, 2022 United States $ 6,046 $ 6,318 United Kingdom 1,633 1,615 $ 7,679 $ 7,933 22 Table of Contents