What changed in this filing

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Item 1. Financial Statements

2021-08-09 compared with 2021-05-05 · 137 added, 103 removed, 390 unchanged (38% of the section changed)

3 unchanged sentences

(in thousands, except per share data)

March 31, 2021

June 30, 2021

December 31, 2020

28 unchanged sentences

10,000 shares authorized, and no shares issued

and outstanding at March 31, 2021 and December 31, 2020

and outstanding at June 30, 2021 and December 31, 2020

Common stock;

$ 0.0001 par value;

100,000 shares authorized at March 31, 2021

100,000 shares authorized at June 30, 2021

and December 31, 2020;

42,555 and 37,476 shares issued and outstanding at

March 31, 2021 and December 31, 2020, respectively

June 30, 2021 and December 31, 2020, respectively

Additional paid-in capital

7 unchanged sentences

(in thousands, except per share data)

Three Months Ended March 31,

Three Months Ended June 30,

Six Months Ended June 30,

License and royalty revenue

9 unchanged sentences

Interest income from licensing

Investment income (loss)

Investment income

Interest expense

1 unchanged sentence

Loss before income taxes

Income Tax Expense

Other Comprehensive Loss

Unrealized loss on available-for-sale securities, net

Total other comprehensive loss

Income Tax Benefit (Expense)

Other Comprehensive Income (Loss)

Unrealized gain (loss) on available-for-sale securities, net

Total other comprehensive income (loss)

Comprehensive loss

5 unchanged sentences

(in thousands)

Three Months Ended March 31, 2021

Three Months Ended June 30, 2021

Comprehensive

Stockholders’

Balances at March 31, 2021

Exercise of stock options

Stock-based compensation expense

Unrealized gain on available-for-sale securities, net

Balances at June 30, 2021

Three Months Ended June 30, 2020

Comprehensive

Stockholders’

Income (Loss)

Balances at March 31, 2020

Exercise of stock options

Stock-based compensation expense

Unrealized gain on available-for-sale securities, net

Balances at June 30, 2020

Six Months Ended June 30, 2021

Comprehensive

Stockholders’

Balances at December 31, 2020

6 unchanged sentences

Unrealized loss on available-for-sale securities, net

Balances at March 31, 2021

Three Months Ended March 31, 2020

Balances at June 30, 2021

Six Months Ended June 30, 2020

Comprehensive

Stockholders’

Income (Loss)

Balances at December 31, 2019

3 unchanged sentences

Stock-based compensation expense

Unrealized loss on available-for-sale securities, net

Balances at March 31, 2020

Unrealized gain on available-for-sale securities, net

Balances at June 30, 2020

The accompanying notes are an integral part of these unaudited consolidated financial statements.

2 unchanged sentences

(in thousands)

Three Months Ended March 31,

Six Months Ended June 30,

Cash flows from operating activities

3 unchanged sentences

Provision for credit losses

Net amortization of premiums on marketable securities

Net amortization of premiums on marketable debt securities

Net realized and unrealized losses (gains) on marketable securities

15 unchanged sentences

Maturities of marketable debt securities

Sales of marketable debt securities

Sales of marketable equity securities

6 unchanged sentences

and commissions

Issuance costs for public offerings of common stock

Issuance costs for public offering of common stock

Repayments under liability related to sale of future royalties

1 unchanged sentence

Net cash provided by financing activities

Net decrease in cash and cash equivalents and restricted cash

Net increase (decrease) in cash and cash equivalents and restricted cash

Cash and cash equivalents and restricted cash

3 unchanged sentences

Additions to property and equipment through accounts payable and accrued expenses

Non-cash consideration received for licenses granted

The accompanying notes are an integral part of these unaudited consolidated financial statements.

6 unchanged sentences

In addition to its internal product development efforts, the Company also selectively licenses the NAV® Technology Platform to other leading biotechnology and pharmaceutical companies (NAV Technology Licensees).

As of March 31, 2021, the NAV Technology Platform was being applied by NAV Technology Licensees in one commercially available product, Zolgensma®, and in the preclinical and clinical development of more than 20 licensed products.

As of June 30, 2021, the NAV Technology Platform was being applied by NAV Technology Licensees in one commercially available product, Zolgensma®, and in the preclinical and clinical development of 20 licensed products.

The Company was formed in 2008 in the State of Delaware and is headquartered in Rockville, Maryland.

As of March 31, 2021, the Company had generated an accumulated deficit of $ 339.2 million since inception.

As of June 30, 2021, the Company had generated an accumulated deficit of $ 396.9 million since inception.

As the Company has incurred cumulative losses since inception, transition to recurring profitability is dependent upon achieving a level of revenues adequate to support the Company’s cost structure, which depends heavily on the successful development, approval and commercialization of its product candidates.

The Company may never achieve recurring profitability, and unless and until it does, the Company will continue to need to raise additional capital, to the extent possible.

As of March 31, 2021, the Company had cash, cash equivalents and marketable securities of $ 656.5 million, which management believes is sufficient to fund operations for at least the next 12 months from the date these consolidated financial statements were issued.

As of June 30, 2021, the Company had cash, cash equivalents and marketable securities of $ 593.0 million, which management believes is sufficient to fund operations for at least the next 12 months from the date these consolidated financial statements were issued.

Summary of Significant Accounting Policies

23 unchanged sentences

The following table provides a reconciliation of cash and cash equivalents and restricted cash as reported on the consolidated balance sheets to the total of these amounts as reported at the end of the period in the consolidated statements of cash flows (in thousands):

March 31, 2021

March 31, 2020

June 30, 2021

June 30, 2020

Cash and cash equivalents

34 unchanged sentences

Marketable Securities

The following tables present a summary of the Company’s marketable securities, which consist of available-for-sale debt securities and equity securities (in thousands):

The following tables present a summary of the Company’s marketable securities, which consist solely of available-for-sale debt securities (in thousands):

Amortized Cost

March 31, 2021

June 30, 2021

government and federal agency securities

8 unchanged sentences

Municipal securities

As of March 31, 2021 and December 31, 2020, no available-for-sale debt securities had remaining maturities greater than three years.

As of June 30, 2021 and December 31, 2020, no available-for-sale debt securities had remaining maturities greater than three years.

The amortized cost of marketable debt securities is adjusted for amortization of premiums and accretion of discounts to maturity, or to the earliest call date for callable debt securities purchased at a premium.

As of March 31, 2021 and December 31, 2020, the balance in the Company’s accumulated other comprehensive loss consisted solely of unrealized gains and losses on available-for-sale debt securities, net of reclassification adjustments for realized gains and losses and income tax effects.

As of June 30, 2021 and December 31, 2020, the balance in the Company’s accumulated other comprehensive loss consisted solely of unrealized gains and losses on available-for-sale debt securities, net of reclassification adjustments for realized gains and losses and income tax effects.

The Company uses the aggregate portfolio approach to release the tax effects of unrealized gains and losses on available-for-sale debt securities in accumulated other comprehensive loss.

Realized gains and losses from the sale or maturity of marketable securities are based on the specific identification method and are included in results of operations as investment income (loss) .

Unrealized loss on available-for-sale securities, net, as presented in the statements of operations and comprehensive loss consisted of the following (in thousands):

Three Months Ended March 31,

Unrealized loss before reclassifications

Realized gains reclassified to investment income

Realized gains and losses from the sale or maturity of marketable securities are based on the specific identification method and are included in results of operations as investment income .

Unrealized gain (loss) on available-for-sale securities, net, as presented in the statements of operations and comprehensive loss consisted of the following (in thousands):

Three Months Ended June 30,

Six Months Ended June 30,

Unrealized gain (loss) before reclassifications

Realized losses (gains) reclassified to investment income

Income tax expense

Unrealized loss on available-for-sale securities, net

Unrealized gain (loss) on available-for-sale

securities, net

The following tables present the fair values and unrealized losses of available-for-sale debt securities held by the Company in an unrealized loss position for less than 12 months and 12 months or greater (in thousands):

1 unchanged sentence

12 Months or Greater

March 31, 2021

June 30, 2021

government and federal

5 unchanged sentences

Corporate bonds

As of March 31, 2021, available-for-sale debt securities held by the Company which were in an unrealized loss position consisted of 49 investment grade security positions.

The Company has the intent and ability to hold such securities until recovery, and due to the credit quality of the issuers and low severity of each unrealized loss position relative to its amortized cost basis, the Company did not identify any credit losses associated with its available-for-sale debt securities.

The Company did no t record an allowance for credit losses on its available-for-sale debt securities as of March 31, 2021 or December 31, 2020.

The Company did no t recognize any impairment or credit losses on available-for-sale debt securities during the three months ended March 31, 2021 and 2020.

During the three months ended March 31, 2020, the Company recognized total net realized and unrealized losses of $ 5.1 million related to its marketable equity securities of Prevail Therapeutics Inc.

As of June 30, 2021, available-for-sale debt securities held by the Company in an unrealized loss position consisted of 43 investment grade security positions.

The Company has the intent and ability to hold such securities until recovery, and based on the credit quality of the issuers and low severity of each unrealized loss position relative to its amortized cost basis, the Company did not identify any credit losses associated with its available-for-sale debt securities.

The Company did no t record an allowance for credit losses on its available-for-sale debt securities as of June 30, 2021 or December 31, 2020.

The Company did no t recognize any impairment or credit losses on available-for-sale debt securities during the three and six months ended June 30, 2021 and 2020.

During the three and six months ended June 30 , 2020, the Company recognized total net realized and unrealized gains ( losses ) of $ 4.4 million and $ ( 0.7 ) million, respectively, related to its marketable equity securities of Prevail Therapeutics Inc.

(Prevail), which were acquired as consideration for a license to the NAV Technology Platform granted to Prevail in August 2017.

3 unchanged sentences

The following tables present the fair value of cash equivalents and marketable securities in accordance with the hierarchy discussed in Note 2 (in thousands):

March 31, 2021

June 30, 2021

Cash equivalents:

21 unchanged sentences

Accounts receivable which contain non-current portions are recorded at their present values using a discount rate that is based on prevailing market rates and the credit profile of the licensee on the date the amounts are initially recorded.

Management does not believe there have been any significant changes in market conditions or credit quality that would cause the discount rates initially used to be materially different from those that would be used as of March 31, 2021 to determine the present value of the receivables.

Management does not believe there have been any significant changes in market conditions or credit quality that would cause the discount rates initially used to be materially different from those that would be used as of June 30, 2021 to determine the present value of the receivables.

Accordingly, management estimates that the carrying value of its non-current accounts receivable approximates the fair value of those instruments.

Non-marketable equity securities are measured at cost less impairment, adjusted for observable price changes for identical or similar investments of the same issuer.

As of March 31, 2021 and December 31, 2020, non-marketable equity securities had a carrying value of $ 1.1 million and were included in other assets on the consolidated balance sheets.

The Company did not identify any observable price changes or changes in circumstances that would have had an adverse effect on the fair value of the securities as of March 31, 2021 or December 31, 2020.

No remeasurements or impairment losses were recorded on non-marketable equity securities during the three months ended March 31, 2021 and 2020.

As of June 30, 2021 and December 31, 2020, non-marketable equity securities had a carrying value of $ 1.1 million and were included in other assets on the consolidated balance sheets.

The Company did not identify any observable price changes or changes in circumstances that would have had an adverse effect on the fair value of the securities as of June 30, 2021 or December 31, 2020.

No remeasurements or impairment losses were recorded on non-marketable equity securities during the three and six months ended June 30, 2021 and 2020.

Property and Equipment, Net

Property and equipment, net consists of the following (in thousands):

March 31, 2021

June 30, 2021

December 31, 2020

22 unchanged sentences

The Company estimates the effective interest rate used to record non-cash interest expense under the Royalty Purchase Agreement based on its estimate of future royalty payments to be received by HCR.

As of March 31, 2021, the estimated effective interest rate under the agreement was 13.9 %.

As of June 30, 2021, the estimated effective interest rate under the agreement was 13.7 %.

Over the life of the arrangement, the actual effective interest rate will be affected by the amount and timing of the royalty payments received by HCR and changes in the Company’s forecasted royalties.

1 unchanged sentence

The following table presents the changes in the liability related to the sale of future royalties under the Royalty Purchase Agreement with HCR (in thousands):

Three Months Ended

March 31, 2021

Six Months Ended

June 30, 2021

Liability related to sale of future royalties, beginning balance

8 unchanged sentences

License and Royalty Revenue

As of March 31, 2021, the Company’s NAV Technology Platform was being applied by NAV Technology Licensees in one commercially available product, Zolgensma, and in the development of more than 20 licensed products.

As of June 30, 2021, the Company’s NAV Technology Platform was being applied by NAV Technology Licensees in one commercially available product, Zolgensma, and in the development of 20 other licensed products.

Consideration to the Company under its license agreements may include:

4 unchanged sentences

Sales-based milestones are excluded from the transaction price of each license agreement and recognized as royalty revenue in the period of achievement.

As of March 31, 2021, the Company’s license agreements, excluding additional licenses that could be granted upon the exercise of options by licensees, contained unachieved milestones which could result in aggregate milestone payments to the Company of up to $ 194.8 million, including (i) $ 23.3 million upon the commencement of various stages of clinical trials, (ii) $ 21.0 million upon the submission of regulatory approval filings, (iii) $ 93.5 million upon the approval of commercial products by regulatory agencies and (iv) $ 57.0 million upon the achievement of specified sales targets for licensed products.

As of June 30, 2021, the Company’s license agreements, excluding additional licenses that could be granted upon the exercise of options by licensees, contained unachieved milestones which could result in aggregate milestone payments to the Company of up to $ 194.8 million, including (i) $ 23.3 million upon the commencement of various stages of clinical trials, (ii) $ 21.0 million upon the submission of regulatory approval filings, (iii) $ 93.5 million upon the approval of commercial products by regulatory agencies and (iv) $ 57.0 million upon the achievement of specified sales targets for licensed products.

To the extent the milestone payments are realized by the Company, the Company will be obligated to pay sublicense fees to licensors based on a specified percentage of the fees earned by the Company.

2 unchanged sentences

The following table presents changes in the balances of the Company’s net accounts receivable, contract assets and deferred revenue, as well as other information regarding revenue recognized during the periods presented (in thousands):

Three Months Ended March 31,

Three Months Ended June 30,

Six Months Ended June 30,

Accounts receivable, net, current and non-current:

14 unchanged sentences

Deductions to contract assets during the periods presented consisted of the achievement of such milestones and billing of the associated milestone payments by the Company.

As of March 31, 2021, the Company had recorded deferred revenue of $ 4.1 million which represents consideration received from licensees for performance obligations that have not yet been satisfied by the Company.

As of June 30, 2021, the Company had recorded deferred revenue of $ 4.0 million which represents consideration received from licensees for performance obligations that have not yet been satisfied by the Company.

Unsatisfied performance obligations consisted of (i) options granted to licensees that provide material rights to the licensee to acquire additional licenses from the Company, which will be satisfied upon the exercise or expiration of the options and (ii) research and development services to be performed by the Company related to licensed products, which will be satisfied as the research and development services are performed.

Revenue recognized from performance obligations satisfied in previous periods was primarily attributable to Zolgensma royalty revenues as well as changes in the transaction prices of the Company’s license agreements.

Revenue recognized from performance obligations satisfied in previous periods was primarily attributable to Zolgensma royalty revenues, sublicense fees earned from licensees and changes in the transaction prices of the Company’s license agreements.

Changes in transaction prices were primarily attributable to development milestones achieved or deemed probable of achievement during the periods, which were previously not considered probable of achievement.

1 unchanged sentence

Accounts receivable, net consisted of the following (in thousands):

March 31, 2021

June 30, 2021

December 31, 2020

7 unchanged sentences

Total accounts receivable, net

The following table presents the changes in the allowance for credit losses related to accounts receivable and contract assets for the three months ended March 31, 2021 (in thousands):

The following table presents the changes in the allowance for credit losses related to accounts receivable and contract assets for the six months ended June 30, 2021 (in thousands):

Accounts Receivable

2 unchanged sentences

Provision for credit losses

Balance at March 31, 2021

The Company’s allowance for credit losses as of March 31, 2021 and December 31, 2020 was related solely to accounts receivable from Abeona Therapeutics Inc.

Balance at June 30, 2021

The Company’s allowance for credit losses as of June 30, 2021 and December 31, 2020 was related solely to accounts receivable from Abeona Therapeutics Inc.

Please refer to the section below, Abeona Therapeutics Inc., for further information regarding amounts due from Abeona and the associated allowance for credit losses.

The Company’s provision for credit losses for the three months ended March 31, 2021 was $ 0.6 million and was related solely to changes in estimates regarding the allowance for credit losses associated with the accounts receivable from Abeona.

No provision for credit losses was recorded for the three months ended March 31, 2020.

The Company’s provision for credit losses for the three and six months ended June 30, 2021 was zero and $ 0.6 million, respectively, and was related solely to changes in estimates regarding the collectability of the accounts receivable from Abeona.

No provision for credit losses was recorded for the three and six months ended June 30, 2020.

Novartis Gene Therapies, Inc.

3 unchanged sentences

The Company recognized the following amounts under the March 2014 License with Novartis Gene Therapies (in thousands):

Three Months Ended March 31,

Three Months Ended June 30,

Six Months Ended June 30,

Royalties on net sales of Zolgensma

Other license revenue

Total license and royalty revenue

Interest income from licensing

As of March 31, 2021 and December 31, 2020, the Company had recorded total accounts receivable of $ 18.1 million and $ 19.6 million, respectively, from Novartis Gene Therapies under the March 2014 License, which consisted primarily of unbilled receivables for Zolgensma royalties.

Zolgensma royalties receivable as of March 31, 2021 included $ 13.2 million which was expected to be paid to HCR in accordance with the Royalty Purchase Agreement discussed in Note 6.

As of June 30, 2021 and December 31, 2020, the Company had recorded total accounts receivable of $ 19.1 million and $ 19.6 million, respectively, from Novartis Gene Therapies under the March 2014 License, which consisted primarily of unbilled receivables for Zolgensma royalties.

Zolgensma royalties receivable as of June 30, 2021 included $ 9.8 million expected to be paid to HCR in accordance with the Royalty Purchase Agreement discussed in Note 6.

The Company recognizes royalty revenue from net sales of Zolgensma in the period in which the underlying products are sold by Novartis Gene Therapies, which in certain cases may require the

Company to estimate royalty revenue for periods of net sales which have not yet been reported to the Company.

Estimated royalties are reconciled to actual amounts reported in subsequent periods and royalty revenues are adjusted, as necessary.

Abeona Therapeutics Inc.

In November 2018, the Company entered into a license agreement with Abeona, as amended, (the November 2018 License), for the development and commercialization of various diseases using the NAV Technology Platform.

In November 2018, the Company entered into a license agreement with Abeona (as amended, the November 2018 License), for the treatment of various diseases using the NAV Technology Platform.

Pursuant to the November 2018 License, Abeona was required to pay a license fee of $ 8.0 million to the Company no later than April 1, 2020.

Abeona failed to make this payment, and in April 2020, the Company delivered to Abeona a notice of its breach of the license agreement and written demand for payment.

Upon expiration of the applicable cure period in May 2020, the license agreement was terminated.

Upon expiration of the applicable cure period in May 2020, the license agreement terminated.

As a result of the termination, Abeona was required to pay a $ 20.0 million license fee to the Company within 15 days of the termination date, which otherwise would have been due to the Company in November 2020.

As of April 30, 2021, the Company had not received any portion of the $ 28.0 million in license fees due from Abeona under the license agreement.

As of June 30, 2021, the Company had not received any portion of the $ 28.0 million in license fees due from Abeona under the license agreement.

Unpaid balances due under the November 2018 License accrue interest at 1.5 % per month.

In May 2020, subsequent to the termination of the November 2018 License, Abeona filed a claim in arbitration alleging that the Company had breached certain responsibilities to communicate with Abeona regarding the Company’s prosecution of licensed patents under the November 2018 License.

The Company disputes Abeona’s claim and filed a counterclaim in arbitration demanding payment of the $ 28.0 million of unpaid fees from Abeona, plus accrued interest.

Based on its evaluation of the merits of Abeona’s claims, the Company did not record any liabilities related these claims as of March 31, 2021, and the Company currently expects that its demand for payment in full will be upheld in arbitration.

A binding arbitration was held in March 2021 and the arbitrators’ decision is pending.

The Company intends to enforce the full collection of all amounts due from Abeona;

however, the outcome of the arbitration and timing of payment from Abeona remain uncertain.

As of March 31, 2021 and December 31, 2020, the Company had recorded gross accounts receivable of $ 30.1 million from Abeona under the November 2018 License, which consisted of the $ 8.0 million fee due April 1, 2020, the $ 20.0 million fee due within 15 days of the termination of the license agreement in May 2020 and accrued interest on the outstanding balances.

While the Company currently expects its demand for payment in full will be upheld in arbitration and intends to enforce the full collection of all amounts due, the Company assessed the collectability of the $ 30.1 million due from Abeona as it relates to credit risk.

In performing this assessment, the Company evaluated Abeona’s credit profile and financial condition, as well its expectations regarding Abeona’s future cash flows and ability to satisfy this obligation upon the completion of arbitration in 2021.

As a result of its analyses, the Company recorded an allowance for credit losses of $ 8.2 million and $ 7.7 million as of March 31, 2021 and December 31, 2020, respectively, related to the accounts receivable due from Abeona.

The Company recorded a provision for credit losses of $ 0.6 million for the three months ended March 31, 2021 as a result of changes in estimates regarding the allowance during the period.

As of March 31, 2021 and December 31, 2020, the Company had recognized interest income from licensing of $ 2.1 million related to the unpaid license fees from Abeona under the November 2018 License, which is included in the gross accounts receivable balance of $ 30.1 million.

In accordance with its interest accrual policy, the Company ceased the recognition of interest income accrued under the license agreement subsequent to the recognition of the allowance for credit losses in the third quarter of 2020, and will continue to maintain the accounts receivable from Abeona on non-accrual status unless and until such amounts are deemed to be collectable.

However, the Company intends to enforce the full collection of all accrued interest contractually due from Abeona upon the completion of arbitration.

In May 2020, after the termination of the November 2018 License, Abeona filed a claim in arbitration alleging that the Company had breached certain responsibilities to communicate with Abeona regarding the Company’s prosecution of licensed patents under the November 2018 License.

The Company disputed Abeona’s claim and filed a counterclaim in arbitration demanding payment of the $ 28.0 million of unpaid fees from Abeona, plus accrued interest.

Based on its evaluation of the merits of Abeona’s claim, the Company did not record any liabilities related to this claim as of June 30, 2021.

A binding arbitration was held in March 2021.

In July 2021, the arbitration tribunal issued its ruling, which denied Abeona’s claim and upheld the Company’s counterclaim.

The tribunal awarded the Company $ 28.0 million in damages and $ 6.1 million in accrued interest to be paid by Abeona.

The accrued interest awarded was subsequently reduced to $ 5.6 million to correct a computational error, resulting in a total corrected award of $ 33.6 million payable to the Company by Abeona.

As of August 4, 2021, the Company had not received any portion of the $ 33.6 million arbitration award from Abeona.

The Company has filed a petition to confirm the arbitration award and to enter judgment on it in the Supreme Court of the State of New York for New York County.

The Company cannot be certain of the precise timing or amount of recovery and will continue to pursue enforcement of the award against Abeona.

As of June 30, 2021 and December 31, 2020, the Company had recorded gross accounts receivable of $ 30.1 million from Abeona under the November 2018 License, which consisted of the $ 8.0 million fee due April 1, 2020, the $ 20.0 million fee due within 15 days of the termination of the license agreement in May 2020 and accrued interest on the outstanding balances.

While the Company anticipates taking appropriate measures to enforce the aforementioned arbitration award if Abeona does not comply with the tribunal’s ruling, the Company assessed the collectability of the $ 30.1 million due from Abeona as it relates to credit risk.

As a result of its analyses, the Company recorded an allowance for credit losses of $ 8.2 million and $ 7.7 million as of June 30, 2021 and December 31, 2020, respectively, related to the accounts receivable due from Abeona.

The Company recorded a provision for credit losses of zero and $ 0.6 million, respectively, for the three and six months ended June 30, 2021 as a result of changes in estimates regarding the allowance during the periods.

As of June 30, 2021 and December 31, 2020, the Company had recognized interest income from licensing of $ 2.1 million related to the unpaid license fees from Abeona under the November 2018 License, which is included in the gross accounts receivable balance of $ 30.1 million.

In accordance with its interest accrual policy, the Company ceased the recognition of interest income accrued under the license agreement subsequent to the establishment of the allowance for credit losses in the third quarter of 2020.

The arbitration tribunal’s ruling in July 2021, as subsequently corrected, awarded the Company $ 5.6 million in accrued interest payable by Abeona, including $ 3.5 million of interest earned subsequent to the receivable being placed on non-accrual status which has not been recognized in the consolidated financial statements.

The Company will continue to maintain the accounts receivable from Abeona on non-accrual status unless and until such amounts are deemed to be collectable.

Stock-based Compensation

In January 2021, the Board of Directors authorized an additional 1,499,037 shares to be issued under the 2015 Equity Incentive Plan (the 2015 Plan).

As of March 31, 2021, the total number of shares of common stock authorized for issuance under the 2015 Plan and the 2014 Stock Plan (the 2014 Plan) was 13,911,954 , of which 2,447,174 remained available for future grants under the 2015 Plan.

As of June 30, 2021, the total number of shares of common stock authorized for issuance under the 2015 Plan and the 2014 Stock Plan (the 2014 Plan) was 13,911,954 , of which 2,389,462 remained available for future grants under the 2015 Plan.

Stock-based Compensation Expense

The Company’s stock-based compensation expense by award type was as follows (in thousands):

Three Months Ended March 31,

Three Months Ended June 30,

Six Months Ended June 30,

Stock options

1 unchanged sentence

Employee stock purchase plan

As of March 31, 2021, the Company had $ 93.8 million of unrecognized stock-based compensation expense related to stock options, restricted stock units and the 2015 Employee Stock Purchase Plan (the 2015 ESPP), which is expected to be recognized over a weighted-average period of 2.8 years.

As of June 30, 2021, the Company had $ 85.4 million of unrecognized stock-based compensation expense related to stock options, restricted stock units and the 2015 Employee Stock Purchase Plan (the 2015 ESPP), which is expected to be recognized over a weighted-average period of 2.6 years.

The Company recorded aggregate stock-based compensation expense in the consolidated statements of operations and comprehensive loss as follows (in thousands):

Three Months Ended March 31,

Three Months Ended June 30,

Six Months Ended June 30,

Research and development

4 unchanged sentences

Cancelled or forfeited

Outstanding at March 31, 2021

Exercisable at March 31, 2021

Vested and expected to vest at March 31, 2021

Outstanding at June 30, 2021

Exercisable at June 30, 2021

Vested and expected to vest at June 30, 2021

The aggregate intrinsic value is calculated as the difference between the exercise price of the underlying options and the fair value of the common stock for the options that were in the money at the dates reported.

The weighted-average grant date fair value per share of options granted during the three months ended March 31, 2021 was $ 27.28 .

During the three months ended March 31, 2021, the total number of stock options exercised was 104,638 , resulting in total proceeds of $ 1.3 million.

The total intrinsic value of options exercised during the three months ended March 31, 2021 was $ 3.6 million.

The weighted-average grant date fair value per share of options granted during the six months ended June 30, 2021 was $ 26.65 .

During the six months ended June 30, 2021, the total number of stock options exercised was 155,496 , resulting in total proceeds of $ 1.6 million.

The total intrinsic value of options exercised during the six months ended June 30, 2021 was $ 5.2 million.

Restricted Stock Units

1 unchanged sentence

Unvested balance at December 31, 2020

Unvested balance at March 31, 2021

No restricted stock units vested during the three months ended March 31, 2021 and 2020.

Unvested balance at June 30, 2021

No restricted stock units vested during the three and six months ended June 30, 2021 and 2020.

Employee Stock Purchase Plan

In January 2021, the Board of Directors authorized an additional 374,759 shares to be issued under the 2015 ESPP.

As of March 31, 2021, the total number of shares of common stock authorized for issuance under the 2015 ESPP was 998,683 , of which 803,728 remained available for future issuance.

During the three months ended March 31, 2021, 19,042 shares of common stock were issued under the 2015 ESPP.

As of June 30, 2021, the total number of shares of common stock authorized for issuance under the 2015 ESPP was 998,683 , of which 803,728 remained available for future issuance.

During the six months ended June 30, 2021, 19,042 shares of common stock were issued under the 2015 ESPP.

The Company has evaluated the positive and negative evidence bearing upon the realizability of its deferred tax assets.

Based on the Company’s history of operating losses, including three-year cumulative loss positions as of March 31, 2021 and December 31, 2020, the Company concluded that it is more likely than not that the benefit of its deferred tax assets will not be realized.

Accordingly, the Company provided a full valuation allowance for its net deferred tax assets as of March 31, 2021 and December 31, 2020.

Based on the Company’s history of operating losses, including three-year cumulative loss positions as of June 30, 2021 and December 31, 2020, the Company concluded that it is more likely than not that the benefit of its deferred tax assets will not be realized.

Accordingly, the Company provided a full valuation allowance for its net deferred tax assets as of June 30, 2021 and December 31, 2020.

Related Party Transactions

4 unchanged sentences

The agreement may be terminated by either party with six months’ advanced written notice.

Expenses incurred under the agreement with FOXKISER for the three months ended March 31, 2021 and 2020 were $ 1.2 million and $ 1.2 million, respectively, and were recorded as research and development expenses in the consolidated statements of operations and comprehensive loss.

Expenses incurred under the agreement with FOXKISER were $ 1.2 million and $ 2.4 million for the three and six months ended June 30, 2021, respectively, and $ 1.2 million and $ 2.4 million for the three and six months ended June 30, 2020, respectively, and were recorded as research and development expenses in the consolidated statements of operations and comprehensive loss.

Net Loss Per Share

Since the Company incurred net losses for the three months ended March 31, 2021 and 2020, common stock equivalents were excluded from the calculation of diluted net loss per share as their effect would be anti-dilutive.

Since the Company incurred net losses for the three and six months ended June 30, 2021 and 2020, common stock equivalents were excluded from the calculation of diluted net loss per share as their effect would be anti-dilutive.

Accordingly, basic and diluted net loss per share were the same for such periods.

The following potentially dilutive common stock equivalents outstanding at the end of the period were excluded from the computations of weighted-average diluted common shares for the periods indicated as their effects would be anti-dilutive (in thousands):

Three Months Ended March 31,

Three and Six Months Ended June 30,

Stock options issued and outstanding

3 unchanged sentences

Accrued expenses and other current liabilities consisted of the following (in thousands):

March 31, 2021

June 30, 2021

December 31, 2020

Accrued purchases of property and equipment

Accrued sublicense fees and royalties

Accrued personnel costs

Accrued external research and development expenses

Accrued sublicense fees and royalties

Accrued income taxes payable

Accrued external general and administrative expenses

Accrued income taxes payable

Other accrued expenses and current liabilities

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements