What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2021-08-09 compared with 2021-05-05 · 97 added, 71 removed, 217 unchanged (44% of the section changed)

13 unchanged sentences

We are advancing two separate routes of administration of RGX-314 to the eye, through a standardized subretinal delivery procedure as well as by delivery to the suprachoroidal space using the SCS Microinjector™ licensed from Clearside Biomedical, Inc.

In January 2021, we announced that we completed an End of Phase 2 meeting with the U.S.

Food and Drug Administration (FDA) to discuss the details of a pivotal program to evaluate the efficacy and safety of RGX-314 in patients with wet AMD using the subretinal delivery approach.

We have initiated a pivotal program to evaluate the efficacy and safety of RGX-314 in patients with wet AMD using the subretinal delivery approach.

We plan to conduct two randomized, well-controlled clinical trials to evaluate the efficacy and safety of RGX-314 in patients with wet AMD, enrolling approximately 700 patients total.

The first pivotal trial (ATMOSPHERE TM ) is active and enrolling patients.

The first pivotal trial (ATMOSPHERE TM ) is enrolling patients and we are on-track to initiate the second pivotal trial in the fourth quarter of 2021.

Based on the outcome of these trials, the pivotal program is expected to support a Biologics License Application (BLA) filing in 2024.

In February 2021, we announced additional positive data from the patients enrolled in the ongoing Phase I/II trial of RGX-314 for the treatment of wet AMD and its Long-Term Follow-Up study.

As of January 22, 2021, RGX-314 continued to be generally well-tolerated across all dose cohorts.

As of January 22, 2021, RGX-314 continued to be generally well-tolerated across all dose cohorts of the ongoing Phase I/II trial of RGX-314 for the treatment of wet AMD and its Long-Term-Follow-Up study.

Durable treatment effect was observed in patients in Cohorts 4 and 5 at 1.5 years after administration of RGX-314, including stable visual acuity, decreased retinal thickness, and reductions in anti-VEGF injection burden.

1 unchanged sentence

We are also conducting a Phase II trial of the suprachoroidal delivery of RGX-314 using the SCS Microinjector for the treatment of wet AMD known as AAVIATE ® .

We have completed enrollment in Cohort 1 of this trial, and we plan to report interim data from Cohort 1 in the third quarter of 2021.

We have also completed enrollment in Cohort 2 and expect to report interim data from Cohort 2 in the second half of 2021.

In addition, we have expanded AAVIATE and began dosing in a third cohort of patients.

We have completed enrollment in Cohort 1 of this trial, and we plan to report interim data from Cohort 1 at the Retina Society 54th Annual Scientific Meeting in Chicago, IL, September 29-October 2, 2021.

We have also completed enrollment in Cohort 2 and expect to report interim data from Cohort 2 in the fourth quarter of 2021.

In addition, we have expanded AAVIATE to include a third cohort of patients and we have completed dosing of patients in Cohort 3.

Cohort 3 will evaluate the efficacy, safety and tolerability of RGX-314 in up to 20 patients who are neutralizing antibody (NAb) positive.

1 unchanged sentence

As with Cohorts 1 and 2, patients in Cohort 3 will not receive prophylactic immune suppressive corticosteroid therapy before or after administration of RGX-314.

In addition, we announced in December 2020 that the first patient had been dosed in ALTITUDE TM , a Phase II trial of the suprachoroidal delivery of RGX-314 for the treatment of DR.

Patient enrollment continues and we expect to report initial data from this trial in 2021.

In addition, we are enrolling patients in ALTITUDE TM , a Phase II trial of the suprachoroidal delivery of RGX-314 for the treatment of DR.

We have completed enrollment of patients in Cohort 1 and we have begun enrolling patients in Cohort 2

of this trial.

W e expect to report initial data from this trial in the fourth quarter of 2021.

In addition, we have expanded ALTITUDE and plan to enroll patients in a third cohort .

Co hort 3 will evaluate the efficacy, safety and tolerability of RGX-314 in up to 20 patients who are NAb positive.

The same dose evaluated in Cohort 2 , 5.0x10 11 GC/eye of RGX-314, will be delivered to patients in Cohort 3 and , as in previous cohorts, patients will not receive prophylactic immune suppressive corticosteroid therapy before or after administration of RGX-314.

AAV-Mediated Antibody Expression for the Treatment of Hereditary Angioedema (HAE):

1 unchanged sentence

HAE is a chronic and severe disease characterized by recurring severe swelling (angioedema), most commonly in the face, airway, intestines and limbs.

We expect to provide a program update in 2021 .

We expect to provide a program update in by the end of 2021.

AAV-Mediated Antibody Expression for the Treatment of Neurodegenerative Diseases:

We have established a research program in partnership with Neurimmune AG (Neurimmune) to jointly develop and commercialize novel gene therapies using NAV Vectors to deliver human antibodies for chronic neurodegenerative diseases, with an initial focus on diseases associated with the accumulation and deposition of the microtubule-associated protein tau (tauopathies) and alpha-synuclein (alpha-synucleinopathies).

We expect to provide a program update in 2021.

We expect to provide a program update by the end of 2021.

Gene therapy programs for the potential treatment of rare monogenic diseases

1 unchanged sentence

Without functional dystrophin protein, muscles throughout the body degenerate and become weak.

We expect to submit an Investigational New Drug (IND) application for this program in mid-2021.

We expect to submit an Investigational New Drug (IND) application for this program in by the end of 2021.

We are developing RGX-121 for the treatment of the neurological symptoms of Mucopolysaccharidosis Type II (MPS II), a severe genetic lysosomal storage disease caused by deficiency of iduronate-2-sulfatase (I2S), an enzyme that is responsible for breakdown of cellular waste products.

3 unchanged sentences

Patients in Cohorts 1 and 2 also demonstrated continued neurocognitive development and evidence of I2S enzyme activity in plasma and urine following administration of RGX-121.

In April 2021, we announced that the first patient has been dosed in Cohort 3 of the ongoing Phase I/II trial.

In addition, the first patient has been dosed in a second Phase I/II trial of RGX-121 for the treatment of pediatric patients with MPS II over the age of 5 years old.

We continue to enroll patients in Cohort 3 of the ongoing Phase I/II trial at an increased dose of 2.0x10 11 GC/g brain mass.

In addition, we continue to enroll patients in a second Phase I/II trial of RGX-121, for the treatment of pediatric patients with MPS II over the age of 5 years old.

We are developing RGX-111 for the treatment of the neurological symptoms of Mucopolysaccharidosis Type I (MPS I), a severe genetic lysosomal storage disease caused by deficiency of α-l-iduronidase (IDUA), an enzyme required for breakdown of cellular waste products.

We have completed dosing of patients in the first cohort of a Phase I/II clinical trial for RGX-111.

We have completed dosing of patients in the first cohort of a Phase I/II clinical trial for RGX-111 and enrollment is now ongoing in Cohort 2 at an increased dose of 5.0x10 10 GC/g brain mass.

We are developing RGX-181 for the treatment of late-infantile neuronal ceroid lipofuscinosis type 2 (CLN2) disease, one of the most common forms of Batten disease, caused by mutations in the tripeptidyl peptidase 1 (TPP1) gene.

An IND was submitted to the FDA, after which the FDA notified REGENXBIO that its proposed trial had been placed on clinical hold and the agency requested more information to support the initial dose selection and certain study drug administration procedures.

REGENXBIO is evaluating the FDA’s requests and plans to provide an update on the program in the second half of 2021.

REGENXBIO is evaluating the FDA’s requests and plans to provide an update on the program by the end of 2021.

We are developing RGX-381 for the treatment of ocular manifestations of CLN2 disease.

Based on communication with the FDA and the update from the RGX-181 program, we now expect to provide a program update in the second half of 2021.

Based on communication with the FDA and the update from the RGX-181 program, we now expect to provide a program update by the end of 2021.

In addition to our lead product candidates described above, we have also funded, and plan to continue to fund, preclinical research on potential product candidate programs that may become part of our internal product development pipeline.

2 unchanged sentences

In addition to our internal product development efforts, we also selectively license the NAV Technology Platform to other leading biotechnology and pharmaceutical companies, which we refer to as NAV Technology Licensees.

As of March 31, 2021, our NAV Technology Platform was being applied in one FDA approved product (Zolgensma®), and the preclinical and clinical development of more than 20 partnered programs.

As of June 30, 2021, our NAV Technology Platform was being applied in one FDA approved product (Zolgensma®), and the preclinical and clinical development of 20 partnered programs.

Licensing the NAV Technology Platform allows us to maintain our internal product development focus on our core disease indications and therapeutic areas while still expanding the NAV gene therapy pipeline, developing a greater breadth of treatments for patients, providing additional technological and potential clinical proof-of-concept for our NAV Technology Platform, and creating potential additional revenue.

Impact of COVID-19

We are actively monitoring the impact of the COVID-19 pandemic on our business, results of operations and financial condition.

We are actively monitoring the impact of the COVID-19 pandemic, including the emergence of variant strains, on our business, results of operations and financial condition.

Our offices, laboratories, clinical trial sites, prospective clinical trial sites, contract research organizations (CROs), contract manufacturing organizations (CMOs) and other collaborators and partners are located in jurisdictions where quarantines, executive orders, shelter-in-place orders, guidelines, and other similar orders and restrictions intended to control the spread of the disease have been put in place by governmental authorities.

We have implemented a work-from-home policy for all employees who are not essential to be onsite, and we may take further actions that alter our operations, as may be required by federal, state or local authorities or which we determine are in the best interests of our employees.

At certain times during the COVID-19 pandemic, we have implemented a work-from-home policy for all employees who are not essential to be onsite, and we may take additional actions that alter our operations, as may be required by federal, state or local authorities or which we determine are in the best interests of our employees.

The COVID-19 pandemic has caused delays to our clinical trials and may further delay or prevent us from proceeding with our clinical trials.

Our other business initiatives, such as preclinical development and manufacturing operations, may also be affected by the COVID-19 pandemic.

For example, the construction of our new headquarters, including our current good manufacturing practice production facility, has been delayed from our original estimates, and may be delayed further, due to various government orders and restrictions relating to the COVID-19 pandemic .

For example, the construction of our current good manufacturing practice production facility has been delayed from our original estimates, and may be delayed further, due to various government orders and restrictions relating to the COVID-19 pandemic .

In addition, if the business and operations of our licensees are adversely affected by the COVID-19 pandemic, our revenues could in turn be adversely affected.

We are proactively taking measures to mitigate or reduce any adverse impact of the COVID-19 pandemic on the progress of our clinical trials and other business initiatives.

Our results of operations for the three months ended March 31, 2021 and 2020 were not significantly impacted by the COVID-19 pandemic.

Our results of operations for the three months ended June 30, 2021 and 2020 were not significantly impacted by the COVID-19 pandemic.

However, the full extent to which the COVID-19 pandemic will directly or indirectly impact our business, results of operations and financial condition in the future is unknown at this time and will depend on future developments that are highly unpredictable.

1 unchanged sentence

Financial Overview

Our revenues to date primarily consist of license and royalty revenue resulting from the licensing of our NAV Technology Platform.

Our revenues to date consist primarily of license and royalty revenue resulting from the licensing of our NAV Technology Platform.

We have not generated any revenues from commercial sales of our own products.

47 unchanged sentences

continued acquisition and manufacture of clinical trial materials in support of our anticipated clinical trials.

The following table summarizes our research and development expenses incurred during the three months ended March 31, 2021 and 2020 (in thousands):

Three Months Ended March 31,

The following table summarizes our research and development expenses incurred during the three and six months ended June 30, 2021 and 2020 (in thousands):

Three Months Ended June 30,

Six Months Ended June 30,

Direct Expenses

20 unchanged sentences

In accordance with our revenue recognition policy, interest income from licensing consists of imputed interest recognized from significant financing components identified in our license agreements with NAV Technology Licensees as well as interest income accrued on unpaid balances due from licensees.

Investment Income (Loss)

Investment income (loss) consists of interest income earned and gains and losses realized from our cash equivalents and marketable securities, as well as unrealized gains and losses on marketable equity securities.

Investment Income

Investment income consists of interest income earned and gains and losses realized from our cash equivalents and marketable securities, as well as unrealized gains and losses on marketable equity securities.

Cash equivalents are comprised of money market mutual funds and highly liquid debt securities with original maturities of 90 days or less at acquisition.

12 unchanged sentences

Our consolidated results of operations were as follows (in thousands):

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

Comparison of the Three Months Ended March 31, 2021 and 2020

Income Tax Benefit (Expense)

Comparison of the Three Months Ended June 30, 2021 and 2020

License and Royalty Revenue.

License and royalty revenue increased by $1.2 million, from $17.6 million for the three months ended March 31, 2020 to $18.9 million for the three months ended March 31, 2021.

The increase was primarily attributable to Zolgensma royalty revenues, which increased by $8.3 million, from $10.0 million for the first quarter of 2020 to $18.3 million for the first quarter of 2021.

As reported by Novartis, sales of Zolgensma for the first quarter of 2021 increased by 88% as compared to the first quarter of 2020.

The increase in revenues was partially offset by $7.2 million of non-recurring revenue recognized during the three months ended March 31, 2020 related to a license granted to Ultragenyx Pharmaceutical Inc.

License and royalty revenue increased by $5.5 million, from $16.6 million for the three months ended June 30, 2020 to $22.0 million for the three months ended June 30, 2021.

The increase was primarily attributable to Zolgensma royalty revenues, which increased by $6.5 million, from $11.9 million for the second quarter of 2020 to $18.4 million for the second quarter of 2021.

As reported by Novartis, sales of Zolgensma for the second quarter of 2021 increased by 54% as compared to the second quarter of 2020, driven by geographic expansion of product access.

Research and Development Expense.

Research and development expenses increased by $7.8 million, from $38.1 million for the three months ended June 30, 2020 to $45.9 million for the three months ended June 30, 2021.

The increase was primarily attributable to the following:

an increase of $3.9 million for external costs associated with clinical trial and regulatory activities for our lead product candidates, primarily attributable to RGX-314 and RGX-121 clinical trials;

an increase of $2.2 million for external costs associated with preclinical studies and other early-stage research and development;

an increase of $2.0 million for personnel-related costs as a result of increased headcount of research and development personnel, including a $0.8 million increase in stock-based compensation expense;

an increase of $1.4 million for laboratory costs and facilities used by research and development personnel, including depreciation expense allocated to research and development functions.

The increase in research and development expenses was partially offset by a $2.6 million decrease in external costs associated with manufacturing-related services, primarily attributable to RGX-202 and RGX-121 clinical supply.

General and Administrative Expense.

General and administrative expenses increased by $2.9 million, from $15.6 million for the three months ended June 30, 2020 to $18.4 million for the three months ended June 30, 2021.

The increase was primarily attributable to the following:

an increase of $1.3 million for personnel-related costs as a result of increased headcount of general and administrative personnel, including a $0.9 million increase in stock-based compensation expense;

an increase of $0.5 million for professional services, primarily related to legal and other advisory services.

Investment Income .

Investment income decreased by $5.3 million, from $5.7 million for the three months ended June 30, 2020 to $0.4 million for the three months ended June 30, 2021.

The decrease was primarily attributable to net gains of $4.4 million recognized in the second quarter of 2020 related to our marketable equity securities of Prevail Therapeutics Inc.

We sold all of our Prevail equity securities prior to the end of 2020.

The change in investment income also includes a decrease of $0.9 million in interest income in the second quarter of 2021, primarily attributable to lower yields on investments in cash equivalents and marketable debt securities.

Interest Expense .

Interest expense increased from zero for the three months ended June 30, 2020 to $6.4 million for the three months ended June 30, 2021.

Interest expense consists solely of non-cash interest recognized under our royalty purchase agreement with HCR for the sale of future Zolgensma royalties which occurred in December 2020.

Comparison of the Six Months Ended June 30, 2021 and 2020

License and Royalty Revenue.

License and royalty revenue increased by $6.7 million, from $34.2 million for the six months ended June 30, 2020 to $40.9 million for the six months ended June 30, 2021.

The increase was primarily attributable to Zolgensma royalty revenues, which increased by $14.8 million, from $21.9 million for the first half of 2020 to $36.7 million for the first half of 2021.

As reported by Novartis, sales of Zolgensma for the first half of 2021 increased by 69% as compared to the first half of 2020, driven by geographic expansion of product access.

The increase in revenues was partially offset by $7.2 million of non-recurring revenue recognized during the six months ended June 30, 2020 related to a license granted to Ultragenyx Pharmaceutical Inc.

during the period.

Research and Development Expense.

Research and development expenses increased by $2.7 million, from $37.0 million for the three months ended March 31, 2020 to $39.7 million for the three months ended March 31, 2021.

Research and development expenses increased by $ 10.5 million, from $75.1 million for the six months ended June 30, 2020 to $ 85.6 million for the six months ended June 30, 2021.

The increase was primarily attributable to the following:

an increase of $5.8 million for personnel-related costs as a result of increased headcount of research and development personnel, including a $1.8 million increase in stock-based compensation expense;

an increase of $1.7 million for external costs associated with clinical trial and regulatory activities for our lead product candidates;

an increase of $5.6 million for external costs associated with clinical trial and regulatory activities for our lead product candidates, primarily attributable to RGX-314 and RGX-121 clinical trials;

an increase of $2.5 million for laboratory costs and facilities used by research and development personnel, including depreciation expense allocated to research and development functions;

The increase in research and development expenses was partially offset by a $3.9 million decrease in external costs associated with manufacturing-related services, primarily related to RGX-314.

an increase of $2.4 million for external costs associated with preclinical studies and other early-stage research and development.

The increase in research and development expenses was partially offset by a $6.4 million decrease in external costs associated with manufacturing-related services, primarily attributable to RGX-314 and RGX-121 clinical supply.

General and Administrative Expense.

General and administrative expenses increased by $3.0 million, from $14.8 million for the three months ended March 31, 2020 to $17.8 million for the three months ended March 31, 2021.

General and administrative expenses increased by $5.9 million, from $30.4 million for the six months ended June 30, 2020 to $36.3 million for the six months ended June 30, 2021.

The increase was primarily attributable to the following:

an increase of $1.8 million for professional services, primarily related to commercial consulting and legal services;

an increase of $2.5 million for personnel-related costs as a result of increased headcount of general and administrative personnel, including a $1.8 million increase in stock-based compensation expense;

Investment Income (Loss) .

Investment income was $0.6 million for the three months ended March 31, 2021, as compared to investment loss of $3.2 million for the three months ended March 31, 2020, a change of $3.8 million.

The change was primarily attributable to net realized and unrealized losses of $5.1 million recognized in the first quarter of 2020 related to our marketable equity securities of Prevail Therapeutics Inc.

We sold all of our Prevail equity securities prior to the first quarter of 2021.

The change in investment income was partially offset by a decrease of $1.3 million in interest income in the first quarter of 2021, primarily attributable to lower yields on investments in cash equivalents and marketable debt securities.

an increase of $2.3 million for professional services, primarily related to legal and other advisory services.

Interest Expense .

Interest expense increased by $6.7 million for the three months ended March 31, 2021, from zero for the three months ended March 31, 2020.

Interest expense increased from zero for the six months ended June 30, 2020 to $13.1 million for the six months ended June 30, 2021.

Interest expense consists solely of non-cash interest recognized under our royalty purchase agreement with HCR for the sale of future Zolgensma royalties which occurred in December 2020.

1 unchanged sentence

Sources of Liquidity

As of March 31, 2021, we had cash, cash equivalents and marketable securities of $656.5 million, which were primarily derived from the sale of our common stock, license and royalty revenue and the monetization of our Zolgensma royalty stream.

We expect that our cash, cash equivalents and marketable securities as of March 31, 2021, will enable us to fund our operating expenses and capital expenditure requirements for at least the next 12 months from the date of this report, based on our current business plan.

As of June 30, 2021, we had cash, cash equivalents and marketable securities of $593.0 million, which were primarily derived from the sale of our common stock, license and royalty revenue and the monetization of our Zolgensma royalty stream.

We expect that our cash, cash equivalents and marketable securities as of June 30, 2021, will enable us to fund our operating expenses and capital expenditure requirements for at least the next 12 months from the date of this report, based on our current business plan.

In January 2021, we completed a public offering of 4,899,000 shares of our common stock (inclusive of 639,000 shares pursuant to the full exercise by the underwriters of their option to purchase additional shares) at a price of $47.00 per share.

The aggregate net proceeds from the offering, inclusive of the underwriters’ option exercise, were $216.1 million, net of underwriting discounts and commissions and offering expenses payable by us.

We intend to devote the majority of our current capital to clinical development, seeking regulatory approval of our product candidates and capital expenditures to build out additional office, laboratory and manufacturing capacity, including the buildout of our future corporate, manufacturing and research headquarters at 9804 Medical Center Drive in Rockville, Maryland.

We intend to devote the majority of our current capital to clinical development, seeking regulatory approval of our product candidates and capital expenditures to build out additional office, laboratory and manufacturing capacity, including the buildout of our corporate, manufacturing and research headquarters at 9804 Medical Center Drive in Rockville, Maryland.

Because of the numerous risks and uncertainties associated with the development and commercialization of gene therapy product candidates, we are unable to estimate the total amount of operating expenditures and capital outlays necessary to complete the development of our product candidates.

Additionally, our estimates are based on assumptions that may prove to be wrong, and we may use our available capital resources sooner than we currently expect.

Furthermore, given the continuing uncertainty and volatile market and economic conditions caused by the COVID-19 pandemic, as well as potential for further effects due to a resurgence in COVID-19 infections, we will continue to monitor the nature and extent of the impact of the COVID-19 pandemic on our liquidity and capital resources.

Furthermore, given the continuing uncertainty and volatile market and economic conditions caused by the COVID-19 pandemic, as well as the potential for further effects due to a resurgence in COVID-19 infections, we will continue to monitor the nature and extent of the impact of the COVID-19 pandemic on our liquidity and capital resources.

Our consolidated cash flows were as follows (in thousands):

Three Months Ended March 31,

Six Months Ended June 30,

Net cash used in operating activities

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 Flows from Operating Activities

Our net cash used in operating activities for the three months ended March 31, 2021 increased by $5.6 million from the three months ended March 31, 2020.

The increase was largely driven by an increase in operating expenses of $7.6 million in the first quarter of 2021.

Our net cash used in operating activities for the six months ended June 30, 2021 increased by $13.9 million from the six months ended June 30, 2020.

The increase was largely driven by an increase in operating expenses of $23.4 million in the first half of 2021.

We expect to continue to incur net cash out outflows from operations for the foreseeable future as we continue the development and advancement of our lead product candidates and other research programs.

For the three months ended March 31, 2021, our net cash used in operating activities of $41.1 million consisted of a net loss of $50.1 million and changes in working capital of $11.2 million, offset by $20.2 million in adjustments for non-cash items.

The changes in working capital include a $10.5 million decrease in accrued expenses and other current liabilities which was largely driven by decreases in accrued personnel costs, accrued royalties payable to licensors and accrued external research and development expenses as of March 31, 2021.

For the six months ended June 30, 2021, our net cash used in operating activities of $71.0 million consisted of a net loss of $107.8 million and changes in working capital of $3.3 million, offset by $40.1 million in adjustments for non-cash items.

The changes in working capital include a $5.9 million decrease in accrued expenses and other current liabilities which was largely driven by decreases in accrued personnel costs and income taxes payable as of June 30, 2021.

The changes in working capital were partially offset by an increase in operating lease liabilities of $10.5 million which was largely driven by funds received under our tenant improvement allowance related to the ongoing buildout of our new headquarters facility in Rockville, Maryland.

Other changes in working capital were incurred in the normal course of business, primarily as a result of differences in the timing of payments to service providers and the period in which such costs are incurred.

Adjustments for non-cash items primarily consisted of stock-based compensation expenses of $9.9 million, non-cash interest expense recognized under our royalty purchase agreement with HCR of $6.7 million and depreciation and amortization expense of $1.9 million.

For the three months ended March 31, 2020, our net cash used in operating activities of $35.6 million consisted of a net loss of $40.0 million and changes in working capital of $9.9 million, offset by $14.3 million in adjustments for non-cash items.

The changes in working capital include an increase in accounts receivable of $5.7 million which was largely driven by new licenses granted by us during the first quarter of 2020, and a decrease in accrued expenses and other current liabilities of $3.8 million which was largely driven by a decrease in accrued personnel costs as of March 31, 2020.

Adjustments for non-cash items primarily consisted of stock-based compensation expense of $19.9 million, non-cash interest expense recognized under our royalty purchase agreement with HCR of $13.1 million and depreciation and amortization expense of $4.1 million.

For the six months ended June 30, 2020, our net cash used in operating activities of $57.1 million consisted of a net loss of $73.8 million and changes in working capital of $3.1 million, offset by $19.8 million in adjustments for non-cash items.

The changes in working capital include an increase in accounts receivable of $2.7 million which was largely driven by an increase in unbilled Zolgensma royalties during the period.

Adjustments for non-cash items primarily consisted of stock-based compensation expenses of $8.0 million, net losses on our Prevail equity securities of $5.1 million and depreciation and amortization expense of $2.0 million.

Adjustments for non-cash items primarily consisted of stock-based compensation expense of $16.3 million, depreciation and amortization expense of $4.1 million, and net losses on our marketable equity securities of Prevail of $0.7 million, and were partially offset by imputed interest earned from our license agreements of $1.9 million.

Cash Flows from Investing Activities

For the three months ended March 31, 2021, our net cash used in investing activities consisted of $233.6 million to purchase marketable debt securities and $31.0 million to purchase property and equipment, offset by $50.5 million in maturities of marketable debt securities.

The substantial majority of our capital expenditures in first quarter of 2021 were related to the build out of our future corporate, manufacturing and research headquarters at 9804 Medical Center Drive in Rockville, Maryland.

For the six months ended June 30, 2021, our net cash used in investing activities consisted of $242.0 million to purchase marketable debt securities and $50.9 million to purchase property and equipment, offset by $86.5 million in maturities of marketable debt securities.

The substantial majority of our capital expenditures in the first half of 2021 were related to the build out of our corporate, manufacturing and research headquarters at 9804 Medical Center Drive in Rockville, Maryland.

We expect capital expenditures to continue to increase in 2021 as a result of the ongoing build out of this facility.

1 unchanged sentence

However, the actual amount and timing of these capital expenditures are uncertain and may differ materially from our current estimates.

For the three months ended March 31, 2020 , our net cash provided by investing activities consisted of $ 68.0 million in sales and maturities of marketable securities, offset by $ 30.7 million to purchase marketable debt securities and $ 4.6 million to purchase property and equipment.

For the six months ended June 30, 2020, our net cash provided by investing activities consisted of $155.8 million in sales and maturities of marketable securities, offset by $70.7 million to purchase marketable debt securities and $7.9 million to purchase property and equipment.

Cash Flows from Financing Activities

For the three months ended March 31, 2021, our net cash provided by financing activities primarily consisted of $216.2 million in net proceeds received from a public offering of our common stock completed in January 2021, net of underwriting discounts and commissions and other offering expenses paid during the period, and was partially offset by $9.5 million of Zolgensma royalties paid to HCR during the period under the Zolgensma royalty purchase agreement.

For the three months ended March 31, 2020, our net cash provided by financing activities consisted of $2.8 million in proceeds received from the exercise of stock options and issuance of common stock under our employee stock purchase plan.

For the six months ended June 30, 2021, our net cash provided by financing activities primarily consisted of $216.1 million in net proceeds received from a public offering of our common stock completed in January 2021, net of underwriting discounts and commissions and other offering expenses paid during the period, and was partially offset by $22.0 million of Zolgensma royalties paid to HCR during the period under the Zolgensma royalty purchase agreement.

For the six months ended June 30, 2020, net cash provided by financing activities consisted of $4.6 million in proceeds received from the exercise of stock options and issuance of common stock under our employee stock purchase plan.

Future Funding Requirements

We have incurred cumulative losses since our inception and had an accumulated deficit of $339.2 million as of March 31, 2021.

We have incurred cumulative losses since our inception and had an accumulated deficit of $396.9 million as of June 30, 2021.

Our transition to recurring profitability is dependent upon achieving a level of revenues adequate to support our cost structure, which depends heavily on the successful development, approval and commercialization of our product candidates.

19 unchanged sentences

Many of these factors are outside of our control.

necessary data or results required to obtain regulatory and marketing approval and achieve product sales.

Identifying potential product candidates and conducting preclinical testing and clinical trials is a time-consuming, expensive and uncertain process that takes years to complete, and we may never generate the necessary data or results required to obtain regulatory and marketing approval and achieve product sales.

In addition, our product candidates, if approved, may not achieve commercial success.

6 unchanged sentences

Contractual Obligations, Commitments and Contingencies

There have been no material changes to our contractual obligations, commitments and contingencies as of March 31, 2021 from the information provided in Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” included in our Annual Report on Form 10-K for the year ended December 31, 2020.

There have been no material changes to our contractual obligations, commitments and contingencies as of June 30, 2021 from the information provided in Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” included in our Annual Report on Form 10-K for the year ended December 31, 2020.

Off-Balance Sheet Arrangements

2 unchanged sentences

For information regarding market risk, refer to Item 7A, “Quantitative and Qualitative Disclosures About Market Risk,” included in our Annual Report on Form 10-K for the year ended December 31, 2020.

There have been no material changes to our exposure to market risk during the three months ended March 31, 2021.

There have been no material changes to our exposure to market risk during the six months ended June 30, 2021.

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

What changed 10-Q

Item 2. Management’s Discussion and Analysis