What changed in this filing

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Item 1. Financial Statements

2021-11-02 compared with 2021-08-09 · 180 added, 121 removed, 406 unchanged (43% of the section changed)

3 unchanged sentences

(in thousands, except per share data)

June 30, 2021

September 30, 2021

December 31, 2020

28 unchanged sentences

10,000 shares authorized, and no shares issued

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

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

Common stock;

$ 0.0001 par value;

100,000 shares authorized at June 30, 2021

100,000 shares authorized at September 30, 2021

and December 31, 2020;

42,752 and 37,476 shares issued and outstanding at

June 30, 2021 and December 31, 2020, respectively

September 30, 2021 and December 31, 2020, respectively

Additional paid-in capital

5 unchanged sentences

REGENXBIO INC.

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)

(in thousands, except per share data)

Three Months Ended June 30,

Six Months Ended June 30,

Three Months Ended September 30,

Nine Months Ended September 30,

License and royalty revenue

6 unchanged sentences

Total operating expenses

Loss from operations

Income (loss) from operations

Other Income (Expense)

Interest income from licensing

Investment income

Investment income (loss)

Interest expense

Total other income (expense)

Loss before income taxes

Income (loss) before income taxes

Income Tax Benefit (Expense)

Net income (loss)

Other Comprehensive Income (Loss)

1 unchanged sentence

Total other comprehensive income (loss)

Comprehensive loss

Net loss per share, basic and diluted

Weighted-average common shares outstanding, basic and diluted

Comprehensive income (loss)

Net income (loss) per share:

Weighted-average common shares outstanding:

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

2 unchanged sentences

(in thousands)

Three Months Ended June 30, 2021

Three Months Ended September 30, 2021

Comprehensive

Stockholders’

Balances at March 31, 2021

Balances at June 30, 2021

Exercise of stock options

Issuance of common stock under employee

stock purchase plan

Stock-based compensation expense

Unrealized gain on available-for-sale securities, net

Balances at June 30, 2021

Three Months Ended June 30, 2020

Unrealized loss on available-for-sale securities, net

Balances at September 30, 2021

Three Months Ended September 30, 2020

Comprehensive

Stockholders’

Income (Loss)

Balances at March 31, 2020

Balances at June 30, 2020

Exercise of stock options

Issuance of common stock under employee

stock purchase plan

Stock-based compensation expense

Unrealized gain on available-for-sale securities, net

Balances at June 30, 2020

Six Months Ended June 30, 2021

Unrealized loss on available-for-sale securities, net

Balances at September 30, 2020

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

REGENXBIO INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(in thousands)

Nine Months Ended September 30, 2021

Comprehensive

8 unchanged sentences

Unrealized loss on available-for-sale securities, net

Balances at June 30, 2021

Six Months Ended June 30, 2020

Balances at September 30, 2021

Nine Months Ended September 30, 2020

Comprehensive

6 unchanged sentences

Unrealized gain on available-for-sale securities, net

Balances at June 30, 2020

Balances at September 30, 2020

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

2 unchanged sentences

(in thousands)

Six Months Ended June 30,

Nine Months Ended September 30,

Cash flows from operating activities

4 unchanged sentences

Net amortization of premiums on marketable debt securities

Net realized and unrealized losses (gains) on marketable securities

Net losses (gains) on investments

Imputed interest income from licensing

15 unchanged sentences

Sales of marketable debt securities

Sales of marketable equity securities

Sales of equity securities

Purchases of property and equipment

14 unchanged sentences

Supplemental disclosures of non-cash investing and financing activities

Additions to property and equipment through accounts payable and accrued expenses

Net additions to property and equipment through accounts payable and accrued expenses

Non-cash additions to property and equipment through tenant improvement allowance

Non-cash consideration received for licenses granted

Proceeds due to Company from sales of non-marketable equity securities

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 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.

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

As of September 30, 2021, the Company had generated an accumulated deficit of $ 455.3 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 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.

As of September 30, 2021, the Company had cash, cash equivalents and marketable securities of $ 533.5 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.

Summary of Significant Accounting Policies

17 unchanged sentences

The most significant estimates affecting the Company’s consolidated financial statements that may be impacted by the COVID-19 pandemic are related to the Company’s assessment of credit losses on accounts receivable, contract assets and available-for-sale debt securities.

Reclassifications

Certain amounts reported in prior periods have been reclassified to conform to current period financial statement presentation.

These reclassifications are not material and have no effect on previously reported financial position, results of operations and cash flows.

Restricted Cash

1 unchanged sentence

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):

June 30, 2021

June 30, 2020

September 30, 2021

September 30, 2020

Cash and cash equivalents

28 unchanged sentences

Please refer to Note 4 for further information on the fair value measurement of the Company’s financial instruments.

Net Loss Per Share

Basic net loss per share is calculated by dividing net loss applicable to common stockholders by the weighted-average common shares outstanding during the period, without consideration for common stock equivalents.

Diluted net loss per share is calculated by adjusting the weighted-average common shares outstanding for the dilutive effect of common stock equivalents outstanding for the period, determined using the treasury-stock method.

Contingently convertible shares in which conversion is based on non-market-priced contingencies are excluded from the calculations of both basic and diluted net loss per share until the contingency has been fully met.

For purposes of the diluted net loss per share calculation, common stock equivalents are excluded from the calculation of diluted net loss per share if their effect would be anti-dilutive.

Net Income (Loss) Per Share

Basic net income (loss) per share is calculated by dividing net income (loss) applicable to common stockholders by the weighted-average common shares outstanding during the period, without consideration for common stock equivalents.

Diluted net income (loss) per share is calculated by adjusting the weighted-average common shares outstanding for the dilutive effect of common stock equivalents outstanding for the period, determined using the treasury-stock method.

Contingently convertible shares in which conversion is based on non-market-priced contingencies are excluded from the calculations of both basic and diluted net income (loss) per share until the contingency has been fully met.

For purposes of the diluted net income (loss) per share calculation, common stock equivalents are excluded from the calculation of diluted net income (loss) per share if their effect would be anti-dilutive.

Marketable Securities

1 unchanged sentence

Amortized Cost

June 30, 2021

September 30, 2021

government and federal agency securities

8 unchanged sentences

Municipal securities

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

As of September 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 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.

As of September 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 .

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,

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

Three Months Ended September 30,

Nine Months Ended September 30,

Unrealized gain (loss) before reclassifications

Realized losses (gains) reclassified to investment income

Realized gains reclassified to investment income (loss)

Income tax expense

4 unchanged sentences

12 Months or Greater

June 30, 2021

September 30, 2021

government and federal

agency securities

Certificates of deposit

Corporate bonds

3 unchanged sentences

Corporate bonds

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.

As of September 30, 2021, available-for-sale debt securities held by the Company in an unrealized loss position consisted of 47 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.

The Company did no t record an allowance for credit losses on its available-for-sale debt securities as of September 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 nine months ended September 30, 2021 and 2020.

During the three and nine months ended September 30, 2020, the Company recognized total net realized and unrealized losses of $ 7.5 million and $ 8.3 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):

June 30, 2021

September 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 June 30, 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 September 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

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 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.

As of September 30, 2021, the Company did no t hold any non-marketable equity securities.

As of 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 sheet.

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 December 31, 2020.

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

The Company’s non-marketable equity securities as of December 31, 2020 consisted solely of equity securities of Corlieve Therapeutics SAS (Corlieve), which were acquired in June 2020 as consideration under a license and collaboration agreement with Corlieve.

In July 2021, Corlieve was acquired by uniQure N.V.

In exchange for its ownership in Corlieve, the Company received proceeds of € 4.8 million ($ 5.6 million) from uniQure and is entitled to receive additional proceeds of € 0.6 million ($ 0.6 million as of September 30, 2021) by July 2022.

During the three and nine months ended September 30, 2021, the Company recorded a realized gain of $ 5.2 million as a result of the acquisition of its Corlieve securities by uniQure, which is included in investment income (loss) in the consolidated statements of operations and comprehensive income (loss).

In connection with the acquisition, the Company is also eligible to receive payments of up to € 37.1 million ($ 43.2 million as of September 30, 2021) from uniQure contingent upon the achievement of various development and regulatory milestones, none of which have been recognized in the consolidated financial statements as of September 30, 2021.

Proceeds contingent upon the achievement of these milestones will be recognized as investment income in the period in which any uncertainty regarding realization is substantially resolved, which may not occur until the achievement of the underlying milestones.

It is at least reasonably possible that some or all of the proceeds contingent upon these milestones will not be realized by the Company.

Property and Equipment, Net

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

June 30, 2021

September 30, 2021

December 31, 2020

14 unchanged sentences

If, on or prior to the defined dates for each Cap Amount, the total amount of royalty payments received by HCR equals or exceeds the Cap Amount applicable to such date, the Royalty Purchase Agreement will automatically terminate and all rights to the Zolgensma royalty payments will revert back to the Company.

The Company has no obligation to repay any amounts to HCR if total future Zolgensma royalty payments are not sufficient to achieve the applicable Cap Amount prior to the termination of the license agreement with Novartis Gene Therapies.

The Company has a call option to repurchase its rights to the purchased royalties from HCR for a repurchase price equal to, as of the option exercise date, $ 300.0 million minus the total amount of royalty payments received by HCR;

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

As of September 30, 2021, the estimated effective interest rate under the agreement was 14.9 %.

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):

Six Months Ended

June 30, 2021

Nine Months Ended

September 30, 2021

Liability related to sale of future royalties, beginning balance

8 unchanged sentences

License and Royalty Revenue

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.

As of September 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 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.

As of September 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 June 30,

Six Months Ended June 30,

Three Months Ended September 30,

Nine Months Ended September 30,

Accounts receivable, net, current and non-current:

10 unchanged sentences

Performance obligations satisfied in previous periods

Additions to accounts receivable during the periods presented consisted primarily of receivables recorded related to royalties on net sales of Zolgensma, new licenses granted by the Company, the achievement of development milestones by licensees and interest income from licensing recognized during the period.

Additions to accounts receivable during the periods presented consisted primarily of receivables recorded related to royalties on net sales of Zolgensma, new licenses granted by the Company, the achievement of development and sales-based milestones by licensees and interest income from licensing recognized during the period.

Deductions to accounts receivable during the periods presented consisted primarily of amounts collected from licensees and increases in the allowance for credit losses, as discussed further below.

1 unchanged sentence

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 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.

As of September 30, 2021, the Company had recorded deferred revenue of $ 3.9 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, sublicense fees earned from licensees and 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, the achievement of sales-based milestones for net sales of Zolgensma, 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):

June 30, 2021

September 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 six months ended June 30, 2021 (in thousands):

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

Accounts Receivable

2 unchanged sentences

Provision for credit losses

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.

Balance at September 30, 2021

The Company’s allowance for credit losses as of September 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 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.

The Company’s provision for credit losses was $ 5.0 million and $ 5.5 million for the three and nine months ended September 30, 2021, respectively, and $ 7.7 million and $ 7.7 million for the three and nine months ended September 30, 2020, respectively.

The Company’s provision for credit losses for the three and nine months ended September 30, 2021 and 2020 was related solely to changes in estimates regarding the collectability of the accounts receivable due from Abeona.

Novartis Gene Therapies, Inc.

2 unchanged sentences

Novartis Gene Therapies launched commercial sales of Zolgensma, a licensed product under the March 2014 License, in the second quarter of 2019, upon which the Company began recognizing royalty revenue on net sales of the licensed product.

Pursuant to the March 2014 License, Novartis Gene Therapies was obligated to pay a sales-based milestone fee of $ 80.0 million to the Company upon the achievement of $ 1.0 billion in cumulative net sales of licensed products.

Novartis Gene Therapies achieved cumulative net sales of Zolgensma of $ 1.0 billion in the third quarter of 2020, upon which the Company recognized revenue of $ 80.0 million related to the sales-based milestone fee.

The $ 80.0 million milestone fee was recorded as accounts receivable as of September 30, 2020, and the Company received payment of the $ 80.0 million milestone fee from Novartis Gene Therapies in October 2020.

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

Three Months Ended June 30,

Six Months Ended June 30,

Three Months Ended September 30,

Nine Months Ended September 30,

Royalties on net sales of Zolgensma

Achievement of sales-based milestone for Zolgensma

Other license revenue

1 unchanged sentence

Interest income from licensing

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.

As of September 30, 2021 and December 31, 2020, the Company had recorded total accounts receivable of $ 28.4 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 recorded as of September 30, 2021 included $ 13.8 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.

4 unchanged sentences

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 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.

As a result of the termination, Abeona was required to pay an additional $ 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 September 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.

1 unchanged sentence

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 arbitration tribunal’s ruling, which was subsequently amended to reflect a minor adjustment in the computation of accrued interest, awarded the Company a total of $33.6 million, which consisted of $ 28.0 million in damages and $ 5.6 million in accrued interest payable to the Company by Abeona.

As of October 28, 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.

Abeona has filed an additional claim in a second arbitration to enforce a purported settlement relating to the unpaid fees, which the Company disputes.

As of September 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.

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.

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.

As a result of its analyses, the Company recorded an allowance for credit losses of $ 13.2 million and $ 7.7 million as of September 30, 2021 and December 31, 2020, respectively, related to the accounts receivable due from Abeona.

The Company recorded a provision for credit losses of $ 5.0 million and $ 5.5 million for the three and nine months ended September 30, 2021, respectively, as a result of changes in estimates regarding the allowance during the periods.

As of September 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.

The arbitration tribunal’s ruling in July 2021, as subsequently adjusted, 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.

As of September 30, 2021, the Company had continued to maintain the accounts receivable due from Abeona on non-accrual status and will not recognize any further interest income associated with the accounts receivable unless and until such amounts are deemed to be collectable.

Collaboration and License Agreement with AbbVie

In September 2021, the Company entered into a Collaboration and License Agreement with AbbVie Global Enterprises Ltd.

(AbbVie), a subsidiary of AbbVie Inc., to develop and commercialize RGX-314, the Company’s product candidate for the treatment of wet age-related macular degeneration (wet AMD), diabetic retinopathy (DR) and other chronic retinal diseases (the AbbVie Collaboration and License Agreement).

The transaction is contingent upon the satisfaction of customary closing conditions, including the expiration or termination of the applicable waiting or suspension period under the Hart-Scott Rodino Antitrust Improvements Act of 1976, as amended, and any other applicable competition laws.

Pursuant to the AbbVie Collaboration and License Agreement, the parties will conduct certain activities for the development of products containing RGX-314 under a development plan determined in accordance with the AbbVie Collaboration and License Agreement.

The Company and AbbVie will develop licensed products in the United States, and AbbVie will be responsible for the development of licensed products in specified markets outside the United States.

Through December 31, 2022, the Company will be responsible for development expenses for certain ongoing trials of RGX-314 and the parties will share additional development expenses related to RGX-314.

Beginning on January 1, 2023, AbbVie will be responsible for the majority of all RGX-314 development expenses.

The Company will lead the manufacturing of RGX-314 for clinical development and U.S.

commercial supply, and AbbVie will lead manufacturing of RGX-314 for commercial supply outside the United States.

Manufacturing expenses will be allocated between the parties in accordance with the terms of the AbbVie Collaboration and License Agreement and mutually agreed supply agreements.

In the United States, the Company shall participate in commercialization of licensed products under a commercialization plan to be determined in accordance with the AbbVie Collaboration and License Agreement, and the parties will equally share net profits and net losses associated with commercialization of licensed products in the United States.

Outside the United States, AbbVie will be responsible, at its sole cost, for the commercialization of licensed products.

The Company will receive an upfront payment of $ 370.0 million from AbbVie in connection with the closing of the AbbVie Collaboration and License Agreement.

Additionally, the Company will be eligible to receive up to $ 1.38 billion in development, regulatory and commercial milestone payments, in the aggregate, for the achievement of specified milestones for the licensed products, of which $ 782.5 million are based on development and regulatory milestones, with the remainder based on commercial milestones.

The Company will also be eligible to receive tiered royalties on net sales by AbbVie of licensed products outside the United States at percentages in the mid-teens to low twenties, subject to specified offsets and reductions.

Royalties will be payable on a product-by-product and country-by-country basis outside the United States commencing on the date of first commercial sale of each licensed product, and ending on the later of (a) expiration of all valid claims of specified licensed patents in such country, (b) expiration of regulatory exclusivity in such country and (c)(x) if such country is in the European Union, 12 years following first commercial sale of such product in such country, or (y) if such country is outside the European Union, 10 years following the first commercial sale of such product in such country (the Royalty Term).

The AbbVie Collaboration and License Agreement will remain in effect, unless earlier terminated, on a country-by-country basis until (a) in the case of the United States, the later of (i) the 120th day after any quarter in which no licensed product is being developed or commercialized under such agreement, and (ii) the date that specified licensed patents for a licensed product expire in the United States, and (b) in the case of any country outside the United States, the date the Royalty Term for a licensed product expires in such country.

The AbbVie Collaboration and License Agreement contains provisions for termination, including termination for convenience by AbbVie.

Contemporaneously with entering into the AbbVie Collaboration and License Agreement, in September 2021, the Company entered into a Sublicense Agreement with AbbVie (the AbbVie Sublicense Agreement) pursuant to which the Company granted AbbVie an exclusive sublicense to exploit licensed products in connection with the AbbVie Collaboration and License Agreement

under specified patents licensed to the Company from The Trustees of the University of Pennsylvania.

The AbbVie Sublicense Agreement will be coterminous with the AbbVie Collaboration and License Agreement.

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 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.

As of September 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 2,392,917 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 June 30,

Six Months Ended June 30,

Three Months Ended September 30,

Nine Months Ended September 30,

Stock options

1 unchanged sentence

Employee stock purchase plan

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 June 30,

Six Months Ended June 30,

As of September 30, 2021, the Company had $ 75.7 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 2.5 years.

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

Three Months Ended September 30,

Nine Months Ended September 30,

Research and development

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Cancelled or forfeited

Outstanding at June 30, 2021

Exercisable at June 30, 2021

Vested and expected to vest at June 30, 2021

Outstanding at September 30, 2021

Exercisable at September 30, 2021

Vested and expected to vest at September 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 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.

The weighted-average grant date fair value per share of options granted during the nine months ended September 30, 2021 was $ 26.28 .

During the nine months ended September 30, 2021, the total number of stock options exercised was 325,273 , resulting in total proceeds of $ 3.3 million.

The total intrinsic value of options exercised during the nine months ended September 30, 2021 was $ 10.1 million.

Restricted Stock Units

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Unvested balance at December 31, 2020

Unvested balance at June 30, 2021

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

Unvested balance at September 30, 2021

No restricted stock units vested during the three and nine months ended September 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 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.

As of September 30, 2021, the total number of shares of common stock authorized for issuance under the 2015 ESPP was 998,683 , of which 769,174 remained available for future issuance.

During the nine months ended September 30, 2021, 53,596 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 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.

Based on the Company’s history of operating losses, including three-year cumulative loss positions as of September 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 September 30, 2021 and December 31, 2020.

Related Party Transactions

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

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 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.

Expenses incurred under the agreement with FOXKISER were $ 1.2 million and $ 3.6 million for the three and nine months ended September 30, 2021, respectively, and $ 1.2 million and $ 3.6 million for the three and nine months ended September 30, 2020, respectively, and were recorded as research and development expenses in the consolidated statements of operations and comprehensive income (loss).

Net Income (Loss) Per Share

The computations of basic and diluted net income (loss) per share were as follows (in thousands, except per share data):

Three Months Ended September 30,

Nine Months Ended September 30,

Basic net income (loss) per share:

Net income (loss)

Shares used in computation:

Weighted-average common shares outstanding

Basic net income (loss) per share

Diluted net income (loss) per share:

Net income (loss)

Shares used in computation:

Weighted-average common shares outstanding

Stock options

Employee stock purchase plan

Weighted-average diluted common shares

Diluted net income (loss) per share

For periods in which the Company incurred net losses, 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 and Six Months Ended June 30,

Three Months Ended September 30,

Nine Months Ended September 30,

Stock options issued and outstanding

3 unchanged sentences

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

June 30, 2021

September 30, 2021

December 31, 2020

Accrued purchases of property and equipment

Accrued sublicense fees and royalties

Accrued personnel costs

Accrued purchases of property and equipment

Accrued external research and development expenses

3 unchanged sentences

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