What changed in this filing

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Item 1. Financial Statements

2022-05-04 compared with 2021-11-02 · 227 added, 243 removed, 343 unchanged (58% of the section changed)

3 unchanged sentences

(in thousands, except per share data)

September 30, 2021

March 31, 2022

December 31, 2021

19 unchanged sentences

Total current liabilities

Deferred revenue

Operating lease liabilities

5 unchanged sentences

$ 0.000 1 par value;

10,000 shares authorized, and no shares issued

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

10,000 shares authorized, no shares issued

and outstanding at March 31, 2022 and December 31, 2021

Common stock;

$ 0.0001 par value;

100,000 shares authorized at September 30, 2021

100,000 shares authorized at March 31, 2022

and December 31, 2021;

42,982 and 42,831 shares issued and outstanding at

September 30, 2021 and December 31, 2020, respectively

March 31, 2022 and December 31, 2021, respectively

Additional paid-in capital

5 unchanged sentences

REGENXBIO INC.

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

(in thousands, except per share data)

Three Months Ended September 30,

Nine Months Ended September 30,

Three Months Ended March 31,

License and royalty revenue

4 unchanged sentences

General and administrative

Provision for credit losses and other

Credit losses and other

Total operating expenses

Income (loss) from operations

Loss from operations

Other Income (Expense)

Interest income from licensing

Investment income (loss)

Investment income

Interest expense

Total other income (expense)

Income (loss) before income taxes

Loss before income taxes

Income Tax Benefit (Expense)

Net income (loss)

Other Comprehensive Income (Loss)

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

Total other comprehensive income (loss)

Comprehensive income (loss)

Net income (loss) per share:

Weighted-average common shares outstanding:

Other Comprehensive Loss

Unrealized loss on available-for-sale securities, net

Total other comprehensive loss

Comprehensive loss

Net loss per share, basic and diluted

Weighted-average common shares outstanding, basic and diluted

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

2 unchanged sentences

(in thousands)

Three Months Ended September 30, 2021

Comprehensive

Stockholders’

Balances at June 30, 2021

Exercise of stock options

Issuance of common stock under employee

stock purchase plan

Stock-based compensation expense

Unrealized loss on available-for-sale securities, net

Balances at September 30, 2021

Three Months Ended September 30, 2020

Three Months Ended March 31, 2022

Comprehensive

Stockholders’

Balances at June 30, 2020

Exercise of stock options

Balances at December 31, 2021

Vesting of restricted stock units, net of tax

Exercise of stock options, net of tax

Issuance of common stock under employee

2 unchanged sentences

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

Balances at March 31, 2022

Three Months Ended March 31, 2021

Comprehensive

8 unchanged sentences

Unrealized loss on available-for-sale securities, net

Balances at September 30, 2021

Nine Months Ended September 30, 2020

Comprehensive

Stockholders’

Balances at December 31, 2019

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 September 30, 2020

Balances at March 31, 2021

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

2 unchanged sentences

(in thousands)

Nine Months Ended September 30,

Three Months Ended March 31,

Cash flows from operating activities

4 unchanged sentences

Net amortization of premiums on marketable debt securities

Net losses (gains) on investments

Net gains on investments

Imputed interest income from licensing

14 unchanged sentences

Maturities of marketable debt securities

Sales of marketable debt securities

Sales of equity securities

Purchases of property and equipment

Net cash provided by (used in) investing activities

Net cash used in investing activities

Cash flows from financing activities

Proceeds from exercise of stock options

Taxes paid related to net settlement of stock-based awards

Proceeds from issuance of common stock under employee stock purchase plan

2 unchanged sentences

Issuance costs for public offering of common stock

Repayments under liability related to sale of future royalties

Repayments under liability related to sale of future royalties, net of imputed interest

Transaction costs for sale of future royalties

Net cash provided by financing activities

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

Net cash provided by (used in) financing activities

Net decrease in cash and cash equivalents and restricted cash

Cash and cash equivalents and restricted cash

1 unchanged sentence

End of period

Supplemental disclosures of non-cash investing and financing activities

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 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.

As of March 31, 2022, 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 a number of licensed products.

Additionally, the Company has licensed intellectual property rights to collaborators for the joint development and commercialization of certain product candidates.

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

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

As of March 31, 2022, the Company had generated an accumulated deficit of $ 238.0 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 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.

As of March 31, 2022, the Company had cash, cash equivalents and marketable securities of $ 764.8 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

10 unchanged sentences

The preparation of the consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses and related disclosure of contingent assets and liabilities for the periods presented.

Management bases its estimates on historical experience and on various other factors that it believes are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities, and other reported amounts, that are not readily apparent from other sources.

Management bases its estimates on historical experience and various other factors that it believes are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities, and other reported amounts, that are not readily apparent from other sources.

Actual results may differ materially from these estimates.

Significant estimates are used in the following areas, among others:

license and royalty revenue, the allowance for credit losses, accrued research and development expenses and other accrued liabilities, stock-based compensation expense, non-cash interest expense, income taxes and the fair value of financial instruments.

license and royalty revenue, the allowance for credit losses, accrued research and development expenses and other accrued liabilities, stock-based compensation expense, interest expense under the liability related to the sale of future royalties, income taxes and the fair value of financial instruments.

The Company is actively monitoring the impact of the COVID-19 pandemic on its business, results of operations and financial condition.

The full extent to which the COVID-19 pandemic will directly or indirectly impact the Company’s 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 .

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

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.

Restricted Cash

Restricted cash includes money market mutual funds used to collateralize irrevocable letters of credit as required by the Company’s lease agreements.

Restricted cash includes money market mutual funds and other deposits used to collateralize irrevocable letters of credit required under the Company’s lease agreements and other certain agreements.

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):

September 30, 2021

September 30, 2020

Three Months Ended March 31,

Cash and cash equivalents

2 unchanged sentences

Accounts Receivable

Accounts receivable primarily consist of consideration due to the Company resulting from its license agreements with NAV Technology Licensees.

Accounts receivable primarily consist of consideration due to the Company resulting from its license agreements with customers.

Accounts receivable include amounts invoiced to licensees as well as rights to consideration which have not yet been invoiced, including unbilled royalties, and for which payment is conditional solely upon the passage of time.

23 unchanged sentences

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

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.

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.

Correction of Previously Issued Financial Statements

During the quarter ended December 31, 2021, the Company identified an immaterial error in the presentation of payments made under the liability related to the sale of future royalties in the consolidated statements of cash flows for the three months ended March 31, 2021, six months ended June 30, 2021 and nine months ended September 30, 2021.

Payments made under the liability related to the sale of future royalties were presented as cash outflows from financing activities in the interim financial statements for these periods.

Upon further review, the Company determined that the amount of these payments attributable to imputed interest expense should be presented as cash outflows from operating activities, and only the amount attributable to principal repayments should be presented as cash outflows from financing activities.

The amounts previously reported as cash outflows from financing activities which should have been reported as cash outflows from operating activities were $ 2.9 million for the three months ended March 31, 2021, $ 9.1 million for the six months ended June 30, 2021 and $ 15.3 million for the nine months ended September 30, 2021.

The Company evaluated the materiality of these errors from both a quantitative and qualitative perspective and concluded that they were immaterial to the aforementioned previously issued interim financial statements taken as a whole.

The error in presentation did not have an impact on the financial statements for any periods prior to 2021, and did not have an impact on the previously reported assets, liabilities, stockholders’ equity or results of operations for the interim periods ended March 31, 2021, June 30, 2021 and September 30, 2021.

Although the Company determined the error was not material to its previously issued interim financial statements for 2021, the Company is revising the previously issued interim financial statements to correct for such error, which revision has been effected in the accompanying consolidated statement of cash flows for the three months ended March 31, 2021, and will be effected in connection with its future filings of Form 10-Q for the interim periods ended June 30, 2022 and September 30, 2022.

The accompanying consolidated statement of cash flows for the three months ended March 31, 2021 reflects the as corrected impact of correcting the error, resulting in an increase in net cash used in operating activities and a corresponding increase in net cash provided by financing activities of $ 2.9 million as compared to the previously issued interim financial statements for the period ended March 31, 2021.

Marketable Securities

1 unchanged sentence

Amortized Cost

September 30, 2021

government and federal agency securities

March 31, 2022

government and agency securities

Certificates of deposit

Corporate bonds

Municipal securities

Amortized Cost

December 31, 2021

government and federal agency securities

government and agency securities

Certificates of deposit

Corporate bonds

Municipal securities

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

As of March 31, 2022 and December 31, 2021, 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 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.

As of March 31, 2022 and December 31, 2021, the balance in 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 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 gains reclassified to investment income (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 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

Income tax expense

Unrealized gain (loss) on available-for-sale

securities, net

Unrealized 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

September 30, 2021

government and federal

agency securities

March 31, 2022

government and agency securities

Certificates of deposit

3 unchanged sentences

December 31, 2021

government and agency securities

Certificates of deposit

Corporate bonds

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.

As of March 31, 2022, available-for-sale debt securities held by the Company which were in an unrealized loss position consisted of 132 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 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.

As of December 31, 2020, the Company had sold all of its Prevail equity securities.

The Company did no t record an allowance for credit losses on its available-for-sale debt securities as of March 31, 2022 or December 31, 2021.

The Company did no t recognize any impairment or credit losses on available-for-sale debt securities during the three months ended March 31, 2022 and 2021.

Fair Value of Financial Instruments

1 unchanged sentence

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

September 30, 2021

March 31, 2022

Cash equivalents:

2 unchanged sentences

Marketable securities:

government and federal agency securities

government and agency securities

Certificates of deposit

Corporate bonds

Municipal securities

Total marketable securities

5 unchanged sentences

Marketable securities:

government and federal agency securities

government and agency securities

Certificates of deposit

Corporate bonds

Municipal securities

Total marketable securities

Total cash equivalents and marketable securities

Management estimates that the carrying amounts of its current accounts receivable, accounts payable and accrued expenses and other current liabilities approximate fair value due to the short-term nature of those instruments.

Management estimates that the carrying values of its current accounts receivable, other current assets, accounts payable, accrued expenses and other current liabilities approximate fair value due to the short-term nature of those instruments.

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 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.

Certain non-current payables reported as other liabilities on the consolidated balance sheets are recorded at their present values using a discount rate that is based on prevailing market rates and the credit profile of the Company 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, 2022 to determine the present value of these receivables and liabilities.

Accordingly, management estimates that the carrying values of its non-current accounts receivable and other liabilities approximate the fair value of those instruments.

Management estimates that the carrying value of the liability related to the sale of future royalties approximates fair value.

As discussed in Note 6, the carrying value of the liability related to the sale of future royalties is based on the Company’s estimate of future royalties expected to be paid to HCR over the life of the arrangement, which are considered Level 3 inputs.

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 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.

As of March 31, 2022 and December 31, 2021, the Company did no t hold any non-marketable equity securities.

No remeasurements or impairment losses were recorded on non-marketable equity securities during the three months ended March 31, 2022 and 2021.

Property and Equipment, Net

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

September 30, 2021

March 31, 2022

December 31, 2021

19 unchanged sentences

In order to determine the amortization of the liability, the Company is required to estimate the total amount of future royalty payments to be received by HCR, subject to the Cap Amount, over the life of the arrangement.

The total amount of royalty payments received by HCR under the agreement, less the net proceeds received by the Company of $ 192.5 million, is recorded as non-cash interest expense over the life of the arrangement using the effective interest method.

The total amount of royalty payments received by HCR under the agreement, less the net proceeds received by the Company of $ 192.5 million, is recorded as interest expense over the life of the arrangement using the effective interest method.

Due to its continuing involvement in the underlying license agreement with Novartis Gene Therapies, the Company continues to recognize royalty revenue on net sales of Zolgensma and records the royalty payments to HCR as a reduction of the liability when paid.

As such payments are made to HCR, the balance of the liability will be effectively repaid over the life of the Royalty Purchase Agreement.

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

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

As of March 31, 2022, the estimated effective interest rate under the agreement was 14.8 %.

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):

Nine Months Ended

September 30, 2021

Liability related to sale of future royalties, beginning balance

Liability Related to

Sale of Future Royalties

Balance at December 31, 2021

Zolgensma royalties paid to HCR

Non-cash interest expense

Liability related to sale of future royalties, ending balance

Interest expense recognized

Balance at March 31, 2022

Current portion of liability related to sale of future royalties

Liability related to sale of future royalties, non-current

Capitalization

In January 2021, the Company completed a public offering of 4,899,000 shares of its 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 received by the Company from the offering, inclusive of the underwriters’ option exercise, were $ 216.1 million, net of underwriting discounts and commissions and offering expenses payable by the Company.

Commitments and Contingencies

The Trustees of the University of Pennsylvania

In February 2009, the Company entered into a license agreement, which has been amended from time to time, with The Trustees of the University of Pennsylvania (together with the University of Pennsylvania, Penn) (the Penn License) for exclusive, worldwide rights to certain patents owned by Penn underlying the Company’s NAV Technology Platform, as well as exclusive rights to certain data, results and other information.

In March 2022, the Company and Penn entered into a letter agreement (the Penn Letter Agreement) pursuant to which the Company will pay to Penn a total of $ 20.0 million, consisting of (i) $ 8.0 million to satisfy payment of any sublicense fees due or owed in the future under the Penn License as a result of the Company’s collaboration and license agreement with AbbVie Global Enterprises Ltd., which is payable within 30 days of the effective date of the Penn Letter Agreement, and (ii) $ 12.0 million to satisfy any other past or future obligations of the Company to pay sublicense fees under the Penn License, which is payable in four equal annual installments of $ 3.0 million beginning on first anniversary of the effective date of the Penn Letter Agreement.

The Penn Letter Agreement amended the Penn License to remove the Company’s obligations to pay sublicense fees under the license agreement.

The Company will continue to be obligated to pay Penn royalties on net sales of licensed products, milestone fees and reimbursement of certain patent maintenance costs in accordance with the Penn License.

In connection with the execution of the Penn Letter Agreement, the Company’s royalty obligations under its March 2009 license agreement with GlaxoSmithKline LLC (GSK) (the GSK License) were assigned by GSK to Penn.

Beginning upon the effective date of the Penn Letter Agreement in March 2022, any royalties payable by the Company under the GSK License will be paid to Penn rather than GSK.

The Company will continue to be obligated to pay GSK sublicense fees and reimbursement of certain patent maintenance costs in accordance with the GSK License.

The Company recognized a charge of $ 9.2 million as cost of revenues during the three months ended March 31, 2022 related to the execution of Penn Letter Agreement, which consisted of $ 17.3 million representing the present value of the $ 20.0 million payable under the Penn Letter Agreement, less $ 8.1 million in sublicense fees previously recognized as expense by the Company in prior periods and accrued as liabilities prior to the effectiveness of the Penn Letter Agreement.

The present value discount is accreted as interest expense over the contractual payment period using the effective interest method.

In addition to other amounts payable under the Penn License, as of March 31, 2022, the Company had recorded a total of $ 17.4 million payable to Penn under the Penn Letter Agreement, net of present value discount, of which $ 10.0 million was included in accounts payable and accrued expenses and other current liabilities and $ 7.4 million was included in other liabilities on the consolidated balance sheet.

License and Collaboration Agreements

License and Royalty Revenue

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.

As of March 31, 2022, the Company’s NAV Technology Platform was being applied by NAV Technology Licensees in one commercially available product, Zolgensma, and in the development of a number of licensed products.

Additionally, the Company has licensed intellectual property rights to collaborators for the joint development of certain product candidates.

Consideration to the Company under its license agreements may include:

(i) up-front and annual fees, (ii) option fees to acquire additional licenses, (iii) milestone payments based on the achievement of certain development and sales-based milestones by licensees, (iv) sublicense fees and (v) royalties on sales of licensed products.

(i) up-front and annual fees, (ii) milestone payments based on the achievement of certain development and sales-based milestones, (iii) sublicense fees, (iv) royalties on sales of licensed products and (v) other consideration payable upon optional goods and services purchased by licensees.

Sublicense fees vary by license and range from a mid-single digit percentage to a low-double digit percentage of license fees received by licensees as a result of sublicenses.

Royalties on net sales of commercialized products vary by license and range from a mid-single digit percentage to a low double-digit percentage of net sales by licensees.

License and royalty revenue consisted of the following (in thousands):

Three Months Ended March 31,

Zolgensma royalties

Other license and royalty revenue

Total license and royalty revenue

Development milestone payments are evaluated each reporting period and are only included in the transaction price of each license and recognized as license revenue to the extent the milestones are considered probable of achievement.

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 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.

As of March 31, 2022, 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 $ 1.58 billion, including (i) $ 537.8 million upon the commencement of various stages of clinical trials, (ii) $ 21.0 million upon the submission of regulatory approval filings, (iii) $ 141.0 million upon the approval of commercial products by regulatory agencies and (iv) $ 877.0 million upon the achievement of specified sales targets for licensed products, including milestones payable upon the first commercial sales of 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.

The achievement of milestones by licensees is highly dependent on the successful development and commercialization of licensed products and it is at least reasonably possible that some or all of the milestone fees will not be realized by the Company.

The achievement of these milestones is highly dependent on the successful development and commercialization of licensed products and it is at least reasonably possible that some or all of the milestone fees will not be realized by the Company.

Changes in Accounts Receivable, Contract Assets and Deferred Revenue

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 September 30,

Nine Months Ended September 30,

Three Months Ended March 31,

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 and sales-based milestones by licensees and interest income from licensing recognized during the period.

Additions to accounts receivable during the periods presented consisted primarily of royalties on net sales of Zolgensma and the achievement of development milestones by licensees 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.

Additions to contract assets during the periods presented consisted primarily of development milestones deemed probable of achievement by licensees during the period.

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 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, 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.

Additions to contract assets during the periods presented consisted of development milestones deemed probable of achievement by licensees during the period and revenue recognized from research and development services performed by the Company for which payment by the licensee is not unconditional.

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

Contract assets as of March 31, 2022 and December 31, 2021 are included in other current assets on the consolidated balance sheets.

As of March 31, 2022, the Company had recorded deferred revenue of $ 3.3 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 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 royalties 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.

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

September 30, 2021

March 31, 2022

December 31, 2021

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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 nine months ended September 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 three months ended March 31, 2022 (in thousands):

Allowance for Credit Losses

Accounts Receivable

2 unchanged sentences

Provision for credit losses

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.

Changes in present value discount of receivables

Balance at March 31, 2022

The Company’s allowance for credit losses as of March 31, 2022 and December 31, 2021 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 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.

The Company’s provision for credit losses was zero and $ 0.6 million for the three months ended March 31, 2022 and 2021, respectively, and was related solely to changes in estimates regarding the collectability of the accounts receivable due from Abeona.

Zolgensma License with Novartis Gene Therapies

In March 2014, the Company entered into an exclusive license agreement, as amended, (the March 2014 License) with Novartis Gene Therapies (formerly AveXis, Inc.).

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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 September 30,

Nine Months Ended September 30,

Royalties on net sales of Zolgensma

Achievement of sales-based milestone for Zolgensma

Other license revenue

Three Months Ended March 31,

Zolgensma royalties

Total license and royalty revenue

Interest income from licensing

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.

As of March 31, 2022 and December 31, 2021, the Company had recorded total accounts receivable of $ 21.0 million and $ 26.6 million, respectively, from Novartis Gene Therapies under the March 2014 License, which consisted primarily of Zolgensma royalties receivable.

The Zolgensma royalties receivable recorded as of March 31, 2022 included $ 14.3 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.

Settlement Agreement with Abeona Therapeutics

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.

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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.

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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.

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 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.

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 $ 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 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

A binding arbitration was held in March 2021, and the arbitration tribunal issued its ruling in July 2021, which denied Abeona’s claim and upheld the Company’s counterclaim.

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 in damages and accrued interest payable by Abeona.

Subsequent to the arbitration tribunal’s ruling in July 2021, Abeona filed an additional claim in a second arbitration to enforce a purported settlement relating to the unpaid fees, which the Company disputed.

In November 2021, the Company and Abeona entered into a settlement agreement and mutual release (the Settlement Agreement) to resolve all arbitration and legal proceedings and mutually release each party from any and all claims under the November 2018 License.

Pursuant to the Settlement Agreement, Abeona will pay the Company a total of $ 30.0 million as follows:

(i) $ 20.0 million which was paid in November 2021, (ii) $ 5.0 million payable in November 2022, which is fully secured by an irrevocable standby letter of credit issued to the Company by a reputable U.S.

financial institution, and (iii) $ 5.0 million payable on the earlier of the third anniversary of the Settlement Agreement in November 2024 or the closing of a specified type of transaction by Abeona.

As of March 31, 2022 and December 31, 2021, the Company had recorded gross accounts receivable of $ 8.9 million and $ 8.8 million, respectively, from Abeona under the Settlement Agreement.

The gross accounts receivable of $ 8.9 million as of March 31, 2022 consisted of current accounts receivable of $ 5.0 million for the payment due in November 2022, and non-current accounts receivable of $ 3.9 million for the present value of the $ 5.0 million payment due by November 2024.

While the Company anticipates taking appropriate measures to enforce the full collection of all amounts due from Abeona under the Settlement Agreement, the Company assessed the collectability of the accounts receivable from Abeona as it relates to credit risk.

As a result of its analysis, the Company recorded an allowance for credit losses of $ 3.9 million and $ 3.8 million as of March 31, 2022 and December 31, 2021, respectively, related to the non-current accounts receivable due from Abeona.

The Company recorded a provision for credit losses of zero and $ 0.6 million for the three months ended March 31, 2022 and 2021, respectively, as a result of changes in estimates regarding the allowance during the periods.

The present value discount of the non-current accounts receivable from Abeona is accreted as interest income from licensing through the contractual due date using the effective interest method.

The Company has elected to record increases in the allowance for credit losses associated with the accretion of the present value discount of the receivable as a reduction of the associated interest income, resulting in no interest income recognized during the periods related to the accretion of the present value discount on the non-current receivable from Abeona.

AbbVie Collaboration and License Agreement

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.

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

The AbbVie Collaboration Agreement became effective in November 2021.

Pursuant to the AbbVie Collaboration Agreement, the Company granted AbbVie a co-exclusive license to develop and commercialize RGX-314 in the United States and an exclusive license to develop and commercialize RGX-314 outside the United States.

The Company and AbbVie will collaborate to develop RGX-314 in the United States, and AbbVie will be responsible for the

development of RGX-314 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.

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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.

commercial supply, and AbbVie will lead the 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 Agreement and supply agreements determined in accordance with the agreement.

If requested by AbbVie, the Company will manufacture up to a specified portion of RGX-314 for commercial supply outside the United States at a price specified in the agreement.

AbbVie will lead the commercialization of RGX-314 globally, and the Company will participate in U.S.

commercialization efforts as provided under a commercialization plan determined in accordance with the agreement.

The Company and AbbVie will share equally in the net profits and net losses associated with the commercialization of RGX-314 in the United States.

Outside the United States, AbbVie will be responsible, at its sole cost, for the commercialization of RGX-314.

In consideration for the rights granted under the AbbVie Collaboration Agreement, AbbVie paid the Company an up-front fee of $ 370.0 million upon the effective date of the agreement in November 2021, and is required to pay to the Company up to $ 1.38 billion upon the achievement of specified development and sales-based milestones, of which $ 562.5 million are based on development milestones and $ 820.0 million are sales-based milestones.

AbbVie is also required to pay to the Company tiered royalties on net sales of RGX-314 outside the United States at percentages in the mid-teens to low twenties, subject to specified offsets and reductions.

The Company applied the requirements of Topic 606 to the AbbVie Collaboration Agreement for the units of account in which AbbVie was deemed to be a customer.

The Company determined that there is only one material performance obligation under the agreement for the delivery of the intellectual property license to develop and commercialize RGX-314 globally.

The intellectual property licensed to AbbVie includes the rights to certain patents, data, know-how and other rights developed and owned by the Company, as well as other intellectual property rights exclusively licensed by the Company from various third parties.

As of March 31, 2022 and December 31, 2021, the transaction price of the AbbVie Collaboration Agreement was $ 370.0 million, which consisted solely of the up-front payment received in November 2021.

The $370.0 million transaction price was fully recognized as revenue upon the delivery of the license to AbbVie in November 2021.

Variable consideration under the AbbVie Collaboration Agreement, which has been excluded from the transaction price, includes $ 562.5 million in payments for development milestones that have not yet been achieved and were not considered probable of achievement.

Additionally, the transaction price excludes sales-based milestone payments of $ 820.0 million and royalties on net sales of RGX-314 outside the United States.

Development milestones will be added to the transaction price and recognized as revenue upon achievement, or if deemed probable of achievement.

In accordance with the sale- or usage-based royalty exception under Topic 606, royalties on net sales and sales-based milestones will be recognized as revenue in the period the underlying sales occur or milestones are achieved.

There were no changes in the transaction price of the AbbVie Collaboration Agreement, and no revenue was recognized, during the three months ended March 31, 2022.

The Company applied the requirements of Topic 808 to the AbbVie Collaboration Agreement for the units of account which were deemed to be a collaborative arrangement.

Both the Company and AbbVie will perform various activities related to the development, manufacturing and commercialization of RGX-314 in the United States.

Development costs are shared between the parties in accordance with the terms of the AbbVie Collaboration Agreement, and the parties will share equally in the net profits and losses derived from sales of RGX-314 in the United States.

The Company accounts for payments to and from AbbVie for the sharing of development and commercialization costs in accordance with its accounting policy for collaborative arrangements.

Amounts owed to AbbVie for the Company’s share of development costs or commercialization costs incurred by AbbVie are recorded as research and development expense or general and administrative expense, respectively, in the period the costs are incurred.

Amounts owed to the Company for AbbVie’s share of development costs or commercialization costs incurred by the Company are recorded as a reduction of research and development expense or general and administrative expense, respectively, in the period the costs are incurred.

At the end of each reporting period, the Company records a net amount due to or from AbbVie as a result of the cost-sharing arrangement.

As of March 31, 2022 and December 31, 2021, the Company had recorded $ 3.1 million and $ 5.9 million, respectively, due from AbbVie for reimbursement of costs incurred for activities performed under AbbVie Collaboration Agreement, which is included in other current assets on the consolidated balance sheets.

The Company recognized the following amounts under the AbbVie Collaboration Agreement (in thousands):

Three Months Ended

March 31, 2022

Net cost reimbursement from AbbVie for collaboration activities included in:

Research and development expense

General and administrative expense

Total net cost reimbursement from AbbVie

Stock-based Compensation

In January 2022, the Board of Directors authorized an additional 1,713,246 shares to be issued under the 2015 Equity Incentive Plan (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.

As of March 31, 2022, the total number of shares of common stock authorized for issuance under the 2015 Plan and the 2014 Stock Plan (the 2014 Plan) was 15,625,200 , of which 2,693,341 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 September 30,

Nine Months Ended September 30,

Three Months Ended March 31,

Stock options

1 unchanged sentence

Employee stock purchase plan

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,

As of March 31, 2022, the Company had $ 88.9 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 2.7 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,

Research and development

4 unchanged sentences

Cancelled or forfeited

Outstanding at September 30, 2021

Exercisable at September 30, 2021

Vested and expected to vest at September 30, 2021

Outstanding at March 31, 2022

Exercisable at March 31, 2022

Vested and expected to vest at March 31, 2022

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 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.

The weighted-average grant date fair value per share of options granted during the three months ended March 31, 2022 was $ 20.37 .

During the three months ended March 31, 2022, the total number of stock options exercised was 80,123 , resulting in total proceeds of $ 0.4 million.

The total intrinsic value of options exercised during the three months ended March 31, 2022 was $ 1.8 million.

Restricted Stock Units

The following table summarizes restricted stock unit activity under the 2015 Plan (in thousands, except per share data):

Weighted-average

Unvested balance at December 31, 2021

Unvested balance at September 30, 2021

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

Unvested balance at March 31, 2022

The total intrinsic value of restricted stock units vested during the three months ended March 31, 2022 was $ 2.0 million.

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

Employee Stock Purchase Plan

In January 2022, the Board of Directors authorized an additional 428,311 shares to be 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 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.

As of March 31, 2022, the total number of shares of common stock authorized for issuance under the 2015 ESPP was 1,426,994 , of which 1,175,112 remained available for future issuance.

During the three months ended March 31, 2022, 22,373 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 as of March 31, 2022 and December 31, 2021.

Based on the Company’s history of operating losses, and other relevant facts and circumstances, the Company concluded that it was 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, 2022 and December 31, 2021.

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 $ 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.

In December 2021, the Company provided notice of termination of the agreement to FOXKISER, with such termination to be effective in June 2022.

Expenses incurred under the agreement with FOXKISER were $ 1.2 million and $ 1.2 million for the three months ended March 31, 2022 and 2021, 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, 2022 and 2021, 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 September 30,

Nine Months Ended September 30,

Three Months Ended March 31,

Stock options issued and outstanding

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Supplemental Disclosures

Accrued Expenses and Other Current Liabilities

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

September 30, 2021

March 31, 2022

December 31, 2021

Accrued income taxes payable

Accrued external research and development expenses

Accrued sublicense fees and royalties

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Accrued purchases of property and equipment

Accrued external research and development expenses

Accrued external general and administrative expenses

Accrued income taxes payable

Other accrued expenses and current liabilities

Supplemental Disclosures of Non-cash Investing and Financing Activities

Purchases of property and equipment included in accounts payable and accrued expenses and other current liabilities were $ 5.4 million as of March 31, 2022, a net decrease of $ 4.7 million from December 31, 2021, and $ 13.3 million as of March 31, 2021, a net increase of $ 3.8 million from December 31, 2020.

Proceeds due to the Company for sales of non-marketable equity securities included in other current assets as of March 31, 2022 were $ 0.6 million.

No such amounts were recorded as of March 31, 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 1. Financial Statements