What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2022-08-03 compared with 2022-05-04 · 75 added, 87 removed, 212 unchanged (43% of the section changed)

15 unchanged sentences

ATMOSPHERE and ASCENT are multi-center, randomized, active-controlled trials to evaluate the efficacy and safety of a single-administration of RGX-314 versus standard of care in patients with wet AMD.

We initiated the pivotal program using cGMP material produced from our existing manufacturing process and plan to incorporate our scalable suspension cell culture manufacturing process to support future commercialization, upon completion of a bridging study.

We are also evaluating the efficacy, safety and tolerability of suprachoroidal delivery of RGX-314 through AAVIATE ® , a multi-center, open label, randomized, controlled, dose-escalation Phase II trial of RGX-314 for the treatment of wet AMD.

Enrollment in AAVIATE is expected to be completed in the first half of 2022.

Cohorts 4 and 5 are evaluating RGX-314 at a third dose level of 1x10 12 genomic copies per eye (GC/eye).

Cohort 5 is evaluating RGX-314 in patients who are neutralizing antibody (NAb) positive.

As in previous cohorts, patients will not receive prophylactic immune suppressive corticosteroid therapy before or after administration of RGX-314.

Enrollment is complete in ALTITUDE TM , a multi-center, open label, randomized, controlled, dose-escalation Phase II trial to evaluate the efficacy, safety and tolerability of RGX-314 for the treatment of DR.

We have completed enrollment in Cohort 5 of AAVIATE, which is evaluating RGX-314 at a third dose level of 1x10 12 genomic copies per eye (GC/eye) in patients who are neutralizing antibody (NAb) positive.

As in previous cohorts, patients did not receive prophylactic immune suppressive corticosteroid therapy before or after administration of RGX-314.

Enrollment is complete in ALTITUDE ® , a multi-center, open label, randomized, controlled, dose-escalation Phase II trial to evaluate the efficacy, safety and tolerability of RGX-314 for the treatment of DR.

Cohorts 2 and 3 are evaluating RGX-314 at an increased dose level of 5x10 11 GC/eye, with Cohort 3 evaluating RGX-314 in patients who are NAb positive.

As in Cohort 1, patients did not receive prophylactic immune suppressive corticosteroid therapy before or after administration of RGX-314.

As of January 18, 2022, suprachoroidal delivery of RGX-314 continued to be well tolerated in the 15 patients dosed with RGX-314 in Cohort 1 in ALTITUDE, with no drug-related serious adverse events (SAEs), and no intraocular inflammation observed.

Of the patients dosed with RGX-314 in Cohort 1, 47% demonstrated a two-step or greater improvement from baseline on the Early Treatment Diabetic Retinopathy Study-Diabetic Retinopathy Severity Scale (ETDRS-DRSS) at six months, compared to 0% in the observational control group.

One patient (7%) dosed with RGX-314 continued to demonstrate a four-step improvement.

The percentage of Cohort 1 patients dosed with RGX-314 achieving at least two-step improvement at six months in RGX-314 treated eyes (47%) increased from the previously reported three-month results (33%).

We are developing RGX-202 for the treatment of Duchenne muscular dystrophy (Duchenne), a rare disease caused by mutations in the gene responsible for making dystrophin, a protein of central importance for muscle cell structure and function.

3 unchanged sentences

This will be a multicenter, open-label dose escalation and dose expansion clinical study to evaluate the safety, tolerability and clinical efficacy of RGX-202 in patients with Duchenne.

We have taken proactive measures that will result in the delayed dosing of the first patient in AFFINITY DUCHENNE due to a n unexpected observation in the final stages of manufacturing at one of our third-party manufacturers .

We continue to prepare for trial initiation, including readying clinical trial sites and manufacturing additional clinical supply for the upcoming trial .

Preparation for the initiation of the AFFINITY DUCHENNE trial continues , including readying clinical trial sites and manufacturing additional clinical supply for the trial.

We anticipate dosing the first patient in this trial in the first half of 2023.

We are developing RGX-121 for the treatment of Mucopolysaccharidosis Type II (MPS II), a rare disease caused by a deficiency of the IDS gene which encodes I2S, an enzyme that is responsible for the breakdown of structures that dispose of waste products inside cells.

We are conducting a Phase I/II trial of RGX-121 in patients with MPS II under the age of 5 years old to evaluate the safety and tolerability of RGX-121, as well as the effects of RGX-121 on biomarkers of I2S enzyme activity, neurocognitive development and other clinical measures.

As of December 20, 2021, RGX-121 continued to be well-tolerated, with no drug-related SAEs across three dose levels.

Preliminary results indicated dose-dependent reductions in key cerebrospinal fluid biomarkers, with patients in Cohort 3 approaching normal levels of the D2S6 biomarker.

Measures of neurodevelopmental function from patients in Cohorts 1 and 2 demonstrated continued developmental skill acquisition up to 2 years after RGX-121 administration.

Evidence of systemic enzyme expression and biomarker activity continued to be observed.

We continue with plans for enrollment in the Cohort 3 expansion arm of this trial using commercial-scale cGMP material.

Enrollment is ongoing in a second Phase I/II trial of RGX-121 for the treatment of pediatric patients with MPS II ages 5-18 years old to evaluate the safety of a single administration of RGX-121, the effects of RGX-121 on biomarkers of I2S enzyme activity, and changes in cognitive function, adaptive behavior, daily function and quality of life.

Following discussions with the FDA, we intend to file a BLA in 2024 using the accelerated approval pathway for RGX-121 for the treatment of MPS II.

The ongoing Phase I/II trial of RGX-121 in patients with MPS II under the age of 5 y ears has been expanded into a pivotal Phase I/II/III trial named CAMPSIITE TM .

CAMPSIITE, a multicenter, open-label trial, is active and enrolling patients .

The trial is expected to enroll up to 10 MPS II patients using commercial-scale cGMP material to support the BLA filing, with the potential to enroll additional patients.

Glycosaminoglycans (GAGs) in the cerebrospinal fluid (CSF) have the potential to be considered a surrogate biomarker that is reasonably likely to predict clinical benefit in MPS II disease under the accelerated approval pathway, as buildup of GAGs in the CSF of MPS II patients correlates with clinical manifestations, including neurodevelopmental de ficits.

A second Phase I/II trial of RGX-121 is ongoing for the treatment of pediatric patients with MPS II ages 5-18 years old to evaluate the safety of a single administration of RGX-121, the effects of RGX-121 on biomarkers of I2S enzyme activity, and changes in cognitive function, adaptive behavior, daily function and quality of life.

We are developing RGX-111 for the treatment of Mucopolysaccharidosis Type I (MPS I), a rare disease caused by a deficiency of IDUA, an enzyme required for the breakdown of structures that dispose of waste products inside cells.

We are conducting a Phase I/II clinical trial in patients with MPS I to evaluate the safety, tolerability and pharmacodynamics of RGX-111, as well as the effects of RGX-111 on biomarkers of IDUA activity, neurocognitive development and other outcome measures.

As of December 20, 2021, RGX-111 was well tolerated across two dose levels in the Phase I/II trial and in the single-patient IND, with no drug-related SAEs.

Biomarker and neurodevelopmental assessments indicated encouraging central nervous system profile in patients dosed with RGX-111, with emerging evidence of systemic biomarker activity observed.

We continue with plans for enrollment in the Cohort 2 expansion arm of the Phase I/II trial.

We continue with plans to enroll additional patients in a Cohort 2 expansion arm of the Phase I/II trial.

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

2 unchanged sentences

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

As of March 31, 2022, our NAV Technology Platform was being applied in one FDA approved product (Zolgensma®), and the preclinical and clinical development of a number of partnered programs.

As of June 30, 2022, our NAV Technology Platform was being applied in one FDA approved product (Zolgensma ® ), and the preclinical and clinical development of a number of partnered programs.

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

Impact of COVID-19

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

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

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

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

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

3 unchanged sentences

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

Our results of operations for three months ended March 31, 2022 and 2021 were not significantly impacted by the COVID-19 pandemic.

Our results of operations for the three and six months ended June 30, 2022 and 2021 were not significantly impacted by the COVID-19 pandemic.

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

27 unchanged sentences

Personnel costs including salaries, benefits, bonuses and stock-based compensation expense, comprise a significant component of research and development and general and administrative expenses.

We allocate indirect expenses associated with our facilities, information technology costs, depreciation and other overhead costs between research and development and general and administrative categories based on employee headcount and the nature of work performed by each employee.

Cost of Revenues

15 unchanged sentences

Our current and planned research and development activities include the following:

continued development of RGX-314 products under our collaboration with AbbVie, including:

continued development of RGX-314 product candidates under our collaboration with AbbVie, including:

a Phase I/II clinical trial and associated long-term follow-up study to evaluate the safety and efficacy of the subretinal delivery of RGX-314 for the treatment of wet AMD;

3 unchanged sentences

a Phase I/II clinical trial to evaluate the safety and efficacy of RGX-202 for the treatment of Duchenne (AFFINITY DUCHENNE);

Phase I/II clinical trials to evaluate the safety and efficacy of RGX-121 for the treatment of MPS II;

a pivotal Phase I/II/III clinical trial (CAMPSIITE) and a second Phase I/II clinical trial to evaluate the safety and efficacy of RGX-121 for the treatment of MPS II;

a Phase I/II clinical trial to evaluate the safety and efficacy of RGX-111 for the treatment of MPS I;

3 unchanged sentences

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

The following table summarizes our research and development expenses incurred during the three months ended March 31, 2022 and 2021 (in thousands):

Three Months Ended March 31,

The following table summarizes our research and development expenses incurred during the three and six months ended June 30, 2022 and 2021 (in thousands):

Three Months Ended June 30,

Six Months Ended June 30,

Direct Expenses

RGX-314 (net of cost reimbursement from AbbVie)

RGX-121 and RGX-111

RGX-181 and RGX-381

Other product candidates

7 unchanged sentences

Total research and development

Direct expenses related to the development of RGX-314 for the three months ended March 31, 2022 include $2.9 million in net costs reimbursable by AbbVie under our eye care collaboration which were recorded as a reduction of research and development expenses during the period.

Platform and new technologies include direct costs not identifiable with a specific lead product candidate, including costs associated with our research and development platform used across programs, process development, manufacturing analytics and early research and development for prospective product candidates and new technologies.

Direct expenses related to the development of RGX-314 for the three and six months ended June 30, 2022 include $5.2 million and $8.1 million, respectively, in net costs reimbursable by AbbVie under our eye care collaboration that were recorded as a reduction of research and development expenses during the periods.

Platform and new technologies includes direct costs not identifiable with a specific lead product candidate, including costs associated with our research and development platform used across programs, process development, manufacturing analytics and early research and development for prospective product candidates and new technologies.

We typically utilize our employee and infrastructure resources across our development programs.

25 unchanged sentences

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

Three Months Ended March 31,

Three Months Ended June 30,

Six Months Ended June 30,

License and royalty revenue

14 unchanged sentences

Income Tax Benefit (Expense)

Comparison of the Three Months Ended March 31, 2022 and 2021

Comparison of the Three Months Ended June 30, 2022 and 2021

License and Royalty Revenue.

License and royalty revenue increased by $3.3 million, from $18.9 million for the three months ended March 31, 2021 to $22.2 million for the three months ended March 31, 2022.

The increase was primarily attributable to Zolgensma royalty revenues, which increased by $3.3 million, from $18.3 million for the first quarter of 2021 to $21.5 million for the first quarter of 2022.

As reported by Novartis, sales of Zolgensma for the first quarter of 2022 increased by 14% as compared to the first quarter of 2021, driven by geographic expansion of product access.

License and royalty revenue increased by $10.6 million, from $22.0 million for the three months ended June 30, 2021 to $32.6 million for the three months ended June 30, 2022.

The increase was primarily attributable to Zolgensma royalty revenues, which increased by $10.0 million, from $18.4 million for the second quarter of 2021 to $28.4 million for the second quarter of 2022.

As reported by Novartis, sales of Zolgensma for the second quarter of 2022 increased by 20% (USD) as compared to the second quarter of 2021, driven by geographic expansion of product access outside the United States.

Research and Development Expense.

Research and development expenses increased by $ 15.1 million, from $ 45.9 million for the three months ended June 30 , 2021 to $ 61.0 million for the three months ended June 30 , 2022 .

The increase was primarily attributable to the following:

an increase of $7.7 million in costs associated with clinical trial and regulatory activities for our lead product candidates, largely driven by RGX-314 clinical trials;

an increase of $5.1 million in manufacturing-related expenses, primarily related to clinical supply for our lead product candidates;

an increase of $4.1 million in personnel-related costs as a result of increased headcount of research and development personnel, including a $0.3 million increase in stock-based compensation expense, largely driven by the commencement of in-house manufacturing of clinical supply in 2022;

an increase of $2.8 million in costs for laboratories and facilities used by research and development personnel, including a $0.4 million increase in depreciation expense allocated to research and development functions, largely driven by the occupation of our new corporate, research and manufacturing headquarters beginning in mid-2021.

The increase in research and development expenses was partially offset by $5.2 million of net development cost reimbursement from AbbVie recorded in the second quarter of 2022 under our RGX-314 collaboration, which was recorded as a reduction of research and development expenses.

General and Administrative Expense.

General and administrative expenses increased by $2.4 million, from $18.4 million for the three months ended June 30, 2021 to $20.8 million for the three months ended June 30, 2022.

The increase was primarily driven by personnel-related costs and other general and administrative expenses including travel, information technology and other overhead costs.

Comparison of the Six Months Ended June 30, 2022 and 2021

License and Royalty Revenue.

License and royalty revenue increased by $13.9 million, from $40.9 million for the six months ended June 30, 2021 to $54.9 million for the six months ended June 30, 2022.

The increase was primarily attributable to Zolgensma royalty revenues, which increased by $13.2 million, from $36.7 million for the first half of 2021 to $49.9 million for the first half of 2022.

As reported by Novartis, sales of Zolgensma for the first half of 2022 increased by 17% (USD) as compared to the first half of 2021, driven by geographic expansion of product access outside the United States.

Cost of Revenues.

Cost of revenues increased by $10.9 million, from $4.9 million for the three months ended March 31, 2021 to $15.7 million for the three months ended March 31, 2022.

Cost of revenues increased by $14.0 million, from $14.7 million for the six months ended June 30, 2021 to $28.7 million for the six months ended June 30, 2022.

The increase was primarily attributable to a non-recurring charge of $9.2 million recognized in the first quarter of 2022 related to the amendment of our license agreement with The Trustees of the University of Pennsylvania (Penn) to buy out our obligation to pay sublicense fees to Penn under the license agreement.

1 unchanged sentence

Research and Development Expense.

Research and development expenses increased by $15.9 million, from $39.7 million for the three months ended March 31, 2021 to $55.6 million for the three months ended March 31, 2022.

Research and development expenses increased by $31.0 million, from $85.6 million for the six months ended June 30, 2021 to $116.6 million for the six months ended June 30, 2022.

The increase was primarily attributable to the following:

an increase of $16.1 million in costs associated with clinical trial and regulatory activities for our lead product candidates, largely driven by RGX-314 clinical trials;

an increase of $3.7 million in personnel-related costs as a result of increased headcount of research and development personnel, including a $0.6 million increase in stock-based compensation expense, largely driven by the expected commencement of in-house manufacturing of clinical supply in 2022;

an increase of $8.0 million in manufacturing-related expenses, primarily related to clinical supply for our lead product candidates;

an increase of $1.5 million in costs of laboratories and facilities used by research and development personnel, including a $0.6 million increase in depreciation expense allocated to research and development functions, largely driven by the occupation of our new corporate, research and manufacturing headquarters in mid-2021;

an increase of $1.3 million in costs associated with preclinical activities and other early stage research and development.

The increase in research and development expenses was partially offset by $2.9 million of net development cost reimbursement from AbbVie recorded in the first quarter of 2022 under our RGX-314 collaboration, which was recorded as a reduction of research and development expenses.

an increase of $7.8 million in personnel-related costs as a result of increased headcount of research and development personnel, including a $0.9 million increase in stock-based compensation expense, largely driven by the commencement of in-house manufacturing of clinical supply in 2022;

an increase of $4.3 million in costs for laboratories and facilities used by research and development personnel, including a $1.0 million increase in depreciation expense allocated to research and development functions, largely driven by the occupation of our new corporate, research and manufacturing headquarters beginning in mid-2021.

The increase in research and development expenses was partially offset by $8.1 million of net development cost reimbursement from AbbVie recorded in the first half of 2022 under our RGX-314 collaboration, which was recorded as a reduction of research and development expenses.

General and Administrative Expense.

General and administrative expenses increased by $4.5 million, from $17.8 million for the three months ended March 31, 2021 to $22.3 million for the three months ended March 31, 2022.

General and administrative expenses increased by $6.9 million, from $36.3 million for the six months ended June 30, 2021 to $43.2 million for the six months ended June 30, 2022.

The increase was primarily attributable to the following:

an increase of $2.4 million in personnel-related costs as a result of increased headcount of general and administrative personnel, including a $0.3 million increase in stock-based compensation expense;

an increase of $1.6 million for professional services, primarily related to legal and other advisory services.

an increase of $1.3 million in professional services, primarily related to legal and other advisory services;

increases in other general and administrative expenses including travel, information technology and other overhead costs.

Liquidity and Capital Resources

Sources of Liquidity

As of March 31, 2022, we had cash, cash equivalents and marketable securities of $764.8 million, which were primarily derived from the sale of our common stock, license and royalty revenue and the monetization of our Zolgensma royalty stream.

We expect that our cash, cash equivalents and marketable securities as of March 31, 2022, will enable us to fund our operating expenses and capital expenditure requirements, and are sufficient to meet our financial commitments and obligations, for at least the next 12 months from the date of this report, based on our current business plan.

As of June 30, 2022, we had cash, cash equivalents and marketable securities of $682.0 million, which were primarily derived from the sale of our common stock, license and royalty revenue and the monetization of our Zolgensma royalty stream.

We expect that our cash, cash equivalents and marketable securities as of June 30, 2022, will enable us to fund our operating expenses and capital expenditure requirements, and are sufficient to meet our financial commitments and obligations, for at least the next 12 months from the date of this report, based on our current business plan.

We intend to devote the majority of our current capital to clinical development, seeking regulatory approval of our product candidates and additional capital expenditures needed to support these activities.

3 unchanged sentences

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

Three Months Ended March 31,

Six Months Ended June 30,

Net cash used in operating activities

3 unchanged sentences

Cash Flows from Operating Activities

Our net cash used in operating activities for the three months ended March 31, 2022 increased by $11.9 million from the three months ended March 31, 2021.

The increase was largely driven by an increase in operating expenses in the first quarter of 2022.

Our net cash used in operating activities for the six months ended June 30, 2022 increased by $37.5 million from the six months ended June 30, 2021.

The increase was largely driven by an increase in operating expenses in the first half of 2022.

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

For the three months ended March 31, 2022, our net cash used in operating activities of $55.9 million consisted of a net loss of $76.7 million, offset by adjustments for non-cash items of $14.8 million and favorable changes in working capital of $6.0 million.

Adjustments for non-cash items primarily consisted of stock-based compensation expense of $10.8 million and depreciation and amortization expense of $2.6 million.

The changes in working capital include a decrease in accounts receivable of $5.7 million which was largely driven by a decrease in Zolgensma royalties receivable, a decrease in other current assets of $3.0 million which was largely driven by a decrease in amounts due from AbbVie for net reimbursement of development costs under our RGX-314 collaboration, and an increase in other liabilities of $6.9 million which was largely driven by a long-term liability recorded during the period resulting from the amendment of our license agreement with Penn.

The favorable changes in working capital were partially offset by a net decrease in total accounts payable and accrued expenses and other current liabilities of $9.7 million, which was primarily driven by a decrease in accrued personnel costs.

For the six months ended June 30, 2022, our net cash used in operating activities of $117.7 million consisted of a net loss of $144.9 million and unfavorable changes in working capital of $2.8 million, offset by adjustments for non-cash items of $30.1 million.

The changes in working capital include a net decrease in total accounts payable and accrued expenses and other current liabilities of $16.1 million primarily attributable to decreases in accrued personnel costs, accrued sublicense fees and royalties, and income taxes payable, and an increase in accounts receivable of $5.0 million primarily attributable to license fees billed in the second quarter of 2022 which were receivable at the end of the period.

The unfavorable changes in working capital were partially offset by an increase in other liabilities of $7.8 million primarily attributable to a long-term liability recorded during the period related to the amendment of our license agreement with Penn.

Other changes in working capital were incurred in the normal course of business.

For the three months ended March 31, 2021, our net cash used in operating activities of $44.0 million consisted of a net loss of $50.1 million and unfavorable changes in working capital of $11.2 million, offset by $17.3 million in adjustments for non-cash items.

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

The changes in working capital were partially offset by an increase in operating lease liabilities of $4.2 million which was largely driven by funds received under our tenant improvement allowance for the buildout of our new headquarters facility in Rockville, Maryland.

Adjustments for non-cash items primarily consisted of stock-based compensation expense of $21.1 million and depreciation and amortization expense of $5.2 million.

For the six months ended June 30, 2021, our net cash used in operating activities of $80.1 million consisted of a net loss of $107.8 million and unfavorable changes in working capital of $3.3 million, offset by $31.0 million in adjustments for non-cash items.

The changes in working capital include a $5.9 million decrease in accrued expenses and other current liabilities primarily attributable to decreases in accrued personnel costs and income taxes payable, and were partially offset by an increase in operating lease liabilities of $10.5 million primarily attributable to funds received under our tenant improvement allowance for the buildout of our new headquarters facility in Rockville, Maryland.

Other changes in working capital were incurred in the normal course of business .

Adjustments for non-cash items primarily consisted of stock-based compensation expenses of $9.9 million, non-cash interest expense recognized under our royalty purchase agreement with HCR of $ 3.8 million and depreciation and amortization expense of $1.9 million.

Adjustments for non-cash items primarily consisted of stock-based compensation expense of $19.9 million, depreciation and amortization expense of $4.1 million and non-cash interest expense of $4.0 million under our royalty purchase agreement with HCR.

Cash Flows from Investing Activities

For the three months ended March 31, 2022, our net cash used in investing activities consisted of $129.5 million to purchase marketable debt securities and $11.0 million to purchase property and equipment, offset by $49.9 million in maturities of marketable debt securities.

The substantial majority of our capital expenditures for the three months ended March 31, 2022 were related to the build out of our corporate, manufacturing and research headquarters at 9804 Medical Center Drive in Rockville, Maryland.

We have completed the build out of this facility, and capital expenditures in 2022 are expected to be lower than 2021 as a result of the completed build out of this facility.

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

For the six months ended June 30, 2022, our net cash used in investing activities consisted of $158.4 million to purchase marketable debt securities and $20.2 million to purchase property and equipment, offset by $86.9 million in maturities of marketable debt securities.

The majority of our capital expenditures for the six months ended June 30, 2022 were related to the build out of our corporate, manufacturing and research headquarters in Rockville, Maryland, which was completed in the first half of 2022.

Capital expenditures for the year ended 2022 are expected to be lower than 2021 as a result of the completion of the buildout of this facility.

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

Cash Flows from Financing Activities

For the three months ended March 31, 2022, our net cash used in financing activities primarily consisted of $7.5 million of Zolgensma royalties paid to HCR under our royalty purchase agreement, net of imputed interest, and was partially offset by $1.0 million in proceeds received from the exercise of stock options and issuance of common stock under our employee stock purchase plan.

For the three months ended March 31, 2021, our net cash provided by financing activities primarily consisted of $216.2 million in net proceeds received from a public offering of our common stock completed in January 2021, net of underwriting discounts and commissions and other offering expenses paid during the period, and was partially offset by $6.6 million of Zolgensma royalties paid to HCR, net of imputed interest, under our royalty purchase agreement.

For the six months ended June 30, 2022, our net cash used in financing activities primarily consisted of $16.7 million of Zolgensma royalties paid, net of imputed interest, under our royalty purchase agreement with HCR, and was partially offset by $2.5 million in proceeds received from the exercise of stock options and issuance of common stock under our employee stock purchase plan.

For the six months ended June 30, 2021, our net cash provided by financing activities primarily consisted of $216.1 million in net proceeds received from a public offering of our common stock completed in January 2021, net of underwriting discounts and commissions and other offering expenses paid during the period, and was partially offset by $12.8 million of Zolgensma royalties paid, net of imputed interest, under our royalty purchase agreement with HCR.

Additional Capital Requirements

Our financial obligations primarily consist of vendor contracts to provide research services and other purchase commitments with suppliers.

In the normal course of business, we enter into services agreements with contract research organizations, contract manufacturing organizations and other third parties.

Generally, these agreements provide for termination upon notice, with specified amounts due upon termination based on the timing of termination and the terms of the agreement.

The amounts and timing of payments under these agreements are uncertain and contingent upon the initiation and completion of the services to be provided.

Our commitments also include obligations to our licensors under our in-license agreements, which may include sublicense fees, milestones fees, royalties and reimbursement of patent maintenance costs.

Sublicense fees are payable to licensors when we sublicense underlying intellectual property to third parties;

the fees are based on a percentage of the license fees we receive from sublicensees.

Milestone fees are payable to licensors upon our future achievement of certain development and regulatory milestones.

Royalties are payable to licensors based on a percentage of net sales of licensed products.

Patent maintenance costs are payable to licensors as reimbursement for the cost of maintaining of license patents.

Due to the contingent nature of the payments, the amounts and timing of payments to licensors under our in-license agreements are uncertain and may fluctuate significantly from period to period.

We have entered into a number of long-term operating leases for office, laboratory and manufacturing space in Rockville, Maryland and New York, New York, as well as a number of laboratory and other equipment leases.

Please refer to Note 6 to the audited consolidated financial statements accompanying our Annual Report on Form 10-K for the year ended December 31, 2021 for further information regarding our lease commitments.

There have been no material changes to our leasing arrangements since December 31, 2021.

Under the terms of our royalty purchase agreement with HCR, our future Zolgensma royalties, less amounts payable by us to certain licensors, will be payable to HCR up to a specified capped amount.

As of March 31, 2022 , the total amount of future Zolgensma royalties to be paid to HCR under the agreement was $ 194.2 million if paid by November 7, 2024, or $ 234.2 million if paid after that date.

We have no obligation to repay any amounts to HCR if total future Zolgensma royalty payments are not sufficient to repay these amounts.

Our material capital requirements from known contractual and other obligations primarily relate to vendor service contracts and purchase commitments, in-license agreements, operating lease agreements and our Zolgensma royalty purchase agreement with HCR.

Our material commitments and obligations are further described in Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our Annual Report on Form 10-K for the year ended December 31, 2021, and in the notes to the audited consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2021.

Other than the changes described in the notes to the unaudited consolidated financial statements accompanying this Quarterly Report on Form 10-Q, including Note 7, “Commitments and Contingencies,” there have been no material changes to our commitments and obligations since December 31, 2021.

Future Funding Requirements

We have incurred cumulative losses since our inception and had an accumulated deficit of $238.0 million as of March 31, 2022.

We have incurred cumulative losses since our inception and had an accumulated deficit of $306.1 million as of June 30, 2022.

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

31 unchanged sentences

For information regarding market risk, refer to Item 7A, “Quantitative and Qualitative Disclosures About Market Risk,” included in our Annual Report on Form 10-K for the year ended December 31, 2021.

There have been no material changes to our exposure to market risk during the three months ended March 31, 2022.

There have been no material changes to our exposure to market risk during the six months ended June 30, 2022.

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

What changed 10-Q

Item 2. Management’s Discussion and Analysis