What changed in this filing

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Item 1. Financial Statements

2020-08-06 compared with 2020-05-07 · 83 added, 55 removed, 270 unchanged (34% of the section changed)

26 unchanged sentences

10,000,000 shares authorized

at March 31, 2020 and December 31, 2019;

at June 30, 2020 and December 31, 2019;

no shares issued and

outstanding at March 31, 2020 and December 31, 2019

outstanding at June 30, 2020 and December 31, 2019

Common stock, $ 0.001 par value;

300,000,000 shares authorized at

March 31, 2020 and December 31, 2019;

June 30, 2020 and December 31, 2019;

46,068,393 shares issued and

outstanding at March 31, 2020 and 45,987,571 shares issued and

outstanding at June 30, 2020 and 45,987,571 shares issued and

outstanding at December 31, 2019;

2,295,699 pre-funded warrants outstanding at

March 31, 2020 and December 31, 2019

June 30, 2020 and December 31, 2019

Additional paid-in capital

Accumulated other comprehensive (loss) gain

Accumulated other comprehensive income

Accumulated deficit

5 unchanged sentences

(unaudited, in thousands, except share and per share data)

Three Months Ended March 31,

Three Months Ended June 30,

Six Months Ended June 30,

Operating expenses:

5 unchanged sentences

Other income (expense):

Interest income

Interest (expense) income

Total other income (expense), net

7 unchanged sentences

(unaudited, in thousands)

Three Months Ended March 31,

Three Months Ended June 30,

Six Months Ended June 30,

Other comprehensive loss:

5 unchanged sentences

(unaudited, in thousands, except share / unit data)

For the Three Months Ended March 31, 2020

For the Three Months Ended June 30, 2020

comprehensive

1 unchanged sentence

Stockholders'

Balance at March 31, 2020

Equity-based compensation

Forfeiture of restricted stock awards

Unrealized gain on available for sale

Balance at June 30, 2020

For the Six Months Ended June 30, 2020

comprehensive

income (loss)

Stockholders'

Balance at December 31, 2019

2 unchanged sentences

Forfeiture of restricted stock awards

Unrealized gain on available for sale

Unrealized loss on available for sale

Balance at June 30, 2020

For the Three Months Ended June 30, 2019

comprehensive

income (loss)

Stockholders'

Balance at March 31, 2019

For the Three Months Ended March 31, 2019

Equity-based compensation

Forfeiture of restricted stock awards

Unrealized loss on available for sale

Balance at June 30, 2019

For the Six Months Ended June 30, 2019

comprehensive

5 unchanged sentences

Unrealized gain on available for sale

Balance at March 31, 2019

Balance at June 30, 2019

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

2 unchanged sentences

(unaudited, in thousands)

Three Months Ended

Six Months Ended

Cash flows from operating activities:

11 unchanged sentences

Proceeds from sale and maturities of available-for-sale securities

Purchases of marketable investments

Net cash provided by (used in) investing activities

Purchases of available-for-sale securities

Net cash provided by investing activities

Cash flows from financing activities:

30 unchanged sentences

In April 2020, the Company submitted a response to the FDA that included changes to the clinical protocol designed to enhance patient safety, as well as information related to improvements to its manufacturing process.

The FDA has responded by maintaining the clinical hold and requesting further data and analyses relating to this manufacturing process.

The Company is in the process of generating these data and expects to submit this information to the FDA before the end of the third quarter of 2020.

The FDA responded by maintaining the clinical hold and requesting further data and analyses relating to this manufacturing process.

In June 2020, the Company submitted a response to the FDA that provided data related to manufacturing process improvements.

In July 2020, the Company announced that the FDA responded by maintaining the clinical hold and requesting further manufacturing information and updated safety and efficacy data for all patients dosed in the trial, as well as providing direction on the total viral load to be administered per patient.

The Company is evaluating next steps and plans to continue its dialogue with the FDA to determine the appropriate path for SGT-001.

The Company is subject to risks and uncertainties common to early-stage companies in the biotechnology industry, including, but not limited to, development by competitors of new technological innovations, dependence on licenses, protection of proprietary technology, dependence on key personnel, compliance with government regulations and the need to obtain additional financing to fund operations.

7 unchanged sentences

The accompanying condensed consolidated financial statements have been prepared on a basis that assumes the Company will continue as a going concern and which contemplates the realization of assets and satisfaction of liabilities and commitments in the ordinary course of business.

Through March 31, 2020, the Company has funded its operations primarily with the proceeds from the sale of redeemable preferred units and member units as well as the sale of common stock and prefunded warrants to purchase shares of its common stock in private placements and the sale of common stock in its initial public offering.

In accordance with Accounting Standards Codification (“ ASC ”) 205-40, Going Concern, the Company has evaluated whether there are conditions and events, considered in the aggregat e, that raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date the financial statements are issued.

As of March 31, 20 20 , the Company had an accumulated deficit of $3 42 , 97 3 .

During the three months ended March 31, 20 20 , the Company incurred a net loss of $ 26, 694 and used $ 2 9, 27 4 of cash in operations.

Through June 30, 2020, the Company has funded its operations primarily with the proceeds from the sale of redeemable preferred units and member units as well as the sale of common stock and prefunded warrants to purchase shares of its common stock in private placements and the sale of common stock in its initial public offering.

In accordance with Accounting Standards Codification (“ASC”) 205-40, Going Concern, the Company has evaluated whether there are conditions and events, considered in the aggregate, that raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date the financial statements are issued.

As of June 30, 2020, the Company had an accumulated deficit of $ 361,960 .

During the three and six months ended June 30, 2020, the Company incurred a net loss of $ 18,987 and $ 45,681 , respectively, and the Company used $ 42,342 of cash in operations for the six months ended June 30, 2020.

The Company expects to continue to generate operating losses in the foreseeable future.

Based upon its current operating plan, the Company expects that its cash, cash equivalents and available-for-sale securities of $ 5 3,5 8 7 as of Ma rch 31, 2020 will be sufficient to fund its operating expenses and capital requirements into 2021.

Based upon its current operating plan, the Company expects that its cash and cash equivalents of $ 40,441 as of June 30, 2020 will be sufficient to fund its operating expenses and capital requirements into the first quarter of 2021.

In accordance with the requirements of ASC 205-40, the Company determined that there is substantial doubt about the Company’s ability to continue as a going concern within twelve months of the issuance date of these financial statements.

10 unchanged sentences

The year-end condensed consolidated balance sheet data presented for comparative purposes was derived from the Company’s audited financial statements but does not include all disclosures required by GAAP.

The results of operations for the three months ended March 31, 2020 are not necessarily indicative of the operating results for the full year or for any other subsequent interim period.

The results of operations for the three and six months ended June 30, 2020 are not necessarily indicative of the operating results for the full year or for any other subsequent interim period.

Summary of Significant Accounting Policies

The Company’s accounting policies are described in the “Notes to Consolidated Financial Statements” in its 2019 Form 10-K and updated, as necessary, in this report.

The Company’s accounting policies are described in the “Notes to Consolidated Financial Statements” in its Annual Report on Form 10-K for the year ended December 31, 2019 and updated, as necessary, in this report.

Use of Estimates

9 unchanged sentences

Restricted Cash

The Company held restricted cash of $327 in separate restricted bank accounts as security deposits for leases of the Company’s facilities as of March 31, 2020 and December 31, 2019.

The Company has included restricted cash of $327 as a non-current asset as of March 31, 2020 and December 31, 2019.

The Company held restricted cash of $ 327 in separate restricted bank accounts as security deposits for leases of the Company’s facilities as of June 30, 2020 and December 31, 2019.

The Company has included restricted cash of $ 327 as a non-current asset as of June 30, 2020 and December 31, 2019.

A reconciliation of the amounts of cash and cash equivalents and restricted cash from the cash flow statement to the balance sheet is as follows:

33 unchanged sentences

The following tables present information about the Company’s assets and liabilities that are measured at fair value on a recurring basis and indicate the level of the fair value hierarchy utilized to determine such fair values:

Fair Value Measurements as of March 31, 2020

Fair Value Measurements as of June 30, 2020

Cash equivalents

Available-for-sale securities

Fair Value Measurements as of December 31, 2019

1 unchanged sentence

Available-for-sale securities

As of March 31, 2020 and December 31, 2019, the fair values of the Company’s available-for-sale debt securities were determined using Level 2 inputs.

At March 31, 2020, the Company’s portfolio of available-for-sale securities consisted of corporate bond securities.

As of June 30, 2020, there were no available-for-sale securities.

As of December 31, 2019, the fair values of the Company’s available-for-sale debt securities were determined using Level 2 inputs.

At December 31, 2019, the Company’s portfolio of available-for-sale securities consisted of corporate bond securities and commercial paper.

During the three months ended March 31, 2020 and the year ended December 31, 2019, there were no transfers between Level 1, Level 2 and Level 3.

During the six months ended June 30, 2020 and the year ended December 31, 2019, there were no transfers between Level 1, Level 2 and Level 3.

The fair value of the Company’s cash, restricted cash, accounts payable, and accrued expenses and other current liabilities approximate their carrying value due to their short-term maturities.

Available-for-Sale Securities

As of March 31, 2020 and December 31, 2019, the fair value of available-for-sale securities by type of security was as follows:

March 31, 2020

Corporate bond securities

As of June 30, 2020, there were no available-for-sale securities.

As of December 31, 2019, the fair value of available-for-sale securities by type of security was as follows:

December 31, 2019

2 unchanged sentences

The estimated fair value and amortized cost of the Company’s available-for-sale securities by contractual maturity are summarized as follows:

March 31, 2020

December 31, 2019

1 unchanged sentence

Total available-for-sale securities

The weighted average maturity of the Company’s available-for-sale securities as of March 31, 2020 and December 31, 2019 was approximately 0.2 years and 0.2 years, respectively.

The weighted average maturity of the Company’s available-for-sale securities as of December 31, 2019 was approximately 0.2 years.

As of June 30, 2020, there were no available-for-sale securities.

Property and Equipment

7 unchanged sentences

Less accumulated depreciation

Depreciation expense was $1,026 and $596 for the three months ended March 31, 2020 and 2019, respectively.

Depreciation expense was $ 1,334 and $ 2,360 for the three and six months ended June 30, 2020, respectively, and $ 658 and $ 1,254 for the three and six months ended June 30, 2019, respectively.

Prepaid Expenses and Other Current Assets

11 unchanged sentences

The Company received gross proceeds from the private placement of $ 59,977 , before deducting offering costs of $ 2,079 .

No warrants were exercised during the three months ended March 31, 2020 and no warrants were outstanding during the three months ended March 31, 2019.

No warrants were exercised during the three or six months ended June 30, 2020 and no warrants were outstanding during the three or six months ended June 30, 2019.

Equity-Based Compensation

In connection with the closing of the Company’s initial public offering, the board of directors and stockholders approved the 2018 Omnibus Incentive Plan, which provides for the reservation of 5,001,000 shares of common stock for equity awards.

During the three months ended March 31, 2020 and March 31, 2019, the Company granted options for the purchase of 816,116 and 1,543,421 shares of common stock, respectively.

During the three months ended March 31, 2020 , the Company granted 957,655 restricted stock units.

On June 16, 2020, the Company’s stockholders approved the 2020 Equity Incentive Plan (“2020 Plan”) which consists of (i) 3,000,000 shares of common stock and (ii) additional shares of common stock (up to 4,879,025 )as is equal to (i) the number of shares reserved under the

Company’s 2018 Omnibus Incentive Plan (“2018 Plan”) that remain available for grant under the 2018 Plan as of immediately prior to the date the 2020 Plan was approved by the Company’s stockholders and (ii) the number of shares subject to awards granted under the 2018 Plan which awards expire, terminate or are otherwise surrendered, cancelled, forfeited or repurchased by the Company at their original issuance price pursuant to a contractual repurchase right.

During the three and six months ended June 30, 2020, the Company granted options for the purchase of 581,800 and 1,397,916 shares of common stock, respectively.

During the three and six months ended June 30, 2020 , the Company granted 436,065 and 1,393,720 restricted stock units, respectively.

The Company recorded equity-based compensation expense related to all of its share-based awards to employees and non-employees in the following captions within its condensed consolidated statements of operations:

Three Months Ended March 31,

Three Months Ended June 30,

Six Months Ended June 30,

Research and development

1 unchanged sentence

Restructuring

During the three months ended March 31, 2020 and 2019, the Company recorded no income tax benefits for the net operating losses incurred or for the research and development tax credits and orphan drug credits generated in each year due to its uncertainty of realizing a benefit from those items.

The Company has provided a valuation allowance for the full amounts of its net deferred tax assets because, at March 31, 2020 and December 31, 2019, it was more likely than not that any future benefit from deductible temporary differences and net operating loss and tax credit carryforwards would not be realized.

As of March 31, 2020, and December 31, 2019, the Company had not recorded any amounts for unrecognized tax benefits.

During the three and six months ended June 30, 2020 and 2019, the Company recorded no income tax benefits for the net operating losses incurred or for the research and development tax credits and orphan drug credits generated in each year due to its uncertainty of realizing a benefit from those items.

The Company has provided a valuation allowance for the full amount of its net deferred tax assets because, at June 30, 2020 and December 31, 2019, it was more likely than not that any future benefit from deductible temporary differences and net operating loss and tax credit carryforwards would not be realized.

As of June 30, 2020, and December 31, 2019, the Company had no t recorded any amounts for unrecognized tax benefits.

The Company files income tax returns as prescribed by the tax laws of the jurisdictions in which it operates.

6 unchanged sentences

The Company may periodically become subject to legal proceedings and claims arising in connection with ongoing business activities, including claims or disputes related to patents that have been issued or that are pending in the field of research on which the Company is focused.

The Company is not aware of any material claims as of March 31, 2020.

The Company is not aware of any material claims as of June 30, 2020.

Net Loss per Share

1 unchanged sentence

The numerator for basic and diluted net loss per share attributable to common stockholders is as follows:

Three Months Ended March 31,

Three Months Ended June 30,

Six Months Ended June 30,

Net loss attributable to common stockholders

The denominator is as follows:

Three Months Ended March 31,

Three Months Ended June 30,

Six Months Ended June 30,

Weighted average shares of common stock outstanding,

1 unchanged sentence

Net loss per share attributable to common stockholders, basic and diluted is as follows:

Three Months Ended March 31,

Three Months Ended June 30,

Six Months Ended June 30,

Net loss per share attributable to common stockholders

The following potential common stock equivalents, presented based on amounts outstanding at each period end, were excluded from the calculation of diluted net loss per share attributable to common stockholders for the periods indicated because including them would have had an anti-dilutive effect for the three months ended March 31 :

Options to purchase shares of common stock

6 unchanged sentences

Affected employees were eligible to receive severance payments and outplacement services in connection with the restructuring plan.

In the three months ended March 31, 2020, the Company recorded aggregate restructuring charges of $1,944 related to severance payments and other employee-related costs.

During the three and six months ended June 30, 2020, the Company recorded aggregate restructuring charges of $ 0 and $ 1,944 , respectively, related to severance payments and other employee-related costs.

The Company does not expect to incur any additional significant costs associated with this restructuring.

During the three months ended March 31, 2020, $963 of the estimated restructuring charges were paid.

The Company expects the remaining accrued restructuring costs of $981 will be paid in the next 12 months.

The following table shows the total amount expected to be incurred and the liability related to the 2020 restructuring as of March 31, 2020:

During the three and six months ended June 30, 2020, $ 462 and $ 1,425 , respectively, of the estimated restructuring charges were paid.

The Company expects the remaining accrued restructuring costs of $ 519 will be paid in the next nine months.

The following table shows the total amount expected to be incurred and the liability related to the 2020 restructuring for the three and six months ended June 30, 2020:

One-Time Employee

Termination Benefits

Accrued restructuring costs beginning balance

Accrued restructuring costs as of December 31, 2019

Restructuring charges incurred during the period

1 unchanged sentence

Accrued restructuring costs as of March 31, 2020

Amounts paid during the period

Accrued restructuring costs as of June 30, 2020

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