What changed in this filing

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Item 1. Financial Statements

2020-11-05 compared with 2020-08-06 · 95 added, 64 removed, 289 unchanged (35% of the section changed)

3 unchanged sentences

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

September 30,

Current assets:

21 unchanged sentences

10,000,000 shares authorized

at June 30, 2020 and December 31, 2019;

at September 30, 2020 and December 31, 2019;

no shares issued and

outstanding at June 30, 2020 and December 31, 2019

outstanding at September 30, 2020 and December 31, 2019

Common stock, $ 0.001 par value;

300,000,000 shares authorized at

June 30, 2020 and December 31, 2019;

September 30, 2020 and December 31, 2019;

46,178,519 shares issued and

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

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

outstanding at December 31, 2019;

2,295,699 pre-funded warrants outstanding at

June 30, 2020 and December 31, 2019

September 30, 2020 and December 31, 2019

Additional paid-in capital

7 unchanged sentences

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

Three Months Ended June 30,

Six Months Ended June 30,

Three Months Ended September 30,

Nine Months Ended September 30,

Operating expenses:

15 unchanged sentences

(unaudited, in thousands)

Three Months Ended June 30,

Six Months Ended June 30,

Three Months Ended September 30,

Nine Months Ended September 30,

Other comprehensive loss:

5 unchanged sentences

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

For the Three Months Ended June 30, 2020

For the Three Months Ended September 30, 2020

comprehensive

1 unchanged sentence

Stockholders'

Balance at March 31, 2020

Balance at June 30, 2020

Equity-based compensation

Vesting of restricted stock units

Forfeiture of restricted stock awards

Unrealized gain on available for sale

Balance at June 30, 2020

For the Six Months Ended June 30, 2020

Balance at September 30, 2020

For the Nine Months Ended September 30, 2020

comprehensive

6 unchanged sentences

Unrealized loss on available for sale

Balance at June 30, 2020

For the Three Months Ended June 30, 2019

Balance at September 30, 2020

For the Three Months Ended September 30, 2019

comprehensive

1 unchanged sentence

Stockholders'

Balance at March 31, 2019

Balance at June 30, 2019

Equity-based compensation

Forfeiture of restricted stock awards

Sale of common stock, net of issuance costs of $ 2,079

Sale of pre-funded warrants

Repurchase of shares of common stock

Unrealized loss on available for sale

Balance at June 30, 2019

For the Six Months Ended June 30, 2019

Balance at September 30, 2019

For the Nine Months Ended September 30, 2019

comprehensive

3 unchanged sentences

Equity-based compensation

Forfeiture of restricted stock awards

Sale of common stock, net of issuance costs of $ 2,079

Sale of pre-funded warrants

Repurchase of shares of common stock

Unrealized gain on available for sale

Balance at June 30, 2019

Balance at September 30, 2019

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

2 unchanged sentences

(unaudited, in thousands)

Six Months Ended

Nine Months Ended

September 30,

Cash flows from operating activities:

3 unchanged sentences

Depreciation expense

Loss on sale of property and equipment

Changes in operating assets and liabilities:

9 unchanged sentences

Cash flows from financing activities:

Proceeds from issuance of common stock

Proceeds from issuance of warrants

Payment of offering costs

Net cash provided by financing activities

Net decrease in cash, cash equivalents and restricted cash

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

Cash, cash equivalents, and restricted cash at beginning of period

3 unchanged sentences

Property and equipment included in accounts payable and accruals

Offering costs included in accounts payable and accruals

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

25 unchanged sentences

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.

In October 2020, the Company announced that the FDA lifted the clinical hold placed on the Company’s IGNITE DMD Phase I/II clinical trial.

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.

Product candidates currently under development will require significant additional research and development efforts, including extensive pre-clinical studies and clinical trials and regulatory approval, prior to commercialization.

Product candidates currently under development will require significant additional research and development efforts, including extensive preclinical studies and clinical trials and regulatory approval, prior to commercialization.

These efforts require significant amounts of additional capital, adequate personnel infrastructure and extensive compliance and reporting capabilities.

5 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 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.

Through September 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.

As of September 30, 2020, the Company had an accumulated deficit of $ 383,206 .

During the three and nine months ended September 30, 2020, the Company incurred a net loss of $ 21,246 and $ 66,927 , respectively, and the Company used $ 57,906 of cash in operations for the nine months ended September 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 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.

Based upon its current operating plan, the Company expects that its cash and cash equivalents of $ 24,797 as of September 30, 2020, together with the proceeds of $ 40,000 received in October 2020 from the sale of shares of common stock to Ultragenyx Pharmaceutical, Inc.

(“Ultragenyx”) as well as the net proceeds of $ 23,209 received from the sale of shares of common stock in October 2020 pursuant to a sales agreement, dated March 13, 2019, between the Company and Jefferies LLC (the “ATM Sales Agreement”) will be sufficient to fund its operating expenses and capital requirements into the second half 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.

2 unchanged sentences

As such, under the requirements of ASC 205-40, management may not consider the potential for future capital raises or management plans to reduce costs that are not considered probable in its assessment of the Company’s ability to meet its obligations for the next twelve months.

If the Company is unable to obtain funding, the Company would be forced to delay, reduce or eliminate some or all of its research and development programs, pre-clinical and clinical testing or commercialization efforts, which could adversely affect its business prospects.

If the Company is unable to obtain funding, the Company would be forced to delay, reduce or eliminate some or all of its research and development programs, preclinical and clinical testing or commercialization efforts, which could adversely affect its business prospects.

The accompanying condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”).

5 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 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.

The results of operations for the three and nine months ended September 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

11 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 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.

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

The Company has included restricted cash of $ 327 as a non-current asset as of September 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:

September 30,

Cash and cash equivalents as presented on balance sheet

6 unchanged sentences

Recently Adopted Accounting Pronouncements

In August 2018, the Financial Accounting Standards Board issued ASU No.

In August 2018, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No.

2018-13 , Fair Value Measurement (Topic 820):

4 unchanged sentences

Recently Issued Accounting Pronouncements

In June 2016, the Financial Accounting Standards Board (“FASB”) issued ASU No.

In June 2016, the FASB issued ASU No.

2016-13, Financial Instruments—Credit Losses (Topic 326):

16 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 June 30, 2020

Fair Value Measurements as of September 30, 2020

Cash equivalents

2 unchanged sentences

Available-for-sale securities

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

As of September 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 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.

During the nine months ended September 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 June 30, 2020, there were no available-for-sale securities.

As of September 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:

7 unchanged sentences

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

Property and equipment consists of the following:

September 30,

Furniture and fixtures

5 unchanged sentences

Less accumulated depreciation

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.

Depreciation expense was $ 766 and $ 3,126 for the three and nine months ended September 30, 2020, respectively, and $ 764 and $ 2,018 for the three and nine months ended September 30, 2019, respectively.

Prepaid Expenses and Other Current Assets

Prepaid expenses and other current assets consist of the following:

September 30,

Prepaid research and development expenses

2 unchanged sentences

Accrued expenses and other current liabilities consist of the following:

September 30,

Accrued research and development

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

No warrants were exercised during the three and nine months ended September 30, 2020 and 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.

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.

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 nine months ended September 30, 2020, the Company granted options for the purchase of 41,440 and 1,439,356 shares of common stock, respectively.

During the three and nine months ended September 30, 2020, the Company granted 0 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 June 30,

Six Months Ended June 30,

Three Months Ended September 30,

Nine Months Ended September 30,

Research and development

1 unchanged sentence

Restructuring

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.

During the three and nine months ended September 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 September 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 September 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 June 30, 2020.

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

Six Months Ended June 30,

Three Months Ended September 30,

Nine Months Ended September 30,

Net loss attributable to common stockholders

The denominator is as follows:

Three Months Ended June 30,

Six Months Ended June 30,

Three Months Ended September 30,

Nine Months Ended September 30,

Weighted average shares of common stock outstanding,

basic and diluted

Weighted average shares of pre-funded warrants to purchase

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

Three Months Ended June 30,

Six Months Ended June 30,

Three Months Ended September 30,

Nine Months Ended September 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 and six months ended June 30 :

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.

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.

During the three and nine months ended September 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 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:

During the three and nine months ended September 30, 2020, $ 246 and $ 1,671 , respectively, of the estimated restructuring charges were paid.

The Company expects the remaining accrued restructuring costs of $ 273 will be paid in the next three months.

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

One-Time Employee

6 unchanged sentences

Accrued restructuring costs as of June 30, 2020

Amounts paid during the period

Accrued restructuring costs as of September 30, 2020

Subsequent Events

Ultragenyx Collaboration Agreement

On October 22, 2020 the Company entered into a collaboration and license agreement (the “Collaboration Agreement”) with Ultragenyx, to focus on the development and commercialization of new gene therapies for Duchenne.

The Company granted Ultragenyx an exclusive worldwide license for any pharmaceutical product that expresses the Company’s proprietary microdystrophin construct from AAV8 and variants thereof in clade E for the treatment of Duchenne and other diseases resulting from the lack of functional dystrophin.

The Company will conduct certain activities agreed to by the parties with respect to the development of licensed products.

Ultragenyx will reimburse the Company for personnel and out-of-pocket costs that the Company incurs in conducting such development activities.

Otherwise, Ultragenyx has decision-making authority with respect to the development, manufacturing and commercialization of licensed products.

The Company retains exclusive rights to all other uses of its microdystrophin proteins, including under its existing SGT-001 program.

In connection with the execution of the Collaboration Agreement, Ultragenyx and the Company also entered into a stock purchase agreement , pursuant to which the Company issued and sold 7,825,797 shares of its common stock to Ultragenyx at a price of $ 5.1113 per share, which represented a 33 % premium to the volume weighted average price of the Company’s common stock for the 10 trading days prior to the closing date, for an aggregate purchase price of approximately $ 40,000 .

Ultragenyx also agreed to pay up to $ 255,000 in cumulative milestone payments per product upon achievement of specified milestone events, and tiered royalties on worldwide net sales at low double digit to mid-teens percentages.

Upon achievement of proof-of-concept, the Company has the right to opt-in to co-fund collaboration programs in return for participation in a profit share or increased royalty payments.

At-the-Market Offering

In October 2020, the Company sold 6,302,632 shares of common stock pursuant to the ATM Sales Agreement resulting in net proceeds to the Company of $ 23,209 .

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