What changed in this filing

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Item 1. Financial Statements

2021-05-14 compared with 2020-11-05 · 157 added, 142 removed, 242 unchanged (55% of the section changed)

3 unchanged sentences

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

September 30,

Current assets:

Cash and cash equivalents

Available-for-sale-securities

Prepaid expenses and other current assets

Accounts receivable - related party

Total current assets

2 unchanged sentences

Other non-current assets

Restricted cash

Restricted cash, excluding current portion

Liabilities and Stockholders’ Equity

4 unchanged sentences

Finance lease liabilities

Other current liabilities

Deferred revenue - related party

Total current liabilities

1 unchanged sentence

Finance lease liabilities, excluding current portion

Deferred revenue - related party, excluding current portion

Other non-current liabilities

Total liabilities

2 unchanged sentences

10,000,000 shares authorized

at September 30, 2020 and December 31, 2019;

at March 31, 2021 and December 31, 2020;

no shares issued and

outstanding at September 30, 2020 and December 31, 2019

outstanding at March 31, 2021 and December 31, 2020

Common stock, $ 0.001 par value;

300,000,000 shares authorized at

September 30, 2020 and December 31, 2019;

March 31, 2021 and December 31, 2020;

110,288,567 shares issued and

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

outstanding at March 31, 2021 and 84,893,994 shares issued and

outstanding at December 31, 2020;

2,158,329 pre-funded warrants outstanding at

September 30, 2020 and December 31, 2019

March 31, 2021 and December 31, 2020

Additional paid-in capital

7 unchanged sentences

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

Three Months Ended September 30,

Nine Months Ended September 30,

Three Months Ended March 31,

Collaboration revenue - related party

Operating expenses:

15 unchanged sentences

(unaudited, in thousands)

Three Months Ended September 30,

Nine Months Ended September 30,

Three Months Ended March 31,

Other comprehensive loss:

5 unchanged sentences

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

For the Three Months Ended September 30, 2020

For the Three Months Ended March 31, 2021

comprehensive

1 unchanged sentence

Stockholders’

Balance at June 30, 2020

Balance at December 31, 2020

Equity-based compensation

Sale of common stock, net of issuance

costs of $ 8,872

Exercise of stock options

Vesting of restricted stock units

Forfeiture of restricted stock awards

Balance at September 30, 2020

For the Nine Months Ended September 30, 2020

Balance at March 31, 2021

For the Three Months Ended March 31, 2020

comprehensive

6 unchanged sentences

Unrealized loss on available for sale

Balance at September 30, 2020

For the Three Months Ended September 30, 2019

comprehensive

income (loss)

Stockholders'

Balance at June 30, 2019

Equity-based compensation

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 September 30, 2019

For the Nine Months Ended September 30, 2019

comprehensive

income (loss)

Stockholders'

Balance at December 31, 2018

Equity-based compensation

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 September 30, 2019

Balance at March 31, 2020

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

2 unchanged sentences

(unaudited, in thousands)

Nine Months Ended

September 30,

Three Months Ended

Cash flows from operating activities:

3 unchanged sentences

Depreciation expense

Loss on sale of property and equipment

Gain on disposal of property and equipment

Changes in operating assets and liabilities:

Prepaid expenses and other current and non-current assets

Accounts receivable - related party

Accounts payable

Accrued expenses and other current and non-current liabilities

Deferred revenue- related party, current and non-current

Net cash used in operating activities

6 unchanged sentences

Proceeds from issuance of common stock

Proceeds from issuance of warrants

Payment of offering costs

Proceeds from exercise of stock options

Net cash provided by financing activities

3 unchanged sentences

Supplemental disclosure of non-cash investing and financing activities:

Operating lease liabilities arising from obtaining right-of-use asset

Offering costs in accruals

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.

17 unchanged sentences

The Company’s lead product candidate, SGT-001, is a gene transfer candidate under investigation for its ability to drive functional dystrophin protein expression in patients’ muscles and improve the course of the disease.

SGT-001 has been granted Rare Pediatric Disease Designation and Fast Track in the United States and Orphan Drug Designations in both the United States and European Union.

SGT-001 has been granted Rare Pediatric Disease Designation and Fast Track Designation in the United States and Orphan Drug Designations in both the United States and European Union.

The Company filed an Investigational New Drug application (“IND”) in September 2017 and initiated a Phase I/II clinical trial for SGT-001 in the United States during the fourth quarter of 2017 , which is called IGNITE DMD.

6 unchanged sentences

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.

In February 2021, we resumed treatment of patients in the IGNITE DMD 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.

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 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.

Through March 31, 2021, the Company has funded its operations primarily with the proceeds from the sale of redeemable preferred units and member units, 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 follow-on public offering in March 2021 and sales under its at-the-market sales agreement.

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 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.

As of March 31, 2021, the Company had an accumulated deficit of $ 421,469 .

During the three months ended March 31, 2021, the Company incurred a net loss of $ 16,900 and the Company used $ 21,366 of cash in operations for the three months ended March 31, 2021.

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 $ 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.

The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Although the Company has been successful in raising capital in the past, there is no assurance that it will be successful in obtaining such additional financing on terms acceptable to the Company, if at all, nor is it considered probable under the accounting standards.

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.

Based upon its current operating plan, the Company expects that its cash and cash equivalents of $ 268,497 as of March 31, 2021, will be sufficient to fund its operating expenses and capital expenditure requirements for at least twelve months from the date of issuance of these financial statements.

However, the Company has based this estimate on assumptions that may prove to be wrong, and its operating plan may change as a result of many factors currently unknown to it.

As a result, the Company could deplete its capital resources sooner than it currently expects.

The Company expects to finance its future cash needs through a combination of equity offerings, debt financings, collaborations, strategic alliances or licensing arrangements.

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.

6 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 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.

The results of operations for the three months ended March 31, 2021 are not necessarily indicative of the operating results for the full year or for any other subsequent interim period.

Summary of Significant Accounting Policies

2 unchanged sentences

The preparation of the Company’s condensed consolidated financial statements in conformity with GAAP requires management to make estimates, judgments and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of expenses during the reporting periods.

Significant estimates and assumptions reflected in these condensed consolidated financial statements include, but are not limited to, the recognition of research and development expenses and equity-based compensation.

Significant estimates and assumptions reflected in these condensed consolidated financial statements include, but are not limited to, estimates related to revenue recognition, the recognition of research and development expenses and equity-based compensation.

Estimates are periodically reviewed in light of changes in circumstances, facts and experience.

Changes in estimates are recorded in the period in which they become known.

Actual results could differ from the Company’s estimates.

The full extent to which the COVID-19 pandemic will directly or indirectly impact the Company’s business, results of operations and financial condition, including clinical trials and employee-related amounts, will depend on future developments that are highly uncertain, including new information that may emerge concerning COVID-19 and the actions taken to contain it or treat its impact.

4 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 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.

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, 2021 and December 31, 2020.

The Company has included restricted cash of $ 327 as a non-current asset as of March 31, 2021 and December 31, 2020.

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

5 unchanged sentences

All of the Company’s tangible assets are held in the United States.

Related Parties

In October 2020, we entered into a collaboration and license agreement (the “Collaboration Agreement”) with Ultragenyx Pharmaceutical Inc.

(“Ultragenyx”).

In connection with the Collaboration Agreement, Ultragenyx also purchased 7,825,797 shares of the Company’s common stock, which resulted in Ultragenyx becoming a related party of the Company.

In November 2020, we entered into a consulting agreement with Danforth Advisors, LLC, or Danforth, an affiliate of Stephen DiPalma, our interim chief financial officer.

Pursuant to the consulting agreement, Danforth provides us with the chief financial officer services of Mr.

DiPalma, and other services, including financial planning, offering support and accounting services, in exchange for fees payable to Danforth based on hourly rates.

We have paid Danforth approximately $ 0.2 million to date.

In accordance with the consulting agreement, in November 2020, we issued to Danforth a warrant to purchase 30,000 shares of our common stock at an exercise price per share of $ 3.29 .

The consulting agreement may be terminated by either party without cause upon 60 days’ prior written notice to the other party and with cause upon 30 days’ prior written notice to the other party.

Recently Adopted Accounting Pronouncements

3 unchanged sentences

This new standard modifies certain disclosure requirements on fair value measurements.

This new standard became effective for the Company on January 1, 2020 .

This new standard was effective for the Company on January 1, 2020 .

The adoption of this new standard did not have a material impact on the Company’s disclosures.

Recently Issued Accounting Pronouncements

In June 2016, the FASB issued ASU No.

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

Measurement of Credit Losses on Financial Instruments (‘‘ASU 2016-13’’), which requires the measurement and recognition of expected credit losses for financial assets held at amortized cost.

ASU 2016-13 replaces the existing incurred loss impairment model with an expected loss model.

It also eliminates the concept of other-than-temporary impairment and requires credit losses related to available-for-sale debt securities to be recorded through an allowance for credit losses rather than as a reduction in the amortized cost basis of the securities.

These changes may result in earlier recognition of credit losses.

In November 2018, the FASB issued ASU No.

2018-19, Codification Improvements to Topic 326, Financial Instruments—Credit Losses , which narrowed the scope and changed the effective date for non-public entities for ASU 2016-13.

The FASB subsequently issued supplemental guidance within ASU No.

2019-05, Financial Instruments—Credit Losses (Topic 326):

Targeted Transition Relief (‘‘ASU 2019-05’’).

ASU 2019-05 provides an option to irrevocably elect the fair value option for certain financial assets previously measured at amortized cost basis.

For public entities that are Securities and Exchange Commission filers, excluding entities eligible to be smaller reporting companies, ASU 2016-13 is effective for annual periods beginning after December 15, 2019, including interim periods within those fiscal years.

For all other entities, ASU 2016-13 is effective for annual periods beginning after December 15, 2022, including interim periods within those fiscal years.

Early adoption is permitted.

This standard will be effective for the Company on January 1, 2023 .

The Company is currently evaluating the potential impact that this standard may have on its financial statements and related disclosures .

In December 2019, the FASB issued ASU No.

2019-12, Income Taxes (Topic 740):

Simplifying the Accounting for Income Taxes , which simplifies the accounting for income taxes by removing certain exceptions to the general principles in ASC 740 and clarifies and amends existing guidance to improve consistent application.

The standard became effective for the Company beginning January 1, 2021.

The amendments that are related to changes in ownership of foreign equity method investments or foreign subsidiaries are to be applied on a modified retrospective basis through a cumulative-effect adjustment to retained earnings as of the beginning of the fiscal year of adoption.

The amendments that are related to franchise taxes that are partially based on income are to be applied on either a retrospective basis for all periods presented or a modified retrospective basis through a cumulative-effect adjustment to retained earnings as of the beginning of the fiscal year of adoption.

All other amendments under this ASU are to be applied on a prospective basis.

The Company adopted the guidance effective January 1, 2021 .

The adoption of this new standard did not have a material impact on the Company’s financial statements.

Collaborations

Ultragenyx Collaboration Agreement

Collaboration Agreement

On October 22, 2020 (the “Effective Date”), the Company entered into a collaboration and license agreement with Ultragenyx Pharmaceutical Inc.

to focus on the development and commercialization of new gene therapies for Duchenne Muscular Dystrophy.

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 Muscular Dystrophy and other diseases resulting from the lack of functional dystrophin (the “Licensed Products”).

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

The Company will conduct certain research and development activities with respect to the development of the Licensed Products.

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

In addition, Ultragenyx granted to the Company an exclusive Development Option or Income Share Option (each as defined and described below) exercisable in the Company’s sole discretion one time per Licensed Product.

After the date of first achievement of clinical proof of concept, Ultragenyx will provide to the Company a data package with respect to the relevant Licensed Product.

The Company will use the data package to determine whether to exercise the corresponding Development Option or Income Share Option with respect to such Licensed Product.

With respect to each Licensed Product for which the Company has not exercised the Development Option or Income Share Option the Company will be entitled to milestone payments of up to $ 25,000 in the aggregate for each such Licensed Product that achieves specified development milestones and $ 65,000 in the aggregate for each such Licensed Product that achieves specified regulatory milestones.

With respect to each Licensed Product for which the Company has not exercised the Income Share Option, the Company will also be entitled to milestone payments of up to $ 165,000 in the aggregate for each Licensed Product that archives specified annual worldwide net sales milestones.

For Licensed Products for which the Company has not exercised the Development Option or Income Share Option, Ultragenyx will pay the Company tiered royalties on a Licensed Product-by-Licensed Product and country-by-country basis ranging from a low double digit percentage to a mid-teens percentage based on Ultragenyx’s annual worldwide net sales of such Licensed Products.

For each Licensed Product for which Ultragenyx decides to initiate a registrational trial in humans, the Company will have the option to fund 30 % of the development costs in the United States and European Union for such Licensed Product and forgo the development and regulatory milestones (the “Development Option”) and receive tiered royalties on a Licensed Product-by-Licensed Product and country-by-country basis ranging from a mid-teens percentage to a low twenties percentage based on Ultragenyx’s annual worldwide net sales of each such Licensed Product.

For each Licensed Product for which the Company exercises the Development Option, the Company may also elect to share 30 % of the net income and net losses on net sales of such Licensed Product in the United States and European Union (the “Income Share Option”).

For Licensed Products for which the Company has exercised the Income Share Option, the Company will not be entitled to milestone payments and Ultragenyx will pay the Company tiered royalties on a Licensed Product-by-Licensed Product and country-by-country basis ranging from a mid-teens percentage to a low twenties percentage based on Ultragenyx’s annual net sales of each such Licensed Product outside of the United States and European Union.

The Company may only exercise an Income Share Option if neither the Company nor any of its affiliates is then developing or commercializing a product that is competitive with the Licensed Product that is subject to such option.

If the Company or any of its affiliates subsequently develops or commercializes a product that is competitive with a Licensed Product for which the Company has exercised an Income Share Option, then the Company and Ultragenyx will no longer share the net income and net losses on net sales of such Licensed Product and such Licensed Product will be treated as if the Company had exercised the Development Option with respect to such Licensed Product.

Following the Company’s exercise of the Development Option or Income Share Option with respect to a Licensed Product, the Company also has the right to cease participation in the sharing of development costs and sharing in net income and net losses on net sales, as applicable, for such Licensed Product by written notice to Ultragenyx.

Upon such notice, the Company will no longer share in the development costs and net income and net losses on net sales of such Licensed Product, as applicable, and will be eligible to receive payments on milestones achieved after the opt-out for such Licensed Product and royalties at the rates applicable to Licensed Products for which the Company has not exercised the Development Option or Income Share Option, as described above.

The Collaboration Agreement continues on a country-by-country and Licensed Product-by-Licensed Product basis until the expiration of all payment obligations under the agreement.

With respect to any Licensed Product for which the Company has exercised an Income Share Option, the Collaboration Agreement continues until there are no longer sales of such Licensed Product in the United States or Europe.

Either party has the right to terminate the agreement if the other party has materially breached in the performance of its obligations under the agreement and such breach has not been cured within the applicable cure period.

Ultragenyx may also terminate the Collaboration Agreement in its sole discretion upon 90 days ’ prior written notice to the Company.

Stock Purchase Agreement

In connection with the execution of the Collaboration Agreement, Ultragenyx and the Company also entered into a stock purchase agreement (the “Stock Purchase Agreement”) on October 22, 2020 (the “Closing Date”), pursuant to which the Company issued and sold 7,825,797 shares of its common stock (the “Shares”) to Ultragenyx at a price of $ 5.1113 per share for an aggregate purchase price of approximately $ 40,000 .

The Stock Purchase Agreement contains customary representations, warranties and covenants of each of the parties thereto.

Following the sale of the Shares, Ultragenyx beneficially owned approximately 14.45 % of the Company’s outstanding common stock.

As of March 31, 2021, Ultragenyx beneficially owned approximately 7.10 % of the Company’s outstanding common stock.

Investor Agreement

In connection with the consummation of the transactions contemplated by the Stock Purchase Agreement, the Company and Ultragenyx entered into an Investor Agreement (the “Investor Agreement”) on the Effective Date.

Pursuant to the terms of the Investor Agreement, Ultragenyx agreed that the Shares will be subject to a lock-up restriction, such that Ultragenyx will not, and will also cause its affiliates not to, without the prior approval of the Company and with certain exceptions, sell, transfer or otherwise dispose of the Shares until the earliest to occur of (i) 18 months after the Effective Date, (ii) the termination of the Collaboration Agreement or (iii) other specified events.

Pursuant to the terms of the Investor Agreement, Ultragenyx agreed that, so long as it holds at least 10 % of the Company’s outstanding common stock, the Shares will be subject to a voting agreement, such that until the earliest to occur of certain specified events, and subject to specified conditions, Ultragenyx will, and will cause its permitted transferees to, vote in accordance with the recommendation of the Company’s Board of Directors with respect to specified matters.

Accounting Treatment

The Company concluded that the Collaboration Agreement and the Stock Purchase Agreement should be combined and treated as a single arrangement for accounting purposes as the agreements were entered into contemporaneously and in contemplation of one another.

The Company assessed this arrangement in accordance with ASC 606 and concluded that the contract counterparty, Ultragenyx, is a customer.

The Company identified the following promises in the Collaboration Agreement that were evaluated under the scope of ASC 606:

(1) an exclusive worldwide license to the Licensed Products;

(2) an obligation to perform research and development services;

and (iii) an obligation to participate in a joint steering committee.

The Company assessed the promised goods and services to determine if they are distinct.

Based on this assessment, the Company determined that Ultragenyx cannot benefit from the promised goods and services separately from the others as they are highly interrelated and therefore not distinct.

Due to the early stage of the Licensed Products, the research and development services could not be performed by another party.

The Company’s skill-set, knowledge and expertise are required to conduct the research and development services and the research and development services are expected to involve significant further development of the Licensed Products.

Accordingly, the promised goods and services represent one combined performance obligation and the entire transaction price will be allocated to that single combined performance obligation.

The Company determined the transaction price under ASC 606 at the inception of the Collaboration Agreement to be $ 22,513 , which represents the excess proceeds from the equity investment under the Stock Purchase Agreement, when measured at fair value after taking into consideration a discount for lack of marketability, plus the estimated reimbursement of research and development costs, which represents variable consideration.

The Company included the estimated reimbursement of research and development costs in the transaction price at the inception of the arrangement because the Company is required to perform research and development services and the contract requires Ultragenyx to reimburse the Company for costs incurred.

Also, since the related revenue would be recognized only as the costs are incurred, the Company determined it is not probable that a significant reversal of cumulative revenue would occur.

The Company evaluated how much variable consideration related to development and regulatory milestones, and the Company’s potential exercise of its Development Option or Income Share Option per Licensed Product, to include in the transaction price using the most likely amount approach and concluded that no amount should be included in the transaction price due to the high degree of uncertainty and risk associated with these potential payments.

The Company also determined that royalties and sales milestones relate solely to the license of intellectual property and are therefore excluded from the transaction price under the sales- or usage-based royalty exception of ASC 606.

Revenue related to these royalties and sales milestones will only be recognized when the associated sales occur, and relevant thresholds are met.

The Company determined that revenue under the Collaboration Agreement should be recognized over time as Ultragenyx simultaneously receives the benefit from the Company as the Company performs under the single performance obligation over time.

The Company will recognize revenue for the single performance obligation using a cost-to-cost input method as the Company has concluded it best depicts the research and development and joint steering committee participation services performed.

Under this method, the transaction price is recognized over the contract’s entire performance period, using costs incurred relative to total estimated costs to determine the extent of progress towards completion.

During the three months ended March 31, 2021, the Company recognized $ 3,335 of related party collaboration revenue, associated with its collaboration with Ultragenyx related to research and development services performed during the period and the corresponding cost reimbursement receivable.

The following table presents changes in the balances of the Company’s related party collaboration receivables and contract liabilities during the three months ended March 31, 2021:

Balance as of December 31, 2020

Balance as of March 31, 2021

Related party collaboration receivable

Contract liabilities:

Deferred revenue

The change in receivables balance for the three months ended March 31, 2021 is driven by amounts owed to the Company for research and development services provided.

The Company did no t collect any amounts from Ultragenyx during the period.

As of March 31, 2021, there was $ 17,663 of deferred revenue related to the Ultragenyx Collaboration Agreement, which is classified as either current or non-current in the accompanying condensed consolidated balance sheet based on the period the services are expected to be delivered.

Additionally, as of March 31, 2021, there was $ 280 of related party collaboration receivables related to reimbursable costs expected to be received from Ultragenyx for research and development services performed.

Costs incurred relating to the Ultragenyx Collaboration Programs consist of internal and external research and development costs, which primarily include salaries and benefits, lab supplies, preclinical research studies, clinical studies, consulting services, and commercial development.

These costs are included in research and development expenses in the Company’s condensed consolidated statement of operations during the three months ended March 31, 2021.

Fair Value of Financial Assets and Liabilities

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 September 30, 2020

Fair Value Measurements as of March 31, 2021

Cash equivalents

1 unchanged sentence

Cash equivalents

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 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.

As of March 31, 2021 and December 31, 2020, there were no available-for-sale securities.

During the three months ended March 31, 2021 and the year ended December 31, 2020, 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 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:

December 31, 2019

Corporate bond securities

Commercial paper

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

December 31, 2019

Due in one year or less

Total available-for-sale securities

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

Property and Equipment

Property and equipment consists of the following:

September 30,

Furniture and fixtures

5 unchanged sentences

Less accumulated depreciation

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.

Depreciation expense was $ 734 and $ 1,026 for the three months ended March 31, 2021 and 2020, 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 and nine months ended September 30, 2020 and 2019.

No warrants were exercised during the three months ended March 31, 2021 and 2020.

In October 2020, in connection with the execution of the Collaboration Agreement, Ultragenyx and the Company also entered into the 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 for an aggregate purchase price of approximately $ 40,000 .

In October 2020, the Company sold 6,309,632 shares of common stock pursuant to a sales agreement, dated March 13, 2019, (the “ATM Sales Agreement”), by and between the Company and Jefferies LLC (“Jefferies”) resulting in net proceeds to the Company of $ 23,209 .

On December 15, 2020, the Company issued and sold in a private placement 24,324,320 shares of its common stock at a price per share of $ 3.70 .

The Company received net proceeds from the private placement of $ 86,210 after deducting placement agent fees and offering expenses of $ 3,790 .

On March 23, 2021, the Company issued and sold in a public offering 25,000,000 shares of its common stock at a price to the public of $ 5.575 per share.

The Company received net proceeds of $ 134,878 after deducting underwriting discounts and commissions and offering expenses.

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.

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.

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.

In April 2021, the board of directors approved an amendment to the 2020 Plan to reserve an additional 7,000,000 shares of common stock for issuance under the plan, subject to stockholder approval.

During the three months ended March 31, 2021, the Company granted options for the purchase of 2,397,495 shares of common stock.

During the three months ended March 31, 2021, the Company granted no restricted stock units.

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 September 30,

Nine Months Ended September 30,

Three Months Ended March 31,

Research and development

1 unchanged sentence

Restructuring

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.

During the three months ended March 31, 2021 and 2020, 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 March 31, 2021 and December 31, 2020, 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, 2021, and December 31, 2020, 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 September 30, 2020.

The Company is not aware of any material legal proceedings or claims as of March 31, 2021.

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 September 30,

Nine Months Ended September 30,

Three Months Ended March 31,

Net loss attributable to common stockholders

The denominator is as follows:

Three Months Ended September 30,

Nine Months Ended September 30,

Three Months Ended March 31,

Weighted average shares of common stock outstanding,

2 unchanged sentences

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

Three Months Ended September 30,

Nine Months Ended September 30,

Three Months Ended March 31,

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 nine months ended September 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 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.

During 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.

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

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:

During the three months ended March 31, 2021, the remaining restructuring charges were paid.

The following table shows the total amount expected to be incurred and the liability related to the 2020 restructuring for the three months ended March 31, 2021:

One-Time Employee

1 unchanged sentence

Accrued restructuring costs as of December 31, 2020

Restructuring charges incurred during the period

Amounts paid during the period

Accrued restructuring costs as of March 31, 2021

Amounts paid during the period

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