What changed in this filing

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Item 2. Management’s Discussion and Analysis

2022-04-27 compared with 2021-11-03 · 88 added, 165 removed, 180 unchanged (58% of the section changed)

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There is no cure for Duchenne and, for the vast majority of patients, there are no satisfactory symptomatic or disease-modifying treatments.

Our efforts are focused on our lead product candidate, SGT-001, 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.

Based on our preclinical program that included multiple animal species of different phenotypes and genetic variations, as well as preliminary clinical trial biomarker results, we believe that SGT-001, has the potential to slow or even halt the progression of Duchenne, regardless of the type of genetic mutation or stage of the disease.

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

The safety and efficacy of SGT-001 are currently being evaluated in a Phase I/II clinical trial called IGNITE DMD.

In March 2021, we announced that the seventh patient, who was the fourth patient in the 2E14 vg/kg cohort, was treated with SGT-001, under an amended clinical protocol designed to enhance patient safety, incorporating the prophylactic use of both anti-complement inhibitor eculizumab and C1 esterase inhibitor, and increasing the prednisone dose in the first month post dosing.

This patient was safely dosed, with transient and manageable adverse events, none of which were serious.

In April 2021, an eighth patient, also in the 2E14 vg/kg cohort, was treated with SGT-001.

The patient experienced a systemic inflammatory response which has since fully resolved.

The event was classified as a serious adverse event and considered by the investigator to be drug related.

This type of event is described in our Investigators Brochure and is not considered unexpected.

Following dosing of these two patients with our second-generation manufacturing process and clinical strategy, we conducted an extensive review of all clinical data, resulting in a strengthened risk mitigation plan, which has also been submitted to the FDA.

Activities are underway to advance IGNITE DMD with the next patient dosing anticipated in the fourth quarter of 2021.

No new drug-related safety findings have been identified in patients one through eight in post-dosing periods of 90 days to more than 3.5 years.

We continue to follow dosed patients and collect data to support the potential benefit from dosing with SGT-001.

In May 2021, we reported long-term biopsy data collected from patients four through six, who were dosed at the 2E14 vg/kg dose level.

Analyses of the biopsies, taken 2 years, 1.5 years and 1 year post-dosing, respectively, demonstrated durable and widespread expression of the microdystrophin protein.

The long-term results are consistent with the day 90, interim data reported in March 2021 and continue to demonstrate the functionality of the SGT-001 microdystrophin, as highlighted by the recruitment of key dystrophin associated proteins:

beta-sarcoglycan and neuronal Nitric Oxide Synthase or nNOS.

The long-term muscle biopsy results were analyzed by two methods, western blot and immunofluorescence.

As reflected in the table below, the Western Blot data indicate that expression was maintained in patient four and increased compared to the day 90 biopsies in patients five and six.

Immunofluorescence data show microdystrophin function via continued localization to the muscle membrane, with the percent positive fibers remaining comparable to the day 90 biopsies in all three patients.

Last Timepoint Post-Dosing

Immunofluorescence (% Positive Fibers)

Last Timepoint

*Below the limit of quantification

Further morphological analysis of the muscle biopsies conducted by us indicate that sustained microdystrophin protein expression and function resulted in membrane stabilization, evidenced by minimal progression of muscle deterioration since the day 90 timepoint.

These long-term pathophysiological improvements support the recently reported positive trends in the clinical biomarker and functional data.

In September 2021, we reported 1.5-year functional data and patient-reported outcome measures for patients four through six in IGNITE DMD, who were dosed at the 2E14 vg/kg dose level.

Also in September 2021, we reported additional pulmonary function data from the first six patients in IGNITE DMD, three who were dosed at the 5E13 vg/kg dose level and three who were dosed at the 2E14 vg/kg dose level.

In May 2021, we announced the advancement of a next-generation Duchenne microdystrophin gene transfer program, SGT-003.

We have developed a library of novel capsids that show increased muscle tropism, decreased liver biodistribution and drive improved efficiency compared with AAV9 in various in vitro and in vivo models.

SGT-003 is a preclinical candidate that combines a novel and rationally-designed capsid candidate from this library with Solid’s proprietary nNOS containing microdystrophin construct.

We are currently targeting an IND submission for SGT-003 in early-2023.

In November 2021, in collaboration with REGENXBIO, we formally launched the Pathway Development Consortium (PDC), a multistakeholder initiative which aims to identify, develop, expand and maintain pathways to effective therapies for patients diagnosed early in life with rare diseases.

The PDC seeks to achieve these goals by bringing together a broad and diverse group of stakeholders from the rare disease and AAV gene therapy communities, including patients, industry, regulators, academia and payers, among others, for meaningful scientific and policy discussions.

Since our inception, we have devoted substantial resources to identifying and developing SGT-001, SGT-003 and our other product candidates, developing our manufacturing processes, organizing and staffing our company and providing general and administrative support for these operations.

In March 2022, we announced two-year interim safety and efficacy data from the first three Patients (Patients 4-6) treated with SGT-001 in the 2E14 vg/kg dose cohort of our Phase I/II clinical trial called IGNITE DMD.

Results suggested durable benefit compared to natural history trajectories 24-months post-administration of SGT-001, across functional, pulmonary and patient reported outcome measures.

In addition, no new drug-related safety findings have been identified in patients treated with SGT-001 in IGNITE DMD in post-dosing periods of 90 days to approximately four years.

In April 2022, we announced that we will be streamlining our operations and making a strategic shift to a commercially scaled, transient transfection-based manufacturing process for SGT-001.

Following a robust manufacturing analysis, we believe that a new, outsourced process may provide improvements to manufacturability as well as additional organizational efficiencies.

We anticipate that the use of transfection-based manufacturing processes for both SGT-001 and SGT-003, will allow us to focus our operating structure and better leverage external manufacturing expertise.

In addition, we plan to narrow our research and development activities to those related to SGT-001, SGT-003 and next generation capsids.

In connection with these activities, we announced in April 2022 that we will reduce our headcount by approximately 35 percent.

As a result of the reorganization and our anticipated reduction in planned corporate expenditures, we believe that our cash, cash equivalents, and available-for-sale securities as of March 31, 2022 will enable us to fund our operating expenses and capital expenditure requirements into the second quarter of 2024 .

In April 2022, we also announced that we have concluded enrollment in IGNITE DMD and will continue monitoring dosed patients for five years post-treatment.

We anticipate that future patients will be treated with SGT-001 manufactured using the new transient transfection-based process.

We currently expect to continue dosing with SGT-001 in 2023 , pending discussions with the U.S.

Food and Drug Administration, or FDA.

SGT-003 is our next-generation gene transfer candidate.

It is comprised of our nNOS binding domain microdystrophin transgene and muscle-specific promoter present in SGT-001 and uses a lead candidate novel, rationally designed AAV capsid, developed for enhanced muscle tropism, to deliver these components to target tissues.

We believe that the properties of this novel capsid may allow for enhanced benefit over therapies using traditional capsids, potentially both in terms of efficacy and safety.

In April 2022, we released new preclinical data suggesting that the novel, next generation capsid candidate may have meaningful advantages for the delivery of muscle-related gene therapies.

New data from a non-human primate study using a reporter transgene in our novel capsid demonstrated increased muscle tropism, decreased liver biodistribution and improved efficiency compared with AAV9.

These results are consistent with earlier in vitro and in vivo studies in both dystrophic (MDX) and wild type mouse models, which suggested improved muscle tropism with our novel capsid as well as improved expression of our microdystrophin compared with AAV9.

Our novel, muscle tropic capsid has been combined with our differentiated microdystrophin for the SGT-003 program for Duchenne.

We remain on track for an anticipated early 2023 IND submission for SGT-003.

Since our inception, we have devoted substantial resources to identifying and developing SGT-001, SGT-003 and other future product candidates, developing our manufacturing processes, organizing and staffing our company and providing general and administrative support for these operations.

We have incurred significant losses every year since our inception.

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To date, we have not generated any revenue from product sales.

Our ability to eventually generate any product revenue sufficient to achieve profitability will depend on the successful development, approval and eventual commercialization of SGT-001, SGT-003 and our other product candidates.

If successfully developed and approved, we intend to commercialize SGT-001 and SGT-003 in the United States and European Union and may enter into licensing agreements or strategic collaborations in other markets.

If we generate product sales or enter into licensing agreements or strategic collaborations, we expect that any revenue we generate will fluctuate from quarter to quarter and year to year as a result of the timing and amount of any product sales, license fees, milestone payments and other payments.

If we fail to complete the development of SGT-001, SGT-003 and our other product candidates in a timely manner or obtain regulatory approval of them, our ability to generate future revenue, and our results of operations and financial position, would be materially adversely affected.

If we fail to complete the development of SGT-001, SGT-003 and other future product candidates in a timely manner or obtain regulatory approval of them, our ability to generate future revenue, and our results of operations and financial position, would be materially adversely affected.

Due to our significant research and development expenditure, licensing and patent investment, and general administrative costs associated with our operations, we have generated substantial operating losses in each period since our inception.

Our net losses were $53.6 million for the nine months ended September 30, 2021 and $66.9 million for the nine months ended September 30, 2020.

As of September 30, 2021, we had an accumulated deficit of $458.1 million.

Our net losses were $25.3 million for the three months ended March 31, 2022 and $16.9 million for the three months ended March 31, 2021.

As of March 31, 2022, we had an accumulated deficit of $502.1 million.

We expect to incur significant expenses and operating losses for the foreseeable future.

In January 2020, we announced a reduction in workforce by approximately 30% as part of a strategic plan designed to create a leaner company focused on advancing SGT-001.

As we seek to develop and commercialize SGT-001, SGT-003 or any other product candidates, we anticipate that our expenses will increase significantly and that we will need substantial additional funding to support our continuing operations.

As we seek to develop and commercialize SGT-001, SGT-003 or other future product candidates, we anticipate that our expenses will increase significantly and that we will need substantial additional funding to support our continuing operations.

Until such time as we can generate significant revenue from product sales, if ever, we expect to finance our operations through a combination of public or private equity financings, debt financings or other sources, which may include licensing agreements or strategic collaborations.

We may be unable to raise additional funds or enter into such agreements or arrangements when needed on favorable terms, if at all.

If we fail to raise capital or enter into such agreements as and when needed, we may have to significantly delay, scale back or discontinue the development or commercialization of SGT-001, SGT-003 or our other product candidates.

Because of the numerous risks and uncertainties associated with product development, we are unable to predict the timing or amount of increased expenses or determine when or if we will be able to achieve or maintain profitability.

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If we fail to become profitable or are unable to sustain profitability on a continuing basis, then we may be unable to continue our operations at planned levels and be forced to reduce or terminate our operations.

In October 2020, we entered into a collaboration and license agreement, or the Collaboration Agreement, with Ultragenyx Pharmaceutical Inc., or Ultragenyx, pursuant to which we granted Ultragenyx an exclusive worldwide license under certain intellectual property rights controlled by us to make, have made, use, distribute, offer for sale, sell, import and export, including to research, develop, modify, enhance, improve, register, distribute, commercialize, or otherwise dispose of AAV8 or other clade E AAV variant pharmaceutical products that express our MD5 nNOS binding domain form of microdystrophin protein for the diagnosis, treatment, cure, mitigation or prevention of Duchenne and other disease indications resulting from a lack of functional dystrophin, including Becker muscular dystrophy.

On a product-by-product basis, we have the option to fund 30% of the development costs in the United States and European Union and share 30% of the net income and net losses on net sales of such Licensed Product in the United States and European Union.

In connection with the execution of the Collaboration Agreement, we also entered into a stock purchase agreement with Ultragenyx, pursuant to which we issued and sold 7,825,797 shares of our common stock to Ultragenyx for an aggregate purchase price of approximately $40 million.

During the year ended December 31, 2020, we sold 6,309,632 shares pursuant to the ATM Sales Agreement, resulting in net proceeds of $23.2 million.

In December 2020, we completed a private placement of shares of common stock resulting in net proceeds to us of $86.2 million, after deducting offering costs.

In March 2021, we issued and sold in a public offering 25,000,000 shares of our common stock at a price per share to the public of $5.75, including the full exercise by the underwriters of an option to purchase additional shares of common stock, or the March 2021 Offering.

We received net proceeds of approximately $134.9 million after deducting underwriter discounts and commissions and offering expenses.

As of September 30, 2021, we had cash, cash equivalents, and available-for-sale securities of $229.8 million.

We believe that our cash, cash equivalents, and available-for-sale securities as of September 30, 2021 will enable us to fund our operating expenses and capital expenditure requirements into the second quarter of 2023.

We received net proceeds of approximately $134.9 million after deducting underwrit ing discounts and commissions and offering expenses.

As of March 31, 2022, we had cash, cash equivalents, and available-for-sale securities of $180.1 million.

Based on the reorganization announced in April 2022 and our anticipated reduction in planned corporate expenditures, we believe that our cash, cash equivalents, and available-for-sale securities as of March 31, 2022 will enable us to fund our operating expenses and capital expenditure requirements into the second quarter of 2024.

We have based this estimate on assumptions that may prove to be wrong, and we could use our available capital resources sooner than we currently anticipate.

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Collaboration revenue

Collaboration revenue was $3.

5 million and $ 10 .

5 million for the three and nine months ended September 30, 2021 , respectively.

We recognized this revenue related to research services and cost reimbursement from the Collaboration Agreement.

Collaboration revenue was $1.9 million for the three months ended March 31, 2022 compared to $3.3 million for the three months ended March 31, 2021.

We recognized this revenue related to research services and cost reimbursement from the collaboration and license agreement, or the Collaboration Agreement, with Ultragenyx Pharmaceutical Inc., or Ultragenyx.

Product revenue

We have not generated any product revenue to date and do not expect to generate any product revenue from the sale of our products for the foreseeable future, if ever.

If our development efforts for SGT-001, SGT-003 or our other product candidates are successful and result in marketing approval, we may generate product revenue in the future from product sales.

If our development efforts for SGT-001, SGT-003 or other future product candidates are successful and result in marketing approval, we may generate product revenue in the future from product sales.

Operating expenses

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Research and development expenses

Research and development expenses consist primarily of costs incurred for our research activities, including our discovery efforts, and the development of SGT-001, SGT-003 and our other product candidates and include:

expenses incurred under agreements with third parties, including contract research organizations, or CROs, that conduct research and preclinical activities on our behalf, as well as contract manufacturing organizations, or CMOs, that manufacture SGT-001, SGT-003 and our other product candidates for use in our preclinical studies and clinical trials;

expenses incurred under agreements with third parties, including contract research organizations, or CROs, that conduct research and preclinical activities on our behalf, as well as contract manufacturing organizations, or CMOs, that manufacture SGT-001, SGT-003 and other future product candidates for use in our preclinical studies and clinical trials;

salaries, benefits and other related costs, including equity-based compensation expense, for personnel engaged in research and development functions;

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costs of laboratory supplies and acquiring, developing and manufacturing preclinical study and clinical trial materials;

costs incurred in seeking regulatory approval of SGT-001, SGT-003 and our other product candidates;

costs incurred in seeking regulatory approval of SGT-001, SGT-003 and other future product candidates;

expenses incurred under our intellectual property licenses;

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Three Months Ended

September 30,

Nine Months Ended

September 30,

(In thousands)

SGT-003 and other product candidates

SGT-003 and other development programs

Unallocated research and development expenses

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Total research and development expenses

We cannot determine with certainty the duration, costs and timing of clinical trials of SGT-001, SGT-003 and our other product candidates or if, when or to what extent we will generate revenue from the commercialization and sale of any of our product candidates for which we obtain marketing approval or our other research and development expenses.

We cannot determine with certainty the duration, costs and timing of clinical trials of SGT-001, SGT-003 and other future product candidates, or if, when or to what extent we will generate revenue from the commercialization and sale of any of our product candidates for which we obtain marketing approval or our other research and development expenses.

We may never succeed in obtaining marketing approval for any of our product candidates.

The duration, costs and timing of clinical trials and development of our product candidates will depend on a variety of factors, including:

the scope, rate of progress, expense and results of any clinical trials of SGT-001, SGT-003 or other product candidates and other research and development activities that we may conduct;

the scope, rate of progress, expense and results of any clinical trials of SGT-001, SGT-003 or other future product candidates and other research and development activities that we may conduct;

the imposition of regulatory restrictions on clinical trials, including full and partial clinical holds, and the time and activities required to lift any such holds;

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Product candidates in later stages of clinical development generally have higher development costs than those in earlier stages of clinical development, primarily due to the increased size and duration of later-stage clinical trials.

We expect that our research and development expenses will increase for the foreseeable future as we proceed with clinical trials for SGT-001, initiate clinical trials for SGT-003 or any future product candidates and continue to identify and develop additional product candidates.

Our research and development expenses will increase in the future as we proceed with clinical trials for SGT-001, initiate clinical trials for SGT-003 or any future product candidates and continue to identify and develop additional product candidates.

General and administrative expenses

General and administrative expenses consist primarily of salaries and other related costs, including equity-based compensation, for personnel in our executive, finance, business development and administrative functions.

General and administrative expenses also include legal fees relating to patent and corporate matters, professional fees for accounting, auditing, tax and consulting services, insurance costs, travel expenses, and facility-related expenses, which include direct depreciation costs and allocated expenses for rent and maintenance of office facilities and other operating costs.

We expect that our general and administrative expenses will increase in the future as we increase our general and administrative personnel headcount to support our research and development activities and activities related to the clinical trials for and potential commercialization of SGT-001, SGT-003 and our other product candidates.

Restructuring charges

In January 2020, we implemented changes to our organizational structure to create a leaner company focused on advancing SGT-001.

In connection with the restructuring, we made changes to our management team and reduced headcount by approximately 30%.

General and administrative expenses also include legal fees relating to patent and corporate matters, professional fees for accounting, auditing, tax and consulting services,

insurance costs, travel expenses, and facility-related expenses, which include direct depreciation costs and allocated expenses for rent and maintenance of office facilities and other operating costs.

We expect that our general and administrative expenses will increase in the future as we support our research and development activities and activities related to the clinical trials for and potential commercialization of SGT-001, SGT-003 and other future product candidates.

Other income (expense), net

Other income (expense), net consists of interest income earned on our cash, cash equivalents, available-for-sale securities, funding from charitable organizations, and financing leases interest expense.

Other income (expense), net consists of interest income earned on our cash, cash equivalents, available-for-sale securities, and funding from charitable organizations, net of financing leases interest expense.

We account for income taxes using an asset and liability approach, which requires recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been recognized in the consolidated financial statements but have not been reflected in taxable income.

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Our actual results may differ from these estimates.

During the nine months ended September 30, 2021, there were no material changes to our critical accounting policies.

During the three months ended March 31, 2022, there were no material changes to our critical accounting policies.

Our critical accounting policies are described under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Critical accounting policies and use of estimates” in our Annual Report on Form 10-K for the year ended December 31, 2021 and the notes to the unaudited condensed consolidated financial statements included in Part I, Item 1, “Financial Statements (unaudited),” of this quarterly report on Form 10-Q.

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Results of operations

Comparison of the three months ended September 30, 2021 and 2020

The following table summarizes our results of operations for the three months ended September 30, 2021 and 2020:

Comparison of the three months ended March 31, 2022 and 2021

The following table summarizes our results of operations for the three months ended March 31, 2022 and 2021:

Three Months Ended

September 30,

(in thousands)

3 unchanged sentences

General and administrative

Restructuring charges

Total operating expenses

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Collaboration revenue

Collaboration revenue for the three months ended September 30, 2021 was $3.5 million, compared to no collaboration revenue for the three months ended September 30, 2020.

The increase in collaboration revenue was related to research services and cost reimbursement received under the Collaboration Agreement with Ultragenyx, which we entered into in the fourth quarter of 2020.

Collaboration revenue for the three months ended March 31, 2022 was $1.9 million, compared to $3.3 million of collaboration revenue for the three months ended March 31, 2021.

The decrease in collaboration revenue was related to reduced research services and cost reimbursement received under the Collaboration Agreement with Ultragenyx.

Research and development expenses

Three Months Ended

September 30,

(in thousands)

SGT-003 and other product candidates

SGT-003 and other development programs

Unallocated research and development expenses

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Total research and development expenses

Research and development expenses for the three months ended September 30, 2021 were $14.4 million, compared to $16.0 million for the three months ended September 30, 2020.

The decrease of $1.6 million in research and development expenses was primarily due to a $4.3 million decrease in manufacturing costs for our lead product candidate SGT-001, offset by an increase in unallocated research and development costs of $1.9 million, primarily due to an increase in personnel related expenses of $1.1 million and an increase in other R&D expenses of $0.8 million, and an increase in clinical and non-clinical costs of $0.8 million.

Research and development expenses for the three months ended March 31, 2022 were $19.9 million, compared to $14.2 million for the three months ended March 31, 2021.

The increase of $5.7 million in research and development expenses was primarily due to a $3.2 million increase in costs for SGT-003 and other development programs, primarily in manufacturing and related costs, and an increase in unallocated research and development costs of $3.3 million, primarily due to an increase in personnel related expenses of $2.8 million and an increase in other research and development expenses of $0.5 million, partially offset by a decrease in SGT-001 expenses of $0.8 million primarily due to a reduction in clinical development costs.

General and administrative expenses

General and administrative expenses were $7.1 million for the three months ended September 30, 2021, compared to $5.2 million for the three months ended September 30, 2020.

The increase of $2.0 million was due to an increase in corporate expenses of $1.1 million primarily related to consulting and professional services and an increase in personnel related expenses of $0.9 million.

General and administrative expenses were $7.4 million for the three months ended March 31, 2022, compared to $6.0 million for the three months ended March 31, 2021.

The increase of $1.4 million was primarily due to an increase in personnel related expenses.

Other income (expense), net

Other income (expense), net was less than $0.1 million for the three months ended September 30, 2021, compared to other expense of less than $0.1 million for the three months ended September 30, 2020.

Other income (expense), net was less than $0.1 million for the three months ended March 31, 2022, compared to other expense of less than $0.1 million for the three months ended March 31, 2021.

The activity was primarily related to the increase in interest income on available-for-sale securities included within our portfolio.

Comparison of the nine months ended September 30, 2021 and 2020

The following table summarizes our results of operations for the nine months ended September 30, 2021 and 2020:

Nine Months Ended September 30,

(in thousands)

Collaboration revenue - related party

Operating expenses:

Research and development

General and administrative

Restructuring charges

Total operating expenses

Loss from operations

Other income (expense), net

Collaboration revenue

Collaboration revenue for the nine months ended September 30, 2021 was $10.5 million, compared to no collaboration revenue for the nine months ended September 30, 2020.

Research and development expenses

Nine Months Ended September 30,

(in thousands)

SGT-003 and other product candidates

Unallocated research and development expenses

Personnel related expenses

External expenses

Total unallocated research and development expenses

Total research and development expenses

Research and development expenses for the nine months ended September 30, 2021 were $44.1 million, compared to $49.1 million for the nine months ended September 30, 2020.

The decrease of $5.0 million in research and development expenses was primarily due to a $6.4 million decrease in costs related to our lead product candidate SGT-001, driven by lower manufacturing costs of $7.4 million offset by an increase in clinical and non-clinical costs of $1.0 million.

The decrease in research and development expenses was also offset by a $1.1 million increase in personnel related expenses.

The decrease in research and development was offset by a $0.3 million increase in costs related to SGT-003 and other product candidates.

General and administrative expenses

General and administrative expenses were $19.9 million for the nine months ended September 30, 2021, compared to $16.0 million for the nine months ended September 30, 2020.

The increase of $3.9 million was due to an increase in corporate expenses of $2.2 million primarily related to consulting and professional services and an increase in personnel related expenses of $1.7 million.

Other income (expense), net

Interest expense was less than $0.1 million for the nine months ended September 30, 2021, compared to interest income of $0.1 million for the nine months ended September 30, 2020.

The decrease was primarily related to less interest income earned on the available-for-sale securities in our portfolio.

Liquidity and capital resources

Sources of liquidity

To date, we have financed our operations primarily through the sale of redeemable preferred units and member units, the sale of common stock and prefunded warrants to purchase shares of our common stock in private placements and the sale of common stock in

our initial public offering and a follow-on public offering .

Through September 30, 2021 , we raised an aggregate of $144.6 million of gross proceeds from our sales of preferred units prior to the completion of our initial public offering, and an aggregate of $ 471 .

3 million of net proceeds from the sale of our common stock through public offerings, including our IPO, private placements, our ATM Sales Agreement and pursuant to the stock purchase agreement with Ultragenyx , as detailed in the following paragraphs .

We completed our initial public offering on January 30, 2018, in which we sold 8,984,375 shares of common stock, including the underwriters’ over-allotment option, at a public offering price of $16.00 per share, resulting in net proceeds of $129.1 million.

On July 30, 2019, we issued and sold in a private placement (i) 10,607,525 shares of our common stock at a price per share of $4.65 and (ii) 2,295,699 pre-funded warrants to purchase shares of our common stock at a price per warrant of $4.64.

Each pre-funded warrant is exercisable for one share of common stock at an exercise price of $0.01 and the pre-funded warrants have no expiration date.

We received $57.9 million of net proceeds from the private placement after deducting offering costs .

On October 2, 2020, 137,460 of these pre-funded warrants were exercised.

On October 22, 2020, we entered into the Collaboration Agreement with Ultragenyx.

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

We received $86.2 million of net proceeds from the private placement after deducting offering costs.

On March 13, 2019, we entered into the ATM Sales Agreement under which we may offer and sell, from time to time, shares of our common stock having aggregate gross proceeds of up to $50.0 million through Jefferies as sales agent.

Through March 31, 2022, we raised an aggregate of $144.6 million of gross proceeds from our sales of preferred units prior to the completion of our initial public offering, and an aggregate of $471.3 million of net proceeds from the sale of our common stock through public offerings, including our IPO, private placements, our “at-the-market offering” sales agreement, dated March 13, 2019 and amended on August 16, 2021, by and between us and Jefferies LLC, or Jefferies, or the ATM Sales Agreement, and pursuant to the stock purchase agreement with Ultragenyx, as detailed in the following paragraphs.

On March 13, 2019, we entered into the ATM Sales Agreement, which was amended in August 2021, under which we may offer and sell, from time to time, shares of our common stock having aggregate gross proceeds of up to $75.0 million through Jefferies as sales agent.

Any such sales being made by any method that is deemed an “at-the-market offering” as defined in Rule 415 promulgated under the Securities Act.

We will pay Jefferies a commission of up to 3% of the gross proceeds of any sales of common stock pursuant to the ATM Sales Agreement.

During the nine months ended September 30, 2021 , we did not sell any shares pursuant to the ATM Sales Agreement.

During the year ended December 31, 2020, we sold 6,309,632 shares pursuant to the ATM Sales Agreement resulting in net proceeds of $23.2 million.

During the year ended December 31, 2021 and the three months ended March 31, 2022, we did not sell any shares pursuant to the ATM Sales Agreement.

On March 23, 2021, we issued and sold in a public offering 25,000,000 shares of our common stock at a price per share of $5.75, including the full exercise by the underwriters of an option to purchase additional shares of common stock, or the March 2021 Offering.

We received net proceeds of approximately $134.9 million after deducting underwriter discounts and commissions and offering expenses.

As of September 30, 2021, we had cash, cash equivalents and available-for-sale securities of $229.8 million and had no debt outstanding.

We received net proceeds of approximately $134.9 million after deducting underwriting discounts and commissions and offering expenses.

As of March 31, 2022, we had cash, cash equivalents and available-for-sale securities of $180.1 million and had no debt outstanding.

The following table summarizes our sources and uses of cash for each of the periods presented:

Nine Months Ended

September 30,

Three Months Ended

(in thousands)

Cash used in operating activities

Cash (used in) provided by investing activities

Cash provided by (used in) investing activities

Cash provided by financing activities

Net decrease in cash, cash equivalents and restricted cash

Net increase in cash, cash equivalents and restricted cash

Operating activities

During the nine months ended September 30, 2021, operating activities used $56.9 million of cash, primarily resulting from our net loss of $53.6 million and cash used in changes in our operating assets and liabilities of 16.0 million offset by non-cash charges of $12.7 million due to equity-based compensation of $10.0 million, depreciation expense of $2.2 million and amortization on available for sale securities of $0.5 million.

Net cash used in changes in our operating assets and liabilities during the nine months ended September 30, 2021 consisted primarily of a decrease in accrued expenses and other liabilities of $4.8 million, a decrease in deferred revenue of $9.6 million, an increase in accounts receivable of $0.6 million and an increase prepaid expenses and other assets of $1.6 million, offset by an increase in accounts payable of $0.6 million.

During the nine months ended September 30, 2020, operating activities used $57.9 million of cash, primarily resulting from our net loss of $66.9 million and cash used in changes in our operating assets and liabilities of $3.2 million offset by non-cash charges of

$12.2 million due primarily to equity-based compensation of $9.1 million and depreciation expense of $3.1 million.

Net cash used in changes in our operating assets and liabilities during the nine months ended September 30, 2020 consisted primarily of a decrease in accrued expenses and other liabilities of $2.0 million and a decrease in accounts payable of $2.6 million partially offset by a net decrease in prepaid expenses and other assets of $1.5 million.

These changes were primarily due to the timing of payments.

During the three months ended March 31, 2022, operating activities used $27.2 million of cash, primarily resulting from our net loss of $25.3 million and cash used in changes in our operating assets and liabilities of $5.6 million offset by non-cash charges of $3.7 million due to equity-based compensation of $2.6 million, depreciation expense of $0.7 million and amortization on available for sale securities of $0.4 million.

Net cash used in changes in our operating assets and liabilities during the three months ended March 31, 2022 consisted primarily of an increase in prepaid expenses and other assets of $3.4 million, a decrease in deferred revenue of $1.9 million and a decrease in accrued expenses and other liabilities of $0.4 million, offset by an increase in accounts payable of $0.1 million and a decrease in accounts receivable of $0.1 million.

During the three months ended March 31, 2021, operating activities used $21.4 million of cash, primarily resulting from our net loss of $16.9 million and cash used in changes in our operating assets and liabilities of $8.1 million offset by non-cash charges of $3.6 million due to equity-based compensation of $2.9 million and depreciation expense of $0.7 million.

Net cash used in changes in our operating assets and liabilities during the three months ended March 31, 2021 consisted primarily of a reduction in accrued expenses

and other liabilities of $3.9 million, a decrease in deferred revenue of $3.1 million, a net increase in prepaid expenses and other assets of $0.8 million and an increase in accounts receivable of $0.3 million .

Investing activities

During the nine months ended September 30, 2021, investing activities used $121.2 million of cash, resulting from purchases of available-for-sale securities and property and equipment.

During the nine months ended September 30, 2020, investing activities provided $6.7 million of cash, consisting primarily of proceeds from maturities of available-for-sale securities partially offset by purchases of property and equipment, and available-for-sale securities.

During the three months ended March 31, 2022, investing activities provided $37.7 million of cash, resulting from the sale or maturity of available-for-sale securities of $46.8 million, offset by $8.9 million from purchases of available-for-sale securities and $0.2 million of purchases of property and equipment.

During the three months ended March 31, 2021, investing activities used $0.1 million of cash, resulting from purchases of property and equipment .

Financing activities

During the nine months ended September 30, 2021, financing activities provided $134.9 million of cash resulting from the March 2021 Offering.

During the nine months ended September 30, 2020, we received no cash from financing activities.

During the three months ended March 31, 2022, financing activities provided less than $0.1 million of cash, primarily resulting from the exercise of pre-funded warrants.

During the three months ended March 31, 2021, financing activities generated $135.1 million of cash, primarily resulting from the March 2021 Offering.

Funding requirements

We expect our expenses to increase substantially in connection with our ongoing development activities related to SGT-001, SGT-003 and our other product candidates.

In addition, we expect to incur additional costs associated with operating as a public company.

We expect our expenses to increase substantially in connection with our ongoing development activities related to SGT-001, SGT-003 and other future product candidates.

In addition, we have incurred and expect to continue to incur costs associated with operating as a public company.

We expect that our expenses will increase substantially if and as we:

continue to enroll patients in IGNITE DMD and continue clinical development of SGT-001 ;

move SGT-003 and other product candidates into clinical trials;

continue research and preclinical development of SGT-003 and our other product candidates;

continue clinical development of SGT-001 ;

move SGT-003 or other future product candidates into clinical trials;

continue research and preclinical development of SGT-003 or other future product candidates;

seek to identify additional product candidates;

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add operational, financial and management information systems and personnel.

As of September 30, 2021, we had cash, cash equivalents and available-for-sale securities of $229.8 million.

We believe that our cash, cash equivalents and available-for-sale securities as of September 30, 2021 will be sufficient to fund our operating expenses and capital requirements into the second quarter of 2023.

As of March 31, 2022, we had cash, cash equivalents and available-for-sale securities of $180.1 million.

Based on the reorganization announced in April 2022 and our anticipated reduction in planned corporate expenditures, we believe that our cash, cash equivalents and available-for-sale securities as of March 31, 2022 will be sufficient to fund our operating expenses and capital requirements into the second quarter of 2024.

As a result, in order to continue to operate our business beyond that time, we will need to raise additional funds.

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In addition, we have based this estimate on assumptions that may prove to be wrong, and we could use our available capital resources sooner than we currently anticipate.

Because of the numerous risks and uncertainties associated with the development of SGT-001 , SGT-003 and our other product candidates and programs and because the extent to which we may enter collaborations with third parties for development of our product candidates is unknown, we are unable to estimate the timing and amounts of increased capital outlays and operating expenses associated with completing the research and development of our product candidates.

Because of the numerous risks and uncertainties associated with the development of SGT-001 , SGT-003 and other future product candidates and programs and because the extent to which we may enter collaborations with third parties for development of our product candidates is unknown, we are unable to estimate the timing and amounts of increased capital outlays and operating expenses associated with completing the research and development of our product candidates.

Our future capital requirements will depend on many factors, including:

the progress and results of IGNITE DMD and future clinical trials of SGT-001, SGT-003 and our other product candidates;

the costs, timing and outcome of regulatory review of SGT-001, SGT-003 and our other product candidates;

the scope, progress, results and costs of discovery, laboratory testing, manufacturing, preclinical development and clinical trials for SGT-003 and our other product candidates that we may pursue in the future, if any;

the progress and results of IGNITE DMD and future clinical trials of SGT-001, SGT-003 and other future product candidates;

the costs, timing and outcome of regulatory review of SGT-001, SGT-003 and other future product candidates;

the scope, progress, results and costs of discovery, laboratory testing, manufacturing, preclinical development and clinical trials for SGT-003 and other future product candidates that we may pursue in the future, if any;

the costs associated with our manufacturing process development and evaluation of third-party manufacturers;

whether we decide to construct and validate our own manufacturing facility and the associated costs;

revenue, if any, received from commercial sale of SGT-001, SGT-003 or our other product candidates, should any of our product candidates receive marketing approval;

revenue, if any, received from commercial sale of SGT-001, SGT-003 or other future product candidates, should any of our product candidates receive marketing approval;

the costs of preparing, filing and prosecuting patent applications, maintaining, defending and enforcing our intellectual property rights and defending intellectual property-related claims;

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

What changed 10-Q

Item 2. Management’s Discussion and Analysis