What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2020-08-05 compared with 2020-05-06 · 172 added, 71 removed, 317 unchanged (43% of the section changed)

9 unchanged sentences

our plan to continue building out our network for commercial distribution in jurisdictions in which our products are approved;

estimated timelines and milestones for 2020 and beyond, including having safety and dosing insights for SRP-5051 in the second half of 2020, the plan to commence a trial evaluating SRP-9001 using commercial supply in 2020, pending regulatory feedback, having the results from the second cohort of SRP-9003 and making a dose selection in the third quarter of 2020, and completing dosing in LYS-SAF 302 by the middle of 2020 ;

estimated timelines and milestones for 2020 and beyond, including having safety and dosing insights for SRP-5051 in the second half of 2020, commencing a trial evaluating SRP-9001 using commercial supply in 2020, pending regulatory feedback, and completing Good Manufacturing Practices runs for SRP-9003 by the end of 2020 ;

our plan to expand our pipeline through internal research and development and through strategic transactions;

14 unchanged sentences

We undertake no obligation to update any of the forward-looking statements contained in this Quarterly Report on Form 10-Q after the date of this report, except as required by law or the rules and regulations of the U.S.

Securities and Exchange Commission.

Securities and Exchange Commission (the “SEC”) .

We caution readers not to place undue reliance on forward-looking statements.

16 unchanged sentences

On March 28, 2019, we announced results from our interim analysis of muscle biopsy endpoints comparing casimersen treatment to placebo in the ESSENCE study.

In January 2020, we commenced a rolling submission of an NDA to the FDA seeking accelerated approval for casimersen.

In June 2020, we completed the submission of a rolling New Drug Application (“NDA”) to the FDA seeking accelerated approval for casimersen.

SRP-5051 uses our next-generation chemistry platform, PPMO, and our exon-skipping technology to skip exon 51 of the dystrophin gene.

8 unchanged sentences

On March 25, 2019, we presented nine-month functional and CK data from baseline from these four individuals, and twelve-month CK data from baseline from one of these individuals.

In June 2020, we announced that functional, safety and tolerability data at twelve-months from baseline from these four individuals had been published in JAMA Neurology.

In the fourth quarter of 2018, we commenced a randomized, double-blind, placebo-controlled trial of SRP-9001 with the goal to establish the functional benefits of micro-dystrophin expressions.

6 unchanged sentences

A Phase 1/2a trial of SRP-9003 was commenced in the fourth quarter of 2018.

On February 27, 2019, we announced positive two-month biopsy data from the first three-patient cohort dosed in the SRP-9003 trial, and on October 4, 2019, we announced positive nine-month functional data from these three patients.

In February 2019, we announced positive two-month biopsy data from the first three-patient low-dose cohort dosed in the SRP-9003 trial, and in October 2019, we announced positive nine-month functional data from these three patients.

We have recently dosed one additional cohort of three patients at a higher dose per the study protocol.

We expect to have the results from the second cohort and make a dose selection in the third quarter of 2020.

In June 2020, we announced safety and expression results from three clinical trial participants in the high-dose cohort measured at 60 days, and one-year functional data from three clinical trial participants in the low-dose cohort.

We expect to complete Good Manufacturing Practices (“GMP”) runs for SRP-9003 by the end of 2020.

LYS-SAF 302 .

1 unchanged sentence

Lysogene is conducting a global Phase 2/3 clinical trial of LYS-SAF302 (AAVance) to evaluate the effectiveness of a one-time delivery of an AAVrh.10 virus carrying the N-SGSH gene.

We expect to complete dosing in this trial by the middle of 2020.

Dosing in this trial has been completed.

On June 5, 2020, Lysogene announced that the FDA issued a clinical hold for this trial.

Our pipeline includes more than 40 programs in various stages of pre-clinical and clinical development, reflecting our aspiration to apply our multifaceted approach and expertise in precision genetic medicine to make a profound difference in the lives of patients suffering from rare diseases.

4 unchanged sentences

In 2017, we opened a facility in Andover, Massachusetts, which significantly enhanced our research and development manufacturing capabilities.

However, we currently do not have internal Good Manufacturing Practices (“GMP”) manufacturing capabilities.

However, we currently do not have internal GMP manufacturing capabilities.

For our current and future manufacturing needs, we have entered into supply agreements with specialized contract manufacturing organizations (each a “CMO”) to produce custom raw materials, the active pharmaceutical ingredients (“APIs”), drug product and finished goods for our products and product candidates for both commercial and clinical use.

8 unchanged sentences

We plan to continue building out our network for commercial distribution in jurisdictions in which our products are approved.

Our gene therapy manufacturing capabilities have been greatly enhanced through partnerships with Thermo Fisher Scientific, Inc., formerly Brammer Bio MA, LLC (“ Thermo ”), Catalent, Inc.

, formerly Paragon Bioservices, Inc.

Our gene therapy manufacturing capabilities have been greatly enhanced through partnerships with Thermo Fisher Scientific, Inc., formerly Brammer Bio MA, LLC (“Thermo”), Catalent, Inc., formerly Paragon Bioservices, Inc.

(“Catalent”), and Aldevron LLC (“Aldevron”).

6 unchanged sentences

Cash, Cash Equivalents and Investments

As of March 31, 2020, we had approximately $2,180.7 million of cash, cash equivalents and investments, consisting of $1,764.2 million of cash and cash equivalents, $406.9 of short-term investments, and $9.6 million of long-term restricted cash and investments.

As of June 30, 2020, we had approximately $2,070.9 million of cash, cash equivalents and investments, consisting of $1,640.0 million of cash and cash equivalents, $421.3 of short-term investments, and $9.6 million of long-term restricted cash and investments.

We believe that our balance of cash, cash equivalents and investments is sufficient to fund our current operational plan for at least the next twelve months.

1 unchanged sentence

COVID-19 Pandemic

In December 2019, an outbreak of a novel strain of coronavirus (“COVID-19”) originated in Wuhan, China and has since spread to a number of other countries, including the United States.

In December 2019, an outbreak of a novel strain of coronavirus (“COVID-19”) originated in Wuhan, China and has since spread to a number of other countries, including the U.S.

On March 11, 2020, the World Health Organization characterized COVID-19 as a pandemic.

8 unchanged sentences

With respect to our active gene therapy trials, all dosing for the 48-week analysis in our placebo controlled, blinded study to evaluate the safety and efficacy of SRP-9001 (Study 102) and in our high-dose arm for SRP-9003 to treat LGMD2E has occurred and we are working within the FDA guidance on clinical trial conduct during the pandemic to avoid or minimize delays in trial follow-up visits.

For trials that involve weekly or monthly dosing, we are working to adapt protocols to allow for virtual interactions, while remaining compliant with Good Clinical Practice and continuing to advance these investigational treatments.

The response to COVID-19 by healthcare providers is expected to delay site initiation, slow down enrollment, and make the ongoing collection of data for patients enrolled in studies more difficult or intermittent.

For trials that involve weekly or monthly dosing, we have adapted protocols to allow for virtual interactions, while remaining compliant with Good Clinical Practice and continuing to advance these investigational treatments.

The response to COVID-19 by healthcare providers is expected to delay site initiation, delay the completion of post-marketing requirements and commitments, slow down enrollment, and make the ongoing collection of data for patients enrolled in studies more difficult or intermittent.

For example, with respect to our planned trial evaluating SRP-9001 using commercial supply (Study 301), COVID-19 is expected to delay some necessary site initiation visits.

4 unchanged sentences

To date, our remote working arrangements have not impacted our ability to maintain critical business operations.

Facility-dependent employees, including those

needed to maintain manufacturing and clinical research, are reporting to work under strict protocols designed to help those employees remain healthy.

Facility-dependent employees, including those needed to maintain manufacturing and clinical research, are reporting to work under strict protocols designed to help those employees remain healthy.

We are continuing to assess the potential impact of the COVID-19 pandemic on our business, operations and financial condition and results.

5 unchanged sentences

The discussion and analysis of our financial condition and results of operations is based upon our unaudited condensed consolidated financial statements included elsewhere in this report.

The preparation of our unaudited condensed consolidated financial statements in accordance with accounting principles generally accepted in the United States requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses and related disclosure of contingent assets and liabilities for the periods presented.

The preparation of our unaudited condensed consolidated financial statements in accordance with accounting principles generally accepted in the U.S.

requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses and related disclosure of contingent assets and liabilities for the periods presented.

Some of these judgments can be subjective and complex and, consequently, actual results may differ from these estimates.

4 unchanged sentences

Hoffman-La Roche Ltd.

(“Roche”), we have added collaboration revenue recognition to our critical accounting policies and estimates as of March 31, 2020.

(“Roche”), we have added collaboration revenue recognition to our critical accounting policies and estimates.

As such, we believe the following accounting policies to be the most critical to the judgments and estimates used in the preparation of our unaudited condensed consolidated financial statements:

10 unchanged sentences

Variable consideration, consisting of development and regulatory milestones, will be included in the transaction price only if we expect to receive such consideration and if it is probable that the inclusion of the variable consideration will not result in a significant reversal in the cumulative amount of revenue recognized under the arrangement.

Sales-based royalty and milestone payments are excluded from the transaction price we expect to receive until the underlying sales occur because the license to our intellectual property is deemed to be the predominant item to which the royalties or milestones relate as it is the primary driver of value in its collaboration arrangement.

For the recognition of revenue associated with each performance obligation, if we determine ASC 606 is not appropriate to apply by analogy, we will apply a reasonable, rational, and consistently applied accounting policy election to faithfully depict the

transfer of services to the collaboration partner over the estimated performance period.

Sales-based royalty and milestone payments are

excluded from the transaction price we expect to receive until the underlying sales occur because the license to our intellectual property is deemed to be the predominant item to which the royalties or milestones relate as it is the primary driver of value in its collaboration arrangement.

Up-front payments from a collaboration partner are recognized as deferred revenue when received and recognized as revenue over the estimated performance period.

7 unchanged sentences

Other than revenue recognition, there have been no changes to our critical accounting policies and significant estimates as detailed in our Annual Report on Form 10-K for the year ended December 31, 2019.

Results of Operations for the Three Months Ended March 31, 2020 and 201 9

The following table sets forth selected consolidated statements of operations data for each of the periods indicated:

Results of Operations for the Three and Six Months Ended June 30, 2020 and 201 9

The following tables set forth selected unaudited condensed consolidated statements of operations data for each of the periods indicated:

For the Three Months Ended

3 unchanged sentences

Total revenues

Cost and expenses:

Cost of sales (excluding amortization of in-licensed rights)

Research and development

Selling, general and administrative

Acquired in-process research and development

Amortization of in-licensed rights

Total cost and expenses

Operating loss

Other expense, net

Total other loss

Loss before income tax expense

Income tax expense

Net loss per share - basic and diluted

For the Six Months Ended

(in thousands, except per share amounts)

Products, net

Collaboration

Total revenues

Costs and expenses:

2 unchanged sentences

Selling, general and administrative

Acquired in-process research and development

Amortization of in-licensed rights

15 unchanged sentences

If actual results in the future vary from our estimates, we will adjust these estimates, which would affect net product revenue and net loss in the period such variances become known.

Net product revenues for our products for the three months ended March 31, 2020 increased by $13.4 million compared with the three months ended March 31, 2019.

Net product revenues for our products for the three and six months ended June 30, 2020 increased by $16.7 million and $30.1 million, respectively, compared with the three and six months ended June 30, 2019.

These increases primarily reflect increasing demand for our products in the U.S.

2 unchanged sentences

Of that amount, $348.7 million is being recognized as revenue on a straight-line basis over the performance period, estimated to be through the fourth quarter of 2023.

For the three months ended March 31, 2020, we recognized $13.2 million of collaboration revenue.

For the three and six months ended June 30, 2020, we recognized $26.0 million and $39.2 million of collaboration revenue, respectively.

For more information, please read Note 3, Collaboration and License Agreements .

3 unchanged sentences

Prior to receiving regulatory approval for EXONDYS 51 and VYONDYS 53 by the FDA in September 2016 and December 2019, respectively, we expensed such manufacturing and material costs as research and development expenses.

For VYONDYS 53 sold in the three months ended March 31, 2020, the majority of related manufacturing costs incurred had previously been expensed as research and development expenses, as such costs were incurred prior to the FDA approval of the products.

For EXONDYS 51 sold in the three months ended March 31, 2020 and 2019, only part of the related manufacturing costs incurred had previously been expensed as research and development expenses.

If product related costs had not previously been expensed as research and development expenses prior to receiving FDA approval, the incremental inventory costs related to our products sold would have been approximately $5.6 million and $2.3 million for the three months ended March 31, 2020 and 2019, respectively.

For VYONDYS 53 sold in the three and six months ended June 30, 2020, the majority of related manufacturing costs incurred had previously been expensed as research and development expenses, as such costs were incurred prior to the FDA approval of the products.

For EXONDYS 51 sold in the three and six months ended June 30, 2020 and 2019, only part of the related manufacturing costs incurred had previously been expensed as research and development expenses.

If product related costs had not previously been expensed as research and development expenses prior to receiving FDA approval, the incremental inventory costs related to our products sold would have been approximately $11.4 million and $5.1 million for the six months ended June 30, 2020 and 2019, respectively.

The following table summarizes the components of our cost of sales for each of the periods indicated:

4 unchanged sentences

Total cost of sales

The cost of sales for the three months ended March 31, 2020 increased by $0.6 million, or 5%, compared with the same period in 2019.

The increase was primarily driven by the following:

$1.4 million decrease in inventory costs related to products sold primarily as a result of the increasing demand for our products, offset by write-offs of certain batches of EXONDYS 51 not meeting our quality specifications for the three months ended March 31, 2019, with no similar activity for the three months ended March 31, 2020.

The cost of sales for the three months ended June 30, 2020 decreased by $2.6 million, or 16%, compared with the same period in 2019.

The decrease was primarily driven by the following:

$3.8 million decrease in inventory costs related to products sold primarily as a result of the write-offs of certain batches of EXONDYS 51 not meeting our quality specifications for the three months ended June 30, 2019, with no similar activity for the three months ended June 30, 2020, partially offset by increasing demand for our products;

$1.2 million increase in royalty payments to BioMarin and UWA reflects increasing demand for our products.

For the Six Months Ended

(in thousands)

Inventory costs related to products sold

Royalty payments

Total cost of sales

The cost of sales for the six months ended June 30, 2020 decreased by $ 2.0 million , or 7 %, compared with the same period in 201 9 .

The decrease was primarily driven by the following:

$5.2 million decrease in inventory costs related to products sold primarily as a result of the write-offs of certain batches of EXONDYS 51 not meeting our quality specifications for the six months ended June 30, 2019, with no similar activity for the six months ended June 30, 2020, partially offset by increasing demand for our products;

$3.2 million increase in royalty payments to BioMarin and UWA reflects increasing demand for our products.

Research and Development Expenses

5 unchanged sentences

As a result, a significant portion of our research and development expenses are not tracked on a project-by-project basis, as the costs may benefit multiple projects.

The following table summarizes our research and development expenses by project for each of the periods indicated:

The following tables summarize our research and development expenses by project for each of the periods indicated:

For the Three Months Ended

(in thousands)

Gene therapies

Micro-dystrophin

Other gene therapies

Casimersen (exon 45)

Up-front, milestone, and other expenses

PPMO platform

Eteplirsen (exon 51)

Golodirsen (exon 53)

Other projects

Collaboration cost-sharing

Internal research and development expenses

Roche collaboration reimbursement

Total research and development expenses

For the Six Months Ended

(in thousands)

Micro-dystrophin

Other gene therapies

Casimersen (exon 45)

Up-front, milestone, and other expenses

Golodirsen (exon 53)

Eteplirsen (exon 51)

6 unchanged sentences

NM = Not Meaningful

The following table summarizes our research and development expenses by category for each of the periods indicated:

The following table s summarize our research and development expenses by category for each of the periods indicated:

For the Three Months Ended

(in thousands)

Clinical and manufacturing expenses

Manufacturing expenses

Compensation and other personnel expenses

Clinical expenses

Facility- and technology-related expenses

Up-front, milestone, and other expenses

Stock-based compensation

Professional services

Pre-clinical expenses

Collaboration cost-sharing

Research and other

Roche collaboration reimbursement

Total research and development expenses

NM = Not Meaningful

Research and development expenses for the three months ended June 30, 2020 increased by $75.3 million, or 66%, compared with the three months ended June 30, 2019.

The increase was primarily driven by the following:

$81.6 million increase in manufacturing expenses primarily due to a continuing ramp-up of our micro-dystrophin program;

$4.6 million increase in compensation and other personnel expenses primarily due to a net increase in headcount;

$6.5 million decrease in clinical trial expenses primarily due to a ramp-down of the PROMOVI trial in EXONDYS 51 and the Phase 1/2 trial in golodirsen.

The decreases were offset by increased patient enrollment for our ESSENCE program as well as certain start-up activities for our micro-dystrophin program;

$1.9 million increase in facility- and technology-related expenses due to our continuing global expansion efforts;

$2.3 million decrease in up-front, milestone and other expenses primarily due to $12.0 million of up-front payments as a result of the execution of certain research and license agreements during the second quarter of 2020, offset by $14.4 million of similar activity during the second quarter of 2019;

$4.2 million increase in stock-based compensation expense primarily driven by increases in headcount and stock price;

$1.1 million decrease in professional service expenses primarily due to a decrease in reliance on third-party research and development contractors as a result of an increase in hiring and headcount;

$0.2 million decrease in pre-clinical expenses primarily due to completion of certain toxicology studies in our PPMO platform;

$1.5 million increase in collaboration cost sharing with Genethon on its micro-dystrophin drug candidates and Lysogene S.A on its MPS IIIA drug candidates;

$8.8 million offset to expense incurred in the second quarter of 2020 associated with a collaboration reimbursement from Roche.

For the Six Months Ended

(in thousands)

Manufacturing expenses

Compensation and other personnel expenses

Clinical expenses

Facility- and technology-related expenses

Up-front, milestone, and other expenses

Stock-based compensation

Professional services

5 unchanged sentences

NM = Not Meaningful

Research and development expenses for the three months ended March 31, 2020 increased by $ 45 .

6 million, or 50 %, compared with the three months ended March 31, 2019 .

Research and development expenses for the six months ended June 30, 2020 increased by $120.8 million, or 59%, compared with the six months ended June 30, 2019.

The increase was primarily driven by the following:

$43.3 million increase in clinical and manufacturing expenses primarily due to a continuing ramp-up of our micro-dystrophin program and our ESSENCE program.

The increases were offset by a ramp-down of the PROMOVI trial in EXONDYS 51 and the Phase 1/2 trial in golodirsen;

$123.3 million increase in manufacturing expenses primarily due to a continuing ramp-up of our micro-dystrophin program;

$11.0 million increase in compensation and other personnel expenses primarily due to a net increase in headcount;

$4.9 million decrease in clinical trial expenses primarily due to a ramp-down of the PROMOVI trial in EXONDYS 51 and the Phase 1/2 trial in golodirsen.

The decreases were offset by increased patient enrollment for our ESSENCE program as well as certain start-up activities for our micro-dystrophin program;

$4.0 million increase in facility- and technology-related expenses due to our continuing global expansion efforts;

$5.1 million increase in up-front, milestone and other expenses primarily due to $8.8 million of milestone expense related to payments accrued to an academic institution and $12.0 million of up-front payments as a result of the execution of certain research and license agreements during the six months ended June 30, 2020, offset by $15.5 million of up-front payments as a result of license agreements executed during the same period of 2019 ;

$8.4 million increase in stock-based compensation expense primarily driven by increases in headcount and stock price;

$7.4 million increase in up-front, milestone and other expenses primarily due to $8.8 million of milestone expenses accrued to an academic institution during the three months ended March 31, 2020;

$1.1 million decrease in professional service expenses primarily due to a decrease in reliance on third-party research and development contractors as a result of an increase in hiring and headcount;

$3.9 million increase in collaboration cost sharing with Genethon on its micro-dystrophin drug candidates and Lysogene S.A on its MPS IIIA drug candidates;

$4.8 million decrease in pre-clinical expenses primarily due to completion of certain toxicology studies in our PPMO platform;

$1.0 million increase in research and other primarily driven by an increase in sponsored research with academic institutions;

$16.4 million offset to expense associated with a collaboration reimbursement from Roche.

$1.2 million increase in research and other primarily driven by an increase in sponsored research with academic institutions during the six months ended June 30, 2020;

$25.2 million offset to expense associated with a collaboration reimbursement from Roche during the six months ended June 30, 2020.

Selling, General and Administrative Expenses

1 unchanged sentence

Other general and administrative expenses include an allocation of our facility- and technology-related costs and professional fees for legal, consulting and accounting services.

The following table summarizes selling, general and administrative expenses by category for each of the periods indicated:

The following table s summarize selling, general and administrative expenses by category for each of the periods indicated:

For the Three Months Ended

(in thousands)

Compensation and other personnel expenses

Professional services

Stock-based compensation

Facility- and technology-related expenses

Roche collaboration reimbursement

Total selling, general and administrative expenses

NM = Not Meaningful

Selling, general and administrative expenses for the three months ended June 30, 2020 increased by $6.3 million, or 9%, compared with the three months ended June 30, 2019.

This was primarily driven by the following:

$0.9 million increase in compensation and other personnel expenses primarily due to a net increase in headcount;

$3.6 million increase in stock-based compensation primarily due to increases in headcount and stock price.

For the Six Months Ended

(in thousands)

Compensation and other personnel expenses

Professional services

Stock-based compensation

Facility- and technology-related expenses

Roche collaboration reimbursement

Total selling, general and administrative expenses

Selling, general and administrative expenses for the three months ended March 31, 2020 increased by $22.2 million, or 37%, compared with the three months ended March 31, 2019.

NM = Not Meaningful

Selling, general and administrative expenses for the six months ended June 30, 2020 increased by $28.5 million, or 22%, compared with the six months ended June 30, 2019.

This was primarily driven by the following:

$14.3 million increase in professional services primarily due to a transaction fee for the Roche transaction;

$3.2 million increase in compensation and other personnel expenses primarily due to a net increase in headcount;

$14.3 million increase in professional services primarily due to a transaction fee for the Roche transaction and continuing global expansion;

$7.4 million increase in stock-based compensation primarily due to increases in headcount and stock price;

$1.2 million increase in facility- and technology-related expense primarily due to continuing global expansion.

Acquired In-process Research and Development

As a result of the Myonexus acquisition, we recorded acquired in-process research and development expense of approximately $173.2 million during the second quarter of 2019.

There was no such transaction during the six months ended June 30, 2020.

Amortization of In-licensed Rights

3 unchanged sentences

Each in-licensed right is being amortized on a straight-line basis over the life of the patent from the first commercial sale of each product.

For both the three months ended March 31, 2020 and 2019, we recorded amortization of in-licensed rights of approximately $0.2 million.

For both the three months ended June 30, 2020 and 2019, we recorded amortization of in-licensed rights of

approximately $0.2 million .

For the six months ended June 30, 2020 and 2019, we recorded amortization of in-licensed rights of approximately $0.3 million and $0.4 million, respectively.

Gain from Sale of Priority Review Voucher

2 unchanged sentences

Following the early termination of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, in March 2020, we completed our sale of the PRV and received proceeds of $108.1 million, net of commission, which was recorded as a gain from sale of the PRV as it did not have a carrying value at the time of the sale.

There was no similar activity during the three months ended March 31, 2019.

There was no similar activity during the six months ended June 30, 2019.

Other expense, net

2 unchanged sentences

Interest expense includes interest accrued on our convertible notes and term loan.

For the three months ended March 31, 2020, other expense, net increased by approximately $7.2 million compared with the three months ended March 31, 2019.

The increase primarily reflected the interest expense on our debt facilities entered into in December 2019.

For the three and six months ended June 30, 2020, other expense, net increased by approximately $11.6 million and $18.8 million compared with the three and six months ended June 30, 2019, respectively .

The increase primarily reflected the interest expense on our debt facilities entered into in December 2019 as well as a decrease in interest income and the amortization of investment discounts due to the investment mix of the Company’s investment portfolio.

Income tax expense

Income tax expense for both the three months ended March 31, 2020 and 2019 was approximately $0.1 million, both of which relate to state taxes.

Income tax expense for the three and six months ended June 30, 2020 was less than $0.1 million and approximately $0.1 million, respectively.

Income tax expense for the three and six months ended June 30, 2019 was approximately $0.2 million and $0.3 million, respectively.

Income tax expense for all periods presented relate to state taxes.

Liquidity and Capital Resources

14 unchanged sentences

For the period ended December 31, 2019, our principal sources of liquidity were derived from proceeds from product sales of EXONDYS 51 and debt and equity financings.

For the period ended March 31, 2020, our principal sources of liquidity were primarily derived from our collaboration arrangement with Roche, net proceeds from sale of the PRV and product sales of our products.

Our principal uses of cash are research and development expenses, selling, general and administrative expenses, investments, capital expenditures, business development transactions and other working capital requirements.

The increase in our working capital primarily resulted from cash received from Roche offset by overall use of cash in operating activities.

For the period ended June 30, 2020, our principal sources of liquidity were primarily derived from our collaboration arrangement with Roche, net proceeds from sale of the PRV and product sales of our products.

Our principal uses of cash are research and development expenses, selling, general and administrative expenses, investments, capital

expenditures , business development transactions and other working capital requirements.

The increase in o ur working capital primarily resulted from cash received from Roche offset by overall use of cash in operating activities .

For more information for the Roche transaction, please read Note 3, License and Collaboration Agreements .

12 unchanged sentences

To the extent we issue additional equity securities, our existing stockholders could experience substantial dilution.

For the Three Months Ended

For the Six Months Ended

(in thousands)

6 unchanged sentences

Operating Activities.

Cash provided by operating activities was $627.8 million for the three months ended March 31, 2020.

Cash used in operating activities for the three months ended March 31, 2019 was $146.2 million.

Cash provided by operating activities was $520.2 million for the six months ended June 30, 2020.

Cash used in operating activities for the six months ended June 30, 2019 was $225.2 million.

The favorable change was primarily driven by the following:

$794.5 million net increase in deferred revenue primarily as a result of the collaboration arrangement with Roche;

$12.1 million increase in non-cash adjustment.

$24.0 million net increase in non-cash adjustments;

$23.6 million net increase in use of operating assets and liabilities, excluding deferred revenue.

The increases were partially offset by:

$ 48.9 million increase in net loss, excluding the gain from the sale of the PRV, primarily driven by increases in research and development expense and selling, general, and administrative expense, offset by increase s in net product revenues and collaboration revenue ;

$8.9 million net decrease in use of operating assets and liabilities, excluding deferred revenue.

$96.6 million increase in net loss, excluding acquired in-process research and development expense and the gain from the sale of the PRV, primarily driven by increases in research and development expense and selling, general, and administrative expense, offset by increases in net product revenues and collaboration revenue.

Investing Activities.

Cash used in investing activities was $17.7 million for the three months ended March 31, 2020.

Cash provided by investing activities for the three months ended March 31, 2019 was $135.2 million.

The unfavorable change was driven by a decrease of $396.8 million in proceeds from the sale or maturity of available-for-sale securities, which was partially offset by:

$129.0 million decrease in purchase of available-for-sale securities;

$108.1 million increase as a result of the sale of the PRV;

$7.1 million decrease in purchase of property and equipment.

Cash used in investing activities was $51.9 million for the six months ended June 30, 2020.

Cash provided by investing activities for the six months ended June 30, 2019 was $287.6 million.

The unfavorable change was primarily driven by the following:

$598.9 million decrease in proceeds from the sale or maturity of available-for-sale securities during the six months ended June 30, 2020;

$25.5 million increase in purchase of available-for-sale securities during the six months ended June 30, 2020.

The decreases were partially offset by:

$172.6 million decrease as a result of the acquisition of Myonexus during the six months ended June 30, 2019;

$108.1 million increase as a result of the sale of the PRV during the six months ended June 30, 2020;

$4.7 million decrease in purchase of property and equipment during the six months ended June 30, 2020.

Financing Activities.

Cash provided by financing activities decreased by $58.5 million for the three months ended March 31, 2020 compared with the three months ended March 31, 2019, primarily driven by the following:

$365.3 million decrease in proceeds from the sale of common stock;

$4.8 million decrease in proceeds from the exercise of options and the purchase of stock under our Employee Stock Purchase Program;

Cash provided by financing activities decreased by $47.3 million for the six months ended June 30, 2020 compared with the six months ended June 30, 2019, primarily driven by the following:

$365.4 million decrease in net proceeds from the sale of common stock;

$3.9 million increase in taxes paid related to net share settlement of equity awards.

The decreases were partially offset by:

$316.3 million increase in proceeds from the issuance of common stock to Roche.

$312.1 million increase in net proceeds from the issuance of common stock to Roche;

$10.0 million increase in proceeds from the exercise of options and the purchase of stock under our Employee Stock Purchase Program.

Off-Balance Sheet Arrangements

2 unchanged sentences

In our continuing operations, we have entered into long-term contractual arrangements from time to time for our facilities, the provision of goods and services, and acquisition of technology access rights, among others.

The following table presents contractual obligations arising from these arrangements as of March 31, 2020:

The following table presents contractual obligations arising from these arrangements as of June 30, 2020:

Payment Due by Period

10 unchanged sentences

Milestone Obligations

For product candidates that are currently in various research and development stages, we may be obligated to make up to $3.2 billion of future development, regulatory, and commercial, royalty and up-front milestone payments associated with our license and collaboration agreements.

For product candidates that are currently in various research and development stages, we may be obligated to make up to $3.2 billion of future development, regulatory, commercial and up-front royalty milestone payments associated with our license and collaboration agreements.

Payments under these agreements generally become due and payable upon achievement of certain development, regulatory or commercial milestones.

Because the achievement of these milestones is not probable, and payment is not required as of March 31, 2020, such contingencies have not been recorded in our unaudited condensed consolidated financial statements.

Because the achievement of these milestones is not probable, and payment is not required as of June 30, 2020, such contingencies have not been recorded in our unaudited condensed consolidated financial statements.

Amounts related to contingent milestone payments are not yet considered contractual obligations as they are contingent on the successful achievement of certain development, regulatory approval and sales milestones.

2 unchanged sentences

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