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Item 2. Management’s Discussion and Analysis

2021-05-05 compared with 2020-11-05 · 149 added, 266 removed, 236 unchanged (64% of the section changed)

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These forward-looking statements include, but are not limited to

the expected or potential impact of the COVID-19 pandemic on our business, including our commercial sales, ongoing and planned clinical trials, manufacturing and operations;

our expectations regarding the continued growth of our business operations due, in part, to the commercialization of new pharmaceutical products;

our technologies and programs, including those with strategic partners, and their respective potential benefits, including the goal of exon skipping to create the production of an internally truncated but functional dystrophin protein and the goal of SRP-9003 to restore the dystrophin associated protein complex;

the expected or potential impact of the ongoing COVID-19 pandemic on our business, including our commercial sales, ongoing and planned clinical trials, manufacturing and operations;

our belief that our proprietary technology platforms and collaborations can be used to develop novel pharmaceutical products to treat a broad range of diseases;

our intention to leverage our technology platforms, organizational capabilities, collaborations and resources to lead the field of precision genetic medicines, including the treatment of rare, neuromuscular and other diseases, with a diversified portfolio of product candidates;

our technologies and programs, including those with strategic partners, and their respective potential benefits, including our PMO based compounds’ potential to be designed to create more, less, or none of certain proteins, or produce analogues of endogenous proteins;

the potential of our PPMO to be tailored to reach other organs beyond muscle and result in enhanced delivery into the cell with less frequent dosing than PMOs;

and the benefits of the AAVrh.74 vector, the MHCK7 promoter and the transgene;

our expectation that our partnerships with manufacturers will support our clinical and commercial manufacturing capacity for our micro-dystrophin Duchenne muscular dystrophy gene therapy programs and Limb-girdle muscular dystrophy programs, while also acting as a manufacturing platform for potential future gene therapy programs, and our belief that our current network of manufacturing partners are able to fulfil the requirements of our commercial plan;

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 the regulatory action date of February 25, 2021 for casimersen, having safety and dosing insights for SRP-5051 in the fourth quarter of 2020, commencing a trial evaluating SRP-9001 using commercial process manufacturing material (Study 103) in the fourth quarter of 2020, releasing results from Study 102 in the first quarter of 2021, completing the production of Good Manufacturing Practices material for SRP-9003 by the end of 2020 and having it available for use in clinical trials in the first quarter of 2021;

estimated timelines and milestones for 2021 and beyond, including discussing with the U.S.

Food and Drug Administration (“FDA”) the path for the commencement of Part B of Study 5051-201, announcing additional results from Part 2 of Study SRP-9001-102 in the first quarter of 2022, reporting expression and safety results from Study SRP-9001-103 in the second quarter of 2021, completing GMP runs for SRP-9003 in 2021, and seeking the FDA confirmation to initiate our pivotal trial for SRP-9003 in 2021;

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

the timely completion and satisfactory outcome of our post-marketing requirements and commitments, including verification of a clinical benefit for EXONDYS 51 and VYONDYS 53 in confirmatory trials;

the timely completion and satisfactory outcome of our post-marketing requirements and commitments, including verification of a clinical benefit for our products in confirmatory trials;

our plan to evaluate future engagement with the European Medicines Agency (the “EMA”) on potential next steps for EMA approval of our products;

our ability to further secure long-term supply of our commercial products and our product candidates to satisfy our planned commercial, early access programs and clinical needs;

the impact of regulations and regulatory decisions by the U.S.

Food and Drug Administration and other regulatory agencies on our business, as well as the development of our product candidates and our financial and contractual obligations;

the possible impact of any competing products on the commercial success of EXONDYS 51, VYONDYS 53 and our product candidates and our ability to compete against such products;

our ability to further secure long-term supply of our commercial products and our product candidates to satisfy our planned commercial, early access programs (“EAP”) and clinical needs;

the impact of regulations and regulatory decisions by the FDA and other regulatory agencies on our business, as well as the development of our product candidates and our financial and contractual obligations;

the possible impact of any competing products on the commercial success of our products and our product candidates and our ability to compete against such products;

our ability to enter into research, development or commercialization alliances with universities, hospitals, independent research centers, non-profit organizations, pharmaceutical and biotechnology companies and other entities for specific molecular targets or selected disease indications and our ability to selectively pursue opportunities to access certain intellectual property rights that complement our internal portfolio through license agreements or other arrangements;

our expectations regarding the potential benefits of the partnership, licensing and/or collaboration arrangements and other strategic arrangements and transactions we have entered into or may enter into in the future;

the extent of protection that our patents provide and our pending patent applications may provide, if patents issue from such applications, to our technologies and programs, and our ability to obtain and maintain patent protection for our technologies and programs;

our plans and ability to file and progress to issue additional patent applications to enhance and protect our new and existing technologies and programs;

our belief that our owned and licensed patents and patent applications provide us with a competitive advantage;

our estimates regarding how long our currently available cash and cash equivalents will be sufficient to finance our operations and business plans and statements about our future capital needs;

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Applying our proprietary, highly-differentiated and innovative technologies, and through collaborations with our strategic partners, we are developing potential therapeutic candidates for a broad range of diseases and disorders, including Duchenne muscular dystrophy (“DMD”), Limb-girdle muscular dystrophies (“LGMDs”), and other neuromuscular and central nervous system (“CNS”) related disorders.

Our first commercial product, EXONDYS 51 (eteplirsen) Injection (“EXONDYS 51”), was granted accelerated approval by the U.S.

Food and Drug Administration (the “FDA”) on September 19, 2016.

We commercialize three products that were approved by the FDA:

EXONDYS 51 (eteplirsen) Injection (“EXONDYS 51”), was granted accelerated approval by the FDA on September 19, 2016.

EXONDYS 51 is indicated for the treatment of DMD in patients who have a confirmed mutation of the DMD gene that is amenable to exon 51 skipping.

EXONDYS 51 uses our phosphorodiamidate morpholino oligomer (“PMO”) chemistry and exon-skipping technology to skip exon 51 of the dystrophin gene.

Our second commercial product, VYONDYS 53 (golodirsen) Injection (“VYONDYS 53”), was granted accelerated approval by the FDA on December 12, 2019.

VYONDYS 53 (golodirsen) Injection (“VYONDYS 53”), was granted accelerated approval by the FDA on December 12, 2019.

VYONDYS 53 is indicated for the treatment of DMD in patients who have a confirmed mutation of the DMD gene that is amenable to exon 53 skipping.

VYONDYS 53 uses our PMO chemistry and exon-skipping technology to skip exon 53 of the dystrophin gene.

We are in the process of conducting various EXONDYS 51 and VYONDYS 53 clinical trials, including studies that are required to comply with our post-marketing FDA requirements/commitments to verify and describe the clinical benefit of EXONDYS 51 and VYONDYS 53.

AMONDYS 45 (casimersen) Injection (“AMONDYS 45”), was granted accelerated approval by the FDA on February 25, 2021.

AMONDYS 45 is indicated for the treatment of DMD in patients who have a confirmed mutation of the DMD gene that is amenable to exon 45 skipping.

AMONDYS 45 uses our PMO chemistry and exon-skipping technology to skip exon 45 of the dystrophin gene.

We are in the process of conducting various EXONDYS 51, VYONDYS 53 and AMONDYS 45 clinical trials, including studies that are required to comply with our post-marketing FDA requirements/commitments to verify and describe the clinical benefit of these products.

A summary description of our main product candidates, including those in collaboration with our strategic partners, is as follows:

Casimersen (SRP-4045) uses our PMO chemistry and exon-skipping technology to skip exon 45 of the DMD gene.

Casimersen is designed to bind to exon 45 of dystrophin pre-mRNA, resulting in exclusion, or “skipping”, of this exon during mRNA processing in patients with genetic mutations that are amenable to exon 45 skipping.

We are enrolling and dosing patients in ESSENCE (4045-301), our Phase 3 placebo controlled confirmatory trial in patients who have a confirmed mutation of the DMD gene that is amenable to exon 45 or 53 skipping using casimersen and golodirsen, respectively.

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 June 2020, we completed the submission of a rolling new drug application (“NDA”) to the FDA seeking accelerated approval for casimersen.

In August 2020, the FDA accepted our NDA and provided a regulatory action date of February 25, 2021.

The FDA indicated it does not currently plan to hold an advisory committee to discuss the application.

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

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In the fourth quarter of 2017, we commenced a first-in-human, single ascending dose, study for the treatment of DMD in patients who are amenable to exon 51 skipping.

In 2019, we commenced a multiple ascending dose study for the treatment of DMD with SRP-5051 in patients who are amenable to exon 51 skipping, and we expect to have safety and dosing insights in the fourth quarter of 2020.

In 2019, we commenced Study 5051-201.

In December 2020, we announced an interim analysis on clinical results from the 10 mg/kg and 20 mg/kg dose cohorts of Part A of Study 5051-201.

In May 2021, we announced results from the 30 mg/kg cohort of Part A of Study 5051-201.

We will discuss with the FDA the path for the commencement of Part B of Study 5051-201.

SRP-9001 (DMD, micro-dystrophin gene therapy program), aims to express micro-dystrophin – a smaller but functional version of dystrophin.

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We have dosed all 41 participants in that trial and are dosing participants in the crossover phase of the study.

We plan to release r esults from this study in the first quarter of 2021.

In addition, w e plan to commence a trial evaluating SRP-9001 using commercial process manufactured material ( S tudy 103) in the fourth quarter of 2020 .

In January 2021, we released top-line results for Part 1 of Study 102 (the 48-week assessment of 41 participants) and interim expression results from Part 2 of Study 102 (the crossover phase).

We expect additional results from Part 2 of Study 102 in the first quarter of 2022.

We have com pleted dosing in Study 103, an open-label study evaluating the safety and expression of commercially representative material for SRP-9001, and expect to report expression and safety results from Study 103 in the second quarter of 2021.

SRP-9003 (LGMD, gene therapy program).

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In September 2020, we announced six-month functional data from three clinical trial participants in the high-dose cohort, and eighteen-month functional data from three clinical trial participants in the low-dose cohort.

We expect to complete the production of Good Manufacturing Practices (“GMP”) material for SRP-9003 by the end of 2020 and have it available for use in clinical trials in the first quarter of 2021.

LYS-SAF 302 .

We are collaborating with Lysogene S.A (“Lysogene”) to develop a gene therapy, LYS-SAF302, to treat MPS IIIA.

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.

Dosing in this trial has been completed.

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

We expect to complete GMP runs for SRP-9003 in 2021.

We also plan to seek FDA confirmation to initiate our pivotal trial in 2021.

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

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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 GMP manufacturing capabilities.

However, we currently do not have internal large-scale Good Manufacturing Practices (“GMP”) manufacturing capabilities to produce our products and product candidates for commercial and/or clinical use.

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.

All of our CMO partners have extensive technical expertise, GMP experience and experience manufacturing our specific technology.

For our commercial DMD program, we have worked with our existing manufacturers to scale-up our process and increase our capacity.

While there are a limited number of companies that can produce raw materials and APIs in the quantities and with the quality and purity that we require for our commercial products, based on our diligence to date, we believe our current network of manufacturing partners are able to fulfill these requirements, and are capable of expanding capacity as needed.

For our commercial DMD program, we have worked with our existing CMOs to increase product capacity from mid-scale to large-scale.

While there are a limited number of companies that can produce raw materials and APIs in the quantities and with the quality and purity that we require for our commercial products, based on our diligence to date, we believe our current network of CMOs are able to fulfill these requirements, and are capable of expanding capacity as needed.

Additionally, we have, and will continue to evaluate further relationships with additional suppliers to increase overall capacity as well as further reduce risks associated with reliance on a limited number of suppliers for manufacturing.

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through a limited network of home infusion specialty pharmacy providers that deliver the medication to patients and a specialty distributor that distributes our products to hospitals and hospital outpatient clinics.

With respect to the pre-commercial distribution of our products to patients outside of the U.S., we have contracted with third party distributors and service providers to distribute our products in certain countries through our ex-U.S.

early access programs (“EAP”).

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.

(“Thermo”), Catalent, Inc.

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

We have adopted a hybrid development and manufacturing strategy in which we are building internal manufacturing expertise relative to all aspects of AAV-based manufacturing, including gene therapy and gene editing supply, while closely partnering with first-in-class manufacturing partners to expedite development and commercialization of our gene therapy programs.

We expect that our partnerships with Thermo and Catalent will support our clinical and commercial manufacturing capacity for our micro-dystrophin DMD gene therapy and LGMD programs, while also acting as a manufacturing platform for potential future gene therapy programs.

We expect that our partnerships with Thermo and Catalent will support our clinical and commercial manufacturing capacity for our micro-dystrophin DMD gene therapy programs and LGMD programs, while also acting as a manufacturing platform for potential future gene therapy programs.

The collaboration integrates process development, clinical production and testing, and commercial manufacturing.

Aldevron is expected to provide GMP-grade plasmid for our SRP-9001 micro-dystrophin DMD gene therapy program and LGMD programs, as well as plasmid source material for future gene therapy programs, such as CMT, MPS IIIA and other neuromuscular and CNS related disorders.

Aldevron is expected to provide GMP-grade plasmid for our SRP-9001 micro-dystrophin DMD gene therapy program and LGMD programs, as well as plasmid source material for future gene therapy programs, such as Charcot-Marie-Tooth (“CMT”) and other neuromuscular and CNS related disorders.

Manufacturers and suppliers of our commercial products and product candidates are subject to the FDA’s current GMP (“cGMP”) requirements and other rules and regulations prescribed by foreign regulatory authorities.

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Cash, Cash Equivalents and Investments

As of September 30, 2020, we had approximately $1,825.7 million of cash, cash equivalents and investments, consisting of $1,474.6 million of cash and cash equivalents, $341.5 of short-term investments, and $9.6 million of long-term restricted cash and investments.

As of March 31, 2021, we had approximately $1,747.1 million of cash, cash equivalents and investments, consisting of $1,481.8 million of cash and cash equivalents, $256.0 of short-term investments, and $9.3 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.

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We have activated business continuity plans to minimize disruption to patients.

There has been minimal disruption to our commercial and clinical supply chains and we continue to provide an uninterrupted supply of our approved or investigational therapies to patients.

Although the vast majority of EXONDYS 51 patients are treated in home, and although we are working to increase the percentage of patients that can initiate treatment with VYONDYS 53 and EXONDYS 51 at home, the response to COVID-19 by healthcare providers has made it difficult for some patients to receive infusions or initiate treatment with our commercial products.

For this and other reasons, such as potential delays in processing reauthorizations and modifications to program benefits by insurers, we expect that COVID-19 will impact our revenue.

The response to COVID-19 by healthcare providers has made it difficult for some patients, especially those dependent on a hospital setting, to receive infusions or initiate treatment with our commercial products.

In addition, as a result of the pandemic, some patients may choose to delay or stop treatment to avoid a visit to a hospital or a visit of a third party in their homes to minimize the risk of infection.

The impact of COVID-19 may also result in delays in processing reauthorizations and modifications to program benefits by insurers, making it difficult for patients to obtain or maintain favorable coverage decisions for our products.

In addition, the increase in unemployment due to the pandemic has resulted in decreased insurance coverage for many individuals.

These challenges may continue for the duration of the COVID-19 pandemic, which is uncertain, and are expected to reduce our revenue and cash flows.

Clinical Trials :

With respect to our active gene therapy trials, all dosing for the 48-week analysis in our placebo controlled, double 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.

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

The recent responses to COVID-19 by healthcare providers and regulatory agencies could delay the commencement of trials, site initiation, the completion of trials, including 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.

We are implementing certain technology in an attempt to mitigate this risk in the event of subsequent outbreaks.

We are operating under guidance from federal agencies, including the FDA and Centers for Disease Control and Prevention (“CDC”), which designate healthcare companies as “critical infrastructure” with a special responsibility to maintain normal work schedules.

Our partners and suppliers share these special responsibilities to maintain operations and ensure the integrity of the supply chain.

To protect the health of our employees, their families, and our communities, and in accordance with direction from state and local government authorities, we have taken precautionary measures, including the institution of mandatory work-from-home for all employees and contingent workers, other than those who are facility-dependent.

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

The impact of COVID-19 has caused disruptions and may cause delays in some of our clinical trials.

Missing data could undermine data integrity and probability of success.

The response to COVID-19 by healthcare providers and regulatory agencies could delay the commencement of trials, site initiation, compliance in the trials, the completion of trials, including 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.

We are implementing certain strategy and technology in an attempt to mitigate this risk in the event of subsequent outbreaks.

In addition, as COVID-19 continues to spread, some participants and clinical investigators may be unable or unwilling to comply with clinical trial protocols.

For example, quarantines or other travel limitations (whether voluntary or required) have been implemented in many countries, and may impede participant movement, affect sponsor access to study sites, or interrupt healthcare services, which may negatively impact the execution of clinical trials.

Significant delays or disruptions to our clinical trials could adversely affect our ability to timely initiate studies, conduct successful studies, obtain or maintain regulatory approvals, or commercialize our product candidates.

On March 13, 2020, to protect the health of our employees and their families, and our communities, and in accordance with direction from state and local government authorities, we instituted mandatory work-from-home for all employees and contingent workers other than those who are facility-dependent.

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.

Our increased reliance on personnel working from home may negatively impact productivity or disrupt, delay or otherwise adversely impact our business.

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

In addition, remote working could increase our cyber security risk.

General protective measures put into place at various governmental levels, including quarantines, travel restrictions and business shutdowns, may also negatively affect our operations.

Further, if the spread of the COVID-19 pandemic continues and our operations are adversely impacted, including due to an outbreak in a facility, we risk a delay, default and/or nonperformance under existing agreements.

Manufacturing :

A significant outbreak at one of our partner sites could lead to delays in the manufacturing of our products and product candidates.

In addition, the need to prioritize rated orders issued by the Federal Emergency Management Agency pursuant to the U.S.

Defense Production Act could impact the manufacturing, supply chain and distribution of our products and product candidates.

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

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The full extent to which the COVID-19 pandemic will directly or indirectly impact our business, results of operations and financial condition will depend on future developments that are highly uncertain and cannot be accurately predicted, including new information that may emerge concerning COVID-19, the actions taken to contain it or treat its impact and the economic impact on local, regional, national and international markets.

For additional information on the various risks posed by the COVID-19 pandemic, refer to Part II, Item 1A.

Risk Factors of this Quarterly Report on Form 10-Q.

For additional information on the various risks posed by the COVID-19 pandemic, refer to the Risk Factors of this Quarterly Report on Form 10-Q.

Critical Accounting Policies and Estimates

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Although we believe that our judgments and estimates are appropriate, actual results may differ from these estimates.

Due to the collaboration arrangement with F.

Hoffman-La Roche Ltd.

(“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:

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:

revenue recognition;

Revenue recognition – collaboration revenue

Our collaboration revenue is generated from our collaboration arrangement with Roche.

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

At the inception of a collaboration arrangement, we first assess whether the contractual arrangement is within the scope of ASC 808, Collaborative Arrangements (“ASC 808”), to determine whether the arrangement involves a joint operating activity and involves two (or more) parties that are both active participants in the activity and exposed to significant risks and rewards dependent on the commercial success of such activities.

Then we determine whether the collaboration arrangement in its entirety represents a contract with a customer as defined by ASC 606, Revenue from Contracts with Customers (“ASC 606”).

If only a portion of the collaboration arrangement is potentially with a customer, we apply the distinct good or service unit-of-account guidance in ASC 606 to determine whether there is a unit of account that should be accounted for under ASC 606.

For the units of account in the collaboration arrangement that do not represent a vendor-customer relationship, we will (i) consider applying other GAAP, including by analogy, or (ii) if there is no appropriate analogy, consistently apply a reasonable and rational accounting policy election.

In general, by analogy to ASC 606, we identify the performance obligations within the collaboration arrangement and identify and allocate the transaction price we expect to receive on a relative standalone selling price basis to each performance obligation.

The residual approach is used to determine estimated standalone selling prices when the selling price is uncertain.

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.

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

Reimbursement payments from a collaboration partner associated with research and development cost sharing provisions in a collaboration arrangement are recognized as the related expense is incurred and classified as an offset to research and development expense.

Our collaboration arrangements may contain options which provide the collaboration partner with the right to obtain additional licenses.

If an arrangement contains customer options, by analogy to ASC 606, we evaluate the customer options to determine whether they represent material rights, which may include options to acquire additional goods or services for free or at a discount.

If the customer options are determined to represent material rights, they are recognized as a separate performance obligation at inception of the arrangement.

We allocate a portion of the transaction price of the collaboration arrangement to material rights based on the relative standalone selling price.

Amounts allocated to material rights are not recognized as revenue until related options are exercised or expire.

Key assumptions to determine the standalone selling price of units of account in a collaboration arrangement include, but are not limited to, forecasted revenues, development timelines, incremental costs related to the arrangement, discount rates and probabilities of technical and regulatory success.

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 and Nine Months Ended September 30, 2020 and 201 9

Aside from the removal of valuation of product options as a critical accounting policy as of January 1, 2021, 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, 2020.

Results of Operations for the Three Months Ended March 31, 2021 and 20 20

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

For the Three Months Ended

September 30,

(in thousands, except per share amounts)

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Total revenues

Cost and expenses:

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

Research and development

Selling, general and administrative

Amortization of in-licensed rights

Total cost and expenses

Operating loss

Loss on contingent consideration

Other expense, net

Total other loss

Loss before income tax expense

Income tax expense

Net loss per share - basic and diluted

For the Nine Months Ended

September 30,

(in thousands, except per share amounts)

Products, net

Collaboration

Total revenues

Costs and expenses:

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Selling, general and administrative

Acquired in-process research and development

Settlement and license charges

Amortization of in-licensed rights

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Operating loss

Other income (loss):

Gain from sale of Priority Review Voucher

Loss on contingent consideration

Other (loss) income:

Other expense, net

Total other income (loss)

Loss before income tax expense

Income tax expense

Gain from sale of Priority Review Voucher

Total other (loss) income

Loss before income tax (benefit) expense

Income tax (benefit) expense

Net loss per share - basic and diluted

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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 and nine months ended September 30, 2020 increased by $22.4 million and $52.5 million, respectively, compared with the three and nine months ended September 30, 2019.

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

Net product revenues for our products for the three months ended March 31, 2021, increased by $24.5 million compared with the three months ended March 31, 2020.

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

Collaboration revenue relates to our collaboration arrangement with Roche.

In February 2020, we received an aggregate of approximately $1.2 billion in cash consideration from Roche, consisting of an up-front payment and an equity investment in our company.

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 and nine months ended September 30, 2020, we recognized $22.5 million and $61.7 million of collaboration revenue, respectively.

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

For the three months ended March 31, 2021 and 2020, we recognized $22.0 million and $13.2 million of collaboration revenue, respectively.

For more information, please read Note 3, Collaboration and License Agreements within our Annual Report on Form 10-K for the year ended December 31, 2020.

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

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(“BioMarin”) and the University of Western Australia (“UWA”) , inventory costs that relate to sales of our products and the related overhead costs.

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 and nine months ended September 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 nine months ended September 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 $19.3 million and $8.8 million for the nine months ended September 30, 2020 and 2019, respectively.

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

Prior to receiving regulatory approval for EXONDYS 51, VYONDYS 53, and AMONDYS 45 by the FDA in September 2016, December 2019, and February 2021, respectively, we expensed such manufacturing and material costs as research and development expenses.

For AMONDYS 45 sold in the three months ended March 31, 2021, and 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 VYONDYS 53 sold in the three months ended March 31, 2021, and EXONDYS 51 sold in the three months ended March 31, 2021 and 2020, 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 $6.3 million and $5.6 million for the three months ended March 31, 2021 and 2020, respectively.

For the Three Months Ended

September 30,

(in thousands)

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Total cost of sales

The cost of sales for the three months ended September 30, 2020 increased by $2.0 million, or 15%, compared with the same period in 2019.

The increase was primarily driven by the following:

$0.5 million increase in inventory costs related to products sold primarily as a result of increasing demand for our products, partially offset by the write-offs of certain batches of EXONDYS 51 not meeting our quality specifications for the three months ended September 30, 2019, with no similar activity for the three months ended September 30, 2020;

$1.5 million increase in royalty payments to BioMarin and UWA reflects increasing demand for our products.

For the Nine Months Ended

September 30,

(in thousands)

Inventory costs related to products sold

Royalty payments

Total cost of sales

The cost of sales for the nine months ended September 30, 2020 remained relatively consistent when compared with the same period in 201 9 .

Th e changes were primarily driven by the following:

$4.7 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 nine months ended September 30, 2019, with no similar activity for the nine months ended September 30, 2020, partially offset by increasing demand for our products;

The cost of sales for the three months ended March 31, 2021 increased by $9.7 million, or 77%, compared with the same period in 2020.

The changes were primarily driven by the following:

$8.1 million increase in inventory costs related to products sold primarily as a result of increasing demand for our products as well as the write-offs of certain batches of our products not meeting our quality specifications for the three months ended March 31, 2021, with no similar activity for the three months ended March 31, 2020;

$1.6 million increase in royalty payments to BioMarin and UWA reflects increasing demand for our products.

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

For the Three Months Ended

September 30,

(in thousands)

1 unchanged sentence

Other gene therapies

Up-front, milestone, and other expenses

Eteplirsen (exon 51)

Golodirsen (exon 53)

Casimersen (exon 45)

PPMO platform

Collaboration cost-sharing

Other projects

Internal research and development expenses

Roche collaboration reimbursement

Total research and development expenses

For the Nine Months Ended

September 30,

(in thousands)

Micro-dystrophin

Other gene therapies

Casimersen (exon 45)

Up-front, milestone, and other expenses

Golodirsen (exon 53)

Eteplirsen (exon 51)

PPMO platform

Eteplirsen (exon 51)

Collaboration cost-sharing

Up-front, milestone, and other expenses

Other projects

3 unchanged sentences

NM = Not Meaningful

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

For the Three Months Ended

September 30,

(in thousands)

Manufacturing expenses

Clinical expenses

Compensation and other personnel expenses

Up-front, milestone, and other expenses

Clinical trial expenses

Facility- and technology-related expenses

1 unchanged sentence

Collaboration cost-sharing

Professional services

Pre-clinical expenses

Research and other

Roche collaboration reimbursement

Total research and development expenses

NM = Not Meaningful

Research and development expenses for the three months ended September 30, 2020 increased by $56.5 million, or 42%, compared with the three months ended September 30, 2019.

The increase was primarily driven by the following:

$42.5 million increase in manufacturing expenses primarily due to a continuing ramp-up of our gene therapy programs;

$11.2 million increase in clinical trial expenses primarily due to increased patient enrollment for our ESSENCE program as well as certain start-up activities for our micro-dystrophin program;

$4.2 million increase in compensation and other personnel expenses primarily due to a net increase in headcount;

$3.2 million increase in up-front, milestone and other expenses primarily due to $15.1 million of up-front payments as a result of the execution of certain research, option, and license agreements during the third quarter of 2020, offset primarily by $10.0 million of similar activity during the third quarter of 2019;

$2.2 million increase in facility- and technology-related expenses due to our continuing global expansion efforts;

$3.7 million increase in stock-based compensation expense primarily driven by increases in headcount and stock price;

$5.6 million increase in collaboration cost sharing with Genethon on its micro-dystrophin drug candidates and Lysogene on its MPS IIIA drug candidate;

$2.1 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;

$1.0 million increase in pre-clinical expenses primarily due to an increase of toxicology studies in our gene therapy platforms during the third quarter of 2020, offset by the completion of certain toxicology studies in our PPMO platform;

$16.7 million offset to expense incurred in the third quarter of 2020 associated with a collaboration reimbursement from Roche.

For the Nine Months Ended

September 30,

(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

Collaboration cost-sharing

Pre-clinical expenses

Research and other

2 unchanged sentences

NM = Not Meaningful

Research and development expenses for the nine months ended September 30, 2020 increased by $177.3 million, or 53%, compared with the nine months ended September 30, 2019.

Research and development expenses for the three months ended March 31, 2021, increased by $59.0 million, or 43%, compared with the three months ended March 31, 2020.

The increase was primarily driven by the following:

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$10.0 million increase in clinical trial expenses primarily due to increased patient enrollment for our ESSENCE program as well as certain start-up activities for our micro-dystrophin program;

$6.2 million increase in facility- and technology-related expenses due to our continuing global expansion efforts;

$8.3 million increase in up-front, milestone and other expenses primarily due to $9.3 million of milestone expense related to payments accrued to an academic institution and $27.1 million of up-front payments as a result of the execution of certain research, option and license agreements during the nine months ended September 30, 2020, offset primarily by $25.5 million of up-front payments as a result of license agreements executed during the same period of 2019 ;

$12.1 million increase in stock-based compensation expense primarily driven by increases in headcount and stock price;

$3.2 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 facility- and technology-related expenses due to our continuing expansion efforts;

$1.9 million increase in stock-based compensation expense primarily driven by increases in headcount and changes in stock price;

$3.6 million increase in collaboration cost sharing with Genethon on its micro-dystrophin drug candidates and Lysogene on its MPS IIIA drug candidate;

$3.8 million decrease in pre-clinical expenses primarily due to completion of certain toxicology studies in our PPMO platform, offset by an increase of toxicology studies in our gene therapy platforms;

$2.7 million increase in research and other primarily driven by an increase in sponsored research with academic institutions during the nine months ended September 30, 2020;

$41.9 million offset to expense associated with a collaboration reimbursement from Roche during the nine months ended September 30, 2020.

$4.6 million increase in pre-clinical expenses primarily due to an increase of toxicology studies in our PPMO platforms;

$4.5 million decrease in up-front, milestone and other expenses primarily due to $4.0 million of milestone expense incurred in the three months ended March 31, 2021, offset by $8.8 million of milestone expense accrued to an academic institution during the same period of 2020;

$1.9 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;

$6.9 million increase in research and other primarily driven by an increase in sponsored research with academic institutions during the three months ended March 31, 2021;

$3.3 million increase in the offset to expense associated with a collaboration reimbursement from Roche primarily due to continuing development of our micro-dystrophin gene therapy.

Selling, General and Administrative Expenses

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

For the Three Months Ended

September 30,

(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 September 30, 2020 remained relatively consistent when compared with the three months ended September 30, 2019.

The changes were primarily driven by the following:

$3.0 million decrease in professional services primarily due to a decrease in reliance on third-party contractors as a result of an increase in hiring and headcount;

$2.6 million increase in stock-based compensation primarily due to increases in headcount and stock price.

For the Nine Months Ended

September 30,

(in thousands)

Compensation and other personnel expenses

Professional services

Stock-based compensation

Facility- and technology-related expenses

2 unchanged sentences

NM = Not Meaningful

Selling, general and administrative expenses for the nine months ended September 30, 2020 increased by $28.4 million, or 14%, compared with the nine months ended September 30, 2019.

Selling, general and administrative expenses for the three months ended March 31, 2021 decreased by $11.6 million, or 14%, compared with the three months ended March 31, 2020.

This was primarily driven by the following:

$1.3 million increase in compensation and other personnel expenses primarily due to a net increase in headcount;

$11.3 million increase in professional services primarily due to a transaction fee for the Roche transaction;

$10.0 million increase in stock-based compensation primarily due to increases in headcount and stock price;

$1.3 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 nine months ended September 30, 2019.

There was no such transaction during the nine months ended September 30, 2020.

$2.6 million increase in stock-based compensation primarily due to increases in headcount and changes in stock price;

$15.6 million decrease in professional services primarily due to a decrease in reliance on third-party selling, general and administrative contractors as a result of an increase in hiring and headcount, as well as a transaction fee for the Roche transaction incurred during the three months ended March 31, 2020, with no similar activity incurred during the three months ended March 31, 2021.

Settlement and License Charges

In February 2021, we recognized a $10.0 million settlement charge related to contingent settlement payments to BioMarin as a result of the approval of AMONDYS 45.

This was a result of a settlement and license agreement with BioMarin in July 2017.

There was no such expense recognized during the same period of 2020 .

Amortization of In-licensed Rights

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We recorded an in-licensed right asset of approximately $6.6 million in 2017 as a result of the settlement and license agreements with BioMarin.

Additionally, following the first sale of EXONDYS 51 in September 2016 and VYONDYS 53 in December 2019, we recorded an in-licensed right asset of $1.0 million and $0.5 million, respectively, related to the license agreement

Additionally, following the first sale of EXONDYS 51 in September 2016, VYONDYS 53 in December 2019 and AMONDYS 45 in February 2021, we recorded an in-licensed right asset of $1.0 million, $0.5 million and $0.5 million, respectively, related to the license agreement with UWA.

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 September 30, 2020 and 201 9 , we recorded amortization of in-licen sed rights of approximately $0.2 million .

For the nine months ended September 30, 2020 and 2019, we recorded amortization of in-licensed rights of approximately $0.

5 million and $0.

6 million, respectively.

Gain from sale of Priority Review Voucher

In February 2020, we entered into an agreement with Vifor (International) Ltd.

to sell the rare pediatric disease Priority Review Voucher (“PRV”) we received from the FDA in connection with the approval of VYONDYS 53.

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 nine months ended September 30, 2019.

Loss on contingent consideration

The loss on contingent consideration relates to the fair value adjustment of the Company’s contingent consideration derivative liability related to regulatory-related contingent payments to Myonexus selling shareholders as well as to an academic institution under separate license agreements that meet the definition of a derivative.

During the three months ended September 30, 2020, the Company recognized $45.0 million of expense to adjust the fair value of the contingent consideration.

There was no similar activity during the three or nine months ended September 30, 2019.

For further information on our contingent considerations, please read Note 5, Fair Value Measurements.

For both the three months ended March 31, 2021 and 2020, we recorded amortization of in-licensed rights of approximately $0.2 million.

Other expense, net

2 unchanged sentences

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

For the three and nine months ended September 30, 2020, other expense, net increased by approximately $11.8 million and $30.7 million compared with the three and nine months ended September 30, 2019 , respectively.

The increase primarily reflected the interest expense on our debt facility 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 the three and nine months ended September 30, 2020 was approximately $0.1 million and $0.2 million, respectively.

Income tax expense for the three and nine months ended September 30, 2019 was approximately $0.2 million and $0.5 million, respectively.

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

For the three months ended March 31, 2021, other expense, net, increased by approximately $8.1 million compared with the three months ended March 31, 2020.

The increase primarily reflected an increase in interest expense incurred on our term loan debt facilities due to an increase in the outstanding balance partially offset by a reduction of interest expense incurred on our convertible debt related to the adoption of ASU 2020-06, 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.

As a result of the adoption of ASU 2020-06, interest expense was reduced by $5.4 million for the three months ended March 31, 2021.

Gain from s ale of Priority Review Voucher

In February 2021, we entered into an agreement to sell the rare pediatric disease Priority Review Voucher (“PRV”) we received from the FDA in connection with the approval of AMONDYS 45 for consideration of $102.0 million.

The closing of the transaction is subject to the expiration or termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 and other customary conditions.

The transaction closed on April 13, 2021 and the net proceeds will be recorded as a gain from sale of the PRV as it does not have a carrying value at the time of the sale during the quarter ended June 30, 2021.

In February 2020, we entered into an agreement to sell the rare pediatric disease PRV we received from the FDA in connection with the approval of VYONDYS 53.

Income tax (benefit) expense

Income tax benefit for the three months ended March 31, 2021 was approximately $0.1 million.

Income tax expense for the three months ended March 31, 2020 was approximately $0.1 million.

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

Liquidity and Capital Resources

The following table summarizes our financial condition for each of the periods indicated:

September 30,

(in thousands)

10 unchanged sentences

Total working capital

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 September 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.

For the periods ended March 31, 2021, and December 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 more information for the Roche transaction, please read Note 3, License and Collaboration Agreements .

The changes in our total borrowings reflect the adoption of ASU 2020-06 as of January 1, 2021, which resulted in the convertible debt being accounted for as a single liability measured at its amortized cost.

For more information on the adoption and impact of ASU 2020-06, please read Note 11, Indebtedness.

Our working capital changes reflect that current assets are lower primarily as a result of reductions in short-term investments, reflecting overall use of cash in operating activities.

Our current liabilities decrease primarily reflects decreases in accounts payable due to decreased obligations as a result of our operating activities.

Our future expenditures and capital requirements may be substantial and will depend on many factors, including but not limited to the following:

our ability to continue to generate revenues from sales of EXONDYS 51, VYONDYS 53, and potential future products;

the timing and costs associated with our global expansion;

our ability to continue to generate revenues from sales of EXONDYS 51, VYONDYS 53, AMONDYS 45 and potential future products;

the timing and costs associated with our expansion efforts;

the timing and costs of building out our manufacturing capabilities;

8 unchanged sentences

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

For the Nine Months Ended

September 30,

For the Three Months Ended

(in thousands)

Cash provided by (used in)

Cash (used in) provided by

Operating activities

1 unchanged sentence

Financing activities

Increase in cash and cash equivalents

(Decrease) increase in cash and cash equivalents

NM = Not Meaningful

Operating Activities

Cash provided by operating activities was $282.0 million for the nine months ended September 30, 2020.

Cash used in operating activities for the nine months ended September 30, 2019 was $292.7 million.

The favorable change was primarily driven by the following items that were adjustments to net loss:

$771.9 million net increase in deferred revenue primarily as a result of the collaboration arrangement with Roche;

Cash used in operating activities was $180.4 million for the three months ended March 31, 2021.

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

The unfavorable change was primarily driven by the following items:

$41.7 million increase in net loss, excluding the gain from the sale of the PRV, primarily driven by an increase in research and development expense, offset by increases in net product revenues and collaboration revenue and a decrease in selling, general and administrative expense;

$842.4 million net decrease in the change in deferred revenue primarily as a result of the collaboration arrangement with Roche being executed during the three months ended March 31, 2020, with no similar activity during the three months ended March 31, 2021.

The decreases were partially offset by:

$7.8 million net increase in non-cash adjustments;

The increases were partially offset by:

$166.7 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;

$110.7 million net increase in use of operating assets and liabilities, excluding deferred revenue.

$68.2 million net decrease in use of operating assets and liabilities, excluding deferred revenue.

Investing Activities

Cash provided by investing activities decreased by $267.5 million for the nine months ended September 30, 2020 compared with the nine months ended September 30, 2019, primarily driven by the following:

$622.9 million decrease in proceeds from the sale or maturity of available-for-sale securities during the nine months ended September 30, 2020;

$11.2 million increase in purchase of property and equipment during the nine months ended September 30, 2020.

The decreases were partially offset by:

$172.6 million decrease in net payments as a result of the acquisition of Myonexus during the nine months ended September 30, 2019;

$108.1 million increase in net proceeds from the sale of the PRV during the nine months ended September 30, 2020;

$86.5 million decrease in purchase of available-for-sale securities during the nine months ended September 30, 2020.

Cash provided by investing activities was $156.7 million for the three months ended March 31, 2021.

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

The favorable change was primarily driven by the following:

$335.4 million decrease in purchase of available-for-sale securities during the three months ended March 31, 2021.

The changes were partially offset by:

$108.1 million decrease in net proceeds from the sale of the PRV during the three months ended March 31, 2021;

$40.0 million decrease in proceeds from the sale or maturity of available-for-sale securities during the three months ended March 31, 2021;

$12.0 million increase in purchase of property and equipment during the three months ended March 31, 2021.

Financing Activities

Cash provided by financing activities decreased by $30.2 million for the nine months ended September 30, 2020 compared with the nine months ended September 30, 2019, primarily driven by the following:

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

The decreases were partially offset by:

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

Cash provided by financing activities decreased by $316.1 million for the three months ended March 31, 2021 compared with the three months ended March 31, 2020, primarily driven by the following:

$316.3 million decrease in net proceeds from the issuance of common stock to Roche;

$1.5 million increase in taxes paid related to net share settlement of equity awards.

The changes were partially offset by:

$1.7 million increase in proceeds from the exercise of options and the purchase of stock under our Employee Stock Purchase Program.

3 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 September 30, 2020:

The following table presents contractual obligations arising from these arrangements as of March 31, 2021:

Payment Due by Period

8 unchanged sentences

Manufacturing obligations include agreements to purchase goods and services that are enforceable and legally binding or subject to cancellation fees and that specify all significant terms.

Manufacturing obligations relate primarily to our commercialization of EXONDYS 51 and VYONDYS 53, and clinical programs for DMD as well as our gene therapy programs.

Manufacturing obligations relate primarily to our commercialization of EXONDYS 51, VYONDYS 53 and AMONDYS 45, and clinical programs for DMD as well as our gene therapy programs.

Milestone Obligations

For product candidates that are currently in various research and development stages, we may be obligated to make up to $3.7 billion of future development, regulatory, commercial and up-front royalty 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 $3.9 billion of future development, regulatory, commercial and up-front royalty and sales 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 September 30, 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 March 31, 2021, 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