What changed in this filing

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Item 1. Financial Statements

2022-08-08 compared with 2022-05-10 · 77 added, 58 removed, 371 unchanged (27% of the section changed)

28 unchanged sentences

authorized, 39,382,467 and 36,902,499 shares issued and outstanding as

of March 31, 2022 and December 31, 2021, respectively

of June 30, 2022 and December 31, 2021, respectively

Additional paid-in capital

7 unchanged sentences

(in thousands, except share and per share amounts)

Three Months Ended March 31,

Three Months Ended June 30,

Six months ended

Operating expenses:

11 unchanged sentences

Other comprehensive loss:

Unrealized gain (loss) on marketable securities

Unrealized loss on marketable securities

Total other comprehensive loss

13 unchanged sentences

Balance as of March 31, 2021

Stock-based compensation

Unrealized loss on marketable securities

Issuance of common stock upon exercise of stock options

Balance as of June 30, 2021

Balance as of December 31, 2021

5 unchanged sentences

Balance as of March 31, 2022

Stock-based compensation

Unrealized loss on marketable securities

Issuance of common stock upon exercise of stock options

Shares sold as part of controlled equity offering sales agreements

Balance as of June 30, 2022

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

2 unchanged sentences

(in thousands)

Three Months Ended March 31,

Six Months Ended June 30,

Cash flows from operating activities:

17 unchanged sentences

Proceeds from issuance of common stock upon exercise of stock options

Proceeds from controlled equity offering sales agreement

Proceeds from controlled equity offering sales agreements

Net cash provided by financing activities

2 unchanged sentences

Cash, cash equivalents and restricted cash—end of period

Right-of-use assets recognized in exchange for operating leases

Property and equipment included in accrued expense and accounts payable

8 unchanged sentences

Shelf Registration

In July 2020, the Company filed a universal Shelf Registration statement on Form S-3 (the “Registration Statement”) with the Securities and Exchange Commission (the “SEC”).

The Registration Statement was declared effective by the SEC on July 20, 2020, and contains two prospectuses:

a base prospectus, which covers the offering, issuance and sale by the Company of up to a maximum aggregate offering price of $ 400,000,000 of our common stock, preferred stock, debt securities, warrants to purchase our common stock, preferred stock or debt securities, subscription rights to purchase our common stock, preferred stock or debt securities and/or units consisting of some or all of these securities;

and a sales agreement prospectus covering the offering, issuance and sale by us of up to a maximum aggregate offering price of $ 150,000,000 of our common stock that may be issued and sold under a Controlled Equity Offering Sales Agreement (“Sales Agreement”).

In July 2020, the Company filed a universal Shelf Registration statement on Form S-3 (the “Prior Registration Statement”) with the Securities and Exchange Commission (the “SEC”).

The Prior Registration Statement was declared effective by the SEC on July 20, 2020, and contained two prospectuses:

a base prospectus, which covered the offering, issuance and sale by the Company of up to a maximum aggregate offering price of $ 400,000,000 of its common stock, preferred stock, debt securities, warrants to purchase common stock, preferred stock or debt securities, subscription rights to purchase common stock, preferred stock or debt securities and/or units consisting of some or all of these securities;

and a sales agreement prospectus covering the offering, issuance and sale by the Company of up to a maximum aggregate offering price of $ 150,000,000 of its common stock that may be issued and sold under a Controlled Equity Offering Sales Agreement (“Prior Sales Agreement”).

On May 31, 2022, the Prior Registration Statement was deactivated upon the effectiveness of the Registration Statement (as defined below).

As of such date, the Company had issued approximately 2.2 million shares of common stock in connection with the Prior Sales Agreement for net proceeds of $ 45.3 million.

In May 2022, the Company filed an additional universal Shelf Registration statement on Form S-3 (the “Registration Statement”) with the SEC.

The Registration Statement was declared effective by the SEC on May 31, 2022, and contains two prospectuses:

a base prospectus, which covers the offering, issuance and sale by the Company of up to a maximum aggregate offering price of $ 400,000,000 of its common stock, preferred stock, debt securities, warrants to purchase common stock, preferred stock or debt securities, subscription rights to purchase common stock, preferred stock or debt securities and/or units consisting of some or all of these securities;

The specific terms of any securities to be offered pursuant to the base prospectus will be specified in a prospectus supplement to the base prospectus.

The $ 150,000,000 of common stock that may be offered, issued and sold under the sales agreement prospectus is included in the $ 400,000,000 of securities that may be offered, issued and sold by the Company under the base prospectus.

As of March 31, 2022, the Company had issued approximately 2.1 million shares in connection with the Sales Agreement for net proceeds of $ 42.2 million.

Since April 1, 2022, the Company sold approximately 138,000 shares of our common stock and received $ 3.1 million after deducting commissions related to the Sales Agreement.

As of June 30, 2022, the Company had not issued any shares pursuant to the Sales Agreement.

Subsequent to June 30, 2022, the Company did not sell any shares of its common stock under the Sales Agreement.

Uncertainties

14 unchanged sentences

Accordingly, they do not include all the information and footnotes required by GAAP for complete financial statements and should be read in conjunction with the Company’s consolidated financial statements and related footnotes as of and for the year ended December 31, 2021, which was filed with the SEC on March 10, 2022.

The Company’s financial information as of March 31, 2022 and for the three months ended March 31, 2022 and 2021 is unaudited, but in the opinion of management, all adjustments, consisting only of normal recurring adjustments, considered necessary for a fair presentation of the financial position, results of operations and

cash flows at the dates and for the periods presented of the results of these interim periods have been included.

The Company’s financial information as of June 30, 2022 and for the six months ended June 30, 2022 and 2021 is unaudited, but in the opinion of management, all adjustments, consisting only of normal recurring adjustments, considered necessary for a fair presentation of the financial position, results of operations and cash flows at the dates and for the periods presented of the results of these interim periods have been included.

The balance sheet information as of December 31, 2021 was derived from audited financial statements.

5 unchanged sentences

Cash, cash equivalents and restricted cash

The Company considers all highly liquid investments with an original maturity of nine months or less at the date of purchase to be cash equivalents.

The Company considers all highly liquid investments with an original maturity of three months or less at the date of purchase to be cash equivalents.

The Company deposits its cash in checking, sweep and money market accounts.

At March 31, 2022, restricted cash consisted of money market accounts collateralizing letters of credit issued as security deposits in connection with the Company’s leases of its corporate facilities.

At June 30, 2022, restricted cash consisted of money market accounts collateralizing letters of credit issued as security deposits in connection with the Company’s leases of its corporate facilities.

Cash and cash equivalents, and restricted cash in the condensed consolidated statements of cash flows consists of the following (in thousands):

As of March 31,

As of June 30,

Cash and cash equivalents

34 unchanged sentences

and (v) recognition of revenue when (or as) the Company satisfies each performance obligation.

As part of the accounting for this arrangements, the Company must use its judgment to determine:

As part of the accounting for this arrangement, the Company must use its judgment to determine:

(a) the number of performance obligations based on the determination under step (ii) above;

38 unchanged sentences

The Company will remain an emerging growth company until the earliest of (1) the last day of its first fiscal year (a) in which the Company has total annual gross revenues of at least $1.07 billion, or (b) in which the Company is deemed to be a large accelerated filer, which means the market value of its common stock that is held by non-affiliates exceeds $700.0 million as of the prior June 30 th , (2) the date on which it has issued more than $1.0 billion in non-convertible debt securities during the prior three-year period and (3) December 31, 2024.

The Company is also a “smaller reporting company,” meaning that, the market value of its stock held by non-affiliates is less than $700 million and our annual revenue is less than $100 million during the most recently completed fiscal year.

The Company is also a “smaller reporting company,” meaning that, the market value of its stock held by non-affiliates is less than $700 million and the Company’s annual revenue is less than $100 million during the most recently completed fiscal year.

The Company may continue to be a smaller reporting company as long as either (i) the market value of its stock held by non-affiliates is less than $250 million or (ii) its annual revenue is less than $100 million during the most recently completed fiscal year and the market value of its stock held by non-affiliates is less than $700 million.

10 unchanged sentences

The following tables present information about the Company’s financial assets measured at fair value on a recurring basis and indicate the level of the fair value hierarchy utilized to determine such fair values (in thousands):

Fair value measurements as of March 31, 2022

Fair value measurements as of June 30, 2022

Cash equivalents:

14 unchanged sentences

The Company’s assets with fair value categorized as Level 1 within the fair value hierarchy include money market funds.

Money market funds are publicly traded mutual funds and are presented as cash equivalents on the condensed consolidated balance sheets as of March 31, 2022 and December 31, 2021.

Money market funds are publicly traded mutual funds and are presented as cash equivalents on the condensed consolidated balance sheets as of June 30, 2022 and December 31, 2021.

The Company measures its marketable securities at fair value on a recurring basis and classifies those instruments within Level 2 of the fair value hierarchy.

4 unchanged sentences

Marketable Securities

The following table summarizes the Company’s marketable securities as of March 31, 2022 (in thousands):

March 31, 2022

The following table summarizes the Company’s marketable securities as of June 30, 2022 (in thousands):

June 30, 2022

Amortized Cost

14 unchanged sentences

US Government debt securities

The weighted average maturity of the Company’s marketable securities as of March 31, 2022 ranged from approximately 0.3 years to 0.9 years.

The weighted average maturity of the Company’s marketable securities as of June 30, 2022 ranged from approximately 0.3 years to 0.8 years.

As of December 31, 2021 the weighted average maturity of the Company’s marketable securities ranged from approximately 0.2 years to 1.1 years.

The Company did no t record an allowance for credit losses as of March 31, 2022 related to its marketable securities.

The Company did no t record an allowance for credit losses as of June 30, 2022 related to its marketable securities.

Further, given the lack of significant change in the credit risk of these investments, the Company did not recognize any other-than-temporary impairment losses.

14 unchanged sentences

The expense is included in operating expenses in the condensed consolidated statements of operations and comprehensive loss.

The Company’s lease agreements also contain variable payments, primarily maintenance-related costs, which are expensed as incurred and not included in the measurement of the right-of-use assets and lease liabilities.

Company’s lease agreements also contain variable payments, primarily maintenance-related costs, which are expensed as incurred and not included in the measurement of the right-of-use assets and lease liabilities.

In August 2018, the Company entered into an agreement to lease approximately 23,000 square feet of space for a term of three years .

3 unchanged sentences

In addition, this lease provides for the lease of an additional 15,000 square feet of rentable space beginning on April 1, 2022 and ending on December 31, 2024 .

The Company recognized a right-of-use asset and operating lease liability of $ 3.5 million for the 23,000 square feet.

As the Company did not have access to the additional 15,000 square feet of space, a right of use asset was not recognized as of March 31, 2022.

In December 2021, the Company recognized a right-of-use asset and operating lease liability of $ 3.5 million for the 23,000 square feet.

On April 1, 2022 the Company recognized a right-of-use asset and operating lease liability of $ 1.8 million for the 15,000 square feet.

In December 2018, the Company entered into an agreement to lease 2,485 square feet of space for an initial term of three years .

6 unchanged sentences

The amended lease provides the Company with the option to extend the term of the lease for an additional two years .

The Company recognized a right-of-use asset and operating lease liabilities of $ 0.7 million for the extension of the lease to April 30, 2025 and a right-of-use asset and operating lease liabilities of $ 0.8 million for the additional 2,357 square feet of rentable space.

Future minimum lease payments under non-cancellable leases as of March 31, 2022, including leases entered into where access has yet to be granted, were as follows (in thousands):

In 2021, the Company recognized a right-of-use asset and operating lease liabilities of $ 0.7 million for the extension of the lease to April 30, 2025 and a right-of-use asset and operating lease liabilities of $ 0.8 million for the additional 2,357 square feet of rentable space.

Future minimum lease payments under non-cancellable leases as of June 30, 2022 (in thousands):

Total lease payments

1 unchanged sentence

Present value of lease liabilities

Lease balances as of March 31, 2022 were as follows (in thousands):

Lease balances as of June 30, 2022 were as follows (in thousands):

Operating right-of-use assets

2 unchanged sentences

Total operating lease liabilities

The weighted average remaining lease term and weighted average discount rate of our operating leases as of March 31, 2022 were as follows:

The weighted average remaining lease term and weighted average discount rate of the Company’s operating leases as of June 30, 2022 were as follows:

Weighted average remaining lease term in years

Weighted average discount rate

In accordance with Topic 842, lease expense incurred under operating leases was approximately $ 0.4 million for the three months ended March 31, 2022, and $ 0.3 million for three months ended March 31, 2021.

In accordance with Topic 842, lease expense incurred under operating leases was approximately $ 0.6 million for the three months ended June 30, 2022 and for the three months ended June 30, 2021 was $ 0.3 million.

Lease expenses incurred in the six months ended June 30, 2022 were $ 1.0 million and for the six months ended June 30, 2021 were $ 0.6 million.

Scientific Advisory Board Agreement

In June 2020, the Company entered into a scientific advisory board agreement with a member of the Company’s board of directors, who is also an employee of Cold Spring Harbor Laboratory (“CSHL”), to provide scientific advisory services related to the Company’s Targeted Augmentation of Nuclear Gene Output (“TANGO”) antisense oligonucleotide technology and other antisense oligonucleotide technologies, as well as current and future therapeutic targets and programs.

Following the expiration of the initial scientific agreement in June 2021, the parties entered into a subsequent scientific board agreement on substantially the same terms.

The Company recognized expense of $ 0.01 million each for the three months ended March 31, 2022 and 2021 for such scientific advisory services.

The term of this agreement is 12 months.

Following the expiration of the initial scientific agreement in June 2021 and a renewal agreement in June 2022, the parties entered into subsequent scientific board

agreements on substantially the same terms.

The Company recognized expense of $ 0.01 million in the three-month period ended June 30, 2022, and $ 0.02 million for the six-month period ended June 30, 2022, compared to $ 0.01 million for the three month period ended June 30, 2021 and $ 0.02 million for the six month period ended June 30, 2021 for such scientific advisory services.

The term of the renewal agreement is 12 months .

License and research agreements

4 unchanged sentences

These royalty obligations apply on a licensed product-by-licensed product and country-by-country basis until the latest of (i) the expiration of the last valid claim of a CSHL patent covering the applicable licensed product or (ii) the expiration of any regulatory exclusivity for the applicable licensed product.

In addition, if the Company sublicenses the rights

under the CSHL Agreement, the Company is required to pay a maximum of twenty percent of the sublicense revenue to CSHL, which may be reduced to a mid-teens or a mid-single digit percentage upon achievement of certain clinical milestones for the applicable licensed product.

In addition, if the Company sublicenses the rights under the CSHL Agreement, the Company is required to pay a maximum of twenty percent of the sublicense revenue to CSHL, which may be reduced to a mid-teens or a mid-single digit percentage upon achievement of certain clinical milestones for the applicable licensed product.

Finally, the Company is required to pay an annual license maintenance fee of $ 0.01 million, which amount is creditable against any owed royalty or milestone payments.

The maximum aggregate potential milestone payments payable total approximately $ 0.9 million.

Additionally, certain licenses under the CSHL Agreement require the Company to reimburse CSHL for certain past and ongoing patent related expenses, however , there were no expenses related to these reimbursable patent costs during the three month s ende d March 31, 2022 a nd 20 2 1 .

Additionally, certain licenses under the CSHL Agreement require the Company to reimburse CSHL for certain past and ongoing patent related expenses, however, there were no expenses related to these reimbursable patent costs during the six months ended June 30, 2022 and 2021.

In April 2016, the Company entered into an exclusive, worldwide license agreement with the University of Southampton (the “Southampton Agreement”), whereby the Company acquired rights to foundational technologies related to the Company’s TANGO technology.

3 unchanged sentences

In addition, if the Company sublicenses its rights under the Southampton Agreement, the Company is required to pay a mid-single digit percentage of the sublicense revenue to the University of Southampton.

As of March 31, 2022, the Company has recorded a liability of $ 0.5 million under the Southampton Agreement due to the Acadia Pharmaceuticals Inc.

license and collaboration agreement (see Note 7) and had no recorded liability as of March 31, 2021.

As of June 30, 2022, the Company has recorded a liability of $ 0.7 million under the Southampton Agreement due to the Acadia Pharmaceuticals Inc.

license and collaboration agreement (see Note 7) and had no recorded liability as of June 30, 2021.

Additionally, certain licenses under the Southampton Agreement require the Company to reimburse the University of Southampton for certain past and ongoing patent related expenses.

For the three months ended March 31, 2022 these expenses were $ 0.08 million compared to $ 0.01 million for the three months ended March 31, 2021.

For the three months ended June 30, 2022 these expenses were $ 0.06 million compared to $ 0.05 million for the three months ended June 30, 2021, and for the six months ended June 30, 2022 these expenses were $ 0.14 million compared to $ 0.06 million for the six months ended June 30, 2021.

License and Collaboration Agreement with Acadia Pharmaceuticals Inc.

7 unchanged sentences

Acadia agreed to fund the research to identify potential licensed products for MECP2 and the neurodevelopmental target, and the Company will equally fund with Acadia the research to identify potential licensed products for SYNGAP1.

The Company is eligible to receive up to $ 907,500,000 in potential total milestone payments based upon the achievement of certain development, regulatory, first commercial sales and sales milestone events across the programs for the three targets, assuming each milestone were achieved at least once.

The Company is eligible to receive up to $ 907.5 million in potential total milestone payments based upon the achievement of certain development, regulatory, first commercial sales and sales milestone events across the programs for the three targets, assuming each milestone were achieved at least once.

With respect to licensed products for MECP2 and the neurodevelopmental target, the Company is also eligible to receive tiered royalties at percentages ranging from the mid-single digits to the mid-teens on future net sales by Acadia of licensed products worldwide.

1 unchanged sentence

For SYNGAP1 licensed products that the Company is co-developing and co-commercializing, the Company will be responsible for 50% of the development and commercialization costs and will receive 50% of the profits from global commercialization.

The Company is provided with a co-development and co-commercialization opt out option relating to the SYNGAP1 target indication at the Company’s discretion.

The Company is provided with a co-development and co-

commercialization opt out option relating to the SYNGAP1 target indication at the Company’s discretion.

Such opt-out would reduce development and commercialization milestones but would provide the Company with royalties on an escalating basis attributable to net sales milestones.

14 unchanged sentences

Any such adjustments will be recorded on a cumulative catch-up basis.

As of March 31, 2022, the Company had $ 58.0 million in upfront consideration associated with the Acadia agreement relating to performance obligations that are unsatisfied or partially unsatisfied.

As of June 30, 2022, the Company had $ 55.8 million in upfront consideration associated with the Acadia agreement relating to performance obligations that are unsatisfied or partially unsatisfied.

Equity incentive plans

2 unchanged sentences

The number of shares reserved for issuance under the Company’s 2019 Plan will increase automatically on January 1 of each of 2020 through 2029 by the number of shares equal to 4 % of the aggregate number of outstanding shares of the Company’s common stock as of the immediately preceding December 31, or a lesser number as may be determined by the Company’s board of directors.

As of March 31, 2022, there were no shares available for future issuance under the 2014 Plan and 2,076,273 shares were available under the 2019 Plan.

During the three months ended March 31, 2022, the Company granted options to purchase 2,061,975 shares of common stock to certain of its employees.

As of June 30, 2022, there were no shares available for future issuance under the 2014 Plan and 1,797,543 shares were available under the 2019 Plan.

During the three months ended June 30, 2022, the Company granted options to purchase 360,400 shares of common stock to certain of its employees.

The options vest up to four years and are exercisable at a per share price equal to the fair value of the common stock on the grant date.

Stock-based compensation

As of March 31, 2022, there was $ 66.5 million of unrecognized compensation cost related to unvested stock-based compensation arrangements granted under the 2014 and 2019 Plans.

The compensation is expected to be recognized over a weighted average period of 2.96 years as of March 31, 2022.

As of June 30, 2022, there was $ 62.2 million of unrecognized compensation cost related to unvested stock-based compensation arrangements granted under the 2014 and 2019 Plans.

The compensation is expected to be recognized over a weighted average period of 2.86 years as of June 30, 2022.

Stock-based compensation expense recorded as research and development and general and administrative expenses in the accompanying condensed consolidated statements of operations and comprehensive loss is as follows (in thousands):

Three Months Ended March 31,

Three Months Ended June 30,

Six Months Ended June 30,

Research and development

3 unchanged sentences

The Company initially reserved 315,000 shares of common stock for sale under the ESPP.

At March 31, 2022, the Company had 995,298 shares available for issuance under the plan.

At June 30, 2022, the Company had 995,298 shares available for issuance under the plan.

The average grant date fair value per share under the plan was $ 23.01 for 2022.

The total ESPP stock-based compensation expense for the three months ended March 31, 2022 was $ 0.1 million and for the three months ended March 31, 2021 was $ 0.1 million.

The number of shares reserved for issuance under the ESPP will increase

automatically on January 1st of each of the first ten calendar years following the first offering date by the number of shares equal to the lesser of 1 % of the total outstanding shares of the Company’s common stock as of the immediately preceding December 31 or a lower amount determined by the Company’s board of directors.

The total ESPP stock-based compensation expense for the three and six months ended June 30, 2022 was $ 0.1 million and $ 0.2 million, respectively, and for the three and six months ended June 30, 2021 was $ 0.08 million and $ 0.16 million, respectively.

The number of shares reserved for issuance under the ESPP will increase automatically on January 1st of each of the first ten calendar years following the first offering date by the number of shares equal to the lesser of 1 % of the total outstanding shares of the Company’s common stock as of the immediately preceding December 31 or a lower amount determined by the Company’s board of directors.

The aggregate number of shares issued over the term of the ESPP will not exceed 3,150,000 shares of the Company’s common stock.

1 unchanged sentence

The following table summarizes the computation of basic and diluted net loss per share of the Company (in thousands except share and per share amounts):

Three Months Ended March 31,

Three Months Ended June 30,

Six Months Ended June 30,

Weighted-average number of common shares,

5 unchanged sentences

Outstanding options to purchase common stock

The Company did no t record an income tax benefit in its condensed consolidated statement of operations and comprehensive loss for the three months ended March 31, 2022 and 2021 as it is more likely than not that the Company will not recognize the federal and state deferred tax benefits generated by its losses.

The Company did no t record an income tax benefit in its condensed consolidated statement of operations and comprehensive loss for the three and six months ended June 30, 2022 and 2021 as it is more likely than not that the Company will not recognize the federal and state deferred tax benefits generated by its losses.

The Company had net deferred tax assets and liabilities of $ 66.0 million at December 31, 2021.

The Company has provided a valuation allowance for the full amount of its net deferred tax assets and liabilities as of March 31, 2022 and December 31, 2021, as management has determined it is more likely than not that any future benefit from deductible temporary differences and net operating loss and tax credit carryforwards would not be realized.

The Company did no t record any amounts for unrecognized tax benefits as of March 31, 2022 or December 31, 2021.

The Company has provided a valuation allowance for the full amount of its net deferred tax assets and liabilities as of June 30, 2022 and December 31, 2021, as management has determined it is more likely than not that any future benefit from deductible temporary differences and net operating loss and tax credit carryforwards would not be realized.

The Company did no t record any amounts for unrecognized tax benefits as of June 30, 2022 or December 31, 2021.

Subsequent events

Since April 1, 2022, the Company sold approximately 138,000 shares of our common stock and received $ 3.1 million after deducting commissions related to the Sales Agreement.

The Company has evaluated subsequent events through the issuance date of these interim condensed consolidated financial statements.

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

What changed 10-Q

Item 1. Financial Statements