UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549
FORM 10-K
| x | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | ||||
o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | ||||
May 15, 2023. ” program updates disclosed herein and elsewhere are reported on a calendar year basis. RP1 in skin cancers, including the setting for the confirmatory clinical trial in melanoma which is expected to be required to support a potential accelerated approval of RP1 in anti-PD1 failed melanoma. 4-1BBL, as well as anti-CTLA-4 and GALV-GP R(-), but without the expression of GM-CSF. Our and product candidates also to cause highly immunogenic death of tumor cells. We believe that these factors will increase the potency of the systemic anti-tumor immune response that is generated by our product candidates. With the intention of further amplifying the anti-tumor response, RP3, are being developed to express additional therapeutic proteins. We believe that our Union, two patents have been granted by the applicable authorities in Hong Kong and three patents have been granted by the applicable authorities in Japan, two patents have been granted by the applicable authorities in Israel, and one patent has been granted by the applicable authorities in each of Singapore, China and Australia. The granted US patents include US patent numbers 10,570,377; 10,612,005; 10,626,377; 10,947,513; 11,427,810; and 11,473,063 and include description and claims directed to oncolytic virus compositions of matter, pharmaceutical compositions encompassing an oncolytic virus and methods of use in treating cancer with oncolytic virus compositions. Two of our European patents have been opposed, one of which was recently successfully maintained and the other remains under the opposition process. One of our US patents has been petitioned for post-grant review and one of our Japanese patents has been maintained as granted following being opposed. We continue to vigorously pursue advancement and defense of our patents and patent applications through the respective patent offices in which they are granted or pending throughout the world. See " patent term restoration of a portion of the patent term lost during the U.S. clinical development and FDA regulatory review process. The Hatch-Waxman Act permits a patent term extension of up to five years beyond the expiration of the patent. The length of the patent term extension is related to the length of time the drug is under clinical development in the United States and the length of time the drug is under regulatory review. Patent term extension cannot extend the remaining term of a patent beyond a total of 14 years from the date of product approval and only one patent applicable to an approved drug may be extended. Similar provisions are available in Europe and other foreign jurisdictions to extend the term of a patent that covers an approved drug. In the future, if and when our products receive FDA approval, and if and when patents grant, we expect to apply for patent term extensions on patents covering those products. We plan to seek Our oncolytic product candidates, if and when marketed, will compete with a number of drugs that are currently marketed or in development that also target cancer but that utilize a different mechanism of action. To compete effectively with these agents, our product candidates will need to demonstrate advantages that lead to improved clinical efficacy and safety compared with these competitors. At the same time, however, we believe that our oncolytic product candidates, if and when ultimately marketed, would likely be used principally in combination with checkpoint blockade therapies in addition to existing cancer therapies, including surgery, chemotherapy, radiation therapy and other biological therapies such as antibodies targeting particular surface receptors. We therefore believe that our product candidates, if and when marketed, would largely complement rather than compete directly with these existing treatment options. our ongoing and planned clinical studies and, if approved, commercial launch and commercialization of our product candidates, if approved. In January 2020, this agreement was expanded to cover an additional cohort of 125 patients with anti-PD-1 failed melanoma. RP2 in combination with nivolumab. CSCC. may be terminated by either party upon sixty (60) days prior written notice to the other party. Regulatory requirements are also continually evolving. By example, the FDA and governmental authorities in other countries have issued a growing body of guidance documents on various regulatory matters, including those specific to cell and gene therapy development.Delaware 82-2082553 (State or other jurisdiction of
incorporation or organization)82-2082553
(I.R.S. Employer
Identification No.)18 Commerce Way995-2443
222-9600Registrant'sRegistrant’s telephone number, including area code)Title of each class Trading Symbol(s) Name of each exchange on which registered Common Stock, par value $0.001 per share REPL o¨ No ýxo¨ No ýxýx No o¨232.045232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ýx No o¨"large“large accelerated filer," "accelerated” “accelerated filer," "smaller” “smaller reporting company,"” and "emerging“emerging growth company"company” in Rule 12b-2 of the Exchange Act.Large accelerated filer o☐ Accelerated filer o☐ Non-accelerated filer ý☒ Smaller reporting company o☒ Emerging growth company ý☒ ýxo¨ No ýx$184$486.9 million, based on the closing price of the registrant'sregistrant’s Common Stock on September 28, 2018,30, 2022, the last business day of the registrant'sregistrant’s most recently completed second fiscal quarter.31,663,70157,775,993 shares of Common Stock outstanding as of June 21, 2019.2019.2023. Portions of such definitive proxy statement are incorporated by reference into Part III of this Annual Report on Form 10-K.2019
2023Page No. PART IItem 1.Business5Item 1A.Risk factors33Properties83Selected financial data85
Changes in and disagreements with accountants on accounting and financial disclosuresItem 9B.Other information106PART IIISIGNATURES"outlook," "believes," "expects," "potential," "continues," "may," "will," "should," "seeks," "approximately," "predicts," "intends," "plans," "estimates," "anticipates"“outlook,” “believes,” “expects,” “potential,” “continues,” “may,” “will,” “should,” “seeks,” “approximately,” “predicts,” “intends,” “plans,” “estimates,” “anticipates” or the negative version of these words or other comparable words. Such forward-looking statements are subject to various risks and uncertainties. Accordingly, there are or will be important factors that could cause actual outcomes or results to differ materially from those indicated in these statements. We believe these factors include, among other things:RP1 or any of our other product candidates, including the timing of initiation and completion of studies or trials and related preparatory work and the period during which the results of the trials will become available;ourRP3 or any other product candidates from our RPx platform if approved for commercial use;the coststimingmaintain successful operation, approval and qualification of establishing, equipping,our in-house manufacturing operations;operatingmaintain sufficient quantities of raw material supplies or access single or limited sources of goods or services needed to build or maintain our plannedproduct candidate supplies or otherwise operate our in-house manufacturing facility;orand our other product candidates;fieldfields of immuno-oncology;"Risk“Risk factors."patients. We usepatients through our novel tumor-directed oncolytic immunotherapies. Our proprietary Immulytic platform to design and developtumor-directed oncolytic immunotherapy product candidates that are designed and intended to maximally activate the immune system against cancer.treatment thattreatments, alongside checkpoint blockade. Oncolytic immunotherapy exploits the ability of certain viruses to selectively replicate in and directly kill tumors, as well as induce a potent, patient-specific, anti-tumor immune response. Such oncolytic, or "cancer killing," viruses have the potential to generate an immune response targeted to an individual patient's particular set of tumor antigens, including neo-antigens that are uniquely present in tumors. Our product candidates incorporate multiple mechanisms of action into a practical "off-the-shelf"“off-the-shelf” approach that is intended to maximize the immune response against a patient'spatient’s cancer and to offer significant advantages over other approaches to inducing anti-tumor immunity, including personalized vaccine approaches. We believe that the bundling of multiple approaches for the treatment of cancer into single therapies will increase clinical efficacy and simplify the development path of our product candidates, while also improving patient outcomes at a lower cost to the healthcare system than the use of multiple different drugs. The foundation of our Immulyticconsists ofis based on a proprietary, engineered strain of herpes simplex virus 1, or HSV-1, that has been "armed"backbone with payloads added to maximize immunogenic cell death and the induction of a fusogenic protein intended to substantially increase anti-tumor activity. Our platform enables us to incorporate various genes whose expression is intended to augment the inherent properties of HSV-1 to both directly destroy tumor cells and induce ansystemic anti-tumor immune response. The RPx platform has a unique dual local and systemic mechanism of action, or MOA, consisting of direct selective virus-mediated killing of the tumor resulting in the release of tumor-derived antigens and altering of the tumor microenvironment, or TME, to ignite a strong and durable systemic response. This MOA is expected to be synergistic with most established and experimental cancer treatment modalities, and, with an attractive safety profile, the RPx platform is expected to have the versatility to be developed alone or combined with a variety of other treatment options. We believecurrently have three RPx product candidates in our development pipeline, RP1 (vusolimogene oderparepvec), our lead product candidate, RP1, will be effective at killing tumorsRP2 and inducing immunogenic, or immune-stimulating, tumor cell deathRP3. Although our fiscal year runs from April 1st - March 31st, our programs and that it will be highly synergistic with immune checkpoint blockade therapies.currently conducting a Phase 1/2number of clinical trialtrials of RP1, both as a monotherapy and in combination with RP1 in approximately 150 patients.anti-PD-1 therapy, with a focus on establishing a major skin cancer franchise. We have completed enrollment of the Phase 1 dose rising part of thisenrolling patients in a randomized, controlled Phase-2 clinical trial in which we are assessing the safety and tolerability of RP1 administered alone in 22 patients with mixed advanced solid tumor types, and followingcutaneous squamous cell carcinoma, or CSCC, RP1’s lead indication, which is referred to herein as CERPASS or the review of the data by the Safety Review Committee,CERPASS trial, under an agreement with our partner Regeneron Pharmaceuticals, Inc., or SRC, have determined the dose regimen to be administered in the Phase 2 part of this clinical trial. We are completing enrollment ofRegeneron. CERPASS is a Phase 1 expansion cohort of approximately 12 patients in which we are assessing the safety and tolerability of RP1 administered in combination with an anti-PD1 therapy at the determined Phase 2 dose level. One patient with microsatellite instability high cancers, or MSI-H/dMMR, remains to be enrolled in the expansion cohort. The Phase 2 part of thisregistration directed clinical trial is designed to assess the safety and efficacy ofevaluating RP1 in combination with cemiplimab, an anti-PD1anti-PD-1 therapy developed by Regeneron, versus cemiplimab alone. Regeneron has granted to us a non-exclusive royalty-free license to cemiplimab for use in four cohorts of approximately 30 patients with melanoma, non-melanoma skin cancers, bladder cancerthis trial, is supplying cemiplimab at no cost and MSI-H/dMMR. Following SRC review of the Phase 1 data to date, including data from the expansion cohort receiving RP1 with anti-PD1 therapy, we have opened enrollment in the United States and the United Kingdom of the melanoma, bladder cancer, and non-melanoma skin cancer Phase 2 cohorts, and will open enrollment of the MSI-H-dMMR Phase 2 cohort after a final evaluable MSI-H/dMMR patient has been enrolled in the Phase 1 expansion cohort without safety concerns. In the Phase 2 partfunded one-half of the clinical trial costs up to the amount agreed in the first study plan. CERPASS enrolled 211 patients with locally advanced or metastatic CSCC who are naïve to anti-PD1 therapy. An additional 20 patients were also dosed with RP1 made at our in-house manufacturing facility. The CERPASS protocol evaluates complete response, or CR rate, and overall response rate, or ORR, as its two independent primary efficacy endpoints as assessed by independent review, as well as duration of response, progression-free survival, or PFS, and overall survival, or OS, as secondary endpoints. As previously reported, we are also evaluating efficacy undermet with the clinical trialFDA in the first quarter and discussed the rationale for the changes to the study design we made in 2020 reducing the study size from 240 to 180 patients and adding CR as a dual independent primary endpoint (the study subsequently over enrolled with 211 patients randomized, as reported in November 2022). No changes were made to the protocol primarily on the basisas a result of the proportion of patients who have a response within each tumor type cohort. Responses are either defined as a partial response (a 30% or greater reductionmeeting. As reported in tumor size) or a complete response (a complete eradication ofFebruary 2023, topline data from the disease). We then intend to analyze each cohort's data to determine the indications that merit progressing into further clinical development. This Phase 1/2 clinicalCERPASS trial is being conducted asexpected to be announced in Q3 2023. Assuming positive primary analysis data is generated, including demonstrating overall clinical benefit, we continue to expect to make a Biologics License Application submission for RP1 in Q1 2024.Bristol-MyersBristol Myers Squibb Company, or BMS, under which itBMS has granted us a non-exclusive, royalty-free license to, and is supplying at no cost, its anti-PD-1 therapy, nivolumab, for use in combination with RP1 in this clinical trial. BMS has no further development-related obligations under this collaboration. We have also entered into a collaboration agreement with Regeneron Pharmaceuticals, Inc., or Regeneron, under which we intend to conduct clinical development of our product candidates in combination with cemiplimab, an anti-PD-1 therapy developed by Regeneron. For each clinical trial conducted under this collaboration, Regeneron will fund one-half of the clinical trial costs, supply cemiplimab at no cost, and grant us a non-exclusive, royalty-free license to cemiplimab for use in the clinical trial. The first planned clinical trial under this collaboration is a randomized, controlledmulti-cohort Phase 1/2 clinical trial ofwhich is referred to herein as IGNYTE, or the IGNYTE trial. The leading tumor specific cohort in the IGNYTE trial is our registration directed Phase 2 expansion cohort enrolling 125 patients with anti-PD-1 failed cutaneous melanoma who are being treated with RP1 in combination with cemiplimab, versus cemiplimabnivolumab. We are also continuing enrollment into the cohorts of patients with anti-PD-1 failed non-melanoma skin cancers, or NMSC, which includes patients with both naïve and anti-PD-1 failed disease, including CSCC.approximately 240combination with CTLA-4 blockade. In March 2021, we held a Type B meeting with the FDA to discuss the design of the 125 patient expansion cohort in the IGNYTE trial. In this meeting, the FDA expressed that while a randomized controlled clinical trial would always be preferred for registration purpose, that in this patient population with no clear standard of care, if the clinical data is sufficiently compelling then the data could be considered for submission by the FDA under the accelerated approval pathway. The FDA also indicated that a randomized confirmatory trial would also be needed as is required under the accelerated approval pathway. The design of the confirmatory trial is intended to be discussed with the FDA prior to a BLA submission. In December 2022, we reported data from the first 75 patients with at least six months follow-up. The data snapshot based on investigator response showed a 20% CR rate and a 36% ORR with activity across all disease stages and strong durability. In January 2023, we completed target enrollment of 125 patients with patients in screening at that time continuing to be enrolled. We completed enrollment in this cohort in March 2023, ultimately enrolling 141 patients. Further updated data from the initial 75 patients is expected to be presented at the American Society of Clinical Oncology, or ASCO, in June 2023, and a data snapshot for all 141 patients, who will all have a minimum of 6 months follow-up, is expected in Q4 2023. The data snapshot for all 141 patients with a minimum of 6 months follow-up will be evaluated for the potential to align a dual launch with CERPASS, assuming both indications for RP1 are timely approved, however, the per protocol primary analysis continues to be expected 12 months after enrollment of the last patient, March 2024, with topline data expected in Q2 2024.CSCC. Initial study site activation is currently underwayCSCC, basal cell carcinoma, or BCC, merkel cell carcinoma, or MCC, and angiosarcoma. Updated data from the CSCC patients in the United Statesanti-PD-1 naïve NMSC cohort, presented in March 2022, continued to show nearly half of the patients achieving a complete response and Australia,nearly 65% achieving a complete or partial response. We are currently enrolling an extension of the NMSC cohort of RP1 in combination with study initiationnivolumab in NMSC patients who have failed prior treatment with anti-PD(L)-1. In March 2022, we reported initial data (N=12) from this extension cohort where responses had been observed in anti-PD(L)-1 failed CSCC, MCC and angiosarcoma tumors. We believe the activity of RP1 combined with nivolumab in this anti-PD(L)-1 failed cohort represents a new potential therapeutic option for these patients and supports the broad potential for RP1 in anti-PD(L)-1 failed skin cancers beyond melanoma. Recruitment remains ongoing, with a data update expected in August 2019. If compelling clinical data are generated demonstrating the benefits of the combined treatment, we believe the data from thisQ3 2023.could support a filingof single agent RP1 in solid organ transplant recipients with skin cancers, including CSCC, which is referred to herein as ARTACUS or the ARTACUS trial, which we believe to be potentially registrational (in its own right or, subject to discussion with regulatory authorities, following enrollment of additional patients, including as a potential label expansion after an initial approval of RP1 in a different indication). We are currently enrolling up to 65 patients in the ARTACUS trial to assess the safety and efficacy of RP1 in liver, kidney, heart, lung, and hematopoietic cell transplant patients transplant recipients with skin cancers. Enrollment in this clinical trial had been impacted by COVID-19, as the patient population is severely immune-compromised and considered very high risk, however, more recently we have seen enrollment increase in the ARTACUS trial. As reported in March 2022, we have observed responses in these patients with RP1 as monotherapy with a similar safety profile to that observed in our other RP1 clinical trials in patients who are not immune suppressed. Enrollment continues in the ARTACUS trial and we expect to present updated initial data at the American Transplant Congress in June 2023.marketing approval.built on our Immulytic platform, that arehave been further engineered to enhance anti-tumor immune responses and are intended to address additional tumor types, including traditionally less immune responsive tumor types. In addition to the expression of GALV-GP R(-) and human GM-CSF as in RP1, RP2 has been engineered to express an antibody-like molecule that blocksintended to block the activity of CTLA-4, a protein that inhibits the full activation of an immune response, including to tumors. RP3 ishas been engineered with the intent of not only blocking the activity of CTLA-4, but also to further stimulate an anti-tumor immune response through activation of the immune co-stimulatory pathways through the additional expression of the ligands for CD40 and 4-1BB.intend to initiateinitiated a Phase 1Phase-1 clinical trial withof RP2 alone and in combination with nivolumab in the third quartersecond half of 2019, pending our response to queries from the FDA in the United States and the Medicines and Healthcare products Regulatory Agency, or MHRA, in the United Kingdom regarding certain Chemistry, Manufacturing, and Controls, or CMC aspects of the clinical trial. These queries, which we received from the FDA and MHRA in February 2019 and May 2019, respectively, were in response to our submission of pre-IND questions to the FDA and the CTA, respectively. Our responses to these queries, including with respect to the FDA, the development of a further analytical data, have delayed the intended opening of this Phase 1 clinical trial beyond the second quarter of 2019 as we originally intended. The2019. This clinical trial is now expected to initiate, initially in the UK, in the third quarter of 2019. The Phase 1 clinical trial of RP2 will also bebeing conducted as apart of our collaboration with BMS, under which itBMS has granted us a non-exclusive, royalty-free license to, and will supply at no cost, nivolumab, for use in combination with RP2. BMS hasWe have presented data from the single agent RP2 portion of this clinical trial that showed deep and durable responses, including demonstration of tumor response in uninjected lesions and in patients with difficult to treat advanced cancers. We believe that this data supports the hypothesis that anti-CTLA-4 delivered intra-tumorally through oncolytic virus replication, with accompanying antigen release and presentation, can provide potent anti-tumor effects. We have also presented combination data from both the clinical trialfurther development-related obligationsviable alternative treatment option, indicating the potential utility of RP3 in treating this difficult to treat tumor type.this collaboration. We intend to file an IND and/a supply and cost share clinical collaboration arrangement with Roche Holding AG, or foreign equivalents forRoche. Our signal finding studies in SCCHN are being developed in combination with nivolumab under our collaboration agreement with BMS.assuming regulatory clearance, enter clinical development during 2020. IND enabling studies are currently underway. Our product candidatesthe second cohort will enroll patients who have progressed on 1L immunotherapy (including atezolizumab/bevacizumab), and will be treated with atezolizumab combined with bevacizumab and RP3.canis intended to lead to the induction of tumoranti-tumor immune responses inleading to clinical response of tumors whichthat have not themselves been injected, which is known as an "abscopal" effect.injected.strategy Our goal is to create the leading oncolytic immunotherapy company that discovers, develops and commercializes next-generation products with multiple mechanisms of action for the treatment of a broad range of solid tumor types. Key elements of our strategy include the following: Advance the development of, and seek regulatory approval for, our lead product candidate, RP1. We are advancing two clinical trials for RP1. We are currently initiating a randomized, controlled Phase 2 clinical trial of RP1 in combination with cemiplimab, versus cemiplimab alone, in approximately 240 patients with CSCC, which we have designed to potentially support product registration. In addition, we are currently conducting the Phase 2 part of our Phase 1/2 clinical trial of RP1 in combination with nivolumab, enrollment of which is currently open for three of the four intended tumor type cohorts. We then intend to analyze each cohort's data to determine the indications that merit further clinical development. Initiate the clinical development of and obtain regulatory approval for RP2, our next product candidate. We have engineered RP2, which is based on RP1 but additionally expresses an anti-CTLA-4 antibody-like protein, to target tumor types that do not respond to single-agent immune checkpoint blockade therapies and patients who have not responded to or who have progressed on anti-PD-1/L1 therapy. In the third quarter of 2019, we plan to initiate a Phase 1 clinical trial of RP2 alone and in combination with nivolumab following receipt of regulatory approval to proceed in the United States and/or United Kingdom. Pending the results of this Phase 1 clinical trial, we intend to initiate separate Phase 2 clinical trials in individual tumor types, currently intended to include triple negative breast cancer and two additional indications, which we expect to define in the second half of 2019. Leverage our Immulytic platform to build a portfolio of product candidates that target a range of immune mechanisms and progress these product candidates into the clinic. We plan to utilize our Immulytic platform to develop additional product that express further combinations of proteins aimed at activating multiple immune mechanisms for the treatment of a broad range of solid tumor types. Our intended goal in the coming years is to introduce one product candidate into the clinic each year. Current focus, however, is on the development of RP1, RP2 and RP3 rather than expansion of the pipeline beyond these product candidates. Apply our extensive expertise to establish, equip, and operate our own in-house manufacturing facility. We intend to establish, equip, and operate our own manufacturing facility in Framingham, Massachusetts for multi-product current Good Manufacturing Practice, or cGMP, manufacturing. We expect our facility to be ready to produce clinical-grade material during the first half of 2020 and ultimately to be able to support commercial product launch. Retain significant economic and commercial rights to our product candidates in key geographic areas. We intend to retain rights in the United States for our product candidates and to develop an oncology-focused commercial organization. When economically attractive, we intend to evaluate and enter into development and marketing agreements with pharmaceutical and biotechnology partners for geographic areas in which we are unlikely to pursue development and commercialization on our own.Immuno-oncology background and limitations of existing therapies Cancer is a broad group of diseases in which normal cells are transformed into a state of rapid and uncontrolled cell division, typically forming tumors. Cancer originates from a particular tissue in the body, such as the lung or skin, and often spreads, or metastasizes, as the disease progresses. Tumors are comprised of multiple cell types, including cancerous cells and immune cells. The composition and the type of tumor dictate the aggressiveness of a particular cancer, its susceptibility to treatment, and ultimately the outcome for the patient. A promising new approach to cancer treatment, which is thesubject of significant ongoing drug development activity, is to activate the immune system against cancer. The immune system contains many different cell types that fall into two general categories, cells of the innate immune system and cells of the adaptive immune system. The innate immune system is a first-line, ubiquitous, non-specific defense mechanism aimed at combating elements that the body views as foreign, particularly microbial pathogens and parasites, but also tumor cells. After the innate immune system is activated, an adaptive immune response is triggered that is specific to particular proteins, known as antigens. The adaptive immune system is flexible and can evolve. Importantly, it has the capacity for immune memory, or the ability to be recalled into action if the same foreign antigen is detected in the body in the future. Activation of both the innate and adaptive components of the immune system is believed to be essential for the induction of an effective anti-cancer immune response. Immune checkpoints are key mechanisms of the adaptive immune system that function to inhibit immune responses and, in particular, to prevent the induction of autoimmunity. In the cancer setting, tumors can hijack these immune checkpoints such that the tumors become protected from the effects of anti-cancer immunity. This enables tumors to continue growing without or with reduced immune interference, even if an anti-tumor immune response had been initiated. Additional immune checkpoints inhibit the initial induction of an immune response, rather than subsequently protecting the tumor from a previously established immune response. Checkpoint inhibitor therapies block these negative regulators of the immune system with the intent of either rendering tumors susceptible to immune attack and/or increasing the potency of the anti-tumor immune response that is generated. This approach to cancer therapy has the potential to result in long-lasting anti-cancer effects in certain patients with certain tumor types. To date, multiple immune checkpoint blockade products have been approved in a number of cancer indications, and there are numerous other related drug candidates in preclinical and clinical development. Market researchers forecast that immuno-oncology treatments will grow to over $25 billion a year in sales globally by 2022. While immune checkpoint blockade has been a transformational treatment for many patients with cancer, the majority of patients do not respond to current treatments. This is because checkpoint blockade therapies require a pre-existing immune response to a patient's tumor and that the tumors be "inflamed," or "hot." Because many patients do not have an ongoing pre-existing anti-tumor immune response, which is often referred to as a tumor being immunologically "cold," only a minority of patients respond to checkpoint blockade therapies alone. We therefore believe that the ability to effectively convert "cold" tumors to "hot" would substantially increase the response rates and the types of tumors which are susceptible to immune checkpoint blockade therapies.Our approach—— Oncolytic immunotherapypatient'spatient’s cancer and turn immunologically "cold"“cold” tumors "hot."“hot.” To achieve this objective, we use oncolytic immunotherapies that combine multiple mechanisms of action in a single product candidate. We believe our product candidates will initiate or enhance an immune response in patients with no or minimal pre-existing cancer immunity, including to tumor neo-antigens, and thereby increase the effectiveness of immune checkpoint blockade therapies. Oncolytic immunotherapy is the treatment of cancer with viruses that selectively replicate in tumors as compared to normal tissue, thereby killing the virus-infected tumor cells. In addition to this direct oncolytic killing of cancer cells, the presence of the virus and the generation of immune-stimulating tumor cell death triggers both innate and adaptive immune responses that result in further tumor destruction, intended to result in the establishment of lasting anti-tumor immunity."danger,"“danger,” the danger associated molecular patterns, or DAMPs, while the virus produces pathogen associated markers of danger, or PAMPs. These trigger various pathways of the innate immune system, including the STING pathway and pathways mediated through toll-like receptors, or TLRs, each resulting in the production of interferon. Innate immune activation would be expected to itself provide anti-tumor effects, as interferon activates natural killer cells which can destroy tumor cells. Innate immune activation would also be expected to help to trigger adaptive anti-cancer immunity, in which antigen presenting cells, or APCs, are attracted to the injected tumor. APCs internalize cancer antigens, including neo-antigens, and traffic back to the draining lymph nodes where they present the antigens to T cells. These arePrimed with the antigens, these T cells then primed to proliferate and disperse systemically to seek and destroy cancer cells with the same antigen profile throughout the body, withresulting in the aimpotential destruction of destroying distant tumor deposits.oncolytic immunotherapiesproduct candidates are intended to genetically encode and expressencoded with multiple potent, cell-killing and immune-stimulating proteins in the tumor—— in other words, our oncolytic immunotherapiesproduct candidates are "armed"“armed” with these therapeutic genes."off-the-shelf"“off-the-shelf” approach to initiating or enhancing an anti-tumor immune response, including to neo-antigens, will offer significant advantages over the various approaches to immune activation that are currently in development, including personalized vaccine treatments. Tumor neo-antigens are uniquely present in tumors, as compared torather than normal tissue, because they result from the genetic changes that occur as cancer develops. Unlike the antigens present in normal tissue, the immune system seesidentifies neo-antigens as foreign. As a result, the immune system is able to mount an immune response to tumor neo-antigens in the same way that it would to the antigens contained in disease-causing micro-organisms, which the immune system also seesidentifies as foreign. Researchers believe immune responses to tumor neo-antigens are particularly important in providing the patient's immune system thesystem’s ability to combat cancer, and as a consequence various "personalized vaccine"“personalized vaccine” approaches to generating immune responses to tumor neo-antigens are in development. These approaches are generally both expensive and time consuming because a vaccine cannot be designed and manufactured until a tumor biopsy is taken and analyzed in the laboratory to identify the mutated tumor antigens that will be targeted by the treatment. We also believe that our “off-the-shelf” approach may also offer significant advantages over other approaches to anti-cancer immune activation that only target a single pathway of the immune system, as is the case with most of the other immuno-oncology therapies currently under development. Importantly, our product candidates are intended to maximally activate an immune response against cancer, which we believe is the missing element needed to allow anti-PD-1 or anti-PD-L1anti-PD(L)-1 therapy to treat more patients and tumor types, unlike some other therapies whichthat are intended to act by blocking additional defense mechanisms against an anti-tumor immune response once it has been initiated.ImmulyticOncolytic Immunotherapy platform
which we call our Immulytic platform, consists of a proprietary strain of HSV-1 that we have engineered to replicate selectively in tumors and to express a fusogenic glycoprotein, a protein that triggers the fusion of the membranes between cells. HSV-1 is both highly cell lytic and inflammatory, and also has a large carrying capacity, which makes it possible to incorporate multiple genes encoding therapeutic proteins. We believe our combination of HSV-1 with the expression of the fusogenic glycoprotein increases the natural ability of HSV-1 to kill tumor cells and to induce an anti-tumor immune response. The fusogenic functionality of our product candidates is intended not only to increase the number of tumor cells that are killed, butfurther, we have also engineered our product candidates tothat express in tumors a range of additional potent, immune activating genes encoding therapeutic proteins. proteins in tumors.for the development of thesefrom which our additional oncolytic immunotherapies expressing further therapeutic proteins. In addition to RP1, our current pipeline products areproduct candidates, RP2 and RP3.intended step-wisesequential development approach from RP1 through RP3of further enhancing our product candidates with additional therapeutic proteins reduces clinical risk, as we will beare able to study the safety profile of each therapeutic protein prior to moving to the next product candidate with an additional therapeutic protein that is intended to provide more potent anti-tumor immune effects.WeWepromoter. This increasespromoter which we believe will increase virus replication in tumors without reducing tumor-selectivity; andWewhich resultsresulting in the expression of these therapeutic proteins with the intention of increasing both the direct tumor cell killing and the potency of the anti-tumor immune response that is induced.are developinghave developed RP1 as a monotherapy and for use in combination with immune checkpoint blockade therapy, particularly therapies targeting PD-1 or PD-L1.PD-(L)-1. We believe that the robust release of tumor antigens and the highly immunogenic tumor cell death intended to be caused by RP1 will further increase the synergy previously seenobserved synergy between oncolytic viruses and immune checkpoint blockade therapy.Preclinical results In one of our preclinical experiments, tumors were induced in both the left and right flanks of rats. RP1 was then injected into the tumors in only the right flanks. We observed destruction not only of the injected tumors in the right flanks, but also of the large un-injected tumors in the left flanks of 70% of the treated rats. When formulation buffer with no RP1 was injected into "control" rats, no impact on the growth of the injected or un-injected tumors was observed. This effect of RP1 in both injected and un-injected tumors provides support for the potent systemic, or "abscopal," effect of RP1.Phase 1/2 clinical trial in multiple tumor types We are currently conducting a Phase 1/2 clinical trial with RP1 in approximately 150 patients. We have completed enrollment of the Phase 1 dose rising part of this clinical trial in which we are assessing the safety and tolerability of RP1 administered alone in 22 patients with mixed advanced solid tumor types and, following the review of the data by the SRC, have determined the dose regimen to be administered in the Phase 2 part of this clinical trial. We are completing enrollment of a Phase 1 expansion cohort of approximately 12 patients in which we are assessing the safety and efficacy of RP1 administered in combination with nivolumab. One patient with MSI-H/dMMR remains to be enrolled in the expansion cohort. We have designed the Phase 1 part of the trial to provide insights on theeffects of RP1 on tumors, including necrosis, inflammation and erythema, the biodistribution of RP1 in the blood, saliva and mucosa, and the impact of RP1 administration on anti-HSV-1 antibody responses. For the patients in the Phase 1 part of the trial who also receive nivolumab, we are assessing certain biomarkers indicative of immune activation in tumor biopsies. These include the infiltration of T cells, expression of PD-L1, and the presence of an "inflamed gene signature," each of which would indicate ongoing immune activation. The Phase 2 part of this clinical trial is designed to assess the safety and efficacy of RP1 in combination with an anti-PD1 therapy in four cohorts of approximately 30 patients with melanoma, non-melanoma skin cancers, bladder cancer and MSI-H/dMMR. Following SRC review of the Phase 1 data to date, we have opened enrollment in the United States and the United Kingdom of the melanoma, bladder cancer, and non-melanoma skin cancer Phase 2 cohorts, and will open enrollment of the MSI-H-dMMR Phase 2 cohort after a final evaluable MSI-H/dMMR patient has been enrolled in the Phase 1 expansion cohort without safety concerns. In the Phase 2 part of the clinical trial, we are also evaluating efficacy under the clinical trial protocol, primarily on the basis of the proportion of patients who have a response within each tumor type cohort. Responses are either defined as a partial response (a 30% or greater reduction in tumor size) or a complete response (a complete eradication of the disease). We then intend to analyze each cohort's data to determine the indications that merit progressing into further clinical development. We have chosen the tumor types in the Phase 2 part of the clinical trial because they have shown that they have some level of underlying responsiveness to treatment with immune checkpoint blockade therapies but for which we believe considerable unmet medical need remains. We intend to expand the number of patients treated and/or add a control arm for each cohort where we see promising signs of efficacy, either as part of the same clinical trial or as separate clinical trials, as a means to gather more definitive data in support of the clinical benefit of the combination of RP1 and nivolumab in these respective tumor types. We believe that the expanded clinical trials can be designed to support a filing with regulatory authorities for marketing approval. This Phase 1/2 clinical trial is being conducted as a collaboration with Bristol-Myers Squibb Company, or BMS, under which it has granted us a non-exclusive, royalty-free license to, and is supplying at no cost, its anti-PD-1 therapy, nivolumab, for use in combination with RP1 in this clinical trial. BMS has no further development-related obligations under this collaboration.Phase 2 clinical trial in CSCC We are also planning to initiate a randomized, controlled Phase 2 clinical trial of RP1 in combination with cemiplimab, versus cemiplimab alone, in approximately 240 patients with cutaneous squamous cell carcinoma, or CSCC. Initial study site activation is currently underway in the United States and Australia, with study initiation expected in August 2019. This clinical trial will be conducted in collaboration with Regeneron. If compelling clinical data are generated demonstrating the benefits of the combined treatment, we believe the data from this trial could support a filing with regulatory authorities for marketing approval.Product candidate pipeline We are also developing additionalcandidates,candidates: RP2 and RP3 built on our Immulytic platform, that are further engineered to enhance anti-tumor immune responses and intended to address additional tumor types. RP2 has been engineered to express an antibody-like molecule that blocks the activity of CTLA-4, a protein that inhibits the immune response to tumors. RP3 is engineered with the intent of not only blocking the activity of CTLA-4, but also to further stimulate an anti-tumor response through activation of the immune co-stimulatory pathways through expression of the ligands for CD40 and 4-1BB.Pipeline product candidate: RP2in orderintended to block the inhibition of the immune response otherwise caused by CTLA-4. We believe that RP2 willmay offer advantages compared with current CTLA-4 approaches, including ipilimumab. By expressing anti-CTLA-4 only locally in the tumor and draining lymph nodes, we believe that activity will be retained, but that toxicity will be reduced. We intend that our RP2 product candidate will be used in combination with other treatment approaches, including anti-PD-1 therapy, which we believe will result in both synergy with the oncolytic virusimmunotherapy and the expression of the anti-CTLA-4 in the tumor. We intend to administer RP2 in combination with anti-PD-1 or anti-PD-L1 therapy in tumor types with poor responsiveness to anti-PD-1/L1 therapy alone, and in patients who have not responded to or who have progressed on prior anti-PD-1/L1 therapy. We currently expect to include patients with triple negative breast cancer and two further indications in our initial clinical trial with RP2, and we expect to determine which tumor types to target in the second half of 2019.Preclinical results We have conducted preclinical tests comparing RP1 and RP2 to determine the effect of expressing the anti-CTLA-4 antibody-like protein and have observed an enhanced effect with RP2. In one of these preclinical experiments, tumors were induced in both the left and right flanks of mice. Either RP1 or RP2 was then injected into the tumors in only the right flanks. We observed enhanced destruction of tumors with RP2 as compared to RP1, particularly of the un-injected tumors. In this experiment only a low dose of virus was used such that with RP1 un-injected tumors only partially responded to the treatment. This was to allow the potential benefits of anti-CTLA-4 expression to be observed. In a further experiment with RP2 in combination with anti-PD-1 therapy, we demonstrated that the responses in 15 mice in which tumors had been eradicated were durable and that all but one of these mice were protected against re-challenge with tumor cells, demonstrating that memory immune responses had been induced.Planned Phase 1 clinical trial We intend to initiate a Phase 1 clinical trial with RP2 alone and in combination with nivolumab in the third quarter of 2019, pending our response to queries from the FDA in the United States and the MHRA in the United Kingdom regarding certain CMC aspects of this Phase 1 clinical trial with RP2, as described below. Our responses to these queries have delayed the intended opening of this Phase 1 clinical trial with RP2 beyond the second quarter of 2019 as we originally intended. This Phase 1 clinical trial of RP2 will also be conducted as a collaboration with BMS, under which it has granted us a non-exclusive, royalty-free license to, and will supply at no cost, nivolumab, for use in combination with. BMS has no further development-related obligations under this collaboration.Regulatory status In the United Kingdom, prior to filing a CTA, we participated in a pre-CTA meeting with the MHRA in December 2018. We subsequently filed our CTA with the MHRA in February 2019 and received a response with a number of queries in March 2019. We responded to the MHRA in April 2019 and in May 2019 the MHRA notified us that further CMC information was required. In June 2019, the MHRA provided clarification with respect to the required information, which related to the provision of additional comparability data between the intended clinical batches and those used in non-clinical studies. We expect that, after submitting the requested data to the MHRA, we will initiate the Phase 1 clinical trial with RP2 alone and in combination with nivolumab in the third quarter of 2019, rather than the second quarter as originally planned. In the United States, we submitted pre-IND questions to the FDA in January 2019 and the FDA responded in February 2019 with a number of CMC related queries, including indicating the need for further analytical data to be generated and that further justification was required for certain aspects of the intended clinical trial protocol. We are currently addressing these queries and expect to file an IND with the FDA once they have been addressed.Pipeline product candidate: RP3CD40CD40L and 4-1BB4-1BBL pathways. Pre-clinical studies with RP3 are currently underway, with Good Laboratory Practice, or GLP, toxicology and biodistribution studies expected in the second half of 2019. As with RP2, we intend to study RP3 in indications that are less responsive to anti-PD-1 or anti-PD-L1 therapy. We expect to bring RP3 into clinical development in 2020.Preclinical results We have conducted preclinical tests to assess the benefit of expressing immune co-stimulatory pathway ligands, and have observed an enhanced effect associated with the expression of these proteins as compared to RP1. In one of these preclinical experiments, tumors were induced in both the left and right flanks of mice. Either RP1 or versions of RP1 additionally expressing the ligands which activate CD40, 4-1BB or OX40 were then injected into the tumors in only the right flanks. We observed enhanced destruction of tumors with the co-stimulatory pathway ligand expressing viruses as compared to RP1, particularly of the un-injected tumors. In this experiment only a low dose of virus was used such that with RP1 un-injected tumors only partially responded to the treatment. This was to allow the potential benefits of co-stimulatory pathway ligand expression to be observed. After evaluation of our own data relating to the activity of immune co-stimulatory pathway activating ligands, as well as external clinical data targeting these pathways, we chose to incorporate CD40 ligand and 4-1BB ligand into RP3ImmulyticRPx platform and each of our product candidates, we have filed fivesix patent applications under the Patent Cooperation Treaty, or PCT, and four U.S. provisional applications. FourPCT. All six of these PCT applications have entered the national phase and are in different stages of pending and/or issued in a range of countries, and one is stillcountries. Examination has started in connection with some of the international phase. None of our PCT-derived patent applications or U.S. provisional applicationsnational phase applications. Six US patents have been granted by a patent office. Early stage examination has started onlythe applicable authorities in connection withthe US. Four European patents have been granted by the applicable authorities in the European national phase applications.convincing physicians, insurers and third-party payors ofdemonstrating the safety and efficacy of our product candidates over currently approved therapies;approvaloperation and operationapproval of facilities designed tofor the manufacture biologics.and filling of complex biological products. Our team has already developed a robust and reproducible manufacturing process for our product candidates. We are also developing our product candidates for maximum practicality of use compared with some other oncolytic immunotherapies; in particular, our product candidates do not require refrigeration at –700 Celsius at clinical sites. To date,immunotherapies.sourcing raw materials for use in the cGMP manufacture in accordance with cGMP,and filling of our product candidates for use in our planned early clinical trials. We currently use fetal bovine sera, a commonly used growth supplement, in the initial growth of the mammalian cells used in the production of our viral product candidates and a recombinant human protein to increase the stability of our drug formulation. We are in the process of developinghave established our raw material supply chain for our product candidates as part of the process of establishing and qualifying our own manufacturing facility and intend to enter into commercial supply, collaboration or similar agreements prioras needed to conducting advancedoperate the in-house manufacturing of our product candidates for our clinical trials. We have leased antrials and, if approved, build commercial supply of our products.square-footsquare foot manufacturing facility in Framingham, Massachusetts where weis fully operational. We have completed the process of transferring the manufacturing of RP1, RP2 and RP3 from our third-party contract manufacturer. Comparability analysis of RP1, RP2 and RP3 produced at our Framingham facility with the contract manufacturer material used in our clinical studies is complete. The FDA and some European regulatory agencies have approved the use of material produced at Framingham in ongoing and future clinical trials. We plan to operate our own in-house manufacturing facility in order to secure suppliesour product candidates for pivotallaunch. Construction is underwaylaunch and plannedsupply. The facility has been designed to be substantially complete by the endallow us to produce enough material to cover full global commercialization of 2019. Thisall our current product candidates. The facility is intended to give us control over key aspects of the supply chain for our products and product candidates. We are designing this facility to allow us to produce two different products in parallel and several different products in the same facility.quality.long-lead time to conduct manufacturing campaigns. We believe that having control over the whole manufacturing process will allow us to reduce cycle times and cost of goods for commercial production and to shorten overall timelines for new product candidates in our development pipeline, as well as help us to develop drug formulations or presentations to simplify distribution and/or administration of future oncolytic immunotherapies. We also believe that having a dedicated manufacturing facility will allow us to optimize commercial-scale processes and to develop a suitable workforce capableensure security of supportingsupply to support market launch.hashave been approved for sale. If and when our product candidates receive marketing approval, we intend to commercialize them on our own in the United States and potentially with pharmaceutical or biotechnology partners in other geographies. We currentlyIn January 2023, we announced the strengthening of our executive team with the appointment of Christopher Sarchi as our Chief Commercial Officer and the appointment of Sushil Patel, Ph.D., previously Replimune’s Chief Commercial Officer, to a newly created position of Chief Strategy Officer. Following these appointments, we have nofurther built our in-house sales, marketing or commercialization capabilities with the addition of sales, marketing, trade and have no experiencedistribution, as a company doing such activities. However, we intend to build the necessary capabilities and infrastructure over time following the advancement of our product candidates.well as other related expertise. Clinical data, the size of the opportunity for our product candidates, RP1, RP2 and RP3, and the size of the commercial infrastructure required will influence our commercialization plans and decision making. On 26, 2018, we entered into a Clinical Trial Collaboration and Supply Agreement with BMS. Pursuant to the agreement, BMS will provideis providing to us, at no cost, nivolumab, its anti-PD-1 therapy, for use in combination with RP1 in our ongoing Phase 1/2 clinical trial. Under the agreement, we will sponsor, fund and conduct the clinical trial in accordance with an agreed-upon protocol. Under the agreement, BMS has granted us a non-exclusive, non-transferrable, royalty-free license (with a right to sublicense) under its intellectual property to use nivolumab in the clinical trial and has agreed to supply nivolumab, at itsno cost and for no charge to us, for use in the clinical trial. Both parties will own the study data produced in the clinical trial, other than study data related solely to(a)(i) the completion of the clinical trial, (b)(ii) all related clinical trial data have been delivered to both parties and (c)(iii) the completion of any statistical analyses and bioanalyses contemplated by the clinical trial protocol or any analysis otherwise agreed upon by the parties. The agreement may be terminated by either party (i)(x) in the event of an uncured material breach by the other party, (ii)(y) in the event the other party is insolvent or in bankruptcy proceedings or (iii)(z) for safety reasons. Upon termination, the licenses granted to us to use nivolumab in the clinical trial will terminate. The agreement contains representations, warranties, undertakings and indemnities customary for a transaction of this nature.TableIn April 2019, we entered into a separate agreement with BMS on terms similar to the terms set forth in the agreement described above, pursuant to which BMS will provide, at no cost to us, nivolumab for use in our Phase 1 clinical trial of Contents On 29, 2018, we entered into a Master Clinical Trial Collaboration and Supply Agreement with Regeneron. Pursuant to the agreement we agreed to undertake one or more clinical trials with Regeneron for the administration of our product candidates in combination with cemiplimab, an anti-PD-1 therapy developed by Regeneron, across multiple solid tumor types, thetypes. The first of which, agreed in June 2018, is intended to be our plannedongoing Phase 2 clinical trial oftesting RP1 in combination with cemiplimab versus cemiplimab alone in patients with CSCC. Each clinical trial will be conducted pursuant to an agreed study plan which, among other things, will identify the name of the sponsor and which party will manage the particular study, and include the protocol, the budget and a schedule of clinical obligations. The first study plan related to the Phase 2 clinical trial in CSCC has been agreed. the agreed study plans. Development costs of a particular clinical trial will be split equally. In July 2022, Regeneron informed the Company that the costs of the study have reached the initial budget for the initial study plan of June 2018 and that Regeneron's reimbursement of CERPASS study costs to the Company have completed in the period ending June 30, 2022 in relation to the initial study budget. As a result of this notice from, and the ongoing communications with, Regeneron, we have not recorded any cost-sharing reimbursements from Regeneron in prepaid expenses and other current assets in the consolidated balance sheet or as an offset to research and development expense within the consolidated statement of operations since Regeneron informed us that Regeneron’s reimbursement of CERPASS study costs have completed. The Company does not expect any further reimbursements from Regeneron related to the initial study plan of June 2018. The agreement contains representations, warranties, undertakings and indemnities customary for a transaction of this nature. The agreement also contains certain time-based covenants that restrict us from entering into a third-party arrangement with respect to the use of our product candidates in combination with an anti-PD-1 therapy and that restrict Regeneron from entering into a third-party arrangement with respect to the use of cemiplimab in combination with an HSV-1 based product,virus, in each case, for the treatment of a tumor type that is the subject of a clinical trial to which the covenants apply. Unless otherwise mutually agreed in a future study plan, these covenants are only applicable to our plannedongoing Phase 2 clinical trial in CSCC and expire upon the one-year anniversary of the commencement of the applicable study plan.(ii)and the parties have not entered into a study plan for an additional clinical trial within a period of time after the delivery of the most recent final study report or (iii)(ii) in the event of a material breach.contains representations, warranties, undertakings and indemnities customary for a transaction of this nature.
IND (or equivalent in other countries). Additional preclinical testing, such as animal tests of reproductive adverse events and carcinogenicity, may continue after the IND is submitted.
must review and approve the plan for any clinical trial, informed consent forms, and communications to study subjects before a study commences at that site. An IRB considers, among other things, whether the risks to individuals participating in the trials are minimized and are reasonable in relation to anticipated benefits, and whether the planned human subject protections are adequate. The IRB must continue to oversee the clinical trial while it is being conducted. Special clinical trial ethical considerations also must be taken into account if a study involves children. Once an IND is in effect, each new clinical protocol and any amendments to the protocol must be added to the IND for FDA review and sent to the IRB for approval. If a product candidate is being investigated for multiple intended indications, separate INDs may also be required. Progress reports detailing the results of the clinical trials must also be submitted at least annually to the FDA and the IRB and more frequently if serious adverse events or other significant safety information is found.
trial plus confirmatory evidence or a single large multicenter trial without confirmatory evidence.
data and real-world evidence. Real world evidence may also be used to assist in clinical trial design. For appropriate indications sought through supplemental BLAs, data summaries may provide marketing application support. For genetically targeted products and variant protein targeted products intended to address an unmet medical need in one or more patient subgroups with a serious or life threatening rare disease or condition, the FDA may allow a sponsor to rely upon data and information previously developed by the sponsor or for which the sponsor has a right of reference, that was submitted previously to support an approved application for a product that incorporates or utilizes the same or similar genetically targeted technology or a product that is the same or utilizes the same variant protein targeted drug as the product that is the subject of the application. More recently, a program was established whereby a platform technology that is incorporated within or utilized by an approved drug or biologic product may be designated as a platform technology, provided that certain conditions are met, in which case development and approval of subsequent products using such technology may be expedited.
With the full departure of the United Kingdom from the European Union in January 2021, the United Kingdom is not covered by the European Union Clinical Trial Regulation, in force since January 2022, which
inter alia introduced a portal to streamline cross-border trial applications, and is instead subject to rules equivalent to the previous 2001 EU Clinical Trials Regulation.trial results, including negative or ambiguous results as well as positive findings, are all submitted to the FDA, along with the proposed labeling, as part of a BLA requesting approval to market the product for one or more indications. In most cases, the submission of a BLA is subject to a substantial application user fee. These user fees must be paid at the time of the first submission of the application, even if the application is being submitted on a rolling basis. Fee waivers or reductions are available in certain circumstances. One basis for a waiver of the application user fee is if the applicant employs fewer than 500 employees, including employees of affiliates, the applicant does not have an approved marketing application for a product that has been introduced or delivered for introduction into interstate commerce, and the applicant, including its affiliates, is submitting its first marketing application. Product candidates that are designated as orphan products, which are further described below, are also not subject to application user fees unless the application includes an indication other than the orphan indication.
or provide in an action letter, a summary of the reasons why the FDA did not refer the product candidate to an advisory committee. An advisory committee is typically a panel that includes clinicians and other experts, which review, evaluate, and make a recommendation as to whether the application should be approved and under what conditions. The FDA is not bound by the recommendations of an advisory committee, but it considers such recommendations carefully when making decisions.
Broadly
Biosimilars and exclusivity
The FDA has issued a number of guidance documents outlining its approach for review and approval of biosimilars, including guidance documents on the demonstration of interchangeability and the licensure of biosimilar and interchangeable products for fewer than all of the reference product’s licensed conditions of use.
marketing although the European Union has proposed legislation reducing these exclusivity periods.
condition of approval, such as Phase 4 clinical trials, REMS, and surveillance to assess safety and effectiveness after commercialization.
Many states also regulate the distribution of drug product samples and commercial product.
Adverse event reporting and submission of periodic reports, including annual reports and deviation reports, are required following FDA approval of a BLA. Later discovery of previously unknown problems with a product, including adverse events of unanticipated severity or frequency, or with manufacturing processes, or failure to comply with regulatory requirements, may result in significant regulatory actions. Such actions may include refusal to approve pending applications, license suspension or revocation, imposition of a clinical hold or termination of clinical trials, warning letters, untitled letters, cyber letters, modification of promotional materials or labeling, provision of corrective information, imposition of post-market requirements including the need for additional testing, imposition of distribution or other restrictions under a REMS, product recalls, product seizures or detentions, refusal to allow imports or exports, total or partial suspension of production or distribution, FDA debarment, injunctions, fines, consent decrees, corporate integrity agreements, suspension and debarment from government contracts, refusal of orders under existing government contracts, exclusion from participation in federal and state healthcare programs, restitution, disgorgement, or civil or criminal penalties, including fines and imprisonment, and result in adverse publicity, among other adverse consequences.
There are also a number of additional standards that apply to oncolytic virus products. The FDA has issued various applicable guidance documents on factors that the agency considers during product development including, but not limited to, preclinical assessments; chemistry manufacturing and controls; and long-term patient and clinical study subject follow up and regulatory reporting. In the European Union, while there is no direct equivalent to the separate route for biologics, the EMA issues scientific guidelines on biological medicinal products and the standard Common Technical Document structure is modified for biologicals and plasma-derived products. induce or in return for purchasing, leasing, ordering, or arranging for or recommending the purchase, lease, or order, or the referral to another for the furnishing or arranging for the furnishing of any item or service reimbursable under Medicare, Medicaid, or other federal healthcare programs, in whole or in part. The term suspension and debarment from government contracts, and refusal of orders under existing government contracts. entity no longer needs to have actual knowledge of the statute, or the specific intent to violate it, to have committed a violation. family. Certain payments for clinical trials are included within the ambit of this law. CMS makes the reported information publicly available. to the United States to ensure that European Union standards of data privacy will be applied to such data. government programs may result in lower reimbursement for our product candidates or exclusion of our product candidates from coverage. In addition, government programs like Medicaid include substantial penalties for increasing commercial prices over the rate of state and may include a variety of risk share agreements with payors. biopharmaceutical industry has been a particular focus of these efforts and has been significantly affected by major legislative initiatives. similar reduction in payments from private payors. This rule has now been rescinded, but similar programs have been described in recent legislative proposals. The cost of biopharmaceuticals continues to generate substantial governmental and third-party payor interest. We expect that the biopharmaceutical industry will experience pricing pressures due to the trend toward managed healthcare, the increasing influence of managed care organizations and additional legislative proposals. Our results of operations could be adversely affected by current and future healthcare reforms. factors of a BLA or other comparable submission in foreign jurisdictions or to obtain regulatory approval in the United States or elsewhere; Moreover, the development of our product candidates for use in combination with another product or product candidate may present challenges that are not faced for single agent product candidates. about the product manufacturing process to, and inspection or remote regulatory assessment of manufacturing facilities and clinical trial sites by, the regulatory authorities. If we do not receive approval from the FDA and comparable foreign regulatory authorities for any of our product candidates, we will not be able to commercialize such product candidates in the United States or in other jurisdictions. If significant delays in obtaining approval for and commercializing our product candidates occur in any or associated with RP1 or our other product candidates as they continue through or enter clinical development. Serious adverse events or Regulatory approval by the FDA or comparable foreign regulatory authorities is limited to those specific indications and conditions for which approval has been granted, and we may be subject to substantial fines, criminal penalties, injunctions, or other enforcement actions if we are determined to be promoting the use of our products for unapproved or and, if we do not successfully defend against such actions, those actions may have a material adverse effect on our business, financial condition, results of operations, stock price and prospects. post approval. or comparable foreign regulatory consuming and could delay any product launch. Developing our sales capabilities may also divert resources and management attention away from product development. manner, which may prevent us from completing our clinical trials or commercializing our product candidates on a timely or profitable basis, if at all. connection with competitor therapies, could result in a decrease in demand for We will require Risks related to intellectual property their work for us, disputes may arise between us and those third parties as to the rights in related inventions. business, financial condition, results of operations, stock price and prospects. Competitors may infringe any future licensed patents or any patent we own in the future or misappropriate or otherwise violate our intellectual property rights. We may also be required to defend against claims of infringement and our licensed patents and any patents we own in the future may become involved in priority or other intellectual property related disputes. To counter infringement or unauthorized use, litigation may be necessary in the future to enforce or defend our intellectual property rights, to protect our trade secrets or to determine the validity and scope of our own intellectual property rights or the proprietary rights of others. Furthermore, because of the substantial amount of discovery required in connection with intellectual property litigation in the United States, there is a risk that some of our trade secrets, know-how, or proprietary or confidential information could be compromised by disclosure during this type of litigation. There could also be public announcements of the results of hearings, motions or other interim proceedings or developments in any such proceedings. If securities analysts or investors perceive these results to be negative, it could have a material adverse effect on the price of shares of our common stock. Any of the foregoing may have a material adverse effect Risks related to manufacturing and our reliance on third parties Additionally, we are subject to specific risks associated with our collaboration partners, including possible discrepancies as to the timing, nature and the extent of development plans, contract interpretations, and the costs and allocation of costs related to the conduct of our clinical trials. If we and any collaboration partner are unable to agree or fail to perform our respective obligations or effectively manage our relationship, our clinical trials performed under such collaboration could incur additional costs, be delayed or could result in costly or time-consuming legal proceedings that could have an adverse effect on a collaboration or on our business. development program or one or more of our other candidates or if it withdraws any such approval in the future, we may need to find alternative manufacturing facilities, which would significantly impact our ability to develop, obtain regulatory approval for or market our product candidates, if approved. supply, including our own manufacturing facility. In timeline, product candidate supplies and, if approved, our commercial product supplies. If we experience any unanticipated shortages of key raw materials, or other difficulties related to our raw material supply, we may not be able to effectively manage our ongoing manufacturing timelines and costs which may negatively affect our product development schedule and our ability to provide clinical trial supplies to patients in our clinical trials, and if approved, commercial product supplies. We believe we have sufficient insurance coverage in place for our business operations. However, our insurance coverage may not reimburse us or may not be sufficient to reimburse us for any expenses or losses we may suffer. Moreover, insurance coverage is becoming increasingly expensive and, in the future, we may not be able to maintain insurance coverage at a reasonable cost or in sufficient amounts to protect us against losses due to liability. We intend to expand our insurance coverage to include the sale of commercial products if we obtain FDA or comparable foreign regulatory approval for our product candidates in development, but we may be unable to obtain commercially reasonable product liability insurance for any products approved for marketing, or at all. Failure to obtain and retain sufficient product liability insurance at an acceptable cost could prevent or inhibit the commercialization of products we develop. If we fail to comply with federal and state healthcare laws, including fraud and abuse and health and other information privacy and security laws, we could face substantial penalties and our business, financial condition, results of operations, stock price and prospects will be materially harmed. We are subject to new legislation, regulatory proposals and healthcare payor initiatives that may increase our costs of compliance, and adversely affect our ability to market our products, obtain collaborators, and raise capital. and we are not successful in defending ourselves or asserting our rights, those actions could have a significant impact on our business, financial condition, results of operations, stock price and prospects, including the imposition of significant fines or other sanctions. perceived failure to comply with such obligations could lead to government enforcement actions (which could include civil or criminal penalties), private litigation and/or adverse publicity and could negatively affect our operating results and business. foreign jurisdictions at significant expense. Our future financial performance and our ability to commercialize RP1 and our other product candidates will depend, in part, on our ability to effectively manage any future growth, which would impose significant additional responsibilities on members of management and personnel. increased turnover. If we fail to establish and maintain proper and effective internal control over financial reporting. We may discover weaknesses in our system of internal financial and accounting controls and procedures that could result in a material misstatement of our consolidated financial statements. Our internal control over financial reporting will not prevent or detect all errors and all fraud. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that misstatements due to error or fraud will not occur or that all control issues and instances of fraud will be detected. and general risks common stock, our stockholders may not be able to sell their common stock at or above the price at which such stockholder acquired our common stock or at the time that they would like to sell. use as a basis for valuing these awards change over time, including, our underlying stock price and stock price volatility, the magnitude of the expense that we must recognize may vary significantly. common stock could decline substantially. Such a stock price decline could occur even when we have met any previously publicly stated revenue and/or earnings guidance we may provide. Sales of a substantial number of shares of our common stock in the public market could cause our stock price to fall. 2026. In October 2021 and March 2023, the Company entered into additional agreements to lease approximately 2,951 and 2,058 square feet, respectively, of research and Consolidated Statement of Operations Data: Operating expenses: Research and development General and administrative Total operating expenses Loss from operations Other income: Research and development incentives Investment income Change in fair value of warrant liability Other income (expense), net Total other income (expense), net Net loss Net loss attributable to common stockholders Net loss per share attributable to common stockholders—basic and diluted(1) Weighted average common shares outstanding—basic and diluted(1) Consolidated Balance Sheet Data: Cash, cash equivalents and short-term investments Working capital(1) Total assets Convertible preferred stock Total stockholders' equity (deficit) Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act. We have based these forward-looking statements on our current expectations and projections about future events. The following information and any forward-looking statements should be considered in light of factors discussed elsewhere in this Annual Report on Form 10-K, particularly including those risks identified in Part I, Item 1A “Risk factors” and our other filings with the SEC. the forward-looking statements. selling, general and administrative support for our operations. To date, we have incurred significant operating losses and we have financed our operations primarily with proceeds from the sale of equity years and our ability to generate product revenue sufficient to achieve profitability will depend on the successful development and commercialization of one or more of our product candidates. ” RP1 Unallocated research and development expenses Total research and development expenses Research and development activities are central to our business model. Product candidates in later stages of clinical development generally have higher development costs than those in earlier stages of clinical development, primarily due to the increased size and duration of later-stage clinical trials. We expect that our research and development expenses will continue to increase for the foreseeable future as we continue enrollment and initiate additional clinical trials development program provided by the United Kingdom tax relief program, such that a percentage of up to 14.5% of our qualifying research and development expenditures are reimbursed by the United Kingdom government, and such incentives are reflected as other income. 2022 Operating expenses: Research and development General and administrative Total operating expenses Loss from operations Other income (expense): Research and development incentives Investment income Change in fair value of warrant liability Other income (expense), net Total other income (expense), net Net loss Direct research and development expenses by program: RP1 Unallocated research and development expenses: Personnel related (including stock-based compensation) Other Total research and development expenses Research and development expenses for the year ended March 31, marketing programs, advertising and market research. Operating expenses: Research and development General and administrative Total operating expenses Loss from operations Other income (expense): Research and development incentives Investment income Change in fair value of warrant liability Other income (expense), net Total other income (expense), net Net loss Direct research and development expenses by program: RP1 Unallocated research and development expenses: Personnel related (including stock-based compensation) Other Total research and development expenses Net cash used in operating activities Net cash used in investing activities Net cash provided by financing activities Effect of exchange rate changes on cash and cash equivalents Net increase in cash, cash equivalents and restricted cash During the year ended March 31, expenditures. options. options. calendar year 2025. ” conduct our business, and may require the issuance of warrants, which could potentially dilute Manufacturing commitments(1) Operating lease commitments(2) Total this balance is due within one year. with an agreed-upon protocol. In January 2020, this agreement was expanded to cover an additional cohort of 125 patients with anti-PD-1 failed melanoma. CSCC. and liabilities in our consolidated financial statements. We base our estimates on historical experience, known trends and events and various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. We evaluate our estimates and assumptions on an ongoing basis. Our actual results may differ from these estimates under different assumptions or conditions. stock options and restricted stock units. We measure such stock-based awards operations. revised accounting standards when they are required to be adopted by public companies that are not emerging growth companies. communicated to a company’s management, including Information financial statements. statement schedules. exhibits. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion. Assets Current assets: Cash and cash equivalents Short-term investments Research and development incentives receivable Prepaid expenses and other current assets Total current assets Property and equipment, net Restricted cash Total assets Liabilities, Convertible Preferred Stock and Stockholders' Equity (Deficit) Current liabilities: Accounts payable Accrued expenses and other current liabilities Total current liabilities Deferred rent, net of current portion Warrant liability Financing obligation Total liabilities Commitments and contingencies (Note 13) Convertible preferred stock (Series Seed, A and B), $0.001 par value; 0 and 1,975,968 shares authorized as of March 31, 2019 and 2018, respectively; 0 and 1,925,968 shares issued and outstanding as of March 31, 2019 and 2018, respectively Stockholders' Equity (Deficit) Common stock, $0.001 par value; 150,000,000 and 27,314,288 shares authorized (inclusive of 0 and 26,258 shares of common A stock) as of March 31, 2019 and 2018, respectively; 31,656,950 and 5,007,485 shares issued and outstanding (inclusive of 0 and 26,258 shares of common A stock) as of March 31, 2019 and 2018, respectively Additional paid-in capital Accumulated deficit Accumulated other comprehensive loss Total stockholders' equity (deficit) Total liabilities, convertible preferred stock and stockholders' equity (deficit) The accompanying notes are an integral part of these consolidated financial statements. Operating expenses: Research and development General and administrative Total operating expenses Loss from operations Other income (expense): Research and development incentives Investment income Change in fair value of warrant liability Other income (expense), net Total other income (expense), net Net loss Net loss attributable to common shareholders Net loss per share attributable to common shareholders, basic and diluted Weighted average common shares outstanding—basic and diluted The accompanying notes are an integral part of these consolidated financial statements. Net loss Other comprehensive income (loss): Foreign currency translation gain (loss) Net unrealized gain (loss) on short-term investments, net of tax Comprehensive loss The accompanying notes are an integral part of these consolidated financial statements. Balances as of March 31, 2017 Issuance of series B convertible preferred stock, net of $198 issuance costs Issuance of common A stock Foreign currency translation adjustment Unrealized loss on short-term investments, net of tax Stock options in exchange for consulting services Stock-based compensation expense Net loss Balances as of March 31, 2018 Conversion of convertible preferred stock into common stock upon closing of initial public offering Conversion of convertible preferred stock warrants into common stock warrants Repurchase of class A common stock upon closing of initial public offering Issuance of common stock upon closing of initial public offering, net of issuance costs and underwriter fees of $9,935 Stock-based compensation expense Exercise of stock options Unrealized gain on short-term investments Foreign currency translation adjustment Net loss Balances as of March 31, 2019 The accompanying notes are an integral part of these consolidated financial statements. Cash flows from operating activities: Net loss Adjustments to reconcile net loss to net cash used in operating activities: Stock-based compensation expense Depreciation and amortization Change in fair value of warrant liability Stock options in exchange for consulting services Net amortization of premiums and discounts on short-term investments Non-cash rent expense Changes in operating assets and liabilities: Research and development incentives receivable Prepaid expenses and other current assets Accounts payable Accrued expenses and other current liabilities Deferred rent Net cash used in operating activities Cash flows from investing activities: Purchases of property, plant and equipment Purchase of short-term investments Proceeds from sales and maturities of short-term investments Net cash used in investing activities Cash flows from financing activities: Proceeds from issuance of series A convertible preferred stock Proceeds from issuance of series B convertible preferred stock, net of issuance costs Proceeds from issuance of common stock in initial public offering, net of underwriting fees and discounts Exercise of stock options Payment of issuance costs Net cash provided by financing activities Effect of exchange rate changes on cash, cash equivalents and restricted cash Net increase in cash, cash equivalents and restricted cash Cash, cash equivalents and restricted cash at beginning of year Cash, cash equivalents and restricted cash at end of year Supplemental disclosure of non-cash investing and financing activities: Net unrealized gain (loss) on short term investments Purchases of property and equipment included in accounts payable Conversion of preferred stock into common stock Conversion of convertible preferred stock warrants into common stock warrants Amounts capitalized under build-to-suit lease transaction The accompanying notes are an integral part of these consolidated financial statements. (Ireland) Limited. Basis of presentation experienced any losses on such accounts. cash The two years. The Company discounted cash flows. To date, the Company has not recorded any impairment losses on long-lived assets. Upfront payments for materials and supplies acquired for particular research and development activities that have no alternative future use in other research and development projects or otherwise, and therefore have no separate economic value, are expensed as research and development costs at the time the costs are incurred. Stock-based compensation Comprehensive loss Basic net income (loss) per adopted accounting pronouncements Assets Money market funds Commercial paper US Government Agency bonds US Treasury bonds Corporate debt securities Assets Money market funds Commercial paper Corporate debt securities Liabilities: Warrant liability The underlying securities held in the money market funds held by the Company are all government backed securities. During the years ended March 31, Balance at March 31, 2018 Change in fair value Conversion of convertible preferred stock warrant into common stock warrant Balance at March 31, 2019 Commercial paper US Government agency bonds US Treasury bonds Corporate debt securities Commercial paper Corporate debt securities 5.Property, plant and equipment, net Leasehold improvements Construction in progress Build-to-suit lease asset Office equipment Computer equipment Plant and laboratory equipment Less: Accumulated depreciation and amortization Depreciation and amortization expense was Accrued research and development costs Accrued compensation and benefits costs Accrued professional fees Deferred rent Other Series seed preferred stock Series A preferred stock Series B preferred stock 2023. any outstanding awards under the 2015 Plan have continued, and will continue with their original terms. The Company concluded that the cancellation of the 2015 Plan and issuance of replacement awards under the 2017 Plan was a modification with no change in the material rights and preferences and therefore no recorded change in the fair value of each respective award. employees, officers, members of the board of directors, advisors, and consultants of the Company typically vest over four years. In 2021 the board of directors initiated the award of restricted stock units ("RSUs"), under the 2018 Plan in addition to stock option awards available as part of the Company’s equity incentive for employees, officers, advisors and consultants of the Company. The RSUs typically vest over four approximately equal annual installments with the first such installment occurring on a designated vesting date that is approximately on the one year anniversary date of the date of grant and the subsequent installments occurring on the subsequent three annual anniversaries of the designated vesting date. The Risk-free interest rate Expected term (in years) Expected volatility Expected dividend yield Stock option valuation Outstanding as of March 31, 2018 Granted Exercised Cancelled Outstanding as of March 31, 2019 Options exercisable as of March 31, 2018 Options exercisable as of March 31, 2019 Stock-based compensation Research and development General and administrative As of March 31, Numerator: Net loss attributable to common stockholders Denominator: Weighted average common shares outstanding, basic and diluted Net loss per share attributable to common stockholders, basic and diluted The Options to purchase common stock Convertible preferred stock (as converted to common stock) Warrants to purchase convertible preferred stock (as converted to common stock) 12.Significant agreements In January 2020, this agreement was expanded to cover an additional cohort of 125 patients with anti-PD-1 failed melanoma. nivolumab. Inc. that restrict Regeneron from entering into a third-party arrangement with respect to the use of cemiplimab in combination with an HSV-1 virus, in each case, for the treatment of a tumor type that is the subject of a clinical trial to which the covenants apply. Unless otherwise mutually agreed in a future study plan, these covenants are only applicable to our ongoing Phase 2 clinical trial in CSCC. sheet, respectively. single lease component. Rent expense Amounts capitalized as build-to-suit lease 2022 as follows: 2020 2021 2022 2023 2024 2025 Thereafter 2023. 2022. proceedings plans United States Foreign (United Kingdom) the realization of such losses. U.S. Federal statutory income tax rate State taxes, net of federal benefit Research and development expenses Remeasurement of deferred taxes as a result of tax reform Foreign tax rate differential Change in valuation allowance Other Effective income tax rate Components of the Deferred tax assets: Foreign net operating loss carryforwards Federal net operating loss carryforwards State net operating loss carryforwards Capitalized start-up costs Stock compensation Accrued expenses Other Total deferred tax assets Deferred tax liabilities: Property, plant and equipment Total deferred tax liabilities Valuation allowance Net deferred tax assets As of March 31, does not reflect uncertain tax positions in the U.S. and offsetting positions in the U.K. related to the transfer pricing arrangement. carryforwards that can be utilized annually to offset future taxable income and tax liabilities, respectively. The Company has not completed a study to assess whether a change of ownership has occurred, or whether there have been multiple ownership changes since its formation, due to the significant cost and complexity associated with such a study. Any limitation may result in expiration of a portion of the net operating loss carryforwards before utilization. Valuation allowance as of beginning of year Increases recorded to income tax provision Remeasurement of deferred taxes as a result of tax reform Valuation allowance as of end of year positions. Although, carryforward attributes may still be adjusted upon examination if they either have been or will be used in a future period. information United States United Kingdom Operating expenses Net loss Net loss per share attributable to common shareholders, basic and diluted Operating expenses Net loss Net loss per share attributable to common shareholders, basic and diluted manufacturer'smanufacturer’s tests performed on the lot. The FDA may also perform certain confirmatory tests on lots of some products before releasing the lots for distribution by the manufacturer."remuneration"“remuneration” has been interpreted broadly to include anything of value. The Anti-Kickback Statute has been interpreted to apply to arrangements between biopharmaceutical manufacturers on one hand and prescribers, purchasers, formulary managers, and beneficiaries on the other, as well as to free trial and starter prescriptions provided through pharmacies. There are certain statutory exceptions and regulatory safe harbors protecting some common activities from prosecution. HHS recently promulgated a regulation that is effective in two phases. First, the regulation excludes from the definition of “remuneration” limited categories of (a) PBM rebates or other reductions in price to a plan sponsor under Medicare Part D or a Medicaid Managed Care Organization plan reflected in point-of sale reductions in price and (b) PBM service fees. Second, the regulation expressly provides that rebates to plan sponsors under Medicare Part D either directly to the plan sponsor under Medicare Part D, or indirectly through a pharmacy benefit manager will not be protected under the anti-kickback discount safe harbor. Recent legislation has delayed implementation of the aforementioned regulation until January 1, 2032. The exceptions and safe harbors are drawn narrowly, and practices that involve remuneration that may be alleged to be intended to induce prescribing, purchases, or recommendations may be subject to scrutiny if they do not qualify for an exception or safe harbor. Failure to meet all of the requirements of a particular applicable statutory exception or regulatory safe harbor does not make the conduct per se illegal under the Anti-Kickback Statute. Instead, the legality of the arrangement will be evaluated on a case-by-case basis based on a cumulative review of all of the facts and circumstances. Several courts have interpreted the statute'sstatute’s intent requirement to mean that if any one purpose of an arrangement involving remuneration is to induce referrals of federal healthcare covered business, including purchases of products paid by federal healthcare programs, the statute has been violated. The ACA modified the intent requirement under the Anti-Kickback Statute to a stricter standard, such that a person or entity no longer needs to have actual knowledge of the statute or specific intent to violate it in order to have committed a violation. In addition, the ACA also provided that a violation of the federal Anti-Kickback Statute is grounds for the government or a whistleblower to assert that a claim for payment of items or services resulting from such violation constitutes a false or fraudulent claim for purposes of the federal civil False Claims Act."any“any request or demand"demand” for money or property presented to the U.S. government. The civil False Claims Act has been used to assert liability on the basis of kickbacks and other improper referrals, improperly reported government pricing metrics such as Best Price or Average Manufacturer Price, improper use of Medicare provider or supplier numbers when detailing a provider ofproduct'sproduct’s label, and allegations as to misrepresentations with respect to theproducts, contract requirements and services rendered. In addition, private payers have been filingfiled follow-on lawsuits alleging fraudulent misrepresentation, although establishing liability and damages in these cases is more difficult than under the civil False Claims Act.misrepresentation. Intent to deceive is not required to establish liability under the civil False Claims Act. Civil False Claims Act actions may be brought by the government or may be brought by private individuals on behalf of the government, called "qui tam"“qui tam” actions. If the government decides to intervene in a qui tam action and prevails in the lawsuit, the individual will share in the proceeds from any fines or settlement funds. If the government declines to intervene, the individual may pursue the case alone. The civil False Claims Act provides for treble damages and a civil penalty for each false claim, such as an invoice or pharmacy claim for reimbursement, which can aggregate into millions of dollars. For these reasons, since 2004, civil False Claims Act lawsuits against biopharmaceutical companies have increased significantly in volume and breadth, leading to several substantial civil and criminal settlements, as much as $3.0 billion, regarding certain sales practices and promoting off label uses. Civil False Claims Act liability may further be imposed for known Medicare or Medicaid overpayments for example, overpayments caused by understated rebate amounts, that are not refunded within 60 days of discovering the overpayment, even if the overpayment was not caused by a false or fraudulent act. In addition, conviction or civil judgment for violating the civil False Claims Act may result in exclusion from federal health care programs, andfraudulent and, unlikefraudulent. Unlike the civil False Claims Act, the criminal False Claims Act requires proof of intent to submit a false claim.In addition, therapeutics covered by Medicaid are subject to an additional inflation penalty which can substantially increase rebate payments. For products approved under a BLA (including biosimilars), or an NDA, the Veterans Health Care Act, or VHCA, requires manufacturers to calculate and report to the Department Veterans Administration,Affairs, or VA, a different price called the Non-Federal Average ManufacturingManufacturer Price, which is used to determine the maximum price that can be charged to certain federal agencies, referred to as the Federal Ceiling Price, or FCP. Like the Medicaid rebate amount, the FCP includes an inflation penalty. A Department of Defense regulation requires manufacturers to provide this discount on therapeutics dispensed by retail pharmacies when paid by the TRICARE Program. All of these price reporting requirements create risk of submitting false information to the government, and potential FCA liability.manufacturer'smanufacturer’s reported Medicaid pricing information. The 340B program has its own regulatory authority to impose sanctions for non-compliance and adjudicate overcharge claims against manufacturers by the purchasing entities. The ACA further created newrequirements for reporting, by applicablePhysician Payments Sunshine Act and its implementing regulations, manufacturers of covered therapeutics,biologics for which payment is available under Medicare, Medicaid, or the Children’s Health Insurance Program (with certain exceptions) must make annual reports to CMS regarding payments and other transfers of value made to or at the request of covered recipients, such as, but not limited to, physicians, physician assistants, nurse practitioners, clinical nurse specialists, and certified registered nurse anesthetists and teaching hospitals, andas well as ownership and investment interests held by physicians and other healthcare providers and their immediate family members. certain requirements on covered entities relating to the privacy, security, and transmission of certain individually identifiable health information known as protected health information. Among other things, the HITECH Act, through its implementing regulations, makes HIPAA'sHIPAA’s security standards and certain privacy standards directly applicable to business associates, defined as a person or organization, other than a member of a covered entity'sentity’s workforce, that creates, receives, maintains, or transmits protected health information on behalf of a covered entity for a function or activity regulated by HIPAA. The HITECH Act also strengthened the civil and criminal penalties that may be imposed against covered entities, business associates, and individuals, and gave state attorneys general new authority to file civil actions for damages or injunctions in federal courts to enforce the federal HIPAA laws and seek attorneys'attorney’s fees and costs associated with pursuing federal civil actions. In addition, other federal and state laws, such as the California Consumer Privacy Act, may govern the privacy and security of health and other information in certain circumstances, many of which differ from each other in significant ways and may not be preempted by HIPPA,HIPAA, thus complicating compliance efforts.manufacturers'manufacturers’ use of prescriber-identifiable data. Certain states also require implementation of commercial compliance programs and compliance with the pharmaceutical industry'sindustry’s voluntary compliance guidelines and the applicable compliance guidance promulgated by the federal government, or otherwise restrict payments or the provision of other items of value that may be made to healthcare providers and other potential referral sources; impose restrictions on marketing practices; or require manufacturers to track and report information related to payments, gifts, and other items of value to physicians and other healthcare providers. Recently, states have enacted or are considering legislation intended to make drug prices more transparent and deter significant price increases. These laws may affect our future sales, marketing, and other promotional activities by imposing administrative and compliance burdens.provider'sprovider’s acquisition cost. In the United States, it is also common for government and private health plans to use coverage determinations to leverage rebates from manufacturers in order to reduce the plans'plans’ net costs. These restrictions and limitations influence the purchase of healthcare services and products and lower the realization on manufacturers'manufacturers’ sales of prescription therapeutics. Third-party payors are developing increasingly sophisticated methods of controlling healthcare costs. Third-party payors may limit coverage to specific therapeutic products on an approved list, or formulary, which might not include all of the FDA-approved products for a particular indication or might impose high copayment amounts to influence patient choice. Third-party payors also control costs by requiring prior authorization or imposing other dispensing restrictions before covering certain products and by broadening therapeutic classes to increase competition. Third-party payors are increasingly challenging the price and examining the medical necessity and cost-effectiveness of medical products and services, in addition to their safety and efficacy. Absent clinical differentiators, third-party payors may treat products as therapeutically equivalent and base formulary decisions on net cost. To lower the prescription cost, manufacturers frequently rebate a portion of the prescription price to the third-party payors. Recently, purchasers and third-party payors have begun to focus on value of new therapeutics and sought agreements in which price is based on achievement of performance metrics.inflation whichinflation. All of these conditions can affect realization and return on investment.payor'spayor’s decision to provide coverage for a product does not imply that an adequate reimbursement rate will be approved. Adequate third-party reimbursement may not be available to enable us to maintain price levels sufficient to realize anstate.which covers products administered by physicians in an outpatient setting, maydrugs and biologicals will be undergoing a significant change in payment rates. CMS has proposed a rule that would compensate physicians for therapeutics they administer based on a smaller mark-up overprice that reflects the manufacturer's Average Sales Price and a fixed fee, which is intended to incentivize physicians to purchase and bill Medicare for lower priced products. The proposed rule would also authorize CMS to establish methods for determining comparative cost effectiveness and seek value-based discounts Similarly, the American Recovery and Reinvestment Actlowest per capita Gross Domestic Product-adjusted (GDP-adjusted) price of 2009 established funding for the federal government to compare the effectiveness of different treatments for the same illness. The Agency for Healthcare Research and Quality conducts patient-centered outcome research, develops evidence-based tools and resources on medication therapies, maintains databases of health care related data and standards, and issues periodic reports on specific studies. Although the resultsany non-U.S. member country of the comparative effectiveness studies are not intended to mandate coverage policiesOrganization for public or private payors, itEconomic Co-operation and Development (OECD) with a GDP per capita that is not clear what effect, if any,at least sixty percent of the organization's research has had or will have on the sales of any product, if any such product or the condition that it is intended to treat is the subject of a study. It is also possible that comparative effectiveness research demonstrating benefitsU.S. GDP per capita. Any reduction in reimbursement from Medicare and other government programs may result in a competitor's product could adversely affect the sales of our product candidates. If third-party payors do not consider our product candidates to be cost-effective compared to other available therapies, they may not cover our product candidates, once approved, as a benefit under their plans or, if they do, the level of payment may not be sufficient to allow us to sell our products on a profitable basis.manufacturers'manufacturers’ Medicaid rebate liability. The law also expanded the 340B discount program that mandates discounts to certain hospitals, community centers, and other qualifying providers, by expanding the categories of entities eligible to purchase under the program, although, withprogram. In addition, the exception of children's hospitals, these newly eligible entities are ineligible to receive discountedACA authorized civil monetary penalties for violating 340B pricing requirements, and regulations implementing this authority became effective on orphan therapeutics used to treat an orphan disease or condition.January 1, 2019. The ACA revised the definition of "average“average manufacturer price"price”, or AMP, for reporting purposes, which generally increased the amount of Medicaid rebates to states and created a separate AMP for certain categories of administered therapeutics provided in non-retail outpatient settings. The law additionally extended manufacturer'smanufacturer’s Medicaid rebate liability to covered therapeutics dispensed to patients enrolled in Medicaid managed care organizations and increased the statutory minimum rebates a manufacturer must pay under the Medicaid Drug Rebate program. The revisions to the AMP definition and Medicaid rebate formula can have the further effect of increasing the required 340B discounts. Further, the ACA requiresrequired manufacturers of covered therapeutics to pay 50%mandatory Medicare Part D coverage gap rebates, and the Bipartisan Budget Act of 2018, increased the required percentage to 70% of the pharmacy charge to Medicare Part D patients while they are in the coverage gap, and this percentage was increased to 70% by the Bipartisan Budget Act of 2018.gap. Finally, the ACA imposes a significant annual fee on companies that manufacture or import branded prescription therapeutic products. Substantial new provisions affecting compliance have also been enacted through the ACA and otherwise, including the reporting of therapeutic sample distribution, which may require us to modify our business practices with healthcare practitioners. Although the ACA was recently amended to repeal the individual insurance mandate, and efforts to repeal and replace portions of the law may continue, it is likely that pressure on biopharmaceutical pricing, especially under the Medicare program, will continue, and may also increase our regulatory burdens and operating costs. Moreover, in the coming years, additional changes could be made to governmental healthcare programs that could significantly impact the success of our product candidates.candidates. Recently, CMS issued regulations reducing Medicare Part B payments to certain hospitals for outpatient therapeutics purchased under the 340B program.legislation'slegislation’s automatic reductions to several government programs. These reductions include aggregate reductions to Medicare payments to providers of up to 2% per fiscal year. The Bipartisan Budget Act of 2018 retained the federal budget "sequestration"“sequestration” Medicare payment reductions of 2%, andat present that reduction has been extended it through 2027.2030. The American Taxpayer Relief Act of 2012 further reduced Medicare payments to several categories of healthcare providers and increased the statute of limitations period for the government to recover overpayments to providers from three to five years. These and other healthcare reform initiatives may result in additional reductions in Medicare and other healthcare funding, which could have a material adverse effect on our financial operations. We expect that additional state and federal healthcare reform measures will be adopted in the future, any of which could limit the amounts that federal and state governments will pay for healthcare products and services, which could further limit the prices we are able to charge, or the amounts of reimbursement available, for our product candidates once they are approved. The Bipartisan Budget Act also extended Manufacturer responsibility for prescription costs in the Medicare Part D coverage gap to biosimilars, which had previously been exempt.business.business or obtaining an improper advantage. The FCPA also obligates companies whose securities are listed in the United States to comply with books and records an accounting control provisions requiring the company to maintain books and records that accurately and fairly reflect all transactions of the corporation, including international subsidiaries, and to devise and maintain an adequate system of internal accounting controls for international operations. Activities that violate the FCPA, even if they occur wholly outside the United States, can result in criminal and civil fines, imprisonment, disgorgement, oversight by compliance monitors, and suspension and debarment from government contracts, and refusal of orders under existing government contracts.TableBackground on certain of Contentsour target indicationsFactors"Management's Discussion“Management’s discussion and Analysisanalysis of Resultsresults of Operationsoperations and Financial Condition."financial condition.” If any of the following risks are realized, our business, financial condition, operating results and prospects could be materially and adversely affected. In that event, the price of our common stock could decline, and you could lose part or all of your investment. The risks and uncertainties described below are not the only ones we face. Additional risks and uncertainties not presently known to us or that we currently believe to be immaterial may also adversely affect our business. early development. We have not generated any revenues from the sale of products and do not expect to do so for at least the next several years.years, if ever. Our lead product candidate, RP1, and any other product candidates will require extensive preclinical and/or clinical testing and regulatory approval prior to commercial use. Our research and development efforts may not be successful. Even if our clinical development efforts result in positive data, our product candidates may not receive regulatory approval or be successfully introduced and marketed at prices that would permit us to operate profitably.We currently have only one product candidate, RP1, in clinical development. A failure of this product candidate in clinical development would adversely affect our business and may require us to discontinue development of other product candidates based on the same therapeutic approach. RP1 is our only clinical development-stage product candidate. Although we have other product candidates, RP2 and RP3, in preclinical development and we intend to develop additional product candidates in the coming years, it will take additional investment and time for such product candidates to reach the same stage of development as RP1, and there can be no assurance that they will ever do so. Since all of the product candidates in our current pipeline are based on our Immulytic platform, if RP1 fails in development as a result of any underlying problem with our Immulytic platform, then we may be required to discontinue development of all product candidates that are based on our therapeutic approach. If we were required to discontinue development of RP1 or our other product candidates, or if any of them were to fail to receive regulatory approval or achieve sufficient market acceptance, we could be prevented from or significantly delayed in achieving profitability. We can provide no assurance that we would be successful at developing other product candidates based on an alternative therapeutic approach. Our lead product candidate, RP1, is in an ongoing Phase 1/2 clinical trial alone and in combination with nivolumab, and we expect to initiate a Phase 2 clinical trial of RP1 in combination with cemiplimab in CSCC in August 2019. While our other product candidates, RP2 and RP3, are in pre-clinical development, subject to regulatory clearance, we expect RP2 to begin a Phase 1/2 clinical trial in the third quarter of 2019 and expect RP3 to enter clinical development in 2020. Our productcandidates will require preclinical and clinical trials before we can submit a marketing application to the applicable regulatory authorities.later-stagelater stage clinical trials. Our product candidates may not perform as we expect, may ultimately have a different or no impact on tumors, may have a different mechanism of action than we expect in humans, and may not ultimately prove to be safe and effective.regulators or institutional review boards, or IRBs, may not authorize us or our investigators to commence a clinical trial, conduct a clinical trial at a prospective trial site, or amend trial protocols, or may require that we modify or amend our clinical trial protocols;•we may experience delays in reaching, or fail to reach, agreement on acceptable clinical trial contracts or clinical trial protocols with prospective trial sites and/or CROs;•clinical trials of our product candidates may produce negative or inconclusive results, or our studies may fail to reach the necessary level of statistical significance, and we may decide, or regulators may require us, to conduct additional clinical trials or abandon product development programs;•Biologics License Application, or BLA or equivalent authorizations from comparable foreign regulatory authorities;inadequate;programs;candidate'scandidate’s benefits do not outweigh its safety risks;ofincluding our product candidatesregistration directed or registration intended trials may not be sufficient to the satisfaction of the FDA or comparable foreign regulatory authorities to support the submissioncandidates;candidates or necessary inspections before an approval can be issued may be delayed; andmaywill be required to obtain additional funds to complete clinical trials and prepare for possible commercialization of our product candidates. We do not know whether any preclinical tests or clinical trials beyond what we currently have planned will be required, will begin as planned, will need to be restructured, or will be completed on schedule, or at all. Significant delays relating to any preclinical or clinical trials also could shorten any periods during which we may have the exclusive right to commercialize our product candidates or allow our competitors to bring products to market before we do and impair our ability to successfully commercialize our product candidates and may harm our business and results of operations. In addition, many of the factors that cause, or lead to, delays in clinical trials may ultimately lead to the denial of marketing approval of any of our product candidates. If any of these occur, our business, financial condition, results of operations, stock price and prospects may be materially harmed.are intended tomay be administered in combination with checkpoint blockade drugs, a class of drugs that are intended to stop tumor cells from "switching off"“switching off” an immune system attack against themselves. We have entered into an agreementagreements with BMS for the supply of nivolumab, its anti-PD-1 therapy, for use in connection with our currentongoing IGNYTE Phase 1/2 trials with RP1, our Phase 1/2 clinical trial with RP1.RP2 and our Phase 1 and Phase 2 clinical trials with RP3 where we decide to use nivolumab. We have also entered into a clinical collaboration agreement with Regeneron, which includes the supply of cemiplimab, its anti-PD-1 therapy, for clinical trials conducted thereunder. Additionally, our signal finding studies in HCC and CRC are being developed in combination with atezolizumab and bevacizumab under the Regeneron agreement.a supply and cost share clinical collaboration arrangement with Roche. We are currently initiatingusing cemiplimab in the CERPASS trial, our first planned clinical trial under the agreement, a randomized, controlled Phase 2 clinical trial of RP1 in combination with cemiplimab, versus cemiplimab alone, in approximately 240 patients with CSCC.Regeneron agreement. We may enter into additional agreements for the supply of anti-PD-1 products for use in connectioncombination with and for the continued development of one or more of our product candidates. Our ability to develop and ultimately commercialize our product candidates used in combination with nivolumab, cemiplimab, atezolizumab, bevacizumab or any other checkpoint blockade therapy will depend on our ability to access such drugs on commercially reasonable terms for the clinical trials and their availability for use with the commercialized product, if approved. We cannot be certain that current or potential future commercial relationships will provide us with a steady supply of such drugs on commercially reasonable terms or at all.WeWhile we have opened a clinical trial for use of RP1 as a monotherapy, we are generally developing RP1 and our other product candidates for use in combination with anti-PD-1 or anti-PD-L1potentially anti-PD(L)-1 therapies and may develop RP1 or our other product candidates for use with other therapies. TheAlthough we intend our IGNYTE anti-PD-1 failed melanoma cohort and our CERPASS trial to be registration directed, the FDA may require us to use more complex clinical trial designs in order to evaluate the contribution of each product and product candidate to any observed effects. It is possible that the results of these trials could show that any positive previous trial results are attributable to the combination therapy with which our products were combined and not our product candidates. Moreover, following product approval, the FDA may require that products used in conjunction with each other be cross labeledcross-labeled for combined use. To the extent that we do not have rights to the other product, this may require us to work with a third party to satisfy such a requirement. Moreover, developments related to the other product may impact our clinical trials for the combination as well as our commercial prospects should we receive marketing approval. Such developments may include changes to the other product'sproduct’s safety or efficacy profile, changes to the availability of the approved product, and changes to the standard of care.delayed.delayed, interrupted or halted. In the event we are unable to source a supply of an acceptable alternative anti-PD-1 therapy, or are unable to do so on commercially reasonable terms, our business, financial condition, results of operations, stock price and prospects may be materially harmed.candidate'scandidate’s safety and efficacy for that indication. Securing marketing approval also requires the submission of informationjurisdictions,jurisdiction, our business, financial condition, results of operations, stock price and prospects will be materially harmed. Even if our product candidates are approved, they may:risk evaluation and mitigation strategy, or REMS to monitor the safety or efficacy of the products.candidate'scandidate’s clinical development and may vary among jurisdictions and there may be varying interpretations of data obtained from preclinical studies or clinical trials, any of which may cause delays or limitations in the approval or a decision not to approve an application. These regulatory requirements may require us to amend our clinical trial protocols, conduct additional preclinical studies or clinical trials that may require regulatory or IRB approval, or otherwise cause delays in the approval or rejection of an application. For example, in February 2023, we received a response from the FDA following submission of our draft statistical analysis plan in September 2022, which raised a number of points and recommendations requiring further discussion. As previously reported, we met with the FDA in the first quarter of 2023 and discussed the rationale for the changes to the study design we made in 2020 reducing the study size from 240 to 180 patients and adding CR as a dual independent primary endpoint (the study subsequently over enrolled with 211 patients randomized, as reported in November 2022). While no changes were made to the protocol as a result of the meeting, the FDA reiterated that the data would need to demonstrate an overall clinically meaningful benefit based on the totality of the data. Any delay in obtaining or failure to obtain required approvals could materially adversely affect our ability to generate revenue from the particular product candidate, which may materially harm our business, financial condition, results of operations, stock price and prospects. To date, the most commonly reported adverse events observed for RP1 are local injection site reactions and systemic constitutional symptoms, such as fatigue, fevers and chills. However, there additional undesirable side effects or serious adverse events will not be caused bystudy'sstudy’s design, or the monitoring of safety data by a data monitoring committee, among other strategies. The FDA or comparable foreign regulatory authority requests for additional data or information could also result in substantial delays in the approval of our product candidates.post-approvalpost approval study requirements, or other testing and surveillance.risk-benefitrisk/benefit perspective. The therapeutic-related side effects could affect patient recruitment or the ability of enrolled patients to complete the trial or result in potential product liability claims. Any of these occurrences may materially harm our business, financial condition, results of operations, stock price and prospects.later-stagelater stage clinical trials towards approval and commercialization, it is common that various aspects of the development program, such as manufacturing methods, facilities, equipment and formulation, are altered along the way in an effort to optimize processes and results. Any of these changes could cause our product candidates to perform differently and affect the results of planned clinical trials or other future clinical trials conducted with the altered materials. Such changes may also require additional testing, or notification to, or approval by the FDA or a comparable foreign regulatory authority. This could delay completion of clinical trials, require the conduct of bridging clinical trials or studies, require the repetition of one or more clinical trials, increase clinical trial costs, delay approval of our product candidates and/or jeopardize our ability to commence product sales and generate revenue."off-label"“off label” uses, resulting in damage to our reputation and business.Services'Services’ Office of Inspector General, state attorneys general, members of Congress, and the public. When the FDA or comparable foreign regulatory authorities issue regulatory approval for a product candidate, the regulatory approval is limited to those specific uses and indications for which a product is approved. If we are not able to obtain FDA approval for desired uses or indications for our product candidates, we may not market or promote them for those indications and uses, referred to as off-labeloff label uses, and our business, financial condition, results of operations, stock price and prospects willmay be materially harmed. We also must sufficiently substantiate any claims that we make for our products, including claims comparing our products to other companies'companies’ products, and must abide by the FDA'sFDA’s strict requirements regarding the content of promotion and advertising.product'sproduct’s labeling and for uses that differ from those tested in clinical trials and approved by the regulatory authorities, we are prohibited from marketing and promoting the products for indications and uses that are not specifically approved by the FDA. These off-labeloff label uses are commonoff-labeloff label use.off-labeloff label uses, and a company that is found to have improperly promoted a product may be subject to significant sanctions. The federal government has levied large civil and criminal fines against companies for alleged improper promotion and has enjoined several companies from engaging in off-labeloff label promotion. The FDA has also requested that companies enter into consent decrees or permanent injunctions under which specified promotional conduct is changed or curtailed.off-labeloff label uses can also subject us to false claims and other litigation under federal and state statutes. These include fraud and abuse and consumer protection laws, which can lead to civil and criminal penalties and fines and agreements with governmental authorities that materially restrict the manner in which we promote or distribute therapeutic products and conduct our business. These restrictions could include corporate integrity agreements, suspension or exclusion from participation in federal and state healthcare programs, and suspension and debarment from government contracts and refusal of orders under existing government contracts. These False Claims Act lawsuits against manufacturers of drugs and biologics have increased significantly in volume and breadth, leading to several substantial civil and criminal settlements, up to $3.0 billion, pertaining to certain sales practices and promoting off-label uses.breadth. In addition, False Claims Act lawsuits may expose manufacturers to follow-on claims by private payers based on fraudulent marketing practices. This growth in litigation has increased the risk that a biopharmaceutical company will have to defend a false claim action, pay settlement fines or restitution, as well as criminal and civil penalties, agree to comply with burdensome reporting and compliance obligations, and be excluded from Medicare, Medicaid, or other federal and state healthcare programs. If we do not lawfully promote our approved products, if any, we may become subject to such litigationpost-approvalpost approval clinical data, labeling, packaging, distribution, adverse event reporting, shortage reporting, risk management plans, supply chain security, storage, recordkeeping, export, import, advertising, marketing, and promotional activities for such product. These requirements further include submissions of safety and other post-marketing information, including manufacturing deviations and reports, registration and listing requirements, the payment of annual fees, continued compliance with current Good Manufacturing Practice, or cGMP, requirements relating to manufacturing, quality control, quality assurance, and corresponding maintenance of records and documents, and good clinical practices, or GCPs, for any clinical trials that we conduct post-approval.product'sproduct’s indicated uses or marketing, or impose ongoing requirements for potentially costly post-approvalpost approval studies or post-market surveillance. Any such restrictions could limit sales of the product.pre-approvalpreapproval for product and manufacturing changes.FDA'sFDA’s policies or those of comparable foreign regulatory authorities may change and additional government regulations may be enacted that could prevent, limit or delay regulatory approval of our product candidates, limit the marketability of our product candidates, or impose additional regulatory obligations on us. Changes in medical practice and standard of care may also impact the marketability of our product candidates.post-approvalpost approval regulations may have a negative effect on our operations and business and could adversely impact our business, financial condition, results of operations, stock price and prospects.outcomefull departure of the United Kingdom's proposed withdrawalKingdom from the European Union remains uncertain.in January 2021, commonly referred to as Brexit, there is continuing regulatory uncertainty. Since a significant proportion of the regulatory framework in the United Kingdom is derived from European Union directives and regulations, and the withdrawal ofdegree to which the United Kingdom from theand European Union regulatory regimes align or diverge could materially impact the regulatory regime with respect to theexecution of our clinical trials or approval of our product candidates in the United Kingdom or the European Union. including compliance with Brexit, could result in significant delays, difficulties and costs for us and could delay or prevent the introduction of our products in certain countries. If we fail to comply with the regulatory requirements in international markets and/or receive applicable marketing approvals, our target market will be reduced and our ability to realize the full market potential of RP1 and our other product candidates will be harmed. If we obtain approval for any product candidate and ultimately commercialize that product in foreign markets, we would be subject to additional risks and uncertainties, including the burden of complying with complex and changing foreign regulatory, tax, accounting and legal requirements and the reduced protection of intellectual property rights in some foreign countries.authorities'authority approval for their products more rapidly than we may obtain approval for ours, which could result in our competitors establishing a strong market position before we are able to enter the market. In addition, our ability to compete may be affected in many cases by insurers or other third-party payors coverage decisions. Manydecisions or third-party intellectual property rights that another may allege are violated by our product candidates.Early-stageEarly stage companies may also prove to be significant competitors, particularly through collaborative arrangements with large and established companies. These third parties compete with us in recruiting and retaining qualified scientific and management personnel and establishing clinical trial sites and patient registration for clinical trials, as well as in developing or acquiring technologies complementary to, or necessary for, our programs. If we are unable to successfully compete with these companies our business, financial condition, results of operations, stock price and prospects may be materially harmed.cancer immunotherapies.product candidates. If and when our product candidates receive marketing approval, we intend to commercialize our product candidates on our own in the United States and potentially with pharmaceutical or biotechnology partners in other geographies. In order to commercialize our products, we must build our marketing, sales, and distribution capabilities or make arrangements with third parties to perform these services. Weservices, and we may not be successful in doing so. Should we decide to move forward in developing our own marketing capabilities, we maywill incur expenses prior to product launch or even approval in order to recruit a sales force and develop a marketing and sales infrastructure. If a commercial launch is delayed as a result of the FDA or comparable foreign regulatory authority requirements or other reasons, we would incur these expenses prior to being able to realize any revenue from sales of our product candidates. Even if we are able to effectively hire a sales force and develop a marketing and sales infrastructure, our sales force and marketing teams may not be successful in commercializing our product candidates. This may be costly, and our investment would be lost if we cannot retain or reposition our sales and marketing personnel.havecontinue to compete with other biopharmaceutical and biotechnology companies, including oncology-focused companies, to recruit, hire, train, manage, and retain marketing and sales personnel, which is expensive and timeproducts'products’ approved labeling; We have concentrated all of our research and development efforts on product candidates based on our Immulytic platform, and our future success depends on the successful development of this therapeutic approach. post-approvalpost approval regulatory requirements, including requirements pertaining to manufacturing, distribution, and promotion. We may need to devote significant time and resources to compliance with these requirements. Market acceptance of our product candidates by the medical community, patients, and third-party payors will depend on a number of factors, some of which are beyond our control. For example, physicians are often reluctant to switch their patients and patients may be reluctant to switch from existing therapies even when new and potentially more effective or safer treatments enter the market. Effortsthird-partythird party payors on the benefits of our product candidates may require significant resources and may not be successful. If any of our product candidates is approved but does not achieve an adequate level of market acceptance, we could be prevented from or significantly delayed in achieving profitability.including:product'sproduct’s FDA-approved labeling or those of comparable foreign regulatory authorities, including potential limitations or warnings for our product candidates that may be more restrictive than other competitive products;co-administeredco-administered;third-partythird party payors to obtain coverage;other surveys.surveys of clinics. Although we believe that our internal assumptions are reasonable, these assumptions involve the exercise of significant judgment on the part of our management, are inherently uncertain, and their reasonableness has not been assessed by an independent source. If any of the assumptions proves to be inaccurate, the actual markets for our product candidates could be smaller than our estimates of the potential market opportunities.RP1 or any of our other product candidates and negatively affect our business.RP1 or our other product candidates or in clinical trials of others developing similar products and the resulting publicity, as well as any other negative developments in the field of immuno-oncology that may occur in the future, including inRP1 or our other product candidates that we may develop.candidates. These events could also result in the suspension, discontinuation, or clinical hold of or modification to our clinical trials. If public perception is influenced by claims that the use of cancer immunotherapies is unsafe, whether related to our therapies or those of our competitors, our product candidates may not be accepted by the general public or the medical community and potential clinical trial subjects may be discouraged from enrolling in our clinical trials. As a result, we may not be able to continue or may be delayed in conducting our development programs.anti-viralantiviral vaccines or clinical trials of other oncolytic immunotherapy products based on viruses may result in a disproportionately negative effect for RP1 or our other product candidates as compared to other products in the field of immuno-oncology that are not based on viruses. Future negative developments in the field of immuno-oncology or the biopharmaceutical industry could also result in greater governmental regulation, stricter labeling requirements and potential regulatory delays in the testing or approvals of our products. Any increased scrutiny could delay or increase the costs of obtaining marketing approval for RP1 or our other product candidates.clinical-stageclinical stage biopharmaceutical company with a very limited operating history. We have incurred net losses since our inception and anticipate that we will continue to incur substantial and increasing net losses in the foreseeable future. We may never achieve or sustain profitability.clinical-stageclinical stage biopharmaceutical company with a limited operating history, and we are early in our development efforts. We have no products approved for commercial sale and have not generated any revenue from product sales to date, and we continue to incur significant research and development and other expenses related to our ongoing operations. Investment in biopharmaceutical product development is highly speculative because it entails substantial upfront capital expenditures and significant risk that any potential product candidate will fail to demonstrate adequate efficacy or an acceptable safety profile, gain marketing approval and become commercially viable. We have financed our operations to date primarily through the sale of equity securities, including the sale of our common stock and pre-funded warrants in our IPO.public offerings. Since our inception, most of our resources have been dedicated to the preclinical and clinical development of our Immulyticproprietary RPx platform, including our lead product candidate, RP1, and our other product candidates. The size of our future net losses will depend, in part, on our future expenses and our ability to generate revenue, if any.2019, 20182023 and 2017,2022, we reported a net loss of $30.8 million, $19.7$174.3 million and $7.7$118.0 million, respectively. At March 31, 2019,2023, we had an accumulated deficit of $59.8$485.5 million. We expect to continue to incur significant losses for the foreseeable future, and we expect these losses to increase as we continue our research and development of, and seek marketing approvals for, RP1, our other product candidates and any additional product candidates we may develop.stockholders'stockholders’ equity and working capital.We have never generated any revenue from product sales, and ourOur ability to generate revenue from product sales and become profitable will depend significantly on our success in achieving a number of goals. have not generated any revenue from product sales, and do not anticipate generating any revenue from product sales until after we have received marketing approval for the commercial sale of a product candidate, if ever. Our ability to generate revenue and achieve profitability depends significantly on our success in achieving a number of goals, including: substantial additional financing to achieve our goals, and a failure to obtain this necessary capital when needed on acceptable terms, or at all, could force us to delay, limit, reduce or terminate our product development or commercialization efforts.2019,2023, our cash and cash equivalents and short-term investments were $134.8 million$583.4 million. We expect to continue to spend substantial amounts to continue the clinical and preclinical development of RP1 and our other product candidates. Accordingly, we will need to obtain substantial additional funds to achieve our business objectives. If we are able to gain marketing approval of any product candidate, we will require significant additional amounts of cash in order to launch and commercialize such product. In addition, other unanticipated costs may arise.establishing, equipping, and operating our planned manufacturing facility;research and development plans,current operating plan, we expect that our existing cash and cash equivalents and short-term investments, as of March 31, 2023 will enable us to fund our planned operating expenses and capital expenditure requirements into the second half of calendar year 2021.2025. We have based this estimate on assumptions that may prove to be wrong, and we could exhaust our available capital resources sooner than we expect. In addition, because the design and outcome of our planned and anticipated clinical trials is highly uncertain, we cannot reasonably estimate the actual amounts necessary to successfully complete the development and commercialization of RP1 or our other product candidates.Raising additional capitalcause dilutionin the future, exceed the Federal Deposit Insurance Corporation (“FDIC”) insurance limits. If such banking institutions were to fail, we could lose all or a portion of those amounts held in excess of such insurance limitations. In March 2023, the FDIC took control of Silicon Valley Bank (“SVB”), where we previously held a portion of our stockholders, restrictcash. The Federal Reserve subsequently announced that account holders would be made whole and we were able to access all of our cash held at SVB. However, the FDIC may not make all account holders whole in the event of future bank failures. In addition, even if account holders are ultimately made whole with respect to a future bank failure, account holders’ access to their accounts and assets held in their accounts may be substantially delayed. Any material loss that we may experience in the future or inability for a material time period to access our cash, short-term investments and cash equivalents could have an adverse effect on our ability to pay our operational expenses, fund our operations or require us to relinquish rights tomake other payments, which could adversely affect our technologies or product candidates. To the extent that we raise additional capital through the sale of common stock or securities convertible or exchangeable into common stock, our existing stockholders' interest will be diluted. Debtfinancing, if available, would increase our fixed payment obligations and may involve agreements that include covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures or declaring dividends. If we are unable to raise additional funds through equity or debt financings when needed, we may be required to grant rights to develop and market one or more of our product candidates or technologies that we would otherwise prefer to develop and market ourselves.Immulyticand proprietary RPx platform, including our lead product candidate, RP1, and our other product candidates. We rely on trade secret, patent, copyright and trademark laws, and confidentiality, licensing and other agreements with employees and third parties, all of which offer only limited protection. We seek to protect our proprietary position by filing and prosecuting patent applications in the United States and abroad related to our technology and product candidates.litigation.litigation and subject to change with regulatory agencies and court decisions. As a result, the issuance, scope, validity, enforceability and commercial value of our licensed patents and any patents we own in the future are highly uncertain. The steps we have taken to protect our proprietary rights may It is also possible thatwill fail to identify patentable aspects of inventions made in the course of our development and commercialization activities before it is too late to obtain patent protection on them. In addition, the patent prosecution process is expensive, time-consuming and complex, and we may not be able to file, prosecute, maintain, enforce or license all necessary or desirable patent applications at a reasonable cost or in a timely manner. Although we enter into non-disclosure and confidentiality agreements with parties who have access to confidential or patentable aspects of our research and development output, such as our employees, collaborators, and other third parties, any of these parties may breach the agreements and disclose such output before a patent application is filed, thereby jeopardizing our abilityintend to seek patent protection. It is also possible that we will fail to identify patentable aspectsapproval as biological products may face competition sooner than anticipated. Given the amount of our researchtime required for the development, testing and development efforts in time to obtain patent protection. For the core technology in our Immulytic platform and eachregulatory review of our product candidates, we have filed five patent applications under the Patent Cooperation Treaty, or PCT,such as RP1 and four U.S. provisional applications. Four of these PCT applications have entered the national phase and are pending in arange of countries, and one is still in the international phase. None of our PCT-derived patent applications or U.S. provisional applications have been granted by a patent office. Early stage examination has started only in connection with the European national phase applications. Any future provisional patent applications are not eligible to become issued patents until, among other things, we file a non-provisional patent application within 12 months of filing of one or more of our related provisional patent applications. If we do not timely file any non-provisional patent applications, we may lose our priority date with respect to our provisional patent applications and any patent protection on the inventions disclosed in our provisional patent applications. Although we intend to timely file non-provisional patent applications relating to our provisional patent applications, we cannot predict whether any of our future patent applications will result in the issuance of patents that effectively protect our technology or RP1 or our other product candidates, patents protecting such product candidates might expire before or if anyshortly after such product candidates are commercialized.future issued patents will effectively prevent others from commercializing competitive products. Publications of discoveriesproducts than those in the scientific literature often lag behindUnited States. In addition, the actual discoveries,laws and practices of some foreign countries do not protect intellectual property rights to the same extent as federal and state laws in the United States. Changes to the patent applicationslaw in the United States and other jurisdictions are typicallycould diminish the value of patents in general, thereby impairing our ability to protect RP1 and our other product candidates. Consequently, we may not published until 18 months after filingbe able to prevent third parties from practicing our inventions in all countries outside the United States, or from selling or importing products made using our inventions in some casesand into the United States or other jurisdictions. Competitors may use our technologies or inventions in jurisdictions where we have not at all until they are issued as a patent. Therefore, we cannot be certain that we were the first to make the inventions claimed in our pending patent applications, or that we were the first to file forobtained patent protection of such inventions. Our pending applications cannot be enforced against third parties practicing the inventions claimed in such applications unlessto develop and/or manufacture their own products and until amay export otherwise infringing products to territories where we have patent issues from such applications. Because the issuance of a patentprotection but where enforcement is not conclusive as to its inventorship, scope, validity or enforceability, issued patentsstrong as that we license from third parties or own in the future may be challenged in the courts or patent offices in the United StatesStates. These products may compete with our products and abroad, including through opposition proceedings, derivation proceedings,inter partes review, interference proceedingsour patent claims or litigation. Such proceedingsother intellectual property rights may result in the loss of patent protection, the narrowing of claims in such patentsnot be effective or the invalidity or unenforceability of such patents, which could limit our abilitysufficient to stop othersprevent them from using or commercializing similar or identical products, or limit the duration of the patent protection for our technology. so competing.If we are unable to protect the confidentiality of our proprietary information and know-how, the value of our technology and products could be adversely affected.To maintain the confidentiality of our trade secrets and proprietary information,Although we enter into confidentiality agreements with our employees, consultants, collaborators, suppliers, manufacturers and other third parties who have access to our trade secrets. Oursecrets, and our agreements with employees also provide that any inventions conceived by the individual in the course of rendering services to us shall be our exclusive property. However,property, we may not obtain these agreements in all circumstances, and individuals with whom we have these agreements may not comply with their terms. The assignment of intellectual property rightsterms or may not be self-executing or the assignmenthave conflicting agreements may be breached, and we may be forced to bring claims againstwith third parties, or defend claims that they may bring against us, to determine the ownership of what we regard as our intellectual property.parties. In addition, in the event of unauthorized use or disclosure of our trade secrets or proprietary information, these agreements, even if obtained, may not provide meaningful protection, particularly for our trade secrets or other confidential information. To the extent that our employees, consultants or contractors use technology or know-how owned by third parties in Adequate remedies may not exist in the event of unauthorized use or disclosure of our confidential information including a breach of our confidentiality agreements. Enforcing a claim that a party illegally disclosed or misappropriated a trade secret is difficult, expensive, and time consuming, and the outcome is unpredictable. In addition, some courts in and outside of the United States are less willing or unwilling to protect trade secrets. If any of our trade secrets, know-how or confidential or proprietary information were to be lawfully obtained, patented or independently developed by a competitor or other third party, we would have no right to prevent them from using that technology or information to compete with us.us andoutcomesuccess of which would be uncertain and could harm our business.candidates, including interference proceedings, post-grant review,inter partes review and derivation proceedings before thecandidates. For example, we are aware of U.S. Patent 10,034,938 (the '938 Patent) held by Amgen Inc., which includes claims purported to cover methods and Trademark Office,kits for treating stage IIIb to IV melanoma by the administration of (i) an effective amount of an anti-PD-1 antibody or USPTO. anti-CTLA-4 antibody; and (ii) a herpes simplex virus, wherein the herpes simplex virus lacks a functional ICP34.5 encoding gene and a functional ICP47 encoding gene, and comprises a gene encoding human GM-CSF. We believe the USPTO erred in its issuance of the '938 Patent for at least the reason that the invention covered by the claims of the '938 Patent was in the public domain prior to the filing date of the '938 Patent, and accordingly on November 2, 2022, we filed a petition for inter partes review with the Patent Trial and Appeal Board (PTAB) of the USPTO, seeking to invalidate certain claims of United States Patent 10,034,938 (the '938 Patent).party'sparty’s intellectual property rights, and we are unsuccessful in demonstrating that such intellectual property rights are invalid, unenforceable or unenforceable,otherwise not infringed, we could be required to obtain a license from such third partythird-party to continue developing, manufacturing and commercializing RP1 and our other product candidates. However, weSuch a license may not be able to obtain any required licenseavailable on commercially reasonable terms, or at all. Even if we were able to obtain a license, it could be non-exclusive,nonexclusive, thereby giving our competitors and other third parties access to the same technologies and inventions licensed to us, and it could require us to make substantial licensing and royalty payments. We also could be forced, including by court order, to cease developing, manufacturing, and commercializing RP1 or our other product candidates. In addition, in any such proceedingcandidates or litigation, we could be found liable for significant monetary damages including treble damages and attorneys' fees, if we are found to have willfully infringed a patent or other intellectual property right. Any of the foregoing could have a material adverse effect on our business, financial condition, results of operations, stock price and prospects. Any claims by third parties that we have misappropriated their know-how, confidential or proprietary information or trade secrets could have a similar material adverse effect on our business.RP1certain of our product candidates in combination with nivolumab and cemiplimab,products, which are or may be covered by patents or licenses held by BMSthird parties, and Regeneron, respectively, to which we do not have a license other than for use in connection with the applicable clinical trial. We also plan tomay develop our product candidates in combination with products developed by additionalWe may not be able to protect our intellectual property and proprietary rights throughout the world. Filing, prosecuting and defending patents on our technology in all countries throughout the world would be prohibitively expensive, and our intellectual property rights in some countries outside the United States can be less extensive than those in the United States. In addition, the laws and practices of some foreign countries do not protect intellectual property rights to the same extent as federal and state laws in the United States. Consequently, we may not be able to prevent third parties from practicing our inventions in all countries outside the United States, or from selling or importing products made using our inventions in and into the United States or other jurisdictions. Competitors may use our technologies in jurisdictions where we have not obtained patent protection to develop and/or manufacture their own products and may export otherwise infringing products to territories where we have patent protection but where enforcement is not as strong as that in the United States. These products may compete with our products and our patent claims or other intellectual property rights may not be effective or sufficient to prevent them from so competing. Many companies have encountered significant problems in protecting and defending intellectual property rights in certain foreign jurisdictions. The legal systems of certain countries, particularly certain developing countries, do not favor the granting or enforcement of patents, trade secrets and other intellectual property protection, particularly those relating to biopharmaceuticals, which could make it difficult for us to obtain patent rights or stop the infringement of our patents or marketing of competing products in violation of our intellectual property and proprietary rights generally in those countries. Proceedings to enforce our intellectual property and proprietary rights in foreign jurisdictions could result in substantial cost and divert our efforts and attention from other aspects of our business, could put our patents at risk of being invalidated or interpreted narrowly and our patent applications at risk of not issuing and could provoke third parties to assert claims against us. We may not prevail in any lawsuits that we initiate, and the damages or other remedies awarded, if any, may not be commercially meaningful. Accordingly, our efforts to protect and enforce our intellectual property and proprietary rights around the world may be inadequate to obtain a significant commercial advantage from the intellectual property we develop or license. In addition, the laws of certain foreign countries may not protect our rights to the same extent as the laws of the United States, and those foreign laws may also be subject to change. For example, methods of treatment and manufacturing processes may not be patentable in certain jurisdictions, and the requirements for patentability may differ in certain countries. Furthermore, biosimilar product manufacturers or other competitors may challenge the scope, validity and enforceability of our patents, requiring us to engage in complex, lengthy and costly litigation or proceedings. Moreover, many countries have compulsory licensing laws under which a patent owner may be compelled to grant licenses to third parties. Many countries limit the enforceability of patents against government agencies or government contractors. In these countries, the patent owner may have limited remedies, which could materially diminish the value of such patent. If we are forced to grant a license to third parties with respect to any patents relevant to our business, our competitive position may be impaired and our business and results of operations may be adversely affected.Obtaining and maintaining patent protection depends on compliance with various procedural, document submission, fee payment and other requirements imposed by governmental patent agencies, and our patent protection could be reduced or eliminated for non-compliance with these requirements. The USPTO and various foreign governmental patent agencies require compliance with a number of procedural, documentary, fee payments and other similar provisions during the patent application process and to maintain patents after they are issued. For example, periodic maintenance fees, renewal fees, annuity fees and various other government fees on issued patents and patent applications often must be paid to the USPTO and foreign patent agencies over the lifetime of our licensed patents orany patents we own in the future. In certain circumstances, we may rely on future licensing partners to take the necessary action to comply with these requirements with respect to licensed intellectual property. Although an unintentional lapse can be cured for a period of time by payment of a late fee or by other means in accordance with the applicable rules, there are situations in which noncompliance can result in abandonment or lapse of the patent or patent application, resulting in partial or complete loss of patent rights in the relevant jurisdiction. Non-compliance events that could result in abandonment or lapse of a patent or patent application include, but are not limited to, failure to respond to official actions within prescribed time limits, non-payment of fees and failure to properly legalize and submit formal documents. If we fail to obtain and maintain the patents and patent applications covering our products or procedures, we may not be able to stop a competitor from marketing products that are the same as or similar to RP1 or our other product candidates, which could have a material adverse effect on our business.Changes to the patent law in the United States and other jurisdictions could diminish the value of patents in general, thereby impairing our ability to protect RP1 and our other product candidates. As is the case with other biopharmaceutical companies, our success is heavily dependent on intellectual property, particularly patents. Obtaining and enforcing patents in the biopharmaceutical industry involves both technological and legal complexity and is therefore costly, time consuming and inherently uncertain. Changes in either the patent laws or interpretation of the patent laws in the United States could increase the uncertainties and costs. Patent reform legislation in the United States and other countries, including the Leahy-Smith America Invents Act, or the Leahy-Smith Act, signed into law on September 16, 2011, could increase those uncertainties and costs surrounding the prosecution of our patent applications and the enforcement or defense of our issued patents. The Leahy-Smith Act includes a number of significant changes to U.S. patent law. These include provisions that affect the way patent applications are prosecuted, redefine prior art and provide more efficient and cost-effective avenues for competitors to challenge the validity of patents. These include allowing third-party submission of prior art to the USPTO during patent prosecution and additional procedures to attack the validity of a patent by USPTO administered post-grant proceedings, including post-grant review,inter partes review, and derivation proceedings. After March 2013, under the Leahy-Smith Act, the United States transitioned to a first inventor to file system in which, assuming that the other statutory requirements are met, the first inventor to file a patent application will be entitled to the patent on an invention regardless of whether a third party was the first to invent the claimed invention. However, the Leahy-Smith Act and its implementation could increase the uncertainties and costs surrounding the prosecution of our patent applications and the enforcement or defense of our issued patents, all of which could have a material adverse effect on our business, financial condition, results of operations, stock price and prospects. The U.S. Supreme Court has ruled on several patent cases in recent years, either narrowing the scope of patent protection available in certain circumstances or weakening the rights of patent owners in certain situations. Depending on future actions by the U.S. Congress, the U.S. courts, the USPTO and the relevant law-making bodies in other countries, the laws and regulations governing patents could change in unpredictable ways that would weaken our ability to obtain new patents or to enforce our existing patents and patents that we might obtain in the future.We may become involved in lawsuits to protect or enforce our intellectual property, which could be expensive, time-consuming and unsuccessful and have a material adverse effect on the success of our business. Also, third parties may initiate legal proceedings against us to assert that we are infringing their intellectual property rights or to challenge the validity or scope of our owned or licensed intellectual property rights. Litigation and other intellectual property related proceedings could result in substantial costs and diversion of management resources, which could harm our business and financial results. In addition, in an infringement proceeding, a court may decide that a patent owned by or licensed to us is invalid or unenforceable, or may refuse to stop the other party from using the technology at issue on the grounds that our patents do not cover the technology in question. An adverse result in any litigation or other intellectual property related proceeding could put one or more of our patents at risk of being invalidated, held unenforceable or interpreted narrowly.our business, financial condition, results of operations, stock price and prospects.We may be subject to claims by third parties asserting that our collaborators, employees or we have misappropriated their intellectual property, or claiming ownership of what we regard as our own intellectual property. Many of our employees, including our senior management team, were previously employed at, or consulted for, universities or other biotechnology or pharmaceutical companies, including our competitors or potential competitors. Our collaborators' employees may currently be or previously have been employed at universities or other biotechnology or pharmaceutical companies, including our competitors or potential competitors. Some of these persons, including each member of our senior management team, executed proprietary rights, non-disclosure and non-competition agreements, or similar agreements, in connection with such previous employment or consulting agreements, that assigned ownership of intellectual property relating to work performed under such agreements to the contracting third party. Although we take steps to ensure that our employees do not use, claim as theirs, or misappropriate the intellectual property, proprietary information or know-how of others in their work for us, we may be subject to claims that we or these employees have used, claimed as theirs, misappropriated or disclosed intellectual property, including trade secrets or other proprietary information, of any such individual's current or former employer. Litigation may be necessary to defend against such claims. If we fail in defending any such claims, in addition to paying monetary damages, we may lose valuable intellectual property rights or personnel or sustain damages. Such intellectual property rights could be awarded to a third party, and we could be required to obtain a license from such third party to commercialize our technology or products. Such a license may not be available on commercially reasonable terms, or at all. Even if we are successful in defending against such claims, litigation could result in substantial costs and be a distraction to management. Any of the foregoing may have a material adverse effect on our business, financial condition, results of operations, stock price and prospects.We may be subject to damages resulting from claims that we or our employees have wrongfully used or disclosed confidential information of third parties or are in breach of non-competition or non-solicitation agreements with our competitors. We could be subject to claims that we or our employees, including senior management, have inadvertently or otherwise used or disclosed alleged trade secrets or other confidential information of former employers or competitors or others. Although we take steps to ensure that our employees and consultants do not use the intellectual property, proprietary information, know-how or trade secrets of others in their work for us, we may be subject to claims that we caused an employee to breach the terms of their non-competition or non-solicitation agreement, or that we or these individuals have, inadvertently or otherwise, used or disclosed the alleged trade secrets or other proprietary information of a former employer or competitor or other party. Litigation may be necessary to defend against these claims. Even if we are successful in defending against these claims, litigation could result in substantial costs and could be a distraction to management. If our defenses to these claims fail, in addition to requiring us to pay monetary damages, a court could prohibit us from using technologies or features that are essential to RP1 and our other product candidates, if such technologies or features are found to incorporate or be derived from the trade secrets or other proprietary information of the former employers, competitors or other parties. An inability to incorporate such technologies or features would have a material adverse effect on our business, and may prevent us from successfully commercializing RP1 and our other product candidates. In addition, we may lose valuable intellectual property rights or personnel as a result of such claims. Moreover, any such litigation or the threat thereof may adversely affect our ability to hire employees or consultants. A loss of key personnel or their work product could hamper or prevent our ability to develop and commercialize RP1 and our other product candidates, which could have an adverse effect on our business, financial condition, results of operations, stock price and prospects.If we obtain any issued patents covering our technology, such patents could be found invalid or unenforceable if challenged in court or before the USPTO or comparable foreign regulatory authority. If we or one of our licensing partners initiate legal proceedings against a third party to enforce a patent covering any of our technology, the defendant could counterclaim that the patent covering our product candidate is invalid or unenforceable. In patent litigation in the United States, defendant counterclaims alleging invalidity or unenforceability are commonplace, and there are numerous grounds upon which a third party can assert invalidity or unenforceability of a patent. Grounds for a validity challenge could be, among other things, an alleged failure to meet any of several statutory requirements, including lack of novelty, obviousness, or non-enablement. Grounds for an unenforceability assertion could be, among other things, an allegation that someone connected with prosecution of the patent withheld relevant information from the USPTO, or made a misleading statement, during prosecution. Third parties may also raise similar claims before administrative bodies in the United States or abroad, even outside the context of litigation. Such mechanisms include re-examination,inter partes review, post-grant review, interference proceedings, derivation proceedings and equivalent proceedings in foreign jurisdictions, such as opposition proceedings. Such proceedings could result in revocation, cancellation or amendment of our patents in such a way that they no longer cover and protect RP1 and our other product candidates. The outcome following legal assertions of invalidity and unenforceability is unpredictable. For example, with respect to the validity of our licensed patents or any patents we obtain in the future, we cannot be certain that there is no invalidating prior art of which we, our or our licensing partner's patent counsel, and the patent examiner were unaware during prosecution. If a third party were to prevail on a legal assertion of invalidity and/or unenforceability, we would lose at least part, and perhaps all, of the patent protection on RP1 and our other product candidates. Such a loss of patent protection could have a material adverse impact on our business.Patent terms may be inadequate to protect our competitive position on our products for an adequate amount of time, and our product candidates for which we intend to seek approval as biological products may face competition sooner than anticipated. Given the amount of time required for the development, testing and regulatory review of new product candidates, such as RP1 and our other product candidates, patents protecting such candidates might expire before or shortly after such candidates are commercialized. In the United States, the Drug Price Competition and Patent Term Restoration Act of 1984 permits a patent term extension of up to five years beyond the normal expiration of the patent, but no longer than 14 years from the product's approval date, which is limited to the approved indication (or any additional indications approved during the period of extension). However, the applicable authorities, including the FDA and the USPTO in the United States, and any equivalent regulatory authorities in other countries, may not agree with our assessment of whether such extensions are available, and may refuse to grant extensions to our patents, or may grant more limited extensions than we request. If this occurs, our competitors may be able to take advantage of our investment in development and clinical trials by referencing our clinical and preclinical data and launch their products earlier than might otherwise be the case, which could have a material adverse effect on our business, financial condition, results of operations, stock price and prospects. The enactment of the Biologics Price Competition and Innovation Act of 2009, or BPCIA, as part of the Patient Protection and Affordable Care Act, or ACA, created an abbreviated pathway for the approval of biosimilar and interchangeable biological products. The abbreviated regulatory pathway establishes legal authority for the FDA to review and approve biosimilar biologics, including the possible designation of a biosimilar as "interchangeable" based on its similarity to an existing brand product. Under the BPCIA, an application for a biosimilar product cannot be approved by the FDA until 12 years after the original branded product was approved under a BLA. Certain changes, however, and supplements to an approved BLA, and subsequent applications filed by the same sponsor, manufacturer, licensor, predecessor in interest, or other related entity do not qualify for the 12-year exclusivity period. RP1 and our other product candidates are all biological product candidates. We anticipate being awarded market exclusivity for each of our biological product candidates that is subject to its own BLA for 12 years in the United States, 10 years in Europe and significant durations in other markets. However, the term of the patents that cover such product candidates may not extend beyond the applicable market exclusivity awarded by a particular country. For example, in the United States, if all of the patents that cover our particular biological product expire before the 12-year market exclusivity expires, a third party could submit a marketing application for a biosimilar product four years after approval of our biological product, the FDA could immediately review the application and approve the biosimilar product for marketing 12 years after approval of our biological product, and the biosimilar sponsor could then immediately begin marketing. Alternatively, a third party could submit a full BLA for a similar or identical product any time after approval of our biological product, and the FDA could immediately review and approve the similar or identical product for marketing and the third party could begin marketing the similar or identical product upon expiry of all of the patents that cover our particular biological product. There is also a risk that this exclusivity could be changed in the future. For example, this exclusivity could be shortened due to congressional action or through other actions, including future proposed budgets, international trade agreements and other arrangements or proposals. Additionally, there is a risk that the FDA will not consider our product candidates to be reference products for competing products, potentially creating the opportunity for biosimilar competition sooner than anticipated. The extent to which a biosimilar, once approved, will be substituted for any one of our reference products in a way that is similar to traditional generic substitution for non-biological products is not yet clear, and will depend on a number of marketplace and regulatory factors that are still developing. It is also possible that payers will give reimbursement preference to biosimilars over reference biologics, even absent a determination of interchangeability. To the extent that we do not receive any anticipated periods of regulatory exclusivity for our product candidates or the FDA or foreign regulatory authorities approve any biosimilar, interchangeable, or other competing products to our product candidates, it could have a material adverse effect on our business, financial condition, results of operations, stock price and prospects.RP1 and our other product candidates. If our relationships with BMS, Regeneron, or any future collaborator or supplier are not successful, we may be delayed in completing the development of RP1 and our other product candidates.RP1.RP1, RP2 and RP3 for where nivolumab or cemiplimab, respectively, are intended to be used for these clinical programs. BMS is providing nivolumab, its anti-PD-1 therapy, for use in our ongoing IGNYTE Phase 1/2 trials with RP1, our Phase 1/2 clinical trial with RP1RP2 and our Phase 1 and Phase 2 clinical trials with RP3 where we intend to use nivolumab and may potentially do so for other clinical trials in the future; Regeneron is providing cemiplimab, its anti-PD-1 therapy, for use in our randomized, controlledongoing CERPASS Phase 2 clinical trial with RP1and may potentially do so for other clinical trials in approximately 240 patients with CSCC and other potential clinical trials.the future. We may also enter into agreements with additional companies for the supply of anti-PD-1 therapies for use in the development of RP1 and our other product candidates.candidates, similar to our agreement with Roche. The outcome of these clinical trials is dependent, in part, both on the performance of our partners'partners’ products and product candidates and also on our partners'partners’ ability to deliver sufficient quantities of adequately produced product. Should any of our partners'partners’ products or product candidates fail to produce the results that we anticipate, we may have to rerunre-run clinical trials for RP1 or our other product candidates or may otherwise be delayed in the commercialization of RP1 or our other product candidates. Similarly, should any partner fail to provide us with a product or product candidate that suits our requirements, we may have to rerunre-run clinical trials for RP1 or our other product candidates or may be otherwise delayed in the commercialization of RP1 or our other product candidates. These disagreements can be difficult to resolve if neither of the parties has final decision-making authority.collaborators'collaborators’ strategic focus or available funding, or external factors, such as an acquisition, that divert resources or create competing priorities;deemphasizede-emphasize or terminate development or commercialization of any product candidate it licenses to us. If one of our collaborators terminates its agreement with us, we may find it more difficult to attract new collaborators and our reputation in the business and financial communities could be adversely affected. upon our assessment of the collaborator'scollaborator’s resources and expertise, the terms and conditions of the proposed collaboration and the proposed collaborator'scollaborator’s evaluation of a number of factors.the FDA's Good Laboratory Practice, or GLP regulations, as appropriate. Moreover, the FDA and comparable foreign regulatory authorities require us to comply with standards, commonly referred to as GCPs for conducting, recording, and reporting the results of clinical trials to assure that data and reported results are credible and accurate and that the rights, integrity, and confidentiality of trial participants are protected. Regulatory authorities enforce these requirements through periodic inspections or remote regulatory assessment of trial sponsors, clinical investigators, and trial sites. If we or any of our third parties fail to comply with applicable GCPs or other regulatory requirements, we or they may be subject to enforcement or other legal actions, the data generated in our trials may be deemed unreliable and the FDA or comparable foreign regulatory authorities may require us to perform additional studies. In addition, we will be required to report certain financial interests of our third-party investigators if these relationships exceed certain financial thresholds or meet other criteria. The FDA or comparable foreign regulatory authorities may question the integrity of the data from those clinical trials conducted by investigators who may have conflicts of interest. We cannot assure you that upon inspection by a given regulatory authority, such regulatory authority will determine that any of our trials complies with the applicable regulatory requirements. In addition, our clinical trials must be conducted with product candidates that were produced under cGMP regulations. Failure to comply with these regulations may require us to repeat clinical trials, which would delay the regulatory approval process. We also are required to register certain clinical trials and post the results of certain completed clinical trials on a government-sponsored database, ClinicalTrials.gov, within specified timeframes. Failure to do so can result in enforcement actions and adverse publicity. The third parties with which we work may also have relationships with other entities, some of which may be our competitors, for whom they may also be conducting trials or other therapeutic development activities that could harm our competitive position. In addition, such third parties are not our employees, and except for remedies available to us under our agreements with such third parties we cannot control whether or not they devote sufficient time and resources to our ongoing clinical, non-clinical, and preclinical programs. requires management time and focus. In addition, there is a natural transition period when a new third party commences work. As amay result in delays could occur, whichthat could compromise our ability to meet our desired development timelines. Until our planned manufacturing facility is operational, we willsupplies. Theresupplies until our in-house manufactured clinical trial product supplies are qualified for use in our clinical trials. As a result, there can be no assurance that our clinical development will not be limited, interrupted, or of satisfactory quality or continue to be available at acceptable prices. In particular, any replacement of our contract manufacturer could require significant effort and expertise because there may be a limited number of qualified replacements. Any delays in obtaining adequate supplies ofthat meet the necessary quality standards may delay our development or commercialization. We may not succeedfor use in our efforts to establish manufacturing relationshipsclinical trials. In addition, we do not have any long-term commitments from our suppliers of raw materials or other alternative arrangementsclinical trial material or guaranteed prices for any of our product candidates or programs. Our product candidates may compete with other products and product candidates for access to manufacturing facilities.their components. There are a limited number of manufacturers that operate under cGMP regulations and that are both capable of manufacturing and filling our viral product for us and willing to do so. If our existing third-party manufacturers of raw materials or our product candidates, or the third parties that we engage in the future, should cease to work with us, we likely would experience delays in obtaining sufficient quantities of our product candidates for us to meet commercial demand or to advance our clinical trials while we identify and qualify replacement suppliers. If for any reason we are unable to obtainAny replacement of our contract manufacturer could require significant effort and expertise because there may be a limited number of qualified replacements. Any delays in obtaining adequate supplies of our raw materials or product candidates that meet the necessary quality standards may delay our development or the therapeutic substances used to manufacture them, it will be more difficult for us to developcommercialization.product candidates and compete effectively. Further, even if we do establish such collaborationsmanufacturers of raw materials, equipment or arrangements, our third-party manufacturers may breach, terminate, or not renew these agreements. Any problems or delays we experience in preparing for commercial-scale manufacturing of a product candidate or component may result in a delay in product development timelines and FDA or comparable foreign regulatory authority approval of the product candidate or may impair our ability to manufacture commercial quantities or such quantities at an acceptable cost and quality, which could result in the delay, prevention, or impairment of clinical development and commercialization of our product candidates and may materially harm our business, financial condition, results of operations, stock price and prospects. We currently have only one contract manufacturer for our product candidates for use in our clinical trials. In addition, weprocess consumables do not have any long-term commitments from our suppliers of clinical trial materialperform as agreed or guaranteed prices for our product candidates or their components. The manufacture of biopharmaceutical products requires significant expertise and capital investment, including the development of advanced manufacturing techniques and process controls. Manufacturers of therapeutics often encounter difficulties in production, particularly in scaling up initial production. These problems include difficulties with production costs and yields, quality control, including stability of the product candidate and quality assurance testing, shortages of qualified personnel or key raw materials, and compliance with strictly enforced federal, state, and foreign regulations. Our contract manufacturers may not perform as agreed. If our manufacturers were to encounter theseregulations, or other difficulties, our ability to provide product candidates to patients in our clinical trials could be jeopardized. Contract manufacturers ofproduct candidates may be unable to comply with our specifications, applicable cGMP requirements or other FDA, state or foreign regulatory requirements. Poor control of production processes can lead to the introduction of adventitious agents or other contaminants, or to inadvertent changes in the properties or stability of a product candidate that may not be detectable in final product testing. If our contract manufacturersFramingham manufacturing site cannot successfully manufacture material that conforms to our specifications and the strict regulatory requirements of the FDA or other regulatory authorities, theywe will not be able to secure or maintain regulatory approval for theirour manufacturing facilities. Any such deviations may also require remedial measures that may be costly and/or time-consumingtime consuming for us or a third party to implement and that may include the temporary or permanent suspension of a clinical trial or the temporary or permanent closure of a facility. Any such remedial measures imposed upon us or third parties with whom we contract could materially harm our business. Any delays in obtaining raw materials, products or product candidates that comply with the applicable regulatory requirements may result in delays to clinical trials, product approvals, and commercialization. It may also require that we conduct additional studies. While wemanufacturers'raw materials or process consumables manufacturers’ compliance with these regulations and standards. If the FDA or a comparable foreign regulatory authority does not approve these facilities for the manufacture of our productAny new manufacturers would need to either obtain or develop the necessary manufacturing know-how, and obtain the necessary equipment and materials, which may take substantial time and investment. We must also receive FDA approval for the use of any new manufacturers for clinical or commercial supply.manufacturers'or our manufacturers’ failure to adhere to applicable laws or for other reasons, we may not be able to obtain regulatory approval for or successfully commercialize our product candidates. Any failure or refusal to supply our product candidates or components for our product candidates that we may develop could delay, prevent or impair our clinical development or commercialization efforts. Any change in our manufacturers could be costly because the commercial terms of any new arrangement could be less favorable and because the expenses relating to the transfer of necessary technology and processes could be significant.If there are delays in completing our planned manufacturing facility, we may be delayed in scaling up manufacturing of our product candidates, may be forced to devote additional resources and management time to completing our manufacturing facility and may face delays in our product development timelines. Additionally, the We have begun construction activities with respect to a lease signed in June 2018 for ansquare-footsquare foot manufacturing facility in Framingham, Massachusetts is now fully operational. We have completed the process of transferring the manufacturing of RP1, RP2 and RP3 from our third-party contract manufacturer. Comparability analysis of RP1, RP2 and RP3 produced at which we intend to establishour in-house Framingham facility with the contract manufacturer material used in our clinical trials is complete. The FDA and equipsome European regulatory agencies have approved the use of material produced at our own manufacturingFramingham facility in order to secure supplies for pivotal studiesongoing and commercial launch. Thisfuture clinical trials. The Framingham facility is intended to give us control over key aspects of the supply chain for our products and product candidates. We may face delays in the completion of the facility. In addition,However, we may not experience the anticipated operating efficiencies as we commence manufacturing operations at the new facility. Any such delays may disrupt or delay the supply of our product candidates if we have not maintained a sufficient back-upbackup supply of our product candidates through third-party manufacturers. Moreover, changing manufacturing facilities may also require that we conduct additional studies, make notifications to the regulatory authorities, make additional filings to the regulatory authorities, and obtain regulatory authority approval for the new facilities, which may be delayed or which we may never receive. We will further need to comply with the FDA'sFDA’s and applicable foreign regulatory authorities'authorities’ cGMP requirements for the production of our product candidates for clinical trials and, if approved, commercial supply, and will be subject to FDA and comparable foreign regulatory authority inspection. These requirements include the qualification and validation of our manufacturing equipment and processes.inspections. We may not be able to develop or acquire the internal expertise and resources necessary for compliance with these requirements. ShouldIf we failare not able to comply with cGMP regulations, the opening ofapplicable regulatory requirements or produce product that meets our manufacturing facilityrequirements and specifications, we will be delayed.subject to the same risks that we would be subject to should third party manufacturers be unable to comply with the applicable regulatory requirements or produce product meeting our requirements or specifications, as described above. If we fail to achieve the operating efficiencies that we anticipate, our manufacturing and operating costs may be greater than expected, which could have a material adverse impact on our operating results.order to completeoperating our plannedown manufacturing facility, we may be forced to devote greater resources and management time than anticipated, particularly in areas relating to operations, quality, raw material supply, regulatory, facilities and information technology. Further, should corrective or preventative actions be required, we will be fully responsible for these. If we experience unanticipated employee turnover in any of these areas, we may not be able to effectively manage our ongoing manufacturing operations and we may not achieve the operating efficiencies that we anticipate from the new facility, which may negatively affect our product development timeline. For example, we may be sued if any product candidate we develop allegedly causes injury or is found to be otherwise unsuitable during clinical testing, manufacturing, marketing or sale. Any such product liability claims may include allegations of defects in manufacturing, defects in design, a failure to warn of dangers inherent in the product, negligence, strict liability or a breach of warranties. Claims could also be asserted under state consumer protection acts. Product liability claims might be brought against us by consumers, healthcare providers or others using, administering or selling our products. If we cannot successfully defend ourselves against these claims, we will incur substantial liabilities or be required toOn occasion, large judgments have been awarded in class action lawsuits based on therapeutics that had unanticipated side effects. A successful product liability claim or series of claims brought against us could cause our stock price to fall and, if judgments exceed our insurance coverage, could decrease our cash, and materially harm our business, financial condition, results of operations, stock price and prospects.anti-corruptionanticorruption laws, as well as import and export control laws, customs laws, sanctions laws and other laws governing our operations. If we fail to comply with these laws, we could be subject to civil or criminal penalties, other remedial measures, and legal expenses, which could adversely affect our business, financial condition, results of operations, stock price and prospects.anti-corruptionanticorruption laws, including the U.S. Foreign Corrupt Practices Act, or FCPA, the U.K. Bribery Act 2010, or the Bribery Act, and other anti-corruptionanticorruption laws that apply in countries where we do business. The FCPA, the Bribery Act, and these other laws generally prohibit us and our employees and intermediaries from bribing, being bribed or making other prohibited payments to government officials or other persons to obtain or retain business or gain some other business advantage. We also may participate in collaborations and relationships with third parties whose actions, if non-compliant,noncompliant, could potentially subject us to liability under the FCPA, Bribery Act or local anti-corruptionanticorruption laws. In addition, we cannot predict the nature, scope or effect of future regulatory requirements to which our international operations might be subject or the manner in which existing laws might be administered or interpreted.anti-corruptionanticorruption laws or other legal requirements, including trade control laws. If we are not in compliance with applicable anti-corruptionanticorruption laws or trade control laws, we may be subject to criminal and civil penalties, disgorgement and other sanctions and remedial measures, and legal expenses, which could have an adverse impact on our business, financial condition, results of operations, stock price and prospects. Likewise, any investigation of any potential violations of these anti-corruptionanticorruption laws or trade control laws by U.S., U.K. or other authorities could also have an adverse impact on our reputation, our business, financial condition, results of operations, stock price and prospects. including those described in "Business—Regulatory matters," such as the federal Anti-Kickback Statute, the federal civil and criminal False Claims Acts, the civil monetary penalties statute, the Medicaid Drug Rebate statute and other price reporting requirements the Veterans Health Care Act of 1992, or VHCA, the federal Health Insurance Portability and Accountability Act of 1996 (as amended by the Health Information Technology for Economics and Clinical Health Act, or HITECH), or HIPAA, the FCPA, the ACA, and similar state laws. Even though we do not and will not control referrals of healthcare services or bill directly to Medicare, Medicaid or other third-party payors, certain federal and state healthcare laws, and regulations pertaining to fraud and abuse, reimbursement programs, government procurement, and patients'patients’ rights are and will be applicable to our business. We would be subject to healthcare fraud and abuse and patient privacy regulation by both the federal government and the states and foreign jurisdictions in which we conduct our business. In the European Union, the data privacy laws are generally stricter than those that apply in the United States and include specific requirements for the collection of personal data of European Union persons or the transfer of personal data outside of the European Union to the United States to ensure that European Union standards of data privacy will be applied to such data. governmental laws or regulations that apply to us, we may be subject to penalties, including civil, criminal, and administrative penalties, damages, fines, disgorgement, suspension and debarment from government contracts, and refusal of orders under existing government contracts, exclusion from participation in U.S. federal or state health care programs, corporate integrity agreements, and the curtailment or restructuring of our operations, any of which could materially adversely affect our ability to operate our business and our financial results. If any of the physicians or other healthcare providers or entities with whom we expect to do business is found not to be in compliance with applicable laws, it may be subject to criminal, civil or administrative sanctions, including but not limited to, exclusions from participation in government healthcare programs, which could also materially affect our business. Although an effective compliance program can mitigate the risk of investigation and prosecution for violations of these laws, the risks cannot be entirely eliminated. Moreover, achieving and sustaining compliance with applicable federal, state and foreign privacy, data protection, security, reimbursement, and fraud laws may prove costly. Any action against us for violation of these laws, even if we successfully defend against it, could cause us to incur significant legal expenses and divert our management'smanagement’s attention from the operation of our business.If the government or third-party payors fail to provide adequate coverage, reimbursement and payment rates for our product candidates, or if health maintenance organizations or long-term care facilities choose to use therapies that are less expensive or considered a better value, our revenue and prospects for profitability will be limited. In both domestic and foreign markets, sales of our products will depend in part upon the availability of coverage and reimbursement from third-party payors. Such third-party payors include government health programs such as Medicare and Medicaid, managed care providers, private health insurers, and other organizations. Coverage decisions may depend upon clinical and economic standards that disfavor new therapeutic products when more established or lower cost therapeutic alternatives are already available or subsequently become available, even if our products are alone in a class. If reimbursement is not available, or is available only to limited levels, our product candidates may be competitively disadvantaged, and we may not be able to successfully commercialize our product candidates. Even if coverage is provided, the approved reimbursement amount may not be high enoughto allow us to establish or maintain a market share sufficient to realize a sufficient return on our or their investments. Alternatively, securing favorable reimbursement terms may require us to compromise pricing and prevent us from realizing an adequate margin over cost. There is significant uncertainty related to third-party payor coverage and reimbursement of newly approved therapeutics. Marketing approvals, pricing, and reimbursement for new therapeutic products vary widely from country to country. Current and future legislation may significantly change the approval requirements in ways that could involve additional costs and cause delays in obtaining approvals. Some countries require approval of the sale price of a therapeutic before it can be marketed. In many countries, the pricing review period begins after marketing or product licensing approval is granted. In some foreign markets, prescription biopharmaceutical pricing remains subject to continuing governmental control even after initial approval is granted. As a result, we might obtain marketing approval for a product in a particular country, but then be subject to price regulations that delay commercial launch of the product, possibly for lengthy time periods, which may negatively impact the revenues we are able to generate from the sale of the product in that country. Adverse pricing limitations may hinder our ability to recoup our investment in one or more product candidates, even if our product candidates obtain marketing approval. Our ability to commercialize our product candidates will depend in part on the extent to which coverage and reimbursement for these products and related treatments will be available from government health administration authorities, private health insurers and other organizations. Regulatory authorities and third-party payors, such as private health insurers, and health maintenance organizations, decide which medications they will cover and establish reimbursement levels. The healthcare industry is acutely focused on cost containment, both in the United States and elsewhere. Several third-party payors are requiring that companies provide them with predetermined discounts from list prices, are using preferred drug lists to leverage greater discounts in competitive classes, are disregarding therapeutic differentiators within classes, are challenging the prices charged for therapeutics, and are negotiating price concessions based on performance goals. Third-party payors, whether foreign or domestic, or governmental or commercial, are developing increasingly sophisticated methods of controlling healthcare costs. In addition, in the United States, no uniform policy of coverage and reimbursement for products exists among third-party payors. Therefore, coverage and reimbursement for products can differ significantly from payor to payor. Further, we believe that future coverage and reimbursement will likely be subject to increased restrictions both in the United States and in international markets. Third-party coverage and reimbursement for our products or product candidates for which we receive regulatory approval may not be available or adequate in either the United States or international markets, which could have a negative effect on our business, financial condition, results of operations, stock price and prospects. Assuming coverage is approved, the resulting reimbursement payment rates might not be adequate. If payors subject our product candidates to maximum payment amounts, or impose limitations that make it difficult to obtain reimbursement, providers may choose to use therapies which are less expensive when compared to our product candidates. Additionally, if payors require high copayments, beneficiaries may seek alternative therapies. We may need to conduct post-marketing studies in order to demonstrate the cost-effectiveness of any products to the satisfaction of hospitals, other target customers and their third-party payors. Such studies might require us to commit a significant amount of management time and financial and other resources. Our products might not ultimately be considered cost-effective. Adequate third-party coverage and reimbursement might not be available to enable us to maintain price levels sufficient to realize an appropriate return on investment in product development. In addition, federal programs impose penalties on manufacturers of therapeutics in the form of mandatory additional rebates and/or discounts if commercial prices increase at a rate greater than the Consumer Price Index-Urban, and these rebates and/or discounts, which can be substantial, may impact our ability to raise commercial prices. A few states have also passed or are considering legislation intended to prevent significant price increases. Regulatory authorities and third-party payors haveattempted to control costs by limiting coverage and the amount of reimbursement for particular medications, which could affect our ability to sell our product candidates profitably. These payors may not view our products, if any, as cost-effective, and coverage and reimbursement may not be available to our customers, or may not be sufficient to allow our products, if any, to be marketed on a competitive basis. Cost-control initiatives could cause us to decrease, discount, or rebate a portion of the price we, or they, might establish for products, which could result in lower than anticipated product revenues. If the realized prices for our products, if any, decrease or if governmental and other third-party payors do not provide adequate coverage or reimbursement, our prospects for revenue and profitability will suffer. There may also be delays in obtaining coverage and reimbursement for newly approved therapeutics, and coverage may be more limited than the indications for which the product is approved by the FDA or comparable foreign regulatory authorities. Such delays have made it increasingly common for manufacturers to provide newly approved drugs to patients experiencing coverage delays or disruption at no cost for a limited period in order to ensure that patients are able to access the drug. Moreover, eligibility for reimbursement does not imply that any therapeutic will be paid for in all cases or at a rate that covers our costs, including research, development, manufacture, sale, and distribution. Interim reimbursement levels for new therapeutics, if applicable, may also not be sufficient to cover our costs and may only be temporary. Reimbursement rates may vary, by way of example, according to the use of the product and the clinical setting in which it is used. Reimbursement rates may also be based on reimbursement levels already set for lower cost products or may be incorporated into existing payments for other services. In addition, third-party payors are increasingly requiring higher levels of evidence of the benefits and clinical outcomes of new technologies, benchmarking against other therapies, seeking performance-based discounts, and challenging the prices charged. We cannot be sure that coverage will be available for any product candidate that we commercialize and, if available, that the reimbursement rates will be adequate. An inability to promptly obtain coverage and adequate payment rates from both government-funded and private payors for any of our product candidates for which we obtain marketing approval could have a material adverse effect on our operating results, our ability to raise capital needed to commercialize products and our overall financial condition.post-approvalpost approval activities and affect our ability to profitably sell any products for which we obtain marketing approval. We expect that current laws, as well as other healthcare reform measures that may be adopted in the future, may result in more rigorous coverage criteria and in additional downward pressure on the price that we may receive for any approved products. For example, legislative changes have been proposed and adopted since the ACA was enacted in 2010. These changes include, among other things, aggregate reductions to Medicare payments to providers of up to 2% per fiscal year, which went effective on April 1, 2013. In addition, the American Taxpayer Relief Act of 2012, among other things, further reduced Medicare payments to several providers and increased the statute of limitations period for the government to recover overpayments to providers from three to five years. The Centers for Medicare and Medicaid Services, or CMS, promulgated regulations governing manufacturers' obligations and reimbursement under the Medicaid Drug Rebate Program, and recently promulgated a regulation that limited Medicare Part B payment to certain hospitals for outpatient drugs purchased under the 340B program. Changes imposed by recentlegislative actions are further described in "Business—Regulatory matters." These new laws may result in additional reductions in Medicare and other healthcare funding,products, which could have a material adverse effect on customers for our products, if approved, and, accordingly, on our results of operations. We expect that the ACA, as well as other federal and state healthcare reform measures that may be adopted in the future, may result in more rigorous coverage criteria, increased regulatory burdens and operating costs, decreased net revenue from our biopharmaceutical products, decreased potential returns from our development efforts, and additional downward pressure on the price that we receive for any approved product. In addition, there have been a number of other legislative and regulatory proposals aimed at changing the biopharmaceutical industry. For instance, the Drug Quality and Security Act imposes obligations on manufacturers of biopharmaceutical products related to product tracking and tracing. Among the requirements of this legislation, manufacturers are required to provide certain information regarding the product to individuals and entities to which product ownership is transferred, will be required to label products with a product identifier, and are required to keep certain records regarding the product. The transfer of information to subsequent product owners by manufacturers is also required to be done electronically. Manufacturers are also being required to verify that purchasers of the manufacturers' products are appropriately licensed. Further, manufactures have product investigation, quarantine, disposition, and FDA, other comparable foreign regulatory authorities, and trading partner notification responsibilities related to counterfeit, diverted, stolen, and intentionally adulterated products that would result in serious adverse health consequences of death to humans, as well as products that are the subject of fraudulent transactions or which are otherwise unfit for distribution such that they would be reasonably likely to result in serious health consequences or death.It is not always possible to identify and deter this type of misconduct, and the precautions we take to detect and prevent this activity may not be effective in controlling unknown or unmanaged risks or losses or in protecting us from governmental investigations or other actions or lawsuits stemming from a failure to be in compliance with such laws or regulations. Moreover, it is possible for a whistleblower to pursue a False Claims Act case against us even if the government considers the claim unmeritorious and declines to intervene, which could require us to incur costs defending against such a claim. If any such actions are instituted against us,third-partythird party claims. Although we generally contract with third parties for the disposal of hazardous materials and wastes from our operations, we cannot eliminate the risk of contamination or injury from these materials. In the event of contamination or injury resulting from our use of hazardous materials, we could be held liable for any resulting damages, and any liability could exceed our resources. We also could incur significant costs associated with civil or criminal fines and penalties.workers'workers’ compensation insurance to cover costs and expenses, we may incur due to injuries to our employees resulting from the use of hazardous materials, this insurance may not provide adequate coverage against potential liabilities. We do not maintain insurance for environmental liability or toxic tort claims that may be asserted against us in connection with our storage or disposal of biological or hazardous materials.radioactive materials.computer systems,privacy and security policies, contracts, and other obligations that govern the processing of personal data by us and on our behalf.thosedisclose individually identifiable health information maintained by a HIPAA-covered entity in a manner that is not authorized or permitted by HIPAA.third-party CROsbusiness activities and increase our compliance costs and potential liability. In addition, it is anticipated that the California Privacy Rights Act, or CPRA, which became operative on January 1, 2023, will expand the CCPA, including by expanding consumers’ rights with respect to certain sensitive personal data. The CPRA also creates the new California Privacy Protection Agency to implement and enforce the CCPA and the CPRA, which could increase compliance costs. Similar laws have passed in Virginia, Utah, Connecticut and Colorado, and have been proposed in other states and at the federal level, reflecting a trend toward more stringent privacy legislation in the United States. The enactment of such laws could have potentially conflicting requirements that would make compliance challenging. In the event that we are subject to or affected by HIPAA, the CCPA, the CPRA or other contractors or consultants, may fail or suffer security breaches, whichdomestic privacy and data protection laws, any liability from failure to comply with the requirements of these laws could result in a material disruptionadversely affect our financial condition.our development programs. Our internal computer systems,laws, regulations, and those of our CROs, CMOs, information technology suppliersindustry standards apply to data privacy and other contractors and consultants are vulnerable to damage from computer viruses, cyber attacks and other unauthorized access, natural disasters, terrorism, war, and telecommunication and electrical failures. If such an event were to occur and cause interruptions in our operations, it could result in a material disruption of our development programs.security. For example, the lossEuropean Union’s General Data Protection Regulation, or EU GDPR, and the United Kingdom’s GDPR, or UK GDPR, impose strict requirements for processing personal data. For example, under the EU GDPR, government regulators may impose temporary or definitive bans on data processing, as well as fines up to the greater of clinical trial€20 million or 4% of annual global revenue. Further, individuals may initiate litigation related to processing of their personal data.completed, ongoingEurope or planned clinical trialsother foreign jurisdictions. The inability to import personal data to the United States could result in delays insignificantly and negatively impact our regulatory approval efforts and significantlybusiness operations, limiting our ability to collaborate with parties that are subject to such cross-border data transfer or localization laws; or requiring us to increase our costs to recover or reproduce the data. To the extent that any disruption or security breach were to resultpersonal data processing capabilities and infrastructure in a loss of or damage to our data or applications, or inappropriate disclosure of personal, confidential or proprietary information, we could incur liability and the further development of any of our product candidates could be delayed. As of March 31, 2019, we had 67 full-time employees, including 58 employees engaged in research and development. Future growth would impose significant added responsibilities on members of management, including:•identifying, recruiting, integrating, maintaining and motivating additional employees;•managing our internal development efforts effectively, including the clinical, FDA and comparable foreign regulatory review process for our product candidates, while complying with our contractual obligations to contractors and other third parties; and•strengthening our operational, financial and management controls, reporting systems and procedures.our management may also have to divert a disproportionate amount of itstheir attention away from day-to-day activities in order to devote a substantial amount of time to managing these growth activities.We cannot assure you thatIf the services of independent organizations, advisors and consultants will continue to be availablebecome unavailable to us on a timely basis when needed, or that we can find qualified replacements. In addition, if we are unable to effectively manage our outsourced activities, or if the quality or accuracy of thesuch services provided by consultants is compromised for any reason, our clinical trials may be extended, delayed or terminated, we may not comply with our financial reporting and accounting obligations on a timely basis and we may not be able to obtain marketing approval of RP1 and our other product candidates or otherwise advance our business. We cannot assure you that we will be able to manage our existing consultants or find other competent outside contractors and consultants on economically reasonable terms, or at all.We are highly dependentpersonnel, including Robert Coffin, Ph.D., our Presidentemployees and Chief Executive Officer; Philip Astley-Sparke, our Executive Chairman; Howard Kaufman, M.D., our Chief Medical Officer;consultants, and Colin Love, Ph.D., our Chief Operating Officer. If we are not successful in attracting, motivatingto attract and retainingmotivate highly qualified personnel, we may not be able to successfully implement our business strategy.management and particularly on the services of our founders,executive leadership team, as well as our other scientific, manufacturing, quality and medical personnel. Robert Coffin, Ph.D., our President and Chief Executive Officer, Philip Astley-Sparke, our Executive Chairman, and Colin Love, Ph.D., our Chief Operating Officer, were the founder and senior management team of BioVex Group, Inc., or BioVex, where they invented and developed T-Vec, the only oncolytic immunotherapy to receive FDA approval. BioVex was acquired by Amgen Inc., or Amgen, in 2011. Our Chief Medical Officer, Howard Kaufman, M.D., was the principal investigator for the pivotal study upon which T-Vec was approved and previously served as President of the Society for the Immunotherapy of Cancer. We believe that their drug discovery and development experience, and overall biopharmaceutical company management experience, would be difficult to replace. The loss of the services of our key personnel and any of our other executive officers, key employees, and scientific and medical advisors, andwithout our inability to find suitable replacements, could result in delays in product development and harm our business. Furthermore,historical results,hiring or departure of executives and key employees from time to time could disrupt our business. Over the a past performance and/fiscal year, there have been changes to our executive leadership team. For example, in December 2022, we announced the appointment of Konstantinos Xynos as our Chief Medical Officer, the hiring of Christopher Sarchi as our Chief Commercial Officer and the appointment of Sushil Patel, our former Chief Commercial Officer as our Chief Scientific Officer. Subsequently, in May 2023, we announced Jean Franchi, our Chief Financial Officer notified us of her resignation from the Company effective June 2, 2023. These changes and any future significant leadership changes or acquisitionssenior management transitions involve inherent risk. Any failure to find a timely and suitable replacement and ensure an effective transition, including the effective onboarding, assimilation, and retention of companiesour management team and key employees, could hinder our strategic planning, business execution and future performance. In addition, executive leadership transitionwhich our founders were affiliated, including BioVex, do not necessarily predictdeep institutional or guarantee similar results for our company. We conducttechnical knowledge, or result in changes to business strategy or objectives, and may negatively impact our operations at our facilities near Boston, Massachusetts and near Oxford, England, each of which arerelationships with employees and third-parties due to increased or unanticipated expenses, operational inefficiencies, uncertainty regarding changes in regions that are home to many other biopharmaceutical companiesstrategy, decreased employee morale and many academicproductivity, and research institutions. Competition for skilled personnel is intense and the turnover rate can be high, which may limit our ability to hire and retain highly qualified personnel on acceptable terms or at all. We expect that we will need to recruit talent from outside of these regions, and doing so may be costly and difficult. We do not maintain "key man" insurance policies on the lives of any of these individuals or the lives of any of our other employees.We have identified material weaknesses in our internal control over financial reporting. If we are unable to remediate these material weaknesses, or if we identify additional material weaknesses in the future or otherwise fail to maintain an effective system of internal controls, we may not be able to accurately or timely report our financial condition or results of operations, which may adversely affect our business. In connection with the audits of our consolidated financial statements as of and for the years ended March 31, 2019, 2018 and 2017, we identified material weaknesses in our internal control over financial reporting. A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis. If we are unable to remediate these material weaknesses, or if we identify additional material weaknesses in the future or otherwise fail to maintain an effective system of internal controls, we may not be able to accurately or timely report our financial condition or results of operations, which may adversely affect investor confidence in us and, as a result, our stock price and ability to access the capital markets in the future. The material weaknesses we identified were as follows:•We did not design or maintain an effective control environment commensurate with our financial reporting requirements. We lacked a sufficient number of professionals with an appropriate level of accounting knowledge, training and experience to appropriately analyze, record and disclose accounting matters timely and accurately. Additionally, the limited personnel resulted in our inability to consistently establish appropriate authorities and responsibilities in pursuit of our financial reporting objectives, as demonstrated by, among other things, our insufficient segregation of duties in our accounting function. This material weakness further contributed to the material weakness below.•We did not design and maintain formal accounting policies, processes and controls to analyze, account for and disclose complex transactions, including accounting for preferred stock, stock-based compensation, warrant liabilities and leases. Each of these control deficiencies could result in a misstatement of our accounts or disclosures that would result in a material misstatement of our annual or interim consolidated financial statements that would not be prevented or detected, and accordingly, we determined that these control deficiencies constitute material weaknesses. These material weaknesses also resulted in adjustments to preferred stock, stock compensation expense, warrant liability and deferred rent in our consolidated financial statements as of and for the year ended March 31, 2017, which were recorded prior to their issuance. Prior to the completion of our IPO, we were a private company with limited accounting personnel to adequately execute our accounting processes and other supervisory resources with which to address our internal control over financial reporting. We have implemented, and continue to implement, measures designed to improve our internal control over financial reporting and remediate the control deficiencies that led to these material weaknesses. To date, we have hired additional finance and accounting personnel and have engaged a third-party consulting firm to assist us in the design and documentation of appropriate controls. We are continuing these efforts in order to design and implement our financial control environment, including the establishment of controls to account for and disclose complex transactions. We cannot assure you that the measures we have taken to date, and actions we intend to take in the future, will be sufficient to remediate the control deficiencies that led to these material weaknesses in our internal control over financial reporting or that they will prevent or avoid potential future material weaknesses. In addition, neither our management nor an independent registered public accounting firm has performed an evaluation of our internal control over financial reporting in accordance with the provisions of the Sarbanes-Oxley Act because no such evaluation has been required. Had we or our independent registered public accounting firm performed an evaluation of our internal control over financial reporting in accordance with the provisions of the Sarbanes-Oxley Act, additional material weaknesses may have been identified. If we are unable to successfully remediate our existing or any future material weaknesses in our internal control over financial reporting, or identify any additional material weaknesses, the accuracy and timing of our financial reporting may be adversely affected, potentially resulting in restatements of our financial statements, we may be unable to maintain compliance with securities law requirements regarding timely filing of periodic reports and applicable Nasdaq listing requirements, investors may lose confidence in our financial reporting, and our share price may decline as a result.controlscontrol over financial reporting our ability to produce accurate and timely financial statements could be impaired.controlscontrol over financial reporting. Commencing with our fiscal year ending March 31, 2020, weWe must perform system and process design evaluation and testing of the effectiveness of our internal controls over financial reporting to allow management to report on the effectiveness of our internal controls over financial reporting, in our Annual Report on Form 10-K filing for that year, as required by Section 404 of the Sarbanes-Oxley Act. ThisWe continue to be engaged in a process to document and evaluate our internal control over financial reporting, which is both costly and challenging. In this regard, we will require that weneed to continue to incur substantial additional professional fees and internal costs to expandfor our accounting and finance functions, and that we expend significant management efforts. Priorefforts, continue to our IPO,implement plans developed to address areas that we were not required to test ourhave identified as requiring improvement, validate through testing that controls are functioning as documented and implement a continuous reporting and improvement process for internal controls within a specified period and, as a result, we may experience difficulty in meeting these reporting requirements in a timely manner. if our independent registered public accounting firm determines that we continue to have a material weakness or significant deficiency in our internal control over financial reporting, or if we are unable to maintain proper and effective internal controls over financial reporting, we may not be able to produce timely and accurate financial statements. If that were to happen, our investors could lose confidence in our reported financial information, the market price of our stock could decline and we could be subject to sanctions or investigations by the SEC, Nasdaq or other regulatory authorities.well-conceivedwell conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met.decision-makingdecision making can be faulty, and that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people or by an unauthorized override of the controls. Accordingly, because of the inherent limitations in our control system, misstatements due to error or fraud may occur and not be detected.disclosure controlsbusiness and procedures were not effective as of March 31, 2019, and in any event may not prevent or detect all errors or acts of fraud. We must design our disclosure controls and procedures to reasonably assure that information we must disclose in reports we file or submit under the Exchange Act is accumulated and communicated to management, and recorded, processed, summarized and reported within the time periods specifiedoperations could suffer in the rulesevent of system failures or unauthorized or inappropriate use of or access to our systems.formsshare (collectively, processing) sensitive information, including personal data, proprietary and confidential business data, trade secrets, intellectual property, data we collect about trial participants in connection with clinical trials, and sensitive third-party data. The secure maintenance of this information is critical to our operations and business strategy. Some of this information could be an attractive target of criminal attack or unauthorized access and use by third parties with a wide range of motives and expertise, including organized criminal groups, “hacktivists,” patient groups, disgruntled current or former employees and others. Cyber-attacks are of ever-increasing levels of sophistication, and despite our security measures, our information technology and infrastructure may be vulnerable to such attacks or may be breached, including due to employee error or malfeasance.SEC. Based on the evaluationrisks of cyber-crime are complex and continue to evolve. There can be no assurance that our security efforts and measures will be effective or that attempted security breaches or disruptions would not be successful or damaging. Our internal computer systems and those of our disclosure controlscontractors and procedures as of March 31, 2019, we concluded that, as of March 31, 2019, our disclosure controlsconsultants are vulnerable to damage or interruption from computer viruses, unauthorized or inappropriate access or use, natural disasters,procedures were not effective at the reasonable assurance level as a result of the material weaknesses discussed above. Notwithstanding these material weaknesses, our management has concluded that the financial statements included elsewhere in this Annual Report present fairly, in all material respects, our financial position, results of operationstelecommunication and cash flows in conformity with generally accepted accounting principles. We believe that any disclosure controls and procedures or internal controls and procedures, no matter how well-conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people or by an unauthorized override of the controls. Accordingly, because of the inherent limitations in our control system, misstatements due to error or fraud may occur and not be detected.If we engage in future acquisitions or strategic partnerships, this may increase our capital requirements, dilute our stockholders,electrical failures. Such events could cause us to incur debt or assume contingent liabilities, and subject us to other risks. We may evaluate various acquisitions and strategic partnerships, including licensing or acquiring complementary products, intellectual property rights, technologies, or businesses. Any potential acquisition or strategic partnership may entail numerous risks, including:•increased operating expenses and cash requirements;•the assumption of additional indebtedness or contingent liabilities;•the issuanceinterruption of our equity securities;•assimilation of operations, intellectual property and products of an acquired company, including difficulties associated with integrating new personnel;•the diversion of our management's attention from our existing product programs and initiatives in pursuing such a strategic merger or acquisition;•retention of key employees,operations. For example, the loss of key personnel, and uncertainties inpre-clinical trial data or data from clinical trials for our ability to maintain key business relationships;•risks and uncertainties associated with the other party to such a transaction, including the prospects of that party, their regulatory compliance status, and their existing products or product candidates and marketing approvals; and•our inability to generate revenue from acquired technology and/or products sufficient to meet our objectives in undertaking the acquisition or even to offset the associated acquisition and maintenance costs. In addition, if we undertake acquisitions, we may issue dilutive securities, assume or incur debt obligations, incur large one-time expenses and acquire intangible assets that could result in significant future amortization expensedelays in our regulatory filings and development efforts, as well as delays in the commercialization of our products, and significantly increase our costs. To the extent that any disruption, security breach or intangible asset impairment charges. Moreover, we may not be able to locate suitable acquisition opportunities and this inability could impair our ability to growunauthorized or obtaininappropriate use or access to technology or products that may be importantour systems were to the development of our business. Any of the foregoing may materially harm our business, financial condition, results of operations, stock price and prospects.Unfavorable market and economic conditions may have serious adverse consequences on our business, financial condition, results of operations, stock price and prospects. Our results of operations could be adversely affected by general conditions in the global economy and in the global financial markets. The most recent global financial crisis caused extreme volatility and disruptions in the capital and credit markets. A severe or prolonged economic downturn could result in a varietyloss of risksor damage to our business,data, or inappropriate disclosure of confidential or proprietary information, including a reduced abilitybut not limited to raise additional capital when needed on acceptable terms, if at all. A weakpatient, employee or declining economyvendor information, we could also strain our suppliers, possibly resulting in supply disruption. Any of the foregoing could harm our businessincur notification obligations to affected individuals and we cannot anticipate all of the ways in which the economic climate and financial market conditions could adversely impact our business. At March 31, 2019, we had $134.8 million of cash and cash equivalents and short-term investments. Although we are not aware of any downgrades, material losses,government agencies, liability, including potential lawsuits from patients, collaborators, employees, stockholders or other significant deterioration inthird parties and liability under foreign, federal and state laws that protect the fair valueprivacy and security of personal information, and the development and potential commercialization of our cash equivalentsproduct candidates could be delayed. or short-term investments since that date, we cannot assure you that deterioration ofadditional information, see the global creditRisk Factor captioned “financial markets would notchanging obligations related to privacy and security. Our actual or perceived failure to comply with such obligations could lead to government enforcement actions (which could include civil or criminal penalties), private litigation and/or adverse publicity and could negatively impact our current portfolio of cash equivalents or short-term investments, or our ability to meet our financing objectives. Furthermore, our stock price may decline due, in part, to the volatility of the stock market and general economic downturns.Exchange rate fluctuations may materially affect our operating results of operations and financial conditions. Owing to the international scope of our operations, fluctuations in exchange rates, particularly between the U.S. dollar and the British pound and the euro, may adversely affect us. Although we are based in the United States, we have significant research and development operations in the United Kingdom, and source third-party manufacturing, consulting and other services in the United Kingdom and the European Union. As a result, our business and the price of our common stock may be affected by fluctuations in foreign exchange rates, which may have a significant impact on our results of operations and cash flows from period to period. Currently, we do not have any exchange rate hedging arrangements in place.19,20, 2018. Given the limited trading history of our common stock, there is a risk that an active trading market for shares of our common stock may not be sustained. In the absence of an active trading market for shares of our"Risk factors"“Risk factors” section.employee'semployee’s requisite service period. As the variables that weestablishing, equipping and operating our planned manufacturing facilityfacility;actual timing of the facility becoming operational;•FDA'sFDA’s and comparable foreign regulatory authorities'authorities’ guidelines and requirements, the quantity of production and the terms of any agreements with manufacturers;and the establishment and equipping of our planned manufacturing facility, as well as for general corporate purposes, including working capital requirements and other operating expenses. As a result, investors will be relying upon management'smanagement’s judgment with only limited information about our specific intentions for the use of our resources. We may use our resources for purposes that do not yield a significant return or any return at all for our stockholders. In addition, pending their use, we may invest our cash, cash equivalents and investments in a manner that does not produce income or that loses value.Our executive officers, directors, and stockholders and their affiliates who beneficially own more than 5% of our common stock exercise significant influence over our company, which limits your ability to influence corporate matters and could delay or prevent a change in corporate control. Based on the number of shares outstanding as of March 31, 2019, our executive officers, directors, holders of 5% or more of our capital stock and their respective affiliates beneficially owned a significant percentage of our voting stock. While these stockholders collectively own less than a majority of our voting stock, these stockholders will nevertheless continue to have significant influence over matters requiring stockholder approval. For example, these stockholders will continue to significantly influence elections of directors, amendments of our organizational documents, or approval of any merger, sale of assets, or other major corporate transaction. This may prevent or discourage unsolicited acquisition proposals or offers for our common stock that you may feel are in your best interest as one of our stockholders.Conflicts of interest may arise because some members of our board of directors are representatives of our principal stockholders. Certain of our principal stockholders or their affiliates are venture capital funds or other investment vehicles that could invest in entities that directly or indirectly compete with us. As a result of these relationships, when conflicts arise between the interests of the principal stockholders or their affiliates and the interests of other stockholders, members of our board of directors that are representatives of the principal stockholders may not be disinterested. Neither the principal stockholders nor the representatives of the principal stockholders on our board of directors, by the terms of our amended and restated certificate of incorporation, are required to offer us any transaction opportunity of which they become aware and could take any such opportunity for themselves or offer it to their other affiliates, unless such opportunity is expressly offered to them solely in their capacity as members of our board of directors.equity-relatedequity related securities in the future at a time and price that we deem appropriate, or to use equity as consideration for future acquisition.approximately 6.9 milliona significant number of shares of common stock that are either subject to outstanding options and restricted stock units, reserved for future issuance under our equity incentive plans or subject to outstanding warrants are eligible for sale in the public market to the extent permitted by the provisions of various vesting schedules and Rule 144 and Rule 701 under the Securities Act.Act, including our ESPP if activated. If these additional shares of common stock are sold, or if it is perceived that they will be sold, in the public market, the market price of our common stock could decline.approximately 19.2 million shares of our common stock pursuant to the amended and restated investors'investors’ rights agreement by and among us and certain of our stockholders. Registration of these shares under the Securities Act would result in the shares becoming freely tradable without restriction under the Securities Act, except for shares purchased by affiliates. Any sales of securities by these stockholders could have a material adverse effect on the market price of our common stock.incur significantly increased costs asmay sell up to $93.3 million of shares of our common stock in “at-the-market” offerings pursuant to a resultSales Agreement entered into on June 23, 2022 with SVB Leerink LLC, or the 2022 Sales Agreement. The sale of operating as a public company, andsubstantial number of shares of our management is required to devote substantial time to compliance initiatives. As a public company, we incur significant legal, accounting and other expenses. We are subjectcommon stock pursuant to the reporting requirements2022 Sales Agreement, or anticipation of such sales, could cause the Exchange Act, which requires, among other things,trading price of our common stock to decline or make it more difficult for us to sell equity or equity-related securities in the future at a time and at a price that we file withmight otherwise desire. In addition, issuances of any shares of our common stock sold pursuant to the SEC annual, quarterly and current reports with respect2022 Sales Agreement will have a dilutive effect on our existing stockholders.businessstockholders, restrict our operations or require us to relinquish rights to our technologies or product candidates.financial condition. In addition, the Sarbanes-Oxley Act, and related SEC and Nasdaq rules impose significant requirements on public companies, including requiring establishment and maintenance of effective disclosure and financial controls and changes in corporate governance practices. Further, in July 2010, the Dodd-Frank Wall Street Reform and Consumer Protection Act,may involve agreements that include covenants limiting or the Dodd-Frank Act, was enacted. There are significant corporate governance and executive compensation-related provisions in the Dodd-Frank Act that require the SECrestricting our ability to adopt additional rules and regulations in these areastake specific actions, such as "say on pay" and proxy access. Recent legislation permits emerging growth companiesincurring additional debt, making capital expenditures or declaring dividends.implement many of these requirements over a longer period and up to five years from the pricing of our IPO. We intend to take advantage of this new legislation, but cannot guarantee thatraise additional funds through equity or debt financings when needed, we will notmay be required to implement thesegrant rights to develop and market one or more of our product candidates or technologies that we would otherwise prefer to develop and market ourselves.sooner than budgeteddilute our stockholders, cause us to incur debt or plannedassume contingent liabilities, and therebysubject us to other risks.unexpected expenses. Stockholder activism,debt obligations, incur large one-time expenses and acquire intangible assets that could result in significant future amortization expense or intangible asset impairment charges. Moreover, we may not be able to locate suitable acquisition opportunities and this inability could impair our ability to grow or obtain access to technology or products that may be important to the current political environment anddevelopment of our business. Any of the current high level of government intervention and regulatory reformforegoing may lead to substantial new regulations and disclosure obligations, which may lead to additional compliance costs and impact the manner in which we operatematerially harm our business, in ways we cannot currently anticipate. The rulesfinancial condition, results of operations, stock price and regulations applicable to public companiesprospects.substantially increased our legal and financial compliance costs and have made some activities more time-consuming and costly. If these requirements divert the attention of our management and personnel from other business concerns, they could have a materialserious adverse effectconsequences on our business, financial condition, results of operations, stock price and prospects.increased costs will decreasemost recent global financial crisis caused extreme volatility and disruptions in the capital and credit markets. A severe or prolonged economic downturn could result in a variety of risks to our net incomebusiness, including a reduced ability to raise additional capital when needed on acceptable terms, if at all. A weak or increasedeclining economy could also strain our net losssuppliers, possibly resulting in supply disruption. Any of the foregoing could harm our business and we cannot anticipate all of the ways in which the economic climate and financial market conditions could adversely impact our business.require usreduce our ability to reduce costsaccess capital, which could negatively impact our short-term and long-term liquidity.other areasthe fair value of our business. For example, these rulescash equivalents or short-term investments, we cannot assure you that deterioration of the global credit and regulationsfinancial markets would not negatively impact our current portfolio of cash equivalents or short-term investments, or our ability to meet our financing objectives. Furthermore, our stock price may decline due, in part, to the volatility of the stock market and general economic downturns.made it more difficultsignificant research and more expensive for us to obtain directordevelopment operations in the United Kingdom, and officer liability insurancesource third-party manufacturing, consulting and we may be required to incur substantial costs to maintainother services in the same or similar coverage. The impact ofthese requirements could also make it more difficult for us to attractUnited Kingdom and retain qualified persons to serve on our board of directors, our board committees or as executive officers.If securities analysts do not publish research or reports aboutthe Europeanor if they publish negative evaluations of our stock,and the price of our stock could decline. The trading market for our common stock relies,may be affected by fluctuations in part,foreign exchange rates, which may have a significant impact on the researchour results of operations and reports that industry or financial analysts publish about us or our business. If one or more of the analysts coveringcash flows from period to period. Currently, we do not have any exchange rate hedging arrangements in place.downgrade their evaluationsfinancial condition or results of our stock, the priceoperations.our stockoperations could decline. If one or more of these analysts cease to cover our stock, we could lose visibilitybe adversely affected by general conditions in the market for our stock, which,global economy and in turn, could cause our stock price to decline.Anti-takeover provisions in our charter documents and under Delaware law could make an acquisition of our company, which may be beneficial to our stockholders, more difficult and may prevent attempts by our stockholders to replace or remove our current management. Provisions in our certificate of incorporation and amended and restated bylaws may delay or prevent an acquisition of our company or a change in our management. These provisions include a classified board of directorsthe global financial markets. The financial markets and the ability of our board of directors to issue preferred stock without stockholder approval. In addition, because we are incorporated in Delaware, we are governedglobal economy may also be adversely affected by the provisionscurrent or anticipated impact of Section 203military conflict, including the ongoing conflict between Russia and Ukraine, terrorism or other geopolitical events. Sanctions imposed by the United States and other countries in response to such conflicts may also adversely impact our clinical trials, the financial markets and the global economy, and any economic countermeasures by the affected countries or others could exacerbate market and economic instability. A weak or declining economy or political disruption, including any international trade disputes, could disrupt or otherwise adversely impact our operations and those of the Delaware General Corporation Law, or DGCL,third parties upon which limits the ability of stockholders owning in excess of 15% of our outstanding voting stock to merge or combine with our company.we rely. Although we believe these provisions collectively provide for an opportunity to obtain greater value for stockholders by requiring potential acquirers to negotiate with our board of directors, they would apply even if an offer rejected by our board of directors were considered beneficial by some stockholders. In addition, these provisions may frustratedo not currently operate in Russia or prevent any attempts by our stockholders to replace or remove our current management by making it more difficult for our stockholders to replace members of our board of directors, which is responsible for appointing the members of our management.We are an emerging growth company, and we cannot be certainUkraine, if the reduced reporting requirements applicable to emerging growth companies will make our common stock less attractive to investors. We are an emerging growth company. For as long as we continue to be an emerging growth company, weconflict broadens it may take advantage of exemptions from various reporting requirements applicable to other public companies that are not emerging growth companies, including not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act and critical audit matters reporting, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements and exemptions from the requirements of holding nonbinding advisory votes on executive compensation and stockholder approval of any golden parachute payments not previously approved. We could be an emerging growth company for up to five years following the yearimpact countries or territories in which we completeddo operate or intend to operate, which could have a negative impact on our IPO, although circumstancesability to achieve our objectives or timelines.causeincrease our costs, harm our reputation and adversely impact our financial results.lose that status earlier. We will remain an emerging growth company until the earlier of (1) March 31, 2024, (2) the last day of the fiscal year (a) in which we have total annual gross revenue of at least $1.07 billion or (b) in whichsustainability. If we are deemednot effective in addressing environmental, social and other sustainability matters affecting our business, or setting and meeting relevant sustainability goals, our reputation and financial results may suffer. We may experience increased costs in order to beexecute upon our sustainability goals and measure achievement of those goals, which could have a large accelerated filer, which requires the market value ofmaterially adverse impact on our common stock that is held by non-affiliates to exceed $700.0 million as of the prior September 30th,business and (3) the datefinancial condition. In addition, this emphasis on which we have issued more than $1.0 billionenvironmental, social and other sustainability matters has resulted and may result in non-convertible debt during the prior three-year period. Even after we no longer qualify as an emerging growth company, we may still qualify as a "smaller reporting company" which would allow us to take advantage of many of the same exemptions from disclosure requirements including reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements. We cannot predict if investors will find our common stockless attractive because we may rely on these exemptions. If some investors find our common stock less attractive as a result, there may be a less active trading market for our common stock and our stock price may be more volatile. Under the Jumpstart Our Business Startups Act of 2012, emerging growth companies can also delay adopting new or revised accounting standards until such time as those standards apply to private companies. We have irrevocably elected not to avail ourselves of this exemption from new or revised accounting standards and, therefore, will be subject to the same new or revised accounting standards as other public companies that are not emerging growth companies. As a result, changes in rules of U.S. generally accepted accounting principles or their interpretation, the adoption of new guidancelaws and regulations, including new reporting requirements. If we fail to comply with new laws, regulations or reporting requirements, our reputation and business could be adversely impacted.applicationLoan Agreement with Hercules Capital, Inc., or Hercules, in its capacity as administrative agent and collateral agent and as a lender. The Hercules Loan Agreement contains certain affirmative and negative covenants that could prevent us from taking certain actions without the consent of existing guidance to changesour lenders. These covenants may limit our flexibility in operating our business could significantly affectand our financial position and results of operations.Our amended and restated certificate of incorporation providesability to take actions that the Court of Chancery of the State of Delaware willmight be the exclusive forum for substantially all disputes betweenadvantageous to us and our stockholders, which couldstockholders. The Hercules Loan Agreement also contains customary affirmative and negative covenants that, among other things, may limit our stockholders'ability, subject to certain exceptions, to incur indebtedness, grant liens, enter into a merger or consolidation, enter into transactions with affiliates, or sell all or a portion of our property, business or assets. The Hercules Loan Agreement contains customary events of default. Upon the occurrence and continuation of an event of default, all amounts due under the Hercules Loan Agreement become (in the case of an insolvency or bankruptcy event), or may become (in the case of all other events of default and at the option of Hercules), immediately due and payable. If an event of default under the Hercules Loan Agreement should occur, we could be required to immediately repay any outstanding indebtedness. If we are unable to repay such debt, the lenders would be able to foreclose on the secured collateral, including our cash accounts, and take other remedies permitted under the Hercules Loan Agreement. Even if we are able to repay any indebtedness on an event of default, the repayment of these sums may significantly reduce our working capital and impair our ability to obtain a favorable judicial forum for disputes with us or our directors, officers, or employees. Our amended and restated certificate of incorporation provides that the Court of Chancery of the State of Delaware is the exclusive forum for:•any derivative action or proceeding brought on our behalf;•any action asserting a breach of fiduciary duty;•any action asserting a claim against us arising under the DGCL, our amended and restated certificate of incorporation, or our amended and restated bylaws; and•any action asserting a claim against us that is governed by the internal-affairs doctrine. This exclusive-forum provision may limit a stockholder's ability to bring a claim in a judicial forum that it finds favorable for corporate disputes with us or our directors, officers, or other employees, which may discourage lawsuits against us and our directors, officers, and other employees. If a court were to find this exclusive-forum provision in our amended and restated certificate of incorporation to be inapplicable or unenforceable in an action, we may incur additional costs associated with resolving the dispute in other jurisdictions, which could seriously harm our business. Our certificate of incorporation currently further provides that the federal district courts of the United States will be the exclusive forum for resolving any complaint asserting a cause of action arising under the Securities Act. Following a November 2018 decision of the Delaware Court of Chancery, we understand that this provision is invalid. We do not intend to enforce this provision, and we intend to seek the approval of our shareholders at the 2019 annual meeting to amend our certificate of incorporate to remove this provision. current corporate headquarters are located in Woburn, Massachusetts. We lease this facility, which consists of approximately 4,000 square feet. Our Woburn lease expires in March 2021. In June 2019,Massachusetts, where we entered into a lease for another facility located in Woburn, Massachusetts, which consists ofoccupy approximately 18,712 square feet. The term of thefeet pursuant to a lease is approximately ten years,expiring in 2029, with an option for us to extend the lease by an additional five years. We intend to use this facility as our corporate headquarters upon the completion of planned renovations, which we expect will occur in the fourthcalendar quarter of 2019. We also lease an approximately 12,000 square-foot facility in Oxfordshire, United Kingdom, containing research and development, laboratory and office space. This lease expires in April 20262031 and we have the right to terminate it in April 2021.signed aentered into an agreement to lease for an approximately 63,000 square-foot facilitysquare feet of office, manufacturing and laboratory space in Framingham, Massachusetts to house our manufacturing operations and our translational science laboratory. Our plan is to have the facility ready to produce clinical-grade material during the first half of 2020 and ultimately to be able to support commercial product launch.Massachusetts. Pursuant to the lease agreement, the lease term commenced in November 2018. TheDecember 2018 and the rent commencement date is estimated to becommenced in August 2019. The initial lease term is ten years from the rent commencement date and includes two optional five-year extensions.existingcurrent facilities are suitable and planned facilities will be adequate to meet our current and planned needs and that ourneeds. Our leases can be renewed, orand we believe that suitable alternative spaces will be available as needed in the future, on commercially reasonable terms. We do not own any real property.registrant'sregistrant’s common equity, related stockholder matters and issuer purchases of equity securities"REPL"“REPL” since July 19,20, 2018. Prior to that date, there was no public trading market for our common stock.June 21, 2019,the close of business on May 15, 2023, there were approximately 1115 holders of record of our common stock. This number does not reflect beneficial owners whose shares are held in street name.cashany dividends on our capital stock. We currently intend to retain all available funds and any future earnings for use in the operation of our business and do not anticipate paying any dividends on our common stock in the foreseeable future. Any future determination to declare dividends will be made at the discretion of our board of directors and will depend on our financial condition, operating results, capital requirements, contractual restrictions, business prospects, general business conditions and other factors that our board of directors may deem relevant.Use proceeds from registered securities On July 24, 2018, we closed our initial public offering, or IPO, in which we sold an aggregate of 6,700,000 shares of common stock at a price to the public of $15.00 per share. On July 30, 2018 we sold an additional 707,936 shares of common stock at a price to the public of $15.00 per share in connection with the partial exercise of the underwriters' option to purchase 1,005,000 additional shares of common stock. The aggregate offering price for shares sold in the offering was $111.1 million. After deducting underwriting discounts, commissions and offering expenses paid or payable by us of approximately $7.8 million, the net proceeds from the offering were approximately $103.3 million. No offering expenses were paid or are payable, directly or indirectly, to our directors or officers, to persons owning 10% or more of any class of our equity securities or to any of our affiliates. The offer and sale of all of the shares in the IPO were registered under the Securities Act pursuant to a registration statement on Form S-1 (File No. 333- 225846), which was declared effective by the SEC on July 19, 2018 . No additional shares were registered. There has been no material change in the planned use of proceeds from our IPO as described in our Registration Statement. We invested the funds received in short-term, interest-bearing investment-grade securitiesIssuer and government securities, including commercial papers, U.S. Government Agencies bonds, U.S. Treasury bills and bonds and corporate debt securities.Issuer purchases of equity securities Not applicable.Selected financial data You should read the following selected consolidated financial data together with our consolidated financial statements and the related notes appearing at the end of this Annual Report on Form 10-K and the "Management's discussion and analysis of financial condition and results of operations" sectionof this Annual Report on Form 10-K. We have derived the consolidated statement of operations data for the years ended March 31, 2019, 2018 and 2017 and the consolidated balance sheet data as of March 31, 2019 and 2018 from our audited consolidated financial statements appearing at the end of this Annual Report on Form 10-K. Our historical results are not necessarily indicative of results that should be expected in any future period. Year Ended March 31, 2019 2018 2017 $ 22,173 $ 13,516 $ 6,936 8,773 5,713 2,711 30,946 19,229 9,647 (30,946 ) (19,229 ) (9,647 ) 2,528 2,267 1,442 2,585 288 25 (5,452 ) (972 ) (150 ) 451 (2,056 ) 626 112 (473 ) 1,943 (30,834 ) (19,702 ) (7,704 ) $ (30,834 ) $ (19,702 ) $ (7,704 ) $ (1.33 ) $ (3.96 ) $ (1.55 ) 23,198,400 4,978,539 4,973,439
Reserved(1)See Note 11 to our consolidated financial statements appearing at the end of this filing for further details on the calculation of basic and diluted net loss per share attributable to common stockholders. March 31, 2019 2018 (in thousands) $ 134,811 $ 65,028 131,096 59,539 154,326 65,151 — 86,361 137,856 (28,068 ) (1)We define working capital as current assets less current liabilities.Management'sManagement’s discussion and analysis of financial condition and results of operationstogetherin conjunction with our consolidated financial statements and related notes appearingand other financial information included elsewhere in this Annual Report.Report on Form 10-K. In addition to historical information, some of the statements contained in this discussion and analysis containsor set forth elsewhere in this Annual Report on Form 10-K, including information with respect to our plans and strategy for our business, constitute forward-lookingTable statements within the meaning of Contentsinvolve risks, uncertaintiesforward-looking statements are not guarantees of future performance and assumptions. Ourthat our actual results of operations, financial condition and liquidity, and the development of the industry in which we operate may differ materially from those anticipated in thesethe forward-looking statements as a result of certain factors. We discuss factors that we believe could cause or contribute to these differences below and elsewherecontained in this report, includingAnnual Report on Form 10-K. Statements made herein are as of the date of the filing of this Annual Report on Form 10-K with the SEC and should not be relied upon as of any subsequent date. Even if our results of operations, financial condition and liquidity, and the development of the industry in which we operate are consistent with the forward-looking statements contained in this Annual Report on Form 10-K, they may not be predictive of results or developments in future periods. We disclaim any obligation, except as specifically required by law and the rules of the SEC, to publicly update or revise any such statements to reflect any change in our expectations or in events, conditions or circumstances on which any such statements may be based or that may affect the likelihood that actual results will differ from those set forth under Item 1A. "Risk Factors" and under "Cautionary Note Regarding Forward-Looking Statements" in this Annual Report.patients. We usepatients through our novel tumor-directed oncolytic immunotherapies. OurImmulytic platform to design and developtumor-directed oncolytic immunotherapy product candidates that are designed and intended to maximally activate the immune system against cancer.treatment thattreatments, alongside checkpoint blockade. Oncolytic immunotherapy exploits the ability of certain viruses to selectively replicate in and directly kill tumors, as well as induce a potent, patient-specific, anti-tumor immune response. Such oncolytic, or "cancer killing," viruses have the potential to generate an immune response targeted to an individual patient's particular set of tumor antigens, including neo-antigens that are uniquely present in tumors. Our product candidates incorporate multiple mechanisms of action into a practical "off-the-shelf"“off-the-shelf” approach that is intended to maximize the immune response against a patient'spatient’s cancer and to offer significant advantages over other approaches of inducing anti-tumor immunity, including personalized vaccine approaches. We believe that the bundling of multiple approaches for the treatment of cancer into single therapies will simplify the development path of our product candidates, while also improving patient outcomes at a lower cost to the healthcare system than the use of multiple different drugs. The foundation of our Immulytic platform consists of a proprietary, engineered strain of HSV-1 that has been "armed" with a fusogenic protein intended to substantially increase anti-tumor activity. Our platform enables us to incorporate various genes whose expression is intended to augment the inherent properties of HSV-1 to both directly destroy tumor cells and induce an anti-tumor immune response. We believe RP1 will be effective at killing tumors and inducing immunogenic, or immune-stimulating, tumor cell death and that it will be highly synergistic with immune checkpoint blockade therapies. We are currently conducting a Phase 1/2 clinical trial with RP1 in approximately 150 patients. We have completed enrollment of the Phase 1 dose rising part of this clinical trial in which we are assessing the safety and tolerability of RP1 administered alone in 22 patients with mixed advanced solid tumor types, and following the review of the data by the SRC, have determined the dose regimen to be administered in the Phase 2 part of this clinical trial. We are completing enrollment of a Phase 1 expansion cohort of approximately 12 patients in which we are assessing the safety and tolerability of RP1 administered in combination with an anti-PD1 therapy at the determined Phase 2 dose level. One patient with MSI-H/dMMR remains to be enrolled in the expansion cohort. The Phase 2 part of this clinical trial is designed to assess the safety and efficacy of RP1 in combination with an anti-PD1 therapy in four cohorts of approximately 30 patients with melanoma, non-melanoma skin cancers, bladder cancer and MSI-H/dMMR. Following SRC review of the Phase 1 data to date, including data from the expansion cohort receiving RP1 with anti-PD1 therapy, we have opened enrollment in the United States and the United Kingdom of the melanoma, bladder cancer, and non-melanoma skin cancer Phase 2 cohorts, and will open enrollment of the MSI-H-dMMR Phase 2 cohort after a final evaluable MSI-H/dMMR patient has been enrolled in the Phase 1 expansion cohort without safety concerns. In the Phase 2 part of the clinical trial we are also evaluating efficacy under the clinical trial protocol, primarily on the basis of the proportion of patients who have a response within each tumor type cohort. Responses are either defined as a partial response (a 30% or greater reduction in tumor size) or a complete response (a complete eradication of the disease). Wethen intend to analyze each cohort's data to determine the indications that merit progressing into further clinical development. We have entered into a collaboration agreement with BMS, under which it has granted us a non-exclusive, royalty-free license to, and is supplying at no cost, its anti-PD-1 therapy, nivolumab, for use in combination with RP1 in this clinical trial. BMS has no further development-related obligations under this collaboration. We have also entered into a collaboration agreement with Regeneron under which we intend to conduct clinical development of our product candidates in combination with cemiplimab. For each clinical trial conducted under this collaboration, Regeneron will fund one-half of the clinical trial costs, supply cemiplimab at no cost, and grant us a non-exclusive, royalty-free license to cemiplimab for use in the clinical trial. The first planned clinical trial under this collaboration is a randomized, controlled Phase 2 clinical trial of RP1 in combination with cemiplimab, versus cemiplimab alone, in approximately 240 patients with CSCC. Initial study site activation is currently underway in the United States and Australia, with study initiation expected in August 2019. If compelling clinical data are generated demonstrating the benefits of the combined treatment, we believe the data from this Phase 2 clinical trial could support a filing with regulatory authorities for marketing approval. We are also developing additional product candidates, RP2 and RP3, built on our Immulytic platform, that are further engineered to enhance anti-tumor immune responses and intended to address additional tumor types. RP2 has been engineered to express an antibody-like molecule that blocks the activity of CTLA-4, a protein that inhibits the immune response to tumors. RP3 is engineered with the intent of not only blocking the activity of CTLA-4, but also to further stimulate an anti-tumor response through activation of the immune co-stimulatory pathways through expression of the ligands for CD40 and 4-1BB. We began operations as Replimune Limited, an English limited company that was incorporated in 2015. On July 5, 2017, Replimune Group, Inc., a Delaware corporation, was incorporated and, on July 10, 2017, the shareholders of Replimune Limited effected a share-for-share exchange pursuant to which they exchanged their outstanding shares in Replimune Limited for shares in Replimune Group, Inc., on a one-for-one basis. In addition, the holders of warrants to purchase shares of series seed preferred stock and stock options to acquire Replimune Limited capital stock canceled their warrants and stock options in Replimune Limited and were issued replacement warrants and stock options to acquire Replimune Group, Inc. capital stock on a one-for-one basis. We refer to these transactions collectively as the reorganization. Upon completion of the reorganization, the historical consolidated financial statements of Replimune Limited became the historical consolidated financial statements of Replimune Group, Inc. because the reorganization was accounted for similar to a reorganization of entities under common control due to the high degree of common ownership of Replimune Limited and Replimune Group, Inc. and lack of economic substance to the transaction. We concluded that the reorganization resulted in no change in the material rights and preferences of each respective class of equity interests and no change in the fair value of each respective class of equity interests before and after the reorganization. On December 8, 2017, Replimune Limited transferred all outstanding shares of its wholly owned subsidiary, Replimune, Inc., to Replimune Group, Inc., a Delaware corporation. Replimune Group, Inc. is the sole shareholder of Replimune Limited, Replimune, Inc. and Replimune Securities Corporation, a Massachusetts corporation that was incorporated in November 2017. overviewImmulyticproprietary RPx platform, and our lead product candidate, RP1, building our intellectual property portfolio, conducting research and development of our product candidates, business planning, raising capital and providingsecurities. We do not have any products approved for salesecurities and have not generated any revenueto a lesser extent the proceeds from product sales. On July 24, 2018, we completed our initial public offering ("IPO")the issuance of our common stock and issued and sold 6,700,000 shares of our common stock at a public offering price of $15.00 per share, resulting in net proceeds of approximately $93.5 million after deducting underwriting discounts and commissions but before deducting offering costs. On July 30, 2018, we issued and sold an additional 707,936 shares of our common stock at the IPO price of $15.00 per share pursuant to the underwriters' partial exercise of their option to purchase additional shares of common stock, resulting in additional net proceeds of approximately $9.9 million after deducting discounts and commissions and other offering expenses. Since our inception, we have incurred significant operating losses.debt securities. Our ability to generate product revenue sufficient to achieve profitability will depend on the successful development and eventual commercialization of one or more of our product candidates. We do not have any products approved for sale and have not generated any revenue from product sales.$30.8 million, $19.7$174.3 million and $7.7$118.0 million for the years ended March 31, 2019, 20182023 and 2017,2022, respectively. As of March 31, 2019,2023, we had an accumulated deficit of $59.8$485.5 million. These losses have resulted primarily from costs incurred in connection with research and development activities and selling, general and administrative costs associated with our operations. We expect to continue to incur significant expenses and increasing operating losses for at least the next several years.preclinical activities and clinical trials, ofdevelopment and pre-commercial activities related to our RPx platform product candidates. In addition, we expect to continue to incur additional costs associated with operating as a public company. We expect that our expensescandidates, and capital requirements will increase substantially if and as we:RP1;•progress the preclinicalRP1, RP2 and clinicalRP3;RP2 and RP3;establish, equip, and own in-house manufacturing facility;financeselling, general and administration personnel; technologies; andour continued transition to operatingoperations as a public company. We will not generate revenue from product sales unless and until we successfully complete clinical development and obtain regulatory approval for RP1 or our other product candidates. If we obtain regulatory approval for any of our product candidates and do not enter into a commercialization partnership in any jurisdiction (which we currently do not intend to do in the United States), we expect to incur significant expenses related to developing our internal commercialization capability to support product sales, marketing, and distribution. As a result, we will need substantial additional funding to support our continuing operations and pursue our growth strategy. Until such time as we can generate significant revenue from product sales, if ever, we expect to finance our operations through a combination of equity offerings, debt financings, collaborations, strategic alliances, and marketing, distribution, or licensing arrangements. We may be unable to raise additional funds or enter into such other agreements or arrangements when needed on favorable terms, or at all. If we fail to raise capital or enter into such agreements as, and when, needed, we may have to significantly delay, scale back, or discontinue the development and commercialization of one or more of our product candidates.2019,2023, we had cash and cash equivalents and short-term investments of $134.8$583.4 million. We believe that our existing cash and cash equivalents and short-term investments will enable us to fund our operating expenses and capital expenditure requirements through at least 12 months from the issuance of the consolidated financial statements included in this Annual Report on Form 10-K."—“— Liquidity and capital resources"resources” and "Risk factors—“Risk factors — Risks related to our financial position and need for additional capital." Our expenses since inception have consisted solely of research and development costs and general and administrative costs.RP1 and our other product candidates, and include:RP1 and our other product candidates; andTo date, we have not allocated expenses to our earlier-stage programs for RP2 and RP3. In addition, weWe do not allocate employeepersonnel costs, costs associated with our discovery efforts, laboratory supplies and facilities, including depreciation or other indirect costs, to specific product development programs because these costs are deployed across multiple product development programs and, as such, are not separately classified. The table below summarizes Non-employee costs associated with our researchmanufacturing facility including depreciation, amortization and facility costs are appropriately allocated to development expenses by product candidate or development program for eachprograms based on the percentage of the periods presented: Year Ended March 31, 2019 2018 2017 (Amounts in thousands) $ 9,685 $ 7,250 $ 3,874 12,488 6,266 3,062 $ 22,173 $ 13,516 $ 6,936 of RP1, complete preclinical development and pursue initial stages of clinical development of RP2 and RP3 and continue to discover and develop additional product candidates. The successful development and commercialization of our product candidates is highly uncertain. This is due to the numerous risks and uncertainties associated with product development and commercialization, including the following:of RP1, as well as of any future clinical trials of RP2 and RP3 or other product candidates and other research and development activities that we may conduct;design and patientdesign;rates;in clinical trials;establishing, equipping, and operating aour manufacturing facility, or securing manufacturing supply through relationships with third parties;wouldcould be required to expend significant additional financial resources and time on the completion of clinical development. We may never succeed in obtaining regulatory approval for any of our product candidates.General GeneralGeneralSelling, general and administrative expenses also include professional fees for legal, patent, accounting, auditing, tax and consulting services;services, pre-commercial planning, marketing and strategic planning, business development, travel expenses;expenses, and facility-related expenses, which include direct depreciation costs and allocated expenses for rent and maintenance of facilities and other operating costs.associated with being a public company, including costs of accounting, audit, legal, regulatory and tax-related services associated with maintaining compliance with exchange listing and SEC requirements; director and officer insurance costs; and investor and public relations costs.Change in fair value of warrant liability In connection with the issuance of the series seed preferred stock, we issued to the series seed preferred stockholders warrants to purchase shares of series seed preferred stock. Prior to the completion of our IPO, we classified the warrants as a liability on our consolidated balance sheets. We remeasured the warrant liability to fair value at each reporting date and recognized changes in the fair value of the warrant liability as a component of other income (expense), net in our consolidated statements of operations. Effective upon the completion of our IPO, the warrants to purchase shares of series seed preferred stock became exercisable for shares of common stock instead of shares of preferred stock, and the warrant liability was reclassified to additional paid-in capital. As a result, effective upon the completion of our IPO, we no longer recognize changes in the fair value of the warrant liability as other income (expense), net in our consolidated statements of operations. Interest Since our inception and through March 31, 2019, we have not recorded any income tax benefits for the net losses we incurred in each jurisdiction in which we operate, as we believe, based upon the weight of available evidence, that it is more likely than not that all of our net operating loss carryforwards will not be realized. On December 22, 2017, the U.S. government enacted comprehensive tax legislation commonly referred to as the Tax Cuts and Jobs Act, or the Tax Act. The Tax Act includes a number of changes to existing tax law, including, among other things, a permanent reduction in the federal corporate income tax rate from a top marginal rate of 35% to a flat rate of 21%, effective as of January 1, 2018, as well as limitation of the deduction for net operating losses to 80% of annual taxable income and elimination of net operating loss carrybacks, in each case, for losses arising in taxable years beginning after December 31, 2017 (though any such net operating losses may be carried forward indefinitely). Under the Tax Act, our deferred tax assets and liabilities (before valuation allowance) were remeasured at the lower federal tax rate, resulting in an increase to our income tax provision with an equal and offsetting reduction in our valuation allowance. We completed our final determination of the remeasurement of our deferred tax assets and liabilities for2019 under SEC Staff Accounting Bulletin No. 118 and we have not2023, the Company recorded any adjustmentsan income tax provision of $0.3 million related to U.S. current taxes primarily due to the provisional amounts recorded attransfer pricing arrangement between the U.S. and the U.K., as well as unfavorable adjustments related to stock compensation, resulting in U.S. taxable income reduced by certain prior year available net operating losses.20192023 and 201820192023 and 2018: Year Ended March 31, 2019 2018 Change (Amounts in thousands) $ 22,173 $ 13,516 $ 8,657 8,773 5,713 3,060 30,946 19,229 11,717 (30,946 ) (19,229 ) (11,717 ) 2,528 2,267 261 2,585 288 2,297 (5,452 ) (972 ) (4,480 ) 451 (2,056 ) 2,507 112 (473 ) 585 $ (30,834 ) $ (19,702 ) $ (11,132 ) Year Ended March 31, Change 2023 2022 $ % (Amounts in thousands) Operating expenses: Research and development $ 126,527 $ 79,545 $ 46,982 59 % Selling, general and administrative 50,553 38,769 11,784 30 % Total operating expenses 177,080 118,314 58,766 50 % Loss from operations (177,080) (118,314) (58,766) 50 % Other income (expense): Research and development incentives 2,914 3,170 (256) (8) % Investment income 10,006 390 9,616 2466 % Interest expense on finance lease liability (2,197) (2,223) 26 (1) % Interest expense on debt obligations (1,963) — (1,963) (100) % Other (expense) income (5,676) (1,059) (4,617) 436 % Total other income (expense), net 3,084 278 2,806 1009 % Loss before income taxes $ (173,996) $ (118,036) $ (55,960) 47 % Income tax provision 288 — 288 (100) % Net loss $ (174,284) $ (118,036) $ (56,248) 48 % Year Ended
March 31, 2019 2018 Change (Amounts in thousands) $ 9,685 $ 7,250 $ 2,435 7,534 4,120 3,414 4,954 2,146 2,808 $ 22,173 $ 13,516 $ 8,657 20192023 were $22.2$126.5 million, compared to $13.5$79.5 million for the year ended March 31, 2018. 2022. The following table summarizes our research and development expenses for the years ended March 31, 2023 and 2022:Year Ended March 31, Change 2023 2022 $ % Direct research and development expenses by program: RP1 39,641 16,291 23,350 143 % RP2 3,632 13,958 (10,326) (74) % RP3 13,349 1,227 12,122 988 % Unallocated research and development expenses: Personnel related (including stock-based compensation) 53,634 37,528 16,106 43 % Other 16,271 10,541 5,730 54 % Total research and development expenses $ 126,527 $ 79,545 $ 46,982 59 % $8.7$21.8 million in our unallocated expenses was due primarily to an increase of approximately $2.4 million in direct research costs associated with RP1 and an approximately $6.2a $16.1 million increase in our unallocated research and development costs. The increase in RP1 costs was due primarily to an increase in clinical trial costs in the year ended March 31, 2019 associated with our ongoing Phase 1/2 clinical trial, which commenced in the United Kingdom in October 2017. The increase in unallocated research and development expenses reflected an increase of $3.4 million in personnel-related costs, including a $14.6 million increase in payroll and fringe benefits and a stock-based compensation and an increase of $2.8 million in other costs.$1.5 million. The increase in personnel-related costs largely reflected the hiring of additional personnel in our research and development functions as we began work on our planned Phase 2 clinical trial of RP1expand the development plan in patients with CSCC. Personnel-relatedmultiple indications. Personnel related costs for the years ended March 31, 20192023 and 20182022 included stock-based compensation expense of $2.7$10.1 million and $0.8$8.6 million,Contentsrespectively. Other$2.6 million in consulting costs across our platform and a $0.9 million of increased primarily duecosts related to purchases of supplies used across all of our product candidates.Generalmanufacturing facility and related lease costs. General$8.8$50.6 million for the year ended March 31, 2019,2023, compared to $5.7$38.8 million for the year ended March 31, 2018.2022. The increase of $3.1$11.8 million is primarily reflected increasesthe result of $2.1an increase of $5.9 million in personnel related costs, and increasesincluding a stock-based compensation increase of $1.3$2.4 million, an increase of $3.5 million in facilitypayroll and other variable costs partially offset by decreases of $0.3 million in professional fees.fringe benefits. The increase in personnel related costs was due todriven by the continued hiring of additional personnel in our selling, general and administrative functions, as we expanded our operationsfocusing on additional pre-launch planning and initial build of the Company's commercial infrastructure, which accounts for approximately $1.2 million of the increase compared to prior year. Additionally, there is an increase of $4.9 million in the United States. The decrease in professional fees was due primarily to reduced legal fees after the completion of our IPO. The increase in facility and other variable costs was due primarily to an increase in costs associated with our directorswhich is driven by external spend increases for sales and officers insurance.(expense)for the year ended March 31, 2023 was $0.1$3.1 million compared to $0.3 million for the year ended March 31, 2019,2022. The net change of $2.8 million is primarily attributable to an increase of $9.6 million in investment income in the current year as compared to $(0.5)the prior year. This increase was somewhat offset by a $4.6 million increase in expense due to the changes in foreign exchange rates of the Great British Pound to United States Dollar, as well as an increase in expense of $2.0 million as a result of interest expense on debt obligations.2018.2022. The increase of $0.6 million was primarilyincome tax provision for the current year is attributable to a $0.3 million increase in research and development incentives, a $2.3 million increase in investment income due to the reinvestment of our IPO proceeds received in July 2018 and $2.5 million increase in other income due primarily to changes in foreign currency exchange rates of Great British Pounds to United States Dollars, partially offset by a $4.5 million charge related to the change in the fair value of the warrant liability.Comparison of the years ended March 31, 2018 and 2017 The following table summarizes our results of operations for the years ended March 31, 2018 and 2017: Year Ended March 31, 2018 2017 Change (Amounts in thousands) $ 13,516 $ 6,936 $ 6,580 5,713 2,711 3,002 19,229 9,647 9,582 (19,229 ) (9,647 ) (9,582 ) 2,267 1,442 825 288 25 263 (972 ) (150 ) (822 ) (2,056 ) 626 (2,682 ) (473 ) 1,943 (2,416 ) $ (19,702 ) $ (7,704 ) $ (11,998 ) Research and development expenses Year Ended
March 31, 2018 2017 Change (Amounts in thousands) $ 7,250 $ 3,874 $ 3,376 4,120 2,121 1,999 2,146 941 1,205 $ 13,516 $ 6,936 $ 6,580 Research and development expenses for the year ended March 31, 2018 were $13.5 million, compared to $6.9 million for the year ended March 31, 2017. The increase of $6.6 million was due primarily to an increase of approximately $3.4 million in direct research costs associated with RP1 and an approximately $3.2 million increase in our unallocated research and development costs. The increase in RP1 costs was due primarily to an increase in clinical trial costs in the year ended March 31, 2018 associated with our ongoing Phase 1/2 clinical trial, which commenced in the United Kingdom in October 2017. The increase in unallocated research and development expenses reflected an increase of $2.0 million in personnel-related costs, including stock-based compensation, and an increase of $1.2 million in other costs. The increase in personnel-related costs wasU.S. current taxes primarily due to the hiring of additional personneltransfer pricing arrangement between the U.S. and the U.K., as well as unfavorable adjustments related to stock compensation, resulting in our research and development functions as we began work on our planned Phase 2 clinical trial of RP1 in patients with CSCC. Personnel-related costs for each of the years ended March 31, 2018 and 2017 included stock-based compensation expense of $0.8 million and $0.2 million, respectively. Other costs increased primarily due to purchases of supplies used across all of our product candidates.General and administrative expenses General and administrative expenses were $5.7 million for theU.S. taxable income reduced by certain prior year ended March 31, 2018, compared to $2.7 million for the year ended March 31, 2017. The increase of $3.0 million primarily reflected increases of $1.1 million in personnel related costs and $1.6 million in professional fees. The increase in personnel related costs was due to the hiring of additional personnel in our general and administrative functions as we expanded our operations in the United States. The increase in professional fees was due to costs associated with the preparation, audit and review of our financial statements and readiness to become a public company.Total other income (expense),available net Other income (expense) was $(0.5) million for the year ended March 31, 2018, compared to $1.9 million for the year ended March 31, 2017. The decrease of $2.4 million was primarily attributable to a $2.7 million increase in the expense due to a change in foreign exchange rates and a $0.8 million increase in the expense due to a change in the fair value of the warrant liability, partially offset by a $0.8 million increase in expenditure reimbursements recognized under the research and development program provided by the United Kingdom government and a $0.3 million increase in investment income.securities.securities and, to a lesser extent, proceeds from borrowing under a secured loan facility. Through March 31, 2019,2023, we had received grossnet proceeds of approximately $198.0$935.9 million through the sale of equity securities, as well as net $27.8 million from our salesincurrence of common stock and preferred stock.debt under the Hercules Loan Agreement. As of March 31, 2019,2023, we had cash and cash equivalents and short-term investments of $134.8$583.4 million. On July 24, 2018, we completed our IPO and issued and sold 6,700,000 shares of our common stock at a public offering price of $15.00 per share, resulting in net proceeds of $93.5 million after deducting underwriting discounts and commissions but before deducting offering costs. On July 30, 2018, we issued and sold an additional 707,936 shares of our common stock at the IPO price of $15.00 per share pursuant to the underwriters' partial exercise of their option to purchase additional shares of our common stock, resulting in additional net proceeds of $9.9 million after deducting discounts and commissions and other offering expenses.Year Ended March 31, 2023 2022 (Amounts in thousands) Net cash used in operating activities $ (128,050) $ (82,180) Net cash (used in) investing activities (142,502) (1,806) Net cash provided by financing activities 311,303 6,598 Effect of exchange rate changes on cash and cash equivalents (109) 818 Net increase (decrease) in cash and cash equivalents $ 40,642 $ (76,570) Year Ended March 31, 2019 2018 2017 (in thousands) $ (25,378 ) $ (16,014 ) $ (7,077 ) (65,944 ) (44,046 ) (238 ) 101,390 54,752 15,000 (839 ) 2,297 (1,419 ) $ 9,229 $ (3,011 ) $ 6,266 Operating activities2019,2023, net cash used in operating activities was $25.4$128.1 million, primarily resulting from our net loss of $30.8 million and net cash used by changes in our operating assets and liabilities of $1.3$174.3 million, partially offset by non-cash charges of $6.7 million. Net$31.1 million, consisting primarily of stock-based compensation expense of $28.1 million, and an increase in cash used byof $15.1 million related to changes in our operating assets and liabilities. Changes in our operating assets and liabilities for the year ended March 31, 20192023 consisted primarily of a $0.1$11.4 million increase in accrued expenses and other current liabilities, a net $2.4 million change in operating and financing right-of-use assets and lease liabilities, and a $2.0 million increase in accounts payable.partially offset byand a $0.8 million decreaseincrease in prepaid expenses and other current assets, as well as a $0.3$0.2 million increase in the research and development incentives receivable from the United Kingdom government due to the timing and amount of our qualifying expenditures and a $0.3 million increase in prepaid expenses and other current assets.2018, net cash used in operating activities was $16.0 million, primarily resulting from our net loss of $19.7 million, partially offset by net cash provided by changes in our operating assets and liabilities of $1.9 million and non-cash charges of $1.8 million. Net cash provided by changes in our operating assets and liabilities for the year ended March 31, 2018 consisted primarily of a $1.6 million increase in accounts payable and a $1.4 million increase in accrued expenses and other current liabilities, partially offset by a $0.8 million increase in the research and development incentives receivable from the United Kingdom government due to the timing and amount of our qualifying expenditures and a $0.3 million increase in prepaid expenses and other current assets due to CRO deposits related to the ongoing Phase 1/2 clinical trial for RP1. During the year ended March 31, 2017, net cash used in operating activities was $7.1 million, primarily resulting from our net loss of $7.7 million, partially offset by non-cash charges of $0.5 million, and net cash provided by changes in our operating assets and liabilities of $0.1 million. Net cash used by changes in our operating assets and liabilities for the year ended March 31, 2017 consisted primarily of a $0.2 million increase in accounts payable and a $1.4 million increase in accrued expenses due to accrued RP1 clinical trial costs, accrued compensation costs and accrued audit fees, partially offset by a $1.2 million increase in the research and development incentives receivable from the United Kingdom government due to the timing and amount of our qualifying expenditures and a $0.3 million increase in prepaid expenses and other current assets due to value-added tax receivables and CMO deposits for RP1 clinical trial supplies.Investing activities During the year ended March 31, 2019,2023, net cash used in investing activities was $65.9$142.5 million, consisting of $189.9$583.4 million in purchases of available for sale securities and $2.6$2.3 million in purchases of property, plant and equipment, partially offset by $126.6$443.2 million in proceeds from sales and maturities of short-term investments.2018,2022, net cash used in investing activities was $44.0$1.8 million, consisting of $52.5$255.7 million in purchases of available for sale securities and $0.1$2.3 million in purchases of property, plant and equipment, partially offset by $8.6$256.3 million in proceeds from sales and maturities of short-term investments.2017, net cash used in investing activities was $0.2 million, consisting of purchases of property, plant and equipment. We expect that purchases of property, plant and equipment will increase over the next several years resulting from our intended establishment of our own in-house manufacturing facility.Financing Activities During the year ended March 31, 2019,2023, net cash provided by financing activities was $101.4$311.3 million, consisting primarily of net cash$149.9 million in proceeds of $103.3 million from ourthe issuance of common stock, $92.8 million from the issuance of pre-funded warrants to purchase common stock, $37.4 million from the issuance of common stock through sales under our at-the-market facilities, $28.2 million in connection with our IPO and $0.2proceeds from the incurrence of debt under the Hercules Loan Agreement, as well as approximately $3.4 million in proceeds from the exercise of stock options, partially offset by $2.2 million of payments of issuance costs.2018,2022, net cash provided by financing activities was $54.8$6.6 million, consisting primarily consisting of net$6.9 million in proceeds from our issuancethe exercise of series B convertible preferred stock or series B preferred stock. During the year ended March 31, 2017, net cash provided by financing activities was $15.0 million, primarily consisted of proceeds from our issuance of series A convertible preferred stock, or series A preferred stock.RP1 and our other product candidatesRPx platform, and continue to expand our research pipeline and our internal research and development capabilities. We expect our expenses to increase substantially in connection with our ongoing activities, particularly as we advance the preclinical activities and clinical trials of our product candidates. In addition, we expect to continue to incur additional costs associated with operating as a public company. We expect that our expenses will increase substantiallycandidates and if and as we:of RP1;•progress the preclinicalwith RP1, RP2 and clinicalRP3;RP2our RPx platform;RP3;operational, require the manufacturefully validated, continued limited manufacturing by third parties of larger quantities of our product candidates for clinical development and potentially commercialization; technologies; andour continued transition to operatingoperations as a public company.2019,2023, we had cash and cash equivalents and short-term investments of $134.8$583.4 million. WeBased on our current operating plan, we believe that our existing cash, and cash equivalents and short-term investments as of March 31, 2023, will enable us to fund our operating expenses and capital expenditure requirements through at least 12 months fromoperations into the issuancesecond half of the consolidated financial statements included elsewhere in this Annual Report on Form 10-K."—“— Operating expenses—expenses — Research and development expenses." In addition, we intend to establish, equip, and operate an in-house manufacturing facility to manufacture RP1 and our other product candidates. We expect that such a facility would require total capital expenditures of approximately $22.5 million to construct, net of approximately $8.9 million in tenant improvement costs.shareholders'shareholders’ interest may be diluted, and the terms of these securities may include liquidation or other preferences and anti-dilution protections that could adversely affect the rights of our common stockholder. Additional debt or preferred equity financing, if available, may involve agreements that include restrictive covenants that may limit our ability to take specific actions, such as incurring debt, adversely impact our ability toour shareholders'your ownership interest. The following table summarizes our contractual obligations as of March 31, 2019 and the effectssuch obligations are expectedcontractually obligate us to have onmake payments that will affect our liquidity and cash flows in future periods: Payments due by period Total Less than 1 year 1 to 3 years 4 to 5 years More than
5 years (Amounts in thousands) $ 4,694 $ 4,694 $ — $ — $ — 28,164 2,062 5,394 5,213 15,495 $ 32,858 $ 6,756 $ 5,394 $ 5,213 $ 15,495 (1)Amounts in the table reflect commitments forperiods. Our contractual obligations include those related to our operating and financing leases, long-term debt, as well as costs associated with our external CMO, which we engaged to manufacture clinical trial materials.(2)Amounts in the table reflect minimum payments due under (i) our two operating leases of laboratory and office space in Woburn, Massachusetts and Oxfordshire, United Kingdom, at a monthly commitment of $7 and $31, respectively, and (ii) our build-to-suit lease of approximately 63,000 square feet of office, manufacturing and laboratory space in Framingham, Massachusetts. Our lease in Woburn expires in March 2021, and our lease in Oxfordshire expires in April 2026 and is terminable by us in April 2021. The lease term for our Framingham lease commenced in November 2018, subject to the landlord completing certain agreed upon landlord improvements. The rent commencement date is estimated to be August 2019. The initial lease term is ten years from the rent commencement date and includes two optional five-year extensions. We entercontracts entered into contracts in the normal course of business with CROs, CMOs and other third parties for clinical trials and preclinical research studies and testing. in the preceding table include agreements that are enforceable and legally binding on us and that specify all significant terms, including fixed or minimum quantities to be purchased; fixed, minimum or variable price provisions; and the approximate timing of the transaction. ForAs of March 31, 2023, the aggregate amount of non-cancelable purchase obligations with cancellation provisions, the amounts included in the preceding tablerelated to such manufacturing commitments are limited to the non-cancelable portionapproximately $1.0 million and all of the agreement terms or the minimum cancellation fee. On 26, 2018, we entered into a Clinical Trial Collaboration and Supply Agreement with Bristol- MyersBristol-Myers Squibb Company, or BMS. Pursuant to the agreement, BMS will provideis providing to us, at no cost, nivolumab, its anti-PD-1 therapy, for use in combination with RP1 in our ongoing Phase 1/2 clinical trial. Under the agreement, we will sponsor, fund and conduct the clinical trial in accordance Under the agreement, BMS granted us a non-exclusive, non-transferrable, royalty-free license (with a right to sublicense) under its intellectual property to use nivolumab in the clinical trial and has agreed to supply nivolumab, at itsno cost and for no charge to us, for use in the clinical trial. Both parties will own the study data produced in the clinical trial, other than study data related solely to nivolumab, which will belong solely to BMS, or study data related solely to RP1, which will belong solely to us.(i)(x) in the event of an uncured material breach by the other party, (ii)(y) in the event the other party is insolvent or in bankruptcy proceedings or (iii)(z) for safety reasons. Upon termination, the licenses granted to us to use nivolumab in the clinical trial will terminate. The agreement contains representations, warranties, undertakings and indemnities customary for a transaction of this nature. On 29, 2018, we entered into a Master Clinical Trial Collaboration and Supply Agreement with Regeneron Pharmaceuticals, Inc., or Regeneron. Pursuant to the agreement we agreed to undertake one or more clinical trials with Regeneron for the administration of our product candidates in combination with cemiplimab, an anti-PD-1 therapy developed by Regeneron, across multiple solid tumor types, the first of which is intended to be our plannedongoing Phase 2 clinical trial oftesting RP1 in combination with cemiplimab versus cemiplimab alone in patients with CSCC. Each clinical trial will be conducted pursuant to an agreed study plan which, among other things, will identify the name of the sponsor and which party will manage the particular study, and include the protocol, the budget and a schedule of clinical obligations. The first study plan related to the Phase 2 clinical trial in CSCC has been agreed.a particular clinical trialan agreed study plan will be split equally. In July 2022, Regeneron informed the Company that the costs of the study have reached the initial budget for the initial study plan of June 2018 and that Regeneron's reimbursement of CERPASS study costs to the Company have completed in the period ending June 30, 2022 in relation to the initial study budget. As a result of this notice from, and the ongoing communications with, Regeneron, we have not recorded any cost-sharing reimbursements from Regeneron in prepaid expenses and other current assets in the consolidated balance sheet or as an offset to research and development expense within the consolidated statement of operations since Regeneron informed us that Regeneron’s reimbursement of CERPASS study costs have completed. The Company does not expect any further reimbursements from Regeneron related to the initial study plan of June 2018. The agreement contains representations, warranties, undertakings and indemnities customary for a transaction of this nature. The agreement also contains certain time-based covenants that restrict us from entering into a third-party arrangement with respect to the use of our product candidates in combination with an anti-PD-1 therapy and that restrict Regeneron from entering into a third-party arrangement with respect to the use of cemiplimab in combination with an HSV-1 virus, in each case, for the treatment of aplannedongoing Phase 2 clinical trial in CSCC, and expire upon the one-year anniversary of the commencement of the applicable study plan.(ii)and the parties have not entered into a study plan for an additional clinical trial within a period of time after the delivery of the most recent final study report or (iii)(ii) in the event of a material breach.significant judgments and estimatesmanagement'smanagement’s discussion and analysis of financial condition and results of operations is based on our consolidated financial statements, which have been prepared in accordance with generally accepted accounting principles in the United States. The preparation of our consolidated financial statements and related disclosures requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities, costs and expenses and the disclosure of contingent assetsthethis Annual Report on Form 10-K, we believe that the following accounting policies are those most critical to the judgments and estimates used in the preparation of our consolidated financial statements.
Stock-based compensationTableContentsStock-based compensationgrantedin accordance with ASC 718, employeesbe recognized in the consolidated statements of operations and directorscomprehensive loss based on their fair value on the date of the grant and recognizethe related compensation expense for those awards is recognized over the requisite service period, which is generally the vesting period of the respective award. We have, to date, only issued stock-based awards with service-based vesting conditions and record the expense for these awards using the straight-line method. The fair value of each stock option grant is estimated on the date of grant using the Black-Scholes option-pricing model, which requires inputs based on certain subjective assumptions, including the expected stock price volatility, the expected term of the option, the risk-free interest rate for a period that approximates the expected term of the option, and our expected dividend yield. See Note 10 of the "Notes to our consolidated financial statements appearing elsewhereConsolidated Financial Statements" contained in Part II, Item 8 of this Annual Report on Form 10-K for more information. Forfeitures are accounted for as they occur. The fair value of each stock-based award is estimated on the date of grant based on the fair value of our common stock on that same date. Prior to the adoption of ASC 2018-07, for stock-based awards granted to consultants and non-employees, we recognize compensation expense over the period during which services are rendered by such non-employees and consultants until completed. At the end of each financial reporting period prior to completion of the service, the fair value of these awards is remeasured using the then-current fair value of our common stock and updated assumption inputs in the Black-Scholes option pricing model. After the adoption of ASC 2018-07, for stock-based awards granted to consultants and non-employees, we measure stock-based these awards based on their fair value on the date of the grant and recognizes compensation expense for those awards over the requisite service period, which is generally the vesting period of the respective award. We have to date only issued stock-based awards with service-based vesting conditions and record the expense for these awards using the straight-line method. The fair value of each stock option grant is estimated on the date of grant using the Black-Scholes option-pricing model, which requires inputs based on certain subjective assumptions, including the expected stock price volatility, the expected term of the option, the risk-free interest rate for a period that approximates the expected term of the option, and our expected dividend yield.recipient'srecipient’s payroll costs are classified or in which the award recipient'srecipient’s service payments are classified.Off-balance sheet arrangements We did not have any off-balance sheet arrangements during the periods presented, and we do not currently have, any off-balance sheet arrangements, as defined in the rules and regulations of the SEC. Arecently issuedrecent accounting pronouncements that are applicable to our business and may potentially have an impact on our financial position and results of operations is disclosed in Note 2 to our consolidated financial statements appearing elsewhere in this Annual Report on Form 10-K."emerging“emerging growth company,"” the Jumpstart Our Business Startups Act of 2012 permits us to take advantage of an extended transition period to comply with new or revised accounting standards applicable to public companies until those standards would otherwise apply to private companies. We have irrevocably elected to "opt out"“opt out” of this provision and, as a result, we will comply with new or2019,2023, we had cash and cash equivalents and short-term investments of $134.8$583.4 million, which consisted of cash equivalents, commercial paperU.S. Treasury securities and commercial debtU.S. government agency securities. Interestincome is sensitive to changes in the general level of interest rates; however, due to the nature of these investments, an immediate 10% change in interest rates would not have a material effect on the fair market value of our investment portfolio. As of March 31, 2019, we had no debt outstanding and are therefore not subject to interest rate risk related to debt.2019, 20182023 and 2017,2022, we recognized a net foreign currency transaction gains (losses)losses of $0.5 million, $(2.1)$5.7 million and $0.6$1.1 million, respectively. These gains (losses)losses are primarily related to unrealized and realized foreign currency gains and losses as a result of transactions entered into by our United Kingdom subsidiary in currencies other than the British pound, primarily the euro. These foreign currency transaction gains (losses)losses were recorded as a component of other income (expense), net in our consolidated statements of operations. We believe that a 10% change in the exchange rate between the British pound and the euro would not have a material impact on our financial position or results of operations. Not Applicable. DisclosureSecurities Exchange Act, of 1934, as amended, or the Exchange Act, arerefers to controls and other procedures that are designed to ensure that information required to be disclosed by a company in the reports filedthat it files or submittedsubmits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified byin the SEC’s rules and forms promulgated by the SEC.forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that such information is accumulated andthe chiefits principal executive officer and the chief accounting officer,principal financial officers, as appropriate to allow timely decisions regarding required disclosure. In connection with Under the preparation of this Annual Report on Form 10-K, we completed an evaluation, as of March 31, 2019, under the supervision of and with the participation of our management, including our Chief Executive Officer and Chief AccountingFinancial Officer, as towe conducted an evaluation of the effectiveness of our disclosure controls and procedures (as such term is defined in Rules 13a-15(e)as of March 31, 2023. Based on this evaluation, our Chief Executive Officer and 15d-15(e) under the Exchange Act). It should be notedChief Financial Officer concluded that any systemour disclosure controls and procedures were effective at a reasonable assurance level as of March 31, 2023.howeverand procedures, management recognizes that disclosure controls and procedures, no matter how well designedconceived and operated, can provide only reasonable, and not absolute, assurance that the objectives of the system will bedisclosure controls and procedures are met. In addition,Additionally, in designing disclosure controls and procedures, our management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible disclosure controls and procedures. The design of any control system of controls also is based in part upon certain assumptions about the likelihood of future events. Based uponevents, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions; over time, controls may become inadequate because of changes in conditions, or the evaluation, our Chief Executive Officer and Chief Accounting Officer have concluded that, asdegree of March 31, 2019, our disclosure controls andcompliance with policies or procedures were not effective atmay deteriorate. Because of the inherent limitations in a reasonable assurance levelcontrol system, misstatements due to the material weakness described below. In connection with the audits of our consolidated financial statements as oferror or fraud may occur and for the years ended March 31, 2019, 2018 and 2017, we identified material weaknesses in our internal control over financial reporting. A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis. The material weaknesses that we identified were as follows:•We did not design or maintain an effective control environment commensurate with our financial reporting requirements. We lacked a sufficient number of professionals with an appropriate level of accounting knowledge, training and experience to appropriately analyze, record and disclose accounting matters timely and accurately. Additionally, the limited personnel resulted in our inability to consistently establish appropriate authorities and responsibilities in pursuit of our financial reporting objectives, as demonstrated by, among other things, our insufficient segregation of duties in our accounting function. This material weakness further contributed to the material weakness below.•We did not design and maintain formal accounting policies, processes and controls to analyze, account for and disclose complex transactions, including accounting for preferred stock, stock-based compensation, warrant liabilities and leases. Each of these control deficiencies could result in a misstatement of our accounts or disclosures that would result in a material misstatement of our annual or interim consolidated financial statements that would not be prevented or detected, and accordingly, we determined that these control deficiencies constitute material weaknesses.Management'sdetected. This Annual Report on Form 10-K does not include a report of management's assessment regarding internal control over financial reporting or an attestation report of our registered public accounting firm due to a transition period established by rules of the SECnewly public companies. See also "Risk Factors—We have identified material weaknesses in our internal control over financial reporting. If we are unable to remediate these material weaknesses, or if we identify additional material weaknesses in the future or otherwise fail to maintain an effective system of internal controls, we may not be able to accurately or timely report our financial condition or results of operations, which may adversely affect our business."Changes in internal control over financial reporting There were no changes in ourestablishing and maintaining adequate internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act). Internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles and includes those policies and procedures that:occurredin reasonable detail, accurately and fairly reflect the transactions and dispositions of our assets;2019the fiscal year ended March 31, 2023 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.information The information required under this item is incorporated herein by reference to our definitive proxy statement pursuant to Regulation 14A, which proxy statement will be filed with the Securities and Exchange Commission not later than 120 days after the close of our fiscal year ended March 31, 2019."Corporate Governance"“Corporate Governance” section of our website, www.replimune.com. A copy of the Code of Business Conduct and Ethics can be obtained free of charge on our website. We intend to disclose on our website any amendments to, or waivers from, our Code of Business Conduct and Ethics that are required to be disclosed pursuant to the rules of the Securities and Exchange Commission and Nasdaq. The information contained on our website is not considered part of, or incorporated by reference into, this Annual Report on Form 10-K or any other filing that we make with the Securities and Exchange Commission.2019.2023.Number of Securities to be Issued Upon Exercise of Outstanding Options, Warrants and Rights Weighted-Average Exercise Price of Outstanding Options, Warrants and Rights Number of Securities Available for Future Issuance Under Equity Compensation Plans Plan Category: Equity compensation plans approved by stockholders 2017 Plan 1,176,227 3.12 — 7,301,131 19.44 2,209,597 ESPP 2,076,603 Total 8,477,358 4,286,200 2019.2023.2019.2023.2019.2023.Financial Statements.Statement Schedules.Exhibits.Exhibit Indexexhibit index immediately preceding the signature page of this Annual Report on Form 10-K are incorporated by reference or are filed or furnished with this Annual Report on Form 10-K, in each case as indicated therein.Exhibit index
Financial Statements*Filed herewith.**FurnishedFor the Years Ended March 31, 2023 and not filed herewith.†Indicates management contract or compensatory plan.‡Indicates confidential treatment has been requested with respect to specific portions of this exhibit. Omitted portions have been filed with the Securities and Exchange Commission pursuant to Rule 406 of the Securities Act of 1933, as amended. Pursuant to the requirements of Section 13 or 15(d) of the Securities Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.REPLIMUNE GROUP, INC.Date: June 28, 2019By:/s/ ROBERT COFFINRobert Coffin, Ph.D.President, Chief Executive Officer and Director Pursuant to the requirements of the Securities Act of 1934, this report has been signed by the following persons in the capacities and on the dates indicated.NameTitleDate
Page/s/ ROBERT COFFINRobert Coffin, Ph.D.President, Chief Executive Officer and Director (Principal Executive Officer)June 28, 2019/s/ PHILIP ASTLEY-SPARKEPhilip Astley-SparkeExecutive Chairman, Treasurer, Secretary and DirectorJune 28, 2019/s/ STEPHEN GORGOLStephen GorgolChief Accounting Officer (Principal Financial and Accounting Officer)June 28, 2019/s/ KAPIL DHINGRAKapil DhingraDirectorJune 28, 2019/s/ HYAM LEVITSKYHyam LevitskyDirectorJune 28, 2019/s/ JASON RHODESJason RhodesDirectorJune 28, 2019/s/ JOSEPH SLATTERYJoseph SlatteryDirectorJune 28, 2019/s/ OTELLO STAMPACCHIAOtello StampacchiaDirectorJune 28, 2019NameTitleDate/s/ SANDER SLOOTWEGSander SlootwegDirectorJune 28, 2019/s/ DIETER WEINANDDieter WeinandDirectorJune 28, 2019REPLIMUNE GROUP, INC.Financial StatementsFor the Years Ended March 31, 2019, 2018 and 2017
Replimune Group, Inc."Company"“Company”) as of March 31, 20192023 and 2018,2022, and the related consolidated statements of operations, of comprehensive loss, of convertible preferred stock and stockholders'stockholders’ equity (deficit) and of cash flows for each of the three years in the periodthen ended, March 31, 2019 including the related notes (collectively referred to as the "consolidated“consolidated financial statements"statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of March 31, 20192023 and 2018,2022, and the results of its operations and its cash flows for each of the three years in the periodthen ended March 31, 2019 in conformity with accounting principles generally accepted in the United States of America.Company'sCompany’s management. Our responsibility is to express an opinion on the Company'sCompany’s consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.auditaudits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud.June 28, 2019Company'sCompany’s auditor since 2018.March 31,
2023March 31,
2022Assets Current assets: Cash and cash equivalents $ 146,590 $ 105,948 Short-term investments 436,796 289,707 Research and development incentives receivable 2,939 3,055 Prepaid expenses and other current assets 6,278 5,267 Total current assets 592,603 403,977 Property, plant and equipment, net 7,479 7,933 Restricted cash 1,636 1,636 Right-to-use asset – operating leases 5,208 5,552 Right-to-use asset – financing leases 39,665 42,094 Total assets $ 646,591 $ 461,192 Liabilities and Stockholders’ Equity Current liabilities: Accounts payable $ 5,364 $ 3,732 Accrued expenses and other current liabilities 24,704 13,392 Operating lease liabilities, current 1,118 1,070 Financing lease liabilities, current 2,639 2,562 Total current liabilities 33,825 20,756 Operating lease liabilities, non-current 4,389 4,801 Financing lease liabilities, non-current 23,965 24,406 Long term debt, net of discount 28,648 — Other liabilities, non-current 472 — Total liabilities $ 91,299 $ 49,963 Commitments and contingencies (Note 13) Stockholders’ equity: Common stock, $0.001 par value; 150,000,000 shares authorized as of March 31, 2023 and March 31, 2022; 56,676,313 and 47,338,660 shares issued and outstanding as of March 31, 2023 and March 31, 2022, respectively 57 47 Additional paid-in capital 1,034,994 723,359 Accumulated deficit (485,488) (311,204) Accumulated other comprehensive income (loss) 5,729 (973) Total stockholders’ equity 555,292 411,229 Total liabilities and stockholders’ equity $ 646,591 $ 461,192 March 31, 2019 2018 $ 25,704 $ 17,583 109,107 43,968 2,474 2,389 3,696 763 140,981 64,703 12,159 370 1,186 78 $ 154,326 $ 65,151 $ 7,084 $ 1,993 2,801 3,171 9,885 5,164 24 52 — 1,642 6,561 — 16,470 6,858 — 86,361
32
5 198,645 1,097 (59,766 ) (28,932 ) (1,055 ) (238 ) 137,856 (28,068 ) $ 154,326 $ 65,151 Year Ended March 31, 2023 2022 Operating expenses: Research and development $ 126,527 $ 79,545 Selling, general and administrative 50,553 38,769 Total operating expenses 177,080 118,314 Loss from operations (177,080) (118,314) Other income (expense): Research and development incentives 2,914 3,170 Investment income 10,006 390 Interest expense on finance lease liability (2,197) (2,223) Interest expense on debt obligations (1,963) — Other (expense) income (5,676) (1,059) Total other income, net 3,084 278 Loss before income taxes $ (173,996) $ (118,036) Income tax provision 288 — Net loss $ (174,284) $ (118,036) Net loss per common share, basic and diluted $ (2.99) $ (2.26) Weighted average common shares outstanding, basic and diluted 58,213,010 52,212,269 Year Ended March 31, 2019 2018 2017 $ 22,173 $ 13,516 $ 6,936 8,773 5,713 2,711 30,946 19,229 9,647 (30,946 ) (19,229 ) (9,647 ) 2,528 2,267 1,442 2,585 288 25 (5,452 ) (972 ) (150 ) 451 (2,056 ) 626 112 (473 ) 1,943 (30,834 ) (19,702 ) (7,704 ) $ (30,834 ) $ (19,702 ) $ (7,704 ) $ (1.33 ) $ (3.96 ) $ (1.55 ) 23,198,400 4,978,539 4,973,439 Year Ended March 31, 2023 2022 Net loss $ (174,284) $ (118,036) Other comprehensive loss: Foreign currency translation gain 5,483 748 Net unrealized gain (loss) on short-term investments, net of tax of $0 1,219 (1,327) Comprehensive loss $ (167,582) $ (118,615) Year Ended March 31, 2019 2018 2017 $ (30,834 ) $ (19,702 ) $ (7,704 ) (897 ) 2,376 (1,437 ) 80 (65 ) — $ (31,651 ) $ (17,391 ) $ (9,141 ) CONVERTIBLE PREFERRED STOCK ANDSTOCKHOLDERS'STOCKHOLDERS’ EQUITY (DEFICIT)Common stock Additional paid-in capital Accumulated deficit Accumulated other comprehensive income (loss) Total stockholders’ equity Shares Amount Balances as of March 31, 2021 46,566,481 $ 47 $ 692,243 $ (193,168) $ (394) $ 498,728 Foreign currency translation adjustment — — — — 748 748 Unrealized loss on short-term investments — — — — (1,327) (1,327) Exercise of stock options 768,186 — 6,862 — — 6,862 Vesting of RSUs 3,993 — — — — — Stock-based compensation expense — — 24,254 — — 24,254 Net loss — — — (118,036) — (118,036) Balances as of March 31, 2022 47,338,660 $ 47 $ 723,359 $ (311,204) $ (973) $ 411,229 Issuance of common stock through ATM sales, net of offering costs 2,026,438 2 37,436 — — 37,438 Issuance of prefunded warrants to purchase common stock — — 92,778 — — 92,778 Issuance of common stock, net of issuance costs and underwriter fees 6,810,658 7 149,847 — — 149,854 Foreign currency translation adjustment — — — — 5,483 5,483 Unrealized gain on short-term investments — — — — 1,219 1,219 Exercise of stock options 296,876 1 3,443 — — 3,444 Vesting of RSUs 203,681 — — — — — Stock-based compensation expense — — 28,131 — — 28,131 Net loss — — — (174,284) — (174,284) Balances as of March 31, 2023 56,676,313 $ 57 $ 1,034,994 $ (485,488) $ 5,729 $ 555,292 Convertible
preferred stock Common stock Accumulated
other
comprehensive
loss Total
stockholders'
equity
(deficit) Additional
paid-in
capital Accumulated
deficit Shares Amount Shares Amount 1,064,553 $ 31,609 4,973,439 $ 5 $ 259 $ (9,230 ) $ (2,549 ) $ (11,515 ) 861,415 54,752 — — — — — — — — 26,258 — — — — — — — — — — 2,376 2,376 — — — — — — (65 ) (65 ) — — 7,788 — 26 — — 26 — — — — 812 — — 812 — — — — — (19,702 ) — (19,702 ) 1,925,968 86,361 5,007,485 5 1,097 (28,932 ) (238 ) (28,068 ) (1,925,968 ) (86,361 ) 19,157,360 19 86,342 — — 86,361 — — — — 7,094 — — 7,094 — — (26,258 ) — — — — — — — 7,407,936 7 101,177 — — 101,184 — — — — 2,730 — — 2,730 — — 110,427 1 205 — — 206 — — — — — — 80 80 — — — — — — (897 ) (897 ) — — — — — (30,834 ) — (30,834 ) — $ — 31,656,950 $ 32 $ 198,645 $ (59,766 ) $ (1,055 ) $ 137,856 ��� Year Ended March 31, 2023 2022 Cash flows from operating activities: Net loss $ (174,284) $ (118,036) Adjustments to reconcile net loss to net cash used in operating activities: Stock-based compensation expense 28,131 24,254 Depreciation and amortization 2,447 2,147 Net amortization of premiums and discounts on short-term investments (5,638) 2,220 Noncash interest expense 494 — Unrealized foreign currency transaction losses 5,676 — Changes in operating assets and liabilities: Research and development incentives receivable (61) (247) Prepaid expenses and other current assets (1,059) (815) Operating lease, right-of-use-asset 225 99 Finance lease, right-of-use-asset 2,428 2,428 Accounts payable 1,981 1,118 Accrued expenses and other current liabilities 11,376 4,725 Operating lease liabilities (238) (73) Other non-current liabilities 472 — Net cash used in operating activities (128,050) (82,180) Cash flows from investing activities: Purchases of property, plant and equipment (2,270) (2,336) Purchase of short-term investments (583,412) (255,720) Proceeds from sales and maturities of short-term investments 443,180 256,250 Net cash used in investing activities (142,502) (1,806) Cash flows from financing activities: Proceeds from issuance of common stock, net of underwriting fees and discounts 149,854 — Proceeds from issuance of prefunded warrants to purchase common stock, net of underwriting fees and discounts 92,778 — Proceeds from issuance of common stock through ATM sales, net of offering costs 37,438 — Proceeds from long-term debt, net of debt issuance costs 28,154 — Principal payment of finance lease obligation (365) (264) Proceeds from exercise of stock options 3,444 6,862 Net cash provided by financing activities 311,303 6,598 Effect of exchange rate changes on cash, cash equivalents and restricted cash (109) 818 Net (decrease) increase in cash, cash equivalents and restricted cash 40,642 (76,570) Cash, cash equivalents and restricted cash at beginning of period 107,584 184,154 Cash, cash equivalents and restricted cash at end of period $ 148,226 $ 107,584 Supplemental disclosure of cash flow information: Cash paid during the period for interest 1,066 $ — Cash paid for income taxes, net — 55 Supplemental disclosure of non-cash investing and financing activities: Purchases of property and equipment included in accounts payable $ 103 $ 415 Lease assets obtained in exchange for new operating lease liabilities $ 290 $ 363 Year Ended March 31, 2019 2018 2017 $ (30,834 ) $ (19,702 ) $ (7,704 ) 2,730 812 208 148 109 122 5,452 972 150 — 26 — (1,715 ) (123 ) — 93 — — (255 ) (767 ) (1,210 ) (801 ) (305 ) (325 ) 120 1,596 203 (292 ) 1,393 1,406 (24 ) (25 ) 73 (25,378 ) (16,014 ) (7,077 ) (2,600 ) (136 ) (238 ) (189,931 ) (52,463 ) — 126,587 8,553 — (65,944 ) (44,046 ) (238 ) — — 15,000 — 54,752 — 103,341 — — 206 — — (2,157 ) — — 101,390 54,752 15,000 (839 ) 2,297 (1,419 )
9,229
(3,011
)
6,266 17,661 20,672 14,406 $ 26,890 $ 17,661 $ 20,672 $ 80 $ (65 ) $ — $ 5,047 $ — $ — $ 86,361 $ — $ — $ 7,094 $ — $ — $ 4,292 $ — $ — "Company"“Company”) is a clinical-stage biotechnology company focused on the development of oncolytic immunotherapies to treat cancer. Replimune Limited ("Replimune UK") was incorporated in 2015 under the laws of England, and was the sole shareholder of Replimune, Inc. ("Replimune US"), a Delaware corporation. On July 5, 2017, Replimune Group, Inc., a Delaware corporation,whose predecessor was incorporated and on July 10, 2017founded in 2015, is the shareholders of Replimune UK effected a share-for-share exchange pursuant to which they exchanged their outstanding shares in Replimune UK for shares in Replimune Group, Inc., on a one-for-one basis. In addition, the holders of warrants and stock options to purchase Replimune UK capital stock canceled their warrants to purchase shares of series seed preferred stock and stock options in Replimune UK and were issued replacement warrants to purchase shares of series seed preferred stock and stock options to acquire Replimune Group, Inc. capital stock on a one-for-one basis. These transactions are collectively referred to as the reorganization. Upon completion of the reorganization, the historical consolidated financial statements of Replimune UK became the historical consolidated financial statements of Replimune Group, Inc. because the reorganization was accounted for similar to a reorganization of entities under common control due to the high degree of common ownership of Replimune UK and Replimune Group, Inc. and lack of economic substance to the transaction. The Company concluded that the reorganization resulted in no change in the material rights and preferences of each respective class of equity interests and no change in the fair value of each respective class of equity interests before and after the reorganization. On December 8, 2017, Replimune UK transferred all outstanding sharesparent company of its wholly owned, subsidiary,direct and indirect subsidiaries: Replimune US to Limited (“Replimune Group,UK”); Replimune, Inc. (“Replimune Group. Inc., a Delaware corporation, is the sole shareholder ofUS”); Replimune UK, Replimune USSecurities Corporation; and Replimune Securities Corporation, a Massachusetts corporation that was incorporated in November 2017.Company'sCompany’s product development efforts are successful, it is uncertain when, if ever, the Company will realize significant revenue from product sales.Forward stock split On July 9, 2018, the Company effected a 1-for-9.94688 forward stock split of its issued and outstanding shares of common stock and a proportional adjustment to the existing conversion ratios for each series of the Company's Preferred Stock (see Note 7). Accordingly, all share and per share amounts for all periods presented in the accompanying consolidated financial statements and notes thereto have been adjusted retroactively, where applicable, to reflect this forward stock split and adjustment of the preferred stock conversion ratios. Further, on July 9, 2018, the Company's authorized shares of common stock were increased to 27,314,288. Accordingly, the authorized shares of commonREPLIMUNE GROUP, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)(Amounts in thousands, except share and per share amounts)1. Nature of the business (Continued)stock presented in the accompanying consolidated financial statements and notes thereto have been adjusted retroactively, where applicable, to reflect the newly authorized shares of common stock.Initial public offering On July 24, 2018, the Company completed an initial public offering ("IPO") of its common stock and issued and sold 6,700,000 shares of common stock at a public offering price of $15.00 per share, resulting in net proceeds of $93,465 after deducting underwriting discounts and commissions but before deducting offering costs of $2,157. Upon closing of the IPO, the Company's outstanding convertible preferred stock automatically converted into shares of common stock (see Note 7). Upon conversion of the convertible preferred stock, the Company reclassified the carrying value of the convertible preferred stock to common stock and additional paid-in capital. The warrant to purchase shares of the Company's series seed convertible preferred stock was converted into a warrant to purchase shares of the Company's common stock upon the closing of the IPO. As a result, the warrant liability was remeasured a final time on the closing date of the IPO and reclassified to stockholders' equity (deficit). Additionally, the Company repurchased 26,258 shares of class A common stock at a price equal to its par value upon the closing of the IPO. On July 30, 2018, the Company issued and sold an additional 707,936 shares of its common stock at the IPO price of $15.00 per share pursuant to the underwriters' partial exercise of their option to purchase additional shares of common stock, resulting in additional net proceeds of $9,876 after deducting discounts and commissions and other offering expenses. Also, in connection with the completion of its IPO on July 24, 2018, the Company filed an amended and restated certificate of incorporation with the Secretary of State of the State of Delaware to authorize the issuance of up to 150,000,000 shares of common stock, par value $0.001 per share, and 10,000,000 shares of undesignated preferred stock, par value $0.001 per share.$30,834, $19,702$174.3 million and $7,704$118.0 million for the years ended March 31, 2019, 20182023 and 2017,2022, respectively. In addition, as of March 31, 2019,2023, the Company had an accumulated deficit of $59,766.$485.5 million. The Company expects to continue to generate operating losses for the foreseeable future. As of June 28, 2019, the issuance date of these consolidated financial statements, the Company expects that its cash and cash equivalents and short-term investments will be sufficient to fund its operating expenses and capital expenditure requirements through at least 12 months from the issuance of the consolidated financial statements. The future viability of the Company beyond that point is dependent on its ability to raise additional capital to finance its operations. If the Company is unable to obtain funding it could be forced to delay, reduce or eliminate some or all of its research and development programs, product portfolio expansion or commercialization efforts, which could adversely affect its business prospects, or it may be unable to continue operations. Although management continues to pursue these plans, there is no assurance that the Company will beREPLIMUNE GROUP, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)(Amounts in thousands, except share and per share amounts)1. Nature of the business (Continued)successful in obtaining sufficient funding on terms acceptable to the Company to fund continuing operations, if at all.and Replimune Securities Corporation and Replimune (Ireland) Limited after elimination of all intercompany accounts and transactions. The consolidated financial statements reflect the capital as if Replimune Group, Inc. had been in existence for all periods presented.common stock and stock-based awards. The Company bases its estimates on historical experience, known trends and other market-specific or other relevant factors that it believes to be reasonable under the circumstances. Estimates are periodically reviewed in light of reasonable changes in circumstances, facts and experience. Changes in estimates are recorded in the period in which they become known. Actual results could differ from those estimates or assumptions.Company'sCompany’s wholly owned foreign subsidiary, Replimune UK, is the British pound. Assets and liabilities of Replimune UK are translated into United States dollars at the exchange rate in effect on the balance sheet date. Revenues and expenses are translated at the average exchange rate in effect during the period. Unrealized translation gains and losses are recorded as a cumulative translation adjustment, which is included in the consolidated statements of convertible preferred stock and stockholders'stockholders’ equity (deficit) as a component of accumulated other comprehensive loss. Adjustments that arise from exchange rate changes on transactions denominated in a currency other than the local currency are included in other income (expense), net in the consolidated statements of operations as incurred.limits,limits. We limit our exposure to credit risk by placing investments with high credit quality financial institutions, diversifying our investment portfolio and placing investments with maturities that maintain safety and liquidity. To date, the Company has notREPLIMUNE GROUP, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)(Amounts in thousands, except share and per share amounts)2. Summary of significant accounting policies (Continued)accounts and does not believe it is exposed to any unusual credit risk beyond the normal credit risk associated with commercial banking relationships.supplies and supply raw materials and supply services for its development programs. These programs could be adversely affected by a significant interruption in these manufacturing services or the availability of raw materials.US Treasury bonds, and US Government Agency bonds atas of March 31, 2019. Cash equivalents consisted of money market funds at March 31, 2018.2023 and 2022, respectively. As of March 31, 20192023 and 2018,2022, the amount of cash equivalents included in cash and cash equivalents totaled $10,664$121.5 million and $4,130,$75.1 million, respectively.Cashmaintains certain minimum balancesholds restricted cash in segregated bank accounts in connection with its corporate credit cards and a letter of credit for the benefit of the landlords in connection with an operating lease.credit. As of March 31, 20192023 and 2018,2022, restricted cash consisted of $0 and $78, respectively, held in connection with the Company's corporate credit cards and $1,186 and $0, respectively,$1.6 million, held for the benefit of the landlords in connection with an operating lease.our leases. These amounts have been classified as non-current assets on the Company'sCompany’s consolidated balance sheets.Company'sCompany’s short-term debt security investments are classified as available-for-sale and are carried at fair value, with the unrealized gains and non-credit related losses reported as a component of accumulated other comprehensive income (loss)loss and included in stockholders' equity (deficit).stockholders’ equity. Realized gains and losses and declines in value determined to be other than temporary are based on the specific identification method and are included as a component of other income (expense), net in the consolidated statements of operations. The Company evaluatesshort-term debt security investments with unrealizedamortized cost basis. If either of the criteria regarding intent or requirement to sell is met, the security’s amortized cost basis is written down to fair value through a charge to interest income. For available-for-sale securities that do not meet the aforementioned criteria, we evaluate whether the decline in fair value has resulted from credit losses for other-than-temporary impairment. When assessing short-term debt security investments for other-than-temporary declines in value,or other factors. In making this assessment, the Company considers such factors as, among other things, how significant the decline in value is as a percentageseverity of the original cost,impairment, any changes in interest rates, how long the market value of the investment has been less than its original cost, the Company'sCompany’s ability and intent to retain the short-term debt security investment for a period of time sufficient to allow for any anticipated recovery in fair value and market conditions in general. IfThe credit-related portion of unrealized losses, and any adjustment to fair value reflects a declinesubsequent improvements, are recorded in the value of the short-term debt security investmentinterest income through an allowance account. Any impairment that the Company considers to be "other than temporary," the Company reduces the short-term debt security investment to fair valuehas not been recorded through a charge toan allowance for credit losses is included in other comprehensive loss on the consolidated statements of operations. operations and comprehensive loss.such adjustments were necessarycredit-related losses or impairments have been recognized on the Company's investments in available-for-sale securities during the periods presented.years ended March 31, 2023 or 2022.REPLIMUNE GROUP, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)(Amounts in thousands, except share and per share amounts)2. Summary of significant accounting policies (Continued)Company'sCompany’s short-term debt security investments as of March 31, 20192023 and 20182022 had original maturities of less than one year.Deferred offering costscapitalizes certain legal, professional accountinghas classified its investments with maturities beyond one year as short term, based on their highly liquid nature and other third-party feesbecause they represent the investment of cash that are directly associated with in-process equity financings as deferred offering costs until such financings are consummated. After consummation of the equity financing, these costs are recorded in stockholders' equity (deficit) as a reduction of proceeds generated as a result of the offering. Should an in-process equity financing be abandoned, the deferred offering costs will be expensed immediately as a charge to operating expenses in the consolidated statements ofis available for current operations. The Company did not record any deferred offering costs as of March 31, 2018. As of March 31, 2019, the Company recorded $2,157 of deferred offering costs in stockholders' equity (deficit) as a reduction of proceeds generated as a result of the IPO.Estimated Useful life Office equipment5 yearsComputerOffice equipment35 yearsComputer equipment and software 3 years Plant, manufacturing and laboratory equipment 5 years Leasehold improvements Lesser of lease term or 10 years REPLIMUNE GROUP, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)(Amounts in thousands, except share and per share amounts)2. Summary of significant accounting policies (Continued)Deferred rent The Company recognizes rent expense on a straight-line basis over the respective lease terms and has recorded deferred rent for rent expense incurred but not yet paid.1—1 — Quoted prices in active markets for identical assets or liabilities.2—2 — Observable inputs (other than Level 1 quoted prices), such as quoted prices in active markets for similar assets or liabilities, quoted prices in markets that are not active for identical or similar assets or liabilities, or other inputs that are observable or can be corroborated by observable market data.3—3 — Unobservable inputs that are supported by little or no market activity that are significant to determining the fair value of the assets or liabilities, including pricing models, discounted cash flow methodologies and similar techniques.Company'sCompany’s short-term investments and cash equivalents and warrant liability are carried at fair value, determined according to the fair value hierarchy described above (see Note 3). The carrying values of research and development incentives receivable, prepaid expenses and other current assets, accounts payable and accrued expenses and other current liabilities approximate their fair values due to the short-term nature of these assets and liabilities.Warrant liability Upon Furthermore, the closingcarrying value of the IPO,Company’s long-term debt approximates its fair value as of March 31, 2023 due to its variable interest rate, which approximates a market interest rate.warrants to purchase sharesperiod of the Company's series seed convertible preferred stock were converted into warrants to purchase sharesfinancing arrangement using the effective interest method. If the financing arrangement is canceled or forfeited, or if the utility of the Company's common stock. As a result, the warrant liability was remeasured a final time on the closing date of the IPO and reclassified to stockholders' equity (deficit). Priorarrangement to the IPO, the Company classified warrants to purchase shares of series seed preferred stock (see Note 8)is otherwise compromised, these costs are recognized as a liability on itsinterest expense immediately. The Company’s consolidated balance sheets as these warrants to purchase shares of series seed preferred stock were free-standing financial instruments that could require the Company to transfer assets upon exercise. The warrant liability was initially recorded at fair value upon the date of the warrants' issuance and was subsequently remeasured to fair value at each reporting date. Changesin the fair value of the warrant were recognized as a componentdirect reduction from the carrying amount of total other income (expense), net in the consolidated statements of operations. The Company utilized the Black-Scholes option-pricing model, which incorporated assumptions and estimates, to value the warrantthat debt liability. The Company assessed these assumptions and estimates on a quarterly basis as additional information impacting assumptions was obtained. Estimates and assumptions impacting the fair value measurement included the expected stock price volatility, the expected term of the warrant, the risk-free interest rate for a period that approximated the expected term of the warrant, and the Company's expected dividend yield (see Note 3).Company'sCompany’s current focus is on developing oncolytic immunotherapies for the treatment of cancer.cancelable,cancellable, and related costs are recorded as research and development expenses as incurred. The Company records accruals for estimated ongoing research costs. When evaluating the adequacy of the accrued liabilities, the Company analyzes progress of the studies or clinical trials, including the phase or completion of events, invoices received and contracted costs. Significant judgments and estimates are made in determining the accrued balances at the end of any reporting period. Actual results could differ from the Company'sCompany’s estimates. The Company'sCompany’s historical accrual estimates have not been materially different from the actual costs.REPLIMUNE GROUP, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)(Amounts in thousands, except share and per share amounts)2. Summary of significant accounting policies (Continued)measures all stock-basedaccounts for share-based payment awards granted to employees, consultants, and non-employees and directors based onusing the fair value of the Company’s common stock on the grant date of the grant and recognizes compensation expense is recognized for those awards over the requisite service period, which is generally the vesting period of the respective award. The grant date fair value is utilized for time-vested restricted stock units (“RSUs”) is based on the closing price of the Company's common stock on the date of grant. The fair value of each stock option grant is estimated on the date of grant using the Black-Scholes option-pricing model, which requires inputs based on certain subjective assumptions, including the expected stock price volatility, the expected term of the option, the risk-free interest rate for a period that approximates the expected term of the option, and the Company'sCompany’s expected dividend yield (see Note 10). Forfeitures are accounted for as they occur. To date, the Company has issued stock-based awards with only service-based vesting conditions and records the expense for these awards using the straight-line method. For stock-based awards granted to consultants and non-employees, compensation expense is recognized over the shorter of the vesting period or the period during which services are rendered by such consultants and non-employees until completed. At the end of each financial reporting period prior to completion of the service, the fair value of these awards is remeasured using the then-current fair value of the Company's common stock and updated assumption inputs in the Black-Scholes option-pricing model.recipient'srecipient’s payroll costs are classified or in which the award recipient'srecipient’s service payments are classified.government'sgovernment’s research and development tax reliefs program. Under the program, a percentage of qualifying research and development expenses incurred by the Company'sCompany’s subsidiary in the United Kingdom are reimbursed up to 14.5%.Company'sCompany’s research and development activities and expenditures to determine which activities and expenditures are likely to be eligible under the research and development incentive program described above. At each period end, management estimates the reimbursement available to the Company based on available information at the time.$2,528, $2,267$2.9 million and $1,442$3.2 million during the years ended March 31, 2019, 20182023 and 2017,2022, respectively, in the consolidated statements of operations and a research and development incentives receivable of $2,474$2.9 million and $2,389$3.1 million as of March 31, 20192023 and 2018,2022, respectively, on the consolidated balance sheets.REPLIMUNE GROUP, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)(Amounts in thousands, except share and per share amounts)2. Summary of significant accounting policies (Continued)stockholders'stockholders’ equity (deficit) that result from transactions and economic events other than those with stockholders. For the year ended March 31, 2019,2023, comprehensive loss included $(897)$5.5 million of foreign currency translation adjustmentsgains and $80$1.2 million of unrealized gains on short-term investments, net of tax. For the year ended March 31, 2018,2022, comprehensive loss included $2,376$0.7 million of foreign currency translation adjustmentsgains and $(65)$1.3 million of unrealized losses on short-term investments, net of tax. For the year ended March 31, 2017, comprehensive loss included $(1,437) of foreign currency translation adjustments.Company'sCompany’s tax returns. Deferred tax assets and liabilities are determined on the basis of the differences between the consolidated financial statements and tax basis of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. Changes in deferred tax assets and liabilities are recorded in the provision for income taxes. The Company assesses the likelihood that its deferred tax assets will be recovered from future taxable income and, to the extent it believes, based upon the weight of available evidence, that it is more likely than not that all or a portion of the deferred tax assets will not be realized, a valuation allowance is established through a charge to income tax expense.provision. Potential for recovery of deferred tax assets is evaluated by estimating the future taxable profits expected and considering prudent and feasible tax planning strategies. The Company follows the two-class method when computing net income (loss) per share as the Company has issued shares that meet the definition of participating securities. The two-class method determines net income (loss) per share for each class of common and participating securities according to dividends declared or accumulated and participation rights in undistributed earnings. The two-class method requires income available to common stockholders for the period to be allocated between common and participating securities based upon their respective rights to receive dividends as if all income for the period had been distributed.REPLIMUNE GROUP, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)(Amounts in thousands, except share and per share amounts)2. Summary of significant accounting policies (Continued)share attributable to common stockholdersshare is computed by dividing the net income (loss) attributable to common stockholders by the weighted average number of shares of common stock outstanding for the period. Diluted net income (loss) attributable toper common stockholders is computed by adjusting net income (loss) attributable to common stockholders to reallocate undistributed earnings based on the potential impact of dilutive securities. Diluted net income (loss) per share attributable to common stockholders is computed by dividing the diluted net income (loss) attributable to common stockholders by the weighted average number of shares of common stock outstanding for the period, including potential dilutive common shares assuming the dilutive effect of common stock equivalents. The Company's convertible preferred stock contractually entitled the holders of such shares to participate in dividends but contractually did not require the holders of such shares to participate in losses of the Company. Accordingly, in periods in which the Company reported a net loss, such losses were not allocated to such participating securities. attributable to common stockholders, diluted net loss per share attributable to common stockholders is the same as basic net loss per share, attributable to common stockholders, since dilutive common shares are not assumed to have been issued if their effect is anti-dilutive.Adopted Accounting PronouncementsMay 2017,June 2016, the FASB issued ASU No. 2017-09,Compensation—Stock Compensation2016-13, Financial Instruments- Credit Losses (Topic 718): Scope of Modification Accounting ("ASU 2017-09"), which clarifies when to account326). The standard changes how entities will measure credit losses for a change to the terms or conditions of a share-based payment award as a modification. Under the new guidance, modification accounting is required only if themost financial assets and certain other instruments that are not measured at fair value through net income. Financial assets measured at amortized cost will be presented at the vesting conditions, or the classification of the award (as equity or liability) changes as a result of the change in terms or conditions. The standard is effectivenet amount expected to be collected by using an allowance for annual periods beginning after December 15, 2017, including interim periods within those fiscal years. Early adoption is permitted.credit losses. The Company adopted ASU 2017-092016-13 as of the required effective date of April 1, 2018 and will apply to any changes to the terms or conditions of share-based payment awards prospectively.2022. The adoption of ASU 2017-092016-13 did not have a material impact on the Company's financial position, results of operations, or cash flows. In November 2016, the FASB issued ASU No. 2016-18,Statement of Cash Flows (Topic 230): Restricted Cash ("ASU 2016-18"), which requires restricted cash to be presented with cash and cash equivalents on the consolidated statements of cash flows and disclosure of how the consolidated statements of cash flows reconciles to the balance sheet if restricted cash is shown separately from cash and cash equivalents on the balance sheet. The standard is effective for annual periods beginning after December 15, 2017, including interim periods within those fiscal years. Early adoption is permitted. The Company adopted ASU 2016-18 as of April 1, 2018. Restricted cash is now included as a component of cash, cash equivalents and restricted cash on the Company's consolidated statement of cash flows. Upon the adoption of ASU 2016-18, the amount of cash and cash equivalents previously presented on the consolidated statements of cash flows reflects the inclusion of restricted cash in the amount reported for changes in cash, cash equivalents and restricted cash. Additionally, as a result of the adoption, transfers between restricted and unrestricted cash are no longer presented as a component of the Company's investing activities. The adoption of ASU 2016-08 did not have a material impact on the Company's financial position, results of operations, or cash flows. On the statement ofREPLIMUNE GROUP, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)(Amounts in thousands, except share and per share amounts)2. Summary of significant accounting policies (Continued)cash flows for the years ended March 31, 2018 and 2017, the Company reclassified restricted cash of $78 and $75, respectively, to be included inCash, cash equivalents and restricted cash at beginning of year andCash, cash equivalents and restricted cash at end of year. In October 2016, the FASB issued ASU No. 2016-16,Income Taxes (Topic 740): Intra-Entity Transfer of Assets Other than Inventory ("ASU 2016-16"), which requires the recognition of the income tax consequences of an intra-entity transfer of an asset, other than inventory, when the transfer occurs. The standard is effective for annual periods beginning after December 15, 2017, including interim periods within those fiscal years. The Company adopted ASU 2016-16 as of the required effective date of April 1, 2018. The adoption of ASU 2016-16 did not have a material impact on the Company's financial position, results of operations or cash flows. In August 2016, the FASB issued ASU No. 2016-15,Statement of Cash Flows: Classification of Certain Cash Receipts and Cash Payments ("ASU 2016-15"), to address diversity in practice in how certain cash receipts and cash payments are presented and classified in the consolidated statements of cash flows. The standard is effective for annual periods beginning after December 15, 2017, including interim periods within those fiscal years. The Company adopted ASU 2016-16 as of the required effective date of April 1, 2018. The adoption of ASU 2016-15 did not have a material impact on the Company's financial position, results of operations or cash flows. In May 2014, the FASB issued ASU No. 2014-09,Revenue from Contracts with Customers (Topic 606) ("ASU 2014-09"), which supersedes existing revenue recognition guidance under GAAP. The standard's core principle is that a company will recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. The standard defines a five-step process to achieve this principle, and will require companies to use more judgment and make more estimates than under the current guidance. The Company expects that these judgments and estimates will include identifying performance obligations in the customer contract, estimating the amount of variable consideration to include in the transaction price and allocating the transaction price to each separate performance obligation. ASU 2014-09 also requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts. In August 2015, the FASB issued ASU No. 2015-14,Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date, which delays the effective date of ASU 2014-09 such that the standard is effective for public entities for annual periods beginning after December 15, 2017 and for interim periods within those fiscal years. Early adoption of the standard is permitted for annual periods beginning after December 15, 2016. The Company adopted ASU 2014-09 on a full retrospective basis effective April 1, 2018. The adoption of ASU 2014-09 did not have an impact on the Company's consolidated financial statements as the Company does not currently have any revenue-generating arrangements.Recently Issued Accounting Pronouncements In November 2018, the FASB issued ASU No. 2018-18,Collaborative Arrangements (Topic 808): Clarifying the Interaction between Topic 808 and Topic 606 ("ASU2018-18"), which clarifies that certain transactions between collaborative arrangement participants should be accounted for as revenue under Topic 606 when the collaborative arrangement participant is a customer in the context of a unit of account. In those situations, all the guidance in Topic 606 should be applied, including recognition,REPLIMUNE GROUP, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)(Amounts in thousands, except share and per share amounts)2. Summary of significant accounting policies (Continued)measurement, presentation, and disclosure requirements. The standard adds unit-of-account guidance in Topic 808 to align with the guidance in Topic 606 (that is, a distinct good or service) when an entity is assessing whether the collaborative arrangement or a part of the arrangement is within the scope of Topic 606, and requires that in a transaction with a collaborative arrangement participant that is not directly related to sales to third parties, presenting the transaction together with revenue recognized under Topic 606 is precluded if the collaborative arrangement participant is not a customer. The standard is effective for interim and annual periods beginning after December 15, 2019, with early adoption permitted, including adoption in any interim period for public business entities for periods in which financial statements have not been issued. Amendments in the standard should be applied retrospectively to the date of initial application of Topic 606, but entities may elect to apply the amendments in this Update retrospectively either to all contracts or only to contracts that are not completed at the date of initial application of Topic 606, and should disclose the election. An entity may also elect to apply the practical expedient for contract modifications that is permitted for entities using the modified retrospective transition method in Topic 606. The Company is in the process of evaluating the impact of ASU 2018-18 on its consolidated financial statements and disclosures. In August 2018, the FASB issued ASU No. 2018-13,Fair Value Measurement (Topic 820), Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement ("ASU 2018-13"). The amendments in this ASU require certain existing disclosure requirements in Topic 820 to be modified or removed, and certain new disclosure requirements to be added to the Topic. In addition, this ASU allows entities to exercise more discretion when considering fair value measurement disclosures. ASU 2018-13 is effective after December 15, 2019 with early adoption permitted. The Company is in the process of evaluating the impact of ASU 2018-13 on its consolidated financial statements and disclosures. In June 2018, the FASB issued ASU No. 2018-07,Compensation—Stock Compensation (Topic 718):Improvements to Nonemployee Share-Based Payment Accounting ("ASU 2018-07"). ASU 2018-07 expands the scope of Topic 718 to include share-based payment transactions for acquiring goods and services from nonemployees. ASU 2018-07 also clarifies that Topic 718 does not apply to share-based payments used to effectively provide (1) financing to the issuer or (2) awards granted in conjunction with selling goods or services to customers as part of a contract accounted for under Revenue from Contracts with Customers (Topic 606). The guidance is effective for fiscal years beginning after December 15, 2018, including interim periods within that fiscal year. Early adoption is permitted. The Company is currently assessing the effect that ASU 2018-07 will have on its consolidated financial statements and disclosures. In July 2017, the FASB issued ASU No. 2017-11,Earnings Per Share (Topic 260), Distinguishing Liabilities from Equity (Topic 480), Derivatives and Hedging (Topic 815) I. Accounting for Certain Financial Instruments with Down Round Features II. Replacement of the Indefinite Deferral for Mandatorily Redeemable Financial Instruments of Certain Nonpublic Entities and Certain Mandatorily Redeemable Noncontrolling Interests with a Scope Exception ("ASU 2017-11"). Part I applies to entities that issue financial instruments such as warrants, convertible debt or convertible preferred stock that contain down-round features. Part II replaces the indefinite deferral for certain mandatorily redeemable noncontrolling interests and mandatorily redeemable financial instruments of nonpublic entities contained within Accounting Standards Codification ("ASC") Topic 480 with a scope exception and does not impact the accounting for these mandatorily redeemable instruments. ASU 2017-11 is requiredREPLIMUNE GROUP, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)(Amounts in thousands, except share and per share amounts)2. Summary of significant accounting policies (Continued)to be adopted for annual periods beginning after December 15, 2018, including interim periods within those fiscal years. The adoption of ASU 2017-11 is not expected to have a material impact on the Company's consolidated financial statements. In February 2016, the FASB issued ASU No. 2016-02,Leases (Topic 842), which supersedes FASB Topic 840,Leases (Topic 840) and provides principles for the recognition, measurement, presentation and disclosure of leases for both lessees and lessors. The new standard requires lessees to apply a dual approach, classifying leases as either finance or operating leases based on the principle of whether or not the lease is effectively a financed purchase by the lessee. This classification will determine whether lease expense is recognized based on an effective interest method or on a straight-line basis over the term of the lease, respectively. A lessee is also required to record a right-of-use asset and a lease liability for all leases with a term of greater than 12 months regardless of classification. Leases with a term of 12 months or less will be accounted for similar to existing guidance for operating leases. In January 2018, the FASB issued ASU No. 2018-01,Leases (Topic 842): Land Easement Practical Expedient for Transition to Topic 842, which amends ASU 2016-02 to provide entities an optional transition practical expedient to not evaluate under Topic 842 existing or expired land easements that were not previously accounted for as leases under the current leases guidance in Topic 842. An entity that elects this practical expedient should evaluate new or modified land easements under Topic 842 beginning at the date that the entity adopts Topic 842. In July 2018, the FASB also issued ASU No. 2018-11,Leases (Topic 842): Targeted Improvements, which provides an optional transition method that allows entities to elect to apply the standard prospectively at its effective date, versus recasting the prior periods presented. The standard will be effective for annual and interim periods beginning after December 15, 2018, with early adoption permitted upon issuance. The Company expects to elect the option to not restate comparative periods presented in the financial statements, using a cumulative-effect adjustment on the effective date of the standard, with comparative periods presented in accordance with the existing guidance in ASC 840. The Company will adopt the new standard effective April 1, 2019 and will use the effective date as the date of initial application. The Company currently expects to elect the available package of practical expedients which allows the Company to not reassess previous accounting conclusions around whether arrangements are or contain leases, the classification of leases, and the treatment of initial direct costs. The Company also expects it will make an accounting policy election to utilize the short-term lease exemption, whereby leases with a term of twelve months or less will not follow the recognition and measurement requirements of the new standard. The Company is currently evaluating the impact of pending adoption on its consolidated financial statements and disclosures, including the impact on the Company's build-to-suit lease for which the accounting may change under Topic 842.REPLIMUNE GROUP, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)(Amounts in thousands, except share and per share amounts)Company'sCompany’s financial assets and liabilities measured at fair value on a recurring basis:Fair Value Measurements as of March 31, 2023 Using: Level 1 Level 2 Level 3 Total Cash equivalents: Money market funds $ — $ 121,455 $ — $ 121,455 Short-term investments: US Government Agency bonds — 240,355 — 240,355 US Treasury bonds — 196,441 — 196,441 $ — $ 558,251 $ — $ 558,251 Fair Value Measurements as of
March 31, 2019 Using: Level 1 Level 2 Level 3 Total $ — $ 2,676 $ — $ 2,676 — 46,687 — 46,687 — 20,884 — 20,884 — 41,057 — 41,057 — 8,467 — 8,467 $ — $ 119,771 $ — $ 119,771 Fair Value Measurements as of March 31, 2022 Using: Level 1 Level 2 Level 3 Total Cash equivalents: Money market funds $ — $ 75,117 $ — $ 75,117 Short-term investments: US Government Agency bonds — 26,688 — 26,688 US Treasury bonds — 263,019 — 263,019 $ — $ 364,824 $ — $ 364,824 Fair Value Measurements as of
March 31, 2018 Using: Level 1 Level 2 Level 3 Total $ — $ 4,130 $ — $ 4,130 — 27,998 — 27,998 — 15,970 — 15,970 $ — $ 48,098 $ — $ 48,098 $ — $ — $ 1,642 $ 1,642 $ — $ — $ 1,642 $ 1,642 20192023 and 2018,2022, there were no transfers between levels.commercial paper, USU.S. Treasury bonds USand U.S. Government Agency bonds and corporate debt securities were valued by the Company using quoted prices in active markets for similar securities, which represent a Level 2 measurement within the fair value hierarchy.Valuation Cash equivalents consisted of Warrant Liability The warrant liability is related tomoney market funds at March 31, 2023 and March 31, 2022.warrants to purchase shares of series seed preferred stock (see Note 8). The fair valueCompany's available-for-sale investments by type, consisted of the warrant liability was determined based on significant inputs not observable in the market, which represents a Level 3 measurement within the fair value hierarchy. Upon the closing of the IPO in July 2018, the warrant to purchase shares of the Company's series seed convertible preferred stock was converted into a warrant to purchase shares of the Company's common stock. As a result, the warrant liability was remeasured a final time on the closing date of the IPO and reclassified to stockholders' equity (deficit).following:March 31, 2023 Amortized cost Gross unrealized gains Gross unrealized losses Credit Losses Fair value US Government agency bonds $ 240,371 $ 187 $ (203) $ — $ 240,355 US Treasury bonds 196,488 77 (124) $ — 196,441 $ 436,859 $ 264 $ (327) $ — $ 436,796 3. Fair value of financial assets and liabilities The Company used the Black-Scholes option-pricing model, which incorporated assumptions and estimates, to value the warrant liability. Key estimates and assumptions impacting the fair value measurement include (i) the expected term of the warrants, (ii) the risk-free interest rate, (iii) the expected dividend yield, (iv) expected volatility of the price of the underlying series seed preferred stock and (v) the fair value of the series seed preferred stock on the valuation date. The Company estimated the fair value per share of the underlying series seed preferred stock based, in part, on the results of third-party valuations and additional factors deemed relevant. The risk-free interest rate was determined by reference to the U.S. Treasury yield curve for time periods approximately equal to the remaining contractual term of the warrants. The Company estimated a 0% expected dividend yield based on the fact that the Company has never paid or declared dividends and does not intend to do so in the foreseeable future. Prior to July 2018, the Company was a private company and accordingly, lacked company-specific historical and implied volatility information of its stock, the expected stock volatility was based on the historical volatility of publicly traded peer companies for a term equal to the remaining expected term of the warrants.March 31, 2022 Amortized cost Gross unrealized gains Gross unrealized losses Credit Losses Fair value US Government agency bonds $ 26,827 $ — $ (139) $ — $ 26,688 US Treasury bonds 264,162 — (1,143) — 263,019 $ 290,989 $ — $ (1,282) $ — $ 289,707 2018,2023 and 2022, available-for-sale securities consisted of investments that mature within one year, with the warrant liability was valued at $1,642exception of certain U.S. Government agency bonds and classified as a non-current liability on the consolidated balance sheet. The following assumptions were used in valuing the warrant liability:March 31,2018Risk-free interest rate2.69%Expected term (in years)7.5Expected volatility65.8%Expected dividend yield0% Based on the termsU.S. Treasury bonds which have maturities between one and conditions of the warrant, upon closing of the Company's IPO in July 2018, the warrant to purchase shares of the Company's series seed convertible preferred stock was converted into a warrant to purchase shares of the Company's common stock. On that date, the Company remeasured the warrant liability totwo years and an aggregate fair value of $15.1 million and reclassified the total carrying value to additional paid-in capital. The Company performed the final remeasurement of the warrant liability using the IPO price of $15.00 per share and recorded the change in fair value as a component of total other income (expense), net in the consolidated statement of operations. The following assumptions were used to measure the fair market value of the warrant liability upon the conversion date:Risk-free interest rate2.81%Expected term (in years)7.2Expected volatility64.4%Expected dividend yield0%REPLIMUNE GROUP, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)(Amounts in thousands, except share and per share amounts)3. Fair value of financial assets and liabilities (Continued) The following table presents a roll forward of the warrant liability: Warrant
Liability $ 1,642 5,452 (7,094 ) $ — 4. Short-term investments Short-term investments by investment type consisted of the following: March 31, 2019 Amortized
cost Gross
unrealized
gains Gross
unrealized
losses Fair value $ 46,687 $ 2 $ (2 ) $ 46,687 15,889 4 — 15,893 38,047 13 — 38,060 8,469 — (2 ) 8,467 $ 109,092 $ 19 $ (4 ) $ 109,107 March 31, 2018 Amortized
cost Gross
unrealized
gains Gross
unrealized
losses Fair value $ 28,028 $ 2 $ (32 ) $ 27,998 16,005 — (35 ) 15,970 $ 44,033 $ 2 $ (67 ) $ 43,968 REPLIMUNE GROUP, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)(Amounts in thousands, except share and per share amounts)March 31,
2023March 31,
2022Office equipment $ 1,240 $ 937 Computer equipment 1,806 1,667 Plant and laboratory equipment 9,186 7,720 Leasehold improvements 1,706 785 Construction in progress 783 1,619 14,721 12,728 Less: Accumulated depreciation and amortization (7,242) (4,795) $ 7,479 $ 7,933 March 31, 2019 2018 $ 154 $ 154 124 — 11,514 — 49 49 138 87 584 336 $ 12,563 $ 626 (404 ) (256 ) $ 12,159 $ 370 $148, $109$2.4 million and $122$2.1 million for the years ended March 31, 2019, 20182023 and 2017,2022, respectively, and recorded within research and development and selling, general and administrative expenses in the consolidated statement of operations. Build-to-suit lease asset, as of March 31, 2019, includes $11,514 capitalized in connection with the Company's build-to-suit lease accounting (see Note 13).March 31,
2023March 31,
2022Accrued research and development costs $ 11,261 $ 5,882 Accrued compensation and benefits costs 9,909 5,569 Accrued professional fees 540 621 Other 2,994 1,320 $ 24,704 $ 13,392 March 31, 2019 2018 $ 530 $ 949 1,510 949 464 1,094 24 26 273 153 $ 2,801 $ 3,171 7. Convertible preferred stock Thepreviously issued series seed convertible preferred stockentered into a Loan and Security Agreement (the "series seed preferred stock"“Loan Agreement”), series A convertible preferred stockwith Hercules Capital, Inc., as administrative agent, collateral agent and as a lender (“Hercules”). Pursuant to the Loan Agreement, the Company can borrow term loans in an aggregate maximum principal amount of up to $200.0 million under multiple tranches (the "series A preferred stock") and series B convertible preferred stock (the "series B preferred stock"“Term Loan Facility”). The series seed preferred stock, series A preferred stock and series B preferred stock are collectively referred to asUnder the "preferred stock." In connection withLoan Agreement, the closingCompany borrowed an initial amount of the IPO, the preferred stock converted into 19,157,360 shares of common stock$30.0 million on a 1:9.94688 basis. There was no preferred stock outstanding as of March 31, 2019.theConvertible preferred stockLong-term debt (Continued)2018, preferred stock2023, the amount accrued for the final payment is $0.2 million.thousands, except share amounts)thousands):March 31, 2023 Principal loan balance $ 30,222 Facility charge and diligence fee (315) Unamortized issuance costs (1,410) Accumulated end of term fee 151 Long term debt, net $ 28,648 March 31, 2018 Preferred
Shares
Authorized Preferred
Shares
Issued and
Outstanding Carrying
Value Liquidation
Preference Common Stock
Issuable
Upon
Conversion 250,000 200,000 $ 1,609 $ 2,000 1,989,376 864,553 864,553 30,000 30,000 8,599,601 861,415 861,415 54,752 54,950 8,568,383 1,975,968 1,925,968 $ 86,361 $ 86,950 19,157,360 Prior toThe annual principal payments due under the closing of the IPO, the holders of the preferred stock had the following rights and preferences: The holders of the Preferred Stock have the following rights and preferences:Voting The holders of the preferred stock were entitled to vote, together with the holders of common stock, on all matters submitted to the stockholders for a vote and were entitled to the number of votes equal to the number of whole shares of common stock into which such holders of preferred stock could convert on the record date of for determination of stockholders entitled to vote. The holders of preferred stock and common stock, votingLoan Agreement as a single class, were entitled to elect two directors of the Company. Additionally, the holders of the series seed preferred stock were entitled to elect two directors of the Company, the holders of the series A preferred stock were entitled to elect one director of the Company and the holders of at least 55% of the outstanding series B preferred stock were entitled to elect two directors of the Company.Conversion Each share of preferred stock was convertible into common stock, at any time, at the option of the holder, and without the payment of additional consideration, at the applicable conversion ratio then in effect for each series of preferred stock and subject to adjustment in accordance with anti-dilution provisions. In addition, each share of preferred stock was convertible into common stock at the applicable conversion ratio then in effect for each series of preferred stock upon the earlier of (i) the closing of a firm commitment underwritten public offering of the Company's common stock with gross proceeds to the Company of at least $30,000 and at a price per share of not less than $9.62, subject to appropriate adjustment in the event of any stock split, stock dividend, combination or other similar recapitalization, or (ii) a date specified by vote or written consent of the holders of 75% of the outstanding preferred stock (voting together as a single class on an as-converted basis). For any events of deemed liquidation (as defined below) in which series B preferred stock investors would receive less than their full liquidation preference, a further approval of holders of 55% of the outstanding series B preferred stock was required. As of March 31, 2018, each share of preferred stock was convertible into 9.94688 share of common stock.Convertible preferredLong-term debt (Continued)March 31, 2023 2024 $ — 2025 — 2026 — 2027 13,438 Thereafter 18,701 Total $ 32,139 (Continued) The conversion ratio for each series of preferred stock was determined by dividing the original issue price of each series of preferred stock by the conversion price of each series (as defined below). 2018,2023 and 2022, the series seed preferred stock original issue price and series seed preferred stock conversion price were $1.01 per share and $10.00 per share, respectively. As of March 31, 2018, the series A preferred stock original issue price and series A preferred stock conversion price were $3.49 per share and $34.70 per share, respectively. As of March 31, 2018, the series B preferred stock original issue price and series B preferred stock conversion price were $6.41 per share and $63.79 per share, respectively. Such series seed preferred stock original issue price, series A preferred stock original issue price and series B preferred stock original issue price and series seed preferred stock conversion price, series A preferred stock conversion price and series B preferred stock conversion price, and the rate at which each series of preferred stock may be converted into common stock, were subject to appropriate adjustment from time to time in the event of any stock dividend, stock split, combination or other similar recapitalization with respect to the preferred stock. The series seed preferred stock conversion price, series A preferred stock conversion price and series B preferred stock conversion price were also subject to adjustments based on weighted-average anti-dilution provisions set forth in the Company's certificate of incorporation, as amended and restated, in the event that additional securities were issued at a purchase price less than the series seed preferred stock conversion price, series A preferred stock conversion price or series B preferred stock conversion price then in effect.Dividends The holders of the preferred stock were entitled to be paid noncumulative dividends if and when declared by the Company's board of directors. The Company could not pay any dividends on shares of common stock of the Company unless the holders of preferred stock then outstanding simultaneously receive dividends at the same rate and same time as dividends paid with respect to common stock. Dividends were to accrue on a daily basis assuming a 365-day year, and were to be paid in cash. Through the date of the IPO, when preferred shares converted to common shares, no dividends had been declared or paid.Liquidation preference In the event of any voluntary or involuntary liquidation event, dissolution, winding up of the Company or an event of deemed liquidation, each holder of the then outstanding series B preferred stock would have been entitled to receive, prior and in preference to any distributions to the holders of series A preferred stock, series seed preferred stock and common stock, an amount equal to the greater of (i) the applicable original issue price, plus any declared but unpaid dividends thereon, or (ii) the amount such holder would have received if such holder had converted its shares into common stock immediately prior to such liquidation event. After the payment of all preferential amounts to the holders of series B preferred stock, each holder of the then outstanding series A preferred stock would have been entitled to receive, prior and in preference to any distributions to the holders of series seed preferred stock and common stock, an amount equal to the greater of (i) the applicable original issue price, plus any declared but unpaidREPLIMUNE GROUP, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)(Amounts in thousands, except share and per share amounts)7. Convertible preferred stock (Continued)dividends thereon, or (ii) the amount such holder would have received if such holder had converted its shares into common stock immediately prior to such liquidation event. After the payment of all preferential amounts to the holders of series A preferred stock, each holder of the then outstanding series seed preferred stock would have been entitled to receive, prior and in preference to any distributions to the holders of common stock, an amount equal to the greater of (i) the applicable original issue price, plus any declared but unpaid dividends thereon or (ii) the amount such holder would have received if such holder had converted its shares into common stock immediately prior to such liquidation event. After payments have been made in full to the holders of preferred stock, then, to the extent available, the remaining amounts would have been distributed among the holders of the shares of common stock, the holders of series B preferred stock and the holders of series A preferred stock, pro rata based on the number of shares held by each holder, assuming full conversion of all such preferred stock. The holders of series B preferred stock and series A preferred stock were subject to a participation cap (as defined below) for remaining amounts that would have been distributed, which was $127.58 per share for the series B preferred stock and $69.40 per share for the series A preferred stock. To the extent available, the remaining amounts greater than the total of the participation caps would have been distributed among the holders of the shares of common stock, pro rata based on the number of shares held by each holder. Unless a majority of the holders of the then outstanding preferred stock, on an as-if-converted basis voting together as a single class, elect otherwise, an event of deemed liquidation shall include a merger or consolidation (other than one in which stockholders of the Company own a majority by voting power of the outstanding shares of the surviving or acquiring corporation), sale, transfer or exclusive license of substantially all of the assets of the Company. The preferred stock was conditionally redeemable upon an event of deemed liquidation, which was defined as any (i) merger, consolidation or acquisition, involving the Company or its Subsidiary Undertaking, in which the Company or its subsidiary undertaking was not the surviving entity, (ii) an asset sale, (iii) a share sale, (iv) an initial public offering, (v) the occurrence of a change of control in respect of the Company, (vi) a winding up (vii) or any other a return of capital to stockholders (other than a conversion, redemption or repurchase of shares made in accordance with the applicable governing documents).Redemption The Company's certificate of incorporation, as amended and restated, did not provide redemption rights to the holders of preferred stock. The holders of shares of convertible preferred stock had liquidation rights in the event of a deemed liquidation that, in certain situations, were not solely within the control of the Company. Therefore, convertible preferred stock was classified outside of stockholders' equity (deficit). Upon issuance of each class of preferred stock, the Company assessed the embedded conversion and liquidation features of the securities. The Company determined that each class of preferred stock did not require the Company to separately account for the liquidation features. The Company alsoREPLIMUNE GROUP, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)(Amounts in thousands, except share and per share amounts)7. Convertible preferred stock (Continued)concluded that no beneficial conversion feature existed upon the issuance date of the series A preferred stock or series B preferred stock as of March 31, 2018. However, the Company did conclude that a beneficial conversion feature existed upon the issuance date of the series seed preferred stock. As the series seed preferred stock was convertible into common stock, at any time, at the option of the holder, and without the payment of additional consideration, at the applicable conversion ratio then in effect, the Company recognized the accretion of the beneficial conversion feature as a deemed dividend immediately upon the issuance of the series seed preferred stock.8. Preferred stock warrants In connection with the issuance of the series seed preferred stock, the Company issued to the holders of the series seed preferred stock warrants for the purchase of 50,000 shares of series seed preferred stock, which became fully vested and exercisable in the year of issuance. The warrants to purchase shares of series seed preferred stock were issued at an exercise price of $10.00 per share and expire on the earlier of September 16, 2025 or a qualified change of control event. The issuance date fair value of the warrants to purchase shares of series seed preferred stock was $391 and was recorded as a liability with a corresponding reduction in the carrying value of the series seed preferred stock. As of March 31, 2019 and 2018, the fair value of the warrant liability was $0 and $1,642, respectively. The Company recognized a loss of $5,452, $972 and $150 within total other income (expense), net in the consolidated statements of operations for the years ended March 31, 2019, 2018 and 2017, respectively, related to the change in fair value of the warrant liability. Upon the closing of the Company's IPO in July 2018, all outstanding preferred stock was converted into common stock and the series seed preferred stock warrants became exercisable for common stock instead of series seed preferred stock. As a result, the warrant liability was remeasured a final time on the closing date of the IPO and reclassified to stockholders' equity (deficit).9. Stockholders' EquityCommon Stock As of March 31, 2019, the Company'sCompany’s certificate of incorporation, as amended and restated, authorized the Company to issue up to 150,000,000 shares of common stock, par value $0.001 per share. As of March 31, 2018, the Company was authorized to issue 27,314,288 shares of par value $0.001 per share common stock (including 26,258 authorized shares of common A stock). In July 2017, the Company issued and sold 26,258 shares of par value $0.001 per share common A stock for nominal cash proceeds. In July 2018, the Company repurchased 26,258 shares of par value $0.001 per share common A stock for nominal cash proceeds. voting, dividend and liquidation rights of the holders of the Company's common stock is subject to and qualified by the rights, powers and preferences of the holders of the preferred stock as set forth above. As of March 31, 2019, the Company had reserved 6,873,744 shares offor common stock for the exercise of outstanding stock options and the vesting of restricted share units, the number of shares remaining available for grant under the Company'sCompany’s 2018 Omnibus Incentive Compensation Plan and the Company'sCompany’s Employee Stock Purchase Plan (see Note 10) and the exercise of the outstanding warrants to purchase shares of common. common stock as follows:March 31, 2023 March 31, 2022 Stock options, issued and outstanding 7,454,828 6,514,334 Restricted stock units 1,351,280 826,213 Stock options and restricted stock units, future issuance 2,209,597 1,933,300 Employee stock purchase plan, available for future grants 2,076,603 1,550,375 Pre-IPO warrants to purchase common stock 497,344 497,344 Pre-funded warrants 9,484,238 5,284,238 Total shares of common stock reserved for future issuance 23,073,890 16,605,804 2018,2023, the Company had reserved 22,306,801 shares of common stock for the conversion ofREPLIMUNE GROUP, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)(Amounts in thousands, except share and per share amounts)9. Stockholders' Equity (Continued)outstanding shares of preferred stock (see Note 7), the exercise of outstanding stock options, the number of shares remaining available for grant under the Company's 2017 Equity Compensation Plan (see Note 10) and the exercise of the outstanding warrants to purchase shares of series seed preferred stock (see Note 8), assuming all warrants to purchase shares of series seed preferred stock became warrants to purchase shares of common stock at the applicable conversion ratio.Voting Each share of common stock, including common A stock, entitles the holder to one vote, together with the holders of preferred stock, on all matters submitted to the stockholders for a vote. The holders of common stock, together with the holders of preferred stock and voting as a single class, are entitled to elect two directors of the Company by vote of a majority of such shares.Dividends Common stockholders are entitled to receive dividends, as may be declared by the Company's board of directors, if any, subject to the preferential dividend rights of the preferred stock. Through March 31, 2019, no cash dividends have been declared or paid. Each share of common A stock is entitled to receive dividends, as may be declared by the Company's board of directors, if any, equal to a maximum of 100% of each share's par value. Upon an event of deemed liquidation, common A stock is entitled to receive dividends equal to a maximum of 300% of each share's par value.Undesignated Preferred Stock As of March 31, 2019, the Company'sCompany’s certificate of incorporation, as amended and restated, authorized the Company to issue up to 10,000,000 shares of undesignated preferred stock, par value $0.001 per share. There were no undesignated preferred shares issued or outstanding as of March 31, 2019. Stock-Based Compensation
Stock-based compensationTwelve Months Ended
March 31,2023 2022 Research and development $ 10,074 $ 8,568 Selling, general and administrative 18,057 15,686 $ 28,131 $ 24,254 Twelve Months Ended
March 31,2023 2022 Stock options $ 19,521 $ 19,160 Restricted stock units 8,610 5,094 $ 28,131 $ 24,254 "2015 Plan"“2015 Plan”) provided for Replimune UK to grant incentive stock options, non-statutory stock options, stock awards, stock units, stock appreciation rights and other stock-based awards. Incentive stock options are granted only to the Company'sCompany’s employees, including officers and directors who are also employees. Non-statutory stock options are granted to employees, members of the board of directors, outside advisors and consultants of the Company.the Reorganization,reorganization by Replimune Limited, pursuant to which each shareholder thereof exchanged their outstanding shares in Replimune Limited for shares in Replimune Group, Inc., on a one-for-one basis (the "Reorganization"), the 2015 Plan was terminated, and all awards were cancelled with replacement awards issued under the 2017 Equity Compensation Plan (the "2017 Plan"“2017 Plan”). Subsequent to the Reorganization, no additional grants have been or will be made under the 2015 Plan andREPLIMUNE GROUP, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)(Amounts in thousands, except share and per share amounts)10. Stock-Based Compensation (Continued)Company'sCompany’s 2017 Plan provides for the Company to grant incentive stock options or non-statutory stock options, stock awards, stock units, stock appreciation rights and other stock-based awards. Incentive stock options may bewere granted under the 2017 Plan only to the Company'sCompany’s employees, including officers and directors who arewere also employees. Restricted stock awards and non-statutory stock options may bewere granted under the 2017 Plan to employees, officers, members of the board of directors, advisors and consultants of the Company. The maximum number of common shares that may be issued under the 2017 Plan was 2,659,885, as of March 31, 2019, of which 0none remained available for future grants as of March 31, 2019.2023. Shares with respect to which awards have expired, terminated, surrendered or cancelled under the 2017 Plan without having been fully exercised will be available for future awards under the 2017 Plan.2018 Plan referenced below. In addition, shares of common stock that are tendered to the Company by a participant to exercise an award are added to the number of shares of common stock available for the grant of awards.Company'sCompany’s board of directors adopted, and the Company'sCompany’s stockholders approved the 2018 Omnibus Incentive Compensation Plan (the "2018 Plan"“2018 Plan”), which became effective immediately prior to the effectiveness of the registration statement for the Company'sCompany’s initial public offering. The 2018 Plan provides for the issuance of incentive stock options, non-qualified stock options, stock awards, stock units, stock appreciation rights and other stock-based awards. The number of shares initially reserved for issuance under the 2018 Plan is 3,617,968 shares. If any options or stock appreciation rights, including outstanding options and stock appreciation rights granted under the 2017 Plan (up to 2,520,247 shares), terminate, expire, or are canceled, forfeited, exchanged, or surrendered without having been exercised, or if any stock awards, stock units or other stock-based awards, including outstanding awards granted under the 2017 Plan, are forfeited, terminated, or otherwise not paid in full in shares of common stock, the shares of the Company'sCompany’s common stock subject to such grants will be available for purposes of our 2018 Plan. The number of shares reserved for issuance under the 2018 Plan will increase automatically on the first day of each April equal to 4.0% of the total number of shares of Company stock outstanding on the last trading day in the immediately preceding fiscal year, which includes for these purposes, the 9,484,238 shares issuable upon exercise of those pre-funded warrants described in Note 9 to these consolidated financial statements, or such lesser amount as determined by the Board. On April 1, 2022, the number of shares reserved for issuance under the 2018 Plan automatically increased by 2,104,915 shares pursuant to the terms of the 2018 Plan and based on total number of shares of Company stock outstanding on March 31, 2022. On April 1, 2021, the number of shares reserved for issuance under the 2018 Plan automatically increased by 2,074,028 shares pursuant to the terms of the 2018 Plan. As of March 31, 2019, 2,306,0042023, 2,209,597 shares remained available for future grants under the 2018 Plan.wasare administered by the board of directors or, at the discretion of the board of directors, by a committee of the board of directors. However, the board of directors shall administer and approve all grants made to non-employee directors. The exercise prices, vesting and other restrictions are determined at the discretion of the board of directors, except that the exercise price per share of incentive stock options may not be less than 100% of the fair market value of the common stock on the date of grant (or 110% of fair value in the case of an award granted to employees who hold more than 10% of the total combined voting power of all classes of stock at the time of grant) and the term of stock options may not be greater than five years for an incentive stock option granted to a 10% stockholder and greater than ten years for all other options granted. Stock options awarded under both plans expire ten years after the grant date, unless the board of directors sets a shorter term. Vesting periods for both plans are determined at the discretion of the board of directors. Incentive stock options granted to employees and non-statutory options granted toREPLIMUNE GROUP, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)(Amounts in thousands, except share and per share amounts)10. Stock-Based Compensation (Continued)Company'sCompany’s board of directors adopted and the Company'sCompany’s stockholders approved the Employee Stock Purchase Plan (the "ESPP"“ESPP”), which became effective immediately prior to the effectiveness of the registration statement for the Company's initial public offering.Company’s IPO. The total shares of common stock initially reserved for issuance under the ESPP is limited to 348,612 shares. In addition, as of the first trading day of each fiscal year during the term of the ESPP (excluding any extensions), an additionalCompany'sCompany’s common stock equal to 1% of the total number of shares outstanding on the last trading day in the immediately preceding fiscal year, which includes for these purposes, the 9,484,238 shares issuable upon exercise of those pre-funded warrants described in Note 9 to these consolidated financial statements, or 697,224 shares, whichever is less (or such lesser amount as determined by the Company'sCompany’s board of directors) will be added to the number of shares authorized under the ESPP. In accordance with the terms of the ESPP, on April 1, 2022 and 2021, the number of shares reserved for issuance under the ESPP automatically increased by 526,228 and 518,507 shares, respectively, for a total of 2,076,603 shares reserved for the ESPP. If the total number of shares of common stock to be purchased pursuant to outstanding purchase rights on any particular date exceed the number of shares then available for issuance under the ESPP, then the plan administrator will allocate the available shares pro-rata and refund any excess payroll deductions or other contributions to participants.following table presents, on a weighted-average basis, the assumptions thatCompany’s ESPP is not currently active.usedgranted an equity award to determinea newly hired executive as a material inducement to enter into employment with the grant-date fair valueCompany. The grant constitutes an "employment inducement grant" in accordance with Rule 5635(c)(4) of the Nasdaq Listing Rules and was issued outside of the 2018 Plan and each of the other stock optionsincentive plans described above. The inducement grant included a nonqualified stock option to purchase up to 125,000 shares of the Company's common stock, as well as a restricted stock unit grant representing 88,333 shares of the Company's common stock. These stock option and restricted stock unit inducement grants have terms and conditions consistent with those set forth under the 2018 Plan and vest under the same respective vesting schedules as stock option and restricted stock unit awards granted to employeesunder the 2018 Plan. The inducement grant is included in the stock option and directors: Year Ended March 31, 2019 2018 2017 2.81 % 2.01 % 1.67 % 6.1 6.0 6.0 62.0 % 75.0 % 75.0 % 0 % 0 % 0 % The following table presents the assumptions thatIn December 2022, the Company used to determine the grant-date fair value of stock options granted an equity award to a non-employee:Year EndedMarch 31,2018Risk-free interest rate2.29%Expected term (in years)10.0Expected volatility75.0%Expected dividend yield0% All outstanding non-employee options granted during the year ended March 31, 2018 have vested, and there were no options granted to non-employees during the year ended March 31, 2019 or 2017.REPLIMUNE GROUP, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)(Amounts in thousands, except share and per share amounts)10. Stock-Based Compensation (Continued)TheAs the Company lackshas limited company-specific historical and implied volatility information. Therefore, it estimated itsinformation, the expected stock volatility is based on a combination of Replimune volatility and the historical volatility of a publicly traded set of peer companies. For options with service-based vesting conditions, the expected term of the Company'sCompany’s stock options has been determined utilizing the "simplified"“simplified” method for awards that qualify as "plain-vanilla"“plain-vanilla” options. The expected term of stock options granted to non-employees is equal to the contractual term of the option award. The risk-free interest rate is determined by reference to the U.S. Treasury yield curve in effect at the time of grant of the award for time periods approximately equal to the expected term of the award. Expected dividend yield is based on the fact that the Company has never paid cash dividends and does not expect to pay any cash dividends in the foreseeable future.Stock optionssummarizespresents, on a weighted-average basis, the Company's stock option activity: Number
of
Shares Weighted
Average
Exercise
Price Weighted
Average
Contractual
Term (Years) Aggregate
Intrinsic
Value 2,520,247 $ 2.72 8.91 $ 2,808 1,371,500 14.92 9.78 (110,427 ) 1.87 (59,536 ) 8.65 3,721,784 $ 7.14 8.61 $ 30,150 592,349 $ 1.84 8.22 $ 1,184 1,278,330 $ 2.51 7.75 $ 16,249 The aggregate intrinsicassumptions that the Company used to determine the grant-date fair value of stock options is calculated as the difference between the exercise price of the stock optionsgranted to employees and the fair value of the Company's common stock for those stock options that had exercise prices lower than the fair value of the Company's common stock. The weighted average grant-date fair value per share of stock options granted during the years ended March 31, 2019 and 2018 was $8.82 and $1.92, respectively. The total fair value of options vested during the years ended March 31, 2019 and 2018 was $1,298 and $398, respectively. As of March 31, 2019, there were no outstanding unvested service-based stock options held by non-employees.Twelve Months Ended
March 31,2023 2022 Risk-free interest rate 2.83 % 1.18 % Expected term (in years) 6.0 6.0 Expected volatility 75.2 % 79.8 % Expected dividend yield 0 % 0 % Stock-Based Compensation (Continued)Stock-Based Compensation Expenseexpense was classified in(Continued)consolidated statements of operationsCompany’s equity incentive plans for the year ended March 31, 2023 is as follows:Number of Shares Weighted Average Exercise Price Weighted Average Contractual Term (Years) Aggregate Intrinsic Value Outstanding as of March 31, 2022 6,514,334 $ 16.78 7.26 $ 30,358 Granted 1,604,489 19.02 Exercised (296,876) 11.61 Cancelled (367,119) 21.30 Outstanding as of March 31, 2023 7,454,828 17.24 6.88 $ 31,244 Options exercisable as of March 31, 2023 4,725,073 $ 14.43 5.93 $ 28,570 Options vested and expected to vest as of March 31, 2023 7,454,828 $ 17.24 6.88 $ 31,244 Year Ended March 31, 2019 2018 2017 $ 1,488 $ 335 $ 65 1,242 477 143 $ 2,730 $ 812 $ 208 2019, total2023, there was $34.8 million of unrecognized compensation cost related to the unvested stock-based awards was $11,807,common stock options, which is expected to be recognized over a weighted average period of 2.362.4 years.Number of Restricted Shares Weighted Average Grant Date Fair Value Outstanding as of March 31, 2022 826,213 $ 31.38 Granted 842,807 19.22 Vested (203,681) 31.41 Cancelled (114,059) 24.41 Outstanding as of March 31, 2023 1,351,280 $ 24.38 Basicwas calculated(in thousands, except per share amounts):Twelve Months Ended
March 31,2023 2022 Numerator: Net loss $ (174,284) $ (118,036) Denominator: Weighted average common shares outstanding, basic and diluted 58,213,010 52,212,269 Net loss per share, basic and diluted $ (2.99) $ (2.26) follows: Year Ended March 31, 2019 2018 2017 $ (30,834 ) $ (19,702 ) $ (7,704 ) 23,198,400 4,978,539 4,973,439 $ (1.33 ) $ (3.96 ) $ (1.55 ) Company'sCompany’s potentially dilutive securities, which include stock options preferred stock and warrants to purchase shares of series seed preferredcommon stock have been excluded from the computation of diluted net loss per share as the effect would be to reduce the net loss per share. Common A stock has been excluded from the computation of diluted net loss per share because the shares have nominal economic participation rights. Therefore, the weighted average number of common shares outstanding used to calculate both basic and diluted net loss per share attributable to common stockholders is the same. The Company excluded the following potential common shares, presented based on amounts outstanding at each period end, from the computation of diluted net loss per share attributable toREPLIMUNE GROUP, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)(Amounts in thousands, except share and per share amounts)11. Net loss per share (Continued)common stockholders for the periods indicated because including them would have had an anti-dilutive effect:Twelve Months Ended
March 31,2023 2022 Options to purchase common stock 7,454,828 6,514,334 Warrants to purchase common stock 497,344 497,344 7,952,172 7,011,678 Year Ended March 31, 2019 2018 2017 3,721,784 2,520,247 930,027 — 19,157,360 10,588,977 497,344 497,344 497,344 4,219,128 22,174,951 12,016,348 ("BMS"(“BMS”). Pursuant to the agreement, BMS will provide to the Company, at no cost, a compound for use in the Company'sCompany’s ongoing clinical trial.trial of RP1. Under the agreement, the Company will sponsor, fund and conduct the clinical trial in accordance with an agreed-upon protocol. BMS granted the Company a non-exclusive, non-transferrable, royalty-free license (with a right to sublicense) under its intellectual property to its compound in the clinical trial and agreed to supply its compound, at itsno cost and for no charge to the Company, for use in the clinical trial.(i)(x) in the event of an uncured material breach by the other party, (ii)(y) in the event the other party is insolvent or in bankruptcy proceedings or (iii)(z) for safety reasons. Upon termination, the licenses granted to the Company to use BMS'sBMS’s compound in the clinical trial will terminate. As of March 31,had not incurred any costs and does not expectentered into a separate agreement with BMS on terms similar to incur future coststhe terms set forth in connectionthe agreement described above, pursuant to which BMS will provide to the Company, at no cost, nivolumab for use in the Company’s Phase 1 clinical trial of RP2 in combination with this agreement.Inc.("Regeneron"(“Regeneron”). The Company and Regeneron are each independently developing compounds for the treatment of certain tumor types. Pursuant to the agreement the Company and Regeneron willagreed to undertake one or more clinical trials using awith Regeneron for the administration of our product candidates in combination of the compounds beingwith cemiplimab, an anti-PD-1 therapy developed by each entity. Under the agreement, each studyRegeneron, across multiple solid tumor types. The first of which, agreed in June 2018, is our ongoing Phase 2 clinical trial testing RP1 in combination with cemiplimab versus cemiplimab alone in patients with CSCC. Each clinical trial will be conducted under terms set out in a separatelypursuant to an agreed upon study plan thatwhich, among other things, will identify the name of the sponsor and which party will manage the particular clinical trial,study, and include the protocol, the budget and a schedule of clinical obligations. In June 2018, under the terms of the agreement between the Company and Regeneron, the parties agreedThe first study plan related to the first study plan. The Company and Regeneron have agreed to the protocol, budget, sample testing andPhase 2 clinical trial in CSCC has been agreed.clinical obligations schedule under the study plan. Development and supply costs associated with the study plan will be split equally between the Company and Regeneron.agreed-upon or to-be agreed upon study plans. Development costs of a particular clinical trial will be split equally betweenequally.Companyuse of our product candidates in combination with an anti-PD-1 therapy and Regeneron.(ii)and the parties have not entered into a study plan for an additional clinical trial within a period of time after the delivery of the most recent final study report or (iii)(ii) in the event of a material breach.will accountaccounts for costs incurred as part of the study, including costs to supply compounds for use in the study, as research and development expenses within the consolidated statement of operations. The Company will recognizerecognizes any amounts received from Regeneron in connection with this agreement as an offset to research and development expense within the consolidated statement of operations. Under the terms of the agreement, on a quarterly basisand Regeneron true-upthat the costs of the study have reached the initial budget for the initial study plan of June 2018 and make corresponding paymentsthat Regeneron's reimbursement of CERPASS study costs to the partyCompany have completed in the period ending June 30, 2022 in relation to the initial study budget. As a result of this notice from, and the ongoing communications with, Regeneron, we have not recorded any cost-sharing reimbursements from Regeneron in prepaid expenses and other current assets in the consolidated balance sheet or as an offset to research and development expense within the consolidated statement of operations since Regeneron informed us that incurredRegeneron’s reimbursement of CERPASS study costs have completed. The Company does not expect any further reimbursements from Regeneron related to the majorityinitial study plan of the costs. June 2018.2019,2023 and 2022, the Company recorded $1.1 million and $6.8 million, respectively as an offset to research and development expenses. During the years ended March 31, 2023 and 2022, the Company did not receive or make any payments to Regeneron under the terms of the agreement. During the years ended March 31, 2023 and 2022, the Company received payments under the terms of the agreement to Regeneron.from Regeneron of $3.1 million and $6.1 million, respectively. As of March 31, 2019,2023 and 2022, the Company recorded $337had a balance of $0.0 million and $2.0 million of receivables from Regeneron in connection with this agreement in prepaid expenses and other current assets in the consolidated balance sheet.Lease agreements In December 2015,enteredrecords a related right-of-use (“ROU”) asset and lease liability at the present value of lease payments over the term. Many leases include fixed rental escalation clauses, renewal options and/or termination options that are factored into athe determination of lease agreement for office spacepayments when appropriate. The Company’s leases do not provide an implicit rate, and thus the Company estimated the incremental borrowing rate in Woburn, Massachusetts, which expires on March 30, 2021.calculating the present value of the lease payments. The Company has the optionelected not to extend therecord a ROU asset and lease agreementobligation for successive periods of five years. Monthlyshort-term leases (with terms less than 12 months) or separate non-lease components from associated lease payments, inclusive of base rent and ancillary charges, total $7. Monthly base rentcomponents for its real estate lease assets. As a result, all contract consideration is subject to increase each year in proportionallocated to the Consumer Price Index.April 2016, the Company entered into a lease agreement for office and laboratory space in Abingdon, England, which expires on April 3, 2026. The Company has the right to terminate the lease as of April 4, 2021 upon at least nine months' prior written notice. Monthly lease payments are inclusive of base rent, ancillary charges, non-rent shared tenant occupancy costs and the respective value added tax to be paid. Monthly lease payments include base rent of approximately $23 through December 3, 2016 and $31 thereafter. Monthly base rent is subject to increase after April 2021 in proportion to the Retail Price Index.Build-to-suit lease In June 2018,March 2023, the Company entered into an agreement to lease approximately 63,0002,058 square feet of research and development, office manufacturing and laboratory space withinin Abingdon, Oxfordshire, United Kingdom. Pursuant to the lease agreement, the lease term commenced on March 31, 2023 with rental payments scheduled to commence on June 30, 2023. The lease term is for five years with no option for renewal. Annual lease payments are approximately $0.1 million. The Company recorded a previously occupied building withright-of-use asset and a lease liability of approximately106,000 square feetrentable space in Framingham, Massachusetts. Pursuantseven years to sixteen years. Some of our leases include one or more options to renew with renewal terms that can extend the lease agreement,for additional years, or options to terminate the leases, both at the Company’s discretion. The Company’s lease terms include options to extend or terminate leases when the Company concludes it is reasonably certain that it would exercise those options. Lease expense for minimum lease payments is recognized on a straight-line basis based on the fixed components of a lease arrangement. The Company amortizes this expense over the term of the lease term commenced in November 2018, subject tobeginning with the landlord completing certain agreed upon landlord improvements. The rent commencement date of initial possession, which is estimated to be August 2019. The initial lease term is ten years from the rent commencement date and includes two optional five year extensions. Annual lease payments during the first year are $2,373 with increases of 3.0% each year. The Company is not the legal owner of the leased space. However, in accordance with ASC 840, Leases, the Company is deemed to be the owner ofcan enter the leased space duringand begin to make improvements in preparation for its intended use. Variable lease components represent amounts that are not fixed in nature and are not tied to an index or rate, and are recognized as incurred.construction period becauselease-related costs which are included in the consolidated statements of certain indemnification provisions withinoperations for the lease agreement. As a result,years ended as of March 31, 2019,2023 and 2022:Twelve Months Ended March 31, 2023 2022 Lease cost Finance lease costs: Amortization of right-to-use asset $ 2,428 $ 2,428 Interest on lease liabilities 2,197 2,223 Operating lease costs 1,018 1,003 Total lease cost $ 5,643 $ 5,654 Company capitalized $4,993 (equal toclassification of lease costs in the estimated fair valueconsolidated statement of its leased portion of the premises) as build-to-suit lease asset within property and equipment. The Company has engaged a third party to develop the leased space to the Company's specifications as office, manufacturing and laboratory space. The Company has capitalized costs of construction of $6,521 to build-to-suit lease asset within property, plant and equipment on its consolidated balance sheet. Of the $6,521 of capitalized costs, $1,474 had been paid, $5,047 remained payable and $2,174 was reimbursable by the landlord as of March 31, 2019. The construction is expected to be completed in September 2019, at which time the Company will assess and determine if the assets and corresponding liability should be de-recognized. The Company recorded the followingoperations for the lease agreement for its new office, manufacturing and laboratory space during the construction period: Year Ended
March 31, 2019 $ 556 $ 11,514 The Company recorded total rent expense of $556, $430 and $282 during the years ended March 31, 2019, 20182023 and 2017, respectively, and recorded within research and development and general and administrative expenses in the consolidated statement of operations. Rent expense for the year ended March 31, 2019 included $93 of ground rent associated with the build-to-suit lease.Twelve Months Ended March 31, 2023 2022 Finance Lease Costs Research and development $ 2,071 $ 2,070 Selling, general and administrative 358 358 Other income 2,197 2,223 Operating Lease Costs Research and development 421 407 Selling, general and administrative 596 596 Total lease cost $ 5,643 $ 5,654 future minimummaturity of the Company’s lease payments due underliabilities on an undiscounted cash flow basis and a reconciliation to the Company's operating leasesand financing lease liabilities recognized on our balance sheet as of March 31, 2019:2023:March 31, 2023 Operating leases Financing lease Total 2024 $ 1,118 $ 2,639 $ 3,757 2025 1,150 2,718 3,868 2026 1,159 2,799 3,958 2027 1,126 2,883 4,009 2028 1,077 2,969 4,046 Thereafter 1,905 35,053 36,958 Total lease payments 7,535 49,061 56,596 Less: interest 2,028 22,457 24,485 Total lease liabilities $ 5,507 $ 26,604 $ 32,111 $ 2,062 2,901 2,493 2,568 2,645 2,725 12,770 $ 28,164
REPLIMUNE GROUP, INC.March 31, 2023 March 31, 2022 Leases Right-to-use operating lease asset $ 5,208 $ 5,552 Right-to-use finance lease asset 39,665 42,094 Total lease assets $ 44,873 $ 47,646 Operating lease liabilities, current $ 1,118 $ 1,070 Finance lease liabilities, current 2,639 2,562 Operating lease liabilities, non-current 4,389 4,801 Finance lease liabilities, non-current 23,965 24,406 Total lease liabilities $ 32,111 $ 32,839 Other information Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from operating leases $ 1,014 $ 968 Operating cash flows from finance leases $ 2,197 $ 2,223 Financing cash flows from finance leases $ 365 $ 264 Right-to-use asset obtained in exchange for new operating lease liabilities $ 290 $ 363 Weighted-average remaining lease term – operating leases 6.6 years 7.7 years Weighted-average remaining lease term – financing leases 16.3 years 17.3 years Weighted-average discount rate – operating leases 10.3 % 10.1 % Weighted-average discount rate – financing leases 8.3 % 8.3 % 2019,2023 and 2022, the Company had committed to minimum payments under these arrangements totaling $4,694$1.0 million and $2.0 million through March 31, 2020. As of March 31, 2018, the Company had committed to minimum payments under these arrangements totaling $2,938 through March 31, 2019.20192023 or 2018.ProceedingsPlans"401(k) Plan"“401(k) Plan”). The 401(k) Plan covers substantially all employees who meet minimum age and service requirements and allows participants to defer a portion of their annual compensation on a pre-tax basis. Matching contributions to the 401(k) Plan may be made at the discretion of the Company'sCompany’s board of directors. During the years ended March 31, 2019, 20182023 and 2017,2022, the Company made contributions totaling $102, $49$1.3 million and $8,$1.1 million, respectively, to the 401(k) Plan.employees'employees’ contributions each year in amounts up to 8% of their annual base salary.TaxesU.S. Tax Reform On December 22, 2017, the U.S. government enacted comprehensive tax legislation commonly referred to as the Tax Cuts and Jobs Act (the "Tax Reform Act"), which significantly reforms the Internal Revenue Code of 1986, as amended (the "Code"). The Tax Reform Act, among other things, contains significant changes to corporate taxation, including reduction of the corporate tax rate fromREPLIMUNE GROUP, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)(Amounts in thousands, except share and per share amounts)15. Income Taxes (Continued)the existing top marginal rate of 35% to a flat rate of 21%, effective as of January 1, 2018; limitation of the deduction for net operating losses to 80% of annual taxable income and elimination of net operating loss carrybacks, in each case, for losses arising in taxable years beginning after December 31, 2017 (though any such tax losses may be carried forward indefinitely); and modifying or repealing many business deductions and credits. The staff of the Securities and Exchange Commission issued Staff Accounting Bulletin No. 118 ("SAB 118") to address the application of U.S. GAAP in situations when a registrant does not have the necessary information available, prepared, or analyzed (including computations) in reasonable detail to complete the accounting for certain income tax effects of the Tax Reform Act. In connection with the initial analysis of the impact of the Tax Reform Act, the Company remeasured certain deferred tax assets and liabilities based on the rates at which they are expected to reverse in the future, which is generally 21%. The remeasurement of the Company's deferred tax assets and liabilities was offset by a corresponding change in the Company's valuation allowance. We completed our final determination of the remeasurement of our deferred tax assets and liabilities for the year ended March 31, 2019 under SEC Staff Accounting Bulletin No. 118 and we have not recorded any adjustments to the provisional amounts recorded at March 31, 2018.Income taxes During the years ended March 31, 2019, 2018 and 2017, the Company recorded no income tax benefits for the net operating losses incurred and capitalized start-up costs generated during the years then ended, due to its uncertainty of realizing a benefit from those items. The Company's net loss before income taxes were generated in the United States and the United Kingdom. Net lossLoss before income taxes for the years ended March 31, 2019, 20182023 and 20172022 were as follows:Year Ended March 31, 2023 2022 United States $ (18,367) $ (28,985) United Kingdom (155,629) (89,051) Total $ (173,996) $ (118,036) Year Ended March 31, 2019 2018 2017 $ (9,483 ) $ (8,992 ) $ (3,450 ) (21,351 ) (10,710 ) (4,254 ) $ (30,834 ) $ (19,702 ) $ (7,704 ) REPLIMUNE GROUP, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)(Amounts in thousands, except share and per share amounts)15. Income Taxes (Continued)Company'sCompany’s effective income tax rate for the years ended March 31, 2019, 20182023 and 20172022 is as follows:Year Ended March 31, 2023 2022 U.S. federal statutory income tax rate -21.0 % -21.0 % State taxes, net of federal benefit -0.6 % -0.3 % Research and development 1.0 % 1 % Stock compensation -0.1 % -2.1 % Foreign tax rate differential 1.8 % 1.5 % Change in tax rates -6.0 % -10.6 % Change in valuation allowance 23.6 % 31.1 % Other 1.5 % 0.4 % 0.2 % 0.0 % March 31, 2019 2018 2017 (21.00 )% (21.00 )% (34.00 )% (1.5 ) (2.6 ) (2.4 ) 3.1 3.8 7.1 — 2.6 — 2.4 2.2 8.8 15.5 14.0 19.2 1.5 1.0 1.3 0.00 % 0.00 % 0.00 % Company'sCompany’s deferred tax assets as of March 31, 20192023 and 20182022 were as follows:Year Ended March 31, 2023 2022 Deferred tax assets: Net operating loss carryforwards $ 93,788 $ 61,112 Research & development credits — 1,000 Property, plant and equipment 4,535 4,367 Capitalized start-up costs 1,301 1,286 Stock compensation 14,757 8,922 Accrued expenses 2,906 1,452 Lease liability 7,964 7,309 Other 24 310.00 Total deferred tax assets 125,275 85,758 Valuation allowance (113,889) (74,892) Net deferred tax assets 11,386 10,866 Deferred tax liabilities: Right of use asset (11,386) (10,866) Other — — Total deferred tax liabilities (11,386) (10,866) Net deferred tax assets (liabilities) $ — $ — March 31, 2019 2018 $ 4,079 $ 1,405 2,223 — 684 15 1,886 3,340 573 1,793 — 1 11,238 4,761 (1,842 ) (37 ) (1,842 ) (37 ) (9,396 ) (4,724 ) $ — $ — 2019,2023, the Company had U.S. federal and foreign net operating loss carryforwards of approximately $10,587 and $23,993 respectively,$39.7 million, which can be carried forward indefinitely subject to 80% limitation of taxable income when utilized. As of March 31, 2023, the Company had U.S. state operating loss carryforwards of $50.3 million, which will begin to expire in 2039. As of March 31, 2023, the Company had U.K. operating loss carryforwards of approximately $332.7 million, which can be carried forward indefinitely. As of March 31, 2019, the Company hadSuch U.S. federal and state, as well as U.K., net operating loss carryforwards of $10,822 which will expire between 2038are based on tax returns filed and 2039.REPLIMUNE GROUP, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)(Amounts in thousands, except share and per share amounts)15. Income Taxes (Continued) Further, until a study is completed by the Company and any limitation is known, no amounts are being presented as an uncertain tax position.20192023 and 20182022 related primarily to the increase in net operating loss carryforwards and capitalized start-up costs in 2018, and were as follows:Year Ended March 31, 2023 2022 Valuation allowance as of beginning of year $ 74,892 $ 40,028 Increases recorded to income tax provision 41,063 36,679 Decreases recorded to equity (2,066) (1,815) Valuation allowance as of end of year $ 113,889 $ 74,892 March 31, 2019 2018 $ 4,724 $ 1,887 4,672 3,347 — (510 ) $ 9,396 $ 4,724 Year Ended March 31, 2023 2022 Unrecognized tax benefits as of beginning of year $ — $ — Increases for tax positions taken during prior years 8,757 — Unrecognized tax benefits as of end of year $ 8,757 $ — 20192023 and 2018,2022, the Company had not recorded any amounts for unrecognized tax benefits. The Company's policy is to record interest and penalties related to income taxes as part of its income tax provision. As of March 31, 2019 and 2018, the Company had no accrued interest or penalties related to uncertain income tax positions and no amounts had been recognized in the Company's consolidated statements of operations and comprehensive loss.United States,U.S., Massachusetts and the United Kingdom as prescribed by the tax laws of the jurisdictions in which it operates.U.K. In the normal course of business, the Company is subject to examination by U.S. federal and state and foreignas well as U.K. jurisdictions, where applicable. There are currently no pending income tax examinations. The Company is open to future U.S. federal income tax examination in the U.S. under statute from 20172020 to the present and in the United KingdomU.K. from 20162022 to the present.InformationCompany'sCompany’s long-lived assets held in different geographic regions is presented in the tables below:March 31, 2023 March 31, 2022 United States $ 5,836 $ 6,318 United Kingdom 1,643 1,615 $ 7,479 $ 7,933 March 31, 2019 2018 $ 11,648 $ 20 511 350 $ 12,159 $ 370
Exhibit indexExhibit Number Exhibit Description Incorporated by Reference Form Date Number 3.1 10-K June 3, 2020 3.1 3.2 8-K July 24, 2018 3.2 4.1 S-1/A July 10, 2018 4.1 4.2 S-1 June 22, 2018 4.2 4.3* 4.4 8-K November 18, 2019 4.1 4.5 8-K June 10, 2020 4.1 4.6 8-K December 12, 2022 4.1 4.7 S-3 August 8, 2019 4.4 10.1† S-1/A July 10, 2018 10.1 10.2† S-1/A June 26, 2018 10.2 10.3†* 10-K May 19, 2022 10.3 10.4† S-1/A July 10, 2018 10.4 10.5† 10-Q November 4, 2021 10.2 10.6† 10-Q November 4, 2021 10.1 10.7† S-1 June 22, 2018 10.7 10.8† S-1/A July 10, 2018 10.9 10.9† 8-K December 9, 2019 10.1 10.10† 10-Q August 7, 2020 10.1 10.11†* 10-K May 20, 2021 10.11 10.12†* 10-K May 20, 2021 10.12 10.13†* 10-K May 20, 2021 10.13 Exhibit Number Exhibit Description Incorporated by Reference Form Date Number 10.14†* 10-K May 20, 2021 10.14 10.15† 10-Q February 13, 2020 10.2 10.16† 10-K June 3, 2020 10.13 10.17 S-1 June 22, 2018 10.8 10.18 S-1 June 22, 2018 10.9 10.19 10-Q August 7, 2020 10.3 10.20‡ S-1/A July 10, 2018 10.12 10.21‡ S-1/A July 17, 2018 10.13 10.22 S-1 June 22, 2018 10.12 10.23 8-K June 13, 2019 10.1 10.24 10-Q February 4, 2021 10.1 10.25 10-K June 3, 2020 10.22 10.26 10-Q February 3, 2022 10.3 10.27†* 10-K May 19, 2022 10.27 10.28 10-Q November 3, 2022 10.1 10.29† 10-Q February 9, 2023 10.2 10.30† 10-Q February 9, 2023 10.3 10.31† 10-Q February 9, 2023 10.4 Table of ContentsTABLE OF CONTENTSREPLIMUNE GROUP, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)(Amounts in thousands, except shareExhibit Number Exhibit Description Incorporated by Reference Form Date Number 10.32†* 10.33†* 10.34* 21.1* 23.1* 31.1* 31.2* 32.1** 32.2** 101.INS* Inline XBRL Instance Document. 101.SCH* Inline XBRL Taxonomy Extension Schema Document. 101.CAL* Inline XBRL Taxonomy Extension Calculation Linkbase Document. 101.DEF* Inline XBRL Taxonomy Extension Definition Linkbase Document. 101.LAB* Inline XBRL Taxonomy Extension Label Linkbase Document. 101.PRE* Inline XBRL Taxonomy Extension Presentation Linkbase Document. per share amounts)17. Quarterly Financial Data (Unaudited) The following informationnot filed herewith.derived from unaudited consolidated financial statements that, inrequested with respect to specific portions of this exhibit. Omitted portions have been filed with the opinionSecurities and Exchange Commission pursuant to Rule 406 of management, include all recurring adjustments necessary for a fair statementthe Securities Act of such information. For the Quarter Ended March 31,
2019 December 31,
2018 September 30,
2018 June 30,
2018 7,825 10,137 7,104 5,879 (6,656 ) (7,673 ) (6,461 ) (10,044 ) (0.29 ) (0.24 ) (0.26 ) (2.02 ) For the Quarter Ended March 31,
2018 December 31,
2017 September 30,
2017 June 30,
2017 7,065 4,732 4,256 3,176 (7,136 ) (4,354 ) (4,660 ) (3,552 ) (1.43 ) (0.87 ) (0.94 ) (0.71 ) 18. Subsequent Events For its consolidated financial statements as of March 31, 2019 and for the year then ended, the Company evaluated subsequent events through the date on which those financial statements were issued.Lease agreement In June 2019, the Company entered into an agreement to lease approximately 18,700 square feet of office space in Woburn, Massachusetts. lease agreement,requirements of Section 13 or 15(d) of the lease term is estimated to commence in July 2019. The rent commencement date isSecurities Act of 1934, the Registrant has duly caused this report to be one month aftersigned on its behalf by the commencementundersigned, thereunto duly authorized.REPLIMUNE GROUP, INC. Date: May 18, 2023 By: /s/ PHILIP ASTLEY-SPARKE Philip Astley-Sparke
Chief Executive Officer and Directorlease term. The initial lease term is ten years fromSecurities Act of 1934, this report has been signed by the rent commencement date and includes an optional five year extension. Annual lease payments during the first year are $488 with increases of approximately 1.6% each year.Increase in Shares Available for Issuance under the 2018 Plan In April 2019, the Company effected an increasefollowing persons in the total number of shares ofcapacities and on the Company's common stock reserved for issuance under the 2018 Plan from 3,617,968 shares to 4,884,338 shares.Name Title Date /s/ PHILIP ASTLEY-SPARKE Chief Executive Officer and Director
(Principal Executive Officer and Principal Financial Officer)May 18, 2023 Philip Astley-Sparke /s/ JEAN FRANCHI Chief Financial Officer May 18, 2023 Jean Franchi /s/ ANDREW SCHWENDENMAN Chief Accounting Officer,
(Principal Accounting Officer)May 18, 2023 Andrew Schwendenman President and Chief Research & Development Officer and Director May 18, 2023 Robert Coffin /s/ KAPIL DHINGRA Director May 18, 2023 Kapil Dhingra /s/ HYAM LEVITSKY Director May 18, 2023 Hyam Levitsky /s/ CHRISTY OLIGER Director May 18, 2023 Christy Oliger /s/ PAOLO PUCCI Director May 18, 2023 Paolo Pucci /s/ JOSEPH SLATTERY Director May 18, 2023 Joseph Slattery /s/ SANDER SLOOTWEG Director May 18, 2023 Sander Slootweg Director May 18, 2023 Dieter Weinand