☒ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
2020
☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
on
Symbol(s)
Large accelerated filer | ☐ | Accelerated filer | ☒ | |||
Non-accelerated filer | ☐ | Smaller reporting company | ☒ | |||
Emerging growth company | ☒ | |||||
Page | ||||||
PART I. | 1 | |||||
Item 1. | 1 | |||||
1 | ||||||
2 | ||||||
3 | ||||||
4 | ||||||
6 | ||||||
7 | ||||||
Item 2. | 25 | |||||
Item 3. | 39 | |||||
Item 4. | 39 | |||||
PART II. | 40 | |||||
Item 1. | 40 | |||||
Item 1A. | 40 | |||||
Item 6. | 83 | |||||
84 | ||||||
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September 30, | December 31, | |||||||
2019 | 2018 | |||||||
Assets | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 98,930 | $ | 55,199 | ||||
Short-term investments | 111,233 | 88,904 | ||||||
Prepaid expenses and other current assets | 6,648 | 4,474 | ||||||
Restricted cash | 950 | 1,025 | ||||||
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Total current assets | 217,761 | 149,602 | ||||||
Property and equipment, net | 10,680 | 10,245 | ||||||
Right-of-use assets, net | 10,527 | — | ||||||
Goodwill | 21,359 | 21,359 | ||||||
Intangible assets, net | 86,695 | 106,445 | ||||||
Other long-term assets | 2,492 | — | ||||||
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Total assets | $ | 349,514 | $ | 287,651 | ||||
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Liabilities and Stockholders’ Equity (Deficit) | ||||||||
Current liabilities: | ||||||||
Accounts payable | $ | 3,407 | $ | 5,168 | ||||
Accrued expenses | 8,767 | 6,547 | ||||||
Current portion of deferred revenue | 12,603 | 2,572 | ||||||
Current portion of operating lease liability | 489 | — | ||||||
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Total current liabilities | 25,266 | 14,287 | ||||||
Long-term portion of contingent consideration | 100,399 | 103,642 | ||||||
Deferred revenue, net of current portion | 30,046 | 41,841 | ||||||
Deferred tax liabilities | — | 481 | ||||||
Deferred rent | — | 2,105 | ||||||
Operating lease liability, net of current portion | 12,230 | — | ||||||
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Total liabilities | 167,941 | 162,356 | ||||||
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Commitments and contingencies (Notes 3, 4 and 13) | ||||||||
Stockholders’ equity (deficit): | ||||||||
Preferred stock, $0.001 par value; 10,000,000 shares authorized as of September 30, 2019 and December 31, 2018; no shares issued and outstanding as of September 30, 2019 and December 31, 2018 | — | — | ||||||
Common stock, $0.001 par value; 200,000,000 shares authorized as of September 30, 2019 and December 31, 2018; 60,020,725 shares and 45,139,955 shares issued and outstanding as of September 30, 2019 and December 31, 2018, respectively | 60 | 45 | ||||||
Additionalpaid-in capital | 509,294 | 371,257 | ||||||
Accumulated deficit | (328,460 | ) | (246,203 | ) | ||||
Accumulated other comprehensive income | 679 | 196 | ||||||
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Total stockholders’ equity (deficit) | 181,573 | 125,295 | ||||||
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Total liabilities and stockholders’ equity (deficit) | $ | 349,514 | $ | 287,651 | ||||
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June 30, 2020 | December 31, 2019 | |||||||
Assets | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 272,193 | $ | 84,580 | ||||
Short-term investments | 20,029 | 104,098 | ||||||
Collaboration receivables | 15,131 | 4,596 | ||||||
Prepaid expenses and other current assets | 7,918 | 9,391 | ||||||
Restricted cash | 950 | 950 | ||||||
Total current assets | 316,221 | 203,615 | ||||||
Property and equipment, net | 15,154 | 12,539 | ||||||
Right-of-use assets, net | 10,130 | 10,400 | ||||||
Goodwill | 21,359 | 21,359 | ||||||
Intangible assets, net | 81,280 | 85,536 | ||||||
Other assets | 10,134 | 2,752 | ||||||
Total assets | $ | 454,278 | $ | 336,201 | ||||
Liabilities and Stockholders’ Equity | ||||||||
Current liabilities: | ||||||||
Accounts payable | $ | 12,912 | $ | 15,968 | ||||
Accrued expenses | 11,126 | 7,072 | ||||||
Current portion of deferred revenue | 27,109 | 18,100 | ||||||
Current portion of operating lease liability | 619 | 530 | ||||||
Total current liabilities | 51,766 | 41,670 | ||||||
Contingent consideration | 109,550 | 103,655 | ||||||
Deferred revenue, net of current portion | 9,818 | 25,256 | ||||||
Operating lease liability, net of current portion | 11,751 | 12,084 | ||||||
Total liabilities | 182,885 | 182,665 | ||||||
Commitments and contingencies (Notes 3, 4 and 12) | ||||||||
Stockholders’ equity: | ||||||||
Preferred stock, $0.001 par value; 10,000,000 shares authorized as of June 30, 2020 and December 31, 2019, respectively; 0 shares issued and outstanding as of June 30, 2020 and December 31, 2019 | — | — | ||||||
Common stock, $0.001 par value; 200,000,000 shares authorized as of June 30, 2020 and December 31, 2019; 69,359,509 shares and 60,022,067 shares issued and outstanding as of June 30, 2020 and December 31, 2019, respectively | 69 | 60 | ||||||
Additional paid-in capital | 680,850 | 512,231 | ||||||
Accumulated deficit | (410,066 | ) | (359,496 | ) | ||||
Accumulated other comprehensive income | 540 | 741 | ||||||
Total stockholders’ equity | 271,393 | 153,536 | ||||||
Total liabilities and stockholders’ equity | $ | 454,278 | $ | 336,201 | ||||
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
2019 | 2018 | 2019 | 2018 | |||||||||||||
Collaboration revenue | $ | 1,266 | $ | 238 | $ | 3,914 | $ | 238 | ||||||||
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Operating expenses: | ||||||||||||||||
Research and development | 17,295 | 12,933 | 51,343 | 40,854 | ||||||||||||
General and administrative | 6,881 | 5,957 | 21,284 | 16,726 | ||||||||||||
Change in fair value of contingent consideration | (19,834 | ) | 26,829 | (3,243 | ) | 39,589 | ||||||||||
Impairment of intangible asset | 18,559 | — | 18,559 | — | ||||||||||||
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Total operating expenses | 22,901 | 45,719 | 87,943 | 97,169 | ||||||||||||
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Loss from operations | (21,635 | ) | (45,481 | ) | (84,029 | ) | (96,931 | ) | ||||||||
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Other income (expense): | ||||||||||||||||
Interest income | 428 | 318 | 1,306 | 499 | ||||||||||||
Other expense | (20 | ) | (7 | ) | (20 | ) | (52 | ) | ||||||||
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Total other income (expense), net | 408 | 311 | 1,286 | 447 | ||||||||||||
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Loss before benefit from income taxes | (21,227 | ) | (45,170 | ) | (82,743 | ) | (96,484 | ) | ||||||||
Benefit from income taxes | — | 2,524 | 486 | 5,126 | ||||||||||||
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Net loss | (21,227 | ) | (42,646 | ) | (82,257 | ) | (91,358 | ) | ||||||||
Accretion of redeemable convertible preferred stock to redemption value | — | — | — | (644 | ) | |||||||||||
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Net loss attributable to common stockholders | $ | (21,227 | ) | $ | (42,646 | ) | $ | (82,257 | ) | $ | (92,002 | ) | ||||
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Net loss per share attributable to common stockholders—basic and diluted | $ | (0.41 | ) | $ | (0.97 | ) | $ | (1.69 | ) | $ | (5.13 | ) | ||||
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Weighted average common shares outstanding—basic and diluted | 51,891,157 | 44,036,206 | 48,574,275 | 17,949,026 | ||||||||||||
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Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2020 | 2019 | 2020 | 2019 | |||||||||||||
Collaboration revenue | $ | 16,319 | $ | 1,174 | $ | 20,974 | $ | 2,648 | ||||||||
Operating expenses: | ||||||||||||||||
Research and development | 29,002 | 16,625 | 50,442 | 34,048 | ||||||||||||
General and administrative | 8,601 | 7,850 | 16,060 | 14,403 | ||||||||||||
Change in fair value of contingent consideration | 15,347 | 4,889 | 5,895 | 16,591 | ||||||||||||
Total operating expenses | 52,950 | 29,364 | 72,397 | 65,042 | ||||||||||||
Loss from operations | (36,631 | ) | (28,190 | ) | (51,423 | ) | (62,394 | ) | ||||||||
Interest income | 343 | 358 | 853 | 878 | ||||||||||||
Loss before benefit from income taxes | (36,288 | ) | (27,832 | ) | (50,570 | ) | (61,516 | ) | ||||||||
Benefit from income taxes | — | — | — | 486 | ||||||||||||
Net loss | $ | (36,288 | ) | $ | (27,832 | ) | $ | (50,570 | ) | $ | (61,030 | ) | ||||
Net loss per share—basic and diluted | $ | (0.58 | ) | $ | (0.57 | ) | $ | (0.83 | ) | $ | (1.30 | ) | ||||
Weighted average common shares outstanding—basic and diluted | 62,282,291 | 48,749,627 | 61,145,254 | 46,866,842 | ||||||||||||
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
2019 | 2018 | 2019 | 2018 | |||||||||||||
Net loss | $ | (21,227 | ) | $ | (42,646 | ) | $ | (82,257 | ) | $ | (91,358 | ) | ||||
Other comprehensive income (loss): | ||||||||||||||||
Unrealized gains (losses) onavailable-for-sale securities, net of tax of $0 | 109 | (76 | ) | 483 | (156 | ) | ||||||||||
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Comprehensive loss | $ | (21,118 | ) | $ | (42,722 | ) | $ | (81,774 | ) | $ | (91,514 | ) | ||||
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Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2020 | 2019 | 2020 | 2019 | |||||||||||||
Net loss | $ | (36,288 | ) | $ | (27,832 | ) | $ | (50,570 | ) | $ | (61,030 | ) | ||||
Other comprehensive income (loss): | ||||||||||||||||
Unrealized gains ( onlosses )available-for-sale securities, net of tax of $0 | (315 | ) | 219 | (201 | ) | 374 | ||||||||||
Comprehensive loss | $ | (36,603 | ) | $ | (27,613 | ) | $ | (50,771 | ) | $ | (60,656 | ) | ||||
AND STOCKHOLDERS’ EQUITY (DEFICIT) (UNAUDITED)
Redeemable Convertible Preferred Stock | Common Stock | Additional Paid-in | Accumulated | Accumulated Other Comprehensive | Total Stockholders’ | |||||||||||||||||||||||||||
Shares | Amount | Shares | Amount | Capital | Deficit | Income | Equity (Deficit) | |||||||||||||||||||||||||
Balances at December 31, 2018 | — | $ | — | 45,139,955 | $ | 45 | $ | 371,257 | $ | (246,203 | ) | $ | 196 | $ | 125,295 | |||||||||||||||||
Exercise of stock options | — | — | 154,484 | — | 897 | — | — | 897 | ||||||||||||||||||||||||
Stock-based compensation expense | — | — | — | — | 1,959 | — | — | 1,959 | ||||||||||||||||||||||||
Unrealized gains onavailable-for-sale securities | — | — | — | — | — | — | 155 | 155 | ||||||||||||||||||||||||
Net loss | — | — | — | — | — | (33,198 | ) | — | (33,198 | ) | ||||||||||||||||||||||
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Balances at March 31, 2019 | — | — | 45,294,439 | 45 | 374,113 | (279,401 | ) | 351 | 95,108 | |||||||||||||||||||||||
Issuance of common stock in connection with private placement, net of placement agent fees and offering costs | — | — | 5,582,940 | 6 | 44,128 | — | — | 44,134 | ||||||||||||||||||||||||
Issuance of common stock in connection with a former employee letter agreement (Note 9) | 67,406 | — | 847 | — | — | 847 | ||||||||||||||||||||||||||
Forfeited restricted common stock | — | — | (1,334 | ) | — | (1 | ) | — | — | (1 | ) | |||||||||||||||||||||
Exercise of stock options | — | — | 66,917 | — | 519 | — | — | 519 | ||||||||||||||||||||||||
Stock-based compensation expense | — | — | — | — | 2,703 | — | — | 2,703 | ||||||||||||||||||||||||
Unrealized gains onavailable-for-sale securities | — | — | — | — | — | — | 219 | 219 | ||||||||||||||||||||||||
Net loss | — | — | — | — | — | (27,832 | ) | — | (27,832 | ) | ||||||||||||||||||||||
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Balances at June 30, 2019 | — | — | 51,010,368 | 51 | 422,309 | (307,233 | ) | 570 | 115,697 | |||||||||||||||||||||||
Issuance of common stock in connection with public offering, net of underwriting discounts and commissions and offering costs | — | — | 9,000,000 | 9 | 84,002 | — | — | 84,011 | ||||||||||||||||||||||||
Forfeited restricted common stock | — | — | (449 | ) | — | — | — | — | — | |||||||||||||||||||||||
Exercise of stock options | — | — | 10,806 | — | 84 | — | — | 84 | ||||||||||||||||||||||||
Stock-based compensation expense | — | — | — | — | 2,899 | — | — | 2,899 | ||||||||||||||||||||||||
Unrealized gains onavailable-for-sale securities | — | — | — | — | — | — | 109 | 109 | ||||||||||||||||||||||||
Net loss | — | — | — | — | — | (21,227 | ) | — | (21,227 | ) | ||||||||||||||||||||||
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Balances at September 30, 2019 | — | $ | — | 60,020,725 | $ | 60 | $ | 509,294 | $ | (328,460 | ) | $ | 679 | $ | 181,573 | |||||||||||||||||
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Common Stock | Additional Paid-in | Accumulated | Accumulated Other Comprehensive | Total Stockholders’ | ||||||||||||||||||||
Shares | Amount | Capital | Deficit | Income | Equity | |||||||||||||||||||
Balances at December 31, 2019 | 60,022,067 | $ | 60 | $ | 512,231 | $ | (359,496 | ) | $ | 741 | $ | 153,536 | ||||||||||||
Exercise of stock options | 15,596 | — | 132 | — | — | 132 | ||||||||||||||||||
Stock-based compensation expense | — | — | 3,172 | — | — | 3,172 | ||||||||||||||||||
Unrealized gains on available-for-sale securities | — | — | — | — | 114 | 114 | ||||||||||||||||||
Net loss | — | — | — | (14,282 | ) | — | (14,282 | ) | ||||||||||||||||
Balances at March 31, 2020 | 60,037,663 | 60 | 515,535 | (373,778 | ) | 855 | 142,672 | |||||||||||||||||
Issuance of common stock in connection with public offerings , net of underwriting discounts and commissions and offering costs | 8,544,982 | 9 | 153,602 | — | — | 153,611 | ||||||||||||||||||
Exercise of stock options | 776,864 | — | 5,699 | — | — | 5,699 | ||||||||||||||||||
Stock-based compensation expense | — | — | 6,014 | — | — | 6,014 | ||||||||||||||||||
Unrealized l onosses available-for-sale securities | — | — | — | — | (315 | ) | (315 | ) | ||||||||||||||||
Net loss | — | — | — | (36,288 | ) | — | (36,288 | ) | ||||||||||||||||
Balances at June 30, 2020 | 69,359,509 | $ | 69 | $ | 680,850 | $ | (410,066 | ) | $ | 540 | $ | 271,393 | ||||||||||||
Common Stock | Additional Paid-in | Accumulated | Accumulated Other Comprehensive | Total Stockholders’ | ||||||||||||||||||||
Shares | Amount | Capital | Deficit | Income | Equity | |||||||||||||||||||
Balances at December 31, 2018 | 45,139,955 | $ | 45 | $ | 371,257 | $ | (246,203 | ) | $ | 196 | $ | 125,295 | ||||||||||||
Exercise of stock options | 154,484 | — | 897 | — | — | 897 | ||||||||||||||||||
Stock-based compensation expense | — | — | 1,959 | — | — | 1,959 | ||||||||||||||||||
Unrealized gains on available-for-sale securities | — | — | — | — | 155 | 155 | ||||||||||||||||||
Net loss | — | — | — | (33,198 | ) | — | (33,198 | ) | ||||||||||||||||
Balances at March 31, 2019 | 45,294,439 | 45 | 374,113 | (279,401 | ) | 351 | 95,108 | |||||||||||||||||
Issuance of common stock in connection with private net of placement agent fees and offering costs | 5,582,940 | 6 | 44,128 | — | — | 44,134 | ||||||||||||||||||
Issuance of common stock in connection with a former employee letter agreement | 67,406 | — | 847 | — | — | 847 | ||||||||||||||||||
Forfeited restricted common stock | (1,334 | ) | — | (1 | ) | — | — | (1 | ) | |||||||||||||||
Exercise of stock options | 66,917 | — | 519 | — | — | 519 | ||||||||||||||||||
Stock-based compensation expense | — | — | 2,703 | — | — | 2,703 | ||||||||||||||||||
Unrealized gains on available-for-sale securities | — | — | — | — | 219 | 219 | ||||||||||||||||||
Net loss | — | — | — | (27,832 | ) | — | (27,832 | ) | ||||||||||||||||
Balances at June 30, 2019 | 51,010,368 | $ | 51 | $ | 422,309 | $ | (307,233 | ) | $ | 570 | $ | 115,697 |
AND STOCKHOLDERS’ EQUITY (DEFICIT)CASH FLOWS (UNAUDITED)
Redeemable Convertible Preferred Stock | Common Stock | Additional Paid-in | Accumulated | Accumulated Other Comprehensive | Total Stockholders’ | |||||||||||||||||||||||||||
Shares | Amount | Shares | Amount | Capital | Deficit | Income (Loss) | Equity (Deficit) | |||||||||||||||||||||||||
Balances at December 31, 2017 | 142,288,292 | $ | 192,896 | 9,582,791 | $ | 10 | $ | 55,204 | $ | (148,808 | ) | $ | 79 | $ | (93,515 | ) | ||||||||||||||||
Accretion of redeemable convertible preferred stock to redemption value | — | 185 | — | — | (185 | ) | — | — | (185 | ) | ||||||||||||||||||||||
Stock-based compensation expense | — | — | — | — | 1,383 | — | — | 1,383 | ||||||||||||||||||||||||
Unrealized losses onavailable-for-sale securities | — | — | — | — | — | — | (79 | ) | (79 | ) | ||||||||||||||||||||||
Net loss | — | — | — | — | — | (21,209 | ) | — | (21,209 | ) | ||||||||||||||||||||||
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Balances at March 31, 2018 | 142,288,292 | 193,081 | 9,582,791 | 10 | 56,402 | (170,017 | ) | — | (113,605 | ) | ||||||||||||||||||||||
Accretion of redeemable convertible preferred stock to redemption value | — | 459 | — | — | (459 | ) | — | — | (459 | ) | ||||||||||||||||||||||
Forfeited restricted common stock | — | — | (311 | ) | — | — | — | — | — | |||||||||||||||||||||||
Stock-based compensation expense | — | — | — | — | 2,875 | — | — | 2,875 | ||||||||||||||||||||||||
Exercise of stock options | — | — | 49,459 | — | 278 | — | — | 278 | ||||||||||||||||||||||||
Net loss | — | — | — | — | — | (27,503 | ) | — | (27,503 | ) | ||||||||||||||||||||||
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Balances at June 30, 2018 | 142,288,292 | 193,540 | 9,631,939 | 10 | 59,096 | (197,520 | ) | — | (138,414 | ) | ||||||||||||||||||||||
Conversion of redeemable convertible preferred stock to common stock | (142,288,292 | ) | (193,540 | ) | 25,612,109 | 26 | 193,514 | — | — | 193,540 | ||||||||||||||||||||||
Issuance of common stock in connection with IPO, net of commissions and offering costs | — | — | 9,714,371 | 9 | 113,183 | — | — | 113,192 | ||||||||||||||||||||||||
Issuance of common stock in full settlement of contingent consideration anti-dilution liability | — | — | 183,619 | — | 2,387 | — | — | 2,387 | ||||||||||||||||||||||||
Issuance of common stock due to the aggregation of fractional shares in connection with reverse stock split | — | — | 52 | — | — | — | — | — | ||||||||||||||||||||||||
Stock-based compensation expense | — | — | — | — | 1,434 | — | — | 1,434 | ||||||||||||||||||||||||
Unrealized losses onavailable-for-sale securities | — | — | — | — | — | — | (76 | ) | (76 | ) | ||||||||||||||||||||||
Net loss | — | — | — | — | — | (42,646 | ) | — | (42,646 | ) | ||||||||||||||||||||||
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Balances at September 30, 2018 | — | $ | — | 45,142,090 | $ | 45 | $ | 369,614 | $ | (240,166 | ) | $ | (76 | ) | $ | 129,417 | ||||||||||||||||
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thousands)
Six Months Ended June 30, | ||||||||
2020 | 2019 | |||||||
Cash flows from operating activities: | ||||||||
Net loss | $ | (50,570 | ) | $ | (61,030 | ) | ||
Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
Depreciation and amortization expense | 5,617 | 1,960 | ||||||
Stock-based compensation expense | 9,186 | 5,509 | ||||||
Change in fair value of contingent consideration | 5,895 | 16,591 | ||||||
Deferred income tax benefit | — | (486 | ) | |||||
Changes in operating assets and liabilities: | ||||||||
Collaboration receivables | (10,535 | ) | 177 | |||||
Prepaid expenses and other assets | (5,909 | ) | (1,766 | ) | ||||
Right-of-use assets | 270 | 234 | ||||||
Accounts payable | (2,783 | ) | (1,858 | ) | ||||
Accrued expenses | 4,013 | 600 | ||||||
Lease liability | (244 | ) | (170 | ) | ||||
Deferred revenue | (6,429 | ) | (1,206 | ) | ||||
Net cash used in operating activities | (51,489 | ) | (41,445 | ) | ||||
Cash flows from investing activities: | ||||||||
Purchases of investments | (27,409 | ) | (38,438 | ) | ||||
Sales and maturities of investments | 111,277 | 55,756 | ||||||
Purchases of property and equipment | (4,446 | ) | (1,793 | ) | ||||
Net cash provided by investing activities | 79,422 | 15,525 | ||||||
Cash flows from financing activities: | ||||||||
Proceeds from public offering s , net ofunderwriting discounts and commissions | 154,292 | — | ||||||
Payments of public offering costs | (443 | ) | — | |||||
Proceeds from private placement, net of placement agent fees | — | 44,608 | ||||||
Payments of private placement offering costs | — | (474 | ) | |||||
Proceeds from option exercises | 5,831 | 1,416 | ||||||
Net cash provided by financing activities | 159,680 | 45,550 | ||||||
Net increase in cash, cash equivalents and restricted cash : | 187,613 | 19,630 | ||||||
Cash, cash equivalents and restricted cash at beginning of period | 85,530 | 56,224 | ||||||
Cash, cash equivalents and restricted cash at end of period | $ | 273,143 | $ | 75,854 | ||||
Cash, cash equivalents and restricted cash at end of period: | ||||||||
Cash and cash equivalents | $ | 272,193 | $ | 74,904 | ||||
Restricted cash | 950 | 950 | ||||||
Total cash, cash equivalents and restricted cash at end of period | $ | 273,143 | $ | 75,854 | ||||
Supplemental disclosure of non-cash investing and financing activities: | ||||||||
Purchases of property and equipment included in accounts payable and accrued expenses | $ | 718 | $ | 59 | ||||
Offering costs included in accrued expenses | $ | 238 | $ | — | ||||
Deferred offering costs included in accounts payable and accrued expenses | $ | — | $ | 123 | ||||
Issuance of common stock in connection with a former employee letter agreement | $ | — | $ | 847 |
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(In thousands)
Nine Months Ended September 30, | ||||||||
2019 | 2018 | |||||||
Cash flows from operating activities: | ||||||||
Net loss | $ | (82,257 | ) | $ | (91,358 | ) | ||
Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
Depreciation and amortization expense | 2,951 | 1,923 | ||||||
Stock-based compensation expense | 8,408 | 5,693 | ||||||
Impairment of intangible asset | 18,559 | — | ||||||
Change in fair value of contingent consideration | (3,243 | ) | 39,589 | |||||
Deferred income tax benefit | (486 | ) | (5,126 | ) | ||||
Changes in operating assets and liabilities: | ||||||||
Prepaid expenses and other assets | (4,785 | ) | (1,602 | ) | ||||
Right-of-use assets | 357 | — | ||||||
Accounts payable | (1,740 | ) | (1,593 | ) | ||||
Accrued expenses | 2,244 | 1,394 | ||||||
Deferred rent | — | 429 | ||||||
Lease liability | (270 | ) | — | |||||
Deferred revenue | (1,638 | ) | 44,762 | |||||
|
|
|
| |||||
Net cash used in operating activities | (61,900 | ) | (5,889 | ) | ||||
|
|
|
| |||||
Cash flows from investing activities: | ||||||||
Purchases of investments | (138,156 | ) | (128,313 | ) | ||||
Sales and maturities of investments | 116,311 | 15,998 | ||||||
Purchases of property and equipment | (2,241 | ) | (5,567 | ) | ||||
|
|
|
| |||||
Net cash used in investing activities | (24,086 | ) | (117,882 | ) | ||||
|
|
|
| |||||
Cash flows from financing activities: | ||||||||
Proceeds from public offering, net of underwriting discounts and commissions | 84,600 | — | ||||||
Payments of public offering costs | (589 | ) | — | |||||
Proceeds from private placement, net of placement agent fees | 44,608 | — | ||||||
Payments of private placement offering costs | (477 | ) | — | |||||
Proceeds from initial public offering of common stock, net of underwriting discounts and commissions | — | 117,447 | ||||||
Payments of initial public offering costs | — | (4,089 | ) | |||||
Proceeds from option exercises | 1,500 | 278 | ||||||
|
|
|
| |||||
Net cash provided by financing activities | 129,642 | 113,636 | ||||||
|
|
|
| |||||
Net increase (decrease) in cash, cash equivalents and restricted cash | 43,656 | (10,135 | ) | |||||
Cash, cash equivalents and restricted cash at beginning of period | 56,224 | 50,024 | ||||||
|
|
|
| |||||
Cash, cash equivalents and restricted cash at end of period | $ | 99,880 | $ | 39,889 | ||||
|
|
|
| |||||
Cash, cash equivalents and restricted cash at end of period: | ||||||||
Cash and cash equivalents | $ | 98,930 | $ | 38,864 | ||||
Restricted cash | 950 | 1,025 | ||||||
|
|
|
| |||||
Total cash, cash equivalents and restricted cash at end of period | $ | 99,880 | $ | 39,889 | ||||
|
|
|
| |||||
Supplemental disclosure ofnon-cash investing and financing activities: | ||||||||
Purchases of property and equipment included in accounts payable and accrued expenses | $ | 2 | $ | 363 | ||||
Deferred offering costs included in accounts payable and accrued expenses | $ | — | $ | 13 | ||||
Issuance of common stock in connection with acquisition of MRT Program | $ | — | $ | 2,387 | ||||
Issuance of common stock in connection with a former employee letter agreement (Note 9) | $ | 847 | $ | — | ||||
Accretion of redeemable convertible preferred stock to redemption value | $ | — | $ | 644 |
The accompanying notes are an integral part of these condensed consolidated financial statements.
The Company is also pursuing the applicability of its MRT platform for the development of mRNA vaccines for infectious diseases under a collaboration with Sanofi Pasteur Inc. (“Sanofi”), the vaccines global business unit of Sanofi S.A. The Company’s MRT platform may also be applied to produce various classes of treatments, such as therapeutic antibodies for infectious diseases and other diseases.
In September 2019,sites are assessing the potential for patients to safely return to the clinic for study enrollment and dosing. At this time the Company announcedis unable to predict the timing for reporting data.
Acquisition of Shire’s MRT Program
In December 2016, the Company entered into an asset purchase agreement (as amended in June 2018, the “Shire Agreement”) with Shire Human Genetic Therapies, Inc. (“Shire”), a subsidiary of Takeda Pharmaceutical Company Ltd., pursuant to which Shire sold equipment to and assigned to the Company all of its rights to certain patent rights, permits, real property leases, contracts, regulatory documentation, books and records, and materials related to Shire’s mRNA therapy platform (the “MRT Program”), including its cystic fibrosis transmembrane conductance regulator program.
Reverse Stock Split
On June 15, 2018, the Company effected aone-for-5.5555 reverse 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 redeemable convertible preferred stock (see Note 8). Accordingly, all share and per share amounts for all periods presented in the accompanying condensed consolidated financial statements and notes thereto have been adjusted retroactively, where applicable, to reflect this reverse stock split and the associated adjustment of the preferred stock conversion ratios.
On
On May 3, 2019, the Company issued and sold 5,582,940 shares of its common stock in a private placement at a price per share of $8.50, resulting in gross proceeds of $47.5 million, before deducting placement agent fees of $2.8 million and other offering expenses of $0.6 million.
On July 3, 2019, the Company filed a universal shelf registration statement on Form On September 20, 2019, the Company issued and sold 9,000,000 shares of its common stock through a public offering under the 2019 Shelf at a price per share of $10.00, resulting in gross proceeds of $90.0 million, before deducting underwriting discounts and commissions of $5.4 million and other offering expenses of $0.6 million.On
The Company is eligible to receive up to $805.0 million in payments, including an additional upfront payment of $45.0$300.0 million, which was received in
Going Concern
policies.
The Company elected the permitted practical expedients within ASC 842, which allowed the Company to not reassess previous accounting conclusions around whether arrangements are or contain leases, and carried forward both the historical classification of leases and the treatment of initial direct costs. In addition, the Company elected to exclude leases with an initial term of one year or less in the recognized ROU assets and lease liabilities.
Adoption of the new standard resulted in the recording of ROU assets and related lease liabilities of approximately $10.9 million and $13.0 million, respectively, as of January 1, 2019. The standard did not materially impact the Company’s consolidated net earnings and had no impact on cash flows. Refer to Note 12 for the additional disclosures required by ASC 842.
The Company determines if an arrangement is a lease at inception. For leases where the Company is the lessee, ROU assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent an obligation to make lease payments arising from the lease. ROU assets and lease liabilities are recognized at the lease commencement date based on the present value of lease payments over the lease term. As most of the Company’s leases do not provide an implicit interest rate, the Company uses its incremental borrowing rate, which are the rates incurred to borrow on a collateralized basis over a term equal to the lease payments in a similar economic environment, in determining the present value of lease payments. The lease terms used to calculate the ROU asset and related lease liability include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option. Lease expense for operating leases is recognized on a straight-line basis over the lease term as an operating expense. The Company has lease agreements which require payments for lease andnon-lease components and has elected to account for these as a single lease component.
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 (“ASU2017-11”). 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 ASC Topic 480 with a scope exception and does not impact the accounting for these mandatorily redeemable instruments. The Company adopted ASU2017-11 as of the required effective date for annual periods beginning after December 15, 2018, and its adoption had no impact on the Company’s financial position, results of operations or cash flows.
In June 2018, the FASB issued ASUNo. 2018-07,Compensation-Stock Compensation (Topic 718) (“ASU2018-07”), which aligns the accounting for share-based payment awards issued to employees andnon-employees. Under the new guidance, the existing employee guidance will apply tonon-employee share-based transactions. The Company adopted ASU2018-07 as of the required effective date on January 1, 2019. Upon adoption, the Company remeasured the fair value of a grant previously awarded to anon-employee which did not have a material impact on the Company’s financial position, results of operations or cash flows.
Recently Issued Accounting Pronouncements
In June 2016, the FASB issued guidance on the Measurement of Credit Losses on Financial Instruments. The guidance requires that credit losses be reported using an expected losses model rather than the incurred losses model that is currently used, and establishes additional disclosures related to credit risks. Foravailable-for-sale debt securities with unrealized losses, the standard now requires allowances to be recorded instead of reducing the amortized cost of the investment. This standard will be effective for the Company on January 1, 2020. The Company does not expect that the adoption of this new standard will have a material impact on its disclosures.
In January 2017, the FASB issued ASUNo. 2017-04,Intangibles–
the Company’s consolidated financial statements.
In November 2018, the FASB issued ASUNo.(“ASU2018-18”).: Clarifying the Interaction between Topic 808 and Topic 606.Recognitionfrom Contracts with CustomersTopic 606)“ASC 606”), and ASC 808,Topic 808)“ASC 808”), including the alignment of unit of account guidance between the two topics. This update isThe Company adopted this new standard as of the required effective in fiscal years, including interim periods, beginning after December 15,date of January 1, 2020, and earlyits adoption had no impact on the Company’s consolidated financial statements.
Under the Sanofi Agreement,to up to 6.
Under the
the vaccine against
Sanofi has sole responsibility for all commercialization activities for mRNA vaccines in the Licensed Fields and is obligated to bear all costs in connection with any such commercialization.
TheOriginal Sanofi Agreement, providesas amended by the First Sanofi Amendment, provided that the Company is
The Notwithstanding the foregoing, pursuant to the Original Sanofi Agreement, providesas amended by the First Sanofi Amendment, royalty payments
606. In determining the appropriate amount of revenue to be recognized under ASC 606,Revenue from Contracts with Customers(“ASC 606”), the Company performed the following steps: (i) identified the promised goods or services in the contract; (ii) determined whether the promised goods or services are performance obligations including whether they are distinct in the context of the contract; (iii) measurement of the transaction price, including the constraint on variable consideration; (iv) allocation of the transaction price to the performance obligations; and (v) recognition of revenue when (or as) the Company satisfies each performance obligation.
Agreement, as amended by the First Sanofi Amendment.
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
2019 | 2018 | 2019 | 2018 | |||||||||||||
Collaboration revenue | $ | 1,266 | $ | 238 | $ | 3,914 | $ | 238 |
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2020 | 2019 | 2020 | 2019 | |||||||||||||
Collaboration revenue | $ | 16,319 | $ | 1,174 | $ | 20,974 | $ | 2,648 |
September 30, | December 31, | |||||||
2019 | 2018 | |||||||
Contract liabilities | ||||||||
Deferred revenue | $ | 42,649 | $ | 44,413 |
June 30, 2020 | December 31, 2019 | |||||||
Contract liabilities | ||||||||
Deferred revenue | $ | 36,927 | $ | 43,356 |
Included in prepaid expenses2020 and other current assets on the condensed consolidated balance sheets as of September 30, 2019, and December 31, 2018 were $0.7 million and $0.8 million,
September 30, 2019 | ||||||||||||||||||||
Estimated Life | Gross Carrying Amount | Accumulated Amortization | Impairment Charge | Net Carrying Amount | ||||||||||||||||
(In thousands) | ||||||||||||||||||||
Definite-lived intangible assets: | ||||||||||||||||||||
MRT | 8 years | $ | 45,992 | $ | (1,588 | ) | $ | — | $ | 44,404 | ||||||||||
|
|
|
|
|
|
|
| |||||||||||||
Indefinite-lived intangible assets: | ||||||||||||||||||||
IPR&D - CF | Indefinite | 42,291 | — | — | 42,291 | |||||||||||||||
IPR&D - OTC | Indefinite | 18,559 | — | (18,559 | ) | — | ||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||
Total intangible assets, net | $ | 106,842 | $ | (1,588 | ) | $ | (18,559 | ) | $ | 86,695 | ||||||||||
|
|
|
|
|
|
|
| |||||||||||||
December 31, 2018 | ||||||||||||||||||||
Estimated Life | Gross Carrying Amount | Accumulated Amortization | Impairment Charge | Net Carrying Amount | ||||||||||||||||
(In thousands) | ||||||||||||||||||||
Definite-lived intangible assets: | ||||||||||||||||||||
MRT | 8 years | $ | 45,992 | $ | (397 | ) | $ | — | $ | 45,595 | ||||||||||
|
|
|
|
|
|
|
| |||||||||||||
Indefinite-lived intangible assets: | ||||||||||||||||||||
IPR&D - CF | Indefinite | 42,291 | — | — | 42,291 | |||||||||||||||
IPR&D - OTC | Indefinite | 18,559 | — | — | 18,559 | |||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||
Total intangible assets, net | $ | 106,842 | $ | (397 | ) | $ | — | $ | 106,445 | |||||||||||
|
|
|
|
|
|
|
|
June 30, 2020 | ||||||||||||||||||||
Estimated Life | Gross Carrying Amount | Accumulated Amortization | Impairment Charge | Net Carrying Amount | ||||||||||||||||
(In thousands) | ||||||||||||||||||||
Definite-lived intangible assets: | ||||||||||||||||||||
MRT | 6 years | $ | 45,992 | $ | (7,003 | ) | $ | — | $ | 38,989 | ||||||||||
Indefinite-lived intangible assets: | ||||||||||||||||||||
IPR&D - CF | Indefinite | 42,291 | — | — | 42,291 | |||||||||||||||
Total intangible assets, net | $ | 88,283 | $ | (7,003 | ) | $ | — | $ | 81,280 | |||||||||||
December 31, 2019 | ||||||||||||||||||||
Estimated Life | Gross Carrying Amount | Accumulated Amortization | Impairment Charge | Net Carrying Amount | ||||||||||||||||
(In thousands) | ||||||||||||||||||||
Definite-lived intangible assets: | ||||||||||||||||||||
MRT | 8 years | $ | 45,992 | $ | (2,747 | ) | $ | — | $ | 43,245 | ||||||||||
Indefinite-lived intangible assets: | ||||||||||||||||||||
IPR&D - CF | Indefinite | 42,291 | — | — | 42,291 | |||||||||||||||
IPR&D - OTC | Indefinite | 18,559 | — | (18,559 | ) | — | ||||||||||||||
Total intangible assets, net | $ | 106,842 | $ | (2,747 | ) | $ | (18,559 | ) | $ | 85,536 | ||||||||||
During the six months ended June 30, 2020 and 2019, the Company did 0t recognize any impairment charges related to goodwill.
Fair Value Measurements as of September 30, 2019 Using: | ||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Assets: | ||||||||||||||||
Money market funds | $ | — | $ | 48,872 | $ | — | $ | 48,872 | ||||||||
U.S. government agency bonds | — | 111,233 | — | 111,233 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
$ | — | $ | 160,105 | $ | — | $ | 160,105 | |||||||||
|
|
|
|
|
|
|
| |||||||||
Liabilities: | ||||||||||||||||
Contingent consideration | $ | — | $ | — | $ | 100,399 | $ | 100,399 | ||||||||
|
|
|
|
|
|
|
| |||||||||
$ | — | $ | — | $ | 100,399 | $ | 100,399 | |||||||||
|
|
|
|
|
|
|
|
Fair Value Measurements as of June 30, 2020 Using: | ||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Assets: | ||||||||||||||||
Money market funds | $ | — | $ | 191,447 | $ | — | $ | 191,447 | ||||||||
U.S. government agency bonds | — | 20,029 | — | 20,029 | ||||||||||||
$ | — | $ | 211,476 | $ | — | $ | 211,476 | |||||||||
Liabilities: | ||||||||||||||||
Contingent consideration | $ | — | $ | — | $ | 109,550 | $ | 109,550 | ||||||||
$ | — | $ | — | $ | 109,550 | $ | 109,550 | |||||||||
Fair Value Measurements as of December 31, 2018 Using: | ||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Assets: | ||||||||||||||||
Money market funds | $ | — | $ | 23,318 | $ | — | $ | 23,318 | ||||||||
U.S. government agency bonds | — | 88,904 | — | 88,904 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
$ | — | $ | 112,222 | $ | — | $ | 112,222 | |||||||||
|
|
|
|
|
|
|
| |||||||||
Liabilities: | ||||||||||||||||
Contingent consideration | $ | — | $ | — | $ | 103,642 | $ | 103,642 | ||||||||
|
|
|
|
|
|
|
| |||||||||
$ | — | $ | — | $ | 103,642 | $ | 103,642 | |||||||||
|
|
|
|
|
|
|
|
Fair Value Measurements as of December 31, 2019 Using: | ||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Assets: | ||||||||||||||||
Money market funds | $ | — | $ | 56,591 | $ | — | $ | 56,591 | ||||||||
U.S. government agency bonds | — | 104,098 | — | 104,098 | ||||||||||||
$ | — | $ | 160,689 | $ | — | $ | 160,689 | |||||||||
Liabilities: | ||||||||||||||||
Contingent consideration | $ | — | $ | — | $ | 103,655 | $ | 103,655 | ||||||||
$ | — | $ | — | $ | 103,655 | $ | 103,655 | |||||||||
Unobservable Inputs at September 30, 2019 and December 31, 2018 | Fair Value at | |||||||||
Projected Year of Payment | September 30, | December 31, | ||||||||
2019 | 2018 | |||||||||
Earnout payments | 2026 - 2039 | $ | 93,078 | $ | 94,999 | |||||
Milestone payments | 2026 - 2030 | 7,321 | 8,643 | |||||||
|
|
|
| |||||||
$ | 100,399 | $ | 103,642 | |||||||
|
|
|
|
Unobservable Inputs | Fair Value at | |||||||||||
Projected Year of Payment | June 30, 2020 | December 31, 2019 | ||||||||||
Earnout payments | 2026 - 2039 | 101,570 | $ | 96,097 | ||||||||
Milestone payments | 2026 - 2030 | 7,980 | 7,558 | |||||||||
$ | 109,550 | $ | 103,655 | |||||||||
2019.
Fair Value | ||||
Balance as of December 31, 2018 | $ | 103,642 | ||
Discontinuation of MRT5201 | (23,174 | ) | ||
Increase in fair value of contingent consideration | 19,931 | |||
|
| |||
Balance as of September 30, 2019 | $ | 100,399 | ||
|
|
Fair | ||||
Balance as of December 31, 2019 | $ | 103,655 | ||
Increase in fair value of contingent consideration | 5,895 | |||
Balance as of June 30, 2020 | $ | 109,550 | ||
time.
September 30, | December 31, | |||||||
2019 | 2018 | |||||||
Laboratory equipment | $ | 8,788 | $ | 7,012 | ||||
Computer equipment | 780 | 686 | ||||||
Office equipment | 883 | 836 | ||||||
Leasehold improvements | 5,634 | 5,635 | ||||||
Construction in progress | 1,237 | 959 | ||||||
|
|
|
| |||||
17,322 | 15,128 | |||||||
Less: Accumulated depreciation and amortization | (6,642 | ) | (4,883 | ) | ||||
|
|
|
| |||||
$ | 10,680 | $ | 10,245 | |||||
|
|
|
|
June 30, 2020 | December 31, 2019 | |||||||
Laboratory equipment | $ | 10,500 | $ | 9,044 | ||||
Computer equipment | 893 | 779 | ||||||
Office equipment | 883 | 883 | ||||||
Leasehold improvements | 5,635 | 5,635 | ||||||
Construction in progress | 5,865 | 3,460 | ||||||
23,776 | 19,801 | |||||||
Less: Accumulated depreciation and amortization | (8,622 | ) | (7,262 | ) | ||||
$ | 15,154 | $ | 12,539 | |||||
September 30, | December 31, | |||||||
2019 | 2018 | |||||||
Accrued external research and development expenses | $ | 4,221 | $ | 1,901 | ||||
Accrued employee compensation and benefits | 3,283 | 2,933 | ||||||
Accrued consultant and professional fees | 1,263 | 977 | ||||||
Other | — | 736 | ||||||
|
|
|
| |||||
$ | 8,767 | $ | 6,547 | |||||
|
|
|
|
8. Redeemable Convertible Preferred Stock
As
June 30, 2020 | December 31, 2019 | |||||||
Accrued employee compensation and benefits | $ | 3,244 | $ | 3,547 | ||||
Accrued external research and development expenses | 2,820 | 1,763 | ||||||
Accrued consultant and professional fees | 2,165 | 1,390 | ||||||
Other | 2,897 | 372 | ||||||
$ | 11,126 | $ | 7,072 | |||||
Upon the closing of the Company’s IPO on July 2, 2018, all then-outstanding shares of redeemable convertible preferred stock converted into an aggregate of 25,612,109 shares of common stock according to their terms. As of Septemberthree months ended June 30, 2019 and December 31, 2018, there were no shares of redeemable convertible preferred stock authorized, issued or outstanding.
9.2020.
As of September 30, 2019,plan and no shares had been issued under the 2018 ESPP.
Number of Shares | Weighted Average Exercise Price | Weighted Average Remaining Contractual Term | Intrinsic Value | |||||||||||||
(in years) | ||||||||||||||||
Outstanding as of December 31, 2018 | 6,236,006 | $ | 7.78 | 8.74 | $ | 1,104 | ||||||||||
Granted | 2,723,200 | $ | 8.52 | |||||||||||||
Exercised | (232,207 | ) | $ | 6.47 | ||||||||||||
Forfeited | (158,493 | ) | $ | 8.02 | ||||||||||||
|
| |||||||||||||||
Outstanding as of September 30, 2019 | 8,568,506 | $ | 8.04 | 8.67 | $ | 16,352 | ||||||||||
|
| |||||||||||||||
Exercisable as of September 30, 2019 | 3,071,842 | $ | 7.65 | 8.21 | $ | 6,970 | ||||||||||
Vested and expected to vest as of September 30, 2019 | 8,568,506 | $ | 8.04 | 8.67 | $ | 16,352 | ||||||||||
Exercisable as of December 31, 2018 | 1,827,004 | $ | 7.16 | 7.95 | $ | 632 | ||||||||||
Vested and expected to vest as of December 31, 2018 | 6,236,006 | $ | 7.78 | 8.74 | $ | 1,104 |
Number of Shares | Weighted Average Exercise Price | Weighted Average Remaining Contractual Term | Intrinsic Value | |||||||||||||
(in years) | ||||||||||||||||
Outstanding as of December 31, 2019 | 8,646,378 | $ | 8.06 | 8.42 | $ | 3,687 | ||||||||||
Granted | 2,861,118 | $ | 8.98 | |||||||||||||
Exercised | (792,460 | ) | $ | 7.36 | ||||||||||||
Forfeited | (220,047 | ) | $ | 7.98 | ||||||||||||
Outstanding as of June 30, 2020 | 10,494,989 | $ | 8.37 | 8.21 | $ | 100,634 | ||||||||||
Exercisable as of June 30, 2020 | 4,422,596 | $ | 7.94 | 7.56 | $ | 44,150 | ||||||||||
Vested and expected to vest as of June 30, 2020 | 10,494,989 | $ | 8.37 | 8.21 | $ | 100,634 |
Nine Months Ended September 30, | ||||||||
2019 | 2018 | |||||||
Risk-free interest rate | 2.39 | % | 2.81 | % | ||||
Expected term (in years) | 6.0 | 6.0 | ||||||
Expected volatility | 73.1 | % | 75.6 | % | ||||
Expected dividend yield | 0 | % | 0 | % |
Six Months Ended June 30, | ||||||||
2020 | 2019 | |||||||
Risk-free interest rate | 0.79 | % | 2.42 | % | ||||
Expected term (in years) | 6.1 | 6.0 | ||||||
Expected volatility | 68.6 | % | 73.3 | % | ||||
Expected dividend yield | 0 | % | 0 | % |
Number of Shares | Weighted Average Grant-Date Fair Value | |||||||
Unvested restricted common stock outstanding as of December 31, 2018 | 219,148 | $ | 1.27 | |||||
Forfeited restricted common stock | (1,783 | ) | $ | 1.28 | ||||
Vested restricted common stock | (144,688 | ) | $ | 1.27 | ||||
|
| |||||||
Unvested restricted common stock outstanding as of September 30, 2019 | 72,677 | $ | 1.28 | |||||
|
|
2019:
Number of Shares | Weighted Average Grant-Date Fair Value | |||||||
Unvested restricted common stock outstanding as of December 31, 2019 | 34,168 | $ | 1.28 | |||||
Forfeited restricted common stock | — | $ | — | |||||
Vested restricted common stock | (32,477 | ) | $ | 1.28 | ||||
Unvested restricted common stock outstanding as of June 30, 2020 | 1,691 | $ | 1.28 | |||||
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
2019 | 2018 | 2019 | 2018 | |||||||||||||
Research and development expenses | $ | 1,301 | $ | 639 | $ | 3,454 | $ | 3,092 | ||||||||
General and administrative expenses | 1,598 | 796 | 4,954 | 2,601 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
$ | 2,899 | $ | 1,435 | $ | 8,408 | $ | 5,693 | |||||||||
|
|
|
|
|
|
|
|
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2020 | 2019 | 2020 | 2019 | |||||||||||||
Research and development expenses | $ | 4,091 | $ | 1,284 | $ | 5,545 | $ | 2,153 | ||||||||
General and administrative expenses | 1,923 | 2,265 | 3,641 | 3,356 | ||||||||||||
$ | 6,014 | $ | 3,549 | $ | 9,186 | $ | 5,509 | |||||||||
no change to the exercise price of such options. Stock options for the purchase of 550,278 shares of common stock, representing all of the options held by the EVP and Founder, will be exercisable for 18 months following his resignation.
10.
11.
Net Loss per Share
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
2019 | 2018 | 2019 | 2018 | |||||||||||||
Numerator: | ||||||||||||||||
Net loss | $ | (21,227 | ) | $ | (42,646 | ) | $ | (82,257 | ) | $ | (91,358 | ) | ||||
Accretion of redeemable convertible preferred stock to redemption value | — | — | — | (644 | ) | |||||||||||
|
|
|
|
|
|
|
| |||||||||
Net loss attributable to common stockholders | $ | (21,227 | ) | $ | (42,646 | ) | $ | (82,257 | ) | $ | (92,002 | ) | ||||
|
|
|
|
|
|
|
| |||||||||
Denominator: | ||||||||||||||||
Weighted average common shares outstanding—basic and diluted | 51,891,157 | 44,036,206 | 48,574,275 | 17,949,026 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Net loss per share attributable to common stockholders—basic and diluted | $ | (0.41 | ) | $ | (0.97 | ) | $ | (1.69 | ) | $ | (5.13 | ) | ||||
|
|
|
|
|
|
|
|
Three Months Ended | Six Months Ended | |||||||||||||||
2020 | 2019 | 2020 | 2019 | |||||||||||||
Numerator: | ||||||||||||||||
Net loss | $ | (36,288 | ) | $ | (27,832 | ) | $ | (50,570 | ) | $ | (61,030 | ) | ||||
Denominator: | ||||||||||||||||
Weighted average common shares outstanding—basic and diluted | 62,282,291 | 48,749,627 | 61,145,254 | 46,866,842 | ||||||||||||
Net loss per share—basic and diluted | $ | (0.58 | ) | $ | (0.57 | ) | $ | (0.83 | ) | $ | (1.30 | ) | ||||
September 30, | ||||||||
2019 | 2018 | |||||||
Options to purchase common stock | 8,568,506 | 6,241,584 | ||||||
Unvested restricted common stock | 72,677 | 290,267 | ||||||
|
|
|
| |||||
8,641,183 | 6,531,851 | |||||||
|
|
|
|
12.
June 30, | ||||||||
2020 | 2019 | |||||||
Options to purchase common stock | 10,494,989 | 8,548,660 | ||||||
Unvested restricted common stock | 1,691 | 119,988 | ||||||
10,496,680 | 8,668,648 | |||||||
The Company is a lessee under two operating leases comprising a commercial real estate lease and an equipment lease.
Real Estate Lease
In June 2017, the Company entered into an operating lease for office and laboratory space at its headquarters in Lexington, Massachusetts. The Company occupies approximately 59,000 square feet of space under a10-year lease agreement expiring in April 2028. The Company occupied this property in March 2018. Monthly lease payments include base rent charges of $0.2 million, which are subject to a 3% annual increase each year. In June 2017, in connection with this lease agreement, the Company issued a letter of credit collateralized by cash deposits of $1.0 million, which are classified as restricted cash on the consolidated balance sheets as of September 30, 2019 and December 31, 2018.
Equipment Lease
In March 2018, the Company entered into an operating lease for communications equipment for use at its office and laboratory space in Lexington, Massachusetts. The term of the lease is five years, expiring in March 2023.
The Company excludes leases with an initial term of one year or less in the recognized ROU assets and lease liabilities. The Company recognizes lease expense for these leases on a straight-line basis over the lease term. For lease agreements entered into or reassessed after the adoption of ASC 842, lease andnon-lease components are combined into a single lease component. The Company’s leases have remaining lease terms of up to nine years, excluding two five-year options to extend the real estate lease after the expiration of the initial term. The Company believes the real estate lease for office and laboratory spaces will be sufficient to meet its needs for the foreseeable future and that suitable additional space will be available as and when needed.
The components of lease cost were as follows (dollar amounts in thousands):
Three Months Ended | Nine Months Ended | |||||||
September 30, 2019 | September 30, 2019 | |||||||
Lease cost | ||||||||
Operating lease cost | $ | 673 | $ | 2,019 | ||||
Short-term lease cost | — | — | ||||||
|
|
|
| |||||
Total lease cost | $ | 673 | $ | 2,019 | ||||
|
|
|
| |||||
Other information | ||||||||
Operating cash flows from operating leases | $ | 650 | $ | 1,933 | ||||
Operating lease liabilities arising from obtainingright-of-use assets | $ | — | $ | — | ||||
Weighted-average remaining lease term | 8 years | 8 years | ||||||
Weighted-average discount rate | 17.5 | % | 17.5 | % |
During the three and nine months ended September 30, 2018, the company recorded rent expense of $0.7 million and $2.4 million, respectively.
As of September 30, 2019, maturities of operating lease liabilities are as follows (in thousands):
September 30, 2019 | ||||
2019 | $ | 650 | ||
2020 | 2,659 | |||
2021 | 2,737 | |||
2022 | 2,818 | |||
2023 | 2,860 | |||
2024 and thereafter | 13,097 | |||
|
| |||
Total future minimum lease payments | 24,821 | |||
Less: imputed interest | (12,102 | ) | ||
|
| |||
Present value of lease liabilities | $ | 12,719 | ||
|
|
As of December 31, 2018, minimum rental commitments under the real estate lease was as follows (in thousands):
December 31, 2018 | ||||
2019 | $ | 2,534 | ||
2020 | 2,610 | |||
2021 | 2,688 | |||
2022 | 2,769 | |||
2023 | 2,852 | |||
2024 and thereafter | 13,096 | |||
|
| |||
Total future minimum lease payments | $ | 26,549 | ||
|
|
As most of the Company’s leases do not provide an implicit rate, the Company uses its incremental borrowing rate which are the rates incurred to borrow on a collateralized basis over a term equal to the lease payments in a similar economic environment in determining the present value of lease payments. The Company used the incremental borrowing rate on January 1, 2019 for operating leases that commenced prior to that date.
13.
Agreement
In November 2016, the Company entered into a research agreement with MIT pursuant to which the Company was obligated to reimburse MIT in an amount up to $3.1 million for specified direct and indirect costs incurred through October 2019 in specified research activities conducted for the Company (the “2016 MIT Agreement”). As of September 30, 2019 and December 31, 2018, the
Company had paid MIT $3.1 million and $2.5 million, respectively, of the total committed amount. Research and development expenses related to this agreement totaled $0.2 million and $0.3 million during the three months ended September 30, 2019 and 2018, respectively, and $0.7 million and $0.9 million during the nine months ended September 30, 2019 and 2018, respectively. As of September 30, 2019, there were no amounts payable by the Company under the agreement. As amended, the 2016 MIT Agreement expired in October 2019.
including products that may be developed under the Company’s collaboration with Sanofi.
2019.
MIT.
project for the commercial development of such licensed product, and provide a business plan with acceptable milestones; demonstrate that the licensed product proposed by such third party would be competitive with a licensed product for which the Company has initiated a fully funded project; or enter into a sublicense agreement with such third party on commercially reasonable terms, and, in each case, MIT, in its sole discretion, grants a license to such third party for the specified patent rights.
2019.
14.
Consulting Agreement with Daniel S. Lynch
In 2012, the Company entered into a consulting agreement with Daniel S. Lynch, the chairman of the Company’s board of directors, for the provision of consulting, advisory and related services. Pursuant to the consulting agreement, as amended through March 2015, Mr. Lynch was entitled to base compensation of $100,000 per year and was eligible to receive an annual performance bonus of up to 25% of his base compensation. In June 2018, the Company’s board of directors approved a director compensation program that became effective on the effective date of the registration statement related to the Company’s IPO. The Company has not made any payments to Mr. Lynch under the consulting agreement since the approval of the director compensation program. During the three months ended September 30, 2019 and 2018, the Company did not record any general and administrative expenses related to this agreement. During the nine months ended September 30, 2019 and 2018, the Company recorded general and administrative expenses of $0 and $0.1 million, respectively, related to this agreement. During the three and nine months ended September 30, 2019 and 2018, the Company paid Mr. Lynch $0, $0, $11,250 and $0.1 million, respectively, in connection with his services provided under the agreement. As of September 30, 2019 and December 31, 2018, amounts due under this agreement totaled $0 and $11,250, respectively, which were included in accrued expenses on the consolidated balance sheets.
Some12, 2020. This Management’s Discussion and Analysis of the statements contained in this discussionFinancial Condition and analysis or set forth elsewhere in this Quarterly Report onForm 10-Q, including information with respect to our plans and strategy for our business, constituteResults of Operations contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. We haveThese forward-looking statements are based on current expectations, estimates, forecasts and projections, and the beliefs and assumptions of our management, and include, without limitation, statements with respect to our expectations regarding our research, development and commercialization plans and prospects, results of operations, selling, general and administrative expenses, research and development expenses, the sufficiency of our cash, cash equivalents and short-term investments for future operations and business activity disruption due to theon our current expectationsare predictions and projections about future events. The following informationare subject to risks, uncertainties and any forward-looking statements should be considered in light of factors discussed elsewhere in this Quarterly Report onForm 10-Q, particularly including those risks identified inPart II-Item 1A “Risk Factors” and our other filings with the SEC.
Ourassumptions that are difficult to predict. Therefore, actual results and timing of certain events may differ materially and adversely from the results discussed, projected, anticipated, or indicatedthose expressed in any forward-looking statements. We caution youAmong the important factors that could cause actual results to differ materially from those indicated by our forward-looking statements are not guarantees of future performancethose discussed under the heading “Risk Factors” in Part II, Item 1A. and that our actual results of operations, financial condition and liquidity, and the development of the industry in which we operate may differ materially from the forward-looking statements containedelsewhere in this Quarterly Report onForm 10-Q.report, and in the 2019 Annual Report. Statements made herein are as of the date of the filing of this Quarterly Report on Form 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 Quarterly Report onForm 10-Q, 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 in the forward-looking statements.
other diseases.
Beyond CF,sites are assessing the potential for patients to safely return to the clinic for study enrollment and dosing. At this time we intendare unable to leveragepredict the timing for reporting data.
In September 2019, we announced our decision to discontinue theThe successful development of MRT5201,our product candidates will require, among other things, our mRNA manufacturing capabilities. To date, we have established
achieve this goal.
In 2018, we entered into a collaboration and license agreement with Sanofi, or the Sanofi Agreement, to develop mRNA vaccines for up to five infectious disease pathogens. Under the Sanofi Agreement, we and Sanofi are jointly conducting research and development activities to advance mRNA vaccines and mRNA vaccine platform development during a three-year research term, which may be extended by mutual agreement. We are eligible to receive up to $805.0 million in payments, including an upfront payment of $45.0 million, which we received in 2018; certain development, regulatory and sales-related milestones across several vaccine targets, and option exercise fees if Sanofi exercises its option related to development of vaccines for additional pathogens. We are also eligible to receive reimbursable development costs and tiered royalty payments associated with worldwide sales of the developed vaccines, if any.
Through SeptemberJune 30, 2019,2020, we have funded our operations primarily with net cashthrough sales of equity securities and research and collaboration agreements and we have received proceeds of $189.2approximately $629.1 million from the sale of redeemable convertible preferred stocksuch transactions.
$22.00, resulting in gross proceeds of $125.0 million, before deducting underwriting discounts and commissions of $7.5 million and other offering expenses of $0.5 million.
pathogens.
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
2019 | 2018 | 2019 | 2018 | |||||||||||||
(in thousands) | ||||||||||||||||
CF program (including MRT5005) | $ | 5,458 | $ | 3,884 | $ | 17,343 | $ | 12,498 | ||||||||
OTC deficiency program (including MRT5201) | 2,155 | 2,636 | 6,241 | 7,961 | ||||||||||||
MRT discovery program | 1,873 | 1,432 | 5,416 | 3,439 | ||||||||||||
Vaccine discovery program | 243 | 102 | 788 | 102 | ||||||||||||
Oligonucleotide discovery program | 107 | 21 | 202 | 100 | ||||||||||||
Unallocated research and development expenses | 7,459 | 4,858 | 21,353 | 16,754 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total research and development expenses | $ | 17,295 | $ | 12,933 | $ | 51,343 | $ | 40,854 | ||||||||
|
|
|
|
|
|
|
|
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2020 | 2019 | 2020 | 2019 | |||||||||||||
(in thousands) | ||||||||||||||||
Vaccine program | $ | 9,387 | $ | 288 | $ | 11,976 | $ | 545 | ||||||||
MRT5005 program | 3,350 | 5,263 | 9,444 | 11,884 | ||||||||||||
Discovery program | 2,033 | 1,500 | 5,807 | 3,543 | ||||||||||||
MRT5201 program | — | 2,217 | — | 4,087 | ||||||||||||
Oligonucleotide program | — | 62 | — | 95 | ||||||||||||
Unallocated research and development expenses | 14,232 | 7,295 | 23,215 | 13,894 | ||||||||||||
Total research and development expenses | $ | 29,002 | $ | 16,625 | $ | 50,442 | $ | 34,048 | ||||||||
In September 2019, we announced our decision to discontinue the development of MRT5201. We will not be investing any additional funds to this program and we have reallocated all resources previously dedicated to the OTC deficiency program to our other programs.
the success of our collaboration with Sanofi;
Impairment of Intangible Assets
In connection with our acquisition of the MRT Program, we recognized indefinite-livedin-process research and development, or IPR&D, which is not subject to amortization, but is tested annually for impairment or more frequently if there are indicators of impairment. Following the impairment test, if the fair value of the indefinite-lived IPR&D is less than its carrying amount, an impairment charge is recognized in the consolidated statements of operations. In September 2019, we announced our decision to discontinue the development of MRT5201 and as a result recorded an impairment charge.
Other Income (Expense), Net
Other Income (Expense), Net
Other income (expense), net consists of miscellaneous income and expense unrelated to our core operations.
the deferred tax asset associated with our alternative minimum tax credit carryforwards, which will be fully refundable.
2019
Three Months Ended September 30, | ||||||||||||
2019 | 2018 | Change | ||||||||||
(in thousands) | ||||||||||||
Collaboration revenue | $ | 1,266 | $ | 238 | $ | 1,028 | ||||||
Operating expenses: | ||||||||||||
Research and development | 17,295 | 12,933 | 4,362 | |||||||||
General and administrative | 6,881 | 5,957 | 924 | |||||||||
Change in fair value of contingent consideration | (19,834 | ) | 26,829 | (46,663 | ) | |||||||
Impairment of intangible asset | 18,559 | — | 18,559 | |||||||||
|
|
|
|
|
| |||||||
Total operating expenses | 22,901 | 45,719 | (22,818 | ) | ||||||||
|
|
|
|
|
| |||||||
Loss from operations | (21,635 | ) | (45,481 | ) | 23,846 | |||||||
|
|
|
|
|
| |||||||
Other income (expense): | ||||||||||||
Interest income | 428 | 318 | 110 | |||||||||
Other expense | (20 | ) | (7 | ) | (13 | ) | ||||||
|
|
|
|
|
| |||||||
Total other income (expense), net | 408 | 311 | 97 | |||||||||
|
|
|
|
|
| |||||||
Loss before benefit from income taxes | (21,227 | ) | (45,170 | ) | 23,943 | |||||||
Benefit from income taxes | — | 2,524 | (2,524 | ) | ||||||||
|
|
|
|
|
| |||||||
Net loss | $ | (21,227 | ) | $ | (42,646 | ) | $ | 21,419 | ||||
|
|
|
|
|
|
Three Months Ended June 30, | ||||||||||||
2020 | 2019 | Change | ||||||||||
(in thousands) | ||||||||||||
Collaboration revenue | $ | 16,319 | $ | 1,174 | $ | 15,145 | ||||||
Operating expenses: | ||||||||||||
Research and development | 29,002 | 16,625 | 12,377 | |||||||||
General and administrative | 8,601 | 7,850 | 751 | |||||||||
Change in fair value of contingent consideration | 15,347 | 4,889 | 10,458 | |||||||||
Total operating expenses | 52,950 | 29,364 | 23,586 | |||||||||
Loss from operations | (36,631 | ) | (28,190 | ) | (8,441 | ) | ||||||
Interest income | 343 | 358 | (15 | ) | ||||||||
Loss before benefit from income taxes | (36,288 | ) | (27,832 | ) | (8,456 | ) | ||||||
Benefit from income taxes | — | — | — | |||||||||
Net loss | $ | (36,288 | ) | $ | (27,832 | ) | $ | (8,456 | ) | |||
2019.
Three Months Ended September 30, | ||||||||||||
2019 | 2018 | Change | ||||||||||
(in thousands) | ||||||||||||
Direct external research and development expenses by program: | ||||||||||||
CF program (including MRT5005) | $ | 5,458 | $ | 3,884 | $ | 1,574 | ||||||
OTC deficiency program (including MRT5201) | 2,155 | 2,636 | (481 | ) | ||||||||
MRT discovery program | 1,873 | 1,432 | 441 | |||||||||
Vaccine discovery program | 243 | 102 | 141 | |||||||||
Oligonucleotide discovery program | 107 | 21 | 86 | |||||||||
Unallocated research and development expenses: | ||||||||||||
Personnel related (including stock-based compensation) | 4,629 | 3,443 | 1,186 | |||||||||
Other | 2,830 | 1,415 | 1,415 | |||||||||
|
|
|
|
|
| |||||||
Total research and development expenses | $ | 17,295 | $ | 12,933 | $ | 4,362 | ||||||
|
|
|
|
|
|
Three Months Ended June 30, | ||||||||||||
2020 | 2019 | Change | ||||||||||
(in thousands) | ||||||||||||
Direct external research and development expenses by program: | ||||||||||||
Vaccine program | $ | 9,387 | $ | 288 | $ | 9,099 | ||||||
MRT5005 program | 3,350 | 5,263 | (1,913 | ) | ||||||||
Discovery program | 2,033 | 1,500 | 533 | |||||||||
MRT5201 program | — | 2,217 | (2,217 | ) | ||||||||
Oligonucleotide program | — | 62 | (62 | ) | ||||||||
Unallocated research and development expenses: | ||||||||||||
Personnel related (including stock-based compensation) | 8,791 | 4,701 | 4,090 | |||||||||
Other | 5,441 | 2,594 | 2,847 | |||||||||
Total research and development expenses | $ | 29,002 | $ | 16,625 | $ | 12,377 | ||||||
the response to the
Direct external expenses of our OTC deficiency program decreased by $0.5 million in the three months ended September 30, 2019 compared to the three months ended September 30, 2018. Expenses incurred in the three months ended September 30, 2018 included increased preclinical development andIND-enabling studies compared to the same period in 2019, partially offset by the initial costs of CROs during the three months ended September 30, 2019 to conduct our planned Phase 1/2 clinical trial of MRT5201 for the treatment of patients with OTC deficiency. In September 2019, we announced our decision to discontinue the development of MRT5201. We will not be investing any additional funds to this program.
Direct external expenses of our MRT discovery program increased by $0.4 million in the three months ended September 30, 2019 compared to the three months ended September 30, 2018 primarily due to increased costs related to our ongoing exploratory research and discovery efforts to identify next-generation CF candidates and identify lead product candidates in the program.
additional pulmonary diseases, such as PCD, IPF and PAH.
discontinue development of this program.
asset, partially offset by a decrease of $0.4 million in professional fees.
In
Impairment of Intangible Asset
In September 2019, we announced our decision to discontinue the development of MRT5201. We determined this was an indicator of impairment time
Benefit from Income Taxes
During the three months ended September 30, 2019 and 2018, we recognized an income tax benefit of $0 and $2.5 million, respectively. The income tax benefit recognized during the three months ended September 30, 2018 resulted from a reduction in the deferred tax liabilities recorded as part of our acquisition of the MRT Program as well as deferred tax assets recorded for net operating losses generated that have an unlimited carryforward period. Net operating losses generated in 2018 and years thereafter can be carried forward indefinitely.
discount rate.
2019
Nine Months Ended September 30, | ||||||||||||
2019 | 2018 | Change | ||||||||||
(in thousands) | ||||||||||||
Collaboration revenue | $ | 3,914 | $ | 238 | $ | 3,676 | ||||||
Operating expenses: | ||||||||||||
Research and development | 51,343 | 40,854 | 10,489 | |||||||||
General and administrative | 21,284 | 16,726 | 4,558 | |||||||||
Change in fair value of contingent consideration | (3,243 | ) | 39,589 | (42,832 | ) | |||||||
Impairment of intangible asset | 18,559 | — | 18,559 | |||||||||
|
|
|
|
|
| |||||||
Total operating expenses | 87,943 | 97,169 | (9,226 | ) | ||||||||
|
|
|
|
|
| |||||||
Loss from operations | (84,029 | ) | (96,931 | ) | 12,902 | |||||||
|
|
|
|
|
| |||||||
Other income (expense): | ||||||||||||
Interest income | 1,306 | 499 | 807 | |||||||||
Other expense | (20 | ) | (52 | ) | 32 | |||||||
|
|
|
|
|
| |||||||
Total other income (expense), net | 1,286 | 447 | 839 | |||||||||
|
|
|
|
|
| |||||||
Loss before benefit from income taxes | (82,743 | ) | (96,484 | ) | 13,741 | |||||||
Benefit from income taxes | 486 | 5,126 | (4,640 | ) | ||||||||
|
|
|
|
|
| |||||||
Net loss | $ | (82,257 | ) | $ | (91,358 | ) | $ | 9,101 | ||||
|
|
|
|
|
|
Six Months Ended June 30, | ||||||||||||
2020 | 2019 | Change | ||||||||||
(in thousands) | ||||||||||||
Collaboration revenue | $ | 20,974 | $ | 2,648 | $ | 18,326 | ||||||
Operating expenses: | ||||||||||||
Research and development | 50,442 | 34,048 | 16,394 | |||||||||
General and administrative | 16,060 | 14,403 | 1,657 | |||||||||
Change in fair value of contingent consideration | 5,895 | 16,591 | (10,696 | ) | ||||||||
Total operating expenses | 72,397 | 65,042 | 7,355 | |||||||||
Loss from operations | (51,423 | ) | (62,394 | ) | 10,971 | |||||||
Interest income | 853 | 878 | (25 | ) | ||||||||
Loss before benefit from income taxes | (50,570 | ) | (61,516 | ) | 10,946 | |||||||
Benefit from income taxes | — | 486 | (486 | ) | ||||||||
Net loss | $ | (50,570 | ) | $ | (61,030 | ) | $ | 10,460 | ||||
2019.
Nine Months Ended September 30, | ||||||||||||
2019 | 2018 | Change | ||||||||||
(in thousands) | ||||||||||||
Direct external research and development expenses by program: |
| |||||||||||
CF program (including MRT5005) | $ | 17,343 | $ | 12,498 | $ | 4,845 | ||||||
OTC deficiency program (including MRT5201) | 6,241 | 7,961 | (1,720 | ) | ||||||||
MRT discovery program | 5,416 | 3,439 | 1,977 | |||||||||
Vaccine discovery program | 788 | 102 | 686 | |||||||||
Oligonucleotide discovery program | 202 | 100 | 102 | |||||||||
Unallocated research and development expenses: | ||||||||||||
Personnel related (including stock-based compensation) | 13,615 | 11,356 | 2,259 | |||||||||
Other | 7,738 | 5,398 | 2,340 | |||||||||
|
|
|
|
|
| |||||||
Total research and development expenses | $ | 51,343 | $ | 40,854 | $ | 10,489 | ||||||
|
|
|
|
|
|
Six Months Ended June 30, | ||||||||||||
2020 | 2019 | Change | ||||||||||
(in thousands) | ||||||||||||
Direct external research and development expenses by program: | ||||||||||||
Vaccine program | $ | 11,976 | $ | 545 | $ | 11,431 | ||||||
MRT5005 program | 9,444 | 11,884 | (2,440 | ) | ||||||||
Discovery program | 5,807 | 3,543 | 2,264 | |||||||||
MRT5201 program | — | 4,087 | (4,087 | ) | ||||||||
Oligonucleotide program | — | 95 | (95 | ) | ||||||||
Unallocated research and development expenses: | ||||||||||||
Personnel related (including stock-based compensation) | 14,777 | 8,986 | 5,791 | |||||||||
Other | 8,438 | 4,908 | 3,530 | |||||||||
Total research and development expenses | $ | 50,442 | $ | 34,048 | $ | 16,394 | ||||||
the response to the
Direct external expenses of our OTC deficiency program decreased by $1.7 million in the nine months ended September 30, 2019 compared to the nine months ended September 30, 2018. Expenses incurred in the nine months ended September 30, 2018 included increased preclinical development andIND-enabling studies compared to the same period in 2019, partially offset by the initial costs of CROs during the nine months ended September 30, 2019 to conduct our planned Phase 1/2 clinical trial of MRT5201 for the treatment of patients with OTC deficiency. In September 2019, we announced our decision to discontinue the development of MRT5201. We will not be investing any additional funds to this program.
Direct external expenses of our MRT discovery program increased by $2.0$2.3 million induring the ninesix months ended SeptemberJune 30, 20192020 compared to the ninesix months ended SeptemberJune 30, 20182019 primarily due to increased costs related to our ongoing exploratory research and discovery efforts to identify next-generation CF candidates and identify lead product candidates in the program.
additional pulmonary diseases, such as PCD, IPF and PAH.
asset.
The increase in personnel-related costs was primarily due to an increase in stock-based compensation expense, resulting from options granted during the year ended December 31, 2018 and the nine months ended September 30, 2019, as well as an increase in headcount in the nine months ended September 30, 2019 compared to the nine months ended September 30, 2018.
The increase in insurance costs was a result of additional insurance coverage associated with operating as a publicly traded company.
The increase in professional fees was due to an increase in legal fees primarily associated with filing patent applications and prosecuting our intellectual property portfolio as well as an increase in costs related to operating as a public company, partially offset by a decrease in consulting costs in the nine months ended September 30, 2018 for which there was no comparable expense in the same period in 2019.
The decrease in depreciation expense was primarily due to the acceleration of unamortized leasehold improvements for a terminated lease in 2018.
expense.
In
Impairmenttime.
See “—Funding Requirements” and Note 1 to the condensed consolidated financial statements in Part I, Item 1 of this Quarterly Report on Form
Onsuch transactions.
On May 3, 2019, we issued and sold 5,582,940 shares of our common stock in a private placement at a price per share of $8.50, resulting in gross proceeds of $47.5 million, before deducting placement agent fees of $2.8 million and other offering expenses of $0.6 million.
On July 3, 2019, we filed a universal shelf registration statement on Form On September 20, 2019, we issued and sold 9,000,000 shares of our common stock through a public offering under the 2019 Shelf at a price per share of $10.00, resulting in gross proceeds of $90.0 million, before deducting underwriting discounts and commissions of $5.4 million and other offering expenses of $0.6 million.On
Nine Months Ended September 30, | ||||||||
2019 | 2018 | |||||||
(in thousands) | ||||||||
Net cash used in operating activities | $ | (61,900 | ) | $ | (5,889 | ) | ||
Net cash used in investing activities | (24,086 | ) | (117,882 | ) | ||||
Net cash provided by financing activities | 129,642 | 113,636 | ||||||
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Net increase (decrease) in cash, cash equivalents and restricted cash | $ | 43,656 | $ | (10,135 | ) | |||
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Six Months Ended June 30, | ||||||||
2020 | 2019 | |||||||
(in thousands) | ||||||||
Net cash used in operating activities | $ | (51,489 | ) | $ | (41,445 | ) | ||
Net cash provided by investing activities | 79,422 | 15,525 | ||||||
Net cash provided by financing activities | 159,680 | 45,550 | ||||||
Net increase in cash, cash equivalents and restricted cash | $ | 187,613 | $ | 19,630 | ||||
MRT5201, which resultedDuring the six months ended June 30, 2019, operating activities used $41.4 million of cash, resulting from our net loss of $61.0 million and net cash used in the removalchanges in our operating assets and liabilities of the $23.2$4.0 million, in contingent consideration liability related to this program, partially offset by annet
Investing Activities
During the nine months ended September 30, 2019, net cash used in investing activities was $24.1 million, consisting of $138.2$27.4 million of purchases of short-term investments and $2.2$4.4 million of purchases of property and equipment, partially offset by $116.3equipment.
During the nine months ended September 30, 2018, net cash used in investing activities was $117.9 million, consisting of $128.3investments, partially offset by $38.4 million of purchases of short-term investments as well as $5.6and $1.8 million of purchases of property and equipment, which primarily consisted of leasehold improvements and other property related to our lease of office and laboratory space in Lexington, Massachusetts, partially offset by $16.0 million of sales and maturities of short-term investments.
equipment.
During the nine months ended September 30, 2018, net cash provided by financing activities was $113.6 million, consisting of net proceeds from our IPO, inclusive of the proceeds from the over-allotment exercise, of $113.4 million after deducting underwriting discounts and commissions and offering expenses.
In September 2019,
In September 2019, we entered into a new research agreement with the Massachusetts Institute of Technology, or MIT, pursuant to which we are obligated to reimbursemake milestone payments to MIT in an amountaggregating up to $4.1$1.375 million upon the achievement of specified clinical and regulatory milestones with respect to each licensed product and $1.250 million upon our first commercial sale of each licensed product, and to pay royalties of a low single-digit percentage to MIT based on our, and any of our affiliates’ and sublicensees’, net sales of licensed products. As a result of the Amended Sanofi Agreement, we will be required to pay MIT a portion of the $300.0 million upfront payment and a portion of the 50 percent premium payment in consideration for specified direct and indirect costs to be incurred from January 2020 through December 2022 in specified research activities conducted for us. As of September 30, 2019, there were no amounts payable by usthe common stock purchased under the Securities Purchase Agreement as well as future option and milestone payments that we may
We adopted ASC 842 as of the required effective date of January 1, 2019. Under ASC 842, most leases are required to be recognized on the balance sheet as aright-of-use asset and a lease liability. The standard has been implemented using the cumulative-effect adjustment on the effective date of the standard, with comparative periods presented in accordance with the previous guidance. We have also elected to utilize the permitted practical expedients, which allowed us to not reassess previous accounting conclusions around whether arrangements are or contain leases, and carried forward both the historical classification of leases and the treatment of initial direct costs. ASC 842 requires us to make significant assumptions and judgments including, but not limited to, the determination of whether a contract contains a lease, the allocation of consideration in a contract between lease andnon-lease components and the determination of the discount rate for the lease. Our assessment of leases under ASC 842 is based upon assumptions we believed to be reasonable, but which are inherently uncertain, and changes in these assumptions could materially affect the amounts recognized as aright-of-use asset and lease liability on the balance sheet, and, as a result, actual results may differ materially from estimates. The adoption of this standard did not materially impact our consolidated net earnings and had no impact on cash flows.
2020.
the success of our collaboration with Sanofi;
obligated to pay a fixed, quarterly earnout payment of a
Comprehensive tax reform legislation could adversely affect our business and financial condition.
On December 22, 2017, the U.S. government enacted the Tax Cuts and Jobs Act, or the Tax Act, which significantly reformed the Internal Revenue Code
In the near term, we are dependent on the success of MRT5005.
successful patient enrollment in and completion of clinical trials;
For example, in April 2020, we announced that enrollment and dosing have been paused in our ongoing Phase 1/2 clinical trial in patients with CF as a consequence of the response to the
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As part of our strategy, we intend to seek to enter into collaborations with third parties for one or more of our programs or product candidates. For example, in June 2018, we entered into
Any collaborations we enter into, including our
Collaborators may have
Collaborators
Collaborators
Collaborators may delay
Collaborators
Product
A collaborator with marketing and distribution rights to one or more of our product candidates that achieve regulatory approval
Collaborators
Collaborators
Collaborations
If our collaborations doSanofi does not result in the successful development and commercialization of products,vaccines, or if one of any future collaboratorsSanofi terminates its agreement with us, we may not receive any future research funding or milestone or royalty payments under the collaboration. If we do not receive the funding we expect under these agreements,our agreement with Sanofi, our development of productvaccine candidates could be delayed and we may need additional resources to develop our productvaccine candidates.
IfSanofi’s activities.
Under Even if we are able to successfully enter into collaborations with third parties for one or more of our programs or product candidates, such collaborations may be subject to risks similar to those described above under the Shire Agreement, priorrisk factor captioned “
business could be adversely affected.
COVID-19
We have not yet experienced construction delays as a consequence of the ongoing
commercialize our products, or we are unable to develop the necessary capabilities on our own, we will be unable to generate sufficient product revenue to sustain our business. We compete with many well-funded and profitable pharmaceutical and biotechnology companies that currently have extensive and experienced medical affairs, marketing and sales operations to recruit, hire, train and retain marketing and sales personnel. We also face competition in our search for third parties to assist us with the sales and marketing efforts of our product candidates. Without an internal team or the support of a third party to perform marketing, sales and medical affairs functions, we may be unable to compete successfully against these more established companies.
In addition to the protection afforded by patents, we rely on trade secret protection and confidentiality agreements to protect proprietary
operations as a result of claims of patent infringement or violation of other intellectual property rights. Further, the outcome of intellectual property litigation is subject to uncertainties that cannot be adequately quantified in advance, including the demeanor and credibility of witnesses and the identity of any adverse party. This is especially true in intellectual property cases, which may turn on the testimony of experts as to technical facts upon which experts may reasonably disagree. Any of the foregoing could have a material adverse effect on our business, financial condition, results of operations or prospects.
trademarks similar to ours, thereby impeding our ability to build brand identity and possibly leading to market confusion. In addition, there could be potential trade name or trademark infringement claims brought by owners of other registered trademarks or trademarks that incorporate variations of our registered or unregistered trademarks or trade names. Over the long term, if we are unable to
COVID-19,”
The United Kingdom had a period of a maximum of two years from the date of its formal notification to negotiate the terms of its withdrawal from, and future relationship with, the European Union. If no formal withdrawal agreement can be reached between the United Kingdom and the European Union, then it is expected that the United Kingdom’s membership in the European Union would automatically terminate on the deadline, which was initially March 29, 2019. On October 28, 2019, that deadline was extended from October 31, 2019 to January 31, 2020 to allow the parties to continue to negotiate a withdrawal agreement. The United Kingdom could leave the European Union earlier if the Parliament approves the withdrawal but that has proven to be extremely difficult to date. Discussions between the United Kingdom and the European Union will continue to focus on finalizing withdrawal issues and transition agreements. However, limited progress to date in these negotiations and ongoing uncertainty within the UK Government and Parliament sustains the possibility of the United Kingdom leaving the European Union on March 29, 2019 without a withdrawal agreement and associated transition period in place, which is likely to cause significant market and economic disruption.
We may seek
In addition, we may not receive such designation for other product candidates.
In addition, if we seek fast track designation for other product candidates, we may not receive it from the FDA.
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insurance coverage or in individuals having insurance coverage with less generous benefits. While the timing and scope
oppose the lower court’s ruling. On July 10, 2019, the Court of Appeals for the Fifth Circuit heard oral argument in this case. On December 18, 2019, that court affirmed the lower court’s ruling that the individual mandate portion of the ACA is unconstitutional and it remanded the case to the district court for reconsideration of the severability question and additional analysis of the provisions of the ACA. On January 21, 2020, the U.S. Supreme Court declined to review this decision on an expedited basis. On March 3, 2020, the Court agreed to hear the case through its normal procedures. On June 25, 2020, the Trump Administration and a coalition of 18 states asked the court to strike down the entirety of the ACA. Litigation and legislation over the ACA are likely to continue, with unpredictable and uncertain results.
FDA-approved
Jefferies LLC, or Jefferies, pursuant to which, from time to time, we may offer and sell through Jefferies up to $50.0$100.0 million of the common stock registered under the universal shelf registration statement pursuant to one or more “at the market” offerings. Through June 30, 2020, pursuant to the Sales Agreement, we had issued and sold an aggregate of 2,863,163 shares of our common stock, for gross proceeds of $37.9 million, before deducting commissions of $1.1 million and other offering expenses of $0.2 million. In September 2019,June 2020, we completed a public offering in which we issued and sold 5,681,819 shares of 9,000,000common stock and a stockholder sold 6,824,992 shares ourof common stock registered under our universal shelf registration statement. Sales of a substantial number of shares of our common stock, or the perception in the market that holders of a large number of shares intend to sell shares, could reduce the market price of our common stock.
An active trading market for our common stock may not be sustained.
Our shares
not being required to comply with the auditor attestation requirements in the assessment of our internal control over financial reporting;
reduced disclosure obligations regarding executive compensation;
exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved; and
an exemption from compliance with the requirement of the Public Company Accounting Oversight Board regarding the communication of critical audit matters in the auditor’s report on the financial statements.
In addition, the JOBS Act provides that an EGC may take advantage of an extended transition period for complying with new or revised accounting standards. This allows an EGC to delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We have irrevocably elected not to avail ourselves of this exemption from new or revised accounting standards and, therefore, we will be subject to the same new or revised accounting standards as other public companies that are not EGCs.
We are also a smaller reporting company, and we will remain a smaller reporting company until the fiscal year following the determination that our voting andnon-voting common shares held bynon-affiliates is more than $250 million measured on the last business day of our second fiscal quarter, or our annual revenues are less than $100 million during the most recently completed fiscal year and our voting andnon-voting common shares held bynon-affiliates is more than $700 million measured on the last business day of our second fiscal quarter. Similar to emerging growth companies, smaller reporting companies have reduced disclosure obligations, such as an exemption from providing selected financial data and an ability to provide simplified executive compensation information and only two years of audited financial statements.
We have elected to take advantage of certain of the reduced reporting obligations. Investors may find our common stock less attractive as a result of our reliance 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.
We previously identified a material weakness in our internal control over financial reporting, which has been remediated. 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 and stock price.
We previously identified a material weakness in our internal control over financial reporting that was unremediated as of December 31, 2017. Although this material weakness was remediated as of December 31, 2018, we cannot assure that we may not identify another material weakness in the future. 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.
In preparation of our financial statements to meet the requirements of our initial public offering, we determined that a material weakness in our internal control over financial reporting existed during fiscal 2016 and remained unremediated as of December 31, 2017. The material weakness we identified is that we did not design and maintain effective controls and procedures over our accounting for and reporting of the income tax impacts of business combinations. This control deficiency could result in a misstatement of our accounts or disclosures that would result in a material misstatement of our annual or interim condensed consolidated financial statements that would not be prevented or detected, and accordingly, we determined that the control deficiency constitutes a material weakness. The material weakness also resulted in revisions to our previously issued 2016 annual consolidated financial statements, which we concluded were not material to those financial statements, and adjustments to our interim condensed consolidated financial statements for the nine months ended September 30, 2017 before their issuance. Specifically, the material weakness resulted in errors in our accounting for and reporting of income taxes and goodwill in the purchase accounting for a business combination and in subsequent reporting periods.
We cannot assure you that the measures we have taken to date, and actions we may take in the future, will be sufficient to 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 any future material weaknesses in our internal control over financial reporting, or identify any material weaknesses in the future, or otherwise fail to maintain an effective system of internal controls, the accuracy and timing of our financial reporting may be adversely affected, we may be unable to maintain compliance with securities law requirements regarding timely filing of periodic reports in addition to applicable stock exchange listing requirements, investors may lose confidence in our financial reporting, and our share price may decline as a result.
Sales of Unregistered Securities
None.
Use of Proceeds from Initial Public Offering of Common Stock
On July 2, 2018, we closed our IPO of 9,350,000 shares of common stock at a public offering price of $13.00 per share, and on July 24, 2018, we issued and sold an additional 364,371 shares of common stock at a price of $13.00 per share pursuant to the exercise of the underwriters’ over-allotment option. The aggregate gross proceeds to us from our IPO, inclusive of the over-allotment exercise, were $126.3 million. The offer and sale of all of the shares in the offering were registered under the Securities Act pursuant to registration statement on FormS-1 (FileNo. 333-225368), which was declared effective by the SEC on June 27, 2018. Citigroup Global Markets Inc., Leerink Partners LLC and Evercore Group L.L.C. acted as joint book-running managers for the offering and as representatives of the underwriters. The offering commenced on June 27, 2018 and did not terminate until the sale of all of the shares offered.
Aggregate net proceeds from the offering, inclusive of the proceeds from the over-allotment exercise, were $113.2 million, after deducting underwriting discounts and commissions of $8.8 million and offering expenses of $4.3 million payable by us. None of the underwriting discounts and commissions or offering expenses were paid directly or indirectly to any directors or officers of ours or their associates or to persons owning 10% or more of any class of equity securities or to any affiliates of ours.
As of September 30, 2019, we have used approximately $85.5 million of the net proceeds to fund the development of MRT5005 and MRT5201, to fund the discovery and additional preclinical research and development of additional product candidates and platform enhancement, and for working capital and other general corporate purposes. There has been no material change in our planned use of the net proceeds from the offering as described in our final prospectus filed with the SEC on June 29, 2018 pursuant to Rule 424(b) under the Securities Act.
* | Filed herewith. |
** | Furnished herewith. |
+ | Portions of this exhibit have been omitted pursuant to Item 601(b)(10)(iv) of Regulation S-K. |
Translate Bio, Inc. | ||||||
Date: | By: | /s/ Ronald C. Renaud, Jr. | ||||
Ronald C. Renaud, Jr. | ||||||
President and Chief Executive Officer | ||||||
Date: | By: | /s/ John R. Schroer | ||||
John R. Schroer | ||||||
Chief Financial Officer and Treasurer |
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