QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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(State or other jurisdiction of incorporation or organization)
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(I.R.S. Employer Identification No.)
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(Address of principal executive office)
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(Zip Code)
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Title of each class
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Trading Symbol(s)
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Name of each exchange on which registered
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Accelerated filer ☐
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Non-accelerated filer ☐
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Smaller reporting company
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Emerging growth company |
Page
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PART I – FINANCIAL INFORMATION
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Item 1.
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Financial Statements
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|
4 | ||
5 | ||
6 | ||
7 | ||
9 | ||
10 | ||
Item 2.
|
23 | |
Item 3.
|
38 | |
Item 4.
|
39 | |
PART II – OTHER INFORMATION
|
||
Item 1.
|
40 | |
Item 1A.
|
40
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Item 2.
|
40 | |
Item 3.
|
40 | |
Item 4.
|
40 | |
Item 5.
|
40
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Item 6.
|
41 | |
42 |
• |
federal, state, and non-U.S. regulatory requirements, including regulation of our current or any other future product candidates by the U.S. Food and Drug
Administration (“FDA”);
|
• |
the timing of and our ability to submit regulatory filings with the FDA and to obtain and maintain FDA or other regulatory authority approval of, or other action with
respect to, our product candidates;
|
• |
our competitors’ activities, including decisions as to the timing of competing product launches, pricing, and discounting;
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• |
whether safety and efficacy results of our clinical trials and other required tests for approval of our product candidates provide data to warrant progression of
clinical trials, potential regulatory approval, or further development of any of our product candidates;
|
• |
our ability to develop, acquire and advance product candidates into, enroll a sufficient number of patients into, and successfully complete, clinical studies, and our
ability to apply for and obtain regulatory approval for such product candidates, within currently anticipated timeframes, or at all;
|
• |
our ability to establish key collaborations and vendor relationships for our product candidates and any other future product candidates;
|
• |
our ability to develop our sales and marketing capabilities or enter into agreements with third parties to sell and market any of our product candidates;
|
• |
our ability to obtain additional funding to conduct our planned research and development efforts;
|
• |
our ability to acquire additional businesses, form strategic alliances or create joint ventures and our ability to realize the benefit of such acquisitions,
alliances, or joint ventures;
|
• |
our ability to successfully develop and commercialize any technology that we may in-license or products we may acquire;
|
• |
the development of our direct manufacturing capabilities for our AAV programs;
|
• |
our ability to successfully operate in non-U.S. jurisdictions in which we currently or in the future do business, including compliance with applicable regulatory
requirements and laws;
|
• |
our ability to obtain and enforce patents to protect our product candidates, and our ability to successfully defend ourselves against unforeseen third-party
infringement claims;
|
• |
anticipated trends and challenges in our business and the markets in which we operate;
|
• |
our estimates regarding our capital requirements; and
|
• |
our ability to obtain additional financing and raise capital as necessary to fund operations or pursue business opportunities.
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Item 1. |
Financial Statements
|
June 30, | December 31, | |||||||
2023
|
2022
|
|||||||
(unaudited) | ||||||||
Assets
|
||||||||
Current assets:
|
||||||||
Cash and cash equivalents
|
$
|
|
$
|
|
||||
Investments
|
|
|
||||||
Prepaid expenses and other current assets
|
|
|
||||||
Total current assets
|
|
|
||||||
Property and equipment, net
|
|
|
||||||
Goodwill
|
|
|
||||||
Intangible assets
|
||||||||
Restricted cash
|
|
|
||||||
Deposits
|
|
|
||||||
Investments
|
||||||||
Operating lease right-of-use assets
|
|
|
||||||
Finance lease right-of-use asset
|
|
|
||||||
Total assets
|
$
|
|
$
|
|
||||
Liabilities and stockholders’ equity
|
||||||||
Current liabilities:
|
||||||||
Accounts payable and accrued expenses
|
$
|
|
$
|
|
||||
Operating lease liabilities, current
|
|
|
||||||
Finance lease liability, current
|
|
|
||||||
Total current liabilities
|
|
|
||||||
Operating lease liabilities, non-current
|
|
|
||||||
Finance lease liability, non-current
|
|
|
||||||
Other liabilities
|
|
|
||||||
Total liabilities
|
|
|
||||||
Commitments and contingencies (Note 12)
|
||||||||
Stockholders’ equity:
|
||||||||
Preferred stock, $
|
||||||||
Series A convertible preferred stock;
|
|
|
||||||
Series B convertible preferred stock;
|
|
|
||||||
Common stock, $
|
|
|
||||||
Treasury stock, at cost,
|
( |
) | ( |
) | ||||
Additional paid-in capital
|
|
|
||||||
Accumulated other comprehensive loss
|
(
|
)
|
(
|
)
|
||||
Accumulated deficit
|
(
|
)
|
(
|
)
|
||||
Total stockholders’ equity
|
|
|
||||||
Total liabilities and stockholders’ equity
|
$
|
|
$
|
|
|
Three Months Ended June 30,
|
Six Months Ended June 30,
|
||||||||||||||
|
2023
|
2022
|
2023
|
2022
|
||||||||||||
Revenue
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
|
||||||||||||||||
Operating expenses:
|
||||||||||||||||
Research and development
|
|
|
|
|
||||||||||||
General and administrative
|
|
|
|
|
||||||||||||
Total operating expenses
|
|
|
|
|
||||||||||||
Loss from operations
|
(
|
)
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||||
Interest expense
|
(
|
)
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||||
Interest and other income, net
|
|
|
|
|
||||||||||||
Accretion of discount and amortization of premium on investments, net
|
|
(
|
)
|
|
(
|
)
|
||||||||||
Net loss
|
$
|
(
|
)
|
$
|
(
|
)
|
$
|
(
|
)
|
$
|
(
|
)
|
||||
Net loss per share - basic and diluted
|
$
|
(
|
)
|
$
|
(
|
)
|
$
|
(
|
)
|
$
|
(
|
)
|
||||
Weighted-average common shares outstanding - basic and diluted
|
|
|
|
|
|
Three Months Ended June 30,
|
Six Months Ended June 30,
|
||||||||||||||
|
2023
|
2022
|
2023
|
2022
|
||||||||||||
Net loss
|
$
|
(
|
)
|
$
|
(
|
)
|
$
|
(
|
)
|
$
|
(
|
)
|
||||
Other comprehensive loss
|
||||||||||||||||
Net unrealized loss on investments
|
(
|
)
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||||
Total comprehensive loss
|
$
|
(
|
)
|
$
|
(
|
)
|
$
|
(
|
)
|
$
|
(
|
)
|
Accumulated | ||||||||||||||||||||||||||||
Additional | Other | Total | ||||||||||||||||||||||||||
Common Stock | Treasury | Paid-In |
Comprehensive | Accumulated |
Stockholders’
|
|||||||||||||||||||||||
Shares
|
Amount
|
Stock |
Capital
|
Income/(Loss)
|
Deficit
|
Equity
|
||||||||||||||||||||||
Balance at December 31, 2022
|
|
$
|
|
$ | ( |
) |
$
|
|
$
|
(
|
)
|
$
|
(
|
)
|
$
|
|
||||||||||||
Issuance of common stock pursuant to exercise of stock options
|
|
|
|
|
|
|
||||||||||||||||||||||
Issuance of common stock pursuant to vesting of restricted stock units
|
( |
) | ||||||||||||||||||||||||||
Issuance of common stock pursuant to exercise of warrants
|
||||||||||||||||||||||||||||
Issuance of common stock pursuant to the at-the-market offering program, net of issuance costs
|
||||||||||||||||||||||||||||
Unrealized comprehensive gain on investments
|
-
|
|
|
|
|
|
||||||||||||||||||||||
Stock-based compensation
|
-
|
|
|
|
|
|
||||||||||||||||||||||
Net loss
|
-
|
|
|
|
(
|
)
|
(
|
)
|
||||||||||||||||||||
Balance at March 31, 2023
|
|
$
|
|
$ | ( |
) |
$
|
|
$
|
(
|
)
|
$
|
(
|
)
|
$
|
|
||||||||||||
Issuance of common stock pursuant to exercise of stock options
|
|
|
|
|
|
|
||||||||||||||||||||||
Issuance of common stock pursuant to vesting of restricted stock units
|
( |
) | ||||||||||||||||||||||||||
Unrealized comprehensive loss on investments
|
-
|
|
|
(
|
)
|
|
(
|
)
|
||||||||||||||||||||
Stock-based compensation
|
-
|
|
|
|
|
|
||||||||||||||||||||||
Net loss
|
-
|
|
|
|
(
|
)
|
(
|
)
|
||||||||||||||||||||
Balance at June 30, 2023
|
|
$
|
|
$ | ( |
) |
$
|
|
$
|
(
|
)
|
$
|
(
|
)
|
$
|
|
Accumulated
|
||||||||||||||||||||||||||||
Additional
|
Other | Total |
||||||||||||||||||||||||||
Common Stock | Treasury |
Paid-In |
Comprehensive
|
Accumulated |
Stockholders’
|
|||||||||||||||||||||||
Shares | Amount | Stock |
Capital |
(Loss)
|
Deficit | Equity | ||||||||||||||||||||||
Balance at December 31, 2021
|
|
$
|
|
$ |
$
|
|
$
|
(
|
)
|
$
|
(
|
)
|
$
|
|
||||||||||||||
Issuance of common stock pursuant to exercise of stock options and restricted stock units
|
|
|
|
|
|
|
||||||||||||||||||||||
Unrealized comprehensive loss on investments
|
-
|
|
|
(
|
)
|
|
(
|
)
|
||||||||||||||||||||
Stock-based compensation
|
-
|
|
|
|
|
|
||||||||||||||||||||||
Net loss
|
-
|
|
|
|
(
|
)
|
(
|
)
|
||||||||||||||||||||
Balance at March 31, 2022
|
|
$ |
|
$ |
$ |
|
$ |
(
|
)
|
$ |
(
|
)
|
$ |
|
||||||||||||||
Issuance of common stock pursuant to exercise of stock options
|
|
|
|
|
|
|
||||||||||||||||||||||
Issuance of common stock pursuant to the at-the-market offering program, net of issuance costs
|
|
|
|
|
|
|
||||||||||||||||||||||
Unrealized comprehensive loss on investments
|
-
|
|
|
(
|
)
|
|
(
|
)
|
||||||||||||||||||||
Stock-based compensation
|
-
|
|
|
|
|
|
||||||||||||||||||||||
Net loss
|
-
|
|
|
|
(
|
)
|
(
|
)
|
||||||||||||||||||||
Balance at June 30, 2022
|
|
$
|
|
$ |
$
|
|
$
|
(
|
)
|
$
|
(
|
)
|
$
|
|
Six Months Ended June 30,
|
||||||||
2023
|
2022
|
|||||||
Operating activities:
|
||||||||
Net loss
|
$
|
(
|
)
|
$
|
(
|
)
|
||
Adjustments to reconcile net loss to net cash used in operating activities:
|
||||||||
Depreciation and amortization of property and equipment
|
|
|
||||||
Amortization of finance lease right of use asset
|
||||||||
Write down of property and equipment, net
|
||||||||
Stock-based compensation
|
|
|
||||||
Amortization of premium and accretion of discount on investments, net
|
( |
) | ||||||
Changes in operating assets and liabilities:
|
||||||||
Prepaid expenses and other assets
|
|
(
|
)
|
|||||
Accounts payable and accrued expenses
|
(
|
)
|
|
|||||
Operating lease liabilities
|
|
(
|
)
|
|||||
Finance lease liability
|
|
|
||||||
Other liabilities
|
(
|
)
|
(
|
)
|
||||
Net cash used in operating activities
|
(
|
)
|
(
|
)
|
||||
Investing activities:
|
||||||||
Purchases of investments
|
(
|
)
|
(
|
)
|
||||
Proceeds from maturities of investments
|
|
|
||||||
Payments made to acquire right of use asset
|
( |
) | ||||||
Purchases of property and equipment
|
(
|
)
|
(
|
)
|
||||
Net cash (used in) provided by investing activities
|
(
|
)
|
|
|||||
Financing activities:
|
||||||||
Issuance of common stock, pursuant to exercise of stock options
|
|
|
||||||
Exercise of warrants
|
||||||||
Issuance of common stock pursuant to the at-the-market offering program, net of issuance costs
|
||||||||
Net cash provided by financing activities
|
|
|
||||||
Net change in cash, cash equivalents and restricted cash
|
(
|
)
|
(
|
)
|
||||
Cash, cash equivalents and restricted cash at beginning of period
|
|
|
||||||
Cash, cash equivalents and restricted cash at end of period
|
$
|
|
$
|
|
||||
|
||||||||
Supplemental disclosure of non-cash financing and investing activities:
|
||||||||
Accrued purchases of property and equipment, ending balance
|
$
|
|
$
|
|
||||
Unrealized loss on investments
|
$
|
(
|
)
|
$
|
(
|
)
|
1. |
Nature of Business
|
2. |
Risks and Liquidity
|
3. |
Basis of Presentation, Principles of Consolidation and Summary of Significant
Accounting Policies
|
June 30, | December 31, | |||||||
2023
|
2022
|
|||||||
Cash and cash equivalents
|
$
|
|
$
|
|
||||
Restricted cash
|
|
|
||||||
|
$
|
|
$
|
|
•
|
Level 1—Valuations based on unadjusted quoted prices in active markets for identical assets or liabilities that the Company has the ability to access at the measurement
date.
|
•
|
Level 2—Valuations based on quoted prices for similar assets or liabilities in markets that are not active or for which all significant inputs are observable, either directly
or indirectly.
|
•
|
Level 3—Valuations that require inputs that reflect the Company’s own assumptions that are both significant to the fair value measurement and unobservable.
|
4. |
Fair Value of Financial Instruments
|
Fair Value Measurements as of
|
||||||||||||||||
June 30, 2023 Using:
|
||||||||||||||||
Level 1
|
Level 2
|
Level 3
|
Total
|
|||||||||||||
Assets:
|
||||||||||||||||
Cash equivalents:
|
||||||||||||||||
Money market mutual funds
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
Corporate Bonds
|
|
|
|
|
||||||||||||
United States Treasury securities
|
|
|
|
|
||||||||||||
|
|
|
|
|||||||||||||
Investments:
|
||||||||||||||||
Commercial Paper
|
|
|
|
|
||||||||||||
United States Treasury securities
|
|
|
|
|
||||||||||||
Corporate Bonds
|
|
|
|
|
||||||||||||
Agency Bonds
|
|
|
|
|
||||||||||||
|
|
|
|
|||||||||||||
Total assets
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
Liabilities:
|
||||||||||||||||
Warrant liability
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
Total liabilities
|
$
|
|
$
|
|
$
|
|
$
|
|
Fair Value Measurements as of
|
||||||||||||||||
December 31, 2022 Using:
|
||||||||||||||||
Level 1
|
Level 2
|
Level 3
|
Total
|
|||||||||||||
Assets:
|
||||||||||||||||
Cash equivalents:
|
||||||||||||||||
Money market mutual funds
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
Commercial Paper
|
|
|
|
|
||||||||||||
United States Treasury Securities
|
|
|
|
|
||||||||||||
Corporate Bonds
|
|
|
|
|
||||||||||||
|
|
|
|
|||||||||||||
Investments:
|
||||||||||||||||
Commercial Paper
|
|
|
|
|
||||||||||||
United States Treasury securities
|
|
|
|
|
||||||||||||
Corporate Bonds
|
|
|
|
|
||||||||||||
Agency Bonds
|
|
|
|
|
||||||||||||
|
|
|
|
|||||||||||||
Total assets
|
$
|
|
$
|
|
$
|
|
$
|
|
Liabilities:
|
||||||||||||||||
Warrant liability
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
Total liabilities
|
$
|
|
$
|
|
$
|
|
$
|
|
Warrant Liability
|
||||
Balance, December 31, 2022
|
$
|
|
||
Fair value adjustments
|
(
|
)
|
||
Balance, June 30, 2023
|
$
|
|
June 30,
2023
|
December 31,
2022
|
|||||||
Stock price
|
$
|
|
$
|
|
||||
Exercise price
|
$
|
|
$
|
|
||||
Expected volatility
|
|
%
|
|
%
|
||||
Risk-free interest rate
|
|
%
|
|
%
|
||||
Expected dividend yield
|
|
|
||||||
Expected life (years)
|
|
|
||||||
Fair value per warrant
|
$
|
|
$
|
|
5. |
Property and Equipment, Net
|
June 30, | December 31, | |||||||
2023 |
2022
|
|||||||
Laboratory equipment
|
$
|
|
$
|
|
||||
Machinery and equipment
|
|
|
||||||
Computer equipment
|
|
|
||||||
Furniture and fixtures
|
|
|
||||||
Leasehold improvements
|
|
|
||||||
Internal use software
|
|
|
||||||
|
|
|
||||||
Less: accumulated depreciation and amortization
|
(
|
)
|
(
|
)
|
||||
|
$
|
|
$
|
|
6. |
Intangible Assets and Goodwill
|
Gross
Carrying
Value
|
Accumulated Amortization
|
Intangible
Assets, Net
|
||||||||||
In process research & development
|
$
|
|
$
|
-
|
$
|
|
||||||
Mice colony model
|
|
-
|
|
|||||||||
Total intangible assets
|
$
|
|
$
|
-
|
$
|
|
7. |
Accounts Payable and Accrued Expenses
|
June 30, | December 31, | |||||||
2023
|
2022
|
|||||||
Research and development
|
$
|
|
$
|
|
||||
Employee compensation
|
|
|
||||||
Property and equipment
|
|
|
||||||
Professional fees
|
|
|
||||||
Acquisition related expenses | ||||||||
Government grant payable
|
|
|
||||||
Other
|
|
|
||||||
|
$
|
|
$
|
|
8. |
Stockholders’ Equity
|
9. |
Stock-Based Compensation
|
Six Months
Ended June 30,
|
||||||||
|
2023
|
2022
|
||||||
Risk-free interest rate
|
|
%
|
|
%
|
||||
Expected term (in years)
|
|
|
||||||
Expected volatility
|
|
%
|
|
%
|
||||
Expected dividend yield
|
|
|
||||||
Exercise price
|
$
|
|
$
|
|
||||
Fair value of common stock
|
$
|
|
$
|
|
Weighted | Weighted | |||||||||||||||
Average | Average | Aggregate | ||||||||||||||
Number of | Exercise | Contractual | Intrinsic | |||||||||||||
Shares | Price |
Term (Years)
|
Value | |||||||||||||
Outstanding as of December 31, 2022
|
|
$
|
|
|
$
|
|
||||||||||
Granted
|
|
|
|
|||||||||||||
Exercised
|
(
|
)
|
|
|
|
|||||||||||
Cancelled or forfeited
|
(
|
)
|
|
|||||||||||||
Outstanding as of June 30,
2023
|
|
$
|
|
|
$
|
|
||||||||||
|
||||||||||||||||
Options vested and exercisable as of June 30, 2023
|
|
$
|
|
|
$
|
|
||||||||||
Options unvested as of June 30,
2023
|
|
$
|
|
|
$ |
Weighted | ||||||||
Average | ||||||||
Number of
|
Grant Date
|
|||||||
Shares
|
Fair Value
|
|||||||
Unvested as of December 31, 2022
|
|
$
|
|
|||||
Granted
|
|
|
|
|||||
Vested(1)
|
( |
) | |
|||||
Forfeited
|
( |
) | |
|||||
Unvested as of June 30, 2023
|
|
$ |
|
Three Months Ended
June 30,
|
Six Months
Ended
June 30,
|
|||||||||||||||
|
2023
|
2022
|
2023
|
2022
|
||||||||||||
Stock options
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
Restricted stock units
|
|
|
|
|
||||||||||||
Total stock-based compensation expense
|
$
|
|
$
|
|
$
|
|
$
|
|
Three Months Ended
June 30,
|
Six Months Ended
June 30,
|
|||||||||||||||
|
2023
|
2022
|
2023
|
2022
|
||||||||||||
Research and development
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
General and administrative
|
|
|
|
|
||||||||||||
Total stock-based compensation expense
|
$
|
|
$
|
|
$
|
|
$
|
|
10. |
Warrants
|
Exercise Price
|
Outstanding
|
Grant/Assumption Date
|
Expiration Date
|
|||
|
|
|
|
|||
|
|
|
|
|||
|
|
|
|
|||
|
|
|
|
|||
|
|
|
|
|||
|
|
|
|
|||
Total
|
|
Number of | ||||||||
Warrant Shares | ||||||||
Outstanding and | Exercise Price | |||||||
Exercisable
|
per Share
|
|||||||
Balance as of December 31, 2022
|
|
|||||||
Granted | $ | |||||||
Exercised
|
(
|
)
|
|
|||||
Expired
|
( |
) | $ | |||||
Balance as of June 30, 2023
|
|
11. |
Net Loss Per Share
|
|
Three Months Ended June 30,
|
Six Months Ended June 30,
|
||||||||||||||
|
2023
|
2022
|
2023
|
2022
|
||||||||||||
Numerator:
|
||||||||||||||||
Net loss attributable to common stockholders
|
$
|
(
|
)
|
$
|
(
|
)
|
$
|
(
|
)
|
$
|
(
|
)
|
||||
Denominator:
|
||||||||||||||||
Weighted-average common shares outstanding - basic and diluted
|
|
|
|
|
||||||||||||
Net loss per share attributable to common stockholders - basic and diluted
|
$
|
(
|
)
|
$
|
(
|
)
|
$
|
(
|
)
|
$
|
(
|
)
|
|
Three and Six Months Ended
June 30,
|
|||||||
|
2023
|
2022
|
||||||
Warrants exercisable for common shares
|
|
|
||||||
Restricted stock units convertible for common shares
|
|
|
||||||
Options to purchase common shares
|
|
|
||||||
|
|
|
12. |
Commitments and Contingencies
|
Six Months Ended |
||||
Lease cost
|
June 30, 2023
|
|||
Operating lease cost
|
$
|
|
||
Finance lease cost
|
||||
Amortization of right of use assets
|
|
|||
Interest on lease liabilities
|
|
|||
Total lease cost
|
$
|
|
Fiscal Year Ending
December 31,
|
June 30, 2023
|
|||
2023 (six months)
|
|
|||
2024
|
|
|||
2025
|
|
|||
2026
|
|
|||
2027 | ||||
Thereafter | ||||
Total lease payments
|
$
|
|
||
Less: interest
|
(
|
)
|
||
Total operating lease liabilities
|
$
|
|
Fiscal Year Ending December 31,
|
June 30, 2023
|
|||
2023 (six months)
|
|
|||
2024
|
|
|||
2025
|
|
|||
2026
|
|
|||
2027
|
|
|||
Thereafter
|
|
|||
Total lease payments
|
$
|
|
||
Less: interest
|
(
|
)
|
||
Total finance lease liability
|
$
|
|
Leases
|
June 30, 2023
|
|||
Operating right-of-use assets
|
$
|
|
||
|
||||
Operating current lease liabilities
|
|
|||
Operating noncurrent lease liabilities
|
|
|||
Total operating lease liabilities
|
$
|
|
||
|
||||
Finance right-of-use assets
|
$
|
|
||
Finance current lease liability
|
|
|||
Finance noncurrent lease liability
|
|
|||
Total finance lease liability
|
$
|
|
Other information
|
||||
Cash paid for amounts included in the measurement of lease liabilities:
|
||||
Operating cash flows from operating leases
|
$
|
|
||
Cash flows from finance lease
|
$
|
|
||
Weighted-average remaining lease term - operating leases
|
|
|||
Weighted-average remaining lease term - finance lease
|
|
|||
Weighted-average discount rate - operating leases
|
|
%
|
||
Weighted-average discount rate - finance lease
|
|
%
|
13. |
Agreements Related to Intellectual Property
|
14. |
Renovacor Acquisition
|
Shares
|
Value
|
Total
|
||||||||||
Stock consideration
|
|
$
|
|
$
|
|
|||||||
Cash consideration(1)
|
- |
|
||||||||||
Stock options
|
|
|
||||||||||
Time-vesting RSUs
|
|
|
||||||||||
Assumed warrants(2)
|
|
|
||||||||||
Total consideration
|
|
$
|
|
Working capital(1)
|
$
|
(
|
)
|
|
Cash and cash equivalents
|
|
|||
Property and equipment
|
|
|||
Operating lease right-of-use assets
|
|
|||
Other non-current assets
|
|
|||
IPR&D
|
|
|||
Other intangible asset
|
|
|||
Operating lease liability
|
(
|
)
|
||
Deferred tax liability
|
(
|
)
|
||
Net assets acquired
|
|
|||
Goodwill
|
|
|||
Purchase consideration
|
$
|
|
15. |
CIRM Grants
|
16. |
Related Party Transactions
|
17. |
401(k) Savings Plan
|
Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations
|
• |
New York Heart Association (“NYHA”) Functional Classification is the most commonly used heart failure classification system. NYHA Class II is where a patient exhibits a slight limitation of physical activity,
is comfortable at rest, and ordinary physical activity results in fatigue, palpitation and/or dyspnea. Class I is where a patient exhibits no limitation of physical activity and ordinary physical activity does not cause undue fatigue,
palpitation and/or dyspnea. Class III and IV are considered more severe or advanced heart failure.
|
• |
Brain natriuretic peptide (“BNP”) is a blood-based evaluation and a key marker of heart failure with prognostic significance in CHF and cardiomyopathies. Elevations in BNP are strongly associated with
worsening heart failure and poor outcomes in cardiovascular disease.
|
• |
High sensitivity troponin I (“hsTnI”) is a blood-based evaluation and a key marker of cardiac injury, one that is (like BNP) frequently elevated in DD patients and has been shown to be markedly elevated in
patients with advanced stage disease.
|
• |
Echocardiographic measurements of heart thickness, most notably, left ventricular mass (“LVM”) and maximal left ventricular wall thickness (“MLVWT”), indicate the degree of hypertrophy present in the heart.
|
• |
Kansas City Cardiovascular Questionnaire (“KCCQ”) is a validated, patient-reported outcomes assessment that measures a patients perception of their heart failure symptoms, impact of disease on physical and
social function, and the impact of their heart failure on overall health status and quality of life. Assessment scores range from 0 (very poor health status) to 100 (excellent health status). Changes in KCCQ score of +/- 5 points are
considered meaningful and have been shown to correlate with outcomes.
|
• |
Histologic examination of endomyocardial biopsies via hematoxylin and eosin (“H&E”) histology and electron microscopy is used to detect evidence of DD-associated tissue derangements, including the
presence of autophagic vacuoles and disruption of myofibrillar architecture, each of which are characteristic of DD-related myocardial damage.
|
• |
LAMP2B gene expression in endomyocardial biopsy samples is measured via both immunohistochemistry and Western blot and confirms the presence of LAMP2B protein in DD cardiac tissue following RP-A501
treatment.
|
• |
expenses incurred under agreements with research institutions and consultants that conduct R&D activities including process development, preclinical, and clinical activities on our behalf;
|
• |
costs related to process development, production of preclinical and clinical materials, including fees paid to contract manufacturers and manufacturing input costs for use in internal manufacturing processes;
|
• |
consultants supporting process development and regulatory activities; and
|
• |
costs related to in-licensing of rights to develop and commercialize our product candidate portfolio.
|
• |
salaries and personnel-related costs, including benefits, travel, and stock-based compensation, for our scientific personnel performing R&D activities;
|
• |
facilities and other expenses, which include expenses for rent and maintenance of facilities, and depreciation expense; and
|
• |
laboratory supplies and equipment used for internal R&D activities.
|
Three Months Ended June 30,
|
Six Months Ended June 30,
|
|||||||||||||||
2023
|
2022
|
2023
|
2022
|
|||||||||||||
Direct Expenses:
|
||||||||||||||||
Danon Disease (AAV) RP-A501
|
$
|
6,993
|
$
|
9,568
|
$
|
13,396
|
$
|
15,942
|
||||||||
Leukocyte Adhesion Deficiency (LV) RP-L201
|
7,299
|
7,044
|
13,140
|
10,095
|
||||||||||||
Fanconi Anemia (LV) RP-L102
|
6,740
|
4,557
|
13,288
|
9,087
|
||||||||||||
Pyruvate Kinase Deficiency (LV) RP-L301
|
1,288
|
632
|
1,587
|
1,486
|
||||||||||||
Infantile Malignant Osteopetrosis (LV) RP-L401(1)
|
-
|
-
|
-
|
190
|
||||||||||||
Other product candidates
|
5,021
|
3,776
|
8,460
|
7,030
|
||||||||||||
Total direct expenses
|
27,341
|
25,577
|
49,871
|
43,830
|
||||||||||||
Unallocated Expenses
|
||||||||||||||||
Employee compensation
|
$
|
11,687
|
$
|
6,964
|
$
|
22,897
|
$
|
12,511
|
||||||||
Stock based compensation expense
|
4,638
|
2,889
|
8,457
|
5,207
|
||||||||||||
Depreciation and amortization expense
|
1,183
|
1,060
|
2,320
|
1,887
|
||||||||||||
Laboratory and related expenses
|
4,137
|
1,291
|
9,239
|
2,518
|
||||||||||||
Professional Fees
|
933
|
629
|
1,918
|
1,190
|
||||||||||||
Other expenses
|
1,464
|
2,946
|
3,052
|
5,007
|
||||||||||||
Total other research and development expenses
|
24,042
|
15,779
|
47,883
|
28,320
|
||||||||||||
Total research and development expense
|
$
|
51,383
|
$
|
41,356
|
$
|
97,754
|
$
|
72,150
|
• |
the scope, rate of progress, and expense of ongoing as well as any clinical studies and other R&D activities that we undertake;
|
• |
future clinical study results;
|
• |
uncertainties in clinical study enrollment rates;
|
• |
changing standards for regulatory approval; and
|
• |
the timing and receipt of any regulatory approvals.
|
• |
the scope, progress, outcome and costs of our clinical trials and other R&D activities;
|
• |
the efficacy and potential advantages of our product candidates compared to alternative treatments, including any standard of care;
|
• |
the market acceptance of our product candidates;
|
• |
obtaining, maintaining, defending, and enforcing patent claims and other intellectual property rights;
|
• |
significant and changing government regulation; and
|
• |
the timing, receipt, and terms of any marketing approvals.
|
Three Months Ended June 30,
|
||||||||||||
2023
|
2022
|
Change
|
||||||||||
Operating expenses:
|
||||||||||||
Research and development
|
$
|
51,383
|
$
|
41,356
|
$
|
10,027
|
||||||
General and administrative
|
17,374
|
12,854
|
4,520
|
|||||||||
Total operating expenses
|
68,757
|
54,210
|
14,547
|
|||||||||
Loss from operations
|
(68,757
|
)
|
(54,210
|
)
|
(14,547
|
)
|
||||||
Interest expense
|
(468
|
)
|
(465
|
)
|
(3
|
)
|
||||||
Interest and other income, net
|
846
|
669
|
177
|
|||||||||
Accretion of discount and amortization of premium on investments - net
|
2,678
|
(396
|
)
|
3,074
|
||||||||
Total other income (expense), net
|
3,056
|
(192
|
)
|
3,248
|
||||||||
Net loss
|
$
|
(65,701
|
)
|
$
|
(54,402
|
)
|
$
|
(11,299
|
)
|
Six Months Ended June 30,
|
||||||||||||
2023
|
2022
|
Change
|
||||||||||
Operating expenses:
|
||||||||||||
Research and development
|
$
|
97,754
|
$
|
72,150
|
$
|
25,604
|
||||||
General and administrative
|
33,197
|
24,624
|
8,573
|
|||||||||
Total operating expenses
|
130,951
|
96,774
|
34,177
|
|||||||||
Loss from operations
|
(130,951
|
)
|
(96,774
|
)
|
(34,177
|
)
|
||||||
Interest expense
|
(936
|
)
|
(928
|
)
|
(8
|
)
|
||||||
Interest and other income, net
|
2,754
|
1,291
|
1,463
|
|||||||||
Accretion of discount and amortization of premium on investments - net
|
5,097
|
(973
|
)
|
6,070
|
||||||||
Total other income (expense), net
|
6,915
|
(610
|
)
|
7,525
|
||||||||
Net loss
|
$
|
(124,036
|
)
|
$
|
(97,384
|
)
|
$
|
(26,652
|
)
|
Six Months Ended June 30,
|
||||||||
2023
|
2022
|
|||||||
Net cash used in operating activities
|
$
|
(108,429
|
)
|
$
|
(78,262
|
)
|
||
Net cash (used in) provided by investing activities
|
(5,515
|
)
|
15,794
|
|||||
Net cash provided by financing activities
|
18,525
|
17,322
|
||||||
Net decrease in cash, cash equivalents and restricted cash
|
$
|
(95,419
|
)
|
$
|
(45,146
|
)
|
Item 3. |
Quantitative and Qualitative Disclosures About Market Risk
|
Item 1. |
Legal Proceedings
|
Item 1A. |
Risk Factors
|
Item 2. |
Unregistered Sales of Equity Securities, Use of Proceeds and Issuer Purchases of Equity Securities
|
Item 3. |
Defaults Upon Senior Securities
|
Item 4. |
Mine Safety Disclosures
|
Item 5. |
Other Information
|
Item 6. |
Exhibits
|
Exhibit
Number
|
Description of Exhibit
|
|
Agreement and Plan of Merger and Reorganization, dated as of September 12, 2017, by and among Inotek Pharmaceuticals Corporation, Rocket Pharmaceuticals, Ltd., and Rome Merger Sub
(incorporated by reference to Exhibit 2.1 to the Company’s Current Report on Form 8- K (001-36829), filed with the SEC on September 13, 2017)
|
||
Agreement and Plan of Merger, dated September 19, 2022, by and among Rocket Pharmaceuticals, Renovacor, Inc., Zebrafish Merger Sub, Inc. and Zebrafish Merger Sub II, LLC (incorporated by reference to Exhibit 2.1 to the Company’s Current
Report on Form 8-K (001-36829), filed with the SEC on September 20, 2022).
|
||
Seventh Amended and Restated Certificate of Incorporation of Rocket Pharmaceuticals, Inc., effective as of February 23, 2015(incorporated by reference to Exhibit 3.1 to the Company’s
Annual Report on Form 10-K (001-36829), filed with the SEC on March 31, 2015)
|
||
Certificate of Amendment (Reverse Stock Split) to the Seventh Amended and Restated Certificate of Incorporation of the Registrant, effective as of January 4, 2018 (incorporated by
reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K (001-36829), filed with the SEC on January 5, 2018)
|
||
Certificate of Amendment (Name Change) to the Seventh Amended and Restated Certificate of Incorporation of the Registrant, effective January 4, 2018 (incorporated by reference to Exhibit
3.2 to the Company’s Current Report on Form 8-K (001-36829), filed with the SEC on January 5, 2018)
|
||
Certificate of Amendment (Declassify Board of Directors) to the Seventh Amended and Restated Certificate of Incorporation of the Registrant, effective as of June 25, 2018 (incorporated by
reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K (001-36829), filed with the SEC on June 25, 2019
|
||
|
Amended and Restated By-Laws of Rocket Pharmaceuticals, Inc., effective as of March 29, 2018 (incorporated by reference to Exhibit 3.2 to the Company’s Current Report on Form 8-K (001-36829),
filed with the SEC on April 4, 2018)
|
|
Severance and Change in Control Policy, effective as of February 14, 2023.
|
||
Certification of Principal Executive Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley
Act of 2002
|
||
Certification of Principal Financial Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley
Act of 2002
|
||
Certification of Principal Executive Officer and Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
|
||
101.INS
|
Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the inline XBRL document.
|
|
101.SCH
|
Inline XBRL Taxonomy Extension Schema Document.
|
|
101.CAL
|
Inline XBRL Taxonomy Extension Calculation Document.
|
|
101.DEF
|
Inline XBRL Taxonomy Extension Definition Linkbase Document.
|
|
101.LAB
|
Inline XBRL Taxonomy Extension Labels Linkbase Document.
|
|
101.PRE
|
Inline XBRL Taxonomy Extension Presentation Link Document.
|
|
104
|
Cover Page Interactive Data File (the cover page XBRL tags are embedded within the Inline XBRL document)
|
* |
Filed herewith.
|
** |
The certification furnished in Exhibit 32.1 hereto is deemed to be furnished with this Quarterly Report on Form 10-Q and will not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of
1934, as amended, except to the extent that the Registrant specifically incorporates it by reference
|
ROCKET PHARMACEUTICALS, INC.
|
||
August 9, 2023
|
By:
|
/s/ Gaurav Shah, MD
|
Gaurav Shah, MD
|
||
Chief Executive Officer and Director
|
||
(Principal Executive Officer)
|
||
August 9, 2023
|
By:
|
/s/ John Militello
|
John Militello
|
||
VP of Finance, Senior Controller and Treasurer
|
||
(Interim Principal Financial Officer and Principal Accounting Officer)
|