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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-K
(Mark One)
☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2020
OR
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission File Number: 001-37625
Voyager Therapeutics, Inc.
(Exact Name of Registrant as Specified in Its Charter)
Delaware
(State or Other Jurisdiction of
Incorporation or Organization)
75 Sidney Street,
Cambridge, Massachusetts
(Address of Principal Executive Offices)
46-3003182
(IRS Employer
Identification No.)
02139
(Zip Code)
(857) 259-5340
(Registrant’s Telephone Number, Including Area Code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Common Stock, $0.001 par value
Trading Symbol(s)
VYGR
Name of each exchange on which registered
Nasdaq Global Select Market
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No ☒
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐ No ☒
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past
90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of
this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging
growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the
Exchange Act.
Large accelerated filer
Non-accelerated filer
☐
☐
Accelerated filer
Smaller reporting company
Emerging growth company
☒
☒
☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised
financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over
financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☒
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ☒
The aggregate market value of Common Stock held by non-affiliates of the registrant computed by reference to the price of the registrant’s Common Stock as of June
30, 2020, the last business day of the registrant’s most recently completed second fiscal quarter, was approximately $291.7 million (based on the last reported sale price on
the Nasdaq Global Select Market as of such date).
As of February 19, 2021, there were 37,653,805 shares of the registrant’s common stock, par value $0.001 per share, outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the registrant’s definitive Proxy Statement relating to its 2021 Annual Meeting of Stockholders are incorporated by reference into Part III of this Annual
Report on Form 10-K where indicated. Such Proxy Statement is expected to be filed with the U.S. Securities and Exchange Commission not later than 120 days after the
end of the fiscal year to which this report relates.
Table of Contents
Table of Contents
PART I.
Item 1.
Item 1A.
Item 1B.
Item 2.
Item 3.
Item 4.
PART II.
Item 5.
Item 6.
Item 7.
Item 7A.
Item 8.
Item 9.
Item 9A.
Item 9B.
PART III.
Item 10.
Item 11.
Item 12.
Item 13.
Item 14.
PART IV.
Item 15.
Item 16.
Signatures
Business
Risk Factors
Unresolved Staff Comments
Properties
Legal Proceedings
Mine Safety Disclosures
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer
Purchases of Equity Securities
Selected Financial Data
Management’s Discussion and Analysis of Financial Condition and Results of
Operations
Quantitative and Qualitative Disclosures about Market Risk
Financial Statements and Supplementary Data
Changes in and Disagreements with Accountants on Accounting and Financial
Disclosure
Controls and Procedures
Other Information
Directors, Executive Officers and Corporate Governance
Executive Compensation
Security Ownership of Certain Beneficial Owners and Management and Related
Stockholder Matters
Certain Relationships and Related Transactions, and Director Independence
Principal Accountant Fees and Services
Exhibits, Financial Statement Schedules
Form 10-K Summary
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FORWARD-LOOKING STATEMENTS
This Annual Report on Form 10-K contains forward-looking statements that involve substantial risks and
uncertainties. All statements other than statements of historical facts contained in this Annual Report on Form 10-K,
including statements regarding our strategy, future operations, future financial position, future revenue, projected costs,
prospects, plans, objectives of management and expected market growth, are forward-looking statements. These statements
involve known and unknown risks, uncertainties and other important factors that may cause our actual results, performance
or achievements to be materially different from any future results, performance or achievements expressed or implied by
the forward-looking statements.
The words “anticipate,” “believe,” “estimate,” “expect,” “intend,” “may,” “might,” “plan,” “predict,” “project,”
“target,” “potential,” “contemplate,” “anticipate,” “goals,” “will,” “would,” “could,” “should,” “continue,” and similar
expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these
identifying words. These forward-looking statements include, among other things, statements about:
● our plans to develop and commercialize our product candidates based on adeno-associated virus, or AAV,
gene therapy;
● our ability to identify and optimize product candidates and novel AAV gene therapy capsids;
● our strategic collaboration with and funding from our collaboration partner Neurocrine Biosciences, Inc., or
Neurocrine;
● our ongoing and planned clinical trials and related timelines, and our preclinical development efforts and
studies;
● formulation changes to our product candidates that may require us to conduct additional clinical studies to
bridge our modified product candidates to earlier versions;
● our ability to resolve the clinical hold placed on our investigational new drug, or IND, application for our
planned Phase 1b clinical trial to evaluate VY-HTT01 for the treatment of Huntington’s disease and the
clinical hold placed on the RESTORE-1 Phase 2 clinical trial for VY-AADC (NBIb-1817) as treatment for
Parkinson’s disease and the requirements for and timing of any such resolution of the clinical holds;
● the timing of and our ability to submit applications for, and obtain and maintain regulatory approvals for our
product candidates, including the ability to file IND applications for our programs;
● our estimates regarding expenses, future revenues, capital requirements, and needs for additional financing;
● our ability to continue to develop our gene therapy platform;
● our ability to develop a manufacturing capability compliant with current good manufacturing practices for
our product candidates;
● our ability to access, develop, and obtain regulatory clearance for devices to deliver our AAV gene therapies
to critical targets of neurological disease;
● our intellectual property position and our ability to obtain, maintain and enforce intellectual property
protection for our proprietary assets;
● our estimates regarding the size of the potential markets for our product candidates and our ability to serve
those markets;
● the rate and degree of market acceptance of our product candidates for any indication once approved;
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● our plans and ability to raise additional capital, including through equity offerings, debt financings,
collaborations, strategic alliances, and licensing arrangements;
● our competitive position and the success of competing products that are or become available for the
indications that we are pursuing;
● the impact of government laws and regulations including in the United States, the European Union, and other
important geographies such as Japan;
● our ability to enter into future collaborations, strategic alliances, or licensing arrangements; and
● the potential impact of the coronavirus disease, or COVID-19, pandemic on our clinical trials and other
business operations.
These forward-looking statements are only predictions and we may not actually achieve the plans, intentions or
expectations disclosed in our forward-looking statements. You should not place undue reliance on our forward-looking
statements. Actual results or events could differ materially from the plans, intentions and expectations disclosed in the
forward-looking statements we make. We have based these forward-looking statements largely on our current expectations
and projections about future events and trends that we believe may affect our business, financial condition and operating
results. We have included important factors in the cautionary statements included in this Annual Report on Form 10-K,
particularly in “Part I, Item 1A - Risk Factors” that could cause actual future results or events to differ materially from the
forward-looking statements that we make. Our forward-looking statements do not reflect the potential impact of any future
acquisitions, mergers, dispositions, joint ventures or investments we may make.
You should read this Annual Report on Form 10-K and the documents that we have filed as exhibits to the Annual
Report on Form 10-K with the understanding that our actual future results may be materially different from what we
expect. We do not assume any obligation to update any forward-looking statements whether as a result of new information,
future events or otherwise, except as required by applicable law.
RISK FACTOR SUMMARY
Investment in our securities involves risk and uncertainties that you should be aware of when evaluating our
business. The following is a summary of what we believe to be the principal risks facing our business, as more fully
described under “ Part I, Item 1A - Risk Factors” and elsewhere in this Annual Report on Form 10-K. The risks and
uncertainties described below are not the only risks and uncertainties we face. Additional risks and uncertainties not
presently known to us or that we presently deem less significant may also impair our business operations.
● We have incurred significant losses in every year prior to 2020 and anticipate that we will incur losses for the
foreseeable future and may never achieve or maintain consistent profitability. We may not be able to generate
sufficient revenue from the commercialization of our product candidates and may never be consistently
profitable.
● We will need to raise additional funding, which may not be available on acceptable terms, or at all. Failure to
obtain this necessary capital when needed may force us to delay, limit or terminate certain of our product
development efforts or other operations.
● To date, all of our revenue has been derived from our collaborations with Sanofi Genzyme Corporation,
AbbVie Biotechnology Ltd., AbbVie Ireland Unlimited Company and Neurocrine Biosciences, Inc. If any
ongoing or future collaboration agreements were to be terminated, our business financial condition, results of
operations and prospects could be harmed.
● Our AAV gene therapy product candidates are based on a novel technology, which makes it difficult and
potentially infeasible to predict the duration and cost of development of, and of subsequently obtaining
regulatory approval for, our product candidates.
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● Regulatory requirements governing gene and cell therapy products have changed frequently and may
continue to change in the future. Such requirements may lengthen the regulatory review process, require us to
modify current studies or perform additional studies or increase our development costs, which in turn may
force us to delay, limit, or terminate certain of our programs.
● We may encounter substantial delays or difficulties in commencement, enrollment or completion of our
preclinical studies or clinical trials, or may fail to demonstrate safety and efficacy to the satisfaction of
applicable regulatory authorities, which could prevent us from commercializing our current and future
product candidates on a timely basis, if at all.
● Our product candidates or the process for administering our product candidates may cause undesirable side
effects or have other properties that could delay or prevent their regulatory approval, limit their commercial
potential or result in significant negative consequences following any potential marketing approval.
● We face significant competition in an environment of rapid technological change and the possibility that our
competitors may achieve regulatory approval before us or develop therapies that are more advanced or
effective than ours, which may harm our business and financial condition, and our ability to successfully
market or commercialize our product candidates.
● Gene therapies and their companion diagnostics are novel, complex and difficult to manufacture. We could
experience manufacturing problems that result in delays in the development or commercialization of our
product candidates or otherwise harm our business.
● Our gene therapy approach utilizes vectors derived from viruses, which may be perceived as unsafe or may
result in unforeseen adverse events. Negative public opinion and increased regulatory scrutiny of gene
therapy may damage public perception of the safety of our product candidates and adversely affect our ability
to conduct our business or obtain regulatory approvals for our product candidates.
● If we are unable to obtain and maintain patent protection for our products and technology, or if the scope of
the patent protection obtained is not sufficiently broad, our competitors could develop and commercialize
products and technology similar or identical to ours, and our ability to successfully commercialize our
products and technology may be adversely affected.
● A widespread outbreak of an illness or other health issue could significantly disrupt our operations. The
current COVID-19 pandemic and the response to it have had, and we expect they will continue to have, an
adverse effect on our business, operations, and future results.
ITEM 1.
BUSINESS
PART I
We are a clinical-stage gene therapy company focused on developing life-changing treatments for patients
suffering from severe neurological diseases. We focus on neurological diseases where we believe an adeno-associated
virus, or AAV, gene therapy approach that either increases or decreases the production of a specific protein can slow or
reduce the symptoms experienced by patients, and therefore have a clinically meaningful impact. We have built a gene
therapy platform that we believe positions us to be a leading company at the intersection of AAV gene therapy and severe
neurological disease. Our gene therapy platform enables us to engineer, optimize, manufacture and deliver our AAV-based
gene therapies that have the potential to provide durable efficacy following a single administration.
Additionally, we are working to identify novel AAV capsids, which are the outer viral protein shells that enclose
the genetic material of the virus payload. Our team of experts in the fields of AAV gene therapy and neuroscience first
identifies and selects severe neurological diseases that are well-suited for treatment using AAV gene therapy. We then
engineer and optimize AAV vectors for delivery of the virus payload to the targeted tissue or cells. Our manufacturing
process employs an established system that we believe will enable production of high quality AAV vectors at commercial
scale. In addition to our capsid optimization efforts, we leverage novel delivery paradigms,
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established routes of administration, and advances in dosing techniques to optimize delivery of our AAV gene therapies to
target tissues, regions and cell types that are critical to the disease of interest. We believe we can achieve this directly, with
targeted infusions to discrete regions of the brain or spinal cord, or systemically, in conjunction with our novel capsids.
Our business strategy focuses on discovering, developing, manufacturing and commercializing our gene therapy
programs. As part of this strategy, we have developed core competencies specific to AAV gene therapy development and
manufacturing and are beginning to build our commercial infrastructure. This business strategy also includes business
development activities that may include in-licensing activities or partnering certain programs in specific geographies with
collaborators, as we have demonstrated through our ongoing collaboration with Neurocrine Biosciences, Inc., which we
refer to as Neurocrine. Since our inception, our operations have focused on organizing and staffing our company, business
planning, raising capital, establishing our intellectual property portfolio, determining which neurological diseases to pursue,
advancing our product candidates including delivery and manufacturing, and conducting preclinical studies and clinical
trials. We do not have any product candidates approved for sale and have not generated any revenue from product sales. We
have funded our operations primarily through private placements of redeemable convertible preferred stock, public
offerings of our common stock and our strategic collaborations, including our prior collaborations with Sanofi Genzyme
Corporation, or Sanofi Genzyme, and AbbVie Biotechnology Ltd. and AbbVie Ireland Unlimited Company, which we
collectively refer to as AbbVie, and our ongoing collaboration with Neurocrine.
Our pipeline of gene therapy programs is summarized in the table below:
Our pipeline consists of wholly-owned programs for severe neurological indications, including Huntington’s
disease; a monogenic form of amyotrophic lateral sclerosis, or ALS; and tau-related diseases including Alzheimer’s
disease, frontotemporal dementia, or FTD, and progressive supranuclear palsy, or PSP. We may seek orphan drug
designation, breakthrough therapy designation, or other expedited review processes for certain of our product candidates in
the United States, Europe, and Japan. Additionally, we have partnered with Neurocrine on programs for severe neurological
diseases including Parkinson’s disease and Friedreich’s ataxia. We refer to our collaboration with Neurocrine as the
Neurocrine Collaboration.
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As part of the Neurocrine Collaboration, we and Neurocrine have been developing VY-AADC (NBIb-1817) for
the treatment of Parkinson’s disease, or the VY-AADC Program. VY-AADC (NBIb-1817) is currently being evaluated in
the RESTORE-1 Phase 2 clinical trial. In December 2020, the FDA notified Neurocrine that the FDA had placed a clinical
hold on the RESTORE-1 Phase 2 trial, and has subsequently informed Neurocrine of the information required to provide a
complete response to the FDA. In February 2021, Neurocrine notified us of its termination of the Neurocrine Collaboration
with regards to the VY-AADC Program, effective August 2, 2021, or the Neurocrine VY-AADC Program Termination
Effective Date. Upon the Neurocrine VY-AADC Program Termination Effective Date, the license granted by us to
Neurocrine will expire and we will regain worldwide intellectual property rights to the VY-AADC Program in accordance
with the collaboration agreement. We intend to support Neurocrine, the study sponsor and IND holder, on ongoing matters
related to the completion of imaging and clinical assessments requested by the Data Safety and Monitoring Board, or
DSMB, and the provision of other information requested by the U.S. Food and Drug Administration, or FDA, for the
RESTORE-1 Phase 2 clinical trial. The imaging requests include additional magnetic resonance imaging, or MRI, scans
from the participants in the Phase 1b trials and positron emission tomography, or PET, scans from the RESTORE-1 Phase 2
clinical trial participants. We plan to determine the potential path forward for the VY-AADC Program based on, among
other things, the additional information being collected by Neurocrine in response to the DSMB requests.
VY-HTT01 is our clinical gene therapy candidate for the treatment of Huntington’s disease. VY-HTT01 is
composed of an AAV capsid (AAV1) and a proprietary transgene that harnesses the RNA interference pathway to
selectively knock down, or reduce, levels of HTT mRNA.
In non-human primate studies, one-time administration of VY-HTT01 resulted in robust and durable reduction of
HTT mRNA and protein with knock-down stabilization between six and twelve months, and widespread distribution of
VY-HTT01 vector genome across the striatum and cortex. VY-HTT01 treatment demonstrated robust reduction of HTT
mRNA and protein in the YAC128 and BACHD transgenic mouse models of Huntington’s disease, with significant
improvements in motor function. We plan to present preclinical data from the IND-enabling studies at a medical conference
in 2021.
In September 2020, we submitted an IND application to evaluate VY-HTT01 in a Phase 1b clinical trial in patients
with Huntington’s disease. In October 2020, the FDA placed a clinical hold on our IND application pending the resolution
of certain chemistry, manufacturing and controls, or CMC, information requests. We have subsequently received written
feedback from the FDA requesting additional information on specific CMC topics, including drug device compatibility and
drug substance and product characterization. We expect to provide our complete response to the additional requests from
the FDA regarding the IND application for VY-HTT01 in the first half of 2021. Subject to our resolution of the clinical
hold and the clearance of our IND application, we expect to initiate our clinical evaluation of VY-HTT01.
We are pursuing additional product candidates in the preclinical stages of development, including treatment
programs for Friedreich’s ataxia, ALS, tau-related neurodegenerative diseases, and other severe neurological diseases. We
continue to evaluate additional severe neurological diseases that could be treated using AAV gene therapy through
application of either a gene replacement or a gene knockdown approach and are also actively exploring additional potential
treatment methods that can utilize an AAV vector.
Finally, we have developed our real-time, intra-operative, MRI compatible device, the variable trajectory array
guide, or V-TAG®, that can be used with other neuro-navigational systems for the administration of drugs and other
surgical procedures, to avoid blood vessels and reduce the risk of potential hemorrhage during surgery, and to maximize
drug coverage of the targeted structures. In July 2018, the Center for Devices and Radiological Health, or the CDRH, of the
FDA, provided 510(k) clearance for V-TAG. We are currently working with ClearPoint Neuro, Inc. (formerly known as
MRI Interventions, Inc.), or CLPT, on process development and manufacturing of the device, and in March 2019, we
transferred our premarket notification (510(k)) clearance for V-TAG to CLPT. Investigators have used an alternative MRI-
compatible device called the ClearPoint® System in our Phase 1 and Phase 1b clinical trials and in the RESTORE-1 Phase
2 clinical trial of VY-AADC (NBIb-1817). We currently plan to use either the V-TAG or the ClearPoint System in our
Phase 1b clinical trial of VY-HTT01 for Huntington’s disease.
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Sanofi Genzyme Collaboration
In February 2015, we entered into a strategic collaboration with Sanofi Genzyme to leverage our combined
expertise and assets to develop AAV gene therapies for certain severe neurological diseases. Under the agreement, we
received $65.0 million in upfront cash, a $30.0 million upfront equity investment, and an in-kind commitment of $5.0
million, totaling $100.0 million. At the inception of the agreement, we were eligible to receive up to $745.0 million in
option and milestone payments while retaining U.S. commercial rights to most programs. Under the terms of the
collaboration, we granted Sanofi Genzyme an exclusive option (i) to license, develop and commercialize ex-U.S. rights to
VY-AADC (NBIb-1817) for Parkinson’s disease, or the VY-AADC Program, VY-FXN01 for Friedreich’s ataxia, or the FA
Program, VY-HTT01 for Huntington’s disease, or the Huntington’s Program, and a future program to be designated by
Sanofi Genzyme, or the Future Program, which we refer to collectively as the Split Territory Programs; (ii) to license,
develop and commercialize worldwide rights to VY-SMN101, our spinal muscular atrophy program; and (iii) to co-
commercialize VY-HTT01 in the United States. Each of Sanofi Genzyme’s options to a Split Territory Program was
triggered following the completion of the first proof-of-principle human clinical study, or POP Study, on a program-by-
program basis.
In October 2017, Sanofi Genzyme notified us that it had decided not to exercise its option for the ex-U.S. rights to
the VY-AADC Program. As a result, we were no longer entitled to receive $45.0 million and $60.0 million of regulatory
and commercial milestone payments from Sanofi Genzyme, respectively, related to the VY-AADC Program. If we use
certain Sanofi Genzyme technology in VY-AADC (NBIb-1817), Sanofi Genzyme is entitled to receive low-single-digit
royalty payments based on a percentage of net sales by us, and we may be obligated to make certain regulatory milestone
payments to a third-party licensor.
In June 2019, we and Sanofi Genzyme executed a termination agreement to terminate the Sanofi Genzyme
Collaboration Agreement, or the Sanofi Genzyme Termination Agreement. Under the terms of the Sanofi Genzyme
Termination Agreement, Sanofi Genzyme relinquished its rights to the exclusive license options to the Huntington’s
Program, the FA Program, and the Future Program. We have been relieved of our obligations to perform the research and
development services under those programs through completion of the respective POP Studies. As a result, we gained
worldwide rights to the Huntington’s Program, and ex-U.S. rights to the FA Program. In accordance with our Collaboration
and License Agreement with Neurocrine, or the Neurocrine Collaboration Agreement, the ex-U.S. rights to the FA Program
then passed to Neurocrine. Additionally, we and Sanofi Genzyme entered into the Amended and Restated Option and
License Agreement related to certain AAV capsids, or the Amended Capsid Agreement. Under the Amended Capsid
Agreement, Sanofi Genzyme obtains exclusive option rights to select up to two novel AAV capsids owned or controlled by
us for exclusive use for up to an aggregate of two non-central nervous system, or CNS, indications.
Under the Sanofi Genzyme Termination Agreement, we made a $10.0 million upfront payment to Sanofi
Genzyme and an additional $10.0 million milestone payment to Sanofi Genzyme following the filing of our IND
application for a product candidate incorporating certain intellectual property rights developed under or substantially
related to, the Huntington’s Program, which we refer to as a Post-Termination HD Product. We have agreed to pay Sanofi
Genzyme (i) 50% of any income received from sublicensing arrangements related to Post-Termination HD Products in
excess of specified thresholds and entered into prior to (a) the filing of an IND application for a Post-Termination HD
Product or (b) the dosing of the first patient in a clinical trial for a Post-Termination HD Product in the United States or
certain European countries, respectively and (ii) a low-double digit percentage of any income received from sublicensing
arrangements outside the United States related to products incorporating intellectual property rights developed under, or
substantially related to, the FA Program, which we refer to as Post-Termination FA Products, that are in excess of a
specified threshold and entered into prior to the dosing of the first patient in a clinical trial for a Post-Termination FA
Product in the United States or certain European countries, in each case, subject to certain limitations. We have also agreed
to pay low-single-digit royalties on net sales of Post-Termination HD Products. Under the Sanofi Genzyme Collaboration
Agreement, we had rights to certain in-kind services. As of the effective date of the Sanofi Genzyme Termination
Agreement, we waived our right to approximately $0.4 million in unused in-kind services, we have relinquished our rights
to the spinal muscular atrophy program, and we no longer have the right to receive any option payments, regulatory or
commercial milestone payments or royalties from Sanofi Genzyme under the Sanofi Genzyme Collaboration Agreement.
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AbbVie Tau Collaboration
In February 2018, we entered into an exclusive collaboration and option agreement with AbbVie, or the AbbVie
Tau Collaboration Agreement, for the research, development, and commercialization of AAV and other virus-based gene
therapy products for the treatment of diseases of the CNS and other neurodegenerative diseases related to defective or
excess aggregation of tau protein in the human brain, including Alzheimer’s disease. Under the terms of the AbbVie Tau
Collaboration Agreement, we received an upfront payment of $69.0 million and were eligible to receive option exercise
payments, future development and regulatory milestone payments and royalties prior to the termination of the AbbVie Tau
Collaboration Agreement, effective August 3, 2020, the AbbVie Collaboration Termination Date. We expect to continue to
advance the research and development efforts related to vectorized antibodies, including vectorized antibody compounds
comprised of an AAV or other virus vector genome that encodes one or more antibodies that target and bind to a tau
protein, and we are currently evaluating our options for advancing these efforts individually or with other potential
collaborators.
In connection with the termination of the AbbVie Tau Collaboration Agreement, we were obligated to undertake
certain transition activities, including transferring to AbbVie certain data and reports generated under the collaboration as
well as any regulatory filing relating to certain compounds and product candidates investigated in the collaboration. All
such activities were completed on or prior to September 30, 2020. As a result of the termination, we have been relieved of
future research and development obligations under the collaboration. Exclusivity provisions restricting either party or any
of its respective affiliates from directly or indirectly exploiting any vectorized antibody compound targeting a tau protein
and restricting us, alone or jointly with any third party, from directly or indirectly exploiting specified antibodies targeting a
tau protein have also terminated. Each party retains a royalty-free, exclusive license to the other’s interest in certain
intellectual property rights developed by or on behalf of either party under the collaboration, or the Joint IP, to exploit
antibodies it contributed to the collaboration as well as a royalty-free, non-exclusive license to the Joint IP for any other
purpose. Further, AbbVie has granted us, effective as of the AbbVie Collaboration Termination Date, a worldwide, royalty-
free, transferable, sublicensable (though multiple tiers), exclusive license to AbbVie’s interest in the Joint IP to exploit
research compounds or product candidates that were investigated under the collaboration and do not encode antibodies
contributed by AbbVie or include active pharmaceutical ingredients owned by AbbVie or its affiliates, for all human
diagnostic, prophylactic and therapeutic uses. We are not obligated to repay the upfront payment we received from AbbVie
in connection with entering into the AbbVie Tau Collaboration Agreement but are no longer eligible to receive option
payments, milestone payments or royalties thereunder.
AbbVie Alpha-Synuclein Collaboration
In February 2019, we entered into an exclusive collaboration and option agreement with AbbVie, or the AbbVie
Alpha-Synuclein Collaboration Agreement, for the development and commercialization of vectorized antibodies directed
against pathological species of alpha-synuclein for the potential treatment of Parkinson’s disease and other
synucleinopathies. Under the terms of the AbbVie Alpha-Synuclein Collaboration Agreement, we received an upfront
payment of $65.0 million and were eligible to receive option exercise payments, future development and regulatory
milestone payments and royalties prior to the termination of the AbbVie Alpha-Synuclein Collaboration Agreement,
effective August 3, 2020, the AbbVie Collaboration Termination Date.
In connection with the termination of the AbbVie Alpha-Synuclein Collaboration Agreement, we were obligated
to undertake certain transition activities including transferring to AbbVie certain data and reports generated under the
collaboration as well as any regulatory filings relating to compounds and product candidates investigated in the
collaboration. All such activities were completed on or prior to September 30, 2020. As a result of the termination, we have
been relieved of future research and development obligations under the collaboration. Exclusivity provisions restricting
either party or any of its respective affiliates from directly or indirectly exploiting any vectorized antibody compound
targeting an alpha-synuclein protein and restricting us, alone or jointly with any third party, from directly or indirectly
exploiting specified antibodies have also terminated. AbbVie retains a royalty-free, exclusive license to our interest in the
Joint IP to exploit antibodies AbbVie contributed to the collaboration. We otherwise retain a royalty-free, non-exclusive
license to AbbVie’s interest in the Joint IP. We are not obligated to repay the upfront payment we received
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from AbbVie in connection with entering into the AbbVie Alpha-Synuclein Collaboration Agreement but are no longer
eligible to receive option payments, milestone payments, or royalties thereunder.
We are evaluating our options for potentially advancing our alpha-synuclein program in the future.
Neurocrine Collaboration
In January 2019, we entered into the Neurocrine Collaboration Agreement for the research, development and
commercialization of four programs including the VY-AADC Program, FA Program, and other undisclosed programs, or
the Discovery Programs. The Neurocrine Collaboration Agreement became effective in March 2019 following expiration
of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and
satisfaction of customary closing conditions. Under the terms of the Neurocrine Collaboration Agreement, we received an
upfront payment of $115.0 million and may receive future development and regulatory milestone payments and royalties.
In connection with the Neurocrine Collaboration Agreement, Neurocrine also paid us $50.0 million as consideration for an
equity purchase of 4,179,728 shares of our common stock. In June 2019, in conjunction with the termination of the Sanofi
Genzyme Collaboration Agreement, we gained worldwide rights to the Huntington’s Program and ex-U.S. rights to the FA
Program. Our ex-U.S. rights to the FA Program were transferred to Neurocrine pursuant to the Neurocrine Collaboration
Agreement. To facilitate the transfer of the ex-U.S. rights to the FA Program to Neurocrine, we and Neurocrine amended
the Neurocrine Collaboration Agreement and we received a $5.0 million payment from Neurocrine. We are obligated to use
commercially reasonable efforts to develop the products in each of these programs under the terms of the Neurocrine
Collaboration Agreement. Neurocrine is responsible for all costs incurred by us in conducting these activities for each
program, in accordance with an agreed budget.
Under the terms of the Neurocrine Collaboration Agreement for the VY-AADC Program, Neurocrine agreed to
fund the clinical development of the RESTORE-1 Phase 2 clinical trial for VY-AADC (NBIb-1817). After the data readout
of the RESTORE-1 Phase 2 trial, we would have had the option to either: (i) co-commercialize VY-AADC (NBIb-1817)
with Neurocrine in the United States under a 50/50 cost- and profit-sharing arrangement and receive milestones and
royalties based on ex-U.S. sales, or (ii) grant Neurocrine full global commercial rights in exchange for milestone payments
and royalties based on global sales. We were eligible to receive aggregate development milestone payments under the VY-
AADC Program of up to $170.0 million. We were also eligible to receive royalties, based on future net sales of the
collaboration product for the VY-AADC Program in and outside the U.S. as applicable, at a rate of mid-teens to thirty and
low-teens to twenty, respectively.
On February 2, 2021, Neurocrine notified us that it has elected to terminate the Neurocrine Collaboration
Agreement solely with regards to the VY-AADC Program, effective August 2, 2021, or the Neurocrine VY-AADC
Program Termination Effective Date. The Neurocrine Collaboration Agreement remains in full force and effect for each
other program thereunder. As a result of the termination, as of the Neurocrine VY-AADC Program Termination Effective
Date, the license granted by us to Neurocrine under the Neurocrine Collaboration Agreement for the VY-AADC Program
will expire and we will regain worldwide intellectual property rights regarding the VY-AADC Program, in each case in
accordance with the terms of the Neurocrine Collaboration Agreement. We intend to support Neurocrine, the study sponsor
and IND holder, on ongoing matters related to the completion of imaging and clinical assessments requested by the DSMB
and the provision of other information requested by the FDA for the RESTORE-1 Phase 2 clinical trial. We plan to
determine the potential path forward for the VY-AADC Program based on the additional information being collected by
Neurocrine in response to the DSMB requests. Subsequent to the VY-AADC Program Termination Effective Date,
Neurocrine will no longer reimburse us for research and development activities related to the VY-AADC Program.
In addition to the upfront payment, we are eligible to receive aggregate development milestone payments under
the FA Program of up to $195.0 million, and under each of the Discovery Programs of up to $130.0 million per program.
We may also be entitled to receive aggregate commercial milestone payments for each collaboration product of up to
$275.0 million, subject to an aggregate cap on commercial milestone payments across all programs of $1.1 billion. We are
also eligible to receive royalties, based on future net sales of the collaboration products. Such royalty percentages, for net
sales in and outside the United States, as applicable, range (i) for the FA Program, from the low-teens to high-teens
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and high-single digits to mid-teens, respectively; and (ii) for each Discovery Program, from the high-single digits to mid-
teens and mid-single digits to low-teens, respectively.
Mission and Strategy
Our mission is to become the world leader in AAV gene therapy focused on treating severe neurological diseases
by developing transformative therapies. Our strategy to achieve this mission is to:
● Optimize and advance our gene therapy programs. We have a deep pipeline of AAV gene therapy programs
in various stages of development. Our most advanced clinical candidate, VY-AADC (NBIb-1817) for the
treatment of Parkinson’s disease is being evaluated in the RESTORE-1 Phase 2 clinical trial which is
currently on clinical hold by the FDA. We have completed preclinical studies and submitted an IND
application for VY-HTT01, our clinical candidate for the treatment of Huntington’s disease. The IND was
placed on hold pending the resolution of additional information requested on CMC topics. We have several
additional gene therapy programs in preclinical development. We plan to advance these programs, either on
our own or with collaborative partners, to clinical evaluation.
● Partner and collaborate to enhance our pipeline of gene therapy programs focused on severe neurological
diseases. We believe that our leadership position in AAV gene therapy for severe neurological diseases and
our gene therapy platform provide us with the necessary capabilities to evaluate and capitalize on external
opportunities. As such, we plan to opportunistically expand our pipeline through acquisition, in-licensing or
other strategic transactions.
● Continuously invest in our AAV gene therapy platform. We plan to continuously invest in our gene therapy
platform to maintain our leadership in AAV gene therapy for neurological diseases. Specifically, we intend to
further develop and enhance our gene therapy platform by focusing on (i) vector engineering and
optimization; and (ii) dosing and delivery techniques. We plan to continue generating novel AAV vectors by
engineering and optimizing vectors best suited to a targeted disease. Leveraging our research efforts on our
TRACER system and novel capsid discovery, we believe that our gene therapy platform will have the ability
to optimally treat certain neurological diseases through systemic delivery of our AAV gene therapies. We
expect to utilize established and novel techniques for dosing and delivery of our AAV gene therapies to
improve transduction efficiency and immune response.
● Establish a leadership position in commercial-scale, high quality AAV manufacturing. We believe that
manufacturing capacity and expertise are critical to successfully treating patients using gene therapy. We
have built an onsite, state-of-the-art process research and development facility to enable the manufacturing of
high quality AAV gene therapy vectors at laboratory scale. We have established relationships with multiple
current good manufacturing practices, or cGMP, contract manufacturers. Previously, through our
collaborations with MassBiologics, an FDA-licensed manufacturer affiliated with the University of
Massachusetts Medical School, we initiated cGMP production activities. We announced additional
agreements with Thermo Fisher Scientific and with Fujifilm Diosynth Biotechnologies, established contract
manufacturers that specialize in gene therapy and AAV vectors. We are using the baculovirus/Sf9 AAV
production system, a technology for producing AAV vectors at scale in insect-derived cells, originally
invented and developed by several current and former members of our production team while at the National
Institutes of Health, or NIH, which we continue to improve upon. We believe that having oversight through
these key relationships over our own commercial manufacturing process is critical to ensuring quality
product with commercial yields.
● Retain commercialization rights to our programs. We hold worldwide rights for our Huntington’s Program,
ALS Program and our Tau Program. We have retained co-development and co-commercialization rights for
the FA Program under our Neurocrine Collaboration, and we will recover worldwide rights for the VY-
AADC Program as of the Neurocrine VY-AADC Program Termination Effective Date. As these and other
programs advance through late-stage clinical development, we intend to build our own sales and marketing
infrastructure and leverage our partnerships to support our programs where we have retained
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commercialization rights. Collaborations represent an important advance in our strategy to leverage our AAV
gene therapy platform and programs through collaborative partnerships with biopharmaceutical companies
that bring complementary expertise, capabilities, and experience, in addition to capital.
● Expand our intellectual property portfolio. We seek to have an industry leading intellectual property
portfolio. To that end, we seek patent rights for various aspects of our programs, including vector engineering
and construct design, our production process, and all features of our clinical products including compositions
and methods of delivery. We expect to continue to expand our intellectual property portfolio by aggressively
seeking patent rights for promising aspects of our gene therapy platform and product candidates.
AAV Gene Therapy for Neurological Diseases
Gene therapy is an approach whereby gene expression is directly altered in patients to address the underlying
cause or predominant manifestations of disease. We believe that the targeted nature of gene therapy may enable powerful
treatment options and provide these patients with meaningful and durable benefits.
While AAV gene therapy can potentially be harnessed for multiple treatment methods, we are currently focused on
gene replacement, gene knockdown and vectorized antibody approaches. Gene replacement is intended to restore the
expression of a protein that is not expressed, expressed at abnormally low levels or functionally mutated with loss of
function. Gene knockdown, or gene silencing, is intended to reduce the expression of a pathologically mutated RNA or
protein that has detrimental effects. Vectorizing an antibody for delivery using AAV has the ability to increase exposure of
large antibodies in brain parenchyma that otherwise cannot cross the blood-brain barrier in any meaningful way when
administered passively.
Our gene therapy approach uses AAV vectors which we believe are ideal vectors for gene therapy for several
reasons:
reasons:
Broad Applicability. AAV is able to transduce, or transfer a therapeutic gene, into numerous cell types including
target cells in the CNS.
Safety. We believe AAV is safe and is not known to cause any disease in humans.
Does Not Readily Integrate. AAV does not readily integrate into the genome of the target cell, reducing the
potential for oncogenesis, or the induction of cancer.
Scalability. AAV is able to be manufactured at commercial quality and scale.
We believe that neurological diseases are well-suited for treatment with AAV gene therapy for the following
Validated Targets. Many neurological diseases are caused by well-defined mutations in genes and these genes
represent genetically validated drug targets for AAV gene therapy.
Targeted Delivery. We believe advances in delivery techniques allow for direct delivery of AAV vectors to
discrete regions in the brain, broader delivery throughout the spinal cord via the cerebrospinal fluid, or CSF, or
systemically in conjunction with our novel capsids.
Durable Expression. Long-term gene expression may be achievable in the CNS following one-time dosing and
transfer of the therapeutic gene with an AAV vector. Neurons in the CNS are terminally differentiated, or no
longer divide, eliminating the potential for cell division to dilute expression of the therapeutic gene. Repeated or
continual dosing with direct injection of drugs into the CNS is complex, therefore a one-time AAV gene therapy
has significant advantages.
Immune Privileged Site. There is a reduced risk of harmful immune response or reduced efficacy due to localized
delivery in a self-contained system.
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We are currently focused on gene replacement, gene knockdown, and vectorized antibody approaches, and we are
also actively exploring additional potential treatment methods such as gene editing to correct or delete a gene in the cell
genome.
The Voyager Gene Therapy Platform
We have built a gene therapy platform that we believe positions us to be the leading company at the intersection of
AAV gene therapy and severe neurological diseases. Our team of experts in the fields of AAV gene therapy and
neuroscience first identifies and selects severe neurological diseases that are well-suited for treatment using AAV gene
therapy. We then engineer and optimize AAV vectors for delivery of the virus payload to the targeted tissue or cells.
Finally, we leverage established routes of administration and advances in dosing techniques to optimize delivery of our
AAV gene therapies to target cells that are critical to the disease of interest either directly with targeted infusions to discrete
regions of the brain, the spinal cord, or systemically. We believe that optimizing each of these parameters is a key factor for
overall program success. We expect that our current and future pipeline programs will make use of technological advances
generated with our gene therapy platform.
Disease Selection
We assess potential product programs based upon the following criteria:
Unmet Need. There is a significant unmet medical need for the indication and substantial commercial potential.
Target Validation. There is strong evidence that expression of a specific gene or protein, or lack thereof, is
causing, or critical to, the disease state.
Delivery Using AAV. There is strong evidence supporting the ability to target the relevant tissue and cells using an
AAV vector to achieve sufficient target gene expression.
Clinical Readouts. The clinical impact of an AAV gene therapy can be clearly measured, including through well-
accepted clinical endpoints and the use of both existing and novel biomarkers.
Scalability of Manufacturing. Sufficient AAV vector to supply late-stage clinical development and
commercialization can be manufactured.
In addition to the criteria above, we also look for groups of diseases where our knowledge can be transferred. For
instance, we believe that some of the delivery parameters and imaging techniques that are employed in the VY-AADC
Program can be applied to AAV gene therapy delivery for Huntington’s disease or other diseases where direct, targeted
delivery to the brain is warranted.
Vector Engineering and Optimization
We have advanced or intend to advance our multiple preclinical programs towards selection of lead clinical
candidates using AAV vectors that we believe are best suited for each of our programs either through use of our existing
capsids, through exercising a non-exclusive worldwide commercial license to capsid sequences covered by third parties, or
by engineering or optimizing novel capsids. The key components of an AAV vector include: (i) the capsid; (ii) the
therapeutic gene, or transgene; and (iii) the promoter, or the DNA sequence that drives the expression of the transgene.
Members of our team have co-discovered many of the known naturally occurring AAV capsids and have also
created promising genetically engineered AAV capsids. Genetically engineered capsids have yielded vectors with desirable
properties, such as higher biological potency and enhanced tissue specificity. We believe that there is an opportunity to
further optimize AAV capsids to confer desired characteristics relating to properties such as tissue specificity and
immunogenicity. We have a significant effort dedicated to designing and screening for novel AAV capsids using a number
of different scientific approaches. We believe that the information generated by this work will enhance our ability to
rationally design AAV capsids with specific properties for particular therapeutic applications. For example, we have
identified several capsids that demonstrate significantly higher blood-brain barrier penetrance than
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naturally occurring AAV capsids in preclinical experiments conducted to date, and we are evaluating the possibility of
leveraging these novel capsids in current and potential programs.
In early 2019, we presented on our discovery and development of AAV capsids that cross the blood brain barrier,
or BBB, after IV administration with improved transduction of the brain and spinal cord and enhanced cellular specificity
using libraries under the control of either the neuron-specific synapsin, or SYN, promoter or the astrocyte-specific glial
fibrillary acidic protein, or GFAP, promoter to apply selective pressure for capsid variants that transduce the cell type of
interest. As part of that effort, our scientists have developed a proprietary system called TRACER (Tropism Redirection of
AAV by Cell Type-Specific Expression of RNA) to facilitate the selection of AAV capsids with BBB crossing and cell-
specific transduction properties for particular therapeutic applications. The TRACER system is a broadly-applicable,
functional RNA-based AAV capsid screening platform that allows for rapid in vivo evolution of AAV capsids with cell-
specific transduction properties in wild-type animals. Multiple capsid variants have been identified with significant
improvement of central nervous system transduction and BBB-penetrant properties over AAV9 in both mouse and non-
human primate models following IV administration after three rounds of selection. These capsids are now in advanced
stages of characterization for deployment in our gene therapy development programs. We are also applying the TRACER
system towards further capsid variant libraries and selection for tropism and transduction in additional cell and tissue types.
We expect to present data concerning our experiments conducted with these novel capsids in non-human primates at a
scientific conference and other presentations in the first half of 2021.
With respect to the target DNA delivered through AAV gene therapy, we are selecting promoters that we believe
have the appropriate activity and tissue, selectively for our specific gene therapy programs. We are also designing
transgenes to provide optimal expression once delivered to the targeted cells.
Manufacturing at Commercial Quality and Scale
The ability to produce high quality AAV vectors at commercial-scale is a critical success factor in AAV gene
therapy. While at the NIH, former members of our production team invented and developed a baculovirus/Sf9 AAV
production system, which we use and have continued to improve. This system has a number of attributes that we believe
will enable high quality commercial-scale manufacturing, including:
High Yield. A single manufacturing run at 500-liter scale can yield many thousands of doses of an AAV gene
therapy.
High Purity. A relatively high percentage of AAV vectors contain the therapeutic DNA, reducing the number of
empty capsids compared to alternative manufacturing approaches. In addition, the baculovirus/Sf9 system
eliminates the risk of introducing mammalian cell derived impurities.
Scalability. This process has been reproduced at volumes ranging from 0.02 liters to 250 liters. We believe the
existing process is scalable to substantially higher volumes.
We have built a state-of-the-art process research and development production facility for manufacturing research-
grade AAV vectors onsite at our Lexington, Massachusetts location. We have also established multiple contract
manufacturing relationships with companies specializing in the manufacture of gene therapy and AAV vectors.
Optimized Delivery and Route of Administration
Identifying the optimal route of administration and delivery parameters for AAV gene therapy, such as infusion
volume, flow rate, vector concentration and dose and formulation for a specific disease, are critical to achieving safe and
effective levels of transgene expression in the targeted location in the CNS. We aim to develop clinically feasible protocols
that yield reproducible results across patients. For the VY-AADC Program and Huntington’s Program, we are pursuing
direct injection into the brain, called intraparenchymal injection. For our ALS SOD1 program and the FA Program, we are
evaluating multiple routes of administration including injection into the CSF within the cerebrospinal space, called
intrathecal injection, as well as intravenous injection, intraparenchymal injection, and other delivery alternatives.
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V-TAG®-guided Intraparenchymal Injection to the Brain
The surgical approach that we are using for VY-AADC (NBIb-1817) is similar, in some respects, to the
stereotactic approach used for deep brain stimulation, or DBS, a marketed device-based treatment for Parkinson’s disease.
One primary difference with our approach is the ability to assist the physician in visualizing the delivery of VY-AADC
(NBIb-1817) to the putamen using real-time, intra-operative MRI to avoid specific blood vessels to reduce the risk of
potential hemorrhages during the surgical procedure and to maximize the coverage of the putamen.
Investigators in the Phase 1b clinical trial, the separate Phase 1 posterior trajectory trial, and the RESTORE-1
Phase 2 clinical trial of VY-AADC (NBIb-1817) used the real-time, intra-operative, MRI system called the ClearPoint
System® from CLPT. However, not all neuro-surgical units within the United States utilize this system and may employ
other neuro-navigational systems that are not compatible with real-time MRI imaging.
Consequently, we developed V-TAG® as our device for use as a real-time, intra-operative, MRI-compatible device
that can be used with other neuro-navigational systems for this and other surgical procedures. In July 2018, we received
510(k) clearance from the FDA. In March 2019, we transferred our premarket notification (510(k)) clearance to CLPT and
continue to work with CLPT on the manufacturing and clinical supply of the device. We believe that our experience gained
from the VY-AADC Program can be applied to AAV gene therapy delivery for our Huntington’s Program and possibly
other projects as well.
Overview of Intraparenchymal Delivery
Overview of Our Pipeline
Courtesy of: Okinawa Institute of Science and Technology.
We have leveraged our gene therapy platform to assemble a pipeline of novel AAV gene therapies for the
treatment of severe neurological diseases with high unmet medical need. Depending on the disease, our current AAV gene
therapies will use a gene replacement, gene knockdown, or vectorized antibody approach. Our goal is to address the
underlying cause or the predominant manifestations of a specific disease by significantly increasing or decreasing
expression of the relevant proteins at targeted sites within the CNS.
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Parkinson’s Disease: VY-AADC Program
Disease and VY-AADC (NBIb-1817) Overview
Parkinson’s disease is a chronic, progressive and debilitating neurodegenerative disease that affects approximately
1 million people in the United States and 10 million people worldwide. Parkinson’s disease is characterized by a loss of
dopamine and its function. Dopamine is a chemical “messenger” that is produced in the brain and is involved in the control
of movement. Some chemicals, like dopamine, are made from other chemicals by proteins called enzymes. Dopamine is
made in the brain when the enzyme AADC (aromatic l-amino acid decarboxylase) converts the chemical levodopa to
dopamine. Levodopa, AADC, and dopamine are each present at normal levels in healthy people.
When dopamine levels decrease in the brain and there is no longer enough to control movement, the motor
symptoms of Parkinson’s disease including tremors, slow movement or loss of movement, rigidity, and postural instability,
may occur. When this happens, a doctor may prescribe a levodopa medication, which is converted into dopamine by AADC
in substantially the same way that naturally occurring levodopa is converted to dopamine.
As Parkinson’s disease worsens, there is less AADC enzyme in parts of the brain where it is needed to convert
levodopa to dopamine. Therefore, the amount of dopamine that is produced from each dose of levodopa medicine may be
reduced. When this happens, patients’ motor function may worsen and a less predictable response to medications may
occur.
The Unified Parkinson’s Disease Rating Scale, or UPDRS, is a standard and widely used four-part clinical rating
scale for Parkinson’s disease that evaluates cognitive, functional, and motor deficits, as well as medication-related
complications. UPDRS Part III measures motor function by physician examination. The UPDRS is conducted when
patients are taking their Parkinson’s disease medications (referred to as “on” medication) and when patients are not taking
their Parkinson’s disease medications (referred to as “off” medication). In addition, a patient-completed Hauser diary
records the patient’s motor response over the course of several days as ON time when they have good mobility with or
without non-troublesome dyskinesia, or uncontrolled, involuntary movement; OFF time when they have poor mobility; and
ON time with troublesome dyskinesia when they have uncontrolled movements. As shown in the figure below, diary ON
time decreases, while OFF time and dyskinesias increase as patients progress from the early honeymoon period into later
stages of Parkinson’s disease.
Our investigational gene therapy VY-AADC (NBIb-1817) is designed to put the AADC enzyme into brain cells
where it can convert levodopa to dopamine. To do this, the AADC gene is delivered inside a transporter called “adeno-
associated viral vector,” which we refer to as AAV, much like a letter that carries the instructions the brain needs to make
the AADC enzyme with the AAV as the envelope that carries the letter.
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Overview of Progression of Parkinson’s Disease (PD)
VY-AADC (NBIb-1817) Phase 1b Trial (PD-1101)
In 2014, the University of California, San Francisco, or UCSF, initiated an open-label Phase 1b clinical trial to
optimize the development of VY-AADC (NBIb-1817). The IND for the Phase 1b trial was filed by UCSF in July 2013 and
was transferred to us in October 2015. In November 2017, we completed enrolling this open-label, dose-escalating PD-
1101 Phase 1b trial of VY-AADC (NBIb-1817). The trial included 15 patients with Parkinson’s disease and was designed
to evaluate the safety and efficacy of escalating doses of VY-AADC (NBIb-1817). In this trial, one-time administration of
VY-AADC (NBIb-1817) led to improvements in patients’ motor function, and patients were able to reduce their daily
levodopa and other Parkinson’s disease medications. To date, administration of VY-AADC (NBIb-1817) has been well-
tolerated. In patients treated in this trial, there have been no vector-related serious adverse events reported.
Patients in three cohorts of five patients each were treated with a single administration of ascending doses of VY-
AADC (NBIb-1817) administered under MRI guidance to the putamen, a region of the brain associated with impaired
motor function in Parkinson’s disease. The primary endpoints of this trial are safety and tolerability of the treatment. This
trial incorporated three key design features:
● Use of real-time, intra-operative MRI system during surgery to assist the physician in visualizing the delivery
of VY-AADC (NBIb-1817) to the putamen and to avoid specific blood vessels during the surgical procedure,
with the goal of reducing the risk of hemorrhages.
● Larger infusion volumes designed to increase coverage of the putamen with VY-AADC (NBIb-1817).
● Higher concentrations of VY-AADC (NBIb-1817) vector compared to the previously completed UCSF
Phase 1 trial.
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Secondary endpoints of this trial, which are being used to assess the potential pharmacologic activity of VY-
AADC (NBIb-1817), include UPDRS, AADC positron emission tomography, or PET imaging, quality of life, a patient-
completed Hauser diary monitoring good ON time without troublesome dyskinesia, and a behavioral test using intravenous
levodopa treatment to measure changes in a patients’ sensitivity to levodopa as well as endpoints to measure motor
functions.
We have completed enrollment and the three-year follow-up for PD-1101. Data demonstrated that VY-AADC
(NBIb-1817) has been generally well-tolerated and that administration with VY-AADC (NBIb-1817) improved patients’
motor function and quality of life as measured by standard scores and measures used in Parkinson’s disease trials. Cohort 1
patients received a single administration of VY-AADC (NBIb-1817) at a concentration of 8.3×1011 vector genomes per
milliliter, or vg/ml, using an infusion volume of up to 450 µL per putamen, or up to 900 µL per patient, for a total dose of
7.5×1011 vg. Cohort 2 patients received a single administration of VY-AADC (NBIb-1817) at a concentration of 8.3×1011
vg/ml, using an infusion volume of up to 900 µL per putamen, or up to 1,800 µL per patient, for a total dose of 1.5×1012
vg. Cohort 3 patients received a three-fold higher vg concentration of 2.6×1012 with the same infusion volumes of VY-
AADC (NBIb-1817) similar to those received by Cohort 2 patients (up to 900 µL per putamen), for a total dose of up to
4.5×1012 vg.
Administration of VY-AADC (NBIb-1817) has been well-tolerated in all fifteen patients treated in the three
cohorts with no reported vector-related serious adverse events, or SAEs. Fourteen of the 15 patients were discharged from
the hospital within two days following surgery. As previously reported, one patient experienced two SAEs: a pulmonary
embolism or blood clot in the lungs, and related heart arrhythmia or irregular heartbeat. Investigators determined that these
SAEs were most likely related to immobility during the administration of the product; consequently, deep vein thrombosis
prophylaxis has been added to the clinical trial protocol.
Patients enrolled in Cohorts 1, 2 and 3 were:
● On average, 58 years of age with a Parkinson’s disease diagnosis for an average of 10 years.
● Candidates for surgical intervention including deep-brain stimulation due to disabling motor complications
despite treatment with optimal anti-Parkinsonian medication.
● At baseline, the average patient diary ON time without troublesome dyskinesia was 10.5 hours and, average
diary OFF time was 4.6 hours; both diary measures were normalized to a 16-hour waking day.
● Average UPDRS-III (motor function) on medication score was 13.5 and UPDRS-III off-medication score was
37.1; average UPDRS-II (activities of daily living) on medication score was 3.9 and UPDRS-II off
medication score was 16.5. Patients in Cohort 3 entered the trial with more severe dyskinesia at baseline than
patients in Cohorts 1 and 2 based on the Unified Dyskinesia Rating Scale, with a mean score of 30.2 for
Cohort 3 compared with a mean score of 19.2 and 17.4 for Cohorts 1 and 2, respectively.
● At baseline, patients were treated with optimal levels of multiple dopaminergic medications including, in
many cases, amantadine for the treatment of dyskinesia, or uncontrolled or involuntary movements. Patients’
average amount of Parkinson’s disease medications at baseline was 1,526 mg of oral LEDs per day.
VY-AADC (NBIb-1817) Phase 1 Posterior Trajectory Clinical Trial (PD-1102)
In the PD-1102 Phase 1 clinical trial, we explored a posterior, or back of the head, trajectory administration of VY-
AADC (NBIb-1817) to the putamen, compared to a transfrontal, or top of the head, delivery approach used in Cohorts 1
through 3 of the PD-1101 Phase 1b clinical trial described above. A posterior approach better aligns the infusion of VY-
AADC (NBIb-1817) with the anatomical structure of the putamen, which reduces the number of trajectories needed and
potentially reduces the total procedure time and increases the total coverage of the putamen. Administration of VY-AADC
(NBIb-1817) with this posterior approach has been well-tolerated in the eight patients treated with no reported SAEs. Most
patients were discharged from the hospital the day after surgery. We have
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completed enrollment and continue to follow patients in PD-1102. This trial utilized the same dose concentration as Cohort
3 of our Phase 1b clinical trial at a higher volume, yielding a total dose of up to 9.0×1012 vg compared with a total dose of
up to 4.5×1012 vg in Cohort 3.
The PD-1102 trial included eight patients with advanced Parkinson’s disease. On average the baseline
characteristics of patients enrolled in PD-1102 were generally consistent with the baseline characteristics of patients
enrolled in PD-1101. In PD-1102, patients were on average 57 years of age with a Parkinson’s disease diagnosis for an
average of nine years, and all patients were not responding adequately to oral medications and were candidates for surgical
intervention due to disabling motor complications. At baseline, PD-1102 patients’ mean good ON time was 9.1 hours and
mean OFF time when they have poor mobility was 6.8 hours.
Administration of VY-AADC (NBIb-1817) with the posterior trajectory resulted in a mean coverage of the
putamen of 54% and reduced the infusion time by approximately two hours (from a mean of 5.2 hours to a mean of 3.1
hours) compared to PD-1101. In PD-1102, treatment with VY-AADC (NBIb-1817) increased mean AADC enzyme activity
in the putamen as measured by PET using [18F] fluorodopa, which we refer to as 18F-DOPA PET scan, by 85%. AADC
enzyme activity in the putamen as measured by PET using 18F-DOPA reflects the capacity of neurons in the brain to
convert levodopa to dopamine.
Recent Results from VY-AADC (NBIb- 1817) Phase 1b Clinical Development
At the Movement Disorder Society (MDS) Virtual Congress 2020 held in September 2020, we and Neurocrine
presented the final three-year data on all three cohorts of the PD-1101 Phase 1b clinical trial, as well as two-year data from
the PD-1102 Phase 1 clinical trial. The results demonstrated that a one-time treatment with VY-AADC (NBIb-1817)
showed sustained improvement in motor function including greater “ON” time without troublesome dyskinesia,
improvement in the UPDRS, Part III scores, and reduction in the amount of Parkinson’s disease medications required.
In the three-year data from PD-1101 trial, the one-time treatment with VY-AADC (NBIb-1817) showed sustained
reduction in diary “OFF” time by an average of -0.15 to -1.91 hours (from an applicable baseline ranging from 4.28 to 4.93
hours) and improved “ON” time without troublesome dyskinesia by an average of 0.26 to 2.23 hours (from an applicable
baseline ranging from 10.32 to 10.46 hours) across the cohorts, in each case, as reported in validated self-reported patient
diaries by 15 patients with advanced Parkinson’s disease. VY-AADC (NBIb-1817) also showed sustained improvement in
motor function after three years, as measured by UPDRS Part III off medication scores, by -10.2 to -19.0 points (from an
applicable baseline ranging from 35.8 to 38.2 points) across the cohorts, per clinician assessment. Requirements for
Parkinson’s disease medications were also reduced in cohorts 2 and 3, in levodopa-equivalent daily doses, by an average of
322.0 and 441.2 mg/day, respectively, from applicable baselines of 1507.0 and 1477.0 mg/day.
Two-year data from seven patients in the PD-1102 trial showed that VY-AADC (NBIb-1817) reduced diary-
reported “OFF” time by an average of 3.2 hours and increased diary-reported good “On” time by 2.1 hours (from
applicable baselines of 9.3 hours and 6.6 hours, respectively). In this study, patients treated with VY-AADC (NBIb-1817)
showed sustained improvement in motor function after two years, with improved UPDRS Part III off medication scores of
-12.0 points (from an applicable baseline of 34.4). Requirements for Parkinson’s disease medications were also reduced, in
levodopa-equivalent daily doses, by an average of 439.5 mg/day from a baseline 1500.9 mg/day.
Preliminary safety data from both trials suggest that VY-AADC (NBIb-1817) was generally well-tolerated, with
no study drug-related serious adverse events reported. The most common adverse events reported were headache,
hypoesthesia, and musculoskeletal pain for patients enrolled in PD-1101, and upper respiratory tract infection, headache,
nausea, and depression for patients enrolled in PD-1102.
VY-AADC (NBIb-1817) RESTORE-1 and RESTORE-2 Program
In December 2017, we submitted an IND for VY-AADC (NBIb-1817) to the FDA. As part of the IND application
for VY-AADC (NBIb-1817), the chemistry, manufacturing, and controls section included data demonstrating comparability
between VY-AADC (NBIb-1817) using our baculovirus/Sf9 manufacturing process and VY-AADC
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(NBIb-1817) produced using a mammalian cell system consisting of triple-transfection of HEK293 cells, which was used
in our two Phase 1 clinical trials. Both were produced under cGMP. Our baculovirus/Sf9 manufacturing process is designed
for production of AAV vectors at clinical and commercial scale, with the potential for increased yields and efficient
scalability compared with mammalian-based systems. We have demonstrated that this production platform change resulted
in comparable vector quality and activity. VY-AADC (NBIb-1817) manufactured in our baculovirus/Sf9 system is being
used in the RESTORE-1 Phase 2 clinical trial. In June 2018, the FDA granted regenerative medicine advanced therapy
designation for the VY-AADC Program gene therapy treatment, which provides for an enhanced level of interactions
between the company sponsor and the FDA throughout the development program. The designation was based on our Phase
1b clinical data with VY-AADC (NBIb-1817)). The FDA has also granted fast-track designation for VY-AADC (NBIb-
1817).
In December 2018, we announced randomization of the first patient in the RESTORE-1 Phase 2, randomized,
double-blind, sham-surgery controlled trial evaluating the safety and efficacy of VY-AADC (NBIb-1817) for the treatment
of moderate to advanced Parkinson’s disease in patients with motor fluctuations. We received written feedback from the
FDA, including FDA guidance received during the Type B meeting, that in a disease such as Parkinson’s, two adequate and
well-controlled clinical trials are suggested. Based upon feedback received from the FDA, we and Neurocrine amended the
RESTORE-1 clinical trial protocol to support a future registration filing, if successful, for VY-AADC (NBIb-1817) for the
treatment of Parkinson’s disease in the United States. The protocol amendments included increasing the planned enrollment
to approximately 85 patients from the previously planned 42 patients, and adjusting future enrollment in the trial to
randomize patients 2:1 to VY-AADC (NBIb-1817) or sham-surgery, respectively, as compared to the previous 1:1
randomization. The eligibility criteria remained substantially the same: the trial is potentially available to patients who have
been diagnosed with Parkinson’s disease for at least four years, are not responding adequately to oral medications, and have
at least three or more hours of OFF time during the day as measured by a validated self-reported patient diary. The
protocol amendments were anticipated to facilitate enrollment and patient convenience.
A dose of up to 3.6 x 1012 vg, which we refer to as the maximum total bilateral dose, was selected for the
RESTORE-1 Phase 2 clinical trial. This dose is between the maximum total vector genome doses administered in Cohorts 2
and 3 from PD-1101 when considering the higher volume administered with the posterior trajectory and vector produced
using the baculovirus system.
The primary efficacy endpoint of the RESTORE-1 Phase 2 clinical trial is the mean improvement from baseline to
12 months in good ON time as measured by a validated self-reported patient diary at 12 months compared to sham surgery.
Secondary endpoints include mean improvement in diary OFF time, other motor function and quality of life measures from
the UPDRS (UPDRS-II and -III scores), assessments from the Parkinson’s Disease Questionnaire, or PDQ-39, and patient’s
global function as measured by the proportion of participants with improvement on the Clinical Global Impression, or CGI,
score. The trial will also measure non-motor symptoms from the Non-Motor Symptom Scale, or NMSS, as well as safety.
Changes in patients’ daily doses of oral levodopa and related medications will also be recorded. Biomarker data
collected during the RESTORE-1 Phase 2 clinical trial include measurements of the coverage of the putamen, the specific
region of the brain targeted with VY-AADC (NBIb-1817), and measurements of AADC enzyme expression and activity in
the putamen measured by positron emission tomography using 18F-DOPA.
In November 2020, the sponsor medical monitor and surgical core requested that the DSMB for the RESTORE-1
Phase 2 clinical trial, review certain patient MRI abnormalities observed in some clinical trial participants in the ongoing
clinical trial. Following this review, the DSMB requested additional information about magnetic resonance imaging
abnormalities observed in trial participants and recommended a pause in the dosing of patients in the RESTORE-1 Phase 2
clinical trial pending review by the DSMB of these additional data. The DSMB informed Neurocrine that patient screening
could continue for the trial and that the trial should remain blinded. Trial sites participating in the RESTORE-1 clinical trial
were not screening, enrolling, or dosing patients at the time of this DSMB request as a result of the COVID-19 pandemic.
In response to the DSMB’s recommendation to pause the dosing of patients, we and Neurocrine decided to delay the
planned resumption of patient screening in the RESTORE-1 Phase 2
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clinical trial until Neurocrine had submitted the required expedited IND safety report related to these matters and the
DSMB was able to complete its evaluation.
In December 2020, the FDA notified Neurocrine that it had placed a clinical hold on the RESTORE-1 clinical
trial. In January 2021, the FDA informed Neurocrine of the information required to provide a complete response to the
FDA in connection with the clinical hold. Information required by the FDA includes an assessment of how the
investigational product may have given rise to the adverse findings, a mitigation plan to manage the adverse findings, and
supportive data to justify that a favorable benefit/risk profile remains for the product.
The DSMB met to review additional patient data in January 2021 and has characterized the MRI abnormalities
observed in the RESTORE-1 Phase 2 clinical trial as having uncertain clinical significance. The DSMB requested that
Neurocrine obtain and provide additional information on past and current patients in the VY-AADC (NBIb-1817) clinical
program. The clinical implications of this observation are currently unknown and are being evaluated.
In February 2021, Neurocrine notified us of its decision to terminate the Neurocrine Collaboration with respect to
the VY-AADC Program, effective August 2, 2021. The Collaboration Agreement remains in full force and effect for each
other program thereunder. Upon the termination of the VY-AADC Program, the license granted by us to Neurocrine will
expire, and we will regain worldwide intellectual property rights to the VY-AADC Program in accordance with the
collaboration agreement. We intend to support Neurocrine, the study sponsor and IND holder, on ongoing matters related to
the completion of imaging and clinical assessments requested by the DSMB and the provision of other information
requested by the FDA for the RESTORE-1 Phase 2 clinical trial. We plan to determine the potential path forward for the
VY-AADC Program based on the additional information being collected by Neurocrine in response to the DSMB requests.
Huntington’s Program: VY-HTT01
Disease Overview
Huntington’s disease is a fatal, inherited neurodegenerative disease that results in the progressive decline of motor
and cognitive functions and a range of behavioral and psychiatric disturbances. The average age of onset is 39 years, with
patients typically dying approximately 15 to 20 years following diagnosis. According to the Huntington’s Disease Society
of America, Huntington’s disease affects approximately 30,000 patients in the United States. Huntington’s disease is caused
by mutations in the huntingtin, or HTT, gene. Huntington’s disease is an autosomal dominant disorder, which means that an
individual is at risk of inheriting the disease if only one parent is affected. More than 200,000 individuals in the United
States are at risk for inheriting the mutant gene from an affected parent. While the exact function of the HTT gene in
healthy individuals is unknown, it is essential for normal development before birth and mutations in the HTT gene
ultimately lead to the production of abnormal intracellular huntingtin protein aggregates that cause neuronal cell death.
Currently, there are no approved treatments targeting the underlying cause of the disease and only one drug, tetrabenazine,
has been approved for the treatment of the specific motor symptoms of Huntington’s disease.
Our Treatment Approach
We believe that AAV gene therapy is an attractive approach to treating Huntington’s disease. Since HTT gene
mutations that cause Huntington’s disease are toxic gain-of-function mutations, we believe that we can employ an AAV
gene therapy approach designed to knock down expression of the HTT gene. In addition, the targeted cells for treatment
primarily reside in discrete regions of the brain - the striatum and the cortex - that can be targeted with AAV gene therapy
delivered directly into the brain. The mechanism of action of VY-HTT01 is knockdown of HTT gene expression in neurons
in the striatum and cortex, thereby reducing the level of toxicity associated with mutated protein in these brain regions, and
slowing the progression of cognitive and motor symptoms. We believe that we can use the same surgical approach for this
program that has been used for VY-AADC (NBIb-1817) delivery to the brain, allowing us to leverage prior clinical
experience.
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Preclinical Studies
In 2015, we entered into the Sanofi Genzyme Collaboration and granted Sanofi Genzyme exclusive options to
license, develop and commercialize VY-HTT01 outside the United States and to co-commercialize VY-HTT01 in the
United States, among rights to other programs. Accordingly, Sanofi Genzyme’s Huntington’s disease gene therapy program
was combined with our efforts at that time. Our collaborators at Sanofi Genzyme had completed significant preclinical
work focused on AAV gene therapy for Huntington’s disease. Sanofi Genzyme’s preclinical studies in a mouse model of
Huntington’s disease demonstrated the safety and efficacy of AAV gene therapy targeting the knockdown of the HTT gene
in the CNS.
As shown in the figure below, using an AAV vector delivered directly to the CNS, HTT gene expression was
observed to be reduced by over 50%, on average, in the treatment group as compared to the control group. No signs of
toxicity were reported.
Knockdown of HTT Following AAV Delivery(1)
(1) Stanek et al, Human Gene Therapy (2014); 25; 461-474. The publisher for this copyrighted material is Mary Ann Liebert, Inc. publishers.
*
p<0.05
In addition, significant functional benefit was observed in the treatment group, as measured by the rotarod test to
assess motor function, and the Porsolt Swim Test to measure depressive behavior in mice. In the figure below, both normal
or wild type mice, and mice with the HTT mutation, or YAC128, were evaluated following treatment with either an AAV
vector targeting the knockdown of the HTT gene, labeled as AAV2/1-miRNA-Htt below, or a negative control vector,
labeled as AAV2/1-Null below. As expected, knocking down HTT in the control mice was observed to have no functional
impact, whereas knocking down HTT in YAC128 mice was observed to have significant functional benefit.
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Reduction of Behavioral Deficits in an Animal Model of Huntington’s Disease(2)
(2) Stanek et al, Human Gene Therapy (2014); 25; 461-474. The publisher for this copyrighted material is Mary Ann Liebert, Inc. publishers.
*
p<0.05
VY-HTT01 is our clinical gene therapy candidate for the treatment of Huntington’s disease. VT-HTT01 is
composed of an AAV capsid (AAV1) and proprietary transgene that harnesses the RNA interference pathway to selectively
knock down, or reduce, levels of HTT messenger RNA.
The extent of HTT mRNA suppression (greater than 50%) and high precision and efficiency of primary
microRNA processing in our preclinical studies supported the selection of our lead clinical candidate. Additionally,
preclinical data in large mammals have demonstrated that a single intraputaminal administration results in robust
knockdown of HTT in the putamen.
Additional preclinical delivery studies have further optimized the dosing paradigm. In late 2018 and early 2019,
we presented results demonstrating significant reduction of HTT mRNA at five weeks post-dosing in adult non-human
primates using an MRI-guided surgical delivery of VY-HTT01 and a novel delivery paradigm targeting both the putamen
and thalamus. Targeting the thalamus in addition to the putamen leverages more extensive and more preserved neuronal
pathways to the cortex than delivery to the putamen alone. In adult non-human primates, at five weeks post-dosing, this
novel dosing paradigm with VY-HTT01 resulted in well-tolerated and significant suppression of HTT in the striatum and in
cortical neurons, which are critical in the progression of disease.
Recently, in non-human primate studies, a single administration of VY-HTT01 was well-tolerated and resulted in
robust and widespread knockdown of HTT mRNA and protein with knock-down stabilization between six and twelve
months and widespread distribution of VY-HTT01 vector genome across the striatum and cortex. VY-HTT01 treatment
demonstrated robust reduction of HTT mRNA and protein in the YAC128 and BACHD transgenic mouse models of
Huntington’s disease, with significant improvements in motor function. We plan to present preclinical data from the IND-
enabling studies at a medical conference and other presentations in 2021.
VY-HTT01 Program Status
In June 2019, we and Sanofi Genzyme executed the Sanofi Genzyme Termination Agreement, under the terms of
which Sanofi Genzyme relinquished its rights to the Huntington’s Program, including its rights to the exclusive license
options to the Huntington’s Program. As a result, we gained worldwide rights to the treatment program for Huntington’s
disease.
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In September 2020, we submitted an IND application to evaluate VY-HTT01 in a Phase 1b clinical trial in patients
with Huntington’s disease. In October 2020, the FDA placed a clinical hold on our IND application pending the resolution
of certain chemistry, manufacturing and controls, or CMC, information requests. We have subsequently received written
feedback from the FDA requesting additional information on specific CMC topics, including drug device compatibility and
drug substance and product characterization, and plan to provide our complete response to the FDA in the first half of
2021. If we are able to resolve the clinical hold and obtain clearance of our IND application, we expect to initiate our
clinical evaluation of VY-HTT01.
Friedreich’s Ataxia Program: VY-FXN01
Disease Overview
Friedreich’s ataxia is a debilitating neurodegenerative disease resulting in poor coordination of legs and arms,
progressive loss of the ability to walk, generalized weakness, loss of sensation, scoliosis, diabetes and cardiomyopathy as
well as impaired vision, hearing and speech. The typical age of onset is 10 to 12 years, and life expectancy is severely
reduced with patients generally dying of neurological and cardiac complications between the ages of 35 and 45. According
to the Friedreich’s Ataxia Research Alliance, there are approximately 6,400 patients living with the disease in the United
States. There are currently no FDA-approved treatments for the disease.
Friedreich’s ataxia patients have mutations of the FXN gene that reduce production of the frataxin protein,
resulting in the degeneration of sensory pathways and a variety of debilitating symptoms. Friedreich’s ataxia is an
autosomal recessive disorder, meaning that a person must obtain a defective copy of the FXN gene from both parents in
order to develop the condition. One healthy copy of the FXN gene, or 50% of normal frataxin protein levels, is sufficient to
prevent the disease phenotype. We therefore believe that restoring FXN protein levels to at least 50% of normal levels by
AAV gene therapy might lead to a successful therapy.
Our Treatment Approach
We are developing an AAV gene therapy approach that we believe will deliver a functional version of the FXN
gene to the sensory pathways through intravenous injection. We think this approach has the potential to improve balance,
ability to walk, sensory capability, coordination, strength and functional capacity of Friedreich’s ataxia patients. Most
Friedreich’s ataxia patients produce low levels of the frataxin protein, which although insufficient to prevent the disease,
exposes the patient’s immune system to frataxin. This reduces the likelihood that the FXN protein expressed by AAV gene
therapy will trigger a harmful immune response.
Preclinical Studies
We initially conducted preclinical studies in non-human primates and achieved high FXN expression levels within
the target sensory ganglia, or clusters of neurons, along the spinal region following intrathecal injection. More recently, we
conducted preclinical studies in non-human primates with IV injection and achieved target FXN expression levels within
sensory ganglia and the heart. The levels of FXN expression observed using an AAV vector were, on average, greater than
FXN levels present in control normal human brain tissue. FXN expression was also observed in the cerebellar dentate
nucleus, another area of the CNS that is often affected in Friedreich’s ataxia, and that is often considered difficult to target
therapeutically.
Our Program Status
As part of the Neurocrine Collaboration, we are developing VY-FXN01 for the treatment of Friedreich’s ataxia.
VY-FXN01 is currently in preclinical development. We and Neurocrine are in the process of identifying a lead candidate
that will comprise a capsid, promoter, and FXN transgene. We are completing AAV capsid biodistribution experiments to
confirm capsid serotypes that effectively transduce disease target tissues in non-human primates following intravenous
injection. Criteria for evaluating these capsids include safety, the overall level of transgene expression achieved, and the
anatomic and cellular distribution of the transgene expression. Also, we have optimized the promoter for VY-FXN01 to
achieve an acceptable therapeutic index for frataxin replacement. To evaluate the therapeutic potential of our vectors, we
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have conducted testing in a new genetic mouse model of Friedreich’s ataxia. In this preclinical model of Friedreich’s ataxia,
our gene therapy candidates durably improved sensory function and rescued the disease phenotype based on multiple
functional tests. In physiological and behavioral assays, our gene therapy candidates demonstrated dose-dependent and
durable responses for more than 10 months after a single administration, preventing central and peripheral disease
progression. We also have a significant effort focused on better understanding the clinical course of Friedreich’s ataxia,
identifying potential fluid biomarkers and selecting clinical endpoints for future clinical trials. If we and Neurocrine
successfully identify a lead candidate for this program, we plan to complete IND enabling studies to evaluate its safety and
efficacy.
ALS Program: VY-SOD102
Disease Overview
ALS is a fatal neurodegenerative disease that leads to muscle atrophy, spasticity and weakness as well as impaired
speech, swallowing and breathing, with many patients requiring ventilator support as the disease progresses. The average
age of onset of ALS is 55 years, and median survival is approximately three years after initial symptoms appear. It is
estimated that there are approximately 20,000 patients in the United States who are living with the disease. Familial, or
inherited, ALS accounts for approximately 10% of ALS cases, and an estimated 20% of familial ALS is caused by
mutations in the superoxide dismutase 1, or SOD1, gene. Therefore, there are an estimated 400-800 patients in the United
States with ALS caused by mutations in the SOD1 gene.
The normal function of the SOD1 protein is to catalyze the conversion of superoxide anion (O2
-) to hydrogen
peroxide (H2O2) and oxygen (O2). Mutations in SOD1 have been shown to lead to the formation of toxic aggregates of the
SOD1 protein, resulting in the dysfunction and death of motor neurons. Patients with familial ALS caused by certain
mutations in the SOD1 gene progress more rapidly than patients with other forms of ALS, although the reason for this more
rapid progression is unknown.
There are currently only two FDA-approved treatments for ALS, Riluzole by Sanofi, which has been shown to
have only modest efficacy, prolonging life by a few months, and Edaravone, which has been shown to slow decline of daily
functioning.
Our Treatment Approach
We believe that AAV gene therapy is an attractive approach to treating monogenic ALS caused by SOD1
mutations. Since the SOD1 gene mutations that cause ALS are toxic gain-of-function mutations, we believe that we can
employ an AAV gene therapy approach that targets the knockdown of SOD1 gene expression. In addition, the primary
target cells - motor neurons - reside within the spinal cord, which we believe can be effectively transduced with AAV gene
therapy through intraparenchymal injection as well as other routes of administration. The mechanism of action of VY-
SOD102 is knockdown of SOD1 expression in motor neurons, thereby potentially reducing the level of toxicity associated
with mutated protein, and slowing functional decline and prolonging ventilator-independent survival.
We believe that there is also the potential to leverage our approach for the treatment of other genetically defined
forms of ALS.
Preclinical Studies Targeting SOD1 for Monogenic ALS
Results from our preclinical studies using intraparenchymal delivery of AAV vector to the spinal cord support
targeting mutant SOD1 for the treatment of monogenic ALS. In the mini-pig, used as an animal model as it has a spinal
cord similar in size to the human spinal cord, significant knockdown of SOD1 expression was observed following
intraparenchymal spinal cord injection of an AAV vector carrying a transgene designed to inhibit SOD1 expression. This
novel delivery approach with VY-SOD102 reduced SOD1 mRNA in the spinal cord on average by 70% and 50% in the
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cervical and thoracic regions, respectively, both regions critical for respiratory function, and 82% near the site of cervical
injection. In addition, VY-SOD102 reduced SOD1 mRNA by 22% in the lumbar region.
The knockdown of SOD1 has also been reported to provide significant survival benefits in animal models of ALS.
As shown in the example below, mice with a SOD1 mutation treated with an AAV vector to knock down expression of the
mutant human SOD1 gene extended median survival by 87 days compared to mice treated with a control vector.
Improved Survival Post Knockdown of SOD1(1)
(1) Reprinted by permission from Macmillan Publishers Ltd: Foust et al, Molecular Therapy (2013), 21 (12); 2148-2159, copyright (2013). Purple
line represents mice treated with AAV gene therapy, while gray line represents control mice.
These studies provide proof-of-principle for our approach to treating monogenic ALS due to SOD1 mutations with
VY-SOD102.
Our Program Status
In late 2016, we identified VY-SOD101 as a lead clinical candidate after screening a series of capsids, microRNA
expression cassettes, (a segment of DNA that contains the sequence that targets SOD1 gene expression selectively for
knockdown), and encoded payloads. We screened more than 100 RNAi sequences, each represented by a
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bar in the graph below, and successfully identified multiple, highly-potent RNAi sequences targeting SOD1, as highlighted
by the yellow bars in the figure below:
Overview of miRNA Target Sequences for Knockdown of SOD1
The most potent RNAi sequences targeting SOD1 gene expression were evaluated in multiple microRNA
expression cassettes and with a number of vector genome configurations. We have completed the necessary experiments to
evaluate these potential lead candidates based upon criteria that include safety, selectivity, potency, and efficiency and
precision of microRNA processing.
In late 2017, we initiated additional preclinical studies to further optimize our ALS program’s therapeutic
approach, including exploration of additional routes of administration and novel AAV capsids in large animal models.
Based on these studies, we selected VY-SOD102 as our lead candidate. VY-SOD102, our clinical candidate for the
treatment of a monogenic form of ALS, is composed of an AAV capsid and a proprietary transgene that harnesses the RNA
interference pathway to selectively knock down, or reduce, levels of SOD1 mRNA. VY-SOD102 has the potential to
durably reduce the levels of toxic mutant SOD1 protein in the spinal cord to slow the progression of disease. In late 2018
and early 2019, we presented data on VY-SOD102 administered with a novel delivery paradigm comprising a one-time
infusion after laminectomy to the cervical region of the spinal cord. Preclinical data previously reported included
significant reductions of SOD1 mRNA throughout the spinal cord of the Göttingen mini-pig, which has a spinal cord
similar in length and diameter to the human spinal cord. This novel delivery approach with VY-SOD102 yielded well-
tolerated and significant reduction of SOD1 mRNA throughout the spinal cord at four weeks post-dosing. In June 2019 in
connection with the restructuring of our gene therapy relationship with Sanofi Genzyme, we decided to reallocate resources
to our Huntington’s Program and new discovery efforts. We may seek a partner to advance our preclinical program for
SOD1 prior to filing an IND application for advancing VY-SOD102 into clinical development. We are currently conducting
preclinical studies to generate data with VY-SOD102 in non-human primates with alternative routes of administration.
Tau Program
Disease Overview
In healthy individuals, tau is an abundant soluble cytoplasmic protein that binds to microtubules, which are key
structural proteins in cells, to promote their stability and function. In Alzheimer’s disease and other tauopathies, tau
aggregates and forms insoluble tau-containing neurofibrillary tangles. The progressive spread of tau pathology along
distinct anatomical pathways in the brain closely correlates with disease progression and severity in a number of
tauopathies, including Alzheimer’s disease, FTD, and PSP. In addition, mutations in the tau gene have been shown to cause
inherited forms of tauopathies, including FTD and PSP. Because the extent of tau pathology in Alzheimer’s disease and
other tauopathies closely correlates with the severity of neurodegeneration, synapse loss, and cognitive
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deficits, attempts to prevent, reduce, or slow the development of tau pathology have become important therapeutic
strategies for these diseases.
In previous preclinical studies in animal models, despite high weekly or biweekly systemic doses of anti-tau
monoclonal antibodies administered over three to six months, only very low levels of antibody reached the brain, resulting
in a modest reduction of tau pathology by ~40 –50%. This incomplete and modest reduction in tau pathology following
treatment with very high and frequent systemic doses of these antibodies may pose therapeutic challenges in humans with
various tauopathies. To address these limitations, our tau program attempts to develop AAV gene therapies to deliver
monoclonal antibodies to the brain directed against tau as potential new treatments for Alzheimer’s disease and other tau-
related neurodegenerative diseases.
Our Program Status
The Tau program is currently in the preclinical stage. In February 2018, we entered into the AbbVie Tau
Collaboration Agreement, for the research, development, and commercialization of AAV gene therapy products for the
treatment of diseases of the central nervous system and other neurodegenerative diseases related to defective or excess
aggregation of tau protein in the human brain, including Alzheimer’s disease. The AbbVie Tau Collaboration Agreement
was terminated in its entirety in August 2020. In connection with the termination, we were obligated to undertake certain
transition activities, including transferring to AbbVie certain data and reports generated under, and any regulatory filing
relating to certain compounds and product candidates investigated in the collaboration. All such activities were completed
on or prior to September 30, 2020. As a result of the termination, we have been relieved of future research and
development obligations under the collaboration. Exclusivity provisions restricting either party or any of its respective
affiliates from directly or indirectly exploiting any vectorized antibody compound targeting a tau protein and restricting us,
alone or jointly with any third party, from directly or indirectly exploiting specified antibodies targeting a tau protein were
also terminated. Each party retains a royalty-free, exclusive license to the other’s interest in the Joint IP to exploit
antibodies it contributed to the collaboration as well as a royalty-free, non-exclusive license to the Joint IP for any other
purpose. Further, AbbVie has granted us, effective as of the AbbVie Collaboration Termination Date, a worldwide, royalty-
free, transferable, sublicensable (though multiple tiers), exclusive license to AbbVie’s interest in Joint IP to exploit research
compounds or product candidates that were investigated under the collaboration and do not encode antibodies contributed
by AbbVie or include active pharmaceutical ingredients owned by AbbVie or its affiliates, for all human diagnostic,
prophylactic and therapeutic uses. We are not obligated to repay the upfront payment it received from AbbVie in
connection with entering into the AbbVie Tau Collaboration Agreement but are no longer eligible to receive option
payments, milestone payments or royalties thereunder.
Following the termination, we continue to advance the research and development efforts related to vectorized
antibodies, including vectorized antibody compounds comprised of an AAV or other virus vector genome that encodes one
of more antibodies that target and bind to a tau protein. We are currently evaluating our options for advancing these efforts
individually or with other potential collaborators.
Future Programs
We are evaluating additional severe neurological diseases that could be treated using AAV gene therapy through
application of either a gene replacement or a gene knockdown approach and are also actively exploring additional potential
treatment methods that can utilize an AAV vector.
Collaborations and License Agreements
Neurocrine Collaboration
In January 2019, we entered into the Neurocrine Collaboration Agreement for the research, development and
commercialization of certain of our AAV gene therapy products. Under the Neurocrine Collaboration Agreement, upon the
expiration or termination of applicable waiting periods and the receipt of any required approvals or clearances including
antitrust clearance, we agreed to collaborate on the conduct of four collaboration programs, which we refer to
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collectively as the Neurocrine Programs: the VY-AADC Program for the treatment of Parkinson’s disease, the FA Program
for the treatment of Friedreich’s ataxia including the development of the VY-FXN01 product candidate, which together
with the VY-AADC Program, we refer to as the Legacy Programs, and the Discovery Programs.
Collaboration and Licenses
Under the terms of the Neurocrine Collaboration Agreement, subject to the rights retained by us thereunder, we
agreed to collaborate with Neurocrine on, and to grant, exclusive, royalty-bearing, non-transferable, sublicensable licenses
to certain of our intellectual property rights, for all human and veterinary diagnostic, prophylactic, and therapeutic uses, for
the research, development, and commercialization of gene therapy products, which we refer to as the Collaboration
Products, under (i) the VY-AADC Program, on a worldwide basis; (ii) the FA Program, in the United States and, all
countries in the world in which the Neurocrine Collaboration Agreement remains in effect with respect to the FA Program;
and (iii) each Discovery Program, on a worldwide basis.
As a result of the June 2019 Sanofi Genzyme Termination Agreement, we gained worldwide rights to the
Huntington’s Program and ex-U.S. rights to the FA program. We subsequently transferred the ex-U.S. rights to the FA
Program to Neurocrine pursuant to the Neurocrine Collaboration Agreement. To facilitate our transfer of the ex-U.S. rights
to the FA Program to Neurocrine, we and Neurocrine amended the Neurocrine Collaboration Agreement and we received a
$5.0 million payment from Neurocrine.
Pursuant to development plans to be agreed by the parties, which are overseen by a joint steering committee, or
JSC, we have operational responsibility, subject to certain exceptions, for the conduct of each Neurocrine Program prior to
the Transition Event for each Program, as described below, and are required to use commercially reasonable efforts to
develop the Collaboration Products. Neurocrine has agreed to be responsible for all costs incurred by us in conducting these
activities for each Neurocrine Program, in accordance with an agreed budget. If we breach our development responsibilities
or in certain circumstances upon a change in control of us, Neurocrine has the right but not the obligation to assume the
activities under such Neurocrine Program.
Upon the occurrence of a specified event for each Neurocrine Program, or a Transition Event, Neurocrine agreed
to assume responsibility for development, manufacturing and commercialization activities for such Neurocrine Program
from us and to pay milestones and royalties on future net sales as described further below. For each Legacy Program, we
were granted the option, or a Co-Co Option, to co-develop and co-commercialize such Neurocrine Program upon the
occurrence of a specified event, or a Co-Co Trigger Event. We agreed, upon our exercise of a Co-Co Option, to enter into a
cost- and profit-sharing arrangement with Neurocrine, or a Co-Co Agreement, and (i) jointly develop and commercialize
Collaboration Products for such Neurocrine Program, or Co-Co Products, (ii) share in its costs, profits and losses, and (iii)
forfeit certain milestones and royalties on net sales in the United States during the effective period of the applicable Co-Co
Agreement. The Transition Events are (i) with respect to the VY-AADC Program, our receipt of topline data for the
ongoing RESTORE-1 Phase 2 clinical trial for VY-AADC (NBIb-1817); (ii) with respect to the FA Program, our receipt of
topline data for the initial Phase 1 clinical trial for an FA Program product candidate; and (iii) with respect to each
Discovery Program, the preparation by us and the approval by Neurocrine of an IND application to be filed with the FDA
by Neurocrine for the first development candidate in such Discovery Program. The Co-Co Trigger Events are (i) with
respect to the VY-AADC Program, our receipt of topline data for the ongoing RESTORE-1 Phase 2 clinical trial for VY-
AADC (NBIb-1817) and (ii) with respect to the FA Program, the achievement of milestones or metrics specified in the
applicable development plan, as determined by the JSC.
Under the Neurocrine Collaboration Agreement, subject to exceptions specified, we and Neurocrine agreed that
profits and losses under our Co-Co Option would be allocated (i) 50% to Neurocrine and 50% to us for a Collaboration
Product from the VY-AADC Program and (ii) 60% to Neurocrine and 40% to us for a Collaboration Product from the FA
Program; provided, however, that Neurocrine would have the right to elect, within a specified period following the
acceptance for filing of a BLA from the FDA, to pay a $35.0 million rate-shifting fee to us to change the allocation for the
VY-AADC Program to 55% to Neurocrine and 45% to us. The parties agreed that each Co-Co Agreement would provide us
the right to terminate for any reason upon prior written notice to Neurocrine and Neurocrine the right to terminate in certain
circumstances upon our change of control.
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Governance
Our research and development activities under the Neurocrine Collaboration Agreement are to be conducted
pursuant to plans agreed to by the parties, on a program-by-program basis, and overseen by the JSC, which is composed of
an equal number of representatives from the parties. The JSC may delegate matters within its authority to subcommittees of
the JSC. In addition, the Neurocrine Collaboration Agreement establishes working groups to handle specified matters on a
subject matter-by-subject matter basis. If a working group or subcommittee cannot agree on a matter within its purview
within a specified time, such matter is to be referred sequentially to the JSC and then the executive officers of the parties. If
the executive officers are not able to resolve the matter, then (i) with respect to each Legacy Program, subject to specified
exceptions, (a) Neurocrine has the right to resolve such matter prior to our exercise of our Co-Co Option with regard to
such Co-Co Product or if such Co-Co Option expires or goes unexercised and (b) following the timely exercise by us of our
Co-Co Option, depending on the subject of such matter, either Neurocrine, in certain instances, or the parties jointly or the
JSC, in other instances, would have the right to resolve such matter, and (ii) with respect to Discovery Programs, subject to
specified exceptions, Neurocrine has the right to resolve such matter.
Candidate Selection
The parties have committed to agree on a list of up to eight target genes, or Targets, from which Neurocrine has
the right to nominate Targets for the two Discovery Programs. The Targets nominated for the Discovery Programs must be
approved by a consensus of the JSC or the executive officers.
Manufacturing
Prior to the Transition Event for a Neurocrine Program, we are responsible for the manufacture of any
Collaboration Products for the Program. Following the Transition Event, the parties shall negotiate the manufacturing and
supply responsibilities, subject to the terms of any applicable Co-Co Agreement.
Financial Terms
Under the terms of the Neurocrine Collaboration Agreement, Neurocrine has paid us an upfront payment of
$115.0 million. In connection with the Neurocrine Collaboration Agreement, Neurocrine also paid us $50.0 million as
consideration for an equity purchase of 4,179,728 shares of our common stock. The Neurocrine Collaboration Agreement
provides for aggregate development milestone payments from Neurocrine to us for Collaboration Products under (i) the
VY-AADC Program of up to $170.0 million; (ii) the FA Program of up to $195.0 million, and (iii) each of the two
Discovery Programs of up to $130.0 million per Discovery Program. We may be entitled to receive aggregate commercial
milestone payments for each Collaboration Product of up to $275.0 million, subject to an aggregate cap on commercial
milestone payments across all Neurocrine Programs of $1.1 billion.
Neurocrine has also agreed to pay us royalties, based on future net sales of the Collaboration Products. Such
royalty percentages, for net sales in and outside the United States, as applicable, range (i) for the VY-AADC Program, from
the mid-teens to thirty and the low-teens to twenty, respectively; (ii) for the FA Program, from the low-teens to high-teens
and high-single digits to mid-teens, respectively; and (iii) for each Discovery Program, from the high-single digits to mid-
teens and mid-single digits to low-teens, respectively. On a country-by-country and program-by-program basis, royalty
payments would commence on the first commercial sale of a Collaboration Product and terminate on the later of (a) the
expiration of the last patent covering the Collaboration Product or its method of use in such country, (b) 10 years from the
first commercial sale of the Collaboration Product in such country and (c) the expiration of regulatory exclusivity in such
country, or the Royalty Term. Royalty payments may be reduced by up to 50% in specified circumstances, including
expiration of patents rights related to a Collaboration Product, approval of biosimilar products in a given country or
required payment of licensing fees to third parties related to the development and commercialization of any Collaboration
Product. Additionally, the licenses granted to Neurocrine shall automatically convert to fully paid-up, non-royalty bearing,
perpetual, irrevocable, exclusive licenses on a country-by-country and product-by-product basis upon the expiration of the
Royalty Term applicable to such Collaboration Product in such country.
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Intellectual Property
Under the terms of the Neurocrine Collaboration Agreement and subject to specified exceptions therein, each
party owns the entire right, title and interest in and to all intellectual property rights made solely by its employees or agents
in the course of the collaboration. The parties jointly own all rights, title and interest in and to all intellectual property rights
made or invented jointly by employees or agents of both parties.
Exclusivity
During the term of the Neurocrine Collaboration Agreement, neither party nor any of its respective affiliates is
permitted to directly or indirectly exploit any AAV-based gene therapy products directed to a Target to which a
Collaboration Product is directed, subject to specified exceptions, including the parties’ conduct of basic research activities.
Termination
Unless earlier terminated, the Neurocrine Collaboration Agreement expires on the later of (i) the expiration of the
last to expire Royalty Term with respect to a Collaboration Product in all countries in the relevant territory or (ii) the
expiration or termination of all Co-Co Agreements. Neurocrine may terminate the Neurocrine Collaboration Agreement in
its entirety or on a program-by-program or country-by-country basis by providing at least (a) 180-day advance notice if
such notice is provided prior to the first commercial sale of the Collaboration Product to which the termination applies or
(b) one-year advance notice if such notice is provided after the first commercial sale of the Collaboration Product to which
the termination applies. We may terminate the Neurocrine Collaboration Agreement, subject to specified conditions,
if Neurocrine challenges the validity or enforceability of certain of our intellectual property rights. Subject to a cure period,
either party may terminate the Neurocrine Collaboration Agreement in the event of a material breach by the other party in
whole or in part, subject to specified conditions.
Upon termination in certain cases, Neurocrine has agreed to grant to us licenses to certain Neurocrine intellectual
property, subject to a negotiation between the parties to establish royalty rates for use of such intellectual property. In the
event of a breach by us with respect to a Neurocrine Program, if such termination were to occur after a Transition Event,
then (i) if a Co-Co Agreement is in effect with respect to such program, Neurocrine can terminate the Co-Co Agreement for
such program and we would no longer have co-development and co-commercialization rights with respect to the
Collaboration Product and (ii) subject to any license agreements, Neurocrine would no longer have any obligations with
respect to any Collaboration Products resulting from such program.
On February 2, 2021, Neurocrine notified us that it had elected to terminate the Neurocrine Collaboration
Agreement solely with regards to the VY-AADC Program, effective as of the Neurocrine VY-AADC Program Termination
Effective Date. The Neurocrine Collaboration Agreement remains in full force and effect for each other program
thereunder. As a result of the termination, as of the Neurocrine VY-AADC Program Termination Effective Date, the
license granted by the Company to Neurocrine thereunder regarding the VY-AADC Program shall expire and we shall
regain worldwide intellectual property rights regarding the VY-AADC Program. The Company intends to support
Neurocrine, the study sponsor and IND holder, on ongoing matters related to the completion of imaging and clinical
assessments requested by the DSMB and the provision of other information requested by the FDA for the RESTORE-1
Phase 2 clinical trial. We plan to determine the potential path forward for the VY-AADC Program based on the additional
information being collected by Neurocrine in response to the DSMB requests.
License Agreement with University of Massachusetts
On January 30, 2014, we entered into a license agreement with the University of Massachusetts, or UMass,
pursuant to which UMass granted us an exclusive, worldwide, royalty-bearing license to certain of its licensed patents to
make, have made, use, offer for sale, sell, have sold and import certain licensed products in the field of human diseases that
use gene therapy applications. Our license is subject to any rights that may be required to be granted to the
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government of the United States, and UMass reserves the right to use the licensed patents for education and research and,
with our consent, for non-commercial patient care, without the payment of any compensation to us.
In consideration for rights granted to us under the agreement, we made an upfront payment of $0.2 million to
UMass. We are obligated to pay UMass (i) low-single digit royalty payments based on net sales of the licensed products,
(ii) annual maintenance payments of $30.0 thousand, which are creditable against royalties payable in such period,
(iii) minimum aggregate annual royalty payments that are creditable against royalties payable in such period, with the
minimum aggregate amount payable being in the low-six digits for each of the first four years of this agreement and a
minimum aggregate amount payable being in the mid-six digits for each year, thereafter, (iv) milestone payments of up to
$1.8 million, per licensed product for the first five licensed products, based on the achievement of development and
regulatory milestones and (v) a percentage of sublicensing income that decreases over time from low double digit
percentages to a mid-single digit percentage. We also agreed to reimburse UMass approximately $0.7 million for patent
related expenses incurred by UMass as of the effective date of the agreement over a two-year period.
Under the agreement, we agreed to use commercially reasonable efforts to develop licensed products and to
introduce such licensed products into the commercial market, and further agreed to certain development milestones.
The agreement will terminate on the date that is the later of (i) seven years after the first commercial sale of the
last licensed product under the agreement or (ii) such time as there are no valid claims covering a licensed product. We
have the right to terminate the agreement for any reason upon 90 days prior written notice, and we and UMass have the
right to terminate the agreement if the other party fails to cure a written breach within 60 days of receiving written notice of
such breach.
MassBiologics and UMass Collaboration Agreement
On October 20, 2014, we entered into a Collaboration Agreement with UMass and MassBiologics, pursuant to
which we shall (i) fund certain projects that will be conducted by UMass or MassBiologics, (ii) fund certain educational
programs of UMass, including post-doctoral research at our laboratories beginning in 2015 and an annual lecture series
beginning in 2015 and (iii) collaborate with MassBiologics to establish scalable processes for manufacturing recombinant
AAV vector products using cGMP.
In November 2014, we agreed to the first project under this agreement whereby we funded approximately
$2.9 million over a 16-month period for certain research and development services performed by MassBiologics. The
project commenced in January 2015 and completed during 2016. We and UMass and/or MassBiologics may agree to
conduct other projects in the future, the terms of which will be agreed upon at such time.
This agreement will remain in effect for a period of five years and automatically renews for additional one-year
periods. Either party has the right to terminate this agreement, once in each renewal period, for any reason upon providing
the other party with 90 days written notice or in the event of a material breach of the agreement by the other party that is
not cured within 60 days of written notice.
We will own all intellectual property rights generated under this agreement, either by our employees, UMass
and/or MassBiologics employees, or jointly by our employees and UMass and/or MassBiologics employees, that cover
AAV materials. We and UMass and/or MassBiologics, as applicable, will jointly own any intellectual property rights
generated under this agreement jointly by our employees and the employees of UMass and/or MassBiologics, as applicable,
that do not cover AAV materials.
Competition
The biopharmaceutical industry is characterized by intense and dynamic competition to develop new technologies
and proprietary therapies. Any product candidates that we successfully develop into products and commercialize may
compete with existing therapies and new therapies that may become available in the future. While we believe that our gene
therapy platform, product programs, product candidates and scientific expertise in the fields of
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gene therapy and neuroscience provide us with competitive advantages, we face potential competition from various
sources, including larger and better-funded pharmaceutical, specialty pharmaceutical and biotechnology companies, as well
as from academic institutions, governmental agencies and public and private research institutions.
We are aware of several companies focused on developing AAV gene therapies in various indications, including
AAVANTIBio, Inc., Abeona Therapeutics, Inc., Adverum Biotechnologies, Inc., Aevitas Therapeutics, Inc., Amicus
Therapeutics, Inc., Apic Bio, Inc., Applied Genetic Technologies Corporation, Asklepios BioPharmaceutical, Inc., or
AskBio (acquired by Bayer), Audentes Therapeutics, Inc. (acquired by Astellas Pharma Inc.), Biogen, Inc., or Biogen,
Brain Neurotherapy Bio, Inc. (merged with AskBio), Encoded Therapeutics, Inc., GenSight Biologics SA, Homology
Medicines, Inc., LEXEO Therapeutics, Inc., LogicBio Therapeutics, Inc., Lysogene SA, MeiraGTx Ltd., or MeiraGTx,
Neurogene, Inc., Novartis Gene Therapies, Inc. (formerly AveXis, Inc.), Passage Bio, Inc., Pfizer, Inc., Prevail
Therapeutics, Inc. (acquired by Eli Lilly), PTC Therapeutics, Inc., REGENXBio Inc., Sarepta Therapeutics, Inc., Sio Gene
Therapies, Inc., Solid Biosciences, Inc., Spark Therapeutics, Inc. (acquired by Roche), StrideBio, Inc., Taysha Gene
Therapies, Inc. and uniQure, as well as several companies addressing other methods for modifying genes and regulating
gene expression. Any advances in gene therapy technology made by a competitor may be used to develop therapies that
could compete against any of our product candidates.
We expect that VY-AADC (NBIb-1817) will potentially compete with a variety of therapies currently marketed
and in development for Parkinson’s disease, including DBS marketed by Medtronic plc, Abbott Laboratories (acquired
from St. Jude Medical in 2017), and other medical device companies, DUOPA/Duodopa marketed by AbbVie, as well as
other novel, non-oral forms of levodopa, including Mitsubishi Tanabe Pharma’s ND0612 (acquired from NeuroDerm in
2017), Acorda Therapeutics’ inhaled levodopa, INBRIJA, and Sunovion Pharmaceuticals’, or Sunovion’s, sublingual
apomorphine, KYNMOBI. Gene therapy competition for Parkinson’s disease includes AAV2-GDNF being developed by
Brain Neurotherapy Bio, Inc. and AAV-GAD being developed by MeiraGTx. Sio Gene Therapies is developing a second
generation LentiVector gene therapy, AXO-Lenti-PD (previously OXB-102, licensed from Oxford Biomedica in 2018).
We expect that our preclinical programs will compete with a variety of therapies in development, including:
● VY-HTT01 for Huntington’s disease will potentially compete with RG6042 (IONIS-HTTRx) being
developed by Roche in collaboration with Ionis Pharmaceuticals, Inc., or Ionis, WVE-120101, WVE-120102,
and WVE-003 being developed by WAVE Life Sciences Ltd. in collaboration with Takeda Pharmaceutical
Company Limited, or Takeda, a Zinc Finger Protein (ZFP) therapy being developed by Sangamo
Therapeutics, Inc. in collaboration with Takeda, and AMT-130, an AAV gene therapy being developed by
uniQure and a gene therapy being developed by Spark;
● VY-SOD102 for a monogenic form of ALS will potentially compete with BIIB067 (IONIS-SOD1Rx) being
developed by Biogen, in collaboration with Ionis, and gene therapies being developed by Novartis Gene
Therapies, Inc. and Apic Bio, Inc.; VY-FXN01 for Friedreich’s ataxia will potentially compete with AAV
gene therapies being developed by Pfizer, Inc., PTC Therapeutics, Inc., StrideBio, Inc. in collaboration with
Takeda, AAVANTIBio, Inc., Novartis Gene Therapies, Inc., and LEXEO Therapeutics, Inc.;
● VY-FXN01 for Friedreich’s ataxia will potentially compete with AAV gene therapies being developed by
Pfizer, Inc., PTC Therapeutics, Inc., StrideBio, Inc. in collaboration with Takeda, AAVANTIBio, Inc.,
Novartis Gene Therapies, and LEXEO Therapeutics, Inc.; and
● Our Tau program for tauopathies including Alzheimer’s disease, PSP, and FTD will potentially compete with
tau antibodies being developed by Roche Genentech Inc. in collaboration with AC Immune SA, Eli Lilly &
Co., AbbVie, Biogen, and several other companies, as well as an antisense oligonucleotide program being
developed by Ionis in collaboration with Biogen.
In addition, companies that are currently engaged in gene therapy for non-neurological diseases could at any time
decide to develop gene therapies for neurological diseases.
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Many of our competitors, either alone or with their strategic partners, have substantially greater financial,
technical and human resources than we do and significantly greater experience in the discovery and development of
product candidates, obtaining FDA and other regulatory approvals of product candidates and commercializing those
product candidates. Accordingly, our competitors may be more successful than us in obtaining approval for product
candidates and achieving widespread market acceptance. Our competitors’ product candidates may be more effective, or
more effectively marketed and sold, than any product candidate we may commercialize and may render our treatments
obsolete or non-competitive before we can recover the expenses of developing and commercializing any of our product
candidates.
Mergers and acquisitions in the biotechnology and pharmaceutical industries may result in even more resources
being concentrated among a smaller number of our competitors. These competitors also compete with us in recruiting and
retaining qualified scientific and management personnel and establishing clinical trial sites and subject registration for
clinical trials, as well as in acquiring technologies complementary to, or necessary for, our programs. Smaller or early-stage
companies may also prove to be significant competitors, particularly through collaborative arrangements with large and
established companies.
We anticipate that we will face intense and increasing competition as new product candidates enter the market and
advanced technologies become available. We expect any product candidates that we develop and commercialize to compete
on the basis of, among other things, efficacy, safety, convenience of administration and delivery, price, and the availability
of reimbursement from government and other third-party payers.
Our commercial opportunity could be reduced or eliminated if our competitors develop and commercialize
products that are safer, more effective, have fewer or less severe side effects, are more convenient or are less expensive
than any products that we may develop. Our competitors also may obtain FDA or other regulatory approval for their
product candidates more rapidly than we may obtain approval for ours, which could result in our competitors establishing a
strong market position before we are able to enter the market.
Manufacturing
The manufacture of gene therapy products is technically complex, and necessitates substantial expertise and
capital investment. Production difficulties caused by unforeseen events may delay the availability of material for our
clinical studies. To meet the requirements of our current and planned future trials we have developed a proprietary
manufacturing platform that provides a robust and scalable process for AAV production. We are using the baculovirus/Sf9
AAV production system, a technology for producing AAV vectors at scale in insect-derived cells. We focus on developing
internal processes and capabilities to produce high-yield and high-quality gene therapies. The process has been successfully
transferred to our contract manufacturing organizations where it is used in manufacturing of clinical materials in
accordance with the FDA’s cGMP. We have entered into agreements with Thermo Fisher Scientific and Fujifilm Diosynth
Biotechnologies to further expand our manufacturing capabilities to support the development of our gene therapy
programs. We have also built an onsite, state-of-the-art process research and development facility to enable the
manufacturing of high quality AAV gene therapy vectors at laboratory and pilot scale.
We presently contract with third parties for the manufacturing of our program materials. We currently have no
plans to build our own clinical or commercial scale manufacturing capabilities. The use of contracted manufacturing and
reliance on collaboration partners is relatively cost efficient and has eliminated the need for our direct investment in
manufacturing facilities and additional staff early in development. Although we rely on contract manufacturers, we have
personnel with manufacturing and quality experience to oversee our contract manufacturers.
Intellectual Property
Overview
We strive to protect the proprietary technology, inventions, and know-how to enhance improvements that are
commercially important to the development of our business, including seeking, maintaining, and defending patent rights,
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whether developed internally or licensed from third parties. We also rely on trade secrets and know-how relating to our
proprietary technology platform, on continuing technological innovation and on in-licensing opportunities to develop,
improve and maintain the strength of our position in the field of gene therapy that may be important for the development of
our business. We additionally may rely on regulatory protection afforded through data exclusivity, market exclusivity and
patent term extensions where available.
Our commercial success may depend in part on our ability to: obtain and maintain patent and other protections for
commercially important technology, inventions and know-how related to our business; defend and enforce our patents;
preserve the confidentiality of our trade secrets; and operate without infringing the valid enforceable patents and
intellectual property rights of third parties. Our ability to stop third parties from making, having made, using, selling,
offering to sell or importing our products may depend on the extent to which we have rights under valid and enforceable
licenses, patents or trade secrets that cover these activities. In some cases, these rights may need to be enforced by third-
party licensors. With respect to both licensed and company-owned intellectual property, we cannot be sure that patents will
be granted with respect to any of our pending patent applications or with respect to any patent applications filed by us in
the future, nor can we be sure that any of our existing patents or any patents that may be granted to us in the future will be
commercially useful in protecting our commercial products and methods of manufacturing the same.
We have 368 patent applications pending in the United States and foreign jurisdictions. At least 29 patent
applications have been filed and are pending in the United States and foreign jurisdictions by or on behalf of universities
which have granted us exclusive license rights to the technology. To date, 82 patents have issued to our licensors which
have granted us exclusive license rights to the technology. To date, 117 patents have issued to our licensors which have
granted us non-exclusive license rights to the technology with 40 applications pending. Our policy is to file patent
applications to protect technology, inventions and improvements to inventions that are commercially important to the
development of our business. We seek United States and international patent protection for a variety of technologies,
including: research tools and methods, methods for transferring genetic material into cells, AAV-based biological products,
methods of designing novel AAV constructs, methods for treating diseases of interest and methods for manufacturing our
AAV-based products. We also intend to seek patent protection or rely upon trade secret rights to protect other technologies
that may be used to discover and validate targets and that may be used to identify and develop novel biological products.
We seek protection, in part, through confidentiality and proprietary information agreements. We are a party to various other
license agreements that give us rights to use specific technologies in our research and development.
Company-Owned Intellectual Property
Parkinson’s Disease
We own four pending patent families with five issued patents and 69 patent applications directed to AAV
constructs encoding the gene AADC for therapeutic uses. Patents that grant from these patent families are generally
expected to start to expire in 2035, subject to possible patent term extensions.
Huntington’s Disease
We own six pending patent families with 35 patent applications directed to pharmaceutical compositions and
methods for targeting HTT for the treatment of Huntington’s disease. Patents from this family are generally expected to
start to expire in 2037, subject to possible patent term extensions.
ALS
We own five pending patent families with 3 issued patents and 35 patent applications directed to targeting SOD1
for the treatment of ALS, and we have an ownership interest in a sixth patent family with seven patent applications directed
to pharmaceutical compositions and methods for the treatment of ALS to protect our intellectual property arising from a
funded grant from The Amyotrophic Lateral Sclerosis Association. We own one pending patent family with 1 patent
application directed to chromosome 9 open reading frame 72, or C9orf72, for the treatment of ALS.
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Patents that grant from these patent families are generally expected to start to expire in 2035, subject to possible patent term
extensions.
Friedreich’s Ataxia
We own three pending patent families with 10 patent applications and we have an ownership interest in one
pending patent family with 8 patent applications directed to AAVs encoding frataxin constructs for the treatment of
Friedreich’s ataxia. Patents that grant from these patent families are generally expected to start to expire in 2036, subject to
possible patent term extensions.
Tauopathies, Synucleinopathies and Antibodies
We own eleven pending patent families directed to antibodies with 22 patent applications. The first patent family
has five patent applications directed to assays for the detection of neutralizing antibodies. The next nine patent families
have 16 patent applications directed to vectorized antibodies and other therapies. The last patent family has one patent
application directed to vectored augmentation of proteins. Patents that grant from these families are generally expected to
start to expire in 2036, subject to possible patent term extensions.
We have one pending patent family with one patent application directed to pharmaceutical compositions and
methods for the treatment of Alzheimer’s Disease. We also have one pending patent family with one patent application
directed to pharmaceutical compositions and methods for the treatment of tauopathies. Patents that grant from these
families are generally expected to start to expire in 2041, subject to possible patent term extensions.
We have one pending patent family with one patent application directed to pharmaceutical compositions and
methods for the treatment of Synucleinopathies. Patents that grant from this family are generally expected to start to expire
in 2041, subject to possible patent term extensions.
Neuropathic Pain
We own one pending patent family with one patent application directed to pharmaceutical compositions and
methods for the treatment of neuropathic pain. Patents from this family are generally expected to start to expire in 2041,
subject to possible patent term extensions.
Regulatable Expression
We own two pending patent families with four patent applications directed to regulatable expression control of
AAV transgenes. Patents that grant from this patent family are generally expected to start to expire in 2036, subject to
possible patent term extensions.
Delivery
We own one pending patent family with one patent application directed to cannula delivery system and methods of
use. Patents that grant from this patent family are generally expected to start to expire in 2039, subject to possible patent
term extensions.
We have an ownership interest in two pending patent families directed to trajectory array delivery devices,
including the V-TAG device and methods of use. Patents that grant from these patent families are generally expected to
start to expire in 2037, subject to possible patent term extensions.
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Engineering
We own ten pending patent families with one issued patent and 29 patent applications directed to AAV production
and/or engineering of the capsid and we have an ownership interest in two patent families with two patent applications
directed to engineering of the capsid. Among the pending applications we own, one application is directed to the TRACER
method for selection of AAV capsids with BBB crossing and cell-specific transduction properties. Also pending are
provisional applications directed to capsid variants identified using the TRACER method showing improved properties
over AAV9. Patents that grant from these patent families are generally expected to start to expire in 2035, subject to
possible patent term extensions.
We own three patent families with 6 issued patents and 45 patent applications directed to engineering of the vector
genome. Patents that grant from these patent families are generally expected to start to expire in 2035, subject to possible
patent term extensions.
We own one patent family with one patent application directed to genome engineering. Patents that grant from this
patent family are generally expected to start to expire in 2040, subject to possible patent term extensions.
Production; Chemistry, Manufacturing, and Controls
We own twenty-six pending patent families with 50 patent applications directed to AAV production and CMC.
Patents that grant from this patent family are generally expected to start to expire in 2035, subject to possible patent term
extensions. We have an ownership interest in one pending patent family with 15 patent applications directed to AAV
production and CMC.
Licensed Intellectual Property
We have obtained exclusive licenses and non-exclusive licenses to patents directed to both compositions of matter
and methods of use.
We have licensed six families of patents and patent applications, in the exclusive field of gene therapy for human
diseases, directed to RNAi constructs as vector payloads, their design and use in the treatment of neurological disorders
from the University of Massachusetts. These families of patents and applications are pending and/or granted in the United
States and other territories and comprises 92 granted patents and 12 applications. Patents have been granted in the United
States, Canada, Europe, Israel, Japan, Korea and Australia. Nationalization for some members has taken place in Germany,
Spain, France, Great Britain, Italy, and Netherlands. Patents that grant from these patent families are generally expected to
expire between 2022 and 2025, subject to possible patent term extensions.
We have exclusively licensed three families of patents and patent applications directed to novel AAV capsids from
the University of Massachusetts. These families of patents and applications, pending and/or granted in the United States
and other territories, and comprises 35 granted patents and 22 applications. Patents have been granted in the United States,
Europe and Japan. Nationalization for some members has taken place in Switzerland, Germany, Denmark, Spain, France,
Great Britain, Ireland, Italy, Netherlands, and Sweden. Patents that grant from these patent families are generally expected
to expire between 2030 and 2035, subject to possible patent term extensions.
We have non-exclusively licensed a patent family directed to production methods for AAV in insect cells from the
NIH, U.S. Department of Health and Human Services. This family of patents is granted in the United States, Canada,
Australia and Europe and further nationalized in Germany, France and Great Britain and comprises 8 granted patents.
Patents that grant from this patent family are generally expected to expire in 2022, subject to possible patent term
extensions.
We have non-exclusively licensed one patent family directed to novel AAV capsids from the Board of Trustees of
the Leland Stanford Junior University. This family comprises 5 granted patents. Patents that grant from these patent
families are generally expected to expire beginning in 2027, subject to possible patent term extensions.
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We have non-exclusively licensed two families of patents and patent applications from Ablexis, LLC. These
families of patents and patent applications are pending and/or granted in the United States and other territories and
comprise 40 granted patents and 11 applications. Patents have been granted in Australia, Canada, Europe, Korea, New
Zealand and the United States. Nationalization for some members has taken place in Austria, Belgium, Denmark, France,
Germany, Ireland, Italy, Netherlands, Poland, Spain, Switzerland, and United Kingdom. Patents that grant from these patent
families are generally expected to expire between 2029 and 2030, subject to possible patent term extensions.
We have non-exclusively licensed two families of patents and patent applications directed to AAV capsids from
the California Institute of Technology. These families of patents and patent applications are pending in the United States
and internationally and comprise 19 granted patents and 24 applications. Patents have been granted in the United States.
Patents that grant from these patent families are generally expected to start to expire in 2034, subject to possible patent term
extensions.
Trademark Protection
We own U.S. Reg. Nos. 4,545,283 for the service mark VOYAGER THERAPEUTICS and 4,621,083 for the
service mark VOYAGER THERAPEUTICS Logo for “pharmaceutical research and development in the field of gene
therapy.” These marks were granted registration on the Principal Register of the United States Patent and Trademark
Office, or USPTO, on June 3, 2014 and October 14, 2014, respectively.
We also own U.S. Reg. No. 6,024,564 for the mark V-TAG and U.S. Reg. No. 6,019,421 for the V-TAG Logo, for
“medical system comprised of a surgical device for guiding, locating or placing a diagnostic device or therapeutic device,
namely, stents, probes, needles, leads, grafts, pumps, syringes, catheters, and implants during a medical procedure and
related software sold as a unit, none of the aforesaid for use in cardiac ablation; MRI-compatible medical system comprised
of an MRI-compatible surgical device for guiding, locating or placing a diagnostic device or therapeutic device, namely,
stents, probes, needles, leads, grafts, pumps, syringes, catheters, and implants during a MRI-guided procedure and related
software sold as a unit, none of the aforesaid for use in cardiac ablation,” as well as European Community trademark
registration for V-TAG (No. 017430182, registered May 8, 2018) and a United Kingdom trademark (UK00917430182,
registered May 8, 2018) for a medical system comprised of a surgical device for guiding, locating or placing a diagnostic
device or therapeutic device, namely, stents, probes, needles, leads, grafts, pumps, syringes, catheters, and implants during
a medical procedure and related software sold as a unit; MRI-compatible medical system comprised of an MRI-compatible
surgical device for guiding, locating or placing a diagnostic device or therapeutic device, namely, stents, probes, needles,
leads, grafts, pumps, syringes, catheters, and implants during a MRI-guided procedure and related software sold as a unit.”
We plan to register trademarks in connection with our biological products.
Trade Secret Protection
Finally, we may rely, in some circumstances, on trade secrets to protect our technology. We seek to protect our
proprietary technology and processes, in part, by entering into confidentiality agreements with our employees, consultants,
scientific advisors and contractors. We also seek to preserve the integrity and confidentiality of our data and trade secrets
by maintaining physical security of our premises and physical and electronic security of our information technology
systems. While we have confidence in these individuals, organizations and systems, agreements or security measures may
be breached, and we may not have adequate remedies for any breach. In addition, our trade secrets may otherwise become
known or be independently discovered by competitors. To the extent that our consultants, contractors or collaborators use
intellectual property owned by others in their work for us, disputes may arise as to the rights in related or resulting know-
how and inventions.
Government Regulation and Product Approval
In the United States, biological products, including gene therapy products, are licensed by FDA for marketing
under the Public Health Service Act, or PHS Act, and regulated under the Federal Food, Drug, and Cosmetic Act, or
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FDCA. Both the FDCA and the PHS Act and their corresponding regulations govern, among other things, the testing,
manufacturing, safety, purity, potency, efficacy, labeling, packaging, storage, record keeping, distribution, import, export,
reporting, advertising and other promotional practices involving biological products. FDA clearance must be obtained
before clinical testing of biological products, and each clinical study protocol for a gene therapy product is reviewed by the
FDA and, in some instances, the NIH, through the Recombinant DNA Advisory Committee, or RAC. Biological products
are approved for marketing under provisions of the Public Health Service Act, or PHSA via a Biologics License
Application, or BLA. The process of obtaining regulatory approvals and the subsequent compliance with appropriate
federal, state, local and foreign statutes and regulations require the expenditure of substantial time and financial resources.
Within the FDA, the Center for Biologics Evaluation and Research, or CBER, regulates gene therapy products.
Within CBER, the Office of Tissues and Advanced Therapies (OTAT) is responsible for gene therapy review and
evaluation. CBER works closely with the NIH and its RAC, which makes recommendations to the NIH on gene therapy
issues and engages in a public discussion of scientific, safety, ethical and societal issues related to proposed and ongoing
gene therapy protocols. The FDA and the NIH have published guidance documents with respect to the development and
submission of gene therapy protocols. The FDA also has published guidance documents related to, among other things,
gene therapy products in general, their preclinical assessment, observing subjects involved in gene therapy studies for
delayed adverse events, viral shedding, environmental assessments, potency testing, and chemistry, manufacturing and
control information in gene therapy INDs. FDA guidance documents provide the agency’s current thinking about a
particular subject but are not legally binding.
U.S. Biological Products Development Process
The process required by the FDA before a biological product may be marketed in the United States generally
involves the following:
● completion of nonclinical laboratory tests and animal studies according to good laboratory practices, or
GLPs, and applicable requirements for the humane use of laboratory animals or other applicable regulations;
● preparation of clinical trial material in accordance with cGMPs;
● submission to the FDA of an application for an IND, which must become effective before human clinical
trials may begin;
● approval by an institutional review board, or IRB, reviewing each clinical site before each clinical trial may
be initiated;
● approval by an institutional biosafety committee, or IBC, assessing the safety of the clinical research and
identifying any potential risk to public health or the environment;
● performance of adequate and well-controlled human clinical trials according to the FDA’s regulations
commonly referred to as good clinical practice, or GCPs, and any additional requirements for the protection
of human research subjects and their health information, to establish the safety, purity, potency, and efficacy,
of the proposed biological product for its intended use;
● submission to the FDA of a BLA, for marketing approval that includes substantive evidence of safety, purity,
potency, and efficacy from results of nonclinical testing and clinical trials;
● satisfactory completion of an FDA inspection prior to BLA approval of the manufacturing facility or facilities
where the biological product is produced to assess compliance with cGMP, to assure that the facilities,
methods and controls are adequate to preserve the biological product’s identity, strength, quality and purity;
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● potential FDA audit of the nonclinical and clinical study sites that generated the data in support of the BLA;
● potential FDA Advisory Committee meeting to elicit expert input on critical issues and including a vote by
external Committee members;
● FDA review and approval, or licensure, of the BLA, and payment of associated user fees; and
● compliance with any post approval requirements, including the potential requirement to implement a Risk
Evaluation and Mitigation Strategy, or REMS, and the potential requirement to conduct post approval studies.
Preclinical Studies
Before testing any biological product candidate, including a gene therapy product, in humans, the product
candidate enters the preclinical testing stage. Preclinical tests, also referred to as nonclinical tests, include laboratory
evaluations of product chemistry, toxicity and formulation, as well as animal studies to assess the potential safety and
activity of the product candidate. The conduct of the preclinical tests must comply with federal regulations and
requirements including GLPs.
Special Regulations and Guidance Governing Gene Therapy Products
Human gene therapy products are a new category of therapeutics. Because this is a relatively new and expanding
area of novel therapeutic interventions, there can be no assurance as to the length of the study period, the number of
patients the FDA will require to be enrolled in the studies in order to establish the safety, efficacy, purity and potency of
human gene therapy products, or that the data generated in these studies will be acceptable to the FDA to support marketing
approval. The NIH and the FDA have a publicly accessible database the Genetic Modification Clinical Research
Information System which includes information on gene transfer studies and serves as an electronic tool to facilitate the
reporting and analysis of adverse events on these studies. Previously, when a gene therapy study was conducted at, or
sponsored by, institutions receiving NIH funding for recombinant DNA research, prior to the submission of an IND to the
FDA, a protocol and related documentation was to be submitted to and the study was registered with the NIH Office of
Biotechnology Activities, or OBA, pursuant to the NIH Guidelines for Research Involving Recombinant DNA Molecules,
or NIH Guidelines. Compliance with the NIH Guidelines was mandatory for investigators at institutions receiving NIH
funds for research involving recombinant DNA, however many companies and other institutions not otherwise subject to
the NIH Guidelines had voluntarily followed them. Under an FDA and NIH proposal in 2018, the role of the RAC, in
reviewing gene therapy protocols would be entirely eliminated and sponsors would no longer be required to submit reports
to NIH on such protocols. Going forward, NIH says the RAC will continue to function as an advisory board to NIH on
emerging fields such as gene editing, synthetic biology and neurotechnology.
The FDA has issued various guidance documents regarding gene therapies, including recent final guidance
documents released in January 2020 relating to chemistry, manufacturing and controls information for gene therapy INDs,
gene therapies for rare diseases and gene therapies for retinal disorders as well as draft guidance in January 2021 for
Human Gene Therapy for Neurodegenerative Diseases. Although the FDA has indicated that these and other guidance
documents it previously issued are not legally binding, we believe that our compliance with them is likely necessary to gain
approval for any gene therapy product candidate we may develop. The guidance documents provide additional factors that
the FDA will consider at each of the above stages of development and relate to, among other things, the proper preclinical
assessment of gene therapies; the chemistry, manufacturing, and control information that should be included in an IND
application; the proper design of tests to measure product potency in support of an IND or BLA application; and measures
to observe delayed adverse effects in subjects who have been exposed to investigational gene therapies when the risk of
such effects is high. Further, the FDA usually recommends that sponsors observe subjects for potential gene therapy-related
delayed adverse events for a 15-year period, including a minimum of five years of annual examinations followed by
10 years of annual queries, either in person or by questionnaire.
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The IND and IRB Processes
The clinical study sponsor must submit the results of the preclinical tests, together with manufacturing
information, analytical data, any available clinical data or literature and a proposed clinical protocol, to the FDA as part of
the IND. Some preclinical testing typically continues after the IND is submitted. An IND is an exemption from the FDCA
that allows an unapproved product to be shipped in interstate commerce for use in an investigational clinical trial and a
request for FDA authorization to administer an investigational product to humans. The IND automatically becomes
effective 30 days after receipt by the FDA, unless the FDA requests certain changes to a protocol before the study can
begin, or the FDA places the clinical study on a clinical hold within that 30-day time period. In such a case, the IND
sponsor and the FDA must resolve any outstanding concerns before the clinical study can begin. With gene therapy
protocols, if the FDA allows the IND to proceed, but the RAC decides that full public review of the protocol is warranted,
the FDA will request at the completion of its IND review that sponsors delay initiation of the protocol until after
completion of the RAC review process. The FDA may also impose clinical holds on a biological product candidate at any
time before or during clinical trials due to safety concerns or non-compliance. If the FDA imposes a clinical hold, studies
may not recommence without FDA authorization and then only under terms authorized by the FDA.
Clinical Trials in Support of a Marketing Application
Clinical trials involve the administration of the biological product candidate to healthy volunteers or subjects
under the supervision of qualified investigators, generally physicians not employed by or under the study sponsor’s control.
Clinical trials are conducted under protocols detailing, among other things, the objectives of the clinical study, dosing
procedures, subject selection and exclusion criteria, and the parameters to be used to monitor subject safety, including
stopping rules that assure a clinical study will be stopped if certain adverse events should occur. Each protocol and any
amendments to the protocol must be submitted to the FDA as part of the IND. Clinical trials must be conducted and
monitored in accordance with the FDA’s regulations comprising the GCP requirements, including the requirement that all
research subjects provide informed consent. Further, each clinical study must be reviewed and approved by an independent
IRB, at or servicing each institution at which the clinical study will be conducted. An IRB is charged with protecting the
welfare and rights of study participants and considers such items as whether the risks to individuals participating in the
clinical trials are minimized and are reasonable in relation to anticipated benefits. The IRB also approves the form and
content of the informed consent that must be signed by each clinical study subject or his or her legal representative and
must monitor the clinical study until completed. Additionally, some trials are overseen by an independent group of
qualified experts organized by the trial sponsor, known as a data safety monitoring board or committee. Clinical trials
involving recombinant or synthetic (or both) nucleic acid molecules performed at or sponsored by an institution that
receives any NIH funding for such research also must be reviewed by an IBC, a local institutional committee that reviews
and oversees basic and clinical research conducted at that institution. The IBC assesses the safety of the research and
identifies any potential risk to public health or the environment.
Human clinical trials are typically conducted in three sequential phases that may overlap or be combined:
● Phase 1. The biological product is initially introduced into healthy human subjects and tested for safety. In
the case of some products for severe or life-threatening diseases, especially when the product may be too
inherently toxic to ethically administer to healthy volunteers, the initial human testing is often conducted in
patients. Guidelines on clinical trials with gene therapy products issued by OTAT state that the FDA has
determined that the benefit-risk ratio of these products does not warrant their evaluation in healthy human
subjects.
● Phase 2. The biological product is evaluated in a limited patient population to identify possible adverse
effects and safety risks, to preliminarily evaluate the efficacy of the product for specific targeted diseases and
to determine dosage tolerance, optimal dosage and dosing schedule.
● Phase 3. Clinical trials are undertaken to further evaluate dosage, clinical efficacy, potency and safety in an
expanded patient population at geographically dispersed clinical trial sites. These clinical trials are intended
to establish the overall risk/benefit ratio of the product and provide an adequate basis for product labeling.
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Post-approval clinical trials, sometimes referred to as Phase 4 clinical trials, may be conducted after initial
marketing approval. These clinical trials are used to gain additional experience from the treatment of patients in the
intended therapeutic indication, particularly for long-term safety follow-up. The FDA recommends that sponsors observe
subjects for potential gene therapy-related delayed adverse events for a 15-year period, including a minimum of five years
of annual examinations followed by ten years of annual queries, either in person or by questionnaire, of trial subjects.
During all phases of clinical development, regulatory agencies require extensive monitoring and auditing of all
clinical activities, clinical data, and clinical trial investigators. Annual progress reports detailing the results of the clinical
trials must be submitted to the FDA. Written IND safety reports must be promptly submitted to the FDA, the NIH and the
investigators for serious and unexpected adverse events, any findings from other studies, tests in laboratory animals or in
vitro testing that suggest a significant risk for human subjects, or any clinically important increase in the rate of a serious
suspected adverse reaction over that listed in the protocol or investigator brochure. The sponsor must submit an IND safety
report within 15 calendar days after the sponsor determines that the information qualifies for reporting. The sponsor also
must notify the FDA of any unexpected fatal or life-threatening suspected adverse reaction within seven calendar days after
the sponsor’s initial receipt of the information. Phase 1, Phase 2, and Phase 3 clinical trials may not be completed
successfully within any specified period, if at all. The FDA or the sponsor or its data safety monitoring board may suspend
a clinical trial at any time on various grounds, including a finding that the research subjects or patients are being exposed to
an unacceptable health risk. Similarly, an IRB can suspend or terminate approval of a clinical trial at its institution if the
clinical trial is not being conducted in accordance with the IRB’s requirements or if the biological product has been
associated with unexpected serious harm to patients.
Concurrent with clinical trials, companies usually complete additional animal studies and must also develop
additional information about the physical characteristics of the biological product as well as finalize a process for
manufacturing the product in commercial quantities in accordance with cGMP requirements. To help reduce the risk of the
introduction of adventitious agents with use of biological products, the PHS Act emphasizes the importance of
manufacturing control for products whose attributes cannot be precisely defined. The manufacturing process must be
capable of consistently producing quality batches of the product candidate and, among other things, the sponsor must
develop methods for testing the identity, strength, quality, potency and purity of the final biological product. Additionally,
appropriate packaging must be selected and tested and stability studies must be conducted to demonstrate that the
biological product candidate does not undergo unacceptable deterioration over its shelf life.
Information about certain clinical trials must be submitted within specific timeframes to the NIH for public
dissemination on its ClinicalTrials.gov website. Similar requirements for posting clinical trial information are present in the
European Union and other countries.
Expanded Access to an Investigational Drug for Treatment Use
Expanded access, sometimes called “compassionate use,” is the use of investigational new drug products outside
of clinical trials to treat patients with serious or immediately life-threatening diseases or conditions when there are no
comparable or satisfactory alternative treatment options. The rules and regulations related to expanded access are intended
to improve access to investigational drugs for patients who may benefit from investigational therapies. FDA regulations
allow access to investigational drugs under an IND by the company or the treating physician for treatment purposes on a
case-by-case basis for: individual patients (single-patient IND applications for treatment in emergency settings and non-
emergency settings); intermediate-size patient populations; and larger populations for use of the drug under a treatment
protocol or Treatment IND Application.
When considering an IND application for expanded access to an investigational product with the purpose of
treating a patient or a group of patients, the sponsor and treating physicians or investigators will determine suitability when
all of the following criteria apply: patient(s) have a serious or immediately life-threatening disease or condition, and there is
no comparable or satisfactory alternative therapy to diagnose, monitor, or treat the disease or condition; the potential
patient benefit justifies the potential risks of the treatment and the potential risks are not unreasonable in the context or
condition to be treated; and the expanded use of the investigational drug for the requested treatment will not
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interfere initiation, conduct, or completion of clinical investigations that could support marketing approval of the product or
otherwise compromise the potential development of the product.
Sponsors are required to make such policies publicly available upon the earlier of initiation of a Phase 2 or Phase
3 study; or 15 days after the drug or biologic receives designation as a breakthrough therapy, fast track product, or
regenerative medicine advanced therapy.
In addition, on May 30, 2018, the Right to Try Act was signed into law. The law, among other things, provides a
federal framework for certain patients to access certain investigational new drug products that have completed a Phase I
clinical trial and that are undergoing investigation for FDA approval. Under certain circumstances, eligible patients can
seek treatment without enrolling in clinical trials and without obtaining FDA permission under the FDA expanded access
program. There is no obligation for a drug manufacturer to make its drug products available to eligible patients as a result
of the Right to Try Act, but the manufacturer must develop an internal policy and respond to patient requests according to
that policy.
Pediatric Studies
Under the Pediatric Research Equity Act of 2003, an application or supplement thereto must contain data that are
adequate to assess the safety and effectiveness of the product for the claimed indications in all relevant pediatric
subpopulations, and to support dosing and administration for each pediatric subpopulation for which the product is safe and
effective. Sponsors must also submit pediatric study plans prior to the assessment data. Those plans must contain an outline
of the proposed pediatric study or studies the applicant plans to conduct, including study objectives and design, any deferral
or waiver requests and other information required by regulation. The applicant, the FDA, and the FDA’s internal review
committee must then review the information submitted, consult with each other and agree upon a final plan. The FDA or
the applicant may request an amendment to the plan at any time.
The FDA may, on its own initiative or at the request of the applicant, grant deferrals for submission of some or all
pediatric data until after approval of the product for use in adults, or full or partial waivers from the pediatric data
requirements. Additional requirements and procedures relating to deferral requests and requests for extension of deferrals
are contained in the Food and Drug Administration Safety and Innovation Act. The FDA maintains a list of diseases that
are exempt from PREA requirements due to low prevalence of disease in the pediatric population. Congress amended the
FDA Reauthorization Act of 2017. Previously, drugs that had been granted orphan drug designation were exempt from the
requirements of the Pediatric Research Equity Act. Under the amended section 505B, beginning on August 18, 2020, the
submission of a pediatric assessment, waiver or deferral is required for certain molecularly targeted cancer indications with
the submission of an application or supplement to an application.
U.S. Review and Approval Processes
After the completion of clinical trials of a biological product, FDA approval of a BLA, must be obtained before
commercial marketing of the biological product. The BLA must include results of product development, laboratory and
animal studies, human studies, information on the manufacture and composition of the product, proposed labeling and other
relevant information. In addition, under the Pediatric Research Equity Act, or PREA, a BLA or supplement to a BLA must
contain data to assess the safety and effectiveness of the biological product for the claimed indications in all relevant
pediatric subpopulations and to support dosing and administration for each pediatric subpopulation for which the product is
safe and effective. The FDA may grant deferrals for submission of data or full or partial waivers. Unless otherwise required
by regulation, PREA does not apply to any biological product for an indication for which orphan designation has been
granted. The testing and approval processes require substantial time and effort and there can be no assurance that the FDA
will accept the BLA for filing and, even if filed, that any approval will be granted on a timely basis, if at all.
Under the Prescription Drug User Fee Act, or PDUFA, as amended, each BLA must be accompanied by a
significant user fee. Under federal law, the submission of most applications is subject to an application user fee, which for
federal fiscal year 2021 is $2,875,842 for an application requiring clinical data. The sponsor of an approved
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application is also subject to an annual program fee, which for fiscal year 2021 is $336,432. Fee waivers or reductions are
available in certain circumstances, including a waiver of the application fee for the first application filed by a small
business. Additionally, no user fees are assessed on BLAs for product candidates designated as orphan drugs, unless the
product candidate also includes a non-orphan indication.
Within 60 days following submission of the application, the FDA reviews a BLA submitted to determine if it is
substantially complete before the agency accepts it for filing. The FDA may refuse to file any BLA that it deems
incomplete or not properly reviewable at the time of submission and may request additional information. In this event, the
BLA must be resubmitted with the additional information. The resubmitted application also is subject to review before the
FDA accepts it for filing. The application also needs to be published and submitted in an electronic format that can be
processed through the FDA’s electronic systems. If the electronic submission is not compatible with FDA’s systems, the
BLA can be refused to file. Once the submission is accepted for filing, the FDA begins an in-depth substantive review of
the BLA. The FDA reviews the BLA to determine, among other things, whether the proposed product is safe, potent, and
effective, for its intended use, and has an acceptable purity profile, and whether the product is being manufactured in
accordance with cGMP to assure and preserve the product’s identity, safety, strength, quality, potency and purity. The FDA
may refer applications for novel biological products or biological products that present difficult questions of safety or
efficacy to an advisory committee, typically a panel that includes clinicians and other experts, for review, evaluation and a
recommendation as to whether the application should be approved and under what conditions. The FDA is not bound by
the recommendations of an advisory committee, but it considers such recommendations carefully when making decisions.
During the biological product approval process, the FDA also will determine whether a REMS is necessary to assure the
safe use of the biological product. If the FDA concludes a REMS is needed, the sponsor of the BLA must submit a
proposed REMS; the FDA will not approve the BLA without a REMS, if required.
Before approving a BLA, the FDA will inspect the facilities at which the product is manufactured. The FDA will
not approve the product unless it determines that the manufacturing processes and facilities are in compliance with cGMP
requirements and adequate to assure consistent production of the product within required specifications. Additionally,
before approving a BLA, the FDA will typically inspect one or more clinical trial sites to assure that the clinical trials were
conducted in compliance with IND study requirements and GCP requirements. To assure cGMP and GCP compliance, an
applicant must incur significant expenditure of time, money and effort in the areas of training, record keeping, production,
and quality control.
Finally, for a gene therapy product, the FDA also will not approve the product if the manufacturer is not in
compliance with good tissue practices, or GTP. These standards are found in FDA regulations and guidance that govern the
methods used in, and the facilities and controls used for, the manufacture of human cells, tissues, and cellular and tissue
based products, or HCT/Ps, which are human cells or tissue intended for implantation, transplant, infusion, or transfer into
a human recipient. The primary intent of the GTP requirements is to ensure that cell and tissue based products are
manufactured in a manner designed to prevent the introduction, transmission, and spread of communicable disease. FDA
regulations also require tissue establishments to register and list their HCT/Ps with the FDA and, when applicable, to
evaluate donors through screening and testing.
Notwithstanding the submission of relevant data and information, the FDA may ultimately decide that the BLA
does not satisfy its regulatory criteria for approval and deny approval. Data obtained from clinical trials are not always
conclusive and the FDA may interpret data differently than we interpret the same data. If the agency decides not to approve
the BLA in its present form, the FDA will issue a complete response letter that usually describes all of the specific
deficiencies in the BLA identified by the FDA. The deficiencies identified may be minor, for example, requiring labeling
changes, or major, for example, requiring additional clinical trials. Additionally, the complete response letter may include
recommended actions that the applicant might take to place the application in a condition for approval. If a complete
response letter is issued, the applicant may either resubmit the BLA, addressing all of the deficiencies identified in the
letter, or withdraw the application.
If a product receives regulatory approval, the approval may be significantly limited to specific diseases and
dosages or the indications for use may otherwise be limited, which could restrict the commercial value of the product.
Further, the FDA may require that certain contraindications, warnings or precautions be included in the product labeling.
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The FDA may impose restrictions and conditions on product distribution, prescribing, or dispensing in the form of a risk
management plan, or otherwise limit the scope of any approval. In addition, the FDA may require post marketing clinical
trials, sometimes referred to as Phase 4 clinical trials, designed to further assess a biological product’s safety and
effectiveness, and testing and surveillance programs to monitor the safety of approved products that have been
commercialized. As a condition for approval, the FDA may also require additional non-clinical testing as a Phase 4
commitment.
One of the performance goals agreed to by the FDA under the PDUFA is to review standard BLAs in 10 months
from filing and priority BLAs in six months from filing, whereupon a review decision is to be made. The FDA does not
always meet its PDUFA goal dates for standard and priority BLAs and its review goals are subject to change from time to
time. The review process and the PDUFA goal date may be extended by three months if the FDA requests or the BLA
sponsor otherwise provides additional information or clarification regarding information already provided in the
submission within the last three months before the PDUFA goal date.
Post-Approval Requirements
Maintaining substantial compliance with applicable federal, state, and local statutes and regulations requires the
expenditure of substantial time and financial resources. Rigorous and extensive FDA regulation of biological products
continues after approval, particularly with respect to cGMP. We will rely, and expect to continue to rely, on third parties for
the production of clinical and commercial quantities of any products that we may commercialize. Manufacturers of our
products are required to comply with applicable requirements in the cGMP regulations, including quality control and
quality assurance and maintenance of records and documentation. Following approval, the manufacturing facilities are
subject to biennial inspections by the FDA’s biologics team and such inspections may result in an issuance of FDA Form
483 deficiency observations or a warning letter, which can lead to plant shutdown and other more serious penalties and
fines. Prior to the institution of any manufacturing changes, a determination needs to be made whether FDA approval is
required in advance. If not done in accordance with FDA expectations, the FDA may restrict supply and may take further
action. Annual product reports are required to be submitted annually. Other post-approval requirements applicable to
biological products, include reporting of cGMP deviations that may affect the identity, potency, purity and overall safety of
a distributed product, record-keeping requirements, reporting of adverse effects, reporting updated safety and efficacy
information, and complying with electronic record and signature requirements. After a BLA is approved, the product also
may be subject to official lot release. As part of the manufacturing process, the manufacturer is required to perform certain
tests on each lot of the product before it is released for distribution. If the product is subject to official release by the FDA,
the manufacturer submits samples of each lot of product to the FDA together with a release protocol showing a summary of
the history of manufacture of the lot and the results of all of the manufacturer’s tests performed on the lot. The FDA also
may perform certain confirmatory tests on lots of some products, such as viral vaccines, before releasing the lots for
distribution by the manufacturer. In addition, the FDA conducts laboratory research related to the regulatory standards on
the safety, purity, potency, and effectiveness of biological products. Systems need to be put in place to record and evaluate
adverse events reported by health care providers and patients and to assess product complaints. An increase in severity or
new adverse events can result in labeling changes or product recall. Defects in manufacturing of commercial products can
result in product recalls.
We also must comply with the FDA’s advertising and promotion requirements, such as those related to direct-to-
consumer advertising, the prohibition on promoting products for uses or in patient populations that are not described in the
product’s approved labeling (known as “off-label use”), industry-sponsored scientific and educational activities, and
promotional activities involving the internet. Discovery of previously unknown problems or the failure to comply with the
applicable regulatory requirements may result in restrictions on the marketing of a product or withdrawal of the product
from the market as well as possible civil or criminal sanctions. Failure to comply with the applicable U.S. requirements at
any time during the product development process, approval process or after approval, may subject an applicant or
manufacturer to administrative or judicial civil or criminal sanctions and adverse publicity. FDA sanctions could include
refusal to approve pending applications, withdrawal of an approval or license revocation, clinical hold, warning or untitled
letters, product recalls, product seizures, total or partial suspension of production or distribution, injunctions, fines, refusals
of government contracts, mandated corrective advertising or communications with doctors, debarment, restitution,
disgorgement of profits, or civil or criminal penalties. Any agency or judicial enforcement action could have a material
adverse effect on us.
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Biological product manufacturers and other entities involved in the manufacture and distribution of approved
biological products are required to register their establishments with the FDA and certain state agencies, and are subject to
periodic unannounced inspections by the FDA and certain state agencies for compliance with cGMPs and other laws.
Accordingly, manufacturers must continue to expend time, money, and effort in the area of production and quality control
to maintain cGMP compliance. Discovery of problems with a product after approval may result in restrictions on a product,
manufacturer, or holder of an approved BLA, including withdrawal of the product from the market. In addition, changes to
the manufacturing process or facility generally require prior FDA approval before being implemented and other types of
changes to the approved product, such as adding new indications and additional labeling claims, are also subject to further
FDA review and approval.
Fast Track, Breakthrough Therapy, Priority Review and Regenerative Advanced Therapy Designations
The FDA is authorized to designate certain products for expedited review if they are intended to address an unmet
medical need in the treatment of a serious or life-threatening disease or condition. These programs are referred to as fast
track designation, breakthrough therapy designation, priority review designation and regenerative advanced therapy
designation.
Specifically, the FDA may designate a product for Fast Track review if it is intended, whether alone or in
combination with one or more other products, for the treatment of a serious or life-threatening disease or condition, and it
demonstrates the potential to address unmet medical needs for such a disease or condition. For Fast Track products,
sponsors may have greater interactions with the FDA and the FDA may initiate review of sections of a Fast Track product’s
application before the application is complete. This rolling review may be available if the FDA determines, after
preliminary evaluation of clinical data submitted by the sponsor, that a Fast Track product may be effective. The sponsor
must also provide, and the FDA must approve, a schedule for the submission of the remaining information and the sponsor
must pay applicable user fees. However, the FDA’s time period goal for reviewing a Fast Track application does not begin
until the last section of the application is submitted. In addition, the Fast Track designation may be withdrawn by the FDA
if the FDA believes that the designation is no longer supported by data emerging in the clinical trial process.
Second, a product may be designated as a Breakthrough Therapy if it is intended, either alone or in combination
with one or more other products, to treat a serious or life-threatening disease or condition and preliminary clinical evidence
indicates that the product may demonstrate substantial improvement over existing therapies on one or more clinically
significant endpoints, such as substantial treatment effects observed early in clinical development. The FDA may take
certain actions with respect to Breakthrough Therapies, including holding meetings with the sponsor throughout the
development process; providing timely advice to the product sponsor regarding development and approval; involving more
senior staff in the review process; assigning a cross-disciplinary project lead for the review team; and taking other steps to
design the clinical trials in an efficient manner.
Third, the FDA may designate a product for priority review if it is a product that treats a serious condition and, if
approved, would provide a significant improvement in safety or effectiveness. The FDA determines, on a case-by-case
basis, whether the proposed product represents a significant improvement when compared with other available therapies.
Significant improvement may be illustrated by evidence of increased effectiveness in the treatment of a condition,
elimination or substantial reduction of a treatment-limiting product reaction, documented enhancement of patient
compliance that may lead to improvement in serious outcomes, and evidence of safety and effectiveness in a new
subpopulation. A priority designation is intended to direct overall attention and resources to the evaluation of such
applications, and to shorten the FDA’s goal for taking action on a marketing application from ten months to six months.
With passage of the 21st Century Cures Act, or the Cures Act, in December 2016, Congress authorized the FDA to
accelerate review and approval of products designated as regenerative advanced therapies. A product is eligible for this
designation if it is a regenerative medicine therapy that is intended to treat, modify, reverse or cure a serious or life-
threatening disease or condition and preliminary clinical evidence indicates that the product has the potential to address
unmet medical needs for such disease or condition. The benefits of a regenerative advanced therapy designation include
early interactions with FDA to expedite development and review, benefits available to breakthrough therapies, potential
eligibility for priority review and accelerated approval based on surrogate or intermediate endpoints.
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U.S. Patent Term Restoration
Depending upon the timing, duration and specifics of the FDA approval of the use of our product candidates,
some of our U.S. patents may be eligible for limited patent term extension under the Drug Price Competition and Patent
Term Restoration Act of 1984, commonly referred to as the Hatch-Waxman Amendments. The Hatch-Waxman
Amendments permit a patent restoration term of up to five years as compensation for patent term lost during product
development and the FDA regulatory review process. However, patent term restoration cannot extend the remaining term
of a patent beyond a total of 14 years from the product’s approval date. The patent term restoration period is generally one-
half the time between the effective date of an IND and the submission date of a BLA plus the time between the submission
date of a BLA and the approval of that application, less any time the applicant failed to act with due diligence. Only one
patent applicable to an approved biological product is eligible for the extension and the application for the extension must
be submitted prior to the expiration of the patent. The U.S. Patent and Trademark Office, in consultation with the FDA,
reviews and approves the application for any patent term extension or restoration. In the future, we may intend to apply for
restoration of patent term for one of our currently owned or licensed patents to add patent life beyond its current expiration
date, depending on the expected length of the clinical trials and other factors involved in the filing of the relevant BLA.
Market and Data Exclusivity
The 2010 Patient Protection and Affordable Care Act, or the ACA, which was signed into law on March 23, 2010,
included a subtitle called the Biologics Price Competition and Innovation Act of 2009 or BPCIA. The BPCIA established a
regulatory scheme authorizing the FDA to approve biosimilars and interchangeable biosimilars. As of January 1, 2021, the
FDA has approved 29 biosimilar products for use in the United States. No interchangeable biosimilars have been approved.
The FDA has issued several guidance documents outlining an approach to review and approval of biosimilars. Additional
guidance is expected to be finalized by FDA in the near term.
Under the BPCIA, a manufacturer may submit an application for licensure of a biologic product that is “biosimilar
to” or “interchangeable with” a previously approved biological product or “reference product.” In order for the FDA to
approve a biosimilar product, it must find that there are no clinically meaningful differences between the reference product
and proposed biosimilar product in terms of safety, purity and potency. For the FDA to approve a biosimilar product as
interchangeable with a reference product, the FDA must find that the biosimilar product can be expected to produce the
same clinical results as the reference product, and (for products administered multiple times) that the biologic and the
reference biologic may be switched after one has been previously administered without increasing safety risks or risks of
diminished efficacy relative to exclusive use of the reference biologic.
Under the BPCIA, an application for a biosimilar product may not be submitted to the FDA until four years
following the date of approval of the reference product. The FDA may not approve a biosimilar product until 12 years from
the date on which the reference product was approved. Even if a product is considered to be a reference product eligible for
exclusivity, another company could market a competing version of that product if the FDA approves a full BLA for such
product containing the sponsor’s own preclinical data and data from adequate and well-controlled clinical trials to
demonstrate the safety, purity and potency of their product. The BPCIA also created certain exclusivity periods for
biosimilars approved as interchangeable products. At this juncture, it is unclear whether products deemed
“interchangeable” by the FDA will, in fact, be readily substituted by pharmacies, which are governed by state pharmacy
law.
Orphan Drug Designation and Exclusivity
Under the Orphan Drug Act, the FDA may grant Orphan Drug Designation, or ODD, to a drug or biological
product intended to treat a rare disease or condition, which is generally a disease or condition that affects fewer than
200,000 individuals in the United States, or more than 200,000 individuals in the United States and for which there is no
reasonable expectation that the cost of developing and making a drug or biological product available in the United States
for this type of disease or condition will be recovered from sales of the product. ODD must be requested before submitting
a BLA. After the FDA grants ODD, the identity of the therapeutic agent and its potential orphan use are
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disclosed publicly by the FDA. ODD does not convey any advantage in or shorten the duration of the regulatory review and
approval process.
If a product that has ODD receives the first FDA approval for the disease or condition for which it has such
designation, the product is entitled to orphan product exclusivity, which means that the FDA may not approve any other
applications to market the same biological product for the same indication for seven years, except in limited circumstances,
such as not being able to supply the product for patients or showing clinical superiority to the product with orphan
exclusivity. This is the case despite an earlier court opinion holding that the Orphan Drug Act unambiguously required the
FDA to recognize orphan exclusivity regardless of a showing of clinical superiority.
Competitors, however, may receive approval of different products for the indication for which the orphan product
has exclusivity or obtain approval for the same product but for a different indication for which the orphan product has
exclusivity. In particular, the concept of what constitutes the "same drug" for purposes of orphan drug exclusivity remains
in flux in the context of gene therapies, and the FDA has issued draft guidance suggesting that it would not consider two
gene therapy products to be different drugs solely based on minor differences in the transgenes or vectors. Orphan product
exclusivity also could block the approval of one of our products for seven years if a competitor obtains approval of the
same biological product as defined by the FDA or if our product candidate is determined to be contained within the
competitor’s product for the same indication or disease. If a biological product designated as an orphan product receives
marketing approval for an indication broader than what is designated, it may not be entitled to orphan product exclusivity.
Pediatric Exclusivity
Pediatric exclusivity is another type of non-patent exclusivity in the United States and, if granted, provides for the
attachment of an additional six months of marketing protection to the term of any existing regulatory exclusivity, including
both the Reference Product and Orphan Drug Exclusivity periods. This six-month exclusivity may be granted if an
application sponsor submits pediatric data that fairly respond to a written request from the FDA for such data. The data do
not need to show the product to be effective in the pediatric population studied; rather, if the clinical trial is deemed to
fairly respond to the FDA’s request, the additional protection is granted. If reports of requested pediatric studies are
submitted to and accepted by the FDA within the statutory time limits, whatever statutory or regulatory periods of
exclusivity or patent protection cover the product are extended by six months. Thus, pediatric exclusivity adds six months
to existing exclusivity periods applicable to biological products under the BPCIA—namely, the four-year period during
which the FDA will not consider an application for a biosimilar product, and the 12-year period during which the FDA will
not approve a biosimilar application.
Other Healthcare Laws
Although we currently do not have any products on the market, we may be subject to additional healthcare
regulation and enforcement by the federal government and by authorities in the states in which we conduct our business.
Such laws include, without limitation, state and federal anti-kickback, fraud and abuse, false claims, privacy and security
and physician sunshine laws and regulations, many of which may become more applicable to us if our product candidates
are approved and we begin commercialization. If our operations are found to be in violation of any of such laws or any
other governmental regulations that apply to us, we may be subject to penalties, including, without limitation,
administrative, civil and criminal penalties, damages, fines, disgorgement, the curtailment or restructuring of our
operations, exclusion from participation in federal and state healthcare programs and imprisonment, any of which could
adversely affect our ability to operate our business and our financial results.
In addition, the ACA is intended to broaden access to health insurance, reduce or constrain the growth of
healthcare spending, enhance remedies against fraud and abuse, add transparency requirements for the healthcare and
health insurance industries, impose taxes and fees on the health industry and impose additional health policy reforms. With
regard to biopharmaceutical products, in addition to the Biologics Price Competition and Innovation Act of 2009 included
in the ACA, among other things, the ACA expanded and increased industry rebates for drugs covered under Medicaid
programs and made changes to the coverage requirements under the Medicare prescription drug benefit.
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Since enactment of the ACA, there have been, and continue to be, numerous legal challenges and Congressional
actions to repeal and replace provisions of the law. For example, with enactment of the Tax Cuts and Jobs Act of 2017, or
the TCJA, which was signed by President Trump on December 22, 2017, Congress repealed the “individual mandate.” The
repeal of this provision, which requires most Americans to carry a minimal level of health insurance, became effective in
2019. Further, on December 14, 2018, a U.S. District Court judge in the Northern District of Texas ruled that the individual
mandate portion of the ACA is an essential and inseverable feature of the ACA, and therefore because the mandate was
repealed as part of the TCJA, the remaining provisions of the ACA are invalid as well. On December 18, 2019, the Court of
Appeals for the Fifth Circuit 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. Thereafter, the U.S. Supreme Court agreed to hear this case. Oral argument in the
case took place on November 10, 2020. On February 10, 2021, the Biden Administration withdrew DOJ’s support for this
lawsuit. A ruling by the U.S. Supreme Court is expected sometime in 2021. Litigation and legislation over the ACA are
likely to continue, with unpredictable and uncertain results.
The Trump Administration also took executive actions to undermine or delay implementation of the ACA,
including directing federal agencies with authorities and responsibilities under the ACA to waive, defer, grant exemptions
from, or delay the implementation of any provision of the ACA that would impose a fiscal or regulatory burden on states,
individuals, healthcare providers, health insurers, or manufacturers of pharmaceuticals or medical devices. On January 28,
2021, however, President Biden rescinded those orders and issued a new Executive Order which directs federal agencies to
reconsider rules and other policies that limit Americans’ access to health care, and consider actions that will protect and
strengthen that access. Under this Executive Order, federal agencies are directed to re-examine: policies that undermine
protections for people with pre-existing conditions, including complications related to COVID-19; demonstrations and
waivers under Medicaid and the ACA that may reduce coverage or undermine the programs, including work requirements;
policies that undermine the Health Insurance Marketplace or other markets for health insurance; policies that make it more
difficult to enroll in Medicaid and the ACA; and policies that reduce affordability of coverage or financial assistance,
including for dependents.
The costs of prescription pharmaceuticals have also been the subject of considerable discussion in the United
States. To date, there have been several recent U.S. congressional inquiries, as well as proposed and enacted state and
federal legislation designed to, among other things, bring more transparency to drug pricing, review the relationship
between pricing and manufacturer patient programs, reduce the costs of drugs under Medicare and reform government
program reimbursement methodologies for drug products. To those ends, President Trump issued several Executive Orders
intended to lower the costs of prescription drug products. It is unclear whether, and to what extent, these orders will remain
in force under the Biden Administration. Further, on September 24, 2020, the Trump Administration finalized a
rulemaking allowing states or certain other non-federal government entities to submit importation program proposals to the
FDA for review and approval. Applicants are required to demonstrate that their importation plans pose no additional risk to
public health and safety and will result in significant cost savings for consumers. The FDA has issued draft guidance that
would allow manufacturers to import their own FDA-approved drugs that are authorized for sale in other countries (multi-
market approved products).
At the state level, individual states are increasingly aggressive in passing legislation and implementing regulations
designed to control pharmaceutical and biological product pricing, including price or patient reimbursement constraints,
discounts, restrictions on certain product access and marketing cost disclosure and transparency measures, and, in some
cases, designed to encourage importation from other countries and bulk purchasing. In addition, regional health care
authorities and individual hospitals are increasingly using bidding procedures to determine what pharmaceutical products
and which suppliers will be included in their prescription product and other health care programs. These measures could
reduce the ultimate demand for our products, once approved, or put pressure on our product pricing. We expect that
additional state and federal healthcare reform measures will be adopted in the future, any of which could limit the amounts
that federal and state governments will pay for healthcare products and services, which could result in reduced demand for
our product candidates or additional pricing pressures.
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Additional Regulation
In addition to the foregoing, state and federal laws regarding environmental protection and hazardous substances,
including the Occupational Safety and Health Act, the Resource Conservancy and Recovery Act and the Toxic Substances
Control Act, affect our business. These and other laws govern our use, handling and disposal of various biological,
chemical and radioactive substances used in, and wastes generated by, our operations. If our operations result in
contamination of the environment or expose individuals to hazardous substances, we could be liable for damages and
governmental fines. We believe that we are in material compliance with applicable environmental laws and that continued
compliance therewith will not have a material adverse effect on our business. We cannot predict, however, how changes in
these laws may affect our future operations.
U.S. Foreign Corrupt Practices Act
The U.S. Foreign Corrupt Practices Act, to which we are subject, prohibits corporations and individuals from
engaging in certain activities to obtain or retain business or to influence a person working in an official capacity. It is illegal
to pay, offer to pay or authorize the payment of anything of value to any foreign government official, government staff
member, political party or political candidate in an attempt to obtain or retain business or to otherwise influence a person
working in an official capacity.
Review and Clearance of Companion Diagnostics in the United States
If safe and effective use of a therapeutic depends on an in vitro diagnostic, then the FDA generally will require
approval or clearance of that diagnostic, known as a companion diagnostic, at the same time that the FDA approves the
therapeutic product. In August 2014, the FDA issued final guidance clarifying the requirements that will apply to approval
of therapeutic products and in vitro companion diagnostics. According to the guidance, for novel drugs, a companion
diagnostic device and its corresponding therapeutic should be approved or cleared contemporaneously by the FDA for the
use indicated in the therapeutic product’s labeling. In July 2016, the FDA issued a draft guidance intended to assist
sponsors of the drug therapeutic and in vitro companion diagnostic device on issues related to co-development of the
products.
The guidance also explains that a companion diagnostic device used to make treatment decisions in clinical trials
of a biologic product candidate generally will be considered an investigational device, unless it is employed for an intended
use for which the device is already approved or cleared. If used to make critical treatment decisions, such as patient
selection, the diagnostic device generally will be considered a significant risk device under the FDA’s Investigational
Device Exemption, or IDE, regulations. Thus, the sponsor of the diagnostic device will be required to comply with the IDE
regulations. According to the guidance, if a diagnostic device and a product are to be studied together to support their
respective approvals, both products can be studied in the same investigational study, if the study meets both the
requirements of the IDE regulations and the IND regulations. The guidance provides that depending on the details of the
study plan and subjects, a sponsor may seek to submit an IND alone, or both an IND and an IDE.
If FDA determines that a companion diagnostic device or delivery device (combination product) is essential to the
safe and effective use of a novel therapeutic product or indication, FDA generally will not approve the therapeutic product
or new therapeutic product indication if the companion diagnostic or delivery device is not approved or cleared for that
indication. Approval or clearance of the companion diagnostic or delivery device will ensure that the device has been
adequately evaluated and has adequate performance characteristics in the intended population. The review of in vitro
companion diagnostics in conjunction with the review of our therapeutic treatments for cancer will, therefore, likely
involve coordination of review by the FDA’s Center for Drug Evaluation and Research and the FDA’s CDRH Office.
Under the FDCA, in vitro diagnostics, including companion diagnostics, are regulated as medical devices. In the
United States, the FDCA and its implementing regulations, and other federal and state statutes and regulations govern,
among other things, medical device design and development, preclinical and clinical testing, premarket clearance or
approval, registration and listing, manufacturing, labeling, storage, advertising and promotion, sales and distribution, export
and import, and post-market surveillance. Unless an exemption applies, diagnostic tests require marketing
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clearance or approval from the FDA prior to commercial distribution. The two primary types of FDA marketing
authorization applicable to a medical device are premarket notification, also called 510(k) clearance, and premarket
approval, or PMA approval.
The PMA process, including the gathering of clinical and preclinical data and the submission to and review by the
FDA, can take several years or longer. It involves a rigorous premarket review during which the applicant must prepare and
provide the FDA with reasonable assurance of the device’s safety and effectiveness and information about the device and
its components regarding, among other things, device design, manufacturing and labeling. PMA applications are subject to
fees for medical device product review. For federal fiscal year 2021, the standard fee for review of a PMA is $365,657 and
the small business fee is $91,414.
A 510(k) must demonstrate that the proposed device is substantially equivalent to another legally marketed device,
or predicate device, that did not require premarket approval. In evaluating a 510(k), the FDA will determine whether the
device has the same intended use as the predicate device, and (i) has the same technological characteristics as the predicate
device, or (ii) has different technological characteristics, and (a) the data supporting substantial equivalence contains
information, including appropriate clinical or scientific data, if deemed necessary by the FDA, that demonstrates that the
device is as safe and as effective as a legally marketed device, and (b) does not raise different questions of safety and
effectiveness than the predicate device. Most 510(k)s do not require clinical data for clearance, but the FDA may request
such data. The FDA seeks to review and act on a 510(k) within 90 days of submission, but it may take longer if the agency
finds that it requires more information to review the 510(k). If the FDA concludes that a new device is not substantially
equivalent to a predicate device, the new device will be classified in Class III and the manufacturer will be required to
submit a PMA to market the product. On July 23, 2018, the CDRH of the FDA cleared the 510(k) for our V-TAG® device
that is compatible for use with MRIs.
Government Regulation Outside of the United States
In addition to regulations in the United States, we will be subject to a variety of regulations in other jurisdictions
governing, among other things, clinical trials and any commercial sales and distribution of our products. Because
biologically sourced raw materials are subject to unique contamination risks, their use may be restricted in some countries.
Whether or not we obtain FDA approval for a product, we must obtain the requisite approvals from regulatory
authorities in foreign countries prior to the commencement of clinical trials or marketing of the product in those countries.
Certain countries outside of the United States have a similar process that requires the submission of a clinical trial
application much like the IND prior to the commencement of human clinical trials, e.g., a clinical trial application for each
clinical trial for each EU country in which the trial is conducted; a clinical trial notification is required in Japan.
If we fail to comply with applicable foreign regulatory requirements, we may be subject to, among other things,
fines, suspension or withdrawal of regulatory approvals, product recalls, seizure of products, operating restrictions and
criminal prosecution.
Coverage, Pricing and Reimbursement for Biopharmaceutical Products
Sales of our products, when and if approved for marketing, will depend, in part, on the extent to which our
products will be covered by third-party payors, such as federal, state, and foreign government health care programs,
commercial insurance and managed healthcare organizations. These third-party payors are increasingly reducing
reimbursements for medical products, drugs and services. In addition, the U.S. government, state legislatures and foreign
governments have continued implementing cost containment programs, including price controls, restrictions on coverage
and reimbursement and requirements for substitution of generic products. Adoption of price controls and cost containment
measures, and adoption of more restrictive policies in jurisdictions with existing controls and measures, could further limit
our net revenue and results. Decreases in third-party reimbursement for our product candidates or a decision by a third-
party payor not to cover our product candidates could reduce physician usage of our products once approved and have a
material adverse effect on our sales, results of operations and financial condition.
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Our Corporate Information
We were incorporated under the laws of Delaware in June 2013. Our principal executive offices are located at 75
Sidney Street, Cambridge, MA 02139. Other operations, including laboratory space, are located at 64 Sidney Street,
Cambridge, MA 02139 and 75 Hayden Avenue, Lexington, MA. We lease our office and laboratory space, which consist of
approximately 74,000 square feet located in two locations in Cambridge, Massachusetts and 32,142 square feet located in
Lexington, MA. Our lease in Cambridge expires in 2026 and our lease in Lexington expires in 2031.
Employees and Human Capital Resources
As of December 31, 2020, we employed 177 full-time employees in the United States, including 134 in research
and development and 45 in general and administrative, and two part-time employees. Sixty-two of our employees have
either an MD or PhD. We have never had a work stoppage, and none of our employees is represented by a labor
organization or under any collective-bargaining arrangements. We consider our employee relations to be positive.
Our human capital resources objectives include, as applicable, identifying, recruiting, retaining, incentivizing and
integrating our existing and additional employees. The principal purposes of our equity incentive plans are to attract, retain
and motivate selected employees, consultants and directors through the granting of stock-based compensation awards.
Available Information
Our Internet address is http://www.voyagertherapeutics.com. We make available, free of charge, on or through our
website our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, proxy statements
and any amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities and Exchange
Act as soon as reasonably practicable after such material is electronically filed with or furnished to the Securities and
Exchange Commission. The information on our website is not part of this Annual Report for the year ended
December 31, 2020.
ITEM 1A.
RISK FACTORS
The following risk factors and other information in this Annual Report on Form 10-K, including our financial
statements and related notes thereto, should be carefully considered. The risks and uncertainties described below are not
the only ones we face. Additional risks and uncertainties not presently known to us or that we presently deem less
significant may also impair our business operations. Please see page 3 of this Annual Report on Form 10-K for a
discussion of some of the forward-looking statements that are qualified by these risk factors. If any of the following risks
occur, our business, financial condition, results of operations and future growth prospects could be materially and
adversely affected.
Risks Related to Our Financial Position and Need for Capital
We have incurred significant losses in every year prior to 2020 and anticipate that we will incur losses for the
foreseeable future and may never achieve or maintain consistent profitability.
We are a clinical-stage gene therapy company with a limited operating history and have not yet generated
revenues from the sales of our product candidates. Investment in biotechnology companies is highly speculative because it
entails substantial upfront capital expenditures and significant risk that any product candidates will fail to be safe and
efficacious, obtain regulatory approval or become commercially viable. We have not yet demonstrated the ability to
complete any clinical trials of our product candidates, obtain marketing approvals, manufacture a commercial-scale product
or conduct sales and marketing activities necessary for successful commercialization. We continue to incur significant
expenses related to research and development, and other operations in order to commercialize our product candidates. We
have incurred significant operating losses in every year prior to 2020. We reported net income of $36.7 million for the year
ended December 31, 2020 primarily due to revenue recognition in connection with the terminations
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of our prior collaborations with AbbVie Biotechnology Ltd and AbbVie Ireland Unlimited Company, or collectively,
AbbVie. Our net losses were $43.6 million and $88.3 million for the years ended December 31, 2019 and 2018
respectively. As of December 31, 2020, we had an accumulated deficit of $275.9 million.
We historically have financed our operations primarily through private placements of our redeemable convertible
preferred stock, public offerings of our common stock, and strategic collaborations, including our prior collaborations with
Sanofi Genzyme Corporation, or Sanofi Genzyme, and AbbVie, and our ongoing collaboration with Neurocrine
Biosciences, Inc., or Neurocrine.
To date, we have devoted substantially all of our financial resources to building our gene therapy platform,
selecting product programs, conducting research and development, including preclinical development of our product
candidates, building our intellectual property portfolio, building our team, and establishing strategic collaborations. We
expect that it could be several years before we have a commercialized product, if we ever succeed in doing so. We expect to
continue to incur significant expenses and increasing operating losses for the foreseeable future. The net losses we incur
may fluctuate significantly from quarter to quarter. We anticipate that our expenses will increase substantially if, and as,
we:
● continue investing in our gene therapy platform to optimize capsid engineering and payload development,
manufacturing, dosing, and delivery techniques;
● work with Neurocrine, the IND holder and RESTORE-1 clinical trial sponsor, to determine the potential path
forward for VY-AADC (NBIb-1817) as a treatment for Parkinson’s disease based on, among other things, the
additional information being collected by Neurocrine in response to the Data Safety and Monitoring Board,
or DSMB, requests;
● initiate additional preclinical studies and clinical trials for, and continue research and development of, our
other programs and seek to resolve the clinical hold on VY-HTT01 for the treatment of Huntington’s disease;
● conduct joint research and development under our strategic collaborations for the research, development, and
commercialization of certain of our pipeline programs;
● continue our process research and development activities, as well as establish our research-grade and
commercial manufacturing capabilities;
● identify additional neurological diseases for treatment with our adeno-associated virus, or AAV, gene
therapies and develop additional programs or product candidates;
● work to identify and optimize novel AAV capsids;
● expand our manufacturing capabilities;
● develop, obtain and maintain regulatory clearances for devices to deliver our AAV gene therapies, and to
provide financial and operating support to partners manufacturing and supplying these devices for use in our
clinical development program;
● seek marketing and regulatory approvals for any of our product candidates or devices that successfully
complete clinical development;
● maintain, expand, protect and enforce our intellectual property portfolio;
● identify, acquire or in-license other product candidates and technologies;
● develop a sales, marketing and distribution infrastructure to commercialize any product candidates for which
we may obtain marketing approval;
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● expand our operational, financial and management systems and personnel, including personnel to support our
clinical development, manufacturing and commercialization efforts and our operations as a public company;
● increase our product liability and clinical trial insurance coverage as we expand our clinical trials and
commercialization efforts; and
● continue to operate as a public company.
Because of the numerous risks and uncertainties associated with pharmaceutical product development, we are
unable to accurately predict the timing or amount of increased expenses or when, or if, we will be able to achieve consistent
profitability. Our expenses will increase if:
● we are required by the U.S. Food and Drug Administration, or FDA, or the European Medicines Agency, or
EMA, or other regulatory agencies to redesign or modify trials or studies or to perform trials or studies in
addition to those currently expected;
● there are any delays in the receipt of regulatory clearance to begin our planned clinical programs or to use
companion devices required in such clinical programs; or
● there are any delays in enrollment of patients in or completing our clinical trials or the development of our
product candidates.
To become and remain profitable, we must develop and commercialize, alone or with our collaborators, product
candidates with significant market potential, which will require us to be successful in a range of challenging activities.
These activities include completing preclinical studies and clinical trials of our product candidates; obtaining marketing
approval for these product candidates; developing and obtaining marketing approval of any required companion devices;
manufacturing at clinical and commercial scale; marketing and selling those products that are approved; satisfying any
post-marketing requirements and achieving an adequate level of market acceptance of and obtaining and maintaining
adequate coverage and reimbursement from third-party payors for such products; and protecting our rights to our
intellectual property portfolio. We may never succeed in any or all of these activities and, even if we do, we may never
generate revenues that are significant or large enough to achieve profitability. If we do achieve profitability, we may not be
able to sustain or increase profitability on a quarterly or annual basis. Our failure to become and remain profitable would
decrease the value of our company and could impair our ability to raise capital, maintain our research and development
efforts, expand our business or continue our operations. A decline in the value of our company also could cause our
stockholders to lose all or part of their investment.
We may not be able to generate sufficient revenue from the commercialization of our product candidates and may never
be consistently profitable.
Our ability to generate revenue and achieve profitability depends on our ability, alone or with our collaboration
partners, to successfully complete the development of, and obtain the regulatory approvals necessary to commercialize, our
current and future product candidates. We are a clinical stage company. We do not anticipate generating revenues from
product sales for the next several years, and we may never succeed in doing so. Our ability to generate future revenues
from product sales depends heavily on our and our collaborators’ success in:
● completing preclinical and clinical development of our product candidates and any required companion
devices and identifying new product candidates;
● seeking and obtaining regulatory and marketing approvals for product candidates for which we complete
clinical trials;
● launching and commercializing product candidates for which we obtain regulatory and marketing approval
by establishing a sales, marketing and distribution infrastructure or, alternatively, collaborating with a
commercialization partner;
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● obtaining and maintaining adequate coverage and reimbursement by government and third-party payors for
our product candidates if and when approved;
● maintaining and enhancing a sustainable, scalable, reproducible and transferable manufacturing process for
our vectors and product candidates;
● establishing and maintaining supply and manufacturing relationships with third parties that have the
financial, operating and technical capabilities to provide adequate products and services, in both amount and
quality, to support clinical development and the market demand for our product candidates, if and when
approved;
● obtaining an adequate level of market acceptance of our product candidates as a viable treatment option;
● addressing any competing technological and market developments;
● implementing additional internal systems and infrastructure, as needed;
● negotiating favorable terms in any collaboration, licensing or other arrangements into which we may enter
and performing our obligations in such collaborations;
● obtaining, maintaining, protecting, enforcing and expanding our portfolio of intellectual property rights,
including patents, trade secrets and know-how;
● avoiding and defending against third-party claims of interference or infringement; and
● attracting, hiring and retaining qualified personnel.
Even if one or more of the product candidates that we develop is approved for commercial sale, we anticipate
incurring significant costs associated with commercializing any approved product candidate. Our expenses could increase
beyond expectations if we are required by the FDA, EMA, or other regulatory authorities to redesign or modify preclinical
studies or clinical trials or to perform preclinical studies or clinical trials in addition to those that we currently anticipate.
Even if we are able to generate revenues from the sale of any approved products, we may not become profitable and may
need to obtain additional funding to continue operations.
We will need to raise additional funding, which may not be available on acceptable terms, or at all. Failure to obtain this
necessary capital when needed may force us to delay, limit or terminate certain of our product development efforts or
other operations.
We expect our expenses to increase in connection with our ongoing and planned activities, particularly as we
continue the research and development of, continue or initiate clinical trials of, and seek marketing approval for, our
product candidates. In addition, if we obtain marketing approval for any of our product candidates, we expect to incur
significant expenses related to product sales, medical affairs, marketing, manufacturing and distribution. Since the
completion of our IPO on November 16, 2015, we have also incurred costs associated with operating as a public company.
Accordingly, we will need to obtain substantial additional funding in connection with our continuing operations. If we are
unable to raise capital or enter into business development transactions when needed or on acceptable terms, we could be
forced to delay, reduce or eliminate certain of our research and development programs or any future commercialization
efforts.
Our operations have consumed significant amounts of cash since inception. As of December 31, 2020, our cash,
cash equivalents, and marketable debt securities were $174.8 million. Based upon our current operating plan, we expect
that our existing cash, cash equivalents, and marketable debt securities, as well as ongoing reimbursement amounts
expected from development costs related to our collaboration and license agreement with Neurocrine, or the Neurocrine
Collaboration Agreement, will enable us to meet our planned operating expenses and capital expenditure requirements into
mid-2022.
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Our future capital requirements will depend on many factors, including:
● the scope, progress, results, and costs of product discovery, preclinical studies and clinical trials for our
product candidates and any required companion devices;
● the scope, progress, results, costs, prioritization, and number of our research and development programs;
● the progress and status of our strategic collaborations, including any research and development costs for
which we are responsible, our collaborators’ willingness and ability to approve desirable budgets for research
and development costs for which they are responsible, the potential exercise by our collaboration partners of
any options to develop or license certain products and product candidates that they might have, our potential
receipt of future milestone payments and royalties from our collaboration partners, and any decisions by our
collaborators to exercise their rights to terminate a collaboration in whole or in part;
● the extent to which we are obligated to reimburse, or entitled to reimbursement of, preclinical development
and clinical trial costs, or the achievement of milestones or occurrence of other developments that trigger
payments, under any other collaboration agreement to which we might become a party;
● the costs, timing and outcome of regulatory review of our product candidates;
● our ability to establish and maintain collaboration, distribution, or other marketing arrangements for our
product candidates on favorable terms, if at all;
● the costs and timing of preparing, filing and prosecuting patent applications, maintaining and enforcing our
intellectual property rights and defending intellectual property-related claims;
● the extent to which we acquire or in-license other product candidates and technologies, including any
intellectual property associated with such candidates or technologies, or acquire or invest in other businesses,
such as our investment in ClearPoint Neuro, Inc. (formerly known as MRI Interventions, Inc.), or CLPT;
● the costs related to evaluating possible alternative devices that may be useful in the delivery of our product
candidates, including our potential delivery devices, such as the variable trajectory array guide, or V-TAG®;
● the costs of advancing our manufacturing capabilities and of securing manufacturing arrangements for pre-
commercial and commercial production;
● the level of product sales by us or our collaborators from any product candidates for which we obtain
marketing approval in the future;
● the costs of operating as a public company, meeting applicable financial, regulatory, and quality control
standards, fulfilling healthcare compliance requirements, and maintaining adequate product, clinical trial, and
directors’ and officers’ liability insurance coverage; and
● the costs of establishing or contracting for sales, manufacturing, marketing, distribution, and other
commercialization capabilities if we obtain regulatory approvals to market our product candidates.
Identifying potential product candidates and conducting preclinical studies and clinical trials is a time-consuming,
expensive, and uncertain process that takes years to complete. We may never generate the necessary data or results required
to maintain the financial support of our collaborators or obtain marketing approval and achieve product sales. For example,
the proposed 2021 budgets for certain programs under our collaboration with Neurocrine are contingent on the progress and
status of those programs in the first quarter of 2021. In the event we are unable to achieve milestones necessary to
demonstrate progress on those programs, Neurocrine may be unwilling to fund these programs at the desired levels or at all,
which could require us to fund these programs to a greater extent than we have
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expected, to decline to pursue certain program objectives or to discontinue one or more of the programs. Our product
revenues, if any, and any commercial milestone payments or royalty payments under our collaboration agreements will be
derived from sales of products that may not be commercially available for many years, if at all. In addition, our product
candidates, if approved, may not achieve commercial success. Accordingly, we will need to continue to rely on additional
financing and business development to achieve our business objectives. Adequate additional financing or business
development transactions may not be available to us on acceptable terms, or at all.
Raising additional capital may cause dilution to our stockholders, restrict our operations or require us to relinquish
rights to our technologies or product candidates.
Until such time, if ever, as we can generate product revenues sufficient to achieve consistent profitability, we
expect to finance our cash needs through a combination of equity offerings, debt financings, collaborations, strategic
alliances, and licensing arrangements. We do not have any committed external source of funds other than the amounts we
are entitled to receive from our collaboration partner Neurocrine for the reimbursement of certain research and
development expenses, the achievement of specified regulatory and commercial milestones, and royalty payments under
our collaboration agreement. To the extent that we raise additional capital through the sale of equity or equity-linked
securities, including convertible debt, our stockholders’ ownership interests will be diluted, and the terms of these securities
may include liquidation or other preferences that adversely affect our existing stockholders’ rights as holders of our
common stock. Debt financing and preferred equity financing, if available, may involve agreements that include covenants
limiting or restricting our ability to take specific actions, such as incurring additional debt, obtaining additional capital,
acquiring or divesting businesses, making capital expenditures or declaring dividends. In addition, we may seek additional
capital due to favorable market conditions or strategic considerations, even if we believe we have sufficient funds for our
current or future operating plans. Our issuance of additional securities, whether equity or debt, or the possibility of such
issuance, may cause the market price of our common stock to decline. Further, our existing stockholders may not agree
with the terms of such financings.
If we raise additional funds through collaborations, strategic alliances, or licensing arrangements with third
parties, we may have to relinquish valuable rights to our technologies, future revenue streams, research programs or
product candidates or to grant licenses on terms that may not be favorable to us. If we are unable to raise additional funds
through equity or debt financings when needed, we may be required to delay, limit, reduce or terminate our product
development or future commercialization efforts or grant rights to develop and market products or product candidates that
we would otherwise prefer to develop and market ourselves. Such collaborations, alliances, or licensing arrangements
could therefore cause the market price of common stock to decline.
Our limited operating history may make it difficult for our stockholders to evaluate the success of our business to date
and to assess our future viability.
We are a clinical-stage company. Our operating history is short, and to date has been limited to building our team,
business planning, raising capital, establishing our intellectual property portfolio, determining which neurological diseases
to pursue, advancing our product candidates including delivery and manufacturing and conducting preclinical studies and
clinical trials. Consequently, any predictions about our future success or viability may not be as accurate as they could be if
we had a longer operating history.
In addition, as a new business, we may encounter unforeseen expenses, difficulties, complications, delays and
other known and unknown factors. To achieve our current goals, we will need to transition in the future from a company
with a research and development focus to a company capable of supporting commercial activities. We may not be
successful in such a transition.
We expect our financial condition and operating results to continue to fluctuate significantly from quarter-to-
quarter and year-to-year due to a variety of factors, many of which are beyond our control. Accordingly, our stockholders
should not rely upon the results of any quarterly or annual periods as indications of future operating performance.
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Risks Related to the Development and Regulatory Approval of Our Product Candidates
Our AAV gene therapy product candidates are based on a novel technology, which makes it difficult and potentially
infeasible to predict the duration and cost of development of, and subsequently obtaining regulatory approval for, our
product candidates. Only two AAV gene therapy products have been approved in the United States. In Europe, only two
AAV gene therapy products have been approved.
We have concentrated our research and development efforts to date on our gene therapy platform, identifying our
initial targeted disease indications, and our initial product candidates. Our future success depends on our successful
development of viable AAV gene therapy product candidates. Currently, only one of our product candidates, VY-AADC
(NBIb-1817), which is currently subject to a clinical hold, is in clinical development, and the remainder of our product
candidates are in preclinical development. AAV gene therapies are a relatively new technology. We cannot accurately
predict when or if any of our product candidates will prove effective or safe in humans or whether these product candidates
will receive marketing approval. There can be no assurance that we will not experience problems or delays in the
preclinical testing or development of our product candidates and that such problems or delays will not cause unanticipated
costs, or that any such problems or delays can be solved in a timely or profitable basis, if at all. We also may experience
unanticipated problems or delays in expanding our manufacturing capacity.
The clinical trial requirements of the FDA, the EMA and other regulatory authorities and the criteria these
regulators use to determine the safety and efficacy of a product candidate vary substantially according to the type,
complexity, novelty and intended use and market of the product candidate. The regulatory approval process for novel
product candidates such as gene therapies can be more expensive and take longer than for other, better known or more
extensively studied product candidates. Until August 2017, the FDA had never approved a gene therapy product. Since that
time, it has approved Luxturna, an AAV gene therapy product by Spark Therapeutics, Inc. (acquired by F. Hoffmann-La
Roche Ltd., or Roche, in 2019), or Spark, for patients with an inherited form of vision loss, and Zolgensma, an AAV gene
therapy product by Avexis, a Novartis company, for pediatric patients with spinal muscular atrophy. The FDA has also
approved three non-AAV gene therapy products, Kymriah by Novartis International AG, for pediatric and young adult
patients with a form of acute lymphoblastic leukemia; Yescarta by Kite Pharma, Inc., or Kite Pharma, for adult patients
with certain forms of non-Hodgkin lymphoma; and Tecartus by Kite Pharma for adult patients with relapsed/refractory
mantle cell lymphoma. In Europe, two AAV gene therapy products, Glybera by uniQure N.V., or uniQure, and Luxturna by
Spark, have been granted marketing authorization; however, uniQure decided not to pursue renewal of such authorization
in 2017 and has since withdrawn Glybera from the European market. The European Commission also has approved four
non-AAV gene therapy products, Strimvelis by Orchard Therapeutics (Netherlands) BV, Kymriah, Yescarta, and
ZYNTEGLO by bluebird bio for a form of transfusion-dependent β-thalassemia.
For example, in October 2020, the FDA notified us that the IND application for our planned Phase 1b clinical trial
to evaluate VY-HTT01 in patients with Huntington’s disease was placed on clinical hold pending the resolution of certain
chemistry, manufacturing and controls, or CMC, matters. We plan to provide a complete response to the additional requests
from the FDA regarding the IND application for VY-HTT01 in the first half of 2021. Any delay in our ability, or our
inability, to resolve the clinical hold and initiate our clinical trial of VY-HTT01, may require us to incur additional clinical
development costs, slow down our product candidate development and approval process or delay or potentially jeopardize
our ability to commence product sales and generate revenue from the program.
In addition, in November 2020, the sponsor medical monitor and surgical core requested that the DSMB for the
RESTORE-1 Phase 2 clinical trial, review certain patient MRI abnormalities observed in some clinical trial participants in
the ongoing clinical trial. Following this review, the DSMB requested additional patient-level data and recommended a
pause in the dosing of patients in the RESTORE-1 Phase 2 clinical trial pending review by the DSMB of these additional
data. In response to the DSMB’s recommendation to pause the dosing of patients, we and Neurocrine decided to delay the
planned resumption of patient screening in the RESTORE-1 Phase 2 clinical trial until Neurocrine had submitted the
required expedited IND safety report related to these matters and the DSMB was able to complete its evaluation. Further,
in December 2020, the FDA notified Neurocrine that it had placed a clinical hold on the RESTORE-1 Phase 2 clinical trial.
In January 2021, the FDA informed Neurocrine of the information required to provide a complete response to the FDA in
connection with the clinical hold. Information required by the FDA includes an assessment of how the investigational
product may have given rise to the adverse findings, a mitigation plan to manage
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the adverse findings, and supportive data to justify that the product candidate continues to have a favorable benefit/risk
profile. The DSMB met to review additional patient data in January 2021 and requested that Neurocrine provide additional
information. The clinical implications of these observations are currently unknown and are being evaluated. We intend to
support Neurocrine, the clinical trial sponsor and IND holder, on ongoing matters related to the completion of imaging and
clinical assessments requested by the DSMB and the provision of other information requested by the FDA for the
RESTORE-1 Phase 2 clinical trial. We plan to determine the potential path forward for the VY-AADC Program based on,
among other things, the additional information being collected by Neurocrine in response to the DSMB requests If the
clinical hold on the RESTORE-1 Phase 2 clinical trial is resolved and we decide to resume clinical activities as the clinical
trial sponsor for the VY-AADC Program, we may be required to incur additional clinical development costs, slow down
our product candidate development and approval process and delay or potentially jeopardize our ability to commence
product sales and generate revenue from the program.
It is difficult to determine how long it will take or how much it will cost to obtain regulatory approvals for our
product candidates in either the United States or the European Union or how long it will take to commercialize our product
candidates. The few regulatory approvals to date may not be indicative of what the FDA, European Commission, or other
regulatory authorities may require for approval or whether different or additional preclinical studies or clinical trials may be
required to support regulatory approval in a particular jurisdiction. Delay or failure to obtain, or unexpected costs in
obtaining, the regulatory approval necessary to bring a potential product candidate to market could decrease our ability to
generate sufficient product revenue, and our business, financial condition, results of operations and prospects may be
harmed.
Regulatory requirements governing gene and cell therapy products have changed frequently and may continue to
change in the future. Such requirements may lengthen the regulatory review process, require us to modify current
studies or perform additional studies or increase our development costs, which in turn may force us to delay, limit, or
terminate certain of our programs.
The Center for Biologics Evaluation and Research, or CBER, of the FDA regulates biological products for human
use. The Office of Tissues and Advanced Therapies, or OTAT, formerly known as the Office of Cellular, Tissue and Gene
Therapies, within CBER reviews gene therapy and related products and has established the Cellular, Tissue and Gene
Therapies Advisory Committee to advise CBER in its review.
NIH-funded institutions need to have their institutional biosafety committee, or IBC, as well as their institutional
review board, or IRB, review proposed clinical trials to assess the safety of the trial. The PD-1101 Phase 1b clinical trial of
VY-AADC (NBIb-1817), the PD-1102 Phase 1 trial exploring the delivery of VY-AADC (NBIb-1817) using a posterior
trajectory, and the RESTORE-1 Phase 2 clinical trial are being conducted at multiple sites, and therefore are subject to
oversight by these authorities. Such trials will need to be re-reviewed by the respective institutional IRBs if the protocols
for the trials are amended, and any delay in or failure to obtain institutional IRB approval for any protocol or protocol
amendment could delay, interrupt, or limit the conduct of the clinical trial at one or more participating clinical trial sites.
For example, we and our collaboration partner Neurocrine paused screening of new patients for enrollment in the
RESTORE-1 Phase 2 clinical trial in April 2020 prior to the FDA’s imposition of the clinical hold, in part to facilitate IRB
reviews of certain amendments made to the RESTORE-1 clinical trial protocol. The resumption of any patient screening or
dosing in the trial is subject to the resolution of the clinical hold on VY-AADC (NBIb-1817).
Adverse or unforeseen developments in clinical trials of gene therapy products conducted by us or others may
cause the FDA or other oversight bodies to change the requirements for approval of any of our product candidates.
Similarly, EMA and local health authorities of individual countries within the European Union may issue new guidelines
concerning the clinical development and marketing authorization for gene therapy medicinal products and require that we
comply with these new guidelines. The EMA and agencies at both the federal and state level in the United States have
expressed an interest in further regulating new biotechnologies, including gene therapy. In addition, gene therapy products
are considered genetically-modified organism, or GMO, products and are regulated as such in each country. Designation of
the type of GMO product and subsequent handling and disposal requirements can vary across countries and is variable
throughout the European Union. Addressing each specific country requirement and obtaining approval to
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commence a clinical trial in these countries could result in delays in starting, conducting, or completing a clinical trial.
Similar issues could be faced in other regions of the world including the Asia-Pacific region.
These regulatory review committees and advisory groups and the new guidelines they promulgate may lengthen
the regulatory review process, require us to perform additional studies, increase our development costs, lead to changes in
regulatory positions and interpretations, delay or prevent approval and commercialization of these product candidates or
lead to significant post-approval limitations or restrictions. As we advance our product candidates, we will be required to
consult with these regulatory and advisory groups and comply with applicable guidelines. We have requested feedback
from the FDA on, among other matters, the regulatory pathway for VY-AADC (NBIb-1817) and the design of the proposed
pivotal program. We had multiple interactions with the FDA throughout 2018 and received certain written feedback
requiring additional clarification. In December 2018, we held a Type B meeting with the FDA to discuss the overall
development and pivotal program for VY-AADC (NBIb-1817). We received written feedback from the FDA, including
FDA guidance received during the Type B meeting that in a disease such as Parkinson’s two adequate and well-controlled
clinical trials is suggested.
In connection with our Neurocrine Collaboration Agreement, we agreed to transfer sponsorship of the clinical
research program for VY-AADC (NBIb-1817) in Parkinson’s disease, or the VY-AADC Program, to Neurocrine, which
required the related IND application to be transferred to Neurocrine. The transition process required additional regulatory
filings with and review by the FDA. Based upon feedback received from the FDA, we and Neurocrine amended the
RESTORE-1 clinical trial protocol. The protocol amendments included increasing the planned enrollment to approximately
85 patients, from the previously planned 42 patients, and a transition to 2:1 randomization to VY-AADC (NBIb-1817) or
sham surgery, respectively, compared to the previous 1:1 randomization. Any further guidance that we or Neurocrine may
receive from the FDA could lead to further modification of the clinical VY-AADC (NBIb-1817) protocol and to additional
costs or delays in the VY-AADC Program. Following Neurocrine’s termination of the Neurocrine Collaboration Agreement
with respect to the VY-AADC Program, Neurocrine remains the sponsor of the RESTORE-1 Phase 2 clinical trial and the
holder of the applicable IND. If sponsorship of the RESTORE-1 Phase 2 clinical trial is transferred back to us to advance
the program, such transition would require additional regulatory filings with and review by the FDA, and would likely lead
to additional costs and delays in the enrollment of patients in the RESTORE-1 Phase 2 clinical trial.
As previously discussed, in October 2020, the FDA notified us that the IND application for our planned Phase 1b
clinical trial to evaluate VY-HTT01 in patients with Huntington’s disease was placed on clinical hold pending the
resolution of certain CMC information requests. We had previously sought and received FDA feedback on the VY-HTT01
development program in a pre-IND meeting in 2017. Because the FDA only grants one pre-IND meeting per product in a
given indication, however, we were unable to have additional formal consultations with the FDA prior to our submission of
our IND application in September 2020 concerning changes to the program since our 2017 meeting. Now that we have
received specific written feedback from the FDA regarding the cause of the clinical hold, we may schedule a Type A
meeting with the FDA to discuss steps to resolve the underlying CMC information requests and, if possible, advance our
clinical development of VY-HTT01. Any delay in our ability, or our inability, to resolve the clinical hold and initiate our
clinical trial of VY-HTT01 may require us to incur additional clinical development costs, slow down our product candidate
development and approval process and delay or potentially jeopardize our ability to commence product sales and generate
revenue from our Huntington’s program.
We plan to continue to seek and incorporate FDA guidance in our ongoing development plans for each of our
potential clinical candidates. If we fail to consult or solicit guidance from regulators or are unable to obtain sufficiently
frequent or detailed guidance from regulators, we may be required to delay or discontinue development of certain of our
product candidates. These additional processes may result in a review and approval process that is longer than we otherwise
would have expected. Delays as a result of increased or lengthier regulatory approval process and further restrictions on
development of our product candidates can be costly and could negatively impact our or our collaborators’ ability to
complete clinical trials and commercialize our current and future product candidates in a timely manner, if at all.
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Results from preclinical studies and early-stage clinical trials may not be indicative of efficacy in late-stage clinical
trials.
All of our product candidates are in early stages of development. Clinical testing is expensive, is difficult to design
and implement, can take many years to complete and is uncertain as to outcome. A failure of one or more clinical trials can
occur at any stage of testing. Our product candidates may fail to show the desired safety and efficacy in preclinical testing
or clinical development despite demonstrating promising results in earlier preclinical studies or clinical trials. In addition,
the outcome of preclinical testing and early clinical trials may not be predictive of the success of later stage clinical trials.
Similarly, interim results generated from clinical trials do not necessarily predict final results, and results from one
completed clinical trial may not be replicated in a subsequent clinical trial with a similar study design. For example, data
from the PD-1101 Phase 1b clinical trial and from the separate PD-1102 Phase 1 clinical trial exploring the delivery of VY-
AADC (NBIb-1817) using a posterior trajectory suggest that one-time treatment with VY-AADC (NBIb-1817) could result
in sustained improvement in motor function in patients with Parkinson’s disease. These results, however, may not be
predictive of the results of the RESTORE-1 Phase 2 clinical trial or any future clinical trials. Some of our clinical trials,
including the PD-1101 and PD-1102 clinical trials, were conducted with small patient populations and were not blinded or
placebo-controlled, making it difficult to predict whether the favorable results that we observed in such trials will be
sustained or repeated in larger and more advanced clinical trials such as, for Parkinson’s disease, the RESTORE-1 Phase 2
clinical trial or the RESTORE-2 Phase 3 clinical trial. To scale up for later, larger clinical trials and potential commercial
production, we transitioned to a new manufacturing process for the RESTORE-1 Phase 2 clinical trial from that used in our
PD-1101 and PD-1102 clinical trials as described in additional detail below. Moreover, preclinical and clinical data are
often susceptible to varying interpretations and analyses, and many companies that have believed their product candidates
performed satisfactorily in preclinical studies and clinical trials have nonetheless failed to obtain marketing approval of
their products.
There is a high failure rate for product candidates proceeding through preclinical studies and clinical trials. A
number of companies in the pharmaceutical and biotechnology industries have suffered significant setbacks in late-stage
clinical trials even after achieving promising results in early-stage clinical trials. If a larger population of patients does not
experience positive results, if these results are not reproducible, or if our products show diminishing activity over time, our
products may not receive approval from the EMA or the FDA. Data obtained from preclinical and clinical activities are
subject to varying interpretations, which may delay, limit or prevent regulatory approval. In addition, we may encounter
regulatory delays or rejections as a result of many factors, including changes in regulatory policy during the period of
product development. Failure to confirm favorable results from earlier trials by demonstrating the safety and effectiveness
of our products in late-stage clinical trials with larger patient populations could harm our business and we may never
succeed in commercialization or generating product revenue.
The dosing and coverage of the putamen in the PD-1101 Phase 1b clinical trial, the separate PD-1102 Phase 1 clinical
trial, and the RESTORE-1 Phase 2 clinical trial are different than the dosing and coverage of the putamen in prior
clinical trials conducted by other parties. The maximum total vector genome dose chosen in the RESTORE-1 Phase 2
clinical trial may not demonstrate the safety and effectiveness of VY-AADC (NBIb-1817) in the RESTORE-1 Phase 2
clinical trial, or in the potential RESTORE-2 Phase 3 clinical trial. Any failure to demonstrate safety or effectiveness
could result in a decision to modify dosing and/or coverage of the putamen in any subsequent clinical trials, and such
decisions could cause a delay in achieving marketing authorization, or may result in limiting or terminating the
program entirely.
The clinical trial results of some of our collaborators have been negatively affected by factors that had not been
fully anticipated prior to the design of the clinical trials. For example, the magnitude of some of the clinical responses seen
in the Phase 1 clinical trial of AAV2-AADC, a therapy similar to VY-AADC (NBIb-1817) we previously evaluated in
early-stage clinical trials, was similar to the placebo effects observed in previous surgical therapies for Parkinson’s disease.
As a result, we are unable to rely on the results of this prior Phase 1 trial as an indicator of the efficacy of treatment with
VY-AADC (NBIb-1817). We believe that to increase the likelihood of a clinical benefit, the dose and volume of infusion of
VY-AADC (NBIb-1817) should be optimized to substantially increase the coverage of the putamen, the region of the brain
targeted by VY-AADC (NBIb-1817). However, it is not possible at this time to know if we are optimizing these parameters,
and as a result, to know if we will be able to achieve sufficient coverage of the putamen and a clinical benefit.
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The PD-1101 Phase 1b clinical trial of VY-AADC (NBIb-1817) incorporated several design features in an attempt
to increase the coverage area of the putamen, particularly the posterior putamen. We employed larger infusion volumes and
higher doses of VY-AADC (NBIb-1817), and we used the ClearPoint® System to provide real-time, intra-operative,
magnetic resonance imaging, or MRI, assistance to the physician surgically administering VY-AADC (NBIb-1817) to the
patient.
In the PD-1102 Phase 1 clinical trial, we utilized posterior, or back of the head, delivery of VY-AADC (NBIb-
1817) into the putamen, compared to a transfrontal, or top of the head, delivery approach used in the PD-1101 Phase 1b
clinical trial described above. A posterior approach better aligns the infusion of VY-AADC (NBIb-1817) with the
anatomical structure of the putamen to potentially reduce the total procedure time and increase the total coverage of the
putamen. Administration of VY-AADC (NBIb-1817) with this posterior approach has been well-tolerated to date with no
reported serious adverse events, or SAEs.
Due to the nature of the techniques used in the Phase 1 clinical development and the numerous variables that can
be changed, it is possible that the data generated from this trial may not provide evidence of statistically significant or
durable clinical benefit. For example, physicians may use cannulas, which are small tubes of differing lengths, in the
infusion procedure, or may use differing infusion speeds or infusion angles. These differences could affect the dose of VY-
AADC (NBIb-1817) that ultimately reaches the putamen, leading to highly variable results. Similarly, we have limited
experience to date with the posterior delivery approach which we have selected as the preferred surgical route of
administration for the RESTORE-1 Phase 2 clinical trial. Further, use of a posterior approach may not generate outcomes
that are clinically superior to the outcomes achieved with a transfrontal approach.
A dose of up to 3.6 x 1012 vector genomes as a maximum total bilateral dose has been selected for the RESTORE-
1 Phase 2 clinical trial. This dosing level is between the up to maximum total vector genome doses administered in Cohorts
2 and 3 from the PD-1101 Phase 1b trial when considering the higher volume administered with the posterior trajectory and
vector produced using the baculovirus system. We have not previously evaluated this dosing level in a clinical trial. To
achieve safety, primary and secondary efficacy endpoints, the dose concentration and volume selected for the RESTORE-1
Phase 2 clinical trial may be modified, and regardless of the dose concentration and volume selected, we may never achieve
desired safety and efficacy outcomes.
The RESTORE-1 Phase 2 clinical trial is a randomized, double-blind, sham-surgery controlled trial with a planned
enrollment of approximately 85 patients who have been diagnosed with Parkinson’s disease for at least four years, are not
responding adequately to oral medications, and have at least three hours of OFF time during the day as measured by a
validated self-reported patient diary. As amended, the clinical trial protocol states that patients will be randomized 2:1 to
VY-AADC (NBIb-1817) or sham surgery, respectively. Patient eligibility criteria and the protocol design, including the
total number of patients in the trial and the number of patients who receive VY-AADC (NBIb-1817) or placebo, may
change during the course of the trial in response to recruiting challenges, clinical patient assessments, data collection,
statistical analysis modifications, and other factors, such as modifications to the clinical trial protocol made to date.
The primary efficacy endpoint of the RESTORE-1 Phase 2 clinical trial is the mean improvement from baseline to
12 months on time without troublesome dyskinesia, or good ON time, as measured by a validated self-reported patient
diary at 12 months compared to placebo. Secondary endpoints include diary OFF time, other motor function and quality of
life measures from the Unified Parkinson’s Disease Rating Scales (UPDRS-II,-III scores), the Parkinson’s Disease
Questionnaire (PDQ-39), and patient’s global function as measured by the proportion of participants with improvement on
the Clinical Global Impression (CGI) score. The trial is also designed to measure non-motor symptoms from the Non-
Motor Symptom Scale (NMSS), as well as safety. Primary and secondary endpoints may be adjusted during the trial in
response to changes in the protocol design.
Biomarker data collected during the RESTORE-1 Phase 2 clinical trial include measurements of the coverage of
the putamen, the specific region of the brain targeted with VY-AADC (NBIb-1817), and measurements of AADC enzyme
expression and activity in the putamen measured by positron emission tomography (PET) using fluorodopa F-18. The trial
is also designed to record changes in patients’ daily doses of oral levodopa and related medications.
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If sponsorship of the program is transferred back to us, we would plan to continue to seek and incorporate FDA
guidance in our clinical trial plans. Additional interaction with the FDA regarding the RESTORE-1 and RESTORE-2
clinical trial plans could result in changes to the current plan.
Additionally, we have used and may continue to use a different manufacturing process for our AAV gene therapy
vector in the RESTORE-1 Phase 2 clinical trial and the planned RESTORE-2 Phase 3 clinical trial. We have begun to
manufacture VY-AADC (NBIb-1817) using our baculovirus/Sf9 system as opposed to manufacturing in HEK 293 cells,
which were used in the Phase 1 clinical trials. We have also begun to use our baculovirus/Sf9 system to manufacture other
of our product candidates including VY-HTT01. We have conducted studies to demonstrate comparability between the
current version and the new version. It is possible, however, that the results of the RESTORE-1 Phase 2 clinical trial and
the potential RESTORE-2 Phase 3 clinical trial in Parkinson’s disease may differ from the results of the PD-1101 Phase 1b
or the separate PD-1102 Phase 1 clinical trial based on the use of VY-AADC (NBIb-1817) manufactured using our
baculovirus/Sf9 system as opposed to using HEK 293 cells.
We may in the future conduct, and intend to conduct, clinical trials for product candidates at sites outside the United
States, and the FDA may not accept data from trials conducted in such locations.
To date, we have only conducted clinical trials in the United States. However, we may in the future choose to
conduct one or more of our clinical trials or include sites in current or future clinical trials outside the United States.
Although the FDA may accept data from sites or clinical trials outside the United States, acceptance of these data
is subject to conditions imposed by the FDA. For example, the clinical trial must be well-designed and conducted and
performed by qualified investigators in accordance with ethical principles. The trial population must also adequately
represent the U.S. population, and the data must be applicable to the U.S. population and U.S. medical practice in ways that
the FDA deems clinically meaningful. In addition, while these clinical trials or trial sites are subject to the applicable local
laws, FDA acceptance of the data will depend on its determination that the trials or trial sites also complied with all
applicable U.S. laws and regulations. If the FDA does not accept the data from any trial or trial site outside the United
States, it would likely result in the need for additional trials, which would be costly and time-consuming and would delay
or permanently halt our development of the applicable product candidates.
Other risks inherent in conducting international clinical trials or using international trial sites include:
● foreign regulatory requirements that could restrict or limit our ability to conduct our clinical trials;
● the administrative burden of complying with a variety of foreign laws, medical standards and regulatory
requirements, including the regulation of pharmaceutical and biotechnology products and treatment;
● the failure of enrolled patients to adhere to clinical protocols or inadequate collection and assessment of
clinical data as a result of differences in healthcare services or cultural customs;
● foreign exchange fluctuations;
● diminished or loss of protection of intellectual property in the relevant jurisdiction; and
● political, economic, environmental, and health risks relevant to specific foreign countries, including risks
related to natural disasters or disease outbreaks, including the current coronavirus disease 2019, or COVID-
19, pandemic.
We may encounter substantial delays or difficulties in commencement, enrollment or completion of our preclinical
studies or clinical trials, or may fail to demonstrate safety and efficacy to the satisfaction of applicable regulatory
authorities, which could prevent us from commercializing our current and future product candidates on a timely basis,
if at all.
Before obtaining marketing approval from regulatory authorities for the sale of our current and future product
candidates, we must conduct extensive clinical trials to demonstrate the safety and efficacy of the product candidates. To
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conduct clinical trials, we must first complete preclinical testing and studies to support IND applications or similar
applications in other jurisdictions. We cannot be certain of the timely completion or successful outcome of our preclinical
testing and studies. Our ability to complete our preclinical testing and studies is contingent on our ability to source animals
and other supplies required for the conduct of such testing and studies. If we are unable to obtain all necessary animals and
other supplies required for the conduct of our preclinical testing and studies, we may be unable to complete such preclinical
testing and studies in a timely manner or at all. For example, some of our IND-enabling toxicology and other studies
require certain non-human primates that are customarily imported from the People’s Republic of China, or the PRC, and
current trade relations between the United States and the PRC has made the sourcing of these non-human primates
challenging. We have encountered, and may continue to encounter, delays in obtaining a sufficient supply of such non-
human primates to enable the conduct of our preclinical studies and testing. Our inability to obtain a sufficient supply of
these non-human primates in a timely manner or at all may impair our ability to complete preclinical testing and studies to
support IND applications or similar applications in other jurisdictions or delay the submission of such applications.
Additionally, we cannot predict if the FDA or similar regulatory authorities outside the United States will accept
our planned clinical programs or if the outcome of our preclinical testing and studies will ultimately support the further
development of our preclinical and clinical programs.
For example, in September 2020, we submitted an IND to the FDA in connection with the proposed initiation of a
Phase 1b clinical trial for VY-HTT01 in patients with Huntington’s disease. In October 2020, the FDA notified us that the
IND application for VY-HTT01 was placed on clinical hold pending the resolution of certain CMC information requests.
While we have received written feedback from the FDA on these requests and plan to submit our complete response to the
FDA in the first half of 2021, we cannot be certain that these requests will be resolved promptly or at all and when, or if,
we will be permitted to initiate our Phase 1b clinical trial for VY-HTT01.
We also have very limited experience with clinical trials. The transfer of sponsorship of the VY-AADC Program to
Neurocrine requires Neurocrine to be the sponsor of the RESTORE-1 Phase 2 clinical trial in any sites. The sponsorship
transition required additional regulatory filings with and review by regulatory officials, and has led to additional costs and
delays in the enrollment of patients in the RESTORE-1 Phase 2 clinical trial. Following Neurocrine’s termination of the
Neurocrine Collaboration Agreement with respect to the VY-AADC Program, Neurocrine remains the sponsor of the
RESTORE-1 Phase 2 clinical trial and the holder of the applicable IND. If sponsorship of the RESTORE-1 Phase 2
clinical trial is transferred back to us, such transition would require additional regulatory filings with and review by the
FDA, and would likely lead to additional costs and delays in the enrollment of patients in the RESTORE-1 Phase 2 clinical
trial.
We cannot guarantee that any clinical trials will be conducted as planned or completed on schedule, if at all. A
clinical trial failure can occur at any stage of testing. Similarly, there may be delays or difficulties in our initiation of future
clinical trials. Due to the additional regulatory uncertainties associated with gene therapy products, we did not initiate the
RESTORE-1 Phase 2 clinical trial for VY-AADC (NBIb-1817) as a treatment for Parkinson’s disease until we met with
OTAT to discuss our proposed trial design and overall development plan. While we have received OTAT’s feedback and
incorporated it as appropriate in our plans, the clinical trial as designed may not achieve the prospectively defined primary
clinical endpoints or provide a favorable benefit to risk ratio to support a biologics license application, or BLA, filing or
approval. As previously discussed, in November 2020, the sponsor medical monitor and surgical core requested that the
DSMB for the RESTORE-1 Phase 2 clinical trial review certain patient MRI abnormalities observed in some clinical trial
participants in the ongoing clinical trial. Following this review, the DSMB requested additional patient-level data and
recommended a pause in the dosing of patients in the RESTORE-1 Phase 2 clinical trial pending its review of these
additional data. In response to the DSMB’s recommendation, we and Neurocrine decided to delay the planned resumption
of patient screening in the RESTORE-1 Phase 2 clinical trial until Neurocrine had submitted the required expedited IND
safety reports related to these matters and the DSMB was able to complete its evaluation. In December 2020, the FDA
notified Neurocrine that it had placed a clinical hold on the RESTORE-1 Phase 2 clinical trial. The DSMB met to review
additional patient data in January 2021 and characterized the MRI abnormalities as having uncertain clinical significance
and requested that Neurocrine provide additional information.
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Identifying and qualifying patients to participate in clinical trials of our product candidates is critical to our
success. We may not be able to identify, recruit and enroll a sufficient number of patients, or those with required or desired
characteristics, to complete our clinical trials in a timely manner or at all pursuant to the requirements of the FDA, EMA, or
other regulatory authorities. Patient enrollment and trial completion are affected by many factors including:
● perceived risks and benefits of AAV gene therapy approaches for the treatment of neurological diseases;
● perceived risks of the delivery procedure, such as intracranial infusion for VY-AADC (NBIb-1817) and VY-
HTT01;
● formulation changes to our product candidates, which may require us to conduct additional clinical studies to
bridge our modified product candidates to earlier versions;
● size of the patient population and process for identifying patients;
● design of the trial protocol;
● eligibility and exclusion criteria;
● patients with preexisting antibodies to the gene therapy vector that preclude their participation in the trial;
● perceived risks and benefits of the product candidate under study;
● availability of competing therapies and clinical trials;
● severity of the disease under investigation;
● availability of genetic testing for potential patients;
● proximity and availability of clinical trial sites for prospective patients;
● lack of adequate compensation of patients;
● ability to obtain and maintain patient consent;
● risk that enrolled patients will drop out before completion of the trial;
● our ability to locate appropriately trained physicians to conduct such clinical trials, particularly for clinical
trials such as the VY-AADC (NBIb-1817) RESTORE-1 Phase 2 and RESTORE-2 Phase 3 clinical trials in
which we have historically used, and expect to use, the ClearPoint System, which is only available at a small
number of academic medical centers in the United States;
● the ability to commercially launch V-TAG, our real-time, intra-operative, MRI-compatible device, and to
train physicians to conduct clinical trials using the device;
● willingness of patients to participate in a placebo-controlled trial, including a trial utilizing sham surgery;
● patient referral practices of physicians; and
● ability to monitor patients adequately during and after treatment.
Further, we plan to seek marketing approvals in the United States, the European Union and other jurisdictions,
which may require that we conduct clinical trials in foreign countries. Our ability to successfully initiate, enroll and
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complete a clinical trial in any foreign country is subject to numerous risks unique to conducting business in foreign
countries, including:
● difficulty in establishing or managing relationships with clinical research organizations, or CROs, and
physicians;
● different standards for the conduct of clinical trials;
● absence in some countries of established groups with sufficient regulatory expertise for review of AAV gene
therapy protocols;
● our inability to locate qualified local partners or collaborators for such clinical trials; and
● the potential burden of complying with a variety of foreign laws, medical standards and regulatory
requirements, including the regulation of pharmaceutical and biotechnology products and treatment.
If we have difficulty enrolling a sufficient number of patients to conduct our clinical trials as planned, we may
need to delay, limit or terminate ongoing or planned clinical trials in some or all localities, any of which would harm our
business, financial condition, results of operations and prospects.
Other events that may prevent successful or timely completion of clinical development include:
● delays in reaching a consensus with regulatory authorities or collaborators on trial design, implementation,
management, or other aspects of the clinical trial;
● delays in reaching agreement on acceptable terms with prospective CROs and clinical trial sites;
● delays in opening clinical trial sites or obtaining required IRB or independent ethics committee approval at
each clinical trial site;
● imposition of a clinical hold by regulatory authorities, such as the clinical hold that the FDA placed on the
IND application for our planned Phase 1b clinical trial of VY-HTT01 in October 2020 or the clinical hold
that the FDA placed on the IND application for the RESTORE-1 Phase 2 clinical trial of VY-AADC (NBIb-
1817) in Parkinson’s disease in December 2020; or
● as a result of a serious adverse event or after an inspection of our clinical trial operations or trial sites or the
decision by us or our collaborators, such as the pause in screening and enrollment of patients in the
RESTORE-1 Phase 2 clinical trial in Parkinson’s disease, or the requirement of regulators or IRBs to suspend
or terminate clinical research for various reasons, including noncompliance with regulatory requirements or a
finding that the participants are being exposed to unacceptable health risks;
● failure by us, our collaboration partners, any CROs we engage, or any other third parties to adhere to clinical
trial protocols or regulatory requirements;
● failure by us, our collaboration partners, any CROs we engage, or any other third parties to perform in
accordance with the FDA’s good clinical practices, or GCPs, or applicable regulatory guidelines in the
European Union;
● failure by physicians to adhere to delivery protocols leading to variable results;
● delays in the testing, validation, manufacturing and delivery of our product candidates to the clinical sites,
including delays by third parties with whom we have contracted to perform certain of those functions;
● insufficient or inadequate supply or quality of our product candidates or other materials necessary to conduct
clinical trials of our product candidates;
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● delays in having patients complete participation in a trial or return for post-treatment follow-up;
● clinical trial sites or patients dropping out of a trial at a rate higher than we anticipate;
● selection of clinical endpoints that require prolonged periods of clinical observation or analysis of the
resulting data;
● receipt of negative or inconclusive clinical trial results;
● occurrence of serious adverse events associated with the product candidate that are viewed to outweigh its
potential benefits;
● occurrence of serious adverse events in trials of the same class of agents conducted by other sponsors;
● changes in regulatory requirements and guidance that require amending or submitting new clinical protocols;
or
● the cost of clinical trials of our product candidates may be greater than we anticipate.
Any inability to successfully initiate or complete preclinical studies and clinical trials could result in additional
costs and potential delays to us or impair our ability to generate revenues from product sales, regulatory and
commercialization milestones and royalties. We do not know whether any of our preclinical studies or clinical trials will
begin as planned, will need to be restructured, or will be completed on schedule, or at all. In addition, if we make
manufacturing or formulation changes to our product candidates, such as our previous transition from an HEK 293-based
production system to a baculovirus/Sf9 AAV production system or as a result of unanticipated clinical trial results, we may
need to conduct additional studies to bridge our modified product candidates to earlier versions. Clinical trial delays also
could shorten any periods during which we may have the exclusive right to commercialize our product candidates or allow
our competitors to bring products to market before we do, which could impair our ability to successfully commercialize our
product candidates and may harm our business, financial condition, results of operations and prospects.
Additionally, if the results of our clinical trials are inconclusive or if there are safety concerns or SAEs associated
with our product candidates, we may:
● be delayed in obtaining marketing approval for our product candidates, if we are able to do so at all;
● obtain approval for indications or patient populations that are not as broad as intended or desired;
● obtain approval with labeling that includes significant use or distribution restrictions or safety warnings;
● be subject to changes in the way the product is administered;
● be required to perform additional clinical trials to support approval or be subject to additional post-marketing
testing requirements;
● have regulatory authorities withdraw, or suspend, their approval of the product or impose restrictions on its
distribution in the form of a Risk Evaluation and Mitigation Strategy, or REMS;
● be subject to the addition of labeling statements, such as warnings or contraindications;
● be sued or otherwise become party to dispute proceedings; or
● experience damage to our reputation.
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Our product candidates or the process for administering our product candidates may cause undesirable side effects or
have other properties that could delay or prevent their regulatory approval, limit their commercial potential or result in
significant negative consequences following any potential marketing approval.
In past clinical trials that were conducted by others with non-AAV gene therapy vectors, several significant side
effects were caused by gene therapy treatments, including reported cases of leukemia and death. Other potential side effects
could include an immunologic reaction and insertional oncogenesis, which is the process whereby the insertion of a
functional gene near a gene that is important in cell growth or division results in uncontrolled cell division, which could
potentially enhance the risk of malignant transformation. If our vectors demonstrate a similar adverse effect, or other
adverse effects, we may be required to halt or delay further clinical development of our product candidates or withdraw the
product from the market post-approval. For example, in a recently published review of patients with hepatocellular
carcinomas, it was shown that a small subset contained an integrated genome sequence of wild-type AAV2 and it was
suggested that AAV2 may be associated with insertional oncogenesis.
In addition to side effects caused by the product candidate, the administration process or related procedures also
can cause side effects. VY-AADC (NBIb-1817) and VY-HTT01 are designed to be administered directly to the targeted
areas and cells in the brain, requiring the patient to undergo brain surgery. There are risks associated with direct delivery of
AAV gene therapy into the brain. In a previous Phase 1 clinical trial conducted by UCSF, three patients experienced
hemorrhages caused by the surgical procedure for administering VY-AADC (NBIb-1817). Investigators in the PD-1101
Phase 1b clinical trial, the separate PD-1102 Phase 1posterior trajectory trial, and the RESTORE-1 Phase 2 clinical trial of
VY-AADC (NBIb-1817), have used and may continue to use the ClearPoint System to provide accurate placement of the
cannula in the putamen and allow for real-time, intra-operative MRI to assist the physician in visualizing the delivery of
VY-AADC (NBIb-1817) to the putamen and to avoid specific blood vessels during the duration of the surgical procedure,
with the goal of reducing the risk of hemorrhages. The ClearPoint System has only been used in limited gene therapy
neurosurgeries to date. One patient in the Phase 1b clinical trial experienced two SAEs, a pulmonary embolism, or blood
clot in the lungs, and related heart arrhythmia, or irregular heartbeat, which were determined to be related to the surgical
procedure and prolonged immobility, not VY-AADC (NBIb-1817). We may use V-TAG, a proprietary real-time, intra-
operative, MRI-compatible device that we developed with CLPT in future trials. Limited clinical data are available for this
route of administration. If other side effects were to occur in connection with the surgical procedures described above, or
problems were encountered with the use of the ClearPoint System or V-TAG, our clinical trials could be suspended or
terminated.
In the RESTORE-1 Phase 2 clinical trial, MRI abnormalities have been observed in some of the participants. To
assist Neurocrine, the study sponsor, we continue to examine the potential causes and clinical implications of these
abnormalties.
If in the future we are unable to demonstrate that such side effects were caused by the administration process or
related procedures or are unable to modify the trial protocol adequately to address such side effects, the FDA, the European
Commission, the EMA or other regulatory authorities could order us to cease further development of, or deny approval of,
our product candidates for any or all targeted indications. For products that “knock down” or reduce the expression of a
gene or the production of its encoded protein, their effects on other parts of the body, or “off target” effects, could result in
unforeseen toxicity. Even if we are able to demonstrate that any future SAEs are not product-related, and regulatory
authorities do not order us to cease further development of our product candidates, such occurrences could affect patient
recruitment or the ability of enrolled patients to complete the trial. Moreover, if we elect, or are required, to delay, suspend
or terminate any clinical trial of any of our product candidates, the commercial prospects of such product candidates may
be harmed and our ability to generate product revenues from any of these product candidates may be delayed or eliminated.
Any of these occurrences may harm our ability to develop other product candidates and may harm our business, financial
condition and prospects significantly.
Additionally, if any of our product candidates receives marketing approval, the FDA could require us to adopt a
REMS to ensure that the benefits outweigh its risks. Such REMS may include, among other things, a medication guide
outlining the risks of the product for distribution to patients and a communication plan to health care practitioners or the
limitation of the use of the product to specifically trained neurosurgeons and/or certain centers. Furthermore, adverse events
which were initially considered unrelated to the study treatment of the clinical trial may later be found to be
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caused by the study treatment. If we or others later identify undesirable side effects caused by our product candidate,
several potentially significant negative consequences could result, including:
● regulatory authorities may suspend or withdraw approvals of such product candidate;
● regulatory authorities may require additional warnings on the label;
● we may be required to change the way a product candidate is administered or conduct additional clinical
trials;
● we could be sued and held liable for harm caused to patients; and
● our reputation may suffer.
Any of these events could prevent us from achieving or maintaining market acceptance of our product candidates
and could significantly harm our business, prospects, financial condition and results of operations.
We may be unable to obtain orphan drug designation or exclusivity for any of our product candidates for which we seek
such designation. If our competitors are able to obtain orphan drug exclusivity for products that constitute the “same
drug” and treat the same indications as our product candidates, we may not be able to have competing products
approved by the applicable regulatory authority for a significant period of time. For products for which we may obtain
orphan drug designation or exclusivity, we may be unable to prevent the approval or marketing authorization of other
similar products based upon regulator decisions regarding product “sameness”.
Regulatory authorities in some jurisdictions, including the United States and the European Union, may designate
drugs for relatively small patient populations as orphan drugs. Under the Orphan Drug Act of 1983, or the Orphan Drug
Act, the FDA may designate a product candidate as an orphan drug or biological product if it is intended to treat a rare
disease or condition, which is generally defined as having a patient population of fewer than 200,000 individuals in the
United States, or a patient population greater than 200,000 in the United States where there is no reasonable expectation
that the cost of developing the drug or biological product will be recovered from sales in the United States. We have
received feedback from the FDA that VY-AADC (NBIb-1817) for the treatment of Parkinson’s disease does not qualify for
orphan disease designation because the potential for its use in earlier stages of Parkinson’s disease exceeds the 200,000
patient population criterion in the United States. In the European Union, EMA’s Committee for Orphan Medicinal Products
grants orphan drug designation to promote the development of products that are intended for the diagnosis, prevention or
treatment of a life-threatening or chronically debilitating condition affecting not more than five in 10,000 persons in the
European Union. Additionally, orphan designation is granted for products intended for the diagnosis, prevention or
treatment of a life-threatening, seriously debilitating or serious and chronic condition and when, without incentives, it is
unlikely that sales of the drug in the European Union would be sufficient to justify the necessary investment in developing
the drug or biologic product. We have received feedback from the Committee for Orphan Medicinal Products that orphan
designation likely would not be granted for VY-AADC (NBIb-1817) in Parkinson’s disease since the Committee does not
grant such status for products targeting more severe stages of a disease.
Generally, if a product candidate with an orphan drug designation receives the first marketing approval for the
indication for which it has such designation, the product is entitled to a period of marketing exclusivity, which precludes
the applicable regulatory authority from approving another marketing application for a product that constitutes the same
drug treating the same indication for that marketing exclusivity period, except in limited circumstances. If another sponsor
receives such approval before we do (regardless of our orphan drug designation), we may be precluded from receiving
marketing approval for our product for the applicable exclusivity period. The applicable period is seven years in the United
States and 10 years in the European Union. The exclusivity period in the United States can be extended by six months if the
BLA sponsor submits pediatric data that adequately respond to a written request from the FDA for such data. The
exclusivity period in the European Union can be reduced to six years if a product no longer meets the criteria for orphan
drug designation or if the product is sufficiently profitable so that market exclusivity is no longer justified. Orphan drug
exclusivity may be revoked if any regulatory agency determines that the request for designation was
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materially defective or if the manufacturer is unable to assure sufficient quantity of the product to meet the needs of
patients with the rare disease or condition.
We believe that all of our current programs may qualify for orphan drug designation except for VY-AADC (NBIb-
1817) for Parkinson’s disease. On March 15, 2019, we received notification from the FDA that VY-HTT01, an AAV gene
therapy containing a transgene that encodes a microRNA targeting huntingtin messenger RNA, had been granted orphan
drug designation for the treatment of Huntington’s disease. Even if we obtain orphan drug exclusivity for a product
candidate, that exclusivity may not effectively protect the product candidate from competition because different drugs or
biological products can be approved for the same condition. In the United States, even after an orphan drug is approved, the
FDA may subsequently approve another drug or biological product for the same condition if the FDA concludes that the
latter drug or biological product is not the same drug or biological product or is clinically superior in that it is shown to be
safer or more effective or makes a major contribution to patient care. In particular, the concept of what constitutes the
"same drug" for purposes of orphan drug exclusivity remains in flux in the context of gene therapies, and the FDA has
issued recent draft guidance suggesting that it would not consider two gene therapy products to be different drugs solely
based on minor differences in the transgenes or vectors. In the European Union, marketing authorization may be granted to
a similar medicinal product for the same orphan indication if:
● the second applicant can establish in its application that its medicinal product, although similar to the orphan
medicinal product already authorized, is safer, more effective or otherwise clinically superior;
● the holder of the marketing authorization for the original orphan medicinal product consents to a second
orphan medicinal product application; or
● the holder of the marketing authorization for the original orphan medicinal product cannot supply sufficient
quantities of orphan medicinal product.
Even if we seek orphan drug designation from the FDA, the European Commission or other regulatory agencies
for a product candidate, there can be no assurances that the regulatory agency or agencies will grant such designation.
Additionally, the designation of any of our product candidates as an orphan drug does not guarantee that any regulatory
agency will ultimately approve that product candidate or prevent other products from receiving marketing authorization due
to decisions of the applicable regulatory agency regarding “sameness” of the products.
On August 3, 2017, the Congress passed the FDA Reauthorization Act of 2017, or FDARA. FDARA, among
other things, codified the FDA’s pre-existing regulatory interpretation to require that a drug sponsor demonstrate the
clinical superiority of an orphan drug that is otherwise the same as a previously approved drug for the same rare disease in
order to receive orphan drug exclusivity. The new legislation reverses prior precedent holding that the Orphan Drug Act
unambiguously requires that the FDA recognize the orphan exclusivity period regardless of a showing of clinical
superiority. The FDA may further reevaluate the Orphan Drug Act and its regulations and policies. We do not know if,
when, or how the FDA may change the orphan drug regulations and policies in the future, and it is uncertain how any
changes might affect our business. Depending on what changes the FDA may make to its orphan drug regulations and
policies, our business could be adversely impacted.
A potential breakthrough therapy designation by the FDA for our product candidates may not lead to a faster
development or regulatory review or approval process, and it does not increase the likelihood that our product
candidates will receive marketing approval.
We have sought and may in the future seek a breakthrough therapy designation for some of our product
candidates. A breakthrough therapy is defined as a drug or biological product that is intended, alone or in combination with
one or more other drugs, to treat a serious or life-threatening disease or condition, and preliminary clinical evidence
indicates that the drug or biological product may demonstrate substantial improvement over existing therapies on one or
more clinically significant endpoints, such as substantial treatment effects observed early in clinical development. For
drugs or biological products that have been designated as breakthrough therapies, interaction and communication between
the FDA and the sponsor of the trial can help to identify the most efficient path for clinical development while
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minimizing the number of patients placed in ineffective control regimens. Drugs designated as breakthrough therapies by
the FDA may also be eligible for accelerated approval.
Designation as a breakthrough therapy is within the discretion of the FDA. Accordingly, even if we believe one of
our product candidates meets the criteria for designation as a breakthrough therapy, the FDA may disagree and instead
determine not to make such designation. In any event, the receipt of a breakthrough therapy designation for a product
candidate may not result in a faster development process, review or approval compared to drugs considered for approval
under conventional FDA procedures and does not assure ultimate approval by the FDA. In addition, even if one or more of
our product candidates qualify as breakthrough therapies, the FDA may later decide that the drugs or biological products no
longer meet the conditions for qualification.
A potential regenerative medicine advanced therapy designation by the FDA for our product candidates may not lead to
a faster development or regulatory review or approval process, and it does not increase the likelihood that our product
candidates will receive marketing approval.
We have sought and may in the future seek a regenerative medicine advanced therapy, or RMAT, designation for
some of our product candidates. Under the 21st Century Cures Act, or the Cures Act, to be eligible to receive RMAT
designation from the FDA, a product candidate must be (i) considered a “regenerative medicine therapy” as defined in the
Cures Act; (ii) intended to treat, modify, reverse, or cure one or more serious or life-threatening diseases or conditions; and
(iii) indicated, in preliminary clinical evidence, to have the potential to address unmet medical needs for such diseases or
conditions. Gene therapies, including genetically modified cells, that lead to a durable modification of cells or tissues may
meet the definition in the Cures Act of a regenerative medicine therapy.
The RMAT program is intended to facilitate efficient development and expedite review of such therapies. A new
drug application or a BLA for a product candidate that has received an RMAT designation may be eligible for priority
review or accelerated approval through (1) surrogate or intermediate endpoints reasonably likely to predict long-term
clinical benefit or (2) reliance upon data obtained from a meaningful number of sites. Benefits of such designation also
include early interactions with FDA to discuss any potential surrogate or intermediate endpoint to be used to support
accelerated approval. A product candidate that has received an RMAT designation that is granted accelerated approval and
is subject to post-approval requirements may fulfill such requirements through the submission of clinical evidence, clinical
studies, patient registries, or other sources of real world evidence, such as electronic health records; the collection of larger
confirmatory data sets; or post-approval monitoring of all patients treated with such therapy prior to its approval.
In June 2018, the FDA granted RMAT designation for the VY-AADC (NBIb-1817) gene therapy treatment for
Parkinson’s disease in patients with motor fluctuations that are refractory to medical management. The designation was
based on data from the PD-1101 Phase 1b clinical trial.
RMAT designation is within the discretion of the FDA. Accordingly, even if we believe one of our other product
candidates meets the criteria for RMAT designation, the FDA may disagree and instead determine not to make such
designation. In any event, the receipt of RMAT designation for a product candidate may not result in a faster development
process, review or approval compared to drugs considered for approval under conventional FDA procedures and does not
assure ultimate approval by the FDA. In addition, the FDA may later decide that a product candidate that received RMAT
designation no longer meets the conditions for designation. Alternatively, we or our collaborative partners may decide not
to proceed with the clinical development of a product candidate that has previously received RMAT designation or decide
to pursue such product candidate for an indication for which it has not received RMAT designation.
Fast track designation by the FDA may not actually lead to a faster development or regulatory review or approval
process and does not assure FDA approval of our product candidate.
If a drug is intended for the treatment of a serious or life-threatening condition and the drug demonstrates the
potential to address unmet medical need for this condition, the drug sponsor may apply for FDA fast track designation. VY-
AADC (NBIb-1817) has been granted fast track designation by the FDA. We may seek such a designation for our
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other product candidates. A fast track designation does not ensure that the product candidate will receive marketing
approval or that approval will be granted within any particular timeframe. Thus, fast track products may not experience a
faster development process, review or approval compared to conventional FDA procedures. In addition, the FDA may
withdraw fast track designation if it believes that the designation is no longer supported by data from a product candidate’s
clinical development program. Fast track designation alone does not guarantee qualification for the FDA’s priority review
procedures.
Priority review designation by the FDA may not lead to a faster regulatory review or approval process and, in any event,
does not assure FDA approval of our product candidate.
If the FDA determines that a product candidate offers major advances in treatment or provides a treatment where
no adequate therapy exists, the FDA may designate the product candidate for priority review. A priority review designation
means that the FDA’s goal to review an application is six months, rather than the standard review period of ten months. We
may request priority review for our product candidates. The FDA has broad discretion with respect to whether or not to
grant priority review status to a product candidate, so even if we believe a particular product candidate is eligible for such
designation or status, the FDA may decide not to grant it. Moreover, a priority review designation does not necessarily
mean a faster regulatory review process or necessarily confer any advantage with respect to approval compared to
conventional FDA procedures. Receiving priority review from the FDA does not guarantee approval within the six-month
review cycle or thereafter.
Even if we complete the necessary preclinical studies and clinical trials, the marketing approval process is expensive,
time-consuming and uncertain and may prevent us from obtaining approvals for the commercialization of some or all of
our product candidates. If we or any current or future collaborators are not able to obtain, or if there are delays in
obtaining, required regulatory approvals, we or they may not be able to commercialize our products, and our ability to
generate revenue may be materially impaired.
Our product candidates and the activities associated with their development and commercialization, including
their design, testing, manufacture, safety, efficacy, recordkeeping, labeling, storage, approval, advertising, promotion, sale
and distribution, export and import, are subject to comprehensive regulation by the FDA and other regulatory agencies in
the United States and by the EMA and comparable regulatory authorities in other countries. Failure to obtain marketing
approval for a product candidate will prevent us from commercializing the product candidate. We have not received
approval to market any of our product candidates from regulatory authorities in any jurisdiction. We have only limited
experience in filing and supporting the applications necessary to gain marketing approvals and expect to rely on third-party
CROs to assist us in this process.
Securing marketing approval requires the submission of extensive preclinical and clinical data and supporting
information to the various regulatory authorities for each therapeutic indication to establish the product candidate’s safety
and efficacy. Securing regulatory approval also requires the submission of information about the product manufacturing
process to, and inspection of manufacturing facilities by, the relevant regulatory authority. Our product candidates may not
be effective, may be only moderately effective or may prove to have undesirable or unintended side effects, toxicities or
other characteristics that may preclude our obtaining marketing approval or prevent or limit commercial use.
The process of obtaining marketing approvals, both in the United States and abroad, is expensive; may take many
years if additional clinical trials are required, if approval is obtained at all and can vary substantially based upon a variety
of factors, including the type, complexity and novelty of the product candidates involved. In the United States, for example,
the submission fee to obtain U.S. marketing approval is more than $2.0 million, and may be higher in the future. Changes
in marketing approval policies during the development period, in or the enactment of additional statutes or regulations, or
in regulatory review for each submitted product application, may cause delays in the approval or rejection of an
application. The FDA and comparable authorities in other countries have substantial discretion in the approval process and
may refuse to accept any application or may decide that our data are insufficient for approval and require additional
preclinical, clinical or other studies. In addition, varying interpretations of the data obtained from preclinical and clinical
testing could delay, limit or prevent marketing approval of a product candidate. Any marketing
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approval we, or any current or future collaborators, ultimately obtain may be limited or subject to restrictions or post-
approval commitments that render the approved product not commercially viable.
Disruptions at the FDA and other agencies may also prolong the time necessary for new products to be reviewed
and/or approved by necessary government agencies, which would adversely affect our business. For example, over the last
several years, the U.S. government has shut down several times and certain regulatory agencies, such as the FDA, have had
to furlough critical employees and stop critical activities. If a prolonged government shutdown occurs, it could significantly
impact the ability of the FDA to timely review and process our regulatory submissions, which could have a material
adverse effect on our business. The Trump Administration also took several executive actions that could impose significant
burdens on, or otherwise materially delay, the FDA’s ability to engage in routine regulatory and oversight activities.
Additionally, in July 2018, we received 510(k) regulatory clearance of V-TAG, our potential delivery device, from
the Center for Devices and Radiological Health of the FDA, or CDRH. There are additional steps needed in making this
device available for use including the manufacture of the product and compliance with state and federal laws and
regulations for medical devices. We expect to rely on third parties in the development and manufacture of our potential
delivery devices. In May 2018, for example, we entered into a master services and supply agreement with CLPT which
provides for CLPT to perform certain manufacturing, supply, development, and services as requested by us, including the
supply of the ClearPoint System and cannula devices as well as to collaborate on V-TAG. In March 2019, we transferred
our premarket notification (510(k)) clearance for the V-TAG device to CLPT. CLPT has sole responsibility for regulatory
compliance related to V-TAG.
Accordingly, if we or any current or future collaborators experience delays in obtaining approval or if we or they
fail to obtain or retain approval of our product candidates and devices, the commercial prospects for our product candidates
may be harmed and our ability to generate revenues could be materially impaired.
Even if we obtain regulatory approval for a product candidate, our products will remain subject to regulatory oversight.
Even if we obtain any regulatory approval for our product candidates, they will be subject to ongoing regulatory
requirements for manufacturing, labeling, packaging, storing, advertising, promoting, sampling, record-keeping and
submitting safety and other post-market information. Any regulatory approvals that we receive for our product candidates
also may be subject to a REMS, limitations on the approved indicated uses for which the product may be marketed or to the
conditions of approval or contain requirements for potentially costly post-marketing testing, including Phase 4 clinical
trials, and surveillance to monitor the quality, safety and efficacy of the product. For example, the holder of an approved
BLA is obligated to monitor and report adverse events and any failure of a product to meet the specifications in the BLA.
FDA guidance advises that patients treated with some types of gene therapy undergo follow-up observations for potential
adverse events for as long as 15 years. The holder of an approved BLA also must submit new or supplemental applications
and obtain FDA approval for certain changes to the approved product, product labeling or manufacturing process.
Advertising and promotional materials must comply with FDA rules and are subject to FDA review, in addition to other
potentially applicable federal and state laws.
In addition, product manufacturers and their facilities are subject to payment of user fees and continual review and
periodic inspections by the FDA and other regulatory authorities for compliance with current good manufacturing practice,
or cGMP, requirements and adherence to commitments made in the BLA or foreign marketing application. If we, or a
regulatory authority, discover previously unknown problems with a product, such as adverse events of unanticipated
severity or frequency, or problems with the facility where the product is manufactured or such regulatory authority
disagrees with the promotion, marketing or labeling of that product, the regulatory authority may impose restrictions
relative to that product, the manufacturing facility or us, including requiring recall or withdrawal of the product from the
market or suspension of manufacturing.
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If we fail to comply with applicable regulatory requirements following approval of any of our product candidates,
a regulatory authority may:
● issue a warning letter asserting that we are in violation of the law;
● seek an injunction or impose administrative, civil or criminal penalties or monetary fines;
● suspend or withdraw regulatory approval;
● suspend any ongoing clinical trials;
● refuse to approve a pending BLA or comparable foreign marketing application, or any supplements thereto,
submitted by us or our collaboration partners;
● restrict the marketing or manufacturing of the product;
● seize or detain the product or otherwise require the withdrawal of the product from the market;
● refuse to permit the import or export of products; or
● refuse to allow us to enter into supply contracts, including government contracts.
Any government investigation of alleged violations of law could require us to expend significant time and
resources in response and could generate negative publicity. The occurrence of any event or penalty described above may
inhibit our ability to commercialize our product candidates and adversely affect our business, financial condition, results of
operations and prospects.
In addition, FDA policies, and those of equivalent foreign regulatory agencies, may change and additional
government regulations may be enacted that could prevent, limit or delay regulatory approval of our product candidates.
We cannot predict the likelihood, nature or extent of government regulation that may arise from future legislation or
administrative action, either in the United States or abroad. If we are slow or unable to adapt to changes in existing
requirements or the adoption of new requirements or policies, or if we are not able to maintain regulatory compliance, we
may lose any marketing approval that we may have obtained and we may not achieve or sustain profitability, which would
harm our business, financial condition, results of operations and prospects.
We face significant competition in an environment of rapid technological change and the possibility that our
competitors may achieve regulatory approval before us or develop therapies that are more advanced or effective than
ours, which may harm our business and financial condition, and our ability to successfully market or commercialize
our product candidates.
The biopharmaceutical industry is characterized by intense and dynamic competition to develop new technologies
and proprietary therapies. Any product candidates that we successfully develop into products and commercialize may
compete with existing therapies and new therapies that may become available in the future. While we believe that our gene
therapy platform, product programs, product candidates and scientific expertise in the fields of gene therapy and
neuroscience provide us with competitive advantages, we face potential competition from various sources, including larger
and better-funded pharmaceutical, specialty pharmaceutical and biotechnology companies, as well as from academic
institutions, governmental agencies and public and private research institutions.
We are aware of several companies focused on developing AAV gene therapies in various indications, including
AAVANTIBio, Inc., Abeona Therapeutics, Inc., Adverum Biotechnologies, Inc., Aevitas Therapeutics, Inc., Amicus
Therapeutics, Inc., Apic Bio, Inc., Applied Genetic Technologies Corporation, Asklepios BioPharmaceutical, Inc., or
AskBio (acquired by Bayer), Audentes Therapeutics, Inc. (acquired by Astellas Pharma Inc.), Biogen, Inc., or Biogen,
Brain Neurotherapy Bio, Inc. (merged with AskBio), Encoded Therapeutics, Inc., GenSight Biologics SA, Homology
Medicines, Inc., LEXEO Therapeutics, Inc., LogicBio Therapeutics, Inc., Lysogene SA, MeiraGTx Ltd., or
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MeiraGTx, Neurogene, Inc., Novartis Gene Therapies, Inc. (formerly AveXis, Inc.), Passage Bio, Inc., Pfizer, Inc., Prevail
Therapeutics, Inc. (acquired by Eli Lilly), PTC Therapeutics, Inc., REGENXBio Inc., Sarepta Therapeutics, Inc., Sio Gene
Therapies, Inc., Solid Biosciences, Inc., Spark Therapeutics, Inc. (acquired by Roche), StrideBio, Inc., Taysha Gene
Therapies, Inc. and uniQure, as well as several companies addressing other methods for modifying genes and regulating
gene expression. Any advances in gene therapy technology made by a competitor may be used to develop therapies that
could compete against any of our product candidates.
We expect that VY-AADC (NBIb-1817) will potentially compete with a variety of therapies currently marketed
and in development for Parkinson’s disease, including DBS marketed by Medtronic plc, Abbott Laboratories (acquired
from St. Jude Medical in 2017), and other medical device companies, DUOPA/Duodopa marketed by AbbVie, as well as
other novel, non-oral forms of levodopa, including Mitsubishi Tanabe Pharma’s ND0612 (acquired from NeuroDerm in
2017), Acorda Therapeutics’ inhaled levodopa, INBRIJA, and Sunovion Pharmaceuticals’, or Sunovion’s, sublingual
apomorphine, KYNMOBI. Gene therapy competition for Parkinson’s disease includes AAV2-GDNF being developed by
Brain Neurotherapy Bio, Inc. and AAV-GAD being developed by MeiraGTx. Sio Gene Therapies, Inc. is developing a
second generation LentiVector gene therapy, AXO-Lenti-PD (previously OXB-102, licensed from Oxford Biomedica in
2018).
We expect that our preclinical programs will compete with a variety of therapies in development, including:
● VY-HTT01 for Huntington’s disease will potentially compete with RG6042 (IONIS-HTTRx) being
developed by Roche in collaboration with Ionis Pharmaceuticals, Inc., or Ionis, WVE-120101, WVE-120102,
and WVE-003 being developed by WAVE Life Sciences Ltd. in collaboration with Takeda Pharmaceutical
Company Limited, or Takeda, a Zinc Finger Protein (ZFP) therapy being developed by Sangamo
Therapeutics, Inc. in collaboration with Takeda, and AMT-130, an AAV gene therapy being developed by
uniQure and a gene therapy being developed by Spark;
● VY-SOD102 for a monogenic form of ALS will potentially compete with BIIB067 (IONIS-SOD1Rx) being
developed by Biogen, in collaboration with Ionis, and gene therapies being developed by Novartis Gene
Therapies, Inc. and Apic Bio, Inc.; VY-FXN01 for Friedreich’s ataxia will potentially compete with AAV
gene therapies being developed by Pfizer, Inc., PTC Therapeutics, Inc., StrideBio, Inc. in collaboration with
Takeda, AAVANTIBio, Inc., Novartis Gene Therapies, Inc., and LEXEO Therapeutics, Inc.;
● VY-FXN01 for Friedreich’s ataxia will potentially compete with AAV gene therapies being developed by
Pfizer, Inc., PTC Therapeutics, Inc., StrideBio, Inc. in collaboration with Takeda, AAVANTIBio, Inc.,
Novartis Gene Therapies, and LEXEO Therapeutics, Inc.; and
● Our Tau program for tauopathies including Alzheimer’s disease, PSP, and FTD will potentially compete with
tau antibodies being developed by Roche Genentech Inc. in collaboration with AC Immune SA, Eli Lilly &
Co., AbbVie, Biogen, and several other companies, as well as an antisense oligonucleotide program being
developed by Ionis in collaboration with Biogen.
We are also aware of several companies and institutions who have developed or are developing real-time, intra-
operative, MRI-compatible devices that would compete with V-TAG. Investigators in the PD-1101 Phase 1b, the separate
PD-1102 Phase 1 posterior trajectory trial, and the RESTORE-1 Phase 2 clinical trial of VY-AADC (NBIb-1817) have used
and may continue to use the ClearPoint System from CLPT.
Many of our potential competitors, alone or with their strategic partners, have substantially greater financial,
technical and other resources, such as larger research and development, clinical, marketing and manufacturing
organizations. Mergers and acquisitions in the biotechnology and pharmaceutical industries, including recent transactions
involving a number of gene therapy companies, may result in even more resources being concentrated among a smaller
number of competitors. Smaller and other early stage companies may also prove to be significant competitors, particularly
through collaborative agreements with large and established companies. Our commercial opportunity could be reduced or
eliminated if competitors develop and commercialize products that are safer, more effective, have fewer or
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less severe side effects, are more convenient or are less expensive than any products that we may develop. Competitors also
may obtain FDA or other regulatory approval for their products more rapidly or earlier than us or may obtain orphan drug
or other marketing exclusivity, which could result in our competitors establishing a strong market position before we are
able to enter the market or reducing the number of available subjects for enrollment in our clinical trials to support
regulatory submissions and approvals of our product. Additionally, technologies developed or acquired by our competitors
may render our potential product candidates uneconomical or obsolete, and we may not be successful in marketing our
product candidates against competitors. These third parties also compete with us in recruiting and retaining qualified
scientific and management personnel, establishing clinical trial sites, and registering patients for clinical trials.
In addition, as a result of the expiration or successful challenge of our patent rights, we could face more litigation
with respect to the validity and scope of patents relating to our competitors’ products. The availability of our competitors’
products could limit the demand, and the price we are able to charge, for any products that we may develop and
commercialize. If we are not able to compete effectively against potential competitors, our business will not grow and our
financial condition and operations will be harmed.
Even if we obtain and maintain approval for our product candidates from the FDA, we may never obtain approval for
our product candidates outside of the United States, which would limit our market opportunities and adversely affect
our business.
Approval of a product candidate in the United States by the FDA does not ensure approval of such product
candidate by regulatory authorities in other countries or jurisdictions, and approval by one foreign regulatory authority does
not ensure approval by regulatory authorities in other foreign countries or by the FDA. Sales of our product candidates
outside of the United States will be subject to foreign regulatory requirements governing clinical trials and marketing
approval. Even if the FDA grants marketing approval for a product candidate, comparable regulatory authorities of foreign
countries also must approve the manufacturing and marketing of the product candidates in those countries. Approval
procedures vary among jurisdictions and can involve requirements and administrative review periods different from, and
more onerous than, those in the United States, including additional preclinical studies or clinical trials or manufacturing
control requirements. In many countries outside the United States, a product candidate must be separately approved for
reimbursement before it can be approved for sale in that country. In some cases, the price that we intend to charge for our
products, if approved, is also subject to approval. We intend to submit a marketing authorization application to EMA for
approval of our product candidates in the European Union but obtaining such approval from the European Commission
following the opinion of EMA is a lengthy and expensive process. Even if a product candidate is approved, the FDA or the
European Commission may limit the indications for which the product may be marketed, require extensive warnings on the
product labeling or require expensive and time-consuming additional clinical trials or reporting as conditions of approval.
Regulatory authorities in countries outside of the United States and the European Union also have requirements for
approval of product candidates with which we must comply prior to marketing in those countries. Obtaining foreign
regulatory approvals and compliance with foreign regulatory requirements could result in significant delays, difficulties and
costs for us and could delay or prevent the introduction of our product candidates in certain countries.
Further, clinical trials conducted in one country may not be accepted by regulatory authorities in other countries.
Regulatory approval for any of our product candidates may be withdrawn. If we fail to comply with the regulatory
requirements, our target market will be reduced and our ability to realize the full market potential of our product candidates
will be harmed and our business, financial condition, results of operations and prospects will be harmed.
Additionally, we could face heightened risks with respect to seeking marketing approval in the United Kingdom as
a result of the recent withdrawal of the United Kingdom from the European Union, commonly referred to as Brexit.
Pursuant to the formal withdrawal arrangements agreed between the United Kingdom and the European Union, the United
Kingdom withdrew from the European Union, effective December 31, 2020. On December 24, 2020, the United Kingdom
and European Union entered into a Trade and Cooperation Agreement. The agreement sets out certain procedures for
approval and recognition of medical products in each jurisdiction. Since the regulatory framework for pharmaceutical
products in the United Kingdom covering quality, safety, and efficacy of pharmaceutical products,
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clinical trials, marketing authorization, commercial sales, and distribution of pharmaceutical products is derived from
European Union directives and regulations, Brexit could materially impact the future regulatory regime that applies to
products and the approval of product candidates in the United Kingdom. Any delay in obtaining, or an inability to obtain,
any marketing approvals, as a result of the Trade and Cooperation Agreement would prevent us from commercializing any
product candidates in the United Kingdom and/or the European Union and restrict our ability to generate revenue and
achieve and sustain profitability. If any of these outcomes occur, we may be forced to restrict or delay efforts to seek
regulatory approval in the United Kingdom and/or European Union for any product candidates, which could significantly
and materially harm our business.
We expect that we will be subject to additional risks in commercializing any of our product candidates that receive
marketing approval outside the United States, including tariffs, trade barriers and regulatory requirements; economic
weakness, including inflation, or political instability in particular foreign economies and markets; compliance with tax,
employment, immigration and labor laws for employees living or traveling abroad; foreign currency fluctuations, which
could result in increased operating expenses and reduced revenue, and other obligations incident to doing business in
another country; and workforce uncertainty in countries where labor unrest is more common than in the United States.
Risks Related to Third Parties
To date, all of our revenue has been derived from our collaborations with Sanofi Genzyme, AbbVie, and Neurocrine. If
any ongoing or future collaboration agreements were to be terminated, our business financial condition, results of
operations and prospects could be harmed.
In February 2015, we entered into the Sanofi Genzyme Collaboration Agreement to leverage our combined
expertise and assets in gene therapy for neurological diseases. Under the Sanofi Genzyme Collaboration Agreement, we
received an upfront commitment of approximately $100.0 million. Pursuant to the agreement, we granted Sanofi Genzyme
an exclusive option to license, develop and commercialize (i) ex-U.S. rights to the VY-AADC Program, Friedreich’s ataxia
program, or FA Program, and Huntington’s disease program, or Huntington’s Program, and a future program, collectively,
the Split Territory Programs, with an incremental option to co-commercialize the product candidate from our Huntington’s
Program in the United States and (ii) worldwide rights to our spinal muscular atrophy program. If Sanofi Genzyme would
have exercised an option for a Split Territory Program, except for the VY-AADC Program, it would have been required to
make an option exercise payment to us. At the inception of the agreement, we were eligible to receive up to $745.0 million
in the aggregate upon the achievement of specified regulatory and commercial milestones, as well as tiered royalty
payments based on a percentage of net sales of product candidates from the programs for which Sanofi Genzyme exercised
its option.
In June 2019, we and Sanofi Genzyme executed a termination agreement to terminate the Sanofi Genzyme
Collaboration Agreement, or the Sanofi Genzyme Termination Agreement. Under the terms of the Sanofi Genzyme
Termination Agreement, Sanofi Genzyme relinquished its rights to its exclusive license options to the Huntington’s
Program, FA Program and the unnamed future program described above, and we were relieved of our obligations to
perform the research and development services under those programs under the Sanofi Genzyme Collaboration Agreement.
As a result, we gained worldwide rights to the Huntington’s Program and ex-U.S. rights to the FA Program. Our ex-U.S.
rights to the FA Program were, in turn, transferred from us to Neurocrine Biosciences pursuant to the Neurocrine
Collaboration Agreement. In connection with the Sanofi Genzyme Termination Agreement, we also relinquished our rights
to the spinal muscular atrophy program. As of the termination date, we also waived our right to approximately $0.4 million
in unused in-kind services, and we no longer had the right to receive any option payments, regulatory or commercial
milestone payments or royalties from Sanofi Genzyme under the Sanofi Genzyme Collaboration Agreement.
In February 2018, we entered into an exclusive collaboration and option agreement with AbbVie, which we refer
to as the AbbVie Tau Collaboration Agreement, for the research, development, and commercialization of AAV gene
therapy products for the treatment of diseases of the central nervous system and other neurodegenerative diseases related to
defective or excess aggregation of tau protein in the human brain, including Alzheimer’s disease. Under the terms of the
AbbVie Tau Collaboration Agreement, we received an upfront payment of $69.0 million and were eligible to receive option
exercise payments, future development and regulatory milestone payments and royalties prior to the
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termination of the AbbVie Tau Collaboration Agreement, effective August 3, 2020. We continue to advance the research
and development efforts related to vectorized antibodies, including vectorized antibody compounds comprised of an AAV
or other virus vector genome that encodes one of more antibodies that target and bind to a tau protein. We are currently
evaluating our options for advancing these efforts individually or with potential collaborators. If we seek another
collaboration partner for the program, we may be unable to find a suitable collaborator on a timely basis, on terms
acceptable to us, or at all. If we opt to progress this program ourselves, our expenditures would increase, and we might lack
the resources or expertise that an appropriate collaboration partner could provide. If we are unable to find a suitable
collaboration partner or unable or unwilling to increase our financial commitment to the tau program to undertake its
development, we may have to delay or curtail the program.
In January 2019, we entered into the Neurocrine Collaboration Agreement for the research, development and
commercialization of four programs including the VY-AADC Program, our FA Program, and two programs to be
determined by us and Neurocrine at a later date, or the Discovery Programs. Under the terms of the agreement, we received
an upfront payment of $115.0 million and may receive future development and regulatory milestones and royalties. In
connection with the Neurocrine Collaboration Agreement, Neurocrine also paid us $50.0 million as consideration for an
equity purchase of 4,179,728 shares of our common stock. In June 2019, in conjunction with the termination of the Sanofi
Genzyme Collaboration Agreement, we and Neurocrine amended the Neurocrine Collaboration Agreement to facilitate the
transfer of the ex-U.S. rights to the FA Program which we acquired from Sanofi Genzyme to Neurocrine. In connection
with the amendment, we received a $5.0 million payment from Neurocrine.
Under the terms of the Neurocrine Collaboration Agreement, subject to the rights retained by us thereunder, we
have agreed to collaborate with Neurocrine on, and to grant, exclusive, royalty-bearing, non-transferable, sublicensable
licenses to certain of our intellectual property rights for all human and veterinary diagnostic, prophylactic, and therapeutic
uses for the research, development, and commercialization of gene therapy products, which we refer to as the Collaboration
Products, under (i) the VY-AADC Program, on a worldwide basis; (ii) the FA Program, on a worldwide basis; and (iii) each
Discovery Program, on a worldwide basis. We refer to each of these programs as a Neurocrine Program and, collectively,
as the Neurocrine Programs.
Pursuant to development plans to be agreed by the parties, which will be overseen by a joint steering committee,
we have operational responsibility, subject to certain exceptions, for the conduct of each Neurocrine Program (prior to
specified transition events for each program), and are required to use commercially reasonable efforts to develop the
Collaboration Products. Neurocrine has agreed to be responsible for all costs incurred by us in conducting these activities
for each Neurocrine Program in accordance with an agreed budget. If we breach our development responsibilities or in
certain circumstances upon a change in control of us, Neurocrine has the right but not the obligation to assume the activities
under such Neurocrine Program.
Upon the occurrence of specified events for each program, Neurocrine agreed to assume responsibility for
development, manufacturing and commercialization activities for such program and to pay us milestones and royalties on
future net sales. For each of the VY-AADC Program and the FA Program, we have the option to co-develop and co-
commercialize such program upon the occurrence of a specified event. Should we elect to exercise our co-development and
co-commercialization option, we and Neurocrine have agreed to enter into a cost- and profit-sharing arrangement whereby
we and Neurocrine agree to jointly develop and commercialize Collaboration Products for such program and share in its
costs, profits and losses, and we forfeit certain milestones and royalties on net sales in the United States during the effective
period of the applicable co-development and co-commercialization agreement. As described above, our research and
development activities in connection with a collaboration might not be successful. Neurocrine may terminate the
Neurocrine Collaboration Agreement in its entirety or on a program-by-program or country-by-country basis by providing
at least 180-day advance notice if such notice is provided prior to the first commercial sale of the Collaboration Product to
which the termination applies or one-year advance notice if such notice is provided after the first commercial sale of the
Collaboration Product to which the termination applies. If Neurocrine were to terminate the agreement, we would become
responsible for all research and development expenses relating to the Neurocrine Programs, and would not receive any
future milestone payments or royalty payments under the Neurocrine Collaboration Agreement.
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Neurocrine might not be successful in obtaining approvals for the product candidates arising from our
collaboration, or commercializing or manufacturing the resulting products. Further, Neurocrine’s objectives in connection
with the collaboration may not be consistent with our best interests. With respect to the rights granted to Neurocrine by us,
Neurocrine could take actions that may be adverse to us, or it could halt, slow, or deprioritize its development and
commercialization efforts under the collaboration. In any such instances, our business, financial condition, results of
operations and prospects could be materially harmed.
On February 2, 2021, Neurocrine notified us that it had elected to terminate the Neurocrine Collaboration
Agreement solely with regards to the VY-AADC Program, effective August 2, 2021, which we refer to as the Neurocrine
VY-AADC Program Termination Effective Date. The Neurocrine Collaboration Agreement remains in full force and effect
for each other program thereunder. Upon the termination of the VY-AADC Program, the license granted by us to
Neurocrine will expire, and we will regain worldwide intellectual property rights to the VY-AADC Program in accordance
with the collaboration agreement. We plan to determine the potential path forward for the VY-AADC Program based on,
among other things, the additional information being collected by Neurocrine in response to the DSMB requests.
In February 2019, we entered into a collaboration agreement, which we refer to as the AbbVie Alpha-Synuclein
Collaboration Agreement, for the research, development, and commercialization of AAV gene therapy products directed
against alpha-synuclein for indications including Parkinson’s disease and other synucleinopathies. Under the terms of the
AbbVie Alpha-Synuclein Collaboration Agreement, we received an upfront payment of $65.0 million and were eligible to
receive option exercise payments, future development and regulatory milestone payments and royalties prior to the
termination of the AbbVie Alpha-Synuclein Collaboration Agreement, effective August 3, 2020. We are continuing to
evaluate our options for the future of our alpha-synuclein program. If we seek another collaboration partner for the
program, we may be unable to find a suitable collaborator on a timely basis, on terms acceptable to us, or at all. If we opt to
progress this program ourselves, our expenditures would increase, and we might lack the resources or expertise that an
appropriate collaboration partner could provide. If we are unable to find a suitable collaboration partner or unable or
unwilling to increase our financial commitment to the alpha-synuclein program to undertake its development, we may have
to delay or curtail the program.
We have only used the ClearPoint System to deliver our product candidates to date. While other devices for delivery may
be used in the future, any issues with the ClearPoint System or the manufacturer of the ClearPoint System may result in
delays in the development and commercialization of certain of our product candidates, which could have an adverse
impact on our business.
The surgical approach that we are using for VY-AADC (NBIb-1817) is similar, in some respects, to the
stereotactic approach used for DBS. One primary difference with our approach is the ability to assist the physician in
visualizing the delivery of VY-AADC (NBIb-1817) to the putamen using real-time, intra-operative MRI, scans to avoid
specific blood vessels to potentially reduce the risk of hemorrhages during the surgical procedure and to maximize the
coverage of the putamen.
Investigators in the PD-1101 Phase 1b clinical trial, the separate PD-1102 Phase 1 posterior trajectory trial, and the
RESTORE-1 Phase 2 clinical trial for VY-AADC (NBIb-1817) have used and may continue to use the real-time, intra-
operative, MRI imaging system known as the ClearPoint System. The ClearPoint System is manufactured by CLPT. Not all
neurosurgical units within the United States utilize the ClearPoint system and may employ other neuro-navigational
systems that are not compatible with real-time MRI imaging. Investigators have used the ClearPoint System at certain sites
in the RESTORE-1 Phase 2 clinical trial and may continue to use it in future clinical trials of VY-AADC (NBIb-1817) and
any other of our product candidates that are injected directly into the brain. Therefore, any issues with the ClearPoint
System, such as a finding that use of the ClearPoint System causes adverse events or a product recall, or issues with CLPT,
the manufacturer of the ClearPoint System, such as bankruptcy or a decision to stop production of the system due to lack of
profitability, could delay the development or commercialization of certain of our product candidates, including VY-AADC
(NBIb-1817), as there currently is no other manufacturer of the ClearPoint System. Outside the United States, the
ClearPoint System is not widely available or utilized in neurosurgical units.
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We have developed V-TAG as our real-time, intra-operative device that is compatible with MRI imaging and can
be used with other neuro-navigational systems to dose VY-AADC (NBIb-1817) and for other surgical procedures. We
believe that the experience we have gained from delivering VY-AADC (NBIb-1817) in our clinical trials to date and our
work to develop V-TAG may inform AAV gene therapy delivery for our Huntington’s Program and other projects. In July
2018, we received 510(k) regulatory clearance of V-TAG from the CDRH. There are additional steps needed in making this
device available for use, including the manufacture of the product and compliance with state and federal laws and
regulations for medical devices.
We expect to rely on third parties in the development and manufacture of our potential delivery devices. In May
2018, we entered into a master services and supply agreement with CLPT for the development and manufacture of devices,
including V-TAG. This agreement provides for CLPT to perform certain manufacturing, supply, development and other
services, including the supply of the ClearPoint System and cannula devices. In March 2019, we transferred our premarket
notification (510(k)) clearance for the V-TAG device to CLPT, and expect to work with CLPT on the manufacturing and
clinical supply of the device.
We may seek to enter into collaborations in the future with other third parties. If we are unable to enter into such
collaborations, or if these collaborations are not successful, our business could be adversely affected.
We may seek to enter into additional collaborations in the future, including sales, marketing, distribution,
development, licensing, and/or broader collaboration agreements. Our likely collaborators include large and mid-size
pharmaceutical companies, regional and national pharmaceutical companies, biotechnology companies, and medical device
manufacturers. However, we may not be able to enter into additional collaborations on favorable terms or at all. Our ability
to generate revenues from our collaborations will depend on our and our collaborators’ abilities to successfully perform the
functions assigned to each of us in these arrangements. In addition, our collaborators might have the ability to abandon
research or development projects and terminate applicable agreements. Moreover, an unsuccessful outcome in any clinical
trial for which our collaborator is responsible could be harmful to the public perception and prospects of our gene therapy
platform.
Our relationship with any current or future collaborators may pose several risks, including the following:
● collaborators have significant discretion in determining the amount and timing of the efforts and resources
that they will apply to these collaborations;
● collaborators may not perform their obligations as expected or desired;
● the preclinical studies and clinical trials conducted as part of these collaborations may not be successful;
● collaborators may not pursue development and commercialization of any product candidates that achieve
regulatory approval or may elect not to continue or renew development or commercialization programs based
on preclinical study or clinical trial results, changes in the collaborators’ strategic focus or available funding
or external factors, such as an acquisition, that divert resources or create competing priorities;
● collaborators may delay preclinical studies and clinical trials, provide insufficient funding for preclinical
studies and clinical trials, stop a preclinical study or clinical trial or abandon a product candidate, repeat or
conduct new preclinical studies or clinical trials or require a new formulation of a product candidate for
preclinical studies or clinical trials;
● we may not have access to, or may be restricted from disclosing, certain information regarding product
candidates being developed or commercialized under a collaboration and, consequently, may have limited
ability to inform our stockholders about the status of such product candidates;
● collaborators could independently develop, or develop with third parties, products that compete directly or
indirectly with our product candidates if the collaborators believe that competitive products are more likely
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to be successfully developed or can be commercialized under terms that are more economically attractive
than ours;
● product candidates developed in collaboration with us may be viewed by our collaborators as competitive
with their own product candidates or products, which may cause collaborators to cease to devote resources to
the commercialization of our product candidates;
● a collaborator with marketing and distribution rights to one or more of our product candidates that achieve
regulatory approval may not commit sufficient resources to the marketing and distribution of any such
product candidate;
● disagreements with collaborators, including disagreements over proprietary rights, contract interpretation or
the preferred course of development of any product candidates, may cause delays or termination of the
research, development or commercialization of such product candidates, may lead to additional
responsibilities or expenses for us with respect to such product candidates or may result in litigation or
arbitration, any of which would be time-consuming and expensive;
● collaborators may not properly maintain or defend our intellectual property rights or may use our proprietary
information in such a way as to invite litigation that could jeopardize or invalidate our intellectual property or
proprietary information or expose us to potential litigation;
● disputes may arise with respect to the ownership or inventorship of intellectual property developed pursuant
to our collaborations;
● collaborators may infringe the intellectual property rights of third parties, which may expose us to litigation
and potential liability;
● the terms of our collaboration agreement may restrict us from entering into certain relationships with other
third parties, thereby limiting our options; and
● collaborations may be terminated for the convenience of the collaborator and, if terminated, we could be
required to raise additional capital to pursue further development or commercialization of the applicable
product candidates.
Collaboration agreements may not lead to the development or commercialization of product candidates in the most
efficient manner, or at all. If our collaborations do not result in the successful development and commercialization of
products, or if one of our collaborators 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 development of our product candidates could be delayed, and we may need additional resources to develop our product
candidates. For example, the proposed 2021 budgets for certain programs under our collaboration with Neurocrine are
contingent on the progress and status of those programs in the first quarter of 2021. In the event we are unable to achieve
milestones necessary to demonstrate progress on those programs, Neurocrine may be unwilling to fund these programs at
the desired levels or at all, which could require us to fund these programs to a greater extent than we have expected, to
decline to pursue certain program objectives or to discontinue one or more of the programs. Additionally, subject to its
contractual obligations to us, if a collaborator of ours were to be involved in a business combination, it might deemphasize
or terminate the development or commercialization of any product candidate licensed to it by us. If one of our collaborators
terminates its agreement with us, we may find it more difficult to attract new collaborators, and the perception of us in the
business and financial communities could be adversely affected. All of the risks relating to product development, regulatory
approval and commercialization described in this periodic report also apply to the activities of our collaborators.
We will face significant competition in seeking appropriate collaborators, and the negotiation process is time-
consuming and complex. Our ability to reach a definitive collaboration agreement with any future collaborators will
depend, among other things, upon our assessment of the collaborator’s resources and expertise, the terms and conditions of
the proposed collaboration and the proposed collaborator’s evaluation of several factors. Those factors may include
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the design or results of clinical trials, the likelihood of approval by the FDA or similar regulatory authorities outside the
United States, the potential market for the subject product candidate, the costs and complexities of manufacturing and
delivering such product candidate to patients, the potential of competing products, the existence of uncertainty with respect
to our ownership of technology, which can exist if there is a challenge to such ownership without regard to the merits of the
challenge, and industry and market conditions generally. The collaborator may also consider alternative product candidates
or technologies for similar indications that may be available to collaborate on and whether such a collaboration could be
more attractive than the one with us for our product candidate. We may also be restricted under future license agreements
from entering into agreements on certain terms with potential collaborators. In addition, there have been a significant
number of recent business combinations among large pharmaceutical companies that have resulted in a reduced number of
potential future collaborators.
If we are unable to reach agreements with suitable collaborators on a timely basis, on acceptable terms, or at all,
we may have to curtail the development of a product candidate, reduce or delay its development program or one or more of
our other development programs, delay its potential commercialization or reduce the scope of any sales or marketing
activities, or increase our expenditures and undertake development or commercialization activities at our own expense. If
we elect to fund and undertake development or commercialization activities on our own, we may need to obtain additional
expertise and additional capital, which may not be available to us on acceptable terms or at all. If we fail to enter into
collaborations and do not have sufficient funds or expertise to undertake the necessary development and commercialization
activities, we may not be able to further develop our product candidates or bring them to market or continue to develop our
gene therapy platform. If we license rights to product candidates, we may not be able to realize the benefit of such
transactions if we are unable to successfully integrate them with our existing operations and company culture.
We have relied, and we expect to continue to rely, on third parties to conduct, supervise and monitor our preclinical
studies and clinical trials, and if these third parties perform in an unsatisfactory manner, our business could be harmed.
We expect to rely on CROs, clinical trial sites, and other vendors to ensure our preclinical studies and clinical
trials are conducted properly and on time. We may also engage third parties such as clinical data management
organizations, medical institutions and clinical investigators to conduct or assist in our clinical trials or other preclinical and
clinical research and development work. While we will have agreements governing their activities, we will have limited
influence over their actual performance. We will control only certain aspects of our third-party service providers’ activities.
Nevertheless, we will be responsible for ensuring that each of our preclinical studies and clinical trials is conducted in
accordance with the applicable protocol, legal, quality, regulatory and scientific standards. Our reliance on these third
parties does not relieve us of our regulatory responsibilities. For example, the PD-1101 Phase 1b clinical trial of VY-AADC
(NBIb-1817) and the separate PD-1102 Phase 1 clinical trial exploring the delivery of VY-AADC (NBIb-1817) using a
posterior trajectory were conducted at several locations. The protocol for the RESTORE-1 Phase 2 clinical trial states that
the clinical trial is intended to be conducted at over twenty clinical trial sites, including neurosurgical and neurology
patient referral sites. If any locations terminate a particular clinical trial, we or our collaborators would be required to find
other parties or locations to conduct such clinical trial. We may be unable to find a new party to conduct new trials of our
product candidates or obtain clinical supply of our product candidates or AAV vectors for such trials. If we elect to
internalize some or all activities related to the conduct of our preclinical studies or clinical trials that are currently
performed by our third-party service providers, or if we are required to do so due to a service provider’s termination of our
relationship, then we may be required to source additional technology and personnel in order to perform the relevant
activities. We may be unsuccessful in our efforts to internalize some or all relevant activities, either on the desired timeline
or at all.
We and our third-party service providers are required to comply with the FDA’s good laboratory practices, or
GLPs, and GCPs for conducting, recording and reporting the results of IND-enabling preclinical studies and clinical studies
to assure that the data and reported results are credible and accurate and that the rights, integrity and confidentiality of
clinical trial participants are protected. We are also required to register ongoing clinical trials and post the results of
completed clinical trials on a government-sponsored database, ClinicalTrials.gov, within specified timeframes. The FDA
enforces these GLPs and GCPs through periodic inspections of trial sponsors, principal investigators, clinical trial sites, and
laboratories at which the FDA may determine that our preclinical studies and clinical trials did not comply with GLPs or
GCPs. If we, our collaborators, or our third-party service providers fail to
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comply with applicable GLPs or GCPs, the preclinical or clinical data generated in our future preclinical studies or clinical
trials may be deemed unreliable and the FDA may require us to perform additional preclinical studies or clinical trials
before approving the relevant INDs or marketing applications. In addition, our future clinical trials will require a sufficient
number of patients to evaluate the safety and effectiveness of our product candidates. Accordingly, if we, our collaborators,
or our third-party service providers fail to comply with these regulations or fail to recruit a sufficient number of patients,
we may be required to repeat such preclinical studies or clinical trials, which would delay the regulatory approval process.
Failure to comply can also result in fines, adverse publicity, and civil and criminal sanctions.
Our third-party service providers are not our employees, and we are therefore unable to directly monitor whether
or not they devote sufficient time, attention, expertise and resources to our clinical and nonclinical programs. These third-
party service providers may also have relationships with other commercial entities, including our competitors, for whom
they may also be conducting clinical trials or other drug development activities that could harm our competitive position. If
our third-party service providers do not successfully carry out their contractual duties or obligations, fail to meet expected
deadlines, or if the quality or accuracy of the preclinical or clinical data they obtain is compromised due to the failure to
adhere to our clinical protocols or regulatory requirements, or for any other reasons, our preclinical studies or clinical trials
may be extended, delayed or terminated, and we may not be able to obtain regulatory approval for, or successfully
commercialize our product candidates. As a result, our financial results and the commercial prospects for our product
candidates could be harmed, our costs could increase, and our ability to generate revenues could be delayed.
Risks Related to Manufacturing
Gene therapies and their companion diagnostics are novel, complex and difficult to manufacture. We could experience
manufacturing problems that result in delays in the development or commercialization of our product candidates or
otherwise harm our business.
The manufacture of gene therapy products is technically complex and necessitates substantial expertise and capital
investment. Production difficulties caused by unforeseen events may delay the availability of material for our clinical
studies. To meet the requirements of our current and planned future trials we have developed a proprietary manufacturing
platform that provides a robust and scalable process for AAV production. We are using the baculovirus/Sf9 AAV
production system, a technology for producing AAV gene therapy vectors at scale in insect-derived cells. The process has
been successfully transferred to our contract manufacturing organizations where it is used in manufacturing clinical
materials in accordance with the FDA’s cGMPs. We have also built an onsite, state-of-the-art process research and
development facility to enable the manufacturing of clinical quality AAV gene therapy vectors at laboratory scale.
We presently contract with third parties for the manufacturing of our program materials. We are currently
assessing our manufacturing capabilities and although we do not currently have our own clinical or commercial scale
manufacturing, we may choose to build those capabilities. The use of contracted manufacturing and reliance on
collaboration partners is relatively cost efficient and has eliminated the need for our direct investment in manufacturing
facilities and additional staff early in development. Although we rely on contract manufacturers, we have personnel with
manufacturing and quality experience to oversee our contract manufacturers.
To date, our third-party manufacturers have met our manufacturing requirements for our program materials. We
expect third-party manufacturers to be capable of providing sufficient quantities of our program materials to meet
anticipated clinical trial scale demands. To meet our projected needs for commercial manufacturing, third parties with
whom we currently work might need to increase their scale of production or we will need to secure alternate suppliers. We
believe that there are alternate sources of supply for our program materials that can satisfy our clinical and commercial
requirements, although we cannot be certain that identifying and establishing relationships with such sources, if necessary,
would not result in significant delay or material additional costs.
To date, our third-party manufacturers have met our quality standards for our program materials. The
manufacturers of pharmaceutical products must comply with strictly enforced cGMP requirements, state and federal
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regulations, as well as foreign requirements when applicable. Any failure by us or our contract manufacturing organizations
to adhere to or document compliance to such regulatory requirements could lead to a delay or interruption in the
availability of our program materials for clinical study. If we or our manufacturers were to fail to comply with the FDA,
EMA, or other regulatory authority, it could result in sanctions being imposed on us, including clinical holds, fines,
injunctions, civil penalties, delays, suspension or withdrawal of approvals, license revocation, seizures or recalls of product
candidates or products, operating restrictions and criminal prosecutions, any of which could significantly and adversely
affect supplies of our product candidates. Our potential future dependence upon others for the manufacture of our product
candidates may also adversely affect our future profit margins and our ability to commercialize any product candidates that
receive regulatory approval on a timely and competitive basis.
Biological products are inherently difficult to manufacture. Our program materials are manufactured using
technically complex processes requiring specialized equipment and facilities, highly specific raw materials, cells, and
reagents, and other production constraints. Several of these raw materials, cells, and reagents are provided by a limited
number of suppliers. Even though we aim to have backup supplies and suppliers of raw materials, cells, and reagents
whenever possible, we cannot be certain they will be sufficient if our primary sources are unavailable. A shortage of a
critical raw material, cell line, or reagent, or a technical issue during manufacturing may lead to delays in clinical
development or commercialization plans. Any changes in the manufacturing of components of the raw materials we use
could result in unanticipated or unfavorable effects on our manufacturing processes, including delays.
Companion diagnostic devices may be required to diagnose a genetic disease or to determine patient antibody
levels to certain components in a product, and could also require a sophisticated, technically complex manufacturing
processes. If we or our contract manufacturing organizations fail to manufacture such diagnostics or comply with relevant
regulatory requirements or approvals, we might seek to transition such manufacturing processes to another contract
manufacturing organization. We might not be able to transition such processes in a timely manner or at all, and our
commercialization and development efforts could be delayed.
Delays in obtaining regulatory approval of our or our collaborators’ manufacturing processes and facilities or
disruptions in such manufacturing processes may delay or disrupt our commercialization efforts. Until recently, no
cGMP gene therapy manufacturing facility in the United States had received approval from the FDA for the
manufacture of an approved gene therapy product.
Before we can begin to commercially manufacture a product candidate in our own facility, or the facility of a
collaborator, we must obtain regulatory approval from the FDA for our manufacturing process and our collaborator’s
facility. A manufacturing authorization must also be obtained from the appropriate European Union regulatory authorities.
Until recently, no cGMP gene therapy manufacturing facility in the United States had received approval from the FDA for
the manufacture of an approved gene therapy product and, therefore, the timeframe required for us to obtain such approval
is uncertain. In addition, we must pass a pre-approval inspection of our or our collaborator’s manufacturing facility by the
FDA and other relevant regulatory authorities before any of our product candidates can obtain marketing approval. In order
to obtain approval, we will need to ensure that all of our processes, methods and equipment are compliant with cGMP, and
perform extensive audits of vendors, contract laboratories and suppliers. If any of our vendors, contract laboratories or
suppliers is found to be out of compliance with cGMP, we may experience delays or disruptions in manufacturing while we
work with these third parties to remedy the violation or while we work to identify suitable replacement vendors. The cGMP
requirements govern quality control of the manufacturing process and documentation policies and procedures. In
complying with cGMP, we will be obligated to expend time, money and effort in production, record keeping and quality
control to assure that the product meets applicable specifications and other requirements. If we fail to comply with these
requirements, we would be subject to possible regulatory action and may not be permitted to sell any products that we may
develop.
Failure to comply with ongoing regulatory requirements could cause us to suspend production or put in place costly or
time-consuming remedial measures.
The regulatory authorities may, at any time, following approval of a product for sale, audit the manufacturing
facilities for such product or institute biennial inspections. If any such inspection or audit identifies a failure to comply with
applicable regulations, or if a violation of product specifications or applicable regulations occurs independent of
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such an inspection or audit, the relevant regulatory authority may require remedial measures that may be costly or time-
consuming to implement and that may include the temporary or permanent suspension of a clinical trial or commercial
sales or the temporary or permanent closure of a manufacturing facility. Any such remedial measures imposed upon our
third-party manufacturers, our collaborators, or us could harm our business, financial condition, results of operations and
prospects.
If our third-party manufacturers, our collaborators, or we fail to comply with applicable cGMP regulations, FDA
and foreign regulatory authorities can impose regulatory sanctions including, among other things, refusal to approve a
pending application for a new product candidate or suspension or revocation of a pre-existing approval. Such an occurrence
may cause our business, financial condition, results of operations and prospects to be harmed.
Additionally, if supply from any third-party manufacturers is delayed or interrupted, there could be a significant
disruption in the supply of our clinical or commercial material. We have agreements in place with our contract
manufacturers pursuant to which we are collaborating on cGMP manufacturing processes and analytical methods for the
manufacture of our AAV product candidates. Therefore, if we are unable to enter into an agreement with our contract
manufacturers to manufacture clinical or commercial material for our product programs, or if our agreement with our
contract manufacturers were terminated, we would have to find suitable alternative manufacturers. This could delay our or
our collaborators’ ability to conduct clinical trials or commercialize our current and future product candidates. The
regulatory authorities also may require additional trials if a new manufacturer is relied upon for commercial production.
Switching manufacturers may involve substantial costs and could result in a delay in our desired clinical and commercial
timelines.
Any contamination in the manufacturing process for our products or product candidates, shortages of raw materials,
cells or reagents, or failure of any of our key suppliers to deliver necessary components could result in delays in our
clinical development or marketing schedules.
Given the nature of biologics manufacturing, there is a risk of contamination. Any contamination could adversely
affect our ability to produce product candidates on schedule and could, therefore, harm our results of operations and cause
reputational damage.
Some of the raw materials required in our manufacturing process are derived from biologic sources. Such raw
materials are difficult to procure and may be subject to contamination or recall. A material shortage, contamination, recall
or restriction on the use of biologically derived substances in the manufacture of our product candidates could adversely
impact or disrupt the commercial manufacturing or the production of clinical material, which could adversely affect our
development timelines and our business, financial condition, results of operations and prospects.
Interruptions in the supply of product candidates or inventory loss may harm our operating results and financial
condition.
Our product candidates and our product delivery devices are manufactured using technically complex processes
requiring specialized facilities, highly specific raw materials and other production constraints. The complexity of these
processes, as well as strict government standards for the manufacture and storage of our product candidates and delivery
devices, subjects us to manufacturing risks. While product candidate batches released for use in clinical trials or for
commercialization undergo sample testing, some defects may only be identified following product release. In addition,
process deviations or unanticipated effects of approved process changes may result in these intermediate products not
complying with stability requirements or specifications. Our product candidates and delivery devices must be stored and
transported at temperatures within a certain range and in sterile environments. If these temperature and environmental
conditions deviate, the remaining shelf-life of a product candidate or utility of a device could be impaired or its efficacy
and safety could be negatively impacted, making it no longer suitable for use.
The occurrence, or suspected occurrence, of manufacturing and distribution difficulties can lead to lost inventories
and, in some cases, product recalls, with consequential reputational damage and the risk of product liability. The
investigation and remediation of any identified problems can cause production delays, substantial expense, lost sales and
delays of new product launches. Any interruption in the supply of finished products or the loss thereof could hinder our
ability to timely distribute our products and satisfy customer demand. Any unforeseen failure in the storage of the
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product or loss in supply could delay our clinical trials and, if our product candidates are approved, result in a loss of our
market share and negatively affect our business, financial condition, results of operations and prospects.
Failure to obtain access to or to protect intellectual property related to the manufacturing of our products or product
candidates may result in changes, delays and/or inability to manufacture such products or product candidates.
The intellectual property related to the manufacture of biological products is complex. If we are unable to
maintain control of manufacturing technology such as our trade secrets, or we are unable to protect ongoing improvements
comprehensively and in a sufficient number of jurisdictions, it would impact our ability to produce products for commercial
sale or product candidates for preclinical testing or clinical trials and our development timelines and operations timelines
could be adversely affected.
We presently manufacture our products using either an insect cell AAV production system or a mammalian cell
system. We are aware of third parties which also use these systems in the manufacture of their products and who hold
intellectual property on their AAV manufacturing systems. If we determine that access to certain third-party intellectual
property is necessary for the manufacturing of our products and product candidates and are unable to license or otherwise
access this intellectual property, it would impact our ability to produce products for commercial sale or product candidates
for preclinical testing or clinical trials and our development timelines and operations timelines could be adversely affected.
Risks Related to Our Business Operations
We may not be successful in our efforts to identify or discover additional product candidates and may fail to capitalize
on programs or product candidates that may be a greater commercial opportunity, or for which there is a greater
likelihood of success.
The success of our business depends upon our ability to identify, develop and commercialize product candidates
generated through our gene therapy platform. Research programs to identify new product candidates require substantial
technical, financial and human resources. Although VY-AADC (NBIb-1817) is currently in clinical development and our
other product candidates are in preclinical development, we may fail to identify other potential product candidates for
clinical development for several reasons. For example, our research may be unsuccessful in identifying potential product
candidates or our potential product candidates may be shown to have harmful side effects, may be commercially
impracticable to manufacture or may have other characteristics that may make the products unmarketable or unlikely to
receive marketing approval.
Additionally, because we have limited resources, we may forego or delay pursuit of opportunities with certain
programs or product candidates or for indications that later prove to have greater commercial potential. Our spending on
current and future research and development programs may not yield any commercially viable products. If we do not
accurately evaluate the commercial potential for a particular product candidate, we may relinquish valuable rights to that
product candidate through strategic collaboration, licensing or other arrangements in cases in which it would have been
more advantageous for us to retain sole development and commercialization rights to such product candidate. Alternatively,
we may allocate internal resources to a product candidate in a therapeutic area in which it would have been more
advantageous to enter into a partnering arrangement. Several of our current preclinical programs have previously been part
of collaborations with third parties. While we have invested significant resources in these programs, we may decide in the
future to cease development activities on one or more of them.
If any of these events occur, we may be forced to abandon our development efforts with respect to a particular
product candidate or fail to develop a potentially successful product candidate, which could harm our business, financial
condition, results of operations and prospects.
Our future success depends on our ability to retain key members of our management team, and to attract, retain and
motivate qualified personnel.
We are highly dependent on the management, technical, and scientific expertise of principal members of our
management, scientific, and clinical teams including G. Andre Turenne, our President and Chief Executive Officer.
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While we have entered into employment agreements or offer letters with each of our executive officers, any of them could
leave our employment at any time, as all of our employees are “at will” employees. We currently do not have “key person”
insurance on any of our employees. The loss of the services of one or more of our current employees might impede the
achievement of our research, development and commercialization objectives.
Recruiting and retaining other qualified employees, consultants and advisors for our business, including scientific
and technical personnel is also critical to our success. There currently is a shortage of skilled individuals with substantial
gene therapy experience, which is likely to continue. As a result, competition for skilled personnel, including in gene
therapy research and vector manufacturing, is intense and the turnover rate can be high. We may not be able to attract and
retain personnel on acceptable terms, if at all, given the competition among numerous pharmaceutical and biotechnology
companies and academic institutions for individuals with similar skill sets. Our consultants and advisors may be employed
by employers other than us and may have commitments under consulting or advisory contracts with other entities that may
limit their availability to us. In addition, failure to succeed in preclinical or clinical trials or applications for marketing
approval may make it more challenging to recruit and retain qualified personnel. The inability to recruit, or loss of services
of certain executives, key employees, consultants or advisors, may impede the progress of our research, development and
commercialization objectives and could harm our business, financial condition, results of operations and prospects.
If we are unable to manage expected growth in the scale and complexity of our operations, our performance may suffer.
If we are successful in executing our business strategy, we will need to expand our managerial, operational,
financial and other systems and resources to manage our operations, continue our research and development activities and,
in the longer term, build a commercial infrastructure to support commercialization of any of our product candidates that are
approved for sale. We can provide no assurances that we will have sufficient resources in the future to manage all of our
planned programs. Future growth would impose significant added responsibilities on members of management, may lead to
significant added costs, and may divert our management and business development resources. It is likely that our
management, finance, development personnel, systems and facilities currently in place may not be adequate to support this
future growth. Our need to effectively manage our operations, growth and product candidates requires that we continue to
develop more robust business processes and improve our systems and procedures in each of these areas and to attract and
retain sufficient numbers of talented employees. We may be unable to successfully implement these tasks on a larger scale
and, accordingly, may not achieve our research, development and growth goals.
Our employees, principal investigators, consultants and commercial partners may engage in misconduct or other
improper activities, including non-compliance with regulatory standards and requirements and insider trading.
We are exposed to the risk of fraud or other misconduct by our employees, principal investigators, consultants,
collaborators, and commercial partners. Misconduct by these parties could include intentional failures to comply with FDA
regulations or the regulations applicable in the European Union and other jurisdictions, provide accurate information to the
FDA, the European Commission and other regulatory authorities, comply with healthcare fraud and abuse laws and
regulations in the United States and abroad, report financial information or data accurately or disclose unauthorized
activities to us. In particular, sales, marketing and business arrangements in the healthcare industry are subject to extensive
laws and regulations intended to prevent fraud, misconduct, kickbacks, self-dealing and other abusive practices. These laws
and regulations restrict or prohibit a wide range of pricing, discounting, marketing and promotion, sales commission,
customer incentive programs and other business arrangements. Such misconduct also could involve the improper use of
information obtained in the course of clinical trials or interactions with the FDA or other regulatory authorities, which
could result in regulatory sanctions and cause serious harm to our reputation. We have adopted a code of conduct applicable
to all of our employees, but it is not always possible to identify and deter employee misconduct, and the precautions we
take to detect and prevent this activity may not be effective in controlling unknown or unmanaged risks or losses or in
protecting us from government investigations or other actions or lawsuits stemming from a failure to comply with these
laws or regulations. If any such actions are instituted against us, and we are not successful in defending ourselves or
asserting our rights, those actions could have a significant impact on our business, financial condition, results of operations
and prospects, including the imposition of significant fines or other sanctions.
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Current and future legislation may increase the difficulty and cost for us and any collaborators to obtain marketing
approval of and commercialize our product candidates and affect the prices we, or they, may obtain.
In the United States and foreign jurisdictions, there have been a number of legislative and regulatory changes and
proposed changes regarding the healthcare system that could prevent or delay marketing approval of our product
candidates, restrict or regulate post-approval activities and affect our ability, or the ability of any collaborators, to profitably
sell any products for which we obtain marketing approval. We expect that current laws, as well as other healthcare reform
measures that may be adopted in the future, may result in more rigorous coverage criteria and in additional downward
pressure on the price that we, or any collaborators, may receive for any approved products. If reimbursement of our
products is unavailable or limited in scope, our business could be materially harmed.
In March 2010, President Obama signed into law the Patient Protection and Affordable Care Act, as amended by
the Health Care and Education Affordability Reconciliation Act, or collectively, the ACA. In addition, other legislative
changes have been proposed and adopted since the ACA was enacted. In August 2011, the Budget Control Act of 2011,
among other things, created measures for spending reductions by Congress. A Joint Select Committee on Deficit
Reduction, tasked with recommending a targeted deficit reduction of at least $1.2 trillion for the years 2013 through 2021,
was unable to reach required goals, thereby triggering the legislation’s automatic reduction to several government
programs. These changes included aggregate reductions to Medicare payments to providers of up to 2% per fiscal year,
which went into effect in April 2013 and will remain in effect through 2030 under the Coronavirus Aid, Relief, and
Economic Security Act, or the CARES Act. The American Taxpayer Relief Act of 2012, among other things, reduced
Medicare payments to several providers and increased the statute of limitations period for the government to recover
overpayments to providers from three to five years. These laws may result in additional reductions in Medicare and other
healthcare funding and otherwise affect the prices we may obtain for any of our product candidates for which we may
obtain regulatory approval or the frequency with which any such product candidate is prescribed or used.
Since enactment of the ACA, there have been, and continue to be, numerous legal challenges and Congressional
actions to repeal and replace provisions of the law. For example, with enactment of the Tax Cuts and Jobs Act of 2017, or
the TCJA, which was signed by President Trump on December 22, 2017, Congress repealed the “individual mandate.” The
repeal of this provision, which requires most Americans to carry a minimal level of health insurance, became effective in
2019. Further, on December 14, 2018, a U.S. District Court judge in the Northern District of Texas ruled that the individual
mandate portion of the ACA is an essential and inseverable feature of the ACA, and therefore because the mandate was
repealed as part of the TCJA, the remaining provisions of the ACA are invalid as well. On December 18, 2019, the Court of
Appeals for the Fifth Circuit 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. Thereafter, the U.S. Supreme Court agreed to hear this case. Oral argument in the
case took place on November 10, 2020, and a ruling by the U.S. Supreme Court is expected sometime in 2021. Litigation
and legislation over the ACA are likely to continue, with unpredictable and uncertain results.
The Trump Administration also took executive actions to undermine or delay implementation of the ACA,
including directing federal agencies with authorities and responsibilities under the ACA to waive, defer, grant exemptions
from, or delay the implementation of any provision of the ACA that would impose a fiscal or regulatory burden on states,
individuals, healthcare providers, health insurers, or manufacturers of pharmaceuticals or medical devices. On January 28,
2021, however, President Biden issued a new Executive Order which directs federal agencies to reconsider rules and other
policies that limit Americans’ access to health care, and consider actions that will protect and strengthen that access. Under
this Executive Order, federal agencies are directed to re-examine: policies that undermine protections for people with pre-
existing conditions, including complications related to COVID-19; demonstrations and waivers under Medicaid and the
ACA that may reduce coverage or undermine the programs, including work requirements; policies that undermine the
Health Insurance Marketplace or other markets for health insurance; policies that make it more difficult to enroll in
Medicaid and the ACA; and policies that reduce affordability of coverage or financial assistance, including for dependents.
The prices of prescription pharmaceuticals in the United States and foreign jurisdictions are subject to considerable
legislative and executive actions and could impact the prices we obtain for our drug products, if and when approved.
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The costs of prescription pharmaceuticals have also been the subject of considerable discussion in the United
States and other jurisdictions. To date, there have been several recent U.S. congressional inquiries, as well as proposed and
enacted state and federal legislation designed to, among other things, bring more transparency to drug pricing, review the
relationship between pricing and manufacturer patient programs, reduce the costs of drugs under Medicare and reform
government program reimbursement methodologies for products. To those ends, President Trump issued several Executive
Orders intended to lower the costs of prescription drug products. Certain of these Executive Orders are reflected in recently
promulgated regulations, including an interim final rule implementing President Trump’s most favored nation model, but
such final rule is currently subject to a nationwide preliminary injunction. It remains to be seen whether these Executive
Orders and resulting regulations will remain in force during the Biden Administration. Further, on September 24, 2020, the
Trump Administration finalized a rulemaking allowing states or certain other non-federal government entities to submit
importation program proposals to the FDA for review and approval. Applicants are required to demonstrate that their
importation plans pose no additional risk to public health and safety and will result in significant cost savings for
consumers. The FDA has issued draft guidance that would allow manufacturers to import their own FDA-approved drugs
that are authorized for sale in other countries (multi-market approved products). At the state level, individual states are
increasingly aggressive in passing legislation and implementing regulations designed to control pharmaceutical and
biological product pricing, including price or patient reimbursement constraints, discounts, restrictions on certain product
access and marketing cost disclosure and transparency measures, and, in some cases, designed to encourage importation
from other countries and bulk purchasing. In addition, health care organizations and individual hospitals are increasingly
using bidding procedures to determine what pharmaceutical products and which suppliers will be included in their
prescription drug and other health care programs. These measures could reduce the ultimate demand for our products, once
approved, or put pressure on our product pricing. We expect that additional state and federal healthcare reform measures
will be adopted in the future, any of which could limit the amounts that federal and state governments will pay for
healthcare products and services, which could result in reduced demand for our product candidates or additional pricing
pressures.
In other countries, particularly the countries of the European Union, the pricing of prescription pharmaceuticals is
subject to governmental control. In these countries, pricing negotiations with governmental authorities can take
considerable time after the receipt of marketing approval for a drug. To obtain reimbursement or pricing approval in some
countries, we, or our collaborators, may be required to conduct a clinical trial that compares the cost-effectiveness of our
products or product candidates to other available therapies. If reimbursement of our products or product candidates is
unavailable or limited in scope or amount, or if pricing is set at unsatisfactory levels, our business could be materially
harmed.
We may be subject, directly or indirectly, to federal, state, and foreign healthcare laws and regulations, including fraud
and abuse laws, false claims laws and health information privacy and security laws. If we are unable to comply, or have
not fully complied, with such laws, we could face substantial penalties.
If we obtain FDA approval for any of our product candidates and begin commercializing those products in the
United States, our operations will be directly, or indirectly through our prescribers, customers and purchasers, subject to
various federal and state laws and regulations, including, without limitation, the federal Anti-Kickback Statute, the federal
civil and criminal false claims act, and the Physician Payments Sunshine Act and regulations. These laws will impact,
among other things, our proposed sales, marketing and educational programs. In addition, we may be subject to data
privacy laws by both the federal government and the states in which we conduct our business. Such laws that may constrain
the business or financial arrangements and relationships through which we conduct our operations include, but are not
limited to:
● the federal Anti-Kickback Statute, which prohibits, among other things, persons and entities from knowingly
and willfully soliciting, receiving, offering or paying any remuneration (including any kickback, bribe or
rebate), directly or indirectly, overtly or covertly, in cash or in kind, to induce or in return for either the
referral of an individual for, or the purchase, recommendation, leasing or furnishing of, an item or service
reimbursable under a federal healthcare program, such as the Medicare and Medicaid programs. This statute
has been interpreted to apply to arrangements between pharmaceutical manufacturers on the one hand, and
prescribers, purchasers and formulary managers on the other. Further, the ACA amended the intent
requirement of the federal Anti-Kickback Statute. A person or entity no longer needs to have actual
knowledge of this statute or specific intent to violate it;
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● the federal civil and criminal false claims laws and civil monetary penalty laws, including the civil False
Claims Act, which prohibit, among other things, individuals or entities from knowingly presenting, or
causing to be presented, claims for payment or approval from Medicare, Medicaid or other government
payors that are false or fraudulent, or making a false statement to avoid, decrease, or conceal an obligation to
pay money to the federal government. The ACA provided and recent government cases against
pharmaceutical and medical device manufacturers support the view that federal Anti-Kickback Statute
violations and certain marketing practices, including off-label promotion, may implicate the civil False
Claims Act;
● the federal Health Insurance Portability and Accountability Act of 1996, or HIPAA, which created additional
federal criminal statutes that prohibit a person from knowingly and willfully executing or attempting to
execute a scheme or from making false or fraudulent statements to defraud any healthcare benefit program,
regardless of the payor (e.g., public or private);
● HIPAA, as amended by the Health Information Technology for Economic and Clinical Health Act, or
HITECH, and its implementing regulations, and as amended again by the final HIPAA omnibus rule,
Modifications to the HIPAA Privacy, Security, Enforcement, and Breach Notification Rules Under HITECH
and the Genetic Information Nondiscrimination Act; Other Modifications to HIPAA, published in January
2013, which imposes certain requirements relating to the privacy, security and transmission of individually
identifiable health information without appropriate authorization by entities subject to the rule, such as health
plans, health care clearinghouses and health care providers;
● federal transparency laws, including the federal Physician Payments Sunshine Act, which is part of the ACA,
that requires certain manufacturers of drugs, devices, biologics and medical supplies for which payment is
available under Medicare, Medicaid, or the Children’s Health Insurance Program, with specific exceptions, to
report annually to CMS information related to payments and other transfers of value provided to physicians
and teaching hospitals, and ownership and investment interests held by physicians and their immediate family
members, by the 90th day of each subsequent calendar year, and disclosure of such information is made by
CMS on a publicly available website; and
● state and/or foreign law equivalents of each of the above federal laws, such as state anti-kickback and false
claims laws that may apply to arrangements and claims involving health care items or services reimbursed by
non-governmental third-party payors; state laws that require drug manufacturers to report information related
to payments and other transfers of value to physicians and other healthcare providers or marketing
expenditures; state laws that require pharmaceutical companies to comply with the pharmaceutical industry’s
voluntary compliance guidelines and the relevant compliance guidance promulgated by the federal
government; and state and foreign laws governing the privacy and security of health information in certain
circumstances, many of which differ from each other in significant ways and may not have the same effect,
thus complicating compliance efforts in certain circumstances, such as specific disease states.
Because of the breadth of these laws and the narrowness of the statutory exceptions and safe harbors available, it
is possible that some of our business activities could be subject to challenge under one or more of such laws. If our
operations are found to be in violation of any of the laws described above or any other government regulations that apply to
us, we may be subject to penalties, including civil and criminal penalties, damages, fines, exclusion from participation in
government health care programs, such as Medicare and Medicaid, disgorgement, contractual damages, reputational harm,
diminished profits and future earnings, imprisonment and the curtailment or restructuring of our operations, any of which
could adversely affect our ability to operate our business and our results of operations.
The provision of benefits or advantages to physicians to induce or encourage the prescription, recommendation,
endorsement, purchase, supply, order or use of medicinal products is prohibited in the European Union. The provision of
benefits or advantages to physicians is also governed by the national anti-bribery laws of European Union Member States,
such as the UK Bribery Act 2010. Infringement of these laws could result in substantial fines and imprisonment.
Payments made to physicians in certain European Union Member States must be publicly disclosed. Moreover,
agreements with physicians often must be the subject of prior notification and approval by the physician’s employer, his
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or her competent professional organization and/or the regulatory authorities of the individual European Union Member
States. These requirements are provided in the national laws, industry codes or professional codes of conduct, applicable in
the European Union Member States. Failure to comply with these requirements could result in reputational risk, public
reprimands, administrative penalties, fines or imprisonment.
The collection, use, disclosure, transfer, or other processing of personal data regarding individuals in the European
Union, including personal health data, is subject to the European Union General Data Protection Regulation, or the GDPR,
which became effective on May 25, 2018. The GDPR is wide-ranging in scope and imposes numerous requirements on
companies that process personal data, including requirements relating to processing health and other sensitive data,
obtaining consent of the individuals to whom the personal data relates, providing information to individuals regarding data
processing activities, implementing safeguards to protect the security and confidentiality of personal data, providing
notification of data breaches, and taking certain measures when engaging third-party processors. The GDPR also imposes
strict rules on the transfer of personal data to countries outside the European Union, including the United States, and
permits data protection authorities to impose large penalties for violations of the GDPR, including potential fines of up to
€20 million or 4% of annual global revenues, whichever is greater. The GDPR also confers a private right of action on data
subjects and consumer associations to lodge complaints with supervisory authorities, seek judicial remedies, and obtain
compensation for damages resulting from violations of the GDPR. Compliance with the GDPR has been and will continue
to be a rigorous and time-intensive process that has increased and will continue to increase our cost of doing business or
require us to change our business practices, and despite those efforts, there is a risk that we or our collaborators may be
subject to fines and penalties, litigation, and reputational harm in connection with any European activities, which could
adversely affect our business, prospects, financial condition and results of operations.
Product liability lawsuits against us could cause us to incur substantial liabilities and could limit commercialization of
any product candidates that we may develop.
We face an inherent risk of product liability exposure related to the testing of our product candidates in clinical
trials and may face an even greater risk if we commercialize any products that we may develop. If we cannot successfully
defend ourselves against claims that our product candidates caused injuries, we could incur substantial liabilities.
Regardless of merit or eventual outcome, liability claims may result in:
● decreased demand for any product candidates that we may develop;
● loss of revenue;
● substantial monetary awards to trial participants or patients;
● significant time and costs to defend the related litigation;
● withdrawal of clinical trial participants;
● the inability to commercialize any product candidates that we may develop; and
● injury to our reputation and significant negative media attention.
Although we maintain product liability insurance coverage in the amount of $1.0 million per occurrence and
$2.0 million in the aggregate, and clinical testing liability insurance in the amount of $10.0 million per occurrence and
$10.0 million in the aggregate, this insurance may not be adequate to cover all liabilities that we may incur. We anticipate
that we will need to increase our insurance coverage each time we commence a clinical trial and if we successfully
commercialize any product candidate. Insurance coverage is increasingly expensive. We may not be able to maintain
insurance coverage at a reasonable cost or in an amount adequate to satisfy any liability that may arise.
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If we, our collaborators, or any third-party manufacturers engaged by us or our collaborators fail to comply with
environmental, health and safety laws and regulations, we could become subject to fines or penalties or incur costs that
could harm our business.
We, our collaborators, and any third-party manufacturers we engage are subject to numerous environmental,
health and safety laws and regulations, including those governing laboratory procedures and the generation, handling, use,
storage, treatment, manufacture, transportation and disposal of, and exposure to, hazardous materials and wastes, as well as
laws and regulations relating to occupational health and safety. Our operations involve the use of hazardous and flammable
materials, including chemicals and biologic and radioactive materials. Our operations also produce hazardous waste
products. We generally contract with third parties for the disposal of these materials and wastes. We cannot eliminate the
risk of contamination or injury from these materials. In the event of contamination or injury resulting from our use of
hazardous materials or from any other work-related injuries, we could be held liable for any resulting damages, and any
liability could exceed our resources. We also could incur significant costs associated with civil or criminal fines and
penalties.
Although we maintain general liability insurance and workers’ compensation insurance for certain costs and
expenses we may incur due to injuries to our employees resulting from the use of hazardous materials or other work-related
injuries, this insurance may not provide adequate coverage against potential liabilities. We do not maintain insurance for
environmental liability or toxic tort claims that may be asserted against us in connection with our storage or disposal of
biologic, hazardous or radioactive materials.
In addition, we may incur substantial costs in order to comply with current or future environmental, health and
safety laws and regulations, which have tended to become more stringent over time. These current or future laws and
regulations may impair our research, development or production efforts. Failure to comply with these laws and regulations
also may result in substantial fines, penalties or other sanctions or liabilities, which could harm our business, financial
condition, results of operations and prospects.
Further, with respect to the operations of any current or future collaborators or third-party contract manufacturers,
it is possible that if they fail to operate in compliance with applicable environmental, health and safety laws and regulations
or properly dispose of wastes associated with our products, we could be held liable for any resulting damages, suffer
reputational harm or experience a disruption in the manufacture and supply of our product candidates or products.
Unfavorable global economic conditions could adversely affect our business, financial condition or results of
operations.
Our results of operations could be adversely affected by general conditions in the global economy and in the
global financial markets. The most recent global financial crisis caused extreme volatility and disruptions in the capital and
credit markets. A severe or prolonged economic downturn, such as the most recent global financial crisis, could result in a
variety of risks to our business, including weakened demand for our product candidates and our ability to raise additional
capital when needed on acceptable terms, if at all. This is particularly true in the European Union, which is recovering from
a severe economic crisis. A weak or declining economy could strain our suppliers, possibly resulting in supply disruption,
or cause delays in payments for our services by third-party payors or our collaborators. Any of the foregoing could harm
our business and we cannot anticipate all of the ways in which the current economic climate and financial market
conditions could adversely impact our business.
A widespread outbreak of an illness or other health issue could significantly disrupt our operations. The current
coronavirus disease 2019 (COVID-19) pandemic and the response to it have had, and we expect they will continue to
have, an adverse effect on our business, operations, and future results.
Health issues such as epidemics or other medical emergencies outside of our control could significantly disrupt
our operations and negatively impact our business.
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In December 2019, a novel strain of coronavirus called severe acute respiratory syndrome coronavirus 2, also
referred to as SARS-CoV-2, which causes the coronavirus disease 2019, also referred to as COVID-19, began to be
reported in China and other countries. The World Health Organization has declared the outbreak a pandemic and a global
public health emergency. In addition to those who have been directly affected, millions more have been affected by local
and national government efforts in the United States, the European Union and around the world to slow the spread of the
pandemic through quarantines, travel restrictions, heightened border scrutiny and other measures.
The COVID-19 pandemic continues to evolve rapidly. Our corporate headquarters is in Massachusetts, a state
particularly hard hit by the initial wave of the pandemic. We have and will continue to adhere to applicable guidelines and
safety measures including stay-at-home policies and the reporting of only essential personnel for business continuity to
ensure the safety of our employees, consultants, contractors, and staff. Certain of our clinical trial sites and collaboration
partners have experienced facility closures or been subject to quarantines, travel restrictions and other governmental
restrictions and have appropriately diverted attention and resources to respond to the impacts of COVID-19 on their own
operations and personnel. Some have even become involved in research and development efforts related to COVID-19.
Additionally, we have experienced, and may continue to experience, delays in services provided to us by CROs and third-
party manufacturers.
The current workplace safety measures that we have enacted in response to COVID-19 have required a reduction
in on-site activity at our facilities in Massachusetts, including in our laboratories in which preclinical experiments are
conducted. As a result, we have had to prioritize our preclinical experiments and terminate or delay some non-critical
experiments in order to maintain critical experiments for our preclinical programs. If these measures must be maintained
for an extended period of time, or if more restrictive workplace safety measures are recommended by federal and state
authorities, we may need to delay or terminate other preclinical experiments, including critical experiments for our
preclinical programs, which we expect could have a material adverse impact on our development and regulatory plans and
timelines for our preclinical programs. To the extent that any preclinical experiments impacted in this manner relate to a
collaboration program, our reimbursement revenues from collaborators for the relevant activities may decrease or be
delayed.
Additionally, prior to the FDA’s imposition of a clinical hold on the RESTORE-1 Phase 2 clinical trial, we
experienced a slower pace of enrollment in the clinical trial than we had expected because we and our collaboration partner
Neurocrine paused patient screening in April 2020 to evaluate, among other things, the safety of trial participants due to the
COVID-19 pandemic.
The extent to which COVID-19 ultimately impacts our business, financial condition, and results of operations will
depend on future developments such as the duration and scope of the pandemic and the response of policymakers,
businesses and individuals that are highly uncertain and cannot be accurately predicted. In the future, there may be other
material adverse impacts on our business and operations during the pandemic and once it subsides. Employees and other
key personnel could become ill, quarantined, or otherwise unable to work and/or travel due to health reasons or
governmental restrictions. Disruptions in the supply chain for personal protective equipment and other supplies critical for
laboratory operations and/or the maintenance of current or future workplace safety measures could limit our ability to
maintain business continuity. Regulators could be delayed in inspections, reviews, and approvals of product candidates
including INDs and BLAs. Quarantines and travel restrictions could impact the ability of our third-party manufacturers
and other suppliers to deliver clinical supplies or raw materials to us in a timely manner. Restrictions imposed on the
construction industry could cause delays in completing our current and contemplated construction projects, resulting in
program delays, cost increases and disruption to our current laboratory activities and general operations. Prolonged stay-at-
home policies and a distributed workforce could inhibit our ability to restore operations to pre-COVID-19 pandemic norms
and to attract, retain, and motivate qualified personnel, and consequently, to allow our operations to develop as anticipated
and to make our expected organizational growth more difficult. We are dedicating financial resources towards mitigating
operational adjustments arising from the COVID-19 pandemic. If we need to access the capital markets to address
requirements arising from the impacts of COVID-19 pandemic, there is no assurance that financing will be available on
attractive terms, if at all.
We will continue to monitor the issues raised by the global spread of COVID-19 and have put in place and will
continue to put in place measures as appropriate and necessary for, or that we believe to be in the best interest of, our
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business, employees, collaborators, stockholders, and the community. However, there is no assurance that the pandemic
will not have a material adverse impact on our business, operations, and future results.
Risks Related to the Commercialization of Our Product Candidates
The affected populations for our product candidates may be smaller than we or third parties currently project, which
may affect the addressable markets for our product candidates.
Our projections of the number of people who have the diseases we are seeking to treat, as well as the subset of
people with these diseases who have the potential to benefit from treatment with our product candidates, are estimates
based on our knowledge and understanding of these diseases. The total addressable market opportunity for our product
candidates will ultimately depend upon a number of factors including the diagnosis and treatment criteria included in the
final label, if approved for sale in specified indications, acceptance by the medical community, patient access and product
pricing and reimbursement. Prevalence estimates are frequently based on information and assumptions that are not exact
and may not be appropriate, and the methodology is forward-looking and speculative. The process we have used in
developing an estimated prevalence range for the indications we are targeting has involved collating limited data from
multiple sources. While we believe these sources are reliable, we have not independently verified the data. Accordingly, the
prevalence estimates included in our periodic reports and other reports filed with or furnished to the Securities and
Exchange Commission, or SEC, should be viewed with caution. Further, the data and statistical information used in such
reports, including estimates derived from them, may differ from information and estimates made by our competitors or
from current or future studies conducted by independent sources.
The use of such data involves risks and uncertainties, and such data is subject to change based on various factors.
Our estimates may prove to be incorrect and new studies may change the estimated incidence or prevalence of the diseases
we seek to address. The number of patients with the diseases we are targeting in the United States, the European Union and
elsewhere may turn out to be lower than expected or may not be otherwise amenable to treatment with our products, or new
patients may become increasingly difficult to identify or access, all of which would harm our results of operations and our
business. Additionally, because some patients with the diseases we are targeting in the United States, the European Union,
and elsewhere may have increased susceptibility to COVID-19, the COVID-19 pandemic could limit the number of
patients willing to participate in clinical trials related to our products or amenable to treatment with our products, which
would harm our results of operations and our business.
If we are unable to establish sales, medical affairs and marketing capabilities or enter into agreements with third parties
to market and sell our product candidates, we may be unable to generate any product revenue.
To successfully commercialize any products that may result from our clinical development programs, we will need
to further develop these capabilities, either on our own or with others. The establishment and development of our own
commercial team or the establishment of a contract sales force to market any products we may develop will be expensive
and time-consuming and could delay any product launch. Moreover, we cannot be certain that we will be able to
successfully develop this capability.
Under the Neurocrine Collaboration Agreement, Neurocrine agreed to fund the clinical development through the
readout of the RESTORE-1 Phase 2 clinical trial for VY-AADC (NBIb-1817). If Neurocrine had not terminated the
Neurocrine Collaboration Agreement with respect to VY-AADC (NBIb-1817), after the data readout of the RESTORE-1
Phase 2 clinical trial, we would have had the option to either: (1) co-commercialize VY-AADC (NBIb-1817) with
Neurocrine in the United States under a 50/50 cost- and profit-sharing arrangement and receive milestones and royalties
based on ex-U.S. sales, or (2) retain the right to receive milestone payments and royalties based on global sales pursuant to
the full global commercial rights granted to Neurocrine. Under the terms of the Neurocrine Collaboration Agreement for
the FA Program, Neurocrine has agreed to fund the development through the Phase 1 clinical trial of VY-FXN01. After the
data readout of the Phase 1 clinical trial, we have the option to either: (1) co-commercialize VY-FXN01 with Neurocrine in
the United States under a 60/40 cost- and profit-sharing arrangement, or (2) retain the right to receive milestone payments
and royalties based on global sales pursuant to the full global commercial rights granted to Neurocrine.
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In the future, we may seek to enter into collaborations regarding other of our product candidates with other entities
to utilize their established marketing and distribution capabilities, but we may be unable to enter into such agreements on
favorable terms, if at all. If any current or future collaborators do not commit sufficient resources to 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 companies that currently have extensive, experienced and
well-funded 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. We might face unforeseen costs and expenses associated with creating an independent sales and marketing
organization. Our sales personnel might also face difficulties obtaining access to physicians or being able to persuade
adequate numbers of physicians to use or prescribe our products or selling our products if we lack complementary products,
which could disadvantage us compared to companies with more extensive product lines. Without an internal team or the
support of a third party to perform marketing and sales functions, we may be unable to compete successfully against these
more established companies.
Our efforts to educate the medical community and third-party payors on the benefits of our product candidates
may require significant resources and may never be successful. Such efforts may require more resources than are typically
required due to the complexity and uniqueness of our potential products. If any of our product candidates is approved but
fails to achieve market acceptance among physicians, patients, or third-party payors, we will not be able to generate
significant revenues from such product, which could harm our business, financial condition, results of operations and
prospects.
The insurance coverage and reimbursement status of newly-approved products is uncertain. Failure to obtain or
maintain adequate coverage and reimbursement for our product candidates, if approved, could limit our ability to
market those products and decrease our ability to generate product revenue.
We expect the cost of a single administration of gene therapy products, such as those we are developing, to be
substantial, when and if they receive regulatory approval. We expect that coverage and reimbursement by government and
private payors will be essential for most patients to be able to afford these treatments. Accordingly, sales of our product
candidates will depend substantially, both domestically and abroad, on the extent to which the costs of our product
candidates will be paid by health maintenance, managed care, pharmacy benefit and similar healthcare management
organizations, or will be reimbursed by government authorities, private health coverage insurers and other third-party
payors. Coverage and reimbursement by a third-party payor may depend upon several factors, including the third-party
payor’s determination that use of a product is:
● a covered benefit under its health plan;
● safe, effective and medically necessary;
● appropriate for the specific patient and the indication;
● convenient and easy-to-administer compared to alternative treatments;
● cost-effective compared to alternative treatments; and
● neither experimental nor investigational.
No uniform policy requirement for coverage and reimbursement for biopharmaceutical products exists among
third-party payors. Therefore, coverage and reimbursement for such products can differ significantly from payor to payor.
As a result, obtaining coverage and reimbursement for a product from third-party payors is a time-consuming and costly
process that could require us to provide to each different payor supporting scientific, clinical and cost-effectiveness data,
and to receive the support of medical associations and technology assessment committees. We may not be able to provide
data sufficient to gain acceptance with respect to coverage and reimbursement. If coverage and reimbursement are not
available, or are available only at limited levels, we may not be able to successfully commercialize our product candidates.
Even if coverage is provided, the approved reimbursement amount may not be adequate to realize a sufficient return on our
investment including our research, development, manufacture, sales, and
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distribution expenses. Interim reimbursement levels for new drugs, if applicable, may also not be sufficient to cover our
costs and may not be made permanent. Reimbursement rates may vary according to the use of the drug and the clinical
setting in which it is used, may be based on reimbursement levels already set for lower cost drugs and may be incorporated
into existing payments for other services. Assuming we obtain coverage for a given product by a third-party payor, the
resulting reimbursement payment rates may not be adequate or may require co-payments that patients find unacceptably
high. Patients who are prescribed medications for the treatment of their conditions, and their prescribing physicians,
generally rely on third-party payors to reimburse all or part of the costs associated with their prescription drugs. Patients are
unlikely to use our products unless coverage is provided and reimbursement is adequate to cover all or a significant portion
of the cost of our products. Therefore, coverage and adequate reimbursement are critical to new product acceptance.
Additionally, there may be significant delays in obtaining coverage and reimbursement for newly approved drugs and
biologics, and coverage may be more limited than the purposes for which the drug is approved by the FDA or comparable
foreign regulatory authorities.
There is significant uncertainty related to third-party coverage and reimbursement of newly approved products. In
the United States, third-party payors, including government payors such as the Medicare and Medicaid programs, play an
important role in determining the extent to which new drugs and biologics will be covered and reimbursed. The Medicare
and Medicaid programs increasingly are used as models for how private payors and government payors develop their
coverage and reimbursement policies. A primary trend in the U.S. healthcare industry and elsewhere is cost containment.
Government authorities and third-party payors have attempted to control costs by limiting coverage and the amount of
reimbursement for particular medications. Increasingly, third-party payors are requiring that drug companies provide them
with predetermined discounts from list prices and are challenging the prices charged for medical products.
The CMS is responsible for determining whether a product should be approved for coverage and reimbursement
under the Medicare program. It is difficult to predict what CMS will decide with respect to coverage and reimbursement for
novel products such as ours, as there is no body of established practices and precedents for these types of products.
Currently, no gene therapy product has been approved for coverage and reimbursement by the CMS. Moreover,
reimbursement agencies in the European Union may be more conservative than CMS. For example, several cancer drugs
have been approved for reimbursement in the United States and have not been approved for reimbursement in certain
European Union Member States. It is difficult to predict what third-party payors will decide with respect to the coverage
and reimbursement for our product candidates, especially given that the cost of our product candidates is likely to be very
high and pricing of such products is highly uncertain.
Outside the United States, international operations generally are subject to extensive government price controls
and other market regulations, and increasing emphasis on cost-containment initiatives in the European Union, Canada and
other countries may put pricing pressure on us. In many countries, the prices of medical products are subject to varying
price control mechanisms as part of national health systems. In general, the prices of medicines under such systems are
substantially lower than in the United States. Other countries allow companies to fix their own prices for medical products,
but monitor and control company profits. Additional foreign price controls or other changes in pricing regulation could
restrict the amount that we are able to charge for our product candidates. Accordingly, in markets outside the United States,
the reimbursement for our products may be reduced compared with the United States and may be insufficient to generate
commercially reasonable product revenues.
Moreover, increasing efforts by government and third-party payors in the United States and abroad to cap or
reduce healthcare costs may cause such organizations to limit both coverage and the level of reimbursement for new
products approved and, as a result, they may not cover or provide adequate payment for our product candidates. Payors
increasingly are considering new metrics as the basis for reimbursement rates, such as average sales price, or ASP, average
manufacturer price, or AMP, and Actual Acquisition Cost. The existing data for reimbursement based on some of these
metrics is relatively limited, although certain states have begun to survey acquisition cost data for the purpose of setting
Medicaid reimbursement rates, and CMS has begun making pharmacy National Average Drug Acquisition Cost and
National Average Retail Price data publicly available on at least a monthly basis. The regulations that govern marketing
approvals, pricing, coverage and reimbursement for new drug and device products vary widely from country to country.
Current and future legislation may significantly change the approval requirements in ways that could involve additional
costs and cause delays in obtaining approvals. Some countries require approval of the sale price of a drug before it can be
marketed. In many countries, the pricing review period begins after marketing or product licensing
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approval is granted. In some foreign markets, prescription pharmaceutical pricing remains subject to continuing
governmental control even after initial approval is granted. As a result, we might obtain marketing approval for a product in
a particular country, but then be subject to price regulations that delay our commercial launch of the product, possibly for
lengthy time periods, and negatively impact the revenues we are able to generate from the sale of the product in that
country. To obtain reimbursement or pricing approval in some countries, we may be required to conduct a clinical trial that
compares the cost-effectiveness of our product candidate to other available therapies. Adverse pricing limitations may
hinder our ability to recoup our investment in one or more product candidates, even if our product candidates obtain
marketing approval.
Therefore, it is difficult to project the impact of these evolving reimbursement metrics on the willingness of payors
to cover candidate products that we or our partners are able to commercialize. We expect to experience pricing pressures in
connection with the sale of any of our product candidates due to the trend toward managed healthcare, the increasing
influence of health maintenance organizations and additional legislative changes. The downward pressure on healthcare
costs in general, particularly prescription drugs and surgical procedures and other treatments, has become intense. As a
result, increasingly high barriers are being erected to the entry of new products such as ours.
The commercial success of any of our product candidates will depend upon its degree of market acceptance by
physicians, patients, third-party payors and others in the medical community.
Ethical, social and legal concerns about gene therapy could result in additional regulations restricting or
prohibiting our products. Even with the requisite approvals from the FDA in the United States, EMA in the European
Union and other regulatory authorities internationally, the commercial success of our product candidates will depend, in
part, on the support and acceptance of medical associations and technology assessment committees, physicians, patients
and health care payors of gene therapy products in general, and our product candidates in particular, as medically necessary,
cost-effective and safe. Any product that we commercialize may not gain acceptance by physicians, patients, health care
payors and others in the medical community. If these products do not achieve an adequate level of acceptance, we may not
generate significant product revenue and may not become profitable. The degree of market acceptance of gene therapy
products and, in particular, our product candidates, if approved for commercial sale, will depend on several factors,
including:
● the efficacy and safety of such product candidates as demonstrated in clinical trials;
● the potential and perceived advantages of product candidates over alternative treatments;
● the cost of treatment relative to alternative treatments;
● the clinical indications for which the product candidate is approved by the FDA or the European
Commission, or other regulatory authorities;
● patient awareness of, and willingness to seek, genotyping;
● the willingness of physicians to prescribe new therapies;
● the willingness of physicians to undergo specialized training with respect to administration of our product
candidates;
● the willingness of the target patient population to try new therapies;
● the prevalence and severity of any side effects;
● product labeling or product insert requirements of the FDA, EMA or other regulatory authorities, including
any limitations or warnings contained in a product’s approved labeling or restrictions on the use of our
products together with other medications;
● relative convenience and ease of administration;
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● the strength of marketing and distribution support;
● the timing of market introduction of competitive products;
● publicity concerning our products or competing products and treatments; and
● sufficient third-party payor coverage and reimbursement.
Even if a potential product displays a favorable efficacy and safety profile in preclinical studies and clinical trials,
market acceptance of the product will not be fully known until after it is launched.
Our gene therapy approach utilizes vectors derived from viruses, which may be perceived as unsafe or may result in
unforeseen adverse events. Negative public opinion and increased regulatory scrutiny of gene therapy may damage
public perception of the safety of our product candidates and adversely affect our ability to conduct our business or
obtain regulatory approvals for our product candidates.
Gene therapy remains a novel technology, with few gene therapy products approved to date in the United States
and the European Union. Public perception may be influenced by claims that gene therapy is unsafe, and gene therapy may
not gain the acceptance of the public or the medical community. Medical events such as the COVID-19 pandemic that
emphasize harmful effects of certain viruses could also indirectly foster negative public perception of virus-based therapies.
In particular, our success will depend upon physicians who specialize in the treatment of genetic diseases targeted by our
product candidates, prescribing treatments that involve the use of our product candidates in lieu of, or in addition to,
existing treatments with which they are familiar and for which greater clinical data may be available. More restrictive
government regulations or negative public opinion would have an adverse effect on our business, financial condition,
results of operations and prospects and may delay or impair the development and commercialization of our product
candidates or demand for any products we may develop.
For example, earlier gene therapy trials led to several well-publicized adverse events, including cases of leukemia
and death seen in other trials using non-AAV gene therapy vectors. Adverse events and SAEs in our clinical trials such as
the MRI abnormalities detected in some patients dosed in the RESTORE-1 Phase 2 clinical trial, or other clinical trials
involving gene therapy products or our competitors’ products, even if not ultimately attributable to the relevant product
candidates, and the resulting publicity, could result in increased government regulation, unfavorable public perception,
potential regulatory delays in the testing or approval of our product candidates, stricter labeling requirements for those
product candidates that are approved and a decrease in demand for any such product candidates.
If we obtain approval to commercialize our product candidates outside of the United States, in particular in the United
Kingdom or European Union, a variety of risks associated with international operations could harm our business.
We expect that we will be subject to additional risks in commercializing our product candidates outside the United
States, including:
● different regulatory requirements for approval of drugs and biologics in foreign countries;
● reduced or loss of protection under our intellectual property rights;
● unexpected changes in tariffs, trade barriers and regulatory requirements;
● economic weakness, including inflation, or political instability in particular foreign economies and markets;
● compliance with tax, employment, immigration and labor laws for employees living or traveling abroad;
● foreign currency fluctuations, which could result in increased operating expenses and reduced revenues, and
other obligations incident to doing business in another country;
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● workforce uncertainty in countries where labor unrest is more common than in the United States;
● shortages resulting from any events affecting raw material supply or manufacturing capabilities abroad;
● business interruptions resulting from geopolitical actions, including war and terrorism; natural disasters
including earthquakes, typhoons, floods and fires; or economic or political instability; and
● greater difficulty with enforcing our contracts in jurisdictions outside of the United States.
We must dedicate additional resources to comply with numerous laws and regulations in each jurisdiction in which
we plan to operate. The Foreign Corrupt Practices Act, or FCPA, prohibits any U.S. individual or business from paying,
offering, authorizing payment or offering anything of value, directly or indirectly, to any foreign official, political party or
candidate for the purpose of influencing any act or decision of the foreign entity in order to assist the individual or business
in obtaining or retaining business. The FCPA also obligates companies whose securities are listed in the United States to
comply with certain accounting provisions requiring the company to maintain books and records that accurately and fairly
reflect all transactions of the corporation, including international subsidiaries, and to devise and maintain an adequate
system of internal accounting controls for international operations.
Compliance with the FCPA is expensive and difficult, particularly in countries in which corruption is a recognized
problem. In many foreign countries, it is common for others to engage in business practices that are prohibited by U.S. laws
and regulations applicable to us, including the FCPA. In addition, the FCPA presents particular challenges in the
pharmaceutical industry because, in many countries, hospitals are operated by the government, and doctors and other
hospital employees are considered foreign officials. Certain payments to hospitals in connection with clinical trials and
other work have been deemed to be improper payments to government officials and have led to FCPA enforcement actions.
Various laws, regulations and executive orders also restrict the use and dissemination outside of the United States,
or the sharing with certain non-U.S. nationals, of information classified for national security purposes, as well as certain
products and technical data relating to those products. If we expand our presence outside of the United States, it will
require us to dedicate additional resources to comply with these laws, and these laws may preclude us from developing,
manufacturing, or selling certain products and product candidates outside of the United States, which could limit our
growth potential and increase our development costs.
The failure to comply with laws governing international business practices may result in substantial civil and
criminal penalties and suspension or debarment from government contracting. The SEC also may suspend or bar issuers
from trading securities on U.S. exchanges for violations of the FCPA’s accounting provisions. Although we expect to
implement policies and procedures designed to comply with these laws and policies, there can be no assurance that our
employees, contractors and agents will comply with these laws and policies. If we are unable to successfully manage the
challenges of international expansion and operations, our business and operating results could be harmed.
Risks Related to Our Intellectual Property
Our rights to develop and commercialize our product candidates are subject to, in part, the terms and conditions of
licenses granted to us by others.
We are reliant upon licenses to certain patent rights and proprietary technology from third parties that are
important or necessary to the development of our technology and products, including technology related to our
manufacturing process and our product candidates. These and other licenses may not provide exclusive rights to use such
intellectual property and technology in all relevant fields of use and in all territories in which we may wish to develop or
commercialize our technology and products in the future. As a result, we may not be able to prevent competitors from
developing and commercializing competitive products in territories included in all of our licenses. These licenses may also
require us to grant back certain rights to licensors and to pay certain amounts relating to sublicensing patent and other
rights under the agreement.
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In some circumstances, particularly in-licenses with academic institutions, we may not have the right to control
the preparation, filing and prosecution of patent applications, or to maintain, enforce or defend the patents, covering
technology that we license from third parties. Therefore, we cannot be certain that these patents and applications will be
prosecuted, maintained and enforced in a manner consistent with the best interests of our business. If our licensors fail to
maintain such patents, or lose rights to those patents or patent applications, the rights we have licensed may be reduced or
eliminated and our right to develop and commercialize any of our products that are the subject of such licensed rights could
be adversely affected. In certain circumstances, we have or may license technology from third parties on a non-exclusive
basis. In such instances, other licensees may have the right to enforce our licensed patents in their respective fields, without
our oversight or control. Those other licensees may choose to enforce our licensed patents in a way that harms our interest,
for example, by advocating for claim interpretations or agreeing on invalidity positions that conflict with our positions or
our interest. In addition to the foregoing, the risks associated with patent rights that we license from third parties will also
apply to patent rights we own or may own in the future.
Further, in many of our license agreements we are responsible for bringing any actions against any third party for
infringing on the patents we have licensed. Certain of our license agreements also require us to meet development
thresholds to maintain the license, including establishing a set timeline for developing and commercializing products and
minimum yearly diligence obligations in developing and commercializing the product. Certain of our license agreements
contain “no challenge” clauses which preclude and prevent us from taking any action to limit or narrow the intellectual
property of a licensor. In some cases, these limitations extend to any intellectual property of our licensor and not just that
which is licensed to us. Such constraints may limit our ability to develop or commercialize products or to expand such
efforts beyond the scope of any license. Disputes may arise regarding intellectual property subject to a licensing agreement,
including:
● the scope of rights granted under the license agreement and other interpretation-related issues;
● the extent to which our technology and processes infringe on intellectual property of the licensor that is not
subject to the licensing agreement;
● the sublicensing of patent and other rights under our collaborative development relationships;
● our diligence obligations under the license agreement and what activities satisfy those diligence obligations;
● the inventorship or ownership of inventions and know-how resulting from the creation or use of intellectual
property by our licensors and us and our partners; and
● the priority of invention of patented technology.
If disputes over intellectual property that we have licensed prevent or impair our ability to maintain our current
licensing arrangements on acceptable terms, we may be unable to successfully develop and commercialize the affected
product candidates.
If we fail to comply with our obligations under these license agreements, or we are subject to a bankruptcy, the
licensor may have the right to terminate the license, in which event we would not be able to develop, manufacture, or
market products covered by the license or may face other penalties under the agreements. Termination of any of our
agreements involving intellectual property or reduction or elimination of our rights under these agreements may result in
our having to negotiate new or reinstated agreements with less favorable terms or cause us to lose our rights under these
agreements, including our rights to important intellectual property or technology. Termination may also result in
unfavorable terms associated with such termination or may result in obligations on our part to license or grant back
intellectual property rights to prior licensors.
Furthermore, the research resulting in certain of our licensed patent rights and technology was funded by the U.S.
government. As a result, the government may have certain rights, or march-in rights, to such patent rights and technology.
When new technologies are developed with U.S. government funding, the U.S. government generally obtains certain rights
in any resulting patents, including a non-exclusive, royalty-free license authorizing the U.S.
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government, or a third party on its behalf, to use the invention for non-commercial purposes. These rights may permit the
government to disclose our confidential information to third parties and to exercise march-in rights to use or allow third
parties to use our licensed technology. The U.S. government can exercise its march-in rights if it determines that action is
necessary because we fail to achieve practical application of the government-funded technology, because action is
necessary to alleviate health or safety needs, to meet requirements of federal regulations or to give preference to U.S.
industry. In addition, our rights in such inventions may be subject to certain requirements to manufacture products
embodying such inventions in the United States. Any exercise by the government, or a third party on its behalf, of such
rights could harm our competitive position, business, financial condition, results of operations and prospects.
If we are unable to obtain and maintain patent protection for our products and technology, or if the scope of the patent
protection obtained is not of sufficient breadth, our competitors could develop and commercialize products and
technology similar or identical to ours, and our ability to successfully commercialize our products and technology may
be adversely affected.
Our success depends, in large part, on our and our licensors’ ability to obtain and maintain patent protection in the
United States and other countries with respect to our product candidates and manufacturing technology. We and our
licensors have sought, and we intend to seek in the future, to protect our proprietary position by filing patent applications in
the United States and abroad related to many of our technologies and product candidates that are important to our business.
The patent prosecution process is expensive, time-consuming and complex, and we may not have and may not in
the future be able to file, prosecute, maintain, enforce, defend or license all necessary or desirable patent applications in
some or all relevant jurisdictions at a reasonable cost or in a timely manner. For example, in some cases, the work of certain
academic researchers in the gene therapy field has entered the public domain, which may compromise our ability to obtain
patent protection for certain inventions related to or building upon such prior work. Consequently, we may not be able to
obtain any such patents to prevent others from using our technology for, and developing and marketing competing products
to treat, these indications. It is also possible that we will fail to identify patentable aspects of our research and development
output before it is too late to obtain patent protection. In some cases, we may be able to obtain patent protection, but such
protections may expire before we commercialize the product protected by those rights, leaving us no meaningful protection
for our products. In other cases, where our intellectual property is being managed by a third-party collaborator, licensee or
partner, that third party may fail to act diligently in prosecuting, maintaining, defending or enforcing our patents. Such
conduct may result in the failure to maintain or obtain protections, loss of rights, loss of patent term or, in cases where a
third party has acted negligently or inequitably, patents being found unenforceable.
The patent position of biotechnology and pharmaceutical companies generally is highly uncertain, involves
complex legal and factual questions and has, in recent years, been the subject of much litigation. As a result, the issuance,
scope, validity, enforceability and commercial value of our and our licensors’ patent rights are highly uncertain. Our
pending and future patent applications may not result in patents being issued which protect our technology or product
candidates or which effectively prevent others from commercializing competitive technologies and product candidates. In
particular, during prosecution of any patent application, the issuance of any patents based on the application may depend
upon our ability to generate additional preclinical or clinical data that support the patentability of our proposed claims. We
may not be able to generate sufficient additional data on a timely basis, or at all. Changes in either the patent laws or
interpretation of the patent laws in the United States and other countries may diminish the value, narrow the scope, or
eliminate the enforceability of our and our licensors’ patent protection.
We may not be aware of all third-party intellectual property rights potentially relating to our product candidates.
Publications of discoveries in the scientific literature often lag behind the actual discoveries, and patent applications in the
United States and other jurisdictions are typically not published until 18 months after filing or, in some cases, only upon
issuance or not at all. Therefore, we cannot be certain that we, or a licensor, were the first to make the inventions claimed in
any owned or any licensed patents or pending patent applications, respectively, or which entity was the first to file for
patent protection until such patent application publishes or issues as a patent. Databases for patents and publications, and
methods for searching them, are inherently limited, so it is not practical to review and know the full
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scope of all issued and pending patent applications. As a result, the issuance, scope, validity, enforceability, and
commercial value of our and our licensed patent rights are uncertain.
Even if the patent applications we license or may own in the future do issue as patents, they may not issue in a
form that will provide us with any meaningful protection, prevent competitors or other third parties from competing with us
or otherwise provide us with any competitive advantage. Our competitors or other third parties may be able to circumvent
our patents by developing similar or alternative technologies or products in a non-infringing manner.
In spite of a legal presumption of validity, the issuance of a patent is not conclusive as to its inventorship,
ownership, scope, validity, or enforceability which may be challenged in the courts and patent offices in the United States
and abroad. Such challenges may result in loss of exclusivity or in patent claims being narrowed, invalidated or held
unenforceable, which could limit our ability to stop others from using or commercializing similar or identical technology
and products, or limit the duration of the patent protection of our technology and product candidates. Given the amount of
time required for the development, testing and regulatory review of new product candidates, patents protecting such
candidates might expire before or shortly after such candidates are commercialized. As a result, our intellectual property
may not provide us with sufficient rights to exclude others from commercializing products similar or identical to ours.
Our intellectual property licenses with third parties may be subject to disagreements over contract interpretation, which
could narrow the scope of our rights to the relevant intellectual property or technology, resulting in termination of our
access to such intellectual property, or increase our financial or other obligations to our licensors.
The agreements under which we currently license intellectual property or technology from third parties are
complex, and certain provisions in such agreements may be susceptible to multiple interpretations. The resolution of any
contract interpretation disagreement that may arise could narrow what we believe to be the scope of our rights to the
relevant intellectual property or technology, result in loss of access, or increase what we believe to be our financial or other
obligations under the relevant agreement, any of which could harm our business, financial condition, results of operations
and prospects.
We may not be successful in obtaining necessary rights to our product candidates through acquisitions and in-licenses.
We currently have rights to certain intellectual property, through licenses from third parties, to develop our product
candidates. Because our programs may require the use of proprietary rights held by third parties, the growth of our business
likely will depend, in part, on our ability to acquire, in-license or use these proprietary rights. We may be unable to acquire
or in-license any compositions, methods of use, processes or other intellectual property rights from third parties that we
identify as necessary for our product candidates. The licensing or acquisition of third-party intellectual property rights is a
competitive area, and several more established companies may pursue strategies to license or acquire third-party
intellectual property rights that we may consider attractive. These established companies may have a competitive advantage
over us due to their size, capital resources and greater clinical or technical development and commercialization capabilities.
In addition, companies that perceive us to be a competitor may be unwilling to assign or license rights to us. We also may
be unable to license or acquire third-party intellectual property rights on terms that would allow us to make an appropriate
return on our investment.
We currently co-own certain intellectual property rights with one or more third parties. We may not be able to
obtain a license to the third parties’ interest such that we have exclusive access and control of such co-owned assets. In this
case, and depending on the jurisdiction of the patent filing, we may not be able to license, enforce, or exploit the co-owned
rights without the consent from, or an accounting to, the other co-owners.
We sometimes collaborate with non-profit and academic institutions to accelerate our preclinical research or
development under written agreements with these institutions. Typically, these institutions provide us with an option to
negotiate a license to any of the institution’s rights in technology resulting from the collaboration. Regardless of such
option, we may be unable to negotiate a license within the specified timeframe or under terms that are acceptable to us. If
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we are unable to do so, the institution may offer the intellectual property rights to other parties, potentially blocking our
ability to develop our program. We may also decide not to exercise an option to such institutional rights.
If we are unable to successfully obtain rights to required third-party intellectual property rights or maintain the
existing intellectual property rights we have, we may be required to expend significant time and resources to redesign our
product candidates or the methods for manufacturing them or to develop or license replacement technology, all of which
may not be feasible on a technical or commercial basis. If we are unable to do so, we may be unable to develop or
commercialize the affected product candidates, which could harm our business significantly.
Obtaining and maintaining our patent protection depends on compliance with various procedural, document
submission, fee payment and other requirements imposed by government patent agencies, and our patent protection
could be reduced or eliminated for non-compliance with these requirements.
Periodic maintenance fees, renewal fees, annuity fees and various other government fees on patents and/or
applications will be due to be paid to the United States Patent and Trademark Office, or USPTO, and various government
patent agencies outside of the United States over the lifetime of our licensed patents and/or applications and any patent
rights we may own in the future. We rely on our outside counsel or our licensing partners to pay these fees due to patent
agencies. The USPTO and various non-U.S. government patent agencies require compliance with several procedural,
documentary, fee payment and other similar provisions during the patent application process. We employ reputable law
firms and other professionals to help us comply and we are also dependent on our licensors to take the necessary action to
comply with these requirements with respect to our licensed intellectual property. In many cases, an inadvertent lapse can
be cured by payment of a late fee or by other means in accordance with the applicable rules. There are situations, however,
in which non-compliance can result in abandonment or lapse of the patent or patent application, resulting in partial or
complete loss of patent rights in the relevant jurisdiction, and may compromise the strength of other intellectual property in
our portfolio. In such an event, potential competitors might be able to enter the market and this circumstance could harm
our business.
On February 1, 2019 the government of Venezuela, in response to certain U.S. sanctions, began to require that
foreign entities pay all official fees, including patent fees (either for pending matters or new petitions), in PETRO, a
“cryptocurrency” created by the Nicolás Maduro administration in February 2018 as a way to collect U.S. dollars while
avoiding American financial sanctions issued under an Executive Order of President Trump on March 19, 2018. The
Executive Order banned transactions involving “any digital currency, digital coin, or digital token, that was issued by, for,
or on behalf of the Government of Venezuela on or after January 9, 2018.” The prohibition is applicable to any U.S. entity
unless exempted by license. We do not hold such a license and therefore may not be able to secure patents in Venezuela.
We may not be able to protect our intellectual property rights throughout the world.
Filing, prosecuting and defending patents on product candidates in all countries throughout the world would be
prohibitively expensive. Our intellectual property rights may vary from country to country and foreign protections could be
less extensive than those in the United States. In addition, the laws of some foreign countries do not protect intellectual
property rights to the same extent as federal and state laws in the United States. Consequently, we may not be able to
prevent third parties from practicing our inventions in all countries outside the United States, or from selling or importing
products made using our inventions in and into the United States or other jurisdictions. Competitors may use our
technologies in jurisdictions where we have not obtained patent protection to develop their own products and, further, may
export otherwise infringing products to territories where we have patent protection, but enforcement is not as strong as that
in the United States. These products may compete with our products and our patents or other intellectual property rights
may not be effective or sufficient to prevent them from competing.
Many companies have encountered significant problems in protecting and defending intellectual property rights in
foreign jurisdictions. The legal systems of certain countries, particularly certain developing countries, do not favor the
enforcement of patents, trade secrets and other intellectual property protection, particularly those relating to biotechnology
products or methods of treatment, which could make it difficult for us to stop the infringement of our patents or marketing
of competing products in violation of our proprietary rights generally. For example, an April 2014
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report from the Office of the United States Trade Representative identified a number of countries, including India and
China, where challenges to the procurement and enforcement of patent rights have been reported. Several countries,
including India and China, have been listed in the report every year since 1989. With Brexit, there is uncertainty associated
with obtaining, defending, and enforcing intellectual property rights in the United Kingdom. International treaties and
regulations promulgated as a result of this transition could impede or eliminate our ability to obtain or maintain meaningful
intellectual property rights in the United Kingdom. Proceedings to enforce our patent rights in foreign jurisdictions could
result in substantial costs and divert our efforts and attention from other aspects of our business, could put our patents at
risk of being invalidated or interpreted narrowly and our patent applications at risk of not issuing and could provoke third
parties to assert claims against us. We may not prevail in any lawsuits that we initiate, and the damages or other remedies
awarded, if any, may not be commercially meaningful. Accordingly, our efforts to enforce our intellectual property rights
around the world may be inadequate to obtain a significant commercial advantage from the intellectual property that we
develop or license.
Issued patents covering our technology or product candidates could be found invalid or unenforceable if challenged in
court. We may not be able to protect our trade secrets in court.
If one of our licensing partners or we initiate legal proceedings against a third party to enforce a patent covering
our technology or one of our product candidates, the defendant could counterclaim that the patent covering such technology
or product candidate is invalid or unenforceable. In patent litigation in the United States, defendant counterclaims alleging
invalidity or unenforceability are commonplace. Grounds for a validity challenge could be an alleged failure to meet any of
several statutory requirements, including lack of novelty, obviousness, lack of written description or non-enablement.
Grounds for an unenforceability assertion could be an allegation that an individual connected with prosecution of the
patent, including an inventor, an employee of the company, a collaborator or advisor, withheld information material to
patentability from the USPTO, or made a misleading statement, during prosecution. Third parties also may raise similar
claims before administrative bodies in the United States or abroad, even outside the context of litigation. Such mechanisms
include pre-issuance submissions, ex parte re-examination, post-grant review, inter partes review and equivalent
proceedings in foreign jurisdictions. Some of these mechanisms may even be exploited anonymously by third parties. Such
proceedings could result in the revocation or cancellation of or amendment to our patents in such a way that they no longer
cover our technology or product candidates. The outcome following legal assertions of invalidity and unenforceability is
unpredictable. With respect to the validity question, for example, we cannot be certain that there is no invalidating prior art,
of which the patent examiner and we or our licensing partners were unaware during prosecution. If a defendant were to
prevail on a legal assertion of invalidity or unenforceability, we could lose part or, all of the patent protection on one or
more of our product candidates or our supporting technology. Such a loss of patent protection could harm our business.
In addition to the protection afforded by patents, we rely on trade secret protection, nondisclosure, and
confidentiality agreements to protect proprietary know-how that is not patentable or that we elect not to patent, processes
for which patents are difficult to enforce and any other elements of our product candidate discovery and development
processes that involve proprietary know-how, information or technology that is not covered by patents. However, trade
secrets can be difficult to protect. Some courts inside and outside the United States are less willing or unwilling to protect
trade secrets. We seek to protect our proprietary technology and processes, in part, by entering into confidentiality
agreements with our employees, consultants, scientific advisors, collaborators, contractors, and other third parties. We
cannot guarantee that we have entered into such agreements with each party that may have or have had access to our trade
secrets or proprietary technology and processes. We also seek to preserve the integrity and confidentiality of our data and
trade secrets by maintaining physical security of our premises and physical and electronic security of our information
technology systems. While we have confidence in these individuals, organizations and systems, agreements or security
measures may be breached, and we may not have adequate remedies for any breach. In addition, our trade secrets may
otherwise become known or be independently discovered by competitors.
Third parties may initiate legal proceedings alleging that we are infringing their intellectual property rights, the
outcome of which would be uncertain and could harm our business.
Our commercial success depends upon our ability and the ability of our collaborators to develop, manufacture,
market and sell our product candidates and use our proprietary technologies without infringing the proprietary rights and
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intellectual property of third parties. The biotechnology and pharmaceutical industries are characterized by extensive and
complex litigation regarding patents and other intellectual property rights. We may become party to, or threatened with,
infringement litigation claims regarding our products and technology, including claims from competitors or from non-
practicing entities that have no relevant product revenue and against whom our own patent portfolio may have no deterrent
effect. Moreover, we may become party to, or be threatened with, adversarial proceedings or litigation regarding
intellectual property rights with respect to our product candidates and technology, including ex parte re-examination, post-
grant review and inter partes review before the USPTO or foreign patent offices. Third parties may assert infringement
claims against us based on existing patents or patents that may be granted in the future, regardless of the merit of the claim.
There is a risk that third parties may choose to engage in litigation with us to enforce or to otherwise assert their patent
rights against us. Even if we believe such claims are without merit, a court of competent jurisdiction could hold that these
third-party patents are valid, enforceable and infringed, which could adversely affect our ability to commercialize our
product candidates or any other of our product candidates or technologies covered by the asserted third-party patents. In
order to successfully challenge the validity of any such asserted third-party U.S. patent in federal court, we would need to
overcome a presumption of validity. As this burden is a high one requiring us to present clear and convincing evidence as
to the invalidity of any such U.S. patent claim, there is no assurance that a court of competent jurisdiction would invalidate
the claims of any such U.S. patent. Similar challenges exist in other jurisdictions. If we are found to infringe a third-party’s
valid and enforceable intellectual property rights, we could be required to obtain a license from such third-party to continue
developing, manufacturing and marketing our product candidates and technology. However, we may not be able to obtain
any required license on commercially reasonable terms or at all. Even if we were able to obtain a license, it could be non-
exclusive, thereby giving our competitors and other third parties access to the same technologies licensed to us, and it could
require us to make substantial licensing and royalty payments. We could be forced, including by court order, to cease
developing, manufacturing and commercializing the infringing technology or product candidates. In addition, we could be
found liable for monetary damages, including treble damages and attorneys’ fees, if we are found to have willfully
infringed a patent or other intellectual property right. A finding of infringement could prevent us from manufacturing and
commercializing our product candidates or force us to cease some of our business operations, which could harm our
business. In addition, we may be forced to redesign our product candidates, seek new regulatory approvals, and indemnify
third parties pursuant to contractual agreements. Claims that we have misappropriated the confidential information or trade
secrets of third parties could have a similar negative impact on our business, reputation, financial condition, results of
operations and prospects.
Intellectual property litigation could cause us to spend substantial resources and distract our personnel from their
normal responsibilities.
Competitors may infringe our intellectual property rights or the intellectual property rights of our licensing
partners, or we may be required to defend against claims of infringement. To counter infringement or unauthorized use
claims or to defend against claims of infringement can be expensive and time consuming. Even if resolved in our favor,
litigation or other legal proceedings relating to intellectual property claims may cause us to incur significant expenses and
could distract our technical and management personnel from their normal responsibilities. In addition, there could be public
announcements of the results of hearings, motions or other interim proceedings or developments. If securities analysts or
investors perceive these results to be negative, it could have a substantial adverse effect on the price of our common stock.
Such litigation or proceedings could substantially increase our operating losses and reduce the resources available for
development activities or any future sales, marketing or distribution activities. We may not have sufficient financial or
other resources to conduct such litigation or proceedings adequately. Some of our competitors may be able to sustain the
costs of such litigation or proceedings more effectively than we can because of their greater financial resources and more
mature and developed intellectual property portfolios. Uncertainties resulting from the initiation and continuation of patent
litigation or other proceedings could adversely affect our ability to compete in the marketplace.
We may be subject to damages resulting from claims asserting that our employees, consultants or advisors have
wrongfully used or disclosed alleged trade secrets of their current or former employers or from claims asserting
ownership of what we regard as our own intellectual property.
Many of our directors, employees, consultants, and advisors are currently, or were previously, employed at
universities or other biotechnology or pharmaceutical companies, including our competitors or potential competitors.
Although we try to ensure that these individuals do not use the proprietary information or know-how of others in their
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work for us, we may be subject to claims that these individuals or we have used or disclosed intellectual property, including
trade secrets or other proprietary information, of any such individual’s current or former employer. Litigation may be
necessary to defend against these claims. If we fail in defending any such claims, in addition to paying monetary damages,
we may lose valuable intellectual property rights or personnel. Even if we are successful in defending against such claims,
litigation could result in substantial costs and be a distraction to management.
In addition, while it is our policy to require our employees, consultants, advisors and contractors who may be
involved in the conception or development of intellectual property to execute agreements assigning such intellectual
property to us, we may be unsuccessful in executing such an agreement with each party who, in fact, conceives or develops
intellectual property that we regard as our own. The assignment of intellectual property rights may not be self-executing or
the assignment agreements may be breached, and we may be forced to bring claims against third parties, or defend claims
that they may bring against us, to determine the ownership of what we regard as our intellectual property.
If we fail in prosecuting or defending any such claims, in addition to paying monetary damages, we may lose
valuable intellectual property rights or personnel. Even if we are successful in prosecuting or defending against such
claims, litigation could result in substantial costs and be a distraction to management.
Changes in U.S. patent law could diminish the value of patents in general, thereby impairing our ability to protect our
products.
Patent reform legislation could increase the uncertainties and costs surrounding the prosecution of patent
applications and the enforcement or defense of issued patents. On September 16, 2011, the Leahy-Smith America Invents
Act, or the Leahy-Smith Act, was signed into law. The Leahy-Smith Act includes several significant changes to U.S. patent
law. These include provisions that affect the way patent applications are prosecuted and also may affect patent litigation.
These also include provisions that switched the United States from a “first-to-invent” system to a “first-inventor-to-file”
system, allow third-party submission of prior art to the USPTO during patent prosecution and set forth additional
procedures to attack the validity of a patent by the USPTO administered post grant proceedings. Under a first-inventor-to-
file system, assuming the other requirements for patentability are met, the first inventor to file a patent application
generally will be entitled to the patent on an invention regardless of whether another inventor had made the invention
earlier. The USPTO has promulgated regulations and procedures to govern administration of the Leahy-Smith Act, and
many of the substantive changes to patent law associated with the Leahy-Smith Act, and in particular, the first-inventor-to-
file provisions, became effective on March 16, 2013. The Leahy-Smith Act has resulted in an increased investment in filing
applications earlier, and consequently has increased the uncertainties and costs surrounding the prosecution of our patent
applications, and may increase the enforcement or defense of our issued patents, all of which could harm our business,
financial condition, results of operations and prospects.
The administrative tribunal created by the Leahy-Smith Act, known as the Patent Trial and Appeals Board, or
PTAB, may have an impact on the operation of our business in the future. For example, the initial results of patent
challenge proceedings before the PTAB since its inception in 2013 have resulted in the invalidation of many U.S. patent
claims. The availability of the PTAB as a lower-cost, faster and potentially more potent tribunal for challenging patents
could therefore increase the likelihood that our own licensed patents will be challenged, thereby increasing the uncertainties
and costs of maintaining and enforcing them. Moreover, if such challenges occur, we may not have the right to control the
defense. In certain situations, we may be required to rely on our licensor to consider our suggestions and to defend such
challenges, with the possibility that it may not do so in a way that best protects our interests.
We also may be subject to a third-party pre-issuance submission of prior art to the USPTO or become involved in
other contested proceedings such as opposition, derivation, reexamination, inter partes review, or post-grant review
proceedings challenging our patent rights or the patent rights of others. An adverse determination in any such submission,
proceeding or litigation could reduce the scope of, or invalidate, our patent rights, allow third parties to commercialize our
technology or products and compete directly with us, without payment to us, or result in our inability to manufacture or
commercialize products without infringing third-party patent rights. In addition, if the breadth or strength of protection
provided by our patents and patent applications is threatened, it could dissuade companies from collaborating with us to
license, develop or commercialize current or future products.
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The patent positions of companies engaged in the development and commercialization of biologics and
pharmaceuticals are particularly uncertain as the courts address issues such as patenting genes or gene products. Recent
guidance provided under Berkheimer v HP, Inc. (April 19, 2018) and Vanda Pharmaceuticals, Inc. v West-Ward
Pharmaceuticals (June 7, 2018) instruct USPTO examiners on the ramifications of the court rulings as applied to method of
treatment claims, natural products and principles including all naturally occurring nucleic acids. Patents for certain of our
product candidates contain claims related to specific DNA sequences that are naturally occurring and, therefore, could be
the subject of future challenges made by third parties. In addition, the recent USPTO guidance could make it impossible for
us to pursue similar patent claims in patent applications we may prosecute in the future.
We cannot assure you that our efforts to seek patent protection for our technology and products will not be
negatively impacted by the court decisions referenced above, rulings in other cases or changes in guidance or procedures
issued by the USPTO. We cannot fully predict what impact decisions from the U.S. Supreme Court’s decisions in Mayo
Collaborative Services v. Prometheus Laboratories and Molecular Pathology v. Myriad Genetics, Inc. or other applicable
court decisions may have on the ability of life science companies to obtain or enforce patents relating to their products and
technologies in the future. These decisions, the guidance issued by the USPTO and rulings in other cases or changes in
USPTO guidance or procedures could have an adverse effect on our existing patent portfolio and our ability to protect and
enforce our intellectual property in the future.
Moreover, although the U.S. Supreme Court has held that isolated segments of naturally occurring DNA are not
patent-eligible subject matter, certain third parties could allege that activities that we may undertake infringe other gene-
related patent claims, and we may deem it necessary to defend ourselves against these claims by asserting non-infringement
and/or invalidity positions, or paying to obtain a license to these claims. In any of the foregoing or in other situations
involving third-party intellectual property rights, if we are unsuccessful in defending against claims of patent infringement,
we could be forced to pay damages or be subjected to an injunction that would prevent us from utilizing the patented
subject matter. Such outcomes could harm our business, financial condition, results of operations or prospects.
Outside the United States, other courts have also begun to address the patenting of genetic material. In August
2015, the Australian High Court ruled that isolated genes cannot be patented in Australia. The decision did not address
methods of using genetic material. Any ruling of a similar scope in other countries could affect the scope of our intellectual
property rights. The ambiguities and changing law in all countries as to patenting genetic material may directly affect our
ability to secure and/or maintain patent protection for our products.
If we do not obtain patent term extension and data exclusivity for our product candidates, our business may be harmed.
Patents have a limited lifespan. In the United States, if all maintenance fees are timely paid, the natural expiration
of a patent is generally 20 years from its earliest U.S. non-provisional filing date. Various extensions may be available, but
the life of a patent, and the protection it affords, is limited. Even if patents covering our product candidates are obtained,
once the patent life has expired, we may be open to competition from competitive products, including generics or
biosimilars.
Depending upon the timing, duration and specifics of any FDA marketing approval of our product candidates, one
or more of our U.S. patents, which may cover non-gene therapy compounds, may be eligible for limited patent term
extension under the Drug Price Competition and Patent Term Restoration Act of 1984, or the Hatch-Waxman Act. The
Hatch-Waxman Act permits a patent extension term of up to five years as compensation for patent term lost during the
FDA regulatory review process. A patent term extension cannot extend the remaining term of a patent beyond a total of 14
years from the date of product approval, only one patent may be extended per FDA-approved product, and only those
claims covering the approved drug, a method for using it or a method for manufacturing it may be extended. Further,
certain of our licenses currently or in the future may not provide us with the right to control decisions the licensor or its
other licensees on Orange Book listings or patent term extension decisions under the Hatch-Waxman Act. Thus, if one of
our important licensed patents is eligible for a patent term extension under the Hatch-Waxman Act, and it covers a product
of another licensee in addition to our own product candidate, we may not be able to obtain that extension if the other
licensee seeks and obtains that extension first. However, we may not be granted an extension because of, for
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example, failing to exercise due diligence during the testing phase or regulatory review process, failing to apply within
applicable deadlines, failing to apply prior to expiration of relevant patents or otherwise failing to satisfy applicable
requirements.
The Biologics Price Competition and Innovation Act of 2009 provides up to 12 years of market exclusivity for a
reference biological product. We may not be able to obtain such exclusivity for our products. Moreover, the applicable
time-period or the scope of patent protection afforded during any such extension could be less than we request. If we are
unable to obtain patent term extension or the scope of term of any such extension is less than we request, the period during
which we will have the right to exclusively market our product may be shortened and our competitors may obtain approval
of competing products following our patent expiration, and our revenue could be materially reduced.
If our trademarks and trade name are not adequately protected, then we may not be able to build name recognition in
our markets of interest and our business may be adversely affected.
We own service mark registrations in the USPTO for the marks “VOYAGER THERAPEUTICS” and
“VOYAGER THERAPEUTICS Logo” and European Community trademark registrations for the marks “V-TAG” and
“VOYAGER TRAJECTORY ARRAY GUIDE.” Our trademarks or our trade name may be challenged, infringed,
circumvented or declared generic or found to infringe prior third-party marks. We may not be able to protect our rights in
our trademarks or in our trade name, which we need in order to build name recognition among potential partners or
customers in our markets of interest. It is possible that competitors may adopt trade names or 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 prior registered trademarks or trademarks that
incorporate variations of our registered or unregistered trademarks or trade name. Over the long term, if we are unable to
establish name recognition based on our trademarks and trade name, then we may not be able to compete effectively, and
our business may be adversely affected. Our efforts to enforce and protect our proprietary rights related to trademarks, trade
secrets, domain names, copyrights and other intellectual property may be ineffective and could result in substantial costs
and diversion of resources and could adversely impact our financial condition or results of operations.
Intellectual property rights do not necessarily address all potential threats.
The degree of future protection afforded by our intellectual property rights is uncertain because intellectual
property rights have limitations, and such rights may not adequately protect our business or permit us to maintain our
competitive advantage. For example:
● others may be able to make gene therapy products that are similar to our product candidates but that are not
covered by the claims of the patents that we own, license or may access in the future;
● we, or our license partners or current or future collaborators, might not have been the first to make the
inventions covered by the issued patent or pending patent application that we license or may own in the
future;
● we, or our license partners or current or future collaborators, might not have been the first to file patent
applications covering certain of our or their inventions;
● others may independently develop similar or alternative technologies or duplicate any of our technologies
without infringing our owned or licensed intellectual property rights;
● it is possible that our pending patent applications or those that we may own in the future will not lead to
issued patents;
● issued patents that we hold rights to may be held invalid or unenforceable, including as a result of legal
challenges by our competitors;
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● our competitors might conduct research and development activities in countries where we do not have patent
rights and then use the information learned from such activities to develop competitive products for sale in
our major commercial markets;
● we may not develop additional proprietary technologies that are patentable;
● the patents of others may have an adverse effect on our business; and
● we may choose not to file a patent for certain inventions, trade secrets or know-how, and a third party may
subsequently file a patent covering such intellectual property.
Should any of these events occur, they could significantly harm our business, financial condition, results of
operations and prospects.
We may not be able to maintain sufficient control over our proprietary know-how or trade secrets when employees,
consultants, advisors or persons with access to our proprietary information terminate their relationship with us.
Despite our efforts to protect our proprietary know-how and trade secrets, our competitors may discover this
information, or obtain the benefit of this information, through a breach of confidentiality and/or non-competition
obligations by persons who were formerly associated with us but who have established relationships as employees,
contractors, consultants or advisors with other companies, including our competitors. If discovered in a timely manner, our
efforts to enforce rights to protect against these types of breaches may not be possible under law, or may not be successful
if commenced.
It is also possible that, as we grow and establish ourselves in multiple geographic areas, alignment and/or
compliance with company polices may not be consistently maintained. In any such cases, the risk of loss of control or
proper management of our proprietary information could jeopardize our intellectual property.
Our reliance on third parties requires us to share our trade secrets, which increases the possibility that a competitor will
discover them or that our trade secrets will be misappropriated or disclosed.
Because we currently rely on certain third parties to manufacture all or part of our product candidates and to
perform quality testing, and because we collaborate with various organizations and academic institutions for the
advancement of our gene therapy platform and pipeline, we must, at times, share our proprietary technology and
confidential information, including trade secrets, with them. We seek to protect our proprietary technology, in part, by
entering into confidentiality agreements and, if applicable, material transfer agreements, collaborative research agreements,
consulting agreements or other similar agreements with our collaborators, advisors, employees and consultants prior to
beginning research or disclosing proprietary information. These agreements typically limit the rights of the third parties to
use or disclose our confidential information. Despite the contractual provisions employed when working with third parties,
the need to share trade secrets and other confidential information increases the risk that such trade secrets become known
by our competitors, are inadvertently incorporated into the technology of others or are disclosed or used in violation of
these agreements. Given that our proprietary position is based, in part, on our know-how and trade secrets, a competitor’s
discovery of our proprietary technology and confidential information or other unauthorized use or disclosure would impair
our competitive position and may harm our business, financial condition, results of operations and prospects.
Despite our efforts to protect our trade secrets, our competitors may discover our trade secrets, either through
breach of these agreements, independent development or publication of information including our trade secrets by third
parties. A competitor’s discovery of our trade secrets would impair our competitive position and have an adverse impact on
our business, financial condition, results of operations and prospects.
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Changes to national patent laws and diminished or limited access to United States and/or foreign patent counsel and the
courts in response to the ongoing COVID-19 pandemic may compromise our ability to pursue, obtain, enforce or defend
our intellectual property patent protections throughout the world.
In response to the ongoing COVID-19 pandemic, many national patent offices promulgated emergency measures
and alternative procedures for filing, prosecuting and adjudicating disputes regarding intellectual property. While some of
these new rules involve the provision of extensions for certain filing deadlines, none of these emergency-situation rules
have been tested in a litigation setting or for their harmonization with the laws of other countries.
Access to the USPTO and other patent offices has been restricted by government mandated shelter-in-place or
stay-home orders thereby limiting our ability to appear before any tribunal in support of our intellectual property. Should
the remaining electronic access to these tribunals be interrupted or non-existent, we may not be able to secure, defend or
enforce patent protections in all jurisdictions.
We also rely on United States and foreign patent counsel in the management of our intellectual property. Should
our access to counsel be diminished or lost due to effects of COVID-19 on these service providers and their organizations,
we may not be able to manage, maintain or secure our intellectual property position.
Risks Related to Ownership of Our Common Stock
Our executive officers, directors, principal stockholders and their affiliates exercise significant influence over our
company.
The holdings of our executive officers, directors, principal stockholders and their affiliates, including investment
funds affiliated with Third Rock Ventures, LLC and Neurocrine represent beneficial ownership, in the aggregate, of
approximately 36% of our outstanding common stock as of December 31, 2020. As a result, these stockholders, if they act
together, will be able to influence our management and affairs and the outcome of matters submitted to our stockholders for
approval, including the election of directors and any sale, merger, consolidation, or sale of all or substantially all of our
assets. In addition, this concentration of ownership might adversely affect the market price of our common stock by:
● delaying, deferring or preventing a change of control of us;
● impeding a merger, consolidation, takeover or other business combination involving us; or
● discouraging a potential acquirer from making a tender offer or otherwise attempting to obtain control of us.
An active trading market for our common stock may not be sustained.
Our shares of common stock began trading on the Nasdaq Global Select Market on November 11, 2015. Given the
limited trading history of our common stock, there is a risk that an active trading market for our shares will not be
sustained, which could put downward pressure on the market price of our common stock and thereby affect the ability of
our stockholders to sell their shares.
Sales of a substantial number of shares of our common stock in the public market could cause our stock price to fall.
Persons who were our stockholders prior to our initial public offering continue to hold a substantial number of
shares of our common stock. If such persons sell, or indicate an intention to sell, substantial amounts of our common stock
in the public market, the trading price of our common stock could decline.
In addition, shares of common stock that are either subject to outstanding options or restricted stock units, or
RSUs, or reserved for future issuance under our stock incentive plans will become eligible for sale in the public market to
the extent permitted by the provisions of various vesting schedules and Rule 144 and Rule 701 under the Securities Act of
1933, as amended. We have also filed a registration statement on Form S-8 permitting shares of common stock
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issued on exercise of options or the settlement of RSUs to be freely sold in the public market. If these additional shares of
common stock are sold, or if it is perceived that they will be sold, in the public market, the trading price of our common
stock could decline. We also have an effective registration statement on Form S-3 for the sale of up to $300.0 million in
aggregate of an indeterminate number of shares of common stock and preferred stock, an indeterminate principal amount of
debt securities, and an indeterminate number of warrants, of which we have reserved $100.0 million for the offering,
issuance, and sale of common stock through at-the-market offerings or negotiated transactions under a sales agreement we
entered into with Cowen and Company, LLC, on November 6, 2019.
Certain holders of our common stock have rights, subject to specified conditions, to require us to file registration
statements covering their shares or to include their shares in registration statements that we may file for ourselves or other
stockholders. Any sales of securities by these stockholders could have a material adverse effect on the trading price of our
common stock.
The price of our common stock may be volatile and fluctuate substantially, which could result in substantial losses for
purchasers of our common stock.
The price of our common stock is likely to be volatile and may fluctuate substantially. From January 1, 2020
through December 31, 2020, the sales price of our common stock ranged from a high of $14.80 to a low of $6.26 on the
Nasdaq Global Select Market. As a result of this volatility, our stockholders may not be able to sell their common stock at
or above the price at which they purchased it. The market price for our common stock may be influenced by many factors,
including:
● our success in commercializing any product candidates for which we obtain marketing approval;
● regulatory action and results of clinical trials of our product candidates or those of our competitors;
● the success of competitive products or technologies;
● the results of clinical trials of our product candidates;
● the results of clinical trials of product candidates of our competitors;
● the commencement, termination, and success of our collaborations, including the ability or willingness of our
collaboration partners to fulfill their obligations to us;
● regulatory or legal developments in the United States and other countries;
● developments or disputes concerning patent applications, issued patents or other proprietary rights;
● the recruitment or departure of key personnel;
● the level of expenses related to any of our product candidates or clinical development programs;
● the results of our efforts to discover, develop, acquire or in-license additional product candidates or
technologies, the cost of commercializing such product candidates, and the cost of development of any such
product candidates or technologies;
● actual or anticipated changes in estimates as to financial results, development timelines or recommendations
by securities analysts;
● variations in our financial results or those of companies that are perceived to be similar to us;
● the ability to secure third-party reimbursement for our product candidates;
● changes in the structure of healthcare payment systems;
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● market conditions in the pharmaceutical and biotechnology sectors;
● general economic, industry and market conditions; and
● the other factors described in this “Risk Factors” section and elsewhere in this Annual Report on Form 10-K.
If our operating results fall below the expectations of investors or securities analysts for a given period, the price
of our common stock could decline substantially. Furthermore, any fluctuations in our operating results from period to
period may, in turn, cause the price of our stock to fluctuate substantially. We believe that such comparisons of our financial
results are not necessarily meaningful and should not be relied upon as an indication of our future performance.
In the past, following periods of volatility in the market price of a company’s securities, securities class-action
litigation often has been instituted against that company. We also may face securities class-action litigation if we cannot
obtain regulatory approvals for or if we otherwise fail to commercialize our product candidates. As described in “Part II,
Item 3—Legal Proceedings,” we and certain of our current and former officers and directors have been named as
defendants in a purported class action lawsuit. This proceeding and other similar litigation, if instituted against us, could
cause us to incur substantial costs to defend such claims and divert management’s attention and resources, which could
seriously harm our business, financial condition, results of operations and prospects.
We have broad discretion in how we apply our available funds, and we may not use these funds effectively, which could
affect our results of operations and cause our stock price to decline.
Our management will have broad discretion in the application of our existing cash, cash equivalents and
marketable securities and could spend these funds in ways that do not improve our results of operations or enhance the
value of our common stock. The failure by our management to apply our available funds effectively could result in
financial losses that could cause the price of our common stock to decline and delay the development of our product
candidates and preclinical programs. Pending their use, we may invest our available funds in a manner that does not
produce income or that loses value.
We have been a “smaller reporting company” and the reduced disclosure requirements applicable to such companies
may make our common stock less attractive to investors.
As we have previously qualified as a smaller reporting company, or SRC, we have been permitted to rely, and
have relied, on the reduced disclosure requirements available to SRCs, including reduced disclosure obligations regarding
executive compensation. Our ability to rely on the reduced disclosure requirements available to SRCs will cease after the
filing of this Annual Report on Form 10-K, including those portions of our definitive proxy statement relating to our 2021
Annual Meeting of Stockholders incorporated by reference into Part III of this Annual Report on Form 10-K.
We are currently subject to legal actions and proceedings related to the decline in our stock price, which could distract
our management and could result in substantial costs or large judgments against us.
The market prices of securities of companies in the biotechnology and pharmaceutical industry, including the
market price of our common stock, have been extremely volatile and have experienced fluctuations that have often been
unrelated or disproportionate to the operating performance of these companies. On January 22, 2021, a putative class action
lawsuit was filed in the U.S. District Court for the Eastern District of New York against us and certain of our current and
former officers and directors. The complaint seeks, among other things, unspecified compensatory damages, interest,
attorneys’ and expert fees and costs. Due to the volatility in our stock price, we may be the target of similar litigation in the
future.
In connection with such legal proceedings, we could incur substantial costs and such costs and any related
settlements or judgments may not be covered by insurance. We could also suffer an adverse impact on our reputation and a
diversion of management’s attention and resources, which could cause serious harm to our business, operating results and
financial condition.
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We incur increased costs as a result of operating as a public company, and our management is required to devote
substantial time to new compliance initiatives.
As a public company, we incur significant legal, accounting and other expenses that we did not incur as a private
company. We expect these expenses to increase as we will no longer be able to rely on the reduced disclosure requirements
available to SRCs. In addition, the Sarbanes-Oxley Act of 2002, the Dodd-Frank Wall Street Reform and Consumer
Protection Act, and rules subsequently implemented by the SEC and The Nasdaq Stock Market have imposed various
requirements on public companies, including establishment and maintenance of effective disclosure and financial controls
and corporate governance practices. Our management and other personnel devote a substantial amount of time to these
compliance initiatives. Moreover, these rules and regulations have increased our legal and financial compliance costs and
have made some activities more time-consuming and costly. For example, these rules and regulations have made it more
difficult and more expensive for us to obtain director and officer liability insurance, and we have been required to accept
reduced policy limits and coverage or incur substantially higher costs to obtain the same or similar coverage. As a result, it
may be more difficult for us to attract and retain qualified people to serve on our board of directors, our board committees
or as executive officers.
Pursuant to Section 404 of the Sarbanes-Oxley Act of 2002, or Section 404, we are required to furnish a report by
our management on our internal control over financial reporting. To achieve compliance with Section 404, we must engage
in a process to document and evaluate our internal control over financial reporting, which is both costly and challenging. In
this regard, we need to continue to dedicate internal resources, potentially engage outside consultants and execute a detailed
work plan to assess and document the adequacy of internal control over financial reporting, continue steps to improve
control processes as appropriate, validate through testing that controls are functioning as documented and carryout a
continuous reporting and improvement process for internal control over financial reporting. Despite our efforts, there is a
risk that neither we nor our independent registered public accounting firm will be able to conclude that our internal control
over financial reporting is effective as required by Section 404. If we identify one or more material weaknesses in our
internal control over financial reporting, it could result in an adverse reaction in the financial markets due to a loss of
confidence in the reliability of our financial statements.
Provisions in our amended and restated certificate of incorporation and bylaws and Delaware law could make an
acquisition of us, which may be beneficial to our stockholders, more difficult and may prevent attempts by our
stockholders to replace or remove our current management.
Provisions in our amended and restated certificate of incorporation and bylaws may discourage, delay or prevent a
merger, acquisition or other change in control of us that stockholders may consider favorable, including transactions in
which our stockholders might otherwise receive a premium for their shares. These provisions also could limit the price that
investors might be willing to pay in the future for shares of our common stock, thereby depressing the market price of our
common stock. In addition, because our board of directors is responsible for appointing the members of our management
team, these provisions may frustrate or prevent any attempts by our stockholders to replace or remove our current
management by making it more difficult for stockholders to replace members of our board of directors. Among other
things, these provisions:
● establish a classified board of directors such that only one of three classes of members of the board is elected
each year;
● allow the authorized number of our directors to be changed only by resolution of our board of directors;
● limit the manner in which stockholders can remove directors from the board;
● establish advance notice requirements for stockholder proposals that can be acted on at stockholder meetings
and nominations to our board of directors;
● require that stockholder actions must be effected at a duly called stockholder meeting and prohibit actions by
our stockholders by written consent;
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● limit who may call stockholder meetings;
● authorize our board of directors to issue preferred stock without stockholder approval, which could be used to
institute a stockholder rights plan, or so-called “poison pill,” that would work to dilute the stock ownership of
a potential hostile acquirer, effectively preventing acquisitions that have not been approved by our board of
directors; and
● require the approval of the holders of at least 75% of the votes that all our stockholders would be entitled to
cast to amend or repeal certain provisions of our amended and restated certificate of incorporation or bylaws.
Moreover, because we are incorporated in Delaware, we are governed by the provisions of Section 203 of the
Delaware General Corporation Law, which prohibits a person who owns in excess of 15% of our outstanding voting stock
from merging or combining with us for a period of three years after the date of the transaction in which the person acquired
in excess of 15% of our outstanding voting stock, unless the merger or combination is approved in a prescribed manner.
Our amended and restated certificate of incorporation designates the Court of Chancery of the State of Delaware as the
sole and exclusive forum for certain types of actions and proceedings that may be initiated by our stockholders, which
could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us or our directors, officers or
employees.
Our amended and restated certificate of incorporation provides that, unless we consent in writing to an alternative
forum, the Court of Chancery of the State of Delaware will be the sole and exclusive forum for (i) any derivative action or
proceeding brought on our behalf, (ii) any action asserting a claim of breach of a fiduciary duty owed by any of our
directors, officers and employees to us or our stockholders, (iii) any action asserting a claim arising pursuant to any
provision of the Delaware General Corporation Law, our certificate of incorporation or our bylaws or (iv) any action
asserting a claim that is governed by the internal affairs doctrine, in each case subject to the Court of Chancery having
personal jurisdiction over the indispensable parties named as defendants therein. Any person purchasing or otherwise
acquiring any interest in any shares of our capital stock shall be deemed to have notice of and to have consented to this
provision of our amended and restated certificate of incorporation. This choice of forum provision is inapplicable to actions
arising under the Securities Exchange Act of 1934, as amended, and we likewise do not intend to apply this choice of
forum provision to actions arising under the Securities Act of 1933, as amended.
This choice of forum provision may limit a stockholder’s ability to bring a claim that is not arising under the
Securities Exchange Act of 1934, as amended, or the Securities Act of 1933, as amended, in a judicial forum that he, she or
it finds favorable for disputes with us or our directors, officers or employees, which may discourage such lawsuits against
us and our directors, officers and employees even though an action, if successful, might benefit our stockholders.
Stockholders who do bring a claim in the Court of Chancery could face additional litigation costs in pursuing any such
claim, particularly if they do not reside in or near the State of Delaware. The Court of Chancery may also reach different
judgments or results than would other courts, including courts where a stockholder considering an action may be located or
would otherwise choose to bring the action, and such judgments or results may be more favorable to us than to our
stockholders. Alternatively, if a court were to find this provision of our amended and restated certificate of incorporation
inapplicable to, or unenforceable in respect of, one or more of the specified types of actions or proceedings, we may incur
additional costs and business interruption that could have a material adverse effect on our business, financial condition or
results of operations.
Because we do not anticipate paying any cash dividends on our capital stock in the foreseeable future, capital
appreciation, if any, will be our stockholders’ sole source of gain.
We have never declared or paid cash dividends on our capital stock. We currently intend to retain all of our future
earnings, if any, to finance the growth and development of our business. In addition, the terms of any future debt
agreements may preclude us from paying dividends. As a result, capital appreciation, if any, of our common stock will be
the sole source of gain for our stockholders for the foreseeable future.
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General Risk Factors
Changes in tax laws or in their implementation or interpretation may adversely affect our business and financial
condition.
Changes in tax law may adversely affect our business or financial condition. On December 22, 2017, the U.S.
government enacted the TCJA, which significantly revised the Internal Revenue Code of 1986, as amended, or the Code.
The TCJA, among other things, contained significant changes to corporate taxation, including reduction of the corporate
tax rate from a top marginal rate of 35% to a flat rate of 21%, limitation of the tax deduction for net interest expense to 30%
of adjusted earnings (except for certain small businesses), limitation of the deduction for net operating losses, or NOLs, to
80% of current year taxable income and elimination of NOL carrybacks, in each case, for losses arising in taxable years
beginning after December 31, 2017 (though any such NOLs may be carried forward indefinitely), imposition of a one-time
taxation of offshore earnings at reduced rates regardless of whether they are repatriated, elimination of U.S. tax on foreign
earnings (subject to certain important exceptions), the allowance of immediate deductions for certain new investments
instead of deductions for depreciation expense over time, and the modification or repeal of many business deductions and
credits.
As part of Congress’ response to the COVID-19 pandemic, the Families First Coronavirus Response Act, or FFCR
Act, was enacted on March 18, 2020, the CARES Act was enacted on March 27, 2020 and COVID-19 relief provisions
were included in the Consolidated Appropriations Act, 2021 or CAA, which was enacted on December 27, 2020. All
contain numerous tax provisions. In particular, the CARES Act retroactively and temporarily (for taxable years beginning
before January 1, 2021) suspends application of the 80%-of-income limitation on the use of NOLs, which was enacted as
part of the TCJA. It also provides that NOLs arising in any taxable year beginning after December 31, 2017, and before
January 1, 2021, are generally eligible to be carried back up to five years. The CARES Act also temporarily (for taxable
years beginning in 2019 or 2020) relaxes the limitation of the tax deductibility for net interest expense by increasing the
limitation from 30 to 50% of adjusted taxable income.
Regulatory guidance under the TCJA, the FFCR Act, the CARES Act and the CAA is and continues to be
forthcoming, and such guidance could ultimately increase or lessen impact of these laws on our business and financial
condition. It is also possible that Congress will enact additional legislation in connection with the COVID-19 pandemic,
and as a result of the changes in the U.S. presidential administration and control of the U.S. Senate, additional tax
legislation may also be enacted; any such additional legislation could have an impact on us. In addition, it is uncertain if
and to what extent various states will conform to the TCJA, the FFCR Act, the CARES Act or the CAA.
We might not be able to utilize a significant portion of our net operating loss carryforwards.
As of December 31, 2020, we had both federal and state NOL carryforwards of $153.4 million and $140.9 million,
respectively, which expire beginning in 2033. These NOL carryforwards could expire unused and be unavailable to offset
our future income tax liabilities. As described above under the heading “Changes in tax laws or in their implementation or
interpretation may adversely affect our business and financial condition,” the TCJA, as amended by the CARES Act,
includes changes to U.S. federal tax rates and the rules governing NOL carryforwards that may significantly impact our
ability to utilize our NOLs to offset taxable income in the future. Nor is it clear how various states will respond to the
TCJA, the FFCR Act or the CARES Act. In addition, state NOLs generated in one state cannot be used to offset income
generated in another state. Furthermore, the use of NOL carryforwards may become subject to an annual limitation under
Section 382 of the Code and similar state provisions in the event of certain cumulative changes in the ownership interest of
significant shareholders in excess of 50 percent over a three-year period. This could limit the amount of NOL
carryforwards that can be utilized annually to offset future taxable income or tax liabilities. The amount of the annual
limitation is determined based on the value of a company immediately prior to the ownership change. Our company has
completed several transactions since its inception which resulted in an ownership change under Section 382 of the Code.
In addition, future changes in our stock ownership, some of which are outside of our control, could result in ownership
changes in the future. For these reasons, even if we attain profitability, we may be unable to use a material portion of our
NOLs and other tax attributes.
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Our internal computer systems, or those of our collaborators or other contractors or consultants, may fail or suffer
security breaches, which could result in a material disruption of our product development programs.
Our internal computer systems and those of our current and any future collaborators and other contractors or
consultants are vulnerable to damage from cyber-attacks, computer viruses, unauthorized access, sabotage, natural
disasters, terrorism, war and telecommunication and electrical failures. While we have not experienced any such material
system failure, accident or security breach to date, if such an event were to occur and cause interruptions in our operations
or the operations of those third parties with which we contract, it could result in a material disruption of our development
programs and our business operations, whether due to a loss of our trade secrets or other proprietary information or other
similar disruptions, and could require a substantial expenditure of resources to remedy. For example, the loss of clinical
trial data from completed or ongoing clinical trials could result in delays in our regulatory approval efforts and significantly
increase our costs to recover or reproduce the data. We could also be subject to risks caused by misappropriation, misuse,
leakage, falsification or intentional or accidental release or loss of information maintained in our information systems and
networks, including personal information of our employees. Outside parties may attempt to penetrate our systems or those
of the third parties with which we contract or to fraudulently induce our employees or employees of such third parties to
disclose sensitive information to gain access to our data.
The number and complexity of these threats continue to increase over time. Although we develop and maintain
systems and controls designed to prevent these events from occurring, and we have a process to identify and mitigate
threats, the development and maintenance of these systems, controls and processes is costly and requires ongoing
monitoring and updating as technologies change and efforts to overcome security measures become more sophisticated.
Despite our efforts, the possibility of these events occurring cannot be eliminated entirely. Although we maintain cyber risk
insurance for certain costs we may incur due to a cyber-related event, this insurance may not provide adequate coverage
against potential liabilities. To the extent that any disruption or security breach were to result in a loss of, or damage to, our
data or applications, or inappropriate disclosure of confidential or proprietary information, we could incur liability, our
competitive position and the market perception of the effectiveness of our security measures could be harmed, our
credibility could be damaged, and the further development and commercialization of our product candidates could be
delayed.
If securities analysts do not publish research or reports about our business or if they publish negative evaluations of our
stock, the price of our stock could decline.
The trading market for our common stock will rely in part on the research and reports that industry or financial
analysts publish about us or our business. If no or few analysts maintain coverage of us, the trading price of our stock
would likely decrease. If one or more of the analysts covering our business downgrade their evaluations of our stock, the
price of our stock could decline. If one or more of these analysts cease to cover our stock, we could lose visibility in the
market for our stock, which in turn could cause our stock price to decline.
ITEM 1B.
UNRESOLVED STAFF COMMENTS
Not applicable.
ITEM 2.
PROPERTIES
Our corporate headquarters are located in Cambridge, Massachusetts. Other operations, including laboratory
space, are located in Lexington, MA. We lease our office and laboratory space, which consist of approximately 74,000
square feet located in two locations in Cambridge, Massachusetts and 32,142 square feet located in Lexington, MA.
ITEM 3.
LEGAL PROCEEDINGS
In the ordinary course of business, we are from time to time involved in lawsuits, claims, investigations,
proceedings, and threats of litigation relating to intellectual property, commercial arrangements and other matters. While
the outcome of these proceedings and claims cannot be predicted with certainty, as of December 31, 2020, we were not
party to any legal matters, claims, or arbitration proceedings that may have, or have had in the recent past, significant
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effects on our financial position or profitability. No governmental proceedings are pending or, to our knowledge,
contemplated against us. We are not a party to any material proceedings in which any director, member of senior
management or affiliate of ours is either a party adverse to us or our subsidiaries or has a material interest adverse to us or
our subsidiaries.
On January 22, 2021, a putative class action lawsuit was filed in the U.S. District Court for the Eastern District of
New York against us and certain of our current and former officers and directors, captioned Karp v. Voyager Therapeutics,
Inc. et al., No. 1:21-cv-00381. The complaint purports to be brought on behalf of stockholders who purchased our common
stock between June 1, 2017 and November 9, 2020. The complaint generally alleges that the defendants violated Sections
10(b) and/or 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder by making material
misstatements or omissions concerning the Huntington’s Program and our IND for VY-HTT01. The complaint seeks,
among other things, unspecified compensatory damages, interest, attorneys’ and expert fees and costs. We deny any
allegations of wrongdoing and believe we have a valid defense against these claims and, therefore, intend to vigorously
defend ourselves against this lawsuit.
ITEM 4.
MINE SAFETY DISCLOSURES
Not applicable.
PART II
ITEM 5.
MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER
MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES.
Our common stock has been traded on the Nasdaq Global Select Market under the symbol “VYGR” since
November 11, 2015. Prior to this time, there was no public market for our common stock.
Stockholders
As of February 19, 2021, there were approximately 14 holders of record of our common stock. The actual number
of stockholders is greater than this number of record holders, and includes stockholders who are beneficial owners, but
whose shares are held in street name by brokers and other nominees. This number of holders of record also does not
include stockholders whose shares may be held in trust by other entities.
Dividends
We have not paid any cash dividends on our common stock since inception and do not anticipate paying cash
dividends in the foreseeable future.
Recent Sales of Unregistered Securities
In the year ended December 31, 2020, we issued non-statutory stock options to purchase an aggregate of 172,500
shares of our common stock and restricted stock unit awards settleable for an aggregate of 29,000 shares of our common
stock, respectively, to three individuals, in each case outside of our 2015 Stock Option and Incentive Plan as an inducement
material to such individual’s acceptance of an offer of employment with us in accordance with Nasdaq Listing Rule
5635(c)(4). We intend to file a registration statement on a Form S-8 to register the shares of common stock underlying
these inducement awards prior to the time at which the awards become exercisable or settleable, as applicable.
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ITEM 6.
SELECTED FINANCIAL DATA
Not applicable.
ITEM 7.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
You should read the following discussion and analysis of our financial condition and results of operations together
with our consolidated financial statements and related notes appearing elsewhere in this Annual Report on Form 10-K. In
addition to historical information, this discussion and analysis contains forward-looking statements that involve risks,
uncertainties and assumptions. Our actual results may differ materially from those anticipated in these forward-looking
statements as a result of certain factors. We discuss factors that we believe could cause or contribute to these differences
below and elsewhere in this report, including those set forth under Item 1A. “Risk Factors” and under “Forward-Looking
Statements” in this Annual Report on Form 10-K.
We are a clinical-stage gene therapy company focused on developing life-changing treatments for patients
suffering from severe neurological diseases. We focus on neurological diseases where we believe an adeno-associated
virus, or AAV, gene therapy approach that either increases or decreases the production of a specific protein can slow or
reduce the symptoms experienced by patients, and therefore have a clinically meaningful impact. We have built a gene
therapy platform that we believe positions us to be a leading company at the intersection of AAV gene therapy and severe
neurological disease. Our gene therapy platform enables us to engineer, optimize, manufacture and deliver our AAV-based
gene therapies that have the potential to provide durable efficacy following a single administration.
Additionally, we are working to identify novel AAV capsids, which are the outer viral protein shells that enclose
the genetic material of the virus payload. Our team of experts in the fields of AAV gene therapy and neuroscience first
identifies and selects severe neurological diseases that are well-suited for treatment using AAV gene therapy. We then
engineer and optimize AAV vectors for delivery of the virus payload to the targeted tissue or cells. Our manufacturing
process employs an established system that we believe will enable production of high quality AAV vectors at commercial-
scale. In addition to our capsid optimization efforts, we leverage novel delivery paradigms, established routes of
administration, and advances in dosing techniques to optimize delivery of our AAV gene therapies to target tissues, regions
and cell types that are critical to the disease of interest. We believe we can achieve this directly, with targeted infusions to
discrete regions of the brain, the spinal cord, or systemically, in conjunction with our novel capsids.
Our business strategy focuses on discovering, developing, manufacturing and commercializing our gene therapy
programs. As part of this strategy, we have developed core competencies specific to AAV gene therapy development and
manufacturing and are beginning to build our commercial infrastructure. This business strategy also includes business
development activities that may include in-licensing activities or partnering certain programs in specific geographies with
collaborators, as we have demonstrated through our ongoing collaboration with Neurocrine. Since our inception, our
operations have focused on organizing and staffing our company, business planning, raising capital, establishing our
intellectual property portfolio, determining which neurological diseases to pursue, advancing our product candidates
including delivery and manufacturing, and conducting preclinical studies and clinical trials. We do not have any product
candidates approved for sale and have not generated any revenue from product sales. We have funded our operations
primarily through private placements of redeemable convertible preferred stock, public offerings of our common stock, and
our strategic collaborations, including our prior collaboration with Sanofi Genzyme, or the Sanofi Genzyme Collaboration,
which commenced in February 2015 and was terminated in June 2019, our prior collaboration with AbbVie focusing on
tau-related disease, or the AbbVie Tau Collaboration, which commenced in February 2018 and was terminated in August
2020, our prior collaboration with AbbVie focusing on pathological species of alpha-synuclein, or the AbbVie Alpha-
Synuclein Collaboration which commenced in February 2019 and was terminated in August 2020, and our ongoing
collaboration with Neurocrine, or the Neurocrine Collaboration, which commenced in March 2019. We refer to our
collaboration agreement with Neurocrine as the Neurocrine Collaboration Agreement.
In February 2021, Neurocrine notified us that it had elected to terminate the Neurocrine Collaboration solely with
regards to the VY-AADC Program, effective August 2, 2021, or the Neurocrine VY-AADC Program Termination
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Effective Date. The Neurocrine Collaboration Agreement remains in full force and effect for each other program
thereunder. We intend to support Neurocrine, the clinical trial sponsor and IND holder, on ongoing matters related to the
completion of imaging and clinical assessments requested by the DSMB and the provision of other information requested
by the FDA for the RESTORE-1 Phase 2 clinical trial. As a result of the termination, subsequent to the Neurocrine VY-
AADC Program Termination Effective Date, Neurocrine will no longer reimburse us for research and development
activities related to the VY-AADC Program.
We have incurred significant operating losses in every year prior to 2020. We reported a net income of $36.7
million for the year ended December 31, 2020 primarily due to revenue recognition in connection with the terminations of
our prior collaborations with AbbVie. As of December 31, 2020, we had an accumulated deficit of $275.9 million. We
reported a net loss of $43.6 million and $88.3 million for the years ended December 31, 2019 and 2018, respectively. We
expect to continue to incur significant expenses and operating losses for the foreseeable future. We anticipate that our
expenses will increase significantly in connection with our ongoing activities, as we:
● continue investing in our gene therapy platform to optimize capsid engineering and payload development,
manufacturing, dosing, and delivery techniques;
● work with Neurocrine, the IND holder and RESTORE-1 clinical trial sponsor, to determine the potential path
forward for VY-AADC (NBIb-1817) as a treatment for Parkinson’s disease based on, among other things, the
additional information being collected by Neurocrine in response to the DSMB;
● initiate additional preclinical studies and clinical trials for, and continue research and development of, our
other programs and seek to resolve the clinical hold on VY-HTT01 for the treatment of Huntington’s disease;
● conduct joint research and development under our strategic collaborations for the research, development, and
commercialization of certain of our pipeline programs;
● continue our process research and development activities, as well as establish our research-grade and
commercial manufacturing capabilities;
● identify additional neurological diseases for treatment with our AAV gene therapies and develop additional
programs or product candidates;
● work to identify and optimize novel AAV capsids;
● expand our manufacturing capabilities;
● develop, obtain and maintain regulatory clearances for devices to deliver our AAV gene therapies, and to
provide financial and operating support to partners manufacturing and supplying these devices for use in our
clinical development program;
● seek marketing and regulatory approvals for our product candidates or devices that arise from our programs
that successfully complete clinical development;
● maintain, expand, protect and enforce our intellectual property portfolio;
● identify, acquire or in-license other product candidates and technologies;
● develop a sales, marketing and distribution infrastructure to commercialize any product candidates for which
we may obtain marketing approval;
● expand our operational, financial and management systems and personnel, including personnel to support our
clinical development, manufacturing and commercialization efforts and our operations as a public company;
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● increase our product liability and clinical trial insurance coverage as we expand our clinical trials and
commercialization efforts; and
● continue to operate as a public company.
Financial Operations Overview
Revenue
To date, we have not generated any revenue from product sales and do not expect to generate any revenue from
product sales for the foreseeable future. For the year ended December 31, 2020, we recognized $50.8 million of
collaboration revenue from the AbbVie Tau Collaboration, inclusive of the recognition of $46.3 million related to its
termination, $63.7 million of collaboration revenue from the AbbVie Alpha-Synuclein Collaboration, inclusive of the
recognition of $58.9 million related to its termination, and $56.7 million of collaboration revenue from the Neurocrine
Collaboration. For additional information about our revenue recognition policy related to the collaborations, see the section
titled “—Critical Accounting Policies and Estimates—Revenue.”
For the foreseeable future, we expect substantially all of our revenue will be generated from our collaboration
agreement with Neurocrine and any other strategic collaborations we may enter into in the future. If our development
efforts are successful, we may also generate revenue from product sales.
Expenses
Research and Development Expenses
Research and development expenses consist primarily of costs incurred for our research activities, including our
program discovery efforts, and the development of our programs and gene therapy platform, which include:
● employee-related expenses including salaries, benefits, and stock-based compensation expense;
● costs of funding research performed by third parties that conduct research and development, preclinical
activities, manufacturing and production design on our behalf;
● the cost of purchasing lab supplies and non-capital equipment used in designing, developing and
manufacturing preclinical study materials;
● consultant fees;
● facility costs including rent, depreciation and maintenance expenses; and
● fees for maintaining licenses under our third-party licensing agreements.
Research and development costs are expensed as incurred. Costs for certain activities, such as manufacturing,
preclinical studies, and clinical trials, are generally recognized based on an evaluation of the progress to completion of
specific tasks using information and data provided to us by our vendors and collaborators.
At this time, we cannot reasonably estimate or know the nature, timing and estimated costs of the efforts that will
be necessary to complete the development of our product candidates. We are also unable to predict when, if ever, material
net cash inflows will commence from sales of our product candidates. This is due to the numerous risks and uncertainties
associated with developing such product candidates, including the uncertainty of:
● successful enrollment in and completion of clinical trials;
● establishing an appropriate safety profile;
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● establishing commercial manufacturing capabilities or making arrangements with third-party manufacturers;
● receipt of marketing approvals from applicable regulatory authorities;
● commercializing the product candidates, if and when approved, whether alone or in collaboration with others;
● obtaining and maintaining patent and trade secret protection and regulatory exclusivity for our product
candidates;
● continued acceptable safety profiles of the products following approval; and
● retention of key research and development personnel.
A change in the outcome of any of these variables with respect to the development of any of our product
candidates would significantly change the costs, timing and viability associated with the development of that product
candidate.
Research and development activities are central to our business model. We expect research and development costs
to increase for the foreseeable future as our development programs progress and as we seek to move our other product
candidates, including VY-HTT01 as a treatment for Huntington’s disease, into clinical trials. We expect that Neurocrine’s
partial termination of the Neurocrine Collaboration Agreement will decrease research and development costs related to the
VY-AADC Program. However, we continue to evaluate the potential path forward for the VY-AADC Program and, if
sponsorship of the RESTORE-1 Phase 2 clinical trial were transferred back to us, we would expect a significant increase in
research and development costs above our current forecasts.
General and Administrative Expenses
General and administrative expenses consist primarily of salaries and other related costs, including stock-based
compensation, for personnel in executive, finance, accounting, business development, legal and human resource functions.
Other significant costs include corporate facility costs not otherwise included in research and development expenses, legal
fees related to patent and corporate matters and fees for accounting and consulting services.
We anticipate that our general and administrative expenses will increase in the future to support continued
research and development activities, including the ongoing research and development activities and initiation of clinical
trials for our product candidates. These increases will likely include increased costs related to the hiring of additional
personnel and fees to outside consultants. We also anticipate increased expenses associated with being a public company,
including costs for audit, legal, regulatory, and tax-related services, director and officer insurance premiums, business
development activities, and investor relations costs.
Other Income (Expense)
Interest and other income (expense) consists primarily of interest income on our marketable debt securities and the
gain or loss on the equity securities investment in ClearPoint Neuro, Inc. (formerly known as MRI Interventions, Inc.), or
CLPT.
Critical Accounting Policies and Estimates
Our management’s discussion and analysis of our consolidated financial condition and results of operations are
based on our consolidated financial statements, which have been prepared in accordance with U.S. generally accepted
accounting principles. The preparation of these consolidated financial statements requires us to make judgments and
estimates that affect the reported amounts of assets, liabilities, revenues and expenses and the disclosure of contingent
assets and liabilities in our consolidated financial statements. We base our estimates on historical experience, known trends
and events, and various other factors that are believed to be reasonable under the circumstances. Actual results
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may differ from these estimates under different assumptions or conditions. On an ongoing basis, we evaluate our judgments
and estimates in light of changes in circumstances, facts and experience. The effects of material revisions in estimates, if
any, will be reflected in the financial statements prospectively from the date of change in estimates.
While our significant accounting policies are described in more detail in the notes to our consolidated financial
statements appearing elsewhere in this Annual Report on Form 10-K, we believe the following accounting policies used in
the preparation of our financial statements require the most significant judgments and estimates.
Revenue Recognition – ASC 606
In the year ended December 31, 2020, our revenue was generated from the AbbVie Tau Collaboration, the AbbVie
Alpha-Synuclein Collaboration, and the Neurocrine Collaboration. We recognize revenue in accordance with Financial
Accounting Standards Board, or FASB, Accounting Standards Codification, or ASC, Topic 606 Revenue from Contracts
with Customers, or ASC 606. Effective January 1, 2018, we adopted the provisions of ASC 606 using the modified
retrospective transition method. Under this method, we recorded the cumulative effect of initially applying the new
standard to all contracts as of the date of adoption.
We enter into collaboration agreements which are within the scope of ASC 606, under which we license rights to
certain of our product candidates and perform research and development services. The terms of these arrangements
typically include payment of one or more of the following: non-refundable, upfront fees; reimbursement of research and
development costs; development, regulatory and commercial milestone payments; and royalties on net sales of licensed
products.
Under ASC 606, an entity recognizes revenue when its customer obtains control of promised goods or services, in
an amount that reflects the consideration which the entity expects to receive in exchange for those goods or services. To
determine the appropriate amount of revenue to be recognized for arrangements determined to be within the scope of ASC
606, we perform the following five steps: (i) identification of the promised goods or services in the contract; (ii)
determination of 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) we
satisfy each performance obligation. We only apply the five-step model to contracts when it is probable that we will collect
consideration we are entitled to in exchange for the goods or services we transfer to the customer.
The promised goods or services in our arrangement typically consist of license rights to our intellectual property
or research and development services. We provide options to additional items in the contracts, which are accounted for as
separate contracts when the customer elects to exercise such options, unless the option provides a material right to the
customer. We evaluate the customer options for material rights, or options to acquire additional goods or services for free or
at a discount. If the customer options are determined to represent a material right, the material right is recognized as a
separate performance obligation at the outset of the arrangement. Performance obligations are promised goods or services
in a contract to transfer a distinct good or service to the customer and are considered distinct when (i) the customer can
benefit from the good or service on its own or together with other readily available resources and (ii) the promised good or
service is separately identifiable from other promises in the contract. In assessing whether promised goods or services are
distinct, we consider factors such as the stage of development of the underlying intellectual property, the capabilities of the
customer to develop the intellectual property on their own or whether the required expertise is readily available and
whether the goods or services are integral or dependent to other goods or services in the contract.
We estimate the transaction price based on the amount expected to be received for transferring the promised goods
or services in the contract. The consideration may include fixed consideration or variable consideration. At the inception of
each arrangement that includes variable consideration, we evaluate the amount of potential payment and the likelihood that
the payments will be received. We utilize either the most likely amount method or expected amount method to estimate the
amount expected to be received based on which method best predicts the amount expected to be received. The amount of
variable consideration which is included in the transaction price may be constrained, and is
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included in the transaction price only to the extent that it is probable that a significant reversal in the amount of the
cumulative revenue recognized will not occur in a future period.
Our contracts often include development and regulatory milestone payments which are assessed under the most
likely amount method and constrained if it is probable that a significant revenue reversal would occur. Milestone payments
that are not within our control or the licensee’s control, such as regulatory approvals, are not considered probable of being
achieved until those approvals are received. At the end of each reporting period, we re-evaluate the probability of
achievement of such development milestones and any related constraint, and if necessary, adjust our estimate of the overall
transaction price. Any such adjustments are recorded on a cumulative catch-up basis, which would affect collaboration
revenues in the period of adjustment. To date, we have not recognized any consideration related to the achievement of
development, regulatory, or commercial milestone revenue resulting from any of our collaboration arrangements.
For arrangements that include sales-based royalties, including milestone payments based on the level of sales, and
the license is deemed to be the predominant item to which the royalties relate, we recognize revenue at the later of (i) when
the related sales occur, or (ii) when the performance obligation to which some or all of the royalty has been allocated has
been satisfied (or partially satisfied). To date, we have not recognized any consideration related to sales-based royalty
revenue resulting from any of our collaboration arrangements.
We allocate the transaction price based on the estimated stand-alone selling price of each of the performance
obligations. We must develop assumptions that require judgment to determine the stand-alone selling price for each
performance obligation identified in the contract. We utilize key assumptions to determine the stand-alone selling price for
service obligations, which may include other comparable transactions, pricing considered in negotiating the transaction and
the estimated costs. Additionally, in determining the standalone selling price for material rights, we utilize comparable
transactions, industry standards for product development and clinical trial success probabilities and estimates of option
exercise likelihood. Variable consideration is allocated specifically to one or more performance obligations in a contract
when the terms of the variable consideration relate to the satisfaction of the performance obligation and the resulting
amounts allocated are consistent with the amounts we would expect to receive for the satisfaction of each performance
obligation.
The consideration allocated to each performance obligation is recognized as revenue when control is transferred
for the related goods or services. For performance obligations which consist of licenses and other promises, we utilize
judgment to assess the nature of the combined performance obligation to determine whether the combined performance
obligation is satisfied over time or at a point in time and, if over time, the appropriate method of measuring progress. We
evaluate the measure of progress each reporting period and, if necessary, adjust the measure of performance and related
revenue recognition.
Upfront payments and fees are recorded as contract liabilities within deferred revenue upon receipt or when due
until we perform our obligations under these arrangements. Amounts are recorded as accounts receivable when our rights
to consideration are unconditional. A significant portion of revenue recognized from the Neurocrine Collaboration is
related to performance obligations pursuant to which revenue is recognized using a proportional performance model.
Revenue is recognized using input-based measurements, which involves the measurement of progress toward each
performance obligation based on the actual costs incurred compared to total projected costs. We estimate the expected
remaining costs to complete the research and development services for each performance obligation. We evaluate the
measure of progress each reporting period and, if necessary, adjust the measure and related revenue recognition.
Accrued Research and Development Expenses
As part of the process of preparing our financial statements, we are required to estimate our accrued expenses as
of each balance sheet date. This process involves reviewing open contracts and purchase orders, communicating with our
personnel to identify services that have been performed on our behalf and estimating the level of service performed and the
associated cost incurred for the service when we have not yet been invoiced or otherwise notified of the actual cost. The
majority of our service providers invoice us monthly in arrears for services performed or when contractual milestones are
met. We make estimates of our accrued expenses as of each balance sheet date based on facts and
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circumstances known to us at that time. We periodically confirm the accuracy of our estimates with the service providers
and make adjustments if necessary. The significant estimates in our accrued research and development expenses include the
costs incurred for services performed by our vendors in connection with research and development activities for which we
have not yet been invoiced.
We record our expenses related to research and development activities on our estimates of the services received
and efforts expended pursuant to quotes and contracts with vendors that conduct research and development on our behalf.
The financial terms of these agreements are subject to negotiation, vary from contract to contract and may result in uneven
payment flows. There may be instances in which payments made to our vendors will exceed the level of services provided
and result in a prepayment of the research and development expense. In accruing service fees, we estimate the time period
over which services will be performed and the level of effort to be expended in each period. If the actual timing of the
performance of services or the level of effort varies from our estimate, we adjust the accrual or prepaid accordingly. Non-
refundable advance payments for goods and services that will be used in future research and development activities are
expensed when the activity has been performed or when the goods have been received rather than when the payment is
made.
Although we do not expect our estimates to be materially different from amounts actually incurred, if our
estimates of the status and timing of services performed differ from the actual status and timing of services performed, it
could result in us reporting amounts that are too high or too low in any particular period. To date, there have been no
material differences between our estimates of such expenses and the amounts actually incurred.
Results of Operations
Comparison of the years ended December 31, 2020 and 2019:
The following table summarizes our results of operations for the years ended December 31, 2020 and 2019,
respectively, together with the changes in those items in dollars:
Collaboration revenue
Operating expenses:
Research and development
General and administrative
Total operating expenses
Other income:
Interest income
Other income
Total other income
Net income (loss)
Collaboration Revenue
Year ended
December 31,
2020
2019
(in thousands)
Change
$
171,128 $
104,391 $
66,737
108,753
34,991
143,744
1,659
7,698
9,357
36,741
$
119,735
36,335
156,070
6,457
1,625
8,082
(43,597)
$
$
(10,982)
(1,344)
(12,326)
(4,798)
6,073
1,275
80,338
Collaboration revenue was $171.1 million for the year ended December 31, 2020, and $104.4 million for the year
ended December 31, 2019. The $66.7 million increase in collaboration revenue in 2020 was primarily a result of the
termination of the AbbVie Tau Collaboration and the AbbVie Alpha-Synuclein Collaboration in August 2020. We
recognized $50.8 million related to research services from the AbbVie Tau Collaboration in the year ended December 31,
2020. This amount included $4.5 million related to research services provided prior to the termination date and $46.3
million of deferred revenue remaining under the agreement at the termination date as all of our obligations were complete
as of September 30, 2020. We also recognized $63.7 million related to research services from the AbbVie Alpha-Synuclein
Collaboration in the year ended December 31. 2020. This amount included $4.8 million related to research services
provided prior to the termination date and $58.9 million of deferred revenue remaining under the agreement at the
termination date as all of our obligations were complete as of September 30, 2020. Additionally, we
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recognized $56.7 million of revenue related to the Neurocrine Collaboration for collaboration-related services provided and
expenses reimbursed in the year ended December 31, 2020. We expect the termination of the collaboration related to VY-
AADC Program will result in a decrease in revenue related to services provided and expenses reimbursed from the
Neurocrine Collaboration.
Our collaboration revenues were not materially impacted by the COVID-19 pandemic during the year ended
December 31, 2020. In subsequent periods, the COVID-19 pandemic could affect our collaboration revenues and our
operations.
Research and Development Expense
Research and development expense decreased by $10.9 million from $119.7 million for the year ended
December 31, 2019 to $108.8 million for the year ended December 31, 2020. The following table summarizes our research
and development expenses for the years ended December 31, 2020 and 2019:
Year ended
December 31,
2020
2019
(in thousands)
Change
External research and development expenses
Employee and contractor related expenses
Facility, technology, and other expenses
License fees
Total research and development expenses
$
44,698 $
44,895
18,634
526
$ 108,753
64,212
38,211
16,693
619
$ 119,735
$ (19,514)
6,684
1,941
(93)
$ (10,982)
The decrease in research and development expense for the year ended December 31, 2020 was primarily
attributable to the following:
● a reduction of approximately $19.5 million for external research and development costs primarily related to
clinical and manufacturing activities related to the VY-AADC Program, and preclinical and manufacturing
activities related to our VY-HTT01 Program for Huntington’s disease;
● offset by an increase of approximately $6.7 million for employee-related and consultant compensation costs
as we continue to increase research and development headcount to support our internal efforts on program
activities; and
● an increase of approximately $1.9 million for facility and other costs including rent, depreciation,
maintenance and other expenses due to the additional space leased at 75 Hayden Avenue;
The COVID-19 pandemic continues to evolve rapidly. Our corporate headquarters is in Massachusetts, a state
particularly hard hit by the pandemic. We have and will continue to adhere to applicable guidelines and safety measures
including stay-at-home policies and the reporting of only essential personnel for business continuity to ensure the safety of
our employees, consultants, contractors, and staff. Certain of our clinical trial sites and collaboration partners have
experienced facility closures or been subject to quarantines, travel restrictions and other governmental restrictions and have
appropriately diverted attention and resources to respond to the impacts of COVID-19 on their own operations and
personnel. Some have even become involved in research and development efforts related to COVID-19.
The current workplace safety measures that we have enacted in response to COVID-19 have required a reduction
in on-site activity at our facilities in Massachusetts, including in our laboratories in which preclinical experiments are
conducted. As a result, we have had to prioritize our preclinical experiments and terminate or delay some non-critical
experiments in order to maintain critical experiments for our preclinical programs.
We will continue to monitor the issues raised by the global spread of COVID-19 and have put in place and will
continue to put in place measures as appropriate and necessary for, or that we believe to be in the best interest of, our
business, employees, collaborators, stockholders, and the community.
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General and Administrative Expense
General and administrative expense decreased by $1.3 million from $36.3 million for the year ended
December 31, 2019 to $35.0 million for the year ended December 31, 2020. The change in general and administrative
expense was primarily attributable to the following:
● a decrease of approximately $1.8 million for legal and intellectual property expenses;
● offset by an increase of approximately $0.5 million for compensation costs associated with the increase in
administrative function headcount;
Other Income, Net
Interest and other income of approximately $9.4 million and $8.1 million was recognized in the years ended
December 31, 2020 and 2019, primarily driven by $7.7 million and $1.6 million in the years ended December 31, 2020 and
2019, respectively, related to gains on our common stock investment in and warrants to purchase shares of common stock
of CLPT, and interest income on marketable securities balances.
Comparison of year ended December 31, 2019 and 2018:
The following table summarizes our results of operations for the year ended December 31, 2019 and 2018,
respectively, together with the changes in those items in dollars:
Collaboration revenue
Operating expenses:
Research and development
General and administrative
Total operating expenses
Other income:
Interest income
Other income (expense)
Total other income, net
Loss before income taxes
Income tax benefit
Net loss
Collaboration Revenue
Year ended
December 31,
2019
2018
(in thousands)
Change
$
104,391 $
7,619 $
96,772
119,735
36,335
156,070
6,457
1,625
8,082
(43,597)
—
(43,597)
$
64,905
33,809
98,714
3,310
(683)
2,627
(88,468)
180
(88,288)
$
$
54,830
2,526
57,356
3,147
2,308
5,455
44,871
(180)
44,691
Collaboration revenue was $104.4 million for the year ended December 31, 2019, and $7.6 million for the year
ended December 31, 2018. The $96.8 million increase in collaboration revenue in 2019 was primarily a result of the
termination of the Sanofi Genzyme Collaboration in June 2019, as well as our entries into the Neurocrine Collaboration and
AbbVie Alpha-Synuclein Collaboration in the beginning of 2019. As a result of the termination, we paid $10.0 million to
Sanofi Genzyme and paid an additional $10.0 million in September 2020 after the filing of an IND application for a
product candidate incorporating certain intellectual property rights developed under or substantially related to VY-HTT01
for Huntington’s disease, or a Post-Termination HD Product. We recognized $31.8 million of revenue related to the Sanofi
Genzyme Collaboration in 2019. This amount includes $2.9 million related to research services provided prior to the
termination date, $0.2 million of in-kind related services, and $48.7 million of deferred revenue remaining under the
agreement at the termination date. These amounts were offset by the $10.0 million paid in June 2019 and the $10.0 million
paid to Sanofi Genzyme related to the filing of an IND application in September 2020. Additionally, we
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recognized $11.3 million, $1.3 million, and $60.0 million of revenue related to the AbbVie Tau Collaboration, AbbVie
Alpha-Synuclein Collaboration, and the Neurocrine Collaboration, respectively, for collaboration-related services provided
and expenses reimbursed.
Research and Development Expense
Research and development expense increased by $54.8 million from $64.9 million for the year ended
December 31, 2018 to $119.7 million for the year ended December 31, 2019. The following table summarizes our research
and development expenses, for the year ended December 31, 2019 and 2018, respectively:
Year ended
December 31,
2019
2018
(in thousands)
Change
External research and development expenses
Employee and contractor related expenses
Facility, technology, and other expenses
License fees
Total research and development expenses
$
64,212 $
38,211
16,693
619
$ 119,735
$
28,890
26,075
9,305
635
64,905
$
$
35,322
12,136
7,388
(16)
54,830
The change in research and development expense was primarily attributable to research and development, and
included the following:
● approximately $35.3 million for increased external research and development costs primarily related to
clinical and manufacturing activities for the VY-AADC Program, and preclinical and manufacturing activities
for the Huntington’s Program.
● approximately $12.1 million for increased research and development employee-related and consultant
compensation costs (including an increase of $2.7 million in stock-based compensation) as we continue to
increase research and development headcount to support our program pipeline; and
● approximately $7.4 million for increased facility and other costs including rent, depreciation, maintenance
and other expenses due to the additional space leased at 64 Sidney Street and 75 Sidney Street;
General and Administrative Expense
General and administrative expense increased by $2.5 million from $33.8 million for the year ended
December 31, 2018 to $36.3 million for the year ended December 31, 2019. The change in general and administrative
expense was primarily attributable to the following:
● approximately $6.4 million for increased employee compensation cost due to increases in headcount and
stock-based compensation. The increase is offset by the recognition of $5.4 million of stock-based
compensation related to the retirement agreement with our former Chief Executive Officer, Dr. Steven Paul
for the year ended December 31, 2018;
● approximately $1.1 million for increased legal and intellectual property expenses; and
● approximately $0.4 million for increased facility and other costs including rent, depreciation, maintenance
and other expenses.
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Other Income, Net
Interest and other income of approximately $8.1 million and $2.6 million was recognized in the years ended
December 31, 2019 and 2018, respectively, related to interest income on marketable securities balances, which increased
by $235.0 million during 2019 as a result of our AbbVie Alpha-Synuclein and Neurocrine Collaborations, in addition to
gains and losses on our common stock investment in and warrants to purchase shares of common stock of CLPT.
Income Tax
There was no income tax payable for the year ended December 31, 2019. We recorded an income tax benefit of
$0.2 million in the year ended December 31, 2018 related to our alternative minimum tax, or AMT, liability.
Liquidity and Capital Resources
Sources of Liquidity
We have funded our operations primarily through private placements of redeemable convertible preferred stock,
public offerings of our common stock, the Sanofi Genzyme Collaboration which commenced in February 2015 and was
terminated in June 2019, the AbbVie Tau Collaboration which commenced in February 2018 and was terminated in August
2020, the AbbVie Alpha-Synuclein Collaboration which commenced in February 2019 and was terminated in August
2020, and the Neurocrine Collaboration, which commenced in March 2019.
In February 2021, Neurocrine notified us it had elected to terminate the Neurocrine Collaboration solely with
regards to the VY-AADC Program, effective August 2, 2021. The Neurocrine Collaboration Agreement remains in full
force and effect for each other program thereunder. We intend to support Neurocrine, the study sponsor and IND holder, on
ongoing matters related to the completion of imaging and clinical assessments requested by the DSMB and the provision of
other information requested by the FDA for the RESTORE-1 Phase 2 clinical trial. As a result of the termination,
subsequent to the Neurocrine VY-AADC Program Termination Effective Date, Neurocrine will no longer reimburse us for
research and development activities related to the VY-AADC Program.
As of December 31, 2020, we had cash, cash equivalents, and marketable debt securities of $174.8 million. Based
upon our current operating plans, we expect that our existing cash, cash equivalents, and marketable debt securities as well
as amounts expected to be received for reimbursement amounts expected from development costs related to our
collaboration and license agreement with Neurocrine will enable us to meet our planned operating expenses and capital
expenditure requirements into mid-2022.
Cash Flows
The following table provides information regarding our cash flows for the years ended December 31, 2020, 2019,
and 2018.
Net cash (used in) provided by:
Operating activities
Investing activities
Financing activities
Net increase in cash and cash equivalents
2020
Year ended
December 31,
2019
(in thousands)
2018
$
$
(96,716) $
112,995
3,163
19,442
$
48,666
(90,477)
80,994
39,183
$
$
(15,887)
26,467
4,749
15,329
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Cash Flows from Operating Activities
Net cash used in operating activities was $96.7 million during the year ended December 31, 2020. The cash used
in operating activities for the year ended December 31, 2020 was primarily driven by the one-time recognition of $105.2
million deferred revenue related to the termination of the AbbVie Tau Collaboration and the AbbVie Alpha-Synuclein
Collaboration, offset by $36.7 million of net income, and changes in working capital.
Net cash provided by operating activities was $48.7 million during the year ended December 31, 2019 and was
primarily due to an increase in cash received of $157.0 million from the upfront payments related to the AbbVie Alpha-
Synuclein Collaboration and the Neurocrine Collaboration, offset by an increase of $57.4 million in operating expenses, net
of stock-based compensation and depreciation, as we increased our research and development activities and infrastructure
to support our program initiatives.
Net cash used in operating activities was $15.9 million during the year ended December 31, 2018 and was
primarily due to an increase in deferred revenue of $69.0 million from the upfront payment related to the AbbVie Tau
Collaboration in 2018, offset by a $16.7 million increase in operating expenses, net of stock-based compensation and
depreciation, due to increased research and development activities, as well as higher general and administrative expenses.
The decrease in cash used in operating activities was also offset by an increase in prepaid expenses and other current assets
as well as a decrease in accrued expenses.
Cash Flows from Investing Activities
Net cash provided by investing activities was $113.0 million during the year ended December 31, 2020. The cash
provided by investing activities for the year ended December 31, 2020 was primarily due to proceeds from maturities of
marketable securities of $195.5 million, offset by purchases of marketable securities of $70.4 million and purchases of
property and equipment of $12.3 million.
Net cash used in investing activities was $90.5 million during the year ended December 31, 2019. The cash used
in investing activities for the year ended December 31, 2019 was primarily due to purchases of marketable securities of
$494.2 million and purchases of property and equipment of $5.1 million, offset by proceeds from maturities of marketable
securities of $411.3 million.
Net cash provided by investing activities was $26.5 million during the year ended December 31, 2018. The cash
provided by investing activities for the year ended December 31, 2018 was primarily due to proceeds from maturities of
marketable securities of $364.0 million offset by purchase of marketable securities of $333.2 million and purchases of
property and equipment of $4.3 million.
Cash Flows from Financing Activities
Net cash provided by financing activities was $3.2 million during the year ended December 31, 2020 primarily
due to the proceeds from the exercise of stock options, and purchases by our employees of our common stock under our
employee stock purchase plan.
Net cash provided by financing activities was $81.0 million during the year ended December 31, 2019 primarily
related to the issuance of 4,179,728 shares of our common stock to Neurocrine pursuant to a stock purchase agreement in
connection with the Neurocrine Collaboration as well as proceeds from exercises of stock options.
Net cash provided by financing activities was $4.7 million during the year ended December 31, 2018 related to
proceeds from exercises of stock options, and purchases by our employees of our common stock under our employee stock
purchase plan.
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Funding Requirements
We expect our expenses to increase in connection with our ongoing activities, particularly as we continue the
research and development of, continue or initiate clinical trials of, and seek marketing approval for, our product candidates.
In addition, if we obtain marketing approval for any of our product candidates, we expect to incur significant expenses
related to program sales, marketing, manufacturing and distribution to the extent that such sales, marketing and distribution
are not the responsibility of potential collaborators. Furthermore, we expect to incur increasing costs associated with
operating as a public company, meeting financial controls, satisfying regulatory and quality standards, fulfilling healthcare
compliance requirements, and maintaining product, clinical trial and directors’ and officers’ liability insurance coverage.
Accordingly, we will need to obtain substantial additional funding in connection with our continuing operations. If we are
unable to raise capital or enter into business development transactions when needed or on acceptable terms, we could be
forced to delay, reduce or eliminate our research and development programs or any future commercialization efforts.
Based upon our current operating plan, we expect that our existing cash, cash equivalents, and marketable debt
securities as well as amounts expected to be received for reimbursement amounts expected from development costs related
to the Neurocrine Collaboration Agreement, will enable us to meet our planned operating expenses and capital expenditure
requirements into mid-2022. Our future capital requirements will depend on many factors, including:
● the scope, progress, results, and costs of product discovery, preclinical studies and clinical trials for our
product candidates and any required companion devices;
● the scope, progress, results, costs, prioritization, and number of our research and development programs;
● the progress and status of our strategic collaborations, including any research and development costs for
which we are responsible, our collaborators’ willingness and ability to approve desirable budgets for research
and development costs for which they are responsible, the potential exercise by our collaboration partners of
any options to develop or license certain products and product candidates that they might have, our potential
receipt of future milestone payments and royalties from our collaboration partners, and any decisions by our
collaborators to exercise their rights to terminate a collaboration in whole or in part;
● the extent to which we are obligated to reimburse, or entitled to reimbursement of, preclinical development
and clinical trial costs, or the achievement of milestones or occurrence of other developments that trigger
payments, under any other collaboration agreement to which we might become a party;
● the costs, timing and outcome of regulatory review of our product candidates;
● our ability to establish and maintain collaboration, distribution, or other marketing arrangements for our
product candidates on favorable terms, if at all;
● the costs and timing of preparing, filing and prosecuting patent applications, maintaining and enforcing our
intellectual property rights and defending intellectual property-related claims;
● the extent to which we acquire or in-license other product candidates and technologies, including any
intellectual property associated with such candidates or technologies, or acquire or invest in other businesses,
such as our investment in CLPT;
● the costs related to evaluating possible alternative devices that may be useful in the delivery of our product
candidates, including our potential delivery devices, such as the variable trajectory array guide, or V-TAG®;
● the costs of advancing our manufacturing capabilities and of securing manufacturing arrangements for pre-
commercial and commercial production;
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● the level of product sales by us or our collaborators from any product candidates for which we obtain
marketing approval in the future;
● the costs of operating as a public company, meeting applicable financial, regulatory, and quality control
standards, fulfilling healthcare compliance requirements, and maintaining adequate product, clinical trial, and
directors’ and officers’ liability insurance coverage; and
● the costs of establishing or contracting for sales, manufacturing, marketing, distribution, and other
commercialization capabilities if we obtain regulatory approvals to market our product candidates.
Identifying potential product candidates and conducting preclinical studies and clinical trials is a time-consuming,
expensive and uncertain process that takes years to complete. We may never generate the necessary data or results required
to obtain marketing approval and achieve product sales. In addition, our product candidates, if approved, may not achieve
commercial success. Our product revenues, if any, and any commercial milestone payments or royalty payments under our
collaboration agreements, will be derived from sales of products that may not be commercially available for many years, if
at all. Accordingly, we will need to continue to rely on additional financing and business development transactions to
achieve our business objectives. Adequate additional financing may not be available to us on acceptable terms, or at all.
Until such time, if ever, as we can generate product revenues sufficient to achieve consistent profitability, we
expect to finance our cash needs through a combination of equity offerings, debt financings, collaborations, strategic
alliances and licensing arrangements. We do not have any committed external source of funds other than the amounts we
are entitled to receive from Neurocrine for the reimbursement of certain research and development expenses, the
achievement of specified regulatory and commercial milestones, and royalty payments related to ongoing programs under
the Neurocrine Collaboration. To the extent that we raise additional capital through the sale of equity or equity-linked
securities, including convertible debt, our stockholders’ ownership interests will be diluted, and the terms of these securities
may include liquidation or other preferences that adversely affect our existing stockholders’ rights as holders of our
common stock. Debt financing and preferred equity financing, if available, may involve agreements that include covenants
limiting or restricting our ability to take specific actions, such as incurring additional debt, obtaining additional capital,
acquiring or divesting businesses, making capital expenditures or declaring dividends.
If we raise additional funds through collaborations, strategic alliances or licensing arrangements with third parties,
we may have to relinquish valuable rights to our technologies, future revenue streams, research programs or product
candidates or to grant licenses on terms that may not be favorable to us. If we are unable to raise additional funds through
equity or debt financings when needed, we may be required to delay, limit, reduce or terminate our product development or
future commercialization efforts or grant rights to develop and market product candidates that we would otherwise prefer to
develop and market ourselves.
Contractual Obligations
We enter into agreements in the normal course of business with clinical research organizations, contract
manufacturing organizations, and institutions to license intellectual property. These contracts are cancelable at any time by
us, generally upon 30 to 90 days prior written notice.
Our agreements to license intellectual property include potential milestone payments that are dependent upon the
development of products using the intellectual property licensed under the agreements and contingent upon the
achievement of clinical trial or regulatory approval milestones. We may also be required to pay annual maintenance fees or
minimum amounts payable ranging from low-four digits to low five-digits depending upon the terms of the applicable
agreement.
We also have non-cancelable operating lease commitments arising from our leases of office and laboratory space
at our facilities in Cambridge and Lexington, Massachusetts. We expect lease costs under these commitments to total $7.8
million in 2021 and increase annually; in 2025, we expect total lease costs of approximately $9.6 million.
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As described elsewhere in this Annual Report on Form 10-K including in “Part I, Item 1—Business,” we are also
currently party to a collaboration agreement with Neurocrine.
Off-Balance Sheet Arrangements
We did not have, during the periods presented, and we do not currently have, any off-balance sheet arrangements,
as defined under applicable rules of the Securities and Exchange Commission, or the SEC.
Smaller Reporting Company Status
We previously qualified as a “smaller reporting company,” as defined in Rule 12b-2 under the Exchange Act, and
have been permitted to rely, and have relied, on the reduced disclosure requirements available to smaller reporting
companies, including reduced disclosure obligations regarding executive compensation. Our ability to rely on the reduced
disclosure requirements available to smaller reporting companies will cease after the filing of this Annual Report on Form
10-K, including those portions of our definitive proxy statement relating to our 2021 Annual Meeting of Stockholders
incorporated by reference into Part III of this Annual Report on Form 10-K.
ITEM 7A.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
We are exposed to market risk related to changes in interest rates. We have policies requiring us to invest in high-
quality issuers, limit our exposure to any individual issuer, and ensure adequate liquidity. Our primary exposure to market
risk is interest rate sensitivity, which is affected by changes in the general level of U.S. interest rates, particularly because
our investments, including cash equivalents, are in the form of money market fund and marketable securities and are
invested in U.S. Treasury and U.S. government agency obligations. Due to the short-term duration of our investment
portfolio and the low risk profile of our investments, an immediate 100 basis point change in interest rates would not have
had a material effect on the fair market value of our portfolio.
We are not currently exposed to market risk related to changes in foreign currency exchange rates; however, we
may contract with vendors that are located in Asia and Europe in the future and may be subject to fluctuations in foreign
currency rates at that time.
Inflation generally affects us by increasing our cost of labor and clinical trial costs. We do not believe that
inflation had a material effect on our business, financial condition, or results of operations during the year ended
December 31, 2020.
ITEM 8.
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The financial statements required to be filed pursuant to this Item 8 are appended to this report. An index of those
financial statements is found in Item 15.
ITEM 9.
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
ITEM 9A.
CONTROLS AND PROCEDURES
Management’s Evaluation of Disclosure Controls and Procedures
We maintain “disclosure controls and procedures,” as defined in Rules 13a-15(e) or 15d-15(e) under the Exchange
Act to mean controls and other procedures of a company that are designed to ensure that information required to be
disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized,
and reported within the time periods specified in the SEC’s rules and forms. Our disclosure controls and procedures
include, without limitation, controls and other procedures designed to ensure that information required to be disclosed by us
in the reports we file or submit under the Exchange Act is accumulated and communicated to our management, including
our principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required
disclosure.
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Our management, with the participation of our principal executive officer and principal financial officer, evaluated
the effectiveness of our disclosure controls and procedures as of December 31, 2020. Our management recognizes that any
controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving
their objectives, and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible
controls and procedures. Our principal executive officer and principal financial officer have concluded based upon the
evaluation described above that, as of December 31, 2020, our disclosure controls and procedures were effective at the
reasonable assurance level.
We continue to review and document our disclosure controls and procedures and may from time to time make
changes aimed at enhancing their effectiveness and to ensure that our systems evolve with our business.
Management’s Annual Report on Internal Control over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting.
Internal control over financial reporting is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act as a process
designed by, or under the supervision of, a company’s principal executive officer and principal financial officer, or persons
performing similar functions, and effected by a company’s board of directors, management, and other personnel, to provide
reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external
purposes in accordance with generally accepted accounting principles and includes those policies and procedures that:
● pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions
and dispositions of a company’s assets;
● provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial
statements in accordance with generally accepted accounting principles, and that a company’s receipts and
expenditures are being made only in accordance with authorizations of our management and directors; and
● provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or
disposition of our assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect
misstatements. Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may
become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may
deteriorate.
Under the supervision of and with the participation of our principal executive officer and principal financial and
accounting officer, our management assessed the effectiveness of our internal control over financial reporting as of
December 31, 2020 based on the criteria set forth by the Committee of Sponsoring Organizations of the Treadway
Commission (COSO) in Internal Control—Integrated Framework (2013 framework). Based on this assessment,
management concluded that our internal control over financial reporting was effective as of December 31, 2020.
The effectiveness of our internal control over financial reporting as of December 31, 2020, has been audited by
Ernst & Young LLP, an independent registered public accounting firm, who has issued an attestation report on such audit,
which is included herein.
Changes in Internal Control over Financial Reporting
No change in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the
Exchange Act) occurred during our fiscal quarter ended December 31, 2020 that has materially affected, or is reasonably
likely to materially affect, our internal control over financial reporting.
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Report of Independent Registered Public Accounting Firm
To the Stockholders and the Board of Directors of Voyager Therapeutics, Inc.
Opinion on Internal Control over Financial Reporting
We have audited Voyager Therapeutics, Inc.’s internal control over financial reporting as of December 31, 2020, based on criteria
established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway
Commission (2013 framework) (the COSO criteria). In our opinion, Voyager Therapeutics, Inc. (the Company) maintained, in all
material respects, effective internal control over financial reporting as of December 31, 2020, based on the COSO criteria.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB),
the consolidated balance sheets of the Company as of December 31, 2020 and 2019, the related consolidated statements of operations
and comprehensive income (loss), stockholders’ equity, and cash flows for each of the three years in the period ended December 31,
2020, and the related notes and our report dated February 25, 2021 expressed an unqualified opinion thereon.
Basis for Opinion
The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of
the effectiveness of internal control over financial reporting included in the accompanying Management’s Annual Report on Internal
Control Over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting
based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the
Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange
Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects.
Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness
exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such
other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.
Definition and Limitations of Internal Control Over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting
principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the
maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the
company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in
accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in
accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention
or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the
financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of
any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in
conditions, or that the degree of compliance with the policies or procedures may deteriorate.
/s/ Ernst & Young LLP
Boston, Massachusetts
February 25, 2021
ITEM 9B.
OTHER INFORMATION
None.
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PART III
ITEM 10.
DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
Incorporated by reference from the information in our Proxy Statement for our 2021 Annual Meeting of
Stockholders, which we expect to file with the SEC within 120 days of the end of the fiscal year to which this Annual
Report on Form 10-K relates.
ITEM 11.
EXECUTIVE COMPENSATION
Incorporated by reference from the information in our Proxy Statement for our 2021 Annual Meeting of
Stockholders, which we expect to file with the SEC within 120 days of the end of the fiscal year to which this Annual
Report on Form 10-K relates.
ITEM 12.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
AND RELATED STOCKHOLDER MATTERS
Incorporated by reference from the information in our Proxy Statement for our 2021 Annual Meeting of
Stockholders, which we expect to file with the SEC within 120 days of the end of the fiscal year to which this Annual
Report on Form 10-K relates.
ITEM 13.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
INDEPENDENCE
Incorporated by reference from the information in our Proxy Statement for our 2021 Annual Meeting of
Stockholders, which we expect to file with the SEC within 120 days of the end of the fiscal year to which this Annual
Report on Form 10-K relates.
ITEM 14.
PRINCIPAL ACCOUNTANT FEES AND SERVICES
Incorporated by reference from the information in our Proxy Statement for our 2021 Annual Meeting of
Stockholders, which we expect to file with the SEC within 120 days of the end of the fiscal year to which this Annual
Report on Form 10-K relates.
ITEM 15.
EXHIBITS, FINANCIAL STATEMENT SCHEDULES
PART IV
(a)(1) Financial Statements.
Report of independent registered public accounting firm
Consolidated Balance Sheets
Consolidated Statements of Operations and Comprehensive Income (Loss)
Consolidated Statements of Stockholders’ Equity
Consolidated Statements of Cash Flows
Notes to consolidated financial statements
(a)(2) Financial Statement Schedules.
135
Pages
F- 1
F-3
F-4
F-5
F-6
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Table of Contents
All schedules have been omitted because they are not required or because the required information is given in the
Consolidated Financial Statements or Notes thereto set forth under Item 8 above.
(a)(3) Exhibits.
See the Exhibit Index immediately preceding the signature page of this Annual Report on Form 10-K. The
exhibits listed in the Exhibit Index below are filed or incorporated by reference as part of this Annual Report on Form 10-
K.
ITEM 16.
FORM 10-K SUMMARY
This Annual Report on Form 10-K does not include a summary.
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Table of Contents
Report of Independent Registered Public Accounting Firm
To the Stockholders and the Board of Directors of Voyager Therapeutics, Inc.
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of Voyager Therapeutics, Inc. (the “Company”) as
of December 31, 2020 and 2019, the related consolidated statements of operations and comprehensive income (loss),
stockholders’ equity, and cash flows for each of the three years in the period ended December 31, 2020, and the related
notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial
statements present fairly, in all material respects, the financial position of the Company at December 31, 2020 and 2019,
and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2020, in
conformity with U.S. generally accepted accounting principles.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board
(United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2020, based on
criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the
Treadway Commission (2013 framework) and our report dated February 25, 2021 expressed an unqualified opinion
thereon.
Adoption of ASU No. 2016-02
As discussed in Note 2 to the consolidated financial statements, the Company changed its method of accounting
for leases in 2019 due to the adoption of ASU No. 2016-02, Leases, and the related amendments.
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express
an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the
PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities
laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial statements are free of material
misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material
misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those
risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial
statements. Our audits also included evaluating the accounting principles used and significant estimates made by
management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a
reasonable basis for our opinion.
Critical Audit Matter
The critical audit matter communicated below is a matter arising from the current period audit of the financial
statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts
or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging,
subjective or complex judgments. The communication of the critical audit matter does not alter in any way our opinion on
the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below,
providing separate opinions on the critical audit matter or on the accounts or disclosures to which it relates.
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Revenue recognition under the proportional performance model
Description of the
Matter
As discussed in Note 9 to the consolidated financial statements, in 2019 the Company entered into a
Collaboration Agreement which resulted in collaboration revenue of $56.7 million for the year ended
December 31, 2020. The Company recognizes consideration allocated to each performance
obligation using the proportional performance method. Revenue is recognized using input-based
measurements, which involves the measurement of progress toward each performance obligation
based on the actual costs incurred compared to total projected costs.
Auditing collaboration and other research and development revenue recognized was especially
challenging and judgmental because the proportional performance calculation involves subjective
management assumptions about estimates of the expected remaining costs to complete the research
and development services for each performance obligation. Changes in expected remaining costs to
complete can have a material effect on the amount of collaboration revenue recognized.
How We
Addressed the
Matter in Our
Audit
We obtained an understanding of the Company’s process, evaluated the design and tested the
operating effectiveness of internal controls over the Company’s collaboration revenue recognition
process. Our procedures included, among others, testing the Company’s internal controls over the
completeness and accuracy of management’s estimates of the expected remaining costs to complete
the research and development services for each performance obligation.
Our audit procedures included, among others, the inspection of the Company’s contract and testing of
the completeness and accuracy of the underlying data used to determine the expected remaining costs
to complete the research and development services for each performance obligation. We performed
inquiries of research and development personnel to validate management’s estimates and compared
management’s estimates to the required performance obligations in the contract to assess the
reasonableness of the proportional performance calculation. We also performed a retrospective
review to assess the Company’s historical estimates of the remaining hours to complete the research
and development services and a sensitivity analysis to evaluate the materiality of reasonable changes
in management’s assumptions.
/s/ Ernst & Young LLP
We have served as the Company’s auditor since 2015.
Boston, Massachusetts
February 25, 2021
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Table of Contents
Voyager Therapeutics, Inc.
Consolidated Balance Sheets
(amounts in thousands, except share and per share data)
Assets
Current assets:
Cash and cash equivalents
Marketable securities, current
Related party collaboration receivable
Prepaid expenses and other current assets
Total current assets
Property and equipment, net
Deposits and other non-current assets
Marketable securities, non-current
Operating lease, right-of-use assets
Total assets
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable
Accrued expenses
Other current liabilities
Deferred revenue, current
Total current liabilities
Deferred revenue, non-current
Other non-current liabilities
Total liabilities
Commitments and contingencies (see note 9)
Stockholders’ equity:
Preferred stock, $0.001 par value: 5,000,000 shares authorized; no shares issued and outstanding at
December 31, 2020 and 2019
Common stock, $0.001 par value: 120,000,000 shares authorized; 37,368,027 and 36,865,116 shares
issued and outstanding at December 31, 2020 and 2019, respectively
Additional paid-in capital
Accumulated other comprehensive loss
Accumulated deficit
Total stockholders’ equity
Total liabilities and stockholders’ equity
December 31,
2020
2019
$
$
$
$
$
104,440
76,698
8,012
8,619
197,769
25,435
2,316
—
36,064
261,584
634
14,205
4,198
7,729
26,766
36,088
44,410
107,264
—
37
430,324
(134)
(275,907)
154,320
261,584
$
$
$
86,042
195,491
18,496
4,630
304,659
17,986
1,723
1,920
28,472
354,760
4,070
21,516
3,193
47,233
76,012
147,260
31,976
255,248
—
37
412,227
(104)
(312,648)
99,512
354,760
The accompanying notes are an integral part of these consolidated financial statements.
F-3
Table of Contents
Voyager Therapeutics, Inc.
Consolidated Statements of Operations and Comprehensive Income (Loss)
(amounts in thousands, except share and per share data)
Collaboration revenue
Operating expenses:
Research and development
General and administrative
Total operating expenses
Operating income (loss)
Other income (expense), net:
Interest income
Other income (expense), net
Total other income
Income (loss) before income taxes
Income tax benefit
Net income (loss)
Other comprehensive (loss) income
Net unrealized (loss) gain on available-for-sale-securities
Total other comprehensive (loss) income
Comprehensive income (loss)
Net income (loss) per share, basic
Net income (loss) per share, diluted
2020
171,128 $
$
Year ended
December 31,
2019
104,391 $
2018
7,619
108,753
34,991
143,744
27,384
1,659
7,698
9,357
36,741
—
36,741
(30)
(30)
36,711
0.99
0.98
$
$
$
119,735
36,335
156,070
(51,679)
6,457
1,625
8,082
(43,597)
—
(43,597)
29
29
(43,568)
(1.21)
(1.21)
$
$
$
$
$
$
$
64,905
33,809
98,714
(91,095)
3,310
(683)
2,627
(88,468)
180
(88,288)
34
34
(88,254)
(2.75)
(2.75)
Weighted-average common shares outstanding, basic
Weighted-average common shares outstanding, diluted
37,132,447
37,348,514
35,898,266
35,898,266
32,065,781
32,065,781
The accompanying notes are an integral part of these consolidated financial statements.
F-4
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Voyager Therapeutics, Inc.
Consolidated Statements of Stockholders’ Equity
(amounts in thousands, except share data)
Balance at December 31, 2017
Exercises of vested stock options
Vesting of restricted stock
Issuance of common stock under ESPP
Stock-based compensation expense
Unrealized gain on available-for-sale securities, net of tax
Cumulative-effect adjustment to beginning accumulated deficit and statement of operations
resulting from ASU No. 2016-01
Modified retrospective adjustment to beginning accumulated deficit and deferred revenue resulting
from ASU No. 2014-09
Net loss
Balance at December 31, 2018
Exercises of vested stock options
Issuance of common stock in connection with the Neurocrine Collaboration Agreement
Issuance of common stock under ESPP
Stock-based compensation expense
Unrealized gain on available-for-sale securities, net of tax
Net loss
Balance at December 31, 2019
Exercises of vested stock options
Vesting of restricted stock units
Issuance of common stock under ESPP
Stock-based compensation expense
Unrealized loss on available-for-sale securities, net of tax
Net income
Balance at December 31, 2020
Common Stock
Shares
31,572,044
384,186
319,891
88,774
—
—
$
Amount
32
—
—
—
—
—
—
—
—
32,364,895
250,276
4,179,728
70,217
—
—
—
36,865,116
228,436
170,367
104,108
—
—
—
37,368,027
$
$
$
—
—
—
32
1
4
—
—
—
—
37
—
—
—
—
—
—
37
Additional
Paid-In
Capital
$
$
$
$
295,019
3,891
9
969
15,710
—
—
—
—
315,598
2,713
77,613
663
15,640
—
—
412,227
2,319
—
1,279
14,499
—
—
430,324
Accumulated
Other
Comprehensive Accumulated
Loss
(287)
—
—
—
—
34
120
—
—
(133)
—
—
—
—
29
—
(104)
—
—
—
—
(30)
—
(134)
$
$
$
$
$
$
$
$
Deficit
(160,713)
—
—
—
—
—
Stockholders’
Equity
$
134,051
3,891
9
969
15,710
34
(120)
—
(19,930)
(88,288)
(269,051)
—
—
—
—
—
(43,597)
(312,648)
—
—
—
—
—
36,741
(275,907)
$
$
$
(19,930)
(88,288)
46,446
2,714
77,617
663
15,640
29
(43,597)
99,512
2,319
—
1,279
14,499
(30)
36,741
154,320
The accompanying notes are an integral part of these consolidated financial statements
F-5
Table of Contents
Voyager Therapeutics, Inc.
Consolidated Statements of Cash Flows
(amounts in thousands)
Cash flow from operating activities
Net income (loss)
Adjustments to reconcile net income (loss) to net cash (used in) provided by operating activities:
Stock-based compensation expense
Depreciation
Amortization of premiums and discounts on marketable securities
In-kind research and development expenses
Deferred rent
Change in fair value for common stock and warrants to purchase equity securities
Changes in operating assets and liabilities:
Related party collaboration receivable
Prepaid expenses and other assets
Operating lease, right-of-use assets
Other non-current assets
Accounts payable
Accrued expenses
Operating lease liabilities
Lease incentive benefit
Deferred revenue
Net cash (used in) provided by operating activities
Cash flow from investing activities
Purchases of property and equipment
Proceeds from sale of equipment
Purchases of marketable securities
Proceeds from maturities or sales of marketable securities
Net cash provided by (used in) investing activities
Cash flow from financing activities
Proceeds from the issuance of common stock in connection with the Neurocrine Collaboration Agreement, net
Proceeds from the exercise of stock options
Proceeds from the purchase of common stock under ESPP
Net cash provided by financing activities
Net increase in cash and cash equivalents
Cash, cash equivalents, and restricted cash beginning of period
Cash, cash equivalents, and restricted cash end of period
Supplemental disclosure of cash and non-cash activities
Impact of adopting new accounting standards
Operating lease right-of-use assets obtained in exchange for operating lease liabilities
Capital expenditures incurred but not yet paid
Year ended
December 31,
2019
2018
2020
$
36,741
$ (43,597)
$ (88,288)
14,934
3,817
27
—
—
(7,698)
10,484
(551)
(7,592)
275
(3,436)
(6,480)
13,439
15,640
2,765
(3,584)
616
—
(1,612)
(18,496)
1,675
2,951
(343)
2,598
11,728
(2,506)
—
—
(150,676)
(96,716)
80,831
48,666
15,710
2,117
(2,163)
176
52
807
—
(3,937)
—
(180)
(282)
(1,600)
—
321
61,380
(15,887)
(12,097)
—
(70,403)
195,495
112,995
(7,718)
172
(494,231)
411,300
(90,477)
(4,305)
—
(333,228)
364,000
26,467
—
2,319
844
3,163
19,442
86,777
$ 106,219
77,617
2,714
663
80,994
39,183
47,594
86,777
$
—
3,889
860
4,749
15,329
32,265
47,594
$
$
$
$
— $
$
$
10,818
831
— $
$
$
30,964
434
20,050
—
300
The accompanying notes are an integral part of these consolidated financial statements.
F-6
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1. Nature of business
VOYAGER THERAPEUTICS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Voyager Therapeutics, Inc. (the “Company”) is a clinical-stage gene therapy company focused on developing life-
changing treatments for patients suffering from severe neurological diseases. The Company is focused on neurological
diseases where it believes an adeno-associated virus (“AAV”) gene therapy approach that either increases or decreases the
production of a specific protein can slow or reduce the symptoms experienced by patients, and therefore have a clinically
meaningful impact. The Company has built a gene therapy platform that it believes positions itself to be a leading company
at the intersection of AAV gene therapy and severe neurological disease. The Company’s gene therapy platform enables it
to engineer, optimize, manufacture and deliver its AAV-based gene therapies that have the potential to provide durable
efficacy following a single administration.
Additionally, the Company is working to identify novel AAV capsids, which are the outer viral protein shells that
enclose the genetic material of the virus payload. The Company’s team of experts in the fields of AAV gene therapy and
neuroscience first identifies and selects severe neurological diseases that are well-suited for treatment using AAV gene
therapy. The Company then engineers and optimizes AAV vectors for delivery of the virus payload to the targeted tissue or
cells. The Company’s manufacturing process employs an established system that it believes will enable production of high
quality AAV vectors at commercial-scale. In addition to the Company’s capsid optimization efforts, it leverages novel
delivery paradigms, established routes of administration, and advances in dosing techniques to optimize delivery of its
AAV gene therapies to target tissues, regions and cell types that are critical to the disease of interest. The Company believes
it can achieve this directly, with targeted infusions to discrete regions of the brain, the spinal cord, or systemically, in
conjunction with its novel capsids.
The Company’s business strategy focuses on discovering, developing, manufacturing and commercializing its
gene therapy programs. As part of this strategy, the Company has developed core competencies specific to AAV gene
therapy development and manufacturing. This business strategy also includes business development activities that may
include in-licensing activities or partnering certain programs in certain geographies with collaborators, as the Company has
demonstrated through its ongoing collaboration with Neurocrine Biosciences, Inc. (the “Neurocrine Collaboration
Agreement”). The Company is devoting substantially all of its efforts to product research and development, market
development, and raising capital. The Company is subject to risks common to companies in the biotechnology and gene
therapy industries, including but not limited to, the need to obtain sufficient capital to continue to fund its operations, risks
of failure of preclinical studies and clinical trials, the need to obtain marketing approval for its product candidates, the need
to successfully commercialize and gain market acceptance of its product candidates, dependence on key personnel,
protection of proprietary information and technology, protection against data breaches and other cybersecurity threats,
compliance with government regulations, development by competitors of technological innovations, and ability to
transition from pilot-scale manufacturing to large-scale production of products.
The Company has incurred annual net operating losses in every year prior to 2020. As of December 31, 2020, the
Company had an accumulated deficit of $275.9 million. The Company has not generated any product revenue and has
financed its operations primarily through public offerings and private placements of its equity securities and funding from
its prior collaborations with Sanofi Genzyme Corporation (“Sanofi Genzyme”), AbbVie Biotechnology Ltd and AbbVie
Ireland Unlimited Company (collectively, “AbbVie”), and its ongoing collaboration with Neurocrine Biosciences, Inc.
(“Neurocrine”).
Based upon its current operating plan, the Company expects that its existing cash, cash equivalents, and
marketable debt securities, as well as ongoing reimbursement amounts expected from development costs related to the
Neurocrine Collaboration Agreement, will enable the Company to meet its planned operating expenses and capital
expenditure requirements into mid-2022.
There can be no assurance that the Company will be able to obtain additional debt or equity financing or generate
product revenue or revenue from collaborative partners on terms acceptable to the Company, on a timely basis
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or at all. The failure of the Company to obtain sufficient funds on acceptable terms when needed could have a material
adverse effect on the Company’s business, results of operations, and financial condition.
2. Summary of significant accounting policies
The following is a summary of significant accounting policies followed in the preparation of these financial
statements.
Basis of presentation
The accompanying consolidated financial statements include those of the Company and its subsidiary, Voyager
Securities Corporation, after elimination of all intercompany accounts and transactions. The accompanying consolidated
financial statements have been prepared in conformity with accounting principles generally accepted in the United States of
America (“GAAP”).
Use of Estimates
The preparation of consolidated financial statements in conformity with GAAP requires management to make
estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying
notes. On an ongoing basis, the Company’s management evaluates its estimates, which include, but are not limited to,
estimates related to revenue recognition, accrued expenses, stock-based compensation expense, and income taxes. The
Company bases its estimates on historical experience and other market specific or other relevant assumptions that it
believes to be reasonable under the circumstances. Actual results may differ from those estimates or assumptions.
Fair Value of Financial Instruments
ASC Topic 820, Fair Value Measurement (“ASC 820”), establishes a fair value hierarchy for instruments
measured at fair value that distinguishes between assumptions based on market data (observable inputs) and the Company’s
own assumptions (unobservable inputs). Observable inputs are inputs that market participants would use in pricing the asset
or liability based on market data obtained from sources independent of the Company. Unobservable inputs are inputs that
reflect the Company’s assumptions about the inputs that market participants would use in pricing the asset or liability, and
are developed based on the best information available in the circumstances.
ASC 820 identifies fair value as the exchange price, or exit price, representing the amount that would be received
to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As a basis for
considering market participant assumptions in fair value measurements, ASC 820 establishes a three-tier fair value
hierarchy that distinguishes between the following:
● Level 1—Quoted market prices in active markets for identical assets or liabilities.
● Level 2—Inputs other than Level 1 inputs that are either directly or indirectly observable, such as quoted
market prices, interest rates, and yield curves.
● Level 3—Unobservable inputs developed using estimates of assumptions developed by the Company, which
reflect those that a market participant would use.
To the extent that the valuation is based on models or inputs that are less observable or unobservable in the
market, the determination of fair value requires more judgment. Accordingly, the degree of judgment exercised by the
Company in determining fair value is greatest for instruments categorized in Level 3. A financial instrument’s level within
the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement.
The carrying amounts reflected in the balance sheets for cash and cash equivalents, prepaid expenses and other
current assets, accounts payable and accrued expenses approximate their fair values, due to their short-term nature.
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Table of Contents
Cash and Cash Equivalents
The Company considers all highly liquid investments purchased with original maturities of 90 days or less at
acquisition to be cash equivalents. Cash and cash equivalents include cash held in banks and amounts held in money
market funds.
Marketable Securities
The Company classifies marketable debt securities with a remaining maturity of greater than three months when
purchased as available-for-sale. Marketable debt securities with a remaining maturity date greater than one year and
marketable equity securities are classified as non-current where the Company has the intent and ability to hold these
securities for at least the next 12 months. During 2016, the Company invested in a supplier and received common stock and
warrants to purchase common stock in that entity. The common stock is considered an available-for-sale marketable equity
security and is included in current marketable securities, and the warrants are included in current assets since they expire in
September of 2021.
All available for sale debt securities are carried at fair value with the unrealized gains and losses included in other
comprehensive income (loss) as a component of stockholders’ equity until realized. Any premium or discount arising at
purchase is amortized and/or accreted to interest income and/or expense. Realized gains and losses are determined using
the specific identification method and are included in other income (expense). If any adjustment to fair value reflects a
decline in value of the investment, the Company uses a forward-looking approach based on expected losses to estimate
credit losses on certain types of financial instruments, including trade receivables and available-for-sale debt securities. No
other than temporary losses have been recognized.
Cash, cash equivalents, and marketable securities as of December 31, 2020 and 2019 consist of the following:
As of December 31, 2020
Money market funds included in cash and cash equivalents
Marketable securities:
U.S. Treasury notes
Equity securities
Total marketable securities
Total money market funds and marketable securities
As of December 31, 2019
Money market funds included in cash and cash equivalents
Marketable securities:
U.S. Treasury notes
Equity securities
Total marketable securities
Total money market funds and marketable securities
Amortized
Cost
Unrealized
Gains
Unrealized
Losses
Fair
Value
(in thousands)
$ 103,992
$
— $
— $ 103,992
70,348
1,220
$
71,568
$ 175,560
$
78,303
195,467
1,220
$ 196,687
$ 274,990
$
$
$
$
$
—
5,136
5,136
5,136
$
$
6
—
6
6
70,342
6,356
$
76,698
$ 180,690
— $
— $
78,303
52
700
752
752
$
$
28
—
28
28
195,491
1,920
$ 197,411
$ 275,714
All of the Company’s marketable debt securities at December 31, 2020 and 2019 have a contractual maturity of
one year or less.
F-9
Table of Contents
Restricted Cash
As of December 31, 2020 and 2019, the Company maintained restricted cash totaling approximately $1.8 million
and $0.7 million, respectively, held in the form of money market accounts as collateral for the Company’s facility lease
obligations. The balance is included within deposits in other non-current assets in the accompanying consolidated balance
sheets. The following table provides a reconciliation of cash, cash equivalents, and restricted cash within the consolidated
balance sheets that sum to the total of the same such amounts shown in the statements of cash flows:
Cash and cash equivalents
Restricted cash included in deposits and other noncurrent assets
Total cash, cash equivalents, and restricted cash
$
$
Property and Equipment
2020
104,440
1,779
106,219
As of December 31,
2019
(in thousands)
86,042
$
735
86,777
$
$
$
2018
46,859
735
47,594
Property and equipment consists of laboratory equipment, furniture and office equipment, and leasehold
improvements and is stated at cost, less accumulated depreciation. Maintenance and repairs that do not improve or extend
the lives of the respective assets are expensed to operations as incurred; while costs of major additions and betterments are
capitalized. Depreciation is calculated over the estimated useful lives of the assets using the straight-line method.
Impairment of Long-Lived Assets
The Company evaluates long-lived assets for potential impairment when events or changes in circumstances
indicate the carrying value of the assets may not be recoverable. Recoverability is measured by comparing the book values
of the assets to the expected future net undiscounted cash flows that the assets are expected to generate. If such assets are
considered to be impaired, the impairment to be recognized is measured by the amount by which the book values of the
assets exceed their fair value. The Company has not recognized any impairment losses from inception through
December 31, 2020.
Revenue Recognition
As of December 31, 2020, all of the Company’s revenue has been generated from its collaboration agreements
with Sanofi Genzyme, AbbVie, and Neurocrine.
The Company enters into collaboration agreements which are within the scope of ASC 606, Revenue from
Contracts with Customers (“ASC 606”), under which the Company licenses rights to certain of the Company’s product
candidates and performs research and development services. The terms of these arrangements typically include payment of
one or more of the following: non-refundable, upfront fees; reimbursement of research and development costs;
development, regulatory, and commercial milestone payments; and royalties on net sales of licensed products.
Under ASC 606, an entity recognizes revenue when its customer obtains control of promised goods or services, in
an amount that reflects the consideration which the entity expects to receive in exchange for those goods or services. To
determine the appropriate amount of revenue to be recognized for arrangements determined to be within the scope of ASC
606, the Company performs the following five steps: (i) identification of the promised goods or services in the contract; (ii)
determination of 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. The Company only applies the five-step model to contracts when it is
probable that the entity will collect consideration it is entitled to in exchange for the goods or services it transfers to the
customer.
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Table of Contents
The promised goods or services in the Company’s arrangements typically consist of license rights to the
Company’s intellectual property and research and development services. The Company provides options to additional items
in the contracts, which are accounted for as separate contracts when the customer elects to exercise such options, unless the
option provides a material right to the customer. The Company evaluates the customer options for material rights, or
options to acquire additional goods or services for free or at a discount. If the customer options are determined to represent
a material right, the material right is recognized as a separate performance obligation at the outset of the arrangement.
Performance obligations are promised goods or services in a contract to transfer a distinct good or service to the customer
and are considered distinct when (i) the customer can benefit from the good or service on its own or together with other
readily available resources and (ii) the promised good or service is separately identifiable from other promises in the
contract. In assessing whether promised goods or services are distinct, the Company considers factors such as the stage of
development of the underlying intellectual property, the capabilities of the customer to develop the intellectual property on
its own or whether the required expertise is readily available and whether the goods or services are integral or dependent to
other goods or services in the contract.
The Company estimates the transaction price based on the amount expected to be received for transferring the
promised goods or services in the contract. The consideration may include fixed consideration or variable consideration. At
the inception of each arrangement that includes variable consideration, the Company evaluates the amount of potential
payments and the likelihood that the payments will be received. The Company utilizes either the most likely amount
method or expected amount method to estimate the amount expected to be received based on which method best predicts
the amount expected to be received. The amount of variable consideration which is included in the transaction price may be
constrained, and is included in the transaction price only to the extent that it is probable that a significant reversal in the
amount of the cumulative revenue recognized will not occur in a future period.
The Company’s contracts often include development and regulatory milestone payments which are assessed under
the most likely amount method and constrained if it is probable that a significant revenue reversal would occur. Milestone
payments that are not within the Company’s control or the licensee’s control, such as regulatory approvals, are not
considered probable of being achieved until those approvals are received. At the end of each reporting period, the Company
re-evaluates the probability of achievement of such development milestones and any related constraint, and if necessary,
adjusts its estimate of the overall transaction price. Any such adjustments are recorded on a cumulative catch-up basis,
which would affect collaboration revenues in the period of adjustment. To date, the Company has not recognized any
consideration related to the achievement of development, regulatory, or commercial milestone revenue resulting from any
of the Company’s collaboration arrangements.
For arrangements that include sales-based royalties, including milestone payments based on the level of sales, and
the license is deemed to be the predominant item to which the royalties relate, the Company recognizes revenue at the later
of (i) when the related sales occur, or (ii) when the performance obligation to which some or all of the royalty has been
allocated has been satisfied (or partially satisfied). To date, the Company has not recognized any consideration related to
sales-based royalty revenue resulting from any of the Company’s collaboration arrangements.
The Company allocates the transaction price based on the estimated stand-alone selling price of each of the
performance obligations. The Company must develop assumptions that require judgment to determine the stand-alone
selling price for each performance obligation identified in the contract. The Company utilizes key assumptions to determine
the stand-alone selling price for service obligations, which may include other comparable transactions, pricing considered
in negotiating the transaction and the estimated costs. Additionally, in determining the standalone selling price for material
rights, the Company utilizes comparable transactions, clinical trial success probabilities, and estimates of option exercise
likelihood. Variable consideration is allocated specifically to one or more performance obligations in a contract when the
terms of the variable consideration relate to the satisfaction of the performance obligation and the resulting amounts
allocated are consistent with the amounts the Company would expect to receive for the satisfaction of each performance
obligation.
The consideration allocated to each performance obligation is recognized as revenue when control is transferred
for the related goods or services. For performance obligations which consist of licenses and other promises, the Company
utilizes judgment to assess the nature of the combined performance obligation to determine whether the combined
performance obligation is satisfied over time or at a point in time and, if over time, the appropriate method of
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Table of Contents
measuring progress. The Company evaluates the measure of progress each reporting period and, if necessary, adjusts the
measure of performance and related revenue recognition.
Upfront payments and fees are recorded as contract liabilities within deferred revenue on the consolidated balance
sheets until the Company performs its obligations under these arrangements. Amounts are recorded as accounts receivable
when the Company’s right to consideration is unconditional.
Research and Development
Research and development costs are charged to expense as incurred in performing research and development
activities. The costs include employee compensation costs, external research, consultant costs, sponsored research, license
fees, process development and facilities costs. Facilities costs primarily include the allocation of rent, utilities and
depreciation.
Leases
Under Accounting Standards Codification (ASC) 842 Leases, which was adopted on January 1, 2019, the
Company determines if an arrangement is or contains a lease at inception. For leases with a term of 12 months or less, the
Company does not recognize a right-of-use asset or lease liability. The Company's operating leases are recognized on its
consolidated balance sheet as other long-term assets, other current liabilities, and other long-term liabilities. The Company
does not have any finance leases.
Right-of-use assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities
represent the Company’s obligation to make lease payments arising from the lease. Operating lease right-of-use assets and
liabilities are recognized at the lease commencement date based on the present value of lease payments over the lease term.
As the Company’s leases typically do not provide an implicit rate, the Company uses an estimate of its incremental
borrowing rate based on the information available at the lease commencement date in determining the present value of
lease payments. Operating lease right-of-use assets also include the effect of any lease prepaid or deferred lease payments
and are reduced by lease incentives. The lease terms may include options to extend or terminate the lease when it is
reasonably certain that the Company will exercise that option. Lease expense is recognized on a straight-line basis over the
lease term.
The Company has lease agreements with lease and non-lease components, which are generally accounted for
separately. Non-lease components as it pertains to the Company's leased premises generally refer to common area
maintenance charges related to the premises.
Prior to January 1, 2019, rent expense and lease incentives from operating leases were recognized on a straight-
line basis over the lease term. The difference between rent expenses recognized and rental payments was recorded as
deferred rent in the accompanying consolidated balance sheets.
Research Contract Costs and Accruals
The Company has entered into various research and development contracts with research institutions and other
companies. These agreements are generally cancelable. The Company records accruals for estimated ongoing research
costs. When evaluating the adequacy of the accrued liabilities, the Company analyzes progress of the studies, including the
phase or completion of events, invoices received and contracted costs. Significant judgments and estimates may be made in
determining the accrued balances at the end of any reporting period. Actual results could differ from the Company’s
estimates. The Company’s historical accrual estimates have not been materially different from the actual costs.
Patent Costs
The Company expenses patent application and related legal costs as incurred and classifies such costs as general
and administrative expenses in the accompanying statements of operations.
F-12
Table of Contents
Stock-Based Compensation Expense
The Company accounts for its stock-based compensation awards in accordance with ASC Topic 718
Compensation—Stock Compensation (“ASC 718”). ASC 718 requires all stock-based payments to employees, directors,
and other service providers, referred to as non-employees, including grants of restricted stock units and stock options, to be
recognized as expense in the consolidated statements of operations based on their grant date fair values. The Company
estimates the fair value of options granted using the Black-Scholes option pricing model. The Company uses the fair value
of its common stock to determine the fair value of restricted stock awards and restricted stock units.
The Black-Scholes option pricing model requires inputs based on certain subjective assumptions, including (i) the
expected stock price volatility, (ii) the calculation of expected term of the award, (iii) the risk-free interest rate and
(iv) expected dividends. Due to a lack of company-specific historical and implied volatility data, the Company bases the
estimate of expected volatility on the historical volatility of a group of similar companies that are publicly traded, blended
with the historical volatility of its common stock. The historical volatility is calculated based on a period of time
commensurate with the expected term assumption. The computation of expected volatility is based on the historical
volatility of a representative group of companies with similar characteristics to the Company, including stage of product
development and life science industry focus. The Company uses the simplified method as prescribed by the SEC Staff
Accounting Bulletin No. 107, Share-Based Payment, to calculate the expected term for stock options granted to employees
as it does not have sufficient historical exercise data to provide a reasonable basis upon which to estimate the expected
term. For stock options granted to non-employees, the Company utilizes the contractual term of the arrangement as the
basis for the expected term assumption. The risk-free interest rate is based on a treasury instrument whose term is
consistent with the expected term of the stock options. The expected dividend yield is assumed to be zero as the Company
has never paid dividends and has no current plans to pay any dividends on its common stock.
The Company expenses the fair value of its stock-based compensation awards on a straight-line basis over the
associated service period, which is generally the period in which the related services are received, adjusted for actual
forfeitures of unvested awards as they occur.
The Company records the expense for stock-based compensation awards subject to performance conditions over
the remaining service period when management determines that achievement of the performance condition is probable.
Management evaluates when the achievement of a performance condition is probable based on the expected satisfaction of
the performance conditions as of the reporting date.
Income Taxes
Income taxes are recorded in accordance with ASC Topic 740, Income Taxes (“ASC 740”), which provides for
deferred taxes using an asset and liability approach. Under this method, deferred tax assets and liabilities are determined
based on the difference between the financial reporting and the tax reporting basis of assets and liabilities and are measured
using the enacted tax rates and laws that are expected to be in effect when the differences are expected to reverse. The
Company provides a valuation allowance against net deferred tax assets unless, based upon the weight of available
evidence, it is more likely than not that the deferred tax assets will be realized.
The Company accounts for uncertain tax positions in accordance with the provisions of ASC 740. When uncertain
tax positions exist, the Company recognizes the tax benefit of tax positions to the extent that the benefit will more likely
than not be realized. The determination as to whether the tax benefit will more likely than not be realized is based upon the
technical merits of the tax position as well as consideration of the available facts and circumstances. As of
December 31, 2020, the Company does not have any significant uncertain tax positions.
Comprehensive Income (Loss)
Comprehensive income (loss) is comprised of net income (loss) and other comprehensive income or loss. Other
comprehensive income or loss consists of unrealized gains or losses on marketable securities.
F-13
Table of Contents
Net Income (Loss) Per Share
Basic net income (loss) per share is calculated by dividing the net income (loss) by the weighted-average number
of shares of common stock outstanding during the period, without consideration for potentially dilutive securities. Diluted
net income (loss) per share is computed by dividing the net income (loss) by the weighted-average number of shares of
common stock and potentially dilutive securities outstanding for the period determined using the treasury-stock and if-
converted methods.
For purposes of the diluted net income (loss) per share, unvested restricted common stock and outstanding stock
options are considered to be potentially dilutive securities. Unvested restricted common stock and outstanding stock
options were excluded from the calculation of diluted net loss per share in the years ended December 31, 2019 and 2018,
because their effect would be anti-dilutive and therefore, basic and diluted net loss per share were the same for the years
ended December 31, 2019 and 2018.
The following table sets forth the outstanding potentially dilutive securities that have been excluded in the
calculation of diluted net income (loss) per share because to do so would be anti-dilutive:
Unvested restricted common stock awards
Unvested restricted common stock units
Outstanding stock options
Total
2020
156,863
527,625
5,379,856
6,064,344
As of December 31,
2019
176,471
455,404
5,317,326
5,949,201
2018
235,294
—
4,225,152
4,460,446
Basic net income (loss) and diluted weighted-average shares outstanding are as follows for the year ended
December 31, 2020, 2019, and 2018.
Numerator:
Net income (loss)
Denominator for basic net income (loss) per share:
Weighted average shares outstanding-basic
Denominator for diluted net income (loss) per share:
Weighted average shares outstanding
Common stock options and restricted stock units
Weighted average shares outstanding-diluted
Concentrations of Credit Risk and Off-Balance Sheet Risk
Year Ended December 31,
2020
2019
(in thousands, except share data)
2018
$
36,741
$
(43,597)
$
(88,288)
37,132,447
35,898,266
32,065,781
37,132,447
216,068
37,348,514
35,898,266
—
35,898,266
32,065,781
—
32,065,781
The Company has no financial instruments with off-balance sheet risk such as foreign exchange contracts, option
contracts or other foreign currency hedging arrangements. Financial instruments that potentially subject the Company to a
concentration of credit risk are cash and cash equivalents. The Company’s cash is held in accounts at financial institutions
that may exceed federally insured limits. The Company has not experienced any credit losses in such accounts and does not
believe it is exposed to any significant credit risk on these funds.
Concentration of Suppliers
The Company is dependent on third-party manufacturers to supply certain products for research and development
activities in its programs. In particular, the Company relies on a sole manufacturer to supply it with specific vectors related
to the Company’s research and development programs.
F-14
Table of Contents
Segment Information
Operating segments are defined as components of an enterprise about which separate discrete information is
available for evaluation by the chief operating decision maker in deciding how to allocate resources and assess
performance. The Company and the Company’s chief operating decision maker, the Company’s Chief Executive Officer,
views the Company’s operations and manages its business as a single operating segment, which is the business of
developing and commercializing gene therapies.
Recently Adopted Accounting Pronouncements
In 2016, the Financial Accounting Standards Board, or FASB, issued ASU 2016-13, Financial Instruments-Credit
Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”), which amends the
impairment model by requiring entities to use a forward-looking approach based on expected losses to estimate credit
losses on certain types of financial instruments, including trade receivables and available-for-sale debt securities. The
Company adopted the standard on January 1, 2020. Based on the composition of our investment portfolio, current market
conditions, and historical credit loss activity, the adoption of this standard did not have a material impact on the
consolidated financial statements and related disclosures.
In August 2018, the FASB issued ASU No. 2018-13, Disclosure Framework - Changes to the Disclosure
Requirements for Fair Value Measurement (“ASU 2018-13”). This standard eliminates, adds and modifies certain
disclosure requirements for fair value measurements as part of its disclosure framework project. The Company adopted the
standard on the required effective date of January 1, 2020. The adoption of this standard did not have a material impact on
the consolidated financial statements and related disclosures.
Recent Accounting Pronouncements
In August 2020, the FASB issued ASU No. 2020-06, Debt – Debt with Conversion and Other Options (Subtopic
470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40). This standard amends the
guidance on convertible instruments and the derivatives scope exception for contracts in an entity’s own equity and amends
the related earnings per share (“EPS”) guidance. The ASU will be effective for smaller reporting companies for fiscal years
beginning after December 15, 2023 and interim periods within those fiscal years. Early adoption is permitted in fiscal years
beginning after December 15, 2020, including interim periods within those fiscal years. The Company is assessing the
impact of ASU 2020-06 on the consolidated financial statements and does not expect it to have a material impact.
In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for
Income Taxes (“ASU 2019-12”), which is intended to simplify the accounting for income taxes. ASU 2019-12 removes
certain exceptions to the general principles in Topic 740 and also clarifies and amends certain aspects of the existing
guidance to improve consistent application. The new standard will be effective for public business entities for fiscal years
beginning after December 15, 2020. The Company is assessing the potential impact ASU 2019-12 may have on its financial
position and results of operations upon adoption.
F-15
Table of Contents
3. Fair value measurements
Assets and liabilities measured at fair value on a recurring basis as of December 31, 2020 and 2019 are as follows:
Assets
Total
Quoted Prices
in Active
Markets for
Identical Assets
(Level 1)
Significant
Other
Observable
Inputs
(Level 2)
(in thousands)
Significant
Unobservable
Inputs
(Level 3)
December 31, 2020
Money market funds included in cash and cash equivalents
Marketable securities:
U.S. Treasury notes
Equity securities
Total marketable securities
Warrants to purchase equity securities
Total
December 31, 2019
Money market funds included in cash and cash equivalents $ 78,303
Marketable securities:
U.S. Treasury notes
Equity securities
$ 103,992
$
103,992
$
— $
70,342
6,356
$ 76,698
3,816
$ 184,506
195,491
1,920
$ 197,411
554
$ 276,268
70,342
6,356
76,698
—
180,690
78,303
195,491
1,920
197,411
—
275,714
$
$
$
$
$
$
$
$
$
$
—
—
— $
3,816
3,816
$
— $
—
—
— $
554
554
$
Total marketable securities
Warrants to purchase equity securities
Total
—
—
—
—
—
—
—
—
—
—
—
—
The Company measures the fair value of money market funds, U.S. Treasuries and equity securities based on
quoted prices in active markets for identical securities. The Level 2 equity securities include warrants to purchase equity
securities that are valued using the Black-Scholes model. The Black-Scholes option pricing model requires inputs based on
certain subjective assumptions, including (i) the expected stock price volatility, (ii) the calculation of expected term of the
awards, (iii) the risk-free interest rate, and (iv) expected dividends. The assumptions utilized to value the warrants to
purchase equity securities as of December 31, 2020 and 2019 are as follows.
Risk-free interest rate
Expected dividend yield
Expected term (in years)
Expected volatility
As of December 31,
2020
2019
0.1 %
— %
0.7
89.2 %
1.6 %
— %
1.7
71.6 %
The expected volatility is based on the historic volatility for the equity securities underlying the warrants and is
calculated based on a period of time commensurate with the expected term assumption. The expected term is based on the
remaining contractual life of the warrants on each measurement date. The risk-free interest rate is based on a treasury
instrument whose term is consistent with the expected term of the warrants. The expected dividend yield is assumed to be
zero as the entity that issued the warrants has never paid and has not indicated any intention to pay dividends.
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Table of Contents
4. Prepaid expenses and other current assets
Prepaid expenses and other current assets consist of the following:
Warrants to purchase equity securities
Prepaid research and development contracts
Other current assets
Prepaid insurance
Accrued interest receivable
Total
5. Property and equipment, net
Property and equipment, net consists of the following:
Laboratory equipment
Leasehold improvements
Furniture and office equipment
Construction in progress
Other
Total property and equipment
Less: accumulated depreciation
Property and equipment, net
$
$
$
$
As of December 31,
2020
2019
$
(in thousands)
3,816
1,674
1,575
1,459
95
8,619
$
554
1,999
1,398
203
476
4,630
As of December 31,
2020
2019
(in thousands)
18,093
15,469
2,410
866
167
37,005
(11,570)
25,435
$
$
13,748
7,129
1,888
2,188
690
25,643
(7,657)
17,986
The Company recorded $3.8 million, $2.8 million, and $2.1 million in depreciation expense during the years
ended December 31, 2020, 2019, and 2018, respectively.
6. Accrued expenses
Accrued expenses consist of the following:
As of December 31,
2020
2019
Research and development costs
Employee compensation costs
Professional services
Accrued goods and services
Other
Total
$
$
7. Lease obligation
Operating Leases
$
(in thousands)
6,624
5,857
1,153
496
75
14,205
$
13,248
5,733
897
1,386
252
21,516
As of December 31, 2020, the Company has leases for office and lab space at 75 and 64 Sidney Street in
Cambridge, Massachusetts through November 30, 2026.
F-17
Table of Contents
In March 2020, the Company entered into an agreement to lease additional laboratory and office space at 75
Hayden Avenue in Lexington, Massachusetts through January 31, 2031. The Company gained control of and occupied the
space in November of 2020.
The Company received leasehold improvement incentives from the landlord totaling $5.3 million for the 75 and
64 Sidney Street leases. The Company also received $5.6 million of leasehold improvement incentives for the 75 Hayden
Avenue lease. The leasehold improvements have been capitalized as leasehold improvements and the Company recorded
the incentives as a component of its right-of-use assets and is amortizing them as a reduction of lease expense over the life
of the lease.
The Company’s lease agreements require the Company to maintain a cash deposit or irrevocable letter of credit of
$1.8 million payable to the landlord as security for the performance of its obligations under the leases. These amounts are
recorded as restricted cash and included in deposits and other non-current assets in the accompanying consolidated balance
sheets.
The following table summarizes the Company’s significant contractual obligations under operating leases as of
payment due date by period at December 31, 2020:
2021
2022
2023
2024
2025
Thereafter
Total future minimum lease payments
Less: imputed interest
Total lease liabilities
Reported as:
Other current liabilities
Other non-current liabilities
Total lease liabilities
$
Total Minimum
Lease Payments
(in thousands)
7,822
8,469
8,723
8,985
9,644
19,945
63,588
(15,981)
47,607
$
$
$
$
4,198
43,409
47,607
Total lease cost for operating leases of approximately $6.2 million and $5.7 million was incurred during the years
ended December 31, 2020 and 2019, respectively. As of December 31, 2020, the weighted average remaining lease term
was 6.8 years and the weighted average incremental borrowing rate used to determine the operating lease liabilities was
8.0%.
Total rent expense for the year ended December 31, 2018 recorded under ASC 840 Leases was approximately $4.0
million.
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8. Other liabilities
As of December 31, 2020 and 2019, other current and non-current liabilities consisted of the following:
As of December 31,
2020
2019
(in thousands)
$
$
$
4,198
4,198
43,409
1,001
44,410
$
$
$
3,193
3,193
30,975
1,001
31,976
Other current liabilities
Lease liabilities
Total other current liabilities
Other non-current liabilities
Lease liabilities
Other
Total other non-current liabilities
9. Commitments and contingencies
Significant Agreements
Neurocrine Collaboration Agreement
Summary of Agreement
In March 2019, the Company entered into the Neurocrine Collaboration Agreement for the research, development
and commercialization of certain of its AAV gene therapy products. Under the Neurocrine Collaboration Agreement, the
Company agreed to collaborate on the conduct of four collaboration programs (the “Neurocrine Programs”) which include:
(i) the VY-AADC Program, (ii) the FA Program (collectively, the “Legacy Programs”); and (iii) two programs to be
determined by the Company and Neurocrine at a later date (the “Discovery Programs”).
In June 2019, in conjunction with the termination of the Sanofi Genzyme Collaboration Agreement, the Company
gained ex-U.S. rights to the FA Program. The Company’s ex-U.S. rights to the FA Program were subsequently transferred
to Neurocrine under the terms of the Neurocrine Collaboration Agreement. To facilitate the transfer of the ex-U.S. rights to
the FA Program to Neurocrine, the Company and Neurocrine executed an amendment to the Neurocrine Collaboration
Agreement (the “June 2019 Modification”), and Neurocrine paid $5.0 million to the Company. There were no other
changes in pricing or scope of the obligations required to be performed under the Neurocrine Collaboration Agreement.
Under the terms of the Neurocrine Collaboration Agreement, the Company has agreed to collaborate with
Neurocrine on, and to grant, exclusive, royalty-bearing, non-transferable, sublicensable licenses to certain of its intellectual
property rights, for all human and veterinary diagnostic, prophylactic, and therapeutic uses, for the research, development,
and commercialization of gene therapy products (the “Collaboration Products”) on a worldwide basis under (i) the VY-
AADC Program; (ii) the FA Program; and (iii) each Discovery Program.
Pursuant to development plans agreed by the parties, which are overseen by a joint steering committee (“JSC”),
the Company has operational responsibility, subject to certain exceptions, for the conduct of each Neurocrine Program prior
to the occurrence of a specified event for such Neurocrine Program (a “Transition Event”), as described below, and is
required to use commercially reasonable efforts to develop the corresponding Collaboration Products. Neurocrine has
agreed to be responsible for all costs incurred by the Company in conducting these activities for each Neurocrine Program,
in accordance with an agreed budget for each Neurocrine Program. If the Company breaches its development
responsibilities or in certain circumstances upon a change in control, Neurocrine has the right but not the obligation to
assume the activities under such Neurocrine Program.
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Upon the occurrence of a Transition Event for each Neurocrine Program, Neurocrine has agreed to assume
responsibility for development, manufacturing and commercialization activities for such Neurocrine Program from the
Company and to pay milestones and royalties on future net sales as described further below. The Transition Events are
(i) with respect to the VY-AADC Program, the Company’s receipt of topline data for the RESTORE-1 Phase 2 clinical trial
for VY-AADC (NBIb-1817); (ii) with respect to the FA Program, the Company’s receipt of topline data for the initial Phase
1 clinical trial for an FA Program product candidate; and (iii) with respect to each Discovery Program, the preparation by
the Company and the approval by Neurocrine of an IND application to be filed with the FDA by Neurocrine for the first
development candidate in such Discovery Program. For each Legacy Program, the Company was granted the option (the
“Co-Co Option”) to co-develop and co-commercialize such Neurocrine Program upon the occurrence of a specified event
(a “Co-Co Trigger Event”). The Company agreed, upon its exercise of a Co-Co Option, to enter into a cost- and profit-
sharing arrangement with Neurocrine (a “Co-Co Agreement”), and (i) jointly develop and commercialize Collaboration
Products for such Legacy Program (“Co-Co Products”), (ii) share in its costs, profits and losses, and (iii) forfeit certain
milestones and royalties on net sales in the United States during the effective period of the applicable Co-Co Agreement.
The Co-Co Trigger Events are (i) with respect to the VY-AADC Program, the Company’s receipt of topline data for the
ongoing RESTORE-1 Phase 2 clinical trial for VY-AADC (NBIb-1817) and (ii) with respect to the FA Program, the receipt
of topline data for the initial Phase 1 clinical trial for an FA Program product candidate.
Under the Neurocrine Collaboration Agreement, subject to exceptions specified therein, the Company and
Neurocrine agreed that profits and losses under the Company’s Co-Co Option would be allocated (i) 50% to Neurocrine
and 50% to the Company for a Collaboration Product from the VY-AADC Program and (ii) 60% to Neurocrine and 40% to
the Company for a Collaboration Product from the FA Program; provided, however, that Neurocrine would have the right
to elect, within a specified period following the acceptance for filing of a biologics license application from the FDA, to
pay a $35.0 million rate-shifting fee to the Company to change the allocation for the VY-AADC Program to 55% to
Neurocrine and 45% to the Company. The parties agreed that each Co-Co Agreement would provide the Company the right
to terminate for any reason upon prior written notice to Neurocrine and Neurocrine the right to terminate in certain
circumstances upon change of control.
The Company’s research and development activities under the Neurocrine Collaboration Agreement are conducted
pursuant to plans agreed to by the parties, on a program-by-program basis, and are overseen by the JSC, as detailed in the
Neurocrine Collaboration Agreement.
The parties have committed to agree on a list of up to eight target genes (the “Targets”) from which Neurocrine
has the right to nominate Targets for the two Discovery Programs. The Targets nominated for the Discovery Programs must
be approved by a consensus of the JSC or the executive officers.
The Neurocrine Collaboration Agreement provides for an upfront non-refundable payment of $115.0 million, as
well as for aggregate development and regulatory milestone payments from Neurocrine to the Company for Collaboration
Products under (i) the VY-AADC Program of up to $170.0 million; (ii) the FA Program of up to $195.0 million, and
(iii) each of the two Discovery Programs of up to $130.0 million per Discovery Program. The Company may be entitled to
receive aggregate commercial milestone payments for each Collaboration Product of up to $275.0 million, subject to an
aggregate cap on commercial milestone payments across all Neurocrine Programs of $1.1 billion. Furthermore, in
connection with the Neurocrine Collaboration Agreement, Neurocrine purchased 4,179,728 shares of the Company’s
common stock at a price of $11.9625 per share, for an aggregate purchase price of $50.0 million.
Neurocrine also agreed to pay the Company royalties, based on future net sales of the Collaboration Products.
Such royalty percentages, for net sales in and outside the United States, as applicable, range (i) for the VY-AADC Program,
from the mid-teens to low thirties and the low-teens to low twenties, respectively; (ii) for the FA Program, from the low-
teens to high-teens and high-single digits to mid-teens, respectively; and (iii) for each Discovery Program, from the high-
single digits to mid-teens and mid-single digits to low-teens, respectively. On a country-by-country and program-by-
program basis, royalty payments would commence on the first commercial sale of a Collaboration Product and terminate
on the later of (a) the expiration of the last patent covering the Collaboration Product or its method of use in such country,
(b) ten years from the first commercial sale of the Collaboration Product in such country and (c) the expiration of
regulatory exclusivity in such country, or the Royalty Term. Royalty payments may be reduced by up to
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50% in specified circumstances, including expiration of patents rights related to a Collaboration Product, approval of
biosimilar products in a given country or required payment of licensing fees to third parties related to the development and
commercialization of any Collaboration Product. Additionally, the licenses granted to Neurocrine shall automatically
convert to fully paid-up, non-royalty bearing, perpetual, irrevocable, exclusive licenses on a country-by-country and
product-by-product basis upon the expiration of the Royalty Term applicable to such Collaboration Product in such country.
Under the terms of the Neurocrine Collaboration Agreement and subject to specified exceptions therein, each
party owns the entire right, title and interest in and to all intellectual property rights made solely by its employees or agents
in the course of the collaboration. The parties jointly own all rights, title and interest in and to all intellectual property rights
made or invented jointly by employees or agents of both parties.
During the term of the Neurocrine Collaboration Agreement, neither party nor any of its respective affiliates is
permitted to directly or indirectly exploit any AAV-based gene therapy products directed to a Target to which a
Collaboration Product is directed, subject to specified exceptions including the parties’ conduct of basic research activities.
Unless earlier terminated, the Neurocrine Collaboration Agreement expires on the later of (i) the expiration of the
last to expire royalty term with respect to a Collaboration Product in all countries in the relevant territory or (ii) the
expiration or termination of all Co-Co Agreements. Neurocrine may terminate the Neurocrine Collaboration Agreement in
its entirety or on a program-by-program or country-by-country basis by providing at least (a) 180-day advance notice if
such notice is provided prior to the first commercial sale of the Collaboration Product to which the termination applies or
(b) one-year advance notice if such notice is provided after the first commercial sale of the Collaboration Product to which
the termination applies. The Company may terminate the Neurocrine Collaboration Agreement, subject to specified
conditions, if Neurocrine challenges the validity or enforceability of certain of the Company’s intellectual property rights.
Subject to a cure period, either party may terminate the Neurocrine Collaboration Agreement in the event of a material
breach by the other party in whole or in part, subject to specified conditions.
Upon termination in certain cases, Neurocrine has agreed to grant to the Company licenses to certain Neurocrine
intellectual property, subject to a negotiation between the parties to establish royalty rates for use of such intellectual
property. In the event of a breach by the Company with respect to a Neurocrine Program, if such termination were to occur
after a Transition Event, then (i) if a Co-Co Agreement is in effect with respect to such program, Neurocrine can terminate
the Co-Co Agreement for such program and the Company would no longer have co-development and co-commercialization
rights with respect to the Collaboration Product and (ii) subject to any license agreements, Neurocrine would no longer
have any obligations with respect to any Collaboration Products resulting from such program.
Termination of VY-AADC Program
In February 2021, Neurocrine notified the Company that it had elected to terminate the Neurocrine Collaboration
solely with regards to the VY-AADC Program, effective August 2, 2021 (the “Neurocrine VY-AADC Program Termination
Effective Date”). The Neurocrine Collaboration Agreement remains in full force and effect for each other program
thereunder.
As a result of the termination, as of the Neurocrine VY-AADC Program Termination Effective Date, the license
granted by the Company to Neurocrine thereunder regarding the VY-AADC Program shall expire and the Company shall
regain worldwide intellectual property rights regarding the VY-AADC Program, in each case in accordance with the terms
of the Neurocrine Collaboration Agreement. The Company intends to support Neurocrine, the study sponsor and IND
holder, on ongoing matters related to the completion of imaging and clinical assessments requested by the DSMB and the
provision of other information requested by the FDA for the RESTORE-1 Phase 2 clinical trial.
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Accounting Analysis
At inception, the Neurocrine Collaboration Agreement included the following performance obligations: (i)
research and development services for each Legacy Program combined with a development and commercialization license
for each such program and (ii) research and development services for each Discovery Program combined with a
development and commercialization license for each program. The research services and license on a program by program
basis are not distinct as Neurocrine cannot benefit from such license on its own or from other resources commonly
available in the industry, without the corresponding research services due to the unique and specialized expertise of the
Company that is not readily available in the marketplace.
The Company identified $92.4 million of fixed transaction price consisting of the $115.0 million upfront fee and
$5.0 million payment from the June 2019 Modification, offset by a discount of $27.6 million related to the $50.0 million
equity investment of 4,179,728 shares when measured at fair value on the date of issuance. The Company is also entitled to
reimbursement of costs incurred by the Company prior to the Transition Events associated with each Neurocrine Program.
These amounts are determinable based on program plans and budgets, and the Company has a contractual right to the
payment of cost incurred under the agreed upon program plans. The Company utilized the most likely amount approach
and estimated the expected cost reimbursement to be $431.1 million at inception. The Company concluded that these
amounts do not require a constraint and are included in the transaction price at inception. The Company considers this
estimate at each reporting date and updates the estimate based on information available. During the fourth quarter of 2020,
the Company further revised the estimate of the expected reimbursement to $316.2 million based on current expectations.
Additional consideration to be paid to the Company upon reaching certain milestones are excluded from the transaction
price at inception due to the uncertainty of achieving the development and regulatory milestones.
The Company allocated the fixed transaction price to the separate performance obligations based on the relative
standalone selling price of each performance obligation or in the case of certain variable consideration to one or more
performance obligations. The estimated standalone selling prices for performance obligations, that include a license and
research services, were developed using the estimated selling price of the license, using comparable and market data, and
an estimate of the overall effort to perform the research services along with a reasonable profit for research services.
The Company has concluded that the variable consideration related to the cost reimbursement of each program
will be allocated to each respective program as the cost reimbursement relates specifically to the respective program
services being performed under the Neurocrine Collaboration Agreement. The reimbursement of research services is
considered to be at a market rate and the allocation of the fixed consideration to all of the performance obligations depicts
the estimated amounts in which it would expect to receive for these obligations, absent the variable consideration related to
the research reimbursement. The total variable consideration allocated to each program related to the expected cost
reimbursement was as follows at December 31, 2020:
Performance Obligation
Variable Consideration
VY-AADC Program
FA Program
Discovery Program 1
Discovery Program 2
Total
Amount
(in thousands)
$
$
86,480
87,991
72,247
69,515
316,233
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Based on the relative standalone selling price allocation, the allocation of the transaction price, exclusive of the
variable consideration allocated to the individual performance obligations, to the separate performance obligations was as
follows:
Performance Obligation
Fixed Consideration
VY-AADC Program
FA Program
Discovery Program 1
Discovery Program 2
Total
Amount
(in thousands)
$
$
80,373
6,005
3,002
3,002
92,382
The Company recognizes the transaction price associated with each performance obligation on a proportional
performance basis over the period of service using input-based measurements such as costs incurred to date, to estimate
proportion performed, and remeasures its progress towards completion at the end of each reporting period.
During the years ended December 31, 2020 and 2019, the Company recognized $56.7 million and $60.0 million of
revenue, respectively, associated with its collaboration with Neurocrine related to research and development services
performed during the period and the corresponding cost reimbursement receivable. As of December 31, 2020, there was
$43.8 million of deferred revenue related to the Neurocrine Collaboration Agreement, which is classified as either current
or non-current in the accompanying consolidated balance sheet based on the period the services are expected to be
delivered. Additionally, as of December 31, 2020, there was $8.0 million of collaboration receivables related to
reimbursable costs expected to be received from Neurocrine for research and development services performed.
The following table presents changes in the balances of the Company’s related party collaboration receivables and
contract liabilities during the year ended December 31, 2020:
Balance at
December 31, 2019
Related party collaboration receivable
Contract liabilities:
Deferred revenue
$
$
18,496
70,040
$
$
Additions
Deductions
(in thousands)
$
35,952
(46,436)
$
(26,351)
Balance at
December 31, 2020
$
$
8,012
43,689
The change in the receivables balance for the year ended December 31, 2020 is primarily driven by amounts owed
to the Company for research and development services provided, offset by amounts collected from Neurocrine during the
period.
Costs incurred relating to the Collaboration Programs consist of internal and external research and development
costs, which primarily include: salaries and benefits, lab supplies, preclinical research studies, clinical studies, consulting
services, and commercial development. These costs are included in research and development expenses in the Company’s
consolidated statements of operations during the year ended December 31, 2020.
The Company incurred approximately $0.8 million of costs to obtain the Neurocrine Collaboration Agreement
which were payable only upon the close of the deal and therefore considered incremental costs of obtaining a contract with
a customer and capitalized. The costs are recorded in prepaid expenses and other non-current assets and are being
amortized over the period in which the research services will be provided.
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Sanofi Genzyme Collaboration Agreement
Summary of Agreement
In February 2015, the Company entered into the Sanofi Genzyme Collaboration Agreement which included a non-
refundable upfront payment of $65.0 million. In addition, contemporaneous with entering into the Sanofi Genzyme
Collaboration Agreement, Sanofi Genzyme entered into a Series B Stock Purchase Agreement, under which Sanofi
Genzyme purchased 10,000,000 shares of Series B Preferred Stock for $30.0 million.
Under the Sanofi Genzyme Collaboration Agreement, the Company granted Sanofi Genzyme an exclusive option
to license, develop and commercialize (i) ex-U.S. rights to the following programs, which are referred to as Split Territory
Programs; VY-AADC (NBIb-1817) for Parkinson’s disease (the “VY-AADC Program”), VY-FXN01 for Friedreich’s ataxia
(the “FA Program”), a future program to be designated by Sanofi Genzyme (the “Future Program), and VY-HTT01 for
Huntington’s disease (the “Huntington’s Program”), with an incremental option to co-commercialize VY-HTT01 in the
United States and (ii) worldwide rights to VY-SMN101 (the “Spinal Muscular Atrophy Program”). Sanofi Genzyme’s
option for the Split Territory Programs and the Spinal Muscular Atrophy Program is triggered following the completion of
the first proof-of-principle human clinical study (“POP Study”), on a program by program basis.
The Company was solely responsible for all costs incurred in connection with the development of the Split
Territory Programs and the Spinal Muscular Atrophy Program prior to the exercise of an option by Sanofi Genzyme with
the exception of the following: (i) at the Company’s request and upon mutual agreement, Sanofi Genzyme would provide
“in-kind” services valued at up to $5.0 million and (ii) Sanofi Genzyme would be responsible for the costs and expenses of
activities under the Huntington’s Program development plan to the extent such activities were covered by financial support
Sanofi Genzyme is entitled to receive from a patient advocacy group.
Termination of Agreement
On June 14, 2019 (the “Termination Date”), the Company and Sanofi Genzyme executed a termination agreement
to terminate the Sanofi Genzyme Collaboration Agreement (the “Sanofi Genzyme Termination Agreement”). Under the
terms of the Sanofi Genzyme Termination Agreement, Sanofi Genzyme relinquished its rights to the exclusive license
options to the Huntington’s Program, the FA Program and the Future Program. The Company was relieved of its
obligations to perform the research and development services under those programs through completion of the respective
POP Studies. As a result, the Company gained worldwide rights to the Huntington’s Program and ex-U.S. rights to the FA
Program. The ex-U.S. rights to the FA Program were, in turn, transferred from the Company to Neurocrine pursuant to the
collaboration and option agreement with Neurocrine. Additionally, the Company and Sanofi Genzyme entered into an
Amended and Restated Option and License Agreement related to AAV capsids (the “Amended Capsid Agreement”). Under
the Amended Capsid Agreement, Sanofi Genzyme obtained exclusive option rights to exclusively license up to two select
novel AAV capsids owned or controlled by the Company for exclusive use for up to two non-central nervous system (“non-
CNS”) indications.
Sanofi Genzyme granted the Company exclusive, irrevocable, perpetual, royalty-free, fully-paid sublicensable
(through multiple tiers), non-transferable, worldwide licenses in Sanofi Genzyme’s interests in the collaboration technology
generated under or used in the Huntington’s Program and the FA Program with respect to those programs pursuant to the
Sanofi Genzyme Collaboration Agreement. In addition, Sanofi Genzyme has granted the Company non-exclusive,
irrevocable, perpetual, royalty-free, fully-paid, sublicensable (through multiple tiers), non-transferable, worldwide licenses
to the Sanofi Genzyme technology that was contributed to the Sanofi Genzyme Collaboration Agreement and was used in
the development or manufacture of product candidates prior to the termination date.
Under the Sanofi Genzyme Termination Agreement, the Company made a $10.0 million upfront payment to
Sanofi Genzyme and paid a $10.0 million milestone payment to Sanofi Genzyme within fifteen days of the filing of an
investigational new drug (“IND”) application for a product candidate incorporating certain intellectual property rights
developed under or substantially related to the Huntington’s Program (a “Post-Termination HD Product”). The Company
has agreed to pay Sanofi Genzyme (i) 50% of any income received from sublicensing arrangements related to Post-
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Termination HD Products in excess of specified thresholds and entered into prior to (a) the filing of an IND application for
a Post-Termination HD Product or (b) the dosing of the first patient in a clinical trial for a Post-Termination HD Product in
the United States or certain European countries, respectively and (ii) a low-double digit percentage of any income received
from sublicensing arrangements outside the United States related to products incorporating intellectual property rights
developed under, or substantially related to, the FA Program (collectively, “Post-Termination FA Products”), that are in
excess of a specified threshold and entered into prior to the dosing of the first patient in a clinical trial for a Post-
Termination FA Product in the United States or certain European countries, in each case, subject to certain limitations. The
Company also agreed to pay low-single-digit royalties on net sales of Post-Termination HD Products. Under the Sanofi
Genzyme Collaboration Agreement, the Company had rights to certain in-kind services. As of the effective date of the
Sanofi Genzyme Termination Agreement, the Company waived its right to approximately $0.4 million in unused in-kind
services, relinquished its rights to the Spinal Muscular Atrophy Program, and no longer has the right to receive any option
payments, regulatory or commercial milestone payments or royalties from Sanofi Genzyme under the Sanofi Genzyme
Collaboration Agreement.
The Company granted Sanofi Genzyme an exclusive royalty-free, fully-paid, sublicensable (through multiple
tiers), non-transferable, worldwide license under the Company’s interest in the collaboration technology generated under or
used in the Spinal Muscular Atrophy Program pursuant to the Sanofi Genzyme Collaboration Agreement to manufacture,
develop, and commercialize any Spinal Muscular Atrophy product. Under the Amended Capsid Agreement, the Company
has granted Sanofi Genzyme an exclusive option to evaluate up to four capsids for no consideration. During the capsid
evaluation period, the Company has granted Sanofi Genzyme a non-exclusive license to the capsid intellectual property to
conduct evaluation studies. In addition, Sanofi Genzyme is able to evaluate up to two additional capsids for a low six-figure
payment per additional capsid. The Company is not obligated to perform any additional research on the capsids. Sanofi
Genzyme shall have the right to obtain an exclusive license for up to two capsids, each in a specified non-CNS indication.
At its discretion, Sanofi Genzyme may exercise both its options for the same capsid for different specified non-CNS
indications. Upon its exercise of each option, Sanofi Genzyme has agreed to pay the Company a $1.0 million option
exercise fee. Under the Amended Capsid Agreement, the Company is also entitled to receive potential development and
regulatory milestone payments upon the achievement of certain milestone events for products containing licensed capsids
(“Sanofi Licensed Products”) of up to an aggregate of $15.0 million per Sanofi Licensed Product. In addition, for each
specified indication, Sanofi Genzyme has agreed to pay to the Company a one-time sales milestone payment of $20.0
million, if aggregate worldwide net sales for all Sanofi Licensed Products for such specified indication surpass a specified
amount, and low-to-mid single-digit tiered royalty payments on worldwide net sales of Sanofi Licensed Products, on a
Sanofi Licensed Product-by-Sanofi Licensed Product basis.
Accounting Analysis
The Sanofi Genzyme Termination Agreement modified both the pricing and scope of the Sanofi Genzyme
Collaboration Agreement. As the modification does not add distinct goods or services to the Sanofi Genzyme Collaboration
Agreement, the agreement is considered a modification of the original contract.
The Sanofi Genzyme Termination Agreement included the following performance obligations: (i) worldwide
license to collaboration technology and Sanofi Genzyme technology for the development, manufacturing and
commercialization of the Huntington’s Program and (ii) worldwide license to collaboration technology and Sanofi
Genzyme technology for the development, manufacturing and commercialization for the FA Program. Such performance
obligations were satisfied upon the Termination Date as control had transferred upon execution of the Sanofi Genzyme
Termination Agreement. Therefore, the remainder of the transaction price under the Sanofi Genzyme Collaboration
Agreement, which had not yet been recognized, was recognized as revenue upon the Termination Date.
The Company recognized $28.7 million of revenue upon the Termination Date. This amount consists of $48.7
million of deferred revenue related to the original agreement as of the Termination Date, offset by (x) $10.0 million related
to the fee paid by the Company to Sanofi Genzyme on the Termination Date, and (y) $10.0 million related to the milestone
payment paid to Sanofi Genzyme upon the Company’s filing in September 2020 of an IND application for VY-HTT01 for
the treatment of Huntington’s disease.
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Following the milestone payment related to the filing of the IND for VY-HTT01 in September 2020, the Company
recorded the payment as a reversal of deferred revenue. The $20.0 million payable by the Company to Sanofi Genzyme in
aggregate was treated as consideration payable to a customer and therefore accounted for as a reduction of the transaction
price.
During the years ended December 31, 2019 and 2018, the Company recognized $32.6 million and $0.9 million of
revenue, respectively, related to obligations performed under the Sanofi Genzyme Collaboration.
AbbVie Tau Collaboration Agreement
Summary of Agreement
In February 2018, the Company entered into an exclusive collaboration and option agreement (the “AbbVie Tau
Collaboration Agreement”) with AbbVie for the research, development and commercialization of AAV and other virus-
based gene therapy products for the treatment of diseases of the central nervous system and other neurodegenerative
diseases related to defective or excess aggregation of tau protein in the human brain, including Alzheimer’s disease. Under
the AbbVie Tau Collaboration Agreement, the Company and AbbVie agreed to collaborate on the research and
development of specified vectorized antibody compounds comprised of an AAV or other viral capsid and a virus vector
genome that encodes one or more antibodies that target and bind to a tau protein. The collaboration was comprised of a
research period (the “Research Period”), a development period (the “Development Period”), and an exclusive license
option (the “License Option”). The AbbVie Tau Collaboration Agreement included a non-refundable upfront payment of
$69.0 million to the Company for services during the Research Period.
During the Research Period, each party agreed to identify up to five antibodies for inclusion in the collaboration.
Subject to certain conditions and exceptions, the parties agreed to select up to three antibodies (each, a “Research
Antibody”) as candidates for creation of research compounds (each, a “Research Compound”), with AbbVie having the
right to select two of the three Research Antibodies. The Company was required to use diligent efforts to conduct antibody
engineering and other research activities to create Research Compounds and to develop product candidates containing or
comprised of such Research Compounds (“Product Candidates”). The Company was solely responsible for its costs and
expenses during the Research Period. During a specified portion of the Research Period, AbbVie had the right to exercise
one or more of its exclusive development options (each, a “Development Option”) to select up to a total of three Research
Compounds (the “Selected Research Compounds”) and their corresponding Product Candidates (the “Selected Product
Candidates”) to proceed to the Development Period.
Upon AbbVie’s exercise of a Development Option, AbbVie agreed to pay the Company $80.0 million for the first
Selected Research Compound and $30.0 million each for up to two additional Selected Research Compounds. During the
Development Period, the Company was obligated to use diligent efforts to conduct development activities, including IND
application-enabling and Phase 1 clinical trial activities, for the Selected Research Compounds and corresponding Selected
Product Candidates. The Company was solely responsible for the costs and expenses during the Development Period.
During a specified portion of the Development Period (the “License Option Period”), AbbVie had the right to exercise its
License Option to further develop and commercialize all of the Research Compounds (the “Licensed Compounds”), and
corresponding product candidates (the “Licensed Products”). Upon AbbVie’s exercise of its License Option, AbbVie
agreed to provide a one-time payment of $75.0 million to the Company, and the Company agreed to grant to AbbVie an
exclusive, worldwide license, with the right to sublicense, under certain of the Company’s intellectual property rights to
develop and commercialize the Licensed Compounds and the Licensed Products for all human diagnostic, prophylactic and
therapeutic uses. In addition, after AbbVie’s exercise of the License Option, the Company had certain obligations to
complete any remaining research and development activities that had not been completed for any Research Compounds and
Product Candidates.
The Company’s research and development activities were to be conducted pursuant to the plans agreed to by the
parties and overseen by a joint governance committee (“JGC”) as detailed in the AbbVie Tau Collaboration Agreement.
Any material amendment to the research or development plans were required to be mutually agreed to by the Company and
AbbVie, which could be through the JGC.
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Under the AbbVie Tau Collaboration Agreement, AbbVie was required to use commercially reasonable efforts to
develop and commercialize at least one Licensed Product in each of the United States, Japan, the United Kingdom,
Germany, France, Italy, and Spain. After exercise of the License Option, AbbVie was solely responsible for all
development and commercialization activities relating to Licensed Compounds and Licensed Products at its sole cost and
expense, subject to the agreed-upon research and development plans. The Company had the option to elect to share in
AbbVie’s development costs relating to a Licensed Product on an indication-by-indication basis in exchange for a specified
increase in royalties (a “Cost-Sharing Option”). If the Company exercised a Cost-Sharing Option, the Company would
either reimburse AbbVie for AbbVie’s applicable development costs or, in the case of certain budget overruns, AbbVie
would instead deduct applicable development costs, up to a specified cap, from milestone and royalty payments owed by
AbbVie to the Company.
Under the AbbVie Tau Collaboration Agreement, the Company was eligible to receive specified development and
first-sale milestone payments for each Licensed Compound of up to an aggregate of $550.0 million in the case of an
Alzheimer’s disease indication, up to $230.0 million in the case of the first indication other than Alzheimer’s disease and
up to $115.0 million for a subsequent non-Alzheimer’s disease indication. Additionally, the Company was eligible to
receive tiered, escalating royalties, in a range from a high-single digit to a mid-to-high teen (or, if the Company had
exercised its Cost-Sharing Option, low-twenties) percentage of aggregate net sales of Licensed Products on a Licensed
Compound by Licensed Compound basis, subject to potential reductions in certain circumstances. For each Licensed
Product, AbbVie also had the right to decrease or eliminate its royalty payments on such Licensed Product in exchange for
a one-time payment by AbbVie at a fair market value to be negotiated by the parties or determined pursuant to dispute
resolution procedures specified in the AbbVie Tau Collaboration Agreement.
Termination
On August 3, 2020 (the “AbbVie Collaboration Termination Date”), the termination of the AbbVie Tau
Collaboration Agreement in its entirety became effective, in accordance with its terms and conditions, subject to surviving
rights and obligations thereunder. In connection with such termination, the Company was obligated to undertake certain
transition activities, including transferring to AbbVie certain data and reports generated under, and any regulatory filing
relating to certain compounds and product candidates investigated in, the collaboration. All such activities were completed
on or prior to September 30, 2020. As a result of the termination, the Company has been relieved of future research and
development obligations under the collaboration. Exclusivity provisions restricting either party or any of its respective
affiliates from directly or indirectly exploiting any vectorized antibody compound targeting a tau protein and restricting the
Company, alone or jointly with any third party, from directly or indirectly exploiting specified antibodies targeting a tau
protein have also terminated. Each party retains a royalty-free, exclusive license to the other’s interest in certain intellectual
property rights developed by or on behalf of either party under the collaboration (the “Joint IP”) to exploit antibodies it
contributed to the collaboration as well as a royalty-free, non-exclusive license to the Joint IP for any other purpose.
Further, AbbVie has granted the Company, effective as of the AbbVie Collaboration Termination Date, a worldwide,
royalty-free, transferable, sublicensable (though multiple tiers), exclusive license to AbbVie’s interest in the Joint IP to
exploit research compounds or product candidates that were investigated under the collaboration and do not encode
antibodies contributed by AbbVie or include active pharmaceutical ingredients owned by AbbVie or its affiliates, for all
human diagnostic, prophylactic and therapeutic uses. The Company is not obligated to repay the upfront payment it
received from AbbVie in connection with entering into the AbbVie Tau Collaboration Agreement but is no longer eligible
to receive option payments, milestone payments or royalties thereunder.
Accounting Analysis
The Company assessed the promised goods and services under the AbbVie Tau Collaboration Agreement, in
accordance with ASC 606, and determined that the AbbVie Tau Collaboration Agreement included the following
performance obligations: (i) research services during the Research Period (through the delivery of the final research report)
including the identification of the Research Antibodies, conduct of research activities and provision of information to
AbbVie to allow AbbVie to determine whether to exercise up to three development options to be rendered (collectively, the
“Research Services”), and (ii) a material right associated with the Development Option on the first Research Compound
and associated Product Candidates (“First Development Option Material Right”). The first Development Option provided
AbbVie with (i) additional development services on a selected Research Compound and
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(ii) the ability to exercise the License Option. The Company concluded the option provided a material right as the
consideration paid by AbbVie upon exercise of the first Development Option would have been less than the amount that the
Company would otherwise have expected to receive outside the context of the contract.
The Company concluded that the First Development Option Material Right was a separate performance obligation
under ASC 606. The First Development Option Material Right was distinct from the other performance obligations in the
arrangement as it was an option in the contract that was not required for AbbVie to obtain the benefit of the other promised
goods or services in the arrangement. The First Development Option Material Right did not include the underlying goods
or services that were delivered upon exercise of the option, but rather represented the value to the customer of having the
right to obtain development services and the right to the License Option at an advantageous price.
The Company received a nonrefundable, upfront payment of $69.0 million as consideration under the AbbVie Tau
Collaboration Agreement, which represented the transaction price at inception. Additional consideration to be paid to the
Company upon the exercise of the Development and License Options by AbbVie or upon reaching certain milestones were
excluded from the transaction price as they relate to option fees and milestones that could only be achieved subsequent to
the option exercise or were outside of the initial contract term.
The Company allocated the transaction price to the separate performance obligations based on their relative
standalone selling price. The Company determined the standalone selling price at contract inception based on each
obligation’s estimated standalone selling price (“ESP”). The Company determined the ESP for the research services
obligation based on internal estimates of the costs to perform the services, including expected internal expenses and
expenses with third parties for services and supplies, inclusive of a reasonable profit margin. The ESP for the First
Development Option Material Right was determined based on the fees AbbVie would pay to exercise the Development and
License Options, the estimated costs to perform the development services, inclusive of a reasonable profit margin, the
estimated value of the License Option using comparable transactions, and the probability that the Development and License
Options would be exercised by AbbVie.
Based on the relative standalone selling price, the allocation of the transaction price to the separate performance
obligations was as follows:
Performance Obligation
Research Services
First Development Option Material Right
Total
Amount
(in thousands)
34,482
34,518
69,000
$
$
The Company recognized the amounts associated with Research Services on a proportional performance basis
over the period of service using input-based measurements of total cost of research incurred to estimate proportion
performed and remeasured its progress towards completion at the end of each reporting period. The amount allocated to the
First Development Option Material Right was recorded as deferred revenue and was expected to be recognized either over
the period in which goods and services underlying the option are transferred or upon expiry of the option.
During the year ended December 31, 2020 the Company recognized $4.5 million of revenue related to the
Research Services associated with the AbbVie Tau Collaboration Agreement performed prior to the AbbVie Collaboration
Termination Date. During the year ended December 31, 2020 the Company recognized $46.3 million of additional revenue,
related to the remaining amounts included in deferred revenue at the AbbVie Collaboration Termination Date, given that
the Company did not have any performance obligations remaining under the AbbVie Tau Collaboration Agreement
subsequent to September 30, 2020. During the years ended December 31, 2019 and 2018, the Company recognized $11.3
million and $6.9 million of revenue associated with the AbbVie Tau Collaboration related to Research Services performed
during the period.
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AbbVie Alpha Synuclein Collaboration Agreement
Summary of Agreement
In February 2019, the Company entered into an exclusive collaboration and option agreement (“the AbbVie
Alpha-Synuclein Collaboration Agreement”) with AbbVie, for the research, development and commercialization of AAV
and other virus-based gene therapy products directed against pathological species of alpha-synuclein for the potential
treatment of Parkinson’s disease and other diseases characterized by the abnormal accumulation of misfolded alpha-
synuclein protein (“synucleinopathies”). Under the AbbVie Alpha-Synuclein Collaboration Agreement, the Company and
AbbVie have agreed to collaborate on the research and development of specified vectorized antibody compounds
comprised of an AAV or other viral capsid and a virus vector genome that encodes one or more antibodies that target and
bind to the alpha-synuclein protein. The collaboration was comprised of a research period (the “ASN Research Period”), an
optional development period (the “ASN Development Period”), and an exclusive license option (the “ASN License
Option”). The AbbVie Alpha-Synuclein Collaboration Agreement included a non-refundable upfront payment to the
Company of $65.0 million for services during the ASN Research Period.
During the ASN Research Period, the Company was obligated to conduct research activities directed to
constructing one or more virus vectors that encode antibodies designated by AbbVie (the “AbbVie Designated Antibodies”)
which initially were to be antibodies provided by AbbVie. The Company was obligated to use diligent efforts to conduct
research activities to create research compounds (“ASN Research Compounds”) and to develop product candidates
containing or comprised of the ASN Research Compounds (“ASN Product Candidates”). The Company was solely
responsible for the costs and expenses during the ASN Research Period. During a specified portion of the ASN Research
Period, AbbVie had the right to exercise one or more of its exclusive development options to select up to a total of four
ASN Research Compounds and their corresponding ASN Product Candidates to proceed to the ASN Development Period.
Upon AbbVie’s exercise of an option to proceed to the ASN Development Period (an “ASN Development
Option”), AbbVie agreed to pay the Company $80.0 million for the first ASN Research Compound and $30.0 million each
for up to three additional ASN Research Compounds. During the ASN Development Period, the Company was obligated to
use diligent efforts to conduct development activities, including IND application-enabling and Phase 1 clinical trial
activities, for each selected ASN Research Compound and corresponding selected ASN Product Candidates. The Company
is solely responsible for the costs and expenses during the ASN Development Period. During a specified portion of the
ASN Development Period, AbbVie had the right to exercise its ASN License Option to further develop and commercialize
all of the ASN Research Compounds and corresponding ASN Product Candidates. Upon AbbVie’s exercise of its ASN
License Option, the Company agreed to grant to AbbVie an exclusive, worldwide license, with the right to sublicense,
under certain of the Company’s intellectual property rights to develop and commercialize the licensed compounds and the
licensed products for all human diagnostic, prophylactic and therapeutic uses. In addition, after AbbVie’s exercise of the
ASN License Option, the Company had certain obligations to complete any remaining research and development activities
that had not been completed for any ASN Research Compounds and ASN Product Candidates.
The Company’s research and development activities were to be conducted pursuant to the plans agreed to by the
parties and overseen by a joint governance committee (the “ASN JGC”) as detailed in the AbbVie Alpha-Synuclein
Collaboration Agreement. Any material amendment to the research or development plans, however, were required to be
mutually agreed to by the parties, which may be through the ASN JGC.
Under the AbbVie Alpha-Synuclein Collaboration Agreement, AbbVie was required to use commercially
reasonable efforts to develop and commercialize at least one licensed product in each of the United States, Japan, the
United Kingdom, Germany, France, Italy and Spain. After exercise of the ASN License Option, AbbVie is solely
responsible for all development and commercialization activities relating to licensed compounds and licensed products at
its sole cost and expense, subject to the Company’s obligation to complete any remaining research and development
activities set forth in the agreed-upon research and development plans.
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Under the terms of the AbbVie Alpha-Synuclein Collaboration Agreement, the Company was eligible to receive
(i) specified development and first-sale milestone payments for each licensed compound of up to an aggregate of $450.0
million in the case of a Parkinson’s disease indication and up to $185.0 million in the case of the first indication other than
Parkinson’s disease and $92.5 million for a subsequent non-Parkinson’s disease indication; (ii) specified commercial
milestone payments based on net sales for all licensed products and all indications up to an aggregate of $500.0 million;
and (iii) tiered, escalating royalties, in the mid-single digit percentage range for aggregate net sales of licensed products on
a licensed compound by licensed compound basis, subject to potential reductions in certain circumstances.
Termination
On the AbbVie Collaboration Termination Date, the termination of the AbbVie Alpha-Synuclein Collaboration
Agreement in its entirety became effective, in accordance with its terms and conditions, subject to surviving rights and
obligations thereunder. In connection with such termination, the Company was obligated to undertake certain transition
activities including transferring to AbbVie certain data and reports generated under, and any regulatory filings relating to
compounds and product candidates investigated in, the collaboration. All such activities were completed on or prior to
September 30, 2020. As a result of the termination, the Company has been relieved of future research and development
obligations under the collaboration. Exclusivity provisions restricting either party or any of its respective affiliates from
directly or indirectly exploiting any vectorized antibody compound targeting an alpha-synuclein protein and restricting the
Company, alone or jointly with any third party, from directly or indirectly exploiting specified antibodies have also
terminated. AbbVie retains a royalty-free, exclusive license to the Company’s interest in the Joint IP to exploit antibodies
AbbVie contributed to the collaboration. The Company otherwise retains a royalty-free, non-exclusive license to AbbVie’s
interest in the Joint IP. The Company is not obligated to repay the upfront payment it received from AbbVie in connection
with entering into the AbbVie Alpha-Synuclein Collaboration Agreement but is no longer eligible to receive option
payments, milestone payments, or royalties thereunder.
Accounting Analysis
The Company assessed the promised goods and services under the AbbVie Alpha-Synuclein Collaboration
Agreement, in accordance with ASC 606, and determined that the AbbVie Alpha-Synuclein Collaboration Agreement
included the following performance obligations: (i) research services during the ASN Research Period (through the
delivery of the final research report) including the conduct of research activities and provision of information to AbbVie to
allow AbbVie to determine whether to exercise up to four ASN Development Options (collectively, the “ASN Research
Services”), and (ii) a material right associated with the first ASN Development Option on the first ASN Research
Compound and associated ASN Product Candidates (“ASN First Development Option Material Right”). The exercise of
the first ASN Development Option provided AbbVie with (i) additional development services on a selected ASN Research
Compound and (ii) the ability to exercise the ASN License Option. The Company had concluded the option provided a
material right as the consideration paid by AbbVie upon exercise of the first ASN Development Option would have been
less than the amount that the Company would otherwise have expected to receive outside the context of the contract.
The Company concluded that the ASN First Development Option Material Right was a separate performance
obligation under ASC 606 as AbbVie was provided additional services and an ASN License Option for additional
consideration that represented a significant discount from amounts that would otherwise be offered outside the context of
the contract. The ASN First Development Option Material Right was distinct from the other performance obligations in the
arrangement as it was an option in the contract that was not required for AbbVie to obtain the benefit of the other promised
goods or services in the arrangement. The ASN First Development Option Material Right does not include the underlying
goods or services that were delivered upon exercise of the option, but rather represented the value to the customer of having
the right to obtain development services and the right to the ASN License Option at an advantageous price.
The Company received a nonrefundable, upfront payment of $65.0 million as consideration under the AbbVie
Alpha-Synuclein Collaboration Agreement, which represented the transaction price at inception. Additional consideration
to be paid to the Company upon the exercise of the ASN Development and ASN License Options by
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AbbVie or upon reaching certain milestones were excluded from the transaction price as they related to option fees and
milestones that could only be achieved subsequent to the option exercise or are outside of the initial contract term.
The Company allocated the transaction price to the separate performance obligations based on their relative
standalone selling price. The Company determined the standalone selling price at contract inception based on each
obligation’s ESP. The Company determined the ESP for the research services obligation based on internal estimates of the
costs to perform the services, including expected internal expenses and expenses with third parties for services and
supplies, inclusive of a reasonable profit margin. The ESP for the ASN First Development Option Material Right was
determined based on the fees AbbVie would pay to exercise the ASN Development and ASN License Options, the
estimated costs to perform the development services, inclusive of a reasonable profit margin, the estimated value of the
ASN License Option using comparable transactions, and the probability that the ASN Development and License Options
would be exercised by AbbVie.
Based on the relative standalone selling price, the allocation of the transaction price to the separate performance
obligations was as follows:
Performance Obligation
ASN Research Services
ASN First Development Option Material Right
Total
Amount
(in thousands)
23,768
41,232
65,000
$
$
The Company recognized the amounts associated with the ASN Research Services on a proportional performance
basis over the period of service using input-based measurements of total cost of research incurred to estimate proportion
performed and remeasured its progress towards completion at the end of each reporting period. The amount allocated to the
ASN First Development Option Material Right was recorded as deferred revenue and was expected to be recognized either
over the period in which goods and services underlying the option are transferred or upon expiry of the option.
During the year ended December 31, 2020, the Company recognized $4.8 million of revenue related to ASN
Research Services associated with the AbbVie Alpha-Synuclein Collaboration Agreement performed prior to the AbbVie
Collaboration Termination Date. During the year ended December 31, 2020, the Company recognized additional revenue of
$58.9 million, related to the remaining amounts included in deferred revenue at the AbbVie Collaboration Termination
Date, given that the Company does not have any performance obligations under the AbbVie Alpha-Synuclein Collaboration
Agreement subsequent to September 30, 2020. During the year ended December 31, 2019, the Company recognized $1.3
million of revenue associated with the AbbVie Alpha-Synuclein Collaboration related to the ASN Research Services
performed during the period then ended.
ClearPoint Neuro, Inc. License and Securities Purchase Agreements
In September 2016, the Company entered into a securities purchase agreement (the “Securities Purchase
Agreement”) and a license agreement (the “CLPT License Agreement”) with ClearPoint Neuro, Inc. (“CLPT”), formerly
known as MRI Interventions, Inc. CLPT is the only supplier of the ClearPoint® System, which is being used by the
Company in ongoing development and clinical trials. Under the Securities Purchase Agreement, the Company paid $2.0
million for shares of CLPT common stock and a warrant to purchase additional shares of CLPT common stock. The
Company also entered into the CLPT License Agreement, which provided for certain rights to CLPT technology and for
CLPT to transfer the rights and know-how to manufacture the ClearPoint System to enable the Company to utilize an
alternative supplier for the ClearPoint System for use in the Company’s development and clinical trials. During 2017, the
Company terminated the CLPT License Agreement and all prior and future commitments and obligations under such
agreement became null and void.
In May 2018, the Company entered into a master services and supply agreement with CLPT (the “CLPT Supply
Agreement”) which provides for CLPT to perform certain manufacturing, supply, development and services as requested
by the Company, including the supply of the ClearPoint System and cannula devices. In March 2019, the Company
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transferred its premarket notification (510(k)) clearance for the V-TAG device to CLPT, and will work with CLPT on the
manufacturing and clinical supply of the device.
As of December 31, 2020, the Company holds the common stock and the warrants to purchase additional shares of
common stock as current assets.
Other Agreements
The Company has entered into various agreements with contract research organizations and institutions to license
intellectual property. In consideration for the licensed rights the Company generally made upfront payments, which were
recorded as research and development expense as the acquired technologies were considered in-process research and
development. The license agreements obligate the Company to make additional payments that are contingent upon specific
clinical trial and regulatory approval milestones being achieved as well as royalties on future product sales. The agreements
to license intellectual property include potential milestone payments that are dependent upon the development of products
licensed under the agreements and contingent upon the achievement of clinical trial or regulatory approval milestones. As
of December 31, 2020, the Company reached a milestone related to first patient dosing on the RESTORE-1 Phase 2 clinical
trial which resulted in a $0.1 million milestone payment to one of its licensors. The Company can generally terminate the
license agreements upon 30-90 days prior written notice.
Additionally, certain license agreements require the Company to reimburse the licensor for certain past and
ongoing patent related expenses. During the years ended December 31, 2020, 2019, and 2018, the Company incurred $0.5
million, $0.6 million, and $0.8 million of expense, respectively, related to these reimbursable patent costs which are
recorded as general and administrative expense
During the year ended December 31, 2016, the Company entered into a research and development funding
arrangement with a non-profit organization that provides up to $4.0 million in funding to the Company upon the
achievement of clinical and development milestones. The agreement provides that the Company repay amounts received
under certain circumstances including termination of the agreement, and to pay an amount up to 2.6 times the funding
received upon successful development and commercialization of any products developed. During the year ended December
31, 2017, the Company earned a milestone payment of $1.0 million. The Company evaluated the arrangement and
concluded that it represents a research and development financing arrangement as it is probable that the Company will
repay amounts received under the arrangement. As a result, the $1.0 million earned through the year ended December 31,
2017 is recorded as a non-current liability in the consolidated balance sheet.
Litigation
The Company is not a party to any material legal matters or claims and does not have contingency reserves
established for any litigation liabilities as of December 31, 2020 or 2019.
On January 22, 2021, a putative class action lawsuit was filed in the U.S. District Court for the Eastern District of
New York against the Company and certain of its current and former officers and directors, captioned Karp v. Voyager
Therapeutics, Inc. et al., No. 1:21-cv-00381. The complaint purports to be brought on behalf of stockholders who
purchased its common stock between June 1, 2017 and November 9, 2020. The complaint generally alleges that the
defendants violated Sections 10(b) and/or 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated
thereunder by making material misstatements or omissions concerning the Huntington’s Program and its investigational
new drug application for VY-HTT01. The complaint seeks among other things, unspecified compensatory damages,
interest, attorneys’ and expert fees and costs. The Company denies any allegations of wrongdoing and believes it has a
valid defense against these claims and, therefore, intends to vigorously defend itself against this lawsuit.
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10. Preferred stock
The Company has authorized preferred stock amounting to 5,000,000 shares as of December 31, 2020 and 2019.
11. Common stock
As of December 31, 2020 and 2019, the Company had authorized 120,000,000 shares of common stock, at $0.001
par value per share.
General
The voting, dividend and liquidation rights of the holders of the common stock are subject to and qualified by the
rights, powers and preferences of the holders of preferred stock. The common stock has the following characteristics:
Voting
The holders of shares of common stock are entitled to one vote for each share of common stock held at all
meetings of stockholders and written actions in lieu of meetings.
Dividends
The holders of shares of common stock are entitled to receive dividends, if and when declared by the Board of
Directors. No dividends have been declared or paid by the Company since its inception.
Liquidation
The holders of shares of common stock are entitled to share ratably in the Company’s remaining assets available
for distribution to its stockholders in the event of any voluntary or involuntary liquidation, dissolution or winding up of the
Company or upon occurrence of a deemed liquidation event.
Shares Reserved For Future Issuance
Shares reserved for vesting of restricted stock awards under the Founder
Agreements
Shares reserved for exercise of outstanding stock options
Shares reserved for vesting of outstanding restricted stock units
Shares reserved for issuances under the 2015 Stock Option Plan
Shares reserved for issuances under the 2015 Employee Stock Purchase Plan
As of December 31,
2020
2019
156,863
5,485,078
638,471
2,827,185
1,484,923
10,592,520
176,471
5,317,326
455,404
1,875,078
1,218,876
9,043,155
12. Stock-based compensation
2014 Stock Option and Grant Plan
In January 2014, the Company adopted the 2014 Stock Option and Grant Plan (the “2014 Plan”), under which it
could grant incentive stock options, non-qualified stock options, restricted stock awards, unrestricted stock awards, or
restricted stock units to purchase up to 823,529 shares of common stock to employees, officers, directors and consultants of
the Company.
The terms of stock option agreements, including vesting requirements, were determined by the Board of Directors
and were subject to the provisions of the 2014 Plan. Restricted stock awards granted by the Company generally vest based
on each grantee’s continued service with the Company during a specified period following grant. Stock
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options granted to employees generally vest over four years, with 25% vesting on the one year anniversary and 75%
vesting ratably, on a monthly basis, over the remaining three years. Stock options granted to non-employee consultants
generally vest monthly over a period of one to four years.
Founder Awards
In January 2014, the Company issued 1,188,233 shares of restricted stock to its founders (each, a “Founder”) at an
original issuance price of $0.0425 per share. Of the total restricted shares awarded to the Founders, 835,292 shares
generally vest over one to four years, based on each Founder’s continued service to the Company in varying capacity as a
Scientific Advisory Board member, consultant, director, officer or employee, as set forth in each grantee’s individual
restricted stock purchase agreement.
The remaining 352,941 of the shares issued begin vesting upon the achievement of certain performance objectives
as well as continued service to the Company, as set forth in the agreements. These performance conditions are tied to
certain milestone events specific to the Company’s corporate goals, including but not limited to preclinical and clinical
development milestones related to the Company’s product candidates. Stock-based compensation expense associated with
these performance-based awards is recognized when the achievement of the performance condition is considered probable,
using management’s best estimates. Management concluded that the achievement of the performance milestone for one of
the three performance-based awards had been met during 2016. Stock-based compensation expense in the amount of $0.3
million was recorded in the year ended December 31, 2018 related to this award.
In December 2019, the Company modified one of the remaining performance awards, repurchasing 58,823 shares
of common stock previously issued to one of the Company’s founders. Additionally, the Company modified the award to
vest solely based on time rather than on performance. The Company revalued the award at the modification date and is
recognizing expense on a straight-line basis over the three-year vesting period. Stock-based compensation related to this
award was de minimis in the years ended December 31, 2020 and 2019. The performance-based milestone of the remaining
performance-based award has not been met as of December 31, 2020.
2015 Stock Option Plan
In October 2015, the Company’s board of directors and stockholders approved the 2015 Stock Option and
Incentive Plan (“2015 Stock Option Plan”), which became effective upon the completion of the IPO. The 2015 Stock
Option Plan provides the Company with the flexibility to use various equity-based incentive and other awards as
compensation tools to motivate its workforce. These tools include stock options, stock appreciation rights, restricted stock,
restricted stock units, unrestricted stock, performance share awards and cash-based awards. The 2015 Stock Option Plan
replaced the 2014 Plan. Any options or awards outstanding under the 2014 Plan remained outstanding and effective. The
number of shares initially reserved for issuance under the 2015 Stock Option Plan is the sum of (i) 1,311,812 shares of
common stock and (ii) the number of shares under the 2014 Plan that are not needed to fulfill the Company’s obligations
for awards issued under the 2014 Plan as a result of forfeiture, expiration, cancellation, termination or net issuances of
awards thereunder. The number of shares of common stock that may be issued under the 2015 Stock Option Plan is also
subject to increase on the first day of each fiscal year by up to 4% of the Company’s issued and outstanding shares of
common stock on the immediately preceding December 31.
Effective January 1, 2016 and every anniversary thereafter an additional 4% of outstanding common stock was
added to the Company’s 2015 Stock Option Plan pursuant to its “evergreen” provision, for future issuance. This has
accumulated to a total of 7,707,888 shares through January 1, 2021. During the year ended December 31, 2020, the
Company granted options to purchase 1,388,075 shares of common stock to employees and directors under the 2015 Stock
Option Plan. As of December 31, 2020, there were 2,827,185 shares available for future issuance under the 2015 Stock
Option Plan.
2015 Employee Stock Purchase Plan
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In October 2015, the Company’s board of directors and stockholders approved the 2015 Employee Stock Purchase
Plan (the “2015 ESPP”). Under the 2015 ESPP, all full-time employees of the Company are eligible to purchase common
stock of the Company twice per year, at the end of each six-month payment period. During each payment period, eligible
employees who so elect, may authorize payroll deductions in an amount of 1% to 10% (whole percentages only) of the
employee’s base pay for each payroll period. At the end of each payment period, the accumulated deductions are used to
purchase shares of common stock from the Company at a discount. A total of 262,362 shares of common stock were
initially authorized for issuance under this plan.
The 2015 ESPP became effective upon the completion of the IPO. Effective January 1, 2016 and every
anniversary thereafter an additional 1% of outstanding common stock was added to the 2015 ESPP, pursuant to its
evergreen provision, for future issuance. This has accumulated to a total of 1,926,969 shares through January 1, 2021. The
Company issued 104,108 and 70,217 shares of common stock under the 2015 ESPP in the years ended December 31, 2020
and 2019. As of December 31, 2020, there were 1,484,923 shares available for future purchase under the 2015 ESPP.
Inducement Awards
In the year ended December 31, 2020, the Company issued non-statutory stock options to purchase an aggregate
of 172,500 shares of the Company’s common stock and restricted stock unit awards for an aggregate of 29,000 shares of
the Company’s common stock, respectively, to three individuals in each case outside of the Company’s 2015 Stock Option
Plan as an inducement material to such individual’s acceptance of an offer of employment with the Company in accordance
with Nasdaq Listing Rule 5635(c)(4).
In the year ended December 31, 2019, the Company issued non-statutory stock options to purchase an aggregate
of 338,750 shares of the Company’s common stock and restricted stock unit awards for an aggregate of 58,125 shares of
the Company’s common stock, respectively, to two executives in each case outside of the Company’s 2015 Stock Option
Plan as an inducement material to such executive’s acceptance of an offer of employment with the Company in accordance
with Nasdaq Listing Rule 5635(c)(4).
In the year ended December 31, 2018, the Company issued a non-statutory stock option to purchase an aggregate
of 650,000 shares of the Company’s common stock to one executive, outside of the Company’s 2015 Stock Option Plan as
an inducement material to the executive’s acceptance of an offer of employment with the Company in accordance with
Nasdaq Stock Market Listing Rule 5635(c)(4).
The stock options will vest over a four-year period, with 25% of the shares underlying the option award vesting on
the first anniversary of the award and the remaining 75% of the shares underlying the award vesting monthly thereafter
over the subsequent 36-month period. The restricted stock units vest over a three-year period, with 33% of the restricted
stock units vesting on the first anniversary, 33% of the restricted stock units vesting on the second anniversary, and the
remaining restricted stock units vesting on the third anniversary.
Stock-based Compensation Expense
Total compensation cost recognized for all stock-based compensation awards in the statements of operations and
comprehensive income (loss) is as follows:
Research and development
General and administrative
Total stock-based compensation expense
$
$
6,357
8,577
14,934
7,383
8,257
15,640
$
$
2020
Year ended December 31,
2019
(in thousands)
$
$
2018
4,717
10,993
15,710
Stock-based compensation expense by type of award included within the consolidated statements of operations
and comprehensive income (loss) was as follows:
F-35
Table of Contents
Stock options
Restricted stock awards and units
Employee stock purchase plan awards
Total stock-based compensation expense
2020
11,387
3,110
437
14,934
$
$
Year ended December 31,
2019
(in thousands)
13,380
1,935
325
15,640
$
$
$
$
2018
14,956
482
272
15,710
In June 2019, the Company entered into a consulting agreement (the “Sah Agreement”) with Dr. Dinah Sah,
Ph.D., the Company’s former Chief Scientific Officer, pursuant to which Dr. Sah has agreed to provide consulting and
advisory services, including but not limited to scientific guidance in connection with certain of the Company’s
collaborations and research and development programs for a three-year period which commenced on June 28, 2019. In
accordance with its terms, the Sah Agreement triggered an equity modification resulting in the recognition in 2019 of $2.2
million of stock-based compensation expense related to the non-substantive service period of the Sah Agreement.
In August 2018, the Company entered into a consulting agreement (the “Paul Agreement”) with Dr. Steven M.
Paul, M.D., the Company’s former President and Chief Executive Officer, pursuant to which Dr. Paul has agreed to provide
consulting and advisory services, including but not limited to scientific guidance in connection with certain of the
Company’s collaborations and research and development programs for a three-year period which commenced on August 2,
2018. In accordance with its terms, the Paul Agreement triggered an equity modification resulting in the recognition in
2018 of $5.4 million of stock-based compensation expense related to the non-substantive service period of the Paul
Agreement.
Restricted Stock Units
A summary of the status of and changes in unvested restricted stock unit activity under the Company’s equity
award plans for the year ended December 31, 2020 was as follows:
Unvested restricted stock units as of December 31, 2019
Awarded
Vested
Forfeited
Unvested restricted stock units as of December 31, 2020
Weighted
Average
Grant Date
Fair Value
Per Unit
Units
$
455,404
494,604
$
(150,759) $
(160,778) $
638,471
$
12.16
12.67
12.12
11.47
12.74
Stock-based compensation of restricted stock units is based on the fair value of the Company’s common stock on
the date of grant and recognized over the vesting period. The restricted stock units granted in the year ended
December 31, 2020 vest in equal amounts, annually over three years. The stock-based compensation expense related to
awards granted was $2.8 million, $1.9 million, and $0.1 million for the years ended December 31, 2020, 2019, and 2018
respectively.
As of December 31, 2020, the Company had unrecognized stock-based compensation expense related to its
unvested restricted stock units of $5.6 million which is expected to be recognized over the remaining weighted average
vesting period of 1.8 years
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Table of Contents
Stock Options
A summary of the status of, and changes in, stock options was as follows:
Outstanding at December 31, 2019
Granted
Exercised
Cancelled or forfeited
Outstanding at December 31, 2020
Exercisable at December 31, 2020
Weighted Remaining Aggregate
Intrinsic
Contractual
Life
Value
(in years)
(in thousands)
Shares
5,317,326
$
$
1,560,575
(228,436) $
(1,164,387) $
5,485,078
$
3,027,116
$
Average
Exercise
Price
15.98
11.87
10.15
17.33
14.77
15.24
7.5
6.5
$
$
1,313
—
Using the Black-Scholes option pricing model, the weighted average fair value of options granted to employees
and directors during the year ended December 31, 2020 was $7.64. The stock-based compensation expense related to stock
option awards granted to employees and directors was $11.2 million, $13.3 million, and $14.6 million for the years ended
December 31, 2020, 2019, and 2018, respectively.
The fair value of each option was estimated at the date of grant using the Black-Scholes option pricing model with
the following weighted-average assumptions:
Risk-free interest rate
Expected dividend yield
Expected term (in years)
Expected volatility
2020
Year ended December 31,
2019
1.0 %
— %
6.0
73.7 %
2.2 %
— %
6.0
74.7 %
2018
2.8 %
— %
6.0
74.4 %
As of December 31, 2020, the Company had unrecognized stock-based compensation expense related to its
unvested stock options of $20.0 million which is expected to be recognized over the remaining weighted average vesting
period of 2.5 years.
13. 401(k) Savings plan
The Company has a defined-contribution savings plan under Section 401(k) of the Internal Revenue Code (the
“401(k) Plan”). The 401(k) Plan covers all employees who meet defined minimum age and service requirements, and
allows participants to defer a portion of their annual compensation on a pretax basis. The Company expensed
approximately $1.1 million, $1.0 million, and $0.8 million related to employer contributions made during the years ended
December 31, 2020, 2019, and 2018, respectively.
F-37
Table of Contents
14. Income taxes
The Company recognized deferred tax assets and liabilities for the expected future tax consequences of events that
have been recognized in the Company’s financial statements or tax returns. Under this method, deferred tax assets and
liabilities are determined based on differences between the financial statement carrying amounts and the tax bases of the
assets and liabilities using the enacted tax rates in effect in the years in which the differences are expected to reverse. A
valuation allowance against deferred tax assets is recorded if, based on the weight of the available evidence, it is more
likely than not that some or all the deferred tax assets will not be realized. The Company accounts for uncertain tax
positions using a more-likely-than-not threshold for recognizing and resolving uncertain tax positions. The evaluation of
uncertain tax positions is based on factors including, but not limited to, changes in the law, the measurement of tax
positions taken or expected to be taken in tax returns, the effective settlement of matters subject to audit, new audit activity,
and changes in facts or circumstances related to a tax position. The Company evaluates its tax positions on an annual basis.
The benefit for incomes taxes is as follows:
Current
Federal
State
Total current
Deferred
Federal
State
Total deferred
Total tax expense
2020
Year ended December 31,
2019
2018
(in thousands)
$
$
— $
—
—
—
—
—
— $
— $
—
—
—
—
—
— $
180
—
180
—
—
—
180
A reconciliation of the expected income tax (benefit) computed using the federal statutory income tax rate at the
Company’s effective tax rate for the years ended December 31, 2020, 2019, and 2018 is as follows:
Income tax computed at federal statutory tax rate
Non-deductible expenses
Other
State taxes, net of federal benefit
Change in valuation allowance
General business credit carryovers
Total
Year ended December 31,
2020
2019
2018
21.0 %
5.0 %
1.9 %
(2.3)%
(5.0)%
(20.6)%
— %
21.0 %
(2.2)%
— %
8.0 %
(36.2)%
9.4 %
— %
21.0 %
(2.1)%
— %
6.3 %
(28.1)%
3.1 %
0.2 %
The Company incurred net operating losses (“NOLs”) through December 31, 2019. As of December 31, 2020, the
Company had federal and state net operating loss carryforwards of $153.4 million and $140.9 million, respectively, with
the pre-2018 NOLs beginning to expire in 2033, and the post 2019 portion limited to 80% of taxable income and carried
forward indefinitely. During 2020, the Company did not generate federal and state NOL carryforwards. As of
December 31, 2020, the Company had federal and state research and development tax credit carryforwards of $21.1 million
and $8.3 million, respectively, which expire beginning in 2030. As of December 31, 2020, the Company had state
investment credits of $0.9 million, which expire beginning in 2021.
Under the provisions of the Internal Revenue Code, certain substantial changes in the Company’s ownership may
result in a limitation on the amount of NOL carryforwards and research and development credit carryforwards that may be
utilized annually to offset future taxable income and taxes payable. In general, an ownership change, as defined
F-38
Table of Contents
by Section 382, results from transactions that increase the ownership of 5% stockholders or public groups in the stock of a
corporation by more than 50 percent in the aggregate over a three-year period. During 2016, the Company completed a
study through June 30, 2016, to determine whether any ownership change had occurred since the Company’s formation and
determined that its transactions had resulted in three ownership changes, as defined by Section 382. Additionally, in the
first quarter of the 2020 calendar year, and in the first quarter of the 2021 calendar year, the Company completed additional
studies that did not identify additional ownership changes. There could be additional ownership changes in the future that
could further limit the amount of NOLs and tax credit carryforwards that the Company can utilize.
The significant components of the Company’s deferred tax assets and (liabilities) as of December 31, 2020 and
2019 are as follows:
Deferred tax assets:
Net operating loss carryforwards
Tax credit carryforwards
Deferred revenue
Lease liability
Stock compensation
Non-deductible accruals and reserves
Intangibles
Total deferred tax assets
Less valuation allowance
Net deferred tax assets
Deferred tax liabilities
Unrealized gain on available-for-sale securities
Right of use assets
Depreciation and amortization
Net deferred taxes
As of December 31,
2020
2019
(in thousands)
$
$
41,130
28,173
12,176
13,006
4,368
1,288
721
100,862
(84,866)
15,996
(8)
(9,852)
(6,136)
$
— $
49,713
17,297
16,805
9,335
5,157
1,502
776
100,585
(90,920)
9,665
(8)
(7,779)
(1,878)
—
As required by ASC 740, management has evaluated the positive and negative evidence bearing upon the
realizability of its deferred tax assets, which principally comprise NOL carryforwards, research and development credit
carryforwards, and deferred revenue. Management has determined that it is more likely than not that the Company will not
recognize the benefits of its federal and state deferred tax assets, and as a result, a valuation allowance of $84.9 million and
$90.9 million has been established at December 31, 2020 and 2019, respectively. The change in valuation allowance was
$1.0 million for the year ended December 31, 2020. The primary reason for the difference between the income tax expense
recorded by the Company and the amount of income tax expense at statutory income tax rates was the change in the general
business credit carryovers.
At December 31, 2020 and 2019, the Company had no unrecognized tax benefits. The Company has not as yet
conducted a study of its research and development credit carryforwards. This study may result in an adjustment to the
Company’s research and development credit carryforwards; however, until a study is completed, and any adjustment is
known, no amounts are being presented as an uncertain tax position. A full valuation allowance has been provided against
the Company’s research and development credits, and if an adjustment is required, this adjustment would be offset by an
adjustment to the valuation allowance. Thus, there would be no impact to the balance sheets or statements of operations if
an adjustment were required.
Interest and penalty charges, if any, related to unrecognized tax benefits would be classified as income tax expense
in the accompanying statements of operations. As of December 31, 2020 and 2019, the Company has no accrued interest
related to uncertain tax positions. Since the Company is in a loss carryforward position, it is generally subject to
examination by the U.S. federal, state, and local income tax authorities for all tax years in which a loss carryforward is
available.
F-39
Table of Contents
15. Related-party transactions
During the years ended December 31, 2020, 2019, and 2018, the Company received board and scientific advisory
services from two of its prior executives, Steven M. Paul, M.D., the Company’s former President and Chief Executive
Officer, and Dinah Sah, Ph.D., the Company’s former Chief Scientific Officer. The total amount of fees paid to Dr. Paul for
services provided during the years ended December 31, 2020, 2019 and 2018 was $0.2 million, $0.2 million, and $0.1
million respectively. The total amount of fees paid to Dr. Sah for services provided during the years ended December 31,
2020 and December 31, 2019 was $0.4 million in each of the years. There were no fees for scientific advisory services paid
to Dr. Sah in the year ended December 31, 2018.
Under the collaboration agreement, the Company and Neurocrine have agreed to conduct research, development
and commercialization of certain of the Company’s AAV gene therapy products (Note 9). Amounts due from Neurocrine
are reflected as related party collaboration receivables. The Company recorded approximately $8.0 million and $18.5
million in related party collaboration receivables associated with Neurocrine as of December 31, 2020 and 2019,
respectively.
16. Subsequent Events
In February 2021, Neurocrine notified the Company that it had elected to terminate the Neurocrine Collaboration
solely with regards to the VY-AADC Program, effective August 2, 2021 (the “Neurocrine VY-AADC Program Termination
Effective Date”). The Neurocrine Collaboration Agreement remains in full force and effect for each other program
thereunder.
As a result of the termination, as of the Neurocrine VY-AADC Program Termination Effective Date, the license
granted by the Company to Neurocrine thereunder regarding the VY-AADC Program shall expire and the Company shall
regain worldwide intellectual property rights regarding the VY-AADC Program, in each case in accordance with the terms
of the Neurocrine Collaboration Agreement. The Company intends to support Neurocrine, the study sponsor and IND
holder, on ongoing matters related to the completion of imaging and clinical assessments requested by the DSMB and the
provision of other information requested by the FDA for the RESTORE-1 Phase 2 clinical trial.
F-40
Table of Contents
EXHIBIT INDEX
Exhibit
No.
3.1
3.2
4.1
4.2
4.3
Description
Amended and Restated Certificate of
Incorporation of the Registrant
Amended and Restated By-Laws of the
Registrant
Specimen Common Stock Certificate of
the Registrant
Form of Indenture to be entered into
between the Registrant and Trustee
Second Amended and Restated Investors’
Rights Agreement, by and among the
Registrant and certain of its stockholders,
dated as of April 10, 2015
Form or
Schedule
8-K
Incorporated by Reference to:
Filing
Date with
SEC
11/16/2015
Exhibit
No.
3.1
SEC File
Number
001-
37625
Filed
Herewith
8-K
3.2
11/16/2015
10-K
4.1
03/14/2018
S-3/A
4.2
12/19/2016
S-1/A
4.2
10/28/2015
4.4
Description of Registrant’s Securities
10-K
4.4
03/03/2020
10.1#
10.2#
10.3†
10.4*
10.5*
10.6*
2014 Stock Option and Grant Plan and
forms of award agreements thereunder
S-1/A
10.1
10/28/2015
2015 Stock Option and Incentive Plan and
forms of award agreements thereunder
S-1/A
10.2
10/28/2015
Collaboration Agreement, by and between
the Registrant and Sanofi Genzyme
Corporation, dated February 11, 2015
Termination Agreement, by and between
the Registrant and Genzyme Corporation,
dated June 14, 2019
Amended and Restated Option and
License Agreement, by and between the
Registrant and Genzyme Corporation,
dated June 14, 2019
First Amendment to Amended and
Restated Option and License Agreement
with Genzyme Corporation, dated
September 20, 2020
S-1/A
10.3
11/06/2015
10-Q
10.3
08/09/2019
10-Q
10.4
08/09/2019
10-Q
10.1
11/09/2020
10.7†
Collaboration and License Agreement, by
and between the Registrant and
10-K
10.28
02/26/2019
001-
37625
001-
37625
333-
207367
333-
207367
001-
37625
333-
207367
333-
207367
333-
207367
001-
37625
001-
37625
001-
37625
001-
37625
Table of Contents
10.8
10.9
10.10
10.11†
10.12†
10.13†
10.14†
10.15
10.16
10.17
10.18
Neurocrine Biosciences, Inc., dated
January 28, 2019
Amendment No. 1 to the
Collaboration and License
Agreement, by and between the
Registrant and Neurocrine
Biosciences, Inc., dated June 14,
2019
Stock Purchase Agreement, by and
between the Registrant and
Neurocrine Biosciences, Inc., dated
January 28, 2019
Investor Agreement, by and between
the Registrant and Neurocrine
Biosciences, Inc., dated January 28,
2019
Collaboration Agreement, by and
between the Registrant and AbbVie
Biotechnology Ltd, dated February
16, 2018
Collaboration and Option Agreement,
by and between the Registrant and
AbbVie Ireland Unlimited Company,
dated February 21, 2019
Exclusive License Agreement, by and
between the Registrant and the
University of Massachusetts, dated
January 30, 2014
License Agreement, by and between
the Registrant and ReGenX
Biosciences, LLC, dated May 28,
2014
Lease Agreement, by and between
the Registrant and UP 45/75 Sidney
Street, LLC, dated April 1, 2014
First Amendment to the Lease
Agreement, by and between the
Registrant and UP 45/75 Sidney
Street, LLC, dated December 23,
2015
Second Amendment to the Lease
Agreement, by and between the
Registrant and UP 45/75 Sidney
Street, LLC, dated February 5, 2018
Third Amendment to the Lease
Agreement, by and between the
Registrant and UP 45/75 Sidney
Street, LLC, dated June 1, 2018
10-Q
10.5
08/09/2019
10-K
10.29
02/26/2019
10-K
10.30
02/26/2019
10-K
10.22
03/14/2018
10-K
10.31
02/26/2019
S-1
10.4
10/09/2015
S-1/A
10.11
11/04/2015
S-1/A
10.5
10/28/2015
10-Q
10.5
05/12/2016
8-K
10.1
02/07/2018
8-K
10.1
06/05/2018
001-
37625
001-
37625
001-
37625
001-
37625
001-
37625
333-
207367
333-
207367
333-
207367
001-
37625
001-
37625
001-
37625
Table of Contents
10.19
10.20
10.21
10.22
10.23
Lease Agreement, by and between
the Registrant and UP 64 Sidney
Street, LLC, dated December 23,
2015
First Amendment to the Lease
Agreement, by and between the
Registrant and UP 64 Sidney Street,
LLC, dated June 1, 2018
Lease Agreement, by and between
the Registrant and HCP/King 75
Hayden LLC, dated March 16, 2020
Form of Indemnification Agreement
to be entered into between the
Registrant and its directors
Form of Indemnification Agreement
to be entered into between the
Registrant and its executive officers
10-Q
10.6
05/12/2016
8-K
10.2
06/05/2018
8-K
10.1
03/19/2020
S-1/A
10.9
10/28/2015
S-1/A
10.10
10/28/2015
10.24#
2015 Employee Stock Purchase Plan
S-1/A
10.12
10/28/2015
10.25#
10.26#
10.27#
10.28#
10.29#
10.30#
10.31#
Amendment No. 1 to the 2015
Employee Stock Purchase Plan
Retirement Agreement, by and
between the Registrant and Steven M.
Paul, M.D., dated June 28, 2018
Employment Agreement, by and
between the Registrant and G. Andre
Turenne, dated June 28, 2018
Transition, Separation and Release
Agreement, by and between the
Registrant and Matthew P. Ottmer,
dated February 12, 2020
Employment Agreement, by and
between the Registrant and Allison
Dorval, dated November 7, 2018
Retirement Agreement, by and
between the Registrant and Dinah
Sah, Ph.D., dated May 20, 2019
Employment Agreement, by and
between the Registrant and Omar
Khwaja, M.D., Ph.D., dated May 20,
2019
10-K
10.21
03/14/2018
8-K
10.1
06/29/2018
8-K
10.2
06/29/2018
8-K
10.1
02/14/2020
10-Q
10.3
11/07/2018
8-K
10.1
05/21/2019
10-Q
10.2
08/09/2019
001-
37625
001-
37625
001-
37625
333-
207367
333-
207367
333-
207367
001-
37625
001-
37625
001-
37625
001-
37625
001-
37625
001-
37625
001-
37625
Table of Contents
10.32#
10.33#
10.34#
10.35#
10.36#
10.37#
10.38#
10.39
10.40#
21.1
Employment
Agreement, by
and between the
Registrant and
Robert W.
Hesslein, dated
January 15, 2019
Consulting
Agreement, by
and between the
Registrant and
Steven M. Paul,
M.D., dated
August 2, 2018
Amendment No. 1
to the Consulting
Agreement, by
and between the
Registrant and
Steven M. Paul,
M.D., dated July
9, 2019
Consulting
Agreement, by
and between the
Registrant and
Dinah Sah, Ph.D.,
dated June 28,
2019
Amendment No. 1
to the Consulting
Agreement, by
and between the
Registrant and
Dinah Sah, Ph.D.,
dated September
16, 2019
Form of Non-
Qualified Stock
Option Agreement
for Inducement
Form of Restricted
Stock Unit
Agreement and
Inducement Grant
Sales Agreement,
by and between
the Registrant and
Cowen and
Company, LLC,
dated November
5, 2019
Amendment No. 2
to the Consulting
Agreement, by
and between the
Registrant and
Steven M. Paul,
M.D., effective
August 1, 2020
Subsidiaries of the
Registrant.
10-Q
10.5
05/07/2019
10-Q
10.5
08/07/2018
10-Q
10.1
11/06/2019
10-Q
10.6
08/09/2019
10-Q
10.2
11/06/2019
10-K
10.27
02/26/2019
10-K
10.33
02/26/2019
S-3
1.2
11/06/2019
001-
37625
001-
37625
001-
37625
001-
37625
001-
37625
001-
37625
001-
37625
333-
234527
X
X
23.1
24.1
31.1
31.2
Consent of Ernst
& Young,
Independent
Registered Public
Accounting Firm.
Power of Attorney
(see signature
page of this
Annual Report on
Form 10-K).
Certification of
Principal
Executive Officer
pursuant to
Exchange Act
Rules 13a-14 or
15d-14.
Certification of
Principal
Financial Officer
pursuant to
Exchange Act
Rules 13a-14 or
15d-14.
X
X
X
X
Table of Contents
32.1+
101.INS
101.SCH
101.CAL
101.LAB
101.PRE
101.DEF
Certifications of Principal Executive
Officer and Principal Financial
Officer pursuant to Exchange Act
Rules 13a-14(b) or 15d-14(b) and 18
U.S.C. Section 1350.
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.
Inline XBRL Taxonomy Extension
Schema Document.
Inline XBRL Taxonomy Extension
Calculation Document.
Inline XBRL Taxonomy Extension
Definition Linkbase Document.
Inline XBRL Taxonomy Extension
Labels Linkbase Document.
Inline XBRL Taxonomy Extension
Presentation Link Document.
X
X
X
X
X
X
X
# Management contract or compensatory plan or arrangement filed in response to Item 15(a)(3) of the Instructions to the
Annual Report on Form 10-K.
† Confidential treatment has been granted as to certain portions, which portions have been omitted and separately filed
with the Securities and Exchange Commission.
* Portions of this exhibit have been omitted pursuant to Item 601(b)(10)(iv) of Regulation S-K
+ The certification furnished in Exhibit 32.1 hereto is deemed to be furnished with this Annual Report on Form 10-K and
will not be deemed to be “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.
Table of Contents
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly
caused this Form 10-K to be signed on its behalf by the undersigned, thereunto duly authorized.
SIGNATURES
February 25, 2021
VOYAGER THERAPEUTICS, INC.
By:
/s/ G. Andre Turenne
G. Andre Turenne
Chief Executive Officer, President, and
Director
SIGNATURES AND POWER OF ATTORNEY
We, the undersigned directors and officers of Voyager Therapeutics, Inc. (the “Company”), hereby severally
constitute and appoint G. Andre Turenne and Allison Dorval, and each of them singly, our true and lawful attorneys, with
full power to them, and to each of them singly, to sign for us and in our names in the capacities indicated below, any and all
amendments to this Annual Report on Form 10-K, and to file or cause to be filed the same, with all exhibits thereto and
other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys, and
each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in
connection therewith, as fully to all intents and purposes as each of us might or could do in person, and hereby ratifying
and confirming all that said attorneys, and each of them, or their substitute or substitutes, shall do or cause to be done by
virtue of this Power of Attorney.
Pursuant to the requirements of the Securities Exchange Act of 1934, this Annual Report on Form 10-K has been
signed by the following persons in the capacities and on the dates indicated.
Name
/s/ G. Andre Turenne
G. Andre Turenne
/s/Allison Dorval
Allison Dorval
/s/Mark Levin
Mark Levin
/s/Jim Geraghty
Jim Geraghty
/s/Michael Higgins
Michael Higgins
/s/Steven Hyman, M.D.
Steven Hyman, M.D.
/s/Steve Paul, M.D.
Steve Paul, M.D.
/s/Glenn Pierce, M.D., Ph.D.
Glenn Pierce, M.D., Ph.D.
/s/Nancy Vitale
Nancy Vitale
Title
Chief Executive Officer, President, and Director
(Principal Executive Officer)
Chief Financial Officer
(Principal Financial and Accounting Officer)
Director
Director
Director
Director
Director
Director
Director
Date
February 25, 2021
February 25, 2021
February 25, 2021
February 25, 2021
February 25, 2021
February 25, 2021
February 25, 2021
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4
February 25, 2021
February 25, 2021
AMENDMENT NO. 2
TO
CONSULTING AGREEMENT
Exhibit 10.40
THIS AMENDMENT NO. 02 TO CONSULTING AGREEMENT (“Amendment”) is entered
into as of August 1, 2020 (the “Amendment Effective Date”) between Steven M. Paul, M.D. ‐
(“Company”) and Voyager Therapeutics, Inc. (“Voyager”) and relates to the Agreement referred to
below.
WHEREAS, the parties previously entered into a CONSULTING AGREEMENT, effective
August 2, 2018, as amended by the AMENDMENT NO. 1, effective July 9, 2019 (the “Agreement”);
and
WHEREAS, the parties desire to amend the Agreement as set forth herein.
NOW, THEREFORE, in consideration of the covenants and obligations set forth below, and
other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged,
the parties agree as follows:
1. The 1st sentence of Section 2 – Term and Termination shall be amended as set forth below:
“This Agreement will commence on the Effective Date and will expire on December 31, 2020 unless earlier
terminated in accordance with this Agreement or extended by mutual written agreement (the “Term”).”
2 The 1st sentence of Section 2 – Compensation of Exhibit A - Accounting of Services Form shall be
amended as set forth below:
“Fees: Voyager will pay Consultant consulting fees of $16,700 per month during the Term.”
3. The 1st sentence of Section 3 – Period of Performance of Exhibit A - Accounting of Services
Form shall be amended as set forth below:
“Services are anticipated to be complete by December 31, 2020.”
4. Initially capitalized terms used herein but not otherwise defined shall have the same meanings as
set forth in the Agreement.
5. Except as expressly modified by this Amendment, all terms and conditions of the Agreement shall
remain in full force and effect.
6. This Amendment may be executed and delivered by facsimile or electronically transmitted
signature and in two or more counterparts, all of which together shall constitute one and the same
instrument. The parties agree that upon being signed and delivered by the parties, this Amendment
shall become effective and binding and that such signed copies will constitute evidence of the
existence of this Amendment.
[Remainder of this page is intentionally left blank]
SIGNATURE PAGE TO
AMENDMENT NO. 2 TO
CONSULTING AGREEMENT
IN WITNESS WHEREOF, the parties hereto entered into this Amendment by their duly
authorized representatives as of the Effective Date.
VOYAGER THERAPEUTICS, INC.
CONSULTANT ‐
By: /s/ Omar Khwaja
By: /s/ Steven M. Paul
Name: Omar Khwaja, M.D., Ph.D.
Name: Steven M. Paul, M.D.
Title: Chief Medical Officer & Head of R&D
SUBSIDIARIES OF THE REGISTRANT
Name of Entity
Voyager Securities
State/Country of Organization
Corporation Massachusetts
Exhibit 21.1
Exhibit 23.1
Consent of Independent Registered Public Accounting Firm
We consent to the incorporation by reference in the following Registration Statements:
● Registration Statement (Form S-3 No. 333-234527) and related Prospectus of Voyager Therapeutics, Inc. for the
registration of debt securities, common stock, preferred stock, depositary shares, units and warrants,
● Registration Statement (Form S-8 No. 333-207958) pertaining to the 2014 Stock Option and Grant Plan, the 2015
Stock Option and Incentive Plan, and the 2015 Employee Stock Purchase Plan of Voyager Therapeutics, Inc.,
● Registration Statement (Form S-8 No. 333-210258) pertaining to the 2015 Stock Option and Incentive Plan and
the 2015 Employee Stock Purchase Plan of Voyager Therapeutics, Inc.,
● Registration Statement (Form S-8 No. 333-216699) pertaining to the 2015 Stock Option and Incentive Plan and
the 2015 Employee Stock Purchase Plan of Voyager Therapeutics, Inc.,
● Registration Statement (Form S-8 No. 333-223638) pertaining to the 2015 Stock Option and Incentive Plan and
the 2015 Employee Stock Purchase Plan of Voyager Therapeutics, Inc.,
● Registration Statement (Form S-8 No. 333-229891) pertaining to the 2015 Stock Option and Incentive Plan, the
2015 Employee Stock Purchase Plan, the Inducement Stock Option Grant Awards and the Inducement Restricted
Stock Unit Awards of Voyager Therapeutics, Inc.,
● Registration Statement (Form S-8 No. 333-236870) relating to the 2015 Stock Option and Incentive Plan and the
2015 Employee Stock Purchase Plan of Voyager Therapeutics, Inc;
of our reports dated February 25, 2021, with respect to the consolidated financial statements of Voyager Therapeutics, Inc.
and the effectiveness of internal control over financial reporting of Voyager Therapeutics, Inc. included in this Annual
Report (Form 10-K) of Voyager Therapeutics, Inc. for the year ended December 31, 2020.
/s/ Ernst & Young LLP
Boston, Massachusetts
February 25, 2021
I, G. Andre Turenne, certify that:
Certification
1. I have reviewed this Annual Report on Form 10-K of Voyager Therapeutics, Inc.;
Exhibit 31.1
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material
fact necessary to make the statements made, in light of the circumstances under which such statements were made, not
misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present
in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the
periods presented in this report;
4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and
procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting
(as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be
designed under our supervision, to ensure that material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in
which this report is being prepared;
b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to
be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting
and the preparation of financial statements for external purposes in accordance with generally accepted accounting
principles;
c. Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our
conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered
by this report based on such evaluation; and
d. Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during
the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that
has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial
reporting; and
5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control
over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or
persons performing the equivalent functions):
a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial
reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and
report financial information; and
b. Any fraud, whether or not material, that involves management or other employees who have a significant role in
the registrant’s internal control over financial reporting.
Date: February 25, 2021
/s/ G. Andre Turenne
G. Andre Turenne
Chief Executive Officer, President, and Director
(Principal Executive Officer)
I, Allison Dorval, certify that:
Certification
1. I have reviewed this Annual Report on Form 10-K of Voyager Therapeutics, Inc.;
Exhibit 31.2
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material
fact necessary to make the statements made, in light of the circumstances under which such statements were made, not
misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present
in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the
periods presented in this report;
4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and
procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting
(as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be
designed under our supervision, to ensure that material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in
which this report is being prepared;
b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to
be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting
and the preparation of financial statements for external purposes in accordance with generally accepted accounting
principles;
c. Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our
conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered
by this report based on such evaluation; and
d. Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during
the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that
has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial
reporting; and
5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control
over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or
persons performing the equivalent functions):
a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial
reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and
report financial information; and
b. Any fraud, whether or not material, that involves management or other employees who have a significant role in
the registrant’s internal control over financial reporting.
Date: February 25, 2021
/s/ Allison Dorval
Allison Dorval
Chief Financial Officer
(Principal Financial and Accounting Officer)
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
Exhibit 32.1
In connection with the Annual Report on Form 10-K of Voyager Therapeutics, Inc. (the “Company”) for the year ended
December 31, 2020 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), each of the
undersigned officers hereby certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002, that to the best of his or her knowledge:
1)
2)
the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as
amended; and
the information contained in the Report fairly presents, in all material respects, the financial condition and results of
operations of the Company.
Date: February 25, 2021
Date: February 25, 2021
/s/ G. Andre Turenne
G. Andre Turenne
Chief Executive Officer, President, and Director
(Principal Executive Officer)
/s/ Allison Dorval
Allison Dorval
Chief Financial Officer
(Principal Financial and Accounting Officer)