2023 AN NUA L RE PORT
VOYAGER THERAPEUTICS / 2023 ANNUAL REPORT
TO OUR SHAREHOLDERS
We are in an unprecedented time in neurotherapeutics. Medicines that address the causative
disease biology underlying central nervous system (CNS) diseases such as Alzheimer’s disease
and amyotrophic lateral sclerosis (ALS) are becoming a reality for patients. Despite these
advancements, progress is limited by delivery challenges, as the blood-brain barrier (BBB)
prevents the uptake of many investigational therapies. Voyager is committed to overcoming
this challenge and delivering transformative neurogenetic medicines to patients in need.
The Voyager team made tremendous progress developing and advancing a robust pipeline of
wholly-owned and partnered neurotherapeutic programs in 2023. I look forward to continuing
this momentum in 2024 as we aim to initiate clinical studies with VY-TAU01, our lead antibody
for Alzheimer’s disease, and advance multiple CNS gene therapy programs towards the clinic,
with the potential to generate clinical data in 2025 and 2026.
CNS Pipeline Advances towards Clinical Trials
VY-TAU01, Voyager’s most advanced program, is an antibody targeting pathological tau. It is
differentiated from other anti-tau antibodies, some of which have failed in the clinic, by the epitope
it targets. As the field learned from the development of the anti-amyloid antibodies a decade
ago, epitope matters – it can be the difference between a drug that works and one that doesn’t.
The Voyager team created and evaluated hundreds of novel antibodies targeting pathological
epitopes across the tau protein, including C-terminal and mid-domain regions; ultimately VY-TAU01,
which targets an epitope in the C-terminal, performed best in our experiments. We presented
these data at the 2023 International Conference on Alzheimer’s and Parkinson’s Diseases and
Related Neurological Disorders (AD/PD™ 2023), and at AD/PD 2024, we presented additional
data showing VY-TAU01 was well-tolerated and demonstrated favorable pharmacokinetics in
non-human primates. We expect to initiate a Phase 1a single ascending dose study in healthy
volunteers in 2024 following IND clearance, and anticipate initiating a Phase 1b multiple ascending
dose study in patients with early Alzheimer’s disease in 2025 for this program. The Phase 1b study
has the potential to generate proof of concept in 2026 that VY-TAU01 may slow the spread of
pathological tau as evidenced by PET imaging.
Voyager also advanced several gene therapy programs during 2023 and early 2024. We selected
a development candidate in 2023 for our wholly-owned, SOD1-silencing gene therapy for ALS,
and we expect to file an IND in mid-2025 and then initiate a Phase 1 clinical trial in ALS patients.
In early 2024, the joint steering committee with our partner Neurocrine Biosciences selected
development candidates for our partnered Friedreich’s ataxia gene therapy program, triggering
a $5 million milestone payment to Voyager, and for our GBA1 gene therapy program for the
potential treatment of Parkinson’s disease and other GBA1-mediated diseases, triggering a
$3 million milestone payment to Voyager. These three gene therapy programs have the potential
to enter clinical trials in 2025, and each has the potential to establish proof-of-concept that our
novel, BBB-targeted capsids derived from our TRACER™ capsid discovery platform do cross the
blood-brain barrier and allow for appropriate expression in the CNS in humans.
VOYAGER THERAPEUTICS / 2023 ANNUAL REPORT
As our late-preclinical pipeline advanced in 2023, Voyager introduced several new programs,
including a gene therapy program for Huntington’s disease and two gene therapy programs for
Alzheimer’s disease, one delivering a vectorized tau-targeted siRNA and the other delivering a
vectorized anti-amyloid antibody. The two Alzheimer’s disease gene therapies continue to advance
within our wholly-owned pipeline, with the tau silencing gene therapy achieving proof of concept
in animals and moving into late-research with an IND filing anticipated in 2026. The Huntington’s
disease gene therapy program, meanwhile, became a central asset in our collaboration with
Novartis announced in early 2024.
Two Partners Double Down
When it comes to partnering activity in 2023 and early 2024, what I found most remarkable was
that two of our highly regarded existing partners chose to expand their relationships with us.
Neurocrine Biosciences originally partnered with Voyager in 2019 around gene therapy programs
for Friedreich’s ataxia and two undisclosed targets. In January 2023, we entered into a second
collaboration with Neurocrine, this time for our GBA1 gene therapy program and three undisclosed
targets. As part of the 2023 collaboration, we received upfront consideration of $175 million, and
Voyager is eligible for up to $5.5 billion in milestone payments under the two collaborations, as well
as tiered royalties on net sales, and program funding. While we may not realize the full $5.5 billion
due to the high-risk nature of biotech, it is encouraging to see development candidate selections
in two programs triggering the first milestone payments. We hope these are the first of many.
In early 2023, Novartis exercised options to license our capsids for two neurological disease
targets. They made this decision after working with our capsids in their own labs for a year.
Then, in December 2023, Novartis entered an additional capsid license agreement and strategic
collaboration with us around two programs: Huntington’s disease and spinal muscular atrophy
(SMA). We received $25 million in 2023 associated with the option exercise and $100 million in
proceeds in 2024 associated with the additional transactions, including $80 million in upfront fees
for the strategic collaboration and capsid license agreement and a $20 million equity investment.
Voyager is eligible for up to $1.8 billion in milestone payments under our license agreements and
collaborations with Novartis, as well as tiered royalties on net sales, and program funding.
In both of these cases, what I was most gratified to see was that Neurocrine and Novartis chose
to expand their relationships with Voyager. I can think of no higher testament to the quality of
our science.
Defining A Future in Neurogenetic Medicines
Voyager’s mission is to create disease-modifying neurogenetic medicines by identifying validated
targets, advancing multiple therapeutic modalities, and delivering these therapies to the right
areas within the central nervous system.
VOYAGER THERAPEUTICS / 2023 ANNUAL REPORT
Our TRACER capsid discovery platform is the cornerstone of our strategy to-date as it addresses
BBB delivery utilizing a virus. Voyager scientists have engineered AAV capsids with robust
penetration of the BBB and enhanced CNS tropism in multiple species, including non-human
primates. We also identified the receptor associated with one of our capsid families, and we are
exploring if we can leverage this receptor to shuttle non-viral genetic medicines across the BBB.
As we work to achieve our mission, we have expanded our leadership talent. In 2023, we added
Jacquelyn Fahey Sandell, J.D. as Chief Legal Officer, and we added three individuals to our Board
of Directors: Grace Colón, Ph.D., Jude Onyia, Ph.D., and George Scangos, Ph.D. In early 2024, Toby
Ferguson, M.D., Ph.D. was appointed as Chief Medical Officer, bringing an exceptional record of
designing and running neurological disease clinical programs, which will be critical as we advance
into the clinic.
In summary, Voyager closed 2023 with a strong balance sheet after making significant progress
during the year. We expect that balance sheet to provide runway into 2027 – removing our financing
overhang and enabling us to potentially generate value-creating clinical data in 2025 and 2026.
I am deeply grateful to our team, collaborators, board members,
and shareholders for your continued support. Thank you for your
collaboration and for sharing our vision of providing transformative
treatments and cures to the millions afflicted with neurological
diseases.
Sincerely,
Alfred Sandrock, M.D., Ph.D.
President and Chief Executive Officer
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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, 2023
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 Hayden Avenue,
Lexington, Massachusetts
(Address of Principal Executive Offices)
46-3003182
(IRS Employer
Identification No.)
02421
(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 electronically 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. ☒
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the
correction of an error to previously issued financial statements. ☐
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the
registrant’s executive officers during the relevant recovery period pursuant to § 240.10D-1(b). ☐
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,
2023, the last business day of the registrant’s most recently completed second fiscal quarter, was approximately $488.8 million (based on the last reported sale price on the
Nasdaq Global Select Market as of such date).
As of February 21, 2024 there were 54,300,627 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 2024 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
Business
Risk Factors
Unresolved Staff Comments
Cybersecurity
Properties
Legal Proceedings
Mine Safety Disclosures
Page
7
49
111
111
112
112
112
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity
Securities
[Reserved]
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
112
113
113
123
124
124
124
125
PART I.
Item 1.
Item 1A.
Item 1B.
Item 1C.
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.
126
Directors, Executive Officers and Corporate Governance
Executive Compensation
126
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters 126
126
Certain Relationships and Related Transactions, and Director Independence
126
Principal Accountant Fees and Services
PART IV.
Item 15.
Item 16.
Exhibits and Financial Statement Schedules
Form 10-K Summary
Signatures
126
127
2
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 and our proprietary antibodies;
our ability to continue to develop our proprietary gene therapy platform technologies, including our
TRACERTM (Tropism Redirection of AAV by Cell-type-specific Expression of RNA) discovery
platform and our vectorized antibody platform, our proprietary antibody program, and our gene therapy and
vectorized antibody programs;
our ability to identify and optimize product candidates and proprietary AAV capsids;
our strategic collaborations and licensing agreements with, and funding from, our collaboration partners
Neurocrine Biosciences, Inc. and Novartis Pharma AG, or Novartis, and our licensee Alexion, AstraZeneca
Rare Disease (successor-in-interest to former licensee Pfizer Inc.);
our ongoing and planned preclinical development efforts, related timelines and studies;
our ability to enter into future collaborations, strategic alliances, or option and license arrangements;
the timing of and our ability to submit applications and obtain and maintain regulatory approvals for our
product candidates, including the ability to submit investigational new drug, or IND, applications for our
programs;
our estimates regarding revenue, expenses, contingent liabilities, future revenues, existing cash resources,
capital requirements and cash runway;
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;
our need for additional funding and our plans and ability to raise additional capital, including through
equity offerings, debt financings, collaborations, strategic alliances, and option and license arrangements;
our competitive position and the success of competing products that are or might 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; and
3
•
our ability to control costs and prioritize our product candidate pipeline and platform development
objectives successfully in connection with our strategic initiatives.
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, strategic collaborations, licenses, 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.
We obtained the statistical and other industry and market data in this Annual Report on Form 10-K and the
documents we have filed as exhibits to the Annual Report on Form 10-K from our own internal estimates and research,
as well as from industry and general publications and research, surveys, studies and trials conducted by third parties.
Some data is also based on our good faith estimates, which are derived from management’s knowledge of the industry
and independent sources. This data involves a number of assumptions and limitations, and you are cautioned not to give
undue weight to such estimates. In addition, while we believe the market opportunity information included in this
Annual Report on Form 10-K and the documents we have filed as exhibits to the Annual Report on Form 10-K is reliable
and is based upon reasonable assumptions, such data involves risks and uncertainties and are subject to change based on
various factors, including those discussed under “Risk Factors” and in the documents we have filed as exhibits to the
Annual Report on Form 10-K. In addition, statements that “we believe” and similar statements reflect our beliefs and
opinions on the relevant subject. These statements are based upon information available to us as of the date of this
Annual Report on Form 10-K, and while we believe such information forms a reasonable basis for such statements, such
information may be limited or incomplete, and our statements should not be read to indicate that we have conducted an
exhaustive inquiry into, or review of, all potentially available relevant information. These statements are inherently
uncertain and investors are cautioned not to unduly rely upon these statements.
We own various U.S. federal trademark registrations and applications and unregistered trademarks, including
our corporate logo. This Annual Report on Form 10-K and the documents filed as exhibits to the Annual Report on Form
10-K contain references to trademarks, service marks and trade names referred to in this Annual Report on Form 10-K
and the information incorporated herein, including logos, artwork, and other visual displays, that may appear without the
® or TM symbols, but such references are not intended to indicate, in any way, that we will not assert, to the fullest
extent under applicable law, our rights or the rights of the applicable licensor to these trademarks, service marks or trade
names. We do not intend our use or display of other companies’ trade names, service marks or trademarks to imply a
relationship with, or endorsement or sponsorship of us by, any other companies. All trademarks, service marks and trade
names included or incorporated by reference into this Annual Report on Form 10-K and the documents filed as exhibits
to the Annual Report on Form 10-K are the property of their respective owners.
4
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 a history of incurring significant losses and anticipate that we will continue to incur losses for the
foreseeable future and may never achieve or maintain consistent profitability.
• 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.
• Our AAV gene therapy and other biological therapy product candidates are based on a proprietary
technology and, in several disease areas, unvalidated treatment approaches, 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.
• Regulatory requirements governing biological and gene 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 are early in our development efforts. All of our active product candidates are currently in preclinical
development or are advancing into the clinic. We may encounter substantial delays or difficulties in
commencement, enrollment or completion of our preclinical studies or clinical trials, or we may fail to
demonstrate safety and efficacy to the satisfaction of applicable regulatory authorities, any of which could
prevent us from commercializing our current and future product candidates on a timely basis, if at all.
• 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.
• To date, all of our revenue has been derived from our ongoing collaborations and licensing agreements with
Neurocrine, Novartis, Alexion and Sangamo and from our prior collaborations with Sanofi Genzyme
Corporation, AbbVie Biotechnology Ltd and AbbVie Ireland Unlimited Company. If any ongoing or future
collaboration, option and license, or license agreements were to be terminated, our business financial
condition, results of operations and prospects could be harmed.
• Our gene therapies 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 future success depends on our ability to retain key members of our management and research and
development teams, and to attract, retain and motivate qualified personnel.
• Our gene therapy and vectorized antibody approaches utilize vectors derived from viruses that are
selectively engineered, which may be perceived as unsafe or may result in unforeseen adverse events.
5
Negative public opinion and increased regulatory scrutiny of gene therapy may damage public perception
of the safety of our gene therapy product candidates and adversely affect our ability to conduct our business
or obtain regulatory approvals for our gene therapy 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.
6
ITEM 1.
BUSINESS
PART I
We are a biotechnology company whose mission is to leverage the power of human genetics to modify the
course of and ultimately cure neurological diseases. Our pipeline includes programs for Alzheimer’s disease, or AD;
amyotrophic lateral sclerosis, or ALS; Parkinson’s disease; and multiple other diseases of the central nervous system.
Many of our programs are derived from our TRACER™ (Tropism Redirection of AAV by Cell-type-specific Expression
of RNA) adeno-associated virus, or AAV, capsid discovery platform, which we have used to generate novel capsids, or
TRACER Capsids, and identify associated receptors to potentially enable high brain penetration with genetic medicines
following intravenous dosing. Some of our programs are wholly-owned, and some are advancing with licensees and
collaborators including Alexion, AstraZeneca Rare Disease, or Alexion; Novartis Pharma AG, or Novartis; Neurocrine
Biosciences, Inc., or Neurocrine; and Sangamo Therapeutics, Inc., or Sangamo.
We focus on leveraging our expertise in capsid discovery and neuropharmacology to address the delivery
hurdles that have constrained the genetic medicine and neurology disciplines, with the goal of either halting or slowing
disease progression or reducing symptom severity, and therefore providing clinically meaningful impact to patients. We
are advancing our own proprietary pipeline of drug candidates for neurological diseases, with a focus on AD. Our
wholly-owned prioritized pipeline programs include an anti-tau antibody for AD; a superoxide dismutase 1, or SOD1,
silencing gene therapy for ALS; and a tau silencing gene therapy for AD. We identified a lead development candidate for
our anti-tau antibody program in the first quarter of 2023 and expect to submit an investigational new drug, or IND,
application to the U.S. Food and Drug Administration, or the FDA, for this program in the first half of 2024. We believe
this trial could result in the potential to generate proof-of-concept data for slowing the spread of pathological tau via tau
positron emission tomography, or PET, imaging in 2026. We identified a lead development candidate for the SOD1
silencing gene therapy program in the fourth quarter of 2023, and we expect to submit the IND application for this
program in mid-2025. We promoted our tau silencing gene therapy program to a prioritized program in the first quarter
of 2024, based on preclinical data demonstrating robust reductions in tau messenger RNA, or mRNA, in a murine model,
and we anticipate submission of an IND in 2026. Our proprietary pipeline also includes an early research initiative to
develop a gene therapy for the treatment of AD. This program seeks to combine a vectorized anti-amyloid antibody with
a TRACER Capsid.
We are also working with our collaboration partners on multiple programs. In January 2019 and January 2023,
we entered into collaboration and license agreements with Neurocrine. Under our agreements with Neurocrine, we are
actively advancing two later preclinical stage programs: a glucocerebrosidase 1, or GBA1, gene therapy program for
Parkinson’s disease and other GBA1-mediated diseases, and a frataxin, or FXN, gene therapy program for Friedreich’s
ataxia, or the FA Program. Pursuant to such agreements, we are also working with Neurocrine on five early-stage
programs for the research, development, manufacture and commercialization of gene therapies designed to address
central nervous system diseases or conditions associated with rare genetic targets. We have also entered into agreements
with licensees including Novartis, Alexion, and Sangamo, to license or to provide options to receive exclusive licenses to
certain TRACER Capsids. As described further below, in December 2023, we entered into a license and collaboration
agreement with Novartis to provide Novartis certain rights regarding the development of potential gene therapy product
candidates for the treatment of spinal muscular atrophy and to collaborate with Novartis to develop gene therapy product
candidates for the treatment of Huntington’s disease. The joint steering committee with Neurocrine selected a
development candidate for the FA Program, during the first quarter of 2024, and expects to advance into first-in-human
clinical trials in 2025. We anticipate that our collaborative partners and licensees will submit at least one additional IND
application for a partnered program and initiate clinical development for the associated program by the end of 2025.
All of the gene therapies in our wholly-owned and collaborative pipeline leverage novel capsids derived from
our TRACER™ Capsid discovery platform. TRACER is a broadly applicable, RNA-based screening platform that
enables rapid discovery of AAV capsids with robust penetration of the blood-brain barrier and enhanced central nervous
system, or CNS, tropism in multiple species, including non-human primates, or NHPs.
7
Vision, Mission, and Strategy
Our vision is a world in which transformative treatments and cures are available to the millions afflicted with
neurological diseases. Our mission is to create disease-modifying neurogenetic medicines by identifying validated
targets, advancing multiple therapeutic modalities, and delivering to the right areas within the central nervous system.
Our strategy is to define and become a leader in the field of neurogenetic medicine. We intend to achieve our
broader vision, mission, and strategic imperatives through the following strategic initiatives:
• Advancing our prioritized CNS pipeline by achieving preclinical and clinical milestones and
establishing proof-of-biology and proof-of-concept.
• Fueling our future by initiating and advancing research programs in gene therapy and other therapeutic
approaches to neurogenetic medicine.
• Maximizing value for all stakeholders by advancing our wholly-owned and partnered assets intended
to transform the treatment of neurological disease.
Overview of Our Pipeline
We have leveraged our TRACER discovery platform and other gene therapy platforms, our expertise with
proprietary antibodies, vectorized small interfering RNA, or siRNA, knockdown, gene delivery and our vectorized
antibody platform to assemble a pipeline of proprietary antibody, AAV gene therapy and other genetic medicine
programs for the treatment of neurological diseases. We have prioritized pipeline programs for our development based
on the following criteria: high unmet medical need, target validation, efficient path to human proof of biology, robust
preclinical pharmacology, and strong commercial potential. Depending on the disease, we are seeking to develop AAV
gene therapies that will use a gene replacement, gene silencing or vectorized antibody approach, and antibodies that will
use a passive administration approach.
Our pipeline of programs, all of which are in preclinical development, is summarized in the table below:
Our Platforms
We have expertise in both viral and non-viral approaches to neurogenetic medicine.
8
Our TRACER Capsid discovery platform is a broadly applicable, RNA-based screening platform that enables
rapid discovery of AAV capsids with robust penetration of the blood-brain barrier, or BBB, and enhanced CNS, tropism
observed in multiple animal species, including NHPs. TRACER allows us to identify proprietary AAV capsids, the outer
viral protein shells that enclose genetic material that makes up the vector payload. TRACER employs directed evolution
to facilitate the selection of AAV capsids with enhanced tissue delivery characteristics, such as more effective delivery
across the BBB and cell-specific transduction. The TRACER discovery platform is a broadly applicable, functional
RNA-based AAV capsid discovery platform that allows for rapid in vivo evolution of AAV capsids with cell-specific
transduction properties in multiple species, including NHPs. We believe that these TRACER Capsids have the potential
to significantly enhance the activity and safety of our single dose gene therapy product candidates, which we expect to be
delivered with systemic infusions, as compared with conventional capsids. We have leveraged the TRACER discovery
platform to generate multiple families of TRACER Capsids with robust CNS tropism following intravenous delivery.
We have presented data at scientific conferences demonstrating strong transduction to multiple areas within the brain and
activity across multiple animal species. We have entered into agreements with licensees including Alexion, Novartis, and
Sangamo, to license or to provide options to receive exclusive licenses to certain of our TRACER Capsids to develop
and commercialize AAV gene therapy candidates in specified indications.
Vector Engineering and Optimization
The key components of an AAV vector include: (a) the capsid; (b) the therapeutic gene, or transgene; and (c)
payload control elements, including the promoter or other DNA sequences that modulate the expression of the transgene.
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 TRACER Capsids. We have also built, or intend to build, capabilities to design, screen, and
advance genetic sequences within our AAV vectors, including transgenes and payload control elements, to create
optimized therapeutic candidates for each of our preclinical programs.
Non-Viral Delivery
We have additional expertise in the discovery and development of monoclonal antibodies as well as in receptor-
mediated non-viral delivery to the CNS. We have discovered multiple antibodies as part of the anti-tau antibody program
and other research programs. Some of these programs have been advanced in a vectorized setting, such as our anti-
amyloid program, while others have been advanced in a non-vectorized setting, such as the anti-tau antibody program.
Separately, we have identified receptors for some of our TRACER Capsids as well as ligands for a particular
receptor and are conducting experiments to evaluate the potential to leverage our receptors to shuttle non-viral genetic
medicines across the BBB.
Wholly-Owned Programs
Anti-Tau Antibody (VY-TAU01) for the Treatment of Alzheimer’s Disease
Disease Overview
AD is a progressive neurodegenerative disease estimated to affect 6 million people in the United States and up
to 416 million people globally. The disease causes memory loss and may escalate to decreased independence,
communication challenges, behavioral disorders such as paranoia and anxiety, and lack of physical control. In 2023, the
total cost of caring for people living with Alzheimer’s and other dementias in the United States is estimated at $345
billion.
Our Treatment Approach
We have maintained a long-standing focus on developing proprietary and complimentary approaches to disrupt
the progression of tau pathology believed to be central to AD and other tauopathies. Reduction of toxic tau aggregates
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may slow disease progression and cognitive decline in these diseases. We selected VY-TAU01 as our lead humanized
anti-tau antibody candidate to advance against AD. We believe VY-TAU01 is differentiated from other anti-tau
antibodies based on the epitope, or the part of a foreign protein or antigen that is capable of generating an immune
response, it targets, which is located in the C-terminal rather than the N-terminal, mid-domain, or microtubule binding
region of the tau protein.
Preclinical Studies
At the Alzheimer’s Association International Conference in August 2022, we presented data for our proprietary
anti-tau antibodies, targeting the mid-domain and C-terminus with high affinity and showing favorable biophysical
characteristics and strong activity in preclinical studies in mouse models. In the P301S seeding-propagation tauopathy
mouse model, our C-terminal targeting anti-tau antibody blocked the seeding/propagation of filamentous tau and
demonstrated substantial reduction of induced tau pathology. In March 2023, we presented data at the Alzheimer's and
Parkinson's Diseases, or AD/PD, 2023 Conference highlighting the differentiating characteristics resulting in the
selection of lead candidate VY-TAU01. In March 2024, we will present data at the AD/PD 2024 Conference
demonstrating VY-TAU01 was well-tolerated, and its serum pharmacokinetic profile was as expected in an NHP study.
Program Status
In January 2023, we selected VY-TAU01 as our lead humanized anti-tau antibody candidate to advance against
AD. In April 2023, we received pre-IND written feedback from the FDA for VY-TAU01. Process development and
manufacturing at a contract manufacturer have been initiated, and we initiated good laboratory practice, or GLP,
toxicology studies in the third quarter of 2023 to enable an IND submission.
These GLP toxicology studies are progressing, and we plan to submit an IND application for VY-TAU01 to the
FDA in the first half of 2024. Following clearance of the IND, the planned Phase 1 clinical trial is designed to assess the
safety of VY-TAU01 in a single ascending dose, or SAD, study in healthy subjects, and is expected to be initiated in
2024. A multiple ascending dose, or MAD, study in subjects with mild cognitive impairment or early AD is expected to
be initiated in 2025. The MAD study has the potential to generate proof-of-concept data for slowing the spread of
pathological tau via tau PET imaging in 2026.
SOD1 Silencing Gene Therapy Program for the Treatment of ALS
Disease Overview
We are developing a gene therapy leveraging a BBB-penetrant, CNS-tropic TRACER Capsid to treat ALS
caused by the SOD1 mutation via a gene silencing approach. ALS is a progressive neurodegenerative disease in which
the motor neurons atrophy and die, resulting in loss of the ability to speak, move, eat and, eventually, breathe. SOD1
ALS is typically fatal within approximately two to five years of symptom onset. The disease is estimated to affect
approximately 20,000 people in the United States. Multiple genes have been implicated in ALS; mutations in the SOD1
gene are estimated to occur in approximately 2-3% of ALS cases, or up to 600 people in the United States. SOD1
mutations in ALS patients are thought to cause a toxic gain-of-function that leads to the degeneration of motor neurons
along the entire length of the spinal cord, the brainstem, and the upper motor neurons in the cerebral cortex.
Our Treatment Approach
We believe that a therapeutic delivering a vectorized highly potent siRNA construct via intravenous
administration of an AAV gene therapy may enable broad CNS knockdown of SOD1. This could potentially slow the
decline of functional ability in ALS patients with the SOD1 mutation. We have selected a potent, specific vectorized
siRNA transgene targeting SOD1, delivered using a novel TRACER Capsid. We believe that a Phase 1 clinical trial to
demonstrate reductions in SOD1 in the cerebrospinal fluid and in neurofilament light chain in the plasma will provide
evidence of target engagement and the attenuation of motor neuron loss, respectively.
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Preclinical Studies
At the American Society of Gene & Cell Therapy 25th Annual Meeting in May 2022, or the ASGCT 2022
Meeting, we presented preclinical data demonstrating robust SOD1 knockdown in all levels of the spinal cord and
significant improvements in motor performance, body weight, and survival in an SOD1-ALS mouse model following
intravenous delivery of a vectorized siRNA using a mouse BBB-penetrant capsid. When we announced the selection of a
development candidate in the fourth quarter of 2023, we disclosed that, in an NHP study, the candidate demonstrated
73% reduction of SOD1 in cervical spinal cord motor neurons following a single intravenous dose in cynomolgus
macaques. The candidate also demonstrated robust knockdown of SOD1 across all levels of the spinal cord and motor
cortex. Further, the candidate demonstrated an ability to transduce both neurons and astrocytes, two cell types thought to
play an important role in ALS.
Program Status
We have identified a potent and specific vectorized siRNA transgene that resulted in substantially extended
lifespan and motor function when delivered using a BBB-penetrant capsid in a mouse model and on December 6, 2023,
we announced the selection of a lead development candidate for our SOD1 program. We plan to submit an IND
application to the FDA in mid-2025 for our lead development candidate and to initiate a Phase 1 clinical trial in subjects
with SOD1 ALS for the program as soon as possible thereafter. We expect to evaluate the safety and biological activity
of its SOD1 ALS product candidate in this Phase 1 trial.
Tau Silencing Gene Therapy Program for the Treatment of AD
Disease Overview
AD is a progressive neurodegenerative disease estimated to affect 6 million people in the United States and up
to 416 million people globally. The disease causes memory loss and may escalate to decreased independence,
communication challenges, behavioral disorders such as paranoia and anxiety, and lack of physical control. In 2023, the
total cost of caring for people living with Alzheimer’s and other dementias in the United States is estimated at $345
billion.
Our Treatment Approach
We have maintained a long-standing focus on developing proprietary and complimentary approaches to disrupt
the progression of tau pathology believed to be central to AD and other tauopathies. Reduction of toxic tau aggregates
may slow disease progression and cognitive decline in these diseases. In addition to our aforementioned anti-tau
antibody program, we are advancing a gene therapy that leverages an intravenously delivered TRACER Capsid
containing a vectorized siRNA, specifically targeting tau mRNA.
Preclinical Studies
In March 2024, we will present data at the AD/PD 2024 Conference demonstrating that a single intravenous
administration of our tau silencing gene therapy in mice expressing human tau resulted in broad AAV distribution across
multiple brain regions and dose-dependent reductions in tau mRNA levels of up to 90%, which were associated with
robust reductions in human tau protein levels across the brain.
Program Status
In the first quarter of 2024, we promoted the tau silencing gene therapy program to a prioritized program, and
we promoted it to the late-research stage of our wholly-owned pipeline, based on its demonstration on in vivo proof-of-
concept and expected advancement to IND within two to three years. We are evaluating the optimal combination of
payload and capsid for this program, to enable selection of a development candidate. We expect to file an IND in 2026.
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Vectorized Anti-Amyloid Antibody Early Research Program for the Treatment of AD
In August 2023, we announced an early research initiative investigating a gene therapy targeting anti-amyloid
for the treatment of AD. The program combines a vectorized anti-amyloid antibody with an intravenously delivered
TRACER Capsid.
Collaboration Programs
Friedreich’s Ataxia Program: VY-FXN01 (2019 Neurocrine Collaboration)
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. While one treatment for Friedreich’s ataxia has recently been approved by the FDA, we believe there
remains a significant unmet need.
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 seeking to develop 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 NHPs 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 NHPs with intravenous injection and achieved target FXN expression levels within
sensory ganglia and the heart. The levels of FXN expression observed in the brain 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
Under the collaboration and license agreement with Neurocrine entered into in January 2019, or the 2019
Neurocrine Collaboration Agreement, we are developing VY-FXN01 for the treatment of Friedreich’s ataxia. VY-
FXN01 is currently in preclinical development. In February 2024, the joint steering committee with Neurocrine selected
a development candidate combining an FXN gene replacement payload with a novel TRACER Capsid for its FA
Program and expects to advance into first-in-human clinical trials in 2025.
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GBA1 Gene Replacement Program for the Treatment of Parkinson’s Disease (2023 Neurocrine Collaboration)
Disease Overview
We are developing a gene therapy leveraging a BBB-penetrant, CNS-tropic TRACER Capsid to treat diseases
linked to GBA1 mutations via a gene replacement approach. Our lead indication for this gene therapy is Parkinson’s
disease with GBA1 mutations. Mutations in GBA1, the gene encoding the lysosomal glucocerebrosidase enzyme, or
Gcase, are the most common genetic risk factor for synucleinopathies such as Parkinson’s disease. Parkinson’s disease is
among the most common neurodegenerative diseases, affecting about one million patients in the United States and more
than 10.0 million patients worldwide. Up to 10% of Parkinson’s disease patients have a GBA1 mutation, and these
mutations increase the risk of Parkinson’s disease by approximately 20-fold. GBA1 mutations can decrease the activity
of Gcase, leading to the accumulation of Gcase substrates which is linked to alpha-synuclein aggregates, which are
thought to be toxic to neurons.
Our Treatment Approach
We believe that restoring Gcase activity may attenuate disease progression and potentially slow
neurodegeneration. We anticipate delivering GBA1 via intravenous administration of an AAV gene therapy to enable
widespread distribution to multiple affected brain regions and to avoid the need for more invasive approaches. We
believe that the measurement of the Gcase substrates such as glucosylsphingosine as cerebrospinal fluid biomarkers may
facilitate efficient clinical demonstration of proof-of-biology. Such substrates of the Gcase enzyme are elevated in the
cerebrospinal fluid of Parkinson’s disease patients who harbor the GBA1 mutation, and we expect that substrate levels
would be normalized if our gene therapy restores Gcase enzyme expression in the brain. This gene therapy may also
have potential utility in idiopathic Parkinson’s disease, where there is evidence of loss of Gcase activity in the substantia
nigra in Parkinson’s disease patients even in the absence of GBA1 mutations as well as evidence of lysosomal
dysfunction in general.
Preclinical Studies
At the ASGCT 2022 Meeting, we presented preclinical data demonstrating CNS target engagement and delivery
of therapeutically relevant levels of Gcase in a GBA1 loss of function mouse model, as well as sustained expression for
three or more months following intravenous administration. At the AD/PD 2023 Conference, we presented new data
from additional mouse efficacy studies showing that three potential development candidates each demonstrated
significant improvement in several efficacy biomarkers. We presented data at the ASGCT 2023 Meeting summarizing
the mouse findings and additional data from an NHP study showing that the administration of a reporter transgene via a
single, intravenous dose using two novel BBB-penetrant AAV capsids demonstrated substantially improved
biodistribution and gene expression compared to conventional AAV9 in the putamen and substantia nigra, two areas of
the brain that are affected in Parkinson’s disease.
Program Status
Under the collaboration and license agreement with Neurocrine entered into in January 2023, or the 2023
Neurocrine Collaboration Agreement, we are developing gene therapy products directed to the gene that encodes GBA1
for the treatment of Parkinson’s disease and other diseases associated with GBA1, or the GBA1 Program. The GBA1
Program is currently in preclinical development. We and Neurocrine are in the process of identifying a lead candidate
that will be comprised of a TRACER Capsid, promoter, and transgene. If we and Neurocrine successfully identify a lead
development candidate for this program, we plan to complete IND enabling studies to evaluate its safety and efficacy.
HD Program (2023 Novartis Collaboration Agreement)
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. 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
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individual is at risk of inheriting the disease if only one parent is affected. While the exact function of the HTT gene in
healthy individuals is unknown, it is essential for normal development before birth. Mutations in the HTT gene
ultimately lead to the production of abnormal intracellular huntingtin protein aggregates and expansions in the gene in
neurons that may cause neuronal cell death.
Program Status
On December 28, 2023, we entered into a license and collaboration agreement with Novartis, or the 2023
Novartis Collaboration Agreement. Under the 2023 Novartis Collaboration Agreement, we and Novartis have agreed to
collaborate to develop AAV gene therapy products and product candidates intended for the treatment of Huntington’s
disease, which we refer to as the Novartis HD Program. The Novartis HD Program is currently in preclinical
development. From and after the first IND application filing for the Novartis HD Program, we and Novartis have agreed
that Novartis will assume sole responsibility for the development and commercialization of gene therapy products and
product candidates under the Novartis HD Program, including all further preclinical and clinical development and any
commercialization of the Novartis HD Program products and product candidates.
Collaboration Programs and Licensing Agreements
2023 Novartis Collaboration Agreement
On December 28, 2023, or the 2023 Novartis Collaboration Agreement Effective Date, we entered into the 2023
Novartis Collaboration Agreement, with Novartis to (a) provide rights to Novartis with respect to certain TRACER
Capsids for use in the research, development, and commercialization by Novartis of AAV gene therapy products and
product candidates, comprising such TRACER Capsids and payloads intended for the treatment of spinal muscular
atrophy, or the Novartis SMA Program, and (b) collaborate to develop AAV gene therapy products and product
candidates under the Novartis HD Program, in each case, leveraging TRACER Capsids and other intellectual property
controlled by us.
Novartis SMA Program and Novartis HD Program Licenses
•
•
•
Under the terms of the 2023 Novartis Collaboration Agreement, we granted to Novartis and its affiliates:
a non-exclusive, non-transferable, non-sublicensable (except in limited circumstances for contractors),
worldwide, royalty-free right and license under any patents or know-how controlled by us and related to the
TRACER Capsids to evaluate the same for use in the development of a product or product candidate under the
Novartis SMA Program, or a Novartis SMA Program Product, comprising such a TRACER Capsid and a
payload selected by Novartis during the period beginning on the 2023 Novartis Collaboration Agreement
Effective Date and ending on the third anniversary of the 2023 Novartis Collaboration Agreement Effective
Date;
an exclusive (even as to us), sublicensable, non-transferable, worldwide, royalty-bearing right and license under
any patents or know-how controlled by us and relating to the selected TRACER Capsids to exploit the same as
incorporated into a Novartis SMA Program Product for all human and veterinary diagnostic, prophylactic and
therapeutic uses during the 2023 Novartis Collaboration Term (as defined below); and
an exclusive (even as to us), non-transferable, sublicensable, worldwide, royalty-bearing right and license under
any patents and know-how controlled by us and relating to the development of a product or product candidate
under the Novartis HD Program, or a Novartis HD Program Product to exploit the same for all human and
veterinary diagnostic, prophylactic and therapeutic uses during the 2023 Novartis Collaboration Term.
Governance
We and Novartis have agreed to manage the Novartis HD Program through a joint steering committee until
dissolved after the first IND application filing for a Novartis HD Program Product. We and Novartis have further agreed
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that day-to-day activities of both the Novartis SMA Program and the Novartis HD Program shall be managed through
designees from each of us and Novartis, acting as alliance managers.
Development, Regulatory Approval, Commercialization and Diligence.
Under the 2023 Novartis Collaboration Agreement, Novartis is solely responsible for, and has sole decision-
making authority with respect to, at its own expense, the exploitation of a Novartis SMA Program Product.
With respect to the Novartis HD Program, the parties have agreed to conduct research and pre-clinical
development of Novartis HD Program Products pursuant to a research plan, with Novartis reimbursing us for our
activities thereunder in accordance with the agreed-to budget. From and after the first IND application filing for the
Novartis HD Program, the parties have agreed that Novartis will assume sole responsibility for the development and
commercialization of Novartis HD Program Products, including all further preclinical and clinical development and any
commercialization of the Novartis HD Program products and product candidates.
With respect to each of the Novartis SMA Program Products and Novartis HD Program Products, Novartis is
obligated to use commercially reasonable efforts to develop and obtain regulatory approval for at least one of each such
product in the United States and in certain other international markets specified in the 2023 Novartis Collaboration
Agreement.
Intellectual Property
Under the terms of the 2023 Novartis Collaboration Agreement, each party owns the entire right, title, and
interest in and to all patents or know-how controlled by such party and existing as of or before the 2023 Novartis
Collaboration Agreement Effective Date, or invented, authored, discovered, developed, created or acquired solely by or
on behalf of such party after the 2023 Novartis Collaboration Effective Date outside of its activities under the 2023
Novartis Collaboration Agreement.
We and Novartis have further agreed that all know-how created by either or both parties in the performance of
the activities as undertaken pursuant to the performance of the Novartis HD Program plan or in the course of
development, manufacture and commercialization of Novartis HD Program Products and all patent rights covering such
know-how, or collectively, the 2023 Novartis Arising IP, is to be owned as follows: (i) we solely own all 2023 Novartis
Arising IP comprised of know-how or other intellectual property rights related to any TRACER Capsid, including the
use or manufacture of any TRACER Capsid, and that is created jointly by our representatives and representatives of
Novartis or created solely by representatives of Novartis through the use of our confidential information; and (ii) with
respect to all other 2023 Novartis Arising IP, (A) we solely own all such 2023 Novartis Arising IP created solely by our
representatives, (B) Novartis solely owns all such 2023 Novartis Arising IP created solely by Novartis representatives;
and (C) the parties jointly own all such 2023 Novartis Arising IP created jointly by representatives of both Novartis and
us.
Exclusivity
Subject to certain limitations and exceptions, we have agreed during the 2023 Novartis Collaboration Term not
to (i) conduct any wholly-owned program or program on behalf of a third party that is directed to the development or
commercialization of any capsids for use in any therapeutic product containing a capsid in combination with a payload
designed to have therapeutic effect on the gene agreed between the parties as the target of the Novartis SMA Program
when packaged into a capsid and delivered to the appropriate cells; (ii) develop or commercialize any competing
Novartis HD Program Product intended to have a therapeutic effect on genes agreed between the parties as the targets of
the Novartis HD Program; or (iii) grant any third party any right, license, option, covenant not to assert or similar right,
under any patents or know-how controlled by us or our affiliates (excluding an acquiring entity) as of the 2023 Novartis
Collaboration Agreement Effective Date or during the 2023 Novartis Collaboration Term, that would enable a third party
to do any of the foregoing.
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Termination
Unless earlier terminated, with respect to any licensed product(s) under the 2023 Novartis Collaboration
Agreement, on a country-by-country basis, the 2023 Novartis Collaboration Agreement expires upon the expiration of
the last-to-expire royalty term with respect to such licensed product in such country in the territory, or the 2023 Novartis
Collaboration Term. Subject to a cure period, either party may terminate the 2023 Novartis Collaboration Agreement, in
whole or in part, subject to specified conditions, in the event of the other party’s uncured material breach. Novartis may
also terminate the 2023 Novartis Collaboration Agreement, in whole or in part, subject to specified conditions, for our
insolvency, for the occurrence of a violation of global trade control laws, or for our non-compliance with certain anti-
bribery or anti-corruption covenants. Novartis may terminate the 2023 Novartis Collaboration Agreement, in whole or in
part, for any or no reason upon ninety days’ written notice to us. In the event that Novartis has the right to terminate the
2023 Novartis Collaboration Agreement as a result of an uncured material breach by us that materially impairs the ability
of Novartis to exploit one or more licensed products, Novartis may, in lieu of such termination, elect for the 2023
Novartis Collaboration Agreement to remain in full force and effect, and all milestone payments and royalties that would
have otherwise been payable by Novartis under such licenses had the 2023 Novartis Collaboration Agreement not been
breached would be substantially reduced.
Financial Terms
Under the 2023 Novartis Collaboration Agreement, Novartis paid us an upfront payment of $80.0 million. We
are eligible to receive specified development, regulatory, and commercialization milestone payments of up to an
aggregate of $200.0 million for the Novartis SMA Program and up to an aggregate of $225.0 million for the Novartis
HD Program, in each case for the first corresponding product to achieve the corresponding milestone. We are also
eligible to receive (a) specified sales milestone payments of up to an aggregate of $400.0 million for the Novartis SMA
Program and up to an aggregate of $375.0 million for the Novartis HD Program and (b) tiered, escalating royalties in the
high single-digit to low double-digit percentages of annual net sales of the Novartis SMA Program Products and the
Novartis HD Program Products. The royalties are subject to potential customary reductions, including patent claim
expiration, payments for certain third-party licenses, and biosimilar market penetration, subject to specified limits.
2023 Novartis Stock Purchase Agreement
We and Novartis also entered into a stock purchase agreement on December 28, 2023, or the 2023 Novartis
Stock Purchase Agreement, for the sale and issuance of 2,145,002 shares of our common stock, or the Novartis Shares,
to Novartis at a price of $9.324 per share, for an aggregate purchase price of approximately $20.0 million. In accordance
with the terms and conditions of the 2023 Stock Purchase Agreement, we issued and sold the Novartis Shares to Novartis
on January 3, 2024, or the 2023 Novartis Investment Closing Date.
2023 Novartis Investor Agreement
We and Novartis also entered into an investor agreement on December 28, 2023, or the 2023 Novartis Investor
Agreement, which became effective as of the 2023 Novartis Investment Closing Date, providing for standstill and lock-
up restrictions.
Pursuant to the terms of the 2023 Novartis Investor Agreement, Novartis has agreed not to, without the prior
written approval of us and subject to specified conditions, directly or indirectly acquire shares of our outstanding
common stock, publicly seek or propose a tender or exchange offer or merger between the parties, solicit proxies or
consents to vote any voting securities that we have issued, or undertake other specified actions related to the potential
acquisition of additional equity interests in us, or the Novartis Standstill Restrictions. Further, Novartis has also agreed
not to, and to cause its affiliates not to, sell or transfer any of the Novartis Shares without our prior approval, subject to
specified conditions, or the Novartis Lock-Up Restrictions.
Each of the Novartis Standstill Restrictions and the Novartis Lock-Up Restrictions terminate upon the earliest to
occur of: (i) the expiration or earlier termination of the 2023 Novartis Collaboration Agreement; (ii) the date that is the
third anniversary of the 2023 Novartis Investment Closing Date; (iii) our liquidation or dissolution; and (iv) the
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deregistration of our common stock. The Novartis Lock-Up Restrictions also terminate on a change of control of us or
the date on which Novartis and its affiliates beneficially own less than three percent of our common stock on an
outstanding basis.
2022 Novartis Option and License Agreement
Summary of Agreement
On March 4, 2022, or the 2022 Novartis Option and License Effective Date, we entered into an option and
license agreement with Novartis, or the 2022 Novartis Option and License Agreement. Pursuant to the 2022 Novartis
Option and License Agreement, we granted Novartis options, or the Novartis License Options, to license TRACER
Capsids, or the Novartis Licensed Capsids, for exclusive use with certain targets to develop and commercialize AAV
gene therapy candidates comprised of Novartis Licensed Capsids and payloads directed to such targets, or the Novartis
Payloads.
Research and License Option
During the period commencing on the 2022 Novartis Option and License Effective Date and ending on the first
anniversary thereof or, in the event Novartis has exercised a Novartis License Option, the third anniversary thereof, on a
target-by-target basis, or the Novartis Research Term, we have granted Novartis a non-exclusive research license to
evaluate our TRACER Capsids for potential use, in combination with Novartis Payloads, in programs
targeting three specified genes, or the Initial Novartis Targets. Upon the payment of additional fees, Novartis may also
assess our TRACER Capsids for use with up to two other targets, or the Additional Novartis Targets, subject to certain
conditions including that such target is not part of, or reasonably competitive with, our current development programs.
We refer to the Initial Novartis Targets and the Additional Novartis Targets collectively as the Novartis Targets. During
the Novartis Research Term, as applicable, we may, at our sole discretion and expense, conduct further research
activities to identify additional TRACER Capsids. If we elect to do so, we have agreed to disclose performance
characteristics of such new TRACER Capsids to Novartis on a rolling basis.
During the Novartis Research Term, Novartis may exercise up to three Novartis License Options—or up
to five Novartis License Options if Novartis is evaluating the Additional Novartis Targets—in the aggregate, provided
that Novartis may only exercise one Novartis License Option for each Novartis Target. Upon the exercise of any
Novartis License Option, we have granted Novartis a target-exclusive, worldwide license, with the right to sublicense,
under certain of our intellectual property, the rights to develop and commercialize the applicable Novartis Licensed
Capsid as incorporated into products containing the corresponding Novartis Payload, or the Novartis Licensed Products.
Upon the exercise of a Novartis License Option, we have agreed to provide certain additional know-how to enable
Novartis to exploit the Novartis Licensed Capsid and the corresponding Novartis Payload for use in a Novartis Licensed
Product. Novartis may, during the applicable Novartis Research Term but following the exercise of a Novartis License
Option, conduct additional evaluation of our capsid candidates and has the right to substitute any other TRACER Capsid
for a Novartis Licensed Capsid.
Governance
Subject to our disclosure obligations described above, we and Novartis have agreed to conduct our respective
research and evaluation activities independently, with communications being managed by two alliance managers
comprised of a designee from each of the parties.
Development, Regulatory Approval, and Commercialization
Under the 2022 Novartis Option and License Agreement, Novartis is solely responsible for, and has sole
decision-making authority with respect to, development and commercialization of the Novartis Licensed Products.
Novartis is required to use commercially reasonable efforts to develop and obtain regulatory approval for at
least one Novartis Licensed Product for each Novartis Target for which it has exercised a Novartis License Option in (a)
the United States and (b) at least three of the following countries: the United Kingdom, France, Germany, Italy, Spain
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and Japan, each of which we refer to as a Novartis Major Market Country, subject to certain limitations. Novartis is also
required to use commercially reasonable efforts to commercialize each Novartis Licensed Product in the United States
and at least three Novartis Major Market Countries where Novartis or its designated affiliates or sublicensees has
received regulatory approval for such Novartis Licensed Product, subject to certain limitations.
During the Novartis Research Term, we have agreed to provide plasmids to Novartis for the production of
TRACER Capsids for evaluation upon request. We have also granted Novartis a non-exclusive license, effective upon an
exercise of a Novartis License Option and in addition to its options for target-exclusive licenses under certain of our
intellectual property described above, on a Novartis Licensed Capsid-by-Novartis Licensed Capsid basis, under certain
of our know-how to exploit the applicable Novartis Licensed Capsid as incorporated into Novartis Licensed Products
containing the corresponding Novartis Payload.
Financial
Under the terms of the 2022 Novartis Option and License Agreement, Novartis paid us an upfront payment of
$54.0 million. Effective as of March 1, 2023, Novartis exercised its Novartis License Options to license TRACER
Capsids for use in gene therapy programs against two undisclosed Initial Novartis Targets. With Novartis’ option
exercise on two Initial Novartis Targets, we received a $25.0 million option exercise payment in April 2023, and are
eligible to receive associated potential development, regulatory, and commercial milestone payments, as well as mid- to
high-single-digit tiered royalties based on net sales of the Novartis Licensed Products incorporating the Novartis
Licensed Capsids. The two Initial Novartis Targets licensed are distinct from targets in our wholly-owned and partnered
pipeline. In addition, during the research term, Novartis retains the right to expand the agreement to include options to
license capsids for up to two Additional Novartis Targets, subject to their availability, for a fee of $18.0 million per
Additional Novartis Target. Under such an expansion, we would be eligible to receive a $12.5 million license option
exercise fee for each Additional Novartis Target exercised, as well as future potential milestone payments per Additional
Novartis Target and tiered mid- to high-single digit royalties on the Novartis Licensed Products incorporating the
Novartis Licensed Capsids.
Novartis elected not to license a capsid for one Initial Novartis Target under the 2022 Novartis Option and
License Agreement prior to the expiration of the applicable Novartis License Option. As a result, the non-exclusive
research license that we granted to Novartis in connection with this Initial Novartis Target has terminated, the Novartis
Research Term for this Initial Novartis Target has expired, and we are no longer eligible to receive development,
regulatory, and commercial milestone payments or royalties in connection with this Initial Novartis Target. All capsid
rights with respect to that Initial Novartis Target have returned to us.
Intellectual Property
Under the terms of the 2022 Novartis Option and License Agreement, each party owns the entire right, title, and
interest in and to all patents or know-how controlled by such party and existing as of or before the 2022 Novartis Option
and License Effective Date, or invented, developed, created, generated or acquired solely by or on behalf of such party
after the 2022 Novartis Option and License Effective Date. Subject to certain specified exceptions, any patents and
know-how that are invented or otherwise developed jointly by or on behalf of the parties during the term of the 2022
Novartis Option and License Agreement and in the course of the parties’ activities under the 2022 Novartis Option and
License Agreement will follow inventorship under U.S. patent law.
Exclusivity
Subject to certain limitations and exceptions, we have agreed (a) during the Novartis Research Term, not to
conduct any internal program or program on behalf of a third party that is directed to the development or
commercialization of any of our capsids, or grant any third party or affiliate any right or license under our rights in such
capsids, to exploit any therapeutic product containing a capsid in combination with a payload designed to have
therapeutic effect on any of the Novartis Targets; and (b) after Novartis’ exercise of Novartis License Options, not to
grant any third party or affiliate any right or license under our patents to exploit any Novartis Licensed Capsid for the
applicable Novartis Target.
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Termination
Unless earlier terminated, the 2022 Novartis Option and License Agreement expires on the expiration of the
last-to-expire royalty term with respect to all Novartis Licensed Products in all countries. Subject to a cure period, either
party may terminate the 2022 Novartis Option and License Agreement, in whole or in part, subject to specified
conditions, in the event of the other party’s uncured material breach. Novartis may also terminate the 2022 Novartis
Option and License Agreement, in whole or in part, subject to specified conditions, for our insolvency, the occurrence of
a violation of global trade control laws, or for our non-compliance with certain anti-bribery or anti-corruption covenants.
Novartis may terminate the 2022 Novartis Option and License Agreement, in whole or in part, for any or no reason
upon ninety days’ written notice to us.
Upon certain terminations for cause by Novartis, the licenses granted by us to Novartis under the 2022 Novartis
Option and License Agreement shall become irrevocable and perpetual, and all milestone payments and royalties that
would have otherwise been payable by Novartis under such licenses had the 2022 Novartis Option and License
Agreement remained in effect would be substantially reduced.
2023 Neurocrine Collaboration Agreement
Summary of Agreement
On January 8, 2023, we entered into the 2023 Neurocrine Collaboration Agreement for the research,
development, manufacture and commercialization of the 2023 Neurocrine Programs.
Collaboration and License
Under the 2023 Neurocrine Collaboration Agreement, we and Neurocrine have agreed to collaborate on the
conduct of the 2023 Neurocrine Programs. The 2023 Neurocrine Collaboration Agreement became effective upon the
expiration of all applicable waiting periods under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended, which occurred on February 21, 2023, or the Neurocrine Effective Date. Under the terms of the 2023
Neurocrine Collaboration Agreement, subject to the rights retained by us thereunder, we granted to Neurocrine, as of the
Neurocrine Effective Date, an exclusive, royalty-bearing, sublicensable, worldwide license, under certain of our
intellectual property rights, to research, develop, manufacture and commercialize gene therapy products, or the 2023
Collaboration Products, arising under the 2023 Neurocrine Programs.
Pursuant to mutually-agreed development plans, during the period beginning on the Neurocrine Effective Date
and ending on the third anniversary of the Neurocrine Effective Date, which period may be extended upon mutual
written agreement of us and Neurocrine, or the 2023 Discovery Period, and as overseen by the Joint Steering Committee,
or JSC, that oversees our ongoing collaboration with Neurocrine, we are responsible for identifying capsids meeting
target criteria, producing development candidates, and conducting other non-clinical activities regarding the 2023
Collaboration Products. Neurocrine has agreed to be responsible for all costs we incur in conducting preclinical
development activities for each 2023 Neurocrine Program, in accordance with JSC-agreed upon workplans and
budgets. If we breach our development responsibilities or, in certain circumstances, upon a change of control, Neurocrine
has the right, but not the obligation, to assume the conduct of our activities under such 2023 Neurocrine Program.
We have been granted the option, or a 2023 Co-Co Option, to co-develop and co-commercialize 2023
Collaboration Products in the GBA1 Program in the United States upon the occurrence of a specified event, or a 2023
Co-Co Trigger Event. Should we elect to exercise our 2023 Co-Co Option, we and Neurocrine agree to enter into a cost-
and profit-sharing arrangement, or a 2023 Co-Co Agreement, whereby we and Neurocrine agree to jointly develop and
commercialize 2023 Collaboration Products in the GBA1 Program, or 2023 Co-Co Products, in the United States and
share equally in the GBA1 Program’s costs, profits and losses in the United States, with each party entitled to or
responsible for 50% of profits and losses with respect to each 2023 Co-Co Product in the United States, subject to
specified exceptions. The parties have agreed that the 2023 Co-Co Agreement will provide us the right to terminate the
2023 Co-Co Agreement for any reason upon prior written notice to Neurocrine and provide Neurocrine the right to
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terminate or amend the 2023 Co-Co Agreement upon a change of control under certain circumstances. In the event we
exercise our 2023 Co-Co Option, the parties have also agreed that Neurocrine is entitled to receive (in addition to its
50% share of profits) 50% of our share of profits until our obligation to repay 50% of all development costs incurred by
Neurocrine in connection with the GBA1 Program prior to such exercise have been paid off out of such 50% of our share
of profits. The 2023 Co-Co Trigger Event is the date on which we receive topline data from the first Phase 1 clinical trial
for a product candidate being developed pursuant to the GBA1 Program.
Governance
Our research and development activities under the 2023 Collaboration Agreement are to be conducted pursuant
to plans agreed to by the parties, on a 2023 Neurocrine Program-by-2023 Neurocrine Program basis, and overseen by the
JSC, which is composed of an equal number of representatives from each of us and Neurocrine. The JSC may delegate
matters within its authority to subcommittees of the JSC. In addition, the 2023 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 (a) with respect to the GBA1 Program, subject to specified exceptions, (x) Neurocrine has the right to
resolve such matter prior to our exercise of our 2023 Co-Co Option for the GBA1 Program or in the event we elect not to
exercise our 2023 Co-Co Option, and (y) following the exercise by us of our 2023 Co-Co Option for the GBA1 Program,
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 (b) with respect to the 2023 Discovery Programs, subject to
specified exceptions, Neurocrine has the right to decide any unresolved matters relating to a 2023 Discovery Program
that are within the JSC’s authority.
Candidate Selection
Either party may notify the JSC of any gene therapy product candidate that includes a Voyager capsid and a
payload that is being developed under a 2023 Neurocrine Program, or a Collaboration Candidate, that it desires to
nominate as a development candidate. In such event, the JSC shall determine whether such nominated Collaboration
Candidate meets certain development criteria. There will be a maximum of four potential development candidates for
which development is being performed under any 2023 Neurocrine Program at any given time during the 2023
Discovery Period. If a Collaboration Candidate fails to meet criteria established by the JSC and is removed from
consideration to become a development candidate or is named a development candidate, then a new Collaboration
Candidate may be nominated to be a potential development candidate to replace the Collaboration Candidate that has
failed or succeeded such that not more than four potential development candidates per program are under consideration
at any one time during the 2023 Discovery Period.
Manufacturing
The parties have agreed that the applicable development plans shall specify the allocation between us and
Neurocrine of responsibilities for the manufacturing of Collaboration Candidates associated with the applicable 2023
Neurocrine Program during the 2023 Discovery Period. In accordance with the 2023 Collaboration Agreement, the
parties have also agreed that, if we conduct any portion of the manufacturing of a Collaboration Candidate, the
applicable development plan shall include an obligation for us to assist with the technology transfer of such
manufacturing responsibilities to Neurocrine or a third-party contract manufacturing organization, as reasonably
requested by Neurocrine, on terms to be mutually-agreed by us and Neurocrine. Following the end of the 2023 Discovery
Period, Neurocrine shall be responsible for the manufacturing of all Collaboration Candidates and products.
Financial Terms
Under the terms of the 2023 Neurocrine Collaboration Agreement, Neurocrine paid us an upfront payment of
approximately $136.0 million and approximately $39.0 million as consideration for an equity purchase of 4,395,588
shares of our common stock in February 2023. The 2023 Collaboration Agreement provides for aggregate development
milestone payments from Neurocrine to us for 2023 Collaboration Products under (a) the GBA1 Program of up to $985.0
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million; and (b) each of the three 2023 Discovery Programs of up to $175.0 million for each 2023 Discovery Program.
We may be entitled to receive aggregate commercial milestone payments for up to two 2023 Collaboration Products
under the GBA1 Program of up to $950.0 million per 2023 Collaboration Product and for one 2023 Collaboration
Product under each 2023 Discovery Program of up to $275.0 million per 2023 Discovery Program.
Neurocrine has also agreed to pay us tiered royalties, based on future net sales of the 2023 Collaboration
Products. Such royalty percentages, for net sales in and outside the United States, range from (a) for the GBA1 Program,
the low double-digits to twenty and the high single-digits to mid-teens, respectively, and (b) for each 2023 Discovery
Program, high single-digits to mid-teens and mid-single digits to low double-digits, respectively. On a country-by-
country and 2023 Neurocrine Program-by-2023 Neurocrine Program basis, the parties have agreed royalty payments
would commence on the first commercial sale of a 2023 Collaboration Product in such country and terminate upon the
latest of (a) the expiration, invalidation or the abandonment of the last patent covering the composition of the 2023
Collaboration Product or its approved method of use in such country, (b) ten years from the first commercial sale of the
2023 Collaboration Product in such country and (c) the expiration of regulatory exclusivity in such country, or the 2023
Royalty Term. Royalty payments may be reduced by up to 50% in specified circumstances, including expiration of
patent rights related to a 2023 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 2023 Collaboration
Product. Additionally, the licenses granted to Neurocrine shall automatically convert to a fully-paid, perpetual,
irrevocable royalty-free license on a country-by-country and 2023 Collaboration Product-by-2023 Collaboration Product
basis upon the expiration of the 2023 Royalty Term applicable to the 2023 Collaboration Product in such country.
Intellectual Property
Under the terms of the 2023 Neurocrine Collaboration Agreement, each party owns all right, title and interest in
and to all patent rights or know-how controlled by such party and existing as of or before the Neurocrine Effective Date
or created or acquired solely by or on behalf of such party (including through its or its affiliate’s representatives) after the
Neurocrine Effective Date outside of its activities under the 2023 Neurocrine Collaboration Agreement. The parties have
further agreed that all know-how created by either or both parties in the performance of the activities as undertaken
pursuant to a development plan during the 2023 Discovery Period or in the course of development, manufacture and
commercialization of Collaboration Candidates or products and all patent rights covering such know-how, or collectively
the 2023 Neurocrine Arising IP, is to be owned as follows: (a) we solely own all 2023 Neurocrine Arising IP created
jointly by representatives of us and Neurocrine that constitutes capsid know-how and capsid patent rights, and 2023
Neurocrine Arising IP created solely by representatives of Neurocrine through the use of our confidential information,
including unpublished sequence information for our capsids; and (b) with respect to all other 2023 Neurocrine Arising
IP, (x) we solely own all such 2023 Neurocrine Arising IP created solely by our representatives, (y) Neurocrine solely
owns all such 2023 Neurocrine Arising IP created solely by Neurocrine representatives; and (z) the parties jointly own
all such 2023 Neurocrine Arising IP created jointly by representatives of both Neurocrine and us. 2023 Neurocrine
Arising IP owned by us is included in the license granted from us to Neurocrine described above.
Exclusivity
During the term of the 2023 Neurocrine Collaboration Agreement, neither party nor any of its respective
affiliates is permitted to directly or indirectly develop, manufacture or commercialize any other gene therapy product
directed to a target under any 2023 Neurocrine Program, or grant any affiliate or third party a license or sublicense to
enable any third-party to do so, subject to specified exceptions, including the parties’ conduct of certain basic research,
provided that Neurocrine or its affiliates may develop competitive products that do not contain an adeno-associated virus
as the viral vector.
Termination
Unless earlier terminated, the 2023 Neurocrine Collaboration Agreement expires on the later of (a) the
expiration of the last to expire 2023 Royalty Term with respect to all 2023 Collaboration Products worldwide or (b) the
expiration or termination of any 2023 Co-Co Agreement. Neurocrine may terminate the 2023 Neurocrine Collaboration
Agreement in its entirety or on a 2023 Neurocrine Program-by-2023 Neurocrine Program and/or country-by-country
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basis by providing at least (a) 180-day advance notice if such notice is provided prior to the first commercial sale of any
2023 Collaboration Product to which the termination applies or (b) one-year advance notice if such notice is provided
after the first commercial sale of any product to which the termination applies. Neurocrine may terminate the 2023
Neurocrine Collaboration Agreement with respect to a given 2023 Collaboration Product by providing written notice of
termination to us within thirty days after complete readout of any clinical trial if the results of such clinical trial fail to
meet the pre-specified primary endpoint(s) set forth in the applicable protocol or if there is a safety finding during the
clinical trial relating to such 2023 Collaboration Product that either (a) is substantially irreversible or not monitorable in
patients or (b) results in Neurocrine’s decision to designate such 2023 Collaboration Product as a terminated product
under the 2023 Collaboration Agreement.
We may terminate the 2023 Neurocrine Collaboration Agreement with respect to a particular patent right of
ours, if Neurocrine challenges the validity or enforceability of such patent right. Subject to a cure period, either party
may terminate the 2023 Neurocrine Collaboration Agreement in the event of a material breach in whole or in part,
subject to specified conditions.
2023 Neurocrine Stock Purchase Agreement
In connection with the execution of the 2023 Neurocrine Collaboration Agreement, we and Neurocrine also
entered into a stock purchase agreement on January 8, 2023 for the sale and issuance of 4,395,588 shares of common
stock to Neurocrine at a price of $8.88 per share, for an aggregate purchase price of approximately $39.0 million. In
accordance with the terms and conditions of the stock purchase agreement, we issued and sold these shares to Neurocrine
on February 23, 2023.
2023 Neurocrine Amended and Restated Investors Rights Agreement
In connection with the execution of the 2023 Neurocrine Collaboration Agreement, we and Neurocrine also
amended and restated our existing investor agreement on January 8, 2023, or the 2023 Neurocrine Amended and
Restated Investor Agreement, providing for standstill and lock-up restrictions and a voting agreement with respect to our
shares owned by Neurocrine. Pursuant to the 2023 Neurocrine Amended and Restated Investor Agreement, we caused
Jude Onyia, Ph.D., Chief Scientific Officer of Neurocrine, to be appointed to our board of directors as a Class III director
on February 23, 2023. We have agreed that we shall cause Dr. Onyia, or another individual designated by Neurocrine, to
be nominated for election to our board of directors when Dr. Onyia’s initial term is scheduled to expire. Under the 2023
Neurocrine Amended and Restated Investor Agreement, Neurocrine’s right to designate an individual to serve as a
director on our board of directors and our agreement to nominate such individual for election to our board of directors is
subject to specified conditions and shall terminate upon the earliest of (a) Neurocrine holding less than 10% of our
outstanding common stock; (b) a change of control of us or Neurocrine; (c) a liquidation or dissolution of us; and (d) the
date that is ten years from the closing date of the 2023 Neurocrine Amended and Restated Investor Agreement.
Pursuant to the terms of the 2023 Neurocrine Amended and Restated Investor Agreement, Neurocrine has
agreed not to, without the prior written approval of us and subject to specified conditions, directly or indirectly acquire
shares of our outstanding common stock, seek or propose a tender or exchange offer or merger between the parties,
solicit proxies or consents with respect to any matter, or undertake other specified actions related to the potential
acquisition of additional equity interests in us, or the Neurocrine Standstill Restrictions. Further, Neurocrine has also
agreed not to, and to cause its affiliates not to, sell or transfer any of our shares without our prior written approval subject
to specified conditions, or the Neurocrine Lock-Up Restrictions.
In addition, pursuant to the terms of the 2023 Neurocrine Amended and Restated Investor Agreement,
Neurocrine has agreed that any of our shares it owns are subject to a voting agreement such that, subject to specified
conditions and excluding specified extraordinary matters, Neurocrine has agreed to, and has agreed to cause its permitted
transferees to, vote in accordance with the recommendation of our board of directors and has granted us an irrevocable
proxy with respect to the foregoing, or the Neurocrine Voting Agreement.
Each of the Neurocrine Standstill Restrictions, the Neurocrine Lock-Up Restrictions, and the Neurocrine Voting
Agreement terminate upon the earliest to occur of: (i) the date that is the third anniversary of the effective date of the
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2023 Neurocrine Amended and Restated Investor Agreement and (ii) our liquidation or dissolution. The Neurocrine
Standstill Restrictions and Neurocrine Lock-Up Restrictions also terminate upon the deregistration of our common stock,
if earlier. The Neurocrine Lock-Up Restrictions and Neurocrine Voting Agreement also terminate on a change of control
of us or the date on which Neurocrine and its affiliates beneficially own less than three percent of our common stock on
an outstanding basis. The Neurocrine Standstill Restrictions and Neurocrine Voting Agreement also terminate upon the
later of (x) the expiration or termination of the 2019 Neurocrine Collaboration Agreement and (y) the expiration or
termination of the 2023 Neurocrine Collaboration Agreement.
2019 Neurocrine Collaboration Agreement
In January 2019, we entered into the 2019 Neurocrine Collaboration Agreement for the research, development
and commercialization of certain of our AAV gene therapy products. Under the 2019 Neurocrine Collaboration
Agreement, we agreed to collaborate on the conduct of four collaboration programs, which we refer to collectively as the
2019 Neurocrine Programs: the NBIb-1817 (VY-AADC) program for the treatment of Parkinson’s disease, or the VY-
AADC Program; the FA Program, which together with the VY-AADC Program, we refer to as the Legacy Programs;
and other undisclosed programs, or the 2019 Discovery Programs.
Collaboration and Licenses
Under the terms of the 2019 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 2019 Collaboration Products, under (a) the VY-AADC Program on a worldwide basis; (b) the FA Program, in the
United States and, all countries in the world in which the 2019 Neurocrine Collaboration Agreement remains in effect
with respect to the FA Program; and (c) each of the 2019 Discovery Programs, on a worldwide basis. Licenses related to
the VY-AADC Program terminated in August 2021.
As a result of the June 2019 Sanofi Genzyme Termination Agreement, we gained worldwide rights to the
Huntington’s disease program for VY-HTT01 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 2019 Neurocrine Collaboration Agreement. To facilitate our
transfer of the ex-U.S. rights to the FA Program to Neurocrine, we and Neurocrine amended the 2019 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 the JSC, we have operational
responsibility, subject to certain exceptions, for the conduct of each 2019 Neurocrine Program prior to the occurrence of
a specified event for each 2019 Neurocrine Program, or a 2019 Transition Event, and are required to use commercially
reasonable efforts to develop the 2019 Collaboration Products. Neurocrine has agreed to be responsible for all costs
incurred by us in conducting these activities for each 2019 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 2019 Neurocrine Program.
Upon the occurrence of a 2019 Transition Event for each 2019 Neurocrine Program, Neurocrine agreed to
assume responsibility for development, manufacturing and commercialization activities for such 2019 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 2019 Co-Co Option, to co-develop and co-commercialize such 2019
Neurocrine Program upon the occurrence of a specified event, or a 2019 Co-Co Trigger Event. We agreed, were we to
exercise a 2019 Co-Co Option, to enter into a cost- and profit-sharing arrangement with Neurocrine, or a 2019 Co-Co
Agreement, and (a) jointly develop and commercialize 2019 Collaboration Products for such 2019 Neurocrine Program,
or 2019 Co-Co Products, (b) share in its costs, profits and losses, and (c) forfeit certain milestones and royalties on net
sales in the United States during the effective period of the applicable 2019 Co-Co Agreement. The 2019 Co-Co Option
has expired, and the 2019 Transition Event and the 2019 Co-Co Trigger Event are no longer applicable, with respect to
the VY-AADC Program in light of the termination of the 2019 Neurocrine Collaboration Agreement with respect to the
program. The remaining 2019 Transition Events are (a) with respect to the FA Program, our receipt of topline data for
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the initial Phase 1 clinical trial for an FA Program product candidate; and (b) with respect to each 2019 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 2019 Discovery Program. The 2019 Co-Co Trigger Event for the
FA Program is the achievement of milestones or metrics specified in the applicable development plan, as determined by
the JSC.
Under the 2019 Neurocrine Collaboration Agreement, subject to exceptions specified, we and Neurocrine
agreed that profits and losses under our 2019 Co-Co Option would be allocated (a) 50% to Neurocrine and 50% to us for
a 2019 Collaboration Product from the VY-AADC Program and (b) 60% to Neurocrine and 40% to us for a 2019
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, or 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 2019 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.
Governance
Our research and development activities under the 2019 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 2019 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 (a) with respect to each
Legacy Program, subject to specified exceptions, (x) Neurocrine has the right to resolve such matter prior to our exercise
of our 2019 Co-Co Option with regard to such 2019 Co-Co Product or if such 2019 Co-Co Option expires or goes
unexercised and (y) following the timely exercise by us of our 2019 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 (b) with respect to 2019 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 2019 Discovery Programs. The Targets nominated for the 2019 Discovery
Programs must be approved by a consensus of the JSC or the executive officers.
Manufacturing
Prior to the 2019 Transition Event for a 2019 Neurocrine Program, we are responsible for the manufacture of
any 2019 Collaboration Products for the 2019 Neurocrine Program. Following the Transition Event, the parties shall
negotiate the manufacturing and supply responsibilities, subject to the terms of any applicable 2019 Co-Co Agreement.
Financial Terms
Under the terms of the 2019 Neurocrine Collaboration Agreement, Neurocrine has paid us an upfront payment
of $115.0 million. In connection with the 2019 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 2019 Neurocrine
Collaboration Agreement provides for aggregate development milestone payments from Neurocrine to us for 2019
Collaboration Products under (a) the FA Program of up to $195.0 million, and (b) each of the two 2019 Discovery
Programs of up to $130.0 million per 2019 Discovery Program. We may be entitled to receive aggregate commercial
milestone payments for each 2019 Collaboration Product of up to $275.0 million, subject to an aggregate cap on
commercial milestone payments across all 2019 Neurocrine Programs of $1.1 billion. We are no longer eligible to
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receive milestone or royalty payments for the VY-AADC Program in light of the partial termination of the 2019
Neurocrine Collaboration Agreement with respect to the VY-AADC Program.
Neurocrine has also agreed to pay us royalties, based on future net sales of the 2019 Collaboration Products.
Such royalty percentages, for net sales in and outside the United States, as applicable, range (a) for the FA Program,
from the low-teens to high-teens and high-single digits to mid-teens, respectively; and (b) for each 2019 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 2019
Collaboration Product and terminate on the later of (x) the expiration of the last patent covering the 2019 Collaboration
Product or its method of use in such country, (y) 10 years from the first commercial sale of the 2019 Collaboration
Product in such country and (z) the expiration of regulatory exclusivity in such country, or the 2019 Royalty Term.
Royalty payments may be reduced by up to 50% in specified circumstances, including expiration of patents rights related
to a 2019 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 2019 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 2019 Royalty Term
applicable to such 2019 Collaboration Product in such country.
Intellectual Property
Under the terms of the 2019 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 2019 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 2019 Collaboration Product is directed, subject to specified exceptions, including the parties’ conduct of basic research
activities.
Termination
Unless earlier terminated, the 2019 Neurocrine Collaboration Agreement expires on the later of (a) the
expiration of the last to expire 2019 Royalty Term with respect to a 2019 Collaboration Product in all countries in the
relevant territory or (b) the expiration or termination of all 2019 Co-Co Agreements. Neurocrine may terminate the 2019
Neurocrine Collaboration Agreement in its entirety or on a program-by-program or country-by-country basis by
providing at least (x) 180-day advance notice if such notice is provided prior to the first commercial sale of the 2019
Collaboration Product to which the termination applies or (y) one-year advance notice if such notice is provided after the
first commercial sale of the 2019 Collaboration Product to which the termination applies. We may terminate the 2019
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 2019
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 2019 Neurocrine Program, if such termination were to occur
after a 2019 Transition Event, then (a) if a 2019 Co-Co Agreement is in effect with respect to such program, Neurocrine
can terminate the 2019 Co-Co Agreement for such program and we would no longer have co-development and co-
commercialization rights with respect to the 2019 Collaboration Product and (b) subject to any license agreements,
Neurocrine would no longer have any obligations with respect to any 2019 Collaboration Products resulting from such
program.
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On February 2, 2021, Neurocrine notified us that it had elected to terminate the 2019 Neurocrine Collaboration
Agreement solely with regards to the VY-AADC Program, effective as of the Neurocrine VY-AADC Program
Termination Effective Date. The 2019 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 thereunder regarding the VY-AADC Program expired and we
regained worldwide intellectual property rights regarding the VY-AADC Program.
Alexion Option and License Agreement (Formerly Pfizer Option and License Agreement)
Summary of Agreement
On October 1, 2021, or the Pfizer Effective Date, we entered into an option and license agreement, or the Pfizer
Agreement, with Pfizer, Inc., or Pfizer, pursuant to which we granted Pfizer the Pfizer License Options to certain
TRACER Capsids to develop and commercialize certain AAV gene therapy candidates comprised of a capsid and
specified Pfizer transgenes, or the Pfizer Transgenes. Under the terms of the Pfizer Agreement, during an initial research
term that ended as of October 1, 2022, or the Pfizer Research Term, Pfizer had the right to evaluate the potential use of
the capsids in combination with up to two Pfizer Transgenes to help treat respective CNS and cardiovascular diseases.
Research and License Option
During the Pfizer Research Term, we agreed to provide Pfizer with certain quantities of materials encoding
specified existing capsids for Pfizer’s evaluation. Further, during the Pfizer Research Term, we agreed to disclose to
Pfizer, on a rolling basis, the performance characteristics identified during the Pfizer Research Term for all such capsid
candidates. Pfizer had the right, in its sole discretion, to select any capsid candidate for evaluation to determine its
interest in exercising a Pfizer License Option with respect to such capsid candidate. Pfizer had the right to exercise up
to two Pfizer License Options, provided that it could exercise only one Pfizer License Option for each Pfizer Transgene.
Effective as of September 30, 2022, Pfizer exercised its Pfizer License Option with respect to a capsid for the
specified Pfizer Transgene for potential treatment of a rare neurological disease. Pfizer did not exercise its option to
license a capsid for the potential treatment of a cardiovascular disease. As result, Pfizer’s right to exercise a Pfizer
License Option for a cardiovascular disease has terminated in accordance with the terms of the Pfizer Agreement and all
rights to capsids for that cardiovascular disease have reverted to us. Pfizer’s exercise of a Pfizer License Option extended
the Pfizer Research Term to October 1, 2024, during which period we may, at our sole discretion and expense, conduct
additional research activities to identify additional proprietary capsids that may be useful for AAV gene therapies for the
treatment of the rare neurological disease associated with the exercise of the applicable Pfizer License Option.
Pursuant to the exercise of the Pfizer License Option, we granted Pfizer an exclusive, worldwide license, with
the right to sublicense, under certain of our intellectual property, the rights to develop and commercialize rare
neurological disease products utilizing the capsid candidate and incorporating the corresponding Pfizer Transgene, or the
Pfizer Licensed CNS Products.
On July 28, 2023, Alexion entered into a definitive purchase and license agreement for preclinical gene therapy
assets and enabling technologies from Pfizer. Effective upon the closing of the transaction on September 20, 2023,
Alexion acquired all of Pfizer’s rights under the Pfizer Agreement, which we now refer to as the Alexion Agreement,
and became the successor-in-interest to Pfizer thereunder. The acquisition does not impact the material terms of the
option and license agreement. Until October 1, 2024, while we are not obligated to conduct additional research activities
to identify additional proprietary capsids that may be useful for AAV gene therapies for the treatment of rare
neurological diseases, we have agreed to continue to disclose to Alexion, on a rolling basis, the performance
characteristics identified for all such capsid candidates, if and when available, until the expiration of the Pfizer Research
Term, which we now refer to as the Alexion Research Term. Alexion may, during the Alexion Research Term, conduct
additional evaluations of such capsid candidates and has the right to substitute any other capsid candidate for the capsid
Pfizer elected to license when it exercised the Pfizer License Option.
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Development, Regulatory Approval and Commercialization
Under the Alexion Agreement, Alexion is solely responsible for, and has sole decision-making authority with
respect to, development and commercialization of the Pfizer Licensed CNS Products, which we now refer to as the
Alexion Licensed Products. Alexion is required to use commercially reasonable efforts to develop and obtain regulatory
approval for at least one Alexion Licensed CNS Product for which Pfizer exercised its Pfizer License Option in (a) the
United States and (b) at least one of the following countries: the United Kingdom, France, Germany, Italy, Spain and
Japan, each of which we refer to as an Alexion Major Market Country, subject to certain limitations. Alexion is also
required to use commercially reasonable efforts to commercialize each Alexion Licensed CNS Product in the United
States and at least one Alexion Major Market Country where Alexion or its designated affiliates or sublicensees has
received regulatory approval for such Alexion Licensed CNS Product, subject to certain limitations.
Intellectual Property
Under the terms of the Alexion Agreement, each of the parties owns the entire right, title, and interest in and to
all patents or know-how controlled by such party and existing as of or before the effective date of the Alexion
Agreement, or invented, developed, created, generated or acquired solely by or on behalf of such party after such
effective date.
Exclusivity
Subject to certain specified exceptions, any patents and know-how that are invented or otherwise developed
jointly by or on behalf of the parties during the term of the Alexion Agreement and in the course of our and Alexion’s
activities under the Alexion Agreement will follow inventorship under U.S. patent law. Subject to certain limitations and
exceptions, we have agreed (a) during the Alexion Research Term, not to conduct any internal program or program on
behalf of a third party that is directed to development or commercialization of any capsid candidates, or grant any third
party or affiliate any right or license under our rights in such capsid candidates to exploit any therapeutic product, in
combination with any Pfizer Transgene, which we now refer to as an Alexion Transgene, in any indication for
therapeutic, diagnostic and prophylactic human and veterinary use; and (b) not to grant any third party or affiliate any
right or license under our patents to exploit any licensed capsid in combination with any Alexion Transgene.
Financial
Under the terms of the Alexion Agreement, Pfizer paid us an upfront payment of $30.0 million in October 2021.
Following the exercise of the Pfizer License Option, Pfizer paid us a fee of $10.0 million. We are also eligible to receive
specified development, regulatory, and commercialization milestone payments of up to an aggregate of $115.0 million
for the first corresponding Alexion Licensed CNS Product to achieve the corresponding milestone. On an Alexion
Licensed CNS Product-by-Alexion Licensed CNS Product basis, we are also eligible to receive (a) specified sales
milestone payments of up to an aggregate of $175.0 million per Alexion Licensed CNS Product and (b) tiered, escalating
royalties in the mid- to high-single-digit percentages of annual net sales of each Alexion Licensed CNS Product. The
royalties are subject to potential reductions in customary circumstances including patent claim expiration, payments for
certain third-party licenses, and biosimilar market penetration, subject to specified limits.
Termination
Unless earlier terminated, the Alexion Agreement expires on the expiration of the last-to-expire royalty term
with respect to all Alexion Licensed CNS Products in all countries. Subject to a cure period, either party may terminate
the Alexion Agreement, in whole or in part, subject to specified conditions, in the event of the other party’s uncured
material breach. Alexion may also terminate the Alexion Agreement, in whole or in part, subject to specified conditions,
for our insolvency, the occurrence of a violation of global trade control laws, or for our noncompliance with certain anti-
bribery or anti-corruption covenants. Alexion may also terminate the Alexion Agreement, in whole or in part, for any or
no reason upon ninety days’ written notice to us.
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Upon certain terminations for cause by Alexion, the license that we have granted to Alexion under the Alexion
Agreement shall become irrevocable and perpetual, and all milestone payments and royalties that would have otherwise
been payable by Alexion under such license had the Alexion Agreement remained in effect would be substantially
reduced.
License Agreement with Sangamo
On June 28, 2023, we entered into a definitive license agreement for a potential treatment of prion disease with
Sangamo. Using their proprietary epigenetic regulation platform, Sangamo has developed zinc finger transcriptional
regulators which they believe can specifically and potently block expression of the prion protein, the pathogenic driver of
prion disease. We are eligible to earn certain license fees, royalties on potential commercial sales of any products using
our capsid, and, in the event the prion program is out licensed by Sangamo, a portion of all licensing revenues received
with respect to this program.
License Agreement with Touchlight IP Limited
On November 3, 2022, we and Touchlight IP Limited, or Touchlight, entered into a license agreement, or the
Touchlight License Agreement, to authorize historical use by us of a certain DNA preparation process, or the Subject
DNA Preparation Process, and to authorize the prospective exploitation of TRACER Capsids created with the use of the
Subject DNA Preparation Process.
The terms of the Touchlight License Agreement include a one-time, non-refundable technology access fee of
$5.0 million, paid to Touchlight during the fourth quarter of 2022.
The terms of the Touchlight License Agreement also include future milestone payments and low single-digit
royalties payable to Touchlight by us if we or our program collaborators or licensees choose to utilize in a therapeutic
product certain TRACER Capsids that were created with the historical use of the Subject DNA Preparation Process.
Additionally, we are obligated to pay low single-digit royalties to Touchlight on future payments we receive in
connection with licensing of certain TRACER Capsids that were created with the historical use of the Subject DNA
Preparation Process, excluding the licensing of or collaboration on any of our therapeutic programs.
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
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 expect that our TRACER discovery platform and preclinical programs will compete with a variety of
therapies in development, including:
• Our anti-tau antibody and tau silencing gene therapy programs for AD will potentially compete with tau
antibodies being developed by Lundbeck Inc., Merck & Co. Inc. in collaboration with Teijin Limited,
Roche Genentech Inc. in collaboration with AC Immune SA, Eisai Co., Ltd., Janssen Pharmaceuticals, Inc.,
UCB S.A., Bristol Myers Squibb Company in collaboration with Prothera Inc., along with several other
companies, as well as an antisense oligonucleotide program being developed by Ionis in collaboration with
Biogen;
• Our program for a monogenic form of ALS will potentially compete with Tofersen being developed by
Biogen, in collaboration with Ionis, and gene therapies being developed by Novartis Gene Therapies, Inc.
and uniQure, Inc.; and
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• Our TRACER discovery platform will potentially compete with a variety of companies developing AAV
capsids, including: 4D Molecular Therapeutics, Inc., Affinia Therapeutics Inc., Apertura Gene Therapy,
LLC, Capsida Biotherapeutics, Inc., Capsigen, Inc., Dyno Therapeutics, Inc., Kate Therapeutics, Inc., and
Shape Therapeutics Inc.
We are aware of several companies focused on developing AAV gene therapies in various indications,
including Abeona Therapeutics, Inc., Adverum Biotechnologies, Inc., Akouos, Inc. (acquired by Eli Lilly and Company,
or Eli Lilly), Alcyone Therapeutics, Inc., Amicus Therapeutics, Inc., Asklepios BioPharmaceutical, Inc. (acquired by
Bayer), Astellas Gene Therapies, Inc., Beacon Therapeutics Holdings Limited, Biogen, Inc., or Biogen, BioMarin
Pharmaceuticals, Inc., Encoded Therapeutics, Inc., GenSight Biologics S.A., Homology Medicines, Inc., LEXEO
Therapeutics, Inc., LogicBio Therapeutics, Inc. (acquired by AstraZeneca), MeiraGTx Ltd., Neurogene, Inc., Novartis
Gene Therapies, Inc. (formerly AveXis, Inc.), Passage Bio, Inc., Pfizer, Inc., Prevail Therapeutics, Inc. (acquired by Eli
Lilly), REGENXBio Inc., Sarepta Therapeutics, Inc., Solid Biosciences, Inc., Spark Therapeutics, Inc. (acquired by
Roche Genentech Inc.), Taysha Gene Therapies, Inc. and uniQure, Inc., 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.
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 HEK
293 transient transfection manufacturing process that is scalable for large scale AAV manufacturing – both for
preclinical research activities and clinical and commercial manufacturing. We continuously innovate and develop
advanced manufacturing technologies to enable high yields and product quality, and we manufacture preclinical AAV
material for large animal studies at our onsite, state-of-the-art chemistry, manufacturing, and controls, or CMC,
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development facility. Our new manufacturing process is being transferred to our contract manufacturing organizations to
enable clinical current good manufacturing practice, or, cGMP manufacturing.
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 cGMP manufacturing capabilities. The use of contract manufacturing
and reliance on collaboration partners is relatively cost-efficient and we believe that it eliminates the need for our direct
investment in manufacturing facilities and additional staff early in development. Although we expect to 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,
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 neurogenetic medicines and 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 know-how; and operate without infringing the valid and
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 and patents 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 using or manufacturing the
same.
We own at least 422 pending patent applications and at least 79 patents have issued in the United States and
foreign jurisdictions. We co-own at least 42 pending patent applications and at least 12 patents have issued from these
co-owned families in the United States and foreign jurisdictions. At least ten 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, at least 29 patents have issued to our licensors which have granted us exclusive
license rights to the technology. To date, at least 153 patents have issued to our licensors which have granted us non-
exclusive license rights to the technology with at least 58 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 U.S. and international patent protection for a variety of technologies, including: AAV-based
biological products and constructs, antibodies, non-viral therapeutic modalities, methods of delivering said AAV-based
biological products and constructs, antibodies and non-viral modalities, methods of treating diseases of interest, as well
as methods of engineering and manufacturing of the same. We also intend to seek patent protection or rely upon know-
how and 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.
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Company-Owned Intellectual Property
Tauopathies
We own seven pending patent families directed to antibodies to tau and vectorized forms thereof with 38
pending patent applications. Patents that grant from these families are generally expected to commence expiration in
2037, with some later filed applications commencing expiration in 2040, 2041, 2042, and 2043 all of which are subject
to possible patent term extensions. We own one pending patent family to RNA inhibitors for treating tauopathies with
three pending patent applications. Patents that grant from this family are generally expected to commence expiration in
2043, subject to possible patent term extensions.
ALS
We own five pending patent families and have 12 issued patents and 35 patent applications directed to targeting
SOD1 for the treatment of ALS. We co-own a sixth patent family with one granted patent and seven pending 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. Patents that grant from these
patent families are generally expected to commence expiration in 2035, with some applications expiring in 2038, 2039,
and 2040, all of which are subject to possible patent term extensions.
Friedreich’s Ataxia
We own three pending patent families with one granted patent and 21 patent applications and we co-own one
pending patent family with eight 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 commence expiration in 2036,
with some later filed applications commencing expiration in 2038, 2039, and 2040, all of which are subject to possible
patent term extensions.
GBA1 Gene Therapy
We own three pending patent families with 17 pending patent applications directed to AAVs encoding GBA1
for the treatment of Parkinson’s disease, Gaucher disease, and dementia with Lewy Bodies. Patents that grant from this
patent family are expected to commence expiration in 2041, 2043, and 2044, subject to possible patent term extensions.
Huntington’s Disease
We own five pending patent families with eight issued patents and 24 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 commence expiration in 2037, with some applications expiring in 2038, 2040, and 2044
all of which are subject to possible patent term extensions.
Parkinson’s Disease
We own three pending patent families with five issued patents and at least 23 patent applications directed to
AAV constructs encoding the gene AADC for therapeutic uses. Patents that grant from these patent families are
generally expected to commence expiration in 2035, 2038, and 2039, subject to possible patent term extensions.
Capsids
We own two patent families pending in the United States and foreign jurisdictions that are directed to the
TRACER discovery platform for selection of AAV capsids with BBB crossing and cell-specific transduction properties.
In these two pending patent families directed to the TRACER discovery platform, there are 11 applications pending, and
are generally expected to commence expiration in 2039 and 2041, respectively, subject to possible patent term
extensions. We also own seven pending patent families comprising 45 pending U.S. and foreign applications and one
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granted U.S. patent, as well as ten pending provisional applications directed to capsid variants identified using the
TRACER discovery platform showing improved properties over their wild-type AAV counterparts. Patents that grant
from these patent families and pending provisional applications are generally expected to commence expiration in 2041,
2042, 2043, 2044, and 2045, subject to possible patent term extensions. We own at least 49 pending provisional
applications and five pending non-provisional applications directed to constructs containing TRACER Capsids in
combination with specific payloads for treatment of CNS and other indications. Patents that grant from these pending
provisional and non-provisional applications are generally expected to commence expiration in 2042, 2043, and 2044,
subject to possible patent term extensions. We own one pending patent family with three pending non-provisional patent
applications, as well as one pending provisional application directed to ligands to capsid receptors. Patents that grant
from these pending provisional and non-provisional applications are generally expected to commence expiration in 2044
and 2045, subject to possible patent term extensions.
We also own four patent families pending in the United States and foreign jurisdictions directed to capsid
variants generated using other methodologies. In these four pending patent families, there are three granted patents and
18 pending patent applications. Patents that grant from these patent families are generally expected to commence
expiration in 2038 and 2039, subject to possible patent term extensions. We also co-own three patent families directed to
other capsid variants. In these three pending patent families there are five pending applications. Patents that grant from
these patent families are generally expected to commence expiration in 2039 and 2040, subject to possible patent term
extensions.
Vectorized Antibodies
We own four patent families with two issued patents and eight pending patent applications directed to
vectorized antibodies and related platforms. Patents that grant from these patent families are generally expected to
commence expiration in 2037, with some later filed applications commencing expiration in 2040, all of which are subject
to possible patent term extensions.
Regulatable Expression
We own one pending patent family with three pending patent application directed to regulatable expression
control of AAV transgenes. Patents that grant from this patent family are generally expected to commence expiration in
2036, subject to possible patent term extensions.
Vector and Genome Engineering
We own three patent families with 43 issued patents (including 15 patents in European countries) and 41 patent
applications directed to engineering of the vector genome. Patents that grant from these patent families are generally
expected to commence expiration in 2035, 2037, and 2038, which are all 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 commence expiration in 2040, subject to possible patent term extensions.
Production; Chemistry, Manufacturing, and Controls
We own 21 pending patent families with two granted patents and at least 64 pending patent applications
directed to AAV production and CMC. Patents that grant from the earliest filed patent families are generally expected to
commence expiration in 2035 and patents that grant from the latest filed patent families are generally expected to
commence expiration in 2042, all of which are subject to possible patent term extensions. We co-own one pending patent
family with nine granted patents and ten pending patent applications directed to AAV production and CMC. Patents that
grant from this patent family are generally expected to commence expiration in 2037, subject to possible patent term
extensions.
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Other
We own one pending patent family with one pending patent application directed to AAVs encoding HER2
antibodies for treating metastatic HER2 positive cancers. Patents that grant from these patent families are generally
expected to commence expiration in 2042, subject to possible patent term extensions.
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 commence expiration in 2039, subject to
possible patent term extensions.
We co-own two pending patent families directed to trajectory array delivery devices, including the variable
trajectory array guide, or V-TAG®, device and methods of use. The first pending patent family has one granted patent
and six pending patent applications, and the second pending patent family has one granted patent and six pending patent
applications. Patents that grant from these patent families are generally expected to commence expiration in 2037 and
2038, subject to possible patent term extensions.
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 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. Three of the six families of patents and applications are exclusively licensed and
comprise 14 granted patents and seven applications in the United States and other territories. Three of the six families of
patents and applications are non-exclusively licensed and comprise 56 granted patents and one pending application in the
United States and other territories. Patents from these six families 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 2024 and 2036, subject to possible patent term extensions.
We have exclusively licensed one family of patents and patent applications directed to AAV capsids from the
University of Massachusetts. In this pending patent family, there are 15 granted patents and three pending patent
applications. Patents that grant from this patent family are generally expected to commence expiration in 2031, subject to
possible patent term extensions.
We have non-exclusively licensed two pending patent families from Ablexis, LLC. These families of patents
and patent applications are pending and/or granted in the United States and other territories and comprise 50 granted
patents and 6 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 2031, subject to possible patent term extensions.
We have non-exclusively licensed two pending patent families 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 47 granted patents and ten applications. Patents have been granted in the United States.
Patents that grant from these patent families are generally expected to commence expiration in 2034 and 2036, subject to
possible patent term extensions.
We have non-exclusively licensed three pending patent families directed to microRNA detargeting from the
University of Pennsylvania. These families of patent applications are pending in the United States and internationally
and comprise 41 applications. Patents that grant from these patent families are generally expected to commence
expiration in 2039, 2041, and 2042, subject to possible patent term extensions.
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Trademark Protection
We own trademark registrations in the United States for the marks VOYAGER THERAPEUTICS, the
VOYAGER THERAPEUTICS Logo, and VOYAGER (with design elements), and registrations in the European Union
and United Kingdon for VOYAGER (with design elements) for “pharmaceutical research and development in the field
of gene therapy.” We also own registrations in the United States, the European Union, and United Kingdom for
VOYAGER (with design elements), and pending applications in the United States for VOYAGER and VOYAGER
(with design elements) for goods including, among other, biological preparations for gene therapy for the treatment of
various diseases. We also own pending applications for VOYAGER and VOYAGER (with design elements) in the
United States, and registrations for VOYAGER (with design elements) in the European Union and United Kingdom, for
goods and services including, among others, “medical services provided for clinical trials.”
We also own U.S. trademark registrations for the mark V-TAG and 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 trademark registrations in the
European Union and United Kingdom for V-TAG for similar trademark classes.
We also own registrations in the United States and United Kingdom, for the mark TRACER for services
including, among others, “research and development of platform technologies for genetic delivery of therapies and
pharmaceutical via adeno-associated virus (AAV) capsids.”
We plan to register trademarks in connection with our biological products.
Protection of Confidential Information, Know-how and Trade Secrets
Finally, we may rely, in some circumstances, on confidential information, know-how and 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, know-how 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 confidential information, know-how and 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
The research, development, testing, manufacture, quality control, packaging, labeling, storage, record-keeping,
distribution, import, export, promotion, advertising, marketing, sale, pricing and reimbursement of biologic products are
extensively regulated by governmental authorities in the United States and other countries. The processes for obtaining
regulatory approvals in the United States and in foreign countries and jurisdictions, along with compliance with
applicable statutes and regulations and other regulatory requirements, both pre-approval and post-approval, require the
expenditure of substantial time and financial resources. The regulatory requirements applicable to biological product
development, approval and marketing are subject to change, and regulations and administrative guidance often are
revised or reinterpreted by the agencies in ways that may have a significant impact on our business.
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U.S. Government Regulation
U.S. Biological Products Development Process
In the United States, the FDA approves and regulates gene therapy and antibody products as biological
products, or biologics. These products are licensed for marketing under the Public Health Service Act, or the PHSA, and
regulated under the Federal Food, Drug, and Cosmetic Act, or FDCA. A company, institution, or organization which
takes responsibility for the initiation and management of a clinical development program for such products, and for their
regulatory approval, is typically referred to as a sponsor.
The process required by the FDA before a biological product may be marketed in the United States generally
involves the following:
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completion of nonclinical laboratory tests and animal studies according to the FDA’s GLPs and applicable
requirements for the humane use of laboratory animals or other applicable regulations;
preparation of clinical trial material in accordance with cGMPs;
design of a clinical protocol and submission to the FDA of an application for an IND, which must become
effective before human clinical trials may begin;
approval by an independent institutional review board, or IRB, or ethics committee representing each clinical
trial site before each clinical trial may be initiated;
performance of adequate and well-controlled human clinical trials according to the FDA’s good clinical
practices, 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, and potency from results of nonclinical testing and clinical studies, including payment of application
user fees;
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;
potential FDA inspection 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;
• FDA review and approval, or licensure, of the BLA; and
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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 a sponsor begins testing a product candidate with potential therapeutic value in humans, the product
candidate enters the preclinical testing stage. Preclinical tests include laboratory evaluations of product chemistry,
formulation and stability, as well as other studies to evaluate, among other things, the toxicity of the product candidate.
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These studies are generally referred to as IND-enabling studies. The conduct of the preclinical tests and formulation of
the compounds for testing must comply with federal regulations and requirements, including GLP regulations and
standards and the United States Department of Agriculture’s Animal Welfare Act, if applicable. The results of the
preclinical tests, together with manufacturing information and analytical data, are submitted to the FDA as part of an
IND. Some long-term preclinical testing, such as animal tests of reproductive adverse events and carcinogenicity, and
long-term toxicity studies, may continue after the IND is submitted.
The IND and IRB Processes
An IND is an exemption from the FDCA that allows an unapproved product candidate to be shipped in
interstate commerce for use in an investigational clinical trial and a request for FDA authorization to administer such
investigational product to humans. An IND must be secured prior to interstate shipment and administration of any
product candidate that is not the subject of an approved new drug application, or NDA, or BLA. In support of a request
for an IND, sponsors must submit a protocol for each clinical trial and any subsequent protocol amendments must be
submitted to the FDA as part of the IND. An IND automatically becomes effective 30 days after receipt by the FDA,
unless before that time the FDA raises concerns or questions related to one or more proposed clinical trials or studies and
places the trial on a clinical hold. The FDA may also place a hold or partial hold on a clinical study based on chemistry,
manufacturing, and controls issues involving the investigational product. In either case, the IND sponsor and the FDA
must resolve any outstanding concerns before the clinical trial may proceed. As a result, submission of an IND may not
result in the FDA allowing clinical trials to commence.
Following commencement of a clinical trial under an IND, the FDA may also place a clinical hold or partial
clinical hold on that trial. A clinical hold is an order issued by the FDA to the sponsor to delay a proposed clinical
investigation or to suspend an ongoing investigation. A partial clinical hold is a delay or suspension of only part of the
clinical work requested under the IND. For example, a partial clinical hold might state that a specific protocol or part of a
protocol may not proceed, while other parts of a protocol or other protocols may do so. No more than 30 days after the
imposition of a clinical hold or partial clinical hold, the FDA will provide the sponsor a written explanation of the basis
for the hold. Following the issuance of a clinical hold or partial clinical hold, a clinical investigation may only resume
once the FDA has notified the sponsor that the investigation may proceed. The FDA will base that determination on
information provided by the sponsor correcting the deficiencies previously cited or otherwise satisfying the FDA that the
investigation can proceed or recommence. Occasionally, clinical holds are imposed due to manufacturing issues that may
present safety issues for the clinical study subjects.
An IRB representing each institution participating in the clinical trial must also review and approve the plan for
any clinical trial before it commences at that institution, and the IRB must conduct continuing review and reapprove the
study at least annually. The IRB, which must operate in compliance with FDA regulations, must review and approve,
among other things, the study protocol and informed consent information to be provided to study subjects before the
study can commence at the institution and must monitor the trial until completed. An IRB can suspend or terminate
approval of a clinical trial at its institution, or an institution it represents, if the clinical trial is not being conducted in
accordance with the IRB’s requirements or if the product candidate has been associated with unexpected serious harm to
patients.
Additionally, some trials are overseen by an independent group of qualified experts organized by the trial
sponsor, known as a data monitoring committee, or DMC. This group provides an independent recommendation as to
whether or not a trial may move forward at designated checkpoints based on review of available data from the study, to
which only the DMC maintains access. Suspension or termination of development during any phase of a clinical trial can
occur if the DMC recommends stopping a trial due to safety or efficacy.
Human Clinical Trials
Clinical trials involve the administration of the investigational product candidate to human subjects under the
supervision of a qualified investigator in accordance with GCP requirements which include, among other things, the
requirement that all research subjects provide their informed consent in writing before they participate in any clinical
trial. Clinical trials are conducted under written clinical trial protocols detailing, among other things, the objectives of the
trial, inclusion and exclusion criteria, the parameters to be used in monitoring safety and the effectiveness criteria to be
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evaluated. Each protocol, and any subsequent material amendment to the protocol, must be submitted to the FDA as part
of the IND, and progress reports detailing the status of the clinical trials must be submitted to the FDA annually.
Human clinical trials are typically conducted in three sequential phases, but the phases may overlap or be
combined. Additional studies may also be required after approval.
Phase 1 clinical trials are initially conducted in a limited population, which may be healthy volunteers or
subjects with the target disease, to test the product candidate for safety, including adverse effects, dose tolerance,
absorption, metabolism, distribution, excretion and pharmacodynamics in healthy humans or in patients. During Phase 1
clinical trials, information about the product candidate’s pharmacokinetics and pharmacological effects may be obtained.
Phase 2 clinical trials are generally conducted in a patient population to identify possible adverse effects and
safety risks, evaluate the efficacy of the product candidate for specific targeted indications and determine dose tolerance
and optimal dosage. Multiple Phase 2 clinical trials may be conducted by the sponsor to obtain information prior to
beginning larger and more costly Phase 3 clinical trials. Phase 2 clinical trials are typically well-controlled and closely
monitored.
Phase 3 clinical trials proceed if the prior clinical trials demonstrate that the product candidate is potentially
effective and has an acceptable safety profile. Phase 3 clinical trials are undertaken in the proposed patient population to,
provide evidence of clinical efficacy and safety. A well-controlled, statistically robust Phase 3 clinical trial is designed to
deliver the data that regulatory authorities will use to decide whether or not to approve, and, if approved, how to
appropriately label a new biologic product. Such Phase 3 clinical trials are referred to as “pivotal” trials.
A clinical trial may combine the elements of more than one phase and the FDA often requires more than one
Phase 3 trial to support marketing approval of a product candidate. A company’s designation of a clinical trial as being
of a particular phase is not necessarily indicative that the study will be sufficient to satisfy the FDA requirements of that
phase because this determination cannot be made until the protocol and data have been submitted to and reviewed by the
FDA. Moreover, as noted above, a pivotal trial is a clinical trial that is believed to satisfy FDA requirements for the
evaluation of a product candidate’s safety and efficacy such that it can be used, alone or with other pivotal or non-pivotal
trials, to support regulatory approval. Generally, pivotal trials are Phase 3 trials, but they may be Phase 2 trials if the
design provides a well-controlled and reliable assessment of clinical benefit, particularly in an area of unmet medical
need or rare patient population.
In December 2022, with the passage of the Food and Drug Omnibus Reform Act, or FDORA, Congress
required sponsors to develop and submit a diversity action plan for each Phase 3 clinical trial or any other “pivotal study”
of a new drug or biological product. These plans are meant to encourage the enrollment of more diverse patient
populations in late-stage clinical trials of FDA-regulated products. Specifically, action plans must include the sponsor’s
goals for enrollment, the underlying rationale for those goals, and an explanation of how the sponsor intends to meet
them.
In some cases, the FDA may approve an NDA or BLA for a product candidate but require the sponsor to
conduct additional clinical trials to further assess the product candidate’s safety and effectiveness after approval. Such
post-approval trials, typically referred to as post-marketing studies or clinical trials, may be conducted after initial
marketing approval. These trials are used to either gain additional experience from the treatment of a larger number of
patients in the intended treatment group or to evaluate a specific outcome of interest (safety or efficacy). In certain
instances, the FDA may mandate the performance of post-marketing studies or clinical trials, such as to verify clinical
benefit in the case of products approved under accelerated approval regulations. Failure to exhibit due diligence with
regard to conducting mandatory post-marketing studies or clinical trials could result in withdrawal of FDA approval for
products.
In June 2023, the FDA issued draft guidance with updated recommendations for GCPs aimed at modernizing
the design and conduct of clinical trials. The updates are intended to help pave the way for more efficient clinical trials to
facilitate the development of medical products. The draft guidance is adopted from the International Council for
Harmonisation’s recently updated E6(R3) draft guideline that was developed to enable the incorporation of rapidly
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developing technological and methodological innovations into the clinical trial enterprise. In addition, the FDA issued
draft guidance outlining recommendations for the implementation of decentralized clinical trials.
Finally, sponsors of clinical trials are required to register and disclose certain clinical trial information on a
public registry (clinicaltrials.gov) maintained by the U.S. National Institutes of Health, or NIH. In particular, information
related to the product, patient population, phase of investigation, study sites and investigators and other aspects of the
clinical trial is made public as part of the registration of the clinical trial. The NIH’s Final Rule on registration and
reporting requirements for clinical trials became effective in 2017. Although the FDA has historically not enforced these
reporting requirements due to a long delay by the Department of Health and Human Services, or HHS, in issuing final
implementing regulations, the FDA has issued several pre-notices for voluntary corrective action and several notices of
non-compliance during the past two years. While these notices of non-compliance did not result in civil monetary
penalties, the failure to submit clinical trial information to clinicaltrials.gov, as required, is a prohibited act under the
FDCA with violations subject to potential civil monetary penalties of up to $10,000 for each day the violation continues.
Clinical Studies Outside of the United States in Support of FDA Approval
In connection with the clinical development of our programs, we may conduct trials at sites outside of the
United States. When a foreign clinical study is conducted under an IND, all IND requirements must be met unless
waived. When a foreign clinical study is not conducted under an IND, the sponsor must ensure that the study complies
with certain regulatory requirements of the FDA in order to use the study as support for an IND or application for
marketing approval. Specifically, the studies must be conducted in accordance with GCPs, including undergoing review
and receiving approval by an independent ethics committee and seeking and receiving informed consent from subjects.
GCP requirements encompass both ethical and data integrity standards for clinical studies. The FDA’s regulations are
intended to help ensure the protection of human subjects enrolled in non-IND foreign clinical studies, as well as the
quality and integrity of the resulting data. They further help ensure that non-IND foreign studies are conducted in a
manner comparable to that required for IND studies.
The acceptance by the FDA of study data from clinical trials conducted outside the United States in support of
United States approval may be subject to certain conditions or may not be accepted at all. In cases where data from
foreign clinical trials are intended to serve as the sole basis for marketing approval in the United States, the FDA will
generally not approve the application on the basis of foreign data alone unless (i) the data are applicable to the U.S.
population and U.S. medical practice; (ii) the trials were performed by clinical investigators of recognized competence
and pursuant to GCP regulations; and (iii) the data may be considered valid without the need for an on-site inspection by
the FDA, or if the FDA considers such inspection to be necessary, the FDA is able to validate the data through an on-site
inspection or other appropriate means.
In addition, even where the foreign study data are not intended to serve as the sole basis for approval, the FDA
will not accept the data as support for an application for marketing approval unless the study is well-designed and well-
conducted in accordance with GCP requirements and the FDA is able to validate the data from the study through an
onsite inspection if deemed necessary. Many foreign regulatory authorities have similar approval requirements. In
addition, such foreign trials are subject to the applicable local laws of the foreign jurisdictions where the trials are
conducted.
Interactions with the FDA During the Clinical Development Program
Following the clearance of an IND and the commencement of clinical trials, a sponsor is given the opportunity
to meet with the FDA at certain points in the clinical development program. There are five types of meetings that occur
between sponsors and the FDA. Type A meetings are those that are necessary for an otherwise stalled product
development program to proceed or to address an important safety issue. Type B meetings include pre-IND and pre-
NDA meetings as well as end of phase meetings such as end of Phase 2, or EOP2, meetings. A Type C meeting is any
meeting other than a Type A or Type B meeting regarding the development and review of a product. A Type D meeting
is focused on a narrow set of issues and should not require input from more than three disciplines or divisions. Finally,
INTERACT meetings are intended for novel products and development programs that present unique challenges in the
early development of an investigational product.
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The FDA has indicated that its responses, as conveyed in meeting minutes and advice letters, only constitute
mere recommendations and/or advice made to a sponsor and, as such, sponsors are not bound by such recommendations
and/or advice. Nonetheless, from a practical perspective, a sponsor’s failure to follow the FDA’s recommendations for
design of a clinical program may put the program at significant risk of failure.
Gene Therapy Products
We expect that the procedures and standards applied to gene therapy products will be applied to any product
candidates we may develop. The FDA has defined a gene therapy product as one that seeks to modify or manipulate the
expression of a gene or to alter the biological properties of living cells for therapeutic use. The products may be used to
modify cells in vivo or transferred to cells ex vivo prior to administration to the recipient. Within the FDA, the Center for
Biologics Evaluation and Research, or CBER, regulates gene therapy products. Within CBER, the review of gene
therapy and related products is consolidated in the Office of Therapeutic Products, or OTP.
The FDA has issued various guidance documents regarding gene therapies. Although the FDA has indicated
that these and other guidance documents it previously issued are not legally binding, the guidance documents provide the
FDA’s current thinking on, 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 for potential delayed
adverse effects in participants who have received investigational gene therapies with the duration of follow-up based on
the potential for risk of such effects. For AAV vectors specifically, the FDA typically recommends that sponsors
continue to monitor participants for potential gene therapy-related adverse events for up to a five-year period.
Manufacturing and Other Regulatory Requirements
Concurrently with clinical trials, sponsors usually complete additional animal safety studies, develop additional
information about the chemistry and physical characteristics of the product candidate and finalize a process for
manufacturing commercial quantities of the product candidate in accordance with cGMP requirements. The
manufacturing process must be capable of consistently producing quality batches of the product candidate and, among
other criteria, the sponsor must develop methods for testing the identity, strength, quality, and purity of the finished
product. Additionally, appropriate packaging must be selected and tested, and stability studies must be conducted to
demonstrate that the product candidate does not undergo unacceptable deterioration over its shelf life.
Specifically, the FDA’s regulations require that pharmaceutical products be manufactured in specific approved
facilities and in accordance with cGMPs. The cGMP regulations include requirements relating to organization of
personnel, buildings and facilities, equipment, control of components and product containers and closures, production
and process controls, packaging and labeling controls, holding and distribution, laboratory controls, records and reports
and returned or salvaged products. Manufacturers and other entities involved in the manufacture and distribution of
approved pharmaceuticals are required to register their establishments with the FDA and some state agencies and are
subject to periodic unannounced inspections by the FDA for compliance with cGMPs and other requirements. The
PREVENT Pandemics Act, which was enacted in December 2022, clarifies that foreign drug manufacturing
establishments are subject to registration and listing requirements even if a drug or biologic undergoes further
manufacture, preparation, propagation, compounding, or processing at a separate establishment outside of the United
States prior to being imported or offered for import into the United States. Inspections must follow a “risk-based
schedule” that may result in certain establishments being inspected more frequently. Manufacturers may also have to
provide, on request, electronic or physical records regarding their establishments. Delaying, denying, limiting, or
refusing inspection by the FDA may lead to a product being deemed to be adulterated. Changes to the manufacturing
process, specifications or container closure system for an approved product are strictly regulated and often require prior
FDA approval before being implemented. The FDA’s regulations also require, among other things, the investigation and
correction of any deviations from cGMP and the imposition of reporting and documentation requirements upon the
sponsor and any third-party manufacturers involved in producing the approved product.
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Pediatric Studies
Under the Pediatric Research Equity Act of 2003, or PREA, a BLA 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. The sponsor must submit an initial pediatric study plan within 60 days of an EOP2 meeting or as may be
agreed between the sponsor and the FDA. 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 sponsor plans to conduct, including
study objectives and design, any deferral or waiver requests, and other information required by regulation. The sponsor,
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 sponsor may request an amendment to the plan at any time.
The FDA may, on its own initiative or at the request of the sponsor, 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. A deferral may be granted for several reasons, including a finding that the product or therapeutic candidate
is ready for approval for use in adults before pediatric trials are complete or that additional safety or effectiveness data
needs to be collected before the pediatric trials begin. The FDA is required to send a PREA non-compliance letter to
sponsors who have failed to submit their pediatric assessments required under PREA, have failed to seek or obtain a
deferral or deferral extension or have failed to request approval for a required pediatric formulation. Unless otherwise
required by regulation, the pediatric data requirements generally do not apply to products with orphan designation,
although the FDA has taken steps to limit what is considers abuse of this statutory exemption in the PREA by
announcing that is does not intend to grant any additional orphan drug designations for rare pediatric subpopulations of
what is otherwise a common disease. In May 2023, the FDA issued new draft guidance that further describes the
pediatric study requirements under PREA.
Submission of a BLA to the FDA
FDA approval is required before any new biologic product can be marketed in the United States. Thus,
assuming successful completion of all required preclinical and human testing in accordance with all applicable
regulatory requirements, detailed product information is submitted to the FDA in the form of a BLA. Under the
Prescription Drug User Fee Act, or PDUFA, each BLA must be accompanied by a significant user fee unless an
exception or waiver applies, such as the first application filed by a small business or BLAs for product candidates
designated as orphan drugs, unless the product candidate includes an indication that is not for a rare disease or condition.
For federal fiscal year 2024, the application user fee is $4,048,695 for an application requiring clinical data, and the
sponsor of a licensed BLA is subject to an annual program fee, which for fiscal year 2024 is more than $416,734.
The FDA conducts a preliminary review of all applications within 60 days of receipt and must inform the
sponsor at that time or before whether an application is sufficiently complete to permit substantive review. In pertinent
part, FDA’s regulations state that an application “shall not be considered as filed until all pertinent information and data
have been received” by the FDA. In the event the FDA determines that an application does not satisfy this standard, it
will issue a Refuse to File, or RTF, determination to the sponsor. In this event, the BLA must be resubmitted.
If the submission is accepted for filing, the FDA’s goal is to review the BLA, within ten months for a standard
review, or, if the BLA relates to an unmet medical need in the treatment of a serious or life-threatening condition,
perform a priority review, within six months. The review process may be extended by the FDA for three additional
months to consider new information or in the case of a clarification provided by the sponsor to address an outstanding
deficiency identified by the FDA following the original submission. Despite these review goals, it is not uncommon for
FDA review of an application to extend beyond the PDUFA target action date.
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
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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.
In connection with its review of 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, 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. With passage of FDORA, Congress
clarified the FDA’s authority to conduct inspections by expressly permitting inspection of facilities involved in the
preparation, conduct, or analysis of clinical and non-clinical studies submitted to the FDA as well as other persons
holding study records or involved in the study process. To assure cGMP and GCP compliance, a sponsor must incur
significant expenditure of time, money and effort in the areas of training, record keeping, production, and quality control.
The FDA’s Decision on a BLA
The FDA reviews an application to determine, among other things, whether the product is safe, pure, and
potent. To reach this determination, the FDA must determine that the investigational product is effective and that its
expected benefits outweigh its potential risks to patients. This “benefit-risk” assessment is informed by the extensive
body of evidence about the product’s safety, purity and potency in the BLA. This assessment is also informed by other
factors, including: the severity of the underlying condition and how well patients’ medical needs are addressed by
currently available therapies; uncertainty about how the premarket clinical trial evidence will extrapolate to real-world
use of the product in the post-market setting; and whether risk management tools are necessary to manage specific risks.
The FDA typically requires a robust safety database and two adequate and well-controlled clinical
investigations to establish the efficacy of a new product. Under certain circumstances, however, FDA has indicated that a
single trial with certain characteristics and additional information may satisfy this standard. The FDA issued draft
guidance in September 2023 that outlines considerations for relying on confirmatory evidence in lieu of a second clinical
trial to demonstrate efficacy.
After evaluating the application and all related information, including the advisory committee
recommendations, if any, and inspection reports of manufacturing facilities and clinical trial sites, the FDA will issue
either a Complete Response Letter, or CRL, or an approval letter. A CRL indicates that the review cycle of the
application is complete, and the application will not be approved in its present form. A CRL generally outlines the
deficiencies in the submission and may require substantial additional testing or information in order for the FDA to
reconsider the application. The CRL may require additional clinical or other data, additional pivotal Phase 3 clinical
trial(s) and/or other significant and time-consuming requirements related to clinical trials, preclinical studies or
manufacturing. If a CRL is issued, the sponsor will have one year to respond to the deficiencies identified by the FDA, at
which time the FDA can deem the application withdrawn or, in its discretion, grant the sponsor an additional six-month
extension to respond. For those seeking to challenge the FDA’s CRL decision, the FDA has indicated that sponsors may
request a formal hearing on the CRL or they may file a request for reconsideration or a request for a formal dispute
resolution. During the product approval process, the FDA also will determine whether a REMS is necessary to assure the
safe use of the 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.
An approval letter, on the other hand, authorizes commercial marketing of the product with specific prescribing
information for specific indications. That is, the approval will be limited to the conditions of use (e.g., patient population,
indication) described in the FDA-approved labeling. Further, depending on the specific risk(s) to be addressed, the FDA
may require that contraindications, warnings or precautions be included in the product labeling, require that post-
approval trials, including post-marketing studies or clinical trials, be conducted to further assess a product’s safety after
approval, require testing and surveillance programs to monitor the product after commercialization or impose other
conditions, including distribution and use restrictions or other risk management mechanisms under a REMS which can
materially affect the potential market and profitability of the product. The FDA may prevent or limit further marketing of
a product based on the results of post-marketing studies, clinical trials, or surveillance programs. After approval, some
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types of changes to the approved product, such as adding new indications, manufacturing changes and additional labeling
claims, are subject to further testing requirements and FDA review and approval.
Post-Approval Requirements
Biologic products manufactured or distributed pursuant to regulatory approvals are subject to pervasive and
continuing regulation by the regulatory authorities, including, among other things, requirements relating to formal
commitments for post approval clinical trials and studies, manufacturing, recordkeeping, periodic reporting, product
sampling and distribution, marketing, labeling, advertising and promotion and reporting of adverse experiences with the
product. After approval, most changes to the approved product, such as adding new indications or other labeling claims,
are subject to prior regulatory authority review and approval.
Manufacturers are subject to periodic unannounced inspections by regulatory authorities and country or state
agencies for compliance with cGMP and other requirements. Changes to the manufacturing process are strictly regulated,
and, depending on the significance of the change, may require prior regulatory approval before being implemented.
Regulations also require investigation and correction of any deviations from cGMP and impose reporting and
documentation requirements upon us and any third-party manufacturers that we may decide to use. Accordingly,
manufacturers must continue to expend time, money and effort in the area of production and quality control to maintain
compliance with cGMP and other aspects of regulatory compliance.
Further, although physicians may prescribe legally available products for unapproved uses or patient
populations, which are commonly referred to as “off-label uses,” manufacturers may not market or promote such uses.
The FDA and other agencies actively enforce the laws and regulations prohibiting the promotion of off-label uses, and a
company that is found to have improperly promoted off-label uses may be subject to significant liability. In September
2021, the FDA published final regulations which describe the types of evidence that the FDA will consider in
determining the intended use of a biologic. If a company is found to have promoted off-label uses, it may become subject
to administrative and judicial enforcement by the FDA, the Department of Justice, or the Office of the Inspector General
of the HHS, as well as state authorities.
It may be permissible, under very specific, narrow conditions, for a manufacturer to engage in nonpromotional,
non-misleading communication regarding off-label information, such as distributing scientific or medical journal
information. Moreover, with passage of the Pre-Approval Information Exchange Act, or PIE Act, in December 2022,
sponsors of products that have not been approved may proactively communicate to payors certain information about
products in development to help expedite patient access upon product approval. Previously, such communications were
permitted under FDA guidance, but the new legislation explicitly provides protection to sponsors who convey certain
information about products in development to payors, including unapproved uses of approved products. In addition, in
October 2023, the FDA published draft guidance outlining its non-binding policies governing the distribution of
scientific information on unapproved uses to healthcare providers. This draft guidance calls for such communications to
be truthful, non-misleading, factual, and unbiased and include all information necessary for healthcare providers to
interpret the strengths and weaknesses and validity and utility of the information about the unapproved use.
Expedited Review Programs
The FDA is authorized to expedite the review of applications in several ways. None of these expedited
programs, however, changes the standards for approval but each may help expedite the development or approval process
governing product candidates.
• Fast Track Designation. Candidate products are eligible for Fast Track designation if they are intended to
treat a serious or life-threatening condition and demonstrate the potential to address unmet medical needs
for the condition. Fast Track designation applies to the combination of the product candidate and the
specific indication for which it is being studied. In addition to other benefits, such as the ability to have
greater interactions with the FDA, the FDA may initiate review of sections of a Fast Track application
before the application is complete, a process known as rolling review.
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• Breakthrough therapy designation. To qualify for the breakthrough therapy program, product candidates
must be intended to treat a serious or life-threatening disease or condition and preliminary clinical evidence
must indicate that such product candidates may demonstrate substantial improvement on one or more
clinically significant endpoints over existing therapies. The FDA will seek to ensure the sponsor of a
breakthrough therapy product candidate receives intensive guidance on an efficient development program,
intensive involvement of senior managers and experienced staff on a proactive, collaborative and cross-
disciplinary review and rolling review.
• Priority review. A product candidate is eligible for priority review if it treats a serious condition and, if
approved, it would be a significant improvement in the safety or effectiveness of the treatment, diagnosis or
prevention compared to marketed products. FDA aims to complete its review of priority review
applications within six months as opposed to ten months for standard review.
• Accelerated approval. Biologic products studied for their safety and effectiveness in treating serious or life-
threatening illnesses and that provide meaningful therapeutic benefit over existing treatments may receive
accelerated approval. Accelerated approval means that a product candidate may be approved on the basis of
adequate and well controlled clinical trials establishing that the product candidate has an effect on a
surrogate endpoint that is reasonably likely to predict a clinical benefit, or on the basis of an effect on a
clinical endpoint other than survival or irreversible morbidity or mortality or other clinical benefit, taking
into account the severity, rarity and prevalence of the condition and the availability or lack of alternative
treatments. As a condition of approval, the FDA may require that a sponsor of a biologic product candidate
receiving accelerated approval perform adequate and well controlled post-marketing studies or clinical
trials. In addition, the FDA currently requires as a condition for accelerated approval pre-approval of
promotional materials.
• With the passage of FDORA in December 2022, Congress modified certain provisions governing
accelerated approval of drug and biologic products. Specifically, the new legislation authorized the FDA to:
require a sponsor to have its confirmatory clinical trial underway before accelerated approval is awarded,
require a sponsor of a product granted accelerated approval to submit progress reports on its post-approval
studies to the FDA every six months until the study is completed; and use expedited procedures to
withdraw accelerated approval of an NDA or BLA after the confirmatory trial fails to verify the product
candidate’s clinical benefit. Further, FDORA requires the FDA to publish on its website “the rationale for
why a post-approval study is not appropriate or necessary” whenever it decides not to require such a study
upon granting accelerated approval. In March 2023, the FDA issued draft guidance that outlines its current
thinking and approach to accelerated approval for designing, conducting, and analyzing data for trials
intended to support accelerated approvals of oncology therapeutics.
• Regenerative advanced therapy. With the 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 candidate 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 the 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.
U.S. Orphan Drug Designation and Exclusivity
A product may qualify for orphan drug designation, or ODD, under the Orphan Drug Act, if it is 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 as stipulated in the ODD. ODD must be requested before
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submitting a BLA. After the FDA grants ODD, the identity of the therapeutic agent and its potential orphan use are
disclosed publicly by the FDA. ODD entitles a party to financial incentives such as opportunities for grant funding
towards clinical study costs, tax advantages, and user-fee waivers. 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 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.
Competitors, however, may receive approval of a different therapy 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. Orphan-drug exclusivity also could block the approval of one of our products for seven years if a competitor
obtains approval of the same therapy as defined by the FDA.
In September 2021, the Court of Appeals for the Eleventh Circuit held that, for the purpose of determining the
scope of market exclusivity, the term “same disease or condition” in the statute means the designated “rare disease or
condition” and could not be interpreted by the FDA to mean the “indication or use.” Thus, the court concluded, orphan
drug exclusivity applies to the entire designated disease or condition rather than the “indication or use.” Although there
have been legislative proposals to overrule this decision, they have not been enacted into law. On January 23, 2023, the
FDA announced that, in matters beyond the scope of that court order, the FDA will continue to apply its existing
regulations tying orphan-drug exclusivity to the uses or indications for which the orphan drug was approved.
Priority Review Vouchers
A priority review voucher, or PRV, is a voucher that the FDA issues to a sponsor of a rare pediatric disease or
tropical disease product application at the time of the marketing application approval. Vouchers are transferable to other
sponsors that may apply it to their NDAs or BLAs. A PRV entitles the holder to designate a single human drug
application submitted under Section 505(b)(1) of the FDCA or Section 351 of the PHSA as qualifying for a priority
review. An FDA priority review may expedite the review process of a marketing application reducing the review time
from ten months after formal acceptance of the file to six months after formal acceptance of the file. Applying the PRV
to a marketing application does not ensure the FDA’s approval of the marketing application and all requirements
supporting the safety and efficacy of the product must be met. Orphan drug products are eligible for Rare Pediatric
Disease Designation if greater than 50% of patients living with the disease are under age 18.
Biosimilars and Exclusivity
When a biological product is licensed for marketing by FDA with approval of a BLA, the product may be
entitled to certain types of market and data exclusivity barring FDA from approving competing products for certain
periods of time. In March 2010, the Patient Protection and Affordable Care Act, as amended by the Health Care and
Education Reconciliation Act of 2010, or collectively the ACA, was enacted in the United States and included the
Biologics Price Competition and Innovation Act of 2009, or the BPCIA. The BPCIA amended the PHSA to create an
abbreviated approval pathway for biological products that are biosimilar to or interchangeable with an FDA-licensed
reference biological product. To date, the FDA has approved both biosimilar products and interchangeable biosimilar
products. In December 2022, Congress clarified through FDORA that the FDA may approve multiple first
interchangeable biosimilar biological products so long as the products are all approved on the first day on which such a
product is approved as interchangeable with the reference product.
A reference biologic is granted twelve years of exclusivity from the time of first licensure of the reference
product. Approval of a 351(k) application may not be made effective until twelve years after the date of first licensure of
the reference product, which under the statute excludes the date of licensure of supplements and certain other
applications. Additionally, a 351(k) application for a biosimilar or interchangeable biological product cannot be
submitted for review until four years after the date on which the reference product was first licensed under section 351(a)
of the PHSA. Even if a product is considered to be a reference product eligible for exclusivity, however, another
company could market a competing version of that product if the FDA approves a full BLA for such product containing
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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. There have been recent government proposals to reduce the twelve-year reference
product exclusivity period, but none has been enacted to date. At the same time, since passage of the BPCIA, many states
have passed laws or amendments to laws, which address pharmacy practices involving biosimilar products.
Pediatric Exclusivity
Pediatric exclusivity is a type of non-patent marketing exclusivity in the United States and, if granted, provides
for the attachment of an additional six months of exclusivity. For biologic products, the six-month period may be
attached to any existing regulatory exclusivities but not to any patent terms. The conditions for pediatric exclusivity
include the FDA’s determination that information relating to the use of a new product in the pediatric population may
produce health benefits in that population, the FDA making a written request for pediatric clinical trials, and the sponsor
agreeing to perform, and reporting on, the requested clinical trials within the statutory timeframe. This six-month
exclusivity may be granted if an NDA sponsor submits pediatric data that fairly respond to a written request from the
FDA for such data. The data does 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 that cover the product are extended by six months.
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 sponsor 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.
Other Healthcare Laws
Although we currently do not have any products on the market, we will be subject to additional healthcare
regulation and enforcement by the federal government and by authorities in the states in which we conduct our business,
if and when our product candidates are approved by the FDA and subject to federal healthcare reimbursement. Such laws
include, without limitation, state and federal anti-kickback, fraud and abuse, false claims, privacy and security and
physician sunshine laws and regulations. In addition, 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. 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.
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Healthcare Reform
A primary trend in the U.S. healthcare industry and elsewhere is cost containment. There have been a number of
federal and state proposals during the last few years regarding the pricing of biologic products, limiting coverage and
reimbursement for medical products and other changes to the healthcare system in the United States. In March 2010, the
United States Congress enacted the ACA, which, among other things, includes changes to the coverage and payment for
pharmaceutical products under government healthcare programs. 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. 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. Litigation and
legislation over the ACA are likely to continue, with unpredictable and uncertain results.
In March 2010, the United States Congress enacted the ACA, which, among other things, includes changes to
the coverage and payment for products under government healthcare programs. Other legislative changes have been
proposed and adopted in the United States since the ACA was enacted. For example, 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 2012
through 2021, was unable to reach required goals, thereby triggering the legislation’s automatic reduction to several
government programs. This includes aggregate reductions of Medicare payments to providers of up to 2% per fiscal year,
which will remain in effect through 2031 pursuant to the Coronavirus Aid, Relief and Economic Security Act, or
CARES Act.
The American Taxpayer Relief Act of 2012, which was enacted in January 2013, among other things, further
reduced Medicare payments to several providers, including hospitals, imaging centers, and cancer treatment centers, 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. Indeed, under current legislation, the actual reductions in
Medicare payments may vary up to 4%.
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 June 17, 2021, the United States Supreme Court dismissed a challenge to the ACA after
finding that the plaintiffs do not have standing to challenge the constitutionality of the ACA. Litigation and legislation
over the ACA are likely to continue, with unpredictable and uncertain results.
Although the Trump administration took executive actions to undermine or delay implementation of the ACA,
those actions were rescinded with issuance of an Executive Order on January 28, 2021 by President Biden, 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.
Pharmaceutical Price Reform
The prices of prescription pharmaceuticals have also been the subject of considerable discussion in the United
States. There have been several recent United States congressional inquiries, as well as proposed and enacted state and
federal legislation designed to, among other things, bring more transparency to pharmaceutical pricing, review the
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relationship between pricing and manufacturer patient programs, and reduce the costs of pharmaceuticals under
Medicare and Medicaid. In 2020, President Trump issued several executive orders intended to lower the costs of
prescription products and certain provisions in these orders have been incorporated into regulations. These regulations
include an interim final rule implementing a most favored nation model for prices that would tie Medicare Part B
payments for certain physician-administered pharmaceuticals to the lowest price paid in other economically advanced
countries, effective January 1, 2021. That rule, however, has been subject to a nationwide preliminary injunction and, on
December 29, 2021, the Centers for Medicare & Medicaid Services, or CMS, issued a final rule to rescind it. With
issuance of this rule, CMS stated that it will explore all options to incorporate value into payments for Medicare Part B
pharmaceuticals and improve beneficiaries’ access to evidence-based care.
In addition, the HHS and the FDA published a final rule allowing states and other entities to develop a Section
804 Importation Program, or SIP, to import certain prescription drugs from Canada into the United States. That
regulation was challenged in a lawsuit by the Pharmaceutical Research and Manufacturers of America, or PhRMA, but
the case was dismissed by a federal district court in February 2023 after the court found that PhRMA did not have
standing to sue HHS. Nine states (Colorado, Florida, Maine, New Hampshire, New Mexico, North Dakota, Texas,
Vermont, and Wisconsin) have passed laws allowing for the importation of drugs from Canada. Certain of these states
have submitted Section 804 Importation Program proposals and are awaiting FDA approval. On January 5, 2024, the
FDA approved Florida’s plan for Canadian drug importation.
Further, on November 20, 2020, HHS finalized a regulation removing safe harbor protection for price
reductions from pharmaceutical manufacturers to plan sponsors under Part D, either directly or through pharmacy benefit
managers, unless the price reduction is required by law. The final rule would also eliminate the current safe harbor for
Medicare drug rebates and create new safe harbors for beneficiary point-of-sale discounts and pharmacy benefit manager
service fees. The Inflation Reduction Act of 2022, or IRA, further delayed implementation of this rule to January 1,
2032.
On July 9, 2021, President Biden signed Executive Order 14063, which focuses on, among other things, the
price of pharmaceuticals. To address these costs, the executive order directs HHS to create a plan within 45 days to
combat “excessive pricing of prescription drugs and enhance domestic pharmaceutical supply chains, to reduce the prices
paid by the federal government for such drugs, and to address the recurrent problem of price gouging.” Thereafter, on
September 9, 2021, HHS released its plan to reduce drug prices. The key features of that plan are to: (a) make drug
prices more affordable and equitable for all consumers and throughout the health care system by supporting drug price
negotiations with manufacturers; (b) improve and promote competition throughout the prescription drug industry by
supporting market changes that strengthen supply chains, promote biosimilars and generic drugs, and increase
transparency; and (c) foster scientific innovation to promote better healthcare and improve health by supporting public
and private research and making sure that market incentives promote discovery of valuable and accessible new
treatments.
On August 16, 2022, the IRA was signed into law by President Biden. The new legislation has implications for
Medicare Part D, which is a program available to individuals who are entitled to Medicare Part A or enrolled in
Medicare Part B to give them the option of paying a monthly premium for outpatient prescription drug coverage. Among
other things, the IRA requires manufacturers of certain drugs to engage in price negotiations with Medicare (beginning in
2026), with prices that can be negotiated subject to a cap; imposes rebates under Medicare Part B and Medicare Part D to
penalize price increases that outpace inflation (first due in 2023); and replaces the Part D coverage gap discount program
with a new discounting program (beginning in 2025). The IRA permits the Secretary of the HHS to implement many of
these provisions through guidance, as opposed to regulation, for the initial years.
Specifically, with respect to price negotiations, Congress authorized Medicare to negotiate lower prices for
certain costly single-source drug and biologic products that do not have competing generics or biosimilars and are
reimbursed under Medicare Part B and Part D. CMS may negotiate prices for ten high-cost drugs paid for by Medicare
Part D starting in 2026, followed by 15 Part D drugs in 2027, 15 Part B or Part D drugs in 2028, and 20 Part B or Part D
drugs in 2029 and beyond. This provision applies to drug products that have been approved for at least 9 years and
biologics that have been licensed for 13 years, but it does not apply to drugs and biologics that have been approved for a
single rare disease or condition. Further, the legislation subjects drug manufacturers to civil monetary penalties and a
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potential excise tax for failing to comply with the legislation by offering a price that is not equal to or less than the
negotiated “maximum fair price” under the law or for taking price increases that exceed inflation. The legislation also
requires manufacturers to pay rebates for drugs in Medicare Part D whose price increases exceed inflation. The new law
also caps Medicare out-of-pocket drug costs at an estimated $4,000 a year in 2024 and, thereafter beginning in 2025, at
$2,000 a year.
On June 6, 2023, Merck & Co. filed a lawsuit against HHS and CMS asserting that, among other things, the
IRA’s Drug Price Negotiation Program for Medicare constitutes an uncompensated taking in violation of the Fifth
Amendment of the Constitution. Subsequently, a number of other parties, including the U.S. Chamber of Commerce,
Bristol Myers Squibb Company, the Pharmaceutical Research and Manufacturers of America, Astellas, Novo Nordisk,
Janssen Pharmaceuticals, Novartis, AstraZeneca and Boehringer Ingelheim, also filed lawsuits in various courts with
similar constitutional claims against HHS and CMS. Litigation involving these and other provisions of the IRA will
continue with unpredictable and uncertain results.
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.
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.
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 in these countries.
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.
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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 Hayden Avenue, Lexington, MA. Other operations, including laboratory space, are located at 64 Sidney Street,
Cambridge, MA. We lease our office and laboratory space, which consist of approximately 26,148 square feet located in
Cambridge, Massachusetts and 93,449 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, 2023, we employed 162 full-time employees in the United States, including 126 in research
and development positions and 36 in general and administrative positions. Approximately 53 of our employees have
either an MD or PhD degree. 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 our employees and directors and selected consultants 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, or the SEC. The information on our website is not part of this Annual Report for
the year ended December 31, 2023.
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 the discussion under the caption “Forward-Looking
Statements” in 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 a history of incurring significant losses and anticipate that we will continue to incur losses for the
foreseeable future and may never achieve or maintain consistent profitability.
We are an early-stage biotechnology company and have not yet generated revenues from the sales of our
product candidates. All of our product candidates are in the early stages of development. 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 a history of incurring significant operating losses. We had net
income of $132.3 million and net losses of $46.4 million for the years ended December 31, 2023 and
December 31, 2022, respectively. As of December 31, 2023, we had an accumulated deficit of $261.2 million.
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We historically have financed our operations primarily through private placements of our redeemable
convertible preferred stock, public offerings and private placements of our common stock, and strategic collaborations,
including our prior collaborations with Sanofi Genzyme Corporation, or Sanofi Genzyme, AbbVie Biotechnology Ltd
and AbbVie Ireland Unlimited Company, and our ongoing collaborations with Neurocrine Biosciences, Inc., or
Neurocrine, and Novartis Pharma AG, or Novartis; our option and license agreement, or the Alexion Agreement, with
Alexion, AstraZeneca Rare Disease, or Alexion; and our option and license agreement, or the 2022 Novartis Option and
License Agreement, with Novartis. We refer to our ongoing collaborations with Neurocrine collectively as the
Neurocrine Collaborations.
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 ever. We expect to continue to incur
significant expenses and increasing operating losses for the foreseeable future. We also anticipate the cost of goods and
services and the levels of compensation paid to employees will increase due to inflationary conditions existing in the
general economy. The net losses we incur may fluctuate significantly from quarter to quarter.
We anticipate that our expenses will increase substantially if, and as, we:
•
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•
•
•
conduct preclinical development activities and initiate investigational new drug, or IND, application-
enabling studies and clinical trials in connection with our anti-tau antibody program and our SOD1 ALS
gene therapy program;
continue investing in our proprietary antibody program, gene therapy and vectorized antibody platforms
and programs, and other research and development initiatives;
increase our investment in and support for TRACERTM (Tropism Redirection of AAV by Cell Type-
Specific Expression of RNA), our proprietary discovery platform to facilitate the selection of adeno-
associated virus, or AAV, capsids and expand our investment to discover TRACER Capsids with broad
tropism in central nervous system, or CNS and other tissues with cell-specific transduction properties for
particular therapeutic applications;
increase our investment in the discovery and development of modalities for receptor-mediated non-viral
delivery of therapeutic payloads to the CNS;
conduct joint research and development under our strategic collaborations for the research, development,
and commercialization of certain of our pipeline programs, including our FXN gene therapy program for
Friedreich’s ataxia, or the FA Program, pursuant to our collaboration and license agreement with
Neurocrine entered into in January 2019, or the 2019 Neurocrine Collaboration Agreement; our
glucocerebrosidase 1, or GBA1, gene therapy program for Parkinson’s disease and other GBA1-mediated
diseases, or the GBA1 Program, pursuant to our collaboration and license agreement with Neurocrine
entered into on January 8, 2023, or the 2023 Neurocrine Collaboration Agreement; and our Huntington’s
disease program, or the Novartis HD Program pursuant to our license and collaboration agreement with
Novartis entered into on December 28, 2023, or the 2023 Novartis Collaboration Agreement;
initiate additional preclinical studies and clinical trials for, and continue research and development of, our
other programs;
continue our process research and development activities, as well as establish our research-grade
manufacturing capabilities;
identify additional diseases for treatment with our AAV gene therapies and develop additional programs or
product candidates;
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•
seek marketing and regulatory approvals for any of our product candidates that successfully complete
clinical development;
• maintain, expand, protect and enforce our intellectual property portfolio;
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identify, acquire or in-license other product candidates and technologies;
expand our operational, financial and management systems and personnel, including personnel to support
our clinical development, manufacturing and commercialization efforts;
continue our clinical trial insurance coverage as we expand our clinical trials and increase our product
liability insurance once we engage in 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. Our expenses will increase if:
• we are required by the U.S. Food and Drug Administration, or the 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;
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there are any delays in the receipt of regulatory clearance to begin our planned 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; contracting with third parties with expertise in current good manufacturing
practices, or cGMPs, to manufacture our product candidates 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. All of our product candidates are in the early stages of development. We do
not anticipate generating revenues from product sales for at least 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’ and
licensors’ success in:
•
completing preclinical and clinical development of our product candidates or product candidates
incorporating our licensed capsids or other technologies and identifying new product candidates;
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seeking and obtaining regulatory and marketing approvals for product candidates for which we or they
complete clinical trials;
launching and commercializing product candidates for which we or they obtain regulatory and marketing
approval by establishing a sales, marketing and distribution infrastructure or, alternatively, collaborating
with a commercialization partner;
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;
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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 or their product candidates, if
and when approved;
obtaining an adequate level of market acceptance of our or their 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, option, 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 over time 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.
We also continue to incur 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.
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Our operations have consumed significant amounts of cash since inception. As of December 31, 2023, our cash,
cash equivalents, and marketable securities were $230.9 million. Based upon our current operating plan, we expect that
our existing cash, cash equivalents, and marketable securities at December 31, 2023, together with the $80.0 million
upfront payment received in January 2024 in connection with the 2023 Novartis Collaboration Agreement, the $20.0
million in proceeds from Novartis’ stock purchase, and the $93.5 million in net proceeds received from our public
offering in January 2024, along with amounts expected to be received as reimbursement for development costs under our
collaboration and license agreements with Neurocrine and Novartis, certain near term milestones, and interest income, to
be sufficient to meet our planned operating expenses and capital expenditure requirements into 2027.
Our future capital requirements will depend on many factors, including:
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the scope, progress, results, and costs of product discovery, preclinical studies and clinical trials for our
product candidates;
the scope, progress, results, costs, prioritization, and number of our research and development programs;
the progress and status of our strategic collaborations and option and license agreements and any similar
arrangement we may enter into in the future, including any research and development costs for which we
are responsible, and our receipt of any future milestone payments and royalties from our collaboration
partners or licensors;
the extent to which we are obligated to reimburse preclinical development and clinical trial costs, or the
achievement of milestones or occurrence of other developments that trigger milestone and royalty
payments, under any collaboration or license agreements to which we might become a party, such as our
license agreement with Touchlight IP Limited, or Touchlight, which we refer to as the Touchlight License
Agreement;
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, acquire or invest in other businesses,
or out-license our product candidates, capsids or other technologies;
the costs of advancing our manufacturing capabilities and 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 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
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sales. In the event we are unable to achieve milestones necessary to demonstrate progress on those programs, a current or
future collaboration partner or licensor 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. Our ability to develop a product candidate for any of our lead
gene therapy or other biological therapy programs may take longer than we anticipate, or may not happen at all, and
could require funding at a level higher than we expect. Our product revenues, if any, and any commercial milestone
payments or royalty payments under our collaboration or option and license 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 option and license arrangements. We do not have any committed external source of funds other than the
amounts we are entitled to receive from our collaboration partners Neurocrine and Novartis for the reimbursement of
certain research and development expenses, the achievement of specified regulatory and commercial milestones, and
royalty payments under the 2019 Neurocrine Collaboration Agreement, the 2023 Neurocrine Collaboration Agreement,
and the 2023 Novartis Collaboration Agreement and the amounts we are entitled to receive from our licensees Alexion
and Novartis for the achievement of specified development, regulatory, and commercialization milestones and royalty
payments under the applicable option and license agreements. 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. The amount of stockholder dilution will be affected by the size of each securities offering and the offering price
for the securities sold. The offering price will likely reflect the prevailing market price for our securities, with dilution
increasing as the prevailing market price for our securities decreases. The terms of these securities may include
liquidation or other preferences that adversely affect our existing stockholders’ rights as holders of our common stock.
For example, we completed a private placement of 2,145,002 shares of our common stock to Novartis and an
underwritten public offering of 7,777,778 shares of our common stock and pre-funded warrants to purchase up to
3,333,333 shares of our common stock in January 2024. 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 option and license 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 option and license
arrangements could therefore cause the market price of common stock to decline.
The early stage of our development efforts may make it difficult for our stockholders to evaluate the success of our
business to date and to assess our future viability.
Our operating history 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 early-phase clinical
trials. Consequently, any predictions about our future success or viability may not be as accurate as they could be if we
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had an operating history that included the late stage of clinical development, completion of clinical development, or
commercialization of one or more product candidates. All of our active product candidates are currently in preclinical
development.
In addition, we may encounter unforeseen expenses, difficulties, complications, delays and other known and
unknown factors such as the regulatory setbacks that previously occurred in prior clinical programs such as those put on
hold by the FDA. These and other events that are part of our operating history may impact our ability to operate our
business and to raise capital. All of our product candidates are in the early stages of development. 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 as we advance our programs
into the clinical stage. Accordingly, our stockholders should not rely upon the results of any quarterly or annual periods
as indications of future operating performance.
Risks Related to the Development and Regulatory Approval of Our Product Candidates
Our AAV gene therapy and other biological therapy product candidates are based on a proprietary technology and, in
several disease areas, unvalidated treatment approaches, 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.
Our future success depends on our successful development of AAV gene therapy and other biological therapy
product candidates, including our anti-tau antibody candidate. Each of the product candidates we are advancing, either
alone or together with our strategic collaborators, is currently 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. Additionally, 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 or outsourcing manufacturing activities to contract
manufacturers.
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 an AAV gene therapy product.
Since that time, it has approved a limited number of gene therapy products. In Europe, a similarly limited number of
AAV gene therapy products have been granted marketing authorization.
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 of gene therapies to date may not be indicative of what the FDA,
EMA, 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.
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Regulatory requirements governing biological and gene 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.
U.S. regulations require each clinical trial site’s institutional review board, or IRB, to review proposed clinical
trials to assess the safety of the trial. If the protocol for such a trial was amended, it would need to be re-reviewed by the
respective institutional IRBs of each institution. 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.
Adverse or unforeseen developments in clinical trials of proprietary antibody and 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 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.
Any inability to receive timely, actionable feedback from regulatory authorities could also delay or otherwise
hinder our development efforts. These and other regulatory delays 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 product candidates.
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.
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, and the risk of failure is high. 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
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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. For example, despite data we believed was promising from the
earlier PD-1101 Phase 1b clinical trial and from the separate PD-1102 Phase 1 clinical trial evaluating the delivery of
VY-AADC (NBIb-1817), we and our strategic collaborator Neurocrine did not receive favorable data, and were
ultimately unable to complete, the RESTORE-1 Phase 2 clinical trial evaluating VY-AADC (NBIb-1817) for the
treatment of Parkinson’s disease. 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. Some of our 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. 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.
We may in the future 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. For
example, we may include clinical trial sites outside the United States for our planned Phase 1 clinical trial to evaluate
VY-TAU01.
Although the FDA may accept data from clinical trials conducted outside the United States, acceptance of these
data is subject to conditions imposed by the FDA. In cases where data from foreign clinical trials are intended to serve as
the sole basis for marketing approval in the United States, the FDA will generally not approve the application on the
basis of foreign data alone unless (i) the data are applicable to the U.S. population and U.S. medical practice; (ii) the
trials were performed by clinical investigators of recognized competence and pursuant to GCP regulations; and (iii) the
data may be considered valid without the need for an on-site inspection by the FDA, or if the FDA considers such
inspection to be necessary, the FDA is able to validate the data through an on-site inspection or other appropriate means.
In addition, even where the foreign trial data are not intended to serve as the sole basis for approval, the FDA
will not accept the data as support for an application for marketing approval unless the trial satisfies certain conditions.
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 are subject to the applicable local laws, FDA acceptance of the data will depend on
its determination that the trials also complied with all applicable U.S. laws and regulations. If the FDA does not accept
the data from any trial we conduct 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. Even if the FDA accepted such data, it could require us to modify our planned clinical trials to receive
clearance to initiate such trials in the United States or to continue such trials once initiated.
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Other risks inherent in conducting international clinical trials or using international trial sites include:
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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.
We are early in our development efforts. All of our active product candidates are currently in preclinical development
or are advancing into the clinic. We may encounter substantial delays or difficulties in commencement, enrollment or
completion of our preclinical studies or clinical trials, or we may fail to demonstrate safety and efficacy to the
satisfaction of applicable regulatory authorities, any of which could prevent us from commercializing our current and
future product candidates on a timely basis, if at all.
We are early in our development efforts, and all of our active product candidates are currently in preclinical
development. 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 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, among other things, our ability to
source animals and other supplies required for the conduct of such testing and studies. If we are unable to obtain such
supplies, 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, capsid discovery, and other studies require certain non-human primates, or NHPs,
that are customarily imported from outside the United States. Our inability to obtain access to a sufficient supply of these
NHPs in a timely manner or at all may impair or delay our ability to complete preclinical studies to support capsid
discovery efforts or IND applications or similar applications in other jurisdictions. We have previously encountered, and
may encounter in the future, delays in obtaining a sufficient supply of such NHPs due to governmental or regulatory
actions that result in importation restrictions in the United States or exportation restrictions in the country of origin. At
times when the NHP supply in the United States has been constrained, we have conducted NHP studies at contract
research facilities outside of the United States. When utilizing such facilities, we are required to observe export control
regulations for the shipment of product candidates and their component materials and import control regulations for the
shipment of samples to us for evaluation and storage. We may be required to incur delays or expenses in order to conduct
our NHP studies in compliance with these regulations, and we may be subject to additional penalties, delays, or expenses
if we fail to achieve compliance.
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. In connection with our VY-HTT01 Program for the
treatment of Huntington’s disease, for example, we were unable to predict what the FDA would require and were unable
to obtain a second pre-IND meeting with the FDA to discuss the product candidate’s regulatory pathway with the FDA.
As a result, in October 2020, the FDA notified us that the IND application for the planned Phase 1 and Phase 2 clinical
trial to evaluate VY-HTT01 had been put on clinical hold.
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In addition, the FDA’s and other regulatory authorities’ policies with respect to clinical trials may change and
additional government regulations may be enacted. For example, in December 2022, with the passage of Food and Drug
Omnibus Reform Act, known was FDORA, Congress required sponsors to develop and submit a diversity action plan for
each Phase 3 clinical trial or any other “pivotal study” of a new drug or biological product. These plans are meant to
encourage the enrollment of more diverse patient populations in late-stage clinical trials of FDA-regulated products.
Specifically, action plans must include the sponsor’s goals for enrollment, the underlying rationale for those goals, and
an explanation of how the sponsor intends to meet them. In addition to these requirements, the legislation directs the
FDA to issue new guidance on diversity action plans. Similarly, the regulatory landscape related to clinical trials in the
European Union, or EU, recently evolved. The EU Clinical Trials Regulation, or CTR, which was adopted in April 2014
and repeals the EU Clinical Trials Directive, became applicable on January 31, 2022. While the Clinical Trials Directive
required a separate clinical trial application, or CTA, to be submitted in each member state, to both the competent
national health authority and an independent ethics committee, the CTR introduces a centralized process and only
requires the submission of a single application to all member states concerned. The CTR allows sponsors to make a
single submission to both the competent authority and an ethics committee in each member state, leading to a single
decision per member state. The assessment procedure of the CTA has been harmonized as well, including a joint
assessment by all member states concerned, and a separate assessment by each member state with respect to specific
requirements related to its own territory, including ethics rules. Each member state’s decision is communicated to the
sponsor via the centralized EU portal. Once the CTA is approved, clinical study development may proceed. If we are
slow or unable to adapt to changes in existing requirements or the adoption of new requirements or policies governing
clinical trials, our development plans may be impacted.
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. 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, for example, 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.
We also have very limited historical experience with clinical trials. 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:
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perceived risks and benefits of proprietary antibody and AAV gene therapy approaches for the treatment of
neurological and other diseases;
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;
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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 requiring lengthy and highly complex surgical protocols, the performance of which may only be
possible at major academic medical centers or specialized surgical centers;
• willingness of patients to participate in a placebo-controlled trial;
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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
complete a clinical trial in any foreign country is subject to numerous risks unique to conducting business in foreign
countries, including:
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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:
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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;
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as a result of a serious adverse event, or SAE, or after an inspection of our clinical trial operations or trial
sites or the decision by us or our collaborators, 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;
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 SAEs associated with the product candidate that are viewed to outweigh its potential
benefits;
occurrence of SAEs 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. For example, our decision to
refocus our Huntington’s disease program means we must conduct new preclinical studies, prepare a new IND, submit it
to the FDA, and resolve any potential FDA objections before enrolling our first patient in a new clinical trial. In addition,
if we make manufacturing or formulation changes to our product candidates, such as our previous transition to an HEK
293-based production system from 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.
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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:
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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.
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.
Our proprietary antibodies and gene therapy product candidates may cause an immunologic reaction, or an
immune response against the relevant product candidate. Other potential side effects associated with our gene therapy
product candidates could include 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. In past clinical trials that were conducted by others using non-AAV gene
therapy vectors, several significant side effects were caused by gene therapy treatments, including reported cases of
leukemia and death. 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 also could cause side
effects. 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 example, product candidates designed to
“knock down” or reduce the expression of a gene or the production of its encoded protein, could have effects on other
parts of the body, or “off target” effects, that 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.
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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. We believe that the likelihood of the FDA requiring a REMS may
be higher for treatments with more invasive routes of administration such as direct delivery through brain surgery. 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 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:
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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 regulatory 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 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. 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.
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 new drug application or 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 nine years if a
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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 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 certain of our current programs may qualify for orphan drug designation. 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 other drug or biological product is not the “same drug” or biological
product or even if it is, the FDA determines that it is clinically superior in that it is shown to be safer or more effective or
makes a major contribution to patient care. In September 2021, the FDA issued final guidance describing its current
thinking on when a gene therapy product is the “same” as another product for purposes of orphan exclusivity. Under the
guidance, if either the transgene or vector differs between two gene therapy products in a manner that does not reflect
“minor” differences, the two products would be considered different drugs for orphan drug exclusivity purposes. The
FDA will determine whether two vectors from the same viral class are the same on a case-by-case basis and may
consider additional key features in assessing the sameness.
In the European Union, marketing authorization may be granted to a similar medicinal product for the same
orphan indication if:
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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.
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 and Congress may further reevaluate the Orphan Drug Act and its regulations and policies,
particularly in light of a decision from the U.S. Court of Appeals for the Eleventh Circuit in September 2021 finding that,
for the purpose of determining the scope of exclusivity, the term “same disease or condition” means the designated “rare
disease or condition” and could not be interpreted by the FDA to mean the “indication or use.” Thus, the Court of
Appeals concluded, orphan drug exclusivity applies to the entire designated disease or condition rather than the
“indication or use.” On January 23, 2023, the FDA announced that, in matters beyond the scope of that Court’s order, the
FDA will continue to apply its existing regulations tying orphan-drug exclusivity to the uses or indications for which the
orphan drug was approved. 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.
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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 previously 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 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 (a) considered a “regenerative medicine therapy” as defined in
the Cures Act; (b) intended to treat, modify, reverse, or cure one or more serious or life-threatening diseases or
conditions; and (c) 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.
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.
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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.
We have sought and may in the future seek such a designation for our 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 FDA may also require that NDA submissions for our product candidates include pediatric data. Under the
PREA, an NDA, BLA or supplement to an NDA or BLA for certain drugs and biological products must contain data to
assess the safety and effectiveness of the drug or biological product in all relevant pediatric subpopulations and to
support dosing and administration for each pediatric subpopulation for which the product is safe and effective, unless the
sponsor receives a deferral or waiver from the FDA. Applicable legislation in the EU also requires sponsors to either
conduct clinical trials in a pediatric population in accordance with a Pediatric Investigation Plan approved by the
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Pediatric Committee of the European Medicines Agency, or EMA, or to obtain a waiver or deferral from the conduct of
these studies by this Committee. For any of our product candidates for which we are seeking regulatory approval in the
United States or the EU, we cannot guarantee that we will be able to obtain a waiver or alternatively complete any
required studies and other requirements in a timely manner, or at all, which could result in associated reputational harm
and subject us to enforcement action.
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 application user fee to obtain FDA review of a marketing application is more than $4.0 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 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.
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
post-marketing studies or 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 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.
If we fail to comply with applicable regulatory requirements following approval of any of our product
candidates, a regulatory authority may:
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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;
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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.
Further, our ability to develop and market new drug products may be impacted by ongoing litigation
challenging the FDA’s approval of mifepristone. Specifically, on April 7, 2023, the U.S. District Court for the Northern
District of Texas stayed the approval by the FDA of mifepristone, a drug product which was originally approved in 2000
and whose distribution is governed by various conditions adopted under a REMS. In reaching that decision, the District
Court made a number of findings that may negatively impact the development, approval and distribution of drug
products in the United States. Among other determinations, the District Court held that plaintiffs were likely to prevail in
their claim that FDA had acted arbitrarily and capriciously in approving mifepristone without sufficiently considering
evidence bearing on whether the drug was safe to use under the conditions identified in its labeling. Further, the District
Court read the standing requirements governing litigation in federal court as permitting a plaintiff to bring a lawsuit
against the FDA in connection with its decision to approve an NDA or establish requirements under a REMS based on a
showing that the plaintiff or its members would be harmed to the extent that FDA’s drug approval decision effectively
compelled the plaintiffs to provide care for patients suffering adverse events caused by a given drug.
On April 12, 2023, the District Court decision was stayed, in part, by the U.S. Court of Appeals for the Fifth
Circuit. Thereafter, on April 21, 2023, the U.S. Supreme Court entered a stay of the District Court’s decision, in its
entirety, pending disposition of the appeal of the District Court decision in the Court of Appeals for the Fifth Circuit and
the disposition of any petition for a writ of certiorari to or the U.S. Supreme Court. The Court of Appeals for the Fifth
Circuit held oral argument in the case on May 17, 2023 and, on August 16, 2023, issued its decision. The Court of
Appeals declined to order the removal of mifepristone from the market, finding that a challenge to the FDA’s initial
approval in 2000 is barred by the statute of limitations. But the Court of Appeals did hold that plaintiffs were likely to
prevail in their claim that changes allowing for expanded access of mifepristone that FDA authorized in 2016 and 2021
were arbitrary and capricious. On September 8, 2023, the Justice Department and a manufacturer of mifepristone filed
petitions for a writ of certiorari, requesting that asked the United States Supreme Court to review the Court of Appeals
decision. On December 13, 2023, the U.S. Supreme Court granted these petitions for writ of certiorari for the appeals
court decision.
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.
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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, vectorized antibody platform, product programs, product candidates and
scientific expertise in the fields of proprietary antibodies, 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 their proprietary antibodies or AAV gene therapies
in various indications, as well as several companies addressing other methods for modifying genes and regulating gene
expression. Any advances in antibody or 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 our TRACER discovery platform and preclinical programs will compete with a variety of
therapies in development, including:
• Our anti-tau antibody and tau silencing gene therapy programs for AD will potentially compete with tau
antibodies being developed by Lundbeck Inc., Merck & Co. Inc. in collaboration with Teijin Limited,
Roche Genentech Inc. in collaboration with AC Immune SA, Eisai Co., Ltd., Janssen Pharmaceuticals, Inc.,
UCB S.A., Bristol Myers Squibb Company in collaboration with Prothera Inc., along with several other
companies, as well as an antisense oligonucleotide program being developed by Ionis in collaboration with
Biogen;
• Our program for a monogenic form of ALS will potentially compete with Tofersen being developed by
Biogen, in collaboration with Ionis, and gene therapies being developed by Novartis Gene Therapies, Inc.
and uniQure, Inc.; and
• Our TRACER discovery platform will potentially compete with a variety of companies developing AAV
capsids, including: 4D Molecular Therapeutics, Inc., Affinia Therapeutics Inc., Apertura Gene Therapy,
LLC, Capsida Biotherapeutics, Inc., Capsigen, Inc., Dyno Therapeutics, Inc., Kate Therapeutics, Inc., and
Shape Therapeutics Inc.
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
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.
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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.
Further, we could face heightened risks with respect to obtaining marketing authorization in the UK as a result
of the withdrawal of the UK from the EU, commonly referred to as Brexit. The UK is no longer part of the European
Single Market and EU Customs Union. As of January 1, 2021, the Medicines and Healthcare products Regulatory
Agency, or the MHRA, became responsible for supervising medicines and medical devices in Great Britain, comprised
of England, Scotland and Wales under domestic law, whereas under the terms of the Northern Ireland Protocol, Northern
Ireland is currently subject to EU rules. The UK and EU have however agreed to the Windsor Framework which
fundamentally changes the existing system under the Northern Ireland Protocol, including with respect to the regulation
of medicinal products in the UK Once implemented, the changes introduced by the Windsor Framework will see the
MHRA be responsible for approving all medicinal products destined for the entire UK market (i.e., both Great Britain
and Northern Ireland), and the EMA will no longer have any role in approving medicinal products destined for Northern
Ireland.
In addition, foreign regulatory authorities may change their approval policies and new regulations may be
enacted. For instance, the EU pharmaceutical legislation is currently undergoing a complete review process, in the
context of the Pharmaceutical Strategy for Europe initiative, launched by the European Commission in November 2020.
The European Commission’s proposal for revision of several legislative instruments related to medicinal products
(potentially reducing the duration of regulatory data protection, revising the eligibility for expedited pathways, etc.) was
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published on April 26, 2023. The proposed revisions remain to be agreed and adopted by the European Parliament and
European Council and the proposals may therefore be substantially revised before adoption, which is not anticipated
before early 2026. The revisions may however have a significant impact on the pharmaceutical industry and our business
in the long term.
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, increasing interest rates, 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.
If approved, our product candidates that are licensed and regulated as biologics may face competition from
biosimilars approved through an abbreviated regulatory pathway.
The Biologics Price Competition and Innovation Act of 2009, or BPCIA, was enacted as part of the Patient
Protection and Affordable Care Act, as amended by the Health Care and Education Affordability Reconciliation Act, or
collectively, the ACA, to establish an abbreviated pathway for the approval of biosimilar and interchangeable biological
products. The regulatory pathway establishes legal authority for the FDA to review and approve biosimilar biologics,
including the possible designation of a biosimilar as “interchangeable” based on its similarity to an approved biologic.
Under the BPCIA, a reference biological product is granted 12 years of data exclusivity from the time of first licensure
of the product, and the FDA will not accept an application for a biosimilar or interchangeable product based on the
reference biological product until four years after the date of first licensure of the reference product In addition, the
licensure of a biosimilar product may not be made effective by the FDA until 12 years from the date on which the
reference product was first licensed. During this 12-year period of exclusivity, another company may still develop and
receive approval of a competing biologic, so long as its BLA does not rely on the reference product or sponsor’s data, or
the company does not submit the application as a biosimilar application.
We believe that any of the product candidates we develop as a biological product under a BLA should qualify
for the 12-year period of exclusivity. However, there is a risk that this exclusivity could be shortened due to
congressional action or otherwise, or that the FDA will not consider the subject product candidates to be reference
products for competing products, potentially creating the opportunity for biosimilar competition sooner than anticipated.
Moreover, the extent to which a biosimilar, once approved, will be substituted for any one of the reference products in a
way that is similar to traditional generic substitution for non-biological products will depend on a number of marketplace
and regulatory factors that are still developing. Nonetheless, the approval of a biosimilar to our product candidates would
have a material adverse impact on our business due to increased competition and pricing pressure.
Risks Related to Third Parties
To date, all of our revenue has been derived from our ongoing collaborations and licensing agreements with
Neurocrine, Novartis, Alexion, and Sangamo Therapeutics, Inc., or Sangamo, and from our prior collaborations with
Sanofi Genzyme, AbbVie Biotechnology Ltd and AbbVie Ireland Unlimited Company, or AbbVie. If any ongoing or
future collaboration, option and license, or license agreements were to be terminated, our business financial
condition, results of operations and prospects could be harmed.
To date, all of our revenue has been derived from our ongoing collaborations and licensing agreements with
Neurocrine, Novartis, Alexion and Sangamo and from our prior collaborations with Sanofi Genzyme Corporation,
AbbVie Biotechnology Ltd and AbbVie Ireland Unlimited Company. If any ongoing or future collaboration, option and
license, or license agreements were to be terminated, our business financial condition, results of operations and prospects
could be harmed. For example, certain of our prior collaborations were terminated. As a result of the terminations of our
collaborations with Sanofi Genzyme and AbbVie, we ceased to be eligible to receive option and milestone payments
pursuant to the collaborations or to receive royalties in connection with any potential products developed under the
collaborations.
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On February 2, 2021, Neurocrine notified us that it had elected to terminate the 2019 Neurocrine Collaboration
Agreement solely with regards to the VY-AADC Program. This termination became effective August 2, 2021, which we
refer to as the Neurocrine VY-AADC Program Termination Effective Date. The 2019 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 regarding the VY-AADC Program expired, and we regained worldwide
intellectual property rights to the VY-AADC Program in accordance with the collaboration agreement, and the
restrictions on us to develop, manufacture or commercialize a gene therapy product directed to the targets specified in
the VY-AADC Program terminated. If Neurocrine were to terminate the remainder of the 2019 Neurocrine Collaboration
Agreement, we would become responsible for all research and development expenses relating to the remaining
Neurocrine Programs and would not receive any future milestone payments or royalty payments under the 2019
Neurocrine Collaboration Agreement with respect to such programs.
In October 2021, we entered into an option and license agreement with Pfizer, or the Pfizer Agreement,
pursuant to which we granted Pfizer options to receive an exclusive license, or the Pfizer License Options, to certain
novel capsids we have generated using our TRACER Capsid discovery platform, or TRACER Capsids, to develop and
commercialize certain AAV gene therapy candidates comprised of a capsid and specified Pfizer transgenes, or Pfizer
Transgenes. Effective as of September 30, 2022, Pfizer exercised a Pfizer License Option with respect to a capsid for the
specified Pfizer Transgene for potential treatment of a rare neurological disease. In connection with the exercise of the
Pfizer License Option for a rare neurological disease, we granted Pfizer an exclusive, worldwide license, with the right to
sublicense, under certain of our intellectual property, the rights to develop and commercialize rare neurological disease
products utilizing the capsid candidate and incorporating the corresponding Pfizer Transgene, or the Pfizer Licensed
CNS Products. Pfizer did not exercise its option to license a capsid for the potential treatment of a cardiovascular
disease. As result, Pfizer’s right to exercise a Pfizer License Option for a cardiovascular disease has terminated in
accordance with the terms of the Pfizer Agreement and all rights to capsids for that cardiovascular disease have reverted
to us. On July 28, 2023, Alexion, AstraZeneca Rare Disease, or Alexion, entered into a definitive purchase and license
agreement for preclinical gene therapy assets and enabling technologies from Pfizer. Effective upon the closing of the
transaction on September 20, 2023, Alexion acquired all of Pfizer’s rights under the Pfizer Agreement and became the
successor-in-interest to Pfizer thereunder. We refer to the Pfizer Agreement following the acquisition, as the Alexion
Agreement. The acquisition does not impact the material terms of the option and license agreement.
In March 2022, we entered into an option and license agreement with Novartis, or the 2022 Novartis Option and
License Agreement, pursuant to which we granted Novartis options to receive an exclusive license to TRACER Capsids
to develop and commercialize certain AAV gene therapy candidates comprised of a TRACER Capsid and specified
genetic payloads for specific genetic targets. Under the terms of the 2022 Novartis Option and License Agreement, we
received an upfront payment of $54.0 million. Effective as of March 1, 2023, Novartis exercised its options to license
TRACER Capsids for use in gene therapy programs against two undisclosed neurologic disease targets. With Novartis’
option exercise on two targets, we received a $25.0 million option exercise payment in April of 2023, and we are eligible
to receive associated potential development, regulatory, and commercial milestone payments, as well as mid- to high-
single-digit tiered royalties based on net sales of Novartis products incorporating the licensed capsids. In addition, during
the research term, Novartis retains the right to expand the agreement to include options to license capsids for up to two
additional rare CNS targets, subject to their availability, for a fee of $18.0 million per target. Under such an expansion,
we would be eligible to receive a $12.5 million license option exercise fee for each target exercised, as well as future
potential milestone payments per target and mid- to high-single-digit tiered royalties on products incorporating the
licensed capsids. Novartis elected not to license a capsid for one CNS target under the 2022 Novartis Option and License
Agreement prior to the expiration of the applicable option period. As a result we are no longer eligible to receive
development, regulatory, and commercial milestone payments or royalties in connection with this target, and all capsid
rights with respect to that target have returned to us.
Our current collaborators or any future collaborator might not be successful in obtaining approvals for the
product candidates arising from our collaboration or commercializing or manufacturing the resulting products. Further,
such collaborator’s objectives in connection with the collaboration may not be consistent with our best interests. With
respect to the rights granted to a collaborator by us, the collaborator 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.
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We may seek to enter into collaborations, and out-licensing transactions in the future with other third parties. If we
are unable to enter into such collaborations or out-licensing transactions, or if these collaborations or out-licensing
transactions 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, option, licensing, and/or broader collaboration agreements. For example, on January 8, 2023, we entered
into a second collaboration agreement, or the 2023 Neurocrine Collaboration Agreement, with Neurocrine for the
research, development, manufacture and commercialization of gene therapy products directed to the gene that encodes
GBA1, for the treatment of Parkinson’s disease and other diseases associated with GBA1, or the GBA1 Program, and
three new programs focused on the research, development, manufacture and commercialization of gene therapies
designed to address central nervous system diseases or conditions associated with rare genetic targets, or the 2023
Discovery Programs, and, collectively with the GBA1 Program, the 2023 Neurocrine Programs. On December 28, 2023,
we entered into the 2023 Novartis Collaboration Agreement to (a) provide rights to Novartis with respect to certain of
our TRACER Capsids for use in the research, development, and commercialization by Novartis of AAV gene therapy
products and product candidates, comprising such TRACER Capsids and payloads intended for the treatment of spinal
muscular atrophy, or the Novartis SMA Program, and (b) collaborate to develop AAV gene therapy products and product
candidates intended for the treatment of Huntington’s disease under the Novartis HD Program, in each case, leveraging
our TRACER Capsids and other intellectual property controlled by us.
Our likely collaborators, optionees, and licensees 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 or option and license transactions on favorable terms
or at all. Our ability to generate revenues from our collaborations and option and license transactions will depend on our
and our collaborators’, optionees’, and licensees’ abilities to successfully perform the functions assigned to each of us in
these arrangements. In addition, our collaborators, optionees, and licensees 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, optionee, or licensee is responsible could be harmful to the public perception and prospects of
our proprietary antibody program and gene therapy and vectorized antibody platforms.
Our relationship with any current or future collaborators, optionees, or licensees may pose several risks,
including the following:
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•
collaborators, optionees, and licensees have significant discretion in determining the amount and timing of
the efforts and resources that they will apply to these collaborations and option and license transactions;
collaborators, optionees, or licensees may not perform their obligations as expected or desired;
the preclinical studies and clinical trials conducted as part of these collaborations or by our licensees may
not be successful;
collaborators, optionees, or licensees 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’, optionees’, or licensees’ strategic focus or available funding or external factors, such as an
acquisition, which divert resources or create competing priorities;
collaborators, optionees, or licensees 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;
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• we may not have access to, or may be restricted from disclosing, certain information regarding product
candidates being developed or commercialized under a collaboration or by a licensee and, consequently,
may have limited ability to inform our stockholders about the status of such product candidates;
•
•
•
•
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•
•
•
collaborators, optionees, or licensees could independently develop, or develop with third parties, products
that compete directly or indirectly with our product candidates if the collaborators, optionees, or licensees
believe that competitive products are more likely to be successfully developed or can be commercialized
under terms that are more economically attractive than ours;
product candidates developed in collaboration with us or by a licensee may be viewed by our collaborators
or licensees as competitive with their own product candidates or products, which may cause collaborators
or licensees to cease to devote resources to the commercialization of our product candidates;
a collaborator or licensee 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, optionees, or licensees, 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 (in the case of
collaborations) or may result in litigation or arbitration, any of which would be time-consuming and
expensive;
in collaboration, licensing, and option arrangements where we have licensed intellectual property rights to
collaborators, licensees, and optionees who have the right to control prosecution of the licensed intellectual
property rights, disputes may arise with respect to the prosecution strategy for the relevant intellectual
property rights, which may impair our ability to pursue our preferred prosecution strategy or achieve the
desired protection from any relevant patents;
collaborators, optionees, or licensees 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 or option and license transactions;
collaborators, optionees, or licensees may infringe the intellectual property rights of third parties, which
may expose us to litigation and potential liability;
the terms of our collaboration or license 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 and license agreements may not lead to the development or commercialization of product
candidates in the most efficient manner, or at all. If our collaborations or option and license transactions do not result in
the successful development and commercialization of products, or if one of our collaborators, optionees, or licensees
terminates its agreement with us, we may not receive any future research funding or milestone or royalty payments under
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the collaboration or option and license transactions. 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. In the event we are unable to achieve milestones necessary to demonstrate progress on our programs
relevant to our ongoing collaborations with Neurocrine or Novartis, Neurocrine or Novartis 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, optionee, or licensee of ours were to be
involved in a business combination, it might deemphasize or terminate the development or commercialization of any
product candidate optioned or licensed to it by us. If one of our collaborators, optionees, or licensees terminates its
agreement with us, we may find it more difficult to attract new collaborators, optionees, or licensees, 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, optionees, and licensees.
We will face significant competition in seeking appropriate collaborators, optionees, and licensees, and the
negotiation process is time-consuming and complex. Our ability to reach a definitive collaboration or license agreement
with any future collaborators, optionees, and licensees will depend, among other things, upon our assessment of the
collaborator’s, optionee’s, or licensee’s resources and expertise, the terms and conditions of the proposed collaboration
or option and license transactions and the proposed collaborator’s, optionee’s, or licensee’s evaluation of several factors.
Those factors may include 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,
optionee, or licensee may also consider alternative product candidates or technologies for similar indications that may be
available to collaborate on and whether such a collaboration or option and license transaction 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, optionees, or licensees. 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, optionees, and licensees.
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 or option and license transactions 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 proprietary antibody program or gene therapy and vectorized
antibody platforms and programs. 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 and our collaborators have relied, and we and our collaborators 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 and our collaborators 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 and our collaborators 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 and our collaborators will have
agreements governing their activities, we and our collaborators will have limited influence over their actual performance.
We and our collaborators will control only certain aspects of our third-party service providers’ activities. Nevertheless,
we and our collaborators will be responsible for ensuring that each of our preclinical studies and clinical trials is
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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. Additionally, we had expected to initiate the
planned VYTAL Phase 1 and 2 clinical trial for VY-HTT01 at multiple sites in the United States before our decision to
refocus the Huntington’s disease program. 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 and our collaborators 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 or our collaborators 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 or our collaborators are required to do so due to a service provider’s termination of our relationship, then we or
our collaborators may be required to source additional technology and personnel in order to perform the relevant
activities. We and our collaborators may be unsuccessful in our efforts to internalize some or all relevant activities, either
on the desired timeline or at all.
We, our collaborators, 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 and our collaborators 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 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 and our collaborators 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
Our gene therapies 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 flexible
manufacturing platform that is based on proprietary technology and provides a scalable process for preclinical and
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clinical AAV production. We are using a HEK 293 based transient transfection manufacturing process to support our
preclinical research activities. We also have expertise with the baculovirus/Sf9 AAV production system, a technology for
producing AAV gene therapy vectors at scale in insect-derived cells, which we have used for our clinical development
activities in the past and may use in the future for clinical development activities. As the field advances, we will continue
to evaluate additional novel manufacturing technologies that may be suitable for future clinical and commercial
manufacturing.
We presently contract with third parties for the manufacturing of our program materials for our proprietary
antibody and gene therapy product candidates. We have also built an onsite, state-of-the-art process research and
development facility to enable the manufacturing of preclinical AAV gene therapy vectors for large animal studies
including IND enabling GLP toxicology materials. We are currently assessing our manufacturing capabilities, and we do
not currently have our own clinical or commercial scale manufacturing. The use of contract manufacturing and reliance
on collaboration partners is relatively cost-efficient and eliminates 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 clinical and commercial manufacturing, third
parties with whom we currently work might need to increase their scale of production or we may need to secure
additional suppliers as part of our external manufacturing network. 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 and technology transfers with such sources, if necessary, would not result in
significant delay or material additional costs. However, if a third-party manufacturer decided to not enter into a new
contract with us for program materials or if they did not have the capacity to meet our needs for program materials, we
may be required to contract with additional suppliers on terms which may be less favorable to us or would result in
additional material 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
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.
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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
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 proprietary antibody and 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.
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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.
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 AAV product candidates using a mammalian cell system. We are aware of third
parties which also use this system 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 proprietary antibody program and our gene therapy and vectorized antibody platforms and
programs. Research programs to identify new product candidates require substantial technical, financial and human
resources. Our product candidates are in preclinical development. Our current portfolio of product candidates is subject
to change as we continue to conduct preclinical testing and to develop product candidates and prioritize or abandon
product candidates based on such results and other factors. For example, in August 2022, we announced a re-
prioritization of our portfolio based on a review evaluating our programs based on, among other things, our assessment
of their potential for competitive differentiation, the efficiency of such product candidate’s path to human proof of
biology or proof of mechanism (reflecting the availability of validated biomarkers), unmet medical need, commercial
opportunity, and alignment with our overall strategy, as well as supportive preclinical data. We may also fail to identify
other 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. Similar to our
prior investments with regard to our VY-AADC (NBIb-1817) and VY-HTT01 programs, our spending on current and
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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, option and license, 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 and research and development
teams, 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. 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 qualified employees, consultants and advisors for our business, including scientific and
technical personnel, is 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, the termination of relationships with collaborators, and the reduction of our workforce in
connection with the development of a new portfolio and platform strategy 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.
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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.
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 the ACA into law. 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
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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 June 17, 2021, the U.S. Supreme Court dismissed this case
after finding that plaintiffs do not have standing to challenge the constitutionality of the ACA. 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.
The prices 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 pharmaceutical
pricing, review the relationship between pricing and manufacturer patient programs, reduce the costs of pharmaceuticals
under Medicare and Medicaid, and reform government program reimbursement methodologies for products. In 2020,
former President Trump issued several executive orders intended to lower the costs of prescription products and certain
provisions in these orders have been incorporated into regulations. These regulations include an interim final rule
implementing a most favored nation model for prices that would tie Medicare Part B payments for certain physician-
administered pharmaceuticals to the lowest price paid in other economically advanced countries, effective January 1,
2021. That rule, however, has been subject to a nationwide preliminary injunction and, on December 29, 2021, the
Centers for Medicare & Medicaid Services, or CMS, issued a final rule to rescind it. With issuance of this rule, CMS
stated that it will explore all options to incorporate value into payments for Medicare Part B pharmaceuticals and
improve beneficiaries’ access to evidence-based care.
In addition, in October 2020, the Department of Health and Human Services, or the HHS and the FDA
published a final rule allowing states and other entities to develop a Section 804 Importation Program, or SIP, to import
certain prescription drugs from Canada into the United States. That regulation was challenged in a lawsuit by the
Pharmaceutical Research and Manufacturers of America, or PhRMA, but the case was dismissed by a federal district
court in February 2023 after the court found that PhRMA did not have standing to sue HHS. Nine states (Vermont,
Colorado, Florida, Maine, New Mexico, New Hampshire, North Dakota, Texas, and Wisconsin) have passed laws
allowing for the importation of drugs from Canada. Certain of these states have submitted Section 804 Importation
Program proposals and are awaiting FDA approval. On January 5, 2023, the FDA approved Florida’s plan for Canadian
drug importation.
Further, in November 2020, the HHS finalized a regulation removing safe harbor protection for price reductions
from pharmaceutical manufacturers to plan sponsors under Part D, either directly or through pharmacy benefit managers,
unless the price reduction is required by law. The rule also creates a new safe harbor for price reductions reflected at the
point-of-sale, as well as a safe harbor for certain fixed fee arrangements between pharmacy benefit managers and
manufacturers. Pursuant to court order, the removal and addition of the aforementioned safe harbors were delayed and
recent legislation imposed a moratorium on implementation of the rule until January 1, 2026. The Inflation Reduction
Act of 2022, or IRA, further delayed implementation of this rule to January 1, 2032.
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In July 2021, President Biden signed Executive Order 14063, which focuses on, among other things, the price
of pharmaceuticals. The order directed the HHS to create a plan within 45 days to combat “excessive pricing of
prescription pharmaceuticals and enhance domestic pharmaceutical supply chains, to reduce the prices paid by the
federal government for such pharmaceuticals, and to address the recurrent problem of price gouging.” In September
2021, the HHS released its plan to reduce pharmaceutical prices. The key features of that plan are to: (a) make
pharmaceutical prices more affordable and equitable for all consumers and throughout the health care system by
supporting pharmaceutical price negotiations with manufacturers; (b) improve and promote competition throughout the
prescription pharmaceutical industry by supporting market changes that strengthen supply chains, promote biosimilars
and generic drugs, and increase transparency; and (c) foster scientific innovation to promote better healthcare and
improve health by supporting public and private research and making sure that market incentives promote discovery of
valuable and accessible new treatments.
More recently, on August 16, 2022, the IRA was signed into law by President Biden. The new legislation has
implications for Medicare Part D, which is a program available to individuals who are entitled to Medicare Part A or
enrolled in Medicare Part B to give them the option of paying a monthly premium for outpatient prescription drug
coverage. Among other things, the IRA requires manufacturers of certain drugs to engage in price negotiations with
Medicare (beginning in 2026), with prices that can be negotiated subject to a cap; imposes rebates under Medicare Part B
and Medicare Part D to penalize price increases that outpace inflation (first due in 2023); and replaces the Part D
coverage gap discount program with a new discounting program (beginning in 2025). The IRA permits the Secretary of
the HHS to implement many of these provisions through guidance, as opposed to regulation, for the initial years.
Specifically, with respect to price negotiations, Congress authorized Medicare to negotiate lower prices for
certain costly single-source drug and biologic products that do not have competing generics or biosimilars and are
reimbursed under Medicare Part B and Part D. CMS may negotiate prices for ten high-cost drugs paid for by Medicare
Part D starting in 2026, followed by 15 Part D drugs in 2027, 15 Part B or Part D drugs in 2028, and 20 Part B or Part D
drugs in 2029 and beyond. This provision applies to drug products that have been approved for at least 9 years and
biologics that have been licensed for 13 years, but it does not apply to drugs and biologics that have been approved for a
single rare disease or condition. Nonetheless, since CMS may establish a maximum price for these products in price
negotiations, we would be fully at risk of government action if our products became the subject of Medicare price
negotiations. Moreover, given the risk that could be the case, these provisions of the IRA may also further heighten the
risk that we would not be able to achieve the expected return on any drug products or full value of our patents protecting
our products if prices are set after such products have been on the market for nine years.
Further, the legislation subjects drug manufacturers to civil monetary penalties and a potential excise tax for
failing to comply with the legislation by offering a price that is not equal to or less than the negotiated “maximum fair
price” under the law or for taking price increases that exceed inflation. The legislation also requires manufacturers to pay
rebates for drugs in Medicare Part D whose price increases exceed inflation. The new law also caps Medicare out-of-
pocket drug costs at an estimated $4,000 a year in 2024 and, thereafter beginning in 2025, at $2,000 a year. In addition,
the IRA potentially raises legal risks with respect to individuals participating in a Medicare Part D prescription drug plan
who may experience a gap in coverage if they required coverage above their initial annual coverage limit before they
reached the higher threshold, or “catastrophic period” of the plan. Individuals requiring services exceeding the initial
annual coverage limit and below the catastrophic period must pay 100% of the cost of their prescriptions until they reach
the catastrophic period. Among other things, the IRA contains many provisions aimed at reducing this financial burden
on individuals by reducing the co-insurance and co-payment costs, expanding eligibility for lower income subsidy plans,
and price caps on annual out-of-pocket expenses, each of which could have potential pricing and reporting implications.
On June 6, 2023, Merck & Co. filed a lawsuit against the HHS and CMS asserting that, among other things, the
IRA’s Drug Price Negotiation Program for Medicare constitutes an uncompensated taking in violation of the Fifth
Amendment of the Constitution. Subsequently, a number of other parties, including the U.S. Chamber of Commerce,
Bristol Myers Squibb Company, the PhRMA, Astellas, Novo Nordisk, Janssen Pharmaceuticals, Novartis, AstraZeneca
and Boehringer Ingelheim, also filed lawsuits in various courts with similar constitutional claims against the HHS and
CMS. We expect that litigation involving these and other provisions of the IRA will continue, with unpredictable and
uncertain results.
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Accordingly, while it is currently unclear how the IRA will be effectuated, we cannot predict with certainty
what impact any federal or state health reforms will have on us, but such changes could impose new or more stringent
regulatory requirements on our activities or result in reduced reimbursement for our products, any of which could
adversely affect our business, results of operations and financial condition.
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 downward 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 and access. In these countries, pricing negotiations with governmental authorities can
take considerable time after the receipt of marketing approval for a product. 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.
These measures, as well as others adopted in the future, may result in additional downward pressure on the price
that we receive for any approved product we or our collaborators might bring to market. Accordingly, such reforms, if
enacted, could have an adverse effect on anticipated revenue from that we, or our collaborators, may successfully
develop and for which we, or they, may obtain marketing approval and may affect our overall financial condition and
ability to develop or commercialize product candidates.
Our relationships with healthcare providers, physicians and third-party payors will be subject, directly or indirectly, to
applicable anti-kickback, fraud and abuse and other healthcare laws and regulations, which, in the event of a
violation, could expose us to criminal sanctions, civil penalties, contractual damages, reputational harm and
diminished profits and future earnings.
Healthcare providers, physicians and third-party payors will play a primary role in the recommendation and prescription
and use of our products and any product candidates for which we obtain marketing approval. Our future arrangements
with healthcare providers, physicians and third-party payors may expose us to broadly applicable fraud and abuse and
other healthcare laws and regulations that may constrain the business or financial arrangements and relationships through
which we market, sell and distribute any products for which we obtain marketing approval. Restrictions under applicable
federal and state healthcare laws and regulations include the following:
•
•
the federal Anti-Kickback Statute prohibits, among other things, persons from knowingly and willfully
soliciting, offering, receiving or providing remuneration, directly or indirectly, in cash or in kind, to induce
or reward, or in return for, either the referral of an individual for, or the purchase, order or recommendation
or arranging of, any good or service, for which payment may be made under a federal healthcare program
such as Medicare and Medicaid;
the federal False Claims Act imposes criminal and civil penalties, including through civil whistleblower or
qui tam actions, against individuals or entities for, among other things, knowingly presenting, or causing to
be presented, false or fraudulent claims for payment by a federal healthcare program or making a false
statement or record material to payment of a false claim or avoiding, decreasing or concealing an obligation
to pay money to the federal government, with potential liability including mandatory treble damages and
significant per-claim penalties;
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•
the federal Health Insurance Portability and Accountability Act of 1996, or HIPAA, imposes criminal and
civil liability for executing a scheme to defraud any healthcare benefit program or making false statements
relating to healthcare matters;
• HIPAA, as amended by the Health Information Technology for Economic and Clinical Health Act, and its
implementing regulations, also imposes obligations, including mandatory contractual terms, with respect to
safeguarding the privacy, security and transmission of individually identifiable health information;
•
•
the federal Physician Payments Sunshine Act requires applicable manufacturers of covered products to
report payments and other transfers of value to physicians, other healthcare providers, and teaching
hospitals; and
analogous state and foreign laws and regulations, such as state anti-kickback, false claims, and transparency
laws, may apply to sales or marketing arrangements and claims involving healthcare items or services
reimbursed by non-governmental third-party payors, including private insurers. Some state laws require
pharmaceutical companies to comply with the pharmaceutical industry’s voluntary compliance guidelines
and the relevant compliance guidance promulgated by the federal government and may require product
manufacturers to report information related to payments and other transfers of value to physicians and other
healthcare providers or marketing expenditures. State and foreign laws also govern the privacy and security
of health information in some circumstances, many of which differ from each other in significant ways and
often are not preempted by HIPAA, thus complicating compliance efforts.
If our operations or the operations of our present and future collaborators are found to be in violation of any of
the laws described above or any government regulations that apply to us or them, we or they may be subject to penalties,
including civil and criminal penalties, damages, fines, and the curtailment or restructuring of our operations. Any
penalties, damages, fines, curtailment or restructuring of our operations could adversely affect our or their financial
results. We are developing and implementing a corporate compliance program designed to ensure that we will market
and sell any future products that we successfully develop from our product candidates in compliance with all applicable
laws and regulations, but we cannot guarantee that this program will protect us from governmental investigations or
other actions or lawsuits stemming from a failure to be in compliance with such 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, including the imposition of significant fines or other sanctions.
Efforts to ensure that our business with third parties will comply with applicable healthcare laws and regulations
will involve substantial costs. For example, we are engaged in an ongoing effort to improve our healthcare compliance
program and establish a more robust compliance infrastructure. We may fail to establish appropriate compliance
measures, and even with a stronger program in place, it is possible that governmental authorities will conclude that our
business practices may not comply with current or future statutes, regulations or case law involving applicable fraud and
abuse or other healthcare laws and regulations. If our operations are found to be in violation of any of these laws or any
other governmental regulations that may apply to us, we may be subject to significant civil, criminal and administrative
penalties, damages, fines, imprisonment, exclusion of products from government funded healthcare programs, such as
Medicare and Medicaid, and the curtailment or restructuring of our operations. If any of the physicians or other
healthcare providers or entities with whom we expect to do business is found to be not in compliance with applicable
laws, they may be subject to criminal, civil or administrative sanctions, including exclusions from government funded
healthcare programs.
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 also prohibited in other jurisdictions. The provision
of benefits or advantages to physicians is governed by anti bribery laws of European Union Member States and the UK
Bribery Act 2010.
Payments made to physicians in certain European Union Member States must be publicly disclosed and often
must be the subject of prior notification and approval by the physician’s employer, his or her competent professional
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organization and/or the regulatory authorities of the individual European Union Member States. Failure to comply with
these requirements could result in reputational risk, public reprimands, administrative penalties, fines or imprisonment.
We are subject to stringent privacy laws, information security laws, regulations, policies and contractual obligations
related to data privacy and security and changes in such laws, regulations, policies, and contractual obligations or
our failure to comply with such requirements could subject us to significant fines and penalties, which may have a
material adverse effect on our business, financial condition or results of operations.
We are subject to data privacy and protection laws and regulations that apply to the collection, transmission,
storage and use of personally-identifying information, which among other things, impose certain requirements relating to
the privacy, security and transmission of personal information, including comprehensive regulatory systems in the
United States, European Union, and United Kingdom. The legislative and regulatory landscape for privacy and data
protection continues to evolve in jurisdictions worldwide, and there has been an increasing focus on privacy and data
protection issues with the potential to affect our business. Failure to comply with any of these laws and regulations could
result in enforcement action against us, including fines, imprisonment of company officials and public censure, claims
for damages by affected individuals, costly changes to our business practices, damage to our reputation and loss of
goodwill, any of which could have a material adverse effect on our business, financial condition, results of operations or
prospects.
There are numerous U.S. federal and state laws and regulations related to the privacy and security of personal
information. In particular, regulations promulgated pursuant to HIPAA establish privacy and security standards that limit
the use and disclosure of individually identifiable health information, or protected health information that we may obtain
directly or indirectly from health care providers, health plans or other health care industry stakeholders and require the
implementation of administrative, physical and technological safeguards to protect the privacy of protected health
information and ensure the confidentiality, integrity and availability of electronic protected health information.
Determining whether we handle protected health information and whether it has been handled in compliance with
applicable privacy standards and our contractual obligations can be complex and may be subject to changing
interpretation. These obligations may be applicable to some or all of our business activities now or in the future.
In 2018, California passed into law the California Consumer Privacy Act, or CCPA, which took effect on
January 1, 2020 and imposed many requirements on certain businesses that process the personal information of
California residents. Many of the CCPA’s requirements are similar to those found in the European Union’s General Data
Protection Regulation, or GDPR, including requiring businesses to provide notice to data subjects regarding the
information collected about them and how such information is used and shared, and providing data subjects the right to
request access to such personal information and, in certain cases, request the erasure of such personal information. The
CCPA also affords California residents the right to opt-out of “sales” of their personal information. The CCPA
prescribes significant penalties for companies that violate its requirements. On November 3, 2020, California voters
passed a ballot initiative for the California Privacy Rights Act, or CPRA, which went into effect on January 1, 2023 and
significantly expanded the CCPA to incorporate additional GDPR-like provisions including requiring that the use,
retention, and sharing of personal information of California residents be reasonably necessary and proportionate to the
purposes of collection or processing, granting additional protections for sensitive personal information, and requiring
greater disclosures related to notice to residents regarding retention of information. The CPRA also created a new
enforcement agency – the California Privacy Protection Agency – whose sole responsibility is to enforce the CPRA,
which will further increase compliance risk. The CPRA may apply to some of our business activities. In addition, other
states, including Connecticut, Colorado, Florida, Indiana, Iowa, Montana, New Jersey, Tennessee, Texas, Utah, and
Virginia, have recently passed state privacy laws; the laws in Connecticut, Colorado, Utah, and Virginia became
effective in 2023, the laws in Florida, Montana, and Texas are scheduled to go into effect later in 2024, the laws in Iowa,
New Jersey, and Tennessee are scheduled to go into effect in 2025, and the law in Indiana is scheduled to go into effect
in 2026. Congress, at the federal level, and other states are expected to consider similar laws in the future. These laws
may impact our business activities, including our identification of research subjects, relationships with business partners
and ultimately the marketing and distribution of our products.
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 GDPR, which became effective on May 25, 2018. The
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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 require 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. 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 activities occurring in the European Union,
which could adversely affect our business, prospects, financial condition and results of operations.
GDPR restrictions on transfers of personal data from the European Union to the United States are unsettled and
may impact our business operations. The GDPR generally prohibits transfers of personal data of European Union data
subjects outside of the European Union, unless a lawful data transfer solution has been implemented or a specific
exception applies. In July 2020, the European Court of Justice invalidated the Privacy Shield program, a voluntary self-
certification privacy protection mechanism that facilitated transfers of personal data from the European Union to the
United States. The court upheld the validity of an alternative contractual mechanism for such data transfers but required
companies to take additional steps, such as evaluating supplementary measures that may need to be taken to protect the
transferred personal data. In October 2022, President Biden signed an executive order to implement the European Union
-U.S. Data Privacy Framework, which would replace the Privacy Shield. In December 2022, the European Commission
began the European Union’s process for adopting the European Union-U.S. Data Privacy Framework, but it is unclear if
and when the framework will be finalized and whether it will be challenged in court. Continued uncertainty relating to
European Union -U.S. data transfers may adversely impact our business operations in the European Union.
Beyond GDPR, there are privacy and data security laws in a growing number of countries around the world.
Following the exit of the United Kingdom, or UK, from the European Union, the United Kingdom’s Data Protection Act
of 2018 applies to the processing of personal data that takes place in the UK and includes parallel obligations to those set
forth by GDPR. Privacy and data security laws in several other countries loosely follow GDPR as a model but often
contain different or conflicting provisions. These laws will impact our ability to conduct our business activities,
including both our clinical trials and any eventual commercialization and distribution of commercial products, through
increased compliance costs, costs associated with contracting and potential enforcement actions. Any failure to comply
with data protection and privacy laws could result in government-imposed fines or orders requiring that we change our
practices, claims for damages or other liabilities, regulatory investigations and enforcement action, litigation and
significant costs for remediation, any of which could adversely affect our business. Even if we are not determined to
have violated these laws, government investigations into these issues typically require the expenditure of significant
resources and generate negative publicity, which could harm our business, financial condition, results of operations or
prospects.
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:
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decreased demand for any product candidates that we may develop;
loss of revenue;
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substantial monetary awards to trial participants or patients;
significant time and costs to defend the related litigation;
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the inability to commercialize any product candidates that we may develop; and
injury to our reputation and significant negative media attention.
Although we maintain clinical trial 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. In addition, if we successfully
commercialize any product candidate, we will need to obtain product liability insurance. 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.
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.
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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 recent 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 2019 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 2019 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 2019 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 achievement of milestones or metrics specified in the
applicable development plan, as determined by the JSC, 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, 60% to Neurocrine and 40% to
us, 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 2023 Neurocrine Collaboration Agreement, Neurocrine agreed to fund the non-clinical development
activities for the GBA1 Program. Upon our receipt of topline data from the first Phase 1 clinical trial for a product
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candidate being developed pursuant to the GBA1 Program, we will have the option to either: (1) co-commercialize
collaboration products in the GBA1 Program 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. In the
event we exercise our 2023 Co-Co Option, the parties have also agreed that Neurocrine is entitled to receive (in addition
to its 50% share of profits) 50% of our share of profits until our obligation to repay 50% of all development costs
incurred by Neurocrine in connection with the GBA1 Program prior to such exercise have been paid off out of such 50%
of our share of profits. The 2023 Co-Co Trigger Event is the date on which we receive topline data from the first Phase 1
clinical trial for a product candidate being developed pursuant to the GBA1 Program.
Under the 2023 Novartis Collaboration Agreement, Novartis is solely responsible for, and has sole decision-
making authority with respect to, at its own expense, the exploitation of a product or product candidate under the
Novartis SMA Program, or the Novartis SMA Program Product. With respect to the Novartis HD Program, the parties
have agreed to conduct research and pre-clinical development of Novartis HD Program Products pursuant to a research
plan, with Novartis reimbursing us for our activities thereunder in accordance with the agreed-to budget. From and after
the first IND application filing for the Novartis HD Program, the parties have agreed that Novartis will assume sole
responsibility for the development and commercialization of Novartis HD Program Products, including all further
preclinical and clinical development and any commercialization of the Novartis HD Program products and product
candidates. With respect to each of the Novartis SMA Program Products and Novartis HD Program Products, Novartis is
obligated to use commercially reasonable efforts to develop and obtain regulatory approval for at least one of each such
product in the United States and in certain other international markets specified in the 2023 Novartis Collaboration
Agreement.
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 certain 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
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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:
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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
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
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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
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 gene therapy 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 proprietary antibody and 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
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profitable. The degree of market acceptance of proprietary antibody and gene therapy products and, in particular, our
product candidates, if approved for commercial sale, will depend on several factors, including:
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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;
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 and vectorized antibody approaches utilize vectors derived from viruses that are selectively
engineered, 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 gene therapy
product candidates and adversely affect our ability to conduct our business or obtain regulatory approvals for our
gene therapy product candidates.
Gene and vectorized antibody therapies remain novel technologies, 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 recent 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
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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:
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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;
• workforce uncertainty in countries where labor unrest is more common than in the United States;
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shortages resulting from any events affecting raw material supply or manufacturing capabilities abroad;
business interruptions resulting from geopolitical actions, including war and terrorism, from natural
disasters including earthquakes, typhoons, floods and fires, or from economic, social, 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 creation, implementation and maintenance of international business practices compliance
programs is costly and such programs are difficult to enforce, particularly where reliance on third parties is required. 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
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internal accounting controls for international operations. The anti-bribery provisions of the FCPA are enforced primarily
by the Department of Justice. The SEC is involved with enforcement of the books and records provisions of the FCPA.
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, we will be required 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/or to pay certain amounts relating to the use of the licensed
intellectual property. For example, the Touchlight License Agreement obligates us to make future milestone and royalty
payments if we, or our collaboration partners or TRACER Capsid licensees, use a capsid created using certain DNA
preparation processes licensed under the Touchlight License Agreement.
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.
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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:
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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.
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.
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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.
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 and biotechnology and biopharmaceutical companies 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,
particularly due to the competitive and rapidly-evolving gene therapy patent landscape. 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 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.
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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
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 decide not to obtain, or 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.
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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 licensors 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 2023
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
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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 licensees or licensors 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 subject matter eligibility, lack of novelty,
obviousness, lack of written description, failure to enable third parties to practice the relevant invention, or double
patenting. 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 licensees or licensors 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
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
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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.
In November 2022, we and Touchlight entered into the Touchlight License Agreement to allow for our
historical use of a certain DNA preparation process, or the Subject DNA Preparation Process, and to authorize the
prospective exploitation of TRACER Capsids that we have previously created using the Subject DNA Preparation
Process. As previously referenced in the Risk Factor section of our prior periodic reports, Touchlight had made us aware
in early 2022 that it believed that some of its intellectual property rights could potentially be asserted against us, although
we disagreed with this assessment. In connection with entering into the Touchlight License Agreement, Touchlight also
agreed to release any potential claims against us regarding the alleged historical use of certain of Touchlight’s
intellectual property rights and exploitation of TRACER Capsids created with the alleged use of such intellectual
property rights.
Potential parties may emerge and 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 licensees or
licensors, 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.
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We may be subject to claims asserting that our employees, consultants or advisors have wrongfully used or disclosed
alleged trade secrets or other proprietary confidential information or know-how of their current or former employers
or 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
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 increased
pressure to invest 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.
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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.
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 gene therapy products.
If we do not obtain patent term extension and regulatory 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
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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, an approved 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 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 BPCIA 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.
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:
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others may be able to make antibody or 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;
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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;
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;
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the patents of others may have an adverse effect on our business; and
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• 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. The recent departures of certain
executives, key employees, consultants or advisors, and the restructuring of our organization, may make it more difficult
to enforce our rights in protecting this information. Further, 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, confidential information and know-how, which
increases the possibility that a competitor will discover them or that our trade secrets, confidential information and/or
know-how 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 proprietary antibody program and gene therapy and vectorized antibody platforms and programs, 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 and know-how increases the risk that such trade secrets and confidential information and know-how 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 and know-how, our competitors may discover our trade secrets or
know-how, either through breach of these agreements, independent development or publication of information including
our trade secrets or know-how by third parties. A competitor’s discovery of our trade secrets and/or know-how would
impair our competitive position and have an adverse impact on our business, financial condition, results of operations
and prospects.
Risks Related to Ownership of Our Common Stock
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.
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In January 2024, we completed a private placement of 2,145,002 shares of our common stock to Novartis and
an underwritten public offering of 7,777,778 shares of our common stock and pre-funded warrants to purchase up to
3,333,333 shares of our common stock. 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 registration statements on Form S-8 permitting
shares of common stock 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 depositary shares, subscription rights,
warrants, purchase contract and units, of which we have reserved $75.0 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 8, 2022.
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, 2023
through December 31, 2023, the sales price of our common stock ranged from a high of $14.34 to a low of $5.87 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:
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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;
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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;
• market conditions in the pharmaceutical and biotechnology sectors;
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general economic, industry and market conditions, including interest rates and inflation; and
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. We and certain of our
current and former officers and directors were previously 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 are a “smaller reporting company” and the reduced disclosure requirements applicable to such companies may
make our common stock less attractive to investors.
We are a “smaller reporting company,” as defined in Rule 12b-2 under the Securities Exchange Act of 1934, as
amended. We would cease to qualify as a smaller reporting company if we have (a) a non-affiliate public float in excess
of $250 million and annual revenues in excess of $100 million during our last fiscal year, or (b) a non-affiliate public
float in excess of $700 million, in each case determined on an annual basis as of the last business day of our second
quarter. As a smaller reporting company, we are permitted and intend to rely on exemptions from certain disclosure
requirements that are applicable to other public companies that are not smaller reporting companies. These exemptions
include:
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being permitted to provide only two years of audited consolidated financial statements in this Annual
Report on Form 10-K, with correspondingly reduced “Management’s Discussion and Analysis of Financial
Condition and Results of Operations” disclosure;
reduced disclosure obligations regarding executive compensation; and
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not being required to furnish a stock performance graph in our annual report.
We expect to continue to take advantage of some or all of the available exemptions until we cease to be a
smaller reporting company. We may cease to qualify as a smaller reporting company as early as June 30, 2024, which
would require us to comply with disclosure requirements that are applicable to other public companies that are not
smaller reporting companies following the filing of our Annual Report on Form 10-K for the year ending December 31,
2024, and any portions of our definitive proxy statement relating to our 2025 Annual Meeting of Stockholders
incorporated by reference therein. We cannot predict whether investors will find our common stock less attractive if we
rely on these exemptions. If some investors find our common stock less attractive as a result, there may be a less active
trading market for our common stock and our stock price may be more volatile.
We have been, and could in the future be, 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. In January 2021, a putative class action
lawsuit was filed against us and certain of our current and former officers and directors. In July 2021, the lead plaintiff
voluntarily dismissed the action without prejudice against all defendants and as to all claims, and this action is no longer
pending. Nonetheless, due to the volatility in, or the unfulfilled expectations of stockholders for, 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.
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:
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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;
limit who may call stockholder meetings;
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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 (a) any
derivative action or proceeding brought on our behalf, (b) 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, (c) any action asserting a claim arising
pursuant to any provision of the Delaware General Corporation Law, our certificate of incorporation or our bylaws or (d)
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
We might not be able to utilize a significant portion of our net operating loss carryforwards.
As of December 31, 2023, we had both federal and state net operating loss, or NOL, carryforwards of $55.3
million and $33.2 million, respectively. The state NOLs will expire beginning in 2041 while the federal NOLs do not
expire. These state 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 Families First
Coronavirus Response 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 Internal Revenue Code, or 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.
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, ransom requests,
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 or to use such access to request cash compensation in the form of a ransom for the return of such 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, or a loss of
cash in response to ransom threats, we could incur liability, our competitive and financial 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.
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ITEM 1B.
UNRESOLVED STAFF COMMENTS
Not applicable.
ITEM 1C.
CYBERSECURITY
We have certain processes for assessing, identifying and managing cybersecurity risks, which are built into our
overall risk management program/information technology function. These processes are designed to help protect our
information assets and operations from internal and external cyber threats, protect employee, vendor, and collaborator
information from unauthorized access or attack, and secure our networks and systems. They include physical, procedural
and technical safeguards, response plans, regular tests on our systems, incident simulations, and routine review of our
policies and procedures to identify risks and improve our cybersecurity risk management practices. We engage certain
external parties, including consultants with expertise in information security, cybersecurity incident response, and
governance, to enhance our cybersecurity oversight. We consider the internal risk oversight programs of third-party
information technology service providers before engaging them in order to help protect us from any related
vulnerabilities.
Our Board of Directors does not believe that there are currently any known risks from cybersecurity threats that
are reasonably likely to materially affect us or our business strategy, results of operations or financial condition. Our
Audit Committee provides direct oversight over cybersecurity risk, and provides updates to the Board of Directors
regarding such oversight. The Audit Committee receives updates from management twice a year regarding cybersecurity
matters and is notified between such updates regarding significant new cybersecurity threats or incidents.
Our Vice President of Information Technology leads operational oversight of company-wide cybersecurity
strategy, policy, standards, and processes, and works across the relevant departments to assess and help prepare us to
address cybersecurity risks. Additionally, our Vice President of Information Technology participates in management’s
semi-annual updates to the Audit Committee. In the event of a cybersecurity incident, our Vice President of Information
Technology works with our information technology department and appropriate representatives of other affected
departments to assess and respond to the incident, and to determine whether internal and external reporting of the
incident is merited under the circumstances. Our Vice President of Information Technology has more than 15 years of
experience managing cybersecurity, including service as the Chief Information Security Officer for a multi-national
company in the specialty materials industry. He has experience with compliance programs for cybersecurity-related
regulations and standards such as the European Union’s General Data Protection Regulation, The Payment Card Industry
Data Security Standard (PCI-DSS), and the U.S. Food and Drug Administration’s regulations on electronic records and
electronic signatures. He has also participated in Gartner cybersecurity programs and conferences and received training
in the identification and prevention of cyber threats such as spam, phishing, spear-phishing, malware, and social
engineering.
In an effort to deter and detect cyber threats, we annually provide all of our personnel, including full-time and
part-time employees and temporary staff, with a data protection, cybersecurity and incident response and prevention
training and compliance program, which covers timely and relevant topics, including social engineering, phishing,
password protection, confidential data protection, asset use and mobile security, and the importance of reporting all
incidents immediately. We also use technology-based tools to mitigate cybersecurity risks and to bolster our employee-
based cybersecurity programs. We have implemented a proactive cybersecurity monitoring program that is designed to
achieve threat detection and swift response, which includes the use of best-in-class tools to mitigate vulnerabilities and
protect our information assets and operations. We also utilize a stringent endpoint security practice, geo-fencing and geo-
blocking on firewalls, and automatic prioritization of emails to enable our information technology department to
efficiently prioritize response to the most dangerous threats.
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ITEM 2.
PROPERTIES
Our corporate headquarters are located in Lexington, Massachusetts. Other operations, including laboratory
space, are located in Cambridge, Massachusetts. We lease our office and laboratory space, which consist of
approximately 26,148 square feet located in Cambridge, Massachusetts and 93,449 square feet located in Lexington,
Massachusetts.
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 any such matters cannot be predicted with certainty, as of December 31, 2023, we were not party to any
material pending proceedings. No material 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.
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 21, 2024, there were approximately 12 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
Set forth below is information regarding shares of our common stock issued and stock options granted by us for
the twelve months ended December 31, 2023 that were not registered under the Securities Act of 1933, as amended, or
the Securities Act and that have not otherwise been described in a Quarterly Report on Form 10-Q or a Current Report
on Form 8-K.
On October 1, 2023, we granted to six employees restricted stock unit awards settleable for an aggregate of
211,500 shares of our common stock. These restricted stock units were made 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.
RESERVED
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 biotechnology company whose mission is to leverage the power of human genetics to modify the
course of and ultimately cure neurological diseases. Our pipeline includes programs for Alzheimer’s disease, or AD;
amyotrophic lateral sclerosis, or ALS; Parkinson’s disease, and multiple other diseases of the central nervous system.
Many of our programs are derived from our TRACER™ (Tropism Redirection of AAV by Cell Type-Specific
Expression of RNA) adeno-associated virus, or AAV, capsid discovery platform, which we have used to generate novel
capsids, or TRACER Capsids, and identify associated receptors to potentially enable high brain penetration with genetic
medicines following intravenous dosing. Some of our programs are wholly-owned, and some are advancing with
licensees and collaborators including Alexion, AstraZeneca Rare Disease, or Alexion; Novartis Pharma AG, or Novartis;
Neurocrine Biosciences, Inc., or Neurocrine; and Sangamo Therapeutics, Inc., or Sangamo.
We focus on leveraging our expertise in capsid discovery and neuropharmacology to address the delivery
hurdles that have constrained the genetic medicine and neurology disciplines, with the goal of either halting or slowing
disease progression or reducing symptom severity, and therefore providing clinically meaningful impact to patients. We
are advancing our own proprietary pipeline of drug candidates for neurological diseases, with a focus on AD. Our
wholly-owned prioritized pipeline programs include an anti-tau antibody for AD; a superoxide dismutase 1, or SOD1,
gene therapy for ALS; and a tau silencing gene therapy for AD. We identified a lead development candidate for our anti-
tau antibody program in the first quarter of 2023 and expect to submit an investigational new drug, or IND, application to
the U.S. Food and Drug Administration, or the FDA, for this program in the first half of 2024. We believe this trial could
result in the potential to generate proof-of-concept data for slowing the spread of pathological tau via tau positron
emission tomography imaging in 2026. We identified a lead development candidate for the SOD1 silencing gene therapy
program in the fourth quarter of 2023, and we expect to submit the IND application for this program in mid-2025. We
promoted our tau silencing gene therapy program to a prioritized program in the first quarter of 2024, based on
preclinical data demonstrating robust reductions in tau messenger RNA, or mRNA, in a murine model, and we anticipate
submission of an IND in 2026. Our proprietary pipeline also includes an early research initiative to develop a gene
therapy for the treatment of AD. This program seeks to combine a vectorized anti-amyloid antibody with a TRACER
Capsid.
We are also working with our collaboration partners on multiple programs. In January 2019 and January 2023,
we entered into collaboration and license agreements with Neurocrine. Under our agreements with Neurocrine, we are
actively advancing two later preclinical stage programs: a glucocerebrosidase 1, or GBA1, gene therapy program for
Parkinson’s disease and other GBA1-mediated diseases, and a frataxin gene therapy program for Friedreich’s ataxia, or
the FA Program. Pursuant to such agreements, we are also working with Neurocrine on five early-stage programs for the
research, development, manufacture and commercialization of gene therapies designed to address central nervous system
diseases or conditions associated with rare genetic targets. We have also entered into agreements with licensees
including Novartis, Alexion, and Sangamo, to license or to provide options to receive exclusive licenses to certain
TRACER Capsids. As described further below, in December 2023, we entered into a license and collaboration
agreement with Novartis to provide Novartis certain rights regarding the development of potential gene therapy product
candidates for the treatment of spinal muscular atrophy and to collaborate with Novartis to develop gene therapy product
candidates for the treatment of Huntington’s disease. The joint steering committee with Neurocrine has selected a
development candidate for the FA Program, during the first quarter of 2024, and expects to advance into first-in-human
113
clinical trials in 2025. We anticipate that our collaborative partners and licensees will submit at least one additional IND
application for a partnered program and initiate clinical development for the associated program by the end of 2025.
Despite reporting $132.3 million in net income for the year ended December 31, 2023, we have a history of
incurring significant losses. We reported a net loss of $46.4 million for the year ended December 31, 2022. We reported
a net loss of $71.2 million for the year ended December 31, 2021. As of December 31, 2023, we had an accumulated
deficit of $261.2 million. We expect to continue to incur significant expenses and operating losses for the foreseeable
future. We anticipate that our expenses will increase substantially in connection with our ongoing activities, as we:
•
•
•
•
•
•
•
•
•
conduct preclinical development activities and initiate investigational new drug, or IND, application-
enabling studies and clinical trials in connection with our anti-tau antibody program and our SOD1 ALS
gene therapy program;
continue investing in our proprietary antibody program, gene therapy and vectorized antibody platforms
and programs, and other research and development initiatives;
increase our investment in and support for TRACER, our proprietary discovery platform to facilitate the
selection of AAV capsids and expand our investment to discover TRACER Capsids with broad tropism in
central nervous system, or CNS, and other tissues with cell-specific transduction properties for particular
therapeutic applications;
increase our investment in the discovery and development of modalities for receptor-mediated non-viral
delivery of therapeutic payloads to the CNS;
conduct joint research and development under our strategic collaborations for the research, development,
and commercialization of certain of our pipeline programs, including our FA Program pursuant to our
collaboration and license agreement with Neurocrine entered into in January 2019, or the 2019 Neurocrine
Collaboration Agreement, and our GBA1 Program pursuant to our collaboration and license agreement
with Neurocrine entered into on January 8, 2023, or the 2023 Neurocrine Collaboration Agreement; and our
Huntington’s disease program, or the Novartis HD Program, pursuant to our license and collaboration
agreement with Novartis entered into on December 28, 2023, or the 2023 Novartis Collaboration
Agreement;
initiate additional preclinical studies and clinical trials for, and continue research and development of, our
other programs;
continue our process research and development activities, as well as establish our research-grade
manufacturing capabilities;
identify additional diseases for treatment with our AAV gene therapies and develop additional programs or
product candidates;
seek marketing and regulatory approvals for any of our product candidates that successfully complete
clinical development;
• maintain, expand, protect and enforce our intellectual property portfolio;
•
•
•
identify, acquire or in-license other product candidates and technologies;
expand our operational, financial and management systems and personnel, including personnel to support
our clinical development, manufacturing and commercialization efforts;
continue our clinical trial insurance coverage as we expand our clinical trials and increase our product
liability insurance once we engage in commercialization efforts; and
114
•
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, 2023, we recognized $80.8 million of
collaboration revenue from the 2023 Neurocrine Collaboration Agreement, $80.0 million of collaboration revenue from
the 2023 Novartis Collaboration Agreement, $79.0 million of collaboration revenue from our option and license
agreement with Novartis entered into on March 4, 2022, or the 2022 Novartis Agreement, $9.8 million of collaboration
revenue from the 2019 Neurocrine Collaboration Agreement, and $0.4 million of other collaboration revenue. For
additional information about our revenue recognition policy, see the section titled “—Summary of significant accounting
policies and basis of presentation.”
For the foreseeable future, we expect substantially all of our revenue will be generated from the 2019
Neurocrine Collaboration Agreement, the 2023 Neurocrine Collaboration Agreement, the 2023 Novartis Collaboration
Agreement, the 2022 Novartis Option and License Agreement, and our option and license agreement with Alexion
entered into on October 1, 2021, or the Alexion Agreement, and any other strategic collaborations and out-licensing
arrangements 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 proprietary antibody program and gene therapy and vectorized
antibody platforms and programs 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 laboratory supplies and non-capital equipment used in designing, developing and
manufacturing preclinical study materials;
consultant fees;
facility costs including rent, depreciation and maintenance expenses;
the cost of securing and protecting intellectual property rights associated with our research and
development activities; and
fees for maintaining licenses under our third-party licensing agreement.
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.
Research and development activities are central to our business model. We are in the early stages of
development of our product candidates. During the year ended December 31, 2023, our research and development
expenses have increased as compared to the amounts recorded in the same period in the prior year. As our development
programs progress and as we identify product candidates and initiate preclinical studies and clinical trials, including as
we initiate our planned Phase 1 clinical trial to evaluate VY-TAU01 in 2024, we expect research and development costs
115
to continue to increase. However, 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.
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. Our expenses will increase if:
• we are required by the FDA or the European Medicines Agency 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
there are any delays in enrollment of patients in or completing our clinical trials or the development of our
product candidates.
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, information technology, 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.
During the year ended December 31, 2023, our general and administrative expenses have increased as
compared to the amount recorded in the same period in prior year. As our development programs progress and we
identify product candidates and initiate preclinical studies and clinical trials, including as we initiate our planned Phase 1
clinical trial to evaluate VY-TAU01 in 2024, we continue to expect general and administrative expenses to increase to
support these additional research and development activities.
Other Income, Net
Other income, net consists primarily of interest income on our marketable securities.
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
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 that certain aspects of our accounting
policy on revenue recognition require the most significant judgments and estimates in the preparation of our financial
statements.
Revenue Recognition – ASC 606
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.
116
We enter into license, option, and collaboration agreements which are within the scope of ASC 606, under
which we license or provide options to license certain of our product candidates and, in certain cases, perform research
and development. 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; option exercise fees; and royalties on net sales of licensed products.
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 and/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
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. Given the nature of the milestone payments in our contracts with customers,
most of the variable consideration is subject to a constraint that does not involve significant judgement.
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 performance 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. We do not believe that reasonable changes in the assumptions used to determine
stand-alone selling price for our performance obligations would materially impact the amount of revenue we recognize.
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.
A significant portion of revenue recognized from the 2019 Neurocrine Collaboration Agreement and the 2023
Neurocrine Collaboration Agreement 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 use judgement in estimating the expected remaining costs to complete the research and development
services for each performance obligation based on discussions with the joint steering committee for the program and
discussions with our collaboration partners. We evaluate the measure of progress each reporting period and, if necessary,
adjust the measure and related revenue recognition. Changes in our estimates of the expected remaining costs to
complete the research and development services for our performance obligations, such as the significant change that
occurred in the fourth quarter of 2021 as a result of decisions made by the JSC for the 2019 Neurocrine Collaboration
Agreement, can result in significant changes to the amount of revenue we recognize each period.
117
Results of Operations
Comparison of the years ended December 31, 2023 and 2022:
The following table summarizes our results of operations for the years ended December 31, 2023 and 2022,
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, net:
Interest income
Other income
Total other income, net
Income (loss) before income taxes
Income tax provision
Net income (loss)
Year ended
December 31,
2023
2022
(in thousands)
Change
$
250,008 $
40,907 $
209,101
92,172
35,822
127,994
60,764
30,980
91,744
31,408
4,842
36,250
11,721
3
11,724
133,738
1,408
132,330 $
1,792
2,653
4,445
(46,392)
16
(46,408) $
9,929
(2,650)
7,279
180,130
1,392
178,738
$
Collaboration Revenue
Collaboration revenue was $250.0 million and $40.9 million for the years ended December 31, 2023 and 2022,
respectively. The increase in collaboration revenue was the result of $79.0 million in revenue recognized during the year
ended December 31, 2023, in connection with Novartis’ decision to exercise two of its license options under the 2022
Novartis Option and License Agreement, or Novartis License Options, along with the expiration of a third Novartis
License Option. In addition, during the year ended December 31, 2023, we recognized $80.0 million of revenue
associated with the 2023 Novartis Collaboration Agreement, $80.8 million of revenue associated with the 2023
Neurocrine Collaboration Agreement, $9.8 million of revenue associated with the 2019 Neurocrine Collaboration
Agreement, and $0.4 million of other collaboration revenue. During the year ended December 31, 2022, collaboration
revenue was primarily related to Pfizer’s decision, as Alexion’s predecessor-in-interest under the Alexion Agreement, to
exercise the first material right for a license option under the Alexion Agreement, or the Pfizer License Option, along
with the expiration of the second material right associated with the Pfizer License Option, which resulted in revenue
recognized of $40.0 million.
Research and Development Expense
Research and development expense increased by $31.4 million from $60.8 million for the year ended
December 31, 2022 to $92.2 million for the year ended December 31, 2023. The following table summarizes our
research and development expenses for the years ended December 31, 2023 and 2022:
Employee and consultant
External research and development
Facilities and other
Professional fees
$
Total research and development expenses
$
Year ended
December 31,
2023
2022
(in thousands)
Change
42,445 $
34,185
6,790
8,752
92,172 $
29,209 $
15,679
7,863
8,013
60,764 $
13,236
18,506
(1,073)
739
31,408
118
The increase in research and development expense for the year ended December 31, 2023 was primarily
attributable to the following:
•
•
•
•
approximately $13.2 million for increased employee and consultant-related costs associated with higher
headcount in research and development functions as compared to the same period in the prior year due to
the progress in our development programs; and
approximately $18.5 million for external research and development costs related to increased program-
related spending, particularly on manufacturing and IND-enabling studies for our anti-tau antibody
program and SOD1 program, along with increased Neurocrine program support during the 2023 period,
and the fee due to Touchlight pursuant to our license agreement;
approximately $0.7 million for increased professional fees to support our pipeline programs; partially offset
by
approximately $1.1 million for decreased facility and other costs primarily related to the termination of the
lease for office and laboratory space at 75 Sidney Street during the second quarter of 2022.
General and Administrative Expense
General and administrative expense increased by $4.8 million from $31.0 million for the year ended December
31, 2022 to $35.8 million for the year ended December 31, 2023. The increase in general and administrative expense was
primarily attributable to increased compensation costs and stock-based compensation associated with higher headcount
in general and administrative functions as compared to the same period in the prior year, as well as the recognition of
$1.9 million of business development costs related to the 2023 Novartis Collaboration Agreement as general and
administrative expenses during the year ended December 31, 2023.
Other Income, Net
Other income, net of approximately $11.7 million was recognized during the year ended December 31, 2023, as
compared to $4.4 million during the year ended December 31, 2022. Other income, net during the year ended December
31, 2023 was primarily related to interest income due to increased interest rates on increased balances of marketable
securities, while other income, net during the year ended December 31, 2022 was primarily related to an employee
retention tax credit under the Coronavirus Aid, Relief, and Economic Security Act and interest income on marketable
securities balances.
Liquidity and Capital Resources
Sources of Liquidity
We have funded our operations primarily through private placements of redeemable convertible preferred stock,
public offerings and private placements of our common stock, strategic collaborations and option and license
arrangements, including our 2019 Neurocrine Agreement, 2023 Neurocrine Collaboration Agreement, 2022 Novartis
Agreement, 2023 Novartis Collaboration Agreement, Alexion Agreement, and with our prior collaboration agreements.
As of December 31, 2023, we had cash, cash equivalents, and marketable securities of $230.9 million. Based
upon our current operating plan, we expect that our existing cash, cash equivalents, and marketable securities at
December 31, 2023, together with the $80.0 million upfront payment received in January 2024 in connection with the
2023 Novartis Collaboration Agreement, the $20.0 million in proceeds from Novartis’ stock purchase, the $93.5 million
in net proceeds received from a public offering in January 2024 (refer to Note 15 of our consolidated financial statements
included elsewhere in this Annual Report on Form 10-K), along with amounts expected to be received as reimbursement
for development costs under our collaboration and license agreements with Neurocrine and Novartis, certain near term
milestones, and interest income, to be sufficient to meet our planned operating expenses and capital expenditure
requirements into 2027.
119
Cash Flows
The following table provides information regarding our cash flows for the years ended December 31, 2023,
2022, and 2021:
Net cash provided by (used in):
Operating activities
Investing activities
Financing activities
Year ended
December 31,
2023
2022
2021
(in thousands)
$
77,919 $ (12,509) $
(141,643)
33,645
(7,339)
1,110
(53,525)
65,906
612
Net (decrease) increase in cash, cash equivalents,
and restricted cash
$
(30,079) $ (18,738) $
12,993
Cash Flows from Operating Activities
Net cash provided by operating activities was $77.9 million during the year ended December 31, 2023 as
compared to $12.5 million of net cash used in operating activities for the year ended December 31, 2022. The increase
was primarily due to our net income for the year ended December 31, 2023 of $132.3 million as compared to our net loss
for the year ended December 31, 2022 of $46.4 million. This is offset by an increase in accounts receivable of $80.2
million during the year ended December 31, 2023 primarily attributable to the upfront payment due in connection with
the 2023 Novartis Collaboration Agreement, as compared to no accounts receivable activity during the year ended
December 31, 2022.
Net cash used in operating activities was $12.5 million during the year ended December 31, 2022. The cash
used in operating activities for the year ended December 31, 2022 was primarily driven by operating expenses, net of
stock-based compensation and depreciation, offset by an increase in deferred revenue partially driven by the upfront
payment of $54.0 million from Novartis in connection with our entry into the 2022 Novartis Agreement during the year
ended December 31, 2022.
Net cash used in operating activities was $53.5 million during the year ended December 31, 2021. The cash
used in operating activities for the year ended December 31, 2021 was primarily driven by operating expenses, net of
stock-based compensation and depreciation. We also received an upfront payment of $30.0 million from Pfizer as the
predecessor-in-interest to Alexion, in connection with our entry into the Alexion Agreement.
Cash Flows from Investing Activities
Net cash used in investing activities was $141.6 million during the year ended December 31, 2023. The cash
used in investing activities for the year ended December 31, 2023 was primarily due to $224.0 million for purchases of
marketable securities and $3.3 million for purchases of property and equipment, offset by $85.6 million from proceeds
from maturities and sales of marketable securities.
Net cash used in investing activities was $7.3 million during the year ended December 31, 2022. The cash used
in investing activities for the year ended December 31, 2022 was primarily due to $54.8 million for purchases of
marketable securities and $2.5 million for purchases of property and equipment, offset by $50.0 million from proceeds
from maturities and sales of marketable securities.
Net cash provided by investing activities was $65.9 million during the year ended December 31, 2021. The cash
provided by investing activities for the year ended December 31, 2021 was primarily due to $70.0 million from
maturities of marketable securities and $12.6 million from proceeds of sales of marketable securities partially offset by
$15.1 million for purchases of marketable securities and $1.6 million for purchases of property and equipment.
120
Cash Flows from Financing Activities
Net cash provided by financing activities was $33.6 million during the year ended December 31, 2023 primarily
due to the $31.1 million in proceeds from the issuance of common stock in connection with the 2023 Neurocrine
Collaboration Agreement along with 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 $1.1 million during the year ended December 31, 2022 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 $0.6 million during the year ended December 31, 2021 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.
Funding Requirements
Our expenses increased during the year ended December 31, 2023 as compared with the prior year as our
development programs progressed and we increased headcount. We expect our expenses to continue to increase as we
continue the research and development of, conduct clinical trials of, and seek marketing approval for our product
candidates including as we initiate our planned Phase 1 clinical trial to evaluate VY-TAU01 in 2024, and as we continue
to enter into or conduct activities in connection with our collaboration agreements. 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,
executing financial statement controls, satisfying regulatory and quality standards, fulfilling healthcare compliance
requirements, and maintaining product, clinical trial and directors’ and officers’ liability insurance coverage. We also
anticipate the cost of goods and services and the levels of compensation paid to employee will increase due to
inflationary conditions existing in the general economy. 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.
As of December 31, 2023, we had cash, cash equivalents, and marketable securities of $230.9 million. Based
upon our current operating plan, we expect that our existing cash, cash equivalents, and marketable securities at
December 31, 2023, together with the $80.0 million upfront payment received in January 2024 in connection with the
2023 Novartis Collaboration Agreement, the $20.0 million in proceeds from Novartis’ stock purchase, the $93.5 million
in net proceeds received from a public offering executed in January 2024, along with amounts expected to be received as
reimbursement for development costs under our collaboration and license agreements with Neurocrine and Novartis,
certain near term milestones, and interest income, to be sufficient to meet our planned operating expenses and capital
expenditure requirements into 2027. 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;
the scope, progress, results, costs, prioritization, and number of our research and development programs;
the progress and status of our strategic collaborations and option and license agreements and any similar
arrangements we may enter into in the future, including any research and development costs for which we
are responsible, future additional obligations that may be committed to within or outside these agreements,
and our receipt of any future milestone payments and royalties from our collaboration partners or licensors;
the extent to which we are obligated to reimburse preclinical development and clinical trial costs, or the
achievement of milestones or occurrence of other developments that trigger milestone and royalty
121
payments, under any collaboration or license agreements to which we might become a party, such as the
Touchlight License Agreement;
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, acquire or invest in other businesses,
or out-license our product candidates, capsids or other technologies;
the costs of advancing our manufacturing capabilities and 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 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 option and license arrangements. We do not have any committed external source of funds other than the
amounts we are entitled to receive from our collaboration partners and licensors for reimbursement of certain research
and development expenses, potential option exercises, the achievement of specified regulatory and commercial
milestones, and royalty payments under our collaboration, and option and license agreements, as applicable. 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 option and license 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
122
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 generally are cancelable at
any time by us, 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. In certain instances, we are also obligated to pay our licensors royalties based on sales of products, if
approved, using the intellectual property licensed under 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. For more information, refer to Note 7 to our
consolidated financial statements included elsewhere in this Annual Report on Form 10-K.
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
As of June 30, 2023, we have requalified as a “smaller reporting company,” as defined in Rule 12b-2 under the
Securities Exchange Act of 1934, as amended. We would cease to qualify as a smaller reporting company if we have
(a) a non-affiliate public float in excess of $250 million and annual revenues in excess of $100 million during our last
fiscal year, or (b) a non-affiliate public float in excess of $700 million, in each case determined on an annual basis as of
the last business day of our second quarter. As a smaller reporting company, we are permitted and intend to rely on
exemptions from certain disclosure requirements that are applicable to other public companies that are not smaller
reporting companies. These exemptions include:
•
•
•
being permitted to provide only two years of audited consolidated financial statements in this Annual
Report on Form 10-K, with correspondingly reduced Management's Discussion and Analysis of Financial
Condition and Results of Operations disclosure;
reduced disclosure obligations regarding executive compensation; and
not being required to furnish a stock performance graph in our annual report.
We expect to continue to take advantage of some or all of the available exemptions until we cease to be a
smaller reporting company. We may cease to qualify as a smaller reporting company as early as June 30, 2024, which
would require us to comply with disclosure requirements that are applicable to other public companies that are not
smaller reporting companies following the filing of our Annual Report on Form 10-K for the year ending December 31,
2024, and any portions of our definitive proxy statement relating to our 2025 Annual Meeting of Stockholders
incorporated by reference therein.
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
123
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 funds and marketable securities
and are invested in U.S. Treasury notes. Due to the short-term duration of our investment portfolio and the low risk
profile of our investments, we believe an immediate 100 basis point change in interest rates would not have 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 costs of labor, goods, and services. We do not believe that
inflation had, or that an immediate 100 basis point change in inflation would have had, a material effect on our business,
financial condition, or results of operations during the year ended December 31, 2023.
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(c) or 15d-15(e) under the
Exchange Act of 1934, or 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 Securities and Exchange
Commission’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.
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, 2023. 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, 2023, 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
124
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, 2023 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, 2023.
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, 2023 that has materially affected, or is
reasonably likely to materially affect, our internal control over financial reporting.
ITEM 9B.
OTHER INFORMATION
Director and Officer Trading Arrangements
None of our directors or officers adopted or terminated a Rule 10b5-1 trading arrangement or a non-Rule 10b5-
1 trading arrangement (as defined in Item 408(c) of Regulation S-K) during the quarterly period ended December 31,
2023.
ITEM 9C.
DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT
INSPECTIONS
Not applicable.
125
PART III
ITEM 10.
DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
Incorporated by reference from the information in our Proxy Statement for our 2024 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 2024 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 2024 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 2024 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 2024 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 AND FINANCIAL STATEMENT SCHEDULES
(a)(1) Financial Statements.
PART IV
Report of independent registered public accounting firm PCAOB ID 42
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
Pages
F-1
F-3
F-4
F-5
F-6
F-7
126
(a)(2) Financial Statement Schedules.
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.
127
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, 2023 and 2022, 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, 2023, 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, 2023 and 2022,
and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2023, in
conformity with U.S. generally accepted accounting principles.
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 Public
Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the
Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and
Exchange Commission and the PCAOB.
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. The Company is not required to have, nor were we engaged to perform, an audit of its
internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control
over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal
control over financial reporting. Accordingly, we express no such opinion.
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 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 a
separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.
Revenue recognition under the proportional performance model
Description of the
Matter
As discussed in Note 9 to the consolidated financial statements, the Company recorded
collaboration revenue of $11.0 million for the year ended December 31, 2023, and had total
deferred revenue of $75.2 million, as of December 31, 2023 pursuant to certain of its license and
collaboration agreements under the proportional performance method. The Company recognizes
arrangement consideration allocated to certain performance obligations that are delivered over time
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.
F-1
Auditing collaboration 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
Our audit procedures included, among others, the inspection of the Company’s contracts 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
that is accounted for using proportional performance. We performed inquiries of research and
development personnel and inspected the minutes of joint steering committee meetings to validate
management’s estimates and 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 costs 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 28, 2024
F-2
Voyager Therapeutics, Inc.
Consolidated Balance Sheets
(amounts in thousands, except share and per share data)
Assets
Current assets:
Cash and cash equivalents
Marketable securities
Accounts receivable
Related party collaboration receivable
Prepaid expenses and other current assets
Total current assets
Property and equipment, net
Deposits and other non-current assets
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, contingencies, and other liabilities (see note 8)
Stockholders’ equity:
Preferred stock, $0.001 par value: 5,000,000 shares authorized; no shares issued and
outstanding at December 31, 2023 and 2022
Common stock, $0.001 par value: 120,000,000 shares authorized; 44,038,333 and 38,613,891
shares issued and outstanding at December 31, 2023 and 2022, respectively
Additional paid-in capital
Accumulated other comprehensive loss
Accumulated deficit
Total stockholders’ equity
Total liabilities and stockholders’ equity
December 31,
2023
2022
$
$
$
68,802
162,073
80,150
3,341
5,318
319,684
16,494
1,593
13,510
351,281
1,604
16,823
3,200
42,881
64,508
32,359
18,094
114,961
98,959
19,889
—
257
5,394
124,499
17,857
1,515
15,485
159,356
2,566
7,816
2,832
59,377
72,591
6,450
21,295
100,336
—
—
44
497,506
(48)
(261,182)
236,320
351,281
$
38
452,713
(219)
(393,512)
59,020
159,356
$
$
$
$
The accompanying notes are an integral part of these consolidated financial statements.
F-3
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, net:
Interest income (expense)
Other income
Total other income, net
Income (loss) before income taxes
Income tax provision
Net income (loss)
Other comprehensive income (loss)
Net unrealized gain (loss) on available-for-sale-securities
Total other comprehensive income (loss)
Comprehensive income (loss)
Net income (loss) per share, basic
Net income (loss) per share, diluted
$
2023
250,008 $
Year ended
December 31,
2022
2021
40,907 $
37,415
92,172
35,822
127,994
122,014
60,764
30,980
91,744
(50,837)
11,721
3
11,724
133,738
1,408
132,330 $
1,792
2,653
4,445
(46,392)
16
(46,408) $
171
171
132,501 $
(81)
(81)
(46,489) $
73,787
37,246
111,033
(73,618)
(390)
2,811
2,421
(71,197)
—
(71,197)
(4)
(4)
(71,201)
3.08 $
2.97 $
(1.21) $
(1.21) $
(1.89)
(1.89)
$
$
$
$
Weighted-average common shares outstanding, basic
Weighted-average common shares outstanding, diluted
43,020,747
44,569,334
38,356,810
38,356,810
37,668,947
37,668,947
The accompanying notes are an integral part of these consolidated financial statements.
F-4
Voyager Therapeutics, Inc.
Consolidated Statements of Stockholders’ Equity
(amounts in thousands, except share data)
Common Stock
Amount
Balance at December 31, 2020
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 loss
Balance at December 31, 2021
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 loss
Balance at December 31, 2022
Exercises of vested stock options
Vesting of restricted stock units
Issuance of common stock in connection with the 2023 Neurocrine
Collaboration Agreement
Issuance of common stock under ESPP
Stock-based compensation expense
Unrealized gain on available-for-sale securities
Net income
Balance at December 31, 2023
Shares
37,368,027
3,811
346,551
200,006
—
—
—
37,918,395
89,012
456,219
150,265
—
—
—
38,613,891
385,655
531,560
4,395,588
111,639
—
—
—
44,038,333
$
$
$
$
Additional
Paid-In
Capital
Accumulated
Other
Comprehensive
Income (Loss)
Accumulated
Deficit
Stockholders’
Equity
37
1
—
—
—
—
—
38
—
—
—
—
—
—
38
1
—
5
—
—
—
—
44
$
$
$
$
430,324
27
—
918
10,990
—
—
442,259
629
—
672
9,153
—
—
452,713
1,851
—
31,116
959
10,867
—
—
497,506
$
$
$
$
(134)
—
—
—
—
(4)
—
(138)
—
—
—
—
(81)
—
(219)
—
—
—
—
—
171
—
(48)
$
$
$
$
(275,907)
—
—
—
—
—
(71,197)
(347,104)
—
—
—
—
—
(46,408)
(393,512)
—
—
—
—
—
—
132,330
(261,182)
$
$
$
$
154,320
28
—
918
10,990
(4)
(71,197)
95,055
629
—
672
9,153
(81)
(46,408)
59,020
1,852
—
31,121
959
10,867
171
132,330
236,320
The accompanying notes are an integral part of these consolidated financial statements
F-5
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 provided by (used in) operating
activities:
Stock-based compensation expense
Depreciation
Amortization of premiums and discounts on marketable securities
Gain on lease termination
Change in fair value of common stock and warrants to purchase equity securities
Loss on disposal of fixed assets
Changes in operating assets and liabilities:
Accounts receivable
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
Deferred revenue
Net cash provided by (used in) operating activities
Cash flow from investing activities
Purchases of property and equipment
Purchases of marketable securities
Proceeds from sales and maturities of marketable securities
Net cash (used in) provided by investing activities
Year ended
December 31,
2023
2022
2021
$
132,330 $
(46,408) $
(71,197)
11,153
4,441
(3,626)
—
—
178
(80,150)
(3,084)
76
1,975
—
(962)
9,007
(2,833)
9,414
77,919
(3,256)
(223,968)
85,581
(141,643)
9,344
6,191
(16)
(2,468)
—
377
—
475
(1,967)
3,462
(152)
1,992
(3,148)
(3,922)
23,731
(12,509)
(2,491)
(54,848)
50,000
(7,339)
11,324
5,165
349
—
(2,460)
—
—
7,280
1,883
2,606
69
(60)
(3,335)
(3,428)
(1,721)
(53,525)
(1,609)
(15,117)
82,632
65,906
Cash flow from financing activities
Proceeds from the exercise of stock options
Proceeds from the issuance of common stock in connection with the 2023 Neurocrine
Collaboration Agreement
Proceeds from the purchase of common stock under ESPP
Net cash provided by financing activities
Net (decrease) 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
Operating lease right-of-use assets obtained in exchange for operating lease liabilities
Capital expenditures incurred but not yet paid
1,852
629
28
31,121
672
33,645
(30,079)
100,474
70,395 $
—
481
1,110
(18,738)
119,212
100,474 $
—
584
612
12,993
106,219
119,212
— $
— $
— $
14 $
664
80
$
$
$
The accompanying notes are an integral part of these consolidated financial statements.
F-6
VOYAGER THERAPEUTICS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Nature of business
Voyager Therapeutics, Inc. (the “Company”) is a biotechnology company whose mission is to leverage the
power of human genetics to modify the course of and ultimately cure neurological diseases. The Company’s pipeline
includes programs for Alzheimer’s disease (“AD”); amyotrophic lateral sclerosis (“ALS”); Parkinson’s disease, and
multiple other diseases of the central nervous system, (“CNS”). Many of the Company’s programs are derived from its
TRACER™ adeno-associated virus (“AAV”) capsid discovery platform, which the Company has used to generate novel
capsids (“TRACER Capsids”) and identify associated receptors to potentially enable high brain penetration with genetic
medicines following intravenous dosing. Some of the Company’s programs are wholly-owned, and some are advancing
with licensees and collaborators including Alexion, AstraZeneca Rare Disease (“Alexion”); Novartis Pharma AG,
(“Novartis”); Neurocrine Biosciences, Inc. (“Neurocrine”); and Sangamo Therapeutics, Inc. (“Sangamo”).
The Company focuses on leveraging its expertise in capsid discovery and neuropharmacology to address the
delivery hurdles that have constrained the genetic medicine and neurology disciplines, with the goal of either halting or
slowing disease progression or reducing symptom severity, and therefore providing clinically meaningful impact to
patients. The Company is advancing its own proprietary pipeline of drug candidates for neurological diseases, with a
focus on AD. The Company’s wholly-owned prioritized pipeline programs include an anti-tau antibody for AD; a
superoxide dismutase 1 (“SOD1”) silencing gene therapy for ALS; and a tau silencing gene therapy for AD. The
Company identified a lead development candidate for its anti-tau antibody program in the first quarter of 2023, initiated
good laboratory practices (“GLP”) toxicology studies in the third quarter of 2023, and expects to submit an
investigational new drug (“IND”), application to the U.S. Food and Drug Administration (“FDA”) for this program in
the first half of 2024. The Company believes this trial could result in the potential to generate proof-of-concept data for
slowing the spread of pathological tau via tau positron emission tomography imaging in 2026. The Company identified a
lead development candidate for its SOD1 silencing gene therapy program in the fourth quarter of 2023, and the Company
expects to submit the IND application for its SOD1 silencing gene therapy program in mid-2025. The Company
promoted its tau silencing gene therapy program to a prioritized program in the first quarter of 2024, based on preclinical
data demonstrating robust reductions in tau messenger RNA (“mRNA”) in a murine model, and it anticipates submission
of an IND in 2026. The Company’s proprietary pipeline also includes an early research initiative to develop a gene
therapy for the treatment of AD. This program seeks to combine a vectorized anti-amyloid antibody with a TRACER
Capsid.
The Company is also working with its collaboration partners on multiple programs. In January 2019 and
January 2023, the Company entered into collaboration and license agreements with Neurocrine. Under the agreements
with Neurocrine, the Company is actively advancing two later preclinical stage programs: a glucocerebrosidase 1
(“GBA1”) gene therapy program for Parkinson’s disease and other GBA1-mediated diseases, and a frataxin gene therapy
program for Friedreich’s ataxia (the “FA Program”). Pursuant to such agreements, the Company is also working with
Neurocrine on five early-stage programs for the research, development, manufacture and commercialization of gene
therapies designed to address CNS diseases or conditions associated with rare genetic targets. The Company has also
entered into agreements with licensees including Novartis, Alexion, and Sangamo, to license or to provide options to
receive exclusive licenses to certain TRACER Capsids. As described further below, in December 2023, the Company
entered into a license and collaboration agreement with Novartis to provide Novartis certain rights regarding the
development of potential gene therapy product candidates for the treatment of spinal muscular atrophy and to collaborate
with Novartis to develop gene therapy product candidates for the treatment of Huntington’s disease. The joint steering
committee with Neurocrine selected a development candidate for the FA Program, during the first quarter of 2024, and
expects to advance into first-in-human clinical trials in 2025. The Company also anticipates that its collaborative partners
and licensees will submit at least one additional IND application for a partnered program and initiate clinical
development for the associated program by the end of 2025.
The Company has a history of incurring annual net operating losses prior to the operating income in 2023. As of
December 31, 2023, the Company had an accumulated deficit of $261.2 million. The Company has not generated any
F-7
product revenue and has financed its operations primarily through public offerings and private placements of its equity
securities and funding from fees, milestone payments, and cost reimbursements associated with its prior and current
collaborations and license agreements.
As of December 31, 2023, the Company had cash, cash equivalents, and marketable securities of $230.9
million. Based upon its current operating plan, the Company expects that its existing cash, cash equivalents, and
marketable securities at December 31, 2023, together with the upfront $80.0 million payment received in January 2024
in connection with the Collaboration and License Agreement by and between the Company and Novartis dated as of
December 28, 2023 (the “2023 Novartis Collaboration Agreement”), $20.0 million in proceeds from Novartis’ equity
purchase, and $93.5 million in net proceeds received from a public offering closed in January 2024, to be sufficient to
meet the Company’s planned operating expenses and capital expenditure requirements for at least twelve months from
the issuance of these consolidated financial statements.
There can be no assurance that the Company will be able to obtain additional debt or equity financing on terms
acceptable to the Company or generate product revenue or revenue from collaboration partners, on a timely basis 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 and basis of presentation
Basis of presentation
The accompanying consolidated financial statements have been prepared in conformity with accounting
principles generally accepted in the United States of America (“GAAP”) and pursuant to the rules and regulations of the
U.S. Securities and Exchange Commission (“SEC”) for reporting on Form 10-K. The Company’s consolidated financial
statements include the accounts of Voyager Therapeutics, Inc. and its wholly-owned subsidiary, Voyager Securities
Corporation. All intercompany balances and transactions have been eliminated.
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, research and development 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.
F-8
• 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.
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 securities with a remaining maturity of greater than three months when
purchased as available-for-sale. Marketable securities with a remaining maturity date greater than one year are classified
as non-current where the Company has the intent and ability to hold these securities for at least the next 12 months.
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. 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 or credit losses have been recognized.
Cash, cash equivalents, and marketable securities as of December 31, 2023 and 2022 consist of the following:
As of December 31, 2023
Money market funds included in cash and cash
equivalents
Marketable securities:
U.S. Treasury notes
U.S. Government agency securities
Corporate bonds
Commercial paper
As of December 31, 2022
Money market funds included in cash and cash
equivalents
Marketable securities:
U.S. Treasury notes
Total money market funds and marketable securities $
Amortized
Cost
Unrealized
Gains
Unrealized
Losses
Fair
Value
(in thousands)
$
65,589
—
— $
65,589
102,966
31,068
23,975
3,985
227,583 $
81
10
2
—
93 $
(3)
(3)
(7)
—
(13) $
103,044
31,075
23,970
3,985
227,663
$
91,724 $
— $
— $
91,724
19,980
—
— $
(91)
(91) $
19,889
111,613
Total money market funds and marketable securities $
111,704 $
F-9
All of the Company’s marketable securities at December 31, 2023 and 2022 have a contractual maturity of one
year or less.
The Company reviews investments whenever the fair value of an investment is less than the amortized cost and
evidence indicates that an investment’s carrying amount is not recoverable within a reasonable period of time. In
connection with these investments, the Company evaluates whether the decline in fair value has resulted from credit
losses or other factors, considering the extent to which fair value is less than amortized cost, any changes to the rating of
the security by a rating agency, and adverse conditions specifically related to the security, among other factors. If this
assessment indicates that a credit loss exists, the present value of cash flows expected to be collected from the security is
compared to the amortized cost basis of the security. If the present value of cash flows expected to be collected is less
than the amortized cost basis, a credit loss exists and an allowance for credit losses is recorded for the credit loss on the
condensed consolidated balance sheet, limited by the amount that the fair value is less than the amortized cost basis. Any
impairment that is not related to credit is recognized in other comprehensive income (loss). Changes in the allowance for
credit losses are recorded as a provision for (or reversal of) credit loss expense in general and administrative expenses
within the consolidated statement of operations and comprehensive income (loss). Losses are charged against the
allowance when the Company believes the uncollectability of an available-for-sale security is confirmed or when either
of the criteria regarding intent or requirement to sell is met.
The Company held $44.2 million and $19.9 million in marketable securities that were in an unrealized loss
position as of December 31, 2023 and December 31, 2022, respectively. The unrealized losses at December 31, 2023 and
December 31, 2022 were attributable to changes in interest rates and the unrealized losses do not represent credit losses.
The Company does not intend to sell these securities and it is not more likely than not that it will be required to sell them
before recovery of their amortized cost basis.
Restricted Cash
As of December 31, 2023 and 2022, the Company maintained restricted cash totaling approximately $1.6
million and $1.5 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 and 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:
2023
As of December 31,
2022
(in thousands)
2021
Cash and cash equivalents
$
Restricted cash included in deposits and other non-current assets
$
Total cash, cash equivalents, and restricted cash
68,802 $
1,593
70,395 $
98,959 $
1,515
100,474 $
117,433
1,779
119,212
Property and Equipment
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
F-10
values of the assets exceed their fair value. The Company has not recognized any impairment losses from inception
through December 31, 2023.
Revenue Recognition
The Company enters into license, option, and collaboration agreements which are within the scope of ASC 606,
Revenue from Contracts with Customers (“ASC 606”), under which the Company licenses or provides options to license
certain of the Company’s product candidates and, in certain cases, 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; option exercise fees; development, regulatory, and commercial
milestone payments; and royalties on net sales of licensed products.
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 (a) the customer can benefit from the good or service on its own or
together with other readily available resources and (b) 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 revenue 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 or license arrangements.
For arrangements that include sales-based royalties, including milestone payments based on the level of sales, in
which the license is deemed to be the predominant item to which the royalties relate, the Company recognizes revenue at
the later of (a) when the related sales occur, or (b) 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 or license 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
F-11
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
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. A portion of revenue recognized from the 2019
and 2023 Neurocrine Collaboration Agreements and the 2023 Novartis Collaboration Agreement 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. The Company estimates the expected
remaining costs to complete the research and development services for each performance obligation. The Company
evaluates the measure of progress each reporting period and, if necessary, adjusts the measure and related revenue
recognition.
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
The Company determines if an arrangement is or contains a lease at inception under Accounting Standards
Codification (ASC) 842 Leases. 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 operating
lease, right-of-use asset, other current liabilities, and other non-current 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.
F-12
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.
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 and comprehensive income (loss) 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
(a) the expected stock price volatility, (b) the expected term of the award, (c) the risk-free interest rate and (d) expected
dividends. The Company bases the estimate of expected volatility on 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
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
F-13
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, 2023, 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.
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, 2023 and 2022,
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, 2023 and 2022.
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
2023
22,500
1,370,897
7,425,444
8,818,841
As of December 31,
2022
45,000
1,112,563
6,199,571
7,357,134
2021
137,255
806,379
5,013,193
5,956,827
Basic net income (loss) and diluted weighted-average shares outstanding are as follows for the years ended
December 31, 2023, 2022, and 2021:
Numerator:
Net income (loss)
Year Ended December 31,
2023
2021
2022
(in thousands, except share data)
$
132,330
$
(46,408)
$
(71,197)
Denominator for basic net income (loss) per share:
Weighted average shares outstanding-basic
43,020,747 38,356,810 37,668,947
Denominator for diluted net income (loss) per share:
Weighted average shares outstanding
Common stock options and restricted stock units
Weighted average shares outstanding-diluted
43,020,747 38,356,810 37,668,947
—
44,569,334 38,356,810 37,668,947
1,548,587
—
F-14
Concentrations of Credit Risk and Significant Suppliers
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.
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.
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 (“CODM”) in deciding how to allocate resources and
assess performance. The Company and the Company’s CODM, the Company’s Chief Executive Officer, view the
Company’s operations and manages its business as a single operating segment, which is the business of developing and
commercializing genetic medicine.
Recent Accounting Pronouncements
In August 2020, the Financial Accounting Standards Board (“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 November 2023 the FASB issued ASU No. 2023-07, Segment Reporting (Topic 280): Improvements to
Reportable Segment Disclosure. This standard requires annual and interim disclosure of significant segment expenses
that are regularly provided to the CODM. The amendments in this update also expand the interim segment disclosure
requirements. The disclosures required under ASU 2023-07 are also required for public entities with a single reportable
segment. This standard is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal
years beginning after December 15, 2024. Early adoption is permitted and the amendments in this update are required to
be applied on a retrospective basis. The Company is evaluating the impact of ASU 2023-07 on its consolidated financial
statements and does not expect it to have a material impact.
In December 2023, the FASB issued ASU 2023-09, “Income Taxes (Topic 740) - Improvements to Income Tax
Disclosures.” ASU 2023-09 enhances the transparency and decision usefulness of income tax disclosures by requiring
consistent categories and greater disaggregation of information in the rate reconciliation and income taxes paid
disaggregated by jurisdiction. The amendments in ASU 2023-09 are effective for fiscal years, and interim periods within
those fiscal years, beginning after December 15, 2024, and is applicable to the Company in fiscal 2025. However,
retrospective application is permitted. Early adoption is also permitted. Besides a change in income tax disclosures, the
Company does not expect the adoption of ASU 2023-09 to have a material impact on its consolidated financial
statements.
F-15
3. Fair value measurements
Assets and liabilities measured at fair value on a recurring basis as of December 31, 2023 and 2022 are as
follows:
Assets
December 31, 2023
Money market funds included in cash and cash
equivalents
Marketable securities:
U.S. Treasury notes
U.S. Government agency securities
Corporate bonds
Commercial paper
December 31, 2022
Money market funds included in cash and cash
equivalents
Marketable securities:
U.S. Treasury notes
Total money market funds and marketable securities
$
Quoted Prices
in Active
Markets for
Identical Assets
(Level 1)
Significant
Other
Significant
Observable Unobservable
Inputs
(Level 2)
Inputs
(Level 3)
(in thousands)
Total
$
65,589
$
65,589
$
—
$
103,044
31,075
23,970
3,985
227,663 $
103,044
31,075
—
—
199,708 $
—
—
23,970
3,985
27,955 $
$
91,724 $
91,724 $
— $
—
—
—
—
—
—
—
—
—
Total money market funds and marketable securities
$
111,613 $
111,613 $
19,889
19,889
—
— $
The Company measures the fair value of money market funds, U.S. Treasury notes and U.S. Government
agency securities based on quoted prices in active markets for identical securities. The Company measures the fair value
of the Level 2 securities, corporate bonds and commercial paper, based on recent trades of securities in inactive markets
or based on quoted market prices of similar instruments and other significant inputs derived from or corroborated by
observable market data.
4. Prepaid expenses and other current assets
Prepaid expenses and other current assets consist of the following:
Other current assets
Prepaid insurance
Prepaid research and development contracts
Accrued interest receivable
Total
As of December 31,
2023
2022
(in thousands)
$
$
2,628 $
607
1,119
964
5,318 $
4,233
696
83
382
5,394
F-16
5. Property and equipment, net
Property and equipment, net consists of the following:
Laboratory equipment
Leasehold improvements
Furniture and office equipment
Other
Total property and equipment
Less: accumulated depreciation
Property and equipment, net
As of December 31,
2023
2022
(in thousands)
20,536 $
7,106
2,625
1,265
31,532
(15,038)
16,494 $
19,675
12,554
2,333
502
35,064
(17,207)
17,857
$
$
The Company recorded $4.4 million, $6.2 million, and $5.2 million in depreciation expense during the years
ended December 31, 2023, 2022, and 2021, respectively.
6. Accrued expenses
Accrued expenses consist of the following:
Employee compensation costs
Research and development costs
Accrued goods and services
Professional services
Total
7. Lease obligation
Operating Leases
As of December 31,
2023
2022
(in thousands)
6,614 $
5,225
4,229
755
16,823 $
4,559
1,895
636
726
7,816
$
$
As of December 31, 2023, the Company has a lease for laboratory and office space at 75 Hayden Avenue in
Lexington, Massachusetts through January 31, 2031 and a lease for additional office and laboratory space at 64 Sidney
Street in Cambridge, Massachusetts through November 30, 2026.
In September 2021, the Company entered into an agreement with BioNTech US, Inc. (“BioNTech US”) to
sublease part of the office and laboratory space leased by the Company at 75 Sidney Street in Cambridge, Massachusetts
(the “Sublease Agreement”) at that time. The sublease term was for approximately 3.3 years. The sublease did not
relieve the Company of its original obligation under the lease, and therefore the Company did not adjust the operating
lease right-of-use asset as a result of the sublease and accounted for the sublease as a separate lease.
On June 22, 2022 the Company entered into a Lease Termination Agreement (the “Lease Termination
Agreement”) and terminated the lease for office and laboratory space at 75 Sidney Street (the “75 Sidney Street Lease”),
effective immediately. In connection with the Lease Termination Agreement, the Company also entered into a Sublease
Termination Agreement (the “Sublease Termination Agreement”) and terminated the Sublease Agreement with
BioNTech US. The Company did not incur any termination penalties in connection with the Lease Termination
Agreement or Sublease Termination Agreement. The Company derecognized the related right-of-use asset of
approximately $14.5 million and the operating lease liabilities of $17.0 million, accordingly, resulting in a gain of $2.5
million in the year ended December 31, 2022.
F-17
The Company’s lease agreements require the Company to maintain a cash deposit or irrevocable letter of credit
in the aggregate amount of $1.5 million payable to its landlords as security for the performance of its obligations under
the leases.
On August 11, 2023, the Company entered into a first amendment (the “First Amendment”) to its existing lease
for laboratory and office space at 75 Hayden Avenue in Lexington, Massachusetts, pursuant to which the Company
agreed to lease approximately 61,307 square feet of additional office and laboratory space. The term of the First
Amendment commences on the date on which the landlord makes the space available for use by the Company, and
expires on January 31, 2031, unless sooner terminated or extended. As of December 31, 2023, the Company did not have
control of the space and therefore, the lease had not yet commenced. The commencement date for the First Amendment
occurred on February 1, 2024. The expected contractual obligation under the First Amendment to the Company’s
existing lease is approximately $37.8 million, to be paid over the 7 year term of the lease.
Total lease cost for operating leases of approximately $3.6 million, $4.6 million, and $6.8 million was incurred
during the years ended December 31, 2023, 2022, and 2021, respectively. As of December 31, 2023, the weighted
average remaining lease term was 5 years and the weighted average incremental borrowing rate used to determine the
operating lease liability was 7.4%.
The following table summarizes the operating sublease income generated under the Sublease Agreement for the
years ended December 31, 2023, 2022, and 2021:
2023
Years ended
December 31,
2022
(in thousands)
2021
Operating sublease income
$
— $
1,380
$
838
8. Commitments, contingencies, and other liabilities
As of December 31, 2023 and 2022, other current and non-current liabilities consisted of the following:
Other current liabilities
Lease liabilities
Total other current liabilities
Other non-current liabilities
Lease liabilities
Other
Total other non-current liabilities
Strategic Restructuring
As of December 31,
2023
2022
(in thousands)
$
$
$
3,200
3,200 $
$
17,093
1,001
18,094 $
2,832
2,832
20,294
1,001
21,295
On August 6, 2021, the board of directors of the Company approved a strategic restructuring plan to eliminate a
portion of its workforce as part of an initiative to reduce expenses and enhance operations. The strategic restructuring
plan was approved in connection with its portfolio reevaluation efforts and its strategic shift to invest additional
resources in the Company’s TRACER Capsid development efforts.
During the year ended December 31, 2021, the Company incurred restructuring costs of approximately $2.6
million, which consists of severance-related costs. These costs are reported within the Company’s research and
development expenses and general and administrative expenses. All costs have been paid as of December 31, 2023.
F-18
Litigation
The Company was not a party to any material legal matters or claims and did not have contingency reserves
established for any litigation liabilities as of December 31, 2023 or 2022.
9. Significant Agreements
2023 Novartis License and Collaboration Agreement
On December 28, 2023 (the “2023 Novartis Collaboration Agreement Effective Date”), the Company entered
into a License and Collaboration Agreement (the “2023 Novartis Collaboration Agreement”) with Novartis to (a) provide
rights to Novartis with respect to certain TRACER Capsids for use in the research, development, and commercialization
by Novartis of AAV gene therapy products and product candidates, comprising such TRACER Capsids and payloads
intended for the treatment of spinal muscular atrophy (the “Novartis SMA Program”) and (b) collaborate to develop
AAV gene therapy products and product candidates intended for the treatment of Huntington’s disease (the “Novartis
HD Program”), in each case, leveraging TRACER Capsids and other intellectual property controlled by the Company.
Novartis SMA Program and Novartis HD Program Licenses
Under the terms of the 2023 Novartis Collaboration Agreement, the Company granted Novartis and its
affiliates:
•
•
•
a non-exclusive, non-transferable, non-sublicensable (except in limited circumstances for contractors),
worldwide, royalty-free right and license under any patents or know-how controlled by the Company and
related to the TRACER Capsids to evaluate the same for use in the development of a product or product
candidate under the Novartis SMA Program (a “Novartis SMA Program Product”) comprising such a TRACER
Capsid and a payload selected by Novartis during the period beginning on the 2023 Novartis Collaboration
Agreement Effective Date and ending on the third anniversary of the 2023 Novartis Collaboration Agreement
Effective Date;
an exclusive (even as to the Company), sublicensable, non-transferable, worldwide, royalty-bearing right and
license under any patents or know-how controlled by the Company and relating to the selected TRACER
Capsids to exploit the same as incorporated into a Novartis SMA Program Product for all human and veterinary
diagnostic, prophylactic and therapeutic uses during the Term (as defined below); and
an exclusive (even as to the Company), non-transferable, sublicensable, worldwide, royalty-bearing right and
license under any patents and know-how controlled by the Company and relating to the development of a
product or product candidate under the Novartis HD Program (a “Novartis HD Program Product”) to exploit the
same for all human and veterinary diagnostic, prophylactic and therapeutic uses during the Term.
Governance
The Company and Novartis have agreed to manage the Novartis HD Program through a joint steering
committee until dissolved after the first IND application filing for a Novartis HD Program Product. The Company and
Novartis have further agreed that day-to-day activities of both the Novartis SMA Program and the Novartis HD Program
shall be managed through designees from each of the Company and Novartis, acting as alliance managers.
Development, Regulatory Approval, Commercialization and Diligence
Under the 2023 Novartis Collaboration Agreement, Novartis is solely responsible for, and has sole decision-
making authority with respect to, at its own expense, the exploitation of a Novartis SMA Program Product.
With respect to the Novartis HD Program, the parties have agreed to conduct research and pre-clinical
development of Novartis HD Program Products pursuant to a research plan, with Novartis reimbursing the Company for
F-19
its activities thereunder in accordance with the agreed-to budget. From and after the first IND application filing for the
Novartis HD Program, the parties have agreed that Novartis will assume sole responsibility for the development and
commercialization of Novartis HD Program Products, including all further preclinical and clinical development and any
commercialization of the Novartis HD Program products and product candidates.
With respect to each of the Novartis SMA Program Products and Novartis HD Program Products, Novartis is
obligated to use commercially reasonable efforts to develop and obtain regulatory approval for at least one of each such
product in the United States and in certain other international markets specified in the 2023 Novartis Collaboration
Agreement.
Termination
Unless earlier terminated, with respect to any licensed product(s) under the Collaboration Agreement, on a
country-by-country basis, the 2023 Novartis Collaboration Agreement expires upon the expiration of the last-to-expire
royalty term with respect to such licensed product in such country in the territory. Subject to a cure period, either party
may terminate the 2023 Novartis Collaboration Agreement, in whole or in part, subject to specified conditions, in the
event of the other party’s uncured material breach. Novartis may also terminate the 2023 Novartis Collaboration
Agreement, in whole or in part, subject to specified conditions, for the Company’s insolvency, for the occurrence of a
violation of global trade control laws, or for the Company’s non-compliance with certain anti-bribery or anti-corruption
covenants. Novartis may terminate the 2023 Novartis Collaboration Agreement, in whole or in part, for any or no reason
upon ninety days’ written notice to the Company. In the event that Novartis has the right to terminate the 2023 Novartis
Collaboration Agreement as a result of an uncured material breach by the Company that materially impairs the ability of
Novartis to exploit one or more licensed products, Novartis may, in lieu of such termination, elect for the 2023 Novartis
Collaboration Agreement to remain in full force and effect, and all milestone payments and royalties that would have
otherwise been payable by Novartis under such licenses had the 2023 Novartis Collaboration Agreement not been
breached would be substantially reduced.
Financial Terms
Under the 2023 Novartis Collaboration Agreement, Novartis agreed to pay the Company an initial upfront
payment of $80.0 million. The Company is eligible to receive specified development, regulatory, and commercialization
milestone payments of up to an aggregate of $200.0 million for the Novartis SMA Program and up to an aggregate of
$225.0 million for the Novartis HD Program, in each case for the first corresponding product to achieve the
corresponding milestone. The Company is also eligible to receive (a) specified sales milestone payments of up to an
aggregate of $400.0 million for the Novartis SMA Program and up to an aggregate of $375.0 million for the Novartis
HD Program and (b) tiered, escalating royalties in the high single-digit to low double-digit percentages of annual net
sales of the Novartis SMA Program Products and the Novartis HD Program Products. The royalties are subject to
potential customary reductions, including patent claim expiration, payments for certain third-party licenses, and
biosimilar market penetration, subject to specified limits.
Stock Purchase Agreement
Under the stock purchase agreement with Novartis entered into on December 28, 2023 (the “2023 Novartis
Stock Purchase Agreement”), Novartis agreed to purchase 2,145,002 shares of common stock of the Company (the
“Novartis Shares”) for an aggregate purchase price of approximately $20.0 million.
Accounting Analysis
The Company determined the 2023 Novartis Collaboration Agreement represents a contract with a customer
under ASC 606. In addition, the 2023 Novartis Collaboration Agreement did not modify the scope or price of the 2022
Novartis Option and License Agreement, as discussed below. The Company therefore determined that the 2023 Novartis
Collaboration Agreement should be accounted for separately. The 2023 Novartis Collaboration Agreement includes the
following performance obligations: (i) the development and commercialization license for the Novartis SMA Program,
(ii) the development and commercialization license for the Novartis HD Program; and (iii) the research and development
F-20
services for the Novartis HD Program (“Novartis HD Research Services”). The development and commercialization
licenses for the Novartis HD Program and Novartis SMA Program are each distinct, as Novartis can benefit from such
licenses on their own or from other resources commonly available in the industry given the stage of development of the
product candidates subject to the licenses. Similarly, the research and development services for the Novartis HD Program
provide a distinct benefit to Novartis within the context of the contract, separate from the licenses.
The transaction consideration allocated to the performance obligations within the 2023 Novartis Collaboration
Agreement includes fixed consideration of $80.0 million, and variable consideration, which is comprised of an estimated
$24.2 million of cost reimbursements for Novartis HD Research Services, up to $425.0 of potential development
milestone payments, up to $775.0 million of potential sales milestone payment, and sales-based royalties. The
consideration related to the Novartis HD Research Services, becomes due and payable on a quarterly basis as the
services are being performed.
The Company estimates variable consideration using the most likely amount approach. At the outset of the
contract, the Company has determined this consideration should be constrained. The sales milestone payments and
royalties will be recognized in the period the underlying sales occur, as this consideration is related to the two
development and commercialization licenses, the predominant performance obligations in the contract.
The Company allocated the fixed transaction price to the separate performance obligations based on the relative
standalone selling price of each performance obligation. The standalone selling prices for development and
commercialization licenses for the Novartis SMA Program and Novartis HD Program were estimated using an adjusted-
market approach. The Company allocated the variable consideration related to the Novartis HD Research Services as the
consideration becomes payable as the Company delivers the Novartis HD Research Services and allocating the entirety
of this consideration to the Novartis HD Research Services reflects the amount the Company expects to be entitled to for
performing the services. The development milestone payments, the sales milestone payments and the royalties are
allocated to the respective development and commercialization licenses for the Novartis SMA Program and Novartis HD
Program as the variable consideration relates directly to those performance obligations.
The Company recognized the $80.0 million fixed transaction price allocated to the development and
commercialization licenses for the Novartis SMA Program and Novartis HD Program, as collaboration revenue upon
delivery of the development and commercialization licenses to Novartis in December 2023. The issuance of the Novartis
Shares to Novartis pursuant to the 2023 Novartis Stock Purchase Agreement in January 2024 resulted in a premium of
$0.7 million. The premium will be allocated to the development and commercialization licenses for the Novartis HD
Program and Novartis SMA Program and is expected to be recognized as collaboration revenue during the first quarter of
2024, upon the issuance of the Novartis Shares under the 2023 Novartis Stock Purchase Agreement. The Novartis HD
Research Services commenced in the first quarter of 2024. The $80.0 million fixed transaction price was recorded in
accounts receivable as of December 31, 2023. The Company had an unconditional right to the payment, and it was
collected in January of 2024.
The Company incurred approximately $1.9 million of business development costs related to the 2023 Novartis
Collaboration Agreement which were payable only upon the execution of the agreement, and therefore are considered
incremental costs of obtaining a contract with a customer. Given the substantial value associated with the development
and commercialization licenses for the Novartis SMA Program and Novartis HD Program that were delivered in
December 2023, the Company recognized the $1.9 million of costs in general and administrative expenses during the
year ended December 31, 2023.
2022 Novartis Option and License Agreement
Summary of Agreement
On March 4, 2022 (the “Novartis Effective Date”), the Company entered into an option and license agreement
with Novartis (the “2022 Novartis Agreement”). Pursuant to the 2022 Novartis Agreement, the Company granted
Novartis options (the “Novartis License Options”) to license TRACER Capsids (“Novartis Licensed Capsids”) for
F-21
exclusive use with certain targets to develop and commercialize adeno-associated virus gene therapy candidates
comprised of Novartis Licensed Capsids and payloads directed to such targets (the “Novartis Payloads”).
During the period commencing on the Novartis Effective Date and ending on the first anniversary thereof or, in
the event Novartis exercises a Novartis License Option, the third anniversary thereof, on a target-by-target basis (the
“Novartis Research Term”), the Company granted Novartis a non-exclusive research license to evaluate the Company’s
TRACER Capsids for potential use, in combination with Novartis Payloads, in programs targeting three specified genes
(the “Initial Novartis Targets”). Upon the payment of additional fees, Novartis may also assess the Company’s TRACER
Capsids for use with up to two other targets (the “Additional Novartis Targets”), subject to certain conditions including
that such target is not part of, or reasonably competitive with, the Company’s current development programs (the Initial
Novartis Targets and the Additional Novartis Targets collectively, the “Novartis Targets”). During the Novartis Research
Term, as applicable, the Company may, at its sole discretion and expense, conduct further research activities to identify
additional TRACER Capsids. If the Company elects to do so, the Company has agreed to disclose performance
characteristics of such new TRACER Capsids to Novartis on a rolling basis.
During the applicable Novartis Research Term, Novartis may exercise up to three Novartis License Options—or
up to five Novartis License Options if Novartis is evaluating the Additional Novartis Targets—in the aggregate, provided
that Novartis may only exercise one Novartis License Option for each Novartis Target. Upon the exercise of any
Novartis License Option, the Company has agreed to grant Novartis a target-exclusive, worldwide license, with the right
to sublicense, under certain of the Company’s intellectual property, the rights to develop and commercialize the
applicable Novartis Licensed Capsid as incorporated into products containing the corresponding Novartis Payload (the
“Novartis Licensed Products”). Upon the exercise of a Novartis License Option, the Company has agreed to provide
certain additional know-how to enable Novartis to exploit the Novartis Licensed Capsid and the corresponding Novartis
Payload for use in a Novartis Licensed Product. Novartis may, during the applicable Novartis Research Term but
following the exercise of a Novartis License Option, conduct additional evaluation of the Company’s capsid candidates
and has the right to substitute any other TRACER Capsid for a Novartis Licensed Capsid.
Effective March 1, 2023, Novartis exercised its Novartis License Options to license TRACER Capsids for use
in gene therapy programs against two undisclosed Initial Novartis Targets.
Subject to the Company’s disclosure obligations described above, the Company and Novartis have agreed to
conduct their respective research and evaluation activities independently, with communications being managed by two
alliance managers comprised of a designee from each of the Company and Novartis.
Under the 2022 Novartis Agreement, Novartis is solely responsible for, and has sole decision-making authority
with respect to, development and commercialization of the Novartis Licensed Products. In the event Novartis exercises a
Novartis License Option, Novartis is required to use commercially reasonable efforts to develop and obtain regulatory
approval for at least one Novartis Licensed Product for each Novartis Target for which it has exercised a Novartis
License Option in (a) the United States and (b) at least three of the following countries: the United Kingdom, France,
Germany, Italy, Spain and Japan (each of which, a “Novartis Major Market Country”), subject to certain limitations.
Novartis is also required to use commercially reasonable efforts to commercialize each Novartis Licensed Product in the
United States and at least three Novartis Major Market Countries where Novartis or its designated affiliates or
sublicensees has received regulatory approval for such Novartis Licensed Product, subject to certain limitations.
During the Novartis Research Term, the Company has agreed to provide plasmids to Novartis for the
production of TRACER Capsids for evaluation upon request. The Company has also granted Novartis a non-exclusive
license, effective upon an exercise of a Novartis License Option and in addition to its options for target-exclusive
licenses under certain of the Company’s intellectual property described above, on a Novartis Licensed Capsid-by-
Novartis Licensed Capsid basis, under certain of the Company’s know-how to exploit the applicable Novartis Licensed
Capsid as incorporated into Novartis Licensed Products containing the corresponding Novartis Payload.
Under the terms of the 2022 Novartis Agreement, Novartis paid the Company an upfront payment of $54.0
million. Effective as of March 1, 2023, Novartis exercised its Novartis License Options to license TRACER Capsids for
use in gene therapy programs against two undisclosed Initial Novartis Targets.
F-22
Under the terms of the 2022 Novartis Agreement, each party owns the entire right, title, and interest in and to all
patents or know-how controlled by such party and existing as of or before the Novartis Effective Date, or invented,
developed, created, generated or acquired solely by or on behalf of such party after the Novartis Effective Date. Subject
to certain specified exceptions, any patents and know-how that are invented or otherwise developed jointly by or on
behalf of the parties during the term of the 2022 Novartis Agreement and in the course of the parties’ activities under the
2022 Novartis Agreement will follow inventorship under U.S. patent law.
Subject to certain limitations and exceptions, the Company has agreed (a) during the Novartis Research Term,
not to conduct any internal program or program on behalf of a third party that is directed to the development or
commercialization of any Company’s capsids, or grant any third party or affiliate any right or license under the
Company’s rights in such capsids, to exploit any therapeutic product containing a capsid in combination with a payload
designed to have therapeutic effect on any of the Novartis Targets; and (b) after Novartis’s exercise of any Novartis
License Option, not to grant any third party or affiliate any right or license under the Company’s patents to exploit any
Novartis Licensed Capsid for the applicable Novartis Target.
Unless earlier terminated, the 2022 Novartis Agreement expires on the expiration of the last-to-expire royalty
term with respect to all Novartis Licensed Products in all countries. Subject to a cure period, either party may terminate
the 2022 Novartis Agreement, in whole or in part, subject to specified conditions, in the event of the other party’s
uncured material breach. Novartis may also terminate the 2022 Novartis Agreement, in whole or in part, subject to
specified conditions, for the Company’s insolvency, the occurrence of a violation of global trade control laws, or for the
Company’s non-compliance with certain anti-bribery or anti-corruption covenants. Novartis may terminate the 2022
Novartis Agreement, in whole or in part, for any or no reason upon ninety days’ written notice to the Company.
Upon certain terminations for cause by Novartis, the licenses granted by the Company to Novartis under the
2022 Novartis Agreement shall become irrevocable and perpetual, and all milestone payments and royalties that would
have otherwise been payable by Novartis under such licenses had the Novartis Agreement remained in effect would be
substantially reduced.
Accounting Analysis
At inception, the Company determined the 2022 Novartis Agreement was a contract with a customer under
ASC 606. The Company assessed the promised goods and services and determined that the 2022 Novartis Agreement
contains three performance obligations consisting of three material rights, one for each of the Novartis License Options.
The Company concluded that each Novartis License Option provides a material right as consideration for each option is
less than the amount that the Company would otherwise have expected to receive outside the context of the contract. The
promises at inception do not include the underlying goods or services that would be delivered upon exercise of the
option, but rather represent the value to the customer of having the right to exercise the Novartis License Option at the
specified exercise fee. Upon the exercise of a Novartis License Option, until March 4, 2025, while the Company is not
obligated to conduct additional research activities upon any option exercise to identify additional proprietary capsids that
may be useful for AAV gene therapies for the treatment of central nervous system or cardiovascular diseases, it has
agreed to continue to disclose to Novartis, on a rolling basis, the performance characteristics identified for all such capsid
candidates, if and when available. Novartis may conduct additional evaluation of such capsid candidates and has the
right to substitute any other capsid candidate for the Novartis Licensed Capsid it previously elected to license when it
exercised the Novartis License Option. The Company determined that this promise to provide Novartis the ability to
evaluate and potentially substitute other capsid candidates for the Novartis Licensed Capsid it previously elected to
license when it exercised the Novartis License Option, if and when available, is an additional performance obligation in
the arrangement (the “Novartis Substitution Right Performance Obligation”). The Company concluded the options for
Additional Novartis Targets are not material rights as the price reflects the standalone selling price of the options. The
Company will therefore account for the options for Additional Novartis Targets separately, if and when exercised.
The Company received a nonrefundable, upfront payment of $54.0 million as consideration under the 2022
Novartis Agreement, which represents the transaction price at inception. Additional consideration to be paid to the
Company upon exercise of the Novartis License Options or upon reaching certain milestones are excluded from the
F-23
transaction price as they relate to option fees and milestones that could only be achieved subsequent to an option
exercise.
The Company allocated the transaction price to the three material rights based on their relative standalone
selling prices. The estimated standalone selling price for each material right was based on an adjusted market assessment
approach. The Company concluded that the market would be willing to pay an equal amount for each Novartis License
Option on a standalone basis. The Company reached this conclusion after considering (i) the downstream economics
including option fees, milestones and royalties related to each Novartis License Option being identical and (ii)
comparable market data. The Company determined the standalone selling price for the Novartis Substitution Right
Performance Obligation was insignificant to the allocation of the transaction price using the relative standalone selling
price model and did not allocate any transaction price to the Novartis Substitution Right Performance Obligation,
accordingly. This determination was supported by qualitative and quantitative assessments of the standalone selling price
that considered the cost of identifying other potential capsid candidates and the likelihood of license substitution. As
such, based on the relative standalone selling price for each of the three material rights, the allocation of the transaction
price to the separate performance obligations is $18.0 million for each material right.
The amount allocated to each material right was recorded as deferred revenue.
During the year ended December 31, 2023, the Company recognized $79.0 million in collaboration revenue
related to the Novartis Agreement. Of this $79.0 million, $54.0 million is attributable to the exercise of the two material
rights for Novartis License Options and the expiration of the third material right and was previously deferred as of
December 31, 2022. The remaining $25.0 million represents the option exercise fee. This amount was received by the
Company during the second quarter of 2023.
2023 Neurocrine Collaboration Agreement
Summary of Agreement
On January 8, 2023, the Company entered into a collaboration and license agreement with Neurocrine (the
“2023 Neurocrine Collaboration Agreement”) for the research, development, manufacture and commercialization of
gene therapy products directed to the GBA1 Program, and three early research programs focused on the research,
development, manufacture and commercialization of gene therapies designed to address central nervous system (“CNS”)
diseases or conditions associated with rare genetic targets (the “2023 Discovery Programs” and, collectively with the
GBA1 Program, the “2023 Neurocrine Programs”). The 2023 Neurocrine Collaboration Agreement became effective on
February 21, 2023 (the “Neurocrine Effective Date”).
Collaboration and License
Under the 2023 Neurocrine Collaboration Agreement, the Company and Neurocrine have agreed to collaborate
on the conduct of the 2023 Neurocrine Programs. Under the terms of the 2023 Neurocrine Collaboration Agreement,
subject to the rights retained by the Company thereunder, the Company granted to Neurocrine, as of the Neurocrine
Effective Date, an exclusive, royalty-bearing, sublicensable, worldwide license, under certain of the Company’s
intellectual property rights, to research, develop, manufacture and commercialize gene therapy products (the “2023
Collaboration Products”), arising under the 2023 Neurocrine Programs.
Pursuant to mutually-agreed development plans, during the period beginning on the Neurocrine Effective Date
and ending on the third anniversary of the Neurocrine Effective Date, which period may be extended upon mutual
written agreement of the Company and Neurocrine (the “2023 Discovery Period”), and as overseen by the Joint Steering
Committee (“JSC”) for the ongoing collaboration with Neurocrine, the Company is responsible for identifying capsids
meeting target criteria, producing development candidates, and conducting other pre-clinical activities regarding the
2023 Collaboration Products. Neurocrine has agreed to be responsible for all costs the Company incurs in conducting
pre-clinical development activities for each 2023 Neurocrine Program, in accordance with JSC agreed upon workplans
and budgets. If the Company breaches its responsibilities during this time or, in certain circumstances, upon a change of
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control, Neurocrine has the right, but not the obligation, to assume the conduct of the Company’s activities under such
2023 Neurocrine Program.
The Company has been granted the option (“2023 Co-Co Option”) to co-develop and co-commercialize 2023
Collaboration Products in the GBA1 Program in the United States upon the occurrence of the Company receiving topline
data from the first Phase 1 clinical trial for a product candidate being developed pursuant to the GBA1 Program. Should
the Company elect to exercise its 2023 Co-Co Option, the Company and Neurocrine agree to enter into a cost and profit-
sharing arrangement (a “2023 Co-Co Agreement”), whereby the Company and Neurocrine agree to jointly develop and
commercialize 2023 Collaboration Products in the GBA1 Program (“2023 Co-Co Products”) in the United States and
share equally in the GBA1 Program’s costs, profits and losses in the United States, with each party entitled to or
responsible for 50% of profits and losses with respect to each 2023 Co-Co Product in the United States, subject to
specified exceptions. The parties have agreed that the 2023 Co-Co Agreement will provide the Company the right to
terminate the 2023 Co-Co Agreement for any reason upon prior written notice to Neurocrine and provide Neurocrine the
right to terminate or amend the 2023 Co-Co Agreement upon a change of control under certain circumstances. In the
event the Company exercises its 2023 Co-Co Option, the parties have also agreed that Neurocrine is entitled to receive
(in addition to its 50% share of profits) 50% of the Company’s share of profits until the Company’s obligation to repay
50% of all development costs incurred by Neurocrine in connection with the GBA1 Program prior to such exercise have
been paid off out of such 50% of the Company’s share of profits.
Candidate Selection
Either party may notify the JSC of any gene therapy product candidate that includes a Company capsid and a
payload that is being developed under a 2023 Neurocrine Program (a “Collaboration Candidate”), that it desires to
nominate as a development candidate. In such event, the JSC shall determine whether such nominated Collaboration
Candidate meets certain development criteria. There will be a maximum of four potential development candidates for
which development is being performed under any 2023 Neurocrine Program at any given time during the 2023
Discovery Period. If a Collaboration Candidate fails to meet criteria established by the JSC and is removed from
consideration to become a development candidate or is named a development candidate, then a new Collaboration
Candidate may be nominated to be a potential development candidate to replace the Collaboration Candidate that has
failed or succeeded such that not more than four potential development candidates per program are under consideration
at any one time during the 2023 Discovery Period.
Manufacturing
The parties have agreed that the applicable development plans shall specify the allocation between the
Company and Neurocrine of responsibilities for the manufacturing of Collaboration Candidates associated with the
applicable 2023 Neurocrine Program during the 2023 Discovery Period. In accordance with the 2023 Collaboration
Agreement, the parties have also agreed that, if the Company conducts any portion of the manufacturing of a
Collaboration Candidate, the applicable development plan shall include an obligation for the Company to assist with the
technology transfer of such manufacturing responsibilities to Neurocrine or a third-party contract manufacturing
organization, as reasonably requested by Neurocrine, on terms to be mutually-agreed by the Company and Neurocrine.
Following the end of the 2023 Discovery Period, Neurocrine shall be responsible for the manufacturing of all
Collaboration Candidates and products.
Financial Terms
Under the terms of the 2023 Neurocrine Collaboration Agreement, Neurocrine paid the Company an upfront
payment of approximately $136.0 million and approximately $39.0 million for the purchase of 4,395,588 shares of
common stock of the Company at a price of $8.88 per share in February 2023. The 2023 Collaboration Agreement
provides for aggregate development milestone payments from Neurocrine to the Company for 2023 Collaboration
Products under (a) the GBA1 Program of up to $985.0 million; and (b) each of the three 2023 Discovery Programs of up
to $175.0 million for each 2023 Discovery Program. The Company may be entitled to receive aggregate commercial
milestone payments for up to two 2023 Collaboration Products under the GBA1 Program of up to $950.0 million per
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2023 Collaboration Product and for one 2023 Collaboration Product under each 2023 Discovery Program of up to $275.0
million per 2023 Discovery Program.
Neurocrine has also agreed to pay the Company tiered royalties, based on future net sales of the 2023
Collaboration Products. Such royalty percentages, for net sales in and outside the United States, range from (a) for the
GBA1 Program, the low double-digits to twenty and the high single-digits to mid-teens, respectively, and (b) for each
2023 Discovery Program, high single-digits to mid-teens and mid-single digits to low double-digits, respectively. On a
country-by-country and 2023 Neurocrine Program-by-2023 Neurocrine Program basis, the parties have agreed royalty
payments would commence on the first commercial sale of a 2023 Collaboration Product in such country and terminate
upon the latest of (a) the expiration, invalidation or the abandonment of the last patent covering the composition of the
2023 Collaboration Product or its approved method of use in such country, (b) ten years from the first commercial sale of
the 2023 Collaboration Product in such country and (c) the expiration of regulatory exclusivity in such country (the
“2023 Royalty Term”). Royalty payments may be reduced by up to 50% in specified circumstances, including expiration
of patent rights related to a 2023 Collaboration Product, approval of biosimilar products in each country, or required
payment of licensing fees to third parties related to the development and commercialization of any 2023 Collaboration
Product. Additionally, the licenses granted to Neurocrine shall automatically convert to a fully-paid, perpetual,
irrevocable royalty-free license on a country-by-country and 2023 Collaboration Product-by-2023 Collaboration Product
basis upon the expiration of the 2023 Royalty Term applicable to the 2023 Collaboration Product in such country.
Termination
Unless earlier terminated, the 2023 Neurocrine Collaboration Agreement expires on the later of (a) the
expiration of the last to expire 2023 Royalty Term with respect to all 2023 Collaboration Products worldwide or (b) the
expiration or termination of any 2023 Co-Co Agreement. Neurocrine may terminate the 2023 Neurocrine Collaboration
Agreement in its entirety or on a 2023 Neurocrine Program-by-2023 Neurocrine Program and/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 any
2023 Collaboration Product to which the termination applies or (b) one-year advance notice if such notice is provided
after the first commercial sale of any product to which the termination applies. Neurocrine may terminate the 2023
Neurocrine Collaboration Agreement with respect to a given 2023 Collaboration Product by providing written notice of
termination to the Company within thirty days after complete readout of any clinical trial if the results of such clinical
trial fail to meet the pre-specified primary endpoint(s) set forth in the applicable protocol or if there is a safety finding
during the clinical trial relating to such 2023 Collaboration Product that either (a) is substantially irreversible or not
monitorable in patients or (b) results in Neurocrine’s decision to designate such 2023 Collaboration Product as a
terminated product under the 2023 Collaboration Agreement.
The Company may terminate the 2023 Neurocrine Collaboration Agreement with respect to a particular patent
right of the Company’s, if Neurocrine challenges the validity or enforceability of such patent right. Subject to a cure
period, either party may terminate the 2023 Neurocrine Collaboration Agreement in the event of a material breach in
whole or in part, subject to specified conditions.
2023 Neurocrine Stock Purchase Agreement
In connection with the execution of the 2023 Neurocrine Collaboration Agreement, Neurocrine and the
Company also entered into a stock purchase agreement on January 8, 2023 (“the “2023 Neurocrine Stock Purchase
Agreement”), for the sale and issuance of 4,395,588 shares of common stock to Neurocrine at a price of $8.88 per share,
for an aggregate purchase price of approximately $39.0 million. In accordance with the terms and conditions of the 2023
Neurocrine Stock Purchase Agreement, the Company issued and sold these shares to Neurocrine on February 23, 2023.
Accounting Analysis
At inception, the Company determined the 2023 Neurocrine Collaboration Agreement was a contract with a
customer under ASC 606 and that modification accounting was not required given that the 2023 Neurocrine
Collaboration Agreement did not modify the scope or price of the 2019 Neurocrine Collaboration Agreement. The
Company therefore determined that the 2023 Neurocrine Agreement should be accounted for separately. The 2023
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Neurocrine Collaboration Agreement includes the following performance obligations: (i) the development and
commercialization license for the GBA1 Program, (ii) the research and development services for the GBA1 Program,
and (iii) the research and development services for each of the 2023 Discovery Programs combined with a development
and commercialization license for each program. The license for the GBA1 Program is distinct as Neurocrine can benefit
from such license on its own or from other resources commonly available in the industry given the stage of development
of the product candidates subject to the license. Similarly, the research and development services for the GBA1 Program
provide a distinct benefit to Neurocrine within the context of the contract, separate from the license. The research and
development services for the 2023 Discovery Programs are not distinct as Neurocrine cannot benefit from such licenses
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 GBA1
license, GBA1 research and development services and the combined licenses and research and development services for
the 2023 Discovery Programs are distinct from one another as Neurocrine can benefit from each program separately.
The Company identified $143.9 million of fixed transaction price consisting of the $136.0 million upfront fee,
and a premium of $7.9 million related to the $39.0 million equity investment of 4,395,588 shares when measured at fair
value on the date of issuance. The Company is also entitled to reimbursement of costs incurred by the Company during
the 2023 Discovery Period associated with each of the GBA1 Program and 2023 Discovery Programs.
These amounts are determinable based on development plans, and the Company has a contractual right to the
payment of costs incurred under the agreed upon program development plans.
The Company utilizes the most likely amount approach to estimate the cost reimbursement and has concluded
this consideration should be constrained. As of December 31, 2023, the estimate of the expected reimbursement was
$11.3 million of costs incurred based on expectations as of such date. The sales milestone payments and royalties will be
recognized in the period the underlying sales occur, as this consideration is related to the two development and
commercialization licenses, the predominant performance obligations in the contract.
The Company has allocated the fixed transaction price to the separate performance obligations based on the
relative standalone selling price of each performance obligation. The estimated standalone selling prices for performance
obligations were developed using the estimated selling price of the license for the GBA1 Program and each of the three
2023 Discovery Programs, using primarily adjusted market assessment approaches that considered discounted,
probability-weighted cash flow analyses and entity-specific and market factors. The Company did not allocate any of the
fixed transaction price to the GBA1 research and development services performance obligation as the consideration for
such services reflects a market rate.
The Company 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 2023 Neurocrine Collaboration Agreement. The reimbursement of research services is at a
market rate and the allocation of the fixed consideration to each of the three 2023 Discovery Program 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. Based on the initial development plans, the total variable
consideration allocated to each program related to the expected cost reimbursement was as follows as of
December 31, 2023:
Performance Obligation
Variable Consideration
GBA1 Program
2023 Discovery Program 1
2023 Discovery Program 2
2023 Discovery Program 3
Total
Amount
(in thousands)
$
$
5,920
3,779
780
780
11,259
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Based on the relative standalone selling price allocation, the allocation of the fixed transaction price to the
separate performance obligations was as follows:
Performance Obligation
Fixed Consideration
GBA1 Program
2023 Discovery Program 1
2023 Discovery Program 2
2023 Discovery Program 3
Total
Amount
(in thousands)
$
$
69,459
24,807
24,807
24,807
143,880
The Company recognized the fixed transaction price allocated to the development and commercialization
license for the GBA1 Program as collaboration revenue in the first quarter of 2023, upon delivery of the development
and commercialization license for the GBA1 Program to Neurocrine. The Company is recognizing the consideration
allocated to each of the three 2023 Discovery Program performance obligations 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. Proportional performance is
determined based on the workplan cost and timeline estimates.
During the year ended December 31, 2023, the Company recognized $69.5 million of revenue associated with
the 2023 Neurocrine Collaboration Agreement related to the delivery of the development and commercialization license
for the GBA1 Program. During the year ended December 31, 2023, the Company recognized $5.8 million of
collaboration revenue associated with research and development services performed during the period and the
corresponding cost reimbursement receivable for the GBA1 Program. During the year ended December 31, 2023, the
Company recognized a total of $5.5 million of revenue associated with the fixed transaction price allocated to the three
2023 Discovery Programs, and for research and development services performed during the period. As of December 31,
2023, there was $69.1 million of deferred revenue related to the 2023 Neurocrine Collaboration Agreement, of which
$38.4 million was classified as current and $30.7 million was classified as non-current in the accompanying balance
sheets based on the period the services are expected to be delivered. Additionally, as of December 31, 2023, there was
$1.8 million of related party collaboration receivable related to reimbursable costs expected to be received from
Neurocrine for research and development services performed.
The Company incurred approximately $0.4 million of costs to obtain the 2023 Neurocrine Collaboration
Agreement which were payable only upon the close of the transaction and therefore considered incremental costs of
obtaining a contract with a customer and capitalized. The costs are recorded in prepaid expenses and are being amortized
to operating expenses consistent with the manner in which the consideration allocated to the performance obligations is
recognized.
2019 Neurocrine Collaboration Agreement
Summary of Agreement
Effective March 2019, the Company entered into a collaboration agreement with Neurocrine (the “2019
Neurocrine Collaboration Agreement”) for the research, development and commercialization of certain of its AAV gene
therapy products. Under the 2019 Neurocrine Collaboration Agreement, the Company agreed to collaborate on the
conduct of four collaboration programs (the “2019 Neurocrine Programs”) which include: (a) VY-AADC (NBIb-1817)
for Parkinson’s disease (the “VY-AADC Program”), (b) the FA Program (collectively, with the VY-AADC Program, the
“Legacy Programs”), and (c) two programs to be determined by the Company and Neurocrine at a later date (the “2019
Discovery Programs”).
In June 2019, in conjunction with the termination of the collaboration agreement with Sanofi Genzyme (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 2019 Neurocrine
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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 2019 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 2019 Neurocrine Collaboration Agreement.
In February 2021, Neurocrine notified the Company that it had elected to terminate the 2019 Neurocrine
Collaboration Agreement solely with regards to the VY-AADC Program, effective August 2, 2021 (the “Neurocrine VY-
AADC Program Termination Effective Date”). The 2019 Neurocrine Collaboration Agreement remains in full force and
effect for each other program thereunder. As a result of the termination, Neurocrine is no longer obligated to reimburse
the Company for research and development activities related to the VY-AADC Program.
Under the terms of the 2019 Neurocrine Collaboration Agreement, the Company originally 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 “ 2019 Collaboration Products”) under
(a) the VY-AADC Program on a worldwide basis; (b) the FA Program in the United States and, all countries in the world
in which the 2019 Neurocrine Collaboration Agreement remains in effect with respect to the FA Program; and (c) each
2019 Discovery Program on a worldwide basis. As a result of the termination of the 2019 Neurocrine Collaboration
Agreement with regards to the VY-AADC Program, in accordance with the terms of the 2019 Neurocrine Collaboration
Agreement, the licenses granted by the Company to Neurocrine regarding the VY-AADC Program have expired, and the
Company has regained worldwide intellectual property rights regarding the VY-AADC Program, in each case as of the
VY-AADC Termination Effective Date.
Pursuant to development plans agreed by the parties, which are overseen by a JSC, the Company has
operational responsibility, subject to certain exceptions, for the conduct of each 2019 Neurocrine Program prior to the
occurrence of a specified event for such 2019 Neurocrine Program (a “2019 Transition Event”), as described below, and
is required to use commercially reasonable efforts to develop the corresponding 2019 Collaboration Products.
Neurocrine has agreed to be responsible for all costs incurred by the Company in conducting these activities for each
2019 Neurocrine Program, in accordance with an agreed budget for each 2019 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 2019 Neurocrine Program.
Upon the occurrence of a 2019 Transition Event for each 2019 Neurocrine Program, Neurocrine has agreed to
assume responsibility for development, manufacturing and commercialization activities for such 2019 Neurocrine
Program from the Company and to pay milestones and royalties on future net sales as described further below. As a
result of Neurocrine’s termination of the 2019 Neurocrine Collaboration Agreement with respect to the VY-AADC
Program, the 2019 Transition Event with respect to the VY-AADC Program is no longer applicable. The 2019 Transition
Events for the remaining programs are (a) 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 (b) with respect to each 2019 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 2019 Discovery Program. For the FA Program, the Company was
granted the option (the “2019 FA Co-Co Option”) to co-develop and co-commercialize the FA Program upon the
occurrence of a specified event (a “2019 FA Co-Co Trigger Event”). The Company agreed, upon its exercise of the FA
Co-Co Option, to enter into a cost- and profit-sharing arrangement with Neurocrine (the “2019 FA Co-Co Agreement”),
and (a) jointly develop and commercialize the 2019 Collaboration Products for the FA Program (“FA Collaboration
Products”), (b) share in its costs, profits and losses, and (c) forfeit certain milestones and royalties on net sales in the
United States during the effective period of the 2019 FA Co-Co Agreement. The 2019 FA Co-Co Trigger Event for the
FA Program is the achievement of milestones or metrics specified in the applicable development plan , as determined by
the JSC.
Under the 2019 Neurocrine Collaboration Agreement, subject to exceptions specified therein, the Company and
Neurocrine agreed that profits and losses under the Company’s 2019 FA Co-Co Option would be allocated 60% to
Neurocrine and 40% to the Company for any FA Collaboration Product. The parties agreed that 2019 FA Co-Co
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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 2019 Neurocrine Collaboration Agreement are
conducted pursuant to plans agreed to by the parties, on a program-by-program basis, and overseen by the JSC, as
detailed in the 2019 Neurocrine Collaboration Agreement.
Under the 2019 Neurocrine Collaboration Agreement, the parties committed to agree on a list of up to eight
target genes (the “Targets”) from which Neurocrine had the right to nominate Targets for the two 2019 Discovery
Programs. The Company and Neurocrine completed the nomination process, and the JSC has approved the two Targets
for development under the 2019 Discovery Programs. The two Targets are currently under development.
The 2019 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
2019 Collaboration Products under (a) the VY-AADC Program of up to $170.0 million, which the Company is no longer
eligible to receive in light of the partial termination of the 2019 Neurocrine Collaboration Agreement; (b) the FA
Program of up to $195.0 million, and (c) each of the two 2019 Discovery Programs of up to $130.0 million per 2019
Discovery Program. The Company may be entitled to receive aggregate commercial milestone payments for each 2019
Collaboration Product of up to $275.0 million, subject to an aggregate cap on commercial milestone payments across all
2019 Neurocrine Programs of $1.1 billion. Furthermore, in connection with the 2019 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 2019 Collaboration
Products. Such royalty percentages, for net sales in and outside the United States, as applicable, range (a) for the VY-
AADC Program, from the mid-teens to low thirties and the low-teens to low twenties, respectively, which the Company
is no longer eligible to receive in light of the partial termination of the 2019 Neurocrine Collaboration Agreement; (b) for
the FA Program, from the low-teens to high-teens and high-single digits to mid-teens, respectively; and (c) for each 2019
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
2019 Collaboration Product and terminate on the later of (a) the expiration of the last patent covering the 2019
Collaboration Product or its method of use in such country, (b) ten years from the first commercial sale of the 2019
Collaboration Product in such country and (c) the expiration of regulatory exclusivity in such country (the “2019 Royalty
Term”). Royalty payments may be reduced by up to 50% in specified circumstances, including expiration of patents
rights related to a 2019 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 2019 Collaboration Product. As a
result of Neurocrine’s termination of the 2019 Neurocrine Collaboration Agreement with respect to the VY-AADC
Program, the Company is no longer entitled to receive royalties related to the VY-AADC Program. 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 2019 Royalty Term
applicable to such 2019 Collaboration Product in such country.
Under the terms of the 2019 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 2019 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 2019 Collaboration Product is directed, subject to specified exceptions, including the parties’ conduct of basic research
activities.
Unless earlier terminated, the 2019 Neurocrine Collaboration Agreement expires on the later of (a) the
expiration of the last to expire 2019 Royalty Term with respect to a 2019 Collaboration Product in all countries in the
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relevant territory or (b) the expiration or termination of any 2019 FA Co-Co Agreement. Neurocrine may terminate the
2019 Neurocrine Collaboration Agreement in its entirety or on a program-by-program or country-by-country basis by
providing at least (x) 180-day advance notice if such notice is provided prior to the first commercial sale of the 2019
Collaboration Product to which the termination applies or (y) one-year advance notice if such notice is provided after the
first commercial sale of the 2019 Collaboration Product to which the termination applies. The Company may terminate
the 2019 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 2019 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 2019 Neurocrine Program, if such
termination were to occur after a 2019 Transition Event, then (a) with respect to the FA Program, if a 2019 FA Co-Co
Agreement is in effect, Neurocrine can terminate the 2019 FA Co-Co Agreement for such program and the Company
would no longer have co-development and co-commercialization rights with respect to the FA Collaboration Products
and (b) subject to any license agreements, Neurocrine would no longer have any obligations with respect to any 2019
Collaboration Products resulting from such program.
Termination of VY-AADC Program
As described above, as of the Neurocrine VY-AADC Program Termination Effective Date, the license granted
by the Company to Neurocrine thereunder regarding the VY-AADC Program expired, the Company regained worldwide
intellectual property rights regarding the VY-AADC Program, and the restrictions on the Company to develop,
manufacture or commercialize a gene therapy product directed to the target of the VY-AADC Program terminated, in
each case in accordance with the terms of the 2019 Neurocrine Collaboration Agreement. As of the Neurocrine VY-
AADC Program Termination Effective Date, Neurocrine no longer is obligated to reimburse the Company for research
and development activities related to the VY-AADC Program, and the Company is no longer entitled to receive future
milestone or royalty payments related to the VY-AADC Program. The Company is supporting Neurocrine, the study
sponsor and IND holder, should there be any ongoing or future matters regarding the program.
Accounting Analysis
At inception, the Company determined the 2019 Neurocrine Collaboration Agreement was a contract with a
customer under ASC 606, and included the following performance obligations: (a) research and development services for
each Legacy Program combined with a development and commercialization license for each such program and (b)
research and development services for each 2019 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 2019 Transition Events associated with each
2019 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 2021, the Company revised the estimate of the expected reimbursement to approximately $80.0
million based on expectations as a result from decisions made at the JSC meeting held in the fourth quarter of 2021,
which resulted in significantly less research and development services to be provided by the Company under the 2019
F-31
Neurocrine Collaboration Agreement. During the fourth quarter of 2022, the Company further revised the estimate of the
expected reimbursement to approximately $81.7 million, based on expectations resulting from decisions made at the JSC
meeting held in the fourth quarter of 2022. During the fourth quarter of 2023, the Company further revised the estimate
of the expected reimbursement to approximately $83.3 million, based on expectations resulting from decisions made at
the JSC meeting held in the fourth quarter of 2023. 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, which 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 total variable consideration allocated to each program related to the expected cost reimbursement as of
December 31, 2023 was as follows:
Performance Obligation
Variable Consideration
VY-AADC Program
FA Program
2019 Discovery Program 1
2019 Discovery Program 2
Total
Amount
(in thousands)
$
$
53,863
20,309
4,286
4,793
83,251
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
2019 Discovery Program 1
2019 Discovery Program 2
Total
Amount
(in thousands)
$
$
49,045
20,647
14,443
8,247
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.
The Company determined the partial termination of the 2019 Neurocrine Collaboration Agreement with respect
to the VY-AADC Program represented a modification of the arrangement under ASC 606 and that the remaining fixed
transaction price at the Neurocrine VY-AADC Program Termination Effective Date of $42.2 million should be re-
allocated to the FA Program and 2019 Discovery Program 1 and 2 based on their standalone selling prices. Accordingly,
the Company recorded a cumulative adjustment to revenue of approximately $0.9 million on the partially satisfied
remaining performance obligations, as the remaining services to be performed under each of the performance obligations
are not distinct from the services prior to the modification. The Company determined that reasonable changes to the
Company’s estimates of standalone selling prices for the FA Program, 2019 Discovery Program 1 and 2019 Discovery
Program 2 performance obligations did not have a material impact on the re-allocation or the amount of revenue
recorded pursuant to the cumulative catch-up adjustment.
F-32
During the year ended December 31, 2023 and 2022, the Company recognized $9.8 million and $0.9 million of
revenue, respectively, associated with its collaboration with Neurocrine related to fixed transaction price allocated to the
three active programs, and research and development services performed during the period and the corresponding cost
reimbursement receivable. As of December 31, 2023, there was $6.1 million of deferred revenue related to the 2019
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, 2023, there was $1.6 million of collaboration receivable related to reimbursable costs expected to be
received from Neurocrine for research and development services performed.
Costs incurred relating to the Company’s collaboration programs under the 2019 Neurocrine Collaboration
Agreement consist of internal and external research and development costs, which primarily include: salaries and
benefits, laboratory 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.
The Company incurred approximately $0.8 million of costs to obtain the 2019 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.
The following table presents changes in the balances of the Company’s related party collaboration receivable
and contract liabilities for both the 2023 Neurocrine Collaboration Agreement and the 2019 Neurocrine Collaboration
Agreement during the year ended December 31, 2023:
Balance at
December 31, 2022
Additions
Deductions
(in thousands)
Balance at
December 31, 2023
Related party collaboration receivable
Contract liabilities:
Deferred revenue
$
$
257
$
10,081 $
(6,997) $
3,341
11,827
$
74,420 $
(11,007) $
75,240
The change in the related party collaboration receivable balance for the year ended December 31, 2023 is
primarily driven by amounts owed to the Company for research and development services provided, offset by amounts
collected from Neurocrine during the period, for both the 2023 Neurocrine Collaboration Agreement and the 2019
Neurocrine Collaboration Agreement. Deferred revenue activity for the year ended December 31, 2023 includes the
recording of $74.4 million of deferred revenue during the first quarter of 2023 related to the fixed transaction price
allocated to each of the three 2023 Discovery Program performance obligations under the 2023 Neurocrine Collaboration
Agreement, offset by $11.0 million of collaboration revenue recognized on the proportional performance model during
the year ended December 31, 2023 for both the 2023 Neurocrine Collaboration Agreement and the 2019 Neurocrine
Collaboration Agreement.
Alexion Option and License Agreement (Formerly Pfizer Option and License Agreement)
Summary of Agreement
On October 1, 2021, the Company entered into an option and license agreement (the “Pfizer Agreement”) with
Pfizer, Inc. (“Pfizer”) pursuant to which the Company granted Pfizer options to receive an exclusive license (the “Pfizer
License Options”) to certain TRACER Capsids to develop and commercialize certain AAV gene therapy candidates
comprised of a capsid and specified Pfizer transgenes (the “Pfizer Transgenes”). Under the terms of the Pfizer
Agreement, during an initial research term that ended as of October 1, 2022 (the “Pfizer Research Term”), Pfizer had the
right to evaluate the potential use of the capsids in combination with up to two Pfizer Transgenes to help treat respective
CNS and cardiovascular diseases.
During the Pfizer Research Term, the Company agreed to provide Pfizer with certain quantities of materials
encoding specified existing capsids for Pfizer’s evaluation. Further, during the Pfizer Research Term, the Company
F-33
agreed to disclose to Pfizer, on a rolling basis, the performance characteristics identified during the Pfizer Research Term
for all such capsid candidates. Pfizer had the right, in its sole discretion, to select any capsid candidate for evaluation to
determine its interest in exercising a Pfizer License Option with respect to such capsid candidate. Pfizer had the right to
exercise up to two Pfizer License Options, provided that it could exercise only one Pfizer License Option for each Pfizer
Transgene.
Effective as of September 30, 2022, Pfizer exercised its Pfizer License Option with respect to a capsid for the
specified Pfizer Transgene for potential treatment of a rare neurological disease. Pfizer did not exercise its option to
license a capsid for the potential treatment of a cardiovascular disease. As result, Pfizer’s right to exercise a Pfizer
License Option for a cardiovascular disease has terminated in accordance with the terms of the Pfizer Agreement and all
rights to capsids for that cardiovascular disease have reverted to the Company. Pfizer’s exercise of a Pfizer License
Option extended the Pfizer Research Term to October 1, 2024, during which period the Company may, at its sole
discretion and expense, conduct additional research activities to identify additional proprietary capsids that may be useful
for AAV gene therapies for the treatment of the rare neurological disease associated with the exercise of the applicable
Pfizer License Option.
Pursuant to the exercise of the Pfizer License Option, the Company granted Pfizer an exclusive, worldwide
license, with the right to sublicense, under certain of the Company’s intellectual property, the rights to develop and
commercialize rare neurological disease products utilizing the capsid candidate and incorporating the corresponding
Pfizer Transgene (the “Pfizer Licensed CNS Products”).
On July 28, 2023, Alexion entered into a definitive purchase and license agreement for preclinical gene therapy
assets and enabling technologies from Pfizer. Effective upon the closing of the transaction on September 20, 2023,
Alexion acquired all of Pfizer’s rights under the Pfizer Agreement (now the “Alexion Agreement”) and became the
successor-in-interest to Pfizer thereunder. The acquisition does not impact the material terms of the option and license
agreement. Until October 1, 2024, while the Company is not obligated to conduct additional research activities to
identify additional proprietary capsids that may be useful for AAV gene therapies for the treatment of rare neurological
diseases, it has agreed to continue to disclose to Alexion, on a rolling basis, the performance characteristics identified for
all such capsid candidates, if and when available. Alexion may, during the Pfizer Research Term (now the “Alexion
Research Term”), conduct additional evaluations of such capsid candidates and has the right to substitute any other
capsid candidate for the capsid Pfizer elected to license when it exercised the Pfizer License Option.
Under the Alexion Agreement, Alexion is solely responsible for, and has sole decision-making authority with
respect to, development and commercialization of the Pfizer Licensed CNS Products (now the “Alexion Licensed
Products”). Alexion is required to use commercially reasonable efforts to develop and obtain regulatory approval for at
least one Alexion Licensed CNS Product for which Pfizer exercised its Pfizer License Option in (a) the United States and
(b) at least one of the following countries: the United Kingdom, France, Germany, Italy, Spain and Japan (each of which
is referred to as an “Alexion Major Market Country”), subject to certain limitations. Alexion is also required to use
commercially reasonable efforts to commercialize each Alexion Licensed CNS Product in the United States and at least
one Alexion Major Market Country where Alexion or its designated affiliates or sublicensees has received regulatory
approval for such Alexion Licensed CNS Product, subject to certain limitations.
Under the terms of the Alexion Agreement, Pfizer paid the Company an upfront payment of $30.0 million in
October 2021. Following the exercise of the Pfizer License Option, Pfizer paid the Company a fee of $10.0 million. The
Company is also eligible to receive specified development, regulatory, and commercialization milestone payments of up
to an aggregate of $115.0 million for the first corresponding Alexion Licensed CNS Product to achieve the
corresponding milestone. On an Alexion Licensed CNS Product-by-Alexion Licensed CNS Product basis, the Company
is also eligible to receive (a) specified sales milestone payments of up to an aggregate of $175.0 million per Alexion
Licensed CNS Product and (b) tiered, escalating royalties in the mid- to high-single-digit percentages of annual net sales
of each Alexion Licensed CNS Product. The royalties are subject to potential reductions in customary circumstances
including patent claim expiration, payments for certain third-party licenses, and biosimilar market penetration, subject to
specified limits.
Under the terms of the Alexion Agreement, each of the Company and Alexion owns the entire right, title, and
interest in and to all patents or know-how controlled by such party and existing as of or before the effective date of the
F-34
Alexion Agreement, or invented, developed, created, generated or acquired solely by or on behalf of such party after
such effective date.
Subject to certain specified exceptions, any patents and know-how that are invented or otherwise developed
jointly by or on behalf of the parties during the term of the Alexion Agreement and in the course of the Company’s and
Alexion’s activities under the Alexion Agreement will follow inventorship under U.S. patent law. Subject to certain
limitations and exceptions, the Company agreed (a) during the Alexion Research Term, not to conduct any internal
program or program on behalf of a third party that is directed to development or commercialization of any capsid
candidates, or grant any third party or affiliate any right or license under the Company’s rights in such capsid candidates
to exploit any therapeutic product, in combination with any Pfizer Transgene (now an “Alexion Transgene”) in any
indication for therapeutic, diagnostic and prophylactic human and veterinary use; and (b) not to grant any third party or
affiliate any right or license under the Company’s patents to exploit any licensed capsid in combination with any Alexion
Transgene.
Unless earlier terminated, the Alexion Agreement expires on the expiration of the last-to-expire royalty term
with respect to all Alexion Licensed CNS Products in all countries. Subject to a cure period, either party may terminate
the Alexion Agreement, in whole or in part, subject to specified conditions, in the event of the other party’s uncured
material breach. Alexion may also terminate the Alexion Agreement, in whole or in part, subject to specified conditions,
for the Company’s insolvency, the occurrence of a violation of global trade control laws, or for the Company’s
noncompliance with certain anti-bribery or anti-corruption covenants. Alexion may also terminate the Alexion
Agreement, in whole or in part, for any or no reason upon ninety days’ written notice to the Company.
Upon certain terminations for cause by Alexion, the license that the Company has granted to Alexion under the
Alexion Agreement shall become irrevocable and perpetual, and all milestone payments and royalties that would have
otherwise been payable by Alexion under such license had the Alexion Agreement remained in effect would be
substantially reduced.
Accounting Analysis
At inception, the Company determined the Alexion Agreement was a contract with a customer under ASC 606.
The Company assessed the promised goods and services under the Alexion Agreement, in accordance with ASC 606,
and determined that the Alexion Agreement contains two performance obligations consisting of two material rights, one
for each of the Pfizer License Options. The Company concluded that each Pfizer License Option provided a material
right as consideration for each option is less than the amount that the Company would otherwise have expected to
receive outside the context of the contract. The promises at inception do not include the underlying goods or services that
would be delivered upon exercise of the option, but rather represent the value to the customer of having the right to
exercise the Pfizer License Option at the specified exercise fee. Upon the exercise of a Pfizer License Option, until
October 1, 2024, while the Company is not obligated to conduct additional research activities upon option exercise to
identify additional proprietary capsids that may be useful for AAV gene therapies for the treatment of central nervous
system or cardiovascular diseases, it has agreed to continue to disclose to Alexion, on a rolling basis, the performance
characteristics identified for all such capsid candidates, if and when available. Alexion may, conduct additional
evaluations of such capsid candidates and has the right to substitute any other capsid candidate for the capsid Pfizer
elected to license when it exercised the Pfizer License Option. The Company determined that this promise to provide
Alexion the ability to evaluate and potentially substitute other capsid candidates for the capsid Pfizer elected to license
when it exercised the Pfizer License Option, if and when available, is an additional performance obligation in the
arrangement (the “Alexion Substitution Right Performance Obligation”).
The Company received a nonrefundable, upfront payment of $30.0 million as consideration under the Alexion
Agreement, which represented the transaction price at inception. Additional consideration to be paid to the Company
upon exercise of the Pfizer License Option or upon reaching certain milestones are excluded from the transaction price as
they relate to option fees and milestones that could only be achieved subsequent to an option exercise.
The Company allocated the transaction price to the Pfizer License Options based on their relative standalone
selling prices. The estimated standalone selling price for each material right was based on an adjusted market assessment
approach. The Company concluded that the market would be willing to pay an equal amount for each Pfizer License
F-35
Option on a standalone basis. The Company reached this conclusion after considering (a) the downstream economics
including option fees, milestones and royalties related to each Pfizer License Option being identical and (b) comparable
market data. The Company determined the standalone selling price for the Alexion Substitution Right Performance
Obligation was insignificant to the allocation of the transaction price using the relative standalone selling price model
and, accordingly, did not allocate any transaction price to the Alexion Substitution Right Performance Obligation. This
determination was supported by qualitative and quantitative assessments of the standalone selling price that considered
the cost of identifying other potential capsid candidates and the likelihood of license substitution. As such, based on the
relative standalone selling price for each of the two material rights, the allocation of the transaction price to the separate
performance obligations was $15.0 million for each material right. The amount allocated to each material right was
initially recorded as deferred revenue.
During the year ended December 31, 2022, the Company recognized $40.0 million in collaboration revenue
related to the Alexion Agreement. No revenue was recognized under the Alexion Agreement for the year ended
December 31, 2023.
License Agreement with Sangamo
On June 28, 2023, the Company entered into a definitive license agreement for a potential treatment of prion
disease with Sangamo. Using their proprietary epigenetic regulation platform, Sangamo has developed zinc finger
transcriptional regulators which they believe can specifically and potently block expression of the prion protein, the
pathogenic driver of prion disease. The Company is eligible to earn certain license fees, royalties on potential
commercial sales of any products using Voyager’s capsid, and, in the event the prion program is out licensed by
Sangamo, a portion of all licensing revenues received with respect to this program. During the year ended December 31,
2023 the Company recognized $0.4 million of collaboration revenue related to the license agreement with Sangamo.
License Agreement with Touchlight IP Limited
On November 3, 2022, the Company and Touchlight IP Limited (“Touchlight”) entered into a license
agreement (the “Touchlight License Agreement”) to authorize historical use by the Company of a certain DNA
preparation process (“Subject DNA Preparation Process”), and to authorize the prospective exploitation of TRACER
Capsids created with the use of the Subject DNA Preparation Process.
The terms of the Touchlight License Agreement included a one-time, non-refundable technology access fee of
$5.0 million, which was paid during the fourth quarter of 2022. The Company recorded the $5.0 million to research and
development expense in the year ended December 31, 2022, accordingly.
The terms of the Touchlight License Agreement also include future milestone payments and low single-digit
royalties payable to Touchlight if the Company or its program collaborators or licensees choose to utilize in a therapeutic
product TRACER Capsids that were created with the historical use of the Subject DNA Preparation Process.
Additionally, the Company is obligated to pay low single-digit royalties to Touchlight on future payments the Company
receives in connection with licensing of TRACER Capsids that were created with the historical use of the Subject DNA
Preparation Process, excluding the licensing of or collaboration on any Company therapeutic programs.
During the year ended December 31, 2023, the Company recorded $0.5 million in research and development
expense associated with amounts due to Touchlight in conjunction with the 2023 Novartis Collaboration Agreement.
F-36
10. Common stock
As of December 31, 2023 and 2022, 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:
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
11. Stock-based compensation
2014 Stock Option and Grant Plan
As of December 31,
2023
2022
22,500
7,425,444
1,370,897
3,572,195
2,158,966
14,550,002
45,000
6,199,571
1,112,563
3,536,932
1,884,309
12,778,375
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
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
were slated to 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 remainder of the restricted stock awards were slated to vest upon the achievement of certain performance
objectives as well as continued service to the Company, as set forth in the agreements. Stock-based compensation
F-37
expense associated with these performance-based awards is recognized when the achievement of the performance
condition is considered probable, using management’s best estimates. The Company has modified certain of the awards,
including repurchasing a total of 131,470 shares underlying the awards through December 31, 2023, and modifying the
vesting provisions such that the modified awards vest over time rather than based on performance. The stock-based
compensation expense recorded related to these awards during the years ended December 31, 2023, 2022, and 2021 were
immaterial to the Company’s consolidated financial statements.
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 Company’s initial public
offering (“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 (a) 1,311,812 shares of common stock and (b) 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 12,531,505 shares through January 1, 2024. During the year ended December 31, 2023, the
Company granted options to purchase 1,753,800 shares of common stock to employees and directors under the 2015
Stock Option Plan. As of December 31, 2023, there were 3,572,195 shares available for future issuance under the 2015
Stock Option Plan.
2015 Employee Stock Purchase Plan
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.
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
2,692,838 shares through January 1, 2023. The Company issued 111,639 and 150,265 shares of common stock under the
2015 ESPP in the years ended December 31, 2023 and 2022. As of December 31, 2023, there were 2,158,966 shares
available for future purchase under the 2015 ESPP.
Inducement Awards
In the years ended December 31, 2023, 2022 and, 2021, the Company issued non-statutory stock options to
purchase an aggregate of 573,000, 390,000, and 76,500 shares of the Company’s common stock and restricted stock unit
awards for an aggregate of 318,500, 163,000, and 13,000 shares of the Company’s common stock, respectively, in each
case outside of the Company’s 2015 Stock Option Plan as an inducement material to certain individuals’ acceptance of
an offer of employment with the Company in accordance with Nasdaq Listing Rule 5635(c)(4).
F-38
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 of the award, 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:
2023
Year ended December 31,
2022
(in thousands)
2021
General and administrative
Research and development
Total stock-based compensation expense
$
$
7,568 $
3,585
11,153 $
6,398 $
2,946
9,344 $
7,191
4,133
11,324
Stock-based compensation expense by type of award included within the consolidated statements of operations
and comprehensive income (loss) was as follows:
Stock options
Restricted stock awards and units
Employee stock purchase plan awards
$
Total stock-based compensation expense
$
Restricted Stock Units
2023
Year ended December 31,
2022
(in thousands)
5,938
3,215
191
9,344
7,627 $
3,241
285
11,153 $
$
$
2021
7,438
3,551
335
11,324
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, 2023 was as follows:
Unvested restricted stock units as of December 31, 2022
Awarded
Vested
Forfeited
Unvested restricted stock units as of December 31, 2023
Weighted
Average
Grant Date
Fair Value
Per Unit
Units
1,112,563 $
999,250 $
(531,560) $
(209,356) $
1,370,897 $
5.27
7.58
5.73
6.08
6.65
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 is recognized over the vesting period. In the year ended December 31, 2023, the Company
granted 999,250 restricted stock units vesting in equal amounts, annually over three years. The stock-based
compensation expense was $3.1 million, $2.9 million, and $3.3 million for the years ended December 31, 2023, 2022,
and 2021, respectively.
As of December 31, 2023, the Company had unrecognized stock-based compensation expense related to its
unvested restricted stock units of $6.8 million which is expected to be recognized over the remaining weighted average
vesting period of 1.1 years.
F-39
Stock Options
A summary of the status of, and changes in, stock options was as follows:
Weighted
Average
Exercise
Price
Remaining Aggregate
Intrinsic
Contractual
Value
Life
(in years) (in thousands)
Shares
Outstanding at December 31, 2022
Granted
Exercised
Cancelled or forfeited
Outstanding at December 31, 2023
Exercisable at December 31, 2023
6,199,571 $
2,326,800 $
(385,655) $
(715,272) $
7,425,444 $
3,823,420 $
8.12
8.58
4.98
7.86
8.52
9.43
7.3
5.9 $
11,293
6,020
Using the Black-Scholes option pricing model, the weighted average fair value of options granted during the
year ended December 31, 2023 was $6.12. The stock-based compensation expense related to stock option awards granted
was $7.2 million, $5.8 million, and $7.3 million for the years ended December 31, 2023, 2022, and 2021, 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
2023
Year ended December 31,
2022
4.0 %
— %
6.0
80.4 %
2.2 %
— %
6.0
79.4 %
2021
0.9 %
— %
6.0
75.0 %
As of December 31, 2023, the Company had unrecognized stock-based compensation expense related to its
unvested stock options of $16.6 million which is expected to be recognized over the remaining weighted average vesting
period of 2.9 years.
12. 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, $0.9 million, and $1.1 million related to employer contributions made during the years
ended December 31, 2023, 2022, and 2021, respectively.
F-40
13. Income taxes
The Company evaluates its tax positions on an annual basis. The current tax expense recorded for the year
ended December 31, 2023 is the residual tax due, after utilization of tax attributes, associated with revenue from
collaboration agreements. The provision for incomes taxes is as follows:
Current
Federal
State
Total current
Deferred
Federal
State
Total deferred
Total tax provision
2023
Year ended December 31,
2022
2021
(in thousands)
$
$
1,248
160
1,408
—
—
—
1,408
$
$
—
16
16
—
—
—
16
$
$
—
—
—
—
—
—
—
A reconciliation of the expected income tax provision computed using the federal statutory income tax rate at
the Company’s effective tax rate for the years ended December 31, 2023, 2022, and 2021 is as follows:
Income tax computed at federal statutory tax
rate
State taxes, net of federal benefit
Provision to return
General business credit carryovers
Non-deductible expenses
Other
Change in valuation allowance
Total
Year ended December 31,
2022
2021
2023
21.0 %
5.4 %
0.9 %
(0.4) %
0.5 %
(0.4) %
(26.0) %
1.00 %
21.0 %
5.2 %
3.2 %
(3.5) %
(4.6) %
— %
(21.3) %
— %
21.0 %
6.6 %
4.9 %
3.2 %
(3.8) %
— %
(31.9) %
— %
The Company has historically incurred net operating losses (“NOLs”). As of December 31, 2023, the Company
had federal and state net operating loss carryforwards of $55.3 million and $33.2 million, respectively. As of
December 31, 2023, the Company had federal and state research and development tax credit carryforwards of $19.6
million and $10.8 million, respectively, which expire beginning in 2033. As of December 31, 2022, the Company had
state investment credits of $0.4 million, which expire beginning in 2024.
F-41
The significant components of the Company’s deferred tax assets and (liabilities) as of December 31, 2023 and
2022 are as follows:
Deferred tax assets:
Net operating loss carryforward
Tax credit carryforward
Lease liability
Deferred revenue
Stock compensation
Non-deductible accruals and reserves
Capitalized research expenses
Intangibles
Other temporary differences
Total deferred tax assets
Less valuation allowance
Net deferred tax assets
Deferred tax liabilities
Right of use assets
Depreciation and amortization
Other temporary differences
Net deferred taxes
As of December 31,
2023
2022
(in thousands)
13,724
28,427
5,544
1,675
5,157
2,613
31,347
554
—
89,041
(82,612)
6,429
(3,691)
(2,738)
—
—
$
$
47,282
32,060
6,318
17,984
4,630
1,603
14,351
610
(1)
124,837
(117,416)
7,421
(4,231)
(3,190)
—
—
$
$
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, tax credit carryforwards, and
capitalized research expenses. 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 $82.6 million
and $117.4 million has been established at December 31, 2023 and 2022, respectively. The state NOLs will expire
beginning in 2041 while the federal NOLs do not expire. The valuation allowance decreased by $34.8 million for the
year ended December 31, 2023 primarily as a result of the utilization of the NOL carryforwards and tax credits in 2023.
At December 31, 2023 and 2022, the Company had no unrecognized tax benefits. The Company is in the
process of completing a study of its research and development credit carryforwards. The Company has recorded an
adjustment in the current year to reflect the preliminary results of the research and development study. The completion of
the study may result in an additional adjustment to the Company’s research and development credit carryforwards;
however, until a study is completed, 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 and comprehensive income (loss) 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, 2023 and 2022, 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.
14. Related-party transactions
During the years ended December 31, 2023, 2022, and 2021, the Company received scientific advisory services
from one of its prior executives, Dinah Sah, Ph.D., the Company’s former Chief Scientific Officer. The total amount of
fees paid to Dr. Sah for services provided during the years ended December 31, 2023, 2022 and 2021 was $0.7 million,
$0.5 million, and $0.2 million, respectively.
F-42
During the year ended December 31, 2022, the Company received advisory services related to strategic
planning, operations, and management from Alfred Sandrock, M.D., Ph.D., the Company’s current President and Chief
Executive Officer and a member of the Company’s board of directors, before he commenced service in the capacity of
President and Chief Executive Officer in March 2022. The total amount of fees paid to Dr. Sandrock for services
provided was $60,000 for the year ended December 31, 2022.
Under both the 2019 Neurocrine Collaboration Agreement and the 2023 Neurocrine Collaboration Agreement,
the Company and Neurocrine have agreed to conduct research, development and commercialization activities for certain
of the Company’s AAV gene therapy products (Note 9). Amounts due from Neurocrine are reflected as related party
collaboration receivable. As of December 31, 2023, the Company recorded approximately $3.3 million in related party
collaboration receivable relative to the 2019 Neurocrine Collaboration Agreement and the 2023 Neurocrine
Collaboration Agreement.
15. Subsequent events
On January 4, 2024, the Company entered into an underwriting agreement (the “Underwriting Agreement”)
with Citigroup Global Markets Inc. and Guggenheim Securities, LLC, as representatives of the several underwriters
named therein (the “Underwriters”), relating to an underwritten public offering of 7,777,778 shares of the Company’s
common stock, par value $0.001 per share, and, in lieu of common stock to certain investors, pre-funded warrants (the
“Pre-Funded Warrants”) to purchase up to 3,333,333 shares of common stock. The public offering price of the
Company’s common stock was $9.00 per share, and the public offering price of the Pre-Funded Warrants was $8.999 per
share underlying each Pre-Funded Warrant. The Underwriters have agreed to purchase the Company’s stock from the
Company pursuant to the Underwriting Agreement at a price of $8.46 and the Pre-Funded Warrants from the Company
pursuant to the Underwriting Agreement at a price of $8.459 per share underlying each Pre-Funded Warrant. Under the
terms of the Underwriting Agreement, the Company also granted the Underwriters an option, exercisable for 30 days, to
purchase up to an additional 1,666,665 shares of common stock at the public offering price less the underwriting
discounts and commissions. This option was not exercised during the thirty-day exercise period, and the option expired
on February 2, 2024.
The Company received net proceeds from the public offering of approximately $93.5 million after deducting
underwriting discounts and commissions and estimated offering expenses.
The Company and Novartis entered into a stock purchase agreement (“the 2023 Novartis Stock Purchase
Agreement”) on December 28, 2023, for the sale and issuance of 2,145,002 shares of the Company’s common stock (the
“Novartis Shares”) to Novartis at a price of $9.324 per share, for an aggregate purchase price of approximately $20.0
million. In accordance with the terms and conditions of the 2023 Novartis Stock Purchase Agreement, the Company
issued and sold the Novartis Shares to Novartis on January 3, 2024.
In February 2024, the Company announced that the joint steering committee with its collaborator Neurocrine
selected a lead development candidate for the FA Program, which triggered a $5.0 million milestone payment to the
Company. The Company expects to receive the $5.0 million during the first quarter of 2024.
F-43
EXHIBIT INDEX
Exhibit
No.
Description
Form or
Schedule
3.1
Amended and Restated Certificate of
8-K
Incorporation of the Registrant
Exhibit
No.
3.1
Incorporated by Reference to:
Filing
Date with
SEC
SEC File
Number
11/16/2015 001-37625
Filed
Herewith
3.2
Amended and Restated By-Laws of the
8-K
3.2
11/16/2015 001-37625
Registrant
4.1
Specimen Common Stock Certificate of
10-K
4.1
03/14/2018 001-37625
the Registrant
4.2
Form of Pre-Funded Warrant
8-K
4.1
01/08/2024 001-37625
4.4
Description of Registrant’s Securities
10-K
4.4
03/03/2020 001-37625
10.1#
2014 Stock Option and Grant Plan and
forms of award agreements thereunder
S-1/A
10.1
10/28/2015 333-207367
10.2#
2015 Stock Option and Incentive Plan
S-1/A
10.2
10/28/2015 333-207367
and forms of award agreements
thereunder
10.3†
Collaboration Agreement, by and
between the Registrant and Sanofi
Genzyme Corporation, dated February
11, 2015
S-1/A
10.3
11/06/2015 333-207367
10.4*
Termination Agreement, by and between
10-Q
10.3
08/09/2019 001-37625
the Registrant and Genzyme
Corporation, dated June 14, 2019
10.5*
Amended and Restated Option and
10-Q
10.4
08/09/2019 001-37625
License Agreement, by and between the
Registrant and Genzyme Corporation,
dated June 14, 2019
10.6*
First Amendment to Amended and
10-Q
10.1
11/09/2020 001-37625
Restated Option and License Agreement
with Genzyme Corporation, dated
September 20, 2020
10.7†
Collaboration and License Agreement,
by and between the Registrant and
Neurocrine Biosciences, Inc., dated
January 28, 2019
10-K
10.28
02/26/2019 001-37625
10.8
Amendment No. 1 to the Collaboration
10-Q
10.5
08/09/2019 001-37625
and License Agreement, by and between
the Registrant and Neurocrine
Biosciences, Inc., dated June 14, 2019
10.09* Option and License Agreement, by and
between the Registrant and Pfizer Inc.,
dated October 1, 2021
10.10
Lease Agreement, by and between the
Registrant and UP 64 Sidney Street,
LLC, dated December 23, 2015
10-Q
10.2
11/02/21
001-37625
10-Q
10.6
05/12/2016 001-37625
10.11
First Amendment to the Lease
8-K
10.2
06/05/2018 001-37625
Agreement, by and between the
Registrant and UP 64 Sidney Street,
LLC, dated June 1, 2018
10.12
Lease Agreement, by and between the
Registrant and HCP/King 75 Hayden
LLC, dated March 16, 2020
10.13
Form of Indemnification Agreement to
be entered into between the Registrant
and its directors
10.14
Form of Indemnification Agreement to
be entered into between the Registrant
and its executive officers
8-K
10.1
03/19/2020 001-37625
S-1/A
10.9
10/28/2015 333-207367
S-1/A
10.10
10/28/2015 333-207367
10.15#
2015 Employee Stock Purchase Plan
S-1/A
10.12
10/28/2015 333-207367
10.16# Amendment No. 1 to the 2015 Employee
10-K
10.21
03/14/2018 001-37625
Stock Purchase Plan
10.17# Retirement Agreement, by and between
8-K
10.1
05/21/2019 001-37625
the Registrant and Dinah Sah, Ph.D.,
dated May 20, 2019
10.18# Employment Agreement, by and
8-K
10.2
05/19/2021 001-37625
between the Registrant and Michael
Higgins, dated May 19, 2021
10.19# Employment Agreement, by and
8-K
10.3
05/19/2021 001-37625
between the Registrant and Glenn Pierce,
M.D., Ph.D., dated May 19, 2021
10.20# Amendment No. 1 to Employment
8-K
10.1
06/08/2021 001-37625
Agreement, by and between the
Registrant and Glenn Pierce, dated June
7, 2021
10.21# Employment Agreement, by and
10-Q
10.5
05/07/2019 001-37625
between the Registrant and Robert W.
Hesslein, dated January 15, 2019
10.22# Amended and Restated Employment
8-K
10.2
02/03/2022 001-37625
Agreement, by and between the
Registrant and Robin Swartz, effective
as of February 7, 2022
10.23# Consulting Agreement, by and between
10-Q
10.6
08/09/2019 001-37625
the Registrant and Dinah Sah, Ph.D.,
dated June 28, 2019
10.24# Amendment No. 1 to the Consulting
10-Q
10.2
11/06/2019 001-37625
Agreement, by and between the
Registrant and Dinah Sah, Ph.D., dated
September 16, 2019
10.25# Consulting Agreement by and between
8-K
10.1
02/03/2022 001-37625
the Registrant and Alfred Sandrock,
effective as of February 7, 2022
10.26# Form of Non-Qualified Stock Option
Agreement for Inducement
10-K
10.27
02/26/2019 001-37625
10.27# Form of Restricted Stock Unit
10-K
10.33
02/26/2019 001-37625
Agreement for Inducement
10.28
Sales Agreement, by and between the
Registrant and Cowen and Company,
LLC, dated November 8, 2022
S-3
1.2
11/08/2022 333-268240
10.29* Consulting Agreement by and between
8-K
10.1
02/03/2022 001-37625
the Registrant and Alfred Sandrock,
effective as of February 7, 2022
10.30* Option and License Agreement by and
10-K
10.36
03/07/2023 001-37625
between the Registrant and Novartis
Pharma AG, dated March 4, 2022
10.31# Employment Agreement, by and
8-K
10.1
03/22/2022 001-37625
between the Registrant and Alfred
Sandrock, M.D., Ph.D., effective as of
March 22, 2022.
10.32# Consulting Agreement by and between
the Registrant and Glenn Pierce, M.D.,
Ph.D., effective as of June 6, 2022
10.33
Employment Agreement by and between
the Registrant and Peter Pfreundschuh,
effective as of September 7, 2022
8-K
10.1
06/07/2022 001-37625
8-K
10.1
09/07/2022 001-37625
10.34
Second Amended and Restated
8-K
10.2
09/07/2022 001-37625
Employment Agreement by and between
the Registrant and Todd Carter, Ph.D.,
effective as of September 7, 2022
10.35* Patent and Know-How License between
10-K
10.43
03/07/2023 001-37625
the Registrant and Touchlight IP
Limited, dated as of November 3, 2022
10.36
Stock Purchase Agreement by and
10-K
10.44
03/07/2023 001-37625
between the Registrant and Neurocrine
Biosciences, Inc., dated as of January 8,
2023
10.37* Collaboration and License Agreement by
and between the Registrant and
Neurocrine Biosciences, Inc., dated as of
January 8, 2023
10.38
Amended and Restated Investor
Agreement by and between the
Registrant and Neurocrine Biosciences,
Inc., dated as of January 8, 2023
10-K
10.45
03/07/2023 001-37625
10-K
10.46
03/07/2023 001-37625
10.39# Transition, Separation and Release of
8-K
10.1
02/23/2023 001-37625
Claims Agreement, by and between the
Company and Robert W. Hesslein, dated
February 22, 2023.
10.40
Consulting Agreement, by and between
the Registrant and Robert W. Hesslein,
dated April 28, 2023
10-Q
10.5
03/31/2023 001-37625
10.41# Employment Agreement by and between
8-K
10.1
07/10/2023 001-37625
the Registrant and Jacquelyn Fahey
Sandell, effective as of July 5, 2023
10.42
First Amendment to Lease Agreement,
by and between Registrant and LS 75
Hayden, LLC, dated August 11, 2023.
10.43* License and Collaboration Agreement by
and between Registrant and Novartis
Pharma AG, dated December 28, 2023
10.44
Stock Purchase Agreement by and
between Registrant and Novartis Pharma
AG, dated December 28, 2023
10.45
Investor Agreement by and between
Registrant and Novartis Pharma AG,
dated December 28, 2023
10.46
Amendment No. 2 to the Consulting
Agreement, by and between the
Registrant and Dinah Sah, Ph.D., dated
June 27, 2022
10.47
Amendment No. 3 to the Consulting
Agreement, by and between the
Registrant and Dinah Sah, Ph.D., dated
May 1, 2023
21.1
Subsidiaries of the Registrant.
8-K
10.1
08/16/2023 001-37625
X
X
X
X
X
X
23.1
Consent of Ernst & Young, Independent
Registered Public Accounting Firm.
24.1
Power of Attorney (see signature page of
this Annual Report on Form 10-K).
31.1
31.2
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.
32.1+
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.
97.1
Compensation Recovery Policy
101.INS XBRL Instance Document - the instance
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tags are embedded within the Inline
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101.SCH Inline XBRL Taxonomy Extension
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101.CAL Inline XBRL Taxonomy Extension
Calculation Document.
101.LAB Inline XBRL Taxonomy Extension
Definition Linkbase Document.
101.PRE Inline XBRL Taxonomy Extension
Labels Linkbase Document.
101.DEF Inline XBRL Taxonomy Extension
Presentation Link Document.
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X
X
X
X
X
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.
SIGNATURES
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.
Date: February 28, 2024
VOYAGER THERAPEUTICS, INC.
By:
/s/ Alfred Sandrock, M.D., Ph.D.
Alfred Sandrock, M.D., Ph.D.
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 Alfred Sandrock and Peter Pfreundschuh, 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
Title
Date
/s/Alfred Sandrock, M.D., Ph.D. Chief Executive Officer, President, and Director
Alfred Sandrock, M.D., Ph.D. (Principal Executive Officer)
/s/Peter P. Pfreundschuh
Peter P. Pfreundschuh
Chief Financial Officer
(Principal Financial and Accounting Officer)
February 28, 2024
February 28, 2024
/s/Michael Higgins
Michael Higgins
Director (Chairman of the Board)
February 28, 2024
/s/Grace E. Colón, Ph.D.
Grace E. Colón, Ph.D.
Director
/s/Jim Geraghty
Jim Geraghty
Director
/s/Steven Hyman, M.D.
Steven Hyman, M.D.
Director
/s/Catherine J. Mackey, Ph.D. Director
Catherine J. Mackey, Ph.D.
/s/Jude Onyia, Ph.D.
Jude Onyia, Ph.D.
Director
/s/Glenn Pierce, M.D., Ph.D. Director
Glenn Pierce, M.D., Ph.D.
/s/George Scangos, Ph.D.
George Scangos, Ph.D.
Director
/s/Nancy Vitale
Nancy Vitale
Director
February 28, 2024
February 28, 2024
February 28, 2024
February 28, 2024
February 28, 2024
February 28, 2024
February 28, 2024
February 28, 2024
LEADERSHIP TEAM
BOARD OF DIRECTORS
Alfred Sandrock, M.D., Ph.D.
Director, President and
Chief Executive Officer
Michael Higgins (Chair)
Catherine J. Mackey, Ph.D.
Chairman of the Board of Directors:
Pulmatrix, Inc.; Nocion Therapeutics, Inc.
Board Member: Avid Bioservices, Inc.;
IDEAYA Biosciences, Inc.
Todd Carter
Chief Scientific Officer
Jacquelyn Fahey Sandell, J.D.
Chief Legal Officer
Toby Ferguson, MD., Ph.D.
Chief Medical Officer
Trista Morrison
Chief Corporate Affairs Officer
and Chief of Staff to the CEO
Michelle Quinn Smith
Chief Human Resources Officer
Robin Swartz
Chief Operating Officer,
Acting Chief Business Officer,
Principal Financial Officer
Board Member:
Cyclerion Therapeutics, Inc.;
Camp4 Therapeutics Corporation;
Sea Pharmaceuticals, LLC
Grace E. Colón, Ph.D.
Board Member: CareDx, Inc.; Bloom
Science, Inc.; Emm Technology Ltd.;
Inaya Therapeutics, Inc.;
Massachusetts Institute of Technology
(MIT) Corp. (term member);
Biotechnology Innovation Organization
James A. Geraghty
Chairman of the Board of Directors:
Pieris Pharmaceuticals, Inc.;
OMass Therapeutics
Limited Board Member:
Fulcrum Therapeutics, Inc.;
CANbridge Pharmaceuticals Inc.
Steven Hyman, M.D.
Board Member: Cyclerion
Therapeutics, Inc.; Stanley Center
for Psychiatric Research at the Broad
Institute of Harvard and MIT
Faculty Member, Broad Institute
Distinguished Service Professor of
Stem Cell and Regenerative Biology,
Harvard University
Jude Onyia, Ph.D.
Chief Scientific Officer,
Neurocrine Biosciences, Inc.
Glenn Pierce, M.D., Ph.D.
Board Member:
World Federation of Hemophilia
Alfred Sandrock, M.D., Ph.D.
Director, President and Chief Executive
Officer, Voyager Therapeutics, Inc.
Board Member: Verge Genomics, Inc.;
Atalanta Therapeutics, Inc.;
Transition Bio, Inc.; Neurimmune AG
George Scangos, Ph.D.
Board Member: Vir Biotechnology, Inc.;
Cornell University; University of
California, San Francisco;
Life Science Cares
Nancy Vitale
Chief People Officer, Omada Health, Inc.
Legal Counsel
Wilmer Cutler Pickering Hale and Dorr LLP;
Boston, MA / New York, NY
Independent Auditors
Ernst & Young LLP; Boston, MA
Transfer Agent and Registrar
Computershare Trust Company, N.A.;
Canton, MA
Annual Meeting
The Annual Meeting of Stockholders
will be held June 5, 2024, 9:00 am ET
Voyager Therapeutics, Inc.
75 Hayden Avenue
Lexington, MA 02421